OPTICAL SYSTEMS INC, 10SB12G, 1998-07-08

OPTICAL SYSTEMS INC
10SB12G, 1998-07-08

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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 10-SB
GENERAL FORM FOR REGISTRATION OF SECURITIES OF
SMALL BUSINESS ISSUERS
Pursuant to Section 12(b) or 12(g)
of The Securities Exchange Act of 1934

OPTICAL SYSTEMS, INC.
(Name of Small Business Issuer in its Charter)
Florida 65-0755071
(State or other jurisdiction of (IRS Employer incorporation or
organization) Identification No.)

Raritan Plaza II, Raritan Center
Fieldcrest Avenue
Edison, New Jersey 08818
(Address of Principal) (Zip Code)
(Executive Offices)

(732) 417-0023
(Registrant's telephone number, including area code)

Securities to be registered pursuant to Section 12(b) of the Act:
None

Securities to be registered pursuant to Section 12(g) of the Act:
Common Stock, par value $.0001 per share
Preferred Stock, par value $.0001 per share
(Title of Class)

FORM 10-SB REPORT INDEX
Item No. Page No.

PART I
Item 1. Description
of Business..........................1
Item 2. Management's
Discussion and Analysis..............3
Item 3. Description
of Property..........................7
Item 4. Security Ownership
of Certain Beneficial
Owners and Management................8
Item 5. Directors, Executive
Officers, Promoters and
Control Persons......................9
Item 6. Executive
Compensation.........................11
Item 7. Certain Relationships and Related
Transactions.........................12
Item 8. Description
of Securities........................13

PART II

Item 1. Market Price of and Dividends on the
Registrant's Common Equity and other
Shareholder Matters.............. ..15
Item 2. Legal
Proceedings............. ...........16
Item 3. Changes in and Disagreements with
Accountants .........................17
Item 4. Recent Sales of
Unregistered Securities.......... ...18
Item 5. Indemnification of Directors
and Officers........................19
PART I.

Item 1. Description of Business
_________________________________
THE COMPANY

Optical Systems, Inc., a Florida Corporation (hereinafter the "Company")
was incorporated on May 29, 1997 under the name Optical Systems
Holdings, Inc. The Company acquired through merger, 100% of the
issued
and outstanding common stock of Optical Systems, Inc, a New Jersey
corporation ("OSI-NJ"), effective June 30, 1997. Immediately thereafter,
the Company changed its name to Optical Systems, Inc. The Company is
an Information Technology Solutions Provider marketing products and
services in the areas of document management, service bureau operations,
custom programming, consulting for network, Internet and Intranet
environments and identifying and remediating the "Year 2000" (Y2K)
conversion.

Business of the Company

The Company's main goal is to provide advanced solutions to the ever
evolving data storage industry. This will be accomplished with two (2)
main products. The first is a practical, efficient data storage system,
changing existing magnetic tape, macrophage and paper files to highly
automated compact discs. The second is in the field of data extension and
the "Year 2000 Problem." Data storage in the past has always been an
expensive endeavor. The Company intends to offer a solution by reducing
the cost of data storage with its compact disc ("CD") storage program.
The Company also intends to amend a very damaging technique of data
storage used in the past in an effort to reduce cost, specifically, the 6-
digit date technique. Computers will not be able to recognize the year 2000
in that they presently read years as the last two digits, assuming the first
two to be "19." When January 1, 2000 occurs, most computer systems will
recognize that date as January 1, 1900. The 6-digit date problem is
thought by many experts to be as much as a $1 Trillion global computing
nightmare. Such intended services will allow the Company to be a
"one-stop-shop" for efficient, highly automated data storage.

The Company has recently introduced its proprietary magnetic media
migration tool called "SafeCDTM." In addition, the Company has aligned
itself with CCD Online, a Year 2000 tool vendor which has received broad
recognition and numerous accolades from industry participants as
possessing the most completely automated, efficacious and easy to utilize
software tool for Year 2000 conversions. The CCD Online tool is
applicable to most languages and platforms.

The Company has established a shared CCD Online "computer factory"
in its Edison, New Jersey headquarters. The hardware is in place, the
software has been implemented and CCD is providing the technical
support staff necessary to assist with conversion work. Pilot projects for
such conversion services with CCD Online are in the implementation stage and
contracts for complete remediation of millions of lines of code are being
negotiated. The Company and CCD Online will split all revenues equally
from the contracted code conversions.
The Company currently has 14 full time employees.

Competition

There are many competitors entering and established in the information
services related industry. Although the Company believes it will be able
to establish and maintain a sizable market niche, competitors with greater
financial and human resources than the Company can enter the Company's
market with products and services similar or identical to those of the
Company.

Item 2. Management's Discussion and Analysis
_______________________________________________

,Six Months End,Six Months End,Fiscal Year,Fiscal Year
,3/31/98,3/31/97,End 9/30/97,End 9/30/96
Gross Revenues,$901,799,$637,769,$886,735,$1,024,591
Cost of Revenues,402,171,201,983,253,885,280,707
Gross Profit,499,628
,435,786,632,850,743,884
Payroll
Expenses ,317,986,291,460,500,999,562,490
Selling & Administration,346,910,155,553,353,258,259,479
Depreciation,36,900,29,000,60,957,48,754
Income (Loss) from Operations,(212,168),(40,227),(282,364),(126,839)
Other Expenses,(46),(9),(5,145),(18)
Interest Expense,4,381,33,560,64,795,64,257
Net (Loss) Income,($216,503),($73,778),($342,014),($191,078)

Gross Revenues

The Company is an Information Technology Solutions Provider marketing
products and services in the areas of document management, service
bureau operations, custom programming, consulting for network, Internet
and Intranet environments and identifying and remediating the "Year
2000" (Y2K) program code. The revenues from these businesses in the six month
period ended March 31, 1998 were $901,799 or 22% above the same
period ending March 31, 1997.

In September 1997 the Company made a strategic decision to allocate
resources to market products and services dedicated to the "Year 2000
Solutions". These efforts in the first half of the current fiscal year created
revenues of $561,000. During the same six month period there was a
reduction in revenues from the general consulting business of ($423,000)
as the result the reallocation of resources. Revenues from the document
imaging and the service bureau businesses increased approximately
$20,000 in the first six months of fiscal 1998 versus the same period in
fiscal 1997.

Gross revenues for the fiscal year ending September 1997 versus
September 1996 decreased (13%) due to a major client executing a service
contract (non Y2K business) pass the end of the company's fiscal year.
This resulted in revenues for the first six months of fiscal 1998 being 102%
of the total twelve months of fiscal 1997.

Cost of Revenues

For the six months ended March, 1998, virtually the total increase in cost
of revenues (+$200,000) above the same period for 1997 is attributable to
the emphasis placed by management to develop the Y2K business. The
labor component for processing Y2K work was $183,000 for the period
ending March 1998 versus 1997.

Payroll Expenses

Payroll expenses for the fiscal year ending September 1997 versus
September 1996 decreased 11% or $61,000 not matching the comparable
decrease in revenues as the Company retained staff anticipating the client
contract signed in the first quarter of fiscal 1998. For the periods ending
March 1998 and March 1997, payroll expenses increased 13% in 1998 to
support the increasing volume of business.

Selling & Administration

For the six months ended March, 1998, selling and administration
expenses increased $191,357 above the same period for 1997. Slightly more
than half ($106,000) of this increase is related to the Company incurring
costs to maintain its status as a publicly traded company and complete the
recapitalization started in June 1997. The increase attributable to
marketing the Y2K business amounts to approximately $47,000 in the first
half of fiscal 1998 without comparable costs in the 1997 period. The balance
of the increase of $38,000 is for additional administrative services growth
in business.

Selling and administration expenses for the fiscal year ending September
1997 versus September increased +36%. Selling expenses increased
+$35,000 as the Company continued to develop tactics to generated new
account business. Developing the Internet server added $20,000 in
increased year-to-year expenses. Rent increased $15,000 and the balance
of administrative charges for insurance, market monitoring services, etc
added +$24,000.

Depreciation

For the six months ended March, 1998, the increase in depreciation
expense reflects period to period added investment in fixed assets of
$83,000 or +27%. The Company purchased new computer equipment to
build "factory sites" to process Y2K conversions.
Depreciation expense for the fiscal year ending September 1997 versus
September 1996 increased 25% reflecting a full year recognition of
expense for assets purchased through out the previous period.
Interest Expense
For the six months ended March, 1998, interest expense decreased 88% or
$29,000 as the result of the recapitalization started in June 1997. ( See
Liquidity and Working Capital Deficiency).
Interest expense for the fiscal year ending September 1997 and September
1996 are essentially identical reflecting the same level of debt
encumbrances in both periods. ( See Liquidity and Working Capital
Deficiency).

Liquidity and Working Capital Deficiency

Optical Systems Holdings, Inc. (OSHI) was incorporated on May 29, 1997
in the State of Florida. This Company acquired through merger, 100% of
the issued and outstanding common stock of Optical Systems, Inc., a New
Jersey corporation (OSI-NJ) effective June 30, 1997. Immediately
thereafter, the OSHI changed its legal name to Optical Systems, Inc. For
financial reporting purposes the acquisition has been treated as a
recapitalization of OSI-NJ.

The recapitalization resulted in the substitution of interest bearing
installment debt instruments amounting to $675,000 with the issuance of
preferred stock. Cash used in operations consumed the balance.
In the first six months of fiscal 1998, the Company received $200,000
from the issuance of Series A Preferred Stock and $200,000 from the exercise
of warrants relating to a Regulation D 504 Offering.

The Company is also seeking to raise additional capital through the sale of
common stock in the private investor market and has engaged a prominent
Wall Street firm to assist in the effort to raise approximately $5,000,000.
There can be no assurance that these efforts will succeed. The Company is
projecting that a substantial acceleration of the Y2K business is imminent
and that the newly added revenues will reduce if not eliminate the working
capital deficiency. Consequently, the Company believes it will have
sufficient cash flow to sustain operations over the next twelve months
even without receiving proceeds from the sale of common stock.

Item 3. Description of Property
___________________________________

The Company presently leases approximately 6,100 square feet in an
office building located at Raritan Plaza II, Raritan Center, Fieldcrest
Avenue, Edison, New Jersey. The office is exclusively executive offices
for businesses. The facility is leased from a non-affiliated party pursuant
to a non-cancellable five (5) year lease which expires January 20, 2000. The
present minimum monthly rent is $7,522.00 which does not include utilities
and escalation expenses. The lease does not have an option to renew.

Item 4. Security Ownership of Certain Beneficial Owners
and Management
_________________________________________________________

The following table sets forth certain information as of June 22, 1998
regarding the beneficial ownership of all of the Company's outstanding
common stock, par value $.0001 per share (the "Common Stock") and
outstanding preferred stock, par value $.0001 per share (the "Preferred
Stock"), including such ownership by: (i) each of the stockholders of the
Company who own more than five (5%) percent of the outstanding shares
of Common Stock; (ii) each director of the Company; and (iii) all directors
and executive officers of the Company as a group. As of June 22, 1998,
there were 4,654,557 shares of Common Stock outstanding and 1,011,513
shares of Preferred Stock outstanding.
Name and Address of Beneficial Owner (1),Amount and Nature of
Beneficial Ownership (2),Percent of Class

Warren R. Zimmerman ,2,810,122 Common shares,60.37% Common
Shares
Raymond F. Sery,369,557 Common shares; 1,011,513 Series A Preferred,
7.94% Common Shares
All directors and executive officers as a group (2 persons),2,810,122
Common shares,60.37% Common Shares
(1) The address of each person and entity named in the above table
is c/o the Company, Raritan Plaza II, Raritan Center, Fieldcrest
Avenue, Edison, New Jersey 08818.
(2) The persons and entities named in this table have sole voting
and investment power with respect to all shares of common stock and
Series A preferred stock reflected as beneficially owned by each.

Item 5. Directors, Executive Officers, Promoters and Control
Persons
_______________________________________________________________
Directors, Executive Officers, Promoters and Control Persons of the
Company and their ages are as follows:

Name Age Position
Warren R. Zimmerman 50 President, Chief
Executive Officer
Director

Raymond Sery 53 ControlPerson

Richard E. Hoynes 37 Director
William H. Luckman 26 Treasurer and
Director

All officers and directors listed above will remain in office until the
next annual meeting of the stockholders, and until their successors have been
duly elected and qualified. There are no agreements with respect to the
election of Directors. The Company has not compensated its Directors for
service on the Board of Directors, any committee thereof, or reimbursed for
expenses incurred for attendance at meetings of the Board of Directors and/or
any committee of the Board of Directors. Officers are appointed annually by
the Board of Directors and each Executive Officer serves
Directors may in the future determine to pay Director's fees and reimburse
Directors for expenses related to their activities.

None of the Officers and/or Directors of the Company have filed any
bankruptcy petition, been convicted of or been the subject of any criminal
proceedings or the subject of any order, judgment or decree involving the
violation of any state or federal securities laws within the past five (5)
years.
The business experience of each of the persons listed above during the
past five (5) years is as follows:

1. Warren R. Zimmerman has twenty eight years of computer
experience and is the founder of OSI-NJ since its inception in April,
1992. He has an extensive working knowledge of computers and
computer technology developed in his experience at executive and
technical positions. Prior to forming OSI-NJ, he was the Director of
Technical Services at First Investors Corp. located in Woodbridge,
New Jersey from January 1987 until July, 1993. At such position, he
was responsible for managing a staff of system programmers, planning of
hardware and software acquisitions, upgrades, telecommunications planning
and implementation and problem solving as it relates to such areas.

2. Raymond Sery has over twenty five years of management
experience after obtaining his Masters in Business Administration from
the Stern School. He is presently the Vice President and Chief
Financial Officer of Federal Business Centers located in Edison, New
Jersey. He has held such position since July, 1991.

3. Richard E. Hoynes has an extensive computer consulting
background and is presently a Director of Research Information
Management for Warner-Lambert Company, a worldwide company with
headquarters located in Morris Plains, New Jersey. Prior to
commencing work with Warner-Lambert Company in February, 1995,
he worked for the IBM Corporation as a computer consultant from
April 1987 until February, 1995.

4. William H. Luckman has an established business management
and banking background. He established his background in business as
the owner and manager of a mortgage company, International
Mortgage, in Chicago, Illinois from June, 1992 until December, 1993.
After selling his business, he worked for Lincoln Savings Bank, FSB,
located in Jericho, New York as a marketing consultant and mortgage
underwriter. He worked at Lincoln Savings Bank from January, 1994 until
April, 1994. He then worked for American Home Mortgage of New
York, one of the largest privately held mortgage banks in the United States.
He was given the responsibility for out-of-region growth. As the youngest
Vice President in company history, he established satellite offices in New
York, Florida and Illinois. He worked for American Home Mortgage from
April, 1994 until January, 1997. Mr. Luckman was the President,
Treasurer and Director of Premier Supplements Corp. from March, 1997 until
January, 1998. Premier Supplements Corp. (now known as CentraCan
Incorporated) is a publicly traded company on the NASDAQ OTC Bulletin Board
traded under the symbol, CTCE (formerly PMSP).

Item 6. Executive Compensation
________________________________

Summary Compensation Table

The following sets forth the compensation paid by the Company for
services rendered by Officers and Directors of the Company:

Name and Principal Year Annual Salary (1)Position

Warren R. Zimmerman 1998 $80,000.00 President/Chief
Executive
Officer/Director

1. The Company has entered into an employment agreement with
Mr. Zimmerman dated October 1, 1997. Such employment agreement
terminates on October 1, 2002. It provides for an annual salary of
$80,000 and increases in annual salary based on Gross Revenues as
follows: a Base Revenue Amount of $1,116,000 has been set - if the
Gross Revenues for the first fiscal year exceed the Base Revenue
Amount before April 1, 1998, then the base salary increases to
$125,000 per year for the remainder of the first year; after such initial
year if the Company's Gross Revenues for a fiscal year shall be
between $3,000,000 and $5,000,000, then Mr. Zimmerman's annual
salary shall be $200,000; if the Company's Gross Revenues for a fiscal
year shall be between $5,000,001 and $10,000,000, then Mr. Zimmerman's
annual salary shall be $300,000; and if the Company's Gross Revenues for a
fiscal year shall be in excess of $10,000,001, then Mr. Zimmerman's annual
salary shall be $350,000. In addition, the employment agreement provides
for bonuses based on Gross Revenues (Mr. Zimmerman can earn up to an
additional $150,000) and Net Earnings (Mr. Zimmerman can earn up to an
additional $200,000). Specifically, for each $100,000 in excess of the Base
Revenue Amount (see above), Mr. Zimmerman shall receive a $5,000 Gross
Revenue Bonus, not to exceed $150,000 in any given fiscal year; in addition,
the Net Earnings Bonus shall be based on Net Earnings for the prior
fiscal year. Therefore, for each $25,000 increase in Net Earnings from
the previous fiscal year, Mr. Zimmerman shall receive a $2,000 Net Earnings
Bonus, not to exceed $200,000. The Company has not entered into any
employment contracts with its other officers or directors.

Item 7. Certain Relationships and Related Transactions
________________________________________________________

On June 15, 1997, the Company completed a Regulation D 504
Offering in which it issued 500,000 shares of common stock and 450,000
common stock redeemable stock purchase warrants for an aggregate
offering price of $25,000. Each Warrant entitles the holder to one share of
Common Stock at a price of $1.60 per common share. The expiration date
of the warrants is as follows: 250,000 Warrants expired on December 31,
1997; and 200,000 Warrants expire on December 31, 1998. In addition,
on July 21, 1997, the Company completed a second Regulation D 504
Offering in which it received $105,800 in exchange for 105,800 shares of
common stock and 52,900 Warrants with an exercise price of $1.35 per
share. All warrants have an expiration date of June 15, 1998.

On September 26, 1997, the Company issued 811,513 Series A
Preferred Shares to Raymond Sery in consideration of his assumption and
payment of $605,000 of a promissory note payable to First Union Bank
and the cancellation of $70,000 in loan principal due him. In addition, on
January 15, 1998, the Company issued an additional 200,000 shares of
Series A Preferred Stock to Mr. Sery in consideration of $200,000 paid to
the Company on January 29, 1998. The terms of Mr. Sery's investment
provided that if the Company does not undertake a secondary public
offering of its securities under the Securities Act of 1933 by December 31,
1998, Mr. Sery shall have the right to require the Company to repurchase
any or all equity securities of the Company (including all shares of
common stock) then owned by him; provided, however, the Company shall only be
required to repurchase shares with an aggregate repurchase price paid to Mr.
Sery not to exceed more than $1,200,000.

Item 8. Description of Securities
____________________________________

Authorized and Outstanding Capital Stock

The Company's authorized capital stock consists of 50,000,000 shares
of common stock, $.0001 par value and 10,000,000 shares of preferred
stock, $.0001 par value. As of June 22, 1998, 4,654,557 shares of
common stock were outstanding and 1,011,513 shares of preferred stock
were outstanding.

Each share of common stock entitles the holder to one (1) vote on all
matters submitted to a vote of the stockholders. The common stock does
not have cumulative voting rights, which means that the holders of a
majority of the outstanding shares of common stock voting for the election
of directors can elect all members of the Board of Directors. A majority
vote is also sufficient for other actions that require the vote or concurrence
of stockholders except in cases in which more than a simple majority is
required by law. Holders of common stock are entitled to receive
dividends, when, as and if declared by the Board of Directors, in its
discretion, from funds legally available therefore. Subject to the dividend
rights of the holders of the preferred stock, holders of shares of common
stock are entitled to share, on a ratable basis, such dividends as may be
declared by the Board of Directors out of funds, legally available therefor.
Upon liquidation, dissolution or winding up of the Company, after
payment to creditors and holders of preferred stock that may be outstanding,
the holders of common stock are entitled to share ratably in the assets of
the Company, if any, legally available of distribution to common stockholders
of the Company. The Bylaws of the Company require that only a majority of
the issued and outstanding shares of common stock of the Company need be
represented to constitute a quorum and to transact business at a stockholders'
meeting.

The common stock has no preemptive rights or no subscription,
redemption or conversion privileges. All of the outstanding shares of
common stock are fully paid and nonassessable.

The Company's Board of Directors has total discretion as to the
issuance and the determination of the rights and privileges of any shares of
preferred or common stock which may be issued in the future, which
rights and privileges may be detrimental to the rights and privileges of the
holders of the existing shares of the Company's common stock now issued and
outstanding.

The Company has declared a Series A Preferred Stock class, of which
1,065,513 shares are authorized to be issued with the following
preferences, limitations and rights: no voting rights; at such time as a
dividend is declared by the Company's Board of Directors, and provided
such funds are legally available therefor, a preference over the Company's
common stock of of an aggregate of 5% to be non-cumulative; on
liquidation, a preference over Common Stock of $11.60 per share of Series
A Preferred Stock; each and every share of Series A preferred Stock shall
convert into Common Stock of the Company at the rate of one share of
common stock for every share of Series A Preferred Stock, which
conversion shall occur on the earlier of (a) June 30, 1998, or (b) the
Company's filing of a registration statement with the Securities and
Exchange Commission; and the number of shares of Series A Preferred
Stock authorized to be issued, and the number of shares of common stock
into which they shall be converted, shall adjust automatically in the event
of any split, reverse split, recapitalization or other similar action that
may be authorized by the Company.

Transfer Agent

The Transfer Agent for the common stock is Interwest Transfer
Company, Inc.

PART II.

Item 1. Market Price of and Dividends on the Registrant's
Common Equity and Other Shareholder Matters
____________________________________________________________

A. Market Information: The Company's common stock is presently
traded on the NASDAQ OTC Bulletin Board under the symbol "OPSY." There is no
established public trading market for the Company's preferred stock. The
high and low sales prices for each quarter since the Company was accepted for
listing on the NASDAQ OTC Bulletin Board on September 15, 1997 is as follows:
<TABLE>
<S> <C> <C>
Fiscal Quarter High Low
September 30, 1997 4.1250 3.2500
December 31, 1997 5.0000 3.6250
March 30, 1998 4.2500 2.7500
Up to June 22, 1998 3.2500 1.4375
</TABLE>

B. Holders: The number of record holders of shares of the
Company's common stock as of June 25, 1998 was One Hundred Twenty Seven
(127). The aggregate number of shares of the Company's common stock issued
and outstanding as of June 25, 1998 was 4,654,557.

C. Dividends: The Company has not paid or declared any
dividends upon its shares of common stock since its inception and, by
reason of its present financial status and its contemplated financial
requirements, it does not contemplate or anticipate paying any dividends
upon its shares of common stock in the foreseeable future.

Item 2. Legal Proceedings
____________________________

The Company is not presently a party to any litigation of any kind or
nature whatsoever, nor to the Company's best knowledge and belief is any
litigation threatened or contemplated.

Item 3. Changes in and Disagreements with Accountants
_______________________________________________________

The Company's accountants are Mauriello, Franklin & LoBrace, CPAs,
P.A. of Springfield, New Jersey. The Company does not presently intend
to change accountants. At no time have there been any disagreements
with such accountants regarding any matter of accounting principles or
practices, financial statement disclosure, or auditing scope or procedure.

Item 4. Recent Sales of Unregistered Securities.
__________________________________________________

On June 15, 1997, the Company completed a Regulation D 504
Offering through its Officers and Directors, in which it issued 500,000
shares of common stock and 450,000 common stock redeemable stock
purchase warrants for an aggregate offering price of $25,000. Each
Warrant entitles the holder to one share of Common Stock at a price of
$1.60 per common share. The expiration date of the warrants is as
follows: 250,000 Warrants expired on December 31, 1997; and 200,000
Warrants expire on December 31, 1998. In addition, on July 21, 1997, the
Company completed a second Regulation D 504 Offering in which it
received $105,800 in exchange for 105,800 shares of common stock and
52,900 Warrants with an exercise price of $1.35 per share. All warrants
have an expiration date of June 15, 1998.

For each of the above transactions, the Company relied upon the
exemption from registration under the Securities Act of 1933, as amended,
as provided by Section 4(2) of the Act.Item 5. Indemnification of
Directors and Officers

Under Florida law, a director is not personally liable for monetary
damages to the corporation or any other person for any statement, vote,
decision, or failure to act unless (i) the director breached or failed to
perform his duties as a director, and (ii) a director's breach of , or
failure to perform, those duties constitutes (1) a violation of the criminal
law, unless the director had reasonable cause to believe his conduct was
lawful or had no reasonable cause to believe his conduct was unlawful; (2) a
transaction from which the director derived an improper personal benefit,
either directly or indirectly; (3) a circumstance under which an unlawful
distribution is made; (4) in a proceeding by or in the right of the
corporation or in a proceeding in which the corporation procures a
judgment in its favor or by or in the right of a shareholder, conscious
disregard for the best interest of the corporation or willful misconduct; or
(5) in a proceeding by or in the right of someone other than the corporation
or a shareholder, recklessness or an act or omission which was committed
in bad faith or with malicious purpose or in a manner exhibiting wanton
and willful disregard of human rights, safety, or property. A corporation
may purchase and maintain insurance on behalf of any director or officer
against any liability asserted against him and incurred by him in his
capacity or arising out of his status as such, whether or not the corporation
would have the power to indemnify under Florida law.

The Company's Bylaws limit, to the maximum extent permitted by
Florida law, the personal liability of directors and officers for monetary
damages for breach of their fiduciary duties as directors and officers. The
Bylaws provide further that the Company shall indemnify to the fullest
extent permitted by Florida law any person made a party to any action or
proceeding by reason of the fact that such person was a director, officer,
employee or agent of the Company. The Bylaws also provide that
directors and officers who are entitled to indemnification shall be paid
their expenses incurred in connection with any action, suit or proceeding in
which such director or officer is made a party by virtue of his being an
officer or director of the Company to the maximum extent permitted by
Florida law.

Part F/S

The financial statements for the Company as of September 30, 1997
(audited) and as of March 31, 1998 (unaudited) have been examined to the
extent indicated in reports by Mauriello, Franklin & LoBrace, CPAs, P.C.,
independent certified public accountants.

Part III

Item 1. Index to Exhibits
___________________________

The following exhibits are filed with this Form 10-SB:

EXHIBIT # EXHIBIT NAME
3(i) Certificate of Incorporation of Optical Systems, Inc. and
Amendments
3(ii) By-Laws of Optical Systems, Inc.
27 Financial Date Schedule
99.1 Articles of Merger
99.2 Agreement and Plan of Merger

SIGNATURES

In accordance with Section 12 of the Securities Exchange Act of 1934,
the registrant caused this registration statement to be signed on its behalf
by the undersigned, thereunto duly authorized.

OPTICAL SYSTEMS, INC.

By:/s/ Warren R. Zimmerman
__________________________
Warren R. Zimmerman
President, Chief Executive Office
And Director
Dated: June 25, 1998

POWER OF ATTORNEY

KNOW ALL MEN BY THESE PRESENTS, that each director and
officer whose signature appears below constitutes and appoints Richard I.
Anslow as such person true and lawful attorney-in-fact and agent, with full
powers of substitution and re-substitution, for such person in name, place
and stead, to sign in any and all amendments (including post-effective
amendments) to this Form 10-SB, in any and all capacities, and to file the
same, with all exhibits thereto and all other documents in connection
therewith, with the Securities and Exchange Commission, granting unto
such attorney-in-fact and agent, the full power and authority to do and
perform each and every act and thing requisite and necessary to be done,
as fully to all intents and purposes as he might or could do in person, hereby
ratifying and confirming all that such attorney-in-fact and agent, or any of
them, may lawfully do or cause to be done by virtue hereof.
In accordance with the requirements of the Securities Act of 1933, this
Form 10-SB was sign by the following person in the capacities and on the
date stated.

Signature Title Date
/s/ Warren R. Zimmerman President, July 2 , 1998
Chief Executive
Officer and
Director

/s/ William H. Luckman Treasurer and July 2 , 1998
Director

/s/ Richard E. Hoynes Director July 2 , 1998

OPTICAL SYSTEMS, INC.

INDEX TO FINANCIAL STATEMENTS

Independent Auditors' Report F-2
Balance Sheet September 30, 1997
and March 31, 1998 (Unaudited) F-3
Statements of Operations
Years Ended September 30, 1997 and 1996
and Six Months Ended March 31, 1998 and 1997(Unaudited) F-4
Statement of Stockholders'
Equity (Deficiency) Two Years Ended
September 30, 1997, and
Six Months Ended March 31, 1998 (Unaudited) F-5 Thru 7
Statements of Cash Flows
Years Ended September 30, 1997
and 1996, and Six Months Ended
March 31, 1998
and 1997 (Unaudited) F-8
Notes to Financial Statements F-9 Thru 14

INDEPENDENT AUDITORS' REPORT
To the Board of Directors of
Optical Systems, Inc.:

We have audited the accompanying balance sheet of Optical Systems,
Inc. as of September 30, 1997 and the related statements of operations,
stockholders' equity (deficiency), and cash flows for the two years ended
September 30, 1997. These financial statements are the responsibility of
the Company's management. Our responsibility is to express an opinion
on these financial statements based on our audits.

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

In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of Optical Systems, Inc. as
of September 30, 1997 and the results of its operations and its cash flows for
the two years then ended in conformity with generally accepted accounting
principles.

<TABLE>
November 6, 1997
OPTICAL SYSTEMS, INC.
BALANCE SHEETS

<S> <C> <C>
ASSETS September 30,1997 March 31, 1998
(Unaudited)>
Current assets:
Cash and cash equivalents $ 85,927 $23,307
Accounts receivable trade,
net of allowancefor doubtful
accounts of $1,000,
and $1,000 respectively 29,020 493,441

Loan receivable-office -0- 25,818
Prepaid expenses 1,062 79,880
Security deposits -0- 38,706
_______ _______
Total current assets $ 116,009 $ 661,152

Property and equipment:
Office furniture and equipment $ 22,198 $ 30,221
Computer hardware and software 258,678 332,329
Vehicle 24,654 24,654
Total cost $ 305,530 $ 387,204
Accumulated depreciation 143,257 180,157
Total property and equipment $ 162,273 $ 207,047
Total assets $ 278,282 $ 868,199
_________ __________

LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIENCY)
Current liabilities:
8% debenture bonds payable-9/15/98 $ 28,500 $ 28,500
5% convertible notes payable-3/31/98 60,000 40,000
5% demand note payable -0- 35,000
Current maturities of long-term debt 17,592 14,065
Loans payable - shareholders 31,832 34,461
Accounts payable - trade 164,006 534,558
Accrued expenses 62,805 71,139
_________ ________
Total current liabilities $ 364,735 $ 757,723
Long-term debt 37,114 22,980
_________ ________
Total liabilities $ 401,849 $ 780,703

Stockholders' equity (deficiency):
Convertible preferred stock,
$0.0001 par value,
authorized 10,000,000 shares;
issued and outstanding -
811,513 shares (March 31,
1998 - 1,011,513 shares) $81 $ 101
Common stock, $0.0001 par value, authorized
50,000,000 shares; issued and
outstanding - 4,372,712 shares
(March 31, 1998 - 4,654,557 shares) 437 465
Additional paid in capital 980,030 1,407,548
Accumulated deficit (1,104,115) (1,320,618)
___________ ___________
Total stockholders' equity (deficiency) $ (123,567) $ 87,496

Total liabilities and stockholders'
deficiency $ 278,282 $ 868,199
</TABLE>

SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS
F-3

OPTICAL SYSTEMS, INC.
STATEMENTS OF OPERATIONS
<TABLE>
<S> <C> <C>
Years Ended Six Months Ended
September 30, March 31,
1997 1996 1998 1997
____ ____ ____ ____
(Unaudited)
Gross revenue $ 886,735 $1,024,591 $ 901,799 $637,769
Cost of revenue 253,885 280,707 402,171 201,983

Gross profit $ 632,850 $ 743,884 $ 499,628 $435,786

Operating expenses:
Payroll and related fringe costs $ 500,999 $ 562,490 $ 327,986 $291,460
Selling and marketing 82,383 58,099 96,562 35,905
Administrative 270,875 201,380 250,348 119,648
Depreciation 60,957 48,754 36,900 29,000
Total operating expenses $ 915,214 $ 870,723 $ 711,796 $476,013
_________ _______ _________ ________

Loss from operations $(282,364)$ (126,839) $(212,168) $(40,227)

Other income (expense):
Interest expense $ (64,795)$ (64,257) $ (4,381) $(33,560)
Miscellaneous income 5,145 18 46 9
___________ __________ _________ __________
Total other income (expense) $ (59,650) $ (64,239)$ (4,335) $(33,551)
___________ __________ _________ __________

Net loss $ (342,014) $(191,078) $(216,503) $(73,778)

Net loss per share $(.09) $(.06) $(.05) $(.02)

Weighted average common
shares outstanding 3,597,874 3,326,562 4,481,919 3,326,562
</TABLE>

SEE ACCOMPANYING NOTES TO FINANCIAL
STATEMENTS

F-4

<TABLE>
OPTICAL SYSTEMS, INC.
STATEMENTS OF CASH FLOW

<S> <C> <C>
Years Ended Six Months Ended
September 30, March 31,
1997 1996 1998 1997
____ ____ ____ ____
(Unaudited)
CASH FLOWS FROM OPERATING
ACTIVITIES:

Net loss $(342,014) $(191,078) $(216,503) $(73,778)
Adjustments to reconcile
net loss to net cash
provided by (used in)
operating activities:
Depreciation $ 60,957 $ 48,754 $ 36,900 $ 29,000

Financial services -0- -0- 50,000 -0-
Interest expense -0- 6,140 -0- -0-
Provision for bad debts 1,000 -0- -0- -0-
Increase (decrease) in cash
resulting from
changes in current assets
and liabilities:
Accounts receivable 16,302 66,910 (464,421) (34,458)
Loan receivable-officer -0- -0- (25,818) -0-
Prepaid expenses 35,535 (36,154) (78,818) 35,526
Security deposits -0- -0- (38,706) -0-
Accounts payable-trade (90,097) 123,605 370,552 42,167
Deferred revenue -0- (108,000) -0- 96,900
Accrued expenses 55,667 (2,819) 8,334 39,803
Total adjustments $ 79,364 $ 98,436 $(141,977) $208,938

Net cash provided by (used in)
operating activities $ (262,650) $ (92,642) $(358,480) $135,260

CASH FLOWS FROM INVESTING ACTIVITIES:
Additions to property
and equipment $ (24,069) $ (49,314) $ (81,674) $(20,481)

CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from convertible
and demand
notes payable, net $ 60,000 $ -0- $ 15,000 $ -0-

Proceeds from note
payable bank 55,000 50,000 -0- -0-

Proceeds from (repayment of)
loans from
(to) shareholder 20,000 107,977 2,629 (6,071)

Repayment of
long-term debt (97,364) (29,908) (17,661) (54,455)

Issuances of common stock
by successor entity 387,395 -0- 400,844 -0-

Issuance of common
stock by predecessor entity 22 -0- -0- -0-

Stock issuance costs (54,578) -0- (23,278) -0-

Net cash provided by (used in)
financing activities $ 370,475 $ 128,069 $377,534 $(92,026)

INCREASE (DECREASE) IN CASH AND
CASH EQUIVALENTS $ 83,756 $ (13,887) $(62,620) $51,153

Cash and cash equivalents,
beginning of period 2,171 16,058 85,927 2,171

Cash and cash equivalents,
end of period $ 85,927 $ 2,171 $ 23,307 $53,324
</TABLE>

SEE ACCOMPANYING NOTES TO FINANCIAL
STATEMENTS
F-8

OPTICAL SYSTEMS, INC.
STATEMENT OF STOCKHOLDERS' EQUITY(DEFICIENCY)
TWO YEARS ENDED SEPTEMBER 30, 1997 AND
SIX MONTHS ENDED MARCH 31, 1998(UNAUDITED)
<TABLE>
<S> <C> <C> <C> <C> <C> <C>
Shares of Additional Total
Common Common Preferred Paid-In Accumalated Stockholders'
Stock Stock Stock Capital Deficit Deficiency
_______ _______ ________ ________ __________ __________
Balance, Oct. 1, 1995 2,129 $39,500 $(576,378) $(531,878)
Net loss for year ended
September 30, 1996 -0- -0- (191,078) (191,078)
_____ ______ ________ _________
Balance, Sept. 30, 1996 2,129 $39,500 $(762,456) $(722,956)
Issuances of common stock by
predecessor NJ entity for cash
of $.20 per share 111 22 22
Issuance of common
stock by successor
entity prior to reorganization
to founders for services
rendered @$.0001
per share 300,000 30 30
Exchange of common
stock of predecessor NJ
entity for common stock
of successor entity under (2,240) (39,522) (39,522)
reverse acquisition 3,500,012 350 38,817 355 39,522
Issuance of common
stock by successor
entity for cash @
$.05 per share 500,000 50 24,950 25,000
</TABLE>

SEE ACCOMPANYING NOTES TO FINANCIAL
STATEMENTS
F-5

OPTICAL SYSTEMS, INC.
STATEMENT OF STOCKHOLDERS' EQUITY(DEFICIENCY)
TWO YEARS ENDED SEPTEMBER 30, 1997
<TABLE>
<S> <C> <C> <C> <C> <C> <C>
Shares of Additional Total
Common Common Preferred Paid-In Accumulated Stockholders'
Stock Stock Stock Capital Deficit Deficiency
_______ _______ _______ __________ _________ ___________
Retirement and
cancellation of
founders stock (200,000) (20) 20
Issuance of common
stock by successor
entity for cash
@ $1.00 per share 105,800 11 105,789 105,800
Issuance of common
stock by successor
entity based on exercise
of 125,000 warrants
@ $1.60 per
common share 125,000 12 199,988 200,000
Issuance of common
stock by successor
entity based on
exercise of 41,900
warrants @ $1.35
per common share 41,900 4 56,561 56,565
Issuance of preferred
stock in exchange for
assumption of bank
debt of $605,000 and
stockholder
loan of $70,000 81 674,919 675,000
Stock issuance costs (121,014) (121,014)
Net loss for year ended
September 30, 1997 (342,014) (342,014)
_____ ________ ________ ________ _______ _________

Balance, September
30, 1997 4,372,712 $437 $81 $980,030 $(1,104,115) $(123,567)
</TABLE>

SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS
F-6

Stock issuance costs $(90,443) $ (90,443)
Issuance of common stock
based on exercise of
625 warrants @
$1.35 per share 625 844 844
Issuance of common
stock based on
exercise of 125,000
warrants @
$1.60 per share 125,000 12 199,988 200,000
Issuance of 200,000
shares of Series
A preferred stock for
cash 20 199,980 200,000
Issuance of 89,553
shares of common
stock for stock
issuance costs 89,553 9 67,156 67,165
Issuance of 66,667
shares of common
stock for investor
relation services 66,667 7 49,993 50,000
Net loss for six
months ended
March 31, 1998 (216,503) (216,503)
_______ ______ _______ ______ ____________ ________

Balance, March 31,
1998 4,654,557 $465 $101 $1,407,548 $(1,320,618) $ 87,496
</TABLE>
F-7

OPTICAL SYSTEMS, INC
NOTES TO FINANCIAL STATEMENTS
(Information As Of March 31, 1998 And For The Six Months Ended
March 31, 1998 and 1997 is Unaudited)

Note 1--Summary of Significant Accounting Policies
__________________________________________

Organization and Nature of Business
_____________________________

Optical Systems Holdings, Inc. (The Company) was incorporated on
May 29, 1997 in the State of Florida. The Company acquired, thru
merger, 100% of the issued and outstanding common stock of Optical
Systems, Inc., a NJ corporation (OSI-NJ) effective June 30, 1997.
Immediately thereafter, the Company changed its legal name to Optical
Systems, Inc. For financial reporting purposes the acquisition has been
treated as a recapitalization of OSI-NJ. Further OSI-NJ is deemed the
acquiring corporation under a reverse acquisition. The historical financial
statements prior to June 30, 1997 are those of OSI-NJ. Pro forma
information giving effect to the acquisition as if it took place October 1,
1996 is not presented since the transaction is a recapitalization and not a
business combination.

The Company is principally engaged in rendering document
management, Year 2000 program source code remediation, networking
and Intra/Internet services, rendering optical storage and retrieval
products and services, and selling related hardware and software products
to information processing customers. Approximately 38% and 47% of
gross revenue for the years ended September 30, 1997 and 1996 was
derived from one customer.

Unaudited Financial Statements

The accompanying financial statements of the Company as of March
31, 1998 and for the six months ended March 31, 1998 and 1997 are
unaudited. All adjustments (consisting only of normal recurring
adjustments) have been made which, in the opinion of management, are
necessary for a fair presentation indicative of the results that may be
expected for the full year or for any future period.

Use of Estimates

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

F-9

OPTICAL SYSTEMS, INC.
NOTES TO FINANCIAL STATEMENTS
(Information As Of March 31, 1998 And For The Six Months Ended
March 31, 1998 and 1997 is Unaudited)

Note 1--Summary of Significant Accounting Policies (Continued)
_____________________________________________________________

Property and Equipment

Property and equipment are recorded at cost. Depreciation is
computed using both straight-line and accelerated methods over the
estimated service lives which range from 5 to 7 years. Expenditures for
maintenance and repairs are charged to operations. Given the rapid
technology changes and obsolescence that is occurring with computer
hardware and software, it is reasonably possible that the Company's
estimate that it will recover the carrying amount of this equipment from
future operations will change in the near term.
With respect to costs incurred to develop software for its information
processing services, the Company's policy is to capitalize such costs only
after technological feasibility has been established. No software
development costs have been capitalized in the accompanying financial
statements.

Revenue recognition

Information processing service bureau revenue is reported as earned
when services are performed. Sales of information processing hardware
and turnkey systems are reported as earned when systems have been
delivered and accepted by the customer.

Income Taxes

Provision for income taxes is based on income reported in the
accompanying financial statements.

Loss Per Share

Loss per share is based on the weighted average of common shares
outstanding during the reporting periods. Shares issuable upon the
conversion of preferred stock and notes payable, and exercise of warrants
have not been included since their effect would be anti-dilutive.

Cash and Cash Equivalents

For cash flow reporting purposes, cash and cash equivalents include
money market fund investments with an initial maturity of three months or
less.

Note 2 Working Capital Deficiency
______________________________

The Company has incurred operating losses since inception and has a
working capital deficiency as of September 30, 1997.
The Company has prepared a forecast statement of income for the year
ended September 30, 1998 which reflects a positive cash flow from
operations. In addition, the Company anticipates that approximately
$80,000 of notes payable shall be converted into common stock and that
approximately $300,000 in cash (before stock issuance costs) shall be
derived from the exercise of warrants into shares of common stock.
Accordingly the Company shall have sufficient cash flow to sustain
operations over the next twelve months.

F 10

OPTICAL SYSTEMS, INC.
NOTES TO FINANCIAL STATEMENTS
(Information As Of March 31, 1998 And For The Six Months Ended
March 31, 1998 and 1997 is Unaudited)

Note 3 Regulation D Rule 504 Stock Offerings
______________________________________

On June 15, 1997, the Company completed a Regulation D Rule 504
private offering in which the Company received $25,000 in exchange for
500,000 shares of common stock and 450,000 warrants with an exercise
price of $1.60 per share. 250,000 of these warrants have an expiration
date of December 31, 1997. The remaining 200,000 warrants expire on
December 31, 1998. On July 21, 1997 the Company completed another
Regulation D Rule 504 private offering in which the Company received
$105,800 in exchange for 105,800 shares of common stock and 52,900
warrants with an exercise price of $1.35 per share. These warrants have
an expiration date of June 15, 1998.

As of September 30, 1997 the Company had received $200,000 from
the exercise of 78,125 of the $1.60 warrants and $56,565 from the exercise
of 41,900 of the $1.35 warrants.
Subsequent to September 30, 1997 the Company received $844
representing the exercise of 625 warrants @ $1.35 per share and $200,000
from the exercise of 125,500 warrants @ $1.60 per share.

Note 4 Series A Preferred Stock
__________________________
On September 26, 1997 the Company issued 811,513 shares of Series A
preferred stock to a minority shareholder in consideration for his
assumption and payment of $605,000 of note principal due First Union
Bank and the cancellation of $70,000 in loan principal due him.

On January 15, 1998 the Company agreed to issue an additional
200,000 shares of Series A preferred stock to the same shareholder in
consideration for cash of $200,000 which was received in full on January
29, 1998.

The preferred stock has no voting rights but does carry preference over
common shares to the extent of liquidation value and dividends declared on
a non-cumulative basis. The preferred stock is convertible into common
stock at the rate of one share of common stock for each share of preferred
stock, which conversion shall occur on the Company's filing of a
registration statement with the Securities & Exchange Commission.

In the event the Company does not effect an initial public offering of its
securities under the Securities Act of 1933, as amended on or before
December 31, 1998, Sery shall have the right to require the Company to
repurchase any or all equity securities of the Company (including without
limitation all shares of Common Stock, Preferred Stock and Conversion
Shares) then owned by him (collectively, the "Put Shares"); provided,
however, the Company shall only be obligated to repurchase that number
of Put Shares which, when taken together with all prior Put Shares
repurchased by the Company, result in an aggregate repurchase price paid
to Sery of not more than $1,200,000.

Note 5 Convertible Notes Payable
____________________________

The Company issued $60,000 of private investor notes payable either 1)
on March 31, 1998 together with interest of 5% per annum or 2)
convertible into $54,000 of Series A preferred stock which are then
convertible into 54,000 shares of unissued common stock at $1.00 per
share.

On February 10, 1997 the Company repaid $20,000 of the notes
together with accrued interest of $501.

F 11

OPTICAL SYSTEMS, INC.
NOTES TO FINANCIAL STATEMENTS
(Information As Of March 31, 1998 And For The Six Months Ended
March 31, 1998 and 1997 is Unaudited)

Note 6--Loans Payable - Stockholders
________________________________
<TABLE>
<S> <C> <C>
September 30, March 31,
1997 1998
These loans are due two minority stockholders
as follows:
A. Unsecured loan dated September 30, 1997
due on demand together with interest
of 8% per annum . $20,000 $20,000

B. Loan payable minority shareholder in
original amount of $50,000 borrowed
May, 1995 and payable in equal
monthly principal installments of $2,833
commencing June 1995 with the final
payment of $1,833 due November,
1997. Interest of 8% per annum
has been imputed. 11,832 14,461
_______ _______
$31,832 $34,461
Note 7--Long Term Debt
_____________________

Long-term debt consists as follows: September 30, March 31,
1997 1998
A. Loan payable minority stockholder
pursuant to debt restructure agreement
wherein unpaid capital lease obligations
of $21,136 and annual accrued interest
of $1,691 were consolidated into one
loan obligation of $22,827. The loan is
to be repaid in 24 equal principal payments
of $1,032 together with interest of 8%
per annum commencing October 15, 1997
with the final payment due
September15, 2001. $22,827 $22,827

C. 8% loan payable majority stockholder.
Annual interest of $3,224 has been accrued
to September 30, 1997. 14,625 -0-

A. Note payable Ford Motor Credit Company
in original amount of $24,654 dated May 31,
1996 to be repaid in 48 equal monthly
payments of $545 inclusive of 2.9% per annum
commencing June 30, 1996 with the final payment
due May 31, 2000. The note is secured
by a corporate-owned vehicle. 17,254 14,218
_______ ______
Total debt $54,706 $37,045
Current maturities 17,592 14,065
Long-term debt $37,114 $22,980
</TABLE>
F 12

OPTICAL SYSTEMS, INC.
NOTES TO FINANCIAL STATEMENTS
(Information As Of March 31, 1998 And For The Six Months Ended
March 31, 1998 and 1997 is Unaudited)

Note 7--Long Term Debt (Continued)
________________________________

Current maturities of long-term debt for the five years ended September
30, 2002 are as follows:
<TABLE>
<S> <C>
1998 $ 17,592
1999 32,804
2000 4,310
2001 -0-
2002 -0-
______
$ 54,706

</TABLE>
Based on the borrowing rates currently available to the Company for
loans with similar terms and average maturities, the fair value of the notes
and loans payable described in Notes 4, 5, and 6 are approximately equal to
the face value of the debt.

Note 8 Income Taxes
__________________

No provision has been made for income taxes to be paid currently due
to the current and prior year net operating losses incurred. As of
September 30, 1997 the Company had net operating loss carryforwards of
approximately $1,050,000 to be used to offset future taxable income thru
2004 for state reporting purposes and thru 2012 for federal reporting
purposes. A deferred tax asset arising from such loss carryforwards has
been recognized of $451,000 subject to a valuation allowance of an equal
amount since it is more likely than not that the asset will not be realized.

Note 9--Related Party Transactions
_____________________________

The Company engaged in the following transactions
with stockholders:
<TABLE>
<S> <C> <C>
Year Ended Six Months ended
September 30, March 31,
____________ _________________

1997 1996 1998 1997
____ ____ ____ ____
(Unaudited)

Incurred interest expense on loans and
notes payable of which $5,501 and
$4,343 was payable as of September
30, 1997 and 1996, $6,070 and
$6,003 was payable as of March
31, 1998 and 1997 respectively. $12,164 $12,765 $3,648 $8,871

</TABLE>
F 13

OPTICAL SYSTEMS, INC.
NOTES TO FINANCIAL STATEMENTS
(Information As Of March 31, 1998 And For The Six Months Ended
March 31, 1997 and 1998 is Unaudited)

Note 10--Lease Commitments
___________________________

The Company leases its office premises in Edison, New Jersey under a
non-cancellable five year operating lease which expires January 20, 2000.
The present minimum monthly rent is $7,522 which does not include
utilities and escalation expenses which the Company is obligated to pay.
There is no option to renew.

Future minimum lease commitments for all operating leases with
non-cancellable terms in excess of one year as of September 30, 1997 are
as follows:
<TABLE>
<S> <C>
1998 $ 94,352
1999 93,000
2000 30,088
2001 --
2002 --
Thereafter
___________
$217,440
</TABLE>

The Company reported lease expense of $101,188 and $82,544 for the
years ended September 30, 1997 and 1996 respectively, and $51,142 and
$47,676 for the six months ended March 31, 1998 and 1997 respectively.

Note 11 Statement of Cash Flows
____________________________
<TABLE>
<S> <C> <C>
Year Ended Six Months Ended
September 30, March 31,
____________ ________________

1997 1996 1998 1997
____ ____ ____ _____
Supplementary cash flow data:
Interest paid $ 67,369 $55,000 $ 232 $28,341
Income taxes paid -0- 100 -0- -0-
Non-cash transactions:
Issuance of preferred stock
in consideration for assumption
of bank debt of $605,000 and
stockholder loan of $70,000 675,000
Issuance of common stock in
consideration for
stock issuance services 67,165
Unpaid stock issuance costs 66,436
</TABLE>

F 14

Part III

Item 1. Index to Exhibits
______________________________

The following exhibits are filed with this form 10-SB:
EXHIBIT # EXHIBIT NAME
__________ _____________
3(i) Certificate of Incorporation of Optical Systems, Inc.
and Amendments
3(ii) By-Laws of Optical Systems, Inc.
27 Financial Data Schedule
99.1 Articles of Merger
99.2 Agreement and Plan of Merger

ARTICLES OF INCORPORATION

Article I. Name
________________
The name of this Florida corporation is:
Optical Systems Holdings, Inc.

Article II. Address
____________________

The mailing address of the Corporation is:
Optical Systems HOldings, Inc.
265 Sunrise Avenue, Suite 204
Palm Beach, Florida 33480

Article III. Registered Agent
______________________________

The name and address of the registered agent of the Corporation is:

Donald F. Mintmire
265 Sunrise Avenue, Suite 204
Palm Beach, Florida 33480

Article IV. Board of Directors
______________________________

The name of each member of the Corporation's Board of Directors is:

William H. Luckman

The affairs fo the Corporation shall eb managed by a Board of Directors
consisting of no less than one director. The number of directors may be
increased or decreased from time to time in accordance with the Bylaws of
the Corporation. The election of directors shall be done in accordance with
the Bylaws. The directors shall be protected from personal liability to the
fullest extent permitted by applicable law.

Article V. Capital Stock
________________________

The Corporation shall have the authority to issue 50,000,000 shares of common
stock par value $.0001 per share. The Corporation shall have the authority to
issue 10,000,000 shares of preferred stock, par value $.0001 per share
which may be divided into series and with the preferences, limitations and
relative rights determined by the Board of Directors.

Article VI. Incorporator
_________________________

The name and address of the incorporator is:

Donald F. Mintmire
Mintmire & Associates
265 Sunrise Avenue, Suite 204
Palm Beach, Florida 33480

Article VII. Corporate Existence
________________________________

These Articles of Incorporation shall become effective and the corporate
existence will begin on May 27, 1997.

The undersigned incorporator executed these Articles of Incorporation on
May 27, 1997.

/s/ Donald F. Mintmire
________________________
DONALD F. MINTMIRE
Brian R. Fons as attorney-in-fact

AMENDED AND RESTATED ARTICLES OF INCORPORATION
______________________________________________

OF
__

OPTICAL SYSTEMS, INC.
_____________________
(Also known as Optical Systems Holdings, Inc.)

Pursuant to the provisions of Section 687.1007. Florida State this
Corporation adopts the following articles:

Article I. Name
_______________
The name of this Florida corporation is:

Optical Systems, Inc.

Article II. Address
___________________
The mailing address of the Corporation is:

Optical Systems, Inc.
265 Sunrise Avenue, Suite 204
Palm Beach, Florida 33480

Article III. Registered Agent
_____________________________

The name and address of the registered agent of the Corporation is:

Donald F. Mintmire
265 Sunrise Avenue, Suite 204
Palm Beach, Florida 33480

Article IV. Board of Directors
______________________________

The name of each member of the Corporation's Board of Directors is:

Warren Zimmerman
William H. Luckman
Richard E. Hoynes

The affairs of the Corporation shall be managed by a Board of Directors
consisting of no less than one director. The number of directors may be
increased or decreased from time to time in accordance with the Bylaws of the
Corporation. The election of directors shall be done in accordance with the
Bylaws. The directors shall be protected from personal liability to the
fullest extent permitted by applicable law.

Article V. Capital Stock
_________________________

The Corporation shall have the authority to issue 50,000,000 sahre of common
stock, par value $.0001 per share. The Corporation shall have the authority
to issue 10,000,000 shares of preferred stock, per value $.0001 per share,
which may be divided into series and with the preferences, limitations and
relative rights determined by the Board of Directors.

Article VI. Incorporator
________________________

The name and address of the incorporator is:

Donald F. Mintmire
Mintmire & Associates
265 Sunrise Avenue, Suite 204
Palm Beach, Florida 33480

Article VII. Corporate Existence
________________________________

The corporate existence of the Corporation shall begin on May 27, 1997.

Certificate pursuant to 607. Florida Statutes
__________________________________________________

a) These Amended and Restated Articles of Incorporation contain an amendment
to the Articles requiring shareholder approval.

b) These Amended and Restated Articles of Incorporation require shareholder
approval.

c) The amendments hereto were adopted on June 24, 1997.

d) The amendments were approved by the shareholders. The number of votes
cast for the amendments were sufficient for approval.

Signed this 1st day of July, 1997.

OPTICAL SYSTEMS, INC.

/s/ Warren Zimmerman
_____________________
Warren Zimmerman, President

The foregoing instrument was acknowledged before me this 1st day of July, 1997
by Warren Zimmerman, as President of and on behalf of Optical Systems, Inc.,
who is personally known to me and who (did/did not) take an oath.

/s/ Joyce Morgan
________________
Notary Public - Joyce Morgan
Notary Public of New Jersey
My Commission Expires Jan.8,2002

ARTICLES OF AMENDMENT
TO AMEND AND RESTATED ARTICLES OF INCORPORATION
OF
OPTICAL SYSTEMS, INC.
A FLORIDA CORPORATION

The following Articles of Amendment to the Amended and Restated
Articles of Incorporation of Optical Systems, Inc., a Florida corporation,
are submitted for filing pursuant to Section 607.1006 of the Florida
Business Corporation Act.
1. The name of the corporation is Optical Systems, Inc.
2. The following amendment to Article V of the Amended and
Restates Articles of Incorporation of the corporation was
adopted by the Board of Directors of the corporation on
January 7, 1998.

ARTICLE V. Capital Stock
_________________________

The corporation shall have the authority to issue 50,000,000
shares of Common Stock, par value $.0001 per share. The Corporation
shall have the authority to issue 10,000,000 shares of Preferred Stock, par
value $.0001 per share, which may be divided into series and with the
preferences, limitations and relative rights determined by the Board of
Directors.

There is declares a Series A Preferred Stock, of which 1,065,513
shares shall be authorized to be issued with the following preferences,
limitations and rights:

Voting rights: no voting rights.

Liquidation: on liquidation, a preference over Common Stock of
$11.60 per share of Series A Preferred Stock.

Dividend: at such time as a dividend is declared by the corporation's
Board of Director's, and provided such funds are legally available
therefor, a preference over the corporation's Common Stock of 5%, to be
non-cumulative.

Conversion: each and every share of Series A Preferred Stock shall
convert into Common Stock for every shares of Series A Preferred Stock,
which conversion shall occur on the earlier of (a) June 30, 1998, or
(b) the corporation's filing of a registration statement with the
Securities Exchange Commission pursuant to either or both of the
Securities Act of 1933, as amended, or the Securities and Exchange Act of
1934.

Adjustment: the number of shares of Series A Preferred Stock
authorized to be issued, and the number of shares of Common Stock into
which they shall be converted, shall adjust automatically in the event of
any split, reverse split, recapitalization or other similar action that
may be authorized by the corporation.

3. This Amendment was adopted on January 7, 1998.

4. This amendment was approved by the corporation's Board of
Directors on January 7, 1998 in accordance with Section 607.0602(4) of
the Florida Business Corporation Act. Action by the corporation's
shareholders is not required.

IN WITNESS WHEREOF, the undersigned has executed these Articles
of Amendment this 7th day of January, 1998.

OPTICAL SYSTEMS, INC.
/s/ Warren Zimmermann
____________________
Warren Zimmermann, President

OPTICAL SYSTEMS HOLDINGS,INC.
/s/ William H. Luckman
______________________
William H. Luckman
President

ARTICLES OF AMENDMENT
TO AMEND AND RESTATED ARTICLES OF INCORPORATION
OF
OPTICAL SYSTEMS, INC.
A FLORIDA CORPORATION

1. The name of the corporation is Optical Systems, Inc.
2. The following amendment to Article V of the Amended and
Restates Articles of Incorporation of the corporation was
adopted by the Board of Directors of the corporation on
September 30, 1997.

ARTICLE V. Capital Stock
_________________________

There is declares a Series A Preferred Stock, of which 865,513
shares shall be authorized to be issued with the following preferences,
limitations and rights:

Voting rights: no voting rights.

Liquidation: on liquidation, a preference over Common Stock of
$11.60 per share of Series A Preferred Stock.

3. This Amendment was adopted on September 30, 1997.

IN WITNESS WHEREOF, the undersigned has executed these Articles
of Amendment this 30th day of September, 1997
OPTICAL SYSTEMS, INC.
/s/ Warren Zimmermann
____________________
Warren Zimmermann, President

OPTICAL SYSTEMS HOLDINGS, INC.
/s/ William H. Luckman
____________________
William H. Luckman

ARTICLES OF AMENDMENT
TO AMEND AND RESTATED ARTICLES OF INCORPORATION
OF
OPTICAL SYSTEMS, INC.
A FLORIDA CORPORATION

ARTICLE V. Capital Stock
_________________________

There is declares a Series A Preferred Stock, of which 811,513
shares shall be authorized to be issued with the following preferences,
limitations and rights:

Voting rights: no voting rights.

Liquidation: on liquidation, a preference over Common Stock of
$11.60 per share of Series A Preferred Stock.

3. This Amendment was adopted on September 12, 1997.

4. This amendment was approved by the corporation's Board of
Directors on September 12, 1997 in accordance with Section 607.0602(4)
of the Florida Business Corporation Act. Action by the corporation's
shareholders is not required.

IN WITNESS WHEREOF, the undersigned has executed these Articles
of Amendment this 12th day of September, 1997.
OPTICAL SYSTEMS, INC.
/s/ Warren Zimmermann
____________________
Warren Zimmermann, President

OPTICAL SYSTEMS HOLDINGS, INC.
/s/ William H. Luckman
_____________________
William H. Luckman, President

BY-LAWS
OF
OPTICAL SYSTEMS, INC.
ARTICLE I
OFFICES

The principal office of the Corporation in the State of Florida shall be
located in the City of Palm Beach. The Corporation may have such other
offices , either within or without the State Florida, as the business of the
Corporation may require from time to time.

The Registered Office of the Corporation may be, but need not be,
identical with its principal office in theates mail in a sealed envelope
addressed to the shareholder at the shareholder's address as it appears on
the records of the corporation, with postage thereon prepaid.
ds of the corporation, with postage thereon prepaid.
Whenever any notice whatever is required to be given, a waiver thereof in
writing signed by the person or persons entitled to such notice, whether
before or after the time stated therein, shall be deemed equivalent to the
giving of such notice. Attendance at any meeting shall constitute waiver of
notice thereof unless the person at the meeting, prior to the close of the
meeting, objects to the holding of the meeting because proper notice was
not given.

SECTION 2.1 ANNUAL MEETING. The annual meeting of the shareholders shall be
held on the second Thursday in September of each year, for the purpose of
electing directors and for the transaction of such other business as may come
before the meeting. If the election of directors shall not be held at any
annual meeting, or at an adjournment thereof, the board of directors shall
cause the election to be held at a special meeting of the shareholders held
as soon thereafter as may be convenient.

SECTION 2.2 SPECIAL MEETINGS. Special meetings of the shareholders may be
called by the chairman of the board, if elected, by the president, by the
board of directors or by the holders of not less than 10% of all outstanding
shares of the corporation entitled to vote on the matter for which the
meeting is called.

SECTION 2.3. PLACE OF MEETING. Meetings of shareholders may be held at such
place, either within or without the State of Florida, as may be designated in
the notice or waiver of notice of the meeting. If no designation is made,
the place of the meeting shall be the principal office of the corporation in
the State of Florida.

SECTION 2.4. NOTICE AND WAIVER OF NOTICE. Written notice stating the place,
day and hour of the meeting and, in case of a special meeting, the purpose or
purposes for which the meeting is called, shall bedelivered not less than 10
nor more than 60 days before the date of the meeting, or in the case of a
merger, consolidation, share exchange, dissolution or sale, lease or exchange
of assets, not less than 20 nor more than 60 days before the meeting, either
personally or by mail, by or at the direction of the president, or the
secretary, or the officer or persons calling the meeting, to each shareholder
of record entitled to vote at such meeting. If mailed, such notice shall be
deemed to be delivered when deposited in the United States main in a sealed
envelope addressed to the shareholder at the shareholder's address as it
appears on the records of the corporation, with postage thereon prepaid.

Whenever any notice whatever is required to be given, a waiver thereof in
writing signed by the person or persons entitles to such notice, whether
before or after the time stated therein, shall be deemed equivalent to the
giving of such notice. Attendane at any meeting shall constitute waiver of
notice thereof unless the person at the meeting, prior to the closing of the
meeting, objects to the holding of the meetng because proper notice was not
given.

SECTION 2.5. CLOSING THE TRANSFER BOOKS AND FIXING A RECORD DATE. For the
purpose of determining shareholders entitled to notice of or to vote at any
meeting of shareholders, or shareholders entitled to receive payment of any
dividend, or in order to make a determination of shareholders for any other
proper purpose, the board of directors of the corporation may fix in advance a
date as the record date for any such determination of shareholders, such date
in any case to be not more than 70 days and, for a meeting of shareholders,
not less than 10 days, or in the case of a merger, consolidation, share
exchange, dissolution or sale, lease or exchange of assets, not less than 20
days, immediately preceeding such meeting. If no record date is fixed for the
determination of shareholders entitled to notice of or to vote at a meeting
of shareholders or shareholders entitled to receive payment of a dividend
the close business on the day next preceeding the day on which notice is given,
or if no notice is given, the day next preceeding the day on which the meeting
is held or the date on whcih the resolution of the board of directors declaring
such dividend is adopted, as the case may be, shall be the record date for such
determination of shareholders. When a determination of shareholders entitled
to vote at any meeting of shareholders has been made as provided in this
Section, such determination shall apply to any adjournment thereof.

SECTION 2.6 VOTING LISTS. The officer or agent having charge of the
transfer book for shares of the corporation shall make available, at least 10
days before such meeting a complete list of the shareholders entitled to vote
at such meeting, arranged in alphabetical order, with the address of and the
number of shares held by each, which list, for a period of 10 days prior to
such meeting, shall be kept on file at the registered office of the
corporation and shall be subject to inspection by any shareholder, and to
copying at the shareholder's expense, at any time during usual business
hours. Such list shall also be produced and kept open at the time and place
of the meeting and shall be subject to the inspection of any shareholder
during the whole time of the meeting. The original share ledger or transfer
book, or a duplicate thereof kept in the State of Florida, shall be prima
facie evidence as to who are the shareholders entitled to examine such list
or share ledger or transfer book or to vote at any meeting of shareholders.

SECTION 2.7. VOTING OF SHARES. Unless otherwise provided in the Articles of
Incorporation, each outstanding share, regardless of class, shall be entitled
to one vote upon each matter submitted to a vote at a meeting of shareholders.

SECTION 2.8. QUORUM AND REQUIRED VOTE. Unless otherwise provided in the
Articles of Incorporation, a majority of the outstanding shares entitled to
vote on a matter, represented in person or by proxy, shall constitute a
quorum at any meeting of shareholders; provided, that if less than a quorum
is present, a majority of the shares represented at the meeting may adjourn
the meeting from time to time without further notice.

If a quorum is present, the affirmative vote of a majority of the shares
represented at the meeting shall be the act of the shareholders, unless the
vote of a greater number or voting by classes is required by law or the
Articles of Incorporation.

SECTION 2.9. PROXIES. A shareholder may appoint a proxy to vote or
otherwise act for such shareholder by signing an appointment form and
delivering it to the person so appointed. Unless the appointment of a proxy
contains an express limitation on the proxy's authority, a corporation may
accept the proxy's vote or other action as that of the shareholder making the
appointment.

No proxy shall be valid after the expiration of 11 months from the date
thereof unless otherwise provided in the proxy. Every proxy continues in
full force and effect until revoked by the person executing it prior to the
vote pursuant thereto, except as otherwise provided in this Section. Such
revocation may be effected by writing delivered to the corporation stating
that the proxy is revoked or by a subsequent proxy executed by, or by
attendance at the meeting and voting in person by, the person executing the
proxy. The dates contained on the forms of proxy presumptively determine the
order of execution, regardless of the postmark dates on the envelopes in
which they are mailed.

An appointment of a proxy is revocable by the shareholder unless the
appointment form conspicuously states that it is irrevocable and the
appointment is coupled with an interest in the shares or in the corporation
generally.

A proxy becomes revocable when the interest in the proxy terminates. The
death or incapacity of the shareholder appointing a proxy does not revoke the
proxy's authority unless notice of the death or incapacity is received by the
officer or agent who maintains the corporation's share transfer book before
the proxy exercises authority under the appointment.

SECTION 2.10. INFORMAL ACTION BY SHAREHOLDERS. Unless otherwise provided
in the Articles of Incorporation, any action required to be taken at any
annual or special meeting of the shareholders of the corporation, or any other
action which may be taken at a 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 (i) by the
holders of outstanding shares 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 voting or (ii)
by all of the shareholders entitled to vote with respect to the subject
matter thereof. If such consent is signed by less than all of the
shareholders entitled to vote on the action which is the subject of
the consent, then such consent shall become effective only if at least 5
days prior to the execution of the consent a notice in writing is delivered
to all the shareholders entitled to vote with respect to the subject matter
thereof and, after the effective date of consent, prompt notice of the taking
of the corporation action without a meeting by less than unanimous written
consent shall be delivered in writing to those shareholders who have not
consented in writing.

SECTION 2.11. VOTING OF SHARES BY CERTAIN HOLDERS. Shares registered in the
name of a deceased person, a minor ward or an incompetent person, may be
voted by such person's administrator, executor, court appointed guardian or
conservator either in person or by proxy without a transfer of such shares
into the name of such administrator, executor, court appointed guardian or
conservator. Shares standing in the name of a trustee may be voted by the
trustee either in person or by proxy.

Shares registered in the name of a receiver may be voted by such receiver,
and shares held by or under the control of a receiver may be voted by such
receiver without the transfer thereof into the receiver's name if
authority to do so is contained in an appropriate order of the court by which
such receiver was appointed.

A shareholder whose shares are pledged shall be entitled to vote such
shares until the shares have been transferred into the name of the pledgee,
and thereafter the pledgee shall be entitled to vote the shares so
transferred.

SECTION 2.12. CORPORATE RECORDS; EXAMINATION BY SHAREHOLDERS. The
corporation shall keep correct and complete books and records of account and
minutes of the proceedings of its shareholders and board of directors and
committees thereof. The corporation shall also keep at its registered office
or principal place of business in Florida or at the office of a transfer
agent or registrar in Florida, a record of its shareholders, giving the names
and addresses of all shareholders and the number and class of shares held by
each.

Any person who is a shareholder of record shall have the right to examine,
in person or by agent, at any reasonable time or times, the corporation's
books and records of account, minutes, voting trust agreements filed
with the corporation and record of shareholders, and to make extracts
therefrom but only for a proper purpose.

In order to exercise this right, a shareholder must make written demand upon
the corporation, stating with particularity the records sought to be examined
and the purpose therefor.

Upon the written request of any shareholder, the corporation shall mail to
such shareholder within 14 days after receipt of such request a balance sheet
as of the close of its latest fiscal year and a profit and loss statement
for such fiscal year; provided that if such request is received by the
corporation before such financial statements are available, the corporation
shall mail such financial statements within fourteen days after they become
available, but in any event within 120 days after the close of its latest
fiscal year.

ARTICLE III

DIRECTORS

SECTION 3.1. GENERAL POWERS. The business and affairs of the corporation
shall be managed by or under the direction of its board of directors.

SECTION 3.2 NUMBER, TENURE AND QUALIFICATIONS. The number of directors of
the corporation shall be three (3). The number of directors may be increased
or decreased from time to time by amendment to these By-Laws. A decrease in
the number of directors does not shorten an incumbent director's term.

Each director shall hold office until the next annual meeting of share-
holders and until the director's successor shall have been duly elected and
qualified.

Unless the Articles of Incorporation or these By-Laws otherwise provide,
directors need not be residents of Florida or shareholders of the corporation.
SECTION 3.3. REGULAR MEETINGS. A regular annual meeting of the board of
directors shall be held without other notice than this By-Laws, immediately
after and at the same place as the annual meeting of shareholders. The board
of directors may provide, by resolution, the time and place, either within or
without the State of Florida, for the holding of additional regular meetings
without other notice than such resolution.

SECTION 3.4. SPECIAL MEETINGS. Special meetings of the board of directors
may be called by or at the request of the chairman of the board, if elected,
the president or any director. The person or persons authorized
to call special meetings of the board of directors may fix any place, either
within or without the State of Florida, as the place for holding any special
meeting of the board of directors called by them.

SECTION 3.5. INFORMAL ACTION BY DIRECTORS. Unless specifically prohibited
by the Articles of Incorporation, any action required to be taken at a
meeting of the board of directors of the corporation, or any other action
which may be taken at a meeting of the board of directors or a committee
thereof, may be taken without a meeting if a consent in writing, setting
forth the action so taken, shall be signed by all of the directors entitled
to vote with respect to the subject matter thereof, or by all the members of
such committee, as the case may be.

The consent shall be evidenced by one or more written approvals, each of
which sets forth the action taken and bears the signature of one or more
directors. All the approvals evidencing the consent shall be delivered to the
secretary to be filed in the corporate records. The action taken shall be
effective when all the directors have approved the consent unless the consent
specifies a different effective date.

SECTION 3.6. NOTICE AND WAIVER OF NOTICE. Notice of any special meeting
shall be given at least 2 full days prior thereto by written notice delivered
personally or mailed to each director at the director's business address, or
by telegram. If mailed, such notice shall be deemed to be delivered when
deposited in the United States mail in a sealed envelope so addressed, with
postage thereon prepaid. If notice is given by telegram, such notice shall
be deemed to be delivered when the telegram is delivere to the telegraph
company.

Any director may waive notice of any meeting. The attendance of a director
at any meeting shall constitute a waiver of notice of such meeting except
where a director attends the meeting for the express purpose of objecting to
the transaction of any business because the meeting is not lawfully called or
convened. Neither the business to be transacted at nor the purpose of any
regular or special meeting of the board of directors need be specified in the
notice or waiver of notice of such meeting.

SECTION 3.7. QUORUM. A majority of the board of directors fixed by these
By-Laws shall constitute a quorum for the transaction of business at any
meeting of the board; provided that, if less than a majority of the
directors are present at a meeting, a majority of the directors present may
adjourn the meeting from time to time without further notice.

SECTION 3.8. MANNER OF ACTING. The act of a majority of the directors
present at a meeting at which a quorum is present shall be the act of the
board of directors unless a greater number is required by law, the Articles
of Incorporation or these By-Laws.

SECTION 3.9. REMOVAL OF DIRECTORS. One or more of the directors may be
removed, with or without cause, at a meeting of shareholders by the
affirmative vote of the holders of a majority of the outstanding shares then
entitled to vote at an election of directors; provided that no director shall
be removed at a meeting of shareholders unless the notice of such meeting
shall state that a purpose of the meeting is to vote upon the
removal of one or more directors named in the notice.

SECTION 3.10. RESIGNATION OF DIRECTORS. A director may resign at any time
by giving written notice to the board of directors, its chairman, or to the
president or secretary of the corporation. A resignation is effective when
the notice is given unless the notice specifies a future date. The pending
vacancy may be filled before the effective date, but the successor shall not
take office until the effective date.

SECTION 3.11. VACANCIES. Any vacancy occurring in the board of directors or
a directorship to be filled by reason of an increase in the number of
directors may be filled by election at any annual meeting of shareholders or
at a special meeting of shareholders called for that purpose; provided,
however, that in the event of a vacancy or vacancies arising between meetings
of the shareholders by reason of an increase in the number
of directors or otherwise, the board of directors may fill such vacancy. A
director elected by the shareholders to fill a vacancy shall hold office for
the balance of the term for which the director was elected. A director
appointed by the board of directors to fill a vacancy shall serve until the
next annual meeting of shareholders at which directors are to be elected.

SECTION 3.12. COMMUNICATIONS EQUIPMENT. Unless specifically prohibited by
the Articles of Incorporation, members of the board of directors or of any
committee of the board of directors may participate in and act at any meeting
of such board or committee through the use of a conference telephone or other
communications equipment by means of which all persons participating in the
meeting can hear each other.

Participation in such a meeting shall constitute attendance and presence in
person at the meeting of the person or persons so participating.

SECTION 3.13. COMPENSATION. The affirmative vote of a majority of directors
then in office shall be required to fix the compensation of the directors,
which compensation shall be reasonable. No director shall be precluded from
serving the corporation in any other capacity and receiving compensation
therefor.

ARTICLE IV
OFFICERS

SECTION 4.1. NUMBER AND QUALIFICATIONS. The board of directors shall elect
such officers as are required by law and such additional officers as it from
time to time may determine. None of the officers, except the chairman of the
board if elected, need be directors. Any two or more offices may be held by
the same person.

SECTION 4.2. ELECTION; TERM OF OFFICE; RESIGNATION; VACANCIES. The officers
of the corporation shall be elected annually by the board of directors at
the regular meeting of the board of directors held immediately after each
annual meeting of shareholders. If the election of officers shall not be
held at such meeting, such election shall be held as soon thereafter as may
be convenient.

Each officer shall hold office until the next annual meeting of directors
and until the officer's successor shall have been duly elected and shall have
qualified or until the officer's earlier death, resignation or removal. Any
officer may resign at any time by giving written notice to the board of
directors.

Vacancies may be filled or new offices created and filled at any meeting of
the board of directors.

SECTION 4.3. REMOVAL. Any officer elected or appointed by the board of
directors may be removed by the board of directors whenever in its judgment
the best interests of the corporation would be served thereby, but such
removal shall be without prejudice to the contract rights, if any, of the
person so removed. Election or appointment of an officer shall not of itself
create contract rights.

SECTION 4.4. CHAIRMAN OF THE BOARD. The chairman, if one is elected, shall
be the chief executive officer of the corporation. Subject to the direction
of the board of directors, the chairman shall have general charge over the
business, affairs and policies of the corporation. The chairman may sign and
execute all instruments in the name of the corporation and shall preside at
all meetings of the shareholders and of the board of directors. In the
absence or disability of the president or the president's refusal to act,
the chairman shall be vested with the powers and shall perform the duties of
the president. The chairman may delegate any of the chairman's powers or
functions to any officers of the corporation. The chairman shall be a member
of the board of directors.

SECTION 4.5. PRESIDENT. The president shall be the chief operating officer
of the corporation and, if no chairman is elected, the chief executive
officer of the corporation. Subject to the control of the board of
directors, the president shall have general and active management of the day-
to-day business of the corporation.

The president may sign and execute all instruments in the name of the
corporation. In the absence of the chairman, or if a chairman is not
elected, the president shall perform the duties of and shall be vested with
all the powers of the chairman.

SECTION 4.6. VICE PRESIDENTS. In the absence of the president or in the
event of the president's inability or refusal to act, the vice president, if
one if elected, or in the event there are more than one vice president, the
vice presidents in the order designated by the board of directors or if no
such designation has been made, then in the order of their election, shall
perform the duties of the president, and when so acting, shall have all the
powers of and be subject to all the restrictions upon the president. Any
vice president may sign all instruments in the name of the corporation and
shall perform such other duties as from time to time may be assigned to the
vice president by the president or by the board of directors.

SECTION 4.7. TREASURER. The treasurer, if one is elected, shall: (a) have
charge and custody of and be responsible for all funds and securities of the
corporation, receive and give receipts for moneys due and payable
to the corporation from any source whatsoever and deposit all such money in
the name of the corporation in such banks, trust companies or other
depositories as shall be selected in accordance with the provisions of
Article IV of these By-Laws; and (b) in general perform all the duties
incident to the office of treasurer and such other duties as from time to
time may be assigned to the treasurer by the president, or by the board of
directors.

If required by the board of directors, the treasurer shall give a bond for
the faithful discharge of the treasurer's duties in such sum and with such
surety or sureties as the board of directors shall determine.

SECTION 4.8. SECRETARY. The secretary shall: (a) keep the minutes of the
shareholders' and of the board of directors' meetings in one or more books
provided for that purpose; (b) see that all notices are duly given in
accordance with the provisions of these By-Laws or as required by law; (c)
be custodian of the corporate records and of the seal of the corporation and
see that the seal of the corporation is affixed to all certificates for shares
prior to the issuance thereof and to all documents, the execution of which on
behalf of the corporation under its seal is duly authorized in accordance
with the provisions of these By-Laws; (d) keep a register of the post office
address of each shareholder which shall be furnished to the secretary by such
shareholder; (e) sign with the chairman of the board, the president, or a
vice president, certificates for shares of the corporation, the issue of
which shall have been authorized by resolution of the board of directors; (f)
have general charge of the stock transfer books of the corporation; and (g)
in general perform all duties incident to the office of secretary or such
other duties as from time to time may be assigned to the secretary by the
president or by the board of directors.

SECTION 4.9. ASSISTANT TREASURERS AND ASSISTANT SECRETARIES. The assistant
treasurers and assistant secretaries, if elected, shall hold office for such
period as the board of directors may prescribe. The assistant treasurers
shall, respectively, if required by the board of directors, give bonds for
the faithful discharge of their duties in such sums and with such sureties as
the board of directors shall determine. The assistant secretaries may sign
with the chairman of the board, the president or a vice president
certificates for shares of the corporation, the issue of which shall have
been authorized by a resolution of the board of directors. The assistant
treasurers and assistant secretaries, in general, shall perform such duties
as shall be assigned to them by the treasurer or the secretary, respectively,
or by the president or the board of directors.

SECTION 4.10. OTHER OFFICERS, ASSISTANT OFFICERS AND AGENTS. Officers,
assistant officers and agents, if any, other than those whose duties are
provided for in these By-Laws, shall have such authority
and perform such duties as may from time to time be prescribed by resolution
of the board of directors.

SECTION 4.11. COMPENSATION. Compensation of the officers shall be fixed
from time to time by the board of directors and no officer shall be prevented
from receiving such compensation by reason of the fact that
the officer is also a director of the corporation. If an officer is also a
director, then the affirmative vote of a majority of directors then in office
shall be required to fix said officer's compensation.

ARTICLE V

CONTRACTS, LOANS, CHECKS AND DEPOSITS

SECTION 5.1. CONTRACTS. The board of directors may authorize any officer or
officers, agent or agents, to enter into any contract or execute and deliver
any instrument in the name of and on behalf of the corporation, and such
authority may be general or confined to specific instances.

SECTION 5.2. LOANS. No loans shall be contracted on behalf of the
corporation and no evidences of indebtedness shall be issued in its name
unless authorized by a resolution of the board of directors. Such
authority may be general or confined to specific instances.

SECTION 5.3. CHECKS, DRAFTS, ETC. All checks, drafts or other orders for
the payment of money, notes or other evidences of indebtedness issued in the
name of the corporation, shall be signed by such officer or officers, agent
or agents of the corporation and in such manner as shall from time to time
be determined by resolution of the board of directors.

SECTION 5.4. DEPOSITS. All funds of the corporation not otherwise employed
shall be deposited from time to time to the credit of the corporation in such
banks, trust companies or other depositories as the board of directors may
select.

ARTICLE VI

CERTIFICATES FOR SHARES AND THEIR TRANSFER

SECTION 6.1. CERTIFICATES FOR SHARES. Certificates representing shares of
the corporation shall be in such form as may be determined by the Board of
Directors. Such certificates shall be signed by the President
and shall be sealed with the seal of the corporation. All certificates for
shares shall be consecutively numbered.

The name of the persons owning the shares represented thereby with the number
of shares and date of issue shall be entered on the books of the corporation.
All certificates surrendered to the corporation for transfer shall be
canceled and no new certificate shall be issued until the former certificate
for a like number of shares shall have been surrendered and canceled, except
that in the case of a lost, destroyed or mutilated certificate, a new
one may be issued therefor upon such terms and indemnity to the corporation
as the Board of Directors may prescribe.

SECTION 6.2. TRANSFER OF SHARES. Transfer of shares of the corporation
shall be made only by the registered holder thereof or by the holder's
attorney thereunto authorized by power of attorney duly executed
and filed with the secretary of the corporation, and on surrender for
cancellation of the certificate for such shares. The person in whose name
shares stand on the books of the corporation shall be deemed the owner
thereof for all purposes as regards the corporation.

ARTICLE VII

INDEMNIFICATION OF OFFICERS, DIRECTORS AND OTHERS

The corporation shall have the power to indemnify to the full extent
authorized by law, 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 in
nature, by reason of the fact that such person 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, partner, trustee, employee or agent
of another corporation, partnership, joint venture, trust, or
other enterprise, against expenses, including attorneys' fees, judgments,
fines and amounts paid in connection with such action, suit or proceeding.
Such indemnification shall not be deemed exclusive of any other rights to
which a person may be entitled under any by-law, agreement, vote of
disinterested directors, or as a matter of law or otherwise. The corporation
may purchase and maintain insurance on behalf of any person who 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, partner,
trustee, employee or agent of another corporation, partnership, joint
venture, trust or other enterprise, against any liability asserted against
and incurred by said person in any such capacity, or arising out of said
person's status as such, whether or not the corporation would have the power
to indemnify said person against such liability under the provisions of this
Article.

ARTICLE VIII

FISCAL YEAR

The fiscal year of the corporation shall begin on the first day of October
and end on the last day of September of each year.

ARTICLE IX

DISTRIBUTIONS

The board of directors may from time to time make distributions to its
shareholders in the manner and upon the terms and conditions provided by law
and its Articles of Incorporation.

ARTICLE X

SEAL
The board of directors may provide a corporate seal which shall be in the
form of a circle and shall have inscribed thereon the name of the corporation
and the words, "Corporate Seal, Florida".

ARTICLE XI

AMENDMENTS

Unless the power to make, alter, amend or repeal the By-Laws is reserved to
the shareholders by the Articles of Incorporation, these By-Laws may be
altered, amended or repealed at any meeting of the shareholders or of the
board of directors.

Adopted and effective July 1, 1997

EXHIBIT 27 FINANCIAL DATA SCHEDULE

[LEGEND]
OPTICAL SYSTEMS, INC.
EXHIBIT 27-FINANCIAL DATA SCHEDULE
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
BALANCE SHEET AS OF MARCH 31, 1998 AND THE STATEMENT OF LOSS OF OPERATIONS FOR
THE FISCAL YEAR ENDED MARCH 31, 1998 AND IS QUALIFIED IN ITS ENTIRETY BY
REFERENCE
TO SUCH FINANCIAL STATEMENTS.
[LEGEND]
<TABLE>
<S> <C>
<PERIOD TYPE>
<FISCAL YEAR> 9/30/97
<PERIOD END> 3/31/98
[CASH] 23,307
79,880
[RECEIVABLES] 519,259
<SECURITY DEPOSITS> 38,706
[INVENTORY] 0
<CURRENT ASSETS> 661,152
[PP&E] 387,204
[DEPRECIATION] 180,157
<TOTAL ASSETS> 868,199
<CURRENT LIABILITIES> 757,723
<LONG TERM-LIABILITIES> 37,114
[BONDS] 0
[COMMON] 437
[PREFERRED-MANDATORY] 0
[PREFERRED] 81
[OTHER-SE] <124,085>
[TOTAL-LIABILITY-AND-EQUITY] 278,282
[SALES] 901,799
<TOTAL REVENUES> 901,845
[CGS] 402,171
<TOTAL COSTS> 402,171
<OTHER EXPENSES> 711,796
<LOSS PROVISIONS> 212,168
[INTEREST-EXPENSE] <4,381>
[INCOME-PRETAX] <216,503>
[INCOME-TAX] 0
<INCOME-CONTINUING 0
[DISCONTINUED] 0
[EXTRAORDINARY] 0
[CHANGES] 0
[NET-INCOME] 216,503
[EPS-PRIMARY] 0.05
[EPS-DILUTED] 0.05
</TABLE>

EXHIBIT 99.1

ARTICLES OF MERGER
OF
OPTICAL SYSTEMS, INC.
AND
OPTICAL SYSTEMS HOLDINGS, INC.
To the Secretary of State
State of Florida

Pursuant to the provisions of the Florida Business Corporation Act, the
foreign business corporation and the domestic business corporation herein
named do hereby submit the following Articles of Merger.

1. Annexed hereto and made a part hereof is the Agreement and Plan of
Merger for merging Optical Systems,Inc., a New Jersey corporation,
with and into Optical Systems Holdings, Inc., a Florida corporation.
2. The merger of Optical Systems, Inc. with and into Optical Systems
Holdings Inc. is permitted by the laws of the jurisdiction of
organization of Optical Systems, Inc. and is in compliance with said
laws. The date of adoption of the Plan of Merger by the shareholders
of Optical Systems, Inc. was June 24, 1997.
3. The shareholders of Optical Systems Holdings, Inc. entitled to vote
thereon approved and adopted the aforesaid Plan of Merger by written
consent given on June 24, 1997 in accordance with the provisions of
Section 607.0704 of the Florida Business Corporation Act.
4. The effective time and date of the merger herein provided for in the
State of Florida shall be upon the filing of these Articles of Merger
with the Florida Department of State.

Executed on June 30, 1997.
OPTICAL SYSTEMS, INC.
By: /s/ Warren R. Zimmerman
__________________________
Warren R. Zimmerman
President

OPTICAL SYSTEMS HOLDINGS, INC.
By: /s/ William H. Luckman
_______________________
William H. Luckman
President

CERTIFICATE OF MERGER
OF
OPTICAL SYSTEMS, INC.
AND
OPTICAL SYSTEMS HOLDINGS, INC.
To the Secretary of State
State of New Jersey

Pursuant to the provisions of Section 14A:10-7 of the New Jersey Business
Corporation Act, it is hereby certified that:
1. The names of the merging corporations are Optical Systems, Inc., which
is a business corporation organized under the laws of the State of New
Jersey, and Optical Systems Holdings, Inc., which is a business
corporation organized under the laws of the State of Florida.
2. Annexed hereto and made a part hereof is the Agreement and Plan of
Merger for merging Optical Systems, Inc. with and into Optical Systems
Holdings, Inc. as approved by the Board of Directors of each of said
corporations.
3. The number of shares of Optical Systems, Inc. which were entitled to
vote at the time of the approval of the Agreement and Plan of Merger
by its shareholders is 2,239.85, all of which are of one class.
All of the shareholders entitled to vote of the aforesaid corporation
approved the Agreement and Plan of Merger pursuant to their written
consent without a meeting of shareholders; and the number of shares
represented by such consent is 2,239.85. The date of said consent and
approval was June 24, 1997.
4. The applicable provisions of the laws of the jurisdiction of
organization of Optical Systems Holdings Inc. relating to the merger
of Optical Systems, Inc. with and into Optical Systems Holdings, Inc.
have been complied with .
5. Optical Systems Holdings, Inc. hereby agrees that it may be served
with process in the State of New Jersey in any proceeding for the
enforcement of any obligation of Optical Systems, Inc. or any
obligation of Optical Systems Holdings, Inc. for which it is
previously amenable to suit in the State of New Jersey and in any
proceeding for the enforcement of the rights of a dissenting
shareholder of Optical Systems, Inc. against Optical Systems Holdings,
Inc.; and Optical Systems Holdings, Inc. hereby irrevocably appoints
the Secretary of State of New Jersey as its agent to accept service of
process in any such proceeding and designates the following post
office address without the State of New Jersey to which said Secretary
of State shall mail a copy of the process in such proceeding:

Donald F. Mintmire
256 Sunrise Avenue, Suite 204
Palm Beach, Florida 33480

Optical Systems Holdings, Inc. hereby agrees that it will promptly pay to
the dissenting shareholders of Optical Systems, Inc. the amount, if any, to
which they are entitled under the provisions of the New Jersey Business
Corporation Act with respect to the rights of dissenting shareholders.

6. Optical Systems Holdings, Inc. will continue its existence as the
surviving corporation under the name "Optical Systems, Inc." pursuant
to the provisions of the laws of the jurisdiction of its organization.

7. The merger herein provided for shall become effective in the State of
New Jersey upon the filing of this Certificate of Merger with the New
Jersey Secretary of State.

Executed on June 30, 1997.
OPTICAL SYSTEMS, INC.
By: /s/ Warren R. Zimmerman
_____________________
Warren R. Zimmerman
President
OPTICAL SYSTEMS HOLDINGS, INC.
By: /s/ William H. Luckman
____________________
William H. Luckman
President

EXHIBIT 99.2

AGREEMENT AND PLAN OF MERGER

This Agreement and Plan of Merger, dated as of June 24, 1997, by and
between OPTICAL SYSTEMS HOLDINGS INC., a Florida corporation with its
principal offices located at 265 Sunrise Avenue, Suite 204, Palm Beach,
Florida 33480 ("Holdings"), and OPTICAL SYSTEMS, INC., a New Jersey
corporation with its principal offices located at Raritan Plaza II, Raritan
Center, Fieldcrest Avenue, Edison, New Jersey 08818 ("OSI").

RECITALS:

WHEREAS, the Boards of Directors of Holdings and OSI deem it advisable and
in the best interests of their respective stockholders that OSI merge with
and into Holdings (the "Merger") upon the terms and subject to the
conditions set forth herein and in accordance with the applicable provisions
of Florida Statutes, Chapter 607 ("FSA") and the New Jersey Business
Corporation Act, Chapter 10 (the "NJBCA"). (Holdings and OSI are
hereinafter sometimes referred to as the "Constituent Corporations").

WHEREAS, the Boards of Directors of both Constituent Corporations have
approved the Merger upon the terms and conditions set forth herein, and have
recommended to their respective stockholders that the Merger be approved.

NOW, THEREFORE, in consideration of the premises and the mutual covenants
set forth in this Agreement, and for other good and valuable consideration,
the receipt and sufficiency of which are hereby acknowledged, the parties
hereto agree as follows:

ARTICLE I

DEFINITIONS

Section 1.01. Certain Definitions. (a) For all purposes in this
Agreement, the following terms shall have the respective meanings set forth
in this Section 1.01 (such definitions and the other defined terms used in
this Agreement to be equally applicable to both the singular and plural forms
of the terms used herein defined):

(i) "contracts and/or other agreements" means written contracts,
agreements, instruments, indentures, notes, bonds, leases, mortgages, deeds
of trust, franchises, licenses, permits, commitments or binding
arrangements or understandings.

(ii) "knowledge" means the actual knowledge after having made a
reasonable and good faith inquiry.

(iii) "Liabilities" means, with respect to a Person, any direct
or indirect indebtedness, liability, claim, loss, damage, deficiency,
obligation or responsibility of such Person, liquidated or unliquidated,
accrued, absolute, contingent or otherwise, including, without limitation,
liabilities on account of taxes, other governmental, regulatory or
administrative charges or lawsuits brought, whether or not of a kind
required by generally accepted accounting principles to be set forth or
reserved against on a financial statement.

(iv) "Lien" means and includes any lien, security interest, pledge,
charge, option, right of first refusal, claim, mortgage, lease, easement or
any other encumbrance whatsoever.

(v) "Person" means any individual, corporation, general or
limited partnership, firm, joint venture, association, enterprise, joint
stock company, trust, unincorporated organization or other entity.

(vi) "Property" means any real, personal or mixed property.

(vii) "Subsidiary" means any Person as to which a Person,
directly or indirectly, owns or has the power to vote, or to exercise a
controlling influence with respect to, fifty percent (50%) or more of the
securities of any class of such Person, the holders of which class are
entitled to vote for the election of directors (or Persons performing
similar functions) of such Person.

(viii) "Transaction Expenses" means all of the fees and out-of-
pocket expenses incurred by OSI on its own behalf in connection with
preparing for, entering into, and carrying out this Agreement and the
transactions contemplated hereby including, without limitation, legal and
accounting fees and disbursements and brokers and finders fees.

(b) The following terms shall have the meaning specified in the
indicated section of this Agreement:

<TABLE>
<S> <C>
"Closing" Section 2.09
"Closing Date" Section 2.09
"Constituent Corporations" Recitals
"Effective Time" Section 2.02
"504 Offering" Section 4.09
"Holdings" Preamble
"Holdings Common Stock" Section 4.03
"Merger" Recitals
"OSI" Preamble
"OSI Common Stock" Section 3.03
"SEC" Section 2.06(a)
"Surviving Corporation" Section 2.01
</TABLE>

ARTICLE II

THE MERGER; CLOSING

Section 2.01. The Merger. At the Effective Time (as defined in Section
2.02 hereof), OSI shall be merged with and into Holdings in accordance with
the FSA and the NJBCA, whereupon the separate existence of OSI shall cease,
and Holdings shall be the surviving corporation (the "Surviving Corporation").

Section 2.02. Effective Time of the Merger. The Merger shall become
effective at such time as the Certificate of Merger with respect thereto is
duly filed with the Secretary of State of the State of Florida and the
Secretary of State of the State of New Jersey or at such later time as
Holdings and OSI shall agree should be specified in such Certificate of
Merger (the "Effective Time").

Section 2.03. Surviving Corporation. From and after the Effective Time,
the Surviving Corporation shall possess all the rights, privileges, powers,
purposes, immunities and franchises and be subject to all of the
restrictions, disabilities and duties of the Constituent Corporations, all as
provided under FSA.

Section 2.04. Certificate of Incorporation. As a result of the Merger,
the Certificate of Incorporation of the Surviving Corporation shall be in the
form attached hereto as Exhibit A, until thereafter amended as provided
therein and under the FSA.

Section 2.05. By-Laws; Directors and Officers. The By-Laws of the
Surviving Corporation shall be in the form attached hereto as Exhibit B,
until thereafter amended as provided therein and under the FSA. The initial
directors and officers of the Surviving Corporation shall be as set forth on
Schedule 2.05 hereto, in each case until their successors are elected and
qualified.

Section 2.06. Status and Conversion of Securities. At the Effective Time,
by virtue of the Merger and without any action on the part of any of the
Constituent Corporations or the stockholders of any of the Constituent
Corporations:
(a) each share of OSI Common Stock issued and outstanding immediately
prior to the Effective Time shall be converted into and become 1562.61 shares
of validly issued, fully paid and nonassessable (and restricted as
to transferability pursuant to Rule 144 promulgated by the Securities and
Exchange Commission ("SEC") under the Securities Act of 1933, as amended)
common stock, par value $0.0001 per share, of the Surviving
Corporation; and

(b) except for 200,000 shares of Common Stock of Holdings standing in
the name of William Luckman which shall be surrendered to Holdings treasury
and become part of Holdings authorized but unissued shares,
each remaining share of Common Stock of Holdings issued and outstanding
immediately prior to the Effective Time shall remain issued and outstanding
as one share of common stock of the Surviving Corporation; and

(c) each option to acquire one share of OSI Common Stock issued and
outstanding immediately prior to the Effective Time shall be converted into
and become an option to acquire 1562.61 shares of common stock, par
value $0.0001 per share, of the Surviving Corporation, otherwise and in
accordance with the terms and subject to the conditions applicable to the
option to acquire shares of OSI Common Stock, modified as necessary and
appropriate taking into account the occurrence of the Merger; and

(d) each warrant entitling the holder thereof to acquire shares of
Common Stock of Holdings shall entitle the holder hereof to acquire an equal
number of shares of common stock of the Surviving Corporation upon the
same terms and conditions set forth in the applicable stock purchase warrant.

Section 2.07. Additional Rights; Payments; Taking of Necessary and Further
Action.
(a) Each of OSI and Holdings shall, as promptly as practicable, cause
a special meeting of its stockholders to be duly called for the purpose of
voting on the approval and adoption of this Agreement and the Merger. The
Boards of Directors of Holdings and OSI shall recommend approval and adoption
of this Agreement and the Merger by their respective stockholders.

(b) Holdings and OSI shall each use its best efforts to take all such
action as may be necessary or appropriate in order to effectuate the Merger
under the FSA and the NJBCA, as promptly as possible, including without
limitation, the adoption and filing under the FSA and the NJBCA, as
applicable, of a Certificate of Merger consistent with the terms of this
Agreement. If at any time after the Effective Time, any further action
is necessary or desirable to carry out the purposes of this Agreement and to
vest the Surviving Corporation with full right, title and possession to all
assets, Property, rights, privileges, powers, and franchises of either of the
Constituent Corporations, the officers of each of the Constituent
Corporations are fully authorized in its name or otherwise to take, and shall
take, all such lawful and necessary action.

Section 2.08. Closing. The closing of the Merger (the "Closing") will
take place at 10:00 a.m. not later than the first Business Day following the
date on which all conditions set forth in Articles VI, VII and VIII are
satisfied or waived, as applicable (the "Closing Date"), at the offices of
OSI s counsel, Ungaretti & Harris, 3500 Three First National Plaza, Chicago,
Illinois 60602 unless another time, date or place is agreed to in writing by
the parties hereto.

ARTICLE III

REPRESENTATIONS AND WARRANTIES OF OSI

OSI represents and warrants to Holdings as follows:

Section 3.01. Organization and Qualification. OSI is a corporation duly
incorporated, validly existing and in good standing under the laws of New
Jersey, and has the requisite corporate power and lawful authority to own,
lease and operate its assets, Property and business and to carry on its
business as it is now being conducted. OSI is not qualified as a foreign
corporation to transact business in any other jurisdiction, nor is it
required to be so qualified.

Section 3.02. Subsidiaries. OSI has no Subsidiaries.

Section 3.03. Capitalization. The authorized capital stock of OSI
consists of 2,500 shares of common stock, without par value ("OSI Common
Stock"). As of the date hereof, the shares of OSI Common Stock reflected on
Schedule 3.03 are the only such shares issued and all such shares are validly
issued and outstanding, fully paid and nonassessable and owned of record and,
to OSI s knowledge, beneficially, as indicated on Schedule 3.03
hereto. Except as set forth on Schedule 3.03, there are no other shares of
capital stock of OSI outstanding and no outstanding options, warrants,
convertible or exchangeable securities, subscriptions, rights (including any
preemptive rights), stock appreciation rights, calls or commitments of any
character whatsoever requiring the issuance or sale of shares of any capital
stock of OSI, and there are no contracts or other agreements to issue
additional shares of capital stock of OSI or any options, warrants,
convertible or exchangeable securities, subscriptions, rights (including any
preemptive rights), stock appreciation rights, calls or commitments of any
character whatsoever relating to such shares.

Section 3.04 Certificate of Incorporation and By-Laws; Minute Books.
Copies of the Certificate of Incorporation and By-Laws of OSI, and all
amendments to each, have been delivered to Holdings and such copies are true,
complete and accurate. The minute book of OSI has been made available to
Holdings and contains true, complete and accurate records of all meetings and
consents in lieu of meetings of the Board of Directors. The stock record
books of OSI have been made available to Holdings and are true, complete and
accurate.

Section 3.05. Authority Relative to this Agreement. OSI has the requisite
corporate power and authority to enter into this Agreement and to perform its
obligations hereunder. The execution and delivery of this Agreement by OSI
and the consummation by OSI of the transactions contemplated hereby have been
duly authorized by the Board of Directors of OSI and, except for the approval
of its stockholders as set forth in Section 6.01 hereof, no other corporate
proceedings on the part of OSI are necessary to authorize this Agreement, the
Merger and the transactions contemplated hereby. This Agreement has been
duly executed and delivered by OSI and constitutes a valid and binding
obligation of OSI enforceable against it in accordance with its terms.

Section 3.06 Absence of Conflicts. The execution and delivery of this
Agreement, the consummation of the transactions contemplated hereby and
compliance with the provisions hereof do not and will not give rise to: (a)
a violation of or conflict with or breach any provision of, or constitute a
default under, or the termination of, or acceleration of the performance
required by, or result in the creation of any Lien upon any of the assets,
Properties or business of OSI under any of the terms, conditions or
provisions of (i) the charter documents or By-Laws of OSI or (ii) except as
set forth in Schedule 3.06 hereto, any contract or other agreement disclosed
or required to be disclosed on a Schedule hereto to which OSI or any of OSI
assets, Properties or business may be subject; or (b) except as set forth in
Schedule 3.06 hereto, a violation of any judgment, ruling, order, writ,
injunction, award, decree, statute, law, ordinance, code, rule or regulation
of any governmental entity which is applicable to, and which violation would
have an adverse effect on OSI or any its assets, Properties or business.

Section 3.07 Full Disclosure. No representation or warranty of OSI
contained in this Agreement or in any Schedule or Exhibit furnished hereunder
or in connection with the transactions contemplated hereby, contains
any untrue statement of a material fact or omits to state any fact necessary
to make the statements contained in it not misleading, in light of the
circumstances under which they are made.

ARTICLE IV

REPRESENTATIONS AND WARRANTIES OF HOLDINGS

Holdings represents and warrants to OSI as follows:

Section 4.01. Organization and Qualification. Holdings is a corporation
duly incorporated, validly existing and in good standing under the laws of
Florida, and has the requisite corporate power and lawful authority to
own, lease and operate its assets, Property and business and to carry on its
business as it is now being conducted. Holdings is not qualified as a
foreign corporation to transact business in any other jurisdiction, nor
is it required to be so qualified.

Section 4.02. Subsidiaries. Holdings has no Subsidiaries.

Section 4.03. Capitalization. The authorized capital stock of Holdings
consists of 50,000,000 shares of common stock, par value $0.0001 per share
("Holdings Common Stock") and 10,000,000 shares of preferred
stock, par value $0.0001 per share. As of the date hereof, the shares of
Holdings Common Stock reflected on Schedule 4.03 are the only such shares
issued and all such shares are validly issued and outstanding, fully paid
and nonassessable and owned of record and, to Holdings knowledge,
beneficially, as indicated on Schedule 4.03 hereto. Except as set forth on
Schedule 4.03, there are no other shares of capital stock of Holdings
outstanding and no outstanding options, warrants, convertible or exchangeable
securities, subscriptions, rights (including any preemptive rights), stock
appreciation rights, calls or commitments of any character whatsoever
requiring the issuance or sale of shares of any capital stock of Holdings,
and there are no contracts or other agreements to issue additional shares of
capital stock of Holdings or any options, warrants, convertible or
exchangeable securities, subscriptions, rights (including any preemptive
rights), stock appreciation rights, calls or commitments of any character
whatsoever relating to such shares.

Section 4.04 Certificate of Incorporation and By-Laws; Minute Books.
Copies of the Certificate of Incorporation and By-Laws of Holdings, and all
amendments to each, have been delivered to Holdings and such copies are true,
complete and accurate. The minute book of Holdings has been made available
to OSI and contains true, complete and accurate records of all meetings and
consents in lieu of meetings of the Board of Directors. The stock record
books of Holdings have been made available to OSI and are true, complete and
accurate.

Section 4.05. Authority Relative to this Agreement. Holdings has the
requisite corporate power and authority to enter into this Agreement and to
perform its obligations hereunder. The execution and delivery of this
Agreement by Holdings and the consummation by Holdings of the transactions
contemplated hereby have been duly authorized by the Board of Directors of
Holdings and, except for the approval of its stockholders as set forth in
Section 6.01 hereof, no other corporate proceedings on the part of Holdings
are necessary to authorize this Agreement, the Merger and the transactions
contemplated hereby. This Agreement has been duly executed and delivered by
Holdings and constitutes a valid and binding obligation of Holdings
enforceable against it in accordance with its terms.

Section 4.06 Absence of Conflicts. The execution and delivery of this
Agreement, the consummation of the transactions contemplated hereby and
compliance with the provisions hereof do no and will not give rise to: (a)
a violation of or conflict with or breach any provision of, or constitute a
default under, or the termination of, or acceleration of the performance
required by, or result in the creation of any Lien upon any of the assets,
Properties or business of Holdings under any of the terms, conditions or
provisions of (i) the charter documents or By-Laws of Holdings or (ii) except
as set forth in Schedule 4.06 hereto, any contract or other agreement
disclosed or required to be disclosed on a Schedule hereto to which Holdings
or any of Holdings assets, Properties or business may be subject; or (b)
except as set forth in Schedule 4.06 hereto, a violation of any judgment,
ruling, order, writ, injunction, award, decree, statute, law, ordinance,
code, rule or regulation of any Regulatory Entity which is applicable to, and
which violation would have an adverse effect on Holdings or any its assets,
Properties or business.

Section 4.08 No Operations. Holdings is a newly-organized corporation,
has not entered into any contracts or other agreements and has no Liabilities.

Section 4.09 504 Offering. Holdings has issued shares of its common
stock and warrants to purchase shares of its common stock pursuant to a
private placement of securities in accordance with the provisions of Rule 504
of Regulation D promulgated by the Securities and Exchange Commission (the
"504 Offering"). Holdings has complied in all material respects with all
applicable Federal and state securities laws in connection with the
offering and sale of its securities.

Section 4.10 Full Disclosure. No representation or warranty of Holdings
contained in this Agreement or in any Schedule or Exhibit furnished hereunder
or in connection with the transactions contemplated hereby, contains any
untrue statement of a material fact or omits to state any fact necessary to
make the statements contained in it not misleading, in light of the
circumstances under which they are made.

ARTICLE V

COVENANTS AND AGREEMENTS

Section 5.01 Affirmative Covenants of OSI. OSI hereby covenants and
agrees that, without the prior consent of Holdings, from the date hereof
through the Closing Date, OSI shall (a) conduct its business in the ordinary
course in a manner consistent with past practice; (b) provide Holdings and
its representatives during normal business hours and with reasonable advance
notice to OSI access to all records of OSI that they reasonably may request
and provide reasonable access to the Properties of OSI; and (c) not solicit,
consider, or negotiate any offers to acquire the shares or assets of OSI or
to provide any information or to make available any management personnel to
third parties for such purposes.

Section 5.02 Affirmative Covenants of Holdings. Holdings hereby
covenants and agrees that, without the prior consent of OSI, from the date
hereof through the Closing Date, Holdings shall (a) conduct its business in
the ordinary course in a manner consistent with past practice; (b) provide
OSI and its representatives during normal business hours and with reasonable
advance notice to Holdings access to all records of Holdings that they
reasonably may request and provide reasonable access to the Properties of
Holdings; and (c) not issue or sell, agree to issue or sell or authorize the
issuance or sale of any shares of its capital stock or other securities
exchangeable for or convertible into shares of its capital stock or grant any
warrants, options, rights, calls or other commitments of any nature to
acquire any shares of its capital stock (including, without limitation,
issuances under any compensation plan) or split, combine or reclassify its
capital stock.

Section 5.03 Continued Effectiveness of Representations and Warranties;
Satisfaction of Conditions. OSI shall use its best efforts to conduct its
business in such a manner so that the representations and warranties
contained in ARTICLE III hereof shall continue to be true, complete and
accurate on and as of the Closing Date with the same force and effect as if
made on and as of the Closing Date and in a manner so as to satisfy the
condition set forth in Section 7.01 hereof. Holdings shall use its best
efforts to conduct its business in such a manner so that the representations
and warranties contained in ARTICLE IV hereof continue to be true,
complete and accurate on and as of the Closing Date with the same force and
effect as if made on and as of the Closing Date and in a manner so as to
satisfy the condition set forth in Section 8.01 hereof.

ARTICLE VI

CONDITIONS PRECEDENT TO THE OBLIGATION

OF EACH PARTY TO EFFECT THE MERGER

The obligation of each party to consummate the transactions contemplated by
this Agreement shall be subject to the fulfillment at or prior to the
Effective Time of each of the following conditions:

Section 6.01 Stockholder Approval. This Agreement and the Merger shall
have been unanimously approved and adopted by all of the stockholders of OSI
and Holdings, notwithstanding that the FSA and the NJBCA may require a lesser
vote.

Section 6.02 No Injunctions or Restraints; Illegality. No preliminary or
permanent injunction or other, decree or ruling issued by a court of
competent jurisdiction or by a governmental, regulatory or administrative
agency or commission nor any statute, rule, regulation or executive order
promulgated or enacted by a governmental authority shall be in effect on the
Closing Date which would prevent the consummation of the Merger.

ARTICLE VII

CONDITIONS PRECEDENT TO THE OBLIGATION

OF HOLDINGS TO EFFECT THE MERGER

The obligation of Holdings to effect the Merger is subject, at its option,
to the fulfillment on or prior to the Effective Time of the following
conditions, any one or more of which may be waived by it in its discretion:

Section 7.01. Representations and Warranties; Covenants. The
representations and warranties of OSI contained in this Agreement shall be
true, complete and accurate in all material respects on and as of the
Closing Date with the same force and effect as though made on and as of the
Closing Date. OSI shall have performed and complied in all material respects
with all covenants and agreements required by this Agreement to be performed
or complied with by it on or prior to the Closing Date. OSI shall have
delivered to Holdings a certificate, dated the Closing Date and signed by the
President of OSI, to the foregoing effect and stating that all conditions to
Holdings obligations hereunder have been satisfied.

Section 7.02. Good Standing Certificate. OSI shall have delivered to
Holdings (a) a copy of OSI s Certificate of Incorporation, including all
amendments thereto, certified by the Secretary of State of New Jersey; (b) a
certificate from the Secretary of State of New Jersey to the effect that OSI
is in good standing and subsisting in such jurisdiction; and (c) a copy of
OSI s By-Laws certified by the Secretary of OSI.

Section 7.03. Consents. All consents from third parties necessary for the
consummation of the transactions contemplated hereby shall have been obtained
and delivered.

Section 7.04. Opinion of Counsel to OSI. Holdings shall have received an
opinion of OSI s counsel in form and substance reasonably satisfactory to
Holdings and its counsel.

Section 7.05. Secretary s Certificate. Holdings shall have received a
certificate executed by the Secretary of OSI, certifying to (a) the
incumbency of the officers of OSI and (b) the authorization by the directors
of OSI and the adoption and approval by the stockholders of OSI of this
Agreement and the Merger.

Section 7.06. Articles of Merger. OSI shall have executed and delivered a
copy of the Articles of Merger substantially in the form attached hereto as
Exhibit C.

ARTICLE VIII

CONDITIONS PRECEDENT TO THE OBLIGATION
OF OSI TO EFFECT THE MERGER

The obligation of OSI to effect the Merger is subject, at the option of
OSI, to the fulfillment on or prior to the Effective Time of the following
conditions, any one or more of which may be waived by OSI in its sole
discretion:

Section 8.01. Representations and Warranties; Covenants.
The representations and warranties of Holdings contained in this Agreement
shall be true, complete and accurate in all material respects on and as of the
Closing Date with the same force and effect as though made on and as of the
Closing Date. Holdings shall have performed and complied in all material
respects with all covenants and agreements required by this Agreement
to be performed or complied with by it on or prior to the Closing Date.
Holdings shall have delivered to OSI a certificate, dated the Closing Date
and signed by the President of Holdings, to the foregoing effect and stating
that all conditions to Holdings obligations hereunder have been satisfied.

Section 8.02. Good Standing Certificate. Holdings shall have delivered to
OSI (a) a copy of Holdings Certificate of Incorporation, including all
amendments thereto, certified by the Secretary of State of Florida; (b)
a certificate from the Secretary of State of Florida to the effect that
Holdings is in good standing and subsisting in such jurisdiction; and (c) a
copy of Holdings By-Laws certified by the Secretary of Holdings.

Section 8.03. Consents. All consents from third parties necessary for
the consummation of the transactions contemplated hereby shall have been
obtained and delivered.

Section 8.04. Opinion of Counsel to Holdings. OSI shall have received an
opinion of Holdings counsel in form and substance reasonably satisfactory to
OSI and its counsel.

Section 8.05. Secretary s Certificate. OSI shall have received a
certificate executed by the Secretary of Holdings, certifying to (a) the
incumbency of the officers of Holdings and (b) the authorization by the
directors of Holdings and the adoption and approval by the stockholders of
Holdings of this Agreement and the Merger.

Section 8.06. Articles of Merger. Holdings shall have executed and
delivered a copy of the Articles of Merger substantially in the form attached
hereto as Exhibit C.

ARTICLE IX

TERMINATION OF AGREEMENT

Section 9.01. Termination of Agreement. This Agreement may be terminated
prior to the Closing as follows:
(a) at the election of OSI or Holdings if the Closing shall not have
occurred on or before July 15, 1997;
(b) at the election of OSI, if Holdings has breached or failed to
perform or comply with in any material respect any representation, warranty,
covenant or agreement contained in this Agreement; provided, however,
that if such breach or failure is curable, notice of such breach of failure
shall have been given to Holdings and Holdings shall not have cured such
failure within ten days;
(c) at the election of Holdings, if OSI has breached or failed to
perform or comply in any material respect with any representation, warranty,
covenant or agreement contained in this Agreement; provided, however, that
if such breach or failure is curable, notice of such breach or failure shall
have been given to OSI and OSI shall not have cured such failure within ten
days;
(d) at any time on or prior to the Closing Date by OSI or Holdings in
the event that a condition to the terminating party s obligations to close
the transactions contemplated by this Agreement shall become incapable
of satisfaction; and
(e) at any time on or prior to the Closing Date, by written mutual
consent of the Boards of Directors of OSI and Holdings.

Section 9.02. Effect of Termination. In the event that this Agreement is
terminated pursuant to Section 9.01 hereof, it shall become null and void and
have no further force or effect. Any termination by any party hereto shall
be made by written notice to the other parties hereto.

ARTICLE X

MISCELLANEOUS

Section 10.01. Expenses. If this Agreement shall be terminated, each party
shall be responsible for its own expenses. If the Merger is consummated, OSIs
Transaction Expenses shall be paid from the proceeds of the 504 Offering.

Section 10.02. Notices. Any notice or other communication required or
which may be given hereunder shall be in writing and shall be delivered
personally, telecopied, or sent by certified, registered or express mail,
postage prepaid, or by nationally recognized courier or delivery service, to
the parties at the following addresses or at such other addresses as shall be
specified by the parties by like notice, and shall be deemed given when so
delivered personally, telecopied or by courier or delivery service, or if
mailed, five days after the date of mailing, as follows:
If to OSI: Optical Systems, Inc.
Raritan Plaza II
Raritan Center, Fieldcrest Avenue
Edison, New Jersey 08818
Attention: Warren Zimmerman, President

With a copy to: Ungaretti & Harris
3500 Three First National Plaza
Chicago, Illinois 60602
Attention: Michael J. Philippi, Esq.

If to Holdings: Orly Capital
660 Madison Avenue, 14th Floor
New York, New York 10021
Attention: Sharone Perlstein

With a copy to: Mintmire & Associates
265 Sunrise Avenue, Suite 204
Palm Beach, Florida 33480
Attention: Donald F. Mintmire, Esq.

Section 10.03. Entire Agreement. This Agreement, the Exhibits and the
Schedules contain all of the terms and conditions agreed upon by the parties
with reference to the subject matter and supersede any and all previous
agreements, representations, and communications between the parties, whether
written or oral. This Agreement may not be modified or changed except by
written instrument signed by all of the parties, or their respective
successors or assigns.

Section 10.04. Assignment. This Agreement may not be assigned by either
party hereto without the express written consent of the other party. This
Agreement shall inure to the benefit of and be binding on the parties
and their respective successors and permitted assigns.

Section 10.05. Captions. All captions and headings in this Agreement are
for reference purposes only and shall not in any way affect the meaning or
interpretation of this Agreement.

Section 10.06. 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.

Section 10.07. Severability. If any term, provision, covenant or
restriction of this Agreement, or any part thereof, is held by a court of
competent jurisdiction to be invalid, void, unenforceable or against public
policy for any reason, the remainder of the terms, provisions, covenants and
restrictions of this Agreement shall remain in full force and effect and
shall in no way be affected, impaired or invalidated.

Section 10.08 Governing Law. This Agreement shall be governed by, and
construed and enforced in accordance with and subject to the laws of the
State of New Jersey.

IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first written above.
OPTICAL SYSTEMS HOLDINGS, INC.,
a Florida corporation
Attest:
By: By:
(Assistant) Secretary Its:
OPTICAL SYSTEMS, INC., a New Jersey corporation
Attest:
By: By:
(Assistant) Secretary Its SCHEDULE 2.05

Officers and Directors of the Surviving Corporation
Initial Directors:
Warren Zimmerman
William Luckman
Richard E. Hoynes

Initial Officers:
Warren Zimmerman
President, Secretary and Treasurer SCHEDULE 3.03
OSI Stockholders

1. Issued and outstanding shares of OSI common Stock:
<TABLE>
<S> <C>
SHAREHOLDER NUMBER OF SHARES OWNED
Warren R. Zimmerman 1,798.35
James W. Dwyer 62.5
Christine E. Jacobs 87.5
Fred R. Shandor 35
Mary Shandor 20
Raymond Sery 236.5
Total: 2,239.85
</TABLE>

2. Options:
A. Pursuant to an Investment Agreement by and between OSI and
Raymond Sery dated September 14, 1994, as subsequently amended OSI granted
Raymond Sery an option to acquire a total of 236.5 shares of OSI Common
Stock.

B. In connection with additional financing provided to OSI by
Raymond Sery, OSI granted to Raymond Sery an additional option to acquire
an additional 23.65 shares of OSI Common Stock.

SCHEDULE 3.06

OSI Necessary Consents
None SCHEDULE 4.03
Holdings Stockholders
STOCKHOLDERS,COMMON STOCK,PAYMENT

1. STEVEN KATZ
1625 S. KIRKMAN RD., #9103
ORLANDO, FL 32811
,175,000 SHARES**,$8,750
** Includes 175,000 Warrants exercisable on or before December 31,
1997 @ $.80 per share and 140,000 Warrants exercisable on or before
June 14, 1998 @ $.80 per share.

2. DAVE ZIEGELMAN
6728 EDGEWATER COMMERCE PKWY
ORLANDO, FL 32810-4278
,75,000 SHARES**,$3,750
** Includes 75,000 Warrants exercisable on or before December 31,
1997 @ $.80 per share and 60,000 Warrants exercisable on or before
June 14, 1998 @ $.80 per share.

3. NICOLE LEVINE
4840 CYPRESS WOODS DR., #347
ORLANDO, FL 32811
,75,000 SHARES**,$3,750
** Includes 75,000 Warrants exercisable on or before December 31,
1997 @ $.80 per share and 60,000 Warrants exercisable on or before
June 14, 1998 @ $.80 per share.
4. IVAN KAHANA
1625 S. KIRKMAN, #9202
ORLANDO, FL 32811
,175,000 SHARES**,$8,750
** Includes 175,000 Warrants exercisable on or before December 31,
1997 @ $.80 per share and 140,000 Warrants exercisable on or before
June 14, 1998 @ $.80 per share.

5. WILLIAM H. LUCKMAN
131 EAST 23RD STREET
#11C
NEW YORK, NY 10021
,300,000 SHARES,

SCHEDULE 4.06
Holdings Necessary Consents
None EXHIBIT A

Certificate of Incorporation of Surviving Corporation

[attached hereto]

AMENDED AND RESTATED ARTICLES OF INCORPORATION

OPTICAL SYSTEMS, INC.
(also known as Optical Systems Holdings, Inc.)

Pursuant to the provisions of Section 607.1007, Florida Statutes, this
Corporation adopts the following restated articles:
Article I. Name
The name of this Florida corporation is:
Optical Systems, Inc.

Article II. Address

The mailing address of the Corporation is:
Optical Systems, Inc.
265 Sunrise Avenue, Suite 204
Palm Beach, FL 33480

Article III. Registered Agent
The name and address of the registered agent of the Corporation is:
Donald F. Mintmire
265 Sunrise Avenue, Suite 204
Palm Beach, FL 33480

Article IV. Board of Directors
The name of each member of the Corporation s Board of Directors is:
Warren Zimmerman
William H. Luckman
Richard E. Hoynes

The affairs of the Corporation shall be managed by a Board of Directors
consisting of no less than one director.

The number of directors may be increased or decreased from time to time in
accordance with the Bylaws of the Corporation. The election of directors
shall be done in accordance with the Bylaws. The directors shall be
protected from personal liability to the fullest extent permitted by
applicable law.

Article V. Capital Stock

The Corporation shall have the authority to issue 50,000,000 shares of common
stock, par value $.0001 per share. The Corporation shall have the authority
to issue 10,000,000 shares of preferred stock, par value $.0001
per share, which may be divided into series and with the preferences,
limitations and relative rights determined by the Board of Directors.

Article VI. Incorporator

The name and address of the incorporator is:
Donald F. Mintmire
Mintmire & Associates
265 Sunrise Avenue, Suite 204
Palm Beach, FL 33480

Article VII. Corporate Existence

The corporate existence of the Corporation shall begin effective on May 27,
1997.

Certificate pursuant to 607.1007, Florida Statutes

a) These Amended and Restated Articles of Incorporation contain an
amendment to the Articles requiring shareholder approval.
b) Theses Amended and Restated Articles of Incorporation require
shareholder approval.
c) The amendments hereto were adopted on June 24, 1997.
d) The amendments were approved by the shareholders. The number of votes
cast for the amendments were sufficient for approval.

Signed this day of July, 1997.
OPTICAL SYSTEMS, INC.

By: /s/ Warren R. Zimmerman
_______________________
Warren Zimmerman,
President

The foregoing instrument was acknowledged before me this day of July, 1997
by Warren Zimmerman, as President of and on behalf of Optical Systems, Inc.,
who is personally known to me and who (did/did not) take an oath.

Notary Public EXHIBIT B

Form of By-Laws of Surviving Corporation
BY-LAWS
OF
OPTICAL SYSTEMS, INC.
ARTICLE I
OFFICES

The Registered Office of the Corporation may be, but need not be, identical
with its principal office in the State of Florida and the address of the
Registered Office may be changed from time to time by the Board of Directors.

ARTICLE II

SHAREHOLDERS

SECTION 2.1. ANNUAL MEETING. The annual meeting of the shareholders shall
be held on the second Thursday in September of each year, for the purpose of
electing directors and for the transaction of such other business as may come
before the meeting. If the election of directors shall not be held at any
annual meeting, or at an adjournment thereof, the board of directors shall
cause the election to be held at a special meeting of the shareholders held
as soon thereafter as may be convenient.

SECTION 2.2. SPECIAL MEETINGS. Special meetings of the shareholders may
be called by the chairman of the board, if elected, by the president, by the
board of directors or by the holders of not less than 10% of all the
outstanding shares of the corporation entitled to vote on the matter for
which the meeting is called.

SECTION 2.3. PLACE OF MEETING. Meetings of shareholders may be held at
such place, either within or without the State of Florida, as may be
designated in the notice or waiver of notice of the meeting. If no
designation is made, the place of the meeting shall be the principal office
of the corporation in the State of Florida.

SECTION 2.4. NOTICE AND WAIVER OF NOTICE. Written notice stating the
place, day and hour of the meeting and, in case of a special meeting, the
purpose or purposes for which the meeting is called, shall be
delivered not less than 10 nor more than 60 days before the date of the
meeting, or in the case of a merger, consolidation, share exchange,
dissolution or sale, lease or exchange of assets, not less than 20 nor more
than 60 days before the meeting, either personally or by mail, by or at the
direction of the president, or the secretary, or the officer or persons
calling the meeting, to each shareholder of record entitled to vote at such
meeting. If mailed, such notice shall be deemed to be delivered when
deposited in the United States mail in a sealed envelope addressed to the
shareholder at the shareholder's address as it appears on the records of the
corporation, with postage thereon prepaid.

Whenever any notice whatever is required to be given, a waiver thereof in
writing signed by the person or persons entitled to such notice, whether
before or after the time stated therein, shall be deemed equivalent to the
giving of such notice. Attendance at any meeting shall constitute waiver of
notice thereof unless the person at the meeting, prior to the close of the
meeting, objects to the holding of the meeting because proper notice was
not given.

SECTION 2.5. CLOSING THE TRANSFER BOOKS AND FIXING A RECORD DATE. For the
purpose of determining shareholders entitled to notice of or to vote at any
meeting of shareholders, or shareholders entitled to receive payment of any
dividend, or in order to make a determination of shareholders for any other
proper purpose, the board of directors of the corporation may fix in advance
a date as the record date for any such determination of shareholders, such
date in any case to be not more than 70 days and, for a meeting of
shareholders, not less than 10 days, or in the case of a merger,
consolidation, share exchange, dissolution or sale, lease or exchange of
assets, not less than 20 days, immediately preceding such meeting. If no
record date is fixed for the determination of shareholders entitled to
notice of or to vote at a meeting of shareholders, or shareholders entitled
to receive payment of a dividend, the close of business on the day next
preceding the day on which notice is given, or if no notice is given, the day
next preceding the day on which the meeting is held or the date on which the
resolution of the board of directors declaring such dividend is adopted, as
the case may be, shall be the record date for such determination of
shareholders. When a determination of shareholders entitled to vote at any
meeting of shareholders has been made as provided in this Section, such
determination shall apply to any adjournment thereof.

SECTION 2.6. VOTING LISTS. The officer or agent having charge of the
transfer book for shares of the corporation shall make available, at least 10
days before such meeting a complete list of the shareholders entitled to vote
at such meeting, arranged in alphabetical order, with the address of and the
number of shares held by each, which list, for a period of 10 days prior to
such meeting, shall be kept on file at the registered office of the
corporation and shall be subject to inspection by any shareholder, and to
copying at the shareholder's expense, at any time during usual business
hours. Such list shall also be produced and kept open at the time and place
of the meeting and shall be subject to the inspection of any shareholder
during the whole time of the meeting. The original share ledger or transfer
book, or a duplicate thereof kept in the State of Florida, shall be prima
facie evidence as to who are the shareholders entitled to examine such list
or share ledger or transfer book or to vote at any meeting of shareholders.

SECTION 2.7. VOTING OF SHARES. Unless otherwise provided in the Articles
of Incorporation, each outstanding share, regardless of class, shall be
entitled to one vote upon each matter submitted to a vote at a meeting of
shareholders.

SECTION 2.10. INFORMAL ACTION BY SHAREHOLDERS. Unless otherwise provided
in the Articles of Incorporation, any action required to be taken at any
annual or special meeting of the shareholders of the corporation, or any
other action which may be taken at a 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 (i) by
the holders of outstanding shares 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 voting or (ii)
by all of the shareholders entitled to vote with respect to the subject
matter thereof. If such consent is signed by less than all of the
shareholders entitled to vote on the action which is the subject of the
consent, then such consent shall become effective only if at least 5 days
prior to the execution of the consent a notice in writing is delivered to all
the shareholders entitled to vote with respect to the subject matter thereof
and, after the effective date of consent, prompt notice of the taking of the
corporation action without a meeting by less than unanimous written consent
shall be delivered in writing to those shareholders who have not consented in
writing.

SECTION 2.11. VOTING OF SHARES BY CERTAIN HOLDERS. Shares registered in
the name of a deceased person, a minor ward or an incompetent person, may be
voted by such person's administrator, executor, court appointed guardian or
conservator either in person or by proxy without a transfer of such shares
into the name of such administrator, executor, court appointed guardian or
conservator. Shares standing in the name of a trustee may be voted by the
trustee either in person or by proxy.

Shares registered in the name of a receiver may be voted by such receiver,
and shares held by or under the control of a receiver may be voted by such
receiver without the transfer thereof into the receiver's name if authority
to do so is contained in an appropriate order of the court by which such
receiver was appointed.

In order to exercise this right, a shareholder must make written demand upon
the corporation, stating with particularity the records sought to be examined
and the purpose therefor.

ARTICLE III

DIRECTORS

SECTION 3.1. GENERAL POWERS. The business and affairs of the corporation
shall be managed by or under the direction of its board of directors.

Each director shall hold office until the next annual meeting of share-
holders and until the director's successor shall have been duly elected and
qualified.

Unless the Articles of Incorporation or these By-Laws otherwise provide,
directors need not be residents of Florida or shareholders of the corporation.

SECTION 3.3. REGULAR MEETINGS. A regular annual meeting of the board of
directors shall be held without other notice than this By-Laws, immediately
after and at the same place as the annual meeting of shareholders. The board
of directors may provide, by resolution, the time and place, either within or
without the State of Florida, for the holding of additional regular meetings
without other notice than such resolution.

SECTION 3.4. SPECIAL MEETINGS. Special meetings of the board of directors
may be called by or at the request of the chairman of the board, if elected,
the president or any director. The person or persons authorized to call
special meetings of the board of directors may fix any place, either within
or without the State of Florida, as the place for holding any special meeting
of the board of directors called by them.

SECTION 3.9. REMOVAL OF DIRECTORS. One or more of the directors may be
removed, with or without cause, at a meeting of shareholders by the
affirmative vote of the holders of a majority of the outstanding shares
then entitled to vote at an election of directors; provided that no director
shall be removed at a meeting of shareholders unless the notice of such
meeting shall state that a purpose of the meeting is to vote upon the
removal of one or more directors named in the notice.

SECTION 3.11. VACANCIES. Any vacancy occurring in the board of directors
or a directorship to be filled by reason of an increase in the number of
directors may be filled by election at any annual meeting of shareholders or
at a special meeting of shareholders called for that purpose; provided,
however, that in the event of a vacancy or vacancies arising between meetings
of the shareholders by reason of an increase in the number of directors or
otherwise, the board of directors may fill such vacancy. A director elected
by the shareholders to fill a vacancy shall hold office for the balance of
the term for which the director was elected. A director appointed by the
board of directors to fill a vacancy shall serve until the next annual
meeting of shareholders at which directors are to be elected.

Participation in such a meeting shall constitute attendance and presence in
person at the meeting of the person or persons so participating.

SECTION 3.13. COMPENSATION. The affirmative vote of a majority of
directors then in office shall be required to fix the compensation of the
directors, which compensation shall be reasonable. No director shall be
precluded from serving the corporation in any other capacity and receiving
compensation therefor.

ARTICLE IV

OFFICERS

SECTION 4.1. NUMBER AND QUALIFICATIONS. The board of directors shall
elect such officers as are required by law and such additional officers as it
from time to time may determine. None of the officers, except the chairman
of the board if elected, need be directors. Any two or more offices may be
held by the same person.

SECTION 4.2. ELECTION; TERM OF OFFICE; RESIGNATION; VACANCIES. The
officers of the corporation shall be elected annually by the board of
directors at the regular meeting of the board of directors held immediately
after each annual meeting of shareholders. If the election of officers shall
not be held at such meeting, such election shall be held as soon thereafter
as may be convenient.

Any officer may resign at any time by giving written notice to the board of
directors.

Vacancies may be filled or new offices created and filled at any meeting of
the board of directors.

SECTION 4.3. REMOVAL. Any officer elected or appointed by the board of
directors may be removed by the board of directors whenever in its judgment
the best interests of the corporation would be served thereby,
but such removal shall be without prejudice to the contract rights, if any,
of the person so removed. Election or appointment of an officer shall not of
itself create contract rights.

SECTION 4.4. CHAIRMAN OF THE BOARD. The chairman, if one is elected,
shall be the chief executive officer of the corporation. Subject to the
direction of the board of directors, the chairman shall have general
charge over the business, affairs and policies of the corporation. The
chairman may sign and execute all instruments in the name of the corporation
and shall preside at all meetings of the shareholders and of the board
of directors. In the absence or disability of the president or the
president's refusal to act, the chairman shall be vested with the powers and
shall perform the duties of the president. The chairman may delegate any of
the chairman's powers or functions to any officers of the corporation. The
chairman shall be a member of the board of directors.

SECTION 4.5. PRESIDENT. The president shall be the chief operating
officer of the corporation and, if no chairman is elected, the chief
executive officer of the corporation. Subject to the control of the board of
directors, the president shall have general and active management of the day-
to-day business of the corporation.

SECTION 4.7. TREASURER. The treasurer, if one is elected, shall: (a)
have charge and custody of and be responsible for all funds and securities
of the corporation, receive and give receipts for moneys due and payable
to the corporation from any source whatsoever and deposit all such money in
the name of the corporation in such banks, trust companies or other
depositories as shall be selected in accordance with the provisions of
Article IV of these By-Laws; and (b) in general perform all the duties
incident to the office of treasurer and such other duties as from time to
time may be assigned to the treasurer by the president, or by the board of
directors.

SECTION 4.8. SECRETARY. The secretary shall: (a) keep the minutes of the
shareholders' and of the board of directors' meetings in one or more books
provided for that purpose; (b) see that all notices are duly given in
accordance with the provisions of these By-Laws or as required by law; (c) be
custodian of the corporate records and of the seal of the corporation and see
that the seal of the corporation is affixed to all certificates for shares
prior to the issuance thereof and to all documents, the execution of which on
behalf of the corporation under its seal is duly authorized in accordance
with the provisions of these By-Laws; (d) keep a register of the post office
address of each shareholder which shall be furnished to the secretary by such
shareholder; (e) sign with the chairman of the board, the president, or a
vice president, certificates for shares of the corporation, the issue of
which shall have been authorized by resolution of the board of directors; (f)
have general charge of the stock transfer books of the corporation; and (g)
in general perform all duties incident to the office of secretary or such
other duties as from time to time may be assigned to the secretary by the
president or by the board of directors.

SECTION 4.10. OTHER OFFICERS, ASSISTANT OFFICERS AND AGENTS. Officers,
assistant officers and agents, if any, other than those whose duties are
provided for in these By-Laws, shall have such authority and perform such
duties as may from time to time be prescribed by resolution of the board of
directors.

SECTION 4.11. COMPENSATION. Compensation of the officers shall be fixed
from time to time by the board of directors and no officer shall be prevented
from receiving such compensation by reason of the fact that the officer is
also a director of the corporation. If an officer is also a director, then
the affirmative vote of a majority of directors then in office shall be
required to fix said officer's compensation.

ARTICLE V

CONTRACTS, LOANS, CHECKS AND DEPOSITS

SECTION 5.1. CONTRACTS. The board of directors may authorize any officer
or officers, agent or agents, to enter into any contract or execute and
deliver any instrument in the name of and on behalf of the corporation,
and such authority may be general or confined to specific instances.

SECTION 5.4. DEPOSITS. All funds of the corporation not otherwise
employed shall be deposited from time to time to the credit of the
corporation in such banks, trust companies or other depositories as the board of
directors may select.

ARTICLE VI

CERTIFICATES FOR SHARES AND THEIR TRANSFER

SECTION 6.1. CERTIFICATES FOR SHARES. Certificates representing shares of
the corporation shall be in such form as may be determined by the Board of
Directors. Such certificates shall be signed by the President and shall be
sealed with the seal of the corporation. All certificates for shares shall
be consecutively numbered.

The name of the persons owning the shares represented thereby with the number
of shares and date of issue shall be entered on the books of the corporation.
All certificates surrendered to the corporation for transfer shall
be canceled and no new certificate shall be issued until the former
certificate for a like number of shares shall have been surrendered and
canceled, except that in the case of a lost, destroyed or mutilated
certificate, a new one may be issued therefor upon such terms and indemnity
to the corporation as the Board of Directors may prescribe.

ARTICLE VII

INDEMNIFICATION OF OFFICERS, DIRECTORS AND OTHERS

The corporation shall have the power to indemnify to the full extent
authorized by law, 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 in nature, by reason
of the fact that such person 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, partner, trustee, employee or agent of another
corporation, partnership, joint venture, trust, or other enterprise, against
expenses, including attorneys' fees, judgments, fines and amounts paid in
connection with such action, suit or proceeding. Such indemnification shall
not be deemed exclusive of any other rights to which a person may be entitled
under any by-law, agreement, vote of disinterested directors, or as a matter of
law or otherwise. The corporation may purchase and maintain insurance on
behalf of any person who 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, partner, trustee, employee or agent of another
corporation, partnership, joint venture, trust or other enterprise, against
any liability asserted against and incurred by said person in any such
capacity, or arising out of said person's status as such, whether or not the
corporation would have the power to indemnify said person against such
liability under the provisions of this Article.

ARTICLE VIII

FISCAL YEAR

The fiscal year of the corporation shall begin on the first day of October
and end on the last day of September of each year.

ARTICLE IX

DISTRIBUTIONS

The board of directors may from time to time make distributions to its
shareholders in the manner and upon the terms and conditions provided by law
and its Articles of Incorporation.

ARTICLE X

SEAL

The board of directors may provide a corporate seal which shall be in the
form of a circle and shall have inscribed thereon the name of the corporation
and the words, "Corporate Seal, Florida".

ARTICLE XI

AMENDMENTS

Adopted and effective July 1, 1997

EXHIBIT C

Form of Articles of Merger
[attached hereto]

ARTICLES OF MERGER
OF
OPTICAL SYSTEMS, INC.
AND
OPTICAL SYSTEMS HOLDINGS, INC.

To the Secretary of State
State of Florida

2. The merger of Optical Systems, Inc. with and into Optical Systems
Holdings Inc. is permitted by the laws of the jurisdiction of organization of
Optical Systems, Inc. and is in compliance with said laws. The date of
adoption of the Plan of Merger by the shareholders of Optical Systems, Inc.
was June 24, 1997.

3. The shareholders of Optical Systems Holdings, Inc. entitled to vote
thereon approved and adopted the aforesaid Plan of Merger by written consent
given on June 24, 1997 in accordance with the provisions of Section 607.0704
of the Florida Business Corporation Act.

4. The effective time and date of the merger herein provided for in the
State of Florida shall be upon the filing of these Articles of Merger with
the Florida Department of State.

Executed on June 30, 1997.
OPTICAL SYSTEMS, INC.
By: /s/Warren R. Zimmerman
_______________________
Warren R. Zimmerman
President
OPTICAL SYSTEMS HOLDINGS, INC.
By: /s/William H.Luckman
_____________________
William H. Luckman
President
CERTIFICATE OF MERGER
OF
OPTICAL SYSTEMS, INC.
AND
OPTICAL SYSTEMS HOLDINGS, INC.

To the Secretary of State
State of New Jersey

Pursuant to the provisions of Section 14A:10-7 of the New Jersey Business
Corporation Act, it is hereby certified that:

1. The names of the merging corporations are Optical Systems, Inc., which
is a business corporation organized under the laws of the State of New
Jersey, and Optical Systems Holdings, Inc., which is a business corporation
organized under the laws of the State of Florida.

2. Annexed hereto and made a part hereof is the Agreement and Plan of
Merger for merging Optical Systems, Inc. with and into Optical Systems
Holdings, Inc. as approved by the Board of Directors of each of said
corporations.

3. The number of shares of Optical Systems, Inc. which were entitled to
vote at the time of the approval of the Agreement and Plan of Merger by its
shareholders is 2,239.85, all of which are of one class.

All of the shareholders entitled to vote of the aforesaid corporation
approved the Agreement and Plan of Merger pursuant to their written consent
without a meeting of shareholders; and the number of shares represented by
such consent is 2,239.85. The date of said consent and approval was June
24, 1997.

4. The applicable provisions of the laws of the jurisdiction of
organization of Optical Systems Holdings Inc. relating to the merger of
Optical Systems, Inc. with and into Optical Systems Holdings, Inc. have been
complied with .

5. Optical Systems Holdings, Inc. hereby agrees that it may be served
with process in the State of New Jersey in any proceeding for the enforcement
of any obligation of Optical Systems, Inc. or any obligation of Optical
Systems Holdings, Inc. for which it is previously amenable to suit in the
State of New Jersey and in any proceeding for the enforcement of the rights
of a dissenting shareholder of Optical Systems, Inc. against Optical
Systems Holdings, Inc.; and Optical Systems Holdings, Inc. hereby irrevocably
appoints the Secretary of State of New Jersey as its agent to accept service
of process in any such proceeding and designates the following post
office address without the State of New Jersey to which said Secretary of
State shall mail a copy of the process in such proceeding:

Donald F. Mintmire
256 Sunrise Avenue, Suite 204
Palm Beach, Florida 33480

6. Optical Systems Holdings, Inc. will continue its existence as the
surviving corporation under the name "Optical Systems, Inc." pursuant to the
provisions of the laws of the jurisdiction of its organization.

7. The merger herein provided for shall become effective in the State of
New Jersey upon the filing of this Certificate of Merger with the New Jersey
Secretary of State.

Executed on June ___, 1997.
OPTICAL SYSTEMS, INC.
By: /s/ Warren R. Zimmerman
_____________________
Warren R. Zimmerman
President
OPTICAL SYSTEMS HOLDINGS, INC.
By: /s/ William H. Luckman
____________________
William H. Luckman
President