LEARNSAT COM INC, SB-2/A, 1999-11-03

LEARNSAT COM INC
SB-2/A, 1999-11-03
BUSINESS SERVICES, NEC

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<PAGE> 1

AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON NOVEMBER 3, 1999.

REGISTRATION NO. 333-85053
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------

SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------

AMENDMENT

NO. 2 TO

FORM SB-2
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
------------------------

LEARNSAT.COM, INC.
(EXACT NAME OF SMALL BUSINESS ISSUER AS SPECIFIED IN ITS CHARTER)

<TABLE>
<S> <C> <C>
FLORIDA 3663 59-3101307
(STATE OR OTHER JURISDICTION OF (PRIMARY STANDARD INDUSTRIAL (I.R.S. EMPLOYER
ORGANIZATION) CLASSIFICATION CODE NO.) IDENTIFICATION NO.)
</TABLE>

3819 SOUTH PERKINS ROAD
STILLWATER, OKLAHOMA 74074
(405) 377-6100
(ADDRESS AND TELEPHONE NUMBER OF PRINCIPAL EXECUTIVE OFFICES)
------------------------

CHARLES BREWER, PRESIDENT
AND CHIEF EXECUTIVE OFFICER
LEARNSAT.COM, INC.
3819 SOUTH PERKINS ROAD
STILLWATER, OKLAHOMA 74074
(405) 377-6100
(NAME, ADDRESS AND TELEPHONE NUMBER OF AGENT FOR SERVICE)
------------------------

COPIES TO:

<TABLE>
<S> <C>
BARRY FEINER, ESQ. LAWRENCE B. FISHER, ESQ.
170 FALCON COURT ORRICK, HERRINGTON & SUTCLIFFE LLP
MANHASSET, NEW YORK 11030 666 FIFTH AVENUE
PHONE: (516) 484-6890 18TH FLOOR
FAX: (516) 484-6867 NEW YORK, NEW YORK 10103
PHONE: (212) 506-5000
FAX: (212) 506-5151
</TABLE>

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

APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO PUBLIC: As soon as
practicable after the effective date of this Registration Statement.

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

If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering: [ ]

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

If this Form is a post-effective amendment filed pursuant to Rule 462(d)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering: [ ]

If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box: [ ]
------------------------

THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF
THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(a),
MAY DETERMINE.
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<PAGE> 2

EXPLANATORY NOTE

This registration statement contains two prospectuses: one relating to this
offering of 1,334,000 units of LearnSat.Com, plus 200,100 units to cover
over-allotments, if any, and one relating to the offering of 3,437,500 shares of
common stock by some of the shareholders of LearnSat.Com. Following the
prospectus are certain substitute pages of the selling shareholder prospectus,
including alternate front outside and back outside cover pages, an alternate
"The Offering" section of the "Summary" and sections titled "Private Financing,"
"Selling Shareholders and Plan of Distribution" and "Legal Matters." Each of the
alternate pages for the selling shareholder prospectus is labeled "Alternate
Page for Selling Shareholder Prospectus." All other sections of the prospectus,
other than "Use of Proceeds," "Dilution," and "Underwriting" are to be used for
the selling shareholder prospectus.
<PAGE> 3

THE INFORMATION IN THIS PROSPECTUS IS NOT COMPLETE AND MAY BE CHANGED. WE MAY
NOT SELL THESE SECURITIES UNTIL THE REGISTRATION STATEMENT FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION OR ANY APPLICABLE STATE SECURITIES COMMISSION
IS EFFECTIVE. THIS PROSPECTUS IS NOT AN OFFER TO SELL THESE SECURITIES AND IT IS
NOT SOLICITING AN OFFER TO BUY THESE SECURITIES IN ANY STATE WHERE THE OFFER OR
SALE IS NOT PERMITTED.

SUBJECT TO COMPLETION, DATED NOVEMBER 3, 1999

LEARNSAT.COM, INC.
------------------------

1,334,000 UNITS

(EACH UNIT CONSISTING OF
TWO SHARES OF COMMON STOCK,
TWO CLASS C REDEEMABLE WARRANTS AND
ONE CLASS D REDEEMABLE WARRANT)
------------------------

This is an initial public offering. You may trade the common stock and
warrants separately starting six months from the effective date of this offering
unless we agree with the underwriter that trading may begin sooner.

No public market currently exists for the units, the common stock or the
warrants. We anticipate that the initial public offering price will be $3.00 per
unit. We have applied to list the units, common stock and the warrants on Tier
II of the Pacific Stock Exchange under the symbols LSN__, LSN__, LSN__, and
LSN__, respectively. As part of this offering, we have sold the underwriter for
nominal consideration warrants to purchase 133,400 units.

Selling shareholders are also offering up to 3,437,500 shares of common
stock through an alternate prospectus that is dated , 1999.

BEFORE BUYING THE UNITS, CAREFULLY READ THIS PROSPECTUS, ESPECIALLY THE
RISK FACTORS BEGINNING ON PAGE 7. THE PURCHASE OF OUR SECURITIES INVOLVES A HIGH
DEGREE OF RISK.
------------------------

NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED THESE SECURITIES OR PASSED UPON THE
ADEQUACY OR ACCURACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.

<TABLE>
<CAPTION>
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PER UNIT TOTAL
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<S> <C> <C>
Initial public offering price............................... $ $
Underwriting discounts and commissions...................... $ $
Proceeds, before expenses, to LearnSat.Com.................. $ $
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</TABLE>

The underwriter may purchase up to an additional 200,100 units from us at
the initial public offering price, less the underwriting discount.
------------------------

Delivery of the common stock and warrants will be made on or about
, 1999, in New York, New York, against payment in immediately
available funds.

DIRKS & COMPANY, INC.
THE DATE OF THIS PROSPECTUS IS , 1999.
<PAGE> 4

TABLE OF CONTENTS

<TABLE>
<S> <C>
Prospectus Summary.......................................... 3
Risk Factors................................................ 7
Forward-Looking Statements.................................. 13
Use of Proceeds............................................. 14
Dividend Policy............................................. 14
Dilution.................................................... 15
Private Financing........................................... 16
Capitalization.............................................. 17
Selected Financial Data..................................... 18
Management's Discussion and Analysis of Financial Condition
and Results of Operations................................. 20
Business.................................................... 26
Management.................................................. 37
Certain Transactions........................................ 42
Principal Shareholders...................................... 43
Description of Securities................................... 44
Shares Eligible for Future Sale............................. 46
Underwriting................................................ 47
Legal Matters............................................... 49
Experts..................................................... 49
Additional Information...................................... 49
Financial Statements........................................ F-1
</TABLE>

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

You should rely only on the information contained in this document or to
which we have referred you. We have not authorized anyone to provide you with
information that is different. We are not offering to sell you or asking you to
buy anything other than the units. We are not offering to sell you or asking you
to buy anything in any jurisdiction where doing so is not permitted. The
information in this document may only be accurate on the date of this document.

2
<PAGE> 5

PROSPECTUS SUMMARY

This summary highlights some information from this prospectus. This summary
does not contain all of the information that investors should consider before
investing in our common stock and warrants. We encourage you to read the entire
prospectus before you decide whether to invest.

OUR BUSINESS

We market and install satellite communications equipment. We also resell
many other telecommunications products. We plan to build a new communications
delivery system that will provide satellite-based Internet telecommunications
services. The system called ED-WEB(TM) will deliver video, audio, data and other
digital transmissions. This system will send and receive Internet data by
satellite. We will sell it to specific markets -- primarily those markets
located in rural areas and remote parts of the world that lack access to
high-speed telephone lines or cables.

We believe many potential purchasers of our services exist, including:

- schools;

- medical facilities;

- corporate offices;

- power plants and manufacturing facilities; and

- government agencies.

We anticipate that customers for ED-WEB(TM) services will include, among
others, people seeking Internet access, businesses and schools staging video
conferences, and computer users who wish to link to the U.S. Internet
infrastructure, connect to virtual private networks, or buy space from a web
host.

In addition, we recently purchased a local Internet service provider which
we will connect to our ED-WEB(TM) satellite system. This connection will enable
our Internet service provider to expand from offering local services to
providing worldwide services. We believe our Internet service provider will
expand the range of communications services we can offer.

We were incorporated in the State of Florida in October 1991. Our executive
offices are located at 3819 South Perkins Road, Stillwater, Oklahoma 74074. Our
telephone number is (405) 377-6100; and our email address is [email protected].
We maintain a web site at www.learnsat.com. We do not intend for our web site to
be part of this prospectus.

3
<PAGE> 6

THE OFFERING

Securities Offered.................. 1,334,000 units, each unit consisting
of two shares of common stock, two
class C redeemable warrants and one
class D redeemable warrant. The C
warrant is exercisable for one share of
common stock at $3.00 per share until
42 months after the date of this
prospectus. The D warrant is
exercisable for one share of common
stock at $6.50 per share until 66
months after the date of this
prospectus. You may trade the common
stock and warrants separately starting
six months after the effective date of
this offering unless we agree with the
underwriter that trading may begin
sooner. Commencing on the date the
common stock and warrants become
separately tradable we may redeem your
warrants. See "Description of
Securities."

Common Stock Outstanding Prior
to the Offering................... 9,713,277 shares; excludes outstanding
options, underwriter's over-allotment
option and warrants.

Common Stock Outstanding After the
Offering............................ 12,381,277 shares; excludes outstanding
options, underwriter's over-allotment
option and warrants.

Warrants Outstanding After the
Offering............................ 5,877,000 warrants.

Use of Proceeds..................... - Completion of ED-WEB(TM) system
development;

- Initial installation and marketing of
the ED-WEB(TM) system;

- Purchase of equipment for our current
business;

- Repayment of bank line of credit; and

- Working capital and general corporate
purposes.

- - Risk Factors...................... You should read the "Risk Factors"
section as well as the other cautionary
statements throughout the entire
prospectus, so that you understand the
risks associated with an investment in
our securities.

- - Proposed Pacific Stock Exchange
Symbol
for Units......................... LSN __.

for Common Stock.................. LSN __.

for Class C Redeemable Warrants... LSN __.

for Class D Redeemable Warrants... LSN __.

4
<PAGE> 7

SUMMARY FINANCIAL DATA

<TABLE>
<CAPTION>
SIX MONTHS
YEAR ENDED DECEMBER 31, ENDED JUNE 30,
------------------------ ------------------------
1997 1998 1998 1999
---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
STATEMENTS OF OPERATIONS DATA:
Net sales................................. $2,576,230 $2,144,169 $1,072,451 $ 896,820
Cost of sales............................. 2,076,336 1,914,482 922,870 830,767
---------- ---------- ---------- ----------
Gross profit.............................. 499,894 229,687 149,581 66,053
Selling, general and administrative
expenses................................ (282,721) (409,970) (237,806) (252,218)
Net gain on settlement of litigation...... 215,691
---------- ---------- ---------- ----------
Operating income (loss)................... 217,173 (180,283) (88,225) 29,526
Other expenses -- net..................... (42,000) (58,611) (26,954) (15,359)
---------- ---------- ---------- ----------
Income (loss) before provision for income
taxes................................... 175,173 (238,894) (115,179) 14,167
Provision for income taxes................ 2,900
---------- ---------- ---------- ----------
Net Income (loss)......................... $ 175,173 $ (238,894) $ (115,179) $ 11,267
========== ========== ========== ==========
Basic and diluted net income (loss) per
common share............................ $ .02 $ .(03) $ (.01) $ .00
========== ========== ========== ==========
</TABLE>

The following table provides pro forma income statement data as if
LearnSat.Com had entered into employment agreements with two of its officers as
of the first day of each period and as if LearnSat.Com was being taxed as a C
Corporation during each of these periods.

<TABLE>
<CAPTION>
SIX MONTHS
YEAR ENDED DECEMBER 31, ENDED JUNE 30,
------------------------ ------------------------
1997 1998 1998 1999
---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
PRO FORMA STATEMENT OF OPERATIONS DATA:
Income (loss) before pro forma adjustment
for employment agreements and pro forma
provision (credit) for income taxes..... $ 175,173 $ (238,894) $ (115,179)
Pro forma adjustment for employment
agreements.............................. (55,000) (55,000) (27,500)
---------- ---------- ----------
Pro forma income (loss) before provision
(credit) for income taxes............... 120,173 (293,894) (142,679)
---------- ---------- ----------
Pro forma provision (credit) for
income taxes:
Federal................................. 27,300 (27,300) (13,650)
State................................... 7,200 (7,200) (3,600)
---------- ---------- ----------
34,500 (34,500) (17,250)
---------- ---------- ----------
Pro forma net income (loss)............... $ 85,673 $ (259,394) $ (125,429)
========== ========== ==========
Basic and diluted pro forma net income
(loss) per common share................. $ 0.01 $ (0.03) $ (0.01)
========== ========== ==========
Weighted average number of common shares
outstanding -- basic.................... 8,440,677 8,440,677 8,440,677 9,248,688
========== ========== ========== ==========
Weighted average number of common shares
outstanding -- diluted.................. 8,474,011 8,440,677 8,440,677 9,260,474
========== ========== ========== ==========
</TABLE>

5
<PAGE> 8

The following table provides a summary of our balance sheet at June 30,
1999:

- on an actual basis; and

- on an adjusted basis to reflect the sale of 1,334,000 units in this
offering, using an initial offering price of $3.00 per unit and the
receipt of the estimated net proceeds. See "Use of Proceeds" and
"Capitalization."

<TABLE>
<CAPTION>
JUNE 30, 1999
-------------------------
ACTUAL AS ADJUSTED
---------- -----------
<S> <C> <C>
BALANCE SHEET DATA:
Working capital............................................. $ 277,968 $3,451,241
Total assets................................................ 1,530,211 4,597,984
Short-term debt............................................. 414,398 414,398
Long-term debt.............................................. 155,418 155,418
Shareholders' equity........................................ 503,080 3,595,853
</TABLE>

6
<PAGE> 9

RISK FACTORS

Before you invest in our securities you should be aware that there are
various risks, including those described below. Each of these risk factors could
hurt our business, operating results and financial condition, which in turn
could diminish the value of an investment in our common stock and warrants. You
should carefully consider these risk factors together with all of the other
information included in this prospectus before you decide whether to purchase
units in this offering.

BECAUSE OUR PLANNED NEW BUSINESS SEGMENT HAS NO OPERATING HISTORY, THERE IS NO
ASSURANCE OF PROFITABILITY.

We have been in the business of selling and installing satellite
communications equipment since 1991, but are new to the business of providing
two-way satellite-based Internet based Internet telecommunications services. We
cannot assure that we will be able to operate our planned communications
services business segment profitably. In order to attain profitability in this
new market, we must, among other things:

- successfully complete development of our proprietary software;

- install and test our two-way satellite communications system;

- market and sell our new services and the related hardware system;

- develop and sustain a customer base; and

- control costs.

Although we believe that there is a market for our planned services,
assuming that we complete the software development and the system operates to
its specifications, we can give no assurance that potential customers will
accept these services or that we can obtain or expand a customer base for these
services. If we fail to introduce our planned services successfully, whether due
to the capabilities or pricing of these services or otherwise, our business
could become less competitive which would hurt our financial condition and
results of operations.

WE WILL DEPEND ON THE PROCEEDS OF THIS OFFERING TO FINANCE OUR PLANNED NEW
BUSINESS SEGMENT, AND WE MAY NEED ADDITIONAL FINANCING THAT COULD FURTHER DILUTE
THE INTERESTS OF INVESTORS IN THIS OFFERING.

We believe that we will require approximately $2.4 million to complete the
development of our two-way satellite-based Internet communications services and
to begin generating revenues from sales of our proposed new services and system.
Because our current operations are capital intensive, we cannot utilize cash
flow from these operations to fund development of the ED-WEB(TM) system.
Accordingly, we will depend upon the proceeds from the sale of the units to
implement the two-way satellite communications services. We estimate that $2.4
million will be sufficient to attain commercial viability for our new business,
but we can give no assurance to this effect. If we require additional financing,
we cannot assure that we will be able to obtain it on acceptable terms, if at
all. Such additional financing would dilute the equity interests of investors
purchasing securities in this offering. Additionally, we cannot incur additional
indebtedness without the permission of BancFirst, our current lender. BancFirst
may not give us the necessary approval for additional financing. See "Use of
Proceeds" and "Management's Discussion and Analysis of Financial Condition and
Results of Operations."

OUR SUCCESS WILL DEPEND ON OUR OBTAINING PATENT PROTECTION AND MAINTAINING
EXCLUSIVE PROTECTION FOR OUR PROPRIETARY TECHNOLOGY.

Our failure to secure a patent for the ED-WEB(TM) system, or the loss or
challenge of any patent we may obtain, could materially restrict our ability to
provide our proposed services. The success of our new business segment will
depend, in part, on our ability to:

- secure issuance of our patent for providing two-way satellite
communications;

- obtain additional related patents as necessary;

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<PAGE> 10

- protect and enforce patents once issued;

- prevent others from infringing our patents;

- operate without infringing on the proprietary rights of others; and

- maintain exclusive rights to trade secrets and proprietary technology and
similar intellectual property that we develop.

We cannot assure you that:

- any issued patents will provide us with competitive advantages or will
not be challenged by others;

- the patents of others will not restrict our ability to provide our new
services; or

- others will not independently develop similar technologies, or will not
duplicate any of our technologies or design around our patents.

The prosecution or defense of patent infringement litigation, if required, could
involve a substantial commitment of our time and financial resources. In
addition, we regard our trademarks as important to our success. We have filed an
intent to use trademark application to register the mark "LearnSat" and register
the mark "ED-WEB" in the U.S. Patent and Trademark Office. Our efforts to
establish and protect our intellectual property rights may be inadequate to
prevent misappropriation or infringement of these rights. If we are unable to
safeguard these rights, it could alter our business plans, hurt our operating
results and weaken our financial condition. See "Business -- Patents, Trade
Secrets and Trademarks."

THE MARKET IN WHICH OUR NEW BUSINESS WILL COMPETE IS SUBJECT TO RAPID
TECHNOLOGICAL CHANGES THAT COULD PUT US AT A DISADVANTAGE IF WE DO NOT REMAIN
COMPETITIVE.

If we are unable to keep up with the changes in technology in our industry,
we may not be competitive with other companies. The markets in which our new
business will compete -- the telecommunications, Internet and software
industries -- are characterized by rapid technological change. The introduction
of services or products embodying new technologies or the emergence of new
industry standards and practices could render our existing services or products
obsolete. Assuming that we are able to implement two-way satellite
communications services through the ED-WEB(TM) system, our future success will
depend in part on our ability to enhance services and products, and develop new
ones to keep pace with technological advances.

WE ARE LIKELY TO ENCOUNTER INTENSE COMPETITION FROM MAJOR TELECOMMUNICATIONS
COMPANIES WITH SIGNIFICANTLY GREATER RESOURCES THAN WE HAVE.

Even if we are able to establish our two-way satellite communications
services business, we cannot assure you that we will be able to compete
successfully. Although we believe that there is little current direct
competition in the market in which we propose to compete, we are likely to
encounter intense competition from other firms engaged in related businesses
whose products and services could be applicable to our planned market and/or who
could develop products and services to compete directly with our planned
products and services. Our potential competitors include satellite
communications companies such as Hughes Communications, telecommunications
companies such as MCI/WorldCom and telephone companies such as Southwestern
Bell. Most if not all of these potential competitors are substantially larger,
and have:

- substantial and successful operations;

- significantly greater financial and other resources;

- more employees; and

- more extensive facilities.

See "Business -- Planned Operations as a Telecommunications and Internet
Service Provider, ED-WEB(TM) Competition."

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<PAGE> 11

WE COULD ENCOUNTER BARRIERS TO ENTERING THE AREA OF TELEMEDICINE, WHICH IS THE
USE OF ELECTRONIC MEDIA TO CONNECT MEDICAL PRACTITIONERS AND PATIENTS.

We believe that one of the prime markets for our two-way satellite
communications services will be the healthcare industry. Our ED-WEB(TM) system
could be used for remote medical diagnosis and treatment. However, our
participation in telemedicine could involve us in issues of:

- licensing for medical practitioners where more than one state or country
jurisdiction is involved;

- our liability for the actions of medical practitioners who use our
system; and

- qualification for coverage by HMOs or other medical insurance plans.

These issues could hurt our business because they could limit the services we
offer, restrict the areas where we offer our services, or make it more difficult
and expensive to offer telemedicine services. See "Business -- Planned
Operations as a Telecommunications and Internet Service Provider, ED-WEB(TM)
Marketing."

OUR PROPOSED BUSINESS COULD FACE RISKS IN INTERNATIONAL MARKETS WHICH, AMONG
OTHER THINGS, COULD INCREASE OUR COSTS OF CONDUCTING BUSINESS AND RESTRICT OUR
ABILITY TO ADMINISTER OUR OPERATIONS.

We plan to market a portion of our communications services outside of the
United States. There are substantial risks in marketing products and services in
foreign countries. These include, among others:

- the difficulty of administering business abroad which could disrupt our
operations;

- exposure to currency fluctuations and devaluations or restrictions on
money supplies which could subject us to losses;

- foreign and domestic export laws and regulations which could restrict our
ability to deliver products and services;

- taxation, tariffs, import quotas and restrictions which could increase
the price for which we sell our products and services;

- shipping interruptions which could delay the delivery of our products and
services;

- political instability which could prevent us from doing business and
restrict our ability to obtain payment for products and services already
provided by us; and

- other economic and political events entirely beyond our control.

In addition, we may find it difficult to prevent the unauthorized use of our
technology in foreign countries.

THE MARKET IN WHICH OUR CURRENT BUSINESS COMPETES IS RELATIVELY SMALL, CAPITAL
INTENSIVE AND EXHIBITS LIMITED PROFITABILITY.

We estimate that gross annual sales in our current market -- selling and
installing satellite communications equipment -- is approximately $20 million.
We have five major competitors in this market, all of whom are larger than we
are, have greater management, sales and financial resources then we have, and
most of whom generate more annual sales than we do. We cannot assure that we
will continue to compete successfully in this market and it is unlikely that our
sales in this market will increase significantly, if at all.

OUR REVENUES WOULD DECREASE SIGNIFICANTLY IF WE FAIL TO REPLACE MAJOR CUSTOMERS.

During calendar year 1998, three of our customers accounted for
approximately 61% of our sales. During the first six months of 1999, three of
our customers accounted for 62% of our sales, of which one customer accounted
for 31% of sales. We have completed all of the contracts relating to these
customers. If we fail to replace these customers it would materially hurt our
business, financial condition and results of operations

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<PAGE> 12

because our revenues would decrease significantly. See "Business -- Current
Products and Services, Sales and Markets."

LOSS OF OUR EXCLUSIVE SUPPLIER WOULD REDUCE SALES THAT DEPEND UPON THE USE OF
THAT SUPPLIER'S PRODUCTS.

General Instruments is our sole supplier of digital encoders and decoders.
It provided products that generated approximately 33% of our sales on an annual
basis in 1998 and approximately 60% of our sales for the six months ended June
30, 1999. Although we believe that our relationship with this supplier is
satisfactory, the loss of this supplier would materially hurt our business,
financial condition and results of operations because we would lose sales of
those products which depend on the use of digital encoders and decoders.

BECAUSE OUR SATELLITE COMMUNICATIONS SYSTEM IS SUBJECT TO GOVERNMENT
REGULATIONS, WE WOULD BE UNABLE TO DO BUSINESS IF WE FAIL TO COMPLY WITH THESE
REGULATIONS.

The ownership and operation of our communication systems are subject to
significant regulation by the Federal Communications Commission. The license,
upon which our existing business is dependent, is subject to renewal by the FCC.
Our new ED-WEB(TM) system will also depend upon retaining and expanding the
scope of the FCC license for international use. If we fail to retain and expand
our license, we will be unable to conduct our business. We cannot assure you
that the FCC will renew our existing license or that the rules and regulations
of the FCC will continue to permit us to operate our business as planned. See
"Business -- Government Licensing."

IF WE FAIL TO RESOLVE YEAR 2000 ISSUES OUR ABILITY TO OFFER SERVICES COULD BE
RESTRICTED, WHICH WOULD REDUCE OUR REVENUES.

Many computer systems and software products use two digits rather than four
to define the applicable year. In other words, date-sensitive software may
recognize a date using "00" as the year 1900 rather than the year 2000. This
could result in system failures or miscalculations causing disruptions of
operations. Year 2000 compliance of equipment and software provided by third
party vendors is not within our control. Literature on the equipment we
currently sell and install indicates that this equipment is year 2000 compliant.
We are in the process of making inquiries to manufacturers of this equipment to
obtain certification of their year 2000 compliance.

We are developing the proprietary software to be used in our ED-WEB(TM)
system with four digit year recognition and, although we do not anticipate any
year 2000 problems with this software, we can give no assurance to this effect.
In the event that any hardware and/or software is not year 2000 compliant, our
systems may not operate properly. If a year 2000 problem should develop, we
might have to overhaul our hardware and software and, possibly, suspend
satellite communications services, all of which would increase costs and
restrict our ability to offer services and generate revenues. See "Management's
Discussion and Analysis of Financial Condition And Results of Operations -- Year
2000 Issues."

WE DEPEND UPON THE CONTINUED EMPLOYMENT OF CHARLES BREWER AND IF WE LOST HIS
SERVICES IT WOULD BE SIGNIFICANTLY MORE DIFFICULT TO OPERATE OUR BUSINESS.

We believe that our ability to successfully operate our existing business,
implement our proposed plans and operate profitably depends on the continued
employment of Charles Brewer. We currently have an employment agreement with Mr.
Brewer and maintain key man insurance on his life in the amount of $1 million,
of which $200,000 of the proceeds are currently assigned to our lending
institution. The benefits received under this policy would not be sufficient to
compensate LearnSat.Com for the loss of Mr. Brewer's services if we should not
employ a suitable replacement. If he becomes unable or unwilling to continue in
his current position, it would be significantly more difficult to operate our
business, which would hurt our financial condition and results of operations. We
cannot assure that we could recruit and retain new management personnel should
the need arise. See "Management."

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<PAGE> 13

OUR COMPANY IS CONTROLLED BY LINDA AND CHARLES BREWER WHO HAVE THE POWER TO
ELECT ALL OUR DIRECTORS.

Following the offering, Linda and Charles Brewer, two of our executive
officers and directors, will own beneficially approximately 68.58%, and 66.43%
if the underwriter's over-allotment option is exercised in full, of our
outstanding common stock. Mr. and Mrs. Brewer are husband and wife. Because our
Articles of Incorporation do not provide for cumulative voting, Mr. and Mrs.
Brewer will control LearnSat.Com and the power to elect all our directors,
appoint our management and approve actions requiring the approval of a majority
of shareholders. See "Principal Shareholders" and "Description of
Securities -- Common Stock."

WE HAVE A LIMITATION ON OUR DIRECTORS' AND OFFICERS' LIABILITY FOR BREACH OF
FIDUCIARY DUTY.

If you purchase units, you will have a limited right to recover against our
directors and officers' for their breach of fiduciary duty. Our Articles of
Incorporation and our By-laws limit the liability of our directors and officers
to LearnSat.Com or our shareholders for monetary damages for breach of fiduciary
duty except as may be permitted under Florida Law. See "Management -- Limitation
of Liability and Indemnification Matters."

FLORIDA CORPORATE LAW ANTI-TAKEOVER PROVISIONS COULD IMPEDE ACTIONS, SUCH AS THE
REMOVAL OF DIRECTORS, A CHANGE IN CONTROL OR A MERGER, WHICH COULD BE BENEFICIAL
TO YOUR INTERESTS AS A SHAREHOLDER.

Some provisions of the Florida Business Corporation Act could delay or
frustrate the removal of incumbent directors or a change in control of
LearnSat.Com. They also could discourage, impede, or prevent a merger, tender
offer or proxy contest, even if such an event would be favorable to the
interests of our shareholders. See "Description of Securities -- Corporate Law
Anti-Takeover Provisions" for a discussion of these provisions.

OUR ABILITY TO ISSUE PREFERRED STOCK MAY DIMINISH YOUR RIGHTS AS A COMMON
SHAREHOLDER AND BE USED AS AN ANTI-TAKEOVER DEVICE.

Our Articles of Incorporation authorize our board of directors to issue up
to 20 million shares of preferred stock without approval from our shareholders.
If you purchase our common stock, this means that the board of directors has the
right, without your approval as a common shareholder, to fix the relative rights
and preferences of the preferred stock. This would affect your rights as a
common shareholder regarding, among other things, dividends and liquidation. We
could also use the preferred stock to deter or delay a change in control of
LearnSat.Com that may be opposed by our management even if the transaction might
be favorable to you as a common shareholder. See "Description of
Securities -- Preferred Stock."

THE UNDERWRITER MAY CONTINUE TO HAVE INFLUENCE OVER US, INCLUDING OUR ABILITY TO
OBTAIN FINANCING, AND ITS INTERESTS MAY NOT COINCIDE WITH YOUR INTERESTS.

Following the completion of this offering, the underwriter may designate
one person for election to our board of directors for three years after the
effective date of the registration statement. Accordingly, the underwriter will
continue to influence our operations following the completion of this offering.
The underwriter's interests may not coincide with those of our shareholders. The
underwriter's designee on our board of directors could be in a position to cast
a deciding vote on a matter of importance. Because of this, the underwriter
could limit our ability to obtain financing at a time when we may think it
desirable to do so if it does not accede to our attempts to raise capital.

IF YOU INVEST IN OUR COMMON STOCK YOU WILL INCUR IMMEDIATE AND SUBSTANTIAL
DILUTION.

If you purchase units, your investment will sustain an immediate and
substantial dilution because the net tangible book value per share of the common
stock you acquired will be $0.29, compared to the $1.50 per share price you
paid, assuming you allocate the entire cost of a unit to the common stock. In
addition, the exercise of warrants and options currently outstanding could cause
additional, substantial dilution to you. The current shareholders will benefit
from a substantial increase in the net tangible book value of their shares. See
"Dilution."

11
<PAGE> 14

LACK OF A PUBLIC MARKET FOR OUR SECURITIES WOULD LIMIT YOUR ABILITY TO RESELL
THESE SECURITIES.

If you purchase units, in the absence of any readily available secondary
market for our securities, you will likely experience great difficulty in
selling your securities at or near the price you originally pay, if at all.
Prior to the offering, there has been no public market for our units, common
stock or warrants. Although our securities will be listed for trading on the
Pacific Stock Exchange, we do not know the extent to which investor interest in
us will lead to the development of a trading market or how liquid that market
might be. In addition, you may not trade the common stock and warrants
separately from the units until six months from the effective date of this
offering unless we agree with underwriter that trading may begin sooner.

UNREGISTERED SHARES ELIGIBLE FOR FUTURE SALE MAY AFFECT THE MARKET PRICE OF
COMMON STOCK SHOULD A PUBLIC MARKET DEVELOP.

If a market for our common stock should develop in the future, the price of
our common stock could drop as a result of sales of a large number of shares of
common stock in the market after the offering, or the perception that these
sales could occur. These factors also could make it more difficult for us to
raise funds through future offerings of common stock. Mr. and Mrs. Brewer have
agreed with Dirks not to sell or otherwise transfer their restricted securities
until 13 months after the date of this prospectus unless Dirks permits them to
do so earlier. See "Shares Eligible for Future Sale."

THE UNDERWRITER'S ACTIVITIES MAY INFLUENCE THE MARKET FOR OUR SECURITIES.

Although it is under no obligation to do so, the underwriter intends to
make a market in our common stock and may otherwise effect transactions in our
securities. This market-making activity can be discontinued at any time. The
exercise of the warrants may depress the price of our common stock. If this
should occur, the underwriter may choose to discontinue its market-making
activities. Moreover, if the underwriter exercises the underwriter's warrants,
or acts as a warrant solicitation agent for the warrants, the Exchange Act may
require it to temporarily suspend its market-making activities. The prices and
liquidity of our securities may be significantly affected by the degree, if any,
of the underwriter's market-making participation.

THE UNDERWRITER'S WARRANTS MAY RESTRICT OUR ABILITY TO RAISE ADDITIONAL CAPITAL.

When we complete the offering we will sell to the underwriter and/or its
designees, for nominal consideration, warrants to purchase up to 266,800 shares
of common stock at $1.80 per share, 266,800 C non-redeemable warrants and
133,400 D non-redeemable warrants. For the life of the underwriter's warrants,
the holders will have, at a nominal cost, the opportunity to profit from a rise
in the market price of our common stock with a resulting dilution in the
interest of our existing security holders. As long as the underwriter's warrants
remain unexercised, our ability to obtain additional financing may be limited.
The underwriter may exercise its warrants at a time when we would, in all
likelihood, be able to obtain any needed capital by a new offering of securities
on terms more favorable than those provided for by the warrants.

YOU CANNOT SELL THE SHARES UNDERLYING THE WARRANTS IF WE DO NOT HAVE AN
EFFECTIVE REGISTRATION STATEMENT.

You cannot exercise the warrants and sell the underlying shares unless we
keep a prospectus effective and the shares underlying the warrants are qualified
or exempt in the states in which exercising warrant holders reside. We have
registered these shares and have qualified them in the states where we plan to
sell the units unless the state does not require qualification. We have also
filed an undertaking with the SEC to maintain a current prospectus relating to
these shares until the expiration of the warrants. However, we cannot assure
that we will be able to satisfy this undertaking. The warrants may be deprived
of any value if we fail to do so. The common stock and warrants are detachable
and separately transferable six months after the effective date of this offering
unless we agree with the underwriter that trading may begin sooner. Purchasers
may buy warrants in the aftermarket or may move to jurisdictions in which the
shares underlying the warrants are not so registered or qualified during the
period that the warrants are exercisable. In that event, we would be unable to
issue shares to those persons desiring to exercise their warrants, and warrant
holders would have no choice but to offer to sell the warrants in a jurisdiction
where a sale is permitted or allow them to expire unexercised.

12
<PAGE> 15

YOU COULD LOSE YOUR RIGHT TO EXERCISE YOUR WARRANTS IF WE EXERCISE OUR RIGHT TO
REDEEM THE WARRANTS.

Under some circumstances, we may redeem all of the warrants at nominal
cost. If you are a warrant holder and we call for redemption, to the extent we
redeem your warrants, you will lose your right to purchase shares pursuant to
your warrants. Furthermore, the threat of redemption could force you to:

- exercise your warrants at a time when it may be disadvantageous for you
to do so;

- sell your warrants at the then current market price when you might
otherwise wish to hold them; or

- accept the redemption price which will be substantially less than the
market value of your warrants at the time of redemption.

See "Description of Securities -- Warrants" for the conditions under which we
may redeem the warrants. We will not call the warrants for redemption if a
current prospectus is not available for the exercise of the warrants.

FORWARD-LOOKING STATEMENTS

Some of the information in this prospectus may contain forward-looking
statements. You can use forward-looking terminology to identify these
statements, such as "may," "will," "expect," "anticipate," "estimate,"
"continue" or other similar words. These statements discuss future expectations,
contain projections of results of operations or of financial condition or state
other "forward-looking" information. When considering these forward-looking
statements, you should keep in mind the risk factors and other cautionary
statements in this prospectus. Our actual results could differ materially from
those contained in any forward-looking statement because of the risk factors
noted in this section and other factors noted throughout this prospectus,
including some risks and uncertainties.

13
<PAGE> 16

USE OF PROCEEDS

The net proceeds to LearnSat.Com from the sale of the units in this
offering are estimated to be approximately $3.1 million, or approximately $3.6
million if the underwriter's over-allotment option is exercised in full, after
payment of underwriting discounts and commissions and estimated offering
expenses.

The following table sets forth our estimated use of these proceeds.

<TABLE>
<CAPTION>
AMOUNT OF PERCENTAGE OF
PURPOSE NET PROCEEDS NET PROCEEDS
- ------- ------------ -------------
<S> <C> <C>
Completion of ED-WEB(TM) system development................. $1,100,000 35.6
Initial installation and marketing of the ED-WEB(TM)
system.................................................... 1,300,000 42.0
Purchase of equipment for our current business.............. 100,000 3.2
Repayment of bank line of credit............................ 275,000 8.9
Working capital and general corporate purposes.............. 318,000 10.3
---------- ------
TOTAL....................................................... $3,093,000 100.00
========== ======
</TABLE>

The above table represents our best estimate of how we will allocate the
net proceeds of the offering, based on our current operations, plans, and
economic conditions. The amount and timing of expenditures will vary depending
on factors that include our progress in developing and marketing our new
ED-WEB(TM) system and services, and changes in competitive conditions. We
reserve the right to modify the percentage of net proceeds used for any one
purpose to the extent that we determine advisable. Accordingly, we will have
broad discretion as to application of these proceeds. Shareholders may disagree
with our determination of the best use of proceeds. We cannot assure that the
proceeds will be invested to yield a favorable return.

We believe that the net proceeds from the sale of the units and cash
generated by our operations will suffice to satisfy our contemplated cash
requirements for at least 12 months after the date of this prospectus. In the
event that we do require additional financing, we cannot assure that this
financing will be available to us on acceptable terms, if at all.

We plan to invest the proceeds that we do not immediately use principally
in United States government securities, short-term certificates of deposit,
money market funds or other short-term interest bearing investments.

DIVIDEND POLICY

We have never paid any dividends on our common stock. We currently intend
to retain any earnings our operations may generate to finance the development
and expansion of our business. We do not anticipate paying any cash dividends on
our common stock in the foreseeable future. Future cash dividends, if any, will
be paid at the discretion of our board of directors. Any future determination to
pay cash dividends will depend on:

- the results of our operations;

- our financial condition;

- our capital requirements;

- our contractual restrictions; and

- other factors deemed relevant at the time by our board of directors.

14
<PAGE> 17

DILUTION

If you purchase securities in this offering, you will experience immediate
and substantial dilution in the net tangible book value of the common stock from
the initial public offering price. Our net tangible book value per share as of
June 30, 1999 was approximately $0.04 per share of common stock. Net tangible
book value per share is determined by dividing our tangible net worth, that is
our total tangible assets less our total liabilities, by the total number of
outstanding shares of common stock.

As of June 30, 1999, our tangible assets consisted of all of our assets as
shown on our balance sheet, except for intangible assets amounting to $83,928.
After giving effect to our sale of 2,668,000 shares of common stock in this
offering, excluding the underwriter's over-allotment option, without giving
effect to the shares issuable upon the exercise of any warrants, our adjusted
net tangible book value per share as of June 30, 1999 would have been
approximately $0.29. This represents an immediate increase in the adjusted net
tangible book value per share of $0.25 to existing common shareholders and an
immediate dilution, the difference between the $ 1.50 per share price to the
public, assuming that the entire price of the units is allocated to the shares,
and the adjusted net tangible book value per share after the offering, in the
adjusted tangible book value of $1.21 per share, representing a dilution
percentage of approximately 81%, to new investors.

The following table illustrates this per share of common stock dilution:

<TABLE>
<S> <C> <C>
The initial price of a share of common stock paid by new
investors................................................. $1.50
Net tangible book value per share of common stock before the
offering.................................................. $0.04
Increase in adjusted net tangible book value per share of
common stock attributable to new investors................ 0.25
-----
Adjusted net tangible book value per share of common stock
after the offering........................................ 0.29
-----
Dilution of adjusted net tangible book value per share of
common stock to new investors............................. $1.21
=====
</TABLE>

If the over-allotment option is exercised in full, the adjusted net
tangible book value per share of common stock after the offering would have been
$0.32, resulting in dilution to new investors of $1.18 per share of common
stock.

15
<PAGE> 18

PRIVATE FINANCING

In March 1999, we completed the sale of 12.5 units at a price of $50,000
per unit in a private financing transaction. Each private financing unit
consisted of 100,000 shares of common stock, 100,000 class A redeemable common
stock purchase warrants, and 50,000 class B redeemable common stock purchase
warrants. Each class A redeemable warrant entitles the holder to purchase one
share of common stock at a price of $2.50 per share and each class B redeemable
warrant entitles the holder to purchase one share of common stock at a price of
$4.00 per share. The class A redeemable warrants are exercisable through
December 31, 2002 and the class B redeemable warrants are exercisable through
December 31, 2004. The shares of common stock underlying the private financing
units and the shares of common stock issuable upon exercise of the class A
redeemable warrants and the class B redeemable warrants have been registered for
public sale and are being sold by selling shareholders under another prospectus.
Charles and Linda Brewer purchased one half unit which they paid for with a
promissory note. The note, together with interest at the annual rate of 7.75%,
is due on March 5, 2000. On September 26, 1999, Mr. and Mrs. Brewer prepaid
$15,000 of the principal.

Barry W. Blank purchased two units in the private financing and his mother
purchased one half unit. Mr. Blank is employed by Dirks as a registered
representative. He participated in the sale of the private financing units and
will participate in the sale of the units in this offering.

16
<PAGE> 19

CAPITALIZATION

The following table sets forth, as of June 30, 1999, the capitalization of
LearnSat.Com

- on an actual basis; and

- on an as adjusted basis to reflect receipt of the estimated net proceeds
from sale of units in this offering at an initial offering price of $3.00
per unit, excluding the over-allotment option, after deducting
underwriter's discounts and commissions and our offering expenses. See
also "Use of Proceeds."

Shares of common stock does not include: (i) 1,500,000 shares of common
stock reserved for issuance under our stock option plan, of which 585,000 shares
will be subject to outstanding options upon completion of this offering; (ii)
underwriter's warrants to purchase up to 667,000 shares of common stock; and
(iii) 2,062,500 shares of common stock issuable upon exercise of outstanding
warrants owned by purchasers in the private financing. See "Private Financing"
and "Management -- Stock Option Plan." You should read this table in conjunction
with our financial statements and related notes included elsewhere in the
prospectus.

<TABLE>
<CAPTION>
JUNE 30, 1999
-----------------------
ACTUAL AS ADJUSTED
-------- -----------
<S> <C> <C>
Short term borrowings and current portion of long-term
debt...................................................... $414,398 $ 414,398
======== ==========
Long-term debt.............................................. $155,418 $ 155,418
-------- ----------
Shareholders' equity:
Preferred stock, $0.001 par value; 20,000,000 shares
authorized; no shares issued and outstanding, actual and
as adjusted............................................... -- --
Common stock, $0.001 par value; 50,000,000 shares
authorized; 9,690,677 shares issued and outstanding,
actual; 12,358,677 shares issued and outstanding, as
adjusted.................................................. 9,691 12,359
Additional paid-in-capital.................................. 507,743 3,597,848
Retained earnings........................................... 11,267 11,267
Less stock subscription receivable.......................... (25,621) (25,621)
-------- ----------
Total shareholders' equity........................ 503,080 3,595,853
-------- ----------
Total capitalization.............................. $658,498 $3,751,271
======== ==========
</TABLE>

17
<PAGE> 20

SELECTED FINANCIAL DATA

The following selected financial data should be read in conjunction with
the financial statements and the related notes of LearnSat.Com and "Management's
Discussion and Analysis of Financial Condition and Results of Operations"
appearing elsewhere in the prospectus. The selected financial data presented
below under the caption "Statement of Operations Data" for the years ended
December 31, 1997 and 1998 are derived from our financial statements which have
been audited by Goldstein Golub Kessler LLP, independent certified public
accountants. The balance sheet as of December 31, 1998 and the statement of
operations for the years ended December 31, 1997 and 1998 and the related report
are included elsewhere in this prospectus. The selected financial data presented
below under the caption "Pro Forma Statement of Operations Data" are unaudited
and are derived from the financial statements of LearnSat.Com included elsewhere
in this prospectus. The selected financial data presented below as of June 30,
1999 and for the six months ended June 30, 1998 and 1999 are derived from the
unaudited financial statements appearing in this prospectus. In the opinion of
management, the unaudited financial statements for the interim periods include
all adjustments (consisting only of normal recurring accruals) necessary for a
fair presentation of the results for such periods. The results of operations for
the six months ended June 30, 1999 are not necessarily indicative of the results
expected for the full year. No cash dividends, other than S Corporation
distributions, were paid for any years presented.

<TABLE>
<CAPTION>
SIX MONTHS
YEAR ENDED DECEMBER 31, ENDED JUNE 30,
------------------------ -----------------------
1997 1998 1998 1999
---------- ---------- ---------- ---------
<S> <C> <C> <C> <C>
STATEMENTS OF OPERATIONS DATA:
Net sales................................. $2,576,230 $2,144,169 $1,072,451 $ 896,820
Cost of sales............................. 2,076,336 1,914,482 922,870 830,767
---------- ---------- ---------- ---------
Gross profit.............................. 499,894 229,687 149,581 66,053
Selling, general and administrative
expenses................................ (282,721) (409,970) (237,806) (252,218)
Net gain on settlement of litigation...... 215,691
---------- ---------- ---------- ---------
Operating income (loss)................... 217,173 (180,283) (88,225) 29,526
Other expenses -- net..................... (42,000) (58,611) (26,954) (15,359)
---------- ---------- ---------- ---------
Income (loss) before provision for
income taxes............................ 175,173 (238,894) (115,179) 14,167
Provision for income taxes................ 2,900
---------- ---------- ---------- ---------
Net Income (loss)......................... $ 175,173 $ (238,894) $ (115,179) $ 11,267
========== ========== ========== =========
Basic and diluted net income (loss) per
common share............................ $ 0.02 $ (0.03) $ (0.01) $ 0.00
========== ========== ========== =========
</TABLE>

<TABLE>
<CAPTION>
SIX MONTHS
YEAR ENDED DECEMBER 31, ENDED JUNE 30,
-------------------------- --------------------------
1997 1998 1998 1999
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
PRO FORMA STATEMENT OF OPERATIONS
DATA:
Income (loss) before pro forma
adjustment for employment agreements
and pro forma provision (credit) for
income taxes........................ $ 175,173 $ (238,894) $ (115,179)
Pro forma adjustment for employment
agreements.......................... (55,000) (55,000) (27,500)
----------- ----------- -----------
Pro forma income (loss) before
provision (credit) for income
taxes............................... 120,173 (293,894) (142,679)
----------- ----------- -----------
</TABLE>

18
<PAGE> 21

<TABLE>
<CAPTION>
SIX MONTHS
YEAR ENDED DECEMBER 31, ENDED JUNE 30,
-------------------------- --------------------------
1997 1998 1998 1999
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
Pro forma provision (credit) for
income taxes:
Federal.......................... 27,300 (27,300) (13,650)
State............................ 7,200 ( 7,200) (3,600)
----------- ----------- -----------
34,500 (34,500) (17,250)
----------- ----------- -----------
Pro forma net income (loss)........... $ 85,673 $ (259,394) $ (125,429)
=========== =========== ===========
Basic and diluted pro forma net income
(loss) per common share............. $ 0.01 $ (0.03) $ (0.01)
=========== =========== ===========
Weighed average number of common
shares outstanding -- basic......... 8,440,677 8,440,677 8,440,677 9,248,688
=========== =========== =========== ===========
Weighted average number of common
shares outstanding -- diluted....... 8,474,011 8,440,677 8,440,677 9,260,474
=========== =========== =========== ===========
</TABLE>

The following table provides a summary of our balance sheet at June 30,
1999:

- on an actual basis; and

- on an adjusted basis to reflect the sale of 1,334,000 units in this
offering, using an initial offering price of $3.00 per unit and the
receipt of the estimated net proceeds.

19
<PAGE> 22

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

In this section, we explain the financial condition and results of
operations of LearnSat.Com for the fiscal years ended December 31, 1998 and 1997
and the six-month periods ended June 30, 1999 and 1998. We also discuss the
anticipated capital requirements for our planned new business
segment -- providing high-speed two-way satellite communications services. As
you read this section, you may find it helpful to refer to our financial
statements and the notes to those statements at the end of this prospectus.

RESULTS OF OPERATION

In this section, we discuss our earnings for the periods indicated and the
factors affecting them that resulted in changes from one period to the other.

Comparison of Six Months ended June 30, 1999 to Six Months ended June 30, 1998

Net Sales

Net sales consists of sales of products and services net of any discounts
and allowances. Net sales decreased to $896,820 for the six months ended June
30, 1999 from $1,072,451 for the six months ended June 30, 1998. We believe that
this decrease of $175,631, or 16.4%, was primarily due to a decrease in decoder
sales.

Cost of Sales

Cost of sales consists primarily of equipment and materials purchased for
resale. Cost of sales decreased by $92,103, or 10.0%, to $830,767 for the six
months ended June 30, 1999 from $922,870 for the six months ended June 30, 1998.
However, as a percentage of net sales, cost of sales increased to 92.6% for the
six months ended June 30, 1999 from 86.1% for the six months ended June 30,
1998. We believe the increase in cost of sales as a percentage of net sales was
due primarily to an increase in subcontractor expenses incurred by us to rectify
an unexpected malfunction of equipment installed in a 1998 project on a fixed
fee basis.

As a result, gross profit decreased by $83,528, or 55.8%, to $66,053 for
the six months ended June 30, 1999 from $149,581 for the six months ended June
30, 1998.

Selling, General and Administrative Expenses

Selling, general and administrative expenses consist of such items as
salaries, professional fees, depreciation and amortization, travel and
insurance. Selling, general and administrative expenses increased by
approximately 6.1% to $252,218 for the six months ended June 30, 1999 from
$237,806 for the first six months ended June 30, 1998.

Selling expenses decreased to $5,817 for the first six months of 1999 from
$20,527 for the first six months of 1998. This decrease of $14,710, or 71.2%,
reflects the fact that during the six months ended June 30, 1998 we premarketed
ED-WEB(TM) to potential customers.

General and administrative expenses increased by 29,122% to $246,401 for
the first six months of 1999 from $217,279 for the first six months of 1998.
This approximately 13.4% increase primarily represents salaries paid during the
six months ended June 30, 1999 that were not paid during the six months ended
June 30, 1998 because of our S corporation status.

Net Gain on Settlement on Litigation

In September 1999, we settled a lawsuit between us and two suppliers. The
net effect of this settlement to us was a one time gain of $215,691 recorded in
the quarter ended June 30, 1999. For more detailed information on the
computation of this gain, see footnote 6 to our audited financial statements at
the end of this prospectus.

20
<PAGE> 23

Operating Loss

As a result of the factors discussed above, our operating income increased
$117,751, or 133.5%, to $29,526 for the first six months of 1999 from an
operating loss of $88,225 for the first six months of 1998. However, excluding
the one time gain of $215,691 related to the settlement of litigation, our
operating loss increased $97,940, or 111.0%, to $186,165 for the six months
ended June 30, 1999 compared to the six months ended June 30, 1998.

Interest Expense

Interest expense, excluding interest income of $4,311, increased 11.8%, to
$30,130 for the first six months of 1999 from $26,954 for the first six months
of 1998. This increase primarily was due to the fact that we had larger turnkey
projects during the six months ended June 30, 1999 which required us to fund
inventory for longer periods.

Comparison of Fiscal Year ended December 31, 1998 to Fiscal Year ended
December 31, 1997

Net Sales

Net sales decreased to $2,144,169 for fiscal 1998 from $2,576,230 for
fiscal 1997. We believe that the primary reason for this decrease of $432,061,
or 16.8%, was a delay in the delivery of two encoders by the manufacturer until
after December 31, 1998. Had these encoders been timely delivered, net sales for
fiscal 1998 would have increased by approximately $225,000, which represents
approximately 52% of the decrease in net sales from fiscal 1997 to fiscal 1998.
We believe that another significant factor in the decrease in net sales was a
reduction in orders for decoders during the last quarter of fiscal 1998. We do
not believe that this decrease is a long-term trend, although we can give no
assurance to this effect.

Cost of Sales

Cost of sales decreased by $161,854, or 7.8%, to $1,914,482 for fiscal 1998
from $2,076,336 for fiscal 1997. However, as a percentage of net sales, cost of
sales increased to approximately 89.3% for fiscal 1998 from approximately 80.6%
for fiscal 1997. We believe the increase in cost of sales as a percentage of net
sales primarily was due to a tightening of the labor market for skilled
satellite installers which required us to rely on subcontractors rather than
employees for satellite installations.

As a result, gross profit decreased by $270,207, or 54.1%, to $229,687 for
fiscal 1998 from $499,894 for fiscal 1997.

Selling, General and Administrative Expenses

Selling, general and administrative expenses increased $127,249, or 45.0%,
to $409,970 for fiscal 1998 from $282,721 for fiscal 1997.

Selling expenses decreased $3,795, or 17.3%, to $18,091 for fiscal 1998
from $21,886 for fiscal 1997.

General and administrative expenses increased to $391,879 for fiscal 1998
from $260,835 for fiscal 1997. We believe that this increase of $131,044, or
50.2%, resulted primarily from our commencement of activities related to our
proposed new business segment. We began to explore the feasibility of entering
the Internet communications services business in December 1997.

Operating Income (Loss)

As a result of the factors discussed above, our operating income decreased
by $397,456, or 183.0%, to a $(180,283) loss for fiscal 1998 from income of
$217,173 for fiscal 1997.

Interest Expense

Interest expense increased to $58,611 for fiscal 1998 from $42,000 for
fiscal 1997. We believe that this increase of $16,611, or 39.6%, resulted
primarily from increased carrying costs related to inventory that was

21
<PAGE> 24

already in the field but was not installed, due to delays mainly related to
obtaining satellite installers. We generally do not bill a client until
installation is completed or certain major milestones have been met. As a
result, we were required to finance the cost of this equipment for a longer than
usual period of time. In this regard, see the discussion of our credit line
below in "Liquidity and Capital Resources."

Through December 31, 1998, we elected to be treated as an S corporation.
This means that we were able to pass through the income or loss of LearnSat.Com
directly to our shareholders. We were required to terminate S corporation status
prior to the commencement of our private offering in January 1999. The private
offering is discussed below in "Liquidity and Capital Resources" and in the
"Private Financing" section of this prospectus. As a result, all future income
taxes will be LearnSat.Com's responsibility. As reflected in the Statement of
Operations and Note 11 of our financial statements, if we had terminated S
corporation status prior to January 1, 1997, our net income after taxes in
fiscal 1997 would have been $85,673, rather than $175,173 and our net loss after
taxes in fiscal 1998 would have been $259,394, rather than $238,894. This pro
forma data assumes that, in lieu of the S corporation distributions these
shareholders took, we had paid salaries to our shareholder-officers during these
two fiscal years in amounts equal to their first year's salary, as set forth in
their employment agreements.

LIQUIDITY AND CAPITAL RESOURCES

At June 30, 1999, we had working capital of $277,968 compared to working
capital of $263,656 at December 31, 1998. This increase in working capital
resulted primarily from our receipt of net proceeds from the sale of units
consisting of stock and warrants in a private financing transaction completed in
March 1999 primarily offset by a shift of a significant amount of long-term debt
to short-term debt, the purchase of equipment and building construction.

Net Cash Flow From Operating Activities

We had a negative cash flow from operating activities for the first six
months of fiscal 1999 in the amount of $140,964 compared to a positive cash flow
from operating activities for the first six months of fiscal 1998 of $90,757.
Cash flow for the first six months of fiscal 1999 was negative primarily due to
a significant loss from operations, excluding the non-cash gain from the
settlement of litigation, and a significant decrease in accounts payable and
accrued expenses offset by a significant decrease in accounts receivable. Cash
flow from operations was positive for the first six months of fiscal 1998
primarily due to decreases in accounts receivable of $283,117 and costs in
excess of billings on uncompleted contracts of $244,834, offset by a decrease of
$313,309 in accounts payable and accrued expenses. The significant decrease in
accounts receivable during the first six months of fiscal 1998 was due to our
receipt of payment for decoders shipped in December 1997.

We had a positive cash flow from operating activities for the 1998 fiscal
year in the amount of $54,019 compared to a negative cash flow from operating
activities for the 1997 fiscal year of $9,616. Cash flow for fiscal 1998 was
positive primarily due to a significant decrease in accounts receivable, offset
primarily by a decrease in accounts payable and accrued expenses and a net loss
from operations. Accounts receivable decreased by $389,252 during fiscal 1998
compared to an increase in accounts receivable of $514,215 during fiscal 1997.
Similarly, accounts payable decreased by $253,894 during fiscal 1998 compared to
an increase in accounts payable of $146,175 during fiscal 1997. We believe that
the increase in accounts payable and the decrease in the accounts receivable are
both due to timing issues related to shipment and payment; we made a $508,560
shipment of decoders in December 1997, but we did not receive payment until
February 1998.

Net Cash Used in Investing Activities

Our investing activities during the first six months of fiscal 1999
primarily related to the construction of our expanded corporate office building.
Cash flows used in investing activities increased to $63,501 during the first
six months of fiscal 1999 from $45,320 during the first six months of fiscal
1998. This increase of $18,181 or approximately 40.1% primarily was primarily
due to building construction, offset by a non-recurring event -- a minor
insurance recovery related to one of our vehicles -- during the first six months
of fiscal 1999.

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During the 1998 fiscal year, our investing activities consisted primarily
of remodeling our facilities and purchasing a company vehicle. Cash flows used
in investing activities decreased to $64,858 during fiscal 1998 from $173,305
during fiscal 1997. This decrease of $108,447 or approximately 62.6% primarily
was due to the fact that we purchased land and a mobile up-link in fiscal 1997
and did not make comparable purchases during fiscal 1998.

Net Cash Provided by or Used in Financing Activities

We received net cash from financing activities of $309,580 during the first
six months of fiscal 1999. We used $31,001 in financing activities during the
first six months of fiscal 1998. This significant increase in net cash provided
by financing activities was due primarily to the receipt of approximately
$503,750 of net cash proceeds from our private financing transaction, referred
to below.

Net cash received from financing activities decreased to $56,384 during
fiscal 1998 from $164,189 for fiscal 1997. This decrease of $107,805 or
approximately 65.7% primarily resulted from a decrease in the net amount of
proceeds from short-term borrowings and long-term debt, less payments of
short-term borrowings and long-term debt to $154,252 for fiscal 1998 from
$246,513 for fiscal 1997. A $15,544 or approximately 18.9% increase in S
corporation distributions to shareholders also contributed to the decrease in
net cash from financing activities. As discussed above in "Results of
Operation -- Comparison of Fiscal Year ended December 31, 1998 to Fiscal Year
ended December 31, 1997; Interest Expense," we terminated our S corporation
status in December 1998.

In April 1999, we refinanced our existing line of credit with a line of
credit from BancFirst that permits us to borrow up to $450,000. As of October 1,
1999, our outstanding principal balance under the credit line was approximately
$443,593. Outstanding principal under this credit line bears interest at an
annual rate equal to the Chase New York Prime Rate plus 1%. Interest is payable
monthly and all principal and accrued unpaid interest is due on April 8, 2000.
Funds due under this credit line are secured by substantially all of our assets,
including accounts receivable and inventory, and part of the credit line is
secured by the personal guarantees of Linda and Charles Brewer. We will use a
portion of the proceeds from this offering to repay a part of this credit line.

If we default on the credit line or any other debt that we owe to the bank,
the bank can:

- declare the outstanding balance plus all accrued interest immediately
due;

- increase the annual interest rate to the lesser of 21% or the maximum
permitted under Oklahoma law; and

- seize and sell the collateral.

Events of default include:

- our failure to make a payment when due;

- our breach of a promise or our misrepresentation to the bank;

- our failure to perform any other covenants or obligations under the
credit line;

- our default under any other agreement that materially affects our
property or our ability to repay the credit line;

- our becoming insolvent or entering into bankruptcy, insolvency or some
other similar transaction;

- if any creditor of ours attempts to take any of our assets that are
pledged as security under the credit line;

- defective collateralization;

- if either Linda or Charles Brewer, the guarantors of the credit line,
dies or is the subject of any of the other events of default discussed in
this paragraph; or

- if we experience a materially adverse change in our financial condition
or the bank, in good faith, no longer deems itself secured.
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We are required to provide the bank with periodic financial information and
we cannot incur any additional debt without the bank's permission, except for
trade debt incurred in the ordinary course of our business. The amount of any
future advance under the credit line that we may request is limited to 80% of
our eligible finished contract receivables plus 50% of inventory; however, no
advances will be made on work in process.

In April 1999, we refinanced other loans with two term notes from
BancFirst, one for $79,663 and the other for $52,625. As of October 1, 1999, our
outstanding principal balance under the $79,663 note was approximately $72,822
and under the $52,625 note was approximately $46,254. These notes bear interest
at an annual rate equal to the Chase New York Prime Rate plus 1%. Principal and
interest are payable in monthly installments. The final payment under the
$79,663 note is due on April 15, 2003 and the final payment under the $52,625
note is due on April 15, 2002. Funds due under these notes are secured by all of
our equipment, vehicles, furniture, and fixtures. The other material terms of
these notes are similar to those in our credit line with BancFirst discussed
above.

In March 1999, we raised gross proceeds of $625,000 from the sale of units
consisting of stock and warrants in a private financing transaction. $25,000 of
this amount is represented by a note receivable from Mr. and Mrs. Brewer.

FUNDING FOR OUR PLANNED OPERATIONS AS A BROAD BAND INTERNET SERVICE PROVIDER

We believe that we will require approximately $2.4 million to complete the
development of our new ED-WEB system and to begin generating revenues from
sales. We anticipate that we may need an additional $200,000 to $1.2 million to
expand the high-speed two-way satellite communications services system during
the first year and an additional $3.5 million to $31 million to support an
expanded system by the end of our fifth year of operating this new business
segment. The large variation in potential expenditures will depend on how many
remote sites are established, where the sites are located, and the amount of
equipment required at each site.

Each remote site will use some standard ED-WEB(TM) site satellite equipment
but some sites may also require connectivity equipment if an existing
communications infrastructure is not available. Additional equipment could
consist of some or all of the following:

- a dial in 56 KBPS hub;

- data subscriber line equipment; and

- local wireless two-way equipment.

If the site requires all three types of connectivity equipment, our cost could
increase by as much as $100,000 per site. However, to the extent that we lease
rather than purchase the equipment, the amount of funds that we will require
could decrease by up to 75%.

We expect, but we cannot assure, that the net proceeds from this offering
will be sufficient to complete development and begin generating revenues. Our
actual future liquidity and capital requirements will depend on numerous factors
discussed under the sections entitled "Risk Factors" and "Business." We will
need additional funding to continue our expansion plans. In addition, we do not
anticipate that revenues from operations will be sufficient to generate positive
cash flow from then existing operations for at least 18 to 24 months. We hope to
obtain this additional financing from the exercise of warrants, future equity
and/or debt offerings and, possibly, bank or other traditional forms of funding.
We cannot assure you that this funding will be available when required on terms
acceptable to us, or at all. In the event that we are unable to obtain needed
future financing, we may be forced to limit or curtail our expansion plans and
focus on maximizing revenues and reducing costs related to then ongoing
operations.

YEAR 2000 ISSUES

Many currently installed computer systems and software products use two
digits rather than four to define the applicable year, which means that
date-sensitive software may recognize a date using "00" as the year
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1900 rather than the year 2000. Our failure to address potential year 2000
malfunctions in our computer and non-information technology equipment and
systems and those of our business partners could result in our suffering
business interruptions, financial loss, harm to our reputation and legal
liability.

The proprietary software to be used in our ED-WEB(TM) system is being
developed with four digit year recognition. We do not anticipate year 2000
problems with this software although we can give no assurance to this effect.
The hardware in our system will be standard, off-the-shelf personal computers.
Year 2000 compliance of equipment and software provided by third-party vendors
is not within our control. We plan to obtain assurances from our vendors that
any hardware and software that we use to construct the ED-WEB(TM) system will be
year 2000 compliant. However, in the event that this hardware or software is not
year 2000 compliant, our ED-WEB(TM) system may not operate properly. If a year
2000 problem should develop, we may have to overhaul our hardware and software
and, possibly, suspend providing satellite communications services which would
materially reduce revenues generated by our satellite communications services
operations.

Literature on the equipment that we currently sell and install indicates
that this equipment is year 2000 compliant. We are in the process of making oral
and written inquiries to manufacturers of this equipment to obtain certification
of their year 2000 compliance. We have only received a small percentage of
responses to our inquiries thus far. As a result, we have not received year 2000
compliance assurances from many of these parties nor do we expect to. We
anticipate that some entities with whom we have or will have third-party
relationships may not respond to our request for year 2000 assurances because
they have not completed their year 2000 compliance efforts or they may lack
sufficient incentive to respond to our inquiries. We do not plan to
independently verify any of the assurances we receive. In addition, these
parties are reliant upon other companies' applications, some of which may
contain or rely upon software that is not year 2000 compliant and that may not
be revealed through our inquiries. To the extent that year 2000 issues do arise
with regard to this equipment, purchasers will be required to look to the
manufacturer rather than to us for resolution of the problem. There are a number
of back-up suppliers of equipment for most of the equipment that we sell.
However, there are no back-up suppliers of encoders or decoders should there be
year 2000 problems with these devices.

Should we identify any problem with respect to our year 2000 readiness, we
will seek to develop a remedy, test the proposed remedy and prepare a
contingency plan, if necessary. We intend to develop contingency plans to
resolve our most reasonably likely worst case year 2000 problems, which have not
yet been identified. If any of our third-party suppliers are not year 2000
compliant, we will attempt to replace them with a year 2000 compliant supplier.
We intend to complete our determination of the worst case scenarios after we
have received and analyzed responses to our inquiries of third parties. We
expect to complete our contingency plan by the end of October 1999.

We do not have any material contracts with external contractors to assist
us in completing our year 2000 compliance effort. In addition, no employees have
been hired or reassigned to complete our year 2000 compliance.

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BUSINESS

GENERAL

We have marketed and installed satellite communications equipment since our
inception in 1991. We have provided satellite-delivered services that supply
video and audio links between teachers and remote classrooms. We have offered
these satellite communication services by providing our customers with the
products, installation, training and warranties relating to these services. We
have also been a reseller of many telecommunications products.

Based on our experience in the telecommunications market, we plan to expand
into the market for satellite broad band Internet access services. Broad band
Internet service is Internet data operating or transmitting at 256 KBPS or
Kilobits per second and above, which is a data transmitting rate expressed in
thousands of bits per second. Broad band technology allows for the transmission
of video, audio, data and other services over the Internet at 256 KBPS and
above.

We will offer Internet access services via satellite from our own Internet
service provider or from other Internet service providers. In September 1999, we
acquired a local Internet service provider with the domain name of "Cowboy.Net."
Cowboy.Net has been in operation since 1995. Cowboy.Net provides local
connection to the Internet with multiple dial-in hubs and a complete
uninterruptible power source back up in the event of a power loss. A dial-in hub
is the central connection to the network at the Internet service provider's
location. It enables subscribers to dial into the network and connect to other
equipment that can connect to the Internet. We will also offer Intranet service
as a provider of virtual private networks, where the Internet is not fast enough
or the quality of service is unacceptable. A virtual private network is a data
communications network that by-passes public networks such as the Internet.

We plan to utilize our existing FCC-licensed satellite transmitting
facility to offer high-speed Internet satellite services through a new delivery
system that we are developing called ED-WEB(TM). These satellite Internet
services will be offered using existing hardware and software platforms. We will
augment these platforms with software that we are developing and for which we
have filed a patent. We initially intend to establish high-speed Internet access
services, and then offer ED-WEB(TM) as a licensed product.

We believe the rural and global marketplace presents a business opportunity
because most service providers consider it too costly to provide rural areas
with the infrastructure for telecommunications services that will support the
services we intend to provide through the ED-WEB(TM) system. We have identified
rural and global communities under served by other telecommunication providers
for our planned new services. Schools, libraries, hospitals, businesses and
government agencies in these areas generally lack high-speed Internet access.

We believe that ED-WEB(TM) will provide potential customers in these
communities with improved communication services that support new applications
in:

- distance learning -- the use of electronic media to connect teachers and
remote classrooms;

- desktop and group videoconferencing;

- telemedicine -- the use of electronic media to connect medical
practitioners and patients;

- Internet access;

- surveillance -- the use of electronic media to enable monitoring of
remote sites;

- process control -- the use of electronic media to allow control of remote
sites; and

- virtual private networks.

Distance Learning applications include:

- teacher training;

- literacy training;

- citizenship programs;

- job skills training; and

- curriculum development.

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Telemedicine applications include:

- diagnostic analysis;

- tumor treatment;

- patient monitoring;

- patient care;

- clinical treatment for prisoners; and

- clinical treatment for patients in remote locations.

Telemedicine applications will provide direct and immediate contact between
doctors. They will not provide contact between a doctor and a patient unless a
doctor, or other medical professional, is present with the patient. In all
cases, these applications will comply with applicable medical regulation
requirements.

Internet access applications include:

- web hosting -- storage and retrieval services for customer web sites;

- local wireless transmissions;

- multimedia portals -- the ability to provide a group of video, data and
voice application services to markets such as medical practitioners;

- corporate and multi-family access -- the ability to send more than one
signal to a building and then to distribute these signals throughout the
building; and

- global connections for undersea cable providers.

Virtual Private Networks access applications include:

- corporate infrastructure for secure multimedia -- the ability to scramble
satellite signals to prevent unauthorized access;

- private training networks;

- resort and cruise ship multimedia; and

- online test and repairs of specialized equipment.

We also hope to attract businesses, including corporate extension offices
and manufacturing facilities, and government agencies such as correctional
facilities to use our high-speed Internet services. These sites are often
excluded from high-speed Transmission Control Protocol/Internet Protocol,
TCP/IP, based communications systems. TCP/IP is the protocol, or standard, used
to transmit data, video and voice over the Internet.

We cannot assure, however, that the ED-WEB(TM) system and related products
and services will be accepted by the marketplace at a level which will make our
new business profitable because we have not begun to offer these products and
services and have no direct experience on which to base an estimate of
acceptance. We also cannot assure that if the ED-WEB(TM) system is accepted in
the marketplace, others will not enter the market and significantly restrict our
ability to compete.

CURRENT PRODUCTS AND SERVICES

Products

We provide hardware as well as installation and maintenance services for
universities, colleges, and K-12 schools for distance learning courses taught
via satellite. Traditionally, we have focused our efforts on providing sales,
network installation services and products that transmit and receive data
primarily by satellite.

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The general categories in which we currently sell products and services include:

- DIGITALLY ENCODED SATELLITE UP-LINK EARTH STATIONS. These are facilities
located at colleges and universities employed to transmit courses to
satellites using the new compressed digital technology based on ISO
standards. These standards permit equipment manufactured by different
vendors to operate together. ISO, the International Standards
Organization, is a multi-national group that set standards for data
acquisition and transmission.

- DECODER-EQUIPPED SATELLITE DOWN-LINK EARTH STATIONS. These are
television receive-only satellite systems that can decode digitally
transmitted signals.

- STAND-ALONE SATELLITE DECODERS. These are decoders manufactured by
General Instruments. Approximately ten states as well as the Public
Broadcasting System and its affiliates transmit signals that require each
receiving site to use at least one decoder.

- SATELLITE TRANSMISSION SERVICES. These are one-way, scheduled
transmission services.

- TRANSPORTABLE EARTH STATIONS. These are satellite up-links -- one way
connections from earth stations to satellites -- that can be delivered to
remote sites to provide up-link services for specific courses or
programs.

- VIDEO/AUDIO TELECONFERENCING SYSTEMS. These are distance learning
classrooms that include cameras, microphones and other aids to teach
courses from remote locations.

Some of the specific products we distribute include:

- satellite antennas;

- high power amplifiers and transceivers which convert a signal to a higher
frequency and add power to the signal so that it can be transmitted from
an earth station to a satellite;

- video upconverters/modulators which reformat signals for transmission and
convert them to the satellite up-link frequency;

- digital satellite encoders which convert analog signals to digital
signals;

- digital satellite decoders and receivers;

- low noise block converters which convert signals from the satellite
frequency to lower frequencies;

- analog satellite receivers which receive analog signals and translate
them into the standard signals used by video equipment for internal
connections;

- satellite test equipment;

- antenna feeds;

- actuators which position an antenna to a specific satellite; and

- classroom monitors, cameras, microfilm and control equipment.

Data is sent as electronic impulses in analog transmission. In digital
transmission, after being converted into electronic impulses the data is
digitized, or converted into binary numbers, prior to being sent.

We purchase products from various manufacturers, including:

- General Instruments Corporation;

- CPI, Inc. (formerly Varian);

- D.H. Satellite, Inc.;

- Panasonic;

- Andrew Corporation;

- Prodelin Corporation;

- Norsat International, Inc.; and

- Chaparral Communications, Inc.

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We are a valued-added reseller, which means we provide services that add
capabilities to the products we market. We have arrangements with our vendors
that define the price at which we purchase items, specific terms and conditions,
and a description of the products. Some agreements specify minimum purchase
order quantities and, therefore, require that we stock inventory. For those
agreements which do not require minimum quantities, we purchase products against
customer purchase orders. All agreements permit us to sell individual pieces or
integrate the pieces into a system.

We have approximately 20 vendors and written agreements with two of them:
General Instruments and Panasonic. General Instruments accounted for
approximately 41% of our purchases and provided products that generated
approximately 33% of our sales in 1998. It provided products that generated
approximately 60% of our sales for the six months ended June 30, 1999. We have
purchased products from General Instruments since 1996. No other single vendor
has accounted for more than 10% of our purchases. We do not have exclusive
arrangements with our vendors.

Our systems are typically warranted for one year for our workmanship in
building the system. Product warranties are passed through from the
manufacturer. Since inception, the cost of our warranties has approximated less
then 1% of our annual sales.

Sales and Marketing

Most of our sales are through short term arrangements to not-for-profit
organizations, such as schools, universities and Federal and state government
agencies, or to entities that sell to these institutions. We also distribute our
products to about 50 resellers. We have ongoing quantity and fixed price
agreements to sell satellite products to:

- Nebraska ETV; and

- South Carolina ETV.

The following three customers accounted for approximately 61% of our gross sales
for the fiscal year ended December 31, 1998:

- the Florida Department of Education;

- the State of Kentucky; and

- the University of New Mexico.

The work for these customers was performed under contracts which have been
completed.

The following three customers accounted for approximately 62% of our gross
sales for the six months ended June 30, 1999:

- the State of Kentucky;

- Total Video Products; and

- ADEC.

The State of Kentucky accounted for approximately 31% of our gross sales during
this period. The work for these customers was performed under contracts which
have been completed.

Not-for-profit institutions require competitive bidding. Thus,
approximately 90% of what we sell is competitively bid. Some agreements are
multi-year while others are based on dollar volume. In either case, these
institutions are generally restricted to annual or dollar volume budgets.

We sell our products and systems primarily in response to requests for bids
or requests for quotations submitted by our potential customers. We must be a
qualified vendor in order for our bid to be accepted. In order to be a qualified
vendor we must demonstrate that we can competently provide the services we offer
and, in a number of instances, satisfy certain financial requirements. We are
currently a qualified vendor for approximately 100 potential customers.

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We market our services by advertising in trade publications such as the
annual Phillips Satellite Access Guide, Via Satellite and Satellite
Communications, monthly trade journals, and The Funding Sources for K-12 Schools
and Adult Basic Education published by the Oryx Press, an annual funding source
book for not-for-profit organizations. We also participate in industry trade
shows.

Competition

The market for satellite services and products is evolving rapidly. We
expect that competition will continue to intensify. Our major competitors
include:

- Convergent Media Systems;

- Dawn Satellite;

- Satellite Engineering Group;

- Miralite Communications; and

- Andrew Corporation.

Convergent Media Systems is our primary competitor for product sales. It is
a privately owned company located in Atlanta, Georgia. Dawn Satellite, located
in Lake Orion, Michigan, and Satellite Engineering Group, located in Kansas
City, Missouri, are also privately-owned companies that compete with us for
product sales.

Miralite Communications competes with us for product sales and is our
primary competitor for systems sales. It is a privately-owned company located in
Newport Beach, California. Miralite has a larger sales organization than we have
and builds antennas, which we do not. We believe these factors increase
Miralite's ability to compete against us.

Andrew Corporation, one of our antenna vendors, also competes with us for
systems sales. Andrew is a public corporation with annual sales in excess of
$500 million.

Some of our competitors have longer operating histories, larger customer
bases and significantly greater financial, marketing and other resources than we
have. In addition, some of our competitors may be able to secure merchandise
from vendors on more favorable terms, devote greater marketing resources, and
adopt more aggressive pricing policies.

Our customers generally require us, as a systems builder, to obtain
performance and completion bonds. Our current financial condition limits us to
bonding amounts of no more than approximately $1 million per contract.
Accordingly, we do not bid to build systems that will cost more than $1 million.
We believe, but cannot assure, that the proceeds of this offering will permit us
to compete more effectively in our current business by allowing us to raise the
amount of the bonds we can obtain and, thus, increase the number of products we
offer.

PLANNED OPERATIONS AS A TELECOMMUNICATIONS AND INTERNET SERVICE PROVIDER

We are currently expanding the scope of our services to become an Internet
service provider and telecommunications provider offering high-bandwidth, 256
KBPS and above, Internet services, which will allow us to provide broad band
Internet access and compressed digital video delivery. Compressed digital video
files are video files that are digitized and compressed to facilitate delivery.
Our new telecommunications system will be satellite-based and provide high-speed
two-way data, voice and video transmissions. We believe it will be unique in
providing high-bandwidths at remote sites for transmitting as well as receiving
this Internet data. We plan to provide these services through a new delivery
system we are developing called ED-WEB(TM).

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ED-WEB(TM)

ED-WEB(TM) is a satellite-based Internet telecommunications technology we
are creating to provide high-speed communication services to communities under
served by other telecommunication providers. We have a patent application
pending in the U.S. Patent and Trademark Office directed to aspects of this
technology. We plan to offer ED-WEB(TM) initially as a service, beginning in the
fourth quarter of 1999. Eventually, we plan to offer it as a licensed product.

ED-WEB(TM) will permit customers with high-speed connection requirements
who are outside the infrastructure of a local telephone company to send and
receive data at speeds of from 9.6 KBPS to full T-1. T-1 is a bundle of digital
phone lines that operate at a combined bit rate of 1.544 MBPS or megabits per
second, which is a data transfer rate expressed in millions of bits of data per
second. ED-WEB(TM) will offer customers the following three transmission
configurations:

- FULLY INTERACTIVE TWO-WAY VIDEOCONFERENCING AND INTERACTIVE INTERNET. A
fully interactive connection allows the customer's data to be sent from the
site as well as received at the site.

- OUTBOUND ONLY, ALSO KNOWN AS DATA CASTING. Basic data casting allows
high-speed transmission of data to one or multiple nodes of a private, wide
area network. An outbound path transmits data from an earth station to a
satellite. It is designed for use in networks that have a pre-existing
return path or have no need of return path channeling.

- RETURN PATH ONLY, ALSO KNOWN AS BACK HAULS. A return path transmits data
from a customer's earth station to a satellite and back to an earth
station for further transmission.

How the ED-WEB(TM) Service Will Work

ED-WEB(TM) will consist initially of a GEO, or geosynchronous earth
orbital, satellite system with a central site and multiple remote customer
sites. A GEO satellite is a satellite traveling in a fixed orbital path that
allows it to synchronize its movements with the earth. The ED-WEB(TM) system
will transmit data to remote sites using currently available commercial
technologies based on the MPEG II standard. Return data transmissions will use
technologies, or logic, developed by us and defined in our patent application.
MPEG, the Motion Picture Experts Group, is an international organization that
sets standards for the quality of compressed digital data that can transmit
video signals.

The first central site will be located at our facility in Stillwater,
Oklahoma. We will initially locate our remote customer sites within the
satellite coverage of the U.S. domestic arc, which covers the lower 48 states
and also includes Mexico, Central America and South America. The U.S. domestic
arc is the portion of space allocated to U.S. licensed satellites. We are
negotiating for space with resellers of space segments on GEO satellites which
cover these areas.

We plan to begin operating ED-WEB(TM) within a partial GEO transponder and
later expand it to operate within a full GEO transponder. A transponder is the
circuit on a satellite that transmits and receives a signal from earth. We may
add additional GEO transponders if the ED-WEB(TM) network grows. Eventually, we
hope to expand the ED-WEB(TM) network to accommodate multiple satellites with
different GEO coverages. Ultimately, we hope to expand the ED-WEB(TM) system to
include low earth orbital, or LEO, satellites, at which point we envision this
system accommodating customer requirements for both GEO and LEO satellite
transponders. A LEO is a satellite orbiting the earth in a polar arc at an
altitude of 350 to 1,250 miles. To our knowledge, LEO earth station equipment
that fits our high-speed access approach is not commercially available.

A remote site will consist of VSAT equipment. A VSAT, or very small
aperture terminal, is approximately 4' to 6' in diameter. The remote site
equipment will consist of a roof-mounted antenna and PC-based electronics to
support a Ku Band GEO satellite transmitting at a 14-14.5 Ghz frequency. Ku is a
frequency used by satellites that operates at 10 to 20 millionths of a second.
Ghz, or Gigahertz, is a frequency expressed in millionths of a second. We will
furnish, install and maintain this equipment. The ED-WEB(TM)

31
<PAGE> 34

system will also include indoor equipment for remote sites that will connect to
the customer's internal network or our Internet service provider.

The ED-WEB(TM) central site in Stillwater will connect to a telephone
company-supplied high-speed fiber network connected to our Internet service
provider "Cowboy.Net." This connection will also provide other telephone company
services such as ISDN connections. ISDN, or Integrated Services Digital Network,
consists of two 64 KBPS telephone company digital lines. The Stillwater central
site will operate with a fully redundant configuration. That is, the ED-WEB(TM)
system will be capable of automatically switching to an alternate system in the
event of electronic failure. A back-up generator will supply continuous power in
the event of power failure. A battery backup will supply continuous electric
power to enable the system to operate through unplanned power disturbances.

We have designed the central site and most of the remote site. We have
acquired some of the hardware for the central site. We have also designed the
software files to operate ED-WEB(TM). We will use the MPEG II DVB, or Digital
Video Broadcast, system for the outbound path which we will purchase from
General Instruments or another provider of proven products. DVB is a
European-adopted operating standard for the MPEG. We plan to write the
proprietary part of the software for the return path and may contract out the
writing of some of the non-proprietary part.

We estimate it will take approximately 9 to 12 months to complete the
development of ED-WEB(TM) and implement this system by installing the first 28
remote sites. During the first year of operations we hope to install about 200
sites. Thereafter, if customer demand warrants and necessary financing is
available, we plan to install from 500 to 700 sites per year. We estimate the
installation of these additional sites will cost between $1,000 and $6,000 per
site, depending on location and differing data transfer rates. We plan
eventually to support a minimum of 3,500 sites. We can give no assurance,
however, that the cost and/or time needed to complete and install the ED-WEB(TM)
system will not exceed our estimates, that customer support and/or financing
will be available to permit us to expand the system, or that it will attract
sufficient customers to make our business viable.

Internet Access for Internet service providers and Videoconferencing with
ED-WEB(TM)

We recently acquired all of the assets and the business of Cowboy
Communications, LLC, an Internet service provider operating under the name of
Cowboy.Net, from Randall Donahoo, our Vice President of Engineering. See
"Management" and "Certain Transactions." Cowboy.Net has approximately 400
customers in the Stillwater, OK area. We believe this acquisition will allow us
to expand the range of communications services we can offer to potential
ED-WEB(TM) customers. We plan to expand Cowboy.Net to other Oklahoma cities and
remote locations in the United States that require Internet connectivity.

In addition to developing Cowboy.Net, we will also offer remote Internet
access capability through ED-WEB(TM) to other Internet service providers. We
also plan to expand this service to other countries.

Videoconferencing via an Internet protocol will be the second service
ED-WEB(TM) will support. An Internet protocol is a protocol or standard that
allows data to be self-directed. We plan to offer three modes of
videoconferencing:

- A customer may select a dedicated, full-time service. This method will
provide the customer a continuous and uninterrupted video conferencing
connection. The system would operate as though connected to the network
by a telephone company supplied ISDN line. Whenever a customer needs a
connection, the circuit would be available.

- A customer may select a scheduled, time-specific connection. Following a
request for a prearranged time for a conference to the ED-WEB(TM) central
site, the central site would make a space segment available to the
customer for a specific period. Several sites can participate in the
video conference.

- A customer may request an "on demand" connection. This method would
assure the customer either a connection within five seconds of request or
an immediate acknowledgment that the system was

32
<PAGE> 35

seeking one for him. However, the customer would be restricted to
available time in 15 minute increments.

Videoconferences may take place on a point-to-point basis via any of the
three connection options discussed above, or on a point-to-multi-point basis.

Real Time Internet

We plan to offer companies, government agencies and other institutions the
capability to monitor and control activities at remote sites. Using the
ED-WEB(TM) system, these entities can maintain continual contact with remote
sites through uninterrupted data transmissions via the Internet.

ED-WEB(TM) Marketing

Initially, we intend to market ED-WEB(TM) to the following entities:

- healthcare providers;

- educational institutions;

- the Federal government, Federal contractors and Federal communications
consultants; and

- Internet service providers desiring to offer access to rural and
developing areas.

We have recently begun limited marketing at the National Association of
Broadcasters Telcom East and Telcom West trade shows. Our experience there
indicates that the customers interested in ED-WEB(TM) are in four general
categories:

- medical schools and hospitals in the U.S., Saudi Arabia, India and
Guatemala;

- U.S. government entities such as the Federal Bureau of Investigation, the
Internal Revenue Service, the Army, the Air Force and the Department of
Labor;

- commercial enterprises such as video conferencing suppliers, systems
integrators, service providers, and GEO and LEO satellite providers; and

- suppliers of distance learning educational material.

The potential customers who have the resources to purchase ED-WEB(TM)-type
services are primarily medical institutions and private businesses. The U.S.
government entities and the international governments that expressed interest
cannot proceed without a lengthy procurement process. We cannot assure, however,
that any expressions of interest in the ED-WEB(TM) system will ever result in
sales.

Based on our current estimate of the progress of ED-WEB(TM) development, we
will begin offering ED-WEB(TM) in the year 2000 as a basic service to include
hardware installation and Internet access. We plan to include medical,
educational and media related content and anticipate that educators and teaching
facilities unaffiliated with us will provide programming. Subject to compliance
with any applicable government medical licensing requirements, we will offer the
capability of transmitting specialized medical services to remote locations to
supplement available care. We will also provide public schools with the ability
to transmit courses taught via the Internet. We believe virtual private network
service could be put to such uses as specialized videoconferencing for plant
manufacturers in repairing complex equipment that cannot be moved. We will
emphasize the comprehensive nature of ED-WEB(TM) in our marketing to penetrate
the rural and global marketplace.

Another aspect of our marketing will be to focus on the availability of
government funding under the E-Rate provision of the 1996 Telecommunication Act.
This act allows educational institutions to obtain government reimbursement for
a portion of their telecommunications costs which includes Internet access
service. We should be able to provide the telecommunications Internet access
services for which many schools, libraries and hospitals are currently
requesting grant discounts. Telephone companies are currently the predominant
providers of these telecommunications services.

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<PAGE> 36

An important feature of our marketing strategy will be to highlight the
benefits of broad band Internet service to our customers. Because science and
technology as well as business opportunities change rapidly, we believe it
essential that thoughts and ideas be exchanged quickly face-to-face. We believe
that ED-WEB(TM) will provide our customers convenient access to continuing
education without large investments and travel time.

We plan to charge a monthly fee for Internet access. Actual fees may vary
depending on our costs. Our pricing structure should allow flexibility for the
individual customer since cost will depend on the system requirement and the
usage time. Schools, hospitals and libraries will gain access to the ED-WEB(TM)
system at lower rates because they may qualify for as much as an 80% discount
under the government funded E-Rate provision. Because we have no experience
selling the ED-WEB(TM) service, we cannot assure you that our proposed rates
will be acceptable to potential customers.

ED-WEB(TM) Promotion and Sales

We recently began promoting ED-WEB(TM) to educational and medical
institutions by placing a full-page color ad with the Oryx Press. The ad
currently appears on the back cover of the 1998-1999 edition of the National
Funding Source Book, printed every two years.

We plan to contact Internet service providers in or near school districts
that have applied for E-Rate discounts and are least likely to have cable and
fiber optic networks in place. We also intend to continue to exhibit at
technology conferences and trade shows typically attended by potential
customers. The trade shows we plan to attend within the next year include:

- Telcon East;

- Telemedicine 2000;

- Satellite 2000; and

- Internet World East or West.

We are currently identifying additional national and regional conferences
for educators, business people, and the medical profession for future
presentations and exhibits. We also plan to conduct a road show to present
ED-WEB(TM) to select audiences.

Our sales staff will work with local school districts, hospitals,
businesses and government agencies to establish need and technical criteria for
ED-WEB(TM) by completing site-survey forms. Once the system is installed, sales
personnel will assist customers in connecting the site to the network. We plan
to hire additional sales personnel in several regions if and when sales of
ED-WEB(TM) services justify. We intend to use our own employees to install and
service the systems.

COMPETITION IN PROVIDING INTERNET SERVICES

Currently, the dominant telecommunications providers are telephone
companies. AT&T, Sprint and MCI/Worldcom all have major presence points through
which traffic may enter and leave the Internet. In major metropolitan areas,
these companies provide high-speed access using traditional telephone circuits.
These circuits are required to connect multiple computers from a local area
network to the Internet. In rural or global locations, however, these circuits
are often unavailable or too costly for most users.

Cable, computer and other high-technology companies seek to enter the
Internet market as well. They also tend to concentrate on urban areas. These
companies currently depend on telephone lines for some of their connections or
are able to transmit only very limited data streams.

Although there are a large number of firms in this industry, we believe we
can compete because we will be one of a limited number of providers of
high-speed two-way satellite-delivered Internet access to multiple locations in
the rural and global marketplace. We cannot know, however, whether other
companies are currently developing this or similar technology which would
restrict our ability to compete.

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<PAGE> 37

Although our target market has generally been ignored by the major
telecommunications companies, some competitors are directing their products to
our potential customer base. We believe the ED-WEB(TM) technology will be
superior to that used by our competitors. These companies, such as Scientific
Atlanta, approach the market with a traditional VSAT system.

Most other technologies, such as that used by Hughes Direct PC, provide
only one-way, satellite-delivered Internet access. We believe these systems do
not adequately serve our selected market because they still require telephone
lines to an Internet service provider to carry traffic from the site to the
Internet. For instance, if a large file needs to be transferred from the
customer's site, the transfer to the Internet will be very slow, clogging the
entire pipeline and making it difficult for other users to gain access. The flow
of information from the site will require greater bandwidth for highly
interactive distance learning uses.

Intellicom offers two-way satellite-delivered Internet access that could be
marketed to our planned customer base. However, to our knowledge, the highest
speed to the site is 2 MBPS. We believe we will be able to increase ED-WEB(TM)
speed up to 50 MBPS to the site. In addition, to our knowledge Intellicom offers
only a limited return path from the site to the Internet. We anticipate
ED-WEB(TM) will deliver bandwidths in increments of one thousand KBPS up to 50
MBPS.

The following is a non-exclusive list of our potential competitors in three
technology sectors:

<TABLE>
<S> <C>
- - One-way Internet Satellite............. Hughes Direct PC, Intelsat, Orion Network
Systems, NSN Network Services and Satcom
- - Traditional VSAT....................... Intellicom and Scientific Atlanta
- - Hybrid VSAT............................ Shiron Satellite Communications, Limited,
located in Israel, and Tachyon, a
recently-formed company in San Diego,
California.
</TABLE>

Many of these companies are multinational corporations and most of them are
substantially larger than we are, with significantly greater financial and
organizational resources and market recognition and acceptance.

PATENTS, TRADE SECRETS AND TRADEMARKS

We rely on trade secrets and copyright laws to protect our proprietary
technologies, but we cannot assure that these laws will provide us with
sufficient protection, that others will not develop technologies similar or
superior to ours, or that third parties will not copy or otherwise obtain or use
our technologies without our authorization. We have a patent application pending
in the U.S. Patent and Trademark Office for our ED-WEB(TM) technology. The
success of our new business will depend, in part, on our ability to successfully
obtain issuance of a patent directed to our ED-WEB(TM) technology, obtain
related patents, protect and enforce patents once issued and operate without
infringing the proprietary rights of others. Our success also will depend on our
ability to maintain exclusive rights to trade secrets and proprietary technology
we own, are currently developing and will develop. We can give no assurance that
any issued patents will provide us with competitive advantages or will not be
challenged by others, or that the patents of others will not restrict our
ability to conduct business.

We have filed an intent to use trademark application to register the mark
"ED-WEB" in the U.S. Patent and Trademark Office.

Policing unauthorized use of our proprietary technology and other
intellectual property rights could entail significant expense. In addition, we
cannot assure that third parties will not bring claims of copyright or trademark
infringement against us or claim that our use of certain technologies violates a
patent. Any claims of infringement with or without merit could be time-consuming
to defend, result in costly litigation, divert management resources, require us
to enter into expensive royalty or licensing arrangements, or prevent us from
using important technologies, methods or trademarks, any of which could
materially increase our cost of operations and/or reduce the services and
products we may provide or the areas in which we do business.

GOVERNMENT LICENSING

We currently hold a license from the Federal Communications Commission
which permits us to operate solely in the domestic satellite arc. The license
covers a single channel transmitter for either analog or digital
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<PAGE> 38

data. Our proposed ED-WEB(TM) technology will require us to upgrade our license
so that we may transmit internationally and as a VSAT hub. We plan to operate in
Mexico, Central America and parts of South America in addition to the United
States. This international license is usually granted upon the successful
transmission of a test signal to the receiving site of the international
satellite operator. We do not anticipate any difficulty in obtaining the license
and our satellite equipment should satisfy any standards imposed by an
international operator. We have communicated with the owners of two satellites
but will not apply to the FCC to change our license until we have selected a
satellite.

Antennas used for international traffic require certification with an agent
of INTELSAT, an international organization that regulates traffic in satellite
space in the countries where we are trying to add service. INTELSAT sets a
standard for antennas transmitting data internationally.

Licenses are granted for ten-year periods. Our current domestic license
expires in January 2006. We pay a nominal annual license which likely will
increase in the future. Each VSAT site which we establish in the U.S. will
require an annual operating fee of $50. We cannot assure, however, that other
countries will not require confiscatory licensing fees. We intend to quote fees
for international service exclusive of applicable tariff charges.

All our existing and proposed operations are currently unregulated. We can
give no assurance, however, that regulations will not be imposed on our
operations in the future, in which event our cost of business could be
materially increased.

OUR LOCATIONS AND FACILITIES

Our corporate office building, which we recently increased to 2,600 square
feet, is located at 3819 South Perkins Road, Stillwater, Oklahoma 74074 on a
five acre parcel owned by us. This building now has expanded offices and space
for a new satellite operations center. We are also adding a natural gas powered
electrical back-up system for the operations center.

We also lease a warehouse and systems integration facility, where we
assemble our systems, in Stillwater, Oklahoma and an approximately 1,200 square
foot systems integration facility in Eustis, Florida, each from Charles and
Linda Brewer, two of our executive officers and directors, and our principal
shareholders.

Our Stillwater warehouse and integration facility, approximately one mile
from our corporate office, is approximately 4,000 square feet, of which
approximately 1,500 square feet are used for systems integration and 1,500
square feet for shop space. The remaining 1,000 square feet are used as a
storage area. The buildings are located on a 1.5 acre tract. The remainder of
the property is used for outside storage and parking. This property also houses
our satellite up-link facility which we will move to our satellite operations
center when it has been completed.

We lease the Eustis, Florida facility on an annual basis at $750 per month.
The Stillwater facility is leased at $1,000 per month. This lease terminates in
June 2000. We believe that the terms of our leases with Mr. and Mrs. Brewer are
comparable to those we would have obtained for comparable facilities with
parties unaffiliated with us.

We also lease a storage facility in Shelton, Washington from a third party,
consisting of approximately 560 square feet of inside storage space plus about
200 square feet of secured outside storage space. We pay $110 per month for
these facilities pursuant to a month-to-month written lease.

We own 17 motor vehicles in Oklahoma, Florida and Washington.

EMPLOYEES

As of October 1, 1999, we had ten full-time employees, including two in
general management, one in operations, two in administration, two in
engineering, one in system installation and integration and two in sales. We
also have an oral consulting agreement with an accountant who serves as our
controller on a full-time basis. None of our employees is a member of any union
or collective bargaining organization. We consider our relationship with our
employees satisfactory.

LEGAL PROCEEDINGS

We are not currently subject to any material legal proceedings. We may from
time to time become a party to various legal proceedings arising in the ordinary
course of our business.

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<PAGE> 39

MANAGEMENT

DIRECTORS AND EXECUTIVE OFFICERS

The names and ages of our directors and executive officers are set forth
below:

<TABLE>
<CAPTION>
NAME AGE POSITION
- ---- --- --------
<S> <C> <C>
Charles Brewer*.............................. 59 President, Chief Executive Officer, Chief
Operating Officer and Director
Linda Brewer+................................ 52 Chairman of the Board, Chief Financial Officer,
Treasurer and Secretary
Francois S. Warchala......................... 55 Vice President of Operations
Randall D. Donahoo........................... 37 Vice President of Engineering
Charles R. Hoover*+(1)....................... 69 Director
Kenneth G. Harple*+.......................... 70 Director
</TABLE>

- ---------------
* Member of audit committee.

+ Member of compensation committee.

(1) Mr. Hoover is a designee of the underwriter. See "Underwriting."

LearnSat.Com was founded in October 1991 by Linda and Charles Brewer who
are husband and wife.

CHARLES BREWER has served as President, Director and a full-time employee
of LearnSat.Com since our inception in 1991. He became our Chief Executive
Officer and Chief Operating Officer on January 1, 1999. Prior to joining
LearnSat.Com, from 1989 to 1991, Mr. Brewer served as Vice President of Sales
for Microdyne, a manufacturer of telemetry and satellite equipment. From 1988 to
1989, he was a sales and marketing consultant to Skycom LLC, a manufacturer of
satellite two-way VSAT systems. From 1986 to 1988, he served as Vice President
and General Manager of Analogic, a manufacturer of analog conversion and digital
instrumentation products. Mr. Brewer currently serves on the board of directors
of the United States Distance Learning Association and the Global Distance
Learning Association. He is also a former Chairman of the United States Distance
Learning Association's Advisory Board and currently serves as Vice President of
Western Technology for the Global Distance Learning Association.

LINDA BREWER has served as Chairman of the Board, Chief Financial Officer,
Secretary and Treasurer of LearnSat.Com since our inception in 1991. She was
Chief Executive Officer and Chief Operating Officer until January 1, 1999 when
Charles Brewer assumed these positions. From January 1991 to June 1994, Ms.
Brewer was also a material manager and later headed quality control for TRM
Transportation, Inc., a bonded warehouse owned by the Whirlpool Corporation and
located in Orlando, Florida.

FRANCOIS S. WARCHALA has served as Vice President of Operations of
LearnSat.Com since March 1, 1999. Prior to joining LearnSat.Com, from April 1998
to February 1999, Mr. Warchala was the owner and manager of Access
Communications, a marketer and servicer of commercial satellite systems. From
September 1996 to March 1998, he was employed as a senior installer of satellite
systems by ACC Satellite -- TV, a marketer of commercial satellite systems. From
June 1976 to September 1996, he was the owner and manager of Warchala Video
Systems, a marketer and servicer of commercial satellite systems and a video
productions company.

RANDALL D. DONAHOO became Vice President of Engineering of LearnSat.Com on
August 12, 1999. Since April 1987, Mr. Donahoo has been employed by Oklahoma
State University as a research engineer and instructor in electrical
engineering. In January 1998, he acquired Cowboy Communications, LLC, an
Internet service provider providing Internet access service in Stillwater,
Oklahoma. Since September 1987, he has been an executive officer of
Comprehensive Technology Group, Inc., a company that sells and installs computer
systems.

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<PAGE> 40

CHARLES R. HOOVER has served as a Director of LearnSat.Com since April
1999. Mr. Hoover has been a partner with the law firm of Piccoli, Lester &
Hoover, LLP since August 1997. Prior to joining that firm he was a sole
practitioner for several years. He is also the President, Chief Operating
Officer and a director of Adrien Arpel, Inc., positions he has held since August
1998. Adrien Arpel is a developer, marketer and retail distributor of cosmetic
products. Mr. Hoover is also a director of several private corporations.

KENNETH G. HARPLE has served as a Director of LearnSat.Com since July 1999.
Since October 1995, Mr. Harple has served as the Chairman of the Board of Micro
Networks Corporation, a manufacturer of frequency and data acquisition products
located in Worcester, Massachusetts. Mr. Harple received a Bachelor of Science
in Electrical Engineering from Penn State University.

BOARD COMPOSITION

At each annual meeting of our shareholders, all of our directors will be
elected to serve from the time of election and qualification until the next
annual meeting following election. In addition, our bylaws provide that the
maximum authorized number of directors, which is currently seven, may be changed
by resolution of the shareholders or by resolution of the board of directors.

We have granted to the underwriter the right, for a period of five years
from the closing of this offering, to nominate a designee of the underwriter for
election to our board of directors. The underwriter has exercised its right by
designating Mr. Hoover. If in the future the underwriter elects not to exercise
this right, then the underwriter may designate one person to attend meetings of
our board of directors.

Each officer is elected by, and serves at the discretion of, our board of
directors. Each of our officers and directors, other than non-employee
directors, devotes his full time to our affairs. Our non-employee directors
devote such time to our affairs as is necessary to discharge their duties. There
are no family relationships among any of our directors, officers or key
employees except for Mr. and Mrs. Brewer who are husband and wife.

BOARD COMMITTEES

Messrs. Hoover, Brewer and Harple are members of the audit committee and
Linda Brewer and Messrs. Hoover and Harple are members of the compensation
committee. The audit committee makes recommendations to the board of directors
regarding the independent auditors for us, approves the scope of the annual
audit activities of our independent auditors, reviews audit results and has
general responsibility for all of our auditing related matters. The compensation
committee reviews and recommends to the board of directors the compensation
structure for our officers and other management personnel, including salary
rates, participation in incentive compensation and benefit plans, fringe
benefits, non-cash perquisites and other forms of compensation.

DIRECTORS' COMPENSATION

We intend to pay our directors who are not also our employees $250 for each
meeting attended by them in person and reimburse these directors for travel and
other expenses incurred in connection with attending board of directors and
committee meetings. All of our directors are eligible to receive options to
purchase shares of common stock pursuant to our stock option plan. We anticipate
that our board of directors will hold regularly scheduled meetings quarterly.

EXECUTIVE COMPENSATION

Until December 31, 1998, LearnSat.Com had elected to be treated as an S
Corporation under the provisions of Subchapter S of the Internal Revenue Code.
No salary was paid to the Chief Executive Officer or our President who were also
our only shareholders. In lieu of salary, they received distributions as
shareholders. The following table sets forth the total compensation which would
have been paid to the named Chief Executive Officer and the named President for
the fiscal years ended December 31, 1998, 1997 and 1996

38
<PAGE> 41

if we had not elected to be treated as an S Corporation. During 1998, we did not
have any executive officers who earned $100,000 or more in salaries and bonuses.

SUMMARY COMPENSATION TABLE

<TABLE>
<CAPTION>
NAME AND PRINCIPAL POSITION YEAR SALARY
- --------------------------- ---- ------
<S> <C> <C>
Linda Brewer
Chief Financial Officer................................... 1998 $25,000
1997 $25,000
1996 $25,000
Charles Brewer
President, Chief Executive Officer and Chief Operating
Officer................................................... 1998 $30,000
1997 $30,000
1996 $30,000
</TABLE>

Linda Brewer was Chief Executive Officer and Chief Operating Officer of
LearnSat.Com in 1996, 1997 and 1998. Charles Brewer assumed these positions on
January 1, 1999. Charles Brewer was President of LearnSat.Com in 1996, 1997 and
1998. The preceding table does not include rent paid by us to Mr. and Mrs.
Brewer for facilities owned by them. See "Business -- Our Locations and
Facilities" and "Certain Transactions." There were no options granted or
exercised by either Linda or Charles Brewer during 1996, 1997 or 1998.

STOCK OPTION AND INCENTIVE PLAN

We have adopted the LEARNSAT.COM, INC. 1999 LONG TERM INCENTIVE PLAN. The
stock option plan authorizes options to purchase 1.5 million shares of common
stock, subject to adjustment to cover stock splits, stock dividends,
recapitalizations and other capital adjustments for our employees, including our
officers, and directors and consultants. The plan provides that options to be
granted will be designated as incentive stock options or non-qualified stock
options by the board of directors or a compensation committee of the board,
which also will have discretion as to the persons to be granted options, the
number of shares subject to the options and the terms of the options. Options
designated as incentive stock options are intended to receive incentive stock
option tax treatment pursuant to Section 422 of the Internal Revenue Code of
1986, as amended. The plan also provides for the granting of stock appreciation
rights, restricted stock and long term performance awards by the board of
directors or a committee.

The stock option portion of the plan provides that:

- options granted shall be exercisable during a period of no more than ten
years and one month from the date of grant, but not more than ten years
from the date of grant for incentive stock options, and not more than
five years for incentive stock options granted to holders of more than
10% of the combined voting power of LearnSat.Com's securities, depending
upon the specific stock option agreement; and

- the option exercise price for incentive stock options shall be at least
equal to 100% of the fair market value of common stock on the date of
grant and at least 110% for options granted to holders of more than 10%
of the combined voting power of LearnSat.Com's Securities, depending upon
the specific stock option agreement.

Options are not transferable otherwise than by will or the laws of descent
and distribution (except for certain non-qualified stock options which, at the
committee's discretion, may be transferable to a member of the optionee's
immediate family or a family trust) and during the optionee's lifetime are
exercisable only by the optionee. Shares subject to options which expire or
terminate may be used for future options. The plan provides that no new options
may be granted by the board of directors after ten years from the establishment
of the plan.

Under the plan, we have granted options to purchase an aggregate of 585,000
shares of common stock to ten persons. The options granted to Linda Brewer are
exercisable at $1.65 per share. The options granted to the other holders are
exercisable at $1.50 per share. None of the options become exercisable before
April 21,

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<PAGE> 42

2000. The following table sets forth the name, number of options granted and the
option termination date for each optionee.

<TABLE>
<CAPTION>
OPTION
NAME NUMBER OF OPTIONS TERMINATION DATE
- ---- ----------------- ----------------
<S> <C> <C>
Linda Brewer................................................ 100,000 April 20, 2003
Charles Brewer.............................................. 100,000 April 20, 2003
Charles R. Hoover........................................... 100,000 April 20, 2003
Kenneth G. Harple........................................... 100,000 April 20, 2003
Rashmi Mayur................................................ 25,000 Sept 27, 2003
Francois S. Warchala........................................ 30,000 April 20, 2004
Kevin Lampert............................................... 10,000 April 20, 2004
Keshore Kondragunta......................................... 30,000 May 9, 2004
Randall Donahoo............................................. 50,000 July 31, 2004
Dana Fisher................................................. 30,000 Sept 27,2004
Michelle Beesley............................................ 10,000 Sept 27,2004
</TABLE>

One third of the options owned by Ms. Brewer and Messrs. Brewer, Hoover,
Harple and Mayur are exercisable each year. One quarter of the options owned by
Messrs. Warchala, Lampert, Kondragunta, Donahoo, Fisher and Beesley are
exercisable each year.

EMPLOYMENT AGREEMENTS

We have entered into an employment contract with Charles Brewer, which
initially terminates on December 31, 2004. The terms of the agreement are as
follows:

- an annual salary commencing in 1999 of $30,000 which increases in 2000 to
$60,000 and by $10,000 each year thereafter;

- an annual bonus in 1999, and commencing in the year 2000, an annual bonus
based on goals to be determined by the board of directors;

- health insurance;

- life insurance in the amount of $150,000; and

- reimbursement for business expenses paid by Mr. Brewer.

We have entered into an employment contract with Linda Brewer which
initially terminates on December 31, 2004. The terms of the agreement are as
follows:

- an annual salary commencing in 1999 of $25,000 which increases to $40,000
in 2000 and by $10,000 each year thereafter;

- incentive stock options to purchase 100,000 shares of common stock in
1999, which vest over three years, and option grants consistent with
awards made to other senior executive in the future;

- an annual bonus in 1999, and commencing in the year 2000, an annual bonus
based on goals to be determined by the board of directors;

- health insurance;

- life insurance in the amount of $100,000; and

- reimbursement for business expenses paid by Ms. Brewer.

We have the right to terminate either employment agreement for cause in
which event the employee is entitled to receive salary through the date of
termination, any unpaid but earned bonuses, and all benefits then due under
stock option and other employee benefit plans. The agreements continue in effect
on a year-to-year

40
<PAGE> 43

basis beyond the initial termination dates unless one party gives written notice
to the other to terminate at least 90 days prior to the end of the term then in
effect.

Copies of our employment agreements with Mr. and Mrs. Brewer have been
filed as exhibits to our registration statement.

FLORIDA LAW AND ARTICLES OF INCORPORATION AND BY-LAW PROVISIONS

LearnSat.Com is subject to Chapter 607.0901 of the Florida Business
Corporation Act regulating corporate takeovers. This chapter prevents
LearnSat.Com from engaging, under some circumstances, in a business combination,
which includes a merger or sale of more than 5% of our assets, with any
interested shareholder, which is defined as a shareholder who owns 10% or more
of our outstanding voting stock, as well as affiliates and associates of the
interested shareholder, unless:

- the combination is approved by a majority of the board of directors not
affiliated with the interested shareholder;

- the combination is approved by holders of two-thirds of the common stock
not affiliated with the interested shareholder;

- the interested shareholder has been the beneficial owner of at least 80
percent of LearnSat.Com's outstanding voting shares for at least five
years preceding the date business combination is publicly announced;

- the interested shareholder is the beneficial owner of at least 90 percent
of the outstanding voting shares of LearnSat.Com, exclusive of shares
acquired directly from LearnSat.Com in a transaction not approved by a
majority of directors not affiliated with the interested shareholder; or

- the remaining shareholders receive the higher of either the fair market
value of the common stock or the highest per share price paid for shares
of common stock by the interested shareholder during the preceding two
years.

Some of the provisions of our Articles of Incorporation and By-laws could
discourage, delay or prevent an acquisition of LearnSat.Com at a premium price.
Our Articles of Incorporation and By-laws provide that any vacancy on the board
of directors may be filled by a majority of the directors then in office, even
if less than a quorum, or by a plurality of the votes cast at a meeting of
shareholders. Our By-laws provide that special meetings of shareholders may be
called only by our president, the board of directors or by the holders of not
less than one tenth of all of the shares outstanding and entitled to vote.

In addition, our Articles of Incorporation also authorizes the board of
directors to issue preferred stock with voting or other rights or preferences
that could impede the success of any attempt to change control of LearnSat.Com.

41
<PAGE> 44

CERTAIN TRANSACTIONS

We rent warehouse and systems integration facilities in Stillwater,
Oklahoma and Eustis, Florida from Mr. and Mrs. Brewer. The Stillwater facility,
which is approximately 4,000 square feet, is leased at the rate of $1,000 per
month. The Florida facility, which is approximately 1,200 square feet, is leased
at the rate of $750 per month. We believe that the terms of our leases with Mr.
and Mrs. Brewer are comparable to those which we would have obtained for
comparable facilities with parties unaffiliated with us.

On September 22, 1999, we purchased the assets and operations of Cowboy
Communications, LLC, an Internet service provider, for $25,000 and 22,600 shares
of our common stock, from Randall Donahoo, one of our officers. Under the
agreement, we also assumed a contract for telephone communications services with
Southwestern Bell, an Internet connectivity contract with Cable & Wireless, a
lease for hub and router equipment with First Sierra Financial, Inc. and an
equipment lease with a payoff balance of approximately $21,000.

42
<PAGE> 45

PRINCIPAL SHAREHOLDERS

The following table sets forth information with respect to the beneficial
ownership of shares of LearnSat.Com common stock as of September 20,1999 and as
adjusted to reflect this offering, assuming no exercise of the underwriter's
over-allotment option, by:

- each person known by us to be the beneficial owner of more than 5% of our
shares of common stock;

- each of our directors;

- each officer listed in the Summary Compensation Table; and

- all officers and directors as a group.

We have determined beneficial ownership in accordance with the rules of the
SEC which include voting or investment power with respect to shares. Unless
otherwise indicated, the persons named in the table have sole voting and
investment power with respect to the number of shares beneficially owned by
them. The number of shares of outstanding common stock used in calculating
percentage ownership for each listed person includes the shares of common stock
underlying options or warrants held by the person and exercisable within 60 days
after September 20, 1999, but excludes shares of common stock underlying options
or warrants held by any other person.

The table includes 75,000 shares for Mr. and Mrs. Brewer, 75,000 shares for
Mr. Hoover, 600,000 shares for Mr. McConnaughy, and 300,000, for Mr. Blank, all
of which are issuable upon the exercise of the warrants as part of the units
purchased by these persons in the private financing. See "Private Financing."
The asterisk represents less than 1% of the outstanding shares. All addresses
for the officers and directors are c/o LearnSat.Com, Inc., 3819 South Perkins
Road, Stillwater, Oklahoma 74074. Mr. and Mrs. Brewer may each be deemed to be a
beneficial owner of the common stock set forth after their names because of
their marital relationship.

<TABLE>
<CAPTION>
SHARES PERCENTAGE OF SHARES PERCENTAGE OF SHARES
BENEFICIALLY BENEFICIALLY OWNED BENEFICIALLY OWNED
NAME AND ADDRESS OWNED PRIOR TO OFFERING AFTER OFFERING
- ---------------- ------------ -------------------- --------------------
<S> <C> <C> <C>
Charles Brewer.............................. 1,255,971 12.86 10.10
Linda Brewer................................ 7,434,706 76.13 59.79
Francois S. Warchala........................ 0 0 0
Randall Donahoo............................. 0 0 0
Charles R. Hoover........................... 125,000 1.28 1.01
Kenneth G. Harple........................... 0 0 0
John E. McConnaughy, Jr. ................... 1,000,000 9.72 7.72
637 Valley Road
New Canaan, Connecticut
06840
Barry W. Blank, Trustee(1).................. 718,750 7.04 5.58
Barry Blank Trust
5353 North 16th Street
Suite 190
Phoenix, Arizona 85016
All six officers and directors as a group... 10,409,427 94.98 76.39
</TABLE>

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

(1) Includes 218,750 shares issuable on exercise of warrants underlying a
warrant transferred by Dirks to Mr. Blank in connection with the private
financing. See "Private Financing."

43
<PAGE> 46

DESCRIPTION OF SECURITIES

The following statements are brief summaries of provisions of our Articles
of Incorporation, By-Laws and other documents. These summaries are qualified in
their entirety by reference to documents filed as exhibits to the registration
statement. Our capital stock is also governed by applicable provisions of
Florida law.

Our authorized stock consists of 50,000,000 shares of common stock, par
value $0.001 per share, and 20,000,000 shares of preferred stock, par value
$0.001 per share. Upon completion of the offering, there will be 12,381,277,
excluding the exercise of the underwriter's over-allotment option, shares of
common stock issued and outstanding, no shares of preferred stock outstanding,
1,250,000 class A redeemable warrants, 625,000 class B redeemable warrants,
2,668,000 class C redeemable warrants and 1,334,000 class D redeemable warrants
issued and outstanding.

COMMON STOCK

Each holder of common stock is entitled to one vote for each share on all
matters to be voted upon by the shareholders. There are no cumulative voting
rights. Holders of common stock are entitled to receive ratably dividends, if
any, as may be declared from time to time by the board of directors out of
legally available funds, except that holders of preferred stock issued after the
sale of the common stock in this offering may be entitled to receive dividends
before the holders of the common stock.

In the event of a liquidation, dissolution or winding up of LearnSat.Com,
holders of common stock would be entitled to share in our assets remaining after
the payment of liabilities and the satisfaction of any liquidation preference
granted the holders of any then outstanding shares of preferred stock. Holders
of common stock have no preemptive or conversion rights or other subscription
rights. In addition, there are no redemption or sinking fund provisions
applicable to the common stock. All outstanding shares of common stock are, and
the shares of common stock offered by us in this offering, when issued and paid
for, will be fully paid and nonassessable.

The rights, preferences and privileges of the holders of common stock may
be diminished by the rights of the holders of shares of any series of preferred
stock that we designate in the future.

PREFERRED STOCK

The board of directors is authorized, without further action by the
shareholders, to issue up to 20 million shares of preferred stock in series from
time to time with designations, rights, preferences and limitations, including
but not limited to:

- dividend rights;

- conversion features;

- voting rights, which may be greater or lesser than the voting rights of
the common stock;

- rights and terms of redemption;

- liquidation preferences; and

- sinking fund terms.

Accordingly, we may issue preferred stock having voting, dividend and
liquidation preferences over the common stock without the consent of the common
shareholders. In addition, the ability of our board to issue preferred stock
also could be used as a means of resisting a change of control of LearnSat.Com
and, therefore, could be considered an anti-takeover device. We have no current
plans to issue any preferred stock.

WARRANTS

The warrants will be issued in registered form under, governed by, and
subject to the terms of a warrant agreement between LearnSat.Com and American
Stock Transfer & Trust Company as warrant agent.

44
<PAGE> 47

We have authorized the issuance of 3,068,200 Class C redeemable warrants
and 1,534,100 Class D redeemable warrants to purchase an aggregate of 4,602,300
shares of common stock, which includes 600,300 shares issuable upon exercise of
the warrants comprising part of the units issuable pursuant to the underwriter's
over-allotment option and the warrants included in the underwriter's warrants.
We have also reserved an equivalent number shares of common stock for issuance
upon exercise of these warrants.

Each warrant entitles the registered holder to purchase one share of common
stock. The exercise period commences on the date the shares of common stock and
the warrants become separately tradeable and terminates 42 months after the date
of this prospectus for the Class C warrants and 66 months after the date of this
prospectus for the Class D warrants. The Class C redeemable warrant exercise
price is price of $3.00 per share and the Class D redeemable warrant exercise
price is price of $6.50 per share. The warrant exercise prices and the number of
shares issuable upon exercise of the warrants are subject to adjustment as
described below.

Commencing on the date that the shares of common stock and the warrants
become separately tradable, we may redeem your warrants on 30 days notice at
$0.01 per warrant when the closing bid price of the common stock equals or
exceeds 150% of the then warrant exercise price for 30 consecutive trading days
ending three days prior to the mailing of the notice of redemption. You will
have the right to exercise your warrants until the close of business on the date
fixed for redemption. If we redeem any of the warrants, then we must redeem all
of the warrants remaining unexercised at the end of the redemption period.

The warrants contain provisions that protect against dilution by adjustment
of the exercise price and the number of shares issuable upon exercise in some
events. These events include, but are not limited to:

- stock dividends;

- stock splits;

- reclassifications;

- mergers; or

- a sale of substantially all of our assets.

We do not intend to issue fractional shares of common stock, but will round
any fractional share to the nearest whole share. Holders of warrants will not
possess any rights as a shareholder. The shares of common stock, when issued
upon the exercise of the warrants in accordance with their terms, will be
validly issued, fully paid and non-assessable.

The warrants will be exchangeable and transferable on our books at the
principal office of the warrant agent. Holders may exercise their warrants by
surrendering warrant certificates on or prior to the close of business on
, 2003 for the C warrants and , 2005 for the D
warrants, unless earlier redeemed as noted above, at the offices of the warrant
agent. A holder must complete and execute the form of "Election to Purchase" on
the reverse side of the warrant certificate and make payment of the full
exercise price for the number of warrants being exercised. The exercise price
must be paid by cash, or by bank check, certified check or money order payable
to the order of the warrant agent. After warrants are exercised they will become
completely void and of no value. If a market develops for the warrants, the
holder may sell the warrants instead of exercising them. There can be no
assurance, however, that a market for the warrants will develop or, if
developed, will be sustained. No amendment adversely affecting warrant holders'
rights may be made without the approval of the holders of a majority of the then
outstanding warrants.

CORPORATE LAW ANTI TAKEOVER PROVISIONS

The Florida Business Corporation Act may subject us to "fair price"
provisions which, subject to some exceptions, require that, in any merger of
LearnSat.Com with a corporation affiliated with a 10% or greater shareholder,
which is defined in the Act as an "Interested Shareholder," shareholders receive
the higher of:

- the highest price paid by the Interested Shareholder for shares of common
stock during the preceding two years; or
45
<PAGE> 48

- the fair market value of the common stock;

unless the merger is approved by:

- a majority of the directors not affiliated with the Interested
Shareholder; or

- holders of two-thirds of the common stock not affiliated with the
Interested Shareholder.

As a result, the "fair price" provisions of the Florida Business Corporation Act
could:

- delay or frustrate the removal of incumbent directors or a change in
control of LearnSat.Com; or

- discourage, impede, or prevent a merger, tender offer or proxy contest,
even if this event would be favorable to the interests of our
shareholders.

Some of the provisions of our Articles of Incorporation and By-laws could
discourage, delay or prevent an acquisition of LearnSat.Com at a premium price.
Our Articles of Incorporation and By-laws provide that any vacancy on the board
of directors may be filled by a majority of the directors then in office, even
if less than a quorum, or by a plurality of the votes cast at a meeting of
shareholders. Our By-laws provide that special meetings of the shareholders may
be called only by our president, the board of directors or by the holders of not
less than one tenth of all of the shares outstanding and entitled to vote.

TRANSFER AGENT, REGISTRAR AND WARRANT AGENT

The transfer agent and registrar for the common stock, units and warrants
and the warrant agent for the warrants will be American Stock Transfer & Trust
Company.

SHARES ELIGIBLE FOR FUTURE SALE

Prior to this offering, there has been no public market for LearnSat.Com's
common stock. Future sales of substantial amounts of common stock in the public
market or the availability of shares for sale, could hurt the prevailing market
price and restrict the ability of LearnSat.Com to raise equity capital in the
future.

At the date of the prospectus, we have 9,713,277 unregistered shares of
common stock outstanding, assuming no exercise of outstanding options and
warrants or the underwriter's over-allotment option. Upon completion of this
offering, LearnSat.Com will have 12,381,277 shares of common stock outstanding,
assuming no exercise of outstanding options and warrants or the underwriter's
over-allotment option. The 8,440,667 unregistered shares are owned by Mr. and
Mrs. Brewer and are "restricted securities" as that term is defined by Rule 144
of the Securities Act. These restricted securities may only be sold commencing
90 days after the date of this prospectus in compliance with the provision of
Rule 144 unless otherwise registered by us. Ordinarily, under Rule 144 as
currently in effect, a person holding restricted securities for a period of one
year may, every three months thereafter, sell in ordinary brokerage transactions
or in transactions directly with a market maker, an amount of shares equal to
the greater of one percent of the then outstanding common stock or the average
weekly trading volume in the same securities during the four calendar weeks
prior to this sale. For non-affiliated persons who own our securities for at
least two years, the aforementioned volume restrictions are not applicable to
sales by that person. Mr. and Mrs. Brewer have agreed with Dirks not to,
directly or indirectly, offer, sell transfer, pledge, assign, hypothecate or
otherwise transfer their restricted securities until 13 months after the date of
this prospectus unless earlier permitted by Dirks.

46
<PAGE> 49

UNDERWRITING

Subject to the terms and conditions of the underwriting agreement, the form
of which is filed as an exhibit to the registration statement of which this
prospectus is a part, Dirks & Company, Inc., the underwriter, has agreed to
purchase from us, and we have agreed to sell to Dirks, the aggregate number of
units set forth below.

<TABLE>
<CAPTION>
NUMBER OF
UNDERWRITER UNITS
- ----------- ---------
<S> <C>
Dirks & Company, Inc........................................ 1,334,000
---------
Total............................................. 1,334,000
=========
</TABLE>

The underwriting agreement provides that the obligations of the underwriter
are subject to conditions precedent, including the absence of any material
adverse change in our business and the receipt of certain certificates, opinions
and letters from our counsel and our independent public accountants. The
underwriter is committed to take and to pay for all of the units offered, if any
are purchased.

The underwriter has advised us that it proposes to offer all or part of the
units offered directly to the public initially at the price set forth on the
cover page of this prospectus. The underwriter has also advised us that it may
offer units to certain dealers at a price that represents a concession of not
more than $. per unit, and that it may allow, and these dealers may reallow,
a concession of not more than $. per unit to certain other dealers. After
the commencement of this offering, the price to the public and the concessions
may be changed.

We have granted to the underwriter an option, exercisable within 45 days
after the date of this prospectus, to purchase up to an additional 200,100 units
at the same price per unit as the initial 1,334,000 units to be purchased by the
underwriter. The underwriter may exercise this option only to cover
over-allotments, if any.

We have agreed to indemnify the underwriter and its controlling persons
against some liabilities, including liabilities under the Securities Act. We
have agreed to pay the underwriter a non-accountable expense allowance equal to
3% of the gross proceeds of this offering, of which $50,000 has already been
paid as of the date of this prospectus. We have also agreed to pay all expenses
in connection with qualifying the securities under the laws of those states the
underwriter may designate, including fees and expenses of counsel retained for
such purposes by the underwriter and the costs and disbursements in connection
with qualifying the offering with the National Association of Securities
Dealers, Inc.

We have also granted the underwriter the right, for a period of three years
from the closing of this offering, to nominate a designee of the underwriter for
election to our board of directors. Dirks has designated Charles R. Hoover to
serve as a director. We have agreed to reimburse the underwriter's designee for
all out-of-pocket expenses incurred in connection with the designee's attendance
at meetings of the board of directors.

We issued to Dirks, as part of its consideration for acting as the
placement agent for the private financing, a warrant, terminating on March 5,
2004, to purchase 125,000 shares of common stock at $0.60 per share, class A
non-redeemable warrants and class B non-redeemable warrants. In connection with
this offering, we have also agreed to issue to Dirks, for nominal consideration,
underwriter's warrants to purchase 266,800 shares of common stock at $1.62 per
share, class C non-redeemable warrants and class D non-redeemable warrants. The
Class C non-redeemable warrants and the Class D non-redeemable warrants have
substantially the same terms and conditions as the Class C redeemable warrants
and Class D redeemable warrants, except they are not redeemable by us. The
underwriter's warrants are exercisable for a period of four years commencing one
year after the effective date of the registration statement of which this
prospectus is a part. The following table sets forth the material terms of the
Class A through Class D non-redeemable warrants.

47
<PAGE> 50

<TABLE>
<CAPTION>
EXERCISE
WARRANT CLASS NO. OF WARRANTS PRICE TERMINATION DATE
- ------------- --------------- -------- -----------------
<S> <C> <C> <C>
A non-redeemable warrant........................ 125,000 $3.00 December 31, 2002
B non-redeemable warrant........................ 62,500 $4.80 December 31, 2004
C non-redeemable warrant........................ 266,800 $3.60 , 2002
D non-redeemable warrant........................ 133,400 $7.80 , 2004
</TABLE>

The placement agent warrants and underwriter's warrants contain the
anti-dilution provisions providing for automatic adjustments of the exercise
price and number of shares issuable on exercise of the warrants upon the
occurrence of some events, including stock dividends, stock splits, mergers,
acquisitions and recapitalization. The shares underlying the securities acquired
by Dirks as placement agent have been registered for public sale and are
included in this prospectus. The holders of the underwriter's warrants and
underlying common stock and warrants have certain rights of registration
relating to these securities. The underwriter's warrants are restricted from
sale, transfer, assignment or hypothecation for the one year period from the
date of this prospectus, except to officers or partners of the underwriter and
members of the selling group and/or their officers and partners.

The underwriter has informed us that it does not expect sales of the units
offered by this prospectus to discretionary accounts controlled by it to exceed
five percent of the units offered.

In connection with this offering, the underwriter and its affiliates may
engage in transactions that stabilize, maintain or otherwise affect the market
prices of the units, common stock and warrants. These transactions may include
stabilization transactions effected in accordance with Rule 104 of Regulation M,
under which persons may bid for or purchase the common stock and/or warrants for
the purpose of stabilizing their respective prices.

The underwriter also may create a short position by selling more units in
connection with the offering than it is committed to purchase from us, and in
this case may purchase common stock and warrants in the open market following
completion of the offering to cover all or a portion of a short position. The
underwriter may also cover all or a portion of a short position by exercising
the over-allotment option referred to above. In addition, the underwriter may
impose "penalty bids" under contractual arrangements and reclaim from a dealer
participating in the offering, for its account, the selling concession with
respect to the common stock and warrants that are distributed in the offering
but subsequently purchased for its account in the open market. Any of the
transactions described in this paragraph and the preceding paragraph may result
in the maintenance of the prices of the common stock and warrants at a level
above that which might otherwise prevail in the open market. None of the
transactions described in either paragraph is required, and, if they are
undertaken, they may be discontinued at any time.

Prior to this offering, there has been no established market in the United
States or elsewhere for our securities. The public offering price of the units
and terms of the redeemable common stock purchase warrants will be determined by
us in consultation with the underwriter. It is expected that the price
determination will take several factors into account, including our results of
operations, our future prospects and the prevailing market and economic
conditions at the time of this offering. There can be no assurance that an
active market will develop for any of the securities offered by this prospectus,
or that any such securities will trade in the public market subsequent to this
offering at or above the initial public offering price, or at all.

48
<PAGE> 51

LEGAL MATTERS

The validity of the securities being offered hereby will be passed upon for
LearnSat.Com by Barry Feiner, Esq., 170 Falcon Court, Manhasset, New York 11030.
Certain legal matters will be passed upon for Dirks by Orrick, Herrington &
Sutcliffe LLP, 666 Fifth Avenue, 18th Floor, New York, New York 10103. Janet
Portelly, Mr. Feiner's wife, purchased 50,000 shares, 50,000 A warrants and
25,000 B warrants in the private financing. See "Private Financing."

EXPERTS

Our financial statements as of December 31, 1998 and for each of the two
years in the period ended December 31, 1998 included in this prospectus, have
been so included in reliance on the report of Goldstein Golub Kessler LLP,
independent auditors, given upon the authority of said firm as experts in
auditing and accounting.

ADDITIONAL INFORMATION

We have filed with the SEC a registration statement on Form SB-2 under the
Securities Act with respect to the securities offered hereby. This prospectus,
which forms part of the registration statement, does not contain all of the
information set forth in the registration statement, as permitted by the rules
and regulations of the SEC. For further information with respect to LearnSat.Com
and the securities offered hereby, reference is made to the registration
statement. Statements contained in this prospectus as to the contents of any
contract or other document that has been filed as an exhibit to the registration
statement are qualified in their entirety by reference to the exhibits for a
complete statement of their terms and conditions. The registration statement and
other information may be read and copied at the SEC's Public Reference Room at
450 Fifth Street N.W., Washington, D.C. 20549. You may obtain information on the
operation of the Public Reference Room by calling the SEC at 1-800-SEC-0330. The
SEC maintains a web site at http://www.sec.gov that contains reports, proxy and
information statements, and other information regarding issuers that file
electronically with the SEC.

Upon effectiveness of the registration statement, we will be subject to the
reporting and other requirements of the Exchange Act and we intend to furnish
our shareholders with annual reports containing financial statements audited by
our independent auditors and to make available quarterly reports including
unaudited financial statements for each of the first three quarters of each
year.

49
<PAGE> 52

LEARNSAT.COM, INC.

INDEX TO FINANCIAL STATEMENTS

<TABLE>
<CAPTION>
PAGE
----
<S> <C>
INDEPENDENT AUDITOR'S REPORT................................ F-2
FINANCIAL STATEMENTS:
Balance Sheets as of December 31, 1998 (audited) and June
30, 1999 (unaudited)...................................... F-3
Statements of Operations for the Years Ended December 31,
1997 and 1998 (audited) and for the Six-month Periods
Ended June 30, 1998 and June 30, 1999 (unaudited)......... F-4
Statements of Shareholders' Equity (deficiency) for the
Years Ended December 31, 1997 and 1998 (audited) and for
the Six-month Period Ended June 30, 1999 (unaudited)...... F-5
Statements of Cash Flows for the Years Ended December 31,
1997 and 1998 (audited) and for the Six-month Periods
Ended June 30, 1998 and June 30, 1999 (unaudited)......... F-6
Notes to Financial Statements............................... F-7 - F-13
</TABLE>

F-1
<PAGE> 53

INDEPENDENT AUDITOR'S REPORT

To the Board of Directors
LearnSat.Com, Inc.

We have audited the accompanying balance sheet of LearnSat.Com, Inc. as of
December 31, 1998, and the related statements of operations, shareholders'
equity (deficiency), and cash flows for each of the two years in the period
ended December 31, 1998. 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 LearnSat.Com, Inc. as of
December 31, 1998 and the results of its operations and its cash flows for each
of the two years in the period ended December 31, 1998 in conformity with
generally accepted accounting principles.

GOLDSTEIN GOLUB KESSLER LLP

New York, New York

April 16, 1999, except for the last paragraph of Note 1

as to which the date is October 29, 1999

F-2
<PAGE> 54

LEARNSAT.COM, INC.

BALANCE SHEET

<TABLE>
<CAPTION>
DECEMBER 31, JUNE 30,
1998 1999
------------ -----------
(UNAUDITED)
<S> <C> <C>
ASSETS
Current assets:
Cash...................................................... $ 47,300 $ 152,415
Accounts receivable, less allowance for doubtful accounts
of $23,525 and $40,757, respectively................... 639,398 414,910
Costs and estimated earnings in excess of billings on
uncompleted contracts.................................. 180,021 90,993
Inventory................................................. 412,350 445,981
Prepaid expenses and other current assets................. 6,619 45,382
---------- ----------
TOTAL CURRENT ASSETS.............................. 1,285,688 1,149,681
Property, Plant and Equipment -- at cost, less accumulated
depreciation of $241,225 and $258,822, respectively....... 217,168 259,352
Deferred Offering Costs..................................... -- 80,500
Other....................................................... 29,742 40,678
---------- ----------
TOTAL ASSETS...................................... $1,532,598 $1,530,211
========== ==========

LIABILITIES AND SHAREHOLDERS' EQUITY (DEFICIENCY)
Current Liabilities:
Accounts payable and accrued expenses..................... $ 800,479 $ 421,029
Income taxes payable...................................... -- 2,900
Short-term borrowings and current portion of long-term
debt................................................... 186,604 414,398
Unearned revenue.......................................... 34,949 33,386
---------- ----------
TOTAL CURRENT LIABILITIES......................... 1,022,032 871,713
Long-term Debt.............................................. 521,882 155,418
---------- ----------
TOTAL LIABILITIES................................. 1,543,914 1,027,131
---------- ----------
Shareholders' Equity (Deficiency):
Preferred stock -- $.001 par value; authorized 20,000,000
shares, none issued.................................... -- --
Common stock -- $.001 par value; authorized 50,000,000
shares, issued and outstanding 8,440,677 and 9,690,677
shares, respectively................................... 8,441 9,691
Additional paid-in capital................................ 62,569 507,743
Retained earnings (accumulated deficit)................... (82,326) 11,267
Less stock subscription receivable........................ -- (25,621)
---------- ----------
SHAREHOLDERS' EQUITY (DEFICIENCY)................. (11,316) 503,080
---------- ----------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY
(DEFICIENCY).................................... $1,532,598 $1,530,211
========== ==========
</TABLE>

See Notes to Financial Statements
F-3
<PAGE> 55

LEARNSAT.COM, INC.

STATEMENT OF OPERATIONS

<TABLE>
<CAPTION>
SIX-MONTH PERIOD
YEAR ENDED DECEMBER 31, ENDED JUNE 30,
------------------------ ------------------------
1997 1998 1998 1999
---------- ---------- ---------- ----------
(UNAUDITED)
<S> <C> <C> <C> <C>
Net sales................................. $2,576,230 $2,144,169 $1,072,451 $ 896,820
Cost of sales............................. 2,076,336 1,914,482 922,870 830,767
---------- ---------- ---------- ----------
Gross profit.............................. 499,894 229,687 149,581 66,053
Selling, general and administrative
expenses................................ (282,721) (409,970) (237,806) (252,218)
Net gain on settlement of litigation...... -- -- -- 215,691
---------- ---------- ---------- ----------
Operating income (loss)................... 217,173 (180,283) (88,225) 29,526
Interest income........................... -- -- -- 4,311
Interest expense.......................... (42,000) (58,611) (26,954) (30,130)
Other income.............................. -- -- -- 10,460
---------- ---------- ---------- ----------
Income (loss) before provision for income
taxes................................... 175,173 (238,894) (115,179) 14,167
Provision for income taxes................ -- -- -- 2,900
---------- ---------- ---------- ----------
Net income (loss)......................... $ 175,173 $ (238,894) $ (115,179) $ 11,267
========== ========== ========== ==========
Basic and diluted net income (loss) per
common share............................ $ .02 $ (.03) $ (.01) $ .00
========== ========== ========== ==========
Pro forma financial information
(unaudited):
Income (loss) before pro forma
adjustment for employment agreements
and pro forma provision (credit) for
income taxes......................... $ 175,173 $ (238,894) $ (115,179)
Pro forma adjustment for employment
agreements........................... (55,000) (55,000) (27,500)
---------- ---------- ----------
Pro forma income (loss) before provision
(credit) for income taxes............ 120,173 (293,894) (142,679)
---------- ---------- ----------
Pro forma provision (credit) for income
taxes:
Federal.............................. 27,300 (27,300) (13,650)
State................................ 7,200 (7,200) (3,600)
---------- ---------- ----------
34,500 (34,500) (17,250)
---------- ---------- ----------
Pro forma net income (loss)............. $ 85,673 $ (259,394) $ (125,429)
========== ========== ==========
Basic and diluted pro forma net income
(loss) per common share................. $ .01 $ (.03) $ (.01)
========== ========== ==========
Weighted-average number of common shares
outstanding -- basic.................... 8,440,677 8,440,677 8,440,677 9,248,688
========== ========== ========== ==========
Weighted-average number of common shares
outstanding -- diluted.................. 8,474,011 8,440,677 8,440,677 9,260,474
========== ========== ========== ==========
</TABLE>

See Notes to Financial Statements
F-4
<PAGE> 56

LEARNSAT.COM, INC.

STATEMENT OF SHAREHOLDERS' EQUITY (DEFICIENCY)

<TABLE>
<CAPTION>
RETAINED
COMMON STOCK ADDITIONAL EARNINGS STOCK SHAREHOLDERS'
-------------------- PAID-IN (ACCUMULATED SUBSCRIPTIONS EQUITY
SHARES AMOUNT CAPITAL DEFICIT) RECEIVABLE (DEFICIENCY)
---------- ------- ---------- ------------ ------------- -------------
<S> <C> <C> <C> <C> <C> <C>
Balance at January 1,
1997.................... 8,440,677 $ 8,441 $ 41,569 $ 161,587 -- $ 211,597
Net income................ -- -- -- 175,173 -- 175,173
Shareholder
contribution --
forgiveness of rent..... -- -- 21,000 -- -- 21,000
Shareholder
distributions........... -- -- -- (82,324) -- (82,324)
---------- ------- -------- --------- -------- ---------
Balance at December 31,
1997.................... 8,440,677 8,441 62,569 254,436 -- 325,446
Net loss.................. -- -- -- (238,894) -- (238,894)
Shareholder
distributions........... -- -- -- (97,868) -- (97,868)
---------- ------- -------- --------- -------- ---------
Balance at December 31,
1998.................... 8,440,677 8,441 62,569 (82,326) -- (11,316)
(Unaudited):
Reclassification of
accumulated deficit
related to termination
of S Corporation
status.................. -- -- (82,326) 82,326 -- --
Net income.............. -- -- -- 11,267 -- 11,267
Issuance of common stock
in connection with
private placement.... 1,250,000 1,250 527,500 -- $(25,621) 503,129
---------- ------- -------- --------- -------- ---------
Balance at June 30, 1999
(unaudited)............. 9,690,677 $ 9,691 $507,743 $ 11,267 $(25,621) $ 503,080
========== ======= ======== ========= ======== =========
</TABLE>

See Notes to Financial Statements
F-5
<PAGE> 57

LEARNSAT.COM, INC.

STATEMENT OF CASH FLOWS

<TABLE>
<CAPTION>
SIX-MONTH PERIOD ENDED
YEAR ENDED DECEMBER 31, JUNE 30,
------------------------- -----------------------
1997 1998 1998 1999
----------- ----------- --------- -----------
(UNAUDITED)
<S> <C> <C> <C> <C>
Cash flows from operating activities:
Net income (loss)................................... $ 175,173 $ (238,894) $(115,179) $ 11,267
Adjustments to reconcile net income (loss) to net
cash provided by (used in) operating activities:
Net gain on settlement of litigation.............. -- -- -- (215,691)
Provision for bad debts........................... 600 10,000 -- --
Rent expense not paid in cash..................... 21,000 -- -- --
Depreciation and amortization..................... 50,915 60,680 29,447 23,157
Other income...................................... -- -- -- (10,460)
Changes in operating assets and liabilities:
(Increase) decrease in accounts receivable........ (514,215) 389,252 283,117 193,456
(Increase) decrease in costs and estimated
earnings in excess of billings on uncompleted
contracts....................................... (34,444) 99,181 244,834 89,028
(Increase) decrease in inventory.................. 154,293 12,408 (38,053) (33,631)
(Increase) decrease in prepaid expenses and other
current assets.................................. (9,113) 4,742 (100) (38,763)
Increase in other assets.......................... -- (25,105) -- (10,936)
Increase (decrease) in accounts payable and
accrued expenses................................ 146,175 (253,894) (313,309) (149,728)
Increase in income taxes payable.................. -- -- -- 2,900
Increase (decrease) in unearned revenue........... -- 34,949 -- (1,563)
Decrease in billings in excess of costs and
estimated earnings on uncompleted contracts..... -- (39,300) -- --
----------- ----------- --------- -----------
NET CASH PROVIDED BY (USED IN) OPERATING
ACTIVITIES................................. (9,616) 54,019 90,757 (140,964)
----------- ----------- --------- -----------
Cash flows from investing activities:
Purchase of property, plant and equipment........... (173,305) (64,858) (45,320) (74,781)
Cash received on insurance settlement............... -- -- -- 11,280
----------- ----------- --------- -----------
NET CASH USED IN INVESTING ACTIVITIES........ (173,305) (64,858) (45,320) (63,501)
----------- ----------- --------- -----------
Cash flows from financing activities:
Proceeds from short-term borrowings and long-term
debt.............................................. 2,009,746 2,681,036 963,731 1,388,662
Payments of short-term borrowings and long-term
debt.............................................. (1,763,233) (2,526,784) (960,455) (1,527,332)
S Corporation distributions paid.................... (82,324) (97,868) (34,277) --
Proceeds from private placement..................... -- -- -- 600,000
Payment of costs relating to private placement...... -- -- -- (96,250)
Payment of deferred offering costs.................. -- -- -- (55,500)
----------- ----------- --------- -----------
NET CASH PROVIDED BY (USED IN) FINANCING
ACTIVITIES................................. 164,189 56,384 (31,001) 309,580
----------- ----------- --------- -----------
Net increase (decrease) in cash....................... (18,732) 45,545 14,436 105,115
Cash at beginning of period........................... 20,487 1,755 1,755 47,300
----------- ----------- --------- -----------
Cash at end of period................................. $ 1,755 $ 47,300 $ 16,191 $ 152,415
=========== =========== ========= ===========
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid during the period for interest............ $ 41,792 $ 57,340 $ 26,482 $ 31,820
=========== =========== ========= ===========
</TABLE>

See Notes to Financial Statements
F-6
<PAGE> 58

LEARNSAT.COM, INC.

NOTES TO FINANCIAL STATEMENTS
(ALL INFORMATION PERTAINING TO THE SIX-MONTH PERIODS
ENDED JUNE 30, 1998 AND 1999 IS UNAUDITED)

1. PRINCIPAL BUSINESS ACTIVITY AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:

Learnsat Systems, Inc. (the "Company") was incorporated in the State of
Florida in 1991. Effective December 31, 1998, the Company changed its name to
LearnSat.Com, Inc. The Company's main headquarters is located in Oklahoma.

The accompanying unaudited interim financial statements include all
adjustments (consisting only of those of a normal recurring nature) necessary
for a fair statement of the results of the interim periods. The results of
operations for the six-month periods ended June 30, 1998 and 1999 are not
necessarily indicative of the results to be expected for the entire year.

The Company resells telecommunication products to and also installs
satellite-based learning systems at educational and governmental institutions
throughout the United States. Contracts with these institutions are generally
obtained through a competitive bidding process and are generally short-term in
nature. However, some contracts may overlap accounting periods.

On the Company's stand-alone equipment sales, the Company recognizes
revenue when the equipment is shipped to customers. The Company normally accepts
returns on equipment sales only during the related manufacturer's warranty
period and, therefore, the cost of returns is not material to the Company's
operations.

In accordance with Statement of Position 81-1 "Accounting for Performance
of Construction-Type and Certain Production-Type Contracts," the Company
recognizes earnings on the percentage-of-completion method using the ratio of
costs incurred to date to estimated total costs. Certain costs incurred in the
early stages of the contract are ignored in the computation of
percentage-of-completion when these costs do not reflect accurate job
performance. Contracts normally provide for billing upon completion of specific
site installations rather than progress billing. Costs and estimated earnings in
excess of billings on uncompleted contracts represent revenue recognized in
excess of amounts billed.

Contract costs consist of direct material, labor, subcontract cost, and
other direct costs involved in the completion of a contract. General and
administrative costs are charged to period expense as incurred. Provision for
estimated losses on uncompleted contracts is made in the period in which such
losses are determined. Changes in job performance, job conditions, and estimated
profitability, including those arising from contract penalty provisions and
final contract settlements, may result in revisions to cost and income and are
recognized in the period in which the revisions are determined.

These financial statements have been prepared in conformity with generally
accepted accounting principles, which require the use of estimates by
management. Actual results could differ from these estimates.

The Company had elected to be treated as an S Corporation under the
provisions of Subchapter S of the Internal Revenue Code. Effective January 1,
1999, the Company terminated its S Corporation status. Accordingly, there is no
provision for federal or state income taxes for the years ended December 31,
1997 and 1998 and for the six-month period ended June 30, 1998 because such
liability is the responsibility of the individual shareholders.

The Company maintains cash in bank accounts which, at times, may exceed
federally insured limits. The Company has not experienced any loss on these
accounts.

The Company normally maintains an inventory of supplies and materials
commonly used on jobs. Inventory is stated at the lower of cost, determined by
the first-in, first-out, method, or market.

Depreciation of property, plant and equipment is provided for by the
straight-line and accelerated methods over the estimated useful lives of the
related assets. Leasehold improvements are amortized on a
F-7
<PAGE> 59
LEARNSAT.COM, INC.

NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
(ALL INFORMATION PERTAINING TO THE SIX-MONTH PERIODS
ENDED JUNE 30, 1998 AND 1999 IS UNAUDITED)

straight-line basis over the estimated useful lives of the assets, assuming the
continuation of the related party leases described in Note 4.

Basic net income (loss) per common share and basic pro forma net income
(loss) per common share have been computed using the weighted-average number of
common shares outstanding, adjusted for the stock split and stock contribution
described below. Diluted net income per common share and diluted pro forma net
income per common share for the year ended December 31, 1997 and diluted net
income per common share for the six-month period ended June 30, 1999 have been
computed giving retroactive effect to the issuance of 50,000 shares on March 5,
1999 to officers of the Company in conjunction with the private placement
described in Note 9. Using the treasury stock method, the effect of these shares
results in an increase of 33,333 shares and 11,786 shares at December 31, 1997
and June 30, 1999, respectively, of common stock to weighted-average shares
outstanding. Diluted pro forma net loss per common share has not been computed
for other periods as the result would be antidilutive.

Deferred offering costs represent expenses attributable to the proposed
offering of the Company's common stock (see Note 10). The Company intends to
offset these expenses against the future proceeds of the public offering. In the
event that the offering is not completed, these expenses will be charged to
operations.

The Company elected to measure compensation cost using Accounting
Principles Board Opinion No. 25 as is permitted by Statement of Financial
Accounting Standards ("SFAS") No. 123, Accounting for Stock-Based Compensation,
and has elected to comply with other provisions and the disclosure-only
requirements of SFAS No. 123 (see Note 12).

The Company does not believe that any recently-issued but not-yet-effective
accounting standards will have a material effect on the Company's financial
position, results of operations or cash flows.

Effective December 31, 1998, the Company amended its Articles of
Incorporation and became authorized to issue up to 50,000,000 shares of common
stock, $.001 par value and up to 20,000,000 shares of preferred stock, $.001 par
value. As part of this amendment, each share of the Company's common stock was
split into 28,274.266 shares of common stock. All references to number of shares
and per share data give retroactive effect to this stock split.

On October 29, 1999, one of the Company's shareholders contributed
4,000,000 shares of common stock back to the Company for no consideration. The
shares were subsequently cancelled. All references to number of shares and per
share data give retroactive effect to the contributed shares.

2. PREPAID EXPENSES AND OTHER CURRENT ASSETS:

Prepaid expenses and other current assets consist of:

<TABLE>
<CAPTION>
DECEMBER 31, JUNE 30,
1998 1999
------------ -----------
(UNAUDITED)
<S> <C> <C>
Prepayment for merchandise.................................. -- $28,777
Due from officers........................................... -- 8,660
Other....................................................... $6,619 7,945
------ -------
$6,619 $45,382
====== =======
</TABLE>

F-8
<PAGE> 60
LEARNSAT.COM, INC.

NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
(ALL INFORMATION PERTAINING TO THE SIX-MONTH PERIODS
ENDED JUNE 30, 1998 AND 1999 IS UNAUDITED)

3. PROPERTY, PLANT AND EQUIPMENT:

Property, plant and equipment, at cost, consists of the following:

<TABLE>
<CAPTION>
DECEMBER 31, JUNE 30, ESTIMATED
1998 1999 USEFUL LIFE
------------ ----------- --------------
(UNAUDITED)
<S> <C> <C> <C>
Furniture and equipment..................... $209,079 $ 209,793 5 to 10 years
Vehicles.................................... 147,735 132,735 3 to 5 years
Leasehold improvements...................... 17,023 17,023 10 to 39 years
Building and building improvements.......... 67,556 141,623 39 years
Land........................................ 17,000 17,000
-------- -----------
458,393 518,174
Less accumulated depreciation and
amortization.............................. (241,225) (258,822)
-------- -----------
$217,168 $ 259,352
======== ===========
</TABLE>

4. COMMITMENTS:

The Company leases a warehouse in Oklahoma from two of its shareholders
under a five-year lease ending June 30, 2000, with annual lease payments
totaling $12,000. In addition, the Company leases office space in Florida from
these shareholders on a year-to-year basis. Total rent expense under these
leases amounted to $21,000 for each of the years ended December 31, 1997 and
1998 and to $10,500 for each of the six-month periods ended June 30, 1998 and
1999. In 1997, the shareholders waived the right to receive the rentals earned
and, therefore, this amount has been included as a shareholder contribution to
additional paid-in capital for the year ended December 31, 1997.

The future aggregate minimum rental commitments, exclusive of required
payments for operating expenses and real estate taxes, are:

<TABLE>
<S> <C>
Six-month period ending December 31, 1999................... $10,500
Year ending December 31, 2000............................... 6,000
-------
$16,500
=======
</TABLE>

Effective January 1, 1999, the Company entered into employment agreements
expiring December 31, 2003 with two shareholders who are also officers of the
Company. The approximate aggregate commitment for future salaries, excluding
bonuses, under these employment agreements is as follows:

<TABLE>
<S> <C>
Six-month period ending December 31, 1999................... $ 27,500
Year ending December 31:
2000...................................................... 100,000
2001...................................................... 120,000
2002...................................................... 140,000
2003...................................................... 160,000
--------
$547,500
========
</TABLE>

F-9
<PAGE> 61
LEARNSAT.COM, INC.

NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
(ALL INFORMATION PERTAINING TO THE SIX-MONTH PERIODS
ENDED JUNE 30, 1998 AND 1999 IS UNAUDITED)

5. SHORT-TERM BORROWINGS AND LONG-TERM DEBT:

The Company is obligated under financing agreements with financial
institutions which provide for the following:

<TABLE>
<CAPTION>
DECEMBER 31, JUNE 30,
1998 1999
------------ -----------
(UNAUDITED)
<S> <C> <C>
At the balance sheet dates, the Company was liable to a bank
under a line of credit not to exceed the lesser of
$350,000 or prescribed levels of eligible accounts
receivable and inventory, as defined. In April 1999, this
line of credit was refinanced with another bank into a new
line of credit not to exceed the lesser of $450,000 or
prescribed levels of eligible accounts receivable and
inventory, as defined. Borrowings under this new line of
credit bear interest at the new bank's prime lending rate
(7.75% at December 31, 1998 and June 30, 1999) plus 1% and
such interest is payable monthly. The new line of credit
is payable in full on April 8, 2000....................... $347,598 $377,820
A note payable bearing interest at a bank's prime lending
rate plus 2% with interest payable monthly. The note was
due and was repaid in May 1999............................ 150,000 --
Term note originally payable to a bank in 60 monthly
installments commencing February 2, 1997. This note was
refinanced with another bank in April 1999. The new note
is payable in 48 monthly installments through April 15,
2003 and bears interest at the new bank's prime lending
rate plus 1% with interest payable monthly................ 84,862 77,119
Other term notes payable in monthly installments aggregating
approximately $1,800 plus interest. These notes mature at
various dates through July 22, 2013. The notes bear
interest at various rates ranging from 4.8% to 8.75%...... 126,026 114,877
-------- --------
708,486 569,816
Less current portion........................................ 186,604 414,398
-------- --------
LONG-TERM PORTION......................................... $521,882 $155,418
======== ========
</TABLE>

The obligations described above are collateralized by substantially all of
the Company's assets. The line of credit is also collateralized by personal
guarantees by two of the Company's officers aggregating $200,000. These
guarantees are secured through the assignment of $200,000 of face value of life
insurance on the life of one of these officers.

Because the interest rates will change with changes in the prime rate, the
fair value of the bank debt is equal to the carrying amount.

F-10
<PAGE> 62
LEARNSAT.COM, INC.

NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
(ALL INFORMATION PERTAINING TO THE SIX-MONTH PERIODS
ENDED JUNE 30, 1998 AND 1999 IS UNAUDITED)

Maturities of short-term borrowings and long-term debt, which give effect
to the refinancings described above, are as follows:

<TABLE>
<CAPTION>
DECEMBER 31, JUNE 30,
1998 1999
------------ ------------
(UNAUDITED)
<S> <C> <C>
Year (period) ending December 31, 1999..................... $186,604 $ 18,001
Year ending December 31,
2000....................................................... 385,874 415,807
2001....................................................... 41,489 41,489
2002....................................................... 31,388 31,388
2003....................................................... 10,658 10,658
Thereafter................................................. 52,473 52,473
-------- --------
$708,486 $569,816
======== ========
</TABLE>

6. PENDING LITIGATION MATTERS:

The Company was involved in a litigation matter with two of its suppliers.
In 1996, the Company purchased equipment from these suppliers and was invoiced a
total of approximately $786,000. The Company recorded this amount as a purchase
in 1996. The equipment purchased was to be used as materials for two contracts
the Company entered into during 1996. In 1996 and 1997, the Company concluded
that some of this equipment did not meet certain technical requirements and was
not working properly. The Company therefore withheld payment of a portion of the
invoiced amounts. The Company alleged that it incurred significant additional
costs to complete its contracts due to the difficulties it incurred with this
equipment. In April 1997, one of the suppliers sued the Company to collect the
remaining balance. This lawsuit was dismissed on jurisdictional grounds in 1998.
In August 1998, the Company sued the suppliers for breach of contract, fraud and
other related claims. One of the suppliers filed a counterclaim that asserted
that the supplier had delivered equipment to the Company, on which the Company
had an outstanding balance of approximately $351,000. The supplier asserted that
the Company was in breach of contract for that amount.

At December 31, 1998, the Company included the $351,000 in accounts payable
and accrued expenses in the accompanying balance sheet. In addition, accounts
receivable included a balance of approximately $91,000 due from the Company's
customers who were the end users of the equipment.

In August 1999, the Company collected approximately $60,000 of this
accounts receivable balance and received returned equipment (which the Company
deems to be fully usable and saleable) which had been sold to these customers
for approximately $14,000.

In September 1999, there was a settlement of the lawsuit between the
Company and the two suppliers. The settlement resulted in a net payment by the
Company to the suppliers of $25,000. During 1999, the Company incurred legal
fees amounting to approximately $93,000 in relation to this litigation.

As a result of the above, the Company has recorded a net gain on the
settlement of this litigation of approximately $216,000 at June 30, 1999.

The Company is also involved in another legal action arising in the
ordinary course of business. Management is of the opinion that the ultimate
outcome of this matter would not have a material adverse impact on the financial
position of the Company or its results of operations.

F-11
<PAGE> 63
LEARNSAT.COM, INC.

NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
(ALL INFORMATION PERTAINING TO THE SIX-MONTH PERIODS
ENDED JUNE 30, 1998 AND 1999 IS UNAUDITED)

7. MAJOR CUSTOMERS AND SUPPLIERS:

The Company's contracts are generally short-term in nature. Major customers
represent the following percentages of sales and receivables:

<TABLE>
<CAPTION>
PERCENT OF ACCOUNTS
RECEIVABLE AND COSTS AND
ESTIMATED EARNINGS IN
EXCESS OF BILLINGS ON
CUSTOMER PERCENT OF SALES UNCOMPLETED CONTRACTS
-------- ------------------------------------------------------------- -----------------------------
YEAR ENDING SIX MONTHS ENDING
DECEMBER 31, JUNE 30,
----------------------------- ----------------------------- DECEMBER 31, JUNE 30,
1997 1998 1998 1999 1998 1999
------------- ------------- ------------- ------------- ------------- -------------
<S> <C> <C> <C> <C> <C> <C>
A.................... 31% 28% 16% -- 3% --
B.................... 28% -- -- -- -- --
C.................... 19% -- -- -- -- --
D.................... -- 22% 26% 31% 54% 14%
E.................... -- 11% -- -- 16% --
F.................... -- -- 18% -- -- --
G.................... -- -- -- 19% -- 20%
H.................... -- -- -- 12% -- --
</TABLE>

One supplier is the sole supplier of the Company's digital encoders and
decoders. Although the Company believes that its relationship with this supplier
is satisfactory, the loss of this supplier would have a materially adverse
effect on its business and results of operations.

8. INCOME TAXES:

The provision for income taxes at June 30, 1999 consists of the following
components:

<TABLE>
<CAPTION>
CURRENT:
- --------
<S> <C>
Federal..................................................... $2,000
State....................................................... 900
------
$2,900
======
</TABLE>

The total provision for income taxes differs from that amount which would
be computed by applying the U.S. federal income tax rate to income before
provision for income taxes primarily because of the effect of state income
taxes.

9. PRIVATE PLACEMENT:

The Company completed a private placement offering aggregating $625,000.
The private placement offering was for 12 1/2 units at a price of $50,000 per
unit. Each unit consisted of 100,000 shares of common stock, 100,000 class A
warrants and 50,000 class B warrants. Each class A warrant is exercisable until
December 31, 2002 and entitles the holder to purchase one share of common stock
at $2.50 per share. Each class B warrant is exercisable until December 31, 2004
and entitles the holder to purchase one share of common stock at $4.00 per
share. The Company received net proceeds of $503,750, after deducting expenses
of the offering of $96,250. In addition, a stock subscription receivable in the
amount of $25,000, in the form of a note, is due from two officers of the
Company. This note bears interest at 7.75% and is payable on March 5, 2000.
Interest income recorded on this loan amounted to $621 for the six-month period
ended June 30, 1999. The stock subscription receivable has been reflected as a
reduction of stockholders' equity in the accompanying financial statements. The
warrants are subject to redemption by the Company at the redemption price of
$.05 per warrant on 30 days' notice, provided that the reported closing price of
the common stock, as defined, equals or exceeds 150% of the exercise price for a
period of 30 consecutive trading days.

In connection with the private placement, the Company's placement agent
(who is contemplated to be the Company's underwriter in the proposed public
offering described in Note 10) was granted, for nominal consideration, a warrant
exercisable over a five-year period commencing March 5, 1999, to purchase 10% of

F-12
<PAGE> 64
LEARNSAT.COM, INC.

NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
(ALL INFORMATION PERTAINING TO THE SIX-MONTH PERIODS
ENDED JUNE 30, 1998 AND 1999 IS UNAUDITED)

the number of units sold in the private placement offering at an exercise price
equal to 120% of the unit offering price (or $60,000 per unit).

10. SUBSEQUENT EVENTS:

The Company intends to file a Registration Statement on Form SB-2 under the
Securities Act of 1933. The Registration Statement contemplates an offering of
1,334,000 units at a proposed offering price of $3.00 per unit. Each unit will
consist of two shares of common stock, $.001 par value, two Class C redeemable
warrants and one Class D redeemable warrant. The Class C redeemable warrants
will entitle the holder to purchase one share of common stock at a price of
$3.00 per share and will be exercisable for six years commencing six months from
the effective date of the Registration Statement. The Class D redeemable
warrants will entitle the holder to purchase one share of common stock at a
price of $6.50 per share and will be exercisable for five years commencing six
months from the effective date of the Registration Statement. The offering would
provide proceeds of approximately $3,093,000 to the Company, after expenses
estimated to be $909,000. The proceeds of this offering are expected to be used
for purchasing and leasing equipment, sales and technical support and marketing,
general and administrative expenses and for working capital.

In connection with the offering, the Company's underwriter will be granted,
for nominal consideration, warrants to purchase up to 266,800 shares of common
stock at $1.62 per share, 266,800 Class C non-redeemable warrants and 133,400
Class D non-redeemable warrants. These warrants will be exercisable for four
years commencing one year from the effective date of the Registration Statement.

In September 1999, the Company purchased from one of the Company's officers
certain assets and assumed certain liabilities of Cowboy Communications, LLC for
$25,000 in cash and 22,600 shares of common stock. The assets acquired amounted
to approximately $58,000 and the liabilities assumed amounted to approximately
$21,000.

11. PRO FORMA FINANCIAL INFORMATION (UNAUDITED):

The pro forma financial information is unaudited and reflects the
operations of the Company as if the employment agreements described in Note 4
had been entered into at the beginning of the periods presented and as if the
Company had not elected Subchapter S Corporation status.

Pro forma financial information for the six-month period ended June 30,
1999 is not required to be calculated because the employment agreements were
entered into effective January 1, 1999 and the Company terminated its S
Corporation status effective January 1, 1999.

The pro forma provision for income taxes differs from the amount of pro
forma income tax determined by applying the applicable federal statutory rates
primarily because of the effect of state income taxes.

12. STOCK OPTION PLAN:

Effective in April 1999, the Company adopted the 1999 Long-Term Incentive
Plan (the "Plan"), under which 1,500,000 shares of common stock have been
reserved for future issuance. The Plan provides for the sale of shares through
incentive stock options (to employees of the Company only) or through
nonqualified stock options at a price not less than the fair market value of the
shares on the date of the option grant provided that the exercise price of any
option granted to an employee owning more than 10% of the outstanding common
stock of the Company may not be less than 110% of the fair market value of the
shares on the date of the option grant. The term of each option and the manner
of exercise is to be determined by a committee of the board of directors, but in
no case can the incentive stock options be exercisable in excess of 10 years
beyond the date of grant and in no case can the nonqualified stock options be
exercisable in excess of 10 years and 1 month beyond the date of grant. The
stock option committee has the right upon grant of a stock option to award a
stock appreciation right. Upon adoption of the Plan, options to purchase 585,000
shares of common stock, excluding canceled shares, were granted to both
employees and directors of the Company at the fair value at the date of grant.

F-13
<PAGE> 65

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

We have not authorized any dealer, salesperson or other person to give any
information or represent anything not contained in this prospectus. You must not
rely on any unauthorized information. This prospectus does not offer to sell or
buy any shares in any jurisdiction where it is unlawful. The information in this
prospectus is current only as of the date of this prospectus.

LEARNSAT.COM, INC.
1,334,000 UNITS
(EACH UNIT CONSISTING OF
TWO SHARES OF COMMON STOCK,
TWO CLASS C REDEEMABLE WARRANTS AND
ONE CLASS D REDEEMABLE WARRANT)

DIRKS & COMPANY, INC.
, 1999

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

UNTIL , 1999 (25 DAYS AFTER THE DATE OF THIS PROSPECTUS), ALL
DEALERS THAT BUY, SELL OR TRADE THESE SECURITIES, WHETHER OR NOT PARTICIPATING
IN THIS OFFERING, MAY BE REQUIRED TO DELIVER A PROSPECTUS. THIS IS IN ADDITION
TO THE DEALERS' OBLIGATION TO DELIVER A PROSPECTUS WHEN ACTING AS UNDERWRITERS
AND WITH RESPECT TO THEIR UNSOLD ALLOTMENTS OR SUBSCRIPTIONS.

- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE> 66

ALTERNATE PAGE OF SELLING SHAREHOLDER PROSPECTUS

SUBJECT TO COMPLETION, DATED NOVEMBER , 1999

LEARNSAT.COM, INC.

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

3,437,500 SHARES OF COMMON STOCK

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

Selling shareholders may sell the shares using this prospectus.

Using an alternate prospectus, LearnSat.Com is also offering 1,334,000
units plus up to an additional 200,100 units to cover over-allotments, if any,
in an underwritten public offering. Each unit consists of two shares of common
stock, two class C redeemable common stock purchase warrants and one class D
redeemable common stock purchase warrant.

No public market currently exists for the units, the common stock or the
warrants. We anticipate that the initial public offering price of the
underwritten public offering will be $3.00 per unit. We have applied to list the
units, common stock and the warrants on Tier II of the Pacific Stock Exchange
under the symbols LSN __, LSN __, LSN __ and LSN __, respectively.

BEFORE BUYING THE UNITS, CAREFULLY READ THIS PROSPECTUS, ESPECIALLY THE
RISK FACTORS BEGINNING ON PAGE 7. THE PURCHASE OF OUR SECURITIES INVOLVES A HIGH
DEGREE OF RISK.

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

THE DATE OF THIS PROSPECTUS IS , 1999.
<PAGE> 67
ALTERNATE PAGE OF SELLING SHAREHOLDER PROSPECTUS -- (CONTINUED)

TABLE OF CONTENTS

<TABLE>
<S> <C>
Prospectus Summary.......................................... 1
Risk Factors................................................ 7
Forward-Looking Statements.................................. 13
Dividend Policy............................................. 14
Private Financing........................................... 16
Capitalization.............................................. 17
Selected Financial Data..................................... 18
Management's Discussion and Analysis of Financial Condition
and Results of Operations................................. 20
Business.................................................... 26
Management.................................................. 37
Certain Transactions........................................ 42
Principal Shareholders...................................... 43
Selling Shareholders and Plan of Distribution............... 44
Description of Securities................................... 46
Shares Eligible for Future Sale............................. 48
Legal Matters............................................... 49
Experts..................................................... 49
Additional Information...................................... 49
Financial Statements........................................ F-1
</TABLE>

3
<PAGE> 68

ALTERNATE PAGE OF SELLING SHAREHOLDER PROSPECTUS -- (CONTINUED)

THE OFFERING

Securities Offered.................. This prospectus relates to the offering
of 1,375,000 shares of common stock
which are being offered for sale by
selling shareholders and an additional
2,062,500 shares of common stock which
we will issue to them if they exercise
the warrants currently held by them.
See "Description of Securities" and
"Selling Shareholders and Plan of
Distribution."

Common Stock Outstanding After
the Offering...................... 12,381,277 shares; assumes that the
shares of common stock registered under
the concurrent underwritten public
offering have been sold by
LearnSat.Com; excludes outstanding
options, underwriter's over-allotment
option and warrants from the concurrent
offering.

Proceeds............................ We will not receive any of the proceeds
from the sale of shares by the selling
shareholders.

Risk Factors........................ You should read the "Risk Factors"
section as well as the other cautionary
statements throughout the entire
prospectus, so that you understand the
risks associated with an investment in
our securities.

Proposed Pacific Stock Exchange
Symbol
for Units LSN __
for Common Stock LSN __
for Class C Redeemable Warrants LSN __
for Class D Redeemable Warrants LSN __
<PAGE> 69
ALTERNATE PAGE OF SELLING SHAREHOLDER PROSPECTUS -- (CONTINUED)

PRIVATE FINANCING

In March 1999, we completed the sale of 12.5 units at a price of $50,000
per unit in a private financing transaction. Each private financing unit
consisted of 100,000 shares of common stock, 100,000 class A redeemable common
stock purchase warrants, and 50,000 class B redeemable common stock purchase
warrants. Each class A redeemable warrant entitles the holder to purchase one
share of common stock at a price of $2.50 per share and each class B redeemable
warrant entitles the holder to purchase one share of common stock at a price of
$4.00 per share. The class A redeemable warrants are exercisable through
December 31, 2002 and the class B redeemable warrants are exercisable through
December 31, 2004. The shares of common stock underlying the private financing
units and the shares of common stock issuable upon exercise of the class A
redeemable warrants and the class B redeemable warrants have been registered for
public sale and are being sold by the selling shareholders under this
prospectus. Charles and Linda Brewer purchased one half unit which they paid for
with a promissory note. The note, together with interest at the annual rate of
7.75%, is due on March 5, 2000 but Mr. and Mrs. Brewer prepaid $15,000 of the
principal on September 26, 1999. See "Selling Shareholders and Plan of
Distribution" for information relating to the shareholders who are offering
these securities for sale.

Barry W. Blank purchased two units in the private financing and his mother
purchased one half unit. Mr. Blank is employed by Dirks & Company, Inc. as a
registered representative. He participated in the sale of the private financing
units.

Dirks acted as the placement agent for the private financing. We paid Dirks
a fee of $62,500, which was equal to 10% of the aggregate purchase price of the
units sold, and a non-accountable expense allowance of $18,750, which was equal
to 3% of the aggregate purchase price of the units sold. We also granted Dirks,
for nominal consideration, a placement agent warrant, exercisable over a
five-year period which commenced on the closing date of the private financing,
to purchase 125,000 shares of common stock, a like number of class A
non-redeemable warrants and 62,500 class B non-redeemable warrants, which
equaled 10% of the number of shares and class A and B redeemable warrants sold
in the private financing. The exercise price for the common stock equals 120% of
the placement unit offering price. The class A and class B non-redeemable
warrants acquired by Dirks are exercisable at 120% of the exercise prices of the
warrants sold to the purchasers in the private financing. The shares underlying
the securities acquired by Dirks as placement agent have been registered for
public sale and are included in this prospectus. Dirks has granted Barry Blank,
who assisted in marketing the private financing, 70% of the shares of common
stock and warrants underlying the placement agent warrant.
<PAGE> 70
ALTERNATE PAGE OF SELLING SHAREHOLDER PROSPECTUS -- (CONTINUED)

SELLING SHAREHOLDERS AND PLAN OF DISTRIBUTION

The registration statement, of which this prospectus forms a part, relates
to the registration by LearnSat.Com for the account of selling shareholders, of
an aggregate of 3,437,500 shares of common stock. The table below sets forth
information with respect to the selling shareholders as of September 20, 1999.
LearnSat.Com will not receive any of the proceeds from the sale of these shares.
LearnSat.Com will receive proceeds only for shares sold by us to the selling
shareholders pursuant to warrants exercised by them. There are no material
relationships between LearnSat.Com or our affiliates and any of the selling
shareholders except for Mr. and Mrs. Brewer and Mr. Hoover and except as
disclosed in the in the next succeeding paragraph. Based on information provided
to us by the selling shareholders, all shares are beneficially owned. Beneficial
ownership after the offering will depend upon the number of shares sold by each
selling shareholder.

The asterisk represents less than 1% of the outstanding shares. Mr. and
Mrs. Brewer may each be deemed to be a beneficial owner of the common stock set
forth after their names because of their marital relationship. The shares to be
offered for sale by Mr. and Mrs. Brewer are owned jointly by them. These shares
and the shares owned by Mr. Hoover will not be sold except in compliance with
the provisions of Section 16(b) of the Exchange Act. The table includes the
shares issuable on exercise of each selling shareholder's private financing
warrants. Ms. Portelly is the wife of our counsel, Barry Feiner. Mr. Feiner
disclaims any beneficial ownership in these securities. See "Legal Matters."

Mr. Blank is employed by Dirks as a registered representative. He
participated in the sale of the private financing and will participate in the
sale of the units offered by LearnSat.Com. These shares include 87,500 shares
issuable upon exercise of the placement warrant received by Dirks as placement
agent and transferred to Mr. Blank as well as the 131,250 shares issuable upon
exercise of the private financing warrants underlying the placement warrant also
transferred by Dirks to Mr. Blank. See "Private Financing." Violet Blank is the
mother of Barry Blank. The shares owned by Dirks are issuable upon exercise of
the placement warrant and include the shares issuable upon exercise of the
warrants underlying the placement warrant.

<TABLE>
<CAPTION>
NUMBER OF PERCENTAGE
SHARES OWNED BEFORE NUMBER OF
NAME BEFORE OFFERING OFFERING SHARES OFFERED
---- --------------- ---------- --------------
<S> <C> <C> <C>
Charles Brewer........................................ 1,255,971 12.86 125,000
Linda Brewer.......................................... 7,434,706 76.13
Charles R. Hoover..................................... 125,000 1.28 125,000
Joseph Giamanco....................................... 250,000 2.54 250,000
Kenneth Moore......................................... 125,000 1.28 125,000
Robert and Barbara Oliver............................. 125,000 1.28 125,000
William and Joan Quinn................................ 125,000 1.28 125,000
Janet M. Portelly..................................... 125,000 1.28 125,000
John E. McConnaughy, Jr. ............................. 1,000,000 9.72 1,000,000
Barry W. Blank, Trustee............................... 718,750 7.04 718,750
Barry Blank Trust
Joseph Marinelli...................................... 125,000 1.28 125,000
Violet Blank Trust.................................... 125,000 1.28 125,000
Gary Herman........................................... 250,000 2.54 250,000
Robert Wahl........................................... 125,000 1.28 125,000
Dirks & Company, Inc. ................................ 93,750 * 93,750
</TABLE>

- ---------------
* Represents less than 1% of the outstanding shares.

The sale of the shares by the selling shareholders may be effected from
time to time in transactions, which may include block transactions by or for the
account of the selling shareholder, on the Pacific Stock Exchange, in the
over-the-counter market or in negotiated transactions, or through the writing of
options on these shares, a combination of these methods of sale, or otherwise.
Sales may be made at fixed prices which may be changed, at market prices
prevailing at the time of sale, or at negotiated prices.
<PAGE> 71
ALTERNATE PAGE OF SELLING SHAREHOLDER PROSPECTUS -- (CONTINUED)

Selling shareholders may effect these transactions by selling their shares
directly to purchasers, through broker-dealers acting as agents for the selling
shareholders, or to broker-dealers who may purchase shares as principals and
thereafter sell the shares from time to time on the Pacific Stock Exchange, in
the over-the-counter market, in negotiated transactions, or otherwise.
Broker-dealers, if any, may receive compensation in the form of discounts,
concessions, or commissions from the selling shareholders and/or the purchasers
for whom these broker-dealers may act as agents or to whom they may sell as
principals or both, which compensation as to a particular broker-dealer may be
in excess of customary commissions.

The selling shareholders and broker-dealers, if any, acting in connection
with these sales might be deemed to be "underwriters" within the meaning of
Section 2(11) of the Securities Act and any commission received by them and any
profit on the resale of these shares might be deemed to be underwriting
discounts and commissions, under the Securities Act.

At the time a particular offer of the shares is made by or on behalf of a
selling shareholder, to the extent required, a prospectus supplement will be
distributed which will set forth the number of shares being offered and the
terms of the offering, including the name or names of any underwriters, dealers,
or agents, the purchase price paid by any underwriter for shares purchased from
the selling stockholder and any discounts, commissions, or concessions allowed
or reallowed or paid to dealers, and the proposed selling price to the public.

Under the Exchange Act and its regulations, any person engaged in the
distribution of shares of common stock, or securities convertible into common
stock, offered by this prospectus may not simultaneously engage in market-making
activities with respect to the common stock during the applicable "cooling off"
period prior to the commencement of this distribution. In addition, and without
limiting the foregoing, the selling shareholders will be subject to applicable
provisions of the Exchange Act and its rules and regulations, including without
limitation Regulation M promulgated under the Exchange Act, in connection with
transactions in the shares, which provisions may limit the timing of purchases
and sales of shares of common stock by the selling shareholders.

Sales of any shares of common stock by the selling shareholders may depress
the price of the common stock in any market that may develop for these
securities.
<PAGE> 72
ALTERNATE PAGE OF SELLING SHAREHOLDER PROSPECTUS -- (CONTINUED)

LEGAL MATTERS

The validity of the securities being offered hereby will be passed upon for
LearnSat.Com by Barry Feiner, Esq., 170 Falcon Court, Manhasset, New York 11030.
Janet Portelly, Mr. Feiner's wife, purchased 50,000 shares, 50,000 A warrants
and 25,000 B warrants in the private financing and is one of the selling
shareholders. See "Private Financing" and "Selling Shareholders and Plan of
Distribution."
<PAGE> 73
ALTERNATE PAGE OF SELLING SHAREHOLDER PROSPECTUS -- (CONTINUED)

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

[LOGO]

LEARNSAT.COM, INC.

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

3,437,500 SHARES OF COMMON STOCK

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

, 1999

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

- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE> 74

PART II

INFORMATION NOT REQUIRED IN PROSPECTUS

ITEM 24. INDEMNIFICATION OF DIRECTORS AND OFFICERS.

Under the Florida Business Corporation Act, a shareholder is able to
prosecute an action against a director for monetary damages only if he can show
that the director committed a knowing violation of criminal law, engaged in a
transactions in which he derived an improper personal benefit as defined in the
Act, participated in an "unlawful distribution" as defined in the Act, acted in
conscious disregard for the best interests of the corporation, or committed
willful misconduct.

Article X of LearnSat.Com's Articles of Incorporation and Article X of
LearnSat's By-Laws provide for indemnification of officers, directors and
authorized agents to the maximum extent permitted under Florida law.

ITEM 25. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.

The expenses in connection with this offering, other than underwriting
commissions and non-accountable expense allowance are set forth below. All
amounts are estimates except the SEC registration fee, the Pacific Stock
Exchange listing fee and the NASD fee.

<TABLE>
<S> <C>
SEC registration fee........................................ $ 10,115.22
Pacific Stock Exchange listing fee.......................... 20,000.00
NASD fees................................................... 3,852.18
Accounting fees and expenses................................ 150,000.00
Legal fees and expenses..................................... 100,000.00
Blue Sky fees and expenses.................................. 20,000.00
Printing and engraving...................................... 56,500.00
Warrant Agent, Transfer Agent and Registrar fees............ 3,500.00
Miscellaneous expenses...................................... 25,000.00
-----------
TOTAL....................................................... $388,967.40
===========
</TABLE>

LearnSat.Com will bear all expenses shown above.

ITEM 26. RECENT SALES OF UNREGISTERED SECURITIES.

In March 1999, LearnSat.Com completed the sale of 12.5 units at a price of
$50,000 per unit in a private financing transaction. Each unit consisted of
100,000 shares of common stock, 100,000 class A redeemable common stock purchase
warrants, and 50,000 class B redeemable common stock purchase warrants. Each
class A redeemable warrant entitles the holder to purchase one share of common
stock at a price of $2.50 per share and each class B redeemable warrant entitles
the holder to purchase one share of common stock at a price of $4.00 per share.
The class A redeemable warrants are exercisable through December 31, 2002 and
the class B redeemable warrants are exercisable through December 31, 2004. These
securities were sold pursuant to the exemption from the registration provisions
of the Securities Act provided by Rule 506 of Regulation D promulgated under
Section 4(2) of the act. The shares of common stock underlying the units and the
shares of common stock issuable upon exercise of the class A warrants and the
class B warrants are being registered for public sale and are included in this
registration statement.

II-1
<PAGE> 75

The names of the private financing unit purchasers and the number of units
purchased and amount invested by each purchaser is set forth in the following
table:

<TABLE>
<CAPTION>
NO. OF $ AMOUNT
NAME AND ADDRESS UNITS OF PURCHASE
- ---------------- ------ -----------
<S> <C> <C>
Robert and Barbara Oliver................................... 1/2 $ 25,000
Robert Wahl................................................. 1/2 25,000
John E. McConnaughy, Jr. ................................... 4 200,000
Joseph Giamanco............................................. 1 50,000
Charles R. Hoover........................................... 1/2 25,000
Barry Blank Trustee......................................... 2 100,000
Barry Blank Trust Gary Herman............................... 1 50,000
Violet Blank Trust.......................................... 1/2 25,000
Joseph Marinelli............................................ 1/2 25,000
William and Joan Quinn...................................... 1/2 25,000
Janet M. Portelly........................................... 1/2 25,000
Charles and Linda Brewer.................................... 1/2 25,000
Kenneth Moore............................................... 1/2 25,000
</TABLE>

Charles and Linda Brewer paid for their one half unit with a promissory
note. The note, together with interest at the annual rate of 7.75%, is due on
March 5, 2000. Mr. and Mrs. Brewer prepaid $15,000 of the principal on September
27, 1999.

Dirks & Company, Inc. acted as the placement agent for the private
financing. LearnSat.Com paid Dirks a fee of $62,500, which was equal to 10% of
the aggregate purchase price of the units sold, and a non accountable expense
allowance of $18,750, which was equal to 3% of the aggregate purchase price of
the units sold. LearnSat.Com also granted Dirks, for nominal consideration, a
warrant, exercisable over a five year period which commenced on the closing date
of the private financing, to purchase 125,000 shares of common stock, a like
number of class A non-redeemable warrants and 62,500 class B non-redeemable
warrants, which equaled 10% of the number of shares and class A and class B
redeemable warrants sold in the private financing. The exercise price for the
common stock equals 120% of the placement unit offering price. The class A and
class B non-redeemable warrants acquired by Dirks are exercisable at 120% of the
exercise prices of the warrants sold to the purchasers in the private financing.
Dirks has granted Barry Blank, who is employed by Dirks as a registered
representative and assisted in the sale of the private financing units, 70% of
the shares and the warrants LearnSat.Com granted to it as part of the
compensation described above for effecting the private financing.

ITEM 27. EXHIBITS.

<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION OF EXHIBIT
- ------- ----------------------
<C> <S>
1.1 Form of Underwriting Agreement*
3.1 Articles of Incorporation as amended**
3.2 By-Laws**
4.1 Specimen Common Stock certificate**
4.2 Form of Class A Redeemable Warrant*
4.3 Form of Class B Redeemable Warrant*
4.4 Form of Class C Redeemable Warrant (attached to Exhibit 4.6
as Exhbit A)*
4.5 Form of Class D Redeemable Warrant (attached to Exhibit 4.6
as Exhibit B)*
4.6 Form of Warrant Agent's Agreement*
</TABLE>

II-2
<PAGE> 76

<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION OF EXHIBIT
- ------- ----------------------
<C> <S>
4.7 Form of Underwriter's Warrant Agreement*
5.1 Opinion of Barry Feiner, Esq.**
10.1 Lease for Stillwater, Oklahoma warehouse between
LearnSat.Com and Charles and Linda Brewer dated July 1,
1995*
10.2 Lease for Eustis, Florida integration facility between
LearnSat.Com and Charles and Linda Brewer dated July 1,
1992*
10.3 Lease for Shelton, Washington storage facility between
LearnSat.Com and J-D. Mini-Storage dated August 10, 1998*
10.4 Employment contract between LearnSat.Com and Charles Brewer
dated as of January 1, 1999**
10.5 Employment contract between LearnSat.Com and Linda Brewer
dated as of January 1, 1999**
10.6 Learnsat.Com, Inc. 1999 Long Term Incentive Plan**
10.7 Agreement with General Instruments**
10.8 Agreement with Panasonic**
23.1 Consent of Goldstein Golub Kessler LLP
23.2 Consent of Barry Feiner, Esq. (included in Exhibit 5.1)**
27.1 Financial Data Schedule -- June 30, 1999
27.2 Financial Data Schedule -- December 31, 1998
</TABLE>

- ---------------
* Previously filed.
** To be filed by amendment.

ITEM 28. UNDERTAKINGS.

(a) Rule 415 Offering

LearnSat will:

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

(i) Include any prospectus required by Section 10(a)(3) of the
Securities Act of 1933 (the "Securities Act");

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

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

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

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

(b) Equity Offerings of Nonreporting Small Business Issuers

LearnSat.Com will provide to the Underwriter at the closing specified in
the Underwriting Agreement certificates in such denominations and registered in
such names as required by the Underwriter to permit prompt delivery to each
purchaser.

Insofar as indemnification for liabilities arising under the Securities Act
may be permitted to directors, officers or controlling persons of LearnSat.Com
pursuant to the provisions referred to in Item 24 of this

II-3
<PAGE> 77

Registration Statement or otherwise, LearnSat.Com has been advised that in the
opinion of the Securities and Exchange Commission such indemnification is
against public policy as expressed in the Securities Act and is, therefore,
unenforceable.

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

II-4
<PAGE> 78

SIGNATURES

In accordance with the requirements of the Securities Act of 1933, the
registrant certifies that it has reasonable grounds to believe that it meets all
the requirements for filing on Form SB-2, and authorized this registration
statement to be signed on its behalf by the undersigned, in the City of
Stillwater, State of Oklahoma, on this 3rd day of November, 1999.

LEARNSAT.COM, INC.

By: /s/ CHARLES BREWER

------------------------------------
President, Chief Executive and Chief
Operating Officer

<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<S> <C> <C>

/s/ CHARLES BREWER President, Chief Executive November 3, 1999
------------------------------------------------ and Chief Operating
Charles Brewer Officer, Director

/s/ LINDA BREWER Chief Financial and November 3, 1999
------------------------------------------------ Accounting Officer,
Linda Brewer Treasurer, Secretary and
Director

/s/ KENNETH G. HARPLE* Director November 3, 1999
------------------------------------------------
Kenneth G. Harple

/s/ CHARLES R. HOOVER* Director November 3, 1999
------------------------------------------------
Charles R. Hoover

*By: /s/ CHARLES BREWER
--------------------------------------------
Charles Brewer
Attorney-in-Fact, pursuant to the power of
attorney previously filed as part of this
registration statement.
</TABLE>

II-5
<PAGE> 79

EXHIBIT INDEX

<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION OF EXHIBIT
- ------- ----------------------
<C> <S>
23.1 Consent of Goldstein Golub Kessler LLP
27.1 Financial Data Schedule -- June 30, 1999
27.2 Financial Data Schedule -- December 31, 1998
</TABLE>

<PAGE> 1

INDEPENDENT AUDITOR'S CONSENT

To the Board of Directors
LearnSat.Com, Inc.

We hereby consent to the use in the Prospectus constituting part of the
Registration Statement on Form SB-2 of our report dated April 16, 1999, except
for the last paragraph of Note 1 as to which the date is October 29, 1999, on
the financial statements of LearnSat.Com, Inc. as of December 31, 1998 and for
each of the two years in the period then ended which appears in such Prospectus.
We also consent to the references to our firm under the captions "Selected
Financial Data" and "Experts" in such Prospectus.

GOLDSTEIN GOLUB KESSLER LLP

New York, New York

November 2, 1999

<ARTICLE> 5

<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-END> JUN-30-1999
<CASH> 152,145
<SECURITIES> 0
<RECEIVABLES> 455,667
<ALLOWANCES> 40,757
<INVENTORY> 445,981
<CURRENT-ASSETS> 1,149,681
<PP&E> 518,174
<DEPRECIATION> 258,822
<TOTAL-ASSETS> 1,530,211
<CURRENT-LIABILITIES> 871,713
<BONDS> 155,418
0
0
<COMMON> 9,691
<OTHER-SE> 493,389
<TOTAL-LIABILITY-AND-EQUITY> 1,530,211
<SALES> 896,820
<TOTAL-REVENUES> 896,820
<CGS> 830,767
<TOTAL-COSTS> 830,767
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 30,130
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