LORECOM TECHNOLOGIES INC, SB-2/A, 1999-07-28

LORECOM TECHNOLOGIES INC
SB-2/A, 1999-07-28
COMMUNICATIONS SERVICES, NEC

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<PAGE> 1

AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON JULY 28, 1999
REGISTRATION NO. 333-76451

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

Amendment No. 3
to
FORM SB-2
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933

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

LORECOM Technologies, Inc.
(Name of small business issuer in its charter)

OKLAHOMA 443112 73-1548771
-------- ------ ----------
<S> <C> <C>
(STATE OR JURISDICTION OF (PRIMARY STANDARD INDUSTRIAL (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) CLASSIFICATION CODE NUMBER) IDENTIFICATION NO.)
</TABLE>

LORECOM Technologies, Inc. Joseph O. Evans
4200 Perimeter Center 4200 Perimeter Center
Suite 100 Suite 100
Oklahoma City, Oklahoma 73112 Oklahoma City, Oklahoma 73112
Telephone: (405) 748-8888 Telephone: (405) 748-8888
Facsimile: (405) 516-2345 Facsimile: (405) 516-2345

(ADDRESS AND TELEPHONE NUMBER OF (NAME, ADDRESS AND TELEPHONE
PRINCIPAL EXECUTIVE OFFICES AND NUMBER OF AGENT FOR SERVICE)
PRINCIPAL PLACE OF BUSINESS)

-------------------
Copies to:

David J. Ketelsleger, Esq. Mark A. Robertson, Esq.
McAfee & Taft A Professional Corporation Robertson & Williams
Tenth Floor, Two Leadership Square 3033 N.W. 63rd
211 North Robinson Suite 160
Oklahoma City, Oklahoma 73102 Oklahoma City, Oklahoma 73116
Telephone: (405) 235-9621 Telephone: (405) 848-1944
Facsimile: (405) 235-0439 Facsimile: (405) 843-6707

Approximate date of proposed sale to the public:
As soon as practicable after this Registration Statement becomes effective.

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

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

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

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

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

CALCULATION OF REGISTRATION FEE

- --------------------------------------------------------------------------------------------------------------------------------
TITLE OF EACH CLASS OF DOLLAR PROPOSED MAXIMUM PROPOSED MAXIMUM
SECURITIES TO BE AMOUNT TO BE OFFERING PRICE PER AGGREGATE AMOUNT OF
REGISTERED REGISTERED SHARE OFFERING PRICE REGISTRATION FEE
- --------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Common Stock, $.01 par value (1) (1) $19,200,000(2) $5,338
per share...............
- --------------------------------------------------------------------------------------------------------------------------------
</TABLE>

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

The registrant hereby amends this registration statement on such date
or dates as may be necessary to delay its effective date until the registrant
shall file a further amendment which specifically states that this registration
statement shall thereafter become effective in accordance with section 8(a) of
the Securities Act of 1933 or until this registration statement shall become
effective on such date as the Commission, acting pursuant to said section 8(a),
may determine.

<PAGE> 2

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 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.

PRELIMINARY PROSPECTUS

July 28, 1999

[LORECOM Technologies, Inc. LOGO]

1,600,000 SHARES OF COMMON STOCK

LORECOM Technologies, Inc.

4200 Perimeter Court

Suite 100

Oklahoma City, Oklahoma 73112

Telephone: (405) 748-8888

This is our initial public offering, and no public market currently exists
for our shares. The offering price may not reflect the market price of our
shares after the offering.

American Stock Exchange Trading Symbol:

<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------------
PRICE TO PUBLIC UNDERWRITING DISCOUNTS PROCEEDS TO LORECOM
-----------------------------------------------------------------------------------------------------
MINIMUM MAXIMUM MINIMUM MAXIMUM MINIMUM MAXIMUM
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Per share............ $10.00 $12.00 $.80 $.96 $9.20 $11.04
- ---------------------------------------------------------------------------------------------------------------------------
Total................ $16,000,000 $19,200,000 $1,280,000 $1,536,000 $14,720,000 $17,664,000
- ---------------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------------
</TABLE>

* The underwriter is offering the common stock on a firm commitment basis. The
minimum price per share is expected to be $10.00 and the maximum price per
share is expected to be $12.00.

** If the underwriter exercises in full its 45-day option to purchase up to
240,000 additional shares to cover over-allotments, the totals would be
$18,400,000, $1,472,000 and $16,928,000 for the minimum offering and
$22,080,000, $1,766,400 and $20,313,600 for the maximum offering.

This investment involves a high degree of risk and substantial dilution.
You should only purchase shares if you can afford a complete loss. Before
investing, you should carefully read this prospectus and any supplement, paying
particular attention to the "Risk Factors" beginning on page 3.

Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved of these securities, or determined if
this prospectus is truthful or complete. Any representation to the contrary is a
criminal offense.

CAPITAL WEST SECURITIES, INC.
<PAGE> 3

TABLE OF CONTENTS

<TABLE>
<S> <C> <C>
A summary of our goals, strategy, Summary...................................
financial 1
history and other factors relevant to your What is LORECOM?.......................... 1
investment decision. What is an Interconnect Company?.......... 1
Why is LORECOM Combining Different
Interconnect Companies to Form One
Company?............................. 1
The Offering.............................. 1
Summary Financial Data.................... 2

Important factors you should consider Risk Factors..............................
before 3
investing. Forward-Looking Statements................ 5

A selection of our financial information Summary Combined Financial Information....
and 6
information regarding use of proceeds and Unaudited Pro Forma Combined Financial
dilution. Statements................................ 13
Capitalization............................ 19
Use of Proceeds........................... 19
Dilution.................................. 20

About LORECOM and our relationships with Business.................................. 21
the interconnect partners. LORECOM's Business and Growth Strategy.... 21
The Market................................ 22
Products and Services..................... 23
The Interconnect Partners................. 24
The Acquisitions.......................... 26
Fairness Opinion of Houlihan Smith &
Company, Inc. ....................... 28
Competition............................... 28
Property.................................. 29
Employees................................. 29
Legal Proceedings......................... 29
Where You Can Find More Information....... 29

Our plan of operations during the first Management's Plan of Operation............ 31
12 months. Overview.................................. 31
Purpose of Organization................... 31
Plan of Operation......................... 31
Impact of Year 2000 Issues................ 32
</TABLE>

-i-
<PAGE> 4

<TABLE>
<S> <C> <C>
About our directors, executive officers, Management and Principal Stockholders..... 34
significant employees and principal Directors, Executive Officers and
Significant
stockholders. Employees................................. 34
Compensation.............................. 36
Employment Agreements with Executive
Officers............................. 37
Deferred Compensation and Stock Incentive
Plans................................ 37
Limitation on Directors' and Officers'
Liability............................ 39
Ownership of Management and Principal
Stockholders......................... 41
Certain Relationships and Related
Transactions......................... 42

The common stock. Description of Common Stock............... 44
About the Common Stock.................... 44
Dividend Policy........................... 45
Market for Common Stock and Shares
Eligible for Future Sale............. 45
Transfer Agent............................ 46

About the underwriters, the accountants, The Underwriter and the Plan of
Distribution......................... 46
and the validity of the common stock. The Underwriting Agreement................ 46
Determining the Offering Price............ 48
Experts................................... 48
Validity of Common Stock.................. 49

Financial information about Index to Financial Statements............. F-1
LORECOM and our partners.
</TABLE>

-ii-
<PAGE> 5

SUMMARY

Unless we indicate otherwise, the information we provide in this prospectus
gives effect to the acquisition of the interconnect companies, reflects a
2,850-for-one stock split and cancellation of certain shares, both effected on
April 9, 1999, and assumes that the underwriter's over-allotment option is not
exercised.

WHAT IS LORECOM?

LORECOM is a service company that operates in the telecommunications
industry providing communication services to small and medium businesses. After
we complete this offering, LORECOM will consolidate the operations of thirteen
interconnect companies to operate under the LORECOM name.

WHAT IS AN INTERCONNECT COMPANY?

An interconnect company is the link between the telephone company and the
telephone user. Interconnect companies sell, install and maintain telephone
equipment and software applications that enhance the features and functions of
the telephone equipment. They also provide connections to the public telephone
network, local and long-distance and other related services to business
customers. Interconnect companies are responsible for maintaining the customer's
side of the public telephone network.

WHY IS LORECOM COMBINING DIFFERENT INTERCONNECT COMPANIES TO FORM ONE COMPANY?

We believe that combining thirteen interconnect companies will provide our
customers with a "one-stop shop" that will satisfy most of their
telecommunications needs. The consolidation will permit us to sell additional
products and services to the interconnects' combined customer base. We also
expect to negotiate better prices from our vendors than can be negotiated by the
individual companies. The net result of the consolidation should be increased
revenues, decreased expenses, increased net profits and increased shareholder
value.

THE OFFERING

Common stock offered by LORECOM......... 1,600,000 shares.

Common stock to be outstanding after
this offering........................... 2,456,632 shares.

Use of proceeds......................... Assuming an offering price to the
public of $11.00 per share, we
expect to have net proceeds of
approximately $14.9 million. We
plan to use the net proceeds to pay
the cash portion of the purchase
price for the interconnect
partners, to retire indebtedness
incurred to finance the
acquisitions and this offering, to
purchase management information
systems, for future acquisitions
and for general corporate purposes.

American Stock Exchange Symbol..........

1
<PAGE> 6

SUMMARY FINANCIAL DATA

Each of the interconnect partners will either merge with or sell its assets
to a newly formed, wholly-owned subsidiary of LORECOM. The acquisitions will
occur concurrently with the completion of this offering. The following unaudited
pro forma combined summary financial data presents certain data for LORECOM, for
the interconnect partners on an historical combined basis and for LORECOM on a
pro forma combined basis, as adjusted to give effect to the acquisitions and the
offering and the application of the proceeds therefrom. For more information,
you should read the Unaudited Pro Forma Combined Financial Statements and notes
beginning on page 13.

<TABLE>
<CAPTION>
THREE MONTHS ENDED MARCH 31
YEAR ENDED ----------------------------------------------------
DECEMBER 31, 1998 1998(1) 1999
-------------------------------------- ------------ -------------------------------------
INTERCONNECT INTERCONNECT INTERCONNECT
PARTNERS PRO FORMA PARTNERS PARTNERS PRO FORMA
HISTORICAL AS HISTORICAL HISTORICAL AS
COMBINED LORECOM ADJUSTED COMBINED COMBINED LORECOM ADJUSTED
------------ --------- ----------- ------------ ------------ --------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
Statement of Operations Data:
Net sales....................... $17,814,781 $ -- $17,814,781 $3,801,456 $4,613,868 $ 26,436 $4,640,304
Cost of sales................... 8,227,477 -- 8,227,477 1,774,075 2,239,822 26,436 2,266,258
Total cost and expenses......... 17,471,509 113,078 18,389,427 3,860,037 4,585,696 235,158 4,847,834
Income (loss) before income
taxes......................... 343,272 (113,078) (574,646) (58,581) 28,172 (208,722) (207,530)
Income tax expense.............. (108,843) -- (128,403) 6,580 (18,042) -- (7,850)
Net income (loss)............... 234,429 (113,078) (703,049) (52,001) 10,130 (208,722) (215,380)
Net loss per share.............. (.29) (0.09)
Shares used in computing pro
forma per share amounts....... 2,456,632 2,456,632
</TABLE>

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

(1) LORECOM was not in existence during the three months ended March 31, 1998.

<TABLE>
<CAPTION>
AS OF MARCH 31, 1999
------------------------------------
INTERCONNECT
PARTNERS PRO FORMA
HISTORICAL AS
COMBINED LORECOM ADJUSTED
------------ -------- ----------
<S> <C> <C> <C>
Balance Sheet Data:
Cash and cash equivalents................................. 293,445 28,981 5,306,900
Working capital........................................... 1,206,243 (407,893) 5,936,494
Total assets.............................................. 4,353,540 668,207 21,945,096
Total long-term debt, including current portion........... 848,026 32,221 882,847
Stockholders' equity (deficit)............................ 1,594,331 178,210 18,846,960
</TABLE>

2
<PAGE> 7

RISK FACTORS

Buying our common stock involves a high degree of risk. You should
carefully consider the following risk factors and all other information
contained in this prospectus before buying our common stock. Any of the risk
factors discussed in this prospectus could materially adversely affect our
business, operating results and financial condition and could result in a
complete loss of your investment.

WE MAY NOT BE ABLE TO SUCCESSFULLY MARKET OUR PRODUCTS AND SERVICES OR KEEP UP
WITH TECHNOLOGICAL CHANGES.

If the products and services we represent are not accepted for any reason,
our business will be adversely affected. The market for our products may grow
more slowly than we expect. Technologies, customer requirements and industry
standards may change rapidly. We must improve our products to keep up with these
changes. New or improved products from competitors could make our products less
competitive or obsolete.

WE EXPECT OPERATING EXPENSES WILL INCREASE AND THIS COULD ADVERSELY AFFECT US.

The interconnect partners have been successful in recent years, but we may
not continue their success and profitability. We expect our expenses will
increase substantially as we:

- Increase our sales and marketing activities;

- Develop our products and technology to keep up with the changes in the
telecommunications industry;

- Expand our state and regional markets; and

- Pursue strategic relationships and acquisitions.

We expect the net proceeds from this offering to satisfy our capital
requirements until our next significant acquisition. However, many factors could
cause us to need additional capital sooner. We may not be successful in
expanding our markets and our activities may be more expensive than we currently
expect. We may not experience any revenue growth in the future, and, in fact,
our revenue could decline. As a result, we cannot predict our future operating
results with any degree of certainty.

WE CANNOT GROW SUCCESSFULLY IF WE DO NOT INCREASE SALES TO EXISTING CUSTOMERS.

We plan to grow by selling additional products and services to our existing
customers. We will also introduce new products and services to the partners'
customers. If we cannot coordinate the partners' products and services, or
cross-sell products and services economically, we will not be able to grow
adequately.

We depend on the partners' existing customers for future revenues. If the
partners' customers do not purchase additional products and services, or do not
continue to be customers, our business will be adversely affected. These
customers may not purchase additional products, upgrades or professional
services.

3
<PAGE> 8

WE MAY NOT INTEGRATE THE BUSINESSES SUCCESSFULLY, AND THE PARTNERS' SYSTEMS,
HARDWARE AND SOFTWARE MAY BE INCOMPATIBLE.

LORECOM has not conducted significant operations except to complete this
offering and the acquisitions. The combined and pro forma combined financial
information provided in this prospectus may not indicate LORECOM's actual
operating results and financial condition for the periods presented if the
acquisitions had occurred on the dates indicated. Until we establish centralized
accounting, management information and other administrative systems, we must
rely on the separate systems of the acquired companies. To be successful, we
must centralize systems, eliminate duplication of functions and integrate the
businesses we acquire. Systems, hardware and software of some partners may be
incompatible with others. Customer and employee turnover occurs regularly during
and after acquisitions.

OUR NEW EXECUTIVE TEAM MAY NOT BE ABLE TO MEET OUR BUSINESS OBJECTIVES.

Almost all of our executive officers, including our nominee for President
and Chief Executive Officer, the Vice President of Operations and Chief
Technical Officer and the Chief Financial Officer have been employed by LORECOM
for a relatively short period of time. Since joining LORECOM, the new management
team has devoted substantial efforts to expanding our sales, marketing and
professional services activities. This management team has not worked together
previously and may not be able to meet our goals.

WE MAY BE UNABLE TO SUCCESSFULLY CLOSE ALL THE ACQUISITIONS OF THE PARTNERS AND
INTEGRATE THE PARTNERS INTO OUR BUSINESS.

We expect to complete the acquisition of the thirteen companies
concurrently with closing this offering. However, each acquisition is subject to
certain closing conditions which may not be met. We cannot assure you that we
will be able to close all thirteen acquisitions. Even if we can, we must then
integrate the businesses and operations of those thirteen companies. If we are
unsuccessful our business may be adversely affected. Additionally, we may never
achieve the anticipated synergies from the acquisition of the partners,
including marketing, distribution or other operational benefits. We may have
difficulties in integrating the partners, because the companies are
geographically separated, have different corporate cultures and have personnel
with different business backgrounds. We could have problems with:

- Retaining the partners' key employees;

- Standardizing sales quotas, territories and incentive compensation plans
for sales personnel; and

- Keeping the partners' customers.

OUR ATTEMPTS TO GROW BY ACQUISITION MAY NOT BE SUCCESSFUL AND MAY DISRUPT OUR
BUSINESS.

We expect to grow by acquiring more companies. Other companies have similar
goals and may try to acquire the same companies. Many of our competitors have
greater resources than ours and may be willing to pay higher prices than
LORECOM. The stock of larger public companies may be more acceptable to people
who want to sell their companies. Management's attention and resources may focus
on acquisitions and cause a loss of existing business. Additionally, past
operations of, and unanticipated problems with, acquired businesses pose a great
deal of risk. Customer dissatisfaction or performance problems of a single
acquired company could harm LORECOM's reputation generally. We may not succeed
in integrating and profitably managing additional businesses.

We may rely on common stock, cash, notes or other consideration for future
acquisitions. Our ability to use our stock depends on its market value. If we do
not use stock, our ability to raise capital from other sources may be limited.
Significant additional debt could adversely affect LORECOM and the value of the
common stock.

4
<PAGE> 9

OKLAHOMA LAW AND OUR GOVERNING INSTRUMENTS MAY RESTRICT POTENTIAL ACQUISITION
BIDS FOR LORECOM AND ADVERSELY AFFECT OUR OPERATIONS.

Approximately one-third of our board of directors will be elected each
year. Members of the board of directors cannot be removed except for cause. Our
Certificate of Incorporation permits the board of directors to issue preferred
stock with dividend, redemption, conversion and exchange rights selected by the
board without prior approval of LORECOM stockholders. The difficulty of removing
members of the board, and the board's ability to issue preferred stock, could
delay or prevent a change of control of LORECOM. As a result, these provisions
may prevent the market price of LORECOM common stock from reflecting the effects
of actual or rumored takeover attempts. These provisions may also prevent
changes in the management of LORECOM.

Additionally, Oklahoma laws may inhibit potential acquisition bids for
LORECOM. Oklahoma law prevents LORECOM from engaging in a business combination
with any interested stockholder for three years following the date that the
stockholder became an interested stockholder. A business combination includes a
merger or consolidation involving LORECOM and the interested stockholder or the
sale of more than 10% of LORECOM's assets.

If we have 1,000 or more shareholders and meet other conditions, we will be
subject to Oklahoma's control shares act. With exceptions, this act prevents
holders of more than 20% of our stock from voting those shares. This at least
delays the time it takes anyone to gain control of LORECOM. Also, shareholder
action by written consent without a meeting requires unanimous shareholder
consent.

OUR UNDERWRITER HAS LIMITED UNDERWRITING EXPERIENCE IN EVALUATING OFFERINGS.

Capital West Securities, Inc. was first registered as a broker-dealer in
May 1995. Capital West has participated in only nine public equity offerings as
an underwriter, although certain of its employees have had experience in
underwriting public offerings while employed by other broker-dealers.
Prospective purchasers of the securities offered in this prospectus should
consider Capital West's limited underwriting experience in evaluating this
offering.

FORWARD-LOOKING STATEMENTS

We have included some forward-looking statements in this prospectus about
our expectations for LORECOM after the acquisitions. These forward-looking
statements contain substantial risks and uncertainties that may cause our actual
results to differ significantly from our forward-looking statements. You can
identify these statements by forward-looking words such as "may," "will,"
"expect," "anticipate," "believe," "estimate" and "continue" or similar words.
You should read statements that contain these words carefully because they:

- Discuss our future expectations;

- Contain projections of our future operating results or of our future
financial condition; or

- State other "forward-looking" information.

We believe it is important to communicate our expectations to you, but
events may occur in the future over which we have no control and which we are
not accurately able to predict.

5
<PAGE> 10

SUMMARY COMBINED FINANCIAL INFORMATION

The following tables set forth the condensed historical financial data of
LORECOM and the interconnect partners (1) for the periods ended and as of
December 31, 1998, except for Telkey Communications, Inc. and Terra Telecom,
Inc., whose information is as of September 30, 1998 and for the twelve months
then ended, and (2) for the three month periods ended and as of March 31, 1999.
The December 31, 1998 financial data of Access Communications Services, Inc.,
LORECOM Technologies, Inc., American Telcom, Inc., Banner Communications, Inc.,
Communication Services, Inc., Telephone and Paging Divisions of EIS
Communications, Telkey Communications, Inc., Terra Telecom, Inc. and Travis
Business Systems, Inc. are derived from the financial statements of each
company, which have been audited by Deloitte & Touche LLP, independent auditors.
The December 31, 1998 financial data of Commercial Telecom Systems, Inc. are
derived from its financial statements, which have been audited by Hunter, Atkins
& Russell, PLC, independent auditors. The December 31, 1998 financial data of
Nobel Systems, Inc. are derived from its financial statements, which have been
audited by Saxon & Knol, P.C., independent auditors. The December 31, 1998
financial data of Able Communication Incorporated, Perkins Office Machines, Inc.
and The Phone Man Sales and Services, Inc. set forth in the "Others" column, as
well as the March 31, 1999 financial data of LORECOM and the interconnect
partners, are derived from the unaudited financial statements of each company,
which, in the opinion of each company's management, present fairly the financial
condition and results of operations of the company. The tables also set forth
the unaudited condensed historical financial data of the interconnect partners
and of LORECOM on a combined basis for the periods indicated. The information
should be read in conjunction with the historical financial statements and the
Unaudited Pro Forma Combined Financial Statements and the notes thereto included
elsewhere in this prospectus.

6
<PAGE> 11

LORECOM TECHNOLOGIES, INC.

HISTORICAL COMBINED BALANCE SHEETS
DECEMBER 31, 1998
(UNAUDITED)

ASSETS

<TABLE>
<CAPTION>
AMERICAN ACCESS BANNER CSI CTS EIS NOBEL
-------- -------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
CURRENT ASSETS:
Cash.................................... $ 82,545 $187,464 $ 13,486 $ 26,440 $ 54,532 $ -- $ --
Accounts receivable..................... 230,324 127,953 148,033 98,354 72,080 239,130 85,237
Inventory............................... 25,484 51,820 68,939 32,482 90,902 177,340 51,976
Other current assets.................... 2,800 3,864 -- -- -- -- --
-------- -------- -------- -------- -------- -------- --------
Total current assets.............. 341,153 371,101 230,458 157,276 217,514 416,470 137,213
PROPERTY AND EQUIPMENT, NET............... 75,659 143,044 79,140 45,944 14,843 19,212 32,489
OTHER ASSETS.............................. -- 198,977 -- 200 610 -- --
-------- -------- -------- -------- -------- -------- --------
TOTAL............................. $416,812 $713,122 $309,598 $203,420 $232,967 $435,682 $169,702
======== ======== ======== ======== ======== ======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
LIABILITIES:
Accounts payable........................ $ 50,751 $191,484 $ 68,432 $ 68,511 $137,590 $123,327 $ 46,083
Current portion of long-term debt....... 66,827 73,474 50,073 29,445 4,044 11,064 71,567
Other current liabilities............... 87,351 79,595 32,646 51,813 159,341 55,923 16,822
-------- -------- -------- -------- -------- -------- --------
Total current liabilities......... 204,929 344,553 151,151 149,769 300,975 190,314 134,472
Long-term debt.......................... -- 116,748 44,807 28,195 7,348 16,581 17,228
-------- -------- -------- -------- -------- -------- --------
Total liabilities................. 204,929 461,301 195,958 177,964 308,323 206,895 151,700
STOCKHOLDERS' EQUITY (DEFICIT)............ 211,883 251,821 113,640 25,456 (75,356) 228,787 18,002
-------- -------- -------- -------- -------- -------- --------
TOTAL............................. $416,812 $713,122 $309,598 $203,420 $232,967 $435,682 $169,702
======== ======== ======== ======== ======== ======== ========
</TABLE>

HISTORICAL COMBINED STATEMENTS OF OPERATIONS
DECEMBER 31, 1998
(UNAUDITED)

<TABLE>
<CAPTION>
AMERICAN ACCESS BANNER CSI CTS EIS NOBEL
---------- ---------- ---------- -------- ---------- ---------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
NET SALES................................ $1,168,070 $1,345,576 $1,548,874 $807,432 $1,437,932 $2,349,845 $953,046
COSTS AND EXPENSES:
Cost of sales.......................... 463,476 523,506 798,261 350,793 694,385 1,232,744 439,803
Salaries and benefits.................. 365,055 523,127 452,068 285,823 386,413 678,442 330,795
Selling, general and administrative.... 200,126 234,004 216,801 156,493 133,253 421,877 166,224
Interest............................... 3,028 47,444 6,689 4,335 5,099 2,226 9,729
Depreciation and amortization.......... 18,802 27,594 28,837 16,799 10,121 15,085 14,926
---------- ---------- ---------- -------- ---------- ---------- --------
Total costs and expenses......... 1,050,487 1,355,675 1,502,656 814,243 1,229,271 2,350,374 961,477
---------- ---------- ---------- -------- ---------- ---------- --------
INCOME (LOSS) BEFORE INCOME TAXES........ 117,583 (10,099) 46,218 (6,811) 208,661 (529) (8,431)
INCOME TAX (EXPENSE) BENEFIT............. (31,955) 1,515 -- -- (76,316) -- --
---------- ---------- ---------- -------- ---------- ---------- --------
NET INCOME (LOSS)........................ $ 85,628 $ (8,584) $ 46,218 $ (6,811) $ 132,345 $ (529) $ (8,431)
========== ========== ========== ======== ========== ========== ========
</TABLE>

7
<PAGE> 12

LORECOM TECHNOLOGIES, INC.

HISTORICAL COMBINED BALANCE SHEETS -- (CONTINUED)
DECEMBER 31, 1998
(UNAUDITED)

ASSETS

<TABLE>
<CAPTION>
INTERCONNECT
PARTNERS COMBINED
TELKEY TERRA TRAVIS OTHERS COMBINED LORECOM TOTAL
-------- -------- ---------- -------- ------------ -------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
CURRENT ASSETS:
Cash.................................. $140,053 $ 20,946 $ 153,409 $ 12,962 $ 691,837 $79,700 $ 771,537
Accounts receivable................... 154,280 118,120 381,421 63,644 1,718,576 -- 1,718,576
Inventory............................. 88,748 131,035 485,695 4,971 1,209,392 -- 1,209,392
Other current assets.................. 19,065 -- 46,063 282 72,074 1,933 74,007
-------- -------- ---------- -------- ---------- -------- ----------
Total current assets............ 402,146 270,101 1,066,588 81,859 3,691,879 81,633 3,773,512
PROPERTY AND EQUIPMENT, NET............. 73,494 64,920 118,640 28,469 695,854 40,721 736,575
OTHER ASSETS............................ 16,862 8,096 5,884 543 231,172 20,498 251,670
-------- -------- ---------- -------- ---------- -------- ----------
TOTAL........................... $492,502 $343,117 $1,191,112 $110,871 $4,618,905 $142,852 $4,761,757
======== ======== ========== ======== ========== ======== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
LIABILITIES:
Accounts payable...................... $ 31,364 $126,585 $ 172,654 $ 15,596 $1,032,377 $32,464 $1,064,841
Current portion of long-term debt..... 59,782 59,143 -- 13,000 438,419 8,049 446,468
Other current liabilities............. 54,701 86,145 382,341 5,953 1,012,631 98,296 1,110,927
-------- -------- ---------- -------- ---------- -------- ----------
Total current liabilities....... 145,847 271,873 554,995 34,549 2,483,427 138,809 2,622,236
Long-term debt........................ 24,780 56,362 -- 75,173 387,222 26,119 413,341
-------- -------- ---------- -------- ---------- -------- ----------
Total liabilities............... 170,627 328,235 554,995 109,722 2,870,649 164,928 3,035,577
STOCKHOLDERS' EQUITY (DEFICIT).......... 321,875 14,882 636,117 1,149 1,748,256 (22,076) 1,726,180
-------- -------- ---------- -------- ---------- -------- ----------
TOTAL........................... $492,502 $343,117 $1,191,112 $110,871 $4,618,905 $142,852 $4,761,757
======== ======== ========== ======== ========== ======== ==========
</TABLE>

HISTORICAL COMBINED STATEMENTS OF OPERATIONS -- (CONTINUED)
DECEMBER 31, 1998
(UNAUDITED)

<TABLE>
<CAPTION>
INTERCONNECT
PARTNERS COMBINED
TELKEY TERRA TRAVIS OTHERS COMBINED LORECOM TOTAL
---------- ---------- ---------- -------- ------------ --------- -----------
<S> <C> <C> <C> <C> <C> <C> <C>
NET SALES........................... $1,393,165 $1,956,623 $4,198,047 $656,171 $17,814,781 $ -- $17,814,781
COSTS AND EXPENSES:
Cost of sales..................... 566,249 1,052,621 1,771,499 334,140 8,227,477 -- 8,227,477
Salaries and benefits............. 476,800 650,889 1,814,593 204,155 6,168,160 63,267 6,231,427
Selling, general and
administrative.................. 249,538 204,014 618,179 81,264 2,681,773 46,983 2,728,756
Interest.......................... 7,161 19,747 9,177 11,136 125,771 850 126,621
Depreciation and amortization..... 46,874 29,459 43,353 16,478 268,328 1,978 270,306
---------- ---------- ---------- -------- ----------- --------- -----------
Total costs and expenses.... 1,346,622 1,956,730 4,256,801 647,173 17,471,509 113,078 17,584,587
---------- ---------- ---------- -------- ----------- --------- -----------
INCOME (LOSS) BEFORE INCOME TAXES... 46,543 (107) (58,754) 8,998 343,272 (113,078) 230,194
INCOME TAX (EXPENSE) BENEFIT........ (11,792) 16 9,689 -- (108,843) -- (108,843)
---------- ---------- ---------- -------- ----------- --------- -----------
NET INCOME (LOSS)................... $ 34,751 $ (91) $ (49,065) $ 8,998 $ 234,429 $(113,078) $ 121,351
========== ========== ========== ======== =========== ========= ===========
</TABLE>

8
<PAGE> 13

LORECOM TECHNOLOGIES, INC.

HISTORICAL COMBINED BALANCE SHEET
MARCH 31, 1999
(UNAUDITED)

ASSETS

LIABILITIES AND STOCKHOLDERS' EQUITY

LIABILITIES:
Accounts payable....................... $ 20,492 $177,520 $ 68,224 $ 89,685 $133,719 $168,237 $ 52,108
Current portion of long-term debt...... 26,825 74,765 49,174 27,410 4,400 11,352 60,645
Other current liabilities.............. 37,215 60,755 25,066 38,121 167,571 51,725 31,199
-------- -------- -------- -------- -------- -------- --------
Total current liabilities........ 84,532 313,040 142,464 155,216 305,690 231,314 143,952
Long-term debt......................... -- 102,675 39,760 26,398 5,739 13,831 14,250
-------- -------- -------- -------- -------- -------- --------
Total liabilities................ 84,532 415,715 182,224 181,614 311,429 245,145 158,202
STOCKHOLDERS' EQUITY (DEFICIT)........... 191,301 88,092 39,042 45,386 (49,799) 242,026 5,326
-------- -------- -------- -------- -------- -------- --------
TOTAL............................ $275,833 $503,807 $221,266 $227,000 $261,630 $487,171 $163,528
======== ======== ======== ======== ======== ======== ========
</TABLE>

9
<PAGE> 14

LORECOM TECHNOLOGIES, INC.

HISTORICAL COMBINED BALANCE SHEET -- (CONTINUED)
MARCH 31, 1999
(UNAUDITED)

ASSETS

LIABILITIES AND STOCKHOLDERS' EQUITY

LIABILITIES:
Accounts payable........................... $ 38,247 $155,618 $ 104,176 $ 27,832 $1,035,858 $268,873 1,304,731
Current portion of long-term debt.......... 14,424 51,943 185,000 13,000 518,938 8,255 527,193
Other current liabilities.................. 31,700 74,277 351,358 6,338 875,325 188,903 1,064,228
-------- -------- ---------- -------- ---------- -------- ----------
Total current liabilities............ 84,371 281,838 640,534 47,170 2,430,121 466,031 2,896,152
Long-term debt............................. 13,108 37,338 -- 75,989 329,088 23,966 353,054
-------- -------- ---------- -------- ---------- -------- ----------
Total liabilities.................... 97,479 319,176 640,534 123,159 2,759,209 489,997 3,249,206
STOCKHOLDERS' EQUITY (DEFICIT)............... 326,442 61,466 662,171 (17,122) 1,594,331 178,210 1,772,541
-------- -------- ---------- -------- ---------- -------- ----------
TOTAL................................ $423,921 $380,642 $1,302,705 $106,037 $4,353,540 $668,207 $5,021,747
======== ======== ========== ======== ========== ======== ==========
</TABLE>

10
<PAGE> 15

LORECOM TECHNOLOGIES, INC.

HISTORICAL COMBINED STATEMENTS OF OPERATIONS
FOR THE THREE MONTHS ENDED MARCH 31, 1999 AND 1998
(UNAUDITED)

<TABLE>
<CAPTION>
AMERICAN ACCESS BANNER CSI
------------------- ------------------- ------------------- -------------------
1999 1998 1999 1998 1999 1998 1999 1998
-------- -------- -------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
NET SALES.............................. $261,415 $216,119 $363,303 $287,023 $240,355 $276,409 $263,503 $158,053
COSTS AND EXPENSES:
Cost of sales........................ 129,797 107,578 147,845 117,680 125,177 144,334 124,528 70,370
Salaries and benefits................ 104,001 72,806 132,439 137,234 125,828 94,191 78,551 69,047
Selling, general and
administrative..................... 49,024 30,026 62,789 58,999 49,990 48,179 33,924 22,131
Interest............................. 544 626 7,390 8,012 2,467 1,245 1,820 1,043
Depreciation and amortization........ 4,700 5,866 7,903 7,796 5,559 3,900 4,750 4,199
-------- -------- -------- -------- -------- -------- -------- --------
Total costs and expenses....... 288,066 216,902 358,366 329,721 309,021 291,849 243,573 166,790
-------- -------- -------- -------- -------- -------- -------- --------
INCOME (LOSS) BEFORE
INCOME TAXES......................... (26,651) (783) 4,937 (42,698) (68,666) (15,440) 19,930 (8,737)
INCOME TAX (EXPENSE)
BENEFIT.............................. 6,069 -- (1,000) 8,581 -- -- -- --
-------- -------- -------- -------- -------- -------- -------- --------
NET INCOME (LOSS)...................... $(20,582) $ (783) $ 3,937 $(34,117) $(68,666) $(15,440) $ 19,930 $ (8,737)
======== ======== ======== ======== ======== ======== ======== ========
</TABLE>

<TABLE>
<CAPTION>
CTS EIS NOBEL
------------------- ------------------- -------------------
1999 1998 1999 1998 1999 1998
-------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
NET SALES........................................... $332,225 $349,347 $588,396 $465,079 $298,942 $264,905
COSTS AND EXPENSES:
Cost of sales..................................... 189,634 206,792 301,433 197,056 156,881 128,845
Salaries and benefit.............................. 70,830 96,957 164,754 171,046 98,896 90,682
Selling, general and administrative............... 33,566 32,763 103,906 94,845 51,034 31,868
Interest.......................................... 263 805 224 -- 1,647 3,110
Depreciation and amortization..................... 2,500 1,805 2,500 -- 3,160 3,000
-------- -------- -------- -------- -------- --------
Total costs and expenses.................... 296,793 339,122 572,817 462,947 311,618 257,505
-------- -------- -------- -------- -------- --------
INCOME (LOSS) BEFORE INCOME TAXES................... 35,432 10,225 15,579 2,132 (12,676) 7,400
INCOME TAX (EXPENSE) BENEFIT........................ (9,875) (2,026) (2,340) -- -- --
-------- -------- -------- -------- -------- --------
NET INCOME (LOSS)................................... $ 25,557 $ 8,199 $ 13,239 $ 2,132 $(12,676) $ 7,400
======== ======== ======== ======== ======== ========
</TABLE>

11
<PAGE> 16
LORECOM TECHNOLOGIES, INC.

HISTORICAL COMBINED STATEMENTS OF OPERATIONS -- (CONTINUED)
FOR THE THREE MONTHS ENDED MARCH 31, 1999 AND 1998
(UNAUDITED)

<TABLE>
<CAPTION>
TELKEY TERRA TRAVIS OTHERS
------------------- ------------------- --------------------- -------------------
1999 1998 1999 1998 1999 1998 1999 1998
-------- -------- -------- -------- ---------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
NET SALES......................... $388,836 $244,959 $605,247 $448,477 $1,140,659 $897,513 $130,987 $193,572
COSTS AND EXPENSES:
Cost of sales................... 176,884 95,227 268,308 264,505 549,820 331,185 69,515 110,503
Salaries and benefit............ 141,464 102,508 227,105 152,232 442,828 408,155 52,178 37,906
Selling, general and
administrative................ 41,554 43,189 71,131 61,993 106,143 136,686 23,686 19,717
Interest........................ (226) 815 6,274 415 1,539 1,350 1,148 3,376
Depreciation and amortization... 7,450 6,889 8,100 7,500 7,722 6,931 2,819 4,119
-------- -------- -------- -------- ---------- -------- -------- --------
Total costs and
expenses................ 367,126 248,628 580,918 486,645 1,108,052 884,307 149,346 175,621
-------- -------- -------- -------- ---------- -------- -------- --------
INCOME (LOSS) BEFORE INCOME
TAXES........................... 21,710 (3,669) 24,329 (38,168) 32,607 13,206 (18,359) 17,951
INCOME TAX (EXPENSE) BENEFIT...... (3,257) 550 (4,754) 5,732 (6,553) (2,653) 3,668 (3,604)
-------- -------- -------- -------- ---------- -------- -------- --------
NET INCOME (LOSS)................. $ 18,453 $ (3,119) $ 19,575 $(32,436) $ 26,054 $ 10,553 $(14,691) $ 14,347
======== ======== ======== ======== ========== ======== ======== ========
</TABLE>

<TABLE>
<CAPTION>
INTERCONNECT PARTNERS
COMBINED LORECOM COMBINED TOTAL
----------------------- ---------------- -----------------------
1999 1998 1999 1998 1999 1998
---------- ---------- --------- ---- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
NET SALES........................................ $4,613,868 $3,801,456 $ 26,436 -- $4,640,304 $3,801,456
COSTS AND EXPENSES:
Cost of sales.................................. 2,239,822 1,774,075 26,436 -- 2,266,258 1,774,075
Salaries and benefits.......................... 1,638,874 1,432,764 121,323 -- 1,760,197 1,432,764
Selling, general and administrative............ 626,747 580,396 84,455 -- 711,202 580,396
Interest....................................... 23,090 20,797 484 -- 23,574 20,797
Depreciation and amortization.................. 57,163 52,005 2,460 -- 59,623 52,005
---------- ---------- --------- --- ---------- ----------
Total costs and expenses................. 4,585,696 3,860,037 235,158 -- 4,820,854 3,860,037
---------- ---------- --------- --- ---------- ----------
INCOME (LOSS) BEFORE INCOME TAXES................ 28,172 (58,581) (208,722) -- (180,550) (58,581)
INCOME TAX (EXPENSE) BENEFIT..................... (18,042) 6,580 -- -- (18,042) 6,580
---------- ---------- --------- --- ---------- ----------
NET INCOME (LOSS)................................ $ 10,130 $ (52,001) $(208,722) -- $ (198,592) $ (52,001)
========== ========== ========= === ========== ==========
</TABLE>

12
<PAGE> 17

UNAUDITED PRO FORMA COMBINED FINANCIAL STATEMENTS

The following unaudited pro forma combined financial statements give effect
to the acquisitions by LORECOM of the outstanding capital stock or assets of the
interconnect partners. The acquisitions will be accounted for using the purchase
method of accounting. LORECOM has been identified as the accounting acquiror
because our stockholders will own approximately 86% of the outstanding stock
after the acquisitions, and our management will continue as the executive
management of the consolidated entity.

December 31, 1998 unaudited pro forma statements of operations. The
unaudited pro forma combined statement of operations give effect to these
transactions as if they had occurred on January 1, 1998. All of the historical
financial information included in the "Interconnect Partners Historical
Combined" column below is as of December 31, 1998 and for the twelve months then
ended, except for Telkey Communications, Inc. and Terra Telecom, Inc., whose
information is for the nine months ended September 30, 1998.

March 31, 1999 unaudited pro forma combined financial statements. The
unaudited pro forma combined balance sheet gives effect to the acquisitions and
the offering as if they had occurred on March 31, 1999. The unaudited pro forma
combined statements of operations give effect to these transactions as if they
had occurred on January 1, 1998. All of the historical financial information
included in the "Interconnect Partners Historical Combined" column below is as
of March 31, 1999 and for the three months then ended.

For purposes of computing the purchase price for accounting purposes, the
value of shares is determined using an estimated discounted value of $9.90 per
share, which represents a discount of 10 percent from the initial public
offering price of $11.00 per share due to restrictions on the sale and
transferability of the shares issued. The purchase price has been allocated to
the interconnect companies' historical assets and liabilities based on their
respective carrying values as these carrying values are deemed to represent the
fair market value of these assets and liabilities. LORECOM has allocated a
portion of the purchase price to noncompete agreements based on an analysis
prepared by LORECOM. The allocations of the purchase price are considered
preliminary until such time as the closing of the offering and the acquisitions.

LORECOM has preliminarily analyzed the savings that it expects to realize
from reductions in salaries and benefits to certain stockholders of the
interconnect partners who will not be employees of LORECOM. Net reductions have
been reflected in the pro forma combined statements of operations for the
stockholders and management of the interconnect partners who will not be
employed by LORECOM and for certain other cost savings, including the overhead
allocations made by the parent of one of the interconnect partners. These
savings have been offset by the incremental increase in costs related to
consulting agreements and LORECOM's new management. Subsequent to the offering,
LORECOM believes that it can realize savings from (1) increased productivity of
its technical service staff, (2) greater volume discounts from suppliers, and
(3) consolidation of insurance programs and other corporate operations, such as
financial and management reporting. Integration of the interconnect partners may
also present opportunities to reduce costs through the elimination of
duplicative functions and through increased employee utilization. However,
subsequent to the offering, LORECOM will incur additional costs and expenditures
for corporate expenses related to being a public company, systems development
and corporate administration. Neither these anticipated savings nor the
anticipated off-setting costs have been included in the pro forma combined
financial statements of LORECOM.

The pro forma adjustments are based on estimates, available information and
certain assumptions and may be revised as additional information becomes
available. The pro forma combined financial data do not purport to represent
what LORECOM's financial position or results of operations would actually have
been if such transactions in fact had occurred on those dates and are not
necessarily representative of LORECOM's financial position or results of
operations for any future period. Since the interconnect partners were not under
common control or management, historical combined results may not be comparable
to, or indicative of, future performance. The unaudited pro forma combined
financial statements should be read in conjunction with the risk factors
starting on page 3 of this prospectus and the financial statements and notes
thereto included elsewhere in this prospectus.

13
<PAGE> 18

LORECOM TECHNOLOGIES, INC.

UNAUDITED PRO FORMA COMBINED BALANCE SHEET
MARCH 31, 1999

ASSETS

<TABLE>
<CAPTION>
INTERCONNECT
PARTNERS PRO FORMA
HISTORICAL PRO FORMA AS
COMBINED LORECOM ADJUSTMENTS NOTES ADJUSTED
------------ --------- ----------- ----- -----------
<S> <C> <C> <C> <C> <C>
Cash................................ $ 293,445 $ 28,981 $ 5,056,474 1 $ 5,306,900
(72,000) 7
Accounts receivable................. 1,989,106 26,436 2,015,542
Inventory........................... 1,274,550 1,274,550
Other current assets................ 79,263 2,721 81,984
---------- --------- ----------- -----------
Total current assets...... 3,636,364 58,138 4,984,474 8,678,976
Property and equipment, net......... 668,838 100,425 (17,800) 7 751,463
Goodwill and other intangible
assets............................ 12,466,319 2 12,466,319
Other assets........................ 48,338 509,644 (509,644) 1 48,338
---------- --------- ----------- -----------
TOTAL..................... $4,353,540 $ 668,207 $16,923,349 $21,945,096
========== ========= =========== ===========

LIABILITIES AND STOCKHOLDERS' EQUITY

LIABILITIES
Accounts payable.................... $1,035,858 $ 268,873 $ (153,670) 1 $ 1,151,061
Accrued expenses.................... 26,235 35,233 61,468
Current portion of long-term debt... 518,938 8,255 527,193
Other current liabilities........... 849,090 153,670 1,002,760
---------- --------- ----------- -----------
Total current
liabilities............. 2,430,121 466,031 (153,670) 2,742,482
Long-term debt...................... 329,088 23,966 2,600 7 355,654

STOCKHOLDERS' EQUITY
Common stock........................ 8,938 7,610 10,869 1 27,417
Additional paid-in capital.......... 185,952 492,400 18,462,991 1 19,141,343
Retained earnings................... 1,399,441 (321,800) (1,399,441) 1 (321,800)
---------- --------- ----------- -----------
Total stockholders'
equity.................. 1,594,331 178,210 17,074,419 18,846,960
---------- --------- ----------- -----------
TOTAL..................... $4,353,540 $ 668,207 $16,923,349 $21,945,096
========== ========= =========== ===========
</TABLE>

14
<PAGE> 19

LORECOM TECHNOLOGIES, INC.

UNAUDITED PRO FORMA COMBINED STATEMENTS OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1998

<TABLE>
<CAPTION>
INTERCONNECT
PARTNERS PRO FORMA
HISTORICAL PRO FORMA AS
COMBINED LORECOM ADJUSTMENTS NOTES ADJUSTED
------------ --------- ----------- ----- -----------
<S> <C> <C> <C> <C> <C>
Net sales............................ $17,814,781 $17,814,781
----------- -----------
Cost of sales........................ 8,227,477 8,227,477
Salaries and benefits................ 6,168,160 $ 63,267 $(107,708) 3 6,123,719
Selling, general and
administrative..................... 2,681,773 46,983 2,728,756
Interest............................. 125,771 850 126,621
Depreciation and amortization........ 268,328 1,978 912,548 4 1,182,854
----------- --------- --------- -----------
Total costs and expenses... 17,471,509 113,078 804,840 18,389,427
----------- --------- --------- -----------
Income (loss) before income taxes.... 343,272 (113,078) (804,840) (574,646)
Income tax (expense) benefit......... (108,843) (19,560) 5 (128,403)
----------- --------- --------- -----------
Net income (loss).................... $ 234,429 $(113,078) $(824,400) $ (703,049)
=========== ========= ========= ===========
Net loss per share (both basic and
diluted)........................... 6 $ (0.29)
===========
Number of shares used in computing
net loss per share................. 2,456,632
===========
</TABLE>

15
<PAGE> 20

LORECOM TECHNOLOGIES, INC.

UNAUDITED PRO FORMA COMBINED STATEMENTS OF OPERATIONS
FOR THE THREE MONTHS ENDED MARCH 31, 1999

<TABLE>
<CAPTION>
INTERCONNECT
PARTNERS PRO FORMA
HISTORICAL PRO FORMA AS
COMBINED LORECOM ADJUSTMENTS NOTES ADJUSTED
------------ --------- ----------- ----- ----------
<S> <C> <C> <C> <C> <C>
Net sales.............................. $4,613,868 $ 26,436 $4,640,304
---------- --------- ----------
Cost of sales.......................... 2,239,822 26,436 2,266,258
Salaries and benefits.................. 1,638,874 121,323 $(201,157) 3 1,559,040
Selling, general and administrative.... 626,747 84,455 711,202
Interest............................... 23,090 484 23,574
Depreciation and amortization.......... 57,163 2,460 228,137 4 287,760
---------- --------- --------- ----------
Total costs and expenses..... 4,585,696 235,158 26,980 4,847,834
---------- --------- --------- ----------
Income (loss) before income taxes...... 28,172 (208,722) (26,980) (207,530)
Income tax (expense) benefit........... (18,042) 10,192 5 (7,850)
---------- --------- --------- ----------
Net income (loss)...................... $ 10,130 $(208,722) $ (16,788) $ (215,380)
========== ========= ========= ==========
Net loss per share (both basic and
diluted)............................. 6 $ (0.09)
==========
Number of shares used in computing net
loss per share....................... 2,456,632
==========
</TABLE>

16
<PAGE> 21

LORECOM TECHNOLOGIES, INC.

NOTES TO THE UNAUDITED PRO FORMA COMBINED FINANCIAL STATEMENTS

NOTE 1

To record the issuance of stock, net of offering costs, from the sale of
shares in the offering and from the issuance of stock in the acquisitions as
follows:

<TABLE>
<CAPTION>
MARCH 31,
1999
------------
<S> <C>
Cash proceeds.......................................... $ 17,600,000
Offering costs......................................... (2,700,000)
Less costs incurred.................................... 509,644
Payment to related party............................... (153,670)
------------
Net proceeds........................................... 15,255,974
Less amount of proceeds paid to partners............... (10,199,500)
------------
Net cash proceeds...................................... $ 5,056,474
============
</TABLE>

The equity effect was recorded at an assumed issuance of 1,600,000 shares
at $11.00 per share, and 380,682 shares at a value of $9.90 per share, with a
par value of $.01 per share for LORECOM common stock.

Also to eliminate the interconnect partners' historical combined total
equity, including $8,938 in common stock and $185,952 in additional paid-in
capital.

NOTE 2

To reflect allocation of the $13,968,250 purchase price, consisting of
$10,199,500 in cash and $3,768,750 in our common stock, of the interconnect
partners as follows:

<TABLE>
<S> <C>
Cost of net tangible assets........................... $ 1,501,931
-----------
Identified intangible assets.......................... 1,688,631
Goodwill.............................................. 10,777,688
-----------
Adjustment to other assets............................ 12,466,319
-----------
Total purchase price........................ $13,968,250
===========
</TABLE>

Identified intangible assets consist of noncompetition agreements with the
interconnect partners' stockholders.

17
<PAGE> 22

NOTE 3

To reflect:

<TABLE>
<CAPTION>
MARCH 31, DECEMBER 31,
1999 1998
--------- ------------
<S> <C> <C>
Expense reductions:
Salaries and benefits for stockholders of the interconnect
partners that will not continue subsequent to the
acquisition............................................ $172,277 $ 689,108
Overhead allocation from the parent of an interconnect
partner that will not continue......................... 76,618 309,333
-------- ---------
Total estimated cost reductions................... 248,895 998,441
Less additional costs resulting from the purchase:
Consulting agreements with certain interconnect
partners............................................... (39,000) (156,000)
Salaries and benefits for administrative employees of
LORECOM for a twelve month period, net of actual
expenses incurred...................................... (8,738) (734,733)
-------- ---------
Pro forma adjustment to salaries and benefits............... $201,157 $ 107,708
======== =========
</TABLE>

NOTE 4

To reflect amortization of goodwill and identifiable intangible assets. The
companies being acquired have been in business for periods ranging from 12 to 20
years. Each company has had stable management and long-term employees. None of
the companies have any patents or licenses, and each of the interconnect
partners has proven its ability to sell and service telecommunications equipment
over an extended period of time. Management has determined the amortization
period for goodwill separately for each company over periods ranging from 5 to
20 years with an average period equal to 18 years. Identifiable intangible
assets represent non-compete agreements and have been amortized over periods
ranging from four to eight years with an average period of five years.

NOTE 5

To reflect the incremental provision for federal and state income taxes,
assuming each company acquired was subject to federal and state income tax, and
provide the income tax benefit of pro forma net expenses. The adjustment assumes
a corporate income tax rate of 38% and that a majority of the goodwill and
intangible asset amortization is non-deductible.

NOTE 6

Unaudited pro forma net loss per share (both basic and diluted) is
calculated using 2,456,632 shares of common stock. Shares outstanding include
1,600,000 shares sold pursuant to this offering, 380,682 shares issued to
interconnect partners and 475,950 shares owned by the existing shareholders of
LORECOM following the cancellation of 285,000 shares from an exiting
stockholder.

NOTE 7

To reflect certain asset distributions from certain of the interconnect
partners to their stockholders and assumption of certain liabilities prior to
the acquisitions consisting of:

<TABLE>
<S> <C>
Cash....................................................... 72,000
Property and equipment..................................... 17,800
Long-term debt............................................. 2,600
</TABLE>

18
<PAGE> 23

CAPITALIZATION

The following table sets forth, as of March 31, 1999, the cash, long-term
debt, including current maturities, and capitalization of (1) LORECOM on an
actual basis, (2) the interconnect partners on an historical combined basis and
(3) LORECOM on a pro forma combined basis to give effect to the acquisitions and
the offering and the application of the estimated net proceeds therefrom. This
table should be read in conjunction with the Unaudited Pro Forma Combined
Financial Statements of LORECOM and the related notes included elsewhere in this
prospectus.

<TABLE>
<CAPTION>
MARCH 31, 1999
------------------------------------------------
INTERCONNECT PARTNERS LORECOM
LORECOM HISTORIC PRO FORMA AS
ACTUAL COMBINED ADJUSTED
--------- --------------------- ------------
<S> <C> <C> <C>
Cash.............................................. $ 28,981 $ 293,445 $ 5,306,900
========= ========== ===========
Long-term debt; including current portion:........ 32,221 848,026 882,847
Stockholders' equity:
Preferred Stock: $.01 par value, 500,000 shares
authorized: no shares issued and
outstanding.................................. -- -- --
Common Stock: $.01 par value, 4,500,000 shares
authorized: 760,950 shares issued and
outstanding, LORECOM; 2,456,632 shares issued
and outstanding, LORECOM pro forma as
adjusted..................................... 7,610 8,938 27,417
Additional paid-in capital...................... 492,400 185,952 19,141,343
Retained earnings (deficit)..................... (321,800) 1,399,441 (321,800)
--------- ---------- -----------
Total stockholders' equity.............. 178,210 1,594,331 18,846,960
--------- ---------- -----------
Total debt and capitalization........... $ 210,431 $2,442,357 $19,729,807
========= ========== ===========
</TABLE>

USE OF PROCEEDS

The net proceeds to LORECOM from the issuance and sale of its common stock
offered hereby, after deducting the underwriting discount and expenses of the
offering, are estimated to be $14.9 million ($17.3 million if the underwriter's
over-allotment option is exercised in full), assuming an offering price of
$11.00 per share. The following table illustrates the sources and uses of the
net proceeds to LORECOM, as estimated by its management, in connection with the
offering:

<TABLE>
<CAPTION>
SOURCE OF FUNDS
---------------
<S> <C>
Offering of common stock....... $14,900,000
-----------
Total sources of funds.... $14,900,000
===========
</TABLE>

<TABLE>
<CAPTION>
USES OF FUNDS
-------------
<S> <C>
Acquisition of the interconnect
partners..................... $10,199,500
Repayment of the debt.......... 640,000
Management information
system....................... 500,000
Future acquisitions............ 2,000,000
Working capital................ 1,560,500
-----------
Total uses of funds....... $14,900,000
===========
</TABLE>

The repaid debt consists of balance due under a loan from our principal
shareholder. Advances under the loan agreement were used to complete this
offering, to acquire the interconnect partners and for working capital. The loan
is payable on the earlier to occur of the closing of this offering or December
31, 1999, and bears interest at 10%.

Pending their use, all net proceeds from this offering to be used for the
purchase and installation of a management information system and for future
acquisitions will be invested in federally insured or guaranteed short-term
interest bearing investments.

19
<PAGE> 24

DILUTION

The initial public offering price is substantially higher than the net
tangible book value per share of LORECOM's common stock. As a result, investors
purchasing common stock in this offering will incur immediate dilution in net
tangible book value per share of common stock. The historical combined net
tangible book value of LORECOM as of March 31, 1999 was approximately
$1,262,897, or approximately $1.47 per share, after giving effect to the
acquisitions. See "Summary Combined Financial Information." The historical
combined net tangible book value per share represents our pro forma net tangible
assets as of March 31, 1999 divided by the number of shares to be outstanding
after giving effect to the acquisitions. After giving effect to the sale of an
estimated 1,600,000 shares that we are offering at an assumed initial public
offering price of $11.00 per share and deducting estimated underwriting
discounts and commissions and estimated offering expenses payable by LORECOM,
our pro forma net tangible book value as of March 31, 1999 would have been
approximately $6,380,641 or approximately $2.60 per share. This represents an
immediate increase in pro forma net tangible book value of approximately $1.13
per share to existing stockholders and an immediate dilution of approximately
$8.40 per share to new investors purchasing shares in the offering. The
following table illustrates this pro forma dilution:

<TABLE>
<S> <C>
Assumed initial public offering price per share............. $11.00
------
Pro forma net tangible book value per share before the
offering.................................................. 1.47
Increase in pro forma net tangible value per share
attributable to existing stockholders..................... 1.13
------
Pro forma net tangible book value per share after the
offering.................................................. 2.60
------
Dilution per share to new investors......................... $ 8.40
======
</TABLE>

The following table sets forth, on a pro forma basis as of July 15, 1999,
the number of shares of common stock purchased from LORECOM, the total
consideration to LORECOM and the average price per share paid to LORECOM by
existing stockholders and the new investors purchasing shares from LORECOM in
the acquisitions and the offering (before deducting underwriting discounts and
commissions and estimated offering expenses):

<TABLE>
<CAPTION>
SHARES PURCHASED TOTAL CONSIDERATION AVERAGE
------------------- --------------------- PRICE
NUMBER PERCENT AMOUNT PERCENT PER SHARE
--------- ------- ----------- ------- ---------
<S> <C> <C> <C> <C> <C>
Existing stockholders............. 475,950 19.37% $ 500,001 2.29% $ 1.05
Interconnect partners............. 380,682 15.50% 3,768,750 17.23% 9.90
New Investors..................... 1,600,000 65.13% 17,600,000 80.48% 11.00
--------- ----- ----------- ----- ------
Total................... 2,456,632 100% $21,868,751 100% $ 8.90
========= ===== =========== ===== ======
</TABLE>

20
<PAGE> 25

BUSINESS

LORECOM was incorporated in Oklahoma on September 4, 1998, under the name
Advantage Business Solutions, Inc., which changed its name to The Alliance
Group, Inc. on March 17, 1999 and then to LORECOM on May 12, 1999. We formed
LORECOM so that we could consolidate the operations of certain interconnect
companies in Oklahoma. When we refer to LORECOM throughout this prospectus, we
are also referring to The Alliance Group and Advantage Business Solutions.
LORECOM is a subchapter S corporation. We intend to terminate our subchapter S
status prior to the closing of this offering. LORECOM is in the process of
trademarking its name and expects to receive its trademark in the first quarter
of 2000.

LORECOM'S BUSINESS AND GROWTH STRATEGY

Our objective is to become a leader in the next evolution of
interconnection. Interconnect companies have traditionally served as bridges or
integrators between the customers' telecommunications equipment and the public
telephone network. LORECOM anticipates the interconnect's role as a telephone
equipment provider to expand and to include other products and services related
to the merging of voice and data networks. LORECOM also believes that the nature
of the customer-interconnect relationship will put LORECOM in a position to
provide its customers with best-of-class products and services. At the same
time, vendors and suppliers can channel their products through LORECOM to our
consolidated customer base.

LORECOM's primary growth strategy will be the acquisition of interconnect
companies in states contiguous to Oklahoma. Following the acquisitions of the
thirteen original interconnect partners, LORECOM expects to duplicate that model
in the surrounding states. We believe that economies of scale will benefit the
company as it utilizes its growing customer base as a means of distributing
telecommunications products and services.

LORECOM will maintain its market presence in support of traditional
telephone equipment, and will capitalize on as well as take advantage of the
strong demand for emerging technologies in telecommunication equipment and
services. The telecommunications industry has begun to merge traditionally
separate networks of voice and data into one consolidated network. Therefore,
LORECOM will serve as the integrator or bridge between the communications
service provider and the customer.

We believe that LORECOM will gain a significant share of the
interconnect-related telecommunications service business in its regional market.
As part of our business strategy, we will concentrate on:

Providing an integrated portfolio of services. We believe that substantial
demand exists among customers in our target markets for a "one stop" integrated
portfolio of services that satisfies all of their telephone equipment and
related software applications needs. By bundling a wide variety of services and
equipment, we will provide our customers "one stop" shopping for all of their
data networking, data communication and telecommunications needs.

Cross-selling additional services to existing customers. Our interconnect
partners will become multi-service companies. We believe we can increase our
revenues at a relatively minor incremental cost by offering an expanded range of
services to the customers of the interconnect partners. We will have a
substantial reservoir of prospective business customers that are already
familiar with some aspects of our services.

Utilizing the regional customer base. We plan to utilize the consolidated
regional customer base with emerging network providers of voice and data to
provide enhanced services and increase our market presence.

Exploring potential acquisitions and mergers. While we expect to grow
through expanded sales, service and cross marketing efforts, we believe that
there are a number of attractive acquisition candidates in Oklahoma and the
surrounding region.

21
<PAGE> 26

Focusing on small and medium-sized customers. We will principally target
small and medium-sized business customers, initially in Oklahoma, and then
throughout the surrounding region. Growth and spending by these companies, which
generally have fewer than 1,000 telephone, modem and fax connections, reflects a
trend in the overall economy which shows that small and medium-sized companies
are acquiring the technology previously available only to larger companies.
These companies are acquiring more sophisticated technology and, as a result,
requiring more service and support coverage.

Marketing and customer service. We will seek long-term service contracts
with our customers and hope to maintain a low customer attrition rate. We intend
to use an information system which provides immediate access to customer
service, facility inventory and billing records, allowing seamless provisioning
of new service, quick response to service problems and inquiries and a single
invoice for all services.

THE MARKET

The telecommunications industry in the United States is immense and robust.
According to the 1998 MultiMedia Telecommunications Market Review and Forecast,
spending on telecommunications equipment, software and services totaled $406.7
billion in 1997, an increase of 11.3% over 1996 -- nearly twice the 5.8 percent
rate of growth of the economy as a whole. The need to transmit larger volumes of
information, the increased spending by small and medium-sized companies, the
desire to integrate voice and data, the need for more compatible equipment
stemming from the development of standards and the search for cost-effective
solutions are among the principal factors fueling the telecommunications
industry.

Services in support of telecommunications equipment. As the installed base
of high-technology telecommunications equipment rises, demand for services
associated with the support of this equipment grows too. According to the 1998
MultiMedia Telecommunications Market Review and Forecast, industry spending for
these services totaled $82 billion in 1997 and increased by 17.3% in 1997. These
services include market segments in which LORECOM will be positioning itself for
future growth, such as:

- Maintenance and repair;

- Logistical support;

- Providing integration of products from different vendors;

- Technical assistance for hardware and software operations;

- End-user training; and

- Information technology consulting.

Equipment-based sales. The Telecommunications Industry Association market
studies indicate that the telephone system markets will continue strong growth
fueled by system replacements, add-on lines, new purchases and shifts away from
older technology. The majority of shipments and the fastest growth have occurred
in companies with fewer than 1,000 telephone, modem and fax connections,
reflecting the trend in the overall economy in which small and medium-sized
companies are acquiring the technology previously available only to larger
companies. This market segment coincides directly with the target market for the
LORECOM partners. LORECOM believes the small to medium-sized companies will
directly influence its future growth.

Agency agreements for local and long distance. Local and long distance
carriers use agents, like the LORECOM partners, as a cost-effective way to sell
services with commissions ranging from approximately 6% to 15% and, generally,
being paid over the life of the contract. Carriers tend to seek out business
partners who can add value by providing access to new market segments. Some of
the LORECOM partners already enjoy a good agency relationship with Southwestern
Bell. LORECOM would like to enter into similar relationships with long distance
carriers and data communication carriers.

In each of our targeted markets, a number of interconnect companies provide
telecommunications services. Consequently, we have numerous opportunities to
acquire companies that will supply us with

22
<PAGE> 27

important technical support personnel, as well as management expertise. The
interconnect companies' business customers would provide us with a base for
further expansion, increased cash flow and product line development.

In general, an interconnect company has a client base that is considerably
more stable than the traditional carrier-driven long distance consumer base.
Industry data suggest that interconnect companies have client relationships that
last from five to ten years, or longer. On the other hand, long distance
companies, on average, retain customers for only 18 months. Accordingly, the
foundation of our success will be our partners' relationships with their base of
business customers. Many of the business customers have been satisfied clients
for years, in several cases for as long as 15 or 20 years. The longevity of
these business relationships reflects the integrity and quality of service
provided by the partners.

PRODUCTS AND SERVICES

Each of the interconnect partners has two or three primary lines of
telephone equipment it sells and supports. However, many of them perform
maintenance on three to four times that many different manufacturers' products.
This broad base of experience has allowed the interconnect partners to service a
wide range of customers and gain expertise in a wide array of communication
products.

LORECOM intends to focus on equipment lines that have a broad base of
support with the partners, have a strong market share in target market segments
and provide equipment that can easily be updated to accommodate new and emerging
technologies. LORECOM expects to enter into agreements with some vendors that
would not have been available to the partners without LORECOM. LORECOM has
provided the partners with new products to sell their customers and the
opportunity to compete in additional geographic areas.

We will provide new products and services to our interconnect partners.
Some of the partners will enjoy increased margins in their current equipment
lines due to the combined purchasing power of two or more partners. We plan to
market and support the following products and services through the interconnect
partners:

- Telephone equipment sales and support;

- Telecommunications network design for medium to large companies and
companies having multiple locations, intrastate and/or interstate;

- Remote management and support of customer premise telephone equipment;

- Telephone software applications such as:

(1) Voice mail;

(2) Unified messaging -- combines voice mail, fax and e-mail to allow
users to access all of their messages through the telephone or at
their personal computer;

(3) Interactive voice recognition -- systems that allow individuals to
access information in an organization's computer data base and to
receive that information either verbally, using an ordinary touch-tone
phone, or on a personal computer via the Internet; and

(4) Automated call distribution -- the distribution of incoming calls in
some logical pattern to a group of operators;

- Call center design and installation for telemarketing;

- Video conferencing design and installation;

- Design and installation of standards-based cabling systems for both
copper and fiber;

23
<PAGE> 28

- Engineering, installation and administration of data communications
networks used to link computers and peripheral devices; and

- Coordinating and providing local access and long distance telephone
service.

Network provider agency program. LORECOM will secure the local access, long
distance and data communications portion of its business strategy through the
network provider agency program. Rather than committing substantial investments
to build a facilities-based network, initially, LORECOM will secure agency
agreements with leading local exchange carriers or competitive local exchange
carriers and long distance or inter-exchange carrier companies. Later, LORECOM
will have the opportunity to utilize the combined customer base to provide
enhanced network services as a telecommunications reseller, and finally as a
facility-based provider.

Under the agency agreements, we expect to be able to represent the
carriers' mature product lines with the following benefits:

- Extensive service offerings, including enhanced product capabilities;

- Co-branding of the LORECOM name alongside the providers;

- Name recognition and regional marketing support;

- Competitive cost of services, with equal access to direct sales for
promotional and special pricing; and

- Ability to attract and retain top sales representatives which provides
our customers with stable account management.

Targeted business customers that are not currently clients of the partners
may deal with several providers of communication equipment and services. A
typical business customer could employ four or more providers to acquire,
install and maintain voice and data networks. Each of these providers produces
separate invoices, separate contact points for sales and service, and separate
pricing based on specific services rather than solution-based pricing. LORECOM
intends to reduce the number of contacts and provide a single interface for the
customer premise equipment.

A foundational service strategy is to retain customers and increase our
business by maintaining a consistent presence before the customer and being more
responsive to the customer's needs than traditional telephone service providers.
The interconnect partners are not the lowest priced providers and they generally
price their products to permit quality of service and timely response for
support. All of the partners enjoy good working relationships with their
customers and are trusted to provide sound business advice in the
telecommunications area of their businesses.

At this time, we are dependent on Southwestern Bell to provide our local
telephone service. If our customers prefer other providers, we may lose
business. Similarly, we depend on our relationships with, and the success of,
third parties that provide Internet, voice and data services and related
equipment and services. We do not know if we will be able to get these services
on a competitive basis. Our agreements with these third parties are generally
terminable at will. If any of the agreements are terminated, we may not be able
to replace those products or services.

THE INTERCONNECT PARTNERS

Initially the LORECOM partners will continue to be primarily responsible
for their individual businesses and will keep their business relationships with
existing customers. Each partner presently operates as a traditional
interconnect, bridging the customer to the public telephone network through
equipment sales and service. The interconnect partners can combine their sales
and technical abilities, enabling each of them to provide products and services
which are not presently available to them individually. For example, as of the
date of this prospectus, four of the interconnect partners sell and install
equipment related to data communications. Upon completing the acquisitions and
forming
24
<PAGE> 29

LORECOM, each of the thirteen partners will be able to provide customers with
data communications services.

As the following descriptions indicate, LORECOM's interconnect partners
represent a diverse range of telephone products and services and related
software applications that complement one another and can be used to build a
more complete and solid business base.

Able Communication Incorporated: Able was incorporated in 1987 and is based
in Oklahoma City, Oklahoma. Able provides business communications solutions to
small and medium sized business customers. Able is a preferred dealer for the
Comdial product line and coordinates the local access services and data cabling
requirements for its customers. Able has three employees.

Access Communications Services, Inc.: Access Communications was formed in
1986 and is based in Oklahoma City, Oklahoma. Access has 12 employees who sell,
install and maintain a wide range of telecommunication products and services.
Access is a Panasonic DBS, Mitel and Harris dealer. Access also designs,
installs and maintains long distance inter-exchange switch facilities.

American Telcom, Inc.: American Telcom was formed in 1987 and is based in
Del City, Oklahoma. American Telcom currently has 11 employees who sell, install
and maintain telecommunications systems as well as copper and fiber cabling
systems. American services its clients communications needs with a wide variety
of products and services. American is an authorized Toshiba and NEC dealer.
American is also a Southwestern Bell local service and wireless agent and is an
agent for TSR and Pagenet paging services.

Banner Communications, Inc.: Banner was established in 1987 and is based in
Tulsa, Oklahoma. Banner has 13 employees and is a leading provider of voice and
data communicators in northeastern Oklahoma. Banner is a Mitel "Elite" dealer, a
Telrad dealer, an NEC associate, an AVT dealer, an NT Right Fax dealer, a
Spectralink Wireless dealer and a Lucent Data Value Added Reseller. Banner is
also an authorized agent of Southwestern Bell Telephone Company.

Commercial Telecom Systems, Inc.: CTS was incorporated in 1988 and is based
in Oklahoma City, Oklahoma. CTS has eight employees who sell, install and
maintain telecommunications and data equipment for business customers. CTS is a
Newbridge direct distributor that provides digital cross connects, access
concentrators and ATM switches. CTS specializes in telemedicine and hospital
environments.

Communication Services, Inc.: CSI was formed in 1987 and is based in
Shawnee, Oklahoma. CSI has 12 employees who sell, install and maintain
telecommunications systems and digital cellular services. CSI serves the greater
Shawnee area including Oklahoma City with Comdial and Panasonic. CSI is a
premiere authorized agent for Southwestern Bell Telephone Company and
Southwestern Bell wireless. CSI also serves as a cellular service retailer.

Electrical & Instrument Sales Corp. d/b/a EIS Communications: EIS was
formed in 1975 and is located in Tulsa, Oklahoma. EIS is an authorized dealer
for Nortel Norstar and Meridian products and is also a Lucent Technologies
representative. EIS also provides Polycom video teleconferencing services and
private label paging services. The telecom and paging division of EIS, which are
the subject of EIS's asset purchase agreement with us, employs nine people.

Nobel Systems, Inc.: Nobel was formed in 1984 and is based in Oklahoma
City, Oklahoma. Nobel currently has 14 employees who sell, install and maintain
telecommunication systems. Nobel is an authorized Comdial, Key-Voice and Active
Voice dealer. Nobel also installs equipment in support of local and wide area
networks.

Perkins Office Machines, Inc.: Perkins was founded in 1982 and is based in
Lawton, Oklahoma. Perkins began selling telephone equipment in 1989. Perkins
sells, installs and maintains telephone systems and voice mail systems. Perkins
also provides data cabling services for its customers. Perkins has three
employees.

25
<PAGE> 30

The Phone Man Sales and Services, Inc.: The Phone Man was incorporated in
1987 and is based in Oklahoma City, Oklahoma. The Phone Man installs, services
and maintains telephone systems and communication cabling systems. Some of The
Phone Man's customers include a large hospital complex and a multi-location
financial institution.

Telkey Communications, Inc.: Telkey was incorporated in 1984 and is based
in Tulsa, Oklahoma. Telkey has 14 employees who sell, install and maintain
telephone systems. Telkey is the exclusive Tadiran dealer in the state of
Oklahoma. Telkey's customer base includes large school systems which require a
complex network design. Telkey is also an agent for Southwestern Bell and
Southwestern Bell wireless.

Terra Telecom, Inc.: Terra Telcom was founded in 1980 and is based in
Tulsa, Oklahoma. Terra employs 16 people who install and service voice and data
equipment for its customers. Terra was the first ITT/Cortelco PBX authorized
distributor in the United States. Terra is also an authorized Toshiba dealer and
an authorized Southwestern Bell agent.

Travis Business Systems, Inc.: Travis Business Systems was formed in 1988,
and is headquartered in Oklahoma City, Oklahoma. Travis is the exclusive
distributor in Oklahoma for Lanier Worldwide's voice products division and is a
Lucent and Inter-tel telephone distributor. Travis is also an authorized
Southwestern Bell agent. Travis employs 39 people and has offices in Tulsa,
Dallas, Houston, San Antonio and Springdale, Arkansas featuring its Digital
Communications Recording Division for the rapidly expanding call center market.
Travis is the third largest interconnect in Oklahoma and was recently recognized
as the 31st fastest growing company in Oklahoma.

THE ACQUISITIONS

The agreements. LORECOM entered into definitive agreements with each of the
thirteen interconnect partners. LORECOM will acquire the assets of Able
Communication Incorporated, Electrical & Instrument Sales Corp. and The Phone
Man Sales and Service, Inc. by asset purchase and will acquire the assets of the
other ten partners by merger. Each acquisition's closing is subject to the
closing of this offering and several standard conditions, including accuracy of
the representations and warranties made, performance of covenants included in
the agreements, execution of employment and consulting agreements by certain
employees of the interconnect partners and no material adverse change in the
results of operations, financial condition or business of the interconnect
partners. Additionally, any or all of the acquisition agreements may be
terminated before this offering closes:

- By the mutual consent of the boards of directors of LORECOM and the
affected interconnect partner;

- If the offering and the acquisitions are not closed by May 31, 1999;

- By the interconnect partner if its schedules to its acquisition agreement
are amended to reflect a material adverse change and such amendment is
rejected by LORECOM; or

- If a material breach or default under the agreement by one party occurs
and is not waived.

We cannot assure you that the conditions to the closing of all the
acquisitions will be satisfied or waived or that each acquisition will close.
Commercial Telecom Systems, Inc. has agreed to extend the May 31, 1999 deadline
to August 31, 1999. All other interconnect partners have extended the May 31,
1999 deadline to the date LORECOM terminates its efforts to register its common
stock.

The consideration. The aggregate consideration LORECOM is paying in the
acquisitions is approximately $13.97 million, which is to be paid $10.2 million
in cash and $3.77 million in LORECOM common stock. The common stock issued as
purchase consideration will be valued at the initial public offering price less
a 10% discount due to sale and transferability restrictions. The actual number
of shares of common stock to be issued in the acquisitions depends on the
initial public offering price. Each merger and asset purchase agreement provides
that the number of shares of common stock to be issued will be calculated by
dividing the initial public offering price into the designated dollar amount.
LORECOM will

26
<PAGE> 31

also assume the current liabilities and long-term debt of the partners, issue a
limited number of warrants and permit certain distributions to be made by the
interconnect partners to their stockholders prior to closing. LORECOM determined
the amount of consideration it would pay in the acquisitions in arm's length
negotiations between its representatives and representatives of each of the
respective companies.

The following table summarizes information relating to the consideration
payable to the interconnect partners pursuant to the mergers and asset
acquisitions:

<TABLE>
<CAPTION>
AMOUNT OF PURCHASE PRICE PAID IN
-----------------------------------------------------------
CASH STOCK(1)
----------- ---------------------------------------------
VALUE AT OFFERING DISCOUNTED VALUE
COMPANY PRICE ($11.00 PER SHARE) ($9.90 PER SHARE)
- ------- ------------------------ ------------------
<S> <C> <C> <C>
Able Communication Incorporated............. $ 15,000 $ 50,000 $ 45,000
Access Communications Services, Inc. ....... 600,000 300,000 270,000
American Telcom, Inc. ...................... 850,000 250,000 225,000
Banner Communications, Inc. ................ 1,275,000 225,000 202,500
Commercial Telecom Systems, Inc. ........... 1,300,000 100,000 90,000
Communication Services, Inc. ............... 200,000 275,000 247,500
Electrical & Instrument Sales Corp.......... 1,250,000 500,000 450,000
Nobel Systems, Inc. ........................ 385,000 325,000 292,500
Perkins Office Machines, Inc. .............. 187,000 125,000 112,500
The Phone Man Sales and Service, Inc. ...... 37,500 37,500 33,750
Telkey Communications, Inc. ................ 650,000 350,000 315,000
Terra Telecom, Inc. ........................ 1,050,000 450,000 405,000
Travis Business Systems, Inc. .............. 2,400,000 1,200,000 1,080,000
----------- ---------- ----------
TOTAL:............................ $10,199,500 $4,187,500 $3,768,750
=========== ========== ==========
</TABLE>

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

(1) Total purchase price paid in LORECOM stock is the discounted value of the
LORECOM stock, or $3,768,750. The number of shares to be issued, however, is
based on the initial public offering price of the LORECOM stock. As a
result, the number of shares to be issued to the interconnect partners is
approximately 380,682, or $4,187,500 divided by $11.00 per share.

Other consideration.

Cash and stock. The agreement between LORECOM and Electrical & Instrument
Sales Corp. permits an increase in the purchase price by the amount of net
current assets existing on the date of closing, but not to exceed $150,000.
Electrical & Instrument's cash consideration could also increase by an
additional $150,000 if its gross revenues exceed $2,350,000 for the twelve
months ended May 31, 1999. Electrical & Instrument's total consideration
received will also increase by an additional $50,000 in cash, or $100,000 in
LORECOM stock, as purchase price for its paging business. LORECOM expects that
Electrical & Instrument will meet the net asset and gross revenue tests, and
will elect to take cash in consideration for its paging business. As a result,
the cash consideration reflected as payable to Electrical & Instrument in the
table above has been increased by $350,000.

Debt. LORECOM is assuming certain current liabilities and long-term debt of
the partners. As of March 31, 1999, total assumed current liabilities would have
been approximately $2.37 million and total assumed long-term debt would have
been approximately $425,000, including the assumed debt of a shareholder of
Communication Services, Inc., which was approximately $24,000 on March 31, 1999.
Although the debt is in the name of the shareholder, the proceeds were used for
the benefit of Communications Services, Inc.

Other distributions. Banner Communications, Inc. and Perkins Office
Machines, Inc. are Subchapter S corporations. Prior to the closing of the
acquisitions, both Banner and Perkins will distribute cash to their
stockholders, not to exceed the stockholders' individual tax liabilities
resulting from the partners' 1998 operations. The distribution for Banner was
$9,035 and the distribution for Perkins is expected to be

27
<PAGE> 32

no more than $10,000. Prior to closing, Commercial Telecom Systems, Inc. will
distribute cash to its stockholders in an amount equal to the excess of its net
worth on the date of closing over its net worth existing on December 31, 1998.

Able Communication Incorporated, Access Communications Services, Inc.,
American Telcom, Inc., Banner Communications, Inc. and Travis Business Systems,
Inc. will each distribute certain automobiles to their stockholders prior to
closing. The stockholders will assume all liabilities and obligations related to
the automobiles for a net distribution of approximately $60,000. Access will
also distribute a time-share condominium to a shareholder prior to closing. The
time-share is valued at approximately $10,500. Also prior to closing, American
Telcom will cancel notes receivable from its stockholders and distribute cash
and certificates of deposit in the aggregate amount of $99,477.

LORECOM will issue to Commercial Telecom Systems, Inc. 10,000
non-transferable, four-year warrants to purchase common stock exercisable at the
initial public offering price. The warrants are exercisable commencing one year
after the closing of the acquisitions and carry registration rights similar to
those provided to shareholders of the interconnect partners.

FAIRNESS OPINION OF HOULIHAN SMITH & COMPANY, INC.

On July 20, 1999, Houlihan Smith & Company, Inc., a National Association of
Securities Dealers member and independent investment banker, delivered its
written opinion that, as of such date and subject to certain assumptions,
factors and limitations, the consideration to be paid to the shareholders of the
interconnect partners was fair to LORECOM and its shareholders, from a financial
point of view. Houlihan's opinion was based upon market, economic, financial and
other conditions as they existed and could be evaluated as of the date of their
opinion. Events and conditions subsequent to such date have not been considered
and may materially alter the assumptions relied upon in the conclusions stated
by Houlihan in its opinion. Houlihan has no obligation to update, revise or
reaffirm its fairness opinion and LORECOM has no intent to seek any such
updating, revisions, or reaffirmation by Houlihan. LORECOM engaged Houlihan on a
non-contingent fee basis.

COMPETITION

Our business is highly competitive. Many companies provide the same
products and services that we provide, and many of those companies have greater
capital resources and more established reputations than LORECOM. Although each
of our partners have competed in the interconnect industry, we have not done so.
We do not have an established reputation in the industry, and our competitive
position remains to be determined. We will compete primarily on the basis of
pricing, quality of service and customer loyalty. Our ability to compete
effectively will depend on our ability to maintain high quality services at
prices generally equal to or below those charged by our competitors. If our
competitors lower their prices or we are forced to lower ours, we will be
adversely affected.

Our competitors may be able to respond more quickly to new or emerging
technologies and changes in customer requirements. They may also be able to
devote greater resources to the development, promotion and sale of their
products and services than we can. We do not believe that a significant number
of other companies provide single-source solutions for the data networking, data
transport and telecommunications requirements of our target customers, but
numerous competitors can provide one or more of those requirements. Many of our
competitors also have long-standing relationships with their customers and
greater name recognition than LORECOM. Our products and services do not
necessarily have any particular competitive advantage over other industry
participants. We believe we are more capable of satisfying our customers' needs
than larger providers which are traditionally impersonal and slow to respond to
the customers' needs. Additionally, we are better equipped than other smaller
service providers because these smaller competitors generally do not have the
financial capability to provide a complete range of telecommunication products
and services.

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PROPERTY

Our principal administrative, sales, marketing, consulting, education,
customer support and research and development facilities are located at 4200
Perimeter Center, Suite 100, Oklahoma City, Oklahoma 73112. LORECOM currently
occupies an aggregate of approximately 5,000 square feet of office space in
Oklahoma City. We anticipate finalizing our lease negotiations and executing a
lease agreement on or prior to the closing of this offering. The lease is
expected to terminate in May, 2001, and carry a monthly lease cost of $4,583 per
month. Once LORECOM acquires the interconnect partners, it will be responsible
for a total of nine leased facilities in Oklahoma and will own one facility in
Shawnee, Oklahoma. We believe that these facilities will exceed our current and
future requirements and that certain of these leases will be terminated in
accordance with their terms.

EMPLOYEES

As of July 15, 1999, LORECOM had six full-time employees. None of our
employees are currently represented by a collective bargaining agreement. We
believe that we enjoy good relationships with our employees. The interconnect
partners currently have approximately 157 full-time employees, including 19
members of management, 46 in sales and customer service, 71 in technical support
and 21 in finance, administration and operations. None of these employees are
currently represented by a collective bargaining agreement. We expect that we
will have good relationships with employees of the interconnect partners upon
their acquisition.

Several of the interconnect partners' stockholders will execute employment
or consulting agreements with LORECOM. These agreements are intended to ensure
that LORECOM retains the goodwill created by each interconnect partner's
relationship with its customer base. The employment agreements have terms of
three years, provide for aggregate annual base salaries of approximately
$900,000, provide for bonuses generally based on performance and include
noncompete provisions. The consulting agreements have terms of two years and
have aggregate annual payments of $150,000. Consultants will be bound by the
two-year noncompete provisions set forth in the acquisition agreements with each
of the interconnect partners.

To be successful, we must keep the services of a small number of key
management and operating personnel, including certain sales, technical and
marketing personnel. If one or more of these people joins a competitor or
otherwise competes against LORECOM, it could materially hurt our business. If we
lose key people, we may not be able to hire adequate replacements. We intend to
purchase a key-man life insurance policy on Mr. Travis.

Competition for personnel in the telecommunications and data communications
industries is intense. In addition, new employees generally require substantial
training. This training will require substantial resources and management
attention.

LEGAL PROCEEDINGS

Neither LORECOM nor the interconnect partners are involved in any material
legal proceedings nor are they a party to any pending or threatened claim that
could reasonably be expected to have a material adverse effect on LORECOM's
financial condition or results of operations.

WHERE YOU CAN FIND MORE INFORMATION

Because this is our first public offering, we have never been subject to
the reporting requirements of the Securities and Exchange Act of 1934. We filed
a registration statement on Form SB-2 with the Securities and Exchange
Commission under the Securities Act of 1933 describing and discussing the common
stock offered in this prospectus. As allowed by the Securities and Exchange
Commission, this prospectus, which is part of the registration statement, does
not contain all of the information included in the registration statement.
Additionally, statements we make in the prospectus about contracts and other

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<PAGE> 34

documents are not necessarily complete. For more information about LORECOM and
our common stock, you should read the registration statement and any attached
exhibits and schedules.

You can read and copy our registration statement and any other materials we
file with the Securities and Exchange Commission at the Commission's public
reference room at 450 Fifth Street, N.W., Washington, D.C. 20549 or on the
Internet at http://www.sec.gov. You can get information about the operation of
the public reference room by calling the Commission at 1-800-SEC-0330. You may
also access information regarding us through our web page on the Internet at
http://www.lorecom.com.

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MANAGEMENT'S PLAN OF OPERATION

OVERVIEW

You should read the following discussion and analysis in conjunction with
the Unaudited Pro Forma Combined Financial Statements and related notes found
elsewhere in this document.

LORECOM is an Oklahoma corporation and was incorporated on September 4,
1998. With limited exceptions, LORECOM has not started its business operations.
In early 1999, LORECOM executed two contracts to provide services. LORECOM
effectively assigned all benefits and obligations under these contracts to one
of the interconnect partners. LORECOM does not have any significant assets and
has not engaged in any material business operations relating to service
associated with the maintenance and installation of telephone equipment. Our
activities have effectively been limited to acquiring the interconnect partners,
addressing organizational matters, conducting research and due diligence and
preparing and filing the registration statement of which this prospectus is a
part.

PURPOSE OF ORGANIZATION

We organized LORECOM to consolidate and continue the operations of thirteen
interconnect partners in Oklahoma in order to (1) take advantage of economies of
scale, (2) position the partners' combined customer base as a channel for new
products and services and (3) become a leader in the next evolution of
interconnect companies by adding value as the bridge between service providers
and the business market. If successful, LORECOM will gain a competitive
advantage in its operating markets, which will allow LORECOM to expand its base
of operations to the contiguous states surrounding Oklahoma.

PLAN OF OPERATION

Our plan of operation throughout the next twelve months includes (1)
maintenance of current operations within the individual interconnects, (2)
development and installation of supporting information systems, (3)
implementation of new service offerings to the customer base, (4) consolidation
of certain operating facilities within the two major metropolitan areas serviced
by LORECOM and (5) acquisition of additional interconnects initially in Texas,
Arkansas, Missouri or Kansas.

We will retain at least one of the former business owners as manager in
their respective base of business to be responsible for maintaining revenue and
profitability. Management is reinforcing a business as usual directive for the
first few months in order to manage the transition process for the partners'
customers and vendors.

LORECOM has contracted with an organizational and systems design consultant
to document current processes and deliver a recommendation for best practice in
sales and service management. LORECOM is in the process of reviewing information
systems to support sales and service as well as financial system requirements,
project management, call center/technical support and the Internet interface for
internal and external users. LORECOM is also researching the database
requirements to support the consolidation of customer information to include
customer premise equipment, system configuration, cabling system, access lines,
type of services and software applications.

LORECOM intends to implement new service offerings immediately following
the acquisition process. LORECOM will prepare the sales staff to offer
company-wide local access and long distance services within the first 60 days of
consolidated operations. Data communication services, like IP, Frame Relay and
ATM, local area and wide area network support and Internet access will soon
follow (some individual partners currently provide such services). Additional
offerings like unified messaging, interactive-voice response and other
sophisticated voice applications will be marketed as sales and technical staff
is qualified to support the products.

We are currently reviewing plans to consolidate technical, sales and
support staff within our areas of operation, which include Oklahoma City, Tulsa,
Shawnee and Lawton. We have included the partners in
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<PAGE> 36

operational task groups to determine the most efficient means of consolidating
and the most effective means of maintaining customer support and employee
morale.

After we complete the offering and the initial thirteen acquisitions, we
will utilize a similar acquisition model in the states surrounding Oklahoma.
Already, companies in Texas, Arkansas and Missouri have demonstrated interest in
joining LORECOM. Much like the original partners, these companies expressed
interest in merging due to the accelerating change in technology and the lack of
access to adequate capital to fund growth.

On a combined basis, the interconnect partners generate sufficient cash
flow to satisfy our expected cash requirements for on-going operations. Proceeds
from this offering will provide the additional cash needed to complete the
consolidation and integration of the interconnect partners. Our only foreseeable
need for additional capital would be to fund the consummation of any additional
significant acquisitions. We intend to pursue one or more significant
acquisitions within the next 12 months, and as a result, expect to raise
additional capital by issuing debt or equity in either a public or private
offering or incurring bank financing.

Our management expects the consolidation phase of our operations to last
approximately six to twelve months. Barring any unexpected delays, we expect to
consolidate the financial and administrative functions of all of the
interconnect partners within this time frame. LORECOM will operate each
partner's base of business, while one of that partner's original owners serves
as business manager. Each partner will be responsible for its own base of
business, much like a professional services company. Operating in this manner
will allow LORECOM to retain the partners' customers, reduce implementation
barriers to new service offerings and provide coordination for changes in policy
and procedure.

We do not anticipate any significant reduction in employees. The growth
that we expect to experience should provide opportunities for existing
employees, allowing them to accept new or different responsibilities. At the
same time, these opportunities may require the employees to obtain additional
training. We have already started our training program in order to ensure
continued professional training and technical staff certifications. We are also
considering using state vocational-technical institutions to ensure adequate
staffing in critical support areas, such as engineering, installation and
support of voice and data networks.

IMPACT OF YEAR 2000 ISSUE

The year 2000 issue is the result of computer programs using two digits
rather than four digits when defining the year in question. It is possible
date-sensitive software may recognize a date using "00" as the year 1900 rather
than the year 2000. This mistake in recognition could result in system failures
or miscalculations causing disruptions of operations, including a temporary
inability to process transactions, send invoices or engage in similar routine
business activities.

Company readiness. LORECOM's and the interconnect partners' information
systems are generally maintained on personal computers using packaged software
from outside vendors. Management believes that such systems are year 2000
compliant. If not, management believes that most of the tasks performed by the
systems can be temporarily performed manually, and that any costs necessary to
upgrade or replace noncompliant systems will be insignificant.

Readiness of others. It is possible that noncompliance with year 2000
issues of other companies, including but not limited to the regional or national
telephone network or power grid, could delay LORECOM's provision of services to,
or receipt of revenues from, its customers. LORECOM and the interconnect
partners do not provide any assurance of year 2000 compliance for the equipment
they sell or install. Upon request, the interconnect partners have provided
their customers year 2000 compliance documentation from the equipment
manufacturers. LORECOM will continue to communicate with the telephone equipment
manufacturers to coordinate year 2000 compliance.

The interconnect partners regularly warrant the equipment and software they
sell. LORECOM is presently investigating its potential liability for
noncompliant equipment and software which is (1) under a
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<PAGE> 37

manufacturer's warranty, (2) under an extended warranty of the interconnect
partner, or (3) not under a warranty of any kind. Presently, LORECOM does not
believe it will have any material liability under these warranties.

Contingency plans. LORECOM has no contingency plan for conversion of its
own equipment or business application software, and none will be formulated.
With regard to contingency plans for the failure, or possible failure, of
others, each major source of revenues or services will be handled on a case-
by-case basis, with full preparedness by December 31, 1999.

Risks. If any equipment or software of third-party providers does not
recognize the difference between 1900 and 2000, we may incur unexpected expenses
to remedy the problem. Additionally, a regional or national failure in the
telephone network or power grid could prevent LORECOM from servicing its
customers and generating revenues. LORECOM does not have a contingency plan if
any of these events occur.

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MANAGEMENT AND PRINCIPAL STOCKHOLDERS

DIRECTORS, EXECUTIVE OFFICERS AND SIGNIFICANT EMPLOYEES

The following table sets forth certain information concerning each of
LORECOM's directors and executive officers and certain other significant
employees. The board of directors presently consists of one director serving in
one of the three classes of directors serving staggered terms. LORECOM has
nominated six (6) additional directors to fill all three classes effective upon
closing this offering. Directors and executive officers of LORECOM are elected
to serve until they resign or are removed or are otherwise disqualified to
serve, or until their successors are elected and qualified. Directors of LORECOM
are elected at the annual meeting of the stockholders and the board of directors
appoints the officers shortly after each annual meeting of stockholders.
Following the closing of this offering, LORECOM will maintain at least two
independent directors on its board of directors.

<TABLE>
<CAPTION>
AGE
AS OF DIRECTOR
JULY 15, TERM
NAME 1999 POSITION(S) EXPIRES
- ---- -------- ----------- --------
<S> <C> <C> <C>
DIRECTORS AND OFFICERS
Ricky Naylor.......... 45 Chairman of the Board; Director 2000
Larry Travis.......... 52 President and Chief Executive Officer; Director 2002
William J. Hartwig.... 43 Vice President of Operations and Chief Technical Officer
Joseph O. Evans....... 45 Chief Financial Officer and Secretary; Director 2001
Debra G. Morehead..... 38 Chief Accounting Officer
Wesley E. Cantrell.... 64 Director 2002
Wayne Stone........... 49 Director 2000
John J. Wiesner....... 61 Director 2001
Andrew May............ 41 Director 2002
SIGNIFICANT EMPLOYEES
Roger Clanton......... 51 Vice President -- Sales and Marketing
Becky Brittain........ 33 Major Accounts Manager
Don DeWald............ 42 Network Technical Services Manager
</TABLE>

Ricky Naylor, Chairman of the Board and Director. Mr. Naylor has served as
a director of LORECOM since September 8, 1998, and as Chairman of the Board of
LORECOM since March 26, 1999. Mr. Naylor has devoted all his efforts to serving
as President and a director of each of the Naylor Companies during the past five
years, or since inception of the companies. The Naylor Companies presently
include Naylor Concrete, Naylor Concrete and Steel, Milestone General
Contractors, Milestone Real Estate, Interstate Consulting and Prestige
Investments, Inc. Mr. Naylor serves as Chairman of the board of the National
Christian Collegiate Athletic Association.

Larry Travis, President and Chief Executive Officer and Director. Mr.
Travis is presently President of Travis Business Systems, Inc., an interconnect
partner. Mr. Travis has agreed to be the President and Chief Executive Officer
and a director of LORECOM upon completion of this offering and the acquisitions.
Mr. Travis has served as President and Chief Executive Officer of Travis
Business Systems since 1988 and has served as President of Digital Transcription
Systems, Inc. since 1992. Mr. Travis is on the board of directors of Milner
Business Products, a computer and telephone interconnect company in Atlanta,
Georgia. Mr. Travis is also a board member of The Independent Distributor
Association and has served as President of the Independent Distributor
Association twice. Mr. Travis is a current board member of Medical Transcription
Industry Alliance and is a former Vice President National Sales Manager for
Lanier Worldwide in Atlanta, Georgia. Mr. Travis is a graduate of Texas A&M
Commerce with a BBA in marketing.

William J. Hartwig, Vice President of Operations and Chief Technical
Officer. Mr. Hartwig has served as Vice President of Operations and Chief
Technical Officer of LORECOM since May 10, 1999,

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served as President and Chief Operating Officer of LORECOM from March 26, 1999
to May 10, 1999, and served as Vice President -- Operations of LORECOM from
November, 1998 to March 26, 1999. From 1991 to 1998, Mr. Hartwig served as
Systems Development Manager for Braum's Ice Cream and Dairy Stores. Mr. Hartwig
also managed Braum's telecommunications requirements over a five-state area,
with over 270 locations. Mr. Hartwig also installed technologies related to
networking, cabling, telecommunications and personal computer hardware,
including the installation and maintenance of token-ring, Ethernet and TCP/IP
topologies, Unix, Novell, and NT Networks, Cisco, 3Com, Ascend routers, PBX and
voice mail systems, T1 and ISDN communications and structured cabling systems.
Prior to his time at Braum's, Mr. Hartwig was Contracting and Billing Manager
for AAR Oklahoma, Inc. where he managed a department that provided contract
administration, job costing, contract billing and sales accounting for five
aviation division offices. Mr. Hartwig holds a B.S. in Business Administration
from the University of Central Oklahoma and also has earned several technical
certifications.

Joseph O. Evans, Chief Financial Officer and Secretary and Director. Mr.
Evans has agreed to serve as a director of LORECOM upon the completion of this
offering and the acquisitions. Mr. Evans has served as Chief Financial Officer
and Secretary of LORECOM since November, 1998. From 1997 to 1998, Mr. Evans
served as Senior Vice President and Financial Advisor of Energy Lending for the
First National Bank of Commerce in New Orleans, Louisiana. Prior to 1997, Mr.
Evans practiced as an audit partner of Deloitte & Touche LLP, with an emphasis
in SEC practice. From 1990 to 1997, Mr. Evans served as an Associate
Professional Practice Director for the Oklahoma practice of Deloitte & Touche
LLP, related to technical accounting and auditing issues and quality control.
Mr. Evans is a Certified Public Accountant and holds a B.S. in Accounting from
the University of Central Oklahoma.

Debra G. Morehead, Chief Accounting Officer. Ms. Morehead has served as
Chief Accounting Officer of LORECOM since September 8, 1998. Ms. Morehead has
served as controller of The Naylor Companies since May of 1998. From June 1993
to May 1998, Ms. Morehead was a partner at the accounting firm of Olson &
Potter, CPA's. Ms. Morehead is a Certified Public Accountant and received a B.S.
in accounting from the University of Central Oklahoma.

Wesley E. Cantrell, Director. Mr. Cantrell has agreed to serve as a
director of LORECOM upon the completion of this offering and the acquisitions.
Mr. Cantrell is President and CEO of Lanier Worldwide, Inc. based in Atlanta.
Lanier Worldwide, Inc., with revenues in excess of $1.5 billion annually is one
of the world's largest providers and designers of document management solutions
and services. Lanier globally markets a wide array of tailored DOCutivity(TM)
solutions, including color and digital copiers, facsimile systems, digital
dictation systems, print on demand solutions, Systems integration and fully
integrated healthcare information management systems. Mr. Cantrell was selected
to the Board of Directors of Oxford Industries, formerly Lanier's parent company
in 1974 and was named President of Lanier Business Products in 1977. Mr.
Cantrell was President of Lanier when the company was acquired by Harris Corp.
in 1983. In 1987, he was named President and CEO of Harris/3M Document Products,
Inc., a joint venture between Harris and the 3M Company. Mr. Cantrell was named
to his current position and elected an officer of Harris Corporation in 1989.
Mr. Cantrell serves on the Board of Directors of First Union National Bank of
Georgia in Atlanta and Ann Taylor Stores in New York.

Wayne Stone, Director. Mr. Stone has agreed to serve as a director of
LORECOM upon the completion of this offering and the acquisitions. Mr. Stone is
currently a principal of Ward-Stone Company, a real estate development firm.
From October 1997 to August 1998, Mr. Stone served as Chairman, President and
Chief Executive Officer of Bank of Arkansas. From 1994 to 1997, Mr. Stone served
as President of Bank of Oklahoma, Oklahoma City, Oklahoma, Financial
Corporation. Mr. Stone was previously President and Chief Executive Officer of
Founders Bank and Trust Company in Oklahoma City, Oklahoma. He has also served
as a director of Bank of Oklahoma, Tulsa, Oklahoma and as Executive
Vice-President of Management Associates, Inc., a bank acquisition and management
company.

John J. Wiesner, Director. Mr. Wiesner has agreed to serve as a director of
LORECOM upon the completion of this offering and to the acquisitions. Mr.
Wiesner has been a business consultant and a director of Stage Stores, Inc.
since July 1997. Mr. Wiesner serves on Stage's audit committee.

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Mr. Wiesner held various positions at C.R. Anthony, including Chairman of the
Board and President, from 1987 to 1997. Mr. Wiesner also serves as a director of
Lamonts Apparel, Inc. and Elder-Beerman Department Stores, Inc. In each case,
Mr. Wiesner serves on the compensation committee.

Andrew W. May, Director. Mr. May has agreed to serve as a director of
LORECOM upon the completion of this offering and the acquisitions. Mr. May has
been in the investment industry for 24 years and has benefited from significant
experience ranging from money management to investment banking. Currently, Mr.
May is the owner of May Capital Management L.L.C., which is the General Partner
to The May Strategy Fund LP. Mr. May was a founder of ComVest Partners Inc., a
Dallas, Texas-based institutional research and investment banking and
broker-dealer specializing in the telecommunications and networking arenas. He
served as President of ComVest from 1995 until 1999. Mr. May was Managing
Director in charge of institutional sales at William K. Woodruff & Co. Inc., an
institutional research boutique from 1983 to 1995. Between 1975 and 1983, Mr.
May was employed by Ivory & Sime, PLC, an investment management organization
based in Edinburgh, Scotland. Mr. May was employed in various capacities of
which the final four years was as a portfolio manager/research analyst
specializing in high growth companies, primarily in the technology sectors.

Roger Clanton, Vice President Sales and Marketing. Mr. Clanton has served
as Vice President Sales and Marketing for LORECOM since March 1, 1999. Mr.
Clanton was with AT&T prior to joining LORECOM, where he managed the
implementation of advanced communication services for a critical large market
account. From 1987 to 1998, Mr. Clanton served as Major Account Manager for
Sprint. During his tenure with Sprint, he managed Sprint's largest accounts in
Oklahoma City and Tulsa, Oklahoma.

Becky Brittain, Major Accounts Manager. Ms. Brittain became Major Account
Manager for LORECOM on March 1, 1999. Prior to that date, Ms. Brittain was
employed as Major Account Executive for Williams Communications and Major
Account Manager for GTE, Inc. Ms. Brittain also served as National Accounts
Manager, System Designer and Management Information Systems with Nortel, Siemens
Rolm and MCI.

Don DeWald, Network Technical Services Manager. Mr. DeWald was appointed
Network Technical Services Manager on March 1, 1999. Prior to that date, Mr.
DeWald was Manager of Engineering Services for Global Data. From 1996 to 1997,
Mr. DeWald served as Systems Engineer for Precision Computer Services in
Oklahoma City. From 1992 to 1996, Mr. DeWald served as Technology Trainer and
Developer for Wave Technologies. As Technology Trainer and Developer, Mr. DeWald
wrote several training manuals on topics on computer networking and TCP/IP and
was selected by Wave to teach their initial offerings of administration and
advanced administration for Novell NetWare. Mr. DeWald is a Master Certified
Novell Engineer and a Microsoft Certified Systems Engineer.

The board of directors will have two standing committees, which are the
Compensation Committee and the Audit Committee. Each Committee will be composed
of at least two independent directors. Upon closing of this offering, the board
of directors will appoint independent directors to the Compensation and Audit
Committees and determine the duties of each committee.

COMPENSATION

Executive Officers. LORECOM has not conducted any significant operations
except those related to the acquisitions and this offering. In 1998, LORECOM
paid its Chief Executive Officer, David W. Aduddell, $33,615, plus a car
allowance. In 1999, LORECOM paid David Aduddell $44,500, plus a car allowance.

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<PAGE> 41

We expect the following people to be the only executive officers of LORECOM
to receive compensation in excess of $100,000 in 1999. Their expected base
salaries are:

<TABLE>
<CAPTION>
NAME TITLE ANNUAL COMPENSATION
---- ----- -------------------
<S> <C> <C>
Larry Travis................... President and Chief Executive $112,500
Officer
Joseph O. Evans................ Chief Financial Officer $135,000
William J. Hartwig............. Vice President of Operations $110,000
and Chief Technical Officer
</TABLE>

Messrs. Travis, Evans and Hartwig will be paid a bonus in accordance with
their employment agreements. Mr. Travis' salary of $12,500 per month will not
begin until we close this offering and the acquisitions. We are paying Mr.
Travis $12,500 per month as a management fee for his services provided between
April 7, 1999 and the closing of this offering and the acquisitions.

Directors. Directors of LORECOM who are also employees will not receive
directors' fees. LORECOM will pay non-employee directors fees of $1,000 for each
board meeting attended and will reimburse the directors for reasonable
out-of-pocket travel expenditures.

EMPLOYMENT AGREEMENTS WITH EXECUTIVE OFFICERS

We have employment agreements with Messrs. Travis, Evans and Hartwig for an
initial term expiring on the third anniversary of the closing of this offering,
subject to annual extensions of one year. Each of the employment agreements
carry the same terms with the exception of compensation. Mr. Travis will receive
an annual base salary of $150,000, Mr. Evans will receive an annual base salary
of $135,000 and Mr. Hartwig will receive an annual base salary of $110,000.
Messrs. Evans and Hartwig will also receive a one time bonus of $10,000 payable
upon the closing of this offering. Messrs. Travis, Evans and Hartwig are
eligible for bonuses, but only if LORECOM meets certain financial performance
criteria to be determined by the board. Messrs. Travis, Evans and Hartwig will
be reimbursed for all reasonable, ordinary and necessary business expenses, and
will receive a life insurance policy with premiums not to exceed $2,000.

Each of Messrs. Travis, Evans and Hartwig may be terminated by us for death
or cause, and they may terminate our agreements upon a change of control or for
good reason. Upon death, the employee's representatives will receive (1) the
employee's base salary for a period equal to the greater of the remaining
portion of the employment term or two years (the "Continuation Period"), and (2)
any pro rata bonus payable in the year of death. If an employment agreement is
terminated for any reason other than death or cause, or by the employee upon a
change of control or for good reason, the employee will receive (1) his base
salary for the Continuation Period, (2) for each year during the Continuation
Period, the highest annual bonus paid to the employee for any proceeding
calendar year, pro rated for any partial years, and (3) vacation pay for the
Continuation Period, pro rated for any partial years. The employee is also
provided continuing coverage under our group health, life and disability
insurance plans for one year after the termination date. If the employee's
employment is terminated by us for cause, or voluntarily by the employee, the
employee will receive his base salary and group health, life and disability
insurance coverage for one year after his termination date.

Messrs. Travis, Evans and Hartwig cannot compete against us during the term
of his employment or any period during which he is receiving payments or for
which he has been paid pursuant to his employment agreement. However, the
non-competition provisions do not apply if Messrs. Travis, Evans or Hartwig are
terminated without cause. Similarly, Messrs. Travis, Evans and Hartwig cannot
solicit our customers or employees, and cannot interfere with our contractual
relations with others, for the greater of the five-year anniversary of his
employment agreement or two years following termination of the employment
agreement.

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DEFERRED COMPENSATION AND STOCK INCENTIVE PLANS

We have adopted a deferred stock compensation plan and an omnibus long-term
incentive plan to provide incentive to our directors, officers and certain other
key employees and consultants by making available to them an opportunity to
acquire a proprietary interest or to increase their proprietary interest in
LORECOM.

Deferred Stock Compensation Plan. The LORECOM Deferred Stock Compensation
Plan is effective on the closing date of this offering. The plan enables our
directors and officers to defer compensation and fees in cash and to elect
payments of such compensation and fees in LORECOM common stock. All officers and
directors are automatically entitled to participate in the plan. We have
reserved 50,000 shares of common stock for issuance under the plan. Initially,
there will be five individuals eligible to participate in the plan. The plan
will be administered by our Compensation Committee. Directors may elect to defer
a minimum of 25% of their compensation and fees or a greater amount in 25%
increments, and officers may elect to defer a minimum of 5% of compensation and
fees or a greater amount in 5% increments. All director's fees deferred under
the plan are credited to a stock unit account and are converted into LORECOM
common stock by dividing the amount of compensation and fees deferred by the
fair market value of one share of common stock as of the date the fees would
have otherwise been paid. All officer compensation deferred under the plan is
credited to a stock unit account and is converted into LORECOM common stock by
dividing the amount of the compensation deferred for each calendar quarter by
the fair market value of one share of common stock on the first day of the
calendar quarter following the deferral quarter. Once the person ceases to be an
officer or director, his or her participation in the plan automatically
terminates and LORECOM common stock is distributed to the officer or director
either in lump sum or over time not to exceed three years. The plan is subject
to standard anti-dilution provisions.

1999 Long-Term Incentive Plan.

General Description. The 1999 Long-Term Incentive Plan (the "Omnibus Plan")
is effective on the closing date of this offering. The Omnibus Plan provides for
compensatory awards (each an "Award") representing or corresponding to up to
450,000 shares of our common stock. Awards may be granted for no consideration
and consist of stock options, restricted stock, stock appreciation rights
("SARs"), other stock-based awards (such as phantom stock) and performance
awards consisting of any combination of the foregoing. Any shares of common
stock subject to an Award under the Omnibus Plan, which Award for any reason
expires, is cancelled or is terminated unexercised as to such shares, shall
again be available for the grant of other Awards under the Omnibus Plan;
provided, however, that forfeited common stock or other securities shall not be
available for further Awards if the grantee has realized any benefits of
ownership from such common stock. The Compensation Committee will administer the
Omnibus Plan. The Compensation Committee will have the full power and authority,
subject to the provisions of the Omnibus Plan, to designate participants, grant
Awards and determine the time at which all Awards shall be granted. No Award,
other than a nonqualified stock option, can be sold, pledged, assigned,
transferred or encumbered by a grantee other than by will or by the laws of
descent and distribution.

Stock Awards. The Compensation Committee has the right to grant Awards of
shares of common stock which are subject to such restrictions (including
restrictions on transferability and limitations on the right to vote or receive
dividends with respect to the restricted shares) and such terms regarding the
lapse of restrictions as are deemed appropriate. Generally, upon termination of
employment for any reason during the restriction period, restricted shares shall
be forfeited to LORECOM.

SARs. An Award may consist of SARs. Upon exercising a SAR, the holder will
be paid an amount in cash equal to the difference between the fair market value
of the shares of common stock on the date of exercise, and the fair market value
of the shares of common stock on the date of the grant of the SAR, less
applicable withholding of Federal and State taxes. The applicable percentage and
exercise price shall be established by the Compensation Committee at the time
the SAR is granted and shall not be less than the fair market value of a share
of common stock on the date the SAR is granted.

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<PAGE> 43

Options Issued Under Omnibus Plan. The terms of specific options will be
determined by the Compensation Committee. The Compensation Committee may grant
options designated as either nonqualified or incentive stock options. The
exercise price of any stock option will be determined by the Compensation
Committee, and for incentive stock options, will not be less than the fair
market value of the common stock subject to the option on such date. However, if
the grantee is a ten percent or more shareholder, the exercise price of an
incentive stock option will not be less than 110% of the fair market value of
the common stock subject to the option on such date. Each option will be
exercisable for the period or periods specified in the option agreement, which
will not exceed 10 years from the date of grant. The Compensation Committee may
provide for termination of an option in the case of termination of employment or
directorship or any other reason. If a grantee dies or becomes subject to a
disability prior to termination of his or her right to exercise an option, the
stock option agreement may provide that the option may be exercised to the
extent that the shares with respect to the option could have been exercised by
the grantee on the date of his or her death or disability.

Performance Awards Consisting of Options and SARs Issued in Tandem Under
Omnibus Plan. SARs may be granted in tandem with an option, in which event, the
grantee has the right to elect to exercise either the SAR or the option. Upon
the grantee's election to exercise one of these Awards, the other Award is
subsequently terminated. SARs may also be granted as an independent Award. In
the case of an SAR granted in tandem with an incentive stock option to an
employee who is a ten percent shareholder on the date of such grant, the amount
payable with respect to each SAR shall be equal in value to the applicable
percentage of the excess, if any, of the fair market value of a share of common
stock on the exercise date over the exercise price of the SAR, which exercise
price shall not be less than 110% of the fair market value of a share of common
stock on the date the SAR is granted.

Other Performance Awards Issued Under the Omnibus Plan. The Omnibus Plan
authorizes the Compensation Committee to grant, to the extent permitted under
Rule 16b-3 promulgated under the Exchange Act and applicable law, other Awards
that are denominated or payable in, valued by reference to, or otherwise based
on or related to shares of our common stock. Furthermore, the amount or terms of
an Award may be related to our performance or to such other criteria or measure
of performance as the directors or, if appointed, the Compensation Committee may
determine.

On June 21, 1999, the board of directors approved the issuance to each of
Messrs. Travis, Evans and Hartwig nonqualified stock options to purchase an
aggregate of 75,000 shares of common stock at an exercise price per share equal
to the offering price of our common stock in this offering. 15,000 options vest
immediately. The remaining options will vest in 15,000 increments over the next
four years.

LIMITATION ON DIRECTORS' AND OFFICERS' LIABILITY

LORECOM's Certificate of Incorporation provides for the indemnification of
officers and directors to the fullest extent permitted by the Oklahoma General
Corporation Act. All of the Company's directors and officers will be covered by
insurance policies maintained by it against certain liabilities for actions
taken in their capacities as such.

Pursuant to the underwriting agreement filed as an exhibit to the
registration statement, the underwriter has agreed to indemnify LORECOM, each
officer and director of LORECOM and each person, if any, who controls LORECOM
within the meaning of the Securities Act, against certain liabilities resulting
from information in this prospectus provided by the underwriter.

To the extent that indemnification for liabilities arising under the
Securities Act may be permitted to directors, officers and each controlling
person of LORECOM pursuant to its Certificate of Incorporation, Bylaws, Oklahoma
law or otherwise, LORECOM 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 LORECOM of expenses incurred or paid by a director, officer or
controlling person of LORECOM and the successful defense of any person, suit or
proceeding) is asserted by such director, officer or controlling person in
connection with the securities being registered, LORECOM will, unless in
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<PAGE> 44

the opinion of its counsel the matter has been settled by a 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.

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<PAGE> 45

OWNERSHIP OF MANAGEMENT AND PRINCIPAL STOCKHOLDERS

The following table sets forth certain information with respect to the
beneficial ownership of our common stock as of July 15, 1999 by (a) LORECOM's
executive officers, (b) each of LORECOM's directors (including persons who will
become directors upon consummation of the offering), (c) all executive officers
and directors of LORECOM as a group and (d) each other person (or group of
affiliated persons) who we know beneficially owns 5% or more of LORECOM's common
stock.

<TABLE>
<CAPTION>
AMOUNT AND NATURE
OF BENEFICIAL OWNERSHIP PERCENT
-------------------------------- --------------------------------
BEFORE OFFERING AFTER OFFERING BEFORE OFFERING AFTER OFFERING
AND AND AND AND
NAME ACQUISITIONS ACQUISITIONS ACQUISITIONS ACQUISITIONS
- ---- --------------- -------------- --------------- --------------
<S> <C> <C> <C> <C>
Ricky Naylor.......................... 452,153 452,153 95% 18%
821 S.W. 66th
Oklahoma City, OK 73139
Larry Travis.......................... -- 107,727(1)(2) -- 4%(1)(2)
4200 Perimeter Center Drive
Suite 100
Oklahoma City, OK 73112
William J. Hartwig.................... -- 15,000(2) -- <1%(2)
12101 North Meridian
Oklahoma City, OK 73120
Joseph O. Evans....................... -- 15,000(2) -- <1%(2)
12101 North Meridian
Oklahoma City, OK 73120
Debra G. Morehead..................... 4,759 4,759 1% <1%
821 S.W. 66th
Oklahoma City, OK 73139
Wesley E. Cantrell.................... -- -- -- --
2300 Parklake Drive, N.E.
Atlanta, Georgia 30345
Wayne Stone........................... -- -- -- --
710 Cedar Lake Blvd.
Suite 200
Oklahoma City, OK 73114
Jack Wiesner.......................... -- -- -- --
228 Robert S. Kerr Avenue
Suite 350
Oklahoma City, OK 73118
Andrew May............................ -- -- -- --
3309 Westminster
Dallas, Texas 75205
All officers and directors as a group
(9 persons)......................... 456,912 594,639 96% 24%
</TABLE>

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

(1) Mr. Travis is an officer and a director of the general partner of Wylie
Limited Partnership. Wylie Limited Partnership is expected to receive 92,727
shares of LORECOM common stock from the acquisition of Travis Business
Systems, Inc., an interconnect partner, by LORECOM. Mr. Travis owns 25% of
the general partner of Wylie Limited Partnership and owns 50% of the limited
partnership interests in Wylie Limited Partnership. The remaining interests
in the general partner, and

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<PAGE> 46

limited partner interests in Wylie Limited Partnership, are owned by Mr.
Travis' wife and children. Mr. Travis disclaims any beneficial ownership
with respect to these interests.

(2) Messrs. Travis, Evans and Hartwig will each be issued 75,000 nonqualified
stock options upon closing this offering. 15,000 of the options will vest
immediately.

CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

LORECOM was incorporated by David Aduddell on September 4, 1998 under the
name Advantage Business Solutions, Inc. Aduddell capitalized LORECOM with $10.00
cash and certain intangible personal property, including business plans,
organizational documents and economic projections relating to several
consolidating company opportunities. Aduddell was the sole shareholder until
September 8, 1998, when Advantage Business Solutions, Inc. sold 62.5% of its
outstanding stock to Ricky Naylor in exchange for $10.00 cash and a binding
agreement to pay LORECOM $499,990 upon demand. At July 15, 1999, Naylor had paid
LORECOM all amounts owed under this agreement.

David Aduddell is subject to a noncompetition agreement which prohibits him
from (1) directly or indirectly selling local and long distance service in
competition with a certain telephone service provider, and (2) owning an
interest in a competitor of the telephone service provider, except that he can
own up to 1% of a publicly traded competitor. As a result, Aduddell's
affiliation in any way with LORECOM would restrict LORECOM's ability to sell
local and long distance service. Similarly, if LORECOM sells local and long
distance service, Aduddell could only own up to 1% of LORECOM. Aduddell believed
that LORECOM could substantially increase its revenues and net income by selling
local and long distance services through the interconnect partners' customer
bases. Therefore, on April 9, 1999, Aduddell cancelled his 32.5% interest
(285,000 shares) in LORECOM. Also, on April 9, 1999, David Aduddell resigned as
Chief Executive Officer and a director of LORECOM to ensure that LORECOM's
ability to sell local and long distance services would not be restricted by his
affiliation with LORECOM.

David Aduddell also owns 33.33% of Access Communications Services, Inc.,
one of the interconnect partners. Aduddell will receive $100,000 in cash and
LORECOM common stock equal to $200,000 (estimated to be 18,182 shares) upon the
acquisition of Access by LORECOM. Upon completion of the offering and
acquisition of the interconnect partners, we anticipate having approximately
2,456,632 shares of common stock issued and outstanding. Aduddell's 18,182
shares will represent less than 1% of our total outstanding stock.

Steve Aduddell is David Aduddell's brother. Steve Aduddell owns 67.67% of
Access Communications Services, Inc., one of the interconnect partners. Steve
Aduddell will receive $500,000 in cash and LORECOM common stock equal to
$100,000 (estimated to be 9,091 shares) upon the acquisition of Access by
LORECOM.

Aduddell Enterprises owns the lease space where our principal offices are
located. David Aduddell and Steve Aduddell each own 50% of Aduddell Enterprises.
Aduddell Enterprises has sold the lease space, and as a result, LORECOM must
vacate the premises. LORECOM will abandon approximately $22,800 of leasehold
improvements, and Access Communications will abandon approximately $18,000 of
leasehold improvements, which could be deemed to have inured to the benefit of,
and been reflected in the sales price of the building for, Aduddell Enterprises.

Wylie Limited Partnership is expected to receive 92,727 shares of LORECOM
common stock from the acquisition of Travis Business Systems, Inc., an
interconnect partner, by LORECOM. Mr. Travis owns 25% of the general partner of
Wylie Limited Partnership and 50% of the limited partnership interests in Wylie
Limited Partnership.

Ricky Naylor agreed to fund, and has funded through an affiliate, the
operations of LORECOM prior to the closing of this offering. Any and all amounts
loaned to LORECOM are unsecured, bear interest at 10% per year and are payable
on the earlier of the closing of this offering or December 31, 1999. This

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<PAGE> 47

loan, together with accrued interest, will be repaid from the proceeds of this
offering. As of July 15, 1999, the principal amount due Mr. Naylor was
approximately $640,000.

Management believes each transaction between LORECOM and our officers,
directors or principal stockholders or their affiliates were on terms no less
favorable to our officers, directors or principal stockholders or their
affiliates than could reasonably have obtained in an arm's length transaction
with independent third parties. In most cases, however, at the time the
transactions took place, we lacked sufficient disinterested independent
directors to ratify the transactions.

LORECOM's Certificate of Incorporation provides that all transactions
between LORECOM or its subsidiaries and a director, officer or other affiliate
of LORECOM will be void or voidable unless the material facts regarding the
relationship and the transaction are disclosed, or are known to the board, and a
majority of the disinterested directors in good faith authorize the transaction;
or the material facts regarding the relationship and the transaction are
disclosed, or are known to the stockholders entitled to vote on the transaction,
and a majority of the disinterested stockholders approve the transaction. As a
result of these provisions, any future transactions with directors, officers,
employees or affiliates of LORECOM are anticipated to be minimal and will, in
any case, be approved in advance by either a majority of the independent and
disinterested directors or disinterested stockholders of LORECOM. Similarly, all
of our future material affiliate transactions, loans, any forgiveness of loans
and any issuance of preferred stock must be approved by a majority of our
independent directors who do not have an interest in the transactions and who
had access, at our expense, to our legal counsel, or to independent counsel. All
future affiliated transactions will be made or entered into on terms that are no
less favorable to us than those that can be obtained from any unaffiliated third
party.

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<PAGE> 48

DESCRIPTION OF COMMON STOCK

ABOUT THE COMMON STOCK

As of the date of this prospectus, LORECOM is authorized to issue 4,500,000
shares of common stock, par value $.01 per share, and 500,000 shares of
preferred stock, par value $.01 per share. The summary of the terms of LORECOM's
authorized and outstanding capital stock found below is qualified in its
entirety by reference to LORECOM's Certificate of Incorporation, a copy of which
is included as an exhibit to the registration statement of which this prospectus
is a part.

Common stock. Owners of common stock will be entitled to dividends declared
by LORECOM's board of directors out of funds legally available. The common
stockholders are entitled to one vote per share for the election of directors
and other corporate matters. In the event of liquidation, dissolution or winding
up, common stockholders would be entitled to share ratably in all of LORECOM's
assets available for distribution. The common stock carries no preemptive
rights. All outstanding shares of common stock are, and the shares of common
stock to be sold by LORECOM in the offering when issued will be, duly
authorized, validly issued, fully paid and nonassessable. We are making
application to list the common stock on the .

Preferred stock. The board of directors is authorized to issue from time to
time, without stockholder authorization, in one or more designated series,
500,000 shares of preferred stock with such dividend, redemption, conversion,
liquidation and exchange provisions as are provided in the particular series.
Except as expressly provided by law, or except as may be provided by resolution
of the board of directors, the preferred stock shall have no right or power to
vote on any question or in any proceeding or to be represented at, or to receive
notice of, any meeting of LORECOM's stockholders. No shares of preferred stock
are issued or outstanding and the board of directors has no present plans to
issue any of the preferred stock. We will only offer shares of preferred stock
to a promoter, officer, director or shareholder on the same terms as offered to
all other existing stockholders or to new stockholders.

Possible anti-takeover effects. The board is divided into three classes.
Each class of directors consists, as nearly as possible, of one-third of the
total number of directors constituting the entire board. LORECOM's Bylaws
provide that, subject to the rights of the holders of any series of preferred
stock, the number of directors may be fixed from time to time by resolution of
the board, but will consist of not less than one nor more than nine members. The
term for directors in the first class expires at the annual meeting of
stockholders to be held in 2000; the initial term for directors in the second
class expires at the annual meeting of stockholders to be held in 2001; and the
initial term for directors in the third class expires at the annual meeting of
stockholders to be held in 2002. A director of LORECOM may be removed only for
cause and only upon the affirmative vote of the holders of a majority of the
outstanding capital stock entitled to vote at an election of directors. The
board provisions set forth in LORECOM's Certificate of Incorporation may not be
amended without the approval of at least 66 2/3 percent of the voting power of
all shares entitled to vote generally in the election of directors, voting
together as a single class. The provisions of LORECOM's Certificate of
Incorporation and Bylaws, together with the ability of the board to issue
preferred stock without further stockholder action, could delay or frustrate the
removal of incumbent directors and could also discourage or make more difficult
a merger, tender offer or proxy contest even if such event would be favorable to
the interests of stockholders.

Section 1090.3 of the Oklahoma General Corporation Act prohibits a publicly
held Oklahoma corporation from engaging in a "business combination" with an
"interested stockholder" for a period of three years after the date of the
transaction in which the person became an interested stockholder, unless (1)
prior to the date of the business combination, either the business combination
or the transaction which resulted in such person becoming an interested
stockholder is approved by the board of directors; (2) upon consummation of the
transaction which resulted in the stockholder becoming an interested
stockholder, the interested stockholder owns at least 85% of the outstanding
voting stock; or (3) on or after such date the business combination is approved
by the board of directors and by the affirmative vote of at least 66 2/3% of the
outstanding voting stock which is not owned by the interested stockholder. A
"business combination"

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<PAGE> 49

includes mergers, asset sales and other transactions resulting in a financial
benefit to the interested stockholder. An "interested stockholder" is a person
who, together with affiliates and associates, owns 15% or more of the
corporation's voting stock. The effect of such statute may be to discourage
certain types of transactions involving an actual or potential change in control
of LORECOM.

If we have 1,000 or more shareholders and meet other conditions, we will be
subject to Oklahoma's control shares act. With exceptions, this act prevents
holders of more than 20% of our stock from voting those shares. This provision
at least delays the time it takes anyone to gain control of LORECOM. Also,
shareholder action by written consent without a meeting must be unanimous.

DIVIDEND POLICY

LORECOM intends to retain earnings, if any, to finance the expansion of its
business and for general corporate purposes. We do not expect to pay dividends
for the foreseeable future. Future lenders may also impose restrictions on our
ability to pay dividends.

MARKET FOR COMMON STOCK AND SHARES ELIGIBLE FOR FUTURE SALE

No public market currently exists for LORECOM's common stock. The offering
price of our common stock does not necessarily indicate the price at which the
common stock will trade. Stock prices and trading volumes for many
telecommunication companies fluctuate for a number of reasons, including some
reasons which may be unrelated to their business or results of operation. An
active trading market for the common stock may not develop or continue after the
offering.

We presently have four stockholders of record. Upon completion of the
offering, 2,456,632 shares of common stock are expected to be outstanding. All
of the 1,600,000 shares expected to be purchased in the offering (1,840,000
shares if the underwriter's over-allotment option is exercised in full) will be
freely tradeable without registration or other restriction under the Securities
Act, except for shares purchased by affiliates of LORECOM. All of the remaining
shares of common stock outstanding, which are the restricted shares, may be sold
only pursuant to an effective registration statement filed by LORECOM or
pursuant to an applicable exemption, including an exemption under Rule 144 under
the Securities Act. In this regard, 23,797 of the restricted shares of common
stock will be eligible for resale pursuant to Rule 144 no later than September,
1999, approximately 287,955 of the restricted shares of common stock will be
eligible for resale pursuant to Rule 144 no later than one year following the
consummation of this offering, and approximately 544,880 of the restricted
shares will be eligible for resale pursuant to Rule 144 no later than two years
following the consummation of this offering. The effect, if any, that future
market sales of shares or the availability of shares for sale will have on the
prevailing market prices for the common stock cannot be predicted. Nevertheless,
sales of a substantial number of shares in the public market could adversely
affect prevailing market prices for the common stock.

In general, Rule 144 provides that if a person (excluding an affiliate)
holds restricted shares (regardless of whether such person is the initial holder
or a subsequent holder of such shares), and if at least one year has elapsed
since the later of the date on which the restricted shares were issued or the
date that they were acquired from an affiliate, then such person is entitled to
sell within any three-month period a number of shares that does not exceed the
greater of 1% of the then outstanding shares of common stock or the average
weekly trading volume of such stock during the four calendar weeks preceding the
sale. After the restricted shares are held for two years by a person who is not,
and has not been during the preceding three months, deemed an "affiliate" of
LORECOM, the holder would be entitled to sell such shares under Rule 144 without
regard to the volume limitations described above.

The holders of approximately 380,682 shares of common stock and warrants to
purchase an additional 10,000 shares of common stock will have certain rights to
require LORECOM to register such shares for resale under the Securities Act. If,
subsequent to the consummation of the offering, we propose to register any of
our securities under the Securities Act, such holders are entitled to notice of
such registration and to include their shares in such registration with their
expenses borne by LORECOM, subject to the right of an underwriter participating
in the offering to limit the number of shares included in such registration.
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<PAGE> 50

In addition, the holders of a majority of such shares of common stock have the
right to immediately demand, subject to certain limitations, that LORECOM file
one registration statement covering sales of their respective shares, and we are
obligated to pay the expenses of such registration.

Our directors and executive officers (including those holders with
registration rights described above) have agreed that, during the two-year
period following the close of the offering they will not, and LORECOM has agreed
that for a period of 180 days following the date of this prospectus it will not,
without the prior written consent of Capital West Securities, Inc., offer, sell,
contract to sell or otherwise dispose of any shares of common stock or any
securities convertible into, or exercisable or exchangeable for, common stock,
except that we may grant units or awards under our deferred stock compensation
plan and the Omnibus Plan, and may issue shares of common stock (1) in
connection with the acquisitions, or (2) pursuant to the exercise of awards or
distributions of units under our incentive plans.

TRANSFER AGENT

The transfer agent for the common stock is Continental Stock Transfer and
Trust Company.

THE UNDERWRITER AND THE PLAN OF DISTRIBUTION

THE UNDERWRITING AGREEMENT

Capital West Securities, Inc. has agreed, subject to the terms and
conditions set forth in the underwriting agreement between LORECOM and Capital
West, to purchase from LORECOM, and LORECOM has agreed to sell to Capital West,
1,600,000 shares of common stock, excluding the over-allotment option. Capital
West is offering the common stock on a firm commitment basis.

The underwriting agreement provides that the obligations of Capital West to
purchase the shares listed above are subject to certain conditions. The
underwriting agreement also provides that Capital West is committed to purchase,
and we are obligated to sell, all of the shares offered by this prospectus, if
any of the shares being sold pursuant to the underwriting agreement are
purchased (without consideration of any shares that may be purchased through the
exercise of the underwriter's over-allotment option).

Capital West has advised us that it proposes to offer the shares to the
public initially at the public offering price set forth on the cover page of
this prospectus and to certain dealers at such price, less a concession not to
exceed $ per share. Capital West may allow, and the dealers may reallow, a
concession to other dealers not to exceed $ per share. After the initial
public offering of the shares, the public offering price, the concessions to
selected dealers and the reallowance to other dealers may be changed by Capital
West.

Capital West was first registered as a broker-dealer in May 1995. Capital
West has participated in only nine public equity offerings as an underwriter,
although certain of its employees have had experience in underwriting public
offerings while employed by other broker-dealers. Prospective purchasers of the
securities offered in this prospectus should consider Capital West's limited
underwriting experience in evaluating this offering.

We have granted Capital West an option, exercisable during the 45-day
period after the date of this prospectus, to purchase up to an additional
240,000 shares of common stock at the initial public offering price set forth on
the cover page of this prospectus, less underwriting discounts and commissions.
Capital West may exercise such option only to cover over-allotments, if any,
incurred in the sale of shares.

We have agreed to indemnify Capital West against certain liabilities,
including liabilities under the Securities Act, or to contribute to payments
that Capital West may be required to make in respect thereof. Capital West has
informed us that it does not intend to confirm sales to any account over which
it exercises discretionary authority.

We agreed to pay to Capital West a non-accountable expense allowance of 2%
of the gross proceeds derived from the sale of the common stock (including the
sale of any shares of common stock subject to
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<PAGE> 51

Capital West's over-allotment option), $30,000 of which has been paid as of the
date of this prospectus. The non-accountable expense allowance will cover all
expenses incurred in connection with qualifying our common stock for sale under
the laws of such states as Capital West may designate, including filing fees and
fees and expenses of counsel retained for such purposes by the underwriter, and
registering the offering with the National Association of Securities Dealers,
Inc.

In connection with this offering, LORECOM has agreed to sell to Capital
West, for a price of $.001 per warrant, warrants to purchase shares of common
stock equal to 10% of the total number of shares of common stock sold pursuant
to this offering, excluding shares subject to the over-allotment option. The
Capital West warrants are exercisable at a price equal to 140% of the initial
public offering price ($15.40 assuming an initial public offering price of
$11.00 per share) for four years, commencing one year from the date of this
prospectus. The Capital West warrants grant to Capital West, with respect to the
registration under the Securities Act of the securities directly and indirectly
issuable upon exercise of Capital West's warrants, one demand registration right
during the exercise period, as well as piggyback registration rights at any
time. Subject to limited exceptions, the warrants will be restricted from sale,
transfer, pledge or assignment for a period of one year from the effective date
of the offering.

Pursuant to the relevant merger or asset purchase agreement, holders of
approximately 12% of the shares of LORECOM's common stock (including LORECOM's
directors and executive officers) outstanding after completion of this offering
have agreed for a period of 12 months after the date of closing the offering,
they will not offer, sell or otherwise dispose of any shares of common stock
owned by them. LORECOM's executive officers and directors have agreed to enter
into a 24 month lock-up agreement with regard to shares of common stock they
own, representing approximately 24% of the common stock outstanding after
completion of this offering.

The shares of common stock are expected to be listed on the American Stock
Exchange under the trading symbol " ." Any listing is contingent, among
other things, upon LORECOM obtaining 400 shareholders. In connection with this
offering, Capital West may engage in transactions that stabilize, maintain or
otherwise affect the market price of the common stock. Such transactions may
include stabilization transactions effected in accordance with Rule 104 of
Regulation M, pursuant to which such persons may bid for or purchase common
stock for the purpose of stabilizing its market price. Capital West also may
create a short position by selling more common stock in connection with the
offering than it is committed to purchase from LORECOM, and in such case, may
purchase common stock in the open market following completion of the offering to
cover all or a portion of such short position. Capital West may also cover all
or a portion of such short position, up to 240,000 shares of common stock, by
exercising its over-allotment option referred to above. In addition, Capital
West may impose "penalty bids" under contractual arrangements with the
underwriters whereby it may reclaim from an underwriter (or dealer participating
in the offering) for the account of the other underwriters, the selling
concession with respect to common stock that is distributed in the offering but
subsequently purchased for the account of the underwriters in the open market.
Any transactions described in this paragraph may result in the maintenance of
the price of the common stock at a level above that which might otherwise
prevail in the open market. None of the transactions described in this paragraph
are required, and, if they are undertaken, they may be discontinued at any time.

The estimated aggregate expenses, to be paid solely by LORECOM, in
connection with the acquisitions and the distribution of the securities being
registered is approximately $2.7 million.

47
<PAGE> 52

DETERMINING THE OFFERING PRICE

Prior to this offering, there has been no public market for LORECOM's
common stock. We determined the initial public offering price in negotiations
with Capital West. Among the factors we considered in determining the initial
public offering price, in addition to prevailing market conditions, were the
following:

- Our financial information and prospects for future revenues;

- The history of, and the prospects for, LORECOM and the industry in which
it competes;

- That LORECOM and its interconnect partners have not previously engaged in
business transactions before;

- That on a pro forma basis, LORECOM experienced a loss for 1998;

- An assessment of our management;

- LORECOM's past and present operations;

- The dilution that new investors in LORECOM will experience;

- The present state of our development; and

- All of these factors in relation to market values and valuation measures
of other companies engaged in activities similar to LORECOM.

The initial public offering price set forth on the cover page of this
prospectus should not be considered an indication of the actual value of the
common stock. The price is subject to change as a result of market conditions
and other factors. We cannot assure you that an active trading market will
develop for the common stock or that the common stock will trade in the public
market subsequent to the offering at or above the initial public offering price.

EXPERTS

The financial statements of the following companies (for the periods
indicated) included in this prospectus have been audited by Deloitte & Touche
LLP, independent auditors, as stated in their reports (as further described
below) appearing herein, and are included in reliance upon the reports of such
firm given upon their authority as experts in accounting and auditing:

As of December 31, 1998, and for the period from September 4, 1998
(date of inception), to December 31, 1998:
LORECOM Technologies, Inc. (formerly The Alliance Group, Inc.)

As of December 31, 1998, and for the year then ended:
Access Communications Services, Inc.
American Telcom, Inc.
Banner Communications, Inc.
Communication Services, Inc.
Travis Business Systems, Inc.

As of December 31, 1998 and 1997, and for the years then ended:
Telephone and Paging Divisions of Electrical & Instrument Sales
Corporation ("EIS") (which report expresses an unqualified opinion and
includes an explanatory paragraph relating to the divisions being a
component part of EIS)

As of September 30, 1998, and for the year then ended:
Terra Telecom, Inc.
Telkey Communications, Inc.

48
<PAGE> 53

The financial statements of the following companies (for the periods
indicated) included in this prospectus have been audited by Saxon & Knoll, P.C.,
independent auditors, as stated in their reports appearing herein, and are
included in reliance upon the reports of such firm given upon their authority as
experts in accounting and auditing:

As of December 31, 1998, and for the year then ended:
Nobel Systems, Inc.

As of December 31, 1997, and for the year then ended:
Access Communications Services, Inc.
American Telcom, Inc.
Banner Communications, Inc.
Travis Business Systems, Inc.

As of September 30, 1997, and for the year then ended:
Terra Telecom, Inc.
Telkey Communications, Inc.

The financial statements of Commercial Telecom Systems, Inc. as of December
31, 1998, and for the year then ended included in this prospectus have been
audited by Hunter, Atkins & Russell, PLC, independent auditors, as stated in
their report appearing herein, and are included in reliance upon the reports of
such firm given upon their authority as experts in accounting and auditing.

VALIDITY OF COMMON STOCK

The validity of the common stock offered hereby will be passed on for
LORECOM by McAfee & Taft A Professional Corporation, Oklahoma City, Oklahoma.
Certain legal matters in connection with the shares of common stock will be
passed on for Capital West by Robertson & Williams, Oklahoma City, Oklahoma.

49
<PAGE> 54

INDEX TO FINANCIAL STATEMENTS

<TABLE>
<S> <C>
LORECOM Technologies, Inc. ................................. F-2
Access Communications Services, Inc. ....................... F-10
American Telcom, Inc. ...................................... F-21
Banner Communications, Inc. ................................ F-30
Commercial Telecom Systems, Inc. ........................... F-39
Communication Services, Inc. ............................... F-47
Telephone and Paging Divisions of EIS Communications
Combined Financial Statements............................. F-55
Nobel Systems, Inc. ........................................ F-62
Telkey Communications, Inc. ................................ F-70
Terra Telecom, Inc. ........................................ F-80
Travis Business Systems, Inc. .............................. F-90
</TABLE>

F-1
<PAGE> 55

INDEPENDENT AUDITORS' REPORT

To the Board of Directors and Stockholders
LORECOM Technologies, Inc. (formerly
The Alliance Group, Inc.):

We have audited the accompanying balance sheet of LORECOM Technologies,
Inc. (formerly The Alliance Group, Inc.) as of December 31, 1998, and the
related statements of operations, stockholders' deficiency, and cash flows for
the period from September 4, 1998 (date of inception) to 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 audit.

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

In our opinion, such financial statements present fairly, in all material
respects, the financial position of LORECOM Technologies, Inc. (formerly The
Alliance Group, Inc.) at December 31, 1998, and the results of its operations
and its cash flows for the period from September 4, 1998 (date of inception) to
December 31, 1998, in conformity with generally accepted accounting principles.

/s/ DELOITTE & TOUCHE LLP

Oklahoma City, Oklahoma
March 18, 1999 (April 9, 1999 as to
Note 7 to the financial statements, and
May 12, 1999 as to Note 8 to the
financial statements)

F-2
<PAGE> 56

LORECOM TECHNOLOGIES, INC.
(FORMERLY THE ALLIANCE GROUP, INC.)

BALANCE SHEETS

ASSETS

<TABLE>
<CAPTION>
MARCH 31, DECEMBER 31,
1999 1998
----------- ------------
(UNAUDITED)
<S> <C> <C>
CURRENT ASSETS:
Cash...................................................... $ 28,981 $ 79,700
Accounts receivable....................................... 26,436 --
Other current assets...................................... 2,721 1,933
--------- ---------
Total current assets.............................. 58,138 81,633
PROPERTY AND EQUIPMENT:
Vehicles.................................................. 35,988 35,988
Leasehold improvements.................................... 22,795 --
Equipment................................................. 46,080 6,711
104,863 42,699
Less accumulated depreciation............................. (4,438) (1,978)
--------- ---------
Property and equipment, net....................... 100,425 40,721
OTHER ASSETS:
Deferred offering costs................................... 509,644 19,109
Other assets.............................................. -- 1,389
--------- ---------
Total other assets................................ 509,644 20,498
--------- ---------
TOTAL............................................. $ 668,207 $ 142,852
========= =========

LIABILITIES AND STOCKHOLDERS' DEFICIENCY

CURRENT LIABILITIES:
Current portion of long-term debt......................... $ 8,255 $ 8,049
Accounts payable.......................................... 268,873 32,464
Accounts payable -- related parties....................... 118,670 18,296
Note payable -- related party............................. 35,000 --
Cash advances payable..................................... -- 80,000
Other current liabilities................................. 35,233 --
--------- ---------
Total current liabilities......................... 466,031 138,809
Long-term debt, net of current portion...................... 23,966 26,119
--------- ---------
Total liabilities................................. 489,997 164,928
--------- ---------
COMMITMENTS
STOCKHOLDERS' EQUITY (DEFICIENCY):
Preferred stock, $.01 par value, 500,000 shares
authorized; none issued................................ -- --
Common stock, $.01 par value; 4,500,000 shares authorized;
760,950 shares issued and outstanding (see Note 7)..... 7,610 7,610
Additional paid in-capital................................ 492,400 492,400
Accumulated deficit....................................... (321,800) (113,078)
Stock subscription receivable............................. -- (409,008)
--------- ---------
Total stockholders' equity (deficiency)........... 178,210 (22,076)
--------- ---------
TOTAL............................................. $ 668,207 $ 142,852
========= =========
</TABLE>

See notes to financial statements.

F-3
<PAGE> 57

LORECOM TECHNOLOGIES, INC.
(FORMERLY THE ALLIANCE GROUP, INC.)

STATEMENTS OF OPERATIONS

<TABLE>
<CAPTION>
THREE PERIOD FROM
MONTHS SEPTEMBER 4,
ENDED 1998 TO
MARCH 31, DECEMBER 31,
1999 1998
----------- ------------
(UNAUDITED)
<S> <C> <C>
NET SALES................................................... $ 26,436 $ --
COSTS AND EXPENSES:
Cost of sales............................................. 26,436 --
Salaries and benefits..................................... 121,323 63,267
General and administrative expenses....................... 86,915 48,961
Interest expense.......................................... 484 850
--------- ---------
Total costs and expenses.......................... 235,158 113,078
--------- ---------
NET LOSS.................................................... $(208,722) $(113,078)
========= =========
</TABLE>

See notes to financial statements.

F-4
<PAGE> 58

LORECOM TECHNOLOGIES, INC.
(FORMERLY THE ALLIANCE GROUP, INC.)

STATEMENTS OF STOCKHOLDERS' DEFICIENCY

<TABLE>
<CAPTION>
COMMON ADDITIONAL STOCK
SHARES COMMON PAID-IN SUBSCRIPTION ACCUMULATED
(NOTE 7) STOCK CAPITAL RECEIVABLE DEFICIT TOTAL
-------- ------ ---------- ------------ ----------- ---------
<S> <C> <C> <C> <C> <C> <C>
BALANCE, September 4, 1998
(Date of inception) --
Issuance of common stock......... 760,950 $7,610 $492,400 $(500,000) $ -- $ 10
Collections on stock subscription
receivable..................... -- -- -- 90,992 -- 90,992
Net loss......................... -- -- -- -- (113,078) (113,078)
------- ------ -------- --------- --------- ---------
BALANCE, December 31, 1998......... 760,950 7,610 492,400 (409,008) (113,078) (22,076)
Collections on stock subscription
receivable (Unaudited)......... -- -- -- 409,008 -- 409,008
Net loss (Unaudited)............. -- -- -- -- (208,722) (208,722)
------- ------ -------- --------- --------- ---------
BALANCE, March 31, 1999
(Unaudited)...................... 760,950 $7,610 $492,400 $ -- $(321,800) $ 178,210
======= ====== ======== ========= ========= =========
</TABLE>

See notes to financial statements.

F-5
<PAGE> 59

LORECOM TECHNOLOGIES, INC.
(FORMERLY THE ALLIANCE GROUP, INC.)

STATEMENTS OF CASH FLOWS

<TABLE>
<CAPTION>
THREE PERIOD FROM
MONTHS SEPTEMBER 4,
ENDED 1998 TO
MARCH 31, DECEMBER 31,
1999 1998
----------- ------------
(UNAUDITED)
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss.................................................. $(208,722) $(113,078)
Adjustments to reconcile net loss to net cash provided by
operating activities:
Depreciation........................................... 2,460 1,978
Changes in current assets and liabilities:
Accounts receivable.................................. (26,436) --
Other current assets................................. (788) (1,933)
Other assets......................................... (489,146) (20,498)
Accounts payable..................................... 256,783 50,760
Other current liabilities............................ 35,233 80,000
--------- ---------
Net cash used in operating activities............. (430,616) (2,771)
--------- ---------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of property and equipment....................... (62,164) (42,699)
--------- ---------
CASH FLOWS FROM FINANCING ACTIVITIES:
Issuance of common stock.................................. -- 10
Proceeds from borrowings.................................. 35,000 36,073
Payments on long-term debt................................ (1,947) (1,905)
Collections on stock subscription receivable.............. 409,008 90,992
--------- ---------
Net cash provided by financing activities......... 442,061 125,170
--------- ---------
NET (DECREASE) INCREASE IN CASH............................. (50,719) 79,700
CASH, beginning of period................................... 79,700 --
--------- ---------
CASH, end of period......................................... $ 28,981 $ 79,700
========= =========
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
Cash paid during the period for interest.................. $ 450 $ 775
Common stock issued under stock subscription receivable... $ -- $ 500,000
</TABLE>

See notes to financial statements.

F-6
<PAGE> 60

LORECOM TECHNOLOGIES, INC.
(FORMERLY THE ALLIANCE GROUP, INC.)

NOTES TO FINANCIAL STATEMENTS

1. ORGANIZATION

LORECOM Technologies, Inc. (formerly The Alliance Group, Inc., formerly
Advantage Business Solutions, Inc.) (the "Company"), was incorporated on
September 4, 1998, under the laws of the State of Oklahoma. The Company was
formed solely for the purpose of identifying and acquiring interconnect
telecommunications companies.

At December 31, 1998, the Company has an accumulated deficit of $113,078
and a stockholders' deficiency of $22,076 that may raise concerns about the
Company's ability to continue as a going concern. The losses are due to costs
incurred prior to the Company earning any revenues. The stockholders' deficiency
is mainly due to the stock subscription receivable (see Note 4 to the financial
statements). Collections on such subscription will help fund future costs of the
Company. Subsequent to December 31, 1998, the Company collected $284,000 on the
stock subscription receivable through March 18, 1999. In addition, a stockholder
has agreed to fund the Company's operations prior to commencement of operations
in exchange for a note payable. Management's plans to improve the Company's
financial position include plans for expansion by acquisition (see Note 6 to the
financial statements) and seeking large telecommunication installation projects.
In February 1999 the Company obtained its first contract with a third party for
maintenance of telecommunications equipment.

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Unaudited Interim Financial Statements -- The balance sheet as of March 31,
1999, and the statement of operations, stockholders' equity and cash flows for
the three months ended March 31, 1999, have been prepared by the Company without
audit. In the opinion of management, all adjustments (which included only
normal, recurring adjustments) necessary to present fairly the financial
position at March 31, 1999, and the results of operations and cash flows for the
three months ended March 31, 1999, have been made. The results of operations for
the three months ended March 31, 1999 are not necessarily indicative of the
results to be expected for the full year.

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

Property and Equipment -- Property and equipment are stated at cost. Major
additions and improvements are capitalized at cost, while maintenance and
repairs which do not extend the useful lives of the respective assets are
expensed. When assets are sold or retired, cost and accumulated depreciation are
removed from the respective accounts. Any gains or losses resulting from
disposal are included in current period income or loss.

Property and equipment owned by the Company are depreciated using the
straight-line method over their estimated useful lives of three to seven years.

The Company records impairments to its long-lived assets when it becomes
probable that the carrying values of the assets will not be fully recovered over
their estimated lives. Impairments are recorded to reduce the carrying value of
the assets to their estimated fair values determined by the Company based on
facts and circumstances in existence at the time of the determination. No
impairments were recorded in 1998.

Income Taxes -- The Company has elected to be taxed under the provisions of
Subchapter S of the Internal Revenue Code. Under those provisions, the Company
does not pay federal corporate income taxes

F-7
<PAGE> 61
LORECOM TECHNOLOGIES, INC.
(FORMERLY THE ALLIANCE GROUP, INC.)

NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)

on its taxable income. Instead, the stockholders are liable for individual
federal income taxes on their respective shares of the Company's taxable income.

Advertising -- Advertising costs incurred by the Company are expensed
during the period in which the advertising occurs.

Fair Value Disclosure -- The Company's financial instruments include cash,
short-term payables, and notes payable. The carrying amounts of cash and
short-term payables approximate fair value due to their short-term nature. The
carrying amounts of notes payable approximate fair value based on borrowing
terms currently available to the Company.

3. LONG-TERM DEBT

The Company's long-term debt at December 31, 1998, consists of the
following:

<TABLE>
<S> <C>
Note payable to a bank, due in monthly principal and
interest payments, interest rate of 8.75%, secured by a
vehicle, due in 2002...................................... $34,168
Less current maturities..................................... 8,049
-------
Total long-term debt........................................ $26,119
=======
</TABLE>

Maturities of long-term debt for the next four years are as follows:
1999 -- $8,049; 2000 -- $8,782; 2001 -- $9,583; and 2002 -- $7,754.

4. STOCK SUBSCRIPTION RECEIVABLE

In 1998, the Company sold 475,950 shares of common stock to a director in
exchange for a stock subscription receivable of $500,000. Collections have been
made on the subscription as funds were needed to fund operations during the
initial start-up period of the Company. During 1998, approximately $91,000 was
collected. Through March 18, 1999, a total of $375,000 was collected, and the
remaining balance due was $125,000.

Unaudited -- Through March 31, 1999, the remaining balance had been
collected.

5. RELATED PARTY TRANSACTIONS

The Company has recorded a liability for rent and overhead allocations in
the amount of $18,296 to an entity wholly owned and operated by a major
stockholder of the Company.

The Company has recorded a non-interest bearing cash advance payable in the
amount of $80,000 to an entity wholly owned and operated by a major stockholder
of the Company. The advance was repaid in January 1999.

During 1998, a major stockholder of the Company assigned 4,760 shares of
his stock to an employee of an entity owned and operated by the major
stockholder. The employee provided services to the Company which were invoiced
to and expensed by the Company in the amount of $10,397.

Unaudited -- During the three months ended March 31, 1999, the Company has
recorded a liability for:

- purchases of property and equipment in the amount of $35,600 to an entity
wholly owned and operated by a major stockholder of the Company.

F-8
<PAGE> 62
LORECOM TECHNOLOGIES, INC.
(FORMERLY THE ALLIANCE GROUP, INC.)

NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)

- operating expenses of the Company in the amount of $35,000 to a major
stockholder of the Company.

- rent, purchase of property and equipment, and overhead allocations in the
amount of $38,073 to an entity wholly owned and operated by a major
stockholder of the Company.

6. DEFERRED OFFERING COSTS

The Company and its stockholders have entered into definitive agreements
with 13 Oklahoma-based telecommunications companies (the "Entities") pursuant to
which the Company will purchase all of the issued and outstanding common stock
or assets of the Entities concurrently with, and as a condition to, completion
of a public or private offering of the common stock of the Company. All of the
issued and outstanding common stock or assets of the Entities will be exchanged
for cash and common stock of the Company.

7. SUBSEQUENT EVENTS -- CAPITAL STOCK

Subsequent to December 31, 1998, the stockholders effected an increase in
the number of authorized common shares from 1,000 to 4,500,000 and a stock split
that increased the issued and outstanding common shares from 267 to 760,950. The
stockholders also authorized 500,000 shares of $.01 par value preferred stock.
These changes have been reflected in the Company's financial statements on a
retroactive basis as though they had been effected on the date of inception of
the Company.

Also, subsequent to December 31, 1998, the Company's Chief Executive
Officer ("CEO") resigned his position and directorship of the Company.
Additionally, all 285,000 shares of Company stock owned by the CEO, as adjusted
for the stock split, were voluntarily canceled. The shares canceled represented
32.5% of the total shares issued at that time. The cancellation increased the
percent of ownership of the remaining shareholders incrementally.

8. SUBSEQUENT EVENT -- COMPANY NAME CHANGE

In May 1999, the stockholders effected a change in the name of the Company
from The Alliance Group, Inc. (formerly Advantage Business Solutions, Inc.) to
LORECOM Technologies, Inc. This change has been reflected in the Company's
financial statements on a retroactive basis as though it had been effected on
the date of inception of the Company.

F-9
<PAGE> 63

INDEPENDENT AUDITORS' REPORT

To the Stockholders
Access Communications Services, Inc.:

We have audited the accompanying balance sheet of Access Communications
Services, Inc. as of December 31, 1998, and the related statements of
operations, stockholders' equity, and cash flows for the year ended December 31,
1998. The financial statements as of December 31, 1997, and for the year then
ended, were audited by other auditors whose report expressed an unqualified
opinion on those financial statements. These financial statements are the
responsibility of the company's management. Our responsibility is to express an
opinion on the 1998 financial statements based on our audit.

We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the 1998 financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement
presentation. We believe that our audit provides a reasonable basis for our
opinion.

In our opinion, such 1998 financial statements present fairly, in all
material respects, the financial position of Access Communications Services,
Inc. at December 31, 1998, and the results of its operations and its cash flows
for the year ended December 31, 1998, in conformity with generally accepted
accounting principles.

/s/ DELOITTE & TOUCHE LLP

Oklahoma City, Oklahoma
February 28, 1999

F-10
<PAGE> 64

INDEPENDENT AUDITORS' REPORT

To the Stockholders
Access Communications Services, Inc.:

We have audited the accompanying balance sheet of Access Communications
Services, Inc. as of December 31, 1997, and the related statements of
operations, stockholders' equity, and cash flows for the year ended December 31,
1997. These financial statements are the responsibility of the company's
management. Our responsibility is to express an opinion on the 1997 financial
statements based on our audit.

We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the 1997 financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement
presentation. We believe that our audit provides a reasonable basis for our
opinion.

In our opinion, such 1997 financial statements present fairly, in all
material respects, the financial position of Access Communications Services,
Inc. at December 31, 1997, and the results of its operations and its cash flows
for the year ended December 31, 1997, in conformity with generally accepted
accounting principles.

/s/ SAXON & KNOL

Oklahoma City, Oklahoma
February 28, 1999

F-11
<PAGE> 65

ACCESS COMMUNICATIONS SERVICES, INC.

BALANCE SHEETS

ASSETS

<TABLE>
<CAPTION>
DECEMBER 31,
MARCH 31, --------------------
1999 1998 1997
----------- --------- --------
(UNAUDITED)
<S> <C> <C> <C>
CURRENT ASSETS:
Cash..................................................... $ 25,136 $ 187,464 $ 18,922
Accounts receivable...................................... 215,972 127,953 299,553
Inventory................................................ 60,465 51,820 38,220
Other current assets..................................... 3,143 3,864 1,590
--------- --------- --------
Total current assets............................. 304,716 371,101 358,285
PROPERTY AND EQUIPMENT:
Autos and trucks......................................... 124,776 124,776 114,188
Equipment................................................ 105,074 69,524 34,744
Leasehold improvements................................... 35,213 35,213 35,213
Real estate.............................................. 15,198 15,198 15,198
--------- --------- --------
280,261 244,711 199,343
Less accumulated depreciation............................ (109,570) (101,667) (72,251)
--------- --------- --------
Property and equipment, net...................... 170,691 143,044 127,092
--------- --------- --------
RECEIVABLE FROM STOCKHOLDERS............................... 27,400 156,577 138,629
OTHER ASSETS............................................... 1,000 42,400 35,910
--------- --------- --------
TOTAL............................................ $ 503,807 $ 713,122 $659,916
========= ========= ========
LIABILITIES AND STOCKHOLDERS' EQUITY
LIABILITIES:
Current liabilities:
Accounts payable...................................... $ 177,520 $ 191,484 $202,220
Deferred income taxes................................. 29,700 29,700 --
Other current liabilities............................. 31,055 49,895 33,537
Current portion of long-term debt..................... 54,281 53,344 40,974
Current portion of capital lease obligations.......... 20,484 20,130 11,151
--------- --------- --------
Total current liabilities........................ 313,040 344,553 287,882
Long-term debt, net of current portion................... 97,187 109,680 54,645
Deferred income taxes.................................... -- -- 29,700
Capital lease obligations................................ 5,488 7,068 27,284
--------- --------- --------
Total liabilities................................ 415,715 461,301 399,511
COMMITMENTS
STOCKHOLDERS' EQUITY:
Common stock, $5.00 par value; 100 shares authorized,
issued and outstanding................................ 375 500 500
Additional paid in-capital............................... 1,409 168,950 168,950
Retained earnings........................................ 86,308 82,371 90,955
--------- --------- --------
Total stockholders' equity....................... 88,092 251,821 260,405
--------- --------- --------
TOTAL............................................ $ 503,807 $ 713,122 $659,916
========= ========= ========
</TABLE>

See notes to financial statements.

F-12
<PAGE> 66

ACCESS COMMUNICATIONS SERVICES, INC.

STATEMENTS OF OPERATIONS

<TABLE>
<CAPTION>
THREE MONTHS ENDED YEARS ENDED
MARCH 31, DECEMBER 31,
------------------- -----------------------
1999 1998 1998 1997
-------- -------- ---------- ----------
(UNAUDITED)
<S> <C> <C> <C> <C>
SALES........................................... $363,303 $287,023 $1,345,576 $1,447,155
COSTS AND EXPENSES:
Cost of sales................................. 155,748 125,476 551,100 568,732
Salaries and benefits......................... 132,439 137,234 523,127 502,620
Selling, general and administrative........... 62,789 58,999 234,004 243,562
Interest...................................... 7,390 8,012 47,444 28,641
-------- -------- ---------- ----------
Total costs and expenses.............. 358,366 329,721 1,355,675 1,343,555
-------- -------- ---------- ----------
INCOME (LOSS) BEFORE TAXES...................... 4,937 (42,698) (10,099) 103,600
INCOME TAX BENEFIT (EXPENSE).................... (1,000) 8,581 1,515 (30,000)
-------- -------- ---------- ----------
NET INCOME (LOSS)............................... $ 3,937 $(34,117) $ (8,584) $ 73,600
======== ======== ========== ==========
</TABLE>

See notes to financial statements.

F-13
<PAGE> 67

ACCESS COMMUNICATIONS SERVICES, INC.

STATEMENTS OF STOCKHOLDERS' EQUITY

<TABLE>
<CAPTION>
COMMON COMMON
SHARES STOCK ADDITIONAL
(100 SHARES ($5 PAR PAID-IN RETAINED
AUTHORIZED) VALUE) CAPITAL EARNINGS TOTAL
----------- ------- ---------- -------- ---------
<S> <C> <C> <C> <C> <C>
BALANCE, January 1, 1997................ 100 $ 500 $ 168,950 $17,355 $ 186,805
Net income............................ -- -- -- 73,600 73,600
--- ----- --------- ------- ---------
BALANCE, December 31, 1997.............. 100 500 168,950 90,955 260,405
Net loss.............................. -- -- -- (8,584) (8,584)
--- ----- --------- ------- ---------
BALANCE, December 31, 1998.............. 100 500 168,950 82,371 251,821
Common stock redemption (Unaudited)... (25) (125) (167,541) -- (167,666)
Net income (Unaudited)................ -- -- -- 3,937 3,937
--- ----- --------- ------- ---------
BALANCE, March 31, 1999 (Unaudited)..... 75 $ 375 $ 1,409 $86,308 $ 88,092
=== ===== ========= ======= =========
</TABLE>

See notes to financial statements.

F-14
<PAGE> 68

ACCESS COMMUNICATIONS SERVICES, INC.

STATEMENTS OF CASH FLOWS

<TABLE>
<CAPTION>
THREE MONTHS ENDED YEARS ENDED
MARCH 31, DECEMBER 31,
-------------------- ---------------------
1999 1998 1998 1997
--------- -------- --------- ---------
(UNAUDITED)
<S> <C> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss)............................. $ 3,937 $(34,117) $ (8,584) $ 73,600
Adjustments to reconcile net income (loss) to
net cash provided by (used in) operating
activities:
Depreciation............................... 7,903 7,796 27,594 29,459
Loss on sale of assets..................... -- -- 4,185 --
Changes in current assets and liabilities:
Accounts receivable...................... (88,019) 55,524 171,600 (188,485)
Inventory................................ (8,645) 12,476 (13,600) (7,500)
Other current assets..................... 721 182 (2,274) 3,244
Other assets............................. 5,850 (640) (6,490) (1)
Accounts payable......................... (13,964) (9,442) (10,736) 39,918
Other current liabilities................ (18,840) 1,195 16,358 (3,642)
--------- -------- --------- ---------
Net cash provided by (used in)
operating activities................ (111,057) 32,974 178,053 (53,407)
--------- -------- --------- ---------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of property and equipment........... -- -- (51,173) (46,991)
Proceeds from sale of property and
equipment.................................. -- -- 3,442 --
Advances to stockholders...................... (38,489) (18,693) (150,753) (178,833)
Repayment of receivable from stockholders..... -- -- 132,805 85,064
Collections of accounts receivable, other..... -- -- -- 206,380
--------- -------- --------- ---------
Net cash provided by (used in)
investing activities................ (38,489) (18,693) (65,679) 65,620
--------- -------- --------- ---------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from long-term borrowings............ -- -- 181,835 --
Payments on long-term borrowings and capital
leases..................................... (12,782) (12,794) (125,667) (9,862)
--------- -------- --------- ---------
Net cash provided by (used in)
financing activities................ (12,782) (12,794) 56,168 (9,862)
--------- -------- --------- ---------
NET INCREASE (DECREASE) IN CASH................. (162,328) 1,487 168,542 2,351
CASH, beginning of period....................... 187,464 18,922 18,922 16,571
--------- -------- --------- ---------
CASH, end of period............................. $ 25,136 $ 20,409 $ 187,464 $ 18,922
========= ======== ========= =========
SUPPLEMENTAL DISCLOSURES OF CASH FLOW
INFORMATION:
Cash paid during the period for interest...... $ 7,776 $ 7,611 $ 38,027 $ 24,485
Cash paid during the period for income
taxes...................................... $ -- $ -- $ 29,503 $ 35,750
</TABLE>

See notes to financial statements.

F-15
<PAGE> 69

ACCESS COMMUNICATIONS SERVICES, INC.

NOTES TO FINANCIAL STATEMENTS

1. ORGANIZATION

Access Communications Services, Inc. (the "Company") was incorporated in
October 1986, under the laws of the State of Oklahoma. The Company sells,
installs and maintains telephone equipment in the state of Oklahoma market area.

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Unaudited Interim Financial Statements -- The balance sheet as of March 31,
1999, and the statements of operations, stockholders' equity and cash flows for
the three months ended March 31, 1999 and 1998, have been prepared by the
Company without audit. In the opinion of management, all adjustments (which
included only normal, recurring adjustments) necessary to present fairly the
financial position at March 31, 1999, and the results of operations and cash
flows for the three months ended March 31, 1999 and 1998, have been made. The
results of operations for the three months ended March 31, 1999 are not
necessarily indicative of the results to be expected for the full year.

Concentrations -- The Company currently buys most of its telephone
equipment from two manufacturers. Although there are a limited number of
manufacturers of telephone equipment, management believes that other
manufacturers could provide similar equipment on comparable terms. A change in
manufacturers, however, could cause a possible loss of sales, which would affect
operating results adversely.

Revenue Recognition -- Revenue is recognized when equipment is installed or
when maintenance services are rendered. The Company recognizes deferred revenues
for advance payment on agreements to maintain customer telephone equipment. The
deferred revenues are recognized as revenue over the period the services are
provided, which is generally 12 months. Deferred revenues are not significant as
of December 31, 1998 and 1997.

Accounts Receivable -- Allowances for doubtful accounts are established
based on historical losses, experience and knowledge of specific items.
Receivables determined to be uncollectible are written off as a charge to the
allowance for doubtful accounts; recoveries of previously written off amounts
are added back to the allowance for doubtful accounts. No allowances have been
established at December 31, 1998 and 1997 as management believes no material
losses will be incurred from receivables.

Inventory -- Inventory is stated at the lower of cost or market on a
specific identification basis. Cost is determined on a first-in, first-out
method.

Property and equipment owned by the Company are depreciated using an
accelerated method over their estimated useful lives of three to seven years.

Income Taxes -- The Company uses an asset and liability approach to account
for income taxes. Deferred income taxes are recognized for the tax consequences
of temporary differences and operating loss

F-16
<PAGE> 70
ACCESS COMMUNICATIONS SERVICES, INC.

NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)

and tax credit carryforwards by applying enacted tax rates applicable to future
years to differences between the financial statement amounts and the tax bases
of existing assets and liabilities. A valuation allowance is established if, in
management's opinion, it is more likely than not that some portion of the
deferred tax asset will not be realized. At December 31, 1998 and 1997, the
Company's temporary differences between financial and tax bases of assets and
liabilities consist primarily of timing differences in the recognition of gain
from sale of an asset in a prior period.

Product Returns and Warranty -- Product returned by the customer due to
defective manufacture or failure during the manufacturer's warranty period is
returned by the Company to the manufacturer in exchange for replacement product
or refund.

Long-Lived Assets -- Management of the Company assesses recoverability of
its long-lived assets whenever events or changes in circumstances indicate that
the carrying amount of assets may not be recoverable. Recoverability is assessed
and measured on long-lived assets using an estimate of the undiscounted future
cash flows attributable to the asset. Impairment is measured based on future
cash flows discounted at an appropriate rate.

Advertising -- Advertising costs incurred by the company are expensed
during the period in which the advertising occurs.

Fair Value Disclosure -- The Company's financial instruments include cash
and cash equivalents, accounts receivable, receivables from stockholders,
short-term payables, capital lease obligations, and notes payable. The carrying
amounts of cash and cash equivalents, accounts receivable, and short-term
payables approximate fair value due to their short-term nature. The carrying
amounts of receivables from stockholders do not have readily determinable fair
values due to the related party nature of the transaction (see Note 8). The
carrying amounts of capital lease obligations and notes payable approximate fair
value based on borrowing terms currently available to the Company.

3. OPERATING LEASES

The Company has noncancelable operating leases for equipment and a
noncancelable operating lease with a stockholder for its office space. The
future minimum payments by year for these leases at December 31, 1998, are as
follows:

F-17
<PAGE> 71
ACCESS COMMUNICATIONS SERVICES, INC.

NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)

4. LONG-TERM DEBT

The Company's long-term debt at December 31, 1998 and 1997, consisted of
the following:

<TABLE>
<CAPTION>
1998 1997
-------- -------
<S> <C> <C>
Note payable to bank, due in monthly principal and interest
payments; interest rate of 10.6%; maturing in 2002;
secured by all furniture, fixtures, inventory, equipment,
accounts receivable, and 50,000 shares of Zenex Long
Distance, Inc. separately owned by shareholders of the
Company................................................... $ 86,949 $52,445
Note payable to bank, due in monthly principal and interest
payments; interest rate of 10.6%; maturing in 1999;
secured by all furniture, fixtures, inventory, equipment,
accounts receivable, 50,000 shares of Clear-Line
Communications, Inc., and 20,000 shares of Zenex Long
Distance Co., Inc. separately owned by stockholders of the
Company................................................... 46,533 --
Note payable to credit union, due in monthly principal and
interest payments; interest rate of 8.5%; maturing in
2000; secured by vehicle.................................. 9,171 14,537
Note payable to bank, due in monthly principal and interest
payments; interest rate of 10.4%; maturing in 2001;
secured by vehicle........................................ 8,997 12,174
Note payable to bank, due in monthly principal and interest
payments; interest rate of 9.2%; maturing in 2001; secured
by vehicle................................................ 6,505 9,213
Note payable to a related party, due on demand, non
interest-bearing, unsecured; settled in 1998 through
offset with related party receivable...................... -- 7,250
Note payable to bank, due in monthly principal and interest
payments; interest rate of 9.7%; maturing in 2000; secured
by vehicle................................................ 4,869 --
-------- -------
163,024 95,619
Less current maturities..................................... 53,344 40,974
-------- -------
Total long-term debt........................................ $109,680 $54,645
======== =======
</TABLE>

5. CAPITAL LEASES

Future minimum lease payment obligations for leased assets under capital
leases as of December 31, 1998 are as follows:

<TABLE>
<S> <C>
1999........................................................ $20,746
2000........................................................ 7,120
-------
Total minimum lease payments................................ 27,866
Less amount representing interest........................... 668
-------
Present value of minimum lease payments..................... 27,198
Less current portion........................................ 20,130
-------
Long-term portion........................................... $ 7,068
=======
</TABLE>

F-18
<PAGE> 72
ACCESS COMMUNICATIONS SERVICES, INC.

NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)

6. INCOME TAXES

The income tax provision benefit (expense) consists of the following:

<TABLE>
<CAPTION>
1998 1997
------ --------
<S> <C> <C>
Current benefit (expense)................................. $1,515 $(24,136)
Deferred (expense)........................................ -- (5,864)
------ --------
$1,515 $(30,000)
====== ========
</TABLE>

The difference between the statutory Federal income tax rate of 34% and the
Company's effective Federal rate for the years ended December 31, 1998 and 1997,
is due to state taxes and the effect of graduated tax rates.

Deferred tax liabilities at December 31, 1998 and 1997, consist of timing
differences in the recognition of gain from sale of an asset in a prior period.

7. BENEFIT PLAN

All employees are eligible to participate in the Company's simple 401(k)
plan upon completion of one year of employment. Employees may contribute up to
15% of base compensation, as defined. All contributions made by employees are
100% vested at the time the contribution is made. The Company matches 100% of
employee contributions up to 3% of the employee's base compensation. The Company
made contributions totaling $9,470 and $9,602 during the years ended December
31, 1998 and 1997.

8. MAJOR CUSTOMERS

The Company has an account receivable from an individual customer that
amounts to 16% of the Company's total accounts receivable at December 31, 1998.

9. RELATED PARTY TRANSACTIONS

The Company has an investment in Zenex Long Distance, Inc. ("Zenex"), an
affiliate of the Company, of $35,550 at December 31, 1998 and 1997. The
investment is included in other assets and recorded at cost. The Company
provides services and sells equipment to Zenex. Amounts billed by the Company
for sales and services during the years ended December 31, 1998 and 1997,
totaled $108,375 and $204,000, respectively.

The Company has receivables of $156,577 and $138,629 at December 31, 1998
and 1997, respectively, from stockholders. The receivables are non
interest-bearing and unsecured. The Company advanced $150,753 and $178,833
during the years ended December 31, 1998 and 1997, respectively, of which
$132,805 and $85,064 was repaid in 1998 and 1997, respectively.

During the year ended December 31, 1998, the Company borrowed $78,000 from
an affiliated company. Interest paid during the year totaled $13,000. The amount
was repaid in full during the year.

The Company leases office space from an entity controlled by stockholders
of the Company. Lease payments to this affiliated company were $48,000 during
each of the years ended December 31, 1998 and 1997.

Unaudited -- In March 1999:

- The Company exchanged all of its shares of Zenex common stock for office
furniture and equipment from Zenex equal to the Company's investment in
Zenex. No gain or loss was recognized by the Company.

F-19
<PAGE> 73
ACCESS COMMUNICATIONS SERVICES, INC.

NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)

- The Company exchanged the receivable from stockholders for shares of the
Company's common stock. The purchase price for the shares of stock was
determined by management to equal the amount receivable by the Company
from stockholders which totaled $167,666 on the transaction date. The
transaction resulted in the reduction of the receivable from
stockholders, and the shares obtained by the Company were retired.

10. SUBSEQUENT EVENTS

The Company and its stockholders have entered into a definitive agreement
with LORECOM Technologies, Inc. ("LORECOM") (formerly The Alliance Group, Inc.)
pursuant to which the Company will be purchased by LORECOM. All of the issued
and outstanding common stock of the Company will be exchanged for cash and
common stock of LORECOM in conjunction with the consummation of the initial
public offering of the common stock of LORECOM.

F-20
<PAGE> 74

INDEPENDENT AUDITORS' REPORT

To the Stockholders
American Telcom, Inc.:

We have audited the accompanying balance sheet of American Telcom, Inc. as
of December 31, 1998, and the related statements of operations, stockholders'
equity, and cash flows for the year ended December 31, 1998. The financial
statements as of December 31, 1997, and for the year then ended, were audited by
other auditors whose report expressed an unqualified opinion on those financial
statements. These financial statements are the responsibility of the company's
management. Our responsibility is to express an opinion on the 1998 financial
statements based on our audit.

We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the 1998 financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement
presentation. We believe that our audit provides a reasonable basis for our
opinion.

In our opinion, such 1998 financial statements present fairly, in all
material respects, the financial position of American Telcom, Inc. at December
31, 1998, and the results of its operations and its cash flows for the year
ended December 31, 1998, in conformity with generally accepted accounting
principles.

/s/ DELOITTE & TOUCHE LLP

Oklahoma City, Oklahoma
February 19, 1999

F-21
<PAGE> 75

INDEPENDENT AUDITORS' REPORT

To the Stockholders
American Telcom, Inc.:

We have audited the accompanying balance sheet of American Telcom, Inc. as
of December 31, 1997, and the related statements of operations, stockholders'
equity, and cash flows for the year ended December 31, 1997. These financial
statements are the responsibility of the company's management. Our
responsibility is to express an opinion on the 1997 financial statements based
on our audit.

We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the 1997 financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement
presentation. We believe that our audit provides a reasonable basis for our
opinion.

In our opinion, such 1997 financial statements present fairly, in all
material respects, the financial position of American Telcom, Inc. at December
31, 1997, and the results of its operations and its cash flows for the year
ended December 31, 1997, in conformity with generally accepted accounting
principles.

/s/ SAXON & KNOL

Oklahoma City, Oklahoma
February 19, 1999

F-22
<PAGE> 76

AMERICAN TELCOM, INC.

BALANCE SHEETS

ASSETS

<TABLE>
<CAPTION>
DECEMBER 31,
MARCH 31, -------------------
1999 1998 1997
----------- -------- --------
(UNAUDITED)
<S> <C> <C> <C>
CURRENT ASSETS:
Cash...................................................... $ 64,934 $ 82,545 $ 32,428
Accounts receivable, net.................................. 113,998 230,324 101,645
Inventory................................................. 23,142 25,484 29,886
Other current assets...................................... 2,800 2,800 2,800
-------- -------- --------
Total current assets.............................. 204,874 341,153 166,759
PROPERTY AND EQUIPMENT:
Autos and trucks.......................................... 138,258 138,258 97,585
Fixtures and equipment.................................... 15,327 15,327 15,327
-------- -------- --------
153,585 153,585 112,912
Less accumulated depreciation............................. (82,626) (77,926) (65,211)
-------- -------- --------
Property and equipment, net....................... 70,959 75,659 47,701
-------- -------- --------
TOTAL............................................. $275,833 $416,812 $214,460
======== ======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
LIABILITIES:
Current liabilities:
Accounts payable....................................... $ 20,492 $ 50,751 $ 19,680
Accrued compensation................................... 19,897 36,849 32,577
Current portion of long-term debt...................... 26,825 66,827 25,158
Other current liabilities.............................. 17,318 50,502 4,216
-------- -------- --------
Total current liabilities......................... 84,532 204,929 81,631
Long-term debt, net of current portion.................... -- -- 6,574
-------- -------- --------
Total liabilities................................. 84,532 204,929 88,205
COMMITMENTS
STOCKHOLDERS' EQUITY:
Common stock, $1.00 par value; 50,000 shares authorized,
1,000 shares issued and outstanding.................... 1,000 1,000 1,000
Additional paid-in capital................................ 31,902 31,902 31,902
Retained earnings......................................... 158,399 178,981 93,353
-------- -------- --------
Total stockholders' equity........................ 191,301 211,883 126,255
-------- -------- --------
TOTAL............................................. $275,833 $416,812 $214,460
======== ======== ========
</TABLE>

See notes to financial statements.

F-23
<PAGE> 77

AMERICAN TELCOM, INC.

STATEMENTS OF OPERATIONS

<TABLE>
<CAPTION>
THREE MONTHS ENDED YEARS ENDED
MARCH 31, DECEMBER 31,
------------------- ---------------------
1999 1998 1998 1997
-------- -------- ---------- --------
(UNAUDITED)
<S> <C> <C> <C> <C>
NET SALES........................................ $261,415 $216,119 $1,168,070 $901,883
COSTS AND EXPENSES:
Cost of sales.................................. 134,497 113,444 482,278 432,099
Salaries and benefits.......................... 104,001 72,806 365,055 314,712
Selling, general and administrative............ 49,024 30,026 200,126 220,183
Interest....................................... 544 626 3,028 2,161
-------- -------- ---------- --------
Total costs and expenses............... 288,066 216,902 1,050,487 969,155
-------- -------- ---------- --------
INCOME (LOSS) BEFORE TAXES....................... (26,651) (783) 117,583 (67,272)
INCOME TAX (EXPENSE) BENEFIT..................... 6,069 -- (31,955) 11,818
-------- -------- ---------- --------
NET INCOME (LOSS)................................ $(20,582) $ (783) $ 85,628 $(55,454)
======== ======== ========== ========
</TABLE>

See notes to financial statements.

F-24
<PAGE> 78

AMERICAN TELCOM, INC.

STATEMENTS OF STOCKHOLDERS' EQUITY

<TABLE>
<CAPTION>
ADDITIONAL
COMMON COMMON PAID-IN RETAINED
SHARES STOCK CAPITAL EARNINGS TOTAL
------ ------ ---------- -------- --------
<S> <C> <C> <C> <C> <C>
BALANCE, January 1, 1997................... 1,000 $1,000 $31,902 $148,807 $181,709
Net loss................................. -- -- -- (55,454) (55,454)
----- ------ ------- -------- --------
BALANCE, December 31, 1997................. 1,000 1,000 31,902 93,353 126,255
Net income............................... -- -- -- 85,628 85,628
----- ------ ------- -------- --------
BALANCE, December 31, 1998................. 1,000 1,000 31,902 178,981 211,883
Net loss (Unaudited)..................... -- -- -- (20,582) (20,582)
----- ------ ------- -------- --------
BALANCE, March 31, 1999 (Unaudited)........ 1,000 $1,000 $31,902 $158,399 $191,301
===== ====== ======= ======== ========
</TABLE>

See notes to financial statements.

F-25
<PAGE> 79

AMERICAN TELCOM, INC.

STATEMENTS OF CASH FLOWS

<TABLE>
<CAPTION>
THREE MONTHS ENDED YEARS ENDED
MARCH 31, DECEMBER 31,
------------------- --------------------
1999 1998 1998 1997
-------- -------- --------- --------
(UNAUDITED)
<S> <C> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss)............................... $(20,582) $ (783) $ 85,628 $(55,454)
Adjustments to reconcile net income (loss) to
net cash provided by (used in) operating
activities:
Depreciation................................. 4,700 5,866 18,802 23,466
(Gain) loss on sale of assets................ -- -- (8,516) --
Changes in current assets and liabilities:
Accounts receivable........................ 116,326 44,396 (128,679) (7,464)
Inventory.................................. 2,342 17,812 4,402 (897)
Other current assets....................... -- -- -- 14,221
Accounts payable........................... (30,259) (15,222) 31,071 (49,263)
Accrued compensation....................... (16,952) -- 4,272 (2,800)
Other current liabilities.................. (33,184) 2,611 46,286 10,928
-------- -------- --------- --------
Net cash provided by (used in) operating
activities............................ 22,391 54,680 53,266 (67,263)
-------- -------- --------- --------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of property and equipment............. -- -- (66,742) (11,050)
Proceeds from sale of property and equipment.... -- -- 28,498 --
-------- -------- --------- --------
Net cash used in investing activities... -- -- (38,244) (11,050)
-------- -------- --------- --------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from borrowings on long-term debt...... 83,733 32,076
Payments on long-term borrowings................ (40,002) (1,031) (48,638) (344)
-------- -------- --------- --------
Net cash provided by financing
activities............................ (40,002) (1,031) 35,095 31,732
-------- -------- --------- --------
NET INCREASE (DECREASE) IN CASH................... (17,611) 53,649 50,117 (46,581)
CASH, beginning of period......................... 82,545 32,428 32,428 79,009
-------- -------- --------- --------
CASH, end of period............................... $ 64,934 $ 86,077 $ 82,545 $ 32,428
======== ======== ========= ========
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
Cash paid during the period for interest........ $ 1,337 $ -- $ 1,532 $ 2,104
Cash paid during the period for income taxes.... $ 32,000 $ -- $ -- $ 18,628
</TABLE>

See notes to financial statements.

F-26
<PAGE> 80

AMERICAN TELCOM, INC.

NOTES TO FINANCIAL STATEMENTS

1. ORGANIZATION

American Telcom, Inc. (the "Company") was incorporated in January 1987,
under the laws of the State of Oklahoma. The Company sells, installs and
maintains telephone equipment in the greater Oklahoma City area.

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Concentrations -- The Company currently buys most of its telephone
equipment from one manufacturer. Although there are a limited number of
manufacturers of telephone equipment, management believes that other
manufacturers could provide similar equipment on comparable terms. A change in
manufacturers, however, could cause a possible loss of sales, which would affect
operating results adversely.

Revenue Recognition -- Revenue is recognized when equipment is installed or
when maintenance services are rendered. The Company defers revenues on prepaid
agreements to maintain customer telephone equipment. The deferred revenues are
recognized as revenue over the period the services are provided, which is
generally 12 months. Deferred revenues are not significant as of December 31,
1998 and 1997.

Inventory -- Inventory is stated at the lower of cost or market on a
specific identification basis. Cost is determined on a first-in, first-out
method.

Property and equipment owned by the Company are depreciated using an
accelerated method over three to seven years.

F-27
<PAGE> 81
AMERICAN TELCOM, INC.

NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)

the financial statement amounts and the tax bases of existing assets and
liabilities. A valuation allowance is established if, in management's opinion,
it is more likely than not that some portion of the deferred tax asset will not
be realized. As of December 31, 1998, the Company's temporary differences
between financial and tax bases of assets and liabilities are not material, and
no deferred income taxes have been recognized.

Advertising -- Advertising costs incurred by the company are expensed
during the period in which the advertising occurs.

Fair Value Disclosure -- The Company's financial instruments include cash
and cash equivalents, receivables, short-term payables, and notes payable. The
carrying amounts of cash and cash equivalents, receivables, and short-term
payables approximate fair value due to their short-term nature. The carrying
amounts of notes payable approximate fair value based on borrowing terms
currently available to the Company.

3. OPERATING LEASES

The Company has a noncancelable operating lease for its office space with a
related party. The Company expensed and paid $37,060 and $13,850 for rent during
the years ended December 31, 1998 and 1997, respectively. The future minimum
payments by year at December 31, 1998, are as follows:

4. LONG-TERM DEBT

The Company's long-term debt at December 31, 1998 and 1997, consisted of
the following:

<TABLE>
<CAPTION>
1998 1997
------- -------
<S> <C> <C>
Promissory note, balloon payment of principal and interest,
interest rate of 8%, due in February 1999, secured by
vehicles.................................................. $66,827 $ --
Promissory note, due in monthly principal and interest
payments, interest rate of 7.5%, secured by vehicle....... -- 10,707
Promissory note, due in monthly principal and interest
payments, interest rate of 8%, secured by vehicle and
personal guaranties from Company owners................... -- 21,025
------- -------
66,827 31,732
Less current maturities..................................... 66,827 25,158
------- -------
Total long-term debt........................................ $ -- $ 6,574
======= =======
</TABLE>

F-28
<PAGE> 82
AMERICAN TELCOM, INC.

NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)

5. INCOME TAXES

The income tax provision consists of the following:

<TABLE>
<CAPTION>
1998 1997
-------- -------
<S> <C> <C>
Federal income tax (expense) benefit........................ $(29,107) $11,818
State income taxes, net of federal benefit.................. (2,848) --
-------- -------
$(31,955) $11,818
======== =======
</TABLE>

6. BENEFIT PLAN

All employees are eligible to participate in the Company's defined
contribution plan upon completion of two years of employment and reaching the
age of 21. Employees may contribute up to 15% of base compensation, as defined.
All contributions made by employees are 100% vested at the time the contribution
is made. Contributions by the Company are made at the discretion of management.
No contributions were made by the Company during the years ended December 31,
1998 and 1997.

7. MAJOR CUSTOMERS

Sales to the Company's largest customer amounted to approximately 10% of
net sales for fiscal year 1998. No individual customer in 1997 accounted for net
sales in excess of 10%. The Company has accounts receivable from two customers
that amount to 20% and 36% of the Company's total accounts receivable at
December 31, 1998.

8. RELATED PARTY TRANSACTIONS

The Company has recorded a liability to its president and 50% stockholder
of $26,977 at December 31, 1998 and 1997, representing unpaid accrued
compensation.

The Company made rent payments of $37,060 and $13,850 during the years
ended December 31, 1998 and 1997, respectively, for office space to an entity
owned and operated 100% by the owners of the Company.

9. SUBSEQUENT EVENTS

The Company and its stockholders have entered into a definitive agreement
with LORECOM Technologies, Inc. ("LORECOM") (formerly The Alliance Group, Inc.)
pursuant to which the Company will be purchased by LORECOM. All outstanding
shares of the Company will be exchanged for cash and common stock of LORECOM in
conjunction with the consummation of the initial public offering of the common
stock of LORECOM.

In February 1999, the Company made a payment of $40,002 on a promissory
note with a bank having a balance totaling $66,827 at December 31, 1998. The
note terms required a balloon payment for the total amount plus accrued interest
in February 1999. The bank extended the due date for the remaining unpaid amount
plus accrued interest and fees until May 1999. All other note terms remained
unchanged.

Unaudited -- In May 1999, the Company paid an additional $10,000 on the
promissory note and the bank extended the due date until August 1999.

F-29
<PAGE> 83

INDEPENDENT AUDITORS' REPORT

To the Board of Directors and Stockholders
Banner Communications, Inc.:

We have audited the accompanying balance sheet of Banner Communications,
Inc. as of December 31, 1998, and the related statements of earnings,
stockholders' equity, and cash flows for the year ended December 31, 1998. The
financial statements as of December 31, 1997, and for the year then ended, were
audited by other auditors whose report expressed an unqualified opinion on those
financial statements. These financial statements are the responsibility of the
company's management. Our responsibility is to express an opinion on the 1998
financial statements based on our audit.

We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the 1998 financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement
presentation. We believe that our audit provides a reasonable basis for our
opinion.

In our opinion, such 1998 financial statements present fairly, in all
material respects, the financial position of Banner Communications, Inc. at
December 31, 1998, and the results of its operations and its cash flows for the
year ended December 31, 1998, in conformity with generally accepted accounting
principles.

/s/ DELOITTE & TOUCHE LLP

Oklahoma City, Oklahoma
February 28, 1999

F-30
<PAGE> 84

INDEPENDENT AUDITORS' REPORT

To the Board of Directors and Stockholders
Banner Communications, Inc.:

We have audited the accompanying balance sheet of Banner Communications,
Inc. as of December 31, 1997, and the related statements of earnings,
stockholders' equity, and cash flows for the year ended December 31, 1997. These
financial statements are the responsibility of the company's management. Our
responsibility is to express an opinion on the 1997 financial statements based
on our audit.

In our opinion, such 1997 financial statements present fairly, in all
material respects, the financial position of Banner Communications, Inc. at
December 31, 1997, and the results of its operations and its cash flows for the
year ended December 31, 1997, in conformity with generally accepted accounting
principles.

/s/ SAXON & KNOL

Oklahoma City, Oklahoma
February 28, 1999

F-31
<PAGE> 85

BANNER COMMUNICATIONS, INC.

BALANCE SHEETS

ASSETS

<TABLE>
<CAPTION>
DECEMBER 31,
MARCH 31, ---------------------
1999 1998 1997
----------- --------- ---------
(UNAUDITED)
<S> <C> <C> <C>
CURRENT ASSETS:
Cash.................................................... $ 1,670 $ 13,486 $ 24,796
Accounts receivable..................................... 71,195 148,033 101,305
Inventory............................................... 73,939 68,939 77,094
--------- --------- ---------
Total current assets............................ 146,804 230,458 203,195
PROPERTY AND EQUIPMENT:
Autos and trucks........................................ 160,053 160,053 125,060
Fixtures and equipment.................................. 59,532 58,651 50,384
--------- --------- ---------
219,585 218,704 175,444
Less accumulated depreciation........................... (145,123) (139,564) (121,905)
--------- --------- ---------
Property and equipment, net..................... 74,462 79,140 53,539
--------- --------- ---------
TOTAL........................................... $ 221,266 $ 309,598 $ 256,734
========= ========= =========
LIABILITIES AND STOCKHOLDERS' EQUITY

LIABILITIES:
Current liabilities:
Current portion of long-term debt.................... $ 19,174 $ 20,073 $ 17,644
Line of credit....................................... 30,000 30,000 --
Accounts payable..................................... 68,224 68,432 61,180
Other current liabilities............................ 25,066 32,646 5,408
--------- --------- ---------
Total current liabilities....................... 142,464 151,151 84,232
Long-term debt, net of current portion.................. 39,760 44,807 25,435
--------- --------- ---------
Total liabilities............................... 182,224 195,958 109,667
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS' EQUITY:
Common stock, $1.00 par value; 10,000 shares authorized,
500 shares issued and outstanding.................... 500 500 500
Retained earnings....................................... 38,542 113,140 146,567
--------- --------- ---------
Total stockholders' equity...................... 39,042 113,640 147,067
--------- --------- ---------
TOTAL........................................... $ 221,266 $ 309,598 $ 256,734
========= ========= =========
</TABLE>

See notes to financial statements.

F-32
<PAGE> 86

BANNER COMMUNICATIONS, INC.

STATEMENTS OF EARNINGS

<TABLE>
<CAPTION>
THREE MONTHS ENDED YEARS ENDED
MARCH 31, DECEMBER 31,
------------------- -----------------------
1999 1998 1998 1997
-------- -------- ---------- ----------
(UNAUDITED)
<S> <C> <C> <C> <C>
NET SALES....................................... $240,355 $276,409 $1,548,874 $1,314,544
COSTS AND EXPENSES:
Cost of sales................................. 130,736 148,234 827,098 610,731
Salaries and benefits......................... 125,828 94,191 452,068 395,251
Selling, general and administrative
expenses................................... 49,990 48,179 216,801 182,200
Interest expense.............................. 2,467 1,245 6,689 6,624
-------- -------- ---------- ----------
Total costs and expenses.............. 309,021 291,849 1,502,656 1,194,806
-------- -------- ---------- ----------
NET INCOME (LOSS)............................... $(68,666) $(15,440) $ 46,218 $ 119,738
======== ======== ========== ==========
</TABLE>

See notes to financial statements.

F-33
<PAGE> 87

BANNER COMMUNICATIONS, INC.

STATEMENTS OF STOCKHOLDERS' EQUITY

<TABLE>
<CAPTION>
COMMON COMMON RETAINED
SHARES STOCK EARNINGS TOTAL
------ ------ -------- --------
<S> <C> <C> <C> <C>
BALANCE, January 1, 1997............................. 500 $500 $ 50,355 $ 50,855
Dividends to stockholders.......................... (23,526) (23,526)
Net income......................................... -- -- 119,738 119,738
--- ---- -------- --------
BALANCE, December 31, 1997........................... 500 500 146,567 147,067
Dividends to stockholders.......................... (79,645) (79,645)
Net income......................................... -- -- 46,218 46,218
--- ---- -------- --------
BALANCE, December 31, 1998........................... 500 500 113,140 113,640
Dividends to stockholders (Unaudited).............. -- -- (5,932) (5,932)
Net loss (Unaudited)............................... -- -- (68,666) (68,666)
--- ---- -------- --------
BALANCE, March 31, 1999.............................. 500 $500 $ 38,542 $ 39,042
=== ==== ======== ========
</TABLE>

See notes to financial statements.

F-34
<PAGE> 88

BANNER COMMUNICATIONS, INC.

STATEMENTS OF CASH FLOWS

<TABLE>
<CAPTION>
THREE MONTHS ENDED YEARS ENDED
MARCH 31, DECEMBER 31,
------------------- -------------------
1999 1998 1998 1997
-------- -------- -------- --------
(UNAUDITED)
<S> <C> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss)................................ $(68,666) $(15,440) $ 46,218 $119,738
Adjustments to reconcile net income (loss) to net
cash provided by operating activities:
Depreciation.................................. 5,559 3,900 28,837 15,435
Changes in current assets and liabilities:
Accounts receivable......................... 76,838 (36,168) (46,728) (22,695)
Inventory................................... (5,000) (5,200) 8,155 (2,313)
Accounts payable............................ (208) 52,469 7,252 (12,022)
Other current liabilities................... (7,580) 45,123 27,238 (23,413)
-------- -------- -------- --------
Net cash provided by operating
activities............................. 943 44,684 70,972 74,730
-------- -------- -------- --------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of property and equipment.............. (881) (2,544) (10,267) (2,608)
-------- -------- -------- --------
CASH FLOWS FROM FINANCING ACTIVITIES:
Dividends to stockholders........................ (5,932) (8,939) (79,645) (23,526)
Proceeds from borrowings under line of credit.... -- -- 30,000 --
Payments on long-term debt and line of credit.... (5,946) (9,846) (22,370) (20,861)
-------- -------- -------- --------
Net cash used in financing activities.... (11,878) (18,785) (72,015) (44,387)
-------- -------- -------- --------
NET (DECREASE) INCREASE IN CASH.................... (11,816) 23,355 (11,310) 27,735
CASH, beginning of period.......................... 13,486 24,796 24,796 (2,939)
-------- -------- -------- --------
CASH, end of period................................ $ 1,670 $ 48,151 $ 13,486 $ 24,796
======== ======== ======== ========
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
Cash paid during the period for interest......... $ 2,245 $ 1,034 $ 6,689 $ 6,688
Purchase of property and equipment through
borrowings.................................... $ -- $ 30,600 $ 44,171 $ --
</TABLE>

See notes to financial statements.

F-35
<PAGE> 89

BANNER COMMUNICATIONS, INC.

NOTES TO FINANCIAL STATEMENTS

1. ORGANIZATION

Banner Communications, Inc. (the "Company") was incorporated in January
1987, under the laws of the State of Oklahoma. The Company sells, installs and
maintains telephone equipment for commercial customers in the greater Tulsa,
Oklahoma market area.

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Concentrations -- The Company currently buys most of its telephone
equipment from three manufacturers. Although there are a limited number of
manufacturers of telephone equipment, management believes that other
manufacturers could provide similar equipment on comparable terms. A change in
manufacturers, however, could cause a possible loss of sales, which would affect
operating results adversely.

Revenue Recognition -- Revenue is recognized when equipment is installed or
when maintenance services are rendered. The Company defers revenues for deposits
and advance payments received from customers prior to installation. Such amounts
are immaterial and are included in other current liabilities in the accompanying
financial statements.

Accounts Receivable -- Allowances for doubtful accounts receivable are
established based on historical losses, experience and knowledge of specific
items. No allowances have been established at December 31, 1998 and 1997 as
management believes no material losses will be incurred from receivables.

Inventory -- Inventory is stated at the lower of cost (first-in, first-out
method) or market.

Property and equipment owned by the Company are depreciated using
accelerated methods over their estimated useful lives of three to five years.

F-36
<PAGE> 90
BANNER COMMUNICATIONS, INC.

NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)

Income Taxes -- The stockholders of the Company have elected to be taxed as
an S corporation under provisions of the Internal Revenue Code. The items of
income, credit, deduction and loss of the Company pass through to the
stockholders and are includable in their personal income tax returns.
Accordingly, the accompanying financial statements do not reflect a provision or
benefit for income taxes nor deferred tax assets and liabilities.

Under federal income tax laws, regulations and administrative rulings,
certain types of transactions may be accorded varying interpretations.
Accordingly, the Company's financial statements and tax returns, as well as the
individual tax returns of the stockholders, may be changed to conform as a
result of a review by the Internal Revenue Service. No such review is presently
in process.

Advertising -- Advertising costs incurred by the Company are expensed
during the period in which the advertising occurs.

Fair Value Disclosure -- The Company's financial instruments include cash,
receivables, short-term payables, notes payable and borrowings under its line of
credit. The carrying amounts of cash, receivables, and short-term payables
approximate fair value due to their short-term nature. The carrying amounts of
notes payable and borrowings under line of credit approximate fair value based
on borrowing terms currently available to the Company.

3. DEBT

The Company's long-term debt at December 31, 1998 and 1997, consist of the
following:

<TABLE>
<CAPTION>
1998 1997
------- -------
<S> <C> <C>
Notes payable to bank, due in monthly principal and interest
payments, interest rates of 8.5% to 8.95%, maturing in
2002 and 2003, secured by vehicles........................ $39,708 $ --
Note payable to bank, due in monthly principal and interest
payments, interest rate of 9.25%, maturing in December
2001, secured by vehicle.................................. 11,291 14,412
Note payable to bank, due in monthly principal and interest
payments, interest rate of 8.75%, maturing in November
2000, secured by vehicle.................................. 10,543 15,166
Notes payable to banks, due in monthly principal and
interest payments, interest rates of 8.25 to 10.25%,
maturing in July and August 1999, secured by vehicles..... 3,338 9,661
Other....................................................... -- 3,840
------- -------
64,880 43,079
Less current portion of long-term debt...................... 20,073 17,644
------- -------
Long-term debt.............................................. $44,807 $25,435
======= =======
</TABLE>

The Company also has $30,000 outstanding at December 31, 1998 under its
line of credit agreement with a bank. The agreement permits advances up to
$50,000, with interest at Chase Bank Prime plus 1.5% (9.25% at December 31,
1998) and expires March 4, 1999; however, management expects renewal of the
agreement under similar terms. The agreement is collateralized by accounts
receivable, inventory and equipment of the Company.

Maturities of long-term debt and borrowings under the line of credit for
the next five years are as follows: 1999 -- $50,073; 2000 -- $17,870;
2001 -- $14,002; 2002 -- $8,149; 2003 -- $4,786.

F-37
<PAGE> 91
BANNER COMMUNICATIONS, INC.

NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)

Unaudited -- In March 1999 the bank extended the expiration date of the
line of credit to July 31, 1999. All other terms remained unchanged.

4. LEASES

The Company leases its office space under an operating lease with annual
rentals of $17,776. The lease expired in 1998 and is currently month-to-month.

5. RETIREMENT PLAN

The Company sponsors a defined contribution plan covering employees who
meet minimum age requirements. Employees may elect to contribute up to 15% of
their eligible compensation. Contributions by the Company are made at the
discretion of management.

The Company made contributions to the plan totaling $9,037 and $10,028 in
1998 and 1997, respectively.

6. COMMITMENTS AND CONTINGENCIES

The Company is involved in suits and claims incidental to its business. In
the opinion of management, the outcome of such matters will not have a material
adverse effect on the Company's business, financial position, or results of
operations.

7. SUBSEQUENT EVENT

F-38
<PAGE> 92

INDEPENDENT AUDITORS' REPORT

To the Board of Directors and Stockholders
Commercial Telecom Systems, Inc.:

We have audited the accompanying balance sheets of Commercial Telecom
Systems, Inc. as of December 31, 1998 and 1997, and the related statements of
earnings, stockholders' equity, and cash flows for the years ended December 31,
1998 and 1997. These financial statements are the responsibility of the
company's management. Our responsibility is to express an opinion on these
financial statements based on our audits.

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

In our opinion, such financial statements present fairly, in all material
respects, the financial position of Commercial Telecom Systems, Inc. as of
December 31, 1998 and 1997, and the results of their operations and their cash
flows for the years then ended in conformity with generally accepted accounting
principles.

/s/ HUNTER, ATKINS & RUSSELL, PLC

February 18, 1999

F-39
<PAGE> 93

COMMERCIAL TELECOM SYSTEMS, INC.

BALANCE SHEETS

ASSETS

<TABLE>
<CAPTION>
DECEMBER 31,
MARCH 31, -------------------
1999 1998 1997
----------- -------- --------
(UNAUDITED)
<S> <C> <C> <C>
CURRENT ASSETS:
Cash...................................................... $ 46,264 $ 54,532 $ 18,667
Accounts receivable....................................... 107,011 72,080 131,811
Inventory................................................. 95,402 90,902 73,097
-------- -------- --------
Total current assets.............................. 248,677 217,514 223,575
-------- -------- --------
PROPERTY AND EQUIPMENT, at cost:
Autos and trucks.......................................... 58,055 58,055 58,055
Fixtures and equipment.................................... 39,451 39,451 39,451
Furniture and fixtures.................................... 976 976 976
Leasehold improvements.................................... 1,552 1,552 1,552
-------- -------- --------
100,034 100,034 100,034
Less accumulated depreciation............................. (87,691) (85,191) (77,970)
-------- -------- --------
Property and equipment, net....................... 12,343 14,843 22,064
-------- -------- --------
OTHER ASSETS................................................ 610 610 610
-------- -------- --------
TOTAL............................................. $261,630 $232,967 $246,249
======== ======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIENCY)
CURRENT LIABILITIES:
Accounts payable.......................................... $133,719 $137,590 $ 74,865
Deferred maintenance contracts............................ 67,768 64,568 49,042
Other current liabilities................................. 99,803 94,773 20,309
Notes payable, current portion............................ 4,400 4,044 81,723
-------- -------- --------
Total current liabilities......................... 305,690 300,975 225,939
LONG-TERM LIABILITIES:
Long-term debt, net of current portion.................... 5,739 7,348 11,393
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS' EQUITY:
Common stock, $1 par value; 1,000 shares authorized and
outstanding............................................ 1,000 1,000 1,000
Treasury stock............................................ (4,924) (4,924) (4,924)
Retained earnings (Accumulated deficit)................... (45,875) (71,432) 12,841
-------- -------- --------
Total stockholders' equity (deficiency)........... (49,799) (75,356) 8,917
-------- -------- --------
TOTAL............................................. $261,630 $232,967 $246,249
======== ======== ========
</TABLE>

See notes to financial statements.

F-40
<PAGE> 94

COMMERCIAL TELECOM SYSTEMS, INC.

STATEMENTS OF EARNINGS

<TABLE>
<CAPTION>
THREE MONTHS ENDED YEARS ENDED
MARCH 31, SEPTEMBER 30,
------------------- -----------------------
1999 1998 1998 1997
-------- -------- ---------- ----------
(UNAUDITED)
<S> <C> <C> <C> <C>
SALES........................................... $332,225 $349,347 $1,437,932 $1,233,316
COSTS AND EXPENSES:
Cost of sales................................. 192,134 208,597 704,506 631,028
Salaries and benefits......................... 70,830 96,957 386,413 394,632
Selling, general and administrative
expenses................................... 33,566 32,763 133,253 126,167
Interest expense.............................. 263 805 5,099 6,316
-------- -------- ---------- ----------
Total costs and expenses.............. 296,793 339,122 1,229,271 1,158,143
-------- -------- ---------- ----------
INCOME BEFORE TAXES ON INCOME................... 35,432 10,225 208,661 75,173
INCOME TAX EXPENSE.............................. (9,875) (2,026) (76,316) (11,201)
-------- -------- ---------- ----------
NET INCOME...................................... $ 25,557 $ 8,199 $ 132,345 $ 63,972
======== ======== ========== ==========
</TABLE>

See notes to financial statements.

F-41
<PAGE> 95

COMMERCIAL TELECOM SYSTEMS, INC.

STATEMENTS OF STOCKHOLDERS' EQUITY (DEFICIENCY)

<TABLE>
<CAPTION>
RETAINED
EARNINGS
COMMON COMMON TREASURY (ACCUMULATED
SHARES STOCK STOCK DEFICIT) TOTAL
------ ------ -------- ------------ ---------
<S> <C> <C> <C> <C> <C>
BALANCE, January 1, 1997................. 1,000 $1,000 $(4,924) $ 24,903 $ 20,979
Net income............................. 63,972 63,972
Dividends paid......................... -- -- -- (76,034) (76,034)
----- ------ ------- --------- ---------
BALANCE, December 31, 1997............... 1,000 1,000 (4,924) 12,841 8,917
Net income............................. 132,345 132,345
Dividends paid......................... -- -- -- (216,618) (216,618)
----- ------ ------- --------- ---------
BALANCE, December 31, 1998............... 1,000 1,000 (4,924) (71,432) (75,356)
Net income (Unaudited)................. -- -- -- 25,557 25,557
----- ------ ------- --------- ---------
BALANCE, March 31, 1999 (Unaudited)...... 1,000 $1,000 $(4,924) $ (45,875) $ (49,799)
===== ====== ======= ========= =========
</TABLE>

See notes to financial statements.

F-42
<PAGE> 96

COMMERCIAL TELECOM SYSTEMS, INC.

STATEMENTS OF CASH FLOWS

<TABLE>
<CAPTION>
THREE MONTHS ENDED YEARS ENDED
MARCH 31, DECEMBER 31,
------------------- ---------------------
1999 1998 1998 1997
-------- -------- --------- ---------
(UNAUDITED)
<S> <C> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income..................................... $ 25,557 $ 8,199 $ 132,345 $ 63,972
Adjustments to reconcile net income to net cash
provided by operations --
Depreciation................................ 2,500 1,805 10,121 9,485
Gain on disposal of property................ -- -- (2,900) --
Changes in current assets and liabilities:
Accounts receivable....................... (34,931) 31,686 59,731 40,176
Inventory................................. (4,500) 36,306 (17,805) --
Accounts payable.......................... (3,871) 14,338 62,725 (40,181)
Deferred maintenance contracts............ 3,200 471 15,526 (14,999)
Other current liabilities................. 5,030 (3,547) 74,464 15,870
-------- -------- --------- ---------
Net cash provided by operating
activities........................... (7,015) 89,258 334,207 74,323
-------- -------- --------- ---------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of property and equipment............. -- (15,774) -- (21,556)
-------- -------- --------- ---------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from notes payable.................... -- 59,550 100,900 359,834
Payments on long-term debt..................... (1,253) (87,157) (182,624) (345,747)
Dividends paid................................. -- (25,682) (216,618) (76,034)
-------- -------- --------- ---------
Net cash used in financing
activities........................... (1,253) (53,289) (298,342) (61,947)
-------- -------- --------- ---------
NET INCREASE (DECREASE) IN CASH.................. (8,268) 20,195 35,865 (9,180)
CASH, beginning of period........................ 54,532 18,667 18,667 27,847
-------- -------- --------- ---------
CASH, end of period.............................. $ 46,264 $ 38,862 $ 54,532 $ 18,667
======== ======== ========= =========
SUPPLEMENTAL DISCLOSURES OF CASH FLOW
INFORMATION:
Cash paid during the period for interest....... $ 200 $ 1,275 $ 5,099 $ 6,297
Cash paid during the period for taxes.......... $ -- $ -- $ -- $ 3,976
</TABLE>

See notes to financial statements.

F-43
<PAGE> 97

COMMERCIAL TELECOM SYSTEMS, INC.

NOTES TO FINANCIAL STATEMENTS

1. ORGANIZATION

Commercial Telecom Systems, Inc. (the "Company") was incorporated in
December 1988, under the laws of the State of Oklahoma. The Company sells,
installs and maintains telephone equipment in the state of Oklahoma.

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation -- The financial statements are prepared using the
accrual basis of accounting. Revenues are recognized when earned and expenses
are recognized when a liability is incurred.

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

Cash and Cash Equivalents -- For purposes of the Statements of Cash Flows,
the Company considers all highly liquid investments with an original maturity of
three months or less to be a cash equivalent.

Inventory -- Inventory is stated at the lower of cost or market on the
first in, first out basis.

Property and equipment owned by the Company are depreciated using the
straight-line method over the following useful lives: Autos and trucks -- 3 to 7
years; fixtures and equipment -- 5 to 7 years; furniture and fixtures -- 5 to 7
years; and leasehold improvements -- 5 to 20 years.

Depreciation expense for the years ending December 31, 1998 and 1997 was
$10,121 and $9,485, respectively.

Deferred Maintenance Agreements -- The Company recognizes deferred revenues
for advance payment on agreements to maintain customer telephone equipment. The
deferred revenues are recorded as income in the period the services are
provided, which is generally twelve months.

Income Taxes -- Temporary differences between financial and tax bases of
assets and liabilities are not material. Accordingly, no deferred income taxes
have been presented.

F-44
<PAGE> 98
COMMERCIAL TELECOM SYSTEMS, INC.

NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)

Treasury Stock -- Stock held as treasury stock is stated at cost.

Error Corrections -- Certain errors resulting in an over and understatement
of balance sheet accounts occurred in calendar year 1996. These errors resulted
in an adjustment of $3,327 to retained earnings for the year ending December 31,
1997.

Impairment -- Asset impairments are recorded when events or changes in
circumstances indicate that the carrying amount of assets may not be
recoverable. Impairment is assessed and measured on long-lived assets using an
estimate of the undiscounted future cash flows.

Advertising -- Advertising costs incurred by the company are expensed
during the period in which the advertising occurs.

3. OPERATING LEASES

The Company has an operating lease for its office space. The future minimum
payments by year at December 31, 1998, are as follows:

The lease expires July 31, 1999 and has monthly payments of $975. There is
no imputed interest or current maturities associated with this lease.

4. LONG-TERM DEBT

The Company's long-term debt at December 31, 1998 and 1997, consisted of
the following:

<TABLE>
<CAPTION>
1998 1997
------- -------
<S> <C> <C>
Note payable to a bank, due July 1, 2001, carrying an
interest rate of 9.5% with monthly payments of $413. The
loan was for the purchase of a vehicle that was
capitalized at $20,050.................................... $11,392 $16,491
Less current maturities..................................... (4,044) (5,098)
------- -------
Long-term portion........................................... $ 7,348 $11,393
======= =======
</TABLE>

Maturities of long-term debt for years subsequent to December 31, 1998 are:
1999 -- $4,044; 2000 -- $4,445; 2001 -- $2,903.

The Company has a line of credit with a local commercial bank. This line of
credit matures March of each year. The line of credit is for $75,000 and carries
an interest rate of 2% of Chase Manhattan prime. As of December 31, 1998 the
Company did not owe any monies on this line of credit. As of December 31, 1997
the Company owed $64,973. This obligation is secured by bank accounts,
inventory, furniture, fixtures, equipment and the personal guarantee of the
majority stockholder.

F-45
<PAGE> 99
COMMERCIAL TELECOM SYSTEMS, INC.

NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)

5. INCOME TAXES

The Company has accrued liabilities for federal and state income taxes as
follows:

<TABLE>
<CAPTION>
1998 1997
------- -------
<S> <C> <C>
Federal................................................... $63,907 $ 8,625
State..................................................... 12,409 2,576
------- -------
$76,316 $11,201
======= =======
</TABLE>

The Company has also accrued estimates as to the penalties and interest
owed on the above obligations. Total penalties and interest accrued for both
federal and state is $15,801.

6. SUBSEQUENT EVENT

The Company and its stockholders have entered into a definitive agreement
with LORECOM Technologies, Inc. ("LORECOM") (formerly The Alliance Group, Inc.)
pursuant to which the Company will be purchased by LORECOM. All outstanding
shares of the Company will be exchanged for cash and common stock of LORECOM in
conjunction with the consummation of the initial public offering of the common
stock of LORECOM.

F-46
<PAGE> 100

INDEPENDENT AUDITORS' REPORT

To the Board of Directors and Stockholder
Communication Services, Inc.:

We have audited the accompanying balance sheet of Communication Services,
Inc. as of December 31, 1998, and the related statements of operations,
stockholder's equity, and cash flows for the year 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 audit.

In our opinion, such financial statements present fairly, in all material
respects, the financial position of Communication Services, Inc. at December 31,
1998, and the results of its operations and its cash flows for the year ended
December 31, 1998, in conformity with generally accepted accounting principles.

/s/ DELOITTE & TOUCHE LLP

Oklahoma City, Oklahoma
March 9, 1999

F-47
<PAGE> 101

COMMUNICATION SERVICES, INC.

BALANCE SHEETS

ASSETS

<TABLE>
<CAPTION>
MARCH 31, DECEMBER 31,
1999 1998
----------- ------------
(UNAUDITED)
<S> <C> <C>
CURRENT ASSETS:
Cash...................................................... $ 73,033 $ 26,440
Accounts receivable, net of allowance for doubtful
accounts of $42,000 at March 31, 1999 and $42,000 at
December 31, 1998...................................... 83,051 98,354
Inventory................................................. 29,282 32,482
-------- --------
Total current assets.............................. 185,366 157,276
PROPERTY AND EQUIPMENT:
Vehicles.................................................. 76,140 76,140
Equipment................................................. 22,798 26,689
-------- --------
98,938 102,829
Less accumulated depreciation............................. (57,437) (56,885)
-------- --------
Property and equipment, net.......................... 41,501 45,944
OTHER ASSETS................................................ 133 200
-------- --------
TOTAL............................................. $227,000 $203,420
======== ========

LIABILITIES AND STOCKHOLDER'S EQUITY

Current Liabilities:
Current portion of long-term debt......................... $ 9,410 $ 9,410
Line of credit............................................ 18,000 20,035
Accounts payable.......................................... 89,685 68,511
Other current liabilities................................. 38,121 51,813
-------- --------
Total current liabilities......................... 155,216 149,769
Long-term debt, net of current portion.................... 26,398 28,195
-------- --------
Total liabilities................................. 181,614 177,964
-------- --------
COMMITMENTS
STOCKHOLDER'S EQUITY:
Common stock, $1 par value; 50,000 shares authorized; 500
shares issued and outstanding.......................... 500 500
Additional paid in-capital................................ 1,774 1,774
Retained earnings......................................... 43,112 23,182
-------- --------
Total stockholder's equity........................ 45,386 25,456
-------- --------
TOTAL............................................. $227,000 $203,420
======== ========
</TABLE>

See notes to financial statements.

F-48
<PAGE> 102

COMMUNICATION SERVICES, INC.

STATEMENTS OF OPERATIONS

<TABLE>
<CAPTION>
THREE MONTHS ENDED
MARCH 31, YEAR ENDED
------------------- DECEMBER 31,
1999 1998 1998
-------- -------- ------------
(UNAUDITED)
<S> <C> <C> <C>
NET SALES.................................................. $263,503 $158,053 $807,432
COSTS AND EXPENSES:
Cost of sales............................................ 129,278 74,569 367,592
Salaries and benefits.................................... 78,551 69,047 285,823
Selling, general and administrative expenses............. 33,924 22,131 156,493
Interest expense......................................... 1,820 1,043 4,335
-------- -------- --------
Total costs and expenses......................... 243,573 166,790 814,243
-------- -------- --------
NET INCOME (LOSS).......................................... $ 19,930 $ (8,737) $ (6,811)
======== ======== ========
</TABLE>

See notes to financial statements.

F-49
<PAGE> 103

COMMUNICATION SERVICES, INC.

STATEMENTS OF STOCKHOLDER'S EQUITY

<TABLE>
<CAPTION>
ADDITIONAL
COMMON COMMON PAID-IN RETAINED
SHARES STOCK CAPITAL EARNINGS TOTAL
------ ------ ---------- -------- -------
<S> <C> <C> <C> <C> <C>
BALANCE, January 1, 1998..................... 500 $500 $1,774 $31,722 $33,996
Distribution to stockholder................ (1,729) (1,729)
Net loss................................... -- -- -- (6,811) (6,811)
--- ---- ------ ------- -------
BALANCE, December 31, 1998................... 500 500 1,774 23,182 25,456
Net income (Unaudited)..................... -- -- -- 19,930 19,930
--- ---- ------ ------- -------
BALANCE, March 31, 1999 (Unaudited).......... 500 $500 $1,774 $43,112 $45,386
=== ==== ====== ======= =======
</TABLE>

See notes to financial statements.

F-50
<PAGE> 104

COMMUNICATION SERVICES, INC.

STATEMENTS OF CASH FLOWS

<TABLE>
<CAPTION>
THREE MONTHS ENDED
MARCH 31, YEAR ENDED
------------------- DECEMBER 31,
1999 1998 1998
-------- -------- ------------
(UNAUDITED)
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss)......................................... $19,930 $(8,737) $ (6,811)
Adjustments to reconcile net loss to net cash provided by
(used in) operating activities:
Depreciation........................................... 4,750 4,199 16,799
Provision for losses on accounts receivable............ -- -- 37,350
Changes in current assets and liabilities:
Accounts receivable.................................. 15,303 4,903 (82,208)
Inventory............................................ 3,200 3,000 (2,597)
Other assets......................................... 67 1,000 1,108
Accounts payable..................................... 21,174 (8,732) 38,027
Other current liabilities............................ (13,692) 3,024 17,725
------- ------- --------
Net cash provided by (used in) operating
activities...................................... 50,732 (1,343) 19,393
------- ------- --------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of property and equipment....................... (307) -- (7,524)
------- ------- --------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from borrowings under line of credit............. -- 7,045 20,035
Payments on long-term debt and line of credit............. (3,832) (3,351) (14,361)
Distribution to stockholder............................... -- -- (1,729)
------- ------- --------
Net cash provided by financing activities......... (3,832) 3,694 3,945
------- ------- --------
NET INCREASE IN CASH........................................ 46,593 2,351 15,814
CASH, beginning of period................................... 26,440 10,262 10,626
------- ------- --------
CASH, end of period......................................... $73,033 $12,613 $ 26,440
======= ======= ========
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
Cash paid during the period for interest.................. $ 1,697 $ 908 $ 4,335
Purchase of property and equipment through borrowings..... $ -- $21,081 $ 20,910
</TABLE>

See notes to financial statements.

F-51
<PAGE> 105

COMMUNICATION SERVICES, INC.

NOTES TO FINANCIAL STATEMENTS

1. ORGANIZATION

Communication Services, Inc. (the "Company") was incorporated in January
1992, under the laws of the State of Oklahoma. The Company sells, installs and
maintains telephone, wireless communication and paging equipment to commercial
and individual customers in the state of Oklahoma.

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Concentrations -- The Company currently buys most of its equipment and
paging services from three manufacturers and providers. Although there are a
limited number of such manufacturers and providers, management believes that
others could provide similar equipment and services on comparable terms. A
change in manufacturers and providers, however, could cause a possible loss of
sales and services, which would affect operating results adversely.

Revenue Recognition -- Revenue is recognized when equipment is installed or
when paging and maintenance services are provided. The Company defers revenues
for deposits and advance payments received from customers prior to installation.
Such amounts are immaterial and are included in other current liabilities in the
accompanying financial statements.

Inventory -- Inventory is stated at the lower of cost (first-in, first-out
method) or market.

Property and equipment owned by the Company are depreciated using the
straight-line method over their estimated useful lives of three to seven years.

F-52
<PAGE> 106
COMMUNICATION SERVICES, INC.

NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)

Income Taxes -- The stockholder of the Company has elected to be taxed as
an S Corporation under provisions of the Internal Revenue Code. The items of
income, credit, deduction and loss of the Company pass through to the
stockholder and are includable in the stockholder's personal income tax return.
Accordingly, the accompanying financial statements do not reflect a provision or
benefit for income taxes nor deferred tax assets and liabilities.

Under federal income tax laws, regulations and administrative rulings,
certain types of transactions may be accorded varying interpretations.
Accordingly, the Company's financial statements and tax returns, as well as the
individual tax return of the stockholder, may be changed as a result of a review
by the Internal Revenue Service.

Advertising -- Advertising costs incurred by the Company are expensed
during the period in which the advertising occurs.

3. LONG-TERM DEBT

The Company's long-term debt at December 31, 1998, consists of the
following:

<TABLE>
<S> <C>
Notes payable to credit union, due in monthly principal
and interest payments, interest rate of 7.5% and 7.75%,
secured by vehicles, due in 2002 and 2003............... $37,605
Less current maturities................................... 9,410
-------
Total long-term debt............................ $28,195
=======
</TABLE>

The Company also has $20,035 outstanding at December 31, 1998 under its
line of credit agreement with a bank which expires August 20, 1999. Borrowings
under the agreement bear interest at 10.5% and are collateralized by accounts
receivable and inventory of the Company.

Maturities of long-term debt and borrowings under the line of credit for
the next five years are as follows: 1999 -- $29,445; 2000 -- $10,688;
2001 -- $11,534; 2002 -- $5,496; 2003 -- $477.

4. OPERATING LEASES

The Company subleases its retail space under a noncancelable operating
sublease agreement. Minimum future payments under the sublease are $21,000
annually through December 31, 2001.

The Company leases its office space from its stockholder. Rentals for 1998
were $21,000.

5. RETIREMENT PLAN

The Company sponsors a defined contribution plan covering employees who
meet minimum compensation and service requirements. Company contributions to the
plan are made at the discretion of management and totaled $3,009 in 1998.

F-53
<PAGE> 107
COMMUNICATION SERVICES, INC.

NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)

6. SUBSEQUENT EVENT

The Company and its stockholder have entered into a definitive agreement
with LORECOM Technologies, Inc. ("LORECOM") (formerly The Alliance Group, Inc.)
pursuant to which the Company will be purchased by LORECOM. All of the issued
and outstanding common stock of the Company will be exchanged for cash and
common stock of LORECOM in conjunction with the consummation of the initial
public offering of the common stock of LORECOM.

F-54
<PAGE> 108

INDEPENDENT AUDITORS' REPORT

To the Board of Directors and Stockholders
EIS Communications:

We have audited the accompanying combined balance sheets of the Telephone
and Paging Divisions of EIS Communications as of December 31, 1998 and 1997, and
the related combined statements of operations, division equity, and cash flows
for the years ended December 31, 1998 and 1997. These financial statements are
the responsibility of the company's management. Our responsibility is to express
an opinion on these financial statements based on our audits.

In our opinion, such combined financial statements present fairly, in all
material respects, the financial position of the Telephone and Paging Divisions
of EIS Communications at December 31, 1998 and 1997, and the results of their
operations and their cash flows for the years ended December 31, 1998 and 1997,
in conformity with generally accepted accounting principles.

The accompanying combined financial statements have been prepared from the
separate records maintained by the Telephone and Paging Divisions of EIS
Communications and may not necessarily be indicative of the financial condition
that would have existed or the results of operations if the divisions had been
operated as unaffiliated companies. Expenses of $309,000 and $260,000 included
in the accompanying combined financial statements for 1998 and 1997,
respectively, represent allocations from EIS Communications.

/s/ DELOITTE & TOUCHE LLP

Oklahoma City, Oklahoma
March 5, 1999

F-55
<PAGE> 109

TELEPHONE AND PAGING DIVISIONS OF EIS COMMUNICATIONS

COMBINED BALANCE SHEETS

ASSETS

<TABLE>
<CAPTION>
DECEMBER 31,
MARCH 31, -------------------
1999 1998 1997
----------- -------- --------
(UNAUDITED)
<S> <C> <C> <C>
CURRENT ASSETS:
Accounts receivable, net of allowance for doubtful
accounts of $24,000, $22,000 and $28,000,
respectively........................................... $166,718 $239,130 $208,051
Inventory................................................. 303,741 177,340 238,701
-------- -------- --------
Total current assets.............................. 470,459 416,470 446,752
PROPERTY AND EQUIPMENT:
Vehicles.................................................. 34,297 34,297 --
Less accumulated depreciation............................. (17,585) (15,085) --
-------- -------- --------
Vehicles, net..................................... 16,712 19,212 --
-------- -------- --------
TOTAL............................................. $487,171 $435,682 $446,752
======== ======== ========
LIABILITIES AND DIVISION EQUITY
LIABILITIES:
Current liabilities:
Current portion of long-term debt and notes payable.... $ 11,352 $ 11,064 $ 1,072
Accounts payable....................................... 168,237 123,327 315,794
Other current liabilities.............................. 51,725 55,923 19,852
-------- -------- --------
Total current liabilities......................... 231,314 190,314 336,718
Long-term debt, net of current portion.................... 13,831 16,581 --
-------- -------- --------
Total liabilities................................. 245,145 206,895 336,718
COMMITMENTS AND CONTINGENCIES
DIVISION EQUITY............................................. 242,026 228,787 110,034
-------- -------- --------
TOTAL............................................. $487,171 $435,682 $446,752
======== ======== ========
</TABLE>

See notes to financial statements.

F-56
<PAGE> 110

TELEPHONE AND PAGING DIVISIONS OF EIS COMMUNICATIONS

COMBINED STATEMENTS OF OPERATIONS

<TABLE>
<CAPTION>
THREE MONTHS ENDED YEARS ENDED
MARCH 31, DECEMBER 31,
------------------- -----------------------
1999 1998 1998 1997
-------- -------- ---------- ----------
(UNAUDITED)
<S> <C> <C> <C> <C>
NET SALES....................................... $588,396 $465,079 $2,349,845 $2,291,546
COSTS AND EXPENSES:
Cost of sales................................. 303,933 197,056 1,247,829 1,252,849
Salaries and benefits......................... 164,754 171,046 678,442 575,654
Selling, general and administrative
expenses................................... 103,906 94,845 421,877 402,970
Interest...................................... 224 -- 2,226 --
-------- -------- ---------- ----------
Total costs and expenses.............. 572,817 462,947 2,350,374 2,231,473
-------- -------- ---------- ----------
INCOME (LOSS) BEFORE TAXES...................... 15,579 2,132 (529) 60,073
INCOME TAX EXPENSE.............................. 2,340 -- -- 24,000
-------- -------- ---------- ----------
NET INCOME (LOSS)............................... $ 13,239 $ 2,132 $ (529) $ 36,073
======== ======== ========== ==========
</TABLE>

See notes to financial statements.

F-57
<PAGE> 111

TELEPHONE AND PAGING DIVISIONS OF EIS COMMUNICATIONS

COMBINED STATEMENTS OF DIVISION EQUITY

<TABLE>
<S> <C>
BALANCE, January 1, 1997.................................... $107,214
Distribution to parent.................................... (33,253)
Net income................................................ 36,073
--------
BALANCE, December 31, 1997.................................. 110,034
Contribution from parent.................................. 119,282
Net loss.................................................. (529)
--------
BALANCE, December 31, 1998.................................. 228,787
Net income (Unaudited).................................... 13,239
--------
BALANCE, March 31, 1999 (Unaudited)......................... $242,026
========
</TABLE>

See notes to financial statements.

F-58
<PAGE> 112

TELEPHONE AND PAGING DIVISIONS OF EIS COMMUNICATIONS

COMBINED STATEMENTS OF CASH FLOWS

<TABLE>
<CAPTION>
THREE MONTHS ENDED YEARS ENDED
MARCH 31, DECEMBER 31,
--------------------- -------------------
1999 1998 1998 1997
--------- --------- --------- -------
(UNAUDITED)
<S> <C> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss).............................. $ 13,239 $ 2,132 $ (529) $36,073
Adjustments to reconcile net income (loss) to
net cash provided by (used in) operating
activities:
Depreciation................................ 2,500 -- 15,085 --
Provision for losses on accounts
receivable................................ 2,000 6,900 10,690 27,724
Changes in current assets and liabilities:
Accounts receivable....................... 70,412 (29,630) (41,769) (80,791)
Inventory................................. (126,401) (45,303) 61,361 (48,227)
Accounts payable.......................... 44,910 (77,247) (192,467) 134,171
Other current liabilities................. (4,198) 40,765 36,071 (21,258)
--------- --------- --------- -------
Net cash provided by (used in)
operating activities................. 2,462 (102,383) (111,558) 47,692
--------- --------- --------- -------
CASH FLOWS FROM FINANCING ACTIVITIES:
Contributions from (distribution to) parent.... -- 102,383 119,282 (33,253)
Payments on long-term borrowing................ (2,462) -- (7,724) (14,439)
--------- --------- --------- -------
Net cash provided by (used in)
financing activities................. (2,462) 102,383 111,558 (47,692)
--------- --------- --------- -------
NET CHANGE IN CASH............................... -- -- -- --
CASH, beginning of period........................ -- -- -- --
--------- --------- --------- -------
CASH, end of period.............................. $ -- $ -- $ -- $ --
========= ========= ========= =======
SUPPLEMENTAL DISCLOSURES OF CASH FLOW
INFORMATION:
Cash paid during the period for interest....... $ 4,975 $ 2,970 $ 2,226 $ --
Vehicles acquired through borrowings........... $ -- $ -- $ 34,297 $ --
</TABLE>

See notes to financial statements.

F-59
<PAGE> 113

TELEPHONE AND PAGING DIVISIONS OF EIS COMMUNICATIONS

NOTES TO COMBINED FINANCIAL STATEMENTS

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation -- The accompanying financial statements present the
combined assets, liabilities, sales and expenses related to the telephone and
paging divisions (the "Divisions") of EIS Communications ("EIS"). EIS sells,
installs and maintains telephone, wireless communication, paging and radio
equipment to commercial and individual customers in the greater Tulsa, Oklahoma
market area. The financial statements have been prepared from the separate
records maintained by the Divisions and may not necessarily be indicative of the
financial conditions that would have existed or the results of operations if the
Divisions had been operated as unaffiliated companies. Expenses of $309,000 and
$260,000 included in the combined financial statements for the years ended
December 31, 1998 and 1997, respectively, represent allocations made from EIS.
Management is of the opinion that the allocations used are reasonable and
appropriate.

Unaudited Interim Financial Statements -- The combined balance sheet as of
March 31, 1999, and the combined statements of operations, division equity and
cash flows for the three months ended March 31, 1999 and 1998, have been
prepared by EIS without audit. In the opinion of management, all adjustments
(which included only normal, recurring adjustments) necessary to present fairly
the financial position at March 31, 1999, and the results of operations and cash
flows for the three months ended March 31, 1999 and 1998, have been made. The
results of operations for the three months ended March 31, 1999 are not
necessarily indicative of the results to be expected for the full year.

Concentrations -- The Divisions currently buy most of their equipment and
paging services from four manufacturers and providers. Although there are a
limited number of such manufacturers and providers, management believes that
others could provide similar equipment and services on comparable terms. A
change in manufacturers and providers, however, could cause a possible loss of
sales, which would affect operating results adversely.

Revenue Recognition -- Revenue is recognized when equipment is installed or
when paging and maintenance services are rendered. The Divisions defer revenues
for deposits and advance payments received from customers prior to installation.
Such amounts are immaterial and are included in other current liabilities in the
accompanying financial statements.

Inventory -- Inventory is stated at the lower of cost (first-in, first-out
method) or market.

Property and Equipment -- Vehicles are stated at cost and are depreciated
using accelerated methods over their estimated useful lives of three years.

Income Taxes -- EIS uses the asset and liability approach to account for
income taxes. Deferred income taxes are recognized for the tax consequences of
temporary differences and operating loss and tax credit carryforwards by
applying enacted tax rates applicable to future years to differences between the
financial statement amounts and the tax bases of existing assets and
liabilities. A valuation allowance is established if, in management's opinion,
it is more likely than not that some portion of the deferred tax asset will not
be realized.
F-60
<PAGE> 114
TELEPHONE AND PAGING DIVISIONS OF EIS COMMUNICATIONS

NOTES TO COMBINED FINANCIAL STATEMENTS -- (CONTINUED)

For purposes of preparing the combined financial statements of the
Divisions, federal and state income taxes were determined as if the Divisions
filed separate income tax returns. As of December 31, 1998 and 1997, the
Divisions' temporary differences between financial and tax bases of assets and
liabilities are not material and no deferred income taxes have been recognized.

Product Returns and Warranty -- Product returned by the customer due to
defective manufacture or failure during the manufacturer's warranty period is
returned by the Divisions to the manufacturer in exchange for replacement
product or refund.

Advertising -- Advertising costs incurred by the Divisions are expensed
during the period in which the advertising occurs.

Fair Value of Financial Instruments -- The carrying amounts for accounts
receivable and accounts payable approximate fair value because of the short
maturity of those instruments. The carrying amount of long-term debt
approximates fair value based on borrowing terms currently available to EIS.

2. LONG-TERM DEBT

The Divisions' long-term debt at December 31, 1998 consists of four notes
payable to a bank due in monthly installments of principal and interest through
March 2001. The notes bear interest at 9.95% and are secured by the Divisions'
vehicles. Scheduled maturities by year are as follows: 1999 -- $11,064;
2000 -- $12,216; 2001 -- $4,365.

A note payable to an individual with a balance of $1,072 at December 31,
1997 was repaid in 1998.

3. MAJOR CUSTOMERS

At December 31, 1998 and 1997, the Company had an account receivable from
an individual customer that amounted to 17% and 16%, respectively, of the
Company's total accounts receivable.

4. COMMITMENTS AND CONTINGENCIES

EIS is involved in claims and suits incidental to its business. In the
opinion of management, the outcome of such matters will not have a material
adverse effect on the Divisions' business, financial position or results of
operations.

5. SUBSEQUENT EVENT

EIS and its stockholders have entered into a definitive agreement with
LORECOM Technologies, Inc. ("LORECOM") (formerly The Alliance Group, Inc.)
pursuant to which the telephone and paging divisions will be purchased by
LORECOM in exchange for cash and common stock of LORECOM in conjunction with the
consummation of the initial public offering of the common stock of LORECOM.

F-61
<PAGE> 115

INDEPENDENT AUDITORS' REPORT

To the Board of Directors and Stockholders
Nobel Systems, Inc.

We have audited the accompanying balance sheet of Nobel Systems, Inc. as of
December 31, 1998, and the related statements of earnings, stockholders' equity,
and cash flows for the year 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 audit.

In our opinion, such financial statements present fairly, in all material
respects, the financial position of Nobel Systems, Inc. at December 31, 1998,
and the results of their operations and their cash flows for the year ended
December 31, 1998, in conformity with generally accepted accounting principles.

/s/ SAXON & KNOL, P.C.

February 28, 1999

F-62
<PAGE> 116

NOBEL SYSTEMS, INC.

BALANCE SHEETS

ASSETS

<TABLE>
<CAPTION>
MARCH 31, DECEMBER 31,
1999 1998
----------- ------------
(UNAUDITED)
<S> <C> <C>
CURRENT ASSETS:
Cash...................................................... $ 3,175 $ --
Accounts receivable....................................... 67,733 85,237
Inventory................................................. 39,392 51,976
Other current assets...................................... 22,241 --
-------- --------
Total current assets.............................. 132,541 137,213
PROPERTY AND EQUIPMENT, at cost:
Autos and trucks.......................................... 53,117 53,117
Machinery and equipment................................... 44,126 40,062
Furniture and fixtures.................................... 4,350 11,199
-------- --------
101,593 104,378
Less accumulated depreciation............................. (70,606) (71,889)
-------- --------
Property and equipment, net....................... 30,987 32,489
-------- --------
TOTAL............................................. $163,528 $169,702
======== ========

LIABILITIES AND STOCKHOLDERS' EQUITY

CURRENT LIABILITIES:
Accounts payable.......................................... $ 52,108 $ 46,083
Other current liabilities................................. 31,199 16,822
Current portion of long-term debt......................... 60,645 71,567
-------- --------
Total current liabilities......................... 143,952 134,472
LONG-TERM LIABILITIES:
Long-term debt, net of current portion.................... 14,250 17,228
-------- --------
Total liabilities................................. 158,202 151,700
-------- --------
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS' EQUITY:
Common stock, $1.00 par value; 5,000 shares authorized,
800 shares issued and outstanding...................... 800 800
Additional paid in-capital................................ 53,614 53,614
Retained earnings (accumulated deficit)................... (49,088) (36,412)
-------- --------
Total stockholders' equity........................ 5,326 18,002
-------- --------
TOTAL............................................. $163,528 $169,702
======== ========
</TABLE>

See notes to financial statements.

F-63
<PAGE> 117

NOBEL SYSTEMS, INC.

STATEMENTS OF EARNINGS

<TABLE>
<CAPTION>
THREE MONTHS ENDED
MARCH 31, YEAR ENDED
------------------- DECEMBER 31,
1999 1998 1998
-------- -------- ------------
(UNAUDITED)
<S> <C> <C> <C>
SALES...................................................... $298,942 $264,905 $953,046
COSTS AND EXPENSES:
Cost of sales............................................ 160,041 131,845 454,729
Salaries and benefits.................................... 98,896 90,682 330,795
Selling, general and administrative expenses............. 51,034 31,868 166,224
Interest expense......................................... 1,647 3,110 9,729
-------- -------- --------
Total costs and expenses......................... 311,618 257,505 961,477
-------- -------- --------
NET INCOME (LOSS).......................................... $(12,676) $ 7,400 $ (8,431)
======== ======== ========
</TABLE>

See notes to financial statements.

F-64
<PAGE> 118

NOBEL SYSTEMS, INC.

STATEMENTS OF STOCKHOLDERS' EQUITY

<TABLE>
<CAPTION>
RETAINED
ADDITIONAL EARNINGS
COMMON COMMON PAID-IN (ACCUMULATED
SHARES STOCK CAPITAL DEFICIT) TOTAL
------ ------ ---------- ------------ --------
<S> <C> <C> <C> <C> <C>
BALANCE, January 1, 1998................. 500 $500 $ -- $(27,981) $(27,481)
Additional investment.................. 300 300 53,614 -- 53,914
Net loss............................... -- -- -- (8,431) (8,431)
--- ---- ------- -------- --------
BALANCE, December 31, 1998............... 800 800 53,614 (36,412) 18,002
Net loss (Unaudited)................... -- -- -- (12,676) (12,676)
--- ---- ------- -------- --------
BALANCE, March 31, 1999 (Unaudited)...... 800 $800 $53,614 $(49,088) $ 5,326
=== ==== ======= ======== ========
</TABLE>

See notes to financial statements.

F-65
<PAGE> 119

NOBEL SYSTEMS, INC.

STATEMENTS OF CASH FLOWS

<TABLE>
<CAPTION>
THREE MONTHS ENDED
MARCH 31, YEAR ENDED
------------------- DECEMBER 31,
1999 1998 1998
-------- -------- ------------
(UNAUDITED)
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss)....................................... $(12,676) $ 7,400 $ (8,431)
Adjustments to reconcile net income (loss) to net cash
provided by operations:
Depreciation and amortization........................ 3,160 3,160 14,926
Loss on sale of assets............................... -- -- 374
Changes in current assets and liabilities:
Accounts receivable................................ 17,504 61,113 72,084
Inventory.......................................... 12,584 (18,773) (25,552)
Other current assets............................... (22,241) (17,777) 10,572
Accounts payable................................... 6,025 (28,852) (52,613)
Other current liabilities.......................... 14,377 45,909 (5,136)
-------- -------- --------
Net cash provided by operating activities....... 18,733 52,180 6,224
-------- -------- --------
CASH FLOWS FROM INVESTING ACTIVITIES --
Purchases of property and equipment..................... (1,658) (6,970)
-------- -------- --------
CASH FLOWS FROM FINANCING ACTIVITIES:
Additional investment................................... -- 300 53,914
Proceeds from borrowings on long-term debt.............. -- -- 10,472
Payments on long-term borrowings........................ (13,900) (48,457) (67,163)
-------- -------- --------
Net cash used in financing activities........... (13,900) (48,157) (2,777)
-------- -------- --------
NET INCREASE (DECREASE) IN CASH........................... 3,175 4,023 (3,523)
CASH, beginning of period................................. -- 3,523 3,523
-------- -------- --------
CASH, end of period....................................... $ 3,175 $ 7,546 $ --
======== ======== ========
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
Cash paid during the period for interest................ $ 1,647 $ 3,110 $ 25,808
</TABLE>

See notes to financial statements.

F-66
<PAGE> 120

NOBEL SYSTEMS, INC.

NOTES TO FINANCIAL STATEMENTS

1. ORGANIZATION

Nobel Systems, Inc. (the "Company") was incorporated in January 1989, under
the laws of the State of Oklahoma. The Company sells, installs and maintains
telephone equipment in the state of Oklahoma market area.

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation -- The financial statements are prepared using the
accrual basis of accounting. Revenues are recognized when earned and expenses
are recognized when a liability is incurred.

Inventory -- Inventory is stated at the lower of cost or market on a first
in, first out basis.

Property and equipment owned by the Company are depreciated over the
estimated useful lives using straight-line and accelerated tax-based methods.

Deferred Income -- The Company recognizes deferred revenues for advance
payment on agreements to maintain customer telephone equipment. The deferred
revenues are recorded as income in the period the services are provided, which
is generally twelve months.

Income Taxes -- The Company has elected to be taxed under the provisions of
Subchapter S of the Internal Revenue Code. Under those provisions, the Company
does not pay federal corporate income taxes on its taxable income. Instead, the
stockholders are liable for individual federal income taxes on their respective
shares of the Company's taxable income.
F-67
<PAGE> 121
NOBEL SYSTEMS, INC.

NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)

Advertising -- Advertising costs incurred by the company are expensed
during the period in which the advertising occurs.

3. LONG-TERM DEBT

The Company's long-term debt at December 31, 1998, consisted of the
following:

<TABLE>
<S> <C>
Line of credit, monthly interest payments; interest rate of
11.25%; due in February 1999, secured by accounts
receivable................................................ $25,000
Note payable to a related party, due in monthly principal
and interest payments; interest rate of 12%; maturing
in May 2000; unsecured................................. 22,974
Note payable; due in monthly principal and interest
payments; interest rate of 18%; maturing in January
2000; secured by equipment............................. 9,137
Note payable to a related party, due in monthly principal
and interest payments; interest rate of 12%; maturing
in May 2000; unsecured................................. 6,364
Notes payable; due in monthly principal and interest
payments; interest rates from 8.5% to 10.5%; maturing
from January 1999 to March 2000; secured by
vehicles............................................... 21,021
Note payable, due in monthly principal and interest
payments; interest rate of 14.5%; maturing in July
1999; unsecured........................................ 4,299
-------
88,795
Less current maturities................................... (71,567)
-------
$17,228
=======
</TABLE>

Maturities of long-term debt for the next five years are as follows:
1999 -- $71,567; 2000 -- $13,360; 2001 -- $2,996; and 2002 -- $872.

4. COMMITMENTS AND CONTINGENCIES

The transferability of the majority shareholder's stock is subject to the
satisfaction or removal of federal tax liens related to personal income tax
liabilities.

5. CONCENTRATIONS OF CREDIT RISK

Sales to the Company's three largest customers amounted to approximately
20% of net sales for fiscal year 1998. As of December 31, 1998, account balances
due from the Company's three largest customers comprise approximately 12% of
total trade accounts receivable, with the largest balance comprising
approximately 5%.

6. RELATED PARTY TRANSACTIONS

The Company has notes payable to the company's shareholders. The notes bear
interest at the approximate fair value at inception of the note. The notes are
unsecured and mature in 2000.

F-68
<PAGE> 122
NOBEL SYSTEMS, INC.

NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)

7. SUBSEQUENT EVENT

The Company and its stockholders have entered into a definitive agreement
with LORECOM Technologies, Inc. ("LORECOM") (formerly The Alliance Group, Inc.)
pursuant to which the Company will be purchased by LORECOM. All outstanding
shares of the Company will be exchanged for cash and common stock of LORECOM in
conjunction with the consummation of the initial public offering of the common
stock of LORECOM.

F-69
<PAGE> 123

INDEPENDENT AUDITORS' REPORT

To the Stockholders
Telkey Communications, Inc.:

We have audited the accompanying balance sheet of Telkey Communications,
Inc. as of September 30, 1998, and the related statements of operations,
stockholders' equity, and cash flows for the year ended September 30, 1998. The
financial statements as of September 30, 1997, and for the year then ended, were
audited by other auditors whose report expressed an unqualified opinion on those
financial statements. These financial statements are the responsibility of the
company's management. Our responsibility is to express an opinion on the 1998
financial statements based on our audit.

We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the 1998 financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement
presentation. We believe that our audit provides a reasonable basis for our
opinion.

In our opinion, such 1998 financial statements present fairly, in all
material respects, the financial position of Telkey Communications, Inc. at
September 30, 1998, and the results of its operations and its cash flows for the
year ended September 30, 1998, in conformity with generally accepted accounting
principles.

/s/ DELOITTE & TOUCHE LLP

Oklahoma City, Oklahoma
February 26, 1999

F-70
<PAGE> 124

INDEPENDENT AUDITORS' REPORT

To the Stockholders
Telkey Communications, Inc.:

We have audited the accompanying balance sheet of Telkey Communications,
Inc. as of September 30, 1997 and the related statements of operations,
stockholders' equity, and cash flows for the year ended September 30, 1997.
These financial statements are the responsibility of the company's management.
Our responsibility is to express an opinion on these financial statements based
on our audit.

In our opinion, such financial statements present fairly, in all material
respects, the financial position of Telkey Communications, Inc. at September 30,
1997, and the results of their operations and their cash flows for the year
ended September 30, 1997, in conformity with generally accepted accounting
principles.

/s/ SAXON & KNOL

Oklahoma City, Oklahoma
February 26, 1999

F-71
<PAGE> 125

TELKEY COMMUNICATIONS, INC.

BALANCE SHEETS

ASSETS

<TABLE>
<CAPTION>
SEPTEMBER 30,
MARCH 31, --------------------
1999 1998 1997
----------- -------- ---------
(UNAUDITED)
<S> <C> <C> <C>
CURRENT ASSETS:
Cash..................................................... $ 49,002 $140,053 $ 57,247
Receivables, net......................................... 167,461 154,280 193,371
Inventory................................................ 112,389 88,748 82,164
Notes receivable -- current.............................. 7,188 15,324 --
Other current assets..................................... 8,879 3,741 905
--------- -------- ---------
Total current assets............................. 344,919 402,146 333,687
NOTES RECEIVABLE, net of current portion................... 9,673 16,862 --
PROPERTY AND EQUIPMENT:
Autos and trucks......................................... 117,419 117,419 128,164
Fixtures and equipment................................... 49,008 47,207 37,697
Rental telephone equipment............................... 88,385 83,401 64,622
--------- -------- ---------
254,812 248,027 230,483
Less accumulated depreciation............................ (185,483) (174,533) (138,404)
--------- -------- ---------
Property and equipment, net...................... 69,329 73,494 92,079
--------- -------- ---------
TOTAL............................................ $ 423,921 $492,502 $ 425,766
========= ======== =========
LIABILITIES AND STOCKHOLDERS' EQUITY
LIABILITIES:
Current liabilities:
Line of credit........................................ $ -- $ 30,000 $ --
Accounts payable...................................... 38,247 31,364 26,015
Deferred income....................................... 17,834 32,200 46,567
Current portion of long-term debt..................... 14,424 29,782 19,683
Other current liabilities............................. 13,866 22,501 19,554
--------- -------- ---------
Total current liabilities........................ 84,371 145,847 111,819
Long-term debt, net of current portion................... 13,108 24,780 26,823
--------- -------- ---------
Total liabilities................................ 97,479 170,627 138,642
COMMITMENTS
STOCKHOLDERS' EQUITY:
Common stock, $1.00 par value; 10,000 shares authorized,
300 shares issued and outstanding..................... 300 300 300
Retained earnings........................................ 326,142 321,575 286,824
--------- -------- ---------
Total stockholders' equity....................... 326,442 321,875 287,124
--------- -------- ---------
TOTAL............................................ $ 423,921 $492,502 $ 425,766
========= ======== =========
</TABLE>

See notes to financial statements.

F-72
<PAGE> 126

TELKEY COMMUNICATIONS, INC.

STATEMENTS OF OPERATIONS

<TABLE>
<CAPTION>
SIX MONTHS ENDED YEARS ENDED
MARCH 31, SEPTEMBER 30,
------------------- -----------------------
1999 1998 1998 1997
-------- -------- ---------- ----------
(UNAUDITED)
<S> <C> <C> <C> <C>
NET SALES....................................... $697,104 $523,755 $1,393,165 $1,280,220
COSTS AND EXPENSES:
Cost of sales................................. 318,131 200,110 613,123 567,813
Salaries and benefits......................... 278,092 243,596 476,800 447,301
Selling, general and administrative........... 94,466 98,763 249,538 185,188
Interest...................................... 1,041 2,820 7,161 5,340
-------- -------- ---------- ----------
Total costs and expenses.............. 691,730 545,289 1,346,622 1,205,642
-------- -------- ---------- ----------
INCOME BEFORE TAXES............................. 5,374 (21,534) 46,543 74,578
INCOME TAX (EXPENSE) BENEFIT.................... (807) 3,230 11,792 15,527
-------- -------- ---------- ----------
NET INCOME (LOSS)............................... $ 4,567 $(18,304) $ 34,751 $ 59,051
======== ======== ========== ==========
</TABLE>

See notes to financial statements.

F-73
<PAGE> 127

TELKEY COMMUNICATIONS, INC.

STATEMENTS OF STOCKHOLDERS' EQUITY

<TABLE>
<CAPTION>
COMMON COMMON RETAINED
SHARES STOCK EARNINGS TOTAL
------ ------ -------- --------
<S> <C> <C> <C> <C>
BALANCE, October 1, 1996............................. 300 $300 $227,773 $228,073
Net income......................................... -- -- 59,051 59,051
--- ---- -------- --------
BALANCE, September 30, 1997.......................... 300 300 286,824 287,124
Net income......................................... -- -- 34,751 34,751
--- ---- -------- --------
BALANCE, September 30, 1998.......................... 300 300 321,575 321,875
Net income (Unaudited)............................. -- -- 4,567 4,567
--- ---- -------- --------
BALANCE, March 31, 1999 (Unaudited).................. 300 $300 $326,142 $326,442
=== ==== ======== ========
</TABLE>

See notes to financial statements.

F-74
<PAGE> 128

TELKEY COMMUNICATIONS, INC.

STATEMENTS OF CASH FLOWS

<TABLE>
<CAPTION>
SIX MONTHS ENDED YEARS ENDED
MARCH 31, SEPTEMBER 30,
------------------- ------------------
1999 1998 1998 1997
-------- -------- -------- -------
(UNAUDITED)
<S> <C> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss)................................. $ 4,567 $(18,304) $ 34,751 $59,051
Adjustments to reconcile net income (loss) to net
cash provided by (used in) operating
activities:
Depreciation................................... 14,901 13,779 46,874 27,950
Deferred income................................ (14,366) (9,576) (14,367) --
(Gain) loss on disposal........................ (3,951) -- (500) 11,832
Changes in assets and liabilities:
Receivables.................................. (13,181) 50,663 39,091 (25,751)
Inventory.................................... (23,641) (9,033) (6,584) (34,531)
Notes receivable............................. 15,325 (9,663) (32,186) --
Other current assets......................... (5,138) (2,680) (2,836) (6,517)
Accounts payable............................. 6,883 16,609 5,349 4,340
Other current liabilities.................... (8,635) (13,380) 2,947 8,204
-------- -------- -------- -------
Net cash provided by (used in) operating
activities.............................. (27,236) 18,415 72,539 44,578
-------- -------- -------- -------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of property and equipment............... (6,785) (12,024) (28,289) (51,289)
Proceeds from sale of property and equipment...... -- -- 500 --
-------- -------- -------- -------
Net cash used in investing activities..... (6,785) (12,024) (27,789) (51,289)
-------- -------- -------- -------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from borrowings.......................... -- 9,663 87,839 500
Payments on borrowings............................ (57,030) (11,838) (49,783) (22,875)
-------- -------- -------- -------
Net cash provided by (used in) financing
activities.............................. (57,030) (2,175) 38,056 (22,375)
-------- -------- -------- -------
NET INCREASE (DECREASE) IN CASH..................... (91,051) 4,216 82,806 (29,086)
CASH, beginning of period........................... 140,053 57,247 57,247 86,333
-------- -------- -------- -------
CASH, end of period................................. $ 49,002 $ 61,463 $140,053 $57,247
======== ======== ======== =======
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
Cash paid during the period for interest.......... $ 1,070 $ 2,785 $ 5,108 $ 5,281
Cash paid during the period for income taxes...... $ 2,071 $ 6,131 $ 14,802 $15,527
</TABLE>

See notes to financial statements.

F-75
<PAGE> 129

TELKEY COMMUNICATIONS, INC.

NOTES TO FINANCIAL STATEMENTS

1. ORGANIZATION

Telkey Communications, Inc. (the "Company") was incorporated in February
1984, under the laws of the State of Oklahoma. The Company sells, installs and
maintains telephone equipment in the greater Tulsa, Oklahoma market area.

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Unaudited Interim Financial Statements -- The balance sheet as of March 31,
1999, and the statements of operations, stockholders' equity and cash flows for
the six months ended March 31, 1999 and 1998, have been prepared by the Company
without audit. In the opinion of management, all adjustments (which included
only normal, recurring adjustments) necessary to present fairly the financial
position at March 31, 1999, and the results of operations and cash flows for the
six months ended March 31, 1999 and 1998, have been made. The results of
operations for the six months ended March 31, 1999 are not necessarily
indicative of the results to be expected for the full year.

Inventory -- Inventory is stated at the lower of cost or market on a
specific identification basis. Cost is determined on a first-in, first-out
method.

F-76
<PAGE> 130
TELKEY COMMUNICATIONS, INC.

NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)

Property and equipment owned by the Company are depreciated using the
straight-line method, which includes amortization of assets under capital leases
over the following useful lives:

<TABLE>
<CAPTION>
USEFUL LIVES
IN YEARS
------------
<S> <C>
Autos and trucks......................................... 3 - 7
Fixtures and equipment................................... 5 - 7
Rental telephone equipment............................... 5 - 7
</TABLE>

Income Taxes -- The Company uses an asset and liability approach to account
for income taxes. Deferred income taxes are recognized for the tax consequences
of temporary differences and carryforwards by applying enacted tax rates
applicable to future years to differences between the financial statement
amounts and the tax bases of existing assets and liabilities. A valuation
allowance is established if, in management's opinion, it is more likely than not
that some portion of the deferred tax asset will not be realized. As of
September 30, 1998, the Company's temporary differences between financial and
tax bases of assets and liabilities are not material, and no deferred income
taxes have been recognized.

Advertising -- Advertising costs incurred by the company are expensed
during the period in which the advertising occurs.

Fair Value Disclosure -- The Company's financial instruments include cash
and cash equivalents, receivables, notes receivable, short-term payables, and
notes payable. The carrying amounts of cash and cash equivalents, receivables,
and short-term payables approximate fair value due to their short-term nature.
The carrying amounts of notes receivable and notes payable approximate fair
value as rates reflect current market rates.

3. NOTES RECEIVABLE

Notes receivable represent long-term financing of sales to certain
customers. During the year ended September 30, 1998, the Company entered into an
agreement with a bank whereby the bank assumed all servicing rights and a
percentage of interest earned on the notes. In return, the Company received a
cash payment from the bank equal to the principal balance of the notes on the
transfer date. The Company retained all risk associated with nonpayment of any
unpaid principal through a provision in the agreement requiring full recourse.
The Company accounted for this transaction as a secured borrowing and has
recognized the related liability in current and long-term notes payable.
Interest income of $2,010 has been recognized from notes receivable and interest
expense of $1,730 has been recognized on the corresponding note payable during
the year ended September 30, 1998.

F-77
<PAGE> 131
TELKEY COMMUNICATIONS, INC.

NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)

4. OPERATING LEASES

The Company has an operating lease with a related party for the Company's
office space. The Company expensed and paid rent totaling $42,000 and $38,400
for the years ended September 30, 1998 and 1997, respectively. The future
minimum payments by year at September 30, 1998, are as follows:

5. DEBT

The Company's long-term debt at September 30, 1998 and 1997, consisted of
the following:

<TABLE>
<CAPTION>
1998 1997
------- -------
<S> <C> <C>
Note payable to former stockholder, due in monthly principal
and interest payments, interest rate of 7.5%, maturing in
October 2000, secured by common stock..................... $10,405 $14,852
Promissory note, due in monthly principal and interest
payments, interest rate of 9.9%, paid in December 1998,
secured by vehicle........................................ 3,141 6,984
Promissory note, due in monthly principal and interest
payments, interest rate of 8.5%, maturing in January
2000...................................................... 8,830 14,808
Notes payable to bank, due in monthly principal and interest
payments, interest at no less than 2% above prime (12.0%
at September 30, 1998), maturing through August 2001,
secured by notes receivable............................... 32,186 --
Promissory note to related party, due in monthly principal
and interest payments, interest rate of 6%, paid in
September 1998, secured by vehicle........................ -- 9,862
------- -------
54,562 46,506
Less current portion of long-term debt...................... 29,782 19,683
------- -------
Long-term debt.................................... $24,780 $26,823
======= =======
</TABLE>

Maturities of long-term debt for years subsequent to September 30, 1998 are
as follows:

<TABLE>
<S> <C>
1999....................................................... $29,782
2000....................................................... 18,252
2001....................................................... 6,528
-------
Total long-term debt............................. $54,562
=======
</TABLE>

The Company also has $30,000 outstanding at September 30, 1998, under its
line of credit agreement with a bank. The agreement permitted advances up to
$150,000, with interest at the Chase New York Prime Rate plus 1% (9.5% at
September 30, 1998), and expired November 30. The Company repaid the entire
amount prior to expiration and did not renew the line.

F-78
<PAGE> 132
TELKEY COMMUNICATIONS, INC.

NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)

6. INCOME TAXES

The income tax provision consists of the following:

<TABLE>
<CAPTION>
1998 1997
------- -------
<S> <C> <C>
Federal income tax expense.................................. $ 8,542 $11,858
State income taxes, net of federal benefit.................. 3,250 3,669
------- -------
$11,792 $15,527
======= =======
</TABLE>

The difference between the statutory Federal income tax rate of 34% and the
Company's effective Federal rate for the years ended September 30, 1998 and
1997, is due to state taxes and the effect of graduated tax rates.

7. MAJOR CUSTOMERS

Sales to the Company's largest customer amounted to approximately 9% of net
sales for fiscal year 1998. Sales to the Company's two largest customers
amounted to approximately 13% and 11%, respectively, of net sales for fiscal
year 1997.

8. RELATED PARTY TRANSACTIONS

The Company made principal payments of $9,862 and $9,290 during the years
ended September 30, 1998 and 1997, respectively, to an entity owned 100% by the
Company's owners on a promissory note for the purchase of a vehicle. The
promissory note requires monthly principal and interest payments of $849 at an
interest rate of 6%. Interest expense of $326 and $898 was recognized on the
note for the years ended September 30, 1998 and 1997, respectively. The note was
fully repaid in September 1998.

The Company has a note payable to a former owner totaling $10,405 and
$14,852 at September 30, 1998 and 1997, respectively, maturing in October 2000.
The note requires monthly principal and interest payments of $450, at an
interest rate of 7.5%. Principal payments of $4,447 and $4,127 were made during
the years ended September 30, 1998 and 1997, respectively. Interest expense of
$953 and $1,273 was recognized on the note during the years ended September 30,
1998 and 1997, respectively.

The Company made rent payments for office space of $42,000 and $38,400
during the years ended September 30, 1998 and 1997, respectively, to an entity
owned by the Company's stockholders.

9. SUBSEQUENT EVENT

The Company and its stockholders have entered into a definitive agreement
with LORECOM Technologies, Inc. ("LORECOM") (formerly The Alliance Group, Inc.)
pursuant to which the Company will be purchased by LORECOM. All outstanding
shares of the Company will be exchanged for cash and common stock of LORECOM in
conjunction with the consummation of the initial public offering of the common
stock of LORECOM.

F-79
<PAGE> 133

INDEPENDENT AUDITORS' REPORT

To the Stockholders
Terra Telecom, Inc.:

We have audited the accompanying balance sheet of Terra Telecom, Inc. as of
September 30, 1998, and the related statements of operations, stockholders'
equity, and cash flows for the year ended September 30, 1998. The financial
statements as of September 30, 1997, and for the year then ended, were audited
by other auditors whose report expressed an unqualified opinion on those
financial statements. These financial statements are the responsibility of the
company's management. Our responsibility is to express an opinion on the 1998
financial statements based on our audit.

We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the 1998 financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement
presentation. We believe that our audit provides a reasonable basis for our
opinion.

In our opinion, such 1998 financial statements present fairly, in all
material respects, the financial position of Terra Telecom, Inc. at September
30, 1998, and the results of its operations and its cash flows for the year
ended September 30, 1998, in conformity with generally accepted accounting
principles.

/s/ DELOITTE & TOUCHE LLP

Oklahoma City, Oklahoma
February 15, 1999

F-80
<PAGE> 134

INDEPENDENT AUDITORS' REPORT

To the Stockholders
Terra Telecom, Inc.:

We have audited the accompanying balance sheet of Terra Telecom, Inc. as of
September 30, 1997, and the related statements of operations, stockholders'
equity, and cash flows for the year ended September 30, 1997. These financial
statements are the responsibility of the company's management. Our
responsibility is to express an opinion on the 1997 financial statements based
on our audit.

In our opinion, such financial statements present fairly, in all material
respects, the financial position of Terra Telecom, Inc. at September 30, 1997,
and the results of their operations and their cash flows for the year ended
September 30, 1997, in conformity with generally accepted accounting principles.

/s/ SAXON & KNOL

Oklahoma City, Oklahoma
February 15, 1999

F-81
<PAGE> 135

TERRA TELECOM, INC.

BALANCE SHEETS

ASSETS

<TABLE>
<CAPTION>
SEPTEMBER 30,
MARCH 31, ---------------------
1999 1998 1997
----------- --------- ---------
(UNAUDITED)
<S> <C> <C> <C>
CURRENT ASSETS:
Cash.................................................... $ 20,884 $ 20,946 $ 5,364
Accounts receivable, net................................ 212,241 118,120 180,082
Inventory............................................... 94,726 131,035 129,107
--------- --------- ---------
Total current assets............................ 327,851 270,101 314,553
PROPERTY AND EQUIPMENT:
Autos and trucks........................................ 119,953 121,990 102,292
Furniture and fixtures.................................. 64,623 55,286 34,747
Machinery and equipment................................. 45,866 49,836 41,267
--------- --------- ---------
230,442 227,112 178,306
Less accumulated depreciation........................... (185,747) (162,192) (132,733)
--------- --------- ---------
Property and equipment, net..................... 44,695 64,920 45,573
OTHER ASSETS.............................................. 8,096 8,096 3,553
--------- --------- ---------
TOTAL........................................... $ 380,642 $ 343,117 $ 363,679
========= ========= =========
LIABILITIES AND STOCKHOLDERS' EQUITY
LIABILITIES:
Current liabilities:
Current portion of long-term debt.................... $ 51,943 $ 59,143 $ 60,873
Accounts payable..................................... 155,618 126,585 125,758
Other current liabilities............................ 74,277 86,145 55,732
--------- --------- ---------
Total current liabilities....................... 281,838 271,873 242,363
Long-term debt, net of current portion.................. 37,338 56,362 106,343
--------- --------- ---------
Total liabilities............................... 319,176 328,235 348,706
COMMITMENTS
STOCKHOLDERS' EQUITY:
Common stock, $1.00 par value; 25,000 shares authorized;
2,000 shares issued and outstanding.................. 2,000 2,000 2,000
Additional paid-in capital.............................. 82,677 82,677 82,677
Accumulated deficit..................................... (23,211) (69,795) (69,704)
--------- --------- ---------
Total stockholders' equity...................... 61,466 14,882 14,973
--------- --------- ---------
TOTAL........................................... $ 380,642 $ 343,117 $ 363,679
========= ========= =========
</TABLE>

See notes to financial statements.

F-82
<PAGE> 136

TERRA TELECOM, INC.

STATEMENTS OF OPERATIONS

<TABLE>
<CAPTION>
SIX MONTHS ENDED YEARS ENDED
MARCH 31, SEPTEMBER 30,
--------------------- -----------------------
1999 1998 1998 1997
---------- -------- ---------- ----------
(UNAUDITED)
<S> <C> <C> <C> <C>
NET SALES..................................... $1,137,174 $937,048 $1,956,623 $1,522,718
COSTS AND EXPENSES:
Cost of sales............................... 545,828 533,488 1,082,080 825,796
Salaries and benefits....................... 398,907 279,220 650,889 486,087
Selling, general and administrative......... 127,578 119,397 204,014 195,153
Interest.................................... 8,757 7,232 19,747 24,774
---------- -------- ---------- ----------
Total costs and expenses............ 1,081,070 939,337 1,956,730 1,531,810
---------- -------- ---------- ----------
INCOME (LOSS) BEFORE TAXES.................... 56,104 (2,289) (107) (9,092)
INCOME TAX (EXPENSE) BENEFIT.................. (9,520) 350 16 1,364
---------- -------- ---------- ----------
NET INCOME (LOSS)............................. $ 46,584 $ (1,939) $ (91) $ (7,728)
========== ======== ========== ==========
</TABLE>

See notes to financial statements.

F-83
<PAGE> 137

TERRA TELECOM, INC.

STATEMENTS OF STOCKHOLDERS' EQUITY

<TABLE>
<CAPTION>
ADDITIONAL
COMMON COMMON PAID-IN ACCUMULATED
SHARES STOCK CAPITAL DEFICIT TOTAL
------ ------ ---------- ----------- -------
<S> <C> <C> <C> <C> <C>
BALANCE, October 1, 1996................... 2,000 $2,000 $82,677 $(61,976) $22,701
Net loss for the year.................... -- -- -- (7,728) (7,728)
----- ------ ------- -------- -------
BALANCE, September 30, 1997................ 2,000 2,000 82,677 (69,704) 14,973
Net loss for the year.................... -- -- -- (91) (91)
----- ------ ------- -------- -------
BALANCE, September 30, 1998................ 2,000 2,000 82,677 (69,795) 14,882
Net income for six months (unaudited).... -- -- -- 46,584 46,584
----- ------ ------- -------- -------
BALANCE, March 31, 1999 (Unaudited)........ 2,000 $2,000 $82,677 $(23,211) $61,466
===== ====== ======= ======== =======
</TABLE>

See notes to financial statements.

F-84
<PAGE> 138

TERRA TELECOM, INC.

STATEMENTS OF CASH FLOWS

<TABLE>
<CAPTION>
SIX MONTHS ENDED YEARS ENDED
MARCH 31, SEPTEMBER 30,
------------------ -------------------
1999 1998 1998 1997
------- -------- -------- --------
(UNAUDITED)
<S> <C> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss)................................. $46,584 $ (1,939) $ (91) $ (7,728)
Adjustments to reconcile net income (loss) to net
cash provided by operating activities:
Depreciation................................... 15,465 15,590 29,459 32,360
(Gain) loss on disposal........................ 8,090 (8,189) -- (10,456)
Changes in current assets and liabilities:
Accounts receivable.......................... (94,121) 43,505 61,962 (95,583)
Inventory.................................... 36,309 (2,198) (1,928) 17,218
Other assets................................. -- -- (4,543) (1,365)
Accounts payable............................. 29,033 (5,384) 827 31,221
Other current liabilities.................... (11,868) 6,945 30,413 38,779
------- -------- -------- --------
Net cash provided by operating
activities.............................. 29,492 48,330 116,099 4,446
------- -------- -------- --------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of property and equipment............... (3,330) (15,481) (48,806) (17,003)
------- -------- -------- --------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from long-term borrowings................ -- -- 15,786 79,421
Payments on long-term borrowings.................. (26,224) (18,788) (67,498) (58,005)
------- -------- -------- --------
Net cash (used in) provided by financing
activities.............................. (26,224) (18,788) (51,712) 21,416
------- -------- -------- --------
NET (DECREASE) INCREASE IN CASH..................... (62) 14,061 15,582 8,859
CASH, beginning of period........................... 20,946 5,364 5,364 (3,495)
------- -------- -------- --------
CASH, end of period................................. $20,884 $ 19,425 $ 20,946 $ 5,364
======= ======== ======== ========
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
Cash paid during the period for interest.......... $17,861 $ 16,134 $ 11,282 $ 13,877
</TABLE>

See notes to financial statements.

F-85
<PAGE> 139

TERRA TELECOM, INC.

NOTES TO FINANCIAL STATEMENTS

1. ORGANIZATION

Terra Telecom, Inc. (the "Company") was incorporated in October 1982, under
the laws of the State of Oklahoma. The Company sells, installs and maintains
telephone equipment in the greater Tulsa, Oklahoma market area.

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Inventory -- Inventory is stated at the lower of cost (first-in, first-out
method) or market.

F-86
<PAGE> 140
TERRA TELECOM, INC.

NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)

Property and equipment owned by the Company are depreciated using an
accelerated method over the following useful lives:

<TABLE>
<CAPTION>
USEFUL LIVES
IN YEARS
------------
<S> <C>
Autos and trucks........................................ 3-7
Furniture and fixtures.................................. 5-7
Machinery and equipment................................. 3-7
</TABLE>

Income Taxes -- The Company uses an asset and liability approach to account
for income taxes. Deferred income taxes are recognized for the tax consequences
of temporary differences and operating loss and tax credit carryforwards by
applying enacted tax rates applicable to future years to differences between the
financial statement amounts and the tax bases of existing assets and
liabilities. A valuation allowance is established if, in management's opinion,
it is more likely than not that some portion of the deferred tax asset will not
be realized. As of September 30, 1998, the Company's temporary differences
between financial and tax bases of assets and liabilities are not material, and
no deferred income taxes have been recognized.

Advertising -- Advertising costs incurred by the company are expensed
during the period in which the advertising occurs.

Fair Value Disclosure -- The Company's financial instruments include cash
and cash equivalents, receivables, short-term payables, and notes payable. The
carrying amounts of cash and cash equivalents, receivables, and short-term
payables approximate fair value due to their short-term nature. The carrying
amounts of long-term debt approximate fair value based on borrowing terms
currently available to the Company.

3. OPERATING LEASES

The Company has an operating lease for the Company's office space. The
Company has expensed and paid rent of $21,514 and $21,634 for the years ended
September 30, 1998 and 1997, respectively. The future minimum payments by year
at September 30, 1998, are as follows:

F-87
<PAGE> 141
TERRA TELECOM, INC.

NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)

4. LONG-TERM DEBT

The Company's long-term debt at September 30, 1998 and 1997, consisted of
the following:

<TABLE>
<CAPTION>
1998 1997
------- --------
<S> <C> <C>
Notes payable to stockholders, due in monthly principal and
interest payments, interest rate of 10.5%, maturing in
April 2001, unsecured..................................... $54,830 $ 74,274
Promissory note to bank, due in monthly principal and
interest payments, interest rate of 9.25%, maturing in
August 1999, secured by all Company assets................ 30,588 55,820
Promissory note to bank, due in monthly principal and
interest payments, interest rate of 8.8%, maturing in
April 2002, secured by vehicle............................ 11,144 --
Promissory note to credit union, due in monthly principal
and interest payments, interest rate of 7.2%, maturing in
June 2002, secured by vehicle............................. 10,941 14,132
Promissory note to bank, due in monthly principal and
interest payments, interest rate of 10%, maturing in
October 1999, secured by vehicle.......................... 4,218 7,546
Promissory note to bank, due in monthly principal and
interest payments, interest rate of 11%, maturing in April
1999, secured by vehicle.................................. 3,784 7,747
Promissory note to bank, due in monthly principal and
interest payments, interest rate of 8.5%, paid in
September 1998, secured by vehicle........................ -- 2,985
Promissory note to bank, due in monthly principal and
interest payments, interest rate of 9%, paid in October
1998, secured by vehicle.................................. -- 4,712
------- --------
115,505 167,216
Less current maturities..................................... 59,143 60,873
------- --------
$56,362 $106,343
======= ========
</TABLE>

Maturities of long-term debt for years subsequent to September 30, 1998 are
as follows:

<TABLE>
<S> <C>
1999...................................................... $ 59,143
2000...................................................... 30,356
2001...................................................... 21,308
2002...................................................... 4,698
Thereafter................................................ --
--------
Total long-term debt............................ $115,505
========
</TABLE>

5. INCOME TAXES

The income tax benefit consists of the following:

<TABLE>
<CAPTION>
1998 1997
---- ------
<S> <C> <C>
Federal income tax benefit.................................. $16 $1,364
State income taxes, net of federal benefit.................. -- --
--- ------
$16 $1,364
=== ======
</TABLE>

The difference between the statutory Federal income tax rate of 34% and the
Company's effective Federal rate is due to the effect of graduated tax rates.

F-88
<PAGE> 142
TERRA TELECOM, INC.

NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)

6. MAJOR CUSTOMERS

Sales to the Company's largest customer amounted to approximately 11% of
net sales for fiscal year 1998. No individual customer in 1997 accounted for net
sales in excess of 10%. The Company has an account receivable from an individual
customer that amounts to 23% of the Company's total accounts receivable at
September 30, 1998.

7. RELATED PARTY TRANSACTIONS

The Company has a note payable to each of its two owners together totaling
$54,830 and $74,274 at September 30, 1998 and 1997, respectively. The notes are
unsecured and require monthly principal and interest payments totaling $2,050.
Interest on the notes is at 10.5%. Proceeds from the notes were utilized by the
Company for operating capital. Principal payments totaling $19,444 and $7,405
were made on the notes during the years ended September 30, 1998 and 1997,
respectively. Interest expense totaling $5,156 and $3,870 were recorded on the
notes for each of the years ended September 30, 1998 and 1997, respectively. The
notes are scheduled to mature in April 2001.

8. 401(K) PLAN

In fiscal year 1998, the Company established a 401(k) plan (the "Plan"), in
which substantially all employees of the Company are eligible to participate.
Company contributions to the Plan are made at the discretion of Company
management. Contributions totaling $8,352 were made by the Company and charged
to operations for the year ended September 30, 1998.

9. SUBSEQUENT EVENT

The Company and its stockholders have entered into a definitive agreement
with LORECOM Technologies, Inc. ("LORECOM") (formerly The Alliance Group, Inc.)
pursuant to which the Company will be purchased by LORECOM. All outstanding
shares of the Company will be exchanged for cash and common stock of LORECOM in
conjunction with the consummation of the initial public offering of the common
stock of LORECOM.

F-89
<PAGE> 143

INDEPENDENT AUDITORS' REPORT

To the Board of Directors and Stockholders
Travis Business Systems, Inc.:

We have audited the accompanying balance sheet of Travis Business Systems,
Inc. as of December 31, 1998, and the related statements of operations,
stockholders' equity, and cash flows for the year ended December 31, 1998. The
financial statements as of December 31, 1997 and for the year then ended were
audited by other auditors whose report expressed an unqualified opinion on those
financial statements. These financial statements are the responsibility of the
company's management. Our responsibility is to express an opinion on the 1998
financial statements based on our audit.

We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the 1998 financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement
presentation. We believe that our audit provides a reasonable basis for our
opinion.

In our opinion, such 1998 financial statements present fairly, in all
material respects, the financial position of Travis Business Systems, Inc. at
December 31, 1998, and the results of its operations and its cash flows for the
year ended December 31, 1998, in conformity with generally accepted accounting
principles.

/s/ DELOITTE & TOUCHE LLP

Oklahoma City, Oklahoma
February 19, 1999

F-90
<PAGE> 144

INDEPENDENT AUDITORS' REPORT

To the Board of Directors and Stockholders
Travis Business Systems, Inc.:

We have audited the accompanying balance sheet of Travis Business Systems,
Inc. as of December 31, 1997 and the related statements of operations,
stockholders' equity, and cash flows for the year ended December 31, 1997. These
financial statements are the responsibility of the company's management. Our
responsibility is to express an opinion on the 1997 financial statements based
on our audit.

We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the 1997 financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement
presentation. We believe that our audit provides a reasonable basis for our
opinion.

In our opinion, such 1997 financial statements present fairly, in all
material respects, the financial position of Travis Business Systems, Inc. at
December 31, 1997, and the results of its operations and its cash flows for the
year ended December 31, 1997, in conformity with generally accepted accounting
principles.

/s/ SAXON & KNOL

Oklahoma City, Oklahoma
February 19, 1999

F-91
<PAGE> 145

TRAVIS BUSINESS SYSTEMS, INC.

BALANCE SHEETS

ASSETS

<TABLE>
<CAPTION>
DECEMBER 31,
MARCH 31, -----------------------
1999 1998 1997
----------- ---------- ----------
(UNAUDITED)
<S> <C> <C> <C>
CURRENT ASSETS:
Cash................................................... $ -- $ 153,409 $ 57,657
Accounts receivable.................................... 738,111 381,421 639,498
Inventory.............................................. 415,950 485,695 423,229
Other current assets................................... 34,913 46,063 48,277
---------- ---------- ----------
Total current assets........................... 1,188,974 1,066,588 1,168,661
PROPERTY AND EQUIPMENT:
Autos and trucks....................................... 90,749 90,749 62,166
Equipment.............................................. 67,153 66,297 54,715
Furniture and fixtures................................. 61,788 60,715 49,147
Leasehold improvements................................. 11,998 11,998 11,998
---------- ---------- ----------
231,688 229,759 178,026
Less accumulated depreciation.......................... (118,841) (111,119) (78,159)
---------- ---------- ----------
Property and equipment, net.................... 112,847 118,640 99,867
OTHER ASSETS............................................. 884 5,884 5,884
---------- ---------- ----------
TOTAL.......................................... $1,302,705 $1,191,112 $1,274,412
========== ========== ==========

LIABILITIES AND STOCKHOLDERS' EQUITY

Current Liabilities:
Accounts payable....................................... $ 104,176 $ 172,654 $ 154,370
Deferred income........................................ 255,397 313,846 233,317
Other current liabilities.............................. 95,961 68,495 129,543
Line of credit payable................................. 185,000 -- 72,000
---------- ---------- ----------
Total current liabilities...................... 640,534 554,995 589,230
COMMITMENTS
STOCKHOLDERS' EQUITY:
Common stock, $1.00 par value; 10,000 shares
authorized; 588 shares issued and outstanding....... 588 588 588
Additional paid-in capital............................. 19,500 19,500 19,500
Retained earnings...................................... 642,083 616,029 665,094
---------- ---------- ----------
Total stockholders' equity..................... 662,171 636,117 685,182
---------- ---------- ----------
TOTAL.......................................... $1,302,705 $1,191,112 $1,274,412
========== ========== ==========
</TABLE>

See notes to financial statements.

F-92
<PAGE> 146

TRAVIS BUSINESS SYSTEMS, INC.

STATEMENTS OF OPERATIONS

<TABLE>
<CAPTION>
THREE MONTHS ENDED YEARS ENDED
MARCH 31, DECEMBER 31,
--------------------- -----------------------
1999 1998 1998 1997
---------- -------- ---------- ----------
(UNAUDITED)
<S> <C> <C> <C> <C>
SALES......................................... $1,140,659 $897,513 $4,198,047 $3,810,617
COSTS AND EXPENSES:
Cost of sales............................... 557,542 338,116 1,814,852 1,515,984
Salaries and benefits....................... 442,828 408,155 1,814,593 1,591,483
Selling, general and administrative
expenses................................. 106,143 136,686 618,179 521,818
Interest expense............................ 1,539 1,350 9,177 3,030
---------- -------- ---------- ----------
Total costs and expenses............ 1,108,052 884,307 4,256,801 3,632,315
---------- -------- ---------- ----------
INCOME (LOSS) BEFORE TAXES ON INCOME.......... 32,607 13,206 (58,754) 178,302
INCOME TAX BENEFIT (EXPENSE).................. (6,553) (2,653) 9,689 (62,880)
---------- -------- ---------- ----------
NET INCOME (LOSS)............................. $ 26,054 $ 10,553 $ (49,065) $ 115,422
========== ======== ========== ==========
</TABLE>

See notes to financial statements.

F-93
<PAGE> 147

TRAVIS BUSINESS SYSTEMS, INC.

STATEMENTS OF STOCKHOLDERS' EQUITY

<TABLE>
<CAPTION>
ADDITIONAL
COMMON COMMON PAID-IN RETAINED
SHARES STOCK CAPITAL EARNINGS TOTAL
------ ------ ---------- -------- --------
<S> <C> <C> <C> <C> <C>
BALANCE, January 1, 1997................... 588 $588 $19,500 $549,672 $569,760
Net earnings............................. -- -- -- 115,422 115,422
--- ---- ------- -------- --------
BALANCE, December 31, 1997................. 588 588 19,500 665,094 685,182
Net loss................................. -- -- -- (49,065) (49,065)
--- ---- ------- -------- --------
BALANCE, December 31, 1998................. 588 588 19,500 616,029 636,117
Net income (Unaudited)................... -- -- -- 26,054 26,054
--- ---- ------- -------- --------
BALANCE, March 31, 1999
(Unaudited).............................. 588 $588 $19,500 $642,083 $662,171
=== ==== ======= ======== ========
</TABLE>

See notes to financial statements.

F-94
<PAGE> 148

TRAVIS BUSINESS SYSTEMS, INC.

STATEMENTS OF CASH FLOWS

<TABLE>
<CAPTION>
THREE MONTHS ENDED YEARS ENDED
MARCH 31, DECEMBER 31,
-------------------- ---------------------
1999 1998 1998 1997
--------- -------- --------- ---------
(UNAUDITED)
<S> <C> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss)............................. $ 26,054 $ 10,553 $ (49,065) $ 115,422
Adjustments to reconcile net income (loss) to
net cash provided by (used in) operating
activities:
Depreciation............................... 7,722 6,931 43,353 23,247
Loss on disposal........................... -- -- 3,021 --
Changes in current assets and liabilities:
Accounts receivable...................... (356,690) 166,807 258,077 (10,257)
Inventory................................ 69,745 38,831 (62,466) (17,781)
Other current assets..................... 11,150 (16,227) 2,214 (3,636)
Other assets............................. 5,000 -- -- 4,062
Accounts payable......................... (68,478) 122,828 18,284 (167,336)
Deferred income.......................... (58,449) (38,839) 80,529 (108,845)
Other current liabilities................ 27,466 (56,740) (61,048) 2,360
--------- -------- --------- ---------
Net cash provided by (used in)
operating activities................ (336,480) 234,144 232,899 (162,764)
--------- -------- --------- ---------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of property and equipment........... (1,929) (17,170) (65,147) (38,399)
--------- -------- --------- ---------
CASH FLOWS FROM FINANCING ACTIVITIES:
Borrowings on credit line..................... 530,000 27,000 707,000 72,000
Principal payments on credit line............. (345,000) (99,000) (779,000) --
--------- -------- --------- ---------
Net cash provided by (used in)
financing activities................ 185,000 (72,000) (72,000) 72,000
--------- -------- --------- ---------
NET INCREASE (DECREASE) IN CASH................. (153,409) 144,974 95,752 (129,163)
CASH, beginning of period....................... 153,409 57,657 57,657 186,820
--------- -------- --------- ---------
CASH, end of period............................. $ -- $202,631 $ 153,409 $ 57,657
========= ======== ========= =========
SUPPLEMENTAL DISCLOSURES OF CASH FLOW
INFORMATION:
Cash paid during the period for interest...... $ 2,151 $ 288 $ 4,759 $ 452
Cash paid during the period for income
taxes...................................... $ -- $ 15,296 $ 83,197 $ 75,107
</TABLE>

See notes to financial statements.

F-95
<PAGE> 149

TRAVIS BUSINESS SYSTEMS, INC.

NOTES TO FINANCIAL STATEMENTS

1. ORGANIZATION

Travis Business Systems, Inc. (the "Company") was incorporated in September
1988, under the laws of the State of Oklahoma. The Company sells, installs and
maintains telephone equipment in the state of Oklahoma market area.

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Concentrations -- The Company currently buys most of its communications
products from two manufacturers. Although there are a limited number of
manufacturers of communications products, management believes that other
manufacturers could provide similar products on comparable terms. A change in
manufacturers, however, could cause a possible loss of sales, which would affect
operating results adversely.

Inventory -- Inventory is stated at the lower of average cost (first-in,
first-out method) or market.

Property and equipment owned by the Company are depreciated using the
straight-line method over the following useful lives:

<TABLE>
<CAPTION>
USEFUL LIVES
IN YEARS
------------
<S> <C>
Autos and trucks......................................... 3 - 5
Equipment................................................ 3 - 7
Furniture and fixtures................................... 3 - 5
Leasehold improvements................................... 15 - 20
</TABLE>

F-96
<PAGE> 150
TRAVIS BUSINESS SYSTEMS, INC.

NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)

Income Taxes -- The Company uses an asset and liability approach to account
for income taxes. Deferred income taxes are recognized for the tax consequences
of temporary differences and operating loss and tax credit carryforwards by
applying enacted tax rates applicable to future years to differences between the
financial statement amounts and the tax bases of existing assets and
liabilities. A valuation allowance is established if, in management's opinion,
it is more likely than not that some portion of the deferred tax asset will not
be realized. As of December 31, 1998, the Company's temporary differences
between financial and tax bases of assets and liabilities are not material, and
no deferred income taxes have been recognized.

Advertising -- Advertising costs incurred by the company are expensed
during the period in which the advertising occurs.

Fair Value Disclosure -- The Company's financial instruments include cash
and cash equivalents, receivables, short-term payables, and notes payable. The
carrying amounts of cash and cash equivalents, receivables, and short-term
payables approximate fair value due to their short-term nature. The carrying
amount of notes payable approximates fair value based on borrowing terms
currently available to the Company.

3. OPERATING LEASES

The Company has operating leases for its office space and certain of its
equipment. Lease expense during the years ended December 31, 1998 and 1997,
totaled $84,947 and $86,380, respectively. The future minimum payments by year
at December 31, 1998, are as follows:

4. INCOME TAXES

The income tax provision consists of the following:

<TABLE>
<CAPTION>
DECEMBER 31,
-----------------
1998 1997
------ --------
<S> <C> <C>
Federal income tax benefit (expense)........................ $9,689 $(52,788)
State income taxes, net of federal benefit.................. -- (10,092)
------ --------
$9,689 $(62,880)
====== ========
</TABLE>

F-97
<PAGE> 151
TRAVIS BUSINESS SYSTEMS, INC.

NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)

5. LINE OF CREDIT

The Company has a line of credit agreement with a bank. The agreement
permits advances up to $450,000 with interest at Chase Manhattan Bank Prime
floating (8.5% at December 31, 1998) and expires September 30, 1999; however,
management expects renewal of the agreement under similar terms. The agreement
is collateralized by the Company's bank accounts, accounts receivable,
inventory, contract rights, proceeds, goods, general intangibles and personal
guarantee from the Company's majority shareholder. There was no amount
outstanding on the line of credit at December 31, 1998. At December 31, 1997,
the amount outstanding totaled $72,000.

6. 401(K) RETIREMENT PLAN

The Company sponsors a 401(k) employee pension plan covering employees who
meet minimum age and service requirements. Employees may elect to contribute up
to 15% of their eligible compensation. Contributions by the Company are made at
the discretion of management and vest ratably after one year over the term of a
participant's employment at 20% per year. The Company made contributions to the
plan totaling $15,520 and $11,447 during the years ended December 31, 1998 and
1997, respectively.

7. MAJOR CUSTOMER

No individual customer in 1998 accounted for net sales in excess of 10%.
Sales to the Company's largest customer amounted to approximately 11% of net
sales for the year ended December 31, 1997.

8. SUBSEQUENT EVENTS

The Company and its stockholders have entered into a definitive agreement
with LORECOM Technologies, Inc. ("LORECOM") (formerly The Alliance Group, Inc.)
pursuant to which the Company will be purchased by LORECOM. All outstanding
shares of the Company will be exchanged for cash and common stock of LORECOM in
conjunction with the consummation of the initial public offering of the common
stock of LORECOM.

Subsequent to December 31, 1998, the Company recognized a loss of $157,725
for damaged inventory caused by a fire that occurred in January 1999. The
Company has since received insurance proceeds of $207,224 related to the fire.
The resulting gain of $49,499 is recorded as an offset to selling, general and
administrative expenses in the income statement.

F-98
<PAGE> 152

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

1,600,000 Shares

[LORECOM Technologies, inc.]

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

PROSPECTUS
------------------------

CAPITAL WEST SECURITIES, INC.

July 28, 1999

DEALER PROSPECTUS DELIVERY OBLIGATION

Until , 1999, all dealers that effect transactions in 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> 153

PART II

INFORMATION NOT REQUIRED IN PROSPECTUS

INDEMNIFICATION OF DIRECTORS AND OFFICERS

LORECOM is incorporated under the laws of the State of Oklahoma.
Section 1031 ("Section 1031") of the Oklahoma General Corporation Act, as the
same exists or may hereafter be amended, inter alia, provides that an Oklahoma
corporation may indemnify any persons who were, are or are threatened to be
made, parties to any threatened, pending or completed action, suit or
proceeding, whether civil, criminal, administrative or investigative (other
than an action by or in the right of such corporation), by reason of the fact
that such person is or was an officer, director, employee or agent of such
corporation, or is or was serving at the request of such corporation as a
director, officer employee or agent of another corporation or enterprise. The
indemnity may include expenses (including attorneys' fees), judgments, fines
and amounts paid in settlement actually and reasonably incurred by such person
in connection with such action, suit or preceding, provided such person acted
in good faith and in a manner he reasonably believed to be in or not opposed to
the corporation's best interests and, with respect to any criminal action or
proceeding, had no reasonable cause to believe that his conduct was illegal. An
Oklahoma corporation may indemnify any persons who are, were or are threatened
to be made, a party to any threatened, pending or completed action or suit by
or in the right of the corporation by reasons of the fact that such person was
a director, officer, employee or agent of such corporation, or is or was
serving at the request of such corporation as a director, officer, employee or
agent of another corporation or enterprise. The indemnity may include expenses
(including attorneys' fees) actually and reasonably incurred by such person in
connection with the defense or settlement of such action or suit, provided such
person acted in good faith and in a manner he reasonably believed to be in or
not opposed to the corporation's best interests, provided that no
indemnification is permitted without judicial approval if the officer,
director, employee or agent is adjudged to be liable to the corporation. Where
an officer, director, employee or agent is successful on the merits or
otherwise in the defense of any action referred to above, the corporation must
indemnify him against the expenses which such officer or director has actually
and reasonably incurred.

Section 1031 further authorizes a corporation to purchase and maintain
insurance on behalf of any person who is or was a director, officer, employee
or agent of the corporation, or is or was serving at the request of the
corporation as a director, officer, employee or agent of another corporation or
enterprise, against any liability asserted against him and incurred by him in
any such capacity arising out of his status as such, whether or not the
corporation would otherwise have the power to indemnify him under Section 1031.

LORECOM's Certificate of Incorporation, as amended, eliminates in
certain circumstances the liability of directors for a breach of their
fiduciary duty as directors. These provisions do not eliminate the liability of
a director:

o For a breach of the director's duty of loyalty to LORECOM or its
stockholders;

o For acts or omissions by a director not in good faith or which
involve intentional misconduct or a knowing violation of law;

o For liability relating to the declaration of dividends and
purchase or redemption of shares in violation of the Oklahoma
General Corporation Act; or

o For any transaction from which the director derived an improper
personal benefit.

LORECOM's certificate of incorporation provides that LORECOM shall
indemnify all of its directors and officers to the full extent permitted by the
Oklahoma General Corporation Act. Under such provisions, any director or
officer, who in his capacity as such, is made or threatened to be a made a
party to any suit or proceeding, may be indemnified if the board of directors
determines such director or officer acted in good faith and in a manner he
reasonably

II-1

<PAGE> 154

believed to be in or not opposed to the best interest of LORECOM. The
Certificate and the Oklahoma General Corporation Act further provide that such
indemnification is not exclusive of any other rights to which such individuals
may be entitled under the Certificate, any agreement, vote of stockholders or
disinterested directors or otherwise.

All of LORECOM's directors and officers will be covered by insurance
policies maintained by it against certain liabilities for actions taken in
their capacities as such.

II-2

<PAGE> 155
OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION

The following is a statement of estimated expenses, to be paid solely
by LORECOM, in connection with the distribution of the securities being
registered:

<TABLE>
<S> <C>
SEC Registration Fee ........................ $ 5,338

Printing and engraving expenses ............. $ 100,000

Accounting fees and expenses ................ $ 500,000

Legal fees and expenses ..................... $ 400,000

Miscellaneous expenses ...................... $ 100,000
----------

Total .............................. $1,105,338
</TABLE>

* All amounts are estimated.

RECENT SALES OF UNREGISTERED SECURITIES

On September 4, 1998, LORECOM issued 100 shares of common stock, par
value $.01, to David W. Aduddell for aggregate consideration of $1.00 and
certain intangible personal property, including business plans, organizational
documents and economic projections relating to several consolidating company
opportunities. The transaction was exempt from registration under Section 4(2)
of the Securities Act because no public offering was involved.

On September 8, 1998, LORECOM issued 167 shares of common stock, par
value $.01, to Ricky Naylor for aggregate consideration of $500,000, which
consisted of $10.00 in cash and a binding agreement to pay LORECOM $499,990 on
demand. The transaction was exempt from registration under Section 4(2) of the
Securities Act because no public offering was involved.

On the closing date of this offering, LORECOM will issue such number
of shares to shareholders of the interconnect partners equal to $4,187,500
divided by the offering price of LORECOM's common stock pursuant to this
offering. The transactions are exempt from registration under section 4(2) of
the Securities Act and the regulations promulgated thereunder because no public
offering is involved. The total number of persons who will be issued stock
pursuant to this exemption is 21. Each of these people has represented that he
has knowledge and experience in financial and business matters and that he is
capable of evaluating the merits and risks of an investment in LORECOM. Each
purchaser has been active in the operations of their respective interconnect
company.

II-3

INDEX TO EXHIBITS

EXHIBIT
NO. DESCRIPTION
- ------- -----------
<S> <C>
1.1 Form of Underwriting Agreement.*
2.1 Agreement and Plan of Merger, dated March 10, 1999, by and among
The Alliance Group, Inc., Alliance Acquisition V Corp., Access
Communications Services, Inc., David Aduddell and Steve
Aduddell.
2.2 Agreement and Plan of Merger, dated March 10, 1999, by and among
The Alliance Group, Inc., Alliance Acquisition VI Corp.,
American Telecom, Inc., Tony B. Alexander and William R.
Pearson.
2.3 Agreement and Plan of Merger, dated March 9, 1999, by and among
The Alliance Group, Inc., Alliance Acquisition VII Corp., Banner
Communications, Inc., Charles O'Toole and Phillip Rodger
Williams.
2.4 Agreement and Plan of Merger dated March 9, 1999, by and among
The Alliance Group, Inc., Alliance Acquisition IX Corp.,
Communication Services, Inc. and Steve Williams.
2.5 Agreement and Plan of Merger dated March 10, 1999, by and among
The Alliance Group, Inc., Alliance Acquisition VII Corp.,
Commercial Telecom Systems, Inc., John Whitten, Mark Whitten and
Jody Slape.
2.6 Amendment to Agreement and Plan of Merger dated March 24, 1999,
by and among The Alliance Group, Inc., Alliance Acquisition XIII
Corp., Commercial Telecom Systems, Inc., John Whitten, Mark
Whitten and Jody Slape.
2.7 Agreement and Plan of Merger dated March 10, 1999, by and among
The Alliance Group, Inc., Alliance Acquisition III Corp., Nobel
Systems, Ken Blood, David Andres and Jim Pearson.
2.8 Agreement and Plan of Merger dated March 10, 1999, by and among
The Alliance Group, Inc., Alliance Acquisition II Corp., Perkins
Office Machines, Inc. and Jack Perkins.
2.9 Agreement and Plan of Merger dated March 10, 1999, by and among
The Alliance Group, Inc., Alliance Acquisition X Corp., Telkey
Communications, Inc., Michael P. Murphy and Deborah S. Murphy.
2.10 Agreement and Plan of Merger dated March 10, 1999, by and among
The Alliance Group, Inc., Alliance Acquisition I Corp., Terra
Telecom, Inc., Jerry McCart, Paula L. McCart, Ron Crainshaw and
Lora M. Crainshaw.
2.11 Agreement and Plan of Merger dated March 12, 1999, by and among
The Alliance Group, Inc., Alliance Acquisition XI Corp., Travis
Business Systems, Inc., Wylie Limited Partnership, Gregory
Mantia and Scott McCrory.
2.12 Asset Purchase Agreement dated March 10, 1999, by and among The
Alliance Group, Inc., Alliance Acquisition IV Corp. and Able
Communications Incorporated.
2.13 Asset Purchase Agreement dated March 10, 1999, by and among The
Alliance Group,Inc., Alliance Acquisition XI Corp., Electrical
and Instrument Sales Corp. d/b/a EIS Communications, and
Electronic Information Systems, L.L.C.
2.14 Asset Purchase Agreement dated March 10, 1999, by and among The
Alliance Group, Inc., Alliance Acquisition XIII Corp. and The
Phone Man Sales and Services, Inc.
2.15 Amendment to Agreement and Plan of Merger dated April 15, 1999,
by and among The Alliance Group, Inc., Alliance Acquisition V
Corp., Access Communications Services, Inc., David Aduddell and
Steve Aduddell.
3.1 Amended and Restated Certificate of Incorporation of the
Registrant.
3.2 Bylaws of the Registrant.
4.1 Form of Certificate representing Common Stock.
5.1 Opinion of McAfee & Taft A Professional Corporation.*
10.1 Form of Warrant to be issued to John Whitten.
10.2 Loan Agreement by and between Naylor Concrete and Construction
Company, Inc. and The Alliance Group, Inc. dated
January 5, 1999.
</TABLE>

II-4

<PAGE> 157

<TABLE>
<S> <C>
10.3 Employment and Non-Competition Agreement by and between LORECOM
and Larry Travis dated June 21, 1999.
10.4 Employment and Non-Competition Agreement by and between LORECOM
and Joe Evans dated June 21, 1999.
10.5 Employment and Non-Competition Agreement by and between LORECOM
and Jeff Hartwig dated June 21, 1999.
10.6 LORECOM Technologies, Inc. Deferred Stock Compensation Plan.
10.7 LORECOM Technologies, Inc. 1999 Long-Term Incentive Plan.
10.8 Form of Underwriter Warrant.*
21.1 Subsidiaries of the Registrant.
23.1 Consent of Deloitte & Touche LLP.*
23.2 Consent of Hunter, Atkins & Russell, PLC.*
23.3 Consent of Saxon & Knol P.C.*
23.4 Consent of McAfee & Taft A Professional Corporation (contained
in Exhibit 5.1).*
23.5 Consent of Larry Travis.
23.6 Consent of Joe Evans.
23.7 Consent of Wayne Stone.
23.8 Consent of John J. Wiesner.
23.9 Consent of Andrew May.
23.10 Consent of Wesley E. Cantrell
23.11 Consent of Houlihan Smith and Company, Inc.
24.1 Powers of Attorney (included on the signature page of this
Registration Statement).
27.1 Financial Data Schedule.
99.1 Fairness Opinion issued by Houlihan Smith and Company, Inc.*
99.2 Form of LORECOM Technologies, Inc. Nonqualified Stock Option
Agreement.
99.3 Form of Lock-up Letter to be executed by executive officers,
directors and 5% shareholders of LORECOM Technologies, Inc.
</TABLE>

- ---------------------
* Filed with this amendment.

II-5

<PAGE> 158

UNDERTAKINGS

The small business issuer 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 of 1933 (the "Act") may be permitted to directors, officers and
controlling persons of the small business issuer pursuant to the foregoing
provisions, or otherwise, the small business issuer has been advised that in
the opinion of the Securities and Exchange Commission such indemnification is
against public policy as expressed in the Act and is, therefore, unenforceable.

In the event that a claim for indemnification against such liabilities
(other than the payment by the small business issuer of expenses incurred or
paid by a director, officer or controlling person of the small business issuer
in the successful defense of any action, suit or proceeding) is asserted by
such director, officer or controlling person in connection with the securities
being registered, the small business issuer 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.

The undersigned small business issuer will:

(1) For determining any liability under the Securities Act, treat the
information omitted from the form of prospectus filed as part of this
registration statement in reliance upon Rule 430A and contained in a
form of prospectus filed by the small business issuer under Rule
424(b)(1), or (4) or 497(h) under the Securities Act as part of this
registration statement as of the time the Commission declared it
effective.

(2) For determining any liability under the Securities Act, treat each
post-effective amendment that contains a form of prospectus as a new
registration statement for the securities offered in the registration
statement, and that offering of the securities at that time as the
initial bona fide offering of those securities.

II-6

<PAGE> 159
SIGNATURES

Pursuant to the requirements of the Securities Act of 1933, LORECOM
has duly caused this Amendment No. 3 to its Registration Statement to be signed
on its behalf by the undersigned, thereunto duly authorized, in the City of
Oklahoma City, State of Oklahoma, on July 28, 1999.

LORECOM Technologies, Inc.

By: /s/ WILLIAM J. HARTWIG
----------------------------------------

William J. Hartwig
Vice President of Operations

Each person whose signature appears below on this Registration
Statement hereby constitutes and appoints William J. Hartwig and Joseph O.
Evans with full power to act without the other, his true and lawful
attorney-in-fact and agent, with full power of substitution and resubstitution,
for him and in his name, place and stead, in any and all capacities (until
revoked in writing) to sign any and all amendments (including post-effective
amendments and amendments thereto) to this registration statement, including
any registration statement filed pursuant to Rule 462 under the Securities Act
of 1933, and to file the same with all exhibits thereto and other documents in
connection therewith, with the Securities and Exchange Commission, granting
unto said attorney-in-fact and agent full power and authority to do and perform
each and every act and thing requisite and necessary fully to all intents and
purposes as he might do or could do in person thereby ratifying and confirming
all that said attorney-in-fact and agent, or his substitute may lawfully do or
cause to be done by virtue hereof.

Pursuant to the requirements of the Securities Act of 1933, this
Amendment No. 3 to the Registration Statement was signed by the following
persons on July 28, 1999, in the capacities indicated:

<TABLE>
<CAPTION>
SIGNATURE CAPACITY
--------- --------
<S> <C>
/s/ Ricky Naylor* Chairman of the Board and Director
- ---------------------------
Ricky Naylor

/s/ William J. Hartwig Vice President of Operations (Principal Executive
- --------------------------- Officer)
William J. Hartwig

/s/ Joseph O. Evans Chief Financial Officer (Principal Financial Officer)
- ---------------------------
Joseph O. Evans

/s/ Debra G. Morehead* Chief Accounting Officer (Principal Accounting
- --------------------------- Officer)
Debra G. Morehead

* Executed by William J.
Hartwig by Power of Attorney
</TABLE>

II-7
<PAGE> 160
INDEX TO EXHIBITS

<TABLE>
<CAPTION>
EXHIBIT
NO. DESCRIPTION
- ------- -----------
<S> <C>
1.1 Form of Underwriting Agreement.*
2.1 Agreement and Plan of Merger, dated March 10, 1999, by and among
The Alliance Group, Inc., Alliance Acquisition V Corp., Access
Communications Services, Inc., David Aduddell and Steve
Aduddell.
2.2 Agreement and Plan of Merger, dated March 10, 1999, by and among
The Alliance Group, Inc., Alliance Acquisition VI Corp.,
American Telecom, Inc., Tony B. Alexander and William R.
Pearson.
2.3 Agreement and Plan of Merger, dated March 9, 1999, by and among
The Alliance Group, Inc., Alliance Acquisition VII Corp., Banner
Communications, Inc., Charles O'Toole and Phillip Rodger
Williams.
2.4 Agreement and Plan of Merger dated March 9, 1999, by and among
The Alliance Group, Inc., Alliance Acquisition IX Corp.,
Communication Services, Inc. and Steve Williams.
2.5 Agreement and Plan of Merger dated March 10, 1999, by and among
The Alliance Group, Inc., Alliance Acquisition VII Corp.,
Commercial Telecom Systems, Inc., John Whitten, Mark Whitten and
Jody Slape.
2.6 Amendment to Agreement and Plan of Merger dated March 24, 1999,
by and among The Alliance Group, Inc., Alliance Acquisition XIII
Corp., Commercial Telecom Systems, Inc., John Whitten, Mark
Whitten and Jody Slape.
2.7 Agreement and Plan of Merger dated March 10, 1999, by and among
The Alliance Group, Inc., Alliance Acquisition III Corp., Nobel
Systems, Ken Blood, David Andres and Jim Pearson.
2.8 Agreement and Plan of Merger dated March 10, 1999, by and among
The Alliance Group, Inc., Alliance Acquisition II Corp., Perkins
Office Machines, Inc. and Jack Perkins.
2.9 Agreement and Plan of Merger dated March 10, 1999, by and among
The Alliance Group, Inc., Alliance Acquisition X Corp., Telkey
Communications, Inc., Michael P. Murphy and Deborah S. Murphy.
2.10 Agreement and Plan of Merger dated March 10, 1999, by and among
The Alliance Group, Inc., Alliance Acquisition I Corp., Terra
Telecom, Inc., Jerry McCart, Paula L. McCart, Ron Crainshaw and
Lora M. Crainshaw.
2.11 Agreement and Plan of Merger dated March 12, 1999, by and among
The Alliance Group, Inc., Alliance Acquisition XI Corp., Travis
Business Systems, Inc., Wylie Limited Partnership, Gregory
Mantia and Scott McCrory.
2.12 Asset Purchase Agreement dated March 10, 1999, by and among The
Alliance Group, Inc., Alliance Acquisition IV Corp. and Able
Communications Incorporated.
2.13 Asset Purchase Agreement dated March 10, 1999, by and among The
Alliance Group,Inc., Alliance Acquisition XI Corp., Electrical
and Instrument Sales Corp. d/b/a EIS Communications, and
Electronic Information Systems, L.L.C.
2.14 Asset Purchase Agreement dated March 10, 1999, by and among The
Alliance Group, Inc., Alliance Acquisition XIII Corp. and The
Phone Man Sales and Services, Inc.
2.15 Amendment to Agreement and Plan of Merger dated April 15, 1999,
by and among The Alliance Group, Inc., Alliance Acquisition V
Corp., Access Communications Services, Inc., David Aduddell and
Steve Aduddell.
3.1 Amended and Restated Certificate of Incorporation of the
Registrant.
3.2 Bylaws of the Registrant.
4.1 Form of Certificate representing Common Stock.
5.1 Opinion of McAfee & Taft A Professional Corporation.*
10.1 Form of Warrant to be issued to John Whitten.
10.2 Loan Agreement by and between Naylor Concrete and Construction
Company, Inc. and The Alliance Group, Inc., dated
January 5, 1999.
</TABLE>

<PAGE> 161

- ---------------------
* Filed with this amendment.

<PAGE> 1

EXHIBIT 1.1

1,600,000 SHARES

LORECOM TECHNOLOGIES, INC.
(an Oklahoma corporation)

(Par Value $0.01 Per Share)

UNDERWRITING AGREEMENT

August __, 1999

CAPITAL WEST SECURITIES, INC.
211 N. Robinson, Suite 200
One Leadership Square
Oklahoma City, Oklahoma 73102

Ladies/Gentlemen:

LORECOM Technologies, Inc., an Oklahoma corporation (the "Company"),
hereby confirms its agreement with Capital West Securities, Inc. ("Capital
West") as representative of the several underwriters named in Schedule A hereto
(herein collectively called the "Underwriters") as follows:

1. DESCRIPTION OF SHARES. The Company proposes to issue and sell
1,600,000 shares (the "Firm Shares") of its authorized and unissued common
stock, par value $0.01 per share (the "Common Stock") to the Underwriters upon
the terms and subject to the conditions set forth herein. The Company also
proposes to grant to the Underwriters an option to purchase, for the sole
purpose of covering over-allotments in connection with the sale of Firm Shares,
an aggregate of up to 240,000 additional shares ("Option Shares") of Common
Stock upon the terms and subject to the conditions set forth herein and as
provided in Section 7 hereof. As used in this Agreement, the term "Shares"
shall include the Firm Shares and the Option Shares. All shares of Common Stock
of the Company, including the Shares, are hereinafter referred to as "Common
Stock."

2. REPRESENTATIONS, WARRANTIES AND AGREEMENTS OF THE COMPANY. Unless
otherwise indicated or the context otherwise requires, references to the
"Company" in this Section 2 are references to LORECOM Technologies, Inc., an
Oklahoma corporation. The Company represents and warrants to and agrees with
the Underwriters, as follows:

(a) A registration statement on Form SB-2 (File No. 333-76451) with
respect to the Shares, including a prospectus subject to completion, has been
prepared by the Company in conformity with the requirements of the Securities
Act of 1933, as amended (the "Act"), and the applicable rules and regulations
(the "Rules and Regulations") of the Securities and Exchange Commission (the
"Commission") under the Act and has been filed with the Commission; such
amendments to such registration statement and such amended prospectuses subject
to completion, as may have been required prior to the date hereof have been
similarly prepared and filed with the Commission; and the Company will file
such additional amendments to such registration statement and such amended
prospectuses subject to completion, as may hereafter be required. The Company
meets the requirements for use of a Registration Statement on Form SB-2. Copies
of such

<PAGE> 2

registration statement and any amendments and of each related prospectus
subject to completion have been delivered to you.

If the registration statement has been declared effective under the
Act by the Commission, the Company will prepare and promptly file with the
Commission the information omitted from the registration statement pursuant to
Rule 430A(a) of the Rules and Regulations or as part of a post-effective
amendment to the registration statement (including a final form of prospectus).
If the registration statement has not been declared effective under the Act by
the Commission, the Company will prepare and promptly file a further amendment
to the registration statement, including a final form of prospectus. The term
"Registration Statement" as used in this Agreement shall mean such registration
statement, including financial statements, schedules and exhibits, in the form
in which it became or becomes, as the case may be, effective (including, if the
Company omitted information from the registration statement pursuant to Rule
430A(a) of the Rules and Regulations, the information deemed to be a part of
the registration statement at the time it became effective pursuant to Rule
430A(b) of the Rules and Regulations) and, in the event of any amendment
thereto after the effective date of such registration statement, shall also
mean (from and after the effectiveness of such amendment) such registration
statement as so amended. The term "Prospectus" as used in this Agreement shall
mean the prospectus relating to the Shares as included in such Registration
Statement at the time it becomes effective (including, if the Company omitted
information from the Registration Statement pursuant to Rule 430A(a) of the
Rules and Regulations, the information deemed to be a part of the Registration
Statement at the time it became effective pursuant to Rule 430A(b) of the Rules
and Regulations), except that after the effective date of the Registration
Statement if any revised prospectus shall be provided to the Underwriters by
the Company for use in connection with the offering of the Shares that differs
from the Prospectus on file with the Commission at the time the Registration
Statement became or becomes, as the case may be, effective (whether or not such
revised prospectus is required to be filed with the Commission pursuant to Rule
424(b)(3) of the Rules and Regulations), the term "Prospectus" shall refer to
such revised prospectus from and after the time it is first provided to the
Underwriters for such use.

(b) The Commission has not issued any order preventing or
suspending the use of any Preliminary Prospectus or instituted proceedings for
that purpose, and each such Preliminary Prospectus has conformed in all
material respects to the requirements of the Act and the Rules and Regulations
and, as of its date, has not included any untrue statement of a material fact
or omitted to state a material fact necessary to make the statements therein,
or necessary to make the statements therein, in the light of the circumstances
under which they were made, not misleading; and at the time the Registration
Statement became or becomes, as the case may be, effective and at all times
subsequent thereto up, to and on the Closing Date (hereinafter defined) and on
any later date on which Option Shares are to be purchased, (i) the Registration
Statement and the Prospectus, and any amendments or supplements thereto,
contained and will contain all material information required to be included
therein by the Act and the Rules and Regulations and will in all material
respects conform to the requirements of the Act and the Rules and Regulations,
and (ii) neither the Registration Statement nor the Prospectus, nor any
amendments or supplements thereto, will include any untrue statement of a
material fact or omit to state any material fact required to be stated therein
or necessary to make the statements therein, in the light of the circumstances
under which they were made, not misleading; provided, however, that none of the
representations and warranties contained in this subparagraph shall apply to
information contained in or omitted from the Registration

-2-

<PAGE> 3

Statement or the Prospectus or any such amendment or supplement in reliance
upon, and in conformity with, written information furnished to the Company by
any Underwriter specifically for inclusion therein.

(c) Each contract, agreement, instrument, lease, license or other
item required to be described in the Registration Statement or the Prospectuses
or filed as an exhibit to the Registration Statement has been so described or
filed, as the case may be.

(d) The Company and each of its Subsidiaries (as such term is
defined in Rule 405 under the Act) has been duly incorporated and is validly
existing as a corporation in good standing under the laws of the jurisdiction
of its organization, with full corporate power and authority to own, lease and
operate its properties and to conduct its business as described in the
Registration Statement; each of the Company and its Subsidiaries is duly
qualified to do business as a foreign corporation and is in good standing in
each jurisdiction in which the ownership or leasing of its properties or the
conduct of its business requires such qualification except where the failure to
be so qualified or to be in good standing would not have a material adverse
effect on the condition (financial or otherwise), earnings, operations,
business or business prospects of the Company and its Subsidiaries considered
as a whole; each of the Company and its Subsidiaries is in possession of and
operating in compliance with all authorizations, licenses, certificates,
consents, orders and permits from state, Federal and other regulatory
authorities which are material to the conduct of its business, all of which are
valid and in full force and effect; neither the Company nor its Subsidiaries is
in violation of its charter or bylaws or in default in the performance or
observance of any material obligation, agreement, covenant or condition
contained in any material indenture, mortgage, deed of trust, loan agreement,
bond, debenture, note agreement or other evidence of indebtedness, or any
material lease, contract, joint venture, or other agreement or instrument to
which it is a party or by which its property is bound or in violation of any
law, order, rule, regulation, writ, injunction, judgment or decree of any
government, governmental agency or body or court, domestic or foreign, of which
it has knowledge except such failures to comply as would not, individually or
in the aggregate, have a material adverse effect on the Company and its
Subsidiaries considered as a whole.

(e) The Company has full legal right, power and authority to enter
into this Agreement and perform the transactions contemplated hereby. This
Agreement and the Warrant Agreement (the "Warrant Agreement") by and between
the Company and the Underwriters have been duly authorized, executed and
delivered by the Company and are valid and binding agreements on the part of
the Company, enforceable in accordance with their respective terms, except as
rights to indemnification and contribution hereunder may be limited by
applicable law and except as the enforcement hereof may be limited by
applicable bankruptcy, insolvency, reorganization moratorium or other similar
laws relating to or affecting creditors' rights generally, or by general
equitable principles; the performance of this Agreement and the Warrant
Agreement and the consummation of the transactions herein and therein
contemplated will not result in a breach or violation of any of the terms and
provisions of, or constitute a default under, (i) any material indenture,
mortgage, deed of trust, loan agreement, bond, debenture, note agreement or
other evidence of indebtedness, or any material lease, contract, joint venture
or other agreement or instrument to which the Company is a party or by which
the property of the Company is bound including any licenses from third parties,
or (ii) the Certificate of Incorporation and Bylaws of the Company, or (iii)
any law, order, rule, regulation, writ, injunction, judgment or decree of any
government or governmental agency or body

-3-

<PAGE> 4
or court, domestic or foreign, having jurisdiction over the Company or over the
properties of the Company, except for breaches, violations or defaults that
individually or in the aggregate, would not have a material adverse effect on
the Company; and no consent, approval, authorization or order of any court or
governmental agency or body is required for the consummation of the transactions
herein contemplated, except such as may be required under the Act, the
Securities and Exchange Act of 1934, as amended (the "Exchange Act"), or under
state or other securities or Blue Sky laws, all of which requirements have been
satisfied in all material respects.

(f) Except as disclosed in the Registration Statement or the
Prospectus, there is no action, suit or proceeding before or by any court or
governmental agency or body, domestic or foreign, now pending, or, to the
knowledge of the Company, threatened, against or affecting the Company or its
Subsidiaries which (i) is required to be disclosed in the Registration
Statement or the Prospectus or which might result in any material adverse
change in the condition, financial or otherwise, or in the earnings, business
affairs or business prospects of the Company and its Subsidiaries considered as
one enterprise, or which might materially and adversely affect the properties
or assets thereof; or (ii) which might be expected to materially and adversely
affect the consummation of the transactions contemplated by this Agreement; all
pending legal or governmental proceedings to which the Company or its
Subsidiaries is a party or of which any of their respective properties or
assets is the subject which are not described in the Registration Statement,
including ordinary routine litigation incidental to the Company's business,
could not reasonably be expected to result in a material adverse change in the
condition, financial or otherwise, or the earnings, business affairs or
business properties of the Company and its Subsidiaries considered as one
enterprise; and there are no contracts or documents of the Company or its
Subsidiaries which are required to be described in the Registration Statement
or the Prospectus, or to be filed as exhibits thereto, by the Act or by the
Rules and Regulations which have not been accurately described in all material
respects and filed as exhibits to the Registration Statement. To the best of
the Company's knowledge, the contracts so described in the Prospectus are in
full force and effect on the date hereof, and neither the Company nor its
Subsidiaries is in breach of or default under, and to the Company's knowledge,
no other party is in material breach of or material default under, any of such
contracts.

(g) All outstanding shares of capital stock of the Company have
been duly authorized and validly issued and are fully paid and nonassessable,
have been issued in compliance with all Federal and state securities laws, were
not issued in violation of or subject to any preemptive rights or other rights
to subscribe for or purchase securities (other than such preemptive rights or
other rights to subscribe for or purchase securities as were fully complied
with or expressly waived or with respect to the violation of which the right to
make claim is barred by the applicable statute of limitations), and the
authorized and outstanding capital stock of the Company conforms in all
material respects to the statements relating thereto contained in the
Registration Statement and the Prospectus (and such statements correctly state
the substance of the instruments defining the capitalization of the Company);
the Firm Shares and the Option Shares to be purchased from the Company
hereunder have been duly authorized for issuance and sale to the Underwriters
pursuant to this Agreement and, when issued and delivered by

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<PAGE> 5

the Company against payment therefor in accordance with the terms of this
Agreement, will be duly and validly issued and fully paid and nonassessable;
the shares of Common Stock issuable under the warrant (the "Underwriters'
Warrant") to be granted to the Underwriters under the Warrant Agreement have
been duly authorized for issuance and sale to the Underwriters pursuant to this
Agreement and, when issued and delivered by the Company against payment
therefor in accordance with the terms of the Warrant Agreement, will be duly
and validly issued and fully paid and nonassessable; and no preemptive right,
co-sale right, registration right, right of first refusal or other similar
right of stockholders exists with respect to any of the Firm Shares, Option
Shares or shares of Common Stock issuable under the Underwriters' Warrant or
the issuance and sale thereof other than those that have been expressly waived
prior to the date hereof and those that will automatically expire upon the
consummation of the transactions contemplated on the Closing Date. No further
approval or authorization of any stockholder, the Board of Directors or others
is required for the issuance and sale or transfer of the Shares except as may
be required under the Act, the Exchange Act or under state or other securities
or Blue Sky laws. Except as disclosed in or contemplated by the Prospectus and
the financial statements of the Company (including the notes thereto) included
in the Prospectus, the Company has no outstanding options to purchase, or any
preemptive rights or other rights to subscribe for or to purchase, any
securities or obligations convertible into, or any contracts or commitments to
issue or sell, shares of its capital stock or any such options, rights,
convertible securities or obligations. The description of the Company's stock
option, stock bonus and other stock plans or arrangements, and the options or
other rights granted and exercised thereunder, set forth in the Prospectus
accurately and fairly presents the information required to be shown with
respect to such plans, arrangements, options and rights. The shares of Common
Stock reserved for issuance upon exercise of the Company's outstanding options
and warrants have been duly and validly authorized and are sufficient in number
to meet the exercise requirements of such options.

(h) Deloitte & Touche LLP, which has examined the financial
statements (together with related schedules and notes) of the Company filed with
the Commission as a part of the Registration Statement and which are included in
the Prospectus, are independent accountants within the meaning of the Act and
the Rules and Regulations; the audited financial statements of the Company,
together with the related schedules and notes, and the unaudited financial
information (other than pro forma information), forming part of the Registration
Statement and Prospectus, fairly present the financial position and the results
of operations of the Company at the respective dates and for the respective
periods to which they apply; and all audited financial statements, together with
the related schedules and notes, and the unaudited financial information (other
than pro forma information), filed with the Commission as part of the
Registration Statement, have been prepared in accordance with generally accepted
accounting principles consistently applied throughout the periods involved
except as may be otherwise stated therein. The selected and summary financial
and statistical data included in the Registration Statement present fairly the
information shown therein and have been compiled from the audited and unaudited
financial statements presented therein. No other financial statements or
schedules are required to be included in the Registration Statement.

(i) Since the respective dates as of which information is given in
the Registration Statement and the Prospectus, except as otherwise stated
therein, (i) there has been no material adverse change in the business,
properties, operations, condition (financial or otherwise) or in the earnings,
business affairs or business prospects of the Company and its Subsidiaries,
whether or not arising in the ordinary course of business, (ii) there have been
no transactions entered into by the Company other than those in the ordinary
course of business, which are material with respect to the Company, (iii) there
has been no obligation that is material to the Company, direct or contingent,
incurred by the Company or any Subsidiary, except obligations incurred in the
ordinary course of business, (iv) there has been no change in the capital stock
of the Company, (v) except for amounts

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<PAGE> 6

loaned by an affiliate of Ricky Naylor to the Company prior to the date of this
Agreement, there has been no change in the outstanding indebtedness of the
Company which is material to the Company, (vi) there has been no dividend or
distribution of any kind declared, paid or made by the Company on behalf of any
class of its respective capital stock, (vii) there has been no redemption,
purchase or acquisition or agreement to redeem, purchase or acquire shares of
Common Stock of the Company, or (viii) to the knowledge of the Company, there
has been no change in any Federal, state, or other laws, rules, or regulations
(or interpretations thereof) applicable to the business of the Company that
would have a material adverse effect on the Company, and, to the knowledge of
the Company, no such change is pending other than as described in the
Prospectus.

(j) Except as described in the Prospectus, (i) the Company and its
Subsidiaries have good title to all properties and assets described in the
Prospectus as owned by them, free and clear of all liens, charges, encumbrances
or restrictions of any kind, except those described in the Prospectus, or those
not material, singly or in the aggregate, to the business of the Company and
its Subsidiaries considered as a whole, (ii) the agreements to which the
Company is a party described in the Prospectus are valid agreements,
enforceable by the Company, except as the enforcement thereof may be limited by
applicable bankruptcy, insolvency, reorganization, moratorium or other similar
laws affecting creditors' rights generally or by general equitable principles,
and (iii) the Company has valid and enforceable leases for the properties
described in the Prospectus as leased by it except as enforcement may be
limited by applicable bankruptcy, insolvency, reorganization, moratorium or
other similar laws relating to or affecting creditors' rights generally or by
general equitable principles.

(k) All Federal, state, local and foreign tax returns required to
be filed by the Company or its Subsidiaries in any jurisdiction have been
filed, and all material taxes, including withholding taxes, penalties and
interest, assessments, fees and other charges due or claimed to be due from
such entities have been paid other than those being contested in good faith and
for which adequate reserves have been provided or those currently payable
without penalty or interest; and adequate charges, accruals and reserves have
been provided for in the financial statements referred to in Section 2(g) above
in respect of all Federal, state, local and foreign taxes for all periods as to
which the tax liability of the Company or its Subsidiaries has not been finally
determined or remains open to examination by applicable taxing authorities.

(l) No labor dispute with the employees of the Company or its
Subsidiaries exists or, to the knowledge of the Company, is imminent; and the
Company is not aware of any existing or imminent labor disturbance by the
employees of any of its principal suppliers, manufacturers, contractors or
customers which might be expected to result in any material adverse change in
the condition, financial or otherwise, or in the earnings, business affairs or
business prospects of the Company and its Subsidiaries considered as one
enterprise. No collective bargaining agreement exists with any of the Company's
employees and, to the Company's knowledge, no such agreement is imminent.

(m) The Company and its Subsidiaries own or possess, or can acquire
on reasonable terms, the patents, patent rights, licenses, inventions,
copyrights, know-how (including trade secrets and other unpatented and/or
unpatentable proprietary or confidential information, systems or procedures),
trademarks, service marks and trade names presently employed by them in

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<PAGE> 7

connection with the business now operated by them and neither the Company nor
its Subsidiaries has received any notice or is otherwise aware of any
infringement of or conflict with asserted rights of others with respect to any
patent or proprietary rights or of any facts or circumstances which would
render any patent and proprietary rights invalid or inadequate to protect the
interest of the Company or its Subsidiaries therein, and which infringement or
conflict (if the subject of any unfavorable decision, ruling or finding) or
invalidity or inadequacy singly or in the aggregate, would result in any
material adverse change in the condition, financial or otherwise, or in the
earnings, business affairs or business prospects of the Company and its
Subsidiaries considered as one enterprise.

(n) Except as set forth in the Prospectus, the Company and its
Subsidiaries are in compliance in all material respects with all applicable
laws, statutes, ordinances, rules or regulations, the enforcement of which,
individually or in the aggregate, would be reasonably expected to have a
material adverse effect on the condition, financial or otherwise, or the
earnings, business affairs or business prospects of the Company and its
Subsidiaries considered as one enterprise.

(o) The Common Stock has been approved for quotation on the
American Stock Exchange subject to official notice of issuance.

(p) The Company has been advised concerning the Investment Company
Act of 1940, as amended (the "1940 Act"), and the rules and regulations
thereunder, and has in the past conducted, and intends in the future to
conduct, its affairs in such a manner as to ensure that it will not become an
"investment company" within the meaning of the 1940 Act and such rules and
regulations.

(q) Except as otherwise agreed by Capital West or as disclosed in
the Prospectus, the Company has not distributed and will not distribute prior
to the Closing Date or on any date on which Option Shares are to be purchased,
as the case may be, any offering material in connection with the offering and
sale of the Shares other than the Prospectus, the Registration Statement and
other materials permitted by the Act.

(r) The Company has not at any time during the last five years (i)
made any unlawful contribution to any candidate for foreign office, or failed
to disclose fully any contribution in violation of law, or (ii) made any
payment to any Federal or state governmental officer or official, or other
person charged with similar public or quasi-public duties, other than payments
required or permitted by the laws of the United States or any jurisdiction
thereof.

(s) The Company has not taken and will not take, directly or
indirectly, any action designed to or that might be reasonably expected to
cause or result in stabilization or manipulation of the price of the Common
Stock to facilitate the sale or resale of the Shares. The Company has not
effected any sales of securities required to be disclosed in Item 26 of Form
SB-2 under the Act, other than as disclosed in the Registration Statement.

(t) Each officer and director of the Company, shareholders
acquiring Common Stock in exchange for their stock in the interconnect partners
identified in the Registration Statement and each beneficial owner of at least
5% of the outstanding shares of Common Stock and options and warrants to
purchase Common Stock outstanding prior to the effective date of the
Registration

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<PAGE> 8

Statement have agreed in writing that such persons will not, for a period
expiring 12 months after the effective date of the Registration Statement,
offer to sell, contract to sell, sell short, or otherwise sell or dispose of
any shares of Common Stock of the Company, any options or warrants to purchase
any shares of Common Stock of the Company, or any securities convertible into
or exchangeable for shares of the Common Stock owned directly by such person or
with respect to which such person has the power of disposition otherwise than
(i) as a gift or gifts, provided the donee or donees thereof agree to be bound
by this restriction or (ii) with the prior written consent of Capital West.
Messrs. Ricky Naylor, Larry Travis and each officer and director shall be
subject to a two (2) year lock-up.

(u) Except as described in the Registration Statement, (i) neither
the Company nor its Subsidiaries is in violation of any Federal, state, local
or foreign laws or regulations relating to pollution or protection of human
health, the environment (including, without limitation, ambient air, surface
water, groundwater, land surface or subsurface strata) or wildlife, including,
without limitation, laws and regulations relating to the release or threatened
release of chemicals, pollutants, contaminants, wastes, toxic substances,
hazardous substances, petroleum or petroleum products (collectively,
"Environmental Materials") or to the manufacture, processing, distribution,
use, treatment, storage, disposal, transport or handling of Environmental
Materials (collectively, the "Environmental Laws"), except such violations as
would not, singly or in the aggregate, have a material adverse effect on the
condition, financial or otherwise, or the earnings, business affairs or
business prospects of the Company and its Subsidiaries considered as one
enterprise, and (ii) to the best of the Company's knowledge, there are no
events or circumstances that could form the basis of an order for clean-up or
remediation, or an action, suit or proceeding by any private party or
governmental body or agency, against or affecting the Company or its
Subsidiaries relating to any Environmental Materials or the violation of any
Environmental Laws, which, singly or in the aggregate, could reasonably be
expected to have a material adverse effect on the condition, financial or
otherwise, or the earnings, business affairs or business prospects of the
Company and its Subsidiaries considered as one enterprise.

(v) The Company and its Subsidiaries maintain a system of internal
accounting controls sufficient to provide reasonable assurances that (i)
transactions are executed in accordance with management's general or specific
authorizations; (ii) transactions are recorded as necessary to permit
preparation of financial statements in conformity with generally accepted
accounting principles as in effect in the United States and to maintain asset
accountability; (iii) access to bank accounts is permitted only in accordance
with management's general or specific authorization; and (iv) the recorded
accountability for assets is compared with existing assets at reasonable
intervals and appropriate action is taken with respect to any differences.

(w) There are no outstanding loans, advances (except normal
advances for business expenses in the ordinary course of business) or
guarantees of indebtedness by the Company to or for the benefit of any of the
officers or directors of the Company or any of the members of the families of
any of them, except as disclosed in the Registration Statement and the
Prospectus. Neither the Company nor any employee or agent of the Company has
made any payment or transfer of any funds or assets of the Company or conferred
any personal benefit by use of the Company's assets, or received any funds,
assets or personal benefit in violation of any law, rule or regulation.

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<PAGE> 9

(x) On the Closing Date and upon delivery of the Option Shares, as
applicable, all transfer and other taxes (other than income taxes) that are
required to be paid in connection with the sale and transfer of the Shares to
the Underwriters will have been paid.

(y) The Company does not currently have and has never had any
pension plan subject to the provisions of the Employee Retirement Income
Security Act of 1974, as amended, including the regulations and published
interpretations thereunder ("ERISA"); no "reportable event" (as defined in
ERISA) has occurred with respect to any "pension plan" (as defined in ERISA)
for which the Company would have any liability, the Company has not incurred
and does not expect to incur liability under (i) Title IV of ERISA with respect
to termination of, or withdrawal from, any "pension plan" or (ii) Sections 412
or 4971 of the Internal Revenue Code of 1986, as amended, including the
regulations and published interpretations thereunder (the "Code"); and each
"pension plan" for which the Company would have any liability that is intended
to be qualified under Section 401(a) of the Code is so qualified in all
material respects and nothing has occurred, whether by action or by failure to
act, which would cause the loss of such qualification.

(z) The Company confirms as of the date hereof that it is in
compliance with all provisions of Section 517.075, Florida Statutes (Chapter
92-198, Laws of Florida) An Act Relating to Disclosure of Doing Business with
Cuba (the "Cuba Act"), and the Company further agrees that if it commences
engaging in business with the government of Cuba or with any person or
affiliate located in Cuba after the date the Registration Statement becomes or
has become effective with the Commission or the Florida Department of Banking
and Finance (the "Department"), whichever date is later, or if the information
reported or incorporated by reference in the Prospectus, if any, concerning the
Company's business in Cuba or with any person or affiliate located in Cuba
changes in any material way, the Company will provide the Department notice of
such business or change, as appropriate, in a form acceptable to the
Department.

(aa) Any certificate signed by any officer of the Company and
delivered to the Underwriters or to counsel for the Underwriters shall be
deemed a representation and warranty by the Company to each Underwriter as to
the matters covered thereby.

(bb) Except as may be set forth in the Prospectus, the Company has
not incurred any liability for a fee, commission, or other compensation on
account of the employment of a broker or finder in connection with the
transactions contemplated by the Underwriting Agreement.

(cc) The Company and each subsidiary is insured by insurers of
recognized financial responsibility against such losses and risks and in such
amounts as are prudent and customary in the businesses in which the Company and
the subsidiaries are engaged.

3. PURCHASE, SALE AND DELIVERY OF SHARES. On the basis of the
representations and warranties herein contained and subject to the terms and
conditions herein set forth, the Company agrees to sell to each Underwriter,
severally and not jointly, and each Underwriter, severally and not jointly,
agrees to purchase from the Company, respectively, at a purchase price per
share of $[PRICE PER SHARE] per Share, the number of Shares set forth in
Schedule A hereto (subject to adjustment as provided in Section 10).

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<PAGE> 10

Delivery of definitive certificates for the Firm Shares to be
purchased by the Underwriters pursuant to this Section 3 shall be made against
payment of the purchase price therefor by the Underwriters by certified or
official bank check in next day funds or by wire transfer, payable to the order
of the Company at the offices of Capital West Securities, Inc., 211 N.
Robinson, Suite 200, One Leadership Square, Oklahoma City, Oklahoma 73102, or
at such other place as shall be agreed upon by the Underwriters and the
Company, at 9:30 a.m. on the fourth business day following the first day that
Shares are traded (or at such time and date to which payments and delivery
shall have been postponed pursuant to Section 10 hereof), such time and date of
payment and delivery being herein called the "Closing Date." The certificates
for the Firm Shares to be so delivered will be made available to you at such
office or at such other location as you may reasonably request for checking at
least one business day prior to the Closing Date and will be in such names and
denominations as you may request, such request to be made at least two business
days prior to the Closing Date. If the Underwriters so elect, delivery of the
Shares may be made by credit through full fast transfer to the accounts at
Depository Trust Company designated by the Underwriters.

It is understood that Capital West, individually and not as
representative of the several Underwriters, may (but shall not be obligated to)
make payment of the purchase price on behalf of any Underwriter or Underwriters
whose check or checks shall not have been received by Capital West prior to the
Closing Date for the Firm Shares to be purchased by such Underwriter or
Underwriters. Any such payment by Capital West shall not relieve any such
Underwriter or Underwriters of any of its or their obligations hereunder.

After the Registration Statement becomes effective, the several
Underwriters intend to offer the Firm Shares to the public as set forth in the
Prospectus.

The information set forth in the last paragraph on the front cover
page (insofar as such information relates to the Underwriters) and under
"Underwriting" in any Preliminary Prospectus and in the final form of
Prospectus filed pursuant to Rule 424(b) constitutes the only information
furnished by the Underwriters to the Company for inclusion in any Preliminary
Prospectus, the Prospectus or the Registration Statement, and you, on behalf of
the Underwriters, represent and warrant to the Company that the statements made
therein do not include any untrue statement of a material fact or omit to state
a material fact required to be stated therein or necessary to make such
statements, in the light of the circumstances in which they were made, not
misleading.

4. FURTHER COVENANTS OF THE COMPANY. The Company covenants with the
several Underwriters as follows:

(a) The Company will use its best efforts to cause the Registration
Statement and any amendment thereof, if not effective at the time and date that
this Agreement is executed and delivered by the parties hereto, to become
effective as promptly as possible; it will notify you, promptly after it shall
receive notice thereof, of the time when the Registration Statement or any
subsequent amendment to the Registration Statement has become effective or any
supplement to the Prospectus has been filed; if the Company omitted information
from the Registration Statement at the time it was originally declared
effective in reliance upon Rule 430A(a) of the Rules and Regulations, the
Company will provide evidence satisfactory to you that the Prospectus contains
such information and has been filed, within the time period prescribed, with
the Commission pursuant to

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<PAGE> 11

subparagraph (1) or (4) of Rule 424(b) of the Rules and Regulations or as part
of a post-effective amendment to such Registration Statement as originally
declared effective which is declared effective by the Commission; if for any
reason the filing of the final form of Prospectus is required under Rule
424(b)(3) of the Rules and Regulations, it will provide evidence satisfactory
to you that the Prospectus contains such information and has been filed with
the Commission within the time period prescribed; it will notify you promptly
of any request by the Commission for the amending or supplementing of the
Registration Statement or Prospectus or for additional information; promptly
upon your request, it will prepare and file with the Commission any amendments
or supplements to the Registration Statement or Prospectus which, in the
opinion of counsel for the several Underwriters, may be necessary or advisable
in connection with the distribution of the Shares by the Underwriters; it will
promptly prepare and file with the Commission, and promptly notify you of the
filing of, any amendments or supplements to the Registration Statement or
Prospectus which may be necessary to correct any statements or omissions, if,
at any time when a prospectus relating to the Shares is required to be
delivered under the Act, any event shall have occurred as a result of which the
Prospectus or any other prospectus relating to the Shares as then in effect
would include any untrue statement of a material fact necessary to make the
statements therein, in the light of the circumstances under which they were
made, not misleading; in case any Underwriter is required to deliver a
prospectus nine months or more after the effective date of the Registration
Statement in connection with the sale of the Shares, it will prepare promptly
upon request, but at the expense of such Underwriter, such amendment or
amendments to the Registration Statement and such prospectus or prospectuses as
may be necessary to permit compliance with the requirements of Section 10(a)(3)
of the Act; and it will file no amendment or supplement to the Registration
Statement or Prospectus which shall not previously have been submitted to you a
reasonable time prior to the proposed filing thereof or to which you shall
reasonably object in writing, subject, however, to compliance with the Act, the
Rules and Regulations thereunder and the provisions of this Agreement.

(b) The Company will advise you, promptly after it shall receive
notice or obtain knowledge thereof of the issuance of any stop order by the
Commission suspending the effectiveness of the Registration Statement or of the
initiation or threat of any proceeding for that purpose; and it will promptly
use its best efforts to prevent the issuance of any stop order or to obtain its
withdrawal at the earliest possible moment if such stop order should be issued.

(c) The Company will cooperate with the Underwriters and
Underwriters' counsel in connection with their efforts to qualify the Shares
for offering and sale under the securities laws of such jurisdictions as you
may designate and to continue such qualifications in effect for so long as may
be required for purposes of the distribution of the Shares, except that the
Company shall not be required in connection therewith or as a condition thereof
to qualify as a foreign corporation or to execute a general consent to service
of process in any jurisdiction or to make any undertaking with respect to the
conduct of its business. In each jurisdiction in which the Shares shall have
been qualified as above provided, the Company will make and file such
statements and reports in each year as are or may be reasonably required by the
laws of such jurisdiction.

(d) The Company will furnish you, as soon as available, copies of
the Registration Statement (three of which will be signed and include all
exhibits), each Preliminary Prospectus, the Prospectus and any amendments or
supplements to such documents, including any prospectus

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<PAGE> 12

prepared to permit compliance with Section 10(a)(3) of the Act, all in such
quantities as you may from time to time reasonably request.

(e) The Company will make generally available to its stockholders
as soon as practicable, but in any event not later than the 45th day following
the end of the fiscal quarter first occurring after the first anniversary of
the effective date of the Registration Statement, an earnings statement (which
will be in reasonable detail but need not be audited) complying with the
provisions of Section 11(a) of the Act and covering a twelve-month period
beginning after the effective date of the Registration Statement.

(f) As long as the Company is a reporting company under the
Exchange Act, the Company will furnish to its stockholders, as soon as
practicable after the end of each respective period, annual reports (including
financial statements audited by independent certified public accountants) and
unaudited quarterly reports of operations for each of the first three quarters
of the fiscal year, and for a period of five years after the effective date of
the Registration Statement, the Company will furnish to the several
Underwriters hereunder, upon request (i) concurrently with furnishing such
reports to its stockholders, statements of operations of the Company for each
of the first three quarters in the form furnished to the Company's
stockholders; (ii) concurrently with furnishing to its stockholders, a balance
sheet of the Company as of the end of such fiscal year, together with
statements of operations, of stockholders' equity, and of cash flows of the
Company for such fiscal year, accompanied by a copy of the certificate or
report thereon of independent accountants; (iii) as soon as they are available,
copies of all reports and financial statements furnished to or filed with the
Commission, any securities exchange or the National Association of Securities
Dealers, Inc. ("NASD"); (v) every material press release and every material
news item or article in respect of the Company or its affairs which was
released or prepared by the Company (excluding, in each case customary
product-related press releases and articles); and (vi) any additional
information of a public nature concerning the Company, or its business which
you may reasonably request. During such five-year period, if the Company shall
have active subsidiaries, the foregoing financial statements shall be on a
consolidated basis to the extent that the accounts of the Company and its
Subsidiaries are consolidated, and shall be accompanied by similar financial
statements for any significant subsidiary which is not so consolidated. For a
period of five years from the date of the Registration Statement, the Company
will furnish to you and, upon request, to each of the other Underwriters, as
soon as available, a copy of each report of the Company mailed to holders of
the Common Stock or publicly filed with the Commission or any automated
quotation system or national securities exchange on which any class of
securities of the Company is listed.

(g) The Company will apply the net proceeds from the sale of the
Shares being sold by it in the manner set forth under the caption "Use of
Proceeds" in the Prospectus.

(h) The Company will maintain a transfer agent and, if necessary
under the jurisdiction of incorporation of the Company, a registrar (which may
be the same entity as the transfer agent) for its Common Stock.

(i) The Company shall comply with all provisions of all
undertakings contained in the Registration Statement.

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<PAGE> 13

(j) If the transactions contemplated hereby are not consummated by
reason of any failure, refusal or inability on the part of the Company to
perform any agreement on its part to be performed hereunder or to fulfill any
condition of the Underwriters' obligations hereunder, or if the Company shall
terminate this Agreement under Section 11(a), the Company will reimburse the
several Underwriters for all out-of-pocket accountable expenses (including fees
and disbursements of counsel for the several Underwriters) actually incurred by
the Underwriters in investigating, preparing to market or marketing the Shares.

(k) If at any time during the 90-day period after the Registration
Statement becomes effective, any rumor, publication or event relating to or
affecting the Company shall occur as a result of which in your opinion the
market price of the Common Stock has been or is likely to be materially
affected (regardless of whether such rumor, publication or event necessitates a
supplement to or amendment of the Prospectus), the Company will, after written
notice from you advising the Company to the effect set forth above, forthwith
prepare, consult with you concerning the substance of, and disseminate a press
release or other public statement, reasonably satisfactory to you, responding
to or commenting on such rumor, publication or event.

(l) For a period of 180 days after the date of this Agreement,
without the prior written consent of Capital West, the Company shall not,
directly or indirectly, offer, sell, contract to sell, pledge, grant any option
to purchase or otherwise dispose (or announce any offer, sale, contract of sale
or other disposition of), any shares of Common Stock or any other shares of
capital stock of the Company, or any securities convertible into or exercisable
or exchangeable for, or warrants, options or rights to purchase or acquire,
shares of Common Stock or any other shares of capital stock of the Company, or
any interest in the Common Stock (including derivative interests) other than
the Company's issuance and sale of Shares in accordance with the Underwriting
Agreement, and the issuance of stock options under, or the issuance of Common
Stock upon the exercise of stock options granted under, any stock option plan
described in the Prospectuses.

(m) During a period of 90 days from the effective date of the
Registration Statement, the Company will not file a registration statement
registering shares under any employee benefit plan.

(n) On the Closing Date the Company will sell to you, for $.001 per
share of Common Stock covered by each warrant, the Underwriters' Warrants to
purchase one share of Common Stock of the Company for each ten shares of the
Company's Common Stock which have been sold (or purchased by the Underwriters),
excluding any over-allotment shares, as set forth in the Prospectus. The
Underwriters' Warrants shall have the terms and be in the form filed as an
exhibit to the Registration Statement. At any time during the period commencing
12 months and ending five years after the effective date of the offering and at
the written request of the then holders of 51% of the Underwriters' Warrants
and the Common Stock of the Company issued upon the exercise of the
Underwriters' Warrants, and on one occasion, the Company will file with the
Commission and process to effectiveness a registration statement covering not
less than 51% of the shares of the Common Stock of the Company issuable and/or
issued upon the exercise of the Underwriters' Warrants. The Company must file a
registration statement only if the shares of Common Stock issuable under the
Underwriters' Warrants cannot be sold without registration under Rule 144
promulgated under the Act. The Company agrees to use its commercially
reasonable best efforts to

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<PAGE> 14

cause the filing to become effective. The costs of the filing of such
registration statement including but not limited to, legal (including legal
fees relating to clearance in the various states, limited however to such
states as may be reasonably requested), accounting and printing fees, shall be
borne by the Company but the Company shall not be responsible for the cost of
any separate counsel to review the registration statement on behalf of or to
advise the selling stockholders and shall not be responsible for the payment of
any underwriting discount or commissions with respect to such sale. Such
registration statement shall comply with any undertaking applicable to such
shares. If the Company otherwise than upon the request of the owners of the
Underwriters' Warrants or the shares of Common Stock issuable upon the exercise
thereof files a registration statement under the Act with respect to any of its
securities at any time (other than on Form S-4, S-8, or any other form that
does not provide for resales by selling security holders), the Company will
give such persons 30 days' notice of its intention to do so, and at their
written request given within 10 days of the receipt of such notice, will
include in such registration statement such number of such Shares as they may
specify, all at no cost to them (except for underwriting discounts and the fees
and expenses of counsel to such holders). In connection with any such
registration statement covering all or a part of such shares, the Company
agrees that it will covenant with the owners of such shares with respect to
such shares and the offering thereof, in customary form substantially to the
effect contained in this Section 4. If the offering pursuant to any
registration statement provided for herein is made through Underwriters, the
Company agrees to enter into an underwriting agreement in customary form with
such underwriters in which the Company and the underwriters and each person who
controls such underwriters within the meaning of the Act grant to each other
customary reciprocal indemnities against liabilities under the Act.

(o) As long as the Company is a reporting company under the
Exchange Act, the Company will comply with the Act, the Exchange Act, the rules
and regulations of the NASD and applicable state securities or Blue Sky laws so
as to permit the continuance of sales and dealings in the Common Stock under
the Act, the Exchange Act, the rules and regulations of the NASD, and
applicable state securities or Blue Sky laws, including the filing with the
NASD and the Commission of all reports required to be filed pursuant to the
applicable provisions of the rules and regulations of the NASD, the Act, and
the Exchange Act, and will deliver to the holders of the Common Stock all
reports required to be provided to such holders pursuant to the applicable
provisions of the rules and regulations of the NASD, the Act, the Exchange Act,
and applicable state securities or Blue Sky laws.

(p) For the one (1) year period from the Closing Date, Capital West
shall have the right to designate an observer, who shall be entitled to attend
all meetings of the Board of Directors and receive all correspondence and
communications sent by the Company to the members of the Board of Directors.

5. EXPENSES.

(a) The Company agrees with each Underwriter that the Company will
pay and bear all costs and expenses in connection with the preparation,
printing and filing of the Registration Statement (including financial
statements, schedules and exhibits), Preliminary Prospectuses and the
Prospectus and any amendments or supplements thereto; the printing of this
Agreement, the Preliminary Blue Sky Survey and any Supplemental Blue Sky
Survey, the Underwriters' Questionnaire and Power of Attorney and any
instruments related to any of the foregoing; the issuance and delivery

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<PAGE> 15

of the Shares hereunder to the Underwriters, including transfer taxes, if any,
and the cost of all certificates representing the Shares and transfer agents'
and registrars' fees; the fees and disbursements of counsel for the Company;
all fees and other charges of the Company's independent public accountants; the
cost of furnishing to the Underwriters copies of the Registration Statement
(including appropriate exhibits), Preliminary Prospectus and the Prospectus,
and any amendments or supplements to any of the foregoing; and all postage
costs incurred in connection with the qualification of the Shares under the
laws of such jurisdictions as you may designate; and all other expenses
directly incurred by the Company in connection with the performance of its
obligations hereunder.

(b) Capital West shall be entitled to receive from the Company, for
itself and not as representative of the Underwriters, a nonaccountable expense
allowance equal to two percent (2%) of the aggregate public offering price of
Shares sold to the Underwriters in connection with the Offering (out of which
the Capital West shall pay all filing fees, expenses and disbursements, except
for postage costs, incurred in connection with the qualification of the Shares
under the laws of such jurisdictions as you may designate including fees and
expenses of Underwriters' counsel), reduced by any amounts advanced by the
Company to Capital West pursuant to the terms of the Letter of Intent. Capital
West shall be entitled to withhold this allowance on the Closing Date.

6. CONDITIONS OF UNDERWRITERS' OBLIGATIONS. The obligations of the
Underwriters to purchase and pay for Shares as provided herein shall be subject
to the accuracy, as of the date hereof and the Closing Date and any later date
on which Option Shares are to be purchased (the "Option Closing Date"), as the
case may be, of the representations and warranties of the Company herein, to
the performance by the Company of its obligations hereunder, and to the
following additional conditions:

(a) The Registration Statement shall have become effective not
later than 5:30 p.m. on the date hereof, or with the consent of the
Underwriters, at a later time and date, not later, however, than 5:30 p.m. on
the first business day following the date hereof, or at such later time and
date as may be approved by a majority in interest of the Underwriters; and no
stop order suspending the effectiveness of the Registration Statement shall
have been issued under the Act or proceedings therefor initiated or threatened
by the Commission and any request on the part of the Commission for additional
information (to be included in the Registration Statement or the Prospectus or
otherwise) shall have been complied with to the reasonable satisfaction of
counsel to the Underwriters. If the Company has elected to rely upon Rule 430A
of the Rules and Regulations, the price of the Shares and any price-related
information previously omitted from the effective Registration Statement
pursuant to such Rule 430A shall have been transmitted to the Commission for
filing pursuant to Rule 424(b) of the Rules and Regulations within the
prescribed time period, and prior to the Closing Date the Company shall have
provided evidence satisfactory to the Underwriters of such timely filing, or a
post-effective amendment providing such information shall have been promptly
filed and declared effective in accordance with the requirements of Rule 430A
of the Rules and Regulations. Qualification under the securities laws of such
states as you may deem necessary to the success of the underwriting of the
issue and sale of the Shares upon the terms and conditions set forth in this
Agreement or contemplated by this Agreement and containing no provisions
unacceptable to you will have been secured, and no stop order (or the
equivalent thereof) will be in effect denying or suspending effectiveness of
such qualification, nor will any stop order proceedings

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<PAGE> 16

(or the equivalent thereof) with respect thereto be instituted or pending or
threatened under such laws.

(b) At the Closing Date and the Option Closing Date, if any,
counsel for the Underwriters shall have been furnished with such documents and
opinions as they may require for the purpose of enabling them to pass upon the
issuance and sale of the Shares as contemplated herein and related proceedings
or in order to evidence the accuracy of any of the representations and
warranties, or the fulfillment of any of the conditions, herein contained; and
all proceedings taken by the Company in connection with the issuance and sale
of the Shares as herein contemplated shall be satisfactory in form and
substance to the Underwriters and counsel for the Underwriters.

(c) There shall not have been, since the date hereof or since the
respective dates as of which information is given in the Registration Statement
and the Prospectus, any change in the condition (financial or otherwise),
earnings, operations, business affairs or business prospects of the Company and
its Subsidiaries considered as one enterprise, whether or not arising in the
ordinary course of business which, in your sole judgment, is material and
adverse and that makes it, in your sole judgment, impracticable or inadvisable
to proceed with the public offering of the Shares as contemplated by the
Prospectus, and the Underwriters shall have received a certificate of the
President or Vice President of the Company and of the chief financial or chief
accounting officer of the Company, dated as of the Closing Date, to the effect
that (i) there has been no such material adverse change, (ii) the
representations and warranties in Section 2 hereof are true and correct with
the same force and effect as though expressly made at and as of the Closing
Date, (iii) the Company has complied with all agreements and satisfied all
conditions on its part to be performed or satisfied at or prior to the Closing
Date, and (iv) no stop order suspending the effectiveness of the Registration
Statement has been issued and no proceedings for that purpose have been
initiated or threatened by the Commission or any Blue Sky jurisdiction.

(d) At the Closing Date the Underwriters shall have received:

(1) The opinion, dated as of the Closing Date of McAfee & Taft,
counsel for the Company, in form and substance satisfactory to counsel for the
Underwriters, to the effect that:

(i) The Company has been duly incorporated and is validly
existing as a corporation in good standing under the laws of the State of
Oklahoma.

(ii) The Company has corporate power and authority to own,
lease and operate its properties and to conduct its business as described in
the Registration Statement and the Prospectus and to enter into and perform its
obligations under this Agreement and to issue, sell and deliver to the
Underwriters the Firm Shares or the Option Shares, as the case may be, to be
issued and sold by it hereunder.

(iii) The Company is duly qualified to do business as a foreign
corporation and is in good standing in the State of Oklahoma, and to the best
of its knowledge and based upon the representations of the officers of the
Company is not required to be qualified to do business as a foreign corporation
in any other jurisdiction.

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<PAGE> 17

(iv) At the Closing Date, after giving effect to the sale of
the Firm Shares, the authorized capital stock of the Company is as set forth in
the Prospectus under the caption "Capitalization" as of the dates stated
therein; the issued and outstanding shares of Common Stock have been duly
authorized and validly issued and are fully paid and nonassessable and have not
been issued in violation of any preemptive right contained in the Certificate
of Incorporation or Bylaws of the Company or, to such counsel's knowledge, any
co-sale right, registration right, right of first refusal or other similar
right (other than such preemptive rights or other rights to subscribe for or
purchase securities as were fully complied with or expressly waived or with
respect to the violation of which the right to make a claim is barred by the
applicable statute of limitation).

(v) The Firm Shares and the Option Shares, as the case may be,
to be purchased from the Company hereunder have been duly authorized for
issuance and sale to the Underwriters pursuant to this Agreement and, when
issued and delivered by the Company pursuant to this Agreement against payment
therefor in accordance with the terms hereof, will be validly issued and fully
paid and nonassessable, and will not be issued in violation of any preemptive
right under the Certificate of Incorporation or Bylaws of the Company or, to
such counsel's knowledge, any co-sale right, right of first refusal or other
similar right and the stockholders of the Company have no preemptive right
under the Certificate of Incorporation or Bylaws of the Company or, to such
counsel's knowledge, other rights to purchase any of the Shares; the shares of
Common Stock reserved for issuance upon the exercise of the Underwriters'
Warrants have been duly and validly authorized and are sufficient in number to
meet the exercise requirements thereof, and such shares of Common Stock, when
issued upon exercise, will be duly and validly issued, fully paid (assuming
exercise in accordance with the Warrant Agreement and receipt by the Company of
the exercise price thereof) and nonassessable; the stockholders of the Company
have no preemptive right under the Certificate of Incorporation or Bylaws of
the Company or, to such counsel's knowledge, other rights to purchase any of
the Shares; and the shares of Common Stock reserved for issuance upon the
exercise of the Company's outstanding options have been duly and validly
authorized and are sufficient in number to meet the exercise requirements of
such options, and such shares of Common Stock, when issued upon exercise, will
be duly and validly issued, fully paid (assuming exercise in accordance with
the governing instruments therefor and receipt by the Company of the exercise
price thereof) and nonassessable.

(vi) The issuance of the Shares to be purchased hereunder is
not subject to preemptive or other similar rights arising by operation of law
or, to the best of their knowledge and information, otherwise.

(vii) Each Subsidiary has been duly incorporated and is validly
existing as a corporation and is in good standing under the laws of the
jurisdiction of its incorporation, has full corporate power and authority to
own, lease and operate its properties and to conduct it business as described
in the Registration Statement, and is duly qualified as a foreign corporation
to transact business and is in good standing in the State of Oklahoma, and to
the best of its knowledge and based upon the representations of the officers of
the Company any Subsidiary is not required to be qualified to do business as a
foreign corporation in any other jurisdiction; all of the issued and
outstanding capital stock of such Subsidiary have been duly authorized and
validly issued, is fully paid and nonassessable and, to the best of their
knowledge and information, is owned by the Company directly

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<PAGE> 18

or through subsidiaries, free and clear of any security interest, mortgage,
pledge, lien, encumbrance, claim or equity.

(viii) This Agreement and the Warrant Agreement have been duly
authorized by all necessary corporate action on the part of the Company and
have been duly executed and delivered by the Company and assuming due
authorization, execution and delivery by the Underwriters, are valid and
binding agreements of the Company, except insofar as indemnification and
contribution provisions may be limited by applicable law or equitable
principles, and except as enforceability may be limited by bankruptcy,
insolvency, reorganization, moratorium or similar laws affecting creditors'
rights generally or any general equitable principles;

(ix) The Registration Statement has been declared effective
under the Act; any required filing of the Prospectus pursuant to Rule 424(b)
has been made in the manner and within the time period required by Rule 424(b)
and, to the best of their knowledge and information, no stop order suspending
the effectiveness of the Registration Statement has been issued under the Act
or proceedings therefor have been initiated or are pending or threatened by the
Commission.

(x) The Registration Statement, Prospectus and each amendment
or supplement to the Registration Statement and Prospectus, as of their
respective effective or issue dates (other than the financial statements and
supporting schedules included therein, as to which no opinion need be rendered)
complied as to form in all material respects with the requirements of the Act
and the applicable Rules and Regulations.

(xi) The terms and provisions of the capital stock of the
Company conform in all material respects to the description thereof contained
in the Prospectus under the caption "Description of Securities";

(xii) The information in the Prospectus under the caption
"Description of Securities" to the extent that they constitute matters of law
or legal conclusions, has been reviewed by such counsel and accurately and
fairly summarizes in such counsel's opinion the matters described therein and
to the knowledge of such counsel, there are no outstanding options, warrants,
convertible securities, or other rights to acquire from the Company any capital
stock, except as described in the Registration Statement; in addition, the
forms of certificates evidencing the Company stock comply with Oklahoma law;

(xiii) To the best of their knowledge and information, except
as set forth in the Prospectus, there is not pending or threatened any action,
suit, proceeding, inquiry or investigation, to which the Company or its
Subsidiaries is a party, or to which the property of the Company or its
Subsidiaries is subject, before or brought by any court or government agency or
body, which might reasonably be expected to result in any material adverse
change in the condition, financial or otherwise, or in the earnings, business
affairs or business prospects of the Company and its Subsidiaries considered as
one enterprise, or which might reasonably be expected to materially and
adversely affect the properties or assets thereof or the consummation of this
Agreement or the performance by the Company of its obligations hereunder; and
all pending legal or governmental proceedings to which the Company or its
Subsidiaries is a party or that affect any of their respective properties that
are not described in the Prospectus, including ordinary routine litigation
incidental to

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<PAGE> 19

the business, could not reasonably be expected to result in a material adverse
change in the condition, financial or otherwise, or in the earnings, business
affairs or business prospects of the Company and its Subsidiaries considered as
one enterprise.

(xiv) The information in the Prospectus under the captions
"Business - Legal Proceedings" and "- Property", "Certain Relationships and
Related Transactions" and "Description of Common Stock" in the Prospectus and
Items 24 and 26 of Part II of the Registration Statement to the extent that
such items constitute matter of law, summaries of legal matters, documents or
proceedings, or legal conclusions, has been reviewed by them and is correct in
all material respects, and there are no legal or governmental actions, suits or
proceedings pending or threatened against the Company or its Subsidiaries that
are required to be described in the Prospectus are not described as required by
the Act or the applicable Rules and Regulations.

(xv) All descriptions in the Prospectus of contracts and other
documents in the Prospectus are accurate in all material respects; to the best
of their knowledge and information, there are no agreements, no contracts,
indentures, mortgages, loan agreements, notes, leases or other instrument
required to be described or referred to in the Registration Statement or to be
filed as exhibits thereto other than those described or referred to therein or
filed as exhibits thereto, the descriptions thereof or references thereto are
correct in all material respects, and to the best of counsel's knowledge and
information, the Company is not in default in the due performance or observance
of any material obligation, agreement, covenant or condition contained in any
contract, indenture, mortgage, loan agreement, note, lease or other instrument
so described, referred to or filed as exhibits thereto.

(xvi) No authorization, approval, consent or order of any court
or governmental authority or agency (other than under the Act or the Rules and
Regulations, which have been obtained, or as may be required under the
securities or Blue Sky laws of the various states) is required in connection
with the due authorization, execution and delivery of this Agreement or for the
offering, issuance or sale of the Shares to the Underwriters; and the
execution, delivery and performance of this Agreement and the consummation of
the transactions contemplated herein and compliance by the Company with its
obligations hereunder (other than performance of the Company's indemnification
and contribution obligations hereunder, concerning which no opinion need be
expressed) will not, whether with or without the giving of notice or lapse of
time or both, conflict with or constitute a breach or violation of, or default
under, or result in the creation or imposition of any lien, charge or
encumbrance upon any property or assets of the Company or its Subsidiaries
pursuant to any material contract, indenture, mortgage, loan agreement, note,
lease or other instrument to which the Company has knowledge and to which the
Company or its Subsidiaries is a party or by which it or any of them may be
bound, or to which any of the property or assets of the Company or its
Subsidiaries is subject, nor will such action result in any violation of the
provisions of the Certificate of Incorporation or Bylaws of the Company, or any
applicable law, administrative regulation or court decree, provided, however,
no opinion need be rendered concerning state securities or Blue Sky laws.

(xvii) To the best of such counsel's knowledge and information,
with the exception of the Underwriters' Warrants, no holder of any security of
the Company has any right to require registration of any shares of Common Stock
or any other security of the Company and, except

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<PAGE> 20

as set forth in the Registration Statement and Prospectus, all holders of
securities of the Company having rights to registration of such shares of
Common Stock, or other securities, because of the filing of the Registration
Statement by the Company have, with respect to the offering contemplated
thereby, waived such rights or such rights have expired by reason of lapse of
time following notification of the Company's intent to file the Registration
Statement, or have included securities in the Registration Statement pursuant
to the exercise of such rights.

(xviii) The Company is not an "investment company" or an entity
"controlled" by an "investment company" as such terms are defined in the 1940
Act.

(xix) To the best of such counsel's knowledge and information,
neither the Company nor its Subsidiaries are in violation of their charter or
by-laws.

In rendering such opinion, such counsel may rely as to matters of
fact (but not as to legal conclusions), to the extent they deem proper, on
certificates of responsible officers of the Company and public officials. Such
opinion shall not state that it is to be governed or qualified by, or that it
is otherwise subject to, any treatise, written policy or other document
relating to legal opinions, including with limitation, the Legal Opinion Accord
of the ABA Section of Business Law (1991).

In addition to their opinion required by subsection (d)(1) of this
Section, McAfee & Taft shall additionally state that nothing has come to their
attention that would lead them to believe that the Registration Statement, at
the time it became effective, contained an untrue statement of a material fact
or omitted to state a material fact required to be stated therein or necessary
to make the statements therein not misleading or that the Prospectus, at the
effective date of the Registration Statement (unless the term "Prospectus"
refers to a prospectus which has been provided to the Underwriters by the
Company for use in connection with the offering of the Shares which differs
from the Prospectus declared effective by the Commission, in which case at the
time it is first provided to the Underwriters for such use) or at the Closing
Date, included an untrue statement of a material fact or omitted to state a
material fact necessary in order to make the statements therein, in the light
of the circumstances under which they were made, not misleading. Such statement
may state that such counsel does not assume any responsibility for the
accuracy, completeness or fairness of the statements contained in the
Registration Statement and the Prospectus except as otherwise expressly
provided in such opinion, and such counsel need express no opinion or belief as
to the financial statements, schedules, and other financial or statistical data
included in the Registration Statement or Prospectus.

(2) The opinion, dated as of Closing Date, of Robertson &
Williams, Inc., counsel for the Underwriters, in form and substance
satisfactory to you, with respect to the sufficiency of all such corporate
proceedings and other legal matters relating to this Agreement and the
transactions contemplated hereby as you may reasonably require, and the Company
shall have furnished to such counsel such papers, opinions and information as
they request to enable them to pass upon such matters.

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<PAGE> 21

(e) At the time of the execution of this Agreement, the
Underwriters shall have received from Deloitte & Touche LLP a letter dated such
date, in form and substance satisfactory to the Underwriters, to the effect
that:

(1) they are independent public accountants with respect to the
Company, those companies identified in the Prospectus as having been audited by
them for the periods shown and their Subsidiaries within the meaning of the Act
and the Rules and Regulations;

(2) it is their opinion that the consolidated balance sheet
included in the Registration Statement and covered by their opinion therein
complies as to form in all material respects with the applicable accounting
requirements of the Act and the Rules and Regulations;

(3) based upon limited procedures set forth in detail in such
letter, nothing has come to their attention which causes them to believe that,
at a specified date not more than three days prior to the date of this
Agreement, (A) the unaudited consolidated balance sheet of the Company and its
Subsidiaries included in the Registration Statement does not comply as to form
in all material respects with the applicable accounting requirements of the Act
and the Rules and Regulations or is not presented in conformity with generally
accepted accounting principles applied on a basis substantially consistent with
that of the audited financial statements included in the Registration
Statement, or (B) at a specified date not more than three days prior to the
date of this Agreement, there has been any change in the capital stock of the
Company or any increase in the combined long term debt of the Company and its
Subsidiaries or any decrease in combined net current assets or net assets as
compared with the amounts shown in the December 31, 1998 balance sheet included
in the Registration Statement or, during the period from December 31, 1998 to a
specified date not more than three days prior to the date of this Agreement,
there were any decreases, as compared with the corresponding period in the
preceding year, in combined revenues, net income or net income per share of the
Company and its Subsidiaries, except in all instances for changes, increases or
decreases which the Registration Statement and the Prospectus disclose have
occurred or may occur;

(4) in addition to the examination referred to in their opinion
and the limited procedures referred to in clause (3) above, they have carried
out certain specified procedures, not constituting an audit, with respect to
certain amounts, percentages and financial information which are included in
the Registration Statement and Prospectus and which are specified by the
Underwriters, and have found such amounts, percentages and financial
information to be in agreement with the relevant accounting, financial and
other records of the Company, those companies identified in the Prospectus as
having been audited by them for the periods shown and its Subsidiaries
identified in such letter; and

(5) they have compared the information in the Prospectus under
selected captions with the disclosure requirements of Regulation S-B and on the
basis of limited procedures specified in such letter nothing came to their
attention as a result of the foregoing procedures that caused them to believe
that this information does not conform in all material respects with the
disclosure requirements of Item 402 of Regulation S-B.

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<PAGE> 22

(f) At the Closing Date, the Underwriters shall have received from
Deloitte & Touche LLP a letter, dated as of the Closing Date, to the effect
that they reaffirm the statements made in the letter furnished pursuant to
subsection (e) of this Section 6, except that the specified date referred to
shall be a date not more than three days prior to the Closing Date and, if the
Company has elected to rely on Rule 430A of the 1933 Act Regulations, to the
further effect that they have carried out procedures as specified in clause (4)
of subsection (e) of this Section 6 with respect to certain amounts,
percentages and financial information specified by the Underwriters and deemed
to be a part of the Registration Statement pursuant to Rule 430(A)(b) and have
found such amounts, percentages and financial information to be in agreement
with the records specified in such clause (4).

(g) At the time of the execution of this Agreement, the
Underwriters shall have received from Saxon & Knoll, P.C. a letter dated such
date, in form and substance satisfactory to the Underwriters, to the effect
that:

(1) they are independent public accountants with respect to
those companies identified in the Prospectus as having been audited by them for
the periods shown and any Subsidiaries within the meaning of the Act and the
Rules and Regulations;

(3) based upon limited procedures set forth in detail in such
letter, nothing has come to their attention which causes them to believe that,
at a specified date not more than three days prior to the date of this
Agreement, (A) the unaudited consolidated balance sheet of those companies
identified in the Prospectus as having been audited by them for the periods
shown included in the Registration Statement does not comply as to form in all
material respects with the applicable accounting requirements of the Act and
the Rules and Regulations or is not presented in conformity with generally
accepted accounting principles applied on a basis substantially consistent with
that of the audited financial statements included in the Registration
Statement, or (B) at a specified date not more than three days prior to the
date of this Agreement, there has been any change in the capital stock of said
companies or any increase in the combined long term debt of said companies or
any decrease in combined net current assets or net assets as compared with the
amounts shown in the December 31, 1998 balance sheet included in the
Registration Statement or, during the period from December 31, 1998 to a
specified date not more than three days prior to the date of this Agreement,
there were any decreases, as compared with the corresponding period in the
preceding year, in combined revenues, net income or net income per share of tho
companies, except in all instances for changes, increases or decreases which
the Registration Statement and the Prospectus disclose have occurred or may
occur;

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<PAGE> 23

with the relevant accounting, financial and other records of those companies
identified in such letter; and

(h) At the Closing Date, the Underwriters shall have received from
Saxon & Knoll, P.C. a letter, dated as of the Closing Date, to the effect that
they reaffirm the statements made in the letter furnished pursuant to
subsection (e) of this Section 6, except that the specified date referred to
shall be a date not more than three days prior to the Closing Date and, if the
Company has elected to rely on Rule 430A of the 1933 Act Regulations, to the
further effect that they have carried out procedures as specified in clause (4)
of subsection (e) of this Section 6 with respect to certain amounts,
percentages and financial information specified by the Underwriters and deemed
to be a part of the Registration Statement pursuant to Rule 430(A)(b) and have
found such amounts, percentages and financial information to be in agreement
with the records specified in such clause (4).

(i) At the time of the execution of this Agreement, the
Underwriters shall have received from Hunter, Atkins & Russell, PLC a letter
dated such date, in form and substance satisfactory to the Underwriters, to the
effect that:

(1) they are independent public accountants with respect to
Commercial Telecom Systems, Inc., and its Subsidiaries within the meaning of
the Act and the Rules and Regulations;

(3) based upon limited procedures set forth in detail in such
letter, nothing has come to their attention which causes them to believe that,
at a specified date not more than three days prior to the date of this
Agreement, (A) the unaudited consolidated balance sheet of Commercial Telecom
Systems, Inc. included in the Registration Statement does not comply as to form
in all material respects with the applicable accounting requirements of the Act
and the Rules and Regulations or is not presented in conformity with generally
accepted accounting principles applied on a basis substantially consistent with
that of the audited financial statements included in the Registration
Statement, or (B) at a specified date not more than three days prior to the
date of this Agreement, there has been any change in the capital stock of
Commercial Telecom Systems, Inc. or any increase in the combined long term debt
of Commercial Telecom Systems, Inc. or any decrease in combined net current
assets or net assets as compared with the amounts shown in the December 31,
1998 balance sheet included in the Registration Statement or, during the period
from December 31, 1998 to a specified date not more than three days prior to
the date of this Agreement, there were any decreases, as compared with the
corresponding period in the preceding year, in combined revenues, net income or
net income per share of Commercial Telecom Systems, Inc., except in all

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<PAGE> 24

instances for changes, increases or decreases which the Registration Statement
and the Prospectus disclose have occurred or may occur;

(4) in addition to the examination referred to in their opinion
and the limited procedures referred to in clause (3) above, they have carried
out certain specified procedures, not constituting an audit, with respect to
certain amounts, percentages and financial information which are included in
the Registration Statement and Prospectus and which are specified by the
Underwriters, and have found such amounts, percentages and financial
information to be in agreement with the relevant accounting, financial and
other records of Commercial Telecom Systems, Inc. identified in such letter;
and

(j) At the Closing Date, the Underwriters shall have received from
Hunter, Atkins & Russell, PLC a letter, dated as of the Closing Date, to the
effect that they reaffirm the statements made in the letter furnished pursuant
to subsection (e) of this Section 6, except that the specified date referred to
shall be a date not more than three days prior to the Closing Date and, if the
Company has elected to rely on Rule 430A of the 1933 Act Regulations, to the
further effect that they have carried out procedures as specified in clause (4)
of subsection (e) of this Section 6 with respect to certain amounts,
percentages and financial information specified by the Underwriters and deemed
to be a part of the Registration Statement pursuant to Rule 430(A)(b) and have
found such amounts, percentages and financial information to be in agreement
with the records specified in such clause (4).

(k) At the Closing Date, the Common Stock shall have been approved
for listing on the American Stock Exchange.

(l) In the event that the Underwriters exercise their option
provided in Section 7 hereof to purchase all or any portion of the Option
Shares, the representations and warranties of the Company contained herein and
the statements in any certificates furnished by the Company hereunder shall be
true and correct as of the Option Closing Date and, at the Option Closing Date,
the Underwriters shall have received:

(1) A certificate, dated the Option Closing Date, of the
President or a Vice President of the Company and of the Chief
Financial or Chief Accounting Officer of the Company confirming that
the certificate delivered at the Closing Date pursuant to Section 5(c)
hereof remains true and correct as of the Option Closing Date (except
that all references in such Section to "Closing Date" shall be deemed
to refer to the "Option Closing Date").

(2) The opinions of McAfee & Taft, counsel for the Company, in
form and substance satisfactory to counsel for the Underwriters, dated
the Option Closing Date, relating to the Option Shares and otherwise
to the same effect as the opinion required by

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<PAGE> 25

Section 5(b)(1) hereof (except that all references in such Section to
"Closing Date" shall be deemed to refer to the "Option Closing Date").

(3) The opinion of Robertson & Williams, Inc., counsel for the
Underwriters, dated the Option Closing Date, relating to the Option
Shares to be purchased on the Option Closing Date and otherwise to the
same effect as the opinion required by Section 5(b)(2) hereof (except
that all references in such Section to "Closing Date" shall be deemed
to refer to the "Option Closing Date").

(4) A letter from Deloitte & Touche LLP in form and substance
satisfactory to the Underwriters and dated the Option Closing Date,
substantially the same in form and substance as the letter furnished
to the Underwriters pursuant to Section 6(e) hereof, except that the
"specified date" in the letter furnished pursuant to this Section
6(l)(4) shall be a date not more than three days prior to the Option
Closing Date.

(5) A letter from Saxon & Knoll, P.C. in form and substance
satisfactory to the Underwriters and dated the Option Closing Date,
substantially the same in form and substance as the letter furnished
to the Underwriters pursuant to Section 6(g) hereof, except that the
"specified date" in the letter furnished pursuant to this Section
6(l)(5) shall be a date not more than three days prior to the Option
Closing Date.

(6) A letter from Hunter, Atkins & Russell, PLC in form and
substance satisfactory to the Underwriters and dated the Option
Closing Date, substantially the same in form and substance as the
letter furnished to the Underwriters pursuant to Section 6(i) hereof,
except that the "specified date" in the letter furnished pursuant to
this Section 6(l)(6) shall be a date not more than three days prior to
the Option Closing Date.

(m) The Company and the Underwriters shall have entered into the
Warrant Agreement and the Company shall have sold to the Underwriters the
Underwriters' Warrants, which shall be in the form attached as an exhibit to
the Warrant Agreement.

If any condition specified in this Section shall not have been
fulfilled when and as required to be fulfilled, this Agreement may be
terminated by Capital West, as representative of the Underwriters, by notice to
the Company at any time at or prior to Closing Date, and such termination shall
be without liability of any party to any other party except as provided in
Section 4 and except that Sections 4(i) and 8 shall survive any such
termination and remain in full force and effect.

7. OPTION SHARES.

(a) On the basis of the representations and warranties herein
contained, but subject to the terms and conditions herein set forth, the
Company hereby grants to the several Underwriters, for the purpose of covering
over-allotments in connection with the distribution and sale of the Firm Shares
only, a non-transferable option to purchase up to an aggregate 240,000 Option
Shares at the purchase price per share for the Firm Shares set forth in Section
3 hereof. Such option may be exercised by Capital West on behalf of the several
Underwriters on one occasion in whole or in part during the period of 45
business days from and after the date on which the Firm Shares are initially

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<PAGE> 26

offered to the public, by giving notice to the Company. The number of Option
Shares to be purchased by each Underwriter upon the exercise of such option
shall be the same proportion of the total number of Option Shares to be
purchased by the several Underwriters pursuant to the exercise of such option
as the number of Firm Shares purchased by such Underwriter (set forth in
Schedule A hereto) bears to the total number of Firm Shares purchased by the
several Underwriters (set forth in Schedule A hereto), adjusted by the
Underwriters in such manner as to avoid fractional shares.

Delivery of definitive certificates for the Option Shares to be
purchased by the several Underwriters pursuant to the exercise of the option
granted by this Section 7 shall be made against payment of the purchase price
therefor by the several Underwriters by certified or official bank check or
checks drawn in same day funds, payable to the order of the Company. Such
delivery and payment shall take place at the offices of Capital West
Securities, Inc., 211 N. Robinson, Suite 200, Oklahoma City, Oklahoma 73102 or
at such other place as may be agreed upon between the Underwriters and the
Company on the Closing Date, if written notice of the exercise of such option
is received by the Company not later than three full business days prior to the
Closing Date.

The certificates for the Options Shares so to be delivered will be
made available to you at such office or other location including, without
limitation, in Oklahoma City, as you may reasonably request for checking at
least two full business days prior to the date of payment and delivery and will
be in such names and denominations as you may request, such request to be made
at least three full days prior to such date of payment and delivery. If the
Underwriters so elect, delivery of the Shares may be made by credit through
full fast transfer to the accounts at Depository Trust Company by the
Underwriters.

It is understood that Capital West, individually, and not as the
representative of the Underwriters, may (but shall not be obligated to) make
payment of the purchase price on behalf of any Underwriter or Underwriters
whose check or checks shall not have been received by you prior to the date of
payment and delivery for the Option Shares to be purchased by such Underwriter
or Underwriters. Any such payment by Capital West shall not relieve any
Underwriter of any of its or their obligations hereunder.

(b) Upon exercise of any option provided for in Section 7(a) hereof
the obligations of the Underwriters to purchase such Option Shares will be
subject (as of the date hereof and as of the date of payment for such Option
Shares) to the accuracy of and compliance with the representations and
warranties of the Company herein, to the accuracy of the statements of the
Company and officers of the Company made pursuant to the provisions hereof, to
the performance by the Company of their respective obligations hereunder, and
to the condition that all proceedings taken at or prior to the payment date in
connection with the sale and transfer of such Option Shares shall be
satisfactory in form and substance to you and to Underwriters' counsel, and you
shall have been furnished with all such documents, certificates and opinions as
you may reasonably request in order to evidence the accuracy and completeness
of any of the representations, warranties or statements, the performance of any
of the covenants of the Company or the compliance with any of the conditions
herein contained.

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<PAGE> 27

8. INDEMNIFICATION AND CONTRIBUTION.

(a) The Company agrees to indemnify and hold harmless each
Underwriter against any losses, claims, damages or liabilities, joint or
several, as incurred, to which such Underwriter may become subject under the
Act or otherwise, insofar as such losses, claims, damages or liabilities (or
actions in respect thereof) arise out of or are based upon (i) any breach of
any representation, warranty, agreement or covenant of the Company herein
contained, or (ii) any untrue statement or alleged untrue statement made by the
Company in Section 2 hereof, or (iii) any untrue statement or alleged untrue
statement of a material fact contained (A) in the Registration Statement, any
Preliminary Prospectus, the Prospectus or any amendment or supplement thereto,
or (B) in any blue sky application or other document executed by the Company
specifically for that purpose or based upon written information furnished by
the Company filed in any state or other jurisdiction in order to qualify any or
all of the Shares under the securities laws thereof (any such application,
documents or information being hereinafter called a "Blue Sky Application"), or
(iv) the omission or alleged omission to state in the Registration Statement or
any amendment thereto a material fact required to be stated therein or
necessary to make the statements therein not misleading, or the omission or
alleged omission to state in any Preliminary Prospectus, the Prospectus or any
supplement thereto or in any Blue Sky Application a material fact required to
be stated therein or necessary to make the statements therein, in the light of
the circumstances under which they were made, not misleading; and shall
reimburse each Underwriter for any legal or other expenses reasonably incurred
by such Underwriter in connection with investigating or defending against or
appearing as a third-party witness in connection with any such loss, claim,
damage, liability or action, notwithstanding the possibility that payments for
such expenses might later be held to be improper, in which case the person
receiving them shall promptly refund them; except that the Company shall not be
liable in any such case to the extent, but only to the extent, that any such
loss, claim, damage or liability arises out of or is based upon an untrue
statement or alleged untrue statement or omission or alleged omission made in
the Registration Statement, such Preliminary Prospectus or the Prospectus, or
any amendment or supplement, in reliance upon and in conformity with written
information furnished to the Company by or on behalf of any Underwriter
specifically for use in the preparation thereof and, provided further, that the
indemnity agreement provided in this Section 8(a) with respect to any
Preliminary Prospectus shall not inure to the benefit of any Underwriter from
whom the person asserting any losses, claims, charges, liabilities or
litigation based upon any untrue statement or alleged untrue statement of
material fact or omission or alleged omission to state therein a material fact
purchased Shares, if a copy of the Prospectus in which such untrue statement or
alleged untrue statement or omission or alleged omission was corrected has not
been sent or given to such person within the time required by the Act and the
Rules and Regulations thereunder, unless such failure is the result of
noncompliance by the Company with Section 4(c) hereof.

(b) Each Underwriter severally, but not jointly, shall indemnify
and hold harmless the Company against any losses, claims, damages or
liabilities, joint or several, as incurred, to which the Company may become
subject, under the Act or otherwise, insofar as such losses, claims, damages or
liabilities (or actions in respect thereof) arise out of or are based upon (i)
any untrue statement or alleged untrue statement of a material fact contained
(A) in the Registration Statement, Preliminary Prospectus, the Prospectus or
any amendment or supplement thereto, or (B) in any Blue Sky Application, or
(ii) the omission or alleged omission to state in the Registration Statement or
any amendment thereto a material fact required to

-27-

<PAGE> 28

be stated therein or necessary to make the statements therein not misleading,
or the omission or alleged omission to state in any Preliminary Prospectus, the
Prospectus or any supplement thereto or in any Blue Sky Application a material
fact required to be stated therein or necessary to make the statements therein,
in the light of the circumstances under which they were made, not misleading;
except that such indemnification shall be available in each such case to the
extent, but only to the extent, that such untrue statement or alleged untrue
statement or omission or alleged omission was made in reliance upon and in
conformity with written information furnished to the Company through the
Underwriters by or on behalf of such Underwriter specifically for use in the
preparation thereof; and shall reimburse any legal or other expenses reasonably
incurred by the Company in connection with investigation or defending against
any such loss, claim, damage, liability or action.

(c) Promptly after receipt by an indemnified party under subsection
(a) or (b) above of notice of any claim or the commencement of any action, the
indemnified party shall, if a claim in respect thereof is to be made against
the indemnifying party under such subsection, notify the indemnifying party in
writing of the claim or the commencement of that action; the failure to notify
the indemnifying party shall not relieve it from any liability which it may
have to an indemnified party otherwise than under such subsection. If any such
claim or action shall be brought against an indemnified party, and it shall
notify the indemnifying party thereof, the indemnifying party shall be entitled
to participate therein and, to the extent that it wishes, jointly with any
other similarly notified indemnifying party, to assume the defense thereof with
counsel reasonably satisfactory to the indemnified party; provided, however, if
the defendants in any such action include both the indemnified parties and the
indemnifying party and the indemnified party shall have reasonably concluded
that there may be legal defenses available to it and/or other indemnified
parties which are different from or additional to those available to the
indemnifying party, the indemnified party or parties shall have the right to
select separate counsel to assume such legal defenses and to otherwise
participate in the defense of such action on behalf of such indemnified party
or parties. After notice from the indemnifying party to the indemnified party
of its election to assume the defense of such claim or action, the indemnifying
party shall not be liable to the indemnified party under such subsection for
any legal or other expenses subsequently incurred by the indemnified party in
connection with the defense thereof unless (i) the indemnified party shall have
employed separate counsel in accordance with the proviso to the preceding
sentence (it being understood, however, that the indemnifying party shall not
be liable for the expenses of more than one separate counsel (together with
appropriate local counsel) approved by the indemnifying party, representing all
the indemnified parties under Section 8(a) and 8(b) hereof who are parties to
such action), (ii) the indemnifying party shall not have employed counsel
satisfactory to the indemnified party to represent the indemnified party within
a reasonable time after notice of commencement of the action, or (iii) the
indemnifying party has authorized the employment of counsel for the indemnified
party at the expense of the indemnifying party. In no event shall any
indemnifying party be liable in respect of any amounts paid in settlement of
any action unless the indemnifying party shall have approved the terms of such
settlement; provided, however, that such consent shall not be unreasonably
withheld.

(d) In order to provide for just and equitable contribution in any
action in which a claim for indemnification is made pursuant to this Section 8
for which it is judicially determined (by the entry of a final judgment or
decree by a court of competent jurisdiction and the expiration of time to
appeal or the denial of the last right of appeal) that such indemnification may
not be enforced in such case notwithstanding the fact that this Section 8
provides for indemnification in such case, all the parties hereto shall
contribute to the aggregate losses, claims, damages or liabilities to which
they may be subject (after contribution from others) in such proportion so that
the Underwriters are

-28-

<PAGE> 29

responsible pro rata for the portion represented by the percentage that the
underwriting discount bears to the initial public offering price, and the
Company is responsible for the remaining portion; provided, however, that (i)
no Underwriter shall be required to contribute any amount in excess of the
underwriting discount applicable to the Shares purchased by such Underwriter,
and (ii) no person guilty of a fraudulent misrepresentation (within the meaning
of Section 11(f) of the Act) shall be entitled to a contribution from any
person who is not guilty of such fraudulent misrepresentation. This subsection
(d) shall not be operative as to any Underwriter to the extent that the Company
has received indemnity under this Section 8.

(e) The obligations of the Company under this Section 8 shall be in
addition to any liability which the Company may otherwise have, and shall
extend, upon the same terms and conditions, to each officer and director of
each Underwriter and to each person, if any, who controls any Underwriter
within the meaning of the Act; and the obligations of the Underwriters under
this Section 8 shall be in addition to any liability that the respective
Underwriters may otherwise have, and shall extend, upon the same terms and
conditions, to each director of the Company (including any person who, with his
consent, is named in the Registration Statement as about to become a director
of the Company), to each officer of the Company who has signed the Registration
Statement and to each person, if any, who controls the Company within the
meaning of the Securities Act, in either case, whether or not such person is a
party to any action or proceeding.

(f) The parties to this Agreement hereby acknowledge that they are
sophisticated business persons who were represented by counsel during the
negotiations regarding the provisions hereof including without limitation the
provisions of this Section 8, and are fully informed regarding said provisions.
They further acknowledge that the provisions of this Section 8 fairly allocate
the risks in light of the ability of the parties to investigate the Company and
its business in order to assure that adequate disclosure is made in the
Registration Statement and Prospectus as required by the Act and the Exchange
Act. The parties are advised that Federal or state public policy, as
interpreted by the courts in certain jurisdictions, may be contrary to certain
of the provisions of this Section 8, and the parties hereto hereby expressly
waive and relinquish any right or ability to assert such public policy as a
defense to a claim under this Section 8 and further agree not to attempt to
assert any such defense.

9. REPRESENTATIONS, WARRANTIES AND AGREEMENTS TO SURVIVE DELIVERY. All
representations, warranties, covenants and agreements of the Company contained
in this Agreement (including, without limitation, the agreements of the Company
set forth in Sections 4(i)-(p)), or contained in certificates of officers of
the Company submitted pursuant hereto, and the indemnity and contribution
agreements contained in Section 8 hereof, shall remain operative and in full
force and effect, regardless of any investigation made by or on behalf of any
Underwriter or controlling person, or by or on behalf of the Company, or any of
its officers, controlling persons or directors and shall survive delivery of
the Shares to the several Underwriters hereunder or termination of this
Agreement.

10. SUBSTITUTION OF UNDERWRITER. If any Underwriter or Underwriters
shall fail to take up and pay for the number of Firm Shares agreed by such
Underwriter or Underwriters to be purchased hereunder upon tender of such Firm
Shares in accordance with the terms hereof, and if the aggregate number of Firm
Shares which such defaulting Underwriter or Underwriters so agreed but

-29-

<PAGE> 30

failed to purchase does not exceed 10% of the Firm Shares, the remaining
Underwriters shall be obligated, severally in proportion to their respective
commitments hereunder, to take up and pay for the Firm Shares of such
defaulting Underwriter or Underwriters.

If any Underwriter or Underwriters so defaults and the aggregate
number of Firm Shares which such defaulting Underwriter or Underwriters agreed
but failed to take up and pay for exceeds 10% of the Firm Shares, the remaining
Underwriters shall have the right, but shall not be obligated, to take up and
pay for (in such proportions as may be agreed upon among them) the Firm Shares
which the defaulting Underwriter or Underwriters so agreed but failed to
purchase. If such remaining Underwriters do not, at the Closing Date, take up
and pay for the Firm Shares which the defaulting Underwriter or Underwriters so
agreed but failed to purchase, the Closing Date shall be postponed for
twenty-four hours to allow the several Underwriters the privilege of
substituting within twenty-four hours (including non-business hours) another
underwriter or underwriters (which may include any non-defaulting Underwriter)
satisfactory to the Company. If no such underwriter or underwriters shall have
been substituted as aforesaid by such postponed Closing Date, the Closing Date
may, at the option of the Company, be postponed for a further twenty-four
hours, if necessary to allow the Company the privilege of finding another
underwriter or underwriters, satisfactory to you, to purchase the Firm Shares
which the defaulting Underwriter or Underwriters so agreed but failed to
purchase. If it shall be arranged for the remaining Underwriters or substituted
underwriters to take up the Firm Shares of the defaulting Underwriter or
Underwriters as provided in this Section, (i) the Company shall have the right
to postpone the time of delivery for a period of not more than seven full
business days, in order to effect whatever changes may thereby be made
necessary in the Registration Statement or the Prospectus, or in any other
documents or arrangements, and the Company agrees promptly to file any
amendments to the Registration Statement or supplements to the Prospectus which
may thereby be made necessary, and (ii) the respective number of Firm Shares to
be purchased by the remaining Underwriters and substitute underwriters shall be
taken as the basis of their underwriting obligation. If the remaining
Underwriters shall not take up and pay for all such Firm Shares so agreed to be
purchased by the defaulting Underwriter or Underwriters or substitute another
underwriter or underwriters as aforesaid and the Company shall not find or
shall not elect to seek another underwriter or underwriters for such Firm
Shares as aforesaid, then this Agreement shall terminate.

In the event of any termination of this Agreement pursuant to the
preceding paragraph of this Section, neither the Company shall be liable to any
Underwriter (except as provided in Sections 5 and 8 hereof )nor shall any
Underwriter (other than an Underwriter who shall have failed, otherwise than
for some reason permitted under this Agreement, to purchase the number of Firm
Shares agreed by such Underwriter to be purchased hereunder, which Underwriter
shall remain liable to the Company and the other Underwriters for damages, if
any, resulting from such default) be liable to the Company (except to the
extent provided in Sections 5 and 8 hereof).

The term "Underwriter" in this Agreement shall include any person
substituted for an Underwriter under this Section.

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<PAGE> 31

11. EFFECTIVE DATE OF THIS AGREEMENT AND TERMINATION.

(a) This Agreement shall become effective at the later of (i)
execution of this Agreement, or (ii) when notification of the effectiveness of
the Registration Statement has been released by the Commission.

(b) You shall have the right to terminate this Agreement by giving
notice as hereinafter specified at any time at or prior to the Closing Date (i)
if the Company shall have failed, refused or been unable, to perform any
agreement on its part to be performed, or because any other condition of the
Underwriters' obligations hereunder required to be fulfilled by the Company is
not fulfilled including, without limitation, any change in the financial
condition, earnings, operations, business, management, technical staff, or
business prospects of the Company from that set forth in the Registration
Statement or Prospectus which, in your sole judgment, is material and adverse,
or (ii) if trading on the New York Stock Exchange or the Nasdaq Stock Market
shall have been suspended, or minimum or maximum prices for trading shall have
been fixed, or maximum ranges for prices for securities shall have been
required on the New York Stock Exchange or the Nasdaq Stock Market, by the New
York Stock Exchange, the Nasdaq Stock Market or by order of the Commission or
any other governmental authority having jurisdiction, or if a banking
moratorium shall have been declared by Federal, New York or Oklahoma
authorities, or (iii) if on or prior to the Closing Date, or on or prior to any
later date on which Option Shares are to be purchased, as the case may be, the
Company shall have sustained a loss by strike, fire, flood, earthquake,
accident or other calamity of such character as to interfere materially and
adversely with the conduct of the business and operations of the Company
regardless of whether or not such loss shall have been insured, or (iv) if
there shall have been a material adverse change in the general political or
economic conditions or financial markets in the United States as in your
reasonable judgment makes it inadvisable or impracticable to proceed with the
offering, sale and delivery of the Shares, or (v) if on or prior to the Closing
Date, or on or prior to any later date on which Option Shares are to be
purchased, as the case may be, there shall have been an outbreak or escalation
of hostilities or other international or domestic calamity, crises or material
adverse change in political, financial or economic conditions, the effect of
which on the financial markets of the United States is such as to make it in
your reasonable judgment, inadvisable to proceed with the marketing of the
Shares. In the event of termination pursuant to this Section 11(b), the Company
shall remain obligated to pay costs and expenses pursuant to Section 4(j), 5
and 8 hereof.

If you elect to prevent this Agreement from becoming effective or
to terminate this Agreement as provided in this Section 11, you shall promptly
notify the Company by telephone or telecopy, in each case confirmed by letter.
If the Company shall elect to prevent this Agreement from becoming effective,
the Company shall promptly notify you by telephone or telecopy, in each case,
confirmed by letter.

12. NOTICES. All notices and other communications hereunder shall be
in writing and shall be deemed to have been given if mailed or transmitted by
any standard form of telecommunication. Notices to the Underwriters shall be
directed to the Underwriters in care of Capital West Securities, Inc., 211 N.
Robinson, Suite 200, One Leadership Square, Oklahoma City, Oklahoma 73102,
attention of Robert O. MacDonald; notices to the Company shall be directed to
it at 4200 Perimeter Center, Suite 100, Oklahoma City, Oklahoma 73112,
attention of Joseph O. Evans.

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<PAGE> 32

13. PARTIES. This Agreement shall inure to the benefit of and be
binding upon the several Underwriters and the Company and their respective
executors, administrators, successors, and assigns. Nothing expressed or
mentioned in this Agreement is intended or shall be construed to give any
person or corporation, other than the parties hereto and their respective
executors, administrators, successors, and assigns and the controlling persons
and officers and directors referred to in Section 8 hereof any legal or
equitable right, remedy or claim under or in respect of this Agreement or any
provisions herein contained. This Agreement and all conditions and provisions
hereof are intended to be for the sole and exclusive benefit of the parties
hereto and their respective executors, administrators, successors, and assigns
and said controlling persons and said officers and directors, and for the
benefit of no other person or corporation. No purchaser of the Shares from any
Underwriter shall be construed to be a successor by reason merely of such
purchase.

14. GOVERNING LAW. This Agreement and the Pricing Agreement shall be
governed by and construed in accordance with the laws of the State of Oklahoma
applicable to agreements made and to be performed in said State. Specified
times of day refer to Central time.

15. COUNTERPARTS. This Agreement may be signed in several
counterparts, each of which will constitute an original.

* * * * * * *

If the foregoing correctly sets forth your understanding of our
agreement, please sign in the space provided below for that purpose, whereupon
this instrument, along with all counterparts, will become a binding agreement
between the Underwriter and the Company in accordance with its terms.

LORECOM TECHNOLOGIES, INC.

By:
-------------------------------------

CONFIRMED AND ACCEPTED, as of the date first above written:

CAPITAL WEST SECURITIES, INC.

By:
-------------------------------------

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<PAGE> 33

SCHEDULE A

<TABLE>
<CAPTION>
UNDERWRITER SHARES PURCHASED
----------- ----------------

<S> <C>
Capital West Securities, Inc.

Total 1,600,000
</TABLE>

<PAGE> 1

EXHIBIT 5.1

[MCAFEE & TAFT LETTERHEAD]

July 28, 1999

LORECOM Technologies, Inc.
4200 Perimeter Center, Suite 100
Oklahoma City, Oklahoma 73112

Ladies and Gentlemen:

We have been requested to render our opinion as to certain matters
regarding shares of common stock, par value one cent ($.01) per share (the
"Shares") of LORECOM Technologies, Inc. (the "Company"), which are to be issued
pursuant to a registration statement on Form SB-2 (File No. 333-76451) filed
with the Securities and Exchange Commission on April 16, 1999 (the "Registration
Statement"). We have examined the Company's minute books and other corporate
records, the Registration Statement, Amendment No. 1 thereto filed on May 13,
1999, Amendment No. 2 thereto filed on June 25, 1999, and Amendment No. 3
thereto filed on July 28, 1999, the form of underwriting agreement filed as an
exhibit to the Registration Statement (the "Underwriting Agreement"), and have
made such other investigation as we deem necessary in order to render the
opinions expressed herein. Based upon the foregoing, we are of the opinion
that:

1. The Company is a corporation duly organized and validly existing under
the laws of the State of Oklahoma, with full power and authority to
own its properties and to conduct its business as described in the
preliminary prospectus contained in the Registration Statement.

2. The 1,600,000 shares of Common Stock proposed to be sold by the
Company have been duly and validly authorized for issuance and, when
issued to the underwriters against payment therefore in accordance
with the Underwriting Agreement, will be validly issued, fully paid
and nonassessable.

We hereby consent to the inclusion of this opinion letter as an
exhibit to the Registration Statement. We also consent to the reference to this
firm appearing under the caption "Legal Matters" and elsewhere in the
prospectus which is part of the Registration Statement.

Very truly yours,

McAfee & Taft A Professional Corporation

<PAGE> 1

EXHIBIT 10.8

WARRANT AGREEMENT

August __, 1999

CAPITAL WEST SECURITIES, INC.
c/o Capital West Securities, Inc.
211 N. Robinson, Suite 200
One Leadership Square
Oklahoma City, Oklahoma 73102

Ladies and Gentlemen:

LORECOM Technologies, Inc. (the "Company"), agrees to issue and sell to
you warrants (the "Warrants") to purchase the number of shares of common stock,
no par value per share (the "Common Stock"), of the Company set forth herein,
subject to the terms and conditions contained herein.

1. ISSUANCE OF WARRANTS; EXERCISE PRICE. The Warrants, which shall be
in the form attached hereto as Exhibit A, shall be issued to you concurrently
with the execution hereof in consideration of the payment by you to the Company
of the sum of $0.001 cash per share of Common Stock subject to the Warrants, the
receipt and sufficiency of which are hereby acknowledged. The Warrant shall
provide that you, or such other holder or holders of the Warrants to whom
transfer is authorized in accordance with the terms of this Agreement, shall
have the right to purchase an aggregate of 160,000 shares of Common Stock for an
exercise price equal to [EXERCISE PRICE OF 140% OF PRICE IN OFFERING] per share
(the "Exercise Price") or [TOTAL EXERCISE PRICE] in the aggregate. The number,
character and Exercise Price of such shares of Common Stock are subject to
adjustment as hereinafter provided, and the term "Common Stock" shall mean,
unless the context otherwise requires, the stock and other securities and
property receivable upon exercise of the Warrants. The term "Exercise Price"
shall mean, unless the context otherwise requires, the price per share of the
Common Stock purchasable under the Warrants as set forth in this Section 1, as
adjusted from time to time pursuant to Section 6.

2. REPRESENTATIONS AND WARRANTIES. The Company represents and warrants
to you and to each subsequent holder of Warrants and agrees that:

(a) This Agreement has been duly authorized, executed and delivered by
the Company and constitutes the valid and binding obligation of the Company
enforceable in accordance with its terms; and neither the issuance of the
Warrants nor the issuance of the shares of Common Stock issuable upon exercise
of the Warrants will result in a breach or violation of any terms or provisions
of, or constitute a default under, any contract, indenture, mortgage, deed of
trust, loan agreement or other agreement or instrument to which the Company is a
party or by which the Company is bound, the Certificate of Incorporation or
Bylaws of the Company, or any law, order, rule, regulation or decree of any
government, governmental instrumentality or court, domestic or foreign, or
result in the creation or imposition of any lien, charge or encumbrance upon any
property or assets of the Company.

<PAGE> 2

(b) No consent, approval, authorization or order of any court or
governmental agency or body is required for the sale and issuance of the
Warrants or the sale and issuance of the shares of Common Stock issuable upon
exercise of the Warrants, except such as have been obtained or may be required
under the Securities Act of 1933, as amended (the "Act"), and such as may be
required under state securities or blue sky laws in connection with the issuance
of the Warrants and the shares of Common Stock issuable upon exercise of the
Warrants. Upon exercise of the Warrants by the holder thereof, the shares of
Common Stock with respect to which the Warrants are exercised will be validly
issued, fully paid, and non-assessable, and good and marketable title to such
shares of Common Stock shall be delivered to such holder free and clear of all
liens, encumbrances, equities, claims or preemptive or similar rights.

(c) During the term of this Agreement, the Company shall make timely
filings of all periodic and other reports and forms and other materials required
(but only to the extent required) to be filed with the Securities and Exchange
Commission (the "Commission") pursuant to the Act or the Securities Exchange Act
of 1934, as amended, and with any national securities exchange or quotation
system upon which any of the securities of the Company may be listed.

3. NOTICES OF RECORD DATE; ETC. In the event of (i) any taking by the
Company of a record date with respect to the holders of any class of securities
of the Company for purposes of determining which of such holders are entitled to
dividends or other distributions (other than regular quarterly dividends), or
any right to subscribe for, purchase or otherwise acquire shares of stock of any
class or any other securities or property, or to receive any other right, (ii)
any capital reorganization of the Company, or reclassification or
recapitalization of capital stock of the Company or any transfer in one or more
related transactions of all or a majority of the assets or revenue or income
generating capacity of the Company to, or consolidation or merger of the Company
with or into, any other entity or person, or (iii) any voluntary or involuntary
dissolution or winding up of the Company, then and in each such event the
Company will mail or cause to be mailed to each holder of a Warrant at the time
outstanding a notice specifying, as the case may be, (A) the date on which any
such record is to be taken for the purpose of such dividend, distribution or
right, and stating the amount and character of such dividend, distribution or
right; or (B) the date on which any such reorganization, reclassification,
recapitalization, transfer, consolidation, merger, conveyance, dissolution,
liquidation or winding-up is to take place and the time, if any is to be fixed,
as of which the holders of record of Common Stock (or any other class of stock
or securities of the Company, or another issuer pursuant to Section 6,
receivable upon the exercise of the Warrants) shall be entitled to exchange
their shares of Common Stock (or such other stock or securities) for securities
or other property deliverable upon such event. Any such notice shall be
deposited in the United States mail, postage prepaid, at least ten (10) days
prior to the date therein specified, and the holders(s) of the Warrant(s) may
exercise the Warrant(s) and participate in such event as a registered holder of
Common Stock, upon exercise of the Warrant(s) so held, within the ten (10) day
period from the date of mailing of such notice.

4. NO IMPAIRMENT. The Company shall not, by amendment of its
organizational documents or through any reorganization, transfer of assets,
consolidation, merger, dissolution, issue or sale of securities, or any other
action, avoid or seek to avoid the observance or performance of any of the terms
of this Agreement or of the Warrants, but will at all times in

<PAGE> 3

good faith take any and all action as may be necessary in order to protect the
rights of the holders of the Warrants against impairment. Without limiting the
generality of the foregoing, the Company (a) will at all times reserve and keep
available, solely for issuance and delivery upon exercise of the Warrants,
shares of Common Stock issuable from time to time upon exercise of the Warrants,
(b) will not increase the par value of any shares of stock receivable upon
exercise of the Warrants above the amount payable in respect thereof upon such
exercise, and (c) will take all such action as may be necessary or appropriate
in order that the Company may validly and legally issue fully paid and
non-assessable stock upon the exercise of the Warrants, or any of them.

5. EXERCISE OF WARRANTS. At any time and from time to time on and after
the first anniversary of the date hereof and expiring on the fifth anniversary
of the effective date of the public offering of the Common Stock at 5:00 p.m.,
Oklahoma City, Oklahoma time, Warrants may be exercised as to all or any portion
of the whole number of shares of Common Stock covered by the Warrants by the
holder thereof by surrender of the Warrants, accompanied by a subscription for
shares to be purchased in the form attached hereto as Exhibit B and by a check
payable to the order of the Company in the amount required for purchase of the
shares as to which the Warrant is being exercised, delivered to the Company at
its principal office at 4200 Perimeter Center, Suite 100, Oklahoma City,
Oklahoma 73112, Attention: President. Warrants may also be exercised from time
to time, without any payment required for the purchase of the shares as to which
the Warrant is being exercised, as to all or any portion of the number of shares
of Common Stock covered by the Warrant(s) by the holder thereof by surrender of
the Warrants, accompanied by a subscription for shares in the form attached as
Exhibit C, pursuant to which the holder thereof will be entitled to receive upon
such surrender of the Warrant(s) (and without any further payment) that number
of shares of Common Stock equal to the product of the number of shares of Common
Stock obtainable upon exercise of the Warrant(s) (or the portion thereof as to
which the exercise relates) multiplied by a fraction: (i) the numerator of which
shall be the difference between the then Current Value (as defined in this
Section 5 and Section 7(d)) of one full share of Common Stock on the date of
exercise and the Exercise Price, and (ii) the denominator of which shall be the
Current Value of one full share of Common Stock on the date of exercise. Upon
the exercise of a Warrant in whole or in part, the Company will within five (5)
days thereafter, at its expense (including the payment by the Company of any
applicable issue or transfer taxes), cause to be issued in the name of and
delivered to the Warrant holder a certificate or certificates for the number of
fully paid and non-assessable shares of Common Stock to which such holder is
entitled upon exercise of the Warrant. In the event such holder is entitled to a
fractional share, in lieu thereof such holder shall be paid a cash amount equal
to such fraction, multiplied by the Current Value of one full shares of Common
Stock on the date of exercise. Certificates for shares of Common Stock issuable
by reason of the exercise of the Warrant or Warrants shall be dated and shall be
effective as of the date of the surrendering of the Warrant for exercise,
notwithstanding any delays in the actual execution, issuance or delivery of the
certificates for the shares so purchased. In the event a Warrant or Warrants is
exercised as to less than the aggregate amount of all shares of Common Stock
issuable upon exercise of all Warrants held by such person, the Company shall
issue a new Warrant to the holder of the Warrant so exercised covering the
aggregate number of shares of Common Stock as to which Warrants remain
unexercised.

<PAGE> 4

For purposes of this section, Current Value is defined (i) in the case
for which a public market exists for the Common Stock at the time of such
exercise, according to Section 7(d), and (ii) in the case no public market
exists at the time of such exercise, at the Appraised Value. For the purposes of
this Agreement, "Appraised Value" is the value determined in accordance with the
following procedures. For a period of five (5) days after the date of an event
(a "Valuation Event") requiring determination of Current Value at a time when no
public market exists for the Common Stock (the "Negotiation Period"), each party
to this Agreement agrees to negotiate in good faith to reach agreement upon the
Appraised Value of the securities or property at issue, as of the date of the
Valuation Event, which will be the fair market value of such securities or
property, without premium for control or discount for minority interests,
illiquidity or restrictions on transfer. In the event that the parties are
unable to agree upon the Appraised Value of such securities or other property by
the end of the Negotiation Period, then the Appraised Value of such securities
or property will be determined for purposes of this Agreement by a recognized
appraisal or investment banking firm mutually agreeable to the holders of the
Warrants and the Company (the "Appraiser"). If the holders of the Warrants and
the Company cannot agree on an Appraiser within two (2) business days after the
end of the Negotiation Period, the Company, on the one hand, and the holders of
the Warrants, on the other hand, will each select an Appraiser within ten (10)
business days after the end of the Negotiation Period and those two Appraisers
will select ten (10) days after the end of the Negotiation Period an independent
Appraiser to determine the fair market value of such securities or property,
without premium for control or discount for minority interests. Such independent
Appraiser will be directed to determine fair market value of such securities or
property as soon as practicable, but in no event later than thirty (30) days
from the date of its selection. The determination by an Appraiser of the fair
market value will be conclusive and binding on all parties to this Agreement.
Appraised Value of each share of Common Stock at a time when (i) the Company is
not a reporting company under the Exchange Act and (ii) the Common Stock is not
traded in the organized securities markets, will, in all cases, be calculated by
determining the Appraised Value of the entire Company taken as a whole and
dividing that value by the number of shares of Common Stock then outstanding,
without premium for control or discount for minority interests, illiquidity or
restrictions on transfer. The costs of the Appraiser will be borne by the
Company. In no event will the Appraised Value of the Common Stock be less than
the per share consideration received or receivable with respect to the Common
Stock or securities or property of the same class in connection with a pending
transaction involving a sale, merger, recapitalization, reorganization,
consolidation, or share exchange, dissolution of the Company, sale or transfer
of all or a majority of its assets or revenue or income generating capacity, or
similar transaction.

6. PROTECTION AGAINST DILUTION. The Exercise Price for the shares of
Common Stock and number of shares of Common Stock issuable upon exercise of the
Warrants is subject to adjustment from time to time as follows:

(a) STOCK DIVIDENDS, SUBDIVISIONS, RECLASSIFICATIONS, ETC. In case at
any time or from time to time after the date of execution of this Agreement, the
Company shall (i) take a record of the holders of Common Stock for the purpose
of entitling them to receive a dividend or a distribution on shares of Common
Stock payable in shares of Common Stock or other class of securities, (ii)
subdivide or reclassify its outstanding shares of Common Stock into a greater
number of shares, or (iii) combine or reclassify its outstanding Common Stock
into a smaller number of shares, then, and in each such case, the Exercise Price
in effect at the time of the record date for such dividend or distribution or
the effective date of such subdivision,

<PAGE> 5

combination or reclassification shall be adjusted in such a manner that the
Exercise Price for the shares issuable upon exercise of the Warrants immediately
after such event shall bear the same ratio to the Exercise Price in effect
immediately prior to any such event as the total number of shares of Common
Stock outstanding immediately prior to such event shall bear to the total number
of shares of Common Stock outstanding immediately after such event.

(b) ADJUSTMENT OF NUMBER OF SHARES PURCHASABLE. When any adjustment is
required to be made in the exercise Price under this Section 6, (i) the number
of shares of Common Stock issuable upon exercise of the Warrants shall be
changed (upward to the nearest full share) to the number of shares determined by
dividing (x) an amount equal to the number of shares issuable pursuant to the
exercise of the Warrants immediately prior to the adjustment, multiplied by the
Exercise Price in effect immediately prior to the adjustment, by (y) the
Exercise Price in effect immediately after such adjustment, and (ii) upon
exercise of the Warrant, the holder will be entitled to receive the number of
shares or other securities referred to in Section 6(a) that such holder would
have received had the Warrant been exercised prior to the events referred to in
Section 6(a).

(c) ADJUSTMENT FOR REORGANIZATION, CONSOLIDATION, MERGER, ETC. In case
of any reorganization or consolidation of the Company with, or any merger of the
Company with or into, another entity (other than a consolidation or merger in
which the Company is the surviving corporation) or in case of any sale or
transfer to another entity of the majority of assets of the Company, the entity
resulting from such reorganization or consolidation or surviving such merger or
to which such sale or transfer shall be made, as the case may be, shall make
suitable provision (which shall be fair and equitable to the holders of
Warrants) and shall assume the obligations of the Company hereunder (by written
instrument executed and mailed to each holder of the Warrants then outstanding)
pursuant to which, upon exercise of the Warrants, at any time after the
consummation of such reorganization, consolidation, merger or conveyance, the
holder shall be entitled to receive the stock or other securities or property
that such holder would have been entitled to upon consummation if such holder
had exercised the Warrants immediately prior thereto, all subject to further
adjustment as provided in this Section 6.

(d) CERTIFICATE AS TO ADJUSTMENTS. In the event of adjustment as herein
provided in paragraphs of this Section 6, the Company shall promptly mail to
each Warrant holder a certificate setting forth the Exercise Price and number of
shares of Common Stock issuable upon exercise after such adjustment and setting
forth a brief statement of facts requiring such adjustment. Such certificate
shall also set forth a brief statement of facts requiring such adjustment. Such
certificate shall also set forth the kind and amount of stock or other
securities or property into which the Warrants shall be exercisable after any
adjustment of the Exercise Price as provided in this Agreement.

(e) MINIMUM ADJUSTMENT. Notwithstanding the foregoing, no certificate
as to adjustment of the Exercise Price hereunder shall be made if such
adjustment results in a change in the Exercise Price then in effect of less than
ten cents ($0.10) and any adjustment of less than ten cents ($0.10) of any
Exercise Price shall be carried forward and shall be made at the time of and
together with any subsequent adjustment that, together with the adjustment or
adjustments so carried forward, amounts to ten cents ($0.10) or more; provided
however, that upon the exercise

<PAGE> 6

of a Warrant, the Company shall have made all necessary adjustments (to the
nearest cent) not theretofore made to the Exercise Price up to and including the
date upon which such Warrant is exercised.

7. REGISTRATION RIGHTS.

(a) The Company agrees that upon written notice given to the Company at
any time on or after the first anniversary of the effective date of the public
offering of the Common Stock but before the fifth anniversary of the effective
date of the public offering, from the holder or holders of not less than
fifty-one percent (51%) of the shares issued and issuable upon exercise of the
Warrants, of a proposed distribution by such holder or holders of Common Stock
issued or issuable upon exercise of Warrants, the Company will, within 45 days
after receipt of such notice, promptly prepare, file and diligently prosecute to
effectiveness, an appropriate filing with the Commission of a registration
statement covering the proposed sale or distribution of all or any part of such
shares under the Securities Act of 1933, as amended (the "Act"), and the
appropriate registration statements or applications under the securities laws of
such states as such holders, in their discretion, shall determine, and will use
its reasonable best efforts to have such registration and application (including
both the registration under the Act and the registration or application made
under the various state securities laws) declared effective as soon as
practicable after the filing thereof and to remain effective for such period
that may be reasonably necessary to complete the distribution of securities so
registered or qualified. At least 15 days prior to such filing, the Company
shall give written notice of such proposed filing to each registered holder of
any Warrants at the holders' addresses appearing on the records of the Company
and to each registered holder of Common Stock purchased from the exercise of any
Warrants at such holder's address appearing on the Company records, and shall
offer to include in such registration statement any proposed distribution of
such Common Stock held or to be held by each such registered holder; provided,
however, that except as provided in Section 7(e), the Company need not effect
the registration of the sale or distribution of Common Stock purchased upon
exercise of Warrants more than once. All expenses, disbursements and fees
(including fees and expenses of counsel for the Company, special auditing fees
specifically attributable to the sale by the selling holder or holders of Common
Stock, printing expenses (including all necessary copies of the registration
statement and prospectuses contained therein), registration and filing fees and
blue sky fees and expenses, and fees and charges of the Company's transfer agent
and registrar for services rendered in connection therewith) shall be borne by
the Company; provided, however, that the Company shall not be required to pay
for any expenses of any registration proceeding begun (in which case holders
shall bear such expenses), if the registration request is subsequently withdrawn
at any time at the request of the holder or holders of not less than 51% of the
shares issued and issuable upon exercise of the Warrants, unless such withdrawal
is due to the misconduct of the Company or due to an unforeseen material adverse
change in the business, properties, prospects or financial condition of the
Company occurring prior to the effectiveness of the registration statement, in
which case the Company will continue to bear such expenses.

(b) In connection with any registration under the Act and specified
state securities law pursuant to this Agreement, the Company will, without
charge, furnish each holder whose shares are registered thereunder with copies
of the registration statement and all amendments thereto and will, without
charge, supply each such holder with copies of any preliminary and final

<PAGE> 7

prospectus included therein in such quantities as may be necessary for the
purposes of such proposed sale or distribution that the holder or holders may
reasonably request.

(c) In connection with any registration of shares pursuant to this
Section 7, the holders whose shares are being registered shall furnish the
Company with such information concerning such holders and the proposed sale or
distribution as shall be required for use in the preparation of such
registration statement and applications.

(d) Notwithstanding the foregoing provisions of this Section 7, upon
receipt of such written notice from the holder or holders of not less than fifty
one percent (51%) of the shares issued and issuable upon exercise of the
Warrants requesting that the Company effect registration of the sale or
distribution of Common Stock as provided in Section 7(a) or upon election by
holders of Warrants or Common Stock to participate in a registration pursuant to
Section 7(e), the Company shall have the option, for a period of ten (10) days
thereafter, to purchase all or any such Warrants and all or any such shares of
Common Stock acquired pursuant to the exercise of the Warrants and held by
holders providing the request for registration under Section 7(a) and/or 7(e)
and held by any other holder of Warrants or shares issued and will exercise its
option if it so elects as follows:

(i) as to such Warrants, at a price per Warrant equal to the difference
between (A) the average of the means between the closing bid and asked prices of
the Common Stock in the over-the-counter market for 20 consecutive business days
commencing 30 business days before the date of receipt of such notice, (B) if
the Common Stock is quoted on the Nasdaq SmallCap Market, at the average of the
means of the daily closing bid and asked prices of the Common Stock for 20
consecutive business days commencing 30 business days before the date of such
notice, or (C) if the Common Stock is listed on any national securities exchange
or quoted on the Nasdaq National Market System, at the average of the daily
closing prices of the Common Stock for 20 consecutive business days commencing
30 business days before the date of such notice and the Exercise Price of the
Warrant at the time of receipt of such notice; and

(ii) as to shares of Common Stock previously purchased pursuant to the
exercise of Warrants, at a price per share equal to (A) the average of the means
between the closing bid and asked prices of the Common Stock in the
over-the-counter market for 20 consecutive business days commencing 30 business
days before the date of such notice, (b) if the Common Stock is quoted on the
Nasdaq SmallCap Market, at the average of the means of the daily closing bid and
asked prices of the Common Stock for 20 consecutive business days commencing 30
business days before the date of such notice or (C) if the Common Stock is
listed on any national securities exchange or the Nasdaq National Market System,
at the average of the daily closing prices of the Common Stock for 20
consecutive business days commencing 30 business days before the date of such
notice (such value of shares so determined in this Section 7(d)(ii), as the case
may be, is referred to herein as the "Current Value").

(e) If any time on or after the first anniversary of the date hereof
but before the fifth anniversary of the date hereof the Company proposes to file
a registration statement under the Act covering a proposed sale of shares of
Common Stock, it shall give to each holder who then

<PAGE> 8

owns any Warrants or any shares of Common Stock acquired pursuant to the
exercise of the Warrants notice of such proposed registration at least 30 days
prior to the filing of the registration statement and shall afford each such
holder who then proposed to sell or distribute publicly any of the shares
subject to the Warrants upon giving not less than 10 days notice prior to such
filing, the opportunity to have such shares included in the securities
registered under the registration statement. All expenses, disbursements and
fees (including, but without limitation, fees and expenses of counsel, auditing
fees, printing expenses, SEC filing fees and expenses, but excluding any
underwriting discounts or commissions) incurred in connection with the
registration by the Company of the sale of any shares for any such holder under
this Section 7(e) shall be borne by the Company.

8. INDEMNIFICATION; CONTRIBUTION.

(a) The Company will indemnify and hold harmless each holder and each
affiliate thereof of Common Stock registered pursuant to this Agreement with the
Commission, or under any Blue Sky Law or regulation against any losses, claims,
damages, or liabilities, joint or several, to which such holder may become
subject under the Act or otherwise, insofar as such losses, claims, damages, or
liabilities (or actions in respect thereof) arise out of or are based upon an
untrue statement or alleged untrue statement of a material fact contained in any
preliminary prospectus, registration statement, prospectus, or any amendment or
supplement thereto, or arise out of or are based upon the omission or alleged
omission to state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading, and will reimburse each
such holder and affiliate for any legal or other expenses reasonably incurred by
such holder in connection with investigating or defending any such action or
claim regardless of the negligence of any such holder or affiliate; provided,
however, that the Company shall not be liable in any such case to the extent
that any such loss, claim, damage, or liability arises out of or is based upon
an untrue statement or alleged untrue statement or omission or alleged omission
made in any preliminary prospectus, registration statement or prospectus, or any
such amendment or supplement thereto, in reliance upon and in conformity with
written information furnished to the Company by any such holder expressly for
use therein.

(b) Each holder of Common Stock registered pursuant to this Agreement
will indemnify and hold harmless the Company against any losses, claims,
damages, or liabilities to which the Company may become subject, under the Act
or otherwise, insofar as such losses, claims, damages, or liabilities (or
actions in respect thereof) arise out of or are based upon an untrue statement
or alleged untrue statement of a material fact contained in any preliminary
prospectus, registration statement or prospectus, or any amendment or supplement
thereto, or arise out of or are based upon the omission or alleged omission to
state therein a material fact required to be stated therein or necessary to make
the statements therein not misleading, in each case to the extent, but only to
the extent, that such untrue statement or alleged untrue statement or omission
or alleged omission was made in any preliminary prospectus, registration
statement or prospectus, or any amendment or supplement thereto, in reliance
upon and in conformity with written information furnished to the Company by such
holder expressly for use therein.

(c) Promptly after receipt by an indemnified party under Sections 8(a)
or (b) above of the commencement of any action, such indemnified party shall, if
a claim in respect thereof is to be

<PAGE> 9

made against the indemnifying party under either such subsection, notify the
indemnifying party in writing of the commencement thereof; but the omission so
to notify the indemnifying party shall not relieve it from any liability that it
may otherwise have to any indemnified party. In case any such action shall be
brought against any indemnified party and it shall notify the indemnifying party
of the commencement thereof the indemnifying party shall be entitled to assume
the defense thereof by notice in writing to the indemnified party. After notice
from the indemnifying party to such indemnified party of its election to assume
the defense thereof, the indemnifying party shall not be liable to such
indemnified party under either of such subsections for any legal expenses of
other counsel or any other expense, in each case subsequently incurred by such
indemnified party, in connection with the defense thereof other than reasonable
costs of investigation incurred prior to the assumption by the indemnifying
party, unless such expenses have been specifically authorized in writing by the
indemnifying party, the indemnifying party has failed to assume the defense and
employ counsel, or the named parties to any such action include both the
indemnified party and the indemnifying party, as appropriate, and such
indemnified party has been advised by counsel that the representation of such
indemnified party and the indemnifying party by the same counsel would be
inappropriate due to actual or potential differing interests between them, in
each of which cases the fees of counsel for the indemnified party will be paid
by the indemnifying party.

(d) If the indemnification provided for in this Section 8 is
unavailable or insufficient to hold harmless an indemnified party under Section
8(a) or 8(b) in respect of any losses, claims, damages, or liabilities (or
action in respect thereof) referred to therein, then each indemnifying party
shall contribute to the amount paid or payable by such indemnified party as a
result of such losses, claims, damages, or liabilities (or actions in respect
thereof) in such proportion as is appropriate to reflect the relative benefits
received by the Company and the holder or holders from this Agreement and from
the offering of the shares of Common Stock. If, however, the allocation provided
by the immediately preceding sentence is not permitted by applicable law, then
each indemnifying party shall contribute to such amount paid or payable by such
indemnified party in such proportion as is appropriate to reflect not only such
relative benefits but also the relative fault of the Company and the holders in
connection with the statement or omissions that resulted in such losses, claims,
damages, or liabilities (or actions in respect thereof), as well as any other
relevant equitable considerations. The relative fault shall be determined by
reference to, among other things, whether the untrue or alleged untrue statement
of a material fact or the omission or alleged omission to state a material fact
relates to information supplied by the Company or the holder and the parties'
relative intent, knowledge, access to information and opportunity to correct or
prevent such statement or omission. The Company and the holders agree that it
would not be just and equitable if contribution pursuant to this Section 8(d)
were determined by pro rata allocation (even if the holders were treated as one
entity for such purpose) or by any other method of allocation that does not take
into account the equitable considerations referred to above in this subsection
(e). Except as provided in Section 8(c), the amount paid or payable by an
indemnified party as a result of the losses, claims, damages, or liabilities (or
actions in respect thereof) referred to above in this Section 8(d) shall be
deemed to include any legal or other expenses reasonably incurred by such
indemnified party in connection with investigation or defending any such action
or claim. No person guilty of fraudulent misrepresentation (within the meaning
of Section 11(f) of the Act) shall be entitled to contribution from any person
who was not guilty of such fraudulent misrepresentation. Notwithstanding any
provision in this Section

<PAGE> 10

8(d) to the contrary, no holder shall be liable for any amount, in the
aggregate, in excess of the net proceeds to such holder from the sale of such
holder's shares (obtained upon exercise of Warrants) giving rise to such losses,
claims, damages, or liabilities.

(e) The obligations of the Company under this Section 8 shall be in
addition to any liability that the Company may otherwise have and shall extend,
upon the same terms and conditions, to each person, if any, who controls any
holder of Warrants within the meaning of the Act. The obligations of the holders
of Common Stock under this Section 8 shall be in addition to any liability that
such holders may otherwise have and shall extend, upon the same terms and
conditions to each person, if any, who controls the Company within the meaning
of the Act.

9. STOCK EXCHANGE LISTING. In the event the Company lists its Common
Stock on any national securities exchange, the Company will, at its expense,
also list on such exchange, upon exercise of a Warrant, all shares of Common
Stock issuable pursuant to such Warrant.

10. SPECIFIC PERFORMANCE. The Company stipulates that remedies at law,
in money damages, available to the holder of a Warrant, or of a holder of Common
Stock issued pursuant to exercise of a Warrant, in the event of any default or
threatened default by the Company in the performance of or compliance with any
of the terms of this Agreement are not and will not be adequate. Therefore, the
Company agrees that the terms of this Agreement may be specifically enforced by
a decree for the specific performance of any agreement contained herein or by an
injunction against a violation of any of the terms hereof or otherwise.

11. SUCCESSORS AND ASSIGNS; BINDING EFFECT. This Agreement shall be
binding upon and inure to the benefit of you and the Company and their
respective successors and permitted assigns.

12. NOTICES. Any notice hereunder shall be given by registered or
certified mail, if to the Company, at its principal office referred to in
Section 5 and, if to the holders, to their respective addresses shown in the
Warrant ledger of the Company, provided that any holder may at any time on three
(3) days' written notice to the Company designate or substitute another address
where notice is to be given. Notice shall be deemed given and received after a
certified or registered letter, properly addressed with postage prepaid, is
deposited in the U.S. mail.

13. SEVERABILITY. Every provision of this Agreement is intended to be
severable. If any term or provision hereof is illegal or invalid for any reason
whatsoever, such illegality or invalidity shall not affect the remainder of this
Agreement.

14. ASSIGNMENT; REPLACEMENT OF WARRANTS. If the Warrant or Warrants are
assigned, in whole or in part, the Warrants shall be surrendered at the
principal office of the Company, and thereupon, in the case of a partial
assignment, a new Warrant shall be issued to the holder thereof covering the
number of shares not assigned, and the assignee shall be entitled to receive a
new Warrant covering the number of shares so assigned. Upon receipt of evidence
reasonably satisfactory to the Company of the loss, theft, destruction, or
mutilation of any Warrant and appropriate bond or indemnification protection,
the Company shall issue a new Warrant of like tenor. Except as contemplated by
Section 7 of this Agreement, the Warrants will not be transferred, sold, or
otherwise hypothecated by you or any other person and the Warrants

<PAGE> 11

will be nontransferable, except to (i) one or more persons, each of which on the
date of transfer is an officer, or partner of you; (ii) a partnership or
partnerships, the partners of which are you and one or more persons, each of
whom on the date of transfer is an officer to you; (iii) a successor to you in
merger or consolidation; (iv) a purchaser of all or substantially all of your
assets; or (v) a person that receives a Warrant upon death of a Holder pursuant
to will, trust, or the laws of intestate succession.

15. GOVERNING LAW. This Agreement shall be governed and construed in
accordance with the laws of the State of Oklahoma without giving effect to the
principles of choice of laws thereof.

16. DEFINITION. All references to the word "you", and to "Capital West
Securities, Inc." in this Agreement shall be deemed to apply with equal effect
to any persons or entities to whom Warrants have been transferred in accordance
with the terms hereof, and, where appropriate, to any persons or entities
holding shares of Common Stock issuable upon exercise of Warrants.

17. HEADINGS. The headings herein are for purposes of reference only
and shall not limit or otherwise affect the meaning of any of the provisions
hereof.

Very truly yours,

LORECOM Technologies, Inc.

By:
--------------------------------
Larry Travis, President

Accepted as of August __, 1999.

CAPITAL WEST SECURITIES, INC.

By:
-------------------------------

<PAGE> 12

WARRANT CERTIFICATE

THE WARRANTS REPRESENTED BY THIS CERTIFICATE AND THE OTHER SECURITIES ISSUABLE
UPON EXERCISE THEREOF MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO (i) AN
EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933, (ii) TO THE
EXTENT APPLICABLE, RULE 144 UNDER SUCH ACT (OR ANY SIMILAR RULE UNDER SUCH ACT
RELATING TO THE DISPOSITION OF SECURITIES), OR (iii) AN OPINION OF COUNSEL, IF
SUCH OPINION SHALL BE REASONABLY SATISFACTORY TO THE ISSUER, THAT AN EXEMPTION
FROM REGISTRATION UNDER SUCH ACT IS AVAILABLE.

THE TRANSFER OR EXCHANGE OF THE WARRANTS REPRESENTED BY THIS CERTIFICATE IS
RESTRICTED IN ACCORDANCE WITH THE WARRANT AGREEMENT REFERRED TO HEREIN.

No. ______ _______ Warrants

LORECOM TECHNOLOGIES, INC.
COMMON STOCK PURCHASE WARRANT

THIS IS TO CERTIFY that Capital West Securities, Inc. or its assigns as
permitted in that certain Warrant Agreement (the "Warrant Agreement") dated June
__, 1999, by and among the Company (as hereinafter defined) and Capital West
Securities, Inc. is entitled to purchase at any time or from time to time on or
after [ONE YEAR FROM WARRANT AGREEMENT DATE] until 5:00 p.m., Oklahoma City,
Oklahoma time on [FIVE YEARS LESS ONE DAY FROM WARRANT AGREEMENT DATE], an
aggregate of _________________________________ (_______) shares of Common Stock,
par value $0.01 per share, of LORECOM Technologies, Inc., an Oklahoma
corporation (the "Company"), for an exercise price per share as set forth in the
Warrant Agreement referred to herein. This Warrant is issued pursuant to the
Warrant Agreement, and all rights of the holder of this Warrant are further
governed by, and subject to the terms and provisions of such Warrant Agreement,
copies of which are available upon request to the Company. The holder of this
Warrant and the shares issuable upon the exercise hereof shall be entitled to
the benefits, rights and privileges and subject to the obligations, duties and
liabilities provided in the Warrant Agreement.

The issuance of this Warrant and the shares issuable upon the due and
timely exercise hereof have not been registered under the Securities Act of
1933, as amended (the "Act"), or any similar state securities law or act, and,
as such, no public offering of either this Warrant of any of the shares of
Common Stock issuable upon exercise of this Warrant may be made other than under
an exemption under the Act or until the effectiveness of a registration
statement under such Act covering such offering. Transfer of this Warrant is
restricted as provided in Section 14 of the Warrant Agreement.

Subject to the provisions of the Act, of the Warrant Agreement and of
this Warrant, this Warrant and all rights hereunder are transferrable, in whole
or in part, only to the extent expressly permitted in such documents and then
only at the office of the Company at 4200 Perimeter Center, Suite 100, Oklahoma
City, Oklahoma 73112, Attention: President, by the holder hereof or by a duly
authorized attorney-in-fact, upon surrender of this Warrant duly endorsed,
together with the Assignment hereof duly endorsed. Until transfer hereof on the
books of the Company, the Company may treat the registered holder as the owner
hereof for all purposes.

IN WITNESS WHEREOF, the Company has caused this Warrant to be executed
and its corporate seal to be hereunto affixed by its proper corporate officers
thereunto duly authorized.

LORECOM Technologies, Inc.

By:
-------------------------------------------
Larry Travis, President

<PAGE> 1
EXHIBIT 23.1

INDEPENDENT AUDITORS' CONSENT

We consent to the use in this pre-effective Amendment No. 3 to the Registration
Statement of LORECOM Technologies, Inc. on Form SB-2 of our reports on the
financial statements of the following companies (for the periods indicated)
appearing in the Prospectus, which is part of this Registration Statement:

As of December 31, 1998, and for the period from September 4, 1998 (date
of inception), to December 31, 1998:

LORECOM Technologies, Inc. (formerly The Alliance Group, Inc. and
Advantage Business Solutions, Inc.), dated March 18, 1999 (April 9,
1999 as to Note 7 to the financial statements, and May 12, 1999 as to
Note 8 to the financial statements)

As of December 31, 1998, and the year then ended:

Access Communication Services, Inc., dated February 28, 1999
American Telcom, Inc., dated February 19, 1999
Banner Communications, Inc., dated February 28, 1999
Communication Services, Inc., dated March 9, 1999
Travis Business Systems, Inc., dated February 19, 1999

As of December 31, 1998 and 1997, and for the years then ended:

Telephone and Paging Divisions of Electrical & Instrument Sales
Corporation (which report expresses an unqualified opinion and includes
an explanatory paragraph relating to the divisions being a component
part of EIS), dated March 5, 1999

As of September 30, 1998, and for the year then ended:

Terra Telecom, Inc., dated February 15, 1999
Telkey Communications, Inc., dated February 26, 1999

We also consent to the reference to us under the headings "Summary Combined
Financial Information" and "Experts" in such Prospectus.

/s/ DELOITTE & TOUCHE LLP

Oklahoma City, Oklahoma
July 23, 1999

<PAGE> 1
EXHIBIT 23.2

CONSENT OF INDEPENDENT AUDITORS

We consent to the reference to our firm and to the use of our report dated
February 18, 1999, included in or made a part of the Prospectus of LORECOM
Technologies, Inc. which is made a part of the Registration Statement on Form
SB-2 (No. 333-76451) of LORECOM Technologies, Inc.

/s/ Hunter, Atkins & Russell, PLC

Oklahoma City, Oklahoma
July 27, 1999

<PAGE> 1

EXHIBIT 23.3

INDEPENDENT AUDITORS' CONSENT

We consent to the use in this Registration Statement of LORECOM Technologies,
Inc. on Form SB-2 of our reports on the financial statements of the following
companies (for the periods indicated) appearing in the Prospectus, which is part
of this Registration Statement:

As of December 31, 1998, and for the year then ended:

Nobel Systems, Inc., dated February 28, 1999.

As of December 31, 1997, and for the year then ended:

Access Communications Services, Inc., dated February 28, 1999.
American Telcom, Inc., dated February 19, 1999.
Banner Communications, Inc., dated February 28, 1999.
Travis Business Systems, Inc., dated February 19, 1999.

As of September 30, 1997, and for the year then ended:

Terra Telecom, Inc., dated February 15, 1999.
Telkey Communications, Inc., dated February 26, 1999.

We also consent to the reference to us under the headings "Summary
Combined Financial Information" and "Experts" in such Prospectus.

/s/ Saxon & Knol, P.C.

Oklahoma City, Oklahoma
July 27, 1999

<PAGE> 1
EXHIBIT 99.1

CONFIDENTIAL

July 20, 1999

Board of Directors
LoreCom Technologies, Inc.
12101 North Meridian
Oklahoma City, Oklahoma 73120

Ladies and Gentlemen:

We understand that LoreCom Technologies, Inc., an Oklahoma corporation, ("LTI"),
has entered into definitive agreements to purchase or merge (the
"Purchase/Merger Agreements") 13 separate companies subsequent to a public
offering of its common shares which is planned to be underwritten by Capital
West Securities, Inc. (the "Public Offering"). LTI has Purchase/Merger
Agreements that have been executed and are subject to the completion of the
Public Offering and several standard conditions, including accuracy of the
representations and warranties made, performance of covenants included in the
Purchase/Merger Agreements, execution of employment and consulting agreements by
certain employees of the interconnect partners and no material adverse change in
the results of operations, financial condition or business of the 13 companies.
Further, any or all of the Purchase/Merger Agreements may be terminated before
the closing of the Public Offering:

o By the mutual consent of the boards of directors of LTI and the affected
interconnect partner;
o If the Public offering and the acquisitions are not closed by May 31, 1999;
o By the interconnect partner if its schedules to its Purchase/Merger
Agreement are amended to reflect a material adverse change and such
amendment is rejected by LTI; or
o If a material breach or default under the agreement by one party occurs and
is not waived.

Commercial Telecom Systems, Inc. has agreed to extend the May 31, 1999, deadline
to July 31, 1999. The remaining 12 companies have extended the May 31, 1999,
deadline to the date that LTI terminates its efforts to register its common
stock through the Public Offering. We have been informed that LTI fully expects
to complete the transactions as outlined in the Purchase/Merger Agreements. We
have been informed that LTI will purchase each of the 13 companies for a portion
of cash and a portion of common stock in LTI ("Consideration"). LTI has
negotiated the principal terms of the Purchase/Merger Agreements with each
individual company to form the ongoing concern that is named LoreCom
Technologies, Inc. The following is a listing of the 13 companies that will
either be purchased or merged in order to form LTI subsequent to the Public
Offering:

COMPANIES

Able Communication Incorporated
Access Communications Services, Inc.
American Telcom, Inc.
Banner Communications, Inc.
Commercial Telecom Systems, Inc.
Communications Services, Inc.
Electrical & Instrument Sales Corp.

Page 1 of 3
<PAGE> 2

Nobel Systems, Inc.
Perkins Office Machines, Inc.
The Phone Man Sales and Service, Inc.
Telkey Communications, Inc.
Terra Telecom, Inc.
Travis Business Systems, Inc.

We were provided with financial information regarding ten of the 13 companies.
The three companies where complete financial information was not provided
include Able Communication Incorporated, Perkins Office Machines, Inc., and The
Phone Man Sales and Service, Inc. Accordingly, we are unable to render any
opinion with respect to these three companies. However, given that the total
Consideration for the three companies is approximately 3.142% of the aggregate
purchase price for the 13 companies, we do not believe that it is material.

We understand that each of the 13 companies will be purchased with a portion of
cash and a portion of common stock in LTI. We have relied on the financial,
purchase, and projected information for each of the 13 companies and for LTI
from the Preliminary Prospectus dated June 25, 1999 ("Preliminary Prospectus")
which was provided to us by LTI management and Capital West Securities, Inc.

You have requested our opinion as investment bankers as to whether the
Consideration to be paid by LTI, pursuant to the Purchase Agreements, is fair to
LTI and its shareholders, from a financial point of view, as of the date hereof
(the "Opinion"). For the purposes of the Opinion set forth herein, we have,
among other things:

o Reviewed the financial terms of the Purchase/Merger Agreements as provided
in the Preliminary Prospectus;

o Reviewed the public filings of LTI and the financial information provided
regarding each of the ten companies;

o Compared LTI from a financial point of view with certain other companies in
the telecommunications equipment, service, and agency industries that we
deemed to be relevant. We also considered the financial terms, to the
extent publicly available, of selected recent business combinations in
these industries. We focused on two separate data sets of information
related to two different sets of generally comparable companies, including
but not limited, to significant reliance on general financial ratios as
well as a purchase price to revenue calculations;

o Reviewed LTI's audited financial statements along with those of the ten
other companies for which they have been provided in the Preliminary
Prospectus, which were audited by Deloitte & Touche LLP, Saxon & Knol, and
Hunter, Atkins & Russell, PLC;

o Reviewed certain internal operating and financial information relating to
LTI's business both historically and as forecasted by the management of
LTI; and

o Conducted such other studies, analyses, inquiries and investigations as we
deemed appropriate.

During our review, we relied upon and assumed, without independent verification,
the accuracy, completeness and fairness of the financial and other information
provided, and have further relied upon the assurances of LTI management that
they are unaware of any facts that would make the information provided to us to
be incomplete or misleading for the purposes of this Opinion.

Page 2 of 3
<PAGE> 3

Our Opinion is necessarily based on economic, market, financial and other
conditions as they exist on, and on the information made available to us as of,
the date of this letter. We are expressing no opinion as to whether the Public
Offering, as proposed, will ever be completed nor as to the price at which LTI
common stock will actually trade if the Public Offering is completed. We are
also expressing no opinion as to any income tax consequences of the underwriting
or any of the purchases and/or mergers. Our Opinion does not address the
relative merits of the underwriting nor any of the purchases and/or mergers, nor
does it address the Board's decision or any of the to be purchased and/or merged
companies' decision to proceed with the underwriting or any of the purchases
and/or mergers. Our Opinion does not constitute a recommendation to any
shareholder of LTI nor any recommendation to the companies to be purchased
and/or merged. We disclaim any obligation to advise the Board of LTI or any
person of any change in any fact or matter affecting our Opinion which may come
or be brought to our attention after the date of this Opinion.

Houlihan Smith & Company, Inc. ("Houlihan"), a National Association of
Securities Dealer member, as part of its investment banking services, is
regularly engaged in the valuation of businesses and securities in connection
with mergers, acquisitions, underwritings, sales and distributions of listed and
unlisted securities, private placements and valuations for corporate and other
purposes. Houlihan will receive a non-contingent fee from LTI relating to its
services in providing this Opinion. In an engagement letter dated June 1, 1999,
LTI has agreed to indemnify Houlihan with respect to Houlihan's services as
follows:

If Houlihan or any person or entity associated with Houlihan becomes
involved in any way in any legal or administrative proceeding related
to the services performed hereunder or the report, LTI will indemnify,
defend and hold Houlihan and any such person and / or entity harmless
from all damage and expenses (including reasonable attorney's fees and
expenses and court costs) incurred in connection therewith, except to
the extent that a court having jurisdiction shall have determined in a
final judgement that such loss, claim, damage or liability resulted
primarily from the gross negligence, bad faith, willful misfeasance, or
reckless disregard of the obligations or duties of Houlihan hereunder.

Based on the foregoing and such other factors as we deem relevant, we are of the
opinion that the consideration to be paid by LTI for the ten companies that we
outlined above is fair to the shareholders of LTI, from a financial point of
view given market conditions, as of the date hereof.

Very truly yours,
HOULIHAN SMITH & COMPANY, INC.

/s/ Andrew D. Smith
President

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