ZENGINE INC, S-1/A, 2000-08-22

ZENGINE INC
S-1/A, 2000-08-22
COMPUTER INTEGRATED SYSTEMS DESIGN

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AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION AUGUST 22, 2000

REGISTRATION NO. 333-36312

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

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

AMENDMENT NO. 2 TO

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

ZENGINE, INC.
(Exact name of registrant as specified in its charter)

<TABLE>
<S> <C> <C>
DELAWARE 7373 31-1638932
(State or other jurisdiction of (Primary Standard Industrial (I.R.S. Employer
incorporation or organization) Classification Code Number) Identification No.)
</TABLE>

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

6100 STEWART AVENUE
FREMONT, CALIFORNIA 94538
(510) 651-6400
(Address, including zip code, and telephone number, including area code, of
registrant's principal executive offices)
--------------------------

JOSEPH M. SAVARINO
PRESIDENT AND CHIEF EXECUTIVE OFFICER
ZENGINE, INC.
6100 STEWART AVENUE
FREMONT, CALIFORNIA 94538
(510) 651-6400
(Name, address, including zip code, and telephone number,
including area code, of agent for service)
--------------------------

WITH COPIES TO:

<TABLE>
<S> <C>
JEFFREY A. KOEPPEL LARRY A. BARDEN
KENNETH B. TABACH JON A. BALLIS
ELIAS, MATZ, TIERNAN & HERRICK L.L.P. SIDLEY & AUSTIN
734 15TH STREET, N.W. BANK ONE PLAZA
WASHINGTON, D.C. 20005 CHICAGO, ILLINOIS 60603
(202) 347-0300 (312) 853-7000
(202) 347-2172 (FAX) (312) 853-7036 (FAX)
</TABLE>

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

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

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

If this form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, 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,
check the following box. / /
--------------------------

CALCULATION OF REGISTRATION FEE

<TABLE>
<CAPTION>
PROPOSED
TITLE OF EACH CLASS OF SECURITIES MAXIMUM AGGREGATE AMOUNT OF
TO BE REGISTERED OFFERING PRICE(1) REGISTRATION FEE
<S> <C> <C>
Common Stock, no par value.................................. $73,125,000 $19,305(2)
</TABLE>

(1) Estimated solely for the purpose of computing the amount of the registration
fee pursuant to Rule 457(o) under the Securities Act.

(2) $15,840 of the fee was previously paid and $3,465 is being paid herewith.

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

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

SUBJECT TO COMPLETION, DATED AUGUST 22, 2000

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 WE ARE NOT SOLICITING OFFERS TO BUY THESE
SECURITIES, IN ANY STATE WHERE THE OFFER OR SALE IS NOT PERMITTED.
<PAGE>
PROSPECTUS

4,290,000 SHARES

[LOGO]

COMMON STOCK

Zengine, Inc. is offering 4,290,000 shares of its common stock. As part of
this offering, we are offering 390,000 shares of our common stock at the initial
public offering price to stockholders of MCSi, Inc. (formerly known as Miami
Computer Supply Corporation) that owned at least 100 shares of common stock of
MCSi as of May 15, 2000. MCSi is our parent company and principal stockholder.
MCSi or its designees will purchase any shares of common stock that are not
purchased by MCSi stockholders under the MCSi Subscription Program. See the
section entitled "Plan of Distribution--MCSi Subscription Program."

This is our initial public offering and no public market currently exists
for our shares. We anticipate that the initial public offering price of our
shares will be between $13.00 and $15.00 per share. We have applied to list our
common stock on the Nasdaq National Market under the symbol "ZNGN."

MCSi is an underwriter with respect to the shares offered to the
stockholders of MCSi. MCSi is not an underwriter with respect to any other
shares offered and is not included in the term underwriter as used elsewhere in
this prospectus.

INVESTING IN OUR COMMON STOCK INVOLVES RISKS. FOR MORE INFORMATION, SEE
"RISK FACTORS" COMMENCING ON PAGE 9.

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

NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES, OR DETERMINED THAT
THIS PROSPECTUS IS TRUTHFUL OR COMPLETE. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
--------------------------

<TABLE>
<CAPTION>
UNDERWRITTEN PUBLIC OFFERING PER SHARE TOTAL
<S> <C> <C>
Public Offering Price....................................... $ $
Underwriting Discount....................................... $ $
Proceeds to Zengine......................................... $ $
</TABLE>

<TABLE>
<CAPTION>
MCSI SUBSCRIPTION PROGRAM PER SHARE TOTAL
<S> <C> <C>
Public Offering Price....................................... $ $
Proceeds to Zengine......................................... $ $
</TABLE>

<TABLE>
<CAPTION>
AGGREGATE OFFERING PROCEEDS TOTAL
<S> <C> <C>
Proceeds to Zengine from Underwritten Public Offering and
MCSi Subscription Program................................. $
</TABLE>

The underwriters may also purchase up to an additional 585,000 shares at the
public offering price, less the underwriting discount, from us within 30 days
from the date of this prospectus to cover over-allotments.

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

WILLIAM BLAIR & COMPANY
FRIEDMAN BILLINGS RAMSEY
E*OFFERING
MORGAN KEEGAN & COMPANY, INC.

The date of this prospectus is , 2000
<PAGE>

[(Graphic--Inside Front Cover--In the upper right hand corner is the Zengine
logo consisting of the word "zengine" with gear cogs making up the letter "g".
Underneath in a smaller font is the tag line "Fueling Your Brand's Commerce
Engine."

Centered in the page is a large circle with three circles inside radiating
outward. In the inner-most circle are the words "KORE Platform." The second
inside circle is divided into seven segments titled "Product Content,"
"Merchandising," "Advertising and Sponsorship Management," "Order Management,"
"Reporting and Analysis," "Inventory Management and Order Fulfillment," and
"End-user Customer Service." The third circle has three words surrounding the
second inside circle "Platform Hosting" (at the top), "Design" (on the right
side) and "Integration" (on the left side).

Under the graphic is the following text:

"ZENGINE PROVIDES A COMPLETE SOLUTION

Zengine's comprehensive suite of technology-based solutions enable
businesses to quickly and cost-effectively create, maintain and enhance large
scale business-to-business (B2B) and business-to-consumer (B2C) e-commerce
platforms on an outsourced basis. Zengine's competitive advantage comes from its
ability to deliver a full range of integrated services from one technology
platform--a platform that enables streamlined integration, rapid deployment and
simplified ongoing development.

THE KORE ENGINE

Zengine's proprietary technology platform, the KORE Engine, enables us to
build, deliver and manage e-commerce solutions in less time and more cost
effectively than existing alternatives. The functional components of KORE are
stored on a centralized server array which services all Zengine clients. This
architecture minimizes development costs and reduces time-to-market because we
are able to leverage existing functionality previously developed within KORE
rather than re-engineering the functionality for each application. Upon
completion, the component or feature can be made available to other Zengine
clients without added development time or cost."

Under the text are two horizontal lists of Zengine's clients. The top list
is as follows: the drDrew.com logo, EPSON, everdream, Gyration and its logo,
Hear Me and its logo, Hewlett Packard and its logo, Hitachi and its logo, and
Imation. The bottom list of Zengine's clients are: NER, the On Site Graphics
logo, the People's Tour logo, PLUS Corporation, Presentation Pro, Proxima and
rexstores.com. Under this line is a solid delta pointing to the list followed by
the word "Clients."]

<PAGE>
TABLE OF CONTENTS

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PAGE
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<S> <C>
Prospectus Summary.......................................... 4

Risk Factors................................................ 9

Use of Proceeds............................................. 21

Dividend Policy............................................. 21

Capitalization.............................................. 22

Dilution.................................................... 23

Selected Financial Data..................................... 24

Management's Discussion and Analysis of Financial Condition
and Results of Operations................................. 26

Business.................................................... 32

Management.................................................. 50

Certain Transactions........................................ 57

Principal Stockholders...................................... 60

Description of Capital Stock................................ 61

Shares Eligible for Future Sale............................. 65

Plan of Distribution........................................ 66

Legal Matters............................................... 69

Experts..................................................... 69

Additional Information...................................... 69

Index to Financial Statements............................... F-1

Appendix: "Meet the Management" Presentation................ A-1
</TABLE>

3
<PAGE>
PROSPECTUS SUMMARY

THIS SUMMARY HIGHLIGHTS INFORMATION CONTAINED ELSEWHERE IN THIS PROSPECTUS.
HOWEVER, IT DOES NOT CONTAIN ALL OF THE INFORMATION THAT YOU SHOULD CONSIDER
BEFORE INVESTING IN OUR COMMON STOCK. YOU SHOULD READ THE ENTIRE PROSPECTUS
CAREFULLY, INCLUDING THE INFORMATION UNDER "RISK FACTORS" BEGINNING ON PAGE 9,
AND THE FINANCIAL STATEMENTS BEGINNING ON PAGE F-1, BEFORE MAKING AN INVESTMENT
DECISION.

ZENGINE, INC.

Zengine provides a comprehensive suite of technology-based solutions that
enable businesses to conduct electronic commerce. We offer a full range of
integrated services for both business-to-business, or B2B, and
business-to-consumer, or B2C, e-commerce including Web site user interface
design, product content and merchandising, personalization and customer
relationship management, advertising and sponsorship management, order
management, inventory management and order fulfillment, end-user customer
service and reporting and analysis. We provide our services as a complete, or
"turn-key," package or as component features. We believe our solution allows our
clients to achieve rapid deployment of e-commerce platforms, results in greater
economies of scale and provides cost-effective, ongoing access to leading edge
e-commerce technology. We market our services to businesses seeking to initiate,
expand or enhance their ability to conduct e-commerce. Our solutions are
delivered on an outsourced basis, which means we produce and operate our
client's e-commerce Web sites under their brand. This allows our clients to
quickly and cost-effectively create, maintain and enhance their e-commerce
presence.

Our proprietary technology and infrastructure, the KORE Engine, enables us
to build, deliver and manage e-commerce solutions in less time and more cost
effectively than existing alternatives. The functional components of KORE are
stored on a centralized server array which services all of our e-commerce
clients. This architecture minimizes development costs and reduces time to
market because we are able to leverage existing functionality previously
developed within KORE rather than re-engineering the functionality for each
application. Upon completion, the component or feature can be made available to
other Zengine clients without added development time or cost. In addition, the
KORE Engine is built to be highly-scalable, permitting our clients to deliver
consistent quality of service as transaction volumes increase, enabling the
rapid deployment of high-speed, dynamic e-commerce Web sites. The real-time
personalization technology proprietary to KORE allows businesses to manage
online customer relationships and personalize communication with their customers
and trading partners.

Widespread acceptance of the Internet has opened tremendous opportunities
for companies seeking growth and increased efficiencies through B2B and B2C
e-commerce. Although companies are eager to take advantage of these
opportunities, many may lack the internal resources that the analysis, design
and implementation of an effective Internet solution requires. It is often very
inefficient, expensive and time-consuming for companies to develop and staff
their own e-commerce solutions or to purchase currently available application
software packages that require sophisticated integration and maintenance. As a
result, companies increasingly seek to outsource these services. We believe our
ability to offer a full range of integrated e-commerce services demanded by
clients on a turn-key and outsourced basis provides us a competitive advantage
in today's marketplace.

We actively market our services through a direct sales force to businesses
seeking to initiate, expand or enhance their ability to conduct e-commerce,
including:

- original equipment manufacturers;

- wholesalers, distributors and other businesses that create customized
vendor and supply chain relationships over the Internet or a secure
extranet, a computer network used to communicate business related
information to a particular vendor, distributor or customer;

- bricks and mortar retailers;

4
<PAGE>
- online-only retailers; and

- Web sites that have a large and loyal user base (including portals, pure
content sites, communities, directories and service providers).

We plan to continue to pursue these target clients and to penetrate other
markets through indirect distribution channels such as consulting firms, systems
integrators, advertising firms, and other professional services firms.

After the commercial introduction of the Zengine service, we have
successfully launched our client's e-commerce platforms within an average of
40 days after engagement compared to industry ranges of several months to over
one year. We currently have 15 e-commerce clients, including, drDrew.com,
Everdream, Gyration, KaBloom, MCSi, PresentationPro, rexstores.com, Sharp
Electronics, Work.com, a joint venture between Excite@Home and Dow Jones & Co.,
and Universal Studios. We also sell advertising and sponsorship packages through
our clients' Web sites primarily to original equipment manufacturers whose
products are featured in our client's online stores. We have placed
advertisements for 16 companies, including Epson, Hewlett-Packard, Hitachi,
InFocus, Lexmark, Maxell, Proxima, Sharp, Sony and Toshiba.

Our revenue is generated through a combination of one or more of the
following: initial set-up and integration fees, subscription fees, transaction
fees and advertising and sponsorship fees through our clients' Web sites.

We intend to grow our business by pursuing five key strategies:

- target companies seeking to initiate, expand or enhance their ability to
conduct e-commerce;

- extend the capabilities of our KORE Engine;

- leverage our client base;

- expand our strategic alliances; and

- assist our clients in increasing their revenues using our state-of-the-art
e-commerce solutions.

OUR RELATIONSHIP WITH MCSI

We are a subsidiary of MCSi, Inc., a systems integrator of state-of-the-art
presentation and broadcast facilities throughout the United States, Canada and
certain foreign countries. MCSi offers design-build and engineering, computer
networking and configuration services, an extensive product line and technical
support to the converging audio-visual systems, broadcast media and computer
technology industries. MCSi's common stock is traded on the Nasdaq National
Market under the symbol "MCSI." After the completion of this offering, MCSi will
own approximately 50.7% of the outstanding shares of our common stock, or
approximately 48.9% if the underwriters exercise their over-allotment option in
full.

In addition to the MCSi Subscription Program, MCSi has advised us that it
intends to evaluate, from time to time, alternatives to maximize, for the
benefit of MCSi's stockholders, the value of its Zengine ownership. These
alternatives could include retention of all or a portion of MCSi's
shareholdings, the sale in one or more transactions of all or a portion of
MCSi's shareholdings, the distribution of MCSi's shareholdings to MCSi
shareholders (which might be achieved through a tax free spin-off under
Section 355 of the Internal Revenue Code), the issuance of debt or equity
securities that enable MCSi to monetize all or a portion of its investment in
Zengine or other transactions. We cannot assure you as to which alternative MCSi
may choose, or which may be achievable, or whether or when any such transaction
will occur.

We have entered into a number of agreements with MCSi relating to our
business. Under these agreements, MCSi will continue to provide us with certain
administrative, product fulfillment and customer support services and
facilities, and we will provide MCSi with e-commerce services for its

5
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computer products and accessories and audio-visual products business. For more
information, please see "Risk Factors--Risks Related to Our Relationship With
MCSi" and "Certain Transactions."

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

We were incorporated in Delaware in March 1999. Our principal executive
offices are located at 6100 Stewart Avenue, Fremont, California 94538, and our
telephone number is (510) 651-6400.

We maintain a Web site at www.zengine.com, and MCSi maintains a Web site at
www.mcsinet.com. Information contained on these as well as other Web sites
referred to herein do not constitute part of this prospectus and are not
incorporated by reference in this prospectus.
------------------------

Unless otherwise indicated, all references to "Zengine," "we," "us" and
"our" refer to Zengine, Inc., a Delaware corporation.

THE OFFERING

<TABLE>
<S> <C>
Shares offered by Zengine............ 4,290,000

Shares outstanding after the
offering........................... 16,473,480

Shares reserved for issuance with
respect to outstanding options and
a warrant.......................... 1,660,167

Use of proceeds...................... For general corporate purposes, including working capital,
sales and marketing activities, development of our service
offerings, capital expenditures and potential investments or
acquisitions in order to execute our key strategies. Please
see "Use of Proceeds."

Nasdaq National Market symbol........ "ZNGN"
</TABLE>

Unless otherwise noted, the information in this prospectus assumes the
underwriters do not exercise their option to purchase an additional 585,000
shares of common stock from us to cover over-allotments. The number of
outstanding shares used in this prospectus is 12,183,480 and excludes:

- 1,380,118 shares of common stock issuable upon exercise of outstanding
options at a weighted average exercise price of $0.89;

- 2,004,182 shares of common stock available for the future grant of stock
options under our stock option plan; and

- 280,049 shares of common stock issuable upon the exercise of a warrant to
be issued on the date of the initial public offering at an exercise price
per share equal to the initial public offering price.

MCSi SUBSCRIPTION PROGRAM

As part of this offering, we are offering shares of our common stock at the
initial public offering price to stockholders of MCSi that owned at least 100
shares of MCSi common stock on May 15, 2000 in the MCSi Subscription Program.
MCSi stockholders may subscribe for one share of common stock for every 30
shares of MCSi common stock held by them. The program is described in greater
detail in the section of this prospectus entitled "Plan of Distribution--MCSi
Subscription Program."

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

All information in this prospectus relating to the number of shares of our
common stock, options or warrants, unless otherwise noted, is based upon
information as of June 30, 2000, assuming that the amended and restated
Certificate of Incorporation has been filed to increase the authorized common
stock to 100,000,000 shares, a 6.7686 to one stock split before the offering and
that the MCSi Subscription Program is fully subscribed by MCSi stockholders.

6
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SUMMARY FINANCIAL INFORMATION

The summary financial information set forth below for the period from
inception (January 1, 1999) to September 30, 1999 and the six months ended
March 31, 2000, has been derived from our financial statements which have been
audited by PricewaterhouseCoopers LLP, independent accountants, whose report is
included elsewhere in this prospectus. The unaudited interim financial data for
the three and nine month periods ended June 30, 2000 has been derived from our
unaudited interim financial statements, which in the opinion of management,
includes all adjustments, consisting only of normal recurring adjustments,
necessary for a fair presentation thereof. The summary financial information set
forth below should be read in conjunction with "Management's Discussion and
Analysis of Financial Condition and Results of Operations," and our financial
statements and the accompanying notes thereto included elsewhere in this
prospectus.

<TABLE>
<CAPTION>
PERIOD FROM
INCEPTION SIX MONTHS ENDED
(JANUARY 1, 1999) TO MARCH 31, THREE MONTHS ENDED NINE MONTHS ENDED
SEPTEMBER 30, 1999(1) 2000(1) JUNE 30, 2000(1) JUNE 30, 2000(1)
---------------------- ---------------- ------------------ -----------------
<S> <C> <C> <C> <C>
RESULTS OF OPERATIONS DATA:
Revenue
Third party.............. $ 4,089 $1,354,088 $1,295,077 $2,649,165
Related Party............ -- 1,356,828 1,098,293 2,455,121
---------- ---------- ---------- ----------
4,089 2,710,916 2,393,370 5,104,286
---------- ---------- ---------- ----------
Cost of revenue
Third party.............. 23,511 231,752 203,791 435,543
Related party............ -- 55,253 24,000 79,253
---------- ---------- ---------- ----------
23,511 287,005 227,791 514,796
---------- ---------- ---------- ----------
Gross profit (loss).......... (19,422) 2,423,911 2,165,579 4,589,490
---------- ---------- ---------- ----------
Selling, general and
administrative expenses(2)
Third party.............. 401,081 1,897,202 1,663,253 3,560,455
Related party............ 513,120 435,000 794,251 1,229,251
---------- ---------- ---------- ----------
914,201 2,332,202 2,457,504 4,789,706
---------- ---------- ---------- ----------
Income (loss) from
operations................. (933,623) 91,709 (291,925) (200,216)
Interest income.............. -- 81,464 42,291 123,755
---------- ---------- ---------- ----------
Income (loss) before income
taxes...................... (933,623) 173,173 (249,634) (76,461)
Provision for income taxes... -- -- -- --
---------- ---------- ---------- ----------
Net income (loss)............ $ (933,623) $ 173,173 $ (249,634) $ (76,461)
========== ========== ========== ==========
Earnings (loss) per share of
common stock--basic........ $ (.08) $ .02 $ (.02) $ (.01)
========== ========== ========== ==========
Earnings (loss) per share of
common stock-diluted....... $ (.08) $ .01 $ (.02) $ (.01)
========== ========== ========== ==========
Weighted average number of
common shares
outstanding--basic......... 11,377,184 11,091,515 11,196,537 11,143,051
========== ========== ========== ==========
Weighted average number of
common shares
outstanding-diluted........ 11,377,184 13,338,169 11,196,537 11,143,051
========== ========== ========== ==========
</TABLE>

<TABLE>
<CAPTION>
AT
SEPTEMBER 30, AT
1999(1) JUNE 30, 2000(1)
-------------- ----------------
<S> <C> <C>
BALANCE SHEET DATA:
Working capital (deficit)................................... $(92,167) $3,549,790
Total assets................................................ $355,320 $5,447,043
Long-term debt.............................................. -- --
Total debt.................................................. -- --
Stockholders' equity........................................ $262,747 $4,287,091
</TABLE>

7
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--------------------------

Notes:

(1) The data reflects selected results of operations and balance sheet data from
the period from our inception (January 1, 1999) through September 30, 1999,
for the six month period ended March 31, 2000, for the three month period
ended June 30, 2000 and for the nine month period ended June 30, 2000.
Because our inception was on January 1, 1999, comparable data for the six
month period ended March 31, 1999 and for the nine month period ended
June 30, 2000 is not available. For all periods presented, revenue, cost of
revenue and selling, general and administrative expenses include related
party transactions with MCSi. See Note 4 to our financial statements
included elsewhere in this prospectus.

(2) Selling, general and administrative expenses for the nine month period ended
September 30, 1999, for the six month period ended March 31, 2000, for the
three month period ended June 30, 2000 and for the nine month period ended
June 30, 2000 include $89,483, $113,173, $116,583 and $229,756,
respectively, of non-cash compensation expense. See Note 7 to our financial
statements included elsewhere in this prospectus.

8
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RISK FACTORS

YOU SHOULD CAREFULLY CONSIDER THE RISKS DESCRIBED BELOW BEFORE YOU DECIDE TO
BUY OUR COMMON STOCK. IF ANY OF THE FOLLOWING RISKS ACTUALLY OCCUR, OUR
BUSINESS, FINANCIAL CONDITION OR RESULTS OF OPERATIONS WOULD LIKELY SUFFER. IN
THIS CASE, THE TRADING PRICE OF OUR COMMON STOCK COULD FALL, AND YOU MAY LOSE
ALL OR PART OF THE MONEY YOU PAID TO BUY OUR COMMON STOCK.

THIS PROSPECTUS ALSO CONTAINS FORWARD-LOOKING STATEMENTS THAT INVOLVE
SUBSTANTIAL RISKS AND UNCERTAINTIES. OUR ACTUAL RESULTS, PERFORMANCE OR
ACHIEVEMENTS COULD DIFFER SUBSTANTIALLY FROM THOSE EXPRESSED IN OR IMPLIED BY
THESE FORWARD-LOOKING STATEMENTS AS A RESULT OF SEVERAL FACTORS, INCLUDING THE
RISKS WE FACE, AS MORE FULLY DESCRIBED BELOW IN THIS SECTION AND ELSEWHERE IN
THIS PROSPECTUS.

RISKS RELATED TO OUR BUSINESS

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<S> <C>
WE HAVE A LIMITED OPERATING HISTORY. We commenced operations in January 1999 as a division of MCSi and
since our incorporation in March 1999, we have operated as a
subsidiary of MCSi. Our business and the services we offer are in the
early stages of development. To date, 15 companies have purchased our
e-commerce services and we have placed advertisements for 16
companies. Accordingly, we have a very limited operating history, and
our business and prospects must be considered in light of the risks
and uncertainties facing early-stage companies in rapidly evolving
markets such as e-commerce.

WE HAVE A HISTORY OF LOSSES, EXPECT We are not profitable and cannot be certain that we will generate
FUTURE LOSSES AND CANNOT ASSURE YOU THAT sufficient revenue to ever become profitable. We have incurred net
WE WILL ACHIEVE PROFITABILITY. losses since our inception. To the extent such losses continue, our
accumulated deficit will increase and our stockholders' equity will
decrease. We incurred net losses of $934,000 for the period from
inception (January 1, 1999) to September 30, 1999, and net losses of
$76,000 for the nine months ended June 30, 2000. We anticipate that we
will substantially increase our marketing, technology and
infrastructure, software development and general and administrative
expenses in fiscal 2000 and, as a result, we expect to incur
additional losses for the foreseeable future. In addition, our limited
operating history makes prediction of future results difficult and,
accordingly, we may not achieve or sustain profitability.

THE EXPECTED FLUCTUATIONS OF OUR As a result of our limited operating history, we do not have
QUARTERLY RESULTS COULD CAUSE OUR STOCK meaningful historical financial data for quarterly periods on which to
PRICE TO FLUCTUATE OR DECLINE. base planned operations. Our expense levels are based in part on our
personnel and software development requirements as well as our
expectations as to future revenues. We anticipate that our operating
expenses will increase substantially for the foreseeable future as we
continue to extend the capabilities of our KORE Engine, increase our
sales and marketing activities and broaden our customer support
capabilities.

We expect to experience significant fluctuations in future quarterly
operating results. These fluctuations may be caused by many factors
including, among others:

- cancellation of orders prior to full deployment;
</TABLE>

9
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<TABLE>
<S> <C>
- nonrenewal of service agreements;

- changes in our business strategy; and

- changes in key personnel.

We anticipate that, for the foreseeable future, a significant portion
of our revenues will be derived from a limited number of clients
(including MCSi), and the timing of receipt and fulfillment of any
such orders is expected to cause material fluctuations in our
operating results, particularly on a quarterly basis. In addition, in
the near term, we intend to increase significantly our personnel,
including our software engineers, direct sales and marketing
personnel. The timing of such expansion and the rate at which new
engineers and sales people become productive could also cause material
fluctuations in our quarterly operating results.

Due to the foregoing factors, quarterly revenues and operating results
are difficult to forecast, and we believe that period-to-period
comparisons of our operating results will not necessarily be
meaningful and should not be relied upon as any indication of future
performance. It is likely that our future quarterly operating results
from time to time will not meet the expectations of market analysts or
investors, which may have an adverse effect on the price of our common
stock.

OUR LENGTHY SALES CYCLE MAY CAUSE The sales cycle for our services is long, typically ranging two months
OPERATING RESULTS TO VARY SIGNIFICANTLY or more. Our agreements with our clients generally require a
FROM PERIOD TO PERIOD. substantial set up fee, and often are part of an important strategic
decision by our clients regarding their information systems
infrastructure. Accordingly, the decision to purchase our services
typically requires significant pre-purchase evaluation. We spend
substantial time educating and providing information to prospective
clients regarding the use and benefits of our services. During this
evaluation period, we may expend substantial funds in sales, marketing
and management efforts. This lengthy sales cycle may cause operating
results to vary significantly from period to period.

IF WE EXPERIENCE DELAYS IN THE LAUNCH OF It often takes time and resources to implement and to integrate our
A WEB SITE OR IN THE SATISFACTION OF solution with our clients' existing computer systems. Where our
CONTRACT TERMS, WE MAY HAVE TO DEFER services require that we launch a clients' Web site, we will not
REVENUE UNTIL LATER QUARTERS, CAUSING recognize any revenue until we have launched our client's e-commerce
OUR QUARTERLY RESULTS TO FLUCTUATE. Web site. If we experience delays in the progress on a previously
announced project or in the satisfaction of contract terms required
for revenue recognition in a particular quarter, we may not be able to
recognize revenue until a later period, causing our quarterly results
to fluctuate. This could cause our stock price to decline.

BECAUSE A SMALL NUMBER OF CLIENTS WILL We currently have 15 e-commerce clients and 16 advertising and
ACCOUNT FOR A SUBSTANTIAL PORTION OF OUR sponsorship clients. We expect that a limited number of clients will
REVENUE, OUR REVENUE COULD DECLINE continue to account for a substantial portion of our revenue for the
SIGNIFICANTLY IF WE LOSE A MAJOR CLIENT. foreseeable future. As a result, if we lose a major client or if a
contract is delayed, canceled or deferred, our revenue and operating
results would be adversely affected.
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OUR REVENUE IS DEPENDENT UPON OUR Our revenue is based, in part, on transaction fees and will fluctuate
CLIENTS' BUSINESS AND PRODUCT SALES. with the volume of product sales by our clients. We do not have direct
control over the success of our client's e-commerce sites. If we
dedicate significant resources to a client whose business does not
generate substantial transactions or whose products do not generate
substantial customer sales, our business may suffer.

WE EXPECT THAT A SUBSTANTIAL PORTION OF We currently expect that advertising and sponsorship fees will account
OUR REVENUE FOR THE CURRENT FISCAL YEAR for a substantial portion of our total revenue in the current fiscal
WILL BE DERIVED FROM SHORT-TERM year. The arrangements under which we receive these fees typically are
ADVERTISING AND SPONSORSHIP of a limited duration. Accordingly, our revenue from advertising and
ARRANGEMENTS. sponsorship fees may not be sustained over the longer term.

PERSONALIZATION MAY NOT BE SUCCESSFUL IN The centerpiece of our service offering to our clients is the high
GENERATING ADDITIONAL REVENUE FOR OUR degree of advanced personalization generated by the KORE Engine. Our
CLIENTS. sales proposition to our clients is that the personalization of the
shopping experience results in a higher user conversion ratio (i.e.,
the number of Web site visitors who actually purchase), increased
purchases per visit, increased purchase size and greater customer
loyalty. If our sales proposition turns out to be ineffective for one
or more of our clients, we could lose that business, and possibly
future business, which would result in a material adverse effect on
our results of operations.

IF WE LOSE KEY PERSONNEL OR ARE UNABLE We believe our future success will depend upon our ability to retain
TO ATTRACT AND RETAIN ADDITIONAL our key management personnel, including Joseph Savarino, our President
QUALIFIED PERSONNEL WE MAY NOT BE ABLE and Chief Executive Officer, Lalit Dhadphale, our Vice President of
TO SUCCESSFULLY MANAGE OUR BUSINESS AND Product Development and Chief Operating Officer, and Christopher
ACHIEVE OUR OBJECTIVES. Feaver, our Vice President and Chief Technology Officer, because of
their experience and knowledge regarding the development,
opportunities and challenges of our business. Each of these executives
is subject to a three year employment agreement which is terminable at
will by them. We may not be successful in attracting and retaining
other key employees in the future.

We expect to add additional key personnel in the near future,
including software engineers and direct sales and marketing personnel.
During the next twelve months, we anticipate that our employee related
costs will increase approximately $4.5 million over current levels.
Our future success and our ability to expand our operations will also
depend in large part on our ability to attract and retain additional
qualified technical personnel, as well as marketing and sales
personnel. Competition for these types of employees is intense due to
the limited number of qualified professionals, particularly in the San
Francisco Bay area of California.

DIFFICULTIES WE MAY ENCOUNTER MANAGING We have rapidly expanded our operations and anticipate that further
OUR GROWTH COULD ADVERSELY AFFECT OUR significant expansion will be required to address potential growth in
RESULTS OF OPERATIONS. our client base and market opportunities. Our expansion is placing a
significant strain on our managerial and operational resources. Due to
our limited operating history, our staff has not
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worked together for a significant period of time. A number of key
managerial, technical and operations personnel are relatively new to
our company. In addition, none of our executive officers have ever
managed a public corporation.

IF WE ARE UNABLE TO ESTABLISH AND Our business strategy is dependent upon increasing the sales of our
MAINTAIN RELATIONSHIPS WITH COMPANIES services to companies that desire to establish or enhance their
WHO ARE ENGAGING IN, OR INTEND TO ENGAGE e-commerce efforts. We have entered into service agreements with
IN, E-COMMERCE, OUR BUSINESS WILL NOT companies that have embraced the Internet as a significant
GROW. distribution channel. We do not know if we will be successful in
establishing or maintaining relationships with companies in our target
market. If we are unable to do so, we will likely be unable to
continue to grow our business or establish a meaningful market share.

OUR SYSTEMS MAY NOT ACCOMMODATE Our success depends on our ability to handle a large number of
SIGNIFICANT GROWTH IN THE NUMBER OF OUR transactions for many different clients in various product categories.
CLIENTS. We expect that the volume of transactions we process will increase
significantly as we expand our operations. If this occurs, additional
stress will be placed upon the network hardware and software that
manages our operations. We may not be able to efficiently manage a
large number of transactions. If we are not able to maintain an
appropriate level of operating performance, our reputation and
business would be harmed.

SOFTWARE DEFECTS AND SYSTEM ERRORS COULD Our services are based on complex proprietary software which could
DIMINISH DEMAND FOR OUR SERVICES AND contain undetected errors or defects. We may, in the future, discover
RESULT IN LOSS OF REVENUE, DELAY IN software errors and as a result experience delays in providing the
MARKET ACCEPTANCE AND INJURY TO OUR services we agreed to provide during the period required to correct
REPUTATION. these errors. Errors may be found from time to time in our new or
enhanced service offerings after launch of our client's e-commerce
store, resulting in:

- loss of revenue;

- delay in market acceptance and sales;

- diversion of development resources;

- injury to our reputation; or

- increased remediation costs.

In addition, our service is generally used in systems with the
client's or other vendors' software, and as a result, our software
must integrate successfully with these existing systems. System
errors, whether caused by our software, the client's or those of
another vendor, could adversely affect the market acceptance of our
services and any necessary revisions could cause us to incur
significant expenses.

IF WE BECOME SUBJECT TO PRODUCT Since our services typically operate our client's only e-commerce Web
LIABILITY LITIGATION, IT COULD BE COSTLY site, any performance problems with our services, whether as a result
AND TIME CONSUMING TO DEFEND. of internal or vendor errors, defects or otherwise, could severely
impact our clients' product sales. This could result in financial or
other damages to our clients, who could sue us. Product
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liability litigation, even if it were unsuccessful, would be time
consuming and costly to defend.

IF WE ARE UNABLE TO SECURE ADDITIONAL Because we anticipate net losses for the foreseeable future, it is
FINANCING, WE MAY BE UNABLE TO CONTINUE possible that we will require additional funds to grow our business.
TO GROW OUR BUSINESS. If we are not able to secure additional funds when needed, we may not
be able to cover our operating expenses or pursue our other business
strategies. In such an event, our business could be significantly
harmed.

IF WE ARE UNABLE TO ADEQUATELY PROTECT We have applied for trademarks on our marks, such as the Zengine name,
OUR TRADEMARKS OR BRAND IDENTITY, OUR the Zengine "gear" logo, "KORE," "KOG" and our tag line "Fueling Your
SALES GROWTH COULD DECREASE. Brand's Commerce Engine." Effective trademark protection may not be
available for our marks. We have identified another company that is
utilizing the KORE name. We have demanded that this company stop using
our proprietary name. It is possible that others will adopt product
names or logos similar to KORE or the Zengine gear logo. This would
impede our ability to build our brand identity, lead to customer
confusion, increase our legal expenses and distract management from
the operation of our business. Such events could result in a loss of
significant rights, increased expenses and lower sales of our
services.

RISKS RELATED TO THE INTERNET AND E-COMMERCE INDUSTRY

THE MARKET FOR OUR SERVICES IS IN THE Our services facilitate e-commerce over public and private data
EARLY STAGE OF DEVELOPMENT. networks. The market for our services is at an early stage of
development and is rapidly evolving. As is typical for new and rapidly
evolving industries, demand and market acceptance for recently
introduced products and services are subject to a high level of
uncertainty.

PRIVACY CONCERNS MAY LIMIT INTERNET USE One of the principal features of our proprietary technology is the
AND USE OF OUR SERVICES. ability to develop and maintain highly personalized profiles of users
to assist our clients in determining the nature of the content and the
product offerings to be provided to that customer. Typically, these
profiles are captured when customers visit a site on the Web and
volunteer information in response to survey questions concerning their
backgrounds, interests, and preferences. Profiles are augmented over
time through the collection of usage data. Privacy concerns may
nevertheless cause users to resist providing the personal data
necessary to support this profiling capability. The perception by our
clients' customers or potential customers of substantial security and
privacy concerns, whether or not valid, may inhibit market acceptance
of our technology. Such concerns also may be heightened by legislative
or regulatory requirements that require notification to Web site users
that the data captured as a result of visitation of certain Web sites
may be used by marketing entities to unilaterally address product
promotion and advertising to that user. While we are not aware of any
such legislation or regulatory requirements currently in effect in the
United States,
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certain other countries and political entities, such as the European
Community, have adopted such legislation or regulatory requirements.
Similar legislation or regulatory requirements may be adopted in the
United States in the future.

Certain consumer activist groups have recently sought to have the
Federal Trade Commission determine whether profiling should be
considered "subliminal" marketing which they believe should be
prohibited. While we are not aware of any law or regulation which
prohibits subliminal marketing, the FTC has, in the past, considered
such acts to be deceptive trade practices and has issued
administrative cease and desist orders against companies using those
techniques. The FTC has recently begun an informal inquiry into the
business practices of an Internet marketing and advertising company
that uses personalization techniques to target advertisements to
people who browse certain Web sites. That company is also currently
defending itself against seven private lawsuits alleging, among other
things, the improper collection and use of personal information in
violation of federal and state statutes and the right of privacy. In
addition, the Attorney General's Office of the States of New York and
Michigan have requested that this company provide certain information
concerning its business practices. Zengine is not involved in any
similar investigation or litigation. However, if the privacy concerns
of consumers are not adequately addressed, our business could be
harmed. For more information regarding the personalization features of
our technology, please see "Business--Technology."

A BREACH OF OUR E-COMMERCE SECURITY A requirement of the continued growth of e-commerce is the secure
MEASURES COULD REDUCE DEMAND FOR OUR transmission of confidential information over public networks. We
SERVICES. utilize a third party payment processor for a portion of the
transactions we handle. Both the third party processor and we rely on
public key cryptography. This is an encryption method that utilizes
two keys, a public and a private key, for encoding and decoding data,
and digital certificate technology, or identity verification, to
provide the security and authentication necessary for secure
transmission of confidential information. Regulatory and export
restrictions may prohibit us from using the strongest and most secure
cryptographic protection available and thereby expose us to a risk of
data interception. A party who is able to circumvent our security
measures could misappropriate proprietary information or interrupt our
operations. Any compromise or elimination of our security could harm
our reputation and reduce demand for our services. We currently carry
no insurance to specifically protect us against this risk.

THE INTENSE COMPETITION IN OUR INDUSTRY The market for our services is intensely competitive and subject to
COULD REDUCE OR ELIMINATE THE DEMAND FOR rapid technological change. We expect competition to intensify in the
OUR SERVICES. future. Our primary source of competition comes from e- commerce
retailers who develop their own custom systems or engage consultants
who install packaged software systems. Online retailers who have made
large investments to develop custom
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systems may be less likely to adopt an outsourced transaction
processing strategy. We also face competition from companies such as
Art Technology Group, Breakaway Solutions, Broadvision, E.piphany, Net
Perceptions and USinternetworking. In addition, other companies may
enter the market for our services. In the future, we may also compete
with large companies that derive a significant portion of their
revenues from e-commerce and may offer, or provide a means for others
to offer, e-commerce transaction services.

Many of our competitors have longer operating histories, substantially
greater financial, technical, marketing or other resources, or greater
name recognition than we do. Our competitors may be able to respond
more quickly than we can to new or emerging technologies and changes
in customer requirements. Competition could impede our ability to sell
additional services on terms favorable to us. Our current and
potential competitors may develop and market new technologies that
render our existing or future services obsolete, unmarketable or less
competitive. Our success will depend, in part, on our ability to
internally develop and license leading technologies to enhance our
existing services, develop new services and technology that address
the increasingly sophisticated and varied needs of our clients, and
respond to technological advances and emerging industry standards and
practices on a cost-effective and timely basis. Our current and
potential competitors may make strategic acquisitions or establish
cooperative relationships among themselves or with other solution
providers, thereby increasing the ability of their services or
products to address the needs of our prospective clients. Our current
and potential competitors may establish or strengthen cooperative
relationships with our current or future channel partners, thereby
limiting our ability to sell services through these channels.

THE RISK OF LACK OF CAPACITY, SYSTEM We provide a comprehensive, highly personalized e-commerce service to
FAILURE AND SYSTEM DEVELOPMENT RISKS companies seeking to capitalize on the ability to sell directly to
COULD RESULT IN DOWNTIME WITH A their customers using our proprietary technology. The satisfactory
SIGNIFICANT LOSS OF REVENUE. performance, reliability and availability of our proprietary
technology and its underlying software and network infrastructure are
critical to our operations, level of customer service, and reputation
and ability to attract and retain clients. Our systems and operations
are vulnerable to damage or interruption from earthquake, fire, flood
and other natural disasters; and power loss, telecommunications or
data network failure, operator negligence, improper operation by
employees, and similar events.
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We presently do not carry sufficient business interruption insurance
to fully compensate us for losses that may occur. Despite the use of
network security devices, our servers are vulnerable to computer
viruses, physical or electronic break-ins and similar disruptions,
which could lead to interruptions, delays, loss of data or the
inability to accept and fulfill end-user orders. Any systems
interruption that impairs our ability to serve our client's Web pages,
accept and fill customer orders or to provide customer service reduces
the attractiveness of our offerings, which could materially adversely
affect our business, financial condition and results of operations.

WE HAVE NO PATENT ON THE KORE ENGINE AND Our success and ability to compete depends to a large degree upon our
WE MAY NOT BE ABLE TO ADEQUATELY PROTECT proprietary technology. We rely on a combination of trademark and
OUR PROPRIETARY TECHNOLOGY RIGHTS. trade secret rights, confidentiality procedures and licensing
arrangements to establish and protect our proprietary rights. Our
source code for our proprietary software is protected as a trade
secret. We have not applied for a patent for our KORE Engine.
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RISKS RELATED TO OUR RELATIONSHIP WITH MCSi

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OUR BUSINESS MAY BE MATERIALLY ADVERSELY At the present time, MCSi has not decided whether it will retain or
AFFECTED DEPENDING UPON WHAT MCSi dispose of our common stock that it currently owns. Until, and
DECIDES TO DO WITH ITS OWNERSHIP OF OUR depending upon what decision is made, we will or may continue to be
COMMON STOCK. controlled by MCSi. As long as we are controlled by MCSi, the price of
our shares in the public market could be adversely affected because of
the reduced liquidity and the uncertainty as to if, when and how the
shares held by MCSi would be sold or distributed to the public. Until
a decision is made by MCSi, we cannot predict what will occur, what
effects will result from such decision, or whether or when we or our
shareholders will obtain the expected benefits, if any.

WE DEPEND ON MCSi FOR VARIOUS SERVICES We have historically been dependent on MCSi for various services,
AND FOR A SIGNIFICANT PORTION OF OUR including product fulfillment and distribution, customer service,
REVENUE. facilities, human resources, management information systems, as well
as for working capital. We have entered into a distribution services
agreement, sublease agreement and an administrative services agreement
with MCSi under which MCSi will continue to provide these services to
us until October 2001 and lease property and equipment to us through
May 2001. When the term of these agreements expire, we will need
either to extend the term, engage other entities to perform these
services or perform these services ourselves. MCSi may not continue to
provide these services after the initial term of these agreements and
the cost of these services could be significantly higher if we
purchase services from other parties or devote resources to handle
these functions internally.

In addition, we provide e-commerce services for MCSi's computer supply
and audio-visual products business under a two-year agreement. As a
result, MCSi is one of our largest clients, and we currently expect
that MCSi will remain a significant client for the
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foreseeable future. Consequently, a substantial portion of our
business will be dependent upon the success of MCSi's sales and
marketing of its products. Any decline in sales experienced by MCSi
will have a negative effect on the revenues we would obtain from this
agreement. Revenues related to the e-commerce services agreement with
MCSi represented $2,408,121, or 47.2% of our total revenues for the
nine months ended June 30, 2000. Additionally, for the nine months
ended June 30, 2000, we had advertising revenue of $2,336,750, or
45.8% of total revenue, which was primarily derived from original
equipment manufacturer product advertisers who either placed banner
advertisements on clients' Web pages which we serve or purchased
preferential placement of the OEM products on clients' Web stores.
MCSi has supply arrangements with the OEM companies that purchase
advertising from us. Although we negotiate each OEM advertising
arrangement, it is possible that MCSi's relationship with the OEM
companies influenced our obtaining the advertising and we may not have
obtained the advertising without MCSi's relationship. We cannot assure
you that these relationships would continue if our relationship with
MCSi were to change adversely.

All of our agreements with MCSi were made in the context of a
parent-subsidiary relationship. The prices charged to us, or by us, or
the overall terms and conditions under these agreements may be higher
or lower than the prices that may be charged by, or to, unaffiliated
third parties for similar services.

MCSi WILL OWN 50.7% OF OUR COMMON STOCK After the completion of this offering, MCSi will own approximately
AND WILL BE ABLE TO EXERT SUBSTANTIAL 50.7% of our outstanding shares of common stock, or approximately
INFLUENCE OVER OUR MANAGEMENT AND 48.9% if the underwriters exercise their over-allotment option in
CORPORATE AFFAIRS. full. As long as MCSi owns a significant portion of our outstanding
common stock, MCSi will continue to be able to elect our entire board
of directors and to remove any director, with cause, and generally to
determine the outcome of all corporate actions requiring stockholder
approval. As a result, MCSi will be in a position to continue to
control all matters affecting our company, including:

- the composition of our board of directors and, through it, any
decisions with respect to the direction and policies of our company,
including the appointment and removal of officers;

- any decisions with respect to mergers or other business combinations
involving our company;

- the acquisition or disposition of assets by our company;

- future issuances of common stock or other securities of our company;

- the incurrence of debt by our company;

- amendments, waivers and modifications to our distribution services
agreement, administrative services agreement, sublease agreement and
our e-commerce services agreement with MCSi; and

- the payment of dividends on our common stock.
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WE MAY HAVE POTENTIAL BUSINESS CONFLICTS MCSi will continue to be one of our largest customers for a
OF INTEREST WITH MCSi. significant period of time and will continue to be our controlling
stockholder for the foreseeable future. As a result, conflicts of
interest may arise between us and MCSi in a number of areas,
including:

- the nature, quality and pricing of distribution or administrative
services MCSi has agreed to provide to us;

- the nature, quality and pricing of e-commerce services we provide to
MCSi;

- the incurrence of debt, the payment of dividends, the issuance of
capital stock and business combinations by our company;

- sales or distributions by MCSi of all or any portion of its
ownership interest in our company; and

- MCSi's ability to control the management and affairs of our company.

We may not be able to resolve any potential conflicts or, if resolved,
we may not be able to receive more favorable resolution than if we
were dealing with an unaffiliated party. Conflicts could be resolved
in a manner adverse to us and our stockholders, which could materially
affect our business, results of operations and financial condition or
stock price. The distribution services agreement, administrative
services agreement, e-commerce services agreement and the sublease
agreement we have entered into with MCSi may be amended from time to
time upon agreement between the parties. As long as we are controlled
by MCSi, MCSi could require us to agree to an amendment to the
distribution services agreement, administrative services agreement,
sublease agreement or any other agreement that may be more or less
favorable to us than the current terms of those agreements.

SOME OF OUR DIRECTORS MAY HAVE CONFLICTS After this offering, one of the five members of our board of directors
OF INTEREST BECAUSE THEY ARE ALSO will also be a director of MCSi. Our chairman is the chairman of the
DIRECTORS AND STOCKHOLDERS OF MCSi. board and chief executive officer of MCSi. In addition, two of our
directors, our president and our chief financial officer and eight of
our employees hold shares of MCSi common stock and/or options to
acquire shares of MCSi common stock. These individuals may have
conflicts of interest with respect to certain decisions involving
business opportunities and similar matters that may arise in the
ordinary course of our business or the business of MCSi. Conflicts, if
any, could be resolved in a manner adverse to us and our stockholders,
which could materially adversely affect our business, results of
operations and financial condition or stock price.
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RISKS RELATED TO THIS OFFERING

THE SALE OF A SUBSTANTIAL NUMBER OF The market price of our common stock could drop as a result of sales
SHARES OF OUR COMMON STOCK AFTER THIS of substantial amounts of common stock in the public market after the
OFFERING MAY AFFECT OUR STOCK PRICE. closing of this offering or the perception that substantial sales
could occur. In addition, the sale of these shares could impair our
ability to raise capital through the sale of additional equity
securities. After this offering, MCSi will own 8,347,944 shares of our
common stock, two other investors will own an aggregate of 1,804,956
shares, three of our executive officers will own 2,030,580 shares, our
chairman has an option to acquire 676,860 shares and a client will
have a warrant to purchase up to 1.7% of the number of shares issued
and outstanding immediately after this offering (not including the
underwriters' overallotment option). We have agreed to register all of
the shares of our common stock to be held by MCSi and these investors
and executive officers upon demand after this offering. If MCSi
distributes these shares to its stockholders or MCSi, the other
investors, our executive officers or director sell registered shares
in the public market, those shares will be eligible for immediate
resale in the public market, other than any shares held by our
affiliates. We cannot predict whether substantial amounts of our
common stock will be sold in the open market in anticipation of, or
following, any distribution of our shares by MCSi, the investors, the
director or executive officers. Except as described below, MCSi, the
investors, our director and executive officers have the sole
discretion to determine the timing, structure and all terms of any
distribution or sale of our common stock they hold, all of which may
also affect the level of market transactions in, and the price of, our
common stock.

Upon completion of this offering, we will have outstanding an
aggregate of 16,473,480 shares our common stock, based upon the number
of shares outstanding as of June 30, 2000. Of these shares, all of the
shares sold in this offering will be freely tradable without
restriction or further registration under the Securities Act of 1933,
unless such shares are purchased by our "affiliates," as that term is
defined in Rule 144 under the Securities Act. The 12,183,480 shares of
common stock held by existing stockholders are "restricted securities"
as that term is defined in Rule 144. Restricted shares may be sold in
the public market only if registered or if they qualify for an
exemption from registration, such as those provided by Rule 144 or
Rule 701 under the Securities Act. As a result of contractual
restrictions in our agreement with William Blair & Co. prohibiting
MCSi, our officers and directors and our investors from selling their
shares of common stock prior to 180 days after this offering, and the
provisions of Rule 144 and Rule 701, additional shares will be
available for sale in the public market as follows:

- no restricted shares will be eligible for immediate sale on the date
of this prospectus;
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- 12,183,480 restricted shares will be eligible for sale upon
expiration of the lock-up agreements 180 days after the date of this
prospectus; and

- the remainder of the restricted shares will be eligible for sale
from time to time thereafter upon expiration of their respective
one-year or two-year holding periods depending on whether or not
they are held by affiliates.

PURCHASERS OF OUR COMMON STOCK IN THIS The initial public offering price is substantially higher than the net
OFFERING WILL EXPERIENCE IMMEDIATE AND tangible book value per share of our outstanding common stock
SUBSTANTIAL DILUTION. immediately after this offering. The net tangible book value per share
represents the amount of our total tangible assets less our total
liabilities divided by the total number of shares of common stock
outstanding prior to this offering. Accordingly, purchasers of common
stock will experience immediate and substantial net tangible book
value dilution of approximately $10.40 per share, or approximately
74.3% of the offering price of $14.00 per share. See "Dilution."

OUR AMENDED AND RESTATED CERTIFICATE OF Certain provisions of our amended and restated certificate of
INCORPORATION, OUR AMENDED AND RESTATED incorporation and amended and restated bylaws may discourage, delay or
BYLAWS AND DELAWARE LAW MAKE IT prevent a merger or acquisition that a stockholder may consider
DIFFICULT FOR A THIRD PARTY TO ACQUIRE favorable. Such provisions include:
US. - authorizing the issuance of "blank check" preferred stock;
- providing for a classified board of directors with staggered, three-
year terms;
- prohibiting cumulative voting in the election of directors;
- limiting the persons who may call special meetings of stockholders;
- limiting the liability of our directors, and providing them with
full rights of indemnity; and
- establishing advance notice requirements for nominations for
election to the board of directors or for proposing matters that can
be acted on by stockholders at stockholder meetings.

Certain provisions of Delaware law and our stock option plans may also
discourage, delay or prevent someone from acquiring or merging with
us. For more information, please see "Management--1999 Stock Option
Plan" and "Description of Capital Stock."
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USE OF PROCEEDS

We estimate that we will receive net proceeds of $55.0 million from the sale
of the 4,290,000 shares of common stock in this offering, at the assumed initial
public offering price of $14.00 per share and after deducting estimated
underwriting discount and the estimated offering expenses of $1.2 million. If
the underwriters' over-allotment option is exercised in full, we estimate that
our net proceeds will be $62.7 million.

The principal purposes of this offering are to obtain additional working
capital, create a public market for our common stock and to facilitate future
access by Zengine to public equity markets. We generally intend to use the net
proceeds of this offering as follows:

- hiring of additional technical, direct sales and marketing personnel
(approximately $9 million);

- expansion of our market activities (approximately $12 million);

- capital expenditures (approximately $5 million); and

- working capital (approximately $29 million).

In addition, we may, if appropriate opportunities arise, use an undetermined
portion of the net proceeds to engage in strategic alliances or to acquire or
invest in complementary companies, product or service lines, or technologies.
While we engage in discussions relating to strategic alliances or potential
investments which complement our existing business on an on-going basis, we do
not have any agreements or commitments with respect to any proposed alliance,
acquisition or investment. Pending such uses, we will invest the net proceeds in
investment grade, interest-bearing securities.

DIVIDEND POLICY

We have never paid any cash dividends on our common stock and do not
anticipate paying any cash dividends in the foreseeable future.

21
<PAGE>
CAPITALIZATION

The following table sets forth our cash and capitalization as of June 30,
2000 on an actual basis (based on the assumptions set forth in the Summary) and
an as adjusted basis after giving effect to the issuance of 4,290,000 shares of
common stock in this offering, assuming an initial public offering price of
$14.00 per common share.

<TABLE>
<CAPTION>
AS OF JUNE 30, 2000
-------------------------
ACTUAL AS ADJUSTED
----------- -----------
<S> <C> <C>
Cash........................................................ $ -- $55,038,000
=========== ===========
Stockholders' Equity:
Preferred stock, no par value; no shares authorized,
issued or outstanding, actual; 20,000,000 shares
authorized, none issued and outstanding, as adjusted.... $ -- $ --
Common stock, no par value; 100,000,000 shares authorized,
12,183,480 shares issued and outstanding; 100,000,000
shares authorized, 16,473,480 shares issued and
outstanding, as adjusted................................ -- --
Additional paid-in capital................................ 7,353,250 62,391,250
Unearned compensation..................................... (2,056,075) (2,056,075)
Accumulated deficit....................................... (1,010,084) (1,010,084)
----------- -----------
Total stockholders' equity............................ $ 4,287,091 $59,325,091
=========== ===========
</TABLE>

The table above excludes:

- 1,380,118 shares of common stock subject to outstanding options at a
weighted average exercise price of approximately $.89 per share;

- 2,004,182 shares of common stock reserved for future stock option grants
and purchases under our equity compensation plan; and

- 280,049 shares of common stock issuable upon exercise of the outstanding
warrant at an exercise price per share equal to the per share initial
public offering price.

22
<PAGE>
DILUTION

The net tangible book value of our common stock as of June 30, 2000 was
$4.3 million, or $0.35 per share of common stock. Net tangible book value per
share represents the amount of our total tangible assets less our total
liabilities, divided by the total number of shares of common stock outstanding
prior to this offering.

After giving effect to this offering and the receipt of $55.0 million of net
proceeds from this offering (based on an assumed initial public offering price
of $14.00 per share), the pro forma net tangible book value of the common stock
as of June 30, 2000 would have been approximately $59.3 million, or $3.60 per
share. This amount represents an immediate increase in net tangible book value
of $3.25 per share to MCSi and our other existing stockholders, and an immediate
dilution in net tangible book value of $10.40 per share to purchasers of common
stock in this offering. Dilution is determined by subtracting pro forma net
tangible book value per share after this offering from the amount of cash paid
by a new investor for a share of common stock. The following table illustrates
such dilution:

<TABLE>
<S> <C> <C>
Assumed initial public offering price per share........... $ 14.00
-------
Net tangible book value per share at June 30, 2000........ $ 0.35
-------
Increase in pro forma net tangible book value per share
attributable to new investors........................... 3.25
-------
Pro forma net tangible book value per share after this
offering................................................ 3.60
-------
Dilution per share to new investors....................... $ 10.40
=======
</TABLE>

The following table sets forth, as of June 30, 2000, on the pro forma basis
described above, the number of shares of common stock purchased from us, the
total consideration paid to us and the average price per share paid by the
existing stockholders and by new investors who purchase shares of common stock
in this offering, before deducting the estimated underwriting discounts and
offering expenses.

<TABLE>
<CAPTION>
SHARES PURCHASED TOTAL CONSIDERATION AVERAGE
--------------------- ---------------------- PRICE
NUMBER PERCENT AMOUNT PERCENT PER SHARE
---------- -------- ----------- -------- ---------
<S> <C> <C> <C> <C> <C>
Existing stockholders...................... 12,183,480 74.0% $ 7,353,250 10.9% $ 0.60
New investors.............................. 4,290,000 26.0 60,060,000 89.1 14.00
---------- ----- ----------- -----
Total...................................... 16,473,480 100.0% $67,413,250 100.0% $ 4.09
========== ===== =========== =====
</TABLE>

If the underwriters' over-allotment option is exercised in full, sales in
this offering will reduce the number of shares of common stock held by the
existing stockholders to approximately 71.4% of the total shares of common stock
outstanding after the offering and will increase the number of shares held by
new investors to 4,875,000 or approximately 28.6% of the total shares of common
stock outstanding after the offering.

The foregoing table excludes outstanding stock options to purchase an
aggregate of 1,380,118 shares of common stock at a weighted average exercise
price of $.89 per share and an outstanding warrant to purchase up to 1.7% of the
shares of common stock outstanding immediately after this offering (not
including the underwriters' overallotment option) at the initial public offering
price per share. Exercise of these outstanding options and the warrant would
result in dilution per share of $.05 after the offering. We may also issue
additional shares of common stock upon exercise of future stock option grants,
which could also result in additional dilution to then-existing stockholders.

23
<PAGE>

SELECTED FINANCIAL DATA

The selected financial data set forth below for the period from inception
(January 1, 1999) to September 30, 1999 and the six months ended March 31, 2000,
has been derived from our financial statements which have been audited by
PricewaterhouseCoopers LLP, independent accountants, whose report is included
elsewhere in this prospectus. The unaudited interim financial data for the three
and nine month periods ended June 30, 2000 has been derived from our unaudited
interim financial statements, which in the opinion of management, includes all
adjustments, consisting only of normal recurring adjustments, necessary for a
fair presentation thereof. The selected financial data set forth below should be
read in conjunction with "Management's Discussion and Analysis of Financial
Condition and Results of Operations," and our financial statements and the
accompanying notes thereto included elsewhere in this prospectus.

<TABLE>
<CAPTION>
PERIOD FROM
INCEPTION THREE MONTHS NINE MONTHS
(JANUARY 1, 1999) TO SIX MONTHS ENDED ENDED ENDED
SEPTEMBER 30, 1999(1) MARCH 31, 2000(1) JUNE 30, 2000(1) JUNE 30, 2000(1)
---------------------- ----------------- ---------------- ----------------
<S> <C> <C> <C> <C>
RESULTS OF OPERATIONS DATA:
Revenue
Third party.................. $ 4,089 $1,354,088 $1,295,077 $2,649,165
Related Party................ -- 1,356,828 1,098,293 2,455,121
---------- ---------- ---------- ----------
4,089 2,710,916 2,393,370 5,104,286
---------- ---------- ---------- ----------
Cost of revenue
Third party.................. 23,511 231,752 203,791 435,543
Related party................ -- 55,253 24,000 79,253
---------- ---------- ---------- ----------
23,511 287,005 227,791 514,796
---------- ---------- ---------- ----------
Gross profit (loss).............. (19,422) 2,423,911 2,165,579 4,589,490
---------- ---------- ---------- ----------
Selling, general and
administrative expenses(2)
Third party.................. 401,081 1,897,202 1,663,253 3,560,455
Related party................ 513,120 435,000 794,251 1,229,251
---------- ---------- ---------- ----------
914,201 2,332,202 2,457,504 4,789,706
---------- ---------- ---------- ----------
Income (loss) from operations.... (933,623) 91,709 (291,925) (200,216)
Interest income.................. -- 81,464 42,291 123,755
---------- ---------- ---------- ----------
Income (loss) before income
taxes.......................... (933,623) 173,173 (249,634) (76,461)
Provision for income taxes....... -- -- -- --
---------- ---------- ---------- ----------
Net income (loss)................ $ (933,623) $ 173,173 $ (249,634) $ (76,461)
========== ========== ========== ==========
Earnings (loss) per share of
common stock--basic............ $ (.08) $ .02 $ (.02) $ (.01)
========== ========== ========== ==========
Earnings (loss) per share of
common stock-diluted........... $ (.08) $ .01 $ (.02) $ (.01)
========== ========== ========== ==========
Weighted average number of common
shares outstanding--basic...... 11,377,184 11,091,515 11,196,537 11,143,051
========== ========== ========== ==========
Weighted average number of common
shares outstanding-diluted..... 11,377,184 13,338,169 11,196,537 11,143,051
========== ========== ========== ==========
</TABLE>

24
<PAGE>
--------------------------

Notes:

(1) The data reflects selected results of operations and balance sheet data from
the period from our inception (January 1, 1999) through September 30, 1999
and for the nine month period ended June 30, 2000. Because our inception was
on January 1, 1999, comparable data for the six month period ended
March 31, 1999 and for the nine month period ended June 30, 2000 is not
available. For all periods presented, revenue, cost of revenue and selling,
general and administrative expenses include related party transactions with
MCSi. See Note 4 to our financial statements included elsewhere in this
prospectus.

25
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS

THE FOLLOWING DISCUSSION SHOULD BE READ IN CONJUNCTION WITH "SELECTED
FINANCIAL DATA" AND THE FINANCIAL STATEMENTS AND THE ACCOMPANYING NOTES THERETO
INCLUDED ELSEWHERE IN THIS PROSPECTUS. THE FOLLOWING INFORMATION CONTAINS
FORWARD-LOOKING STATEMENTS THAT INVOLVE CERTAIN RISKS AND UNCERTAINTIES. ACTUAL
RESULTS AND EVENTS MAY DIFFER SIGNIFICANTLY FROM THOSE DISCUSSED IN THE
FORWARD-LOOKING STATEMENTS.

OVERVIEW

We were formed as a division of MCSi in January 1999 to sell computer and
audio-visual products, primarily to the small office/home office, or SOHO,
market. We were subsequently incorporated as a wholly owned subsidiary of MCSi
in March 1999. Also in March 1999, we hired three key executives, Mr. Joseph
Savarino, Mr. Lalit Dhadphale and Mr. Christopher Feaver, to revise our business
concept beyond the sale of computer and audio-visual products to the Zengine
business model of providing a full range of e-commerce services to the B2B and
B2C markets. At such time, we also began to work with dedicated Web sites of
MCSi to enhance, modify and maintain these Web sites; we subsequently entered
into an e-commerce agreement with MCSi related to these activities on
October 1, 1999. We entered into our first third party client contract using the
Zengine business model in September 1999, and we legally changed our corporate
name to Zengine, Inc. in the Fall of 1999, after doing business as Zengine since
March 1999.

ZENGINE SERVICES

We provide a comprehensive suite of technology-based solutions that enable
businesses to conduct electronic commerce. We offer a full range of integrated
services for both B2B and B2C e-commerce platforms, including Web site user
interface design, product content and merchandising, personalization and
customer relationship management, advertising and sponsorship management, order
management, inventory management and order fulfillment, end-user customer
service and reporting and analysis. Our solutions are delivered on an outsourced
basis, which means we produce and operate our client's e-commerce Web sites
under their brand. This allows our clients to quickly and cost-effectively
create, maintain and enhance their e-commerce presence. Our proprietary
technology and infrastructure, the KORE Engine, enables these services; KORE is
a highly scalable and reliable platform that uses personalization as the
centerpiece for managing on-line customer relationships.

In performing our services under the Zengine business model, we enter into
contractual arrangements with our clients that describe the services we will
perform. We generate revenues through service fees, which include integration
and set-up, monthly subscription and transaction fees and from advertising and
sponsorships on Web pages we service on our client's stores.

REVENUE

SERVICE FEES

INTEGRATION AND SET-UP FEES

26
<PAGE>

SUBSCRIPTION FEES

Our subscription arrangements provide for maintenance and related services
over a specified time for a fee. Revenue from subscription fees is recognized
ratably over the term of the subscription.

TRANSACTION FEES

We provide outsourced transaction-based services to customers, such as
providing product content and merchandising, transaction processing, order
management, custom fulfillment and end-user customer service. Revenues from
transaction fees are generally in the form of a commission. Under our first two
arrangements with third party clients, our revenue is determined as a percentage
of the gross margin on revenues. Under all other arrangements entered into
between our clients and us, our revenue is based on a percentage of net
revenues. Revenue from transaction fees is recognized when the service is
completed.

ADVERTISING AND SPONSORSHIP FEES

Revenues from advertising take the form of fees when we sell banner
advertising, product placement or other forms of advertising on Web pages we
service on our clients' stores. These arrangements call for continuous
advertising or product placement over a certain time period and are not
contingent upon events such as obtaining certain levels of sales, Web site
visits or other factors. Revenue is recognized ratably over the period of the
advertising/product placement services based on the fulfillment of obligations
under the advertising/product placement arrangements.

EXPENSES

Our expenses consist of costs associated with our revenues and selling,
general and administrative expenses. Cost of revenues consists of the salaries,
employee benefits and related expenses of our people who work on preparation of
our client's sites. It also includes the depreciation of the computer hardware
and software utilized in providing these services. Furthermore, we have entered
into a distribution services agreement with MCSi where we pay MCSi three percent
of the total revenues we receive from our third party clients on the
transactions in which MCSi performs the inventory management and/or order
fulfillment functions. Our selling, general and administrative expenses includes
the salaries, employee benefits, travel and related expenses of our sales
personnel, advertising expenses and marketing and sales support functions, as
well as our facility related expenses.

We anticipate that our expenses will increase substantially in the future as
we expand our services to new clients.

ARRANGEMENTS WITH MCSI

At the time that MCSi began our operations, MCSi had been providing
dedicated Web site order fulfillment services to a variety of its business
customers (the "dedicated Web site operations"). Over the course of the Spring
and Fall of 1999, MCSi began to transfer its dedicated Web site customers to us
for designing, enhancing and providing certain support services to these sites.
Effective October 1, 1999, we entered into an e-commerce services agreement with
MCSi whereby we provide design, enhancement and certain support services to the
dedicated Web site operations of MCSi and receive a fee of ten percent on the
retail value of goods sold to these dedicated Web site customers.

Also effective October 1, 1999, we entered into a distribution services
agreement with MCSi, under which we will pay MCSi three percent of the retail
value of goods sold to third party clients who utilize the inventory management
and order fulfillment services which MCSi provides to us. We subsequently
amended the agreement to pay MCSi for warehouse space equal to a percentage of
MCSi's gross expenses relating to the operation of the warehouse for us through
the end of the term of the agreement. Finally, effective October 1, 1999, we
entered into an administrative services agreement,

27
<PAGE>

under which MCSi provides us with accounting, treasury, tax, insurance and other
services for an annual fee of $720,000 per year, and a sublease and equipment
lease agreement under which MCSi leases to us real and personal property used in
our business for an annual fee of $150,000 per year.

The terms of our arrangements with MCSi do not necessarily represent those
which would be obtained in an arm's-length transaction with an unrelated party.

RESULTS OF OPERATIONS

During September 1999, we signed our first client contract under the Zengine
business model, and we began earning revenue from this contract in
October 1999. Accordingly, our financial results prior to October 1, 1999 are
not representative of our current business model. We have not presented amounts
for the six month period ended March 31, 1999 or the nine month period ended
June 30, 1999 as we were not in existence for that period and were not operating
under our current business model. Accordingly, prior period amounts from our
inception (January 1, 1999) to June 30, 1999 are not meaningful or comparable.

REVENUE

Revenue for the periods presented is summarized as follows:

<TABLE>
<CAPTION>
NINE MONTHS SIX MONTHS
ENDED ENDED THREE MONTHS NINE MONTHS
SEPTEMBER 30, MARCH 31, ENDED ENDED
1999 2000 JUNE 30, 2000 JUNE 30, 2000
-------------- ---------- -------------- --------------
(UNAUDITED) (UNAUDITED)
<S> <C> <C> <C> <C>
Service fees.............................. $ -- $1,361,666 $1,405,870 $2,767,536
Advertising and sponsorship fees.......... -- 1,349,250 987,500 2,336,750
Product sales............................. 4,089 -- -- --
------ ---------- ---------- ----------
$4,089 $2,710,916 $2,393,370 $5,104,286
====== ========== ========== ==========
</TABLE>

The increases in revenues, as shown above, reflect the implementation of our
business plan and the launch of our clients' e-commerce Web sites, along with
adding additional Web sites being serviced under our e-commerce services
agreement with MCSi.

Our revenue for the nine months ended June 30, 2000 totaled $5,104,286. At
June 30, 2000, we had 12 e-commerce clients. Service fee revenue from the MCSi
dedicated Web sites was $2,408,121 for the nine months ended June 30, 2000,
which was 47.2% of our total revenue for the period. Our current arrangement to
service the MCSi dedicated Web sites expires on October 1, 2001. In addition, we
had advertising revenue of $2,336,750, or 45.8% of total revenue, which was
primarily derived from OEM product advertisers who either placed banner
advertisements on clients' Web pages which we serve, or purchased preferential
placement of the OEM manufacturers products on clients' stores. We have provided
advertising or sponsorship services to 14 clients as of June 30, 2000. MCSi has
supply arrangements with the OEM companies that purchase advertising from us.
Although we negotiate each OEM advertising arrangement, MCSi's relationship with
the OEM companies could have influenced our obtaining the advertising and we may
not have obtained the advertising without MCSi's relationship.

Our revenue for the three months ended June 30, 2000 totaled $2,393,370.
Service fee revenue from the MCSi dedicated Web sites was $1,098,293 for the
three months ended June 30, 2000, which was 45.9% of our total revenue for the
period. In addition, we had advertising revenue of $987,500 or 41.3% of total
revenue, which was primarily derived from OEM product advertisers who either
placed banner advertisements on clients' Web pages which we serve, or purchased
preferential placement of the OEM manufacturers products on clients' stores.

28
<PAGE>

Our revenue for the six months ended March 31, 2000 totaled $2,710,916.
During the six months ended March 31, 2000, we initiated our Zengine service
offerings and began servicing e-commerce clients. At March 31, 2000 we had seven
e-commerce clients. Service fee revenue from the MCSi dedicated Web sites was
$1,309,828 for the six months ended March 31, 2000, which was 48.3% of our total
revenue for the period. In addition, we had advertising revenue of $1,349,250,
or 49.8% of total revenue, which was primarily derived from OEM product
advertisers who either placed banner advertisements on clients' Web pages which
we serve, or purchased preferential placement of the OEM manufacturers products
on clients' stores.

From the date of our inception to September 30, 1999, our revenues totaled
$4,089. These revenues arose from the sale of computer supply and audio-visual
products to consumers under our previous business model.

COST OF REVENUE

As a percentage of our revenues, our gross margin was 89.9% for the nine
months ended June 30, 2000, 90.5% for the three months ended June 30, 2000, and
89.4% for the six months ended March 31, 2000, all under our current business
model. These percentages fluctuate depending primarily on the timing as to when
we add additional employees to perform integration and other services.

Our costs of revenues were $23,511 for the period ended September 30, 1999
and reflects costs we incurred for the products we sold arising from the
activities of our previous business model and the amortization of capitalized
computer software costs.

SELLING, GENERAL AND ADMINISTRATIVE EXPENSES

Selling, general and administrative expenses for the periods presented,
along with these amounts stated as a percentage of our revenues during the
periods we operated under the Zengine business model, is shown below:

<TABLE>
<S> <C> <C>
Nine months ended June 30, 2000.......................... $4,789,706 93.8%
Three months ended June 30, 2000......................... $2,457,504 102.7%
Six months ended March 31, 2000.......................... $2,332,202 86.0%
</TABLE>

Changes in selling, general and administrative expenses are also influenced
as to the timing of when we add additional personnel to support these functions.
Our selling, general and administrative costs during the nine months and three
months ended June 30, 2000 was also impacted by an amendment to our distribution
services agreement with MCSi which totalled $326,751.

Our selling, general and administrative expenses for the nine months ended
September 30, 1999 were $914,201 and relate primarily to costs incurred to
develop the Zengine business model. The more significant selling, general and
administrative expenses relate to payroll and accounting processing costs,
salaries and rent.

INCOME TAXES

We did not provide for any income taxes because we have prepared our
provision for income taxes as if we were a separate entity. We do not owe any
income taxes because we have incurred tax basis operating losses since our
inception, and we did not record any deferred tax benefits relating to these
operating losses or any other deferred tax benefits because we presently believe
it is more likely than not that they will not be realized.

29
<PAGE>
LIQUIDITY AND CAPITAL RESOURCES

During the nine months ended June 30, 2000, we used $1,667,492 of cash in
operations primarily as a result of our loss from operations, increased
receivables and increased other assets relating to deferred offering costs and
prepayments to a customer for sole provider status. We used $2,203,963 of cash
for investing activities to fund a demand note to MCSi and to fund expenditures
for software development and capital expenditures. Cash provided by financing
activities of $3,871,049 is the net cash we received from the sale of our common
stock during the period.

During the three months ended June 30, 2000, we used $414,963 of cash in
operations primarily as a result of our loss from operations and increased
receivables. We generated $364,230 of cash from investing activities as a result
of favorable net cash settlements with MCSi relating to our demand note with
MCSi, partially offset by the funding of software development and capital
expenditures.

During the six months ended March 31, 2000, we used $1,252,529 in cash flow
from operations, primarily as a result of increased receivables and prepayments
to a customer for sole provider status, offset by increased accruals. We used
$2,568,193 of cash for investing activities to fund a demand note to MCSi and to
fund expenditures for software development costs and capital expenditures. Cash
provided by financing activities of $3,871,049 is the net cash we received from
the sale of our common stock during the period.

Primarily by virtue of our losses from operations, we used $730,076 in cash
for operations for the period from inception to September 30, 1999.
Additionally, we used cash of $376,405 for investing purposes, primarily
reflecting software development costs incurred to develop our technology, once
we had established its technological feasibility. We were provided cash flow
from financing activities of $1,106,887 for the period from inception to
September 30, 1999 because MCSi paid for and contributed to our capital the cash
we required to fund our operating and investing activities.

GENERAL

Since our inception, we have looked to MCSi to provide the financial and
capital resources we have required to carry on our business activities. Should
the offering of the common stock to which this prospectus relates not occur, we
would continue to look to MCSi for the financial resources we need to carry on
our operations, and we believe those resources will be adequate to fund our
operations for the next twelve months.

If this offering of common stock occurs, MCSi will not be permitted to loan
us money to provide funding for our operations, and if the proceeds from the
offering are not sufficient to fund our future operating and investing needs, we
may have to look to other sources of financing such as bank loans or the
issuance of debt or equity securities. In any event, we believe that the capital
resources provided by this initial public offering will be sufficient to enable
us to pursue our operations under our business model for the foreseeable future.

As described above, we have entered into certain arrangements with MCSi.
Each of these arrangements provide for monthly "net" settlement, which typically
is effectuated by increasing or decreasing the amounts receivable/payable
between MCSi and us.

On October 1, 1999, we entered into an e-commerce services agreement with
one of our clients, Excite@Home. In addition to our providing e-commerce
services, we entered into a stock purchase agreement which called for
Excite@Home and an unrelated financial investor, Wilblairco Associates (an
affiliate of our managing underwriter, William Blair & Company) to purchase an
aggregate of 1,804,956 shares of our common stock for $2.22 per share, or
$4,000,000. After deducting expenses related to the sale of common stock, we
realized net proceeds of $3,871,049. We loaned these net proceeds to MCSi under
a demand note arrangement and we use these funds as needed to fund our
operations. The e-commerce services agreement also commits us to pay $600,000 to
be the sole audio-visual provider of Excite@Home and Dow Jones & Co.'s Work.com
Web site and to purchase

30
<PAGE>

$3,400,000 of advertising from Excite@Home through December 2001, which we will
expense as the related advertising services are provided. See "Certain
Transactions."

In March 2000, Zengine and PNC Bank agreed to enter into a secured
expandable revolving line of credit to provide Zengine up to $5,000,000 for
working capital and general corporate purposes. The line of credit will have a
term of one year and is subject to the successful completion of an initial
public offering with proceeds of at least $35 million.

As a result of entering into the lease and administrative services
agreements with MCSi, the Company is committed to the following payments for the
periods presented below:

<TABLE>
<CAPTION>
SUBLEASE AND ADMINISTRATIVE
EQUIPMENT SERVICE
LEASE AGREEMENT AGREEMENT
--------------- --------------
<S> <C> <C>
Three months ending September 30, 2000........... $ 37,500 $ 180,000
Year ending September 30, 2001................... 100,000 720,000
-------- ----------
Total.......................................... $137,500 $ 900,000
======== ==========
</TABLE>

RECENT ACCOUNTING PRONOUNCEMENTS

We are not aware of any pending accounting pronouncements that we believe
will have a material impact on our financial position, results of operations or
cash flows, including the provisions of Staff Accounting Bulletin 101, which was
recently issued by the Securities and Exchange Commission.

MARKET RELATED RISKS

Currently, all of our operations are domestic, we have no debt and we do not
hold or issue derivative financial instruments. Accordingly, our risk relating
to foreign exchange and changes in interest rates has not been an issue. In the
future, we intend to pursue international clients and will enter into a
revolving line of credit that has a variable rate of interest. Accordingly, we
will need to develop means to monitor and control these market related risks in
the future.

SEASONALITY

We anticipate that we will experience some seasonality based on the year end
holiday selling season.

31
<PAGE>
BUSINESS

OVERVIEW

Zengine provides a comprehensive suite of technology-based solutions that
enable businesses to conduct electronic commerce. We offer a full range of
integrated services for both business-to-business, or B2B, and
business-to-consumer, or B2C, e-commerce including Web site user interface
design, product content and merchandising, personalization and customer
relationship management, advertising and sponsorship management, order
management, inventory management and order fulfillment, end-user customer
service and reporting and analysis. We believe our ability to offer a
comprehensive set of services and our focus on personalizing customer
relationships provides us with a competitive advantage in the marketplace. We
provide our solutions on a complete, or "turn-key," package basis or as
component features and are able to significantly reduce our clients'
time-to-market and the infrastructure, human resource, development and
maintenance costs typically required for enterprise wide e-commerce initiatives.
We market our services to businesses seeking to initiate, expand or enhance
their ability to conduct e-commerce. Our solutions are delivered on an
outsourced basis, which means we produce and operate our client's e-commerce Web
sites under their brand. This allows our clients to quickly and cost-effectively
create, maintain and enhance their e-commerce presence.

Zengine's solutions are centered around its proprietary technology and
infrastructure, the KORE Engine. The functional components of KORE are stored on
a centralized server array which services all of Zengine's clients. This
architecture minimizes development costs and reduces time to market because we
are able to leverage existing functionality previously developed within KORE
rather than re-engineering the functionality for each application. Upon
completion, the component or feature can be made available to other Zengine
clients without added development time or cost. In addition, the KORE Engine is
built to be highly-scalable, permitting our clients to deliver consistent
quality of service as transaction volumes increase, enabling the rapid
deployment of high-speed, dynamic e-commerce Web sites. The real time
personalization technology proprietary to KORE allows businesses to manage
online customer relationships and personalize communication with their customers
and trading partners. The KORE Engine gives us the ability to offer both
front-end Web site content and design along with back-end transaction processing
and order management functionality. We believe that this allows our clients to
achieve rapid deployment of e-commerce platforms, results in greater economies
of scale and provides cost-effective, ongoing access to leading edge e-commerce
technology. The KORE Engine enables the creation of an e-commerce platform that
creates or replicates the look, feel and functionality of the client's Web site.

Using our technology and services, our client's customers experience all
services under our client's brand, including browsing, ordering, paying,
receiving ordered products and obtaining customer support by e-mail or
telephone. When visitors enter a client's home page, secure extranet or store
function within a client's Web site, they are seamlessly and transparently
transferred to our network where they enter a personalized shopping environment.
By soliciting and tracking user information and behavior, we use our KORE Engine
to anticipate user preferences and interests and assist visitors in obtaining
desired products. We solicit user information by means of questionnaires,
warranty cards, rebates and surveys and we track user behavior through purchase
history and Web site visitation behavior. Accordingly, we can suggest products
to a user based upon their prior transactions and preferences. Our B2B services
focus on building secure corporate extranets for clients who sell products
directly to their corporate customers and channel partners as well as clients
who are purchasing operating resources from their vendors. To date, we have
provided our clients a fully operational Web site to transact e-commerce
business within an average of 40 days from the commencement of our services
compared to industry ranges of several months to over one year.

We actively market our services through a direct sales force to businesses
seeking to initiate, expand or enhance their ability to conduct e-commerce,
including:

- original equipment manufacturers;

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- wholesalers, distributors and other businesses that create customized
vendor and supply chain relationships over the Internet or a secure
extranet;

- bricks and mortar, or BAM, retailers;

- online-only retailers; and

- Web sites that have a large and loyal user base (including portals, pure
content sites, communities, directories and service providers).

Our plan is to continue to pursue these target clients and to penetrate
other markets through indirect distribution channels such as consulting firms,
systems integrators, advertising firms, and other professional services firms.

INDUSTRY BACKGROUND

THE INTERNET

Widespread acceptance of the Internet has opened numerous opportunities for
companies seeking growth and increased efficiencies through B2B and B2C
e-commerce. The GartnerGroup estimates that B2B e-commerce will grow from $145
billion in 1999 to $3.9 trillion in 2003, and B2C e-commerce will increase from
$31 billion in 1999 to $381 billion in 2003, representing five-year compound
annual growth rates of 128% and 87%, respectively. In addition, International
Data Corporation, or IDC, estimates the number of Internet purchasers will
increase from approximately 17 million in 1999 to over 80 million in 2003, a
compound annual growth rate of 47%.

An increasing number of businesses engage e-commerce service providers to
design and implement e-commerce solutions. Although no figures are yet available
on the size of the full-service e-commerce outsourcing market, traditional
e-commerce outsourcing, usually defined as Web site design, strategy consulting,
and software creation and hosting, was a $4.6 billion industry in 1998 and is
expected to grow to $39 billion by 2002 according to IDC representing a compound
annual growth rate of 53%. Furthermore, IDC projects that the world wide market
for Internet professional services will grow from $12.9 billion in 1999 to
$78.6 billion in 2003, representing a compound annual growth rate of
approximately 57%.

E-COMMERCE AND CUSTOMER RELATIONSHIP MANAGEMENT

Most companies today recognize that the Internet enables powerful
functionality ranging from display and order processing to complete
supplier-vendor-customer integration and relationship management. As customer
and supplier expectations increase as a result of industry advancement,
companies are forced to take advantage of and develop more sophisticated
Internet applications. With competition only a mouse-click away, organizations
seek to differentiate themselves by providing superior informational and
transactional experiences for their customers through personalized Web sites
that are easy to use and better manage the unique online relationship possible
between the business and its customer.

Personalized e-commerce enables companies to maintain a unique one-to-one
relationship with customers and suppliers while capturing the efficiency,
affordability and speed of an automated system. Businesses need to track,
collect and store Web site visitor information and transfer that information
across the enterprise to effectively manage the customer relationship in
real-time. We believe that the unique one-to-one relationship established
through personalization enhances the experience of a user and likely will result
in increased traffic and online commerce. Companies that quickly establish
quality one-to-one relationships with online visitors differentiate their
services and potentially gain a competitive advantage.

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CHALLENGES PRESENTED BY E-COMMERCE

PROVIDING A COMPREHENSIVE SOLUTION. Creating a comprehensive solution
requires integration among many intricate components. In order to deliver a
dynamic e-commerce experience, companies must integrate Internet applications
with existing content management, customer database, transaction fulfillment and
customer support systems. Visitor experience depends directly on a company's
ability to execute and support the following difficult and complex activities:

- integrating back office systems with front-end services to fully utilize
existing business systems, customer data and information resources;

- attracting, retaining and servicing a broad demographic range of visitors
by providing dynamic content, interactive dialogues and communities of
interest in a friendly, easy-to-use format;

- developing and maintaining visitor information for tracking and recalling
specific interactions in a secure and private environment;

- merchandising services dynamically through personalized content, products
and incentives to drive increased user visits and transactions;

- fulfilling transactions with secure e-commerce processes;

- offering a readily accessible and consistent end-user experience across
multiple customer touch points, such as call and e-mail centers; and

- managing product and service distribution, including inventory management,
product warehousing, order picking and packing, transportation management
and product returns.

TIME-TO-MARKET. In the emerging digital economy, where the first-to-market
often claims significant competitive advantage, speed is essential. Even if
companies have the skilled personnel to implement end-to-end Internet solutions,
the actual development and integration of these solutions with existing
information systems is a very complex and time-consuming process. Solution
design, development and implementation projects frequently range in time from
several months to over a year. Such long implementation lead-time can allow
competitors the opportunity to claim first mover advantage, become the industry
standard and achieve market leadership.

ADVANCED TECHNOLOGICAL SKILL. Providing advanced solutions requires the
development, employment and maintenance of leading edge technology and service.
Commitment to being a technological leader requires significant investment of
resources, both initially and over time, in support functions outside a
company's core competence. The diversion of resources from core competencies can
be distracting to an organization and may hamper core business execution.

TRAINING AND RETAINING HIGH-COST, HIGHLY-SKILLED PERSONNEL. The
availability of high quality professionals experienced in creating, implementing
and integrating advanced Internet solutions is limited, making the market
extremely competitive for these professionals. As a result, recruiting, training
and retaining experienced professionals are increasingly costly. It is often
inefficient and difficult for companies seeking to implement their own advanced
solutions to hire, train and retain in-house personnel.

HIGH COST TO DEPLOY AND UPGRADE. Building, maintaining and upgrading an
Internet commerce platform requires significant initial and ongoing investment.
GartnerGroup reports that the average cost to develop and deploy an Internet
commerce site was $1.0 million in 1999. Often the total costs of ownership
increase significantly due to new technology developments, upgrades and time
involved to develop upgrades and modifications. In order to justify the
investment, companies need a significant return on investment from B2B and B2C
platforms.

Currently, few companies offer the full range of integrated, comprehensive
e-commerce services necessary for clients to fully capitalize on their
e-commerce potential. Most companies offering outsourced solutions focus on one
or just a few specific services, requiring companies to piece together, or find
a third party to integrate, these disparate solutions. We believe that few, if
any, existing solutions providers offer a comprehensive turn-key and outsourced
approach to critical B2B and B2C

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e-commerce services. Further, speed, accuracy and customer experience are
essential in the emerging digital economy. Long implementation lead times in the
development and integration of e-commerce solutions offer faster and more
efficient competitors market advantages. Most businesses cannot afford to divert
internal personnel from their core competencies, while it becomes increasingly
difficult to obtain and retain highly skilled in-house personnel to implement
these advanced solutions.

THE ZENGINE SOLUTION

Zengine addresses the challenges presented by e-commerce by providing a
comprehensive suite of technology-based solutions that enable our clients to
quickly and cost-effectively create, maintain and enhance their e-commerce
presence on an outsourced basis. Our services for both B2B and B2C e-commerce
include Web site user interface design, product content and merchandising,
personalization and customer relationship management, advertising and
sponsorship management, order management, inventory management and order
fulfillment, end-user customer service and reporting and analysis. Zengine
provides all of these services directly to its clients except for the following
services which are provided by third party vendors through Zengine: inventory
management and order fulfillment which is performed by MCSi, or other third
party vendors, product content and reviews and payment processing.

Our solution enables our clients to:

- ACHIEVE RAPID DEPLOYMENT OF E-COMMERCE PLATFORMS. Our services enable our
clients to quickly establish a fully functional e-commerce environment.
Our KORE Engine eliminates the need for months of custom programming and
reduces the time needed to integrate the e-commerce application with the
client's existing computer systems. As a result, our clients are able to
drastically reduce their time-to-market. To date, we have enabled our
clients to conduct e-commerce within an average of 40 days after the
commencement of our services compared to industry ranges of several months
to over one year.

- OPERATE A USER-FRIENDLY E-COMMERCE WEB SITE. Our technology and
infrastructure provide us with the ability to design and operate a
client's e-commerce Web site that is:

- completely integrated with business systems and customer service,
including inventory management, technical support, customer interaction
by voice or e-mail and product return processing;

- consistent with the look, feel and functionality of our client's
existing Web site and brand strategy;

- engaging, intuitive, attractive and easy to use by the Web site
visitor;

- fast and reliable, to minimize visitor wait time and to maximize
interactivity;

- highly personalized, to improve our client's customer relationships by
dynamically identifying, differentiating and interacting with customers
on a more personal level; and

- secured by state-of-the-art procedures that enable execution of
transactions involving confidential personal and financial data.

- SAVE ON CAPITAL EXPENDITURES AND FOCUS ON CORE COMPETENCIES. Our clients
are able to obtain the benefits of e-commerce without making significant
time and financial investments in hardware, software and technical and
customer service personnel. We generally provide our solutions from our
own premises without interfering with our client's daily operations. This
permits our clients to focus on their core competencies and to leverage
our knowledge, technology and infrastructure.

- BENEFIT FROM OUR INTEGRATED, CONTINUAL IMPROVEMENTS. We are engaged in a
constant process of technological enhancement of our services. These
improvements include the upgrade of our KORE Engine, new merchandising
features and advanced browser-based tools. The architecture of KORE is
designed to automatically and without interruption distribute our service
improvements to our clients without the need to hire consultants, bring
the system offline, or install any client-side software. Upon completion,
the feature or tool can be made available to

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other Zengine clients without added development time or costs. Development
under the KORE framework contrasts with other e-commerce solutions that
provide maintenance and upgrades to custom features on an individual and
typically labor intensive basis.

- INCREASE E-COMMERCE REVENUES THROUGH PERSONALIZED CUSTOMER RELATIONSHIP
MANAGEMENT. We engage in personalized customer relationship management by
attempting to optimize each customer visit to our clients' Web sites
through the use of real time interactive marketing and by attempting to
resolve customer inquiries and complaints as promptly as possible.
Interactive personalization consists of capturing permission based
marketing information from implicit and explicit customer behaviors.
Examples of visitor information include volunteered data, including
purchase history, stated preferences, demographic information and
psychographic information and inferred information, including click-stream
behavior for predictive modeling. By gathering real time information, we
are able to personalize the shopping experience by providing product
suggestions, advertisements, incentives and promotions that are likely to
be of interest to the visitor. We believe that this personalization of the
shopping experience results in a higher user conversion ratio (i.e., the
number of visitors who purchase), increased purchases per visit, increased
purchase size and greater customer loyalty. This personalized customer
relationship management capability allows our clients to use the knowledge
they gain of their customers to strengthen relationships, foster customer
allegiance and create and sustain a competitive advantage.

Our solutions incorporate the following distinguishing characteristics:

- COMPREHENSIVE--We combine Web site user interface design, product content
and merchandising, personalization and customer relationship management,
advertising and sponsorship management, order management, inventory
management and order fulfillment, end-user customer service and reporting
and analysis in one comprehensive suite of services to better ensure
accuracy and integration of the entire customer experience.

- HIGH SPEED--All Web site pages served by Zengine are fastloading,
regardless of the speed of the user's Internet connection.

- RELIABLE--Our technology is highly reliable, and is designed to provide
Web site availability 24 hours a day, 7 days a week and is designed to
support online database backups and, if necessary, rapid database
restoration.

- SCALABLE--Our services allow our clients to deliver consistent quality of
service as transaction volumes grow and to handle daily and seasonal peak
periods.

- FLEXIBLE--Our KORE Engine employs highly flexible modeling and tools to
facilitate connections between computer applications, including enterprise
resource planning, inventory management, call center management, supply
chain management and their underlying databases.

- REAL TIME--Our solutions process visitor interactions, inventory
availability, order status and other business rules in real time, reducing
support costs, bad debt risk and abandoned transactions.

- SECURE--We use state-of-the-art encryption to provide the security and
authentication necessary for secure transmission of confidential personal
and financial information.

- TRANSPARENT--All visitor interaction occurs on our servers, but appears to
the customer to be within our client's Web site. This transparency permits
our clients to operate enterprise wide B2B and B2C e-commerce platforms,
without the cost of obtaining hardware, software, bandwidth and the
associated personnel costs of maintaining the system.

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STRATEGY

Our objective is to capitalize on our proprietary technology and
infrastructure, the KORE Engine, to become the leading provider of comprehensive
e-commerce enabling services. To accomplish this goal, we are pursuing a
strategy built on the following initiatives:

- TARGET COMPANIES SEEKING TO INITIATE, EXPAND OR ENHANCE THEIR ABILITY TO
CONDUCT E-COMMERCE. We target our sales and marketing efforts on companies
that are focused on establishing or improving their ability to conduct
e-commerce yet lack the technical expertise necessary to build and
implement desired Internet functionality. These may include original
equipment manufacturers, wholesalers, distributors and other businesses
that create customized vendor and supply chain relationships, bricks and
mortar retailers, pure online retailers and Web sites with a large and
loyal user base (including portals, pure content sites, communities,
directories and service providers). In order to reach our target
customers, we intend to substantially increase our sales and marketing
efforts. We believe that penetration into our target market along with
increased marketing and trade promotion will establish our brand as the
industry standard for outsourced e-commerce solutions.

- EXTEND THE CAPABILITIES OF OUR KORE ENGINE. We intend to extend the
capabilities of our KORE Engine through continued investment in its
development to provide for additional functionality, extending our use of
artificial intelligence, and for vertical applications complementary to
our current offerings. We believe that our e-commerce services are the
most comprehensive, efficient and personalized real time solutions on the
market today. We maintain an open architecture to allow KORE to integrate
with major operating systems and technologies as they evolve. We intend to
develop additional capabilities through continued internal development
and, potentially, through the licensing or acquisition of complementary
technologies.

- LEVERAGE CLIENT BASE. One of the distinguishing characteristics of the
Zengine business model is the constant level of interaction that Zengine
maintains with its clients. This is in sharp contrast to a software
solution where the vendor has limited, if any, contact with the client
after the installation has been completed. The result is that Zengine has,
and will continue to build, a network of clients that it can leverage. As
an example, Zengine is currently selling advertising and sponsorship
packages on client Web sites to advertisers seeking to efficiently deliver
targeted advertising across our network of e-commerce Web sites. Zengine
will continue to leverage its network of clients by providing additional
services or providing access to its client network. These opportunities
may include additional products or services for Zengine to deliver to its
network of clients such as relevant content, or may include other
opportunities to generate revenue through selling access to its network of
clients to outside sponsors or providers.

- EXPAND OUR STRATEGIC ALLIANCES. We currently have strategic business
alliances with Excite@Home, United Stationers Supply Co. and MCSi. We plan
to continue to develop technology and marketing relationships through
strategic alliances with software and systems integrators, consulting
firms, advertising firms and other professional services firms. These
alliances are intended to complement our direct sales force by providing
business leads, increasing our geographic coverage and addressing new
industry segments. We also intend to leverage these relationships to
commence international sales in countries with high Internet penetration
and growth rates.

- ASSIST OUR CLIENTS IN INCREASING THEIR REVENUES USING OUR STATE-OF-THE-ART
E-COMMERCE SOLUTIONS. Since our revenues are enhanced by increasing the
sales of our client's products through the e-commerce platforms we
provide, we intend to enhance the tools our clients use to increase their
user to buyer conversion rates, increase the number of products per
purchase and the average value of each purchase. Primary tools used in
achieving this goal include, increasing the efficiency of our
personalization technology and merchandising features, such as development
of more robust, real time predictive models. We anticipate that these
models will produce higher levels of personalized content and
merchandising capabilities.

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ZENGINE SERVICES AND TOOLS

ZENGINE SERVICES

We provide our e-commerce services to clients operating in both B2B and B2C
environments. Our business service enables original equipment manufacturers,
wholesalers and distributors to conduct personalized supply-chain management and
customer transactions over the Internet or secure extranets enabled by Zengine.
Our consumer service enables original equipment manufacturers, bricks and mortar
retailers, online-only retailers and Web sites with a large and loyal user base,
to extend their current business over the Internet.

Our services focus on customer relationship management and can be generally
separated into six categories.

- WEB SITE USER INTERFACE DESIGN AND PRODUCT CONTENT. We provide complete
Web site and product content creation in conjunction with our clients'
brand strategy. We focus our efforts on designing simple and intuitive
user-interfaces that leverage rich product content generated by Zengine's
content group, by third parties and by our clients. Examples of content
features enabled by KORE include product comparisons, product
compatibility, related products and accessories and end-user and third
party reviews. Comprehensive content and enabling features encourage
visitors to make and increase their online purchases.

- MERCHANDISING. We provide comprehensive merchandising features designed to
increase the conversion from browser to buyer, retain loyal customers and
personalize experiences for one-to-one communication between our clients
and their customers. Examples of merchandising features enabled by KORE
include personalization, targeting and profiling, top-seller and user
rating systems, gift certificates and coupons, outbound communication and
reporting and analysis.

Whether within or outside of our client Web sites, we extend our clients'
brands to outbound e-mail newsletters and advertising (including banners,
buttons, rich media and affiliate marketing). Scheduled for launch this
year, we are designing new functionality into KORE that automates our
targeted e-mail capabilities. Currently, our marketing personnel
personalize and send targeted e-mails based on customer characteristics
and preferences.

- ADVERTISING AND SPONSORSHIP MANAGEMENT. As an outsourced solution, part of
our service entails the serving of client Web sites. These Web sites may
include advertisements and sponsorships which drive the visitor deeper
into the client's Web sites. As a result, we sell advertising and
sponsorship packages for individual client sites, or across the Zengine
network of client e-commerce Web sites as a package. Advertising and
sponsorship packages are sold to brand and direct-marketing advertisers
seeking to influence targeted visitors within our client e-commerce Web
sites.

- ORDER MANAGEMENT. We provide complete order management capabilities for
clients in a secure environment. Examples of our order management services
enabled by KORE include universal shopping carts and digital wallets,
e-mail notifications for account activation, credit card authorizations
and settlements, inventory availability, order tracking with major
carriers, tax compliance, and fraud protection. We have entered into
agreements with VeriSign, Inc. and CyberSource Corporation for credit card
processing and advanced fraud screening and protection.

Our order management services include handling all logistics after credit
cards have been processed. All orders are processed by secure transactions
via the Internet, by phone, by fax, by mail and/or purchase order (where
terms are extended to business customers with proper credit history). Our
systems provide the ability for both clients and their customers to track
the status of orders at any time in real time. This service is transparent
to our clients' customers and is seamlessly integrated with our clients'
internal and legacy computer systems.

For clients that wish to leverage existing enterprise resource planning
(ERP) systems in their e-commerce platform, Zengine provides an open
adapter (application programming interface) to KORE that enables seamless
connections between a client's legacy computer systems and

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KORE. This direct connection, called KOG (KORE Object Gateway), eliminates
redundant or unnecessary human intervention for order management and
supports a scalable operation designed for long-term growth. A graphic
depiction of KOG follows:

[KOG Graphic

The upper left hand corner of the page contains the following text "KOG
(KORE Object Gateway)/Abstraction Layer for Client System Integration with The
KORE Engine."

The graphic consists of a series of boxes with arrows pointing to the box on
the right, labeled from left to right, as follows:

Box 1: "KORE"; Box 2: "New order," "Send data," "Receive data,"
"Inventory updates," "User data," "Content," "Client System API (ERP, POS,
etc.)" pointing to a gear symbol labeled "KOG" pointing to Box 3 labeled on
top "Object Protocol" with interior vertical boxes labeled, from top to
bottom, "XML," "ODBC," "EDI," "Flat Text FTP," "Secure E-Mail," pointing to
vertical boxes labeled on top "Application Example" with boxes below labeled
"Everdream" (connected to the XML box), "JD Edwards" (connected to the ODBC
box), "Valley Media" (connected to the EDI box), "MCSi:/Muze" (connected to
the Flat Text FTP box) and "rexstores.com" (connected to the Secure E-mail
box).

The Zengine logo is in the lower right hand corner of the page.]

- INVENTORY MANAGEMENT AND ORDER FULFILLMENT. On behalf of our clients, we
have MCSi pick, pack and ship the client's customer orders and provide
customized private label packaging, inserts and promotional literature for
distribution with customer orders. Based upon client needs, we are able to
take advantage of a variety of shipping and delivery options, including
next day service. These services are delivered through our distribution
services agreement with MCSi. MCSi, as our agent, receives third party or
client inventory at its distribution centers, verifies shipment accuracy,
unpacks, inspects for damage and generally stocks for sale the same day.
We also utilize the fulfillment services of certain third party
wholesalers such as Baker & Taylor, Ingram Micro, Ingram Entertainment,
United Stationers and Valley Media. For clients that wish to leverage
their existing distribution capabilities, we provide fulfillment messaging
directly to the client's back office systems for delivery to their
customers. An integral part of our transaction management services also
includes the warehousing and distribution of inventory owned by third
party vendors or our clients and performed by MCSi.

- END-USER CUSTOMER SERVICE. We provide complete call and e-mail center
services to our clients internally and under our distribution services
agreement with MCSi. We believe that an important feature of e-commerce is
the ability for the end-user to talk with a live customer service
representative. Our customer support services utilize features that
integrate voice, e-mail, data and Internet chat communications to respond
to and handle customer inquiries. Our customer service representatives
answer questions in our client's name regarding orders, shipping, billing,
returns and product information as well as a variety of other questions.
Our customer support center automatically identifies each customer request
and routes it to the available customer support representative. Our
customer support centers are designed so that our customer service
representatives can handle various clients and products, thereby creating
economies of scale benefits for our clients.

ZENGINE TOOLS

Our e-commerce services are customized and maintained using Internet-based
tools accessible by our personnel and by our clients. These tools, called KIT
(KORE Interactive Tool), are accessible through standard Web browser interfaces.
KIT provides a set of building blocks comprised of customizable components,
application templates and rule sets. (See the inside back cover page of this
prospectus for a graphic presentation of KIT.) These tools are instrumental in
building, rapidly

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accessing and easily maintaining the Zengine turn-key e-commerce services. A
description of our tools follows:

- ZENGINE REPORTING AND ANALYSIS. Our reporting and analysis tools allow
both Zengine and our clients to easily analyze customer and operational
data. To support this capability, we have designed our reporting and
analysis tools to extract and manage data from individual client
e-commerce sites. Once our tools have analyzed the data, they present the
resulting information in easy-to-use formats, such as graphs and tables.
Examples of real time reports include client specific reports, including
inventory management, end-user statistics such as end-user behavior, sales
trends analysis, per page statistics, references from prior pages and
search results analysis; advertising and sponsorship campaign reporting
including discount and voucher creation and reporting, e-mail marketing
and promotional offer creation and reporting; and call center and customer
management reporting, which provides real time customer purchase history,
current shopping cart items and past interaction data.

- ZENGINE CONTENT MANAGEMENT. This tool allows a distributed and remote team
of non-technical content editors and merchandising experts to
collaboratively manage most aspects of site content, including creating,
editing, staging, production and archiving. This tool provides personal
and shared in-boxes that enable teams of content creators to collaborate
in developing content and provides for content previews prior to
publishing, to control access to publishing and to capture content
classification information. It supports flat content insertion and adds a
user-friendly presentation layer to the content by automatically
generating HTML within the publisher.

- ZENGINE DESIGN CENTER. We shorten the development cycle by creating
simple, intuitive user interfaces for client e-commerce Web sites in
conjunction with their overall brand strategies. By outsourcing the task
of user interface design to us, our clients are able to focus on other
strategic issues involved in launching or retro-fitting their e-commerce
operations. We can provide these services either on a full outsourced
basis or in collaboration with in-house personnel or other external
service providers, such as graphic designers or advertising firms. Our
clients have ultimate authority for user interface and look and feel
decisions.

- ZENGINE CALL CENTER. This tool displays real-time customer information for
call center representatives and general customer service management.
Customer purchase history and past interaction data are available to
authorized representatives, as well as a customer's current shopping cart
items for assistance during checkout. (See the inside back cover page of
this prospectus for a graphic presentation.)

CLIENTS

At June 30, 2000, we had 12 e-commerce clients. We currently have 15
e-commerce clients, which include equipment manufacturers, wholesalers,
distributors and other businesses that create customized vendor and supply chain
relationships, bricks and mortar retailers, pure online retailers and Web sites
that have a large and loyal user base (including portals, pure content sites,
communities, directories and service providers). In addition, we have placed
advertisements for 16 companies, including Epson, Hewlett-Packard, Hitachi,
InFocus, Lexmark, Maxell, Proxima, Sharp, Sony and Toshiba. Only MCSi accounted
for more than 10% of our total revenue for the nine month period ended June 30,
2000, while Sharp accounted for 9.99% of our total revenue for the period.

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CASE STUDIES

The following case studies are representative of the services we provide our
clients.

WORK.COM

CLIENT: Excite@Home is a global media company offering media services
through the Excite Web site and narrow and broadband subscription services
through @Home for consumers and Work.com, a joint venture between Excite@Home
and Dow Jones & Co., a business services and information portal focused on the
business professional.

STRATEGIC IMPERATIVE: Excite@Home was preparing to launch the Work.com Web
site and recognized the opportunity to leverage the capabilities of its
broadband network combined with the retail sales of advanced audio-visual and
video conferencing products to its captive visitors on Work.com. The development
of the proposed e-commerce site had an aggressive time schedule that could not
be realized even by the technology-based company's internal resources. Prior to
the launch of the Work.com Web site, Excite@Home invested $2.0 million in
Zengine in exchange for an equity interest. For more information, please see
"Certain Transactions."

ZENGINE SOLUTION: We launched the Work.com Audio-Visual e-commerce store,
the Work.com AV Store, on December 5, 1999, four weeks after initiating
development. Running on our servers, but appearing to be a part of the Work.com
Web site, the Work.com AV Store offers Work.com's business visitors audio,
video, networking, video conferencing, presentation, high speed broadband and
broadcast service products and is found at http://AVStore.Work.com.

Our agreement with Excite@Home is representative of our strategy to develop
strategic alliances with major industry vendors.

REXSTORES.COM, INC.

CLIENT: rexstores.com is a B2C retailer focusing on the sale of consumer
electronics over the Internet. rexstores.com is a wholly-owned subsidiary of REX
Stores Corporation, a New York Stock Exchange listed company and a leading
retailer of consumer electronics and appliances in small to medium market areas
through 238 stores in 35 states. rexstores.com sells its products over its Web
site and on major auction sites.

STRATEGIC IMPERATIVE: rexstores.com was searching for a cost-effective way
to make its successful retail Web site even more interactive and to personalize
the visitor experience in order to increase repeat visits and to increase its
conversion (shop/buy) ratios.

ZENGINE SOLUTION: We worked closely with rexstores.com's technical team in
redesigning the Web site's user interface and connecting their enterprise
resource systems (primarily inventory and distribution) to the KORE Engine. The
rexstores.com Web site was re-launched within five weeks of the signing of our
agreement and can be found at http://rexstores.com.

Our collaboration with rexstores.com illustrates how Zengine's experienced
production and engineering team can work closely with an established group of
e-commerce professionals to create significant results-oriented enhancements.
Zengine is able to add value to existing online retailers by providing them with
collaborative planning and tools to increase the effectiveness of their
e-commerce initiatives.

MCSI, INC.

CLIENT: MCSi, our parent corporation, is a systems integration and reseller
of state-of-the-art presentation and broadcast facilities, with 1999 annual
revenues of over $680 million.

STRATEGIC IMPERATIVE: In a competitive industry, MCSi needs to maintain its
strong position, in part, by developing additional sales channels. MCSi
recognized that it could significantly enhance its

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distribution by developing an Internet-based method of selling its products to
its business clients and to retail consumers. MCSi initially implemented an
e-commerce site relying on internal development but quickly realized that we
could significantly strengthen its e-commerce efforts through the application of
our dedicated technical expertise.

ZENGINE SOLUTION: We have consulted with and designed MCSi's dedicated Web
sites to permit MCSi to sell its products over its secure extranet to over 1,000
of MCSi's customers at June 30, 2000. These customers log on to MCSi's Web site,
which, based on the work we have performed, appears as a self-branded,
personalized e-commerce extranet mirroring the design of the customers' Web
site. This B2B service provides authorized client users with the right to
purchase specified products from MCSi at preset pricing levels. Under the
administrative services agreement, MCSi employees have the flexibility and
control to update and maintain this Web site under the guidance of Zengine
employees.

MCSi is now able to offer its customers a way to monitor product purchases
while at the same time making it convenient and seamless for the customers'
employees to obtain the products needed. By serving its clients' extranet pages,
MCSi is able to acquire every purchase transaction made by the customer's
employees.

SALES AND MARKETING

We market our services through a direct sales force to businesses seeking to
initiate, expand or enhance their ability to conduct e-commerce, including
original equipment manufacturers, wholesalers, distributors and other businesses
that create customized vendor and supply chain relationships over the Internet
or a secure extranet, bricks and mortar retailers, online-only retailers and
major Internet Web sites with a large and loyal user base (including portals,
pure content sites, communities, directories and service providers). Our plan is
to continue to pursue these target clients and to penetrate other markets
through indirect distribution channels such as consulting firms, systems and
integrators, advertising firms and other professional services firms.

Because we do not promote our own brand to the retail public, we do not
compete with, and are able to serve as a neutral provider of e-commerce services
to, potential and existing clients. This strategy reflects our commitment to
each of our clients' brand preservation and exposure. Our marketing efforts are
two-fold:

- we promote the value of our outsourced e-commerce services by showcasing
our clients' success and leadership; and

- we work cooperatively with clients to promote traffic, revenue and
long-term loyalty to their e-commerce platforms.

Our sales activities generally involve meetings with senior management of
the prospective client in order to educate them about how our services will
fulfill their needs. These meetings also involve a hands-on demonstration of our
service capabilities. Because Zengine's brand is "behind the scenes" and because
a client usually must make an enterprise-wide, strategic decision as to which
company it will choose to operate its B2B e-commerce systems or to operate its
B2B e-commerce store or both our sales process typically requires us to compete
with a company's in-house solution and with other e-commerce service vendors. As
a result, the sales cycle is typically long and unpredictable.

We use a variety of marketing activities to increase market awareness for
our services and educate our target audience. In addition to building brand
awareness with our potential clients, our marketing activities focus on
preparing market research, service offering planning, managing press coverage,
identifying potential clients and generating leads to assist in our direct sales
efforts. To build awareness and attract new clients we seek leads from our
current clients, attend and exhibit at trade shows, build relationships with
industry experts to facilitate networking opportunities, and run cooperative
independent print advertisements in various newspapers, trade journals and
publications. Upon completion of the offering, we intend to greatly expand our
marketing efforts by hiring additional

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personnel who will be dedicated to business and market development and public
relations, along with increasing our expenditures for direct marketing,
promotion and co-marketing arrangements with strategic partners.

An important element of our strategy is to enter into relationships with
software and systems integrators, consulting firms, advertising firms, related
service providers and other professional service firms to assist us in
marketing, selling and delivering our services to potential clients. This
approach is intended to increase the potential for lead generation and access to
large accounts. We currently have strategic alliances with Excite@Home, MCSi,
and United Stationers. Our strategic alliance with Excite@Home is manifested by
our service agreement with them and Excite@ Home's investment in us. The
strategic alliance with United Stationers provides for us to recommend that our
new and existing clients use the services of United Stationer's e-Nited
logistics division and that e-Nited recommend our services to their new and
existing clients. Our strategic alliance with MCSi is based on our affiliation
with MCSi, MCSi's ability to assist us in our marketing efforts by purchasing
products from potential clients in the ordinary course of business, the
agreements we have to provide e-commerce services to MCSi and MCSi's agreement
to provide administrative, distribution and facilities services to us. We are
currently seeking to develop additional strategic alliances. We have vendor
relationships with AboveNet, Cisco Systems, Cybersource, Oracle, pcOrder,
Signio, Sun, Unicast, Verisign, Vertex and Zeus.

TECHNOLOGY AND INFRASTRUCTURE

We believe that our proprietary technology and infrastructure, the KORE
Engine, enables us to build, deliver and manage e-commerce solutions in less
time, at lower cost and with greater business success than existing
alternatives. KORE is a robust architecture that allows existing and custom
functionality to be combined in any number of brand iterations seamlessly and
with superior efficiencies.

THE KORE ENGINE. Zengine's proprietary technology and infrastructure, the
KORE Engine, enables us to build, deliver and manage e-commerce solutions in
less time and more cost effectively than existing alternatives. The functional
components of KORE are stored on a centralized server array which services all
Zengine clients. This architecture minimizes development costs and reduces
time-to-market because we are able to leverage existing functionality previously
developed within KORE rather than re-engineering the functionality for each
application. Upon completion, the component or feature can be made available to
other Zengine clients without added development time or cost. Development within
the KORE framework significantly differs from other e-commerce solutions that
provide maintenance and upgrades to custom features on an individual and
possibly labor intensive basis.

KORE PERSONALIZATION. KORE Personalization is the foundation for our
real-time, personalized marketing and customer relationship management
capabilities. To increase conversion and optimization rates of browsers to
buyers, to extend relationship connections between our clients and their
customers, and to build long-term brand loyalty, we enable client Web sites to
adapt product presentation and merchandising features in real-time based on
implicit and explicit visitor information. KORE Personalization applies
predictive algorithms to infer a customer's interests and adapts content
presentation, such as product features, advertisements and pricing, accordingly.
As a customer's experience and interaction with a client's site develops,
personalized content becomes more relevant, ultimately bridging a more personal
relationship between our client and its customer.

We employ real-time predictive models that compare selected attributes of a
customer's purchase history, behavior, demographics and preferences to the
attributes of large customer populations in detail. Groups of customers
exhibiting attributes similar to the specific customer analyzed are compared to
determine the likely preferences of the customer. In calendar year 2000, we plan
to introduce customizable personal pages, allowing a client's online customers
to personalize the page layout of the

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client's site. This feature will also enable client customers to co-brand the
customized layout and operate as an affiliate e-commerce site where other
customers can then shop.

NETWORK ARCHITECTURE. KORE resides on a secure, private fault-tolerant
network architecture that provides highly reliable service. This is accomplished
by distributing Internet traffic across an array of servers that are scalable
and redundant. Because of this distributed model, rapid increases in server load
can be quickly scaled by allocating more servers to immediately accommodate
client Web site demand. In addition, our redundant network architecture allows
for unpredictable hardware failure with little effect to service because the
failure merely results in the balanced distribution of server load across the
server array.

The diagram below depicts a simplified view of our physical network that is
co-located at Above/ Net Communications, a subsidiary of Metromedia Fiber
Network. Above/Net is a Tier 1 Internet Service Provider with multiple OC-48
capacity, offering clear channel circuits across North America.

[Network Architecture Graphic]

A series of horizontal boxes connected by double-headed arrows, labeled,
starting from the top as follows; "ATM Fiber Switch" with an arrow to the right
labeled "OC-48" to a cloud shape labeled "Internet Backbone." The ATM Fiber
Switch box is separated by an arrow pointing down and labeled "100Mb" to a box
labeled "Zengine Router" separated by three arrows pointing to three parallel
boxes "Secure Webserver Cluster" separated by three arrows pointing to a box
labeled "Zengine Router" separated by three arrows pointing to three parallel
boxes labeled "KORE Cluster" separated by three arrows pointing to two short
cylinders labeled "Data Center."

Next to the graphic is a box containing the words "Our clients' B2B and B2C
e-commerce platforms are served by Zengine from our secure, redundant and
fault-tolerant network."

The Zengine logo is in the lower right hand corner of the page.]

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Zengine utilizes distributed and redundant Sun Microsystems Enterprises
Server technology operating in conjunction with Zeus 128-bit secure Web servers
supported by optimized relational and multi-dimensional databases from MySQL.
Since we handle sensitive information (i.e. credit card numbers and
personalization data), we adhere to 1024-bit secure socket layer (SSL)
encryption to provide the highest level of security available on the market
today.

OPEN SOURCE MOVEMENT. In order to maximize both personalization and speed
of service, we choose to adhere to open source standards and scalable
programming languages. Development within KORE is done in Perl5, a widely
accepted standard programming language for developing object-oriented software
that is the informed choice for building large-scale e-commerce platforms that
require ongoing and rapid development and high-speed dynamically-generated Web
site operations. MySQL, an open source database, is optimized for speed and
scalability and serves as the foundation for KORE's personalized capabilities.
KORE creates multiple database connections for multiple actions both efficiently
and quickly, resulting in high-speed dynamic Web site delivery.

The design of our KORE Engine, KOG, KIT and network architecture enables us
to provide rapid, cost-effective and reliable e-commerce solutions by exploiting
the scalability of open source technologies and multi-processor, shared memory
computers.

PRODUCT DEVELOPMENT

We believe our future success will depend in large part on our ability to
enhance the KORE Engine, develop new products, maintain technological
leadership, and satisfy an evolving range of customer requirements. Our product
development group is responsible for implementing and integrating KORE into our
client's Web sites and business practices, developing content and the user
interface of our client's Web sites, product testing and quality assurance, and
writing product user documentation. In addition, this group supports post-sale
and client account management activities.

We are currently developing the following products and features, all of
which are scheduled to be available in calendar year 2000.

- KORE PERSONALIZATION FEATURES--Key features of the next update to the KORE
Engine will utilize more robust real-time predictive models that we
anticipate will yield a higher degree of relevant content. Later in
calendar year 2000, we plan to implement artificially intelligent systems
that will allow for greater one-to-one personalization across all
e-commerce environments and customer touch-points.

- ENHANCED MERCHANDISING FEATURES--We constantly strive to create more
compelling features that in turn add usability to client e-commerce sites.
For example, "Recurring Purchases" enables customers to set advance
schedules for purchase of products based on consumption or scheduling.
This feature also serves as a data collection point with calendar and
reminder features.

- ADVANCED TOOLS--Our services are customized and maintained using KIT,
browser-based tools easily accessed by our clients via standard Internet
browsers. We will be launching enhancements to our Reporting and Analysis,
Content Management and Design Center Tools to further enable our product
development personnel and our clients to enhance the customization of user
interfaces, and analysis of traffic, buying habits and trends.

COMPETITION

The market for our services is intensely competitive and subject to rapid
technological change. We expect competition to intensify in the future. Our
primary source of competition comes from companies who develop their own custom
e-commerce systems or purchase software packages and hire consultants

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to implement these solutions. Because these companies have likely made
significant initial investments to develop their custom systems, they may be
less likely to employ outsourced transaction processing strategies. We also face
competition from companies such as Art Technology Group, Breakaway Solutions,
Broadvision, E.piphany, Net Perceptions and USinternetworking. In addition,
other companies may enter the market to provide similar services.

Many of our competitors have longer operating histories, substantially
greater financial, technical, marketing or other resources, or greater name
recognition than we do. Our competitors may be able to respond more quickly than
we can to new or emerging technologies and changes in customer requirements.
Competition could seriously impede our ability to sell additional services on
terms favorable to us. Our current and potential competitors may develop and
market new technologies that render our existing or future services obsolete,
unmarketable or less competitive. Our current and potential competitors may make
strategic acquisitions or establish cooperative relationships among themselves
or with other e-commerce solution providers or fulfillment companies, thereby
increasing the ability of their services to address the needs of our prospective
customers. Competitive pressures could reduce our market share or require the
reduction of the prices of our services, either of which could materially and
adversely affect our business, results of operations or financial condition.

We compete on the basis of certain factors, including:

- technology;

- time-to-market;

- breadth of service features and functionality;

- ease of implementation;

- speed, accessibility and ease of use;

- brand recognition;

- price;

- system reliability and capacity; and

- customer support.

We believe that we presently compete favorably with respect to each of these
factors. However, the market for our services is still rapidly evolving, and we
may not be able to compete successfully against current and potential
competitors.

INTELLECTUAL PROPERTY

Our ability to compete depends to a large degree upon our proprietary
technology. Our success depends on protecting our intellectual property, which,
next to our employees, is our most important asset. If we do not adequately
protect our intellectual property, our business, financial condition and results
of operations could be seriously harmed. We rely on a combination of trademark
and trade secret rights, confidentiality procedures, licensing arrangements and
contractual restrictions to establish and protect our proprietary rights. These
legal provisions afford only limited protection for our technology. Our source
code for our proprietary software is protected as a trade secret. We have not
applied for a patent for our KORE Engine and have not decided whether to do so
in the future, since the source code would be publicly revealed upon receipt of
any patent. Even if we filed a patent application, we could not assure you that
a patent would be issued.

We have applied to register our trademarks, such as the Zengine name, the
Zengine "gear" logo, "KORE," "KOG," our tag line "Fueling Your Brand's Commerce
Engine" and "Commerce Engine." However, we cannot assure you that effective
trademark protection will be available for our marks. We

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have identified another company that is using the KORE name. We have demanded
that this company stop using our proprietary name. We cannot assure that we will
be successful in these efforts. It is possible that others will adopt product
names or logos similar to KORE or the Zengine gear logo. This would impede our
ability to build our brand identity, lead to customer confusion, increase our
legal expenses and distract management from the operation of our business.

Finally, we seek to avoid disclosure of our intellectual property by
requiring employees and consultants with access to our proprietary information
to execute confidentiality agreements with us and by restricting access to our
source code. Due to rapid technological change, we believe that factors such as
the technological and creative skills of our personnel, new product developments
and enhancements to existing products are more important than the various legal
protections of our technology to establishing and maintaining a technology
leadership position.

Despite our efforts to protect our proprietary rights, unauthorized parties
may attempt to copy aspects of our services or to obtain and use information
that we regard as proprietary. Policing unauthorized use of our software is
difficult and while we are unable to determine the extent to which piracy of our
software exists, if at all, software piracy can be expected to be a persistent
problem. Litigation may be necessary in the future to enforce our intellectual
property rights, to protect our trade secrets, to determine the ability and
scope of the proprietary rights of others or to defend against claims of
infringement or invalidity. However, the laws of many countries do not protect
our proprietary rights to as great an extent as do the laws of the United
States. Any such resulting litigation could result in substantial costs and
diversion of resources and could seriously harm our business, operating results
and financial condition. We cannot assure you that our means of protecting our
proprietary rights will be adequate or that our competitors will not
independently develop similar technology. Any failure by us to meaningfully
protect our property could have a material adverse effect on our business.

To date, we have not been notified that our products infringe the
proprietary rights of third parties, but we cannot assure you that third parties
will not claim infringement with respect to our current or future services or
technology. Because the e-commerce industry is relatively new, patents relating
to the industry are only now starting to be issued by the U.S. Patent and
Trademark Office. These patents are protecting certain business processes which
many in the industry currently believe are not proprietary. We expect that
developers of Web-based commerce products and services will increasingly be
subject to infringement claims as the number of products, services and
competitors in our industry segment grows and as the functionality of products
in different segments of the industry increasingly overlaps. Any such claims,
with or without merit, could be time-consuming to defend, result in costly
litigation, divert management's attention and resources, cause delays or require
us to enter into royalty or licensing agreements. Such royalty or licensing
agreements, if required, may not be favorable or acceptable to us. A successful
claim of infringement against us and our failure or inability to license the
infringed technology or develop or license technology with comparable
functionality could harm our business. See "Risk Factors--Risks Related to Our
Business--We have no patent on the KORE Engine and we may not be able to
adequately protect our proprietary rights."

We integrate third party software into software we use to perform our
services. This third-party software may not continue to be available on
commercially reasonable terms. We license Internet fraud screen from CyberSource
Corporation and payment processing capabilities from Verisign, Inc. If we cannot
maintain licenses to this third-party software, implementation of our services
could be delayed until equivalent software could be developed or licensed and
integrated into our products, which could materially adversely affect our
business.

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FACILITIES

Our primary offices are located in approximately 17,900 square feet of space
in Fremont, California under a sublease with MCSi expiring on May 1, 2001. For
more information regarding this sublease, refer to the section titled "Certain
Transactions."

EMPLOYEES

As of June 30, 2000, we had a total of 43 full time and 2 part time
employees, and 6 MCSi employees provide full time, and 15 MCSi employees provide
part time, services to us under the Administrative Services Agreement. Of our
total employees (including those of MCSi), 10 are in management, 25 are in
technology/engineering, 21 are in merchandising/content, and 10 persons are in
sales/marketing, for a total of 66. Our future success will depend, in part, on
our ability to attract, retain and motivate highly qualified technical sales and
management personnel, for whom competition is intense. None of our employees is
represented by a labor union, and we have never experienced a work stoppage. We
consider employee relations to be good.

LEGAL PROCEEDINGS

We are not a party to any material legal proceedings.

REGULATION

As e-commerce and the Internet continue to evolve, federal, state and
foreign governments may adopt laws and regulations covering issues such as user
privacy, taxation of goods and services provided over the Internet, pricing,
content and quality of products and services. If enacted, these laws and
regulations could limit the market for e-commerce, and therefore the market for
our services. Although many of these regulations may not apply directly to our
business, we expect that laws regulating the solicitation, collection or
processing of personal or consumer information could indirectly affect our
business.

The Telecommunications Act of 1996 prohibits certain types of information
and content from being transmitted over the Internet. The prohibition's scope
and the liability associated with a Telecommunications Act violation are
currently unsettled. The imposition upon us and other service providers of
potential liability for information carried on or disseminated through our
applications could require us to implement measures to reduce our exposure to
this liability. These measures could require us to expend substantial resources
or discontinue certain services. In addition, although substantial portions of
the Communications Decency Act (the Act through which the Telecommunications Act
of 1996 imposes criminal penalties) were held to be unconstitutional, similar
legislation may be enacted and upheld in the future. It is possible that this
legislation could expose companies involved in e-commerce to liability, which
could limit the growth of e-commerce generally. Legislation like the
Telecommunications Act and the Communications Decency Act could dampen the
growth of Internet usage and decrease its acceptance as a communications and
commercial medium.

Our applications utilize encryption technology, the export of which is
regulated by the United States government. We currently do not provide our
services to clients located outside the United States, but intend to begin
marketing to foreign companies (or companies who reach foreign markets) in
calendar year 2000. Export regulations, either in their current form or as may
be subsequently enacted, may limit our ability to provide our services outside
the United States. Moreover, federal or state legislation or regulation may
further limit levels of encryption or authentication technology that we are able
to utilize. While we will take precautions against unlawful exportation of our
software, the global nature of the Internet makes it difficult to effectively
control the distribution of software. Any unlawful exportation of our software,
or adoption of new legislation or regulation relating to

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exportation of software and encryption technology could have a material adverse
effect on our business, financial condition, and operating results.

The Internet Tax Freedom Act bars state and local governments from imposing
taxes on Internet access or that would subject buyers and sellers of e-commerce
to taxation in multiple states. This act is in effect through October 2000. When
the act expires or if the act is repealed, Internet access and sales across the
Internet may be subject to additional taxation by state and local governments,
thereby discouraging purchases over the Internet and adversely affecting the
market for our services. On May 10, 2000, the U.S. House of Representatives
passed the Internet Nondiscrimination Act of 2000 which amends the Internet Tax
Freedom Act to prohibit, until October 2006, a state from imposing taxes on
Internet access and multiple or discriminatory taxes on electronic commerce.

One of the principal features of our proprietary technology is the ability
to identify users who visit our clients' Web sites and to develop and maintain
highly personalized profiles of users to assist our clients in determining the
nature of the content and the product offerings to be provided to that customer.
Typically, users are identified through the use of "cookies" and other
non-personally-identifiable information. Profiles are captured when customers
visit a site on the Web and volunteer information in response to survey
questions concerning their backgrounds, interests, and preferences, with prior
notice, and the opportunity for a user to opt-out of such targeting and
collection. Profiles are augmented over time through the collection of usage
data. Privacy concerns may cause users to resist providing the personal data
necessary to support this profiling capability. The perception by our clients'
customers or potential customers of substantial security and privacy concerns,
whether or not valid, may inhibit market acceptance of our technology. Such
concerns also may be heightened by legislative or regulatory requirements that
require notification to Web site users that the data captured as a result of
visitation of certain Web sites may be used by marketing entities to
unilaterally address product promotion and advertising to that user.

We are subject to various federal and state regulations concerning the
collection and use of information regarding individuals who access Web sites.
These laws include the Children's Online Privacy Protection Act, federal and
state consumer credit laws, as well as other laws that govern the collection and
use of consumer information. Since many of the proposed laws or regulations are
just being developed, and a consensus on privacy and data usage has not been
reached, we cannot yet determine the impact these regulations may have on our
business. In addition, the U.S. Congress, a number of state governments and
various trade organizations and industry groups have recently proposed
limitations on the collection and use of information regarding Internet users.
Although our compliance with applicable federal and state laws, regulations and
industry guidelines has not had a material adverse effect on us, if governments,
trade associations and industry self-regulatory groups enact more burdensome
laws, regulations and guidelines relating to consumer privacy, its could
materially and adversely affect our business, financial condition and results of
operations.

Certain consumer activist groups have recently sought to have the Federal
Trade Commission determine whether profiling should be considered "subliminal"
marketing which they believe should be prohibited. While we are not aware of any
law or regulation which prohibits subliminal marketing, the FTC has, in the
past, considered such acts to be deceptive trade practices and has issued
administrative cease and desist orders against companies using those techniques.
The FTC has recently begun an informal inquiry into the business practices of an
Internet marketing and advertising company that uses personalization techniques
to target advertisements to people who browse certain Web sites. That company is
also currently defending itself against seven private lawsuits alleging, among
other things, the improper collection and use of personal information in
violation of federal and state statutes and the right of privacy. In addition,
the Attorney General's Office of the States of New York and Michigan have
requested that this company provide certain information concerning its business
practices. Zengine is not involved in any similar investigation or litigation.
However, if the privacy concerns of consumers are not adequately addressed, our
business could be harmed.

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MANAGEMENT
DIRECTORS, EXECUTIVE OFFICERS AND KEY EMPLOYEES

The following table sets forth information regarding our directors and
executive officers as of June 30, 2000.

<TABLE>
<CAPTION>
NAME AGE POSITION
---- -------- -------------------------------------------------------
<S> <C> <C>
Michael E. Peppel.................... 33 Chairman of the Board
Joseph M. Savarino................... 30 President, Chief Executive Officer and Director
Louis T. Lipinski.................... 33 Vice President, Chief Financial Officer, Treasurer and
Secretary
Lalit P. Dhadphale................... 28 Vice President of Product Development and Chief
Operating Officer
Christopher R. Feaver................ 23 Vice President and Chief Technology Officer
Christopher R. Lunt.................. 28 Vice President of Engineering
Anthony W. Liberati.................. 68 Director
Donald B. Hutchison.................. 46 Director
Richard V. Hopple.................... 53 Director
Stacey Snider........................ 39 Director
</TABLE>

MICHAEL E. PEPPEL has served as our Chairman of the Board since March 1999
and has also served as the Chairman of the Board of MCSi, a publicly traded
solutions based reseller and integrator of audio-visual products and reseller of
computer technology products and services, since February 2000 and President and
Chief Executive Officer of MCSi since January 1998. He served as Chief Financial
Officer of MCSi from May 1996 until December 1997. Prior to joining MCSi, he was
a Director and Chief Financial Officer of Diversified Data Products, Inc., Ann
Arbor, Michigan, a computer supply reseller, from 1990 until May 1996. Prior
thereto, he was a money desk manager of the DeBartolo Corporation, Youngstown,
Ohio. Mr. Peppel received his BA degree from the University of Notre Dame.

JOSEPH M. SAVARINO has served as our President since March 1999 and as our
Chief Executive Officer since January 2000. Mr. Savarino became a director of
Zengine in March 1999. Prior to Zengine, he was the Director, Western U.S.
Sales, from November 1998 to February 1999, at Unicast Communications, an online
advertising technology firm, and the Western Region Sales Manager from
October 1997 to November 1998, for INTERVU, Inc., a publicly traded streaming
audio and video solutions provider, which was purchased by Akamai, Inc. on
April 20, 2000. From December 1995 to October 1997, Mr. Savarino served as
Business Development Manager of Sumikin Bussan (Sumitomo Metals Group), an
international commodities trading company. Prior thereto, he was a Senior
Analyst for The Martec Group, an international technical market research firm.
Mr. Savarino received his BA degree from the University of Michigan, Ann Arbor.

LOUIS T. LIPINSKI has served as our Vice President, Chief Financial Officer,
Treasurer and Secretary since January 2000. Prior to joining Zengine, he was the
Mergers and Acquisitions Analyst at MCSi from February 1998 until
December 1999. Mr. Lipinski attended the Graduate School of Business at the
University of Chicago from September 1995 until his graduation in May 1997.
Prior thereto, he was a financial consultant with Comerica Bank from June 1994
to August 1995 and with Merrill Lynch & Co. from March 1993 to June 1994. From
October 1990 to February 1993, Mr. Lipinski was an independent futures trader on
the Chicago Mercantile Exchange. Mr. Lipinski received his MBA from the
University of Chicago and his BA degree from the University of Notre Dame.
Mr. Lipinski is also a certified public accountant.

LALIT P. DHADPHALE has served as our Vice President of Product Development
since March 1999 and as Chief Operating Officer since January 2000. He served as
a director of Zengine from May 1999 to

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January 2000. Mr. Dhadphale was a producer of Excite Japan from July 1997 until
March 1999, where he was involved with product development, internationalization
and localization of Web sites and Internet products. He also produced the launch
of Netscape Netcenter Japan. From December 1996 to July 1997, Mr. Dhadphale was
a member of CNET's international business development team that secured
relationships throughout Asia and the Pacific Rim. Prior thereto, he was the New
Media Development Manager for P.O.V. Associates from July 1995 to November 1996
and an Account Executive for the American Chamber of Commerce in Tokyo, Japan
from January 1995 to June 1995. Mr. Dhadphale received his BA degree from the
University of Michigan, Ann Arbor.

CHRISTOPHER R. FEAVER has served as our Chief Technology Officer since
March 1999 and as Vice President since January 2000. Mr. Feaver served as a
director of Zengine from May 1999 to January 2000. Prior to Zengine, Mr. Feaver
was a lead software engineer for Excite@Home, Inc., where he was employed from
July 1997 to February 1999. During his Excite tenure, Mr. Feaver fulfilled
various roles, including systems engineering lead, network operations,
production engineering and software engineering. In 1998, he co-founded and was
an officer and principal stockholder of Silicon Valley Web Hosting Inc., a
private fully scalable, redundant hosting environment for high bandwidth and
broadband Web sites. From January 1995 to July 1996, he served as a Software
Engineer for Internet Media Services. Mr. Feaver attended the University of
California, Santa Cruz.

CHRISTOPHER R. LUNT has served as our Vice President of Engineering since
November 1999. Prior to joining Zengine, he was an Engineering Manager and Team
Leader at Excite@Home from August 1997 to October 1999. Prior to his Excite@Home
tenure, Mr. Lunt was a Senior Software Engineer at Oracle Corporation from
August 1993 to August 1997. Mr. Lunt received his BA degree from the University
of Michigan, Ann Arbor.

ANTHONY W. LIBERATI has been a director of Zengine since March 1999. He was
the Chairman of the Board of MCSi from May 1996 until his retirement in
February 2000. Commencing in 1982 and until his retirement in August 1995,
Mr. Liberati was employed by the Edward J. DeBartolo Corporation, Youngstown,
Ohio, the nation's largest shopping center developer and the owner of the San
Francisco 49ers professional football team. At the time of his retirement,
Mr. Liberati was the Chief Operating Officer of the DeBartolo Corporation. Prior
to his appointment as the Chief Operating Officer, he was the DeBartolo
Corporation's Chief Financial Officer for ten years. Mr. Liberati is a director
of Hawthorne Financial Corporation, Los Angeles, California, a savings
institution holding company which is traded on the Nasdaq National Market, and
First Fidelity Bancorp, Irvine, California, a privately held thrift and loan
holding company and is a former member of the Board of Directors of DeBartolo
Realty Corporation, Youngstown, Ohio, which was a New York Stock Exchange-traded
real estate investment trust until its merger into Simon Property Group, Inc. in
November 1996. He is a current member of the Board of Directors of Imperial Land
Company, Pittsburgh, Pennsylvania, a privately held land-bank company, Quality
Aggregates, Inc., Pittsburgh, Pennsylvania, a privately held materials supply
company, and a former member of the Board of Directors of Pennsylvania Capital
Bank, Pittsburgh, Pennsylvania, a privately held Pennsylvania commercial bank.
He attended Duquesne University, Pittsburgh, Pennsylvania.

DONALD B. HUTCHISON has been a director of Zengine since April 2000.
Mr. Hutchinson is the Chairman and Chief Executive Officer of Work.com, a
business services and information portal focused on the business professional
which is a joint venture between Dow Jones & Co. and Excite@Home. Prior thereto,
he was Senior Vice President and General Manager of Excite@Home, a position he
held from February 1997 to February 2000. Prior to joining Excite@Home, he was
the Senior Vice President of Netcom from May 1994 to August 1996. Mr. Hutchison
received his BA degree from University of California at Santa Barbara and his
MBA from Loyola Marymount University.

RICHARD V. HOPPLE has been a director of Zengine since April 2000. Since
1996, Mr. Hopple has been the Chairman of the Board and Chief Executive Officer
of Unicast Communications, Inc., New

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York, New York, a privately held Internet advertising company. Prior thereto,
Mr. Hopple was the President of D'Arcy Masius Benton & Bowles North America for
one year and Vice Chairman for three years. Prior thereto, Mr. Hopple was
President of Wells Rich Greene. Mr. Hopple is a director of the Internet
Advertising Bureau, the American Rivers Foundation and the City Center 55th
Street Theatre Foundation, Inc. in New York City. Mr. Hopple received his BA
degree from Northwestern University.

STACEY SNIDER has been a director of Zengine since April 2000. She is the
Chairman of Universal Studios, Inc., a subsidiary of the Seagram Company, Ltd.,
where she is responsible for all production, marketing and domestic distribution
for the studio. From November 1998 to November 1999, Ms. Snider served Universal
as President, Production, was promoted to head of production in April 1998 and
was appointed as co-President, Production in December 1996. Ms. Snider joined
Universal from TriStar Pictures where she had served as President, Production
since January 1992. Ms. Snider received her BA degree from the University of
Pennsylvania and her Juris Doctor degree from the University of California at
Los Angeles.

BOARD STRUCTURE AND COMMITTEES

Under the amended and restated certificate of incorporation, our board of
directors will be divided into three classes serving staggered terms. Directors
in each class will be elected to serve for three-year terms and until their
successors are elected and qualified. Each year, the directors of one class will
stand for election as their terms of office expire. Presently, Mr. Hutchison and
Ms. Snider are designated as the Class I directors, with their terms of office
expiring in 2001; Messrs. Hopple and Liberati are designated as Class II
directors, with their terms of office expiring in 2002; and Messrs. Savarino and
Peppel are designated as Class III directors, with their terms of office
expiring in 2003.

We have three standing committees: an executive committee, an audit
committee and a compensation committee. Messrs. Peppel, Savarino and Liberati
have been appointed as the initial members of the executive committee.
Messrs. Liberati and Hopple and Ms. Snider have been appointed as the initial
members of the audit committee. Messrs. Liberati, Hopple and Hutchison have been
appointed as the initial members of the compensation committee.

The executive committee generally has the authority to act as the board of
directors when the board is not in session, subject to certain exceptions
contained in the Delaware General Corporation Law. Actions of the executive
committee may be taken upon the affirmative vote of any two of the three members
of the committee, provided that one of the committee members so acting must be a
non-employee director. Executive committee decisions must be ratified by the
board of directors at its next regularly scheduled meeting. The audit committee
will select the independent public accountants to audit our annual financial
statements and will establish the scope and oversee the annual audit. The
compensation committee will determine the compensation for employee directors
and, after receiving and considering the recommendation of our president and
chief executive officer, all officers of the company and any other employee that
the compensation committee may designate from time to time and will approve and
administer employee stock option and incentive plans. Our board of directors may
establish other committees from time to time to facilitate the management of the
business and affairs of our company.

NON-EMPLOYEE DIRECTOR COMPENSATION

Each non-employee director receives a fee of $1,000 for each meeting of the
board of directors or a board committee which he or she attends, plus his or her
expenses related to attendance. Non-employee directors will receive an initial
grant of stock options to purchase 12,000 shares of common stock under the 1999
Stock Option Plan upon the closing of the initial public offering with an

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exercise price per share equal to the initial public offering price.
Non-employee directors are also eligible to receive future discretionary grants
under the plan. Directors who are also employees of Zengine receive no payment
for serving as directors or committee members.

EXECUTIVE COMPENSATION

The following table sets forth certain compensation information for our
chief executive officer and our four other most highly compensated executive
officers for services rendered in all capacities to Zengine during the year
ended September 30, 1999. These executives are referred to as the named
executive officers in this prospectus.

SUMMARY COMPENSATION TABLE

<TABLE>
<CAPTION>
LONG-TERM COMPENSATION
ANNUAL --------------------------------------
COMPENSATION SECURITIES
------------------- STOCK UNDERLYING ALL OTHER
NAME AND PRINCIPAL POSITION SALARY BONUS AWARDS($) OPTIONS(#) COMPENSATION
--------------------------- -------- -------- ---------- ---------- ------------
<S> <C> <C> <C> <C> <C>
Joseph M. Savarino........................ $48,461 -- $60,000(1) -- --
PRESIDENT, CHIEF EXECUTIVE OFFICER AND
DIRECTOR
Lalit P. Dhadphale........................ 45,000 -- 60,000(1) -- --
VICE PRESIDENT OF PRODUCT DEVELOPMENT
AND CHIEF OPERATING OFFICER
Louis T. Lipinski......................... -- -- -- 67,686 --
VICE PRESIDENT, CHIEF FINANCIAL OFFICER,
TREASURER AND SECRETARY
Christopher R. Feaver..................... 48,461 -- 60,000(1) -- --
VICE PRESIDENT AND CHIEF TECHNOLOGY
OFFICER
Christopher R. Lunt....................... -- -- -- 135,372 --
VICE PRESIDENT OF ENGINEERING
</TABLE>

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

(1) Represents the grant of 676,860 shares of restricted stock, which had a fair
market value of $60,000 on the date of grant and at September 30, 1999.
One-third (225,620) of the shares vested immediately upon grant in
March 1999 and 34,711 shares vest each calendar quarter thereafter (the
remainder of the unvested shares will vest upon completion of this
offering).

Messrs. Savarino, Dhadphale and Feaver are subject to employment agreements
which provide each of them an annual salary of $90,000. For more information,
please see "Employment Agreements." During fiscal 1999, Mr. Lipinski was
employed by MCSi and he did not become an employee of ours until January 1,
2000. Mr. Lunt joined Zengine on November 1, 1999 at an annual salary of
$100,000.

EMPLOYMENT AGREEMENTS

We have entered into multi-year employment agreements with Joseph Savarino,
our President and Chief Executive Officer, Christopher Feaver, our Chief
Technology Officer, and Lalit Dhadphale, our Vice President of Product
Development and Chief Operating Officer. Each employment agreement is
substantially the same and provides for the following:

- a three year term which ends in March 2002, with automatic one-year
renewals;

- $90,000 annual base salary;

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<PAGE>

- 676,860 restricted shares of our common stock, of which 225,620 shares
vested upon execution of the employment agreement and 34,711 shares which
vest each calendar quarter; upon a change in control of our company, which
is defined to include the completion of this offering, the restricted
shares will immediately vest;

- participation in any benefit or retirement plans offered by us;

- severance pay under certain circumstances which is capped at $14,795;

- an agreement to keep our proprietary information confidential during the
term of the employment agreement and for a period of seven years following
termination of the employment agreement; and an agreement to not compete
with us in an area within a 75 mile radius of any existing office of ours
or MCSi during the term of the employment agreement and for twelve months
following March 1, 2002; and

- indemnification by us of the executive for actions in which the executive
is made a party or is otherwise involved by reason of being or having been
a director, officer, employee or agent of Zengine, MCSi or any affiliates
of either.

1999 STOCK OPTION PLAN

The Amended and Restated 1999 Stock Option Plan provides for the grant of
stock options to all employees and directors of our company, our subsidiaries
and of MCSi who are eligible to participate. The purpose of the 1999 Stock
Option Plan is to further our growth, development and financial success by
providing incentives to our employees and non-employee directors and employees
of our parent corporation, MCSi, by assisting them to become owners of our
common stock. An aggregate of 3,384,300 shares of common stock are reserved for
issuance to employees and directors under the 1999 Stock Option Plan.

The 1999 Stock Option Plan is administered by a committee of our Board of
Directors (the "1999 Stock Option Committee"). The 1999 Stock Option Committee
consists of two or more directors, appointed by our board of directors, who are
"non-employee directors," as defined in Rule 16b-3 under the Securities Exchange
Act of 1934, and "outside directors," as defined in Section 162(m) of the
Internal Revenue Code. The 1999 Stock Option Committee has complete authority
and discretion to determine from among eligible persons those to whom options
will be granted and the number and terms of such options. The current members of
the 1999 Stock Option Committee are Mr. Liberati, Mr. Hutchison and Mr. Hopple.

The 1999 Stock Option Plan provides for the granting of both incentive stock
options and non-qualified stock options under the Internal Revenue Code.
Non-employee directors are eligible to receive only non-incentive stock options
under the plan. The exercise price of incentive stock options granted under the
1999 Stock Option Plan may not be less than 100% of the fair market value on the
date of the grant, except that incentive stock options granted to individuals
owning more than ten percent of the total combined voting power of Zengine may
not have an exercise price less than 110% of the fair market value on the date
of grant. The exercise price of non-qualified stock options is established by
the 1999 Stock Option Committee. Unless otherwise provided for by the 1999 Stock
Option Committee or our Board of Directors, and set forth in the individual
stock option agreements, stock options under the 1999 Stock Option Plan vest
over four years, with 25% vesting one year from the date of grant and 6.25%
vesting each calendar quarter thereafter. Unless otherwise provided for by the
1999 Stock Option Committee or our Board of Directors, stock options issued
under the 1999 Stock Option Plan immediately vest and become exercisable upon
the option holder's death, disability or upon a change of control of Zengine, as
defined in the 1999 Stock Option Plan.

Payment of the exercise price of a stock option may be made in cash, shares
of common stock, or by any other method approved by the 1999 Stock Option
Committee, consistent with Section 422 of the

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<PAGE>
Code and Rule 16b-3 under the Exchange Act. Incentive stock options are not
assignable or transferable except by will or the laws of descent and
distribution, and, during the participant's lifetime, may be exercised only by
the participant. However, an optionee may transfer non-qualified stock options
to his or her spouse, lineal ascendants, lineal descendants, or to a duly
established trust for the benefit of one or more of these individuals.

At the time of any merger, consolidation, reorganization, recapitalization,
stock dividend, stock split, or other change in the corporate structure or
capitalization affecting our common stock, appropriate adjustments to the
exercise price, number and kind of shares to be issued under the 1999 Stock
Option Plan and any outstanding options will be made. Unless terminated earlier,
the 1999 Stock Option Plan will terminate ten years from its adoption, and no
stock options will be granted after the 1999 Stock Option Plan terminates. Our
board of directors has the authority to amend, modify, suspend or terminate the
1999 Stock Option Plan at any time, subject to any requirement of stockholder
approval under the Internal Revenue Code or other applicable law or rule of the
Nasdaq Stock Market, and, if applicable, approval by an optionee whose options
would be adversely affected by the change.

There are currently an aggregate of 1,380,118 options outstanding under the
1999 Stock Option Plan at a weighted average exercise price of $.89 per share.

GRANT OF ZENGINE STOCK OPTIONS IN FISCAL 1999

The following table sets forth information with respect to grants of stock
options to purchase shares of our common stock during fiscal 1999 to the named
executive officers reflected in the Summary Compensation Table. All options were
granted under our 1999 Stock Option Plan.

<TABLE>
<CAPTION>
POTENTIAL
INDIVIDUAL GRANTS REALIZABLE VALUE
----------------------------------------------- AT ASSUMED
% OF TOTAL DEEMED ANNUAL RATES OF
NUMBER OF OPTIONS VALUE STOCK PRICE
SECURITIES GRANTED TO PER APPRECIATION FOR
UNDERLYING EMPLOYEES EXERCISE SHARE OPTION TERM
OPTIONS IN LAST PRICE PER ON DATE EXPIRATION ----------------------
NAME GRANTED FISCAL YEAR SHARE OF GRANT DATE 5% 10%
---- ---------- ----------- --------- -------- ---------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
Joseph M. Savarino........................ -- -- -- -- -- -- --
Lalit P. Dhadphale........................ -- -- -- -- -- -- --
Louis T. Lipinski......................... 67,686 6.0% $0.08 $0.09 09/01/09 $4,700 $10,500
Christopher R. Feaver..................... -- -- -- -- -- -- --
Christopher R. Lunt....................... 135,372 12.0% $0.08 $0.09 09/01/09 $9,400 $21,000
</TABLE>

AGGREGATE OPTION EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR-END OPTION VALUES

None of the named executive officers have exercised options to purchase
shares of our common stock. The following table describes the value of
exercisable and unexercisable options held by the named executive officers as of
September 30, 1999.

The "Value of Unexercised In-the-Money Options at September 30, 1999" is
based on a value of $0.09 per share, the deemed fair market value of our common
stock on that date, less the per share

55
<PAGE>

exercise price, multiplied by the number of shares issuable upon exercise of the
option. All options were granted under our 1999 Stock Option Plan.

<TABLE>
<CAPTION>
NUMBER OF SECURITIES
UNDERLYING UNEXERCISED VALUE OF UNEXERCISED IN-THE-
OPTIONS AT MONEY OPTIONS AT
SEPTEMBER 30, 1999 SEPTEMBER 30, 1999
--------------------------- -----------------------------
NAME EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
---- ----------- ------------- ------------ --------------
<S> <C> <C> <C> <C>
Joseph M. Savarino............. -- -- -- --
Lalit P. Dhadphale............. -- -- -- --
Louis T. Lipinski.............. -- 67,686 -- $ 900
Christopher R. Feaver.......... -- -- -- --
Christopher R. Lunt............ -- 135,372 -- $1,800
</TABLE>

EMPLOYEE STOCK PURCHASE PLAN

We have adopted the 2000 Employee Stock Purchase Plan which will become
effective upon the completion of this offering. The Stock Purchase Plan provides
employees with the opportunity to purchase shares of our common stock on a
regular basis. The purpose of the Stock Purchase Plan is to contribute to our
growth and profitability by allowing our employees to purchase common stock
which will provide them with an incentive to work towards the success of
Zengine. The Stock Purchase Plan is intended to qualify as an employee stock
purchase plan within the meaning of Section 423 of the Internal Revenue Code.
Pursuant to the plan, shares of common stock will be offered to employees of
Zengine in up to two phases known as "offering periods" during which payroll
deductions will be accumulated under the plan during any calendar year.
Generally, there will be two six month offering periods each year. An employee
shall elect to make contributions to the plan by payroll deductions in an
aggregate amount up to 15% of such employee's total compensation. Employees may
not make any separate cash payment to purchase shares pursuant to the plan. On
the first business day of each offering period, Zengine will grant to each
eligible employee who is then a participant in the plan an option to purchase
shares of the common stock at an option price determined by the committee, which
shall not be less than eighty-five percent (85%) of the lesser of (a) the fair
market value of the shares on the first business day of an offering period, or
(b) the fair market value of the shares on the last business day of such
offering period. Shares are purchased on the last day of the offering period.
The common stock purchasable under the Stock Purchase Plan may be shares of
authorized but unissued shares, treasury shares or shares purchased by Zengine
on the open market or from private sources for use under the Stock Purchase
Plan. The maximum number of shares which may be issued over the term of the
Stock Purchase Plan is 100,000, which is subject to anti-dilution provisions.

COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION

The members of our compensation committee are Messrs. Hutchison, Liberati
and Hopple. Mr. Liberati also served as the member of the compensation committee
of MCSi until his retirement in February 2000.

LIMITATION OF LIABILITY AND INDEMNIFICATION OF OFFICERS AND DIRECTORS

Our amended and restated certificate of incorporation and amended and
restated bylaws provide that the personal liability of our directors and
officers shall be eliminated to the fullest extent authorized by Delaware law.
Our amended and restated certificate of incorporation and amended and restated
bylaws further provide that our directors and officers shall be indemnified by
us to the fullest extent authorized by Delaware law. We intend to obtain
insurance which insures our directors and officers against specified losses and
which insures us against specific obligations to indemnify our directors and
officers.

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<PAGE>
CERTAIN TRANSACTIONS

RELATIONSHIP WITH MCSi

Our operations began in January 1999 as a division of MCSi, known as
BuySupply.com, which commenced operations as a branded computer supplies and
accessories e-commerce Web site selling MCSi's inventory. Shortly thereafter,
Messrs. Savarino, Dhadphale and Feaver agreed to combine their prior Internet
experience with funding from MCSi to create an e-commerce services company based
on our current business model. We were subsequently incorporated on March 2,
1999. After the completion of this offering, MCSi will own approximately 50.7%
of the outstanding shares of common stock, or approximately 48.9% if the
underwriters exercise their over-allotment option in full.

As a subsidiary, we have received various services provided by MCSi,
including administration (i.e., payroll, human resources, cash management,
benefit administration, etc.), warehousing and distribution, and property and
equipment. In addition, we have received the services of certain MCSi employees,
including, in particular, Michael E. Peppel, MCSi's chairman, president and
chief executive officer and Ira H. Stanley, its vice president and chief
financial officer. In consideration for these services, MCSi has historically
allocated a portion of its overhead costs related to such services to us. We
cannot assure you that the prices charged to us, or the overall terms and
conditions under these agreements are not higher or lower than the prices that
may be charged by unaffiliated third parties for similar services.

We have entered into certain agreements with MCSi related to administrative
services, distribution services, e-commerce services and a premises and
equipment lease. A summary description of each of these agreements is set forth
below. You should read the full text of these agreements, which have been filed
with the SEC as exhibits to the registration statement of which this prospectus
is a part.

All of our agreements with MCSi were made in the context of a
parent-subsidiary relationship. Although we generally believe that the terms of
these agreements are consistent with fair market values, we have had no
appraisals or valuations performed and therefore we cannot assure you that the
prices charged to us, or by us, under these agreements are not higher or lower
than the prices that may be charged by, or to, unaffiliated third parties for
similar services.

MCSi has advised us that it intends to evaluate, from time to time,
alternatives to maximize, for the benefit of its stockholders, the value of its
Zengine shareholdings. These alternatives could include retention of all or a
portion of its shareholdings, the sale in one or more transactions of all or a
portion of its shareholdings, the distribution of its shareholdings to MCSi
shareholders (which may be in the form of a tax free spin-off under Section 355
of the Internal Revenue Code), the issuance of debt or equity securities that
will enable MCSi to monetize all or a portion of its investment in Zengine or
other transactions. We cannot assure you as to which alternative MCSi may choose
or whether or when any such transaction will occur, if at all.

ADMINISTRATIVE SERVICES AGREEMENT. Since our formation, we have obtained
many of our administrative services from MCSi. In anticipation of this offering,
effective October 1, 1999, we entered into a two-year agreement with MCSi where
MCSi will provide us with services relating to accounts payable, human resources
and compensation, corporate development, employee benefit administration,
treasury and cash management, risk and insurance management, executive
compensation and benefit plan design, benefit administration, Web site
population services and tax planning. In consideration for providing these
services, we will pay MCSi $60,000 per month. The administrative services
agreement is terminable by either party under a number of circumstances. This
agreement is renewable by mutual agreement between Zengine and MCSi.

DISTRIBUTION SERVICES AGREEMENT. We offer product distribution, fulfillment
and warehousing, customer service and other related services to our clients as
part of our e-commerce service offerings. Effective October 1, 1999, we entered
into a two year non-exclusive Distribution Services Agreement with MCSi by which
MCSi will provide these services to our clients. Under the agreement, we will
pay

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<PAGE>

MCSi a service fee equal to three percent (3%) of the total gross revenues for
any product order fulfilled, for third party customers, wholly or partly by MCSi
(plus certain costs incurred by MCSi.) If product is purchased from MCSi,
Zengine will pay MCSi the actual retail list price of that product plus the
actual cost of freight paid by MCSi. We subsequently amended the agreement to
pay MCSi for warehouse space an amount equal to a percentage of MCSi's gross
expenses relating to the operation of the warehouse for us through the end of
the term of the agreement.

E-COMMERCE SERVICES AGREEMENT. Effective October 1, 1999, we entered into
an e-commerce services agreement with MCSi in which we will provide certain
design, enhancement and ongoing maintenance services relating to MCSi's B2B
dedicated Web sites for a period of two years. MCSi will pay us ten percent
(10%) of the revenue derived from product sales on the MCSi Web sites we
service.

PROPERTY SUBLEASE AND EQUIPMENT LEASE AGREEMENT. Effective October 1, 1999,
we entered into an agreement to sublease our main office and to lease certain
equipment, including chairs, desks, cubicle offices and computers, from MCSi.
The agreement provides for monthly payments of $2,083 for the equipment lease
and $10,417 for the property sublease, and expires on May 1, 2001.

TRANSACTIONS WITH WILBLAIRCO ASSOCIATES, AT HOME CORPORATION, MCSI AND CERTAIN
STOCKHOLDERS

On October 1, 1999, we entered into an agreement to sell 902,478 shares of
our common stock to each of Wilblairco Associates and At Home Corporation for
$2.0 million each (the "investment transactions"), which was completed in
October 1999. Wilblairco Associates, an Illinois general partnership, is an
affiliate of William Blair & Company, which is the lead underwriter of this
offering.

In conjunction with our sale of equity to Wilblairco Associates and At Home
Corporation, we entered into a Registration Rights Agreement and a Stockholders
Agreement and MCSi entered into Put Agreements with Wilblairco and At Home. We
subsequently entered into a warrant agreement with REX Stores Corporation, in
conjunction with our agrement to provide e-commerce services to rexstores.com,
Inc., a subsidiary of REX Stores, where we agreed to provide REX Stores with the
same registration rights as we gave to Wilblairco and At Home.

REGISTRATION RIGHTS AGREEMENT. At any time after 180 days after we complete
our first public offering of common stock where the aggregate price less
underwriters' and brokers' commissions and certain expenses equals
$25.0 million or more and results in our common stock being listed on the New
York Stock Exchange, American Stock Exchange or the Nasdaq Stock Market (a
"qualified public offering"), Wilblairco, At Home, MCSi, Joseph Savarino, Lalit
Dhadphale, Christopher Feaver and/or REX Stores (the "registration rights
holders") may request registration (a "demand registration") of at least
$15.0 million of our common stock held by them. We are not obligated to effect
more than one demand registration in any six month period and, subject to
certain conditions, we will not be obligated to effect more than three demand
registrations overall. The registration rights holders also have the right,
subject to certain conditions, to include their shares of our common stock in
any registered offering of our common stock that we make (an "incidental
registration").

The ability of the registration rights holders to request demand
registration of their Zengine common stock is subject to the opinion of the
managing underwriter of the proposed offering that the number of shares desired
to be sold exceeds the number of shares which can be sold in the offering or is
reasonably likely to materially and adversely affect the success or offering
price of such offering. If the underwriter makes this determination, the shares
will be included in the offering in the following priority:

- first, shares of the registration rights holders pro rata on the basis of
the number of share requested to be included by each;

- next, shares requested to be included by us; and

- next, any other shares of our common stock requested to be included by a
third person.

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<PAGE>
If the managing underwriter makes the same determination in connection with an
incidental registration, the shares will be included in the offering in the
following priority:

- shares requested to be included by us;

- next, shares of the registration rights holders pro rata on the basis of
the shares requested to be included by each; and

- next, shares of the holders of any other registration rights granted by us
in writing, pro rata in accordance with the number of such securities each
such holder has requested to be included in the registration.

In addition to the registration priorities discussed in the preceding
paragraph, the registration rights agreement prohibits us from granting
registration rights to any other person, unless the agreement(s) providing for
the rights specifically provides that the holders of the rights ("third party
rights") may not participate in any demand or incidental registration unless the
underwriters of the distribution confirm that the inclusion of the securities
proposed to be included under the third party rights will not materially
adversely affect the offering. We may, however, grant third party rights to a
person who has purchased our securities for an aggregate of at least
$2.0 million prior to a qualified public offering which rights may allow
participation in a demand registration as though such person was a registration
rights holders.

The registration rights agreement sets forth various registration
procedures. It also provides that we will pay all reasonable expenses related to
all demand and incidental registrations other than underwriters discounts and
commissions. The registration rights agreement also contains indemnification and
contribution provisions by us for the benefit of the registration rights
holders, their affiliates and any underwriters, and limited indemnification
provisions by the registration rights holders for the benefit of us and any
underwriters. The rights in the registration rights agreement may not be
assigned by a registration rights holder without our prior consent, which will
not be unreasonably withheld.

PUT AGREEMENTS. MCSi entered into put agreements with each of Wilblairco
and At Home which provide that during a period of two years commencing on
September 30, 2002, Wilblairco and At Home each have the right, from time to
time, to require MCSi to purchase all or a portion of their shares purchased in
the investment transactions at a purchase price of $3.37 per share. The rights
in the put agreements are not transferable and are subject to anti-dilution
provisions. The put agreements will terminate upon the completion of this
offering.

STOCKHOLDERS AGREEMENT. The stockholders agreement between Wilblairco, At
Home, MCSi, Zengine, Joseph Savarino, Lalit Dhadphale, Christopher Feaver and
REX Stores specifies and limits the manner and terms upon and by which the
shares outstanding as of September 30, 1999 shall or may be transferred in
certain circumstances. The stockholders agreement will terminate upon the
completion of this initial public offering.

We believe that the transactions with Wilblairco Associates, At Home
Corporation, MCSi and certain of our stockholders and REX Stores described
immediately above were made on terms no less favorable to us than we could have
obtained from unaffiliated third parties. All future transactions between us and
our directors, officers, principal stockholders and their affiliates will be
approved by a majority of the independent and disinterested outside members of
our board of directors, but we cannot assure you that future transaction will be
on terms no less favorable to us than could be obtained from unaffiliated third
parties.

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<PAGE>
PRINCIPAL STOCKHOLDERS

The following table sets forth information regarding the beneficial
ownership of our common stock as of June 30, 2000, by the following individuals
or groups:

- each person or entity who is known by us to own beneficially more than 5%
of our outstanding stock;

- each of the named executive officers;

- each of our directors; and

- all directors and executive officers as a group.

Under the rules of the Securities and Exchange Commission, beneficial
ownership includes voting or investment power with respect to securities and
includes the shares issuable under stock options that are exercisable within
sixty (60) days of June 30, 2000. Shares issuable under stock options are deemed
outstanding for computing the percentage of the person holding options but are
not outstanding for computing the percentage of any other person. The number of
shares of common stock outstanding after this offering includes shares of common
stock being offered for sale by us in this offering. The percentage of
beneficial ownership for the following table is based upon 12,183,480 shares of
common stock outstanding as of June 30, 2000, and 16,473,480 shares of common
stock outstanding after the completion of this offering assuming no exercise of
the underwriters' overallotment option. As of June 30, 2000, the Company had six
stockholders.

The address for each of the stockholders listed in the table, other than
MCSi, Wilblairco Associates and At Home Corporation, is c/o Zengine, Inc., 6100
Stewart Avenue, Fremont, California 94538. To our knowledge, the persons named
in the table have sole voting and investment power with respect to all shares of
common stock held by them. None of the beneficial owners set forth in the table
below will sell any of the shares in this offering.

<TABLE>
<CAPTION>
PERCENTAGE OF SHARES
OUTSTANDING
NUMBER OF SHARES --------------------------------
NAME AND ADDRESS OF BENEFICIAL OWNER BENEFICIALLY OWNED BEFORE OFFERING AFTER OFFERING
------------------------------------ ------------------ --------------- --------------
<S> <C> <C> <C>
MCSi, Inc. (formerly known as Miami Computer Supply 8,347,944 68.5% %
Corporation)..........................................
4750 Hempstead Station Drive
Dayton, Ohio 45429
Wilblairco Associates................................... 902,478 7.4
222 West Adams Street
Chicago, Illinois 60600
At Home Corporation..................................... 902,478 7.4
450 Broadway
Redwood City, California 94063
Michael E. Peppel....................................... 676,860(1) 5.3
Joseph M. Savarino...................................... 676,860(2) 5.6
Louis T. Lipinski....................................... -- --
Lalit P. Dhadphale...................................... 676,860(2) 5.6
Christopher R. Feaver................................... 676,860(2) 5.6
Christopher R. Lunt..................................... -- --
Anthony W. Liberati..................................... -- --
Donald B. Hutchinson.................................... -- --
Richard V. Hopple....................................... -- --
Stacey Snider........................................... -- --
All directors and officers as a group (10 persons)...... 2,707,440 22.2
</TABLE>

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

(1) Represents shares which may be acquired upon the exercise of stock options
exercisable within 60 days.

(2) Represents restricted shares of common stock of which 399,165 shares were
vested as of June 30, 2000 and the remainder will vest upon completion of
this offering.

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<PAGE>
DESCRIPTION OF CAPITAL STOCK

Under our amended and restated certificate of incorporation (which will be
effective prior to the completion of this offering), our authorized capital
stock consists of 120,000,000 shares, of which 100,000,000 shares are common
stock, no par value per share, and 20,000,000 shares are preferred stock, no par
value per share, of which none are outstanding. Immediately following this
offering, 16,473,480 shares of common stock, or 17,058,480 shares if the
underwriters exercise their over-allotment option in full, will be outstanding.
The following description of our capital stock is qualified in its entirety by
our amended and restated certificate of incorporation and amended and restated
bylaws, both of which are included as exhibits to the registration statement of
which this prospectus forms a part.

COMMON STOCK

Holders of our common stock will be entitled to one vote per share with
respect to each matter presented to our stockholders on which the holders of
common stock are entitled to vote. Except as may be provided in connection with
any preferred stock in a certificate of designation filed pursuant to the
Delaware General Corporation Law (DGCL), or as may otherwise be required by law
or the amended and restated certificate of incorporation, the common stock will
be the only capital stock of Zengine entitled to vote in the election of
directors and on all other matters presented to our stockholders; provided that
holders of common stock, as such, will not be entitled to vote on any matter
that relates solely to the terms of any outstanding series of preferred stock or
the number of shares of such series and does not affect the number of authorized
shares of preferred stock or the powers, privileges and rights pertaining to the
preferred stock. The common stock does not have cumulative voting rights.

Subject to the prior rights of holders of preferred stock, if any, holders
of common stock are entitled to receive such dividends as may be lawfully
declared from time to time by our board of directors. Upon any liquidation,
dissolution or winding up of Zengine, whether voluntary or involuntary, holders
of common stock will be entitled to receive such assets as are available for
distribution to stockholders after there shall have been paid or set apart for
payment the full amounts necessary to satisfy any preferential or participating
rights to which the holders of each outstanding series of preferred stock are
entitled by the express terms of such series.

The outstanding shares of our common stock are, and the shares of common
stock being offered hereby will be, upon payment therefor, validly issued, fully
paid and nonassessable. The common stock sold in this offering will not have any
preemptive, subscription or conversion rights. Additional shares of authorized
common stock may be issued, as determined by our board of directors from time to
time, without stockholder approval, except as may be required by applicable law
or stock exchange or Nasdaq Stock Market requirements.

PREFERRED STOCK

Our board of directors is empowered, without approval of the stockholders,
to cause shares of preferred stock to be issued from time to time in one or more
series, with the numbers of shares of each series and the designation, powers,
privileges, preferences and rights of the shares of each such series and the
qualifications, limitations and restrictions thereof as fixed by our board of
directors. Among the specific matters that may be determined by our board of
directors are:

- the designation of each series;

- whether the shares of each series has voting rights;

- the rate of dividends, if any

61
<PAGE>
- whether dividends, if any, shall be cumulative or non-cumulative;

- the terms of redemption, if any;

- the amount payable in the event of any voluntary or involuntary
liquidation, dissolution or winding up of the affairs of Zengine;

- rights and terms of conversion or exchange, if any;

- the price for which the shares may be issued;

- restrictions on the payment of dividends on redemptions of stock while any
shares of such series is outstanding; and

- any other powers, preferences and other special rights or qualifications
on limitations.

Although no shares of preferred stock are currently outstanding and we have
no current plans to issue preferred stock, the issuance of shares of preferred
stock, or the issuance of rights to purchase such shares, could be used to
discourage an unsolicited acquisition proposal. For example, a business
combination could be impeded by the issuance of a series of preferred stock
containing class voting rights that would enable the holder or holders of such
series to block any such transaction. Alternatively, a business combination
could be facilitated by the issuance of a series of preferred stock having
sufficient voting rights to provide a required percentage vote of the
stockholders. In addition, under certain circumstances, the issuance of
preferred stock could adversely affect the voting power and other rights of the
holders of the common stock. Although our board of directors is required to make
any determination to issue any such stock based on its judgment as to the best
interests of the stockholders of Zengine, it could act in a manner that would
discourage an acquisition attempt or other transaction that some, or a majority,
of the stockholders might believe to be in their best interests or in which
stockholders might receive a premium for their stock over prevailing market
prices of such stock. Our board of directors does not at present intend to seek
stockholder approval prior to any issuance of currently authorized stock, unless
otherwise required by law or applicable stock exchange or Nasdaq Stock Market
requirements.

WARRANT

As of June 30, 2000, there was an agreement to issue one warrant to purchase
1.7% of the issued and outstanding shares of our common stock immediately after
our initial public offering. We agreed to issue this warrant in January 2000 to
REX Stores Corporation contingent upon completion of a successful initial public
offering at an exercise price equal to the initial public offering price per
share. The warrant will be issued and become immediately exercisable immediately
after the closing of our initial public offering. It will expire three years
after its date of issue.

LIMITATION OF LIABILITY OF DIRECTORS

Our amended and restated certificate of incorporation provides that the
personal liability of our directors for monetary damages shall be eliminated to
the fullest extent provided by the DGCL. Section 102(b)(7) of the DGCL states,
that a director of Zengine will not be personally liable to Zengine or its
stockholders for monetary damages for breach of fiduciary duty as a director,
except for liability imposed by law (as in effect from time to time):

- for any breach of the director's duty of loyalty to Zengine or its
stockholders;

- for any act or omission not in good faith or which involved intentional
misconduct or a knowing violation of law; or

- for any transaction from which the director derived an improper personal
benefit.

62
<PAGE>
The inclusion of this provision in the amended and restated certificate of
incorporation may have the effect of reducing the likelihood of derivative
litigation against directors, and may discourage or deter stockholders or
management from bringing a lawsuit against directors for breach of their duty of
care, even though such an action, if successful, might otherwise have benefited
Zengine and its stockholders.

Our amended and restated certificate of incorporation also requires that
Zengine provide indemnification to its directors, officers and employees to the
extent currently permitted by the DGCL.

SECTION 203 OF THE DELAWARE GENERAL CORPORATION LAW AND BYLAWS

We are a Delaware corporation and subject to Section 203 of the DGCL.
Generally, Section 203 prohibits a publicly held Delaware corporation from
engaging in a "business combination" with an "interested stockholder" for a
period of three years after the time such stockholder became an interested
stockholder unless certain conditions are satisfied. Thus, this provision may
make acquisition of control of Zengine more difficult. The prohibitions in
Section 203 of the DGCL do not apply if:

- prior to the time the stockholder became an interested stockholder, the
board of directors of the corporation approved either the business
combination or the transaction which resulted in the stockholder becoming
an interested stockholder;

- upon consummation of the transaction which resulted in the stockholder
becoming an interested stockholder, the interested stockholder owned at
least 85% of the voting stock of the corporation outstanding at the time
the transaction commenced; or

- at or subsequent to the time the stockholder became an interested
stockholder, the business combination is approved by the board of
directors and authorized by the affirmative vote of at least 66 2/3% of
the outstanding voting stock that is not owned by the interested
stockholder.

Under Section 203 of the DGCL, a "business combination" includes:

- any merger or consolidation of the corporation with the interested
stockholder;

- any sale, lease, exchange or other disposition, except proportionately as
a stockholder of such corporation, to or with the interested stockholder
of assets of the corporation having an aggregate market value equal to 10%
or more of either the aggregate market value of all the assets of the
corporation or the aggregate market value of all the outstanding stock of
the corporation;

- certain transactions resulting in the issuance or transfer by the
corporation of stock of the corporation to the interested stockholder;

- certain transactions involving the corporation which have the effect of
increasing the proportionate share of the stock of any class or series of
the corporation which is owned by the interested stockholder; or

- certain transactions in which the interested stockholder receives
financial benefits provided by the corporation.

Under Section 203 of the DGCL, an "interested stockholder" generally is:

- any person that owns 15% or more of the outstanding voting stock of the
corporation;

- any person that is an affiliate or associate of the corporation and was
the owner of 15% or more of the outstanding voting stock of the
corporation at any time within the three-year period prior to the date on
which it is sought to be determined whether such person is an interested
stockholder; and

- the affiliates or associates of any such person.

63
<PAGE>
Because MCSi owned more than 15% of our voting stock before we became a
public company in this offering, Section 203 of the DGCL by its terms is
currently not applicable to business combinations between MCSi and us even
though MCSi owns 15% or more of our outstanding stock. If any other person
acquires 15% or more of our outstanding stock, such person will be subject to
the provisions of Section 203 of the DGCL.

CERTAIN PROVISIONS OF OUR AMENDED AND RESTATED CERTIFICATE OF INCORPORATION

Our amended and restated certificate of incorporation and amended and
restated bylaws contain provisions governing various methods and procedures to
be followed in connection with stockholder actions. These provisions include a
requirement that advance notice be delivered to Zengine of any business to be
brought by a stockholder before an annual or special meeting of stockholders and
for certain procedures to be followed by stockholders in nominating persons for
election to our board of directors. Generally, special meetings of stockholders
may only be called by our board of directors, chairman, president or holders of
35% or more of our outstanding common stock. Only such business may be conducted
at a special meeting of stockholders as is set forth in the notice for such
meeting. Stockholders may act without a meeting provided that written consents
signed by not less than the minimum number of votes that would be necessary to
authorize or take such action at a meeting at which all of the stockholders who
would be entitled to vote at a meeting called for that purpose were present and
voted.

Our amended and restated certificate of incorporation provides that, except
as may be provided in connection with the issuance of any series of preferred
stock, the number of directors shall be fixed from time to time pursuant to a
resolution adopted by our board of directors. Our amended and restated
certificate of incorporation provides for a classified board of directors,
consisting of three classes as nearly equal in size as practicable. Each class
holds office until the third annual stockholders' meeting for election of
directors following the most recent election of such class, except that the
initial terms of the three classes expire in 2001, 2002 and 2003, respectively.
Directors may only be removed for cause on the affirmative vote of a majority of
the outstanding shares then entitled to vote. Vacancies on the board of
directors may be filled by a vote of the directors then in office.

LISTING

Application has been made for quotation of our common stock on the Nasdaq
National Market under the symbol "ZNGN."

TRANSFER AGENT AND REGISTRAR

The transfer agent and registrar for our common stock is Registrar and
Transfer Company. Its address is 10 Commerce Drive, Cranford, New Jersey 07016.

64
<PAGE>
SHARES ELIGIBLE FOR FUTURE SALE

GENERAL

The 4,290,000 shares of our common stock sold in this offering, or 4,875,000
shares if the underwriters exercise their over-allotment option in full, will be
freely tradable without restriction under the Securities Act, except for any
such shares which may be acquired by an "affiliate" of Zengine (an "Affiliate")
as that term is defined in Rule 144 under the Securities Act, which shares will
remain subject to the resale limitations of Rule 144.

The 8,347,944 shares of our common stock that will continue to be held by
MCSi after this offering constitute "restricted securities" within the meaning
of Rule 144, and will be eligible for sale by MCSi in the open market on
, 2000, subject to certain contractual lockup provisions and the
applicable requirements of Rule 144, both of which are described below. Zengine
has granted certain registration rights to MCSi. See "--Registration Rights."

Generally, Rule 144 provides that a person who has beneficially owned
"restricted" shares for at least one year will be entitled to sell on the open
market in brokers' transactions 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; and

- the average weekly trading volume in the common stock on the open market
during the four calendar weeks preceding such sale.

Sales under Rule 144 are also subject to certain post-sale notice requirements
and the availability of current public information about Zengine.

In the event that any person other than MCSi who is deemed to be an
Affiliate purchases shares of our common stock pursuant to this offering or
acquires shares of our common stock pursuant to an employee benefit plan of
Zengine, the shares held by such person are required under Rule 144 to be sold
in brokers' transactions, subject to the volume limitations described above.
Shares properly sold in reliance upon Rule 144 to persons who are not Affiliates
are thereafter freely tradable without restriction.

Sales of substantial amounts of our common stock in the open market, or the
availability of such shares for sale, could adversely affect the price of our
common stock.

Each of Zengine, MCSi, Wilblairco Associates, At Home Corporation and the
directors and executive officers of Zengine and MCSi have agreed that, without
the prior written consent of William Blair & Company on behalf of the
underwriters, they will not, during the period ending 180 days after the date of
this prospectus, sell or otherwise dispose of any shares of our common stock,
subject to certain exceptions. See "Underwriters."

An aggregate of 3,484,300 shares of our common stock are reserved for
issuance under our stock option plan and employee stock purchase plan. We intend
to file a registration statement on Form S-8 covering the issuance of shares of
our common stock pursuant to these plans. Accordingly, the shares issued
pursuant to these stock option plans will be freely tradable, subject to the
restrictions on resale by Affiliates under Rule 144.

REGISTRATION RIGHTS

We have entered into a registration rights agreement with Wilblairco, At
Home, REX Stores, MCSi and Messrs. Savarino, Dhadphale and Feaver which provides
that they may require us to register under the Securities Act all or a portion
of our common stock that they hold at any time after 180 days after this
offering, subject to certain conditions. Any shares of our common stock sold
pursuant to these registration rights would be eligible for immediate resale in
the public market without restriction by persons other than our Affiliates. For
more information regarding this registration rights agreement, please see
"Certain Transactions."

65
<PAGE>
Any sales of substantial amounts of our common stock in the public market,
or the perception that such sales might occur (whether as a result of MCSi's
registration rights or otherwise), could have a material adverse effect on the
market price of our common stock. See "Risk Factors."

PLAN OF DISTRIBUTION

Of the 4,290,000 shares offered by this prospectus, 3,900,000 shares are
being offering by means of an underwritten public offering and 390,000 shares
are being offered by means of the MCSi Subscription Program to stockholders of
MCSi, our parent company and principal stockholder.

UNDERWRITTEN PUBLIC OFFERING

The several underwriters named below, for which William Blair & Company,
L.L.C., Friedman, Billings, Ramsey and Co., Inc., E*OFFERING Corp. and Morgan
Keegan & Company, Inc. are acting as representatives, have severally agreed,
subject to the terms and conditions set forth in the underwriting agreement
among Zengine and the underwriters, to purchase from Zengine, and Zengine has
agreed to sell to each of the underwriters, the respective number of shares of
common stock set forth opposite each underwriter's name in the table below.

<TABLE>
<CAPTION>
NUMBER OF
UNDERWRITER SHARES
----------- ---------
<S> <C>
William Blair & Company, L.L.C..............................
Friedman, Billings, Ramsey & Co., Inc.......................
E*OFFERING Corp.............................................
Morgan Keegan & Company, Inc................................
---------
Total.................................................
=========
</TABLE>

This offering will be underwritten on a firm commitment basis. In the
underwriting agreement, the underwriters have agreed, subject to the terms and
conditions set forth therein, to purchase the shares of common stock being sold
pursuant thereto at a price per share equal to the public offering price less
the underwriting discount specified on the cover page of this prospectus.
According to the terms of the underwriting agreement, the underwriters will
either purchase all of the shares or none of them. In the event of default by
any underwriter, in certain circumstances the purchase commitments of the
non-defaulting underwriters may be increased or the underwriting agreement may
be terminated.

The representatives of the underwriters have advised Zengine that the
underwriters will offer the shares of common stock to the public at the public
offering price specified on the cover page of this prospectus. The underwriters
may also offer the shares to dealers at the public offering price less a
concession of up to per share. The underwriters may allow, and these
dealers may re-allow, a concession of up to per share to certain other
dealers. The underwriters will offer the shares subject to prior sale and
subject to receipt and acceptance of the shares by the underwriters. The
underwriters may reject any order to purchase shares in whole or in part. The
underwriters expect that Zengine will deliver the shares to the underwriters
through the facilities of the Depository Trust Company in New York, New York on
or about , 2000. At that time, the underwriters will pay Zengine for
the shares in immediately available funds. After the commencement of the initial
public offering, the representatives may change the public offering price and
the other selling terms.

The underwriters have the option to purchase up to an aggregate of 585,000
additional shares of common stock from Zengine at the same price they are paying
for the 3,900,000 shares offered hereby in the underwritten public offering. The
underwriters may purchase additional shares only to cover over-allotments made
in connection with this offering and only within 30 days after the date of this
prospectus. If the underwriters decide to exercise this over-allotment option,
each underwriter will be required to purchase additional shares in approximately
the same proportion as set forth in the table

66
<PAGE>

above. The underwriters will offer any additional shares that they purchase on
the terms described in the preceding paragraph.

The following table summarizes the compensation to be paid by Zengine to the
underwriters:

<TABLE>
<CAPTION>
TOTAL
-------------------------------
WITHOUT WITH
PER SHARE OVER-ALLOTMENT OVER-ALLOTMENT
--------- -------------- --------------
<S> <C> <C> <C>
Public offering price................................... $ $ $
Underwriting discount paid by Zengine...................
</TABLE>

Zengine estimates the expenses of this offering payable by Zengine
(excluding the underwriting discount) to be $1.2 million.

Zengine has agreed to indemnify the underwriters and their controlling
persons against specific liabilities, including liabilities under the Securities
Act.

Zengine, its executive officers and directors, MCSi, Wilblairco and At Home
have agreed not to sell or transfer any shares of common stock, or to engage in
hedging transactions with respect to the common stock, for a period of 180 days
from the date of this prospectus without the consent of William Blair. After
giving effect to this offering, stockholders who have agreed to this lock-up
arrangement will hold an aggregate of 12,183,480 shares of common stock and
options to purchase 1,380,118 shares of common stock. For more information, see
"Shares Eligible for Future Sale."

In connection with this offering, the underwriters and other persons
participating in this offering may engage in transactions which affect the
market price of the common stock. These may include stabilizing and
over-allotment transactions and purchases to cover syndicate short positions.
Stabilizing transactions consist of bids or purchases for the purpose of
pegging, fixing or maintaining the price of the common stock. Over-allotment
involves selling more shares of common stock in this offering than are specified
on the cover page of this prospectus, which results in a syndicate short
position. The underwriters may cover this short position by purchasing common
stock in the open market or by exercising all or part of their over-allotment
option. In addition, the representatives of the underwriters may impose a
penalty bid. This allows the representatives to reclaim the selling concession
allowed to an underwriter or selling group member if common stock sold by such
underwriter or selling group member in this offering is repurchased by the
representatives in stabilizing or syndicate short covering transactions. These
transactions, which may be effected on the Nasdaq National Market or otherwise,
may stabilize, maintain or otherwise affect the market price of the common stock
and could cause the price to be higher than it would be without these
transactions. The underwriters and other participants in this offering are not
required to engage in any of these activities and may discontinue any of these
activities at any time without notice. Neither Zengine nor any of the
underwriters makes any representation or prediction as to whether the
underwriters will engage in these transactions or choose to discontinue any
transactions engaged in or as to the direction or magnitude of any effect that
these transactions may have on the price of the common stock.

The representatives of the underwriters have advised Zengine that the
underwriters do not intend to confirm, without client authorization, sales to
any account over which they exercise discretionary authority.

Prior to this offering, there has been no public market for Zengine's common
stock. Consequently, Zengine and the representatives of the underwriters will
negotiate to determine the initial public offering price. They will consider
current market conditions, Zengine's operating results in recent periods, the
market capitalization of other companies in its industry and estimates of
Zengine's potential. The estimated price range specified on the cover page of
this prospectus may change because of market conditions and other factors.

The underwriters have reserved for sale, at the initial public offering
price, up to 195,000 shares of common stock in this offering for Zengine
employees and other individuals with a relationship with

67
<PAGE>

Zengine. Purchases of the reserved shares would reduce the number of shares
available for sale to the general public. The underwriters will offer any
reserved shares which are not so purchased to the general public on the same
terms as the other shares.

We have applied for listing of the common stock on the Nasdaq National
Market under the symbol "ZNGN."

In October 1999, we sold 902,478 shares of our common stock to Wilblairco
Associates for $2.0 million. Wilblairco Associates, an Illinois general
partnership, is an affiliate of William Blair & Company, which is the lead
underwriter of this offering.

fbr.com, a division of FBR Investment Services, Inc., which is an affiliate
of Friedman, Billings, Ramsey & Co., Inc., will be providing an Internet
distribution channel for this offering. Friedman, Billings, Ramsey & Co., Inc.
has agreed to allocate a limited number of shares to fbr.com for sale to its
online brokerage account holders. An electronic prospectus is available on the
Web site maintained by fbr.com. Other than the prospectus in electronic format,
the information on the fbr.com Web site relating to this offering is not a part
of this prospectus and should not be relied upon by prospective investors.

E*OFFERING Corp., one of the underwriters, will allocate for distribution by
E*TRADE Securities, Inc. a portion of the shares that E*OFFERING is underwriting
in this offering. Copies of the prospectus in electronic format, from which you
can link to a "Meet the Management" presentation through an embedded hyperlink,
will be made available on Internet Web site, maintained by E*OFFERING Corp. and
E*TRADE Securities, Inc. Customers of E*TRADE Securities, Inc. who complete and
pass an online eligibility profile may place conditional offers to purchase
shares in this offering through E*TRADE's Internet Web site.

MCSi SUBSCRIPTION PROGRAM

As part of this offering, we are offering 390,000 shares of our common stock
in the MCSi Subscription Program to stockholders of MCSi, our parent company and
principal stockholder. MCSi's stockholders may subscribe for one share of common
stock for every 30 shares of MCSi common stock held by them, and may not
transfer the opportunity to subscribe to another person except involuntarily by
operation of law. Persons who owned at least 100 shares of MCSi common stock as
of May 15, 2000 are eligible to purchase shares from us under the program.
Shareholders who own less than 100 shares of MCSi common stock will be
ineligible to participate in the MCSi Subscription Program.

Under a standby purchase agreement, MCSi will purchase from us any of the
shares offered by us under the program that are not purchased by the
stockholders of MCSi. Distribution of share certificates purchased through the
MCSi Subscription Program will be made to the purchasers as soon as practicable
following closing of the sale of the shares to the public. It is expected that
sales under the MCSi Subscription Program will be reflected in purchasers'
book-entry accounts at the Depository Trust Company, if any, upon the closing of
these sales. After the closing of these sales, we will mail stock certificates
to all purchasers who do not maintain book-entry accounts at the Depository
Trust Company. Prior to this offering, MCSi owned 68.5% of our common stock.
After this offering, MCSi will own approximately 50.7% of our common stock,
assuming that all 390,000 shares are purchased by MCSi stockholders in the
subscription program. The purchase price under the program, whether paid by MCSi
stockholders or MCSi, will be the same price per share as set forth on the cover
page of this prospectus. All shares will be sold to stockholders of MCSi or to
MCSi. Neither MCSi nor any other underwriter will receive any compensation from
Zengine or any other person, with respect to this subscription offering,
including any underwriting discounts or commissions.

The total proceeds before expenses to be received by Zengine from both the
underwritten public offering and the MCSi Subscription Program will be
approximately $55.0 million, assuming no exercise of the over-allotment option.

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<PAGE>

The expenses of the MCSi Subscription Program are estimated at $25,000 and
are payable by us. The total expenses for the offering, including the expenses
associated with the underwritten public offering, are estimated at approximately
$1.2 million.

MCSi is an underwriter with respect to the shares included in the MCSi
Subscription Program. MCSi is not an underwriter with respect to the other
shares offered by this prospectus. MCSi is not included in the term
"underwriter" as used in this prospectus. MCSi's sole condition to purchase any
shares that are not purchased by its stockholders in the MCSi Subscription
Program is that the conditions to the underwriter's obligation have been met.
This means that MCSi will be required to purchase these shares if, and only if,
the underwriters are obligated to purchase shares in the underwritten public
offering. MCSi has not participated in any discussions or negotiations with
Zengine and the underwriters regarding the initial public offering price. MCSi
will not have any right to seek indemnification from Zengine regarding its
agreement to accept underwriter liability with respect to the shares included in
the MCSi Subscription Program.

LEGAL MATTERS

The validity of the common stock offered hereby will be passed upon for us
by Elias, Matz, Tiernan & Herrick L.L.P., Washington, D.C. Certain legal matters
in connection with this offering will be passed upon for the underwriters by
Sidley & Austin, Chicago, Illinois.

EXPERTS

The financial statements of Zengine, Inc., as of September 30, 1999 and
March 31, 2000, and for each of the periods from inception (January 1, 1999) to
September 30, 1999 and from October 1, 1999 to March 31, 2000 included in this
prospectus have been so included in reliance on the report of
PricewaterhouseCoopers LLP, independent accountants, given on the authority of
said firm as experts in auditing and accounting.

ADDITIONAL INFORMATION

We have filed with the SEC a registration statement, as amended, on
Form S-1 under the Securities Act with respect to the shares of our common stock
offered hereby. This prospectus does not contain all of the information set
forth in the registration statement and the exhibits and schedules thereto. Some
items are omitted in accordance with the rules and regulations of the SEC. For
further information about us and our common stock, reference is made to the
registration statement and the exhibits and any schedules filed therewith. To
the extent that statements contained in this prospectus refer to the contents of
any contract or other document which is filed as an exhibit to the registration
statement, reference is made to the copy of such contract or other document, and
each statement is qualified in all respects by such reference. A copy of the
registration statement, including the exhibits and schedules thereto, may be
read and copied at the SEC's Public Reference Room at 450 Fifth Street, N.W.,
Washington, D.C. 20549 and at the SEC's regional offices at Seven World Trade
Center, New York, New York 10048 and 500 West Madison Street, Chicago, Illinois
60661. Information on the operation of the Public Reference Room may be obtained
by calling the SEC at 1-800-SEC-0330. In addition, the SEC maintains an Internet
site at http://www.sec.gov, from which interested persons can electronically
access the registration statement, including the exhibits and any schedules
thereto.

Subject to the foregoing, you should rely only on the information contained
in this prospectus. We have not authorized anyone to provide you with
information different from that contained in this prospectus.

As a result of this offering, we will become subject to the full
informational requirements of the Securities Exchange Act of 1934, as amended.
We will fulfill our obligations with respect to such requirements by filing
periodic reports and other information with the SEC. We intend to furnish our

69
<PAGE>
stockholders with annual reports containing consolidated financial statements
certified by an independent public accounting firm. We also maintain our
Internet site at http://www.zengine.com. Our Internet site and the information
contained therein or connected thereto shall not be deemed to be incorporated
into this prospectus or the registration statement of which it forms a part.

Our name, logo, KORE, KOG, KIT and certain other tag lines, titles and logos
of our products and other products and services mentioned in this prospectus are
either our trademarks or service marks or trademarks or service marks that have
been licensed to us or are owned by others. Each trademark, trade name or
service mark of any other company appearing in this prospectus belongs to its
holder.

70
<PAGE>
ZENGINE, INC.

INDEX TO FINANCIAL STATEMENTS

<TABLE>
<CAPTION>
PAGE(S)
----------------
<S> <C>
Report of Independent Accountants........................... F-2

Balance Sheets as of September 30, 1999, March 31, 2000 and
June 30, 2000 (unaudited)................................. F-3

Statements of Operations for the period from inception
(January 1, 1999) to September 30, 1999, the six months
ended March 31, 2000, the three months ended June 30, 2000
(unaudited) and the nine months ended June 30, 2000
(unaudited)............................................... F-4

Statements of Changes in Stockholders' Equity for the period
from inception (January 1, 1999) to September 30, 1999,
the six months ended March 31, 2000 and the three months
ended June 30, 2000 (unaudited)........................... F-5

Statements of Cash Flows for the period from inception
(January 1, 1999) to September 30, 1999, the six months
ended March 31, 2000, the three months ended June 30, 2000
(unaudited) and the nine months ended June 30, 2000
(unaudited)............................................... F-6

Notes to Financial Statements............................... F-7-F-17
</TABLE>

F-1
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS

To the Board of Directors and Stockholders of Zengine, Inc.

The stock split and the change in the number of authorized shares described
in Note 2 to the financial statements has not occurred at August 21, 2000. When
it has occurred, we will be in a position to furnish the following report:

"In our opinion, the accompanying balance sheets and the related
statements of operations, changes in stockholders' equity and cash flows
present fairly, in all material respects, the financial position of
Zengine, Inc. ("Zengine"), a majority owned subsidiary of MCSi, Inc., at
September 30, 1999 and March 31, 2000, and the results of its operations
and its cash flows for the period from inception (January 1, 1999) to
September 30, 1999 and the six months ended March 31, 2000 in conformity
with accounting principles generally accepted in the United States. These
financial statements are the responsibility of Zengine's management; our
responsibility is to express an opinion on these financial statements
based on our audits. We conducted our audits of these statements in
accordance with auditing standards generally accepted in the United
States which require that we plan and perform the audits to obtain
reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial
statements, assessing the accounting principles used and significant
estimates made by management, and evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable
basis for the opinion expressed above."

PricewaterhouseCoopers LLP

Cincinnati, Ohio
June 26, 2000

F-2
<PAGE>
ZENGINE, INC.
BALANCE SHEETS

<TABLE>
<CAPTION>
SEPTEMBER 30, MARCH 31, JUNE 30,
1999 2000 2000
------------- ----------- -----------
(UNAUDITED)
<S> <C> <C> <C>
Assets:
Current assets:
Cash............................................. $ 406 $ 50,733 $ --
Accounts receivable.............................. -- 1,344,621 2,056,502
Amounts receivable from MCSi (Note 4)............ -- 2,354,449 1,759,245
Other current assets............................. -- 824,963 893,995
----------- ----------- -----------

Total current assets........................... 406 4,574,766 4,709,742
----------- ----------- -----------

Property and equipment, net of accumulated
depreciation..................................... 15,113 41,886 102,194
Capitalized software costs, net of accumulated
amortization..................................... 339,801 446,063 553,218
Other assets....................................... -- 150,000 81,889
----------- ----------- -----------

Total assets................................... $ 355,320 $ 5,212,715 $ 5,447,043
=========== =========== ===========

Liabilities and stockholders' equity:
Liabilities:
Cash overdrafts.................................. $ -- $ -- $ 45,137
Accrued liabilities (Note 6)..................... 92,573 657,989 597,315
Deferred revenue................................. -- 134,584 517,500
----------- ----------- -----------

Total liabilities.............................. 92,573 792,573 1,159,952
----------- ----------- -----------

Commitments and contingencies (Notes 3 and 4)...... -- -- --

Stockholders' equity:
Common stock, no par value, 100,000,000 shares
authorized, 12,860,340 shares issued and
outstanding at September 30, 1999, 12,183,480
at March 31, 2000 and June 30, 2000............ -- -- --
Additional paid-in capital....................... 1,301,895 6,953,226 7,353,250
Unearned compensation............................ (105,525) (1,772,634) (2,056,075)
Accumulated deficit.............................. (933,623) (760,450) (1,010,084)
----------- ----------- -----------

Total stockholders' equity..................... 262,747 4,420,142 4,287,091
----------- ----------- -----------

Total liabilities and stockholders' equity..... $ 355,320 $ 5,212,715 $ 5,447,043
=========== =========== ===========
</TABLE>

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

F-3
<PAGE>
ZENGINE, INC.

STATEMENTS OF OPERATIONS

<TABLE>
<CAPTION>
PERIOD FROM
INCEPTION
(JANUARY 1, SIX MONTHS THREE MONTHS NINE MONTHS
1999) ENDED ENDED ENDED
TO SEPTEMBER 30, MARCH 31, JUNE 30, JUNE 30,
1999 2000 2000 2000
---------------- ---------- ------------ -----------
(UNAUDITED) (UNAUDITED)
<S> <C> <C> <C> <C>
Revenue:

Third party......................... $ 4,089 $1,354,088 $1,295,077 $2,649,165

Related party....................... -- 1,356,828 1,098,293 2,455,121
----------- ---------- ---------- ----------

4,089 2,710,916 2,393,370 5,104,286
----------- ---------- ---------- ----------

Cost of revenue:

Third party......................... 23,511 231,752 203,791 435,543

Related party....................... -- 55,253 24,000 79,253
----------- ---------- ---------- ----------

23,511 287,005 227,791 514,796
----------- ---------- ---------- ----------

Gross profit (loss)................... (19,422) 2,423,911 2,165,579 4,589,490
----------- ---------- ---------- ----------

Selling, general and administrative
expenses:

Third party......................... 401,081 1,897,202 1,663,253 3,560,455

Related party....................... 513,120 435,000 794,251 1,229,251
----------- ---------- ---------- ----------

914,201 2,332,202 2,457,504 4,789,706
----------- ---------- ---------- ----------

Income (loss) from operations......... (933,623) 91,709 (291,925) (200,216)

Interest income....................... -- 81,464 42,291 123,755
----------- ---------- ---------- ----------

Income (loss) before income taxes..... (933,623) 173,173 (249,634) (76,461)

Provision for income taxes (Note 5)... -- -- -- --
----------- ---------- ---------- ----------

Net income (loss)..................... $ (933,623) $ 173,173 $ (249,634) $ (76,461)
=========== ========== ========== ==========

Earnings (loss) per share of common
stock -- basic...................... $ (.08) $ .02 $ (.02) $ (.01)
=========== ========== ========== ==========

Earnings (loss) per share of common
stock -- diluted.................... $ (.08) $ .01 $ (.02) $ (.01)
=========== ========== ========== ==========

Weighted average number of common
shares outstanding -- basic......... 11,377,184 11,091,515 11,196,537 11,143,051
=========== ========== ========== ==========

Weighted average number of common
shares outstanding -- diluted....... 11,377,184 13,338,169 11,196,357 11,143,051
=========== ========== ========== ==========
</TABLE>

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

F-4
<PAGE>
ZENGINE, INC.

STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY

<TABLE>
<CAPTION>
ADDITIONAL
SHARES PAID-IN UNEARNED ACCUMULATED
OUTSTANDING CAPITAL COMPENSATION DEFICIT TOTAL
----------- ---------- ------------ ----------- ----------
<S> <C> <C> <C> <C> <C>
Incorporation of the Company..... 10,829,760 $ 1,000 $ -- $ -- $ 1,000
Capital contributions from MCSi
(Note 4)....................... -- 1,105,887 -- -- 1,105,887
Stock based compensation (Note
7)............................. 2,030,580 195,008 (195,008) -- --
Amortization of stock based
compensation (Note 7).......... -- -- 89,483 -- 89,483
Net loss......................... -- -- -- (933,623) (933,623)
---------- ---------- ----------- ----------- ----------
Balance at September 30, 1999.... 12,860,340 1,301,895 (105,525) (933,623) 262,747

Contribution of shares by MCSi
(Note 3)....................... (2,481,816) -- -- -- --
Sale of common stock, net of
related costs (Note 3)......... 1,804,956 3,871,049 -- -- 3,871,049
Stock based compensation......... -- 1,780,282 (1,780,282) -- --
Amortization of stock based
compensation (Note 7).......... -- -- 113,173 -- 113,173
Net income....................... -- -- -- 173,173 173,173
---------- ---------- ----------- ----------- ----------
Balance at March 31, 2000........ 12,183,480 6,953,226 (1,772,634) (760,450) 4,420,142
Stock based compensation --
(unaudited).................... -- 400,024 (400,024) -- --
Amortization of stock based
compensation (Note 7) --
(unaudited).................... -- -- 116,583 -- 116,583
Net loss--(unaudited)............ -- -- -- (249,634) (249,634)
---------- ---------- ----------- ----------- ----------
Balance at June 30, 2000 --
(unaudited).................... 12,183,480 $7,353,250 $(2,056,075) $(1,010,084) $4,287,091
========== ========== =========== =========== ==========
</TABLE>

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

F-5
<PAGE>
ZENGINE, INC.

STATEMENTS OF CASH FLOWS

<TABLE>
<CAPTION>
PERIOD FROM
INCEPTION SIX MONTHS THREE MONTHS NINE MONTHS
(JANUARY 1, 1999) ENDED ENDED ENDED
TO SEPTEMBER 30, MARCH 31, JUNE 30, JUNE 30,
1999 2000 2000 2000
------------------ ------------- ------------ -----------
(UNAUDITED)
<S> <C> <C> <C> <C>
Cash flows from operating activities:
Net income (loss)................... $ (933,623) $ 173,173 $ (249,634) $ (76,461)
Adjustments to reconcile net loss to
cash used in operating activities:
Depreciation and amortization..... 21,491 80,709 63,511 144,220
Non-cash compensation expense..... 89,483 113,173 116,583 229,756
Changes in assets and liabilities:
Accounts receivable............. -- (1,344,621) (711,881) (2,056,502)
Deferred revenue................ -- 134,584 382,916 517,500
Accrued liabilities and cash
overdrafts.................... 92,573 565,416 (15,537) 549,879
Other assets.................... -- (974,963) (921) (975,884)
----------- ----------- ----------- -----------
Cash used in operating
activities.................. (730,076) (1,252,529) (414,963) (1,667,492)
----------- ----------- ----------- -----------
Cash flows from investing activities:
Capital expenditures................ (16,140) (34,083) (70,640) (104,723)
Capitalized software costs.......... (360,265) (179,661) (160,334) (339,995)
Issuance of demand note--MCSi....... -- (3,871,049) -- (3,871,049)
Net cash settlement under demand
note arrangement with MCSi........ -- 1,516,600 595,204 2,111,804
----------- ----------- ----------- -----------
Cash provided by (used in)
investing activities........ (376,405) (2,568,193) 364,230 (2,203,963)
----------- ----------- ----------- -----------
Cash flows from financing activities:
Sale of common stock to MCSi........ 1,000 -- -- --
Capital contributions from MCSi..... 1,105,887 -- -- --
Sale of common stock, net of related
expenses.......................... -- 3,871,049 -- 3,871,049
----------- ----------- ----------- -----------
Cash provided by financing
activities.................. 1,106,887 3,871,049 -- 3,871,049
----------- ----------- ----------- -----------
Net increase (decrease) in cash....... 406 50,327 (50,733) (406)
Cash--beginning of period............. -- 406 50,733 406
----------- ----------- ----------- -----------
Cash--end of period................... $ 406 $ 50,733 $ -- $ --
=========== =========== =========== ===========
Supplemental cash flow information:
Income taxes paid................... $ -- $ -- $ -- $ --
=========== =========== =========== ===========
Interest paid....................... $ -- $ -- $ -- $ --
=========== =========== =========== ===========
</TABLE>

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

F-6
<PAGE>
ZENGINE, INC.

NOTES TO FINANCIAL STATEMENTS

1. THE COMPANY

Zengine, Inc. (the "Company") commenced operations in January 1999 as a
division of MCSi, Inc. (formerly known as Miami Computer Supply Corporation)
("MCSi") and was incorporated as BuySupply.com, Inc. ("BuySupply"), a wholly
owned subsidiary of MCSi in March 1999. BuySupply changed its name to
Zengine, Inc. in September 1999. At September 30, 1999 and March 31, 2000, MCSi
owned 83.3% and 68.5%, respectively, of the outstanding shares of the Company.
As BuySupply, the Company sold computer supplies and audio-visual equipment over
the Internet. In the Spring of 1999, the Company began to develop the Zengine
business model (described below) and implemented it throughout the Summer and
Fall of 1999, while maintaining its Internet operations. Commencing in the
Spring of 1999, the Company also devoted time to enhancing, improving and
administering dedicated Web sites for certain MCSi customers. Subsequent to
September 30, 1999, the Company focused its efforts solely on implementing the
Zengine business model, including continued work on enhancing, improving and
administering MCSi's Web sites and no longer utilizes the BuySupply model.

The Company emerged from the development stage during the six month period
ended March 31, 2000 as it began to earn revenues from the Zengine business
model. Start-up costs incurred in the preoperating stage were expensed as
incurred. The Company has adopted a fiscal year ending September 30. These
financial statements include audited financial statements as of September 30,
1999 and for the Company's initial fiscal period of January 1, 1999 through
September 30, 1999 and audited financial statements as of March 31, 2000 and for
the six month period then ended. The unaudited financial statements as of
June 30, 2000 and for the three and nine month periods then ended have been
prepared in accordance with Rule 10-01 of SEC Regulation S-X. Consequently, the
unaudited financial statements do not include all the disclosures required under
generally accepted accounting principles for complete financial statements.
However, in the opinion of the management of the Company, the information
presented herein includes all adjustments (consisting only of normal recurring
adjustments) necessary to present fairly the financial position, results of
operations and cash flows of the Company as of June 30, 2000 and for the three
and nine month periods then ended.

The Company provides a comprehensive suite of technology-based solutions
that enable businesses to conduct electronic commerce. The Company offers a full
range of integrated services for both business-to-business and
business-to-consumer e-commerce including Web site user interface design,
product content and merchandising, personalization and customer relationship
management, advertising and sponsorship management, order management, inventory
management and order fulfillment, end-user customer service and reporting and
analysis. The Company's solutions, delivered on an outsourced basis, allow its
clients to quickly and cost-effectively create, maintain and enhance their
e-commerce presence. These solutions allow the Company's clients to build,
manage and understand online customer relationships and to market, sell and
support products and service more effectively.

The Company has looked to MCSi for financial and business support since its
inception. Through September 30, 1999 MCSi contributed $1,106,887 to the capital
of the Company; no capital has been contributed by MCSi since September 30,
1999. Revenues for the six month period ended March 31, 2000 include $1,309,828
of revenue from the administration of MCSi's business-to-business dedicated Web
sites under an e-commerce services agreement, which became effective October 1,
1999. These revenues represent 48.3% of the Company's total revenue for the six
month period ended March 31, 2000. The Company's current arrangement to service
the MCSi dedicated Web sites expires in October, 2001. In addition, advertising
revenue of $1,349,250, or 49.8% of total revenue, for the six month period ended
March 31, 2000 was generated primarily from OEM product advertisers who either
placed banner advertisements on clients' Web pages which the Company serves, or
purchased

F-7
<PAGE>
ZENGINE, INC.

NOTES TO FINANCIAL STATEMENTS (CONTINUED)

preferential placement of the OEM manufacturer's products on clients' stores.
MCSi has supply arrangements with the OEM companies that purchase advertising
from the Company. Although the Company negotiated each OEM advertising
arrangement, MCSi's relationships with the OEM companies could have influenced
the Company's obtaining the advertising and the Company may not have obtained
the advertising without MCSi's relationship. The Company also conducts business
with MCSi under a distribution services agreement, administrative services
agreement and sublease and equipment leasing agreements. All of these
transactions are more fully described in Note 4.

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

REVENUE RECOGNITION

Revenues are recognized when goods are shipped or services are performed and
accepted by the customer. Revenues for the nine month period ended
September 30, 1999 represent revenues of the BuySupply business model.
Subsequent to October 1, 1999, all revenues were derived from the Zengine
business model.

Revenues under the Zengine business model are comprised of (a) service fees,
which include integration and set-up fees, transaction fees and subscription
fees, and (b) advertising and sponsorship fees. Revenues are recognized as
follows:

SERVICE FEES

INTEGRATION AND SET-UP FEES

The Company provides integration and set-up services to its clients. Under
these arrangements, services may include the development or design of a client's
Web site, migration of the client's current Web site content to the Company's
technology, integration of the client's Web site to the client's current
computer systems, or other similar activities. To the extent that these fees are
associated with a contract to provide subsequent outsourced transaction-based
services to a client, these fees are recognized ratably over the term of the
transaction services agreement. Otherwise, revenue is recognized when the
service is completed, the client has accepted the service and there is no future
obligation to provide any additional service.

TRANSACTION FEES

The Company provides outsourced transaction-based services to customers such
as providing product content and merchandising, invoice processing, order
management, custom fulfillment and end-user customer service on a commission
basis. Pursuant to the Company's arrangements with its first two third party
clients, commission revenue is determined as a percentage of the gross margin on
the sales value to the end customer. Under all subsequent arrangements,
commission revenue is based on a percentage of net sales value to the end
customer. Revenue from transaction fees is recognized when the service is
completed.

SUBSCRIPTION FEES

The Company provides subscription arrangements for maintenance and related
services for a fee. Revenue from subscription fees is recognized ratably over
the term of the subscription.

F-8
<PAGE>
ZENGINE, INC.

NOTES TO FINANCIAL STATEMENTS (CONTINUED)

ADVERTISING AND SPONSORSHIP FEES

Revenues from advertising take the form of fees when the Company sells
banner advertising or product placement advertising on Web pages served by the
Company on the Company's clients' stores. These arrangements call for continuous
advertising or product placement over a certain time period and are not
contingent upon events such as obtaining certain levels of sales, Web site
visits or other factors. Revenue is recognized ratably over the period of the
advertising/placement services based on the fulfillment of obligations under the
advertising/placement arrangement.

SUMMARY

Revenue for the nine month period ended September 30, 1999 and the six month
period ended March 31, 2000 is summarized as follows:

<TABLE>
<CAPTION>
NINE MONTHS SIX MONTHS
ENDED ENDED
SEPTEMBER 30, MARCH 31,
1999 2000
-------------- ----------
<S> <C> <C>
Service fees........................................ $ -- $1,361,666
Advertising and sponsorship fees.................... -- 1,349,250
Product sales....................................... 4,089 --
------ ----------
$4,089 $2,710,916
====== ==========
</TABLE>

PROPERTY AND EQUIPMENT

Property and equipment primarily consists of computer technology equipment
and is stated at cost, less accumulated depreciation. Depreciation is computed
on the straight-line method over the estimated useful lives of the assets
(currently, three years for all assets). At September 30, 1999 and March 31,
2000, accumulated depreciation totaled $1,027 and $8,337, respectively.
Depreciation expense totaled $1,027 and $7,310, respectively, for the nine month
period ended September 30, 1999 and the six month period ended March 31, 2000.

SOFTWARE DEVELOPMENT COSTS

Costs to develop the Company's software have been capitalized subsequent to
the Company determining that technological feasibility of the software had been
achieved. Software development costs are being amortized over a three year
period on a straight-line basis, subject to tests for ultimate realizability
based on future estimated revenues. At September 30, 1999 and March 31, 2000,
accumulated amortization totaled $20,464 and $93,863, respectively. Amortization
expense totaled $20,464 and $73,399, respectively, for the nine month period
ended September 30, 1999 and the six month period ended March 31, 2000. Research
and development costs which were charged against operations totaled $15,846
during the nine month period ended September 30, 1999 and nil for the six month
period ended March 31, 2000.

OTHER ASSETS

Other assets include the Company's prepayments to a client for the
contractual right to be the sole audio visual store provider for the client.
These costs are being charged to expense on a straight-line basis over the two
year term of the related arrangement and total $450,000 ($300,000 and $150,000
of

F-9
<PAGE>
ZENGINE, INC.

NOTES TO FINANCIAL STATEMENTS (CONTINUED)

other current assets and other assets, respectively) at March 31, 2000. The
remainder of the other assets relate to the Company's payment of expenses
relating to its planned initial public offering.

ADVERTISING COSTS

The Company expenses all advertising costs as incurred.

INCOME TAXES

Through September 30, 1999, the Company was included in the consolidated
income tax return of MCSi. The provision for income taxes is computed on a
separate company basis. The asset and liability approach is used to recognize
deferred tax assets and liabilities for the expected future tax consequences of
temporary differences between the carrying amounts of assets and liabilities for
financial reporting purposes and the tax bases of assets and liabilities. The
Company records a valuation allowance related to its deferred income tax assets
when, in the opinion of management, it is more likely than not that some portion
or all of the deferred tax assets will not be realized.

EARNINGS (LOSS) PER SHARE

Earnings (loss) per share is computed as if the Company had been
incorporated on January 1, 1999. Basic per share amounts represent the weighted
average number of shares outstanding during the period, while diluted per share
amounts give effect to the conversion of all other convertible equity securities
(stock options and stock awards) to the extent their assumed conversion is not
anti-dilutive. For the period January 1, 1999 through September 30, 1999, the
assumed conversion of stock options (169,302) and stock awards (1,145,450) were
excluded from diluted loss per share because their assumed conversion was
anti-dilutive.

The following table summarizes the shares included in the basic and diluted
loss per share calculations.

<TABLE>
<CAPTION>
NINE MONTHS SIX MONTHS NINE MONTHS
ENDED ENDED ENDED
SEPTEMBER 30, MARCH 31, JUNE 30, 2000
1999 2000 (UNAUDITED)
-------------- ---------- --------------
<S> <C> <C> <C>
Net income (loss) for the period.................... $ (933,623) $ 173,173 $ (76,461)
========== ========== ===========
Weighted average number of shares
outstanding--basic................................ 11,377,184 11,091,515 11,143,051
Dilutive impact of assumed conversion exercises..... -- 2,246,654 --
---------- ---------- -----------
Weighted average number of shares
outstanding--diluted.............................. 11,377,184 13,338,169 11,143,051
========== ========== ===========
Income (loss) per share--basic...................... $ (.08) $ .02 $ (.01)
========== ========== ===========
Income (loss) per share--diluted.................... $ (.08) $ .01 (.01)
========== ========== ===========
</TABLE>

On September 29, 1999, the Company enacted a 10-for-1 stock split;
additionally, the Company intends to effect a 6.7686-for-1 stock split (the
"stock splits") and increase its authorized number of common shares prior to an
initial public offering of its common stock. All share and per share amounts
presented in the financial statements give retroactive treatment to the stock
splits as if they had occurred on January 1, 1999.

F-10
<PAGE>
ZENGINE, INC.

NOTES TO FINANCIAL STATEMENTS (CONTINUED)

COMPREHENSIVE INCOME (LOSS)

The Company has no components of other comprehensive income; accordingly,
net loss and comprehensive loss are the same.

CONCENTRATIONS OF CREDIT RISK

The Company's operations are presently conducted in the United States. While
the Company intends to expand the scope of its operations internationally, no
such activity had occurred through March 31, 2000. At March 31, 2000, accounts
receivables totaled $1,344,621. Based on management's assessment, accounts
receivable are collectible in full, and no allowance for uncollectible accounts
is considered necessary. Accounts receivable are recorded net of amounts owed to
the Company's clients as the right of offset of gross receivables and payables
exists between the parties. Management monitors its credit risks using policies
it considers appropriate in the circumstances.

FAIR VALUES AND DERIVATIVE TRANSACTIONS

The Company believes that the fair value of its monetary assets and
liabilities approximates the carrying value in these financial instruments. The
Company does not engage in derivative transactions.

STOCK COMPENSATION

The Company measures compensation expense for its stock-based employee
compensation plans using the intrinsic value method and has provided in Note 7
the pro forma disclosures of the effect on net income (loss) and earnings (loss)
per common share as if the fair value-based method had been applied in measuring
compensation expense.

RECENT ACCOUNTING PRONOUNCEMENTS

The Company is not aware of any pending accounting pronouncements that it
believes will have a material impact on the Company's financial position,
results of operations or cash flows, including the provisions of Staff
Accounting Bulletin 101, which was recently issued by the Securities and
Exchange Commission.

USE OF ESTIMATES

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

3. EQUITY TRANSACTIONS

In October 1999, the Company sold to one of its clients and an unrelated
investor (the "investors") 1,804,956 shares of common stock of the Company at a
price of $2.22 per share for total gross proceeds of $4 million (net proceeds,
after offering costs, were $3,871,049). MCSi cancelled 2,481,816 shares of the
Company it owned to facilitate this transaction. As described in Note 4, the
proceeds from this sale were forwarded to MCSi pending future use by Zengine and
is recorded as a component of the amounts receivable from MCSi.

F-11
<PAGE>
ZENGINE, INC.

NOTES TO FINANCIAL STATEMENTS (CONTINUED)

In connection with the transaction described in the preceding paragraph, the
Company paid $600,000 to the client for the contractual right to be the sole
audio visual store provider to the client. The amount was capitalized as other
assets and is being charged to expense on a straight-line basis over the term of
the arrangement. In addition, the Company has committed to purchase $3,400,000
of advertising services over 24 months beginning in December 1999 from one of
the investors in monthly installments of $141,667. The Company is recognizing
the expense associated with this advertising program as the advertising services
are provided on a straight-line basis over the term of the agreement.

In conjunction with an e-commerce services agreement entered into with one
of the Company's clients in January 2000, the Company and the client agreed that
the client would be granted a warrant to purchase the Company shares if the
Company completes an initial public offering ("IPO"). If granted, the warrant
will entitle the client to purchase 1.7% of outstanding shares of the Company
subsequent to the IPO, at the IPO price. The warrant would be exercisable for a
three year period, commencing on the date of grant. Since the issuance of this
warrant is based upon uncertain future events, these financial statements do not
reflect any accounting relative to this warrant.

4. RELATED PARTY TRANSACTIONS

Effective October 1, 1999, the Company entered into an e-commerce services
agreement with MCSi for a two year period. Under the terms of the e-commerce
agreement, the Company receives a commission equal to 10% of retail value of
products sold to those customers of MCSi provided with dedicated customer Web
sites ("Web sites") in exchange for the Company designing, enhancing and
providing certain support services for these Web sites.

Additionally, effective October 1, 1999, the Company entered into three
other agreements with MCSi; these are (a) a distribution services agreement
whereby the Company will pay MCSi a fee of three percent of the retail value of
the goods sold to or through third party clients for which MCSi performs the
fulfillment and distribution function, (b) an administrative services agreement
whereby the Company will be charged $720,000 per year in reimbursement for
treasury and cash management services, accounting services, corporate
development services, risk management and administrative insurance services,
benefit plan design services, human resources and compensation services, Web
site population services and advertising sales services costs which MCSi incurs
for the Company's benefit, and (c) a leasing agreement whereby the Company will
pay MCSi $125,000 per year to lease corporate offices and $25,000 per year to
lease certain personal property. These agreements between the Company and MCSi
have a two year term, except for the leasing agreement, which expires on May 1,
2001. In June 2000, the distribution services agreement was amended to provide
for a fee payable by the Company to MCSi equal to a percentage of MCSi's gross
expenses relating to the operation of MCSi's warehouse. This agreement expires
on October 1, 2001. The terms of the arrangements with MCSi do not necessarily
represent those which would be obtained in an arm's-length transaction with an
unrelated party.

F-12
<PAGE>
ZENGINE, INC.

NOTES TO FINANCIAL STATEMENTS (CONTINUED)

The income statement for the six month period ended March 31, 2000 includes
the following relative to these transactions with MCSi:

<TABLE>
<S> <C>
Revenues associated with the e-commerce services
agreement................................................. $1,309,828
==========
Cost of revenues associated with the distribution services
agreement................................................. $ 7,293
==========
Expenses associated with the administrative services
agreement and leasing agreement:
Cost of revenue........................................... 48,000
Selling, general and administrative expenses.............. 435,000
----------
$ 483,000
==========
</TABLE>

Using the proceeds from the sale of stock described in Note 3, in October,
1999, the Company and MCSi entered into a demand note arrangement ("Demand
Note"), whereby the Company loaned $3,871,049 to MCSi. The demand note is
payable on demand and accrues interest quarterly at the Merrill Lynch Ready
Asset Trust rate (5.65% at March 31, 2000).

In December 1999, MCSi purchased advertising of $47,000 from the Company. In
addition, advertising revenue of $1,302,250 for the six months ended March 31,
2000 was generated primarily from OEM product advertisers who either placed
banner advertisements on clients' Web pages which the Company serves, or
purchased preferential placement of the OEM manufacturer's products on clients'
stores. MCSi has supply arrangements with the OEM companies that purchase
advertising from the Company. Although the Company negotiated each OEM
advertising arrangement, MCSi's relationships with the OEM companies could have
influenced the Company's obtaining the advertising and the Company may not have
obtained the advertising without MCSi's relationship.

With respect to all of its transactions with MCSi, the Company and MCSi have
agreed to a monthly "net" settlement. The following table summarizes the net
receivable due from MCSi related to the aforementioned agreements as of
March 31, 2000:

<TABLE>
<S> <C>
Net amount receivable from MCSi arising from the Demand
Note...................................................... $ 3,871,049
Amounts receivable from MCSi arising from the e-commerce
services agreement........................................ 1,309,828
Amounts receivable arising from advertising services........ 47,000
Amounts receivable arising from interest on the Demand
Note...................................................... 81,464
Accounts payable arising from current account activity...... (2,464,599)
Amounts payable to MCSi arising from the distribution
services agreement........................................ (7,293)
Amounts payable to MCSi arising from the administrative
services and the leasing agreement........................ (483,000)
-----------
Net amount receivable from MCSi............................. $ 2,354,449
===========
</TABLE>

F-13
<PAGE>
ZENGINE, INC.

NOTES TO FINANCIAL STATEMENTS (CONTINUED)

Amounts payable arising from current account activity include trade accounts
payable and other expenses of the Company which are being paid by MCSi on the
Company's behalf. Accordingly, no separate trade accounts payable are included
on the accompanying balance sheet.

As a result of entering into the leasing agreement with MCSi, the Company is
committed to the following minimum lease payments for the periods presented
below:

<TABLE>
<S> <C>
Six months ending September 30, 2000........................ $ 75,000
Year ending September 30, 2001.............................. 100,000
--------
Total..................................................... $175,000
========
</TABLE>

Through September 30, 1999 the Company looked to MCSi for many of the
services it currently receives under the administrative services agreement
entered into effective October 1, 1999. These included administrative services
such as treasury, payroll, accounting and financial support functions. The
financial statements for the nine month period ended September 30, 1999 include
charges for these services from MCSi totalling $435,623 and have been allocated
from MCSi to the Company based upon the ratio of the number of the Company's
employees to the total number of MCSi employees. Management believes this basis
is reasonable in the circumstances. As the Company has looked to MCSi for these
administrative services since its inception, and will rely on MCSi for these
services for the foreseeable future, it is not practical to estimate the costs
the Company would have incurred had it obtained these services from unrelated
parties.

Through September 30, 1999 MCSi had contributed to the Company, as capital,
all of the financial support it had provided rather than loaning funds to the
Company. The following table summarizes the interest free financial support that
MCSi provided to the Company on a monthly basis from January 1999 through
September 30, 1999 that has been recorded as additional paid in capital:

<TABLE>
<S> <C>
January......................................... $ 56,782
February........................................ 39,609
March........................................... 14,941
April........................................... 140,616
May............................................. 106,822
June............................................ 149,664
July............................................ 137,447
August.......................................... 239,987
September....................................... 220,019
----------
$1,105,887
==========
</TABLE>

Prior to entering into the leasing agreement effective October 1, 1999, the
Company operated from premises leased to it, on a month to month basis, by MCSi.
During the period ended September 30, 1999, MCSi charged the Company $77,497 for
rental of these facilities.

The employees of the Company are permitted to participate in MCSi's defined
contribution pension plan. This plan covers substantially all employees who meet
certain eligibility requirements and the Company's expense related thereto
comprises matches to employee contributions to the Plan, limited to a percent of
the employees' compensation. Expenses under the plan were nil and $3,999,
respectively, for the nine month period ended September 30, 1999 and the six
month period ended March 31, 2000.

F-14
<PAGE>
ZENGINE, INC.

NOTES TO FINANCIAL STATEMENTS (CONTINUED)

5. INCOME TAXES

From January 1, 1999 through March 31, 2000 the Company paid no income taxes
and had no current provision for income taxes due to its operating losses since
inception. The components of the provision for income taxes follows:

<TABLE>
<CAPTION>
NINE MONTHS SIX MONTHS
ENDED ENDED
SEPTEMBER 30, MARCH 31,
1999 2000
-------------- ----------
<S> <C> <C>
Current
U.S. Federal...................................... $ -- $ --
State and local................................... -- --
--------- --------
Total current provision......................... -- --
--------- --------

Deferred
U.S. Federal...................................... (326,767) (25,388)
State and local................................... (28,009) (2,987)
Valuation allowance............................... 354,776 28,375
--------- --------
Total deferred provision........................ -- --
--------- --------
Total provision for income taxes................ $ -- $ --
========= ========
</TABLE>

A summary of the components of deferred income taxes follows:

<TABLE>
<CAPTION>
SEPTEMBER 30, MARCH 31,
1999 2000
------------- ---------
<S> <C> <C>
Start up costs.................................... $ 347,396 $ 312,656
Net operating losses.............................. 132,316 219,249
Stock based compensation.......................... 4,188 20,750
Capitalized software.............................. (129,124) (169,504)
Valuation allowance............................... (354,776) (383,151)
--------- ---------
$ -- --
========= =========
</TABLE>

Startup costs above relate to selling, general and administrative costs
which the Company incurred in its development stage and were expensed in the
Company's statement of operations, but must be capitalized and amortized to
expense over a five year period for income tax purposes. The Company began
amortizing these costs for tax purposes as it generated revenue from its planned
business activities during the six month period ended March 31, 2000.

The Company has provided a valuation allowance against its net deferred tax
assets because management, at the present time, is of the view that it is more
likely than not that these assets will not be realized. The Company's effective
tax rate differs from the expected statutory rate by virtue of the inability to
currently deduct net operating losses and the valuation allowance described
above. The Company's net operating losses of $348,200 and $576,971 at
September 30, 1999 and March 31, 2000, respectively, are subject to carryfoward
provisions which expire from 2014 through 2015.

F-15
<PAGE>
ZENGINE, INC.

NOTES TO FINANCIAL STATEMENTS (CONTINUED)

6. ACCRUED LIABILITIES

Accrued liabilities consists of the following:

<TABLE>
<CAPTION>
SEPTEMBER 30, MARCH 31,
1999 2000
------------- ---------
<S> <C> <C>
Payroll and payroll related costs................... $36,317 $135,378
Advertising costs................................... -- 141,667
Other............................................... 56,256 380,944
------- --------
$92,573 $657,989
======= ========
</TABLE>

7. STOCK COMPENSATION AND RELATED MATTERS

In March 1999, the Company granted to three key executives a total of
2,030,580 shares of common stock. These grants vest one third commencing on the
date of grant and ratably thereafter, on a quarterly basis, through June 30,
2002. Based on an independent appraisal of the fair value of the shares granted,
the Company will recognize compensation expense of $180,000 over the vesting
period, of which $78,462 was recognized during the nine month period ended
September 30, 1999 and $18,462 was recognized during the six month period ended
March 31, 2000.

In August 1999, the Board of Directors formally adopted the Zengine 1999
Stock Option Plan (the "Plan") which had been in effect since March 1999. The
Plan provides that up to 1,353,720 options to purchase common stock of the
Company may be granted to employees and others. Although, options may be granted
with exercise prices equivalent to the estimated fair value of the stock on the
grant date, the options granted through May 2000, were granted at exercise
prices less than the estimated fair value of the shares on the grant date. The
grants with exercise prices less than the fair market value of the stock will
result in aggregate compensation charges over the vesting period of $2,195,314
and resulted in compensation charges of $11,021 and $94,711 for the nine month
period ended September 30, 1999, and the six month period ended March 31, 2000
respectively. Vesting occurs ratably over a four-year period, although two
grants totaling 812,232 options vested on the date of grant. All options expire,
if not exercised, ten years from the date of grant. At March 31, 2000, 14,214
options remain which could be granted under the Plan.

The following table summarizes activity in the stock option plan in number
of shares:

<TABLE>
<CAPTION>
NINE MONTHS SIX MONTHS
ENDED ENDED
SEPTEMBER 30, MARCH 31,
1999 2000
-------------- ----------
<S> <C> <C>
Outstanding, beginning balance...................... -- 1,128,664
Granted............................................. 1,128,644 226,071
Exercised........................................... -- --
Expired............................................. -- --
Forfeited........................................... -- (15,229)
--------- ---------
Outstanding, ending balance......................... 1,128,664 1,339,506
========= =========
</TABLE>

At March 31, 2000, 812,232 options were exercisable. Outstanding stock
options at March 31, 2000 were exercisable at the following amounts per share:
$3.69 (61,933 shares), $2.22 (159,062 shares) and

F-16
<PAGE>
ZENGINE, INC.

NOTES TO FINANCIAL STATEMENTS (CONTINUED)

$0.08 (1,118,511 shares). The weighted average exercise price of all options
outstanding at March 31, 2000 was $.50.

In April 2000, the Company amended and restated its 1999 Stock Option Plan
to increase the number of options authorized under the plan to 3,384,300 shares.

The following table illustrates the impact, on a pro forma basis, on the
Company's net loss and net loss per share assuming the fair value based method
of stock based compensation had been followed by the Company for all stock-based
compensation transactions.

<TABLE>
<CAPTION>
NINE MONTHS SIX MONTHS
ENDED ENDED
SEPTEMBER 30, MARCH 31,
1999 2000
------------- ----------
<S> <C> <C>
As reported:
Net income (loss)............................... $(933,623) $ 173,173
========= =========
Earnings (loss) per share (basic)............... $ (.08) $ .02
========= =========
Earnings (loss) per share (diluted)............. $ (.08) $ .01
========= =========
Pro forma:
Net income (loss)............................... $(948,140) $ 165,360
========= =========
Earnings (loss) per share (basic and diluted)... $ (.08) $ .01
========= =========
</TABLE>

The fair value of each option grant is estimated on the date of grant using
the minimum value option pricing model, as the Company has no history of stock
price volatility, with the following assumptions:

<TABLE>
<CAPTION>
NINE MONTHS
ENDED SIX MONTHS
SEPTEMBER 30, ENDED
1999 MARCH 31, 2000
------------------- -------------------
<S> <C> <C>
Expected term.................................. 5 years 5 years

Risk-free interest rate........................ 5.41%-6.07% 6.47%

Dividend yield................................. 0.00% 0.00%
</TABLE>

F-17
<PAGE>
"MEET THE MANAGEMENT" PRESENTATION FOR
ZENGINE, INC.

Prospective investors will be able to log on to a website maintained by
E*OFFERING Corp. at WWW.EOFFERING.COM, where a prospectus is available for
review. Within designated sections of the prospectus, including the table of
contents and the Underwriting Section of the prospectus, an embedded hyperlink
{click here for "Meet the Management" Presentation} will provide exclusive
access to the "Meet the Management" Presentation. This presentation highlights
selected information contained elsewhere in the prospectus. This presentation
does not contain all of the information that you should consider before
investing in our common stock. You should read the entire prospectus carefully,
including the "Risk Factors" and our financial statements and notes to those
financial statements, before making an investment decision.

Visual 1: Disclaimer

Imagery: Border and Company logo.

Visual Text: The "Meet the Management" Presentation is part of our
prospectus. This presentation highlights selected information contained
elsewhere in this prospectus. This presentation does not contain all of the
information that you should consider before investing in our common stock. You
should read the entire prospectus carefully, including the "Risk Factors" and
our financial statements and notes to those financial statements, before making
an investment decision.

Script: (Joseph Savarino) The "Meet the Management" Presentation is part of
our prospectus. This presentation highlights selected information contained
elsewhere in this prospectus. This presentation does not contain all of the
information that you should consider before investing in our common stock. You
should read the entire prospectus carefully, including the "Risk Factors" and
our financial statements and notes to those financial statements, before making
an investment decision.

A-1
<PAGE>

Visual 2: Introduction

Imagery: See Description of Artwork on inside front cover of the
Registration Statement for a description of the image located on the inside
front cover of the prospectus.

Script: (Joseph Savarino) Welcome to the "Meet the Management" Presentation
for Zengine. I'm Joseph Savarino, President and Chief Executive Officer. I would
like to introduce Louis Lipinski, Chief Financial Officer and Treasurer. We
would like to talk to you about Zengine, a provider of a comprehensive suite of
technology-based solutions that enable businesses to conduct electronic
commerce. We offer a full range of integrated services for both
business-to-business, or B2B, and business-to-consumer, or B2C, e-commerce
including Web site user interface design, product content and merchandising,
personalization and customer relationship management, advertising and
sponsorship management, order management, inventory management and order
fulfillment, end-user customer service and reporting and analysis.

A-2
<PAGE>

Visual 3: Industry Background

Imagery: Border and Company logo. Two boxes positioned on the left half
of the page have arrows pointing from left to right towards a Company logo.

Visual Text: Title: "Industry Background". Box at top left hand of the page
has caption: "Growth of the Internet." Box at bottom left of page has caption:
"Challenges Presented by E-Commerce."

Script: (Joseph Savarino) (see "Business--Industry Background"). Widespread
acceptance of the Internet has opened numerous opportunities for companies
seeking growth and increased efficiencies through B2B and B2C e-commerce. The
Gartner Group estimates that B2B e-commerce will grow from $145 billion in 1999
to $3.9 trillion in 2003, and B2C e-commerce will increase from $31 billion in
1999 to $381 billion in 2003, representing five-year compound annual growth
rates of 128% and 87%, respectively. As a result of this growth, an increasing
number of businesses engage e-commerce service providers to design and implement
e-commerce solutions. Although no figures are yet available on the size of the
full-service e-commerce outsourcing market, traditional e-commerce outsourcing,
usually defined as Web site design, strategy consulting, and software creation
and hosting, was a $4.6 billion industry in 1998 and is expected to grow to
$39 billion by 2002 according to IDC, representing a compound growth rate of
53%. As customer and supplier expectations increase as a result of industry
advancement, companies are forced to take advantage of and develop more
sophisticated Internet applications. Currently, few companies offer the full
range of integrated, comprehensive e-commerce services necessary for clients to
fully capitalize on their e-commerce potential. Most companies offering
outsourced solutions focus on one or just a few specific services, requiring
companies to piece together, or find a third party to integrate, these disparate
solutions. Further, speed, accuracy and customer experience are essential in the
emerging digital economy. Long implementation lead times in the development and
integration of e-commerce solutions offer faster and more efficient competitors
market advantages. Most businesses cannot afford to divert internal personnel
from their core competencies, while it becomes increasingly difficult to obtain
and retain highly skilled in-house personnel to implement these advanced
solutions.

A-3
<PAGE>

Visual 4: The Zengine Solution

Imagery: Border and Company logo. Gear image with Company logo in center
of page with five surrounding gear images containing text.

Visual Text: Title: "The Zengine Solution". Five gear images surrounding
center logo are labeled: "Achieve rapid deployment of e-commerce platforms",
"Operate a user-friendly e-commerce Web site", "Save on capital expenditures and
focus on core competencies", "Increase e-commerce revenues through personalized
customer relationship management", "Benefit from our integrated, continual
improvements".

Script: (Joseph Savarino) (see "Business--The Zengine Solution"): Zengine
addresses the challenges presented by e-commerce by providing a comprehensive
suite of technology-based solutions that enable our clients to quickly and
cost-effectively create, maintain and enhance their e-commerce presence on an
outsourced basis.

Our services enable our clients to quickly establish a fully functional
e-commerce environment. Our KORE Engine eliminates the need for months of custom
programming and reduces the time needed to integrate the e-commerce application
with the client's existing computer systems. As a result, our clients are able
to drastically reduce their time-to-market. To date, we have enabled our clients
to conduct e-commerce within an average of 40 days after the commencement of our
services compared to industry ranges of several months to over one year.

Our technology and infrastructure provide us with the ability to design and
operate a client's e-commerce Web site that is: consistent with the look, feel
and functionality of our client's existing Web site and brand strategy;
engaging, intuitive, attractive and easy to use by the Web site visitor; fast
and reliable; highly personalized; able to modify and define the client's
services in real time; secured by state-of-the-art procedures that enable
execution of transactions involving confidential personal and financial data;
and completely integrated with business systems and customer service.

Our clients are able to obtain the benefits of e-commerce without making
significant time and financial investments in hardware, software, technical and
customer service personnel. We generally provide our solutions from our own
premises without interfering with our client's daily operations. This permits
our clients to focus on their core competencies and to leverage our knowledge,
technology and infrastructure.

We engage in personalized customer relationship management by attempting to
optimize each customer visit to our clients' Web sites through the use of real
time interactive marketing and by attempting to resolve customer inquiries and
complaints as promptly as possible. By gathering real time information, we are
able to provide product suggestions, advertisements, incentives and promotions
that are likely to be of interest to the visitor. We believe that this
personalization of the shopping experience results in a higher user conversion
ratio, increased purchases per visit, increased purchase size and greater
customer loyalty.

We are engaged in a constant process of technological enhancement of our
services. These improvements include the upgrade of our KORE Engine, new
merchandising features and advanced browser-based tools. The architecture of
KORE is designed to automatically and without interruption distribute our
service improvements to our clients without the need to hire consultants, bring
the system offline, or install any client-side software. Upon completion, the
feature or tool can be made available to other Zengine clients without added
development time or costs. Development under the KORE framework contrasts with
other e-commerce solutions that provide maintenance and upgrades to custom
features on an individual and typically labor intensive basis.

A-4
<PAGE>

Visual 5: Strategy

Imagery: Border and Company logo. Circles filled with text heading will
be connected to the logo as spokes.

Visual Text: Title: "Strategy". Inside circled spokes: "Target companies
seeking to initiate, expand or enhance their ability to conduct e-commerce",
"Extend the capabilities of our KORE Engine", "Leverage client base", "Expand
our strategic alliances", "Assist our clients in increasing their revenues using
our state-of-the-art e-commerce solutions".

Script: (Joseph Savarino) (see "Business--Strategy"): Our objective is to
capitalize on our proprietary technology and infrastructure, the KORE Engine, to
become the leading provider of comprehensive e-commerce enabling services. To
accomplish this goal, we are pursuing a strategy built on the following
initiatives:

We target our sales and marketing efforts on companies that are focused on
establishing or improving their ability to conduct e-commerce yet lack the
technical expertise necessary to build and implement desired Internet
functionality. These may include original equipment manufacturers, wholesalers,
distributors and other businesses that create customized vendor and supply chain
relationships, bricks and mortar retailers, pure online retailers and Web sites
with a large and loyal user base (including portals, pure content sites,
communities, directories and service providers).

We intend to extend the capabilities of our KORE Engine through continued
investment in its development to provide for additional functionality, extending
our use of artificial intelligence, and for vertical applications complementary
to our current offerings. We intend to develop additional capabilities through
continued internal development and, potentially, through the licensing or
acquisition of complementary technologies.

One of the distinguishing characteristics of the Zengine business model is
the constant level of interaction that Zengine maintains with its clients.
Zengine will continue to leverage its network of clients by providing additional
services or providing access to its client network. These opportunities may
include additional products or services for Zengine to deliver to its network of
clients such as relevant content, or may include other opportunities to generate
revenue through selling access to its network of clients to outside sponsors or
providers.

We currently have strategic business alliances with Excite@Home, United
Stationers Supply Co. and MSCi. We plan to continue to develop technology and
marketing relationships through strategic alliances with software and systems
integrators, consulting firms, advertising firms and other professional services
firms. These alliances are intended to complement our direct sales force by
providing business leads, increasing our geographic coverage and addressing new
industry segments. We also intend to leverage these relationships to commence
international sales in countries with high Internet penetration and growth
rates.

We intend to enhance the tools our clients use to increase their user to
buyer conversion rates, increase the number of products per purchase and the
average value of each purchase. Primary tools used in achieving this goal
include, increasing the efficiency of our personalization technology and
merchandising features, such as development of more robust, real time predictive
models.

Visual 6: Services and Tools

Imagery: Border with Company logo. Company logo connected to two
rectangles below by two arrows.

Visual Text: Title: "Services and Tools". In the Services rectangle will be
in bulleted text: "Web site user interface design and product content",
"Merchandising", "Advertising and sponsorship management", "Order management",
"Inventory management and order fulfillment" and "End-user

A-5
<PAGE>

customer service". In the Tools rectangle will be the bulleted text: "Zengine
Reporting and Analysis", "Zengine Content Management", "Zengine Design Center",
and "Zengine Call Center".

Script: (Joseph Savarino) (see "Business--Zengine Services and Tools"): Our
business service enables original equipment manufacturers, wholesalers and
distributors to conduct personalized supply-chain management and customer
transactions over the Inernet or secure extranets enabled by Zengine. Our
consumer service enables original equipment manufacturers, bricks and mortar
retailers, online-only retailers and Web sites with a large and loyal user base,
to extend their current business over the Internet. Our services include: Web
site user interface design and product content; Merchandising; Advertising and
sponsorship management; Order management; Inventory management and order
fulfillment and End-user customer service.

Our e-commerce services are customized and maintained using Internet-based
tools accessible by our personnel and by our clients. These tools, called KIT
(KORE Interactive Tool), are accessible through standard Web browser interfaces.
KIT provides a set of building blocks comprised of customizable components,
application templates and rule sets. These tools are instrumental in building,
rapidly accessing and easily maintaining the Zengine turn-key e-commerce
services. Our tools include: Zengine Reporting and Analysis; Zengine Content
Management; Zengine Design Center and Zengine Utility Center.

Visual 7: Technology

Imagery: Border and Company logo.

Visual Text: Title: "Technology". Subhead: "Key Technology Components:". In
gear image bullets, "The KORE Engine", "KORE Personalization", "Network
Architecture", "Open Source Movement".

Script: (Joseph Savarino) (see "Business--Technology and Infrastructure"):
Our technology is based on the following four key components. Our proprietary
technology and infrastructure, the KORE Engine, enables us to build, deliver and
manage e-commerce solutions in less time and more cost effectively than existing
alternatives. The functional components of KORE are stored on a centralized
server array which services all of our e-commerce clients. This architecture
minimizes development costs and reduces time to market because we are able to
leverage existing functionality previously developed within KORE rather than
re-engineering the functionality for each application. Development within the
KORE framework significantly differs from other e-commerce solutions that
provide maintenance and upgrades to custom features on an individual and
possibly labor intensive basis.

KORE resides on a secure, private fault-tolerant network architecture that
provides highly reliable service. This is accomplished by distributing Internet
traffic across an array of servers that are scalable and redundant. Because of
this distributed model, rapid increases in server load can be quickly scaled by
allocating more servers to immediately accommodate client Web site demand. In
addition, our redundant network architecture allows for unpredictable hardware
failure with little effect to service because the failure merely results in the
balanced distribution of server load across the server array.

In order to maximize both personalization and speed of service, we choose to
adhere to open source standards and scalable programming languages. Development
within KORE is done in Perl5, a widely accepted standard programming language
for developing object oriented software that is the informed choice for building
large-scale e-commerce platforms that require ongoing and rapid development and
high-speed dynamically-generated Web site operations. MySQL, an open source
database, is optimized for speed and scalability and serves as the foundation
for KORE's personalized capabilities. KORE creates multiple database connections
for multiple actions both efficiently and quickly, resulting in high-speed
dynamic Web site delivery.

Visual 8: Competition

Imagery: Border and Company logo.

A-6
<PAGE>

Visual Text: Title: "Competition". Subhead: "Primary Source of
Competition:". In gear image bullets, "Companies who develop their own
e-commerce system", "Internet consulting companies".

Script: (Joseph Savarino) (see "Business--Competition"): The market for our
services is intensely competitive and subject to rapid technological change. We
expect competition to intensify in the future. Our primary source of competition
comes from companies who develop their own custom e-commerce systems or purchase
software packages and hire consultants to implement these solutions. Because
these companies have likely made significant initial investments to develop
their custom systems, they may be less likely to employ outsourced transaction
processing strategies. We also face competition from companies such as Art
Technology Group, Breakaway Solutions, Broadvision, E.piphany, Net Perceptions
and USinternetworking. In addition, other companies may enter the market to
provide similar services. We compete on the basis of certain factors, including:
technology; time-to-market; breadth of service features and functionality; ease
of implementation; speed, accessibility and ease of use; brand recognition;
price; system reliability and capacity; and customer support. We believe that we
presently compete favorably with respect to each of these factors. However, the
market for our services is still rapidly evolving, and we may not be able to
compete successfully against current and potential competitors.

And with that, I will turn it over to Louis Lipinski for an overview of our
financial results. Louis. . .

A-7
<PAGE>

Visual 9: Financial Summary

Imagery: Border and Company Logo. Two gear images are located on the
center-left side of the page.

Visual Text: Title: "Financial Summary." Subhead: "Revenue". In gear image
bullets, "Service Fees", with three sub-text bulleted lines reading:
"Integration and Set-up Fees", "Subscription Fees", "Transaction Fees". Second
gear image bulleted text reads: "Advertising and Sponsorship Fees".

Script: (Louis Lipinski) (See "Management's Discussion and Analysis of
Financial Condition and Results of Operations"): Thanks, Joe. We were formed as
a division of MCSi in January 1999 to sell computer and audio-visual products,
primarily to the small office/home office market. We were subsequently
incorporated as a wholly owned subsidiary of MCSi in March 1999. Also in
March 1999, we hired three key executives, Mr. Joseph Savarino, Mr. Lalit
Dhadphale and Mr. Christopher Feaver, to revise our business concept beyond the
sale of computer and audio-visual products to the Zengine business model of
providing a full range of e-commerce services to the B2B and B2C markets. We
entered into our first third party client contract using the Zengine business
model in September 1999, and we legally changed our corporate name to
Zengine, Inc. in the Fall of 1999, after doing business as Zengine since
March 1999.

In performing our services under the Zengine business model, we enter into
contractual arrangements with our clients that describe the services we will
perform. We generate revenues through service fees, which include integration
and set-up, monthly subscription, transaction and product content fees and from
advertising and sponsorships on Web pages we service on our client's stores.

We provide integration and set-up services to our clients. Under these
arrangements, our services may include the development or design of a client's
Web site, migration of the client's current Web site content to our technology,
integration of the client's Web site to the client's current computer systems or
other similar activities. To the extent that these fees are associated with a
contract to provide subsequent outsourced transaction-based services to a
client, these fees are recognized ratably over the term of the transaction
services agreement. Otherwise, revenue is recognized when the service is
completed, the client has accepted the service and we have no future obligation
to provide any additional services. Our subscription arrangements provide for
maintenance and related services over a specified time for a fee. Revenue from
subscription fees is recognized ratably over the term of the subscription. We
provide outsourced transaction-based services to customers, such as providing
product content and merchandising, transaction processing, order management,
custom fulfillment and end-user customer service. Revenues from transaction fees
are generally in the form of a commission. Under our first two arrangements with
third-party clients, our revenue is determined as a percentage of the gross
margin on revenues. Under all other arrangements entered into between our
clients and us, our revenue is based on a percentage of net revenues. Revenue
from transaction fees is recognized when the service is completed. Revenues from
advertising take the form of fees when we sell banner advertising, product
placement or other forms of advertising on Web pages we service on our clients'
stores. These arrangements call for continuous advertising or product placement
over a certain time period and are not contingent upon events such as obtaining
certain levels of sales, Web site visits or other factors. Revenue is recognized
ratably over the period of the advertising or product placement services based
on the fulfillment of obligations under the advertising or product placement
arrangements.

Visual 10: Financial Summary

Imagery: Border and Company Logo. See "Selected Historical and Pro Forma
Financial Data".

Visual Text: Title: "Financial Summary".

A-8
<PAGE>

Script: (Louis Lipinski) (See "Management's Discussion and Analysis of
Financial Condition and Results of Operations" and see "Risk Factors--Risks
Related to Our Business"): During September 1999, we signed our first client
contract under the Zengine business model, and we began earning revenue from
this contract in October 1999. Accordingly, our historic financial results prior
to October 1, 1999 are not representative of our current business model. We have
not presented amounts for the six month period ended March 31, 1999 as we were
not in existence for that period and were not operating under our current
business model. Accordingly, prior period amounts from our inception
(January 1, 1999) to March 31, 1999 are not meaningful or comparable.

Our revenue for the nine months ended June 30, 2000 totaled $5,104,286. At
June 30, 2000, we had 12 e-commerce clients. Service fee revenue from the MCSi
dedicated Web sites was $2,408,121 for the nine months ended June 30, 2000,
which was 47.1% of our total revenue for the period. Our current arrangement to
service the MCSi dedicated Web sites expires on October 1, 2001. In addition, we
had advertising revenue of $2,336,750, or 45.8% of total revenue, which was
primarily derived from OEM product advertisers who either placed banner
advertisements on a client's Web pages which we serve, or purchased preferential
placement of the OEM manufacturers products on a client's stores. MCSi has
supply arrangements with the OEM companies that purchase advertising from us. We
have provided advertising or sponsorship services to 14 clients as of June 30,
2000. Although we negotiate each OEM advertising arrangement, MCSi's
relationship with the OEM companies could have influenced our obtaining the
advertising and we may not have obtained the advertising without MCSi's
relationship.

Our revenue for the three months ended June 30, 2000 totaled $2,393,370.
Service fee revenue from the MCSi dedicated Web sites was $1,098,293 for the
three months ended June 30, 2000, which was 45.9% of our total revenue for the
period. In addition, we had advertising revenue of $987,500 or 41.3% of total
revenue, which was primarily derived from OEM product advertisers who either
placed banner advertisements on a client's Web pages which we serve, or
purchased preferential placement of the OEM manufacturers products on a client's
store.

Service fee revenue from the MCSi dedicated Web sites was $1,309,828 for the
six months ended March 31, 2000, which was 48.3% of our total revenue for the
period. In addition, we had advertising revenue of $1,349,250, or 49.8% of total
revenue, which was primarily derived from OEM product advertisers who either
placed banner advertisements on client's Web pages which we serve, or purchased
preferential placement of the OEM manufacturers products on client's stores.

Our cost of revenue includes the amortization of capitalized computer
software costs, the costs of our employees to perform integration and other
services and the three percent fee we pay to MCSi under the distribution
services agreement, which expires on October 1, 2001. As a percentage of our
revenues, cost of revenues was 89.9% for the nine months ended June 30, 2000,
90.5% for the three months ended June 30, 2000, and 89.4% for the six months
ended March 31, 2000, all under our business model. These percentages fluctuate
depending primarily on the timing as to when we add additional employees to
perform integration and other services.

A-9
<PAGE>

<TABLE>
<S> <C> <C>
Nine months ended June 30, 2000.......................... $4,789,706 100.1%
Three months ended June 30, 2000......................... $2,457,504 105.5%
Six months ended March 31, 2000.......................... $2,337,202 95.5%
</TABLE>

Changes in selling, general and administrative expenses are also influenced
as to the timing of when we add additional personnel to support these functions.
Our Selling, general and administrative costs during the nine months and three
months ended June 30, 2000 was also impacted by an amendment to our distribution
services agreement with MCSi which totalled $326,751.

Selling, general and administrative expenses also include $520,875 of
accretion expense associated with a put agreement written by MCSi, which will
terminate upon consumation of this initial public offering.

We did not provide for any income taxes because we have prepared our
provision for income taxes as if we were a separate entity. We do not owe any
income taxes because we have incurred operating losses since our inception, and
we did not record any deferred tax benefits relating to these operating losses
or any other deferred tax benefits because we presently believe it is more
likely than not that they will not be realized.

We incurred net losses of $934,000 for the period from inception to
(January 1, 1999) to September 30, 1999, and net losses of $76,000 for the nine
months ended June 30, 2000. We anticipate that we will substantially increase
our sales and marketing, technology and infrastructure, software and development
and general and administrative expenses in fiscal 2000 and, as a result, we
expect to incur additional losses for the foreseeable future.

Joe...

Visual 11: End of Presentation

Imagery: See Description of Artwork on inside back cover of the
Registration Statement for a description of the image located on the inside back
cover of the prospectus.

Script: (Joseph Savarino): We hope that this presentation was helpful in
understanding the Zengine business model and the strategy that our management
team intends to execute. We encourage you to refer back to the prospectus for
additional support and disclosure as well as to take a look at the "Risk
Factors" in detail. Again, thank you for your interest in Zengine.

-END-

A-10
<PAGE>

[Graphic--Inside Back Cover--In the upper left hand corner is the Zengine
logo consisting of the word "zengine" with the gear cogs making up the letter
"g," and a line under the word from the right to the left margin.

On the left hand side of the page is the text as follows:

"KIT (KORE INTERACTIVE TOOL)

Zengine's KIT (KORE Interactive Tools) is a set of Web-based tools used by
Zengine and its clients to manage the administration of client platforms.
Included within KIT are inventory management, campaign management, call
center management, and reporting and analysis tools.

REPORTING AND ANALYSIS

KIT generates client-specific reports and enables clients to track their
platform's performance in real time. The reporting and analysis tools record
all measurable Web site activity, including customer behavior, sales trends,
per-page statistics, referrals from prior pages, search results, click-
trail analysis and repeat-user behavior."

A solid delta points to the screen shot, described below.

On the right hand side of the page is a screen shot of samples of the charts
and graphs generated by the Zengine reporting and analysis tools.

In the center of the page on the left hand side of the page is a screen shot
of the tracking and analysis of an advertising campaign provided by the Zengine
reporting and analysis tools. On the right hand side of the page is the text as
follows:

"CAMPAIGN MANAGEMENT

Client advertising and sponsorship campaigns can be tracked and analyzed in
real time. Client-specific campaign management functionality includes
discount and voucher creation and reporting, advertising message reporting,
e-mail marketing creation and reporting, and promotional offer creation and
reporting."

A solid delta points to the above described screen shot.

Below that, on the left hand side of the page is the following text:

"CALL CENTER AND CUSTOMER MANAGEMENT

KIT displays real-time customer information for call center representatives
and general customer service management. Customer purchase history and past
interaction data are available to authorized representatives, as well as a
customer's current shopping cart items for assistance during checkout."

A solid delta points to the screen shot, described below.

On the left hand side of the page is a screen shot of the customer call log
available to Zengine customer service representatives.

Under that are two horizontal lists of Zengine's clients. The top list is:
InFocus, the KaBloom logo, the Lexmark logo, Maxell, MCSi and its logo,
Mitsubishi Electronic and its logo, and NEC. The bottom list of Zengine's
clients are: the Sanyo logo, SHARP, SONY, the Talk City logo, Toshiba, the
Universal logo and the Work.com logo. Under this line is the word "Clients"
followed by a solid delta pointing to the list.

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

YOU SHOULD RELY ONLY ON THE INFORMATION CONTAINED IN THIS PROSPECTUS. WE
HAVE NOT AUTHORIZED ANYONE TO PROVIDE YOU WITH INFORMATION DIFFERENT FROM THAT
WHICH IS SET FORTH IN THIS PROSPECTUS. WE ARE OFFERING TO SELL SHARES OF COMMON
STOCK AND SEEKING OFFERS TO BUY SHARES OF COMMON STOCK ONLY IN JURISDICTIONS
WHERE OFFERS AND SALES ARE PERMITTED. THE INFORMATION CONTAINED IN THIS
PROSPECTUS IS ACCURATE ONLY AS OF THE DATE OF THIS PROSPECTUS, REGARDLESS OF THE
TIME OF DELIVERY OF THE PROSPECTUS OR OF ANY SALE OF COMMON STOCK.

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

UNTIL , 2000 (25 DAYS AFTER THE DATE OF THIS PROSPECTUS), ALL DEALERS
EFFECTING TRANSACTIONS IN THE REGISTERED SECURITIES, WHETHER OR NOT
PARTICIPATING IN THIS DISTRIBUTION, MAY BE REQUIRED TO DELIVER A PROSPECTUS.
THIS IS IN ADDITION TO THE OBLIGATION OF DEALERS TO DELIVER A PROSPECTUS WHEN
ACTING AS UNDERWRITERS AND WITH RESPECT TO THEIR UNSOLD ALLOTMENTS OR
SUBSCRIPTIONS.

4,290,000 SHARES

[LOGO]

COMMON STOCK

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

PROSPECTUS

, 2000

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

WILLIAM BLAIR & COMPANY
FRIEDMAN BILLINGS RAMSEY
E*OFFERING
MORGAN KEEGAN & COMPANY, INC.

--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS

ITEM 13. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION

The following table sets forth the costs and expenses, other than
underwriting discounts and commissions, payable in connection with the sale and
distribution of the securities being registered. All amounts are estimated
except the Securities and Exchange Commission registration fee and the NASD
registration fee.

<TABLE>
<CAPTION>
ITEM AMOUNT
---- ----------
<S> <C>
Securities and Exchange Commission registration fee......... $ 19,305
NASD registration fee....................................... 6,500
Nasdaq Stock Market listing fees............................ 15,000
Blue Sky qualification fees and expenses.................... 5,000
Legal fees and expenses..................................... 300,000
Accounting fees and expenses................................ 450,000
Transfer agent and registrar fees........................... 20,000
Printing and engraving expenses............................. 300,000
Miscellaneous expenses...................................... 84,195
----------
Total................................................. $1,200,000
==========
</TABLE>

ITEM 14. INDEMNIFICATION OF DIRECTORS AND OFFICERS

Zengine is incorporated under the laws of the State of Delaware.
Section 145 ("Section 145") of the General Corporation Law of the State of
Delaware (the "General Corporation Law") provides that a Delaware 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
proceeding, provided such person acted in good faith and in a manner he
reasonably believed to be in or not opposed to the corporation's best interests
and, with respect to any criminal action or proceeding, had no reasonable cause
to believe that his conduct was illegal.

Section 145 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 145.

Zengine's amended and restated certificate of incorporation and amended and
restated bylaws provide for the indemnification of officers and directors to the
fullest extent permitted by the General Corporation Law.

Zengine anticipates that all of its directors and officers will be covered
by insurance policies against certain liabilities for actions taken in their
capacities as such, including liabilities under the Securities Act of 1933, as
amended.

II-1
<PAGE>
ITEM 15. RECENT SALES OF UNREGISTERED SECURITIES

Since the Registrant's incorporation on March 2, 1999, it has issued
unregistered securities to a limited number of persons as described below:

(1) In connection with its incorporation, the Registrant issued 67,686
shares of common stock to MCSi for an aggregate of $1,000, and other
non-monetary consideration.

(2) On September 14, 1999, the Registrant issued 676,860 shares of common
stock to each of Joseph M. Savarino, Lalit P. Dhadphale and Christopher
Feaver, pursuant to employment agreements entered into between the
recipients and the Registrant in March, 1999 and 10,762,074 shares to
MCSi for non-monetary consideration, 2,481,816 of which shares were
surrendered back to the Registrant on September 29, 1999.

(3) On October 1, 1999, the Registrant sold 902,478 shares of common stock
to Wilblairco Associates for $2.0 million.

(4) On October 1, 1999, the Registrant sold 902,478 shares of common stock
to At Home Corporation for $2.0 million.

(5) On January 21, 2000, in connection with the transactions contemplated by
a software services agreement with rexstores.com, Inc. and REX Stores
Corporation, the Registrant agreed to issue a warrant to REX Stores
Corporation to purchase the number of shares of common stock that is
equal to 1.7 percent of the number of shares outstanding on the day
immediately following the date on which this offering is completed (not
including the underwriters' overallotment option). The per share exercise
price of the warrant equals the initial public per share offering price
of this offering.

On September 29, 1999, the Registrant effected a 10-for-1 split of its
common stock. In addition, the Registrant intends to effect a 6.7686-for-1 split
of its common stock prior to consummation of the offering. The number of shares
described in this Item 15 reflects such stock splits.

The Registrant believes that all of the above issuances were exempt from
registration under Section 4(2) of the Securities Act as transactions not
involving any public offering.

ITEM 16. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES

(a) Exhibits

<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
--------------------- ------------------------------------------------------------
<C> <S>
1.1 Form of Underwriting Agreement

1.2 Standby Stock Purchase Agreement*

1.3 Form of Lock up Agreement

3.1 Amended and Restated Certificate of Incorporation*

3.2 Amended and Restated Bylaws*

4.1 Form of Common Stock Certificate of Zengine*

4.2 Form of Warrant to Purchase Common Stock of Zengine*

5.1 Opinion of Elias, Matz, Tiernan & Herrick L.L.P.

10.1 Amended and Restated 1999 Stock Option Plan*

10.2 Form of 2000 Employee Stock Purchase Plan*

10.3 Administrative Services Agreement by and between MCSi and
Zengine dated as of October 1, 1999*
</TABLE>

II-2
<PAGE>

<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
--------------------- ------------------------------------------------------------
<C> <S>
10.4 Distribution Services Agreement by and between MCSi and
Zengine dated as of October 1, 1999*

10.4.1 Amendment to Distribution Services Agreement by and between
MCSi and Zengine dated June 1, 2000

10.4.2 Amendment to Distribution Services Agreement by and between
MCSi and Zengine dated August 17, 2000

10.5 Sublease and Equipment Lease Agreement by and between MCSi
and Zengine dated as of October 1, 1999*

10.6 Stock Purchase Agreement by and among Zengine, MCSi and
certain listed purchasers dated as of September 30, 1999*

10.7 Registration Rights Agreement by and among Zengine, MCSi and
certain investors and founders dated as of September 30,
1999*

10.7.1 Amendment dated April 6, 2000 to Registration Rights
Agreement by and among Zengine, MCSi and certain investors
and founders dated September 30, 1999

10.8 Stockholders Agreement by and among Zengine, MCSi and
certain investors and option holders dated as of
September 30, 1999*

10.8.1 Amendment and Addendum dated April 6, 2000 to Stockholder's
Agreement by and among Zengine, MCSi and certain investors
and option holders dated September 30, 1999.

10.9 E-commerce Services Agreement by and between MCSi and
Zengine dated October 1, 1999*

10.10 Employment Agreement by and between Zengine, Inc. and Joseph
M. Savarino dated March 1, 1999*

10.11 Employment Agreement by and between Zengine, Inc. and Latit
Dhadphale dated March 15, 1999*

10.12 Employment Agreement by and between Zengine, Inc. and
Christopher Feaver dated March 8, 1999*

10.13 Strategic Alliance Agreement by and among United Stationers
Supply Co. and Zengine dated as of April 3, 2000.

23.1 Consent of PricewaterhouseCoopers LLP

23.2 Consent of Elias, Matz, Tiernan & Herrick L.L.P. (included
in Exhibit 5.1)

24.1 Power of Attorney (contained on Page II-5 to original filing
of registration statement)*

27.1 Financial Data Schedule

99.1 Form of letter from Zengine to holders of more than 100
shares of MCSi common stock describing the MCSi Subscription
Program*

99.2 Form of letter from William Blair & Company to MCSi
stockholders*

99.3 Form of letter from Zengine to brokers describing the MCSi
Subscription Program*

99.4 Form of Subscription Form for MCSi Subscription Program*

99.5 Consent of Work.com

99.6 Consent of rexstores.com, Inc.

99.7 Consent of MCSi, Inc.

99.8 Form of MCSi Subscription Program Web site presentation*
</TABLE>

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

* Previously filed.

II-3
<PAGE>
(b) Financial Statement Schedules

Schedules have been omitted because the information required to be set forth
therein is not applicable, is immaterial or is shown in the financial statements
included in the prospectus.

ITEM 17. UNDERTAKINGS

The undersigned Registrant hereby undertakes to provide to the underwriters
at the closing specified in the underwriting agreement, certificates in such
denominations and registered in such names as required by the underwriters to
permit prompt delivery to each purchaser.

Insofar as the indemnification for liabilities arising under the Securities
Act of 1933 may be permitted as to directors, officers and controlling persons
of the Registrant pursuant to the provisions described in Item 14, or otherwise,
the Registrant has been advised that in the opinion of the SEC, 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 payments by the Registrant of expenses incurred
or paid by a director, officer or controlling person of the Registrant in the
successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the Registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Act and will be governed by the final adjudication of
such issue.

The undersigned Registrant hereby undertakes that:

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

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

II-4
<PAGE>
SIGNATURES

Pursuant to the requirements of the Securities Act of 1933, the registrant
has duly caused this registration statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of Fremont, State of
California, on August 21, 2000.

<TABLE>
<S> <C> <C>
/S/ JOSEPH M. SAVARINO
---------------------------------------------
Joseph M. Savarino
PRESIDENT AND CHIEF EXECUTIVE OFFICER
</TABLE>

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

<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<C> <S> <C>
/s/ MICHAEL E. PEPPEL Chairman of the Board
------------------------------------------- August 21, 2000
Michael E. Peppel

President, Chief Executive
/s/ JOSEPH M. SAVARINO Officer and Director
------------------------------------------- (Principal Executive August 21, 2000
Joseph M. Savarino Officer)

Vice President, Chief
/s/ LOUIS T. LIPINSKI* Financial Officer, Treasurer
------------------------------------------- and Secretary (Principal August 21, 2000
Louis T. Lipinski Financial and Accounting
Officer)

/s/ ANTHONY W. LIBERATI* Director
------------------------------------------- August 21, 2000
Anthony W. Liberati

/s/ DONALD B. HUTCHISON* Director
------------------------------------------- August 21, 2000
Donald B. Hutchison

/s/ RICHARD V. HOPPLE* Director
------------------------------------------- August 21, 2000
Richard V. Hopple

/s/ STACEY SNIDER* Director
------------------------------------------- August 21, 2000
Stacey Snider
</TABLE>

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

* By Michael E. Peppel, his or her attorney-in-fact.

II-5