HARISTON CORP, 10-K405, 1998-04-15

HARISTON CORP
10-K405, 1998-04-15
GROCERY STORES

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<PAGE> 1
================================================================================

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

-------------------------
FORM 10-K
-------------------------

(MARK ONE)
[X] ANNUAL REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
OF 1934

for the fiscal year ended December 31, 1997.

[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934

for the transition period from ____________ to ____________.

Commission file no.: 0-13966

HARISTON CORPORATION
(Exact name of Registrant as specified in its charter)

Canada 33-0645339
(State or other jurisdiction (I.R.S. Employer Identification No.)
of incorporation or organization)

1500 W. GEORGIA ST., SUITE 1555, VANCOUVER, BRITISH COLUMBIA CANADA V6G 2Z6
(Address of principal executive offices) (Zip Code)

(Registrant's telephone number, including area code): (604) 685-8514
Securities registered pursuant to Section 12(b) of the Act: NONE
Securities registered pursuant to Section 12(g) of the Act:
-----------------

COMMON STOCK
(Title of Class)
-----------------

Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes [X] No [ ]

Indicate by check mark if disclosure of delinquent filers in response to
Item 405 of Regulation S-K is not contained herein, and will not be contained,
to the best of registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K. [X]

The aggregate market value of the voting stock held by non-affiliates of
the registrant computed by reference to the price at which the stock was sold;
or the average bid and asked prices of such stock, was: $3,165,778 at April 6,
1998.

Number of shares outstanding of each of the issuer's classes of common
equity, as of the latest practicable date: 12,663,113 shares of Common Stock, as
of April 6, 1998.

DOCUMENTS INCORPORATED BY REFERENCE

List hereunder the following documents if incorporated by reference, and
the part of the Form 10-K (e.g., Part I, Part II, etc.) into which the document
is incorporated: (1) any annual report to security holders; (2) any proxy or
information statement; and (3) any prospectus filed pursuant to Rule 424(b) or
(c) of the Securities Act of 1933: None

================================================================================

<PAGE> 2

PART I

ITEM 1. DESCRIPTION OF BUSINESS.

HISTORY

Hariston Corporation ("Hariston" or the "Company") is a Canadian holding
company which has historically made investments in a wide variety of start-up or
early-stage businesses.

In July 1995 Hariston sold the operating subsidiaries of its Metanetix
Division ("Metanetix"), a development-stage technology concern engaged in the
recovery of minerals from contaminated water at a Butte, Montana facility, to
Consolidated Western and Pacific Resources Corp. (since renamed Synergy
Renewable Resources Inc.), its partner in the development of the Butte project,
for a purchase price of up to $7 million(1) with payments dependent upon the
Butte project's future profitability. The Butte project has not yet achieved
profitability and Hariston has received no sale proceeds to date.

In August 1995 Hariston sold its ownership interests in Canadian oil and
gas properties to a private third party for $2.4 million in cash and the
assumption of $979,000 of debt. During this period, the Company also sold a
portion of the shares it held in Madison Partners Limited (since renamed
Northpoint Corporation), a Canadian public company in which as of December 31,
1997 Hariston held 233,591 shares representing a 2.5% interest.

In June 1995 Hariston incorporated a wholly-owned California subsidiary,
CD-Soft Corporation, to pursue acquisitions in the multimedia software industry.
This subsidiary was subsequently merged into a Delaware subsidiary named Educorp
Multimedia, Inc. ("Educorp").

In August 1995 Educorp, through a wholly-owned subsidiary, acquired
certain assets and liabilities of a CD-ROM catalog retailer and its affiliates,
Gazelle Technologies, Inc. and Affiliates, doing business under the name
"Educorp." Located in San Diego, this subsidiary was renamed Educorp Direct,
Inc. ("Direct").

In January 1996 Educorp, through a wholly-owned subsidiary, purchased
certain assets and liabilities of a book and multimedia software publisher known
as HighText Publications, Inc. Also located in San Diego, this subsidiary was
renamed HighText Interactive, Inc. ("HighText") and focused on the development
and publishing of interactive adult education multimedia software. In February
1997 HighText reached agreement to sell its book publishing operations back to
the individuals who were previously the principals of HighText Publications,
Inc., in return for Hariston being relieved of its obligation to pay
consideration in the form of Hariston common stock to the individuals equivalent
to the after-tax income of the book publishing operations over a five year
period.

Until the sale of their multimedia software assets in December 1997 and
February 1998 respectively, Direct and HighText were operated as the sole
operating subsidiaries of Educorp.

On December 19, 1997 Direct sold substantially all of its assets and
operations, and transferred substantially all of its liabilities, to a
wholly-owned subsidiary of Arch Publishers Group, Inc. ("APG"), for
consideration consisting solely of a 15% equity interest in APG. APG is a
private Elmsford, New York based publisher, reseller and distributor of
educational and entertainment software.

On February 13, 1998 HighText sold substantially all of its assets, and
transferred substantially all of its liabilities, to Byron Preiss Multimedia
Company, Inc. ("Preiss") for consideration consisting solely of 150,000 shares
of common stock of Preiss subject to adjustment intended to provide $1.33 in
proceeds per share for shares sold during the six months period beginning on
February 13, 1999. Preiss is a developer of educational software and a publisher
of

- --------

(1) Unless otherwise indicated, all dollar amounts herein are in U.S. Dollars.

<PAGE> 3

books and software for educational and consumer markets. Preiss is a public
company whose common shares trade on the Nasdaq SmallCap Market tier of The
Nasdaq Stock Market under the symbol "CDRM".

Hariston's other significant asset as of December 31, 1996 was its
minority shareholding in Polish Life Improvement S.A. ("PLI"), a Kielce, Poland
based retailer co-founded by the Company in 1993. As of December 31, 1996
Hariston retained 1,820,566 common shares in PLI or a 25.8% interest. PLI is
publicly traded on the parallel market to the Warsaw Stock Exchange under the
symbol "PLI", and operates a chain of home-improvement stores in Poland under
the name "NOMI". During 1997 Hariston sold all of its PLI shares, realizing net
proceeds of $6,756,786. These sales were undertaken in order to use the proceeds
to repay current indebtedness and to provide partial funding of the acquisition
of a controlling interest in an operating business outside of the multimedia
software industry.

In February 1997 Hariston entered into a letter of intent to acquire
certain assets, and assume certain liabilities, of a Pennsylvania based
aerospace products manufacturer but in April 1997 the seller withdrew the
operation from sale. A number of other acquisition opportunities were
subsequently examined during 1997, including a Massachusetts based food products
manufacturer and a Connecticut based shopping incentives marketer, but Hariston
was unable to reach acceptable terms for concluding an acquisition.

In September 1997 Hariston commenced discussions with various European
parties about investing in business operations in Poland and a related private
placement of treasury shares. Certain Polish operations were identified for
possible acquisition and were visited by Hariston's management in October and
November, 1997. The private placement financing was scheduled to close by
year-end but in January 1998 Hariston received notice that the funds would not
be forthcoming. In reaction, Hariston both broadened the number of parties with
which it was in discussions and streamlined its investment plans for Poland to
reduce the amount of immediately required financing. Discussions with these
parties are ongoing.

Going forward, Hariston's strategy is to seek acquisition or businesses
opportunities that offer the possibility for significant income or capital gains
appreciation, to be earned in a manner that utilizes the Company's significant
tax losses, while minimizing down-side risk. Management is mindful of the need
to avoid both undue equity dilution and undue leverage and will seek to raise
only such financing as is necessary to give effect to a particular transaction
or series of transactions while maintaining a margin of liquidity.

EDUCORP MULTIMEDIA, INC. ("EDUCORP")

Educorp is an inactive company which as of December 31, 1997 held, and
continues to hold, a 15% shareholding in Arch Publishers Group, Inc. ("APG"), a
private Elmsford, New York based publisher, reseller and distributor of
educational and entertainment software.

During 1996 and most of 1997, Educorp was an early-stage developer,
publisher and distributor of interactive multimedia software with a strategic
focus on adult education titles. Educorp operated through its two subsidiaries,
Direct (primarily engaged in direct response sales and marketing) and HighText
(primarily engaged in software development and publishing).

During 1997 in order to conserve cash, Hariston significantly reduced
the level of funding it provided to Educorp and in response, both Direct and
HighText took measures to reduce their costs. The impact on HighText was
relatively severe as it was not generating significant revenues. By March 31,
1997 HighText had ceased all software development activities, laid off all but
one employee and closed its offices. Responsibility for the sales and marketing
of HighText's product line was transferred to Direct and HighText became
essentially inactive though it continued to generate revenues from sales of its
inventory.

On December 19, 1997 Direct sold substantially all of its assets and
operations, becoming an inactive holding company thereafter. On February 13,
1998 HighText sold substantially all of its assets.

<PAGE> 4

BUSINESS STRATEGY. Hariston's strategy to grow Educorp had been to
develop, publish, and distribute interactive "adult education" software titles
that satisfied the demand for interactive multimedia software by the adult
consumer, higher education, and corporate management and training market
segments. This strategy was the reason for Educorp's January 1, 1996 purchase of
the HighText operations, as HighText had developed several multimedia CD-ROM
software titles aimed at this target market. However, HighText did not achieve
significant sales of its multimedia CD-ROM titles in 1996 or 1997. Additionally,
Direct experienced disappointing sales and low gross margins in 1996 and 1997
due primarily to a decline in average realized prices for multimedia CD-ROM
software titles and an increased number of direct and indirect competitors.
Assessing the 1996 results, Hariston's Board and management concluded in
January, 1997 that the poor economics of the multimedia software publishing and
distribution industry for a small company without a recognized brand name, large
distribution network or deep-pockets partner were such that Hariston's
shareholders would be better served by Hariston withdrawing from the multimedia
software industry and investing its limited resources in an industry or business
with higher expected returns. Accordingly, during 1997 management actively
pursued the sale of the Educorp operations and in December 1997 and February
1998 the assets of Direct and HighText were sold.

During 1997 Hariston's Board and management devoted much time and
attention to analyzing and pursuing specific acquisition opportunities and
business plans in a number of different industries. However, the Company was
unable to conclude an acquisition or related financing on satisfactory terms.
After Hariston and its subsidiaries became inactive (ceased generating revenues
from active business operations) in December 1997, the Board and management
redoubled their efforts to locate another business for the Company to engage in.
The Board and management are confident that a positive new direction for the
Company will be set in 1998.

INDUSTRY BACKGROUND. On the December 19, 1997 sale of Direct's
operations, Hariston and its subsidiaries became inactive.

PRODUCTS; PRODUCT DEVELOPMENT; SALES AND MARKETING; DISTRIBUTION. Since
the sale of Direct's operations in December 1997, Hariston and its subsidiaries
have not produced or sold a product, engaged in product development activities,
or engaged in sales and marketing or distribution activities.

COMPETITION. On behalf of the Company, Hariston's Board and management
are currently pursuing certain acquisition opportunities and related financing
arrangements. Competition for attractive acquisition targets is keen. The amount
of capital allocated to financial buyers including venture capital and leveraged
buyout funds is at an all-time high. Strategic acquirers are also extremely
active. However, the Board and management believe that Hariston will be able to
conclude one or more transactions during 1998 on beneficial terms for the
Company.

INTELLECTUAL PROPERTY. All intellectual property was disposed of in
December 1997 and February 1998 on the sale of the assets of Direct and
HighText, respectively.

SEASONALITY. The Company is currently inactive. It is probable that when
the Company recommences operations, such operations will be subject to a
seasonal effect.

EMPLOYEES. As of December 31, 1996 the Company employed in its Educorp
operations 44 people on a full-time basis. This figure declined to 24 by March
31, 1997, 14 by June 30, 1997 and 7 by September 30, 1997. After the sale of
Direct's operations in December 1997, one person was left employed by Educorp
until March 31, 1998. At the Hariston and EuroEastern legal entities level, five
people were employed as of December 31, 1996 and three on December 31, 1997 of
which two are full-time. The Board believes that this is the minimum number of
employees required to conduct the Company's affairs. The Company and its
employees are not parties to any employment or collective bargaining agreements.

<PAGE> 5

POLISH LIFE IMPROVEMENT S.A.

PLI was formed in February 1993 for the purpose of engaging in various
retail businesses in Poland. PLI began operations with a supermarket, grocery
store/delicatessen, and consumer electronics store in Kielce, Poland. Shortly
after the company's formation, PLI converted the electronics store into a small
do-it-yourself home-improvement store and focused future expansion efforts on
retail supermarkets and home-improvement stores. Hariston provided the initial
expansion capital to open new stores in exchange for an 80% ownership position
in PLI. In December 1994 PLI completed its initial public offering and in
February 1996 PLI's shares of common stock were approved by the Polish
Securities Commission for trading on the parallel market to the Warsaw Stock
Exchange.

As of December 31, 1996 PLI operated six "NOMI" home-improvement stores.
The NOMI stores carry building materials, plumbing and electrical supplies,
hardware, paint, gardening supplies, and home decorating items. As of December
31, 1996 the supermarkets were no longer held by PLI. In December 1995 PLI sold
a 51% interest in its supermarket subsidiary to a joint venture controlled by
Royal Ahold NV, one of the world's largest food retailers, for $10.5 million. In
July, 1996 PLI sold the remaining 49% interest to the Royal Ahold joint venture
for $9.4 million.

Following share issuances by PLI, sales by Hariston of its PLI stock and
Hariston's receipt of PLI shares on the settlement of a note in default, as of
December 31, 1996 Hariston owned 1,820,566 PLI common shares or 25.8% of the
issued and outstanding stock of PLI.

During the first and second quarters of 1997 Hariston, through private
and open market sales, sold all of its remaining PLI shares realizing net
proceeds of $6,756,786 including a $1.5 million note receivable of which
$500,000 remained to be collected as of December 31, 1997. The $500,000 amount
was subsequently received by the Company on April 3, 1998.

ITEM 2. PROPERTIES.

PRESENT OPERATIONS

The Company's registered head office is located in Vancouver, British
Columbia at the offices of the Company's Canadian legal counsel. The Company's
principal executive offices are located in Vancouver, British Columbia in
facilities occupied pursuant to a lease expiring on November 30, 1998. During
1997 the Company, through its subsidiaries, also leased a facility in San Diego,
California of approximately 12,000 square feet, housing the Educorp operations.
This facility was occupied pursuant to a short-term lease. Effective September
1, 1997 the Company reduced costs by reducing by approximately 1/2 the area of
leased premises in the San Diego facility. Effective January 1, 1998 the San
Diego facility lease was assumed by the purchaser of the Direct operations. The
purchaser terminated the lease effective March 1, 1998 and moved the former
Direct operations to Elmsford, New York.

ITEM 3. LEGAL PROCEEDINGS.

CAPOZZI, ET AL. V. HARISTON CORPORATION, ET AL.

In this action, originally filed in the United States Federal District
Court, District of Connecticut, the plaintiffs originally claimed that the
Company deprived them of options to acquire stock to which they were allegedly
entitled, that they did not receive their rightful share of proceeds of a
settlement between the Company and Telecom USA, and that the Company and Mr.
Irving Kott, another defendant in this matter, failed to provide them with
correct information concerning the Company causing them to lose money in
purchasing and selling the Company's stock on the open market. The damages
claimed in this matter were an aggregate of approximately $800,000, together
with treble damages as to certain of the alleged claims. The Company's motion to
dismiss this action on the grounds of improper venue was granted on March 29,
1995, subject to the plaintiffs' rights to appeal this ruling or recommence this
action in another forum.

<PAGE> 6

The plaintiffs recommenced this action in respect of the allegation
that Mr. Irving Kott failed to provide them with correct information concerning
the Company causing them to lose money on the purchase and sale of the
Company's stock on the open market, on September 22, 1995 in the Superior Court
of the Province of Quebec, District of Montreal (Case No. CSM:
500-05-010184-958). The defendants include the Company and Mr. Irving Kott. In
this case, the plaintiffs seek damages of approximately $83,000 (Cdn$111,857).
As refiled, the plaintiffs allege that Mr. Kott controlled the Company and that
he made misrepresentations concerning the Company on behalf of himself and the
Company which caused the plaintiffs to suffer a loss in 1990 in connection with
the plaintiffs' transactions in the stock of the Company. The Company believes
the claim is without merit and intends to vigorously defend this matter.
However, the outcome of the lawsuit is not currently determinable.

The plaintiffs also filed an action in respect of the allegation that
the Company deprived them of options to acquire stock to which they were legally
entitled, on February 24, 1997 in the Supreme Court of the Province of British
Columbia, Vancouver Registry (Case No. C971045). The defendants include the
Company and Mr. Irving Kott. In this case, the plaintiffs seek damages of
$560,000. The plaintiffs allege that Mr. Kott controlled the Company and that he
made misrepresentations on behalf of the Company concerning the exercisability
of stock options granted by the Company, which caused the plaintiffs to suffer a
loss in 1993 when the Company did not allow the plaintiffs to exercise the stock
options on the grounds that the plaintiffs had left the employ of the Company.
The Company believes the claim is without merit and intends to vigorously defend
this matter. However, the outcome of the lawsuit is not currently determinable.

MEADLOCK, ET AL. V. HARISTON CORPORATION, ET AL.

In this action, filed in January 1997 in the Circuit Court of Brevard
County, Florida, State of Florida, the plaintiffs claim that in 1993 the Company
committed fraud, negligent misrepresentations, civil theft and other wrongful
acts pursuant to the law of the State of Florida in that the Company deprived
them of their shares in Bullion International, Inc. by willful
misrepresentations made by Mr. Irving Kott and other defendants on behalf of
themselves and the Company. The defendants include the Company and Messrs.
Irving Kott and Michael Kott. The damages claimed in this lawsuit are in an
unspecified amount. However, legal counsel for the plaintiffs separately
proposed by letter to Hariston settlement of the lawsuit if Hariston were to pay
$3,000,000 to the plaintiffs, being threefold the damages purported in the
letter to have been sustained by the plaintiffs. The Company believes that it
has been indemnified by co-defendant Michael Kott or an entity controlled by him
against any liability in this matter. The Company believes the claim is without
merit and intends to vigorously defend this matter. However, the outcome of the
lawsuit is not currently determinable.

FORMER MONTANA OPERATIONS

Until mid-1995 the Company's former subsidiary Metanetix Corporation
("Metanetix") was engaged in the business of developing technology for the
removal of minerals and other inorganic compounds from water, soil and sludge.
In connection with these development efforts, Metanetix and affiliated
corporations operated a laboratory and plant in Butte, Montana, at the site of a
former copper mine which held large volumes of contaminated water. The Metanetix
operations involved, among other things, treating contaminated water extracted
from the mine, and returning the treated water to the mine shaft. This mine and
surrounding areas are part of a Superfund Area designated by the Environmental
Protection Agency ("EPA") under the Comprehensive Environmental Response,
Compensation and Liability Act of 1980 ("CERCLA"). Under CERCLA, the EPA
designates "potentially responsible parties," including current and former
owners of property or property rights in the Superfund Area, and operators in
connection therewith, as parties who may be jointly and severally liable for
clean-up costs attributable to hazardous materials on and from their properties.

In April 1994 and May 1995, the Company received letters from the EPA
indicating that the EPA believes Metanetix to be a "potentially responsible
party." As of June 1995, the EPA was undertaking "remedial investigations" and
"feasibility studies" to define the nature of the contamination and to evaluate
alternatives to the remedial actions to remove or contain hazardous substances
in areas including the properties at which the former Metanetix operations were
conducted. No further correspondence has been received from the EPA.

<PAGE> 7

Because of the Company's status as former parent corporation to
Metanetix, and as a result of Metanetix's amalgamation with the Company in
January 1995, the Company may be a "potentially responsible party" with respect
to clean-up costs and other statutory liabilities (including fines) relating to
the Butte operations. In June 1995 the Company sold all of its stock in
Metanetix's operating subsidiaries to Consolidated Western and Pacific Resources
Corp. (since renamed Synergy Renewable Resources Inc.), its joint venture
partner in the development of, and the legal owner of the property underlying,
the Butte plant.

The designation of a party as a "potentially responsible party" under
CERCLA does not necessarily mean that the party is liable under CERCLA, or that
the EPA has decided to assert a CERCLA claim against that party. Neither the EPA
nor any other governmental agency has made any formal claim that the Company is
liable under CERCLA or any other similar statute with respect to the Butte
operations. No assurance can be given, however, that such a claim will not be
made in the future. If such a claim is made and is successful, the costs,
damages and fines that may be imposed on the Company as a result could be
material.

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.

The 1997 Annual Meeting of Shareholders was held on December 12, 1997.
The matters voted on, and the votes cast, were as follows:

1. In respect of the election of Directors as follows:

<TABLE>

<S> <C> <C>
James P. Angus FOR: 4,806,356 WITHHELD: 15,144
Nuno Brandolini FOR: 4,806,272 WITHHELD: 15,228
Neil S. MacKenzie FOR: 4,806,292 WITHHELD: 15,208
Kevin R. McCarthy FOR: 4,806,456 WITHHELD: 15,044
L. James Porter FOR: 4,795,436 WITHHELD: 26,064
</TABLE>

2. In respect of the appointment of Arthur Andersen, Chartered Accountants,
as the Auditors of the Corporation and authorizing the Directors to fix
the remuneration to be paid to the Auditors, as follows:

FOR: 4,807,689 WITHHELD: 14,000

PART II

ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS.

Until and including March 7, 1997 the Company's Common Stock traded on
the SmallCap Market tier of The Nasdaq Stock Market in the United States.
Effective March 10, 1997 the Company's Common Stock began trading on the "Pink
Sheets" inter-dealer market in the United States. Effective April 10, 1997 the
Company's Common Stock began trading on the OTC Bulletin Board in the United
States, an over-the-counter market regulated by the NASD. The Company's trading
symbol remains "HRSNF".

As of April 6, 1998 there were 3,937 shareholders of record, some of
which are street name holders and depository trusts representing an unknown
number of beneficial holders of Common Stock. The Company has not historically
paid cash dividends on its Common Stock and intends to retain earnings for the
foreseeable future for use in its business.

<PAGE> 8

The following table sets forth the price range of the high and low sale
price per share of Common Stock for each of the quarterly periods shown below:

High Low $
(U.S.) (U.S.)
------ ------
<S> <C> <C>
1996:
First Quarter 3 7/8 2 1/8
Second Quarter 2 1
Third Quarter 1 3/4 1
Fourth Quarter 1 7/16 1/4

1997:
First Quarter 97/256 5/64
Second Quarter 1/4 9/128
Third Quarter 17/128 1/16
Fourth Quarter 5/16 1/128
</TABLE>

There are no governmental laws, decrees or regulations in Canada
relating to restrictions on the import of capital or affecting the remittance of
interest, dividends or other payments to non-resident holders of the Company's
shares, except for withholding tax provisions discussed below. There are no
limitations on the right of non-resident or foreign owners to hold or vote the
shares of the Company, except as provided in the Investment Canada Act (the
"Act"). The Act provides for the review and approval by the Canadian government
of direct or indirect acquisitions of control of Canadian businesses where the
investment exceeds specified thresholds, and for the divestment of investments
which have not been approved. The Company is not aware of any such control
positions held by United States investors.

Generally, dividends paid by Canadian corporations to non-resident
shareholders are subject to a withholding tax of 25% of the gross amount of such
dividends. However, Article X of the reciprocal tax treaty between Canada and
the United States reduces to 15% the withholding tax on the gross amount of
dividends paid to residents of the United States. A further reduction in the
withholding tax rate may be applicable when a U.S. resident owns at least 10% of
the voting stock of the Canadian corporation paying the dividends. The Company
is not aware of any individual or corporation owning 10% or more of the
Company's voting stock.

A nonresident who holds shares of the Company as capital property will
not be subject to tax in Canada on capital gains realized on the disposition of
such shares unless such shares are "taxable Canadian property" within the
meaning of the Income Tax Act (Canada) and no relief is afforded under any
applicable tax treaty. The shares of the Company would be taxable Canadian
property of a nonresident if at any time during the five year period immediately
preceding a disposition by the nonresident of such shares not less than 25% of
the issued shares of any class of the Company belonged to the nonresident and/or
to a person with whom the nonresident did not deal at arm's length.

Shares of stock in the Company held by a citizen or resident of the
United States would normally be subject to tax on capital gains upon disposition
under the laws of the United States.

ITEM 6. SELECTED FINANCIAL DATA.

Set forth below is selected financial data for the Company for the
fiscal years ended December 31, 1993 to December 31, 1997.

<PAGE> 9

SELECTED FINANCIAL DATA FOR
HARISTON CORPORATION AND SUBSIDIARIES

(in thousands except per share data)(1)
<TABLE>
<CAPTION>

YEAR ENDED YEAR ENDED
DECEMBER 31, 1997 DECEMBER 31, 1996
------------------- ------------------
ADJUSTED TO ADJUSTED TO
CANADIAN CONFORM TO CANADIAN CONFORM TO
GAAP U.S. GAAP GAAP U.S. GAAP
------- ------- ------- -------
<S> <C> <C> <C> <C>
Operating Revenue:
Rent and Other ............................ $ -- $ -- $ -- $ --
------- ------- ------- -------
Total Revenue (2) ......................... -- -- -- --
Income Before Discontinued Operations ..... 4,509 4,501 554 473
Discontinued Operations Income (Loss):
Loss from Multimedia Operations ........... (1,284) (1,284) (3,719) (3,719)
Loss on Disposal of Multimedia Operations.. (923) (923) (1,800) (1,800)
------- ------- ------- -------
Total ................................... (2,207) (2,207) (5,519) (5,519)
Net Income (Loss) ......................... 2,302 2,294 (4,965) (5,046)
Net Income (Loss) Per Share:
Continuing Operations ..................... 0.35 0.35 0.05 0.05
Discontinued Operations ................... (0.17) (0.17) (0.47) (0.47)
------- ------- ------- -------
Total Income (Loss) Per Share ........... 0.18 0.18 (0.42) (0.42)
Total Assets (3) .......................... 4,055 4,055 7,910 7,910
Long-Term Debt (3) ........................ -- -- 201 201
Cash Dividends Per Common Share ........... $ -- $ -- $ -- $ --
======= ======= ======= =======
</TABLE>

- ----------

(1) All amounts in U.S. dollars.

(2) Excluded are revenues from discontinued multimedia software and book
operations ($2,163 in 1997, $6,334 in 1996).

(3) As of December 31 of the year indicated.

<PAGE> 10
SELECTED FINANCIAL DATA FOR
HARISTON CORPORATION AND SUBSIDIARIES

(in thousands except per share data)(1)

YEAR ENDED YEAR ENDED
DECEMBER 31, 1995 DECEMBER 31, 1994
------------------- ------------------
ADJUSTED TO ADJUSTED TO
CANADIAN CONFORM TO CANADIAN CONFORM TO
GAAP U.S. GAAP GAAP U.S. GAAP
-------- -------- -------- --------
<S> <C> <C> <C> <C>
Operating Revenue:
Rent and Other ....................... 21 21 22 22
-------- -------- -------- --------
Total Revenue (2) .................... 21 21 22 22
Loss Before Discontinued Operations .. (1,296) (1,372) (1,736) (1,511)
Discontinued Operations Income (Loss):
Multimedia Operations ................ (507) (507) -- --
Polish Retail ........................ -- -- (1,289) (1,289)
Factoring Operation .................. (5) (5) 128 128
Minerals Recovery Project ........... (321) (321) (12,478) (9,185)
Oil and Gas Interests ................ 1,306 1,306 678 678
-------- -------- -------- --------
Total .............................. 473 473 (12,961) (9,668)
Net Loss ............................. (823) (899) (14,697) (11,179)
Net Income (Loss) Per Share:
Continuing Operations ................ (0.13) (0.14) (0.16) (0.14)
Discontinued Operations .............. 0.05 0.05 (1.19) (0.89)
-------- -------- -------- --------
Total Loss Per Share ............... (0.08) (0.09) (1.35) (1.03)
Total Assets (3) ..................... 10,188 10,188 7,829 7,646
Long-Term Debt (3) ................... 3,500 3,500 1,238 1,238
Cash Dividends Per Common Share ...... $ -- $ -- $ -- $ --
======== ======== ======== ========
</TABLE>

(1) All amounts in U.S. dollars.

(2) Excluded are revenues from discontinued multimedia software and book
operations ($2,805 in 1995), revenues from discontinued Polish retail
operations ($5,179 in 1994), revenues from discontinued factoring
operations ($576 in 1994) and revenues from discontinued oil and gas
operations ($562 in 1995, $1,586 in 1994).

(3) As of December 31 of the year indicated.

<PAGE> 11

SELECTED FINANCIAL DATA FOR
HARISTON CORPORATION AND SUBSIDIARIES

(in thousands except per share data)(1)

YEAR ENDED
DECEMBER 31, 1993
ADJUSTED TO
CANADIAN CONFORM TO
GAAP U.S. GAAP
-------- --------
<S> <C> <C>
Operating Revenue:
Rent and Other ....................... $ 62 $ 62
-------- --------
Total Revenue (2) .................... 62 62
Loss Before Discontinued Operations .. (1,374) (1,995)
Discontinued Operations Income (Loss):
Polish Retail ........................ (399) (399)
Factoring Operation .................. (115) (115)
Minerals Recovery Project ............ -- (3,382)
Oil and Gas Interests ................ 565 565
-------- --------
Total .............................. 51 (3,331)
Net Loss ............................. (1,323) (5,326)
Net Income (Loss) Per Share:
Continuing Operations ................ (0.19) (0.27)
Discontinued Operations .............. 0.01 0.45
-------- --------
Total Loss Per Share ............... (0.18) (0.72)
Total Assets (3) ..................... 24,639 21,491
Long-Term Debt (3) ................... 1,238 1,238
Cash Dividends Per Common Share ...... $ -- $ --
======== ========
</TABLE>

(1) All amounts in U.S. dollars.

(2) Excluded are revenues from discontinued Polish retail operations ($5,689),
revenues from discontinued factoring operations ($637) and revenues from
discontinued oil and gas operations ($1,575).

(3) As of December 31 of the year indicated.

<PAGE> 12

ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS.

The following information should be read in conjunction with the
consolidated financial statements and the notes thereto included, or
incorporated by reference, in Item 8.

OVERVIEW

During 1997 Hariston divested or discontinued its multimedia software
and book publishing and distribution operations, setting the stage for the
Company to pursue new business opportunities in 1998. Prior to entering into the
multimedia software business in August 1995, the Company had participated in
such diverse businesses and investments as environmental remediation technology,
oil and gas working and royalty interests, receivables factoring, retailing of
sports memorabilia and commemorative coins, and Polish supermarkets and
home-improvement stores. The Company currently has no operations and the Board
and management are actively pursuing new business opportunities and related
financing.

Effective July 19, 1996 Hariston appointed a new Chief Executive Officer
and President. The new management team completed a review of the Company's
operations and concluded that a change in strategic direction would be in the
best interests of shareholders. Given the disappointing results of the Company's
multimedia software and book operations, management considered various
alternatives in order to maximize long-term shareholder value and after careful
consideration, in January 1997 management and Hariston's Board determined that
the multimedia operations should be sold.

The Company's multimedia operations were conducted through HighText
Interactive, Inc. ("HighText") and Educorp Direct, Inc. ("Direct"), both
wholly-owned subsidiaries of Hariston's wholly-owned subsidiary Educorp
Multimedia, Inc. ("Educorp").

On February 21, 1997 HighText reached agreement to sell its book
publishing operations back to the individuals who were previously the principals
of HighText Publications, Inc., the company from which the operations had been
originally purchased, in return for Hariston being relieved of its obligation to
pay consideration in the form of Hariston common stock to the individuals
equivalent to the after-tax income of the book publishing operations over a five
year period.

During 1997 the Company sold all of its remaining shares in Polish Life
Improvement S.A. ("PLI"). See "Investments: Polish Life Improvement S.A."

CHANGES IN CORPORATE STRUCTURE

In June 1995 Hariston incorporated a wholly-owned California subsidiary,
CD-Soft Corporation, to pursue a strategy of focusing on the multimedia software
publishing and distribution business. In July 1995 CD-Soft Corporation
incorporated a wholly-owned California subsidiary, CD-Soft Source Corporation,
for the purpose of acquiring

<PAGE> 13

substantially all of the assets of a group of businesses operating under the
name "Educorp". Effective March 8, 1996 this subsidiary was renamed Educorp
Direct, Inc.

In December 1995 CD-Soft Corporation formed a second wholly-owned
California subsidiary, CD-Soft Press Corporation, for the purpose of acquiring
substantially all of the assets and selected liabilities of HighText
Publications, Inc. Effective January 22, 1996 this subsidiary was renamed
HighText Interactive, Inc.

In March 1996 CD-Soft Corporation was merged into Educorp Multimedia,
Inc., a wholly-owned Delaware subsidiary of Hariston formed in January 1996.
Upon this merger, Educorp Multimedia, Inc. became the holding company for all of
Hariston's multimedia software and book development, publishing and distribution
operations.

In October 1995 Hariston formed a wholly-owned Delaware subsidiary,
EuroEastern Investment Corporation ("EuroEastern"), for the purpose of pursuing
investment opportunities in central and eastern Europe. This company has been
largely inactive to date.

CHANGES IN MANAGEMENT AND BOARD OF DIRECTORS

Effective July 19, 1996 James V. McGoodwin resigned as Hariston's
President and Chief Executive Officer. He also resigned from the Company's Board
and from his positions with Hariston's affiliated and subsidiary companies. Mr.
McGoodwin had served as a Director and Officer of the Company since December
1994 and left to pursue other interests. Concurrent with Mr. McGoodwin's
departure, Nuno Brandolini, a Hariston Director and President of Hariston's
wholly-owned subsidiary EuroEastern Investment Corporation, was appointed as
Hariston's Chief Executive Officer and was elected Chairman of the Board, and
Kevin R. McCarthy was appointed as Hariston's President and was elected to the
Board.

Effective December 11, 1997 Nuno Brandolini and Kevin R. McCarthy
resigned from their positions with Hariston and from the Board. They also
resigned from their positions with Hariston's affiliated and subsidiary
companies. Messrs. Brandolini and McCarthy resigned in order to concentrate
their energies on running Scorpion Holdings, Inc., a private financial advisory
company of which they are Chief Executive Officer and President, respectively.
Concurrent with Messrs. Brandolini and McCarthy's departure, James P. Angus, a
Hariston Director since December 1994, was appointed as Hariston's President and
Chief Executive Officer and was elected Chairman of the Board.

RESULTS OF OPERATIONS

COMPARISON OF TWELVE MONTH PERIOD ENDED DECEMBER 31, 1997 TO TWELVE MONTH PERIOD
ENDED DECEMBER 31, 1996

The Company earned consolidated net income of $2,301,178 for the fiscal
year ended December 31, 1997, consisting of $4,508,309 of net income from
continuing operations offset by a $2,207,131 loss attributable to the
discontinued multimedia operations. The $4,508,309 of net income from continuing
operations consisted of $4,573,523 of net income earned by Hariston offset by a
$57,660 loss attributable to EuroEastern and $7,554 of corporate expenses
incurred by Educorp.

The $4,573,523 of net income earned at the Hariston legal entity level
consisted of $5,571,441 gain on sale of PLI shares and $99,998 of net interest
income, offset by $37,083 of foreign exchange loss and $1,060,833 of corporate
expenses.

An analysis of the 1997 results and a comparison to 1996 results is
presented below. Discussion of the Educorp multimedia operations is limited as
these operations are discontinued.

<PAGE> 14

EDUCORP DISCONTINUED OPERATIONS

The Educorp operations generated consolidated revenues of $2,162,743 and
incurred a net loss of $2,207,131 for the period January 1, 1997 to December 19,
1997. The Direct operations were sold as of December 19, 1997 and HighText
ceased sales of its inventory and became inactive at that time.

The $2,207,131 net loss figure consisted of $1,284,553 loss from
operations, $744,294 of write-downs of intangible assets taken during the third
quarter and $178,284 of loss booked in the fourth quarter on disposition of
Direct's operations and cessation of HighText's sales. For full-year reporting
purposes, the third quarter write-downs represent loss on disposition, such that
the loss on disposal of the multimedia software operations totals $922,578.

By comparison, the Educorp operations generated revenues of $6,333,989
and incurred a net loss of $5,518,570 for the year ended December 31, 1996,
comprised of $3,718,570 loss from operations and $1,800,000 of write-downs of
goodwill.

The Educorp operations generated losses each quarter during 1996 and
1997 and sales revenues and gross margins declined over this time principally
due to the high level of competition experienced in the multimedia CD-ROM retail
and wholesale distribution businesses, as well as a decline in sales of
Macintosh CD-ROM titles. After examining various alternatives, in January 1997
Hariston's Board adopted a plan to dispose of or discontinue the Educorp
operations. Direct's operations were sold on December 19, 1997 and HighText's
sales ceased at that time. HighText's assets were sold on February 13, 1998.

HARISTON AND EUROEASTERN OPERATING AND CORPORATE EXPENSES

The majority of Hariston's $1,060,833 of non-consolidated operating and
corporate expenses for 1997 consisted of $313,418 of salaries and consultants
fees, $325,103 of legal fees, $76,252 of accounting, audit and tax return
preparation fees, $86,554 of shareholder communication costs including transfer
agent fees, $62,640 of insurance costs, $74,734 of travel costs, $23,819 of rent
expense and $23,659 of directors fees. Hariston incurred exceptional legal fees
and consultants fees during the fourth quarter due to the sale of its Educorp
operations.

By comparison, the majority of Hariston's $1,360,677 of non-consolidated
operating and corporate expenses for 1996 consisted of $493,521 of salaries and
consultants fees, $313,702 of legal fees, $130,475 of accounting, audit and tax
return preparation fees, $126,680 of shareholder communication costs including
transfer agent and investor relations firm fees, $76,523 of insurance costs,
$48,571 of travel costs, $45,024 of rent expense, and $25,850 of directors fees.
Hariston incurred exceptional salaries and consultants fees during the third and
fourth quarters of 1996 due to the closure of its Costa Mesa, California
offices. Hariston incurred significant non-recurring legal and accounting fees
during the first and second quarters as a consequence of the filings and
disclosures required in connection with the August 25, 1995 acquisition of the
Direct operations and the January 1, 1996 acquisition of the HighText
operations.

EuroEastern's $57,660 of non-consolidated operating and corporate
expenses for 1997 consisted of $37,873 of consultant's fees including travel
costs reimbursement, $5,049 of secretarial fees, $10,250 of rent expense and
$4,488 of telephone, courier and other charges.

By comparison, in 1996 EuroEastern incurred $140,285 of operating and
corporate expenses, consisting of $72,899 of consultant's fees including travel
cost reimbursement, $19,355 of secretarial fees, $38,686 of rent expense and
$9,345 of telephone, courier and other charges.

COMPARISON OF TWELVE MONTH PERIOD ENDED DECEMBER 31, 1996 TO TWELVE MONTH PERIOD
ENDED DECEMBER 31, 1995

The Company incurred a consolidated net loss of $4,965,994 for the
fiscal year ended December 31, 1996, consisting of $552,576 of net income from
continuing operations offset by a $5,518,570 loss attributable to the
discontinued multimedia operations. The $552,576 of net income from continuing
operations consisted of $692,861 of

<PAGE> 15

net income earned by Hariston offset by a $140,285 loss incurred by EuroEastern.
The $692,861 of net income earned by Hariston consisted of a $2,353,545 net gain
on sale of PLI shares and a $2,873 foreign exchange gain, offset by $302,880 of
net interest expense and $1,360,677 of corporate expenses.

An analysis of the 1996 results and a comparison to 1995 results is
presented below. Discussion of the Educorp multimedia operations is limited as
these operations are discontinued.

EDUCORP DISCONTINUED OPERATIONS

The Educorp operations generated consolidated revenues of $6,333,989 and
incurred a net loss of $5,518,570 for the year ended December 31, 1996.
Excluding a $1,800,000 write-down of goodwill, the Educorp operations incurred a
net loss of $3,718,570. Of the $6,339,989 total revenues figure, $5,807,172 was
generated by the Direct operations and $526,817 by the HighText operations. Of
the $3,718,570 loss figure before goodwill write-downs, $2,120,876 arose from
the Direct operations, $977,986 from the HighText operations and $619,708 from
the Educorp legal entity level.

The Direct operations were purchased by the Company effective August 25,
1995. The HighText operations were purchased by the Company effective January 1,
1996.

For the period August 25, 1995 to December 31, 1995 the Direct
operations generated revenues of $2,797,292 and incurred a net loss of $459,216.
For the twelve months ended December 31, 1995 these operations generated
revenues of $7,926,706.

The 26.7% decline in sales of the Direct operations from 1995 to 1996
reflected primarily the following factors: a 14% decline in the average realized
retail CD-ROM price, a 15% decline in the average realized dealer CD-ROM price,
the discontinuance in the second half of 1995 of sales of certain high-margin
software titles, a delay in catalog mailings in 1996 due to delays in the
implementation of a new Management Information System, the widely publicized
problems at Apple Computer affecting sales of Macintosh CD-ROM titles, and a
trend towards publishers selling their titles directly to dealers.

HARISTON AND EUROEASTERN OPERATING AND CORPORATE EXPENSES

The majority of Hariston's $1,360,677 of non-consolidated operating and
corporate expenses for 1996 consisted of $493,521 of salaries and consultants
fees, $313,702 of legal fees, $130,475 of accounting, audit and tax return
preparation fees, $126,680 of shareholder communication costs including transfer
agent and investor relations firm fees, $76,523 of insurance costs, $48,571 of
travel costs, $45,024 of rent expense, and $25,850 of directors fees. Hariston
incurred exceptional salaries and consultants fees during the third and fourth
quarters due to the closure of its Costa Mesa, California offices. Hariston
incurred significant non-recurring legal and accounting fees during the first
and second quarters as a consequence of the filings and disclosures required in
connection with the August 25, 1995 acquisition of the Direct operations and the
January 1, 1996 acquisition of the HighText operations.

By comparison, the majority of Hariston's $1,272,422 of non-consolidated
operating and corporate expenses for 1995 consisted of $364,967 of salaries and
consultants fees, $228,110 of legal fees, $106,799 of accounting, audit and tax
return preparation fees, $104,689 of shareholder communication costs including
transfer agent and investor relations firm fees, $48,075 of insurance costs,
$78,995 of travel costs, $76,663 of rent expense and $28,791 of directors fees.

The majority of EuroEastern's $140,285 of non-consolidated operating and
corporate expenses for 1996 consisted of $72,899 of consultant's fees including
travel cost reimbursement, $19,355 of secretarial fees and $38,686 of rent
expense. There were no comparable prior year figures for EuroEastern as it was
incorporated in October, 1995.

<PAGE> 16

INVESTMENTS: POLISH LIFE IMPROVEMENT S.A.

PLI is a retail operator of a chain of home-improvement stores in Poland
called NOMI. PLI is a public Polish company whose shares began trading on the
parallel market to the Warsaw Stock Exchange on February 5, 1996.

As of December 31, 1996 Hariston owned 1,820,566 shares of PLI,
representing a 25.8% ownership interest in PLI. During 1997 Hariston sold
1,500,000 PLI shares in private transactions and a further 320,566 PLI shares on
the open market, realizing net proceeds of $6,756,786 including a $1.5 million
note receivable of which $500,000 remained to be collected as of year-end. This
balance was subsequently received on April 3, 1998. As of December 31, 1997 the
Company retained no shareholding in PLI.

INVESTMENTS: NORTHPOINT CORPORATION.

Northpoint Corporation ("Northpoint") was formerly a supplier of
proprietary home medical products and is now engaged in marketing products to
home-based businesses. A public company based in a suburb of Toronto, Canada,
Northpoint's shares are traded on the Canadian Dealing Network, an
over-the-counter market associated with the Toronto Stock Exchange, under the
symbol "NOPT".

As of December 31, 1997 Hariston owned 233,591 shares of Northpoint
common stock, representing a 2.5% interest in that company. These shares are
recorded on Hariston's balance sheet at a cost of $7,304, or approximately $0.03
per share. In March 1998 Hariston sold 80,000 Northpoint shares at Cdn$0.25 per
share to one or more insiders of Northpoint, on a broker-to-broker basis through
the mechanism of the Canadian Dealing Network. Substantially all of the shares
sold had been purchased by Hariston for Cdn$0.15 per share in 1996. Management
is hopeful that Hariston will be able to sell its remaining 153,591 Northpoint
shares at a higher price per share in the future, although realization of a
higher price is not assured. As of April 6, 1998 Northpoint's shares were
trading on the Canadian Dealing Network at Cdn$0.40 per share.

DISCONTINUED OPERATIONS

EDUCORP MULTIMEDIA. On January 29, 1997 Hariston's Board resolved to
seek a buyer for the Company's multimedia software operations. These operations
were subsequently sold as follows: the Direct operations on December 19, 1997
and the assets of HighText on February 13, 1998.

Consideration received on the December 1997 sale of the Direct
operations consisted of a 15% shareholding in Arch Publishers Group, Inc.
("APG"), a private corporation based in Elmsford, New York. This shareholding
was not ascribed any value for financial reporting purposes due to the
difficulty of establishing a value given that APG's shares do not trade on a
quoted public market. Management is hopeful that on eventual sale, Hariston will
realize significant proceeds from its shareholding in APG. However, no sale is
currently contemplated.

Consideration received on the February 1998 sale of HighText's assets
consisted of 150,000 common shares of the purchaser, Byron Preiss Multimedia
Company, Inc., a public company traded on the Nasdaq SmallCap Market tier of The
Nasdaq Stock Market under the symbol "CDRM". Under the terms of the sale
agreement, these shares are subject to adjustment intended to cause the shares
to be valued at $1.33 per share if sold within the six months period commencing
February 13, 1999.

OIL AND GAS INTERESTS. On August 14, 1995 Hariston disposed of its oil
and gas royalty and working interests for cash proceeds of approximately $2.4
million and the assumption by the purchaser of approximately $979,000 of debt.

METANETIX DIVISION. On July 28, 1995 Hariston reached an agreement to
sell its Metanetix Division and related technology to Consolidated Western and
Pacific Resources Corp. (subsequently renamed Synergy Renewable Resources Inc.
and herein referred to as "Synergy") for a purchase price of up to $9 million,
to be paid as a royalty from any profits that may be generated from Synergy's
use of the Metanetix minerals recovery process and the Butte, Montana recovery

<PAGE> 17

plant. Synergy subsequently informed Hariston that it did not wish to acquire
the related technology license, thereby reducing the maximum purchase price to
$7 million. The Butte plant has been unprofitable to date and no proceeds have
been recognized on the sale of the Metanetix Division due to management's belief
that the ultimate realization of any proceeds cannot be reasonably determined at
this time.

LIQUIDITY AND CAPITAL RESOURCES

At December 31, 1997 the Company had cash balances in excess of $3.2
million, a working capital ratio of 11.70 and a debt/equity ratio of 0.09. This
compares favorably to December 31, 1996 figures of $2.8 million, 0.87 and 4.62,
respectively.

Cash was generated during 1997 and 1996 primarily from the sale of PLI
shares, though cash of $1.7 million was also raised in 1996 from the private
placement of shares and the issue of shares on exercise of share purchase
warrants. The Company realized net proceeds of $6,756,786 in 1997 and $3,101,905
in 1996 from the sale of PLI shares. The sale of the multimedia software and
book operations during 1997 produced no cash proceeds for the Company and the
Company does not expect to sell its shares in Arch Publishers Group, Inc. and
Byron Preiss Multimedia Company, Inc. until fiscal 1999 at the earliest.

A significant portion of the proceeds from PLI share sales was used in
1997 to repay $3.2 million of notes issued in 1995 to effect the acquisition of
the Direct operations and a $250,000 obligation that arose in 1996 when this sum
was borrowed to provide funds to the Direct and HighText operations.

The Company's principal continuing capital requirements include working
capital to finance ongoing general and administrative expenses and costs which
may be incurred in connection with the acquisition of a business in the future.

Historically, the Company has required capital to finance operating
losses, having incurred losses from continuing operations in each year from 1991
to 1995. As of December 31, 1997, the Company had an accumulated deficit of
$28,289,316.

The ability of the Company to continue to effectively manage its working
capital and ultimately, to attain profitability, is dependent upon a number of
factors including but not limited to: competitive conditions in the venture
capital market, general economic conditions, the efficiency with which the
Company conducts its activities, continuing access to investment capital and the
successful completion of one or more acquisition or financing transactions.

Management is contemplating a number of business opportunities. In order
to pursue and execute one or more of these opportunities, the Company may need
to raise additional equity and/or debt capital during fiscal 1998. There is no
assurance that additional debt or equity financing, if required, will be
available or will be available on terms acceptable to the Company.

FORWARD-LOOKING INFORMATION

This Annual Report on Form 10-K includes forward-looking statements,
including information concerning the Company's business strategies and financing
plans. These forward-looking statements are subject to risks and uncertainties,
including risks and uncertainties regarding the competitive and economic
environments, the Company's ability to recruit and retain qualified personnel,
the Company's continued access to investment capital and the successful
conclusion of one or more acquisition or financing transactions, which could
cause actual results to differ from those anticipated.

<PAGE> 18

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.

The financial statements of the Company follow hereafter. See Financial
Statement Index at Item 14(a).

<PAGE> 19

HARISTON CORPORATION

CONSOLIDATED FINANCIAL STATEMENTS
AS AT DECEMBER 31, 1997 AND 1996
TOGETHER WITH AUDITORS' REPORT

<PAGE> 20

AUDITORS' REPORT

To the Shareholders of HARISTON CORPORATION:

We have audited the consolidated balance sheets of Hariston Corporation
(a Canada corporation) as at December 31, 1997 and 1996 and the consolidated
statements of operations and deficit and changes in financial position for the
years ended December 31, 1997, 1996 and 1995. These consolidated financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these consolidated financial
statements based on our audits.

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

In our opinion, these consolidated financial statements present fairly,
in all material respects, the financial position of the Company as at December
31, 1997 and 1996 and the results of its operations and the changes in its
financial position for the years ended December 31, 1997, 1996 and 1995 in
accordance with generally accepted accounting principles.

Vancouver, British Columbia
February 23, 1998.

ARTHUR ANDERSEN & CO.

<PAGE> 21

HARISTON CORPORATION

CONSOLIDATED BALANCE SHEETS -- DECEMBER 31, 1997 AND 1996
(Amounts in thousands of U.S. dollars)

1997 1996
-------- --------
ASSETS
<S> <C> <C>
CURRENT ASSETS:
Cash and cash equivalents ........................ $ 3,266 $ 2,554
Short-term investments ........................... 8 1,216
Accounts and note receivables .................... 520 18
Prepaid expenses ................................. 11 11
Assets of discontinued operations (Note 3) ....... 230 4,084
-------- --------
.................................................. 4,035 7,883

EQUIPMENT (Note 4) ............................... 20 27
-------- --------
.................................................. $ 4,055 $ 7,910
======== ========
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable and accruals .................... $ 315 $ 405
Term debt (Note 5) ............................... -- 3,230
Liabilities of discontinued operations (Note 3) .. 30 2,867
-------- --------
345 6,502
CONTINGENCIES (Note 6)
SHAREHOLDERS' EQUITY:
Share capital (Note 7) ........................... 31,999 31,999
Deficit .......................................... (28,289) (30,591)
-------- --------
3,710 1,408
-------- --------
$ 4,055 $ 7,910
======== ========
</TABLE>

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

<PAGE> 22

HARISTON CORPORATION

CONSOLIDATED STATEMENTS OF OPERATIONS AND DEFICIT

FOR THE YEARS ENDED DECEMBER 31, 1997, 1996 AND 1995
(Amounts in thousands of U.S. dollars)
<TABLE>
<CAPTION>

1997 1996 1995
------------ ------------ ------------

<S> <C> <C> <C>
REVENUE ........................................................ $ -- $ -- $ 21

OPERATING AND CORPORATE EXPENSES (Note 8) ...................... 1,125 1,500 1,289
------------ ------------ ------------
Loss before the following items ................................ (1,125) (1,500) (1,268)

INTEREST INCOME (EXPENSE), net ................................. 100 (303) (125)

GAIN (LOSS) ON DISPOSAL OF INVESTMENTS AND LOANS
(Note 9) ....................................................... 5,571 2,354 161
FOREIGN EXCHANGE GAIN (LOSS) ................................... (37) 3 (64)
------------ ------------ ------------
Income (loss) before discontinued operations ................... 4,509 554 (1,296)
------------ ------------ ------------
INCOME (LOSS) FROM DISCONTINUED OPERATIONS
(Note 3):
Results of multimedia software operations ...................... (1,284) (3,719) (507)
Loss on disposal of multimedia software operations ............. (923) (1,800) --
Loss on disposal of factoring operation ........................ -- -- (5)
Loss on disposal of minerals recovery project .................. -- -- (321)
Income from oil and gas royalty and working interests .......... -- -- 166
Gain on disposal of oil and gas royalty and working interests .. -- -- 1,140
------------ ------------ ------------
Income (loss) from discontinued operations ..................... (2,207) (5,519) 473
------------ ------------ ------------
Net income (loss) .............................................. 2,302 (4,965) (823)
DEFICIT, beginning of year ..................................... (30,591) (25,626) (24,803)
------------ ------------ ------------
DEFICIT, end of year ........................................... $ (28,289) $ (30,591) $ (25,626)
============ ============ ============
NET INCOME (LOSS) PER SHARE:
Income (loss) from continuing operations ....................... $ 0.35 $ 0.05 $ (0.13)
Income (loss) from discontinued operations ..................... (0.17) (0.47) 0.05
------------ ------------ ------------
Net income (loss) per share .................................... $ 0.18 $ (0.42) $ (0.08)
============ ============ ============

WEIGHTED AVERAGE NUMBER OF SHARES OUTSTANDING .................. 12,663,113 11,731,427 10,927,011
============ ============ ============
</TABLE>

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

<PAGE> 23

HARISTON CORPORATION

CONSOLIDATED STATEMENTS OF CHANGES IN FINANCIAL POSITION

FOR THE YEARS ENDED DECEMBER 31, 1997, 1996 AND 1995
(Amounts in thousands of U.S. dollars)

1997 1996 1995
------- ------- -------
<S> <C> <C> <C>
CASH PROVIDED FROM (USED IN) OPERATING ACTIVITIES:
Income (loss) from continuing operations ................................... $ 4,509 $ 554 $(1,296)
Add (deduct) items not affecting cash--
Loss on disposal of property and equipment ............................ 41 -- --
Depreciation and amortization ......................................... 8 19 22
Gain on disposal of investments and loans ............................. (5,571) (2,354) (161)
------- ------- -------
(1,013) (1,781) (1,435)

Changes in non-cash working capital accounts from continuing operations .... (592) 1,570 (143)
------- ------- -------
(1,605) (211) (1,578)
------- ------- -------
Income (loss) from discontinued operations ................................. (2,207) (5,519) 473
Add (deduct) items not affecting cash--
Depreciation and amortization ......................................... 63 1,108 404
(Gain) loss on disposal of discontinued operations .................... 923 1,800 (814)
------- ------- -------
(1,221) (2,611) 63
------- ------- -------
(2,826) (2,822) (1,515)
------- ------- -------
CASH PROVIDED FROM (USED IN) FINANCING ACTIVITIES:
Issuance of common shares for acquisition of multimedia software business .. -- 412 500
Amount payable upon exercise of put option ................................. -- -- 300
Issuance of short-term seller's note for acquisition of multimedia
software business ..................................................... -- -- 374
Net cash proceeds from share issuance ...................................... -- 1,700 39
Proceeds from (repayment of) term debt, net ................................ (3,230) 127 1,119
------- ------- -------
(3,230) 2,239 2,332
------- ------- -------
CASH PROVIDED FROM (USED IN) INVESTING ACTIVITIES:
Acquisition of multimedia software business ................................ -- (469) (6,067)
Disposal (acquisition) of property, equipment and leaseholds, net .......... (11) (287) 37
Issuance of notes receivable ............................................... -- -- 1,170
Recovery of finders' fee ................................................... -- -- 230
Proceeds from disposal of investments and loans ............................ 6,779 3,101 157
Acquisition of Madison shares .............................................. -- (8) --
Proceeds from disposal of oil and gas royalty and working interests,
net of costs of disposition ........................................... -- -- 3,318
Minerals recovery project .................................................. -- -- (61)
------- ------- -------
6,768 2,337 (1,216)
------- ------- -------
Increase (decrease) in cash and cash equivalents ........................... 712 1,754 (399)
CASH AND CASH EQUIVALENTS, beginning of year ............................... 2,554 800 1,199
------- ------- -------
CASH AND CASH EQUIVALENTS, end of year ..................................... $ 3,266 $ 2,554 $ 800
======= ======= =======
</TABLE>

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

<PAGE> 24

HARISTON CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 1997, 1996 AND 1995
(Dollar amounts in thousands of U.S. dollars unless otherwise stated)

1. ORGANIZATION AND OPERATIONS

Hariston Corporation (the "Company") is incorporated under the Canada
Business Corporations Act. Prior to 1996, the Company was engaged in various
business activities, including the exploitation of technology for the extraction
of metals from water and other media, and the holding and management of royalty
and working interests in oil and gas production. During 1995, the Company
changed its business strategy and disposed of its minerals recovery project and
its royalty and working interests in oil and gas production and acquired
operations engaged in the publishing, distribution and marketing of multimedia
CD-ROM titles for use with both Macintosh and IBM-compatible computers. Sales
were predominantly generated through catalog direct marketing to consumers. The
majority of sales were cash sales to individual customers. During 1997, the
Company substantially disposed of its multimedia software businesses and is
currently seeking opportunities in other businesses.

2. SIGNIFICANT ACCOUNTING POLICIES

BASIS OF PRESENTATION

The Company's accounting and reporting policies conform to generally
accepted accounting principles in Canada.

PRINCIPLES OF CONSOLIDATION

These consolidated financial statements include the accounts of the
Company and its wholly-owned subsidiaries Educorp Multimedia, Inc., HighText
Interactive, Inc., Educorp Direct, Inc. and EuroEastern Investment Corporation,
all of which have ceased operations. Material intercompany transactions have
been eliminated upon consolidation.

CASH AND CASH EQUIVALENTS

Cash and cash equivalents consist of liquid investments with a maturity
of three months or less when purchased.

EQUIPMENT AND DEPRECIATION

Furniture and equipment are recorded at cost. Depreciation is provided
on the straight-line basis over the estimated useful lives of the assets at the
following rates:

<TABLE>

<S> <C>
Furniture and equipment.............. 5 years
Computer equipment................... 3 years
</TABLE>

INVESTMENTS

Investments are recorded at cost or at net realizable value if there has
been a permanent impairment in value. Investments are classified as short-term
if the intended holding period is less than one year.

<PAGE> 25

HARISTON CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

DECEMBER 31, 1997, 1996 AND 1995
(Dollar amounts in thousands of U.S. dollars unless otherwise stated)

FOREIGN CURRENCY TRANSLATION

Transactions denominated in currencies other than U.S. dollars are
translated under the temporal method. Monetary assets and liabilities are
translated at the exchange rate in effect on the balance sheet date;
non-monetary assets and liabilities are translated at the exchange rate in
effect on the transaction date. Revenue and expense items are translated at the
average monthly exchange rate. Gains and losses resulting from changes in
exchange rates are reflected in the statement of operations and deficit for the
year.

USE OF ESTIMATES

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

FAIR VALUE INFORMATION

The carrying amounts of cash and cash equivalents, investments, accounts
payable and term debt are a reasonable estimate of their fair value.

The fair value information presented herein is based on pertinent
information available to management as of December 31, 1997. Although management
is not aware of any factors that would significantly affect the estimated fair
value amounts, such amounts have not been comprehensively revalued for purposes
of these consolidated financial statements since that date, and current
estimates of fair value may differ significantly from the amounts presented
herein.

INCOME (LOSS) PER SHARE

Income (loss) per share is calculated on the basis of the weighted
average number of shares outstanding during the year. The effect of potential
conversions of common share equivalents on the income (loss) per share is either
anti-dilutive or not material. As a result, no adjusted or fully diluted income
(loss) per share is presented.

RECLASSIFICATION

Certain figures for 1996 and 1995 have been reclassified to conform to
the current year's presentation.

3. DISCONTINUED OPERATIONS

In January of 1997, the Company adopted a formal plan to dispose of its
multimedia software operations.

EDUCORP DIRECT, INC.

On August 25, 1995, a wholly-owned subsidiary of the Company, Educorp
Multimedia, Inc., through a wholly-owned subsidiary, Educorp Direct, Inc.,
acquired substantially all the assets and assumed certain liabilities of a
company and its affiliates engaged in the multimedia software business with the
trade name of Educorp. The acquisition was accounted for by the purchase method.

<PAGE> 26

HARISTON CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

DECEMBER 31, 1997, 1996 AND 1995
(Dollar amounts in thousands of U.S. dollars unless otherwise stated)

On December 19, 1997, the Company sold substantially all the operating
assets and liabilities of Educorp Direct, Inc. to Arch Publishers Group, Inc.
("APG"), a private company, in exchange for a 15% equity interest in APG. The
investment in APG was recorded at nominal value.

HIGHTEXT INTERACTIVE, INC.

Effective January 1, 1996, the Company, through a wholly-owned
subsidiary, HighText Interactive, Inc. ("HighText"), acquired substantially all
of the assets and assumed certain liabilities of HighText Publications, Inc., a
company engaged in the development and distribution of books and multimedia
software titles on CD-ROM. The acquisition was accounted for by the purchase
method.

During 1997, the Company entered into an agreement with the previous
owners of HighText Publications, Inc. whereby the Company agreed to transfer to
them substantially all of the assets and certain liabilities of the book
publishing operations. The transfer represented payment in full of the
contingent consideration related to the purchase and the loss on sale was
recorded as at December 31, 1996.

On February 13, 1998, the Company entered into an agreement with a
publicly listed company whereby the remaining assets and liabilities of the
multimedia software operations would be disposed of in exchange for 150,000
shares in the purchaser valued at $1.33 each (see Note 14).

The remaining assets and liabilities of the multimedia software
operations as at December 31, 1997 consisted of the following:

<TABLE>

<S> <C>
Current assets ................................................ $ 9
Intangible assets, net of provision for loss on disposal of $69 221
----
Assets of discontinued operations ........................ $230
====

Accounts payable .............................................. 30
----
Liabilities of discontinued operations ................... $ 30
====
</TABLE>

Revenue generated from the multimedia operations amounted to $2,163 in 1997
(1996-$6,334, 1995-$2,805). The results of operations from the multimedia
software operations and the loss on disposal are included in income (loss) from
discontinued operations on the consolidated statement of operations and deficit.

4. EQUIPMENT

1997 1996
---------------------------------------- ---------
ACCUMULATED NET BOOK NET BOOK
COST DEPRECIATION VALUE VALUE
----- ------------ --------- ---------
<S> <C> <C> <C> <C>
Furniture and equipment .... $46 $34 $12 $20
Computer equipment ......... 23 15 8 7
--- --- --- ---
$69 $49 $20 $27
=== === === ===
</TABLE>

<PAGE> 27

HARISTON CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

DECEMBER 31, 1997, 1996 AND 1995
(Dollar amounts in thousands of U.S. dollars unless otherwise stated)

5. TERM DEBT

1997 1996
------ ------
<S> <C> <C>
Loan payable bearing interest at prime plus 1% per annum .... $ -- $ 30
Promissory notes bearing interest at 10% per annum .......... -- 3,200
------ ------
$ -- $3,230
====== ======
</TABLE>

6. CONTINGENCIES

ENVIRONMENTAL CONTINGENCIES

The Company disposed of its minerals recovery project in 1995. In
connection with this project, the Company was subject to various United States
federal, state and local statutes, rules and regulations relating to
environmental matters, including provisions related to mine reclamation and the
discharge of materials into the environment. The Company may still be held
liable for environmental clean-up costs notwithstanding indemnifications
obtained from the property lessor and property owners. Currently, no
environmental liabilities have been identified or accrued in these consolidated
financial statements.

LITIGATION

The Company is being sued by certain former option holders for $560 for
its refusal during 1993 to issue shares under the relevant options. The Company
believes the options had expired and, accordingly, no shares should have been
issued. The outcome of the lawsuit is currently not determinable.

The Company is being sued by a former insider for approximately $83 on
account of losses incurred by the individual's spouse on the purchase during
1989 and sale during 1990 of shares of the Company's common stock. The Company
believes the claim is without merit; however, the outcome of the lawsuit is not
currently determinable.

The Company is being sued by the former owners of a business acquired
and sold by Hariston in 1993. The former owners allege that Hariston committed
civil theft due to willful misrepresentation and breach of contract, and are
claiming loss and damages in the suit of an unspecified amount. Separately,
legal counsel to the plaintiffs sent a letter to the Company proposing
settlement of the case for $3,000, which sum was purported in the letter to
represent three times the estimated damages suffered by the plaintiffs. The
Company did not and does not intend to respond to this proposal and intends to
rigorously defend itself in the lawsuit. The outcome of the lawsuit is not
currently determinable. However, the Company believes that it has been
indemnified by its co-defendant in the suit, or an entity controlled by him,
against any liability in this matter.

<PAGE> 28

HARISTON CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

DECEMBER 31, 1997, 1996 AND 1995
(Dollar amounts in thousands of U.S. dollars unless otherwise stated)

7. SHARE CAPITAL

1997 1996
-------- --------
<S> <C> <C>
Authorized
Unlimited number of common shares
Issued and outstanding
Fully paid common shares .................................... $ 32,001 $ 32,001
Shares held in treasury (1,000 shares) ..................... (2) (2)
-------- --------
$ 31,999 $ 31,999
======== ========
</TABLE>

Changes in the Company's issued share capital for the years ended December 31,
1995, 1996 and 1997 were:

COMMON STOCK
-----------------------------
NUMBER
OF SHARES AMOUNT
----------- -----------
<S> <C> <C>
Balance, December 31, 1994 .................................... 10,851,476 $ 29,350
Shares issued to one of the sellers of Educorp as part of the
purchase price pursuant to the Purchase and Sale Agreement 200,000 500
Shares issued for cash on exercise of stock options ........... 15,500 39
Cancelled shares .............................................. (2) --
----------- -----------
Balance, December 31, 1995 .................................... 11,066,974 29,889
Shares issued for acquisition of HighText Interactive, Inc.
(Note 3) ................................................. 146,139 412
Shares issued for cash on exercise of warrants ................ 250,000 500
Shares issued for cash in a private placement ............ 1,200,000 1,200
----------- -----------
Balance, December 31, 1997 and 1996 ........................... 12,663,113 $ 32,001
=========== ===========
</TABLE>

As at December 31, 1997, the Company had outstanding vested stock
options and warrants as follows:

NUMBER OF
VESTED SHARES EXERCISE PRICE EXPIRATION DATE
------------- -------------- ---------------
<S> <C> <C> <C>
Options
Employee......................... 10,000 Cdn. $4.25 February 17, 1998
Director......................... 20,000 Cdn. $4.75 March 31, 1998
Employee......................... 140,000 U.S. $1.25 July 17, 2003
Director......................... 120,000 U.S. $1.25 July 17, 2003
Employee......................... 593,333 U.S. $1.25 August 16, 2003
Director......................... 160,000 U.S. $1.25 August 16, 2003
---------
1,043,333
=========
Warrants
Share warrants................... 1,000,000 U.S. $2.50 August 24, 2000
---------
1,000,000
=========
Weighted average exercise price.. U.S. $1.89
==========
</TABLE>

<PAGE> 29
HARISTON CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

DECEMBER 31, 1997, 1996 AND 1995
(Dollar amounts in thousands of U.S. dollars unless otherwise stated)

8. OPERATING AND CORPORATE EXPENSES

1997 1996 1995
------ ------ ------
<S> <C> <C> <C>
Administration, office and travel ............. $ 289 $ 344 $ 284
Consulting fees, salaries and employee benefits 345 567 376
Directors fees ................................ 24 26 29
Professional fees ............................. 419 459 408
Rent and other ................................ 40 85 170
Depreciation and amortization ................. 8 19 22
------ ------ ------
$1,125 $1,500 $1,289
====== ====== ======
</TABLE>

Consulting fees, salaries and employee benefits include $195 (1996-$108,
1995-$nil) paid to Scorpion Holdings, Inc. ("Scorpion"), a private financial
advisory company. By agreement between Hariston and Scorpion, Scorpion was paid
$20 per month for providing the services of Nuno Brandolini as Chairman and
Chief Executive Officer and Kevin McCarthy as President of the Company. The
management fee was reduced to $10 per month from September 1997 and was
discontinued upon the resignation of Brandolini and McCarthy in December 1997.

9. GAIN ON INVESTMENTS AND LOANS

1997 1996 1995
------ ------ ------
<S> <C> <C> <C>
Provision for loss on Northpoint Corporation
(formerly Madison Holdings, Ltd.) shares ................ $ -- $ -- $ (59)
Gain on disposition of Northpoint shares ................. -- -- 123
Write-off of receivable from Northpoint .................. -- -- (133)
Recovery of finders' fees on Polish Life Improvement S.A . -- -- 230
Gain on sale of investment in Polish Life Improvement S.A 5,571 2,354 --
------ ------ ------
$5,571 $2,354 $ 161
====== ====== ======
</TABLE>

10. INCOME TAXES

The Company has non-capital losses carried forward of approximately
$5,128 (1996-$5,600) for Canadian income tax purposes, which expire at various
dates from 1999 to 2004. They may be utilized to offset taxable income in Canada
of future years. The Company also has net capital losses of approximately $5,778
(1996 -$8,200) for Canadian income tax purposes which may be carried forward
indefinitely and may be applied against future capital gains taxable in Canada.

For U.S. income tax purposes, no provision for federal and state income
taxes has been recorded as the Company incurred net operating losses through
December 31, 1997. At December 31, 1997, the Company had approximately $4,700
(1996-$3,500) of federal net operating loss carry forwards for tax reporting
purposes available to offset future taxable income from 2010 to 2012. Under the
Tax Reform Act of 1986, the amounts of and benefits from net operating losses
carried forward may be impaired or limited in certain circumstances. Events
which may cause

<PAGE> 30

HARISTON CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

DECEMBER 31, 1997, 1996 AND 1995
(Dollar amounts in thousands of U.S. dollars unless otherwise stated)

limitations in the amount of net operating losses that the Company may utilize
in any one year include, but are not limited to, a cumulative ownership change
of more than 50% over a three-year period. At December 31, 1997, the effect of
such limitation, if imposed, is not expected to be material.

The tax benefits of these losses for Canadian and U.S. income tax
purposes have not been recognized in these consolidated financial statements.

<PAGE> 31

HARISTON CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

DECEMBER 31, 1997, 1996 AND 1995
(Dollar amounts in thousands of U.S. dollars unless otherwise stated)

11. SEGMENTED INFORMATION

1997 1996 1995
-------- -------- --------
<S> <C> <C> <C>
By Industry Segment
Revenue
Financing and investments .......................... $ -- $ -- $ 21
======== ======== ========
Operating income (loss)
Financing and investments .......................... $ 5,571 $ 2,354 $ (7)
Less -- Corporate expenses ......................... (1,062) (1,800) (1,289)
-------- -------- --------
Income (loss) from continuing operations ......... 4,509 554 (1,296)
Discontinued operations
Computer software .................................. (2,207) (5,519) (507)
Minerals recovery project .......................... -- -- (321)
Factoring .......................................... -- -- (5)
Oil and gas royalty and working interests .......... -- -- 1,306
-------- -------- --------
Net income (loss) ................................ $ (2,302) $ (4,965) $ (823)
======== ======== ========
Identifiable assets
Computer software .................................. $ 230 $ 4,084 $ 7,314
Financing and investments .......................... 8 1,216 1,956
-------- -------- --------
238 5,300 9,270
Corporate .......................................... 3,817 2,610 918
-------- -------- --------
Total assets ..................................... $ 4,055 $ 7,910 $ 10,188
======== ======== ========
Depreciation and amortization of property,
equipment, leaseholds, and royalty interests --
Computer software .................................. $ 63 $ 1,108 $ 297
Oil and gas royalty and working interests .......... -- -- 107
-------- -------- --------
63 1,108 404
Corporate .......................................... 8 19 22
-------- -------- --------
Total depreciation and amortization .............. $ 71 $ 1,127 $ 426
======== ======== ========
Additions to property, equipment, leaseholds, and royalty
interests --
Computer software .................................. $ -- $ 279 $ 117
Corporate .......................................... 11 8 97
-------- -------- --------
Total additions .................................... $ 11 $ 287 $ 214
======== ======== ========
</TABLE>

<PAGE> 32

HARISTON CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

DECEMBER 31, 1997, 1996 AND 1995
(Dollar amounts in thousands of U.S. dollars unless otherwise stated)

1997 1996 1995
-------- -------- --------
<S> <C> <C> <C>
By Geographic Area
Revenue
Canada .................................. $ -- $ -- $ 21
======== ======== ========

Operating loss
Canada
Continuing operations ................. $ (1,062) $ (1,800) $ (1,296)
Discontinued operations ............... -- -- 1,301
Poland .................................. 5,571 2,354
United States of America--
Continuing operations ................. -- -- --
Discontinued operations ............... (2,207) (5,519) (828)
-------- -------- --------
Net income (loss) ................... $ 2,302 $ (4,965) $ (823)
======== ======== ========
Identifiable assets
Canada .................................. $ 3,825 $ 2,589 $ 918
Poland .................................. -- 1,208 1,956
United States of America ................ 230 4,113 7,314
-------- -------- --------
Total assets ......................... $ 4,055 $ 7,910 $ 10,188
======== ======== ========
</TABLE>

12. DIFFERENCES IN ACCOUNTING POLICIES BETWEEN THE UNITED STATES AND CANADA

In certain respects, Canadian generally accepted accounting principles
("Canadian GAAP") differ from United States of America generally accepted
accounting principles ("U.S. GAAP"). The consolidated financial statements have
been prepared in accordance with Canadian GAAP, which is in agreement with U.S.
GAAP, except as set forth below.

CONSOLIDATED STATEMENTS OF OPERATIONS AND DEFICIT
<TABLE>
<CAPTION>
1997 1996 1995
------- ------- -------

<S> <C> <C> <C>
Net income (loss) according to Canadian GAAP ........... $ 2,302 $(4,965) $ (823)
Non-cash compensation expense (Note 12(a)) ............. (8) (81) (63)
Difference due to exchange rate fluctuation (Note 12(b)) -- -- (13)
------- ------- -------
Net income (loss) according to U.S. GAAP .......... $ 2,294 $(5,046) $ (899)
======= ======= =======
</TABLE>

There are no differences in the consolidated balance sheets as at
December 31, 1997 and 1996.

(a) Options to purchase shares of the Company were issued to employees
at prices which were below the estimated fair market value of the options at the
date of granting. Under Canadian GAAP, the issuance of these shares is recorded
as an increase to the capital stock of the Company at the issue price of the
shares. Under U.S. GAAP, the difference between the estimated fair market value
of the shares subject to the option at the date of granting and the

<PAGE> 33

HARISTON CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

DECEMBER 31, 1997, 1996 AND 1995
(Dollar amounts in thousands of U.S. dollars unless otherwise stated)

exercise price of the options is required to be charged to expense, with the
corresponding amount being credited to capital stock.

(b) Under the relevant U.S. sec regulations, a change in the reporting
currency requires that the financial statements for all the periods for which
financial information continues to be presented be restated, but the cumulative
effect of the change on periods prior to those restated need not be recognized.
the restatement was performed by using an appropriately weighted average
exchange rate for the statements of operations and deficit.

ADDITIONAL DISCLOSURES UNDER U.S. GAAP

INCOME TAXES

In accordance with SFAS No. 109, "Accounting for Income Taxes", U.S.
GAAP requires that the Company use the liability method of accounting for income
taxes. Deferred income taxes are recognized on the difference between financial
statement and income tax bases of assets and liabilities using enacted tax rates
in effect for the year in which the differences are expected to reverse. The
provision for income taxes represents the total of income taxes paid or payable
for the current year, plus the change in deferred taxes during the year.

Deferred tax assets totaling approximately $1.9 million at December 31,
1997 consist primarily of the tax effect of net operating loss carryforwards and
reserves and accrued expenses which are not yet deductible for tax purposes. The
Company has provided a full valuation allowance on the deferred tax asset
because of uncertainty regarding realizability.

<PAGE> 34

HARISTON CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

DECEMBER 31, 1997, 1996 AND 1995
(Dollar amounts in thousands of U.S. dollars unless otherwise stated)

UNAUDITED PRO FORMA INFORMATION

The following table presents the unaudited pro forma results of
operations of the Company for the year ended December 31, 1995, assuming the
acquisition of the Direct and HighText operations (see Note 3) had occurred on
January 1, 1995:

DIRECT FOR HIGHTEXT FOR COMPANY FOR PRO FORMA
THE PERIOD FROM THE YEAR ENDED THE YEAR ENDED RESULTS OF
JANUARY 1 TO DECEMBER 31, DECEMBER 31, PRO FORMA OPERATIONS
AUGUST 25, 1995 1995 1995 ADJUSTMENTS FOR 1995
---------------- ------------ -------------- ---------- ---------
(Unaudited) (Unaudited) (Unaudited) (Unaudited)
<S> <C> <C> <C> <C> <C>
Revenue ............. $ -- $ -- $ 21 $ -- $ 21
Income (loss) from
continuing operations -- -- (1,296) -- (1,296)
Net income (loss) ... (146) 12 (823) (734) (1,691)
Loss per share from
continuing operations $ (0.12)
=======
Net loss per share .. $ (0.12)
=======
</TABLE>
- ----------
No pro forma results of operations for the years ended December 31, 1997
and 1996 are presented since the results of operations of the subsidiaries have
been consolidated since January 1, 1996. The pro forma information is presented
for informational purposes only and is not necessarily indicative of the
operating results that would have occurred had the acquisition been consummated
as of January 1, 1995, nor are they necessarily indicative of future operating
results.

STOCK OPTION PLAN ACTIVITIES

The following table summarizes stock option plan activities for the
years ended December 31, 1997 and 1996:

1997 1996
---------- ----------
<S> <C> <C>
Stock options, beginning of year ........... 1,430,000 1,759,500
Less--
Stock options cancelled ............... -- (2,059,500)
Stock options expired ................. (10,000) (35,000)
Stock options exercised ............... -- --
Add --
Stock options granted ................. -- 1,765,000
---------- ----------
Stock options, end of year ................. 1,420,000 1,430,000
========== ==========
</TABLE>

A total of 375,000 options granted in 1996 were cancelled in the same
year. In addition, a total of 376,668 options granted in 1996 were vested in
each of August 1996 and 1997, while the remainder in the same amount will vest
in August 1998.

As permitted under U.S. GAAP, the Company has adopted the disclosure
provisions of SFAS No. 123 effective January 1, 1996 while continuing to account
for the options under SFAS No. 25. Accordingly, no compensation expense

<PAGE> 35

has been recognized for the stock option plans except to the extent of the
excess of the estimated fair market value of the shares subject to the option at
the date of granting and the option exercise price. Had compensation expense for
the Company's stock option plans been determined based on the fair value at the
date of grant for 1996 and 1995 awards consistent with the provisions of SFAS
No. 123, the Company's net income (loss) and earnings per share would have been
reduced to the pro forma amounts indicated below:

1997 1996
---- ----

<S> <C> <C>
Net income (loss), as reported according to U.S. GAAP..... $2,294 $(5,046)
Net income (loss), pro forma according to U.S. GAAP....... 1,823 (6,115)
Income (loss) per share, as reported according to U.S. GAAP 0.18 (0.43)
Income (loss) per share, pro forma according to U.S. GAAP. 0.14 (0.52)
</TABLE>

Because the SFAS No. 123 method of accounting has not been applied to
options prior to January 1, 1995, the resulting pro forma compensation cost may
not be representative of that to be expected in future years. The fair value of
each option grant was estimated on the date of grant using the Black-Scholes
option-pricing model with the following weighted average assumptions used: risk
free interest rate of 7%, expected option life of 7 years, expected volatility
of 85% and a dividend ratio of zero. The weighted average fair value of options
granted in 1996 and 1995 was $0.97 and $2.16, respectively. The weighted average
exercise price of options granted in 1996 and 1995 was $1.25 and $3.90,
respectively.

SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION

1997 1996 1995
---- ---- ----
<S> <C> <C> <C>
Interest paid ............................................. $ 46 $ 34 $ 100
Taxes paid ................................................ $ -- $ -- $ 19
Other non-cash activities
Interest on term debt paid by transfer of Polish Life ... $ -- $ 155 $ --
Improvement S.A. shares
Equipment acquired and financed by capital leases ....... -- 260 --
Term debt assumed by purchaser of oil and gas interests . -- -- 1,273
</TABLE>

13. YEAR 2000

As of December 31, 1997, the Company has assessed the impact of the Year
2000 issue on its computer systems and is in the process of remediating the
affected hardware and software. Expenditures for the Year 2000 project are not
expected to have a material impact on the financial position of the Company.

<PAGE> 36

14. SUBSEQUENT EVENT

SALE OF MULTIMEDIA SOFTWARE BUSINESS

On February 13, 1998 the Company entered into an asset purchase and sale
agreement to sell substantially all of the remaining assets and liabilities of
its multimedia software business for $200. Consideration received in settlement
was 150,000 shares in the purchaser corporation, valued at $1.33 each. The fair
value of the consideration will be used to record the transaction as the shares
have an established market (the NASDAQ SmallCap Market tier of the NASDAQ Stock
Market). The loss from disposition has been reflected in the current year
through a provision for the loss in the value of the respective assets (see Note
3).

ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE.

None.

PART III

ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT.

The directors and executive officers of the Company and their ages as of
April 6, 1998 are as follows:

NAME Age Position
---- --- --------
<S> <C> <C>
James P. Angus(1)(2)......... 51 Chairman, Director, Chief Executive Officer
L. James Porter (2).......... 33 Chief Financial Officer, Corporate Secretary
Neil S. MacKenzie(1)(2)...... 53 Director
</TABLE>

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

(1) Member of the Compensation Committee.

(2) Member of the Audit Committee.

All directors hold office until the next Annual Meeting of Shareholders
or the election and qualification of their successors. Officers are elected
annually by the Board of Directors and serve at the discretion of the Board.

JAMES P. ANGUS, Chairman of the Board, Chief Executive Officer and
President, has held these offices since December 11, 1997. He was first
appointed to the Company's Board of Directors in December 1994. Mr. Angus is
also President of Angroup Holdings Limited, a private investment holding company
he founded in 1988.

L. JAMES PORTER was appointed the Company's Chief Financial Officer and
Corporate Secretary, and to the Board of Directors, in February 1995. From
September 1987 to February 1995, Mr. Porter was employed as a Senior Tax Manager
and held various other positions with Arthur Andersen, Chartered Accountants.
Mr. Porter is a Chartered Accountant and a Chartered Financial Analyst.

NEIL S. MACKENZIE, was appointed to the Board of Directors in December
1994. Mr. MacKenzie is also President of NS MacKenzie & Company Limited, a
management consulting firm, a position he has held since 1991, a partner with
the Chancellor Partners, a company engaged in management consulting,
Secretary/Treasurer of Canadian Fine Papers (B.C.) Corp., a private merchant of
fine papers, President of 509306 B.C. Limited, a private children's software
developer, President of Interlearn Holdings Ltd., a public holding company, a
Director of Mineral Solutions, Inc., a private marketer of coal combustion
products, a Director of RTDS Technologies, Inc., a private manufacturer of
software and hardware for the electric utility industry, and a Director of
Advanced Process Control Ltd., a private

<PAGE> 37

manufacturer of software for computer controlled industrial processes. From 1976
to 1991, Mr. MacKenzie was a Partner and held various other positions with Ernst
& Young, Management Consultants.

Section 16(a) of the Securities Exchange Act of 1934, and the
regulations thereunder, require the Company's directors, executive officers and
persons who own more than 10% of a registered class of the Company's equity
securities to file with the Securities and Exchange Commission initial reports
of ownership and reports of changes in ownership of Common Stock and other
equity securities of the Company, and to furnish the Company with copies of all
Section 16(a) forms they file. To the Company's knowledge, based solely on
review of the copies of such reports furnished to the Company and written
representations that no other reports were required, during the two fiscal year
ended December 31, 1997, all Section 16(a) filing requirements applicable to the
Company's officers, directors and greater than 10% beneficial owners were
complied with.

ITEM 11. EXECUTIVE COMPENSATION.

The following table sets forth certain summary information concerning
compensation paid or accrued for services rendered to the Company in all
capacities during the years ended December 31, 1995, 1996 and 1997 to Messrs.
Brandolini and Angus (the "Named Executive Officers"), each of whom served as
Chief Executive Officer of the Company during 1997. No other executive officer's
total salary and bonus for 1997 exceeded $100,000.
<TABLE>
<CAPTION>
LONG TERM
COMPENSATION AWARDS
-------------------
ANNUAL SECURITIES
COMPENSATION UNDERLYING ALL OTHER
NAME AND PRINCIPAL POSITION YEAR SALARY BONUS OPTIONS(#) COMPENSATION
--------------------------- ---- ------ ----- ---------- ------------
($) ($)
<S> <C> <C> <C> <C> <C>
Nuno Brandolini, Chairman and Chief
Executive Officer(1)......... 1996 (3) (3) 440,000 (3)
1997 (3) (3) 0 0

James P. Angus, Chairman, Chief 1995 0 0 0 0
Executive officer (3)........ 1996 0 0 0 0
1997 0 0 0 0
</TABLE>

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

(1) Mr. Brandolini resigned as Chief Executive Officer of the Company in
December 1997.

(2) Mr. Brandolini received no salary or bonus payments from the Company. Mr.
Brandolini's services were rendered to the Company through an arrangement
between the Company and Scorpion Holdings, Inc. During 1997, the Company
paid $194,876 (1996-$107,741) to Scorpion Holdings, Inc. pursuant to this
arrangement. Prior to his July 1996 appointment as Chief Executive Officer
of the Company, Mr. Brandolini received directors fees from the Company of
$4,777 in 1996.

(3) Mr. Angus was appointed Chief Executive Officer of the Company in December
1997. Prior to such appointment, Mr. Angus received directors fees from the
Company of Cdn$15,851 (1996-Cdn$14,808; 1995-Cdn$16,327).

No options to purchase shares of the Company were issued during the
fiscal year of the Company ended December 31, 1997.

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

The following table sets forth information with respect to exercises of
stock options by the Named Executive Officers during the fiscal year ended
December 31, 1997 and the number and value of securities underlying unexercised
options held by the Named Executive Officers as of December 31, 1997.

SHARES
ACQUIRED NUMBER OF SECURITIES
ON VALUE UNDERLYING UNEXERCISED VALUE OF UNEXERCISE IN-
EXERCISE REALIZED OPTIONS AT THE-MONEY OPTIONS AT
-------- -------- DECEMBER 31, 1997 (#) DECEMBER 31, 1997 ($)(1)
NAME (#) ($) EXERCISABLE/UNEXERCISABLE EXERCISABLE/UNEXERCISABLE
- ---- --- --- ------------------------- -------------------------
<S> <C> <C> <C> <C>
Nuno Brandolini ... 0 0 306,667/133,333 $0/ $0
James P. Angus..... 0 0 120,000/40,000 $0/ $0
</TABLE>

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

(1) Based on the closing price of the Common Stock of $0.24 on December 31,
1997.

DIRECTOR COMPENSATION

Directors, other than Messrs. Angus and Porter, receive a fee from the
Company equal to Cdn$1,000 per month plus Cdn$500 per meeting attended.

STOCK OPTIONS

1996 STOCK OPTION PLAN. In July 1996 the Company adopted the 1996 Stock
Option Plan (the "1996 Plan") covering an aggregate of 260,000 shares of the
Company's Common Stock. The purpose of the 1996 Plan is to attract and retain
qualified personnel, to provide additional incentives to employees, officers,
directors and consultants of the Company and to promote the success of the
Company's business. Pursuant to the 1996 Plan, the Company may grant incentive
and nonstatutory (nonqualified) stock options to key employees, officers,
directors or consultants of the Company.

The 1996 Plan is administered by the Board of Directors, which has sole
discretion and authority, consistent with the provisions of the 1996 Plan, to
determine which eligible participants will receive options, the time when
options will be granted, the terms of options granted and the number of shares
which will be subject to options granted under the 1996 Plan. The Board may also
appoint a committee to administer the 1996 Plan and, subject to applicable law,
to exercise all of the powers of the Board under the 1996 Plan. As of December
31, 1997, 260,000 options were outstanding under the 1996 Plan at a weighted
average exercise price equal to $1.25 per share.

The maximum term of a stock option under the 1996 Plan is seven years.
If an optionee terminates his or her service to the Company, the optionee may
exercise only those option shares vested as of the date of termination. The
exercise price of incentive stock options granted under the 1996 Plan must be at
least equal to the fair market value of the Common Stock subject to the option
on the date of grant. The exercise price of incentive stock options granted to
an optionee who owns stock possessing more than 10% of the voting power of the
Company's outstanding capital stock must equal to at least 110% of the fair
market value of the Common Stock subject to the option on the date of grant. The
exercise price of nonstatutory stock options granted under the 1996 Plan shall
be determined by the Board. Payment of the exercise price under an option may be
made in cash, previously acquired shares of the Company's Common Stock or such
other consideration as may be determined by the Board of Directors.

The 1996 Plan may be amended at any time by the Board of Directors,
although certain amendments would require stockholder approval. The 1996 Plan
will terminate in July 2006 unless earlier terminated by the Board.

1996 STOCK OPTION PLAN NO. 2. In August 1996, the Company adopted the
1996 Stock Option Plan No. 2 (the "1996 Plan No. 2") covering an aggregate of
2,000,000 shares of the Company's Common Stock. The purpose of the 1996 Plan No.
2 is to attract and retain qualified personnel, to provide additional incentives
to employees, officers, directors and consultants of the Company and to promote
the success of the Company's business. Pursuant to the 1996 Plan No. 2, the
Company may grant incentive and nonstatutory (nonqualified) stock options to key
employees, officers, directors or consultants of the Company.

<PAGE> 39

The 1996 Plan No. 2 is administered by the Board of Directors, which has
sole discretion and authority, consistent with the provisions of the 1996 Plan
No. 2, to determine which eligible participants will receive options, the time
when options will be granted, the terms of options granted and the number of
shares which will be subject to options granted under the 1996 Plan No. 2. The
Board may also appoint a committee to administer the 1996 Plan No. 2 and,
subject to applicable law, to exercise all of the powers of the Board under the
1996 Plan No. 2. As of December 31, 1997, 1,130,000 options were outstanding
under the 1996 Plan No. 2 at a weighted average exercise price equal to $1.25
per share.

The maximum term of a stock option under the 1996 Plan No. 2 is seven
years. If an optionee terminates his or her service to the Company, the optionee
may exercise only those option shares vested as of the date of termination and
must effect such exercise within three months, although the Board may set longer
periods for exercise of supplemental stock options. The exercise price of
incentive stock options granted under the 1996 Plan No. 2 must be at least equal
to the fair market value of the Common Stock subject to the option on the date
of grant. The exercise price of incentive stock options granted to an optionee
who owns stock possessing more than 10% of the voting power of the Company's
outstanding capital stock must equal to at least 110% of the fair market value
of the Common Stock subject to the option on the date of grant. The exercise
price of nonstatutory stock options granted under the 1996 Plan No. 2 shall be
determined by the Board. Payment of the exercise price under an option may be
made in cash, previously acquired shares of the Company's Common Stock or such
other consideration as may be determined by the Board of Directors.

The 1996 Plan No. 2 may be amended at any time by the Board of
Directors, although certain amendments would require stockholder approval. The
1996 Plan No. 2 will terminate in August 2006 unless earlier terminated by the
Board.

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.

Except as provided herein, based on review of the registered
shareholders listing, SEC filings, and limited inquiry, the Company is not aware
of any person (individual or corporate), or group of persons owning beneficially
more than 5% of the outstanding shares of the Company's voting securities.

The following table sets forth certain information regarding the
beneficial ownership of the Company's Common Stock as of April 6, 1998 by the
Company's directors, by the Named Executive Officers, by each person who is
known to be the beneficial owner of 5% or more of the Company's Common Stock and
by all directors and officers as a group. Unless otherwise indicated, the
persons named in the table possess sole voting and investment power with respect
to the shares listed (except to the extent such authority is shared with spouses
under applicable law).

SHARES OWNED BENEFICIALLY AS OF
APRIL 6, 1998
------------------------------------
NO. OF SHARES PERCENT OF CLASS(1)
------------- ------------------
<S> <C> <C>
L. James Porter.............................. 526,666(2) 4.0%
James P. Angus............................... 320,000(3) 2.5%
Neil S. MacKenzie............................ 320,000(3) 2.5%
Pierre Anthamatten........................... 900,000(4) 7.1%
Pacific Mercantile Company Limited........... 696,000(5) 5.5%
All Directors and Officers as a Group
(3 Persons) .............................. 1,166,666(6) 8.5%
</TABLE>

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

(1) Based on 12,663,113 shares of Common Stock, outstanding as of April 6, 1998.

(2) Includes 376,666 shares issuable upon exercise of options which are
exercisable within 60 days.

(3) Consists solely of shares issuable upon exercise of options which are
exercisable within 60 days.

<PAGE> 40

(4) As reported on Schedule 13D dated January 15, 1993, which Schedule 13D has
not been amended. According to such Schedule 13D, such shares are owned
directly by Olinka, S.A., a Luxembourg corporation, all of the outstanding
shares of which are owned by Mr. Anthamatten. According to such Schedule
13D, Olinka, S.A.'s business address is 3, Rue Adames, L-1114 Luxembourg.

(5) As reported on Schedule 13D dated March 5, 1998, which Schedule 13D has not
been amended. According to such Schedule 13D, such shares are owned directly
by Cross Creek Finance Group Ltd., a British Columbia corporation, all of
the outstanding shares of which are owned by Pacific Mercantile Company
Limited, an Alberta corporation. According to such Schedule 13D, Cross Creek
Finance Group Ltd.'s business address is Suite 220, 375 Water Street,
Vancouver B.C. V6B 5C6.

(6) Includes 1,016,666 shares issuable upon exercise of options which are
exercisable within 60 days.

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.

In June 1996 under the terms of two $125,000 short-term notes the
Company borrowed $250,000 from McGoodwin James & Co., a company controlled by
Hariston's then President and Chief Executive Officer, James V. McGoodwin. The
proceeds were used to fund the working capital needs of the Company's multimedia
software operations. The notes bore simple interest at a rate of 10%. In January
1997, payment on the two $125,000 notes was extended by way of conversion into a
new $250,000 note, also bearing interest at 10%. Under the terms of the new
note, payments were made by Hariston in monthly installments thereafter and the
note was fully repaid by December 15, 1997.

Upon the resignation in July 1996 of James V. McGoodwin, Nuno Brandolini
replaced Mr. McGoodwin as Chairman and Chief Executive Officer and Kevin R.
McCarthy replaced Mr. McGoodwin as President of the Company. Until their
resignations in December 1997, the services of Messrs. Brandolini and McCarthy
were rendered to the Company through an arrangement between Hariston and
Scorpion Holdings, Inc. ("Scorpion"). Under the terms of this arrangement,
Scorpion was paid a monthly fee of $20,000, which decreased to $10,000 effective
September 1997. During 1997 the Company paid $194,876 (1996-$107,741) to
Scorpion pursuant to this arrangement.

PART IV

ITEM 14. EXHIBITS, FINANCIAL STATEMENTS AND REPORTS ON FORM 8-K.

(a)Financial Statements and Schedules. The following financial
statements are included in, or incorporated by reference in, Part II, Item 8:

(1)FINANCIAL STATEMENTS FOR HARISTON CORPORATION

(i) Independent Auditors Report;

(ii) Consolidated Balance Sheets at December 31, 1997 and 1996;

(iii) Consolidated Statements of Operations and Deficit for the years
ended December 31, 1997, 1996 and 1995;

(iv) Consolidated Statements of Changes in financial position for the
years ended December 31, 1997, 1996 and 1995;

(v) Notes to Consolidated Financial Statements.

(b) REPORTS ON FORM 8-K. No reports on Form 8-K were filed by the
Company during the last quarter of the period covered by this report.

<PAGE> 41

EXHIBIT
NO. EXHIBIT DESCRIPTION
--- ------------------------------------------------------------------

<S> <C>
2.1 Asset Purchase and Sale Agreement among CD-Soft Acquisition
Corporation, Bodycello, Inc., Gazelle Technologies, Inc., Manta
Distribution Co., Educorp, L.P., and Vahe Guzelimian dated August 1,
1995 (incorporated herein by this reference to Exhibit 2.1 to the
Registrant's current report on Form 8-K filed September 11, 1995).

2.2 Agreement of Purchase and Sale dated August 1, 1995 between Hariston
Corporation and 3147479 Canada, Inc. (with included indemnity
agreement) (incorporated herein by this reference to Exhibit 2.2 to
the Registrant's Quarterly Report on Form 10-Q for the quarter ended
September 30, 1995).

2.3 Agreement and Plan of Reorganization dated December 31, 1995 by and
among CD-Soft Press Corporation, High Text Publications, Inc., Carol
Lewis, Jack Lewis and Harry Helms (incorporated herein by this
reference to Exhibit 2.1 to the Registrant's Quarterly Report on Form
10-Q for the quarter ended March 31, 1996).

3.1 Articles of Amalgamation of Hariston Corporation (incorporated herein
by this reference to Exhibit 3.1 to the Registrant's Quarterly Report
on Form 10-Q for the quarter ended September 30, 1995).

3.2 Amended and Restated Bylaws of Hariston Corporation (incorporated
herein by this reference to Exhibit 3.2 to the Registrant's Quarterly
Report on Form 10-Q for the quarter ended September 30, 1996).

4.1 Series 1995 Promissory Note between the Company and Privatim Finanz
A.G. (incorporated herein by this reference to Exhibit 4.1 to the
Registrant's Quarterly Report on Form 10-Q for the quarter ended
September 30, 1995).

4.2 Series 1995 Promissory Note between the Company and Zocal Foundation
(incorporated herein by this reference to Exhibit 4.2 to the
Registrant's Quarterly Report on Form 10-Q for the quarter ended
September 30, 1995)

4.3 Series 1995 Promissory Note between the Company and Kinaro S.A.
(incorporated herein by this reference to Exhibit 4.3 to the
Registrant's Quarterly Report on Form 10-Q for the quarter ended
September 30, 1995)

4.4 Series 1995 Promissory Note between the Company and Neval Management,
Ltd. (incorporated herein by this reference to Exhibit 4.4 to the
Registrant's Quarterly Report on Form
</TABLE>

<PAGE> 42

EXHIBIT
NO. EXHIBIT DESCRIPTION
--- ---------------------------------------------------------------
<S> <C>
10-Q for the quarter ended September 30, 1995)

4.5 Form of Pledge and Security Agreement between the Registrant and the
holders of the Registrant's Series 1995 Promissory Notes (incorporated
herein by this reference to Exhibit 4.5 to the Registrant's Quarterly
Report on Form 10-Q for the quarter ended September 30, 1995)

4.8 1996 Hariston Corporation Stock Option Plan (incorporated herein by
this reference to Exhibit 4.8 to the Registrant's Quarterly Report on
Form 10-Q for the quarter ended September 30, 1996

4.9 1996 Hariston Corporation Stock Option Plan No. 2 (incorporated herein
by this reference to Exhibit 4.9 to the Registrant's Quarterly Report
on Form 10-Q for the quarter ended September 30, 1996

10.1 Asset Purchase Agreement dated as of December 19, 1997 between Educorp
Direct, Inc., Arch Publishers Group, Inc. and Educorp LLC
(filed herewith)

10.2 Arch Publishers Group, Inc. Stockholders Agreement dated December 19,
1997 (filed herewith)

10.3 Agreement dated February 21, 1997 between HighText Interactive, Inc.
and Harry Helms, Carol Lewis and Jack Lewis (filed herewith)

10.4 Asset Purchase Agreement dated February 13, 1998 by and among Byron
Preiss Multimedia Holdings, Inc., Byron Preiss Multimedia Company,
Inc. and HighText Interactive, Inc. (filed herewith)

10.5 Agreement dated as of December 10, 1997 by and among the Company, Nuno
Brandolini and Kevin McCarthy (filed herewith)

21 Subsidiaries of the Registrant (filed herewith)

23 Consent of Arthur Andersen & Co. (filed herewith)

27 Financial Data Schedule
</TABLE>

(d) SCHEDULES.

None

<PAGE> 43

SIGNATURES

In accordance with Section 13 or 15(d) of the Securities Exchange Act of
1934, the Registrant has duly caused this report to be signed on its behalf by
the undersigned, thereunto duly authorized.

Dated: April 15, 1998

HARISTON CORPORATION

By: /s/ L. James Porter
-------------------------------------
L. James Porter
Chief Financial Officer

In accordance with the Securities Exchange Act of 1934, this report has
been signed below by the following persons on behalf of the Registrant and in
the capacities and on the dates indicated.

<TABLE>

<S> <C>
/s/ James P. Angus Dated: April 15, 1998
- -----------------------
James P. Angus
Director, Chief Executive Officer
(Principal Executive Officer)

/s/ L. James Porter Dated: April 15, 1998
- -----------------------
L. James Porter
Director, Chief Financial Officer,
Corporate Secretary
(Principal Financial Officer,
Principal Accounting Officer)

/s/ Neil S. MacKenzie Dated: April 15, 1998
- -----------------------
Neil S. MacKenzie
Director
</TABLE>

<PAGE> 44

EXHIBIT INDEX

Sequentially
Exhibit Number
No. Exhibit Description Pages
--- ---------------------------------------------------------------------- -----
<S> <C> <C>
2.1 Asset Purchase and Sale Agreement among CD-Soft Acquisition *
Corporation, Bodycello, Inc., Gazelle Technologies, Inc., Manta
Distribution Co., Educorp, L.P., and Vahe Guzelimian dated August 1,
1995 (incorporated herein by this reference to Exhibit 2.1 to the
Registrant's current report on Form 8-K filed September 11, 1995.....

2.2 Agreement of Purchase and Sale dated August 1, 1995 between Hariston *
Corporation and 3147479 Canada, Inc. (with included indemnity
agreement) (incorporated herein by this reference to Exhibit 2.2 to
the Registrant's Quarterly Report on Form 10-Q for the quarter
ended September 30, 1995)............................................

2.3 Agreement and Plan of Reorganization dated December 31, 1995 *
by and among CD-Soft Press Corporation, High Text
Publications, Inc., Carol Lewis, Jack Lewis and Harry Helms
(incorporated herein by this reference to Exhibit 2.1 to the
Registrant's Quarterly Report on Form 10-Q for the quarter
ended March 31, 1996)................................................

3.1 Articles of Amalgamation of Hariston Corporation (incorporated *
herein by this reference to Exhibit 3.1 to the Registrant's Quarterly
Report on Form 10-Q for the quarter ended September 30, 1995)........

3.2 Amended and Restated Bylaws of Hariston Corporation (incorporated *
herein by this reference to Exhibit 3.2 to the Registrant's Quarterly
Report on Form 10-Q for the quarter ended September 30, 1996)........

4.1 Series 1995 Promissory Note between the Company and Privatim *
Finanz A.G. (incorporated herein by this reference to Exhibit 4.1
to the Registrant's Quarterly Report on Form 10-Q for the quarter
ended September 30, 1995)............................................

4.2 Series 1995 Promissory Note between the Company and Zocal *
Foundation (incorporated herein by this reference to Exhibit 4.2
to the Registrant's Quarterly Report on Form 10-Q for the quarter
ended September 30, 1995)............................................

4.3 Series 1995 Promissory Note between the Company and *
Kinaro S.A. (incorporated herein by this reference to Exhibit 4.3
to the Registrant's Quarterly Report on Form 10-Q for the quarter
ended September 30, 1995)............................................

4.4 Series 1995 Promissory Note between the Company and Neval *
Management, Ltd. (incorporated herein by this reference to
Exhibit 4.4 to the Registrant's Quarterly Report on Form 10-Q
for the quarter ended September 30, 1995)............................
</TABLE>

<PAGE> 45

Sequentially
Exhibit Number
No. Exhibit Description Pages
--- ---------------------------------------------------------------------- -------------
<S> <C> <C>
4.5 Form of Pledge and Security Agreement between the Registrant *
and the holders of the Registrant's Series 1995 Promissory Notes
(incorporated herein by this reference to Exhibit 4.5 to the
Registrant's Quarterly Report on Form 10-Q for the quarter ended
September 30, 1995)....................................................................

4.8 1996 Hariston Corporation Stock Option Plan (incorporated herein *
by this reference to Exhibit 4.8 to the Registrant's Quarterly Report
on Form 10-Q for the quarter ended September 30, 1996..................................

4.9 1996 Hariston Corporation Stock Option Plan No. 2 (incorporated *
herein by this reference to Exhibit 4.9 to the Registrant's Quarterly
Report on Form 10-Q for the quarter ended September 30, 1996...........................

10.1 Asset Purchase Agreement dated as of December 19, 1997 between
Educorp Direct, Inc., Arch Publishers Group, Inc. and Educorp LLC (filed herewith)..... 48 - 64

10.2 Arch Publishers Group, Inc. Stockholders Agreement dated
December 19, 1997 (filed herewith) ................................................... 65 - 73

10.3 Agreement dated February 21, 1997 between HighText Interactive, Inc.
and Harry Helms, Carol Lewis and Jack Lewis (filed herewith) ......................... 74 - 82

10.4 Asset Purchase Agreement dated February 13, 1998 by and among
Byron Preiss Multimedia Company, Inc. and HighText Interactive, Inc (filed herewith)... 83 - 101

10.5 Agreement dated as of December 10, 1997 by and among the Company,
Nuno Brandolini and Kevin McCarthy(filed herewith) ................................... 102 - 105

21 Subsidiaries of the Registrant (filed herewith)........................................ PCN 46

23 Consent of Arthur Andersen & Co. (filed herewith)...................................... 47

27 Financial Data Schedule................................................................ 627
</TABLE>

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

* INCORPORATED BY REFERENCE.

<PAGE> 1
EXHIBIT 10.1

ASSET PURCHASE AGREEMENT

THIS AGREEMENT is made as of December 19, 1997 between Educorp Direct,
Inc., a California corporation ("Seller"), Arch Publishers Group, Inc., a New
York corporation ("Parent") and Educorp, LLC, a New York limited liability
company ("Purchaser").

R E C I T A L S

A. Seller engages in the business of distributing interactive
multimedia software with an emphasis on adult-learning titles and operating a
multimedia software catalog business (collectively, the "Business").

B. Seller desires to sell to Purchaser substantially all of Seller's
assets, properties and rights, other than the Excluded Assets, as herein defined
(the "Purchased Assets"), and Purchaser desires to purchase the Purchased
Assets, all on the terms and subject to the conditions contained in this
Agreement.

A G R E E M E N T S

Therefore, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties agree as follows:

ARTICLE I.

Purchase and Sale of Assets

1.1 Agreement to Purchase and Sell. On the terms and subject to the
conditions contained in this Agreement, Purchaser hereby purchases from Seller,
and Seller hereby sells to Purchaser, Seller's right, title and interest in the
Purchased Assets.

1.2 Enumeration of Purchased Assets. The Purchased Assets shall
include the following assets owned by Seller:

(a) all inventory, including raw materials, work in process,
finished goods, and supplies, including substantially the inventory
listed in Schedule 1.2(a) (subject to any changes since November 29,
1997) (collectively, the "Inventory");

(b) all trade accounts receivable (including substantially the
trade accounts receivable listed in Schedule 1.2(b), subject to
adjustments requested by vendors and any changes since November 29,
1997), notes receivable, negotiable instruments and chattel paper
(collectively, the "Accounts Receivable"); provided however that,
notwithstanding the foregoing, the Accounts Receivable being purchased
hereunder shall not include any amounts owed to Seller by HighText
Interactive, Inc., Educorp Multimedia, Inc., or Hariston Corporation;

48
<PAGE> 2

(d) all furniture, equipment, computer hardware, and all other
tangible personal property (other than the Inventory), including the
items presently located at 7438 Trade Street, San Diego, California
92121, but excluding in all events the assets of HighText Interactive,
Inc. and Educorp Multimedia, Inc. which are located at such address;

(e) current catalog in electronic format;

(f) all contracts, including sales orders and sales contracts,
purchase orders and purchase contracts, quotations and bids, license
agreements, distribution agreements, co-op agreements, sales
representative agreements, service agreements, supply agreements,
franchise agreements, computer software agreements and technical service
agreements;

(g) all customer lists, customer records and information
(including the mailing address database for Seller's distribution
network);

(h) all intellectual property (including the name "Educorp
Direct" but excluding Seller's corporate name), and all goodwill
associated with the intellectual property;

(i) all computer software, including all documentation and
source codes with respect to such software and licenses and leases of
software to the extent they are legally transferable by Seller;

(j) all cash, cash equivalents and investments, including the
cash in the bank accounts listed in Schedule 1.2(j).; and

(k) refunds due with respect to insurance premium payments.

1.3 Excluded Assets. The Excluded Assets shall consist of the
following items:

(a) Seller's bank accounts (other than the cash, cash
equivalents and investments therein), checkbooks and canceled checks;

(b) claims (and benefits to the extent they arise therefrom)
that relate to liabilities other than the Assumed Liabilities (as herein
defined) and assets other than the Purchased Assets;

(d) rights arising from prepaid expenses, if any, with respect
to assets not being sold hereunder;

(e) tax refunds due from federal, state and local taxing
authorities;

(f) all rights of indemnification and claims which relate to
the conduct of the Business prior to the Closing Date;

49
<PAGE> 3
(g) Seller's rights under this Agreement; and

(h) Seller's corporate name (provided that Seller will change
its corporate name if it actively engages in business after the date
hereof), Seller's corporate charter, minute and stock record books,
corporate seal, general ledger and other books of original entry,
employee records, payroll and employee benefit records, and tax returns.

ARTICLE II.

Assumption of Liabilities

2.1 Assumed Liabilities. Purchaser hereby assumes and agrees to
discharge and perform when due the following (and only the following)
liabilities and obligations of Seller (collectively, the "Assumed Liabilities"):
(i) the liabilities listed in Schedule 2.1 hereto (subject to changes since
November 29, 1997), (ii) any and all liabilities and obligations incurred on or
after November 29, 1997, (iii) without limitation of clause (i), the executory
portion of contracts (including royalty agreements, computer leases, any other
equipment leases, and the real estate lease) solely with respect to the period
after the date hereof, and (iv) up to an additional $50,000 of liabilities and
obligations.

2.2 Excluded Liabilities. Seller shall remain solely responsible for
all liabilities and obligations of Seller other than the Assumed Liabilities
(the "Excluded Liabilities"). Without limitation of the foregoing, the following
shall in all events be deemed to be Excluded Liabilities:

(a) any liabilities for legal, accounting, audit and investment
banking fees, brokerage commissions, and any other expenses incurred by
Seller in connection with the negotiation and preparation of this
Agreement and the sale of the Purchased Assets to Purchaser;

(b) any liabilities of Seller for income taxes, or for any of
the following taxes incurred prior to November 1, 1997: sales taxes, use
taxes, gross receipts taxes, personal property taxes; and any other
federal, state or local government taxes;

(d) all severance amounts and other accrued expenses (including
without limitation, accrued compensation, vacation benefits, or sick pay)
with respect to Seller's employees (except Pam Manno, Scot Caprio, Keri
Moisa, Bill Springer, and Margaret Hendrix); and

(e) all amounts owed by Seller to HighText Interactive, Inc.,
Educorp Multimedia, Inc., or Hariston Corporation.

2.3 No Expansion of Third Party Rights. The assumption by Purchaser of
the Assumed Liabilities shall not expand the rights or remedies of any third
party against the Purchaser or the Seller as compared to the rights and remedies
which such third party would have had against the Seller had the Purchaser not
assumed the Assumed Liabilities.

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<PAGE> 4
ARTICLE III.

Purchase Price and Manner of Payment

3.1 Purchase Price. The "Purchase Price" of the Purchased Assets is
(i) 3.5294 shares (the "Shares") of common stock, no par value, of Parent (which
Shares upon issuance shall constitute 15% of the issued and outstanding shares
of capital stock of Parent), plus (ii) the Assumed Liabilities.

3.2 Manner of Payment of the Purchase Price. Purchaser hereby assumes
the Assumed Liabilities. Contemporaneously herewith, Purchaser shall deliver to
Seller a stock certificate issued in the name of Seller evidencing the Shares.

3.3 Cash Infusion. Hariston Corporation, Inc., a Canadian corporation
and the indirect parent of Seller ("Hariston"), shall make a cash capital
contribution to Seller on the date hereof in the amount of US $74,625.00 (the
"Cash Infusion").

3.4 Allocation of Purchase Price. The parties agree that the portion
of the Purchase Price allocable to Seller's fixed assets is $10,000.

ARTICLE IV

Representations and Warranties

4.1 Representations and Warranties of Parent and Purchaser. Parent and
Purchaser jointly and severally represent and warrant to Seller that:

(a) Parent is a corporation duly organized, existing and in
good standing, under the laws of the State of New York. Purchaser is a
limited liability company duly organized, existing and in good standing,
under the laws of the State of New York.

(b) Parent has full corporate power and authority to enter into
and perform (x) this Agreement and (y) all documents and instruments to
be executed by Parent pursuant to this Agreement (collectively, "Parent's
Ancillary Documents"). This Agreement and Parent's Ancillary Documents
have been duly executed and delivered by a duly authorized officer of
Parent.

Purchaser has full limited liability company power and authority
to enter into and perform (x) this Agreement and (y) all documents and
instruments to be executed by Purchaser pursuant to this Agreement
(collectively, "Purchaser's Ancillary Documents"). This Agreement and
Purchaser's Ancillary Documents have been duly executed and delivered by
the manager of Purchaser.

(c) No consent, authorization, order or approval of, or filing
or registration with, any governmental authority or other person is
required for the execution and delivery by Purchaser of this Agreement
and Purchaser's Ancillary Agreements, and the consummation by Purchaser
of the transactions contemplated by this Agreement and Purchaser's
Ancillary Documents.

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<PAGE> 5
(d) Neither the execution and delivery of this Agreement and
Purchaser's Ancillary Documents by Purchaser, nor the execution and
delivery of this Agreement and Parent's Ancillary Documents by Parent,
nor the consummation by Purchaser and Parent of the transactions
contemplated hereby, will conflict with or result in a breach of any of
the terms, conditions or provisions of Parent's Certificate of
Incorporation or By-laws, or Purchaser's articles of organization or
operating agreement, or of any statute or administrative regulation, or
of any order, writ, injunction, judgment or decree of any court or
governmental authority or of any arbitration award.

(e) Neither Purchaser nor Parent is a party to any unexpired,
undischarged or unsatisfied written or oral contract, agreement,
indenture, mortgage, debenture, note or other instrument under the terms
of which performance by Purchaser or Parent according to the terms of
this Agreement will be a default, or whereby timely performance by
Purchaser or Parent according to the terms of this Agreement may be
prohibited, prevented or delayed.

(f) Neither Purchaser nor Parent , nor any of their respective
Affiliates has dealt with any person or entity who is or may be entitled
to a broker's commission, finder's fee, investment banker's fee or
similar payment for arranging the transactions contemplated hereby or
introducing the parties to each other. As used herein, an "Affiliate" is
any person or entity which controls a party to this Agreement, which that
party controls, or which is under common control with that party.
"Control" means the power, direct or indirect, to direct or cause the
direction of the management and policies of a person or entity through
voting securities, contract or otherwise.

(g) This Agreement and each of Purchaser's Ancillary Documents
constitutes the legal, valid and binding obligation of Purchaser
enforceable against Purchaser in accordance with their respective terms.
This Agreement and each of Parent's Ancillary Documents constitutes the
legal, valid and binding obligation of Parent enforceable against Parent
in accordance with their respective terms.

(h) The authorized capital stock of Parent consists of a single
class of 200 shares of common stock, no par value ("Common Stock"), of
which 20 shares are issued and outstanding. There are no shares of
capital stock of Parent of any other class authorized, issued or
outstanding. All of the issued and outstanding shares of Common Stock
have been validly issued and are fully paid and nonassessable. The
Shares, when issued to Seller pursuant hereto, shall be validly issued,
fully paid and nonassessable. As of the date hereof, after giving effect
to the issuance of the Shares to the Seller, the only issued and
outstanding capital stock of Seller consists of (i) 20 shares of Common
Stock owned of record and beneficially by Arthur Frischman and (ii)
3.5294 shares of Common Stock owned of record and beneficially by Seller.
There are no outstanding subscriptions, options, warrants, rights
(including preemptive rights), calls, convertible securities or other
agreements or commitments of any character relating to the issued or
unissued capital stock or other securities of the Parent obligating the
Parent to issue any securities of any kind. As of the date hereof (after
giving effect to the issuance of the Shares to Seller), Seller owns
fifteen percent (15%) of the issued and outstanding shares of Common
Stock of the Parent. Purchaser is a wholly-owned subsidiary of Parent.
There are no outstanding subscriptions, options, warrants, rights
(including preemptive rights), calls, convertible securities or other
agreements or commitments of any character relating to the issued or
unissued limited liability company interests in Purchaser obligating the
Purchaser to issue any securities of any kind.

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<PAGE> 6
4.2 Seller's Representations and Warranties. Seller represents and
warrants to Purchaser that:

(a) Seller is a corporation duly organized, existing and in
good standing, under the laws of the State of California. Seller has all
necessary corporate power and authority to conduct the Business as the
Business is now being conducted.

(b) Seller has qualified as a foreign corporation, and is in
good standing, under the laws of all jurisdictions where the nature of
the Business or the nature or location of its assets requires such
qualification and where the failure to so qualify would have a "Material
Adverse Effect" (as herein defined). For the purposes of this Agreement,
"Material Adverse Effect" means a material adverse effect on the assets,
liabilities, financial condition or results of operations of the
Business, taken as a whole.

(c) Seller has full corporate power and authority to enter into
and perform (x) this Agreement and (y) all documents and instruments to
be executed by Seller pursuant to this Agreement (collectively, "Seller's
Ancillary Documents"). This Agreement and Seller's Ancillary Documents
have been duly executed and delivered by duly authorized officers of
Seller.

(d) No consent, authorization, order or approval of, or filing
or registration with, any governmental authority is required for the
execution and delivery of this Agreement and Seller's Ancillary Documents
and the consummation by Seller of the transactions contemplated by this
Agreement and Seller's Ancillary Documents.

(e) Neither the execution and delivery of this Agreement and
Seller's Ancillary Documents by Seller, nor the consummation by Seller of
the transactions contemplated hereby, will conflict with or result in a
breach of any of the terms, conditions or provisions of Seller's
Certificate of Incorporation or By-laws, or of any statute or
administrative regulation, or of any order, writ, injunction, judgment or
decree of any court or any governmental authority or of any arbitration
award.

(f) Copies of the unaudited financial statements of Seller, as
of and for the year ended December 31, 1996 have previously been provided
to Purchaser. Said financial statements present fairly, in all material
respects, the financial position of Seller as of the dates thereof, and
the statement of operations and deficit of Seller for the periods covered
by said statements, in accordance with generally accepted accounting
principles, consistently applied, except as disclosed therein.

(g) With respect to employees of Seller, Seller does not
maintain, administer or contribute to any employee pension benefit plan
(as defined in Section 3(2) of the Employee Retirement Income Security
Act of 1974, as amended ("ERISA"), whether or not excluded from coverage
under specific Titles or Subtitles of ERISA) for the benefit of employees
of the Seller (a "Pension Plan").

(h) To Seller's Knowledge (as defined herein), except for
threatened litigation by creditors, there is no litigation or proceeding,
in law or in equity, and there are no proceedings or governmental
investigations before any commission or other administrative authority,
pending or overtly threatened, against Seller, or with respect to the
consummation of the transactions

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<PAGE> 7
contemplated hereby, or the use of the Purchased Assets (whether used by
Purchaser after the Closing or by Seller prior thereto) which if decided
adversely to Seller would have a Material Adverse Effect.

(i) Seller owns no real estate.

(j) Neither Seller, nor any of its Affiliates, has dealt with
any person or entity who is or may be entitled to a broker's commission,
finder's fee, investment banker's fee or similar payment from Seller for
arranging the transactions contemplated hereby or introducing the parties
to each other.

(k) Seller is acquiring the Shares for its own account for
investment and with no present intention of distributing or reselling
such shares or any part thereof in any transaction which would constitute
a "distribution" within the meaning of the Securities Act of 1933, as
amended (the "Securities Act"). Purchaser understands that the Shares
have not been registered under the Securities Act or any state securities
laws.

4.3 Limitation on Warranties.

(a) Except as expressly set forth in Section 4.2, Seller makes
no express or implied warranty of any kind whatsoever, including any
representation as to physical condition or value of any of the Purchased
Assets or the future profitability or future earnings performance of the
Business. ALL IMPLIED WARRANTIES OF MERCHANTABILITY AND FITNESS FOR A
PARTICULAR PURPOSE ARE EXPRESSLY EXCLUDED. Except as expressly set forth
in Section 4.2, the Purchased Assets are being sold "AS IS, WHERE IS."

(b) Notwithstanding the foregoing, the Purchaser acknowledges
that the shareholders of Hariston have not approved the transaction
contemplated hereby, and agrees that each of Seller's representations and
warranties in Section 4.2 is qualified by that fact.

4.4 Definition of Knowledge. For the purposes of this Agreement, the
knowledge of Seller shall be deemed to be limited to the actual knowledge as of
the date hereof of L. James Porter, without giving effect to imputed knowledge.

ARTICLE V.

Deliveries

5.1 Purchaser's Deliveries. Concurrently with the execution and
delivery of this Agreement, Purchaser shall execute and/or deliver to Seller all
of the following:

(a) the stock certificate for the Shares, issued in the name of
Seller;

(b) a copy of Parent's Certificate of Incorporation and
By-laws, certified by Purchaser's secretary;

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<PAGE> 8
(c) a copy of Purchaser's Articles of Organization, certified
by Purchaser's manager;

(d) certificates of good standing of Parent, issued not earlier
than twenty days prior to the date hereof by the Secretary of State of
New York;

(e) a certified copy of resolutions of Purchaser's board of
directors, authorizing the execution, delivery and performance of this
Agreement and Purchaser's Ancillary Documents;

(f) a resale certificate with respect to Purchaser's purchase
of the Inventory;

(g) without limitation by the specific enumeration of the
foregoing, all other documents reasonably required from Purchaser to
consummate the transactions contemplated hereby.

5.2 Seller's Deliveries. Concurrently with the execution and delivery
of this Agreement, Seller shall deliver to Purchaser physical possession of all
tangible Purchased Assets, and shall execute (where applicable in recordable
form) and/or deliver to Purchaser all of the following:

(a) certified copies of Seller's Certificate of Incorporation
and By-laws;

(b) certificates of good standing of Seller, issued not earlier
than twenty days prior to the date hereof by the Secretary of State of
California;

(c) a certified copy of resolutions of Seller's board of
directors and sole stockholder, authorizing the execution, delivery and
performance of this Agreement and Seller's Ancillary Documents;

(d) assignments of registered trademarks and copyrights, if
any;

(e) UCC, federal and state tax lien, bankruptcy and judgment
searches with respect to Seller; and

(f) without limitation by the specific enumeration of the
foregoing, all other documents reasonably required from Seller to
consummate the transactions contemplated hereby.

5.3 Joint Deliveries. Concurrently with the execution and delivery
hereof, the parties shall execute and deliver, or cause to be executed and
delivered, to each other:

(a) all legally required transfer tax declarations, if any,
concerning the Purchased Assets; and

(b) a shareholder's agreement.

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<PAGE> 9
ARTICLE VII

Post-Closing Agreements

7.1 Post-Closing Agreements. From and after the Closing, the parties
shall have the respective rights and obligations which are set forth in the
remainder of this Article VII.

7.2 Inspection of Records. Seller and Purchaser shall each retain and
make their respective books and records (including work papers in the possession
of their respective accountants) available for inspection by the other party, or
by its duly accredited representatives, for reasonable business purposes at all
reasonable times during normal business hours, for a five (5) year period after
the date hereof, with respect to all transactions occurring prior to the date
hereof or relating to the consummation of the transactions contemplated hereby,
and the historical financial condition, assets, liabilities, operations and cash
flows of Seller, or the Assumed Liabilities. As used in this Section 7.2, the
right of inspection includes the right to make extracts or copies. The
representatives of a party inspecting the records of the other party shall be
reasonably satisfactory to the other party.

7.3 Use of Trademarks; References to Seller. Seller shall cease to use
and shall not license or permit any third party to use the name "Educorp
Direct", or any name, slogan, logo or trademark which is similar or deceptively
similar to any of the Trademarks or the name "Educorp Direct". Purchaser may
refer to its Business as formerly being Seller's. Seller shall have no
obligation to change its corporate name; provided that it must do so before
actively engaging in business after the date hereof.

7.4 Payments of Accounts Receivable. In the event Seller shall receive
any instrument of payment of any of the Accounts Receivable, Seller shall
forthwith deliver it to Purchaser, endorsed where necessary, without recourse,
in favor of Purchaser.

7.5 Non-Assignment. Notwithstanding any provision to the contrary
contained herein, Seller shall not be obligated to assign to Purchaser any
contract, purchase order, sales order, lease or other instrument which provides
that it may not be assigned without the consent of the other party thereto and
for which such consent is not obtained, but in any such event, Seller shall
cooperate with Purchaser in any reasonable arrangement designed to provide the
benefits thereof to Purchaser.

7.6 Further Assurances. The parties shall execute such further
documents, and perform such further acts, as may be necessary to transfer and
convey the Purchased Assets to Purchaser, on the terms herein contained, and to
otherwise comply with the terms of this Agreement and consummate the
transactions contemplated hereby.

7.7 Frischman Loan. During the first twelve (12) months after the date
hereof, Purchaser shall not issue any capital stock (or options, warrants or
other rights to acquire capital stock) in order to raise funds unless Purchaser
on or prior to the date of such issuance has borrowed at least US $150,000.00
from Arthur Frischman, which loan shall provide for straight line amortization
of principal and interest over a three year period and shall bear interest at no
more than the Prime Rate plus three percent (3%) per annum. As used herein,
"Prime Rate" means the rate announced by Bank of America from time to time as
its prime or reference rate.

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<PAGE> 10
7.8 Amendments to Certificate of Incorporation and By-Laws of Parent.
No later than five (5) business days after the date hereof, Parent shall, if it
has not already done so, amend its Certificate of Incorporation and Bylaws as
provided in Exhibit A hereto. Parent shall promptly provide to Seller copies of
such amendments (which, in the case of the amendment to the Certificate of
Incorporation, shall be a copy or an original of the amendment as certified by
the New York Secretary of State).

ARTICLE VIII.

Indemnification

8.1 General. From and after the Closing, the parties shall indemnify
each other as provided in this Article VIII. As used in this Agreement, the term
"Damages" shall mean all liabilities, demands, claims, actions or causes of
action, regulatory, legislative or judicial proceedings or investigations,
assessments, levies, losses, fines, penalties, damages, costs and expenses,
including reasonable attorneys' fees and expenses.

8.2 Indemnification Obligations of Seller. Subject to the provisions
of Section 8.3, Seller shall indemnify, save and keep harmless Purchaser and its
successors and permitted assigns ("Purchaser Indemnitees") against and from all
Damages sustained or incurred by any of them resulting from or arising out of or
by virtue of:

(a) any inaccuracy in or breach of any representation and
warranty made by Seller in this Agreement or in any closing document
delivered to Purchaser in connection with this Agreement;

(b) any breach by Seller of, or failure by Seller to comply
with, any of its covenants or obligations under this Agreement (including
its obligations under this Article VIII); and

8.3 Limitation on Seller's Indemnification Obligations. Seller's
obligations pursuant to the provisions of Section 8.2 are subject to the
following limitations:

(a) the Purchaser Indemnitees shall not be entitled to recover
under Section 8.2(a): (i) until the total amount which Purchaser would
recover under Section 8.2(a), but for this Section 8.3(a), exceeds
$25,000, and then only for the excess over $25,000; (ii) unless a claim
for Damages has been asserted by written notice, specifying the details
of the alleged misrepresentation or breach of warranty, delivered to
Seller on or prior to April 30, 1999; or (iii) if on or before the date
hereof Purchaser had actual knowledge of the misrepresentation or breach
of warranty;

(b) the Purchaser Indemnitees shall not be entitled to recover
under Section 8.2(b) or (c) hereof if indemnification is also available
under Section 8.2(a) hereof;

(i) with respect to title to the Leased Premises;

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<PAGE> 11
(ii) WITH RESPECT TO CONSEQUENTIAL DAMAGES, INCLUDING
CONSEQUENTIAL DAMAGES CONSISTING OF BUSINESS INTERRUPTION OR LOST
PROFITS, OR WITH RESPECT TO PUNITIVE DAMAGES;

(iii) to the extent aggregate Damages under Section 8.3(a)
exceed the then value of the Shares;

(iv) to the extent the Damages are covered by insurance
(including title insurance) held by Purchaser;

(v) with respect to the nonassignability or
nontransferability of any of the Purchased Assets or Assumed
Liabilities or the failure to obtain any consent, or conditions
imposed incident to the giving of any consent, required in
connection with, or as a consequence of, the transfer of any of
the Purchased Assets to, or the assumption of the Assumed
Liabilities by, Purchaser;

(d) the amount of any recovery pursuant to Section 8.2 shall be
net of any income tax benefits inuring to the Purchaser Indemnitees as a
result of the state of facts which entitled the Purchaser Indemnitees to
recover from Seller pursuant to Section 8.2.

(e) this paragraph 8.3 shall not apply to and does not limit
Seller's representations and warranties regarding corporate power and
authority to enter into and fully perform this agreement.

(f) this paragraph 8.3 shall not apply to Seller's obligations
pursuant to Section 2.2 and 9.1 of this agreement and there shall be no
limitation as to Seller's obligation to indemnify Purchaser with regard
to all liabilities, if any, that may arise pursuant to 2.2 of this
Agreement.

8.4 Limited Recourse. Notwithstanding any provision to the contrary
contained in this Agreement, Purchaser's sole recourse with respect to Seller's
obligations under this Article VIII (including any judgment with respect
thereto) shall be against the Shares, and Purchaser shall no recourse with
respect to such obligations against any other assets of Seller or any assets of
any other person or entity. Seller shall continue to hold the Shares until the
later of (i) April 30, 1999 or (ii) the date that all timely claims by Purchaser
for indemnification hereunder have been finally determined and satisfied.

8.5 Purchaser's Indemnification Covenants. Purchaser shall indemnify,
save and keep harmless Seller and its successors and permitted assigns against
and from all Damages sustained or incurred by any of them resulting from or
arising out of or by virtue of:

(a) any inaccuracy in or breach of any representation and
warranty made by Purchaser in this Agreement or in any closing document
delivered to Seller in connection with this Agreement;

(b) any breach by Purchaser of, or failure by Purchaser to
comply with, any of its covenants or obligations under this Agreement
(including its obligations under this Article VIII); or

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8.6 Indemnification Exclusive Remedy. Indemnification pursuant to the
provisions of this Article VIII shall be the exclusive remedy of the parties for
any misrepresentation or breach of any warranty or covenant contained herein or
in any closing document executed and delivered pursuant to the provisions hereof
with respect to any matter which is the subject of this Article VIII. Without
limiting the generality of the preceding sentence, no legal action sounding in
tort or strict liability may be maintained by any party.

ARTICLE IX.

Miscellaneous

9.1 Sales and Transfer Taxes. Seller shall pay all sales, use,
transfer and conveyance taxes arising in connection with the sale and transfer
of the Purchased Assets to Purchaser pursuant to this Agreement.; provided,
however, that Purchaser shall pay all such taxes to the extent (and only to the
extent) that the resale certificate provided by it is inadequate.

9.2 Notices. All notices required or permitted to be given hereunder
shall be in writing and may be delivered by hand, by facsimile, by nationally
recognized private courier, or by United States mail. Notices delivered by mail
shall be deemed given three (3) business days after being deposited in the
United States mail, postage prepaid, registered or certified mail. Notices
delivered by hand by facsimile, or by nationally recognized private carrier
shall be deemed given on the first business day following receipt; provided,
however, that a notice delivered by facsimile shall only be effective if such
notice is also delivered by hand, or deposited in the United States mail,
postage prepaid, registered or certified mail, on or before two (2) business
days after its delivery by facsimile. All notices shall be addressed as follows:

If to Seller
Addressed to

Hariston Corporation
1500 West Georgia Street, Suite 1555
Vancouver, B.C. V6G 2Z6
Attention: L. James Porter, Chief Financial Officer
Telecopier: (604) 685-8534

with a copy to

Altheimer & Gray
10 South Wacker Drive
Suite 4000
Chicago, Illinois 60606
Attention: Nancy Kasko, Esq. and Stephen Otis, Esq.
Telecopier: (312) 715-4800

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If to Purchaser or Parent,
Addressed to

Arch Publishers Group, Inc.
134 Saw Mill River Road
Elmsford, NY 10523
Attention: Arthur Frischman, President
Telecopier: (914) 347-0217

with a copy to

Stanley J. Somer & Associates, P.C.
2171 Jericho Turnpike
Suite 350
Commack, New York 11725
Attention: Jeffrey T. Heller
Telecopier: 516-462-2338

and/or to such other respective addresses and/or addressees as may be designated
by notice given in accordance with the provisions of this Section 9.2.

9.3 Expenses. Subject to Article VIII, each party hereto shall bear
all fees and expenses incurred by such party in connection with, relating to or
arising out of the execution, delivery and performance of this Agreement and the
consummation of the transactions contemplated hereby, including attorneys',
accountants' and other professional fees and expenses.

9.4 Entire Agreement. This Agreement and the instruments to be
delivered by the parties pursuant hereto constitute the entire agreement between
the parties. Each exhibit, schedule and the Disclosure Schedule shall be
considered incorporated into this Agreement. Any matter which is disclosed in
any portion of the Disclosure Schedule is deemed to have been disclosed for the
purposes of all relevant provisions of this Agreement. The inclusion of any item
in the Disclosure Schedule is not evidence of the materiality of such item for
the purposes of this Agreement and Seller's Ancillary Documents. The parties
make no representations or warranties to each other, except as contained in this
Agreement. Purchaser acknowledges that it has conducted an independent
investigation of the financial condition, assets, liabilities, properties and
projected operations of the Business in making its determination as to the
propriety of the transactions contemplated by this Agreement, and in entering
into this Agreement has relied solely on the results of said investigation and
on the representations and warranties of Seller expressly contained in this
Agreement.

9.5 Non-Waiver. The failure in any one or more instances of a party to
insist upon performance of any of the terms, covenants or conditions of this
Agreement, to exercise any right or privilege in this Agreement conferred, or
the waiver by said party of any breach of any of the terms, covenants or
conditions of this Agreement, shall not be construed as a subsequent waiver of
any such terms, covenants, conditions, rights or privileges, but the same shall
continue and remain in full force and effect as if no such forbearance or waiver
had occurred. No waiver shall be effective unless it is in writing and signed by
an authorized representative of the waiving party.

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9.6 Applicable Law. This Agreement shall be governed and controlled as
to validity, enforcement, interpretation, construction, effect and in all other
respects by the internal laws of the State of New York applicable to contracts
made in that State.

9.7 Binding Effect; Benefit. This Agreement shall inure to the benefit
of and be binding upon the parties hereto, and their successors and permitted
assigns. Nothing in this Agreement, express or implied, is intended to confer on
any person or entity other than the parties hereto, and their respective
successors and permitted assigns any rights, remedies, obligations or
liabilities under or by reason of this Agreement, including third party
beneficiary rights.

9.8 Assignability. This Agreement shall not be assignable by either
party without the prior written consent of the other party.

9.9 Amendments. This Agreement shall not be modified or amended except
pursuant to an instrument in writing executed and delivered on behalf of each of
the parties hereto.

9.10 Headings. The headings contained in this Agreement are for
convenience of reference only and shall not affect the meaning or interpretation
of this Agreement.

9.11 Construction. As used herein, (i) "including" and "include" means
including without limitation, and (ii) "hereof", "herein" and "hereunder" each
refer to this Agreement, not just to the section or provision in which such term
appears.

[Remainder of page intentionally blank]

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IN WITNESS WHEREOF, the parties have executed this Asset Purchase
Agreement as of the date first above written.

SELLER:

EDUCORP DIRECT, INC.

By: /s/ L. JAMES PORTER
-------------------------------------

Its: Secretary, Chief Financial Officer
-----------------------------------

PURCHASER:

EDUCORP, L.L.C.

By: /s/ ARTHUR FRISCHMAN
-------------------------------------
Arthur Frischman
Its: Manager

PARENT:

ARCH PUBLISHERS GROUP, INC.

By: /s/ ARTHUR FRISCHMAN
-------------------------------------
Arthur Frischman
Its: President

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EXHIBIT A

1. Certificate of Incorporation. The Certificate of Incorporation of Parent
shall be amended by adding a new Article SEVENTH as follows:'

"The Corporation shall not issue any shares of its capital stock (or any
options, warrants or other rights directly or indirectly to acquire such
shares) ("Offered Securities") unless it first offers in writing to each
of the then stockholders of the Corporation the right to buy a pro-rata
portion (based on such stockholder's percentage ownership of the common
stock of the Corporation) of the Offered Securities at a specified cash
price. Each stockholder may elect (by written notice to the Corporation
and the other stockholder(s) within thirty days after receipt of such
offer) to accept such offer as to some or all of the Offered Securities.
To the extent that the stockholders do not so elect to accept such offer
within such 30 day period, then the Corporation shall have the right (but
not the obligation) to sell the Offered Securities during the six month
period following the expiration of said 30 day period at a cash price
that is no lower than that specified in the offer notice. After the
expiration of said six month period, any subsequent offering by the
Corporation must comply with the above pre-emptive rights provisions.
Notwithstanding the foregoing, this Article SEVENTH does not apply to:
(i) to the issuance of 3.5294 shares to Educorp Direct, Inc. on or about
December 19, 1997; (ii) a public offering; or (iii) any offering after
the Corporation becomes a public company. The Corporation shall not
authorize or permit the issuance or transfer to any person or entity
(except itself) of any shares of capital stock or other ownership
interests (or options, warrants or other rights to acquire same) in any
of its direct or indirect subsidiaries (including without limitation
Educorp LLC), unless it has first offered such stock or ownership
interests to the stockholders of the Corporation in a similar manner as
set forth above and designated in this Article as preemptive rights. This
Article SEVENTH shall not be amended without the consent of holders of
ninety-five percent (95%) of the issued and outstanding share of each
class of capital stock of the Corporation."

2. By-Laws: The By-Laws of Parent shall be amended (if they have not already
been so amended) as follows:

(a) amend Article III, Section 1 to permit directors to be designees
of shareholders;

(b) amend Article III, Section 2 in its entirety, so that it reads
"The number of directors shall be four."; and

"ARTICLE XII - INDEMNIFICATION

"The corporation shall indemnify each of its directors to the
maximum extent permitted under applicable law with respect to any
and all claims, actions, lawsuits, damages, expenses (including
reasonably attorney's fees) and liabilities in connection with his
actions or omissions as a director (a "Claim"). In addition, the
corporation shall advance to such director the expenses (including
reasonable attorney's fees) of defending against any and all such
Claims to the maximum extent and at the earliest time permitted
under applicable law.

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This provision shall be directly enforceable by the directors of
the Corporation as a contract right."

<PAGE> 1
EXHIBIT 10.2

ARCH PUBLISHER'S GROUP, INC.
STOCKHOLDERS AGREEMENT
----------------------

AGREEMENT made this 19 day of December, 1997, by and among ARCH PUBLISHER'S
GROUP, INC., a New York Corporation (the "Corporation"), ARTHUR M. FRISCHMAN,
residing at 1374 Midland Avenue, Apartment 311, Bronxville, New York 10708
(hereinafter "Frischman") and EDUCORP DIRECT, INC., a California Corporation
with an office located at c/o Hariston Corporation, 1500 West Georgia Street,
Vancouver, B.C. V6G 2Z6 (hereinafter "Educorp Direct"), both Frischman and
Educorp Direct being shareholders of the corporation.

W I T N E S S E T H:
- - - - - - - - - -

WHEREAS, the aggregate number of shares which the Corporation has been
authorized to issue is two hundred (200) common shares, no par value; and

WHEREAS, it is desired by the parties by this Agreement to fix the
relationship, rights and obligations of and among the shareholders hereto
respecting their stock ownership and for other purposes;

NOW, THEREFORE, in consideration of the promises and of the mutual
covenants of the parties hereto, as herein contained, it is mutually agreed
among them:

1. (a) That Frischman is the holder of twenty (20) shares of stock under
Certificate #1 of the Corporation.

(b) That Educorp Direct is the holder of three and five thousand two
hundred ninety four ten thousandths (3.5294) shares of stock under Certificate
#2 of the Corporation.

2. The parties hereto agree:

(a) The following directors have been elected and the parties will
continue to cause them to be re-elected for the Corporation:

1. Arthur M. Frischman

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<PAGE> 2
(b) That after the date of this agreement, there shall be four
directors and the parties shall elect and continue to cause them to be reelected
for the Corporation:

1. Arthur M. Frischman
2. Ted Rubel
3. Andrew Schulkind
4. A designee of Educorp Direct who
shall be L. James Porter

(c) That Arthur Frischman shall have the absolute and exclusive right
to elect three (3) directors of his choice to the board of directors and Educorp
Direct, Inc. shall have the exclusive and absolute right to elect one (1)
director of its choice to the board of directors.

(d) The following officers have been elected for the Corporation:

President: Arthur M. Frischman
Secretary/Treasurer: Arthur M. Frischman

3. (a) That until the date (the "Expiration Date") that is the earlier
of (i) the third anniversary of the date hereof or (ii) such time as the
corporation becomes a public company, whichever event first occurs, no
Stockholder, his heirs, executors or administrators shall sell, assign,
transfer, pledge, encumber or in any way dispose of any or all of the shares of
stock of the Corporation that may now or hereinafter be held by such
Stockholder, unless such shares have first been offered for sale to the
Corporation and then other stockholders.

(b) That such offer shall be in writing for a specific cash price per
share and shall state that the offer or offers to sell to the Corporation or to
the other stockholders any or all of the shares of stock held or owned by the
offering Stockholders and such offer, signed by the offeror shall be sent by
registered mail to the Corporation and a duplicate copy of such offer as signed
and mailed shall similarly be sent by registered mail to the other stockholders
or parties to this Agreement.

(c) That in the event the Corporation has sufficient surplus from
which to purchase the said shares so offered for sale, then the Corporation
shall have a period of fifteen (15) days from the receipt of said offer within
which to

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<PAGE> 3

determine whether or not it shall accept said offer, and if the said
Corporation, having a sufficient surplus therefor, elects to accept such offer,
the said Corporation shall, within such period of fifteen (15) days from the
receipt of said offer so signify in writing, duly signed on its behalf by the
other Stockholders to the offering Stockholders and such acceptance shall be
sent by certified mail to the offering Stockholders.

(d) That in the event the Corporation, because of a lack of
sufficient surplus, shall be unable to purchase any or all of such shares of
stock, or shall fail to accept the offer so made to it, then the other
stockholders shall have the right to purchase, pro rata to the relation of
shares such Stockholder holds to the number of issued and outstanding shares,
from the offeror the shares of stock remaining unaccepted at the expiration of
such fifteen (15) days as though at the expiration of such fifteen (15) days, an
offer to sell the same were then made by the offering Stockholders under the
preceding paragraphs of this Article, and such other Stockholders shall act upon
the right hereby so granted (hereinafter called the "re-offer") before the
expiration of a period of fifteen (15) days following the fifteen (15) days
hereinbefore described, in the same manner as if an offer had been made to them
under the preceding paragraphs of this Article.

(e) That if any offer made as aforesaid, or any re-offer made as
provided in paragraph "(d)" of this Article, shall have been accepted as
hereinabove provided, the shares of stock so accepted for purchase shall be
delivered and paid for by the accepting Stockholders or the Corporation in the
manner and at the price provided in this offer, and no shares of stock of the
Corporation held or owned by the Stockholders shall be transferable in any other
manner or to any other person, firm, association or corporation, until said
Corporation and/or the other Stockholders to whom such offer or re-offer
required to be made as aforesaid shall have refused in writing or shall have
failed to accept the offer or re-offer therefor, or made payment therefor within
the periods hereinabove or hereinafter provided.

(f) That if any of the shares of stock so offered or re-offered for
purchase shall not be accepted for purchase as and within the period or periods
of time above prescribed, then the offering Stockholder shall have the right
(but not the obligation), during the six (6) months after the expiration of the
periods of time as hereinabove set forth to offer or re-offer the said stock for
sale at a price no lower than the price offered to the

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<PAGE> 4
Corporation or other shareholders. After such six (6) month period is over,
Seller must comply again with this Section 3 with regard to any sale prior to
the Expiration Date.

4. The death of any Stockholder, the dissolution of or transfer of any
stockholder shall be deemed an offer to sell the shares of the deceased,
dissolved or transferred Stockholder under and pursuant to the provisions of
Paragraph "3" of this Agreement, at the then fair market value.

5. That in order to more fully effectuate the intent of the respective
parties hereto, the certificate or certificates representing the shares of
common capital stock of the Corporation shall have endorsed on them the
following:

"Transfer, bequest, devise, hypothecation, negotiation,
assignment, pledge, sale or other disposition of this share
certificate and the shareholdings represented hereby are
restricted by and are subject to all of the terms,
conditions and provisions of a certain Shareholder's
Agreement entered into among the shareholders of the
Corporation as of the 19th day of December, 1997 and all
amendments thereto, a copy of which is on file at the
principal office of the Corporation."

6. Any sale, assignment, transfer, pledge or other distribution of any of
the shares of stock of the Corporation owned by the said Stockholders in
contravention to the provisions herein contained shall be of no force and the
said Corporation is by these presents authorized and directed not to make any
assignment of such shares in contravention to the terms of this Agreement.

7. The Corporation shall not issue any shares of its capital stock (or
any options, warrants or other rights directly or indirectly to acquire such
shares) ("Offered Securities") unless it first offers in writing to each of the
then stockholders of the Corporation the right to buy a pro-rata portion (based
on such stockholder's percentage ownership of the Corporation) of the Offered
Securities at a specified cash price. Each stockholder may elect (by written
notice to the Corporation and the other stockholder(s) within thirty days after
receipt of such offer) to accept such offer as to some or all of the Offered
Securities. To the extent that the stockholders do not so elect to accept such

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<PAGE> 5
offer within such 30 day period, then the Corporation shall have the right (but
not the obligation) to sell the Offered Securities during the six month period
following the expiration of said 30 day period at a cash price that is no lower
than that specified in the offer notice. After the expiration of said six month
period, any subsequent offering by the Corporation must comply with the above
pre-emptive rights provisions. Such provisions do not apply to the issuance of
3.5294 shares to Educorp Direct, Inc. on or about December 19, 1997 or to a
public offering. The Corporation shall not authorize or permit the issuance or
transfer to any person or entity (except itself) of any shares of capital stock
or other ownership interests (or options, warrants or other rights to acquire
same) in any of its direct or indirect subsidiaries (including without
limitation Educorp LLC), unless it has first offered such stock or other
ownership interests to the stockholders of Arch in a similar manner as set forth
and designated in this paragraph as preemptive rights.

8. The parties hereto agree to execute any papers, resolutions or
agreements and will do any and all other acts that may be necessary to
effectuate the terms of this Agreement.

9. No agreement of the parties hereto shall have the effect of
discharging this Agreement or of changing or modifying it or any part thereof
unless such agreement shall be in writing and signed by the parties hereto, nor
shall any waiver of any of the conditions or provisions of this Agreement be
effective and binding unless such waiver shall be in writing and signed by the
party claimed to have given consent to or suffered the waiver.

10. That this Agreement shall in all respects be binding upon each of the
parties hereto, their respective heirs, administrators and assigns. That this
Agreement shall be deemed to have been made under and shall be governed by the
laws of the State of New York applicable thereto, including matters of
construction, validity and performance. In the event that any provision thereto
shall at any time be deemed to be contrary to the law and invalid, the other
terms and provisions shall remain in full force and effect.

11. That this Agreement may be executed in any number of counterparts, all
of which shall continue as one and the same Agreement.

12. If any disagreement shall arise among the parties hereto with respect
to any of the provisions of this Agreement, the same shall be determined by
"JUDICATE", and a decision of the arbitrator or arbitrators so designated by the
said Association, when made in writing, shall be conclusive and binding upon all
of the parties

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<PAGE> 6
hereto, and judgment thereon may be entered in the Supreme Court of the State of
New York or such other court as shall have jurisdiction.

13. This Agreement shall terminate upon the happening of (i) the tenth
anniversary of the date hereof or (ii) a public offering by the company.

IN WITNESS WHEREOF, the parties hereto have set their hands and seals the
day and year first above written.

/s/ Arthur M. Frischman
-------------------------------
ARTHUR M. FRISCHMAN

ARCH PUBLISHER'S GROUP, INC.
BY: /s/ Arthur Frischman, President
-------------------------------
ARTHUR M. FRISCHMAN, PRESIDENT

EDUCORP DIRECT, INC.
BY:
-------------------------------
STATE OF NEW YORK)
ss:
COUNTY OF SUFFOLK)

On this 19th day of December, 1997 before me personally came ARTHUR M.
FRISCHMAN to me known and known to me to be the individual who executed the
foregoing instrument, and who acknowledged to me that he executed same.

/s/ Jeffrey T. Heller
-------------------------------
NOTARY PUBLIC

JEFFREY T. HELLER
Notary Public, State of New York
STATE OF NEW YORK) No.52-6030500
ss: Qualified in Suffolk County
COUNTY OF ) Commission Expires July 19, 1998

On this 19th day of December, 1997 before me personally came ARTHUR M.
FRISCHMAN to me known, who, being duly sworn, did depose and say that he
resides at Bronxville, New York; that he is the President of ARCH PUBLISHER'S
GROUP, INC., the corporation described in and which executed the foregoing
instrument; that he knows the seal of said corporation; that the

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<PAGE> 7
seal affixed to said instrument is such corporate seal; that it was so affixed
by order of the board of directors of said corporation, and that he signed his
name thereto by like order.

/s/ Jeffrey T. Heller
-------------------------------
NOTARY PUBLIC

JEFFREY T. HELLER
Notary Public, State of New York
STATE OF ) No.52-6030500
ss: Qualified in Suffolk County
COUNTY OF ) Commission Expires July 19, 1998

On this ____ day of December, 1997 before me personally came ______________
to me known, who, being duly sworn, did depose and say that he/she resides at
____________________________; that he/she is the _________________ of EDUCORP
DIRECT, INC., the corporation described in and which executed the foregoing
instrument; that he/she knows the seal of said corporation; that the seal
affixed to said instrument is such corporate seal; that it was so affixed
by order of the board of directors of said corporation, and that he/she signed
his/her name thereto by like order.

-------------------------------
NOTARY PUBLIC

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<PAGE> 8
hereto, and judgment thereon may be entered in the Supreme Court of the State of
New York or such other court as shall have jurisdiction.

13. This Agreement shall terminate upon the happening of (i) the tenth
anniversary of the date hereof or (ii) a public offering by the company.

IN WITNESS WHEREOF, the parties hereto have set their hands and seals the
day and year first above written.

/s/ ARTHUR M. FRISCHMAN
----------------------------------
Arthur M. Frischman

ARCH PUBLISHER'S GROUP, INC.

By: /s/ ARTHUR M. FRISCHMAN
-------------------------------
Arthur M. Frischman, President

EDUCORP DIRECT, INC.

By: /s/ L. JAMES PORTER
-------------------------------
L. James Porter
Secretary, CFO

STATE OF NEW YORK)
) ss:
COUNTY OF SUFFOLK)

On this ________ day of December, 1997 before me personally came ARTHUR M.
FRISCHMAN to me known and known to me to be the individual who executed the
foregoing instrument, and who acknowledged to me that he executed same.

------------------------------
NOTARY PUBLIC

STATE OF NEW YORK)
ss:
COUNTY OF )

On this ____ day of December, 1997 before me personally came Arthur M.
Frischman to me known, who, being duly sworn, did depose and say that he resides
at _____________________________________; that he is the President of
ARCH PUBLISHER'S GROUP INC., the corporation described in and which executed
the foregoing instrument; that he knows the seal of said corporation; that the

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<PAGE> 9

seal affixed to said instrument is such corporate seal; that it was so affixed
by order of the board of directors of said corporation, and that he signed his
name thereto by like order.

------------------------
NOTARY PUBLIC

STATE OF ILLINOIS )
ss:
COUNTY OF COOK )

On this 19th day of December, 1997 before me personally came L. James
Porter to me known, who, being duly sworn, did depose and say that he/she
resides at Vancouver, British Columbia; that he/she is the Secretary/CFO of
EDUCORP DIRECT, INC., the corporation described in and which executed the
foregoing instrument; that he/she knows the seal of said corporation; that the
seal affixed to said instrument is such corporate seal; that it was so affixed
by order of the board of directors of said corporation, and that he/she signed
his/her name thereto by like order.

/s/ STEPHEN R. OTIS
------------------------
NOTARY PUBLIC

[OFFICIAL SEAL]

<PAGE> 1
EXHIBIT 10.3

AGREEMENT

AGREEMENT ("Agreement") dated as of February 21, 1997 among High Text
Interactive, Inc., a California corporation ("Seller"); and Harry Helms, Carol
Lewis and Jack Lewis ("Purchasers").

Recitals:

A. Seller is engaged in the business of developing, marketing and
distributing educational multimedia software and CD-ROM programs (the
"Multimedia Operations") and in the business of book publishing (the "Book
Publishing Operations"). Certain of the assets owned by Seller and used in
connection with the Multimedia Operations and the Book Publishing Operations
were acquired by Seller pursuant to an Agreement and Plan of Reorganization
dated December 31, 1995 (the "Prior Agreement") among Seller (under its former
name CD-Soft Press Corporation), Purchasers and High Text Publications, Inc., a
California corporation then owned by Purchasers("HPI").

B. Pursuant to Section 2.1.4 of the Prior Agreement, Seller agreed to
make certain payments to HPI as the purchase price for the Book Publishing
Operations (the "Section 2.1.4 Payments"), the first such payment to be made on
or before March 31, 1997. By virtue of the liquidation and dissolution of HPI,
Purchasers are now entitled to receive the Section 2.1.4 Payments.

C. Purchasers have offered to purchase from Seller, and Seller has
agreed to sell to Purchasers, the Book Publishing Operations on the terms and
conditions set forth in this Agreement.

NOW, THEREFORE, in consideration of the agreements herein set forth, the
parties agree as follows:

1. Purchase and Sale. Subject to the terms and conditions of this
Agreement, on the Closing Date (as hereafter defined) but effective as of the
Effective Date (as hereafter defined), Seller agrees to sell to Purchasers,
and Purchasers agree to purchase from Seller, all of the following assets,
rights and properties of Seller relating to the Book Publishing Operations
(collectively, the "Transferred Assets"):

(a) all inventory of Seller relating to the Book Publishing Operations
existing as of the Effective Date, wherever located (the "Inventory");

(b) the furniture, equipment, computers and associated peripheral
equipment owned by Seller and used exclusively in connection with the Book
Publishing Operations which is identified on Schedule 1(b) attached hereto (the
"Equipment");

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<PAGE> 2
(c) the accounts receivable listed on Schedule 1(c) which are marked
"BK" (the "Accounts Receivable");

(d) all right and interest of Seller under the contracts and permits
relating to the Book Publishing Operations described on Schedule 1(d) attached
hereto (the "Contract Rights");

(e) the advances and prepaids to book authors described on Schedule
1(e) attached hereto;

(f) all of Seller's right, title and interest in and to all books and
other publications described on Schedule 1(f) attached hereto, together with
all work-in-process for uncompleted publications and all copyrights and other
proprietary rights relating thereto;

(g) all customer, prospect and vendor lists and databases relating
exclusively to the Book Publishing Operations;

(h) all price lists, product brochures and related sales or marketing
materials used exclusively in the Book Publishing Operations;

(i) all records relating exclusively to the Book Publishing
Operations;

(j) the exclusive right and license to use the name "HighText
Publications" for a period of 3 years after the Effective Date; and

(k) that portion of Seller's present web site (the "Web Site")
relating to the Book Publishing Operations, together with the exclusive right
and license to use of the Internet Domain Name "www.hightext-publications.com"
for a period of 3 years after the Effective Date.

2. Excluded Assets. Expressly excluded from the Purchased Assets are:
(a) all insurance policies, and rights to premium refunds thereunder,
maintained by Seller in connection with the Book Publishing Operations; (b)
Seller's corporate minute and stock books; (c) the name "High Text
Interactive"; (d) that portion of the Web Site relating to the Multimedia
Operations, including the Internet Domain Name "www.hightext-interactive.com";
and (f) all other assets not specifically included and enumerated among the
Transferred Assets.

3. Assumption of Liabilities. As of the Effective Date, Purchasers shall
assume and agree to discharge and perform when due all liabilities, commitments
and obligations of the Book Publishing Operations (whether accrued or
unaccrued, due or to become due, contractual or noncontractual) (collectively,
the "Assumed Liabilities"), including, without limitation, the following
obligations and liabilities: (a) all accounts

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<PAGE> 3
payable of Seller relating exclusively to the Book Publishing Operations and
existing as of the Effective Date, including, without limitation, the accounts
payable listed on Schedule 3 attached hereto which are marked "BK" (the
"Accounts Payable"); (b) all sales, use and other taxes payable relating
exclusively to the Book Publishing Operations (other than as set forth in
Section 4 below); and (c) all obligations and liabilities of Seller under the
Contract Rights.

4. Excluded Liabilities. Notwithstanding the provisions of Section 3,
Purchasers shall not and do not assume any of the following liabilities or
obligations of Seller (the "Excluded Liabilities"): (a) liabilities and
obligations of Seller for any federal, state or local tax imposed on, or
measured by, net income, regardless of the period of time to which
attributable; (b) liabilities and obligations of Seller for sales tax payable
in respect of the sale of the Transferred Assets to Purchasers hereunder; (c)
royalties due to authors for the month of January, 1997 up to an aggregate
amount of $5,000; and (d) the liabilities and obligations, if any, described
on Schedule 4 attached hereto.

5. Time and Place of Closing. The closing ("Closing") of the purchase
and sale hereunder shall take place at the offices of Seller on the date
hereof. The Closing shall be effective as of the close of business on January
31, 1997 (the "Effective Date").

6. Purchase Price. The purchase price ("Purchase Price") of the
Transferred Assets shall be an amount equal to the Section 2.1.4 Payments plus
the assumption by Purchasers of the Assumed Liabilities.

7. Manner of Payment of Purchase Price. The Purchase Price shall be paid
and deemed satisfied by the cancellation of Seller's obligations to make the
Section 2.1.4 Payments under the Prior Agreement and by Purchasers' assumption
of the Assumed Liabilities. Upon the consummation of the transaction
contemplated by this Agreement, all obligations of Seller to make the Section
2.1.4 Payments shall be deemed satisfied and discharged.

8. Representations and Warranties. The Transferred Assets are being sold
to Purchasers by Seller on an "as-is", "where is" basis and Seller makes no
representations and warranties to Purchasers with respect to the Transferred
Assets except as follows:

(a) Seller is a corporation validly existing and in good standing
under the laws of the State of California.

(b) The execution, delivery and performance of this Agreement by
Seller have been duly authorized by all necessary corporate action, do not
require the

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<PAGE> 4
approval or consent of any governmental authority or any other person, do not
and will not conflict with or result in a default under any provision of law or
of the articles of incorporation or by-laws of Seller or of any agreement or
court order binding on or applicable to Seller of any of the Transferred
Assets and do not and will not result in the creation of any lien on any of the
Transferred Assets. This Agreement constitutes the valid and binding agreement
of Seller enforceable in accordance with its terms.

(c) Seller has, and on the Closing Date will convey to Purchasers,
good title to the Transferred Assets free and clear of all liens, claims or
encumbrances.

9. Purchasers' Representations and Warranties. Purchasers represents and
warrants to Seller as follows:

(a) The execution, delivery and performance of this Agreement by
Purchasers do not require the approval or consent of any governmental authority
or any other person and do not and will not conflict with or result in a
default under any provision of law or of any agreement or court order binding
on or applicable to Purchasers.

(b) This Agreement constitutes the valid and binding agreement of
Purchasers enforceable in accordance with its terms.

10. Closing.

(a) Deliveries by Seller. At the Closing, Seller shall deliver to
Purchasers physical possession of all tangible Transferred Assets and shall
deliver or cause to be delivered to Purchasers the following:

(i) a bill of sale, executed by Seller, conveying all of the
Inventory and Equipment;

(ii) an assignment (the "Assignment"), executed by Seller,
assigning to Purchasers all of the Transferred Assets other than the
Inventory and Equipment, together with the original instruments, if
any, representing, evidencing or constituting such Transferred Assets;

(iii) a certified copy of resolutions of the Board of Directors
and stockholders of Seller authorizing the execution, delivery and
performance of this Agreement.

(b) Deliveries by Purchasers. At the Closing, Purchasers shall
deliver or cause to be delivered to Seller the following:

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<PAGE> 5
(i) an acceptance of the Assignment and an assumption of the
Assumed Liabilities;

(ii) a resignation, executed by Jack Lewis and Carol Lewis,
resigning from their position as officers of Seller; and

(iii) a resale certificate with respect to the Inventory.

11. Additional Agreements.

(a) Accounts Receivable. Seller agrees to remit to Purchasers,
promptly upon receipt but in any event within five business days after receipt,
any checks or other proceeds received by Seller in payment of any Account
Receivable.

(b) Access to Records. Purchasers shall permit Seller to have access
to such books and records constituting part of the Transferred Assets as may be
necessary for Seller in the operation of its Multimedia Operations subsequent
to the Closing Date.

(c) Employee. Seller shall terminate the employment of Jeanette Moyer
as an employee of Seller effective as of the Closing Date.

(d) Use of Name HighText. The Transferred Assets include the
exclusive right and license to use the name "HighText Publications" for a period
of 3 years after the Effective Date but solely in connection with the Book
Publishing Operations being purchased hereunder and Purchasers agree not to
expand the use of the name "HighText Publications" to areas not related to or
incidental to the Book Publishing Operations.

(e) Web Site. The Transferred Assets include the exclusive right and
license to use of the Internet Domain Name "hightext-publications.com" and that
portion of the Web Site relating solely to the Book Publishing Operations.
Seller agrees to deliver to Purchasers on the Closing Date a copy of all source
codes and documentation relating to the Web Site. As soon as practicable after
the Closing Date, Purchasers shall remove the information concerning the
Multimedia Operations from its copy of the Web Site and Seller shall remove the
information concerning the Book Publishing Operations from the Web Site. Each
party shall provide a hypertext link to each other's site for not less than 6
months after the Effective Date.

(f) Databases. It is understood by the parties that the databases
referred to in Section 1(g) of this Agreement contain the databases of the Book
Publishing Operations. All such data shall be removed from Seller's databases
and Seller shall cease use of such data from and after the Closing Date.

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<PAGE> 6
(g) Agreement to Provide Consulting Services. Purchasers, and each
of them, agree to provide Seller with consulting services at such times and at
such places as may be mutually agreed between such Purchaser and Seller. Seller
shall pay for such consulting services rendered at the rate of $100.00 per hour.

12. Indemnification.

(a) Seller agrees to indemnify, defend and hold Purchasers harmless
from and against any liability, loss, cost, damage or expense, including
reasonable attorneys' fees (collectively, "Claims"), incurred or sustained by
Purchasers as a result of or arising out of: (i) any false representation or
warranty made herein by Seller; (ii) the failure of Seller to comply with any
of the covenants of this Agreement to be performed by Seller; (iii) the failure
of Seller to discharge when due the Excluded Liabilities.

(b) Purchasers agree to indemnify, defend and hold Seller harmless
from and against any and all Claims incurred or sustained by Seller as a result
of or arising out of any false representation or warranty made herein by
Purchasers or arising out of the failure of Purchasers to comply with any of
the covenants of this Agreement to be performed by Purchasers or arising out of
the failure of Purchasers to cause to be performed when due any of the Assumed
Liabilities or arising out of the conduct of the Book Publishing Operations
by Purchasers subsequent to the Closing Date.

(c) If any party ("Indemnitee") has reasonable cause to believe it
has grounds for indemnification pursuant to this Section 12, it shall promptly
deliver a notice of Claim to the other party ("Indemnitor"), setting forth with
reasonable particularity the grounds of such Claim. If there is asserted any
Claim by a person not a party to this Agreement that in the judgment of
Indemnitee should be taken into account in determining the liability, if any,
of Indemnitor under this Section 18, then, as a condition precedent to the
assertion by Indemnitee against Indemnitor of any such Claim, Indemnitee shall
give notice of such Claim to Indemnitor within 30 business days of Indemnitee's
receipt of notice thereof and Indemnitor shall have the right, at Indemnitor's
expense, to participate in the defense of such Claim or, at Indemnitor's
option, to assume the entire defense of or settle such Claim. Indemnitee shall
cooperate with Indemnitor in the defense of any Claim assumed by Indemnitor.

13. Release. In consideration of the purchase and sale of the Transferred
Assets, Purchasers, on the one hand, and Seller, on the other hand, on behalf
of itself, himself or herself, any parent, affiliate, subsidiary or affiliate
corporation or partnership, and their respective officers, directors, partners,
trustees, personal representatives, successors and assigns, do hereby forever
release, discharge and acquit the other, and any parent, subsidiaries and
affiliate corporation and partnerships, and their respective

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officers, directors, partners, trustees, shareholders, agents, attorneys and
employees, and their respective heirs, legal representatives, succesors and
assigns, of and from any and all claims, demands, liabilities,
responsibilities, disputes, causes of action, whether at law or equity,
indebtedness and obligations of whatever kind or nature, whether known or
unknown, direct or indirect, new or existing, by reason of any matter, cause or
thing whatsoever arising arising out of or relating to the Prior Agreement or
to the employment by Seller of any Purchaser.

14. General and Miscellaneous.

(a) Further Assurances. Each of the parties shall execute such other
documents and take such other action as may be necessary or desirable to vest
ownership and possession of the Transferred Assets in Purchasers and to
otherwise carry out the terms of this Agreement.

(b) Notices. All notices provided for herein shall be in writing and
shall be deemed to have been given or made when served personally or five days
after being deposited in the United States mail, certified mail, return receipt
requested, postage prepaid, addressed to Purchasers or Seller at their
respective addresses set forth on the signature page hereto, or to such other
address as either party may designate by notice given in accordance with this
Section 14(b).

(c) No Brokers. Each of the parties represents that it has not
dealt with any broker or finder in connection with the transactions
contemplated by this Agreement and that no broker or other person is entitled
to a commission or finder's fee in connection with this transaction.

(d) Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original and all of which
together shall constitute one and the same instrument.

(e) Benefits. This Agreement shall be binding upon and inure to
the benefit of the parties hereto and their respective legal representatives,
successors and assigns.

(f) Governing Law. This Agreement shall be governed by the laws of
the State of California.

(g) Entire Agreement; Amendment; Assignment. This Agreement
represents the entire agreement and understanding of the parties hereto and all
prior or concurrent agreements, understandings, representations and warranties,
whether written or oral, in regard to the subject matter hereof are merged
herein. This Agreement may be amended only by a writing signed by both of the
parties hereto.

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No party may assign this Agreement or any interest herein without the prior
written consent of the other party, which consent may be granted or withheld at
the absolute discretion of such other party. Notwithstanding the foregoing,
Purchasers may assign its rights under this Agreement to a corporation,
partnership or limited liability company wholly-owned by Purchasers; provided,
however, that Purchasers shall remain liable for all obligations of Purchasers
hereunder. Nothing in this Section 14(g) shall preclude in any way Purchasers,
or any assignee of Purchasers pursuant to the foregoing sentence, from selling,
transferring or otherwise disposing of the Transferred Assets after the Closing
Date.

(h) Severability. The invalidity or unenforceability of any provision
of this Agreement shall not affect the validity or enforceability of any other
provision hereof.

(i) Expenses. Each of the parties shall pay all costs and expenses
incurred or to be incurred by it in negotiation and preparation of this
Agreement and in closing and carrying out the transactions contemplated by this
Agreement.

(j) No Waiver. The failure of any party to insist upon strict
compliance by the other party with any of the terms herein by any of the parties
hereto shall not be deemed to be a waiver of any future breach. No remedy made
available by any of the provisions of this Agreement is intended to be exclusive
of any other remedy and each and every remedy shall be cumulative and shall be
in addition to every other remedy given hereunder or now or hereafter existing
at law or in equity.

(k) Survival. All representations, warranties, covenants and
agreements herein shall survive the Closing of the transactions contemplated by
this Agreement.

(l) Bulk Sales Compliance. Each of the parties hereto waives
compliance with the laws of any jurisdiction relating to bulk transfers in
connection with the transactions contemplated by this Agreement.

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IN WITNESS WHEREOF, the undersigned have executed this Agreement on the
date first written above.

PURCHASERS: SELLER:

/s/ HARRY L. HELMS HIGHTEXT INTERACTIVE, INC.
- ------------------------------------
Harry Helms

Address: 309 Solana Hills Drive $76
Solana Beach, CA 92075
By: /s/ KENNETH PERILLI
----------------------------------
Address: 611 Anton Blvd., Suite 1270
Costa Mesa, CA 92626

/s/ JACK W. LEWIS
- ------------------------------------
Jack Lewis

Address: 125 N. Acacia Ave. #202
Solana Beach, CA 92075

/s/ CAROL S. LEWIS
- ------------------------------------
Carol Lewis

Address: 125 N. Acacia Ave. #202
Solana Beach, CA 92075

<PAGE> 1
EXHIBIT 10.4

================================================================================

ASSET PURCHASE AGREEMENT

BY AND AMONG

BYRON PREISS MULTIMEDIA HOLDINGS, INC.

BYRON PREISS MULTIMEDIA COMPANY, INC.

AND

HIGHTEXT INTERACTIVE, INC.

February 13, 1998

================================================================================

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ASSET PURCHASE AGREEMENT

AGREEMENT, dated as of February 13, 1998, by and among BYRON PREISS
MULTIMEDIA HOLDINGS, INC., a Delaware corporation (hereafter referred to as
"Purchaser"), BYRON PREISS MULTIMEDIA COMPANY, INC., a New York corporation
(hereafter referred to as "BPMC") and HIGHTEXT INTERACTIVE, INC., a California
corporation (hereinafter referred to as "Seller"). Purchaser and BPMC are
sometimes referred to herein collectively as the "Purchaser Parties."

W I T N E S S E T H :

WHEREAS, Seller desires to sell, and Purchaser desires to purchase, certain
assets of Seller on the terms set forth in this Agreement;

NOW, THEREFORE, in consideration of the agreements herein set forth and
other good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the parties hereto agree as follows:

ARTICLE I
DEFINITIONS

Capitalized terms used in this Agreement shall, unless the context
otherwise requires, have the meanings specified in this Article I. Certain
additional defined terms are set forth elsewhere in this Agreement.

1.1 ACQUIRED ASSETS. "Acquired Assets" shall mean all of Seller's right,
title and interest in and to the following assets of Seller which the Purchaser
is acquiring, effective as of the date hereof, pursuant to the terms of this
Agreement:

(i) all of the computer software described on Schedule A hereto
and any and all source codes, documentation, manuals, modules, gold masters,
artwork, color separations for packaging or syquest disks of packaging
documentation, inventory (which inventory is substantially as listed on Schedule
D (the "Inventory")) and any and all other tangible embodiments thereof (in
whatever form or medium) relating thereto (collectively, the "Software");

(ii) any and all United States and foreign copyrights, copyright
registration applications, trademarks, trademark registrations, trademark
applications, trade names, trade name registrations, trade name registration
applications and any and all other related items of intellectual property or
other intangible assets, including the "URL," if any, for "Crash Course,"
related to the intangible property listed on Schedule B hereto (the
"Intellectual Property");

(iii) all of Seller's right, title and interest in Seller's web
site, if any, relating to Seller's "Crash Course" business, including any
internet domain names (the "Web Site"); and

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(iv) any and all warranties, claims and causes of action against
third parties relating to any of the assets transferred pursuant to this
Agreement;

1.2 ASSUMED LIABILITIES. "Assumed Liabilities" means (i) only those
liabilities set forth on Schedule C, but only to the extent of $30,000.00, and
(ii) the executory portion of all of Seller's license, royalty, development and
other agreements set forth on Schedule A, but only with respect to the period
after the date hereof. Purchaser hereby assumes and agrees to discharge when
due, the Assumed Liabilities. The assumption of the Assumed Liabilities
hereunder shall not expand the rights or remedies of any third party against the
Purchaser or Seller as compared to the rights and remedies which such third
party would have had against the Seller had the Purchaser not assumed the
Assumed Liabilities.

1.3 COMMON STOCK. "Common Stock" means the shares of common stock par
value $.001 per share of BPMC.

1.4 FINANCIAL STATEMENTS. "Financial Statements" shall mean the balance
sheet of the Seller as of December 31, 1996, and the related statements of
operations, deficit and change in financial position for the year ended December
31, 1996, including any related notes.

1.5 PERSON. "Person" means and includes an individual, a partnership, a
joint venture, a corporation, a trust, an unincorporated organization and a
government or other department or agency thereof.

1.6 SECURITIES ACT. "Securities Act" means the Securities Act of 1933, as
amended.

ARTICLE II
SALE AND PURCHASE OF ASSETS

2.1 SALE AND PURCHASE OF ASSETS. (a) Subject to the terms and conditions
set forth in this Agreement, Seller hereby sells, transfers and assigns to the
Purchaser, and the Purchaser hereby purchases from Seller all of Seller's right,
title and interest in and to the Acquired Assets.

(b) Except for the Assumed Liabilities, Purchaser does not assume any of
Seller's accounts payable, obligations (contingent or otherwise), liabilities or
other debts of any kind, all of which will remain Seller's obligations. Without
limiting the generality of the foregoing, Seller hereby covenants and agrees to
pay and discharge when due any and all of its liabilities, other than the
Assumed Liabilities, including, but not limited to, any tax liabilities, any
liability to JVC, Larry N. Sanford, GloLar Multimedia Productions, Carol Lewis,
Jack Lewis, Jim Johnson or Harry Helms, any pending or threatened litigation,
any unknown or undisclosed claims, liabilities or obligations; provided,
however, that nothing herein shall prohibit Seller from contesting in good faith
any alleged liability to a third party.

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2.2 CONSIDERATION. The aggregate consideration to be delivered by the
Purchaser for the Acquired Assets is One Hundred Fifty Thousand (150,000) shares
of Common Stock of BPMC (the "Payment Shares"). The Purchaser Parties hereby
guarantee an aggregate selling price of the Common Stock at $1.33 per share,
before commissions or other transaction fees, for each such share actually sold
on a bonafide trade on The NASDAQ Market System or such other exchange or over
the counter market that BPMC's Common Stock is then listed or traded during the
period beginning one (1) year and ending eighteen (18) months from the date
hereof (the "Determination Period"). To the extent that Seller sells any or all
of the Payment Shares during the Determination Period, the Purchaser Parties
will pay to Seller the amount of the Shortfall in cash or stock, at their sole
discretion. For purposes of this Agreement, a "Shortfall" shall mean the
difference between (A) the aggregate sales price, before commissions or other
transaction fees, obtained by Seller in respect of all of the Payment Shares
sold during the Determination Period less (B) the number of such Payment Shares
sold by Seller during the Determination Period multiplied by $1.33. In the event
of a Shortfall, the Purchaser Parties shall deliver either cash or Shortfall
Shares to the Seller, within thirty (30) business days of its receipt of written
notice, which notice shall be given no earlier than at the end of the
Determination Period, by the Seller of such Shortfall accompanied with
documentation that is reasonably acceptable to the Purchaser that supports such
Shortfall calculation. In the event that the Purchaser Parties elect to make up
such Shortfall with Shortfall Shares, the value of a Shortfall Share shall be
the average of the closing sale price of the Common Stock for the twenty (20)
business days immediately following the end of the Determination Period. The
definition of "Shortfall" shall be appropriately adjusted in the event of any
stock split, stock dividend, reverse stock split or other recapitalization of
BPMC. For example, if BPMC were to engage in a ten for one reverse stock split,
then $13.30 would be substituted for $1.33 in the definition of Shortfall.

ARTICLE III
REPRESENTATIONS OF THE PURCHASER

Each of BPMC and the Purchaser represents, warrants and covenants to Seller
as follows:

3.1 ORGANIZATION. (a) The Purchaser is a corporation duly organized,
validly existing and in good standing under the laws of the State of Delaware.
The Purchaser is duly qualified to transact business as a foreign corporation in
all jurisdictions where the ownership or leasing of its properties or the
conduct of its business requires such qualification and the failure to so
qualify would have a material adverse effect on the business, financial
condition, results of operations or properties of the Purchaser. The Purchaser
has all requisite right, corporate power and authority to execute, deliver and
perform this Agreement and to consummate the transactions contemplated hereby.
The Purchaser has the requisite corporate power and authority to own or lease
and operate its properties and conduct its business as presently conducted.

(b) BPMC is a corporation duly organized, validly existing and in good
standing under the laws of the State of New York. BPMC is duly qualified to
transact business as a foreign corporation in all jurisdictions where the
ownership or leasing of its

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properties or the conduct of its business requires such qualification and the
failure to so qualify would have a material adverse effect on the business,
financial condition, results of operations or properties of BPMC. BPMC has all
requisite corporate right, power and authority to execute, deliver and perform
this Agreement and to consummate the transactions contemplated hereby. BPMC has
the requisite corporate power and authority to own or lease and operate its
properties and conduct its business as presently conducted.

3.2 AUTHORIZATION; ENFORCEABILITY. Each of BPMC and the Purchaser has the
capacity to execute, deliver and perform this Agreement. All documents executed
and delivered by either BPMC or the Purchaser, as the case may be, pursuant to
and in connection with the transactions contemplated by this Agreement have
been duly authorized by all requisite corporate action on the part of such
party, and this Agreement and all documents to be executed and delivered by
each of BPMC or the Purchaser, as the case may be, pursuant to this Agreement
have been and will be duly executed and delivered by each of BPMC or the
Purchaser, as the case may be, and constitute the legal, valid and binding
obligations of such party, enforceable in accordance with their respective
terms, except to the extent that their enforcement is limited by bankruptcy,
insolvency, reorganization or other laws relating to or affecting the
enforcement of creditors' rights generally and by general principles of equity.

3.3 NO VIOLATION OR CONFLICT. The execution, delivery and performance of
this Agreement by each of BPMC and the Purchaser and the consummation by each
of BPMC and the Purchaser of the transactions contemplated hereby do not
violate or conflict with any law or regulation (whether federal, state of
local), writ, order or decree of any court or governmental or regulatory
authority applicable to such party, or any provision of either BPMC's or the
Purchaser's Certificate of Incorporation or Bylaws.

3.4 BROKERS. Except as set forth on Schedule 3.4 neither BPMC nor the
Purchaser has employed any financial advisor, broker or finder, and neither has
incurred or will incur any broker's, finder's, investment banking or similar
fees, commissions or expenses in connection with the transactions contemplated
by this Agreement.

3.5 CAPITALIZATION. The authorized capital stock of BPMC consists of: (a)
30,000,000 shares of common stock, $.001 par value, of which 7,399,438 shares
are issued and outstanding as of the date hereof; and (b) 5,000,000 shares of
preferred stock, of which there are no shares issued and outstanding. All
shares of BPMC's issued and outstanding capital stock have been duly
authorized, are validly issued and outstanding, and are fully paid and
nonassessable. No securities issued by BPMC from the date of its incorporation
to the date hereof were issued in violation of any statutory or common law
preemptive rights. There are no dividends which have accrued or been declared
but are unpaid on the capital stock of BPMC. The Payment Shares, when issued
pursuant hereto, shall be validly issued and outstanding and fully paid and
nonassessable.

ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE SELLER

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In order to induce BPMC and the Purchaser to enter into this
Agreement and to consummate the transactions contemplated hereby, the Seller
makes the following representations and warranties to BPMC and the Purchaser:

4.1 ORGANIZATION. The Seller is a corporation duly organized,
validly existing and in good standing under the laws of the State of
California. The Seller is duly qualified to transact business as a foreign
corporation in all jurisdictions where the ownership or leasing of its
properties or the conduct of its business requires such qualification and the
failure to so qualify would have a material adverse effect on the business,
financial condition, results of operations or properties of the Seller. The
Seller has all requisite corporate right, power and authority to execute,
deliver and perform this Agreement and to consummate the transactions
contemplated hereby. The Seller has the requisite corporate power and authority
to own or lease and operate its properties and conduct its business as most
recently conducted.

4.2 AUTHORIZATION; ENFORCEABILITY. The Seller has the capacity to
execute, deliver and perform this Agreement. All documents executed and
delivered by the Seller pursuant to and in connection with the transactions
contemplated by this Agreement have been duly authorized by all requisite
corporate action on the part of the Seller, and this Agreement and all
documents to be expected and delivered by the Seller pursuant to this Agreement
have been and will be duly executed and delivered by the Seller and constitute
the legal, valid and binding obligations of the Seller, enforceable in
accordance with their respective terms, except to the extent that their
enforcement is limited by bankruptcy, insolvency, reorganization or other laws
relating to or affecting the enforcement of creditors' rights generally and by
general principles of equity.

4.3 NO VIOLATION OR CONFLICT. The execution, delivery and
performance of this Agreement by the Seller and the consummation by the Seller
of the transactions contemplated hereby do not violate or conflict with any law
or regulation (whether federal, state or local), writ, order or decree of any
court or governmental or regulatory authority applicable to the Seller, or any
provision of the Seller's Certificate of Incorporation of Bylaws.

4.4 CONSENTS OF GOVERNMENTAL AUTHORITIES AND OTHERS. No consent,
approval or authorization of, or registration, qualification of filing with,
any federal, state or local governmental or regulatory authority is required to
be made by the Seller in connection with the execution, delivery or performance
of this Agreement by the Seller or the consummation by the Seller of the
transactions contemplated hereby.

4.5 CONDUCT OF BUSINESS. The Sellers no employees and has gone out
of business, except for a minimal amount of inventory sales to Educorp Direct,
Inc. or its successor in interest Educorp LLC. The amount and identity of the
Inventory being transferred to Purchaser hereunder is substantially as set forth
on Schedule D.

4.6 LITIGATION. There is no litigation pending or to the best of
the Seller's knowledge threatened before any court or by or before any
governmental or regulatory authority or arbitrator: (a) affecting Seller (as
plaintiff or defendant) which could,

<PAGE> 7
individually or in the aggregate, have a material adverse effect on the Acquired
Assets; or (b) against the Seller relating to the transactions contemplated by
this Agreement.

4.7 BROKERS. The Seller has not employed any financial advisor,
broker or finder, and has not incurred or will not incur any broker's, finder's,
investment banking or similar fees, commissions or expenses in connection with
the transactions contemplated by this Agreement.

4.8 COMPLIANCE. To the knowledge of the Seller, the Seller is in
compliance with all federal, state, local and foreign laws, ordinances,
regulations, judgments, rulings and orders applicable relating to the Acquired
Assets. To the knowledge of the Seller, the Seller is not subject to any
judicial, governmental or administrative order, judgment or decree.

4.9 FINANCIAL STATEMENTS. The Seller has previously delivered to the
Purchaser true and complete copies of the Financial Statements. To the knowledge
of the Seller, the Financial Statements: (a) have been prepared in accordance
with the books of account and records of the Seller; (b) fairly present in all
material respects the Seller's financial condition and results of operations at
the dates and for the periods specified in the those statements; and (c) have
been prepared in accordance with United States generally accepted accounting
principles consistently applied with prior periods.

4.10 CERTAIN EMPLOYEES. To the knowledge of the Seller, the Seller
treated Carol Lewis, Jack Lewis, Jim Johnson and Harry Helms as employees of the
Seller for tax purposes (including withholding).

4.11 LICENSES. To the knowledge of the Seller, the Seller holds all
governmental, franchises, authorizations, permits, certificates, variances,
exemptions, orders and approvals, domestic or foreign (collectively, the
"Licenses") which are required or utilized in the operation or usage of the
Acquired Assets. To the knowledge of the Seller, the Seller has not engaged in
any activity that would cause revocation or suspension of any such Licenses. To
the knowledge of the Seller, no action or proceeding looking to or contemplating
the revocation or suspension of any such Licenses is pending or threatened.

4.12 PROPRIETARY RIGHTS. Except as set forth on Schedule 4.12, (i) to
the knowledge of the Seller, the Intellectual Property is owned by, licensed to
and/or licensed by the Seller, (ii) to the knowledge of the Seller, the Seller
is not in conflict with or infringing upon the asserted rights of others in
connection with the Intellectual Property, (iii) HighText Publications, Inc. has
transferred to the Seller all of its rights, title and interest in and to any
and all proprietary, technology, legal and other rights in all multimedia
software and CD-Rom software and programs, and all books and other publications,
in each case relating to the "Crash Course" line of products together with any
and all copyrights, patents, trademarks, trade secrets and other proprietary
rights relating thereto, and (iv) the Seller has not assigned any rights
relating to the "Crash Course" products or Web Site, if any.

4.13 INVESTMENT REPRESENTATIONS.

(a) The Seller understands and acknowledges that the Payment Shares
have not been registered under the Securities Act. The Seller hereby represents
and warrants that:

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(i) the Payment Shares are being acquired only for investment for the Seller's
own account, and not as a nominee or agent and not with a view to the resale or
distribution thereof, and the Seller has no present intention of selling,
granting any participation in or otherwise distributing any interest therein
within the meaning of the Securities Act, (ii) the Seller does not have any
contracts, understandings, agreements or arrangements with any Person to sell,
transfer or grant participation to such Person or any third Person, with
respect to any of the Payment Shares, (iii) the Seller has had an opportunity
to seek outside advice with respect to the terms and conditions of this
Agreement and its investment in the Payment Shares, and (iv) the Seller has had
ample opportunity to ask questions of BPMC's representatives concerning its
investment.

(b) The Seller acknowledges that it can bear the economic risk of its
investment in the Payment Shares for an indefinite period of time and has such
knowledge and experience in financial and business matters as to be capable of
evaluating the merits and risks of an investment therein. The Seller
understands that the Payment Shares are characterized as "restricted
securities" under federal securities laws since they are being acquired in a
transaction not involving a public offering and that under such laws and
applicable regulations the Payment Shares may not be resold without
registration or an exemption from registration under the Securities Act. The
Seller represents that it is generally familiar with and generally understands
the existing resale limitations imposed by the Securities Act and the rules and
regulations promulgated thereunder.

(c) The Seller understands and agrees that the certificates evidencing
the Payment Shares will bear an appropriate legend evidencing the restricted
nature of the Payment Shares and indicating that no transfer of any of the
Payment Shares may be made unless such Payment Shares are registered under the
Securities Act or an exemption from such registration is available, and that
BPMC will instruct its transfer agents not to transfer any such Payment Shares
unless such transfer shall be made in compliance with such legend. The
legend shall be substantially in the form set forth below.

"THE SALE, TRANSFER, ASSIGNMENT, PLEDGE OR HYPOTHECATION
OF THE SHARES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT
TO THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT OF
1933, AS AMENDED (THE "ACT"). THESE SHARES MAY NOT BE SOLD,
TRANSFERRED, ASSIGNED, PLEDGED OR HYPOTHECATED UNLESS DULY
REGISTERED UNDER THE ACT OR UNLESS, IN THE OPINION OF COUNSEL
REASONABLY SATISFACTORY TO THE COMPANY, SUCH TRANSACTION IS
EXEMPT FROM THE REGISTRATION PROVISIONS OF THE ACT."

4.14 INVENTORY. To the knowledge of the Seller, there are no security
interests under any security agreements affecting the Inventory.

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4.15 LIMITATION ON SELLER'S WARRANTIES. Except as expressly set forth in
Article IV, Seller makes no express or implied warranty of any kind whatsoever,
including, without limitation, any representation as to physical condition or
value of the Acquired Assets or the future profitability or future earnings
performance of any business. ALL IMPLIED WARRANTIES OF MERCHANTABILITY AND
FITNESS FOR A PARTICULAR PURPOSE ARE EXPRESSLY EXCLUDED. Except as expressly set
forth in this Agreement, the Acquired Assets are being sold "AS IS, WHERE IS."

4.16 DEFINITION OF KNOWLEDGE. For purposes of this Agreement, the
knowledge of the Seller shall be deemed to be limited to the actual knowledge
as of the date hereof of L. James Porter, without giving effect to imputed
knowledge and without any duty of investigation.

ARTICLE V
ADDITIONAL AGREEMENTS

5.1 SURVIVAL OF REPRESENTATIONS AND WARRANTIES; EFFECT OF REPRESENTATIONS
AND WARRANTIES. The representations and warranties of the Purchaser and of the
Seller set forth in this Agreement shall survive the date hereof to the extent
provided in Section 5.3(d) hereof.

5.2 INVESTIGATION. The representations, warranties, covenants and
agreements set forth in this Agreement shall not be affected or diminished in
any way by any investigation (or failure to investigate) at any time by or
on behalf of the party for whose benefit such representations, warranties,
covenants and agreements were made.

5.3 INDEMNIFICATION.

(a) By the Seller. Subject to Section 5.3(d) hereof, the Seller agrees
to indemnify and hold harmless the Purchaser and its directors, officers,
employees and agents from, against and in respect of, the full amount of any
and all liabilities, damages, claims, deficiencies, fines, assessments, losses,
taxes, penalties, interest, costs and expenses, including, without limitation,
reasonable fees and disbursements of counsel, arising from, in connection with,
or incident to (i) any breach or violation of any of the representations,
warranties, covenants or agreements of the Seller contained in this Agreement
or any agreements referred to herein and delivered to Purchaser; and (ii)) any
and all third party actions, suits, proceedings, demands, assessments or
judgments, costs and expenses incidental to any of the foregoing.

(b) By the Purchaser and BPMC. Subject to Section 5.3(d) hereof, BPMC
and the Purchaser each agree to indemnify and hold harmless the Seller from,
against and in respect of, any and all liabilities, damages, claims,
deficiencies, fines, assessments, losses, taxes, penalties, interest, costs and
expenses, including, without limitation, reasonable fees and disbursements of
counsel, arising from, in connection with, or incident to (i) any breach or
violation of any of the representations, warranties, covenants or agreements of
BPMC or the Purchaser contained in this Agreement or any agreement referred to
herein and delivered to Seller; and (ii) any and all third party actions,
suits, proceedings, demands, assessments or judgments, costs and expenses
incidental to any of the foregoing.

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(c) Indemnity Procedure. A party or parties hereto agreeing to be
responsible for or to indemnify against any matter pursuant to this Agreement
is referred to herein as the "Indemnifying Party" and the other party or
parties claiming to indemnity is referred to as the "Indemnified Party".

An Indemnified Party under this Agreement shall, with respect to claims
asserted against such party by any third party, give written notice to the
Indemnifying Party of any liability which might give rise to a claim for
indemnity under this Agreement promptly after the receipt of any written claim
from any such third party, and not later than twenty (20) days prior to the
date any answer or responsive pleading is due, and with respect to other
matters for which the Indemnified Party may seek indemnification, give prompt
written notice to the Indemnifying Party of any liability which might give rise
to a claim for indemnity; provided, however, that any failure to give such
notice will waive any rights of the Indemnified Party only to the extent the
rights of the Indemnifying Party are materially prejudiced.

The Indemnifying Party shall have the right, at its election, to take over
the defense or settlement of such claim by giving written notice to the
Indemnified Party at least ten (10) days prior to the time when an answer or
other responsive pleading or notice with respect thereto is required. If the
Indemnifying Party makes such election, it may conduct the defense of such claim
through counsel of its choosing (subject to the Indemnified Party's approval of
such counsel, which approval shall not be unreasonably withheld), shall be
solely responsible for the expenses of such defense and shall be bound by the
results of its defense or settlement of the claim. The Indemnifying Party shall
not settle any such claim without prior notice to and consultation with the
Indemnified Party, and no such settlement involving any equitable relief and no
settlement which might otherwise have a material adverse effect on the
Indemnified Party may be agreed to without the written consent of the
Indemnified Party (which consent shall not be unreasonably withheld). So long as
the Indemnifying Party is diligently contesting any such claim in good faith,
the Indemnified Party may pay or settle such claim only at its own expense and
the Indemnifying Party will not be responsible for the fees of separate legal
counsel to the Indemnified Party. If the Indemnifying Party does not make such
election, or having made such election does not in the reasonable opinion of the
Indemnified Party proceed diligently to defend such claim, then the Indemnified
Party may (after written notice to the Indemnifying Party), at the expense of
the Indemnifying Party, elect to take over the defense of and proceed to handle
such claim in its discretion and the Indemnifying Party shall be bound by any
defense or settlement that the Indemnified Party may make in good faith with
respect to such claim. In connection therewith, the Indemnifying Party will
fully cooperate with the Indemnified Party should the Indemnified Party elect to
take over the defense of any such claim.

The parties agree to cooperate in defending such third party claims and
the Indemnified Party shall provide such cooperation and such access to its
books, records and properties as the Indemnifying Party shall reasonably
request with respect to any matter for which indemnification is sought
hereunder; and the parties agree to cooperate with each other in order to
ensure the proper and adequate defense thereof.

With regard to claims of third parties for which indemnification is
payable hereunder, such indemnification shall be paid by the Indemnifying Party
upon the earlier to

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<PAGE> 11
occur of: (i) the entry of a judgment against the Indemnified Party and the
expiration of any applicable appeal period; (ii) the entry of an unappealable
judgment or final appellate decision against the Indemnified Party; or (iii) a
settlement of the claim. Notwithstanding the foregoing, provided that there is
no dispute as to the applicability of indemnification, the reasonable expenses
of counsel to the Indemnified Party shall be reimbursed on a current basis by
the Indemnifying Party if such expenses are a liability of the Indemnifying
Party. With regard to other claims for which indemnification is payable
hereunder, such indemnification shall be paid promptly by the Indemnifying
Party upon demand by the Indemnified Party.

(d) Indemnity Limitations. Notwithstanding anything to the contrary
herein, (i) no claim for indemnification for violation of any covenant,
agreement, representation or warranty may be asserted after eighteen months of
the date hereof; and (ii) the maximum liability of each Indemnifying Party for
any breach of a covenant, agreement, representation or warranty shall be the
lesser of (i) $199,500.00 or (ii) the value of the Payment Shares (determined in
the manner and as of the time set forth in the last sentence of Section 5.3(e);
provided, however that the limitations set forth above shall not apply to
breaches of covenants under Section 2.2. Indemnification pursuant to this
Section 5.3 shall be the exclusive remedy of the parties for any inaccuracy in
or breach of any representation, warranty, covenant or agreement contained in
this Agreement or in any closing document executed and delivered pursuant to the
provisions of this Agreement. Without limiting the generality of the foregoing
sentence, no legal action sounding in tort or strict liability may be maintained
by any party.

(e) Payment for Liabilities. The amount of the Liabilities for which
indemnification is determined to be due pursuant to this Section 5.3 from the
Seller to the Purchaser, shall be tendered by the Seller to the Purchaser:
(i) by returning the Payment shares; (ii) in cash; and (iii) through any other
mechanism acceptable to the Purchaser. For purposes of determining the value of
the Payment Shares returned to the Purchaser pursuant to this Section 5.3, the
Payment Shares shall be deemed to have a value equal to the average of the
closing NASDAQ (or other exchange or over the counter market, if applicable)
sale prices for Common Stock of Purchaser during the 30 day period immediately
preceding (but not including) the earlier of the date of (a) the determination
by a court of competent jurisdiction and/or arbitration tribunal that such
Liabilities are due or (b) the settlement of the claim.

ARTICLE VI
CLOSING; DELIVERIES

6.3 CLOSING. (a) Upon execution of this Agreement, the Seller shall
deliver the following to the Purchaser:

(i) documents transferring and assigning to Purchaser the
ownership of the items of Intellectual Property constituting part of the
Acquired Assets;

(ii) a certificate of the Secretary of State of the State of
California, as of a recent date, as to the good standing of Seller;

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<PAGE> 12
(iii) a certificate, dated the closing date, of the Secretary of the
Seller, setting forth the authorizing resolutions adopted by the Seller's Board
of Directors and Shareholders with respect to the transactions contemplated
hereby and certifying its Certificate of Incorporation;

(iv) except for the estimated closing date used in the bulk sale
notice falling on a date prior to the date hereof, the Seller shall have
complied with any bulk sales law requirements and Seller shall deliver to
Purchaser a certificate, dated the closing date, from the President of the
Seller to such effect;

(v) the Schedules to this Agreement;

(vi) all of the Inventory shall have been placed with a third party
common carrier on route to Purchaser (it being agreed that (X) title to the
Acquired Assets passes to Purchaser as of the date of this Agreement, (Y)
Purchaser and Seller shall each pay one-half of the freight costs for
delivering the Inventory to Purchaser, and (Z) Purchaser bears all risk
associated with the shipment of the Inventory to Purchaser once the Inventory
is delivered to a third party common carrier); and

(vii) such other documents and instruments as the Purchaser may
reasonably request.

(b) Upon execution of this Agreement, the Purchaser shall deliver the
following documents and instruments, duly executed, to the Seller:

(i) the certificates representing the Payment Shares, issued in the
name of Seller;

(ii) certificates of the Secretaries of State of the States of New
York and Delaware, as of a recent date, as to the good standing of each of BPMC
and the Purchaser and certifying its Certificate of Incorporation;

(iii) certificates, dated the closing date, of the Secretary of
each of BPMC and the Purchaser, setting forth the authorizing resolutions
adopted by each of BPMC's and the Purchaser's Board of Directors with respect
to the transactions contemplated hereby;

(iv) a resale certificate of BPMC; and

(v) such other documents and instruments as the Seller may
reasonably request.

ARTICLE VII

COVENANTS
---------

7.1 RESTRICTION ON TRANSFER.

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<PAGE> 13
(a) During the one year period following the date of this Agreement,
the Seller covenants and agrees not to sell, assign, pledge or otherwise
transfer, encumber or dispose of all or any part of the Payment Shares without
the prior written consent of the Purchaser, which consent may be withheld
arbitrarily. Notwithstanding the foregoing, upon prior written notice to BPMC,
(i) Seller may transfer the Payment Shares to its parent, Educorp Multimedia,
Inc. and (ii) Educorp Multimedia, Inc. may transfer the Payment Shares to its
parent, Hariston Corporation, in each case only if such transferee agrees to be
bound by the terms and conditions of this Agreement and the form of such
agreement by such transferee is reasonably acceptable to BPMC. BPMC will
instruct its transfer agents not to transfer any Payment Shares unless such
transfer shall be made in compliance with this Agreement. Any transfer or
purported transfer by Seller in violation of the provisions of this Section 7.1
shall be null and void.

(b) In addition to the legend set forth in Section 4.13 the
certificates representing the Payment Shares shall be endorsed as follows:

"Any transfer or other disposition of the shares
represented by this certificate is subject to the
restrictions on transfer set forth in an Asset
Purchase Agreement among Byron Preiss Multimedia
Company, Inc., Byron Preiss Holdings, Inc. and
HighText Interactive, Inc. dated ____________,
1998; provided, however, that all such
restrictions on transfer under the Asset Purchase
Agreement expire on the first anniversary of the
date of the Asset Purchase Agreement."

7.2 NON-COMPETITION. (a) The Seller agrees that, for a period of two
(2) years after the date hereof, the Seller shall not, in the United States or
any other geographic area where the Purchaser does business, alone or in
association with others; (i) engage, directly or indirectly, in the type of
business conducted by Seller within the two (2) years prior to the date hereof
(the "Competitive Activities"); and (ii) have any interest in or be employed by
(or act as a consultant to) any company which is engaged in Competitive
Activities.

(b) During the same period, the Seller shall not, and shall use its
respective best efforts not to allow any person under its actual control
(including employees and agents of the Seller or any affiliated company under
its actual control) to, directly or indirectly, on behalf of itself or any other
person: (i) call upon or accept business involving the Competitive Activities
from or solicit business involving the Competitive Activities of any person who
is, or who had been at any time during the preceding two (2) years, a customer
of Purchaser or Seller, or otherwise divert or attempt to divert any business
involving the Competitive Activity from Purchaser or Seller; (ii) recruit or
otherwise solicit or induce any person who is an employee of, or otherwise
engaged by, Purchaser to terminate his or her employment or other relationship
with Purchaser or hire any person who has left the employ of Purchaser during
the preceding two (2) years; or (iii) use or purport to authorize any person to
use any name, mark, logo, trade dress or other identifying words or images which

95
<PAGE> 14
are the same as or confusingly similar to those used at any time by Purchaser
or Seller in connection with the Acquired Assets.

(c) Except as otherwise provided herein, each party hereto will keep
confidential any information obtained from the other party in connection with
the transactions contemplated by this Agreement, except as and to the extent
required by applicable law.

(d) The restrictions set forth in this Section 7.3 are considered by the
parties to be fair and reasonable. The Seller further acknowledges that the
Purchaser would be irreparably harmed and that monetary damages would not
provide an adequate remedy in the event of a breach of the provisions of this
Section 7.2. Accordingly, the Seller agrees that, in addition to any other
remedies available to the Purchaser, the Purchaser shall be entitled to specific
performance, injunction and other equitable relief to secure the enforcement of
these provisions, and the party seeking such relief shall not be required to
post bond as a condition thereto. If any provisions of this Section 7.1 relating
to the time period, scope of activities or geographic area of restrictions is
declared by a court of competent jurisdiction to exceed the maximum permissible
time period, scope of activities or geographic area, the maximum time period,
scope of activities or geographic area, as the case may be, shall be reduced to
the maximum which such court deems enforceable. If any provisions of this
Section 7.2 other than those described in the preceding sentence are adjudicated
to be invalid or unenforceable, the invalid or unenforceable provisions shall be
deemed amended (with respect only to the jurisdiction in which such adjudication
is made) in such manner as to render them enforceable and to effectuate as
nearly as possible the original intentions and agreement of the parties.

7.2 CHANGE OF CORPORATE NAME. Seller may retain its corporate name so
long as it is not actively engaged in business. Prior to actively engaging in
any business, Seller shall take all necessary corporate action to effect the
change of its corporate name to a name dissimilar to its present name,
including the filing of the required amendment to its certificate of
incorporation in the offices of the Secretary of State of the State of
California.

7.3 SALES TAX. All sales, transfer and similar taxes in connection with
the sale of the Acquired Assets hereunder to the Purchaser shall be borne
equally by the Seller and the Purchaser.

7.4 BULK SALES LAWS. Seller shall comply with and fulfill all
requirements regarding any applicable bulk sales law. In addition to any other
rights to indemnification contained herein, the Seller, subject to the
limitations set forth in Section 5.3(d), shall indemnify and hold the purchaser
harmless against any and all claims, losses, liabilities and damages and any
and all costs and expenses, which Purchaser may incur as a result of or arising
out of any failure by the parties to comply with any bulk sales law.

ARTICLE VIII
MISCELLANEOUS

9.1 NOTICES. Any Notice, demand, claim or other communication under
this Agreement shall be in writing and shall be deemed to have been given upon
the delivery, mailing or transmission thereof, as the case may be, if delivered
personally or sent by

96
<PAGE> 15
certified mail, return receipt requested, postage prepaid, or sent by facsimile
or prepaid overnight courier to the parties at the addresses set forth below
their names on the signature pages of this Agreement (or at such other
addresses as shall be specified by the parties by like notice). A copy of any
notices delivered to the Purchaser shall also be sent to (i) Kane Kessler, P.C.
- - 26th Floor, 1350 Avenue of the Americas, New York, New York 10019, Attention:
Robert L. Lawrence, Esq., Facsimile No.(212) 245-3009. A copy of any notices
delivered to the Seller shall also be sent to Altheimer & Gray, 10 South Wacker
Drive, Suite 4000, Chicago, IL 60606, Attention: Stephen Otis, Esq., Facsimile
No.(312) 715-4800.

8.2 ENTIRE AGREEMENT. This Agreement (including the exhibits and
schedules hereto) contains every obligation and understanding between the
parties relating to the subject matter hereof and merges all prior discussions,
negotiations and agreements (including, but not limited to, the Letter of
Intent dated August 27, 1997), if any, between them, and none of the parties
shall be bound by any conditions, definitions, understandings, warranties or
representations other than as expressly provided herein. All exhibits and
schedules referenced in this Agreement are expressly made a part of, and
incorporated by reference into, this Agreement.

8.3 BINDING EFFECT. This Agreement shall be binding upon and inure to
the benefit of the parties hereto and their respective successors, heirs,
personal representatives, legal representatives, and permitted assigns.

8.4 RESERVED.

8.5 ASSIGNMENT. This Agreement may not be assigned by any party without
the written consent of the other party.

8.6 WAIVER AND AMENDMENT. Any representation, warranty, covenant, term or
condition of this Agreement which may legally be waived, may be waived, or the
time of performance thereof extended, at any time by the party entitled to the
benefit thereof, and any term, condition or covenant hereof (including, without
limitation, the period during which any condition is to be satisfied or any
obligation performed) may be amended by the parties at any time. Any such
waiver, extension or amendment shall be evidenced by an instrument in writing
executed on behalf of the appropriate party (in the case of the Purchaser by its
President, any Vice President or any other person who has been authorized by its
Board of Directors to execute waivers, extensions or amendments on its behalf).
No waiver by any party hereto, whether express or implied, of such party's
rights under any provision of this Agreement shall constitute a waiver of such
party's rights under such provisions at any other time or a waiver of such
party's rights under any other provision of this Agreement. No failure by any
party to take any action against any breach of this Agreement or default by
another party shall constitute a waiver of the former party's right to enforce
any provision of this Agreement or to take action against such breach or default
or any subsequent breach or default by such other party.

8.7 NO THIRD PARTY BENEFICIARY. Nothing expressed or implied in this
Agreement in intended, or shall be construed, to confer upon or give any
Person, other than the parties hereto and their respective heirs, personal
representatives, legal representatives,

97
<PAGE> 16
successors are permitted assigns, any rights or remedies under or by reason of
this Agreement.

8.8. SEVERABILITY. In the event that any one or more of the
provisions contained in this Agreement shall be declared invalid, void or
unenforceable, the remainder of the provisions of this Agreement shall remain
in full force and effect, and such invalid, void or unenforceable provision
shall be interpreted as closely as possible to the manner in which it was
written.

8.9 EXPENSES. Each party agrees to pay, without right of
reimbursement from the other party, the costs incurred by it incident to the
performance of its obligations under this Agreement and the consummation of the
transactions contemplated hereby, including, without limitation, costs incident
to the preparation of this Agreement, and the fees and disbursements of
counsel, accountants and consultants employed by such party in connection
herewith.

8.10 HEADINGS. The section and other headings contained in this
Agreement are for reference purposes only and shall not affect the meaning or
interpretation of any provisions of this Agreement.

8.11 COUNTERPARTS. This Agreement may be executed in any number of
counterparts, each of which shall be deemed an original but all of which
together shall constitute one and the same instrument.

8.12 INJUNCTIVE RELIEF. It is possible that remedies at law may be
inadequate and, therefore, the parties hereto shall be entitled to equitable
relief including, without limitation, injunctive relief, specific performance
or other equitable remedies in addition to all other remedies provided
hereunder or available to the parties hereto at law or in equity.

8.13 REMEDIES CUMULATIVE. No remedy made available by any of the
provisions of this Agreement is intended to be exclusive of any other remedy,
and each and every remedy shall be cumulative and shall be in addition to every
other remedy given hereunder or now hereafter existing at law or in equity.

8.14 GOVERNING LAW. This Agreement has been entered into and shall
be construed and enforced in accordance with the laws of the State of New York
without reference to the choice of law principles thereof.

8.15 JURISDICTION AND VENUE. This Agreement shall be subject to the
exclusive jurisdiction of the courts of New York County, State of New York. The
parties to this Agreement agree that any breach of any term or condition of
this Agreement shall be deemed to be a breach occurring in the State of New
York by virtue of a failure to perform an act required to be performed in the
State of New York and irrevocably and expressly agree to submit to the
jurisdiction of the courts of the State of New York for the purpose of
resolving any disputes among the parties relating to this Agreement or the
transactions contemplated hereby. The parties irrevocably waive, to the fullest
permitted by law, any objection which they may now or hereafter have to the
laying of venue of any suit, action or proceeding arising out of or relating to
this Agreement, or any judgment entered by any

98
<PAGE> 17
court in respect hereof brought in New York County, State of New York, and
further irrevocably waive any claim that any suit, action or proceeding brought
in New York County, State of New York has been brought in an inconvenient forum.

8.16 PARTICIPATION OF PARTIES. The parties hereto acknowledge that this
Agreement and all matters contemplated herein have been negotiated by both
parties hereto and their respective legal counsel and that both parties have
participated in the drafting and preparation of this Agreement from the
commencement of negotiations at all times through the execution thereof.

8.17 FURTHER ASSURANCES. The parties hereto shall deliver any and all
other instruments or documents required to be delivered pursuant to, or
necessary or proper in order to give effect to, all of the terms and provisions
of this Agreement.

8.18 TERMS IN CONTEXT. Whenever from the context it appear appropriate,
each term stated in either the singular or the plural shall include the
singular and the plural and pronouns in either the masculine, the feminine or
the neuter gender shall include the masculine, feminine and neuter.

99
<PAGE> 18
IN WITNESS WHEREOF, the parties hereto have each executed and delivered
this Agreement as of the day and year first above written.

BYRON PREISS MULTIMEDIA
HOLDINGS, INC.

By: /s/ BYRON PREISS
-------------------------------------
Name: Byron Preiss
Title: Chief Executive Officer
and President
Facsimile No. (212) 627-2788
Address: 24 W. 25th Street, 5th Floor
New York, NY

BYRON PREISS MULTIMEDIA
COMPANY, INC.

HIGHTEXT INTERACTIVE, INC.

By:
-------------------------------------
Name: L. James Porter
Title:
Facsimile No. (604) 685-8534
Address: c/o Hariston Corporation
1500 West Georgia Street
Vancouver, B.C. V8G 226

100
<PAGE> 19
IN WITNESS WHEREOF, the parties hereto have each executed and
delivered this Agreement as of the day and year first above written.

BYRON PREISS MULTIMEDIA
HOLDINGS, INC.

By:
-------------------------------------
Name: Byron Preiss
Title: Chief Executive Officer
and President
Facsimile No. (212) 627-2788
Address: 24 W. 25th Street, 5th Floor
New York, NY

BYRON PREISS MULTIMEDIA
COMPANY, INC.

By:
-------------------------------------
Name: Byron Preiss
Title: Chief Executive Officer
and President
Facsimile No. (212) 627-2788
Address: 24 W. 25th Street, 5th Floor
New York, NY

HIGHTEXT INTERACTIVE, INC.

By: /s/ L. JAMES PORTER
----------------------------------
Name: L. James Porter
Title: Chief Financial Officer
and Secretary
Facsimile No. (604) 685-8534
Address: c/o Hariston Corporation
1500 West Georgia Street
Vancouver, B.C. V8G 2Z6

101

<PAGE> 1
EXHIBIT 10.5

AGREEMENT

This AGREEMENT (the "Agreement") is entered into as of December 10, 1997
by and among Hariston Corporation, a Canadian Corporation ("Hariston"), on the
one hand, and Nuno Brandolini ("Brandolini") and Kevin McCarthy ("McCarthy") on
the other hand.

RECITALS

A. Each of Brandolini and McCarthy are officers and directors of Hariston;

B. Brandolini and McCarthy have agreed to resign as officers and directors
of Hariston effective December 11, 1997 on the terms and conditions set
forth in this Agreement; and

C. In connection with Brandolini's and McCarthy's resignations, Hariston
desires to provide Brandolini and McCarthy with the benefits and
privileges set forth in this Agreement.

AGREEMENT

NOW, THEREFORE, in consideration of the promises and mutual obligations
of the parties set forth below, the parties hereby covenant and agree as
follows:

1. Resignation. Brandolini and McCarthy hereby resign as officers and directors
of Hariston effective December 11, 1997 (the "Effective Date"). Brandolini and
McCarthy agree to execute any and all additional documents which Hariston may
reasonably request to evidence such resignation or to effect the transition of
any powers or rights to any successor to any position previously held by
Brandolini and McCarthy.

2. Corporate Expense Reimbursement. On or prior to December 31, 1997, Brandolini
and McCarthy shall submit to Hariston reimbursement requests for all business
expenses incurred prior to the Effective Date for which Brandolini or McCarthy
is entitled to reimbursement and such expenses shall be reimbursed by Hariston
within thirty days.

3. Acknowledgements. Brandolini and McCarthy acknowledge and agree that, except
for the payments to be made in the future as expressly provided for in this
Agreement, they have received payment of all amounts due to them in connection
with their employment by Hariston, including without limitation, all salary,
severance pay, bonuses, sick leave, holiday pay, vacation pay, expense
reimbursement, life insurance, health or medical insurance, workers'
compensation, disability and other benefits or compensation.

4. Indemnities to Directors and Others.

(a) Except in respect of an action by or on behalf of Hariston or body
corporate to procure a judgment in its favour, Hariston shall indemnify each of
Brandolini and McCarthy, and his heirs and legal representatives (collectively,
the "Brandolini Indemnified Parties"), against all costs, charges and expenses
(including attorney's fees and expenses, witness fees and travel

<PAGE> 2

expenses), including an amount paid to settle an action or satisfy a judgment,
reasonably incurred by him ( the "Expenses") in respect of any civil, criminal
or administrative action or proceeding to which he is made a party by reason of
being or having been a director or officer of the corporation or such body
corporate, if:

(i) he acted honestly and in good faith with a view to the best
interests of Hariston; and

(ii) in the case of a criminal or administrative action or
proceeding that is enforced by a monetary penalty, he had
reasonable grounds for believing that his conduct was
lawful.

(b) In connection with any matter for which indemnification may be
available hereunder, the Brandolini Indemnified Parties shall be entitled to
retain counsel satisfactory to them to represent them in such matter, such
counsel to be reasonably satisfactory to Hariston; provided, however, that the
Brandolini Indemnified Parties as a group may retain only one law firm with
respect to each related matter except to the extent that, in the opinion of
counsel to a Brandolini Indemnified Party, under applicable standards of
professional conduct, a conflict on any significant issue exists between
positions of any two or more Brandolini Indemnified Parties.

(c) Hariston may advance to the Brandolini Indemnified Parties, prior to
any final disposition of any threatened or pending action, suit, investigation
or proceeding, whether civil, criminal, administrative or investigative, any and
all Expenses (including legal fees and expenses) incurred in participating in,
investigating or defending any such action, suit, investigation or proceeding,
or testifying in connection therewith, within ten (10) days after receiving
copies of invoices for such Expenses.

(d) The rights conferred on the Brandolini Indemnified Parties by this
Agreement shall not be exclusive of any other right which they may have or
hereafter acquire under any statute, provision of the charter or Bylaws of
Hariston.

5. Miscellaneous

(a) Entire Agreement. This agreement and the agreements referred to
herein contain the entire agreement and understanding among the parties hereto
concerning the subject matter hereof and supersede and replace all prior
negotiations, proposed agreements and agreements, written or oral. Each of the
parties acknowledges and confirms that such party has made no promises,
representations or warranties whatsoever, express or implied, not contained
herein or in an agreement referred to herein concerning the subject matter
hereof, and that such party has not executed this Agreement in reliance on any
such promise, representation or warranty not contained herein or in such other
agreement.

<PAGE> 3

(b) Further Acts. Each party shall do all acts and things and make,
execute and deliver such written instruments as shall be reasonably required to
carry out the terms and intent of this Agreement.

(c) Counterparts. This agreement may be executed in any number of
counterparts, each of which shall be deemed to be an original and all of which
shall constitute one and the same agreement.

(d) Modifications. This Agreement may not be modified by any party
except in a writing signed by all of the parties hereto.

(e) Governing Law. This Agreement and the rights of the parties
hereunder shall be governed by and construed in accordance with the laws of the
Province of British Columbia in effect at the date of this Agreement, including
all matters of construction, validity, performance and enforcement and without
giving effect to principles of conflicts of laws.

(f) Severability. If any provision or term of this Agreement is held to
be illegal, invalid or unenforceable under present or future laws, such
provision or term shall be fully severable, and this Agreement shall be
construed and enforced as if such illegal, invalid or unenforceable provision
had never comprised part of this Agreement, and the remaining provisions of this
Agreement shall remain in full force and effect and shall be affected by the
illegal, invalid or unenforceable provision or by its severance from this
Agreement. Furthermore, in lieu of each such illegal, invalid or unenforceable
provision or term, there shall be added automatically as a part of this
Agreement another provision or term as similar to the illegal, invalid or
unenforceable provision, as may be possible and be legal, valid and enforceable.

(g) Captions. The captions used in the Section headings to this
Agreement are for convenience of reference only and shall not control or effect
the meaning or construction of any provision of this Agreement.

(h) Successors and Assigns. This Agreement shall be binding upon and
inure to the benefit of and be enforceable by the parties and their respective
successors and assigns. Hariston shall require and cause any successor (whether
direct or indirect, by purchaser, merger, consolidation, sale of assets or
otherwise) to execute a written agreement expressly assuming the obligations of
Hariston hereunder

<PAGE> 4

IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first written above.

HARISTON CORPORATION

By: /s/ L. James Porter /s/ Nuno Brandolini
------------------------------------ ---------------------------
NUNO BRANDOLINI

Title: Secretary and Chief Financial Officer /s/ Kevin McCarthy
------------------------------------- ---------------------------
KEVIN McCARTHY

<PAGE> 1
EXHIBIT 21

SUBSIDIARIES OF THE REGISTRANT

State or Jurisdiction
Name of Incorporation
---- ----------------

<S> <C>
Educorp Multimedia, Inc. (inactive) ............ Delaware

Educorp Direct, Inc.(1) (inactive) ............. California
(formerly named "CD-Soft Acquisition
Corporation" and "CD-Soft Source Corporation")

HighText Interactive, Inc.(1) (inactive) ....... California
(formerly named "CD-Soft Press Corporation")

EuroEastern Investment Corporation (inactive) .. Delaware
</TABLE>

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

(1) Wholly-owned by Educorp Multimedia, Inc.

<PAGE> 1

[ARTHUR ANDERSEN LETTERHEAD]

EXHIBIT 23

CONSENT OF INDEPENDENT ACCOUNTANT

We consent to the incorporation of our report included in this Form 10-K
into the Company's previously filed Registration Statements on Form S-8 (File
No. 333-20109 and File No. 333-20091) and the Company's previously filed
Registration Statement on Form S-3 (File No. 333-07843).

/s/ Arthur Andersen & Co.

Vancouver, British Columbia

April 10, 1998

<ARTICLE> 5
<MULTIPLIER> 1,000

<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> DEC-31-1997
<CASH> 3,266
<SECURITIES> 8
<RECEIVABLES> 525
<ALLOWANCES> 5
<INVENTORY> 0
<CURRENT-ASSETS> 4,035
<PP&E> 69
<DEPRECIATION> 49
<TOTAL-ASSETS> 4,055
<CURRENT-LIABILITIES> 345
<BONDS> 0
0
0
<COMMON> 31,999
<OTHER-SE> (28,289)
<TOTAL-LIABILITY-AND-EQUITY> 4,054
<SALES> 0
<TOTAL-REVENUES> 0
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> (100)
<INCOME-PRETAX> 4,509
<INCOME-TAX> 0
<INCOME-CONTINUING> 4,509
<DISCONTINUED> (2,207)
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 2,302
<EPS-PRIMARY> 0.18
<EPS-DILUTED> 0.18

</TABLE>