WISMER MARTIN INC, SB-2/A, 1995-08-03

WISMER MARTIN INC
SB-2/A, 1995-08-03
PREPACKAGED SOFTWARE

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<PAGE>

U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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AMENDMENT NO. 1
TO
FORM SB-2
REGISTRATION STATEMENT
Under
THE SECURITIES ACT OF 1933

WISMER*MARTIN, INC.
(Name of small business issuer in its charter)

WASHINGTON 7373 91-1196514
(State or jurisdiction of (Primary Standard Industrial (I.R.S. Employer
incorporation or organization) Classification Code Number) Identification No.)

N. 12828 NEWPORT HIGHWAY
MEAD, WASHINGTON 99021
(509) 466-0396
(Address and telephone number of principal executive offers)

N. 12828 NEWPORT HIGHWAY
MEAD, WASHINGTON 99021
(Address of principal place of business or intended principal place of business)

RONALD L. HOLDEN
CHAIRMAN AND CHIEF EXECUTIVE OFFICER
WISMER*MARTIN, INC.
N. 12828 NEWPORT HIGHWAY
MEAD, WASHINGTON 99021
(509) 466-0396
(Name, address and telephone number of agent for service)
-----------------------

COPY TO:
LAWRENCE R. SMALL
PAINE, HAMBLEN, COFFIN, BROOKE & MILLER
717 WEST SPRAGUE AVENUE, SUITE 1200
SPOKANE, WASHINGTON 99204-0464
(509) 455-6000
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APPROXIMATE DATE OF PROPOSED SALE TO THE PUBLIC:
As soon as practicable after this Registration Statement becomes effective.
-----------------------

CALCULATION OF REGISTRATION FEE

<TABLE>
<CAPTION>
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- ------------------------------------------------------------------------------------------------------------------------------------
TITLE OF EACH CLASS OF DOLLAR AMOUNT TO BE PROPOSED MAXIMUM PROPOSED MAXIMUM AMOUNT OF
SECURITIES TO BE REGISTERED REGISTERED OFFERING PRICE PER AGGREGATE OFFERING REGISTRATION FEE
UNIT(1) PRICE
<S> <C> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------------------------------------
Common Stock, $.001 par
value per share. . . . $3,750,000 $1.25 $3,750,000 $1,293.10
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------

<FN>

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

</TABLE>

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

Information contained herein is subject to completion or amendment. A
registration statement relating to these securities has been filed with the
Securities and Exchange Commission. These securities may not be sold nor may
offers to buy be accepted prior to the time the registration statement becomes
effective. This prospectus shall not constitute an offer to sell or the
solicitation of an offer to buy nor shall there be any sale of these securities
in any State in which such offer, solicitation or sale would be unlawful prior
to registration or qualification under the securities laws of any such State.

<PAGE>

Subject to Completion
_______________, 1995

3,000,000 SHARES

WISMER*MARTIN, INC.

COMMON STOCK

Prior to this offering, there has been only a limited public market
for the Common Stock of the Company. It is currently estimated that the public
offering price will be $1.25 per share See "Determination of Offering Price"
for the factors considered in determining the public offering price.

Following this offering, the current executive officers and directors
of the Company will beneficially own or have voting control over approximately
50% of the Common Stock. See "Risk Factors--Concentration of Ownership" and
"Security Ownership of Certain Beneficial Owners and Management."

THE COMMON STOCK OFFERED HEREBY INVOLVES A HIGH DEGREE OF RISK. SEE "RISK
FACTORS."

THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED
UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.

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PRICE PROCEEDS
TO UNDERWRITING DISCOUNTS TO
PUBLIC AND COMMISSIONS(1) COMPANY(2)
<S> <C> <C> <C>
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Per Share. . . . . . . . $1.25 $-0- $1.25
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Total . . . . . . . . . $3,750,000 $-0- $3,750,000
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<FN>

(1) The services of an underwriter, broker, dealer or finder have not been
engaged for the offering. No discounts, commissions or fees for such
services will be incurred in connection with the offering. See
Prospectus "Use of Proceeds."

(2) Before deducting expenses of the offering estimated at $120,000 for
audit and legal fees.

</TABLE>

THE DATE OF THIS PROSPECTUS IS ______________, 1995.

<PAGE>

ADDITIONAL INFORMATION

THE COMPANY HAS FILED A REGISTRATION STATEMENT ON FORM SB-2 UNDER THE
SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), WITH RESPECT TO THE
SHARES OF COMMON STOCK OFFERED HEREBY WITH THE SECURITIES AND EXCHANGE
COMMISSION (THE "COMMISSION"), IN WASHINGTON, D.C. THIS PROSPECTUS DOES NOT
CONTAIN ALL OF THE INFORMATION SET FORTH IN THE REGISTRATION STATEMENT AND THE
EXHIBITS AND SCHEDULES THERETO. FOR FURTHER INFORMATION WITH RESPECT TO THE
COMPANY AND THE COMMON STOCK OFFERED HEREBY, REFERENCE IS MADE TO THE
REGISTRATION STATEMENT AND THE EXHIBITS AND SCHEDULES FILED HEREWITH.
STATEMENTS CONTAINED IN THIS PROSPECTUS AS TO THE CONTENTS OF ANY CONTRACT OR
ANY OTHER DOCUMENT REFERRED TO ARE NOT NECESSARILY COMPLETE, AND IN EACH
INSTANCE REFERENCE IS MADE TO THE COMPANY OF SUCH CONTRACT OR OTHER DOCUMENT
FILED AS AN EXHIBIT TO THE REGISTRATION STATEMENT, EACH SUCH STATEMENT BEING
QUALIFIED IN ALL RESPECTS BY SUCH REFERENCE. A COPY OF THE REGISTRATION
STATEMENT MAY BE INSPECTED WITHOUT CHARGE AT THE OFFICES OF THE COMMISSION IN
WASHINGTON, D.C. 20549, AND COPIES OF ALL OR ANY PART OF THE REGISTRATION
STATEMENT MAY BE OBTAINED FROM THE PUBLIC REFERENCE SECTION OF THE COMMISSION AT
450 FIFTH STREET, N.W., WASHINGTON, D.C. 20549, AND AT 5757 WILSHIRE BOULEVARD,
SUITE 500 EAST, LOS ANGELES, CALIFORNIA 90036, UPON THE PAYMENT OF THE FEES
PRESCRIBED BY THE COMMISSION.

NO PERSON HAS BEEN AUTHORIZED IN CONNECTION WITH THE OFFERING MADE HEREBY TO
GIVE ANY INFORMATION OR TO MAKE ANY REPRESENTATION NOT CONTAINED IN THIS
PROSPECTUS AND, IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATION MUST NOT BE
RELIED UPON AS HAVING BEEN AUTHORIZED BY THE COMPANY. THIS PROSPECTUS DOES NOT
CONSTITUTE AN OFFER TO SELL OR A SOLICITATION OF ANY OFFER TO BUY ANY OF THE
SECURITIES OFFERED HEREBY TO ANY PERSON OR BY ANYONE IN ANY JURISDICTION IN
WHICH IT IS UNLAWFUL TO MAKE SUCH OFFER OR SOLICITATION. NEITHER THE DELIVERY OF
THIS PROSPECTUS NOR ANY SALE MADE HEREUNDER SHALL, UNDER ANY CIRCUMSTANCES,
CREATE ANY IMPLICATION THAT THE INFORMATION CONTAINED HEREIN IS CORRECT AS OF
ANY DATE SUBSEQUENT TO THE DATE HEREOF.

AVAILABLE INFORMATION

The Company is subject to the information requirements of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and in accordance
therewith files reports, proxy statements and other information with the
Securities and Exchange Commission (the "Commission"). Such reports, proxy
statements and other information may be inspected and copied at the public
reference facilities maintained by the Commission at 450 Fifth Street, N.W.,
Washington, D.C. 20549. Copies of such materials can be obtained from the
Public Reference Section of the Commission, 450 Fifth Street, N.W., Washington,
D.C. 20549 upon payment of the prescribed fees.

The Company hereby undertakes to provide without charge to each person,
including any beneficial owner, to whom a copy of this Prospectus has been
delivered, upon written or oral request of such person, a copy of any or all of
the foregoing documents incorporated herein by reference (other than exhibits to
such documents, unless such exhibits are specifically incorporated herein by
reference into such documents). Requests for such documents should be submitted
in writing to the Company at its principal executive offices at 12828 N. Newport
Highway, Mead, Washington 99021 or by telephone at (509) 466-0396 to the
attention of Douglas A. Willford, Chief Financial Officer.

<PAGE>

TABLE OF CONTENTS

PROSPECTUS SUMMARY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4

RISK FACTORS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7

THE COMPANY. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10

USE OF PROCEEDS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11

PRICE RANGE OF THE COMMON STOCK AND DIVIDEND POLICY. . . . . . . . . . . . . 11

CAPITALIZATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12

DILUTION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12

PLAN OF DISTRIBUTION . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13

MANAGEMENT'S DISCUSSION AND ANALYSIS

OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS . . . . . . . . . . . . . . 13

BUSINESS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21

LEGAL PROCEEDINGS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34

MANAGEMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35

CERTAIN TRANSACTIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39

SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT . . . . . . . 39

DESCRIPTION OF CAPITAL STOCK . . . . . . . . . . . . . . . . . . . . . . . . 41

TRANSFER AGENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42

SHARES ELIGIBLE FOR FUTURE SALE. . . . . . . . . . . . . . . . . . . . . . . 42

DETERMINATION OF OFFERING PRICE. . . . . . . . . . . . . . . . . . . . . . . 43

LEGAL MATTERS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43

EXPERTS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43

INDEX TO FINANCIAL STATEMENTS. . . . . . . . . . . . . . . . . . . . . . . . F-1

UNTIL ______, 1995 (25 DAYS AFTER THE DATE OF THIS PROSPECTUS), ALL
DEALERS EFFECTING TRANSACTIONS IN THE COMMON STOCK OFFERED HEREBY, WHETHER OR
NOT PARTICIPATING IN THIS DISTRIBUTION, MAY BE REQUIRED TO DELIVER A PROSPECTUS.
THIS IS IN ADDITION TO THE OBLIGATION OF DEALERS TO DELIVER A PROSPECTUS WHEN
ACTING AS UNDERWRITERS AND WITH RESPECT TO THEIR UNSOLD ALLOTMENTS OR
SUBSCRIPTIONS.

<PAGE>

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PROSPECTUS SUMMARY

THE FOLLOWING SUMMARY IS QUALIFIED IN ITS ENTIRETY BY THE MORE DETAILED
INFORMATION AND THE FINANCIAL STATEMENTS AND NOTES THERETO APPEARING ELSEWHERE
IN THIS PROSPECTUS. INVESTORS SHOULD CAREFULLY CONSIDER THE INFORMATION SET
FORTH UNDER THE HEADING "RISK FACTORS."

THE COMPANY

Wismer Martin develops, markets, installs and supports computer systems which
automate physician offices, group practices, hospitals, and managed care
organizations. The Company believes that it is one of the leading providers of
practice management systems and healthcare information networks. The Company's
SM*RT Net suite of products is designed to provide connectivity utilizing
industry standard data formats for all network participants, including
physicians, hospitals, labs, imaging centers, IPA's, PPO's, HMO's, employers,
third party payors, suppliers and other entities. The Company's SM*RT Practice
product, is designed to manage the financial, administrative and practice
management requirements of group medical practices, and is fully-integrated with
SM*RT Net. In addition, the Company's hospital information system solution,
sold under the name ADDvantage, is designed to provide a complete integrated
application to automate the small to mid-size hospital. These three product
solutions provide the Company's clients with the necessary technology
infrastructure to meet the demands of today's rapidly changing healthcare
environment. The Company also sells hardware, training and installation
support, forms and supplies, and software and hardware maintenance services.

The Company's strategy is to offer its practice management and networking
products to physicians, hospitals, payors, and managed care organizations which
are seeking to create an integrated delivery network in their market area.
Rather than simply providing a hardware or software product, Wismer Martin
offers a complete network solution including a services component which takes
the client from the planning through implementation. The Company's hospital
strategy is to offer its HIS applications solution to the small to mid size
hospital seeking a low cost system which requires few data processing resources
to manage. The Company has installed more than 1,600 practice management
systems serving over 3,800 physicians in several medical specialties ranging in
practice size from one to more than 30 physicians. The Company has installed
two major health information payor sponsored networks which span the states of
Washington and Alaska and is in the process of installing two hospital sponsored
networks in the states of Kentucky and Tennessee. The Company's hospital client
base includes more than 65 hospitals ranging in size from 50 bed rural community
hospitals to major urban medical centers with more than 400 beds.

The Company believes that, due to the ongoing pressures on healthcare providers
from managed care, the demand for healthcare information networks will increase
and continue for the next several years and that these opportunities will drive
the sales of practice management systems and hospital systems which can be
effectively linked to such networks. A major new opportunity within the
practice management market is the patient medical record which the Company is
addressing through its Smart Care product offering under development. The
Company's business strategy is to package its various product lines together
with services offerings to meet the needs of this growing market.

The Company markets its products and services through a direct sales force
consisting of 10 individuals and devotes significant resources to developing and
maintaining relationships with existing customers and practice management
consultants. In addition, the Company markets its products and services through
larger strategic partners such as hardware and communications vendors. In the
fiscal year 1994, systems upgrades, add-on software and hardware, software and
hardware maintenance services, forms and supplies, and other services to
existing customers accounted for approximately 40% of total net revenues.

As part of its business strategy, in February 1994, the Company acquired 100% of
the outstanding stock of Integrated Health Systems, Inc. (IHS), a developer of
software solutions for small to mid-size hospitals which is located in La Jolla,
California and previously related to Wismer Martin through common ownership.
The acquisition provided the Company with a healthcare provider client base,
hospital information systems expertise and enhanced services which are now
available to healthcare information network clients. IHS focuses on the
development and marketing of products which are designed for the hospital and
non-physician enterprise markets.
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RESTRUCTURING PROJECT

During the second quarter of the current fiscal year the Board of Directors
initiated significant changes in the management of the Company. The new
management has realigned the Company's organization and cost structure. The
foundation for the restructuring is a plan to more fully support the Company's
plan to transition the Company away from its historical dependence on small
practice management system sales. The Company will focus on large group
practices, hospitals and other healthcare providers and payors who are
developing networks, while maintaining its existing customer base. In addition,
the Company's effort to reduce costs since the beginning of the third fiscal
quarter has resulted in an annualized reduction of over $2,000,000 from direct
overhead expense. These cost reductions were achieved by the closing of non-
essential field offices, reduction of personnel in practice management areas
which did not contribute to the direct support of existing clients, and by
reorganization of the Company to eliminate unneeded layers of management. There
are no significant restructuring costs. The Company now has three business
units; Practice Management, Healthcare Information Networks, and Hospital
Information Systems, each led by a Business Unit Manager. The sales organization
has been consolidated and centralized within each business unit. It is
anticipated that this project will continue for the next several months as each
business unit examines its operations for additional gains in efficiency. The
Company believes that with the reduced cost structure, highly centralized
operations, and increased focus on growth market areas (particularly hospitals,
PHO's, MSO's, and Payors), the Company can return to profitability in the final
quarter of this fiscal year ending June 30, 1995.

GTE RELATIONSHIP

By letter agreement dated May 25, 1995, Wismer Martin and GTE Data Services
("GTE") agreed that GTE would participate in a technical review of Wismer
Martin's product and network services. The purpose of the review is to evaluate
the potential for forming a teaming alliance between the two firms for the joint
offering of products and services to the healthcare market. Such a cooperative
working relationship would result in the development and implementation of
Healthcare Information Networks on both a regional and national basis. GTE
would provide clients the necessary technical infrastructure to operate the
communications network, while Wismer Martin would provide the software and
implementation services. This arrangement would provide Wismer Martin with a
partner who has a large national marketing and sales presence as well as the
financial resources to assume responsibility for large scale projects. GTE
completed its technical due diligence on or before June 30, 1995. GTE also
provided Wismer Martin with analytical and technical expertise during the period
in which GTE conducted its due diligence review. The business activities of
both parties as described in that letter agreement have been completed and the
parties have not entered into any further agreements or alliances as yet.

As used herein, each of the terms "Wismer Martin" and the "Company" refers to
Wismer*Martin, Inc., a Washington corporation, and its wholly-owned subsidiary,
Integrated Health Systems, Inc. The Company's executive offices are located at
12828 N. Newport Hwy., Mead, WA 99021, and its telephone number at that location
is (509) 466-0396

RISK FACTORS

The Common Stock offered hereby involves a high degree of risk. See "Risk
Factors."
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THE OFFERING

Common Stock offered by the Company. . . . . . . . . . . . 3,000,000 shares

Common Stock to be outstanding after the offering . . . . 12,847,625 shares (1)

Use of proceeds . . . . . . . . . . . . . . . . . . . . . Reduction of long-
term debt, provide
working capital and
other general
Corporate purposes.
See "Use of
Proceeds".

Over-the-Counter Market symbol . . . . . . . . . . . . . . WSMM

(1) Based on shares issued and outstanding as of June 30, 1995, assuming the
maximum number of shares are sold.

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Summary Consolidated Financial Data
(dollars in thousands, except per share data)

For the nine months
-------------------
ended For the fiscal years ended June 30,
----- -----------------------------------
March 31, 1995 1994 1993
-------------- ---- ----
<S> <C> <C> <C>
CONSOLIDATED STATEMENT OF OPERATIONS DATA:

Total net revenues $7,830 $14,397 $8,311
Costs and expenses $9,373 $13,242 $8,182
Income (loss) from operations ($1,542) $1,155 $129
Net income (loss) ($1,482) $698 $4
Net income (loss) per share ($0.15) $0.07 nil

</TABLE>

At March 31, 1995
Actual
<S> <C>
CONSOLIDATED BALANCE SHEET DATA:
Cash and cash equivalents $104
Working capital (deficit) ($2,463)
Software development costs, net $2,500
Total Assets $7,115
Long-term debt, less current maturities $4,070
Stockholders' equity (deficit) (1) ($1,899)

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<FN>

(1) Includes a reduction of $2,533,308 excess purchase price of acquired
subsidiary.

</TABLE>

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<PAGE>

RISK FACTORS

IN ADDITION TO THE OTHER INFORMATION IN THIS PROSPECTUS, THE FOLLOWING
FACTORS SHOULD BE CONSIDERED CAREFULLY IN EVALUATING AN INVESTMENT IN THE SHARES
OF COMMON STOCK OFFERED BY THIS PROSPECTUS.

GTE PARTNERSHIP. The creation of a strategic partnership with a
larger firm with a national presence is considered a key part of the Company's
overall business strategy. Such a partnership is vital in order to move quickly
to capture market share for network business and to enable the Company to win
large scale contracts. While current discussions between the Company and GTE
indicate a working relationship could be formalized, there are no assurances
that a agreement satisfactory to the two firms can be developed or, that if such
a partnership is defined and a formal agreement signed, that the partnership
will result in new and significant revenues to the Company.

RESTRUCTURING PROJECT; FUTURE OPERATING RESULTS. The Company effected
significant cost reductions together with organizational changes designed to
improve efficiency and more effectively focus upon new market areas during the
third quarter of the current fiscal year. There can be no assurance that this
restructuring project, as it continues will not have an adverse effect upon the
Company's operations, particularly during the initial stages of the project.

LONG SALES CYCLE. The major portion of new growth over the next few
years for the Company is projected to result from new health information network
sales. The sales cycle for the Company's network products and services is
typically 6 to 12 months from initial contact to contract execution. During this
period, the Company expends substantial time, effort and funds preparing a
contract proposal and negotiating the contract. Any significant or ongoing
failure by the Company to achieve a signed contract after expending such time,
effort and funds could have a material adverse effect on the Company's business,
financial condition and results of operations.

DEPENDENCE ON PRINCIPAL PRODUCT; MARKET ACCEPTANCE; NEW PRODUCT
DEVELOPMENT. The Company's future success and financial performance will depend
in large part on the Company's ability to continue to meet the increasingly
sophisticated needs of its customers through the timely development and
successful introduction of new and enhanced versions of its SM*RT Practice and
SM*RT Net product lines and other complementary products. Product development
focused on enhancing existing products or introducing new products, such as
SM*RT Care has inherent risks, and there can be no assurance that the Company
will be successful in its product development efforts or that the market will
continue to accept the Company's existing or new products. The Company has
historically expended a significant amount of its net revenues on product
development and believes that significant continuing product development efforts
will be required to sustain the Company's growth. There can be no assurance that
the Company will successfully develop, introduce and market new products or
product enhancements, or that products or product enhancements developed by the
Company will meet the requirements of healthcare providers and achieve market
acceptance. See "Business -- Products and Services" and "--Product Development."

COMPETITION; CONSOLIDATION OF THE HEALTHCARE INDUSTRY. The market for
community-wide and enterprise-specific healthcare information systems is
intensely competitive. Many of the Company's competitors have significantly
greater financial, technical and marketing resources than the Company and can be
potentially more effective in selling to the larger sales prospect. Furthermore,
other major information management companies may enter the market in which the
Company competes. There can be no assurance that future competition will not
have a material adverse effect on the Company's business, financial condition
and results of operations. Competitive pressures and other factors, such as new
product introductions by the Company or its competitors, or the entry into new
geographic markets, may result in significant price erosion that could have a
material adverse effect on the Company's business, financial condition and
results of operations.

Many healthcare providers are consolidating to create larger
healthcare delivery enterprises with greater regional market power. As a result,
these enterprises have greater bargaining power, which may lead to price erosion
of the Company's system. The Company's failure to maintain adequate price levels
could have a material adverse effect on the Company's business, financial
condition and results of operations. In addition, the Company believes that once
a healthcare provider has chosen a particular healthcare information system
vendor, such provider will continue to rely on that vendor for its future
information system requirements. As the healthcare industry undergoes further
consolidation, each sale of the Company's system assumes even greater importance
to the Company's business, financial condition and results of operations. The
Company's inability to make initial

<PAGE>

sales of its system to healthcare providers that are replacing or substantially
modifying their healthcare information systems could have a material adverse
effect on the Company's business, financial condition and results of operations.
See "Business -- Industry Background," "--Target Market," "--Sales and
Marketing" and "--Competition."

FINANCIAL CONDITION AND LIQUIDITY. At March 31, 1995, the Company has
a capital deficit of $1.9 million, negative working capital of $2.5 million and
incurred a significant net loss of $1.5 million from operations for the nine
month period then ended. Additionally, the Company has modified its credit
agreement with the bank as a result of covenant violations (see Note 5 of "Notes
to Consolidated Financial Statements"). During fiscal 1995, management
realigned the Company's organization and instituted a cost reduction program
which included the closing of non-essential field offices and a reduction in
personnel that were in place to support a higher level of sales which were not
achieved. Additionally, management is concentrating its efforts on moving the
Company away from its initial focus on small regional physician practices to a
focus on large group practices, hospitals and other healthcare providers and
payors who are developing networks. The Company intends to fund these efforts
by forming strategic alliances with the large users of the Company's software
products and with monies raised from this offering. Management believes that
with this reduced cost structure, highly centralized operations, and increased
focus on growth market areas (particularly Hospitals, PHO's, MSO's and Payors),
the Company can return to profitability. Should future markets for the
Company's product not develop as projected, management intends to implement
further cost reduction measures, seek external funding from strategic alliance
partners and further leverage the Company's asset base which includes its
current office facilities. Although the Company believes that its operating
plan and efforts to obtain other financing sources will be adequate to meet its
fiscal 1996 working capital needs, there can be no assurance that the Company
may not experience liquidity problems because of adverse market conditions or
other unfavorable events. See Note 2 to "Consolidated Financial Statements."

VARIATION IN QUARTERLY RESULTS OF OPERATIONS; HISTORY OF LOSSES. The
Company's quarterly results of operations have historically varied depending on
such factors as the timing of revenue recognition from system installations and
the variability of operating expenses. The Company's sales of additional
software and services and additional hardware have in the past fluctuated
significantly and may continue to do so in the future. These sales tend to be
unpredictable in nature and vary greatly in dollar amount. For each quarterly
period in 1993, 1994 and 1995, the components of gross margin by revenue
category have varied, and may continue to vary significantly, based on the
Company's performance on individual installation contracts, the amount of
support and maintenance services required during a particular quarter and sales
of additional hardware. A significant portion of the Company's operating
expenses are relatively fixed and are based primarily on revenue forecasts. In
particular, sales and marketing expense is based on the expectation that such
expenditures will result in revenues in future periods. To the extent revenue
targets in any particular quarter are not achieved, the Company may not be able
to adjust expenses accordingly. Fluctuations in the Company's results of
operations may significantly affect the market price of the Common Stock. Since
its incorporation in 1981, the Company has from time to time incurred annual
operating losses. Although the Company achieved profitability for the fiscal
years 1990, 1991, 1992, 1993, and 1994, profitability varied considerably during
that time period. The Company incurred a significant net loss of $1.5 million
for the nine month period ended March 31, 1995 and is expected to incur a loss
for the entire current fiscal year. This loss was sustained due to a decrease in
new network sales in tandem with increased costs incurred in anticipation of
implementation of new network clients. Therefore, there can be no assurance that
the Company will consistently be profitable. See "Management's Discussion and
Analysis of Financial Condition and Results of Operations -- Quarterly Results
of Operations." See, also, "Consolidated Financial Statements."

DEPENDENCE ON PROPRIETARY TECHNOLOGY; INTELLECTUAL PROPERTY RIGHTS.
The Company's success is heavily dependent on its proprietary software. The
Company's software is not patented and existing copyright laws offer only
limited practical protection. The Company relies largely on its license
agreements with clients and its own security systems, confidentiality procedures
and employee nondisclosure agreements to maintain the trade secrecy of its
products. There can be no assurance, however, that the legal protections and
precautions taken by the Company will be adequate to prevent misappropriation of
the Company's technology. In addition, these protections do not prevent
independent third-party development of functionally equivalent or superior
technologies or services. The Company does not believe that its operations or
products infringe on the intellectual property rights of others. See "Business
- -- Intellectual Property" and "--Legal Proceedings."

DEPENDENCE ON KEY PERSONNEL. The Company depends to a significant
extent on key management and technical personnel. The Company's growth and
future success will depend in large part on its ability to attract, motivate and
retain highly qualified personnel, in particular, trained and experienced
professionals capable of

<PAGE>

developing, selling and installing complex healthcare information systems.
Competition for such personnel is intense and there can be no assurance that the
Company will be successful in hiring, motivating or retaining such qualified
personnel. The loss of key personnel or the inability to hire or retain
qualified personnel could have a material adverse effect on the Company's
business, financial condition and results of operations. During the months of
February and March, 1995, several executive officers with sales and technical
responsibilities resigned. Stan Hatch, President and CEO resigned and his duties
were assumed by Ron Holden, the Chairman of the Board of Directors and CEO. Bob
Wilson, CFO and COO resigned and his duties were divided between John Perez,
currently President and COO and Doug Willford, CFO. Mike Magliaro, VP of
Healthcare Information Networks resigned and his duties were assumed by Bill
Campbell, Executive VP for Corporate Development. Beverly Hatch, VP, Product
Management resigned and her duties were assumed by Joe Peterson, VP Product.
These resignations were anticipated by the Company and related, in part, to the
restructuring project that was being prepared. These resignations, in the
opinion of the Company, did not, nor will they, have a material adverse effect
upon the Company. See "Business: Marketing and Sales " and "Business:
Employees."

PRODUCT LIABILITY. The Company's system provides information that
relates to healthcare enterprise operations. Any failure by the Company's system
to provide accurate and timely information could result in claims against the
Company. The Company maintains a $1,000,000 errors and omissions insurance
policy to protect against claims associated with the use of its products, but
there can be no assurance that its insurance coverage would adequately cover any
claim asserted against the Company. A successful claim brought against the
Company in excess of its insurance coverage could have a material adverse effect
on the Company's business, financial condition and results of operations. Even
unsuccessful claims could result in the Company's expenditure of funds in
litigation and management time and resources. There can be no assurance that
the Company will not be subject to product liability claims, that such claims
will not result in liability in excess of its insurance coverage or that the
Company's insurance will cover such claims or that appropriate insurance will
continue to be available to the Company in the future at commercially reasonable
rates.

UNCERTAINTY IN HEALTHCARE INDUSTRY; GOVERNMENT HEALTHCARE REFORM
PROPOSALS. The United States Food and Drug Administration (the "FDA") has
promulgated a draft policy for the regulation of certain computer products as
medical devices under the 1976 Medical Device Amendments to the Federal Food,
Drug and Cosmetic Act (the "FDC Act"). To the extent that computer software is a
medical device under the policy, the manufacturers of such products could be
required, depending on the product, to (i) register and list their products with
the FDA, (ii) notify the FDA and demonstrate substantial equivalence to other
products on the market before marketing such products, or (iii) obtain FDA
approval by demonstrating safety and effectiveness before marketing a product.
In addition, such products would be subject to the FDC Act's general controls
including those relating to good manufacturing practices and adverse experience
reporting. In the draft policy, the FDA announced that it was not aware of any
computer product that is not a component, part or accessory of another device
that would require FDA approval prior to marketing. Although it is not possible
to anticipate the final form of the FDA's policy with regard to computer
software, the Company expects that, whether or not the draft is finalized, the
FDA is likely to become increasingly active in regulating computer software that
is intended for use in healthcare settings. This may become a particular
concern as the Company's network products begin to support clinical data
transactions and our medical records product, SM*RT Care is brought to market.
The FDA, if it chooses to regulate such software, can impose extensive
requirements governing pre- and post-market conditions such as device
investigation, approval, labeling and manufacturing. The FDA currently regulates
the imaging capability that the Company is proposing to license from a third
party. See "Business - Product Development."

The healthcare industry is subject to changing political, economic and
regulatory influences that may affect the procurement practices and operation of
healthcare facilities. During the past several years, the healthcare industry
has been subject to an increase in governmental regulation of, among other
things, reimbursement rates and certain capital expenditures. In addition,
increasing consolidation of healthcare entities and competition for markets is
creating pricing pressures on both healthcare facilities and their suppliers.
Healthcare facilities may react to these pressures and the uncertainty surround-
ing such changes by curtailing or deferring investments, including those for the
Company's system and related services. Even if capital investments are not
curtailed or deferred, the cost containment measures that healthcare providers
are instituting in the face of uncertainty result in greater selectivity in the
allocation of capital funds. Such selectivity could have an adverse effect on
the Company's ability to sell its system and related services. The Company
cannot predict with any certainty what impact, if any, such proposals or
healthcare reforms might have on its business, financial condition and results
of operations.

<PAGE>

CONCENTRATION OF OWNERSHIP. Following this offering, the current
executive officers and directors of the Company will beneficially own or have
voting control over approximately 50% of the Common Stock. Accordingly, these
individuals will have the ability to influence the election of the Company's
directors and effectively control most corporate actions. This concentration of
ownership may also have the effect of delaying, deterring or preventing a change
in control of the Company.

LIMITED PUBLIC MARKET; POSSIBLE VOLATILITY OF STOCK PRICE. Prior to
this offering, there has been a public market for the Common Stock but the
number of transactions have been limited. There can be no assurance that a more
active trading market will develop or be sustained. The public offering price
will be determined by the Board of Directors, and may not be indicative of the
market price of the Common Stock after this offering. The trading price of the
Common Stock could also be subject to significant fluctuations in response to
variations in quarterly results of operations, announcements of technological
innovations or new products by the Company or its competitors, governmental
regulatory action, other developments or disputes with respect to proprietary
rights, general trends in the industry and overall market conditions, and other
factors.

SHARES ELIGIBLE FOR FUTURE SALE. Sales of Common Stock in the public
market after this offering could adversely affect the market price of the Common
Stock. The 3,000,000 shares to be issued in this offering will be freely
tradable without restriction. See "Shares Eligible for Future Sale."

ABSENCE OF DIVIDENDS; DILUTION. The Company has not paid any cash
dividends on the Common Stock and does not anticipate paying any cash dividends
on the Common Stock in the foreseeable future. See "Dividend Policy." Purchasers
of the Common Stock offered hereby will incur immediate substantial dilution in
the net tangible book value per share of Common Stock. See "Dilution."

THE COMPANY

Wismer*Martin develops, markets, and supports computer systems which
automate physician offices, group practices, hospitals, and managed care
organizations. The Company believes that it is one of the leading providers of
practice management systems and healthcare information networks. The Company's
SM*RT Net suite of products is designed to provide connectivity utilizing
industry standard data formats for all network participants, including physi-
cians, hospitals, labs, imaging centers, IPA's, PPO's, HMO's, employers, third
party payors, suppliers and other entities. The Company's SM*RT Practice
product, is designed to manage the financial, administrative and practice
management requirements of group medical practices, and is fully-integrated with
SM*RT Net. In addition, the Company's hospital information system solution,
sold under the name ADDvantage, is designed to provide a complete integrated
application to automate the small to mid-size hospital. These three product
solutions provide the Company's clients with the necessary technology infra-
structure to meet the demands of today's rapidly changing healthcare environ-
ment. The Company also sells hardware, training and installation support, forms
and supplies, and software and hardware maintenance services.

Wismer*Martin, Inc. ("Wismer Martin" or the "Company") was formed to
develop, market and support microcomputer practice management systems and
related services designed for the medical and dental professions. The Company
was founded as a sole proprietorship in February of 1980 and was incorporated on
November 29, 1982 under the laws of the State of Washington as Professional
Software Associates, Inc. The Company changed its name to Wismer*Martin, Inc.
effective August 1, 1985. The Company's principal executive offices are located
at N. 12828 Newport Highway, Mead, Washington, 99021. Its telephone number at
that location is (509) 466-0396.

On September 12, 1991, National Healthtech Corporation (National
Healthtech) acquired 1,714,286 shares of the Company's common stock from the
founders of the Company, Glen and Judith Martin (the Martins). On January 31,
1992, National Healthtech acquired the remaining 2,868,414 shares of common
stock held by the Martins at that time.

On June 10, 1993, National Healthtech sold 4,582,700 shares of common
stock of Wismer Martin to Ronald L. Holden, a former director and stockholder of
National Healthtech. At June 30, 1994, Mr. Holden owned of record 4,582,700
shares of common stock. Mr. Holden is the Chairman of the Board of Directors of
Wismer Martin.

<PAGE>

USE OF PROCEEDS

The net proceeds to the Company from the sale of the 3,000,000 shares
of Common Stock offered by the Company, after deducting estimated offering
expenses, are estimated to be approximately $3,630,000, assuming an initial
public offering price of $1.25 per share. The principal reasons for this
offering are to obtain additional equity capital to finance the Company's
current liquidity needs and ongoing operations and to eliminate $2,500,000 of
Convertible Subordinated Debentures. The Company has a line of credit with
Seafirst Bank with a borrowing limit of $500,000. The interest rate is the
Bank's prime rate plus 3%. The line of credit expires June 30, 1996 and the
Company intends to use proceeds from this offering to repay the indebtedness.
The amount of the indebtedness on July 26, 1995 was approximately $500,000. The
Company expects to use the balance of the net proceeds received from the shares
for general corporate purposes, including working capital. The net proceeds of
this offering will be invested in short term, investment-grade, interest bearing
securities until required to meet the Company's financial requirements.

PRICE RANGE OF THE COMMON STOCK AND DIVIDEND POLICY

The Common Stock of the Company is traded in the over-the-counter
market. The following table sets forth the price range of the high and low bid
quotations per share of the Common Stock for the periods indicated, as reported
by Spokane Quotation System, Inc., Spokane, Washington. The prices reported
reflect inter-dealer prices, without regard to retail mark-ups, mark-downs or
commissions, and do not necessarily represent actual transactions. The bid and
asked prices per share of the Common Stock at July 25, 1995 were $0.50 and
$0.875, respectively. At such date, 9,847,625 shares of Common Stock were
issued and outstanding.

Fiscal Year High Low
----------------- -------- -------
<S> <C> <C> <C>
1995 First Quarter $2.25 $1.50
Second Quarter $2.50 $1.50
Third Quarter $2.25 $0.75

1994 First Quarter $0.50 $0.32
Second Quarter $2.00 $1.50
Third Quarter $3.25 $2.50
Fourth Quarter $2.25 $1.75

1993 First Quarter $0.63 $0.50
Second Quarter $0.63 $0.38
Third Quarter $0.50 $0.28
Fourth Quarter $0.50 $0.28

</TABLE>

As of June 30, 1995, there were approximately 1,000 holders of record of
the Company's Common Stock.

The Company has never declared or paid any dividend on its Common Stock and
does not anticipate paying any cash dividends on the Common Stock in the
foreseeable future. The Company currently intends to retain future earnings to
fund the development and growth of its business.

<PAGE>

CAPITALIZATION

The following table sets forth the actual capitalization of the Company
as of March 31, 1995.

March 31, 1995
--------------------
<S> <C>
Long-term liabilities (1) $4,069,668

Stockholders' equity

Common Stock, $.001 par value 20,000,000 shares authorized; 9,848
9,847,625 shares issued and outstanding;

Additional paid in capital 1,203,809

Excess purchase price of acquired subsidiary (2,533,308)

Retained earnings (deficit) (578,928)
--------------------
Total Stockholders' equity (deficit) (1,898,579)
--------------------
Total Capitalization $2,171,089
--------------------
--------------------
<FN>
(1) The holders of the Company's Convertible Subordinated Debentures due 1999 have provided
the Company with an expression of intent to tender their debentures as payment for shares
of common stock provided for in this offering.

</TABLE>

DILUTION

The net tangible book value of the Company's Common Stock as of March 31,
1995 was approximately ($4,570,654) or ($0.46) per share. Net tangible book
value per share represents the Company's total tangible assets less total
liabilities, divided by the total number of shares of Common Stock outstanding.

Net tangible book value dilution per share represents the difference
between the amount per share paid by purchasers of shares of Common Stock in the
offering made hereby and the pro forma net tangible book value per share of
Common Stock immediately after completion of the offering. After giving effect
to the sale of the 3,000,000 shares of Common Stock offered by the Company
hereby at an assumed public offering price of $1.25 per share and the applica-
tion of the estimated net proceeds therefrom, the pro forma net tangible book
value of the Company as of March 31, 1995 would have been approximately
($940,654) or ($0.07) per share. This represents an immediate increase in net
tangible book value of $0.39 per share to existing shareholders and an immediate
decrease in net tangible book value of $1.32 per share to purchasers of Common
Stock in this offering, as illustrated in the following table:

<TABLE>
<S> <C> <C>
Assumed public offering price per share . . . . . . . . . . . . . . . . . . $1.25
Net tangible book value per share as of March 31, 1995. . . . . . . . . ($0.46)
Increase per share attributable to new investors . . . . . . . . . . . . $0.39
-----
Pro forma net tangible book value per share after the offering. . . . . . . ($0.07)
Net tangible book value dilution per share to new investors . . . . . . . . $1.32
</TABLE>

12
<PAGE>

The following table sets forth as of March 31, 1995 the difference between
the existing shareholders and the purchasers of shares in this offering (at an
assumed initial public offering price of $1.25 per share) with respect to the
number of shares purchased from the Company, the total consideration paid to the
Company, and the average consideration per share paid:

SHARES PURCHASED TOTAL CONSIDERATION AVERAGE
---------------- ------------------- -------

NUMBER PERCENT AMOUNT PERCENT CONSIDERATION

------ ------- ------ ------- -------------
<S> <C> <C> <C> <C> <C>
Existing shareholders 9,847,625 76.6% $1,213,657 24.5% $0.123

New Investors 3,000,000 23.4% $3,750,000 75.5% $1.25
--------- ----- ---------- -----

Total 12,847,625 100.0% $4,963,657 100.0%
---------- ------ ---------- ------
---------- ------ ---------- ------
</TABLE>

PLAN OF DISTRIBUTION

The Company has not engaged an underwriter. The offering will be conducted
solely by executive officers of the Company as associated persons of the Company
in accordance with the provisions of Rule 3a4-1. Officers will not receive any
additional compensation for performing these services. Employees of the Company
and existing shareholders will be provided with a Prospectus and the Company
anticipates that a significant number of the shares will be purchased by
employees and shareholders. A specific number of shares will not be reserved
for employee purchasers.

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

Wismer*Martin, Inc. ("Wismer Martin" or the "Company") was formed to
develop, market, install and support microcomputer practice management systems
and related services designed for the medical and dental professions. The
Company was founded as a sole proprietorship in February of 1980 and was
incorporated on November 29, 1982 under the laws of the State of Washington as
Professional Software Associates, Inc. The Company changed its name to
Wismer*Martin, Inc. effective August 1, 1985. The Company's principal executive
offices are located at N. 12828 Newport Highway, Mead, Washington, 99021.

The Company derives revenue from systems sales and maintenance, forms and
other services. systems sales include sales of physician practice management
systems, health information networks, and hospital information systems to new
customers and sales of system upgrades and add-ons to existing customers.
Systems sales to new customers include software licensing, hardware, installa-
tion, training, and support contracts for software and hardware maintenance.
System upgrades include hardware, installation, software licensing and training.
System add-ons include additional peripheral hardware and installation and
software licensing.

Maintenance, forms and other services revenues include software and
hardware maintenance contracts and sales of forms and supplies. Other services
revenues include sales of the Company's EDI services which are processed through
Equifax and installation, training and support not otherwise covered under
maintenance contracts. Software maintenance represents revenues derived from
maintenance agreements providing customers

13
<PAGE>

with updates and enhancements developed by the Company and access to the
Company's toll-free telephone support service. Hardware maintenance represents
revenues derived from maintenance agreements serviced by Digital Equipment Corp.
for repairs and preventative maintenance to the hardware. Both hardware and
software maintenance are optional to the customer. The Company provides software
maintenance to more than 90% of its customers and hardware maintenance to more
than 20% of its customers under software and hardware maintenance contracts. In
1994, system upgrades, add-on software, software and hardware maintenance, forms
and supplies and other services accounted for approximately 40% of total net
revenues.

RESULTS OF OPERATIONS

The following table sets forth, for the periods indicated, the amounts in
the Company's consolidated statement of operations along with the annualization
of the operations for the nine months ended March 31, 1995.

Fiscal Years Ended
Annualized Nine Months June 30,
March 31, Ended March -------------------------------------
1995 31, 1995 1994 1993
-----------------------------------------------------------------------
<S> <C> <C> <C> <C>
Net sales:
Software license fees $2,865,409 $2,149,057 $5,547,487 $2,631,978
Equipment, software and supplies sales 2,560,203 1,920,152 2,829,889 2,967,502
Software & hardware maintenance contracts 3,839,672 2,879,754 3,513,831 2,638,019
Service revenue 2,873,296 2,154,972 3,777,885 993,995
Discounts (1,697,949) (1,273,462) (1,271,842) (920,437)
-----------------------------------------------------------------------
Net sales 10,440,631 7,830,473 14,397,250 8,311,057
-----------------------------------------------------------------------
Operating expenses:
Cost of software license fees 612,825 459,619 567,058 324,633
Cost of equipment, software and supplies 1,868,015 1,401,011 2,542,421 2,516,856
Cost of support and operations 2,930,113 2,197,585 3,965,059 2,100,261
Selling and marketing 2,527,471 1,895,603 1,994,340 1,195,663
Product research, development & enhance-
ments 2,516,829 1,887,622 1,270,656 678,972
Less: amount capitalized related to
enhancements (1,717,236) (1,287,927) (1,018,308) (652,357)
General and administrative 3,759,085 2,819,313 3,921,134 2,018,322
-----------------------------------------------------------------------
Total operating expenses 12,497,102 9,372,826 13,242,360 8,182,350
-----------------------------------------------------------------------
Operating income (loss) (2,056,471) (1,542,353) 1,154,890 128,707
-----------------------------------------------------------------------
Other income (expense):
Interest income 27,060 20,295 28,180 35,140
Interest expense (402,112) (301,584) (192,407) (147,339)
-----------------------------------------------------------------------
Income (loss) before income taxes &
cumulative effect of change in accounting
principle (2,431,523) (1,823,642) 990,663 16,508
Income tax provision (benefit) (455,788) (341,841) 265,107 12,191
-----------------------------------------------------------------------
Income (loss) before cumulative effect of change
in accounting principle (1,975,735) (1,481,801) 725,556 4,317
Cumulative effect of change in accounting
principle - - 27,479 -
Net income (loss) $(1,975,735) $(1,481,801) $ 698,077 $ 4,317
-----------------------------------------------------------------------
-----------------------------------------------------------------------
</TABLE>

ANNUALIZED MARCH 31, 1995 COMPARED TO FISCAL YEAR ENDED JUNE 30, 1994

On February 10, 1994, the Company acquired all of the outstanding shares of
common stock of Integrated Health Systems, Inc., a California corporation (IHS).
IHS is in the business of developing and licensing software programs for
hospitals and related entities. The Company issued convertible subordinated
debentures having a face value of $2,500,000 in exchange for the shares of
common stock. IHS's major stockholder was Mr. Ronald Holden, who is also a
major stockholder of the Company. Due to Mr. Holden's common control of both
companies, the acquisition has been accounted for as a combination of entities
under common control, similar to a pooling of interests. The financial
statements have been retroactively restated to present Wismer*Martin, Inc. and
Integrated Health Systems, Inc. on a combined basis effective as of June 10,
1993, the date on which Mr. Holden initially had

14
<PAGE>

common control of both companies. As a result of including IHS as of June 10,
1993 rather than July 1, 1992, many of the increases between 1993 and 1994 are
the result of the inclusion of IHS for the entire fiscal year 1994, while only
being included for 20 days in 1993.

At the date of acquisition, the purchase price of $2,500,000 exceeded the
historical cost basis of the net assets of IHS by $2,533,308. Due to the common
control of the companies, the excess purchase price was recorded as a reduction
of stockholders' equity. The results of operations of IHS are included in the
consolidated financial statements since June 10, 1993, the date common control
by Mr. Holden began.

NET SALES

Software license fees decreased by $2,682,000. Of this amount, approxi-
mately $1,425,000 resulted from fewer PHN "network" sales during the fiscal year
ended June 30, 1994 ("1994") as compared to the annualized nine month period
ended March 31, 1995 ("1995"). The remaining $1,257,000 decrease was the result
of fewer software license fee transactions for hospital information systems
during 1995 as compared to 1994.

Equipment, software and supplies sales decreased by $270,000, or about 10%,
due to a decrease in the volume of sales of personal computer hardware ("equip-
ment").

Software and hardware maintenance contract revenue increased by $326,000
primarily due to an increase in the number of the Company's customers who signed
support contracts during 1995.

Service revenue decreased by $905,000. Network marketing services provided
to customers increased by approximately $272,000, while the Company experienced
a decrease ($1,177,000) in the volume of custom modifications and installation
services provided to hospital customers. This latter decrease coincides with
the volume decrease in new software license fee sales to hospital customers.

Discounts increased by $426,000 due to discounts required as a result of
the master licenses sold to two large customers in 1994 (see discussion below
"Fiscal Year Ended June 30, 1994 Compared to Fiscal Year Ended June 30, 1993"
for Software license fees). Since these insurance providers have purchased a
master license to re-distribute the Company's software, within a specified
geographic region, the Company records the full value of sales to individual
physician practices within those regions, but then records as a discount the
value of the Company's software license fees which have already been paid and
earned through the master agreement.

OPERATING EXPENSES

Cost of software license fees represents the amortization of capitalized
software development costs. The amortization of capitalized software develop-
ment costs increased by 8% from 1994 to 1995, which resulted from additional
enhancements which were completed during 1995.

The cost of equipment, software and supplies sold decreased by 27%.
Approximately 10% of the decrease represents a volume decrease, while the
balance of the decrease (17%) resulted from the Company's ability to negotiate
better discounts on computer hardware (equipment) from wholesale distributors
than it was previously able to obtain directly from the manufacturer. Wholesal-
ers, able to obtain greater volume discounts than the Company, are willing to
pass on a large enough discount to enable the Company to purchase computer
equipment at a lower price than the Company can obtain direct from the manufac-
turer.

Cost of support and operations includes: non-technical personnel who answer
customer support calls, the cost of third-party hardware maintenance contracts,
technical personnel who load Company and third-party software on computer
systems and assist with technical issues associated with customer support, and
personnel who perform consulting services for customers. Cost of support and
operations decreased by 26% from 1994 to 1995. This is the result of a decrease
of approximately 20 employees in this area. Of the 20 employees, approximately
5 were transferred to "Product research, development and enhancements." The rest
of the reductions came through attrition, and were not replaced. Many of the
employees that left were technical personnel who are no longer needed due to:
(1) a reduction in new sales of software license contracts (and thus a reduction
in the number of personnel required for installation), and (2) product improve-
ments which have reduced the need for technical personnel to assist with
software support.

15
<PAGE>

Selling and marketing expenses increased by or 27% from 1994 to 1995. This
increase in expense was due to the addition of personnel in the sales and
marketing area, which occurred during the first six months of the fiscal year.
A significant number of these employees were subject to termination in January,
1995 as part of the Company's cost reduction efforts (see "Liquidity" below).
Based on these terminations, and voluntary resignations, selling and marketing
expenses are expected to decline from the level established during the first
nine months of this year.

Product research, development and enhancement costs represent costs
associated with enhancements to, and maintenance of, existing software and
research and development expenses. These costs which relate to enhancement of
technologically feasible products are capitalized and amortized beginning when
the product is available for general release to the customer on a straight-line
basis over the remaining economic life of the products, which is estimated to be
three (3) to five (5) years. Product research, development and enhancement
costs increased $1,246,000, or 98%, from 1994 to 1995. This is the result of
adding approximately 20 employees to new product development efforts. The
Company expects the new products being developed will be ready for release
between July 1995 and January 1996. Research and development expenses will
remain at the current period's expense level for the remainder of the fiscal
year ending June 30, 1995.

The amount of product research, development and enhancement expenses
capitalized for 1995 increased by $714,000 as compared to 1994.This is a 71%
increase over the prior year, and is approximately 60% of the increased
expenditures noted above as "Product research, development and enhancement
expenses." The increase in capitalized software development costs results from
the increase in personnel (noted above under "Product research development and
enhancement costs") performing product development.

The increase in product, research and enhancement expenses as well as
the increase in capitalized software development costs reflects the Company's
commitment to the continuing development of SM*RT Link and its integration
with SM*RT Practice as well as the enhancement of the IHS product line. The
Company is currently developing SM*RT Care, a second-generation software
product in which the patient is the core element of the system. SM*RT Care
will incorpo-rate patient demographics, insurance information, managed care
capabilities as well as a seamless SM*RT Link interface. The Company is
nearing completion in its development of Radiology, Clinical and Nursing
Information Systems, which are part of the Integrated Health Systems product
line being offered to hospitals. These products have been developed
utilizing a "client/server" architecture running on local PC networks, which
the Company expects to increase the marketability of the entire Integrated
Health Systems product line.

General and administrative expenses decreased by $147,000, or 4%. This
reduction reflects the commencement of the Company's efforts to control
overhead expenses, such as executive salaries and rent expense, as
specifically identified in the section "Financial Condition and Liquidity."
General and administrative expenses are expected to decline further in the
fourth quarter of 1995.

Interest expense has increased $210,000 from 1994 to 1995. The increase in
interest expense resulted from (1) the issuance of $2,500,000 in convertible
subordinated debentures on February 10, 1994 which increased interest expense by
approximately $107,000 for 1995 as compared to 1994; and (2) increased borrowin-
gs on the Company's line of credit (notes payable to bank) added an additional
$103,000 in interest expense.

During 1995, the Company reported an income tax benefit of approximately
$456,000 as compared to an income tax provision of $265,000 in 1994. The 1995
benefit is primarily due to the creation of net operating loss carryforwards
resulting from the 1995 net operating loss which the Company believes will be
available to offset the future reversal of temporary differences created by
Software Development Costs and other items which give rise to deferred tax
liabilities. The remaining net deferred tax asset is offset 100% by a
valuation allowance as management could not determine that it was more likely
than not that this asset would be realized.

The factors discussed above resulted in an annualized net loss of approxi-
mately $1,976,000, during 1995, as compared to net income of $698,000 during
1994.

16
<PAGE>

FISCAL YEAR ENDED JUNE 30, 1994 COMPARED TO FISCAL YEAR ENDED JUNE 30, 1993

NET SALES

Software license fees increased by $2,916,000 during the fiscal year
ended June 30, 1994 ("1994") as compared to the year ended June 30, 1993
("1993"). The primary reason for the increase was the signing of two regional
"network" contracts which generated approximately $1,675,000 inadditional
software license fee revenues for the Company. These contracts gave the
customers (insurance providers) unlimited use of certain of the Company's
software products within specified geographical regions of Washington and
Alaska. The remaining $1,241,000 is the result of the inclusion of IHS in the
results of operations for the full fiscal year 1994, as compared to only 20
days (June 10, 1993 - the date common control was established between W*M and
IHS - to June 30, 1993) for fiscal year 1993.

Equipment, software and supplies sales decreased by $138,000, or
about 5%, due to a decrease in the prices the Company was able to charge for
personal computer hardware ("equipment").

Software and hardware maintenance contract revenue increased by
$876,000, or 33% primarily due to an increase in the number of the Company's
customers who signed support contracts during 1994.

Service revenue increased by $2,784,000. Network marketing services
provided to customers increased by approximately $920,000, while the
inclusion of IHS for the full fiscal year 1994 added $1,864,000 in additional
service revenues.

Discounts increased by $351,000 due to discounts required as a result
of the master licenses sold to two large customers, noted above under
"Software license fees." Since these insurance providers have purchased a
master license to re-distribute the Company's software, within a specified
geographic region, the Company records the full value of sales to individual
physician practices within those regions, but then records as a discount the
value of the Company's software license fees which have already been paid and
earned through the master agreement.

OPERATING EXPENSES

Cost of software license fees represents the amortization of
capitalized software development costs. The amortization of capitalized
software development costs increased by $242,000 from 1993 to 1994. This
increase is the result of additional enhancements that were completed during
1994. Of the total increase, $212,000 came from new products being developed
to add to the IHS product line.

Cost of equipment, software and supplies sold increased by $26,000 or
1% from 1993 to 1994 as a result of a slight increase in the volume of
hardware sales.

Cost of support and operations increased $1,865,000 from 1993 to
1994. Of this increase $1,796,000 is the result of the additional cost of
support and operations for IHS for a full year (1994) as compared to only 20
days of expense in 1993. Cost of support and operations for W*M only
increased $69,000 or 4% (as a percentage of W*M-only expenses), during this
period.

Selling and marketing expenses increased by $799,000 or 67% from 1993
to 1994. $384,000 of this increase is the result of the additional cost of
support and operations for IHS for a full year (1994) as compared to only 20
days of expense in 1993. The increase in selling and marketing expenses for
W*M ($415,000 or 36% of W*M-only expenses) is due to an increase in sales
staff from the prior year.

Product research, development, and enhancement expenses increased by
$592,000 from 1993 to 1994. $354,000 of this increase is the result of the
additional cost of support and operations for IHS for a full year (1994) as
compared to only 20 days of expense in 1993. The increase in expenses for
W*M were $238,000 or 35% (as a percentage of W*M-only expenses), and is due
to an increase in the number of technical personnel recruited for product
development and enhancement. The Company has increased the number of staff
to concentrate on enhancing existing products to take advantage of the
technological changes in computer hardware as well as significantly enhancing
the functionality of its software products.

<PAGE>

The costs capitalized for software enhancements increased by $351,000
or 54% from 1993 to 1994. $267,000 of this increase is the result of the
inclusion of capitalized development and enhancements for IHS 1994 (IHS had
no capitalized research, development and enhancement expenses in 1993). The
increase in expenses capitalized for W*M were $84,000 or 13% (as a percentage
of W*M-only expenses), and is due to the Company's increased efforts in
enhancing the SM*RT Link product and its SM*RT Practice product. Costs
associated with enhancements are capitalized and amortized over three to five
years. Research and development costs are expensed as incurred.

General and administrative expenses increased by $1,888,000 or 94%
from 1993 to 1994. $1,762,000 of this increase is the result of the
additional cost of general and administrative expenses for IHS for a full
year (1994) as compared to only 20 days of expense in 1993. W*M's expenses
only increased 6.7% during the same period.

Interest expense increased by approximately 31% from $147,339 in
fiscal 1993 to $192,407 in fiscal 1994. This increase was a result of the
interest incurred on the subordinated convertible debentures which were
outstanding from February 10, 1994 through June 30, 1994.

The Company adopted the provisions of Statement of Financial
Accounting Standards No. 109, "Accounting for Income Taxes" (SFAS No. 109),
effective July 1, 1993. The cumulative effect of adopting SFAS No. 109 in
fiscal 1994 was a charge to operations of $27,479. SFAS No. 109 requires a
company to recognize deferred tax assets and liabilities for the expected
future income tax consequences of events that have been recognized in a
company's financial statements. Under this method, deferred tax liabilities
and assets are determined based on the temporary differences between the
financial statement carrying amounts and tax bases of assets and liabilities
using enacted tax rates in effect in the years in which the temporary
differences are expected to reverse. During the fiscal year ended June 30,
1993, the Company accounted for income taxes as required by Statement of
Financial Accounting Standards No. 96. The income tax provision increased
from $12,191 in fiscal 1993 to $265,107 as a result of the increase in income
from operations.

The various factors discussed above resulted in net income of
approximately $698,000 during 1994 compared to net income of approximately
$4,000 during 1993.

FINANCIAL CONDITION AND LIQUIDITY

GENERAL

During the nine month period ended March 31, 1995, cash and cash equiva-
lents decreased approximately $484,000. The single largest use of the Company's
cash during 1995 was to invest in the Company's software development efforts.
This overall decrease in the Company's cash position was the result of cash
provided by operating activities of $188,000; cash used in investing activities
of $1,683,000 and cash provided by financing activities of $1,011,000. The
significant components of cash provided by operating activities include the net
loss for the period of $1,482,000 (adjusted for noncash items including
depreciation and amortization of $928,000, provision for bad debts of $255,000,
and deferred income tax benefit of $342,000); a decrease in trade receivables of
$820,000, a decrease in inventories of $358,000, and a decrease in accrued
expenses of $362,000. Significant components of cash used in investing
activities included the purchase of $325,000 of new equipment and $1,288,000
invested in software development costs. Cash provided by financing activities
primarily represents $122,000 received through the issuance of common stock and
$959,000 borrowed under the Company's operating line of credit.

During the year ended June 30, 1994, cash and cash equivalents increased
approximately $386,000. The single largest use of the Company's cash during
1994 was to invest in the Company's software development efforts. This overall
increase in the Company's cash position was the result of cash provided by
operating activities of $1,776,000; cash used in investing activities of
$1,775,000 and cash provided by financing activities of $385,000. The
significant components of cash provided by operating activities include the
fiscal 1994 net income of $698,000 (adjusted for noncash items including
depreciation and amortization of $948,000, provision for bad debts of $115,000,
and deferred income tax provision of $229,000); a decrease in unbilled costs and
expenses of $544,000, an increase in inventories of $314,000, and a decrease in
deferred revenues of $617,000. Significant components of cash used in investing
activities included the purchase of $737,000 of new equipment and $1,018,000
invested in software development costs. Cash provided by financing activities
primarily represented

<PAGE>

$191,000 received through the issuance of long term debt, $500,000 received
through the issuance of subordinated debentures and a net repayment of $358,000
on the Company's operating line of credit.

During the year ended June 30, 1993, cash and cash equivalents
increased approximately $141,000. The single largest use of the Company's
cash during 1993 was to invest in the Company's software development efforts.
This overall increase in the Company's cash position was the result of cash
provided by operating activities of $967,000; cash used in investing
activities of $615,000 and cash used in financing activities of $211,000.
The significant components of cash provided by operating activities include
the fiscal 1993 net income of $4,000 (adjusted for noncash items including
depreciation and amortization of $633,000 and the provision for bad debts of
$391,000); an increase in trade receivables of $438,000, an increase in
accounts payable of $323,000, a decrease in accrued expenses of $225,000 and
an increase in deferred revenues of $165,000. Significant components of cash
used in investing activities included the purchase of $145,000 of new
equipment, $652,000 invested in software development costs and $182,000 cash
obtained through the acquisition of IHS. Cash used in financing activities
primarily represented a net repayment of $169,000 on the Company's operating
line of credit.

To date, the Company's primary sources of liquidity have been
internally generated funds, the sale of the subordinated convertible
debentures and its operating line of credit, of which $958,900 was
outstanding at March 31, 1995 ($500,000 of this balance was re-paid by the
Company on April 21, 1995). On a short-term basis, the Company's liquidity
is dependent on the success of this offering, continued availability of the
line of credit with the bank (see below), software and hardware maintenance
contracts which provide over $300,000 in monthly revenues, and continued
sales to new customers as well as upgrade sales to existing customers. See
the discussion of the Company's contingency plans below. On a long-term
basis, liquidity will also be enhanced by the successful completion of this
offering (the Company will no longer be required to make interest payments on
the debentures and will not have to use its cash to pay off these notes in
the next four years). Other long-term measures being considered to further
develop liquidity are: the sale or refinancing of the Company's office
building in Spokane, Washington (having equity of approximately $1 million)
and discussions with GTE indicate a possible alliance between the two firms
which would provide increased opportunities for future sales, the development
of strategic alliances and joint venture partners (see "Sales and Marketing
Plans -- Strategic Partners"), and potential funding of future software
development efforts.

During fiscal 1995, management realigned the Company's organization and
instituted a cost reduction program which included the closing of non-essential
field offices and a reduction in personnel that were in place to support a
higher level of sales which were not achieved. Additionally, management is
concentrating its efforts on moving the Company away from its initial focus on
small regional physician practices to a focus on large group practices,
hospitals and other healthcare providers and payors who are developing networks.
The Company intends to fund these efforts by forming strategic alliances with
the large users of the Company's software products and with monies raised from
the Company's proposed stock offering (see below, and "Notes to Consolidated
Financial Statements," Notes 2 and 14). Management believes that with this
reduced cost structure, highly centralized operations, and increased focus on
growth market areas (particularly Hospitals, Physicians Hospital Organizations
(PHO's), Medical Services Organizations (MSO's) and Payors, the Company can
return to profitability.

The savings achieved from the above restructuring program are as follows:

1. Laid-off 30 employees in mid-January, eliminating over $70,000 in
salaries and benefits per month.

2. Fourteen employees have voluntarily left the Company between March and
June 1995, and will not be replaced, eliminating over $55,000 per
month in salaries and benefits.

3. Five senior management terminations resulted in the elimination of
$35,000 per month in salaries and benefits.

4. Sub-leased 5,000 square feet of the Company's leased office space in
La Jolla, resulting in $8,000 in monthly sub-rent income.

5. Closed three branch offices, eliminating $5,800 in monthly rent
expense.

Although the Company believes that its operating plan and efforts to obtain
other financing sources will be adequate to meet its fiscal 1996 working capital
needs, there can be no assurance that the Company may not experience liquidity
problems because of adverse market conditions or other unfavorable events. The
measures

<PAGE>

above, if successful as a whole, should be adequate for the Company's short-term
and long-term liquidity needs.

If, however, the Company is unsuccessful in its efforts to raise capital
and reduce debt through the successful completion of this offering, alternative
measures will have to be taken by the Company in order to ensure that the
remaining sources of liquidity are not exceeded by cash requirements. Alterna-
tive measures that would be considered would rely heavily on further expense
reductions, principally in the form of salaries and benefits, in the areas of
product development and enhancements, and network (PHN) sales staff. While many
of these expenditures enhance the Company's long-term growth potential, they do
not provide short-term liquidity. The Company would also look to reduce
overhead expenses while seeking to preserve the customer base which provides
software and hardware maintenance contracts (a source of high-margin revenues).
Management believes that, should they become necessary, these cost-reduction
efforts will be successful in reducing expenditures to match the Company's
reduced availability of liquidity until the Company has the opportunity to take
advantage of its long-term liquidity opportunities. See specific discussions
below regarding the "Line of Credit" and the "Public Offering."

LINE OF CREDIT

As of December 31, 1994, the Company was not in compliance with certain
of its loan covenants, specifically relating to Minimum Tangible Net Worth.
As a result, the Company and the bank entered into a Third Amended Business
Loan Agreement which extended the time to cure the default to June 30, 1995
(see "Notes to Consolidated Financial Statements," Note 5). The significant
features of the modified revolving line of credit is as follows: (1) $500,000
of the amount outstanding was converted to a term loan due June 30, 1995
(which was paid by the Company on April 21, 1995), (2) the revolving line of
credit was reduced to $500,000 (the balance is approximately $500,000 on July
26, 1995), and (3) the rate of interest was increased to the bank's prime
rate plus three percent (3%), (4) the Company must raise $1,000,000 of
additional cash (through this offering, sale of building, or signing of new
contracts) and (5) in addition to (4) above, the Company must reduce it's
Convertible Subordinated Debentures by $1,000,000. This commitment expires
on June 30, 1996. The line of credit is collateralized by the Company's
accounts receivable, inventories, property and equipment. In June, the Company
obtained a waiver from the bank extending the period for compliance through
August 31, 1995. As part of the extension granted by the bank until August 31,
1995, the bank and the Company agreed to enter into a Second Modification to
Third Amended Business Loan Agreement which establishes the following debt
covenants:

Previous Proposed Actual Actual
Requirement Requirement March 31, 1995 June 30, 1995
------------- ----------- -------------- -------------
<S> <C> <C> <C> <C>
Minimum Tangible Net
Worth:
By 6/30/95 $3,000,000 $1,101,000 $1,410,000
By 9/30/95 $2,150,000
By 12/31/95 $2,400,000
By 3/31/96 $2,750,000
By 6/30/96 $3,000,000
Minimum Trading Capital 2.5:1.0 Not Applicable 0.98:1.0 0.82:1.0
Maximum Leverage:
By 6/30/95 2.0:1.0 5.5:1.0 4.0:1.0
By 9/30/95 2.5:1.0
By 12/31/95 2.5:1.0
By 3/31/96 2.0:1.0
By 6/30/96 2.0:1.0
Debt Coverage Ratio:
By 6/30/95 2.0:1.0 (1.57):1.0 1.64:1.0
By 9/30/95 4.0:1.0
By 12/31/95 4.0:1.0
By 3/31/96 4.0:1.0
By 6/30/96 4.0:1.0
Maximum Capital $2,000,000 $400,000/Quarter $1,613,000 for the $2,100,000 for
Expenditures Annually beginning with the nine months ended the year ended
Quarter Ending March 31, 1995 June 30, 1995
September 30,
1995
</TABLE>

In the event the proposed requirements above are not met, the
outstanding balance due to the bank will be due on demand. Management
believes the Company can either restructure the debt or repay the amounts due
from the proceeds of that offering or alternatively, operating cash flows or
the proceeds from the sale or refinancing of the of the Company's office
building.

PUBLIC OFFERING

As part of management's efforts to provide additional liquidity for the
Company, and as requested by the bank (see above), the Board of Directors has
approved the sale of the Company's common stock as evidenced by this offering.
While there can be no assurance that any public offering of securities will be
successful, the past experience of Mr. Holden (Chairman of the Board and CEO),
and based on existing relationships with individuals and organizations experi-
enced with investments in companies such as Wismer Martin, management believes
that it is likely to achieve at least the $500,000 minimum capitalization
required by this offering, without the use of an underwriter, broker, dealer or
finder. Management will use many of the same techniques that these profession-
als use, such as advertisements in major financial publications (such as The
Wall Street Journal and Investor's

20
<PAGE>

Business Daily), mailings to existing shareholders as well as posting of the
offering on a variety of national on-line services.

Should this offering by the Company be unsuccessful, then the Company is at
risk of being unable to meet its short-term debt requirements that would be
necessitated by the cancellation of the line of credit by the bank (resulting
from the Company not meeting its loan covenants discussed above). If the
Company is unable to further re-negotiate the line of credit, management
believes the debt can be converted to a note payable and satisfied from
future operating cash flows or satisfied from the proceeds of the sale or
refinancing of the Company's office building. Otherwise, the bank may
foreclose on the Company's office building in order to satisfy the balance
outstanding on the line of credit.

BUSINESS

Wismer Martin is engaged in the business of developing, marketing,
installing and supporting practice management systems, hospital information
systems and products supporting Healthcare Information Networks (HIN's). Rather
than simply providing a hardware or software product, Wismer Martin offers a
complete network information system which is a primary component in managed
competition healthcare distribution systems and community health information
networks. The Company believes that it is one of the nation's leading providers
of physician practice management systems, both in terms of revenues and number
of physicians served. In addition, the Company has implemented two of the
largest HIN projects in the country with networks installed which span the
states of Washington and Alaska. The Company's hospital information system is
installed in more than 65 hospitals across the country and is the only IBM
AS/400 solution available which provides a fully integrated financial, clinical,
and administrative application for the small to mid-size hospital. The Company
also sells hardware, peripherals, training and installation support, forms and
supplies, and software and hardware maintenance services. The Company's product
offerings provide the flexibility required to support the single physician
office to large group practices, the small community hospital to the large
urban medical center, the small rural PHO network to a state-wide HIN linking
thousands of participants.

INDUSTRY BACKGROUND

The Company estimates that there are over 570,000 physicians in private
practice and approximately 196,000 medical practices in the United States. In
addition, there are approximately 6500 hospitals of which approximately 1/3 are
chained owned or operated and 100 major HMO's and insurance payors. The economic
pressures and information demands upon physicians, hospitals, and payors have
increased significantly during the past decade. At the same time, the increased
power and decreased cost of computers have made computers an effective informa-
tion processing solution for a broader range of clients. Approximately 70% of
physician practices and over 95% of hospitals now use computers or computer
services for at least some of their information processing requirements.

The demand for more comprehensive and accurate information processing
solutions is expected to continue. Healthcare cost containment efforts have
greatly increased the amount and complexity of required information. At the
same time, increased competition has resulted in a greater focus on demonstrat-
ing the quality of care delivered to patients. The Company's proprietary
practice management, hospital, and network systems help providers, suppliers,
and payors reduce the costs and improve the quality of delivering healthcare
services by automating patient care and administrative processes, ensuring
timely access to relevant information, streamlining the storage and retrieval of
information, and matching patient needs with available resources.

The ongoing pressure to contain healthcare costs is also changing the
structure of healthcare providers and their system requirements. In the private
sector, managed care techniques such as HMO's and PPO's have become significant
components of the healthcare system. In addition, the number of third-party
payor organizations has increased. At the same time, federal and state
governments, which are estimated to be responsible for approximately 30% of
physician claims for patient charges as a result of Medicare, Medicaid and other
programs, have imposed pricing and reimbursement regulations that significantly
complicate billing procedures and increase the information that a medical
practice or hospital must maintain with respect to their patients. Furthermore,
healthcare payors are increasingly transferring the economic risk of healthcare
delivery to providers by shifting from the traditional fee-for-service reim-
bursement model to managed care reimbursement models, such as payment based on
capitation. Under capitation, providers are paid an annual fixed fee per
individual to deliver all healthcare services required by that individual. This
reimbursement model encourages healthcare providers to modify their emphasis
from not only treating illness, but also to maintaining wellness. The expansion
in the number of managed care and third-party payors organizations, as well as
additional governmental regulation and

21
<PAGE>

changes in reimbursement models, has greatly increased the complexity of
financial management and clinical methods impacting physicians and hospitals.

Other factors also are increasing the demand for more comprehensive and
accurate information systems. The growing administrative burdens placed on
physician offices and hospitals have caused physicians to join together in group
practices and hospitals to merge with chains or other hospitals to share
administrative costs and achieve economies of scale. The Company believes that
the movement to group practices, hospital chains or alliances, and the
combination of hospitals and physicians into PHO's has accelerated the trend
toward automation as these larger scale organizations require the greater
efficiency and productivity of an automated system. Not only has there been a
movement toward group practices, more recently group practices have been
combining to form larger group practices. In addition, hospital are buying
and/or managing physicians practices and networking them into one common system.
The general increase in the size and complexity of healthcare provider organiza-
tions has also resulted in a greater need for analysis of data and production of
timely management information reports which allow physicians and other healthca-
re providers to reach informed conclusions regarding the quality and appropri-
ateness of various procedures and practices.

Technological advances have made more comprehensive, cost-effective
computer solutions available. While early systems concentrated principally on
patient billing and collection activities with clinical systems seen primarily
only in the mid-size to large hospital, systems are now available which record
and store clinical information, automate the processing of insurance and third-
party claims, and integrate the operations of physician practices with larger
healthcare organizations such as hospitals, HMO's and MSO's. The Company
believes that these various factors will cause medical practices and hospitals
to seek additional and more comprehensive computer-based solutions to their
information processing needs.

STRATEGY

Wismer Martin's objective is to be the leading provider of healthcare
information networks with associated hospital and physician applications. Wismer
Martin's products and services are designed to improve the ability of integrated
delivery networks to manage data and achieve success in their market area under
the demands of managed care. The Company's strategy includes the following key
elements:

- PROVIDE ELECTRONIC LINKAGES FOR EMERGING INTEGRATED NETWORKS OF HEALTH CARE
DELIVERY ORGANIZATIONS. The Company's strategy is to provide a
comprehensive technology platform for the integration of diverse
information systems into a unified network which supports the acquisition,
transfer, and security of financial, clinical, and, messaging data over a
geographic area served by a health care delivery organization. In addition,
the Company will provide business services solutions including, marketing,
affiliation, design, and planning services which enable the client to
develop and implement a communication network which mirrors their business
objectives and organization.

- PROVIDE SOPHISTICATED, COMPREHENSIVE APPLICATION SYSTEMS FOR THE PHYSICIAN
GROUP PRACTICE AND SMALL HOSPITAL SETTINGS. The Company's strategy is to
provide easy-to-use yet comprehensive medical practice management and
hospital software which provides a full range of administrative, financial,
clinical, and managed care functionality to meets the needs of the U.S.
market. The Company believes these applications address the needs of
patients, physicians, hospitals, and payors to increase efficiency and
reduce overall costs.

- LEVERAGE EXISTING CUSTOMER BASE. The Company's strategy is to maximize
revenues from its existing customers. In 1994, system upgrades, add-on
software and hardware, software and hardware maintenance, forms and
supplies and other services to existing customers accounted for
approximately 40% of total new revenues. The Company believes through more
sophisticated marketing, new support programs, and partnerships with other
suppliers that this may be increased to more than 50% of future revenues.
In addition, the Company believes that the existing customer base will be
the first and best market for the new Smart Care product, when it is
available.

- IMPROVE DIRECT SALES ORGANIZATION. The Company believes a direct sales
organization, whether in at the individual client level or in concert with
a strategic partner is the most effective way to market its products and
services. The Company's strategy is to improve its direct sales
organization to be able to market to larger of health care organizations,
payors, and consultant firms. The Company currently has separate

22
<PAGE>

groups within each business unit which focus on new systems sales, sales
to existing clients, and sales to hospital and other large healthcare
providers.

- MARKET THROUGH STRATEGIC PARTNERSHIPS. The Company believes that, even
with an improved direct sales force, many opportunities may not be
available to the Company simply due to our size, location, or lack of
penetration within a given market area. To remove this obstacle to growth
it is necessary to establish strategic partners such as hardware vendors,
software vendors, system integrators, and telecommunications vendors who
have wide market penetration, relationships, and the financial resources to
fund marketing and implementation efforts in pilot programs to establish a
presence in certain markets. The Company already has such relationships
established with its hardware vendors, Digital Equipment Corporation and
IBM, and is working to establish such relationships with systems
integrators and telecommunications firms.

- EXPAND MARKET PENETRATION THROUGH NEW PRODUCT OFFERINGS. The Company's
strategy to expand market share and penetration is based on expansion both
vertically within the existing client base and horizontally in other vendor
client bases by the development and sales of new product offerings which
either complement our current offerings or fill needs not satisfied by
other vendors. In the highly competitive and technology driven market the
Company operates in, new product development historically has driven growth
and the demand for new products and technology is accelerating with the
market forces present due to managed care. In this area, the Smart Net
suite of products and the Smart Care product will provide the means to
increase its client base and improve its position in the market for the
foreseeable future. In addition, the Company will continue to add new
modules to its Smart Practice product to keep its functionality current and
competitive.

SALES AND MARKETING PLANS

MARKETING

As a part of the Company restructuring project, Sales and Marketing plans
were realigned to be consistent with the Company strategy to focus on marketing
to larger healthcare organizations. Currently the Company has little presence
or name recognition outside of those areas where direct sales activities have
resulted in concentrations of installed clients, principally in the west and
southeast. In order to promote market awareness of the Company's products and
services on a national basis, formal and consistent effort needs to be conducted
on a number of fronts. To develop and conduct this strategy the Company will
recruit and hire an experienced Director of Marketing who will utilize a
combination of inside and outside resources to accomplish the plan. Each
business unit will own dedicated resource(s) who will execute strategies under
the direction of the Director of Marketing with specialized skills such as
graphic design and video production obtained from outside the Company. The
Director of Marketing will also establish and manage programs with its strategic
partners. Various activities will be encompassed in the marketing effort to
increase its presence in the marketplace including: advertisements, magazine
articles, conventions, seminars, consultants, direct mail, newsletters, and
joint marketing with strategic partners. The purpose of these activities will be
threefold; increase market awareness of Wismer Martin products and services on a
national basis, develop feeder sources for new business, and retain existing
clients by involving them in Wismer Martin activities.

STRATEGIC PARTNERS

In order to provide access to an increasing number of larger opportunities
it will be necessary for the Company to exploit to the greatest extent its
partnerships with other providers who have sales coverage on a national basis.
In addition, such partners can assist the Company with opportunities where our
relatively small size might be a barrier to obtaining the business. The Company
currently has established relationships with IBM, Digital Equipment Corp., and
Microsoft. The Company has just signed a letter of intent with GTE to exchange
information for the purpose of analyzing the potential alignment between the two
firms to jointly market and implement large scale Healthcare Information
Networks on a national basis. GTE is presently conducting its technical due
diligence.

Specifically our relationships with IBM, Digital Equipment Corp. and
Microsoft have been based on a reseller relationship. In the case of IBM this
relationship is referred to as a "Business Partner", for Digital a "Goldkey
Partner" and Microsoft a "Solutions Provider." These relationships provide the
firm with discounts on equipment and software for resale to our clients and for
our internal use. Our partners extend us various

23
<PAGE>

advantageous credit terms for the purchase of their equipment and software. In
addition, we receive advance information as to new products and access to and
training on those products for inclusion with our product offerings. We are
provided with special support assistance from our partners for technical,
configuration, and pricing information required. We have obtained marketing
assistance both in dollars and services from these partnerships and we receive
sales leads from their direct sales forces. We also are invited to various
conferences and sessions sponsored by these partners where we have the
opportunity to exhibit our products. We are included in directories published
by each partner which detail our offerings. Such directories are used by the
partners direct sales force to generate leads for the company as well as
distributed widely to end users of our partners equipment and software. We are
allowed by each partner to use their logo and name in printed materials and
advertisements to publicize our special relationship with our partners. We are
certified by each partner and are allowed to advertise our certification as a
legitimate and knowledgeable supplier of their equipment and software. We have,
where appropriate, jointly bid with our partners on new business.

NEW ACCOUNT SALES

In the past the Company has focused primarily on the single or small group
practice and on the small rural hospital market. Our plan going forward is to
sell to larger organizations with an emphasis on selling "bundles" of products
and services to these larger organizations including geographic site licenses.
These organizations include:

- INSURANCE PAYORS
- SPECIALTY MSO'S
- PHO'S
- LARGE GROUP PRACTICES
- HOSPITAL CHAINS
- STRATEGIC PARTNERS

In order to maximize these sales opportunities, which often require six
months to a year to close, it will be necessary to increase the quality of our
sales staff. Initial creation of opportunities will be driven by direct mail and
call prospecting with additional opportunities to come from the effect of the
marketing plan detailed above. The Company will continue to market its products
to the single physician or small group practice but will only do so when the
cost of sales can be kept low through remote demos or referrals.

EXISTING CLIENT SALES

It is expected that the current inside sales staff will be sufficient to
cover the installed client base and deliver the revenues needed to grow the
business. This group will receive additional training in telemarketing in the
coming months to improve their success rate. This group will sell add-on modules
and system upgrades and services into the 1600 physician practices and 66
hospital client base. At the present 300 of the 1600 SM*RT Practice clients have
upgraded leaving 1300 or approximately $3,000,000 in upgrade revenues to be
obtained through continuing sales efforts for Version 5.0. The major physician
client base add-on opportunities are Dr. Dialer, Scheduler, and Electronic
Claims. The major hospital client base opportunities are clinical applications
including the new client server Radiology Management System. The activities of
this group are supported by user groups held throughout the country as well as
direct mail campaigns conducted both via invoice "stuffers" as well as separate
mailings.

PRODUCTS AND SERVICES

PRACTICE MANAGEMENT SYSTEMS

SM*RT-Registered Trademark- PRACTICE SYSTEM

Historically, Wismer Martin's core product has been its practice management
software, SM*RT Practice. The SM*RT Practice System includes software applica-
tions which automate the financial, administrative, practice management, and
clinical information requirements of medical group practices. The System is
modular to facilitate the addition of new applications. The SM*RT Practice
system modules are designed to collect process, report and electronically
transmit data. To meet the needs of different size practices, the SM*RT Practice
System operates on Novell PC-based LANS which support the latest in Intel Dual
Pentium file servers capable of serving up to hundreds of physicians in a single
group practice. Smaller practices utilize the Intel 486 technology for process-
ing.

24
<PAGE>

Management believes the SM*RT Practice System meets the information
requirements of the vast majority of all medical specialties and practices in
the United States. The price of the SM*RT Practice System depends upon a number
of factors, include size of physician practice and number of system users, and
ranges from approximately $12,000 to $500,000. The SM*RT Practice System
includes a software license, hardware, installation and training, and a limited
warranty on hardware through the manufacturer's warranty and 1 year free on-site
maintenance included in the price of the hardware.

The SM*RT Practice software include basic business applications modules as
standard features, as well as advanced application modules for an additional
fee. The modules include:

SM*RT PRACTICE MODULES CAPABILITIES
- ---------------------- ------------

FINANCIAL APPLICATIONS
Insurance Billing. . . . . . . . . Process and prints insurance claim
forms. Tracks aging of all claims and
provides re-bill options for delinquent
claims. Coordinates billings for
supplemental carriers.
Patient Billing. . . . . . . . . . Process and prints patient statements.
Supports true cycle billing. Family,
individual patient, and open item
statement billing.
Managed Care Tracking. . . . . . . Tracks expected reimbursement and risk
pools; provides the information to
evaluate profitability of managed care
contracts.
Collections. . . . . . . . . . . . Allows for automated collections
letters, statement dunning messages, and
full range of collection reports and
audits.
PlanForm . . . . . . . . . . . . . Enables custom designing of statements,
labels and specialty forms.

ADMINISTRATIVE APPLICATIONS
Word Processing Integration. . . . Provides linkage to industry standard
word processors for correspondence.
Notes & Attributes . . . . . . . . Tracks and reports patient notes and
user define data elements.
Patient Recall . . . . . . . . . . Tracks, reports and sends reminders for
patient exams.

Practice Management Applications

Referral Tracking. . . . . . . . . SM*RT tracks referring doctors or other
sources. Complies with regulatory
requirements for claim data. Tracks
patient and dollar value of referred
patient by source.
Filter - Report Generator. . . . . Enables the practice to customize
reports beyond the standard reports.
System Reporting . . . . . . . . . System reporting include; accounting,
transactional, clinical, recall,
referral, trend analysis, management,
and graphical.

ADVANCED FEATURES
Electronic Linkage . . . . . . . . Custom HIS interfaces.
AutoPost . . . . . . . . . . . . . Electronic claim remittance. Takes
carrier data for paid claim and post to
the patient account in a open item
format automatically.
Appointment Scheduler. . . . . . . Eliminates the appointment book and
gives immediate access to the healthcare
providers daily, weekly, and monthly
schedules. Tracks appointment
cancellations and provides full
reporting.
Dr. Dialer . . . . . . . . . . . . An automated appointment reminder system
which dials patients at home using a
digitized voice system and patient
input/response via touch-tone keys.
Dr. Chart. . . . . . . . . . . . . Electronic patient medical record
system. Tracks patient histories, lab
results, health maintenance,
medications, and encounter information.
Available through third party
relationship.
EZ-CAP . . . . . . . . . . . . . . Provides complete management of
capitated reimbursement contracts for
group practice or IPA. Provides
projected, actual, and variance reports
for management. Transmits claims to
carriers or via EMC. Integrated with
SM*RT Practice. Available through third
party relationship.

<PAGE>

Electronic Media Claims (EMC). . . EMC will edit the claims for data
elements and electronically submit
edited claims to carriers or to
electronic clearing houses. The Company
utilizes Equifax as the national
clearing house for all client EMC.

NEW PRACTICE MANAGEMENT PRODUCT DEVELOPMENT

The Company expects to release in January of 1996 a completely new module,
called SM*RT Care. SM*RT Care is an on line medical record completely integrated
with the current SM*RT Practice and Net Suite products. SM*RT Care is being
developed using client server technology and will run either on a Intel based PC
or Digital Equipment Corp. Alpha minicomputer. SM*RT Care will operate as a
front end to SM*RT Practice and will provide the single physician or large group
practice with a graphical user interface to input and access all patient data
for a latitudinal and longitudinal medical record.

HEALTH INFORMATION NETWORK SYSTEMS

SM*RT NET SUITE

In the past two years the Company has developed and implemented a new
product line now marketed under the name of SM*RT Net. The SM*RT Net Suite was
designed to address the need for electronic exchange of information across the
network. Its objective is to streamline common, intra-organization communication
practices and processes. Specifically, the product suite enables organizations
such as, but not limited to, physician practices, hospitals, payors and allied
care providers to electronically exchange a common and standardized set of
information transactions related to the approval and delivery of patient care.
The breadth of information transactions exchanged are dependent upon the type
and variety of organizations participating in the network. The product is
completely scaleable from small local networks with dozens of participants to
state-wide networks which service thousands of providers and multiple payors.

Wismer Martin's SM*RT Link provides a true interactive interface for all
networked participants, including physicians, hospitals, labs, imaging centers,
IPA's, PPO's, HMO's, employers, third party payors, supplies and other entities.
The distributed hub strategy facilitating this communication capability uses a
distributed processing platform to permit economical incremental growth without
degradation of communication performance. Strict adherence to HL7 (Health Level
7) protocols ensures compatibility, as well as efficient and swift integration
with other healthcare products supporting this clinical communication standard.
The various modules of the SM*RT Net Suite include:

SM*RT NET MODULES CAPABILITIES
- ----------------- ------------

SM*RT Net Hub . . . . . . . . SM*RT Net Hub provides a true interactive
electronic interface between all participants
in a Healthcare Information Network (HIN),
including physicians, hospitals,
laboratories, imaging centers, IPA's, PPO's,
HMOs, employers, third party payors,
suppliers and other entities. Practices can
transmit patient referrals and demographics
and receive admit/discharge data, scheduling
information, lab and test results, pre-
authorizations and claims status, as
examples. The HUB computer facilitating this
communication capability utilizes a
distributed processing platform to permit
economical incremental growth without
degradation of communications performance.
The HUB supports a variety of communication
links and protocols, including TCP/IP, LU6.2,
and SNA. Strict adherence to HL7 (Health
Level 7) protocols ensures compatibility, as
well as efficient and swift integration's
with other healthcare products supporting
this clinical communication. The Net Hub
modules currently supports a wide range of
financial, clinical and other transaction
types.
SM*RT Net Link . . . . . . . . The SM*RT Net Link module is a Netware
loadable software module which manages the
sending and receiving of messages between a
HUB running SM*RT Net Hub software and a
single

<PAGE>

SM*RT Link workstation. This module includes
a full CUI user interface.
SM*RT Lan Link . . . . . . . . The SM*RT Net Lan Link module is a Netware
loadable software module which manages the
sending and receiving of messages between a
HUB running SM*RT Net Hub software and Novell
File Server. This module includes a full CUI
user interface and sends and receives
messages directly to the individual user
workstation.
SM*RT IS Link . . . . . . . . The SM*RT Net Lan Link module is a Netware
loadable software module which manages the
sending and receiving of messages between a
HUB running SM*RT Net Hub software and a
minicomputer or mainframe running a third
party application.
SM*RT Link IDK . . . . . . . . The SM*RT Link IDK module is a set of C
Language routines which are provided to 3rd
party vendors for use in integrating their
application with the SM*RT Net Suite.

SM*RT Net Hub's development is driven by the strategy for creating
successful fee-for-service and managed care hospital-physician network feeder
systems, it goes well beyond the scope of a system interface engine or platform.
Capabilities include data distribution protocols, security and patient referral
tracking capability. This built-in marketing "intelligence" will provide the
capability of tracking all referral transactions: i.e. understanding who the
true referral source of the patient is.

SM*RT Net Hub is completely integrated with SM*RT Practice, permitting ease
of operation with consistent menu driven screens and the automatic updating of
practice computer files. Without this specific programming integration, the
transfer of information among providers merely generates a print/text file,
which normally must be re-keyed into the practice computer system files. This
integration is obviously crucial in creating a seamless network.

NEW SM*RT NET SUITE PRODUCT DEVELOPMENTS

SM*RT Net Hub development plans include full integration with the SM*RT
Care product to be completed this year. The next product release for SM*RT Net
Suite is scheduled for July of 1995. Included in that release is Patient
Activity Index module which will permit accessing patient financial, clinical,
and other information from all points of the network as if the data was
contained in a single database.

HOSPITAL INFORMATION SYSTEMS

The ADDvantage Hospital Information System provides a comprehensive, fully
integrated application including financial, administrative, clinical, and
managed care modules to support the needs of the hospital from 50-300 beds. The
System has been developed, enhanced, and expanded over the past 12 years and
operates on the fastest selling minicomputer system ever developed; the IBM
AS/400. The System is completely modular but is usually purchased in core
groups. The ADDvantage System is designed to work for a single hospital or in a
multi-hospital setting where certain administrative functions, such as medical
records are shared between institutions.

ADDVANTAGE SYSTEM MODULES CAPABILITIES

FINANCIAL APPLICATIONS

Patient Billing. . . . . . . . . . Complete insurance billing module
including payor logs and managed care
processing.
Accounts Receivable. . . . . . . . Statement processing and Collections
follow-up. Payment and adjustment
posting with full account inquiry.
Accounts Payable . . . . . . . . . Controls vendor invoices and payments.
Includes master file maintenance,
transaction processing and reporting.
General Ledger . . . . . . . . . . Provides flexible financial management
including user defined reporting based
on current year, current budget, and
historical data.
Patient Registration . . . . . . . One process manages all types of patient
registrations, from pre-admission to
discharge.

<PAGE>

Materials Management . . . . . . . Manages purchasing, receipts,
requisitions, transfers, Cart/Par level,
lost charges, vendors statistics,
physical inventory, and reporting.
Payroll/Personnel. . . . . . . . . Provides complete management of payroll,
personnel, benefits administration,
payroll budgeting, licensure tracking
and education administration.
DRG OptiMiser. . . . . . . . . . . Operates in tandem with Medical Record
Abstracting Module to optimize DRG
assignment for each patient encounter to
ensure data quality and optimum
allowable reimbursement.
Cost Accounting . . . . . . . . . Provides complete cost tracking
utilizing step down methodology by use
of RVU's or actual costs. Provides cost
accounting information at multiple
levels of the organization.
Fixed Assets . . . . . . . . . . . Complete property management modules
with automatic depreciation calculation
via ARSC or MACRS. Maintains three tax
books; internal, state, and federal.

CLINICAL APPLICATIONS
Clinical Information System. . . . Provides a GUI based view of all
clinical data in the IHS Clinical
Modules via numeric and graphical
representation.
Quality Utilization/Management . . Complete Quality Utilization management,
physicians maintenance, infection
control, and risk management
capabilities.
Radiology Management . . . . . . . Departmental management module including
orders, scheduling, result reporting,
film tracking, and management
statistics.
Pharmacy Management. . . . . . . . Departmental management module including
orders, medication administration, drug
interactions, and patient profile.
Laboratory Management. . . . . . . Departmental management module including
orders, result entry, on line instrument
interfaces for all laboratory
departments.
Clinical Documentation System. . . Multi-disciplinary module which supports
assessments, care plans, flowsheets, and
progress notes. Provides standard care
plans and clinical pathways.

ADMINISTRATIVE APPLICATIONS
Resource Scheduling. . . . . . . . Complete multi-resource scheduler for
hospital and clinic departments.
Executive Information System . . . GUI based executive decision support
module which presents in graphical form
all relevant key indicators for hospital
operations with a focus on managed care
indicators.
Order Communications . . . . . . . Hospital wide order entry module with
direct data entry or menu selection.
Includes complete order explosion
capability.
Medical Records . . . . . . . . . Complete departmental module including
patient index, abstracting, DRG/Case mix
reporting, chart deficiency, and chart
locator.

NEW ADDVANTAGE SYSTEM PRODUCT DEVELOPMENTS

In the past year the Company has begun a major technology shift away from
terminal based applications to client server applications utilizing the IBM
AS/400 as a database server with a PC Lan as a front end providing clients with
a GUI interface. The first two applications marketed using this new technology
are the Clinical Information System and Radiology Management System completed
during this fiscal year. In the next fiscal year it is planned to extend this
technology to the Clinical Documentation System.

<PAGE>

PRODUCT RESEARCH, DEVELOPMENT AND ENHANCEMENT

The computer industry is characterized by rapid technological change
in computer hardware, operating systems and software. To keep pace with this
change, Wismer Martin maintains an aggressive program of new product
development. The Company dedicates considerable resources to further enhance
its existing products and to create new products and technologies. For the
nine months ended March 31, 1995 and for the fiscal years ended June 30, 1994
and 1993, the Company expended $1,887,622, $1,265,464 and $678,972,
respectively, on product research, development and enhancements. Of the
expended amounts, $1,287,927, $1,018,308 and $652,357 related to enhancements
which were capitaized during the nine months ended March 31, 1995 and for the
years ended June 30, 1994 and 1993, respectively. These capitalized costs
represent amounts expended after a product's technological feasibility has
been estabished and before the product is ready for sale. The Company
anticipates that future product research and development will approximate 15%
of product sales provided that the Company has the necessary liquidity to
fund these development efforts.

MARKETING AND SALES

The Company's products are currently distributed nationally through a
direct sales force of 5 sales representatives with an additional 5 employees
dedicated to inside sales to existing clients. Products typically are installed
on a turnkey basis, which includes installation of a respective software
application customized to the needs of the end-user practitioner's specialty and
practice, proper hardware configuration, patient account conversion, classroom
training, customer support and hardware/software system maintenance. The
Company services its distribution network from corporate headquarters in Mead
(Spokane), Washington; and from branch offices located in Seattle, Washington;
and La Jolla, California.

The Company's revenues are derived primarily from the sale of healthcare
information systems, from the licensing of proprietary software to purchasers of
these systems, from the provision of software and hardware maintenance services
and from the sale of paper forms and related supplies. Sales are made
nationwide. Under the terms of the Company's current licensing arrangements,
end-users of its proprietary software pay an annual software maintenance fee.
Additional maintenance fees are imposed for added work stations or additional
data bases. End-users may also elect to purchase software upgrading, technical
support and toll free customer support service from the Company. The Company
also provides end-users with hardware maintenance service, which is charged
separately. Revenue from the licensing of fixed fee multi-site license
arrangements which provide the customer with the right to reproduce additional
copies of the software and for which the Company has insignificant future
obligations are recognized upon delivery of the master copy of the software.
Revenue from the granting of exclusivity arrangements is recognized over the
period covered by the agreement. Installation revenues on long-term
installation contracts are recognized under the percentage-of-completion method
of accounting whereby revenues earned and related costs are recorded based upon
the relationship that total costs incurred bear to total estimated contract
costs. Services and other revenues are recognized pro rata over the period in
which the service is to be provided. (See Note 1 to the Consolidated Financial
Statements)

CUSTOMERS

The Company has installed more than 1600 physician practice management
systems, serving over 3700 physicians in more than 30 medical specialties
ranging in practice size from one to more than 30 physicians. The Company
markets its product to substantially all major specialties including family
practice, orthopedics, obstetrics and gynecology, internal medicine and
cardiology. Company has installed its hospital systems in 66 hospitals ranging
in size from 20 beds to 400 beds. The Company's hospital system has been shown
to meet the needs of the small rural community hospital as well as the large
urban medical center. The Company has installed its HIN products in three state
wide networks, sponsored by Blue Cross of Washington, Blue Cross of Alaska, and
Blue Shield of Eastern Washington, which encompass Washington and Alaska and
which have 370 client participants. The Company is in the process of
installation of its HIN products for two hospitals on the east coast which will
link multiple hospitals, payors, and hundreds of physicians. The Company
believes that an increasing portion of its sales are likely to be made to
hospitals and other large healthcare providers and has refocused its sales
efforts to address this market opportunity. 70% of the installed client base is
located in eight states. Blue Cross of Washington and Alaska accounted for 22%
of the Company's total revenues for the period ended March 31, 1995.

<PAGE>

Not shown but to be included as an exhibit on page 29 of the printed prospectus
will be a map of the continental United States which shows a total by state of
the number of Wismer Martin practice management, hospital, hospital network, and
payor network clients by those categories. These categories are abbreviated and
shown in a legend as P=Practice Management, H=Hospital, PN=Payor Network, HN=
Hospital Network. The data presented for each state on the map is as follows:

Alaska P=54 Ohio P=9, H=1
Alabama P=31 Oklahoma P=21
Arkansas P=3 Oregon P=95, H=3
Arizona P=50, H=1 Pennsylvania P=19, H=1
California P=98, H=24 South Carolina P=6
Colorado P=2, H=2 South Dakota P=5
Connecticut P=1, H=2 Tennessee P=55, H=1, HN=12
Wash, D.C. P=2 Texas P=15, H=1
Florida P=35, H=4 Utah P=39
Georgia P=55 Virginia P=15
Hawaii P=2 Washington P=594, H=4, PN=285
Iowa P=1 West Virginia P=8
Idaho P=103, H=1 Wyoming P=1
Illinois P=11, H=3
Indiana P=10, H=8
Kansas P=1
Kentucky P=122, H=1, HN=12
Louisiana P=17, H=2
Maine P=1
Maryland P=9, H=1
Michigan P=7, H=4
Minnesota P=1, H=1
Missouri P=16, H=1
Mississippi P=20
Montana P=16, H=1
North Carolina P=10
New Jersey P=8
New Mexico P=8, H=1
Nevada P=3, H=2
New York P=1

<PAGE>

SUPPORT SERVICES

As of May 31, 1995, the Company had approximately 60 employees providing
hardware and software maintenance, systems installation, training and support.
Support teams assist customers throughout the course of their relationship with
the Company, providing services which include installation planning,
installation, ongoing training and support.

The Company provides software maintenance to over 90% of its customers and
hardware maintenance to more than 20% of its customers under software and
hardware maintenance contracts. These services include software enhancements,
phone support, hardware repair, and field support.

The Company believes that support is critical to the successful
installation and ongoing operation of its systems and it has dedicated
substantial resources to customer support. The Company's hotline telephone
services are available seven days per week. Hotline services personnel answer
general questions about the system and solve operational difficulties. In-house
technical and research and development staff support the hotline staff on
operational questions which are more complex and require additional technical
expertise.

HARDWARE AND PERIPHERALS

As part of its complete product offerings, the Company sell computers,
terminals, printers, modems and other peripherals. Many clients require
additional peripherals or other upgrades to their hardware configurations as
their needs grow. The ADDvantage system operates on the IBM AS/400 minicomputer
and the SM*RT product lines operate on PC technology utilizing Intel processors.
The Company maintains VAR relationships with IBM and Digital Equipment
Corporation for resales of their equipment. The Company typically purchases
hardware under agreements which expire annually. These agreements are typically
renewed in the ordinary course of business and the Company has no reason to
believe that the agreements will not be renewed. The Company believes that its
relationships with its vendors are good. The Company generally seeks to
maintain a minimum amount of inventory and places order with its vendors upon
receipt of a firm order from a client. The Company is currently evaluating the
feasibility of outsourcing all sales, installation, and support of hardware sold
with its software offerings to its vendor partners. Since the evaluation
process is incomplete, there is no known trend that would provide management
with a reasonable basis for estimating the impact of this proposal. However, if
put into place, this "outsourcing" would reduce the Company's revenues and costs
but improve profit margins.

FORMS AND SUPPLIES

The Company currently maintains relationships with two forms companies,
Printed Systems, Inc. and Data Documents, Inc. which provide standard and custom
forms to our clients. In 1994, sales of forms and supplies represented
approximately 5% of revenues for the Company. The Company plans to outsource
the sales of forms and supplies to our outside partners including the billing
process in the next few months.

ELECTRONIC CLAIMS CLEARING HOUSE

The Company currently maintains a relationship with Equifax for electronic
transmission and clearing of insurance claims for our clients on a national
basis. The Company receives a percentage of the revenues collected by Equifax
which were approximately 2% of total revenues.

PROPRIETARY RIGHTS

The Company regards its software as proprietary and relies primarily on a
combination of copyrights and trade secret laws to establish its proprietary
interest and maintain the confidentiality of its software products.

The Company has copyrighted its software programs and has a trademark with
respect to the ADDvantage and "SM*RT" symbols used in the promotion and
marketing of its systems. The Company has no patents or patents pending, nor
has it filed any patent applications with respect to its practice management
systems. Based upon management's own assessment, the Company does not believe
it is in violation of any existing patents, patents pending or copyrights with
respect to its systems.

<PAGE>

The Company retains ownership rights to all software it develops. All
software is licensed to users and provided in object code pursuant to executed
license agreements. These agreements contain restrictions on disclosure and
transferability.

COMPETITION

The market for the Company's systems and services is highly competitive.
The Company believes that the principal competitive factors in this market are
ongoing system service and support, flexibility, price, ease-of-use and
compatibility of the system, the potential for product enhancements, customer
satisfaction, vendor reputation and financial stability. The industry is
fragmented and includes numerous competitors, none of which the Company believes
dominates the overall markets for the Company's product and services offerings.
The Company believes its principal competitive advantages are the features and
capabilities of its products and services, the high level of customer support
and its pricing methods.

The Company's principal competitors include other practice management
companies, hospital information systems companies, and HIN companies where
price competition is a significant factor. In addition, the Company believes a
significant and growing factor are those competitors which have greater
financial, development, technical, marketing and sales resources than the
Company. These larger competitors have a distinct advantage in pursuing the
larger contracts which are resulting as a part of the ongoing consolidation of
healthcare providers. In addition, as the market for the Company's product and
services develops, additional competitors may enter the market and competition
will intensify. There can be no assurance that the Company will be able to
compete successfully with its competitors in the future. See "Risk Factors --
Competition".

PRODUCTION

Production of the Company's software products involves duplication of disks
and tapes and printed user manuals. The purchase of blank disks and transfer of
the software programs onto these media for distribution to customers is
performed by the Company. Media for the Company's products include 5 1/4"
floppy disks, 3 1/2" micro-diskettes and magnetic tape are available from
multiple sources. User manuals for the Company's products and the packaging
materials are produced to the Company's specifications by outside sources. To
date, the Company has not experienced any material difficulties or delays in
production of its software and documentation.

The Company is not engaged in the business of manufacturing the hardware
components of its practice management systems, but purchases such components
from reputable third-party manufacturers. To date, the Company has not
experienced any material difficulties or delays purchasing hardware components.

The Company does not carry significant inventories of paper products.
Under existing arrangements with its paper products suppliers, the Company
places advance orders for such products and is invoiced upon delivery.

EMPLOYEES

As of May 31, 1995, the Company and its subsidiary had 120 employees, of
whom 33 were in software design and development, 14 in marketing and sales, 45
in customer support, 15 in installation, and 13 in administration. The Company
believes that its future success is dependent in part upon its ability to
continue to attract and retain highly skilled technical, marketing and
management personnel.

None of the Company's employees is subject to a collective bargaining
agreement and the Company has never experienced a work stoppage.

<PAGE>

PROPERTIES

The Company's headquarters are housed in a 17,500 square foot Company-owned
building in Mead (Spokane), Washington. Additionally, the Company leases office
space in the following cities:

<TABLE>
<CAPTION>
Monthly Lease
Location Rental Expiration Date
- -------- ------ ---------------
<S> <C> <C>
N. 10220 Nevada Spokane, Washington $1,890 September 30, 1995
6912 - 220th S.W.
Mountlake Terrace, Washington $4,184 July 30, 1997
7007-220th St. S.W.
Mountlake Terrace, Washington $157(2) June 30, 1995
3030 S.W. Moody
Portland, Oregon $1,303 November 30, 1995
ARCO Center, 300 Oceangate
Long Beach, California $4,481(1)(2) October 1, 1995
4275 Executive Square
La Jolla, California $6,707(1) June 30, 1998

<FN>
(1) The monthly lease amount is shown net of sublease income.

(2) This lease will not be renewed.
</TABLE>

Management believes that these existing facilities are adequate for
present and future operating needs.

LEGAL PROCEEDINGS

The Company is not a party to any material pending legal proceedings, nor
is any of its property subject to any material pending legal proceedings.

<PAGE>

MANAGEMENT

DIRECTORS

The current directors of the Company are listed below:

Name Age Term Served and Experience
- ---- --- --------------------------

Ronald L. Holden 49 Director of the Company since October 18, 1991
and Chairman of the Board of Directors since
February 13, 1992. Chief Executive Officer of
the Company since January 4,1995. President
and a member of the Board of Directors of
National Healthtech Corporation from 1990 to
1993.

Glen E. Martin 51 Director of the Company since November 1982.
Co-founder of the Company. Chairman and Vice-
President of August Systems, Inc. since
November, 1992. Executive Vice President from
May, 1988 to October, 1992.

Clarence H. Barnes, Ph.D. 53 Director of the Company since November, 1989.
Dean, School of Business Administration,
Gonzaga University, Spokane, Washington, 1980-
Present.

Larry R. Eidemiller, M.D. 54 Director of the Company since November, 1989.
Partner, Surgical Associates, Portland, Oregon,
1980-Present. Chief of Surgery, Good Samaritan
Hospital, Portland, Oregon, 1985-Present.

John F. Perez 47 Director of the Company since July 13, 1993.
President of the Company since March 15, 1995.
Chief Executive Officer of Integrated Health
Systems, Inc., a subsidiary of the Company from
July 1993 until Present. Chief Executive
Officer of Software Technology Services from
June, 1990 to June, 1993.

William D. Engel 60 Director of the Company since March 15, 1995.
President and Chief Executive Officer of
Logica, Inc. (the U.S. subsidiary of Logica
plc) since September 1993. Prior to that date,
Mr. Engel was a division executive at Dynatech
Corporation.

Each director is elected annually for a one-year term, to serve until the
next annual meeting of shareholders and until their respective successors are
elected and qualified, or their earlier resignation or removal.

The Audit Committee consists of Messrs. Holden and Barnes. The Audit
Committee's principal functions are to review the audited financial statements
and recommend the selection of auditors to the Board of Directors.

The Compensation Committee consists of Messrs. Holden, Perez, Barnes and
Eidemiller. The Compensation Committee's principal functions are to make
recommendations to the Board of Directors concerning executive management's
compensation program.

The Board of Directors does not maintain a Nominating Committee or a
committee performing similar functions.

DIRECTOR COMPENSATION

Currently, non-employee directors receive $1,000 per Board meeting
attended, or Committee meeting attended that is not held as an adjunct to a
Board meeting and are reimbursed for travel expenses actually incurred in
attending such meetings. The Company does not pay any other cash compensation
to directors for serving in such capacity. Each non-employee director also has
received a warrant for the purchase of 5,000 shares of Common Stock. See
"Security Ownership of Certain Beneficial Owners and Management."

<PAGE>

EXECUTIVE OFFICERS

The current executive officers of the Company are listed below:

Name Age Position and Term Served
- ---- --- ------------------------

Ronald L. Holden 49 Chief Executive Officer since January 4, 1995.
He has been Chairman of the Board of Directors
since February 13, 1992. He was President and
a member of the Board of Directors of National
Healthtech Corporation from 1990 to 1993.

John F. Perez 47 President and Chief Operating Officer since
March 15, 1995. Chief Executive Officer of
Integrated Health Systems, Inc., a subsidiary
of Wismer*Martin, from July, 1993 until
present. Prior to that he was CEO of Software
Technology Services providing programming and
product development in the healthcare industry

William E. Campbell III 41 Executive Vice President - Corporate
Development since January 4, 1995. Mr.
Campbell was a senior associate for Booz, Allen
& Hamilton for several years providing
operational and technology consultation to
healthcare organizations before becoming an
employee of the Company on April 1, 1994

Douglas A. Willford 39 Chief Financial Officer since January 4, 1995.
Mr. Willford has served as CFO of Integrated
Health Systems, Inc. (a subsidiary of
Wismer*Martin) since July, 1993. Prior to that
date, served as CFO for a hospital and two
healthcare management organizations.

Officers serve at the discretion of the Board of Directors.

OTHER SIGNIFICANT EMPLOYEES

Name Age Position and Term Served
- ---- --- ------------------------

James M. Evers 43 Vice President, Sales and Marketing singe July
17, 1995. Since 1976 Mr. Evers has held key
sales and sales management positions, both
regionally and nationally, within the
Healthcare Industry for Medic Computer Systems,
Baxter Travenol, Compucare, EDS and NCR
Corporation.

Richard J. Williams. . . . 38 Vice President, Practice Management since April
1, 1995. Employed by the Company since
September 1990 in a variety of roles including
Director of Client Sales, Manager of Sales
Support, and Support Representative.

Susan Orchanian. . . . . . 29 Vice President, Hospital Information Systems
since April 1, 1995. Ms. Orchanian previously
served as the Director of Client Services for
Integrated Health Systems and as the Director
of Product Management from February 1992 until
March of 1995. Prior to that date, Ms.
Orchanian was employed by Meditech, Inc. as an
Applications Consultant from 1988 until 1992.

Gary J. Peterson . . . . . 38 Vice President, HIN Products since March 15,
1995. Employed by the Company since October
1991 as Product Manager of HIN Products. Prior
to his employment at Wismer, Mr. Peterson
served as Director of Programming and
Development for Cascade Software from 1986
until 1991.

<PAGE>

EXECUTIVE COMPENSATION

SUMMARY COMPENSATION TABLE

The following table presents information regarding the aggregate
compensation for the fiscal years ended June 30, 1993 and 1994 paid or accrued
for (i) the Chief Executive Officer of the Company and (ii) the four other most
highly paid executive officers of the Company. Projected compensation for the
current fiscal year is included.

<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------
Annual Compensation
Fiscal --------------------------------------------
Year Long Term
Ended Other Compensation
Name and Principal Position June 30, Salary Bonus Compensation Awards Options
- ------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Ronald L. Holden: 1995 (1)$140,000 $ -0- (1)$60,000 -0-
Chairman of the Board 1994 $ 54,250 $ -0- (1)$60,000 -0-
Chief Executive Officer 1993 $ -0- $ -0- $ -0- -0-
- ------------------------------------------------------------------------------------------------------------------------
John F. Perez: (2) 1995 $120,000 $ -0- $ -0- 200,000
President & Chief Operating 1994 $ 46,600 $ -0- $ -0- -0-
Officer 1993 $ -0- $ -0- $ -0- -0-
- ------------------------------------------------------------------------------------------------------------------------
William E. Campbell III(3) 1995 $ 95,000 $ -0- $ -0- 200,000
Executive Vice President 1994 $ 23,750 $ -0- $ -0- -0-
Corporate Development 1993 $ -0- $ -0- $ -0- -0-
- ------------------------------------------------------------------------------------------------------------------------
Douglas A. Willford(4) 1995 $ 90,000 $ -0- $ -0- 100,000
Executive Vice President 1994 $ 36,890 $ -0- $ -0- -0-
Chief Financial Officer 1993 $ -0- $ -0- $ -0- -0-
- ------------------------------------------------------------------------------------------------------------------------
Stanley T. Hatch:(5) 1995 $18,676 $ -0- $ -0- -0-
1994 $ 73,164 $108,900 (9)$79,200 -0-
1993 $ 70,350 $ -0- $ -0- -0-
- ------------------------------------------------------------------------------------------------------------------------
Robert M. Wilson:(6) 1995 $18,367 $ -0- $ -0- -0-
1994 $ 65,520 $ 62,000 $ -0- -0-
1993 $ 63,000 $ -0- $ -0- -0-
- ------------------------------------------------------------------------------------------------------------------------
Beverly J. Hatch:(7) 1995 $12,712 $ -0- -0- -0-
1994 $ 56,784 $ 69,000 (9)$ 6,600 -0-
1993 $ 54,600 $ -0- $ -0- -0-
- ------------------------------------------------------------------------------------------------------------------------
Michael J. Magliaro, Jr.:(8) 1995 $23,970 $ -0- $ -0- -0-
1994 $ 74,880 $ 49,400 $ -0- -0-
1993 $ 42,000 $ -0- $ -0- -0-
- ------------------------------------------------------------------------------------------------------------------------
<FN>
(1) The compensation for Mr. Holden for 1994 represents compensation
received from Integrated Health Systems, Inc. from the date of
acquisition, February 10, 1994, through the fiscal year ending June 30,
1994. The other compensation represents consulting fees received from
the Company for the fiscal year ending June 30, 1994. Mr. Holden was
engaged by the Company beginning July 1, 1993. Mr. Holden became the
Chief Executive Officer of the Company on January 4, 1995. The
compensation for Mr. Holden for 1995 represents his actual projected
salary for the entire fiscal year.

(2) The compensation for Mr. Perez for 1994 represents compensation received
from Integrated Health Systems, Inc. from the date of acquisition,
February 10, 1994, through the fiscal year ending June 30, 1994. Mr.
Perez became the President and Chief Operating Officer of the Company on
March 15, 1995. The compensation for Mr. Perez for 1995 represents his
actual projected salary for the entire fiscal year.

(3) The compensation for Mr. Campbell for 1994 represents compensation
received from Integrated Health Systems, Inc. from April 1, 1994,
through the fiscal year ending June 30, 1994. Mr. Campbell became an
Executive Vice President of the Company on January 4, 1995. The
compensation for Mr. Campbell for 1995 represents his actual projected
salary for the entire fiscal year.

<PAGE>

(4) The compensation for Mr. Willford for 1994 represents compensation
received from Integrated Health Systems, Inc. from the date of
acquisition, February 10, 1994, through the fiscal year ending June 30,
1994. Mr. Willford became the Vice President and Chief Financial
Officer of the Company on January 4, 1995. The compensation for Mr.
Willford for 1995 represents his actual projected salary for the entire
fiscal year.

(5) Mr. Hatch is no longer an executive officer, director or employee of the
Company. Mr. Hatch resigned as a director on January 4, 1995. Mr.
Hatch was an executive officer and employee of the Company until March
15, 1995.

(6) Mr. Wilson is no longer an executive officer of the Company. Mr. Wilson
was an executive officer and employee of the Company until May 4, 1995.

(7) Ms. Hatch is no longer an executive officer or employee of the Company.
Ms. Hatch was an executive officer and employee of the Company until
March 15, 1995. Ms. Hatch is the spouse of Mr. Hatch.

(8) Mr. Magliaro is no longer an executive officer or employee of the
Company. Mr. Magliaro was employed by the Company from December 1, 1992
until March 15, 1995.

(9) Represents the amount of compensation attributable to the exercise of
stock options. The amount represents the difference between the fair
market value of the common stock and the exercise price paid for the
common stock.
</TABLE>

STOCK OPTION GRANTS IN LAST FISCAL YEAR

No stock options were granted during the fiscal year ended
June 30, 1994.

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

The following table presents stock options exercised by the Company's
Chief Executive Officer and the Company's executive officers during fiscal year
1994, and the value of all unexercised options at year-end. The value of "in-
the-money" options refers to options having an exercise price which is less than
the market price of the Company's stock on June 30, 1994. Options granted to
Robert M. Wilson and Michael J. Magliaro, Jr. expired following their
termination in 1995 and are not included.

<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------
Value of Unexercised
In-the-Money Options
Number of Unexercised at Fiscal Year End ($)
Shares Acquired on Value Options at Fiscal Year End Exercisable/
Name Exercise (#) Realized($) (#) Unexercisable
- ----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Stanley T. Hatch 240,000 $360,000 480,000 / -0- $720,000 / $ -0-
- ----------------------------------------------------------------------------------------------------------------
Beverly J. Hatch 20,000 $ 30,000 80,000 / -0- $100,000 / $ -0-
- ----------------------------------------------------------------------------------------------------------------
Steven G. Anderson 33,333 $ 50,000 83,334 / -0- $125,001 / $ -0-
- ----------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------
</TABLE>

The options are generally exercisable for a three-year period and expire:
i) immediately upon termination of the employee for cause, ii) sixty days after
termination without cause, or iii) ninety days after death or disability of the
employee.

BENEFIT PLANS

The Board of Directors of the Company, in their discretion, may grant
options to purchase shares of common stock of the Company to key employees. The
number of shares covered by the option is determined by the directors. The
exercise price is set by the directors at not less than the fair market value of
the shares on the date at which the option is granted.

The Company does not have any other stated compensatory employee benefit
plans.

<PAGE>

CERTAIN TRANSACTIONS

1994 CONVERTIBLE SUBORDINATED DEBENTURES.

On February 10, 1994, the Company acquired all of the outstanding shares of
Common Stock of Integrated Health Systems, Inc., a California corporation
("IHS"). The business of IHS has been described in the section of this
prospectus entitled "Business" and is included in the discussion set forth in
"Management's Discussion and Analysis." The acquisition price was comprised
entirely of the issuance by the Company of Convertible Subordinated Debentures
having a face value of Two Million Five Hundred Thousand Dollars ($2,500,000).
The amount of the consideration for the transaction was determined by
negotiation between the parties. The Debentures are due January 31, 1999, with
interest accruing at the rate of seven percent (7%) per annum. The holder of
the Debenture has a right of conversion. See "Conversion of Subordinated
Convertible Debentures."

500 shares of IHS were issued and outstanding at the time of the
transaction. Ronald L. Holden, a director and now Chief Executive Officer of
the Company owned 377 shares of record and beneficially. The remaining 123
shares were owned of record by him but were subject to option granted by him to
key employees of IHS. Mr. Holden received a Debenture having a face amount of
One Million Eight Hundred Eighty-Five Thousand Dollars ($1,885,000) in exchange
for the 377 shares. Mr. John F. Perez, a director and now President of the
Company, following the exercise of the option issued to him by Mr. Holden for 50
shares received a Debenture in the face amount of Two Hundred Fifty Thousand
Dollars ($250,000). Mr. Douglas A. Willford, now the Executive Vice President
and Chief Financial Officer of the Company, following the exercise of the option
to purchase 12 shares issued to him by Mr. Holden, was issued a Debenture in the
amount of Sixty Thousand Dollars ($60,000). The remaining outstanding shares of
Common Stock of IHS were subject to options issued by Mr. Holden to persons who
are not directors or executive officers of the Company. The total amount of
Debentures issued by the Company to those persons is Three Hundred Five Thousand
Dollars ($305,000).

SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

The following table sets forth certain information as of March 31, 1995,
and as adjusted to reflect the sale of shares offered hereby (a) by each person
who is known by the Company to beneficially own more than five percent of the
Common Stock, (b) by each executive officer named in the Summary Compensation
table and each director of the Company, and (c) by all executive officers and
directors of the Company as a group. Shares not outstanding but deemed
beneficially owned by virtue of the right of an individual or group to acquire
them within 60 days are treated as outstanding only when determining the amount
and percentage owned by such individual or group. Unless otherwise noted, each
person or group identified has sole voting and investment power with respect to
the shares shown. Common Stock is the only class of shares issued by the
Company.

<TABLE>
<CAPTION>
Number of Shares Percent Percent
Name and Address Beneficially Owned Before After
---------------- ------------------ ------ -----
<S> <C> <C> <C>
EXECUTIVE OFFICERS AND DIRECTORS
Ronald Holden ((1))
N. 12828 Newport Highway 6,090,700 53.64% 45.60%
Mead, WA 99021

Clarence H. Barnes, Ph.D. ((2))
W. 614 17th Street 27,000 Less than 1% Less than 1%
Spokane, Washington 99203

Glen E. Martin ((3))
West 1406 Elmwood Court 368,333 3.62% 3.02%
Spokane, Washington 99218

Larry R. Eidemiller, M.D. ((4))
5051 S.W. Downs View Court 5,000 Less than 1% Less than 1%
Portland, Oregon 97221

John Perez ((5))
4275 Executive Square, Suite 550 400,000 3.90% 3.27%
La Jolla, CA 92037

</TABLE>

<PAGE>

<TABLE>
<S> <C> <C> <C>
William E. Campbell III (6)
1336 98th Ave. N.E. 201,000 2.00% 1.67%
Bellevue, Washington 98004

Douglas A. Willford (7)
5816 N. Drumheller 148,000 1.48% 1.23%
Spokane, Washington 99205

All executive officers and directors
as a group 7,240,033 58.14% 50.14%

OTHER HOLDERS OF MORE THAN FIVE PERCENT

Stanley T. Hatch 958,500 9.73% 8.09%
North 1619 Westpoint Road
Spokane, Washington 99201

<FN>
(1) Mr. Holden received a debenture in the amount of $1,885,000 on February 10,
1994. The debenture can be converted to common stock at a conversion price
of $1.25 per share after this offering. If the total debenture were
converted, Mr. Holden would be entitled to 1,508,000 shares of common stock
in addition to his current holdings of 4,582,700 shares of common stock.
The shares reflected above include the 4,582,700 shares currently held plus
the 1,508,000 shares for which Mr. Holden is deemed to be the beneficial
owner. The percentages reflect the percentage ownership based upon the
total outstanding stock at March 31, 1995 of 9,847,625 plus the 1,508,000
shares assumed to be converted by Mr. Holden.

(2) Dr. Barnes holds a stock purchase warrant that allows him to purchase 5,000
shares of the Company's common stock. The shares reflected above include
22,000 shares currently held plus the 5,000 shares for which Dr. Barnes is
deemed to be the beneficial owner. Dr. Barnes' ownership is based upon the
total outstanding stock at March 31, 1995 of 9,847,625 plus the 5,000
shares assumed to be exercised by Dr. Barnes and yields a percentage of
less than one percent.

(3) Mr. Martin purchased a debenture in the amount of $200,000 on August 26,
1993. The debenture can be converted to common stock at a conversion price
of $.60 per share. Mr. Martin holds a stock purchase warrant that allows
him to purchase 5,000 shares of the Company's common stock. If the
debenture was converted and the stock purchase warrant was exercised, Mr.
Martin would be entitled to 338,333 shares of common stock in addition to
his current holdings of 30,000 shares of common stock. The shares
reflected above include the 30,000 shares currently held plus the 338,333
shares for which Mr. Martin is deemed to be the beneficial owner. The
percentages reflect the percentage ownership based upon the total
outstanding stock at March 31, 1995 of 9,847,625 plus the 338,333 shares
assumed to be exercised by Mr. Martin.

(4) Dr. Eidemiller holds a stock purchase warrant that allows him to purchase
5,000 shares of the Company's common stock. The shares reflected above
reflect the 5,000 shares for which Dr. Eidemiller is deemed to be the
beneficial owner. Dr. Eidemiller's ownership is based upon the total
outstanding stock at March 31, 1995 of 9,847,625 plus the 5,000 shares
assumed to be exercised by Dr. Eidemiller and yields a percentage less than
one percent.

(5) Mr. Perez received a debenture in the amount of $250,000 on February 10,
1994. The debenture can be converted to common stock at a conversion price
of $1.25 per share after this offering. If the total debenture were
converted, Mr. Perez would be entitled to 200,000 shares of common stock.
Mr. Perez also holds current stock options that allow him to purchase
200,000 additional shares of the Company's common stock. The shares
reflected above include the 400,000 shares for which Mr. Perez is deemed to
be the beneficial owner for the assumed conversion of the debenture and the
exercise of Mr. Perez's stock options. Mr. Perez's ownership is based upon
the total outstanding stock at March 31, 1995 of 9,847,625 plus the 400,000
shares assumed to be converted by Mr. Perez.

(6) Mr. Campbell holds current stock options that allows him to purchase
200,000 additional shares of the Company's common stock. If the stock
option were exercised, Mr. Campbell would be entitled to 200,000 shares of
common stock in addition to his current holdings of 1,000 shares. The
shares reflected above include the 1,000 shares currently held plus the
200,000 shares for which Mr. Campbell is deemed

<PAGE>

to be the beneficial owner. Mr. Campbell's ownership is based upon the
total outstanding stock at March 31, 1995 of 9,847,625 plus the 201,000
shares assumed to be exercised by Mr. Campbell.

(7) Mr. Willford received a debenture in the amount of $60,000 on February 10,
1994. The debenture can be converted to common stock at a conversion price
of $1.25 per share after this offering. If the total debenture were
converted, Mr. Willford would be entitled to 48,000 shares of common
stock. Mr. Willford also holds current stock options that allow him to
purchase 100,000 additional shares of the Company's common stock. The
shares reflected above include the 148,000 shares for which Mr. Willford is
deemed to be the beneficial owner for the assumed conversion of the
debenture and the exercise of Mr. Willford's stock options. Mr. Willford's
ownership is based upon the total outstanding stock at March 31, 1995 of
9,847,625 plus the 148,000 shares assumed to be converted by Mr. Willford.
</TABLE>

DESCRIPTION OF CAPITAL STOCK

GENERAL

The authorized capital stock of the Company consists of 20,000,000 shares
of Common Stock, par value $.001 per share. The following summary description
of the Common Stock is qualified in its entirety by reference to the Company's
Articles of Incorporation, as amended (the "Articles") and Bylaws, copies of
which are filed as exhibits to the Registration Statement of which this
Prospectus forms a part.

As of June 30, 1995, there were 9,847,625 shares of Common Stock outstand-
ing, held of record by approximately 1,000 shareholders. Holders of Common Stock
are entitled to one vote per share on all matters submitted to a vote of
shareholders, to the extent a vote of shareholders is required or permitted
under the Washington Business Corporation Act. Holders of Common Stock are not
entitled to cumulative voting in the election of directors. Holders of Common
Stock are entitled to receive ratably such dividends as may be declared by the
Board of Directors out of funds legally available therefor. In the event of the
liquidation, dissolution or winding up of the Company, holders of Common Stock
are entitled to share ratably in all assets remaining after payment of liabili-
ties. Holders of Common Stock have no preemptive, subscription, redemption or
conversion rights. All the

<PAGE>

outstanding shares of Common Stock are, and all shares of Common Stock to be
outstanding upon completion of this offering will be, fully paid and nonassess-
able.

ANTI-TAKEOVER PROVISIONS

The Company is subject to the Washington Business Corporation Act, which
contains provisions that have the effect of discouraging non-negotiated takeover
attempts. Section 23B.17 of the Act (Chapter 23B.19 RCW) generally prohibits
any "significant business transaction" within five years of the date a person
acquired ten percent or more of the outstanding voting shares of a company,
unless the transaction first receives the approval of a majority of the
disinterested directors prior to the time the ten percent ownership threshold is
crossed. Also, pursuant to Section 23B.17 of the Act, Washington imposes a
"fair price" restriction on corporations with 300 or more record holders of its
shares. This statute provides, subject to certain exceptions, that specified
change-of-control transactions between a company subject to its provisions
(which include the Company) and an "interested shareholder" (defined as a person
or affiliated group beneficially owning twenty percent or more of the Company's
outstanding voting stock) will be prohibited unless a majority of disinterested
directors determine the price offered by the interested shareholder to be fair,
or unless two-thirds of the shareholders of each voting group entitled to vote
separately on the transaction (not including the interested shareholder) approve
such change-of-control transaction.

The Company's articles of incorporation and bylaws do not contain any
similar provisions which may have the effect of discouraging non-negotiated
takeover attempts by delaying or preventing changes-in-control of management of
the Company.

DIRECTOR AND OFFICER INDEMNIFICATION AND LIABILITY

The Company's Articles contain provisions indemnifying directors and
officers of the Company to the fullest extent permitted by law. The Company has
also entered into indemnification agreements pursuant to which it has agreed,
among other things, to advance funds to a director for the payment of expenses
incurred in litigation. In addition, the Articles contain provisions limiting
the personal liability of directors to the Company or its shareholders to the
fullest extent permitted by law.

Insofar as indemnification for liabilities arising under the Securities Act
of 1933 (the "Securities Act") may be permitted to directors, officers or
persons controlling the Company pursuant to the foregoing provisions, the
Company is aware that in the opinion of the Securities and Exchange Commission
such indemnification is against public policy as expressed in the Act and is
therefore unenforceable.

TRANSFER AGENT

The transfer agent and registrar for the Company's Common Stock is
TranSecurities International, Inc., 2510 N. Pines, Spokane, Washington 99206-
7624.

SHARES ELIGIBLE FOR FUTURE SALE

Prior to this offering, there has been only a limited public market for the
Common Stock. Future sales of substantial amounts of Common Stock in the public
market could adversely affect prevailing market prices.

Upon completion of this Offering for the maximum number of shares, the
Company will have 12,847,625 shares of Common Stock outstanding (assuming no
exercise after March 31, 1995 of any outstanding options granted under the
Company's stock option plan, no exercise after March 31, 1995 of any outstanding
warrants granted to the Company's non-employee directors, and no conversion
after the completion of the Offering of any remaining outstanding Debentures).
Of these shares, the 3,000,000 shares sold in this Offering will be freely
tradable without restriction, except for any shares purchased by an existing
"affiliate" of the Company or by an individual or entity subject to a contractu-
al restriction on resale. The number of shares eligible for immediate sale in
the public market on the date of this Offering without restriction cannot be
determined.

Restricted securities and securities held by affiliates may be sold only if
registered under the Securities Act of 1933 or if they qualify for an exemption,
including an exemption pursuant to Rule 144.

<PAGE>

In general, under Rule 144 as currently in effect, a person (or persons
whose shares are aggregated), who has beneficially owned restricted securities
within the meaning of Rule 144 for at least two years, including the holding
period of any prior owner except an affiliate, is entitled to sell within any
three-month period a number of shares that does not exceed the greater of (i) 1%
of the then-outstanding shares of Common Stock and (ii) the average weekly
trading volume of the Common Stock in the over-the-counter market during the
four calendar weeks preceding the date on which notice of the sale is filed with
the Commission. Sales under Rule 144 are also subject to certain manner of sale
provisions, notice requirements and the availability of current public informa-
tion about the Company. Any person (or persons whose shares are aggregated) who
is not deemed to have been an affiliate of the Company at any time during the 90
days preceding a sale, and who owns restricted securities that were purchased
from the Company (or any affiliate) at least three years previously, will be
entitled to sell such shares under Rule 144(k) without regard to the volume
limitations, manner of sale provisions, public information requirements or
notice requirements.

DETERMINATION OF OFFERING PRICE

The public offering price for the shares of Common Stock being offered has
been determined by the Board of Directors. Prior to this offering, however,
there has been only a limited public market for the Common Stock of the Company.
The Board of Directors considered the market price for the Common Stock during
the first five months of 1995 prevailing conditions in the securities markets,
the Company's position in the industry, and the Company's current financial
position.

LEGAL MATTERS

The validity of the shares of Common Stock being offered hereby and certain
legal matters relating to the Offering have been passed upon for the Company by
Paine, Hamblen, Coffin, Brooke & Miller, Spokane, Washington.

EXPERTS

The consolidated financial statements of the Company and subsidiary as of
March 31, 1995 and June 30, 1994 and for the nine months ended March 31, 1995
and years ended June 30, 1994 and 1993 included in this Prospectus and in the
Registration Statement, have been audited by BDO Seidman, LLP, independent
certified public accountants, to the extent and for the periods set forth in
their report appearing elsewhere herein, and are included in reliance upon such
report given upon the authority of said firm as experts in accounting and
auditing.

CHANGE OF ACCOUNTANTS:

Coopers & Lybrand, LLP, was engaged to perform the audit of the Company's
financial statements for the fiscal years ended June 30, 1993 and June 30,
1994.Without prior discussion with the Company, Coopers & Lybrand, LLP ("Coo-
pers") informed the Company on March 28, 1995 that the client-auditor relation-
ship between the Company and their firm had ceased as of that date and that
Coopers would not consent to the use of the audit reports issued by Coopers for
the fiscal years ended June 30, 1993 and June 30, 1994 in any future filings
with the Securities and Exchange Commission. The Board of Directors of the
Company had not considered or contemplated any decision to change accountants;
in fact, the shareholders of the Company, at the Company's request, had ratified
the selection of Coopers as independent public accountants for the fiscal year
ended June 30, 1995 at the Annual Meeting of Shareholders held March 21, 1995.

The Company does not believe that there were any disagreements with Coopers
concerning any matter of accounting principles or practices, financial statement
disclosure, or auditing scope or procedures. Coopers, however, advised the
Company on April 10, 1995 that, events should have been reported by the Company
on Form 8-K pursuant to Item 304(a)(1)(iv)(B)(3) of Regulation SB. Although its
reports on the June 30, 1994 and June 30, 1993 financial statements were not
modified or qualified, Coopers stated that, if its 1994 report had been
reissued, consideration would be given to the Company's ability to continue as a
going concern which could result in a modification of the 1994 report. Coopers
said that it had not carried out sufficient procedures prior to its resignation
to conclude as to whether a modification of the 1994 report would be required.
Coopers also noted that it had made certain inquiries in connection with the
issuance of the Form 10-QSB for the quarter ended December 31, 1994, particu-
larly as to the realizability of the deferred tax asset recorded at December 31,
1994 in view of the significant loss recorded for the quarter and six months
then ended. There were no other items identified by

<PAGE>

Coopers which would have caused them to refuse to reissue their reports on the
financial statement for the fiscal years ended June 30, 1994 and June 30, 1993.
The Company and Coopers agree that Coopers had not been requested to perform,
nor had it performed, any procedures which might have assisted the Company in
reaching an appropriate conclusion regarding the Form 10-QSB.

On April 26, 1995, the Company engaged BDO Seidman, LLP as its independent
public accountants. No discussions regarding the opinion of BDO Seidman, LLP on
accounting matters or financial reporting issues occurred prior to their
engagement as the Company's independent certified public accountants.

<PAGE>

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

Page
----

Report of Independent Certified Public Accountants . . . . . . . . . . F-2

Consolidated Balance Sheets at March 31, 1995 and June 30, 1994. . . . F-3

Consolidated Statements of Operations for the nine months ended
March 31, 1995 and for the years ended June 30, 1994 and 1993. . . . . F-4

Consolidated Statement of Changes in Stockholders' Equity (Deficit)
for the nine months ended March 31, 1995 and for the years ended
June 30, 1994 and 1993 . . . . . . . . . . . . . . . . . . . . . . . . F-5

Consolidated Statements of Cash Flows for the nine months ended
March 31, 1995 and for the years ended June 30, 1994 and 1993. . . . . F-6

Notes to Consolidated Financial Statements . . . . . . . . . . . . . . F-7

F-1

<PAGE>

REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS

Wismer*Martin, Inc.
Mead, Washington

We have audited the accompanying consolidated balance sheets of
Wismer*Martin, Inc. as of March 31, 1995 and June 30, 1994, and the related
consolidated statements of operations, changes in stockholders' equity (deficit)
and cash flows for the nine month period ended March 31, 1995 and the years
ended June 30, 1994 and 1993. These financial statements are the responsibility
of the Company's management. Our responsibility is to express an opinion on
these financial statements based on our audits.

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

In our opinion, the financial statements referred to above present fairly,
in all material respects, the consolidated financial position of Wismer Martin,
Inc. as of March 31, 1995 and June 30, 1994, and the results of their operations
and their cash flows for the nine month period ended March 31, 1995 and the
years ended June 30, 1994 and 1993 in conformity with generally accepted
accounting principles.

As discussed in Note 1 to the consolidated financial statements, the
Company acquired Integrated Health Systems, Inc. in 1994 in a transaction
accounted for as a combination of entities under common control. The
consolidated statements of operations and cash flows for the years ended June
30, 1994 and 1993 have been restated to include the results of Integrated
Health Systems, Inc.'s operations and cash flows subsequent to the date of
common control.

As discussed in Note 1 to the consolidated financial statements, the
Company changed its method of accounting for income taxes in fiscal 1994.

BDO Seidman, LLP

Spokane, Washington
June 2, 1995

F-2

<PAGE>

WISMER*MARTIN, INC.
CONSOLIDATED BALANCE SHEETS

<TABLE>
<CAPTION>
March 31, 1995 June 30, 1994
---------------------------------
ASSETS
<S> <C> <C>
Current assets:
Cash and cash equivalents $ 104,081 $ 588,349
Trade receivables, net of allowance for doubtful
accounts of $278,074 and $176,362 (Note 5) 1,732,537 2,807,368
Unbilled costs and expenses 190,251 166,354
Inventories (Note3) 267,370 625,018
Prepaids and other assets 186,988 199,152
------------- -------------
Total current assets 2,481,227 4,386,241

Property, plant and equipment, net (Notes 4, 5 and 6) 1,948,528 1,962,445
Software development costs, net of accumulated amortization
of $1,338,617 and $878,999 2,500,469 1,672,161
Other assets, net of accumulated amortization
of $171,468 and $75,836 184,606 209,282
Deferred income taxes (Note 8) -- 248,044
------------- -------------
Total assets $ 7,114,830 $ 8,478,173
------------- -------------
------------- -------------
LIABILITIES AND CAPITAL DEFICIT
Current liabilities:
Notes payable to bank (Note 5) $ 958,949 $ --
Accounts payable 1,082,117 1,097,500
Accrued wages and related taxes 341,358 524,455
Other accrued liabilities 151,268 330,449
Deferred revenue 2,318,510 2,231,801
Long-term debt, due within one year (Note 6) 62,234 64,465
Obligations under capital leases, due within one year (Note 7) 29,305 20,164
------------- -------------
Total current liabilities 4,943,741 4,268,834

Other liabilities 93,201 138,740
Long-term debt, due after one year (Note 6) 900,746 949,617
Convertible subordinated debentures (Note 9) 3,000,000 3,000,000
Obligations under capital leases, due after one year (Note 7) 75,721 69,625
Deferred income taxes (Note 8) -- 589,885
------------- -------------
Total liabilities 9,013,409 9,016,701

Capital deficit: (Notes 9 and 10)
Common stock, $.001 par value 20,000,000 shares authorized:
9,847,625 and 9,362,625 shares issued and outstanding 9,848 9,363
Additional paid-in capital 1,203,809 1,082,544
Excess purchase price of acquired subsidiary (Note 1) (2,533,308) (2,533,308)
Retained earnings (deficit) (578,928) 902,873
------------- -------------
Capital deficit (1,898,579) (538,528)
------------- -------------
Total liabilities and capital deficit $ 7,114,830 $ 8,478,173
------------- -------------
------------- -------------
</TABLE>

See accompanying notes to consolidated financial statements

F-3

<PAGE>

WISMER*MARTIN, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS

<TABLE>
<CAPTION>
Nine Months Fiscal Years Ended
Ended June 30,
March 31, 1995 1994 1993
-------------------------------------------
<S> <C> <C> <C>
Net sales:
Software license fees $ 2,149,057 $5,547,487 $2,631,978
Equipment, software and supplies sales 1,920,152 2,829,889 2,967,502
Software and hardware maintenance contracts 2,879,754 3,513,831 2,638,019
Service revenue 2,154,972 3,777,885 993,995
Discounts (1,273,462) (1,271,842) (920,437)
------------------------------------------
Net sales 7,830,473 14,397,250 8,311,057
------------------------------------------
Operating expenses:
Cost of software license fees 459,619 567,058 324,633
Cost of equipment, software and supplies sold 1,401,011 2,542,421 2,516,856
Cost of support and operations 2,197,585 3,965,059 2,100,261
Selling and marketing 1,895,603 1,994,340 1,195,663
Product research, development and enhancements 1,887,622 1,270,656 678,972
Less: amount capitalized related to enhancements (1,287,927) (1,018,308) (652,357)
General and administration 2,819,313 3,921,134 2,018,322
------------------------------------------
Total operating expense 9,372,826 13,242,360 8,182,350
------------------------------------------
Operating income (loss) (1,542,353) 1,154,890 128,707

Other income (expense):
Interest income 20,295 28,180 35,140
Interest expense (301,584) (192,407) (147,339)
------------------------------------------
Income (loss) before income taxes and cumulative
effect of change in accounting principle (1,823,642) 990,663 16,508
Income tax expense (benefit) (Note 8) (341,841) 265,107 12,191
------------------------------------------
Income (loss) before cumulative
effect of change in accounting principle (1,481,801) 725,556 4,317
Cumulative effect of change in accounting
principle (Note 8) - 27,479 -
------------------------------------------
Net income (loss) $(1,481,801) $ 698,077 $ 4,317
------------------------------------------
------------------------------------------
Net income (loss) per share:
Income (loss) before cumulative
effect of change in accounting principle $ (0.15) $ 0.07 Nil
Cumulative effect of change in accounting principle - Nil -
------------------------------------------
Net income (loss) per share $ (0.15) $ 0.07 Nil
------------------------------------------
------------------------------------------
Weighted average common shares outstanding 9,893,346 9,423,845 9,198,191
------------------------------------------
------------------------------------------
</TABLE>

See accompanying notes to consolidated financial statements

F-4

<PAGE>

WISMER*MARTIN, INC.
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY (DEFICIT)
FOR THE NINE MONTHS ENDED MARCH 31, 1995 AND THE YEARS ENDED JUNE 30, 1994
AND 1993

<TABLE>
<CAPTION>
Excess
Common Stock Additional Purchase Price Retained
------------ Paid-In of Acquired Earnings
Shares Amount Capital Subsidiary (Deficit) Total
-----------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Balances at July 1, 1992 9,039,293 $ 9,039 $ 986,518 $ - $ 167,171 $ 1,162,728

Issuances of common stock for
exercise of stock options 16,667 17 4,150 4,167
Net income 4,317 4,317
---------- ----------- ------------ ------------ ----------- ------------

Balances at June 30, 1993 9,055,960 9,056 990,668 - 171,488 1,171,212

Issuances of common stock for
exercise of stock options, after tax
effect 306,665 307 91,876 92,183
Issuance of convertible
subordinated debentures for
common stock of acquired subsidiary (2,500,000) (2,500,000)
Retained deficit of acquired
subsidiary at acquisition (33,308) 33,308 -
Net income 698,077 698,077
---------- ----------- ------------ ------------ ----------- ------------

Balances at June 30, 1994 9,362,625 9,363 1,082,544 (2,533,308) 902,873 (538,528)

Issuances of common stock for
exercise of stock options, after tax
effect 485,000 485 121,265 121,750
Net loss (1,481,801) (1,481,801)
---------- ----------- ------------ ------------ ----------- -------------
Balances at March 31, 1995 9,847,625 $ 9,848 $ 1,203,809 $ (2,533,308) $ (578,928) $ (1,898,579)

---------- ----------- ------------ ------------ ----------- -------------
---------- ----------- ------------ ------------ ----------- -------------
</TABLE>

See accompanying notes to consolidated financial statements.

F-5

<PAGE>

WISMER*MARTIN, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS

<TABLE>
<CAPTION>
Year Ended June 30,
Nine Months Ended -------------------
March 31, 1995 1994 1993
--------------------------------------------------------
<S> <C> <C> <C>
Cash flows from operating activities:
Net income (loss) $ (1,481,801) $ 698,077 $ 4,317
Adjustments to reconcile net income (loss)
to net cash provided by operating activities:
Depreciation and amortization 927,624 948,219 633,041
Provision for bad debts 254,656 115,113 391,293
Loss on property, plant and equipment disposal -- 19,090 --
Cumulative effect of accounting change -- 27,479 --
Deferred income taxes (341,841) 229,286 27,836
Change in operating assets and liabilities, net of acquired business:
Trade receivables 820,175 (62,938) (438,247)
Unbilled costs and expenses (23,897) 543,809 102,700
Inventories 357,648 (314,319) 88,033
Prepaids and other assets 12,164 (51,956) (33,222)
Income tax receivable -- 32,804 --
Accounts payable (15,383) 86,265 323,049
Accrued wages and related taxes (183,097) 118,582 (125,930)
Other accrued expenses (179,181) (34,727) (99,744)
Income taxes payable -- -- (71,000)
Deferred revenue 86,709 (617,328) 164,905
Other liabilities (45,539) 38,740 --
------------ ------------ ------------
Net cash provided by operating activities 188,237 1,776,196 967,031
------------ ------------ ------------
Cash flows from investing activities
Cash acquired from purchase of subsidiary -- -- 181,970
Proceeds from disposition of property, plant and equipment -- 2,500 --
Purchase of property, plant and equipment (324,752) (737,172) (144,971)
Additions to software development costs (1,287,926) (1,018,308) (652,357)
Purchase of other assets (70,956) (22,099) --
------------ ------------ ------------
Net cash used in investing activities (1,683,634) (1,775,079) (615,358)
------------ ------------ ------------
Cash flows from financing activities
Payment of debt obligations (51,102) (31,419) (28,353)
Proceeds from issuance of common stock 121,750 92,183 4,167
Proceeds from long term debt -- 191,099 --
Proceeds from subordinated debentures -- 500,000 --
Payments under capital lease obligations (18,468) (9,959) (16,944)
Net proceeds (payments) on note payable to bank 958,949 (357,327) (169,361)
------------ ------------ ------------
Net cash provided (used) by financing activities 1,011,129 384,577 (210,491)
------------ ------------ ------------
Net increase (decrease) in cash and cash equivalents (484,268) 385,694 141,182

Cash and cash equivalents at beginning of period 588,349 202,655 61,473
------------ ------------ ------------
Cash and cash equivalents at end of period $ 104,081 $ 588,349 $ 202,655
------------ ------------ ------------
------------ ------------ ------------
Supplemental disclosures of cash flow information:
Cash paid during the year for:
Interest $ 351,078 $ 97,380 $ 127,037
------------ ------------ ------------
------------ ------------ ------------
Income taxes $ -- $ 33,800 $ 50,000
------------ ------------ ------------
------------ ------------ ------------
Noncash financing activities:
Equipment acquired under capital lease $ 33,705 $ 70,850
------------ ------------
------------ ------------
Issuance of subordinated debentures for acquisition of
Integrated Health Systems, Inc. $ 2,500,000
------------
------------
</TABLE>

See accompanying notes to consolidated financial statements.

F-6

<PAGE>

WISMER*MARTIN, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

----

1. COMPANY ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES:

ORGANIZATION AND CONSOLIDATION

Wismer Martin, Inc. ("the Company") develops and markets healthcare
computer systems and related services. The consolidated financial
statements include the accounts of the Company and its subsidiary. All
significant intercompany accounts and transactions have been eliminated.

On September 12, 1991, National Healthtech Corporation (National
Healthtech) acquired 1,714,286 shares of the Company's common stock from
the founders of the Company. On January 31, 1992, National Healthtech
acquired the remaining 2,868,414 shares of common stock held by the
founders of the Company. On June 10, 1993 National Healthtech sold all of
its ownership of common stock to Mr. Ronald Holden. Mr. Holden is the
Chairman of the Board of Directors of the Company and until June 30, 1993
was a director and stockholder of National Healthtech.

On February 10, 1994, the Company acquired all of the outstanding shares of
common stock of Integrated Health Systems, Inc. , a California corporation
(IHS). IHS is in the business of developing and licensing software
programs for hospitals and related entities. The Company issued
convertible subordinated debentures having a face value of $2,500,000 in
exchange for the shares of common stock (see Note 9). IHS's major
stockholder was Mr. Ronald Holden, who is also a major stockholder of the
Company. Due to Mr. Holden's common control of both companies, the
acquisition was accounted for as a combination of entities under common
control whereby balance sheet amounts were recorded at their historical
bases and the results of operations and cash flows for IHS have been
included from June 10, 1993, the date on which Mr. Holden obtained control
of both companies.

CASH EQUIVALENTS

Investments with remaining maturities at purchase of three months or less
are considered to be cash equivalents for purposes of the statement of cash
flows.

CONCENTRATION OF CREDIT RISK

The Company's financial instruments that are exposed to concentrations of
credit risk consist primarily of cash and cash equivalents and trade
receivables. The Company places its cash and temporary cash investments
with high credit worthy institutions. At times such investments may be in
excess of the FDIC insurance limit. The Company develops and sells its
products exclusively to enterprises in the health care industry. These
enterprises include physician practice groups, hospitals, insurance payors
and joint ventures between some or all of these entities (often known as
HMO's, PPO's, IPA's and HIN's). Trade receivables are primarily from
customers in the health care industry. For the nine month period ended
March 31, 1995 and the year ended June 30, 1994, the Company had sales of
$1,720,486 and $1,978,386 to one customer (an insurance payor). For the
fiscal year ended June 30, 1993, no single customer accounted for more than
10% of the Company's revenues. At March 31, 1995 and June 30, 1994 ,
$841,806 and $855,000 of these respective amounts are included in accounts
receivable.

F-7

<PAGE>

WISMER*MARTIN, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

----

INVENTORIES

Inventories are carried at the lower of first-in, first-out (FIFO) cost or
net realizable value.

PROPERTY, PLANT AND EQUIPMENT

Property, plant and equipment are carried at cost. Depreciation and
amortization, which includes the amortization of assets recorded under
capital leases, are provided over the lesser of the estimated useful lives
of the respective assets or the lease term (including extensions in the
case of leased assets and leasehold improvements), using the straight-line
method.

SOFTWARE DEVELOPMENT COSTS

Computer software development costs incurred subsequent to establishing
technological feasibility of the resulting product or enhancement and until
the product is available for general release to customers are capitalized
and recorded at the lower of unamortized cost or net realizable value.
Capitalized costs are amortized based on current and anticipated future
revenues for each product or enhancement with an annual minimum equal to
straight-line amortization over the remaining estimated economic life of
the product or enhancement (three to five years). For the nine month
period ended March 31, 1995 and the years ended June 30, 1994 and 1993,
amortization of software development costs was $459,618, $424,885 and
$327,028. Amortization of capitalized software development costs are
included in the Consolidated Statements of Operations in the line item
"Cost of software license fees."

OTHER ASSETS

Other assets, consisting primarily of goodwill and deferred financing fees,
are carried at cost. Financing fees are amortized over the respective term
of the loan agreement using the interest method. Goodwill represents the
excess of cost over the fair value of the net assets acquired and is being
amortized on a straight-line basis over three years.

REVENUE RECOGNITION

SOFTWARE LICENSE FEES

The Company has established its revenue recognition policy in accordance
with the provisions of the American Institute of Certified Public Accounta-
nts' Statement of Position 91-1 "Software Revenue Recognition." Revenue
from the sale of internally-developed software is recognized when the
software has been delivered to the customer and collection is deemed
probable. Customers are required to make deposits of 30% to 50% of the
license fee at the time of contract signing. The balance of the fees are
payable in two installments; at delivery and at installation (which is
typically within twelve months of delivery). In some cases, customers are
sold fixed-price, multi-site licenses which permit the marketing or use of
multiple copies of the Company's software for a single fee (usually limited
geographically). In these cases, the software license fee is priced based
on the anticipated benefit to the customer and is due when the master copy
of the software is delivered to the customer. The cost to distribute
additional copies of the software is insignificant.

Software license agreements may include the sale of hardware, third-party
software and supplies as well as support services and installation and
training. Each of these are separately stated and priced in the contract,
and the revenues from these are separately accounted for under the finan-
cial captions of "Equipment, software and supplies sales," "Software and
hardware maintenance contracts," and "Service revenue," respectively.

F-8

<PAGE>

WISMER*MARTIN, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

----

Service obligations are separately stated and priced in each contract
and the Company accounts for these service obligations separately (see
"Service revenue" below). Any remaining vendor obligations at the time
the software is delivered are insignificant, and the revenues associated
with any remaining obligations are deferred until those obligations have
been satisfied. Support contracts begin immediately after installation.
Cost of sales associated with the sale of internally-developed software
consists of the amortization of software development costs, which is
included in the income statement under the caption "Cost of software
license fees."

Deposits received for software license fees from customers in advance of
revenue recognition are included in the balance sheet under the caption
"Deferred revenue." Amounts that have been recognized as revenue, but are
not yet due are included in the balance sheet caption "Unbilled costs and
expenses."

EQUIPMENT, SOFTWARE AND SUPPLIES SALES

Revenues from third-party hardware (personal computers and peripherals),
third-party software (popular networking and word processing software) and
supplies (forms and envelopes for billing purposes) are separately stated
in contracts for the license of the Company's software products, and are
recognized when the related hardware, software and supplies are delivered
to the customer. The cost of equipment, third-party software and supplies
sales are included in the income statement under the caption "Cost of
equipment, software and supplies sold."

Deposits received for equipment, third-party software and supplies from
customers in advance of delivery are included in the balance sheet caption
"Deferred revenue" and are recognized upon delivery.

SOFTWARE AND HARDWARE MAINTENANCE CONTRACTS

Fees for software support are separately stated and priced in each customer
contract. The revenues from these contracts are deferred and recognized on
a straight-line basis over the period covered by the contract (payments are
typically made either quarterly or annually).

Maintenance contracts for hardware outside of the original manufacturer's
warranty are written between the customer and the Company and are priced at
market rates. The Company then sub-contracts with a third-party vendor (at
a discount from market rates) specializing in on-site hardware maintenance
for the same coverage as the Company has contracted with its customers.
Revenues and the corresponding third-party contract expenses are deferred
and amortized on a straight-line basis over the term of the contract
(usually one year). The cost of the third-party maintenance contracts is
included in the income statement under the caption "Cost of support and
operations."

The Company invoices customers in advance for software and hardware
maintenance contracts. The unamortized balance of amounts invoiced for
software and hardware maintenance contracts are included in the balance
sheet caption "Deferred revenue," while the unamortized cost of third-party
hardware maintenance contracts is included in the caption "Prepaids and
other assets."

SERVICE REVENUE

Revenues resulting from Company personnel providing installation, training,
custom modification programming, and network consulting services are
recorded as "Service revenue." These services are not essential to the
functionality of any other element of the transaction and are separately
stated and priced such that the total contracts price will vary based on
whether or not these services are purchased from the Company. When
collectibility is deemed probable, the revenue from these services is
deferred and recog-

F-9

<PAGE>

WISMER*MARTIN, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

----

nized as the services are performed. In some cases, installation and
training services are contracted on a fixed-fee basis. In these cases, the
revenues are deferred and recognized under the percentage-of-completion
method. Any losses on these type of contracts are recorded as soon as they
are foreseen.

Contracts for service revenue frequently permit billings to customers (and
payments to be received by the Company) in advance of the services being
rendered (this is always the case in fixed-fee installation contracts).
These unearned service revenues are included in the caption "Deferred
revenue."

DISCOUNTS

Discounts are determined at the time of contract signing and are recorded
concurrently with the recording of revenue. Any cost associated with
returns and exchanges are insignificant and are recorded as incurred. The
company provides no warranties which are not supported by third-party
contracts or software support contracts.

FEDERAL INCOME TAXES

The Company adopted the provisions of Statement of Financial Accounting
Standards No. 109, "Accounting for Income Taxes" (SFAS No. 109), effective
July 1, 1993. The cumulative effect of adopting SFAS No. 109 in fiscal
1994 was a charge to operations of $27,479. SFAS No. 109 requires a
company to recognize deferred tax assets and liabilities for the expected
future income tax consequences of events that have been recognized in a
company's financial statements. Under this method, deferred tax liabili-
ties and assets are determined based on the temporary differences between
the financial statement carrying amounts and tax bases of assets and
liabilities using enacted tax rates in effect in the years in which the
temporary differences are expected to reverse. During the fiscal year
ended June 30, 1993, the Company accounted for income taxes as required by
Statement of Financial Accounting Standards No. 96.

NET INCOME (LOSS) PER SHARE

The computation of net income (loss) per share in each period is based on
the weighted average number of common shares outstanding. When dilutive
stock options, debentures and warrants are included as share equivalents
using the treasury stock method, fully diluted net income (loss) per common
share is not materially different from primary net income (loss) per common
share. At March 31, 1995, the Company had options outstanding to purchase
270,001, shares of its common stock, which were considered dilutive.

2. FINANCIAL CONDITION AND LIQUIDITY:

As shown in the accompanying consolidated financial statements at March 31,
1995, the Company has a capital deficit of $1.9 million, negative working
capital of $2.5 million and incurred a significant net loss of $1.5 million
from operations for the nine month period then ended. Additionally, the
Company has modified its credit agreement as a result of covenant viola-
tions (See Note 5).

F-10

<PAGE>

WISMER*MARTIN, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

----

place to support a higher level of sales which were not achieved.
Additionally, management is concentrating its efforts on moving the Company
away from its initial focus on small regional physician practices to a
focus on large group practices, hospitals and other healthcare providers
and payors who are developing networks. Management believes that with this
reduced cost structure, highly centralized operations, and increased focus
on growth market areas (particularly Hospitals, Physicians Hospital
Organizations (PHO's) , Medical Services Organizations (MSO's) and Payors,
the Company can return to profitability.

As discussed in Note 14, part of management's plan to fund these efforts
and provide additional liquidity for the Company includes a proposed sale
of additional shares of the Company's common stock. Management believes
that the Company will be able to raise no less than the $500,000 without
using an underwriter, broker, dealer or finder.

Should future markets for the Company's product not develop as projected or
the public stock offering be unsuccessful, the Company may be unable to
meet its short term debt requirements and not be in compliance with
covenants contained within its credit agreement (see Note 5). Should the
Company fail to comply with these covenants or be unable to renegotiate the
terms of the agreement, the Company is at risk that the bank will foreclose
on the Company's office building in order to satisfy the outstanding
obligation. In the event that the offering is unsuccessful, management
believes the short term liquidity needs of the Company can be satisfied
by reducing or ceasing costs associated with new product development
and attempting to refinance the debt encumbering the Company's office
building. On a longer term basis, management intends to continue to seek
the sale of the Company's office building and to enter into joint venture
arrangements with strategic alliance partners who can provide additional
capital required for new product development.

Although the Company believes that its operating plan and efforts to obtain
other financing sources will be adequate to meet its fiscal 1996 working
capital needs, there can be no assurance that the Company may not experi-
ence liquidity problems because of adverse market conditions or other
unfavorable events.

3. INVENTORIES:

Inventories at March 31, 1995 and June 30, 1994 are summarized as follows:

<TABLE>
<CAPTION>
1995 1994
-------- --------
<S> <C> <C>
Hardware held for sale. . . . . . . . . . . . . . $240,941 $591,298
Software. . . . . . . . . . . . . . . . . . . . . 12,859 20,222
Supplies. . . . . . . . . . . . . . . . . . . . . 13,570 13,498
-------- --------
$267,370 $625,018
-------- --------
-------- --------
</TABLE>

F-11

<PAGE>

WISMER*MARTIN, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

----

4. PROPERTY, PLANT AND EQUIPMENT:

Property, plant and equipment at March 31, 1995 and June 30, 1994 is
summarized as follows:

<TABLE>
<CAPTION>
1995 1994
----------- -----------
<S> <C> <C>
Building and building improvements . . . . . $ 649,551 $ 649,551
Furniture and fixtures . . . . . . . . . . . 536,536 497,177
Computer systems and related equipment . . . 2,298,686 1,959,905
Land and site improvements . . . . . . . . . 248,020 248,020
Leasehold improvements . . . . . . . . . . . 57,920 51,307
Equipment under capital lease . . . . . . . 146,250 172,546
----------- -----------

3,936,963 3,578,506
Accumulated depreciation and amortization . (1,988,435) (1,616,061)
----------- -----------

$1,948,528 $1,962,445
----------- -----------
----------- -----------
</TABLE>

Accumulated amortization of the telephone and computer equipment under
capital lease amounted to $45,368 and $80,372 at March 31, 1995 and June
30, 1994.

5. NOTES PAYABLE TO BANK:

Pursuant to the terms of an amended credit agreement with Seattle First
National Bank (Seafirst), the Company had a line of credit with a maximum
availability of $1,200,000 at March 31, 1995. Advances received under the
line of credit, which totaled $851,049 at March 31, 1995 bear interest at
the bank's prime rate plus 2% (11% at March 31, 1995) and are collateral-
ized by the Company's accounts receivable and inventories. The credit
agreement contains various restrictive covenants. At March 31, 1995, the
Company was not in compliance with the minimum tangible net worth require-
ments, the debt to equity ratios, and the minimum trading capital require-
ments and ratios.

On April 11, 1995, the Company entered into a modification of the amended
credit agreement. Under the terms of the amended credit agreement are as
follows: (1) $500,000 of the amount outstanding was converted to a term
loan due June 30, 1995 (which was paid by the Company on April 21, 1995),
(2) the maximum availability under the credit agreement was reduced to
$500,000 ($347,951 outstanding at May 31, 1995). This commitment expires
on June 30, 1996. The modification agreement also provided that the
interest rate for advances was changed to the bank's prime rate plus 3%,
compliance with the financial covenants was waived until June 30, 1995. In
June, 1995, the bank granted an extension of time to meet the debt cove-
nants until August 31, 1995, and the line of credit agreement was further
collateralized by the Company's office building. In addition, the modifi-
cation requires the Company to raise cash of $1,000,000 and convert
$1,000,000 of convertible subordinated debt to equity by August 31, 1995
(See Note 14).

Also included in notes payable at March 31, 1995 is $107,900 owed by IHS to
Seafirst pursuant to terms of a promissory note, in the original amount of
$185,000. The promissory note requires monthly principal payments of
$15,420 plus interest based on Seafirst's prime rate plus 2.5% (11.5% at
March 31, 1995) and is secured by accounts receivable. The note matures in
October, 1995.

F-12

<PAGE>

WISMER*MARTIN, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

----

6. LONG-TERM DEBT:

Long-term debt at March 31, 1995 and June 30, 1994 is summarized as
follows:

<TABLE>
<CAPTION>
March 31, June 30,
1995 1994

---------- ----------
<S> <C> <C>
Mortgage payable to U.S. Bancorp Mortgage Company in
monthly installments of $4,536, including interest at 3.0%
over the average discount rate of 26-week U.S. Treasury
bills (adjusted semi-annually - 9.0% at March 31, 1995),
maturing in November, 1998 (A) $ 427,173 $ 438,721

Note payable to the Greater Spokane Business Development
Association and the Small Business Administration in
monthly installments of $4,162, including interest at
9.896%, maturing in October, 2008 (B) 353,814 362,799

Escrow contract payable to Adept Escrow, Inc. in annual
installments of $6,000, including interest at 9.0%, and
maturing in July, 1998, collateralized by land 17,975 21,995

Note payable to Seattle First National Bank in monthly
installments of $3,912, including interest at 8.25%, and
maturing in May, 1999, collateralized by telephone system 162,114 188,663

Other 1,904 1,904
---------- ----------
962,980 1,014,082

Less amount due within one year 62,234 64,465
---------- ----------
Amount due after one year $ 900,746 $ 949,617
---------- ----------
---------- ----------
<FN>
(A) This mortgage payable is collateralized by a deed of trust on the Company's
headquarters land and building, and is personally guaranteed by Glen and
Judith Martin.

(B) This note payable is collateralized by substantially all the Company's
property, plant and equipment, subordinated to the first position of U.S.
Bancorp Mortgage Company and Seattle First National Bank, and is personally
guaranteed by Glen and Judith Martin.
</TABLE>

Principal payments on long-term debt as contractually committed at March 31,
1995 are due as follows:

<TABLE>
<CAPTION>
Year Ending March 31,
---------------------
<S> <C>
1996 $ 62,234
1997 76,313
1998 81,396
1999 86,771
2000 50,407
Thereafter 605,859
--------

$962,980
--------
--------
</TABLE>

F-13
<PAGE>

7. OBLIGATIONS UNDER CAPITAL LEASES:

The Company has entered into various lease contracts for computer
equipment, which are accounted for as capital leases. The capital lease
obligations are payable in monthly installments. The future annual minimum
lease payments required under these capital leases are as follows:

Year Ending March 31,
---------------------
<S> <C>
1996 $ 44,820
1997 36,341
1998 32,101
1999 25,565
2000 2,402
--------
141,229
Less amount representing interest (36,203)
--------

Present value of net minimum lease payments 105,026
Less amount due within one year (29,305)
--------

Amount due after one year $ 75,721
--------
--------

</TABLE>

8. INCOME TAXES:

For the nine month period ended March 31, 1995 and the years ended June 30,
1994 and 1993 the major components of the Company's income tax expense
(benefit) are as follows:

1995 1994 1993
---- ---- ----
<S> <C> <C> <C>
Current:
State $ - $ 3,690 $ 965
Federal - 32,131 (16,610)

Deferred:

Federal (341,841) 229,286 27,836
-------- -------- --------
$(341,841) $ 265,107 $ 12,191
-------- -------- --------
-------- -------- --------
</TABLE>

F-14
<PAGE>

The annual tax provision (benefit) is different from the amount which would
be provided by applying the statutory federal income tax rate to the
Company's income before income tax expense (benefit). The reasons for
these differences are as follows:

<TABLE>
<CAPTION>
1995 1994 1993
-------------------------------------------------------------------------
Amount % Amount % Amount %
------ --- ------ --- ------ ---
<S> <C> <C> <C> <C> <C> <C>
Provision (benefit) at the
federal statutory rate $(620,038) (34.0) $336,825 34.0 $5,613 34.0
Provision for state income taxes - - 3,690 .4 965 5.8
Amortization of intangibles 23,644 1.3 3,584 .4 2,999 18.2
Research and development
tax credit - - (68,780) (6.8) (419) (2.5)
Effects of alternative minimum
tax rate differential and
surtax exemption - - (17,776) (1.8) 2,501 15.2
Change in valuation
allowance 287,104 15.7 (27,441) (2.7) - -
Other, net (32,551) (1.7) 35,005 3.2 532 3.1
-------------------------------------------------------------------------

Income tax provision (benefit) $(341,841) (18.7) $265,107 26.7 $12,191 73.8
-------------------------------------------------------------------------
-------------------------------------------------------------------------

</TABLE>

The components of the deferred tax provision (benefit) for the nine month
period ended March 31, 1995 and the years ended June 30, 1994 and 1993 are
due to the following temporary differences as offset by the utilization of
net operating loss carryforwards and research and development credits:

1995 1994 1993
-------- -------- --------
<S> <C> <C> <C>
Software development costs $281,624 $201,764 $110,612
Depreciation 14,448 (2,535) (251)
Accrued vacation pay (44,352) (12,696) 6,900
Inventory obsolescence reserve 8,174 17,716 (35,779)
Change in valuation allowance 287,104 6,559 -
Other (31,052) (10,712) (4,470)
---------- --------- --------
515,946 200,096 77,012
Utilization (benefit) of net operating loss
carryforwards and credits (857,787) 29,190 (49,176)
---------- --------- --------
$ (341,841) $ 229,286 $ 27,836
---------- --------- --------
---------- --------- --------
</TABLE>

F-15
<PAGE>

Temporary differences and carryforwards which give rise to deferred tax
assets and liabilities at March 31, 1995 and June 30, 1994 were as follows:

March 31, June 30,
1995 1994
--------- ---------
<S> <C> <C>
CURRENT:
Allowance for doubtful accounts $ 94,546 $ 43,420
Inventory obsolescence reserve 22,427 30,601
Accrued liabilities 78,650 34,298
Net operating loss carryforwards - 95,827
Tax credit carryforwards - 77,898
Valuation allowance (195,623) (34,000)
--------- ---------
$ - $ 248,044
--------- ---------
--------- ---------
NON-CURRENT:
Capitalized software development costs $(850,159) $(568,535)
Property, plant and equipment (122,537) (108,089)
Accrued liabilities 32,665 52,739
Amortization of intangibles 34,000 34,000
Net operating loss carryforwards 923,681 -
Tax credit carryforwards 107,831 -
Valuation allowance (125,481) -
--------- ---------
$ - $(589,885)
--------- ---------
--------- ---------
</TABLE>

The Company has recorded a 100% valuation allowance on the deferred tax
asset since management could not determine that it would be more likely
than not that its net operating losses and credits in excess of deferred
tax liabilities would be realized. The valuation allowance related to the
deferred tax assets increased by $287,000 and $34,000 during the nine month
period ended March 31, 1995 and the year ended June 30, 1994.

At March 31, 1995, for income tax purposes, the Company had net operating
loss carryforwards of approximately $3,002,000 and $2,488,000 available to
offset regular and alternative minimum taxable income, respectively. For
financial statement purposes, these net operating losses were used to the
extent necessary to offset temporary differences and reduce deferred tax
liabilities. The net operating loss carryforwards expire principally in
2009.

At March 31, 1995, for income tax and financial statement purposes, the
Company had research and development tax credit carryforwards of approxi-
mately $108,000 available to offset future income taxes payable. The tax
credit carryforwards begin to expire in 2006.

During the year ended June 30, 1994, for income tax purposes, the Company
deducted approximately $101,000 associated with the exercise of certain
non-qualified stock options. For financial statement purposes, the tax
benefit of $14,850 associated with the non-qualified options deduction has
been recorded as additional paid-in capital.

F-16
<PAGE>

9. CONVERTIBLE SUBORDINATED DEBENTURES:

On August 26, 1993, the Company issued convertible subordinated debentures
with a face value of $500,000 in exchange for cash. The debentures are due
August 31, 1998. Interest accrues on the outstanding principal of the
debenture at the rate of 7% per annum and is payable semi-annually on
February 28 and August 31 during the term of the debenture. The debenture
allows the holder to convert in whole or part the outstanding balance into
shares of the Company's common stock at any time during the term of the
debenture at a fixed conversion price of $.60 per common share. The
Company may, at its option, call the outstanding principal amount of the
debentures for redemption at any time after December 31, 1993.

On February 10, 1994, the Company issued convertible subordinated
debentures with a face value of $2,500,000 in exchange for all the out-
standing stock of IHS (see Note 1). The debentures are due January 31,
1999. Interest accrues on the outstanding principal of the debenture at
the rate of 7% per annum and is payable semi-annually on January 31 and
July 31 during the term of the debenture. The debenture allows the holder
to convert in whole or part the outstanding balance into shares of the
Company's common stock at any time during the term of the debenture at a
fixed conversion price of $3.23 per common share.

The above conversion rates are subject to adjustment if (a) the Company
pays a dividend or makes a distribution of common shares (b) the Company
consolidates or merges into another corporation or (c) sells any common
shares (excluding existing stock bonus and option plans) for less than the
conversion price if the cumulative value of these transactions exceeds
$100,000.

10. COMMON STOCK:

a. STOCK OPTION PLAN

The Company has a non-qualified stock option plan for the granting of
options to certain key employees. The option exercise price, which is
determined by the Board of Directors, is generally based on the fair
market value at the date granted.

Outstanding options granted pursuant to the non-qualified stock option
plan are as follows:

Number of Option Price
Shares $ Per Share
--------- ------------
<S> <C> <C>
Outstanding, July 1, 1992 1,371,667 .25 - .75
Granted 200,000 .50
Exercised (16,667) .25
Canceled (110,000) .25
---------

Outstanding, June 30, 1993 1,445,000 .25 - .75
Exercised (306,665) .25 - .35
Canceled (73,333) .25 - .50
-------

Outstanding, June 30, 1994 1,065,002 .25 - .75
Granted 525,000 1.60 - 1.75
Exercised (485,000) .25 - .35
Canceled (290,001) .25 - .75
--------

Outstanding, March 31, 1995 815,001 .25 - 1.75
-------
-------

Exercisable, March 31, 1995 795,001 .25 - 1.75
-------
-------
</TABLE>

F-17
<PAGE>

These options generally expire (i) immediately upon termination of the
employee for cause, (ii) sixty days after termination without cause,
or (iii) ninety days after death or disability of the employee. All
options expire three years from the date they become exercisable.

b. RESTRICTED STOCK BONUS PLAN

The Company also has a restricted stock bonus plan for employees under
which shares of common stock may be granted to employees at the
discretion of the Board of Directors. Shares issued pursuant to this
plan are restricted for three years from the date of grant and, in the
event of termination, the Company may repurchase these shares at the
greater of (i) the book value of said shares as of the purchase date
or (ii) the repurchase value of said shares as determined by the Board
of Directors at the time said shares were issued. This restriction
feature results in unearned stock compensation when the shares are
granted. The shares are earned by the employee over a three-year
period from the date of grant. The Company amortizes this unearned
compensation over the restrictive period. No shares were issued under
this plan during the nine month period ended March 31, 1995 or the
years ended June 30, 1994 and 1993.

c. COMMON STOCK PURCHASE WARRANTS

During fiscal 1994, the Company issued warrants to purchase up to
15,000 shares of common stock. The warrants were issued to three
directors of the Company. The warrants may be exercised at any time
prior to February 9, 1996. The exercise price of the warrants is
$3.23 per share of common stock.

11. COMMITMENTS:

The Company leases certain buildings and office space under noncancellable
operating leases which expire at various dates through June 1998, with
options to renew through June 2003. Additionally, the Company subleases an
office building to an unrelated third party. The Company also maintains a
lease where a free rent period was granted. The accompanying statements of
income reflect rent expense on a straight-line basis over the term of the
lease. An obligation of approximately $118,070 representing pro rata
future payments is reflected in the accompanying balance sheet at March 31,
1995. Total rent expense for the nine month period ended March 31, 1995
and the years ended June 30, 1994 and 1993 was $254,654, $183,373 and
$167,786, respectively.

Future minimum lease payments, net of sublease rent income, required under
all operating leases are as follows:

Year ending March 31,
---------------------
<S> <C>
1996 $297,048
1997 251,770
1998 201,530
--------

$750,348
--------
--------
</TABLE>

12. EMPLOYEE BENEFIT PLAN:

Substantially all of the employees of IHS are covered by a 401(k) defined
contribution benefit plan. The plan provides for employee tax-deferred
contributions of up to 15% of eligible compensation. IHS

F-18
<PAGE>

matches 50% of employee contributions with a maximum contribution of 3% of
the employees' eligible compensation. For the nine month period ended
March 31, 1995 and the year ended June 30, 1994, IHS made contributions to
the benefit plan of approximately $18,000 and $21,000.

13. RELATED PARTY TRANSACTIONS:

On September 17, 1990, the Company entered into an agreement with August
Systems, Inc. (ASI), which is owned and operated by Judith Martin, a
stockholder of the Company. Pursuant to this agreement, the Company has
agreed to provide ASI a perpetual right to sublicense the source copy of
SM*RT Practice, the Company's practice management software, including all
of its related modules and user/technical documentation. Additionally, ASI
agrees to pay the Company a 10% royalty on sales of ASI's Patient Account-
ing System product up to a maximum royalty of $100,000. During the nine
month period ended March 31, 1995 and the years ended June 30, 1994 and
1993, the Company did not make any sales or receive any royalty payments
from ASI.

During the year ended June 30, 1994, the Company had sales of approximately
$71,254 to a stockholder.

The Chairman of the Board and Chief Executive Officer has received in
addition to his salary a consulting fee in the amount of $45,000 for the
nine month period ended March 31, 1995, and $55,000 for the year ended
June 30, 1994.

14. PROPOSED STOCK OFFERING:

The Company intends to file a registration statement with the Securities
and Exchange Commission to register approximately 3,000,000 shares of the
Company's stock at an estimated total offering price of $3,750,000.

F-19

<PAGE>

PART II

INFORMATION NOT REQUIRED IN PROSPECTUS

ITEM 24. INDEMNIFICATION OF DIRECTORS AND OFFICERS

The Company has entered into indemnification agreements with each of its
directors in which the Company agrees to indemnify and hold harmless the
director to the fullest extent permitted by applicable law against any and all
reasonable attorney's fees and all other reasonable expense, cost, liability and
loss paid or reasonably incurred by such director or on his or her behalf in
connection with any threatened, pending or completed action, suit or proceeding,
or any inquiry or investigation not initiated by the director that he or she
believes in good faith might lead to the institution of any such action, suit or
proceeding (each such threatened, pending or completed action, suit, proceeding,
inquiry or investigation, a "proceeding"), relating to any event or occurrence
relating to the fact the director is or was a director, officer, employee or
agent of the Company, or is or was serving at the request of the Company as a
director, officer, employee, trustee, agent or fiduciary of another corporation,
or by reason of any action or inaction by the director in such capacity. The
Company is required to reimburse a director for expenses incurred within two
days following the receipt of a written request for reimbursement, provided that
the director agrees to repay any amount paid or advanced to the extent that it
is ultimately determined that the director is not entitled to such
reimbursement. The Company must indemnify a director for other amounts for
which a director may be responsible, defined as "resolution costs" in the
agreement, within 30 days of a written request from a director unless, within
that 30-day period, the Board of Directors, by a majority vote of a quorum
consisting of directors who are not parties to a proceeding as defined in the
agreement, determines that the director is not entitled to indemnification or
the Board of Directors refers the indemnification request to independent legal
counsel. If reference is made to an independent legal counsel, then such
counsel must advise the Company within 45 days whether indemnification should be
allowed.

(i) in the case of conduct in his own capacity with the Company, he
reasonably believed his conduct to be in the Company's best interests, or
(ii) in all other cases, he reasonably believed his conduct to be at least not
opposed to the Company's best interests. Article X of the Bylaws further
provides a procedure for indemnification pursuant to which indemnification shall
be made if a director meets the standard of conduct set forth in Article X and
there is a determination by a majority vote of a quorum of the Board of
Directors (not parties to such proceeding) to authorize indemnification, or by
majority vote of a committee of the Board of Directors consisting solely of two
or more directors not at the time parties to such proceeding, or by a written
opinion by independent legal counsel, or by the Shareholders.

Sections 23B.08.500 through 23B.08.600 of the Washington Business
Corporation Act authorize a court to award, or a corporation's board of
directors to grant, indemnification to directors and officers on terms
sufficiently broad to permit indemnification under certain circumstances for
liabilities arising under the Securities Act of 1933, as amended (the
"Securities Act"). Article X of the Company's Bylaws (Exhibit 3.2 hereto)
provides that the Company shall indemnify its directors to the maximum extent
permitted by applicable law, and that the Company may indemnify its directors to
the full extent permitted by applicable law, or to such lesser extent as the
Company's Board of Directors may determine.

Section 23B.08.320 of the Washington Business Corporation Act authorizes a
corporation to limit a director's personal liability to the corporation or its
shareholders for monetary damages for conduct as a director, except in certain
circumstances involving intentional misconduct, a knowing violation of law, self
dealing, illegal corporate loans or distributions or any transaction from which
the director personally

II-1
<PAGE>

received a benefit in money, property or services to which the director is not
legally entitled. Article XIV of the Company's Amended Articles of
Incorporation (Exhibit 3.1 hereto) contains provisions implementing, to the
fullest extent permitted by Washington law, such limitations on a director's
liability to the Company and its shareholders.

ITEM 25. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION

The following table sets forth the costs and expenses payable by the
Company in connection with the sale of the shares of Common Stock being
registered hereby. All the amounts shown are estimated, except the SEC
registration fee.

SEC registration fee . . . . . . . . . . $1,293
Blue Sky fees and expenses . . . . . . . 3,000
Printing and engraving expenses. . . . . 12,000
EDGAR filing expenses. . . . . . . . . . 800
Legal fees and expenses. . . . . . . . . 35,000
Auditors' accounting fees and expenses . 85,000
Transfer Agent and Registrar fees. . . . 1,000
Miscellaneous expenses . . . . . . . . . 10,000
-------
Total. . . . . . . . . . . . . . . . $148,093
-------
-------

ITEM 26. RECENT SALES OF UNREGISTERED SECURITIES

During the period March 31, 1992 through March 31, 1995, the Company has
issued the following unregistered securities:

# OF PRICE SALE
DATE TITLE SHARES PER SHARE AMOUNT
---- ----- ------ --------- ------

6/9/92 Common stock 16,667 $ 0.25 $ 4,166.75
8/8/92 Common stock 16,667 0.25 4,166.75
8/8/92 Common stock 33,333 0.25 8,333.25
6/30/94 Common stock 240,000 0.25 60,000.00
6/30/94 Common stock 33,333 0.25 8,333.25
6/30/94 Common stock 20,000 0.25 5,000.00
6/30/94 Common stock 6,666 0.35 2,333.10
6/30/94 Common stock 3,333 0.25 833.25
6/30/94 Common stock 3,333 0.25 833.25
9/30/94 Common stock 480,000 0.25 120,000.00
10/10/94 Common stock 5,000 0.35 1,750.00
------- -----------
858,332 $215,749.60
------- -----------
------- -----------

No underwriters were engaged in connection with the foregoing sales of
securities. Such sales were made in reliance upon the exemption from
registration set forth in Section 4(2) of the Securities Act of 1933.

ITEM 27. EXHIBITS

II-2
<PAGE>

EXHIBIT
NUMBER DESCRIPTION
------- -----------

3.1 Amended and Restated Articles of Incorporation of Professional
Software Associates, Inc. filed as Exhibit 3.1 of Small Business
Issuer's Form 10 filed as of May 19, 1989, is incorporated by
reference.

3.2 Articles of Amendment of the Articles of Incorporation of
Professional Software Associates, Inc., filed as Exhibit 3.1 of
Small Business Issuer's Form 10 is incorporated herein by
reference as of May 19, 1989.

3.3 Articles of Amendment of Wismer-Martin, Inc. filed as Exhibit
3.2 of Small Business Issuer's Form 10 is incorporated herein by
reference as of May 19, 1989.

3.4 Bylaws of the Company as currently in effect, filed as Exhibit
3.2 of Small Business Issuer's Form 10-K for the quarter ended
June 30, 1993, is incorporated herein by reference.

4.1 1993 Debenture Purchase Agreement between Wismer*Martin, Inc.
and Glen and Judy Martin.

4.2 1993 Debenture Purchase Agreement between Wismer*Martin, Inc.
and Gertrude L. Holden.

4.3 1993 Debenture Purchase Agreement between Wismer*Martin, Inc.
and MSC Services Corporation.

4.4 1993 Debenture Purchase Agreement between Wismer*Martin, Inc.
and Specialists Associates Profit-Sharing Trusts (Segregated
Account - William Knapp, M.D.).

4.5 1993 Debenture Purchase Agreement between Wismer*Martin, Inc.
and Thomas E. Holden.

4.6 1993 Debenture Purchase Agreement between Wismer*Martin, Inc.
and Harry Holden.

4.7 Convertible Subordinated Debenture isssued by Wismer*Martin, Inc.
to Maureen Theresa Holden, due August 31, 1998.

4.8 1994 Stock and Stock Option Purchase Agreement between Ronald L.
Holden, The Independent Investment Company, PLC, John Perez and
Mary B. Perez, Doug Willford and Jennifer B. Willford, Susan
Orchanian, Mike Barnes and

II-3
<PAGE>

EXHIBIT
NUMBER DESCRIPTION
------- -----------

Melinda Barnes, Bob Heckmann, Carolyne J. Walton and Integrated
Health Systems, Inc., filed as Exhibit 2 to Small Business
Issuer's Form 8-K dated as of February 10, 1994, is incorporated
herein by reference.

4.9 1994 Specimen Convertible Subordinated Debenture, filed as
EXHIBIT 2 to Small Business Issuer's FORM 8-K, dated February
10, 1994, is incorporated herein by reference.

5.1 Opinion of Paine, Hamblen, Coffin, Brooke & Miller. Filed
June 12, 1995.

*10.1 Master Services Agreement, License Agreement and Software
Support and Update Agreement between Wismer*Martin, Inc. and
Blue Cross of Washington and Alaska.

10.2 Debenture Purchase Agreements (contained in Exhibits 4.1, 4.2,
4.3, 4.4, 4.5, and 4.6.).

10.3 1994 Stock and Stock Option Purchase Agreement (contained in
Exhibit 4.8).

10.4 Specimen Non-Qualified Stock Option Plan of Small Business
Issuer, filed as Exhibit 10.10 of Small Business Issuer's Form
10-K for the quarter ended June 30, 1993, is incorporated herein
by reference.

11.1 Statement re: Computation of earnings per share (contained in
Accounting Policies Statement footnote on page F-10 hereto).
Filed June 12, 1995

16.1 Letter on changes in certifying accountant filed as the sole
Exhibit to Small Business Issuer's Form 8-K dated as of April
12, 1995 is incorporated herein by reference.

21.1 Subsidiaries of Small Business Issuer. Filed June 12, 1995

23.1 Consents of Experts and Counsel.

24.1 Power of Attorney. Filed June 12 1995

27.1 Financial Data Schedule. Filed June 12, 1995

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

* To be filed by Amendment.

ITEM 28. UNDERTAKINGS

The Company hereby undertakes as follows:

II-4
<PAGE>

Insofar as indemnification for liabilities arising under the Securities Act
of 1933 (the "Act") may be permitted to directors, officers and controlling
persons of the small business issuer pursuant to the foregoing provisions, or
otherwise, the small business issuer has been advised that in the opinion of the
Securities and Exchange Commission such indemnification is against public policy
as expressed in the Act and is, therefore, unenforceable. In the event that a
claim for indemnification against such liabilities (other than the payment by
the small business issuer of expenses incurred or paid by a director, officer or
controlling person of the small business issuer in the successful defense of any
action, suit or proceeding) is asserted by such director, officer or controlling
person in connection with the securities being registered, the small business
issuer will, unless in the opinion of its counsel the matter has been settled by
controlling precedent, submit to a court of appropriate jurisdiction the
question whether such indemnification by it is against public policy as
expressed in the Securities Act and will be governed by the final adjudication
of such issue.

II-5
<PAGE>

SIGNATURES

In accordance with the requirements of the Securities Act of 1933, the
Company certifies that it has reasonable grounds to believe that it meets all of
the requirements for filing on Form SB-2 and authorized this registration
statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Spokane, State of Washington, on the 2nd day of
August, 1995.

WISMER*MARTIN, INC.

By: /s/
-------------------------------------------------
Ronald L. Holden
Chairman of the Board and Chief Executive Officer
Small Business Issuer
By Power of Attorney

SIGNATURE TITLE DATE
--------- ----- ----

/s/
- ------------------------ Chairman of the board, August 2, 1995
Ronald L. Holden Chief Executive Officer
by Power of Attorney and Director (Principal
Executive Officer)
/s/
- ------------------------ President and Director August 2, 1995
John F. Perez
by Power of Attorney

/s/
- ------------------------ Executive Vice President August 2, 1995
Douglas A. Willford and Chief Financial
Officer (Principal
Financial Officer and
Principal Accounting
Officer)
/s/
- ------------------------ Director August 2, 1995
Glen E. Martin
by Power of Attorney

/s/
- ------------------------ Director August 2, 1995
Clarence H. Barnes, Ph.D.
by Power of Attorney

/s/
- ------------------------ Director August 2, 1995
Larry R. Eidemiller, M.D.
by Power of Attorney

/s/
- ------------------------ Director August 2, 1995
William D. Engel
by Power of Attorney

II-6

<PAGE>

DEBENTURE PURCHASE
AGREEMENT

THIS DEBENTURE PURCHASE AGREEMENT ("Agreement") is made as of August 26,
1993, by and between WISMER*MARTIN, INC., a Washington corporation (the
"Company"), and GLEN MARTIN and JUDY MARTIN (collectively, the "Purchaser").

WHEREAS, the Company is offering up to $500,000 aggregate principal amount
of Convertible Subordinated Debentures for sale solely to a limited number of
accredited investors who meet the qualifications set forth in the Investor
Questionnaire attached hereto as EXHIBIT A (the "Investor Questionnaire");

WHEREAS, the Convertible Subordinated Debentures being offered are in the
form of the Convertible Subordinated Debenture attached hereto as EXHIBIT B (all
such Convertible Subordinated Debentures being offered, "Debentures," and
together with the common stock into which they are convertible, the
"Securities"); and

WHEREAS, the Purchaser is purchasing certain of the Debentures in such
offering.

NOW, THEREFORE, the parties hereto agree as follows:

Purchase and Sale.

1.1 SALE AND ISSUANCE OF THE DEBENTURES. Subject to the terms and
conditions of this Agreement, the Purchaser agrees to purchase from the Company
at the Closing, and the Company agrees to sell and issue to the Purchaser at the
Closing, one or more of the Debentures in an aggregate principal amount of
$200,000 (the minimum aggregate principal amount being $25,000) (all such
Debentures to be purchased by the Purchaser, the "Purchased Debentures," and
together with the common stock into which they are convertible, the "Purchased
Securities") at a purchase price equal to such aggregate principal amount.

1.2 CLOSING. The purchase and sale of the Purchased Debentures shall take
place at the offices of Paine, Hamblen, Coffin, Brooke & Miller, 717 W. Sprague
Avenue, Suite 1200, Spokane, Washington 99204, (509) 455-6000, at 2:00 o'clock
p.m. on August 26, 1993, or at such other time and place as the Company and the
Purchaser may mutually agree upon (such time and place, the "Closing"). At the
Closing, the Company shall deliver to the Purchaser the Purchased Debentures
against delivery to the Company by the Purchaser of a certified bank cashier's
or other check reasonably acceptable to the Company in the amount of the
purchase price.

1.3 USE OF PROCEEDS. The Company agrees to use the proceeds from the sale
of the Purchased Debentures for working capital purposes and other general
corporate purposes.

<PAGE>

2. REPRESENTATIONS AND WARRANTIES OF THE COMPANY.

The Company hereby represents and warrants to the Purchaser that:

2.1 INCORPORATION. The Company is a corporation duly incorporated,
validly existing, and in good standing under the laws of Washington, the Company
has all requisite corporate power and authority to carry on its business as now
conducted and as proposed to be conducted, and the Company is qualified as a
foreign corporation in each jurisdiction where the failure so to qualify would
have a material adverse effect on its business or operations.

2.2 CAPITALIZATION. The authorized capital of the Company consists of
20,000,000 shares of common stock, $.001 par value per share ("Common Stock"),
of which at the Closing (i) not more than 9,500,000 shares shall be issued and
outstanding and (ii) not more than 1,500,000 shares shall be issuable pursuant
to outstanding warrants, options, conversion or exchange privileges or other
rights of any kind to purchase or acquire Common Stock (excluding the
Debentures).

2.3 SUBSIDIARIES. The Company does not presently control, directly or
indirectly, any other corporation, association or business entity.

2.4 AUTHORIZATION. All corporate action on the part of the Company, its
officers and directors necessary for the authorization, execution, delivery and
performance of all obligations of the Company under this Agreement and the
Purchased Debentures, and for the authorization, execution, issuance, sale,
delivery and performance of the Purchased Debentures has been or shall be taken
prior to the Closing, and this Agreement and the Purchased Debentures, when
executed and delivered by the Company, shall constitute a valid and legally
binding obligation of the Company.

2.5 VALIDITY OF COMMON STOCK ISSUABLE, ETC. The Common Stock issuable
upon conversion of the Purchased Debentures has been, or prior to the Closing
shall be, duly and validly reserved (at the initial fixed conversion price), and
upon issuance such Common Stock will be duly and validly issued, fully paid and
nonassessable. Issuance of the Common Stock issuable upon conversion of the
Purchased Debentures will not be subject to preemptive rights of any present or
future stockholders in the Company.

2.6 GOVERNMENTAL CONSENTS. All consents, approvals, orders,
authorizations or registrations, qualifications, designations and declarations
or filings with and federal or state governmental authority on the part of the
Company required in connection with the consummation of the transactions
contemplated herein shall have been obtained prior to, and be effective as of,
the Closing or will be timely filed thereafter.

3. REPRESENTATIONS AND WARRANTIES OF THE PURCHASER.

The Purchaser represents and warrants to the Company as follows:

3.1 AUTHORIZATION. When executed and delivered by the Purchaser, this
Agreement will constitute a valid and legally binding obligation of the
Purchaser.

<PAGE>

3.2 UNREGISTERED SECURITIES. The Purchaser understands (i) that the
Purchased Securities are being offered and sold under exemptions from
registration provided for in the Securities Act of 1933, as amended (the "1993
Act"), including Regulation D promulgated thereunder, the Securities Act of
Washington or any other applicable state securities laws, (ii) that this
offering and any offering documents have not been scrutinized, reviewed or
recommended by the United States Securities and Exchange Commission ("SEC"), the
Washington administrator of securities or any administrative agency charged with
the administration of other applicable state securities laws because of the
small number of persons solicited and the private aspects of the offering, and
(iii) that the Purchased Securities cannot be resold unless they are registered
under the Act, the Securities Act of Washington and any other applicable state
securities laws or are exempt from registration thereunder.

3.3 INFORMATION; INVESTMENT DECISION. The Purchaser understands that the
Company is a reporting company under the Securities and Exchange Act of 1934, as
amended (the "1934 Act"), and that the Purchaser has access to all information
contained in the Company's filings thereunder. The Purchaser understands that
access to all documents, records and books pertaining to the Company or this
investment has been made available to the Purchaser shall remain available upon
reasonable notice for inspection by the Purchaser prior to the Closing. The
Purchaser confirms that, in making this investment decision, Purchaser has
relied solely upon independent investigations made by Purchaser, and that
Purchaser has been given sufficient opportunity to ask questions of, and to
receive answers from, the Company and to obtain any additional requested
information. The Purchaser confirms that the Purchaser has received or been
provided access to all information felt necessary to make an informed investment
decision and that the Purchaser has concluded that the Purchased Securities are
a suitable investment for the Purchaser.

3.4 INVESTMENT INTENT. The Purchased Securities are being acquired by the
Purchaser for investment for an indefinite period for its own account and not
with a view to the sale or distribution of any part thereof, and the Purchaser
has no current undertaking, agreement, arrangement or intention to sell or
otherwise distribute the same.

3.5 REGISTRATION RIGHTS; LIMITS ON RESALE IN ABSENCE OF REGISTRATION. The
Purchaser understands that the Company is under no obligation to register the
Purchased Securities except as specifically provided in Section 7 hereof. The
Purchaser understands that if a registration statement covering the Purchased
Securities under the 1933 Act, the Securities Act of Washington and any other
applicable state securities laws is not in effect when Purchaser desires to sell
any of the Purchased Securities, the Purchaser may be required to hold the
Purchased Securities for an indefinite period. The Purchaser understands that
any resale of the Purchased Securities which might be made by Purchaser in
reliance upon Rule 144 under the 1933 Act may be made only in limited amounts
and in accordance with the other terms and conditions of that Rule. The
Purchaser understands that, in the absence of the availability of Rule 144, any
resale of the Purchased Securities may require compliance with some other
exemption from registration under the 1933 Act, the Securities Act of Washington
and any other applicable state securities laws, and that the Company is under no
obligation to take any action which may be necessary to make Rule 144 or any
such exemption available.

<PAGE>

3.6 ACCREDITED INVESTOR. The Purchaser is an "accredited investor" (as
defined in Rule 501 under the 1933 Act), as further verified by the Investor
Questionnaire to be completed, signed and delivered by the Purchaser pursuant to
Section 5.2 hereof.

3.7 SOURCE OF FUNDS. The Purchaser represents that the funds provided for
this investment are either separate property of the Purchaser, community
property over which the Purchaser has the right of control or are otherwise
funds as to which the Purchaser has the sole right of management.

3.8 RESTRICTIVE LEGENDS. The Purchaser acknowledges the following
restrictions on transfer of the Securities, and consents to the placement of a
legend on the Securities in form substantially as follows (in the case of the
Common Stock, as appropriately adjusted).

THIS DEBENTURE AND THE COMMON SHARES ISSUABLE UPON CONVERSION OF THIS
DEBENTURE HAVE NOT BEEN REGISTERED FOR SALE UNDER THE SECURITIES ACT OF 1933,
THE SECURITIES ACT OF WASHINGTON OR ANY OTHER APPLICABLE STATE SECURITIES LAWS,
AND NEITHER THIS DEBENTURE NOR SUCH COMMON SHARES NOR ANY INTEREST HEREIN OR
THEREIN MAY BE SOLD, OFFERED FOR SALE, PLEDGED OR OTHERWISE DISPOSED OF EXCEPT
IN COMPLIANCE THEREWITH AND PURSUANT TO (i) AN EFFECTIVE REGISTRATION UNDER THE
SECURITIES ACT OF 1933, THE SECURITIES ACT OF WASHINGTON AND ANY OTHER
APPLICABLE STATE SECURITIES LAWS OR (ii) AN AVAILABLE EXEMPTION FROM
REGISTRATION THEREUNDER, AND THE COMPANY MAY REQUIRE, AS A CONDITION TO ANY
TRANSFER, EVIDENCE (INCLUDING AN OPINION OF COUNSEL) SATISFACTORY TO THE COMPANY
THAT SUCH AN EXEMPTION IS AVAILABLE. IN ADDITION, ANY TRANSFER OF THIS
DEBENTURE SHALL BE IN THE MINIMUM PRINCIPAL AMOUNT OF $25,000.

4. CONDITIONS TO THE PURCHASER'S OBLIGATIONS AT CLOSING.

The obligations of the Purchaser under Sections 1.1 and 1.2 of this
Agreement are subject to the fulfillment at or before the Closing of each of the
following conditions, unless waived by the Purchaser in writing:

4.1 MINIMUM AGGREGATE OFFERING. The Company shall have received from the
Purchaser and any other purchasers of the Debentures binding commitments, in the
form of this Agreement, to purchase Debentures in an aggregate principal amount
not less than $300,000.

4.2 REPRESENTATIONS AND WARRANTIES. The representations and warranties
contained in Section 2 hereof shall be true in all material respects on and as
of the Closing.

4.3 PERFORMANCE. The Company shall have performed and complied in all
material respects with all agreements and conditions contained herein required
to be performed or complied with by Purchaser on or before the Closing as though
made on and as of the Closing.

4.4 CERTIFICATION. Consummation of the Closing by the Company shall
constitute certification by it that of the matters set forth in Sections 4.1,
4.2 and 4.3 above.

<PAGE>

4.5 PURCHASED DEBENTURES. The Company shall have issued, executed and
delivered to the Purchaser the Purchased Debentures.

5. CONDITIONS TO THE COMPANY'S OBLIGATIONS AT CLOSING.

The obligations of the Company under Sections 1.1 and 1.2 of this Agreement
are subject to the fulfillment at or before the Closing of each of the following
conditions, unless waived by the Company in writing:

5.1 MINIMUM AGGREGATE OFFERING. The Company shall have received from the
Purchaser and any other purchasers of the Debentures binding commitments, in the
form of this Agreement, to purchase Debentures in an aggregate principal amount
not less than $300,000.

5.2 INVESTOR STATUS. The Company shall have received an Investor
Questionnaire completed and signed by the Purchaser, and based upon the
completed and signed Investor Questionnaire and such other information as may
reasonably be requested by the Company, (i) the Purchaser's status as an
"accredited investor" (as defined in Rule 501 under the Act) shall be
established to the satisfaction of the Company and (ii) the Purchaser's state of
residence shall be established to the satisfaction of the Company as one of the
states in which the Company is offering the Debentures. The Company's
obligations under Sections 1.1 and 1.2 of this Agreement is specifically
conditioned on the foregoing, and this Agreement shall not constitute an offer
or sale of the Purchased Debentures in the absence of satisfaction thereof.

5.3 REPRESENTATIONS AND WARRANTIES. The representations and warranties of
the Purchaser contained in the Investor Questionnaire and in Section 3 hereof
shall be true in all material respects on and as of the Closing as though made
on and as of the Closing.

5.4 CERTIFICATION. Consummation of the Closing by the Purchaser shall
constitute certification by it that of the matters set forth in Sections 5.1,
5.2 and 5.3 above.

5.5 PURCHASE PRICE The company shall have received the purchase price for
the Purchased Debentures as provided in Section 1.2 hereof.

6. SUBORDINATION.

6.1 AGREEMENT OF SUBORDINATION.

(a) The Company covenants and agrees, and the Purchaser and any other
purchasers or subsequent holders upon transfer or assignment of the Debentures
(collectively "Holders"), by his acceptance thereof likewise covenants and
agrees, that all Debentures shall be subject to the provisions of this Section
6; and each Holder accepts and agrees to be bound by such provisions. The
subordination provisions of this Section 6 are intended to be for the benefit of
the holders of Senior Indebtedness (as hereinafter defined) and no amendment
thereof in a manner adverse to any holder of Senior Indebtedness shall be
effective against such holder of Senior Indebtedness without the written consent
of such holder.

<PAGE>

(b) The payment of the principal of and interest on all Debentures shall,
to the extent and in the manner hereinafter set forth, be subordinated and
subject in right of payment to the prior payment in full of all Senior
Indebtedness. "Senior Indebtedness" shall mean the principal of, premium, if
any, on, interest on, and any other payment due pursuant to or in connection
with any of the following (excluding the Debentures), whether outstanding at the
date hereof or hereafter incurred or created:

(i) all indebtedness of the Company for money borrowed or the
deferred purchase price of properties or services (including without limitation
(1) any reimbursement obligations with respect to letters of credit, (2) any
obligations with respect to interest swap or hedging arrangements, and (3) any
indebtedness secured by a mortgage, conditional sales contract or other lien or
security interest which is given to secure all or part of the purchase rice of
property subject thereto, whether given to the seller of such property or to
another, or which is existing on property at the time of acquisition thereof),
whether or not evidenced by notes, debentures, bonds or similar instruments;

(ii) all lease obligations of the Company which are capitalized on the
books of the Company in accordance with generally accepted accounting
principles;

(iii) all indebtedness of others of the kinds described in the
preceding clause (i) and all lease obligations of others of the kinds described
in the preceding clause (ii) which are assumed by or guaranteed by the Company
or in effect assumed or guaranteed by the Company through an agreement to
purchase, contingent or otherwise; and

(iv) all renewals, extensions or refundings of any of the foregoing;

excluding (x) indebtedness, leases, renewals, extensions or refundings
incurred in the ordinary course of business in connection with the acquisition
of properties or services which are recorded as an account payable on the books
of the Company and (y) in the case of any particular indebtedness, lease,
renewal, extension or refunding, the instrument or lease creating or evidencing
the same or the assumption or guarantee of the same expressly provides that such
indebtedness, lease, renewal, extension or refunding is not superior in right of
payment to or PARI PASSU with the Debentures.

6.2 PAYMENTS TO DEBENTUREHOLDERS.

(a) Upon the occurrence and during the continuance of any default in the
payment of principal, premium (if any), interest or any other payment due on any
Senior Indebtedness after expiration of the applicable period of grace, if any,
specified in the instrument or lease evidencing such Senior Indebtedness, then,
unless and until such default shall have been cured or waived or shall have
ceased to exist, no payment shall be made by the Company with respect to the
principal of or interest on the Debentures.

<PAGE>

(b) Upon any payment by the Company, or distribution of assets of the
Company of any kind or character, whether in cash, property or securities, to
creditors upon any dissolution, winding-up, liquidation or reorganization of the
Company, whether voluntary or involuntary or in bankruptcy, insolvency,
receivership or other proceedings, all amounts due or to become due upon all
Senior Indebtedness shall first be paid in full, or payment thereof provided for
in accordance with its terms, before any payment is made on account of the
principal of or interest on the Debentures; and upon any such dissolution,
winding-up, liquidation or reorganization, any payment by the Company, or
distribution of assets of the Company of any kind or character, whether in cash,
property or securities, to which the Holders of the Debentures would be
entitled, except for the provisions of this Section 6, shall be paid by the
Company or by any receiver, trustee in bankruptcy, liquidating trustee, agent or
other person or entity making such payment or distribution, or by the Holders of
the Debentures if received by them, directly to the holders of Senior
Indebtedness or their representative or representatives, or to the trustee or
trustees under any indenture pursuant to which any instruments evidencing any
Senior Indebtedness may have been issued, as their respective interests may
appear (on a pro rata basis, as calculated by the Company, on the basis of the
respective amounts of Senior Indebtedness held), to the extent necessary to pay
all Senior Indebtedness in full, or to provide for payment thereof in accordance
with its terms, after giving effect to any concurrent payment or distribution to
or for the holders of Senior Indebtedness, before any payment or distribution is
made to the Holders of the Debentures.

(c) In the event that, notwithstanding the foregoing, any payment or
distribution of assets of the Company of any kind or character, whether in cash,
property or securities, prohibited by the foregoing, shall be received by the
Holders of the Debentures before all Senior Indebtedness is paid in full, or
provision is made for payment thereof in money in accordance with its terms,
such payment or distribution shall be held in trust for the benefit of and shall
be paid over or delivered to the holders of Senior Indebtedness or their
representative or representatives, or to the trustee or trustees under any
indenture pursuant to which any instruments evidencing any Senior Indebtedness
may have been issued, as their respective interests may appear (on a pro rata
basis, as calculated by the Company, on the basis of the respective amounts of
Senior Indebtedness held) for application to the payment of all Senior
Indebtedness remaining unpaid to the extent necessary to pay all Senior
Indebtedness in full, or provided for payment thereof in accordance with its
terms, after giving effect to any concurrent payment or distribution to or for
the holders of such Senior Indebtedness.

6.3 SUBROGATION; EFFECT OF SUBORDINATION.

(a) Subject to the payment in full of all Senior Indebtedness, or the
provision for payment thereof in accordance with its terms, the Holders of the
Debentures shall be subrogated to the rights of the holders of Senior
Indebtedness with respect to the Senior Indebtedness until the principal of and
interest on the Debentures shall be paid in full.

(b) The provisions of this Section 6 are and are intended solely for the
purpose of defining the relative rights of the Holders of the Debentures, on the
one hand, and the holders of the Senior Indebtedness, on the other hand.
Nothing contained herein is intended to or shall

<PAGE>

affect (i) the relative rights of the Holders of the Debentures and creditors of
the Company other than the holders of the Senior Indebtedness, or (ii) subject
to the preceding sentence, the rights of the Holders of the Debentures against
the Company.

6.4 NOTICES.

The Company shall give prompt written notice to the Holders of the
Debentures of any event known to the Company which would prohibit the making of
any payment in respect of the Debentures pursuant to this Section 6, and the
Holders of the Debentures shall not be charged with knowledge of any such event
until they shall have received written notice thereof from the Company or any
holder of Senior Indebtedness or trustee or representative thereof.

6.5 NO IMPAIRMENT OF SUBORDINATION. No right to enforce subordination as
herein provided shall at any time in any way be impaired by any act or failure
to act on the part of the Company or by any act or failure to act, in good
faith, by any holder of Senior Indebtedness, regardless of any knowledge
thereof which any such holder may have or otherwise be charged with.

7. REGISTRATION RIGHTS.

The Company covenants and agrees as follows:

7.1 PIGGY-BACK REGISTRATION RIGHTS. If, at any time during the term of
the Debentures, the Company proposes to register under the 1933 Act, the
Securities Act of Washington or any other state securities laws (all such laws
under which the Company proposes to register any Common Stock, the "Registrable
Securities Laws") any Common Stock for sale for its own account or for the
account of any other person, it shall give written notice of such intention (the
"Company Notice") to all holders of (i) outstanding Debentures and
(ii) outstanding Common Stock obtained pursuant to conversion rights exercised
prior to the giving of the Company Notice (collectively the "Registrable
Holders"), at least 45 days prior to the filing of a registration statement with
respect to such registration. If any Registrable Holder desires to dispose of
all or part of (i) the Common Stock into which such Debentures are convertible
pursuant to conversion rights not exercised prior to the giving of the Company
Notice (the "Registrable Unconverted Stock") or (ii) the Common Stock obtained
pursuant to conversion rights exercised prior to the giving of the Company
Notice (the "Registrable Converted Stock," and together with the Registrable
Unconverted Stock, the "Registrable Stock"), it may request registration thereof
in connection with the Company's registration by delivering to the Company,
within 30 days after receipt of the Company Notice, written notice of such
request (the "Registrable Holder Notice") stating the number of shares of
Registrable Stock to be disposed of and the intended method of disposition of
such shares by the Registrable Holder; PROVIDED, HOWEVER, that any Registrable
Holder of Registrable Unconverted Stock shall deliver not later than five days
after the Registrable Holder Notice a notice of conversion in the amount of the
shares requested to be registered in the Registrable Holder Notice. The Company
shall use its best efforts to cause all shares of Registrable Stock specified in
the Registrable Holder Notice to be registered under the Registrable Securities
Laws so as to permit the sale or other disposition (in accordance with the

<PAGE>

intended methods thereof as aforesaid) by the Registrable Holder of the shares
so registered, subject, however, to the limitations set forth in Section 7.2
below. The Company shall have no obligation to register the Registrable Stock
under any securities laws other than the Registrable Securities Laws.

7.2 LIMITATIONS ON PIGGY-BACK REGISTRATION RIGHTS.

(a) If the registration of which the Company gives the Company Notice
pursuant to Section 7.1 above is for the purpose of permitting a disposition of
securities by the Company pursuant to a firm commitment underwritten offering,
the Company Notice shall so state, and the Company shall have the right to limit
the aggregate size of the offering by the Registrable Holders if requested to do
so in good faith by the managing underwriter of the offering; PROVIDED, HOWEVER,
that in no event shall less than 25% ("Minimum Participation") of the amount of
Registrable Stock owned by Purchaser be made part of the underwriter's offering.
If such underwriters shall in good faith so request, holders of Registrable
Stock registered pursuant to Section 7.1 but not offered pursuant to such firm
commitment underwriting shall enter into any agreements which require them to
refrain from trading in such securities for a period of up to 180 days.

(b) If as a result of the sale and transfer of any Debentures or any
Common Stock obtained pursuant to conversion thereof, any transferee Holder who
immediately following the transfer holds Registrable Stock of less than 100
shares of Registrable Stock (as appropriately adjusted for stock splits and
combinations) shall not be entitled to any registration rights under Section
7.1.

7.3 REGISTRATION EXPENSES. Each Registrable Holder shall bear such
proportion of any additional registration and qualification fees and expenses
which result from the inclusion of Registrable Stock held by such Registrable
Holder in such registration as the number of shares of Registrable Stock of such
Registrable Holder being registered bears to the total number of shares being
registered; PROVIDED that if any such expense is attributable solely to one
Registrable Holder and does not constitute a normal cost or expense of such
registration, such cost or expense shall be allocated to that Registrable
Holder. In addition, each Registrable Holder shall bear the fees and cost of
its own counsel.

7.4 ADDITIONAL TERMS AND CONDITIONS. Each participating Registrable
Holder shall enter into such additional agreements with additional terms and
conditions (including without limitation indemnities) and take such additional
actions as are customary and usual for participation in a registration or as the
Company or any underwriter may otherwise reasonably require in connection
therewith.

8. COVENANTS.

8.1 ADDITIONAL RESERVATION OF COMMON STOCK. The Company covenants that it
will at all times reserve and keep available, free from preemptive rights, out
of its authorized but unissued Common Stock, or issued Common Stock held in its
treasury, or both, for the purpose

<PAGE>

of effecting conversions of the Debentures, the number of shares of Common Stock
then deliverable upon the conversion of all outstanding Debentures. If at any
time the number of authorized but unissued shares of Common Stock shall not be
sufficient to effect the conversion of all outstanding Debentures, the Company
will take such corporate action as may be necessary to increase its authorized
but unissued shares of Common Stock to such number of shares as shall be
sufficient for that purpose.

9. MISCELLANEOUS.

9.1 AGREEMENT IS ENTIRE CONTRACT. This Agreement together with the
Purchased Debentures and the Investor Questionnaire constitute the entire
contract between the parties hereto with respect to the subject matter hereof
and supersedes any prior oral or written agreement with respect to such subject
matter. No party hereto shall be liable or bound in any manner by any
warranties, representations or covenants except as specifically set forth herein
or therein. The terms and conditions of this Agreement shall inure to the
benefit of and be binding upon the respective successors and assigns of the
parties hereto.

9.2 GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED
UNDER THE LAWS OF THE STATE OF WASHINGTON.

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

9.4 HEADINGS. The headings of the sections of this Agreement are for
convenience and are not to be considered in construing this Agreement.

9.5 NOTICES. Any notice required or permitted hereunder shall be given in
writing and shall be deemed effectively given upon personal delivery, by mail or
by fax addressed to a party at its address hereinafter shown below its signature
or at such other address as such party may designate by written notice to the
other party.

9.6 LEGAL AND OTHER FEES AND EXPENSES. Each party hereto shall bear its
own legal and other fees and expenses in connection with entering into this
Agreement. If suit or action is instituted in connection with any dispute
arising out of this Agreement, or in the enforcement of any rights hereunder,
the prevailing party shall be entitled to recover to its costs of such suit or
action, including reasonable attorneys' fees.

9.7 SURVIVAL OF WARRANTIES. The representations and warranties contained
in or made pursuant to this Agreement shall survive the execution and delivery
of this Agreement and the Closing hereunder.

9.8 AMENDMENT OF AGREEMENT. Subject to Section 6.1(a) hereof, the
provisions of this Agreement may be amended or waived only by a writing executed
by the Company and the Purchaser.

<PAGE>

IN WITNESS WHEREOF, the undersigned have executed this Agreement as of the
day and year first written above.

"Company"

WISMER*MARTIN, INC.

By: R.L. Holden
------------------------------
Title: Chairman of the Board
------------------------

Address: 12828 N. Newport Highway
Mead, WA 99021
Attention: Stanley Hatch
Telephone: (509) 466-0396
Fax: (509) 466-2183

"Purchaser"

GLEN E. MARTIN
-------------------------------------

JUDITH LESLIE MARTIN
-------------------------------------
Address: 1406 W. Elmwood Court
Spokane, WA 99218
Attention: J. MARTIN
------------------
Office Telephone: (509) 468-2988
------------------
Fax: (509) 468-2987
--------------------------

<PAGE>

CONVERTIBLE SUBORDINATED DEBENTURE

No. 1 $200,000

WISMER*MARTIN, INC., a Washington corporation ("Company"), for value
received, promises to pay to GLEN E. MARTIN and JUDITH LESLIE MARTIN, husband
and wife, or subsequent registered holder hereof ("Holder") the principal amount
hereof, and interest thereon, on the terms and conditions provided herein.

1. THE DEBENTURES.

This debenture is one of a duly authorized issue of the Company's
Convertible Subordinated Debentures due August 31, 1998, limited to an aggregate
principal amount of $500,000 (the "Debentures").

2. PRINCIPAL PAYMENT.

The outstanding principal of this debenture shall be due on August 31, 1998
and shall be paid by the Company to the Holder upon presentation of this
debenture at the Company's principal office for surrender. Upon such maturity
date, interest on the outstanding principal of this debenture shall cease to
accrue (except in the case of a default in payment by the Company upon due
presentation by the Holder) and the Holder shall cease to have any rights
hereunder (including without limitation any unexercised conversion rights
pursuant to Section 4 hereof) with respect to this debenture except the right to
receive payment of the outstanding principal hereof and accrued, but unpaid,
interest thereon. The Company may, at its option, redeem and prepay, in whole
or in part, the outstanding principal of this debenture as provided in Section
5(a) below, without premium or penalty.

3. INTEREST PAYMENTS.

Interest shall accrue on the outstanding principal of this debenture at the
rate of 7% per annum (calculated on the basis of a 365/366 day year, actual days
elapsed), payable in arrears semi-annually on each February 28 (or in the case a
leap year, February 29) and August 31 during the term hereof, commencing
February 28, 1994. Payments of interest shall be made by check mailed to the
registered address of the Holder, except in the case of payments of interest at
redemption or maturity which shall be made upon presentation of this debenture
at the Company's principal office for surrender.

4. CONVERSION INTO COMMON SHARES.

The Holder of this debenture may convert, in whole or in part (in the
minimum principal amount of $25,000, the outstanding principal hereof, and
accrued, but unpaid, interest thereon, into shares of the Company's fully paid
and nonassessable common stock, $.001 par value per share ("Common Shares"), at
any time during the term hereof on the following terms and conditions:

<PAGE>

(a) CONVERSION PRICE. The conversion price shall be a fixed conversion
price of $.60 per Common Share, subject to adjustment of the conversion price as
set forth in Section 4(d) below.

(b) MANNER AND EFFECT OF CONVERSION. To convert, the Holder shall present
this debenture at the Company's principal office for surrender, accompanied by
written notice of election to convert (executed on the form included at the end
of this debenture). If less than the full principal amount of this debenture is
being converted, the Company shall issue and deliver to the Holder a new
debenture in the principal amount outstanding after such conversion. As soon as
practicable after the surrender of this debenture, the Company shall issue and
deliver to the Holder a certificate for the number of Common Shares issuable
upon conversion. Upon any conversion, interest on the outstanding principal of
this debenture or part thereof being converted shall cease to accrue and the
Holder shall cease to have any rights hereunder with respect to this debenture
or the part thereof being converted except the right to receive the number of
Common Shares issuable upon conversion.

(c) FRACTIONAL SHARES. No fractional Common Shares shall be issued upon
conversion and instead the number of Common Shares issuable upon conversion
shall be rounded, upwards or downwards, to the nearest whole number.

(d) ADJUSTMENT OF CONVERSION RATE. The number and kind of securities
issuable upon the conversion of this debenture shall be subject to adjustment
during the term hereof from time to time as follows:

(i) In case the Company shall (A) pay a dividend or make a
distribution on the outstanding Common Shares payable in Common Shares,
(B) subdivide the outstanding Common Shares into a greater number of shares
or (C) combine the outstanding Common Shares into a lesser number of
shares, the Holder of this debenture shall thereafter be entitled, upon any
conversion occurring thereafter, to receive the number of Common Shares
which, if this debenture had been converted immediately prior to the
happening of such event, the Holder would have been entitled to receive
upon such dividend, distribution, subdivision or combination. Such
adjustment shall become effective on the day next following the record date
of such dividend or distribution or the day upon which such subdivision or
combination shall become effective.

(ii) In case the Company shall (A) effect a reclassification of the
outstanding Common Shares, (B) consolidate or merge into or with another
corporation, or (C) sell or convey to any other person or persons all or
substantially all of the property of the Company, the Holder of this
debenture shall thereafter be entitled, upon any conversion occurring
thereafter, to receive the kind and amount of shares, other securities,
cash, and property receivable upon such reclassification, consolidation,
merger, sale, or conveyance which, if this debenture had been converted
immediately prior to the happening of such event, the Holder would have
been entitled to receive upon such reclassification, consolidation, merger,
sale, or conveyance, and shall have no other conversion rights. In any
such event, effective provision shall be made, in the certificate or
articles of incorporation of the resulting or surviving corporation, in any
contracts of sale and conveyance, or otherwise so that, so far as
appropriate and as nearly as reasonably may be, the provisions set forth
herein for the protection of the rights of the Holder of this debenture
shall thereafter be made applicable.

<PAGE>

(iii) In case the Company shall issue or sell any Common Shares
for a consideration per share less than the conversion price in effect
immediately prior to the time of such issue or sale excluding any issue or
sale pursuant to any employee, officer or director bonus plan, incentive
plan, stock option plan or stock purchase plan now in effect or hereafter
adopted (Triggering Sale"), and the cumulative value of all such Triggering
Sales exceeds $100,000, then the conversion price shall be adjusted to an
amount equal to the average per Common Share sale price of such Triggering
Sales (such adjustment to continue with respect to any further Triggering
Sale thereafter); PROVIDED, HOWEVER, that no adjustment of the conversion
price shall be made in an amount less than $.01 per Common Share.

(iv) Irrespective of any adjustments in the number or kind of shares
to be received upon conversion of this debenture, the form of debentures
theretofore or thereafter issued may continue to express the number and
kind of shares as are stated in this debenture.

(e) NOTICE OF ADJUSTMENT. Upon any adjustment of the conversion price, the
Company shall mail to the Holder of this debenture a notice stating that the
conversion price has been adjusted, giving the adjusted conversion price and
setting forth the facts requiring the adjustment.

(f) RESERVATION OF COMMON SHARES. The Company covenants that it will at
all times reserve and keep available, free from preemptive rights, out of its
authorized but unissued Common Shares, or its issued Common Shares held in its
treasury, or both, for the purpose of effecting conversions of the Debentures,
the number of Common Shares then deliverable upon the conversion of all
outstanding Debentures. If at any time the number of authorized but unissued
Common Shares shall not be sufficient to effect the conversion of all
outstanding Debentures, the Company will take such corporate action as may be
necessary to increase its authorized but unissued Common Shares to such number
of shares as shall be sufficient for that purpose.

5. OPTIONAL REDEMPTION AND PREPAYMENT.

(a) OPTIONAL REDEMPTION AND PREPAYMENT. Provided that this debenture has
not been converted in full pursuant to Section 4 hereof, the Company may, at its
option, call the outstanding principal amount of this debenture for redemption,
in whole or from time to time in part, at any time on or after December 31, 1993
by the sending of prior written notice of such redemption to the Holder at the
Holder's registered address at least 15 days prior to the redemption date
specified in the notice. The Company may not call this debenture for
redemption, in whole or in part, unless it likewise calls for redemption, in
whole or in part (in an equal percentage of outstanding principal), all other
outstanding Debentures. Notwithstanding such call, the Holder shall have until
such redemption date to convert pursuant to Section 4 hereof this debenture or
the part thereof being redeemed. Unless so converted, the outstanding principal
hereof or the part thereof being redeemed and accrued, but unpaid, interest
thereon through such redemption date shall be due on such redemption date and
shall be paid by the Company upon presentation of this debenture at the
Company's principal office for surrender.

<PAGE>

(b) EFFECT OF OPTIONAL REDEMPTION AND PREPAYMENT. Upon any redemption
date specified in subsection (a) above, interest on the outstanding principal of
this debenture or part thereof being redeemed shall cease to accrue (except in
the case of a default in payment by the Company upon due presentation by the
Holder), and the Holder shall cease to have any rights hereunder (including
without limitation any unexercised conversion rights pursuant to Section 4
hereof) with respect to this debenture or the part thereof being redeemed except
for the Holder's right to receive the redemption payment. If less than the full
principal amount of this debenture is being redeemed, the Company shall issue
and deliver to the Holder a new debenture in the principal amount outstanding
after such partial redemption.

6. EVENTS OF DEFAULT.

If one or more of the following events ("Events of Default") shall occur
and be continuing:

(a) The Company shall fail to pay when due any amount owing under any
Debenture and such failure shall continue for a period of 30 days; or

(b) The Company shall file a petition in bankruptcy, make a general
assignment for the benefit of its creditors, or consent to or acquiesce in the
appointment of a receiver for all or a substantial part of its property, or a
petition in bankruptcy or for the appointment of a receiver shall be filed
against the Company and remain unstayed for a period of 120 days;

then, in any such event, the holders of 66-2/3% aggregate outstanding principal
amount of the Debentures may, by written notice to the Company, declare all
outstanding principal of the Debentures and accrued but unpaid interest thereon
immediately due and payable and, upon such a declaration, the same shall become
immediately due and payable.

7. TRANSFER OF DEBENTURE.

Subject to the provisions of Section 9 below, upon due presentment for
registration of transfer of this debenture, the Company will issue and deliver
in exchange a new debenture or debentures equal in aggregate principal amount to
the outstanding principal amount of this debenture, dated the date to which
interest has been paid and registered in the name of the transferee. Any
transfer shall be in the minimum principal amount of $25,000. Each debenture
presented for registration of transfer, exchange, conversion or payment shall
(if so required by the Company) be duly endorsed by, or be accompanied by a
written instrument of transfer in form satisfactory to the Company and duly
executed by, the Holder or his attorney duly authorized in writing.

<PAGE>

8. STATUS OF REGISTERED HOLDER.

The Company may treat the Holder of this debenture as the absolute owner of
this debenture for the purpose of making payments of principal or interest and
for all other purposes and shall not be affected by any notice to the contrary.

9. SECURITIES LAW AND OTHER TRANSFER RESTRICTIONS.

THIS DEBENTURE AND THE Common Shares ISSUABLE UPON CONVERSION OF THIS
DEBENTURE HAVE NOT BEEN REGISTERED FOR SALE UNDER THE SECURITIES ACT OF 1933,
THE SECURITIES ACT OF WASHINGTON OR ANY OTHER APPLICABLE STATE SECURITIES LAWS,
AND NEITHER THIS DEBENTURE NOR SUCH Common Shares NOR ANY INTEREST HEREIN OR
THEREIN MAY BE SOLD, OFFERED FOR SALE, PLEDGED OR OTHERWISE DISPOSED OF EXCEPT
IN COMPLIANCE THEREWITH AND PURSUANT TO (i) AN EFFECTIVE REGISTRATION UNDER THE
SECURITIES ACT OF 1933, THE SECURITIES ACT OF WASHINGTON AND ANY OTHER
APPLICABLE STATE SECURITIES LAWS OR (ii) AN AVAILABLE EXEMPTION FROM
REGISTRATION THEREUNDER, AND THE COMPANY MAY REQUIRE, AS A CONDITION TO ANY
TRANSFER, EVIDENCE (INCLUDING AN OPINION OF COUNSEL) SATISFACTORY TO THE COMPANY
THAT SUCH AN EXEMPTION IS AVAILABLE. IN ADDITION, ANY TRANSFER OF THIS
DEBENTURE SHALL BE IN THE MINIMUM PRINCIPAL AMOUNT OF $25,000.

10. SUBORDINATION.

The Company covenants and agrees, and the Holder of this debenture by his
acceptance hereof likewise covenants and agrees, that the payment of the
principal of and interest on all Debentures shall be subordinated and subject in
right of payment to the prior payment in full of all certain indebtedness of the
Company in accordance with the subordination provisions set forth in Section 6
of the Debenture Purchase Agreement dated August 26, 1993 between the Company
and the initial Holder (the "Debenture Purchase Agreement"), which provisions
are incorporated herein by reference as though set forth in full.

11. REGISTRATION RIGHTS.

The Holder of this debenture is entitled to certain registration rights in
accordance with the registration rights provisions set forth in Section 7 of the
Debenture Purchase Agreement, which provisions are incorporated by reference as
though set forth in full.

12. RIGHTS OF THE HOLDER.

Prior to conversion hereof, the Holder shall not by virtue hereof, be
entitled to any rights of a shareholder in the Company either at law or equity,
and the rights of the Holder are limited to those specifically expressed in this
debenture.

<PAGE>

13. NOTICES.

Any notice required or contemplated by this debenture shall be deemed
sufficiently given if sent by mail to the Company at its principal office or to
the Holder at the Holder's registered address shown on the books of the Company
or at such other address as the Company or the Holder may designate in a notice
for that purpose.

14. ENTIRE AGREEMENT; AMENDMENTS AND WAIVERS

This debenture, together with the Debenture Purchase Agreement and the
Investor Questionnaire, constitute the entire agreement among the parties hereto
with respect to the subject matter hereof and supersedes any prior written or
oral agreement with respect to such subject matter. Subject to Section 6.1(a)
of the Debenture Purchase Agreement, the provisions of this debenture may be
amended or waived only by a writing executed by the Holder and the Company.

15. HEADINGS.

The headings in this debenture are solely for convenience of reference and
shall not affect its interpretation.

16. GOVERNING LAW.

THIS DEBENTURE SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE
LAWS OF THE STATE OF WASHINGTON.

17. COSTS OF ENFORCEMENT.

If suit or action is instituted in connection with any dispute arising out
of this debenture, or in the enforcement of any rights hereunder, the prevailing
party shall be entitled to recover to its costs of such suit or action,
including reasonable attorney fees.

18. SUCCESSORS AND ASSIGNS.

The terms of this debenture shall inure to the benefit of and be binding
upon the respective successors and assigns of the parties hereto.

<PAGE>

19. HOLIDAYS.

In computing any period of time with respect to this debenture, any date
which falls upon a Saturday, Sunday, or a legal holiday shall be extended until
the next day thereafter which is not a Saturday, Sunday, or legal holiday.

DATED: August 26, 1993.

WISMER*MARTIN, INC.

By R.L. Holden
------------------------------
Title: Chairman of the Board
--------------------------

CONVERSION NOTICE

The undersigned Holder irrevocably exercises the option to convert
$______________ principal amount of this debenture and accrued, but unpaid,
interest thereon into Common Shares in accordance with the terms of this
debenture and directs that the Common Shares issuable on conversion be issued
and delivered to the undersigned.

DATED: _______________ ___________________________________
Signature

____________________________________
Print Name

<PAGE>

DEBENTURE PURCHASE
AGREEMENT

THIS DEBENTURE PURCHASE AGREEMENT ("Agreement") is made as of August 26,
1993, by and between WISMER*MARTIN, INC., a Washington corporation (the
"Company"), and GERTRUDE L. HOLDEN (the "Purchaser").

WHEREAS, the Purchaser is purchasing certain of the Debentures in such
offering.

NOW, THEREFORE, the parties hereto agree as follows:

Purchase and Sale.

1.3 USE OF PROCEEDS. The Company agrees to use the proceeds from the sale
of the Purchased Debentures for working capital purposes and other general
corporate purposes.

<PAGE>

2. REPRESENTATIONS AND WARRANTIES OF THE COMPANY.

The Company hereby represents and warrants to the Purchaser that:

2.3 SUBSIDIARIES. The Company does not presently control, directly or
indirectly, any other corporation, association or business entity.

3. REPRESENTATIONS AND WARRANTIES OF THE PURCHASER.

The Purchaser represents and warrants to the Company as follows:

3.1 AUTHORIZATION. When executed and delivered by the Purchaser, this
Agreement will constitute a valid and legally binding obligation of the
Purchaser.

<PAGE>

4. CONDITIONS TO THE PURCHASER'S OBLIGATIONS AT CLOSING.

4.2 REPRESENTATIONS AND WARRANTIES. The representations and warranties
contained in Section 2 hereof shall be true in all material respects on and as
of the Closing.

4.4 CERTIFICATION. Consummation of the Closing by the Company shall
constitute certification by it that of the matters set forth in Sections 4.1,
4.2 and 4.3 above.

<PAGE>

4.5 PURCHASED DEBENTURES. The Company shall have issued, executed and
delivered to the Purchaser the Purchased Debentures.

5. CONDITIONS TO THE COMPANY'S OBLIGATIONS AT CLOSING.

5.4 CERTIFICATION. Consummation of the Closing by the Purchaser shall
constitute certification by it that of the matters set forth in Sections 5.1,
5.2 and 5.3 above.

5.5 PURCHASE PRICE The company shall have received the purchase price for
the Purchased Debentures as provided in Section 1.2 hereof.

6. SUBORDINATION.

6.1 AGREEMENT OF SUBORDINATION.

<PAGE>

(ii) all lease obligations of the Company which are capitalized on the
books of the Company in accordance with generally accepted accounting
principles;

(iv) all renewals, extensions or refundings of any of the foregoing;

6.2 PAYMENTS TO DEBENTUREHOLDERS.

<PAGE>

6.3 SUBROGATION; EFFECT OF SUBORDINATION.

<PAGE>

6.4 NOTICES.

7. REGISTRATION RIGHTS.

The Company covenants and agrees as follows:

<PAGE>

7.2 LIMITATIONS ON PIGGY-BACK REGISTRATION RIGHTS.

8. COVENANTS.

<PAGE>

9. MISCELLANEOUS.

9.2 GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED
UNDER THE LAWS OF THE STATE OF WASHINGTON.

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

9.4 HEADINGS. The headings of the sections of this Agreement are for
convenience and are not to be considered in construing this Agreement.

9.7 SURVIVAL OF WARRANTIES. The representations and warranties contained
in or made pursuant to this Agreement shall survive the execution and delivery
of this Agreement and the Closing hereunder.

9.8 AMENDMENT OF AGREEMENT. Subject to Section 6.1(a) hereof, the
provisions of this Agreement may be amended or waived only by a writing executed
by the Company and the Purchaser.

<PAGE>

IN WITNESS WHEREOF, the undersigned have executed this Agreement as of the
day and year first written above.

"Company"

WISMER*MARTIN, INC.

By: R.L. Holden
-------------------------------
Title: Chairman of the Board
------------------------

Address: 12828 N. Newport Highway
Mead, WA 99021
Attention: Stanley Hatch
Telephone: (509) 466-0396
Fax: (509) 466-2183

"Purchaser"

GERTRUDE L. HOLDEN

Address: 2685 Benson Road
Tawas City, MI 48763
Attention:
----------------------
Telephone: ( )
-----------------------
Fax: ( )
--------------------------

<PAGE>

CONVERTIBLE SUBORDINATED DEBENTURE

No. 6 $37,500

WISMER*MARTIN, INC., a Washington corporation ("Company"), for value
received, promises to pay to GERTRUDE L. HOLDEN or subsequent registered holder
hereof ("Holder") the principal amount hereof, and interest thereon, on the
terms and conditions provided herein.

1. THE DEBENTURES.

This debenture is one of a duly authorized issue of the Company's
Convertible Subordinated Debentures due August 31, 1998, limited to an aggregate
principal amount of $500,000 (the "Debentures").

2. PRINCIPAL PAYMENT.

3. INTEREST PAYMENTS.

4. CONVERSION INTO COMMON SHARES.

(a) CONVERSION PRICE. The conversion price shall be a fixed conversion
price of $.60 per Common Share, subject to adjustment of the conversion price as
set forth in Section 4(d) below.

<PAGE>

(d) ADJUSTMENT OF CONVERSION RATE. The number and kind of securities
issuable upon the conversion of this debenture shall be subject to adjustment
during the term hereof from time to time as follows:

<PAGE>

5. OPTIONAL REDEMPTION AND PREPAYMENT.

<PAGE>

6. EVENTS OF DEFAULT.

If one or more of the following events ("Events of Default") shall occur
and be continuing:

(a) The Company shall fail to pay when due any amount owing under any
Debenture and such failure shall continue for a period of 30 days; or

7. TRANSFER OF DEBENTURE.

<PAGE>

8. STATUS OF REGISTERED HOLDER.

9. SECURITIES LAW AND OTHER TRANSFER RESTRICTIONS.

10. SUBORDINATION.

11. REGISTRATION RIGHTS.

12. RIGHTS OF THE HOLDER.

<PAGE>

13. NOTICES.

14. ENTIRE AGREEMENT; AMENDMENTS AND WAIVERS

15. HEADINGS.

The headings in this debenture are solely for convenience of reference and
shall not affect its interpretation.

16. GOVERNING LAW.

THIS DEBENTURE SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE
LAWS OF THE STATE OF WASHINGTON.

17. COSTS OF ENFORCEMENT.

18. SUCCESSORS AND ASSIGNS.

The terms of this debenture shall inure to the benefit of and be binding
upon the respective successors and assigns of the parties hereto.

<PAGE>

19. HOLIDAYS.

DATED: August 26, 1993.

WISMER*MARTIN, INC.

By R.L. Holden
----------------------------
Title: Chairman of the Board
-------------------------

CONVERSION NOTICE

DATED: _______________ ___________________________________
Signature

____________________________________
Print Name

<PAGE>

DEBENTURE PURCHASE
AGREEMENT

THIS DEBENTURE PURCHASE AGREEMENT ("Agreement") is made as of August 26,
1993, by and between WISMER*MARTIN, INC., a Washington corporation (the
"Company"), and MSC SERVICE CORPORATION (the "Purchaser").

WHEREAS, the Purchaser is purchasing certain of the Debentures in such
offering.

NOW, THEREFORE, the parties hereto agree as follows:

Purchase and Sale.

1.3 USE OF PROCEEDS. The Company agrees to use the proceeds from the sale
of the Purchased Debentures for working capital purposes and other general
corporate purposes.

<PAGE>

2. REPRESENTATIONS AND WARRANTIES OF THE COMPANY.

The Company hereby represents and warrants to the Purchaser that:

2.3 SUBSIDIARIES. The Company does not presently control, directly or
indirectly, any other corporation, association or business entity.

3. REPRESENTATIONS AND WARRANTIES OF THE PURCHASER.

The Purchaser represents and warrants to the Company as follows:

3.1 AUTHORIZATION. When executed and delivered by the Purchaser, this
Agreement will constitute a valid and legally binding obligation of the
Purchaser.

<PAGE>

4. CONDITIONS TO THE PURCHASER'S OBLIGATIONS AT CLOSING.

4.2 REPRESENTATIONS AND WARRANTIES. The representations and warranties
contained in Section 2 hereof shall be true in all material respects on and as
of the Closing.

4.4 CERTIFICATION. Consummation of the Closing by the Company shall
constitute certification by it that of the matters set forth in Sections 4.1,
4.2 and 4.3 above.

<PAGE>

4.5 PURCHASED DEBENTURES. The Company shall have issued, executed and
delivered to the Purchaser the Purchased Debentures.

5. CONDITIONS TO THE COMPANY'S OBLIGATIONS AT CLOSING.

5.4 CERTIFICATION. Consummation of the Closing by the Purchaser shall
constitute certification by it that of the matters set forth in Sections 5.1,
5.2 and 5.3 above.

5.5 PURCHASE PRICE The company shall have received the purchase price for
the Purchased Debentures as provided in Section 1.2 hereof.

6. SUBORDINATION.

6.1 AGREEMENT OF SUBORDINATION.

<PAGE>

(ii) all lease obligations of the Company which are capitalized on the
books of the Company in accordance with generally accepted accounting
principles;

(iv) all renewals, extensions or refundings of any of the foregoing;

6.2 PAYMENTS TO DEBENTUREHOLDERS.

<PAGE>

6.3 SUBROGATION; EFFECT OF SUBORDINATION.

<PAGE>

6.4 NOTICES.

7. REGISTRATION RIGHTS.

The Company covenants and agrees as follows:

<PAGE>

7.2 LIMITATIONS ON PIGGY-BACK REGISTRATION RIGHTS.

8. COVENANTS.

<PAGE>

9. MISCELLANEOUS.

9.2 GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED
UNDER THE LAWS OF THE STATE OF WASHINGTON.

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

9.4 HEADINGS. The headings of the sections of this Agreement are for
convenience and are not to be considered in construing this Agreement.

9.7 SURVIVAL OF WARRANTIES. The representations and warranties contained
in or made pursuant to this Agreement shall survive the execution and delivery
of this Agreement and the Closing hereunder.

9.8 AMENDMENT OF AGREEMENT. Subject to Section 6.1(a) hereof, the
provisions of this Agreement may be amended or waived only by a writing executed
by the Company and the Purchaser.

<PAGE>

IN WITNESS WHEREOF, the undersigned have executed this Agreement as of the
day and year first written above.

"Company"

WISMER*MARTIN, INC.

By: R.L. Holden
------------------------------
Title: Chairman of the Board
------------------------

Address: 12828 N. Newport Highway
Mead, WA 99021
Attention: Stanley Hatch
Telephone: (509) 466-0396
Fax: (509) 466-2183

"Purchaser"

MSC SERVICE CORPORATION

By: JOHN E. CARLSON
---------------------------------
Title: Director
-------------------------

Address: 3900 E. Sprague
Spokane, WA 99220-3048
Attention: FRED JACOT
--------------
Telephone: (509) 536-4640
---------------
Fax: (509) 536-4770
--------------------

<PAGE>

CONVERTIBLE SUBORDINATED DEBENTURE

No. 4 $100,000

WISMER*MARTIN, INC., a Washington corporation ("Company"), for value
received, promises to pay to MSC SERVICE CORPORATION, or subsequent registered
holder hereof ("Holder") the principal amount hereof, and interest thereon, on
the terms and conditions provided herein.

1. THE DEBENTURES.

This debenture is one of a duly authorized issue of the Company's
Convertible Subordinated Debentures due August 31, 1998, limited to an aggregate
principal amount of $500,000 (the "Debentures").

1. PRINCIPAL PAYMENT.

3. INTEREST PAYMENTS.

4. CONVERSION INTO COMMON SHARES.

1
<PAGE>

(a) CONVERSION PRICE. The conversion price shall be a fixed conversion
price of $.60 per Common Share, subject to adjustment of the conversion price as
set forth in Section 4(d) below.

(d) ADJUSTMENT OF CONVERSION RATE. The number and kind of securities
issuable upon the conversion of this debenture shall be subject to adjustment
during the term hereof from time to time as follows:

<PAGE>

5. OPTIONAL REDEMPTION AND PREPAYMENT.

<PAGE>

6. EVENTS OF DEFAULT.

If one or more of the following events ("Events of Default") shall occur
and be continuing:

(a) The Company shall fail to pay when due any amount owing under any
Debenture and such failure shall continue for a period of 30 days; or

7. TRANSFER OF DEBENTURE.

<PAGE>

8. STATUS OF REGISTERED HOLDER.

9. SECURITIES LAW AND OTHER TRANSFER RESTRICTIONS.

10. SUBORDINATION.

11. REGISTRATION RIGHTS.

12. RIGHTS OF THE HOLDER.

<PAGE>

13. NOTICES.

14. ENTIRE AGREEMENT; AMENDMENTS AND WAIVERS

15. HEADINGS.

The headings in this debenture are solely for convenience of reference and
shall not affect its interpretation.

16. GOVERNING LAW.

THIS DEBENTURE SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE
LAWS OF THE STATE OF WASHINGTON.

17. COSTS OF ENFORCEMENT.

18. SUCCESSORS AND ASSIGNS.

The terms of this debenture shall inure to the benefit of and be binding
upon the respective successors and assigns of the parties hereto.

<PAGE>

19. HOLIDAYS.

DATED: August 26, 1993.

WISMER*MARTIN, INC.

By R.L. Holden
------------------------------
Title: Chairman of the Board
-------------------------

CONVERSION NOTICE

DATED: _______________ ___________________________________
Signature

____________________________________
Print Name

<PAGE>

DEBENTURE PURCHASE
AGREEMENT

THIS DEBENTURE PURCHASE AGREEMENT ("Agreement") is made as of August 26,
1993, by and between WISMER*MARTIN, INC., a Washington corporation (the
"Company"), and SPECIALISTS ASSOCIATES PROFIT-SHARING TRUSTS (SEGREGATED ACCOUNT
- - WILLIAM KNAPP, M.D.) (the "Purchaser").

WHEREAS, the Purchaser is purchasing certain of the Debentures in such
offering.

NOW, THEREFORE, the parties hereto agree as follows:

Purchase and Sale.

1.3 USE OF PROCEEDS. The Company agrees to use the proceeds from the sale
of the Purchased Debentures for working capital purposes and other general
corporate purposes.

<PAGE>

2. REPRESENTATIONS AND WARRANTIES OF THE COMPANY.

The Company hereby represents and warrants to the Purchaser that:

2.3 SUBSIDIARIES. The Company does not presently control, directly or
indirectly, any other corporation, association or business entity.

3. REPRESENTATIONS AND WARRANTIES OF THE PURCHASER.

The Purchaser represents and warrants to the Company as follows:

3.1 AUTHORIZATION. When executed and delivered by the Purchaser, this
Agreement will constitute a valid and legally binding obligation of the
Purchaser.

<PAGE>

4. CONDITIONS TO THE PURCHASER'S OBLIGATIONS AT CLOSING.

4.2 REPRESENTATIONS AND WARRANTIES. The representations and warranties
contained in Section 2 hereof shall be true in all material respects on and as
of the Closing.

4.4 CERTIFICATION. Consummation of the Closing by the Company shall
constitute certification by it that of the matters set forth in Sections 4.1,
4.2 and 4.3 above.

<PAGE>

4.5 PURCHASED DEBENTURES. The Company shall have issued, executed and
delivered to the Purchaser the Purchased Debentures.

5. CONDITIONS TO THE COMPANY'S OBLIGATIONS AT CLOSING.

5.4 CERTIFICATION. Consummation of the Closing by the Purchaser shall
constitute certification by it that of the matters set forth in Sections 5.1,
5.2 and 5.3 above.

5.5 PURCHASE PRICE The company shall have received the purchase price for
the Purchased Debentures as provided in Section 1.2 hereof.

6. SUBORDINATION.

6.1 AGREEMENT OF SUBORDINATION.

<PAGE>

(ii) all lease obligations of the Company which are capitalized on the
books of the Company in accordance with generally accepted accounting
principles;

(iv) all renewals, extensions or refundings of any of the foregoing;

6.2 PAYMENTS TO DEBENTUREHOLDERS.

<PAGE>

6.3 SUBROGATION; EFFECT OF SUBORDINATION.

<PAGE>

6.4 NOTICES.

7. REGISTRATION RIGHTS.

The Company covenants and agrees as follows:

<PAGE>

7.2 LIMITATIONS ON PIGGY-BACK REGISTRATION RIGHTS.

8. COVENANTS.

<PAGE>

9. MISCELLANEOUS.

9.2 GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED
UNDER THE LAWS OF THE STATE OF WASHINGTON.

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

9.4 HEADINGS. The headings of the sections of this Agreement are for
convenience and are not to be considered in construing this Agreement.

9.7 SURVIVAL OF WARRANTIES. The representations and warranties contained
in or made pursuant to this Agreement shall survive the execution and delivery
of this Agreement and the Closing hereunder.

<PAGE>

9.8 AMENDMENT OF AGREEMENT. Subject to Section 6.1(a) hereof, the
provisions of this Agreement may be amended or waived only by a writing executed
by the Company and the Purchaser.

IN WITNESS WHEREOF, the undersigned have executed this Agreement as of the
day and year first written above.

"Company"

WISMER*MARTIN, INC.

By: R.L. Holden
----------------------------
Title: Chairman of the Board
------------------------

Address: 12828 N. Newport Highway
Mead, WA 99021
Attention: Stanley Hatch
Telephone: (509) 466-0396
Fax: (509) 466-2183

"Purchaser"

SPECIALISTS ASSOCIATES PROFIT-SHARING TRUSTS
(SEGREGATED ACCOUNT - WILLIAM KNAPP,
M.D.)

By: W. T. KNAPP, M.D.
--------------------------------
Title: Trustee

Address: 06050-10 Pinelake Club Dr.
Charlevoix, MI 49720
Attention:
-----------------------
Telephone: (610) 547-0406
------------------------
Fax: ( )
------------------------------

11
<PAGE>

CONVERTIBLE SUBORDINATED DEBENTURE

No. 5 $50,000

WISMER*MARTIN, INC., a Washington corporation ("Company"), for value
received, promises to pay to SPECIALISTS ASSOCIATES PROFIT-SHARING TRUSTS
(SEGREGATED ACCOUNT - WILLIAMS KNAPP, M.D.), or subsequent registered holder
hereof ("Holder") the principal amount hereof, and interest thereon, on the
terms and conditions provided herein.

1. THE DEBENTURES.

This debenture is one of a duly authorized issue of the Company's
Convertible Subordinated Debentures due August 31, 1998, limited to an aggregate
principal amount of $500,000 (the "Debentures").

2. PRINCIPAL PAYMENT.

3. INTEREST PAYMENTS.

4. CONVERSION INTO COMMON SHARES.

<PAGE>

(a) CONVERSION PRICE. The conversion price shall be a fixed conversion
price of $.60 per Common Share, subject to adjustment of the conversion price as
set forth in Section 4(d) below.

(d) ADJUSTMENT OF CONVERSION RATE. The number and kind of securities
issuable upon the conversion of this debenture shall be subject to adjustment
during the term hereof from time to time as follows:

<PAGE>

5. OPTIONAL REDEMPTION AND PREPAYMENT.

<PAGE>

6. EVENTS OF DEFAULT.

If one or more of the following events ("Events of Default") shall occur
and be continuing:

(a) The Company shall fail to pay when due any amount owing under any
Debenture and such failure shall continue for a period of 30 days; or

7. TRANSFER OF DEBENTURE.

<PAGE>

8. STATUS OF REGISTERED HOLDER.

9. SECURITIES LAW AND OTHER TRANSFER RESTRICTIONS.

10. SUBORDINATION.

11. REGISTRATION RIGHTS.

12. RIGHTS OF THE HOLDER.

<PAGE>

13. NOTICES.

14. ENTIRE AGREEMENT; AMENDMENTS AND WAIVERS

15. HEADINGS.

The headings in this debenture are solely for convenience of reference and
shall not affect its interpretation.

16. GOVERNING LAW.

THIS DEBENTURE SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE
LAWS OF THE STATE OF WASHINGTON.

17. COSTS OF ENFORCEMENT.

18. SUCCESSORS AND ASSIGNS.

The terms of this debenture shall inure to the benefit of and be binding
upon the respective successors and assigns of the parties hereto.

<PAGE>

19. HOLIDAYS.

DATED: August 26, 1993.

WISMER*MARTIN, INC.

By R.L. Holden
-----------------------------
Title: Chairman of the Board
-------------------------

CONVERSION NOTICE

DATED: _______________ ___________________________________
Signature

____________________________________
Print Name

<PAGE>

DEBENTURE PURCHASE
AGREEMENT

THIS DEBENTURE PURCHASE AGREEMENT ("Agreement") is made as of August 26,
1993, by and between WISMER*MARTIN, INC., a Washington corporation (the
"Company"), and THOMAS E. HOLDEN (the "Purchaser").

WHEREAS, the Purchaser is purchasing certain of the Debentures in such
offering.

NOW, THEREFORE, the parties hereto agree as follows:

Purchase and Sale.

1.3 USE OF PROCEEDS. The Company agrees to use the proceeds from the sale
of the Purchased Debentures for working capital purposes and other general
corporate purposes.

<PAGE>

2. REPRESENTATIONS AND WARRANTIES OF THE COMPANY.

The Company hereby represents and warrants to the Purchaser that:

2.3 SUBSIDIARIES. The Company does not presently control, directly or
indirectly, any other corporation, association or business entity.

3. REPRESENTATIONS AND WARRANTIES OF THE PURCHASER.

The Purchaser represents and warrants to the Company as follows:

3.1 AUTHORIZATION. When executed and delivered by the Purchaser, this
Agreement will constitute a valid and legally binding obligation of the
Purchaser.

<PAGE>

4. CONDITIONS TO THE PURCHASER'S OBLIGATIONS AT CLOSING.

4.2 REPRESENTATIONS AND WARRANTIES. The representations and warranties
contained in Section 2 hereof shall be true in all material respects on and as
of the Closing.

4.4 CERTIFICATION. Consummation of the Closing by the Company shall
constitute certification by it that of the matters set forth in Sections 4.1,
4.2 and 4.3 above.

<PAGE>

4.5 PURCHASED DEBENTURES. The Company shall have issued, executed and
delivered to the Purchaser the Purchased Debentures.

5. CONDITIONS TO THE COMPANY'S OBLIGATIONS AT CLOSING.

5.4 CERTIFICATION. Consummation of the Closing by the Purchaser shall
constitute certification by it that of the matters set forth in Sections 5.1,
5.2 and 5.3 above.

5.5 PURCHASE PRICE The company shall have received the purchase price for
the Purchased Debentures as provided in Section 1.2 hereof.

6. SUBORDINATION.

6.1 AGREEMENT OF SUBORDINATION.

<PAGE>

(ii) all lease obligations of the Company which are capitalized on the
books of the Company in accordance with generally accepted accounting
principles;

(iv) all renewals, extensions or refundings of any of the foregoing;

6.2 PAYMENTS TO DEBENTUREHOLDERS.

<PAGE>

6.3 SUBROGATION; EFFECT OF SUBORDINATION.

<PAGE>

6.4 NOTICES.

7. REGISTRATION RIGHTS.

The Company covenants and agrees as follows:

<PAGE>

7.2 LIMITATIONS ON PIGGY-BACK REGISTRATION RIGHTS.

8. COVENANTS.

<PAGE>

9. MISCELLANEOUS.

9.2 GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED
UNDER THE LAWS OF THE STATE OF WASHINGTON.

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

9.4 HEADINGS. The headings of the sections of this Agreement are for
convenience and are not to be considered in construing this Agreement.

9.7 SURVIVAL OF WARRANTIES. The representations and warranties contained
in or made pursuant to this Agreement shall survive the execution and delivery
of this Agreement and the Closing hereunder.

9.8 AMENDMENT OF AGREEMENT. Subject to Section 6.1(a) hereof, the
provisions of this Agreement may be amended or waived only by a writing executed
by the Company and the Purchaser.

<PAGE>

IN WITNESS WHEREOF, the undersigned have executed this Agreement as of the
day and year first written above.

"Company"

WISMER*MARTIN, INC.

By: R.L. HOLDEN
---------------------------------
Title: Chairman of the Board
--------------------------

Address: 12828 N. Newport Highway
Mead, WA 99021
Attention: Stanley Hatch
Telephone: (509) 466-0396
Fax: (509) 466-2183

"Purchaser"

THOMAS E. HOLDEN
-------------------------------------

Address: 205 Sixth Steet E.
Tierra Verde, FL 33715
Attention: THOMAS E. HOLDEN
-----------------
Telephone: (813) 866-6028
-------------------
Fax: ( )
-------------------------

<PAGE>

CONVERTIBLE SUBORDINATED DEBENTURE

No. 7 $37,500

WISMER*MARTIN, INC., a Washington corporation ("Company"), for value
received, promises to pay to THOMAS E. HOLDEN, or subsequent registered holder
hereof ("Holder") the principal amount hereof, and interest thereon, on the
terms and conditions provided herein.

1. THE DEBENTURES.

This debenture is one of a duly authorized issue of the Company's
Convertible Subordinated Debentures due August 31, 1998, limited to an aggregate
principal amount of $500,000 (the "Debentures").

2 PRINCIPAL PAYMENT.

3. INTEREST PAYMENTS.

4. CONVERSION INTO COMMON SHARES.

(a) CONVERSION PRICE. The conversion price shall be a fixed conversion
price of $.60 per Common Share, subject to adjustment of the conversion price as
set forth in Section 4(d) below.

<PAGE>

(d) ADJUSTMENT OF CONVERSION RATE. The number and kind of securities
issuable upon the conversion of this debenture shall be subject to adjustment
during the term hereof from time to time as follows:

<PAGE>

5. OPTIONAL REDEMPTION AND PREPAYMENT.

<PAGE>

6. EVENTS OF DEFAULT.

If one or more of the following events ("Events of Default") shall occur
and be continuing:

(a) The Company shall fail to pay when due any amount owing under any
Debenture and such failure shall continue for a period of 30 days; or

7. TRANSFER OF DEBENTURE.

<PAGE>

8. STATUS OF REGISTERED HOLDER.

9. SECURITIES LAW AND OTHER TRANSFER RESTRICTIONS.

10. SUBORDINATION.

11. REGISTRATION RIGHTS.

12. RIGHTS OF THE HOLDER.

<PAGE>

13. NOTICES.

14. ENTIRE AGREEMENT; AMENDMENTS AND WAIVERS

15. HEADINGS.

The headings in this debenture are solely for convenience of reference and
shall not affect its interpretation.

16. GOVERNING LAW.

THIS DEBENTURE SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE
LAWS OF THE STATE OF WASHINGTON.

17. COSTS OF ENFORCEMENT.

18. SUCCESSORS AND ASSIGNS.

The terms of this debenture shall inure to the benefit of and be binding
upon the respective successors and assigns of the parties hereto.

<PAGE>

19. HOLIDAYS.

DATED: March 1, 1994
(Reissued upon transfer on March 17, 1994)

WISMER*MARTIN, INC.

By S.T. HATCH
------------------------------
Title: President
---------------------------

CONVERSION NOTICE

DATED: _______________ ___________________________________
Signature

____________________________________
Print Name

<PAGE>

DEBENTURE PURCHASE
AGREEMENT

THIS DEBENTURE PURCHASE AGREEMENT ("Agreement") is made as of August 26,
1993, by and between WISMER*MARTIN, INC., a Washington corporation (the
"Company"), and HARRY HOLDEN (the "Purchaser").

WHEREAS, the Purchaser is purchasing certain of the Debentures in such
offering.

NOW, THEREFORE, the parties hereto agree as follows:

Purchase and Sale.

1.3 USE OF PROCEEDS. The Company agrees to use the proceeds from the sale
of the Purchased Debentures for working capital purposes and other general
corporate purposes.

<PAGE>

2. REPRESENTATIONS AND WARRANTIES OF THE COMPANY.

The Company hereby represents and warrants to the Purchaser that:

2.3 SUBSIDIARIES. The Company does not presently control, directly or
indirectly, any other corporation, association or business entity.

3. REPRESENTATIONS AND WARRANTIES OF THE PURCHASER.

The Purchaser represents and warrants to the Company as follows:

3.1 AUTHORIZATION. When executed and delivered by the Purchaser, this
Agreement will constitute a valid and legally binding obligation of the
Purchaser.

<PAGE>

4. CONDITIONS TO THE PURCHASER'S OBLIGATIONS AT CLOSING.

4.2 REPRESENTATIONS AND WARRANTIES. The representations and warranties
contained in Section 2 hereof shall be true in all material respects on and as
of the Closing.

4.4 CERTIFICATION. Consummation of the Closing by the Company shall
constitute certification by it that of the matters set forth in Sections 4.1,
4.2 and 4.3 above.

<PAGE>

4.5 PURCHASED DEBENTURES. The Company shall have issued, executed and
delivered to the Purchaser the Purchased Debentures.

5. CONDITIONS TO THE COMPANY'S OBLIGATIONS AT CLOSING.

5.4 CERTIFICATION. Consummation of the Closing by the Purchaser shall
constitute certification by it that of the matters set forth in Sections 5.1,
5.2 and 5.3 above.

5.5 PURCHASE PRICE The company shall have received the purchase price for
the Purchased Debentures as provided in Section 1.2 hereof.

6. SUBORDINATION.

6.1 AGREEMENT OF SUBORDINATION.

<PAGE>

(ii) all lease obligations of the Company which are capitalized on the
books of the Company in accordance with generally accepted accounting
principles;

(iv) all renewals, extensions or refundings of any of the foregoing;

6.2 PAYMENTS TO DEBENTUREHOLDERS.

<PAGE>

6.3 SUBROGATION; EFFECT OF SUBORDINATION.

<PAGE>

6.4 NOTICES.

7. REGISTRATION RIGHTS.

The Company covenants and agrees as follows:

<PAGE>

7.2 LIMITATIONS ON PIGGY-BACK REGISTRATION RIGHTS.

8. COVENANTS.

<PAGE>

9. MISCELLANEOUS.

9.2 GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED
UNDER THE LAWS OF THE STATE OF WASHINGTON.

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

9.4 HEADINGS. The headings of the sections of this Agreement are for
convenience and are not to be considered in construing this Agreement.

9.7 SURVIVAL OF WARRANTIES. The representations and warranties contained
in or made pursuant to this Agreement shall survive the execution and delivery
of this Agreement and the Closing hereunder.

9.8 AMENDMENT OF AGREEMENT. Subject to Section 6.1(a) hereof, the
provisions of this Agreement may be amended or waived only by a writing executed
by the Company and the Purchaser.

<PAGE>

IN WITNESS WHEREOF, the undersigned have executed this Agreement as of the
day and year first written above.

"Company"

WISMER*MARTIN, INC.

By: R.L. Holden
-----------------------------------
Title: Chairman of the Board
------------------------

Address: 12828 N. Newport Highway
Mead, WA 99021
Attention: Stanley Hatch
Telephone: (509) 466-0396
Fax: (509) 466-2183

"Purchaser"

HARRY HOLDEN
-------------------------------------

Address: 6151 W. Longview
E. Lansing, MI 48823
Attention: HARRY HOLDEN
------------------
Telephone: (517) 333-3620
------------------
Fax: ( )
-----------------------

<PAGE>

CONVERTIBLE SUBORDINATED DEBENTURE

No. 2 $37,500

WISMER*MARTIN, INC., a Washington corporation ("Company"), for value
received, promises to pay to HARRY HOLDEN, or subsequent registered holder
hereof ("Holder") the principal amount hereof, and interest thereon, on the
terms and conditions provided herein.

1. THE DEBENTURES.

This debenture is one of a duly authorized issue of the Company's
Convertible Subordinated Debentures due August 31, 1998, limited to an aggregate
principal amount of $500,000 (the "Debentures").

2. PRINCIPAL PAYMENT.

3. INTEREST PAYMENTS.

4. CONVERSION INTO COMMON SHARES.

(a) CONVERSION PRICE. The conversion price shall be a fixed conversion
price of $.60 per Common Share, subject to adjustment of the conversion price as
set forth in Section 4(d) below.

<PAGE>

(d) ADJUSTMENT OF CONVERSION RATE. The number and kind of securities
issuable upon the conversion of this debenture shall be subject to adjustment
during the term hereof from time to time as follows:

<PAGE>

5. OPTIONAL REDEMPTION AND PREPAYMENT.

<PAGE>

6. EVENTS OF DEFAULT.

If one or more of the following events ("Events of Default") shall occur
and be continuing:

(a) The Company shall fail to pay when due any amount owing under any
Debenture and such failure shall continue for a period of 30 days; or

7. TRANSFER OF DEBENTURE.

<PAGE>

8. STATUS OF REGISTERED HOLDER.

10. SUBORDINATION.

11. REGISTRATION RIGHTS.

12. RIGHTS OF THE HOLDER.

<PAGE>

13. NOTICES.

14. ENTIRE AGREEMENT; AMENDMENTS AND WAIVERS

15. HEADINGS.

The headings in this debenture are solely for convenience of reference and
shall not affect its interpretation.

16. GOVERNING LAW.

THIS DEBENTURE SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE
LAWS OF THE STATE OF WASHINGTON.

17. COSTS OF ENFORCEMENT.

18. SUCCESSORS AND ASSIGNS.

The terms of this debenture shall inure to the benefit of and be binding
upon the respective successors and assigns of the parties hereto.

<PAGE>

19. HOLIDAYS.

DATED: August 26, 1993.

WISMER*MARTIN, INC.

By R.L. Holden
-------------------------------
Title: Chairman of the Board
---------------------------

CONVERSION NOTICE

DATED: _______________ ___________________________________
Signature

____________________________________
Print Name

<PAGE>

CONVERTIBLE SUBORDINATED DEBENTURE

No. 8 $37,500

WISMER*MARTIN, INC., a Washington corporation ("Company"), for value
received, promises to pay to MAUREEN THERESA. HOLDEN, or subsequent registered
holder hereof ("Holder") the principal amount hereof, and interest thereon, on
the terms and conditions provided herein.

1. THE DEBENTURES.

This debenture is one of a duly authorized issue of the Company's
Convertible Subordinated Debentures due August 31, 1998, limited to an aggregate
principal amount of $500,000 (the "Debentures").

2. PRINCIPAL PAYMENT.

3. INTEREST PAYMENTS.

4. CONVERSION INTO COMMON SHARES.

<PAGE>

(a) CONVERSION PRICE. The conversion price shall be a fixed conversion
price of $.60 per Common Share, subject to adjustment of the conversion price as
set forth in Section 4(d) below.

(d) ADJUSTMENT OF CONVERSION RATE. The number and kind of securities
issuable upon the conversion of this debenture shall be subject to adjustment
during the term hereof from time to time as follows:

<PAGE>

5. OPTIONAL REDEMPTION AND PREPAYMENT.

<PAGE>

6. EVENTS OF DEFAULT.

If one or more of the following events ("Events of Default") shall occur
and be continuing:

(a) The Company shall fail to pay when due any amount owing under any
Debenture and such failure shall continue for a period of 30 days; or

7. TRANSFER OF DEBENTURE.

<PAGE>

8. STATUS OF REGISTERED HOLDER.

10. SUBORDINATION.

11. REGISTRATION RIGHTS.

12. RIGHTS OF THE HOLDER.

<PAGE>

13. NOTICES.

14. ENTIRE AGREEMENT; AMENDMENTS AND WAIVERS

15. HEADINGS.

The headings in this debenture are solely for convenience of reference and
shall not affect its interpretation.

16. GOVERNING LAW.

THIS DEBENTURE SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE
LAWS OF THE STATE OF WASHINGTON.

17. COSTS OF ENFORCEMENT.

18. SUCCESSORS AND ASSIGNS.

The terms of this debenture shall inure to the benefit of and be binding
upon the respective successors and assigns of the parties hereto.

<PAGE>

19. HOLIDAYS.

DATED: March 1, 1994
(Reissued upon transfer on March 17, 1994)

WISMER*MARTIN, INC.

By S.T. HATCH
----------------------------
Title: President
------------------------

CONVERSION NOTICE

DATED: _______________ ___________________________________
Signature

____________________________________
Print Name

<PAGE>

Exhibit 23.1

LAW OFFICES OF

PAINE, HAMBLEN, COFFIN, BROOKE & MILLER

717 WEST SPRAGUE AVENUE, SUITE 1200
SPOKANE, WASHINGTON 99204-0464
(509) 455-6000
FAX (509) 838-0007

__________

August 2, 1995

Board of Directors
Wismer*Martin, Inc.
12828 N. Newport Highway
Mead, Washington 99021

Gentlemen:

We hereby consent to our name being disclosed in the Registration Statement
to be filed in connection with the issuance of three million shares of Common
Stock by the Company as filed on Form SB-2 with the Securities and Exchange
Commission and appropriate state securities divisions or commissions.

Very truly yours,

PAINE, HAMBLEN, COFFIN,
BROOKE & MILLER

/s/
------------------------------------
Lawrence R. Small
Counsel for Issuer

<PAGE>

EXHIBIT 23.1A

CONSENT OF INDEPENDENT
CERITFIED PUBLIC ACCOUNTANTS

Wismer*Martin, Inc.
Mead, Washington

We hereby consent to the use in the Prospectus contituting a part of
this Registration Statement of out report dated June 2, 1995, relating to
the consolidated financial statements of Wismer*Martin, Inc., which is
contained in that Prospectus.

We also consent to the reference to us under the caption "Experts" in
the Prospectus.

BDO Seidman, LLP

Spokane, Washington
August 2, 1995