NET LNNX INC, S-8 POS, 1996-10-30

NET LNNX INC
S-8 POS, 1996-10-30
REAL ESTATE

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As filed with the Securities and Exchange Commission on September 27, 1996
Registration No. 0-14614

POST-EFFECTIVE AMENDMENT NO. 1
TO FORM S-8
REGISTRATION STATEMENT UNDER THE
SECURITIES ACT OF 1933

Net Lnnx, Inc.
(Exact name of registrant as specified in its charter)

Pennsylvania 23-1726390
(State or other jurisdiction of (I. R. S. Employer
incorporation or organization) Identification No.)

324 Datura Street, Suite 150 West Palm Beach, Florida 33401
(Address of Principal Executive Office) (Zip Code)

Net Lnnx, Inc. 1996 Stock Plan
(Full title of the plan)

Robert C. Hackney, Esquire
4521 PGA Blvd., Suite 264 Palm Beach Gardens, FL 33418
(Name and address of agent for service)

(407) 837-2913
(Telephone number, including area code, of agent for service)

Calculation of Registration Fee

<TABLE>
<CAPTION>
Proposed(l) Proposed(l)
Title of Securities Amount to maximum maximum Amount of
to be registered be registered offering price aggregate registration
per unit offering price fee
<S> <C> <C> <C> <C>

Common Stock 10,750 shs. $5.50 $59,125.00 $100.00
(No par value)

</TABLE>

The registrant hereby files this Post Effective Amendment No. 1 to the
Registration Statement as a "reoffer prospectus" to effectuate the resale of
10,750 shares of "control securities", as that term is defined under Rule 405
of the Securities Act of 1933, as amended (the "Act"), pursuant to the General
Instructions to this S-8 Registration Statement. These securities are offered
on a best efforts basis with no minimum purchase requirement. The proceeds
from this offering shall be deposited directly into the account of the selling
securities holder. No proceeds shall be placed in escrow or trust. This
offering shall terminate on December 31, 1996. See "Risk Factors", herein.

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

(1) Based upon the average bid and asked price of $5.50 per share as of
September 25, 1996.

<PAGE>

Registrant Information

All references herein to "Net Lnnx" or the "Corporation" mean Net Lnnx,
Inc., unless otherwise indicated by the context.

Net Lnnx, Inc. is subject to the informational requirements of the
Securities Exchange Act of 1934 (the "Exchange Act") and in accordance
therewith files reports and other information with the Securities and Exchange
Commission. Such reports and other information may be inspected and copied at
the Public Reference Room of the Commission, 450 5th Street, N.W., Room 1024,
Washington, D. C. 20549, and at the Commission's regional offices in New York
(26 Federal Plaza, New York, New York 10007), Chicago (Everett McKinley
Dirksen Building, 219 South Dearborn Street, Chicago, Illinois 60604) and Los
Angeles (5757 Wilshire Blvd., Suite 500 East, Los Angeles, California
90036-3648). Copies of such material can also be obtained from the Public
Reference Section of the Commission, Washington, D. C. 20549 at prescribed
rates. The Commission maintains a Web site that contains reports, proxy and
information statements and other information regarding the Corporation. The
address of such Web site is (http://www.sec.gov).

Incorporation of Certain Documents by Reference

The following documents filed with the Securities and Exchange Commission
by the Corporation are incorporated herein by reference as of their respective
dates as set forth therein:

(a) The Corporation's Form 10-K for the fiscal year ended December
31, 1995.
(b) The Corporation's Form 8-KA Filed January 19,1996.
(c) The Corporation's Form 8-K filed January 12, 1996.
(d) The Corporation's Form 10-C filed February 8, 1996.

(e) The Corporation's Quarterly Reports on Form 10-Q for the quarters
ended March 31,1996, and June 30, 1996.

All documents subsequently filed by the Corporation pursuant to Sections
13(a), 13(c), 14 and 15(d) of the Securities Exchange Act of 1934 after the
date hereof and prior to the filing of a post-effective amendment which
indicates that all securities offered herein have been sold or which registers
all such securities remaining unsold shall be deemed to be incorporated herein
by reference and to be a part hereof from the date of filing of such
documents.

The Corporation will provide without charge to each person, including any
beneficial owner, to whom a Prospectus is delivered, upon written or oral
request of such person, a copy of any and all documents described above (other
than exhibits to such documents). Such requests should be addressed to:

Investor Relations
Net Lnnx, Inc.
324 Datura Street, Suite 150
West Palm Beach, FL 33401
(407) 832-8832

<PAGE>

Report to Shareholders

The Corporation furnishes its stockholders with annual reports containing
consolidated financial statements that have been examined and reported upon,
with an opinion expressed by independent certified public accountants, and
quarterly reports containing unaudited summaries of financial information for
the first three quarters of each fiscal year.

No dealer, salesman or other person has been authorized to give any
information or to make any representations other than those contained in this
Prospectus, and, if given or made, such information or representation must not
be relied upon as having been authorized by the Corporation. This Prospectus
does not constitute an offer or solicitation by anyone in any state in which
such offer or solicitation is not authorized, or in which the person making
such offer or solicitation is not qualified to do so, or to any person whom it
is unlawful to make such offer or solicitation. The delivery of this
Prospectus at any time does not imply that information herein is correct as of
any time subsequent to the date hereof.

THE DELIVERY OF THIS PROSPECTUS AT ANY TIME DOES NOT IMPLY THAT
INFORMATION HEREIN IS CORRECT AS OF ANY TIME SUBSEQUENT TO THE DATE OF THIS
PROSPECTUS. STATEMENTS IN THIS PROSPECTUS AS TO THE PROVISIONS OF THE PLAN
ARE NOT NECESSARILY COMPLETE AND IN EACH INSTANCE REFERENCE IS MADE TO THE
COPY OF THE PLAN WHICH APPEARS AT APPENDIX A TO THE PROSPECTUS, AND EACH SUCH
STATEMENT IN THIS PROSPECTUS IS QUALIFIED IN ALL SUCH RESPECTS BY SUCH
REFERENCE.

The date of this Prospectus is September 27, 1996.

<PAGE>

Risk Factors

The securities being offered hereby involve a high degree of risk. Prior
to making an investment, prospective investors should carefully consider the
following factors inherent in and affecting an investment in the Corporation
and this offering.

Absence of Operating History

The Corporation is a holding company and up until December, 1995 has
conducted virtually no business operations in the past four years, other than
its efforts to seek merger partners. On December 29, 1995, the Corporation
entered into an agreement to exchange approximately 83.5% of its no par
value common stock for approximately 60% of the common stock of
Communications/USA, Inc., which owns and operates interactive voice messaging
franchises in the Voice-Tel system. Besides the above mentioned interactive
voice messaging, in January, 1996, the Corporation formed and now operates an
Internet Service Provider.There can be no assurances that the Corporation will
be successful in its newly acquired and formed operations.

Absence of Profitable Operations in Recent Periods

The Corporation experienced a loss of $88,329 and $237,286 for the three
and six months period ended June 30, 1996. Management expected this loss,
since it is primarily due to start up costs associated with the formation of
its internet service provider. These expenses which will not wind down as the
Corporation's operation increase amounted to approximately $38,000 and
$116,000 for the above mentioned periods. The Corporation also recorded a
non-cash loss on the results of operations of an un-consolidated subsidiary.
The Corporation accounts for this investment under the Equity Method of
Accounting. This loss was approximately $49,000 and $121,000 for the three and
six months period ended June 30, 1996, and was primarily as a result of
amortization of intangible assets as well as depreciation of equipment. There
can be no assurance that the Corporation will recover from its losses and ever
become profitable.

Competition

The interactive voice messaging industry and the internet service
provider industry are both highly competitive. The Corporation competes with
other voice messaging and voice mail products being offered by other
companies, in addition to a large number of internet service provider
companies, certain of which have greater financial resources and more
experience than the Corporation. Accordingly, there can be no assurance that
the Corporation will be able to effectively compete with many of its
competitors in either the voice messaging industry or the internet service
provider industry.

Dependence on Officers, Directors, and Key Employees

The Corporation is presently dependent upon its officers and key
employees and its sole director. In the event the Corporation should lose the
services of any of these officers, key employees or the sole director, the
Corporation could be adversely affected.

<PAGE>

Continued Control by Founding Stockholder

The Corporation's articles of incorporation do not provide for cumulative
voting in the election of directors. Therefore, Robert C. Hackney, the
founding shareholder, will be able to elect the entire board of directors of
the Corporation, which in turn appoints the Corporation's officers.

Over-The-Counter Trading Market

Presently, the Corporation trades its Common Stock in the
over-the-counter trading market, which is a less liquid market than the higher
volume stock exchanges. Therefore, purchasers of the Corporation's Common
Stock may experience difficulty in selling their shares, and therefore may be
unable to readily liquidate their investment in the Common Stock.

Lack of Dividends

To date, the Corporation has not paid any dividends on its Common Stock,
and does not foresee paying any dividends in the near future. There can be no
assurance that the Corporation's financial condition will ever permit the
payment of dividends.

Selling Security Holders

The securities registered herein are being offered for the account of the
following security holders:

<TABLE>
<CAPTION>
Amount of Amount of Amount and
securities owned securities offered percentage owned
Holder Position prior to the offering for seller's acct. after offering
<S> <C> <C> <C> <C>

Robert C. Hackney Pres./Dir. 941,000 10,750 930,250 (86.5%)

</TABLE>

Plan of Distribution

The securities are to be offered through the selling efforts of brokers
on Mr. Hackney's behalf at standard commission charges.

Description of Common Stock

The Corporation is authorized to issue 20,000,000 shares of Common Stock,
no par value. Each share of Common Stock is entitled to share pro rata in
dividends and distributions, if any, with respect to the Common Stock, when
and if declared by the Board of Directors, from funds legally available
therefor. No holder of any shares of Common Stock has any preemptive or
similar right to subscribe for any securities of the Corporation. Upon
liquidation, dissolution or winding up of the Corporation and after payment of
creditors, the assets will be divided pro rata on a share-for-share basis
among the holders of the shares of Common Stock. The holders of shares of
Common Stock are not entitled to cumulative voting in the election of
Directors; they are entitled to one vote per share with respect to all matters
that are required by law to be submitted to stockholders, including the
election of Directors. Accordingly, stockholders representing more than 50%
of the outstanding shares will have the ability to elect all of the Directors.

<PAGE>

Interests of Named Experts and Counsel.

Experts

The audited financial statements and schedules incorporated by reference
from the Corporation's Form 10-K for the fiscal year ended December 31, 1995
and incorporated herein by reference were examined and reported upon by
independent certified public accountants. Such financial statements are
incorporated herein in reliance upon the report of that firm and upon their
authority as experts in accounting and auditing.

Exhibits

1. Consents of experts and counsel.

Undertakings.

The undersigned Registrant hereby undertakes to:

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

(i) To include any material information with respect to the plan of
distribution not previously disclosed in the registration statement or any
material change to such information in the registration statement.

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

3. To remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the termination
of the offering.

4. That, for purposes of determining any liability under the
Securities Act, each filing of the registrant's annual report pursuant to
section 13(a) or section 15(d) of the Securities Exchange Act of 1934 (and,
where applicable, each filing of an employee benefit plan's annual report
pursuant to section 15 (d) of the Securities Exchange Act of 1934) that is
incorporated by reference in the registration statement shall be deemed to be
a new registration statement relating to the securities offered therein, and
the offering of such securities at that time shall be deemed to be the initial
bona fide offering thereof.

Insofar as indemnification for liabilities arising under the Securities
Act may be permitted to directors and officers or persons controlling the
registrant pursuant to the foregoing provisions, or otherwise, the registrant
has been informed that in the opinion of the Securities and Exchange
Commission, such indemnification is against public policy as expressed in the
Securities Act and is, therefore, unenforceable. In the event that a claim

<PAGE>

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

SIGNATURES

The Registrant. Pursuant to the requirements of the Securities Act of
1933, the registrant certifies that it has reasonable grounds to believe that
it meets all of the requirements for filing on Form S-8 and has duly caused
this Amendment No. 1 to the registration statement to be signed on its behalf
by the undersigned, thereunto duly authorized, in the City of West Palm Beach,
State of Florida, on September 27, 1996.

Net Lnnx, Inc.

By: /s/Robert C. Hackney
Robert C. Hackney, Chief Executive Officer

Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed by the following persons in the
capacities and on the date indicated.

By: /s/Robert C. Hackney
Robert C. Hackney, CEO, Sole Director
September 27, 1996

By: /s/Raul E. Balsera
Raul E. Balsera, Chief Financial Officer
September 27, 1996

<PAGE>

INDEX TO EXHIBITS

EXHIBIT
NUMBER EXHIBIT PAGE

23 Consents of experts and counsel E-17

<PAGE>

Richard C. Gates, CPA
Certified Public Accountant
2000 Palm Beach Boulevard
Suite 800
West Palm Beach, Florida 33409
Phone: 561/478-3030 Fax: 561/478-2425

September 23, 1996

Board of Directors
Net Lnnx, Inc.
324 Datura Street, Suite 150
West Palm Beach, FL 33401

CONSENT OF INDEPENDENT PUBLIC ACCOUNTANT

As an independent public accountant, I hereby consent to the use of my
audit report dated January 16, 1996, and March 25, 1996 (and all references to
my firm) included in the Form 10-K and incorporated by reference in the Post
Effective Amendment No. 1 to Form S-8 registration statement of Net Lnnx, Inc.
(formerly Chester County Security Fund, Inc.).

Very truly yours,

/s/Richard C. Gates
Richard C. Gates

RCG/l

<PAGE>

1996 STOCK PLAN

1. Purpose. This 1996 Stock Plan (the "Plan") is intended to provide
incentives: (a) to the officers and other employees of NETLNNX, Inc. (the
"Company"), its parent (if any) and any present or future subsidiaries of the
Company (collectively, "Related Corporations") by providing them with
opportunities to purchase stock in the Company pursuant to options granted
hereunder which qualify as "incentive stock options" under Section 422(b) of
the Internal Revenue Code of 1986 (the "Code") ("ISO" or ISOs"); (b) to
directors, officers, employees and consultants of the Company and Related
Corporations by providing them with opportunities to purchase stock in the
Company pursuant to options granted hereunder which do not qualify as ISOs
("Non-Qualified Option" or "Non-Qualified Options"); (c) to directors,
officers, employees and consultants of the Company and Related Corporations by
providing them with awards of stock in the Company ("Awards"); and (d) to
directors, officers, employees and consultants of the Company and Related
Corporations by providing them with opportunities to make direct purchases of
stock in the Company ("Purchases"). Both ISOs and Non-Qualified Options are
referred to hereafter individually as an "Option" and collectively as
"Options". Options, Awards, and authorizations to make Purchases are referred
to hereafter collectively as "Stock Rights". As used herein, the terms
"parent" and "subsidiary" mean "parent corporation" and "subsidiary
corporation" respectively, as those terms are defined in Section 425 of the
Code.

2. Administration of the Plan.

A. The Plan shall be administered by either (i) the Board of Directors of
the Company (the "Board"); or (ii) a Stock Plan Committee (the "Committee"),
appointed by the Board, pursuant to the requirements of paragraph 2.D.
herein. Subject to paragraph 2.D. herein and the terms of the Plan, the
Committee, if so appointed, shall have the authority to (i) determine the
employees of the Company and Related Corporations (from among the class of
employees eligible under paragraph 3 to receive ISOs) to whom ISOs may be
granted, and to determine (from among the class of individuals and entities
eligible under paragraph 3 to receive Non-Qualified Options and Awards and to
make Purchases) to whom Non-Qualified Options, Awards and authorizations to
make Purchases may be granted; (ii) determine the time or times at which
Options or Awards may be granted or Purchases made; (iii) determine the option
price of shares subject to each Option, which price shall not be less than the
minimum price specified in paragraph 6, and the purchase price of shares
subject to each Purchases; (iv) determine whether each Option granted shall be
an ISO or a Non-Qualified Option; (v) determine (subject to paragraph 7) the
time or times when each Option shall become exercisable and the duration of
the exercise period; (vi) determine whether restrictions such as repurchase
options are to be imposed on shares subject to Options, Awards and Purchases
and the nature of such restrictions, if any, and (vii) interpret the Plan and
prescribe and rescind rules and regulations relating to it. All references in
this Plan to the Committee shall mean the Board if no Committee has been
appointed. If the Committee determines to issue a Non-Qualified Option, it

shall take whatever actions it deems necessary, under Section 422A of the Code
and the regulations promulgated thereunder, to ensure that such Option is not
treated as an ISO. The interpretation and construction by the Committee of any
provisions of the Plan or of any Stock Right granted under it shall be final
unless otherwise determined by the Board. The Committee may from time to time
adopt such rules and regulations for carrying out the Plan as it may deem best.
No member of the Board or the Committee shall be liable for any action or
determination made in good faith with respect to the Plan or any Stock Right
granted under it.

B. The Committee may select one of its members as its chairman, and shall
hold meetings at such time and places it may determine. Acts by a majority of
the Committee, or actions reduced to or approved in writing by a majority of
the members of the Committee, shall be the valid acts of the Committee. From
time to time the Board may increase the size of the Committee and appoint
additional members thereof, remove members (with or without cause) and appoint
new members in substitution therefor, fill vacancies however caused, or remove
all members of the Committee and thereafter directly administer the Plan.

C. Stock Rights may be granted to members of the Board in accordance with
paragraph 2.D. herein and the provisions of this Plan applicable to other
eligible persons. Members of the Board who are either (i) eligible for Stock
Rights pursuant to the Plan or (ii) have been granted Stock Rights may vote on
any matters affecting the administration of the Plan or the grant of any Stock
Rights pursuant to the Plan.

D. Each transaction, i.e. each grant of Stock Rights to any eligible
participant under the Plan who is an officer or director of the Company, (i)
shall be approved in advance to the granting of such right, by either the full
Board or the Committee of the Board which shall be composed solely of two or
more Non-Employee Directors; (ii) shall be approved in advance to the granting
of such right, or ratified no later than the next annual meeting of
shareholders, by the affirmative votes of the holders of a majority of the
securities of the issuer present, or represented, and entitled to vote at a
meeting duly held in accordance with the applicable laws of the state or other
jurisdiction in which the Company is incorporated; or the written consent of
the holders of a majority of the securities of the issuer entitled to vote; or
(iii) shall be held by the officer or director for a period of six months
following the date of such acquisition, provided that with respect to Options,
if at least six months elapse from the date of acquisition/grant of the
Options to the date of disposition of the Options (other than upon exercise or
conversion) or its underlying equity security. A Non-Employee Director is a
director who is not, at the time of such grant an officer of the Company or
any Related Corporation, or otherwise employed by the Company or any Related
Corporation; does not receive compensation, either directly or indirectly,
from the Corporation or any Related Corporation, for services rendered as a
consultant or in any capacity other than a director, except for an amount that
does not exceed the dollar amount for which disclosure is required pursuant to
Item 404(a) of Regulation S-K promulgated under the Securities Act of 1933, as

2
<PAGE>

amended; does not possess an interest in any other transaction for which
disclosure would be required pursuant to Item 404(a) of Regulation S-K; and is
not engaged in a business relationship for which disclosure would be required
pursuant to Item 404(b) of Regulation S-K.

3. Eligible Employees and Others. ISOs may be granted to any
employee of the Company or any Related Corporation. Those officers and
directors of the Company who are not employees may not be granted ISOs under
the Plan. Non-Qualified Options, Awards and authorizations to make Purchases
may be granted to any director (whether or not an employee), officer, employee
or consultant of the Company or any Related Corporation. The Committee may
take into consideration a recipient's individual circumstances in determining
whether to grant an ISO, a Non-Qualified Option or an authorization to make a
Purchase. Granting of any Stock Rights to any individual or entity shall
neither entitle that individual or entity to, nor disqualify him from,
participation in any other grant of Stock Rights.

4. Stock. The stock subject to Options, Awards and Purchases shall
be authorized but unissued shares of Common Stock of the Company, no par value
(the "Common Stock"), or shares of Common Stock reacquired by the Company in
any manner. The aggregate number of shares which may be issued pursuant to
the Plan is 1,000,000, subject to adjustment as provided in paragraph 13. Any
such shares may be issued as ISOs, Non-Qualified Options or Awards, or to
persons or entities making Purchases, so long as the number of shares issued
does not exceed such number, as adjusted. If any Option granted under the
Plan shall expire or terminate for any reason without having been exercised in
full or shall cease for any reason to be exercisable in whole or in part, or
if the Company shall reacquire any unvested shares issued pursuant to Awards
or Purchases, the unpurchased shares subject to such Options and any unvested
shares so reacquired by the Company shall again be available for grants of
Stock Rights under the Plan.

5. Granting of Stock Rights. Stock Rights may be granted under the
Plan at any time after January 20, 1996 and prior to January 20, 2005. Any
Stock Right issued pursuant to subsection (iii) of paragraph 2.D. shall be
held for the period of time described in that subsection. The date of grant of
a Stock Right under the Plan will be the date specified by the Committee at
the time it grants the Stock Right; provided, however, that such date shall
not be prior to the date on which the Committee acts to approve the grant.
The Committee shall have the right, with the consent of the optionee, to convert
an ISO granted under the Plan to a Non-Qualified Option pursuant to paragraph
16. Awards and the price of Purchases shall be at fair market value as
determined by the Board of Directors.

6. Minimum Option Price; ISO Limitations.

A. The price per share specified in the agreement relating to each
Non-Qualified Option granted under the Plan shall in no event be less than the
lesser of (i) the book value per share of Common Stock as of the end of the
fiscal year of the Company immediately preceding the date of such grant, or
(ii) 50 percent of the fair market value per share of Common Stock on the date
of such grant.

3
<PAGE>

B. The price per share specified in the agreement relating to each ISO
granted under the Plan shall not be less than the fair market value per share
of Common Stock on the date of such grant. In the case of an ISO to be
granted to an employee owning stock possessing more than ten percent of the
total combined voting power of all classes of stock of the Company or any
Related Corporation, the price per share specified in the agreement relating
to such ISO shall not be less than 110 percent of the fair market value per
share of Common Stock on the date of the grant and such option is not
exercisable more than five years from the date of its grant.

C. To the extent that the aggregate fair market value (determined at the
time the option is granted) of stock with respect to which options meeting the
requirements of Section 422(b) are exercisable for the first time by any
individual during any calendar year exceeds $100,000, then such options shall
not be treated as incentive stock options.

D. If, at the time an Option is granted under the Plan, the Company's
Common Stock is publicly traded, "fair market value" shall be determined as of
the last business day for which the prices or quotes discussed in this
sentence are available prior to the date such Option is granted and shall mean
(i) the average (on that date) of the high and low prices of the Common Stock
on the principal national securities exchange on which the Common Stock is
traded, if the Common Stock is then traded on a national securities exchange;
or (ii) the last reported sale price (on that date) of the Common Stock on the
NASDAQ National Market List, if the Common Stock is not then traded on a
national securities exchange; or (iii) the closing bid price (or average of
bid prices) last quoted (on that date) by an established quotation service for
over-the-counter securities, if the Common Stock is not reported on the NASDAQ
National Market List. However, if the Common Stock is not publicly traded at
the time an Option is granted under the Plan, "fair market value" shall be
deemed by the Committee after taking into consideration all factors which it
deems appropriate, including, without limitation, recent sale and offer prices
of the Common Stock in private transactions negotiated at arm's length.

7. Option Duration. Subject to earlier termination as provided in
paragraphs 9 and 10, each Option shall expire on the date specified by the
Committee, but not more than (i) five years and one day from the date of grant
in the case of Non-Qualified Options, (ii) five years from the date of grant
in the case of ISOs generally, and (iii) five years from the date of grant in
the case of ISOs granted to an employee owning stock possession more than ten
percent of the total combined voting power of all classes of stock of the
Company or any Related Corporation. Subject to earlier termination as
provided in paragraphs 9 and 10, the term of each ISO shall be the term set
forth in the original instrument granting such ISO, except with respect to any
part of such ISO that is converted into a Non-Qualified Option pursuant to
paragraph 16.

8. Exercise of Option. Subject to the provisions of paragraphs 9
through 12, each Option granted under the Plan shall be exercisable as
follows:

<PAGE>

A. The Option shall either be fully exercisable on the date of grant or
shall become exercisable thereafter in such installments as the Committee may
specify.

B. Once an installment becomes exercisable it shall remain exercisable
until expiration or termination of the Option, unless otherwise specified by
the Committee.

C. Each Option or installment may be exercised at any time or from time to
time, in whole or in part, for up to the total number of shares with respect
to which it is then exercisable.

D. The Committee shall have the right to accelerate the date of exercise
of any installment of any Option; provided that the Committee shall not
accelerate the exercise date of any installment of any Option granted to any
employee as an ISO (and not previously converted into a Non-Qualified Option
pursuant to paragraph 16) if such acceleration would violate the annual
vesting limitation contained in Section 422A(b)(7) of the Code, as described
in paragraph 6(c).

E. With respect to any Options granted to any officer or director of the
Company pursuant to subsection (iii) of paragraph 2.D. herein, at least six
months shall elapse from the date of the acquisition/grant of the Option to
the date of disposition of the Option (other than upon exercise or conversion)
or its underlying equity security.

9. Termination of Employment. If an ISO optionee ceases to be
employed by the Company and all Related Corporations other than by reason of
death or disability as defined in paragraph 10, no further installments of his
ISOs shall become exercisable, and his ISOs shall terminate after the passage
of 60 days from the date of termination of his employment, but in no event
later than on their specified expiration dates, except to the extent that such
ISOs (or unexercised installments thereof) have been converted into
Non-Qualified Options pursuant to paragraph 16. Employment shall be
considered as continuing uninterrupted during any bona fide leave of absence
(such as those attributable to illness, military obligations or governmental
service) provided that the period of such leave does not exceed 90 days or, if
longer, any period during which such optionee's right to reemployment is
guaranteed by statute. A bona fide leave of absence with the written approval
of the Committee shall not be considered an interruption of employment under
the Plan, provided that such written approval contractually obligates the
Company or any Related Corporation to continue the employment of the optionee
after the approved period of absence. ISOs granted under the Plan shall not
be affected by any change of employment within or among the Company and
Related Corporations, so long as the optionee continues to be an employee of
the Company or any Related Corporation. Nothing in the Plan shall be deemed
to give any grantee of any Stock Right the right to be retained in employment
or other service by the Company or any Related Corporation for any period of
time.

5
<PAGE>

10. Death; Disability.

A. If an ISO optionee ceases to be employed by the Company and all Related
Corporations by reason of his death, any ISO of his may be exercised, to the
extent of the number of shares with respect to which he could have exercised
it on the date of his death, by his estate, personal representative or
beneficiary who has acquired the ISO by will or by the laws of descent and
distribution, at any time prior to the earlier of the ISO's specified
expiration date or 180 days from the date of the optionee's death.

B. If an ISO optionee ceases to be employed by the Company and all Related
Corporations by reason of his disability, he shall have the right to exercise
any ISO held by him on the date of termination of employment, to the extent of
the number of shares with respect to which he could have exercised it on that
date, at any time prior to the earlier of the ISO's specified expiration date
or 180 days from the date of the termination of the optionee's employment.
For the purposes of the Plan, the term "disability" shall mean "permanent and
total disability" as defined in Section 22(e)(3) of the Code or successor
statute.

11. Assignability. No ISO shall be assignable or transferable by the
grantee except by will or by the laws of descent and distribution, and during
the lifetime of the grantee each ISO shall be exercisable only by him. All
other Stock Rights shall be freely transferable subject to the limitations
imposed by subsection (iii) of paragraph 2.D. herein, if applicable.

12. Terms and Conditions of Options. Options shall be evidenced by
instruments (which need not be identical) in such forms as the Committee may
from time to time approve. Such instruments shall conform to the terms and
conditions set forth in paragraphs 6 through 11 hereof and may contain such
other provisions as the Committee deems advisable which are not inconsistent
with the Plan, including restrictions applicable to shares of Common Stock
issuable upon exercise of Options. In granting any Non-Qualified Option, the
Committee may specify that such Non-Qualified Option shall be subject to the
restrictions set forth herein with respect to ISOs, or to such other
termination and cancellation provisions as the Committee may determine. The
Committee may from time to time confer authority and responsibility on one or
more of its own members and/or one or more officers of the Company to execute
and deliver such instruments. The proper officers of the Company are
authorized and directed to take any and all action necessary or advisable from
time to time to carry out the terms of such instruments.

13. Adjustments. Upon the occurrence of any of the following events,
an optionee's rights with respect to Options granted to him hereunder shall be
adjusted as hereinafter provided, unless otherwise specifically provided in
the written agreement between the optionee and the Company relating to such
Option:

A.If the shares of Common Stock shall be subdivided or combined into a greater
or

6
<PAGE>

small number of shares of it the Company shall issue any shares of Common
Stock as a stock dividend on its outstanding Common Stock, the number of
shares of Common Stock deliverable upon the exercise of Options shall be
appropriately increased or decreased proportionately, and appropriate
adjustments shall be made in the purchase price per share to reflect such
subdivision, combination or stock dividend.

B. If the Company is to be consolidated with or acquired by another entity in
a merger, sale of all or substantially all of the Company's assets or otherwise
(an "Acquisition"), the Committee or the Board of Directors of any entity
assuming the obligations of the Company hereunder (the "Successor Board"),
shall, as to outstanding Options, either (i) make appropriate provision for
the continuation of such Options by substituting on an equitable basis for the
shares then subject to such Options the consideration payable with respect to
the outstanding shares of Common Stock in connection with the Acquisition; or
(ii) upon written notice to the optionees, provided that all Options must be
exercised, to the extent then exercisable, within a specified number of days
of the date of such notice, at the end of which period the Options shall
terminate; or (iii) terminate all Options in exchange for a cash payment equal
to the excess of the fair market value of the shares subject to such Options
(to the extent then exercisable) over the exercise price thereof.

C. In the event of a recapitalization or reorganization of the Company
(other than a transaction described in subparagraph B above) pursuant to which
securities of the Company or of another corporation are issued with respect to
the outstanding shares of Common Stock, an optionee upon exercising an Option
shall be entitled to receive for the purchase price paid upon such exercise
the securities he would have received if he had exercised his Option prior to
such recapitalization or reorganization.

D. Notwithstanding the foregoing, any adjustments made pursuant to
subparagraphs A, B, or C with respect to ISOs shall be made only after the
Committee, after consulting with counsel for the Company, determines whether
such adjustments would constitute a "modification" of such ISOs (as that term
is defined in Section 425 of the Code) or would cause any adverse tax
consequences for the holders of such ISOs. If the Committee determines that
such adjustments made with respect to ISOs would constitute a modification of
such ISOs, it may refrain from making such adjustments.

E. In the event of the proposed dissolution or liquidating of the Company, each
Option will terminate immediately prior to the consummation of such proposed
action or at such other time and subject to such other conditions as shall be
determined by the Committee.

F. Except as expressly provided herein, no issuance by the Company of shares of
stock of any class, or securities convertible into shares of stock of any
class, shall affect, and

7
<PAGE>

no adjustment by reason thereof shall be made with respect to, the number or
price of shares subject to Options. No adjustments shall be made for
dividends paid in cash or in property other than securities of the Company.

G.No fractional shares shall be issued under the Plan and the optionee
shall receive from the Company cash in lieu of such fractional shares.

H.Upon the happening of any of the foregoing events described in
subparagraphs A, B, and C above, the class and aggregate number of shares set
forth in paragraph 6 hereof that are subject to Stock Rights which previously
have been or subsequently may be granted under the Plan shall also be
appropriately adjusted to reflect the events described in such subparagraphs.
The Committee or the Successor Board shall determine the specific adjustments
to be made under this paragraph 13 and, subject to paragraph 2, its
determination shall be conclusive.

If any person or entity owning restricted Common Stock obtained by
exercise or a Stock Right made hereunder receives shares of securities or cash
in connection with a corporate transaction described in subparagraphs A, B, or
C above as a result of owning such restricted Common Stock, such shares or
securities or cash shall be subject to all of the conditions and restrictions
applicable to the restricted Common Stock with respect to which such shares or
securities or cash were issued, unless otherwise determined by the Committee
or the Successor Board.

14. Means of Exercising Stock Rights. A Stock Right (or any part or
installment thereof) shall be exercised by giving written notice to the
Company at its principal office address. Such notice shall identify the Stock
Right being exercised and specify the number of shares to which such Stock
Right is being exercised, accompanied by full payment of the purchase price
therefor either (a) in United States dollars in cash or by check, or (b) at
the discretion of the Committee, through delivery of shares of Common Stock
having a fair market value equal as of the date of the exercise to the cash
exercise price of the Stock Right, or (c) at the discretion of the Committee,
by delivery of the grantee's personal recourse note bearing interest payable
not less than annually at no less than 100% of the lowest applicable Federal
rate, as defined in Section 1274 (d) of the Code, or (a), (b), and (c) above.
If the Committee exercises its discretion to permit payment of the exercise
price of an ISO by means of the methods set forth in clauses (a), (b), or (c)
of the preceding sentence, such discretion shall be exercised in writing at
the time of the grant of the ISO in question. The holder of a Stock Right
shall not have the rights of a shareholder with respect to the shares covered
by his Stock Right until the date of issuance of a stock certificate to him
for such shares. Except as expressly provided above in paragraph 13 with
respect to changes in capitalization and stock dividends, no adjustment shall
be made for dividends or similar rights for which the record date is before
the date such stock certificate is issued.

15. Term and Amendment of Plan. This Plan was adopted by the Board on
January 20, 1996, and approved by the stockholders of the Company on January
26, 1996, at the Annual Meeting of Stockholders. The Plan was subsequently
amended by the Board on August 30, 1996. The Plan shall expire on January

8
<PAGE>

20, 2005 (except as to Options outstanding on that date). Subject to the
provisions of paragraph 5 above, Stock Rights may be granted under the Plan
prior to the date of stockholder approval of the Plan. The Board may
terminate or amend the Plan in any respect at any time, except that, without
the approval of the holders of a majority of the outstanding shares of
Common Stock obtained within 12 months before or after the Board adopts a
resolution authorizing any of the following actions: (a) the total number of
shares that may be issued under the Plan may not be increased (except by
adjustments pursuant to paragraph 13); (b) the provisions of paragraph 3
regarding eligibility for grants of ISOs may not be modified (except by
adjustment pursuant to Paragraph 13); (c) the provisions of paragraph 6
regarding the exercise price at which shares may be offered pursuant to ISO's
(except by adjustment pursuant to paragraph 13) and (d) the expiration date of
the Plan may not be extended. Except as provided in the fourth sentence of
this paragraph 15, in no event may action of the Board or Stockholders alter
or impair the rights of a grantee, without his consent, under any Stock Right
previously granted to him.

16. Conversion of ISOs into Non-Qualified Options; Termination of
ISOs. The Committee, at the written request of any optionee, may in its
discretion take such actions as may be necessary to convert such optionee's
ISOs (or any installments or portions of installments thereof) that have not
been exercised on the date of conversion into Non-Qualified Options at any
time prior to the expiration of such ISOs, regardless of whether the optionee
is an employee of the Company or a Related Corporation at the time of such
conversion. Such actions may include, but not be limited to, extending the
exercise period or reducing the exercise price of the appropriate installments
of such options. At the time of such conversion, the Committee (with the
consent of the Optionee) may impose such conditions on the exercise of the
resulting Non-Qualified Options as the Committee in its discretion may
determine, provided that such conditions shall not be inconsistent with this
Plan. Nothing in the Plan shall be deemed to give any optionee the right to
have such optionee's ISOs converted into Non-Qualified Options, and no such
conversion shall occur until and unless the Committee takes appropriate
action. The Committee, with the consent of the optionee, may also terminate
any portion of any ISO that has not been exercised at the time of such
termination.

17. Application of Funds. The proceeds received by the Company from
the sale of shares pursuant to Options granted and Purchases authorized under
the Plan shall be used for general corporate purposes.

18. Governmental Regulation. The Company's obligation to sell and
deliver shares of the Common Stock under this Plan is subject to the approval of
any governmental authority required in connection with the authorization,
issuance or sale of such shares.

19. Withholding of Additional Income Taxes. Upon the exercise of a
Non-Qualified Option, the grant of an Award, the making of a Purchase of
Common Stock for less than its fair market value, the making of a
Disqualifying Disposition (as defined in paragraph 20) or the vesting of
restricted Common Stock acquired on the exercise of a Stock Right hereunder,
the Company, in accordance with Section 3402(a) of the Code, may require the
optionee, Award recipient or purchaser to pay additional withholding taxes in

9
<PAGE>

respect of the amount that is considered compensation includible in such
person's gross income. The Committee in its discretion may condition (i) the
exercise of an Option, (ii) the grant of an Award, (iii) the making of a
Purchase of Common Stock for less than its fair market value, or (iv) the
vesting of restricted Common Stock acquired by exercising a Stock Right on the
grantee's payment of such additional withholding taxes.

20. Notice to Company of Disqualifying Disposition. Each employee
who receives an ISO must agree to notify the Company in writing immediately
after the employee makes a Disqualifying Disposition of any Common Stock
acquired pursuant to the exercise of an ISO. A Disqualifying Disposition is
any disposition (including any sale) of such Common Stock before the later of
(a) two years after the date the employee was granted the ISO or (b) one year
after the date the employee has died before such stock is sold, these holding
period requirements do not apply and no Disqualifying Disposition can occur
thereafter.

21. Governing Law: Construction. The validity and construction of
the Plan and the instruments evidencing Stock Rights shall be governed by the
laws of the Commonwealth of Pennsylvania. In construing this Plan, the
singular shall include the plural and the masculine general shall include the
feminine and neuter, unless the context otherwise requires.

10
<PAGE>

PROSPECTUS

Net Lnnx, Inc.
324 Datura Street, Suite 150
West Palm Beach, Florida 33401

1996 Stock Plan

1,000,000 Shares of Common Stock, no par value

All references herein to "Net Lnnx" or the "Corporation" mean Net Lnnx,
Inc., unless otherwise indicated by the context.

Net Lnnx is hereby offering 1,000,000 shares of its Common Stock, no par
value, ("Common Stock") to holders of options, awards of Common Stock or
opportunities to purchase Common Stock granted or to be granted under the
Corporation's 1996 Stock Plan which is described herein and the text of which
is incorporated herein by reference, upon exercise of such options, or upon
receipt of such Common Stock award or purchase of Common Stock, in accordance
with the terms and conditions thereof.

____________________________

The date of this Prospectus is September 27, 1996.

<PAGE>

Plan Information

General Plan Information

Net Lnnx, Inc., a Pennsylvania corporation, located at 324 Datura Street,
Suite 150, West Palm Beach, Florida 33401, is hereby offering 1,000,000 shares
of its common stock, no par value, ("Common Stock") to holders of options,
awards of Common Stock or opportunities to purchase Common Stock granted or to
be granted under the Net Lnnx, Inc. 1996 Stock Plan (the "Plan"). All
references herein to "Net Lnnx," the "Company" or the "Corporation" mean Net
Lnnx, Inc., unless otherwise indicated by the context.

The Common Stock offered by this Prospectus is issuable upon exercise of
Stock Rights (as defined below) granted under the Plan, which is described
below. The 1996 Stock Plan (the "Plan") is intended to provide incentives:
(a) to the officers and other employees of Net Lnnx, Inc. (the
"Corporation"), its parent (if any) and any present or future subsidiaries of
the Corporation (collectively, "Related Corporations") by providing them with
opportunities to purchase stock in the Corporation pursuant to options granted
hereunder which qualify as "incentive stock options" under Section 422(b) of
the Internal Revenue Code of 1986 (the "Code") ("ISO" or ISOs"); (b) to
directors, officers, employees and consultants of the Corporation and Related
Corporations by providing them with opportunities to purchase stock in the
Corporation pursuant to options granted hereunder which do not qualify as ISOs
("Non-Qualified Option" or "Non-Qualified Options"); (c) to directors,
officers, employees and consultants of the Corporation and Related
Corporations by providing them with awards of stock in the Corporation
("Awards"); and (d) to directors, officers, employees and consultants of the
Corporation and Related Corporations by providing them with opportunities to
make direct purchases of stock in the Corporation ("Purchases"). Both ISOs
and Non-Qualified Options are referred to hereafter individually as an
"Option" and collectively as "Options". Options, Awards, and authorizations
to make Purchases are referred to hereafter collectively as "Stock Rights".
As used herein, the terms "parent" and "subsidiary" mean "parent corporation"
and "subsidiary corporation" respectively, as those terms are defined in
Section 425 of the Code.

This Plan was adopted by the Board on January 20, 1996, and approved by
the stockholders of the Corporation on January 26, 1996 at the annual Meeting
of Stockholders. The Plan was subsequently amended by the Board on August 30,
1996. The Plan shall expire on January 20, 2005 (except as to Options
outstanding on that date). Stock Rights may be granted under the Plan prior
to stockholder approval. The Board may terminate or amend the Plan in any
respect at any time, except that, without the approval of the stockholders
obtained within 12 months before or after the Board adopts a resolution
authorizing any of the following actions: (a) the total number of shares that
may be issued under the Plan may not be increased (except by adjustments
pursuant to the Plan); (b) the provisions of the Plan regarding eligibility
for grants of ISOs may not be modified (except by adjustment pursuant to the
Plan); and (d) the expiration date of the Plan may not be extended. Except as
provided in the Plan, in no event may action of the Board or Stockholders
alter or impair the rights of a grantee, without his consent, under any Stock
Right previously granted to him.

The Plan is not an employee benefit plan which is subject to the
provisions of the Employee Retirement Income Security Act of 1974, and the

<PAGE>

provisions of Section 401 (a) of the Code are not applicable to the Plan.

Participants may obtain additional information about the Plan and its
administrators by writing to: Investor Relations, 324 Datura Street, Suite
150, West Palm Beach, Florida 33401, or calling (407) 832-8832.

The Plan shall be administered by either (i) the Board of Directors of
the Corporation (the "Board"); or (ii) a Stock Plan Committee (the
"Committee"), appointed by the Board, subject to the terms of the Plan. All
references in this prospectus to the "Committee" shall mean the Board if no
Committee has been appointed.

Subject to the terms of the Plan, the Board of Directors has the
authority to determine the persons to whom Stock Rights shall be granted
(subject to certain eligibility requirements for grants of ISOs), the number
of shares covered by each such grant, in respect to ISOs, Non-qualified
Options and Purchases, the exercise or purchase price per share, the time or
times at which Stock Rights shall be granted, and other terms and provisions
governing the Stock Rights including the nature of such Stock Right as an ISO,
Non-qualified Option, Award or Purchase, as well as the restrictions, if any,
applicable to shares of Common Stock issuable upon exercise of Stock Rights.
The interpretation or construction by the Board of the Plan or any Stock Right
granted under it shall be final. The administrator of the Plan is the sole
director, who is also the chief executive officer and beneficial owner of
greater than 10% of the Corporation.

If the Board appoints a Committee to administer the Plan, from time to
time the Board may increase the size of the Committee and appoint additional
members thereof, remove members (with or without cause) and appoint new
members in substitution therefor, fill vacancies however caused, or remove all
members of the Committee and thereafter directly administer the Plan.

Securities to be Offered

The Plan authorizes the grant of Stock Rights to acquire 1,000,000 shares
of Common Stock. On September 25, 1996, the average of the last bid and ask
price of the Corporation's Common Stock as reported on the NASDAQ Bulletin
board was $5.50 per share.

The stock subject to Options, Awards and Purchases shall be authorized
but unissued shares of Common Stock of the Corporation, no par value (the
"Common Stock"), or shares of Common Stock reacquired by the Corporation in
any manner. The aggregate number of shares which may be issued pursuant to
the Plan is 1,000,000, subject to adjustment as provided in the Plan. Any
such shares may be issued as ISOs, Non-Qualified Options or Awards, or to
persons or entities making Purchases, so long as the number of shares issued
does not exceed such number, as adjusted. If any Option granted under the
Plan shall expire or terminate for any reason without having been exercised in
full or shall cease for any reason to be exercisable in whole or in part, or
if the Corporation shall reacquire any unvested shares issued pursuant to
Awards or Purchases, the unpurchased shares subject to such Options and any
unvested shares so reacquired by the Corporation shall again be available for
grants of Stock Rights under the Plan.

<PAGE>

Employees Who May Participate in the Plan

ISOs under the Plan may be granted to any employee of the Corporation or
any Related Corporation (as defined in the Plan). As of August 30, 1996, the
Corporation and its subsidiaries had approximately Ten (10) employees.
Officers and directors of the Corporation must also be employees in order to
receive ISOs under the Plan. Non-Qualified Options, Awards and authorizations
to make Purchases may be granted to any director (whether or not an employee),
officer, employee or consultant of the Corporation or any Related
Corporation. The Committee may take into consideration a recipient's
individual circumstances in determining whether to grant an ISO, a
Non-Qualified Option or an authorization to make a Purchase. Granting of any
Stock Rights to any individual or entity shall neither entitle that individual
or entity to, nor disqualify him from, participation in any other grant of
Stock Rights.

Purchase of Securities Pursuant to the Plan and Payment for Securities Offered

Eligible employees may elect to participate in the Plan at any time prior
to the Plan's termination. Stock Rights may be granted under the Plan at any
time on or after January 20, 1996 and prior to January 20, 2005. The Board of
Directors may, with the consent of the holder of an ISO, convert an ISO
granted under the Plan to a Non-Qualified Option. Awards and the price of
Purchases shall be at fair market value as determined by the Board of
Directors.

The price per share specified in the agreement relating to each
Non-Qualified Option granted under the Plan shall in no event be less than the
lesser of (i) the book value per share of Common Stock as of the end of the
fiscal year of the Company immediately preceding the date of such grant, or
(ii) 50 percent of the fair market value per share of Common Stock on the date
of such grant.

The price per share specified in the agreement relating to each ISO
granted under the Plan shall not be less than the fair market value per share
of Common Stock on the date of such grant. In the case of an ISO to be
granted to an employee owning stock possessing more than ten percent of the
total combined voting power of all classes of stock of the Company or any
Related Corporation, the price per share specified in the agreement relating
to such ISO shall not be less than 110 percent of the fair market value per
share of Common Stock on the date of the grant and such option is not
exercisable more than five years from the date of its grant.

The Plan provides that each Option shall expire on the date specified by
the Board of Directors, but not more than five years from its date of grant in
the case of ISOs and five years and one day in the case of Non-qualified
Options. However, in the case of any ISO granted to an employee owning more
than ten percent of the total combined voting power of all classes of stock of
the Corporation or any Related Corporation such ISO shall expire on the date
specified by the Board of Directors, but not more than five years from its
date of grant.

Subject to certain provisions in the Plan relating to termination of
employment, death or disability, and assignability, each Option granted under
the Plan shall be exercisable as follows:

A. The Option shall either be fully exercisable at the time of grant or

<PAGE>

shall become exercisable in such installments as the Board may specify.

B. Once an installment becomes exercisable it shall remain exercisable
until expiration or termination of the Option, unless otherwise specified by
the Board of Directors.

C. Each Option may be exercised from time to time, in whole or in part, up
to the total number of shares with respect to which it is then exercisable.

D. The Board of Directors shall have the right to accelerate the date of
exercise of any installment. (Subject to the $100,00 per year limit on the
fair market value of ISOs granted to any employee which may become exercisable
in any calendar year).

In no event may the aggregate fair market value (determined on the date
of grant of an ISO) of Common Stock for which ISOs granted to any employee are
exercisable for the first time by such employee during any calendar year
(under all stock option plans of the Corporation and any Related Corporation)
exceed $100,000; any portion of an ISO grant that exceeds such $100,000 limit
will be treated for tax purposes as a Non-qualified Option. Otherwise, there
is no restriction as to the maximum or minimum amount of options an employee
may receive.

A Stock Right (or any part or installment thereof ) shall be exercised by
giving written notice to the Corporation at its principal office address.
Such notice shall identify the Stock Right being exercised and specify the
number of shares to which such Stock Right is being exercised, accompanied by
full payment of the purchase price therefor either (a) in United States
dollars in cash or by check, or (b) at the discretion of the Committee,
through delivery of shares of Common Stock having a fair market value equal as
of the date of the exercise to the cash exercise price of the Stock Right, or
(c) at the discretion of the Committee, by delivery of the grantee's personal
recourse note bearing interest payable not less than annually at no less than
100% of the lowest applicable Federal rate, as defined in Section 1274 (d) of
the Code, or (a), (b), and (c) above. If the Committee exercises its
discretion to permit payment of the exercise price of an ISO by means of the
methods set forth in clauses (a), (b), or (c) of the preceding sentence, such
discretion shall be exercised in writing at the time of the grant of the ISO
in question. The holder of a Stock Right shall not have the rights of a
shareholder with respect to the shares covered by his Stock Right until the
date of issuance of a stock certificate to him for such shares. Except as
expressly provided in the Plan with respect to changes in capitalization and
stock dividends, no adjustment shall be made for dividends or similar rights
for which the record date is before the date such stock certificate is issued.

Status reports will be provided from time to time by the Board to
participating employees regarding the amount and status of their accounts.

The stock subject to Options, Awards and Purchases under the Plan shall
be authorized but unissued shares of Common Stock of the Corporation, no par
value (the "Common Stock"), or shares of Common Stock reacquired by the
Corporation in any manner. No fees commissions or other charges shall be
paid.

<PAGE>

Resale Restrictions.

This Prospectus is not available for reoffers or resales of Common Stock
acquired under the Plan by persons who are deemed to be "affiliates" of the
Corporation, as that term is defined in Rule 405 under the Securities Act of
1933, as amended (the "Act"). Such reoffers or resales by affiliates may be
made only pursuant to a separate prospectus (the "reoffer prospectus") or an
exemption from registration, including pursuant to Rule 144.

Tax Effects of Plan Participation.

A. Incentive Stock Options. The following general rules are applicable
for Federal income tax purposes under the existing law to employees who
receive and exercise ISO's granted under the Plan:
1. If the optionee does not own stock possessing more than 10% of the
total voting power of the stock of the Corporation or any Related Corporation
(as defined in the Plan), or if the optionee owns stock possession more than
10% of the total voting power of the stock of the Corporation or any Related
Corporation and the exercise price is at least 110% of the fair market value
per share of the Corporation's Common Stock at the date of grant, no taxable
income results to the optionee upon the grant of an ISO or upon the issuance
of shares to him or her upon exercise of the ISO.

2. No tax deduction is allowed to the Corporation upon either grant or
exercise of an ISO under the Plan.

3. If shares acquired upon exercise of an ISO are not disposed of prior to
the later of (i) two years following the date the option was granted or (ii)
one year following the date shares are transferred to the optionee pursuant to
the ISO exercise, the difference between the amount realized on any subsequent
disposition of the shares and the exercise price will be treated as capital
gain or loss to the optionee.

4. If shares acquired upon exercise of an ISO are disposed of before the
expiration of one or both of the requisite holding periods (a "Disqualifying
Disposition"), then in most cases the lesser of (i) any excess of the fair
market value of the shares at the time of exercise of the ISO over the
exercise price of (ii) the actual gain on disposition, will be treated as
compensation to the optionee and will be taxed as ordinary income in the year
of such disposition.

5. In any year that an optionee recognized compensation income on a
Disqualifying Disposition of stock acquired by exercising an ISO, the
Corporation will be entitled to a corresponding deduction for income tax
purposes if it satisfied certain withholding requirements.

6. Any excess of the amount realized by the optionee as the result of a
Disqualifying Disposition over the sum of (i) the exercise price and (ii) the
amount of ordinary income recognized under the above rules will be treated as

<PAGE>

either long-term or short-term capital gain, depending upon the time elapsed
between receipt and disposition of the shares disposed of.

An optionee may be entitled to exercise an ISO by delivering shares of
the Corporation's Common Stock ("Old Stock") to the Corporation in exchange
for the Common Stock received upon exercise of the ISO ("Option Stock"), if
the optionee's ISO agreement so provides. In general, if an optionee
exchanges Old Stock for Option Stock instead of, or in addition to, paying
part or all of the exercise price in cash, no gain or loss will be recognized
with respect to the exchange of the Old Stock, and shares acquired upon
exercise of the ISO will not be subject to tax as explained above until the
shares are sold. However, an exception exists to this rule when the Old Stock
is "Statutory Option Stock" (as defined below) that has been held for a period
less than the applicable holding periods under the Code. In that event, the
optionee will realize ordinary compensation income with respect to the Old
Stock in an amount equal to the lesser of (i) the excess of the fair market
value of the Option Stock on the date of exercise of the ISO over the basis of
the Old Stock, or (ii) the fair market value of the Old Stock on the date it
was originally exercised over the original option exercise price. "Statutory
Option Stock" consists of stock acquired through the exercise of a "qualified
stock option", "incentive stock option", an option acquired under an "employee
stock purchase plan" or a "restricted stock option", as these terms are
defined in the Code. Further, if the Old Stock used to exercise an ISO is
Restricted Stock it may be treated as the lapse of the restrictions imposed on
such restricted Stock under the rules discussed below, and the optionee may
recognize income as a result.

B. Non-Qualified Stock Options. A Non-Qualified Option granted under the
Plan is taxed in accordance with Section 83 of the Code and the Regulations
issued thereunder. The following general rules are applicable to a holder of
such options and to the Corporation for Federal income tax purposes under
existing law, based upon the assumptions that (i) the options do not have a
readily ascertainable fair market value at the date of grant, and (ii) the
Common Stock acquired by exercising the Non-qualified Option is either
transferable or not subject to a substantial risk of forfeiture (as defined in
Regulations under Section 83 of the Code).

1. The optionee does not realize any taxable income upon the grant of an
Option, and the Corporation is not allowed a business expense deduction by
reason of such grant.

2. The optionee will recognize ordinary compensation income at the time of
exercise of the option in an amount equal to the excess, if any, of the fair
market value of the shares on the date of exercise over the exercise price.
In accordance with the Regulations under the Code and applicable state law,
the Corporation will require the optionee to pay to the Corporation an amount
sufficient to satisfy withholding taxes in respect of such compensation income
at the time of the exercise of the option. If the Corporation withholds stock
to satisfy this withholding tax obligation, instead of cash, the optionee
nonetheless will be required to include in income the fair market value of the
stock withheld.

3. When the optionee sells the shares, he or she will recognize a capital
gain or loss in an amount equal to the difference between the amount realized
upon the sale of the shares and his or her basis in the shares (i. e., the

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exercise price plus the amount taxed to the optionee as compensation income).
If the optionee holds the shares for longer than the statutory holding period,
this gain or loss will be a long-term capital gain or loss. The statutory
holding period is one year.

4. In general, the Corporation will be entitled to a tax deduction in the
year in which compensation income is recognized by the optionee.

An optionee may be entitled to exercise a Non-Qualified Option by
delivering Old Stock to the Corporation in exchange for the Common Stock
received upon exercise of the option ("Nonqualified Option Stock"), if the
optionee's Non-Qualified Option agreement so provides. In general, if an
optionee exchanges Old Stock for Nonqualified Option Stock instead of, or in
addition to, paying part or all of the exercise price in cash, no gain or loss
will be recognized with respect to the exchange of the Old Stock. The
optionee will recognize ordinary compensation income, however, in an amount
equal to the excess, if any, of the fair market value of the Old Stock (at the
time of exercise) surrendered to acquire the nonqualified option is Restricted
Stock (as defined below), and the Common Stock acquired on exercise of the
nonqualified option is not subject to restrictions substantially similar to
those imposed on such Restricted Stock will be treated as the lapse of the
restrictions imposed on such Restricted Stock under the rules discussed below,
and the optionee may recognize income as a result.

C. Special Rules for Restricted Stock. Common stock that is subject to
restrictions on transfer and also to a substantial risk of forfeiture (as
defined in Regulations under Section 83 of the Code), referred to herein as
"Restricted Stock", is subject to special tax rules. If the Common Stock
acquired on the exercise on a Non-Qualified Option or pursuant to an Award or
Purchase is Restricted Stock, the amount of income recognized by the optionee
generally will be determined as of the time the restrictions lapse, and will
be equal to the difference between the amount paid for the Restricted Stock
and the fair market value of the Restricted Stock at that time. In that case,
the payment to the Corporation of withholding taxes will be required as the
income arises, i. e., at the time the transfer restrictions on the stock lapse
or the substantial risk of forfeiture no longer exists. Officers and
directors of the Corporation who exercise Non-Qualified Options (or who make
disqualifying dispositions of stock acquired upon exercise of an ISO) receive
stock treated as Restricted Stock because of certain securities law rules
applicable to such optionees.

If an optionee transfers Restricted Stock to the Corporation to exercise
an ISO, the restrictions on such Restricted Stock will be deemed to have
lapsed on the date of transfer, and the optionee may recognize income at that
time. Similarly, if the optionee transfers Restricted Stock to the
Corporation to exercise a Non-Qualified Option, and the stock received by the
optionee on exercise is not subject to restrictions substantially similar to
those imposed on such Restricted Stock, the restrictions on that Restricted
Stock will be deemed to have lapsed on the date of transfer, and the optionee
may recognize income at that time. Restricted Stock acquired by exercising an
ISO generally is not subject to the rules of Section 83, but rather to the
rules discussed above for ISOs.

Under Section 83(b) of the Code, an election is available to the optionee
to include in gross income, in the taxable year that Restricted Stock is first
transferred to the optionee, the amount of any excess of the fair market value

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(as determined under Section 83) of the Restricted Stock over the amount (if
any) paid for such stock. The election must be made within 30 days after the
Restricted Stock is transferred to the optionee. If this election is made, no
further tax liability will arise at the time the transfer restrictions on the
Restricted Stock lapse or the substantial risk of forfeiture no longer
exists. However, of shares of Restricted Stock for which a Section 83 (b)
election is in effect are forfeiture while such shares are both
nontransferable and subject to a substantial risk of forfeiture, the loss
realized by the optionee on the forfeiture, for tax purposes, is limited to
the amount paid for such shares (not including any compensation income
recognized by the optionee at the time of transfer) less any amount realized
by the optionee on such forfeiture.

D. Awards and Purchases. The receipt of Common Stock of the Corporation
pursuant to an Award or Purchase made under the Plan is taxed in accordance
with the rules of Section 83 of the Code and the Regulations issued
thereunder. These rules are discussed above under Non-Qualified Stock Options
and Special Rules for Restricted Stock. For purposes of applying the
principals of Section 83 to Awards and Purchases (rather than to the exercise
of Non-Qualified Options as discussed above), (i) the "time of exercise" is
equivalent to the time of Award or Purchase, (ii) the "exercise price" with
respect to an Award is zero, and (iii) the "exercise price" with respect to a
Purchase is the price paid for the Common Stock acquired by that Purchase.

E. Capital Gains. Long-term gains generally will be subject to Federal
income tax at the same rates as ordinary income.

F. Minimum Tax. In addition to the tax consequences described above, the
exercise of ISOs granted under the Plan may result in a further "minimum tax"
under the Code, as follows: The Code provides that an "alternative minimum
tax" (at rates between 26%-28%) will be applied against a taxable base which
is equal to regular taxable income, adjusted for certain limited deductions
and losses, increased by items of tax preference, and reduced by a statutory
exemption ($33,750 for single individuals and $45,000 for joint return filers
and surviving spouses and $22,000 for married persons filing separately,
estates and trusts). The statutory exemption is phased out for certain higher
income taxpayers. The bargain element at the time of exercise of an ISO, i.
e., the amount by which the value of the Common Stock received upon exercise
of the ISO exceeds the exercise price, constitutes an item of tax preference
for purposes of the alternative minimum tax. For purposes of determining
alternative minimum taxable income (but not regular taxable income) for any
subsequent year in which the taxpayer sells the stock acquired by exercise of
the ISO, the basis of such stock will be its fair market value at the time the
ISO was exercised. A taxpayer is required to pay the higher of his regular
tax liability or the alternative minimum tax. A taxpayer who pays alternative
minimum tax attributable to the exercise of an ISO may be entitled to a tax
credit against regular tax liability in later years.

G. Incentive Stock Option Changes. The Tax Reform Act of 1986 (the "Act")
replaced the limitation (contained in prior law) on the aggregate amount of
ISOs which can be granted to an employee in any calendar year with a
limitation on the amount of ISOs which can become first exercisable in any
calendar year. Also, the Act repealed the sequential exercise rule of prior
law, effective for incentive stock options granted after 1986. The Plan
incorporates the changes made by the Act.

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Withdrawal From the Plan; Assignment of Interest

Non-Qualified Options are subject to such termination and cancellation
provisions as may be determined by the Board of Directors.

No ISO shall be assignable or transferable by the optionee except by will
or by the laws of descent and distribution, and during the lifetime of the
optionee each ISO shall be exercisable only by him. All other Stock Rights
shall be freely transferable subject to the limitations imposed by the Plan,
if applicable.

Forfeitures and Penalties

If an ISO optionee ceases to be employed by the Company and all Related
Corporations other than by reason of death or disability as defined in the
Plan, no further installments of his ISOs shall become exercisable, and his
ISOs shall terminate after the passage of 60 days from the date of termination
of his employment, but in no event later than on their specified expiration
dates, except to the extent that such ISOs (or unexercised installments
thereof) have been converted into Non-Qualified Options pursuant to the Plan.
Employment shall be considered as continuing uninterrupted during any bona
fide leave of absence (such as those attributable to illness, military
obligations or governmental service) provided that the period of such leave
does not exceed 90 days or, if longer, any period during which such optionee's
right to reemployment is guaranteed by statute. A bona fide leave of absence
with the written approval of the Committee shall not be considered an
interruption of employment under the Plan, provided that such written approval
contractually obligates the Corporation or any Related Corporation to continue
the employment of the optionee after the approved period of absence. ISOs
granted under the Plan shall not be affected by any change of employment
within or among the Corporation and Related Corporations, so long as the
optionee continues to be an employee of the Corporation or any Related
Corporation. Nothing in the Plan shall be deemed to give any grantee of any
Stock Right the right to be retained in employment or other service by the
Corporation or any Related Corporation for any period of time.

If an ISO optionee ceases to be employed by the Corporation and all
Related Corporations by reason of his death, any ISO of his may be exercised,
to the extent of the number of shares with respect to which he could have
exercised it on the date of his death, by his estate, personal representative
or beneficiary who has acquired the ISO by will or by the laws of descent and
distribution, at any time prior to the earlier of the ISO's specified
expiration date or 180 days from the date of the optionee's death.

If an ISO optionee ceases to be employed by the Corporation and all
Related Corporations by reason of his disability, he shall have the right to
exercise any ISO held by him on the date of termination of employment, to the
extent of the number of shares with respect to which he could have exercised
it on that date, at any time prior to the earlier of the ISO's specified
expiration date or 180 days from the date of the termination of the optionee's
employment. For the purposes of the Plan, the term "disability" shall mean
"permanent and total disability" as defined in Section 22(e)(3) of the Code or
successor statute.

<PAGE>

The Committee, at the written request of any optionee, may in its
discretion take such actions as may be necessary to convert such optionee's
ISOs (or any installments or portions of installments thereof) that have not
been exercised on the date of conversion into Non-Qualified Options at any
time prior to the expiration of such ISOs, regardless of whether the optionee
is an employee of the Corporation or a Related Corporation at the time of such
conversion. Such actions may include, but not be limited to, extending the
exercise period or reducing the exercise price of the appropriate installments
of such options. At the time of such conversion, the Committee (with the
consent of the Optionee) may impose such conditions on the exercise of the
resulting Non-Qualified Options as the Committee in its discretion may
determine, provided that such conditions shall not be inconsistent with this
Plan. Nothing in the Plan shall be deemed to give any optionee the right to
have such optionee's ISOs converted into Non-Qualified Options, and no such
conversion shall occur until and unless the Committee takes appropriate
action. The Committee, with the consent of the optionee, may also terminate
any portion of any ISO that has not been exercised at the time of such
termination.

Outstanding Stock Rights are subject to adjustment as described in the
Plan under "Adjustments". Pursuant to the terms of the Plan, shares subject
to Stock Rights which for any reason expire or are terminated unexercised as
to such shares may again be the subject of a grant under the Plan.

Exercise of an Option under the Plan is effected by a written notice of
exercise delivered to the Corporation at its principal office together with
payment for the shares in full in cash or by check, or if authorized by the
Board of Directors in its discretion at the time of grant, in part or in full
by tendering shares of Common Stock of the Corporation or a full recourse
promissory note. Such written notice shall also identify the Option being
exercised and specify the number of shares as to which the Option is being
exercised.

By allowing payment of the exercise price by delivering shares of the
Corporation, the Plan enables a participant to increase his or her equity
ownership in the Corporation without a significant capital contribution. For
example, assume that the optionee has outstanding Options to purchase 100
shares of the Corporation's stock at an exercise price of $5 per share and
that the stock is currently selling at $10 per share. One share could be
submitted for the receipt of two shares, which could in turn be immediately
resubmitted for the receipt of four shares. There successive exchanges could
theoretically continue until all available Options were exercised. The
result, under this example, would be that an optionee would obtain the value
of the spread of $500 between the stock's option exercise price and its market
value without any cash contribution and an investment equivalent only to the
exercise price of one share.

While the use of the stock payment method offers significant advantages
to an optionee, it is subject to certain restrictions. Under recent
amendments to the Code, the use of the stock payment method will result in
unfavorable tax treatment to the optionee where the exchanged shares were
acquired under incentive stock options or certain other tax-advantaged plans
and the applicable period for disqualifying dispositions has not expired. In
addition, under accounting principals, a charge against the Corporation's
income may be necessary for Options exercised by the use of the stock payment
method.

<PAGE>

In the event shares of Common Stock of the Corporation shall be
subdivided or combined into a greater or smaller number of shares or if, upon
a merger, consolidation, reorganization, split-up, liquidation, combination,
recapitalization or the like of the Corporation, the shares of the
Corporation's Common Stock shall be exchanged for other securities of the
Corporation or of another corporation, each optionee shall be entitled to
purchase such number of shares of Common Stock or amount of other securities
of the Corporation or such other corporation as were exchangeable for the
number of shares of Common Stock of the Corporation which such optionee would
have been entitled to purchase except for such action, and appropriate
adjustments shall be made in the purchase price per share to reflect such
subdivision, combination, or exchange. If any person holding restricted
Common Stock obtained by the exercise of an Option or by a Purchase or Award
receives new, additional or different securities in connection with any
corporate transaction described in this paragraph, such new securities shall
be subject to all of the conditions and restrictions applicable to the Common
Stock with respect to which the new securities were issued.

In the event the Corporation shall issue any of its shares as a stock
dividend upon or with respect to the shares of stock of the class which shall
at the time be subject to an Option, each optionee upon exercising such an
Option shall be entitled to receive (for the purchase price paid upon such
exercise) the shares as to which he is exercising his Option and, in addition
thereto (at no additional cost), such number of shares of the class or classes
in which such stock dividend or dividends were declared or paid, and such
amount of cash in lieu of fractional shares, as he would have received if he
had been the holder of the shares as to which he is exercising his Option at
all times between the date of grant of such option and the date of its
exercise.

Upon the happening of any of the foregoing events, the class and
aggregate number of shares reserved for issuance upon the exercise of options
under the Plan shall also be appropriately adjusted to reflect the events
described above. Notwithstanding the foregoing, in respect to ISOs, the
adjustments described above shall be made only after the Board, in
consultation with legal counsel, determines that such adjustments shall not
constitute a modification of such ISOs or would cause adverse tax consequences
to the holders of ISOs.

The Board may terminate or amend the Plan in any respect at any time,
except that, without the approval of the holders of a majority of the
outstanding shares of Common Stock obtained within 12 months before or after
the Board adopts a resolution authorizing any of the following actions, (a)
the total number of shares that may be issued under the Plan may not be
increased (except as described in the Plan under "Adjustments"); (b) the
provisions regarding eligible employees may not be modified (except as
described in the Plan under "Adjustments"); (c) the provisions regarding the
exercise price at which shares may be offered pursuant to ISOs (except as
described in the Plan under "Adjustments"); and (d) the expiration date of the
Plan may not be extended. No action of the Board or shareholders, however,
may, without the consent of an optionee, alter or impair his rights under any
option previously granted to him.

Charges and Deductions and Liens Therefor

Upon the exercise of a Non-Qualified Option, the grant of an Award, the
making of a Purchase of Common Stock for less than its fair market value, the

<PAGE>

making of a Disqualifying Disposition or the vesting of restricted Common
Stock acquired on the exercise of a Stock Right hereunder, the Corporation, in
accordance with Section 3402(a) of the Code, may require the optionee, Award
recipient or purchaser to pay additional withholding taxes in respect of the
amount that is considered compensation includible in such person's gross
income. The Committee in its discretion may condition (i) the exercise of an
Option, (ii) the grant of an Award, (iii) the making of a Purchase of Common
Stock for less than its fair market value, or (iv) the vesting of restricted
Common Stock acquired by exercising a Stock Right on the grantee's payment of
such additional withholding taxes.

A Stock Right (or any part or installment thereof) shall be exercised by
giving written notice to the Corporation at its principal office address.
Such notice shall identify the Stock Right being exercised and specify the
number of shares to which such Stock Right is being exercised, accompanied by
full payment of the purchase price therefor either (a) in United States
dollars in cash or by check; or (b) at the discretion of the Committee,
through delivery of shares of Common Stock having a fair market value equal as
of the date of the exercise to the cash exercise price of the Stock Right; or
(c) at the discretion of the Committee, by delivery of the grantee's personal
recourse note bearing interest payable not less than annually at no less than
100% of the lowest applicable Federal rate, as defined in Section 1274 (d) of
the Code, or (a), (b), and (c) above. If the Committee exercises its
discretion to permit payment of the exercise price of an ISO by means of the
methods set forth in clauses (a), (b), or (c) of the preceding sentence, such
discretion shall be exercised in writing at the time of the grant of the ISO
in question. The holder of a Stock Right shall not have the rights of a
shareholder with respect to the shares covered by his Stock Right until the
date of issuance of a stock certificate to him for such shares. Except as
expressly provided in the Plan with respect to changes in capitalization and
stock dividends, no adjustment shall be made for dividends or similar rights
for which the record date is before the date such stock certificate is issued.

Additional Information.

The proceeds received by the Corporation from the sale of shares pursuant
to the Plan shall be used for general corporate purposes. The Corporation's
obligation to deliver shares is subject to the approval of any governmental
authority required in connection with the sale or issuance of such shares.
The exercise of Non-Qualified Options, Awards or Purchases for less than fair
market value may require the holders to recognize ordinary income and pay
additional withholding taxes in respect of such income, and the Board may
condition the grant or exercise of an Option, Award or Purchase on the payment
to the Corporation of such taxes. Each employee who receives an ISO must
agree to notify the Company in writing immediately after the employee makes a
Disqualifying Disposition of any Common Stock acquired pursuant to the
exercise of an ISO. A Disqualifying Disposition is any disposition (including
any sale) of such Common Stock before the later of (a) two years after the
date the employee was granted the ISO or (b) one year after the date the
employee has died before such stock is sold, these holding period requirements
do not apply and no Disqualifying Disposition can occur thereafter. Unless
terminated earlier by the Board, the Plan will expire on January 20, 2005.

<PAGE>

Registrant Information and Employee Plan Annual Information.

Net Lnnx, Inc. is subject to the informational requirements of the
Securities Exchange Act of 1934 (the "Exchange Act") and in accordance
therewith files reports and other information with the Securities and Exchange
Commission. Such reports and other information may be inspected and copied at
the Public Reference Room of the Commission, 450 5th Street, N.W., Room 1024,
Washington, D. C. 20549, and at the Commission's regional offices in New York
(26 Federal Plaza, New York, New York 10007), Chicago (Everett McKinley Dirksen
Building, 219 South Dearborn Street, Chicago, Illinois 60604) and Los Angeles
(5757 Wilshire Blvd., Suite 500 East, Los Angeles, California 90036-3648).
Copies of such material can also be obtained from the Public Reference Section
of the Commission, Washington, D. C. 20549 at prescribed rates.

Incorporation of Certain Documents by Reference

The following documents filed with the Securities and Exchange Commission
by the Corporation are incorporated herein by reference as of their respective
dates as set forth therein:

(a) The Corporation's Form 10-K for the fiscal year ended December 31,
1995.

(b) The Corporation's Form 8-KA Filed January 19,1996.

(d) The Corporation's Form 10-C filed February 8, 1996.

(e) The Corporation's Quarterly Reports on Form 10-Q for the quarters
ended March 31, 1996, and June 30, 1996.

The Corporation will provide without charge to each person to whom a
Prospectus is delivered, upon written oral request of such person, a copy of
any and all documents described above (other than exhibits to such
documents). Such requests should be addressed to:
Investor Relations
Net Lnnx, Inc.
324 Datura Street, Suite 150
West Palm Beach,, FL 33401
(407) 832-8832

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Report to Shareholders