SYNCRONYS SOFTCORP, SB-2, 1997-07-10

SYNCRONYS SOFTCORP
SB-2, 1997-07-10
PREPACKAGED SOFTWARE

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<PAGE> 1
As filed with the Securities and Exchange Commission on July 10, 1997

REGISTRATION NO. 333-________
================================================================================

SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------
FORM SB-2
REGISTRATION STATEMENT
UNDER THE
SECURITIES ACT OF 1933
------------
SYNCRONYS SOFTCORP
(Name of small business issuer in its charter)

<TABLE>
<CAPTION>
NEVADA 7372 33-0653223
<S> <C> <C>
(State or other jurisdiction of (Primary standard industrial (I.R.S. Employer Identification)
incorporation or organization) classification code number)
</TABLE>

SYNCRONYS SOFTCORP
3958 INCE BOULEVARD
CULVER CITY, CALIFORNIA 90232
(310) 842-9203
(Name, address and telephone number of principal executive offices and
principal place of business)

Daniel G. Taylor
Chairman of the Board
3958 Ince Boulevard
Culver City, California 90232
(310) 842-9203

(Name, address and telephone number of agent for service)
------------
Copies to:

Harvey Saferstein, Esq.
Claude S. Serfilippi, Esq.
Chadbourne & Parke LLP
30 Rockefeller Center
New York, New York 10112
------------
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC:
As soon as practicable after this Registration Statement becomes effective.
------------
If any of the securities being registered on this Form are to be offered on a
delayed or continuous basis pursuant to Rule 415 under the
Securities Act of 1933, check the following box. /x/
<PAGE> 2
<TABLE>
<CAPTION>
CALCULATION OF REGISTRATION FEE
==============================================================================================================
TITLE OF EACH CLASS OF NUMBER OF SHARES TO PROPOSED MAXIMUM PROPOSED AMOUNT OF
SECURITIES TO BE BE REGISTERED (1) AGGREGATE MAXIMUM REGIS-
REGISTERED OFFERING PRICE AGGREGATE TRATION FEE
PER SECURITY (2) OFFERING PRICE (2)
<S> <C> <C> <C> <C> <C>
- ---------------------------------------------------------------------------------------------------------------
Common Stock, 888,945 (3) $ 2.19 $ 1,946,790 $ 590.00
$.0001 par value
- ---------------------------------------------------------------------------------------------------------------
Common Stock, 3,600,000 (4) $ 2.19 $ 7,884,000 $ 2,389.00
$.0001 par value
- ---------------------------------------------------------------------------------------------------------------
Common Stock, 694,444 (5) $ 2.75 $ 1,909,721 $ 579.00
$.0001 par value
- ---------------------------------------------------------------------------------------------------------------
Common Stock, 900,000 (6) $ 3.75 $ 3,375,000 $ 1,023.00
$.0001 par value
- ---------------------------------------------------------------------------------------------------------------
TOTAL: 6,083,389 $ 15,115,511 $ 4,581.00

</TABLE>

(1) Pursuant to Rule 416, the Registration Statement relates to an
indeterminate number of shares of Common Stock issuable upon exercise
of the Private Placement Warrants and conversion of the Private
Placement Debentures and Private Placement Convertible Preferred
Stock, which shares of Common Stock are registered hereunder.

(2) Estimated solely for the purpose of calculating the registration fee
pursuant to Rule 457 under the Securities Act.

(3) Common Stock underlying Private Placement Debenture originally issued
to Plymouth Partners, L.P.

(4) Common Stock issuable upon conversion of the Private Placement
Convertible Preferred Stock and certain Private Placement Warrants
originally issued to Capital Ventures International.

(5) Common Stock issuable upon exercise of Private Placement Warrants
originally issued to Plymouth Partners, L.P.

(6) Common Stock issuable upon exercise of certain Private Placement
Warrants originally issued to Capital Ventures International.

THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE
OR DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT
SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A),
MAY DETERMINE.
<PAGE> 3
SYNCRONYS SOFTCORP
------------
REGISTRATION STATEMENT ON FORM SB-2

CROSS-REFERENCE SHEET PURSUANT TO REGULATION S-B

<TABLE>
<CAPTION>
Form SB-2 Item Caption in Prospectus
-------------- ---------------------
<S> <C> <C>
1. Front of Registration Statement and Outside Front
Cover of Prospectus . . . . . . . . . . . . . . . Front of Registration Statement and Outside Front Cover
Page of Prospectus

2. Inside Front and Outside Back Cover Pages of
Prospectus . . . . . . . . . . . . . . . . . . . . Inside Front and Outside Back Cover Pages of Prospectus

3. Summary Information and Risk Factors . . . . . . . Prospectus Summary; Risk Factors

4. Use of Proceeds . . . . . . . . . . . . . . . . . Use of Proceeds

5. Determination of Offering Price . . . . . . . . . Not Applicable

6. Dilution . . . . . . . . . . . . . . . . . . . . . Not Applicable

7. Selling Security Holders . . . . . . . . . . . . . Selling Stockholders

8. Plan of Distribution . . . . . . . . . . . . . . . Plan of Distribution

9. Legal Proceedings . . . . . . . . . . . . . . . . Business - Litigation

10. Directors, Executive Officers, Promoters and
Control Persons . . . . . . . . . . . . . . . . . Management

11. Security Ownership of Certain Beneficial Owners
and Management . . . . . . . . . . . . . . . . . . Principal Stockholders

12. Description of Securities . . . . . . . . . . . . Description of Securities

13. Interest of Named Experts and Counsel . . . . . . Not Applicable

14. Disclosure of Commission Position on
Indemnification for Securities Act Liabilities . . Disclosure of Commission Position on Indemnification for
Securities Act Liabilities

15. Organization Within Last Five Years . . . . . . . Prospectus Summary; Business

16. Description of Business . . . . . . . . . . . . . Business

17. Management's Discussion and Analysis or Plan of
Operation . . . . . . . . . . . . . . . . . . . . Management's Discussion and Analysis

18. Description of Property . . . . . . . . . . . . . Business - Properties

19. Certain Relationships and Related Transactions . . Certain Transactions

20. Market for Common Equity and Related Stockholder
Matters . . . . . . . . . . . . . . . . . . . . . Market for Common Stock and Related Stockholder Matters

21. Executive Compensation . . . . . . . . . . . . . . Management

22. Financial Statements . . . . . . . . . . . . . . . Financial Statements

23. Changes in and Disagreements With Accountants on
Accounting and Financial Disclosures . . . . . . . Not Applicable
</TABLE>

3
<PAGE> 4

SUBJECT TO COMPLETION
PROSPECTUS
July , 1997

SYNCRONYS SOFTCORP

6,083,389 SHARES OF COMMON STOCK

This Prospectus relates to 6,083,839 shares of common stock of
Syncronys Softcorp (the "Company"), par value $.0001 per share (the "Common
Stock"), which may be offered for sale from time to time by certain stockholders
of the Company (the "Selling Stockholders"). The shares of Common Stock offered
hereby (collectively, the "Securities") consist of (i) up to 694,444 shares of
Common Stock issuable upon exercise of a warrant (the "Plymouth Warrant")
originally issued to Plymouth Partners, L.P. ("Plymouth"); (ii) up to 900,000
shares of Common Stock issuable upon exercise of warrants (the "CVI Warrants")
originally issued to, or to be issued to, Capital Ventures International ("CVI")
(collectively, the "Plymouth Warrant" and the "CVI Warrants" are referred to
herein as the "Private Placement Warrants"); (iii) 888,945 shares of Common
Stock issuable upon conversion of a 9% Convertible Debenture due April 1, 2000
(the "Private Placement Debenture") in the aggregate principal amount of
$1,250,000 and originally issued to Plymouth; and (iv) 3,600,000 shares of
Common Stock issuable upon exercise of 2,000 shares of convertible preferred
stock (the "Private Placement Convertible Preferred Stock") originally issued to
CVI.

The Company will not receive any of the proceeds from the sale of the
shares of Common Stock offered hereby by the Selling Stockholders. The Company
will pay all of the fees and expenses associated with registration of the
Securities except that the Selling Stockholders have paid to the Company an
amount equal to $30,000 as partial reimbursement for such fees and expenses and
have agreed to pay any discounts or commissions with respect to any sale of the
Securities.

THE COMMON STOCK OFFERED HEREBY MAY BE OFFERED FROM TIME TO TIME BY
THE SELLING STOCKHOLDERS THROUGH ORDINARY BROKERAGE TRANSACTIONS, IN NEGOTIATED
TRANSACTIONS OR OTHERWISE, AT MARKET PRICES PREVAILING AT THE TIME OF SALE OR
AT NEGOTIATED PRICES. SEE "PLAN OF DISTRIBUTION."

The Company's Common Stock is quoted on the OTC Bulletin Board under
the symbol "SYCR." There is no public market for the Private Placement
Warrants, the Private Placement Debenture or the Private Placement Convertible
Preferred Stock. The Private Placement Warrants, the Private Placement
Debenture and the Private Placement Convertible Preferred Stock may not be
offered publicly for resale in the absence of an effective registration
statement and none is contemplated.

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

THESE SECURITIES ARE SPECULATIVE AND INVOLVE A HIGH DEGREE OF RISK. SEE
"RISK FACTORS" BEGINNING ON PAGE 11 OF THIS PROSPECTUS FOR A
DISCUSSION OF RISK FACTORS THAT SHOULD BE CONSIDERED BY PROSPECTIVE PURCHASERS
OF THE COMMON STOCK OFFERED HEREBY .

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

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.

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 LAW OF ANY SUCH STATE.

The date of this Prospectus is July __, 1997.

4
<PAGE> 5

AVAILABLE INFORMATION

A Registration Statement on Form SB-2 (the "Registration Statement")
under the Securities Act of 1933, as amended (the "Securities Act"), relating
to the securities offered hereby has been filed by the Company with the
Securities and Exchange Commission (the "Commission"), 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 securities offered hereby,
reference is made to such Registration Statement, exhibits and schedules.
Statements contained in this Prospectus as to the contents of any contract or
other document referred to are not necessarily complete, and in each instance
reference is made to the copy of such contract or other document filed as
exhibits 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 Commission's principal offices in Washington,
D.C., and copies of all or any part thereof may be obtained from the Commission
upon the payment of certain fees prescribed by the Commission.

The Company is subject to the informational requirements of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), and in
accordance therewith files periodic reports, proxy statements and other
information with the Commission. Such reports, proxy statements and other
information concerning the Company may be inspected or copied at the public
reference facilities of the Commission located at 450 Fifth Street, N.W., Room
1024, Washington, D.C. 20549, and at the Commission's Regional Offices in New
York, 7 World Trade Center, 13th Floor, New York, New York 10048, and in
Chicago, Northwestern Atrium Center, 500 West Madison Street, Suite 1400,
Chicago, Illinois 60661-2511. Copies of such documents can be obtained at the
public reference section of the Commission at 450 Fifth Street, N.W.,
Washington, D.C. 20549, at prescribed rates.

The Company intends to furnish its shareholders with annual reports
containing audited financial statements certified by an independent public
accounting firm.

CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS

Certain statements under "Prospectus Summary," "Risk Factors,"
"Management's Discussion and Analysis of Financial Condition and Results of
Operations" and "Business," including statements regarding the anticipated
development and expansion of the Company's business, the markets in which the
Company's software products are offered, anticipated capital expenditures, the
intent, belief or current expectations of the Company, its directors or its
officers with respect to the Company's future financial performance and other
matters, and other statements regarding matters that are not historical facts,
are "forward-looking" statements (within the meaning of the Private Securities
Litigation Reform Act of 1995). Such "forward-looking" statements are subject
to various risks and uncertainties. Accordingly, actual results may differ
materially from those expressed or implied by such forward-looking statements.
Factors that could cause actual results to differ materially from those
expressed or implied by such forward-looking statements include, but are not
limited to, the factors set forth under "Risk Factors" and "Business."

5
<PAGE> 6
PROSPECTUS SUMMARY

The following is a summary of certain information contained in this
Prospectus and is qualified in its entirety by reference to, and should be read
in conjunction with, the more detailed information, the consolidated financial
statements, and the notes thereto appearing elsewhere in this Prospectus. Each
prospective investor is urged to read this Prospectus in its entirety.
References herein to FY 1995 and FY 1996 refer to the Company's fiscal year
ended June 30, 1995 and 1996, respectively.

THE COMPANY

The Company develops and markets software products. Products
currently in retail distribution are: (1) RAM Charger 3.0, which provides a
performance boost for the Mac operating system through intelligent and more
efficient memory utilization and dynamic memory allocation; (2) MacAccess 2.0,
which enables PCs to read, write and format Mac floppy discs and most common
removable media in Windows 3.1x and Windows 95; (3) WinKrypt, an advanced
Windows 95 security suite which allows the user to lock data, secure e-mail and
search for intruders; (4) Burn It!, an enhanced file deletion utility for
Windows 95 and MacIntosh System 7x that overwrites the sector multiple times
effectively barring its retrieval; (5) & (6) CD-Speedster (PC) and CD-Speedster
(Mac), which increase speed and performance of CD-ROMs under Windows 95 and
3.1x, and under MacIntosh System 7x by incorporating proprietary caching
technology; (7) Windrenalin HD, a patented software product designed to add
instant hard drive acceleration to PCs operating under Windows 95; and (8)
SoftRAM3.0, a system performance utility designed to accelerate CD-ROM data
access, compress data in RAM and monitor system performance for Windows 95 and
3.1x. RAM Charger 3.0 and MacAccess 2.0 began shipping late in the first
quarter of fiscal year 1997. WinKrypt, and Burn It! began shipping in November
1996. CD-Speedster (PC) and CD-Speedster (Mac) began shipping in January 1997.
Windrenalin HD and SoftRAM3.0 began shipping in late February 1997. RAM
Charger 3.0, MacAccess 2.0, WinKrypt, Burn It!, CD-Speedster (PC), CD-Speedster
(Mac), Windrenalin HD and SoftRAM 3.0 are collectively referred to herein as
the "Existing New Products."

In order to focus its resources on the release and development of the
products discussed above, the Company has postponed the previously targeted
release dates of EyeCatcher, a Windows 95 program that turns a video or PC
camera into a motion-detection security system providing instant, real-time fax
and e-mail "alert" delivery and/or replay of recorded images triggered by
custom pre-programmed cues or timing. Certain of the Company's distributors and
several software retailers have already indicated a willingness to stock
EyeCatcher when and if available. However, there can be no assurance that
EyeCatcher or other new products will be released by the Company or if
released, that such release will be on a timely basis; or that any product,
including any of the Existing New Products, will achieve any significant degree
of market acceptance or that such acceptance, if attained, will be sustained
for any significant period; or that any such product, including any of the
Existing New Products, will be profitable or that profitability, if any, will
be sustained. Failure to complete on a timely basis, or lack of demand for
products, including the Existing New Products, upon completion and
distribution, would have a material adverse effect upon the Company and such
adverse effect would be severe. As well, the Company's success depends to a
large extent on its ability to respond promptly to market feedback and provide
adequate technical support and service to customers and there can be no
assurance that the Company will be successful in so responding.

Although the Company has been in existence since 1986, its current
operations have been in place only since its merger with Seamless Software
Corporation, a Nevada corporation engaged in the business of software
development and marketing ("Seamless"), in May 1995. See "The Company."
Accordingly, the

6
<PAGE> 7

Company is still in many respects subject to many of the risks and
uncertainties inherent to a new enterprise. See "Risk Factors."

THE OFFERING

<TABLE>
<S> <C>
Securities offered by the Selling Stockholders.......... 6,083,389 Shares of Common Stock

Common Stock outstanding after the Offering.............
----
Risk Factors............................................ The shares of Common Stock offered
hereby are speculative and involve a
high degree of risk. See "RISK
FACTORS."
</TABLE>

RECENT DEVELOPMENTS

On April 10, 1997, the Company completed a $1,250,000 private
placement of the Private Placement Debenture. The Private Placement Debenture
was sold at 100 percent of principal amount and bears interest at a rate of 9%
with interest deferred until the earliest of the date of conversion or April
10, 2000. The Private Placement Debenture is convertible, in whole or in part,
at the option of the holder at any time into shares of the Company's common
stock at a conversion price of $1.80 per share. Any amount not converted by
April 10, 2000 and related accrued interest will automatically be converted
into common stock based on the conversion rate. The Private Placement
Debenture was originally issued to Plymouth with the Plymouth Warrant, which
entitles its holder to purchase 694,444 shares of the Company's common stock at
a purchase price of $2.75 per share. The Plymouth Warrant may be exercised, in
whole or in part, at any time prior to April 10, 2002.

On June 27, 1997, the Company issued to CVI 2,000 shares of 8% Private
Placement Convertible Preferred Stock and warrants to purchase 600,000 shares
of the Company's Common Stock at an exercise price of $3.75 per share. The
Private Placement Convertible Preferred Stock is convertible into common stock
at a price ranging from a zero discount to the market price to a maximum of 15%
after 12 months following the close. Subject to certain conditions, the
Company may issue up to 3,000 additional shares of Private Placement
Convertible Preferred Stock and warrants to purchase 750,000 shares of Common
Stock over the next eight months.

7
<PAGE> 8
RISK FACTORS

THIS OFFERING INVOLVES SUBSTANTIAL INVESTMENT RISKS AND THE COMMON
STOCK OFFERED HEREBY SHOULD BE PURCHASED ONLY BY PERSONS WHO CAN AFFORD TO
SUSTAIN THE LOSS OF THEIR ENTIRE INVESTMENT. IN EVALUATING AN INVESTMENT IN
THE COMPANY AND ITS BUSINESS PRIOR TO PURCHASE, PROSPECTIVE INVESTORS SHOULD
CAREFULLY CONSIDER THE FOLLOWING RISK FACTORS AS WELL AS OTHER INFORMATION SET
FORTH ELSEWHERE IN THIS PROSPECTUS.

DEPENDENCE ON SUCCESS OF NEW PRODUCTS

The Company depends on the successful development of new products,
including new titles and the adaptation of existing titles to new platforms and
technologies, to expand its product offerings and to augment revenues from
products that have declined in revenue prospects. The Company also depends on
upgrades of existing products to lengthen the life cycle of its products. The
Company must continually anticipate and adapt its products to emerging personal
computer platforms and environments. If the Company's products become
outdated, or if new products or existing product upgrades are not introduced
when planned or do not achieve the revenues anticipated by the Company, the
adverse consequences upon the Company could be severe.

PRODUCT DEVELOPMENT

The Company is devoting substantial resources and efforts to the
development of software products that are designed to operate on Microsoft's
Windows 95. Should the Company not be able to develop products successfully
and timely that function under Windows 95, and offer perceived value to Windows
95 users, future revenues would be adversely affected. There can be no
assurance that a market will develop for any of the Company's products, or
that, if a market does develop, that such products will be profitable or that
profitability, if attained, can be sustained. Failure to complete on a timely
basis, or lack of demand for the Company's products upon completion and
distribution, would have a material adverse effect upon the Company and such
adverse effect would be severe.

Exclusive of licensing agreements and acquisitions, the length of time
required to develop the Company's products and product upgrades typically
ranges from nine to 24 months, as is common in the software industry. In the
past, the Company has experienced delays in the planned release of new products
or product upgrades from one to 15 months as a result of completing
development, product testing and quality assurance. There can be no assurance
that such delays from planned product release dates will not occur in the
future. Additionally, there can be no assurance that the Company will be able
to release new products on schedule or that such new products, if released,
will achieve market acceptance. If a product's release is delayed the
Company's expected return on its investment in the product could be materially
delayed or diminished.

ADVERSE IMPACT OF SOFTRAM RECALL

During fiscal years 1995 and 1996, the Company was heavily dependent
on SoftRAM and related products to achieve profitability. The Company released
SoftRAM for Windows 3.x in late May of 1995, and SoftRAM95 for Windows 95 and
3.x in August of 1995. This program was designed to increase the Random Access
Memory ("RAM") that a personal computer ("PC") can make available to Windows
applications through proprietary memory compression technology which allocates
a PC's physical RAM in a manner that optimizes space and speed. A significant
portion of the Company's net revenues were derived from

8
<PAGE> 9

SoftRAM and SoftRAM95 during FY 1996 (approximately 96%). However, the Company
announced on October 20, 1995 that it had identified a problem with SoftRAM95,
the net result of which is that RAM compression was not being delivered to the
Windows 95 operating system. The Company also announced a comprehensive
consumer program which included refunds, extended toll-free customer assistance
and a program to re-sticker all product in the retail channel informing
consumers that SoftRAM95 was suitable for Windows 3.x only. Because this
stickering program did not result in complete coverage of all inventory, on
December 18, 1995, the Company attempted to mitigate the adverse consequences
of the problem by initiating the recall of SoftRAM95 from the Company's retail
channels.

The SoftRAM95 problem resulted in several private lawsuits as well as
investigations by the New York Regional Office of the Federal Trade Commission
and the Florida Attorney General's Office with respect to SoftRAM and/or
SoftRAM95. The Company took one time charges totaling $12,344,652 in fiscal
1996 to provide for the costs of this recall, including product returns in
excess of normal reserves, legal fees and expenses and settlement costs for
litigation related to SoftRAM and SoftRAM95.

While the Company implemented the recall and consumer programs to
mitigate the potential adverse effects on the Company arising from the problem,
there can be no assurance that this will be the case. This problem and the
related litigation could have a material adverse effect on the reputation of
the Company and its products, including the Existing New Products, the
Company's ability to profitably market future versions of SoftRAM and/or other
products and/or the Company's financial condition and results of operations. A
new version of SoftRAM, SoftRAM3.0, a system performance utility designed to
accelerate CD-ROM data access, compress data in RAM and monitor system
performance for Windows 95 and Windows 3.x was released in late February, 1997.
There can be no assurance that SoftRAM3.0 will achieve any degree of market
acceptance or that such acceptance, if attained, will be sustained for any
significant period.

INTENSE COMPETITION

The software industry is intensely competitive and consumer demand for
particular software products may be adversely affected by the increasing number
of competitive products from which to select. The Company has numerous
competitors of varying sizes and resources. Existing competitors may broaden
their product lines and potential competitors (including large computer or
software manufacturers) may enter or increase their focus in the areas in which
the Company's products compete, which could result in greater competition for
the Company. Many of the Company's competitors or potential competitors may
market, or can potentially market, their products to the end users of such
products more effectively than can the Company and may have more ability to
control pricing and marketing decisions. To the extent that competitors
achieve either a performance, price or distribution advantage, the Company
could be adversely affected.

Among the Company's potential competitors is Microsoft Corporation
("Microsoft"), the dominant supplier of computer operating systems. Microsoft
frequently coordinates its operating system marketing efforts with those for
its applications software. Microsoft could seek to design its products so as
to be incompatible with the Company's products, including products under
development, or to incorporate features which duplicate features of the
Company's products. Microsoft could also seek to market its products to
original equipment manufacturers in such a manner that the market for the
Company's products would be diminished. There can be no assurance that
competition from PC hardware suppliers, Microsoft or others would not render
the Company's products non-competitive or obsolete.

9
<PAGE> 10

Competitive pressures could not only have an adverse effect on the
Company's sales but also result in price reductions that could materially
adversely affect the Company's operating results. In particular, competition
in Microsoft's Windows application segment from major software suppliers is
intensifying, and the "competitive upgrade" price discounting among the major
firms is eroding the traditional pricing structures that had previously existed
in the software industry. These competitive pressures may adversely affect
industry-wide operating margins including those of the Company. There can be
no assurance of price-stability or that any price reductions would result in an
increase in unit sales volume. Price reductions would lead to a decrease in
the revenues from, and gross margin on, sales of the Company's products in the
future and could result in lower cash flow or operating margins.

The Company believes that the principal competitive factors in the
software industry include product features, quality, ease of use, access to
distribution channels, relationships with other hardware and software
manufacturers, brand name recognition, quality of support services and price.
Furthermore, increased competition may result in the loss of shelf space,
reduction in sell-through of the Company's products at retail stores, reduction
in access to alternative marketing channels (such as bundling with
complementary products) or additional price competition, any of which could
have a material adverse effect on the Company's results of operations.

FLUCTUATIONS IN OPERATING RESULTS

The Company generally believes that its operating results for any
quarter are not necessarily indicative of results for any future period. The
Company has in the past experienced fluctuations in its quarterly operating
results and expects such fluctuations to continue, to varying and unpredictable
degrees, in the future. Factors that contribute to fluctuations in the
Company's quarterly operating results include the timing of new product
introductions, competitive offerings, product shipments, product returns,
promotional programs, seasonality and general economic conditions. In
addition, quarterly operating results will be affected by changes in market
acceptance and sales of Existing New Products. Historically, seasonality has
not been a significant factor for the Company.

Moreover, because the Company generally ships its software products
within a short period after receipt of an order, it typically does not maintain
a material backlog of unfilled orders. As a result, revenues in any quarter or
other period are substantially dependent upon orders booked in that period.
Orders booked during any particular period are substantially dependent upon
numerous factors, including the scheduled release of new products and product
enhancements and updates by the Company and its competitors; the release or
anticipated release of complementary products by other software suppliers;
market acceptance of such products, enhancements and updates; delays in
customer orders in anticipation of industry developments and numerous other
factors, many of which are beyond the Company's control.

Accordingly, the Company's revenues are difficult to forecast and may
vary significantly from quarter to quarter. In addition the Company's expense
levels for each quarter are, to a significant extent, fixed in advance based
upon the Company's expectation as to the net revenues to be generated during
that quarter. The Company therefore is generally unable to adjust spending in
a timely manner to compensate for any unexpected shortfall in net revenues. As
a result of these factors any delay in product introductions, whether due to
internal delays or delays caused by third party difficulties, or any
significant shortfall in demand in relation to the Company's expectations,
would have an almost immediate adverse impact on the Company's operating
results and on its ability to maintain profitability in a quarter. However,
while the Company's expenses are, to a significant extent, fixed in advance,
the Company is making efforts to adjust spending in relation to net revenues
until such time, if any, that new products are released and such new products
and/or current products gain market acceptance.

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<PAGE> 11

SHORT OPERATING HISTORY; RECENT OPERATING LOSSES

Although the Company has been in existence since 1986, its current
operations have been in place only since its merger with Seamless in May 1995.
Accordingly, the Company is still in many respects subject to the risks and
uncertainties inherent to a new enterprise, including lack of sufficient
capital for expansion, reliance on key personnel, a highly competitive
environment and difficulty in addressing unanticipated problems, delays and
expenses. The Company realized a net loss of $12,021,950 for FY 1996 and
$3,411,696 for the first nine months of FY 1997 and expects losses to continue
until such time, if at all, that the Existing New Products or other new
products, if any, gain acceptance in the marketplace. There can be no
assurance that new products will be released by the Company, or if released
that such release will be on a timely basis; or that any product, including the
Existing New Products, will achieve any degree of market acceptance or that
such acceptance if attained will be sustained for any significant period; or
that any new products, including the Existing New Products, will be profitable
or profitability, if any, can be sustained. Although the Company's expenses
are, to a significant extent, fixed in advance, the Company is making efforts
to adjust spending in relation to net revenues until such time, if any, that
the Existing New Products or other released new products, if any, generate
significant revenue. As well, the Company's success will depend in part on its
ability to respond promptly to market feedback and provide adequate technical
support and service to customers and there can be no assurance that the Company
will be successful in responding.

TECHNOLOGICAL CHANGE

The computer software industry is continually undergoing rapid changes
as a result of technological advances. The Company's ability to continue its
operations will be highly dependent upon its ability to continue to develop
products which utilize the latest technological advances, are compatible with
accepted technological standards, can gain customer acceptance and are
competitively priced. Further technological developments by the Company's
competitors may result in the Company's products becoming less competitive in
the marketplace. Any failure by the Company to anticipate or respond
adequately to changes in technology or customer preferences, or any significant
delays in product development or introduction could have a material adverse
effect on the Company's business.

LITIGATION

The Company and certain current or former directors and officers of
the Company (Daniel G. Taylor, Rainer Poertner, Wendell Brown and Kevin
O'Neill) have been named as defendants in a complaint for declaratory relief
filed on October 1, 1996 in United States District Court for the Central
District of California by Agricultural Excess & Surplus Insurance Company
("AESIC"). The complaint seeks a declaration that AESIC is not obligated under
its directors and officers' insurance policy to indemnify any of the defendants
for any amounts incurred in connection with certain litigation matters
previously settled by the Company. AESIC also seeks a declaration that it is
entitled to recoup all amounts expended to fund the settlement of such
litigation. The Company filed a counterclaim for bad faith against AESIC and a
third party complaint against the brokers. The Company and AESIC have reached
a settlement in principle of the foregoing matters pursuant to which, without
any admission of liability, the Company and the brokers will pay to AESIC
$250,000 and $200,000, respectively. The parties are currently negotiating the
terms of final documentation with respect to such settlement.

11
<PAGE> 12

MARKET FOR SECURITIES; POSSIBLE LOSS OF QUOTATION OF COMMON STOCK; RISKS
RELATING TO LOW-PRICED STOCKS

While the Company's Common Stock is currently quoted on the OTC
Bulletin Board, there can be no assurance that the Company will continue to
meet the maintenance criteria for continued listing of the Common Stock on the
OTC Bulletin Board. In such event, investors will find it difficult to dispose
of, or to obtain accurate quotations as to the price of, the Common Stock. The
Common Stock would then also be subject to the risk that it could become
characterized as low priced or "penny stock," which characterization could
severely affect market liquidity. The Commission's regulations governing
low-priced or penny stocks could limit the ability of broker-dealers to sell
the Common Stock and thus the ability of holders of Common Stock to sell the
Common Stock in the secondary market.

VOLATILITY OF PRICES OF THE SECURITIES

The trading prices, if any, of the Common Stock could be subject to
wide fluctuations in response to variations in the Company's operating results,
announcements by the Company or others, developments affecting the Company or
its competitors, suppliers or customers and other events and factors. In
addition, the stock market in general, and the securities of high technology
companies in particular, have experienced extreme price and volume fluctuations
in recent years. These fluctuations have had a substantial effect on the
market prices for many companies, often unrelated to their performance, and may
adversely affect the market prices, if any, for the Common Stock.

DILUTION

Dilution will occur upon the conversion of outstanding debentures and
the exercise of outstanding stock options and other warrants and may occur in
connection with future financings to meet the Company's capital requirements.

DEPENDENCE ON AND INTENSE COMPETITION FOR KEY PERSONNEL

The continued development of the Company's business and operations has
been dependent upon its principal executive officers, Messrs. Rainer Poertner
and Daniel G. Taylor. While the Company has entered into employment agreements
with each of these executives, each of which has a remaining term of
approximately three years, these executives may voluntarily terminate their
employment with the Company at any time. The loss of the services of either of
these executives could have a material adverse effect on the Company. The
Company does not maintain key man life insurance with respect to either of
these executives.

In addition, recruitment of personnel in the computer software
industry is highly competitive. The Company's success depends to a significant
extent upon the performance of its executive officers and other key personnel.
The loss of the services of key individuals could have a material adverse
effect on the Company. The Company's future success will depend in part upon
its continued ability to attract and retain highly qualified personnel. There
can be no assurance that the Company will be successful in attracting and
retaining such personnel.

POSSIBLE UNAVAILABILITY OF ADDITIONAL FINANCING

The Company will generally be required to seek financing if demand for
its new products is sufficiently great to require expansion at a faster rate
than anticipated, or if research and development expenditures or the extent of
service and customer support that the Company is required to provide are

12
<PAGE> 13

greater than expected or other opportunities arise which require significant
investment. If financing is required, such financing may be raised through
equity offerings, joint ventures or other collaborative relationships,
borrowings and other sources. There can be no assurance that such financing
will be available or, if it is available, that it will be available on
acceptable terms. If funds are raised through the issuance of equity
securities, the percentage ownership of the then current shareholders of the
Company will be reduced and such equity securities may have rights, preferences
or privileges senior to those of the holders of the Common Stock. If adequate
funds are not available to satisfy either short- or long-term capital
requirements, the Company may be required to limit its operations significantly
and this would likely have a material adverse effect on the Company's results
of operations.

MANAGEMENT OF GROWTH

If significant demand for the Company's products develops, the Company
expects rapid growth, which could cause the Company to increase in size,
placing a significant strain on its management, product development personnel,
customer service organization and other resources. In order to support such
growth, the Company would also be required to expand its sales, marketing and
accounting organizations and its management information systems. Failure to
expand effectively its management, product development personnel, sales,
marketing, accounting and customer service organizations or its management
information systems could have a material adverse effect on the business of the
Company. Competition for qualified personnel is intense, and no assurances can
be given that the Company will be able to secure additional qualified
management, product development, customer service, sales and marketing
personnel or to retain such personnel.

In addition, the Company recently acquired Syncronys Softcorp Israel
Ltd. (formerly known as Veritas Technology Solutions Ltd., ("Syncronys
Israel"), a software company. See "Business - Strategy." It is critical to
the Company's success to integrate effectively the operations and businesses of
Syncronys Israel. If the Company is unable to successfully integrate the
operations of Syncronys and Syncronys Israel, the Company's operating results
could be adversely effected.

RELIANCE ON INDIRECT DISTRIBUTION

The Company currently has only a limited direct sales force and its
plans for expansion depend significantly on its ability to market and sell
products domestically and internationally through third parties, such as
distributors, value-added resellers and systems integrators. The Company's
performance may depend in part on attracting, retaining and motivating such
resellers. Certain of the Company's resellers may also act as resellers for
other entities and could devote greater effort and resources to marketing other
products. The Company's resellers may be provided discounts and special
pricing or distribution arrangements, the effect of which would be to decrease
the Company's gross margins compared to those the Company might achieve through
direct sales. There can be no assurance that resellers will be effective in
marketing the Company's products or that they will devote the resources
necessary to provide effective sales and marketing support to the Company. In
addition, the Company may become dependent on the continued viability and
financial stability of its resellers.

MANUFACTURING AND TECHNICAL SUPPORT

All manufacturing, fulfillment and technical support for the Company's
products are provided on a contract basis by unrelated third parties. While
the Company believes that these third parties have excess capacity should the
need arise, there can be no assurance that they will be able to meet future
demand for manufacturing and technical support services. The Company believes
that its relations with these third

13
<PAGE> 14

parties are good and that, while it has no reason to expect the termination of
these relationships, alternative means for providing these services are readily
available at comparable cost to the Company. If alternative arrangements for
manufacturing or technical support are required, the Company may incur
additional costs and expenses or product delays which could adversely affect
operating results.

The Company's third party manufacturer purchases numerous disks for
the Company's software products from various suppliers. Because of the
availability of numerous alternative sources of supply, the Company believes it
is not necessary to enter into written agreements with disk suppliers.
Nevertheless, the Company may be vulnerable to changes in product quality and
pricing by its disk suppliers. Future disruptions in the supply of suitable
disks from the Company's principal suppliers, if prolonged, could have an
adverse effect upon the Company's results of operations unless and until
suitable replacements were obtained.

PRODUCT RETURNS

Like other manufacturers of package software products, the Company is
exposed to the risk of product returns from distributors and reseller
customers. There can be no assurance that actual returns in excess of recorded
allowances will not result in a material adverse effect on the business,
operating results and financial condition.

PROPRIETARY RIGHTS

The Company regards the software that it owns as proprietary and
relies primarily on a combination of copyrights, pending patents, trademarks,
trade secret laws, employee and third-party nondisclosure agreements along with
other methods to protect its proprietary rights. The Company has filed an
application with the United States Patent and Trademark Office requesting
patent protection for the SoftRAM technology, but there is no assurance that a
patent will be issued. None of the Company's other products are covered by
patents or patent applications. The Company believes that, due to the rapid
rate of technological change within the industry, copyrights, trademarks and
patents are important, but are less significant to the Company's success than
factors such as the knowledge, ability and experience of the Company's
personnel, the quality of its customer service, research and development, brand
name recognition and product loyalty.

Only a minority of the Company's products include any mechanisms to
prevent or inhibit unauthorized copying and, on a going forward basis, the
Company does not expect regularly to include these mechanisms in new products
or product updates. The Company is aware that unauthorized copying occurs
within the software industry, but policing unauthorized use of the Company's
products is difficult. While the Company is unable to determine the extent to
which software piracy of its products occurs, software piracy can be expected
to be a persistent issue. If a significant amount of unauthorized copying were
to occur, the Company's operating results could be adversely affected.

The Company believes that its products and other proprietary rights do
not infringe upon the proprietary rights of any third parties. As the number
of software products in the industry increases and the functionality of these
products further overlaps, software developers including the Company may
increasingly become subject to infringement claims. There can be no assurance
that third parties will not assert infringement claims against the Company in
the future, with respect to current or future products, or that any such
assertion may not require the Company to enter into royalty arrangements or to
enter into costly litigation.

14
<PAGE> 15

CONTROL BY CURRENT OFFICERS AND DIRECTORS

Immediately after completion of the offering, without giving effect to
any potential dilution from the exercise of the Debenture, Options or Warrants,
the executive officers and directors of the Company and their affiliates will
be the beneficial owners of shares of Common Stock representing in excess of
45% of the outstanding shares. Accordingly, such stockholders may effectively
have the ability to elect all of the directors of the Company and determine the
outcome of all other matters submitted for approval of the Company's
stockholders.

POTENTIAL ANTI-TAKEOVER EFFECT OF PROVISIONS OF ARTICLES OF INCORPORATION AND
NEVADA LAW

The Company's Articles of Incorporation and By-Laws, and certain
provisions of the Nevada Corporation Law, contain provisions concerning voting,
issuance of preferred stock, removal of officers and directors and other
matters which may have the effect of discouraging, delaying or preventing a
change of control of the Company. See "Description of Capital Stock."

AUTHORIZATION AND DISCRETIONARY ISSUANCE OF PREFERRED STOCK

The Board of Directors, without further action by the shareholders,
may cause the Company to issue up to ten million (10,000,000) shares of
Preferred Stock on such terms and with such rights, preferences and
designations as the Board of Directors may determine. Issuance of such
Preferred Stock, depending upon the rights, preferences and designations
thereof, may have the effect of delaying, deterring or preventing a change in
control of the Company. Pursuant to such authority, on July 1, 1997 the
Company issued 2,000 shares of Convertible Preferred Stock. See
"Summary--Recent Developments."

SHARES AVAILABLE FOR RESALE

As of March 31, 1997, 19,307,892 shares of Common Stock were
outstanding. As of July 10, 1997 all such shares are transferable pursuant to
Rule 144 of the Securities Act. In addition, the Company has reserved
2,000,000 shares of Common Stock for issuance pursuant to the 1995 Stock Option
Plan, 8,000,000 shares of Common Stock for issuance under the May 1996, Private
Placement Warrants and Private Placement Debentures and 4,500,000 shares of
Common Stock for issuance under the June 1997 Private Placement Debentures and
Warrants. Outstanding shares of Common Stock held by, and any reserved shares
issued to affiliates and employees of the Company may not be sold other than
pursuant to an effective registration statement or an exemption from
registration under the Securities Act. No prediction can be made as to the
effect, if any, that future sales of shares or the availability of shares for
future sale will have on the market price of the Common Stock prevailing from
time to time. Sales of substantial amounts of Common Stock in the public
market, or the perception that such sales could occur, could adversely affect
prevailing market prices for the Common Stock and could impair the Company's
ability to raise capital through an offering of its equity securities.

15
<PAGE> 16

USE OF PROCEEDS

The Company will not receive any of the proceeds from the sales, if
any, of the Common Stock by any Selling Stockholder. Any money received by the
Company upon exercise of the Private Placement Warrants will be used for
working capital purposes.

DIVIDEND POLICY

To date, the Company has not paid any cash dividends on its Common
Stock. The Company does not anticipate paying any dividends in the foreseeable
future. The Company intends to retain any future earnings to finance the
growth and development of its business. Any future determination as to the
payment of dividends will be at the discretion of the Board of Directors and
will depend on the Company's operating results, financial condition, capital
requirements and such other factors as the Board of Directors may deem
relevant. In addition, the Company's Board of Directors has the authority,
without obtaining shareholder approval, to issue shares of preferred stock and
to fix the rights, preferences, privileges and restrictions, including voting
rights, of the preferred stock. Accordingly, the terms of such preferred stock
could provide for preferential dividend rights or otherwise restrict the
ability of the Company to pay dividends to the holders of Common Stock.

16
<PAGE> 17
MANAGEMENT'S DISCUSSION AND ANALYSIS OF

FINANCIAL CONDITION AND RESULTS OF OPERATIONS

FLUCTUATIONS IN OPERATING RESULTS

Although the Company's revenues for FY 1996 increased dramatically as
compared to the prior year, these revenues were realized primarily during the
first two fiscal quarters prior to the SoftRAM95 recall. As a result, there
were little or no revenues in the third and fourth quarters of fiscal 1996.
Additionally, the Company generated a significant operating during the first
nine months of FY 1997 and expects to generate ongoing losses, until such time,
if any, new products are released and accepted in the marketplace.
Additionally, the Company's success will depend in part on its ability to
respond promptly to market feedback and provide adequate technical support and
service to customers and there can be no assurance that the Company will be
successful in responding. While the Company's expenses are, to a significant
extent, fixed in advance, the Company is making efforts to adjust spending in
relation to net revenues until such time, if any, that new products are
released and such new products and/or current products gain market acceptance.
However, there can be no assurance that new products will be released by the
Company, or if released that such release will be on a timely basis; or that
any products will achieve any degree of market acceptance or that such
acceptance will be sustained for any significant period; or that they will be
profitable or profitability, if any, can be sustained. Failure to complete on
a timely basis, or lack of demand for products upon completion and
distribution, would have a material adverse effect upon the Company and such
adverse effect would be severe.

17
<PAGE> 18
RESULTS OF OPERATIONS FOR FISCAL YEAR 1995 AS COMPARED TO FISCAL YEAR 1996

Net Revenues

<TABLE>
<CAPTION>
FY 1995 Increase FY 1996
------- -------- -------
<S> <C> <C> <C>
Net Revenues before $ 3,580,404 >100% $12,797,786
product recall returns
</TABLE>

The Company has derived substantially all of its software revenues
from sales of SoftRAM and SoftRAM95 to software distributors, computer
superstores and mass merchandisers in North America. The growth in revenues
during FY 1996 was primarily attributable to the introduction of SoftRAM which
began shipping in May 1995 and SoftRAM95 which began shipping in August 1995.
Sales of SoftRAM and SoftRAM95 constituted roughly 96% and 71% of the
Company's revenues during FY 1996 and FY 1995, respectively. There were little
or no sales in the third and fourth quarters of FY 1996 due to the Company's
announcement that it had identified a problem with SoftRAM95 on October 20,
1995, and its subsequent recall of SoftRAM95 towards the end of the second
quarter. See "Risk Factors--Adverse Impact of SoftRAM Recall."

In connection with the recall of product initiated by the Company,
return and repurchase of product totaled $5,767,375 in FY 1996. Other charges
for legal fees, settlements and upgrades have been charged as operating
expenses - nonrecurring charges.

Cost of Revenues

<TABLE>
<CAPTION>
FY 1995 Increase FY 1996
------- -------- -------
Cost of Revenues $ 280,195 >100% $1,251,126
<S> <C> <C> <C>
Percent of Net Revenues 8% 10%
</TABLE>

Cost of revenues consists of direct manufacturing costs for the
Company's software products. Cost of revenues as a percentage of net revenues
increased to 10% during FY 1996, from 8% in FY 1995, primarily due to the
Company's write off of approximately $325,000 in CD ROM inventories in the
fourth quarter of FY 1996 along with a $150,000 charge to cost of revenues
during the second quarter of FY 1996 to reflect the write-off of existing
inventories of SoftRAM and SoftRAM95. The overall increase in the cost of
revenues in FY 1996 is directly attributable to the increase in net revenues.

Research and Development Expenses

<TABLE>
<CAPTION>
FY 1995 Increase FY 1996
------- -------- -------
R & D Expenses $ 676,037 >100% $1,521,374
<S> <C> <C>
Percent of Net Revenues 19% 12%
</TABLE>

Research and development expenses increased from $676,037 in FY 1995
to $1,521,374 in FY 1996. This increase is primarily attributable to expenses
associated with the development of SoftRAM3.0 and to the increase in the number
of research and development projects. Although the Company's research and
development expenses increased in FY 1996 as compared to the same period in the
prior year, as a percentage of net revenues, research and development expenses
decreased to 12% from 19% due to the even greater growth in the Company's net
revenues. Although the Company is making efforts to adjust its spending to
compensate for the expected shortfall in net revenues until SoftRAM3.0 or other
new products

18
<PAGE> 19

are released, the Company expects research and development expenses to continue
to increase during FY 1997 primarily due to the anticipated increase in the
number of research and development staff and projects.

In accordance with Statement of Financial Accounting Standards No. 86
(FASB 86), the Company examines the software development costs after
technological feasibility has been established to determine if the amounts are
significant enough to require capitalization. Through the end of FY 1996,
these amounts have not been deemed significant, and substantially all software
development costs have been expensed in the period incurred. None of the
Company's research and development costs for FY 1996 or 1995 were borne
directly by the Company's customers.

Marketing and Selling Expenses

<TABLE>
<CAPTION>
FY 1995 Increase FY 1996
------- -------- -------
M & S Expenses $ 797,845 >100% $ 6,199,631
<S> <C> <C> <C>
Percent of Net Revenues 22% 48%
</TABLE>

Marketing and selling expenses are comprised mainly of salaries and
commissions, advertising and promotions, trade shows, and customer service and
technical support expenses. Marketing and selling expenses increased in FY
1996 primarily due to expenses associated with the introduction of SoftRAM95 in
August of 1995, and due to other expenses required to support the increase in
net revenues. While the Company expects marketing and selling expenses to
continue at reduced levels until the release of SoftRAM3.0 or other new
products, the Company expects that additional marketing and selling expenses
will be required to support the launch of SoftRAM3.0 and the release of other
new products during FY 1997.

General and Administrative Expenses

<TABLE>
<CAPTION>
FY 1995 Increase FY 1996
------- -------- -------
<S> <C> <C>
G & A Expenses $ 547,642 >100% $ 2,694,776
Percent of Net Revenues 15% 21%
</TABLE>

General and administrative expenses increased in FY 1996 due primarily
to increases in direct and indirect expenses required to support the increase
in net revenues, the facilities expansion, the increased number of support and
management staff and the corporate structure.

Nonrecurring Charge - SoftRAM95 Product Recall

The Company has taken one time charges totaling $12,344,652 in FY 1996
to provide for the expected costs of this recall, including the costs of
product returned under the recall in excess of normal returns reserves
aggregating $5,767,375, and legal fees and expenses and the cost of settlements
for SoftRAM and SoftRAM95 related litigation aggregating $6,577,277.

Other Income (Expenses), net

<TABLE>
<CAPTION>
FY 1995 Increase FY 1996
------- -------- -------
<S> <C> <C> <C>
Other Income (Expense), net $ (63,034) >100% $(1,192,772)
</TABLE>

Other income and expense consists largely of interest income and
expense, additionally, other income and expense for FY 1996 includes the
approximately $202,000 gain on the sale of the Company's

19
<PAGE> 20

Autoship subsidiary and a $1.3 million non-cash charge to interest expense
related to the issuance of convertible debentures.

Net Income (Loss)

For the reasons outlined above the Company realized a $12,021,950 net
loss in FY 1996 as compared to net income of $692,348 in FY 1995.

RESULTS OF OPERATIONS FOR THE NINE MONTHS ENDED MARCH 31, 1996 AS COMPARED TO
THE NINE MONTHS ENDED MARCH 31, 1997

Net Revenues

<TABLE>
<CAPTION>
FY 1996 FY 1997
------- -------
<S> <C> <C> <C>
Net Revenues First Nine Months $ 13,708,179 $3,964,627
</TABLE>
During FY 1996, the Company derived substantially all of its software
revenues from sales of SoftRAM and SoftRAM95 to software distributors, computer
superstores and mass merchandisers in North America. Revenues during the first
nine months of FY 1996 were primarily attributable to the introduction of
SoftRAM which began shipping in May of 1995 and SoftRAM95 which began shipping
in August 1995. Revenues for the first nine months of FY 1997 were derived
primarily in the third quarter as the Company released four of the Existing New
Products during the third quarter, of which, sales of Windrenalin HD accounted
for a majority. CD-Speedster (PC) and CD-Speedster (Mac) began shipping in
January 1997. Windrenalin HD and SoftRAM3.0 began shipping in late February
1997. Two Existing New Products were released late in the first quarter (RAM
Charger 3.0 and MacAccess 2.0) and two Existing New Products in November 1996
(WinKrypt and Burn It!) - the first products released since the Company's
recall of SoftRAM95. The Company anticipates recognizing relatively little
revenues as compared to the prior year until such time, if any, as the Existing
New Products gain market acceptance.

Cost of Revenues

<TABLE>
<CAPTION>
(Decrease)
FY 1996 Increase FY 1997
------- -------- -------
<S> <C> <C> <C> <C>
Cost of Revenues First Nine Months $ 1,713,163 (40)% $1,026,661
Percent of Net Revenues 12% 26%
</TABLE>

Cost of revenues consists of direct manufacturing costs and royalty
expenses for the Company's software products. Cost of revenues as a
percentage of net revenues increased to 26% during the first nine months of FY
1997, from 12% in the same period of FY 1996, due primarily to royalty expenses
associated with certain of the Company's software products. No royalty
expenses were incurred during FY 1996. The overall decrease in the cost of
revenues during the first nine months of FY 1997 is directly attributable to
the decrease in net revenues.

20
<PAGE> 21

Research and Development Expenses

<TABLE>
<CAPTION>
FY 1996 Increase FY 1997
------- -------- -------
<S> <C> <C> <C> <C>
R & D Expenses First Nine Months $ 933,160 86% $1,736,752
Percent of Net Revenues 7% 44%
</TABLE>

Research and development expenses increased from $933,160 during the
first nine months of FY 1996 to $1,736,752 during the first nine months of FY
1997. This increase is primarily attributable to expenses associated with the
development of several new products and to the increase in the number of
research and development projects. Research and development expenses increased
as a percentage of net revenues during the first nine months, as compared to
the prior year, due to the decrease in revenues for the period and increased
amounts expended for research and development. The Company expects research
and development expenses will be maintained near the current dollar level for
the balance of FY 1997 due to the number of research and development staff and
projects and the acquisition of Syncronys Israel.

In accordance with Statement of Financial Accounting Standards No. 86
(FASB 86), the Company examines the software development costs after
technological feasibility has been established to determine if the amounts are
significant enough to require capitalization. Through the end of the third
quarter of FY 1997, these amounts have not been deemed significant, and
substantially all software development costs have been expensed in the period
incurred. None of the Company's research and development costs for FY 1996 or
1997 have been borne directly by the Company's customers.

Marketing and Selling Expenses

<TABLE>
<CAPTION>
(Decrease)
FY 1996 Increase FY 1997
------- -------- -------
<S> <C> <C> <C> <C>
M & S Expenses First Nine Months $ 6,263,529 (62)% $ 2,410,777
Percent of Net Revenues 46% 61%
</TABLE>

Marketing and selling expenses are comprised mainly of salaries and
commissions, advertising and promotions, trade shows, and customer service and
technical support expenses. Marketing and selling expenses were significantly
higher during the first nine months of FY 1996 as compared to the first nine
months of FY 1997 due primarily to expenses associated with the introduction of
SoftRAM95 in August of 1995 and related marketing expenses throughout the
period. Marketing and selling expenses increased as a percentage of net
revenues during the first nine months of FY 1997, as compared to the prior
year, due to the decrease in revenues for the period. The Company anticipates
that significant marketing and selling expenses will be required to support the
launch of the Existing New Products as well as other new products during the
balance of FY 1997 and that these expenses will continue to increase as a
percentage of net revenues until such time, if any, that the Company's Existing
New Products and any other new products gain market acceptance and are able to
generate sufficient revenues to offset any such increase.

General and Administrative Expenses

<TABLE>
<CAPTION>
FY 1996 (Decrease) FY 1997
------- ---------- -------
<S> <C> <C> <C> <C>
G & A Expenses First Nine Months $ 2,660,667 (28)% $ 1,906,421
Percent of Net Revenues 19% 48%
</TABLE>

21
<PAGE> 22

General and administrative expenses decreased during the first nine
months of FY 1997 as compared to the prior year due primarily to a reduction in
legal fees for the period which was partially offset by increases in direct and
indirect expenses required to support the increase in research and development
projects, the facilities expansion and the increased number of support and
management staff. General and administrative expenses increased as a percentage
of net revenues during the first nine months of FY 1997, as compared to the
prior year, due to the decrease in revenues for the period.

Other Income (Expenses), net

<TABLE>
<CAPTION>
FY 1996 (Decrease) FY 1997
------- ---------- -------
<S> <C> <C> <C> <C>
Other Income (Expense), net First Nine Months $ 273,001 >(100)% $ (295,712)
</TABLE>

Other income and expense for the first nine months of FY 1997 consists
primarily of interest income, an insurance settlement and the unutilized prior
period expense accrual, which were offset by accrued interest on convertible
debentures, the amortization of the related debt issuance costs and a non-cash
charge to interest expense related to the issuance of convertible debentures.
Other income and expense for the first nine months of FY 1996 consists
principally of interest income which more than offset interest expense for the
period.

Net Income (Loss)

For the reasons outlined above the Company realized a $3,411,696 net
loss during the first nine months of FY 1997 as compared to a net loss of
$1,789,339 during the first nine months of FY 1996.

LIQUIDITY AND CAPITAL RESOURCES

Cash and cash equivalents decreased $6,514,008 from $10,027,386 at
June 30, 1996 to $3,513,378 at March 31, 1997 due primarily to the cash used in
operating activities for the nine month period of $6,460,061. Over the same
period, the Company's working capital decreased by $1,515,213 (from $4,086,675
at June 30, 1996 to $2,571,462 at March 31, 1997) due primarily to the
offsetting effects of the decrease in current liabilities. The Company uses
its working capital to finance ongoing operations and the development and
marketing of its software products. Additionally, the Company evaluates from
time to time acquisitions of products or companies that could complement the
Company's business, expand its product line, or augment its revenues and cash
flows. The Company has no plans, commitments or agreements with respect to any
such transactions as of the date of this Prospectus.

The Company's success and ongoing financial viability is contingent
upon its selling of its products and the related generation of cash flows. The
Company is currently generating revenue and generally receives cash from sales
60 to 90 days after shipping its product. Management believes that its
existing cash and working capital balances will be sufficient to meet its
working capital needs for the balance of FY 1997 and FY 1998. Thereafter, the
Company will need substantial additional capital. If the Company's plans or
assumptions change, if its assumptions prove to be inaccurate, if it
consummates investments or acquisitions or if it experiences unanticipated
costs or competitive pressures, the Company may be required to seek additional
capital sooner than currently anticipated. The Company evaluates its liquidity
and capital needs on a continuous basis and based on the Company's requirements
and capital market conditions may, from time to time, raise working capital
through additional debt or equity financing. There is no assurance that such
financing will be available in the future to meet additional capital needs of
the Company, or as to the terms or conditions of any such financing that is
available. Should there be any significant lack of

22
<PAGE> 23

acceptance in the marketplace for the Company's products or if the Company's
working capital needs otherwise exceed its resources, the adverse consequences
would be severe. The generation of the Company's current growth and the
expansion of the Company's current business involve significant financial risk
and require significant capital investment.

MARKET FOR COMMON STOCK

AND RELATED STOCKHOLDER MATTERS

MARKET INFORMATION

The Company's Common Stock is traded on the over-the-counter market
under the symbol "SYCR" and is quoted on the OTC Bulletin Board. The following
table sets forth the closing high and low bid quotations for the Company's
securities as reported by the OTC Bulletin Board since May 11, 1995. There
were no quotations on the OTC Bulletin Board for the Company's common stock
during the last two fiscal years prior to May 11, 1995. These prices are
believed to be representative inter-dealer quotations, without retail markup,
markdown or commissions, and may not represent actual transactions.

<TABLE>
<CAPTION>
Quarter Ended Bid
------------- ---
<S> <C> <C> <C> <C>
June 30,1995 Low: $ 6.00 High: $12.75
September 30,1995 Low: $ 13.00 High: $31.75
December 31, 1995 Low: $ 2.37 High: $10.25
March 31, 1996 Low: $ 1.81 High: $ 4.00
June 30, 1996 Low: $ 2.25 High: $ 6.75
September 30, 1996 Low: $ 1.31 High: $ 5.00
December 31, 1996 Low: $ 0.63 High: $ 1.53
March 31, 1997 Low: $ 0.75 High: $ 4.44
June 30, 1997 Low: $ 1.94 High: $ 3.75
</TABLE>

HOLDERS

As of July 8, 1997, the Company had approximately 373 recordholders of
its Common Stock.

DIVIDENDS

23
<PAGE> 24

THE COMPANY

The Company assumed its present form in May, 1995 as a result of the
merger of Seamless Software Corporation ("Seamless"), a Nevada corporation,
into the Company (then named Redstone Capital, Inc.). The Company changed its
name to Syncronys Softcorp immediately after the merger.

The Company was originally incorporated in Colorado in 1986 under the
name Signum, Inc. ("Signum"). Signum completed a public offering in December
1986, but ceased all of its then-existing business operations (related to
developing a secure modem product to protect computer- based information) in
1988. In May 1994, Signum was reincorporated in Nevada under the name Redstone
Capital, Inc., with its stock reverse split 1 for 400. All financial
information and share data contained herein has been adjusted to reflect this
reverse stock split.

Seamless was a software developer and publisher with an office in
Culver City, California. Seamless was originally incorporated in Delaware on
May 11, 1993 under the name Hypro Technologies, Inc. ("Hypro"). In March,
1995, Hypro merged with a newly formed Nevada corporation for the purpose of
changing its domicile to Nevada and changing its name to Seamless. In April
1995, Seamless acquired Autoship Systems Corporation ("Autoship"), a British
Columbia corporation engaged in the research, development and marketing of
computer software for the marine industry. The Company subsequently sold its
investment in the Autoship subsidiary on March 1, 1996 and recognized a gain on
the sale of approximately $202,000.

BUSINESS

NEW SOFTWARE PRODUCTS

The Company develops and markets software products for sale
principally to software distributors and retailers in the U.S. Products
currently in retail distribution are: (1) RAM Charger 3.0, which provides a
performance boost for the Mac operating system through intelligent and more
efficient memory utilization and dynamic memory allocation; (2) MacAccess 2.0,
which enables PCs to read, write and format Mac floppy discs and most common
removable media in Windows 3.1x and Windows 95; (3) WinKrypt, an advanced
Windows 95 security suite allowing the user to lock data, secure e-mail and
search for intruders; (4) Burn It!, an enhanced file deletion utility for
Windows 95 and MacIntosh System 7x that overwrites the sector multiple times
effectively barring its retrieval; (5) & (6) CD-Speedster (PC) and CD-Speedster
(Mac), which increase speed and performance of CD-ROMs under Windows 95 and
3.1x, and under MacIntosh System 7x by incorporating proprietary caching
technology; (7) Windrenalin HD, a patented software product that adds instant
hard drive acceleration to PCs operating under Windows 95; and (8) SoftRAM3.0,
a system performance utility designed to accelerate CD-ROM data access,
compress data in RAM and monitor system performance for Windows 95 and 3.1x.
RAM Charger 3.0 and MacAccess 2.0 began shipping late in the first quarter of
fiscal year 1997. WinKrypt, and Burn It! began shipping in November 1996.
CD-Speedster (PC) and CD-Speedster (Mac) began shipping in January 1997.
Windrenalin HD and SoftRAM3.0 began shipping in late February 1997.

24
<PAGE> 25

retailers have already indicated a willingness to stock EyeCatcher when and if
available. However, there can be no assurance that EyeCatcher or other new
products will be released by the Company or if released, that such release will
be on a timely basis; or that any product will achieve any significant degree
of market acceptance or that such acceptance, if attained, will be sustained
for any significant period; or that any such product will be profitable or that
profitability, if any, will be sustained. Failure to complete on a timely
basis, or lack of demand for products upon completion and distribution, would
have a material adverse effect upon the Company and such adverse effect would
be severe. As well, the Company's success depends in part on its ability to
respond promptly to market feedback and provide adequate technical support and
service to customers and there can be no assurance that the Company will be
successful in so responding.

RESEARCH AND PRODUCT DEVELOPMENT

In addition to the Existing New Products already in retail
distribution, the Company has other new products under development including
EyeCatcher.

The Company believes continued investment in research and development
to develop state-of-the-art technology for incorporation into its products is
required if it is to remain competitive in the marketplace. As well, the
Company must also maintain good relations with PC platform, operating system
and peripheral equipment vendors to enable it to develop competitive software
products.

Exclusive of licensing agreements and acquisitions, the length of time
required to develop the Company's products and product upgrades typically
ranges from nine to 24 months, as is common in the software industry. In the
past, the Company has experienced delays in the planned release of new products
or product upgrades from one to 15 months as a result of completing
development, product testing and quality assurance. There can be no assurance
that such delays from the planned product release dates will not occur in the
future. Additionally, there can be no assurance that the Company will be able
to release new products on schedule or that such new products, if released,
will achieve market acceptance. If a product's release is delayed, it may lose
market position and the Company's expected return on its investment in the
product could be materially delayed or diminished.

In accordance with Statement of Financial Accounting Standards No. 86
(FASB 86), the Company examines the software development costs after
technological feasibility has been established to determine if the amounts are
significant enough to require capitalization. Through the end of the third
quarter of FY 1997, these amounts have not been deemed significant, and
substantially all software development costs have been expensed in the period
incurred. None of the Company's research and development costs for FY 1996 or
1997 have been borne directly by the Company's customers.

25
<PAGE> 26

ACQUISITIONS, LICENSING AGREEMENTS AND STRATEGIC ALLIANCES

On December 5, 1996, the Company issued 400,000 shares of its Common
stock, $.0001 par value, pursuant to Regulation S to the shareholders of
Veritas Technology Solutions Ltd. ("Veritas"), an Israeli software developer
whose development expertise and product roster is complimentary to the
Company's development and marketing strengths. The shares were issued as
consideration for the acquisition of 100% of the shares outstanding of Veritas
pursuant to a Share Exchange Agreement among the Company, Veritas and the
shareholders of Veritas. Pursuant to the terms of the agreement, half of the
shares issued in conjunction with the acquisition may not be sold prior to
January 27, 1998.

The Company accounted for this transaction as a purchase. The fair
value of the shares on the date of issuance were recorded as goodwill subject
to the Company's full evaluation of the assets acquired, and will be amortized
over no more than a five year period. Final closing of this transaction took
place on January 27, 1997. There can be no assurance that the Company will
generate revenues or profits as a result of this acquisition.

The Company has recently entered into a licensing agreement with
Acceleration Software International Corporation ("Acceleration Software") to
publish and market Windrenalin HD (formerly known as SuperFassst!), a patented
software product that adds instant hard drive acceleration to PCs operating
under Windows 95. Under the terms of the agreement the Company has guaranteed
cumulative minimum royalty payments to Acceleration Software of $850,000 by May
of 1998, of which the Company has advanced $250,000. There can be no assurance
that the Company will generate revenues or profits as a result of this
licensing agreement.

The Company has also formed strategic alliances with two other
software development companies, both of which have expertise in performance and
productivity enhancement technologies. Jump Development Company ("Jump") has
licensed its award-winning RAM Charger Macintosh (Mac) memory management
software to the Company for North America and European distribution.
Additionally, Jump will be leading a dedicated team in the development of new
Mac products for the Company. PowerPro Software, Inc. ("PowerPro") has entered
into a development relationship with the Company to develop system and
productivity software for the Windows utility market. PowerPro will be leading
a dedicated team in the development of new software products for the Windows
platform for the Company. There can be no assurance that the Company will
generate revenue or profits as a result of the licensing agreements or
development relationships with Jump or PowerPro.

ADVERTISING

The Company uses various marketing and merchandising techniques
designed to promote brand awareness and recognition and to maximize the
acquisition of shelf space in retail outlets. The Company promotes its
products directly to consumer through direct mailings, participation in dealer
and industry trade shows and advertising in computer and consumer publications.
The Company may occasionally utilize special promotions, including "bundling"
of selected products with products from other hardware or software vendors.

COMPETITION

26
<PAGE> 27

may broaden their product lines and potential competitors (including large
computer or software manufacturers) may enter or increase their focus in the
areas in which the Company's products compete, which could result in greater
competition for the Company. Many of the Company's competitors or potential
competitors may market, or can potentially market, their products to the end
users of such products more effectively than can the Company and may have more
ability to control pricing and marketing decisions. To the extent that
competitors achieve either a performance, price or distribution advantage, the
Company could be adversely affected.

Among the Company's potential competitors is Microsoft, the dominant
supplier of computer operating systems. Microsoft frequently coordinates its
operating system marketing efforts with those for its applications software.
Microsoft could seek to design its products so as to be incompatible with the
Company's products, including products under development, or to incorporate
features which duplicate features of the Company's products. Microsoft could
also seek to market its products to original equipment manufacturers in such a
manner that the market for the Company's products would be diminished. There
can be no assurance that competition from PC hardware suppliers, Microsoft or
others would not render the Company's products non-competitive or obsolete.

Competitive pressures could result not only in decline in the
Company's sales volume but also in price reductions that could materially
adversely affect the Company's operating results. In particular, competition
in Microsoft's Windows application segment from major software suppliers is
intensifying, and the "competitive upgrade" price discounting among the major
firms is eroding the traditional pricing structures that had previously existed
in the software industry. These competitive pressures may adversely affect
industry-wide operating margins. There can be no assurance of price-stability
or that any price reductions would result in an increase in unit sales volume.
Price reductions would lead to a decrease in the revenues from, and gross
margin on, sales of the Company's products in the future and could result in
lower cash flow or operating margins.

SUPPLIERS AND DISTRIBUTION

The Company sells its software products in the consumer market
primarily through distributors to retail chains, computer superstores,
specialty software stores, mass merchandisers, discount warehouse stores and
mail order houses. The Company has entered into distribution agreements with
the leading U.S. software distributors, Ingram Micro, Inc. ("Ingram Micro"),
Tech Data Corporation ("Tech Data") and Navarre Corporation ("Navarre"), as
well as other distributors, to distribute its products in the U.S. and Canada.
The Company has also entered into an agreement with two sales representation
companies to sell its products to U.S. and Canadian retailers. The Company has
limited distribution agreements to sell its products outside the U.S. and
Canada.

A significant portion of the Company's net revenues arise from sales
to a limited number of distributors. This is expected to continue in the
future. During fiscal 1996 three customers, Ingram Micro, Tech Data and
Navarre, accounted for approximately 37%, 30% and 11% of net revenues,
respectively.

27
<PAGE> 28

During fiscal 1995 these same three customers accounted for approximately 21%,
45% and 0% of net revenues, respectively. During fiscal 1995 and 1996, no
other customer's purchases constituted 10% or more of the Company's net
revenues. The Company generally has entered into non- exclusive distribution
agreements with its distributors and retailers which specify payment terms,
return provisions, coop advertising provisions and pricing. There are no
contractual minimum purchase obligations for any such principal distributor or
retailer. If the Company were to lose all or a significant portion of the
revenue attributable to any of its principal distributors or retailers, or if
its principal distributors were to lose sales of the Company's products to any
of their principal accounts, the loss could have a material adverse effect on
the Company's operating results. The Company's distributors also carry products
produced by competitors of the Company.

The Company uses various marketing and merchandising techniques
designed to promote brand awareness and recognition and to maximize the
acquisition of shelf space in retail outlets. The Company promotes its products
directly to consumers through direct mailings, participation in dealer and
industry trade shows and advertising in computer and consumer publications. The
Company also occasionally utilizes special promotions with other hardware or
software vendors.

The distribution channels through which software products are sold
have been characterized by rapid change, including the consolidations and
financial difficulties of certain distributors and retailers and the emergence
of new retailers such as mass merchandisers. In addition, there are an
increasing number of companies competing for access to these channels. The
Company is subject to intense competition for access to distribution channels.
Retailers of the Company's products typically have a limited amount of shelf
space and promotional resources, and there is intense competition for adequate
levels of shelf space and promotional support from retailers. Since the
Company's products constitute a relatively small percentage of most retailer's
sales volume, there can be no assurance that such retailers will continue to
purchase the Company's products or to provide the Company's products with
continued high quality and adequate levels of shelf space and promotional
support.

Products are generally shipped as orders are received and the Company
has historically operated with a minimal volume of backorders. Because of the
generally short cycle between order and shipment, the Company does not believe
that its backorders as of any particular date are meaningful.

As of July 8, 1997, the Company had a marketing and sales staff of 11,
comprised of both employees and consultants.

PROPRIETARY RIGHTS

The Company regards the software that it owns as proprietary and
relies primarily on a combination of copyrights, pending patents, trademarks,
trade secret laws, employee and third-party nondisclosure agreements along with
other methods to protect its proprietary rights. The Company has filed an
application with the United States Patent and Trademark Office requesting
patent protection for the SoftRAM technology but there is no assurance that a
patent will be issued. None of the Company's other products are covered by
patents or patent applications. The Company believes that, due to the rapid
rate of technological change within the industry, copyrights, trademarks and
patents are important, but are less significant to the Company's success than
factors such as the knowledge, ability and experience of the Company's
personnel, the quality of its customer service, research and development, brand
name recognition and product loyalty.

Only a minority of the Company's products include any mechanisms to
prevent or inhibit unauthorized copying and, on a going forward basis, the
Company does not expect regularly to include these

28
<PAGE> 29

mechanisms in new product or product updates. The Company is aware that
unauthorized copying occurs within the software industry, but policing
unauthorized use of the Company's product is difficult. While the Company is
unable to determine the extent to which software piracy of its product occurs,
software piracy can be expected to be a persistent issue. If a significant
amount of unauthorized copying were to occur, the Company's operating results
could be adversely affected.

The Company believes that its products and other proprietary rights do
not infringe upon the proprietary rights of any third parties. As the number
of software products in the industry increases and the functionality of these
products further overlaps, software developers including the Company may
increasingly become subject to infringement claims. There can be no assurance
that third parties will not assert infringement claims against the Company in
the future, with respect to current or future products, or that any such
assertions may not require the Company to enter into royalty arrangements or to
enter into costly litigation.

PROPERTIES

The Company currently leases approximately 5,600 square feet of office
space in Culver City, California, pursuant to a lease agreement. The monthly
rent for this space is approximately $9,000. The lease agreement provides for a
three year lease term to expire in December 1998.

The Company believes that these facilities will be adequate for its
current needs. The Company has no present understandings, commitments or
agreements, other than as stated above, regarding any alternative facilities
arrangements. The Company believes that suitable additional or alternative
space will be available as needed at commercially reasonable terms.

EMPLOYEES

As of July 8, 1997, the Company had a staff, comprised of both
employees and consultants of 21 people on a full-time basis, including 5 in
research and development, 11 in sales and marketing, and 5 in administration.
The Company believes that its relations with employees are good. The employees
and the Company are not parties to any collective bargaining agreements.

The Company's future success depends in large part on the continued
service of its key employees and its ability to continue to attract, motivate
and retain highly qualified employees. In particular, the Company is highly
dependent on the management services of Rainer Poertner and Daniel Taylor.
These and the Company's other key employees could voluntarily terminate their
employment with the Company at any time. Competition for such employees is
intense, and the process of locating key technical and management personnel
with the combination of skills and attributes required to execute the Company's
strategy is often lengthy. Accordingly, the loss of the services of key
employees could have a material adverse effect upon the Company's research and
development efforts, operations and results. The Company does not currently
maintain key person life insurance covering its executive officers or other key
employees.

INSURANCE

The Company maintains all required insurance coverages along with
additional policies for Commercial Property, Business Interruption, Commercial
General Liability, Errors and Omissions and Directors and Officers Liability.
The Company believes that current coverages are adequate and sufficient to
cover any potential losses, however no assurance can be given.

29
<PAGE> 30

LITIGATION

The Company and certain current or former directors and officers of
the Company (Daniel G. Taylor, Rainer Poertner, Wendell Brown and Kevin
O'Neill) have been named as defendants in a complaint for declaratory relief
filed on October 1, 1996 in United States District Court for the Central
District of California by Agricultural Excess & Surplus Insurance Company
("AESIC"). The complaint seeks a declaration that AESIC is not obligated under
its directors and officers' insurance policy to indemnify any of the defendants
for any amounts incurred in connection with certain litigation matters
previously settled by the Company. AESIC also seeks a declaration that it is
entitled to recoup all amounts expended to fund the settlement of such
litigation. The Company filed a counterclaim for bad faith against AESIC and
a third party complaint against the brokers. The Company and AESIC have
reached a settlement in principle of the foregoing matters pursuant to which,
without any admission of liability, the Company and the brokers will pay to
AESIC $250,000 and $200,000, respectively. The parties are currently
negotiating the terms of final documentation with respect to such settlement.

30
<PAGE> 31
MANAGEMENT

DIRECTORS AND EXECUTIVE OFFICERS

The Directors and Executive Officers of the Company are as follows:

<TABLE>
<CAPTION>
Name Age Positions Held
---- --- --------------
<S> <C> <C>
Daniel G. Taylor . . . . . . . . . . . . . . . . 39 Chairman of the Board, Executive Vice President of Marketing
and Secretary
Rainer Poertner . . . . . . . . . . . . . . . . . 49 Chief Executive Officer, President and a Director
Barbara Velline . . . . . . . . . . . . . . . . . 32 Chief Financial Officer
Myles Lawrence . . . . . . . . . . . . . . . . . 50 Vice President of Engineering
Jon Jackson . . . . . . . . . . . . . . . . . . . 27 Vice President of Sales
John Shaw . . . . . . . . . . . . . . . . . . . . 40 Vice President of Corporate Communications
Lloyd I. Baron . . . . . . . . . . . . . . . . . 51 Director
</TABLE>

DANIEL G. TAYLOR has served as Secretary and a Director of the Company
since May 8, 1995, and as Chairman of the Board and Executive Vice President of
Marketing since July 1, 1995. He also served as Chief Executive Officer from
May 8, 1995 until June 30, 1995. Mr. Taylor was President and a Director of
Autoship Systems Corporation from 1993 to December of 1995. From February 1995
until its merger with the Company on May 8, 1995, he also served as Chief
Executive Officer and a Director of Seamless Software Corporation ("Seamless").
From 1988 to 1992, Mr. Taylor was engaged with Cineplex Odeon Corporation with
the head office in Toronto, Ontario, and on assignment with its UK subsidiary
in London, England. Mr. Taylor was in the development side of the business,
culminating in his appointment as Vice President of Development. Prior to
joining Cineplex, he was a senior litigation associate for five years with the
Toronto- based law firm of Fasken Campbell Godfrey where he participated in a
broad variety of corporate and commercial litigation including corporate
takeovers, shareholder actions and asset purchases. Mr. Taylor received his
law degree from Osgoode Hall in 1982.

RAINER POERTNER has served as President and a Director of the Company
since May 8, 1995, and as Chief Executive Officer since July 1, 1995. He
co-founded Seamless and served as a Director and as President of Seamless from
its inception in May 1993 until its merger with the Company on May 8, 1995. Mr.
Poertner has over 15 years of business experience in the international business
community. After having held several positions in the European and US
entertainment industries, he founded Hybrid Arts, Inc. in 1986 by arranging
venture financing for ADAP - the first Direct-To-Disk Digital Recording System.
After arranging Hybrid Arts' sale in 1991, Mr. Poertner became CEO of Hydra
Systems, Inc. which developed and marketed ANDOR - a fully functional Macintosh
CPU on a PC peripheral card. Hydra Systems subsequently sold the technology
and the inherent rights to a company in Seoul, Korea in 1992 as part of a
Chapter 7 voluntary liquidation. Mr. Poertner received degrees in economics
from the University of Frankfurt in 1975 and the Klinger Business School in
1973.

BARBARA VELLINE has served as Chief Financial Officer of the Company
since December 1995. She also served as Vice President of Finance and
Controller from September through December 1995. From January of 1987 to April
of 1990, Ms. Velline was an auditor for Price Waterhouse in Los Angeles. From

31
<PAGE> 32

April 1990 to August 1994, Ms. Velline was a manager at Pioneer Electronics
(USA) Inc. In August 1994, Ms. Velline relocated with her family to Piemonte,
Italy. Ms. Velline received her Bachelor of Sciences Degree in Business
Administration/Accounting from the University of Southern California in
December of 1986. Ms. Velline was certified as a public accountant by the
State of California in 1992.

MYLES LAWRENCE has served as Vice President of Engineering of the
Company since August 12, 1996. Previously, he held various managerial
positions with Micro Design International, from 1992 to August 1996, most
recently Director of Technical Services in which he managed all technical
departments including sales engineering, product management, corporate MIS and
technical support. Prior to Micro Design, Mr. Lawrence served as a Vice
President of Product Development at AutoScan Systems from 1990 to 1992, and
Director of Product Development at Integrated Computer Graphics from 1989 to
1990. His earlier experience includes Application Engineering Manager at
Intergraph Corporation; Application Engineer with General Electric's CALMA
Division; and CAD/CAM Manager with Parsons Corporation. Mr. Lawrence received
his Bachelor of Sciences Degree in Engineering from Merrimack College in 1969.

JON JACKSON has served as Vice President of Sales of the Company since
October 2, 1996. Prior to joining the Company, Mr. Jackson served as the Buyer
of Application Software at Computer City from September 1995 to October 1996.
He also served as Retail Product Manager for Tech Data Corporation from August
1994 to September 1995 and as a Buyer for Macy's Inc. from January of 1990 to
July of 1993. Mr. Jackson pursued a continuing education opportunity from July
1993 to August 1994 and previously attended Bob Jones University.

JOHN SHAW has served as Vice President of Corporate Communications of
the Company since August 1, 1996. Previously, he served as a Vice President in
the investor relations practice of Sitrick and Company, from August 1995 to
July 1996, where his account management responsibilities included Syncronys.
Previous to Sitrick and Company, Mr. Shaw served as an Account Group Supervisor
at the Financial Relations Board, from February 1992 to August 1995. Prior he
worked as a business journalist including on-air with a CBS affiliate and as a
print journalist with Gannett News. From 1981 to 1985, Mr. Shaw worked as a
stockbroker with E.F. Hutton. He also served as a Captain and Communications
Officer in the United States Marine Corps from 1978 to 1982. Mr. Shaw holds a
Masters Degree in Management from Webster College (1981) and a Bachelor of Arts
Degree in Psychology from the University of Arizona (1978).

LLOYD I. BARON, PH.D., was elected a Director of the Company on
October 16, 1995 by the Company's Board of Directors to fill one of two
vacancies created by the expansion of the board from three to five members.
Dr. Baron has been working in the field of international business and
enterprise development for over 25 years. During this period he has served as
advisor to private and public sector organizations throughout North America as
well as in Asia, Africa, the Caribbean and Latin America. In 1985, he founded
Horizon Pacific International ("HPI") and since has been its managing director,
creating a team of consultants that specialize in facilitating the creation of
joint ventures between emerging Asian enterprises and their counterparts in
America. Dr. Baron is a graduate of Michigan University, M.A. economics, and
McGill University, Ph.D. economics.

JON D. SAWYER resigned as a Director of the Company effective as of
July 7, 1997. Mr. Sawyer had served as a Director of the Company since October
16, 1995.

There are no family relationships among the executive officers and
directors.

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<PAGE> 33

The Company's Directors hold office until the next annual meeting of
the shareholders and until their successors have been elected and qualified.
The Officers of the company are elected by the Board of Directors at the first
meeting after each annual meeting of the Company's shareholders, and hold
office until they shall resign or have been removed from office. The date of
the next annual meeting of the Company will be determined by the Company's
Board of Directors in accordance with Nevada law. The Company has no audit,
compensation or nominating committee.

DIRECTORS' COMPENSATION

Compensation is not provided for directors of the Company for their
services as such. However, the Company granted each of its two outside
directors 15,000 non-qualified stock options on November 7, 1995. These
options were granted at an exercise price of $6.50 which was equal to the fair
market value on the date of grant and were fully vested on the date of grant.

EXECUTIVE COMPENSATION AND SUMMARY COMPENSATION TABLE

The following summary compensation table sets forth information
regarding executive compensation for the Company's Chief Executive Officer and
other highly compensated Executive Officers for the years ended June 30, 1996
and 1995. No executive officer received compensation in excess of $100,000 for
the year ended June 30, 1995:

<TABLE>
<CAPTION>
LONG TERM COMPENSATION
----------------------
ANNUAL COMPENSATION OPTIONS/
-------------------
FISCAL SARs
YEAR SALARY (NUMBER)
---- ------ --------
<S> <C> <C> <C>
Rainer Poertner, .................... 1995 $ 71,000 150,000
Chief Executive Officer & President 1996 187,500 -0-

Daniel G. Taylor .................... 1995 $ 61,000 150,000
Executive Vice President of Marketing 1996 150,000 -0-

Wendell Brown ....................... 1995 $ 12,000 150,000
Vice President of Technology 1996 146,000 -0-
</TABLE>
The Company has entered into employment agreements with Rainer
Poertner (May 8, 1995), Daniel G. Taylor (May 8, 1995) and Wendell Brown (June
1, 1995). The initial term under these agreements is through June 30, 2000,
but unless either party gives the other written notification 60 days prior to
termination of the initial term or any renewal thereof, the agreements will be
extended for an additional four year term. Nevertheless, these executive
officers may voluntarily terminate their employment with the Company at any
time. Effective December 19, 1996 Mr. Brown resigned from his position as Vice
President of Technology, at which point his employment agreement with the
Company terminated. Additionally, effective the same date Mr. Brown terminated
a consulting agreement with the Company which was originally intended to become
effective upon his resignation. The agreement with Mr. Poertner provides for
an annualized base salary of $187,500 and $239,000 for FY 1996 and 1997,
respectively, with increases of $39,000 each year thereafter. The agreement
with Mr. Taylor provides for an annualized base salary of $150,000 and $185,000
for FY 1996 and 1997, respectively, with increases of $30,000 each year
thereafter. In addition, all three agreements provide for bonuses to be paid
from time to time in amounts to be determined by the Company's Board of
Directors, and for car allowances of $500 per month. Each of these agreements
provides that during the term of the individual's employment by the Company,
and for a period

33
<PAGE> 34

of two years following the termination of such employment, they will hold in
confidence all knowledge and information of a confidential nature with respect
to the Company's business, and will not engage in any business, directly or
indirectly, under any corporate or trade name used by the Company without the
Company's prior consent.

In addition, at June 30, 1996 the following officers and a former
officer of the company had outstanding loans to the company in the amounts set
forth below in the form of a demand note which bears interest at the rate of
prime plus 2%: Rainer Poertner ($45,000), Daniel G. Taylor ($34,500), Wendell
Brown ($34,500) and Kevin P. O'Neill ($34,500).

STOCK OPTION PLAN

In May 1995, the Board of Directors adopted a Stock Option Plan (the
"Plan") which was approved by the Company's shareholders on November 28, 1995.
The Plan allows the Board to grant stock options from time to time to
employees, directors and consultants to the Company. The Board has the power
to determine at the time the option is granted whether the option will be an
Incentive Stock Option (an option which qualifies under Section 422 of the
Internal Revenue Code of 1986) or an option which is not an Incentive Stock
Option. Incentive Stock Options will only be granted to persons who are
employees or officers of the Company. Vesting provisions are determined by the
Board at the time options are granted. In November 1996 the Company's
Shareholders approved an increase in the total number of options to be granted
under the plan from 1,200,000 to 1,700,000 (subject to adjustment in the event
of certain recapitalizations, stock splits, reorganizations and similar
transactions). The option price must be satisfied by the payment of cash. The
Board of Directors may amend the Plan at any time, provided that the Board may
not amend the Plan to materially increase the benefits accruing to participants
under the Plan, or materially change the eligible classes of participants
without shareholder approval.

No options were granted to the Company's Chief Executive Officer or
named Executive Officers during fiscal 1996. During fiscal 1996, the Company
granted non-qualified stock options to purchase an aggregate number of 145,000
shares of Common Stock to other employees, outside directors and consultants to
the Company with the exercise prices equal to the fair market value on the date
of grant with vesting provisions at varying intervals through 1999.

SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

The following table sets forth as of July 8, 1997, the stock ownership
of each person known by the Company to be the beneficial owner of five percent
or more of the Company's Common Stock, each named Executive Officer and
Director individually and all Executive Officers and Directors of the Company
as a group, in each case on a fully diluted basis including shares underlying
stock options. Each person listed holds sole voting and investment power with
respect to the shares shown, except as noted.

The Company does not know of any existing agreements, the operation of
which may at subsequent date result in a change in control of the Company.

<TABLE>
<CAPTION>
ADDRESS OF AMOUNT AND NATURE OF PERCENT
NAME OF BENEFICIAL OWNER BENEFICIAL OWNER BENEFICIAL OWNERSHIP OF CLASS
------------------------ ---------------- -------------------- --------
<S> <C> <C> <C>
Rainer Poertner . . . . . . . . . . . . . . . c/o Syncronys Softcorp (a) 2,299,965(1) 10.0%
Three Buoys Holdings . . . . . . . . . . . . Toddman Building 1,575,000 6.9%
Main Street
P.O. Box 3140
Roadtown, Tortolla
British Virgin Islands
</TABLE>

<PAGE> 35

<TABLE>
<S> <C> <C> <C>
Daniel G. Taylor . . . . . . . . . . . . . . c/o Syncronys Softcorp (a) 6,625,035(2) 28.9%
Lloyd I. Baron . . . . . . . . . . . . . . . c/o Syncronys Softcorp (a) 15,000(3) 0.0%
Mobius Capital Corp. . . . . . . . . . . . . Continental Building 6,475,035 28.2%

3rd Floor 25 Church Street

Hamilton, HMLX Bermuda
All Executive Officers and Directors as a

Group (9 Persons) . . . . . . . . . . . . c/o Syncronys Softcorp (a) 9,325,000(1)(2) 40.6%
(3)(4)
- ---------------
</TABLE>

(a) 3958 Ince Boulevard, Culver City, CA 90232.

(1) Includes 150,000 shares underlying stock options held by Mr. Poertner,
all of which are fully vested.

(2) Includes 6,475,035 shares held by Mobius Capital Corp. in which Mr.
Taylor has an indirect beneficial interest and includes 150,000 shares
underlying stock options held by Mr. Taylor, all of which are fully
vested.

(3) Includes 15,000 shares underlying stock options held by Mr. Baron, all of
which are fully vested.

(4) Includes 685,000 shares underlying stock options held by other officers
and directors of the Company, which vest in varying intervals through
1999.

CERTAIN TRANSACTIONS

TRANSACTIONS INVOLVING THE COMPANY

On January 15, 1996 the Company entered into an agreement with a
British Columbia company (the "Autoship Purchaser") to sell the shares in the
Company's wholly-owned subsidiary, Autoship Systems Corporation ("Autoship").
This agreement, as amended February 26, 1996, provides for a purchase price of
approximately $440,000, which is comprised of (i) the forgiveness of a note
payable due to the Autoship Purchaser from the Company in the principal amount
of approximately $220,000 and (ii) cash payments from the Company over time of
approximately $220,000. This transaction closed on February 29, 1996 and was
approved by a committee of the Company's Board of Directors upon their
evaluation of a fairness opinion issued by an independent investment firm which
reviewed and evaluated the agreement and amendment. The Autoship Purchaser is
wholly owned by Dr. Lloyd Baron, an outside member of the Company's Board of
Directors who was not part of the committee of the Company's Board of Directors
which approved this transaction.

MERGER WITH SEAMLESS SOFTWARE CORPORATION

On May 8, 1995, the Company completed a merger with Seamless in which
the Company was the surviving corporation. The Company issued a total of
10,500,000 shares (approximately 90%) of its common stock to the shareholders
of Seamless. The 10,500,000 shares issued in the merger with Seamless were
issued to the following shareholders of Seamless in the amounts set forth
below:

35
<PAGE> 36

<TABLE>
<CAPTION>
Name Number of Shares
---- ------------------
<S> <C>

Rainer Poertner 2,449,965

Wendell Brown 1,575,000

Mobius Capital Corp. 6,475,035
------------

10,500,000
</TABLE>

TRANSACTIONS INVOLVING SEAMLESS

Since its incorporation in May 1993, Seamless issued 500 shares of its
common stock to each of its two founders, Rainer Poertner and Wendell Brown,
for a cash consideration of $500 each, or a total of $1,000. During February
1995, Messrs. Poertner and Brown sold 267 and 350 shares of their stock,
respectively, to Mobius Capital Corp.

During the period from Seamless' inception through December 31, 1994,
a company affiliated by the common ownership of Rainer Poertner manufactured
Seamless' software product (MacAccess). This same company also purchased this
product from Seamless and distributed it to software distributors and
retailers. Seamless' sales to this affiliated company totaled $107,545 for the
period from May 23, 1993 to December 31, 1994. During this same period of
time, the affiliated company charged Seamless $57,553 for manufacturing costs
for this product. During the first quarter of calendar 1995, the affiliated
company discontinued its operations and Seamless took over full responsibility
for manufacturing and marketing its products. All balances due and owing
between these parties have been settled.

SELLING STOCKHOLDERS

The Selling Stockholders are offering an aggregate of 6,083,389 Shares.
The Company has agreed to register the public offering of such Shares and to
pay substantially all of the expenses in connection therewith; provided,
however, that the Selling Stockholders have agreed to pay to the Company an
amount equal to $30,000 in connection with such expenses. None of the Selling
Stockholders has ever held any position or office with the Company or had any
other material relationship with the Company. The following table sets forth
certain information with respect to the Selling Stockholders:

OWNERSHIP OF COMMON STOCK BEFORE THE OFFERING

SELLING STOCKHOLDER NUMBER OF SHARES PERCENTAGE*

36
<PAGE> 37

PLAN OF DISTRIBUTION

The Selling Stockholders will receive their shares of Common Stock
upon exercise of the Private Placement Warrants or conversion of the Private
Placement Debenture or the Private Placement Convertible Preferred Stock. The
registration of the Securities, however, does not necessarily mean that all or
any of the Securities will be sold by the Selling Stockholders. Sales of the
Selling Stockholder's shares may be effected from time to time in transactions
(which may include block transactions) in the over-the-counter market, in
negotiated transactions, or a combination of such methods of sale, at fixed
prices that may be changed, at market prices prevailing at the time of sale, or
at negotiated prices. The Selling Stockholders may effect such transactions by
selling the Securities directly to purchasers of through broker- dealers that
may act as agents or principals. Such broker-dealers may receive compensation
in the form of discounts, concessions or commissions from the Selling
Stockholders and/or the purchasers of the Securities for whom such
broker-dealers may act as agents or to whom they sell as principals, or both
(which compensation as to a particular broker-dealer might be in excess of
customary commissions).

The Selling Stockholders and any broker-dealers that act in connection
with the sale of the Securities as principals may be deemed to be
"underwriters" within the meaning of Section 2(11) of the Securities Act and
any commission received by them and any profit on the resale of such securities
as principals might be deemed to be underwriting discounts and commissions
under the Securities Act. The Selling Stockholders may agree to indemnify any
agent, dealer or broker-dealer that participates in transactions involving
sales of such securities against certain liabilities, including liabilities
arising under the Securities Act. The Company will not receive any proceeds
from the sales of the Securities by the Selling Stockholders, although the
Company will receive proceeds from the exercise of the Private Placement
Warrants. Sales of the Securities, or even the potential of such sales, would
likely have an adverse effect on the market price of the Common Stock.

At the time a particular offer of Securities is made by or on behalf
of the Selling Stockholder, to the extent required, a Prospectus will be
distributed which will set forth the number of Securities being offered by a
Selling Stockholder and the terms of the offering, including the name or names
of any underwriters, dealers or agents, if any, the purchase price paid by any
underwriter for shares purchased from the Selling Stockholder and any
discounts, commissions or concessions allowed or reallowed or paid to dealers.

DESCRIPTION OF CAPITAL STOCK

The description set forth below does not purport to be complete and is
in all respects qualified by reference to, and gives effect to, the Articles of
Incorporation and the By-Laws of the Company, which have been filed as exhibits
to the Registration Statement.

GENERAL

The authorized capital stock of the Company consists of 75,000,000
shares of Common Stock, par value $.0001 per share and 10,000,000 shares of
Preferred Stock, par value $.0001 per share (the "Preferred Stock"). As of the
date of this Prospectus, there are 24,441,004 shares of Common Stock
outstanding, and 14,500,000 shares of Common Stock reserved for issuance under
the Private Placement Warrants, the Private Placement Debentures and the Stock
Option Plan. As of the date of this Registration Statement, there are 2,000
shares of Preferred Stock outstanding and 3,000 shares reserved for issuance.

37
<PAGE> 38

COMMON STOCK

The holders of shares of Common Stock are entitled to one vote per
share held on all matters submitted to a vote at a meeting of stockholders.
Each stockholder may exercise such vote either in person or by proxy.
Stockholders are not entitled to cumulate their vote for the election of
directors, which means that the holders of more than 50% of the outstanding
shares of Common Stock voting for the election of directors are able to elect
all of the directors to be elected by holders of shares of Common Stock and the
holders of the remaining outstanding shares of Common Stock will not be able to
elect any director. Subject to any preferences which holders of shares of any
Preferred Stock issued after this offering may be entitled, the holders of
outstanding shares of Common Stock are entitled to receive ratably such
dividends, if any, as may be declared from time to time by the Board of
Directors out of funds legally available therefor. See "Dividend Policy." In
the event of a liquidation, dissolution or winding up of the Company, the
holders of outstanding shares of Common Stock are entitled to share ratably in
all assets of the Company which are legally available for distribution to
stockholders, subject to the prior rights on liquidation of creditors and to
any preferences to which holders of shares of Preferred Stock issued after this
offering may be entitled. The holders of shares of Common Stock do not have
any preemptive, subscription, redemption or sinking fund rights. The
outstanding shares of Common Stock are, and the Shares will upon issuance and
sale as contemplated hereby be, duly authorized, validly issued, fully paid and
nonassessable.

PREFERRED STOCK

The Board of Directors has had the authority to issue shares of
Preferred Stock in one or more series and to fix the rights, preferences,
privileges and restrictions thereof, including dividend rights, dividend rates,
conversion rights, voting rights, terms of redemption (including sinking fund
provisions), redemption prices and liquidation preferences, and the number of
shares constituting and the designation of any such series, without approval by
the stockholders.

CERTAIN EFFECTS OF AUTHORIZED AND UNISSUED STOCK

The unissued and unreserved shares of capital stock may be issued for
a variety of proper corporate purposes, including future public or private
offerings to raise additional capital or facilitate acquisitions. The Board of
Directors currently does not have any plans to issue additional shares of
Common Stock or shares of Preferred Stock (other than in connection with the
Warrants, the Debentures and the Stock Option Plan).

One of the effects of the existence of such unissued and unreserved
shares may be to enable the Board of Directors to discourage an attempt to
change control of the Company (by means of a tender offer, proxy contest or
otherwise) and thereby to protect the continuity of the Company's management.
The issuance of shares of Preferred Stock, whether or not related to any
attempt to effect change in control, may adversely affect the rights of holders
of shares of Common Stock.

CERTAIN CHARTER AND STATUTORY PROVISIONS

Certain provisions of the Articles of Incorporation, the By-Laws and
Nevada law may (i) discourage an attempt to change control of the Company (by
means of a proxy contest tender offer or otherwise) and consideration of
stockholder proposals (such as proposals regarding the reorganization,
restructuring or liquidation of the Company or the sale of all or a substantial
part of the Company's assets) and (ii) limit the ultimate liability of
directors and executive officers of the Company for breaches of certain of
their duties to the Company and its stockholders.

38
<PAGE> 39

INDEMNIFICATION OF OFFICERS AND DIRECTORS

Section 78.751 of the Nevada Corporation Law of the State of Nevada,
under which the Company is incorporated, empowers a corporation to indemnify
any person who was or is a party or is threatened to be made a party to any
threatened, pending or completed action, suit or proceeding, whether civil,
criminal, administrative or investigative (other than an action by or in the
right of the corporation), by reason of the fact that he is or was a director,
officer, employee or agent of the corporation, or is or was serving at the
request of the corporation as a director, officer, employee or agent of another
corporation, partnership, joint venture, trust or other enterprise, against
expenses (including attorneys' fees), judgments, fines and amounts paid in
settlement actually and reasonably incurred by the party in connection with
such action, suit or proceeding if he acted in good faith and in a manner he
reasonably believed to be in or not opposed to the best interests of the
corporation, and, with respect to any criminal action or proceeding, had no
reasonable cause to believe his conduct was unlawful.

A corporation also may indemnify any person who was or is a party or
is threatened to be made a party to any threatened, pending or completed action
or suit by or in the right of the corporation to procure a judgment in its
favor by reason of the fact that he is or was a director, officer, employee or
agent of the corporation, or is or was serving at the request of the
corporation as a director, officer, employee or agent of another corporation,
partnership, joint venture, trust or other enterprise against expenses
(including attorneys' fees) actually and reasonably incurred by him in
connection with the defense or settlement of such action or suit if he acted in
good faith and in a manner he reasonably believed to be in or not opposed to
the best interests of the corporation. However, in such an action by or on
behalf of a corporation, no indemnification may be made in respect of any
claim, issue or matter as to which the person is adjudged by a court of
competent jurisdiction, after exhaustion of all appeals therefrom, to be liable
to the corporation or for amounts paid in settlement to the corporation, unless
and only to the extent that the court in which the action or suit was brought
or other court of competent jurisdiction determines upon application that in
view of all the circumstances of the case, the person is fairly and reasonably
entitled to indemnify for such expenses as the court deems proper.

Subsection 78.751 of the Nevada Corporation Law further provides that
to the extent that a director, officer, employee or agent of a corporation has
been successful on the merits or otherwise in defense of any action, suit or
proceeding referred to in such section, or in defense of any claim, issue or
matter herein, he must be indemnified by the corporation against expenses,
including attorneys' fees, actually and reasonably incurred by him in
connection with the defense.

Article VII of the Company's Articles of Incorporation provides that
the Company may indemnify directors, officers, employees and agents to the full
extent allowed for under the Nevada Business Corporation Act.

Article XI of the Articles of Incorporation of the Company provides
that no director, officer or stockholder of the Company shall be personally
liable for damages for breach of fiduciary duty as a director or officer;
provided, that this provision shall not eliminate liability of a director or
officer for acts or omissions involving intentional misconduct, fraud or a
knowing violation of law or payments or distributions in violation of Nevada
law.

TRANSFER AGENT AND REGISTRAR

The transfer agent and registrar for the Common Stock is Standard
Registrar & Transfer Agency.

39
<PAGE> 40

DESCRIPTION OF COMMISSION POSITION ON INDEMNIFICATION

FOR SECURITIES ACT LIABILITIES

Insofar as indemnification for liabilities arising under the
Securities Act may be permitted to directors, officers and controlling persons
of the Company pursuant to the foregoing provisions, or otherwise, the Company
has been advised that in the opinion of the Securities and Exchange Commission
(the "Commission") such indemnification is against public policy as expressed
in the Securities Act and is, therefore, unenforceable. In the event that a
claim for indemnification against such liabilities (other than the payment by
the Company for expenses incurred or paid by a director, officer or controlling
person of the Company 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 Company 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 of 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.

LEGAL MATTERS

Certain legal matters relating to the Common Stock offered hereby will
be passed upon for the Company by Chadbourne & Parke LLP, 30 Rockefeller Plaza,
New York, New York 10112.

EXPERTS

The financial statements of the Company as of June 30, 1996 and for
the years ended June 30, 1996 and 1995 have been so included herein in reliance
on the reports of KPMG Peat Marwick LLP, independent certified public
accountants, and upon the authority of said firm as experts in accounting and
auditing.

40
<PAGE> 41

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

NO DEALER, SALESPERSON OR ANY OTHER PERSON IS AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATIONS IN CONNECTION WITH THIS PROSPECTUS
AND, IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATIONS 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 AN OFFER TO BUY ANY SECURITY
OTHER THAN THE SECURITIES OFFERED BY THIS PROSPECTUS, OR AN OFFER TO SELL OR A
SOLICITATION OF AN OFFER TO BUY ANY SECURITIES BY ANYONE IN ANY JURISDICTION IN
WHICH SUCH OFFER OR SOLICITATION IS NOT AUTHORIZED OR IS UNLAWFUL. THE
DELIVERY OF THIS PROSPECTUS SHALL NOT, UNDER ANY CIRCUMSTANCES, CREATE ANY
IMPLICATION THAT THE INFORMATION HEREIN IS CORRECT AS OF ANY TIME SUBSEQUENT TO
THE DATE OF THE PROSPECTUS.

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

TABLE OF CONTENTS

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

6,083,389 SHARES OF COMMON STOCK

SYNCRONYS SOFTCORP

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

PROSPECTUS

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

July __, 1997

41
<PAGE> 42
SYNCRONYS SOFTCORP

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

<TABLE>
<S> <C>
Independent Auditors' Report............................................... F-2

Consolidated Balance Sheets................................................ F-3

Consolidated Statements of Operations...................................... F-4

Consolidated Statements of Stockholders' Equity (Deficiency)............... F-5

Consolidated Statements of Cash Flows...................................... F-6

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

F-1

<PAGE> 43
INDEPENDENT AUDITORS' REPORT

The Board of Directors and Stockholders
Syncronys Softcorp:

We have audited the accompanying consolidated balance sheet of
Syncronys Softcorp and subsidiary as of June 30, 1996 and the related
consolidated statements of operations, stockholders' equity, and cash flows for
the years ended June 30, 1996 and 1995, which financial statements have been
restated as described in Note 17. These consolidated financial statements are
the responsibility of the Company's management. Our responsibility is to express
an opinion on these consolidated financial statements based on our audits.

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

In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the financial position of Syncronys
Softcorp as of June 30, 1996 and their results of operations and their cash
flows for the years ended June 30, 1996 and 1995 in conformity with generally
accepted accounting principles.

/s/ KPMG PEAT MARWICK LLP

Long Beach, California
August 16, 1996, except for Note 17,
as to which the date is May 15, 1997

F-2
<PAGE> 44
SYNCRONYS SOFTCORP

CONSOLIDATED BALANCE SHEETS

<TABLE>
<CAPTION>
JUNE 30, 1996 MARCH 31, 1997
------------ ------------
(UNAUDITED)
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $ 10,027,386 $ 3,513,378
Trade accounts receivable, net 128,427 2,482,675
Other receivables 2,242,236 146,670
Income tax refund receivable 903,112 --
Inventories -- 252,839
Prepaid expenses and other current assets 229,946 171,832
------------ ------------
Total current assets 13,531,101 6,567,394
------------ ------------

Property and equipment, at cost, net 123,017 165,683
Note receivable, excluding current portion 146,670 73,330
Unamortized debt issuance costs 2,000,930 588,429
Goodwill, less accumulated amortization -- 380,000
Amounts due from related parties, principally shareholders 148,500 114,000
------------ ------------
$ 15,950,218 $ 7,888,836
============ ============

LIABILITIES AND STOCKHOLDERS' DEFICIENCY
Current liabilities:
Trade accounts payable $ 1,040,471 $ 1,577,839
Accrued expenses 5,042,198 2,018,093
Product recall liability 3,361,757 400,000
------------ ------------
Total current liabilities 9,444,426 3,995,932
------------ ------------

Convertible debentures 13,167,596 8,141,071

Stockholders' deficiency:
Common stock, $.0001 par value. Authorized 75,000,000 shares;
issued and outstanding 13,971,011 shares at June 30, 1996, and
19,307,892 shares at March 31, 1997 1,397 1,931
Additional paid in capital 4,981,856 10,806,655
Preferred stock, $.0001 par value. Authorized 10,000,000
shares; no shares issued and outstanding -- --
Accumulated deficit (11,645,057) (15,056,753)
------------ ------------
Total stockholders' deficiency (6,661,804) (4,248,167)
------------ ------------
$ 15,950,218 $ 7,888,836
============ ============
</TABLE>

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

F-3

<PAGE> 45
SYNCRONYS SOFTCORP

CONSOLIDATED STATEMENTS OF OPERATIONS

<TABLE>
<CAPTION>
NINE MONTHS ENDED
YEAR ENDED JUNE 30, MARCH 31,
------------------------------- -------------------------------
1995 1996 1996 1997
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
(unaudited)

Net revenues before product recall returns $ 3,580,404 $ 12,797,786 $ 13,708,179 $ 3,964,627
Product recall returns -- 5,767,375 -- --
Cost of revenues 280,195 1,251,126 1,713,163 1,026,661
------------ ------------ ------------ ------------
Gross profit 3,300,209 5,779,285 11,995,016 2,937,966
------------ ------------ ------------ ------------

Operating expenses:
Research and development 676,037 1,521,374 933,160 1,736,752
Marketing and selling 797,845 6,199,631 6,263,529 2,410,777
General and administrative 547,642 2,694,776 2,660,667 1,906,421
Nonrecurring charge - product recall -- 6,577,277 4,200,000 --
------------ ------------ ------------ ------------
Total operating expenses 2,021,524 16,993,058 14,057,356 6,053,950
------------ ------------ ------------ ------------
Operating income (loss) 1,278,685 (11,213,773) (2,062,340) (3,115,984)
------------ ------------ ------------ ------------

Other (expense) income:
Interest income -- 153,440 90,768 193,457
Interest expense (63,034) (167,596) -- (771,885)
Amortization of discount on
convertible debentures charged to -- (1,298,593) -- (621,862)
interest expense
Income from insurance settlement -- -- -- 750,000
Other, net -- 119,977 182,233 154,578
------------ ------------ ------------ ------------
Total other (expense) income (63,034) (1,192,772) 273,001 (295,712)
------------ ------------ ------------ ------------
Income (loss) before income taxes 1,215,651 (12,406,545) (1,789,339) (3,411,696)
Income tax expense (benefit) 523,303 (384,595) -- --

------------ ------------ ------------ ------------
Net income (loss) $ 692,348 (12,021,950) $ (1,789,339) $ (3,411,696)
============ ============ ============ ============

Net earnings (loss) per share $ .05 (.87) $ (.13) $ (.18)
============ ============ ============ ============
Weighted average number of common shares
and common share equivalents used in
computation of net earnings (loss) per share 13,251,693 13,849,136 13,825,773 19,307,892
============ ============ ============ ============
</TABLE>

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

F-4

<PAGE> 46

SYNCRONYS SOFTCORP

CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY (DEFICIENCY)

(Nine months ended March 31, 1997 is unaudited)

RETAINED TOTAL
COMMON STOCK ADDITIONAL EARNINGS FOREIGN STOCKHOLDERS'
---------------------------- PAID IN (ACCUMULATED CURRENCY EQUITY
SHARES AMOUNT CAPITAL DEFICIT) TRANSLATION (DEFICIENCY)
------------ ------------ ------------ ------------ ------------ -------------
<S> <C> <C> <C> <C> <C> <C>

Balance at June 30, 1994 12,956,574 $ 1,296 258,745 (315,455) -- $ (55,414)
Common stock issued for cash 804,437 80 1,608,794 -- -- 1,608,874
Debenture converted to common
stock 60,000 6 119,994 -- -- 120,000
Foreign currency translation
adjustment -- -- -- -- (9,496) (9,496)
Net income -- -- -- 692,348 -- 692,348
------------ ------------ ------------ ------------ ------------ ------------

Balance at June 30, 1995 13,821,011 1,382 1,987,533 376,893 (9,496) 2,356,312
Issuance of common stock in
exchange for consulting
services 150,000 15 356,235 -- -- 356,250
Issuance of stock options in
exchange for consulting
services -- -- 717,633 -- -- 717,633
Foreign currency translation
adjustment -- -- -- -- 9,496 9,496
Discount on issuance of
convertible debentures -- -- 1,920,455 -- -- 1,920,455
Net loss -- -- -- (12,021,950) -- (12,021,950)
------------ ------------ ------------ ------------ ------------ ------------

Balance at June 30, 1996 13,971,011 1,397 4,981,856 (11,645,057) -- (6,661,804)
Debenture converted to common
stock (unaudited) 5,336,881 534 5,610,959 -- -- 5,611,493
Issuance of stock options in
exchange for consulting
services (unaudited) -- -- 213,840 -- -- 213,840
Net loss (unaudited) -- -- -- (3,411,696) -- (3,411,696)
============ ============ ============ ============ ============ ============
Balance at March 31,
1997 (unaudited) 19,307,892 $ 1,931 10,806,655 (15,056,753) -- (4,248,167)
============ ============ ============ ============ ============ ============
</TABLE>

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

F-5

<PAGE> 47

SYNCRONYS SOFTCORP
CONSOLIDATED STATEMENTS OF CASH FLOWS

<TABLE>
<CAPTION>
YEAR ENDED JUNE 30, NINE MONTHS ENDED MARCH 31,
---------------------------- ----------------------------
1995 1996 1996 1997
------------ ------------ ------------ ------------
Cash flows from operating activities: (unaudited)
<S> <C> <C> <C> <C>
Net income (loss) $ 692,348 $(12,021,950) $ (1,789,339) $ (3,411,696)
Adjustments to reconcile net income (loss) to net cash (used in)
provided by operating activities:
Amortization of discount on convertible
debentures charged to interest expense -- 1,298,593 -- 621,862
Depreciation and amortization 91,538 181,390 53,400 283,506
Gain on sale of subsidiary -- (202,616) (202,616) --
Change in deferred taxes (230,000) 230,000 190,395 --
Non-cash expense related to the
issuance of stock and stock options -- 1,073,883 -- 238,670
Accrued interest on debentures -- 167,596 -- 771,886
Other -- (3,485) -- --
Changes in operating assets and liabilities:
Trade accounts receivable (2,418,663) 2,457,077 2,061,468 (2,354,248)
Other receivables -- (2,266,987) -- 2,095,566
Income tax refund receivable -- (903,112) -- 903,112
Inventories (27,733) 27,733 (299,767) (252,839)
Prepaid expenses and other current assets (100,106) (62,831) (204,879) 58,114
Amounts due from related parties,
principally shareholders -- (148,500) -- 34,500
Other assets 5,872 -- -- --
Accounts payable 238,854 846,226 1,172,836 537,368
Accrued expenses 213,676 4,828,522 1,188,763 (3,024,105)
Product recall liability -- 3,361,757 -- (2,961,757)
Taxes payable 724,994 (724,994) (724,994) --
------------ ------------ ------------ ------------
Net cash (used in) provided by operating (809,220) (1,861,698) 1,445,267 (6,460,061)
activities:
------------ ------------ ------------ ------------
Net cash used in investing activities:
Capital expenditures (37,603) (293,201) (125,189) (53,947)
------------ ------------ ------------ ------------
Net cash provided by (used in) financing activities:
Issuance of debentures, net of issuance costs 1,608,874 11,570,000 -- --
Principal payments on long-term debt (57,600) (93,681) (93,681) --
------------ ------------ ------------ ------------
Net cash provided by (used in) financing 1,551,274 11,476,319 (93,681) --
activities:
------------ ------------ ------------ ------------
Effect of exchange rate changes on cash and cash (9,496) -- -- --
equivalents
Net increase (decrease) in cash and cash equivalents 694,955 9,321,420 1,226,397 (6,514,008)
Cash and cash equivalents at beginning of period 11,011 705,966 705,966 10,027,386
------------ ------------ ------------ ------------
Cash and cash equivalents at end of period $ 705,966 $ 10,027,386 $ 1,932,363 $ 3,513,378
============ ============ ============ ============

Supplemental disclosure of cash flow information:
Cash paid during the period for income taxes $ -- $ 903,112 $ 1,015,647 $ --
No cash was paid during the periods for interest $ -- $ -- $ -- $ --

Supplemental disclosure of non-cash activities:
The Company issued 60,000 shares of common stock
in exchange for redemption of a debenture
issued in connection with the purchase of the $ 120,000 $ -- $ -- $ --
remaining minority interest in Subsidiary
Forgiveness of indebtedness in conjunction with $ -- $ 220,000 $ -- $ --
sale of Subsidiary
Convertible debentures including accrued
interest and unamortized debt issuance costs $ -- $ -- $ -- $ 5,216,344
converted to equity during period
Acquisition of Veritas Technology Solutions Ltd.
- a stock for stock purchase recorded at the
fair market value of shares issued on the date $ -- $ -- $ -- $ 400,000
of issuance
</TABLE>

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

F-6

<PAGE> 48

SYNCRONYS SOFTCORP

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(information relating to the nine months ended March 31, 1997 is unaudited)

(1) ORGANIZATION

Syncronys Softcorp (the "Company") develops and markets software products
for sale principally to software distributors and retailers in the U.S.
and Canada. The Company was originally incorporated under the laws of the
State of Colorado on May 2, 1986, under the name "Signum Inc." for the
purpose of evaluating, structuring and completing a merger with, or
acquisition of, a business opportunity. In December 1986, the Company
completed an initial public offering of its securities. In November 1987,
the Company completed the acquisition of certain assets and entered into
the business of attempting to develop a secure modem product designed to
protect computer based information. The business ceased operations during
1988 when the Company had depleted its working capital.

The Company remained inactive until April, 1994 when it arranged for the
receipt of a limited amount of funds to recommence minimal operations. On
May 9, 1994 the shareholders of the Company approved a name change to
"Redstone Capital, Inc." ("Redstone"), a merger with a newly formed
Nevada corporation, for the purpose of changing the Company's state of
domicile to Nevada and a reduction of the shares outstanding through a 1
for 400 reverse stock split. All financial information and share data
contained herein has been adjusted to reflect the reverse split.

On May 4, 1995, the Company's shareholders approved a merger with
Seamless Software Corporation ("Seamless") and a change of the Company's
name to Syncronys Softcorp. The merger with Seamless was completed on May
8, 1995, with the Company being the surviving corporation. Seamless was a
software developer and publisher with offices in Culver City, California
and Vancouver, British Columbia. Seamless was incorporated in Delaware on
May 11, 1993, under the name Hypro Technologies, Inc. ("Hypro"), and in
March 1995, Hypro effected a merger with a newly formed Nevada
corporation for the purposes of changing its domicile to Nevada and
changing its name to Seamless Software Corporation. In April 1995,
Seamless acquired all of the outstanding common stock of Autoship Systems
Corporation ("Autoship"), a company engaged in research, development and
marketing of computer software for the marine industry. On March 1, 1996
the Company sold its interest in the Autoship subsidiary and recognized a
gain on the sale of approximately $202,000.

At the time of the acquisition of Autoship by Seamless the defacto
controlling beneficial shareholder and chief executive officer of
Autoship also owned an indirect majority beneficial interest in Seamless.
Redstone shares were issued to a corporation in which this individual has
an indirect beneficial interest. In connection with the merger with
Seamless the shares issued to the corporation aggregated 6,475,035 or
approximately 55% of total common shares then outstanding. Subsequent to
such merger an additional 4,024,965 shares, or approximately 35% of then
outstanding shares, were issued to the two remaining shareholders of
Seamless. Accordingly, the historical financial statements of the Company
(formerly "Redstone"), as successor to the Seamless and Autoship
businesses, include the combined operations of Seamless for all periods
presented and Autoship through February 29, 1996. Additionally, assets
and liabilities are recorded at the original accounting basis prior to
the merger.

(2) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

CASH AND CASH EQUIVALENTS

Cash and cash equivalents includes certificates of deposit with an
initial term of less than three months.

F-7

<PAGE> 49

SYNCRONYS SOFTCORP

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(information relating to the nine months ended March 31, 1997 is unaudited)

REVENUE RECOGNITION

The Company recognizes revenues as products are shipped, net of
allowances for returns, provided that no significant vendor obligations
remain and collection of the resulting receivable is deemed probable by
management. The Company provides customer support as an accommodation to
purchasers of its products for a limited time. Costs associated with such
post sale customer support have been provided for in accrued expenses on
the accompanying balance sheet.

REVENUE RELATED RESERVES

Reserves for sales returns are established based upon historical
experience and management's estimates as shipments are made. The
allowance for sales returns totaled $1,166,387 and $672,562 at June 30,
1996 and March 31, 1997, respectively, and is shown as a reduction of
accounts receivable on the accompanying balance sheets.

RESEARCH AND DEVELOPMENT COSTS

Costs related to designing, developing and testing new software products
are expensed as research and development as incurred. Although costs
incurred subsequent to establishing technological feasibility of software
products are permitted capitalization pursuant to Statement of Financial
Accounting Standards ("SFAS") No. 86 (Accounting for the Costs of
Computer Software to be Sold, Leased or Otherwise Marketed), the Company
has not capitalized any software development costs since the impact to
the financial statements for the periods presented has been immaterial.
Research and development costs aggregated $1,521,374 and $676,037 for the
fiscal years ended June 30, 1996 and 1995, respectively, and $1,736,752
for the nine months ended March 31, 1997, respectively.

DEPRECIATION AND AMORTIZATION

Property and equipment are stated at cost. Depreciation is provided on
furniture and equipment using the straight-line method over the estimated
economic life of the assets, generally three years. Depreciation is
provided on leasehold improvements using an accelerated method over the
estimated economic life or the lease term, whichever is shorter.

INCOME TAXES

The Company accounts for income taxes under Statement of Financial
Accounting Standards No. 109, "Accounting for Income Taxes" (Statement
109). Statement 109 requires that deferred income taxes be recognized for
the tax consequences of "temporary differences" by applying enacted
statutory tax rates applicable to future years to differences between the
financial statement carrying amounts and the tax basis of existing assets
and liabilities.

NET EARNINGS (LOSS) PER SHARE

Net earnings per share are based on the weighted average number of common
and common equivalent shares outstanding during each period.
Additionally, common shares issued in the merger of Seamless into the
Company (note 1) have been assumed to be outstanding for all periods
presented. Common stock equivalents and convertible debentures have been
excluded from the computation for the year ended June 30, 1996 and the
nine months ended March 31, 1996 and 1997, loss periods, as their
inclusion would be anti-dilutive.

F-8

<PAGE> 50

SYNCRONYS SOFTCORP

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(information relating to the nine months ended March 31, 1997 is unaudited)

FINANCIAL INSTRUMENTS

The Financial Accounting Standards Board's SFAS No. 107 (Disclosures
about Fair Value of Financial Instruments) defines fair value of a
financial instument as the amount at which the instrument could be
exchanged in a current transaction between willing parties. The Company's
carrying value of trade and other accounts receivables, income tax
receivable, notes receivable, accounts payable, accrued expenses, product
recall liability and convertible debentures approximates fair value
because the instrument has a short-term maturity or because applicable
interest rates are comparable to current borrowing rates.

LONG-LIVED ASSETS

In March 1995, SFAS No. 121 (Accounting for the Impairment of Long-Lived
Assets and for Long-Lived Assets to be Disposed of) was issued. This
statement provides guidelines for recognition of impairment losses
related to long-term assets and is effective for fiscal years beginning
after December 15, 1995. The Company's management does not believe that
the adoption of this new standard will have a material effect on the
Company's financial statements.

ACCOUNTING FOR STOCK OPTIONS

In October 1995, SFAS No. 123 (Accounting for Stock-Based Compensation)
was issued. This statement encourages, but does not require, a fair value
based method of accounting for employee stock options and will be
effective for fiscal years beginning after December 15, 1995. The Company
has elected to continue to measure and to recognize compensation costs
under APB Opinion No. 25 (Accounting for Stock Issued to Employees) and
to comply with the pro forma disclosure requirements of SFAS No. 123.

USE OF ESTIMATES

Management of the Company has made a number of estimates and assumptions
relating to the reporting of assets and liablilities to prepare these
financial statements in conformity with generally accepted accounting
principles. Actual results could differ from those estimates.

(3) OTHER RECEIVABLES

Other receivables at June 30, 1996 consists primarily of a $2,000,000
receivable from the Company's primary director's and officer's insurance
carrier for reimbursement of a lawsuit settlement. As discussed at note
15, the Company has reached a settlement in principle whereby the Company
and its insurers would pay $3,250,000 as full settlement. The Company's
primary director's and officer's insurance carrier has agreed to
contribute $2,000,000 to the settlement pursuant to the terms of the
insurance policy.

F-9

<PAGE> 51

SYNCRONYS SOFTCORP

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(information relating to the nine months ended March 31, 1997 is unaudited)

(4) UNAMORTIZED DEBT ISSUANCE COSTS

Unamortized debt issuance costs of $2,000,930 at June 30, 1996 represent
$1,379,068 unamortized portion of fees and expenses and $621,862
unamortized discount related to the Company's issuance of $13 million in
convertible debentures (see note 10 and 17). The fees and expenses will
be amortized through the date of conversion or the maturity date,
whichever is earlier, and the discount will be amortized over the
remaining conversion period of the debenture, approximately three months.
Unamortized debt issuance costs of $588,429 at March 31, 1997 represent
the unamortized portion of fees and expenses (unaudited).

(5) PROPERTY AND EQUIPMENT

Property and equipment at June 30, 1996 consists of the following:

<TABLE>
<S> <C>
Computer & office equipment $ 33,341
Furniture and equipment 92,241
Leasehold improvements 73,551
---------
199,133
Less accumulated depreciation (76,116)
---------
$ 123,017
=========
</TABLE>

(6) NOTE RECEIVABLE FROM RELATED PARTY

On March 1, 1996, the Company sold Autoship, its wholly-owned subsidiary,
(see note 1) to a British Columbia company in which an outside director
of the Company is the sole shareholder. Pursuant to the sale agreement,
the Company received forgiveness of indebtedness of CDN$300,000 (or
approximately US$220,000) and a note for CDN$300,000 (or approximately
US$220,000). The Company believes that the terms of the sale are
comparable to those applicable under an arms-length transaction.

The note receivable bears no interest, is secured by the assets of
Autoship and requires annual principal payments of CDN$100,000 on March 1
1997, 1998 and 1999. The long-term portion of the note receivable totaled
USD$146,670 and USD $73,330 at June 30, 1996 and March 31, 1997,
respectively. The current portion of $73,330 and 146,670 at June 30,1996
and March 31, 1997, respectively, is reflected in other receivables on
the accompanying balance sheet.

(7) AMOUNTS DUE FROM RELATED PARTIES, PRINCIPALLY SHAREHOLDERS

At June 30, 1996 and March 31, 1997 the Company had $148,500 and
$114,000, respectively, in amounts due from certain officers and
shareholders, and a former officer of the Company. The loans bear
interest at a rate of prime plus 2% with the principal amount of the loan
to be paid on demand. The Company does not anticipate collecting the
amounts within the next twelve months.

F-10

<PAGE> 52

SYNCRONYS SOFTCORP

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(information relating to the nine months ended March 31, 1997 is unaudited)

( 8) ACCRUED EXPENSES

Accrued expenses at June 30, 1996 and March 31, 1997, respectively,
consist of the following:

<TABLE>
<CAPTION>
June 30, 1996 March 31, 1997
------------ --------------
(unaudited)
<S> <C> <C>
SoftRAM litigation and settlement costs $4,299,318 $1,250,000
Sales & marketing expenses 484,386 623,088
Other 258,494 145,005
---------- ----------
$5,042,198 $2,018,093
========== ==========
</TABLE>

(9) PRODUCT RECALL LIABILITY

The Company announced on October 20, 1995 that it had identified a
problem with the Windows 95 version of its primary product SoftRAM
(SoftRAM95), the net result of which is that Random Access Memory ("RAM")
was not being delivered to the Windows 95 operating system. On December
18, 1995, the Company initiated the recall of SoftRAM95 from the retail
channel. As a result of the product problem and recall, various third
parties asserted legal claims against the Company (see note 15). Although
the final cost of the recall cannot be estimated with any certainty, the
Company has taken a one time charge of $12,344,652 during fiscal 1996 to
provide for the expected costs of this recall. The nonrecurring charge
consists of the following:

<TABLE>
<S> <C>
Refund and upgrade obligation
arising from legal settlement $ 2,358,200
Estimated returns related to product recall 5,767,375
Other legal settlements and related
fees 4,219,077
-----------
$12,344,652
===========
</TABLE>

The product recall liability at June 30, 1996 and March 31, 1997,
respectively, consists of the following:

<TABLE>
<CAPTION>
June 30, 1996 March 31, 1997
------------- --------------
(unaudited)
<S> <C> <C>
Sales returns on collected sales $1,003,557 $ --
Refund and upgrade obligation
arising from legal settlement 2,358,200 400,000
---------- ----------
$3,361,757 $ 400,000
========== ==========
</TABLE>

F-11

<PAGE> 53

SYNCRONYS SOFTCORP

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(information relating to the nine months ended March 31, 1997 is unaudited)

(10) CONVERTIBLE DEBENTURES

On May 22, 1996, the Company completed a $13 million private placement of
convertible debentures. The convertible debentures were sold at 100
percent of principal amount and carry an interest rate of ten percent,
with interest deferred until the earliest of the date of conversion,
redemption or May 17, 1999. The debentures are initially convertible at
the option of the holder beginning in 45 days from the closing date into
free trading shares of the Company's common stock at the lesser of $5.50
per share or eighty five percent of the market price of the Company's
common stock at the time of conversion. Any debentures not converted by
May 22, 1999 and related accrued interest will automatically be converted
into common stock based on the conversion rate, as defined (see note 15).

Each convertible debenture carries a warrant entitling its holder to
initially purchase a number of shares of the Company's common stock,
equal to the aggregate principal amount of such debenture divided by
$5.50. Warrants are not exercisable for 105 days from the date of
issuance, have a five-year term and are exercisable at a purchase price
of $5.50 per share. The value ascribed to the warrants was not material
to the Company's consolidated financial statements.

(11) INCOME TAXES

Income tax expense (benefit) for the years ended June 30, 1996 and 1995
is as follows:

<TABLE>
<CAPTION>
1995
Current Deferred Total
--------- --------- ---------
<S> <C> <C> <C>
Federal $ 608,821 (195,000) $ 413,821
State 144,482 (35,000) 109,482
--------- --------- ---------
$ 753,303 (230,000) $ 523,303
========= ========= =========
</TABLE>

<TABLE>
<CAPTION>
1996
Current Deferred Total
--------- --------- ---------
<S> <C> <C> <C>
Federal $(530,546) 195,000 $(335,546)
State (84,049) 35,000 (49,049)
--------- --------- ---------
$(614,595) 230,000 $(384,595)
========= ========= =========
</TABLE>

F-12

<PAGE> 54

SYNCRONYS SOFTCORP

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(information relating to the nine months ended March 31, 1997 is unaudited)

Income tax expense differs from the amount computed by applying the Federal
statutory tax rate of 34% to income (loss) before income taxes as shown below:

<TABLE>
<CAPTION>
1995 1996
----------- -----------
<S> <C> <C>
Computed "expected" income
tax (benefit) expense $ 413,321 $(4,218,225)
Nondeductible items -
compensation expense -- 365,120
Nondeductible items-
amortization of discount on
convertible debentures -- 441,521
Change in the valuation
allowance -- 3,433,000
State income taxes, net of
Federal benefit 109,482 10,443
Carryback and refund of
taxes from prior year -- (413,821)
Other 500 (2,633)
----------- -----------
$ 523,303 $ (384,595)
=========== ===========
</TABLE>

The tax effects of temporary differences that give rise to significant portions
of deferred tax assets and deferred tax liabilities at June 30, 1996 and 1995
are presented below:

<TABLE>
<CAPTION>
1995 1996
----------- -----------
<S> <C> <C>
Deferred tax assets:
Accounts receivable reserves $ 127,500 $ 94,000
Inventory -- 131,000
Net operating loss carryforwards -- 2,665,000
Accrued expenses 68,000 520,000
Other 34,500 23,000
----------- -----------
Total gross deferred tax asset 230,000 3,433,000
Less: valuation allowance -- (3,433,000)
=========== ===========
Net deferred tax asset $ 230,000 $ --
=========== ===========
</TABLE>

In assessing the realizability of deferred tax assets, management considers
whether it is more likely than not that some portion or all of the deferred tax
assets will be realized. The ultimate realization of deferred tax assets is
dependent upon the generation of future taxable income during the periods in
which those temporary differences become deductible. Management considers
projected future taxable income and tax planning strategies in making this
assessment. Based on the level of historical taxable income and projections for
future taxable income over the periods in which the level of deferred tax assets
are deductible, management believes that it is not more likely than not that the
Company will realize the benefits of these deductible differences at June 30,
1996. Accordingly, a valuation allowance has been provided for the total
deferred tax assets.

F-13

<PAGE> 55

SYNCRONYS SOFTCORP

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(information relating to the nine months ended March 31, 1997 is unaudited)

(12) STOCK OPTION PLAN

In May, 1995 the Board of Directors (the "Board") of the Company adopted
the "1995 Stock Option Plan" (the "Plan") which was approved by the
Company's shareholders on November 28, 1995. The Plan allows the Board to
grant stock options from time to time to employees, officers, directors
of the Company and consultants to the Company. At the time of grant of
the options the Board determines whether the options are to be "Incentive
Stock Options" or "Non-Qualified Stock Options". Incentive Stock Options
may only be granted to employees of the Company. The options vest over
periods prescribed by the Board at the time of grant. The Plan may be
amended at any time by the Board of Directors of the Company under
certain restrictions. All options granted through June 30, 1996 have been
granted at exercise prices equal to the fair market value at the date of
grant. In addition, the Company grants stock options to third parties
from time to time under an informal option plan. Stock option activity
under the Plans follows:

<TABLE>
<CAPTION>
NUMBER OF PRICE PER
SHARES SHARE
------------- --------------
<S> <C> <C>
Balance at June 30, 1995 703,000 $ 6.50
Options granted 980,000 2.625-6.50
Options terminated (56,918) 6.50
------------- --------------
Balance at June 30, 1996 1,626,082 2.625-6.50
Options granted (unaudited) 1,315,000 0.875-3.53
Options terminated (unaudited) (88,710) 1.50-6.50
------------- --------------
Balance at March 31, 1997
(unaudited) 2,852,376 $ 0.875-6.50
============= ==============
</TABLE>

Under the terms of the plans 818,000 and 1,549,692 options were exercisable as
of June 30, 1996 and March 31, 1997, respectively. The remaining 808,082 and
1,302,684 options issued as of June 30, 1996 and March 31, 1997, respectively,
vest at varying intervals through 2002. The weighted average remaining
contractual life of stock options as of March 31, 1997 was as follows
(unaudited):

<TABLE>
<CAPTION>
Options Outstanding Options exercisable
- ------------------------------------------------------------------------------ -----------------------------------------
Options Weighted Options Weighted average
Range of outstanding at Remaining average exercisable at average
exercise at March 31, contractual exercise at March 31, exercise price
prices 1997 life price 1997 price
- ------------------- ----------------- ----------------- ------------- ---------------- -----------------
<S> <C> <C> <C> <C> <C>
$ 0.875 - 1.25 355,000 4.6 years $ 1.034 66,650 $ 0.9812
1.375 - 1.50 225,000 4.6 years 1.458 8,333 1.375
2.625 - 3.53 1,582,500 3.1 years 3.096 817,500 3.038
6.50 689,876 3.1 years 6.50 657,209 6.50
- ------------------- ----------------- ----------------- ------------- ---------------- -----------------
$ 0.875 - 6.50 2,852,376 3.4 years $ 3.533 1,549,692 $ 4.409
=================== ================= ================= ============= ================ =================
</TABLE>

F-14

<PAGE> 56

SYNCRONYS SOFTCORP

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(information relating to the nine months ended March 31, 1997 is unaudited)

During the year ended June 30, 1996 and nine months ended March 31, 1997
the Company granted 935,000 and 270,000 options, respectively, to
non-employees in exchange for certain product licensing agreements and
services. In accordance with SFAS No. 123 provisions requiring recording
of the fair value of services received for options granted to
non-employees, the Company recorded compensation expense of $717,633 and
$213,840 at June 30, 1996 and March 31, 1997, respectively, for the
vested portion of the estimated fair value of the stock options at the
date of grant. Unvested options with a value at the grant date of
$574,462 and $786,454, at June 30, 1996 and March 31, 1997, respectively,
will be expensed over the vesting period, generally one to three years.
The fair value of each option grant was estimated on the date of grant
using the Black-Scholes option-pricing model with the following weighted
average assumptions: expected volatility of 70%; risk-free interest rates
of 6.25%; and expected lives ranging from two to three years.

(13) SIGNIFICANT CUSTOMERS, CONCENTRATION OF CREDIT RISK AND OTHER
CONCENTRATIONS

Significant Customers

The Company has three significant customers that comprised 37%, 30% and
11%, respectively, of net sales for the year ended June 30, 1996. During
the year ended June 30, 1995 sales to two customers comprised 45% and
21%, respectively, of net sales. During the nine months ended March 31,
1997 sales to two customers comprised 41% and 45%, respectively, of net
sales.

Concentration of Credit Risk

Certain financial instruments subject the Company to credit risk. These
financial instruments consist primarily of trade receivables. The Company
sells its products primarily to software distributors and resellers. The
Company performs ongoing credit evaluations of its customers and
maintains reserves, including reserves to estimate the potential for
future product returns.

Other Concentrations

The Company's SoftRAM product line represents 96% and 71% of the
Company's net sales for the years ended June 30, 1996 and 1995,
respectively. As a result of the Company's recall of SoftRAM, the
Company's future revenues are dependent upon the Company's ability to
develop new products, including the new version of SoftRAM. Windrenalin
HD represents 48 % of the Company's net sales for the nine month period
ended March 31, 1997 (unaudited).

F-15

<PAGE> 57

SYNCRONYS SOFTCORP

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(information relating to the nine months ended March 31, 1997 is unaudited)

(14) SCHEDULE OF VALUATION AND QUALIFYING ACCOUNT

Following is a summary of activity in the Company's allowance for
doubtful accounts and sales returns for the year ended June 30, 1996 and
the nine months ended March 31, 1997 (unaudited):

<TABLE>
<CAPTION>
ALLOWANCE FOR
DOUBTFUL ALLOWANCE FOR
ACCOUNTS SALES RETURNS
------------ ------------
<S> <C> <C>
Balance at June 30, 1995 $ 35,000 $ 340,000
Additions charged to cost and expenses - 5,930,205 (1)(3)
Deductions (35,000) (5,103,818)(2)
------------ ------------
Balance at June 30, 1996 - 1,166,387 (1)(3)
Additions charged to cost and expenses 100,000 175,936
(unaudited)
Deductions (unaudited) - (669,761)
------------ ------------
Balance at March 31, 1997 (unaudited) $ 100,000 $ 672,562
============ ============
</TABLE>

(1) $1,166,387 has been charged against net sales and $4,763,818 has been
recorded as a nonrecurring charge.
(2) Actual returns and product recalled by the Company during the year ended
June 30, 1996.
(3) An additional $1,003,557 has been charged as expense and recorded as
product recall liability as of June 30, 1996.

(15) COMMITMENTS AND CONTINGENCIES

The Company rents its facility under an informal lease arrangement which
requires monthly payments ranging from $8,900 to $10,500 over the three
year lease term expiring in December 1998. Rent expense for the years
ended June 30, 1995 and 1996 were $32,436 and 71,908, respectively. The
minimum lease commitments under the lease aggregate as follows:

<TABLE>
<S> <C>
For the year ended June 30:
1997 $ 111,000
1998 121,000
1999 63,000
------------
Total minimum lease commitments $ 295,000
============
</TABLE>

The Company is obligated under employment agreements with certain
officers of the Company which have initial terms through 2000 and renewal
options for each four year period thereafter.

The Company has been engaged in various lawsuits arisng from the product
recall during the year ended June 30, 1996. As of June 30, 1996, the
Company reached settlement in principle on two of its lawsuits. In one of
the lawsuits, the Company and certain current or former directors and
officer of the Company have been named as defendants in a putative class
action lawsuit commenced on December 14, 1995 in the United States
District Court. The complaint claims that purchasers of the Company's
common stock between June 1, 1995 and December 7, 1995

F-16

<PAGE> 58

SYNCRONYS SOFTCORP

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(information relating to the nine months ended March 31, 1997 is unaudited)

suffered damages. The putative class is seeking damages of an unspecified
amount, injunctive relief and the costs and expenses of litigation
including attorneys fees. The parties have reached settlement in
principle, whereby the defendants would pay $3,250,000 in full
settlement. The Company's primary director's and officer's insurance
carrier has agreed to contribute up to $2,000,000 to the settlement. The
Company's excess director's and officer's insurance carrier has agreed to
contribute up to $1,250,000 to the settlement, but has preserved its
coverage defenses and has reserved its right to bring a declaratory
action against the Company to recover its contributions. (Subsequent to
June 30, 1996 the insurance carrier filed a complaint for declaratory
relief against the Company and certain current and former officers and
directors and the Company filed a counterclaim for bad faith against the
insurance company and the brokers.) The parties have submitted the
settlement papers to the court. Any settlement is subject to notice and
court approval. The Company has provided for the $3,250,000 in accrued
expenses on the accompanying balance sheet as of June 30, 1996, and has
recorded a receivable for the $2,000,000 to be reimbursed by the primary
insurance carrier (see note 3). In the second lawsuit, the Company has
agreed to pay an immaterial amount, which the Company has provided for in
accrued expenses in the accompanying balance sheet. The Company has
secured final settlement on all other lawsuits arising from the product
recall and has provided for the settlement costs in full as of June 30,
1996. Although the Company is not aware of any other asserted or
unasserted legal claims, there can be no assurance that other claims
relating to the product recall will not be asserted in the future.

(16) EVENTS SUBSEQUENT TO JUNE 30, 1996

On August 1, 1996, the Board approved an amendment to the Company's stock
option plan (which was again amended by the Board in October of 1996) to
increase the total number of options to be granted under the Company's
stock option plan from 1,200,000 to 2,000,000 (subject to adjustment in
the event of certain recapitalizations, stock splits, reorganizations and
similar transactions). This increase in total number of options to be
granted under the plan was approved by the Company's Shareholders on
November 26, 1996.

In December, 1996, the Company acquired a foreign software developer. As
part of the agreement, the Company issued 400,000 shares of its common
stock upon the closing of the transaction and may issue up to 600,000
shares in future periods if certain performance milestones, as defined in
the agreement, are achieved. The transaction was accounted for under the
purchase method. The pro forma effect of the transaction, assuming it had
taken place on July 1, 1996 would be immaterial to the accompanying
financial statements.

(17) RESTATEMENT OF FINANCIAL STATEMENTS

In March 1997, the Securities and Exchange Commission issued a new
interpretation for the accounting for convertible preferred stock and
convertible debt instruments issued with provisions providing for
conversion into common stock at a discount from the market price of the
common stock. The new interpretation provides that assured incremental
yield embedded in the conversion terms' discount from fair market value
should be accounted for as an additional interest expense in the case of
convertible debt and as a dividend to preferred shareholders in the case
of convertible preferred stock. Accordingly, the Company has restated its
financial statements for the year ended June 30, 1996. At June 30, 1996,
compliance with this new ruling resulted in a non-cash charge to interest
expense of $1.3 million, and accounted for a $0.10 per share increase in
the Company's net loss per share. During the nine month period ended
March 31, 1997 additional charges aggregating $621,862 relating to the
original issue discount were amortized as interest expense over the
remaining conversion period of the debenture, approximately three months.

F-17

<PAGE> 59

SYNCRONYS SOFTCORP

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(information relating to the nine months ended March 31, 1997 is unaudited)

A summary of the impact of such restatement of the financial statements
for the year ended June 30, 1996 is as follows:

<TABLE>
<CAPTION>
Previously As Restated
Reported
----------- ------------
<S> <C> <C>
Net loss ......................... (10,723,357) (12,021,950)
Net loss per share ............... (.77) (.87)
Assets ........................... 15,328,356 15,950,218
Stockholders Deficiency .......... (7,283,666) (6,661,804)
</TABLE>

(18) EVENTS SUBSEQUENT TO MARCH 31, 1997 (UNAUDITED)

On April 10, 1997, the Company completed a $1,250,000 private placement
of a convertible debenture. The convertible debenture was sold at 100
percent of principal amount and carries an interest rate of nine percent
with interest deferred until the earliest of the date of conversion or
April 10, 2000. The debenture is convertible, in whole or in part, at the
option of the holder at any time into restricted shares of the Company's
common stock at a coversion price of $1.80 per share. Any amount not
converted by April 10, 2000 and related accrued interest will
automatically be converted into common stock based on the conversion
rate. The convertible debenture carries a warrant entitling its holder to
purchase 694,444 shares of the Company's common stock at a purchase price
of $2.75 per share. The warrant may be exercised, in whole or in part, at
any time throughout its five year term.

On June 27, 1997, the Company completed a private placement of up to
5,000 shares or $5,000,000 in convertible preferred stock along with up
to 1,350,000 warrants to purchase one share of the Company's common stock
with exercise prices varying based on calculations on the issue dates.
Under the terms of the transaction the Company issued 2,000 shares of
preferred stock yielding eight percent for $2,000,000 along with 600,000
warrants with an exercise price of $3.75 per share. The preferred shares
are convertible into common stock at a price ranging from a zero discount
to the market price to a maximum of 15 percent after 12 months following
the close. Subject to certain conditions, the Company may issue up to
3,000 additional shares of preferred stock and 750,000 warrants over the
next eight months. The Company retains the right to call the preferred
shares in certain circumstances.

The Company is in the process of determining the amount of incremental
interest expense and preferred stock dividends which will be recorded
over the respective conversion periods pertaining to the April 10, 1997
and June 27, 1997 private placements described above. The Company intends
to record the assured incremental yield embedded in the conversion terms'
discount from fair market value as additional interest expense in the
case of the $1,250,000 convertible debenture and as preferred dividends
in the case of the preferred stock placements.

On June 27, 1997 the Company entered into a settlement in the action and
counterclaim with one of the Company's insurance carriers and their
brokers (see note 15), pursuant to which the Company and the brokers will
pay the insurance carrier $250,000 and $200,000, respectively.

F-18
<PAGE> 60
PART II

INFORMATION NOT REQUIRED IN PROSPECTUS.

ITEM 24. INDEMNIFICATION OF OFFICERS AND DIRECTORS.

Section 78.751 of the Nevada Corporation Law of the State of Nevada,
under which the Company is incorporated, empowers a corporation to indemnify
any person who was or is a party or is threatened to be made a party to any
threatened, pending or completed action, suit or proceeding, whether civil,
criminal, administrative or investigative (other than an action by or in the
right of the corporation), by reason of the fact that he is or was a director,
officer, employee or agent of the corporation, or is or was serving at the
request of the corporation as a director, officer, employee or agent of another
corporation, partnership, joint venture, trust or other enterprise, against
expenses (including attorneys' fees), judgments, fines and amounts paid in
settlement actually and reasonably incurred in connection with such action,
suit or proceeding if he acted in good faith and in a manner he reasonably
believed to be in or not opposed to the best interests of the corporation, and,
with respect to any criminal action or proceeding, had no reasonable cause to
believe his conduct was unlawful.

II-1
<PAGE> 61
ITEM 25. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.

The expenses payable by the Registrant in connection with the issuance
and distribution of the Securities being registered (other than underwriting
discounts or commissions) are estimated as follows:

SEC Registration Fee . . . . . . . . . . . . . $4,581.00

NASD Fees . . . . . . . . . . . . . . . . . . . . ________

Blue Sky Filing Fees and Expenses . . . . . . . . ________

Transfer Agent's Fee and Expenses . . . . . . . . ________

Listing Fees . . . . . . . . . . . . . . . . . . ________

Accounting Fees and Expenses . . . . . . . . . . ________

Legal Fees and Expenses . . . . . . . . . . . . . ________

Printing Expenses . . . . . . . . . . . . . . . . ________

Miscellaneous . . . . . . . . . . . . . . . . . . ________

TOTAL . . . . . . . . . . . . . . . . . . $________

The Selling Stockholder will pay to the Company an amount equal to $30,000 in
connection with the foregoing expenses.

ITEM 26. RECENT SALES OF UNREGISTERED SECURITIES.

(a) In the three years preceding the filing of this Registration
Statement, the Registrant has sold and issued the following securities which
were not registered under the Securities Act:

On May 8, 1995, the Company issued a total of 10,500,000 shares of its
common stock in connection with the merger with Seamless.

On June 5, 1996, the Company issued 150,000 shares of its common stock
pursuant to a consulting agreement.

On April 10, 1997 the Company issued a $1,250,000 9% convertible
debenture and warrants to purchase 694,444 shares of common stock.

On June 27, 1997, the Company issued a total of 2,000 shares of 8%
convertible preferred stock and warrants to purchase 600,000 shares of the
Company's common stock.

The sale and issuance of the securities in the above transactions were
exempt from registration under the Securities Act by virtue of Section 4(2)
thereof as transactions not involving any public offering. The recipients in
each case acquired such securities for investment only and not with a view to
the distribution thereof and appropriate restrictive legends and disclosures
were affixed to the stock certificates

II-2
<PAGE> 62

issued in such transactions. All recipients had full access to information
about the Registrant and were given the opportunity to verify any information
furnished to them.

On May 22, 1996 the Company issued $13 million of convertible
debentures and warrants to purchase 2,363,636 shares of common stock pursuant
to Regulation S under the Securities Act of 1933, as amended.

Since July 6, 1996, $10,096,600 principal amount of convertible
debentures (plus accrued interest at the conversion dates) have been converted
into 7,088,718 shares of the Company's common stock. The common stock was
exempt from registration pursuant to Section 3(a)(9) of the Securities Act of
1933, as amended and Regulation S thereunder.

ITEM 27. EXHIBITS.

The exhibits listed in the accompanying Exhibit Index are filed
(except where otherwise indicated) as part of this Registration Statement.

ITEM 28. UNDERTAKINGS.

1. The undersigned, Company, hereby undertakes:

(a) To file, during any period in which the Company offers or
sells securities, a post-effective amendment(s) to this registration statement.

(1) To include any prospectus required by Section
10(a)(3) of the Securities Act;

(2) To reflect in the prospectus any facts or events
which, individually or together, represent a fundamental change in the
information in the registration statement; and

(3) To include any additional of changed 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;

(b) 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; and

(c) That, for the purpose of determining any liability
under the Securities Act of 1933, 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.

II-3
<PAGE> 63
SIGNATURES

In accordance with 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 this Form SB-2 and has authorized this
Registration Statement to be signed on its behalf by the undersigned, thereunto
duly authorized, in the City of Culver City, State of California, on July 10,
1997.

SYNCRONYS SOFTCORP
By: /s/ Daniel G. Taylor
------------------------------
Daniel G. Taylor
Chairman of the Board,
Executive Vice President

KNOW ALL MEN AND WOMEN BY THESE PRESENTS, that each person whose
signature appears below constitutes and appoints Daniel G. Taylor and/or Rainer
Poertner his true and lawful attorney-in-fact and agent, with full power of
substitution and resubstitution, for him and in his name, place and stead, in
any and all capacities to sign any and all amendment (including post-effective
amendments) to this Registration Statement, and to file the same, with all
exhibits thereto and other documents in connection therewith, with the
Securities and Exchange Commission, granting unto said attorney-in-fact and
agent, full power and authority to do and perform each and every act and thing
requisite or necessary to be done in and about the premises, as fully to all
intents and purposes as he might or could do in person, hereby ratifying and
confirming all that said attorney-in-fact and agent or either of them or their
or his substitute or substitutes, may lawfully do or cause to be done by virtue
hereof.

In accordance with the requirements of the Securities Act of 1933,
this Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.

<TABLE>
<CAPTION>
Signatures Title Date
---------- ----- ----
<S> <C> <C>
/s/ Daniel G. Taylor Chairman of the Board, July 10, 1997
---------------------------------- Executive Vice President
Daniel G. Taylor

/s/ Rainer Poertner Chief Executive Officer, July 10, 1997
---------------------------------- President and Director
Rainer Poertner

(Principal Executive Officer)

/s/ Barbara Velline Chief Financial Officer July 10, 1997
---------------------------------- (Principal Financial and Accounting Officer)
Barbara Velline

/s/ Lloyd I. Baron Director July 10, 1997
----------------------------------
Lloyd I. Baron
</TABLE>

II-4
<PAGE> 64

EXHIBIT INDEX

EXHIBIT INDEX

=================================================================================================================================
EXHIBIT SEQUENTIAL
NUMBER DESCRIPTION LOCATION PAGE NUMBER
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
3.1 Articles of Incorporated by
Incorporation and reference to the
Bylaws Issuer's Form 10-KSB
dated October 4, 1995

5.1 Opinion on Legality To be Filed By
Amendment

10.1 Employment Agreement Incorporated by
with Rainer Poertner reference to the
Issuer's Form 10-KSB
dated October 4, 1995

10.2 Employment Agreement Incorporated by
with Daniel G. Taylor reference to the
Issuer's Form 10-KSB
dated October 4, 1995

10.3 Employment Agreement Incorporated by
with Jon Jackson reference to the
Issuer's Form 10-KSB
dated September 30,
1996

10.4 Stock Option Plan Incorporated by
reference to the
Issuer's Form 10-KSB
dated October 4, 1995
</TABLE>

II-5
<PAGE> 65

<TABLE>
<CAPTION>
EXHIBIT INDEX

=================================================================================================================================
EXHIBIT SEQUENTIAL
NUMBER DESCRIPTION LOCATION PAGE NUMBER
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
10.5 Agreement Incorporated by
dated January reference to
15, 1996 as the Issuer's
amended Form 10-KSB
February 26, dated September
1996 among 30, 1996
Syncronys
Softcorp and
Seamless
Software
Corporation

10.6 Agreement Incorporated by
dated December reference to
8, 1996 among the Issuer's
Syncronys Form 10-QSB
Softcorp and filed May 5,
Acceleration 1997 (Portions
Software of Exhibit 10.6
International were omitted
Corporation pursuant to a
request for
confidential
treatment.)

23.1 Consent of
KPMG Peat
Marwick
</TABLE>

II-6

<PAGE> 1
EXHIBIT 23.1

ACCOUNTANTS' CONSENT

The Board of Directors
Syncronys Softcorp:

We consent to the use of our reports included herein and to the reference to
our firm under the heading "Experts" in the prospectus.

KMPG Peat Marwick LLP

Long Beach, California
July 9, 1997