MEGALITH CORP, 10KSB, 1997-03-19

MEGALITH CORP
10KSB, 1997-03-19
BLANK CHECKS

Previous: DEFINED ASSET FUNDS MUNICIPAL INVT TR FD MON PYMT SER 514, 485BPOS, 1997-03-19

Next: MUNICIPAL INVT TR FD INSURED SERIES 199 DEFINED ASSET FUNDS, 485BPOS, 1997-03-19

<PAGE>

U. S. Securities and Exchange Commission
Washington, D.C. 20549

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

FORM 10-KSB

(Mark One)
[X] Annual Report under Section 13 or 15(d) of the Securities Exchange Act
of 1934

FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 1996

[ ] Transition report pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
For the transition period from __________ to __________

Commission File Number 33-11875-A

MEGALITH CORPORATION
-----------------------------------------------------------------
(Exact name of small business issuer as specified in its charter)

Colorado 22-2701047
(State or other jurisdiction (IRS Employer
of incorporation or organization) Identification No.)

Address of principal executive offices: 4720 Esco Drive, Fort Worth, Texas 76140

Issuer's telephone number: (817) 478-4299

Securities registered under Section 12(b) of the Exchange Act: NONE

Securities registered under Section 12(b) of the Exchange Act:
Title of each class: COMMON STOCK, $.005

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

Check if there is no disclosure of delinquent filers pursuant to item 405 of
Regulation S-B contained in this form, and no disclosure will be contained, to
the best of registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-KSB or any
amendment to this Form 10-KSB.
---

The issuer's revenues for its most recent fiscal year were $2,530,056.

The aggregate market value of the shares of Common Stock held by non-affiliates
of the Registrant, as of March 17, 1997 (based upon the last sales price of
$2.06, as reported by the NASD Bulletin Board) was $22,572,000.

The number of shares outstanding of the Company's common stock as of March 17,
1997 is 16,838,433 shares.

<PAGE>

PART I

ITEM 1. DESCRIPTION OF BUSINESS.

ORGANIZATION AND BUSINESS

Megalith Corporation ("Megalith" or the "Company") was incorporated on
November 3, 1995 in the State of Colorado. Pursuant to Articles of Merger
filed on January 4, 1996, Megalith was merged with Overline Corporation, a
Delaware corporation formed in 1986 ("Overline"), and Megalith was the
surviving entity of the merger. In connection with the merger, all
outstanding shares of Overline were exchanged for an equal number of shares
of Megalith. For approximately five years prior to the merger on November
27, 1995, Overline had been essentially inactive, other than for its efforts
in seeking business opportunities.

Effective as of November 27, 1995, the Company, through its newly-formed
subsidiary (Esco Elevator Corporation), acquired substantially all of the
assets of Esco Elevators Inc. and Esco Properties, Inc. (the "Esco Assets").
Upon the acquisition of the Esco Assets on November 27, 1995, the Company's
principal business is the manufacture and sale of custom passenger and
freight elevators. Esco Elevators Inc. had manufactured, sold and serviced
elevators since 1932.

The Esco Assets were acquired by the Company pursuant to a Plan of
Reorganization of Esco Elevators Inc. and Esco Properties Inc. which was
approved by the U.S. Bankruptcy Court on October 12, 1995. Esco Elevators
Inc. and Esco Properties Inc. (collectively, "Old Esco"), based in Fort
Worth, Texas, had filed for relief under Chapter 11 of the U.S. Bankruptcy
Code on December 14, 1994. A Bankruptcy Trustee was appointed by the Court
on January 10, 1995, and the Trustee soon thereafter entered into a
management agreement with Epsitek, Inc., a Delaware corporation, for the
operation of Old Esco from January through November, 1995. In June 1995, the
Trustee and Epsitek, Inc. jointly filed the Plan of Reorganization of Old
Esco, whereby Epsitek, Inc. would purchase substantially all of the assets
from the Bankruptcy Estate. Effective November 27, 1995, Epsitek, Inc.
assigned to Esco Elevator Corporation, the wholly-owned subsidiary of the
Company, all of its rights and equity in Old Esco, including the right to
acquire the Esco Assets pursuant to the Plan of Reorganization and the
accounts receivable generated during the time of the management agreement,
subject to expenses required to be paid during the same period.

The Esco Assets were acquired in exchange for $808,000 cash paid to the
Bankruptcy Estate of Old Esco, assumption by the Company of certain
installment debt and other obligations of Old Esco aggregating $4,273,642,
and the issuance to Epsitek, Inc. of 4,268,000 shares of the common stock of
the Company. In addition, the Company assumed indebtedness totaling
$1,425,066 and received certain assets from Epsitek, Inc. in connection with
the purchase of the Esco Assets. $800,000 of the cash consideration at
closing was borrowed from certain shareholders or related parties of the
Company on short term notes bearing interest of eight percent, of which
$200,000 of principal on the notes was canceled in exchange for shares of
common stock of the Company upon the exercise of a stock option agreement by
the chief executive officer of the Company on December 4, 1995. An
additional $325,000 of that debt has also been canceled upon the issue of
shares of the Company's Common Stock to the noteholders. Of the debt assumed
by the Company, $3,407,177 was due to an individual who holds first lien
rights to the substantial portion of the Esco Assets, including the land,
buildings and all equipment not encumbered by other priority liens. The
remaining debt assumed by the Company is owed to various financing
institutions and vendors for certain items of equipment or improvements which
are included in the assets acquired by the Company. With one exception, all
of the notes have installment payment provisions of varying terms that are
specified by the Plan of Reorganization.

2
<PAGE>

On July 9, 1996, the Company acquired 100% of the outstanding shares of
Dalcom Elevator Corporation ("Dalcom"), a private company located in Garland,
Texas which manufactures and markets elevator cabs and entrances. In
connection with that purchase, the Company received certain equipment,
accounts receivables, the customer list and the backlog of customer orders.
In exchange, the Company assumed certain indebtedness of Dalcom and issued
944,520 shares of the Company's restricted Common Stock. Immediately after
the closing, the indebtedness was reduced by a cash payment of $250,000. The
Company is presently in negotiation with the previous owner of Dalcom to
cancel a portion of the indebtedness assumed by the Company and receive back
all of the shares issued in the transaction to the treasury of the Company.

OPERATIONS

Operations of the Company are conducted principally through its
subsidiary, Esco Elevator Corporation. As used hereinafter, "ESCO" may refer
to the Company or its products after the purchase on November 27, 1995, as
well as to activities of the predecessor, Esco Elevator, Inc., prior to
November 28, 1995. ESCO is a manufacturer of custom hydraulic elevators and
related products. Having been in the elevator business since 1932, ESCO is
considered a leader in custom-designed hydraulic elevators. ESCO's products
are sold primarily in the U.S. through approximately 100 nonexclusive
distributors and independent elevator sales and installation companies. Its
products have also been regularly sold to the major elevator companies, such
as Otis, Dover and Schindler, whose customers require the ESCO hydraulic
elevator or components. Over the years, ESCO elevators have been installed in
facilities of many well known corporations and public buildings across the
U.S. Historically, ESCO has also provided installation and construction
services for its elevators and, to a lesser extent, service and repair of
existing elevator installations primarily from various service centers in
the Southwestern U.S. The Company's service and installation business is
presently limited and all operations are presently conducted from its main
facility in Fort Worth, Texas. ESCO's main facility, constructed in 1981, is
located at 4720 Esco Drive, Fort Worth, Texas and consists of approximately
195,000 sq. ft. of manufacturing, warehouse and office facilities on 19 acres
of prime industrial land in Southeast Fort Worth.

Management believes that the Americans with Disabilities Act (ADA),
requiring elevator access for all multi-story buildings of public
accommodation and in commercial facilities, will be instrumental in
substantially increasing the sales of ESCO elevators. ESCO has historically
sold its products only in the U.S. Current management, however, brings
international sales, marketing and manufacturing experience and intends to
aggressively pursue elevator sales in the Pacific Rim, South America, Middle
East and Europe.

Demand for the ESCO elevators is expected to grow as the result of the
Americans with Disabilities Act adopted in 1992 by Congress, which
essentially requires all new and existing multi-story buildings to provide
elevator access in all buildings of public accommodation and commercial
facilities. ESCO's major expertise is in constructing smooth riding hydraulic
elevators and low cost holeless elevators. This patented ESCO technology is
specifically useful in retrofitting existing buildings with elevators at
minimum installation costs.

As of the end of February, 1997, ESCO had a backlog of orders of
approximately $3,500,000 from various customers, primarily from independent
elevator installation companies. Based upon limited production capabilities
and working capital in the year following the emergence from bankruptcy,
ESCO's sales were $2,530,056 for the 10 month period ended September 30,
1996, as compared to approximately $2.8 Million for the calendar year 1995
while operating in bankruptcy. Esco Elevators Inc. had sales in excess of
$14,000,000 in calendar 1994, prior to the Chapter 11 bankruptcy filing in
December, 1994. With a concentrated marketing effort and appropriate
financing, management anticipates the sales of the ESCO

3
<PAGE>

elevator products can be increased to the pre-bankruptcy levels and, with
adequate cost controls (aided in part by the prior bankruptcy action),
management believes the business can quickly return to profitability.

JOINT VENTURE AGREEMENT - CHINA

On January 16, 1997 Shaanxi Elevator Corp. in the Province of Shaanxi in
China and Esco Elevator Corporation entered into a Joint Venture Agreement to
manufacture and market a full line of hydraulic and traction elevators and
related products. Under the terms of the agreement, the provincial
government will provide a large plant capable of producing $100 million in
products a year. Esco will equip and manage the plant and China Shaanxi
Elevator Corp. will market the Joint Venture's elevators through its 36
offices in China. Esco will have the right to market the products of the
Joint Venture throughout North, Central and South America, as well as to
continue to manufacture and market elevators from its existing facilities in
Fort Worth, Texas.

Simultaneous with the execution of the Joint Venture Agreement, Esco
received an order from China Shaanxi Elevator Corp. for a minimum of 250, and
up to 400, hydraulic elevators valued at $19 million to $30 million. Esco is
to commence the production of this order immediately so as to open the China
market as soon as possible for the benefit of the Joint Venture. The Company
believes this order will be a "perpetual order" since the joint venture
plant, when operating at full capacity, is expected to supply only a small
portion of China's total needs.

HISTORICAL BACKGROUND OF ESCO

In 1932, Robert F. Loughridge founded the Elevator Service Company,
which pioneered the development and improvement of hydraulic passenger,
freight and special purpose elevators. In the mid-1930s, Elevator Service
Company designed and built the first push-button operated, plunger-type,
hydraulic elevator. As demand for this smooth-riding, cost-effective system
increased, the company grew accordingly. In 1956, Elevator Service Company
became Esco Elevators Inc.

By the early-1980's, ESCO became the nation's largest supplier of
individual hydraulic elevator components and the second largest supplier of
complete hydraulic elevator systems. ESCO manufactured systems and
components for companies throughout the United States, including every major
elevator company and more than 400 independent distributors and developers.
Some of the best known corporations in the U.S. have installed ESCO
elevators. ESCO has installed over 35,000 elevators throughout the U.S.,
most with the unique ESCO patented designs. Hydraulic elevators, which is
the ESCO mainstay, are used primarily on shorter travel distances and slower
speed applications. By comparison, "traction" elevators, which are not
produced by ESCO, are used in applications requiring greater speed and travel
distances.

ESCO has an impeccable reputation for quality and designs of its
products. ESCO has built various sizes of custom designed elevators
including some of the largest freight and specialty elevators. Most of the
major elevator companies, such as Otis, Dover and Schindler have been, and
continue to be, customers of ESCO and purchase custom built elevators from
ESCO as their subcontract manufacturer.

Although Mr. Loughridge had built the new facilities in 1981 and
installed equipment that could produce sales of an estimated $75 million
annually at full capacity, he intentionally maintained a sales volume not to
exceed $25 million annually. Furthermore, ESCO has never pursued the
overseas markets.

In 1988, Mr. Loughridge became seriously ill and was unable to attend to
the business. This event would have a very negative impact on his company.
Thereafter, his widow (now Mrs. McMillan) managed the business and, in 1990,
sold ESCO to an individual. This former owner, on November 30, 1994, while
facing

4
<PAGE>

cash flow problems at ESCO, entered into an agreement for the sale of ESCO to
Overline Corporation in a transaction that included the assumption of
existing indebtedness by Overline. Overline Corporation quickly realized
that in order to bring ESCO back to a profitable stage, a significant capital
infusion would be necessary. In addition, ESCO was behind in payments to its
secured and unsecured creditors for several months. Furthermore, at the time
of the sale, the payroll checks to the employees for the period immediately
preceding the sale had bounced due to insufficient bank funds. Realizing the
gravity of the situation, the new owners of ESCO placed ESCO under the
protection of Chapter 11 of the U.S. Bankruptcy Code on December 14, 1994.
The filing of the bankruptcy petition resulted in the shutdown of operations
for a period of about two weeks. At the time of the shutdown, ESCO had a
backlog of orders of over $6 million, secured debt of approximately $4
million and unsecured claims of approximately $2.5 million. On January 10,
1995 the Bankruptcy Court appointed a Trustee to manage the assets and
operations of ESCO. As described more fully above, Epsitek, Inc. obtained a
management agreement with the Bankruptcy Trustee for the management of ESCO
and subsequently acquired substantially all of the assets of ESCO.
Significant for the Company is that the majority of the current employees of
ESCO have many years of experience in the elevator industry, and in
particular with ESCO, in the manufacture, sales and servicing of its
elevators.

ELEVATOR PRODUCTS

In the elevator industry, there are two basic types of elevators,
hydraulic and traction. In a hydraulic elevator, the movement of the car
upward is by hydraulic fluid under pressure from a pump to a jack unit. To
lower the car, a valve opens and gravity lowers the car. The starting and
stopping of the elevator is controlled by a valve. The weight of the
elevator is supported by a hydraulic jack. The building does not have to be
designed to support the elevator. This results in less building costs and
greater flexibility as to where the elevator can be located in the building.
The hydraulic elevators are primarily used on shorter travel distances and
slower speed applications. By comparison, traction elevators are used in
applications requiring greater speed and longer travel distances. Hydraulic
elevators are much more economical to install and maintain than traction
elevator equipment.

By comparison, in a traction elevator, the movement of the car is by a
cable attached to the car and a counterweight that moves over sheaves that
turn, causing the cable to move, which in turn causes the car to move. The
"traction" designation comes from the traction between the cable and the
sheaves. The building has to be designed to support the complete elevator
and the driving machine.

ESCO manufactures a complete line of hydraulic elevators, that is, the
complete system which consist of the jack unit, sling platform, cab,
entrances, pump unit, and controller.

The standard hydraulic elevator has travel limitations due to the column
strength of the plunger and the cost of drilling the hole for the jack unit.
ESCO's patented CA-CY elevator overcomes these restrictions. ESCO also
manufactures the holeless elevator which normally has a jack unit on each
side of the hoistway. This type of elevator also has travel limitations due
to the design and hoistway construction. ESCO also designs and manufactures
all components of the elevators including the entrances which are UL listed
and sells them as separate items. ESCO designs and manufactures a complete
line of cabs for both passenger and freight use. ESCO designs and
manufactures a complete line of jack units, including the polishing of
plungers and fabrication of the cylinders. ESCO also designs and
manufactures a complete line of controllers and a line of pump units. ESCO
manufactures and designs a complete line of freight elevators, of which the
largest has been a unit that with a 60,000 pound capacity and a sling
platform and cab large enough to handle a complete tractor and trailer. ESCO
also manufactures several items that are used by the industry in general,
such as, silencers and guide shoes. ESCO also has significant sales of parts
for maintaining elevators that were manufactured and shipped in previous
years.

5
<PAGE>

STANDARD HYDRAULIC ELEVATORS

As indicated above, ESCO manufactures a complete line of hydraulic
elevators. ESCO designs and manufactures a standard hydraulic elevator,
which has a plunger located under the car. Normally, the cylinder for a
standard hydraulic elevator is buried in the ground. The primary benefits of
hydraulic elevators are (i) lower cost for the elevator unit, (ii) lower
building construction costs, and (iii) installation can be made even after
the construction of the building is complete, thereby making these the ideal
products for retrofitting existing buildings. Hydraulic elevators are very
reliable and cost less to maintain than traction elevators. The cost of
construction of the building is lower with a hydraulic elevator because the
structure does not have to support the weight of the elevator and does not
require a penthouse for the elevator equipment as required by the traction
type elevators.

886 HOLELESS ELEVATORS

The ESCO "886" elevator is an economical elevator system for fast
delivery and easy installation. The dual jack design provides a quiet,
smooth, solid feel and allows for an optional center-opening door arrangement
in addition to the standard single-slide door. A hospital model is also
available. The 886 is a holeless elevator which consists of two jack units
above ground and is usually located on each side of the hoistway, thereby
eliminating the need for drilling a hole in the ground to bury the jack unit.

In the 886, the power unit contains all the electric and hydraulic
equipment and is located in the machine room. The motor, pump and valve are
easily accessible, and the two jacks are self-aligning.

CA-CY ELEVATORS

ESCO manufactures its patented product called a cable cylinder elevator
which is referred to as a CA-CY. This combines the benefits of hydraulic
with cable technologies. In this elevator the plunger, or the driving force,
consists of a piston attached to a cable which is nylon coated. The cable
attaches to an elevator, up over the sheaves in the overhead, with the other
end attaching to a piston in the cylinder on each side of the hoistway. This
design has all of the advantages of a traction elevator in that there is no
limit to the travel. However, ESCO has limited the speed of this type of
elevator to 200 feet per minute, primarily to achieve lower cost.

OTHER PRODUCTS

ESCO's DUMBWAITER is a revolutionary application of hydraulics to
vertical materials handling. The hydraulic cylinder forms part of the
supporting structure which is made in sections for high rise installations.
These sections bolt together requiring no special tools for field alignment.
The dumbwaiter is virtually unlimited in its travel and number of openings
served and is equally suitable for handling mail, package goods, merchandise,
food and other materials in low and high rise buildings.

ESCO has not made significant efforts to market this product since the
mid-1970s. However, management believes the unit can be marketed
successfully through existing elevator distribution channels. Although there
are existing companies manufacturing and selling dumbwaiters, there exist a
sufficient demand to warrant reentry into the market for the ESCO hydraulic
dumbwaiter.

ESCO patented a product to assist in getting in and out of the swimming
pools for young, old and the handicapped, which is called a "MERMAID LIFT."
The unit looks like a ladder and operates like an elevator. This product
operates on water pressure from the household garden hose. When a person
needs to get out of the

6
<PAGE>

pool, he/she steps onto the unit. The weight on the step trips the valve
causing water to flow into a power piston and the step, along with the
handrails, rises and automatically stops at the pool deck level. The Lift
remains at the top position as long as weight remains on step. When weight
is removed, the step and the rails automatically descend and is ready for the
next upward trip.

ESCO apparently made no efforts to market this product after designing
and field testing the unit. Management believes that with the passage of the
Americans with Disabilities Act discussed previously, the time is right to
aggressively market this product to public places with access to swimming
pools, such as hotels and health and fitness facilities. The product is
inexpensive to manufacture and could be sold at high margins.

MARKETING AND DISTRIBUTION

Historically, ESCO has not been aggressive in marketing its products.
Most of the sales have been generated by word of mouth and by elevator
products distributors, contractors and other elevator companies such as Otis,
Dover, Montgomery and Schindler. These customers typically call for quotes
and place orders at some later date. The Company is pursuing plans to
improve upon the marketing of its products, including a public relations
efforts.

The most significant efforts at increasing markets for the Company's
products has been in connection with overseas markets. As discussed above
under "JOINT VENTURE AGREEMENT - CHINA", the Company has taken clear and
present action at expanding its overseas markets. Historically, the founder
of ESCO was not interested in pursuing business outside the U.S. Contrary to
that, the management of Megalith, with its experience in international sales,
believes that the elevator business in the developing nations is growing at a
much faster pace than in the U.S. The market in the U.S. for elevators has
been mature for a long time and, with the exception of the impact of the
Americans with Disabilities Act for retrofitting existing buildings, the
market growth is stabilized. The major elevator companies attribute much of
their revenues to the business in developing countries. Even in the U.S.,
the Americans with Disabilities Act should make ESCO a major benefactor,
since its elevators provide the ideal and inexpensive solutions to retrofit
existing buildings.

In the domestic market, ESCO will continue to obtain orders for its
elevators, components and spare parts directly from contractors and
developers. Historically, ESCO obtained a significant amount of sales volume
from the major elevator companies. Future sales to those customers will
depend upon ESCO's ability to re-establish production capabilities following
the negative events of the bankruptcy proceedings discussed previously. ESCO
will continue to obtain the majority of its sales of elevators through the
distributors and independent elevator sales and installation companies as it
has done in the past.

The Company is not dependent upon one or a few major customers for its
sales at present.

COMPETITION

The elevator industry is dominated by a few large companies, including
Dover, Otis and Schindler. In addition, numerous smaller companies, which
generally have only a regional focus, are competitors of ESCO. Although
there are about 20 elevator manufacturing companies in the U.S., ESCO is a
very well known company, having delivered over 35,000 elevators around the
U.S. during the last 62 years. Although the major companies (Dover, Otis and
Schindler) may be seen as competitor's of ESCO, they are also customers of
ESCO. Increases in their sales may also result in increased sales for ESCO
since many of the ESCO custom elevators are placed by the 'majors' in
locations around the U.S. ESCO will continue to obtain orders for its
elevators, components and spare parts directly from contractors and
developers and not necessarily through the major manufacturers indicated
above. In addition, ESCO will continue the majority of its sales of
elevators through the distributors and independent elevator sales and
installation companies as it has done in the past.

7
<PAGE>

The smaller 2nd-tier manufacturing companies, which are more-or-less
ESCO's direct competition, include Cemcolift Corporation, Minnesota Elevator,
EECO, Canton Elevator, Amlift International, American Crescent Elevator, and
U.S. Elevator. A profile is provided below on each of these companies.

1) Cemcolift Corporation: Located in Plumsteadville, PA. Family
owned and operated for over 30 years. Supplies complete hydraulic elevator
packages to the elevator industry. Even though this company is a complete
supplier of package product, they do not produce all components in house.
Company has annual sales of $20 million. Company has a focus on the eastern
United States market, and does not have an overall U.S. market
distributorship set-up. Cemco has tried to venture into the Pacific Rim
market with not much success. Maintains a profile of U.S. The quality of
products does not match with that of Esco.

2) Minnesota Elevator- Located in Mankato, Minn. Family owned and
operated with annual sales of approximately $18 million. Supplies complete
elevator package units but does not produce all components in house. Company
has a service concentration in the Minnesota State area. Currently does not
have a national distributorship chain set up. Has not ventured into the
international market except few limited projects. Has no desire to venture
into the Pacific Rim arena because limited resources.

3) EECO- Located in Los Angles, CA.- Privately owned and operated
with products limited to supplying complete package units. This company is
known for its hydraulic valves and various components to the industry. Over
the last five years it has started to supply elevator package units. It does
not produce all components in house and depends on outside supplier for most
of them. It has annual sales of approximately $20 million.

4) Canton Elevator- Located in Canton, Ohio, Privately owned and
operated for over 30 years. Supplies a complete package unit to a limited
customer base. Does not solicit nationally nor internationally. Approx.
yearly sales $12 million.

5) Amlift International- Located in Rosoreta, MX. This company is
new into the market and manufactures all products in Mexico. With the
products produced outside the U.S. it cannot be used on most government
projects. This company will have limited access to the U.S.

6) American Crescent Elevator- Located in Mississippi, limited to
local market share of approx. $4 million per year.

7) U.S. Elevator- Plant located in Mexico with limited customer
base in the U.S. Company does not have much customer following.

EMPLOYEES

The Company and its subsidiaries currently employ approximately 63 full
time employees, all of which are in its elevator manufacturing operation.
This employment level is expected to grow as the Company obtains expected
increase in sales.

ITEM 2. DESCRIPTION OF PROPERTY.

The primary assets of the Company are the improved real estate and
equipment owned by Esco Elevator Corporation which is located at 4720 Esco
Drive, Fort Worth, Texas. The manufacturing facility, constructed in 1981,
is in excellent condition and consists of buildings of approximately 195,000
square feet (including 40,000

8
<PAGE>

square feet of office space) and 19 acres of prime industrial land. The
present manufacturing and office facilities are in excess of that required
for the current level of operations, which provides ample space and capacity
for growth.

ITEM 3. LEGAL PROCEEDINGS.

NORDIC V. MEGALITH, Case # 9612396-B, is pending in the 44th Judicial
District Court Dallas County and a trial date is currently set for June 16,
1997. The suit is on a promissory note, with an original purchase price of
$1,800,000.00, consisting of $150,000.00 cash and $1,650,000.00 promissory
note. Discovery is pending in this action. Total liability by the Company
in this action is currently believed to be approximately $25,000.00, as
payment demand's have been made by Plaintiff in this action for that amount.

In MEGALITH V. PETER DEWAN, File #97-00022, 298th Judicial District
Court Dallas County, a suit on Tortuous Interference with contact, was filed
by Megalith and is pending. However, no trial date is currently set, and no
motions are pending. There is no potential for liability, because as of
November 19, 1996, no counter claim had been filed. Management is proceeding
vigorously with this action to prohibit Mr. Dewan from continued contact with
any vendors or customers of Megalith.

In RICHARD M. BUFERD, II., V. DALCOM MANUFACTURING, INC., AND MEGALITH
CORPORATION, File # 96-11299-H, 160th Judicial District Court, Dallas County
Plaintiff's have a Motion for Summary Judgment set on February 24, 1997. This
is a Suit on Lease of real property located at 210 E. Buckingham, Garland
Texas. This is for a lease entered into by Dalcom Mfg. Inc., and not
Megalith. It is very unlikely that any judgment shall be taken against
Megalith on this action. Management has taken the position that no liability
is owned, and this action is being fully litigated.

HENRY C. SEALS, TRUSTEE, ET AL, V. DICK ELLIS DAVIS, ET AL, V. OVERLINE
CORPORATION ET AL (MEGALITH), Civil Action # 4:95-CV-839-Y, U.S. District
Court for the Northern District of Texas, Fort Worth Division. There are no
trial or motion settings at this time, and no scheduling order that Megalith
is aware of. It is currently unknown what the basis of this action involves,
as Megalith was made a party solely due to the overlapping directors and
officers it shared with Cassco Capital Co. There has been no affirmative
evidence that Megalith is a proper party, and is unlikely that Megalith has
any liability. Management is awaiting Mr. Davis' amended pleadings to
determine the basis of this action, and will make a determination as to how
to proceed based upon that information. The Company does not believe that it
has any responsibility nor liability in this action.

PACIFIC PLUS INTERNATIONAL INC., V MEGALITH CORPORATION AND ESCO
ELEVATORS, INC. #97-00283-D, Dallas County Court at Law #4. This is a suit
based upon a credit account set up by Dalcom with Pacific Plus in the
approximate amount of $15,000.00. This is for a line of credit entered into
by Dalcom Mfg. Inc., and not Megalith. It is very unlikely that any judgment
shall be taken against Megalith on this action. Management has taken the
position that no liability is owned, and this action is being fully defended.

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

No matters were submitted to a vote of security holders during the
fourth quarter of the fiscal year ended September 30, 1996. However, on
December 18, 1996, a special meeting of shareholders was held. At this
meeting, Dr. Arthur H. Malcolm submitted his resignation as Director.

The following actions were adopted at this special meeting:

<PAGE>

(1) Syed G. Zaidi, James W. Landrum, Mohammed Sharabash, Bashir G.
Ahmed and Arthur Steber were elected to serve as members of the Board of
Directors.

(2) An Amendment to the Articles of Incorporation was adopted to
(i) divide the Company's authorized Preferred Stock into series of preferred
shares and to fix and determine the relative rights, limitations, and
preferences of the shares of the Company's Series A, B, and C Preferred
Stock, and (ii) to grant the authority to the Board of Directors of the
Company to fix and determine the relative rights, limitations, and
preferences of the remaining series of the Company's Preferred Stock.

PART II

ITEM 5. MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS.

As indicated above, the Company's Common Stock became publicly-traded on
June 6, 1987, However, from 1989 until 1995, the Company was essentially
inactive and elected to become a non-reporting company for SEC purposes. In
November 1994, the Company again became a reporting company and applied for a
listing on NASDAQ OTC/BB and, on November 14, 1994, the Company started
trading under the symbol "OVRL". In connection with the Merger of Megalith
and Overline described above, the Company received the new trading symbol
"MEGH".

The following table sets forth, for the periods shown, the range of the high
and low bid quotations for the Company's common stock in the over-the-counter
market as reported by NASDAQ. Quotations are inter-dealer quotations,
without retail markups, markdowns or commissions, and do not necessarily
represent actual transactions.

Bid Price
---------
High Low
---- ---
Fiscal 1995: 1st quarter n/a n/a
2nd quarter n/a n/a
3rd quarter n/a n/a
4th quarter n/a n/a

Fiscal 1996: 1st quarter 1.25 0.25
2nd quarter 1.13 0.13
3rd quarter 1.00 0.31
4th quarter 1.00 0.56

On December 31, 1996, the Company had approximately 342 stockholders of
record of its common stock. The Company has not paid cash or stock dividends
on its common stock in either of its two most recent fiscal years and does
not anticipate or contemplate paying dividends in the foreseeable future. It
is the present intention of management to utilize all available funds for the
development of the Company's business. Several of the Company's current
shareholders are broker/dealers which hold title to the Company's shares for
their customers.

10
<PAGE>

ITEM 6. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION.

DESCRIPTION OF CURRENT OPERATIONS

As discussed more fully in Item 1, Part I above, the Company, through
its wholly-owned subsidiary, Esco Elevator Corporation, acquired
substantially all of the assets (the "Esco Assets") of Esco Elevators Inc.
and Esco Properties, Inc. effective as of November 27, 1995. The Esco Assets
were acquired by the Company pursuant to a Plan of Reorganization of Esco
Elevators Inc. and Esco Properties Inc. (collectively, "Old Esco"), two
affiliated companies that had filed for relief under Chapter 11 of the U.S.
Bankruptcy Code on December 14, 1994. During the period of January through
November, 1995, Old Esco was operated by a private company, Epsitek, Inc.,
under a management agreement with the Bankruptcy Trustee. Upon the
acquisition of the Esco Assets, the Company began the operation of its
principal business in the manufacture and sale of custom passenger and
freight elevators. For approximately the five years prior to November 27,
1995, the Company had been essentially inactive, other than for its efforts
in seeking business opportunities.

RESULTS OF OPERATIONS

Revenues of the Company are derived from the sale of passenger and
freight elevators, components, and replacement parts. To a lesser extent,
the Company obtains revenues from the installation and servicing of elevators
generally within the State of Texas, and relies upon sub-contractors to
perform the majority of such services. The revenues and expenses reflected
in the financials of the Company for the year ended September 30, 1996
include only the period from the purchase of the Esco Assets on November 27,
1995 to the end of the year, or a period of about ten months. Also, the
Company did not have active operations in the preceding year, and the only
expenses incurred were in the maintenance of the corporate entity and in
seeking other business opportunities. Therefore, the presence of active
operations for a period of only ten months and the lack of comparative data
in the same period in the preceding year, provides only limited operating
information for the purposes of comparative analysis.

For the period of approximately ten months from the purchase of the Esco
Assets, the revenues from the sales of elevators, components, replacement
parts, and service was $2,530,056, with a gross profit of $205,397 (or 8.1%
of sales). The Company had no operating revenues in the prior year. The
operating loss for the current year was $1,805,613, as compared to an
operating loss of $80,704 for the previous year. After interest and other
non-operating expenses, the Company had a net loss of $2,127,239 for the
current year, as compared to a net loss of $80,704 for the prior year.

All revenues in the current year were generated in operations of the
elevator manufacturing subsidiary. Of the operating expenses, the majority
were incurred in connection with elevator manufacturing; however,
approximately $330,000 of G&A costs were incurred in connection with
corporate and executive costs for the development and execution of the
Company's growth and financing efforts. The interest expense was incurred
primarily in connection with the installment debt related to the Esco Asset
purchase. The Company's efforts are currently directed at increasing sales
and operating profits at its elevator manufacturing subsidiary, following a
period of severe sales decline as a result of the bankruptcy of Old Esco.
The gross revenues are expected to remain at an average of approximately
$300,000 per month until such time as the Company has completed satisfactory
financing arrangements that will ultimately permit a steady growth in sales
provided by a sustained marketing effort, both domestically and in the
foreign markets. However, more rapid growth could potentially be obtained by
commencing deliveries on the China Joint Venture. However, that venture is
also dependent upon adequate financing. Upon the completion of financing,
the Company intends to commit funding to its marketing for the remainder of
the year, which will tend to increase S,G&A costs over present levels.
Conversely, such refinancing is also expected to reduce the interest expense
burden of the Company. The manufacturing plant is operating at far less than
its design capacity and, with the present low volumes, results in cost
inefficiencies. The present headcount of 63 employees compares with a total
headcount of approximately 150 in the predecessor company during periods
immediately prior to the bankruptcy.

11
<PAGE>

LIQUIDITY AND SOURCES OF CAPITAL

The Company had a working capital deficit of $2,689,086 as of September
30, 1996. A primary element of this deficit was the short term debt assumed
in connection with the acquisition of the Esco Assets. The capital resources
to fund operations and complete the acquisition of the Esco Assets was
provided primarily by short term loans to the Company. Until such time as
revenues have increased substantially over the current level, or the current
debt burden is refinanced, or both, the Company can be expected to utilize
additional working capital in its operations. For the liquidity needs of the
Company in the following twelve months, the Company is dependent upon the
operating cash flows generated from the elevator business and on proceeds
from loans and the sale of company stock. However, the Company does not
presently have available lines of credit to provide the necessary working
capital for expansion expected to occur in the coming year. Therefore, the
Company is currently seeking to refinance a substantial portion of its
existing short and long term debt with a combination of long term debt and
equity, while simultaneously providing additional working capital. In the
interim period, however, the Company intends to factor its accounts
receivable to provide an immediate source of working capital. Also,
subsequently to September 30, 1996, the Company has sold shares of its
capital stock in private placements for cash, and may also do so in the
future in order to raise capital.

SUBSEQUENT EVENT - JOINT VENTURE AGREEMENT WITH CHINA PROVINCE

On January 16, 1997 Shaanxi Elevator Corp in the Province of Shaanxi in
China and Esco Elevator Corporation entered into a Joint Venture Agreement to
manufacture and market a full line of hydraulic and traction elevators and
related products. Under the terms of the agreement, the provincial
government will provide a large plant capable of producing $100 million in
products a year. Esco will equip and manage the plant and China Shaanxi
Elevator Corp will market the Joint Venture's elevators through its 36
offices in China. Esco will have the right to market the products of the
Joint Venture throughout North, Central and South America, as well as to
continue to manufacture and market elevators from its existing facilities in
Fort Worth, Texas.

Simultaneous with the execution of the Joint Venture Agreement, Esco
received an order from China Shaanxi Elevator Corp for a minimum of 250, and
up to 400, hydraulic elevators valued at $19 million to $30 million. Esco is
to commence the production of this order immediately so as to open the China
market as soon as possible for the benefit of the Joint Venture. The Company
believes this order will be a "perpetual order" since the joint venture
plant, when operating at full capacity, is expected to supply only a small
portion of China's total needs. The financial impact this venture may have
on the Company has not been fully evaluated.

<PAGE>

ITEM 7. FINANCIAL STATEMENTS

MEGALITH CORPORATION

INDEX TO FINANCIAL STATEMENTS

PAGE

Independent Auditor's Report . . . . . . . . . . . . . . . . . . . . . . . . 14

Balance Sheets, September 30, 1996 and 1995. . . . . . . . . . . . . . . . . 15

Statements of Operations for Years Ended September 30, 1996 and 1995 . . . . 16

Statement of Changes in Stockholders' Equity for the
Year Ended September 30, 1996. . . . . . . . . . . . . . . . . . . . . . . 17

Statements of Cash Flows for the Years Ended September 30, 1996 and 1995 . . 18

Notes to Financial Statements. . . . . . . . . . . . . . . . . . . . . . . . 20

<PAGE>

REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS

Board of Directors and Stockholders
Megalith Corporation

We have audited the accompanying consolidated balance sheets of Megalith
Corporation (a Colorado corporation) and Subsidiaries as of September 30,
1996 and 1995, and the related consolidated statements of operations, changes
in stockholders' equity and cash flows for the years ended September 30, 1996
and 1995. These financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these financial
statements based on our audits.

We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the 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 financial statements referred to above present fairly, in
all material respects, the consolidated financial position of Megalith
Corporation and Subsidiaries as of September 30, 1996 and 1995, and the
consolidated results of their operations and their consolidated cash flows
for the years ended September 30, 1996 and 1995, in conformity with generally
accepted accounting principles.

The accompanying financial statements have been prepared assuming that the
Company will continue as a going concern. As discussed in Note C to the
financial statements, the Company incurred a significant net loss for the
year ended September 30, 1996 and needs capital to maintain adequate levels
of working capital and develop the markets for its products and, in
particular, the Joint Venture in China. These factors, among others, raise
substantial doubt about the Company's ability to continue as a going concern.
Management's plans in regard to these matters are also described in Note C.
The financial statements do not include any adjustments that might result
from the outcome of this uncertainty.

Boamah Boachie, CPA

Dallas, Texas
March 13 , 1997

14
<PAGE>

PART I - FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS.

MEGALITH CORPORATION AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS
<TABLE>
September 30, September 30,
1996 1995
------------- -------------
ASSETS
<S> <C> <C>
Current Assets:
Cash $ 131,438 $ 489
Trade accounts receivable, net 195,343 -
Other receivables 75,000 -
Inventory 616,126 -
---------- --------
Total Current Assets 1,017,907 489
---------- --------

Plant, Property and Equipment 9,102,366 29,000
Less: Accumulated depreciation (525,630) (4,143)
---------- --------
Net Plant, Property & Equipment 8,576,736 24,857
---------- --------

Goodwill 655,930 -
Other Assets, net of amortization 2,180 -
---------- --------
Total Assets 10,252,753 25,346
---------- --------
---------- --------

LIABILITIES AND STOCKHOLDERS' EQUITY

Current Liabilities:
Accounts payable, trade 594,767 -
Customer prepayments 74,760 -
Accrued expenses 333,037 -
Property and payroll taxes payable 556,044 -
Accrued interest related to Esco asset
acquisition 187,489 -
Obligation on Dalcom Acquisition 166,000 -
Short term notes payables to related parties 918,896 76,562
Current portion of long term debt 876,000 -
---------- --------
Total Current Liabilities 3,706,993 76,562
---------- --------
Long term notes payables, net of current portion 3,181,176 -

Stockholders' Equity:
Convertible preferred stock, Series A, $10 par value;
5,000,000 shares authorized; 8,807 shares
outstanding at September 30, 1996 88,070 -
Common stock, $.005 par value; 50,000,000 shares
authorized; 14,597,862 and 1,554,346 shares
issued and outstanding at September 30, 1996
and September 30, 1995, respectively 72,989 7,772
Additional paid-in capital 5,395,809 105,907
Stock subscriptions received 99,850 -
Accumulated deficit (2,292,134) (164,895)
---------- --------
Total Stockholders' Equity 3,364,584 (51,216)
---------- --------
Total Liabilities and Stockholders' Equity $ 10,252,753 $ 25,346
---------- --------
---------- --------
</TABLE>
SEE ACCOMPANYING NOTES.

Page 15
<PAGE>

MEGALITH CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS

YEARS ENDED SEPTEMBER 30,

1996 1995
------------ ----------
Revenues $ 2,530,056 $ -

Cost of Goods Sold 2,324,659 -
------------ ----------

Gross profit 205,397 -

Expenses:
Property taxes 321,412 -
Liability and casualty insurance 179,516 -
Selling, general & administrative expenses 921,334 76,562
Provision for doubtful accounts 63,118 -
Depreciation and amortization 525,630 4,142
------------ ----------
2,011,010 80,704
------------ ----------

Operating loss (1,805,613) (80,704)

Other Income (expense):
Interest expense (259,126) -
Other expenses (62,500) -
------------ ----------

Net loss $ (2,127,239) $ (80,704)
------------ ----------
------------ ----------

Net loss per common and common equivalent shares $ (0.23) $ (0.05)
------------ ----------
------------ ----------

Weighted average number of common and common
equivalent shares outstanding 9,256,917 1,554,346
------------ ----------
------------ ----------

SEE ACCOMPANYING NOTES.

Page 16
<PAGE>

MEGALITH CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
YEAR ENDED SEPTEMBER 30, 1996

<TABLE>
<CAPTION> SERIES A
PREFERRED STOCK COMMON STOCK
ISSUED ISSUED
------------------- --------------------- ADDITIONAL COMMON RETAINED TOTAL
AMOUNT AMOUNT PAID IN STOCK EARNINGS STOCKHOLDERS'
SHARES (AT $10 PAR) SHARES (AT $.005 PAR) CAPITAL SUBSCRIBED (DEFICIT) EQUITY
------ ------------ ------ -------------- ------- ---------- --------- ------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
BALANCE SEPTEMBER 30, 1995 0 $ - 1,554,346 $ 7,772 $ 105,907 $ (164,895) $ (51,216)

Shares issued in connection with the
purchase of the assets of Esco
Elevator Inc. - - 4,268,000 21,340 3,356,610 3,377,950

Proceeds from sale of shares in a
private placement 300 3,000 1,994,334 9,972 429,100 442,072

Exercise of option by a director/
officer for purchase of shares
through a reduction of notes
payable - - 2,000,000 10,000 190,000 200,000

Shares issued to an officer and
directors in reduction of notes
payable 2,500 25,000 1,300,000 6,500 358,500 390,000

Shares issued to various persons in
cancellation of notes payables 8,311 83,110 1,831,160 9,156 802,519 894,785

Shares issued in connection with the
acquisition of Vertical Lift
Management - - 166,668 833 61,667 62,500

Shares issued in connection with the
acquisition of Dalcom Elevator
Corporation - - 944,520 4,723 (4,723) -

Stock issued for services and interest
on notes 196 1,960 272,167 1,361 72,561 75,882

Preferred stock converted to common
stock (2,500) (25,000) 266,667 1,333 23,667 -

Stock subscriptions received - - - - - 99,850 99,850

Current year earnings (loss) (2,127,239) (2,127,239)
-----------------------------------------------------------------------------------------------
BALANCE SEPTEMBER 30, 1996 8,807 $ 88,070 14,597,862 $72,990 $5,395,808 $99,850 $(2,292,134) $ 3,364,584
-----------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------
</TABLE>

See accompanying notes.

Page 17
<PAGE>

MEGALITH CORPORATION AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOWS

YEARS ENDED SEPTEMBER 30,
1996 1995
---- ----
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss): $(2,127,239) $ (80,704)
Adjustments to reconcile net income (loss) to net
cash used in operating activities:
Depreciation and amortization 525,630 4,142
Common and preferred stock issued for services 75,882 -
Loss on disposition of service business 62,500
Change in operating assets and liabilities:
Accounts receivables, trade 48,513 -
Other receivables 62,681 -
Accounts payable, trade 282,358 -
Customer prepayments (41,076) -
Accrued expenses 333,037 -
Property and payroll taxes payable 556,044
----------- ----------
Net cash provided (used) by operating activities (221,670) (76,562)
----------- ----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of assets from Esco Elevators Inc. (808,000) -
Proceeds from sale of subsidiary - 194,591
Purchase of equipment (2,876)
Purchase of service business (VLM) (75,000)
Acquisition of Dalcom Elevator Corp. (280,000)
----------- ----------
Net cash provided (used) in investing activities (1,165,876) 194,591
----------- ----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from loans from related parties 1,225,519 76,562
Proceeds from sale of stock 442,072 -
Proceeds from stock subscriptions received 99,850
Principal payments on installment notes (224,841) -
Repayment on notes to related parties (24,500) (194,591)
Other 395
----------- ----------
Net cash provided by (used in) financing activities 1,518,495 (118,029)
----------- ----------
Net increase (decrease) in cash 130,949 -
Cash, beginning of year 489 489
----------- ----------
Cash, end of period $ 131,438 $ 489
----------- ----------
----------- ----------

See accompanying notes.

Page 18

<PAGE>

MEGALITH CORPORATION AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED)

YEARS ENDED SEPTEMBER 30, 1996 AND 1995

NON-CASH INVESTING AND FINANCING ACTIVITIES:

In connection with the acquisition of substantially all of the assets of Esco
Elevators Inc. from the Bankruptcy Estate effective as of November 27, 1995,
through its newly formed subsidiary, (Esco Elevator Corporation), the Company
assumed various obligations and issued 4,268,000 shares of its common stock.
The fair value of the assets received and the liabilities assumed are
summarized below:

Accounts receivables, trade $ 243,856
Other receivables 62,681
Inventory 616,126
Plant, property and equipment 8,959,420
Other assets 2,575
----------
Total assets 9,884,658
----------
Accounts payables 53,469
Customer prepayments 115,836
Current property taxes payable 130,644
Accrued interest to McMillian assumed
for periods prior to the acquisition 187,489
Installment notes assumed 5,211,270
----------
Total liabilities assumed 5,698,708
----------
Net assets acquired 4,185,950

Less: Cash paid at closing (808,000)
----------
Net increase in equity $ 3,377,950
----------
----------

The Company converted various notes payables and obligations to common and
preferred stock during the year, which in the aggregate, totaled.
$1,484,785. In connection with acquisitions of Vertical Management Left,
Inc. and Dalcom Elevator Corporation, the Company issued 1,111,188 shares of
its common stock and assumed liabilities of $166,000 and owner financing of
$350,000.

See accompanying notes.

Page 19
<PAGE>

MEGALITH CORPORATION AND SUBSIDIARIES

NOTES TO FINANCIAL STATEMENTS

SEPTEMBER 30, 1996

NOTE A - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

ORGANIZATION AND BUSINESS

As described more fully at Note B, Megalith Corporation ("Megalith" or
the "Company") was incorporated on November 3, 1995 in the State of Colorado.
Pursuant to Articles of Merger filed on January 4, 1996, Megalith was merged
with Overline Corporation, a Delaware corporation formed in 1986
("Overline"), and Megalith was the surviving entity of the merger. In
connection with the merger, all outstanding shares of Overline were exchanged
for an equal number of shares of Megalith.

BASIS OF PRESENTATION

The consolidated financial statements include the accounts of Megalith
and its subsidiaries. All significant intercompany accounts and transactions
have been eliminated in consolidation.

USE OF ESTIMATES

The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions
that affect reported amounts of certain assets, liabilities, revenues, and
expenses. Actual results may differ from such estimates.

BUSINESS COMBINATIONS

In business combinations accounted for as purchases, the results of
operations of the acquired companies are included from the respective dates
of acquisition. Net assets of the companies acquired are recorded at their
fair value at the date of acquisition. Related purchase premiums and
discounts, if any, are amortized over the remaining lives of the respective
assets or liabilities. For accounting purposes, the acquisition of the Esco
Assets was treated as a purchase of the assets by Megalith, and the assets
and liabilities assumed were recorded at their fair values. The acquisition
of Dalcom Elevator Corporation was also accounted for by the purchase method,
and the purchase price was allocated to specific assets acquired and
liabilities assumed. The excess of the purchase price over the amount
allocated has been recorded as goodwill. This goodwill is attributed
primarily to the customer list and customer order backlog obtained in the
acquisition. This intangible asset will be amortized over five years.

<PAGE>

ACCOUNTS RECEIVABLE; INVENTORY

Accounts receivables are reflected net of amounts received by the
Company through factoring arrangements.

Inventories are carried at the lower of cost or market.

The allowances for accounts receivable and inventory are the amounts
which, in the opinion of management, are necessary to absorb potential losses
related to the collectibility of receivables and obsolescence of inventory.
The adequacy of the allowance is based on the growth and composition of the
accounts, their related risk characteristics, and continual review by
management of the quality of their respective balances.

PROPERTY AND EQUIPMENT

Property is recorded at cost. Expenditures for major additions and
improvements are capitalized, while minor replacements, maintenance and
repairs are charged to expense as incurred. When property is retired or
otherwise disposed of, the cost and accumulated depreciation and depletion
are removed from the accounts and any resulting gain or loss is reflected in
current operations. Depreciation is computed on the straight line method
based upon the estimated useful lives of the assets.

Office furniture and equipment 3 to 7 years
Vehicles 5 years
Factory equipment 12 years
Buildings 30 years

Statement of Financial Accounting Standards ("SFAS") No. 121, "Accounting for
the Impairment of Long-Lived Assets and for Long-lived Assets to be Disposed
Of", which is effective for fiscal years beginning after December 15, 1995,
requires that long-lived assets and certain identifiable intangibles to be
held and used by an entity be reviewed for impairment whenever events or
changes in circumstances indicate that the carrying value of an asset may not
be recoverable. SFAS No. 121 also requires that long-lived assets and
certain identifiable intangibles to be disposed of be reported at the lower
of carrying amount or fair value less cost to sell. The Company will adopt
SFAS No. 121 effective October 1, 1996, and the impact of such adoption is
expected to be insignificant to its financial condition and results of
operations.

INCOME TAXES

Deferred income taxes are provided, when applicable, on temporary differences
between the recognition of income and expense for tax and for financial
accounting purposes in accordance with Statement of Financial Accounting
Standards No. 109. Deferred income taxes are provided, when applicable, for
all significant temporary differences by the liability method, whereby
deferred tax assets and liabilities are determined by the tax laws and
statutory rates in effect at the balance sheet date.

NOTE B - RECAPITALIZATION AND PURCHASE OF ESCO ASSETS

Megalith Corporation ("Megalith" or the "Company") was incorporated on
November 3, 1995 in the State of Colorado. Pursuant to Articles of Merger
filed on January 4, 1996, Megalith was merged with Overline Corporation, a
Delaware corporation formed in 1986 ("Overline"), and Megalith was the
surviving entity of the merger. In connection with the merger, all
outstanding shares of Overline were exchanged for an equal number of shares
of Megalith. For approximately five years prior to the merger on November 27,
1995, Overline had been essentially inactive, other than for its efforts in
seeking business opportunities.

21
<PAGE>

The Esco Assets were acquired in exchange for $808,000 cash paid to the
Bankruptcy Estate of Old Esco, assumption by the Company of certain
installment debt and other obligations of Old Esco aggregating $4,273,642 and
the issuance to Epsitek, Inc. of 4,268,000 shares of the common stock of the
Company. In addition, the Company assumed indebtedness totaling $1,425,066
and received certain assets from Epsitek, Inc. in connection with the
purchase of the Esco Assets. $800,000 of the cash consideration was borrowed
from certain shareholders or related parties of the Company on short term
notes bearing interest of eight percent, of which $200,000 of principal on
the notes was canceled in exchange for shares of common stock of the Company
upon the exercise of a stock option agreement by the chief executive officer
of the Company on December 4, 1995. Also, another $325,000 of notes was
cancelled with the issuance of Common stock of the Company. Of the debt
assumed by the Company, $3,407,177 was due to an individual who holds first
lien rights to the substantial portion of the Esco Assets, including the
land, buildings and all equipment not encumbered by other priority liens.
The remaining debt assumed by the Company is owed to various financing
institutions and vendors for certain items of equipment or improvements which
are included in the assets acquired by the Company. With one exception, all
of the notes have installment payment provisions of varying terms that are
specified by the Plan of Reorganization.

For accounting purposes, the acquisition of the Esco Assets was treated as a
purchase of the assets by Megalith, and the assets and liabilities assumed
were recorded at their fair values.

NOTE C - GOING CONCERN CONSIDERATIONS

The consolidated financial statements have been presented in conformity with
generally accepted accounting principles, which contemplate continuation of
the Company as a going concern. However, the Company has sustained
substantial losses from operations in the year just ended, and such losses
have continued subsequent to year end. In addition, the Company has used,
rather than provided, cash in its operations. Operations of the Company have
been financed primarily from revenues generated from the sale of elevators
and components, borrowings and contributions from its principal stockholder,
and by proceeds from the sale of its common stock. To implement its business
plan, which is to develop the markets for its products, including expansion
into the China market through the joint venture in China (see "Note N -
Subsequent Events" below) and

22
<PAGE>

complete an adequate refinancing of its subsidiary (Esco Elevator
Corporation) the Company must raise additional capital.

In view of the matters described in the preceding paragraph, recoverability
of a major portion of the recorded asset amounts shown in the accompanying
balance sheet is dependent upon continued operations of the Company, which in
turn is dependent upon the Company's ability to raise capital to (i) obtain
adequate levels of working capital, (ii) expand and develop the markets for
its products, and in particular, develop the Joint Venture in China, and
(iii) to achieve successful operations. The financial statements do not
include any adjustments relating to the recoverability and classification of
recorded asset amounts or amounts and classification of liabilities that
might be necessary should the Company be unable to continue in existence.

The Company is presently undertaking a private placement offering for the
sale of its common stock for which the Company expects to raise up to
$3,000,000 for the purposes of developing additional markets for its
products, expansion of its operations overseas, and for working capital.
Simultaneous with this effort for the sale of common stock, the Company is
pursuing refinancing of its existing long and short term indebtedness. In
addition, the Company has commenced a program to expand the market
penetration for its products and services through the implementation of
marketing efforts into other geographic areas not previously exploited by
the Company. Management believes the above steps will enable the Company to
meet its obligations and sustain operations until profitable operations have
been attained.

NOTE D - ACCOUNTS RECEIVABLE

As of September 30, 1996 the balance of trade accounts receivable was as
follows:

Gross trade receivables $ 682,284
Less: Advances on factored receivables (423,823)
Allowance for doubtful accounts (63,118)
---------
Net trade receivables $ 195,343

Other receivables reflect amounts aggregating $75,000 due in less than
one year for the sale of Vertical Lift Management, Inc. (VLM), an elevator
service and installation company acquired by Megalith during 1996. Megalith
sold its interest in VLM, which transaction was closed on October 4, 1996,
and the Company has recorded a charge of $62,500 against income in the
current year for the disposition.

NOTE E - INVENTORIES

Inventories consisted of the following at September 30, 1996 and 1995:

1996 1995
--------- -----
Raw materials and work-in-progress $ 820,259 $ -0-
Less: Allowance for obsolesence (204,133) -0-
-------------------
Net inventories $ 616,126 $ -0-

During the fourth quarter the Company recorded a provision of $52,133 to
reduce the carrying value of its inventory. An additional reserve amount of
$152,000, included in the total reserve of $204,133 above, was recorded in
connection with the acquisition of the Esco Assets at November 27, 1995.

23
<PAGE>

NOTE F - PROPERTY AND EQUIPMENT

The Company's property and equipment consist of the following at
September 30, 1996 and 1995:

1996 1995
---------- -------
Land and buildings $5,600,000 $ -0-
Furniture and office equipment 314,460 29,000
Computer software 35,000 -0-
Factory equipment 3,101,956 -0-
Automobiles 50,950 -0-
---------- -------
Totals $9,102,366 $29,000
---------- -------
---------- -------

NOTE G - DALCOM ACQUISITION

On July 9, 1996, the Company acquired 100% of the outstanding shares of
Dalcom Elevator Corporation ("Dalcom"), a private company located in Garland,
Texas which manufactures and markets elevator cabs and entrances. In
connecrtion with that purchase, the Company received certain equipment,
accounts receivables, the customer list and the backlog of customer orders.
In exchange, the Company assumed certain indebtedness of Dalcom and issued
944,520 shares of the Company's restricted Common Stock. Immediately after
the closing, the indebtedness was reduced by a cash payment of $250,000. The
Company is presently in negotiation with the previous owner of Dalcom to
cancel a portion of the indebtedness assumed by the Company and receive back
all of the shares issued in the transaction to the treasury of the Company.

NOTE H - ACCRUED LIABILITIES

Accrued expenses consist of the following at September 30, 1996 and 1995:

1996 1995
-------- -------
Officer compensation $152,599 $ -0-
Accrued travel expenses 25,000 -0-
Accrued legal expenses 25,000 -0-
Other accrued expenses 130,438 -0-
-------- -------
Totals $333,037 $ -0-
-------- -------
-------- -------

NOTE I - LONG TERM NOTES PAYABLE

Long term notes payable consists of the following:

Sep. 30, Sep. 30,
1996 1995
---------- --------
Promissory note to McMillan,
secured by first lien deed
of trust on substantially all
equipment and real estate,
assumed effective as of
November 27, 1995 as part
of the Esco Asset acquisition,
principal and interest of
6.5% due in monthly installments
of $45,425, payable in full
July 10, 2002 $3,269,820 -0-

<PAGE>

Various installment notes payable,
assumed effective as of
November 27, 1995 as part of
the Esco Asset acquisition,
with terms ranging from 3
months to 10 years at interest
rates ranging from 3% to 9.9%,
secured by certain equipment
and property 787,356 -0-
---------- --------
$4,057,176 -0-
Less short term portion
of long term debt 876,000 -0-
---------- --------
Net long term debt $3,181,176 -0-

NOTE J - SHORT TERM NOTES PAYABLES TO RELATED PARTIES

Notes and accounts due to related parties consists of the following::

Sep. 30, Sep 30,
1996 1995
-------- --------
Short term note payable to Epsitek,
Inc., unsecured, payable on
demand, with interest at 8%;
issued in exchange for receivables
(net of liabilities) transferred
from Epsitek, Inc. in connection
with the acquisition of the
Esco Assets $152,355 $ -0-

Short term notes payable to four
stockholders, unsecured, with
interest at 8% paid monthly, and
due on demand; loan incurred
in connection with Esco Asset
acquisition 386,432 -0-

Short term note payable to a
shareholder/officer/director,
unsecured, with interest at 8%,
principal and interest due
on demand; loan incurred in
connection with Esco Asset
acquisition 180,109 -0-

90-day note payable payable to
a former officer/director,
non-interest bearing; note
given for cash advance to the
Company in connection with
the Dalcom Acquisition 200,000 -0-

Demand note payable to a former
officer/director, non-interest
bearing; the note was given in
exchange for operating expenses
advanced to the Company -0- 76,562
-------- -------
Total $918,896 $76,562

The demand note due to the former officer/director was reduced during
the current quarter by $24,857 for the net book value of furniture and
equipment distributed to the noteholder upon the merger of Megalith and
Overline; the balance of 51,705 was cancelled upon the issuance of shares of
the Company's Common Stock.

<PAGE>

NOTE K - STOCKHOLDERS' EQUITY

CAPITAL STOCK

The authorized capital stock of the Company as of September 30, 1996
consists of 50,000,000 shares of common stock, par value $.005 per share
("Common Stock") and 5,000,000 shares of preferred stock, par value $10.00
per share ("Preferred Stock"). At a special meeting of shareholders on
December 18, 1996, an amendment to the Company's Certificate of Incorporation
was adopted to (i) divide the Company's authorized Preferred Stock into
series of Preferred shares and to fix and determine the relative rights,
limitations, and preferences of the shares of the Company's Series A, B, and
C Preferred Stock, and (ii) to grant the authority to the Board of Directors
of the Company to fix and determine the relative rights, limitations, and
preferences of the remaining series of the Company's Preferred Stock.

PREFERRED STOCK

During the fiscal year ended September 30, 1996, the Company issued
11,307 shares of its Preferred Stock primarily in exchange for the
cancellation of obligations to various individuals in connection with loans
to the Company, or its predecessor, for the initial financing of the Company.
Certain of the shares issued during the period were sold for cash pursuant
to a private placement offering or as compensation for financial consulting
services provided to the Company. Pursuant to the amendments to the Articles
of Incorporation adopted by the shareholders at the special meeting on
December 18, 1996, each of the 11,307 issued shares were designated as Series
A Preferred Stock. Of the 11,307 shares of Preferred Stock issued, 2,500
shares had been exchanged for shares of Common Stock as of September 30,
1996, as provided for such conversion by the designation of the Series A
Preferred Stock. Subsequent to September 30, 1996, additional shares of the
Preferred Stock were exchanged for Common Stock

Three million shares of the five million authorized Preferred shares are
divided into three series and designated as Series A, Series B, and Series C
Preferred Stock, and the corporation is authorized to issue one million
shares each for Series A, B and C. The Board of Directors is authorized to
divide the two million remaining shares of Preferred Stock into series, to
designate each series, to fix and determine separately for each series the
relative rights, limitations, and preference of such series, and to issue
shares of any series of Preferred Stock then or previously designated, fixed,
or determined. Although the Board of Directors has designated the term for
Series A, Series B and Series C of its Preferred Stock, only the Series A
shares have been issued. Each share of each series of Preferred Stock will
have rights identical to each other share of that series of Preferred Stock.
No dividend on any share of Series A, B or C Preferred Stock will accumulate.

Each share of Series A Preferred Stock has a stated value of $40.00, and
is convertible, at the option of the holder of such share, into Common Stock.
The conversion rate into Common is determined by dividing the $40 per share
stated value of the Preferred by 50% of the closing bid price of the Common
Stock. The term "Closing Bid Price" means, if the corporation stock is
actively traded, the published closing bid price of the Common on the trading
day immediately preceding the date of conversion. Series A shares may be
converted into Common Stock after the Preferred Stock has been issued and
outstanding for at least six months.

COMMON STOCK

During the fiscal year ended September 30, 1996, the Company issued
4,268,000 shares of its Common Stock in connection with the acquisition of
the Esco Assets and 5,131,160 shares in exchange for the cancellation of
obligations to various individuals (including officers and directors) in
connection with loans to the Company, or its predecessor, for the initial
financing of the Company. Certain additional shares were

<PAGE>

issued during the period pursuant to a private placement offering for cash or
as compensation for financial consulting services provided to the Company

Holders of Common Stock are entitled to one vote for each share held of
record on all matters voted on by stockholders. The shares of the Common
Stock do not have cumulative voting rights, which means that the holders of
more than 50% of the shares of the common Stock voting for the election of
the directors can elect all of the directors to be elected by holders of the
Common Stock, in which event the holders of the remaining shares of Common
Stock will not be able to elect any director. Upon any liquidation,
dissolution, or winding-up of the affairs of the Company, holders of the
Common Stock would be entitled to receive, pro rata, all of the assets of the
Company available for distribution to stockholders, after payment of any
liquidation preference of any Preferred Stock that may be issued and
outstanding at the time. Holders of the Common Stock have no subscription,
redemption, sinking fund, or preemptive rights.

Common Stock is stated at the lower of par value or consideration
received, as permitted by state law. Common stock subscribed reflects
amounts received in September, 1996 for shares of the Company's Common Stock
for which the shares were not issued until October, 1996.

STOCK OPTIONS

On April 1, 1996, the Company granted to an individual options to
acquire up to 200,000 shares of restricted common stock of the Company in
conjunction with an agreement to provide services to the Company. The option
agreement expires 24 months from the date of the agreement.

On May 29, 1996, the Company granted to Stacy Investments Partnership
Ltd. the option to purchase 50,000 shares of restricted common stock at a
price of $.60 per share. The option expires in 24 months from the date of
the agreement.

On September 5, 1996, the Company acknowledged to Dr. Arthur Malcolm, a
former Director of the Company, that the Company has granted to him the
option to purchase 100,000 shares of restricted common stock at $.37 per
share and 100,000 shares at $1.00 per share, both expiring March 5, 1998.

On May 1, 1996, the Company accepted certain subscriptions for 105,000
shares of the Company's common stock from five individuals which could
require the Company to buy the shares back at a price of $1.20, only upon the
election of the holder and in the event that within 12 months the bid price
of the Company's Common Stock falls below $1.20 for any consecutive 60 day
period. The Company has not been requested to buy back any of the shares
under the agreements and, based upon the current level of the trading price
of the Common Stock which is in excess of the price required for an election
of the put option, management does not anticipate that the Company will be
required to buy back any shares prior to the expiration date of April 30,
1997. Accordingly, no provision has been made in the financial for any
obligation that might arise in connection with any put option.

27
<PAGE>

NOTE L - COMMITMENTS AND CONTINGENCIES

Effective November 27, 1995, the Company entered into a three-year
employment contract with a director, who is the chief executive officer of the
Company's subsidiary, Esco Elevator Corporation. The contract provides for a
base annual salary of $120,000, expense reimbursements and other provisions.

NOTE M - INCOME TAXES

The Company has net operating loss carryforwards of $1,915,000 available
to offset future taxable income expiring in tax years ended 2010 through
2011. Tax laws limit the utilization of the net operating loss carryforwards
available for use in any given tax year in the event of a significant change
in ownership interests. Due to changes in majority ownership occurring at
November 27, 1995 and again during 1996, the utilization of net operating
losses of the Company will be limited to approximately $250,000 per year.
Furthermore, realization of future deductions for available net operating
losses is dependent on generating sufficient taxable income prior to
expiration of the loss carryforwards. Management believes that it is more
likely than not that any deferred tax asset arising from the net operating
losses carryforwards may not be realized; therefore, a valuation allowance in
the full amount of the deferred tax asset has been provided to reduce the
total deferred tax asset to zero.

NOTE N - SUBSEQUENT EVENT

On January 16, 1997, the Company's subsidiary, Esco Elevator
Corporation, entered into a Joint Venture Agreement with Shaanxi Elevator
Corp. in Province of Shaanxi in China to manufacture and market a full line
of hydraulic and traction elevators and related products. Under the terms of
the agreement, the provincial government will provide a large plant capable
of producing $100 million in products a year, Esco will equip and manage the
plant and China Shaanxi Elevator Corp. will market the Joint Venture's
elevators through its 36 offices in China. Esco will have the right to
market the products of the Joint Venture throughout North, Central and South
America, as well as to continue to manufacture and market elevators from its
existing facilities in Fort Worth, Texas. Simultaneous with the execution of
the Joint Venture Agreement, Esco received an order from China Shaanxi
Elevator Corp. for a minimum of 250, and up to 400, hydraulic elevators
valued at $19 million to $30 million. Esco is to commence the production of
this order immediately so as to open the China market as soon as possible for
the benefit of the Joint Venture.

28
<PAGE>

ITEM 8. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE.

None.

PART III

ITEM 9. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS,
COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE ACT.

The following table lists the names, ages and present position with the
Company for all of the Company's directors and executive officers:

Syed G. Zaidi 51 Chief Executive Officer and
Chairman of the Board of Directors
Bashir G. Ahmed 52 Director
James W. Landrum 47 Director and President of Esco
Elevators, Inc.
Mohammed Sharabash 48 Director
Arthur Steber 38 Director

The executive officers of the Company are elected annually at the first
meeting of the Company's Board of Directors held after each annual meeting of
stockholders. Each executive officer will hold office until the first
meeting of the Board after annual meeting of stockholders next succeeding his
election and until his successor is duly elected and qualified, or until his
death or resignation or until he shall have been removed in the manner
provided in the Company's Bylaws.

BIOGRAPHICAL INFORMATION. Set forth below is certain information concerning
the Directors and Executive officers of the Company.

SYED G. ZAIDI serves as the President, Chief Executive Officer, and
Chairman of the Board. He has been affiliated with the Company since
November, 1995. Since April, 1994, Mr. Zaidi has been the President and
Chief Executive Officer of Epsitek, Inc., a major shareholder of the Company.
Prior to his association with Megalith, he also served as President and
Chief Executive Officer of Alphasoft, Inc., and Baby's Dream Furniture, Inc.
In 1990, Mr. Zaidi, as President of Crib to College, Inc., developed a
distribution program for the company's manufactured products by opening 20
retail stores. From 1985 to 1990, Mr. Zaidi served as Managing Director and
CEO of Intech International in Karachi, Pakistan and a related company,
Fujatech Industries, Ltd in Fujairah, UAE. In 1980, Mr. Zaidi founded
Alphacom, Inc., a company engaged in the business of design, manufacture and
marketing of computer printer products for OEM and consumers, including the
establishment of distribution and manufacturing in Europe and the Far East.
Mr. Zaidi holds a bachelors degree in electrical engineering from Oklahoma
State University.

BASHIR G. AHMED has been a director of the Company since April, 1996.
Mr. Ahmed has served as the President and Chief Executive Officer of Samad
Group, Inc., a venture capital organization, since 1986. Mr. Ahmed holds two
masters degrees from the University of Illinois-Champaign Urbana.

JAMES W. LANDRUM has been affiliated with the Company since November,
1995. Mr. Landrum is presently a director of the Company and also serves as
the President and Chief Executive Officer of Esco Elevator Corporation.
Prior to becoming affiliated with the Company, Mr. Landrum was a Vice
President of

29
<PAGE>

Epsitek, Inc. Prior to that, Mr. Landrum was President of Lanco
Environmental and Lanco Energy, companies founded and owned by him. Mr.
Landrum holds a degree in Business Administration from the University of
Texas at Arlington.

MOHAMMED SHARABASH has been a director of the Company since April, 1996.
Mr. Sharabash is President of Micro System International and CU Online, Inc.
Mr. Sharabash holds a masters and a doctoral degree from the University of
Illinois.

ARTHUR W. STEBER has served as a director of the Company since December,
1996. Mr. Steber is Managing Director of Bagby Elevator Company, Inc., where he
has been employed for over 20 years. Bagby is the largest independent elevator
contractor in the Southeastern U.S., and for 70-years, has sold, installed and
serviced elevators. Mr. Steber has a degree in business administration from the
University of Alabama.

SECTION 16 REPORTING

Section 16(a) of the Securities Exchange Act of 1934 requires the Company's
officers and Directors, and persons who own more than 10% of a registered class
of the Company's equity securities, to file reports of ownership and changes in
ownership with the Securities and Exchange Commission (the "SEC") and the
National Association of Securities Dealers, Inc. Officers, Directors, and
greater than 10% stockholders are also required by SEC regulations to furnish
the company with copies of all Section 16(a) forms they file.

Based upon a review of the Company's files, the Company has apparently not
received copies of the required forms. Therefore, the Company cannot ascertain
whether the reporting requirements of Section 16(a) has been met by the persons
required to report.

ITEM 10. EXECUTIVE COMPENSATION.

The following table sets forth the compensation of the Company's Chief Executive
Officer for the fiscal years ended September 30, 1996, 1995, and 1994.

<TABLE>
------Annual Compensation------ ------Long Term Compensation-----

Awards Payouts
(a) (b) (c) (d) (e) (f) (g) (h) (i)
Other Restricted
Name and Annual Stock Options/ LTIP All Other
Principal Salary Bonus Compen- Awards SARs Payouts Compensation
Position Year $ $ sation $ $ # $ $
- ---------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Syed G. Zaidi, 1996 (1) -- -- (1) (1) -- --
CEO and 1995 -- -- -- -- -- -- --
Chmn of BOD 1994 -- -- -- -- -- -- --

James W. Landrum 1996 (2) -- -- -- -- -- --
Pres. & CEO, 1995 -- -- -- -- -- -- --
Esco Elevator Corp. 1994 -- -- -- -- -- -- --
</TABLE>

(1) Mr. Zaidi began his duties as CEO and Chairman of the Board
effective in November, 1995 and has received no cash compensation for the
fiscal year ended September 30, 1996. Mr. Zaidi has been authorized by the
Board of Directors to receive an annual salary of $120,000 per year, of

30
<PAGE>

which $100,000 was accrued as compensation and $25,000 as travel expense
and obligations of the Company as of September 30, 1996. Mr. Zaidi
received an option for the purchase of 2,000,000 shares of the Company's
Common Stock at a price of $0.10 per share in November, 1995 and on
November 28, 1995, he exercised his option and received those shares. The
exercise price of $200,000 was paid by the cancellation of $200,000 of
indebtedness due to Mr. Zaidi in connection with monies advanced for the
acquisition of the Esco Assets. Also, in February and June, 1996, Mr.
Zaidi was issued a total of 1,100,000 shares of Common Stock of the
Company, and the attributed value of $275,000 for those shares was
used to reduce the indebtedness due to Mr. Zaidi referred to previously.
(2) Mr. Landrum began his duties as President and CEO of Esco
Elevator Corporation effective November 27, 1995 and has an employment
contract for a period of three years with the Company which provides for an
annual salary of $120,000 per year. During the period from November 27,
1995 to the fiscal year ended September 30, 1996, Mr. Landrum was due basic
compensation under the employment contract of approximately $100,000, and
was actually paid $47,401 during the period. The amount under the contract
of $52,599 not paid has been accrued as an expense and an obligation of the
Company as of September 30, 1996.

No other officer or person received compensation of an amount in excess of
$100,000 during the fiscal year ended September 30, 1996.

The Company does not compensate its non-employee Board members for
participation in board meetings. During the fiscal year ended September 30,
1996, the Directors were not paid any compensation in connection with their
services.

ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.

The following table sets forth the total number of shares of the Company's
Common Stock and Preferred Stock beneficially owned by (a) each person who, to
the knowledge of the Company, is the beneficial owner of 5% or more of the
outstanding shares of a class of the Company's Capital Stock, (b) each of the
Company's present Directors and officers and certain other parties, and (c) the
directors and officers of the company as a group, all as reported by each such
person, and as of February 28, 1997. Except as otherwise indicated, ownership
of shares by the persons named below includes sole voting and investment power
held by such persons.
Amount and
Nature of (1)
Beneficial Percent
Name and Address of Beneficial Owner Ownership of Class
- ------------------------------------ --------- --------

COMMON STOCK

Frances H. Alexander
172 Empinado Way
Hot Springs Village, AR 71909 944,520 5.6%

Epsitek, Inc. 3,025,862 (2) 18.0%
3102 Coronado St.
Irving, TX 75062

Syed G. Zaidi 4,989,122 (3) 29.6%
4720 Esco Drive
Fort Worth, TX 76140

31
<PAGE>

Bashir Ahmed 209,622 (4) 1.2%
c/o Samad Group, Inc.
2801 Far Hills Avenue, Suite 205
Dayton, OH 45419

James W. Landrum 1,008,620 (5) 6.0%
4720 Esco Drive
Fort Worth, TX 76140

Mohammed Sharabash 775,643 (6) 4.6%
2907 River Oak Drive
Champaign, IL 61821

Arthur W. Steber 116,245 .7%
c/o Bagby Elevator Company, Inc.
4240 First Avenue South
Birmingham, AL 35232-0919

All Directors and Officers as a 5,892,543 (7) 35.0%
group (5 people)

SERIES A PREFERRED STOCK

Bashir Ahmed 297 (4) 5.3%
c/o Samad Group, Inc.
2801 Far Hills Avenue, Suite 205
Dayton, OH 45419

All Directors and Officers as a 297 5.3%
group (5 people)

(1) Percent of class is based upon the 16,838,433 shares of Common and
5,574 shares of Preferred issued and outstanding as of February 28,
1997; and for each person or group, pursuant to Item 403 of Regulation
S-B, the percentages are calculated on the basis of the amount of
outstanding securities of the particular class plus any securities that
such person or group has the right to acquire within 60 days pursuant
to options, warrants, conversion privileges or other rights.
(2) Shares owned by Epsitek, Inc. are voted by Syed G. Zaidi, in his
capacity as President and Chief Executive officer of Epsitek, Inc. Mr.
Zaidi has an indirect ownership of 1,008,620 of the Epsitek, Inc.
shares, determined by his proportionate ownership of Epsitek, Inc.
(3) Mr. Zaidi's shares beneficially owned includes 1,963,260 shares held
directly by Mr. Zaidi and 3,025,862 shares held by Epsitek, Inc., of
which Mr. Zaidi votes as President and Chief Executive Officer of
Epsitek, Inc.
(4) Mr. Ahmed's shares are held by Samad Group, Inc., of which Mr. Ahmed
is the principal shareholder and entitled to vote the shares. Mr.
Ahmed's shares also include shares of Common which Samad Group, Inc. is
entitled to receive under a conversion of Preferred shares, calculated
based upon an assumed conversion rate of 38.83 shares of Common for
each share of Preferred ($40 per share stated value of Preferred
divided by 50% of the closing bid price of $2.06 on March 17, 1997), in
accordance with the terms of the Preferred.
(5) Mr. Landrum's shares reflect a portion of the Epsitek, Inc. shares,
determined by Mr. Landrum's proportionate ownership of Epsitek, Inc.
(6) Mr. Sharabash's shares include 357,143 shares of Common which were
converted from 2,500 Preferred shares on December 31, 1996, in
accordance with the terms of the Preferred Series A.

32
<PAGE>

ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.

In the transaction involving the purchase of the Esco Assets described
in Item 1. above, the Company issued to Epsitek, Inc. 4,268,000 shares of its
Common Stock and assumed certain indebtedness of Epsitek, Inc. totaling
$1,425,066, and received certain assets from Epsitek, Inc. The obligations
assumed from Epsitek, Inc. were incurred primarily in connection Epsitek's
operations of Esco Elevators, Inc. during the period of the Chapter 11
Bankruptcy under the supervision of the Bankruptcy Trustee and for working
capital for Epsitek, Inc. Mr. Zaidi, Chief Executive Officer and Chairman of
the Board of Megalith, Inc. is the President, Chief Executive Officer,
Director and the major shareholder of Epsitek, Inc. Mr. Landrum, a Director
of Megalith is also a director and major shareholder of Epsitek, Inc. and
serves as its Vice President. In connection with the acquisition of the Esco
Assets from the Bankruptcy Estate for a cash purchase price of $800,000 plus
other expenses, Mr. Zaidi loaned the Company cash of $600,000. In addition,
Mr. Zaidi loaned the Company $79,608 for working capital during the year. On
November 28, 1995, Mr. Zaidi exercised an option granted to him by the
Company for the purchase of 2,000,000 shares of Common Stock, and the
exercise price of $200,000 was paid by the reduction of the note due to him.
Mr. Zaidi also received a total of 1,100,000 shares of the Company's common
stock in the months of February and May, 1996, in exchange for cancellation
of $275,000 of the promissory note due to him. In addition, Mr. Zaidi was
repaid cash in the amount of $24,500 on the note. The balance of all notes
due to Mr. Zaidi was $180,108 at September 30, 1996.

On April 7, 1996, Mohammed Sharabash, a Director of the Company was
issued 200,000 shares of Common Stock and 2,500 shares of Preferred Stock of
the Company in cancellation of $115,000 of indebtedness due to him for loans
made to the Company.

In a transaction recorded in the year ended September 30, 1996 and
closed on October 4, 1996, the Company sold 100% of the stock in Vertical
Lift Management, Inc. (VLM) to Arthur P. Bagby in a transaction for cash and
notes receivable aggregating $75,000. Arthur P. Bagby is the majority
shareholder of Bagby Elevator, Inc., a private company headquartered in
Birmingham, Alabama. Arthur W. Steber, a Director of Megalith, is the
Managing Director and shareholder of Bagby Elevator, Inc. Mr. Steber was not
elected to the Board of Megalith until December 18, 1996, which occurred
after the acquisition of VLM by Arthur P. Bagby. VLM is a private company
involved in the installation and servicing of elevators in the North Texas
area. The stock of VLM, a Texas corporation, had been acquired by Megalith
in a purchase agreement dated April 23, 1996. In connection with the
agreement for the sale of VLM to Mr. Bagby the Company granted to Mr. Bagby
or any of his affiliates ("Bagby"), credits totaling $41,126 in the form of
credits on existing purchase orders due and payable by Bagby to subsidiaries
of Megalith or purchase discounts on future orders for parts and supplies
sold to Bagby within 6 months from the date of the agreement. In addition,
Bagby was granted a preferred customer status as a customer of Esco whereby
Bagby will receive price discounts on purchases from the Company of
approximately 5% for a period of 10 years.

During the year, Samad Group, Inc. was compensated by the issuance of
shares of Common and Preferred shares of the Company in connection with
financial consulting services provided to the Company. The value attributed
to these shares issued during the year was $28,382. Mr. Ahmed, a Director of
the Company, is the President, Chief Executive Officer and principal owner of
Samad Group, Inc.

33
<PAGE>

ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.

(A) FURNISH THE EXHIBITS REQUIRED BY ITEM 601 OF REGULATION S-B.

Exhibit No. Exhibit Description
----------- -------------------
2.1 * Amended Asset Purchase Agreement dated November 27, 1995 by and
among Epsitek, Inc. and Overline Corporation

2.2 * Plan and Agreement of Purchase dated May 22, 1996 by and amongst
Megalith Corporation, Frances H. Alexander, and Dalcom Elevator
Corporation

3.1 Articles of Incorporation of Megalith Corporation (a Colorado
Corporation)

3.2 Articles of Merger of Megalith Corporation (acquiror) and
Overline Corporation (acquired) dated as of November 7, 1995

3.3 Bylaws of Megalith Corporation

10.1 Bill of Sale and Assignment dated as of November 27, 1995 between
Esco Trust, Esco Elevator Corporation and Epsitek

10.2 Assignment dated as of November 27, 1995 between Epsitek, Inc.
and Esco Elevator Corporation

10.3 Assumption, Extension, Modification and Renewal Agreement (to the
Promissory Note and Deed of Trust, Security Agreement and
Financing Statement) dated as of November 7, 1995 between
Esco Elevator Corporation, Epsitek, Inc. and Anna Loughridge
McMillan

17 * Letter on director resignation

21 * Subsidiaries of registrant

23 * Consent of Independent Auditor

27 * Financial Data Schedule

- ----------------
* Indicates documents filed herewith.

(B) REPORTS ON FORM 8-K.

No reports on Form 8-K were filed during the fourth quarter of the
fiscal year ended September 30, 1996.

34
<PAGE>

SIGNATURES

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

MEGALITH CORPORATION:

Date
----
By: /s/ Syed G. Zaidi March 18, 1997
- ------------------------------------------
Syed G. Zaidi, Chief Executive Officer and
Chairman of the Board of Directors

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

/s/ Bashir G. Ahmed March 18, 1997
- ------------------------------------------
Bashir G. Ahmed
Director

/s/ Mohammed Sharabash March 18, 1997
- ------------------------------------------
Mohammed Sharabash
Director

/s/ James W. Landrum March 18, 1997
- ------------------------------------------
James W. Landrum
Director

/s/ Arthur Steber March 18, 1997
- ------------------------------------------
Arthur Steber
Director

35
<PAGE>

Megalith Corporation

Exhibits attached to Form 10-K

Fiscal Year Ended September 30, 1996

2.1 Amended Asset Purchase Agreement dated November 27, 1995 by and
among Epsitek, Inc. and Overline Corporation

2.2 Plan and Agreement of Purchase dated May 22, 1996 by and amongst
Megalith Corporation, Frances H. Alexander, and Dalcom Elevator
Corporation

17 Letter on director resignation

21 Subsidiaries of registrant

23 Consent of Independent Auditor

27 Financial Data Schedule

<PAGE>

AMENDED
ASSET PURCHASE AGREEMENT

This Asset Purchase Agreement (Agreement) made and entered this 27th
day of November, 1995 by and among Epsitek, Inc. located in Dallas, Dallas
County, Texas, a Delaware corporation (hereinafter referred to as "Seller"),
and OVERLINE Corporation a Delaware corporation, located in Dallas, Dallas
County, Texas (hereinafter referred to as "Buyer").

RECITALS:
I. WHEREAS, Seller agreed to sell to Buyer, subject to certain contingencies,
all of the assets and properties, tangible and intangible, used in connection
with Seller's Business, all as more specifically provided in this Agreements;
and

II. WHEREAS, Buyer agrees to buy said assets and properties;

III. NOW THEREFORE, in consideration of the mutual representation, covenants and
undertakings herein contained, and subject to and on the terms and conditions
herein set forth, the parties hereto warrant, covenant and agree as follows:

PURCHASE AND SALE OF ASSETS

Section 1.01 PURCHASE AND SALE OF ASSETS. Seller agrees to sell,
transfer, convey and assign to Buyer, and Buyer agrees to purchase and
acquire from Seller, at the Closing (as hereinafter defined in Article IV
hereof), the assets, properties, rights and interests set forth in this
Article I, to be more fully described in certain Schedules as hereinafter
required (such assets, properties, rights and interests being collectively
referred to herein as the "Assets") for and in consideration of the payment
by Buyer to Seller, of the amounts hereinafter specified.

The Assets shall include the following:

(i) all right, title and interest in and to all licenses, copyrights,
permits, registered trademarks, trademark applications, service marks and
rights under contract relating thereto, and all renewals, modifications
and extensions of any of the foregoing, as well as signs and miscellaneous
advertising material, which are listed on Schedule "A" attached hereto;

(ii) all right title and interest in "Esco Elevator, Inc." and Esco
Properties, Inc. pursuant to the Management Agreement and the Letter
Agreement by and amongst Epsitek and the bankruptcy estate of ESCO and
all goodwill associated with or arising and growing out of Seller's
Business, including, but not limited to, its position, celebrity,
reputation for skill, and all files and records used in the Seller's
Business, together with all information and rights incidental thereto,
and all influence and other intrinsic values generally associated with
the goodwill of a business, as well as the value of the going business,
which the parties hereto recognize as valuable property rights, distinct
and apart from the other assets herein conveyed;

1
<PAGE>

(iii) All of Seller's right title and interest in and to that one
certain plan of reorganization filed on or about June 6, 1995 in The United
States Bankruptcy Court For The Northern District Of Texas Fort Worth
Division IN RE: Esco Elevators, Inc. Case # 404-44339-MT-l 1 Chapter 11
and Esco Properties, Inc. Case # 494-44340-MT- 11 Chapter 11 Jointly
Administered Under Case # 494-44339-MT-l 1

SECTION 1.02 INSTRUMENTS OF CONVEYANCE AND TRANSFER. Seller agrees
to execute, acknowledge and deliver to Buyer at the Closing such good
and sufficient instruments of sale, conveyance, transfer and assignment
as shall be effective to vest in the Buyer all right, title and interest
in and to the Assets, free and clear of all liens, encumbrances,
security interests, equities, options, claims, charges and restrictions
whatsoever, except the liens of Buyer's lender (if any), and except for
the Leases and Contracts, all as provided in this Agreement, and,
simultaneously with such delivery, Seller will take such steps as may be
requisite to put Buyer in actual possession and operating control of the
Assets. Such instruments of sale, conveyance, transfer and assignment
shall include, without limitation, (i) a general conveyance, transfer
and assignment; (ii) an assignment of inventories; (iii) an assignment
of proprietary information and all intellectual property rights therein;
(iv) an assignment of all names and marks and the goodwill of Seller's
Business and goods and services associated therewith; (v) an assignment
of all works covered by the federal copyright laws and all exclusive
rights of copyright therein; (vi) an assignment of certain Leases and
Contracts; and, (vii) an assignment of certain Real Property Contracts,
each in form and substance substantially similar to the form attached
hereto as Exhibit A.

SECTION 1.03 FURTHER ASSURANCES. Seller agrees that from time to time
after the Closing it will, at the request of Buyer and without further
consideration, execute and deliver such supplemental and additional
instruments of sale, conveyance, transfer and assignment and take such
other action as Buyer reasonably may require to more effectively sell,
convey, transfer and assign to the Buyer, and to put it in the
possession of, the Assets.

CONSIDERATION FOR SALE OF ASSETS

SECTION 2.01 CONSIDERATION. THE entire consideration to be delivered
by the Buyer for the Assets and the agreements and covenants of the
Seller set forth herein shall be (i) 3,918,000 , shares of Buyer's
Common Stock which shall constitute 71.59% of the issued and outstanding
Common stock of Buyer to be adjusted at closing so that the Common stock
issued will Equal $5,000,000.00 worth of stock on the day of the
closing. Buyer has not nor will it have any other class of Common stock
issued or outstanding at the time of closing.

2
<PAGE>

SECTION 2.02 VALUE ASSIGNED TO THE ASSETS. Buyer and Seller agree on the
following values assigned to the Assets, pursuant to the appraisal attached
as "Exhibit A" to be acquired by the Buyer:

Furniture, Fixtures and Equipment: $3,664,000.00
Inventory and Supplies: $1,290,000.00
Real Property $5,600,000.00
Goodwill $ 500,000.00

SECTION 2.03 ASSUMPTION OF LIABILITIES. Buyer shall assume and agrees to
perform or pay any debts, accounts payable, liabilities, obligations or
contracts of Seller of any nature, as listed on Schedule "G" attached hereto
except for any obligations expressly not assumed by Buyer in any assignment
referred to in Section 2.02 hereof. Buyer and Seller agree that the
liabilities assumed by Buyer shall not exceed $6,100,000.00 Dollars.

SECTION 2.04 CLOSING FUNDS Buyer agrees to furnish the funds to close the
transaction with the Esco Bankruptcy Estate.

III

CLOSING

SECTION 3.01 CLOSING. THE sale, transfer and assignment of the Assets
shall be consummated at a closing (herein referred to as the Closing") to be
held at the offices of OVERLINE Corporation, located at 5025 Arapaho Rd.
Suite 400 , Dallas, Texas, 75248, at 2:00 P.M. on Tuesday October 23, 1995.

ACTIONS FOLLOWING EXECUTION OF AGREEMENT

SECTION 4.01 APPROVALS. As soon as practicable after the date of this
Agreement, Seller shall deliver to Buyer all documentation and information
necessary to apply for the written approval by any governmental agency
required to approve the sale and purchase. Buyer shall thereafter undertake
all actions reasonably necessary or appropriate to obtain same.

SECTION 4.02 RIGHT TO ENTRANCE. Buyer and its representatives shall be
allowed full and complete access to Seller's Business and the books and
records therefor, up to and including the date of Closing. Buyer shall be
allowed to observe, inspect and audit the operations and books and records of
Seller's Business, and Seller shall cooperate with Buyer in such
observations, inspections and audits.

3
<PAGE>

SECTION 4.03 BULK SALES COMPLIANCE. Buyer and Seller agree to waive the Bulk
Sales Act.

REPRESENTATIONS AND WARRANTIES
OF SELLER

As of the date first above written, as of the date of the Closing, the
following warranties and representations are made:

SECTION 5.01 ORGANIZATION. Seller represents and warrants that Seller is a
corporation duly organized, validly existing and in good standing under the
laws of the State of Texas and has all requisite power and authority to own
and operate its property and to carry on Seller's Business as presently being
conducted. Seller represents and warrants that it has no actual knowledge of
any material fact which, if true, would result in a breach by Seller of the
above-recited warranty/representation.

SECTION 5.02 AUTHORITY. Seller warrants and represents that (i) it has all
requisite power and authority to enter into this Agreement and to carry out
its obligations hereunder, (ii) its execution, delivery and performance of
this Agreement has been and are duly authorized, (iii) no other proceedings
on the part of them is necessary to authorize the execution, delivery and
performance of this Agreement, and (iv) this Agreement has been duly executed
and delivered by Seller and constitutes the legal, valid and binding
obligation of them, enforceable in accordance with its terms.

SECTION 5.03 ABSENCE OF CONFLICTS. Seller represents that neither the
execution and delivery nor the performance by Seller of this Agreement will
(a) violate, cause a default under, breach the terms of or require any
consent, authorization or approval of any other person; or (b) result in the
creation or imposition of any liens, charges or other encumbrances on any of
the Assets; or (c) violate any law, regulation, judgment, order, writ,
injunction or decree.

SECTION 5.04 FINANCIAL STATEMENTS. Seller will immediately furnish to
Buyer the latest balance sheet and income statement (the "Financial
Statements") of Seller. Seller shall promptly advise Buyer of any material
discrepancies or inaccuracies in the Financial Statements of which Seller is
actually aware.

SECTION 5.05 TITLE. Seller warrants and represents that it has full power
to transfer the Assets to Buyer, free and clear of all liens, encumbrances,
security interest, equities, options, claims, charges and restrictions,
except those contained on Schedule "G" herein.

SECTION 5.06 INVENTORIES. Seller represents and warrants that to the best
of its knowledge, the inventory of Seller listed in "Exhibit B" is true and
correct, and consists of items of a quality,

4
<PAGE>

condition and quantity usable or saleable in the normal course of Seller's
Business, other than for normal obsolescence.

SECTION 5.07 ABSENCE OF LIABILITIES. Seller warrants and represents to
the best of its knowledge, there are no liabilities, except as listed in the
Bankruptcy Plan as approved by the Bankruptcy Court on October 12, 1995,
whether accrued, absolute, contingent, or otherwise, that affect Buyer's
ability to accept and hold title to the Assets free and clear of all claims,
liens and encumbrances.

SECTION 5.08 TAXES. Seller warrants and represents that to the best of its
knowledge, all federal, state and local taxes, together with all assessments,
if any, due or relating to or arising out of the ownership, use or operation
of the Assets, except as listed in the Bankruptcy Plan and accrued during
1995, have been paid, extinguished or made moot, to the extent the failure to
pay would give rise to any liens against, or in any way adversely affect, the
Assets, as of the date of Closing.

SECTION 5.09 PROPERTIES. Seller warrants and represents that to the best
of its knowledge, the tangible properties used in the business of Seller have
generally been well maintained and are in good operating condition and repair
except for ordinary wear and tear.

SECTION 5.10 LICENSES. TRADEMARKS. ETC. Seller warrants and represents
that to the best of its knowledge, all licenses, registered trademarks,
trademark applications, service marks, copyrights, permits or other rights
with respect to any of the foregoing, owned or possessed by Seller, are in
good standing and are free and clear of any liens and encumbrances of any
nature whatsoever.

SECTION 5.11 MATERIAL CONTRACTS AND OBLIGATIONS. Attached hereto as
Schedule "H" is a true and correct list of all material agreements,
contracts, understandings, leases, commitments and other instruments of any
nature to which Seller is a party or by which it is bound, including without
limitation, all employment and consulting agreements, loan agreements,
indentures, guarantees (other than endorsements made for collection),
mortgages, pledges, conditional sales or other title retention agreements,
equipment financing obligations, lease and lease-purchase agreements,
purchase contracts, performance and surety bonds, letters of credit,
licenses, permits, employee benefits, bonus, pension, profit-sharing, stock
option, stock purchase and similar plans and agreements, and sales
representative agreements. Copies of such agreements have been previously
provided to Buyer. Except as set forth in Section 6.13 hereof, all of such
agreements are valid, binding and in full force and effect in all material
respects.

SECTION 5.12 COMPLIANCE. Seller has in all material respects complied
with all laws, regulations and orders applicable to Seller's Business and has
all material permits and licenses required thereby. There is no term or
provision of any material mortgage, indenture, contract, agreement or
instrument to which Seller is a party or by which they are bound relating to
Seller's Business, or, to the knowledge of Seller, of any provision of any
state or federal judgment, decree, order, statute, rule or regulation
applicable to or binding upon Seller, which materially and adversely affects
or, to Seller's present knowledge and belief, in the future is reasonably
likely to

5
<PAGE>

materially and adversely affect the business, prospects, condition, affairs,
or operations of any of the Assets.

SECTION 5.13 EMPLOYEES. Seller has complied in all material respects with
all applicable and material state and federal laws respecting employment and
employment practices, terms and conditions of employment, wage and hours, and
other laws relating to employment, and there are no material arrears in the
payment of wages, or social security taxes, as of the date of Closing.

SECTION 5.14 ERISA. SELLER has no employee benefit plan, arrangement or
understanding, whether formal or informal. In addition, SELLER HAS NO
EMPLOYEE BENEFIT plan subject to the Employee Retirement Income Security Act
of 1974 ("ERISA").

SECTION 5.15 ABSENCE OF UNTRUE OR MISLEADING STATEMENTS. Seller warrants
and represents that to the best of its knowledge, no statements contained in
any certificate, separate schedule, financial statement, exhibit or other
document or instrument furnished or to be furnished pursuant to or in
connection with this Agreement or any exhibit or schedule hereto contains any
untrue statement, or omits to state a material fact necessary in order to
make the statements contained herein and therein, not misleading or necessary
to provide Buyer with the proper information with respect thereto. There is
no fact known to Seller which adversely affects, or might reasonably be
expected to have an adverse effect on, the Assets or ability of Buyer to
engage in its business which has not been specifically set forth in the
Agreement or otherwise disclosed to Buyer in writing.

REPRESENTATIONS AND WARRANTIES
OF BUYER

Buyer represents and warrants to Seller, as of the date first written
above, as of the date of the Closing, that:

SECTION 6.01 ORGANIZATION. Buyer is a corporation duly organized, validly
existing and in good standing under the laws of the State of Delaware and has
all requisite power and authority to own and operate its property and to
carry on Buyer's business as presently conducted.

SECTION 6.02 AUTHORITY. Buyer has all requisite power and authority to
enter into this Agreement and to carry out its obligations hereunder. The
execution, delivery and performance of this Agreement has been duly
authorized by all requisite corporate action on the party of Buyer and no
other corporate proceedings on the part of Buyer are necessary to authorize
the execution, delivery and performance of this Agreement by Buyer. This
Agreement has been duly executed and delivered by Buyer and constitutes the
legal, valid and binding obligation of Buyer, enforceable against Buyer in
accordance with its terms.

SECTION 6.03 ABSENCE OF CONFLICTS. Neither the execution and delivery of
this Agreement nor the fulfillment or compliance with the terms hereof will
conflict with or result in a breach of the

<PAGE>

terms, conditions or provisions of or constitute a default under the Articles
of Incorporation or Bylaws of Buyer or any agreement or instrument to which
Buyer is a party.

VII

COVENANTS OF SELLER

SECTION 7.01 CONTINUING OPERATIONS.

(a) Except as otherwise required by, or agreed ~ this Agreement, from and
after the date hereof and until the Closing, Seller agrees to:

(i) operate Seller's Business in substantially the same manner as
operating immediately prior to the date of this Agreement;

(ii) continue all of its usual activities intended to preserve all
existing business relationships with suppliers, subcontractors and others
having business relationships with Seller;

(iii) maintain all Assets (other than inventories sold in the
ordinary course of Seller's Business) in such manner that at the Closing
they will be in substantially the same condition and repair as on the date
and execution of this Agreement, subject only to ordinary wear and tear;

(iv) continue its current course of business activities which have
as their purpose the obtaining of customers and maintenance of existing
customer relationships;

(v) not make any sales, assignments, trades or transfers of all or
any part of the Assets, except to customers in the ordinary course of
business and at fair market value;

(vi) not enter into or become bound by any contract, lease or
agreement, except sales or leases of inventory in the ordinary course of
business and at fair market value, without the approval of Buyer;

(vii) maintain the books, accounts and records in the usual, regular
and ordinary course of business, consistent with accepted practices;

(viii) maintain in full force and effect all insurance of an amount
and type as is customary in the convenience store business.

(ix) to pay or otherwise provide for payment of all amounts due
employees of Seller who are involved in the operation of Seller's Business
as of such date, including salaries, commissions, bonuses and accrued
vacation due and arising out of their employment with Seller.

<PAGE>

SECTION 7.02 ACCESS. Seller will give to Buyer and its representatives
and agents, after reasonable advance notice to Seller, and as often as Buyer
may reasonably request, full and complete access to the Seller's Business,
including, without limitation, all of Seller's assets, and all books,
agreements, papers and records, for the purposes of Buyer's due diligence
investigation of the transactions contemplated by this Agreement, and Seller
will cause Seller's officers, employees and other representatives to
cooperate fully with Buyer's officers, employees and other representatives in
the course of such investigation.

VIII

COVENANTS OF BUYER

SECTION 8.01 COOPERATION. Buyer shall use reasonable efforts to obtain the
approval set forth in Section 5.01 hereof.

CONDITIONS TO BUYER'S OBLIGATIONS

The obligations of Buyer to purchase the Assets under this Agreement are
subject to the satisfaction of the following conditions:

SECTION 9.01 REPRESENTATIONS AND WARRANTIES. THE representations and
warranties made by Seller in this Agreement shall have been true, correct and
accurate when made and shall be true, correct and accurate at and as of the
Closing.

SECTION 9.02 PERFORMANCE. Seller shall have performed and complied with
all covenants and conditions required by this Agreement to be performed or
complied with prior to Closing.

SECTION 9.03 OFFICER'S CERTIFICATE. Seller and each of the Shareholders
shall deliver to Buyer at the First Closing and the Closing a certificate, in
form and substance reasonably acceptable to Buyer, attesting to the truth,
accuracy and correctness of such warranties and representations and to
Seller's compliance and conformity with such covenants and conditions.

SECTION 9.04 CONVEYANCE OF DOCUMENTS. Upon assumption or payment by Buyer
of Seller's Secured Debt and Seller's McMillian Debt, Seller shall have
delivered to Buyer, at the Closing, conveyance documents, in form and
substance reasonably acceptable to Buyer, intended to convey to Buyer free
and unencumbered title and interest in and to the Assets, save and except for
liens encumbering the Assets to secure the Secured Debt and the McMillian
Debt, it being assumed by Buyer, and the Leases and Contracts. At the
Closing, Seller shall deliver written releases of all other liens and
encumbrances, if any, encumbering the Assets.

8
<PAGE>

SECTION 9.05 APPROVALS AND CONSENTS. As of the Closing, Buyer shall have
received the following: (I) the written approval by N/A of the transactions
contemplated by this Agreement and of Buyer as an authorized N/A dealer, (ii)
written approval by Syed Zaidi of the transactions contemplated by this
Agreement, and (iii) written approval by Jim Landrum of the transactions
contemplated by this Agreement.

SECTION 9.06 BOARD APPROVAL. As of the First Closing, the transactions
contemplated herein shall have been approved by appropriate resolutions and
ratification's of the directors of Seller and its Shareholders.

SECTION 9.07 ASSIGNMENT OF LEASES AND CONTRACTS. At the Closing, Seller
shall have obtained and delivered to Buyer all consents and approvals
necessary for the due and valid assignment by Seller to Buyer of each of the
Leases and Contracts of Seller. Such consents and assignments shall be in
form and substance reasonably acceptable to Buyer and shall assign to Buyer
all of Seller's rights and beneficial interest under each Lease and Contract.
No such consent or assignment shall contain any provision or condition which
materially adversely affects or will materially adversely affect Buyer's
ability to enjoy the full benefits of such Leases and Contracts. Buyer shall
assume and agree to be obligated thereafter on all Leases and Contracts being
assigned to it by Seller.

SECTION 9.08 TRANSFER OF TITLE. At the Closing, Seller shall deliver to
Buyer documents and instruments intended to vest in Buyer title to the Cassco
Stock, the Plan Of Reorganization, and the Land Building and Equipment of
ESCO, free and clear of all liens, encumbrances, security interests,
equities, options, claims, charges and restrictions whatsoever, except for
liens securing the Plan Of Reorganization and the McMillian (Debt).

SECTION 9.09 LITIGATION.

(a) There shall be no order, decree or injunction of a court of
competent jurisdiction, including, without limitation, the entry
of a preliminary or permanent injunction, which (i) prevents or
delays the performance by Buyer or Seller of its obligations
hereunder, or (ii) would impose any material limitation on
the ability of Buyer effectively to exercise full rights of
ownership of the Assets.

(b) No action, suit or proceeding before any court or any
governmental or regulatory authority shall be pending against
Buyer or Seller challenging the validity or legality of the
transactions contemplated by this Agreement.

SECTION 9.10 BULK SALES COMPLIANCE. Seller and Buyer agree to waive the Bulk
Sales Act.

SECTION 9.11 ALLOCATION OF ASSET VALUES. At the Closing, Seller and Buyer
shall have mutually agreed upon the values to be assigned to the Assets
purchased by Buyer.

<PAGE>

CONDITIONS TO SELLER'S OBLIGATIONS

The obligations of Seller to sell and transfer the Assets under this
Agreement are subject to the satisfaction of the following conditions.

SECTION 10.01 REPRESENTATIONS AND WARRANTIES. The representatives and
warranties made by Buyer in this Agreement shall have been true, correct and
accurate at and as of the First Closing and the Closing with the same force
and effect as if such representations and warranties were made at and as of
each such closing.

SECTION 10.02 OFFICER'S CERTIFICATE. Buyer shall deliver to Seller at the
First Closing and at the Closing a certificate, in form and substance
reasonably acceptable to Seller, attesting to the truth, accuracy and
correctness of such warranties and representations and Buyer's compliance and
conformity with such covenants and conditions.

SECTION 10.03 PAYMENT OF PURCHASE PRICE. At the Closing, Buyer shall have
delivered to the parties referred to therein the amounts payable pursuant to
and in the manner set forth in Article II of this Agreement.

SECTION 10.04 MANAGEMENT AGREEMENT. At the First Closing, the Management
Agreement, substantially in the form attached hereto as Exhibit D, SHALL have
been executed and shall be in full force and effect.

USE OF SELLER'S NAME

Seller agrees that, from and after the Closing, it shall not use the name
"ESCO" the operation of any business , this Article XII shall survive the
Closing and be binding upon the parties, their heirs, successors, executors
and assigns.

XII

COVENANT NOT COMPETE

In consideration for the Buyer entering into this Agreement and the
purchase of the Assets of Seller by Buyer, Seller and each of the
Shareholders agree that, for a period of seven (7) years from and after the
Closing, it (and its officers, directors, employees, agents and
representatives) and he shall not, directly or indirectly, as proprietor,
partner, shareholder, agent, employee, officer, independent contractor or
otherwise, participate in the operation of or procure any interest in, either
directly or indirectly, any similar facility which is located in the United
States.

<PAGE>

In case the non-competition covenant in the preceding paragraph shall for
any reason be held to be null or unenforceable in any respect, such nullity
or unenforceability shall not affect any other provision of this Agreement
and this Agreement shall be construed as if such covenant had never been
contained herein. Moreover, if any aspect of the non-competition covenant in
the preceding paragraph shall for any reason be held to be excessively broad
as to time, activity or geographical scope, Buyer, Seller and each of the
Shareholders agree that the covenant shall be construed by limiting and
reducing the covenant so as to be enforceable to the extent compatible with
the applicable law.

This non-competition covenant is made in Dallas County, Texas, and is to
be partially performed in Dallas County, Texas. As provided in Section 16.13
of this Agreement, the parties agree that this covenant shall be subject to
and governed and interpreted by the laws of the State of Texas, without
application of the Texas conflict of laws principles that might preclude the
application of Texas law. As stated in Section 16.13, Buyer, Seller and the
Shareholders agree that the state and federal courts sitting in Dallas
County, Texas, shall have personal jurisdiction over the parties to hear and
resolve disputes arising out of the interpretation or enforcement of this
covenant, and, in that connection, each of Buyer, Seller and the Shareholders
does hereby appoint the Secretary of State of the State of Texas as its agent
for service of process to receive the summons issued by the applicable court
in connection with any such litigation.

XIII

INDEMNIFICATION

SECTION 13.01 INDEMNIFICATION BY BUYER. Buyer agrees to indemnify and hold
Seller and the Shareholders harmless from and against any and all damages
incurred by Seller and the Shareholders arising out of or based upon:

(a) any allegation that any representation and warranty made
herein or in any certificate or writing furnished pursuant hereto by Buyer
is untrue or has been breached in any respect;

(b) any allegation that any covenant or agreement made herein by
Buyer has not been performed in accordance with its terms;

(d) any action or proceeding, known or unknown, arising out of;
or by virtue of; or based upon Buyer's business, operations or ownership
of the Assets after the Closing.

Seller and the Shareholders agree to give Buyer prompt notice of any
action or proceeding to which they believe they have a right of
indemnification hereunder; PROVIDED; HOWEVER that the omission so to notify
Buyer shall not release it from any liability which it may have to Seller or
any

<PAGE>

of the Shareholders otherwise than under this Section 14.01. If any such
action or proceeding shall be brought against Seller or any of the
Shareholders and Buyer shall be so notified of the commencement thereof; then
Buyer shall have the right to participate in, and, to the extent that it may
wish, to assume the defense thereof; with counsel reasonably satisfactory to
Seller and the Shareholders (as indicated in writing within five (5) days of
Buyer's request for approval), and after notice of its election to assume the
defense thereof; Buyer will not be liable to Seller or any of the
Shareholders, in connection with any such action or proceeding, other than
(i) the reasonable cost of investigation or assistance required by Buyer or
any party claiming against Buyer, Seller or any of the Shareholders, (ii)
expenses reasonably incurred by Seller or any of the Shareholders to comply
with any order of any court, governmental agent or authority, legal
discovery, or other law, statute, rule or regulation in connection with such
claim, and (iii) expenses reasonably incurred by Seller or any Shareholder's
as a result of; or arising from, Buyer's failure or refusal to defend such
claim.

XIV

TERMINATION OF AGREEMENT

SECTION 14.01 CAUSES OF TERMINATION. THIS Agreement may be terminated at
any time prior to the Closing:

(i) by mutual agreement of Seller, the Shareholders and Buyer;

(ii) by Buyer, if there has been a material violation or breach
by Seller or the Shareholders of any of their representations, warranties or
covenants contained in this Agreement which has not been waived in writing,
or if there has been any event or occurrence which has rendered the
satisfaction of a condition to the obligations of Buyer impossible and such
condition has not been waived in writing;

(iii) by Seller or the Shareholders, if there has been a material
violation or breach by Buyer of any of its representations, warranties or
covenants contained in this Agreement which has not been waived in writing,
or if there has been any event or occurrence which has rendered the
satisfaction of a condition to the obligations of Seller impossible and such
condition has not been waived in writing;

(iv) by any party hereto, if the Closing shall not have occurred
on or before July 31, 1995, unless extended as set forth in Section 4.02
hereof.

MISCELLANEOUS

SECTION 15.01 SURVIVAL OF REPRESENTATIONS WARRANTIES COVENANTS AND
AGREEMENT. All representations, warranties, covenants and agreements of
Seller, the Shareholders and Buyer contained herein shall survive the
closings contemplated herein and any investigation by the parties hereto.'

12
<PAGE>

SECTION 15.02 NOTICES. All notices, claims, certifies, requests, demands
and other communications required or permitted to be delivered hereunder shall
be in writing and shall be deemed to have been duly given, if delivered
personally or mailed by registered or certified mail, postage prepaid, return
receipt requested, as follows:

If to Seller, to: Epsitek, Inc.
3102 Coronado St.
Irving, TX 75062

If to Buyer, to:
OVERLINE Corporation
5025 Arapaho Rd Suite 400
Dallas, TX 75248

or to such other address as the person to whom notice is to be given may have
previously furnished to the other in writing in the manner set forth above.

SECTION 15.03 FINDERS AND BROKERS. Each party to this Agreement agrees
that no third person has in any way brought the parties together or been
instrumental in the making of this Agreement. Each party agrees to indemnify
the other parties hereto against any claim by any third person for any
commission, brokerage or finder's fee, or other similar payment with respect
to this Agreement or the transactions contemplated hereby based on any
alleged agreement or understanding between such party and such third person,
whether express or implied from the actions of such party.

SECTION 15.04 EXPENSES: TAXES: ETC. Except as otherwise provide in this
Agreement, each party hereto shall pay all fees and expenses incurred by it
in connection with this Agreement, including, without limitation, expenses of
attorneys and accountants.

SECTION 15.05 SUCCESSORS AND ASSIGNS. This Agreement may not be assigned
by any party hereto without the written consent of each other party. This
Agreement will be binding upon, inure to the benefit of; and be enforceable
by the parties hereto and their respective permitted successors and assigns,
and this Agreement is not intended to confer upon any other person other than
the parties hereto and their respective permitted successors and assigns any
rights or remedies under or by reason of this Agreement.

SECTION 15.06 ENTIRE AGREEMENT. This Agreement and the Exhibits,
Schedules, certificates, List and other writings delivered pursuant hereto
which form a part hereof contain the entire understanding of the parties
hereto with respect to the subject matter hereof. There are no restrictions,
promises, representations, warranties or undertakings governing the subject
matter of this Agreement, other than those expressly set forth or referred to
herein or therein. This Agreement supersedes all prior agreements and
understandings between the parties hereto with respect to the subject matter
hereof.

<PAGE>

SECTION 15.07 HEADINGS. GENDER AND PERSON. The article, section and other
headings contained in this Agreement have been added for convenience only and
will not affect in any way the meaning or interpretation of this Agreement.
Words used herein, regardless of the number or gender specifically used,
shall be deemed and construed to include any other number, singular or
plural, and any other gender, masculine, feminine or neuter, as the context
shall require.

SECTION 15.08 SEVERABILITY. Any provision of this Agreement which is
invalid, illegal or unenforceable in any jurisdiction shall be ineffective to
the extent of such invalidity, illegality or unenforceability without
invalidating or rendering unenforceable the remaining provisions of this
Agreement, and, to the extent permitted by law, any determination of
invalidity, illegality or unenforceability in any jurisdiction shall not
invalidate or render illegal or unenforceable such provision in any other
jurisdiction.

SECTION 15.09 WAIVER OF COMPLIANCE. Any failure of any party hereto comply
with any obligations, covenant, agreement or condition herein may be
expressly waived in writing, to the extent permitted under applicable law, by
the party or parties hereto entitled to the benefit of such obligation,
covenant, agreement or condition. A waiver or failure to insist upon strict
compliance with any representation, warranty, covenant, agreement or
condition shall not operate as a waiver of; or estoppel with respect to, any
subsequent or other failure.

SECTION 15.10 AMENDMENTS. This Agreement may not be altered, modified or
amended except pursuant to a written instrument duly executed by or on behalf
of all the parties hereto. This agreement supersedes all previous agreements
entered into by and between the parties hereto.

SECTION 15.11 TIME OF THE ESSENCE. Time is of the essence of this
Agreement.

SECTION 15.12 GOVERNING LAW. This Agreement shall be governed by, and
construed and enforced in accordance with, the laws of the States of Texas,
as such law applies to agreements between Texas residents entered into and to
be performed entirely within Texas; and the parties hereto agree that the
state and federal courts situated in Dallas County, Texas shall have personal
jurisdiction over the parties hereto to hear all disputes arising under this
Agreement. This Agreement is to be at least partially performed in Dallas
County, Texas and, as such, the parties agree that venue shall be proper with
the state or federal courts in Dallas County, Texas to hear such disputes. If
any party is not able to effect service of process upon any other party with
respect to such disputes, such other party expressly agrees that the
Secretary of State of the State of Texas shall be an agent for such other
party to receive service of process on behalf of such other party with
respect to such disputes.

SECTION 15.13 COUNTERPARTS. This Agreement may be executed simultaneously
in one or more counterparts, each of which will be deemed an original, but
all of which together shall constitute one and the same instrument.

SECTION 15.14 DIRECTORS. Buyer shall appoint Syed Zaidi and________________
to its Board of Directors at the time of Closing.

<PAGE>

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed as of the day and year first above written.

SELLER:

EPSITEK, INC.

By: /s/ Syed Zaidi
--------------------------------
Its: President

BUYER:

OVERLINE CORPORATION

By: /s/ Charles Stedham
--------------------------------
Its: President/CEO

15
<PAGE>

BILL OF SALE

NOW ALL MEN BY THESE PRESENTS:

That Epsitek, Inc. a Delaware Corporation whose current mailing address
is Irving, TX, pursuant to the Asset Purchase Agreement of October 18, 1995,
in consideration of the sum of Three Million Nine Hundred Eighteen Thousand
(3,918,000) shares of common stock of the Overline Corporation and other
valuable consideration to be paid by Overline Corporation, a Delaware
corporation whose current mailing address is 5025 Arapaho Rd Suite 400 Dr.
Dallas, TX. 75248 have granted, sold, conveyed, transferred and delivered and
by these presents do bargain, sell, grant, convey, transfer and deliver unto
the said Overline.

Capital Corporation, the following:

A. All of Sellers right title and interest in and to that one certain
plan of reorganization filed with the Bankruptcy court for the Northern
District of Texas in the Ft Worth Division in the case of Esco Elevators,
Inc. and Esco Properties, Inc.

Epsitek warrants and represents to Overline Corporation, that it has and does
hereby convey to Overline Corporation, good and marketable title to all of
such items set forth above and warrants and agrees to defend title thereto
against all persons asserting a claim thereto or any part thereof. Except for
the foregoing warranty of title, such assets and property are conveyed AS IS
and WITH ALL FAULTS and no warranties are made or are to be implied in this
transaction.

<PAGE>

TO HAVE AND TO HOLD the same unto the said Overline Corporation, its
successors and assigns forever;

Further, said Epsitek, Inc., does, and for their representatives and
assigns, to and with the said Overline Corporation, warrant and agree to
defend the title to said goods hereby sold unto Overline Corporation, its
successors and assigns as against all and every person and persons whomsoever.

Dated this 27th Day of November 1995.

Epsitek, Inc.:

/s/ Syed Zaidi
--------------------------------
By: Its President

<PAGE>

Exhibit 2.2

PLAN AND AGREEMENT OF PURCHASE

This Plan and Agreement of Purchase entered into in Fort Worth, TX this
22nd day of May, 1996, by and amongst Megalith Corporation, a Colorado
(public) corporation, having its principal place of business at 4720 Esco
Drive, Fort Worth, Texas 76140, sometimes referred to in this Agreement as
the "Acquirer" or "MEGALITH," Esco Elevator Corporation, a Colorado
corporation, being a wholly owned subsidiary of Acquirer, and having its
principal place of business at 4720 Esco Drive, Fort Worth, Texas 76140,
sometimes referred to as "Esco" or "Guarantor", Frances H. Alexander,
resident of 172 Empinado Way, Hot Spring Village, AR 71909, sole shareholder
of Dalcom Elevator Corporation, referred, to herein as "Seller" or
"Shareholder and Dalcom Elevator Corporation, with its principal place of
business at 132 E. Buckingham, Garland, Texas 75040 referred to herein as
the "Acquired Corporation" or "DALCOM".

The Acquirer will acquire from the Shareholder 425,000 shares of common
stock of Dalcom, constituting 100% of all issued and outstanding shares of
all classes of capital stock of Dalcom, in exchange for the payments and
obligations as set forth herein together with Forty Seven Thousand Two
Hundred Twenty Six (47,226) shares of Preferred Stock of MEGALITH to be sold
back to MEGALITH for $472,260 or converted into common stock of MEGALITH
under rule 144 of Security and Exchange Commission at $10.00 per Preferred
Share pursuant to the schedule described in Section 2.02 herein.

Under this Plan, the Acquired Corporation will become a wholly owned
subsidiary of MEGALITH.

ARTICLE I

DEFINITIONS

"Acquirer" has the meaning set forth in the preface above.

"Code" means the Internal Revenue Code of 1986, as amended.

"Affiliated Group" means any affiliated group within the meaning of Code
Section 1504.

"Closing" has the meaning set forth in Section 2.03 below.

"Confidential Information" means any information concerning the business and
affairs of Dalcom and its subsidiaries.

"Controller Group of Corporation" has the meaning set forth in Code Section
1563.

"Disclosure Schedule" has the meaning set forth in Section 3 below.

Dalcom Plan and Agreement of Purchase - Page 1 of 25

<PAGE>

"Intellectual Property" means all:

(a) Patents, patent applications, patent disclosures and improvement
thereto;

(b) trademarks, service marks, logos, trade names and corporate names and
registrations and applications for registration thereof;

(d) computer software, data and documents; and

(e) trade secrets (including ideas, formulas, compositions, inventions,
whether patentable or unpatentable and whether or not reduced to practice, know-
how, manufacturing and production processes and techniques, research and
development information, drawings, specifications, designs, technical data,
copyrightable works.

"Knowledge" means actual knowledge after reasonable investigation.

"Liability" means any liability whether known or unknown, whether absolute or
contingent, whether due or to become due, including any liability for taxes.

"Material" When used in any reference to any big event, change, effect,
agreement or other specific matter being "material" with respect to Seller,
DALCOM or Acquirer means an event, change or effect to the condition
(financial or otherwise), assets, liabilities, business, results of
operations or prospects of Seller, DALCOM or Acquirer, as the case may be.

"Material Adverse Effect" means, with respect to Seller, DALCOM or Acquirer
a material adverse effect on the business, assets, liabilities, results of
operations, condition (financial or otherwise) or prospects of Seller or
Acquirer, as the case may be, to perform his or its obligations hereunder or
to consummate the transactions contemplated hereby, it being understood that
a material adverse effect on any entity shall not include a change with
respect to such party resulting from any change in law, rule or regulation or
generally accepted accounting principles which impairs both the DALCOM and
the Acquirer in a substantially similar manner.

"Ordinary Course of Business" means the ordinary course of business
consistent with past custom and practice (including those relating to
quantity and frequency).

"Purchase Price" has the meaning set forth herein above.

"Securities Act" means the Securities Act of 1933, as amended.

Dalcom Plan and Agreement of Purchase - Page 2 of 25

<PAGE>

ARTICLE II

EXCHANGE OF CAPITAL STOCK

TRANSFER OF ACQUIRED CORPORATION'S CAPITAL STOCK

2.01 Subject to the terms and conditions of this Agreement, each
Shareholder of Acquired Corporation will transfer and deliver to the Acquirer
on the Closing Date 100% of her certificates for shares of Capital Stock of
DALCOM, duly endorsed in blank with signatures guaranteed by a Registered
Stock Broker or Bank.

CONSIDERATION FOR TRANSFER

2.02 In exchange for shares transferred by the Shareholder pursuant to
Paragraph 1.01, the Acquirer will issue and cause to be delivered to the
Shareholder on the Closing Date, Forty-Seven Thousand Two Hundred Twenty-Six
(47,226) shares of Preferred Stock of the Acquirer, par value $10.00 each.
The Seller will have the right to (I) retain the shares of Preferred Stock;
(ii) sell each month for 17 months, commencing 30 days after the Closing
Date, 2,278 shares of preferred stock of MEGALITH to MEGALITH and MEGALITH
must acquire the same for $27,780 (the "Put Option"); or (iii) each month
for the next 17 months, commencing 30 days after the Closing Date, convert
2,278 shares of preferred stock of MEGALITH, valued at $27,780 into common
stock of MEGALITH at 80% of the then market price. The market price of the
common stock will be determined by averaging the trading price of the stock
for previous 5 days. As an example, if the five days average trading price of
common stock is at $1 per share, then the conversion of $27,780 worth of
Preferred Stock represents, (27,780 I ( 0.8 * $1.00) = 34,725. Seller will be
deemed to have exercised her Put Option unless Seller advises MEGALITH in
writing at MEGALITH's address above on or before the twentieth (20th) day of
the month preceding the exercise date as to whether Seller desires to
exercise her conversion right. If Seller desires to exercise the Put Option,
Seller shall transfer the applicable shares of MEGALITH, and MEGALITH shall
pay to Seller, in certified funds, the purchase price therefor on the first
business day of the succeeding month. If Seller desires to exercise her
conversion right, Seller shall deliver the applicable number of Preferred
Shares to MEGALITH and MEGALITH shall deliver the applicable number of shares
of common stock on the first business day of the succeeding month. Guarantor
shall guarantee the Put Option of MEGALITH.

MEGALITH will have the right to buy all or a portion of the Shares of
Preferred Stock issued to the Seller at any time during the 17 months after
the Closing Date at a price of $10.00 per share and at increments of 2,778
shares. In such event, MEGALITH shall give written en notice to Seller at her
address specified above at least ten (10) days prior to the purchase date.
Any purchase of Preferred Shares by MEGALITH shall not effect Seller's Put
Option or conversion rights for any remaining Preferred Shares owned by
Seller.

2.02.1 Acquirer shall pay to Seller on the Closing Date, the sum
of $27,740 in certified funds.

Dalcom Plan and Agreement of Purchase - Page 3 of 25

<PAGE>

2.02.2 Acquirer shall pay on the Closing Date to American Factors
of Texas, Inc., ("American Factors") the outstanding indebtedness owed by
DALCOM to American Factors, including principal, interest and costs, not to
exceed $600,000.00.

2.02.3 Acquirer shall, on or before 5:00 p.m. on the second day
after the Closing Date, deliver to Seller a document from Cash Flow
Management releasing J. R. Alexander of all obligations owed by him under his
Guaranty dated July 12, 1995 relating to that certain Security Agreement by
and between DALCOM and Cash Flow Management dated July 12, 1995. From and
after the Closing Date and until the release document is delivered to Seller,
DALCOM shall not incur any additional liability or obligations with Cash Flow
Management.

2.02.4 On or before the Closing Date, Acquirer, with the assistance
of DALCOM, shall make arrangements for the payment of any obligations (not to
exceed $200,000.00) of DALCOM (the "IRS Debt") to the Internal Revenue
Service under a plan acceptable to Seller. MEGALITH and ESCO shall indemnify
and hold Seller and Seller's spouse, J. R. Alexander, harmless of any
liability owing to the Internal Revenue Service regarding the IRS Debt.

2.02.5 To Secure the payment and performance of the obligations of
Acquirer to Seller hereunder, Acquirer shall grant Seller a first lien
security interest in (a) the shares of stock of DALCOM sold by Seller to
Acquirer hereunder with appropriate restrictions on any dilution thereof or
the transfer of any assets of DALCOM out of the ordinary course of business.
Seller recognizes that the operations of DALCOM may be transferred to the
facilities of ESCO but will maintain its separate corporate and operating
identity; (b) all equipment of DALCOM which, upon any sale thereof, the
proceeds shall be applied to and be retained as security for the payment of
any Put Option (which, in the event of the sale of any equipment, may be
accelerated in the inverse order of their maturity to the extent of any
equipment proceeds).

2.02.6 To further secure the payment and performance of the
obligations of Acquirer, ESCO shall guarantee the obligations of Acquirer
hereunder.

CLOSING DATE

2.03 Subject to the conditions precedent set forth in this Agreement,
and the other obligations of the parties set forth in the Agreement, the Plan
of Purchase shall be consummated at 770 Founders Square, 900 Jackson Street,
Dallas, Texas 75202 on or before June 13 1996, at 10:00 o'clock A.M.
Consummation shall include the delivery by the Shareholder of the Acquired
Corporation, all of her shares of Capital Stock of the Acquired Corporation,
as provided in Paragraph 2.01 of this Agreement, and the delivery by the
Acquirer of the 47,226 shares of Preferred Stock of MEGALITH, the payment of
$27,780 and the delivery of appropriate documents evidencing the guaranties
and indemnifications of MEGALITH and ESCO, the payment owed to American
Factors, and the appropriate documents evidencing the arrangement with the
IRS concerning the IRS Debt and the security interests given to the Seller,
as provided in Paragraph 2.02 of this Agreement. The release of the guaranty
to Cash Flow Management

Dalcom Plan and Agreement of Purchase - Page 4 of 25

<PAGE>

shall be provided within 10 working days after the Closing Date. The date of
the consummation of this Agreement is referred to as the "Closing Date."
MEGALITH shall perform its due diligence from the date hereof and prior to
the closing date. In the event MEGALITH is satisfied with its due diligence
prior to June 13, 1996, it may request for a closing date sooner than June
13, 1996 which request shall not be unreasonably denied.

In the event Acquirer fails to close this transaction on or before the
Closing Date, the terms and conditions of this Agreement shall terminate at
Seller's option upon giving written notice of such option to Acquirer.

ARTICLE III

REPRESENTATIONS AND WARRANTIES OF
ACQUIRED CORPORATION

DALCOM (unless otherwise noted) hereby warrants and represents to MEGALITH
the following:

ORGANIZATION AND STANDING OF ACQUIRED CORPORATION

3.01 DALCOM is a corporation duly organized, validly existing, and in
good standing under the laws of State of Texas, with corporate power to own
property and carry on its business as it is now being conducted. Copies of
the articles of incorporation of DALCOM, that have been certified by the
Secretary of The Company and delivered to the Acquirer, are complete and
accurate as of the date of this Agreement. DALCOM, to the best of its
knowledge, is qualified to transact business in State of Texas and is in good
standing in all jurisdictions in which its principal properties are located
or is not required to be qualified as a foreign corporation to transact
business in any other jurisdiction.

AUTHORIZATION OF TRANSACTION

3.02 Seller warrants and represents that she has full power and
authority to execute and deliver this Agreement and to perform her
obligations hereunder. DALCOM warrants and represents that the Board of
Directors of the Acquired Corporation have duly authorized the execution,
delivery and performance of this Agreement. This Agreement constitutes the
valid and legally binding obligation with its terms and conditions, except as
the enforceability hereof may be limited by bankruptcy, insolvency,
moratorium, fraudulent conveyance, fraudulent transfer, or other similar laws
relating to the enforcement of creditors rights and by general principles of
equity, regardless of whether considered on a proceeding at law or in equity.

Dalcom Plan and Agreement of Purchase - Page 5 of 25
<PAGE>

NON CONTRAVENTION

3.03 Neither the execution and the delivery of this Agreement, nor the
consummation by Seller of the transactions contemplated hereby will:

(i) to the best of its knowledge, violate in any material
respect, any statute, regulation, rule, judgment, order, decree, stipulation,
injunction, charge or other restriction of any government, governmental
agency or court to which Seller or the Acquired Corporation is subject or any
provision of the Articles of Incorporation or bylaws of the Acquired
Corporation; or

(ii) conflict with, result in a breach of; constitute a default
under, result in the acceleration of; create in any part by the right to
accelerate, terminate, modify or cancel or require any notice under any
material contract, lease, sublease, license, sublicense, franchise, permit,
indenture, agreement or mortgage for borrowed money, instrument of
indebtedness, or other arrangement to which Acquired Corporation is party or
by which it is bound or to which of its assets is subject (or result in the
imposition of any Security Interest upon its assets) which would have a
material adverse affect on Acquired Corporation. Acquired Corporation does
not need to file any notice to, make any filing with or obtain any
authorization, consent or approval of any government or governmental agency
in order for the Seller to consummate the transaction contemplated by this
Agreement.

OWNERSHIP

3.04 The Seller is the legal and beneficial owner of Four Hundred and
Twenty Five Thousand (425,000) shares of common stock of the Acquired
Corporation as registered on the books of the Company (collectively
representing 100% of the outstanding stock of the Acquired Corporation).
Further these shares of common stock owned by the Seller are not subject to
any security interests.

SUBSIDIARIES

3.05 The Acquired Corporation does not have any subsidiaries.

CAPITALIZATION

3.06 The Acquired Corporation has an authorized capitalization of
1,000,000 shares of common stock Par Value $1.00, and as of the date of this
Agreement (425,000) shares are issued and outstanding, fully paid, and non
assessable. There are no other classes of capital stock of the Acquired
Corporation outstanding. There are no authorized, outstanding or existing:

(i) proxies, voting trusts or other agreements or understanding
with respect to the voting of any capital stock of the Acquired Corporation
to which Seller or Acquired Corporation are a party;

Dalcom Plan and Agreement of Purchase - Page 6 of 25

<PAGE>

(ii) securities convertible into or exchangeable for any capital
stock of the Acquired Corporation;

(iii) options, warrants or other rights to purchase or subscribe
for any capital stock of the Acquired Corporation or securities convertible
into or exchangeable for any capital stock of the Acquired Corporation or any
obligation of the foregoing;

(iv) agreements of any kind (other than this Agreement) relating
to the issuance of any capital stock of the Acquired Corporation, any such
convertible or exchangeable securities or any such options, warrants or
rights or;

(v) agreements of any kind which (other than this Agreement) may
oblige the Acquired Corporation to issue or purchase any of its securities
after the date hereof; or which would prevent or restrict the transfer of the
Shares to Acquirer.

FINANCIAL STATEMENTS

3.07 (a) The Balance Sheet of the Acquired Corporation, reported on by
the management of DALCOM, attached herewith as Exhibit "A" is true as of the
execution of this agreement. All the financial statements described in this
Paragraph have been prepared in conformity with generally accepted accounting
principles, applied on a consistent basis, and present fairly the financial
position of DALCOM.

(b) Other than changes in the usual and ordinary conduct of the
business, at the Closing Date there will be, no materially adverse changes in
such financial conditions of DALCOM, except that the Shareholder will cancel
all loans to the acquired company prior to the closing date.

(c) Subject to any changes as a result of the ordinary and usual
course of business, the assets of DALCOM at the Closing Date will be
substantially those owned by it and shown on its financial statements as of
the date hereof Prior to the Closing date and after the execution of this
Agreement, the Acquirer shall have the right to perform its due diligence,
verify the financial of the Acquired Corporation including but not limited to
the Balance Sheet, Income Statement, Accounts Receivable, Accounts Payable
and the Backlog of orders.

OPERATIONS SINCE BALANCE SHEET

3.08 Since its Balance Sheet date of April 30, 1996, attached herewith
as exhibit "A". DALCOM has not, and prior to the Closing Date will not have:

(a) Issued or sold any stock, bond, or other corporate securities;

(b) Except for liabilities incurred and obligations entered into in the
ordinary course of business, incurred any absolute or contingent obligation,
including long-term debt;

Dalcom Plan and Agreement of Purchase - Page 7 of 25

<PAGE>

(c) Except for liabilities shown on the balance sheet and current
liabilities incurred since that date in the ordinary course of business,
discharged or satisfied any lien or encumbrance, or paid any obligation or
liability;

(d) Mortgage, pledged, or subjected to lien any of its assets except in
the ordinary course of business;

(e) Except in the ordinary course of business, sold or transferred any of
its tangible assets, or canceled any debts or claims, or waived any rights of
substantial value;

(f) Sold, assigned, licensed, or transferred any patents, formulas,
trademarks, trade names, copyrights, licenses, or other intangible assets;

(g) Incurred any materially adverse losses or damage, or become involved
in any strikes or other labor disputes;

(h) Entered into any transaction other than in the ordinary course of
business, except for the transaction that is the subject matter of this
Agreement;

(i) Changed or authorized any changes in the Articles of Incorporation or
bylaws of the Acquired Corporation;

(j) Not experienced any material damage, destruction or loss (whether or
not covered by insurance) to its property or equipment;

(k) Not made a loan to any of its officers, directors, and employees
outside the Ordinary Course of Business giving rise to any claim or right on its
part against the person or on the part of the person against it;

(1) Incurred any liabilities which, individually or in the aggregate,
would not have a Material Adverse Effect on the Acquired Corporation.

TITLE TO ASSETS

3.09 To the best of its knowledge, the Acquired Corporation has good and
marketable title to all its assets specified in the schedule described in and
reflected in the Balance Sheet of Exhibit A. All such assets are not subject
to any mortgage, pledge, lien, charge, security interest, encumbrance, or
restriction except those that:

(a) Are disclosed on the Balance Sheet as securing specified liabilities;

(b) Are disclosed in the Schedule of Assets listed in Exhibit "A" attached
herewith; or

Dalcom Plan and Agreement of Purchase - Page 8 of 25

<PAGE>

(c) Were granted to American Factors and Cash Flow Management under
their respective factoring agreements, or are deemed granted to governmental
authorities, landlords, vendor's or other third parties by statute, laws,
governmental regulations or ordinance but for which the Acquired Corporation
has not received any written notice of such lien;

(d) Do not materially adversely affect the use of the asset. The
buildings and equipment of DALCOM are in good condition and repair, except
for reasonable wear and tear.

SCHEDULE OF ASSETS

3.10 Prior to the Closing Date, the Acquired Corporation will have
delivered to the Acquirer a separate Schedule of Assets, specifically
referring to this paragraph, containing a true and complete:

(a) Legal description of all real property owned by DALCOM and any real
property in which DALCOM has a leasehold interest;

(b) Aged list of accounts receivable as of the date herein;

(c) List of all capitalized machinery, tools, equipment, and rolling
stock owned by DALCOM that sets forth any liens, claims, encumbrances,
charges, restrictions, covenants, and conditions concerning the listed items.

(d) Description of all machinery, tools, equipment, and rolling stock in
which DALCOM has a leasehold interest, with a description of each interest;

(e) A true and complete list of all patents, patent licenses, trademarks,
trademark registrations, trade names, copyrights, and copyright registrations
owned by DALCOM; and

(f) List of all fire and other casualty and liability policies of DALCOM
in effect at the time of delivery of such schedule.

(g) All software products including source codes.

3.11 (a) Except as set forth in the Balance Sheet of DALCOM, attached
herewith, DALCOM presently has no outstanding indebtedness other than
liabilities incurred in the ordinary course of business or in connection with
this transaction. DALCOM is not in default with respect to any terms or
conditions of any indebtedness (subject to the provisions of 3.12(a).

(b) DALCOM has not made any assignment for the benefit of creditors,
nor has any involuntary or voluntary petition in bankruptcy been filed by or
against DALCOM.

Dalcom Plan and Agreement of Purchase - Page 9 of 25
<PAGE>

LITIGATION

3.12 (a) To the best of its knowledge, DALCOM is not a party to, nor has
it been threatened with, any litigation or governmental proceeding that, if
decided adversely to it, would have a material adverse effect on the
transaction contemplated by this Agreement, or on the financial condition,
net worth, prospects, or business of DALCOM. To the best of the Acquired
Corporation's knowledge, it is not aware of any facts that might result in
any action, suit, or other proceeding that would result in any material
adverse change in the business or financial condition of DALCOM. DALCOM
hereby discloses however, that it has received various demands for payment of
past due accounts, which in the aggregate, may have a material adverse effect
on the business of the Acquired Corporation.

(b) To the best of its knowledge, DALCOM is not infringing on or
otherwise acting adversely to any copyrights, trademark rights, patent
rights, or licenses owned by any other person, and there is not pending claim
or threatened action with respect to such rights. DALCOM is not obligated to
make any payments in the form of royalties, fees, or otherwise to any owner
or of any patent, trademark, trade name, or copyright.

COMPLIANCE WITH LAW AND OTHER INSTRUMENTS

3.13 To the best of its knowledge, the business operation of DALCOM has
been and is being conducted in accordance with all applicable laws, rules,
and regulations of all authorities save and except, any such laws or
regulations regarding the IRS Debt. DALCOM is not in violation of; or in
default under, any terms or provision of its Articles of Incorporation, its
Bylaws, or of any lien, mortgage, lease, agreement, instrument, order,
judgment, or decree, or any other type of restriction that would prevent
consummation of the exchange of securities contemplated by this Agreement.

CONTRACTUAL OBLIGATIONS

3.14 DALCOM is not a party to or bound by any written or oral:

(a) Contract not made in the ordinary course of business;

(b) Contract with any labor union other than in the ordinary course of
business;

(c) Bonus, pension, profit sharing, retirement, stock option,
hospitalization, group insurance, or similar plan providing employee benefits
other than in the ordinary course of business;

(d) Any real or personal property lease or lessor other than in the
ordinary course of business;

Dalcom Plan and Agreement of Purchase - Page 10 of 25
<PAGE>

(e) Advertising contract or contract for public relations services
other than in the ordinary course of business;

(f) Purchase, supply, or service contracts in excess of $10,000 each,
or in the aggregate of $100,000 for all such contracts other than in the
ordinary course of business;

(g) Deed of trust, mortgage, conditional sales contract, security
agreement, pledge trust receipt, or any other agreement subjecting any of
assets or properties of to a lien, encumbrance, or other restriction other
than in the ordinary course of business;

(h) Term contract continuing for a period of more than 1 years that is
not terminable without liability to DALCOM or its successors other than in
the ordinary course of business; or

(i) Contract that:

(1) Contains a predetermination of price or similar type of
provision save and except purchase orders or purchase agreements with its
customers, copies of which are to be made available for Acquirer's review; or

(2) Provides for a fixed price for goods or services sold. DALCOM
has performed all obligations required to be performed by it to date and is
not in material default under any of the contracts, leases, or other
arrangements by which it is bound save and except certain trade payables, all
as disclosed to Acquirer in the trade payables information provided to
Acquirer. None of the parties with whom DALCOM has contractual arrangements
are, to the best knowledge of DALCOM, in default of their obligations.

CHANGES IN COMPENSATION

3.15 Since the date of Balance Sheet attached herewith, DALCOM has not
granted any general pay increase to employees or changed the rate of
compensation, commission, or bonus payable to any officer, employee,
director, agent, or stockholder other than in the normal course of business.

INVENTORIES

3.16 Since the date of Balance Sheet attached herewith, DALCOM has
continued to replenish its inventories in the customary manner of entities
engaged in the business DALCOM conducts, and will continue to do so until the
Closing Date.

RECORDS

3.17 All of the account books, minute books, stock certificate books,
and stock transfer ledgers of DALCOM are complete and accurate.

Dalcom Plan and Agreement of Purchase - Page 11 of 25
<PAGE>

NO BROKERS OR FINDERS

3.18 ALL NEGOTIATIONS ON the part of the Shareholder related to this
Agreement have been accomplished solely by the Shareholder without the
assistance of any person employed as a broker or finder. The Shareholder have
done nothing to give rise to any valid claims against DALCOM for a brokers
commission, finder's fee, or any similar charge.

TAXES

3.19 (a) DALCOM has filed all income tax returns and, in each
jurisdiction where qualified or incorporated, all income tax and franchise
tax returns that are required to be filed. DALCOM has paid all taxes as shown
on the returns as have become due, and has paid all assessments received that
have become due save and except the IRS Debt.

FULL DISCLOSURE

3.20 As of the Closing Date the Acquired Corporation will have
disclosed, to the best of its knowledge, all events, conditions, and facts
materially affecting the business and prospects of DALCOM. The Acquired
Corporation has not withheld knowledge of any events, conditions, and facts
that they have reasonable ground to know may materially affect the business
and prospects of DALCOM. None of the representations and warranties made by
the Acquired Corporation in this Agreement or set forth in any other
instrument furnished to Acquirer contained any untrue statement of a material
fact, or fails to state a material fact.

ARTICLE IV

REPRESENTATIONS AND WARRANTIES OF ACQUIRER

MEGALITH represents and warranties the following:

ORGANIZATION AND STANDING OF ACQUIRER

4.01 MEGALITH Corporation is a corporation duly organized, validly
existing, and in good standing under the laws of the State of Colorado, with
corporate power to own property and carry on its business as it is now being
conducted. Copies of the articles of incorporation of MEGALITH, that have
been certified by the Secretary of State of Colorado and together with the
bylaws and a copy of the statement of preferences for the Preferred Shares
will be delivered to the Acquired Corporation at least fifteen (15) days
prior to the Closing Date, are complete and accurate as of the date of this
Agreement. MEGALITH is qualified as a foreign corporation to transact
business in other jurisdictions.

Dalcom Plan and Agreement of Purchase - Page 12 of 25
<PAGE>

SUBSIDIARIES

4.02 MEGALITH has one subsidiary in Fort Worth, Texas operating under
the name Esco Elevator Corporation.

CAPITALIZATION

4.03 MEGALITH will have an authorized capitalization of 50,000,000
shares of common stock of the par value of $0.005 per share, of which
10,300,000 shares will be issued, outstanding, and fully paid as of the date
of execution of this Agreement and the Closing Date. There will be no
outstanding options, contracts, calls, commitments, or demands relating to
the authorized but issued stock of MEGALITH except as disclosed in Exhibit
"D" attached herewith. MEGALITH will also have 5,000,000 authorized shares of
preferred stock, par value $10.00, of which 54,200 shares will be issued,
outstanding and fully paid as of the Closing Date. There are no shares
outstanding that have any rights or preferences greater than those granted to
the Preferred Shares.

FINANCIAL STATEMENTS

4.04 MEGALITH has delivered to the Acquired Corporation its latest 10-Q
filing which contains the account of operation and the balance sheet, same is
attached herewith as Exhibit ''B'', and the balance sheet of MEGALITH as of
December 31, 1995 and the related statements of income and retained earnings
of MEGALITH for the period ended 1995, filed with Security and Exchange
Commission. The balance sheet of Guarantor and the related statements of
income and retained earnings of Guarantor for the period ending March 31,
1996 have been delivered to the Acquired Corporation, and are true as of the
signing of this agreement.

All the financial statements listed in this Paragraph present fairly the
financial condition of MEGALITH and Guarantor at the specified dates and the
results of its operations for the period specified. The statements were
prepared in accordance with generally accepted accounting principles applied
in a manner consistent with prior accounting periods.

FINANCIAL CONDITION SINCE BALANCE SHEET DATE

4.05 Since the Balance Sheet date of December 31, 1995 and the balance
sheet of Guarantor delivered to the Acquired Corporation, no change, event,
or condition has occurred that materially and adversely affects the financial
condition, assets, business, or prospects of MEGALITH or Guarantor, to the
knowledge of any of its officers.

TITLE TO ASSETS

4.06 All book assets of MEGALITH are in existence in its possession, are
in good condition and repair, and conform to all applicable zoning and
building laws and ordinances.

Dalcom Plan and Agreement of Purchase - Page 13 of 25

<PAGE>

MEGALITH has good and marketable title to all of its assets and, except as
shown on its financial statements as of December 31, 1995 holds such assets
subject to no mortgage, lien, or encumbrance.

STATUS OF TRANSFERRED SHARES

4.07 The shares of stock of MEGALITH that are to be issued and delivered
to Shareholder of Acquired Corporation pursuant to the terms of this
agreement will be validly authorized and issued, and will be fully paid and
non assessable for MEGALITH and the balance sheet of Guarantor of March 31,
1996. No shareholder of MEGALITH will have any preemptive right of
subscription or purchase with respect to the shares to be transferred and
will be free and clear of all liens, security interests, claims, encumbrances
and restrictions. In the event Seller elects to convert the Preferred shares,
the common shares of stock into which they will be converted shall be validly
authorized and issued, fully paid and non assessable, and free and clear of
all liens, security interests, claims, encumbrances and restrictions except
that the shares so issued shall be issued under Rule 144 and shall carry the
restrictions as imposed by Security and Exchange Commission for such shares.

INDEBTEDNESS

4.08 Except as set forth in the balance sheet of MEGALITH as of December
31, 1995, there is not outstanding indebtedness other than liabilities
incurred in the ordinarily course of business or in connection with this
transaction. MEGALITH is not in default with respect to any terms or
conditions of any indebtedness.

LITIGATION

4.09 MEGALITH is not a party to, except a third party defendant to a
lawsuit brought by the Bankruptcy Trustee of Esco Elevators, Inc. against
Dick Davis, the former owner of Esco, nor had it been threatened with any
litigation or governmental proceeding that could have a material, adverse
effect on the transaction contemplated by this Agreement or on the financial
condition of MEGALITH.

ACQUIRER'S AUTHORITY

4.10 The execution and performance of this Agreement have been duly
authorized by all requisite corporate action. This Agreement constitutes a
valid and binding obligation of MEGALITH in accordance with its terms. No
provision of the Articles of Incorporation, Bylaws, minutes, share
certificates, or contracts prevents MEGALITH from delivering good title to
its shares of MEGALITH capital stock in the manner contemplated by this
Agreement.

Dalcom Plan and Agreement of Purchase - Page 14 of 25
<PAGE>

BROKERS

4.11 MEGALITH has not retained nor otherwise utilized the services of
any broker or finder in connection with the transaction contemplated by this
Agreement. MEGALITH has done nothing to give rise to any valid claims against
the Acquired Corporation for a brokerage commission, finder's fee, or any
similar charge.

FULL DISCLOSURE

4.12 As of the Closing Date, MEGALITH will have disclosed to the
Acquired Corporation all events, conditions, and facts materially affecting
the business and prospects of MEGALITH, has not withheld knowledge of any
events, conditions, or facts, it would have reasonable grounds to know which
would materially affect the business and prospects of MEGALITH. None of the
representations and warranties made by MEGALITH in this Agreement or set
forth in any other instrument furnished to the Acquired Corporation contain
any untrue statement of a material fact, or fails to state a material fact.

Compliance With Law and Other Instruments

4.13 To the best of its knowledge, the business operations of MEGALITH
and Guarantor has been and is being conducted in accordance with all
applicable laws, rules, and regulations of all authorities. MEGALITH and
Guarantor are not in violation of; or in default under, any terms or
provisions of their Articles of Incorporation, its Bylaws, or of any lien,
mortgage, lease, agreement, instrument, order, judgment, or decree, or any
other type of restriction that would prevent consummation of the exchange of
securities or the performance of the obligations contemplated by this
Agreement.

ARTICLE V

CONDUCT OF BUSINESS OF ACQUIRED
CORPORATION PENDING CLOSING DATE

CONDUCT OF BUSINESS IN ITS ORDINARY COURSE

5.01 DALCOM will carry on its business in substantially the same manner
as previous to the date of execution of this Agreement, and will:

(a) Continue in full force the amount and scope of insurance coverage
carried prior to that date;

(b) Maintain its business organization and keep it intact, to retain
its present employees, and to maintain its goodwill with suppliers,
customers, and others having business relationships with it;

Dalcom Plan and Agreement of Purchase - Page 15 of 25
<PAGE>

(d) Maintain its assets and properties in good condition and repair,
and not sell or otherwise dispose of any of its assets or properties, except
sales of inventory in the ordinary course of business.

SATISFY CONDITIONS PRECEDENT

ACCESS TO INFORMATION AND DOCUMENTS

5.02 (a) DALCOM will afford the officer and representatives of MEGALITH
from the date of this Agreement until consummation of the Plan of Purchase,
full, access during normal business hours to all properties, books, accounts,
contracts, commitments, and any other records of any kind of DALCOM.
Sufficient access shall be allowed to provide MEGALITH with full opportunity
to make any investigation it desires to make of DALCOM and to keep itself
fully informed of the affairs of DALCOM;

(b) In addition, DALCOM will permit MEGALITH to make extracts or copies
of all such books, accounts, contracts, commitments, and records, and to
furnish to MEGALITH, within twelve (12) days after demand, any further
financial and operating data of the corporation as MEGALITH reasonably
requests;

(c) MEGALITH will use any information obtained under this Paragraph
only for its own purposes in connection with the consummation of the
transaction contemplated by this Agreement, and will not divulge the
information to any other person. All information provided to MEGALITH shall
be subject to the Non-Disclosure Agreement dated April 23, 1996 and executed
by Syed Zaidi as Chairman and Chief Executive Officer of MEGALITH. In the
event this transaction is not consummated, all documents, and copies thereof;
obtained by MEGALITH shall be returned to Acquired Corporation. MEGALITH
understands and acknowledges that it is in competition with Acquired
Corporation and the confidentiality and proper use of the information
obtained is a material provision of this Agreement and shall survive the
termination thereof

NEGATIVE COVENANTS

5.03 Except with notifying MEGALITH, DALCOM will not:

(a) Incur any liabilities other than liabilities incurred in the
ordinary course of business;

(b) Incur any mortgage, lien, pledge, hypothecation, charge,
encumbrance, or restriction of any kind other than in the ordinary course of
business;

Dalcom Plan and Agreement of Purchase - Page 16 of 25
<PAGE>

(c) Become a party to any contract, or renew, extend, 6r modify any
existing contract, except in the ordinary course of business;

(d) Make any capital expenditures, except for ordinary repairs,
maintenance, and replacement and in the ordinary course of business;

(e) Pay any dividend on or make any other distribution to Shareholder.

(f) Purchase, retire, or redeem any shares of its capital stock;

(g) Issue or sell additional shares of its capital stock, whether or
not such shares have been previously authorized or issued;

(h) Issue or sell any warrants, rights, or options to acquire any
shares of its capital stock;

(i) Amend its Articles of Incorporation or Bylaws;

(1) Pay or agree to pay any bonus, increase in compensation, pension,
or severance pay to any director, stockholder, officer, consultant, agent, or
employee except in the ordinary course of business;

(k) Discharge or satisfy any lien or encumbrance, nor pay any
obligation or liability, except current liabilities shown on the Balance
Sheet attached herewith, or incurred in the ordinary course of business since
that date;

(1) Merge or consolidate with any other entity;

(m) Enter into any transaction or take any acts that would constitute a
breach of the representations, and warranties contained in this Agreement; and

(n) Institute, settle, or agree to settle any action or proceeding
before any court or governmental body other than in the ordinary course of
business.

ARTICLE VI
CONDUCT OF BUSINESS OF ACQUIRER PENDING
CLOSING DATE

CONDUCT OF BUSINESS IN ITS ORDINARY COURSE

6.01 MEGALITH will carry on the business of MEGALITH in substantially
the same manner as before the date of execution of this Agreement.

Dalcom Plan and Agreement of Purchase - Page 17 of 25
<PAGE>

SATISFY CONDITIONS PRECEDENT

6.02 MEGALITH will use its best efforts to satisfy any conditions
precedent contained in this Agreement.

ACCESS TO INFORMATION AND DOCUMENTS

6.03 (a) MEGALITH and Guarantor will provide the Acquired Corporation
from the date of this Agreement until the Closing Date full access during
normal business hours to all properties, books, accounts, contracts,
commitments, records of MEGALITH and Guarantor sufficient access shall be
allowed to provide the Acquired Corporation with full opportunity to make any
investigation they desire to make of MEGALITH and Guarantor, and to keep
themselves fully informed of the affairs of MEGALITH and Guarantor.

(b) MEGALITH and Guarantor will permit the Shareholder to make extracts
of copies of all books, accounts, contracts, commitments, and records of
MEGALITH and Guarantor. Additionally, MEGALITH and Guarantor will furnish to
the Shareholder, within twelve (12) days after demand, any further financial
and operating date and other information concerning MEGALITH's and
Guarantor's business and assets that the Shareholder reasonably request.

(c) The Acquired Corporation may use any information secured pursuant
to this Paragraph only for its own purposes in connection with the
consummation of the transaction contemplated by this Agreement and may not
divulge the information to any other persons.

NEGATIVE COVENANTS

6.04 Except with the prior written consent of the Acquired Corporation,
MEGALITH may not declare or pay any dividend or make any other distribution
to its Shareholder and will not issue or sell additional shares of MEGALITH's
capital stock except those referred to in sections herein above.

ARTICLES VII

CONDITIONS PRECEDENT TO OBLIGATIONS OF
ACQUIRED CORPORATION

CONDITIONS PRECEDENT TO CLOSING

7.01 The obligations of the Acquired Corporation to consummate the Plan
of Reorganization in this Agreement shall be subject to the conditions
precedent specified in this Article 6.

Dalcom Plan and Agreement of Purchase - Page 18 of 25
<PAGE>

TRUTH OF REPRESENTATIONS AND WARRANTIES
AND COMPLIANCE WITH COVENANTS

7.02 The representations and warranties of DALCOM and MEGALITH
contained in this Agreement shall be true as of the Closing Date with the
same effect as though made on the Closing Date. DALCOM and MEGALITH, shall
have performed all obligations and complied with all covenants required by
this Agreement to be performed or complied with by them prior to the Closing
Date. DALCOM and MEGALITH shall deliver to each other a certificate as of the
Closing Date and signed by the President or a Vice President and the
Secretary or an Assistant Secretary of DALCOM and MEGALITH, certifying the
truth of the representations and warranties.

NO RESTRICTIONS

7.03 No action or proceeding by any governmental body or agency shall
have been threatened, asserted, or instituted to prohibit the consummation of
the transactions contemplated by this Agreement.

ARTICLE VIII

SURVIVAL OF WARRANTIES AND LIABILITIES

NATURE AND SURVIVAL OF REPRESENTATIONS AND WARRANTIES

8.01 All statements of fact contained in this Agreement, or in any
memorandum, certificate, letter, document, or other instrument delivered by
or on behalf of DALCOM and MEGALITH pursuant to this agreement shall be
deemed representations and warranties made by any such party, respectively,
to each other party under this agreement. The covenants, representations,
and warranties of the parties and the Shareholder shall survive the Closing
Date, and all inspections, examinations, or audits on behalf of the parties
and the shareholder for a period of one (1) year following the Closing Date.

INDEMNIFICATION

EXPENSES

8.02 The Acquired Corporation shall pay its own expenses incurred by
them arising out of this Agreement and the transactions contemplated in this
Agreement, including but not limited to all fees and expenses of their
counsel and accountants. Whether or not this Agreement is terminated, each of
the parties shall bear all expenses incurred by it in connection with this
Agreement and in the consummation of the transactions contemplated by and in
preparation for the Agreement.

Dalcom Plan and Agreement of Purchase - Page 19 of 25
<PAGE>

ARTICLE IX

COMPLIANCE WITH SECURITIES LAWS

UNREGISTERED STOCK UNDER FEDERAL SECURITIES ACT

9.01 (a) Shareholder of the Acquired Corporation acknowledges that the
Preferred Shares of the Acquirer's Stock to be delivered to the Shareholder
pursuant to this Agreement and any common shares upon a conversion have not
been registered under the Federal Securities Act of 1934, as amended,
referred to in this Agreement as the "1934 Act," and that therefore the stock
is not fully transferable except as permitted under various exemptions
contained in the 1934 Act and the rules of the Securities and Exchange
Commission interpreting the Act. The provisions contained in the Paragraph
9.01 are intended to ensure compliance with the 1933 Act.

NO DISTRIBUTION OF STOCK TO PUBLIC

(b) The shareholder of the Acquired Corporation represents and warrants
to the Acquirer that the shareholder is acquiring the Preferred Shares under
this Agreement for the shareholder's own account for investment, and not for
the purpose of resale or any other distribution of the shares. Each
shareholder also represents and warrants that the shareholder has no present
intention of disposing of all or any part of such shares at any particular
time, for any particular price, or on the happening of any particular
circumstances. Each shareholder acknowledges that the Acquirer is relying on
the truth and accuracy of the warranties and representations set forth in
this Paragraph in issuing the shares without first registering the shares
under the 1934 Act. Not withstanding the above, shareholder of the Acquired
Corporation and Acquirer recognize and acknowledge that the Preferred Shares
are subject to the Put Option, and the holders thereof have the intent of
being able to exercise such Put Options in accordance with the terms thereof

NO TRANSFERS IN VIOLATION OF THE 1934 ACT

(c) Each shareholder of the Acquired Corporation covenants and
represents that none of the shares of MEGALITH Capital Stock that will be
issued to the shareholder pursuant to this Agreement, will be offered, sold,
assigned, pledged, transferred, or otherwise disposed of except after full
compliance with all of the applicable provisions of the 1934 Act and the
rules and regulations of the Securities and Exchange Commission under the
1934 Act. Therefore, each shareholder agrees not to sell or otherwise dispose
of any of the shares of the Acquirer's Common Stock received pursuant to this
Agreement unless the shareholder:

(i) HAS delivered to the Acquirer a written legal opinion in form
and substance satisfactory to counsel for the Acquirer to the effect that the
disposition is permissible under the terms of the 1934 Act and regulations
interpreting the Act;

Dalcom Plan and Agreement of Purchase - Page 20 of 25
<PAGE>

(ii) Has complied with the registration and prospectus requirements
of the 1934 Act relating to such a disposition; or

(iii) Has presented the Acquirer satisfactory evidence that such a
disposition is exempt from registration under Section 4(1) of the Act.

The Acquirer shall place a stop transfer order against transfer of the
shares until one of the conditions set forth in this subparagraph has been
met.

INVESTMENT LEGEND ON CERTIFICATE

(d) Seller of the Acquired Corporation agrees that the certificates
evidencing the Common Shares the shareholder will receive upon conversion of
the Preferred Stock under this Agreement will contain the following legend:

THE SECURITIES EVIDENCED) BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1934 AND HAVE BEEN TAKEN FOR INVESTMENT.
THE SECURITIES MAY NOT BE SOLD OR OFFERED FOR SALE UNLESS A
REGISTRATION STATEMENT UNDER THE FEDERAL SECURITIES ACT OF 1934, AS
AMENDED, IS IN EFFECT FOR THE SECURITIES, OR ANY EXEMPTION FROM
THE REGISTRATION REQUIREMENTS OF SUCH ACT IS IN FACT APPLICABLE TO
SUCH OFFER OR SALE.

INDEMNIFICATION BY SHAREHOLDER

(e) If any time in the future any of the Shareholder of the Acquired
Corporation sells or otherwise disposes of any of such Preferred Shares
received from the Acquirer, other than to Acquirer under the Put Option,
without registration under the 1934 Act or any similar federal statute that
may then be in effect, such shareholder agrees to indemnify and hold harmless
the Acquirer against any claim, liabilities, penalties, costs, and expenses
that may be asserted against or suffered by the Acquirer as a result of the
such disposition.

FUTURE REGISTRATION

(f) If within three (3) years after the initial registration of the
Common Shares of the Acquirer, the Acquirer decides to file a registration
statement under the 1934 Act, covering a sale by the Acquirer or a
shareholder of the Acquirer of shares of the Acquirer's preferred or Common
Stock for cash, the Acquirer will mail to each shareholder written notice of
its intent to file such a registration statement. If a shareholder delivers a
written request to the Acquirer within twenty (20) days after the mailing of
such notice setting forth the number of shares of Preferred or Common Stock
the shareholder intends to dispose of; the Acquirer agrees to use its best
efforts to include such shares of each shareholder in the registration
statement. However, the Acquirer shall not be so obligated to register the
shares if in the opinion of counsel for the Acquirer such shares

Dalcom Plan and Agreement of Purchase - Page 21 of 25
<PAGE>

may be disposed of without compliance with the registration and prospectus
requirements of the 1934 Act. If; in spite the best efforts of the Acquirer,
the inclusion of all of the shares that each shareholder intends to sell is
not acceptable to the managing underwriter or underwriters of the offering,
the Acquirer may limit the number of shares of each shareholder to be sold to
ten percent (10% of the total number of shares being offered in the
registration statement. If the offering is not completed within ninety (90)
days after the effective date of the registration statement, the Acquirer
shall be entitled to de-register any unsold portion of such shares: The
manner and conduct of any such registration, including the contents of such
registration statement and of any related underwriting or other agreements
shall be entirely in the control and discretion of the Acquirer. Each
shareholder agrees to cooperate with the Acquirer in the preparation and
filing of any registration statement prepared and filed under this
Subparagraph. The Acquirer shall bear all out-of-pocket expenses except for
registration fees incurred in performing the obligations under this
Subparagraph except that each shareholder shall make the customary
agreements, representations, warranties, and indemnification's to the
underwriters in any such offering with respect to any shares included at the
shareholder's request.

SECURITIES ACT

9.02 Acquirer represents and warrants that the consummation of this
Agreement is not subject to issuance by the Colorado Securities Commissioner
of any permit and any other requirements of Colorado law applying to the
issuance and transfer of the Acquirer's stock in exchange for shares of
Capital Stock of DALCOM.

ARTICLE X

MISCELLANEOUS

AMENDMENT

10.01 This Agreement may be amended or modified at any time and in
any manner only by an instrument in writing executed by the President of
DALCOM and the President of MEGALITH and the Seller.

WAIVER

10.02 Either DALCOM or MEGALITH may, in writing:

EXTENSION OF TIME

(a) Extend the time for the performance of any of the obligations of
any other party to the Agreement.

Dalcom Plan and Agreement of Purchase - Page 22 of 25

<PAGE>

WAIVING INACCURACIES

(b) Waive any inaccuracies and misrepresentations contained in this
Agreement or any document delivered pursuant to the Agreement made by any
other party to the Agreement.

WAIVING COMPLIANCE WITH COVENANTS

(c) Waive compliance with any of the covenants or performance of any
obligations contained in this Agreement by any other party to the Agreement.

WAIVING SATISFACTION OF CONDITION PRECEDENT

(d) Waive the fulfillment of any condition precedent to the performance
by any other party to the Agreement.

ASSIGNMENT

10.03 (a) Neither this entire Agreement nor any right created by the
Agreement shall be assignable by either the Seller or MEGALITH without the
prior written consent of the other, except by the laws of succession.

(b) Except as limited by the provisions of subparagraph (a), this
Agreement shall be binding on and inure to the benefit of the respective
successors and assigns of the parties, as well as the parties.

(c) Nothing in this Agreement, expressed or implied, is intended to
confer upon any person, other than the parties and their successors, any
rights or remedies under this Agreement.

NOTICES

10.04 Any notice or other communication required or permitted by this
Agreement must be in writing and shall be deemed to be properly given when
delivered in person to an officer of the other party, when deposited in the
United States mails for transmittal by certified or registered mail, postage
prepaid, or when deposited with a public telegraph company for transmittal,
charges prepaid, provided that the communication is addressed:

(a) In the case of DALCOM, to:

Dalcom Elevator Corporation.
132 E Buckingham
Garland, Texas 75000
Attn.: Mr. J. R. Alexander

or to such other person or address designated by DALCOM to receive notice.

Dalcom Plan and Agreement of Purchase - Page 23 of 25
<PAGE>

(b) In Case of Seller:

Mrs. Frances H. Alexander
172 Empinado Way
Hot Springs Village, AR 71909

or to such other person or address designated by the Seller to receive notice.

MEGALITH
4720 Esco Drive
Fort Worth, Texas 76140
Attn.: Syed G. Zaidi

or to such other person or address designated by MEGALITH to receive notice.

HEADINGS

10.05 Paragraph and other headings contained in this Agreement are for
reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement.

ENTIRE AGREEMENT

10.06 This instrument and the exhibits to this instrument contain the
entire, and supersedes any previous agreements, Agreement between the parties
with respect to the transaction contemplated by the Agreement. It may be
executed in any number of counterparts by the aggregate of the counterparts
together constitute only one and the same instrument.

EFFECT OF PARTIAL INVALIDITY

10.07 In the event that any one or more of the provisions contained in
this Agreement shall for any reason be held to be invalid, illegal, or
unenforceable in any respect, such invalidity, illegality, or unenforceability
enforceability shall not affect any other provisions of this Agreement, but
this Agreement shall be constructed as if it never contained any such
invalid, illegal, or unenforceable provisions.

Dalcom Plan and Agreement of Purchase - Page 24 of 25
<PAGE>

CONTROLLING LAW

10.08 The validity, interpretation, and performance of this agreement
shall be controlled by and construed under the laws of the State of Texas.

ARBITRATION

10.09 If any portion of this Agreement is in dispute, parties hereto
agree to submit there dispute to Texas Board of Arbitration. The decision by
the Board of Arbitration shall be binding upon the parties to this Agreement.

SPECIFIC PERFORMANCE

10.10 The parties declare that it is impossible to measure in money the
damages that will accrue to a party or its successors as a result of the
other parties' failure to perform any of the obligations under this
Agreement. Therefore, if a party or its successor institutes any action or
proceeding to enforce the provisions of this Agreement, any party opposing
such action or proceeding agrees that specific performance may be sought and
obtained for any breach of this Agreement.

Executed on 22nd day of May, 1996.

ACQUIRER:
MEGALITH

By: /s/ Syed Zaidi
-------------------------------
Its: Chairman & CEO

DALCOM ELEVATOR CORPORATION:

By: /s/ J.R. Alexander
-------------------------------
Its: President

SELLER:

By: /s/ Frances H. Alexander
-------------------------------
Mrs. Frances H. Alexander

Dalcom Plan and Agreement of Purchase - Page 25 of 25

<PAGE>

ARTHUR H. MALCOLM, M. D.
8428 HIGH BRUSH DR.,
DALLAS, TEXAS 75249

Mr. Syed G. Zaidi, December 18, 1996
Chairman of the Board,
and Board of Directors
of Megalith Corp.
Esco Dr.
Fort Worth, TX.

Dear Mr. Zaidi,

Please consider this letter as an official notification of my resignation
from the Board of Megalith Corporation effective immediately.

Sincerely,

A. H. Malcolm M. D.
Director

<PAGE>

EXHIBIT 21

MEGALITH CORPORATION

EXHIBIT NO. 21 AS REQUIRED BY ITEM 601 OF REGULATION S-B

SUBSIDIARIES OF THE REGISTRANT

AS OF APRIL 5, 1996

1. Esco Elevator Corporation, incorporated in the State of Colorado.

2. Dalcom Elevator Corporation, incorporated in the State of Texas.

<PAGE>

Megalith Corporation
4720 Esco Drive
Fort Worth, TX 76140

RE: CONSENT TO USE AUDITED FINANCIAL STATEMENTS AS AN EXHIBIT TO THE FILING
OF 10K STATEMENT.

Please let this letter serve as our consent to the filing of our audited
financial statements of Megalith Corporation, a Colorado Corporation, dated
March 17, 1997 for the year ended September 30, 1996.

Very truly yours,

Boamah Boachie, CPA
Dallas, Texas
March 18, 1997

<PAGE>
<ARTICLE> 5
<MULTIPLIER> 1,000

<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> SEP-30-1996
<PERIOD-START> OCT-01-1995
<PERIOD-END> SEP-30-1996
<CASH> 131,438
<SECURITIES> 0
<RECEIVABLES> 258,461
<ALLOWANCES> 63,118
<INVENTORY> 616,126
<CURRENT-ASSETS> 1,017,907
<PP&E> 9,102,366
<DEPRECIATION> 525,630
<TOTAL-ASSETS> 10,252,753
<CURRENT-LIABILITIES> 3,706,993
<BONDS> 0
0
88,070
<COMMON> 72,989
<OTHER-SE> 3,282,788
<TOTAL-LIABILITY-AND-EQUITY> 3,364,584
<SALES> 2,530,056
<TOTAL-REVENUES> 2,530,056
<CGS> 2,324,659
<TOTAL-COSTS> 2,324,659
<OTHER-EXPENSES> 1,947,892
<LOSS-PROVISION> 63,118
<INTEREST-EXPENSE> 259,126
<INCOME-PRETAX> (2,064,739)
<INCOME-TAX> 0
<INCOME-CONTINUING> (2,064,739)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (2,127,239)
<EPS-PRIMARY> (.23)
<EPS-DILUTED> (.23)

</TABLE>