IFS INTERNATIONAL INC, 424B1, 1997-02-24

IFS INTERNATIONAL INC
424B1, 1997-02-24
BLANK CHECKS

Previous: GREAT BAY POWER CORP, 15-15D/A, 1997-02-24

Next: EMCORE CORP, S-1/A, 1997-02-24

<PAGE>
File No. 333-11653
Filed Pursuant to Rule 424(b)1
PROSPECTUS

1,200,000 SHARES OF SERIES A CONVERTIBLE PREFERRED STOCK
1,700,000 REDEEMABLE SERIES A CONVERTIBLE PREFERRED STOCK PURCHASE WARRANTS
IFS INTERNATIONAL, INC.

IFS International, Inc. (the "Company") is offering hereby 1,200,000
shares of its Series A Convertible Preferred Stock (the "Preferred Stock")
and 1,700,000 Redeemable Series A Convertible Preferred Stock Purchase
Warrants (the "Warrants"). The Preferred Stock and Warrants may be purchased
separately and shall be separately transferable immediately upon issuance.
Each share of Preferred Stock is convertible, at the option of the holder,
into one share of Common Stock, subject to adjustment, for a period of five
years commencing on the date hereof; provided that the Preferred Stock must
be converted into Common Stock upon the earlier of the fifth anniversary of
the date hereof or the occurrence of certain events. Each Warrant entitles
the registered holder thereof to purchase one share of Preferred Stock at a
price of $6.25 per share, subject to adjustment, for a period of three years
commencing on February 21, 1999; except that if the Warrants are called for
redemption, or the Preferred Stock is required to be converted, prior to
February 21, 1999, the Warrants will be exercisable from the date on which
notice of such redemption or mandatory conversion is given by the Company.
The Warrants are redeemable, with the prior consent of Duke & Co., Inc. (the
"Underwriter"), at any time commencing on February 21, 1998, upon notice of
not less than 30 days, at a price of $0.10 per Warrant, provided that the
last sale price of the Preferred Stock has been equal to or greater than
$8.00 per share, subject to adjustment, for a period of 20 consecutive days
of trading of the Preferred Stock prior to the mailing of the notice of
redemption. See "Description of Securities."

Prior to this offering, there has been no public market for the Preferred
Stock or the Warrants. For factors considered in determining the initial
public offering prices of the Preferred Stock and the Warrants and the
exercise price of the Warrants, see "Underwriting." Prior to the date of this
Prospectus, the Common Stock was quoted on the OTC Bulletin Board and on
February 20, 1997, the closing bid price of the Common Stock was $5.00. The
Preferred Stock, Warrants and Common Stock have been approved for quotation
on The Nasdaq SmallCap Market under the symbols "MNYCP," "MNYCW" and "MNYC,"
respectively. The Preferred Stock and Warrants have also been approved for
listing on the Boston Stock Exchange (the "BSE") under the symbols "EFTpA" and
"EFTWSA," respectively.

This offering involves a high degree of risk.
See "Risk Factors" commencing on page 7 hereof.
------

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

<TABLE>
<CAPTION>
Price to Underwriting Proceeds to
Public Discounts(1) Company(2)
<S> <C> <C> <C>
Per Share ..................... $5.00 $.50 $4.50
Per Warrant .................. $.10 $.01 $.09
Total (3) .................... $6,170,000 $617,000 $5,553,000
</TABLE>

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

(1) Does not include additional compensation to the Underwriter in the form
of a nonaccountable expense allowance of 3% of the gross proceeds of this
offering. The Company has also agreed to sell to the Underwriter warrants
to purchase up to 120,000 shares of Preferred Stock at $6.25 per share
and up to 170,000 Warrants at an exercise price of $1.6875 per Warrant,
exercisable over a period of four years commencing one year from the date
hereof (the "Underwriter's Warrants") and to indemnify the Underwriter
against certain liabilities, including liabilities under the Securities
Act of 1933, as amended (the "Securities Act"). See "Underwriting."

(2) Before deducting expenses, including the Underwriter's nonaccountable
expense allowance of $185,100 ($212,865 if the Underwriter's
over-allotment option is exercised in full), estimated at $500,000
($527,765 if the Underwriter's over-allotment option is exercised in
full), payable by the Company.

(3) The Company has granted the Underwriter a 45-day option to purchase up to
180,000 shares of Preferred Stock and up to 255,000 Warrants upon the
same terms and conditions as set forth above, solely to cover
over-allotments, if any. If such over-allotment option is exercised in
full, the total Price to Public, Underwriting Discounts and Proceeds to
Company will be $7,095,500, $709,550 and $6,385,950, respectively. See
"Underwriting."
<PAGE>

The Preferred Stock and Warrants are being offered, subject to prior sale,
when, as and if delivered to and accepted by the Underwriter and subject to
the approval of certain legal matters by counsel and to certain other
conditions. The Underwriter reserves the right to withdraw, cancel or modify
this offering and to reject any order in whole or in part. It is expected
that delivery of certificates representing the Preferred Stock and Warrants
will be made against payment therefor on or about February 28, 1997, at the
offices of the Underwriter, 909 Third Avenue, New York, New York 10022.
------

LOGO DUKE & CO., INC.

The date of this Prospectus is February 21, 1997

<PAGE>

Concurrently with this offering, the Company also has registered on behalf
of certain of its stockholders (the "Selling Stockholders") 100,000 shares of
Common Stock (the "Selling Stockholders' Shares"). The Selling Stockholders'
Shares are not part of this underwritten offering, however, and may not be
sold prior to 12 months after the closing of this offering. The Company will
not receive any proceeds from the sale of the Selling Stockholders' Shares.

AVAILABLE INFORMATION

The Company is subject to the informational requirements of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"). In accordance
therewith, the Company files reports and other information with the
Securities and Exchange Commission (the "Commission"). Reports, proxy
statements and other information that have been or will be filed by the
Company can be inspected and copied at the public reference facilities
maintained by the Commission at Room 1024, 450 Fifth Street, N.W.,
Washington, D.C. 20549 and at the Regional Offices of the Commission at 7
World Trade Center, New York, New York 10048 and Northwestern Atrium Center,
500 West Madison Street, Chicago, Illinois 60621. Copies of such material may
be obtained from the Public Reference Section of the Commission at prescribed
rates by writing to the Commission at 450 Fifth Street, N.W., Washington,
D.C. 20549. In addition, the Commission maintains a Web site on the Internet
at http://www.sec.gov that contains reports and other information of issuers
that file electronically with the Commission.

The Company has filed with the Commission a Registration Statement on Form
SB-2 under the Securities Act with respect to the securities being offered
hereby. This Prospectus does not contain all the information set forth in the
Registration Statement, certain parts of which are omitted in accordance with
the rules and regulations of the Commission. For further information,
reference is made to the Registration Statement, copies of which can be
obtained from the Public Reference Section of the Commission at Room 1024,
450 Fifth Street, N.W., Washington, D.C. 20549, upon payment of the fees
prescribed by the Commission.

STABILIZATION

IN CONNECTION WITH THIS OFFERING, THE UNDERWRITER MAY OVER-ALLOT OR EFFECT
TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICE OF THE PREFERRED
STOCK OR WARRANTS OF THE COMPANY AT A LEVEL ABOVE THAT WHICH MIGHT OTHERWISE
PREVAIL IN THE OPEN MARKET. SUCH TRANSACTIONS MAY BE EFFECTED ON THE NASDAQ
SMALLCAP MARKET. SUCH STABILIZING, IF COMMENCED, MAY BE DISCONTINUED AT ANY
TIME.
<PAGE>

PROSPECTUS SUMMARY

The following summary is qualified in its entirety by the more detailed
information and the Consolidated Financial Statements and notes thereto
appearing elsewhere in this Prospectus. Unless otherwise indicated, such
information has been adjusted to reflect a 1-for-10 reverse split of the
Company's common stock (the "Common Stock") effectuated at the close of
business on November 8, 1996 and assumes no exercise of outstanding options
and warrants, the Underwriter's Warrants and the Underwriter's over-
allotment option. Unless the context requires otherwise, as used in this
Prospectus, the "Company" means IFS International, Inc. and its wholly-owned
subsidiaries.

Certain terms used in the Prospectus are defined in the Glossary on page
40.

THE COMPANY

The Company is engaged in the business of developing, marketing and
supporting software products for the electronic funds transfer ("EFT")
market. The Company's family of software products, marketed under the name
TechNique Plus II ("TPII"), serves as a UNIX-based manager for EFT systems.
TPII software products are designed to operate with computers utilizing the
UNIX operating system, are written in C programming language and incorporate
Oracle relational database technology and object oriented design concepts. As
a result, TPII software products are compatible with a significant portion of
the industry standard computer platforms.

An EFT system ("EFT System") of a bank or other financial institution
permits the processing of transactions involving credit cards and debit cards
(e.g., ATM cards). An EFT System generally consists of one or more of the
following in various configurations: automatic teller machines ("ATMs"),
point of sale ("POS") terminals, a host computer of the financial institution
and regional, national and international networks ("Networks"), such as
CIRRUS, NYCE, MAC or PLUS. TPII software products primarily route and
authorize the processing of transactions through an EFT System. TPII software
is offered in separate modules which perform different functions, including
(i) interfacing with ATMs, POS terminals, a financial institution's host
computer and Network computers, (ii) updating credit and debit card
information, (iii) providing stand-in authorization for transactions when the
financial institution's host computer is not operating, (iv) computing fees
for transactions processed and (v) generating of reports. The TPII software
products are installed generally at the financial institution's main
processing facility.

The Company's primary business objective is to become a leading world-wide
supplier of UNIX-based managers for EFT Systems. To date, the Company's TPII
software products have been primarily installed in EFT Systems of banks and
other financial institutions located in emerging countries and former Eastern
Bloc nations. As of December 31, 1996, fourteen financial institutions and
two Networks were utilizing TPII software products. Certain of such financial
institutions serve up to 200 ATMs and 1,000 POS terminals and the two
Networks serve 22 and 5 financial institutions, respectively. In addition,
agreements have been executed for the installation of TPII software products
in EFT Systems of four additional financial institutions (which excludes the
agreements relating to the smart card pilot programs referred to below). The
Company principally derives its revenues from the licensing of its TPII
software products. A substantial portion of such revenues are generated by
licensing through or to computer manufacturers, which incorporate the TPII
software products into a turnkey system installed at a financial institution.
The preparation of functional specifications, customization and installation
of TPII software products and the training by the Company of the financial
institution's personnel in the use of the TPII software products take an
average of six to twelve months, depending upon the timing of installation
and final acceptance of the EFT System by the customer. The Company generally
receives payment of a substantial portion of the license fee prior to the
final acceptance by the customer. The Company provides its customers with
maintenance services for its TPII software for a separate fee. The Company
also offers other support services, such as additional training of customer
personnel and consulting, for additional consideration.

The Company recently has adapted its TPII software to manage EFT Systems
that process transactions involving the "loading" of value on smart cards. A
smart card is a plastic card with an electronic chip

3
<PAGE>

that acts as a small computer. These cards can include a stored value
feature, which enables the holder to "load" a fixed amount of purchasing
power or cash equivalent on the card as authorized. As a result, the holder
can purchase items or services without the necessity of carrying cash or
entering into a credit card transaction. The Company has developed software
for Visa International Service Association ("Visa") to manage an EFT System
that facilitates the "loading" of value on a smart card through a bank's
terminals. As a result of a successful test of the Company's TPII smart card
software, Visa entered into an agreement with the Company in July 1996 for
the licensing and installation of this software in connection with the
operation of up to seven pilot programs for the purposes of evaluating the
TPII smart card software and other aspects of the smart card system. The
license for each pilot program is for a term of 24 months commencing on the
date such pilot program goes on-line. As of the date hereof, Visa has
selected financial institutions in the following countries to conduct five of
the pilot programs: the United States, the United Kingdom, Japan, Germany and
Italy. The Company anticipates that the first pilot program that will become
operational will be in Germany during the first calendar quarter of 1997.
Although there can be no assurance, the Company anticipates that revenues
from its agreement with Visa will have a material impact on its financial
position during the next 9-12 months.

The Company was incorporated in Delaware in 1986 under the name "Wellsway
Ventures, Inc." and changed its name to "IFS International, Inc." in 1989.
The Company's principal offices are located at Rensselaer Technology Park,
185 Jordan Road, Troy, New York 12180 and its telephone number is (518)
283-7900.

THE OFFERING

<TABLE>
<CAPTION>
<S> <C>
Securities offered by
the Company .................... 1,200,000 shares of Preferred Stock
1,700,000 Warrants
Common Stock:
To be outstanding after this
offering ........................ 1,072,365 shares (1)
Preferred Stock:
To be outstanding after this
offering ........................ 1,200,000 shares
Conversion Rate ................ One share of Common Stock for each share of Preferred Stock, subject to adjustment
to prevent dilution in certain circumstances. See "Description of Securities."
Conversion Period .............. Commencing on the date hereof and terminating on February 20, 2002; provided
that the Preferred Stock must be converted ("Mandatory Conversion") on the
earlier of (i) February 20, 2002 or (ii) the consummation date of a merger
or acquisition of the Company in which the then outstanding securities of the
Company are surrendered or exchanged for cash, property or securities of another
entity if the consideration received in any such transaction is not less than
$5.00 per share on a fully-diluted basis. See "Description of Securities."
Voting Rights .................. One vote for each share held of record on all matters submitted to a vote of
stockholders, voting separately as a class, except that with respect to the
election of directors, the Preferred Stock and the Common Stock vote together
as one class. See "Description of Securities."
Liquidation Preference ......... $5.00 per share
</TABLE>

4
<PAGE>

<TABLE>
<CAPTION>
<S> <C>
Warrants:
To be outstanding after this
offering ........................ 1,700,000 Warrants
Exercise Price ................. $6.25 per share of Preferred Stock, subject to adjustment. See "Description
of Securities."
Exercise Period ................ Commencing on February 21, 1999, and terminating on February 20, 2002; except
that (i) in the event the Company gives notice of redemption of the Warrants
prior to February 21, 1999, the exercise period of the Warrants will commence
on the date of the notice of redemption and terminate on the day prior to the
date fixed for redemption or (ii) if the Preferred Stock is subject to Mandatory
Conversion prior to February 21, 1999, the exercise period of the Warrants
will commence on the date of notice of the Mandatory Conversion. See "Description
of Securities."
Redemption ..................... The Warrants are redeemable, with the prior consent of the Underwriter, at
any time commencing on February 21, 1998, upon notice of not less than 30 days,
at a price of $.10 per Warrant, provided that the last sale price of the Preferred
Stock has been equal to or greater than $8.00 per share, subject to adjustment,
for 20 consecutive trading days prior to the notice of redemption. See "Description
of Securities."
Use of Proceeds ................. Expand contract capabilities by increasing personnel and computer-related
equipment, expand foreign marketing and licensing activities, research and
development for new and existing products, purchase and renovate new office
space, repayment of debt and interest and working capital. See "Use of Proceeds."
Risk Factors .................... This offering involves a high degree of risk. Prospective investors should
carefully consider the risk factors set forth under "Risk Factors."
</TABLE>

<TABLE>
<CAPTION>
Nasdaq Symbols(2)

<S> <C> <C>
Preferred Stock .. MNYCP
Warrants ......... MNYCW
Common Stock ..... MNYC

BSE Symbols(2)
Preferred Stock.... EFTpA
Warrants ......... EFTWSA

</TABLE>

- ------
(1) Assumes no conversion of the Preferred Stock or certain outstanding
convertible debt (which debt is convertible into a maximum of 59,524
shares of Common Stock (subject to adjustment pursuant to anti-dilution
provisions) or exercise of outstanding options to purchase 389,724 shares
of Common Stock and outstanding warrants to purchase 100,000 shares of
Common Stock.

(2) Quotation on The Nasdaq SmallCap Market and listing on the BSE do not imply
that a meaningful sustained market for the Preferred Stock, the Warrants
and/or the Common Stock will develop.

5
<PAGE>

SELECTED CONSOLIDATED FINANCIAL DATA
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)

STATEMENT OF OPERATIONS DATA:

<TABLE>
<CAPTION>
Six Months Ended
Year Ended April 30, October 31,
-------------------- --------------------
(unaudited)
1996 1995 1996 1995
-------- -------- -------- --------
<S> <C> <C> <C> <C>
Total revenues .................................... $2,441 $2,041 $1,587 $ 695
Cost of revenues and services ..................... 505 346 388 163
Operating expenses ................................ 1,934 1,857 1,021 922
Income (loss) from operations ..................... 2 (162) 178 (390)
Other income (expense) ............................ (50) (44) (26) (24)
Litigation settlement costs ....................... -- -- (100) --
Income (loss) before income taxes and extraordinary
item ............................................. (48) (206) 52 (414)
Income (loss) before extraordinary item ........... (48) (206) 52 (414)
Extraordinary item - gain on debt restructuring and
extinguishments .................................. -- 378 -- --
Net income (loss) ................................. (48) 172 52 (414)
Net income (loss) per common share ................ $ (.05) $ .18 $ .04 $(.41)
Weighted average shares outstanding ............... 1,002 953 1,043 998

</TABLE>

BALANCE SHEET DATA:

<TABLE>
<CAPTION>
October 31, 1996
-------------------------------
(Unaudited)
Actual As Adjusted(1)
-------- --------------
<S> <C> <C>
Working capital (deficit) ........... $ (874) $4,179
Total assets ........................ 2,070 6,623
Total long-term debt ................ 436 436
Total stockholders' equity (deficit) (634) 4,419

</TABLE>

- ------
(1) As adjusted to give effect to the sale of 1,200,000 shares of Preferred
Stock and 1,700,000 Warrants offered hereby and the application of the
net proceeds therefrom, including the repayment of $500,000 in
indebtedness incurred in September 1996 (the "Bridge Financing"). See
"Use of Proceeds," "Capitalization" and "Certain Transactions."

6
<PAGE>

RISK FACTORS

The securities offered hereby are highly speculative and should be
purchased only by persons who can afford to lose their entire investment in
the Company. Each prospective investor should carefully consider the
following risk factors, as well as all other information set forth elsewhere
in this Prospectus.

This Prospectus contains certain forward-looking statements. Actual
results could differ materially from those projected in the forward-looking
statements as a result of the factors set forth below and elsewhere in this
Prospectus, including, but not limited to, the success of the Visa pilot
programs, the development of the capacity to accommodate additional and
larger contracts, establishing the ability of TPII software products to
process transactions for larger EFT Systems, acceptance of TPII software
products by a significant number of new customers and the Company's continued
relationship with computer manufacturers.

OPERATING LOSSES; GOING CONCERN UNCERTAINTY INCLUDED AS PART OF AUDITOR'S
REPORT

Although the Company had net income of approximately $52,100 for the six
months ended October 31, 1996, the Company incurred a net loss of $48,380 for
its fiscal year ended April 30, 1996 and a loss before extraordinary item of
$205,472 for its fiscal year ended April 30, 1995. As of October 31, 1996,
the Company had a shareholder's deficit of $633,687, an accumulated deficit
of $2,854,345 and a working capital deficit of $874,445. In addition, as of
October 31, 1996, the Company was not in compliance with several covenants of
certain of its long-term debt obligations, including defaulting on the
payment of principal and interest. However, the Company has received waivers
with respect to such noncompliance and intends to repay the deferred
principal and interest with a portion of the net proceeds of this offering.
The Company's auditor, in its report regarding the Company's financial
statements as of April 30, 1996, indicated that, since the Company had a
working capital deficiency and a shareholders' deficit as of April 30, 1996,
substantial doubt exists as to the Company's ability to continue as a going
concern. There can be no assurance as to the future profitability of the
Company. See "Selected Financial Data" and "Management's Discussion and
Analysis of Financial Condition and Results of Operations."

RELIANCE ON TPII FAMILY OF SOFTWARE PRODUCTS

The Company derived approximately 90%, 96% and 95% of its total revenues
for the fiscal years ended April 30, 1995 and 1996, and the six months ended
October 31, 1996, respectively, from the licensing of its TPII family of
software products, services related to those products and isolated hardware
sales. The TPII software products and related services are expected to
provide the substantial majority of the Company's revenues in the forseeable
future. The Company's results will depend upon continued market acceptance of
its TPII software products and related services as well as the Company's
ability to continue to adapt and configure its TPII software products to meet
the changing needs of its customers. Any reduction in demand for TPII
software products would have a material adverse effect on the Company's
financial condition and results of operations. See "Management's Discussion
and Analysis of Financial Condition and Results of Operations."

DEPENDENCE ON REVENUES FROM FOREIGN SOURCES

The Company derived approximately 91%, 82% and 50% of its total revenues
for the fiscal years ended April 30, 1995 and 1996, and the six months ended
October 31, l996, respectively, from the licensing of TPII software products
to customers outside the United States, primarily banks and other financial
institutions located in emerging countries and former Eastern Bloc nations.
Foreign revenues generally are subject to certain risks, including collection
of accounts receivable, compliance with foreign regulatory requirements,
variability of foreign economic conditions and changing restrictions imposed
by United States export laws. To date, all foreign customers have paid the
Company in United States currency, but if future customers pay in foreign
currencies, the Company would be subject to fluctuations in exchange rates.
There can be no assurance that the Company will be able to manage the risks
related to licensing its TPII software products and selling its services in
foreign markets. See "Business -- Marketing and Customers."

DEPENDENCE ON EFT MARKET

The TPII software products are solely for installation in the EFT market,
making the Company susceptible to adverse events in that market. For example,
a decrease in the number of EFT transactions by the general pub-

7
<PAGE>

lic or in spending by financial institutions for software and related
services could result in a smaller overall market for EFT software. These
factors, as well as others negatively affecting the EFT market, could have a
material adverse effect on the Company's financial condition and results of
operations. See "Business -- The EFT Market."

POSSIBLE NEED FOR ADDITIONAL FINANCING

The Company believes that the proceeds of this offering, together with
anticipated cash flow from operations, will be sufficient to finance the
Company's working capital requirements for a period of at least 24 months
following the completion of this offering. However, since a portion of the
license fee for TPII software products is not paid until acceptance by the
customer and, as a result, the Company is required to fund a portion of the
costs of configuration and installation of such products from available
capital, any substantial increase in the number of installations or delay in
payment could create a need for additional financing. In such event, there
can be no assurance that additional financing will be available on terms
acceptable to the Company, or at all. The Underwriter's consent is required
before the Company may complete certain types of financing. The obligation to
obtain such consent may limit the Company's ability to complete such
financing. See "Management's Discussion and Analysis of Financial Condition
and Results of Operations" and "Underwriting."

DEPENDENCE ON RELATIONSHIPS WITH COMPUTER MANUFACTURERS

In 1994, the Company entered into a strategic alliance with Digital
Equipment International BV ("DEC"), pursuant to which such computer
manufacturer agreed to market on a nonexclusive basis TPII software products
in connection with DEC's world-wide sale of its computers for EFT Systems. In
connection with DEC's sale of computers for EFT Systems, DEC, rather than the
financial institutions, is generally the licensee of the Company's TPII
software products. For the fiscal years ended April 30, 1995 and 1996 and the
six months ended October 31, 1996, approximately 19%, 14% and 23%,
respectively, of the Company's total revenues were derived pursuant to this
relationship. The Company is, therefore, dependent upon this relationship and
would be adversely affected by the loss of such relationship. The Company has
a similar agreement with Unisys World Trade, Inc. ("Unisys") for Europe and
Africa, but as of the date hereof, the Company has not derived any revenues
pursuant to its relationship with Unisys. In addition, pursuant to an
informal arrangement with IBM Thailand Company Limited ("IBM Thailand"), the
Company licensed its TPII software products, through IBM Thailand, to two
Asian financial institutions utilizing International Business Machine
Corporation ("IBM") computers for their EFT Systems. Revenues from such
licenses represented approximately 19% of the Company's total revenues during
the fiscal year ended April 30, 1996. The Company is currently seeking to
enter into alliances with additional computer manufacturers. See "Business --
Marketing and Customers."

GROWTH DEPENDENT ON EXPANDING CUSTOMER BASE

Approximately 72% and 50% of the Company's software revenues for the
fiscal year ended April 30, 1996 and the six months ended October 31, 1996,
respectively, were derived from the licensing of its TPII software products
to new customers at a fixed price. Although the Company will receive
additional revenues from such customers as a result of providing ongoing
maintenance services in support of its licensed TPII software and may receive
additional revenues for enhancements of the TPII software products, the
Company generally will not receive significant license revenues in a
subsequent period from these customers. Since the Company does not usually
generate repeat business from its customers, the Company will be required to
continually attract new customers in order to increase revenues in the
future. As a result, the Company will incur the higher marketing expenses
generally associated with attracting new customers as compared to marketing
expenses associated with attracting additional business from existing
customers. Moreover, the Company's inability to generate additional business
upon completion of its existing contracts would also have a material adverse
effect on the Company's financial condition and results of operations. See
"Management's Discussion and Analysis of Financial Condition and Results of
Operations" and "Business -- Marketing and Customers."

FLUCTUATIONS IN QUARTERLY REVENUES AND OPERATING RESULTS

8
<PAGE>

a software licensing agreement. These delays are primarily due to extended
periods of software evaluation, contract review and the selection of the
computer system. In addition, following execution of the agreement, the
preparation of functional specifications, customization and installation of
TPII software products and the training by the Company of the financial
institution's personnel in the use of the TPII software products take an
average of six to twelve months, depending upon the timing of installation
and final acceptance of the EFT System by the customer. Accordingly, the
Company's revenues may fluctuate dramatically from one quarter to another,
making quarterly comparisons extremely difficult and not necessarily
indicative of any trend or pattern for the year as a whole. Additional
factors effecting quarterly results include the timing of revenue recognition
of advance payments of license fees, the timing of the hiring or loss of
personnel, capital expenditures, operating expenses and other costs relating
to the expansion of operations, general economic conditions and acceptance
and use of EFT. See "Selected Financial Data" and "Management's Discussion
and Analysis of Financial Condition and Results of Operations."

ATTRACTION AND RETENTION OF KEY PERSONNEL

The Company's success depends on Frank Pascuito and Charles Caserta, its
Chief Executive Officer and President, respectively, the loss of either of
whom could have a material adverse effect on the Company's financial
condition and results of operations. Upon completion of this offering, the
Company will use its best efforts to have each of these officers insured
under key person term life policies in the amount of $1,000,000. Upon
completion of this offering, each of these officers will be parties to
employment agreements with the Company. The Company believes that its future
success also depends on its ability to attract and retain highly-skilled
technical, managerial and marketing personnel, including, in particular,
additional personnel in the areas of research and development, technical
support and project management. Competition for personnel is intense. There
can be no assurance that the Company will be successful in attracting and
retaining the personnel it requires. See "Management."

COMPETITION

The market for EFT software is highly competitive. The Company's TPII
software products face strong competition from proprietary (legacy) and
UNIX-based software. In the international EFT market, well established
worldwide competition includes Transaction Systems Architects, Inc., Deluxe
Data Systems, Inc., SDM International, Inc., S2 Systems, Inc., a subsidiary
of Stratus Computer, Inc. ("Stratus"), SLM Software, Inc., Consolidated
Software and Oasis Systems, whose products run on Tandem Computers
Incorporated ("Tandem") or Stratus fault-tolerant computers with proprietary
operating systems or on IBM host or industry standard computers with UNIX
operating systems. In addition, third party companies provide services for
processing EFT transactions, which eliminate the need for a financial
institution to purchase the Company's software products. Most of the
Company's current and potential competitors have significantly greater
financial, marketing, technical and other competitive resources than the
Company. See "Business -- Competition."

TECHNOLOGICAL CHANGE

The market for software in general is characterized by rapid changes in
computer and software technology and is highly competitive with respect to
the need for timely product innovation and new product introductions. If, for
example, the UNIX operating system were no longer a significant operating
system, the Company would be adversely affected if it could not adapt its
TPII software products to whatever operating system becomes dominant. The
Company believes that its future success, of which there can be no assurance,
depends upon its success in enhancing the performance of its current TPII
software products, such as the ability to handle higher volumes of card
transactions and the adaptation of its software products to smart card
technology, and developing new software products that address the
increasingly complex needs of customers. See "Business--Software Development
and Future Products."

DEPENDENCE ON PROPRIETARY TECHNOLOGY

The Company relies on a combination of trade secret and copyright laws,
nondisclosure and other contractual and technical measures to protect its
proprietary rights in its software products. There can be no assurance that
these provisions will be adequate to protect its proprietary rights. In
addition, the laws of certain foreign

9
<PAGE>

countries do not protect intellectual property rights to the same extent as
the laws of the United States. Although the Company believes that its
intellectual property rights do not infringe upon the proprietary rights of
third parties, there can be no assurance that third parties will not assert
infringement claims against the Company. See "Business -- Proprietary
Rights."

BROAD DISCRETION IN USE OF PROCEEDS

Approximately 32% of the net proceeds of this offering will be applied to
working capital. In addition, the application of the balance of the proceeds
may differ considerably from the estimates set forth herein due to changes in
the economic climate and/or the Company's planned business operations or
unanticipated complications, delays and expenses. According, management of
the Company will have broad discretion over the use of proceeds.

LACK OF MARKET; ARBITRARY DETERMINATION OF OFFERING PRICE; POSSIBLE
VOLATILITY OF STOCK PRICE

Prior to this offering, there has been no public market for the Preferred
Stock or Warrants, and only a very limited trading market for the Common Stock.
The Preferred Stock, Warrants and Common Stock have been approved for quotation
on The Nasdaq SmallCap Market. The Preferred Stock and Warrants have also been
approved for listing on the BSE. Nevertheless, there can be no assurance that an
active market in any securities of the Company will develop or be sustained
after this offering. In the absence of an active public trading market, an
investor may be unable to liquidate his or her investment. The initial public
offering prices and other terms of the Preferred Stock and Warrants were
determined by negotiations between the Company and the Underwriter and are not
necessarily related to the Company's assets, earnings, book value per share, its
results of operations or any other generally accepted criteria of value and
should not be construed as indicative of their value. See "Underwriting."

There has been volatility in the market price of securities of technology
companies. Future announcements concerning the Company or its competitors,
including variations in financial results, changes in general market
conditions, governmental regulations or other developments may have a
significant impact on the market price of each of the Company's securities
and could cause the market price of each of the Company's securities to
fluctuate significantly. In addition, broad market fluctuations and general
economic or political conditions may adversely affect the market price of
each of the Company's securities, regardless of the Company's actual
performance.

NONPAYMENT OF DIVIDENDS

SHARES ELIGIBLE FOR FUTURE SALE

Upon completion of this offering, the Company will have outstanding an
aggregate of 1,200,000 shares of Preferred Stock and 1,072,365 shares of Common
Stock. All of the shares of Preferred Stock and 585,318 shares of Common Stock
will be freely tradable without restriction or further registration under the
Securities Act. Of the remaining 487,047 shares of Common Stock outstanding,
396,892 shares are "restricted" shares that are owned by "affiliates" of the
Company as such terms are defined under the Securities Act and 90,155 shares are
"restricted" shares that are owned by nonaffiliates of the Company. Absent
registration under the Securities Act, the sale of such shares of Common Stock
is subject to Rule 144, as promulgated under the Securities Act. In general,
under Rule 144, subject to the satisfaction of certain other conditions, a
person, including an affiliate of the Company, who has beneficially owned
restricted shares of Common Stock for at least two years is entitled to sell in
brokerage transactions, within any three-month period, a number of shares that
does not exceed the greater of 1% of the total number of outstanding shares of
the same class, or if the Common Stock is quoted on The Nasdaq Stock Market or a
national stock exchange, the average weekly trading volume during the four
calendar weeks preceding the sale. In February 1997, the Commission adopted an
amendment to Rule 144 that reduces the holding period of restricted securities
from two years to one year, which amendment will be effective commencing 60 days
after such

<PAGE>

amendment is published in the Federal Register. No prediction can be made as
to the effect, if any, that sales of shares of Common Stock or the
availability of such shares for sale will have on the market prices of the
Company's securities prevailing from time to time. The possibility that
substantial amounts of Common Stock may be sold under Rule 144 into the
public market may adversely affect prevailing market prices for the Preferred
Stock and the Warrants and could impair the Company's ability to raise
capital in the future through the sale of equity securities. See "Shares
Eligible for Future Sale."

UNDERWRITER'S LIMITED UNDERWRITING EXPERIENCE; PENDING INVESTIGATION

While certain of the officers of the Underwriter have significant
experience in corporate financing and the underwriting of securities, the
Underwriter has previously underwritten only three public offerings.
Accordingly, there can be no assurance that the Underwriter's limited public
offering experience will not affect the Company's offering of the Preferred
Stock and Warrants and subsequent development of a trading market, if any, in
such securities. In addition, the Underwriter is aware that the Commission is
investigating certain of the Underwriter's trading practices and mark-ups in
connection with the securities of an issuer whose 1995 public offering was
underwritten by the Underwriter. There can be no assurance that this
investigation will not adversely and materially affect this offering or
subsequent trading in the Preferred Stock, Warrants and/or Common Stock of
the Company. See "Underwriting."

DILUTIVE EFFECT OF OPTIONS, WARRANTS AND CONVERTIBLE SECURITIES

Upon completion of this offering, the Company will sell to the Underwriter
warrants to purchase up to 120,000 shares of Preferred Stock and up to
170,000 Warrants. The Underwriter's Warrants will be exercisable at any time
during the four-year period commencing one year from the date of this
Prospectus. In addition, as of the date hereof, there were (i) options and
warrants outstanding to purchase an aggregate of 489,724 shares of Common
Stock, with exercise prices ranging from $.66 to $5.00 per share and which
will expire on various dates through 2007 and (ii) certain outstanding debt
convertible into a maximum of 59,524 shares of Common Stock (subject to
adjustment pursuant to anti-dilution provisions). If the Underwriter's
Warrants and the outstanding options and warrants are exercised and the
outstanding debt is converted, the percentage of capital stock then held by
the existing stockholders will be reduced. Furthermore, the Underwriter's
Warrants and the outstanding options and warrants can be expected to be
exercised at a time when the Company would be able to obtain funds from the
sale of Preferred Stock, Common Stock or other securities at a price higher
than the exercise prices thereof. See "Description of Securities" and
"Underwriting."

DILUTION

The initial public offering price of the Preferred Stock is substantially
higher than the net book value of the currently outstanding Common Stock.
Therefore, purchasers of the Preferred Stock will experience immediate and
substantial dilution in the net tangible book value of the capital stock of
the Company in the amount of $3.30 per share (66%). See "Dilution."

PORTION OF PROCEEDS TO REPAY DEBT

Approximately $593,000 (11%) of the net proceeds of this offering will be
used to repay a portion of outstanding debt and interest of the Company. See
"Use of Proceeds."

THE NASDAQ SMALLCAP MARKET ELIGIBILITY AND MAINTENANCE REQUIREMENTS; POSSIBLE
DELISTING OF SECURITIES FROM THE NASDAQ SMALLCAP MARKET; RISKS OF LOW-PRICED
STOCKS

The Preferred Stock, Warrants and Common Stock has been approved for
quotation on The Nasdaq SmallCap Market. The Preferred Stock and Warrants have
also been approved for listing on the BSE. The Commission has approved rules
imposing criteria for listing of securities on The Nasdaq SmallCap Market,
including standards for maintenance of such listing. For continued listing, a
company, among other things, must have at least $2,000,000 in total assets and
$1,000,000 in capital and surplus, and the listed security must have a minimum
bid price of $1.00 per share. Recently, a proposal has been made to increase the
continued listing criteria on The Nasdaq SmallCap Market. If implemented as
proposed, stricter criteria for continued listing on The Nasdaq SmallCap Market
would be imposed, including the implementation of a $2,000,000 net tangible
assets test, higher public float and market value of public float criteria and
the imple-

11
<PAGE>

mentation of new corporate governance rules. No assurance can be given that
such proposal will be adopted, or, if adopted, will be adopted in its current
form.

In the event that the Company is unable to satisfy the maintenance
requirements and its securities are subsequently delisted from The Nasdaq
SmallCap Market, trading of the Preferred Stock, Warrants and Common Stock
would be conducted on the NASD's OTC Bulletin Board or in the "pink sheets."
In the absence of the Preferred Stock or Common Stock being quoted on The
Nasdaq SmallCap Market, or the Company having at least $2,000,000 in
stockholders' equity, trading in the Preferred Stock, Warrants and Common
Stock would be covered by Rule 15g-9 promulgated under the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), for non-Nasdaq and
non-exchange listed securities. Under such rule, broker-dealers who recommend
"penny stocks" to persons other than established customers and institutional
accredited investors must make a special written suitability determination
for the purchaser and receive the purchaser's written agreement to a
transaction prior to sale. The Commission defines a "penny stock" to be any
equity security that has a market price of less than $5.00 per share, subject
to certain exceptions. Such exceptions include an equity security listed on
The Nasdaq Stock Market, or an equity security issued by an issuer that has
(i) net tangible assets of at least $2,000,000, if such issuer has been in
continuous operation for three years, (ii) net tangible assets of at least
$5,000,000, if such issuer has been in continuous operation for less than
three years, or (iii) average revenue of at least $6,000,000 for the
preceding three years.

If the Company's securities were to become subject to the regulations
applicable to penny stocks, the market liquidity for the securities would be
severely affected, limiting the ability of broker-dealers to sell the
securities and the ability of purchasers in this offering to sell their
securities in the secondary market. There is no assurance that trading in the
Company's securities will not be subject to these or other regulations that
would adversely affect the market for such securities.

CONTROL BY MANAGEMENT

Upon consummation of this offering, the Company's officers and directors
will beneficially own, in the aggregate, approximately 27.3% of the
outstanding shares of capital stock. Accordingly, such persons, acting
together, will be in a position to exercise influence over the election of
the Company's Board of Directors.

NEED FOR CURRENT PROSPECTUS; NON-REGISTRATION IN CERTAIN JURISDICTIONS OF
SHARES UNDERLYING THE WARRANTS

The Warrants have been registered pursuant to a Registration Statement
filed with the Commission under the Securities Act, of which this Prospectus
is a part. The Warrants may be exercised and their underlying shares of
Preferred Stock may be sold in any public market that may develop for the
securities commencing two years after the date hereof or earlier upon the
occurrence of certain events, but only during the period in which a current
prospectus covering such shares is in effect. Accordingly, unless the
Registration Statement is kept current by the Company and measures to qualify
or keep qualified such securities in certain states are taken, investors
holding the Warrants will not be able to exercise the Warrants or sell the
underlying shares of Preferred Stock issuable upon exercise of the Warrants
in the public market. The Company has agreed to use its reasonable best
efforts to qualify and maintain a current registration statement covering
such shares of Preferred Stock during the term of the Warrants. There can be
no assurance, however, that the Company will be able to maintain a current
registration statement. Furthermore, although the Warrants will not knowingly
be sold to purchasers in jurisdictions in which they are not registered or
otherwise qualified for sale, purchasers may buy Warrants in the aftermarket
or may move to jurisdictions in which the shares of Preferred Stock issuable
upon exercise of the Warrants are not so registered or qualified during the
period that the Warrants are exercisable. In such event, the Company would be
unable to issue shares to those persons desiring to exercise their Warrants
unless and until the shares could be registered or qualified for sale in the
jurisdiction in which such purchasers reside, or an exemption to such
qualification exists or is granted in such jurisdiction. No assurance can be
given as to the ability of the Company to effect any required registration or
qualification of the Preferred Stock in any jurisdiction in which
registration or qualification has not already been completed.Although the
Company does not presently intend to do so, the Company reserves the right to
call the Warrants for redemption whether or not a current prospectus is in
effect or such underlying shares are not, or cannot be, registered in the
applicable states. If the Company is unable to register or qualify the shares
in a particular state and no exemption to such registra-

12
<PAGE>

tion or qualification was available in such jurisdiction, in order to realize
any economic benefit from the purchase of the Warrants, a holder might have
to sell the Warrants rather than exercising them. See "Description of
Securities -- Warrants."

POTENTIAL ADVERSE EFFECT OF REDEMPTION OF WARRANTS

The Warrants offered hereby are redeemable, in whole or in part, at a
price of $.10 per Warrant, commencing one year after the date of this
Prospectus and prior to their expiration with the Underwriter's consent;
provided that (i) prior notice of not less than 30 days is given to the
warrantholders; (ii) the last sale price of the Preferred Stock on each of
the 20 consecutive days of trading of the Preferred Stock ending on the third
business day prior to the date on which the Company gives notice of
redemption has been at least $8.00 per share; and (iii) warrantholders shall
have exercise rights until the close of the business day preceding the date
fixed for redemption. Notice of redemption of the Warrants could force the
holders to exercise the Warrants and pay the exercise price at a time when it
may be disadvantageous for them to do so, or to sell the Warrants at the
current market price when they might otherwise wish to hold them, or to
accept the redemption price, which may be substantially less than the market
value of the Warrants at the time of redemption. In addition, the issuance of
additional shares of Preferred Stock upon exercise of the Warrants may have
an adverse effect upon the prevailing market price of the Preferred Stock.
See "Description of Securities -- Warrants."

UNDERWRITER'S INFLUENCE ON THE MARKET

A significant number of shares of Preferred Stock and Warrants offered
hereby may be sold to customers of the Underwriter. Such customers
subsequently may engage in transactions for the sale or purchase of such
securities through or with the Underwriter. Although it has no obligation to
do so, the Underwriter intends to engage in market-making activities or
solicited broker's activities with respect to the purchase or sale of
Preferred Stock and Warrants in The Nasdaq SmallCap Market or other
over-the-counter market where such securities will trade. However, no
assurance can be given that the Underwriter will continue to participate as a
market maker in the securities of the Company or that other broker/dealers
will make a market in such securities. The Underwriter also has the right to
act as the Company's exclusive agent in connection with any future
solicitation of warrantholders to exercise their Warrants. Unless granted an
exemption by the Commission under the applicable Exchange Act rules and
regulations, the Underwriter will be prohibited from engaging in any market-
making activities or solicited brokerage activities with regard to the
Company's securities during a period prior to the commencement of any such
solicitation and ending on the later of the termination of such solicitation
activity or the termination (by waiver or otherwise) of any right the
Underwriter may have to receive a fee for the exercise of the Warrants
following such solicitation. As a result, the Underwriter and soliciting
broker/dealers may be unable to continue to make a market in the Company's
securities during certain periods while the exercise of the Warrants is being
solicited. Such a limitation, while in effect, could impair the liquidity and
market price of the Company's securities. See "Underwriting."

USE OF PROCEEDS

The net proceeds to the Company from the sale of the Preferred Stock and
Warrants in this offering are estimated to be approximately $5,053,000
($5,858,185 if the over-allotment option is exercised in full), after
deducting the underwriting discounts and the estimated offering expenses
payable by the Company. The Company intends to use the proceeds as follows:

<TABLE>
<CAPTION>
Percentage of
Purpose Amount Net Proceeds
------------------------------------------------------------------------ ----------- ---------------
<S> <C> <C>
Expand contract capabilities by increasing personnel and
computer-related equipment $ 900,000 18%
Expand foreign marketing and licensing activities, including hiring of
personnel and increasing advertising and public relations 750,000 15%
Research and development for new and existing products 600,000 12%
Purchase and renovate new office space 600,000 12%
Repayment of debt and interest(1) 593,000 11%
Working capital (2)(3) 1,610,000 32%
----------- ---------------
TOTAL 5,053,000 100%
=========== ===============
</TABLE>

13
<PAGE>

- ------
(1) Represents repayment of (i) approximately $51,000 of deferred principal
and interest payable to the North Greenbush Industrial Development Agency
(the "NG Loan"), (ii) approximately $21,000 of deferred interest payable
to the New York State Science and Technology Foundation (the "Technology
Loan") and (iii) $500,000 principal amount of notes (the "Notes") issued
in September 1996 (the "Bridge Financing") and approximately $21,000 of
accrued interest thereon payable to unrelated third parties. The NG Loan,
the principal amount of which is $220,000, was originally made in January
1989, bears interest at 7 1/2% per annum and is payable in monthly
installments of approximately $3,800 between May 1996 and April 2002. The
Technology Loan, the principal amount of which is $250,000, was
originally made in July 1989, bears interest at 7 1/2% and is payable in
installments of $80,000, $80,000 and $90,000 in April 1998, April 1999
and April 2000, respectively. The Notes bear interest at 12% per annum
and are due on the earlier of (i) the closing of this offering or (ii)
March 24, 1998. The proceeds of the Notes were used by the Company for
the payment of indebtedness, including deferred salaries, interest and
commissions, and for working capital and general corporate purposes. See
"Certain Transactions."

(2) Includes the payment of $20,000 to the Underwriter upon the consummation
of this offering for services as a financial consultant to be performed
over a period of two years commencing upon the consummation of this
offering. See "Underwriting."

(3) If all or any portion of the over-allotment option is exercised, the net
proceeds therefrom will be used for working capital.

The foregoing represents the Company's estimate of the allocation of the
net proceeds of this offering, based upon the current status of its
operations and anticipated business plans. It is possible, however, that the
application of funds will differ considerably from the estimates set forth
herein due to changes in the economic climate and/or the Company's planned
business operations or unanticipated complications, delays and expenses. Any
reallocation of the net proceeds will be at the discretion of the Board of
Directors of the Company.

Pending the foregoing uses, a portion of the net proceeds of this offering
may be invested in certificates of deposit, United States government
obligations, prime commercial paper, money market funds or similar short-
term investments.

14
<PAGE>

PRICE RANGE OF COMMON STOCK

Prior to the date of this Prospectus, the Company's Common Stock has been
quoted on the OTC Bulletin Board under the symbol IFSE. Commencing on the date
of this Prospectus, the Common Stock will be quoted on The Nasdaq SmallCap
Market under the symbol "MNYC." Prior to the date of this Prospectus, the Common
Stock has been traded, if at all, on a sporadic basis; therefore, the prices
quoted below are not necessarily indicative of market value. The following
table, which is restated to reflect a 1-for-10 reverse split of the Common Stock
effectuated at the close of business on November 8, 1996, sets forth the range
of the high and low bid quotations of the Common Stock on the OTC Bulletin Board
for the periods indicated.

<TABLE>
<CAPTION>
Quarter Ended High* Low*
---------------- ------- -------
<S> <C> <C>
July 31, 1994 $2.00 $1.25
October 31, 1994 $1.50 $ .63
January 31, 1995 $1.50 $ .63
April 30, 1995 $1.50 $ .63
July 31, 1995 $1.50 $1.50
October 31, 1995 $1.50 $1.50
January 31, 1996 $1.88 $1.50
April 30, 1996 $2.50 $1.88
July 31, 1996 $2.50 $2.50
October 31, 1996 $4.38 $2.50
</TABLE>

- ------
* The source of such quotations is the National Quotation Bureau, Inc.

On February 20, 1997, the closing bid price of the Common Stock was
$5.00. The above quotations reflect inter-dealer prices, without mark-up,
mark-down or commission, and may not represent actual transactions.

As of December 31, 1996, there were approximately 280 recordholders of the
Common Stock. The Company believes that there are more than 700 beneficial
owners of Common Stock.

DIVIDEND POLICY

No dividends will be paid on the Preferred Stock, except that holders of
Preferred Stock will be entitled to receive dividends if dividends are
declared with respect to the Common Stock and, in such event, ratably with
the holders of the Common Stock. The Company plans to retain any future
earnings for use in its business and, accordingly, the Company does not
anticipate paying dividends on its Common Stock and Preferred Stock in the
foreseeable future. The payment of any dividends on the Common Stock and
Preferred Stock will be at the discretion of the Company's Board of Directors
and will be dependent upon the Company's results of operations, financial
condition, capital requirements, contractual restrictions and other factors
deemed relevant by the Board of Directors.

15
<PAGE>

CAPITALIZATION

The following table sets forth the capitalization of the Company (i) at
October 31, 1996 and (ii) as adjusted to reflect the sale of the 1,200,000
shares of Preferred Stock and 1,700,000 Warrants offered hereby, and the
application of the estimated net proceeds therefrom. See "Use of Proceeds."
This section should be read in conjunction with the Company's Consolidated
Financial Statements and related notes appearing elsewhere in this
Prospectus.

<TABLE>
<CAPTION>
October 31, 1996
------------------------------
Actual As Adjusted
------------- -------------
<S> <C> <C>
Total short-term debt, including current maturities of long term debt $ 548,886 $ 29,025
------------- -------------
Total long-term debt, less current maturities ....................... 436,394 436,394(1)
------------- -------------
Shareholders' equity (deficit):
Preferred Stock, $.001 par value; 25,000,000 shares authorized; none
issued or outstanding; 1,200,000 shares of Series A Convertible
Preferred Stock issued and outstanding as adjusted(2) .............. $ 0 $ 1,200
Common Stock, $.001 par value; 25,000,000 shares authorized;
1,059,730 shares issued and outstanding; 1,059,730 shares issued and
outstanding as adjusted(3)(4) ...................................... 1,060 1,060
Additional paid-in capital .......................................... 2,219,598 7,271,398
Accumulated deficit ................................................. (2,854,345) (2,854,345)
------------- -------------
Total shareholders' equity (deficit) ................................ $ (633,687) $ 4,419,313
============= =============

</TABLE>

- ------
(1) Exclusive of long-term debt expected to be incurred upon the financing of
the purchase of the Company's new facility. There can be no assurance
that financing will be available on terms acceptable to the Company, or
at all. See "Business -- Properties."

(2) Does not include (i) 1,700,000 shares of Preferred Stock issuable upon
exercise of the Warrants, (ii) 120,000 shares of Preferred Stock issuable
upon exercise of the Underwriter's Warrants and (iii) 170,000 shares of
Preferred Stock issuable upon exercise of the Warrants that are issuable
upon exercise of the Underwriter's Warrants.

(3) Does not include (i) 3,625,000 shares of Common Stock issuable upon
conversion of the Preferred Stock, including the Preferred Stock issuable
upon exercise of the Warrants, the Underwriter's over-allotment option
and the Underwriter's Warrants, (ii) 100,000 shares of Common Stock
issuable upon exercise of the warrants sold in the Bridge Financing,
(iii) 389,724 shares of Common Stock issuable upon exercise of
outstanding stock options and (iv) a maximum of 59,524 shares of Common
Stock issuable upon conversion of certain outstanding debt (subject to
adjustment pursuant to anti-dilution provisions).

(4) On January 10, 1997, the authorized Common Stock was increased to
50,000,000 shares.

16
<PAGE>

DILUTION

At October 31, 1996, the Company had a net tangible book value (deficit)
of $(1,128,658), or $(1.07) per share of outstanding capital stock. Net
tangible book value per share represents the Company's total tangible assets
less total liabilities, divided by the number of shares of capital stock
outstanding. After giving effect to receipt of the estimated net proceeds
from the sale of the 1,200,000 shares of Preferred Stock (after deducting the
estimated offering expenses), the pro forma net tangible book value of the
Company would have been approximately $3,833,363, or approximately $1.70 per
share of outstanding capital stock at October 31, 1996. This represents an
immediate dilution of $3.30 per share, or 66%, to purchasers of Perferred
Stock in this offering. The following table illustrates the per share
dilution to be incurred by the public investors in this offering:

<TABLE>
<CAPTION>
Initial offering price per share ............................. $5.00
<S> <C> <C>
Net tangible book value (deficit) per share at October 31,
1996 .................................................... $(1.07)
Increase per share attributable to shares offered hereby ... 2.77
-------

Pro forma net tangible book value per share after this
offering ................................................... 1.70
-------
Dilution of net tangible book value per share to new investors $3.30
=======
</TABLE>

17
<PAGE>

SELECTED FINANCIAL DATA

The selected consolidated financial data as of April 30, 1996 and for the
fiscal years ended April 30, 1996 and 1995 set forth below have been derived
from the audited consolidated financial statements included herein. Selected
consolidated financial data as of April 30, 1995 set forth below have been
derived from other audited consolidated financial statements. The selected
historical financial data for the six months ended October 31, 1996 and 1995
and as of October 31, 1996 set forth below have been derived from the
Company's unaudited consolidated financial statements included elsewhere
herein and, in the opinion of management, include all adjustments, consisting
solely of normal recurring adjustments, necessary for a fair presentation.
The results of operations for the six months ended October 31, 1996 are not
necessarily indicative of the Company's results of operations to be expected
for the full year. This financial information should be read in conjunction
with "Management's Discussion and Analysis of Financial Condition and Results
of Operations" and the Consolidated Financial Statements and notes thereto
appearing elsewhere herein.

SELECTED CONSOLIDATED FINANCIAL DATA
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)

STATEMENT OF OPERATIONS DATA:

</TABLE>

BALANCE SHEET DATA:

<TABLE>
<CAPTION>
April 30,
------------------
1996 1995 October 31, 1996
------- ------- ----------------
(unaudited)
<S> <C> <C> <C>
Working capital (deficit) ........... (798) (700) (874)
Total assets ........................ 1,307 1,222 2,070
Total long-term debt ................ 452 635 436
Total stockholders' equity (deficit) (728) (832) (634)

</TABLE>

18
<PAGE>

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

INTRODUCTION

The Company is engaged in the business of developing, marketing, and
supporting software for the EFT market. Substantially all of the Company's
revenues have resulted from the licensing of its family of TPII software
products. The preparation of functional specifications, customization and
installation of TPII software products and the training by the Company of the
financial institution's personnel in the use of the TPII software products
take an average of six to twelve months, depending upon the timing of
installation and final acceptance of the EFT System by the customer. The
customer pays 30% to 50% of the licensing fees upon execution of the
licensing agreement and also makes progress payments prior to acceptance. The
Company recognizes revenue under the percentage of completion method for
software installation contracts. The percentage of completion method is
measured by estimates of the progress towards completion as determined by
costs incurred. The Company also derives recurrent revenues from furnishing
certain maintenance services to its customers for the TPII software and may
also receive additional revenues for additional training of customer
personnel and consulting services (collectively "service revenues"). With
respect to revenues for maintenance services, the Company generally receives
annual payments at the beginning of the contract year. Such payments are
reflected as deferred revenues and are recognized ratably during such year.

The Company entered into an agreement with Visa in July 1996 for the
licensing and installation of its TPII smart card software in connection with
the operation of up to seven pilot programs. The license for each pilot
program is for a term of 24 months commencing on the date such pilot program
goes on-line. As of the date hereof, Visa has selected financial institutions
in various countries to conduct five of the pilot programs. Revenues from the
licensing of the TPII smart card software will be recognized in the same
manner as revenues from the licensing of the other TPII software products.

Occasionally, the Company resells hardware to its customers in conjunction
with its TPII software installation contracts. Since such sales are isolated
and random the Company is unable to predict the amount of any future hardware
revenues. Revenues from these occasional hardware sales are recognized when
invoiced to the customer.

RESULTS OF OPERATIONS
SIX MONTHS ENDED OCTOBER 31, 1996 COMPARED WITH SIX MONTHS ENDED OCTOBER 31,
1995

Total revenues of $1,586,985 for the six months ended October 31, 1996
represent an increase of $892,260, or 128.4%, over total revenues of $694,725
for the six months ended October 31, 1995. This increase in total revenues
resulted primarily from a substantial increase in licensing of TPII software
products. Revenues from the licensing and installation of TPII software
products were $1,076,761 for the six months ended October 31, 1996, as
compared to $445,614 for the six months ended October 31, 1995. Service
revenues for the six months ended October 31, 1996 increased by $122,932, or
60.2%, over service revenues for the six months ended October 31, 1995. As of
October 31, 1996, the Company had approximately $177,565 of deferred
maintenance service revenues. Service revenue growth is expected to continue
as long as the number of licenses for TPII software products increases and
the customers continue to utilize such software products.

Revenues from licensing of TPII software products in countries outside the
United States accounted for 49.5% of total revenues for the six months ended
October 31, 1996 as compared to 81.6% for the six months ended October 31,
1995. The decline as a percentage of total revenues resulted primarily from
an increase in domestic software revenues. Such domestic software revenues
increased by approximately $543,000, primarily as a result of revenues
recognized from the smart card pilot programs. The Company nevertheless
expects total revenues from foreign countries to continue to be a significant
portion of its revenues in the future.

Gross profit, as expressed as a percentage of total revenues, decreased to
75.6% for the six months ended October 31, 1996, as compared to 76.5% for the
six months ended October 31, 1995. This slight decrease is

19
<PAGE>

associated with the increase in hardware revenues. Hardware revenues
typically have a lower gross margin than the Company's software products.
Hardware revenues were $127,884 for the six months ended October 31, 1996 as
compared to $35,248 for the six months ended October 31, 1995.

Operating expenses of $1,020,823 for the six months ended October 31, 1996
represent an increase of $99,213, or 10.8%, from operating expenses of
$921,610 for the six months ended October 31, 1995. This increase in
operating expenses resulted primarily from an increase in personnel. The
Company expects that operating expenses will increase following completion of
this offering as a result of the planned addition of new personnel in
anticipation of new business relating to the licensing of TPII software
products, including the TPII smart card software.

Capitalized software costs for the six months ended October 31, 1996 were
$153,983, as compared to $78,480 for the six months ended October 31, 1995.
This increase in capitalized software costs resulted primarily from costs
incurred with respect to the TPII smart card software technology. Such
capitalized costs are being amortized on a straight line basis over the
estimated five year marketing lives of the software.

Net income was $52,051 for the six months ended October 31, 1996, as
compared to a net loss of $414,325 for the six months ended October 31, 1995,
primarily as a result of substantially increased licensing of TPII software
products and increased service revenues.

FISCAL YEAR ENDED APRIL 30, 1996 COMPARED TO FISCAL YEAR ENDED APRIL 30,
1995

Total revenues of $2,440,783 for the fiscal year ended April 30, 1996
represent an increase of $399,526, or 19.6%, over total revenues of
$2,041,257 for the fiscal year ended April 30, 1995. This increase in total
revenues resulted primarily from increased licensing of TPII software
products. Revenues from the licensing and installation of TPII software
products were $1,955,657 for the fiscal year ended April 30, 1996, as
compared to $1,638,004 for the fiscal year ended April 30, 1995, representing
an increase of $317,653, or 19.4%.

Revenues from licensing of software in countries outside the United States
accounted for 82% of total revenues for the fiscal year ended April 30, 1996
as compared to 91% for the fiscal year ended April 30, 1995 primarily because
of an increase in software revenues resulting from licensing agreements with
Standard Federal Bank and Lockheed Federal Credit Union, each a United States
financial institution. However, the Company expects total revenues from
foreign countries to continue to be a significant portion of its revenues in
the future.

Service revenues were $412,743 for the fiscal year ended April 30, 1996,
as compared to $280,080 for the fiscal year ended April 30, 1995,
representing an increase of $132,663. The increased service revenues in
fiscal 1996 reflects an increase in customers utilizing licensed TPII
software products. As of April 30, 1996, the Company had $217,876 in deferred
maintenance service revenues.

Operating expenses of $1,933,652 for the fiscal year ended April 30, 1996
represent an increase of $77,023, or 4.1%, over operating expenses of
$1,856,629 for the fiscal year ended April 30, 1995. This increase resulted
primarily from an increase in technical personnel hired in anticipation of
projected licenses of TPII software products for the fiscal year ended April
30, 1996 (although the actual number of licenses for the year ended April 30,
1996 ultimately proved to be lower than projected). Upon completion of this
offering, the Company intends to increase its technical and marketing
personnel.

The Company incurred a net loss of $48,380 for the fiscal year ended April
30, 1996 as compared to net income of $172,215 for the fiscal year ended
April 30, 1995. Net income resulted from an extraordinary gain recognized in
connection with debt restructuring and extinguishments (i.e., debt
forgiveness). Without giving effect to the extraordinary gain, the Company
incurred an operating loss of $205,472 for the fiscal year ended April 30,
1995.

The Company had net operating loss carryforwards of approximately
$2,200,000 as of April 30, 1996. As a result of this offering, the use of
such net operating loss carryforwards as an offset against future taxable
income in any particular year will be significantly limited.

LIQUIDITY AND CAPITAL RESOURCES

The Company's primary source of funds has been operating revenue. Although
total revenues increased for the fiscal year ended April 30, 1996 by
approximately 19.6%, the Company's working capital deficit increased

20
<PAGE>

to $798,225 as of April 30, 1996 from $700,196 as of April 30, 1995. As a
result, the Company was not able to meet scheduled principal and interest
payments on its outstanding debt during fiscal 1996 nor pay its trade
creditors on a current basis. Although software and service revenues
increased for the six months ended October 31, 1996, the Company's net
working capital deficit as of October 31, 1996 increased to $874,445,
primarily as a result of the funding of noncurrent assets such as capitalized
software costs, the purchase of equipment and deferred offering costs. The
Company obtained approximately $500,000 from the Bridge Financing in
September 1996. The Company believes that anticipated revenues from
operations for the fiscal year ending April 30, 1997, as well as proceeds
from the Bridge Financing, will be sufficient to meet current debt service
requirements and operating costs of the Company through April 30, 1997.
Nevertheless, the Company requires additional working capital in order to
implement its plans to solicit and perform new business. The Company also
believes an improved working capital position also is necessary to attract
potential customers who are reluctant to do business with firms they perceive
to be undercapitalized.

A portion of the net proceeds will be used to satisfy past due amounts
under the NG Loan and the Technology Loan and also to repay the Notes.

QUARTER TO QUARTER SALES AND EARNING VOLATILITY

Quarterly revenues and operating results have fluctuated and will
fluctuate as a result of a variety of factors. The Company can experience
long delays (i.e., between three to twelve months) before a customer executes
a software licensing agreement. These delays are primarily due to extended
periods of software evaluation, contract review and the selection of the
computer system. In addition following execution of the agreement, the
preparation of functional specifications, customization and installation of
software products and the training by the Company of the financial
institution's personnel in the use of the TPII software products take an
average of six to twelve months, depending upon the timing of installation
and final acceptance of the EFT System by the customer. Accordingly, the
Company's revenues may fluctuate dramatically from one quarter to another,
making quarterly comparisons extremely difficult and not necessarily
indicative of any trend or pattern for the year as a whole. Additional
factors effecting quarterly results include the timing of revenue recognition
of advance payments of license fees, the timing of the hiring or loss of
personnel, capital expenditures, operating expenses and other costs relating
to the expansion of operations, general economic conditions and acceptance
and use of EFT.

INFLATION

The Company has not experienced any meaningful impact on its sales or
costs as the result of inflation.

21
<PAGE>

BUSINESS

INTRODUCTION

The Company is engaged in the business of developing, marketing and
supporting software products for the EFT market. The Company's family of
products, marketed under the name TechNique Plus II ("TPII"), serves as a
UNIX-based manager for EFT Systems. TPII software products are designed to
operate with computers utilizing the UNIX operating system, are written in C
programming language and incorporate Oracle relational database technology
and object oriented design concepts. As a result, TPII software products are
compatible with a significant portion of the industry standard computer
platforms.

An EFT System of a bank or other financial institution processes
transactions involving credit cards and debit cards (e.g., ATM cards). An EFT
System generally consists of one or more of the following in various
configurations: automatic teller machines ("ATMs"), point of sale ("POS")
terminals, a host computer of the financial institution and regional,
national and international Networks, such as CIRRUS, NYCE, MAC or PLUS. TPII
software products primarily route and authorize the processing of
transactions through an EFT System. TPII software is offered in separate
modules which perform different functions, including (i) interfacing with
ATMs, POS terminals, a financial institution's host computer and Network
computers, (ii) updating credit and debit card information, (iii) providing
stand-in authorization for transactions when the financial institution's host
computer is not operating, (iv) computing fees for transactions processed and
(v) generating reports. The TPII software products are installed generally at
the financial institution's main processing facility.

EFT SYSTEMS

Typically, the completion of a debit card or credit card transaction or
the "loading" of value to a smart card involves several steps through an EFT
System. First, the bank customer or a retailer inserts the customer's debit,
credit or smart card issued by the bank into an ATM, POS terminal or smart
card "load" device thereby requiring authorization of a transaction. The
request is routed to a Network or bank computer for authorization; the
authorization message is then returned to the terminal at which the
transaction was originated and the transaction then is completed. The whole
process is generally accomplished within thirty seconds or less. Most EFT
Systems operate twenty-four hours a day, seven days a week.

The routing and authorization of EFT transactions is a complex activity
due to the large number of locations and variety of devices through which
transactions can be generated, the large number of card issuers in the
market, the high transaction volumes, the geographic dispersion of the
Networks, the differing types of authorization and the varied reporting
requirements. In addition, there are many variations to an EFT System. For
example, ATMs, POS terminals or smart card "load devices" may be connected to
one or several Network computers, in which case transaction authorization can
be processed by the Network computer, with authorization and record
information transmitted to the bank computer, if appropriate. Many smaller
banks utilize processing firms for all or portion of their transactions or
several banks establish a joint venture to process credit and debit card
transactions.

THE EFT MARKET

The EFT market has expanded considerably both domestically and
internationally. In the United States, growth has occurred in all sectors of
the market, including ATMs and POS terminals. For example, as of September
1995, there were approximately 122,700 ATMs and 554,300 POS terminals in the
United States, an increase of 12.5% and 47.6%, respectively, from 1994 (Bank
Network News - EFT Network Data Book - 1995

22
<PAGE>

Edition). These ATMs and POS terminals generated in the aggregate
approximately 807.4 million and 64.6 million transactions per month,
respectively, an increase of 14.6% and 36.9%, respectively, from 1994 (Bank
Network News - EFT Network Data Book - 1995 Edition). The number of ATMs in
the United States is expected to increase to 135,000 by 1997 (Investors
Business Daily - 11/21/94). As of March 1995, there were approximately
540,000 ATMs deployed in the world, with predictions of growth to
approximately 937,000 by the year 2000 (Nilson Report - 9/94 and 3/95).
(Statistics and industry estimates referred to herein are based on certain
industry publications, which the Company relies upon in the conduct of its
business and believes are generally relied upon by other industry
participants.)

The Company expects increases in EFT transaction volume and more complex
payment systems to be major trends in the marketplace for the reasons set
forth below:

o Many regions of the world are experiencing economic growth. Moreover,
credit and debit cards are being issued to a larger portion of the
world's population, and consumer use of credit and debit technology is
increasing. Demographic factors should also contribute to EFT
transaction growth, as generations of consumers who are comfortable
with technology gain more wealth.

o Lower technology costs make it more economical to deploy devices and
create the networks necessary to implement EFT systems and move away
from traditional paper-based payment processes.

o Banks find EFT-based transactions attractive, since they provide
fee-based revenue.

o The current trend in bank consolidation may result in nationwide
expansion in ATMs and POS terminals.

o Alternatives to banking at the financial institution's facilities (such
as the Internet) will offer consumers additional ways to access banking
services. This is consistent with efforts of financial institutions to
move transactions from branches to less expensive, unmanned electronic
points of delivery such as "self-service banking" and home banking.
The emergence of smart cards with the stored value option should
further increase the volume of electronic transactions, including the
ability to load value to a card from devices in the home, as well as at
the existing ATM base.

TPII SOFTWARE PRODUCTS

The TPII software products are EFT Systems managers. Such software
products primarily route and authorize the processing of transactions through
an EFT System, thereby enabling the system to interface or communicate with
other systems and Networks, as well as to provide other functions. TPII
software products generally can be configured to (i) act as a front-end to a
financial institution's host computer, (ii) perform as a switch connected to
multiple financial institutions' host computers and Networks or (iii) act as
an authorization-only system for financial transactions.

As a front-end system, TPII software products can intercept transactions
from a financial institution's terminals and route them to the institution's
host computer. This eliminates expenses that may be charged by data
processing facilities or Networks. For example, a transaction initiated by
the customer of a bank at the bank's ATM that is part of a larger shared
Network generally is initially routed to the Network computer for a fee
before it is routed back to the bank's host computer, typically referred to
as an "on-us" transaction. The TPII front-end system, however, routes the
"on-us" transaction directly to the bank for processing, thereby bypassing
the Network.

As a switch, TPII software products can route transactions between
multiple host computers of financial institutions for authorization of
transactions. In this environment, ATMs, POS terminals and smart card
"loading" devices of a financial institution are on-line to such financial
institution's host computer and such host computer is on-line to the TPII
software. If such financial institution's host computer receives a
transaction request from an ATM, POS terminal or smart card "loading" device
requiring an authorization from another financial institution which is part
of the Network, then the request is transmitted to the Network utilizing the
TPII software and the TPII software routes the request to the proper
financial institution's host computer for authorization, which then transmits
the authorization response back to the Network. The TPII software then routes
the authorization response to the original requesting financial institution.
In this environment, the TPII software can also authorize the transaction if
the financial institution from which the authorization is requested is
unavailable.

23
<PAGE>

As an authorization-only system, TPII software products receive
authorization requests from various Network switches. In this environment,
the TPII software is installed at the financial institution's main office,
but is not interfaced with any of that institution's ATMs, POS terminals or
smart card load devices. Instead, it will authorize transactions initiated by
credit cards, debit cards and/or smart cards issued by the institution to its
customers when the customers utilize terminals and devices owned by other
financial institutions. In this environment, a transaction request
originating at another financial institution's ATM, POS terminal or smart
card "loading" device by the customer is transmitted to a Network switch and
the Network switch will route the transaction request to the TPII software.
The TPII software will then route the transaction to the host computer of the
financial institution utilizing TPII software for authorization. If such
institution's host computer is unavailable, then the TPII software will
authorize the transaction and transmit the response back to the proper
Network switch.

TPII software products can be installed at the financial institution's
main office, a branch or at a data processing facility. TPII software
products permit 7-day, 24-hour remote banking by storing customer balance
files and communicating with the customers' in-house computer(s) or data
center(s) on a continuous (real time) or batch (delayed) basis with no
changes required to existing host application software. TPII software
products are capable of sending or receiving messages from ATMs, POS
terminals, Networks and host computers. Such products may authorize
transactions without the necessity of interfacing with the host computer and
can periodically input the transactions into the host computer.

TPII software is offered in separate modules depending on the function to
be performed. Set forth below is a description of the various modules of the
Company's TPII software products:

ATM, POS, Smart Card, Host and Network Interfaces each provide for the
access to and messages between a financial institution's or Network's EFT
System and its associated terminals or processors.
The Card Management Module is responsible for the updating and
maintenance of a relational database of card data. This module is capable
of maintaining the day-to-day history of the existing card base and is
used for both the ordering of new cards and the replacement of lost or
damaged cards.
The Stand-In Module is primarily responsible for the logging of
transactions whenever communications are not available between the EFT
System and the host due to host failure or scheduled host downtime. When
communications are re-established the Stand-In Module is responsible for
sending stand-in transactions to the host.
The Settlement Processing Module is responsible for the computation of
fees for both the Network and issuer transactions processed on an EFT
System and is responsible for generating operational and statistical
reports in industry standard format for terminals, banks and Networks.
The Authorization Module provides, if required, transaction
authorization using various methods.
The Software Distribution Module is responsible for the down-line
loading of various configuration parameters to the ATM terminals and to
encrypt and decrypt the personal identical number (PIN) portion of the
message to or from ATMs. The encryption and decryption processes are
performed by the connected Host Security Module on behalf of the Software
Distribution program.
The Device Monitor Module is responsible for supplying the ATM Network
manager with real time device status monitoring. When the device monitor
module determines the need to inform the manager of a particular
condition, it will send a warning message indicating the problem.

VISA CONTRACT

The Company has adapted its TPII software to manage EFT Systems that
process transactions involving the "loading" of value on smart cards. A smart
card is a plastic card with an electronic chip that acts as a small computer.
These cards can include a stored value feature, which enables the holder to
"load" a fixed amount of purchasing power or cash equivalent on the card as
authorized. As a result, the holder can purchase items or services without
the necessity of carrying cash or entering into a credit card transaction.
For example, the smart card may be activated with $60.00 of purchasing power
by inserting the smart card into a smart card terminal

24
<PAGE>

(i.e. a "loading" device). The card holder then uses the smart card to
purchase a product for $12.00, which reduces the purchasing power of the
smart card to $48.00. The stored value on the card can be changed at a
participating ATM or other terminal. This system is not yet fully
operational.

The Company has developed software for Visa to manage an EFT System that
facilitates the "loading" of value on a smart card through a bank's
terminals. As a result of a successful test of the Company's TPII smart card
software, Visa entered into an agreement with the Company in July 1996 for
the licensing and installation of this software in connection with the
operation of up to seven pilot programs for the purposes of evaluating the
TPII smart card software and other aspects of the smart card system. The
license for each pilot program is for a term of 24 months commencing on the
date such pilot program goes on-line. As of the date hereof, Visa has
selected financial institutions in the following countries to conduct five of
the pilot programs: the United States, the United Kingdom, Japan, Germany and
Italy. The Company anticipates that the first pilot program that will become
operational will be in Germany during the first calendar quarter of 1997.
Although there can be no assurance, the Company anticipates that revenues
from its agreement with Visa will have a material impact on its financial
position during the next 9-12 months.

The Company is also negotiating with a financial institution to implement
the "loading" of value to a smart card adapted for use with that
institution's MasterCard. There can be no assurance that the Company and the
financial institution will enter into an agreement.

LICENSING, SERVICES AND TRAINING

The Company licenses its TPII software products pursuant to a
non-exclusive perpetual licensing agreement. Under these agreements, the
customer receives the non-exclusive right to use one copy of the software
product on designated equipment upon payment of a one-time fixed license fee.
Each financial institution's computer requires a separate copy of the TPII
software and the license portion of the fee is incurred for each copy of the
software installed. The Company trains the financial institution's personnel
in the use of the TPII software products.

The TPII software products generally involve customization to enable the
TPII software to interface with a customer's unique host software and to meet
the particular needs of the customer. For example, each financial institution
has different software operating various ATMs or POS terminals, as well as
bank and Network computers, requiring modification to configure with the
Company's TPII software. Licenses for TPII software products generally begin
at $180,000 and average approximately $300,000 per contract depending upon
the modules selected. Payments under these types of contracts are usually
made in several stages commencing with signing of the license agreement and
then as certain milestones are completed. Following this offering, the
Company intends to evaluate the feasibility of licensing its TPII software
products on a fee-per-transaction basis in addition to, or in lieu of, the
one-time licensing fee structure currently used.

The Company generally warrants its TPII software products for 90 days.
Subsequent to the warranty period of the TPII software products, the Company
provides maintenance services with respect to such software products. Yearly
service fees are typically 15% of the original TPII software license fee,
subject to annual increases based on changes in the Consumer Price Index in
the United States, and are generally payable annually in advance. During the
period of service, the customer receives copies of the Company's latest
standard releases and any software enhancements that the Company considers to
be logical improvements. These releases and enhancements are accompanied by
documentation updates as necessary.

For an additional fee, the Company will provide additional training of
customer personnel. Depending on the complexity of the customer's system,
training can take from 2-4 days to 2-4 weeks.

Oracle Corporation has granted the Company, in exchange for the payment of
royalties to Oracle, a nonexclusive license to use, and grant sublicenses
with the respect to, the Oracle relational database software which is
incorporated into the TPII software products.

SPECIAL DEVELOPMENT CONTRACTS

The Company performs specialized software modifications or enhancements to
its TPII software for its customers, such as enhancing the TPII software to
issue postage stamps at an ATM terminal. The Company generally receives a fee
for the modification and has all proprietary rights to the software developed
and may then include the modification in its standard TPII software products.
The Company finds these contracts to be beneficial because of the resulting
enhancements to its base software products.

25
<PAGE>

MARKETING AND CUSTOMERS

TPII software products generally have been primarily installed in EFT
Systems of banks and other financial institutions located in emerging
countries and former Eastern Bloc nations which operate or are members of
geographically-distributed EFT Systems or Networks servicing large volumes of
transactions through many types of devices. They include the following:
Budapest Bank, Budapest, Hungary; Ceska Sporitelna, Prague, Czech Republic;
Slovak State Savings Bank, Bratislava, Slovak Republic; and Trustee's Saving
Bank, Cork, Ireland. Certain of such financial institutions serve up to 200
ATMs and 1,000 POS terminals. In addition, the Company has recently licensed
its TPII software products to two United States financial institutions,
Standard Federal Bank, Detroit, Michigan and Lockheed Federal Credit Union,
Burbank, California.

In 1994, the Company entered into a strategic alliance with DEC, pursuant
to which such computer manufacturer agreed to market on a nonexclusive basis
TPII software products in connection with DEC's world-wide sale of its
computers for EFT Systems. In connection with DEC's sale of computers for EFT
Systems, DEC, rather than the financial institutions, is generally the
licensee of the Company's TPII software products. For the fiscal years ended
April 30, 1995 and 1996 and the six months ended October 31, 1996,
approximately 19%, 14% and 23%, respectively, of the Company's total revenues
were derived pursuant to this relationship. The Company is, therefore,
dependent upon this relationship and would be adversely affected by the loss
of such relationship. The Company has a similar agreement with Unisys for
Europe and Africa, but as of the date hereof, the Company has not derived any
revenues pursuant to its relationship with Unisys. In addition, pursuant to
an informal arrangement with IBM Thailand, the Company licensed its TPII
software products, through IBM Thailand, to two Asian financial institutions
utilizing IBM computers for their EFT Systems. Revenues from such licenses
represented approximately 19% of the Company's total revenues during the
fiscal year ended April 30, 1996. The Company is currently seeking to enter
into alliances with additional computer manufacturers.

The Company also markets its products directly through Charles J. Caserta,
President of the Company, and Simon J. Theobald, Director of the Sales and
Marketing Division in the Company's European office based in London. The
Company intends to hire additional sales personnel after this offering.

The Company's software product information is disseminated internally
within DEC through in-house newsletters and other promotional tools. Products
are also advertised, to a limited extent, in user publications and at various
trade shows. Upon completion of the offering, the Company intends to engage
an advertising agency to implement a marketing campaign, including
advertising in publications targeted for financial institutions.

BACKLOG AND DEFERRED MAINTENANCE SERVICE REVENUES

BACKLOG

As of October 31, 1996 and 1995, the Company had backlog of approximately
$942,000 and $1,182,000, respectively, in software license fees. The backlog
was higher as of October 31, 1995 as the Company had more license agreements
in process at that date as compared to October 31, 1996. Additionally, the
stages of completion on contracts in process as of October 31, 1995 were
generally less than the stages of completion on contracts in process as of
October 31, 1996. The Company includes in its backlog all license fees not
included as revenues under the percentage of completion method to the extent
that the Company contemplates recognition of the related revenues within one
year. Between November 1, 1996 and December 31, 1996, the Company entered
into a new license agreement with a financial institution for an additional
$303,500 in software license fees. There can be no assurance that the
contracts included in backlog will actually generate the specified revenues
or that the actual revenues will be generated within the one year period.

DEFERRED MAINTENANCE SERVICE REVENUES

As of October 31, 1996 and 1995, the Company had deferred maintenance
service revenues of approximately $178,000 and $120,000, respectively. As
more TPII software products are installed, maintenance service revenues are
expected to increase.

26
<PAGE>

COMPETITION

The development and marketing of software for financial institutions is
highly competitive. The Company encounters both direct and indirect
competition from several different sources which vary depending on the
particular product or services involved and the size of the customer served.
Many of these competitors have greater financial resources than the Company.
In addition, many of the larger financial institutions have developed their
own systems internally. However, the Company believes its TPII software
products will continue to be competitive based on cost and technology.

The Company's TPII software products face strong competition from
proprietary (legacy) and UNIX-based software. In the international EFT
market, well established worldwide competition includes Transaction Systems
Architects, Inc., Deluxe Data Systems, Inc., SDM International, Inc., S2
Systems, Inc., a subsidiary of Stratus, SLM Software, Inc., Consolidated
Software and Oasis Systems, whose products run on Tandem or Stratus fault-
tolerant computers with proprietary operating systems or on IBM host or
industry standard computers with UNIX operating systems.

The Company also encounters competition from original equipment
manufacturers such as NCR Corporation, Interbold, Fujitsu and Omron; EFT
software system integrators such as Kirchman Corporation, Hogan Systems,
Inc., ARKSYS (formerly known as Arkansas Systems), Jack Henry and Diebold,
Incorporated; and EFT shared regional networks such as NYCE, MAC and HONOR.
Price competition is considerable, with discounting from list used as an
inducement to buy software and mainframes or to become members of the
Networks.

The Company is aware of only a limited number of companies primarily
marketing UNIX-based products for EFT Systems. The Company is also aware that
S2 Systems, Inc. has developed its own UNIX-based transaction processing
package and Transaction Systems Architects, Inc. has begun to market a
UNIX-based product, TRANS 24.

There are numerous companies which offer EFT outsourcing services. These
third party providers primarily drive ATMs belonging to financial
institutions. A significant portion of all of ATM transactions are processed
by these third party providers. The principal companies in this area are:
Electric Data Systems (EDS), Deluxe Data Corporation, Affiliated Computer
Services, Inc., Fiserv, Inc., Money Access Services (MAC), Information
Services and First Data Corporation.

The retail POS market is rapidly growing and numerous participants are
positioning themselves to capture various segments of the market. Most of
these companies are well established, have greater financial resources than
the Company and an established customer base. There can be no assurance that
the Company can make any inroads in this highly competitive marketplace or
that its efforts will be successful.

In the smart card market, the Company is aware of other financial
institutions attempting to develop their own smart card technology and is
unable to predict which technology, if any, will become the industry
standard.

SOFTWARE DEVELOPMENT AND FUTURE PRODUCTS

In an effort to license TPII software products to larger financial
institutions, the Company will test its software for use in managing EFT
Systems with a greater number of ATMs and POS terminals than in the EFT
Systems currently utilizing the Company's TPII software products.
Establishing this capability will permit the Company to market TPII software
products to financial institutions with larger EFT Systems which may be
reluctant to use the Company's TPII software without proof of its
capabilities in that environment.

Competition, technological advances, changes in customer requirements,
deregulation and other regulatory changes affecting financial institutions
necessitate an ongoing enhancement and development effort to meet the
comprehensive processing needs of banks and other financial institutions. As
a result, the Company will continue ongoing expenditures for enhancement of
the Company's existing software products that take advantage of technological
advances and respond to the increasingly sophisticated requirements of its
customers. Enhancements to existing customers are delivered as add-ons to the
licensing agreements for additional license fees.

The Company may devote a portion of the net proceeds of this offering to
further develop products and services relating to the "loading" of value on
the smart card. Financial institutions utilizing smart cards must

27
<PAGE>

provide for the personalization of the smart cards as well as a purchase
terminal system, a collection system and a clearing system. The Company may
consider developing, itself or jointly, one or all of these products and
services and may also explore the possibility of providing a turnkey or
single vendor solution for financial institutions in this area.

The Company believes that its TPII software products can be adapted for
telephone and Internet/computer banking. The Company intends to evaluate the
potential for these markets upon the completion of this offering.

The Company will also attempt to market additional services to the EFT
industry. Such services will include custom services, as well as facilities
management services. Facilities management services entail the operation on a
fee-basis of an EFT System by the Company's personnel at the customer's
facility.

PROPRIETARY RIGHTS

The Company does not own any patents or registered copyrights. The Company
relies on a combination of trade secret and copyright laws, nondisclosure and
other contractual provisions and technical measures to protect its
proprietary rights. The Company distributes its TPII software products under
software license agreements which typically grant customers nonexclusive
licenses to use the products. Use of the software products is usually
restricted to designated computers at specified locations and is subject to
terms and conditions prohibiting unauthorized reproduction or transfer of the
software products. The Company also seeks to protect the source code of its
software products as a trade secret. The Company also obtains confidentiality
agreements from its employees, customers and others who have access to its
software products. Despite these precautions, there can be no assurance that
misappropriation of the Company's software products and technology will not
occur.

Although the Company believes that its intellectual property rights do not
infringe upon the proprietary rights of third parties, there can be no
assurance that third parties will not assert infringement claims against the
Company. Further, there can be no assurance that intellectual property
protection will be available for the Company's products in certain foreign
countries.

REGULATIONS

The Company's applications are utilized primarily by financial
institutions. Such institutions are subject to state, federal or foreign
regulation. Hence, it is possible that banking regulations may have a
material effect on the Company's operations. In addition, the TPII software
products are subject to export regulations, including regulations relating to
encrypted software, which require prior approval of the licensing of the
software to customers located in foreign countries. To date, however, the
Company has not experienced problems complying with these regulations.

EMPLOYEES

As of October 31, 1996, the Company had thirty-seven employees,
thirty-five of whom were full time. Two employees comprise the direct sales
force; twenty-seven employees are involved in product development, technical
support and services and eight employees are involved in office
administration. Additionally, the Company engages various consultants from
time to time to assist with product development and enhancements to existing
products.

The Company believes it can continue to attract skilled personnel for all
areas and has been able to keep turnover to a minimum. However, the
competition to employ skillful professionals is intense. None of the
employees are covered by a collective bargaining agreement and there have
been no work stoppages. Management believes that relations with its employees
are good.

PROPERTIES

The Company's current headquarters, which consist of approximately 8,500
square feet of leased office space, is located at 185 Jordan Road, Rensselaer
Technology Park, Troy, New York. The term of this lease expires on July 31,
1999. The Company has the option to renew the lease at a mutually agreeable
rental at least

28
<PAGE>

30 days prior to expiration. The current annual base rental amount is
$82,476. In addition to base rent, the Company pays a pro-rata share of
operating costs.

In order to have sufficient space for its projected expanded operations,
the Company entered into a Purchase and Sale Agreement as of December 17,
1996 for the acquisition of a ground lease expiring on May 25, 2083 and a
building with approximately 35,000 square feet of space located at 300 Jordan
Road, Rensselaer Technology Park, Troy, New York. The Company intends to use
approximately 20,000 square feet of this new facility for its operations. The
purchase price of such facility is $995,000, of which an initial deposit of
$20,000 has been paid. An additional deposit of $30,000 is due on February
28, 1997 and the balance is due on March 14, 1997 on the satisfaction of
certain matters. The Company estimates that an additional $400,000 will be
necessary for the renovation of such facility. The Company intends to use
approximately $600,000 of the net proceeds to fund such purchase and
renovation with the balance to be funded by a mortgage. There can be no
assurance that a mortgage will be available on terms acceptable to the
Company, or at all. If the Company is unable to obtain a mortgage for this
facility, it would not proceed with the purchase. In such event, it would
forfeit any deposits paid towards such purchase. If the Company acquires and
moves into this new facility, the landlord of the Company's current lease has
agreed to terminate such lease without any further obligations by the
Company.

The Company's European Sales and Marketing office is also leased and is
located at Salamander Quay (West), Park Lane, Harefield, Uxbridge, Middlesex,
UB9 6NZ, England. This office consists of approximately 890 square feet. The
term of this lease expires in June 1999. The current annual base rental
amount is approximately $22,000.

LEGAL PROCEEDINGS

On June 15, 1989 the Company commenced an action against SLM Software,
Inc. ("SLM"), a competitor of the Company, in the Supreme Court of the State
of New York. The action sought money damages from SLM for fraud and breach of
contract, and further sought rescission of a certain contract between the
parties. Thereafter, SLM commenced a separate action against the Company in
the civil trial courts of the province of Ontario, Canada. All litigation
between the parties was settled on December 4, 1996 with the Company paying
$100,000 to SLM.

The Company is not aware of any other legal proceedings.

29
<PAGE>

MANAGEMENT

DIRECTORS AND EXECUTIVE OFFICERS

The directors and executive officers of the Company are as follows:

<TABLE>
<CAPTION>
Name Age Position
------------------- ----- -----------------------------------------------------------------
<S> <C> <C>
Frank A. Pascuito . 40 Chairman of the Board, Chief Executive Officer and Director
Charles J. Caserta 40 President and Director
Simon J. Theobald . 33 Director of Sales and Marketing for the London office and Director
Carmen A. Pascuito 37 Controller and Secretary
Jerald Tishkoff ... 59 Director
Arnold Wells ...... 77 Director

</TABLE>

Frank A. Pascuito has been the Chief Executive Officer and Chairman of the
Board of the Company since 1989. Mr. Pascuito co-founded the Company's
predecessor company, IFS International, Inc. (formerly named Avant-Garde
Computer Systems, Inc.), a New York corporation engaged in the development
and marketing of software (the "Predecessor"), in 1981 and served as its
President until November 1987 and as its Vice President of Product Planning
until 1989. Prior to 1981, he was employed by NCR Corporation's ATM software
development team. As a consultant to NCR in 1979, he assisted in the
development and performed the installation of the first on-line/off-line ATM
system for NCR in the United States. Mr. Pascuito has over ten years of
operating and marketing experience in EFT system design, sales and service.
Mr. Pascuito is a graduate of the State University of New York at Potsdam
with a B.S. degree in Computer Science. He is active in several area
organizations dealing with technology, software, and world trade.

Charles J. Caserta has been the President and a director of the Company
since 1989. Mr. Caserta co-founded the Predecessor in 1981 and served as its
Chairman until November 1987 and as its Vice President of Sales until 1989.
Mr. Caserta has over ten years of consulting and marketing experience in EFT
system design, sales and service. Mr. Caserta is a graduate of Villanova
University with a B.A. degree in English.

Simon J. Theobald has been a director of the Company since December 1994
and has been the Director of Sales and Marketing of the European Division
based in London since 1992. From 1986 to April 1992, he was employed by
Applied Communications Inc., a subsidiary of Transaction Systems Architects,
Inc. Mr. Theobald has more than fifteen years experience in the electronic
funds transfer industry. Mr. Theobald is a graduate of De-Havilland College
with a degree in computer studies and technology.

Carmen A. Pascuito has been Secretary of the Company since December 1996
and its Controller since 1989. Mr. Pascuito joined the Predecessor in 1985 as
a staff accountant and became its controller in 1988. Mr. Pascuito is a
graduate of Siena College with a B.B.A. degree in Accounting.

Jerald Tishkoff has been a director of the Company since May 1994. Since
1991, Mr. Tishkoff has been Director of Marketing and a member of the Board
of Directors of Allen Technologies, Inc., a private company that provides
interactive television networks to schools and hospitals. Between 1967 and
1991, he was Director of Marketing of Wells National Services, a provider of
interactive television networks to hospitals. He serves on the Advisory Board
of the Jewish Federation, a charitable organization. He is a graduate of
Western Reserve University of Cleveland with a B.B.A. degree and attended
Western Reserve University Law School.

Arnold Wells has been a director of the Company since 1986. Since 1976,
Mr. Wells has been a private investor and consultant in the health and
communications fields. Mr. Wells organized Wells Television (subsequently
named Wells National Services). In 1978, Mr. Wells formed WellsArt Limited, a
company which is engaged in the publishing and licensing work of prominent
artists. Mr. Wells is a graduate of Western Reserve University with a B.A.
degree.

Frank A. Pascuito and Carmen A. Pascuito are brothers.

Pursuant to the terms of the Underwriting Agreement, the Underwriter will
have the right to nominate a member of the Board of Directors and the Company
will use its best efforts to have such nominee elected to the Board. As of
the date hereof, the Underwriter has not nominated any such person. See
"Underwriting."

Promptly after the consummation of this offering, the Company will appoint
an audit committee. One of the members of such committee will be the
director, if any, who is designated by the Underwriter and another member of
such committee will be an independent director.

30
<PAGE>

EXECUTIVE COMPENSATION

The following table sets forth information concerning compensation paid or
accrued by the Company or its subsidiary for services rendered during the
fiscal years ended April 30, 1996, 1995 and 1994 to the Company's Chief
Executive Officer. No executive officer had total annual compensation which
exceeded $100,000 during such fiscal years.

SUMMARY COMPENSATION TABLE

<TABLE>
<CAPTION>
Other All
Annual Restricted Securities Other
Name and Fiscal Compen- Stock Underlying LTIP Compen-
Principal Position Year Salary(1) Bonus sation Award(s) Option(s) Payouts sation
----------------------- -------- ------------ ------- --------- ------------ ------------ --------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Frank Pascuito ........ 1996 $88,000 $-0- $-0- $-0- -0- -0- $-0-
Chief Executive Officer 1995 $88,000 $-0- $-0- $-0- -0- -0- $-0-
1994 $78,454(2) $-0- $-0- $-0- -0- -0- $-0-
</TABLE>

- ------
(1) Does not include accrued interest of $5,706, $5,336 and $4,669 for the
fiscal years ended April 30, 1996, 1995 and 1994, respectively, for
salaries earned but deferred. The interest rate on such deferred salaries
is 12% per annum. See "Certain Transactions."

(2) Includes deferred salary in the amount of $6,769.

Set forth below with respect to Frank Pascuito is further information
concerning options to purchase Common Stock under the Company's stock option
plan.

Number of Securities Value of Unexercised
Number of Shares Underlying Unexercised In-the-Money
of Common Stock Options as of April 30, 1996 Options as of April 30, 1996(1)
Acquired on ------------------------------- -------------------------------
Name Exercise Value Realized Exercisable Unexercisable Exercisable Unexercisable
------------------------ ---------------- -------------- ------------- --------------- ------------- ---------------
<S> <C> <C> <C> <C> <C> <C>
Frank Pascuito,
Chief Executive Officer 0 0 50,773 0 $86,623 $0
</TABLE>

- ------
(1) Based on a market price of $2.50 per share at April 30, 1996.

EMPLOYMENT AGREEMENTS

Upon the completion of this offering, Frank A. Pascuito and Charles J.
Caserta will each enter into a three year employment agreement with the
Company, effective as of January 1, 1997, which will provide for their
employment as Chairman of the Board and President, respectively. Under their
respecive agreements, Messrs. Pascuito and Caserta will each receive a base
salary of $110,000 per year for each of the first two years and an amount to
be determined by the Board of Directors for the third year. In addition,
Messrs. Pascuito and Caserta each will be generally entitled to commissions
of 8% on revenues during any fiscal year in excess of $425,000 pursuant to
licenses agreements generated by their respective sales efforts. The Board of
Directors may in its discretion grant bonuses to Messrs. Pascuito and
Caserta. Pursuant to these employment agreements and not pursuant to any
option plan, Messrs. Pascuito and Caserta also will each receive options to
purchase 75,000 shares of Common Stock at an exercise price of $5.00 per
share. Each agreement contains a restrictive covenant requiring the executive
not to compete with the Company for the term of the agreement, for two years
following termination for cause or for one year if such executive's
employment agreement is not renewed by the Company. Each agreement provides
for a car allowance.

STOCK OPTION PLANS

The Company has two option plans: the 1996 Stock Option Plan (the "1996
Plan") and the 1988 Stock Option Plan (the "1988 Plan").

The 1996 Plan provides for the granting of options which are intended to
qualify either as incentive stock options ("Incentive Stock Options") within
the meaning of Section 422 of the Internal Revenue Code of 1986 or as options
which are not intended to meet the requirements of such section
("Nonstatutory Stock Options"). The total number of shares of Common Stock
reserved for issuance under the 1996 Plan is 300,000. Options to purchase
shares may be granted under the 1996 Plan to persons who, in the case of
Incentive Stock Options, are

31
<PAGE>

key employees (including officers) of the Company or any subsidiary of the
Company, or, in the case of Nonstatutory Stock Options, are key employees
(including officers) or nonemployee directors of, or nonemployee consultants
to, the Company or any subsidiary of the Company.

The 1996 Plan provides for its administration by the Board of Directors or
a committee chosen by the Board of Directors, which has discretionary
authority, subject to certain restrictions, to determine the number of shares
issued pursuant to Incentive Stock Options and Nonstatutory Stock Options and
the individuals to whom, the times at which and the exercise price for which
options will be granted.

The exercise price of all Incentive Stock Options granted under the 1996
Plan must be at least equal to the fair market value of such shares on the
date of the grant or, in the case of Incentive Stock Options granted to the
holder of more than 10% of the Company's Common Stock, at least 110% of the
fair market value of such shares on the date of the grant. The maximum
exercise period for which Incentive Stock Options may be granted is ten years
from the date of grant (five years in the case of an individual owning more
than 10% of the Company's Common Stock). The aggregate fair market value
(determined at the date of the option grant) of shares with respect to which
Incentive Stock Options are exercisable for the first time by the holder of
the option during any calendar year shall not exceed $100,000.

As of the date hereof, no options have been granted pursuant to the 1996
Plan.

The 1988 Plan provides for the issuance of options to purchase Common
Stock to key employees, officers, directors and consultants. As of the date
hereof, there were options outstanding to purchase 239,724 shares of Common
Stock under the 1988 Plan. All options are exercisable at prices ranging from
$.66 to $3.50 per share and expire in various years between 1997 - 2006. As
of the date hereof, options to purchase 8,819 shares of Common Stock were
available for grant under the 1988 Plan.

The exercise price of all future option grants will be at least 85% of the
fair market value of the Common Stock on the date of grant.

32
<PAGE>

PRINCIPAL STOCKHOLDERS

The following table sets forth certain information regarding beneficial
ownership of the Common Stock as of January 15, 1997 by (i) each stockholder
known by the Company to be the beneficial owner of more than 5% of the
outstanding Common Stock, (ii) each director of the Company and (ii) all
directors and executive officers as a group. No director, executive officer
or 5% or greater stockholder is the beneficial owner of any shares of
Preferred Stock. Except as otherwise indicated, the Company believes that the
beneficial owners of the Common Stock listed below, based on information
furnished by such owners, have sole investment and voting power with respect
to such shares, subject to community property laws where applicable.

<TABLE>
<CAPTION>
Name and Address of Number Of Shares Percentage
Beneficial Owner Beneficially Owned of Class
---------------------------------------------------------- ------------------ ------------
<S> <C> <C>
Frank Pascuito ........................................... 307,757(1) 25.7%
Rensselaer Technology Park
185 Jordan Road
Troy, NY 12180
Charles J. Caserta ....................................... 307,757(2) 25.7%
Rensselaer Technology Park
185 Jordan Road
Troy, NY 12180
Simon J. Theobald ........................................ 44,604(3) 4.0%
Little Elms, 12 Green Lane,
Croxley Green, Rickmansworth,
Hertfordshire, WD3 3HR England
Jerald Tishkoff .......................................... 37,486(4) 3.5%
2620 S. Glen
University Heights, Ohio 44122
Arnold Wells ............................................. 5,500(5) .5%
1100 Madison Avenue
New York, NY 10028
All directors and executive officers as a group (5
persons) ............................................... 703,104(6) 51.1%
</TABLE>

- ------
(1) Includes 123,571 shares issuable upon exercise of stock options.

(2) Includes 123,571 shares issuable upon exercise of stock options.

(3) Includes 44,584 shares issuable upon exercise of stock options.

(4) Includes 7,486 shares issuable upon exercise of stock options.

(5) Includes 5,000 shares issuable upon exercise of stock options.

(6) Includes 304,211 shares issuable upon exercise of stock options.

CERTAIN TRANSACTIONS

Frank Pascuito deferred salaries for the five fiscal years ended April 30,
1995 in the aggregate amount of $60,765. Such deferred salaries bore interest
at the rate of 12% per annum until September 30, 1996, which interest
aggregated $31,013 as of such date and was also deferred. As of December 31,
1996, the Company had repaid $36,396 of deferred salaries and anticipates
that the balance of the deferred salaries and interest will be paid prior to
the consummation of this offering.

Charles Caserta deferred salaries for the five fiscal years ended April
30, 1995 in the aggregate amount of $62,439. Such deferred salaries bore
interest at the rate of 12% per annum until September 30, 1996, which
interest aggregated $34,464 as of such date and was also deferred. As of
December 31, 1996, the Company had repaid all of the deferred interest and
anticipates that the deferred salaries will be paid prior to the consummation
of this offering.

33
<PAGE>

Simon J. Theobald, Director of Sales and Marketing for the London office
of the Company, receives pursuant to an oral agreement a base annual salary of
$81,000 and a commission in the amount of 8% of gross revenues of any
licensing agreement for which he provides sales and marketing services.
During the fiscal years ended April 30, 1995 and 1996 and the six months
ended October 31, 1996, Mr. Theobald earned $154,592, $115,500 and $62,933,
respectively, in salaries and commissions.

In September 1996, the Company, as part of the Bridge Financing, sold to
unrelated third parties $500,000 principal amount of the Company's Notes for
$500,000 and warrants to purchase 100,000 shares of Common Stock for $5,000.
The Notes bear interest at 12% per annum and are due on the earlier of March
24, 1998 or closing of this offering. The warrants are exercisable at $2.50
per share, subject to adjustment, at any time until September 24, 2001.

The Company believes that all transactions with officers were made on
terms no less favorable to the Company than those available from unaffiliated
parties. All future transactions between the Company and its officers,
directors and 5% shareholders will be on terms no less favorable than could
be obtained by independent third parties and will be approved by a majority
of the independent disinterested directors of the Company.

DESCRIPTION OF SECURITIES

The following descriptions of the Company's securities are qualified in
all respects by reference to the Certificate of Incorporation and By-laws of
the Company, the Certificate of Designation of the Preferred Stock and the
warrant agreement (the "Warrant Agreement"), dated as of February 21, 1997,
by and between the Company, American Stock Transfer & Trust Company (the
"Warrant Agent") and the Underwriter, copies of which are filed as Exhibits
to the Registration Statement of which this Prospectus is a part. The
Certificate of Incorporation of the Company authorizes the Company to issue
up to 50,000,000 shares of Common Stock, par value $.001 per share, and
25,000,000 shares of preferred stock, par value $.001 per share.

COMMON STOCK

As of the date hereof, there were 1,072,365 shares of Common Stock
outstanding. The holders of Common Stock are entitled to one vote for each
share held of record on all matters submitted to a vote of the stockholders.
Subject to preferential rights with respect to future outstanding preferred
stock, holders of Common Stock are entitled to receive ratably such dividends
as may be declared by the Board of Directors out of funds legally available
therefor. In the event of a liquidation, dissolution or winding up of the
Company, holders of Common Stock are entitled to share ratably in all assets
remaining after payment of liabilities and satisfaction of preferential
rights and have no rights to convert their Common Stock into any other
securities. All shares of Common Stock have equal, non-cumulative voting
rights, and have no preference, exchange, preemptive or redemption rights.

PREFERRED STOCK

Prior to the date hereof, there were no shares of preferred stock
outstanding. The Company's Certificate of Incorporation authorizes the
issuance of the preferred stock with designations, rights and preferences
determined from time to time by its Board of Directors. The Board of
Directors has adopted a resolution that 20,000,000 shares of the preferred
stock be designated as Series A Convertible Preferred Stock (the "Preferred
Stock"). The holders of Preferred Stock are entitled to one vote for each
share held of record on all matters submitted to a vote of the stockholders.
All such matters require approval of the Preferred Stock, voting separately
as a class, except that with respect to the election of directors, the
Preferred Stock and Common Stock vote together as one class. No dividends
will be paid on the Preferred Stock, except that holders of Preferred Stock
will be entitled to receive dividends if dividends are declared with respect
to the Common Stock and, in such event, ratably with the holders of Common
Stock.

Each share of Preferred Stock is convertible at the option of the holder
into one share of Common Stock, subject to adjustment, during the five-year
period commencing on the date hereof; provided that the Preferred

34
<PAGE>

Stock must be converted on the earlier of (i) February 20, 2002 or (ii) the
consummation date of a merger or acquisition of the Company in which the then
outstanding securities of the Company are surrendered or exchanged for cash,
property or securities of another entity if the consideration received in any
such transaction is not less than $5.00 per share on a fully-diluted basis.
The number of shares of Common Stock into which the Preferred Stock is
convertible is subject to adjustment in certain circumstances, including a
stock dividend on, or a stock split, subdivision, combination or
recapitalization of, the Common Stock or the issuance or sale of Common Stock
or securities convertible into or exchangable for Common Stock at less than
$5.00 per share, except in certain circumstances.

In the event of liquidation, dissolution or winding up of the Company,
holders of Preferred Stock are entitled, after payment of liabilities and
satisfaction of any then existing preferential rights of any holders of
capital stock, to receive up to $5.00 per share of the remaining assets of
the Company before payment is made to the holders of Common Stock. After
payment of $5.00 per share to the holders of the Preferred Stock, the holders
of the Preferred Stock are entitled to share with the holders of the Common
Stock in the remaining assets of the Company available for distribution to
its stockholders.

All shares of Preferred Stock have equal, non-cumulative voting rights and
have no preemptive or redemption rights.

The remaining 5,000,000 shares of preferred stock, which have not been
designated as Series A Convertible Preferred Stock (the "Shares"), may be
issued in series, and Shares of each series will have such rights and
preferences as are fixed by the Board of Directors in the resolutions
authorizing the issuance of that particular series. In designating any series
of Shares, the Board of Directors may fix the number of Shares constituting
that series and fix the dividend rights, dividend rate, conversion rights,
voting rights (which may be greater or lesser than the voting rights of the
Common Stock and Preferred Stock), rights and terms of redemption (including
any sinking fund provisions) and the liquidation preferences of the series of
Shares. It is possible, without any action of the stockholders of the
Company, that the holders of any series of Shares, when and if issued, will
have priority claims to dividends and to any distributions upon liquidation
of the Company and that they may have other preferences over the holders of
the Common Stock. The Board of Directors may issue series of Shares without
action of the stockholders of the Company, except that no series of Shares
may be issued with liquidation preferences greater than the liquidation
preferences of the Preferred Stock or with dividend rights on a parity with
or having a preference over the dividend rights of the Preferred Stock
without approval of the holders of the Preferred Stock.

The issuance of Shares may be used as an anti-takeover device without
further action on the part of the stockholders. Furthermore, the issuance of
preferred stock may dilute the voting power of holders of the Common Stock
and Preferred Stock (such as by issuing preferred stock with super-voting
rights) and may render more difficult the removal of current management, even
if such removal may be in the stockholders' best interests. The Company has
no current plans to issue any of the remaining Shares.

The Company has agreed with the Underwriter not to sell or issue any
Preferred Stock or Shares for a period of 36 months commencing with the
consummation of this offering.

WARRANTS

Each Warrant entitles the registered holder thereof to purchase one share
of Preferred Stock at a price of $6.25 per share, subject to adjustment as
set forth below, for a period of three years commencing on February 21, 1999,
except that if the Warrants are called for redemption, or the Preferred Stock
is required to be converted prior to February 21, 1999, the Warrants will be
exercisable from the date on which notice of such redemption or mandatory
conversion is given by the Company.

The Warrants are redeemable by the Company, with the prior consent of the
Underwriter, at any time commencing on February 21, 1998, at a price of $.10
per Warrant, provided that the last sale price of the Preferred Stock, for a
period of 20 consecutive days of trading of the Preferred Stock ending not
more than three days prior to the date of any redemption notice equals or
exceeds at least $8.00 per share, subject to adjustment. The Warrants shall
be exercisable until the close of the business day preceding the date fixed
for redemption. Such notice of redemption will be mailed at least 30 days,
but not more than 45 days, prior to the date fixed for redemption.

The Warrants will be issued pursuant to the Warrant Agreement and will be
evidenced by warrant certificates in registered form.

35
<PAGE>

The exercise price of the Warrants and the number of shares of Preferred
Stock or other securities and property issuable upon exercise of the Warrants
are subject to adjustment in certain circumstances, including a stock
dividend on, or a stock split, subdivision, combination or recapitalization
of, the Common Stock, and will also be subject to adjustment upon the sale or
issuance of Common Stock or securities convertible into or exchangeable for
Common Stock at less than $6.25 per share, except in certain circumstances.
However, the Warrants are not subject to adjustment for issuances of
Preferred Stock at a price below the exercise price of the Warrants.
Additionally, an adjustment will be made upon the sale of all or
substantially all of the assets of the Company in order to enable holders of
Warrants to purchase the kind and number of shares of stock or other
securities or property (including cash) receivable in such event by a holder
of the number of shares of Preferred Stock that might otherwise have been
purchased upon exercise of the Warrant.

The Warrants do not confer upon the holder any voting or any other rights
of a stockholder of the Company.

Warrants may be exercised upon surrender of the Warrant certificate
evidencing those Warrants on or prior to the expiration date (or earlier
redemption date) of the Warrants at the offices of the Warrant Agent with the
form of "Election to Purchase" on the reverse side of the warrant certificate
completed and executed as indicated, accompanied by payment of the full
exercise price (by certified check payable to the order of the Warrant Agent)
for the number of Warrants being exercised.

No Warrant will be exercisable or redeemable unless at the time of
exercise the prospectus covering the shares of Preferred Stock issuable upon
exercise of the Warrant is current and the issuance of shares has been
registered or qualified or is deemed to be exempt from registration or
qualification under the securities laws of the state of residence of the
holder of the Warrant. The Company has undertaken to use its best efforts to
maintain a current prospectus relating to the issuance of shares of Preferred
Stock upon the exercise of the Warrants until the expiration of the Warrants,
subject to the terms of the Warrant Agreement. While it is the Company's
intention to maintain a current prospectus, there is no assurance that it
will be able to do so. The Company anticipates that the Registration
Statement, of which this Prospectus forms a part, will remain effective for
nine months following the date hereof. See "Risk Factors - Need for Current
Prospectus; Non-Registration in Certain Jurisdictions of Shares Underlying
Warrants."

No fractional shares will be issued upon exercise of the Warrants.
However, if a Warrantholder exercises all Warrants then owned of record by
him or her, the Company will pay to that Warrantholder, in lieu of the
issuance of any fractional share which is otherwise issuable, an amount in
cash based on the market value of the Preferred Stock on the last trading day
prior to the exercise date.

DELAWARE LAW AND CERTAIN CHARTER PROVISIONS

The Company will be subject to Section 203 of the Delaware General
Corporation Law, which prohibits a Delaware corporation from engaging in a
wide range of specified transactions with any interested stockholder, defined
to include, among others, any person or entity who in the previous three
years obtained 15% or more of any class or series of stock entitled to vote
in the election of directors, unless, among other exceptions, the transaction
is approved by (i) the Board of Directors prior to the date the interested
stockholder obtained such status or (ii) the holders of two-thirds of the
outstanding shares of each class or series owned by the interested
stockholder. The Company's Certificate of Incorporation and By-laws contain
certain additional provisions which may have the effect of delaying or
preventing a change in control of the Company. Such provisions include blank
check preferred stock (the terms of which may be fixed by the Board of
Directors without stockholder approval). Accordingly, the Company's Board of
Directors is empowered, without stockholder approval, to issue preferred
stock, other than the Preferred Stock, with dividend, liquidation,
conversion, voting or other rights that could adversely affect the voting
power or other rights of the holders of the Preferred Stock and/or Common
Stock. In the event of issuance, the preferred stock could be used, under
certain circumstances, as a method of discouraging, delaying or preventing a
change in control of the Company.

TRANSFER AND WARRANT AGENT

The transfer agent for the Preferred Stock and Common Stock and the
warrant agent for the Warrants is American Stock Transfer & Trust Company.

36
<PAGE>

SHARES ELIGIBLE FOR FUTURE SALE

In general, under Rule 144, a person (or persons whose shares are aggregated)
who has beneficially owned restricted securities within the meaning of Rule 144
("Restricted Shares") for at least two years, including the holding period of
any securities which converted into the Restricted Shares and including the
holding period of any prior owner except an affiliate of the Company, would be
entitled to sell within any three-month period a number of shares that does not
exceed the greater of 1% of the then outstanding shares of Common Stock or the
average weekly trading volume of the Common Stock reported during the four
calendar weeks preceding such sale. Sales under Rule 144 are also subject to
certain manner of sale provisions, notice requirements and the availability of
current public information about the Company. Any person (or persons whose
shares are aggregated with such person) who is not deemed to have been an
affiliate of the Company at any time during the 90 days preceding a sale, and
who has beneficially owned shares for at least three years (including any period
of ownership of preceding non-affiliated holders), would be entitled to sell
such shares under Rule 144(k) without regard to the volume limitations, manner
of sale provisions, public information requirements or notice requirements. In
February 1997, the Commission adopted an amendment to Rule 144 that reduces the
two year holding period of restricted securities to one year and the three year
holding period to two years, which amendment will be effective commencing 60
days after such amendment is published in the Federal Register.

The Company has filed a registration statement under the Securities Act to
register shares of Common Stock to be issued upon exercise of the Bridge
Financing warrants, thus permitting the resale of such shares by non-
affiliates in the public market without restriction under the Securities Act.
The Company also has granted registration rights to the Underwriter with
respect to the Underwriter's Warrants and the securities issuable upon
exercise thereof and to the holder of the Technology Loan with respect to the
shares of Common Stock issuable upon the conversion thereof.

UNDERWRITING

Duke & Co., Inc. (the "Underwriter") has agreed, subject to the terms and
conditions contained in the Underwriting Agreement, to purchase 1,200,000
shares of Preferred Stock and 1,700,000 Warrants. The Underwriter is
committed to purchase and pay for all of the Preferred Stock and Warrants
offered hereby if any of such securities are purchased. The shares of
Preferred Stock and Warrants are being offered by the Underwriter subject to
prior sale, when, as and if delivered to and accepted by the Underwriter and
subject to approval of certain legal matters by counsel and to certain other
conditions.

The Underwriter has advised the Company that it proposes to offer the
Preferred Stock and Warrants to the public at the public offering prices set
forth on the cover page of this Prospectus. The Underwriter may allow to
certain dealers who are members of the National Association of Securities
Dealers, Inc. concessions not in excess of $.25 per share of Preferred Stock
and $.005 per Warrant.

The Company has granted to the Underwriter an option exercisable for 45
days from the date of this Prospectus, to purchase up to 180,000 additional
shares of Preferred Stock and 255,000 additional Warrants at the public
offering prices set forth on the cover page of this Prospectus, less the
underwriting discounts. The Underwriter may exercise this option in whole or,
from time to time, in part solely for the purpose of covering overallotments,
if any, made in connection with the sale of the shares of Preferred Stock and
Warrants offered hereby. The Company has also agreed to pay all expenses in
connection with qualifying the shares of Preferred Stock and Warrants offered
hereby for sale under the laws of such states as the Underwriter may
designate, including expenses of counsel retained for such purposes by the
Underwriter.

The Company has agreed to pay the Underwriter a non-accountable expense
allowance of 3% of the gross proceeds of this offering, including the
proceeds of the over-allotment option, if and to the extent exercised.

37
<PAGE>

The Company has agreed to sell to the Underwriter and its designees, for
an aggregate of $290, warrants (the "Underwriter's Warrants") to purchase up
to 120,000 shares of Preferred Stock at an exercise price of $6.25 per share
and/or up to 170,000 Warrants at an exercise price of $1.6875 per Warrant.
The Underwriter's Warrants may not be sold, transferred, assigned or
hypothecated for one year from the effective date of the Registration
Statement of which this Prospectus forms a part, except to the officers and
partners of the Underwriter, co-underwriters, selling group members and their
officers or partners, and are exercisable during the four-year period
commencing one year from the effective date of the Registration Statement of
which this prospectus forms a part (the "Warrant Exercise Term"). During the
Warrant Exercise Term, the holders of the Underwriter's Warrants are given,
at nominal cost, the opportunity to profit from a rise in the market prices
of the Preferred Stock and the Warrants. To the extent that the Underwriter's
Warrants are exercised, dilution to the interests of the Company's
shareholders will occur. Further, the terms upon which the Company will be
able to obtain additional equity capital may be adversely affected, since the
holders of the Underwriter's Warrants can be expected to exercise them at a
time when the Company would, in all likelihood, be able to obtain any needed
capital on terms more favorable to the Company than those provided in the
Underwriter's Warrants. Any profit realized by the Underwriter on the sale of
the Underwriter's Warrants, the underlying shares of Preferred Stock or the
underlying Warrants, or the shares of Preferred Stock issuable upon the
exercise of such underlying Warrants, may be deemed additional underwriting
compensation. The exercise price and number of shares of Preferred Stock or
the other securities issuable on exercise of the Underwriter's Warrants are
subject to adjustment in certain circumstances, including in the event of a
stock dividend, subdivision, reclassification, reorganization, merger or
recapitalization. An adjustment will also be made in the case of a
distribution to holders of Preferred Stock of evidence of the Company's
indebtedness or assets or subscription rights or warrants. Subject to certain
limitations and exclusions, the Company has agreed, at the request of the
holders of a majority of the Underwriter's Warrants, at the Company's
expense, to register under the Securities Act the Underwriter's Warrants, the
shares of Preferred Stock and Warrants underlying the Underwriter's Warrants,
and the shares of Preferred Stock issuable upon exercise of the underlying
Warrants on one occasion during the four-year period commencing one year from
the effective date of the Registration Statement of which this Prospectus
forms a part, and to include, on one occasion, such Underwriter's Warrants
and such underlying securities in an appropriate registration statement which
is filed by the Company during the Warrant Exercise Term.

The Company has agreed, in connection with the exercise of the Warrants
pursuant to solicitation by the Underwriter (commencing one year from the date
of this Prospectus), to pay to the Underwriter a fee of 5% of the exercise price
for each Warrant exercised; provided, however, that the Underwriter will not be
entitled to receive such compensation in Warrant exercise transactions in which
(i) the market price of Preferred Stock at the time of exercise is lower than
the exercise price of the Warrants; (ii) the Warrants are held in any
discretionary account; (iii) disclosure of compensation arrangements is not
made, in addition to disclosure provided in this Prospectus, in documents
provided to holders of the Warrants at the time of exercise; (iv) the exercise
of Warrants is unsolicited by the Underwriter; or (v) the solicitation of
exercise of the Warrants was in violation of applicable Exchange Act rules and
regulations.

The Company has agreed, for a period of five years from the consummation
of this offering, to engage the designee of the Underwriter as a non-voting
advisor to the Company's Board of Directors or, at the Underwriter's request,
to nominate and use its best efforts to elect a reasonably acceptable
designee of the Underwriter as a director of the Company. The Underwriter has
not yet exercised its right to designate such person.

The Company has also agreed that it will not, during a period of 24 months
following this offering, issue or sell any securities of the Company or issue
or sell any additional Preferred Stock or Shares for a period of 36 months
commencing with the consummation of this offering without the prior consent
of the Underwriter, except in certain circumstances.

In addition, the Company has agreed to enter into a consulting agreement
to retain the Underwriter as a financial consultant for a period of two years
following the consummation of this offering at a fee of $10,000 per year, the
entire $20,000 payable in full immediately upon the consummation of this
offering. The consulting agreement will not require the Underwriter to devote
a specific amount of time to the performance of its duties thereunder. It is
anticipated that these consulting services will be provided by principals of
the Underwriter and/or members of the Underwriter's corporate finance
department who, however, have not been desig-

38
<PAGE>

nated as of the date hereof. In the event that the Underwriter originates a
financing or a merger, acquisition, joint venture or other transaction to
which the Company is a party, the Underwriter will be entitled to receive a
finder's fee in consideration for origination of such transaction.

The Company has agreed to indemnify the Underwriter against certain civil
liabilities, including liabilities under the Securities Act. The Company has
also agreed to reimburse the Underwriter and its counsel for travel expenses
incurred in connection with this offering. It is anticipated that this amount
will not exceed $500.

Prior to this offering, there has been no public trading market for the
Preferred Stock or Warrants, and only a very limited trading market for the
Common Stock. Consequently, the initial public offering prices of the
Preferred Stock and Warrants and the exercise price of the Warrants have been
determined by negotiations between the Company and the Underwriter. Among the
factors considered in determining the initial public offering prices and
other terms of the securities were the Company's financial condition and
prospects, management, market prices of similar securities of comparable
publicly-traded companies, certain financial and operating information of
companies engaged in activities similar to those of the Company and the
general condition of the securities markets.

Although it has no obligation to do so, the Underwriter intends to engage in
market-making activities or solicited brokerage activities with respect to the
purchase or sale of the Preferred Stock and Warrants in The Nasdaq SmallCap
Market or other over-the-counter market where such securities may trade.
However, no assurance can be given that the Underwriter will continue to
participate as a market maker for the securities of the Company or that other
broker/dealers will make a market in such securities. The Underwriter has the
right to act as the Company's exclusive agent in connection with any future
solicitation of holders of the Warrants to exercise their Warrants. Unless
granted an exemption by the Securities and Exchange Commission from applicable
Exchange Act rules and regulations, the Underwriter will be prohibited from
engaging in any market-making activities or solicited brokerage activities with
regard to the Company's securities during a period prescribed by such rules and
regulations before the solicitation of the exercise of any Warrant until the
later of the termination of such solicitation activity or the termination by
waiver or otherwise of any right the Underwriter may have to receive a fee for
the exercise of the Warrants following such solicitation. As a result, the
Underwriter and soliciting broker/dealers may be unable to continue to make a
market for the Company's securities during certain periods while the Warrants
are exercisable. Such a limitation, while in effect, could impair the liquidity
and market prices of the Company's securities.

The Underwriter has become aware that there is a formal order of
investigation by the Commission relating to the Underwriter's trading
practices and mark-ups in connection with securities of a corporation whose
January 1995 public offering was underwritten by the Underwriter. Since the
issuance of the formal order in June 1996, no charges have been brought. The
Underwriter believes that it has violated no laws or regulations in
connection with this matter. The Underwriter intends to vigorously defend
itself against any claims which may be asserted by the Commission, but there
can be no assurance that the pendency of the investigation or any proceeding
which may thereafter be instituted or any remedies granted in connection
therewith would not adversely and materially affect this offering or
subsequent trading in the Preferred Stock, the Warrants and/or the Common
Stock of the Company.

LEGAL MATTERS

Certain legal matters in connection with the securities being offered
hereby will be passed upon for the Company by Parker Duryee Rosoff & Haft,
New York, New York. Zimet, Haines, Friedman & Kaplan, New York, New York, has
served as counsel for the Underwriter in connection with this offering.

EXPERTS

The consolidated financial statements of the Company as of April 30, 1996
and for each of the two years in the period ended April 30, 1996 included in
this Prospectus, have been audited by Urbach Kahn & Werlin PC, independent
certified public accountants, and are included herein and in the Registration
Statement in reliance upon such reports given upon the authority of said firm
as experts in auditing and accounting.

39
<PAGE>

GLOSSARY

ATM -- Abbreviation for automated teller machine. Computers that perform
banking transactions without human intervention.

C Programming language -- One of several computer languages that tells a
computer what functions to perform.

Cirrus -- A national ATM Network owned by Mastercard

Configuration -- The process of entering data specific to the customer's
needs and requests.

Credit Card -- A card issued by a financial institution or credit
provider. A sum corresponding to a purchase is charged to the cardholder's
account. The customer may elect to pay in full each month or revolve the
balance with a rate of interest fixed by a bank or credit provider.

Debit Card -- Generally any payment card, issued by a financial
institution, the use of which results in a debit to the cardholder's account
often within a few seconds of the purchase (online).

Fault Tolerance -- When duplicate computer hardware and/or software are
used to provide computer processing.

Interface -- The communication between two systems that allow them to
exchange information.

Issuer -- A financial institution that provides cards to its customers.

MAC -- An EFT Network of United States banks, primarily located in the
mid-Atlantic region.

Module -- A group of software commands that perform a specific function.

Network -- Generally owned by a group of banks or non-bank entities.
Networks may vary in size and configuration. A Network generates revenue by
charging fees for use of the Network for transaction processing.

NYCE -- An EFT Network of United States banks, primarily located in the
Northeast.

Object oriented design concepts -- Advanced software development technique
for developing software applications.

Open System -- Computers that can run on various operating systems, as
well as utilize several different types of software programs.

Oracle relational database -- Software, developed and distributed by
Oracle Corporation, that permits access to data from multiple sources and
then transforms such data into information that can be used for a specific
purpose. Oracle 7 is the current release which runs with TPII software
products.

PLUS -- A national ATM Network owned by VISA.

POS -- Abbreviation for point of sale. POS terminals are generally used in
retail outlets to process debit and credit card transactions.

Proprietary (legacy) system -- Systems that are vendor specific and do not
conform to software and hardware industry standards.

Smart Cards -- A smart card is a plastic card which contains an electronic
chip. This can be a memory chip with a programmable logic array, or a
microprocessor chip. There are two types of smart card, rechargeable or
non-rechargeable. Rechargeable smart cards are normally microprocessor smart
cards which may also serve as traditional credit or debit cards, except
instead of a magnetic stripe they have a microprocessor chip embedded in the
card. A non-rechargeable or disposable smart card is typically a memory smart
card with a logical security mechanism or a programmable logical array; the
most popular use for this card is by public telephone networks.

Switch -- EFT Systems designed to link together multiple hosts of
financial institutions and multiple Network systems.

UNIX operating system -- Software, originally developed by AT&T's Bell
Laboratories in 1969, that acts as the primary interface to the physical
components of a computer by controlling the operation of such components.

40
<PAGE>

IFS INTERNATIONAL, INC. AND SUBSIDIARY

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

<TABLE>
<CAPTION>
Page
--------
<S> <C>
INDEPENDENT AUDITOR'S REPORT .................... F-2
CONSOLIDATED FINANCIAL STATEMENTS
Balance sheets ............................. F-3
Statements of operations ................... F-4
Statements of shareholders' equity (deficit) F-5
Statements of cash flows ................... F-6
Notes to consolidated financial statements . F-8

</TABLE>

F-1
<PAGE>

INDEPENDENT AUDITOR'S REPORT

To the Board of Directors and Shareholders
IFS International, Inc.

We have audited the accompanying consolidated balance sheet of IFS
International, Inc. and subsidiary as of April 30, 1996, and the related
consolidated statements of operations, shareholders' equity (deficit), and
cash flows for each of the two years in the period ended April 30, 1996.
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 consolidated financial statements referred to above
present fairly, in all material respects, the financial position of IFS
International, Inc. and subsidiary at April 30, 1996, and the results of
their operations and their cash flows for each of the two years in the period
ended April 30, 1996, in conformity with generally accepted accounting
principles.

The consolidated financial statements referred to above have been prepared
assuming that IFS International, Inc. and subsidiary will continue as a going
concern. As discussed in Note 14 to the consolidated financial statements,
the Company has a working capital deficiency and a shareholders' deficit at
April 30, 1996, that 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 14. The consolidated financial statements do not
include any adjustments that might result from the outcome of this
uncertainty.
URBACH KAHN & WERLIN PC
Albany, New York
July 17, 1996, except for the second paragraph of
Note 14, for which the date is August 6, 1996 and
Note 15, for which the date is January 6, 1997.

F-2
<PAGE>

IFS INTERNATIONAL, INC. AND SUBSIDIARY

CONSOLIDATED BALANCE SHEETS
APRIL 30, 1996 AND OCTOBER 31, 1996 (UNAUDITED)

<TABLE>
<CAPTION>
April 30, October 31, 1996
1996 (Unaudited)
------------- ----------------
<S> <C> <C>
ASSETS
CURRENT ASSETS
Cash ......................................................... $ 137,462 $ 596,504
Trade accounts receivable, net of allowance for doubtful
accounts of $7,900 ......................................... 144,669 399,752
Other receivables ............................................ 42,519 22,810
Costs and estimated earnings in excess of billings on
uncompleted contracts ...................................... 432,173 301,077
Prepaid expenses and other current assets .................... 27,549 72,442
------------- ----------------
Total current assets .................................... 784,372 1,392,585
------------- ----------------
PROPERTY, EQUIPMENT, AND IMPROVEMENTS, net ........................ 136,231 182,181
------------- ----------------
OTHER ASSETS
Software license ............................................. 9,082 7,883
Capitalized software costs, net .............................. 377,482 425,067
Deferred offering costs ...................................... -- 62,021
------------- ----------------
Total other assets ...................................... 386,564 494,971
------------- ----------------
$ 1,307,167 $ 2,069,737
============= ================
LIABILITIES AND SHAREHOLDERS' EQUITY (DEFICIT)
CURRENT LIABILITIES
Notes payable ................................................ $ -- $ 500,000
Current maturities of long-term debt ......................... 38,329 48,886
Current portion of capital lease obligations ................. 2,733 --
Accounts payable and other liabilities ....................... 587,170 265,138
Accrued salary, commissions, and other expenses .............. 702,515 823,236
Billings in excess of costs and estimated earnings on
uncompleted contracts ...................................... 32,524 354,705
Deferred revenue and customer deposits ....................... 219,326 275,065
------------- ----------------
Total current liabilities ............................... 1,582,597 2,267,030
------------- ----------------
LONG-TERM LIABILITIES
Long-term debt, less current maturities ...................... 439,831 423,879
Other ........................................................ 12,515 12,515
------------- ----------------
Total long-term liabilities ............................. 452,346 436,394
------------- ----------------
COMMITMENTS AND CONTINGENCIES
SHAREHOLDERS' EQUITY (DEFICIT)
Preferred stock, $.001 par value; 25,000,000 shares
authorized, no shares issued or outstanding ................ -- --
Common stock $.001 par value; 25,000,000 shares authorized,
1,009,361 and 1,059,730 shares issued and outstanding ...... 1,010 1,060
Additional paid-in capital ................................... 2,177,611 2,219,598
Accumulated deficit .......................................... (2,906,397) (2,854,345)
------------- ----------------
Total shareholders' equity (deficit) .................... (727,776) (633,687)
------------- ----------------
$ 1,307,167 $ 2,069,737
============= ================
</TABLE>

See notes to consolidated financial statements.

F-3
<PAGE>

IFS INTERNATIONAL, INC. AND SUBSIDIARY

CONSOLIDATED STATEMENTS OF OPERATIONS
YEARS ENDED APRIL 30, 1996 AND 1995 AND
SIX MONTHS ENDED OCTOBER 31, 1996 AND 1995 (UNAUDITED)

<TABLE>
<CAPTION>
Six Months Ended
Year Ended October 31
April 30 (Unaudited)
------------------------------ ------------------------------
1996 1995 1996 1995
------------- ------------- ------------- -------------
<S> <C> <C> <C> <C>
Revenues:
Software license and installation contract
fees ................................... $1,982,192 $1,729,284 $1,131,931 $ 455,239
Hardware sales ........................... 45,848 31,893 127,884 35,248
Service and maintenance revenue .......... 412,743 280,080 327,170 204,238
------------- ------------- ------------- -------------
2,440,783 2,041,257 1,586,985 694,725
------------- ------------- ------------- -------------
Cost of software license and installation
contract fees ............................... 238,130 213,885 171,878 52,818
Cost of hardware sales ........................ 16,611 23,232 105,359 12,710
Cost of service and maintenance revenue ....... 250,020 108,659 110,482 97,809
------------- ------------- ------------- -------------
504,761 345,776 387,719 163,337
------------- ------------- ------------- -------------
Gross profit .................................. 1,936,022 1,695,481 1,199,266 531,388
------------- ------------- ------------- -------------
Operating expenses:
Research and development ................. 397,976 276,026 241,134 235,092
Salaries ................................. 679,271 770,352 358,226 320,295
Other .................................... 22,727 19,854 12,227 10,878
Rent ..................................... 88,405 109,041 62,435 42,914
Selling, general, and administrative ..... 745,273 681,356 346,801 312,431
------------- ------------- ------------- -------------
1,933,652 1,856,629 1,020,823 921,610
------------- ------------- ------------- -------------
Income (loss) from operations ................. 2,370 (161,148) 178,443 (390,222)
Other income (expense):
Litigation settlement costs .............. -- -- (100,000) --
Interest expense ......................... (52,453) (53,608) (29,267) (26,701)
Other income ............................. 1,703 9,284 2,875 2,598
------------- ------------- ------------- -------------
Income (loss) before income taxes and
extraordinary item .......................... (48,380) (205,472) 52,051 (414,325)
Provision for income taxes .................... -- -- -- --
------------- ------------- ------------- -------------
Income (loss) before extraordinary item ....... (48,380) (205,472) 52,051 (414,325)
Extraordinary item - gain on debt restructuring
and extinguishments ......................... -- 377,687 -- --
------------- ------------- ------------- -------------
Net income (loss) ............................. $ (48,380) $ 172,215 $ 52,051 $(414,325)
============= ============= ============= =============
Attributable to common shares:
Income (loss) before extraordinary item .. $ (0.05) $ (0.21) $ 0.04 $ (0.41)
Extraordinary item ....................... 0.00 0.39 0.00 0.00
------------- ------------- ------------- -------------
Net income (loss) per common share ............ $ (0.05) $ 0.18 $ 0.04 $ (0.41)
============= ============= ============= =============

</TABLE>

See notes to consolidated financial statements.

F-4
<PAGE>

IFS INTERNATIONAL, INC. AND SUBSIDIARY

CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY (DEFICIT)
YEARS ENDED APRIL 30, 1996 AND 1995 AND
SIX MONTHS ENDED OCTOBER 31, 1996 (UNAUDITED)

<TABLE>
<CAPTION>
Common Stock
-------------------------- Additional
Shares Par Paid-in Accumulated
Outstanding Value Capital Deficit Total
------------- --------- ------------- -------------- --------------
<S> <C> <C> <C> <C> <C>
Balances at April 30, 1994 ...... 921,287 $ 922 $1,887,110 $(3,030,232) $(1,142,200)
Issuance of common stock ........ 71,388 71 137,469 -- 137,540
Net income ...................... -- -- -- 172,215 172,215
------------- --------- ------------- -------------- --------------
Balances at April 30, 1995 ...... 992,675 993 2,024,579 (2,858,017) (832,445)
Issuance of common stock ........ 16,686 17 153,032 -- 153,049
Net loss ........................ -- -- -- (48,380) (48,380)
------------- --------- ------------- -------------- --------------
Balances at April 30, 1996 ...... 1,009,361 1,010 2,177,611 (2,906,397) (727,776)
Issuance of common stock
(unaudited) .................... 50,369 50 36,987 -- 37,037
Issuance of common stock warrants
(unaudited) .................... -- -- 5,000 -- 5,000
Net income (unaudited) .......... -- -- -- 52,052 52,052
------------- --------- ------------- -------------- --------------
Balances at October 31, 1996
(unaudited) .................... 1,059,730 $1,060 $2,219,598 $(2,854,345) $ (633,687)
============= ========= ============= ============== ==============

</TABLE>

See notes to consolidated financial statements.

F-5
<PAGE>

IFS INTERNATIONAL, INC. AND SUBSIDIARY

CONSOLIDATED STATEMENTS OF CASH FLOWS
YEARS ENDED APRIL 30, 1996 AND 1995 AND
SIX MONTHS ENDED OCTOBER 31, 1996 AND 1995 (UNAUDITED)

<TABLE>
<CAPTION>
Six Months Ended
Year Ended October 31
April 30 (Unaudited)
--------------------------- ---------------------------
1996 1995 1996 1995
------------ ----------- ----------- ------------
<S> <C> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net income (loss) ............................. $ (48,380) $ 172,215 $ 52,051 $(414,325)
Adjustments to reconcile net income (loss) to
net cash provided by operating activities:
Depreciation and amortization .............. 205,015 164,969 134,302 97,115
Extraordinary gain on debt restructuring and
extinguishments .......................... -- (377,687) -- --
Changes in:
Trade accounts receivable, net ........... 202,530 (105,169) (255,081) 202,099
Other receivables ........................ (7,226) (27,553) 19,709 23,801
Costs, estimated earnings and billings on
uncompleted contracts ................. (179,770) 17,973 453,277 328,057
Other current assets ..................... (5,876) 1,057 (44,893) (15,883)
Accounts payable and other liabilities ... 143,790 64,497 (322,032) 1,368
Accrued salary, commissions, and expenses 112,475 199,342 120,721 35,406
Deferred revenue and customer deposits ... 47,288 58,078 55,739 (47,839)
Other liabilities ........................ -- (4,210) -- --
------------ ----------- ----------- ------------
Net cash provided by operating
activities .......................... 469,846 163,512 213,793 209,799
------------ ----------- ----------- ------------
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of equipment ......................... (62,537) (42,534) (71,989) (17,867)
Capitalized license costs ..................... (2,157) (2,635) (666) (2,158)
Capitalized software costs .................... (160,117) (151,662) (153,983) (78,480)
------------ ----------- ----------- ------------
Net cash used in investing activities . (224,811) (196,831) (226,638) (98,505)
------------ ----------- ----------- ------------
CASH FLOWS FROM FINANCING ACTIVITIES
Payments on capital lease obligations ......... (15,081) (14,056) (2,733) (6,189)
Principal payments on long-term debt .......... (103,624) (63,228) (5,395) (99,693)
Proceeds from short-term borrowing ............ -- -- 500,000 --
Deferred offering costs ....................... -- -- (62,021) --
Proceeds from issuance of stock ............... 3,049 65,666 37,036 --
Proceeds from issuance of warrants ............ -- -- 5,000 --
------------ ----------- ----------- ------------
Net cash provided by (used in)
financing activities ................ (115,656) (11,618) 471,887 (105,882)
------------ ----------- ----------- ------------
Increase/(decrease) in cash ..................... 129,379 (44,937) 459,042 5,412
Cash:
Beginning of year ............................. 8,083 53,020 137,462 8,083
------------ ----------- ----------- ------------
End of period ................................. $ 137,462 $ 8,083 $ 596,504 $ 13,495
============ =========== =========== ============
</TABLE>

See notes to consolidated financial statements.

F-6
<PAGE>

IFS INTERNATIONAL, INC. AND SUBSIDIARY

CONSOLIDATED STATEMENTS OF CASH FLOWS, CONTINUED
YEARS ENDED APRIL 30, 1996 AND 1995 AND
SIX MONTHS ENDED OCTOBER 31, 1996 AND 1995 (UNAUDITED)

<TABLE>
<CAPTION>
Six Months Ended
Year Ended October 31
April 30 (Unaudited)
-------------------------- ---------------------
1996 1995 1996 1995
----------- ----------- --------- --------
<S> <C> <C> <C> <C>
SUPPLEMENTAL DISCLOSURES OF CASH FLOW
INFORMATION
Cash paid during the period for:
Interest ............................... $ 29,042 $ 50,167 $40,239 $2,319
=========== =========== ========= ========
Income taxes ........................... $ 7,476 $ -- $ -- $ --
=========== =========== ========= ========
SUPPLEMENTAL DISCLOSURES OF
NON-CASH INVESTING AND FINANCING TRANSACTIONS
Notes payable, salary obligations, and
accounts payable restructured and/or
extinguished ........................... $ -- $377,687 $ -- $ --
=========== =========== ========= ========
Long-term debt converted to common stock
(150,000 shares in 1996, 259,673 in
1995) .................................. $150,000 $ 71,875 $ -- $ --
=========== =========== ========= ========

</TABLE>

See notes to consolidated financial statements.

F-7
<PAGE>

IFS INTERNATIONAL, INC. AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

APRIL 30, 1996

NOTE 1. ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES

ORGANIZATION AND DESCRIPTION OF BUSINESS

IFS International, Inc. was incorporated in Delaware in September 1986
under the name Wellsway Ventures, Inc. The Company was formed with limited
assets as a blind pool to obtain proceeds from a public offering and then to
acquire an existing business entity. The Company utilized proceeds from the
blind pool to acquire its operating subsidiary, IFS International, Inc., a
New York corporation.

IFS International, Inc. is engaged in the design and development of
computer software for use with automatic teller machines (ATMs), electronic
fund transfers (EFTs), and point of sale (POS) systems used by financial
institutions and retailers. The Company also provides its customers with
support and maintenance services for such systems.

Commencing in 1993, a significant portion of the Company's sales and
revenues were derived from financial institutions and other customers located
outside of the United States (see Note 12). The Company extends credit to its
customers and generally requires deposits upon execution of software
development contracts. With respect to foreign customers, collection may be
more difficult upon default.

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

PRINCIPLES OF CONSOLIDATION:

The consolidated financial statements include the accounts of IFS
International, Inc. (formerly Wellsway Ventures, Inc.) and its wholly-owned
subsidiary, IFS International, Inc. (formerly Avant-Garde Computer Systems,
Inc.). All significant intercompany accounts and transactions have been
eliminated.

PRESENTATION OF INTERIM FINANCIAL STATEMENTS:

The accompanying unaudited consolidated financial statements include all
adjustments which management believes necessary for a fair presentation of
the Company's financial position at October 31, 1996, and the results of its
operations and its cash flows for the six months ended October 31, 1996 and
1995. All adjustments are of a normal recurring nature.

USE OF ESTIMATES:

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

REVENUE RECOGNITION:

Revenue from software installation contracts is recognized on the
percentage-of-completion method, measured by the ratio of costs incurred to
date to management's estimates of total anticipated costs. This method is
used because management considers costs incurred to be the best available
measure of progress on software installation contracts. Because of the
inherent uncertainties in estimating contracts, it is at least reasonably
possible that the Company's estimates of costs and revenues will change in
the near term. Uncertainty inherent in initial estimates is reduced
progressively as work on the contract nears completion. Deposits received in
advance for hardware sales are deferred and recognized as revenue upon
installation and acceptance of the system. Amounts received on service
contracts are initially deferred and recognized ratably over the life of the
contract, generally one year. All revenues derived outside of the United
States are received in U.S. dollars.

F-8
<PAGE>

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

Note 1. Organization and Significant Accounting Policies - (Continued)

ALLOWANCE FOR DOUBTFUL ACCOUNTS:

Bad debts are provided for on the allowance method based upon historical
experience and management's estimation of collection losses on outstanding
accounts receivable.

PROPERTY, EQUIPMENT AND IMPROVEMENTS:

Property, equipment and improvements are stated at cost, with related
depreciation provided by the declining-balance and straight-line methods over
the estimated useful lives of the related assets, generally five years. For
income tax purposes, the accelerated cost recovery system and the modified
accelerated cost recovery system are utilized. Assets recorded under capital
leases are depreciated over the terms of the lease under methods which are
consistent with the Company's depreciation policy for owned assets.

CAPITALIZED SOFTWARE COSTS:

The cost of adding new functions and features (i.e., enhancements) to
existing systems and the cost of development of new systems, for which
technological feasibility has been established and which are not covered by
outside funding, are capitalized. Costs incurred in the establishment of
technological feasibility of new systems are expensed as incurred.

Capitalized software costs are reported at the lower of unamortized cost
or net realizable value. Amortization is recorded over the estimated
five-year marketing lives of the software and is computed on the greater of
the percent-of-revenue method, based on the total estimated future revenues
expected to be derived from sales of the software, or the straight-line
method.

INCOME TAXES:

Current or deferred tax liabilities are recognized for the tax
consequences of all events recognized in the financial statements. Deferred
taxes are computed on the differences between the financial reporting and the
tax reporting basis of assets and liabilities. The Company has not recognized
the benefit of any net operating loss carryforwards due to the uncertainty of
the realizability of such carryforwards.

NET INCOME (LOSS) ATTRIBUTABLE TO COMMON SHARES:

Net income (loss) attributable to common shares is based on the weighted
average number of shares, as adjusted to reflect a 1 for 10 reverse split
(Note 15), outstanding during the respective years (approximately 1,002,000
in 1996 and 953,000 in 1995). The effect of the assumed exercise of options
and warrants outstanding is anti-dilutive or not material.

NOTE 2. COSTS AND ESTIMATED EARNINGS ON UNCOMPLETED CONTRACTS

Costs and estimated earnings on uncompleted contracts are summarized as
follows:

<TABLE>
<CAPTION>
<S> <C>
Expenditures on uncompleted contracts $ 245,285
Estimated earnings thereon ........... 1,546,947
-----------
1,792,232
Less billings to date ................ 1,392,583
-----------
$ 399,649
===========

</TABLE>

F-9
<PAGE>

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

Note 2. Costs and Estimated Earnings on Uncompleted Contracts - (Continued)

Included in the accompanying balance sheet under the following captions:

<TABLE>
<CAPTION>
<S> <C>
Costs and estimated earnings in excess of billings on
uncompleted contracts .............................. $432,173
Billings in excess of costs and estimated earnings on
uncompleted contracts .............................. (32,524)
----------
$399,649
==========

</TABLE>

NOTE 3. PROPERTY, EQUIPMENT AND IMPROVEMENTS

Property, equipment and improvements consist of the following:

<TABLE>
<CAPTION>
<S> <C>
Machinery and equipment .................. $391,827
Equipment under capital leases ........... 54,103
Furniture and fixtures ................... 74,780
Leasehold improvements ................... 17,046
----------
537,756
Less accumulated depreciation ............ 401,525
----------
Property, equipment and improvements, net $136,231
==========

</TABLE>

Amortization related to equipment under capital leases was $10,821 for the
years ended April 30, 1996 and 1995, respectively.

Depreciation related to property, equipment, and improvements was $36,917
and $28,528 for the years ended April 30, 1996 and 1995, respectively.

NOTE 4. CAPITALIZED SOFTWARE COSTS

Capitalized software costs consist of the following:

<TABLE>
<CAPTION>
<S> <C>
Capitalized software costs ... $ 848,878
Less accumulated amortization (471,396)
-----------
$ 377,482
===========

</TABLE>

Amortization expense approximated $154,000 and $123,000 for the years
ended April 30, 1996 and 1995, respectively.

NOTE 5. LONG-TERM DEBT

Long-term debt consists of the following:

<TABLE>
<CAPTION>
<S> <C>
Restructured note payable, government agency,
interest only payments of $1,375 per month through
April 1996 and principal and interest payments of
$3,804 per month, thereafter, including interest
at 7.5%, due April 2002. This note is unsecured
and subordinated to all other debt. .............. $220,000

</TABLE>

F-10
<PAGE>

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

Note 5. Long-Term Debt - (Continued)

<TABLE>
<CAPTION>
<S> <C>
Restructured convertible subordinated debentures
payable to a governmental agency due in
installments of $80,000, $80,000, and $90,000 in
April 1998, 1999, and 2000, respectively.
Interest is payable quarterly at 7.5%. The
debentures are convertible into shares of common
stock at rates ranging from $4.20 per share to
$5.70 per share through July, 1997. At April 30,
1996, 59,524 shares of common stock were issuable
under this conversion feature. ................... 250,000
Other ............................................ 8,160
----------
478,160
Less current portion ............................. 38,329
----------
$439,831
----------

</TABLE>

Certain of the Company's long-term debt obligations require compliance
with financial and non-financial covenants. As of April 30, 1996, the Company
was not in compliance with several of these requirements, however, covenant
violation waivers have been received.

Aggregate maturities of long-term debt are as follows:

<TABLE>
<CAPTION>
Year Ending April 30
--------------------
<S> <C>
1997 .......... $ 38,329
1998 .......... 112,511
1999 .......... 115,035
2000 .......... 127,755
2001 .......... 40,686
Thereafter .... 43,844
----------
$478,160
==========

</TABLE>

NOTE 6. CAPITAL LEASE OBLIGATIONS

The Company is the lessee of computer equipment and a telephone system
under capital leases expiring in various years through 1997. The assets and
liabilities under capital leases are recorded at the lower of the present
value of the minimum lease payment or the fair value of the asset. The assets
are depreciated/amortized over the lesser of their related lease terms or
their estimated productive lives.

Assets recorded under capital leases include the following:

<TABLE>
<CAPTION>
<S> <C>
Computer and telephone equipment ....... $54,103
Accumulated depreciation ............... 43,589
---------
Net capitalized computer and telephone
equipment .......................... $10,514
=========

</TABLE>

Minimum future lease payments under capital leases as of April 30, 1996,
are not material.

F-11
<PAGE>

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

NOTE 7. OPERATING LEASE COMMITMENTS

The Company has operating lease agreements, which begin to expire October
1997, for the rental of its operating facilities and an automobile. Future
minimum lease payments on these noncancellable operating lease arrangements
with terms in excess of one year are as follows:

<TABLE>
<CAPTION>
Year Ending April 30
--------------------
<S> <C>
1997 ............................................... $138,403
1998 ............................................... 90,180
1999 ............................................... 85,935
2000 ............................................... 21,548
----------
$336,066
==========

</TABLE>

NOTE 8. INCOME TAXES

The provision for income taxes for the years ended April 30, 1996 and 1995
differs from the amount obtained by applying the U.S. federal income tax to
pretax income due to the following:

<TABLE>
<CAPTION>
1996 1995
----------- -----------
<S> <C> <C>
Federal income tax benefit at statutory rates ......... $(23,000) $(80,100)
State income tax benefit, net of federal benefits ..... (3,400) (10,200)
Change in valuation allowance for net operating losses 26,400 90,300
----------- -----------
Provision for income taxes ............................ $ -- $ --
=========== ===========

</TABLE>

At April 30, 1996, the Company has net operating loss carryforwards of
approximately $2,200,000, which begin to expire in 2004 to offset future
federal taxable income.

Because of the uncertainty as to realizability, the deferred tax benefit
attributable to net operating loss carryforwards at April 30, 1996 and 1995
of approximately $816,000 and $790,000, respectively, has been offset by an
equivalent valuation allowance.

NOTE 9. STOCK OPTION PLAN

The Company has a stock option plan which provides for the granting of
either options intended to qualify as "incentive stock options" under the
Internal Revenue Code or "supplemental stock options" not intended to
qualify. An aggregate of 332,779 shares of common stock have been reserved in
this connection. The Board of Directors determines the exercise and
expiration dates of the options which may not be later than 10 years from the
date of the grant. The purchase prices of the shares under option must be at
least equal to the fair market value of the common stock at the date of
grant. Options outstanding at April 30, 1996, may be exercised at prices
ranging from $.66 to $2.50 per share. At April 30, 1996, options to acquire
50,896 common shares were available for future issuance. (See Note 15).

F-12
<PAGE>

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
Note 9. Stock Option Plan - (Continued)
The following table summarizes option activity during 1996 and 1995:

<TABLE>
<CAPTION>
Shares Under Option
Year Ended April 30
------------------------------
1996 1995
--------- ---------
<S> <C> <C>
Outstanding beginning of year ...... 269,212 260,115
Granted ............................ 18,000 23,500
Exercised ($1.00 to $2.50 per share) (1,686) (5,421)
Canceled ........................... (3,742) (8,983)
--------- ---------
Outstanding end of year ............ 281,884 269,212
========= =========
Exercisable ........................ 257,077 246,128
========= =========

</TABLE>

NOTE 10. CONTINGENCIES

In June 1989, the Company commenced an action against a software
manufacturer, seeking various remedies in connection with an agreement which
gave the Company certain rights to produce and market an application software
package developed by the manufacturer. In July 1989, subsequent to the
commencement of the action, the Company was named defendant in a lawsuit
filed by the manufacturer alleging breach of contract and claiming
approximately $5,000,000 in damages, interest, and costs and a permanent
injunction, which, if granted, would restrain the Company from marketing
certain computer applications. The Company vigorously contests the merits of
the claim. (See Note 15)

NOTE 11. RELATED PARTY TRANSACTIONS

Included in accrued salary, commissions and other expenses is
approximately $197,000 due to officers/directors for accrued salary and
commissions, including amounts earned in prior years, and related interest,
calculated at 12%. Other long-term liabilities represent amounts due to
officers/directors under a previous compensation plan. These balances earn
interest at 12% which is included in accrued expenses. Included in accounts
payable is approximately $73,000 due to officers/directors.

NOTE 12. EXPORT SALES, MAJOR CUSTOMERS, CERTAIN CONCENTRATIONS

One foreign customer accounted for approximately 12% of total revenues for
the year ended April 30, 1996. There were no outstanding amounts due from
this customer at April 30, 1996. Another foreign customer accounted for
approximately 12% of total revenues for the year ended April 30, 1995.

Total revenues considered export sales approximated $2,008,000 and
$1,862,000, or 82% and 91%, for the years ended April 30, 1996 and 1995,
respectively. Such revenues were derived primarily from customers located in
eastern Europe and the Far East.

Approximately 14% and 19% of the Company's total revenues for the years
ended April 30, 1996 and 1995, respectively, were derived pursuant to a
relationship with one computer manufacturer.

NOTE 13. FAIR VALUE OF FINANCIAL INSTRUMENTS

The fair value of the Company's financial instruments consisting
principally of accounts receivable, long- term debt, accounts payable and
accrued expenses has been estimated to approximate their carrying amounts.

NOTE 14. MANAGEMENT PLANS

The accompanying financial statements have been prepared assuming that the
Company will continue as a going concern and do not include any adjustments
relating to the recoverability and classification of reported asset amounts
or the amounts and classification of liabilities that might be necessary
should the Company be unable to continue as a going concern. A substantial
portion of the accumulated deficit at April 30, 1996 is

F-13
<PAGE>

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

Note 14. Management Plans - (Continued)

attributable to losses from operations in several consecutive fiscal years
prior to 1993. These losses were principally attributable to the Company's
then existing products becoming antiquated, the write off ($1,040,000) of
software development costs in fiscal year 1991, and incurring the research
and development costs associated with its latest software product, TPII.

Management believes that cash flows from operations will be sufficient to
meet debt service requirements and to maintain a current status with its
trade creditors during 1997. Operating cash flows for fiscal year 1997 are
expected to be principally attributable to the anticipated revenues to be
derived from sales of TPII and similar products. Further, in August 1996 the
Company signed a letter of intent with an underwriter to effect a firm
commitment equity offering with minimum gross proceeds of $5 million. There
can be no assurances that the proposed offering will be successful. (See Note
15)

In September 1995, the Company fully converted a note payable to common
stock. Terms of other notes have been modified to delay or extend the
repayment periods and in some cases forgive accrued interest.

As a result of the Company's efforts to enter joint marketing
relationships, the Company signed a prime contracting agreement with Digital
Equipment Corporation in 1994. This agreement has led to several sales for
TPII. The Company has and will continue to market to distributors of Digital
Equipment Corporation around the world. The Company has also entered into a
re-licensing agreement with a Digital distributor, Prime Systems Plus, Inc.
in the Philippines.

NOTE 15. SUBSEQUENT EVENTS

PUBLIC OFFERING:

The Company has filed a registration statement with the U.S. Securities
and Exchange Commission in connection with a proposed public offering of
1,200,000 shares of Series A Convertible Preferred Stock and 1,700,000
Redeemable Series A Convertible Preferred Stock Purchase Warrants. The
preferred stock will be convertible, at the option of the holder, into one
share of the Company's common stock for a period of five years. Each warrant
will entitle the holder to purchase one share of preferred stock for a period
of three years. If successful, net proceeds from the offering will
approximate $5,000,000.

In October and November 1996, in connection with the proposed public
offering, the Company approved a 1 for 10 reverse common stock split,
increased the number of preferred shares authorized to 25,000,000, and
designated 20,000,000 of the preferred shares as Series A Convertible. Issued
and outstanding shares of common stock and all share related and per share
amounts have been restated to give retroactive effect to the split.

In September 1996, the Company borrowed $500,000 in bridge financing
pursuant to a private placement. This debt bears interest at 12% and is due
at the earlier of the closing of the proposed public offering or in March
1998. The bridge financing lenders also acquired warrants to purchase 100,000
shares of common stock at a price of $2.50 per share.

CONTINGENCIES:

In December 1996, the litigation matters referred to in Note 10 were
settled, resulting in the Company paying the software manufacturer $100,000.

1996 STOCK OPTION PLAN:

In December 1996, the Board of Directors of the Company adopted a second
stock option plan (the "1996 Plan") to provide for the granting of options
which are intended to qualify either as "incentive stock options" under the
Internal Revenue Code or "nonstatutory stock options" not intended to
qualify. 300,000 shares of Common Stock have been reserved for issuance under
the 1996 Plan which will be administered by the Board of Directors. The 1996
Plan is subject to stockholder approval.

F-14
<PAGE>

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

Note 15. Subsequent Events - (Continued)

PURCHASE COMMITTMENT:

In December 1996, the Company entered into an agreement for the purchase
of real estate. The agreement provides for deposits of $50,000 to be paid by
the Company, with the balance of the purchase price ($945,000) due upon
closing. The Company intends to renovate the real estate and ultimately house
its operations at this location. A substantial portion of the purchase cost
is expected to be financed through borrowing arrangements.

F-15
<PAGE>

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

No dealer, salesperson or other person has been authorized to give any
information or make any representations other than those contained in this
Prospectus and, if given or made, such information or representations must
not be relied upon as having been authorized by the Underwriter. This
Prospectus does not constitute an offer to sell or a solicitation of an offer
to buy any securities, to any person in any jurisdiction where such offer or
solicitation would be unlawful. Neither the delivery of this Prospectus nor
any sale made hereunder shall under any circumstances create any implication
that there has been no change in the affairs of the Company since the date
hereof.
------
TABLE OF CONTENTS

<TABLE>
<CAPTION>
Page
-----------------------------------------------------------------------------
<S> <C>
Prospectus Summary .............................................. 3
Risk Factors .................................................... 7
Use of Proceeds ................................................. 13
Price Range of Common Stock ..................................... 15
Dividend Policy ................................................. 15
Capitalization .................................................. 16
Dilution ........................................................ 17
Selected Financial Data ......................................... 18
Management's Discussion and Analysis of
Financial Condition and Results of
Operations ..................................................... 19
Business ........................................................ 22
Management ...................................................... 30
Principal Stockholders .......................................... 33
Certain Transactions ............................................ 33
Description of Securities ....................................... 34
Shares Eligible for Future Sale ................................. 37
Underwriting .................................................... 37
Legal Matters ................................................... 39
Experts ......................................................... 39
Glossary ........................................................ 40
Index to Financial Statements ................................... F-1

</TABLE>

Until March 18, 1997 (25 days after the date of this Prospectus), all
dealers effecting transactions in the Company's securities, whether or not
participating in this distribution, may be required to deliver a Prospectus.
This is in addition to the obligation of dealers to deliver a Prospectus with
respect to their unsold allotments or subscriptions.

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

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

IFS INTERNATIONAL, INC.

LOGO

1,200,000 SHARES OF SERIES A
CONVERTIBLE PREFERRED STOCK

1,700,000 REDEEMABLE SERIES A
CONVERTIBLE PREFERRED STOCK
PURCHASE WARRANTS

------
PROSPECTUS
------

[LOGO]

DUKE & CO., INC.

February 21, 1997

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