RECOM MANAGED SYSTEMS INC DE/, SB-2, 1999-07-26

RECOM MANAGED SYSTEMS INC DE/
SB-2, 1999-07-26
BLANK CHECKS

Previous: CORNERSTONE MORTGAGE INVESTMENT GROUP II INC, 10-Q, 1999-07-26

Next: PROFESSIONALLY MANAGED PORTFOLIOS, 485BPOS, 1999-07-26

As filed with the Securities and Exchange Commission on July __, 1999
Registration No. __________
================================================================================
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM SB-2
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933

RECOM MANAGED SYSTEMS, INC.
(Exact name of Small Business Issuer as specified in its charter)

Delaware 94-2641610
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)

2412 Professional Drive, Roseville, California 95661
(916) 789-2022
(Address, including zip code, and telephone number, including area
code, of registrant's principal executive offices)

Wilmington Trust Company
1209 Orange Street
Wilmington, Delaware 19801, (302) 658-4205
(Name, address, including zip code, and telephone number,
including area code, of agent for service)

Please send a copy of communications to:

Todd A. Ellsworth, Esq.
Boyd & Chang, LLP
19900 MacArthur Boulevard, Suite 660, Irvine, California 92612
(949) 851-9800

Approximate date of commencement of proposed sale to the public: From
time to time after the effective date of this Registration Statement.
If the only securities being registered on this form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box. [ ]
If any of the securities being registered on this Form are to be
offered on a delayed or continuous basis pursuant to Rule 415 under the
Securities Act of 1933, other than securities offered only in connection with
dividend or interest investment plans, check the following box. [X]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [ ]
If this Form is a post-effective amendment filed pursuant to Rule
462(c) under the Securities Act, check the following box and list the Securities
Act registration statement number of the earlier effective registration
statement for the same offering. [ ]
If delivery of the Prospectus is expected to be made pursuant to Rule
434, please check the following box. [ ]

<TABLE>
<CAPTION>
CALCULATION OF REGISTRATION FEE
=============================== =================== ========================= =========================== ==========================
Amount of Common
Title of Each Class Stock to Proposed maximum Proposed maximum Amount of
of Securities to be Registered be registered offering price per aggregate offering price1 Registration Fee
share1
=============================== =================== ========================= =========================== ==========================
<S> <C> <C> <C> <C>
Common Stock, $.001 par value 655,000 $4.25 $2,925,000.00 $850.00
=============================== =================== ========================= =========================== ==========================
</TABLE>

1 The offering price is estimated solely for the purpose of calculating
the registration fee in accordance with Rule 457(c), using the closing price
reported by the Nasdaq Bulletin Board for the Common Stock on July 13, 1999,
based upon the last trade of such shares which was $4.25 per share.

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

<PAGE>

PROSPECTUS

RECOM MANAGED SYSTEMS, INC.

650,000 Shares
of Common Stock

This Prospectus (the "Prospectus") covers our registration for possible
resale of 655,000 shares of Common Stock, par value of $.001 (the "Shares"), of
Recom Managed Systems, Inc., a Delaware corporation (the "Company"), that have
been issued to certain of our stockholders (the "Selling Stockholders").

We are not a reporting company as defined in Section 12(g) of the
Exchange Act. We have filed a 10-KSB for the year end December 31, 1998;
however, we have not circulated an annual report to our shareholders.

Certain of our shareholders may sell up to 655,000 Shares from time to
time.

We will not receive any of the proceeds from the sale of the Shares. We
will bear substantially all expenses of registration of the Shares under federal
and state securities laws incurred by the sale of Shares by the Selling
Stockholders. We have also agreed to indemnify certain of the Selling
Stockholders against certain liabilities under the Securities Act. See "Use of
Proceeds," "Selling Stockholders" and "Plan of Distribution".

Our Common Stock (our "Common Stock") is traded on the Nasdaq Bulletin
Board exchange under the symbol "RMSI". On July 13, 1999, the last reported sale
price of our Common Stock was $4.25 per share.

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

INVESTING IN OUR SECURITIES INVOLVES CERTAIN RISKS. SEE "RISK FACTORS"
BEGINNING ON PAGE 3.

NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR DETERMINED IF THIS
PROSPECTUS IS TRUTHFUL OR COMPLETE. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.

The date of this Prospectus is July __, 1999

<PAGE>

TABLE OF CONTENTS
-----------------

PAGE
----

PROSPECTUS SUMMARY ............................................................1

THE COMPANY ...................................................................1

SUMMARY FINANCIAL INFORMATION .................................................2

RISK FACTORS ..................................................................3

DESCRIPTION OF OUR BUSINESS....................................................7

MANAGEMENT'S DISCUSSION AND ANALYSIS AND PLAN OF OPERATIONS ..................13

USE OF PROCEEDS ..............................................................15

DILUTION .....................................................................15

CAPITALIZATION ...............................................................16

SELLING STOCKHOLDERS .........................................................17

LEGAL PROCEEDINGS ............................................................18

DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS .................18

WHO CONTROLS OUR STOCK .......................................................20

DESCRIPTION OF OUR SHARES ....................................................21

INTEREST OF NAMED EXPERTS AND COUNSEL ........................................22

DESCRIPTION OF PROPERTY ......................................................23

CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS ...............................23

MARKET FOR OUR STOCK AND RELATED STOCKHOLDER MATTERS .........................24

PLAN OF DISTRIBUTION .........................................................25

EXECUTIVE COMPENSATION .......................................................25

FINANCIAL STATEMENTS .........................................................27

<PAGE>

ANTI-TAKEOVER PROVISIONS .....................................................27

EXPERTS ......................................................................27

CAUTIONARY NOTICE REGARDING FORWARD-LOOKING STATEMENTS .......................27

WHERE YOU CAN FIND MORE INFORMATION ..........................................27

INCORPORATION BY REFERENCE ...................................................28

CHANGES IN ACCOUNTANTS .......................................................28

PART II

INFORMATION NOT REQUIRED IN PROSPECTUS..................................30

ITEM 24. INDEMNIFICATION OF OFFICERS AND DIRECTORS..............30
ITEM 25. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION............31
ITEM 26. RECENT SALES OF UNREGISTERED SECURITIES................31
ITEM 27. EXHIBITS...............................................31
ITEM 28. UNDERTAKINGS...........................................32

SIGNATURES....................................................................34

INDEX TO FINANCIAL STATEMENTS.................................................36

<PAGE>

PROSPECTUS SUMMARY

THIS PROSPECTUS SUMMARY ONLY HIGHLIGHTS CERTAIN INFORMATION CONTAINED IN THIS
PROSPECTUS. THIS SUMMARY IS NOT COMPLETE AND MAY NOT CONTAIN ALL OF THE
INFORMATION THAT IS IMPORTANT TO YOU IN MAKING A DECISION OF WHETHER OR NOT TO
INVEST. TO FULLY UNDERSTAND OUR COMPANY AND THIS OFFERING, YOU SHOULD READ THE
ENTIRE PROSPECTUS. MOST IMPORTANTLY, YOU SHOULD READ THE "RISK FACTORS"
BEGINNING ON PAGE 3.

The Company

We intend to become a national service provider that develops and
services mid-size and small commercial computer networks, including local and
wide area networks, the Internet and intranets. We will use processes and
procedures obtained from an affiliated company, Recom Technologies, Inc., with
predictable "NASA-level" reliability and quality. We anticipate that we will
service our customers on both an on-site and off-site basis and that we will
provide unique hardware and software configurations for the networks we service,
including their implementation, operation and servicing. In this way, we intend
to provide a complete service package for the commercial and business computer
client.

We plan to introduce our services and products initially to the
Sacramento area and then expand our territory as resources permit. The
Sacramento Valley, forecast by some to be one of the fastest growing business
regions in California and the country in the next ten years, is already
experiencing rapid growth by technology-related companies. Our executive offices
are located at 2412 Professional Drive, Roseville, California 95661. Our
telephone number is (916) 789-2022 and our facsimile number is (916) 789-2023.
Our e-mail address is [email protected], and our Website is
http://www.recom-technologies.com. Information contained in our Website should
not be deemed to be part of the Prospectus.

The Offering

Common Stock outstanding 3,270,000 shares
prior to the Offering:

Common Stock offered: 655,000 shares

Common Stock outstanding 3,270,000 shares
after the Offering:

Use of Proceeds: We will not receive any of the proceeds of
the sale of the Shares.

Risk Factors: The Offering involves a high degree of risk.
See "Risk Factors" beginning on page 3.

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

<PAGE>

<TABLE>
SUMMARY FINANCIAL INFORMATION
<CAPTION>

For the cumulative
For the cumulative period July 31,
period July 31, 1998 1998 (inception)
(inception) through For the quarter through March 31,
December 31, 1998 ended March 31, 1999 1999
----------- ----------- -----------
<S> <C> <C> <C>
Statement of Operations Data:
Revenues $ 79,292 $ 171,932 $ 251,224
Total costs and expenses 158,453 395,793 554,246
----------- ----------- -----------
Net loss $ (79,161) $ (223,861) $ (303,022)
=========== =========== ===========
Net Loss per dilutive common $ (0.03) $ (0.08) $ (0.12)
=========== =========== ===========
share outstanding
Weighted average dilutive 2,361,471 2,818,921 2,530,016
=========== =========== ===========
</TABLE>

<TABLE>
<CAPTION>
As of As of
December 31, 1998 Adjusted (1) March 31, 1999 Adjusted (2)
----------------- ------------ -------------- ------------
<S> <C> <C> <C> <C>
Balance Sheet Data:
Current assets $ 99,307 $ 686,157 $ 353,550 $ 435,550
Working capital $(275,234) $ 311,616 $ (78,200) $ 3,800
Total assets $ 112,985 $ 699,835 $ 451,503 $ 533,503
Total liabilities $ 374,541 $ 374,541 $ 431,750 $ 431,750
Stockholders' equity (deficit) $(261,556) $ 325,294 $ 19,753 $ 101,753
</TABLE>

- ---------------------------------
(1) Adjusted to show the effect of the sale of 504,000 and 50,000 shares of
common stock in connection with the private placement completed in
March 1999 and June 1999, respectively.
(2) Adjusted to show the effect of the sale of 50,000 shares of common
stock in connection with the private placement completed in June 1999,
respectively.

<PAGE>

RISK FACTORS

AN INVESTMENT IN OUR COMPANY IS SPECULATIVE IN NATURE AND INVOLVES A
HIGH DEGREE OF RISK. IN ADDITION TO THE OTHER INFORMATION CONTAINED IN THIS
PROSPECTUS, YOU SHOULD CAREFULLY CONSIDER THE FOLLOWING FACTORS IN EVALUATING
OUR COMPANY AND ITS BUSINESS BEFORE PURCHASING THE SHARES.

We Are a New Business With No Operating History

We were recently formed by merging a newly formed company with an
inactive public shell. Neither company has any operating history. Our services
are currently in development, and there is no assurance that these services will
be successfully developed or that we will be able to attract potential customers
for our services. We have spent most of our resources to date on technology and
infrastructure development. We expect to continue to spend substantial financial
and other resources on developing and introducing new service offerings, and
expanding our sales and marketing organizations, strategic relationships and
operating infrastructure. We expect that our cost of revenues, sales and
marketing expenses, general and administrative expenses, operations and customer
support expenses, and depreciation and amortization expenses will continue to
increase in absolute dollars and may increase as a percent of revenues. If our
revenues do not correspondingly increase, our operating results and financial
condition could be negatively affected.

Our Financial Condition is Uncertain and We Are Dependent on Future Offerings to
Survive

In June, 1999, we concluded a private placement offering, which raised
approximately $625,000 for the Company (after commissions and other offering
costs) and allowed us to commence the start-up of our business. Should our
actual results of operations fall short of our projections or our costs and
capital expenditures exceed the amounts projected, we could be required to seek
additional financing. We cannot assure you that we will be able to raise
additional money if needed. Additional financing may not be available. Any new
financing may also be dilutive to existing shareholders.

We Will be Subject to Intense Competition

We intend to offer services in systems integration and technical
support on an on-site and remote basis to customers primarily using smaller
systems integration engineers. Most on-site systems integration and technical
support industry includes consulting industry giants such as Hewlett Packard,
IBM, G.E. Capital Information, Compaq/Digital, EDS and Anderson Consulting and
each of the Big 5 international accounting firms. Competition for smaller
clients is much more fragmented, however, consists of numerous small and
medium-sized companies with various levels of technical ability. We will be in
competition with each category of service provider as we attempt to generate
business. Each of these providers has longer operating history within the
commercial arena. Most competitors are substantially more experienced in
providing commercial services and substantially better capitalized. These
competitive companies often have a specialization in certain software and
hardware products. We might not be able to compete successfully with existing or
future competitors.

<PAGE>

We Will be Subject to General Risks in the Development of Our Company

We cannot assure you that we will ever be able to successfully promote
our services or generate enough consulting business to produce revenues that
will enable us to continue our operations or provide you with a return on your
investment. Results of our operations in the future will be influenced by many
factors including:

o technological developments
o regulations
o increases in expenses associated with sales growth
o the capacity to expand and maintain the quality of our consulting
services
o recruitment and retention of highly skilled employees and
integration of such persons into a cohesive organization
o our ability to control costs
o our ability to expand our sales and marketing activities
o our ability to create and maintain strategic relationships
o our ability to expand our customer base and retain key clients
o our ability to introduce new services
o our ability to manage growing operations
o our ability to compete in a highly competitive market
o our ability to upgrade our systems and infrastructure to handle
any increases in sales

You should also be aware that newly developing and expanding businesses
such as ours often encounter unforeseen expenses and problems.

We Are Dependent on Computer Infrastructure and We May Experience Impact from
the Year 2000 (Y2K) Problem on Computer Systems

The Y2K issue is the result of computer programs and embedded hardware
systems having been developed using two digits rather than four to define the
applicable year. These computer programs or hardware that have date-sensitive
software or embedded chips may recognize a date using "00" as the year 1900
rather than the year 2000. This could result in system failures or
miscalculations causing disruptions of operations including, among other things,
a temporary inability to process transactions, send invoices or engage in normal
business activities. As a result, many companies' computer systems may need to
be upgraded or replaced in order to comply with the Y2K problem. Many of our
customers maintain their Internet operations on commercially available operating
systems, which may be impacted by Y2K complications. In addition, we rely on
third-party vendors for certain software and hardware included within our
services, which may not be Y2K compliant. If our internal computer systems or
third-party equipment or software fail or if systems maintained by our suppliers
fail to operate properly because of the Y2K problem we could incur significant
unanticipated expenses, system interruptions and loss of data. Any of these
events could harm our reputation, business and operating results.

We Cannot Assure You of the Success of Our Business Plan

While our predecessor (Recom Technologies, Inc.) has been successful in
servicing government contracts, we cannot assure you that we will be able to
effectively and profitably employ the skills and technologies used in
governmental applications in a commercial environment. Investors should not
infer that any success achieved by our predecessor will benefit or be duplicated
by us. Recom Technologies, Inc. did not transfer its market distribution system,

<PAGE>

sales force or customer base to us. The business practice of dealing with
private commercial customers is different from dealing with governmental
customers. Certain risks that are less likely to exist in governmental
operations are more apparent in commercial operations, including longer payment
cycles, uncertainty in economic viability and creditworthiness of customers,
local business practice, vulnerability to changes in economy and greater
susceptibility to competition and competitive pricing. We cannot assure you that
the business experience or model utilized by RTI will work for our commercial
customers.

We Are Dependent on Management for Successful Operations and Continued Growth

Our growth depends on continued active participation of our President,
John C. Epperson, Jr., and the rest of our management team. If we lose
management team members or cannot recruit and train additional key technical and
sales personnel it will hurt our business and operating results. We cannot
assure you that we will be able to continue to attract and retain the qualified
personnel necessary for our business' development. We have employment contracts
with only a few of our employees and we do not have key-person life insurance
policies on any of our employees.

Rapid Technological Change and Introduction of New Services Could Leave Our
Business Obsolete

The information technology industry is characterized by rapid
technological advances, changes in customer requirements and frequent new
product introductions and enhancements. These changes could disrupt our business
and render our services obsolete. Our future success will depend in large part
on our ability to anticipate and respond to advances, changes and new product
introductions. If we fail, it could have a material adverse effect on our
competitive position and results of operation. We are also subject to the risks
generally associated with new product introductions and applications, including
lack of market acceptance, delays in development or failure of products to
perform as expected.

We Are in a Competitive Market for Technical Personnel

Our success depends in part on our ability to attract, hire, train and
retain qualified managerial, technical and sales and marketing personnel.
Competition for skilled computer personnel is intense. We may not be successful
in attracting and retaining the technical personnel we require to conduct and
expand our operations successfully. Our operations could be materially adversely
affected if we are unable to attract, hire, train and retain qualified
personnel. Most of our sales and marketing personnel have recently joined us and
have limited experience working together. We may not be able to compete
successfully against bigger and more experienced sales and marketing
organizations of our competitors.

You Will Pay More for the Shares than Previous Shareholders

Our present shareholders acquired a controlling interest at a nominal
cost, which is substantially less than you will pay for the Shares. Most of the
Selling Stockholders paid only $1.25 per Share. You will bear nearly all of the
financial risk of our anticipated activities. Certain management and existing
shareholders stand to realize benefits from significant stock ownership. You
will pay substantially more per share than certain existing shareholders paid
for their shares.

You May Not be Able to Sell All of Your Shares at Once

Currently our stock is very thinly traded and has a limited market.
Very few of our shares are traded each day. Except for a few limited states
(e.g., Utah and Nevada), we have not yet secured exemptions from registration
for secondary trading in any other states. We cannot assure you that an active

<PAGE>

market will develop so that the Shares can be freely resold. With such a limited
market, the price at which our registered Common Stock trades may be highly
volatile. In addition, other events such as quarter-to-quarter variations in
operating results, news announcements, trading volume, general market trends and
other factors, could result in wide fluctuations in the market price of our
freely traded shares. There can be no assurance that a regular trading market
will develop for our securities. Even if a regular market is developed it might
not be sustained.

Our Common Stock is Currently Treated as a Penny Stock

Our Common Stock currently trades on the OTC Bulletin Board at a price
of less than $5.00 per share. Our stock is subject to the Penny Stock Rules
under the Securities Exchange Act of 1934. These rules regulate broker-dealer
practices for transactions in "penny stocks." Penny stocks generally have a
price of less than $5.00. There are numerous rules and restrictions that must be
followed to sell our shares. These requirements may reduce purchases of our
shares and trading activity in the secondary market for our Common Stock. As
long as our Common Stock is subject to the penny stock rules, investors in this
Offering may find it more difficult to sell their Shares.

Our Accountant Have Noted That We May Fail to Continue as a Going Concern

Our accountants have expressed in our financial statements, the risk
that we may not continue as a going concern. If we are unable to improve our
balance sheet and develop significant revenues from operations, we will not be
able to continue as a going concern or raise additional capital, resulting in a
total loss of your investment.

Our Officers and Directors Have Voting Control of Our Common Stock

Our executive officers and directors beneficially own approximately 45%
of the outstanding shares of Common Stock. Our Certificate of Incorporation does
not authorize cumulative voting with respect to the election of directors. Our
officers and directors are in a position to control the Company by being able to
nominate and elect our Board of Directors. The Board of Directors establishes
corporate policies and has the sole authority to nominate and elect our officers
to carry out those policies. Prospective investors therefore will have limited
participation in our Company's affairs.

Our Bylaws and Delaware Law Each Contain Anti-Takeover Provisions

Our Bylaws have antitakeover provisions designed to have the effect of
making it discourage a third party from attempting to acquire control of the
Company. Certain provisions of Delaware law applicable to us could also delay or
make more difficult a merger, tender offer or proxy contest involving the
Company. Section 203 of the Delaware General Corporation Law, specifically
prohibits a Delaware corporation from engaging in any business combination with
any interested shareholder for a period of three years unless certain conditions
are met. These provisions could limit the price that certain investors might be
willing to pay in the future for our stock.

We Do Not Pay Dividends

We do not anticipate generating significant cash flows from operations
in the near future. If we do generate significant cash flow from operations we
presently intend to use those cash flows to finance further growth of our
business and not to pay dividends to our shareholders. Accordingly, investors
should not plan to receive dividends.

<PAGE>

Projections and Forward-Looking Statements

This Prospectus contains statements regarding matters that are not
historical facts and constitute forward-looking statements within the meaning of
Section 27A of the Act and Section 21E of the Securities Exchange Act of 1934.
Because the outcome of the events described in such forward-looking statements
is subject to risks and uncertainties and in the nature of projections or
predictions of future events, which may not occur, actual results may differ
materially from those expressed in or implied by such forward-looking
statements. Although we believe that the expectations reflected in such
forward-looking statements are based upon reasonable assumptions, we cannot give
any assurance that our expectations will be achieved. Our future revenues and
profitability, if any, are impossible to accurately predict due to uncertainty
as to possible changes in economic, market and other circumstances. Certain of
the factors that could cause actual results to differ from our expectations are
set forth in these Risk Factors and in Managements Discussion and Analysis of
Financial Condition and Results of Operations under Item 6 of Part II of the
Company's form 10-KSB for the year ended December 31, 1998. You are urged to
consult with your own advisors regarding any revenue, financial, business and
other projections contained herein.

Future Resale of Securities

Most of our promoters and controlling shareholders hold shares of our
Stock that are or will be eligible for resale in the future. If these insiders
sell Shares, it could have a substantial adverse impact on the market price of
our securities. Currently, only approximately 5% of our shares are freely
tradeable. The Shares registered in this Prospectus will substantially increase
the number of freely tradeable shares. This new surplus could dramatically
reduce the market price of the Shares. Additionally, a large number of our
Shareholders currently have restricted Shares. Many of these Shares will be
freely tradeable in the future. This will further increase the number of Shares
in the open market. Supply of Shares may outweigh the demand for Shares. This
will cause the price to drop. Substantially more shares will become eligible for
resale in the next two years, especially under new, shorter, one year Rule 144
holding periods. The availability of freely traded shares in this magnitude
could have a material adverse effect on the value of the Company's publicly
traded shares.

Limitation of Liability

Our corporate character provides that our directors shall not be
personally liable for monetary damages to the Company or its shareholders for a
breach of fiduciary duty as directors, subject to limited exceptions. Although
such limitation of liability does not affect the availability of equitable
remedies such as injunctive relief or rescission, the presence of these
provisions in the Certificate of Incorporation could prevent the recovery of
monetary damages against our directors.

DESCRIPTION OF OUR BUSINESS

The Company

We were formed to develop and service commercial computer networks from
offsite or remote access via modem and the Internet. We intend to provide
computer support to our customers from our central offices. We are an affiliate
of Recom Technologies, Inc. (RTI). RTI has extensive historical experience in
providing for technical services related to basic business utilities and network
systems.

We intend to become a national service provider that develops and
services small and mid-size commercial computer networks. Our services will

<PAGE>

include local and wide area networks, the Internet and intranets. We anticipate
servicing our customers on an on-site and off-site basis. We plan to provide
unique hardware and software configurations for the networks we service,
including their implementation, operation and servicing. In this way, we intend
to provide a complete service package for the commercial and business computer
client.

We plan to introduce our services and products initially to the
Sacramento area and then expand from there as resources allow. The Sacramento
Valley is a fast growing business region and is already experiencing rapid
growth in technology-related companies. We believe it provides an excellent
incubator for the growth of our business.

Opportunity to Manage Total Cost of Ownership

The information technology industry is characterized by rapid
technological change, which often leads to increased costs of maintaining
internal information technology resources capable of responding to such change.
Companies have more desktop computers than ever before. Supporting these systems
often depletes the companies' ability to focus on their core business or take
advantage of important new technologies. Many organizations react by hiring
temporary staff, yet real expertise and reliable results are hard to find.
Increasingly, companies are solving this problem by outsourcing basic desktop
and network support services.

Besides the cost savings, other key areas of outsourcing are the
ability to make major capital reinvestments in systems every three years and
sufficient information technology staff to complete needed business growth
projects. We believe that this movement will enhance our services business. We
intend to address the total cost of ownership problem and other related
Information Technology issues by providing the ability to "selectively out-task"
specific desktop and network support responsibilities.

We plan to offer the following services:

Technology and Support Planning

We will offer technology planning to help our clients assess how their
business is currently deploying and supporting distributed computing systems.
Our assessments will seek to identify opportunities for improving desktop and
network support functions.

Help Desk Services and User Training

We will take a proactive approach to user support for desktop and
network applications focusing on continuous improvement to maximize
productivity. Our training courses will be directed at increasing user
productivity while decreasing the levels of support.

Maintenance and Asset Management Services

Another one of our goals is to minimize user downtime and reduce the
cost of on-site technical support. Through our umbrella of maintenance services,
we will provide responsive, single-source maintenance for desktop and network
equipment. We hope to teach our clients how to regain control of their computer
systems and manage cost through our careful tracking of PC and networking
systems.

<PAGE>

Network Services

We will offer a single source for network re-engineering, architecture
planning, integration, operations, network management, administration and
support. These services will be provided for local and wide area network and
Internet/intranet systems.

Full-Service Leasing

We plan to offer our clients a full-service leasing program for
desktop, laptop and servers. Our anticipated full-service leasing program will
combine management services with flexible financing that lets clients upgrade or
trade in assets at virtually any point during the lease term.

Information Technology Staffing

We will provide insource (client managed) or outsource (RMSI managed)
technical staff with a wide range of capabilities, including PowerBuilder,
Oracle and SilverStream.

Services Strategy

Our strategy is to become the leading provider of high quality
information technology services to commercial customers. We intend to provide
the same high-quality technical support provided to computing intensive
government organizations such as NASA by using proven business practices and
support technologies based on proprietary and intellectual assets assigned to us
by Recom Technologies, Inc.

We will provide specialized "out-tasking" service level agreements
designed to meet our clients' prioritized operational needs. Our service
agreements will measure and report critical performance indicators such as
system availability, system performance, customer satisfaction, call and ticket
volume, mean response time and mean time-for-repair.

Our remote support center will seek the capability to predict failures
and solve problems before they become apparent to the customer. Real-time asset
management will be used to determine the status of all network components at any
given time and this information will be available for customer review through
secure access on the user support web site. Knowledge bases will be used by the
remote support staff for problem resolution and also made available to users for
"self help" on the web site.

The remote support center, user support web site, and knowledge base
will better leverage our senior technical staff by reducing the time needed for
on-site visits. With remote control capabilities like remote boot and software
distribution, many systems problems will be resolved without sending a
technician on-site.

To further streamline our service, we will provide a knowledge base
directly to our customers through our web site. This web site will allow
customers to:

resolve many common problems themselves; obtain real time
operational status of computing resources; submit trouble calls
and track their resolution; and receive training on standard
desktop/network software.

<PAGE>

Our support services will concentrate on desktop (Windows NT/95/98),
client/server network architectures (Microsoft NT and Novell Netware) and
internet/intranet systems.

System maintenance and management functions will include:

software installations, metering and updates; remote systems
monitoring, optimization and tuning; system/data back-up and
recovery; data security and virus protection; asset management;
and preventative maintenance.

We will also provide a complete range of desktop support services that
eventually will include the lease of systems/services. Moreover, utilizing
proprietary processes developed by Recom Technologies, Inc. and the latest
remote agent software, we will seek to provide superior services that are not
currently available to the mid-level market.

Market Analysis

The information technology industry is characterized by rapid
technological change, which often leads to increased costs of maintaining
internal information technology resources capable of responding to such change.
International Data Corporation's 1998 study predicts that the computing support
outsourcing market will grow from $7.9 billion in 1997 to $17.4 billion in 2002.
We believe that growth potential of our target market appears significant on a
regional, national and international level. We believe that as companies strive
to compete and utilize complex new technologies, more companies will move toward
outsourcing their information technology requirements.

A survey of Northern California companies that offer network services
reveals that three companies are currently dominant and offer only "time and
materials" support. Also, the largest companies are hardware vendors first and
services suppliers second.

We believe that we are positioned to become a significant participant
in this market. Through our relationship with Recom Technologies, Inc., we have
a group of well-qualified technical staff, in-place procedures, local support
infrastructure and knowledge of local businesses. In addition, we have the
ability to support the State of California through RTI's current California
Master Agreement for Services, thereby enabling state agencies to buy services
through a pre-negotiated contract vehicle.

This marketing niche was selected by us for several reasons:

o Corporate networks (including local area, wide area, Internet and
Intranet connections) are a rapidly growing market.
o It has a rapidly growing customer base (the Sacramento region is
forecasted to be one of the fastest growing regions in the state
and the country and is already experiencing a large migration of
companies from the Silicon Valley).
o Companies know that technical talent is expensive and difficult to
find.
o In-house expertise and small consulting firms seldom offer a full
range of capabilities to completely satisfy enterprise networking
requirements.
o Large companies already have sufficient in-house expertise or
outsource to large service providers; moderate size companies
rarely enjoy a consistent and reliable level of support.

<PAGE>

o Often customers must deal with several vendors for complete
network services. This inevitably leads to delays, "finger
pointing" and an unreliable level of support.

After we are established in the Sacramento Valley, we intend to expand
the regional service concept to other growing west coast business regions such
as: South Bay, San Francisco, Portland, Seattle and Vancouver.

We plan to capture a significant market share by implementing a remote
support center, a user support web site and by extending Recom Technologies,
Inc.'s brand name recognition for quality and reliability. The remote center and
web site will allow us to offer a level of technical support not affordable by
any one mid-size company.

Marketing Plan

Our marketing plan is to demonstrate the benefits of the services our
remote support center, our web site as and our the field technicians. Marketing
and sales will be targeted through the following main initiatives:

Marketing alliance with Capital Communications

We plan to establish a mutual marketing agreement with Capital
Communications, which provides telecommunications systems to small to mid-sized
businesses in the Sacramento region and is recently under new management. As a
long-standing regional business, Capital Communications has a client list
consisting of 2,000 contacts.

Direct Sales and Marketing to Companies having Difficulty Recruiting
Technical staff

We intend to market and sell our information technology services
through our own direct sales and marketing personnel. The initial targeted
market consists of those companies having difficulty recruiting senior technical
staff. We will organize our information technology services business such that
each service technician maintains a direct relationship with certain of our
service customers. Specific marketing programs vary by target customer. We
believe that our direct sales approach, including having our service technicians
serve as client-relationship managers, leads to better account penetration and
management, better communications and long-term relationships with its clients
and greater opportunities for follow-on sales of products and services to its
existing client base.

Hardware and Software

We plan to establish strategic alliances, partnerships and
certification and distribution agreements with the following hardware and
software vendors:

Microsoft Cisco Hewlett Packard
3 COM IBM Dell
Remedy Serviceware Intel
Novell Sun Oracle

These agreements will allow us to implement and support a wide range of
technologies.

<PAGE>

Expanding Customer Base Through Acquisitions

Market growth will be accomplished by acquiring several high potential
technology companies that will have established customers in the Sacramento
region. These acquisitions will also provide technical staff and the associated
infrastructure needed to support our rapid growth. Our plan for acquisitions is:

Desktop/Network Systems Integrators and VARs
Business Internet Service Provider
IT Recruiting/Staffing Agency
IT Training Center

Asset Acquisition

In June, 1999, we completed the purchase of substantially all of the
assets of Valley Networking Corporation ("Valley") (the "Valley Agreement"), in
exchange for cash, equity and other consideration, including the assumption of
long-term debt in the approximate amount of $125,000. We acquired substantially
all of Valley's equipment, facilities, inventory and other assets identified in
the Valley Agreement.

Intellectual Property

We regard our intellectual property, including software, as proprietary
and rely on a combination of copyright, trade secrets, confidentiality
procedures and contractual provisions, including employee and third-party
nondisclosure agreements to protect our proprietary rights. We will seek to
protect our software, documentation and other written materials under trade
secret and copyright laws, which afford only limited protection. We have not
filed any application to register trademarks or copyright and presently have no
patents or patent applications pending. We believe that the ownership of patents
is not presently a significant factor in its business and that our success does
not depend on the ownership of patents, but primarily on the innovative skills,
technical competence and marketing abilities of our personnel. We will require
its personnel to enter into confidentiality agreements.

Despite our efforts to protect our proprietary rights, unauthorized
parties may attempt to copy aspects of our products or to obtain and use
information we regard as proprietary.

Competition

We believe that the competition for systems integration and technical
support fall into two main categories, those services provided by (i) large
international consulting firms such as EDS and Anderson Consulting and Big 5
accounting firms, and (ii) small local and regional providers. The market for
larger company clients, typically using over 1,000 terminals, is primarily
dominated by the large international firms servicing Fortune 1000 firms which
are not our primary market. These firms include Hewlett Packard, IBM, G.E.
Capital Information, Compaq/Digital and the Big 5 accounting firms and
consultants described above. We believe, however, that the market for smaller
companies utilizing 25 to 500 terminals consist largely of small 4 to 6 engineer
consulting firms or mid-sized regional firms, none of which control any
particular segment of the industry. We do not intend to try to compete with
companies such as EDS or the Big 5 accounting firms, which typically draw their
clients from their own accounting or client base. We will compete directly with
smaller public companies operating in the Bay Area and Central California region
such as INS, and Quest Microservice and the small independent consultants which
are prevalent in the market place.

<PAGE>

Employees

We currently have 14 employees; 4 management, 1 administrative, 8
consulting and 1 sales and marketing. We believe that we have good relations
with our employees. We are not subject to any collective bargaining agreement.

Property

We currently operate within the offices of Recom Technologies, Inc. in
Sacramento, California, pursuant to a sublease agreement for which we are
obligated to pay RTI $3,940 per month and reimburse all other operating costs
not covered in the Lease Agreement by RTI.

Recent Reorganization

We were formed through the merger of J-2 Technologies, LLC, a newly
formed California limited liability company spun-off by affiliates of Recom
Technologies, Inc. and Mt. Olympus Enterprises, Inc., a ten year old
publicly-traded shell organized under the laws of the State of Delaware, which
had not conducted business since its inception. We are the surviving entity of
the reverse merger, formed to exploit certain commercial applications of skills
and techniques developed by Recom Technologies, Inc. formerly only used in the
government sector.

MANAGEMENT'S DISCUSSION AND ANALYSIS AND PLAN OF OPERATIONS

This Prospectus contains "forward-looking statements" within the
meaning of Section 27A of the Securities Act of 1933, as amended, and Section
21E of the Securities Exchange Act of 1934, as amended. All statements, other
than statements of historical fact, included in or incorporated by reference
into this Prospectus, are forward-looking statements. In addition, when used in
this document, the words "anticipate," "estimate," "project" and similar
expressions are intended to identify forward-looking statements. These forward
looking statements are subject to certain risks, uncertainties and assumptions
including those risks described in our annual report on Form 10-KSB, as well as
in this report on Prospectus. Should underlying assumptions prove incorrect,
actual results may vary materially from those anticipated, estimated or
projected. Although we believe that the expectations we include in such
forward-looking statements are reasonable, we cannot assure you that these
expectations will prove to be correct.

Among the key risks that could cause actual results to differ
materially from expectations are estimates of costs, projected results or
anticipated results.

The following discussion and analysis should be read in conjunction
with our financial statements and the notes thereto.

Results of Operations

For the three months ended March 31, 1999 and the cumulative period
July 31, 1998 (inception) to December 31, 1998 and March 31, 1999, revenues from
information technology consulting services (IT Revenue) totaled $171,932,
$79,292 and $251,224, respectively. IT Revenues from a single customer with a
master contract that has month-to-month terms totaled $126,086, $79,292 and
$205,378 for the three months ended March 31, 1999 and the cumulative period
July 31, 1998 (inception) to December 31, 1998 and March 31, 1999, respectively.

<PAGE>

The Company believes that it has a very good relationship with the customer and
expects the contract to continue for the foreseeable future. IT Revenues under a
separate month-to-month contract with a second customer totaled $35,741 for the
three months ended March 31, 1999. The Company also earned IT Revenue of $10,105
during the three months ended March 31, 1999 from Recom Technology, a related
party.

The net loss of $223,861, $79,161 and $303,022 for the three months
ended March 31, 1999 and the cumulative period July 31, 1998 (inception) to
December 31, 1998 and March 31, 1999, respectively, can be attributed to
development, marketing and selling, and general and administrative expenses
incurred during the Company's developing stage.

Recent Financing

On June 15, 1999, we completed a private placement offering of 504,000
shares of common stock at $1.25 per Share and 50,000 Shares at $2.00 per Share
yielding to us gross proceeds of $730,000. The shares were sold to 19 accredited
investors. Net proceeds to us, after selling commissions of $78,650 and direct
offering costs of $46,500, totaled $604,850. We intend to use the net proceeds
in our continuing operations.

Liquidity and Sources of Capital

As of December 31, 1998 and March 31, 1999, we had current assets of
$99,307 and $353,550 with current liabilities of $374,541 and $431,750,
respectively. This represents a negative working capital of $275,234 and
$78,200, respectively. Cash flows provided by (used in) operating activities,
totaling ($245,788), $57,984 and ($187,804) for the three months ended March 31,
1999, and the period July 31, 1998 (inception) to December 31, 1998, and March
31, 1999, respectively, were generated primarily from changes in current assets
and liabilities.

Cash flows used in investing activities of $88,238 for the three months
ended March 31, 1999 was expended on information technology infrastructure used
to support the Company's developing business Cash flows used in financing
activities from inception through December 31, 1998 included the inflow of
$190,000 from notes payable to stockholders offset by $202,443 of expenses
related to the reverse acquisition. Cash flows from financing activities during
the quarter ended March 31, 1999 primarily consisted of the $504,850 of net
proceeds from the private placement offering.

Our Plan of Operation for the Next Twelve Months

Our planned business execution during its development stage will
require us to pursue sources of capital funding during the next twelve months in
addition to the capital raised in the March and June of 1999, private placement
offering. These funds are expected to be used for the continued development of
our technology infrastructure necessary to support its planned service
offerings, anticipated business acquisitions, and to support an expected
increase in the number of our employees.

Year 2000

There is significant concern that certain computer programs and
computers are not presently configured to recognize the year 2000 or succeeding
years. This defect in computer functions could have a serious adverse impact
upon our industry and other industries if various computer programs and
applications cease to function or function erroneously as we approach the year
2000. We view the year 2000 compliance problems it may face to fall within three
general categories:

<PAGE>

1. The potential impact on our own information technology.

2. The potential impact of the possibility of collateral failure or
miss-function in non-IT systems due to their computer components such as
telephone systems, security systems, etc.

3. The potential adverse effect upon us from year 2000 failure among
third party service providers.

We believe that we have addressed all of our year 2000 problems related
to our owned IT systems and have determined that our existing, as well as
in-development, internal hardware and software will function past the year 2000
without modification. We have also addressed our non-IT systems and believe that
these systems also will function past the year 2000, without modification. We do
not believe that there are any feasible plans to adjust operations to potential
industry-wide problems, such as may occur with suppliers or outsource
consultants. We will deal with those problems when and if they arise on a
case-by-case basis.

Amounts incurred by us related to the year 2000 for the period July 31,
1998, (inception) to December 31, 1998, were not significant. Amounts expected
to be spent in 1999 are also not expected to be significant.

USE OF PROCEEDS

Since the only securities being offered are those of the Selling
Stockholders we will not receive any of the proceeds from the sale of the
Shares.

DILUTION

Since we do not receive the proceeds of the sale of the Shares, we will
not experience any direct dilution. The existing shareholders paid substantially
less per Share than the Offering Price of the Shares sold by this Prospectus.

<PAGE>

CAPITALIZATION

The following table describes our actual capitalization as of March 31,
1999 and our capitalization as adjusted to show the sale of our Common Stock and
receipt of net proceeds pursuant to the private placement completed in June
1999.

March 31, 1999
Actual As Adjusted
-----------------------
Short Term Debt:

Notes payable to stockholders $190,000 $190,000
======== ========
Stockholders' equity (deficit):

Common Stock, $0.001 par value; 50,000,000
shares authorized; 3,119,000 and 3,169,000
shares issued and outstanding, respectively 3,119 3,169

Additional paid-in-capital 504,656 604,606

Accumulated deficit (488,022) (488,022)
--------- ---------

Total stockholders' equity (deficit) 19,753 119,753
--------- ---------
Total capitalization $209,753 $309,753
--------- ---------

<PAGE>

SELLING STOCKHOLDERS

The Selling Stockholders offering the Shares pursuant this Prospectus
are as follows:

<TABLE>
<CAPTION>
Shares Being
Shares Owned Offered Shares Owned
Prior to this Pursuant to After the
Name of Selling Stockholder(1) Offering this Prospectus Offering (2)

<S> <C> <C> <C>
Sarah H. Lynch 2,000 2,000 -0-
John F. Lynch 20,000 20,000 -0-
Ronald K. Zinszer 3,000 3,000 -0-
Robert L. Lansdowne 1,000 1,000 -0-
Ellis E. Acklin 8,000 8,000 -0-
Wink Capital Mgmt. Ltd. 20,000 20,000 -0-
Darryl S. Brasseale 2,000 2,000 -0-
P. Cory Roberts 10,000 10,000 -0-
Christopher Lynch 14,000 14,000 -0-
Carousel Partners
(Spear, Leeds & Kellogg) 40,000 40,000 -0-
The Lamborn Revocable Trust 20,000 20,000 -0-
Rudolf Limpert 10,000 10,000 -0-
Thair Schneiter 4,000 4,000 -0-
V. Mark Peterson & Dennis Madsen 40,000 40,000 -0-
Dr. Phil Taylor 10,000 10,000 -0-
Atlas Finance Inc. 220,000 220,000 -0-
Sarasu Enterprises, Inc. 80,000 80,000 -0-
Mackenzie Shea, Inc. 20,000 20,000 -0-
Avon Brill, LLC 20,000 20,000 -0-
Haxton Corporation 20,000 20,000 -0-
Brent Y. Suen 10,000 10,000 -0-
Sione Tangen 5,000 5,000 -0-
Boyd & Chang, LLP 26,000 26,000 -0-
The William R. Sperry and Nancy J. Sperry 25,000 25,000 -0-
1997 Revocable Trust
William and Mary Ho 25,000 25,000 -0-

TOTALS 655,000 655,000 -0-
</TABLE>

- -------------------
(1) Each Selling Stockholder has sole voting and investment power with
respect to the Shares beneficially owned by such Selling
Stockholder. All share amounts reflect beneficial ownership
determined pursuant to Rule 13d-3 under the Exchange Act.
(2) Assumes all of the Shares of Common Stock beneficially owned by
the Selling Stockholders and registered hereunder are sold.

<PAGE>

LEGAL PROCEEDINGS

We have not sued and are not being sued by anyone. We are not a party
to any pending legal proceedings, nor are we aware of any threats to sue us.

DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS

Our 7 Member Board of Directors currently consists of Jack Lee, Syed
Shariq, Ph.D., John C. Epperson, Jr., Robert Iger, Roger L. Akers, Curt Pringle
and John Flynn. The following table sets forth information about our present
directors and the senior officers. Directors are elected at our annual
shareholders meeting and serve for one year or until their successors are
elected. Officers are elected by the Board and their terms of office are, unless
governed by employment contracts, at the discretion of the Board.

Name Age Office
---- --- ------

John (Jack) C. Epperson, Jr. 50 Chairman of the Board and
Chief Executive Officer

G.K. (Jack) Lee 62 Director, Secretary

Syed Z. Shariq, Ph.D. 49 Director

Robert S. Iger, Esq. 57 Director

John T. Flynn 49 Director

Curt Pringle 39 Director

Roger L. Akers 45 Director

James P. Joyce 43 Chief Operating Officer

James D. Collins 30 Chief Financial Officer

Jamie B. Madison 45 Vice President, Marketing
and Sales

John (Jack) C. Epperson, Jr. has served as our Chairman of the Board
and Chief Executive Officer since August 1998. He also currently serves as the
Executive Vice President of Recom Technologies, Inc. a related corporation. He
has more than 27 years of experience in the field of corporate management,
information technology and facility support services. We continue leasing Mr.
Epperson's services on a part-time basis from Recom Technologies, Inc. under a
three-year Executive Employment Agreement that has not yet been finalized. Mr.
Epperson has acted as an entrepreneur on the founding of three successful
information service companies and currently serves on the Board of Directors of
Miranet, Inc., Recom International and Recom Applied Solutions.

G.K. (Jack) Lee has served as our Secretary and a Director since August
1998. Mr. Lee was a founder of Recom Technologies, Inc. and has more than 25
years experience in the information technologies services field, including 20

<PAGE>

years in management. Mr. Lee currently serves as President of Recom
Technologies, Inc. and as a member of its Board of Directors. He is also a Board
Member for Goodwill Industries and Attention Control Systems, Inc.

Syed Z. Shariq, Ph.D. has served as one of our Directors since November
1998. Dr. Shariq is Assistant to the Center Director for Strategic Alliances at
NASA Ames Research Center. He has also served as Director of Ames Commercial
Technology Office. Prior to joining NASA, Dr. Shariq served as a Senior
Associate with Montgomery Securities. He has served on the faculties of several
universities, including Duke and John Hopkins, and is a visiting faculty fellow
at Stanford University and University of Texas at Austin. Dr. Shariq is also a
member of numerous advisory groups, including the Governor's California
Information Technology Commission.

Robert S. Iger, Esq. has served as one of our Directors since November
1998. Mr. Iger, in addition to practicing law since 1994, has served on various
boards and in executive positions with LAR Holding, Ltd., Oxford First
Corporation and Xerox Corporation. Mr. Iger's practice concentrates on corporate
and securities law.

John T. Flynn has served as a Director of the Company since December
1998. Mr. Flynn currently serves as a Vice President with Litton/PRC with
responsibilities for state and local government programs. Mr. Flynn was
appointed by Governor Pete Wilson in November 1995, as California's first chief
information officer to oversee the state's two billion dollar annual investment
in information technology and telecommunications, a cabinet-level agency
reporting directly to the Governor. Previously, Mr. Flynn served as the state of
Massachusetts' first chief information officer since July 1994 after spending a
year as the Director of the Commonwealth's Office of Management Information
Systems. In October 1997, he was elected President of the National Association
of State Information Resources Executives (NASIRE). Mr. Flynn also serves on the
U.S. General Accounting Office Executive Counsel on Information Management and
Technology. He is also a member of the Board of Advisors of the Fisher Center
for Management and Information Technology at the University of California,
Berkeley.

Curt Pringle has served as one of our Directors since January 1999. Mr.
Pringle currently serves as a founder of Curt Pringle and Associates, a firm
that specializes in public relations, consulting and government affairs.
Previously, Mr. Pringle completed his final term with the California State
Assembly in November 1998. After serving two years from 1988-1990, he was
re-elected to the Assembly in 1992 and finished his final years of service
allowed under term limits. In January 1996, Mr. Pringle was elected Speaker of
the California State Assembly and presided as Speaker until November 1996, the
longest serving Republican Speaker in thirty years.

Roger L. Akers has served as one of our Directors since February 1999.
Mr. Akers is a senior level executive with 20 years of experience (15 in
management capacity) in information technology related businesses. A majority of
Mr. Akers experience has been in the facilities management, management
consulting, and systems development segments of the national and regional
consulting services industry. He spent eleven years building an eight office
regional consulting company employing over 400 employees serving public and
private sector clients throughout the western U.S. His most recent two years
have been spent providing strategic consulting to Fortune 100 companies,
including executive staff development and equity capital development for
emerging technology related businesses.

James P. Joyce has served as our Chief Operating Officer on a full-time
basis since August 1998. Mr. Joyce has more than 21 years of experience in
providing information system services. Most recently, he served as Director of
the IT Consulting Division within Recom Technologies, Inc. since 1993.
Previously, Mr. Joyce had a distinguished career in Information Systems with the

<PAGE>

US Air Force. His varied technical experience included teaching computer science
at the US Air Force Academy and managing a $25 million automation effort in
support of the F-117 Stealth Fighter.

James D. Collins has served as our Chief Financial Officer on a
part-time basis since November 1998. Mr. Collins was with PricewaterhouseCoopers
LLP since 1990, where he was a senior manager prior to joining us. A majority of
Mr. Collins experience has been related to strategic financial consulting,
management of financial due diligence and acquisition efforts, and management of
initial and other public offerings.

Jamie B. Madison has served as our Vice President, Marketing and Sales
on a full-time basis since December 1998. Ms. Madison has performed technical
marketing and sales for 16 years. With specialties in software products and
services, she has consistently performed as top revenue producer for several
companies. She served as Western Regional Account Manager for Client/Server Labs
where she developed a marketing strategy and closed sales with several banking
institutions. She developed a region that grew to become the top revenue
producer in the company. Her prior responsibilities included Director of
Outsourcing Alliances with Novadigm, Marketing Manager for Optima Software - a
company of which she was a founding partner, and Account Manager for Sterling
Software. Ms. Madison has consistently developed innovative marketing strategies
that have resulted in sales volumes that exceeded goals.

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

We are not aware of any "family relationships" (as defined in Item
401(d) of Regulation S-K promulgated by the Securities and Exchange Commission)
between any of the directors and/or any of the executive officers.

WHO CONTROLS OUR STOCK

The following table sets forth the number of Shares beneficially owned
as of March 31, 1999, by (i) owners of more than 5% of our Shares, (ii) each of
our executive officers, and (iii) all our executive officers and directors.

Number of Percentage
Name and Address Shares of Shares
of Owner Position Owned Outstanding

John C. Epperson, Jr. (1)(3) Chairman
2412 Professional Drive and CEO 300,000 9.17%
Roseville, CA 95661

Jack Lee (1)(3) Secretary
19108 Bonnet Way and Director 300,000 9.17%
Saratoga, CA 95070

Recom Technologies (2) 660,500 20.20%
2412 Professional Drive
Roseville, CA 95661

James Joyce (3) COO 57,000 1.74%
2412 Professional Drive
Roseville, CA 95661

<PAGE>

Syed Shariq, Ph.D. (3) Director 25,000 0.76%
204 Robin Way
Menlo Park, CA 94025

Robert Iger, Esq. (3) Director 20,000 0.61%
601 Lido Park Drive, Suite 4F
Newport Beach, CA 92663

John Flynn (3) Director 20,000 0.61%
11719 Prospect Hill Drive
Gold River, CA 95670

Curt Pringle (3) Director 5,000 0.15%
2532 DuPont Drive
Irvine, CA 92612

Roger Akers (3) Director 5,000 0.15%
8436 Marina Vista Lane
Fair Oaks, CA 95628

All officers and directors
as a group 1,392,500 42.58%

Other Controlling Stockholders

Kayne International None 280,000 8.56%
c/o Hutchings, Barsamian & Levy
110 Cedar Street, Suite 250
Wellesley Hills, MA 02181

Soma 2000, LLC None 340,000 10.40%
640 Bercut Drive #A
Sacramento, CA 95814

DESCRIPTION OF OUR SHARES

Common Stock

We are authorized to issue 50,000,000 shares of Common Stock, par value
$.001 per share. As of June 15, 1999, there were 3,270,000 shares of Common
Stock issued and outstanding. Each share entitles the shareholders to one vote.
Shareholders do not have cumulative voting rights which means that the holders
of more than 50% of shares voting for the election of Directors can elect all of
the Directors if they choose to do so. If this occurs, the holders of the
remaining shares will not be able to elect any Directors. Our bylaws require
that it takes only a simple majority of the issued and outstanding shares of our
Common Stock to transact business at a shareholders' meeting. The Shares have no
preemptive, subscription or conversion rights nor may we redeem it.

<PAGE>

Preferred Stock

There are no shares of Preferred Stock issued or outstanding.

Dividends

Our shareholders are entitled to dividends if any are declared and are
entitled to a pro rata portion of our assets if we liquidate or dissolve our
business if our assets are not first distributed to our creditors. Our Board of
Directors has complete control over whether or not we pay dividends to our
shareholders. We have never paid any dividends on our common stock. We currently
plan to retain all future earnings for use in our business. We do not anticipate
paying any cash dividends in the foreseeable future.

INTEREST OF NAMED EXPERTS AND COUNSEL

Principals or attorneys of Boyd & Chang, LLP, have the ability to
exercise voting control 150,000 shares of our Common Stock issued for the
benefit of various parties. Boyd & Chang also received 26,000 Shares in exchange
for past legal services, and are selling these Shares in this Offering.

- ------------------
1. Also an officer, director and controlling shareholder of Recom
Technologies, Inc., and should be considered the beneficial owner
and to have control over the 660,500 shares of the Company owned
by Recom Technologies, Inc.
2. Recom Technologies is owned and controlled by Jack Lee and John C.
Epperson, Jr.
3. Each of these officers and directors are entitled to receive or
have received stock options vesting over various intervals as
described in the Executive Compensation Section of this
Prospectus. See "Executive Compensation" and "Directors
Compensation."

<PAGE>

DESCRIPTION OF PROPERTY

Our corporate headquarters are located in Roseville, California. We
sub-lease our office facilities for $3,940 per month under a month-to-month
lease agreement with Recom Technologies, Inc., an affiliated entity in which our
Chairman and Chief Executive Officer, John Epperson, Jr., and Director and
Secretary, Jack Lee, are officers, directors and controlling shareholders. We
believe that our current facilities, approximately 1,000 square feet, are
adequate to meet our foreseeable requirements or that suitable additional or
substitute space will be available on commercially reasonable rates.

CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

Recom Transactions

We incurred $19,700 in lease expense from Recom Technologies, Inc. from
July 31, 1998, (inception) through June 15, 1999. We also leased certain
employees and was provided with administrative support by Recom Technologies
from July 31, 1998, (inception) through June 15, 1999, until we could establish
our own infrastructure. We recorded $51,540 and $39,069 of cost of sales and
operating expenses from July 31, 1998, (inception) through March 31, 1999,
related to these services.

Capital Structure

We were originally formed as a California limited liability company. We
subsequently merged with an inactive Nasdaq bulletin board company, which is
described in greater detail below. We recently entered into an agreement with
the founding shareholders as a group to release us from certain debt to the
founding shareholders and adjust their shareholdings. We thereafter conducted a
43:1 reverse split reducing the outstanding number of shares of Common Stock
held by the public to 100,000 shares. We concurrently issued an aggregate of
2,505,000 shares to an aggregate of 20 shareholders, which include the officers,
directors and 5% shareholders reflected in this Prospectus. On March 4, 1999, we
concluded a private placement of our stock at which we sold 504,000 shares of
Common Stock for $1.25 per share. As part of the private placement we issued
75,000 Shares to Mackenzie Shea, Inc., for investment banking services provided
in the private placement.

Loans

In August 1998, our predecessor, J-2 Technologies, LLC, borrowed a
total of $150,000 from four of our shareholders. John C. Epperson, Jr., Jack
Lee, Kayne International and SOMA 2000, LLC, loaned us $37,500 each, pursuant to
one year, ten percent (10%) unsecured promissory notes. The loans were used to
effect the merger. None of the Offering proceeds will be used to pay any
interest or principal on the loans.

In August 1998, Recom Technologies, Inc., loaned us $20,000 evidenced
by a one year, ten percent (10%) Promissory Note, which we used to pay for
appraisals and other due diligence. In November 1998, SOMA 2000 and Kayne
International each loaned us an additional $10,000 pursuant to 10% Promissory
Notes, which was to be used to pay certain legal and accounting bills.

<PAGE>

Executive Employment and Consulting Agreements

We intend to enter into a three year Executive Employment Agreement
with our President and Chief Executive Officer, John C. Epperson, Jr. We have
also entered into a one year Executive Employment Agreement with our Chief
Operating Officer, James Joyce, and a one year Consulting Agreement with our
Chief Financial Officer, James Collins. See "EXECUTIVE COMPENSATION."

MARKET FOR OUR STOCK AND RELATED STOCKHOLDER MATTERS

On October 30, 1998, pursuant to majority shareholder consent, Mt.
Olympus Enterprises, Inc. ("MOE") completed a "Reverse Acquisition" through
which control of MOE was transferred from its existing shareholders to a group
of private owners of a California limited liability company, J2 Technologies,
LLC ("J2"). J2 was itself a newly organized company having a date of inception
of July 31, 1998. Subsequently, MOE changed its name to RECOM Managed Systems,
Inc. The details of the Reverse Acquisition are more fully described in the
Reverse Acquisition Agreement denominated as the "Stock-For-Interest Membership
Exchange Agreement" which was filed as an Exhibit to our report on Form 8-K,
dated November 12, 1998.

At all times during any period of trading through October 30, 1998, the
date of the reverse acquisition described above, the markets on which our
predecessor traded must be described as locally broker generated trading lists,
such as the "pink sheets." Our predecessor's trading symbol during this time was
"MTOP". In connection with the reverse acquisition described above, our Shares
have since traded on the NASDAQ Electronic Bulletin Board under the symbol
"RMSI". Within these limitations, the following chart attempts to set-out the
known high and low price on a bid and ask basis for our stock for each quarter
during the previous two years. On June 10, 1999, the closing price of our Shares
was $1.75.

Year Ended December 31, 1998 Low High

Fourth Quarter $5.00 $7.00
Third Quarter $6.45 $10.75
Second Quarter $6.45 $10.75
First Quarter $3.87 $8.60

Year Ended December 31, 1997

Fourth Quarter $3.87 $8.60
Third Quarter $5.16 $10.75
Second Quarter $3.87 $9.46
First Quarter No quotes No trades

As of March 31, 1999, there were approximately 319 holders of record of
the Company's Common Stock.

Through the 3rd Quarter 1998, the above prices have been adjusted to
reflect the 43:1 reverse stock split referenced above. In actuality, our Common
Stock under its previous capitalization never traded above $1.00.

<PAGE>

PLAN OF DISTRIBUTION

The Selling Stockholders may offer their Shares at various times in one
or more of the following transactions:

1. In the over-the-counter market where our Common Stock is listed;

2. Transactions other than in the over-the-counter market;

3. In connection with short sales of our Common Stock;

4. By pledgees or donees; or

5. A combination of any of the above transactions.

The Selling Stockholders may sell their shares at the market price
prevailing at the time of sale or at negotiated prices.

The Selling Stockholders may use broker-dealers to sell their Shares.
If this happens, the broker-dealers will either receive discounts or commissions
from the Selling Stockholders or they will receive commissions from purchasers
of Shares for whom they acted as agents.

The Selling Stockholders may be precluded from buying and selling our
Shares until all of the Shares are sold.

We anticipate that the Selling Stockholders will attempt to sell all of
the Shares. This could cause the supply of Shares to exceed demand, which could
drive the price of our Shares down.

EXECUTIVE COMPENSATION

The table below shows the annual and long-term compensation of our
executive officers and other employees who are paid or will be paid more than
$100,000 per year.

Stock
Name Position Base Salary Options
- ---- -------- ----------- -------
John (Jack) C. Epperson, Jr. (1) Chairman of the Board and $120,000 100,000
Chief Executive Officer
James P. Joyce (2) Chief Operating Officer $110,000 100,000
James D. Collins (3) Chief Financial Officer $100/hr 100,000
Jamie B. Madison (4) Vice President, Marketing $100,000 100,000
and Sales

(1) We have and intend to continue leasing Mr. Epperson's services from
Recom Technologies, Inc. under a three-year Executive Employment Agreement that
has not yet been finalized. At December 31, 1998, we owed Recom Technologies,
Inc. $81,989 for services that included Mr. Epperson's time during 1998. In
January 1999, Mr. Epperson was granted 100,000 stock options that vest ratably
over a five year period beginning in January 2000.

(2) Mr. Joyce's services were leased from Recom Technologies, Inc., through
December 31, 1998. Mr. Joyce became our employee on January 1, 1999. We have
entered into a one year Executive Employment Agreement with Mr. Joyce that

<PAGE>

continues after December 31, 1999, on a month-to-month basis. At December 31,
1998, we owed Recom Technologies, Inc., $81,989 for services that included Mr.
Joyce's time during 1998. In January 1999, Mr. Joyce was granted 100,000 stock
options that vest ratably over a three year period beginning in January 2000.

(3) We have entered into a one year Consulting Agreement with Mr. Joyce to
act as our Chief Financial Officer. At December 31, 1998, we owed Mr. Collins
$6,000 for services rendered during 1998. In January 1999, Mr. Collins was
granted 100,000 stock options vesting ratably over a five year period beginning
in January 2000.

(4) We hired Ms. Madison effective January 1, 1999, when she was also
granted 100,000 stock options that vest ratably over a three year period
beginning in January 2000.

Directors Compensation

We may reimburse directors for any reasonable expenses pertaining to
attending meetings, including travel, lodging and meals and presently pay
directors $1,000 per meeting for their service. We will issue options to outside
directors (directors who are not principal shareholders or officers, which are
presently limited to Syed Shariq, Robert Iger, Kurt Pringle, Roger Akers and
John Flynn) to purchase up to 30,000 shares of our common stock for $.25 per
share. These options have different vesting schedules (from 1 to 3 years).
Mssrs. Shariq, Iger and Flynn also each receive 20,000 shares of Common Stock on
the merger, which was issued as founders stock.

Other Arrangements

We will also enter into indemnification and reimbursement agreements
with our directors in the near future. We anticipate that we will also enter
into consulting agreements with investment bankers and other consultants.

Stock Option Plan

Our Board of Directors adopted and our shareholders approved our 1998
Stock Plan for Incentive and Non-Qualified Stock Options (the "Plan") in
December 1998. The Plan was established to furnish incentives for employees,
consultants and other participants to continue their service to us. There are
520,000 shares of Common Stock authorized for issuance upon exercise of options
and stock appreciation rights granted under the Plan, which have designated
vesting schedules up to 5 years. As of June 15, 1999, 483,000 options to
purchase our Shares at an average exercise price of $.32 had been issued. Our
Board of Directors will administer the Plan. We may have to issue additional
stock, options or other incentives to attract and retain qualified management
and directors, both advisory and voting. Such plans and incentives could have a
dilutive effect on our Common Stock.

<PAGE>

FINANCIAL STATEMENTS

Our financial statements are filed as part of this Prospectus.

ANTI-TAKEOVER PROVISIONS

Certain provisions of our Certificate of Incorporation and bylaws may
have an anti-takeover effect and may delay, defer or prevent a tender offer or
takeover attempt, including attempts that might result in a premium being paid
over the market price for the shares held by shareholders. Despite our belief as
to the benefits to shareholders of these provisions of our Certificate of
Incorporation, these provisions may also have the effect of discouraging a
future takeover attempt which would not be approved by our Board. As a result,
shareholders who might desire to participate in such a transaction may not have
any opportunity to do so. These provisions will also render the removal of our
Board of Directors and management more difficult and may tend to stabilize our
stock price, thus limiting gains which might otherwise be reflected in price
increases due to a potential merger or acquisition. Our Board of Directors,
however, has concluded that the potential benefits of these provisions outweigh
the possible disadvantages.

EXPERTS

The financial statements appearing in this Prospectus have been audited
by Burnett, Umphress & Company, LLP, Rancho Cordova, California, independent
certified public accountants, to the extent and for the periods set forth in
their report appearing elsewhere herein, and are included in reliance upon such
report given upon the authority of said firm as experts in accounting and
auditing.

LEGAL MATTERS

The validity of the issuance of our securities will be passed upon for
us by Boyd & Chang, LLP, Irvine, California.

CAUTIONARY NOTICE REGARDING FORWARD-LOOKING STATEMENTS

Certain statements contained in, or incorporated by reference in, this
prospectus are forward-looking in nature. Such statements can be identified by
the use of forward-looking terminology such as "believes," "expects," "plans,"
"estimates," "may," "will," "should," or "anticipates" or the negative thereof
or comparable terminology, or by discussions of strategy. You are cautioned that
our business and operations are subject to a variety of risks and uncertainties
and, consequently, our actual results may materially differ from those projected
by any forward-looking statements. Certain of such risks and uncertainties are
discussed below under the heading "Risk Factors." We make no commitment to
revise or update any forward-looking statements in order to reflect events or
circumstances after the date any such statement is made.

WHERE YOU CAN FIND MORE INFORMATION

We have filed a Registration Statement with the SEC on form SB-2 that
registers the Shares. We file reports, proxy statements, and other information
with the SEC. Such reports, proxy statements, and other information can be read
and copied at the SEC's Public Reference Room at 450 Fifth Street, N.W.,
Washington, D.C. 20549. Please call the SEC at 1-800-SEC-0330 for further
information on the Public Reference Room. The SEC maintains an internet site at
http://www.sec.gov that contains reports, proxy and information statements and
other information regarding issuers that file electronically with the SEC,
including our company.

<PAGE>

INCORPORATION BY REFERENCE

The SEC allows us to "incorporate by reference" the documents that we
file with the SEC. This means that we can disclose important information to you
by referring you to those documents. Any information we incorporate in this
manner is considered part of this prospectus. Any information we file with SEC
after the date of this prospectus will automatically update and supersede the
information contained in this prospectus.

We incorporate by reference the following documents that we have filed
with the SEC and any filings that we will make with the SEC in the future under
Sections 13(a), 13(c), 14 or 15(d) of the Securities Exchange Act of 1934 until
this offering is completed:

O Annual Report on Form 10-KSB for the year ended December 31,1998;

0 Quarterly Reports on Form 10-QSB for the quarter ended March 31,
1999.

0 Current Report on Form 8-K dated November 12, 1998; and

O Current Report on Form 8-K dated March 4, 1999.

CHANGES IN ACCOUNTANTS

On March 4, 1999, we selected Burnett, Umphress & Company, LLP to serve
as our new independent accountants and, accordingly, dismissed Whitman Drucker &
Math, Inc. The decision to engage Burnett, Umphress & Company, LLP and dismiss
Whitman Drucker & Math, Inc., was approved by our Board of Directors. Through
March 4, 1999, there were no disagreements with Whitman Drucker & Math, Inc., on
any matter of accounting and financial disclosure. It was our desire to hire
auditors located in Northern California.

<PAGE>

RECOM MANAGED
SYSTEMS, INC.

655,000 Shares of Common Stock

<PAGE>

PART II

INFORMATION NOT REQUIRED IN PROSPECTUS

ITEM 24. INDEMNIFICATION OF OFFICERS AND DIRECTORS

Our bylaws provide that we will indemnify our officers and directors,
employees and agents and former officers, directors, employees and agents unless
their conduct is finally adjudged as grossly negligent or to be willful
misconduct. This indemnification includes expenses (including attorneys' fees),
judgments, fines, and amounts paid in settlement actually and reasonable
incurred by these individuals in connection with such action, suit, or
proceeding, including any appeal thereof, subject to the qualifications
contained in Delaware law as it now exists. Expenses (including attorneys' fees)
incurred in defending a civil or criminal action, suit, or proceeding will be
paid by us in advance of the final disposition of such action, suit, or
proceeding upon receipt of an undertaking by or on behalf of the director,
officer, employee or agent to repay such amount, unless it shall ultimately be
determined that he or she is entitled to be indemnified by us as authorized in
the bylaws. This indemnification will continue as to a person who has ceased to
be a director, officer, employee or agent, and will benefit their heirs,
executors, and administrators. These indemnification rights are not deemed
exclusive of any other rights to which any such person may otherwise be entitled
apart from the bylaws. Delaware law generally provides that a corporation shall
have the power to indemnify persons if they acted in good faith in a manner
reasonably believed to be in, or not opposed to, the best interests of the
company and, with respect to any criminal action or proceeding, had no
reasonable cause to believe the conduct was unlawful. In the event any such
person is judged liable for negligence or misconduct, this indemnification will
apply only if approved by the court in which the action was pending. Any other
indemnification shall be made only after the determination by our Board
(excluding any directors who were party to such action), by independent legal
counsel in a written opinion, or by a majority vote of stockholders (excluding
any stockholders who were parties to such action).

INSOFAR AS INDEMNIFICATION FOR LIABILITIES ARISING UNDER THE SECURITIES
ACT OF 1933 MAY BE PERMITTED TO DIRECTORS, OFFICERS OR PERSONS CONTROLLING THE
COMPANY, WE HAVE BEEN INFORMED THAT IN THE OPINION OF THE SECURITIES AND
EXCHANGE COMMISSION, SUCH INDEMNIFICATION IS AGAINST PUBLIC POLICY AS EXPRESSED
IN THE ACT AND IS THEREFORE UNENFORCEABLE.

IN THE EVENT THAT A CLAIM FOR INDEMNIFICATION AGAINST SUCH LIABILITIES
(OTHER THAN THE PAYMENT BY US OF EXPENSES INCURRED OR PAID BY A DIRECTOR,
OFFICER OR CONTROLLING PERSON IN THE SUCCESSFUL DEFENSE OF ANY ACTION, SUIT OR
PROCEEDING) IS ASSERTED BY SUCH DIRECTOR, OFFICER OR CONTROLLING PERSON IN
CONNECTION WITH THE SECURITIES BEING REGISTERED, WE WILL, UNLESS IN THE OPINION
OF OUR COUNSEL THE MATTER HAS BEEN SETTLED BY CONTROLLING PRECEDENT, SUBMIT TO A
COURT OF APPROPRIATE JURISDICTION THE QUESTION WHETHER SUCH INDEMNIFICATION BY
US IS AGAINST PUBLIC POLICY AS EXPRESSED IN THE SECURITIES ACT AND WILL BE
GOVERNED BY THE FINAL ADJUDICATION OF SUCH ISSUE.

<PAGE>

ITEM 25. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.

The estimated expenses payable by the Company in connection with the
issuance and distribution of the securities being registered are as follows:

SEC registration fee $ 850
Legal fees and expenses $ 20,000
Accounting fees and expenses $ 5,000
Printing and engraving expense $ 2,000
Transfer agent fees and expenses $ 500
Miscellaneous $ 1,500
=========

TOTAL $ 29,850
=========

ITEM 26. RECENT SALES OF UNREGISTERED SECURITIES .

As referenced in Management's Discussion and Analysis and Plan of
Operation section in the Prospectus, we offered and sold 504,000 shares of our
common stock for $1.25 per Share and 50,000 Shares for $2.00 per Share, which
raised a total of $680,000. After paying to various placement agents selling
commissions of 10% and a non-accountable expense allowance of approximately 3%,
we realized $601,350 in net proceeds from the offering. We also paid Mackenzie
Shea, Inc. 75,000 Shares for investment banking services and Boyd & Chang, LLP,
26,000 shares for various legal services. The offering was conducted as a
Regulation D offering pursuant to Rule 506.

ITEM 27. EXHIBITS

Exhibits

(1) Not applicable.
(2) Stock-for-Membership Interest Agreement dated August 24, 1998,
incorporated by reference to Form 8-K filed on November 16, 1998.
(3.1) Amended Articles of Incorporation dated May 10, 1991, incorporated by
reference to Form 8-K filed on May 10, 1991.
(3.2) Bylaws dated May 10, 1991. to be filed with amendment
(4) Common Stock Certificate. to be filed with amendment
(5) Opinion of Boyd & Chang, LLP* to be filed with amendment
(6) Not Applicable.
(7) Not Applicable.
(8) Not Applicable.
(9) Not Applicable.
(10) Not Applicable.
(11) Not Applicable.
(12) Not Applicable.
(13.1) Quarterly Report on Form 10QSB dated March 31, 1999, incorporated by
reference.
(13.2) Annual Report of Form 10KSB dated December 31, 1998, incorporated by
reference.
(14) Not Applicable.

<PAGE>

(15) Not Applicable.
(16) Letter regarding change in certifying accountant, incorporated by
reference to Form 8-K dated March 4, 1999.
(17) Letter on director resignation included as part of Majority Shareholder
Consent Agreement, incorporated by reference to Form 8-K dated November
12, 1998.
(18) Not Applicable.
(19) Shareholder Statement, incorporated by reference to Form 8-K filed on
November 16, 1998.
(20) Not Applicable.
(21) Not Applicable.
(22) Not Applicable.
(23) Consent of Burnett, Umphress & Company, LLP to be filed with amendment
(24) Not Applicable.
(25) Not Applicable.
(26) Not Applicable.
(28) Not Applicable.

* To be filed by amendment.

ITEM 28. UNDERTAKINGS

We hereby undertake to:

1. File, during any period in which it offers or sells securities, a
post-effective amendment to this registration statement to:

(a) Include any prospectus required by Section 10(a)(3)
of the Securities Act.
(b) Reflect in the prospectus any facts or events which,
individually or together, represent a fundamental
change in the information set forth in the
Registration Statement.
(c) Include any additional or changed material
information on the plan of distribution;

2. For determining liability under the Act, treat each post-effective
amendment as a new registration of the securities offered, and the offering of
such securities at that time to be the initial bona fide offering; and

3. File a post effective amendment to remove from registration any of
the securities that remain unsold at the end of the offering.

4. Provide certificates in such denominations and registered in such
names to permit prompt delivery to each purchaser.

Insofar as indemnification for liabilities arising under the Securities
Act may be permitted to directors, officers and controlling persons of the
Company pursuant to the foregoing provisions, or otherwise, the Company has been
advised that in the opinion of the Securities and Exchange Commission such
indemnification is against public policy as expressed in the Securities Act and

<PAGE>

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

For the purpose of determining any liability under the Securities Act,
the Company will treat the information omitted from the form of prospectus filed
as part of this Registration Statement in reliance upon Rule 430A and contained
in a form of prospectus filed by the Company pursuant to Rule 424(b)(1), or (4),
or 497(h) under the Securities Act as part of this Registration Statement as of
the time the Securities and Exchange Commission declares it effective.

For the purpose of determining any liability under the Securities Act,
the Company will treat such post-effective amendment that contains a form of
Prospectus as a new Registration Statement for the securities offered in the
Registration Statement therein, and treat the Offering of the securities at that
time as the initial bona fide offering of those securities.

<PAGE>

SIGNATURES

In accordance with the requirements of the Securities Act of 1933, the
Registrant certifies that it has reasonable grounds to believe that it meets all
of the requirements for filing on Form SB-2 and authorizes this Registration
Statement to be signed on its behalf by the undersigned, in the city of
Roseville, State of California on July ___, 1999.

RECOM MANAGED SYSTEMS, INC.

By:

John C. Epperson, President

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

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

- ------------------------------ Chairman of the
John C. Epperson, Jr. Board of Directors,
Principal Executive Officer,
Principal Financial Officer
and President July __, 1999

- ------------------------------ Secretary, Director July __, 1999
Jack Lee

- ------------------------------ Chief Operating Officer July __, 1999
James Joyce

- ------------------------------ Chief Financial Officer July __, 1999
James Collins

- ------------------------------ Director July __, 1999
Syed Shariq, Ph.D.

- ------------------------------ Director July __, 1999
John Flynn

<PAGE>

Vice President - Operation July __, 1999
- ------------------------------
James Joyce

- ------------------------------ Director July __, 1999
Robert Iger

- ------------------------------ Director July __, 1999
Kurt Pringle

- ------------------------------ Director July __, 1999
Roger Akers

<PAGE>

<TABLE>
<CAPTION>
INDEX TO FINANCIAL STATEMENTS

Interim Financial Statements for the Quarter ended March 31, 1999:
<S> <C>
Balance Sheets at March 31, 1999 (unaudited) and December 31, 1998 F-1

Statements of Operations for the three months ended March 31, 1999
(unaudited) and the cumulative period July 31, 1998 (inception) to
March 31, 1999 (unaudited) F-2

Statements of Cash Flows for the three months ended March 31, 1999
(unaudited) and the cumulative peirod July 31, 1998 (inception) to
March 31, 1999 (unaudited) F-3

Notes to Financial Statements F-4

Financial Statements for the year ended December 31, 1998

Report of independent accountants F-6

Balance Sheet, December 31, 1998 F-7

Statement of Operations, July 31, 1998 (inception)
Through December 31, 1998 F-8

Statement of Changes in Shareholders' Equity (deficit),
July 31, 1998 (inception) through December 31, 1998 F-9

Statement of Cash Flows, July 31, 1998 (inception)
Through December 31, 1998 F-10

Notes to Financial Statements F-11
</TABLE>

<PAGE>

<TABLE>
RECOM MANAGED SYSTEMS, INC.
(A Development Stage Company)
Balance Sheets
<CAPTION>

March 31, December 31,
1999 1998
--------- ---------
(unaudited)
ASSETS
<S> <C> <C>
Current assets:
Cash $ 216,365 $ 23,855
Accounts receivable 129,185 53,766
Deferred offering costs -- 21,686
Other current assets 8,000 --
--------- ---------
Total current assets 353,550 99,307

Property and equipment, net 97,953 13,678
--------- ---------

Total assets $ 451,503 $ 112,985
========= =========

LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)

Current liabilities:
Accounts payable $ 39,156 $ 10,006

Accrued professional fees 13,450 62,789
Accrued payroll, bonuses and benefits 80,215 22,500
Accrued interest 11,942 7,257
Due to related party 96,987 81,989
Notes payable to stockholders 190,000 190,000
--------- ---------
Total current liabilities 431,750 374,541

Stockholders' equity (deficit):
Common Stock, $0.001 par value; 50,000,000 shares authorized; 3,119 2,605
2,605,000 and 3,119,000 shares issued and outstanding

Additional paid-in-capital 504,656 --

Accumulated deficit (488,022) (264,161)
--------- ---------
Total stockholders' equity (deficit) 19,753 (261,556)
--------- ---------
Total liabilities and stockholders' equity (deficit) $ 451,503 $ 112,985
========= =========
</TABLE>

See notes to financial statements.

F-1

<PAGE>

<TABLE>
RECOM MANAGED SYSTEMS, INC.
(A Development Stage Company)
Statements of Operations
(unaudited)
<CAPTION>

Cumulative period
Three months July 31, 1998
ended March 31, (inception) to
1999 March 31, 1999
----------- -----------
<S> <C> <C>
Revenues: -- --

IT staffing services $ 171,932 $ 251,224

Cost of revenues: -- --

IT staffing services 110,115 161,655
----------- -----------
Gross profit 61,817 89,569
----------- -----------
Operating expenses:
Development 118,597 118,597
General and administrative 56,921 132,820
Marketing and selling 105,475 129,232
----------- -----------
Total operating expenses 280,993 380,649
----------- -----------

Operating loss (219,176) (291,080)
Interest expense 4,685 11,942
----------- -----------
Loss before income taxes (223,861) (303,022)

Provision for income taxes -- --
----------- -----------
Net loss $ (223,861) $ (303,022)
=========== ===========

Basic and diluted loss per share $ (0.08) $ (0.12)
=========== ===========

Basic and diluted weighted average number of shares outstanding 2,818,921 2,530,016
=========== ===========
</TABLE>

See notes to financial statements.

F-2

<PAGE>

<TABLE>
RECOM MANAGED SYSTEMS, INC.
(A Development Stage Company)
Statements of Cash Flows
(Unaudited)
<CAPTION>

Cumulative period
Three months July 31, 1998
ended (inception) to
March 31, 1999 March 31, 1999
--------- ---------
<S> <C> <C>
Cash flows from operating activities:
Net loss $(223,861) $(303,022)
Depreciation expense 3,963 10,333
Other 320 320
Change in assets and liabilities:

Accounts receivable (75,419) (129,185)
Other current assets (8,000) (8,000)
Accounts payable 29,150 39,156
Accrued professional fees (49,339) 13,450
Accrued payroll, bonuses and benefits 57,715 80,215
Accrued interest 4,685 11,942
Due to related party 14,998 96,987
--------- ---------
Net cash provided by operating activities (245,788) (187,804)

Cash flows from investing activities:
Acquisitions of property and equipment (88,238) (88,238)
--------- ---------

Cash flows from financing activities:
Proceeds from notes payable to stockholders -- 190,000
Reverse acquisition (Note 1) -- (202,443)
Issuance of stock (Note 3) 504,850 504,850
Deferred offering costs (Note 3) 21,686 --
--------- ---------
Net cash provided by financing activities 526,536 492,407
--------- ---------

Net increase in cash 192,510 216,365
Cash at beginning of the period 23,855 --
--------- ---------
Cash at end of the period $ 216,365 $ 216,365
========= =========
</TABLE>

See notes to financial statements.

F-3

<PAGE>

RECOM MANAGED SYSTEMS, INC.
(A Development Stage Company)
Notes to Financial Statements

Note 1 - Organization

Recom Managed Systems, Inc., a Delaware corporation, (the "Company")
engages in the business of providing information technology desktop services and
application solutions to mid-sized commercial and government entities. The
Company provides a modular set of services that cover the entire lifecycle of
desktops, networks and business applications from initial design through
implementation, ongoing maintenance, upgrade and retirement. The Company is
considered to be in the development stage as limited revenues have been derived
from operations.

The Company was formed on July 31, 1998 as J2 Technologies, LLC ("J2"),
a California limited liability company. On October 30, 1998, pursuant to a
"Stock-for-Membership Interest Exchange Agreement", J2 acquired all of the
outstanding common stock of an inactive public shell company, Mt. Olympus
Enterprises, Inc. ("MOE"). For accounting purposes the acquisition has been
treated as a recapitalization of MOE with J2 as the acquirer (reverse
acquisition). In connection with the closing of the reverse acquisition, MOE's
name was changed to RECOM Managed Systems, Inc. The historical financial
statements prior to October 30, 1998, are those of J2.

Note 2 - Basis of Presentation

In the opinion of management, the accompanying unaudited financial
statements contain all adjustments necessary to present fairly our financial
position at March 31, 1999 and December 31, 1998, and our results of operations
and cash flow for the three months ended March 31, 1999 and the cumulative
period July 31, 1998 (inception) to March 31, 1999. Certain information and
footnote disclosures normally included in financial statements prepared in
accordance with generally accepted accounting principles have been condensed or
omitted. For further information, refer to our Form 10-KSB for the year ended
December 31, 1998. Operating results for the three months ended March 31, 1999
and the cumulative period July 31, 1998 (inception) to March 31, 1999 are not
necessarily indicative of future results.

The accompanying financial statements have been prepared on a going
concern basis which contemplates the realization of assets and the satisfaction
of liabilities in the normal course of business. The Company has had limited
operating history, is in the development stage, and, at March 31, 1999, has
negative working capital as well as an accumulated net deficit. These factors
raise substantial doubt about the Company's ability to continue as a going
concern. The financial statements do not include any adjustments relating to the
recoverability and classification of recorded asset amounts or the amount of
liabilities that might be necessary should the Company be unable to continue in
existence. Continuation of the Company as a going concern is dependent on
obtaining necessary funds to continue its operations. Management plans to
generate these funds through a combination of private placement and / or public
offerings. There is no assurance, however, that such plans will be completed or,
if completed, will generate sufficient funds to enable the Company to continue
operations for the next twelve months.

Note 3 - Stockholders' Equity

In March 1999, the Company completed a private placement offering of
504,000 shares of common stock. Gross and net proceeds after selling commissions
and direct offering costs totaled $630,000 and $504,850, respectively. Selling
commissions and direct offering costs of $78,650 and $46,500, respectively,
where charged to equity upon completion of the private placement.

In January 1999, the Company adopted the 1998 Stock Option Plan (the
"Plan") providing for the granting of options to purchase shares of the
Company's common stock to key employees, directors, officers and consultants as
designated by the Company's Board of Directors. Under the Plan, the Company is
authorized to grant both incentive and non-qualified stock options for up to
520,000 shares of common stock at an exercise price not less than 100% and 85%
of the fair market value on the date of grant for incentive options and
non-qualified options, respectively. The options vest over a period determined
on the date of grant and expire after ten years from the date of grant. In
January 1999, 451,000 options were granted to key employees and officers with an
average exercise price of $0.25 per share, the fair value of the underlying
stock at the date of grant as determined by the Board of Directors.

F-4

<PAGE>

Also in January and February of 1999, separate incentive options were
granted to each of the Company's outside Directors. A total of 110,000 options
were granted with an exercise price of $0.25 per share, the fair value of the
underlying stock at the date of grant as determined by the Board of Directors,
with vesting ranging from one to three years. These options expire after ten
years from the date of grant. Two outside Directors were also issued 5,000
shares each of the Company's common stock at a purchase price equal to the fair
value of the underlying stock at the date of issuance as determined by the Board
of Directors.

In connection with a corporate advisory agreement entered into in
January 1999, the Company issued a total of 75,000 warrants for the purchase of
its common stock at an exercise price of $0.25, the fair market value of the
underlying stock at the date of issuance as determined by the Board of
Directors.

Compensation expense charged to operations for the stock issued to the
two outside Directors and the warrants issued was not material to these
financial statements and was calculated using the Black-Scholes Option pricing
model with the following weighted average assumptions: dividend yield of 0%;
expected volatility of 12%; risk free interest rate of 5.35%; and an expected
life of two years.

F-5

<PAGE>

REPORT OF INDEPENDENT ACCOUNTANTS

To the Board of Directors and Stockholders
of RECOM Managed Systems, Inc.

We have audited the accompanying balance sheet of RECOM Managed Systems, Inc. (a
development stage company) as of December 31, 1998, and the related statements
of operations, changes in stockholders' equity (deficit) and cash flows for the
period from July 31, 1998 (inception) to December 31, 1998. 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 audit.

We conducted our audit 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 audit provide a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of RECOM Managed Systems, Inc. (a
development stage company) as of December 31, 1998, and the results of its
operations and its cash flows for the period July 31, 1998 (inception) to
December 31, 1998 in conformity with generally accepted accounting principles.

The accompanying financial statements have been prepared assuming that the
Company will continue as a going concern. As discussed in Note 2 to the
financial statements, the Company has a very limited operating history, is in
the development stage, and, at December 31, 1998 has a negative working capital
balance as well as an accumulated net deficit. These matters raise substantial
doubt as to the Company's ability to continue as a going concern. Management's
plans in regard to these matters are also described in Note 2. The financial
statements do not include any adjustments that might result from the outcome of
this uncertainty.

- ------------------------------------
Burnett, Umphress & Company, LLP
Rancho Cordova, California
March 19, 1999

F-6

<PAGE>

<TABLE>
RECOM MANAGED SYSTEMS, INC.
(A Development Stage Company)
Balance Sheet
<CAPTION>

December 31,
1998
====================================================================================

ASSETS
<S> <C>
Current assets:
Cash $ 23,855
Accounts receivable 53,766
Deferred offering costs 21,686
---------
Total current assets 99,307
Property and equipment, net 13,678
---------
Total assets $ 112,985
=========

LIABILITIES AND STOCKHOLDERS' DEFICIT

Current liabilities:
Accounts payable $ 10,006
Accrued legal and accounting expenses 62,789
Accrued recruitment fees 22,500
Accrued interest 7,257
Due to related party 81,989
Notes payable to stockholders 190,000
---------
Total current liabilities 374,541
Stockholders' deficit:
Common Stock, $0.001 par value; 50,000,000 shares authorized;
2,605,000 shares issued and outstanding 2,605
Additional paid-in-capital --
Accumulated deficit (264,161)
---------
Total stockholders' deficit (261,556)
---------
Total liabilities and stockholders' deficit $ 112,985
=========
</TABLE>

See notes to financial statements.

F-7

<PAGE>

RECOM MANAGED SYSTEMS, INC.
(A Development Stage Company)
Statement of Operations

For the cumulative
period July 31, 1998
(inception) through
December 31, 1998
================================================================================

Revenues:
Information technology consulting services $ 79,292
Cost of revenues
Information technology consulting services 51,540
-----------
Gross profit 27,752
-----------
Operating expenses:
General and administrative 75,899
Selling and marketing 23,757
-----------
Total operating expenses 99,656
-----------
Operating loss (71,904)
Other income (expense):
Interest expense (7,257)
-----------
Loss before income tax benefit (79,161)
Income taxes --
-----------
Net loss $ (79,161)
===========

Basic and diluted net loss per share $ (0.03)
===========

Basic and diluted weighted average number of shares outstanding 2,361,471
===========

See notes to financial statements.

F-8

<PAGE>

<TABLE>
RECOM MANAGED SYSTEMS, INC.
(A Development Stage Company)
Statement of Changes in Stockholders' Equity (Deficit)
<CAPTION>

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

Common Stock Additional Accumulated
Shares Amount paid-in-capital deficit Total
--------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Contributions at July 31, 1998 (inception) * 2,200,000 $ 2,200 $ 17,848 $ -- $ 20,048

Reverse acquisition (Note 1) 405,000 405 (17,848) (185,000) (202,443)

Net loss (79,161) (79,161)

--------------------------------------------------------------------------
Balance at December 31, 1998 2,605,000 $ 2,605 $ -- $ (264,161) $ (261,556)
==========================================================================
</TABLE>

* Balances have been restated to reflect recapitalization resulting as a
result of the reverse acquisition (Note 1).

See notes to financial statements.

F-9

<PAGE>

RECOM MANAGED SYSTEMS, INC.
(A Development Stage Company)
Statement of Cash Flows

For the cumulative
period July 31, 1998
(inception) through
December 31, 1998
============================================================================

Cash flows from operating activities:
Net loss $ (79,161)
Depreciation expense 6,370
Change in assets and liabilities:
Accounts receivable (53,766)
Accounts payable 10,006
Accrued legal and accounting expenses 62,789
Accrued recruitment fees 22,500
Accrued interest 7,257
Due to related party 81,989
---------
Net cash provided by operating activities 57,984
---------

Cash flows from financing activities:
Proceeds from notes payable to stockholders 190,000
Reverse acquisition (Note 1) (202,443)
Deferred offering costs (21,686)
---------
Net cash used in financing activities (34,129)
---------

Increase in cash 23,855
Cash at beginning of period --
---------
Cash at end of period $ 23,855
=========

See notes to financial statements.

F-10

<PAGE>

RECOM MANAGED SYSTEMS, INC.
(A Development Stage Company)
Notes to Financial Statements

ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

RECOM Managed Systems, Inc., a Delaware corporation, (the "Company") engages in
the business of providing information technology desktop services and
application solutions to mid-sized commercial and government entities. The
Company provides a modular set of services that cover the entire lifecycle of
desktops, networks and business applications from initial design through
implementation, ongoing maintenance, upgrade and retirement. The Company is
considered to be in the development stage as limited revenues have been derived
from operations.

The Company was formed on July 31, 1998 as J2 Technologies, LLC ("J2"), a
California limited liability company. On October 30, 1998, pursuant to a
"Stock-for-Membership Interest Exchange Agreement", J2 acquired all of the
outstanding common stock of an inactive public shell company, Mt. Olympus
Enterprises, Inc. ("MOE"). For accounting purposes the acquisition has been
treated as a recapitalization of MOE with J2 as the acquirer (reverse
acquisition). Costs of the transaction have been charged directly to capital. In
connection with the closing of the reverse acquisition, MOE's name was changed
to RECOM Managed Systems, Inc. The historical financial statements prior to
October 30, 1998, are those of J2. Pro forma information is not presented since
the combination is not a business combination.

A summary of significant accounting policies follows:

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

Computer equipment Computer equipment is stated at historical cost. Maintenance
and repairs are expensed as incurred. Depreciation is provided using the
straight-line method over the estimated useful lives of the related assets. The
Company's assets are currently depreciated over three years.

The cost and accumulated depreciation of computer equipment consist of the
following at December 31, 1998:

Computer equipment $20,048
Less: accumulated depreciation 6,370
------------------
$13,678
==================

Revenue recognition Information technology consulting service revenues are
recognized in the period services are provided based upon rates established by
contract.

Concentrations of credit risk Financial instruments which potentially expose the
Company to concentrations of credit risk consist primarily of cash and accounts
receivable. The Company places its temporary cash investments with FDIC-insured
financial institutions in accounts which, at times, may exceed federally insured
limits. The Company has not experienced any losses in such accounts and
accordingly does not believe it is exposed to any significant credit risk on
cash. The Company generally requires no collateral from its customers but does
performs credit evaluations of its customers' financial condition when
management deems it appropriate. Concentrations of credit risk with respect to
accounts receivable are generally limited due to the credit-worthiness of the
customers. All accounts receivable at December 31, 1998 are outstanding from a
single customer. No provision for doubtful accounts has been recorded during the
period from July 31, 1998 (inception) to December 31, 1998.

F-11

<PAGE>

Concentration of revenues Revenues from a single customer amounted to all of the
Company's revenues for the period July 31, 1998 (inception) through December 31,
1998. Management believes its relationship with this customer is good and that
the contract, which is month-to-month, will continue.

Income taxes Income taxes are recorded using the liability method. Under this
method, deferred taxes are determined by applying current tax rates to the
difference between the tax and financial reporting bases of the Company's assets
and liabilities. In estimating future tax consequences, all expected future
events are considered, except for potential income tax law or rate changes.

For the period from July 31, 1998 to December 31, 1998, the Company generated a
federal and state net operating loss of approximately $79,000. These losses can
be used to offset future taxable income through the year 2006 and 2013 for
federal and state purposes, respectively. The Company has recorded a full
valuation allowance for its deferred tax asset related to these operating
losses. The Company had no other significant temporary or permanent differences
for the period July 31, 1998 (inception) to December 31, 1998.

Earnings per share Basic loss per share is computed using the weighted average
number of common shares outstanding. Diluted loss per share is computed using
the weighted average number of common shares outstanding adjusted for the
incremental shares attributed to outstanding securities with the ability to
purchase or convert into common stock. Basic and diluted loss per share are the
same for the period from July 31, 1998 (inception) to December 31, 1998 as the
Company had no dilutive securities outstanding.

2. GOING CONCERN

The accompanying financial statements have been prepared on a going concern
basis which contemplates the realization of assets and the satisfaction of
liabilities in the normal course of business. The Company has had limited
operating history, is in the development stage, and, at December 31, 1998, has
negative working capital as well as an accumulated net deficit. These factors
raise substantial doubt about the Company's ability to continue as a going
concern. The financial statements do not include any adjustments relating to the
recoverability and classification of recorded asset amounts or the amount of
liabilities that might be necessary should the Company be unable to continue in
existence. Continuation of the Company as a going concern is dependent on
obtaining necessary funds to continue its operations. Management plans to
generate these funds through a combination of private placement and / or public
offerings. There is no assurance, however, that such plans will be completed or,
if completed, will generate sufficient funds to enable the Company to continue
operations for the next twelve months.

3. TRANSFER OF ASSETS FROM RELATED PARTY

In connection with the issuance of all membership shares of J2 on July 31, 1998
(inception), the Company was assigned on a non-exclusive basis certain
intellectual property and transferred computer equipment with a net book value
of $20,048 (Note 1). The intellectual property consists of technology management
plans and corporate documents, technical proposals and management plans,
technical operating procedures, corporate management plans and management
resources, and software and data, collectively, the "Intellectual Assets". The
Intellectual Assets were initially used or developed as part of noncommercial
projects and contracts by the contributors and are currently used in
governmental applications. The assignment does not include rights for the
Company to use the Intellectual Assets in governmental applications, which
rights are retained by the contributors. The Company is able to use the
Intellectual Assets without fees or royalties. The Company had the Intellectual
Assets appraised by an independent valuation firm, which estimated in the fair
market value of the Intellectual Assets to be $4,750,000. The Intellectual
Assets were recorded at the contributors book value of zero.

F-12

<PAGE>

4. RELATED PARTY TRANSACTIONS

The Company leases its office space subject to a month-to-month lease agreement
from Recom Technologies, a company majority owned by officers and directors of
the Company. The Company recorded $7,880 in lease expense from July 31, 1998
(inception) through December 31, 1998.

The Company also leased certain employees and was provided with administrative
support by Recom Technologies from July 31, 1998 (inception) through December
31, 1998, until the Company could establish its own infrastructure. The Company
recorded $51,540 and $22,569 of cost of sales and operating expenses from July
31, 1998 (inception) through December 31, 1998 related to these services.

The Company has a due to related party of $81,989 at December 31, 1998 related
to the above costs.

5. NOTES PAYABLE TO STOCKHOLDERS

Notes payable to stockholders accrue interest at 10% per annum and maturity
dates through August 1, 1999. It is not practicable to determine the fair value
of notes payable to stockholders due to their related party nature.

6. SUBSEQUENT EVENTS

In March 1999, the Company completed a private placement offering of 504,000
shares of common stock. Gross and net proceeds after selling commissions and
direct offering costs totaled $630,000 and $504,850, respectively. Costs of the
offering incurred by the Company through December 31, 1998, totaling $21,686,
have been recorded as a current asset in the December 31, 1998 Balance Sheet and
have subsequently been charged to equity upon completion of the private
placement.

In January 1999, the Company adopted the 1998 Stock Option Plan (the "Plan")
providing for the granting of options to purchase shares of the Company's common
stock to key employees, directors, officers and consultants as designated by the
Company's Board of Directors. Under the Plan, the Company is authorized to grant
both incentive and non-qualified stock options for up to 520,000 shares of
common stock at an exercise price not less than 100% and 85% of the fair market
value on the date of grant for incentive options and non-qualified options,
respectively. The options vest over a period determined on the date of grant and
expire after ten years from the date of grant. In January 1999, 451,000 options
were granted to key employees and officers.

Also in January and February of 1999, separate incentive options were granted to
each of the Company's outside Directors. A total of 110,000 options were granted
at fair market value, as determined by the Board of Directors, with vesting
ranging from one to three years. These options expire after ten years from the
date of grant. Two outside Directors were also issued 5,000 shares each of the
Company's common stock at a purchase price equal to the fair value of the
underlying stock at the date of issuance as determined by the Board of
Directors.

In connection with a corporate advisory agreement entered into in January 1999,
the Company issued a total of 75,000 warrants for the purchase of its common
stock at an exercise price equal to the fair market value of the underlying
stock at the date of issuance as determined by the Board of Directors.

In March 1999, the Company established a 401(k) savings plan which covers
substantially all employees of the Company. Under this plan, employees can elect
to contribute up to 14% of their annual pay to the plan, subject to certain
limits prescribed by tax law. The Company makes a matching contribution equal to
100% of every dollar the employees contribute to the plan up to a maximum of
$1,800 per year. Employees vest ratably over four years in the Company's
matching contributions.

F-13

<PAGE>

EXHIBIT LIST

EXHIBIT
NUMBER DESCRIPTION