RMS NETWORKS INC, S-1, 2000-04-05

RMS NETWORKS INC
S-1, 2000-04-05

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AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON APRIL 5, 2000
REGISTRATION NO. 333-
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
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FORM S-1
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
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RMS NETWORKS, INC.
(Exact name of registrant as specified in its charter)

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<S> <C> <C>
DELAWARE 4833 65-0669140
(State or other jurisdiction of (Primary Standard Industrial (I.R.S. Employer
incorporation or organization) Classification Code Number) Identification No.)
</TABLE>

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633 SOUTH FEDERAL HIGHWAY, 4TH FLOOR
FORT LAUDERDALE, FLORIDA 33301
(954) 525-6464
(Address, including zip code, and telephone number, including area code, of
registrant's principal executive offices)
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JASON M. KATES
PRESIDENT AND CHIEF EXECUTIVE OFFICER
RMS NETWORKS, INC.
633 SOUTH FEDERAL HIGHWAY, 4TH FLOOR
FORT LAUDERDALE, FLORIDA 33301
(954) 525-6464
(Name, address, including zip code, and telephone number, including area code,
of agent for service)
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COPIES TO:

<TABLE>
<S> <C>
VALERIE FORD JACOB, ESQ. STEVEN R. FINLEY, ESQ.
Fried, Frank, Harris, Shriver & Jacobson Gibson, Dunn & Crutcher LLP
One New York Plaza 200 Park Avenue
New York, New York 10004 New York, New York 10166
(212) 859-8000 (212) 351-4000
</TABLE>

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APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As soon as
practicable after this Registration Statement becomes effective.

If any of the securities being registered on this form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act,
check the following box. / /

If this form is filed to register additional securities for an offering
pursuant to Rule 462(b) 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 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 this form is a post-effective amendment filed pursuant to Rule 462(d)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the registration statement for the same
offering. / / _____________

If delivery of the prospectus is expected to be made pursuant to Rule 434,
check the following box. / /
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CALCULATION OF REGISTRATION FEE

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<CAPTION>
PROPOSED MAXIMUM
TITLE OF EACH CLASS OF SECURITIES AGGREGATE OFFERING AMOUNT OF
TO BE REGISTERED PRICE(1) REGISTRATION FEE
<S> <C> <C>
Common Stock, $0.01 par value per share..................... $75,000,000 $19,800
</TABLE>

(1) Estimated solely for the purpose of calculating the registration fee
pursuant to Rule 457(o) under the Securities Act of 1933.
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THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A),
MAY DETERMINE.

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<PAGE>

SUBJECT TO COMPLETION, DATED APRIL 5, 2000

THE INFORMATION CONTAINED IN THIS PROSPECTUS IS NOT COMPLETE AND MAY BE
CHANGED. THESE SECURITIES MAY NOT BE SOLD UNTIL THE REGISTRATION STATEMENT
FILED WITH THE SECURITIES AND EXCHANGE COMMISSION IS EFFECTIVE. THIS
PROSPECTUS IS NOT AN OFFER TO SELL THESE SECURITIES AND IT IS NOT SOLICITING
AN OFFER TO BUY THESE SECURITIES IN ANY STATE WHERE THE OFFER OR SALE IS NOT
PERMITTED.

[LOGO]

COMMON STOCK
$ PER SHARE
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This is an initial public offering of common stock of RMS Networks, Inc. We
are offering shares. We expect that the price to the public in
the offering will be between $ and $ per share.

We have applied to include the common stock on the Nasdaq National Market
under the symbol "RMSN."

INVESTING IN THE COMMON STOCK INVOLVES RISKS. SEE "RISK FACTORS" BEGINNING ON
PAGE 11.

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PER SHARE TOTAL
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Price to the public.................................. $ $
Underwriting discount................................
Proceeds to RMS......................................
</TABLE>

We have granted an over-allotment option to the underwriters. Under this
option, the underwriters may elect to purchase a maximum of
additional shares from us within 30 days following the date of this
prospectus to cover over-allotments.

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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.
CIBC WORLD MARKETS
ROBERTSON STEPHENS
PRUDENTIAL VOLPE TECHNOLOGY
<PAGE>
A UNIT OF PRUDENTIAL
SECURITIES

The date of this prospectus is , 2000.
<PAGE>
[GRAPHICS TO INCLUDE VARIOUS ILLUSTRATIONS OF RMS NETWORKS PRODUCTS]
<PAGE>
TABLE OF CONTENTS

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PAGE
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Prospectus Summary.......................................... 5
Risk Factors................................................ 11
Forward-Looking Statements.................................. 26
Use of Proceeds............................................. 27
Dividend Policy............................................. 27
Capitalization.............................................. 28
Dilution.................................................... 29
Selected Consolidated Financial Data........................ 30
Management's Discussion and Analysis of Financial Condition
and Results of Operations................................. 32
Business.................................................... 39
Management.................................................. 52
Certain Transactions........................................ 65
Principal Stockholders...................................... 67
Description of Capital Stock................................ 69
Shares Eligible for Future Sale............................. 73
United States Tax Consequences to Non-United States
Holders................................................... 76
Underwriting................................................ 79
Notice to Canadian Residents................................ 82
Legal Matters............................................... 83
Experts..................................................... 83
Where You Can Find More Information......................... 83
Index to Consolidated Financial Statements.................. F-1
</TABLE>

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Our principal executive offices are located at 633 South Federal Highway, 4th
Floor, Fort Lauderdale, Florida 33301. Our telephone number is (954) 525-6464.
Our website address is WWW.RMSNETWORKS.COM. Information contained on our website
is not a part of this prospectus.

Unless otherwise stated, all information contained in this prospectus assumes no
exercise of the over-allotment option granted to the underwriters.

Prior to completion of this offering we will effect a for stock
split. All common share numbers in this prospectus reflect the stock split.

The underwriters are offering the shares subject to various conditions and may
reject all or part of any order.

Data included in this prospectus regarding the estimated audience size of our
networks is based on data provided to us by our customers or derived by us from
industry sources. We believe that this data is reliable but have not
independently verified the information they have provided to us. Data included
in this prospectus regarding the estimated number of stores in specific retail
industries is based on 1997 census data, prepared by the U.S. Census Bureau,
which was issued in December 1999. Data regarding consumer purchase decisions is
based on the 1995 Consumer Buying Habits Study prepared by the Point of Purchase
Advertising Institute in conjunction with Meyers Research Center, the 1997/98
POPAI Europe Consumer Buying Habits Study prepared by the Point of Purchase
Advertising Institute and Retail Marketing In-Store Services Limited and the
March 2000 Pilot Study in Preparation for a Worldwide Industry Initiative,
developed by POPAI, the Advertising Research Foundation and Prime Consulting
Group, Inc.

3
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<PAGE>
PROSPECTUS SUMMARY

THIS SUMMARY HIGHLIGHTS INFORMATION CONTAINED ELSEWHERE IN THIS PROSPECTUS. THIS
SUMMARY IS NOT COMPLETE AND MAY NOT CONTAIN ALL OF THE INFORMATION THAT MAY BE
IMPORTANT TO YOU. YOU SHOULD READ THE ENTIRE PROSPECTUS, INCLUDING THE FINANCIAL
INFORMATION AND RELATED NOTES, BEFORE INVESTING IN OUR COMMON STOCK. THE TERMS
"WE," "US," "OUR," "OUR COMPANY" AND "RMS" AS USED IN THIS PROSPECTUS REFER TO
RMS NETWORKS, INC. AND ITS SUBSIDIARIES AS A COMBINED ENTITY, EXCEPT WHERE THE
CONTEXT REQUIRES OTHERWISE.

RMS NETWORKS, INC.

OUR BUSINESS

We are a premier provider of point-of-purchase advertising and information
distributed by broadband satellite networks. Through our relationships with
retailers, we provide advertisers with a platform to direct advertising at
targeted consumers. Retailers use our broadband networks to enhance their in-
store environments with entertaining and informative audio-visual programming
that is designed to increase the duration of shopping visits and result in
increased sales. Our programming consists of broadcast-quality, full motion
video and high quality sound delivered through strategically placed monitors in
retail locations. By delivering programming at the point of purchase, we enable
advertisers and retailers to efficiently engage customers where the most
important purchase decisions are made. Our networks were installed at more than
2,300 locations in 49 states in the United States as of February 29, 2000, an
increase from 37 locations in 20 states at March 31, 1999. We estimate that our
networks currently reach an average of approximately 750,000 consumers each day.

We offer retailers fully-installed turnkey systems consisting of video monitors,
audio components, digital video servers, satellite receivers and proprietary
software that receive and transmit our programming. Our technology allows
programming and advertising to be customized to the specific needs of a retailer
based on location, customer preferences, product availability, current events
and other retailer needs. Broadband satellite technology, integrated with our
proprietary software, enables us to add, delete or rotate programming segments
in real-time via satellite and to verify network statistics necessary to monitor
advertising on our networks. We have entered into a service agreement with
Spacenet Inc., a U.S. subsidiary of Gilat Satellite Networks Ltd., in which
Spacenet has agreed to provide satellite service for our broadband networks and
to install, maintain and finance a significant portion of our equipment.

Our technology, combined with our relationships with retailers such as Advance
Auto Parts and The Sports Authority, enables us to offer what we believe is one
of the most effective advertising mediums currently available at the point of
purchase. Studies show that advertising and product demonstrations at the point
of purchase can significantly influence which products a consumer buys. Our
networks are designed to encourage consumers to remain in retail stores longer,
make return visits and increase their product purchases. By providing
audio-visual programming targeted to clearly defined demographic groups, we
believe that we offer advertisers an efficient and cost-effective advertising
medium.

We can also reinforce advertisers' and retailers' relationships with consumers
through additional channels such as the Internet and e-mail. We develop tailored
Internet strategies for retailers by designing and maintaining websites with
content that largely parallels the presentation on our video networks. Each
network's website can be specifically designed to integrate in-store video
segments and product advertisements with related news, product promotions and
additional web content.

We produce our network programming using video segments that we create ourselves
or that we obtain from various programming suppliers, including CNN, E!
Entertainment, Fox, Time Warner and Ziff Davis. We design our programming to
provide relevant and entertaining information tailored to the demographic
audience of specific retailers. We update our programming on a daily or weekly
basis in order to keep it fresh and topical. Programming represents
approximately 60% of the airtime on our networks, with the remaining 40%
reserved for advertising.

5
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We typically target retail industries with high consumer traffic, multiple
retail outlets, a concentrated base of advertisers and a large number of stock
keeping units, or SKUs. Our strategy is to install our broadband networks in
both national and regional chains as well as in independent stores. To date, we
have created networks in the following industries:

- PHARMACIES. We launched the PharmaSee Network in July 1999 and, as of
February 29, 2000, we provided this network to more than 740 independent
pharmacies with an average audience we estimate to be 110,000 consumers each
day. Programming on the network is also available on our related website,
WWW.PHARMASEE.COM. We have entered into an exclusive licensing agreement to
make the PharmaSee Network available to members of the National Community
Pharmacists Association, or NCPA, the largest association of independent
pharmacists in the United States. In addition, we have entered into an
agreement to launch a custom version of the PharmaSee Network at five
pharmacies run by Albertson's, Inc., which operates more than 2,600
pharmacies nationwide. We have agreed with Albertson's to work towards a
definitive agreement to install and transmit the network in all of the
Albertson's family of drug stores, including its Sav-On, Osco, Albertson's
and Acme locations. There are more than 40,000 pharmacies and drug stores in
the United States.

- AUTO PARTS. We launched the Advance Auto Parts Network in April 1999 and
provide this network to stores operated by Advance Auto Parts, the second
largest auto parts retailer in the United States with more than 1,600 stores
in 37 states. As of February 29, 2000, this network supported more than
1,550 Advance Auto Parts stores with an estimated average audience of
620,000 consumers each day.

- SPORTING GOODS. We launched our sporting goods network in January 2000 and
have entered into an agreement with The Sports Authority, a leading U.S.
sporting goods retailer, to expand the network to all of The Sports
Authority's nearly 200 stores nationwide. The network is currently provided
at three Sports Authority locations. There are more than 15,000 sporting
goods stores in the United States.

- BEER, WINE AND SPIRITS. BEVision, our network for beer, wine and spirits
retailers, is currently under contract to be installed at more than 280
independent beer, wine and spirits stores. We have also entered into an
agreement to provide BEVision at five stores operated by ABC Liquors, Inc.,
which has an option to expand the network to all of its 150 stores after a
two-month trial period. We began the production of programming for this
network in January 2000. We expect to begin installing equipment for this
network and to launch a related website, WWW.BEVISION.NET, during the second
quarter of 2000. We also have an arrangement with the National Association
of Beverage Retailers in which the association has agreed to actively
promote our services to all of its members. There are more than 25,000 beer,
wine and spirits stores in the United States.

Our networks' digital broadband platform can be adapted to support a variety of
complementary services. For example, retailers use our networks to deliver
training and product information to in-store employees and the networks can be
adapted for company-wide corporate communications or live events. Our networks
are also capable of supporting two-way broadband communications and future
commercial data transmission services, including the transmission of retail
inventory and credit card data.

MARKET OPPORTUNITY

Our strategy is to obtain an increasing percentage of companies' advertising
budgets. Approximately $255 billion was spent on U.S. advertising in 1998 and
U.S. advertising sales are expected to reach approximately $365 billion in 2003,
according to Veronis Suhler. The advertising industry is diverse and includes
television, newspapers, magazines, radio, specialty media, the Internet,
billboards, direct mail and telephone directories.

6
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Advertisers are increasingly seeking to diversify their advertising. According
to Veronis Suhler, spending on specialty media was $105.7 billion in 1998 and is
estimated to reach $149.3 billion in 2003. Specialty media consists of consumer
promotion, business to business promotion, direct mail and sponsorships.
Consumer promotion includes point-of-purchase materials and retail displays,
premiums, promotional licensing, product sampling and in-store marketing.
Veronis Suhler estimates that consumer promotion spending totaled $25.3 billion
in 1998 and will reach approximately $31.8 billion in 2003. Our broadband
satellite networks offer advertisers and retailers a unique, technologically
advanced advertising solution which we believe is one of the most effective
advertising mediums available in retail locations.

COMPETITIVE STRENGTHS

We provide the following key benefits to advertisers:

- access to consumers at the point of purchase;

- ability to access large numbers of consumers and to target specific audience
demographics;

- a cost-effective advertising medium;

- integrated advertising across video and Internet media;

- technologically advanced, full motion, broadcast-quality advertising; and

- customized and timely advertising.

We provide the following key benefits to retailers:

- a fully-installed turnkey system;

- an enhanced shopping environment;

- branded networks for specific retailers;

- longer lengths of stay by consumers and an opportunity to enhance sales;

- an ability to promote private label brands and influence brand and product
selection; and

- in-store employee training and product education.

BUSINESS STRATEGY

Our goal is to provide the leading point-of-purchase advertising medium
available to advertisers. Key elements of our business strategy include:

- capturing significant revenue and profits through our point-of-purchase
advertising medium;

- utilizing our broadband technological capabilities to deliver effective
advertising solutions, including timely inventory management;

- expanding current networks and developing new networks in order to extend
the reach of our advertisers; and

- pursuing ancillary revenue sources, including Internet access and credit
card processing, utilizing our broadband platform.

7
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THE OFFERING

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<S> <C>
Common stock offered by us.................. shares

Common stock to be outstanding after this
offering.................................. shares(1)

Use of proceeds............................. We intend to use the proceeds of this
offering for working capital and general
corporate purposes, including the
development of new networks, the purchase of
network equipment and capital expenditures.
See "Use of Proceeds."

Proposed Nasdaq National Market symbol...... RMSN
</TABLE>

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(1) The number of shares of common stock to be outstanding after this offering
is estimated based on the number of shares outstanding as of February 29,
2000. This number excludes:

- shares subject to outstanding options at a weighted average
exercise price of $ per share;

- shares available for future issuance under our employee stock
option plans;

- shares that may be issued if the underwriters exercise their
over-allotment option in full; and

- shares subject to options that will be granted upon completion of
this offering to the placement agent for our second 1999 private
placement.

8
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SUMMARY FINANCIAL INFORMATION

We present below our summary historical financial data. We derived the
historical consolidated balance sheet data as of December 31, 1999 and the
historical consolidated statement of operations data for each of the three years
ended December 31, 1999 from our audited consolidated financial statements,
which are included elsewhere in this prospectus. The statement of operations
data for the period from May 29, 1996 (inception) to December 31, 1996 is
derived from our audited financial statements which are not included in this
prospectus.

NET LOSS PER COMMON SHARE:
Basic and diluted......................... $ (0.18) $ (0.13) $ (0.39)
========== ========== ==========
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING:
Basic and diluted......................... 5,019,521 5,229,219 6,577,840
========== ========== ==========

OTHER DATA:
EBITDA(1)................................... $ (179) $ (773) $ (510) $ (2,402)
Net cash provided by (used in):
Operating activities...................... (120) (557) (340) (1,749)
Investing activities...................... -- (47) (29) (610)
Financing activities...................... 144 882 127 10,887
Capital expenditures........................ -- (47) (29) (520)
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(CONTINUED ON THE FOLLOWING PAGE)

9
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DECEMBER 31, 1999
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HISTORICAL AS ADJUSTED(2)
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(IN THOUSANDS)
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BALANCE SHEET DATA:
Cash and cash equivalents................................. $8,588 $
Working capital........................................... 7,986
Total assets.............................................. 9,809
Total debt................................................ -- --
Total stockholders' equity................................ 8,735
</TABLE>

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(1) EBITDA represents, for any period, loss from operations plus depreciation
and amortization. EBITDA is presented because it is a widely accepted
financial indicator of a company's operating results and cash flows and
management believes that presentation of EBITDA is helpful to investors.
However, EBITDA should not be considered as an alternative to net loss as a
measure of our operating results or to cash flows as a measure of liquidity.
In addition, although the EBITDA measure of performance is not recognized
under generally accepted accounting principles, it is widely used as a
general measure of a company's operating performance because it assists in
comparing performance on a relatively consistent basis across companies
without regard to depreciation and amortization, which can vary
significantly depending on accounting methods or non-operating factors such
as historical cost bases. Because EBITDA is not calculated identically by
all companies, the presentation herein may not be comparable to other
similarly titled measures of other companies.

(2) The as adjusted data gives effect to receipt of the net proceeds from the
sale of shares of common stock offered by us in this offering at the assumed
public offering price of $ per share, the mid-point of the range on
the cover page of this prospectus, after deducting the estimated
underwriting discount and estimated offering expenses payable by our
company.

10
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RISK FACTORS

THIS OFFERING INVOLVES A HIGH DEGREE OF RISK. YOU SHOULD CAREFULLY CONSIDER THE
RISKS DESCRIBED BELOW AND THE OTHER INFORMATION IN THIS PROSPECTUS, INCLUDING
OUR CONSOLIDATED FINANCIAL STATEMENTS AND THE RELATED NOTES, BEFORE YOU PURCHASE
ANY SHARES OF OUR COMMON STOCK. THE RISKS DESCRIBED BELOW ARE INTENDED TO
HIGHLIGHT RISKS THAT ARE SPECIFIC TO US BUT ARE NOT THE ONLY ONES THAT WE FACE.
ADDITIONAL RISKS AND UNCERTAINTIES, INCLUDING RISKS THAT WE CURRENTLY DEEM
IMMATERIAL OR RISKS TO COMPANIES THAT HAVE RECENTLY UNDERTAKEN INITIAL PUBLIC
OFFERINGS, MAY ALSO IMPAIR OUR BUSINESS OR THE VALUE OF YOUR INVESTMENT.

RISKS RELATED TO OUR BUSINESS

WE HAVE INCURRED SIGNIFICANT NET LOSSES SINCE INCEPTION, HAVE RECOGNIZED VERY
LIMITED REVENUE, EXPECT TO INCUR LOSSES IN THE FUTURE AND MAY NEVER ACHIEVE
PROFITABILITY.

Since our inception in May 1996, we have recognized limited revenue and have
incurred significant losses. We incurred a net loss of approximately
$2.6 million during 1999 and a net loss of $0.7 million during 1998. We had
revenue of $0.8 million and a net loss of $0.6 million in the quarter ended
September 30, 1999 and revenue of $0.7 million and a net loss of $1.1 million in
the quarter ended December 31, 1999. As of December 31, 1999, we had an
accumulated deficit of $4.3 million. We expect to incur additional losses at
least through 2002 and cannot assure you that we will ever be profitable. If we
continue to incur net losses, the value of our common stock may decline sharply.

We expect to significantly increase our expenditures as we attempt to grow our
business. In particular, we will need to spend significant amounts on equipment
installations at retail locations before we are able to generate substantial
revenue. In order to expand our broadband networks, we have agreed in some cases
and may agree in the future to pay retailers to install our equipment and
transmit our programming. Accordingly, we will need to generate a significant
amount of revenue from advertising in order to become profitable and sustain
profitability on a quarterly or annual basis. Our ability to achieve
profitability will depend on a number of factors that are outside of our
control, including:

- the extent to which there is market acceptance of our networks by retailers
and advertisers;

- the continued success of existing networks, expansion of existing networks
to additional retail locations and development of new networks in diverse
industries;

- whether competitors announce and develop competing or superior technologies
or products;

- our ability to manage our revenue, costs and capital expenditures; and

- the health of the general economy.

OUR LIMITED OPERATING HISTORY MAKES IT DIFFICULT TO EVALUATE OUR BUSINESS AND
TRENDS THAT AFFECT OUR BUSINESS.

We are in the early stages of our development and an evaluation of our future
prospects is difficult. We were founded in May 1996 and launched the Planet TV
Network with Planet Hollywood in early 1998. We launched the Advance Auto Parts
Network and the PharmaSee Network in mid-1999, and our other networks have only
recently commenced operations. We do not expect to generate revenue in
connection with our newest networks, including BEVision and our networks with
Albertson's and The Sports Authority, in the near term. We currently operate the
Albertson's network pursuant to a short-term agreement that may not be extended
in the future. In addition, ABC Liquors may not extend BEVision to all of its
stores, and we are still in the process of expanding our sporting goods network
to all of The Sports Authority's stores. Our historical financial and operating
information is therefore of limited value in evaluating our company.

11
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We are still in the process of developing and/or finalizing various aspects of
our technology and service applications. In particular, we are working with
Spacenet to finalize the store-and-forward technology to be used in our
networks. Our new Spacenet installations currently utilize video streaming and
will be converted to our new store-and-forward format upon its completion. Our
store-and-forward technology is new and unproven in a widespread deployment and
may need modifications in order to be successful. Technology and applications
currently under development include:

- integrating video monitors, which we expect will allow us to verify whether
a video monitor in a store is turned on or off and to control the monitor's
volume;

- two-way satellite receivers that will enable us to actively verify and
validate advertising statistics to better document advertising on our
networks;

- an interactive system in which network advertisements can vary automatically
based on the inventory levels of particular products in a store; and

- interactive touchscreen video monitors, which would enable consumers to
interactively view video materials and retrieve product and other
information.

Until we have finalized and fully tested these applications, we cannot assure
you that they will all be successful. A delay in developing these applications
would have an adverse effect on our business. If we fail to implement these
initiatives successfully we will not be able to complete our business plan as we
expect.

In addition, any evaluation of our business and prospects must be made in light
of the risks and difficulties frequently encountered by new companies competing
in new and rapidly evolving markets. Some of these risks and uncertainties
relate to our ability to:

- anticipate and adapt to market changes and actions taken by our competitors;

- implement sales and marketing initiatives;

- attract, retain and motivate employees, including sales and technical
personnel;

- protect our critical intellectual property; and

- effectively manage our growth.

As a result of these and other factors, it is difficult to accurately predict
our future revenue and expenses, our future growth rate, if any, or the size of
the market for our in-store networks and related services. As a result, we may
be unable to make accurate financial forecasts and adjust our spending in a
timely manner to compensate for any unexpected revenue shortfall. This could
cause our results of operations in a given quarter to be worse than expected,
which could cause the price of our common stock to decline.

THE SUCCESS OF OUR BUSINESS IS SUBSTANTIALLY DEPENDENT UPON OUR ABILITY TO SELL
ADVERTISING ON OUR BROADBAND NETWORKS, WHICH IS UNPROVEN.

Our business plan is to derive a substantial portion of our revenue from
advertisers that will display their commercials and promotional segments on our
networks. However, our advertising model is relatively new and we still need to
convince advertisers that they will benefit from our format. It is possible that
advertisers will not accept our point-of-purchase advertising as an acceptable
or successful mode of advertising. We derived less than 7% of our revenue from
advertising in 1999 and we may not be able to generate significant revenue from
advertising in 2000 or in the future. We generally do not enter into contracts
with any of our advertisers and we do not have significant experience in selling
advertising. We cannot assure you that current or future advertisers will
purchase advertising from us.

12
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The failure to attract national or other advertisers and derive significant
revenue from these advertisers would have a material adverse effect on our
ability to successfully implement our business model.

One of the principal difficulties that advertisers may face in evaluating our
point-of-purchase advertising is the absence of a recognized third-party ratings
source similar to Nielsen's that can measure our network audience. Unlike
traditional television advertising, which is measured based on the number of
viewers who watch a television program, it is very difficult to measure how many
consumers visit a store and view advertising on our networks. Therefore, we must
rely on our customers to provide us with this information until a third-party
source becomes available. Our advertising agreements generally guarantee that
the network will be shown in a specified number of stores. The absence of a
verifiable third-party measure may cause some advertisers to reject our medium.

OUR BUSINESS MODEL IS NEW AND UNPROVEN AND MAY NEVER GAIN MARKET ACCEPTANCE
AMONG RETAIL COMPANIES.

Our business model is new and unproven. Any inability to retain our current
retailers or to attract new retailers will hinder our future growth. Our
relationship with Albertson's is pursuant to a short-term agreement, and we
cannot assure you that Albertson's will elect to expand our network to
additional locations or to continue to do business with us in the future. We
also cannot assure you that ABC Liquors will elect to extend BEVision to all of
its stores. Furthermore, we have not yet earned any revenue in connection with
BEVision or our Albertson's and Sports Authority relationships.

We may not succeed in attracting additional retail locations to our current
networks or in attracting new retail clients to our new networks. Other
industries may possess particular demographic or other characteristics which
make them unsuited to our networks. Retailers, advertisers and other potential
customers may perceive little or no benefit from our networks and related
websites. Technological advancements, changes in the way consumers make
purchasing decisions, the entry of new competitors into our industry or any
unforeseen transformation in market conditions could materially adversely affect
our ability to execute our business plan. In addition, our ability to expand
within the auto parts industry is limited because we are currently operating
under an exclusivity agreement with Advance Auto Parts which prohibits us from
providing similar services to other retail auto parts chains. Our agreement with
The Sports Authority also limits our ability to expand our sporting goods
network into locations operated by specified competitors of The Sports
Authority. We may be required to agree to similar agreements in new industries
in the future. If the market for our networks does not develop, develops more
slowly than expected or becomes saturated with competitors, our financial
performance will be materially adversely affected.

In addition, it is possible that some retailers may elect not to utilize our
networks as a result of negative reactions from employees. We have not
experienced this difficulty to date. However, it is possible that retail
employees who hear and see the programming on a repetitive basis could object to
being exposed to the programming for extended periods of time. If retailers
terminate our service or do not install our networks due to negative reactions
from employees or otherwise, our financial performance would be materially
adversely affected.

SUBSTANTIALLY ALL OF OUR CURRENT REVENUE IS DERIVED FROM A FEW KEY CUSTOMERS AND
THE LOSS OF ANY ONE OF OUR LARGEST CUSTOMERS WOULD ADVERSELY AFFECT OUR REVENUE
AND FUTURE PROSPECTS.

We have in the past derived nearly all of our revenue from three networks.
During 1999, the Advance Auto Parts Network represented approximately 76% of our
revenue, advertisers on the PharmaSee Network represented approximately 7% of
our revenue and the Planet TV Network represented approximately 7% of our
revenue. We expect that in 2000 the PharmaSee Network will constitute our

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single largest source of revenue. We believe that we will depend upon a limited
number of customers for a significant portion of our revenue for the foreseeable
future.

Any deferral or significant reduction in work performed for these principal
customers, or the termination of our relationship with any of these customers,
would have a material adverse effect on our business. Our contract with Advance
Auto Parts terminates in April 2001, our contracts with The Sports Authority and
ABC Liquors terminate in March 2005 and our PharmaSee Network license terminates
in June 2009. We cannot assure you that any of our principal customers will
renew their contracts or, if they terminate their relationship with us, that we
will be able to replace them with new customers. Our newest networks, which
commenced in January 2000 and are currently operating at a limited number of
locations, have not generated any revenue and may not generate revenue in the
future.

WE DEPEND ON THIRD-PARTY SERVICE PROVIDERS, PARTICULARLY SPACENET, TO PROVIDE,
INSTALL, MAINTAIN AND FINANCE MUCH OF OUR VIDEO, AUDIO, SATELLITE RECEIVING AND
OTHER EQUIPMENT.

We are and will continue to be significantly dependent upon third-party service
providers to provide, install, maintain and finance relevant video, audio,
satellite receiving and other equipment at each customer location. The failure
of any third-party provider to perform these services could interrupt our
business, damage customer relations and delay further services.

In particular, we will rely on Spacenet to provide, install and maintain a large
portion of our new equipment and replace a large portion of our existing
equipment. We have installed Spacenet's equipment in a limited number of
locations to date and certain store-and-forward applications are in development.
Any significant delay in installation of Spacenet's equipment or development of
store-and-forward applications would have a material adverse effect on our
business. We expect that our reliance on Spacenet will increase in 2000 because
Spacenet will become our primary equipment vendor, equipment installer and
satellite distributor. In 1999, we used multiple third parties to provide each
of these services. As a result, any significant modification in our arrangements
with Spacenet or the ability of Spacenet to provide these services could have a
material adverse effect on our business. Spacenet may cancel its service
agreement with us if we fail to maintain a specified installation schedule. We
must also purchase specified amounts of equipment from Spacenet in each
subsequent year. Any termination by Spacenet of its agreement with us would have
a material adverse effect on our business. We can give you no assurance that
Spacenet or other third parties will regard their relationship with us as
significant. If Spacenet were to terminate its relationship with us, we could
not assure you that we would be able to obtain replacement providers on
favorable terms or at all.

Most of our current PharmaSee Network locations are not yet equipped with the
Spacenet equipment. We expect to replace our equipment at most of our current
PharmaSee Network locations with the Spacenet equipment during 2000. Any delay
in this replacement process would have a material adverse effect on our business
plans. We also plan to commence installation of the Spacenet equipment at our
Sports Authority and BEVision networks and at other new locations during 2000.
Any delay in this installation process would have a material adverse effect on
our business.

TECHNOLOGICAL CHANGES IN OUR INDUSTRY COULD HAVE A MATERIAL ADVERSE EFFECT ON
OUR BUSINESS BY REQUIRING US TO UTILIZE AN ALTERNATIVE TRANSMISSION TECHNOLOGY
OR BY RENDERING OUR EXISTING TECHNOLOGY OBSOLETE.

We cannot assure you that our technology and software will be adequate in the
future. The telecommunications industry is characterized by rapidly changing
technologies and evolving industry standards. Our future success will depend on
our ability to adapt to rapidly changing technologies by continually improving
the performance, features and reliability of our networks. We may experience
difficulties that could delay or prevent the successful development,
introduction or marketing of new

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features, content or network services. We could incur substantial costs if we
need to modify our service or infrastructure to adapt to these changes.

In particular, high-speed, high-capacity broadband delivery mechanisms for
information and entertainment are developing rapidly in the United States. These
broadband transmission networks are currently being developed by both cable
television and local telephone companies and may be developed by others,
including electric utilities and satellite providers. It is difficult to predict
the impact that the development of these technologies will have on our business.

In addition, we expect technological developments and enhancements to continue
at a rapid pace in the direct broadcast satellite network industry and related
industries. Technological developments may require us to switch to a different
transmission technology or cause our technology to be rendered obsolete. For
example, we have not yet determined what impact, if any, the advent of digital
television will have on our technology or transmission system. Our future
success is largely dependent on our ability to adapt to technological change in
order to remain competitive.

OUR MANAGEMENT AND INTERNAL SYSTEMS MAY BE INADEQUATE TO HANDLE THE GROWTH OF
OUR BUSINESS. INABILITY TO MANAGE OUR GROWTH COULD HAVE A MATERIAL ADVERSE
EFFECT ON THE QUALITY OF OUR NETWORKS AND OUR BUSINESS.

Our growth has placed and is expected to continue to place significant demands
on our management and other resources. We have grown from one network in 37
locations at March 31, 1999 to four networks in more than 2,300 locations at
February 29, 2000. In addition, our employee headcount increased from six at the
end of 1998 to 61 on February 29, 2000. With the expansion of our current
networks and the potential addition of new networks in the future, we expect
that our growth will continue. As a result, we will need to obtain additional
equipment, personnel and other resources in order to successfully execute new
opportunities. We may have difficulties obtaining these additional resources.

Our future success will depend on our ability to manage our growth effectively,
including:

- training, motivating, managing and retaining our existing employees and
attracting and integrating new employees;

- improving our business development capabilities;

- developing and improving our operational, financial, accounting and other
internal systems and controls;

- establishing procedures and policies for installing and tracking the
installation of our equipment in retail locations and implementing our
relationships with our third-party suppliers; and

- maintaining quality programming on our networks.

Our management has limited experience managing a business with the complexity of
ours and does not have significant experience working together. In addition, a
number of our officers and key employees have only recently joined us. Few of
our employees have experience as officers of public companies. Our systems,
procedures and controls may not be adequate to support our operations or enable
our management to act quickly enough to exploit the market for our products and
services. In addition, we will need new systems in order to support the growth
of our business and cannot assure you that we will be able to develop these
systems on a timely or cost-effective basis. Delays or problems associated with
any improvement or expansion of our operational systems and controls could
adversely impact our business and could result in errors in our financial and
other reporting. Our inability to manage our growth effectively could have a
material adverse effect on the quality of our networks, our ability to retain
key personnel and our results of operations.

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WE DEPEND IN PART UPON OUR CONTINUED ACCESS TO THIRD-PARTY PROGRAMMING IN ORDER
TO PROVIDE ENTERTAINING AND INFORMATIVE CONTENT ON OUR NETWORKS. WE WOULD BE
MATERIALLY ADVERSELY AFFECTED IF PROGRAMMING COSTS SIGNIFICANTLY INCREASED OR IF
PROGRAMMING BECAME UNAVAILABLE.

Our ability to maintain access to quality programming on a regular, long-term
basis on terms favorable to us is important to our future success and
profitability. We have entered into relationships with various programming
providers, including CNN, E! Entertainment, Fox, Goodlife, NASCAR, Ovation, Time
Warner and Ziff Davis. These relationships are generally made pursuant to
short-term written agreements or without contracts and most of our programming
suppliers could stop providing us their programming with very little or no
advance notice. Termination of many of our programming relationships would have
a material adverse effect on us.

In addition, a significant amount of our programming from network and cable
programmers, video news release providers and independent producers is currently
provided to us for free. Should the costs of either externally produced or
internally produced programming significantly increase in the future, our
profitability would be materially adversely affected.

OUR REVENUE IS SUBJECT TO SEASONAL FLUCTUATIONS DUE TO OUR RELIANCE ON REVENUE
FROM ADVERTISING.

We believe that our revenue is subject to seasonal fluctuations because
advertisers generally place fewer advertisements during the first and third
calendar quarters of each year. Expenditures by advertisers also tend to vary in
cycles that reflect overall economic conditions as well as budgeting and buying
patterns. Because some advertisers may discontinue or reduce advertising on our
networks from time to time with little or no notice, we may experience
fluctuations in operating results. In particular, because advertisers generally
reduce their spending during economic downturns, we would be materially
adversely affected by a recession.

THE DEPARTURE OF KEY PERSONNEL, SUCH AS OUR CEO OR OTHER MEMBERS OF OUR
MANAGEMENT WHO HAVE DEVELOPED RELATIONSHIPS WITH OUR CUSTOMERS, COULD HAVE A
DETRIMENTAL EFFECT ON OUR BUSINESS.

Our continued success is highly dependent on the retention of existing
management. The loss of any member of our senior management team could
substantially impede our ability to execute our business plan. If we were forced
to search for a key replacement, relationships with existing customers and
prospective clients could be seriously jeopardized and day-to-day operations
could be impaired. We have entered into employment agreements with our chief
executive officer and chief financial officer which expire in June 2001. We have
also entered into employment agreements with a number of our key employees. In
addition, from time to time, we may become dependent on particular on-air
personalities who host shows on our networks. Any failure to retain or
adequately replace these personalities could harm our business.

THE LOSS OF A LARGE NUMBER OF OUR EMPLOYEES, OR THE INABILITY TO RECRUIT
EXPERIENCED AND QUALIFIED PERSONNEL, WOULD MAKE IT DIFFICULT TO GROW OUR
BUSINESS AND SUCCESSFULLY IMPLEMENT OUR BUSINESS STRATEGY.

Our success depends on identifying, hiring, training and retaining experienced
and knowledgeable employees. In particular, we rely on our advertising sales
force, retailer sales force, technical personnel and programming department. If
a significant number of our current employees leave without adequate
replacement, we would be unable to grow our business and complete our business
strategy. In addition, former employees may compete with us in the future after
the expiration of their noncompete agreements.

Competition for qualified personnel is intense. Competitors and others may
attempt to recruit our employees by, among other things, offering more
attractive compensation packages than we can. Also, it may be difficult to
attract personnel to Fort Lauderdale, Florida, where our headquarters are
located.

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We cannot assure you that we will be able to attract a sufficient number of
qualified employees in the future, or that we will be successful in motivating
and retaining the employees we are able to attract. If we cannot attract,
motivate and retain qualified personnel, our business will suffer.

WE EXPECT THAT OUR DEBT AND OTHER LIABILITIES WILL INCREASE IN THE FUTURE.
INCREASED DEBT LEVELS COULD LIMIT OUR OPERATIONAL FLEXIBILITY.

As of December 31, 1999 we had no outstanding debt. However, we expect that our
debt will increase as we finance new equipment pursuant to our service agreement
with Spacenet. The amount of our debt could impair our ability to obtain
additional financing for working capital, capital expenditures, acquisitions or
other general corporate purposes. In addition, we may incur more debt than our
competitors, which would place us at a competitive disadvantage, and our debt
could make us more vulnerable to changes in general economic conditions. In
addition, any debt financing, if available, would likely involve financial and
operating covenants limiting or restricting our operations or future
opportunities.

In addition, we expect that the licensing fees we are required to pay under our
license agreement related to the PharmaSee Network will increase in the future.
We are required to pay licensing fees based on the number of eligible member
pharmacies that subscribe to the PharmaSee Network. These fees will be credited
dollar for dollar against the liabilities we assumed in the acquisition of the
network and website that were converted into the PharmaSee Network and may be
deferred to the extent our net revenue is insufficient to pay the fees until
June 2001. We expect that following June 2001 we will be required to pay the
licensing fees under these agreements.

We have in the past and may in the future agree to pay fees to retailers in
order to install our networks in their locations. For example, we will begin
paying fees to The Sports Authority in mid-2001. In some cases these fees could
be material to our business. We will need to generate significant revenue in
order to pay these fees and our licensing fees as well as our other operating
expenses.

WE DEPEND ON SATELLITE TECHNOLOGY TO TRANSMIT PROGRAMMING TO RETAIL LOCATIONS.

We depend on our satellite space providers to effectively transmit our
programming. Only a small number of telecommunications companies can provide the
satellite service we require. We currently obtain satellite space from two
companies, Spacenet and Microspace Communications Corporation. These providers
may fail to provide acceptable service quality. Since we do not have direct
control over the reliability and quality of the satellites transmitting our
networks, we cannot assure you that we will be able to provide consistently
reliable network service. Any failure of the satellites upon which we rely could
have a material adverse effect on our business, financial condition and results
of operations.

Most retail locations are connected to our networks through a satellite link.
The complete or partial loss of the satellite used to transmit data could affect
the performance of our networks and result in service interruptions. Orbiting
satellites are subject to the risk of failing prematurely due to mechanical
failure, a collision with objects in space or an inability to maintain proper
orbit. If we were required to move to a substitute satellite, we would have to
redirect all of the satellite dishes in our network, a process that would be
both time consuming and expensive. In addition, the use of satellites to provide
transmissions to our customers requires a direct line of sight between the
satellite and the receiver at the retail location and is subject to distance and
rain attenuation.

Our ability to provide uninterrupted access to our in-store networks also
depends on the efficient and uninterrupted operation of transmission equipment.
This equipment is vulnerable to damage or interruption from earthquakes, floods,
fires, power loss, telecommunication failures and similar events. It is also
subject to break-ins, sabotage, intentional acts of vandalism and other similar
misconduct. For example, damage to Microspace's facility in Raleigh, North
Carolina could have a material adverse impact on our ability to transmit
programming through the PharmaSee Network. Similarly, any damage

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to Spacenet's facility in McLean, Virginia could have a material adverse impact
on our ability to transmit programming. Our business will also be harmed if
clients believe our service is unreliable. Any frequent or persistent system
failures would irreparably damage our reputation.

In the event our satellite service fails, we would be able to deliver CDs to our
Spacenet-equipped customers on a monthly basis which would allow our customers'
retail locations to continue to show our programming. We believe that this
backup mechanism would provide our customers with adequate programming and
provide us with enough time to remedy the satellite failure or obtain
alternative satellite service. However, the use of CD programming would
eliminate a number of the technological advantages we otherwise would offer our
customers by utilizing satellite service and would make it impossible for us to
generate revenue through our two-way interactive satellite transmission
capability.

WE FACE SIGNIFICANT COMPETITION FROM TRADITIONAL MEDIA COMPANIES.

Our point-of-purchase networks compete for advertising revenue with traditional
advertising media, including broadcast and cable television, radio, newspapers,
magazines, other print media, direct mail and billboards. If advertisers do not
perceive our point-of-purchase advertising to be effective, they will not devote
their advertising dollars to our networks.

WE EXPECT INCREASED COMPETITION IN THE FUTURE FROM NEW COMPETITORS, ENHANCED
TECHNOLOGIES AND INTERNET-RELATED COMPANIES.

We are aware of other companies that are pursuing strategies in the out-of-home
media area, including private video networks. It is possible that competitors
with greater resources than we have will enter our market. To the extent our
business grows, we believe that competition will increase and other
organizations will develop and offer private video networks. There are no
meaningful barriers to entry to prevent competitors from entering our market.
The television, telecommunications, Internet and advertising industries are
extremely competitive and crowded with global leaders that have both significant
market share and extraordinary resources. These competitors may be able to
respond more quickly than we can to technological developments and changes in
clients' needs.

New technologies and the expansion of existing technologies may also increase
the competitive pressures on us by enabling our competitors to offer a
lower-cost service. It is possible that distribution of television programming
over the Internet could develop as an alternate business model that can compete
with our satellite-based networks. Increased competition may result in reduced
operating margins and loss of market share. As a strategic response to changes
in the competitive environment, we may, from time to time, be required to make
pricing, service or marketing decisions or acquisitions that could have a
material adverse effect on our business for a particular quarter or other period
of time.

We will also face competition from Internet-related companies, in their
capacities as alternative providers of e-commerce channels and developers of
substitute advertising techniques. Many of these companies have greater brand
recognition and market presence and substantially greater resources than we
have. To the extent that e-commerce supplants shopping at traditional retail
stores, our business, financial condition and results of operations could also
be materially adversely impacted.

NEW LAWS OR REGULATIONS OR INTERPRETATIONS OF EXISTING LAWS COULD REQUIRE US TO
CHANGE OUR BUSINESS PRACTICES AND EXPOSE US TO LEGAL ACTION IF WE FAIL TO
ADEQUATELY COMPLY.

The Federal Communications Commission has broad jurisdiction over the
telecommunications industry. FCC licensing, program content and related
regulations generally do not currently affect us because we operate private
networks in retail locations. However, the FCC could promulgate new regulations
that impact our business directly or indirectly or it could interpret existing
laws in a manner that would cause us to incur significant compliance costs or
force us to alter our business strategy.

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FCC regulations also affect many of our strategic partners and, therefore, these
regulations may indirectly adversely affect our business. In particular, the
satellite industry is highly regulated by the FCC and, in the United States, the
operation and use of satellites require licenses from the FCC. Our satellite
access providers may not be able to obtain all U.S. licenses and authorizations
necessary to operate effectively. The failure of our strategic satellite
providers to obtain some or all necessary licenses or approvals could impose
significant additional costs and restrictions on our business or require us to
change our operating methods.

In addition, the advertising industry is subject to regulation by the Federal
Trade Commission, the Food and Drug Administration and other federal and state
agencies, and to review by various civic groups and trade organizations,
including the National Advertising Division of the Council of Better Business
Bureaus. New laws or regulations governing advertising could have a material
adverse effect on our business. For example, our ability to enter the beer, wine
and spirits store industry in some states requires that restrictions on alcohol
advertising will not apply to private video networks inside beer, wine and
spirits stores. Should new laws or regulations or interpretations of existing
regulations prohibit or restrict the use of alcoholic beverage advertising on
our networks, our entry into the beer, wine and spirits store industry would be
made more difficult and we could be required to reconsider our business strategy
with respect to our BEVision network.

Regulatory approvals from local, state or federal governmental bodies may be
required before we are permitted to expand our networks in particular
industries, including the beer, wine and spirits industry. For example, the sale
of alcoholic beverages is regulated by a state control board in a number of
states. We may be required to obtain the approval of state control boards in
order to provide our networks in beer, wine and spirits stores located within
those states. We have not sought or obtained regulatory approvals in connection
with the expansion of our networks in any beer, wine and spirits stores in any
states where this approval is necessary and we are currently offering our beer,
wine and spirits network, BEVision, only in states where we do not need to first
obtain regulatory approval. We may not be able to obtain any required approvals,
and any approval may be granted on terms that are unacceptable to us or that
adversely affect our business.

MISAPPROPRIATION OF OUR PROPRIETARY SOFTWARE AND TECHNOLOGY COULD MATERIALLY
AFFECT OUR COMPETITIVE POSITION.

We believe our proprietary software and technology is critical to our success
and competitive position. We are currently seeking patent protection for some of
our proprietary software and technology. If we are unable to protect our
proprietary software and technology against unauthorized use by others, or are
unable to obtain requisite patents, our competitive position would be materially
adversely affected.

Despite any precautions that we may take, a third party may copy or otherwise
obtain and use our products, services, software or technology without
authorization, or develop similar technology independently. In addition,
effective patent, copyright, trademark and trade secret protection may be
unavailable or limited. The law in this area is not fully developed. We may also
not be able to enforce confidentiality agreements with our employees or third
parties. We can give you no assurance that the steps we take will prevent
misappropriation or infringement of our software and technology. Litigation may
be necessary in the future to enforce our intellectual property rights, to
protect our trade secrets or to determine the validity and scope of the
proprietary rights of others. This litigation could result in substantial costs
and diversion of resources and could have a material adverse effect on our
company.

In addition, our proprietary software may decline in value or our rights in our
software may not be enforceable. Policing unauthorized use of our proprietary
technology and other intellectual property rights could entail significant
expense and could be difficult or futile, particularly given the fact that the
laws of other countries may afford us little or no effective protection of our
intellectual property.

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We could also lose the advantages of our proprietary technology as a result of
the advent of new technologies that replace our technology. Without these
proprietary technologies, our competitive advantage would be weakened.

OTHERS COULD CLAIM THAT WE INFRINGE THEIR INTELLECTUAL PROPERTY RIGHTS.

Although we believe that our software and technology do not infringe on the
intellectual property rights of others, we cannot assure you that third parties
will not bring patent infringement claims against us or that any infringement
claims will be successfully defended. From time to time we may be subject to
claims of alleged infringement of the trademarks, patents and other intellectual
property rights of third parties by us. Any of these claims or resulting
litigation, if successful, could materially and adversely affect us in the
following ways:

- we may be liable for damages and litigation costs, including attorneys'
fees;

- we may be enjoined from further use of the intellectual property;

- we may have to license the intellectual property and incur licensing fees;

- we may have to develop a non-infringing alternative, which could be costly
and delay projects; and

- we may have to indemnify clients with respect to losses incurred as a result
of our infringement of the intellectual property.

Regardless of the outcome, an infringement claim could result in substantial
costs, diversion of resources and management attention, clients' termination or
delay of business relationships and harm to our reputation.

OUR BUSINESS WOULD SUFFER IF WE WERE HELD LIABLE FOR INFORMATION MADE AVAILABLE
ON OUR NETWORKS OR WEBSITES.

The information we make available on our video transmissions or through our
client websites could subject us to claims for defamation, negligence, copyright
or trademark infringement or other theories based on the nature and content of
the information made available. We may not prevail in any of these claims. Even
if these claims do not result in liability to us, we could incur significant
costs in investigating and defending against them and in implementing measures
to reduce our exposure to this kind of liability. Our insurance may not cover
potential claims of this type or may not be adequate to cover all costs incurred
in defense of potential claims or to indemnify us for all liability that may be
imposed.

The law relating to the liability of the operators of websites for information
carried on, stored on or disseminated through their websites is evolving and few
clear legal precedents have been established. Similarly, the law regarding
Internet advertising remains unsettled. Claims for defamation, negligence,
copyright and trademark infringement have been brought, sometimes successfully,
against operators in the past. Because users may download and redistribute
materials that are included on our websites, claims could be made against us
under both U.S. and foreign law based on the nature and content of these
materials. We could also be exposed to liability because of third-party content
that may be accessible through our websites, including links to websites
maintained by our advertisers, retailers or other third parties, posted directly
to our website or framed by our website, and subsequently retrieved by a third
party. For example, if any third-party content provided through our websites
contains errors, third parties who access this content could make claims against
us for losses incurred in reliance on this content. It is impossible for us to
determine whom the potential rights holders may be with respect to all materials
displayed through our websites.

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WE MAY NOT BE ABLE TO SUCCESSFULLY IMPLEMENT OUR INTERNET STRATEGY.

To date we have not generated any revenue from Internet advertising or
e-commerce. We have little experience in evaluating the ability of our in-store
networks to generate website visits and purchases. We do not expect to generate
significant revenue from these sources in the foreseeable future.

Our Internet strategy depends upon continued growth in the use of the Internet
by our customers, prospective customers and consumers. The factors that may
affect Internet usage or adoption of e-commerce include, among others, actual or
perceived lack of security of information, lack of access and ease of use,
inconsistent quality of service, increases in access costs to the Internet,
increased government regulation, uncertainty regarding intellectual property
ownership and reluctance to adopt new business methods.

Even if Internet usage continues to grow, the Internet infrastructure may not be
able to support the demands placed on it by this growth. As a result, its
performance and reliability may decline. In addition, websites and proprietary
online services have experienced interruptions in their service as a result of
outages, hacking and other delays occurring throughout their infrastructure. If
these outages or delays occur frequently, Internet usage as a medium for the
exchange of information and commerce could grow more slowly or decline.

OUR BUSINESS PLAN DEPENDS IN PART ON THE USE OF THE INTERNET AS AN ADVERTISING
MEDIUM AND ON OUR ABILITY TO SELL ADVERTISING ON THE WEBSITES WE OPERATE.

One element of our business strategy is to increase the sale of advertising on
the websites we operate. To date we have not generated any revenue from Internet
advertising, and there is significant uncertainty about the demand and market
acceptance for Internet advertising. Our ability to generate advertising revenue
on the Internet will depend on a number of factors, including the development of
the Internet as an advertising medium, the level of traffic on our websites and
our ability to achieve, measure and demonstrate to advertisers the unique
demographic characteristics of visitors to our websites. In addition, filter
software programs that limit or prevent advertising from being displayed on a
user's computer are available. It is unclear whether this type of software will
become widely accepted. If it does, it would negatively affect Internet-based
advertising. We cannot assure you that the market for Internet advertising will
continue to emerge or become sustainable.

Competition for advertising revenue on the Internet is intense and our websites
may be unable to attract sufficient amounts of advertising. Many of our
advertising competitors on the Internet have longer operating histories, greater
name recognition, larger user bases and significantly greater resources and more
established relationships with advertisers than we have. We have limited
experience with marketing and pricing banner advertising, performance-based
arrangements and referrals to third-party websites. We also have little
experience with respect to the performance of these arrangements. As a result,
we may not appropriately price, market or structure these arrangements and we
may not perform under these arrangements to the satisfaction of the other
parties.

OUR ABILITY TO SUCCESSFULLY IMPLEMENT OUR INTERNET STRATEGY COULD BE LIMITED BY
RESTRICTIVE GOVERNMENT REGULATIONS AND LEGAL UNCERTAINTIES RELATING TO THE
INTERNET.

Increased regulation of the Internet might slow the growth in use of the
Internet, which would materially impact our ability to successfully implement
our Internet strategy. Congress and state legislatures have recently passed
legislation and federal and state regulatory agencies have adopted regulations
or taken other actions regulating many aspects of the Internet. In addition,
these governmental organizations are considering other legislative and
regulatory proposals that would regulate aspects of the Internet. We do not know
how the courts will interpret laws governing the Internet or the extent to which
they will apply existing laws to the Internet. Therefore, we are not certain how
existing or future laws governing or applied to the Internet will affect our
business.

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In addition, the tax treatment of Internet revenue is currently unsettled. Tax
authorities on the international, federal, state and local levels are currently
reviewing the appropriate tax treatment of companies engaged in Internet
commerce. A number of proposals have been made at the federal, state and local
levels, and by foreign sovereigns, that could impose taxes on the online sale of
goods and services and other Internet activities. If imposed, these taxes may
materially adversely affect our Internet business and results of operations.

The Federal Trade Commission and government agencies in some states and
countries have been investigating some Internet companies regarding their use of
personal information of individuals who visited their websites. Any regulations
imposed to protect the privacy of Internet users could affect the way in which
we currently, or might in the future, conduct our business. If others were able
to penetrate our network security and gain access to, or in some other way
misappropriate, this information, we could be subject to liability. These claims
could result in litigation, which could require us to expend significant
financial resources. We could incur additional expenses if new laws or
regulations regarding the use of personal information are adopted or if any
regulator chooses to investigate our privacy practices.

In addition, we face the possibility that various business methods utilized on
our websites are patented by other persons. In recent years an increasing number
of Internet-related patents that cover both narrow technological improvements
and widespread techniques for doing business have been granted. Internet sites
may be forced to pay royalties to use popular e-commerce features or may be
prohibited from using these methods altogether. We cannot predict the extent to
which these broad patents will be enforced or whether any of our business
practices will be targeted by third parties. Any litigation in this area would
be disruptive to our business, and any requirement that we pay royalties for our
use of third-party patents could have a material adverse affect on our company.

WE MAY NEED ADDITIONAL CAPITAL IN THE FUTURE AND THIS CAPITAL MAY NOT BE
AVAILABLE TO US.

We may need to raise additional funds through public or private debt or equity
financings in order to finance new or expanded networks or cover operating or
other expenses. Our capital requirements in the future will depend on numerous
factors, including the rate of acceptance of our networks by retail companies,
advertisers, e-commerce companies and others. We cannot assure you that any
necessary financing will be available on terms favorable to us, if at all.
Spacenet will not finance all of our equipment, such as selected Sports
Authority equipment. We will also be required to begin paying licensing fees to
NCPA and fees to The Sports Authority in mid-2001 and may be required to pay
fees to other retailers in the future in order to install our networks in their
retail locations. If we cannot raise necessary additional capital on acceptable
terms, we may not be able to develop or enhance our networks and services, take
advantage of future opportunities or respond to competitive pressures or
unanticipated requirements.

POTENTIAL ACQUISITIONS MAY RESULT IN, AMONG OTHER THINGS, INCREASED EXPENSES,
DIFFICULTIES IN INTEGRATING TARGET COMPANIES AND THE DIVERSION OF MANAGEMENT'S
ATTENTION.

We may make strategic acquisitions of or investments in complementary companies,
products or technologies or enter into strategic joint ventures. Some of the
risks that we may encounter in implementing this element of our strategy
include:

- expenses and difficulties in identifying potential targets and the costs
associated with acquisitions that are abandoned before completion;

- expenses, delays and difficulties of integrating the acquired company into
our existing organization and our company's culture;

- the diversion of management's attention during the acquisition and
integration process;

22
<PAGE>
- difficulties in retaining the acquired entity's key management and technical
personnel during the transition period following an acquisition;

- the expense of amortizing the acquired company's goodwill or other
intangible assets, which could be significant in light of the high
valuations of many companies;

- the impact on our financial condition due to the timing of the acquisition;
and

- expenses of any disclosed, undisclosed or potential legal liabilities of the
acquired company, including intellectual property, employment, warranty and
product liability-related problems.

If realized, any of these risks could have a material adverse effect on our
business, financial condition and results of operations.

We cannot assure you that we will make any acquisitions of, or investments in,
other products, technologies or entities or that we will be able to obtain
financing for any of these transactions. Acquisitions may require regulatory or
other third-party approvals that we may not be able to obtain. Also, we may face
significant competition for any acquisition we would like to make, and our
competitors for acquisition targets may have significantly greater resources
than we have. If any acquisitions are made, we may not achieve anticipated
revenue and cost benefits. Acquisitions may also result in dilution to our
existing stockholders if we issue additional equity securities and may increase
our debt.

RISKS RELATED TO THIS OFFERING

CONCENTRATION OF OWNERSHIP OF OUR COMMON STOCK MAY LIMIT YOUR ABILITY TO
INFLUENCE CORPORATE MATTERS.

Immediately following this offering, our directors and senior management will
beneficially own approximately % of the outstanding shares of our common
stock. If our directors and senior management choose to act or vote together,
they will have the power to control the approval of any action requiring the
approval of our board of directors and/or stockholders, including any amendments
to our certificate of incorporation, a change of control, a merger or sale of
all or substantially all of our assets or the terms of any future equity
offering. In addition, without the consent of these stockholders, we could be
prevented from entering into some transactions that could be beneficial to us.
As a result of the concentration of ownership, third parties could be
discouraged from making an offer to acquire our company at a price greater than
the market price. Our directors and management stockholders may have interests
adverse to those of other stockholders in general and may approve or take
actions that are adverse to your interests.

THE SALE OR AVAILABILITY FOR SALE OF SUBSTANTIAL AMOUNTS OF OUR COMMON STOCK
COULD ADVERSELY AFFECT ITS MARKET PRICE.

Sales of substantial amounts of our common stock in the public market after the
completion of this offering, or the perception that these sales could occur,
could materially adversely affect the market price of our common stock and could
materially impair our future ability to raise equity capital.

Of the shares of our common stock to be outstanding upon completion
of this offering,

- the shares offered by this prospectus (plus any shares issued
upon exercise of the underwriters' over-allotment option) will be freely
tradeable;

- shares outstanding prior to this offering will be freely
tradeable immediately after the date of this prospectus, subject to the
limitations of Rule 144 under the Securities Act;

- shares issued prior to this offering pursuant to Rule 701 under
the Securities Act will be freely tradeable 90 days after the date of this
prospectus; and

23
<PAGE>
- shares outstanding prior to this offering will be tradeable,
subject to the limitations of Rule 144, 180 days after the date of this
prospectus. Rule 144 allows shares to be sold publicly subject to minimum
holding periods, public availability of information, volume and manner of
sale restrictions on sales.

In addition, we intend to file a registration statement on Form S-8 under the
Securities Act shortly after the date of this prospectus to register an
aggregate of shares of common stock issued or reserved for issuance
under our stock option plans. Shares subject to options will automatically vest
upon completion of this offering.

In connection with this offering, we and certain of our officers and directors
and some other stockholders have agreed, except in limited circumstances, not to
sell any shares of common stock for 180 days after completion of this offering
without the consent of CIBC World Markets Corp. However, CIBC World Markets
Corp. may release these shares from these restrictions at any time. We cannot
predict what effect, if any, market sales of shares held by principal
stockholders or any other stockholder or the availability of these shares for
future sale will have on the market price of our common stock. See "Shares
Eligible for Future Sale" for a more detailed description of the restrictions on
selling shares of our common stock after this offering.

OUR MANAGEMENT HAS BROAD DISCRETION OVER THE USE OF PROCEEDS FROM THIS OFFERING
AND MAY SPEND THE PROCEEDS IN WAYS WITH WHICH YOU DISAGREE.

Our management has significant flexibility in applying the proceeds we receive
in this offering. Because the proceeds are not required to be allocated to any
specific investment or transaction, you cannot determine the propriety of our
management's application of these proceeds. Because of the number and
variability of factors that will determine our use of the net proceeds of this
offering, we cannot assure you that those uses will not vary substantially from
our current intentions or that you will agree with the uses we have chosen. See
"Use of Proceeds" for a more detailed description of how management intends to
apply the proceeds of this offering.

OUR COMMON STOCK HAS NOT PREVIOUSLY BEEN TRADED PUBLICLY AND THE INITIAL PUBLIC
OFFERING PRICE MAY NOT BE INDICATIVE OF THE MARKET PRICE OF OUR COMMON STOCK
AFTER THIS OFFERING.

There is currently no public market for our common stock, and we cannot assure
you that an active trading market will develop or be sustained after this
offering. The initial public offering price will be determined through
negotiation between us and representatives of the underwriters and may not be
indicative of the market price for the common stock after this offering.
Investors may not be able to resell our common stock at or above the initial
public offering price.

INVESTORS IN THIS OFFERING WILL EXPERIENCE IMMEDIATE AND SUBSTANTIAL DILUTION.

If you purchase common stock in this offering, you will pay more for your shares
than the amounts paid by existing stockholders for their shares. As a result,
you will experience immediate and substantial dilution of approximately
$ per share, representing the difference between our net tangible book
value per share as of December 31, 1999, after giving effect to this offering,
and the assumed public offering price of $ per share (the mid-point of
the range on the cover page of this prospectus). In addition, you may experience
further dilution to the extent that shares of our common stock are issued upon
the exercise of stock options. These shares will be issued at a purchase price
less than the public offering price per share in this offering. See "Dilution"
for a more complete description of how the value of your investment in our
common stock will be diluted upon the completion of this offering. In addition,
if we raise additional capital through the issuance of equity securities, the
percentage ownership of our existing stockholders will decline, existing
stockholders may experience dilution in net book value per share, and the newly
issued equity securities may have rights or preferences senior to those of the
holders of our common stock.

24
<PAGE>
THE MARKET PRICE OF OUR COMMON STOCK MAY FLUCTUATE SIGNIFICANTLY FOLLOWING THIS
OFFERING.

Our quarterly revenue and operating results are difficult to predict and our
revenue and operating results may fluctuate significantly from quarter to
quarter due to a number of factors, many of which are outside of our control.
Therefore, you should not rely on period-to-period comparisons of results of
operations as an indication of our future performance. It is possible that in
future periods our operating results may fall below the expectations of market
analysts or investors and, in this event, the market price of our common stock
would likely fall.

The market price of our common stock could fluctuate significantly as a result
of, among other things:

- the loss or addition of a major customer or programming supplier or changes
in demand by our customers;

- the addition or loss of relationships with one or more advertisers;

- seasonal variations in the level of advertising generally;

- the commencement of operations or the introduction of new products or
services by potential competitors;

- industry changes affecting the way people make purchases or view
advertising;

- changes in our pricing policies or those of our competitors or customers;

- changes in financial estimates by securities analysts;

- the departure or addition of key personnel;

- general economic and stock market conditions;

- earnings and other announcements by, and changes in market valuations of,
companies similar to ours;

- changes in business or regulatory conditions affecting us;

- announcements or implementation by us or our competitors of technological
innovations or new products or services; and

- changes in accounting standards, including standards relating to revenue
recognition, business combinations and stock-based compensation.

Any fluctuations in our stock price caused by the above factors may be
exaggerated if the trading volume of our common stock is low. The securities of
many companies have experienced extreme price and volume fluctuations in recent
years, often unrelated to the companies' operating performance. If the market
price of our common stock reaches an elevated level following this offering, it
may materially decline. In the past, following periods of volatility in the
market price of a company's securities, that company's stockholders have often
instituted securities class action litigation against the company. If we were
involved in a class action suit, it could have a material adverse effect on our
business.

ANTI-TAKEOVER PROVISIONS OF DELAWARE'S GENERAL CORPORATION LAW AND OUR
CERTIFICATE OF INCORPORATION AND BY-LAWS COULD DELAY OR DETER A CHANGE IN
CONTROL.

Provisions in our certificate of incorporation and our by-laws, as well as
various provisions of the Delaware General Corporation Law, may make it more
difficult to effect a change in control of our company. The existence of these
provisions may adversely affect the price of our common stock, discourage third
parties from making a bid for our company or reduce any premiums paid to our
stockholders for their common stock. See "Description of Capital
Stock--Preferred stock," and "Description of Capital Stock--Anti-takeover
effects of our certificate of incorporation and by-laws and provisions of
Delaware law" for a more complete description of provisions which could hinder a
third party's attempts to acquire control of us.

25
<PAGE>
FORWARD-LOOKING STATEMENTS

Some of the information in this prospectus contains forward-looking statements
within the meaning of the federal securities laws. These statements are
contained in sections entitled "Prospectus Summary," "Risk Factors,"
"Management's Discussion and Analysis of Financial Condition and Results of
Operations," "Business" and other sections of this prospectus, and examples
include, among other things, statements regarding

- planned expansion of our existing networks;

- planned development of new networks with additional clients in new
industries;

- anticipated sources of revenue during 2000 and beyond, including ancillary
revenue through the use of Spacenet's two-way satellite transmission
capability;

- the development of various aspects of our technology and service
applications, including store-and-forward capability;

- our ability to attract retailers to our networks;

- our ability to secure quality programming from our current programming
partners and new sources;

- anticipated growth in the Internet and our ability to generate revenue
through Internet advertising, e-commerce and other website opportunities;

- trends in the advertising industry;

- potential acquisitions;

- planned capital expenditures; and

- our ability to generate revenue and achieve profitability.

Forward-looking statements generally can be identified by the use of
forward-looking terminology, including "may," "will," "expect," "should,"
"could," "predict," "project," "intend," "plan," "estimate," "anticipate,"
"believe," "continue," "designed to" or similar terminology, although some
forward-looking statements are expressed differently. We cannot assure you that
the expectations reflected in forward-looking statements will prove to be
correct. You should be aware that our actual results could differ materially
from those contained in the forward-looking statements due to a number of
factors, including our limited operating history, our unproven business model,
our potential inability to manage our growth, our dependence on a few major
clients, our reliance on key personnel, third-party service providers, satellite
technology and third-party programming, competition, potential technological
changes, our inability to protect our proprietary software and technology and
trends in the use of the Internet and e-commerce. You should also consider
carefully the statements under "Risk Factors" and other sections of this
prospectus, that address additional factors that could cause our results to
differ from those set forth in the forward-looking statements.

We undertake no obligation to update publicly or revise any forward-looking
statements, or to update the reasons actual results could differ materially from
those anticipated in any forward-looking statements, even if new information
becomes available in the future.

26
<PAGE>
USE OF PROCEEDS

We will receive net proceeds of approximately $ million, or
approximately $ million if the underwriters' over-allotment option is
exercised in full, from the sale of the shares of common stock offered by this
prospectus, at an assumed initial public offering price of $ per share
(the mid-point of the range on the cover page of this prospectus), after
deducting the estimated underwriting discounts and commissions and offering
expenses payable by us.

We currently expect to use the net proceeds of the offering for general
corporate purposes, including without limitation:

- expansion of our current networks;

- development of new networks;

- sales and marketing activities;

- hiring additional personnel;

- further development of our technology;

- purchasing network equipment;

- funding operating losses; and

- other capital expenditures.

We may also use a portion of the net proceeds to acquire or invest in
complementary businesses, products and technologies or establish joint ventures
that we believe will complement our business. From time to time we engage in
discussions and negotiations with respect to potential acquisitions. However, we
have no specific agreements or understandings for any acquisition or joint
venture at the present time.

We will retain broad discretion in the allocation of the net proceeds of this
offering. The amounts and timing of our expenditures of the net proceeds will
vary depending on a number of factors, including the amount of cash generated by
our operations, competitive and technological developments and the rate of
growth, if any, of our business. We cannot assure you that the uses will not
vary from our current intentions. See "Risk Factors--Risks Related to this
Offering--Our management has broad discretion over the use of proceeds from this
offering and may spend the proceeds in ways with which you disagree" for a
discussion of this risk.

Pending these uses, we intend to invest the net proceeds from this offering in
U.S. government securities or other investment-grade, interest-bearing
instruments.

DIVIDEND POLICY

We have never declared or paid a cash dividend on our common stock and do not
anticipate declaring or paying any cash dividends on shares of our common stock
in the foreseeable future. We currently intend to retain any earnings to finance
the expansion and development of our business. Any determination to declare and
pay dividends will be made by our board of directors based on conditions then
existing, including our earnings, financial condition and capital requirements,
contractual and other legal restrictions and those economic and other conditions
as our board of directors may deem relevant. In addition, the payment of
dividends may be limited or prohibited by financing agreements that we may enter
into in the future.

27
<PAGE>
CAPITALIZATION

The following table shows:

- our capitalization on December 31, 1999 on an actual basis; and

- our capitalization on December 31, 1999 as adjusted to give effect to the
sale of shares of common stock offered by this prospectus at an
assumed initial public offering price of $ per share (the mid-point
of the range on the cover page of this prospectus), after deducting the
estimated underwriting discounts and commissions and offering expenses
payable by us.

<TABLE>
<CAPTION>
AS OF
DECEMBER 31, 1999
----------------------
ACTUAL AS ADJUSTED
-------- -----------
(DOLLARS IN THOUSANDS,
EXCEPT PER SHARE DATA)
<S> <C> <C>
Cash and cash equivalents................................... $8,588 $
====== ========
Total debt.................................................. --

Stockholders' equity:
Common stock, $0.01 par value: 25,000,000 shares
authorized, 8,007,000 shares issued and outstanding,
actual; 75,000,000 shares authorized, shares
issued and outstanding, as adjusted(1).................. 80
Additional paid-in capital................................ 12,968
Accumulated deficit....................................... (4,313)
------ --------
Total stockholders' equity.............................. 8,735
------ --------
Total capitalization.................................. $8,735 $
====== ========
</TABLE>

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

(1) This table excludes the following shares:

- shares subject to outstanding options at a weighted average
exercise price of $ per share as of December 31, 1999;

- an aggregate of shares available for future issuance under our
employee stock option plans as of December 31, 1999; and

- shares subject to options that will be granted upon completion
of this offering to the placement agent for our second 1999 private
placement.

28
<PAGE>
DILUTION

Our net tangible book value as of December 31, 1999 was approximately
$8.7 million, or $ per share. Net tangible book value per share is equal to
our total tangible assets minus our total liabilities divided by the number of
shares of our common stock outstanding. Dilution in net tangible book value per
share represents the difference between the amount per share paid by purchasers
of shares of our common stock in this offering and the net tangible book value
per share of our common stock immediately following this offering. Assuming we
had sold the shares of common stock offered by this prospectus at an
initial public offering price of $ per share (the mid-point of the range
on the cover page of this prospectus), and after deducting underwriting
discounts and commissions and estimated offering expenses payable by us, our net
tangible book value at December 31, 1999 would have been approximately
$ million, or $ per share. This represents an immediate increase
in net tangible book value of $ per share to existing stockholders and
an immediate dilution of $ per share to new investors. The following
table illustrates the substantial and immediate per share dilution to new
investors on a per share basis:

<TABLE>
<S> <C> <C>
Assumed initial public offering price....................... $

Net tangible book value as of December 31, 1999............. $

Increase attributable to new investors......................
-----
Net tangible book value after this offering.................
-----
Dilution to new investors................................... $
=====
</TABLE>

The following table summarizes as of December 31, 1999 the number of shares of
common stock purchased from us, the total consideration paid to us and the
average price per share paid by existing stockholders and by new investors at an
assumed offering price of $ per share (the mid-point of the range shown
on the cover page of this prospectus) and without giving effect to the
underwriting discount and assumed offering expenses:

<TABLE>
<CAPTION>
SHARES OF COMMON TOTAL CASH
STOCK PURCHASED CONSIDERATION
-------------------- ---------------------- AVERAGE PRICE
NUMBER PERCENT AMOUNT PERCENT PER SHARE
--------- -------- ----------- -------- -------------
<S> <C> <C> <C> <C> <C>
Existing stockholders..................... % $ % $
New investors.............................
--------- ---- ----------- ---
Total................................. 100% $ 100%
========= ==== =========== ===
</TABLE>

If the underwriters exercise their over-allotment option in full, the net
tangible book value per share of common stock as of December 31, 1999 would have
been $ per share, which would result in dilution to the new investors of
$ per share, the number of shares held by the new investors will
increase to , or % of the total number of shares to be outstanding after
this offering, and the number of shares held by the existing stockholders will
be shares, or % of the total number of shares to be outstanding after
this offering.

The foregoing tables assume no exercise of any outstanding stock options to
purchase common stock. As of December 31, 1999 and after giving effect to this
offering and the issuance of options to be granted upon completion of this
offering, there were outstanding options to purchase an aggregate of
shares of common stock at a weighted average exercise price of $ per
share. If all of these options had been exercised on December 31, 1999, our net
tangible book value on December 31, 1999 would have been $ , or $
per share, the increase in net tangible book value attributable to new
investors would have been $ per share and the dilution in net tangible
book value to new investors would have been $ per share. To the extent
that these options are exercised in the future, there may be further dilution to
new investors.

29
<PAGE>
SELECTED CONSOLIDATED FINANCIAL DATA

The following table sets forth our selected historical consolidated financial
data. The statement of operations data for the three-year period ended
December 31, 1999 and the balance sheet information as of December 31, 1998 and
1999 are derived from our consolidated financial statements, which have been
audited by KPMG LLP, independent certified public accountants, and are included
elsewhere in this prospectus. The consolidated statement of operations data for
the period from May 29, 1996 (inception) to December 31, 1996 and the balance
sheet information as of December 31, 1997 are derived from our audited financial
statements, which are not included in this prospectus.

<TABLE>
<CAPTION>
MAY 29, 1996
(INCEPTION) TO FISCAL YEAR ENDED DECEMBER 31,
DECEMBER 31, ------------------------------------
1996 1997 1998 1999
-------------- ---------- ---------- ----------
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:
Revenue..................................... $ -- $ -- $ 717 $ 2,182
Operating expenses:
Cost of revenue........................... -- -- 554 1,422
Selling, general and administrative
expenses................................ 18 93 470 2,377
Development expenses...................... 161 686 218 638
Loss on impairment of fixed assets........ -- -- -- 262
---------- ---------- ---------- ----------
Loss from operations.................... (179) (779) (525) (2,517)
Other income (expense):
Interest income........................... -- 11 2 29
Interest expense.......................... (11) (118) (158) (68)
---------- ---------- ---------- ----------
Loss before income taxes................ (190) (886) (681) (2,556)
Income taxes................................ -- -- -- --
---------- ---------- ---------- ----------
Net loss................................ $ (190) $ (886) $ (681) $ (2,556)
========== ========== ========== ==========
NET LOSS PER COMMON SHARE:
Basic and diluted......................... $ (0.18) $ (0.13) $ (0.39)
========== ========== ==========
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING:
Basic and diluted......................... 5,019,521 5,229,219 6,577,840
========== ========== ==========
OTHER DATA:
EBITDA(1)................................... $ (179) $ (773) $ (510) $ (2,402)
Net cash provided by (used in):
Operating activities...................... (120) (557) (340) (1,749)
Investing activities...................... -- (47) (29) (610)
Financing activities...................... 144 882 127 10,887
Capital expenditures........................ -- (47) (29) (520)
</TABLE>

(CONTINUED ON THE FOLLOWING PAGE)

30
<PAGE>

<TABLE>
<CAPTION>
DECEMBER 31,
--------------------------------------------
1996 1997 1998 1999
----------- -------- -------- --------
(UNAUDITED) (IN THOUSANDS)
<S> <C> <C> <C> <C>
BALANCE SHEET DATA:
Cash and cash equivalents.................................. $ 24 $ 302 $ 60 $8,588
Working capital (deficit).................................. (7) 38 (414) 7,986
Total assets............................................... 24 344 148 9,809
Total debt................................................. 102 738 190 --
Total stockholders' (deficit) equity....................... (109) (657) (549) 8,735
</TABLE>

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

31
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following discussion and analysis should be read in conjunction with our
consolidated financial statements, including the notes thereto, which are
included elsewhere in this prospectus. This prospectus contains forward-looking
statements relating to future events and our future financial performance.
Actual results could be significantly different from those discussed in this
prospectus. Factors that could cause or contribute to such differences include
those summarized in the section entitled "Risk Factors," as well as those
discussed in other sections of this prospectus.

OVERVIEW

We were founded in May 1996 and launched the Planet TV Network with Planet
Hollywood in early 1998. During mid-1999 we launched two new networks which
significantly increased our size and revenue. In April 1999, we entered into an
agreement with Advance Auto Parts, the second largest auto parts retailer in the
United States, to establish the Advance Auto Parts Network. In July 1999, we
launched the PharmaSee Network. Revenue generated through the PharmaSee, Advance
Auto Parts and Planet TV Networks comprised substantially all of our revenue
during 1999 and are expected to comprise a substantial majority of our revenue
during 2000. In January 2000, we began operating a new sporting goods network at
The Sports Authority and began production of programming for BEVision, our
network for beer, wine and spirits stores. These networks have not yet generated
revenue and are currently being implemented at a limited number of stores. Our
strategy is to continue to expand our existing networks and to develop new
networks in a number of diverse industries.

We currently offer retail clients two different business models: an advertising
model and a service model. Under our advertising model, we provide retail stores
with a complete turnkey system, including installation and maintenance of video
and satellite equipment, advertising sales, provision of programming and
satellite service. Under this arrangement, we plan to generate the majority of
our revenue from selling advertising on the network. We also plan to earn
revenue from advertisers that pay for production of programming and advertising
segments. Our strategy is also to earn revenue from e-commerce partners by
charging transaction fees for sales generated through our websites. The
PharmaSee Network, The Sports Authority network and BEVision are based on this
model.

Under our service model, we primarily produce and provide programming for our
customers. Under this arrangement, we generate revenue from retailers that pay
fees for baseline monthly programming, custom produced programming, sponsored
segments and training materials. The satellite service cost and the cost of
installing and maintaining the video monitors and satellite equipment are
usually paid by the retailer under this model. The retailer is also responsible
for selling all or a large portion of the advertising. In some circumstances,
the retailer makes some advertising inventory available to us and we generate
revenue from advertising sales as a result. This model requires a minimal
initial capital investment for network creation and allows us to spread our
infrastructure across a broader range of retail stores. Our relationships with
Advance Auto Parts and Planet Hollywood are based on this model.

The two business models contemplate the generation of revenue in the following
categories:

- ADVERTISING. Advertising revenue, which during 1999 comprised approximately
7% of our overall revenue, is expected to become our largest source of
revenue in future years. We expect to generate most of our advertising
revenue from the sale of 15-second, 30-second and 60-second advertising
spots to advertisers.

- PROGRAMMING. We also plan to generate revenue by airing, on our networks,
programming content prepared by third parties, including movie trailers,
music videos and other content segments. We did not generate any revenue
from airing programming content during 1999.

32
<PAGE>
- PRODUCTION FEES. Production revenue consists of fees received when we script
and produce commercial advertising or editorial segments for advertisers or
other clients. We believe that, as a result of our experience in the retail
environment, we have particular expertise in producing high-quality
programming, specifically targeted for the point of purchase, which is able
to attract the attention of consumers in a store environment. Production
revenue comprised only a small part of our total revenue in 1999. Our
strategy is to increase our production revenue in 2000 and 2001.

- SERVICE FEES. Service fees include fees received for assembling externally
and internally produced programming for our customers, such as Advance Auto
Parts, and transmitting this programming to their retail locations. Service
revenue, which in 1999 comprised a substantial majority of our revenue, is
expected to decrease in significance in 2000 and beyond as we place greater
emphasis on the advertising model in the future.

- EMPLOYEE EDUCATION AND COMPANY-WIDE COMMUNICATIONS. Our strategy is to
generate revenue from producing in-store employee training materials for
retailers and vendors. We believe that in-store vendors will find our
networks to be effective in educating and training retail sales and service
staffs regarding new products. In addition, we believe that our networks can
assist retailers in training their employees in company procedures,
particularly in stores that experience high employee turnover. We also
believe that we can generate revenue by offering retailers an opportunity to
use our networks for company-wide corporate communications, including
employee recognition programs. We did not generate any revenue from this
activity in 1999.

- BROADBAND SATELLITE CAPABILITY. Our relationship with Spacenet provides us
with the broadband capability necessary to transmit data to and receive data
from retail locations at high speeds utilizing our networks. We plan to
utilize this two-way satellite capability in order to offer retail stores
additional services, including Internet access, credit card processing, bank
ATM transactions and insurance processing at pharmacies. Each of these
ancillary services will likely require us to work with a third-party vendor,
such as a credit card processor. We did not generate any of this ancillary
revenue during 1999.

During 1999 approximately 76% of our revenue was generated by the Advance Auto
Parts Network, approximately 7% was generated by advertisers on the PharmaSee
Network, approximately 7% was generated by the Planet TV Network and
approximately 9% of our revenue was derived from our license of software to a
third party. We expect that these percentages will change significantly in 2000
and beyond and that advertising revenue across all networks will comprise our
single largest source of revenue in 2000.

We recognize network advertising revenue during the period when the related
advertising is displayed on our network. We recognize service fees ratably over
the service period. Production revenue is recognized when earned. We recognize
equipment revenue when the equipment is shipped. We expect that equipment
revenue will be minimal in 2000 and beyond.

Our expenses are categorized as cost of revenue, selling, general and
administrative expenses or development expenses.

- COST OF REVENUE. Cost of revenue consists of production personnel costs,
costs for acquiring programming from third parties, production costs for
developing our own programming, satellite operating costs and depreciation
of network equipment. In addition, under our arrangements with some
retailers we are, or will be, required to pay fees to those retailers to
allow us to maintain our networks in their locations. For example, in
mid-2001 we will begin to pay these fees to The Sports Authority. We expect
to include these fees in cost of revenue in the future.

- SELLING, GENERAL AND ADMINISTRATIVE EXPENSES. Selling, general and
administrative expenses consist of sales and administrative personnel costs,
professional fees, travel expenses and other general office expenses.

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- DEVELOPMENT EXPENSES. Development expenses include costs related to the
development and production of new networks and the research and development
of new or improved technologies to enhance the functionality of our network
systems. Development expenses include direct personnel costs, marketing
research, production fees, installation fees, related professional services,
network solicitation personnel and related costs. Costs associated with the
development of a new network are no longer recognized as development
expenses when the new network begins to generate revenue.

We have had minimal revenue to date and have incurred net losses, operating
losses and negative operating cash flow each quarter since our inception. Most
of our revenue to date has come from sources other than advertising. At
December 31, 1999, we had an accumulated deficit of $4.3 million. We have funded
our operations since inception from private placements of our common stock and
from capital contributions and loans from existing stockholders. We currently
intend to significantly increase our operating expenses and capital expenditures
in order to continue the development and enhancement of our networks. As a
result, we expect to continue to incur net losses at least through 2002.

RESULTS OF OPERATIONS

Since inception we have engaged principally in the development of our business
model. Accordingly, our historical results of operations are not indicative of
and should not be relied upon as an indicator of our future performance.

COMPARISON OF YEAR ENDED DECEMBER 31, 1999 AND YEAR ENDED DECEMBER 31, 1998

REVENUE. Revenue for the year ended December 31, 1999 was $2.2 million compared
to $0.7 million for the year ended December 31, 1998, an increase of
$1.5 million. The primary cause of the revenue increase was an increase in
service fee revenue of $1.5 million mainly attributable to service fees
generated by the Advance Auto Parts Network. In addition, we generated
advertising revenue from the PharmaSee Network during the second half of 1999 in
the amount of $0.1 million, or approximately 7% of 1999 revenue. The increases
in service fees and advertising were offset by a decline of $0.4 million in
equipment sales during 1999. Equipment sales in 1998 related to the
establishment of the Advance Auto Parts and Planet TV Networks.

COST OF REVENUE. Cost of revenue for the year ended December 31, 1999 was
$1.4 million compared to $0.6 million during the year ended December 31, 1998,
an increase of $0.8 million. The increase in cost of revenue during 1999 was
primarily attributable to the additional personnel, production and depreciation
expenses associated with the Advance Auto Parts and PharmaSee networks.
Personnel and production costs increased by $0.3 million and $0.4 million,
respectively, during 1999. In addition, satellite space fees required to support
the PharmaSee Network were $0.2 million in 1999. The decline in equipment sales
during 1999 also resulted in a decline of $0.3 million in equipment costs during
1999.

SELLING, GENERAL AND ADMINISTRATIVE EXPENSES. Selling, general and
administrative expenses for the year ended December 31, 1999 were $2.4 million
compared to $0.5 million during the year ended December 31, 1998, an increase of
$1.9 million. Personnel costs increased by $1.0 million and related travel costs
increased by $0.1 million during 1999. We added our sales and marketing
personnel during 1999 to support the planned growth of our networks. Technical
personnel increases resulted from our accelerated website development projects,
and administrative personnel increases were necessary to support our growth.
Marketing and sales expenses increased by $0.2 million during 1999 as a result
of website development costs, public relations fees and costs related to
attending trade shows. Professional fees increased by $0.3 million during 1999
as a result of higher accounting, tax preparation, investor services and sales
consulting costs.

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DEVELOPMENT EXPENSES. Development expenses for the year ended December 31, 1999
were $0.6 million compared to $0.2 million during the year ended December 31,
1998, an increase of $0.4 million. The purchase of exclusive rights to license
software products from one of our vendors represents the majority of the
increase, or $0.3 million. An increase in personnel costs of $0.1 million
accounted for the remainder of the increase.

LOSS ON IMPAIRMENT OF FIXED ASSETS. We recorded a loss on impairment of fixed
assets of $0.3 million during the year ended December 31, 1999. We recorded this
loss as a result of entering into our agreement with Spacenet and our decision
to replace certain in-store equipment related to the PharmaSee Network during
2000 with Spacenet's equipment.

LOSS FROM OPERATIONS. Loss from operations during the year ended December 31,
1999 was $2.5 million compared to a loss of $0.5 million during the year ended
December 31, 1998, an increase of $2.0 million.

INTEREST EXPENSE, NET. Interest expense, net during the year ended
December 31, 1999 was less than $0.1 million compared to interest expense, net
of $0.2 million during the year ended December 31, 1998. Interest expense during
both years resulted primarily from the issuance of $0.8 million of promissory
notes payable to stockholders during 1996 and 1997. During 1998, $0.6 million of
the undiscounted principal balance of the notes was converted into 625,000
shares of our common stock. The remaining principal balance of these notes was
repaid in December 1999.

NET LOSS. Net loss during the year ended December 31, 1999 was $2.6 million
compared to a net loss of $0.7 million during the year ended December 31, 1998
as a result of the factors discussed above.

COMPARISON OF YEAR ENDED DECEMBER 31, 1998 AND YEAR ENDED DECEMBER 31, 1997

REVENUE. Revenue for the year ended December 31, 1998 was $0.7 million. We did
not generate revenue in the year ended December 31, 1997. In 1998 the sale of
equipment to initiate the Planet TV and Advance Auto Parts Networks represented
$0.4 million or approximately 62% of our revenue. The remainder of our 1998
revenue was attributable primarily to service fees generated by the Planet TV
Network.

COST OF REVENUE. Cost of revenue for the year ended December 31, 1998 was
$0.6 million. We did not have any cost of revenue during the year ended
December 31, 1997.

SELLING, GENERAL AND ADMINISTRATIVE EXPENSES. Selling, general and
administrative expenses for the year ended December 31, 1998 were $0.5 million
compared to $0.1 million during the year ended December 31, 1997, an increase of
$0.4 million. Approximately $0.3 million of the increase resulted from a shift
of expense classification from the development expense category in 1997 to the
selling, general and administrative expense category in 1998. During 1997, the
majority of our efforts were devoted to the development of new networks and new
technology to support the networks. As a result, all personnel, professional
fees and travel costs were classified as development costs. As the new networks
began to generate revenue in 1998, the majority of our personnel and outside
professional services began to support these networks. Classifications of
associated expenses were changed to cost of revenue or selling, general and
administrative expense as appropriate. In addition, approximately $0.1 million
of the $0.4 million increase resulted from the increases in legal fees, office
rent and travel costs.

DEVELOPMENT EXPENSES. Development expenses for the year ended December 31, 1998
were $0.2 million compared to $0.7 million during the year ended December 31,
1997, a decrease of $0.5 million. The reduction in development expenses resulted
from a shift of expense classification from the development category in 1997 to
the cost of revenue category of $0.2 million and the selling, general and
administrative expense category of $0.3 million in 1998.

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LOSS FROM OPERATIONS. Loss from operations during the year ended December 31,
1998 was $0.5 million compared to a loss of $0.8 million during the year ended
December 31, 1997, a decrease of $0.3 million.

INTEREST EXPENSE, NET. Interest expense, net during the year ended
December 31, 1998 was $0.2 million compared to interest expense, net of
$0.1 million during the year ended December 31, 1997. Interest expense during
both years resulted primarily from the issuance of $0.8 million of promissory
notes payable to stockholders during 1996 and 1997.

NET LOSS. Net loss during the year ended December 31, 1998 was $0.7 million
compared to a net loss of $0.9 million during the year ended December 31, 1997.

LIQUIDITY AND CAPITAL RESOURCES

HISTORICAL LIQUIDITY. We have historically funded our operations from capital
contributions and loans from our stockholders and private sales of our common
stock as follows:

- during 1996 and 1997 we issued approximately $0.2 million of our common
stock to a number of our stockholders and borrowed $0.8 million from a
number of our stockholders;

- from February 1999 through July 1999 we issued approximately $2.6 million of
our common stock to a group of investors; and

- in December 1999 and January 2000 we issued approximately $11.3 million of
our common stock to a group of investors and received net proceeds of
approximately $10.5 million after expenses.

At December 31, 1999, the amount of our accumulated deficit was $4.3 million and
we had cash and cash equivalents of $8.6 million and net working capital of
$8.0 million.

In 1996 and 1997 we issued $0.8 million of promissory notes to six of our
stockholders and at the same time issued to them shares of our common stock. The
notes accrued interest at a rate of 10%. We accounted for the equity issued
using its fair value at the time of the transaction and the notes were
discounted accordingly. The discount on the notes was amortized as interest over
the term of the notes. On December 23, 1998, we entered into an agreement with
the holders of the notes in which $0.6 million of the undiscounted principal
balance of the notes was converted into 625,000 shares of our common stock. The
remaining $0.2 million principal balance of the promissory notes was repaid in
December 1999.

CASH FLOW ITEMS. Net cash used in operating activities totaled $1.7 million in
1999, $0.3 million in 1998 and $0.6 million in 1997. The net cash used for
operations during these periods was principally the result of our net losses
during these periods.

Net cash provided by financing activities was approximately $10.9 million in
1999, $0.1 million in 1998 and $0.9 million in 1997. The cash provided from
financing activities in 1999 and 1998 was derived primarily from proceeds from
the issuance of common stock. The cash provided from financing activities in
1997 derived primarily from the proceeds of loans from stockholders, as well as
proceeds from the issuance of common stock.

Net cash used for investing activities was approximately $0.6 million in 1999,
$29,000 in 1998 and $47,000 in 1997. Investing activities during these periods
related primarily to capital expenditures related to our network rollout.

CAPITAL EXPENDITURES. We expect to commence an aggressive capital expenditure
program in 2000. The capital expenditures will be used to expand our current
networks and to install new networks. We expect to finance certain new equipment
through our service agreement with Spacenet as well as through the proceeds of
this offering. See "Use of Proceeds." We also expect to utilize additional funds
in order to upgrade our systems. We do not expect the cost of this upgrade to be
material.

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PHARMASEE NETWORK LICENSE. In July 1999 we acquired substantially all of the
assets and business of the Neighborhood Pharmacy TV Network (NPTV) and the NPTV
website from the National Community Pharmacists Association and NPTV, LLC. We
acquired substantially all of the accounts receivable, contracts, contract
rights, equipment, goodwill and intangibles related to the business. We paid
$90,000 in cash, assumed approximately $0.5 million of liabilities and assumed
an operating lease payable. The network and website which we acquired were
converted into the PharmaSee Network and WWW.PHARMASEE.COM.

Under our agreements with NCPA and NPTV, LLC, we are required to pay annual fees
based on the number of eligible member pharmacies that subscribe to the
PharmaSee Network. These fees will be credited dollar for dollar against up to
$0.4 million of the assumed liabilities plus the operating lease payable which
we assumed in the acquisition. Payment of the license fee may be deferred to the
extent that our cash flow is insufficient to pay the fees until June 2001.

SPACENET SERVICE AGREEMENT. In December 1999 we contracted with Spacenet Inc.,
a division of Gilat Satellite Networks Ltd., to obtain access to Spacenet's
geostationary orbit communications satellite and various telecommunications
equipment and licensed software, all of which will enable two-way data
transmissions between our central data center and the retail locations which
receive our programming. Spacenet agreed to provide, install, maintain and
support the required video and satellite receiving and transmission equipment in
our clients' retail locations and to finance certain equipment purchases via a
capital lease over a 66-month term.

TECHNOLOGY LICENSE. In February 2000, we agreed to license some of our software
to Spacenet, for the purpose of supporting a video retail network for a Spacenet
customer. Spacenet agreed to pay us approximately $0.5 million for development
of the software. Spacenet also agreed to pay us an annual fee of approximately
$0.1 million for maintenance services for up to seven years.

FUTURE CAPITAL NEEDS. We have incurred substantial losses since commencement of
operations and anticipate that these losses will continue at least through 2002.
In order to become profitable, we expect that additional expenditures will be
required in order to acquire equipment to expand our current networks, increase
the number of our networks and market our networks properly to attract new
retail store customers and advertisers. In order to meet our projected ongoing
operational needs, we will require substantial additional working capital. Our
capital requirements will depend on numerous factors, including market
acceptance of our networks and the amount of resources we invest in sales and
marketing. We have experienced a substantial increase in expenditures since
inception consistent with our growth and expect that this will continue for the
foreseeable future.

We believe that our cash on hand, together with the net proceeds of this
offering, anticipated funds from operations and the liquidity offered by the
Spacenet service agreement, will be sufficient to meet our planned working
capital and capital expenditure needs for the next year. However, Spacenet will
not finance all of our equipment, including some of our Sports Authority
equipment. We will need to raise additional capital in order to fund more rapid
expansion, to install our network equipment, to expand our marketing activities,
to develop new or enhance existing services, to respond to competitive pressures
or to acquire complementary services, businesses or technologies. We will seek
to raise this additional capital through public or private financings, strategic
relationships or other arrangements. We cannot assure you that this financing
will be available on reasonable terms, or at all, when and if required. Our
failure to raise additional capital when needed could have a material adverse
effect on our business, results of operations and financial condition. If we
raise additional funds through the issuance of equity or convertible debt
securities, our existing stockholders will experience dilution in their
holdings. Any of these equity securities might have rights, preferences or
privileges senior to those of our common stock.

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NET OPERATING LOSS CARRYFORWARDS

At December 31, 1999, we had net operating loss carryforwards for federal income
tax purposes of approximately $3.0 million, which are available to offset future
federal taxable income, if any, through 2019. The utilization of the net
operating loss carryforwards may be limited if a change in ownership of our
company occurs in the future.

INFLATION

We believe that inflation has not had a significant impact on our operating
results due to the low level of inflation in the United States since our
inception. However, we can give you no assurance that inflation will not have a
material effect on our business in the future.

RECENT ACCOUNTING PRONOUNCEMENTS

In March 1998, the American Institute of Certified Public Accountants ("AICPA")
issued Statement of Position 98-1, "Accounting for the Costs of Computer
Software Developed or Obtained for Internal Use." This standard requires
companies to capitalize qualifying computer software costs, which are incurred
during the application development stage, and amortize them over the software's
estimated useful life. SOP 98-1 is effective for fiscal years beginning after
December 15, 1998. There was no impact on our consolidated financial statements
related to SOP 98-1.

In April 1998, the AICPA issued Statement of Position 98-5 "Reporting on the
Costs of Start-Up Activities." Pursuant to the provisions of SOP 98-5, all costs
associated with start-up activities, including organization costs, should be
expensed as incurred. Companies that previously capitalized these costs are
required to write off the unamortized portion of these costs as a cumulative
effect of a change of accounting principle. We had no start-up costs capitalized
at December 31, 1999.

In June 1998, the Financial Accounting Standards Board issued SFAS No. 133,
"Accounting for Derivative Instruments and Hedging Activities." SFAS No. 133
requires the recognition of all derivatives as either assets or liabilities in
the balance sheet and the measurement of those instruments at fair value. Gains
and losses resulting from changes in the values of those derivatives would be
accounted for depending on the use of the derivative and whether it qualifies
for hedge accounting. SFAS No. 133 is expected to be effective for our year
ended December 31, 2001. We expect SFAS No. 133 to have no material impact on
our consolidated financial statements.

In December 1999, the SEC issued Staff Accounting Bulletin No. 101, "Revenue
Recognition," which provides guidance on the recognition, presentation and
disclosure of revenue in financial statements filed with the SEC. SAB 101
outlines the basic criteria that must be met to recognize revenue and provides
guidance for disclosures related to revenue recognition policies. We believe
that the impact of SAB 101 will have no material effect on our financial
position or results of operations.

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BUSINESS

OVERVIEW

COMPETITIVE STRENGTHS

We provide the following key benefits to advertisers:

ACCESS TO CONSUMERS AT THE POINT OF PURCHASE. We believe that advertising and
product demonstrations at the point of purchase can significantly influence
which products a consumer buys. Studies on consumer purchasing patterns in
supermarkets and mass merchandisers indicate that more than 70% of brand

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purchase decisions at these locations are made in the store. In addition,
point-of-purchase advertising not only influences a consumer's choice of brand,
but can also bring to the consumer's attention categories of products they might
not have originally considered. We believe point-of-purchase advertising will
become even more compelling to advertisers as advances in technology enable
consumers to watch television at home without the interruption of commercials.

ABILITY TO ACCESS LARGE NUMBERS OF CONSUMERS AND TO TARGET SPECIFIC AUDIENCE
DEMOGRAPHICS. We offer advertisers access to a large audience of potential
customers by installing our networks at major national retailers, including The
Sports Authority, Albertson's and Advance Auto Parts. In addition, we provide
advertisers the ability to direct their advertisements at demographic groups
that are difficult to pinpoint efficiently using other advertising media. We
estimate that, on average, approximately 750,000 consumers view our
advertisements each day at the more than 2,300 locations where our networks are
installed.

A COST-EFFECTIVE ADVERTISING MEDIUM. We believe that our advertising is
efficient because it is highly targeted and timely delivered at the point of
purchase. Unlike traditional television, radio and print advertising, which
scatters advertising across a broad yet passive audience, our point-of-purchase
medium is aimed at actual shoppers who are in the process of making purchase
decisions in the store. Furthermore, the pricing of our advertising is highly
attractive relative to the pricing of network television, cable, radio or print
advertising. Advertising is generally sold based on a cost per thousand
impressions, or CPM. We generally sell advertising at CPM equivalents that are
significantly less than network and cable television rates. Our prices typically
compare favorably to radio and print ads. We believe that our lower rates,
combined with our ability to deliver targeted audiences at the point of
purchase, make our medium attractive to many advertisers.

INTEGRATED ADVERTISING ACROSS VIDEO AND INTERNET MEDIA. We work with our retail
clients to develop Internet websites with programming and advertising that
complement our networks' in-store programming. We can design, provide content
for and, if requested, maintain our clients' websites. Each website can be
specifically designed to combine in-store video segments and product
advertisements with related news, promotions and purchasing options for both
related and unrelated products. For advertisers, we offer an opportunity to
integrate their advertising across both our in-store point-of-purchase network
as well as on the Internet through our websites. For retailers, we extend the
boundaries of the retail environment by creating complementary websites which
make product information available to consumers 24 hours a day. We have launched
the WWW.PHARMASEE.COM website to complement our PharmaSee Network, we are
currently planning to launch the WWW.BEVISION.NET website to complement our
beer, wine and spirits network and we plan to develop additional websites to
complement future networks. We do not intend to compete on our websites with the
retail activity in stores where our networks are located.

TECHNOLOGICALLY ADVANCED, FULL MOTION, BROADCAST-QUALITY ADVERTISING. The
advertising segments we run on our networks, whether produced in-house or
provided by advertisers, contain full motion broadcast-quality video and high
quality sound. In addition, as a result of our expertise in the retail arena,
our promotions are specifically targeted for the point of purchase, are able to
create a "call to immediate action" (such as one-day sales and "ask your
pharmacist for a sample" promotions) and are designed to attract the attention
of consumers in a retail environment even when the consumers are not watching
the video monitor.

CUSTOMIZED AND TIMELY ADVERTISING. Our satellite-based delivery system,
store-and-forward technology and proprietary software enable us to vary
programming and advertising segments to address regional differences such as
culture, lifestyle and weather, in different parts of the country. In addition,
we are able to vary specific product advertisements from store to store. For
example, we can eliminate product advertisements when a product is unavailable
and increase advertisements when a product's inventory level is high.

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We provide the following key benefits to retailers:

A FULLY-INSTALLED TURNKEY SYSTEM. We offer retailers a complete satellite-based
broadband network, including video and transmission equipment, satellite
service, broadcast-quality programming content, advertising, installation,
maintenance and website design capability. The retailer does not need to
contract with multiple third parties in order to set up or operate the network.
We can install the video monitors, two-way satellite receivers, digital video
servers and other equipment, provide satellite service, create and distribute
customized, network-quality programming, sell advertising on the network,
produce advertising customized for the point of purchase, provide regular
maintenance service and develop and maintain a related, customized website. This
turnkey operation provides retailers with an effective system without the
complexity of negotiating different equipment, advertising, programming and
Internet agreements or the inconvenience of coordinating with multiple parties.

AN ENHANCED SHOPPING ENVIRONMENT. We believe that our networks will enhance
consumers' shopping experience by better informing and educating consumers and
retail staff. Our networks provide entertaining programming that is designed to
minimize consumer frustration while they wait for service. Our programming
includes weather, sports features and updates, music videos, movie trailers,
celebrity interviews and other entertaining features selected to appeal to the
demographics of the customers shopping or waiting in line.

BRANDED NETWORKS FOR SPECIFIC RETAILERS. We are able to customize our networks
for particular retailers or groups of stores. Major retail chains can obtain
their own specialized branded network comprised of unique introductions,
segments and advertising. We believe that a retailer's branding image may be
enhanced by having its own "network," which can evidence a retailer's commitment
to quality service and a consumer-friendly shopping environment.

LONGER LENGTHS OF STAY BY CONSUMERS AND AN OPPORTUNITY TO ENHANCE SALES. Our
networks are designed to inform and entertain consumers and to encourage
consumers to remain in retail stores longer and, as a result, to increase their
purchases.

AN ABILITY TO PROMOTE PRIVATE LABEL BRANDS AND INFLUENCE BRAND AND PRODUCT
SELECTION. Our networks allow retailers to promote their own private label
brands, special discounts and other promotions. We believe that by influencing
brand and product selection our networks can improve inventory turnover, product
mix and retailer profitability.

IN-STORE EMPLOYEE TRAINING AND PRODUCT EDUCATION. Our networks can be used for
in-store employee training by both retailers and their vendors. Retailers can
use the networks to train their employees in company procedures, particularly in
stores that experience high employee turnover. Similarly, retailers' vendors
will find that our networks can effectively educate and train retail sales and
service staffs regarding new products. Our PharmaSee Network is used for
transmitting continuing education programming to independent pharmacists. Our
networks can also be used by retailers for communicating and delivering messages
to all of the retailers' employees.

BUSINESS STRATEGY

Our goal is to provide the leading point-of-purchase advertising medium
currently available to advertisers. Key elements of our business strategy
include:

CAPTURING SIGNIFICANT REVENUE AND PROFITS THROUGH OUR POINT-OF-PURCHASE
ADVERTISING MEDIUM. Our strategy is to increase the sale of advertising on our
networks by showing advertisers the benefits of our point-of-purchase
advertising medium. We believe that advertisers appreciate the ability to target
narrowly defined demographic audiences at the point of purchase at a fraction of
the cost of network television advertising. Advertisers also benefit from the
ability to vary their advertisements based on regional, cultural and other
differences, and to integrate their advertising across both video and Internet
media. We target advertisers by working with our retail clients, who provide us
with introductions to their

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principal vendors, as well as with traditional advertising agencies. We sell
standard advertising spots to advertisers and also script and produce commercial
advertising or editorial segments for advertisers. We believe that, as a result
of our experience in the retail arena, we have particular expertise in producing
high quality programming, specifically targeted for the point of purchase, which
is able to attract the attention of consumers in a store environment.

UTILIZING OUR BROADBAND TECHNOLOGICAL CAPABILITIES TO DELIVER EFFECTIVE
ADVERTISING SOLUTIONS, INCLUDING TIMELY INVENTORY MANAGEMENT. We plan to utilize
our store-and-forward technology, in coordination with Spacenet's satellite
capability, in order to provide a superior advertising medium for advertisers.
We expect that store-and-forward technology, once it is fully tested and rolled
out, will allow us to update, delete and rotate program segments in real time on
a store by store basis. In addition, when integrated video monitors are
installed, our technology will allow us to determine whether a video monitor is
turned on or off and to control the volume level of a monitor. We are also
developing an interactive system in which network advertisements can
automatically vary based on the inventory levels of particular products in each
store. We are also currently developing an interactive video monitor for stores
that would enable consumers to touch the monitor in order to retrieve product
and other information.

EXPANDING CURRENT NETWORKS AND DEVELOPING NEW NETWORKS IN ORDER TO EXTEND THE
REACH OF OUR ADVERTISERS. Our strategy is to both expand our existing networks
to additional national retail chains and independent retail outlets as well as
to develop additional networks in a number of diverse industries. Our alliance
with Spacenet provides us with significant capacity to install our networks in a
large number of locations in many different retail industries. For example, in
the pharmacy industry, our strategy is to expand the PharmaSee Network to
additional independent pharmacies and to launch customized versions of the
network at large retail chains. We have agreed with Albertson's, which operates
more than 2,600 pharmacies nationwide, to work toward a definitive agreement to
install the network and transmit programming to all of the Albertson's family of
drug stores, including its Sav-On, Osco, Albertson's and Acme locations. We also
plan to expand our presence in the beer, wine and spirits industry and to
continue rolling out our sporting goods network through The Sports Authority
stores. We are also targeting new industries that have high traffic, large
numbers of SKUs, multiple retail outlets and a concentrated base of advertisers.
We expect that the expansion of our networks and the addition of new networks
will enable our advertisers to reach a broader audience and as a result will
enable us to generate additional revenue from the sale of advertising on a
larger network. In addition, we believe that the expansion of current networks
and the addition of new networks can enable us to improve our operating margins
by spreading the costs of our infrastructure and operations, including
production and programming costs, over a larger number of retail locations.

PURSUING ANCILLARY REVENUE SOURCES, INCLUDING INTERNET ACCESS AND CREDIT CARD
PROCESSING, UTILIZING OUR BROADBAND PLATFORM. Our relationship with Spacenet
provides us with broadband capability to transmit data to and receive data from
retail locations at high speeds utilizing our networks. We plan to utilize this
two-way satellite capability in order to offer retail stores additional
services, such as Internet access, credit card processing, bank ATM transactions
and insurance processing at pharmacies. Each of these ancillary services will
likely require us to work with a third-party vendor, such as a credit card
processor.

INDUSTRY BACKGROUND

According to Veronis Suhler, approximately $255 billion was spent on U.S.
advertising in 1998 and U.S. advertising sales are expected to reach
approximately $365 billion in 2003. The advertising industry is diverse and
includes television, newspapers, magazines, radio, specialty media, the
Internet, billboards, direct mail and telephone directories.

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Specialty media consists of consumer promotion, business to business promotion,
direct mail and sponsorships. According to Veronis Suhler, spending on specialty
media was $105.7 billion in 1998 and is estimated to reach $149.3 billion in
2003. Consumer promotion includes point-of-purchase materials and retail
displays, premiums, promotional licensing, product sampling and in-store
marketing. Veronis Suhler estimates that consumer promotion spending totaled
$25.3 billion in 1998 and will reach approximately $31.8 billion in 2003.

OUR NETWORKS

We currently operate broadband networks in the pharmacy, auto parts and sporting
goods industries and are currently creating the beer, wine and spirits network.
Each of our networks is designed to provide advertising, in-store entertainment,
retailer branding and product demonstrations relevant to the retailer's line of
business and the demographics of its customer base. We believe that our networks
will enhance consumers' shopping experience and that this may encourage them to
stay longer in retail stores and increase their purchases. Our networks were
installed at more than 2,300 locations as of February 29, 2000. We estimate that
our networks currently reach an average of approximately 750,000 consumers each
day.

THE PHARMACY INDUSTRY

The PharmaSee Network is designed to enhance the retail environment of, and
promote increased product sales at, independent pharmacies and large pharmacy
chains by providing health and entertainment programming combined with
advertising to pharmacy customers. The network also serves as a vehicle to
educate pharmacists and employees on industry developments and provide useful
medical information for consumers. Programming on the network is also available
on a related website, WWW.PHARMASEE.COM. The PharmaSee Network includes a core
base of programming that is available to all of our pharmacies, as well as
customized versions of the network for various retailers, chains or groups of
independent pharmacies. The PharmaSee Network was installed at more than 740
pharmacies as of February 29, 2000 and has an estimated average audience size of
approximately 110,000 consumers each day. There are more than 40,000 pharmacies
and drug stores in the United States.

We launched the PharmaSee Network at approximately 570 independent pharmacies in
July 1999 through our acquisition of NPTV from the National Community
Pharmacists Association. We have since expanded and continue to expand the
network to additional independent pharmacies. In early 2000, we entered into an
agreement to provide a customized version of the PharmaSee Network at five
pharmacies run by Albertson's, which operates more than 2,600 pharmacies
nationwide. We agreed with Albertson's to work towards a definitive agreement to
install and transmit the network in all of the Albertson's family of drug
stores, including its Sav-On, Osco, Albertson's and Acme locations.

In addition to providing useful product information and in-store entertainment,
the PharmaSee Network encourages consumers to visit our pharmacy website,
WWW.PHARMASEE.COM, at home after they have left the pharmacy. Consumers can
access the programming content of the network on WWW.PHARMASEE.COM. The content
of WWW.PHARMASEE.COM ranges from health information to entertainment and
lifestyle news. Most importantly, WWW.PHARMASEE.COM provides information at home
that is intended to encourage consumers to purchase products at member pharmacy
locations. These cross-promotional capabilities promote and increase website and
pharmacy visits simultaneously and assist advertisers in reaching target
audiences.

In July 1999, we entered into an exclusive ten-year license agreement to make
the PharmaSee Network available to members of the National Community Pharmacists
Association. Under the license agreement, we provide programming at our expense
and we generate revenue primarily by selling advertising. We also agreed to
supply and install equipment at our own expense in each new

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participating pharmacy. Under the asset purchase and license agreements with the
NCPA, we are required to pay fees based on the number of eligible pharmacies
that subscribe to the PharmaSee Network. We also obtained a non-exclusive
license to provide Internet access, Internet hosting, e-commerce services,
on-line ordering and refills, on-line referral services and other related
services to each of the participating member pharmacies. We have not entered
into arrangements with any pharmacy involving on-line ordering and refills and
do not currently plan to do so. We have one option to extend the term of the
agreement for an additional ten years by giving 90 days' notice. The license
fees during the renewal term may not be higher than the license fees during the
initial term of the license. The agreement may be terminated by either party
after a material default by the other party, subject to a cure period, or in the
event of the bankruptcy of the other party.

THE AUTO PARTS INDUSTRY

Our network for auto parts stores combines frequent advertisements by
manufacturers of automotive products with entertaining programming related to
the automotive industry, music, sports and other similar topics. The network can
be utilized by auto parts retailers to enhance the retail experience of their
customers and to improve the retailer's in-store environment by providing
consumers with assistance for their purchasing decisions. The network can also
be used for corporate communications and to uniformly train employees on new
products and procedures.

The Advance Auto Parts Network was launched in April 1999 and was installed at
more than 1,550 Advance Auto Parts retail locations in the United States as of
February 29, 2000 with an average estimated total audience size of 620,000
consumers each day. Advance Auto Parts is the second largest automotive retail
chain in the United States with more than 1,600 stores in 37 states and
approximately 22,000 employees nationwide.

We entered into a two-year programming agreement with Advance Stores
Company, Inc. in April 1999 with respect to the Advance Auto Parts Network.
Pursuant to this agreement, Advance Auto Parts granted us an exclusive license
to produce and supply all of the sales floor shows for transmission in all
Advance Auto Parts retail stores. However, Advance Auto Parts may use other
informational or training audio or video materials relating to a specific
product or service and managerial audio or video materials relating to store
management and operations. We provide all of the content for the Advance Auto
Parts Network, subject to Advance Auto Parts' prior approval, and Advance Auto
Parts is entitled to provide all of the advertising on the network. The
agreement terminates on March 31, 2001 but may be renewed by Advance Auto Parts
for additional one-year periods.

Under the terms of our agreement, network equipment in each store and satellite
equipment at Advance Auto Parts' headquarters is owned, installed, maintained
and operated by Advance Auto Parts. We own, install, maintain and operate
digital video servers at Advance Auto Parts' corporate headquarters where we
store and deliver the programming and provide the sales floor show feed for
encoding and transmission to all participating stores through Advance Auto
Parts' own satellite distribution network. Advance Auto Parts pays us a set fee
for providing the programming for each two-hour show. Advance Auto Parts may
request from time to time that we provide additional services, for which Advance
Auto Parts pays agreed-upon rates, including solicitation of advertising sales
and custom-produced advertising, editorial and training materials.

Pursuant to the terms of the agreement, we have agreed with Advance Auto Parts
that we will not own, establish, program or operate a network similar to the
Advance Auto Parts Network in any other automotive aftermarket parts retail
store. This agreement is exclusive to automotive aftermarket parts retail stores
and does not include department stores, drug stores, convenience stores, grocery
stores, discount stores, gas stations, automotive service stores, tire stores,
oil change outlets, car dealerships or other stores in which automotive
aftermarket parts constitute only a portion of the products or services
available.

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THE SPORTING GOODS INDUSTRY

Our network for sporting goods stores provides primarily sports-related
programming, with additional content related to health and fitness. The shows
are hosted and segments relate to, among other things, camping, hiking, mountain
biking, archery, fishing and skiing. There are more than 15,000 sporting goods
stores in the United States.

Our sporting goods network was launched in the first quarter of 2000 at three
Sports Authority stores and the Sports Authority corporate headquarters. The
Sports Authority is a leading national retailer of sporting goods with nearly
200 retail locations throughout the United States. We provide The Sports
Authority locations with video monitors, surround sound audio systems, satellite
equipment and installation. Advertisers are expected to include major Sports
Authority vendors. There are up to 32 video monitors in each Sports Authority
store. Each store is equipped with a sound system customized for The Sports
Authority environment.

In March 2000, we entered into a five-year agreement with The Sports Authority,
Inc. We agreed to install our equipment and provide customized programming in
all of The Sports Authority's stores. We receive all revenue from the sale of
advertising slots on The Sports Authority network. Commencing in the third
quarter 2001, we must pay The Sports Authority a monthly concession fee based
upon the number of advertising slots we run each month. In addition, The Sports
Authority is permitted to provide its own programming for up to four minutes of
each typical two hour programming segment. Under the agreement we agreed not to
provide a similar network to specified other sporting goods stores that compete
with The Sports Authority. The agreement terminates in March 2005 and will be
automatically renewed for successive one year periods unless terminated by
either party. The agreement can be terminated by either party in the event of a
material breach or bankruptcy by the other party.

THE BEER, WINE AND SPIRITS INDUSTRY

BEVision, the beer, wine and spirits network, is our network for beer, wine and
spirits retailers, with programming focusing on beer, wine, spirits, and food.
There are more than 25,000 beer, wine and spirits retail locations in the United
States. We began production for this network in January 2000. BEVision is
currently under contract to be installed at more than 280 independent beer, wine
and spirits stores. We have also entered into an agreement to provide BEVision
at five stores operated by ABC Liquors, which has an option to expand the
network to all of its 150 stores after a two-month trial period. We currently
intend to begin installing equipment for this network in the second quarter of
2000. Our plan is to expand BEVision to additional independent and chain beer,
wine and spirits stores. We are currently targeting stores that meet our
BEVision audience criteria--high-end beer, wine and spirits retail environments
that offer a large and varied selection of brands, including specialty items,
including cigars and gourmet foods. We believe that the beer, wine and spirits
industry is well suited for our in-store network in part because alcoholic
beverage manufacturers have large advertising budgets and are usually refused
the right to advertise on network television. Pursuant to our current BEVision
retail agreements with independent beer, wine and spirits stores, we provide
programming and equipment for free and generate revenue by selling advertising
on the network. We plan to launch a complementary website, WWW.BEVISION.NET,
featuring relevant news articles, links, promotions and e-commerce.

In March 2000, we entered into a working partnership with the National
Association of Beverage Retailers, of which we are a corporate benefactor. Under
the working partnership, the NABR has agreed to endorse us as a new member and
promote our services to all NABR members. Furthermore, the NABR will promote our
website, WWW.BEVISION.NET, and will provide us with training and other relevant
content that we can air on our network. We have agreed to air continuing
education to all BEVision retail members using NABR logos and graphics, place
quarterly advertisements in the NABR's publication and participate in certain
NABR-sponsored events.

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PLANET TV

As of February 29, 2000, we provided the Planet TV Network at 59 Planet
Hollywood restaurants located throughout the United States and internationally
with an estimated average audience of approximately 17,700 people each day.
Planet Hollywood was our first customer, commencing network operations in
April 1998. The video entertainment provided by our network is an integral part
of the overall Planet Hollywood experience. Restaurants are equipped with
20-foot screens and surround-sound audio capabilities. The Planet TV Network
consists principally of music videos, movie trailers and other entertainment.
Planet Hollywood currently receives service on a month-to-month basis. Planet
Hollywood pays us a monthly fee in advance. We assemble the Planet Hollywood
show based on the programming sent to us, distribute the domestic show via CD
and create versions of the international shows on CD and Beta. Technical support
and special or additional requests are billed as additional services on a
monthly basis. Planet Hollywood represented approximately 7% of our revenue
during the year ended December 31, 1999 and less than 3% of our revenue during
the quarter ended December 31, 1999.

NETWORK PROGRAMMING

Our networks usually offer a two-hour program that runs repeatedly during retail
business hours every day of the year. Each program typically has four half-hour
shows, with each show containing approximately ten segments and 12 minutes
reserved for advertising. Typically one half-hour of programming content is
updated weekly and the entire show changes each month. Topical information like
weather and sports scores are updated daily. Our programming is created,
developed and assembled for the retail market. We balance the audio and video
features of our programs so that shoppers can understand and enjoy the
programming by listening to it even if they are not viewing the segment itself.
Based on our experience with this medium, we can adjust the audio, video, pace,
presentation and other aspects of the programming for the specific retail
environment. Programming also can be personalized for individual chains, stores
or geographic regions.

Our programming can be divided into five general categories:

- custom programming produced in-house, including introductions by the hosts
of our networks and other segments produced by our own camera crews;

- promotional or other programming, including advertorials, which we produce
for third parties for a fee;

- programming we obtain from a third party, including cable and broadcast
networks, free of charge in exchange for placement of the third party's logo
on the screen while the programming is running;

- programming produced by third parties, including cable and broadcast
networks, for which we pay a fee; and

- programming produced by third parties for which we may, in the future,
receive a fee in exchange for running the programming on one or more of our
networks.

We produce some of our own segments for our networks and provide material for
the host or anchor of each show. This allows our networks to provide customized,
original and professional programming produced in-house for each network. We
write, produce and direct each of our own segments and the material for the
hosts. We subcontract the physical production work, including hiring crew and
cameramen, providing lighting and makeup and assembling the set. In addition,
when we produce segments in the field we typically retain local production teams
to assist in the production. Each network caters to its individual customer
demographics and shopping interests.

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We have also developed strategic alliances with leading cable programming
services, including CNN, E! Entertainment, Fox Health Network, Fox Sports, Good
Life TV, Great American Country, NASCAR, Ovation, Time Warner and Ziff Davis TV.
In addition, RTM Productions provides us with the Car & Driver, Horsepower,
Trucks and American Shooter shows. Each programming supplier assigns a producer
to our projects to work closely with our staff to select the most appropriate
stories and features for our networks. Programming is generally provided on a
split track so that we can use the video portion and replace the audio portion
with our own voiceovers customized for our clients. The programming suppliers
are usually promoted through display of their logo in the lower corner of the
video monitor. We obtain most of our third-party programming free of charge.
Programming is generally provided to us on a non-exclusive basis pursuant to
short-term agreements, which typically permit use of the programming for one or
more specific networks. Some of the agreements limit the geographic area in
which the programming may be used.

We obtain some of our programming from video news release (VNR) providers. VNR
providers are production companies which provide topical news stories, often
health related, to affiliate news stations including local affiliates of CBS,
NBC, ABC, Fox and independent channels. The affiliates typically pay a monthly
licensing fee to the VNR provider in order to obtain the content. Currently, VNR
providers give us their programming for free due to the audience which we can
deliver for their sponsors and corporate partners. Much of our PharmaSee Network
programming is derived from VNR providers, while very little of our Advance Auto
Parts Network programming utilizes VNR provider material.

We also obtain some programming from independent producers and independent
production companies. Many producers and production companies provide
programming to us at no cost in exchange for our recognition of their company or
show. The producers and production companies benefit from having their material
utilized on our networks because, when they negotiate to have their material
shown on a television network or syndicator, it is helpful for them to be able
to show the network or syndicator that they already have an existing national
audience and promotion vehicle.

ADVERTISING SALES

Our strategy is to derive a significant portion of our revenue from
advertisements placed on our networks. We sell primarily commercial spots on our
networks. We also sell program segment sponsorships, website banners and
hyperlinks, sports, weather and trivia sponsorships and in-store product
sampling. Using strategically placed video monitors and customized programming
at retail locations, we seek to influence consumer buying decisions more
effectively than any other mediums in the market. We believe that advertising
and product demonstrations at the point of purchase significantly influence
which products a consumer purchases. Our broadband networks also may encourage
consumers to remain in the stores longer and, as a result, increase their
product purchases. We believe that retailers and advertisers recognize the value
of this advertising and are increasingly willing to pay for access to these
distribution channels.

Advertisers on our networks benefit from our unique ARGO advertising tracking
system. The ARGO system permits our advertisers to verify on our website at any
time, 24 hours a day, every day, for each of their commercials, the number of
times the advertisements were run and the number of locations in which those ads
ran. The information on ARGO is updated daily. We believe that this feature is
very attractive to advertisers. Advertisers can also view all of their
commercials on our website as well.

Our networks generally include 12 minutes reserved for commercial advertising in
each half hour of programming, or 24 30-second spots during each half hour.
Commercial spots typically are 15, 30 or 60 seconds each. Program sales--a two
or three minute editorial piece about a particular product--are another part of
our advertising offering. As is typical in the advertising industry, advertising
sales are generally not made pursuant to long-term written contracts. Our
advertising arrangements generally guarantee that a specified number of stores
will be reached. At the end of each quarter, if the

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guaranteed number of stores are not reached, the advertiser receives a credit of
additional advertising space. We believe that our advertising prices relative to
other media, combined with our point-of-purchase targeted audience, make our
advertising medium attractive to advertisers.

Our advertising salesforce consists of our Vice President of Sales and 11
additional salespersons. Our salesforce works out of Fort Lauderdale, Atlanta,
New York, Chicago, Dallas and Los Angeles. Members of our salesforce solicit
both individual potential advertisers as well as advertising agencies. Their
primary focus is national advertisers whose products are already sold in retail
locations which utilize our networks. Our salesforce also focuses on national
advertisers who would benefit by addressing our targeted audiences. In addition
to standard commercial spots, our advertising salesforce also offers packages
consisting of both in-store and website advertising as well as custom production
of advertorials or advertising oriented for the point of purchase. Our
salesforce also seeks to work with retailers utilizing our networks in order to
obtain additional introductions to potential advertisers. We compensate our
salesforce with a base salary and an incentive plan. We support our salesforce
with marketing and advertising in trade magazines and advertising publications
addressed primarily to marketing and advertising professionals.

TECHNOLOGY

We currently use two types of satellite transmission: video streaming and
store-and-forward. In video streaming, audio and video programming is delivered
in a continuous video signal via satellite to numerous retail locations.
Although video streaming is very cost effective in transmitting programming to a
large number of locations, video streaming requires that all locations receive
the same programming on the same schedule. We currently utilize video streaming
for the Advance Auto Parts Network and for most of the pharmacies using the
PharmaSee Network.

In late 1999, we began to work with Spacenet in order to develop a new form of
satellite transmission: store-and-forward. We anticipate that our new networks
and most of our new pharmacy locations will utilize the store-and-forward
satellite transmission capability once it has been fully tested and developed.
In store-and-forward, the video is transmitted not as a video feed but instead
in the form of data, which can be reassembled differently at each location. By
using store-and-forward technology, we can control, manipulate and monitor the
data at each receiving site. This gives us the ability to control what, when and
how video and audio play at each remote site. The advantage of store-and-forward
over video streaming is that store-and-forward will allow us to vary and control
content on a regional or site by site basis.

We currently utilize two satellite service providers: Spacenet and Microspace
Communications Corporation. We use Microspace and Spacenet for video streaming
and will use Spacenet for store-and-forward transmission once it has been fully
tested and is ready for widespread deployment. We have entered into an agreement
with Spacenet pursuant to which Spacenet provides satellite access,
telecommunications equipment and licensed software, all of which enables two-way
data transmissions between our central data center and the retail locations
which receive our programming. The Spacenet service covers the United States and
specified portions of Canada and Mexico. We believe that as we grow Spacenet or
its affiliates will be able to serve additional sites. The minimum site term for
each site is five and one half years. We expect to use the Spacenet service as
the primary satellite service provider for all of our advertising model
networks.

The Spacenet relationship provides us with the following advantages in addition
to regular satellite transmission capability:

- Spacenet will provide the equipment needed to operate a satellite network at
each retail location, including the satellite dish, cabling, computer,
satellite receiver, several video monitors, mounts and installation service.

- The equipment and installation cost at specified retail locations will be
financed through the Spacenet service agreement.

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- The use of VSAT technology with Spacenet will provide two-way broadband
satellite transmission capability at each retail location. Our plan is to
use this technology together with Spacenet to generate ancillary revenue by
offering retail stores additional services, including Internet access,
credit card processing, bank ATM transactions and insurance processing at
pharmacies. Ancillary revenue generated from these sources may be split with
Spacenet under specified circumstances.

- Spacenet offers next business day equipment maintenance service at retail
locations.

- Spacenet manages and provides the installation crews necessary to install
the broadband networks nationwide.

The agreement with Spacenet terminates on the earlier of the last day of service
on the last-installed site and December 2, 2009.

We are still in the process of developing and/or finalizing various aspects of
our technology and service applications. In particular, we are working with
Spacenet to finalize the store-and-forward technology to be used in our
networks. Our new Spacenet installations currently utilize video streaming and
will be converted to our new store-and-forward format upon its completion. Our
store-and-forward technology is new and unproven in a widespread deployment and
may need modifications in order to be successful. Technology and applications
currently under development include:

- integrating video monitors, which we expect will allow us to verify whether
a video monitor in a store is turned on or off and to control the monitor's
volume;

- two-way satellite receivers that will enable us to actively verify and
validate advertising statistics to better document advertising on our
networks;

- an interactive system in which network advertisements can vary automatically
based on the inventory levels of particular products in a store; and

- interactive touchscreen video monitors, which would enable consumers to
interactively view video materials and retrieve product and other
information.

Our programming is forwarded via satellite to each retail location. Each retail
location typically is equipped with video monitors, remote speakers, satellite
dishes, satellite receivers, cabinetry and merchandising cases. Each retail
location receives, stores and later plays back the programming. During the
retailer's hours of operations, the stored programming is relayed to the video
monitors and audio units strategically placed throughout the store to capture
consumer attention. Store employees are not responsible for the equipment and do
not have control over the system. The result is a continuous transmission with
little or no downtime and no rewinding.

In networks using store-and-forward, each retail location is also equipped with
a digital video server, or DVS. Rather than the continuous audio and video feed
utilized in video streaming, each retail location's DVS stores data files
relayed from the uplink's server. These data files can then be reassembled and
manipulated in order to provide a custom version of the show. Each digital video
server can provide the following features:

- INVENTORY MANAGEMENT. We are currently developing an inventory management
feature pursuant to which advertising content on our networks can be linked
electronically to the retailer's inventory system. When inventory for a
product falls below a predetermined level, the advertisement for that
product will be replaced by a preselected alternate advertisement for a
different product. We are currently seeking patent protection for this
inventory management feature.

- COMPLIANCE. We plan to incorporate technology into our digital video servers
that will allow us to control the video monitor by remote control via an
electronic interface. The ability to control the video monitor will increase
in-store compliance by eliminating the risk of manual operation, since video
monitors activate automatically. We expect that this feature will allow us
to verify advertising statistics for our advertisers.

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- CONTENT ROTATION. The system can rotate advertisements that play in a
specific slot. With content rotation, the system can rotate an unlimited
number of client advertisements in each advertiser's time slot.

- REAL TIME CONTENT. Show content can be rotated out on a real time basis.
Weather and sports scores and schedules can be changed on a daily basis or
more frequently, if desired.

- DAILY SCHEDULING. Multiple playlists can be utilized during the course of a
day. For example, with this mechanism, training can be scheduled for early
and late hours. Similarly, programming can be appropriately targeted to the
correct audience, so that family fare would show during daylight hours while
different content could be shown in the evening hours.

- ONCE THROUGH. The playlist can be configured to start at a specific time and
cycle through only once. This feature can be utilized for training material
where it is intended for viewing at exact times.

We regard our technology as proprietary, and we rely on a combination of trade
secret laws, contractual restrictions, restrictions on disclosure and other
methods to establish and protect our technology and proprietary rights and
information. We also enter into confidentiality agreements with all of our
employees and, when possible, with our partners in order to control access to
and distribution of our documentation and other proprietary information. We do
not currently have any patents, but a number of our patent applications are
pending.

COMPETITION

Our greatest competition for advertising revenue currently comes from other
forms of advertising media, including television, radio, newspapers, magazines,
the Internet, direct mail and billboards. We expect to compete with these forms
of advertising on the basis of price and our unique ability to reach potential
customers at the point of purchase.

In addition, we are aware of other companies that are pursuing strategies in the
out-of-home media area, including private video networks. It is possible that
another entity with greater resources than we have may enter our markets,
particularly because there are few proprietary characteristics of our business
or other barriers to entry. A large number of companies that could choose to
enter our industry have significantly greater financial, marketing, technical
and other resources than we have. Potential competitors may be able to devote
greater resources to marketing and promotional campaigns, adopt more aggressive
pricing policies and devote more resources to technology than we can. New
technologies and the expansion of existing technologies may also increase the
competitive pressures on us by enabling our competitors to offer a lower-cost
service. Increased competition may result in reduced operating margins and loss
of market share. We may not be able to compete successfully against current and
future competitors. Further, as a strategic response to changes in the
competitive environment, we may, from time to time, be required to make certain
pricing, service or marketing decisions or acquisitions that could have a
material adverse effect on our business and results of operations for a
particular quarter or other period of time.

GOVERNMENT REGULATION

Because we operate private networks in retail locations, we are currently not
restricted by licensing, program content and related regulations of the Federal
Communications Commission. However, the FCC could promulgate new regulations or
interpret existing laws so as to impact our business. In addition, the satellite
partners on whom we rely are subject to extensive regulation in the United
States by the FCC. The failure of our satellite partners to obtain some or all
necessary licenses or approvals could impose significant additional costs and
restrictions on our business or require us to change our operating methods.

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and trade organizations including the National Advertising Division of the
Council of Better Business Bureaus. New laws or regulations or interpretations
of existing regulations governing advertising could have a material adverse
effect on our business. For example, our entry into the beer, wine and spirits
store industry assumes that restrictions on alcohol advertising will not apply
to our networks inside beer, wine and spirits stores. Should new laws or
regulations prohibit the use of alcohol advertising on our in-store networks,
our entry into the beer, wine and spirits store industry would likely be
significantly less profitable.

Regulatory approvals may be required prior to the use of our networks in some
industries or states or other jurisdictions. For example, the sale of alcoholic
beverages is regulated by a state control board in a number of states. In 17
states the sale of liquor is fully controlled by the state liquor control board
and we are not permitted to provide our networks in beer, wine and spirits
stores in these states absent approval by the liquor control board. In addition,
in other states, the distribution and wholesaling of liquor is controlled by the
state liquor control board and our ability to provide networks to beer, wine and
spirits stores in these states may therefore be subject to approval of the state
liquor control board. We have not to date sought or obtained and may not be able
to obtain regulatory approvals in connection with the expansion of our networks
in any beer, wine and spirits stores in any states where this approval is
necessary.

EMPLOYEES

As of February 29, 2000, we had 61 employees, including six in marketing, 12 in
sales, 17 in programming and production, 16 in software development and other
technical functions and ten in finance, accounting and administration. We also
utilize independent contractors to perform various services required in
connection with the production, installation and maintenance of our networks.
Most of our employees are located in Fort Lauderdale except for some members of
our sales force who operate out of Atlanta, Dallas, Chicago, New York and Los
Angeles. We believe our relationship with our employees is satisfactory. None of
our employees is represented by a union and we have no collective bargaining
agreement. Generally, our employees are retained on an at-will basis, other than
members of senior management who have entered into employment agreements. All of
our employees are required to sign confidentiality agreements.

FACILITIES

Our principal headquarters is currently located in Fort Lauderdale, Florida and
consists of approximately 6,000 square feet of leased space. We intend to
relocate our corporate headquarters during 2000 to a new 21,000-square foot site
in Fort Lauderdale. We have recently signed a lease for this new site with a
related party. The lease for our new Fort Lauderdale headquarters will expire in
2010 and will require that we pay approximately $30,000 in aggregate monthly
rent during the first year, with annual increases thereafter. We lease
additional space in Fort Lauderdale, where we film our hosted networks and store
our sets, and in Atlanta, Georgia, Chicago, Illinois and Dallas, Texas, where we
maintain sales offices. We do not own any real estate. We believe that our
facilities are adequate for our current operations and for moderate growth. We
will continue to review the adequacy of our facilities in light of our growth.

LEGAL PROCEEDINGS

We may be subject to legal or governmental proceedings from time to time in the
ordinary course of our business. We are not currently a party to any pending or
threatened material legal or governmental proceedings.

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MANAGEMENT

EXECUTIVE OFFICERS, KEY EMPLOYEES AND DIRECTORS

The following table contains information regarding our executive officers, key
employees and directors:

<TABLE>
<CAPTION>
NAME AGE POSITION
- ---- -------- ------------------------------------------
<S> <C> <C>
EXECUTIVE OFFICERS
Jason M. Kates............................ 39 Chairman of the Board, President and Chief
Executive Officer
Brent D. Burns............................ 40 Chief Financial Officer, Executive Vice
President, Treasurer and Director

KEY EMPLOYEES
Samuel S. Ambrose......................... 31 Vice President of Acquisition Sales and
Marketing
David A. Cabana........................... 49 Vice President of Production
Patricia M. Chicvara...................... 43 Vice President and Controller
Thomas D. Fay............................. 46 Vice President of Network Operations
Michael D. Lambert........................ 32 Vice President of Programming
Jeffrey R. Pittle......................... 31 Vice President of Creative Applications
Michael J. Sobel.......................... 32 Vice President of Sales (Southeast Region)
Sergei A. Tselin.......................... 32 Vice President of Engineering
Walter C. Wilson.......................... 53 Vice President of Post Production

OTHER DIRECTORS
David H. Clarke(1)(2)..................... 58 Director
John J. McMenamin(2)...................... 46 Director
Dennis D. Smith(1)........................ 51 General Counsel, Secretary and Director
Norman D. Tripp(1)........................ 62 Director
Brian Woods............................... 40 Director
</TABLE>

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

(1) Member of the audit committee

(2) Member of the compensation committee

JASON M. KATES founded our company in May 1996 and has acted as our Chairman of
the Board and Chief Executive Officer since January 1997 and as our President
and a Director since May 1996. Prior to founding our company, from 1993 to 1995,
Mr. Kates served as Executive Vice President at Investech, an international
manufacturing and import company, where he obtained patents, FDA approvals,
offshore manufacturing rights, funding sources and sales and distribution
outlets for various infant-related products. Investech and various royalty
rights were sold in January 1996. In 1990, Mr. Kates formed Kates Communications
to film and produce videos for companies such as Blockbuster Entertainment
Corporation. Mr. Kates worked at Kates Communications from 1990 to 1992. From
1986 to 1990, Mr. Kates served as a broker and Vice President of Oppenheimer &
Company, Inc. Mr. Kates is a graduate of Florida State University.

BRENT D. BURNS has been our Chief Financial Officer since January 2000, our
Executive Vice President and Treasurer since January 1999 and a Director since
October 1999, and served as our Chief Operating Officer from January 1999
through January 2000. Prior to joining us, Mr. Burns served as Vice President
and Chief Financial Officer of AutoNation Financial Services, Inc. from
October 1996 to October 1998, as Senior Vice President of Revenue and Fleet
Management of Alamo Rent-A-Car, Inc. from January 1995 to September 1996, as
Vice President of Strategic Planning and Treasurer of Alamo Rent-A-Car from
August 1987 to December 1994, and as a certified public accountant with Peat,

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Marwick and Mitchell (n/k/a KPMG LLP) from July 1981 to July 1987. Mr. Burns is
a graduate of Florida Atlantic University with a Bachelor of Business
Administration degree.

SAMUEL S. AMBROSE is our Vice President of Acquisition Sales and Marketing and
has been working at our company since December 1999. Prior to joining us,
Mr. Ambrose was Manager of Advertising Communications for the U.S. and Canada at
Office Depot, Inc. from July 1998 to December 1999, Vice President of Marketing
at Boston Chicken, Inc. from July 1995 to July 1998 and Manager of Corporate
Sales and Sponsorship for the Florida Panthers Hockey Club, Inc. from
November 1993 to July 1995. Mr. Ambrose is a graduate of Florida State
University with a Bachelor of Science degree and a Masters of Science degree.

DAVID A. CABANA is our Vice President of Production and has worked at our
company since April 1999. Prior to joining us, Mr. Cabana operated Cabana
Productions, Inc., a developer of movie and television-related properties, from
February 1997 to February 1999. From March 1994 to February 1997, Mr. Cabana
worked as a Broadcast Production Supervisor at Gold Coast Advertising, Inc. in
Miami, Florida where he supervised Office Depot's national broadcast production.
From May 1988 to February 1994, Mr. Cabana served as General Manager and
Executive Producer of Mincy Productions. From February 1985 to April 1988,
Mr. Cabana was Executive Producer for Florida-based The William Cook Agency,
Inc., where he supervised award-winning broadcast production campaigns for First
Union Bank and Winn-Dixie Stores, Inc. Mr. Cabana is a graduate of California
State University at Fullerton with a Bachelor's degree in Communications.

PATRICIA M. CHICVARA has been our Vice President and Controller since February
2000. Prior to joining us, Ms. Chicvara served as Senior Director of Financial
Reporting and Accounting at Alamo Rent-A-Car, Inc. from May 1996 to February
2000, as Assistant Corporate Controller at IVAX Corporation from 1993 to 1996,
as a Vice President at First Union National Bank of Florida (formerly Southeast
Bank, N.A.) from 1986 to 1992, as the Manager of Accounting at Cordis
Corporation from 1984 to 1986 and as a certified public accountant with Arthur
Andersen & Co. (n/k/a Arthur Andersen LLP) from 1977 to 1984. Ms. Chicvara is a
graduate of the University of Miami, Miami, Florida with a Bachelor of Science
Degree in Accounting.

THOMAS D. FAY is our Vice President of Network Operations and has worked at our
company since July 1997. Prior to joining us, Mr. Fay worked at Carolina
Power & Light Corporation from April 1994 to July 1997. Mr. Fay has over 20
years experience in the public utility industry, managing the integration of new
technologies into existing systems and the rollout of new architectures, as well
as the day-to-day operational and maintenance activities, at power plants for
companies such as Alabama Power Company, Florida Power Corporation, Carolina
Power & Light and Niagara Mohawk Power Corporation. Mr. Fay is a graduate of the
University of Florida with a degree in Nuclear Engineering.

MICHAEL D. LAMBERT is our Vice President of Programming and has worked at our
company since November 1998. Prior to joining us, Mr. Lambert was Vice President
of Marketing and Sales at Nite Lite Studios from 1997 to 1998, Vice President of
Programming at Five Star Productions USA, Inc. from 1995 to 1996 and Vice
President of Advertising at Brookstone Productions from 1992 to 1994.
Mr. Lambert received a Bachelor of Arts degree in Economics from the University
of Maryland and an M.B.A. in Marketing from Florida Atlantic University.

JEFFREY R. PITTLE is our Vice President of Creative Applications and has worked
at our company since May 1999. Prior to joining us, Mr. Pittle was the Art
Director of Heftel Entertainment, LLC from January 1997 to April 1999 and Art
Director of Visionary Studios, Inc. from June 1993 to December 1996. Mr. Pittle
received a Bachelor of Fine Arts in Film Animation from New York's School of
Visual Arts.

MICHAEL J. SOBEL is our Vice President of Sales (Southeast Region) and has
worked at our company since October 1999. Prior to joining us, Mr. Sobel managed
sales and service for the southeast regions

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for CBS Cable Networks, Inc. from 1994 to 1999, was an Account Executive for CBS
Cable from 1993 to 1994, served as a network negotiator at J. Walter Thompson
Co. in New York from 1991 to 1993 and served as an assistant network buyer for
Backer Speilvogel Bates in New York from 1989 to 1991. Mr. Sobel graduated from
Syracuse University with a degree in Advertising and Marketing.

SERGEI A. TSELIN is our Vice President of Engineering and has worked at our
company since March 1999. Prior to joining us, Mr. Tselin was a Senior Software
Engineer at International Interactive Media, Inc. from October 1995 to
December 1998. Mr. Tselin graduated from the Moscow Aviation Institute (Space
Vehicle Department) with a degree in Space Engineering.

WALTER C. WILSON is our Vice President of Post Production and has worked at our
company since April 1999. Prior to joining us, from 1993 to 1998, Mr. Wilson
worked at Visionary Entertainment Group, Inc. as Director, Producer and Editor.
From 1988 to 1993, Mr. Wilson worked at Laser Pacific, Inc. in Los Angeles,
where he edited the television show NORTHERN EXPOSURE, HBO's COMIC RELIEF,
Bobcat Goldthwait's comedy special IS HE LIKE THAT ALL THE TIME and ABC's A
COMEDY SALUTE TO MICHAEL JORDAN. From 1986 to 1988, Mr. Wilson worked at LookOut
Productions, an independent production company. From 1978 to 1986, Mr. Wilson
worked at Utopia Video where he wrote, directed and edited more than 100 music
videos for, among others, Todd Rundgren, The Rolling Stones, Bearsville Records
and Private Music. Mr. Wilson graduated from the University of Florida with a
Bachelor of Science degree in Electrical Engineering.

DAVID H. CLARKE has been a Director since October 1999. Mr. Clarke has served as
Chairman and Chief Executive Officer of U.S. Industries, Inc. since May 1995.
U.S. Industries is an industrial conglomerate which manufactures and distributes
bath and plumbing products, indoor and outdoor lighting fixtures and lawn and
garden tools and hand tools. Mr. Clarke was Vice Chairman of Hanson plc from
1993 until May 1995, Deputy Chairman and Chief Executive Officer of Hanson
Industries, the U.S. arm of Hanson plc, from 1992 until May 1995 and a director
of Hanson plc from 1989 until May 1996. Mr. Clarke is a director of Fiduciary
Trust Company International, Inc., a public company engaged in investment
management and administration of assets for individuals. Mr. Clarke is a
graduate of Hobart College.

JOHN J. MCMENAMIN has been a Director since February 2000. Mr. McMenamin has
served as Executive Vice President, Sales and Marketing, for NBC Internet, Inc.
since December 1999. From June 1999 to December 1999, Mr. McMenamin served as
Vice President and General Manager of Sponsorship for iVillage Inc. From
December 1997 to August 1998, Mr. McMenamin served as President and Chief
Executive Officer of C3 Communications, Inc., an interactive media company. From
1991 through 1997, Mr. McMenamin served in various positions at
Time/Warner/Turner and most recently held the position of President of Turner
Private Networks, a subsidiary of Turner Broadcasting System, Inc.
Mr. McMenamin holds an M.B.A. and certificate degree in Business Law from the
Stillman Graduate School of Business Administration at Seton Hall University and
a B.A. from St. Anselm's College.

DENNIS D. SMITH has been our Secretary and General Counsel since July 1999 and a
Director since January 1997. Mr. Smith is currently the President and a board
member of Tripp, Scott, P.A. and has 23 years of experience as an attorney at
Tripp, Scott handling acquisitions, corporate finance and tax matters.
Mr. Smith is a graduate of the University of Pennsylvania Wharton School and
received his law degree from Villanova University and his LLM in tax from the
University of Miami.

NORMAN D. TRIPP has been a Director since January 1997. Mr. Tripp has been an
officer, director and shareholder of Tripp, Scott, P.A. since 1974 and has over
30 years of experience as an attorney handling litigation, government relations,
real estate, finance and corporate matters. Mr. Tripp is a graduate of the
University of Miami and received his law degree from Cleveland State University.

BRIAN WOODS has been a Director since August 1997. Since December 1999,
Mr. Woods has been Senior Vice President and Chief Marketing Officer of
NetZero, Inc., an Internet service provider which

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provides consumers with access to the Internet. Mr. Woods has served as a
marketing consultant to our company since November 1998. From February 1997 to
October 1998, Mr. Woods was President of the Entertainment Division of Planet
Hollywood International, Inc. From November 1988 to December 1996, Mr. Woods
held several key management positions, including Executive Vice President and
Chief Marketing Officer of Blockbuster Entertainment Group, Inc., where he
created the BLOCKBUSTER ENTERTAINMENT AWARDS SHOW, created the Blockbuster
Entertainment Network, produced several television specials including Paul
McCartney and Tina Turner and was responsible for worldwide marketing alliances
with Visa Card and Coca Cola. Mr. Woods attended the University of Kentucky.

BOARD OF DIRECTORS

Our board of directors is currently composed of seven directors. Our board of
directors is divided into three classes as nearly equal in size as possible with
staggered, three year terms. The term of office of Class I, Class II and
Class III directors will expire at the annual meeting of stockholders to be held
in 2001, 2002 and 2003, respectively. At each annual meeting of the stockholders
beginning with the 2001 annual meeting, the successors to the directors whose
terms will then expire will be elected to serve from the time of their election
and qualification until the third annual meeting following their election or
until their successors have been duly elected and qualified, or until their
earlier resignation and removal, if any. Messrs. , and
have been designated as Class I directors; Messrs. ,
and have been designated as Class II directors; and
Messrs. and have been designated as Class III directors.
The classification of our board of directors could have the effect of making it
more difficult for a third party to acquire, or of discouraging a third party
from acquiring, control of our company.

In addition, our certificate of incorporation provides that the authorized
number of directors may be changed only by resolution of the board of directors.
Any additional directorships resulting from an increase in the number of
directors will be distributed among the three classes so that, as nearly as
possible, each class will consist of one-third of the total number of directors.

COMMITTEES OF THE BOARD OF DIRECTORS

Our audit committee currently has three members: David Clarke, Dennis Smith and
Norman Tripp. The audit committee is responsible for, among other things,
recommending the annual appointment of our auditors, reviewing the independence
of our auditors, reviewing our audited financial statements with management and
our auditors, recommending to the board whether to include our audited financial
statements in our public filings, assessing accounting principles we use in
financial reporting, and reviewing internal auditing procedures and the adequacy
of our internal control procedures.

Our compensation committee currently has two members: David Clarke and John
McMenamin. The compensation committee will make recommendations to the board of
directors regarding compensation and benefits for our executive officers and
administer our equity incentive plans.

COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION

From July 1999 to December 1999, our compensation committee was composed of
three members: Norman Tripp, Joel Kates and Dennis Smith. Joel Kates is the
father of Jason Kates, our president and chief executive officer. Messrs. Tripp
and Smith are directors and officers of Tripp, Scott, our outside general
counsel, and own a portion of the facility in which we plan to maintain our
corporate headquarters. In addition, Messrs. Tripp, Smith and Kates loaned
approximately $0.5 million to us in 1997. A portion of the loans was converted
into common stock in 1998 and the remainder of the loans was fully repaid by
2000. See "Related Party Transactions."

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None of our executive officers serves as a member of the board of directors or
compensation committee of any entity that has one or more executive officers
serving as a member of our board of directors or compensation committee except
as described below. During 1999, a former executive officer, Garry Johnson,
served as a member of the board of directors of Tripp, Scott, which has two
officers, Norman Tripp and Dennis Smith, who serve on our board of directors and
compensation committee. During 1999, one of our directors, Dennis Smith, served
on the compensation committee of Tripp, Scott, which has two officers, Norman
Tripp and Mr. Smith, who serve on our board of directors and compensation
committee. In addition, Dennis Smith, one of our directors, Norman Tripp, one of
our directors, Brent Burns, one of our directors and executive officers, and
Garry Johnson, a former director and executive officer of ours, are directors of
and/or equity investors in LPS Capital Ltd.

Prior to July 1999, matters concerning executive officer compensation were
addressed by the entire board of directors because we did not have a
compensation committee.

COMPENSATION OF DIRECTORS

During the year ended December 31, 1999, our directors received no cash
compensation for serving as directors. During 1999, Jason Kates, Norman Tripp
and Dennis Smith were awarded 33,335 stock options at an exercise price of $6.60
per share, Brian Woods and former director Joel Kates were awarded 33,335 stock
options at an exercise price of $6.00 per share, former director Garry Johnson
was awarded 33,335 stock options at an exercise price of $6.60 per share, each
of Brent Burns and David Clarke was awarded 23,810 stock options at an exercise
price of $8.40 per share, and each of Jason Kates, Joel Kates, Norman Tripp,
Dennis Smith, Garry Johnson, Brian Woods, Brent Burns and David Clarke was
awarded 12,500 stock options at an exercise price of $10.00 or $11.00 per share.
In January 2000 Brent Burns was awarded 20,000 stock options at an exercise
price of $10.00 per share and John McMenamin was awarded 25,000 stock options at
an exercise price of $10.00 per share. These stock options will vest on the day
that this offering is completed. In addition, during 1999, Brian Woods was paid
$90,000 for consulting services which he provided to the company. See
"--Executive compensation" below for additional compensation received during
1999 by our directors who are also our employees. During 2000 we expect that
directors will be paid primarily with stock options and that their expenses in
connection with attending board meetings will be reimbursed in cash.

EXECUTIVE COMPENSATION

The table below summarizes information concerning the compensation we paid
during 1999 to our Chief Executive Officer and Chief Financial Officer, the only
executive officers who earned more than $100,000 during 1999 who served in such
position at the end of the fiscal year, and a former executive

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officer who would have been among the four most highly paid executive officers
had he remained an executive officer at the end of the year (the named executive
officers):

SUMMARY COMPENSATION TABLE FOR 1999

<TABLE>
<CAPTION>
ANNUAL COMPENSATION
----------------------------------------- LONG-TERM COMPENSATION AWARDS
OTHER ANNUAL ---------------------------------
NAME AND PRINCIPAL POSITION SALARY ($) BONUS ($) COMPENSATION ($) SECURITIES UNDERLYING OPTIONS (#)
- --------------------------- ---------- --------- ---------------- ---------------------------------
<S> <C> <C> <C> <C>
Jason M. Kates.................. $160,000 $32,000 -$- 204,170
Chairman of the Board,
President and Chief Executive
Officer
Garry W. Johnson................ 150,000 12,000 8,928(1) 165,835
Vice President, Special
Projects
Brent D. Burns.................. 124,166 27,000 -- 206,310
Chief Financial Officer,
Executive Vice President,
Treasurer and a Director
</TABLE>

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

(1) Represents above-market interest which accrued during 1999 on deferred
compensation earned during 1997 and 1998.

OPTION GRANTS IN FISCAL 1999

The following table sets forth information regarding options to purchase common
stock granted during 1999 to each of the named executive officers, including the
potential realizable value over the term of the options, based on assumed,
annually compounded rates of stock value appreciation. These assumed rates of
appreciation comply with the rules of the Securities and Exchange Commission and
do not represent our estimate of future stock prices. Actual gains, if any, on
stock option exercises will be dependent on the future performance of our common
stock. All the options were granted at an exercise price which our board of
directors believed to be equal to or greater than the fair market value of our
common stock on the date of grant. No stock appreciation rights were granted to
these individuals during the year.

<TABLE>
<CAPTION>
INDIVIDUAL GRANTS(1)
---------------------------------------------------- POTENTIAL REALIZABLE VALUE
PERCENT OF AT ASSUMED ANNUAL RATES
NUMBER OF TOTAL OF STOCK PRICE
SECURITIES OPTIONS EXERCISE OR APPRECIATION FOR OPTION
UNDERLYING GRANTED TO BASE PRICE TERM
OPTIONS EMPLOYEES (PER EXPIRATION --------------------------
NAME GRANTED (#) IN 1999 (%) SHARE) DATE 5% 10%
- ---- ----------- ----------- ----------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
Jason M. Kates..................... 166,670 12.1 $ 6.60 8/5/04 $303,916 $671,574
37,500 2.7 11.00 12/20/04 113,966 251,835
Garry W. Johnson................... 153,335 11.1 6.60 8/5/04 279,600 617,843
12,500 0.9 11.00 12/20/04 37,989 83,943
Brent D. Burns..................... 60,000 4.4 3.00 2/1/04 49,731 109,892
110,000 8.0 6.00 7/27/04 182,346 402,937
23,810 1.7 8.40 11/1/04 55,257 122,104
12,500 0.9 10.00 12/20/04 34,535 76,314
</TABLE>

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

(1) All of the options listed in this table will become exercisable upon
completion of this offering. The options are exercisable for five years
after date of grant.

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AGGREGATE OPTION EXERCISES IN FISCAL 1999 AND FISCAL YEAR-END OPTION VALUES

The following table sets forth information concerning the number and
hypothetical value of in-the-money options held by the named executive officers
as of December 31, 1999. This table is presented solely for purposes of
complying with the SEC rules and does not necessarily reflect the amounts the
optionees will actually receive upon any sale of the shares acquired upon
exercise of the options.

There was no public market for the common stock as of December 31, 1999. The
values of the in-the-money options at December 31, 1999 have been calculated
using the fair market value of the common stock as of December 31, 1999, as
determined by the board of directors on the basis of its assessment of our
prospects, financial condition and results of operations as of that date, less
the aggregate exercise price. All of the options indicated in the table will be
exercisable upon completion of this offering.

<TABLE>
<CAPTION>
NUMBER OF SECURITIES
UNDERLYING UNEXERCISED VALUE OF UNEXERCISED
OPTIONS AT IN-THE-MONEY OPTIONS AT
FISCAL YEAR-END FISCAL YEAR-END
SHARES --------------------------- ---------------------------
ACQUIRED ON VALUE
NAME EXERCISE REALIZED EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ---- ----------- -------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Jason M. Kates..................... -- -- 93,000 363,670 $670,100 $1,429,156
Garry W. Johnson................... -- -- 41,000 247,335 290,500 835,753
Brent D. Burns..................... -- -- -- 206,310 -- 588,000
</TABLE>

EXISTING STOCK OPTION PLANS

Prior to this offering our board of directors authorized three employee stock
option plans: the Retail Media Systems, Inc. 1997 Employee Stock Option Plan,
the Retail Media Systems, Inc. 1998 Employee Stock Option Plan and the Retail
Media Systems, Inc. Employee Stock Option Plan #3. The terms of the plans are
substantially the same. Options to purchase shares have previously
been awarded under the plans. The plans are administered by our board of
directors or, at the board's option, a committee of the board composed of at
least two directors. Upon completion of this offering, no additional options
will be granted under these plans and instead options will be awarded under our
2000 Stock Incentive Plan.

ELIGIBILITY. The plans provide that options may be granted to any of our
employees, including any employee who is one of our officers or directors. The
maximum number of stock options that may be granted during any calendar year to
any employee was 212,500 under the 1997 and 1998 plans and 150,000 under the
third plan, in each case subject to adjustment in the case of stock splits or
other recapitalization events. Options may also be granted to independent
contractors or to non-employee directors as determined by the board of
directors. Multiple option grants may be made to the same individual in any one
year. Options that are intended to qualify as incentive stock options within the
meaning of Section 422 of the Internal Revenue Code will qualify as an incentive
stock option only to the extent that the aggregate fair market value, determined
at the time the option is granted, of the stock with respect to which incentive
stock options are exercisable for the first time by the optionee during any
calendar year does not exceed $100,000.

EXERCISE PRICE. All options granted pursuant to the plans must be evidenced by
a written stock option agreement. The option exercise price must be at least
100% of the fair market value of a share of the stock on the date the option is
granted, provided that in the event the optionee would otherwise be ineligible
to receive an incentive stock option because he owns more than 10% of our
equity, the exercise price of an option that is intended to be an incentive
stock option must be at least 110% of

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the fair market value of the common stock on the date the option is granted.
Each option granted under the plan will terminate five years after the date the
option is granted or on such other date as is fixed by the board and stated in
the stock option agreement.

VESTING. Unless determined otherwise by the board of directors, 20% of the
stock options vest each year, with the first 20% vesting at the end of the first
year after the grant of the option. The stock option plans provide that all
outstanding stock options shall vest automatically upon the completion of this
offering.

CHANGE IN CONTROL. In the event of a change in control, all outstanding options
will become immediately exercisable in full. A change in control will be deemed
to occur if any person (1) acquires direct or indirect beneficial ownership of
more than 50% of the total combined voting power with respect to the election of
directors of our issued and outstanding stock, except that no change in control
will be deemed to have occurred if the persons who were our stockholders
immediately before the acquisition own all or substantially all of the voting
stock of that person immediately after the transaction, or (2) has the power or
ability to elect or cause the election of directors consisting at the time of
the election of a majority of the board of directors.

TERMINATION. Upon the termination of the employment of an optionee with our
company, other than by reason of death or disability, any options granted
pursuant to the plans terminate upon the date of termination of employment,
unless otherwise determined by the board of directors. If the optionee is
terminated other than for cause, the departing optionee will have 90 days after
the date of his or her departure to exercise any and all vested options held by
him or her. If an optionee dies while still an employee or suffers a permanent
and total disability, all options held by the optionee will become immediately
exercisable in full and the optionee (in the case of disability) or the
executors, administrators, legatees or distributees of the optionee's estate (in
the case of death) shall have the right, at any time within 180 days after the
date of such optionee's death, to exercise any option held by the optionee at
the date of such optionee's death.

REPURCHASE OPTION. The stock option agreements in connection with our stock
option plans generally provide that upon termination of an option holder's
employment with us for any reason, or if the option holder wishes to transfer
any option shares, we have the right, but not the obligation, to acquire from
the option holder all or a portion of the option shares then held by the option
holder. The price per share will be (a) if the option holder is discharged for
"cause," the option price per option share, and (b) if employment is not
terminated for cause, the option price per option share plus or minus the
increase or decrease in our book value per share from the grant date through the
date of our last audited consolidated balance sheet. In either event upon
termination of employment all unexercised options will immediately expire. The
term "cause" is defined in the stock option agreement to include, among other
things, drug or alcohol addiction, disclosure of confidential information,
competition with us, felony convictions, flagrant disregard of duty under this
agreement, egregious misconduct involving serious moral turpitude, activities
that cause major advertisers or network partners to take materially adverse
action and termination for cause under any employment agreement.

2000 STOCK INCENTIVE PLAN

PURPOSE. The purpose of the 2000 stock incentive plan is to further strengthen
our company by providing incentives to our employees, officers, directors,
consultants and advisors. The plan provides incentives through the granting or
awarding of incentive and nonqualified stock options, stock appreciation and
dividend equivalent rights, restricted stock, performance units, and performance
shares. Under the plan, we can make awards to our employees, to individuals who
have received a formal, written offer of employment and to our officers,
directors, consultants and advisors. We use these awards to encourage the
recipients to devote their abilities and energies to our success.

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ADMINISTRATION. The compensation committee administers the stock incentive plan.
Each award under the stock incentive plan will be evidenced by an agreement that
includes the terms of the grant. Under the stock incentive plan, the committee
has the authority to, among other things:

- select the individuals to whom awards will be granted;

- determine the type, size and terms and conditions of awards; and

- establish the terms for treatment of awards upon a termination of
employment.

SHARES AVAILABLE FOR ISSUANCE. Under the stock incentive plan, we will have a
total of shares of common stock available for the grant of awards. The
maximum number of shares with respect to which we may grant awards to any
individual during any calendar year is . If our capitalization changes,
however, the committee may adjust the maximum number and class of shares with
respect to which awards may be granted, the number and class of shares which are
subject to outstanding awards and the purchase price. The maximum dollar amount
that an individual may receive during any calendar year in respect of
cash-denominated performance units may not exceed $ .

TERMS OF STOCK OPTIONS. The compensation committee will determine whether any
option is a nonqualified or incentive stock option at the time of grant. The
committee will also determine the per share exercise price of an option granted
under the stock incentive plan at the time of grant. This will be set forth in
the option agreement. Each option is exercisable at the dates and in the
installments determined by the committee. All outstanding options will become
fully exercisable if we have a change in control. In addition, the committee may
accelerate the exercisability of any option at any time. Each option terminates
at the time determined by the committee. However, the term of each option may
not exceed ten years, or five years in the case of an incentive stock option
granted to a 10% stockholder.

Options are not transferable except by will or the laws of descent and
distribution or, in the case of an option other than an incentive stock option,
pursuant to a domestic relations order. An option other than an incentive stock
option may, however, provide that it can be transferred to members of the
optionee's immediate family, to trusts solely for the benefit of the immediate
family members and to partnerships in which family members and/or trusts are the
only partners. Options may be exercised during the optionee's lifetime only by
the grantee or his guardian or legal representative. In the discretion of the
committee, the purchase price for shares may be paid:

- in cash;

- by transferring shares of common stock to our company if such shares have
been held by such person for at least six months prior to the exercise of
the option; or

- by a combination of the foregoing.

In addition, options may be exercised through a registered broker-dealer
pursuant to cashless exercise procedures approved by the committee. The
committee will set forth the terms and conditions applicable to any option upon
a termination of the employment or service of the optionee.

STOCK APPRECIATION RIGHTS. The stock incentive plan permits us to grant stock
appreciation rights either in connection with the grant of an option or as a
freestanding right. A stock appreciation right permits a grantee to receive,
upon exercise of the stock appreciation right, cash and/or shares, in an amount
equal to the excess of the then per share fair market value over the per share
fair market value on the date the stock appreciation right was granted or option
exercise price, in the case of a stock appreciation right granted in connection
with an option. When a stock appreciation right is granted, however, the
committee may establish a limit on the maximum amount a grantee may receive on
exercise. If we have a change in control, all stock appreciation rights become
immediately and fully exercisable. The committee will decide at the time that
the stock appreciation right is granted the date or dates at which it will
become vested and exercisable.

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DIVIDEND EQUIVALENT RIGHTS. Dividend equivalent rights may be granted in
connection with any award under the stock incentive plan. Dividend equivalent
rights may be payable currently or deferred until the lapsing of the
restrictions on the dividend equivalent rights or until the vesting, exercise,
payment, settlement or other lapse of restrictions on the related award.
Dividend equivalent rights may be settled in cash, shares of common stock or a
combination of cash and shares in single or multiple installments.

RESTRICTED STOCK. The committee will determine the terms of each restricted
stock award at the time of grant, including the price, if any, to be paid by the
grantee for the restricted stock, the restrictions placed on the shares, and the
time or times when the restrictions will lapse. In addition, at the time of
grant, the committee may decide:

- whether any deferred dividends will be held for the grantee or deferred
until the restrictions lapse;

- whether any deferred dividends will be reinvested in additional shares of
common stock or held in cash; and

- whether interest will be accrued on any dividends that are not reinvested in
additional shares of restricted stock.

Unless otherwise provided in an agreement at the time of the grant, the
restrictions on the restricted stock will lapse if we have a change in control.
Shares of restricted stock are non-transferable until all restrictions upon the
shares lapse.

PERFORMANCE UNITS AND PERFORMANCE SHARES. The committee may also award
performance units and performance shares. The vesting of performance units and
performance shares will be based upon our attainment of specified performance
goals set by the committee. The performance goals may include:

- earnings per share;

- share price;

- pre-tax profits;

- net earnings;

- return on equity or assets;

- return on certain specified assets;

- revenues;

- EBITDA;

- market share or market penetration;

- free cash flow; or

- any combination of these goals.

When granting performance units or performance shares, the committee may provide
the manner in which performance will be measured against the performance
objectives. The committee may also adjust the performance objectives to reflect
the impact of specified corporate transactions, special charges, foreign
currency effects, accounting changes, and other similar extraordinary or
nonrecurring events. Performance units may be expressed in dollars or in shares
of common stock. Payments in respect of performance units will be made in cash,
shares of common stock, shares of restricted stock or a combination of cash,
shares of common stock or shares of restricted stock.

The agreement evidencing the award of performance shares or performance units
will include the terms and conditions of the awards, including those applicable
if the grantee's employment terminates. If we have a change in control, all or a
portion of the performance units will vest and the restrictions on all

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or a portion of the performance shares will lapse. The committee will determine
these portions at the time of grant and they will be included in the agreement
evidencing the award.

AMENDMENTS AND TERMINATION. The stock incentive plan will terminate on .
The board may at any time amend or terminate the stock incentive plan. If
required by law, no amendment or termination will be effective without the
approval of our stockholders. In addition, no amendment or termination may alter
or adversely impair any rights or obligations under any awards previously
granted, except with the written consent of the grantee.

CERTAIN FEDERAL INCOME TAX CONSEQUENCES. The following discussion is a general
summary of the principal federal income tax consequences under current law for
awards granted to employees under the stock incentive plan. The summary is not
intended to be exhaustive and, among other things, does not describe state,
local or foreign income and other tax consequences.

STOCK OPTIONS. An optionee will not recognize any taxable income upon the grant
of a nonqualified stock option and we will not be entitled to a tax deduction
with respect to the grant. Generally, upon exercise of a nonqualified option,
the excess of the fair market value of common stock on the date of exercise
over the exercise price will be taxable as ordinary income to the optionee. If
we comply with applicable reporting requirements and with Section 162(m) of the
Internal Revenue Code, we will be entitled to a federal income tax deduction in
the same amount and at the same time as the optionee recognizes ordinary
income. The later disposition of shares acquired upon the exercise of a
nonqualified option will ordinarily result in capital gain or loss to the
optionee. Any gain will be subject to reduced tax rates if the shares have been
held for more than twelve months.

Except as described below, an optionee will not recognize taxable income at the
time of grant or exercise of an incentive stock option, and we will not be
entitled to a tax deduction with respect to the grant or exercise. However, the
exercise of an incentive stock option may result in an alternative minimum tax
liability for the optionee.

Generally, if an optionee has held shares acquired upon the exercise of an
incentive stock option for more than one year and more than two years after the
date of grant of the incentive stock option, upon disposition of the shares by
the optionee, the difference, if any, between the sales price of the shares and
the exercise price will be treated as long-term capital gain or loss to the
optionee.

Generally, upon a sale or other disposition of shares acquired upon the
exercise of an incentive stock option within one year after the date of
exercise or within two years after the date of grant of the incentive stock
option, any excess of the fair market value of the shares at the time of
exercise of the option or, if less, at the time of disposition over the
exercise price of such option will constitute ordinary income to the optionee.
Any excess of the amount realized by the holder on the disqualifying
disposition over the fair market value of the shares on the date of exercise
will generally be capital gain. Subject to any deduction limitation under
Section 162(m) of the Internal Revenue Code and our compliance with applicable
reporting requirements, we will be entitled to a federal income tax deduction
equal to the amount of the ordinary income recognized by the holder.

STOCK APPRECIATION RIGHTS. The amount of any cash or the fair market value of
any shares received upon the exercise of a stock appreciation right under the
stock incentive plan will be includible in the grantee's ordinary income. If we
satisfy applicable reporting requirements, we will be entitled to a federal
income tax deduction equal to the amount of the ordinary income recognized by
the grantee.

RESTRICTED STOCK. A grantee will not recognize taxable income upon the grant of
restricted stock. The recognition of any income will be postponed until the
shares are no longer subject to any restrictions or the risk of forfeiture.
When either the restrictions or the risk of forfeiture lapses, the grantee will
recognize ordinary income equal to the fair market value of the restricted
stock at the time that the restrictions lapse. If we satisfy applicable
reporting requirements, we will be entitled to a federal income tax deduction.
A grantee may elect to be taxed when the restricted stock is granted. If the

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grantee makes this election, he will recognize ordinary income equal to the
excess of the fair market value of the restricted stock at the time of grant
over the amount paid, by the grantee for the shares. We are entitled to a
federal income tax deduction at the time the grantee recognizes ordinary income
in an amount equal to such income.

PERFORMANCE SHARES AND PERFORMANCE UNITS. Generally, a grantee will not
recognize any taxable income and we will not be entitled to a deduction upon
the award of performance shares or performance units. When performance shares
vest or the grantee receives a distribution with respect to performance units,
the fair market value of the vested shares or the amount of any cash or shares
received in payment for the awards generally is taxable to the grantee as
ordinary income. If we satisfy applicable reporting requirements, we will be
entitled to a federal income tax deduction equal to the amount of ordinary
income recognized by the grantee.

DIVIDEND EQUIVALENTS. A grantee recognizes ordinary income with respect to
dividend equivalents in an amount equal to any cash received or the fair market
value of any shares received in settlement of the dividend equivalents. If we
satisfy applicable reporting requirements, we will be entitled to a federal
income tax deduction equal to the amount of ordinary income recognized by the
grantee.

SECTION 280G OF THE INTERNAL REVENUE CODE. Under some circumstances, the
accelerated vesting or exercise of options or stock appreciation rights, or the
accelerated lapse of restrictions with respect to other awards, in connection
with a change of control might be deemed an "excess parachute payment" for
purposes of the golden parachute tax provisions of Section 280G of the Internal
Revenue Code. To the extent it is so considered, the grantee may be subject to
a 20% excise tax and we may be denied a federal income tax deduction.

SECTION 162(M). Section 162(m) of the Internal Revenue Code generally disallows
a federal income tax deduction to any publicly held corporation for
compensation paid in excess of $1 million in any taxable year to the chief
executive officer or any of the four other most highly compensated executive
officers who are employed by the corporation on the last day of the taxable
year. Section 162(m) of the Code does, however, allow a deduction for qualified
"performance-based compensation," the material terms of which are disclosed to
and approved by stockholders. The stock incentive plan has been structured so
that compensation resulting from awards of options, stock appreciation rights,
performance shares and performance units may qualify as "performance-based
compensation," and, if so qualified, would be deductible.

EMPLOYMENT AGREEMENTS

JASON M. KATES. We have entered into an employment agreement with Jason M.
Kates pursuant to which Mr. Kates has agreed to serve as our President. The
agreement terminates on June 30, 2001. Pursuant to the agreement, Mr. Kates
receives an annual salary of $200,000, reviewed annually, may participate in any
bonus plan implemented by our board of directors and will receive bonuses in
amounts and upon terms and with vesting rights established by the board of
directors. He will participate in any incentive stock option plan and other
benefit plans on such terms as determined by our board of directors. Reasonable
expenses will be reimbursed.

Mr. Kates agreed not to disclose confidential information to any other person
during the term of employment and for one year thereafter. Mr. Kates also agreed
not to compete with us during the term of his employment and, at our option upon
payment by us to Mr. Kates of a non-compete fee equal to one hundred percent of
his salary, for one year thereafter.

The employment agreement with Mr. Kates may be terminated for cause

- by either party as a result of a breach or default by the other party of any
agreement between us and Mr. Kates, any reasonable policy or procedure or
any term of this employment agreement, in

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which case, if terminated by us, Mr. Kates will receive only the
compensation accrued and unpaid as of the date of termination;

- by either party as a result of the arrest or conviction of the other party
for a felony or the performance or omission by the other party of an act of
willful misconduct, malfeasance or moral turpitude, in which case, if
terminated by us, Mr. Kates will receive only the compensation accrued and
unpaid as of the date of termination;

- by Mr. Kates if there is a change of control coupled with a relocation of
our company outside of the South Florida area within 90 days of the date of
the change in control, in which case Mr. Kates will receive his full salary
through the completion of the term of this agreement; or

- by Mr. Kates in the event we file for bankruptcy, in which case Mr. Kates
will receive his full salary through the completion of the term of this
agreement.

Notwithstanding the above, we may terminate the employment agreement without
cause upon 30 days prior written notice to Mr. Kates. Upon termination of this
agreement without cause, Mr. Kates will be entitled to the continued payment of
all base salary that would have been due through the end of the then current
term.

BRENT D. BURNS. We have entered into an employment agreement with Brent D.
Burns. The agreement terminates on June 30, 2001 and provides that Mr. Burns
will be paid an annual salary of $165,000. The other terms of the agreement are
substantially identical to the terms of Mr. Kates's employment agreement.

STOCK OPTION PLANS. Our stock option plans contain provisions which may result
in the accelerated vesting of our outstanding stock options upon the occurrence
of a change in control or in connection with our initial public offering. See
"--Stock option plans" for more information about these provisions.

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CERTAIN TRANSACTIONS

SHAREHOLDER LOANS

In 1996 and 1997, we issued an aggregate of $825,000 of promissory notes to six
of our shareholders. In June 1996, Jason Kates loaned us $100,000. In June 1996
and January 1997 Gary Halpin loaned us a total of $25,000. On January 29, 1997,
Joel Kates loaned us $87,500 and purchased 250,000 shares for $12,500; Norman
Tripp loaned us $204,166 and purchased 583,330 shares for $29,166; Dennis Smith
and his spouse loaned us $204,167 and purchased 583,335 shares for $29,167; and
Garry Johnson loaned us $204,167 and purchased 583,335 shares for $29,167. The
notes had an interest rate of 10%. We accounted for the equity issued at the
fair value at the time of the transaction and the notes were discounted
accordingly. The discount on the notes was amortized as interest expense over
the term of the notes.

On December 23, 1998, we entered into an agreement with the six holders of the
notes in which $625,000 of the undiscounted principal balance of the notes was
converted into 625,000 shares of our common stock. As a result of the
conversion, Jason Kates converted $75,757.58 of notes into 75,757.58 shares of
common stock; Gary Halpin converted $18,939.39 of notes into 18,939.39 shares of
common stock; Joel Kates converted $66,287.88 of notes into 66,287.88 shares of
common stock; Garry Johnson converted $154,671.00 of notes into 154,671.00
shares of common stock; Dennis Smith and his spouse converted $154,671.97 of
notes into 154,671.97 shares of common stock; and Norman Tripp converted
$154,671.00 of notes into 154,671.00 shares of common stock.

The remaining $200,000 principal amount of the promissory notes was repaid in
full in December 1999.

COMMON STOCK ISSUANCES

We were founded in May 1996 by Jason Kates and Gary Halpin. During 1996 we
issued (a) 1,850,000 shares of our common stock to Jason Kates for $1,747,
(b) 650,000 shares of our common stock to Gary Halpin for $320, (c) 275,000
shares of our common stock to Joel Kates for $225, and (d) 75,000 shares of our
common stock to Cecil C. Williams and Susan P. Williams for $25,047. During 1996
we issued 150,000 shares of our common stock to Tripp, Scott, P.A. (f/k/a Tripp,
Scott, Conklin & Smith) for $35,093 equivalent of legal services.

In January 1997 we issued 250,000 shares of our common stock to Joel Kates for
$12,500, 583,335 shares of our common stock to Garry Johnson for $29,167,
583,330 shares of our common stock to Norman Tripp for $29,166 and 583,335
shares of our common stock to Dennis Smith and his spouse for $29,167.

In July 1997 we issued 50,000 shares of our common stock to Tripp, Scott, P.A.
(f/k/a Tripp, Scott, Conklin & Smith) in consideration of legal services
rendered by such firm.

In May 1998 we sold 50,000 shares of our common stock to Brent Burns and his
spouse for $50,000.

In December 1998 six of our shareholders converted $625,000 of our outstanding
promissory notes into 625,000 shares of our common stock. In connection with
this transaction, we issued 75,757.58 shares to Jason Kates, 66,287.88 shares to
Joel Kates, 18,939.39 shares to Gary Halpin, 154,671.00 shares to Garry Johnson,
154,671.97 shares to Dennis Smith and his spouse and 154,671.00 shares to Norman
Tripp.

In March 1999 we issued to LPS Capital Ltd. options to acquire 58,900 shares of
our common stock at an exercise price of $3.00 per share. LPS Capital assisted
us in connection with our July 1999 private placement. Dennis Smith, an RMS
director, Norman Tripp, an RMS director, Brent Burns, an RMS director and
executive officer, and Garry Johnson, a former RMS director, are directors of
and/or equity investors in, LPS Capital.

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In July 1999 we sold 33,333.30 shares for $100,000 to the Tripp, Scott profit
sharing plan for the benefit of Dennis Smith, 33,333.30 shares for $100,000 to
the Tripp, Scott profit sharing plan for the benefit of Garry Johnson and
66,666.65 shares for $200,000 to the Tripp, Scott profit sharing plan for the
benefit of Norman Tripp.

In July 1999 we sold 250,000 shares of our common stock for $750,000 to Lake
Worth Ventures, Inc. (f/k/a GSB Holdings, Inc.), a corporation controlled by
David Clarke.

In December 1999 as part of our private placement we sold 20,000 shares of our
common stock for $168,000 to Lake Worth Ventures, Inc., a corporation controlled
by David Clarke. In December 1999 as part of our private placement we sold
11,904.76 shares of our common stock to Jon Kates, the brother of Joel Kates.

OTHER TRANSACTIONS

On January 1, 1997 we entered into a shareholders agreement with Jason M. Kates,
Cecil and Susan Williams, Garry W. Johnson, Gary A. Halpin, Norman D. Tripp,
Joel N. Kates, Tripp, Scott, P.A. (f/k/a Tripp, Scott, Conklin & Smith) and
Dennis and Patricia Smith. The shareholders agreement contains provisions
regarding corporate governance and limiting the transferability of our common
stock. In addition, pursuant to the terms of our shareholders agreement, our
shareholders agreed to elect Jason M. Kates, Norman D. Tripp and Dennis Smith,
or their designee, as members of our board of directors. We expect that the
shareholders agreement will be terminated in connection with the completion of
this offering.

Norman D. Tripp and Dennis D. Smith, directors of our company, are directors of
the law firm Tripp, Scott, P.A. Garry Johnson, a five percent beneficial owner
of our common stock, is a director of Tripp, Scott. Tripp, Scott is our outside
general counsel. During 1999 we incurred approximately $133,000 of expense in
connection with legal services provided by Tripp, Scott in the ordinary course
of business. In addition, Messrs. Tripp, Johnson and Smith are partial owners of
the facility where we intend to lease our new corporate headquarters. Our
monthly rental payment pursuant to the lease is approximately $30,000 during the
first year, with annual increases thereafter. In addition, in January 2000 we
paid Mr. Johnson approximately $180,000 of accrued salary that he earned during
1997 and 1998.

We believe that all of the transactions set forth above were made on terms no
less favorable to us than could otherwise have been obtained form unaffiliated
third parties.

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PRINCIPAL STOCKHOLDERS

The following table presents information regarding the beneficial ownership of
our common stock, as adjusted to reflect the sale of the common stock offered
hereby, by

- each person who is known to us to beneficially own more than 5% of the
outstanding shares of our common stock;

- each of our directors and named executive officers; and

- all of our directors and executive officers as a group.

Beneficial ownership is determined in accordance with the rules of the SEC,
subject to applicable community property law, and generally includes voting or
investment power with respect to securities. We believe based on information
provided to us that all persons listed below have sole voting and investment
power with respect to their shares of common stock, except as otherwise
indicated and to the extent authority is shared by spouses under applicable law.
A person is deemed to be the beneficial owner of securities that can be acquired
within 60 days from the date of this prospectus through the exercise of any
option, warrant or right. Shares of common stock subject to options, warrants or
rights that are currently exercisable or exercisable within 60 days are deemed
outstanding for computing the ownership percentage of the person holding such
options, warrants or rights, but are not deemed outstanding for computing the
ownership percentage of any other person.

<TABLE>
<CAPTION>
NUMBER OF SHARES OF COMMON PERCENTAGE OWNED(1)
STOCK BENEFICIALLY OWNED ----------------------------------
NAME BEFORE AND AFTER THE OFFERING PRIOR TO OFFERING AFTER OFFERING
- ---- ----------------------------- ----------------- --------------
<S> <C> <C> <C>
DIRECTORS AND EXECUTIVE OFFICERS
Jason M. Kates(2)..........................
Brent D. Burns(3)..........................
David Clarke(4)............................
John McMenamin(5)..........................
Dennis D. Smith(6).........................
Norman D. Tripp(7).........................
Brian Woods(8).............................
All directors and executive officers as a
group (7 persons)........................

5% STOCKHOLDERS
Gary Halpin(9).............................
Garry W. Johnson(10).......................
Joel N. Kates (11).........................
</TABLE>

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

* Represents beneficial ownership of less than 1% of the outstanding shares of
common stock.

(1) The percentages of shares owned are based upon shares of common
stock outstanding as of , and shares of common stock
outstanding as of the closing of this offering, respectively.

(2) Includes options to purchase shares of common stock exercisable
within 60 days of the date of this prospectus. Excludes shares held by Joel
Kates, the father of Jason Kates, for which shares Jason Kates disclaims
beneficial ownership. Jason Kates's address is c/o RMS Networks, Inc., 633
South Federal Highway, Fort Lauderdale, Florida.

(3) Includes shares held by Mr. Burns jointly with his spouse,
shares held by Mr. Burns in an IRA account and options to
purchase shares of common stock

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exercisable within 60 days of the date of the prospectus. Excludes
shares of common stock held by Laurie Burns, the sister of Brent
Burns. Brent Burns disclaims beneficial ownership of shares of common stock
held by Laurie Burns.

(4) Includes shares held through Lake Worth Ventures, Inc. and
options to purchase shares of common stock exercisable within
60 days of the date of this prospectus.

(5) Includes options to purchase shares of common stock exercisable
within 60 days of the date of this prospectus.

(6) Includes shares owned by Mr. Smith jointly with his spouse,
shares held by the Tripp, Scott profit sharing plan, for which
shares Mr. Smith holds shared investment and voting power, and options to
purchase shares of common stock exercisable within 60 days of
the date of this prospectus. Mr. Smith disclaims beneficial ownership of
shares held by the Tripp, Scott profit sharing plan, other than the
shares held in such plan for Mr. Smith's benefit. Mr. Smith's
address is c/o Tripp, Scott, P.A., 110 Southeast 6th Street, Fort
Lauderdale, Florida.

(7) Includes shares held through Tripperoo Nevada Ltd. Partnership,
shares held by the Tripp, Scott profit sharing plan, for which
shares Mr. Tripp holds shared investment and voting power, and options to
purchase shares of common stock exercisable within 60 days of
the date of this prospectus. Mr. Tripp disclaims beneficial ownership of
shares held by the Tripp, Scott profit sharing plan, other than the
shares held in such plan for Mr. Tripp's benefit. Mr. Tripp's
address is c/o Tripp, Scott, P.A., 110 Southeast 6th Street, Fort
Lauderdale, Florida.

(8) Includes options to purchase shares of common stock exercisable
within 60 days of the date of this prospectus.

(9) Mr. Halpin's address is 3208 North Poinsettia Avenue, Manhattan Beach,
California 90266.

(10) Includes shares held in the Tripp, Scott profit sharing plan
for Mr. Johnson's benefit and options to purchase shares of
common stock exercisable within 60 days of the date of this prospectus.
Mr. Johnson's address is c/o Tripp, Scott, P.A., 110 Southeast 6th Street,
Fort Lauderdale, Florida.

(11) Includes options to purchase shares of common stock exercisable
within 60 days of the date of this prospectus. Does not include shares held
by Jason Kates, the son of Joel Kates, or shares held by Jon
Kates, the brother of Joel Kates, for which shares Joel Kates disclaims
beneficial ownership. Joel Kates's address is 150 Newman Cove Road, Arden,
North Carolina 28704.

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DESCRIPTION OF CAPITAL STOCK

Upon the closing of this offering, our authorized capital stock will consist of
75,000,000 shares of common stock, of which shares will be issued
and outstanding, and 5,000,000 shares of preferred stock, of which no shares
will be issued and outstanding. The following summary of the material terms and
provisions of our capital stock is not complete and is subject to the terms
included in our certificate of incorporation and by-laws. The forms of our
certificate of incorporation and by-laws, which will be adopted in connection
with the completion of this offering, have been filed as exhibits to the
registration statement of which this prospectus is a part and should be reviewed
in their entirety.

COMMON STOCK

Each share of our common stock will be identical in all respects and will
entitle its holder to the same rights and privileges enjoyed by all other
holders of shares of common stock and will subject them to the same
qualifications, limitations and restrictions to which all other holders of
common stock will be subject. The outstanding shares of common stock are, and
the shares offered by us in this offering will be upon receipt of payment for
such shares, validly issued and fully paid and nonassessable.

VOTING RIGHTS. Holders of our common stock will be entitled to one vote per
share on all matters to be voted on by our stockholders. Holders of common stock
will not have cumulative rights.

DIVIDENDS. Holders of our common stock will be entitled to receive ratably such
dividends, if any, as are declared by our board of directors out of funds
legally available for the declaration of dividends, subject to the preferential
rights of any holder of preferred stock that may from time to time be
outstanding.

LIQUIDATION. Upon the liquidation, dissolution or winding up of our company,
the holders of our common stock will be entitled to share pro rata in the
distribution of all of our assets available for distribution after satisfaction
of all of our liabilities and the payment of the liquidation preference of any
preferred stock that may be outstanding.

OTHER PROVISIONS. The holders of our common stock will have no preemptive or
other subscription rights to purchase common stock, and there will be no
conversion rights, redemption rights or sinking fund provisions.

PREFERRED STOCK

Our board of directors will be authorized to issue preferred stock in one or
more series, to establish the number of shares to be included in each series, to
fix the designations, powers, preferences and rights of the shares of each
series and to impose any qualifications, limitations or restrictions of each
series. The board may, among other things, determine with respect to each series
of preferred stock specific voting rights, designations, dividend rights (and
whether dividends are cumulative), dividend rates, terms of redemption
(including sinking fund provisions), redemption price or prices, conversion
rights and liquidation preferences. Because the board of directors will have the
power to establish the preferences and rights of the shares of any series of
preferred stock without any further action or vote by the stockholders, the
board may afford the holders of any series of preferred stock preferences,
powers and rights, including voting rights, senior to the rights of the holders
of common stock.

One of the effects of undesignated preferred stock may be to enable the board of
directors to render more difficult, discourage or prevent an attempt to obtain
control of our company by means of a tender offer, proxy contest, merger or
otherwise and thereby protect the continuity of our current management. The
issuance of shares of the preferred stock pursuant to the board of directors'
authority may adversely affect the rights of holders of common stock. See "Risk
Factors--Risks Related

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to this Offering--Anti-takeover provisions of Delaware's General Corporation Law
and our certificate of incorporation and by-laws could delay or deter a change
in control."

LIMITATION ON LIABILITY AND INDEMNIFICATION MATTERS

Our certificate of incorporation will limit the liability of our directors to
our company and our stockholders to the fullest extent permitted by Delaware
law. Specifically, our directors will not be personally liable for money damages
for breach of fiduciary duty as a director, except for liability

- for any breach of the director's duty of loyalty to us or our stockholders;

- for acts or omissions not in good faith or which involve intentional
misconduct or a knowing violation of law;

- under Section 174 of the Delaware General Corporation Law, which concerns
unlawful payments of dividends, stock purchases or redemptions; and

- for any transaction from which the director derived an improper personal
benefit.

Our certificate of incorporation will also contain provisions indemnifying our
directors, officers, employees and agents to the fullest extent permitted by
Delaware law. The indemnification permitted under Delaware law is not exclusive
of any other rights to which such persons may be entitled under our bylaws, any
agreement, a vote of stockholders or otherwise.

In addition, we maintain directors' and officers' liability insurance to provide
our directors and officers with insurance coverage for losses arising from
claims based on breaches of duty, negligence, error and other wrongful acts.

We have entered into indemnification agreements with our directors and officers.
These agreements contain provisions that may require us, among other things, to
indemnify these directors and officers against certain liabilities that may
arise because of their status or service as directors or officers, advance their
expenses incurred as a result of any proceeding against them as to which they
could be indemnified and obtain directors' and officers' liability insurance.

At the present time there is no pending litigation or proceeding involving any
director, officer, employee or agent as to which indemnification is required or
permitted. We are not aware of any threatened litigation or proceeding which may
result in a claim for such indemnification.

ANTI-TAKEOVER EFFECTS OF OUR CERTIFICATE OF INCORPORATION AND BY-LAWS AND
PROVISIONS OF DELAWARE LAW

A number of provisions in our certificate of incorporation, by-laws and Delaware
law may make it more difficult to acquire control of our company by various
means. These provisions could deprive the stockholders of opportunities to
realize a premium on the shares of common stock owned by them. In addition,
these provisions may adversely affect the prevailing market price of the common
stock. These provisions are intended to:

- enhance the likelihood of continuity and stability in the composition of the
board and in the policies formulated by the board;

- discourage certain types of transactions which may involve an actual or
threatened change in control of our company;

- discourage certain tactics that may be used in proxy fights;

- encourage persons seeking to acquire control of our company to consult first
with the board of directors to negotiate the terms of any proposed business
combination or offer; and

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- reduce our vulnerability to an unsolicited proposal for a takeover that does
not contemplate the acquisition of all of our outstanding shares or that is
otherwise unfair to our stockholders.

STAGGERED BOARD. Our certificate of incorporation and by-laws will provide that
the number of directors of RMS shall be fixed from time to time by a resolution
of a majority of our board of directors. Our certificate of incorporation and
by-laws also will provide that the board of directors shall be divided into
three classes. The members of each class of directors will serve for staggered
three-year terms. In accordance with the Delaware General Corporation Law,
directors serving on classified boards of directors may only be removed from
office for cause. The classification of the board has the effect of requiring at
least two annual stockholder meetings, instead of one, to replace a majority of
the members of the board. Subject to the rights of the holders of any
outstanding series of preferred stock, vacancies on the board of directors may
be filled only by a majority of the remaining directors, or by the sole
remaining director, or by the stockholders if the vacancy was caused by removal
of the director by the stockholders. This provision could prevent a stockholder
from obtaining majority representation on the board by enlarging the board of
directors and filling the new directorships with its own nominees.

ADVANCE NOTICE PROCEDURES FOR STOCKHOLDER PROPOSALS AND DIRECTOR
NOMINATIONS. Our by-laws provide that stockholders seeking to bring business
before an annual meeting of stockholders, or to nominate candidates for election
as directors at an annual meeting of stockholders, must provide timely notice
thereof in writing. To be timely, a stockholder's notice generally must be
delivered to or mailed and received at our principal executive offices at least
90 days and no more than 120 days prior to the anniversary of the prior year's
annual meeting. The by-laws also specify certain requirements as to the form and
content of a stockholder's notice. These provisions may preclude stockholders
from bringing matters before an annual meeting of stockholders or from making
nominations for directors at an annual meeting of stockholders.

STOCKHOLDER ACTION BY WRITTEN CONSENT. Our certificate of incorporation
provides that stockholders may take action by written consent.

SPECIAL MEETINGS OF STOCKHOLDERS. Our certificate of incorporation will provide
that special meetings of our stockholders may be called only by the chairman of
the board, the president or a majority of the board of directors. A special
meeting may not be held absent such a written request. The request must state
the purpose or purposes of the proposed meeting. This limitation on the right of
stockholders to call a special meeting could make it more difficult for
stockholders to initiate actions that are opposed by the board of directors.
These actions could include the removal of an incumbent director or the election
of a stockholder nominee as a director. They could also include the
implementation of a rule requiring stockholder ratification of specific
defensive strategies that have been adopted by the board of directors with
respect to unsolicited takeover bids. In addition, the limited ability of the
stockholders to call a special meeting of stockholders may make it more
difficult to change the existing board and management.

SUPERMAJORITY VOTE TO AMEND CHARTER AND BY-LAWS. Delaware law provides
generally that the affirmative vote of a majority of the shares entitled to vote
on any matter is required to amend a corporation's certificate of incorporation
or by-laws, unless a corporation's certificate of incorporation or by-laws
requires a greater percentage. Our amended and restated certificate of
incorporation imposes supermajority vote requirements (66 2/3%) in connection
with the amendment of certain provisions of our certificate of incorporation and
by-laws, including those provisions relating to the classified board of
directors, the ability of stockholders to call special meetings and the ability
of stockholders to amend our by-laws.

PREFERRED STOCK. The ability of our board to establish the rights and issue
substantial amounts of preferred stock without the need for stockholder
approval, while providing desirable flexibility in

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<PAGE>
connection with possible acquisitions, financings and other corporate
transactions, may among other things, discourage, delay, defer or prevent a
change in control of our company.

AUTHORIZED BUT UNISSUED SHARES OF COMMON STOCK. The authorized but unissued
shares of common stock are available for future issuance without stockholder
approval. These additional shares may be utilized for a variety of corporate
purposes, including future public offerings to raise additional capital,
corporate acquisitions and employee benefit plans. The existence of authorized
but unissued shares of common stock could render more difficult or discourage an
attempt to obtain control of our company by means of a proxy contest, tender
offer, merger or otherwise.

SECTION 203 OF THE DELAWARE GENERAL CORPORATION LAW. We must comply with the
provisions of Section 203 of the Delaware General Corporation Law. In general,
Section 203 prohibits a publicly held Delaware corporation from engaging in a
"business combination" with an "interested stockholder" for a period of three
years after the date of the transaction in which the person became an interested
stockholder, unless the business combination is approved in a prescribed manner.

A "business combination" includes a merger, consolidation, sale or other
disposition of assets having an aggregate value in excess of 10% of the
consolidated assets of the corporation and some transactions that would increase
the interested stockholder's proportionate share ownership in the corporation.
An "interested stockholder" is a person who, together with affiliates and
associates, owns, or, in some cases, within three years prior, did own, 15% or
more of the corporation's voting stock. Under Section 203, a business
combination between our company and an interested stockholder is prohibited
unless it satisfies one of the following three conditions:

- our board of directors must have previously approved either the business
combination or the transaction that resulted in the stockholder becoming an
interested stockholder;

- upon consummation of the transaction that resulted in the stockholder
becoming an interested stockholder, the interested stockholder owned at
least 85% of our voting stock outstanding at the time the transaction
commenced, excluding, for purposes of determining the number of shares
outstanding, shares owned by (1) persons who are directors and also officers
and (2) employee stock plans, in some instances; and

- the business combination is approved by a majority of our board of directors
and authorized at an annual or special meeting of the stockholders by the
affirmative vote of the holders of at least 66 2/3% of the outstanding
voting stock that is not owned by the interested stockholder.

Delaware law contains provisions allowing a corporation to avoid Section 203's
restrictions if stockholders holding a majority of the corporation's voting
stock approve an amendment to the corporation's certificate of incorporation or
by-laws to avoid the restrictions. We have not and do not currently intend to
"opt out" of the application of Section 203.

TRANSFER AGENT AND REGISTRAR

The transfer agent and registrar for our common stock is .

LISTING

We intend to apply to list our common stock on The Nasdaq Stock Market's
National Market under the symbol "RMSN."

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SHARES ELIGIBLE FOR FUTURE SALE

Prior to this offering, there has been no public market for our common stock. We
cannot predict the timing or amount of future sales of shares, or the effect, if
any, that future sales of shares, or the availability of shares for future sale,
will have on the market price of the common stock prevailing from time to time.
Sales of substantial amounts of the common stock in the public market, including
shares issuable upon the exercise of stock options, after the lapse of the
restrictions described above, or the perception that such sales may occur, could
materially adversely affect the prevailing market prices for the common stock
and our ability to raise equity capital in the future. See "Risk Factors--Risks
Related to this Offering--The sale or availability for sale of substantial
amounts of our common stock could adversely affect its market price."

Upon completion of this offering, shares of common stock, or
shares if the underwriters exercise their over-allotment option in
full, will be outstanding. Of these shares, the shares of common
stock sold in this offering will be freely tradeable without restriction or
further registration under the Securities Act, unless held by our "affiliates"
as that term is defined in Rule 144 under the Securities Act. All of the
remaining shares of common stock outstanding prior to this offering
were issued and sold by us in private transactions in reliance upon exemptions
from the registration requirements of the Securities Act and are therefore
deemed "restricted securities," as such term is defined under Rule 144. These
restricted securities may not be sold in the absence of registration under the
Securities Act other than in accordance with Rule 144 or Rule 701 under the
Securities Act or another exemption from registration.

The restricted securities will become fully tradeable as follows:

- immediately following this offering, restricted securities will
be available for immediate sale in the public market subject to Rule 144;

- 90 days after the date of this prospectus, shares will be
available for immediate sale in the public market pursuant to Rule 701 and
shares may be issued upon exercise of stock options and will be
eligible for sale in reliance upon Rule 701; and

- 180 days after the date of this prospectus, restricted
securities will be available for sale in the public market pursuant to
Rule 144.

RULE 144

In general, under Rule 144 as currently in effect, if a minimum of one year has
elapsed since the later of the date of acquisition of the restricted securities
from the issuer or from an affiliate of the issuer, a person (or persons whose
shares of common stock are aggregated), including persons who may be deemed RMS
affiliates, would be entitled to sell within any three-month period a number of
shares of common stock that does not exceed the greater of

- one percent of the then-outstanding shares of common stock, which equals
approximately shares immediately after this offering; and

- the average weekly trading volume of the common stock on the Nasdaq National
Market during the four calendar weeks preceding the date on which notice of
the sale is filed with the SEC.

Sales under Rule 144 are also subject to restrictions as to the manner of sale,
notice requirements and the availability of current public information about our
company.

RULE 144(K)

In addition, under Rule 144(k), if a period of at least two years has elapsed
since the later of the date restricted securities were acquired from us or the
date they were acquired from an affiliate of ours, a

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stockholder who is not an affiliate of ours at the time of sale and who has not
been an affiliate of ours for at least three months prior to the sale would be
entitled to sell shares of common stock in the public market immediately without
compliance with the foregoing requirements under Rule 144, unless otherwise
restricted. Rule 144 does not require the same person to have held the
securities for the applicable periods. The foregoing summary of Rule 144 is not
intended to be a complete description.

RULE 701

Any employee, director or officer of, or consultant to, our company who acquired
shares pursuant to a written compensatory plan or contract may be entitled to
rely on the resale provisions of Rule 701, which permits non-affiliates to sell
their Rule 701 shares without having to comply with the public information,
holding period, volume limitation or notice provisions of Rule 144, and permits
our affiliates to sell their Rule 701 shares without having to comply with the
holding period restrictions of Rule 144, in each case, commencing 90 days after
the effective date of the registration statement of which this prospectus is a
part.

STOCK OPTIONS

Upon the closing of the offering, options to purchase an aggregate of
shares of our common stock were outstanding, of which
were exercisable on the date of the prospectus, at a weighted average exercise
price of $ per share, and an additional shares of
common stock were available for future grant under our stock option plans.
Following this offering, we intend to file a registration statement on Form S-8
under the Securities Act to register 3,500,000 shares of common stock reserved
or to be available for issuance pursuant to our stock option plans. Shares of
common stock acquired upon exercise of options issued under our stock option
plans generally will be available for sale in the open market by holders who are
not RMS affiliates and, subject to the volume and other applicable limitations
of Rule 144, by holders who are RMS affiliates, unless such shares are subject
to the contractual lock-up restrictions described below.

Sterling Financial Investment Group, Inc. owns options to acquire 50,000 shares
of our common stock at an exercise price of $6.60 per share and options to
acquire an additional 80,206 shares of our common stock at an exercise price of
$9.24 per share. Upon completion of this offering, Sterling will also own
additional options to acquire shares of common stock equal to 1% of the shares
issued in this offering at an exercise price of 110% of the offering price. All
of these options will be exercisable for three years. We have agreed that if we
register any of our outstanding shares of common stock under the Securities Act
of 1933 in connection with a public offering of such securities for cash,
Sterling may include its shares in any such registration, subject to certain
limitations.

LOCK-UP AGREEMENTS

RMS and some of its directors and officers and other stockholders, who hold in
the aggregate shares of our common stock, have agreed, subject to
exceptions, not to offer, sell, contract to sell, pledge or otherwise dispose
of, directly or indirectly, or file with the Securities and Exchange Commission
a registration statement under the Securities Act relating to, any shares of our
common stock or securities convertible into or exchangeable or exercisable for
any shares of our common stock without the prior written consent of CIBC World
Markets Corp. for a period of 180 days after the date of this prospectus. The
restrictions set forth in the previous sentence do not apply to grants of
employee stock options pursuant to the terms of our stock option plans,
issuances of securities pursuant to the exercise of such options outstanding on
the date hereof or the exercise of any other stock options outstanding on the
date hereof. CIBC World Markets Corp. may, in its sole discretion and at any
time without notice, release all or any portion of the securities subject to
such lock-up agreements.

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<PAGE>
REGISTRATION RIGHTS

We have given the purchasers of shares of our common stock in our
December 1999 private placement limited registration rights. We agreed that if
we registered any of our outstanding shares of common stock under the Securities
Act in connection with a public offering of such securities for cash (other than
a registration statement on Form S-4, S-8 or any successors to either form), the
investors in our December 1999 private placement would be entitled to have their
shares included in any registration. We further agreed that if the registration
related to an underwritten offering, and the managing underwriter advised us
that the number of shares requested to be included exceeded the number which
could be sold in the offering within a price range reasonably acceptable to us,
we would include in that registration (1) the shares that we wished to sell in
the offering and (2) the securities requested to be included by the investors in
the private placement on a pro rata basis with all outstanding shareholders and
option holders who request to be included. Upon registration, those shares will
be freely tradeable in the public market without restriction.

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UNITED STATES TAX CONSEQUENCES TO NON-UNITED STATES HOLDERS

The following is a general discussion of the principal United States federal
income and estate tax consequences of the ownership and disposition of our
common stock by a non-U.S. holder. As used in this discussion, the term
"non-U.S. holder" means a beneficial owner of our common stock that is not, for
U.S. federal income tax purposes:

- an individual who is a citizen or resident of the United States;

- a corporation or partnership created or organized in or under the laws of
the United States, or of any political subdivision of the United States,
other than a partnership treated as foreign under U.S. Treasury regulations;

- an estate whose income is subject to U.S. federal income taxation regardless
of its source; or

- a trust, in general, if a U.S. court is able to exercise primary supervision
over the administration of the trust and one or more U.S. persons have
authority to control all substantial decisions of the trust.

An individual may be treated as a resident of the United States in any calendar
year for U.S. federal income tax purposes, instead of a nonresident, by, among
other ways, being present in the United States for at least 31 days in that
calendar year and for an aggregate of at least 183 days during a three-year
period ending in the current calendar year. For purposes of this calculation,
you would count all of the days present in the current year, one-third of the
days present in the immediately preceding year and one-sixth of the days present
in the second preceding year. Residents are taxed for U.S. federal income tax
purposes as if they were U.S. citizens.

This discussion does not consider:

- U.S. state or local or non-U.S. tax consequences;

- all aspects of U.S. federal income and estate taxes or specific facts and
circumstances that may be relevant to a particular non-U.S. holder's tax
position, including the fact that in the case of a non-U.S. holder that is a
partnership, the U.S. tax consequences of holding and disposing of our
common stock may be affected by certain determinations made at the partner
level;

- the tax consequences for the shareholders, partners or beneficiaries of a
non-U.S. holder;

- special tax rules that may apply to particular non-U.S. holders, such as
financial institutions, insurance companies, tax-exempt organizations, U.S.
expatriates, broker-dealers, and traders in securities; or

- special tax rules that may apply to a non-U.S. holder that holds our common
stock as part of a "straddle," "hedge," "conversion transaction," "synthetic
security" or other integrated investment.

The following discussion is based on provisions of the U.S. Internal Revenue
Code of 1986, as amended, existing and proposed Treasury regulations and
administrative and judicial interpretations, all as of the date of this
prospectus, and all of which are subject to change, retroactively or
prospectively. The following summary assumes that a non-U.S. holder holds our
common stock as a capital asset. EACH NON-U.S. HOLDER SHOULD CONSULT A TAX
ADVISOR REGARDING THE U.S. FEDERAL, STATE, LOCAL AND NON-U.S. INCOME AND OTHER
TAX CONSEQUENCES OF ACQUIRING, HOLDING AND DISPOSING OF SHARES OF OUR COMMON
STOCK.

DIVIDENDS

We do not anticipate paying cash dividends on our common stock in the
foreseeable future. See "Dividend Policy." In the event, however, that we pay
dividends on our common stock, we will have to withhold a U.S. federal
withholding tax at a rate of 30%, or a lower rate under an applicable income tax
treaty, from the gross amount of the dividends paid to a non-U.S. holder.
Non-U.S. holders should consult their tax advisors regarding their entitlement
to benefits under a relevant income tax treaty.

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<PAGE>
Dividends that are effectively connected with a non-U.S. holder's conduct of a
trade or business in the United States or, if an income tax treaty applies,
attributable to a permanent establishment in the United States, are subject to
U.S. federal income tax on a net income basis at the regular graduated rates and
in the manner applicable to U.S. persons. In that case, we will not have to
withhold U.S. federal withholding tax if the non-U.S. holder complies with
applicable certification and disclosure requirements. In addition, a "branch
profits tax" may be imposed at a 30% rate, or a lower rate under an applicable
income tax treaty, on dividends received by a foreign corporation that are
effectively connected with the conduct of a trade or business in the United
States.

Dividends paid prior to 2001 to an address in a foreign country are presumed,
absent actual knowledge to the contrary, to be paid to a resident of such
country for purposes of the withholding discussed above and for purposes of
determining the applicability of a tax treaty rate. For dividends paid after
2000:

- a non-U.S. holder who wishes to claim the benefit of an applicable income
tax treaty rate generally will be required to satisfy applicable
certification and other requirements;

- in the case of common stock held by a foreign partnership, the certification
requirement will generally be applied to the partners of the partnership and
the partnership will be required to provide certain information, including a
U.S. taxpayer identification number; and

- look-through rules will apply for tiered partnerships.

A non-U.S. holder that is eligible for a reduced rate of U.S. federal
withholding tax under an income tax treaty may obtain a refund or credit of any
excess amounts withheld by filing an appropriate claim for a refund with the
U.S. Internal Revenue Service.

GAIN ON DISPOSITION OF COMMON STOCK

A non-U.S. holder generally will not be subject to U.S. federal income tax on
gain recognized on a disposition of our common stock unless:

- the gain is effectively connected with the non-U.S. holder's conduct of a
trade or business in the United States or, alternatively, if an income tax
treaty applies, is attributable to a permanent establishment maintained by
the non-U.S. holder in the United States; in these cases, the gain will be
taxed on a net income basis at the regular graduated rates and in the manner
applicable to U.S. persons and, if the non-U.S. holder is a foreign
corporation, the "branch profits tax" described above may also apply;

- the non-U.S. holder is an individual who holds our common stock as a capital
asset, is present in the United States for 183 days or more in the taxable
year of the disposition and meets other requirements; or

- we are or have been a "U.S. real property holding corporation" for U.S.
federal income tax purposes at any time during the shorter of the five-year
period ending on the date of disposition or the period that the non-U.S.
holder held our common stock.

Generally, a corporation is a "U.S. real property holding corporation" if the
fair market value of its "U.S. real property interests" equals or exceeds 50% of
the sum of the fair market value of its worldwide real property interests plus
its other assets used or held for use in a trade or business. The tax relating
to stock in a "U.S. real property holding corporation" generally will not apply
to a non-U.S. holder whose holdings, direct and indirect, at all times during
the applicable period, constituted 5% or less of our common stock, provided that
our common stock was regularly traded on an established securities market. We
believe that we are not currently, and we do not anticipate becoming in the
future, a "U.S. real property holding corporation" for U.S. federal income tax
purposes.

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FEDERAL ESTATE TAX

Common stock owned or treated as owned by an individual who is a non-U.S. holder
at the time of death will be included in the individual's gross estate for U.S.
federal estate tax purposes, unless an applicable estate tax or other treaty
provides otherwise and, therefore, may be subject to U.S. federal estate tax.

INFORMATION REPORTING AND BACKUP WITHHOLDING TAX

We must report annually to the U.S. Internal Revenue Service and to each
non-U.S. holder the amount of dividends paid to that holder and the tax withheld
from those dividends. Copies of the information returns reporting those
dividends and withholding may also be made available to the tax authorities in
the country in which the non-U.S. holder is a resident under the provisions of
an applicable income tax treaty or agreement.

Under some circumstances, U.S. Treasury regulations require information
reporting and backup withholding at a rate of 31% on some payments on common
stock. Under currently applicable law, non-U.S. holders generally will be exempt
from these information reporting requirements and from backup withholding on
dividends if we either were required to withhold a U.S. federal withholding tax
from those dividends or, for dividends paid prior to 2001, if we paid those
dividends to an address outside the United States. After 2000, however, the
gross amount of dividends paid to a non-U.S. holder that fails to certify its
non-U.S. holder status in accordance with applicable U.S. Treasury regulations
generally will be reduced by backup withholding at a rate of 31%.

The payment of the proceeds of the disposition of common stock by a non-U.S.
holder to or through the U.S. office of a broker or a non-U.S. office of a U.S.
broker generally will be subject to information reporting and reduced by backup
withholding at a rate of 31% unless the non-U.S. holder either certifies its
status as a non-U.S. holder under penalties of perjury or otherwise establishes
an exemption and the broker has no actual knowledge to the contrary. The payment
of the proceeds of the disposition of common stock by a non-U.S. holder to or
through a non-U.S. office of a non-U.S. broker will not be reduced by backup
withholding or subject to information reporting unless the non-U.S. broker is a
"U.S. related person." In general, the payment of proceeds from the disposition
of common stock by or through a non-U.S. office of a broker that is a U.S.
person or a "U.S. related person" will be subject to information reporting and,
after 2000, may be reduced by backup withholding at a rate of 31%, unless the
broker receives a statement from the non-U.S. holder, signed under penalty of
perjury, certifying its non-U.S. status or the broker has documentary evidence
in its files that the holder is a non-U.S. holder and the broker has no actual
knowledge to the contrary. For this purpose, a "U.S. related person" is:

- a "controlled foreign corporation" for U.S. federal income tax purposes;

- a foreign person 50% or more of whose gross income from all sources for the
three-year period ending with the close of its taxable year preceding the
payment, or for such part of the period that the broker has been in
existence, is derived from activities that are effectively connected with
the conduct of a U.S. trade or business; or

- effective after 2000, a foreign partnership with certain connections to the
United States.

Non-U.S. holders should consult their own tax advisors regarding the application
of the information reporting and backup withholding rules to them, including
changes to these rules that will become effective after 2000.

Any amounts withheld under the backup withholding rules from a payment to a
non-U.S. holder will be refunded, or credited against the holder's U.S. federal
income tax liability, if any, provided that the required information is
furnished to the U.S. Internal Revenue Service.

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UNDERWRITING

We have entered into an underwriting agreement with the underwriters named
below. CIBC World Markets Corp., FleetBoston Robertson Stephens Inc. and
Prudential Securities Incorporated are acting as representatives of the
underwriters.

The underwriting agreement provides for the purchase of a specific number of
shares of common stock by each of the underwriters. The underwriters'
obligations are several, which means that each underwriter is required to
purchase a specified number of shares, but is not responsible for the commitment
of any other underwriter to purchase shares. Subject to the terms and conditions
of the underwriting agreement, each underwriter has severally agreed to purchase
the number of shares of common stock set forth opposite its name below:

<TABLE>
<CAPTION>
NUMBER
OF
UNDERWRITER SHARES
- ----------- --------
<S> <C>
CIBC World Markets Corp.....................................
FleetBoston Robertson Stephens Inc..........................
Prudential Securities Incorporated..........................
-------
Total...............................................
=======
</TABLE>

The underwriters have agreed to purchase all of the shares offered by this
prospectus (other than those covered by the over-allotment option described
below) if any are purchased. Under the underwriting agreement, if an underwriter
defaults in its commitment to purchase shares, the commitments of non-
defaulting underwriters may be increased or the underwriting agreement may be
terminated, depending on the circumstances.

The shares should be ready for delivery on or about , 2000 against
payment in immediately available funds. The representatives have advised us that
the underwriters propose to offer the shares directly to the public at the
public offering price that appears on the cover page of this prospectus. In
addition, the representatives may offer some of the shares to other securities
dealers at such price less a concession of $ per share. The underwriters may
also allow, and such dealers may reallow, a concession not in excess of $
per share to other dealers. After the shares are released for sale to the
public, the representatives may change the offering price and other selling
terms at various times.

We have granted the underwriters an over-allotment option. This option, which is
exercisable for up to 30 days after the date of this prospectus, permits the
underwriters to purchase a maximum of additional shares from us to cover
over-allotments. If the underwriters exercise all or part of this option, they
will purchase shares covered by the option at the initial public offering price
that appears on the cover page of this prospectus, less the underwriting
discount. If this option is exercised in full, the total price to public will be
$ , the total proceeds to us will be $ . The underwriters have
severally agreed that, to the extent the over-allotment option is exercised,
they will each purchase a number of additional shares proportionate to the
underwriter's initial amount reflected in the foregoing table.

The following table provides information regarding the amount of the discount to
be paid to the underwriters by us:

<TABLE>
<CAPTION>
TOTAL WITHOUT EXERCISE TOTAL WITH FULL EXERCISE
OF OVER-ALLOTMENT OF OVER-ALLOTMENT
PER SHARE OPTION OPTION
--------- ---------------------- ------------------------
<S> <C> <C> <C>
RMS........................ $ $ $
</TABLE>

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We estimate that our total expenses of the offering, excluding the underwriting
discount, will be approximately $ .

We have agreed to indemnify the underwriters against certain liabilities,
including liabilities under the Securities Act of 1933.

We and our officers and directors and other stockholders have agreed to a
180-day "lock-up" with respect to shares of common stock that they
beneficially own, including securities that are convertible into shares of
common stock and securities that are exchangeable or exercisable for shares of
common stock. This means that, for a period of 180 days following the date of
this prospectus, we and these persons may not offer, sell, pledge or otherwise
dispose of these securities without the prior written consent of CIBC World
Markets Corp.

The representatives have informed us that they do not expect discretionary sales
by the underwriters to exceed five percent of the shares offered by this
prospectus.

The underwriters have reserved for sale up to shares for employees,
directors and other persons associated with us. These reserved shares will be
sold at the initial public offering price that appears on the cover page of this
prospectus. The number of shares available for sale to the general public in the
offering will be reduced to the extent reserved shares are purchased by such
persons. The underwriters will offer to the general public, on the same terms as
other shares offered by this prospectus, any reserved shares that are not
purchased by those persons.

There is no established trading market for the shares. The offering price for
the shares has been determined by us and the representatives, based on the
following factors:

- negotiations among us and the underwriters;

- prevailing market and economic conditions;

- our financial information;

- our history and the prospects;

- our company and the industry in which we compete;

- an assessment of our management, our past and present operations, and the
prospects for, and timing of, our future revenues; and

- the present stage of our development and the above factors in relation to
market values and various valuation measures of other companies engaged in
activities similar to ours.

Rules of the Securities and Exchange Commission may limit the ability of the
underwriters to bid for or purchase shares before the distribution of the shares
is completed. However, the underwriters may engage in the following activities
in accordance with the rules:

- Stabilizing transactions--The representatives may make bids or purchases for
the purpose of pegging, fixing or maintaining the price of the shares, so
long as stabilizing bids do not exceed a specified maximum.

- Over-allotments and syndicate covering transactions--The underwriters may
create a short position in the shares by selling more shares than are set
forth on the cover page of this prospectus. If a short position is created
in connection with offering, the representatives may engage in syndicate
covering transactions by purchasing shares in the open market. The
representatives may also elect to reduce any short position by exercising
all or part of the over-allotment option.

- Penalty bids--If the representatives purchase shares in the open market in a
stabilizing transaction or syndicate covering transaction, they may reclaim
a selling concession from the underwriters and selling group members who
sold those shares as part of this offering.

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Stabilization and syndicate covering transactions may cause the price of the
shares to be higher than it would be in the absence of such transactions. The
imposition of a penalty bid might also have an effect on the price of the shares
if it discourages resales of the shares.

Neither we nor the underwriters makes any representation or prediction as to the
effect that the transactions described above may have on the price of the
shares. These transactions may occur on the Nasdaq National Market or otherwise.
If such transactions are commenced, they may be discontinued without notice at
any time.

Prudential Securities Incorporated also facilitates the marketing of securities
online through its PrudentialSecurities.com division. Clients of Prudential
Advisor-SM-, a full service brokerage firm program, may view offering terms and
a prospectus online and place orders through their financial advisors. Other
than the prospectus in electronic format, the information on the website is not
part of this prospectus or the registration statement of which this prospectus
forms a part and has not been approved and/or endorsed by RMS or any underwriter
in that capacity and should not be relied upon by prospective investors.

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NOTICE TO CANADIAN RESIDENTS

RESALE RESTRICTIONS

The distribution of the common stock in Canada is being made only on a private
placement basis exempt from the requirement that we prepare and file a
prospectus with the securities regulatory authorities in each province where
trades of common stock are effected. Accordingly, any resale of the common stock
in Canada must be made in accordance with applicable securities laws which will
vary depending on the relevant jurisdiction, and which may require resales to be
made in accordance with available statutory exemptions or pursuant to a
discretionary exemption granted by the applicable Canadian securities regulatory
authority. Purchasers are advised to seek legal advice prior to any resale of
the common stock.

REPRESENTATIONS OF PURCHASERS

Each purchaser of common stock in Canada who receives a purchase confirmation
will be deemed to represent to us and the dealer from whom such purchase
confirmation is received that (1) such purchaser is entitled under applicable
provincial securities laws to purchase such common stock without the benefit of
a prospectus qualified under such securities laws, (2) where required by law,
that such purchaser is purchasing as principal and not as agent and (3) such
purchaser has reviewed the text above under "Resale restrictions."

RIGHTS OF ACTION (ONTARIO PURCHASERS)

The securities being offered are those of a foreign issuer and Ontario
purchasers will not receive the contractual right of action prescribed by
Ontario securities law. As a result, Ontario purchasers must rely on other
remedies that may be available, including common law rights of action for
damages or rescission or rights of action under the civil liability provisions
of the U.S. federal securities laws.

ENFORCEMENT OF LEGAL RIGHTS

All of the issuer's directors and officers, as well as the experts named herein,
may be located outside of Canada and, as a result, it may not be possible for
Canadian purchasers to effect service of process within Canada upon the issuer
or such persons. All or a substantial portion of the assets of the issuer and
such persons may be located outside of Canada and, as a result, it may not be
possible to satisfy a judgment against the issuer or such persons in Canada or
to enforce a judgment obtained in Canadian courts against such issuer or persons
outside of Canada.

NOTICE TO BRITISH COLOMBIA RESIDENTS

A purchaser of common stock to whom the SECURITIES ACT (British Columbia)
applies is advised that such purchaser is required to file with the British
Columbia Securities Commission a report within ten days of the sale of any
common stock acquired by such purchaser pursuant to this offering. Such report
must be in the form attached to British Columbia Securities Commission Blanket
Order BOR #95/17, a copy of which may be obtained from us. Only one such report
must be filed in respect of common stock acquired on the same date and under the
same prospectus exemption.

TAXATION AND ELIGIBILITY FOR INVESTMENT

Canadian purchasers of common stock should consult their own legal and tax
advisors with respect to the tax consequences of an investment in the common
stock in their particular circumstances and with respect to the eligibility of
the common stock for investment by the purchaser under relevant Canadian
legislation.

82
<PAGE>
LEGAL MATTERS

Fried, Frank, Harris, Shriver & Jacobson (a partnership including
professional corporations), New York, New York, will pass upon the validity of
the issuance of the shares of common stock offered by this prospectus. Certain
legal matters will be passed upon for us by Tripp, Scott, P.A., Fort Lauderdale,
Florida. The underwriters have been represented by Gibson, Dunn & Crutcher LLP,
New York, New York. Entities and individuals affiliated with Tripp, Scott
beneficially own shares of our common stock as of the date of this
prospectus. Norman Tripp and Dennis Smith, officers and directors of Tripp,
Scott, serve as directors on our board of directors. See "Management" and
"Principal Stockholders."

EXPERTS

The consolidated financial statements of RMS Networks, Inc. and subsidiaries
(formerly Retail Media Systems, Inc.) as of December 31, 1998 and 1999 and for
each of the years in the three-year period ended December 31, 1999, have been
included herein and in the registration statement in reliance upon the reports
of KPMG LLP, independent certified public accountants, appearing elsewhere
herein, and upon the authority of said firm as experts in accounting and
auditing.

WHERE YOU CAN FIND MORE INFORMATION

We have filed with the SEC a registration statement on Form S-1, including
exhibits and schedules, with respect to the common stock being offered by this
prospectus. This prospectus does not contain all of the information included in
the registration statement and the exhibits and schedules to the registration
statement. The rules and regulations of the SEC permit us to omit some
information included in the registration statement from this prospectus. For
further information with respect to RMS and the shares of common stock offered
by this prospectus, reference is made to the registration statement, including
its exhibits and schedules. With respect to references made in this prospectus
to any contract or other document, such references are not necessarily complete
and you should refer to the exhibits attached to the registration statement for
copies of the actual contract or document.

As a result of this offering, we will become subject to the information and
reporting requirements of the Exchange Act and, in accordance with the Exchange
Act, we will file periodic reports, proxy statements and other information with
the SEC. You may review a copy of the registration statement, including its
exhibits and schedules, as well the reports, proxy statements and other
information that we file with the SEC, at the SEC's public reference room,
located at 450 Fifth Street, N.W., Washington, D.C. 20549, at the SEC's regional
offices located at 500 West Madison Street, Suite 1400, Chicago, Illinois 60661,
and Seven World Trade Center, 13th Floor, New York, New York 10048 or on the
SEC's Internet website located at http://www.sec.gov. You may obtain a copy of
this registration statement from the SEC's public reference room upon payment of
prescribed fees. Please call the SEC at (800) SEC-0330 for further information
on the operation of the public reference room.

Upon approval of the common stock for listing on Nasdaq, you may also review
our reports, proxy and information statements and other information at the
offices of Nasdaq Operations, 1735 K Street, N.W., Washington, D.C. 20006. We
also intend to furnish our stockholders with annual reports containing audited
financial statements and make available to our stockholders quarterly reports
for the first three quarters of each year containing unaudited interim financial
information.

83
<PAGE>
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS OF

RMS NETWORKS, INC. AND SUBSIDIARIES

(FORMERLY RETAIL MEDIA SYSTEMS, INC.)

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

Consolidated Balance Sheets as of December 31, 1998 and
1999...................................................... F-3

Consolidated Statements of Operations for the Years Ended
December 31, 1997, 1998 and 1999.......................... F-4

Consolidated Statements of Stockholders' (Deficit) Equity
for the Years Ended
December 31, 1997, 1998 and 1999.......................... F-5

Consolidated Statements of Cash Flows for the Years Ended
December 31, 1997, 1998 and 1999.......................... F-6

Notes to Consolidated Financial Statements for the Years
Ended
December 31, 1997, 1998 and 1999.......................... F-7
</TABLE>

F-1
<PAGE>
INDEPENDENT AUDITORS' REPORT

The Board of Directors
RMS Networks, Inc. (formerly Retail Media Systems, Inc.):

We have audited the accompanying consolidated balance sheets of RMS
Networks, Inc. (formerly Retail Media Systems, Inc.) and Subsidiaries as of
December 31, 1998 and 1999, and the related consolidated statements of
operations, stockholders' (deficit) equity and cash flows for each of the years
in the three-year period ended December 31, 1999. These consolidated financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these consolidated financial
statements based on our audits.

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

In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the financial position of RMS
Networks, Inc. (formerly Retail Media Systems, Inc.) and Subsidiaries as of
December 31, 1998 and 1999, and the results of their operations and their cash
flows for each of the years in the three-year period ended December 31, 1999 in
conformity with generally accepted accounting principles.

/s/ KPMG LLP

Fort Lauderdale, Florida
January 26, 2000, except as to
the first paragraph of note 1(a) and
note 15, which are as of April 5, 2000

F-2
<PAGE>
RMS NETWORKS, INC. AND SUBSIDIARIES
(FORMERLY RETAIL MEDIA SYSTEMS, INC.)

CONSOLIDATED BALANCE SHEETS

DECEMBER 31, 1998 AND 1999

(IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)

<TABLE>
<CAPTION>
1998 1999
-------- --------
<S> <C> <C>
ASSETS

Current assets:
Cash and cash equivalents................................. $ 60 8,588
Trade accounts receivable, net of allowance of $19 at
December 31, 1999....................................... 33 69
Subscription receivable................................... -- 317
Other receivables......................................... -- 19
Prepaid expenses.......................................... -- 67
------- -------
Total current assets.................................. 93 9,060
------- -------
Property and equipment, net................................. 55 317
Other assets................................................ -- 432
------- -------
Total assets.......................................... $ 148 9,809
======= =======

LIABILITIES AND STOCKHOLDERS' (DEFICIT) EQUITY

Current liabilities:
Accounts payable.......................................... $ 162 445
Accrued expenses.......................................... 345 518
Deferred revenue.......................................... -- 111
------- -------
Total current liabilities............................. 507 1,074
Stockholder loans payable................................... 190 --
------- -------
Total liabilities..................................... 697 1,074

Commitments and contingencies

Stockholders' (deficit) equity:
Common stock, $.01 par value. Authorized 25,000,000
shares; issued and outstanding 5,890,000 shares and
8,007,000 shares at December 31, 1998 and 1999,
respectively............................................ 59 80
Additional paid-in capital................................ 1,149 12,968
Accumulated deficit....................................... (1,757) (4,313)
------- -------
Total stockholders' (deficit) equity.................. (549) 8,735
------- -------
Total liabilities and stockholders' (deficit)
equity.............................................. $ 148 9,809
======= =======
</TABLE>

See accompanying notes to consolidated financial statements.

F-3
<PAGE>
RMS NETWORKS, INC. AND SUBSIDIARIES
(FORMERLY RETAIL MEDIA SYSTEMS, INC.)

CONSOLIDATED STATEMENTS OF OPERATIONS

YEARS ENDED DECEMBER 31, 1997, 1998 AND 1999

(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)

<TABLE>
<CAPTION>
1997 1998 1999
---------- --------- ---------
<S> <C> <C> <C>
Revenue.................................................... $ -- 717 2,182
---------- --------- ---------
Operating expenses:
Cost of revenue.......................................... -- 554 1,422
Selling, general and administrative expenses............. 93 470 2,377
Development expenses..................................... 686 218 638
Loss on impairment of fixed assets....................... -- -- 262
---------- --------- ---------
Total operating expenses............................. 779 1,242 4,699
Loss from operations................................. (779) (525) (2,517)
Other income (expense):
Interest income.......................................... 11 2 29
Interest expense......................................... (118) (158) (68)
---------- --------- ---------
Loss before income taxes............................. (886) (681) (2,556)
Income taxes............................................... -- -- --
---------- --------- ---------
Net loss............................................. $ (886) (681) (2,556)
========== ========= =========
Net loss applicable to common stockholders per share--basic
and diluted.............................................. $ (0.18) (0.13) (0.39)
========== ========= =========
Weighted average shares--basic and diluted................. 5,019,521 5,229,219 6,577,840
========== ========= =========
</TABLE>

See accompanying notes to consolidated financial statements.

F-4
<PAGE>
RMS NETWORKS, INC. AND SUBSIDIARIES
(FORMERLY RETAIL MEDIA SYSTEMS, INC.)

CONSOLIDATED STATEMENTS OF STOCKHOLDERS' (DEFICIT) EQUITY

YEARS ENDED DECEMBER 31, 1997, 1998 AND 1999

(IN THOUSANDS)

<TABLE>
<CAPTION>
TOTAL
ADDITIONAL STOCKHOLDERS'
COMMON PAID-IN ACCUMULATED (DEFICIT)
STOCK CAPITAL DEFICIT EQUITY
-------- ---------- ----------- -------------
<S> <C> <C> <C> <C>
Balances at December 31, 1996..................... $30 51 (190) (109)
Net loss........................................ -- -- (886) (886)
Discount on stockholder loans................... -- 112 -- 112
Common stock issued for services................ 1 49 -- 50
Capital contributions........................... 20 155 -- 175
--- ------ ------ ------
Balances at December 31, 1997..................... 51 367 (1,076) (658)
Net loss........................................ -- -- (681) (681)
Stock options granted to non-employees.......... -- 24 -- 24
Capital contributions........................... 1 126 -- 127
Employee moving expenses converted to common
stock......................................... 1 13 -- 14
Conversion of stockholder loans to common
stock......................................... 6 619 -- 625
--- ------ ------ ------
Balances at December 31, 1998..................... 59 1,149 (1,757) (549)
Net loss........................................ -- -- (2,556) (2,556)
Stock options granted to non-employees.......... -- 127 -- 127
Stock options exercised......................... -- 10 -- 10
Private placements, net of offering expenses.... 20 11,375 -- 11,395
Common stock issued for services................ 1 307 -- 308
--- ------ ------ ------
Balances at December 31, 1999..................... $80 12,968 (4,313) 8,735
=== ====== ====== ======
</TABLE>

See accompanying notes to consolidated financial statements.

F-5
<PAGE>
RMS NETWORKS, INC. AND SUBSIDIARIES
(FORMERLY RETAIL MEDIA SYSTEMS, INC.)

CONSOLIDATED STATEMENTS OF CASH FLOWS

YEARS ENDED DECEMBER 31, 1997, 1998 AND 1999

(IN THOUSANDS)

<TABLE>
<CAPTION>
1997 1998 1999
-------- -------- --------
<S> <C> <C> <C>
Net cash from operating activities:
Net loss.................................................. $(886) (681) (2,556)
Adjustments to reconcile net loss to net cash used in
operating activities:
Depreciation and amortization........................... 6 15 115
Amortization of debt discount........................... 41 77 10
Loss on impairment of fixed assets...................... -- -- 262
Compensation related to non-employee stock options...... -- 24 127
Expenses settled through issuance of common stock....... 50 14 308
Change in operating assets and liabilities, net of
acquisition:
Increase in:
Prepaid expenses.................................... -- -- (67)
Trade and other accounts receivable, net............ -- (33) (14)
Other assets........................................ -- -- (4)
Increase (decrease) in:
Accounts payable.................................... 26 116 (127)
Accrued expenses.................................... 206 128 86
Deferred revenue.................................... -- -- 111
----- ----- ------
Net cash used in operating activities............. (557) (340) (1,749)
----- ----- ------
Cash flows from investing activities:
Capital expenditures...................................... (47) (29) (520)
Business acquisition...................................... -- -- (90)
----- ----- ------
Net cash used in investing activities............. (47) (29) (610)
----- ----- ------
Cash flows from financing activities:
Proceeds from (repayment of) stockholder loans............ 707 -- (200)
Proceeds from stock options exercised..................... -- -- 10
Sale of common stock...................................... 175 127 --
Proceeds from private placements, net of offering
expenses................................................ -- -- 11,077
----- ----- ------
Net cash provided by financing activities......... 882 127 10,887
----- ----- ------
Net increase (decrease) in cash and cash equivalents........ 278 (242) 8,528
Cash and cash equivalents at beginning of year.............. 24 302 60
----- ----- ------
Cash and cash equivalents at end of year.................... $ 302 60 8,588
===== ===== ======
Cash paid for interest...................................... $ -- -- 97
===== ===== ======
Cash paid for income taxes.................................. $ -- -- --
===== ===== ======
Supplemental disclosure of noncash investing and financing
activities:
See notes 2, 5, 9, 10, 11 and 13 for discussion related to
noncash investing and financing activities.
</TABLE>

See accompanying notes to consolidated financial statements.

F-6
<PAGE>
RMS NETWORKS, INC. AND SUBSIDIARIES
(FORMERLY RETAIL MEDIA SYSTEMS, INC.)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 1997, 1998 AND 1999
(IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)

(1) PRINCIPAL BUSINESS ACTIVITY AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

(A) DESCRIPTION OF BUSINESS

Retail Media Systems, Inc. (the "Company"), a Delaware corporation
incorporated on May 29, 1996, changed its name to RMS Networks, Inc. in
April 2000. The Company is a provider of point-of-purchase advertising
and information distributed by broadband satellite networks to retail
store locations. The Company creates, produces, transmits and maintains
broadband networks designed to influence customer decisions at the point
of purchase in retail locations. Programming is tailored to audience
demographics and designed to educate, entertain, reinforce branding and
move products. The Company also develops tailored Internet strategies
providing content for and, in some cases, maintaining websites whose
content largely parallels the presentation on the networks. Each
network's website can be specifically designed to integrate in-store
video segments and product advertisements with related news articles and
product promotions, as well as e-commerce.

During July 1999, the Company completed the acquisition of certain assets
and liabilities of NPTV, LLC ("NPTV") and entered into a multi-year
license agreement with the National Community Pharmacists Association
(the "NCPA"). The license agreement provides that the Company will be the
exclusive network provider for the NCPA for a 10 year period (see
note 2).

The Company is subject to risks common to technology-based companies
including, but not limited to, the development of new technology,
development of markets and distribution channels, dependence on key
personnel, and the ability to obtain additional capital as needed. To
date, the Company has been funded principally by private equity funding
and shareholder loans and has experienced significant losses since
inception. The Company's ultimate success is dependent upon its ability
to raise additional capital and successfully market its services.

(B) PRINCIPLES OF CONSOLIDATION

The consolidated financial statements include the accounts and operations
of the Company and its wholly owned subsidiaries. All intercompany
accounts and transactions have been eliminated in consolidation.

The Company considers all highly liquid debt instruments with original
maturities of three months or less to be cash equivalents.

(D) REVENUE RECOGNITION

The Company's revenues are derived from the production, transmission and
distribution of network programming, advertising sales and related
equipment sales. Revenue from the

F-7
<PAGE>
RMS NETWORKS, INC. AND SUBSIDIARIES
(FORMERLY RETAIL MEDIA SYSTEMS, INC.)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

DECEMBER 31, 1997, 1998 AND 1999
(IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)

assembly and transmission of programming content is recognized ratably
over the term of the related service period. Network advertising revenue
is recognized during the period when advertisements are aired or
displayed on the network. Production revenue is recognized when earned.
Equipment revenues are recognized when the equipment is shipped.

(E) PROPERTY AND EQUIPMENT, NET

Property and equipment are stated at cost, net of accumulated
depreciation. Depreciation of equipment is computed using the
straight-line method based on the estimated useful lives of the related
assets. Maintenance and repair costs are expensed as incurred.

(F) DEVELOPMENT EXPENSES

Development expenses include costs related to the development and
production of new networks and the research and development of new or
improved technologies to enhance the functionality of the Company's
network systems. Expenses include direct personnel costs, marketing
research, production fees, distribution fees, installation fees, related
professional services, network solicitation personnel and related costs.
Costs associated with the development of a new network are no longer
recognized as development expenses when the new network begins to
generate revenue.

(G) INCOME TAXES

Income taxes are accounted for under the asset and liability method.
Deferred tax assets and liabilities are recognized for the future tax
consequences attributable to differences between the financial statement
carrying amounts of existing assets and liabilities and their respective
tax bases and operating loss and tax credit carryforwards. Deferred tax
assets and liabilities are measured using enacted tax rates expected to
apply to taxable income in the years in which those temporary differences
are expected to be recovered or settled. The effect on deferred tax
assets and liabilities of a change in tax rates is recognized in income
in the period that includes the enactment date.

(H) USE OF ESTIMATES

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

(I) IMPAIRMENT OF LONG-LIVED ASSETS AND LONG-LIVED ASSETS TO BE DISPOSED OF

The Company accounts for long-lived assets in accordance with the
provisions of Statement of Financial Accounting Standards ("SFAS")
No. 121, "Accounting for the Impairment of Long-Lived Assets and for
Long-Lived Assets to Be Disposed Of." SFAS No. 121 requires

F-8
<PAGE>
RMS NETWORKS, INC. AND SUBSIDIARIES
(FORMERLY RETAIL MEDIA SYSTEMS, INC.)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

DECEMBER 31, 1997, 1998 AND 1999
(IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)

that long-lived assets and certain identifiable intangibles be reviewed
for impairment whenever events or changes in circumstances indicate that
the carrying amount of an asset may not be recoverable. Recoverability of
assets to be held and used is measured by a comparison of the carrying
amount of an asset to the undiscounted future cash flows expected to be
generated by the asset. If such assets are considered to be impaired, the
impairment to be recognized is measured by the amount by which the
carrying amount of the assets exceed the fair value of the assets. Assets
to be disposed of are reported at the lower of the carrying amount or
fair value, less costs to sell.

(J) CAPITAL STRUCTURE

On October 13, 1999, the stockholders of the Company approved a
five-for-one stock split. This action was ratified by the Company's Board
of Directors and became effective on October 13, 1999. Stockholders of
record at the close of business on October 13, 1999 received four
additional shares for each one held. All share and per share data
presented in the consolidated financial statements and footnotes have
been retroactively adjusted to reflect the five-for-one stock split.

(K) FAIR VALUE OF FINANCIAL INSTRUMENTS

SFAS No. 107, "Disclosures About Fair Value of Financial Instruments,"
requires disclosure of fair value of certain financial instruments. Cash
and cash equivalents, accounts receivable, prepaid expenses and other
current assets, as well as accounts payable, accrued expenses and
deferred revenue, as reflected in the consolidated financial statements,
approximate fair value because of the short-term maturity of these
instruments.

Fair value estimates are made at a specific point in time, based on
relevant market information and information about the financial
instrument. These estimates are subjective in nature and involve
uncertainties and matters of significant judgment and therefore cannot be
determined with precision. Changes in assumptions could significantly
affect the estimates.

(L) BASIC AND DILUTED NET LOSS PER SHARE

Effective January 1, 1997, the Company adopted SFAS No. 128, "Earnings
Per Share". SFAS No. 128 establishes new standards designed to improve
the earnings per share ("EPS") information provided in financial
statements by simplifying the existing computational guidelines, revising
the disclosure requirements and increasing the comparability of EPS data
on an international basis. The adoption of SFAS No. 128 did not have a
significant impact on the Company's reported EPS.

In accordance with Securities and Exchange Commission ("SEC") Staff
Accounting Bulletin No. 98, certain common stock and common stock
equivalents issued for nominal consideration prior to the initial filing
of a registration statement relating to an initial public offering are
treated as outstanding for the entire period. The Company had no
issuances of common stock

F-9
<PAGE>
RMS NETWORKS, INC. AND SUBSIDIARIES
(FORMERLY RETAIL MEDIA SYSTEMS, INC.)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

DECEMBER 31, 1997, 1998 AND 1999
(IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)

and common stock equivalents for nominal consideration during the three
years ended December 31, 1999.

Basic and diluted net loss applicable to common stockholders per share
were computed by dividing net loss applicable to common stockholders by
the weighted-average number of shares of common stock outstanding for
each period presented. Common stock equivalents were not considered for
each of the years in the three-year period ended December 31, 1999 since
their effect would be antidilutive.

(M) ISSUANCE COST

Issuance costs are amounts paid or the estimated value of warrants or
options issued to placement agents or financial consultants to obtain
equity financing. The Company allocates issuance costs for equity
financing on the relative fair value of the individual elements at the
time of issuance. Equity issuance costs are deducted from the proceeds of
the related equity securities. The estimated fair value of options issued
to placement agents in connection with the issuance of common stock
during 1999 was recorded as a stock issuance cost.

(N) COMPREHENSIVE INCOME

Effective January 1, 1998, the Company adopted SFAS No. 130, "Reporting
Comprehensive Income." SFAS No. 130 establishes standards for reporting
and displaying comprehensive income and its components in a full set of
general purpose financial statements. SFAS No. 130 requires that an
enterprise (a) classify items of other comprehensive income by their
nature in financial statements and (b) display the accumulated balance of
other comprehensive income separately from accumulated deficit and
additional paid-in capital in the equity section. Comprehensive income is
defined as a change in equity during the financial reporting period of a
business enterprise resulting from non-owner sources. There were no
differences between net loss and comprehensive loss for each of the years
in the three-year period ended December 31, 1999.

(O) SEGMENT INFORMATION

Effective January 1, 1998, the Company adopted SFAS No. 131, "Disclosures
about Segments of an Enterprise and Related Information." SFAS No. 131
establishes standards for the way that public business enterprises report
information about operating segments in annual financial statements and
requires those enterprises to report selected information about operating
segments in interim financial reports issued to stockholders. The Company
operates in one segment for management reporting purposes.

(P) RECLASSIFICATIONS

Certain 1997 and 1998 amounts have been reclassified to conform to the
1999 presentation.

F-10
<PAGE>
RMS NETWORKS, INC. AND SUBSIDIARIES
(FORMERLY RETAIL MEDIA SYSTEMS, INC.)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

DECEMBER 31, 1997, 1998 AND 1999
(IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)

(Q) NEW ACCOUNTING PRONOUNCEMENTS

In March 1998, the American Institute of Certified Public Accountants
("AICPA") issued Statement of Position 98-1 ("SOP 98-1"), "Accounting for
the Costs of Computer Software Developed or Obtained for Internal Use."
This standard requires companies to capitalize qualifying computer
software costs, which are incurred during the application development
stage, and amortize them over the software's estimated useful life. SOP
98-1 is effective for fiscal years beginning after December 15, 1998.
There was no impact on the Company's consolidated financial statements
related to SOP 98-1.

In April 1998, the AICPA issued Statement of Position 98-5 "Reporting on
the Costs of Start-Up Activities" ("SOP 98-5"). Pursuant to the
provisions of SOP 98-5, all costs associated with start-up activities,
including organization costs, should be expensed as incurred. Companies
that previously capitalized such costs are required to write off the
unamortized portion of such costs as a cumulative effect of a change of
accounting principle. The Company has no start-up costs capitalized at
December 31, 1999.

In June 1998, the Financial Accounting Standards Board issued SFAS
No. 133, "Accounting for Derivative Instruments and Hedging Activities."
SFAS No. 133 requires the recognition of all derivatives as either assets
or liabilities in the balance sheet and the measurement of those
instruments at fair value. Gains and losses resulting from changes in the
values of those derivatives would be accounted for depending on the use
of the derivative and whether it qualifies for hedge accounting.
SFAS No. 133 is expected to be effective for the Company's year ending
December 31, 2001. The Company expects SFAS No. 133 to have no material
impact on its consolidated financial statements.

In December 1999, the SEC issued Staff Accounting Bulletin No. 101 ("SAB
101"), "Revenue Recognition," which provides guidance on the recognition,
presentation and disclosure of revenue in financial statements filed with
the SEC. SAB 101 outlines the basic criteria that must be met to
recognize revenue and provides guidance for disclosures related to
revenue recognition policies. Management believes that the impact of SAB
101 would have no material effect on the financial position or results of
operations of the Company.

(2) BUSINESS ACQUISITION

In July 1999, the Company completed the acquisition of certain assets and
liabilities of NPTV from the NCPA and entered into a 10 year license agreement
with the NCPA. The acquisition of NPTV has been accounted for under the purchase
method and, accordingly the results of the business of NPTV have been included
in the consolidated operating results since the date of acquisition. The
purchase

F-11
<PAGE>
RMS NETWORKS, INC. AND SUBSIDIARIES
(FORMERLY RETAIL MEDIA SYSTEMS, INC.)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

DECEMBER 31, 1997, 1998 AND 1999
(IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)

(2) BUSINESS ACQUISITION (CONTINUED)
price for the assets and liabilities of NPTV was approximately $90 in cash. The
purchase price was allocated as follows:

<TABLE>
<S> <C>
Accounts receivable, net.................................... $ 41
In-store equipment.......................................... 119
Other assets................................................ 28
Prepaid license fees........................................ 400
Assumed liabilities......................................... (498)
-----
Purchase price.............................................. $ 90
=====
</TABLE>

As part of the terms of the asset purchase agreement, the Company is allowed
to offset up to $400 of the assumed liabilities plus amounts to be paid under an
assumed operating lease against future license fees payable to the NCPA. As a
result, the Company recorded prepaid license fees of $400 at the date of
acquisition.

The following unaudited pro forma consolidated results of operations for the
year ended December 31, 1999 assumes the acquisition occurred as of January 1,
1999. The unaudited pro forma information is not necessarily indicative of the
results of operations of the combined company had these events occurred at the
beginning of the year presented, nor is it necessarily indicative of future
results.

<TABLE>
<CAPTION>
YEAR ENDED
DECEMBER 31,
1999
------------
<S> <C>
Revenue..................................................... $ 2,611
Net loss.................................................... $(2,742)
Basic and diluted loss per common share..................... $ (0.42)
</TABLE>

(3) PROPERTY AND EQUIPMENT, NET

Property and equipment, net, are comprised of the following at December 31,
1998 and 1999:

<TABLE>
<CAPTION>
USEFUL
1998 1999 LIVES
-------- -------- ---------
<S> <C> <C> <C>
Computers and communications........................ $ 30 215 3-5 years
Network equipment and software...................... 46 100 1-2 years
Audio/video and test equipment...................... -- 53 3 years
Trade show equipment................................ -- 53 3 years
Furniture........................................... -- 2 4 years
----- ----
76 423
Less accumulated depreciation....................... (21) (106)
----- ----
Property and equipment, net......................... $ 55 317
===== ====
</TABLE>

F-12
<PAGE>
RMS NETWORKS, INC. AND SUBSIDIARIES
(FORMERLY RETAIL MEDIA SYSTEMS, INC.)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

DECEMBER 31, 1997, 1998 AND 1999
(IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)

(3) PROPERTY AND EQUIPMENT, NET (CONTINUED)
Depreciation expense for the years ended December 31, 1997, 1998 and 1999
was $6, $15 and $115, respectively.

(4) LEASES

The Company has several noncancelable operating leases, primarily for its
office space, network related equipment and office equipment that expire over
the next 5 years. These leases generally contain renewal options and require the
Company to pay all executory costs such as maintenance and insurance. Rental
expense for operating leases (except those with lease terms of a month or less
that were not renewed) during 1997, 1998 and 1999 amounted to approximately $36,
$61 and $144, respectively.

Future minimum lease payments under noncancelable operating leases (with
initial or remaining lease terms in excess of one year) as of December 31, 1999
are:

<TABLE>
<CAPTION>
OPERATING
YEAR ENDING DECEMBER 31, LEASES
- ------------------------ ---------
<S> <C>
2000........................................................ $445
2001........................................................ 84
2002........................................................ 30
2003........................................................ 12
Thereafter.................................................. 9
----
Total minimum lease payments................................ $580
====
</TABLE>

In addition, on January 5, 2000, the Company entered into an operating lease
agreement for office facilities with a related party. The lease term is for 120
months after the Company begins occupancy. The base rent under the lease calls
for annual payments of approximately $360. The Company expects to begin
occupancy in the third quarter of 2000.

On December 2, 1999, the Company signed a service agreement with
Spacenet Inc. The agreement provides for capital lease financing for the
equipment used in the Company's broadband networks and provides for the
satellite transmission and reception utilized in the Company's operations. The
capital lease financing arrangement sets a minimum number of in-store sites,
with monthly payments related to the financing based on the amount of equipment
installed, with a 66 month term. The service agreement includes a fixed monthly
payment and additional fees based on the number of sites and optional equipment.
The Company had not incurred any expense or acquired any equipment under the
capital lease arrangement as of December 31, 1999.

F-13
<PAGE>
RMS NETWORKS, INC. AND SUBSIDIARIES
(FORMERLY RETAIL MEDIA SYSTEMS, INC.)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

DECEMBER 31, 1997, 1998 AND 1999
(IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)

(5) STOCKHOLDER LOANS PAYABLE

The Company's stockholder loans consist of the following as of December 31,
1998 and 1999:

<TABLE>
<CAPTION>
1998 1999
-------- --------
<S> <C> <C>
Two unsecured non-negotiable promissory notes totaling $125
dated June 5, 1996, with original maturities on January 1,
2000. Principal payable in full on the date of maturity
and interest due annually at 10% per annum on the unpaid
balance; issued with 2,500,000 common shares (net of
unamortized discount of $1 in 1998*)...................... $ 30 --
Four unsecured promissory notes totaling $700 dated
January 29, 1997, with original maturities of January 1,
2000. Principal payable in full on the date of maturity
and interest due annually at 10% per annum on the unpaid
balances; issued with 2,000,000 common shares (net of
unamortized discount of $10 in 1998*)..................... 160 --
----- --------
Total stockholder loans..................................... $ 190 --
===== ========
</TABLE>

*In connection with the issuance of the unsecured promissory notes (the
"Notes"), the Company also issued to the holders of the Notes shares of the
Company's common stock. The Company accounted for the equity issued at the fair
value at the time of the transaction and the Notes were discounted accordingly.
The discount on the Notes is amortized as interest over the term of the Notes.
Interest expense from the amortization of the discount on the Notes is $41, $77
and $10 for the years ended December 31, 1997, 1998 and 1999, respectively.

On December 23, 1998, the Company and the holders of the Notes entered into
an agreement whereby $625 of the undiscounted principal balance of the Notes was
converted into 625,000 shares of the Company's common stock.

(6) ACCRUED EXPENSES

Accrued expenses consist of the following at December 31:

<TABLE>
<CAPTION>
1998 1999
-------- --------
<S> <C> <C>
Due to related parties...................................... $345 313
Accrued professional fees................................... -- 60
Accrued vacation............................................ -- 33
Other miscellaneous accruals................................ -- 112
---- ---
$345 518
==== ===
</TABLE>

F-14
<PAGE>
RMS NETWORKS, INC. AND SUBSIDIARIES
(FORMERLY RETAIL MEDIA SYSTEMS, INC.)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

DECEMBER 31, 1997, 1998 AND 1999
(IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)

(7) INCOME TAXES

There was no income tax expense or benefit for the years ended December 31,
1997, 1998 and 1999 which differed from the amounts computed by applying the
U.S. Federal income tax rate of 34 percent to pretax loss from operations as a
result of the following:

<TABLE>
<CAPTION>
1997 1998 1999
-------- -------- --------
<S> <C> <C> <C>
Computed "expected" tax benefit......................... $ 301 232 869
Increase (reduction) in income tax benefit resulting
from:
Increase in valuation allowance for deferred tax
asset............................................... (310) (214) (943)
Discount on Notes..................................... (14) (26) (4)
State and local income taxes, net of Federal income
tax................................................. 30 20 91
Other, net............................................ (7) (12) (13)
----- ---- ----
Income tax benefit.................................... $ -- -- --
===== ==== ====
</TABLE>

The tax effects of temporary differences that give rise to significant
portions of the net deferred tax asset at December 31, 1998 and 1999 are
presented below:

<TABLE>
<CAPTION>
1998 1999
-------- --------
<S> <C> <C>
Deferred tax asset:
Fixed assets.............................................. $ 3 89
Capitalized organizational and start-up costs............. 223 167
Capitalized research and experimentation.................. 16 12
Deferred compensation..................................... 100 128
Net operating loss carryforward........................... 251 1,127
Other..................................................... -- 13
----- ------
Total gross deferred tax asset.............................. 593 1,536
Less valuation allowance.................................... (593) (1,536)
----- ------
Net deferred tax asset...................................... $ -- --
===== ======
</TABLE>

As of December 31, 1998 and 1999, a valuation allowance for the full amount
of the net deferred tax asset resulting from the tax net operating losses and
other items was utilized because of uncertainty regarding its realization.

At December 31, 1999, the Company has net operating loss carryforwards for
Federal income tax purposes of $2,994 which are available to offset future
Federal taxable income, if any, through 2019. The utilization of the Company's
net operating loss carryforwards may be limited if a defined change in ownership
occurs for tax purposes.

F-15
<PAGE>
RMS NETWORKS, INC. AND SUBSIDIARIES
(FORMERLY RETAIL MEDIA SYSTEMS, INC.)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

DECEMBER 31, 1997, 1998 AND 1999
(IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)

(8) COMMITMENTS AND CONTINGENCIES

EMPLOYMENT AGREEMENTS

The Company has employment agreements with specified employment terms with
executives that provide for annual base salaries, annual salary increases, an
annual bonus and periodic stock option grants subject to the approval by the
compensation committee of the Company's board of directors. The terms of their
agreements vary in length up to two years and provide for aggregate annual base
salaries of $1,112. These agreements, and other employment agreements with other
executives that do not have specified employment terms, provide for non-compete
provisions.

LICENSE FEES

As part of the acquisition detailed in note 2, the Company has committed to
pay certain license fees to NCPA under a ten year license agreement. The fees
are calculated as a product of the number of eligible subscribers to the
PharmaSee network, multiplied by a fee margin. The number of subscribers to the
PharmaSee network was approximately 650 at December 31, 1999. Per the agreement,
the Company also has the right to offset the license fees payable against $400
of the liabilities assumed in the purchase plus amounts to be paid under an
assumed operating lease.

(9) STOCK OPTION PLANS

On August 1, 1997, the Company adopted the Retail Media Systems, Inc. 1997
Stock Option Plan (the "1997 Plan") pursuant to which the Company's board of
directors may grant stock options to officers, employees and non-employees. The
1997 Plan authorizes grants of options to purchase up to 875,000 shares of
authorized but unissued common stock.

On December 23, 1998, the Company adopted the Retail Media Systems, Inc.
1998 Stock Option Plan (the "1998 Plan") pursuant to which the Company's board
of directors may grant stock options to officers, employees and non-employees.
The 1998 Plan authorizes grants of options to purchase up to 1,375,000 shares of
authorized but unissued common stock.

On September 27, 1999, the Company adopted the Retail Media Systems, Inc.
Employee Stock Option Plan #3 (the "Plan No. 3") pursuant to which the Company's
board of directors may grant options to officers, employees, and non-employees.
Plan No. 3 authorizes grants of options to purchase up to 1,250,000 shares of
authorized but unissued common stock.

F-16
<PAGE>
RMS NETWORKS, INC. AND SUBSIDIARIES
(FORMERLY RETAIL MEDIA SYSTEMS, INC.)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

DECEMBER 31, 1997, 1998 AND 1999
(IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)

(9) STOCK OPTION PLANS

All stock options are granted with an exercise price equal to or greater
than the stock's fair market value at the date of grant. The 1997 Plan, 1998
Plan and Plan No. 3 have 5 year terms and vest ratably over 5 years. The stock
option plans provide for immediate vesting of all outstanding options in the
event of a change of control, as defined, or upon the completion of an initial
public offering of the Company's common stock (note 15).

At December 31, 1999, there were 165,000, 38,970 and 912,819 additional
shares available for grant under the 1997 Plan, the 1998 Plan and the Plan
No. 3, respectively. The per share weighted-average fair value of stock options
granted during 1997, 1998 and 1999 was $0.22, $0.46 and $5.61 on the date of
grant using the Black-Scholes option-pricing model (excluding a volatility
assumption) with the following weighted-average assumptions for 1997, 1998 and
1999--expected dividend yield 0 percent, risk-free interest of 7 percent, and an
expected life of 5 years.

The Company adopted SFAS No. 123, "Accounting for Stock-Based Compensation"
and, pursuant to its provisions, elected to continue using the intrinsic-value
method of accounting for stock-based awards granted to employees in accordance
with Accounting Principles Board No. 25, "Accounting for Stock Issued to
Employees." Accordingly, no compensation cost was recognized for these stock
options in the consolidated financial statements. Compensation expense was
recognized with respect to non-employee stock options during the years ended
December 31, 1997, 1998 and 1999 and is included in selling, general and
administrative expenses. Had the Company determined compensation cost based on
the fair value at the grant date for its stock options issued pursuant to the
1997 Plan, 1998 Plan and Plan No. 3 under SFAS No. 123, the Company's net loss
would have been increased to the pro forma amounts indicated below:

<TABLE>
<CAPTION>
PRO FORMA DISCLOSURES 1997 1998 1999
- --------------------- -------- -------- --------
<S> <C> <C> <C>
Net loss:
As reported............................................... $ (886) (681) (2,556)
------ ----- ------
Pro forma................................................. $ (895) (717) (2,761)
------ ----- ------

Net loss applicable to common shareholders per share:
As reported............................................... $(0.18) (0.13) (0.39)
------ ----- ------
Pro forma................................................. $(0.18) (0.14) (0.42)
------ ----- ------
</TABLE>

Pro forma net loss reflects options granted since the Company's inception in
1996. Therefore, the full impact of calculating compensation cost for stock
options under SFAS No. 123 is reflected in the pro forma net loss amounts
presented above.

The Company accounts for stock options granted to non-employees based on the
fair value of the stock options granted. During 1998 and 1999, the Company
recorded $24 and $127, respectively, of stock compensation expense related to
stock options for the purchase of 85,000 and 133,900 shares of common stock,
respectively, granted to non-employees. The fair value of such options was
estimated on the dates of grant using the Black-Scholes model with the following
assumptions for 1998 and 1999--

F-17
<PAGE>
RMS NETWORKS, INC. AND SUBSIDIARIES
(FORMERLY RETAIL MEDIA SYSTEMS, INC.)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

DECEMBER 31, 1997, 1998 AND 1999
(IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)

(9) STOCK OPTION PLANS (CONTINUED)
volatility at 50 percent, expected dividend yield 0 percent, risk-free interest
of 7 percent, and an expected life of 1 to 5 years.

Stock option activity during the periods indicated is as follows:

<TABLE>
<CAPTION>
NUMBER OF WEIGHTED-AVERAGE
SHARES EXERCISE PRICE
--------- ----------------
<S> <C> <C>
Balance at August 1, 1997................................... -- $ --
Granted................................................... 610,000 1.09
Exercised................................................. -- --
Forfeited................................................. -- --
Expired................................................... -- --
--------- -----
Balance at December 31, 1997................................ 610,000 1.09
Granted................................................... 489,375 1.67
Exercised................................................. -- --
Forfeited................................................. (8,125) 2.00
Expired................................................... -- --
--------- -----
Balance at December 31, 1998................................ 1,091,250 1.34
Granted................................................... 1,556,441 6.21
Exercised................................................. (10,000) 1.00
Forfeited................................................. (45,580) 3.31
Expired................................................... -- --
--------- -----
Balance at December 31, 1999................................ 2,592,111 $4.23
========= =====
</TABLE>

At December 31, 1999, the range of exercise prices and weighted-average
remaining contractual lives of outstanding options was $1.00 to $11.00 and
3.85 years, respectively.

At December 31, 1998 and 1999, the number of options exercisable was 122,000
and 522,900, respectively, and the weighted-average exercise price of those
options was $1.09 and $1.74, respectively.

(10) PRIVATE PLACEMENTS

During 1999 the Company privately placed a total of approximately 2,006,200
shares of common stock through two separate placements. The first placement (the
"First Placement") placed approximately 867,700 shares at $3.00 per share for a
total of $2,558 in net proceeds. Concurrently, the Company granted options for
58,900 shares to the Company's First Placement advisor. The second placement
(the "Second Placement") placed approximately 1,138,500 shares at $8.40 per
share for a total of $8,837 in net proceeds at December 31, 1999, less a
subscription receivable of $317 which was received in January 2000. Subsequent
to December 31, 1999, approximately 203,900 additional shares were placed for a
total of $1,713 in proceeds. At December 31, 1999 an option for 50,000 shares
had been issued to the Company's Second Placement advisor. Upon completion of
the equity transaction in January 2000, the Second Placement advisor was issued
an additional grant of options equal to 80,206

F-18
<PAGE>
RMS NETWORKS, INC. AND SUBSIDIARIES
(FORMERLY RETAIL MEDIA SYSTEMS, INC.)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

DECEMBER 31, 1997, 1998 AND 1999
(IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)

(10) PRIVATE PLACEMENTS (CONTINUED)
shares. In addition, the Second Placement advisor is entitled to warrants equal
to 1 percent of the total number of shares offered in any initial public
offering completed during the term of the advisor's engagement. The warrants
would be exercisable for a term of three years from the date of issuance at an
exercise price equal to 110 percent of the valuation of the Company's common
stock as part of such transaction.

(11) COMMON SHARES ISSUED FOR SERVICES

On June 14, 1999, the Company entered into a licensing agreement with
International Interactive Media, Inc. ("I2M") whereby the Company has exclusive
rights to license products that I2M has developed for the Company. The Company
paid a one-time $300 license fee to I2M by issuing 100,000 shares of the
Company's common stock. The Company expensed these costs, which are included in
development expenses for the year ended December 31, 1999.

(12) BUSINESS AND CREDIT CONCENTRATIONS

During the year ended December 31, 1999, approximately 76 percent of the
Company's total revenue was attributed to one customer. In addition, there were
accounts receivable from this customer at December 31, 1999 of approximately $2.
The loss of this customer or a significant decrease in revenue from this
customer would have a material adverse effect on the results of operations of
the Company.

The Company estimates an allowance for doubtful accounts generally based on
an analysis of collections in prior years, the credit worthiness of its
customers as well as general economic conditions. Consequently, an adverse
change in those factors could effect the Company's estimate of its bad debts.

(13) LOSS ON IMPAIRMENT OF FIXED ASSETS

In connection with entering into the service agreement with Spacenet Inc.
(see note 4), the Company decided to replace its in-store equipment acquired
from NPTV and at certain other locations within the first and second quarter of
2000. As a result, the Company recognized an impairment on this equipment of
$262 at December 31, 1999.

(14) RELATED PARTY TRANSACTIONS

The Company incurred approximately $50, $85 and $133 for legal services
provided by a related party during the years ended December 31, 1997, 1998 and
1999, respectively. The Company converted $50 of legal fees to this related
party into shares of the Company's common stock on August 1, 1997.

Interest expense on stockholder loans amounted to $77, $81 and $58,
(excluding amortization of discount on the Notes) for the years ended
December 31, 1997, 1998 and 1999, respectively. Accrued interest payable at
December 31, 1998 and 1999 on these stockholder loans amounted to $165 and $87,
respectively. The Company converted a portion of the stockholder loans to common
stock during 1998 (see note 5).

F-19
<PAGE>
RMS NETWORKS, INC. AND SUBSIDIARIES
(FORMERLY RETAIL MEDIA SYSTEMS, INC.)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

DECEMBER 31, 1997, 1998 AND 1999
(IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)

(14) RELATED PARTY TRANSACTIONS (CONTINUED)
During 1999, the Company issued options to acquire 58,900 shares of its
common stock at an exercise price of $3.00 per share to its First Placement
Advisor (see note 10) and paid a fee of $30. Certain directors of the Company
are also directors and/or investors in the First Placement Advisor. Another
company controlled by a director of the Company purchased 250,000 shares for
$750 in connection with the First Placement.

During 1999, the Company paid a director $90 in consulting fees.

(15) PROPOSED INITIAL PUBLIC OFFERING

On April 5, 2000, the Company entered into a mandate letter with an
investment banking firm to act as lead underwriter for an initial public
offering of the Company's common shares, which is expected to be completed in
2000. There can be no assurance that the initial public offering will occur.

F-20
<PAGE>

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

[LOGO]
RMS NETWORKS, INC.

COMMON STOCK

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

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

, 2000

CIBC WORLD MARKETS
ROBERTSON STEPHENS
PRUDENTIAL VOLPE TECHNOLOGY
A UNIT OF PRUDENTIAL SECURITIES

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

YOU SHOULD RELY ONLY ON THE INFORMATION CONTAINED IN THIS PROSPECTUS. NO DEALER,
SALESPERSON OR OTHER PERSON IS AUTHORIZED TO GIVE INFORMATION THAT IS NOT
CONTAINED IN THIS PROSPECTUS. THIS PROSPECTUS IS NOT AN OFFER TO SELL NOR IS IT
SEEKING AN OFFER TO BUY THESE SECURITIES IN ANY JURISDICTION WHERE THE OFFER OR
SALE IS NOT PERMITTED. THE INFORMATION CONTAINED IN THIS PROSPECTUS IS CORRECT
ONLY AS OF THE DATE OF THIS PROSPECTUS, REGARDLESS OF THE TIME OF THE DELIVERY
OF THIS PROSPECTUS OR ANY SALE OF THESE SECURITIES.

UNTIL , 2000 (25 DAYS AFTER THE COMMENCEMENT OF THIS OFFERING), ALL
DEALERS THAT EFFECT TRANSACTIONS IN THESE SECURITIES, WHETHER OR NOT
PARTICIPATING IN THIS OFFERING, MAY BE REQUIRED TO DELIVER TO DELIVER A
PROSPECTUS. THIS IS IN ADDITION TO THE DEALERS' OBLIGATION TO DELIVER A
PROSPECTUS WHEN ACTING AS UNDERWRITERS AND WITH RESPECT TO THEIR UNSOLD
ALLOTMENTS OR SUBSCRIPTIONS.
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS

ITEM 13. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.

The following table sets forth expenses and costs payable by RMS (other than
underwriting discounts and commissions) expected to be incurred in connection
with the issuance and distribution of the securities described in this
registration statement. All amounts are estimated except for the Securities and
Exchange Commission's registration fee and the National Association of
Securities Dealers' filing fee.

<TABLE>
<CAPTION>
AMOUNT
----------
<S> <C>
Registration fee under Securities Act....................... $19,800.00
NASD filing fee............................................. 8,000.00
The Nasdaq National Market fees............................. *
Legal fees and expenses..................................... *
Blue sky fees and expenses.................................. *
Accounting fees and expenses................................ *
Printing and engraving expenses............................. *
Registrar and transfer agent fees........................... *
Miscellaneous expenses...................................... *
----------
Total................................................... $ *
==========
</TABLE>

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

* To be filed by amendment.

ITEM 14. INDEMNIFICATION OF DIRECTORS AND OFFICERS.

Our certificate of incorporation and bylaws provide that we will indemnify
our directors and officers to the fullest extent permitted by Delaware law.
Section 145 of the Delaware General Corporation Law permits a corporation to
indemnify any director, officer, employee or agent of the corporation against
expenses, including attorneys' fees, judgments, fines and amounts paid in
settlement actually and reasonably incurred in connection with any action, suit
or proceeding brought by reason of the fact that such person is or was a
director, officer, employee or agent of the corporation, if such person acted in
good faith and in a manner that he reasonably believed to be in or not opposed
to the best interests of the corporation, and, with respect to any criminal
action or proceeding, if he had no reason to believe his conduct was unlawful.
In a derivative action (I.E., one brought by or on behalf of the corporation),
indemnification may be made only for expenses, actually and reasonably incurred
by any director, officer, employee or agent in connection with the defense or
settlement of such an action or suit, if such person acted in good faith and in
a manner that he reasonably believed to be in or not opposed to the best
interests of the corporation, except that no indemnification shall be made if
such person shall have been adjudged to be liable to the corporation, unless and
only to the extent that the court in which the action or suit was brought shall
determine that the defendant is fairly and reasonably entitled to indemnity for
such expenses despite such adjudication of liability.

Pursuant to Section 102(b)(7) of the DGCL, our certificate of incorporation
eliminates the liability of a director to the corporation or its stockholders
for monetary damages for such breach of fiduciary duty as a director, except for
liabilities arising (a) from any breach of the director's duty of loyalty to the
corporation or its stockholders; (b) from acts or omissions not in good faith or
which involve intentional misconduct or a knowing violation of law; (c) under
Section 174 of the DGCL; or (d) from any transaction from which the director
derived an improper personal benefit.

II-1
<PAGE>
We have entered into indemnification agreements with our directors and
officers. These agreements contain provisions that may require us, among other
things, to indemnify these directors and officers against certain liabilities
that may arise because of their status or service as directors or officers.

We have obtained insurance policies insuring our directors and officers and
those of our subsidiaries against certain liabilities they may incur in their
capacity as directors and officers. Under these policies, the insurer, on behalf
of RMS, may also pay amounts for which RMS has granted indemnification to the
directors or officers.

Additionally, reference is made to the underwriting agreement filed as
Exhibit 1.1 to this registration statement, which provides for indemnification
by the underwriters of RMS, its directors and officers who sign the registration
statement and persons who control RMS, under certain circumstances.

ITEM 15. RECENT SALES OF UNREGISTERED SECURITIES.

During 1996 we issued 1,850,000 shares of our common stock to Jason M. Kates
for $1,747, 650,000 shares of our common stock to Gary Halpin for $320, 275,000
shares of our common stock to Joel Kates for $225, and 75,000 shares of our
common stock to Cecil C. Williams and Susan P. Williams for $25,047.

During 1996 we issued 150,000 shares of our common stock to Tripp, Scott,
P.A. (f/k/a Tripp, Scott, Conklin & Smith) for $35,093 equivalent of legal
services.

In January 1997 we issued 250,000 shares of our common stock to Joel Kates
for $12,500, 583,335 shares of our common stock to Garry Johnson for $29,167,
583,330 shares of our common stock to Norman Tripp for $29,166 and 583,335
shares of our common stock to Dennis Smith and his spouse for $29,167.

In July 1997 we issued 50,000 shares of our common stock to Tripp, Scott,
P.A. as consideration for legal services rendered by such firm.

In December 1997 we sold 75,000 shares of our common stock to Ben Wagman for
$75,000. In April 1998 we issued 40,000 shares of our common stock to Thomas
Fay, an employee, for cash and as reimbursement for certain moving costs.

During 1999 we issued 10,000 shares to Ellen Springs, a former employee.

In May 1998 we issued 100,000 shares to four individuals for $100,000. These
individuals represented to us that they were accredited investors within the
meaning of Regulation D under the Securities Act.

In December 1998 six of our shareholders converted $625,000 of our
outstanding promissory notes into 625,000 shares of our common stock.

In March 1999 we issued options to acquire 58,900 shares of our common stock
at an exercise price of $3.00 per share to LPS Capital Ltd.

In June 1999 we issued 100,000 shares of our common stock to Casville
Investments, Ltd. (International Interactive Media, Inc.) as consideration for
the grant of a computer software and hardware license valued at $300,000.
Casville represented to us that it was an accredited investor within the meaning
of Regulation D under the Securities Act.

During February through July 1999 we sold 867,663 shares of our common stock
to institutions and individuals and received gross proceeds of approximately
$2.6 million. These institutions and individuals represented to us that they
were accredited investors within the meaning of Regulation D under the

II-2
<PAGE>
Securities Act, other than two purchasers who bought $45,000 of our common stock
in the offering with the assistance of a sophisticated purchaser representative.

In November 1999 we issued 1,000 shares of our common stock to an individual
as consideration for approximately $8,400 of insurance services provided to us.

In December 1999 and January 2000 we sold 1,342,414 shares of our common
stock to institutions and individuals for gross proceeds of approximately
$11.3 million before expenses. Each purchaser represented to us that it was an
accredited investor within the meaning of Regulation D under the Securities Act,
other than one purchaser who bought $25,000 of our common stock in the offering
with the assistance of a sophisticated purchaser representative. In July 1999 we
issued options to acquire 50,000 shares of our common stock at an exercise price
of $6.60 per share to the placement agent for this private placement and in
January 2000 we issued options to acquire 80,206 shares of our common stock at
an exercise price of $9.24 per share to this placement agent.

In February 2000 we issued 10,000 shares of our common stock to seven
individuals as partial consideration for executing non-compete agreements. The
seven individuals represented that they were accredited investors or making
their investment decision in reliance on a sophisticated purchaser
representative.

The issuances of our common stock and awards of stock options described
above were made pursuant to Sections 4(2) (including Regulation D) or 3(b)
(including Rule 701) under the Securities Act.

II-3
<PAGE>
ITEM 16. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.

The following documents are filed as exhibits to this registration
statement:

<TABLE>
<CAPTION>
EXHIBIT DESCRIPTION
- ------- -----------
<C> <S>
1.1* Form of Underwriting Agreement
3.1* Form of certificate of incorporation of RMS, as amended and
restated
3.2* Form of bylaws of RMS, as amended and restated
4.1* Form of certificate of common stock
5.1* Opinion of Fried, Frank, Harris, Shriver & Jacobson
10.1 Programming Agreement, dated as of April 1, 1999, by and
between Advance Stores Company, Incorporated, and Retail
Media Systems, Inc. Portions of this exhibit have been
omitted pursuant to an application for confidential
treatment pursuant to Rule 406 under the Securities Act of
1933, as amended.
10.2* License Agreement, dated June 30, 1999, by and between
National Community Pharmacists Association, as Licensor, and
Retail Media Systems, Inc., as Licensee.
10.3 Asset Purchase and Sale Agreement, dated June 30, 1999,
between NPTV LLC, National Community Pharmacists Association
and Retail Media Systems, Inc. Portions of this exhibit have
been omitted pursuant to an application for confidential
treatment pursuant to Rule 406 under the Securities Act of
1933, as amended.
10.4 Service Agreement, dated as of December 2, 1999, between
Retail Media Systems, Inc. and Spacenet Inc. Portions of
this exhibit have been omitted pursuant to an application
for confidential treatment pursuant to Rule 406 under the
Securities Act of 1933, as amended.
10.5* Transponder Lease Agreement, dated August 30, 1996, between
Microspace Communications Corporation and The National
Pharmacy Network, LLC; Assignment Agreement, dated June 30,
1999, between NARD Enterprises, Inc., National Pharmacy
Network, LLC, and Pharmasee, L.L.C.
10.6* Office Lease Agreement, dated as of January 5, 2000, between
Third and Ninth Limited Partnership and Retail Media
Systems, Inc.
10.7* Service Agreement, dated as of March 10, 2000, between
Retail Media Systems, Inc., The Sports Authority, Inc. and
the other parties named therein.
10.8* Form of Sterling Financial Group Stock Option Agreement
10.9* Employment Agreement between Retail Media Systems, Inc. and
Jason M. Kates
10.10* Employment Agreement between Retail Media Systems, Inc. and
Brent Burns
10.11* Retail Media Systems 1997 Employee Stock Option Plan, as
amended
10.12* Retail Media Systems 1998 Employee Stock Option Plan, as
amended
10.13* Retail Media Systems Employee Stock Option Plan #3
10.14* 2000 Stock Incentive Plan
10.15* Form of Stock Option Agreement
10.16* Form of Indemnification Agreement
21.1 Subsidiaries of RMS
23.1 Consent of KPMG LLP
23.2* Consent of Fried, Frank, Harris, Shriver & Jacobson
(included in Exhibit 5.1 above)
24.1 Power of Attorney (included on signature page of this
registration statement)
27.1 Financial data schedule
</TABLE>

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

* To be filed by amendment.

II-4
<PAGE>
ITEM 17. UNDERTAKINGS.

Insofar as indemnification for liabilities arising under the Securities Act
of 1933 may be permitted to directors, officers and controlling persons of the
registrant pursuant to the foregoing provisions, or otherwise, the registrant
has been advised 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 the registrant of expenses incurred
or paid by a director, officer or controlling person of the registrant in the
successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Act and will be governed by the final adjudication of
such issue.

The undersigned registrant hereby undertakes that:

(1) It will provide to the underwriters at the closing specified in the
underwriting agreement certificates in such denominations and registered in
such names as required by the underwriters to permit prompt delivery to each
purchaser.

(2) For purposes of determining any liability under the Securities Act of 1933,
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 registrant pursuant to Rule 424(b)(1) or (4) or
497(h) under the Securities Act shall be deemed to be part of this
registration statement as of the time it was declared effective.

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

II-5
<PAGE>
SIGNATURES

Pursuant to the requirements of the Securities Act of 1933, the Registrant
has duly caused this Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of Fort Lauderdale, State of
Florida, on April 5, 2000.

<TABLE>
<S> <C> <C>
RMS NETWORKS, INC.

BY: /S/ JASON M. KATES
-----------------------------------------
Jason M. Kates
Chairman of the Board, President
and Chief Executive Officer
</TABLE>

POWER OF ATTORNEY

KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature appears
below constitutes and appoints Jason M. Kates, Brent D. Burns and Dennis D.
Smith, and each of them, his true and lawful attorneys-in-fact and agents, with
full powers of substitution and resubstitution, for and in his name, place and
stead, in any and all capacities, to sign any or all amendments (including
post-effective amendments) to this registration statement, and any registration
statement related to the offering contemplated by this registration statement
that is to be effective upon filing pursuant to Rule 462(b) under the Securities
Act of 1933, as amended, and to file the same, with all exhibits thereto, and
other documents in connection therewith, with the Securities and Exchange
Commission, granting unto said attorneys-in-fact and agents, and each of them,
full power and authority to do and perform each and every act and thing
requisite and necessary to be done in and about the premises, as fully to all
intents and purposes as might or could be done in person, hereby ratifying and
confirming all that said attorneys-in-fact and agents or any of them, or their
substitutes, may lawfully do or cause to be done by virtue hereof.

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

<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<C> <S> <C>
/s/ JASON M. KATES Chairman of the Board, President and
- ------------------------------------- Chief Executive Officer (Principal April 5, 2000
Jason M. Kates Executive Officer)

Chief Financial Officer, Executive
/s/ BRENT D. BURNS Vice President, Treasurer and
- ------------------------------------- Director (Principal Financial and April 5, 2000
Brent D. Burns Accounting Officer)

/s/ DAVID CLARKE Director
- ------------------------------------- April 5, 2000
David Clarke

/s/ JOHN MCMENAMIN Director
- ------------------------------------- April 5, 2000
John McMenamin
</TABLE>

II-6
<PAGE>

<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<C> <S> <C>
/s/ DENNIS D. SMITH Director
- ------------------------------------- April 5, 2000
Dennis D. Smith, Esq.

/s/ NORMAN D. TRIPP Director
- ------------------------------------- April 5, 2000
Norman D. Tripp, Esq.

/s/ BRIAN WOODS Director
- ------------------------------------- April 5, 2000
Brian Woods
</TABLE>

II-7
<PAGE>
EXHIBIT INDEX

<TABLE>
<CAPTION>
EXHIBIT DESCRIPTION
- --------------------- -----------
<C> <S>
1.1* Form of Underwriting Agreement

3.1* Form of certificate of incorporation of RMS, as amended and
restated

3.2* Form of bylaws of RMS, as amended and restated

4.1* Form of certificate of common stock

5.1* Opinion of Fried, Frank, Harris, Shriver & Jacobson

10.1 Programming Agreement, dated as of April 1, 1999, by and
between Advance Stores Company, Incorporated, and Retail
Media Systems, Inc. Portions of this exhibit have been
omitted pursuant to an application for confidential
treatment pursuant to Rule 406 under the Securities Act of
1933, as amended.

10.2* License Agreement, dated June 30, 1999, by and between
National Community Pharmacists Association, as Licensor, and
Retail Media Systems, Inc., as Licensee.

10.3 Asset Purchase and Sale Agreement, dated June 30, 1999,
between NPTV LLC, National Community Pharmacists Association
and Retail Media Systems, Inc. Portions of this exhibit have
been omitted pursuant to an application for confidential
treatment pursuant to Rule 406 under the Securities Act of
1933, as amended.

10.4 Service Agreement, dated as of December 2, 1999, between
Retail Media Systems, Inc. and Spacenet Inc. Portions of
this exhibit have been omitted pursuant to an application
for confidential treatment pursuant to Rule 406 under the
Securities Act of 1933, as amended.

10.5* Transponder Lease Agreement, dated August 30, 1996, between
Microspace Communications Corporation and The National
Pharmacy Network, LLC; Assignment Agreement, dated June 30,
1999, between NARD Enterprises, Inc., National Pharmacy
Network, LLC, and Pharmasee, L.L.C.

10.6* Office Lease Agreement, dated as of January 5, 2000, between
Third and Ninth Limited Partnership and Retail Media
Systems, Inc.

10.7* Service Agreement, dated as of March 10, 2000, between
Retail Media Systems, Inc. The Sports Authority, Inc. and
the other parties named therein.

10.8* Form of Sterling Financial Group Stock Option Agreement

10.9* Employment Agreement between Retail Media Systems, Inc. and
Jason M. Kates

10.10* Employment Agreement between Retail Media Systems, Inc. and
Brent Burns

10.11* Retail Media Systems 1997 Employee Stock Option Plan, as
amended

10.12* Retail Media Systems 1998 Employee Stock Option Plan, as
amended

10.13* Retail Media Systems Employee Stock Option Plan #3

10.14* 2000 Stock Incentive Plan

10.15* Form of Stock Option Agreement

10.16* Form of Indemnification Agreement

21.1 Subsidiaries of RMS

23.1 Consent of KPMG LLP

23.2* Consent of Fried, Frank, Harris, Shriver & Jacobson
(included in Exhibit 5.1 above)

24.1 Power of Attorney (included on signature page of this
registration statement)

27.1 Financial data schedule
</TABLE>

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

* To be filed by amendment.

<PAGE>

Exhibit 10.1

PROGRAMMING AGREEMENT

THIS AGREEMENT is made as of April 1, 1999 by and between ADVANCE
STORES COMPANY, INCORPORATED, a Virginia corporation ("ADVANCE"), 5673 Airport
Road, Roanoke, Virginia 24012, and RETAIL MEDIA SYSTEMS, INC., a Delaware
corporation ("RMS"), 633 South Federal Highway, 4th Floor, Fort Lauderdale,
Florida 33301.

WHEREAS, ADVANCE, along with its subsidiaries and affiliates, owns and
operates a chain of retail automotive aftermarket parts stores numbering in
excess of 1,500 locations across 37 states;

WHEREAS, ADVANCE and RMS wish to install and operate a private
television network in these stores consisting of television monitors, satellite
and related equipment over which ADVANCE will air and play programming and
advertisements (collectively, the "Programming") uniquely tailored to ADVANCE's
business and customers;

WHEREAS, ADVANCE wishes to retain RMS to produce and license the
Programming, to supply certain equipment and to provide certain related services
in conjunction with the Network (as that term is defined herein), all in
accordance with the terms and conditions set forth herein.

NOW THEREFORE, in consideration of the mutual covenants set forth
herein and other good and valuable consideration, the receipt and adequacy of
which is hereby acknowledged, ADVANCE and RMS hereby agree as follows:

ARTICLE 1. GENERAL

1.1 CONTRACTOR RELATIONSHIP. ADVANCE hereby retains RMS as an
independent contractor to supply certain equipment programming and services in
conjunction with the Network, all as further set forth herein. The relationship
between ADVANCE and RMS shall be solely as set forth herein. Neither party shall
be deemed the employee, agent, partner or joint venturer of the other, nor have,
or represent to have, any authority or capacity to make or alter any agreement
on behalf of the other, to legally bind the other, to credit or receive money
due on behalf of the other or to do any other thing on behalf of the other.
Neither ADVANCE nor RMS will have or attempt to exercise any control or
direction over the methods used by the other to perform its work, duties and
obligations under this Agreement except as set forth herein. The respective
employees, agents and representatives of each of ADVANCE and RMS shall remain
their own employees, agents or representatives, and shall not be entitled to
employment benefits of any kind from the other. ADVANCE and RMS each assume full
responsibility for their own compliance with any and all applicable laws,
ordinances, rules and regulations.

1.2 TERM. The term of this Agreement shall be two years commencing
April 1, 1999, and ending March 31, 2001, unless otherwise earlier terminated as
set forth herein. This Agreement may be renewed by Advance at its option for
additional one year periods by providing written notice of such extension to RMS
no later than six months prior to the expiration of the initial term or any
renewal term.

<PAGE>

ARTICLE 2. NETWORK OVERVIEW

2.1 THE NETWORK. ADVANCE and RMS intend to establish and operate a
private television network within the stores comprising the Advance Auto Parts
retail chain (the "Network"). The Network will be capable of broadcasting,
airing, and playing two channels of programming:

2.1.1 "SALES FLOOR SHOW" produced by RMS for air and play in
all participating stores during business hours. Programming will be produced by
RMS and delivered to and stored upon Digital Video Servers at the satellite hub
as hereinafter described. The Digital Video Servers will provide a continuous
programming feed to ADVANCE's satellite hub for satellite encoding, distribution
to and air and play in the stores.

2.1.2 "CORPORATE COMMUNICATIONS PROGRAMMING" for air and play
in all participating stores before and after business hours and, in limited
time-certain aspects, during business hours. Programming will be produced by
ADVANCE and, in certain instances RMS, either fed live to the satellite hub or
delivered to and stored upon Digital Video Servers, Beta tape or other storage
media at the satellite hub. ADVANCE will select and provide the feed to the
satellite hub for satellite encoding, distribution to and air and play in the
stores.

2.2 NETWORK EQUIPMENT. The Network Equipment will consist of the
following:

2.2.1 "STORE EQUIPMENT" to be owned, installed, maintained and
operated by ADVANCE in each participating retail store and connected to
ADVANCE's satellite distribution network. ADVANCE and RMS will agree upon
standard equipment and installation configurations for each of ADVANCE's
standard store sizes and formats. These configurations are intended to fit the
elements of decor within the stores and to provide an appropriate video and
audio presence within the stores. As a guideline, these configurations for each
store will include a minimum of two 20" television monitors, remote speakers,
satellite receiving components and such other equipment as ADVANCE and RMS deem
desirable ("Store Equipment").

2.2.2 "SATELLITE EQUIPMENT" to be owned, installed, maintained
and operated by ADVANCE in ADVANCE's corporate satellite hub in Roanoke,
Virginia to permit the continuous broadcast, air and play of the Programming to
all participating stores ("Satellite Equipment"). Initially, satellite
broadcasts will be via a single channel to all stores with the ability to add
additional channels. ADVANCE and RMS will agree upon standard equipment and
installation configurations for the initial single channel and any additional
channels desired by ADVANCE.

2.2.3 "DVS HUB EQUIPMENT" to be owned, installed, maintained
and operated by RMS in ADVANCE's corporate satellite hub in Roanoke, Virginia
("DVS Hub Equipment"). ADVANCE and RMS will agree upon standard DVS
configurations for the initial single channel and any additional channels
desired by ADVANCE. The initial single channel configuration will include a
minimum of two Digital Video Servers (one primary, one backup) upon which RMS
will store and deliver the Programming and which will provide the Sales Floor
Show feed for encoding and broadcast to all participating stores via ADVANCE's
satellite distribution network.

2.3 INSTALLATION. ADVANCE and RMS have established an Installation
Schedule for the installation of the Store Equipment, the Satellite Equipment
and the DVS Hub Equipment, which Schedule is attached hereto.

ARTICLE 3. SALES FLOOR SHOW

3.1 NETWORK LICENSE. For the term of this Agreement, ADVANCE hereby
grants to RMS an exclusive license to produce and supply all of the Sales Floor
Shows for broadcast, air and play on the Network in all ADVANCE retail stores,
whether now existing or hereafter created. ADVANCE will cause its participating
retail stores to air and play the Sales Floor Show on the Network continuously
during all business hours that each participating retail store is open. This
license will be exclusive and ADVANCE will not cause or permit any other
programming, broadcast, video, tape, cassette, or other video or audio medium to
be aired or played in the stores during business hours, with the following
exceptions: ordinary testing and demonstration of automotive sound

-2-
<PAGE>

equipment sold in the stores; informational or training audio or video materials
relating to a specific product or service; and managerial audio or video
materials relating to store management and operations; so long as in each
instance, the video or audio of any of these activities does not interfere,
supersede or overshadow the video or audio of the Sales Floor Show on the
Network.

3.2 SALES FLOOR SHOW. The Sales Floor Show for the Network will
initially be comprised of a two-hour video program uniquely tailored to
ADVANCE's business and customers (the "Show"), made up of thirty minute wheels,
with seventeen - twenty minutes comprised of automotive, sports and
entertainment elements ("Elements" to be provided by RMS) and the remaining ten
- - thirteen minutes comprised of advertising ("Ads" to be provided by ADVANCE).
Two hours of new programming materials, including both Elements and Ads, will be
produced by RMS once every four weeks, of which approximately thirty minutes
will be inserted and interwoven into the Show by RMS once each week (each week,
a "Cycle"), all in accordance with the Production Schedule described in Article
4 hereof. All Elements shall be approved by ADVANCE in writing prior to being
included in the Show.

3.3 CONTENT STANDARDS. The content of the Show will consist of Elements
and Ads uniquely tailored to ADVANCE's retail auto parts business and customers.
As a guideline, it is intended that the Show will be of a high quality suitable
for network television, with content suitable for viewing and display in a
retail environment and with a suitable mixture of Elements of interest to
ADVANCE's auto parts customers. ADVANCE or RMS may reject Elements or Ads within
the Show which ADVANCE or RMS reasonably deem to be objectionable for viewing or
display in a retail environment and may refuse to air and play such
objectionable Element or Ad until replaced. RMS will provide replacement
Elements, which may be existing or previously aired Elements, and ADVANCE will
provide replacement Ads, which may be existing or previously aired Ads, as soon
as possible after notice from ADVANCE or RMS of any objectionable Element or Ad.
ADVANCE will distribute the replacement Elements or Ads via satellite
distribution to minimize the impact thereof.

3.4 OWNERSHIP. The Elements and all rights, titles and interests
therein will be owned by, and will be the sole and exclusive property of, RMS.
The Ads, and any other materials provided by ADVANCE, will be owned by and will
be the sole and exclusive property of, ADVANCE. The compilation and arrangement
of Elements and Ads comprising the Show will be the sole and exclusive property
of ADVANCE. ADVANCE will not have, nor will it assert, any right, title or
interest in the Elements. ADVANCE is hereby granted a limited, non-exclusive
license by RMS to broadcast, air and play the Show over the Network in
accordance with the terms of this Agreement. RMS will not have, nor will it
assert, any right, title or interest in the Ads, any other materials provided by
ADVANCE and the compilation and arrangement of Elements and Ads comprising the
Show. RMS agrees it will not copy or use or permit the copying or use by any
unauthorized persons of the Ads, any other materials provided by ADVANCE, and
the compilation and arrangement of Elements and Ads comprising the Show. ADVANCE
agrees it will not copy or permit the copying by any unauthorized persons of the
Elements.

3.5 LICENSES. The Show may include materials owned or licensed by other
persons for which RMS (if produced or provided by RMS) or ADVANCE (if produced
or provided by ADVANCE or an advertiser) has or will obtain the appropriate
licenses for and on behalf of RMS and ADVANCE. Any and all fees, costs and
expenses as a result of, or in connection with, any licensed materials will be
the sole responsibility and obligation of RMS (if produced and/or provided by
RMS) or ADVANCE (if produced and/or provided by ADVANCE or an advertiser).

ARTICLE 4. PRODUCTION

4.1 PRODUCER SERVICES. During the term of this Agreement, RMS will be
the exclusive producer and supplier of, and will produce and/or supply, all
Elements in the Sales Floor Shows for broadcast, air and play on the Network.
ADVANCE will produce and supply, or cause to be produced or supplied, all Ads in
the Sales Floor Shows for broadcast, air and play on the Network.

4.2 MIX. Each Show will be comprised of sixty-eight (68) to eighty (80)
minutes of fresh Elements to be provided by RMS, with the remainder of the Show
comprised of Ads provided by ADVANCE. Elements are

-3-
<PAGE>

expected to range in length from ten seconds to three minutes. Ads are expected
to range in length from ten to thirty seconds and to repeat approximately once
every half hour. All of the Elements and the Ads for each Show will be
consolidated and encoded by RMS once every four weeks. Of these Elements and
Ads, approximately thirty minutes of fresh materials will be inserted and
interwoven into the Show by RMS once each week, all in accordance with the Show
Schedule. Any requests by ADVANCE for Elements, Ads or insertions in excess of
these ranges will constitute additional services which will be quoted as and
when requested.

4.3 CONTENT. The content of the Elements will consist of automotive,
sports and entertainment Elements uniquely tailored to ADVANCE's retail auto
parts business and customers. Content and format of Elements will be determined
by RMS, subject to the prior written approval of ADVANCE. Content and format of
Ads will be determined by ADVANCE, with the reasonable input and assistance of
RMS.

4.4 PRODUCTION AND DELIVERY.

4.4.1 Advance and RMS have established a Show Schedule, which
Schedule is attached hereto, for the production, broadcast, air and play of the
Show on the Network. Each delivery date of a Show shall be referred to herein as
a Show Delivery Date.

4.4.2 RMS will cause the Elements for each Show to be ordered,
created, produced, licensed, purchased and delivered to the RMS production
facility designated in writing from time to time, on or before the date two
weeks prior to such Show's applicable Show Delivery Date (each, an "Element
Delivery Date"). RMS will be responsible for any and all services, costs and
expenses incurred in connection therewith, except as otherwise set forth herein.

4.4.3 ADVANCE will cause the Ads for each Show to be ordered,
created, produced, licensed, purchased and delivered to the RMS production
facility designated in writing from time to time, on or before the date four
weeks prior to such Show's applicable Show Delivery Date (each, an "Ad Delivery
Date"). ADVANCE will be responsible for any and all services, costs and expenses
incurred in connection therewith, except as otherwise set forth herein.

4.4.4 The Elements and the Ads will be formatted and delivered
on such media as RMS may determine from time to time, including VHS, one-inch or
Beta tape, digital compact disc or other. All shipping or delivery charges
incurred will be the responsibility of, and be borne by, RMS (with respect to
Elements) and ADVANCE (with respect to Ads), except as otherwise set forth
herein.

4.4.5 Any and all risk of loss to the Elements, whether caused
by casualty, theft, damage or otherwise, will be borne by RMS. Any and all risk
of loss to the Ads, whether caused by casualty, theft, damage, or otherwise,
will be borne by ADVANCE until the delivery of the Ads to RMS, after which time
such risk of loss shall be borne by RMS.

4.4.6 RMS will cause the Elements and the Ads for each Show to
be sweetened, encoded and delivered to the DVS Hub Equipment, on or before such
Show's applicable Show Delivery Date. RMS will be responsible for any and all
services, costs and expenses incurred in connection therewith, except as
otherwise set forth herein. ADVANCE will provide a T-1 Line at its corporate
satellite hub for electronic delivery of the Elements and the Ads by RMS to the
DVS Hub Equipment.

4.4.7 RMS will cause the Elements and the Ads for each Show to
be scripted, scheduled, controlled, played and monitored from the DVS Hub
Equipment for satellite encoding, broadcast, air and play in the stores in
accordance with such Show's applicable Air Dates as set forth in the Show
Schedule. RMS will be responsible for any and all services, costs and expenses
incurred in connection therewith, except as otherwise set forth herein.

-4-
<PAGE>

ARTICLE 5. FEES AND COMPENSATION

5.1 BASELINE SERVICES. Baseline services include all of the services
required to deliver the Show as set forth in Articles 3 and 4 hereof and will be
priced and invoiced to ADVANCE at the price of [*] per Show, payable in full
twenty (20) days after each Show Delivery Date. Such prices will be
all-inclusive of any and all costs, expenses, materials, licenses, royalties,
fees or charges in connection with the baseline services required hereunder. If
the term of this Agreement is extended, the price will be increased on each
April 1 by an amount equal to 2% of the then current price.

5.2 ADDITIONAL SERVICES. ADVANCE may request of RMS from time to time
additional services not included in the baseline services. These additional
services may include the following services:

5.2.1 "SALES SERVICES" to include solicitation of Ad sales
outside the scope of baseline services.

5.2.2 "MARKETING SERVICES" to include research, preparation,
evaluation, recommendation and implementation services relating to marketing
plans, materials, research, and similar matters outside the scope of baseline
services.

- ---------------------
[*] Confidential treatment has been requested with respect to certain
information contained in this document. Confidential portions have been
omitted from the public filing and have been filed separately with the
Securities and Exchange Commission.

-5-
<PAGE>

5.2.3 "CONSULTING SERVICES" to include consultation, analysis,
evaluation and recommendation services relating to programming sales, marketing,
technology, equipment, satellite, installation and similar matters outside the
scope of baseline services.

5.2.4 "PURCHASING SERVICES" to include research, analysis,
evaluation, purchase, lease, finance, license or similar services or procurement
relating to programming, sales, marketing, technology, equipment, satellite,
installation and similar matters outside the scope of baseline services.

5.2.5 "OPERATIONS SERVICES" to include consultation,
administration, troubleshooting, maintenance, help, production, sweetening,
encoding, distribution, scripting, controlling and similar services relating to
programming, operations, Elements, Ads and similar matters outside the scope of
baseline services.

RMS will use reasonable efforts to provide and to quote such additional services
as and when requested by ADVANCE. RMS will be paid its standard rates as set
forth on its Rate Schedule, which is attached hereto, plus reimbursable
out-of-pocket expenses for additional services, licensing and procurement,
unless otherwise agreed in writing between ADVANCE and RMS. All amounts for
additional services will be due and payable within 30 days after invoicing
(which shall occur after the services are provided by RMS), unless otherwise
agreed in writing between ADVANCE and RMS.

ARTICLE 6. INDEMNIFICATION

6.1 INDEMNIFICATION. ADVANCE and RMS will each indemnify, defend and
save harmless the other of and from any and all fines, suits, claims, royalties,
license fees, infringement damages, demands, taxes, penalties, losses and
actions (including reasonable attorney's fees, costs of investigation and travel
and living expenses) arising from a breach by ADVANCE or RMS, as the case may
be, of any provision of this Agreement.

ARTICLE 7. DEFAULTS AND REMEDIES

7.1 DEFAULTS. The occurrence of any one or more of the following shall
constitute a "Default" hereunder:

7.1.1 Failure of RMS or ADVANCE to pay any amount required
hereunder within twenty (20) days after receipt of written notice that such
payment has not been received when due; or

7.1.2 Failure of RMS or ADVANCE to perform any other covenant,
condition, agreement or provision contained herein within thirty (30) days after
receipt by ADVANCE or RMS, as the case may be, of written notice of such failure
or, in the event such failure cannot reasonably be cured within such thirty (30)
days, failure to diligently and reasonably pursue the cure thereof within such
thirty (30) day period; or

7.1.3 Commencement of bankruptcy, insolvency, assignment for
the benefit of creditors or receivership proceedings against ADVANCE or RMS and
in the case of any involuntary proceeding, which is not dismissed within 60
days.

7.2 REMEDIES. Upon the occurrence and continuance of a Default and
subject to the limitations and waivers otherwise set forth herein, the party not
in Default may, at its option and without any obligation to do so and in
addition to any other remedies otherwise set forth in this Agreement, elect any
one or more of the following remedies:

7.2.1 With respect to material non-monetary Defaults or any
monetary Default pursuant to Section 7.1.1, terminate and cancel this Agreement;
or

7.2.2 With respect to material non-monetary Defaults or any
monetary Default pursuant to Section 7.1.1, withhold performance of any
obligation under this Agreement until such time as such Default is cured; or

7.2.3 Cure such Default and recover the reasonable costs
thereof, together with interest thereon at the lesser of 18% or the maximum
legal rate permitted by applicable law, and attorneys' fees, from the party in
Default; or

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7.2.4 Seek injunctive relief to enjoin any act of a party in
violation hereof, or

7.2.5 Seek specific performance of any covenant or obligation
of a party hereunder; or

7.2.6 Pursue any other remedy now or hereafter available under
the laws or judicial decisions of the Commonwealth of Virginia.

No action or omission by ADVANCE or RMS hereunder shall be construed as an
election by ADVANCE or RMS to terminate this Agreement unless written notice of
such election has been delivered in accordance with Article 8 hereof.

7.3 INTEREST. Any payments due hereunder overdue for more than ten (10)
days shall bear interest at the lesser of eighteen percent (18%) or the maximum
legal rate permitted by applicable law from the due date thereof until paid in
full.

7.4 RIGHTS CUMULATIVE. Each and all of the rights and remedies given by
this Agreement or by law or equity are cumulative, and the exercise of any such
right or remedy shall not impair any party's night to exercise any other right
or remedy available under this Agreement or by law or equity.

7.5 NO WAIVER. No delay or omission of the right to exercise any right
or power shall impair any such right or power, or shall be construed as a waiver
of any breach or default or as acquiescence thereto. One or more waivers of any
covenant, term or condition of this Agreement shall not be construed as a waiver
of a continuing or subsequent breach of the same covenant, provision or
condition. The consent or approval to or of any act of a nature requiring
consent or approval shall not be deemed to waive or render unnecessary consent
to or approval of any subsequent similar act. Payment or receipt of a lesser
amount than that due hereunder shall not be deemed to be other than on account
of the earliest amount due hereunder.

7.6 ATTORNEYS' FEES. In the event of any controversy arising under or
relating to the interpretation or implementation of this Agreement or any breach
thereof, the prevailing party shall be entitled to payment for all costs and
attorneys' fees (both trial and appellate) incurred in connection therewith. The
terms of this Section shall survive any termination of this Agreement.

ARTICLE 8. MISCELLANEOUS

8.1 PROPRIETARY INFORMATION. In recognition of the proprietary
interests of each of ADVANCE and RMS in their respective business operations,
ADVANCE and RMS each acknowledge the confidential nature of their relationship
and any information or data relating to the business operations, systems,
components, customers, prices, methods, plans, programs, results or other
know-how of the other (collectively, "Trade Secrets") and each agrees to
preserve the confidential nature of these relationships (1) by using and
retaining the Trade Secrets of the other in trust and confidence, only for their
own internal use in connection with the performance of this Agreement and not in
any way in competition with the other, (2) by not copying (except for internal
use), altering, disassembling, or otherwise changing, in any manner whatsoever,
the Trade Secrets of the other, (3) by not disclosing any Trade Secrets of the
other to, or permitting the use of any Trade Secrets of the other by, any
unauthorized persons, and (4) upon termination of this Agreement, by returning
any and all Trade Secrets and copies thereof to the proprietary owner thereof,
except as otherwise set forth herein. The terms of this Section shall survive
any termination of this Agreement. In recognition that a breach hereof may cause
irreparable and unascertainable damage to a party, either party shall be
entitled to injunctive relief (and posting of any bond, surety, or security in
connection therewith is hereby waived by all parties) to enjoin any violation or
threatened violation of the terms hereof in addition to any other remedy or
right now or hereafter available to a party under this Agreement or any law or
judicial decision of the Commonwealth of Virginia.

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<PAGE>

8.2 TESTING; ACCESS. RMS is hereby granted access at all reasonable
times to all participating retail stores to install, maintain, repair and remove
any equipment and to conduct such tests and surveys as RMS deems necessary or
desirable; provided, RMS shall not unreasonably interfere with the business of
the participating retail store. ADVANCE will, as ADVANCE and RMS may mutually
agree from time to time, provide to RMS, to the extent reasonably available,
inventory and product movement information for both advertising and
non-advertising products, for both participating and non-participating stores on
a per store basis, and for such time periods as ADVANCE and RMS may mutually
agree.

8.3 TRANSFER RESTRICTIONS. Neither this Agreement nor any interest
herein may be transferred or assigned by either party without the prior written
consent of the other, which consent may not be unreasonably withheld, except
that this Agreement may be transferred or assigned by either party without the
consent of the other to a successor corporation as a result of a merger or sale
of assets. Any transfer or assignment without the required consent shall
constitute a breach hereof and convey no rights to or interest in this
Agreement. In the event either party does not consent to any transfer for which
consent is required, this Agreement shall automatically terminate.

8.4 NOTICES. All notices, certificates or other communications
hereunder shall be deemed given on the date received. The parities may, by
notice given hereunder, designate any further or different addresses to which
subsequent notices, certificates or other communications shall be sent.

8.5 INTERPRETATION. The captions or headings in this Agreement are for
convenience only and in no way limit the scope or intent of any provision of
this Agreement. The words "hereof", "hereby", "hereto", "herein", "hereunder"
and the like refer to this Agreement in its entirety. The words "person" and
"persons" shall include any individual, association, joint venture, partnership,
corporation, joint stock company, trust, unincorporated organization, or
government or any agency or political subdivision thereof. The language used
herein shall be deemed to be the language chosen by the parties to express their
mutual intent and no rule of strict construction shall be applied against any
party.

8.6 ENTIRE AGREEMENT. This Agreement, together with any other
agreements entered into contemporaneously herewith, constitutes and represents
the entire agreement between the parties hereto and supersedes any prior
understandings or agreements, written or verbal, between the parties hereto
respecting the subject matter herein. This Agreement may be amended,
supplemented, modified or discharged only upon an agreement in writing executed
by all of the parties hereto. This Agreement shall inure to the benefit of and
shall be binding upon the parties hereto and their respective successors and
permitted assigns. In the event any provision of this Agreement shall be held
invalid or unenforceable by any court of competent jurisdiction, such holding
shall not invalidate or render unenforceable any other provision hereof.

8.7 APPLICABLE LAW. This Agreement shall be governed by and construed
in accordance with the laws of the Commonwealth of Virginia, United States of
America, and, venue and jurisdiction shall lie only in the state and federal
courts located in the City or County of Roanoke, Virginia. Each of ADVANCE and
RMS hereby submits to such jurisdiction and venue and waives any defense of
inconvenient forum in relation hereto.

8.8 EXCLUSIVITY IN CATEGORY. RMS will not own, establish, program or
operate a private television network similar to the Network in any automotive
aftermarket parts retail store. This category is exclusive to retail stores
dedicated to the sale of automotive aftermarket parts and does not include
department stores, drug stores, convenience stores, grocery stores, discount
stores, gas stations, automotive service stores, tire stores, oil change
outlets, car dealerships or other store or service outlets in which automotive
aftermarket parts constitute only a portion of products or services available in
such stores.

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

RETAIL MEDIA SYSTEMS, INC. ADVANCE STORES COMPANY, INCORPORATED

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By: /s/ Jason M. Kates By: /s/ Chad Tilley
----------------------- ------------------------------
Jason M. Kates, President Chad Tilley, General Manager

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<PAGE>

Exhibit 10.3

ASSET PURCHASE AND SALE AGREEMENT

THIS ASSET PURCHASE AND SALE AGREEMENT, dated this 30th day of June,
1999, is made by and between BUYER and SELLER.

W I T N E S S E T H:

WHEREAS, Seller is the owner of the Business operating under the Trade
Name; and

WHEREAS, Seller desires to sell, and Buyer, in reliance upon the
representations and warranties set forth herein, desires to buy, certain assets
used in connection with the operation of the Business, and the Business itself
as a going concern.

NOW, THEREFORE, in consideration of the promises set forth herein, and
for other good and valuable consideration, the receipt and adequacy of which is
hereby acknowledged, Buyer and Seller agree as follows:

ARTICLE 1
DEFINITIONS AND INTERPRETATIONS.

SECTION 1.1 DEFINITIONS. The following terms (whether or not underscored) when
used in this Agreement, including its preamble and recitals, shall, except where
the context otherwise requires, have the following meanings (such meanings to be
equally applicable to the singular and plural forms thereof):

"ACCOUNTS RECEIVABLE" shall mean any of Seller's (i) right to payment
for goods sold, leased or licensed, or for services rendered, in connection with
the Business, whether or not earned by performance, (ii) notes receivable,
bonds, and any other receivables and evidence of indebtedness from the Business,
and (iii) Seller's right to payment of any nature whatsoever from the Business.

"AGREEMENT" shall mean this Asset Purchase and Sale Agreement.

"ASSIGNMENT AGREEMENT" shall mean the Assignment Agreement between
Buyer and Seller, dated as of the Closing Date, whereby Seller assigns to Buyer,
free and clear of all Encumbrances, each of Seller's right, title and interest
in and to those Purchased Assets which are capable of transfer by assignment.
The Assignment Agreement shall be in the form attached hereto as EXHIBIT A.

"ASSIGNMENT OF LEASE" shall mean the Assignment of Lease Agreement
between Buyer and Seller, dated as of the Closing Date, whereby Seller assigns
to Buyer, free and clear of all Encumbrances, each of Seller's right, title and
interest in and to Seller's leases with individual pharmacies in connection with
the Business. The Assignment of Lease shall be in the form attached hereto as
EXHIBIT B.

"ASSUMED LIABILITIES" shall mean those accounts payable of Seller
arising out of the Business, not to exceed Four Hundred Thousand Dollars
($400,000), a list of which will be attached hereto as SCHEDULE 1 at Closing.
Buyer will negotiate payment terms for the Assumed Liabilities prior to Closing.
The Assumed Liabilities can be paid within six (6) to nine (9) months from the
Closing Date. The Assumed Liabilities will also include the remaining regularly
scheduled payments on the Diversified Leasing Agreement dated January 14, 1999,
such payments not to exceed Ninety Thousand Dollars ($90,000).

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"BILL OF SALE" shall mean the Bill of Sale of Seller to Buyer, dated as
of the Closing Date, whereby Seller transfers to Buyer, free and clear of all
Encumbrances, each of the Purchased Assets which are capable of transfer by bill
of sale. The Bill of Sale shall be in the form attached hereto as EXHIBIT C.

"BOOKS" shall mean all of Seller's manuals and other materials (in any
form or medium), advertising material, catalogues, price lists, correspondence,
mailing lists, lists of customers, distribution lists, sales and promotional
materials and records, purchasing materials, all accounting and business
records, including, without limitation, all accounts receivable and accounts
payable detail, all information concerning payments of accounts payable, all
fixed assets lists (including locations), in each case in connection with the
Business.

"BUSINESS" shall mean Seller's Neighborhood Pharmacy TV Network
business, including the NPTV-online.com web site and NPTV Fax News, each as a
going concern.

"BUYER" shall mean [RMS HEALTH NETWORK, INC., a Delaware corporation].

"BUYER'S ADDRESS" shall mean 633 Federal Highway, Suite 400, Ft.
Lauderdale, FL 33301, Telecopy Number 954-525-4245.

"CLOSING" shall mean the closing on the Closing Date of the
transactions contemplated by this Agreement.

"CLOSING DATE" shall mean June 30th, 1999, or such other date mutually
agreeable to the parties hereto.

"CONSENT" shall mean any consent, approval, order or authorization of,
or any declaration, filing or registration with, or any application or report
to, or any waiver by, or any other action (whether similar or dissimilar to any
of the foregoing) of, by or with, any person, which is necessary in order to
take a specified action or actions, in a specified manner and/or to achieve a
specific result.

"CONTRACT" shall mean all of Seller's written or oral contracts,
agreements, orders or commitments of any nature whatsoever, including, without
limitation, any sales orders, purchase orders, leases, subleases, license
agreements, sublicense agreements, loan agreements, security agreements,
guarantees, management contracts, employment agreements, consulting agreements,
partnership agreements, buy-sell agreements, options, warrants, subscriptions,
calls or puts in connection with the Business, including without limitation, the
agreements listed on the attached SCHEDULE 2.

"CONTRACT RIGHT" shall mean any right, power or remedy under any
Contract, including, without limitation, any right to receive goods or services
or otherwise derive benefit from the payment, satisfaction or performance of
another party's Obligations, and right to demand that another party accept goods
or services or take any other action, and any right to pursue or exercise any
remedy or option.

"CREDITS" shall mean all of Seller's credits, prepaid expenses,
deferred charges, advance payments, security deposits and prepaid items in
connection with the Business.

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"ENCUMBRANCE" shall mean any lien, security interest, pledge, mortgage,
easement, leasehold, assessment, covenant, restriction, reservation, conditional
sale, prior assignment, or any other encumbrance, claim, burden or charge of any
nature whatsoever.

"EQUIPMENT" shall mean any of the equipment owned and used by Seller
(not including equipment owned by any NCPA Member) in connection with the
Business, including, without limitation, all televisions, software, computer
equipment, satellite dishes, satellite receivers, speakers, mounts, cabling and
related equipment.

"GOODWILL" shall mean Seller's goodwill associated with the Business.

"INTANGIBLES" shall mean the Tradename, the programming (including
continuing education materials, other content contained in the programming and
the Beta masters containing the programming) used in connection with the
Business, Seller's web site known as ANPTV Online.com, all licensing agreements
related to the Intangibles and all other Intangibles related to the Business.

"LICENSE AGREEMENT" shall mean the License Agreement to be entered into
between Buyer and Seller on the Closing Date substantially in the form attached
hereto as EXHIBIT D.

"JUDGMENT" shall mean any order, writ, injunction, fine, citation,
award, decree, or any other judgment of any nature whatsoever of any foreign,
federal, state or local court, any governmental, administrative or regulatory
authority, or any arbitration tribunal.

"LAW" shall mean any provision of any law, statute, ordinance,
constitution, charter, treaty, rule or regulation of any foreign, federal, state
or local governmental, administrative or regulatory authority.

"NCPA" shall mean the National Community Pharmacists Association, a
Virginia non-profit trade association, and its affiliates.

"NCPA MEMBER" shall mean independent and other community pharmacies
throughout the United States that are members of NCPA.

"OBLIGATION" shall mean any debt, liability or obligation of any nature
whatsoever, whether secured, unsecured, recourse, nonrecourse, liquidated,
unliquidated, accrued, absolute, fixed, contingent, ascertained, unascertained,
known, unknown, including all obligations arising under executory contracts and
all obligations to pay Taxes.

"PERSON" shall mean any individual, sole proprietorship, joint venture,
partnership, corporation, association, cooperation, trust, estate, government
(or any branch, sub or agency thereof), governmental, administrative or
regulatory authority, or any other entity of any nature whatsoever.

"PROCEEDING" shall mean any demand, claim, suit, action, litigation,
bankruptcy, investigation, arbitration, administrative hearing, or any other
proceeding of any nature whatsoever.

"PURCHASED ASSETS" shall mean the Accounts Receivable, the Books, the
Business, the Contracts, Contract Rights, the Credits, the Equipment, the
Goodwill and the Intangibles.

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"PURCHASE PRICE" shall mean the amount set for in Article 3 hereof.

"SELLER" shall mean the NPTV LLC.

"SELLER'S ADDRESS" shall mean 205 Daingerfield Road, Alexandria, VA
22314, Telecopy Number 703-683-3619.

"TAX" shall mean (a) any foreign, federal, state or local income,
profits, gross receipts, franchise, sales, use, occupancy, general property,
real property, personal property, intangible property, transfer, fuel, excise,
accumulated earnings, personal holding company, unemployment compensation,
social security, withholding taxes, payroll taxes, or any other tax of any
nature whatsoever, (b) any foreign, federal, state or local organization fee,
qualification fee, annual report fee, filing fee, occupation fee, assessment,
rent, or any other fee or charge of any nature whatsoever, or (c) any
deficiency, interest or penalty imposed with respect to any of the foregoing.

"TRADENAME" shall mean the tradenames "Neighborhood Pharmacy TV
Network" and "ANPTV" used by Seller in connection with the Business.

"TRANSACTION DOCUMENTS" shall mean this Agreement, the License, the
Assignment Agreement, the Bill of Sale, the Assignment of Lease and all other
documents, exhibits or schedules delivered in connection with the transaction
contemplated by this Agreement.

SECTION 1.2 INTERPRETATION. Each definition of an agreement in this Article
shall, unless otherwise specified, include such agreement as modified, amended,
restated or supplemented from time to time and, except where the context
otherwise requires, the singular shall include the plural and vice versa. Except
where otherwise specifically restricted, references to a party to this Agreement
or any Transaction Documents include that party and its successors and assigns.

SECTION 1.3 ACCOUNTING TERMS. All references in this Agreement to generally
accepted accounting principles shall be to such principles as in effect from
time to time in the United States of America. All accounting terms used herein
without definition shall be used as defined under such generally accepted
accounting principles.

SECTION 1.4 CROSS REFERENCES. Unless otherwise specified, references in the
Transaction Documents to any Article or Section are references to such Article
or Section of such Transaction Documents and, unless otherwise specified,
references in any Article, Section or definition to any clause are references to
such clause of such Article, Section or definition.

SECTION 1.5 RECITALS, ETC. The foregoing recitals are true and correct and,
together with the exhibits and schedules referred to hereafter, are hereby
incorporated into this Agreement by this reference.

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ARTICLE 2
TRANSFER OF ASSETS AND OTHER BENEFITS AND
ASSUMPTION OF LIABILITIES

SECTION 2.1 PURCHASE AND SALE. Subject to the terms and conditions hereof,
Seller shall sell, transfer, convey and assign, and Buyer shall buy, on the
Closing Date, free and clear of all Encumbrances, the Purchased Assets.

SECTION 2.2 OTHER BENEFITS. In addition to selling the Purchased Assets to
Buyer, Seller agrees to do or cause the following to be done in connection with
this transaction:

2.3 LICENSE AGREEMENT. Seller agree to execute, deliver and
perform its obligations under the License Agreement.

SECTION 2.4 ASSUMPTION OF DEBTS, LIABILITIES AND OBLIGATIONS. Buyer will assume
and undertake to perform and pay all of the Assumed Liabilities. Buyer's
obligations under this Section shall survive the Closing.

SECTION 2.5 EMPLOYEES. Buyer shall have no obligation to continue the employment
of any of the Business's employees. Seller agrees to be responsible for all
obligations and expenses to all of the Business's employees through the Closing
Date, including, without limitation, any termination expenses. Buyer may elect
to hire some of the existing employees of the Business. Seller shall assist
Buyer in identifying which employees to hire and shall permit Buyer to interview
the employees of the Business for such purpose.

ARTICLE 3
CONSIDERATION

SECTION 3.1 PURCHASE PRICE. The Purchase Price shall be paid by Buyer to Seller
in the following manner:

3.1.1 CASH. On the Closing Date, Buyer shall pay to Seller One
Hundred Thousand Dollars ($100,000) in cash, certified check drawn on a
bank doing business in the county where Buyer's office is located or by
wiring immediately available funds to the bank account designated by
Seller in a written notice delivered to Buyer at least five (5) days
prior to Closing; and

3.1.2 ADDITIONAL AMOUNTS. Buyer will determine and pay to
Seller the following amounts (the "ADDITIONAL AMOUNT"), as reduced as
set forth in this subsection:

3.1.2.1 DETERMINATION. On each anniversary of the
Closing Date, Buyer shall determine the number of
Subscriptions, New Subscriptions, Subscription Payment and New
Subscription Payment (each as hereinafter defined) for the
twelve (12) month period just ended.

3.1.2.2 CERTAIN DEFINED TERMS. As used herein, the
following terms will have the following meanings:

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"EQUIPMENT SUBSIDIES" shall mean,
for each determination date and for any
period of time, that portion of the
subsidies, rebates and other incentives
which (i) Buyer makes available to any NPTV
Member to encourage such member to subscribe
to the services provided by Buyer; and (ii)
which were amortized by Buyer during such
period of time; and

"NEW SUBSCRIPTIONS" shall mean, on
each determination date, the difference (but
not less than zero) between (a) the number
of Subscriptions on such determination date,
and (b) the number of Subscriptions on the
immediately prior determination date (or, in
connection with the first determination
date, the number of Subscriptions on the
Closing Date which, for the purposes of this
definition, shall be deemed to be 650); and

"NET REVENUES" shall mean, (a) for
each determination date and for any length
of time occurring during the first
twenty-four (24) months following the
Closing Date, sixty-five percent (65%) of
the difference of (i) the gross revenues of
the Business which have actually been
received in cash by Buyer, and (ii) all of
Buyer's operating expenses and Equipment
Subsidies; and (b) for each determination
date and for any length of time occurring
after the first twenty-four (24) months
following the Closing Date, the difference
of (i) the gross revenues of the Business
which have actually been received in cash by
Buyer, and (ii) all of Buyer's operating
expenses and Equipment Subsidies; and

"NEW SUBSCRIPTION PAYMENT" [*]; and

"NPTV MEMBERS" shall mean, on any
determination date, the sum of (a) NCPA
Members' stores that are subscribers to the
services provided by the Business, and (b)
all other pharmacy stores that have become
subscribers to the services provided by the
Business through NCPA's assistance; and

"SUBSCRIPTIONS" shall mean, on any
determination date, the number of NPTV
Members that currently are and have been
subscribers to the services provided by the
Business for a minimum of six (6) months;
and

"SUBSCRIPTION PAYMENT" [*].

3.1.2.3 NEW SUBSCRIPTION PAYMENT. Buyer shall pay to
Seller forty-five (45%) of the New Subscription Payment (the
"ASSET PURCHASE NEW SUBSCRIPTION PAYMENT") for the previous
twelve (12) month period just ending in twelve (12) equal
installments due on the first day of each month beginning on
the month succeeding the date such payment was determined.

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[*] Confidential treatment has been requested with respect to certain
information contained in this document. Confidential portions have been
omitted from the public filing and have been filed separately with the
Securities and Exchange Commission.

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3.1.2.4 SUBSCRIPTIONS. Buyer shall pay to Seller of
forty-five (45%) the Subscription Payment (the "ASSET
PURCHASE SUBSCRIPTION PAYMENT") for the previous twelve (12)
month period just ending in twelve (12) equal instalments due
on the first day of each month beginning on the month
succeeding the date such payment was determined.

3.1.2.5 SETOFF AGAINST ADDITIONAL AMOUNT. Buyer is
permitted to setoff against and reduce any amounts Buyer owes
to Seller for Additional Amounts hereunder by the amount of
the Assumed Liabilities paid by Buyer. In addition, Buyer may
setoff against and reduce any amounts owed by Buyer to Seller
for Additional Amounts hereunder by any amount owed by Seller
and/or NCPA pursuant to Section 9.2 hereunder.

3.1.2.6 SURVIVAL. Buyer's obligations under this
subsection shall survive the Closing.

SECTION 3.2 ADJUSTMENT OF PURCHASE PRICE. The Purchase Price shall be adjusted
as set forth below:

3.2.1 ADDITIONAL AMOUNTS. During the first twenty-four (24)
months following the Closing Date, to the extent Net Revenues are
insufficient on any payment date to pay Additional Amounts after the
payment of the License Fee (as defined in the License Agreement), the
failure to pay such Additional Amounts when due will not be deemed a
default under this Agreement and the obligation to pay such Additional
Amounts will accumulate and be paid (which payment may occur at any
time including any time after the first twenty-four (24) months
following the Closing Date but shall be made within five (5) years of
the Closing Date) from future Net Revenues. This provision shall
survive the Closing.

3.2.2 LICENSE AGREEMENT. Seller's obligation to pay Additional
Amounts hereunder shall terminate upon the expiration or earlier
termination of the License Agreement. Buyer shall have no obligation to
pay Additional Amounts during any period of time during which Seller is
in default of any of its obligations under the License Agreement.

SECTION 3.3 PURCHASE PRICE ALLOCATION. The Purchase Price shall be allocated
among the Purchased Assets in accordance with the allocation schedule to be
prepared by Buyer on an Internal Revenue Form 8594. The parties will each report
the federal, state and local and other Tax consequences of the purchase and sale
contemplated hereby in a manner consistent with such allocation schedules.

ARTICLE 4
CLOSING AND PRE-CLOSING ITEMS

SECTION 4.1 CLOSING DATE. The Closing shall take place at the offices of Tripp
Scott, P.A., 110 SE 6th Street, 15th Floor, Ft. Lauderdale, FL 33301, on the
Closing Date at 2:30 p.m. prevailing local time or at such location, on such
other date, and at such other time as Buyer and Seller mutually agree in
writing.

SECTION 4.2 DUE DILIGENCE INVESTIGATION. Seller agrees to provide Buyer with
complete access to the Purchased Assets prior to the Closing Date for the
purpose of performing a due diligence investigation of the Business and for the
purpose of determining the accuracy of the representations and

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warranties set forth herein and to enable both parties to comply with their
agreements herein. Seller shall make available for consultation with Buyer, the
employees of Seller involved in operation of the Business and Seller's other
officers with knowledge of the Business. Additionally, Seller agrees to cause
Seller's outside accountants to be available to discuss the financial records,
results and prospects of the Business. Buyer agrees to supply Seller with bank
references upon Seller's request.

SECTION 4.3 OPERATION OF BUSINESS PRIOR TO CLOSING. Between the date hereof and
the Closing Date, Seller shall continue to operate the Business in a manner
consistent with prior practice and will maintain the goodwill of its employees,
suppliers, vendors, customers and other persons with whom it has commercial
dealings. Seller shall deliver to Buyer within ten (10) days following the end
of each month, internally prepared financial statements and balance sheets of
the Business for such calendar month and internally prepared accounts receivable
and accounts payable details in connection with the Business updated as of the
end of such calendar month.

SECTION 4.4 MARKETING EFFORTS PRIOR TO CLOSING. During the period between the
date hereof and Closing, Seller and Buyer acknowledge the importance and
necessity of marketing the Business in order to more fully facilitate Closing.
Accordingly, Seller authorizes Buyer to conduct sales and marketing efforts with
Seller's members in an effort to increase Subscriptions and to increase
advertising and sponsorship of the Business, each as Buyer deems necessary or
desirable. Such efforts may include, without limitation, solicitation of
Seller's members, subscription equipment subsidies, participation in trade show
booths and program solicitations, pilot programming and magazine and newspaper
advertising and editorial coverage. Seller will cooperate and assist Buyer in
all sales and marketing efforts.

ARTICLE 5
REPRESENTATIONS AND WARRANTIES OF SELLER AND NCPA

Seller and NCPA represent and warrant to Buyer that the following are
true and correct on the date hereof and will be true and correct at the time of
the Closing:

SECTION 5.1 LEGAL CAPACITY. Seller is a limited liability company, duly
organized, validly existing and in good standing under the laws of the State of
Virginia. Seller has all necessary legal power and authority to execute, deliver
and perform its obligations under the Transaction Documents, and such execution,
delivery and performance have been duly authorized by all necessary action by
Seller. The Transaction Documents required to be executed by Seller have been or
will be on the Closing Date duly executed and delivered by the duly authorized
officer, employee or agent of Seller and constitute the valid and legally
binding obligations of Seller enforceable in accordance with their terms, except
as limited by bankruptcy, reorganization or similar laws affecting creditors'
rights generally. Seller has all requisite power to own, lease and operate its
properties and to carry on the Business as now being conducted.

SELLER 5.2 NO CONFLICTS. Neither the execution and delivery of the Transaction
Documents to which it is a party, the consummation of the transactions
contemplated thereby nor the fulfillment of or compliance with the terms and
provisions thereof conflict with, result in a material default under or breach
of or grounds for termination of, any material agreement or License to which
Seller is a party or by which Seller may be bound, result in the creation of any
Encumbrance upon the Purchased Assets or result in the violation by Seller of
any provision of Law applicable to Seller or to which Seller or the Purchased
Assets may be subject.

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SECTION 5.3 BROKERS AND FINDERS. Seller has not had any contact with any Person
who allegedly could claim a broker's or finder's fees with respect to the sale
of the Purchased Assets pursuant to the Transaction Documents and the other
transactions contemplated thereby other than Seller's obligations to Press
Williams, which obligations will be paid solely by NCPA.

SECTION 5.4 FULL DISCLOSURE. None of the representations or warranties made by
Seller orally or in this Agreement or in any other Transaction Document, and
none of the statements, documents or other information pertaining to this
transaction made or given by Seller or its officers, directors or employees to
Buyer, its agents or representatives, whether made orally or in writing,
contains any untrue statement of a material fact, or omit any material fact, the
omission of which is misleading, including, without limitation, any information
contained in any balance sheets, financial statements or other financial
information given by Seller to Buyer.

SECTION 5.5 FINANCIAL STATEMENTS. Except for the liabilities reflected, reserved
or otherwise disclosed in the balance sheet of the Business given by Seller to
Buyer, dated as of March 31, 1999 and the Accounts Receivables and Accounts
Payable details given by Seller to Buyer dated as of March 31, 1999, Seller has
no material liabilities, whether absolute or contingent, in connection with the
Business. Since the date of the last monthly income statement of the Business
given by Seller to Buyer, there have been no changes in (a) the financial
position of Seller, (b) the industry in which Seller competes or in which the
Purchased Assets has been or will be used, (c) the Purchased Assets, or (d) in
any other matter which, in each case or in combination, could have a Material
Adverse Effect. The books of account and other financial records of Seller have
been kept accurately and in the ordinary course of business in accordance with
GAAP, and the transactions entered therein represent bona fide transactions.
Such books of accounts and financial records fairly reflect Seller's income,
expenses, assets and liabilities.

SECTION 5.6 PROPERTY.

5.6.1 OWNERSHIP. Seller owns all of the personal property
included in the Purchased Assets, free and clear of any liens, pledges,
encumbrances, restrictions, Claims and rights of third parties, except
for that certain lease with Diversified Leasing, Inc. dated January 14,
1999. Providing for thirty-six (36) monthly payments of Two Thousand
Eight Hundred Sixty-Nine and 54/100 Dollars ($2,869.54).

5.6.2 CONTRACTS. Seller owns or has licenses pursuant to
license agreements to use all of the Intangibles Assets, such license
agreements may be assigned by Seller without obtaining consent of any
licensor under any such license agreement and any such license
agreement will remain in full force and effect following the Closing.

5.6.3 LEASES. All of the leases between Seller and the NPTV
Members listed on the attached SCHEDULE 3 are bona fide leases
representing obligations of the NPTV Members as set forth in each such
leases, such leases may be assigned by Seller without consent of such
NPTV Members and such leases will remain in full force and effect
following the Closing.

5.6.4 BACKLOG. NCPA will use its best efforts to ensure that
all of the NPTV Members set forth on the attached SCHEDULE 4 will
subscribe to the services provided by the Business upon such member's
receipt of the equipment necessary for such services to be provided.

-9-
<PAGE>

5.6.5 ALL NECESSARY. The Purchased Assets comprise all of the
property used in or required for the operation of the Business in the
manner and to the extent presently conducted. All of the Purchased
Assets are located at the leased properties described on the Assignment
of Leases.

5.6.6 MAINTENANCE. All personal property included in the
Purchased Assets were acquired and have been maintained in the ordinary
course of business, and, to the best of Seller's knowledge, are of good
and merchantable quality, consist of a quality, quantity and condition
reasonably usable, leasable or salable in the ordinary course of
business, and are not subject to any material write-down or write-off.

SECTION 5.7 LITIGATION.

5.7.1 LITIGATION. There are no legal actions, suits,
proceedings, strikes and labor disputes, administrative actions,
controversies or investigations pending against Seller or the Business
or, to the knowledge of Seller, threatened or contemplated against
Seller or the Business which may materially adversely affect the
Business, the Purchased Assets, this Agreement or the transactions
contemplated hereby.

5.7.2 JUDGMENTS. Neither Seller nor the Business is a party to
or subject to any judgment, order, ordinance, award, injunction or
decree which would (i) enjoin the transactions contemplated by this
Agreement or adversely affect the Purchased Assets or (ii) otherwise
materially adversely affect this Agreement or the transactions
contemplated hereby.

SECTION 5.8 TAXES.

5.8.1 RETURNS. Seller has duly filed, or caused to be filed,
all federal, state and local income, excise, sales, use and other tax
returns and reports required to have been filed by it. Seller has
timely paid or, where extensions have been obtained, have accrued all
taxes, interest and penalties due for the periods covered thereby. All
such reports are true and correct in all material respects.

5.8.2 AUDITS. There are no ongoing or potential examinations
or audits of the Business by the Internal Revenue Service or any state
or local taxing authority.

5.8.3 WAIVERS. There are no outstanding agreements or waivers
extending the statutory period of limitations applicable to any federal
income tax return for any period with respect to the Business.

SECTION 5.9 ACCOUNTS RECEIVABLE. To the best of Seller's knowledge, all of the
Accounts Receivable reflected on the Business' balance sheet which was
previously delivered to Buyer are bona fide receivables representing obligations
for the face dollar amount thereof and have arisen in the regular course of
Seller's business. Such Accounts Receivable do not represent bill and hold
sales, consignment sales, guaranteed sales, or sale or return arrangements and
such Accounts Receivable are payable currently.

-10-
<PAGE>

SECTION 5.10 AUTHORIZATION, PERMITS AND COMPLIANCE WITH LAWS. To Seller's
knowledge, the Business holds all material certifications, permits, Licenses,
orders or approvals of any federal, state or local regulatory agency which are
required in order to permit Seller to continue to carry on the Business and use
its properties as it now does. Seller owns or has valid leases or licenses to
use all tangible properties necessary to operate the Business as it now does
without incurring any extraordinary expenditures for capital additions or
improvements. Seller does not know of any failure by the Business to comply with
any laws, orders or regulations of federal, state, local or foreign governments
applicable to the business, properties or assets of the Business.

SECTION 5.11 LOSS CONTRACTS. Seller is not a party to any material contract, bid
or offer to sell products or to provide services to third parties which is to be
performed at a price which would not result in a gross profit to the Business.

SECTION 5.12 CHANGE IN SERVICES, CUSTOMERS, ETC. Since January 1, 1999, there
has been no material change in the relationship between the Business and its
suppliers or customers, or in the service mix of the Business as compared with
the twelve months ended December 31, 1998, which would materially adversely
affect the Business. Seller has received no communication from any customer that
any such change is intended or contemplated which would have a material adverse
impact on the Business.

SECTION 5.13 ACCURACY OF REPRESENTATIONS. No representation or warranty made by
Seller orally, in this Agreement or in any Exhibit or Schedule hereto contains
any untrue statement of a material fact or omits to state any material fact
necessary to make the statements made therein, in light of the circumstances
under which they were made, not misleading in any material respect.

ARTICLE 6
REPRESENTATIONS AND WARRANTIES OF BUYER

Buyer represents to Seller that:

SECTION 6.1 CORPORATE ORGANIZATION. Buyer is a corporation duly organized,
validly existing and in good standing under the laws of the State of Delaware.

SECTION 6.2 CORPORATE ORGANIZATION. Buyer has full legal right, power and
authority to enter into this Agreement and the Exhibits to which it is a party
and to consummate all of the transactions contemplated hereby.

SECTION 6.3 DUE EXECUTION. The execution, delivery and performance of the
Transaction Documents have been duly authorized by all necessary corporate
action on the part of Buyer. The Transaction Documents to which Buyer is a party
have been, or will be on the Closing Date, duly executed and delivered by Buyer
and constitute the valid and legally binding obligations of Buyer enforceable in
accordance with their terms, except as limited by bankruptcy, reorganization or
similar laws affecting creditors' rights generally.

SECTION 6.4 NO CONFLICT. Neither the execution and delivery of this Agreement
nor the consummation of the transactions contemplated hereby nor the fulfillment
of or compliance with the terms and provisions hereof conflict with or result in
a default under or breach of or grounds for

-11-
<PAGE>

termination of, any material agreement or instrument or any license, permit or
other governmental authorization to which Buyer is a party or by which Buyer may
be bound, or result in the violation by Buyer of any law, regulation, or order
to which Buyer may be subject which would materially adversely affect the
transactions contemplated hereby.

SECTION 6.5 BROKERS AND FINDERS. Buyer has not had any contact with any person
who allegedly could Claim broker's or finder's fees concerning the purchase of
the Business or the Purchased Assets.

ARTICLE 7
CONDITIONS PRECEDENT TO BUYER'S OBLIGATIONS

Each and every obligation of Buyer to be performed on the Closing Date
shall be subject to satisfaction, prior to or concurrently with the performance
of such obligations, of the following conditions:

SECTION 7.1 PERFORMANCE OF AGREEMENT. Seller shall have performed and complied
with all its obligations under this Agreement which are to be performed or
complied with by it on or prior to the Closing Date and the representations and
warranties of Seller shall be true and correct as of the Closing Date.

SECTION 7.2 SELLER'S DOCUMENTS, ETC. Seller shall deliver, or cause to be
delivered, to Buyer, on the Closing Date, the following:

7.2.1 BOOKS AND RECORDS. All Books;

7.2.2 BILL OF SALE; ASSIGNMENT AGREEMENT. An executed original
copy of the Bill of Sale and the Assignment Agreement;

7.2.3 ASSIGNMENT OF LEASES. An executed counterpart of the
Assignment of Lease;

7.2.4 LICENSE AGREEMENT. An executed counterpart of the
License Agreement; and

7.2.5 SECRETARY'S CERTIFICATE. A certificate from the duly
elected and incumbent Secretary each of Seller and NCPA, each such
certificate to be in the form attached hereto as EXHIBIT E, together
with all of the attachments listed thereon.

SECTION 7.3 OTHER CERTIFICATES, ETC. All other agreements, certificates,
instruments and documents reasonably requested by Buyer in order to fully
consummate the transaction contemplated hereby and carry out the purpose and
intent of this Agreement.

SECTION 7.4 WAIVER. Buyer shall have the right to waive in whole or in part any
one or more of the foregoing conditions and to proceed with the transactions
contemplated by this Agreement.

-12-
<PAGE>

ARTICLE 8
CONDITIONS PRECEDENT TO OBLIGATIONS OF SELLER

Each and every obligation of Seller to be performed on the Closing Date
shall be subject to the satisfaction, prior to or concurrently with the
performance of such obligation, of the following conditions:

SECTION 8.1 PERFORMANCE OF AGREEMENT. Buyer shall have performed and complied
with all of the obligations under this Agreement which are to be performed or
complied with by it on or prior to the Closing Date, and the representations of
Buyer shall be true and correct as of the Closing Date.

SECTION 8.2 BUYER'S DOCUMENTS, ETC. Buyer shall deliver, or cause to be
delivered, to Seller on the Closing Date the following:

8.2.1 ASSIGNMENT AGREEMENT. An executed counterpart of the
Assignment Agreement;

8.2.2 ASSIGNMENT OF LEASES. An executed counterpart of the
Assignment of Leases.

8.2.3 LICENSE. An executed counterpart of the License;

8.2.4 CASH. The cash payment referenced in Section 3.1.1; and

8.2.5 SECRETARY'S CERTIFICATE. A certificate from the duly
elected and incumbent Secretary of Seller in the form attached hereto
as EXHIBIT F, together with all of the attachments listed thereon.

SECTION 8.3 OTHER CERTIFICATES, ETC. All other agreements, certificates,
instruments and documents reasonably requested by Seller in order to fully
consummate the transaction contemplated hereby and carry out the purpose and
intent of this Agreement.

SECTION 8.4 WAIVER. Seller shall have the right to waive in whole or in part any
one or more of the foregoing conditions and to proceed with the transactions
contemplated by this Agreement.

ARTICLE 9
INDEMNIFICATION

SECTION 9.1 SURVIVAL OF REPRESENTATIONS AND WARRANTIES. All representations and
warranties made by any party hereto in this Agreement or pursuant hereto shall
survive the Closing hereunder.

SECTION 9.2 SELLER'S AND NCPA'S AGREEMENT TO INDEMNIFY. Seller and NCPA hereby
agree to jointly and severally indemnify, defend and hold Buyer harmless from
and against all demands, Claims, actions or causes of action, assessments,
losses, damages, liabilities, costs and expenses, including, without limitation,
interest, penalties and attorneys fees and expenses, asserted against, resulting
to, imposed upon or incurred by Buyer or the Business by reason of or resulting
from (i) a breach of any representation, warranty or agreement of Seller or NCPA
contained in or made pursuant to this Agreement and (ii) any action of Seller or
NCPA in connection with the Business prior to the Closing.

-13-
<PAGE>

ARTICLE 10
MISCELLANEOUS

SECTION 10.1 TERMINATION. Either party may terminate this Agreement at its
option by providing written notice thereof to the other party if, through no
fault of such party, the Closing has not occurred on or before June 30, 1999.
SECTION 10.2 EXPENSES. Whether or not the transactions contemplated by this
Agreement are consummated, each of the parties hereto shall pay the fees and
expenses of its respective counsel, accountants, other experts and all other
expenses incurred by such party incident to the negotiation, preparation and
execution of this Agreement or any transaction incident hereto contemplated
hereby.

SECTION 10.3 FURTHER ASSURANCES. At and after the Closing, Seller shall execute
and deliver such additional instruments and documents as Buyer may reasonably
request in order to carry into effect the transactions contemplated hereby.

SECTION 10.4 ENTIRE AGREEMENT. This Agreement, together with any other
agreements entered into contemporaneously herewith, constitutes and represents
the entire agreement between the parties hereto and supersedes any prior
understandings or agreements, written or verbal, between the parties hereto
respecting the subject matter herein. This Agreement may be amended,
supplemented, modified or discharged only upon an agreement in writing executed
by all of the parties hereto. This Agreement shall inure to the benefit of and
shall be binding upon the parties hereto and their respective successors and
permitted assigns. In the event any provision of this Agreement shall be held
invalid or unenforceable by any court of competent jurisdiction, such holding
shall not invalidate or render unenforceable any other provision hereof.

SECTION 10.5 NOTICES. All notices and other communications under this Agreement
shall be in writing and shall be deemed to have been given (a) three (3)
Business Days after deposit in the mail, designated as certified mail, return
receipt requested, postage-prepaid, or (b) one (1) Business Day after being
entrusted to a reputable commercial overnight delivery service for overnight
delivery, or (c) when sent by telex or telecopy on a Business Day with
confirmation of such transmission and such notice is followed up with notice
sent by certified mail or overnight courier as described above, in each case
addressed to the party to which such notice is directed at the following
address: if to Buyer, to Buyer at Buyer's Address; if to Seller, to Seller at
Seller's Address. Any party hereto may change the address to which notices shall
be directed under by giving ten (10) days written notice of such change to the
other party.

SECTION 10.6 GOVERNING LAW; CONSENT TO JURISDICTION. This Agreement shall be
construed in accordance with and governed by the internal laws of the State of
Florida without giving effect to its conflict of law principles. Each party
hereto irrevocably consents to personal jurisdiction and venue in the trial
courts of Broward County, Florida or the United States District Court for the
Southern District of Florida, Broward County Division over any suit, action or
proceeding arising out of or relating to this Agreement or any other Transaction
Document. Seller hereby agrees that service of the summons and complaint and all
other process which may be served in any such suit, action or proceeding may be
effected by mailing by registered mail a copy of such process to Seller at
Seller's Address, and that personal service of process shall not be required.
Nothing herein shall be construed to prohibit service of process by any other
method permitted by law, or the bringing of any suit, action or proceeding in
any

-14-
<PAGE>

other jurisdiction. Seller agrees that final judgment in such suit, action
or proceeding shall be conclusive and may be enforced in any other jurisdiction
by suit on the judgment or in any other manner provided by law.

SECTION 10.7 COUNTERPARTS. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one in the same instrument.

[Signature page to follow]

-15-
<PAGE>

IN WITNESS WHEREOF, each of the parties hereto has caused this
Agreement to be executed the day and year first above stated.

SELLER:
NPTV LLC

By: /s/ Calvin J. Anthony
--------------------------------------
Print Name: Calvin J. Anthony
------------------------------
Title: Partner
-----------------------------------

NATIONAL COMMUNITY PHARMACISTS ASSOCIATION

By: /s/ Calvin J. Anthony
--------------------------------------
Print Name: Calvin J. Anthony
------------------------------
Title: Exec. V.P.
-----------------------------------

BUYER:
RETAIL MEDIA SYSTEMS, INC.

By: /s/ Brent D. Burns
--------------------------------------
Print Name: Brent D. Burns
------------------------------
Title: C.O.O
-----------------------------------

-16-

<PAGE>

Exhibit 10.4

SERVICE AGREEMENT

Between

RETAIL MEDIA SYSTEMS, INC.

and

SPACENET INC.

Agreement No. 1678

CONFIDENTIAL INFORMATION

The information in this Agreement is confidential
to Spacenet Inc. By accepting this Agreement the
recipient agrees that this Agreement and the
information contained herein will be held in strict
confidence, and will not be reproduced in whole or
in part except for purposes of recipient's dealings
with Spacenet Inc.

<PAGE>

TABLE OF CONTENTS

<TABLE>

<S> <C>
Section A -- Services and Prices.................................................. 4
Overview .................................................................. 4
Network Information........................................................ 4
Prices .................................................................. 5
Section B -- General Terms and Conditions......................................... 9
1. Term....................................................................... 9
2. Orders..................................................................... 9
3. Charges and Payments....................................................... 9
4. Taxes and Fees............................................................. 10
5. Assignment................................................................. 10
6. Title and Risk of Loss..................................................... 10
7. Removal of Equipment....................................................... 10
8. Governing Law.............................................................. 11
9. Responsibilities of the Parties............................................ 11
10. Marketing Relationship..................................................... 11
11. Patent Indemnity........................................................... 11
12. Liability of Spacenet and Customer......................................... 12
13. Termination and Suspension of Service...................................... 12
14. Force Majeure.............................................................. 13
15. Confidentiality............................................................ 13
16. Severability............................................................... 14
17. Non-Waiver................................................................. 14
18. Relationship of the Parties................................................ 14
19. Notices and Points of Contact.............................................. 14
20. Counterparts............................................................... 14
21. Entire Agreement........................................................... 14
Section C -- Network Implementation............................................... 15
Ordering Procedures........................................................ 15
Site Installations......................................................... 15
Section D -- Operation and Maintenance............................................ 18
Network Availability Commitment............................................ 18
Site Maintenance........................................................... 18
Software License and Support............................................... 20
Section E -- Traffic Assumptions for Network Bandwidth............................ 22
Section F -- Demarcation of Software Responsibilities............................. 23
Section G -- [*].................................................................. 24

</TABLE>

- ------------------------
[*] Confidential treatment has been requested with respect to certain
information contained in this document. Confidential portions have been
omitted from the public filing and have been filed separately with the
Securities and Exchange Commission.

<PAGE>

[GRAPHIC] [GRAPHIC]

EQUIPMENT PURCHASE AND SERVICE AGREEMENT

SPACENET INC., with its headquarters at 1750 Old Meadow Road, McLean, Virginia
22102 ("SPACENET") hereby agrees to provide its SkyBlaster(TM)* satellite-based
telecommunications services ("Services") TO RETAIL MEDIA SYSTEms, Inc., having
its principal place of business at 633 South Federal Highway, 4th Floor, Fort
Lauderdale, Florida 33301 ("CUSTOMER") pursuant to this Service Agreement
("Agreement") between them. Customer hereby agrees to take andpay for said
Service pursuant to this Agreement.

* SkyBlaster is a trademark of Gilat Satellite Networks, Ltd.

The following sections are an integral part of this Agreement:

Section A -- Services and Prices

Section B -- General Terms and Conditions

Section C -- Network Implementation

Section D -- Operation and Maintenance

Section E -- Traffic Assumptions for Network Bandwidth

Section F -- Demarcation of Software Responsibilities

Section G -- [*]

Under the terms of this Agreement, as set forth in further detail under
Sections A - G herein, Spacenet will provide, install, and maintain certain
telecommunications equipment ("Equipment") and licensed software as further
defined in Section D ("Software") and will provide access to a geostationary
orbit communications satellite ("Space Segment"), all of which will enable
two-way data transmissions between Customer's central data processing center
("Data Center") and its remote locations ("Sites"). All obligations under this
Agreement shall be performed by and between Spacenet and Customer. This
Agreement does not create any rights in end-users or in any other third party
not a signatory hereto. This Agreement will become effective on the date of the
last party to sign below.

AGREED TO BY CUSTOMER: ACCEPTED BY SPACENET:

RETAIL MEDIA SYSTEMS, INC. SPACENET INC.

SIGNATURE: /s/ JASON KATES /s/ SHELDON REVKIN
------------------------- ---------------------------------

PRINTED NAME: Jason M. Kates Sheldon Revkin
------------------------- ---------------------------------

TITLE: President President
------------------------- ---------------------------------

DATE: 12-02-99 12-02-99
------------------------- ---------------------------------

Page 3
<PAGE>

SECTION A -- SERVICES AND PRICES

This Section A contains Customer-specific information on the Equipment and
Services to be provided by Spacenet. In the event of any conflict between this
Section A and the other Sections hereto, this Section A shall prevail.

OVERVIEW

Under this Agreement Spacenet will provide Customer with certain SkyBlaster
equipment and services to support Customer's store and forward video application
and video streaming for in-store television entertainment, information and
commercial messages. SkyBlaster is a service comprised of equipment and software
which enables geographically dispersed locations to exchange data transmissions
via a satellite network. The SkyBlaster service operates on a
point-to-multipoint network architecture. This document establishes the
responsibilities of Spacenet and Customer and the prices, terms, and conditions
under which SkyBlaster equipment and network services will be installed,
operated, and maintained at Spacenet's shared hub and at remote locations
designated by Customer across the continental USA, within the areas bounded by
the following cities in Canada: Calgary, Toronto, Montreal, Vancouver, and
within areas in Mexico within 100 miles from the US/Mexico border:
(collectively, the "Footprint"). In the event Customer requests service outside
the Footprint and Spacenet is able to provide Service at such location, the
parties will negotiate in good faith the terms and conditions (including price
adjustments) for such service. This document also establishes a business
relationship between Customer and Spacenet whereby the parties will work
together to promote and market each other's products and services.

NETWORK INFORMATION

Minimum Site Quantity: [*]

Minimum Site Installation Period: [*]

Minimum Site Service Term: 66 months from date of installation

Location of Data Center: Fort Lauderdale, FL or other Customer
designated location

Supported Applications: Store and forward video application and
video streaming for in-store television
entertainment, information and commercial
messages

Maintenance Option selected: Next Business Day

Network Bandwidth: Inbound: [*]
Outbound: [*]

*The Network Bandwidth [*]

Service Demarcation Points: At Hub: Customer provided IP backhaul
between Customer's Data Center and the
Shared Hub

Page 4
<PAGE>

At VSAT: Customer provided software for the
Supported Applications integrated into the PC
System Unit

Performance Specifications: Network Availability Commitment: [*]

PRICES

DESCRIPTION PRICE
- ----------- -----

STANDARD SERVICE

<S> <C> <C>
- - Equipment and Installation - Includes: [*]

[*] Meter Antenna (or [*] Meter Antenna where required),
Standard Antenna Mount**,
Up to [*] Feet of IFL Cable, Non-Plenum (dual 150'cable run)
[*] Outdoor Unit with LNB,
SkyBlaster PC System Unit with the following minimum configuration:
(1) DVB Receiver and Transmitter (PCI card(s)) and smart plug which
supports the Supported Applications
(2) [*] Mhz CPU
(3) [*] MB RAM
(4) Ethernet
(5) [*] GB HD Minimum
(6) [*]
(7) CD ROM
(8) NT 4.0
(9) TV2VGA card
19" [*] TV (or a substantially equivalent model) with [*] ft. of audio/video and smart card cable
and Standard TV Mount***,
System Integration as described in Section F,
Delivery and Standard Installation of above described Equipment.

</TABLE>

* With respect to a Site existing as of the Effective Date where Customer's
programming is delivered (approximately [*] Sites), (i) in the event Customer
provides a fully installed TV (including mount) at a Site and such TV is
approved by Spacenet for use in the network, Spacenet shall provide Customer
with a credit of [*] for such Site and (ii) in the event Customer provides a
fully installed antenna mount at a Site and such mount is approved by Spacenet
for use in the network, Spacenet shall provide Customer with a credit of [*].
With respect to approximately [*] of the total installed Sites, in the event the
parties agree that a VSAT system cannot be used at a particular Site, Spacenet
will install a CD ROM alternative solution in its place. The parties will
mutually agree to a list of deliverables and price for the CD ROM alternative
solution. Spacenet shall have no obligation to provide maintenance support for
any equipment not provided by Spacenet. For any Site located outside the
continental United States (but within the Footprint), Customer shall be
responsible for any additional charges (including but not limited to shipping
charges, customs, duties, taxes and any other fees) or additional requirements
(including but not limited to obtaining any required licenses, permits or
authorizations) in connection with the provision of Service at such location.

** "Standard" antenna mounts include the following: Non-penetrating Roof with
pad, Close-in Wall and Medium Reach Wall

*** "Standard" TV mount includes a wall mount or ceiling mount (for a wall and
ceiling of standard commercial grade construction) for heights up to 14 feet
(from floor to bottom of truss or structural ceiling). TV should be located
approximately 7 feet above the floor (6 feet to 8 feet acceptable). The standard
wall mount will be a [*] (or a substantially equivalent model). The
standard ceiling mount will be a [*] (or a substantially equivalent
model).

<TABLE>

<S> <C> <C>
- - Network Operations and Support - Includes: [*]

</TABLE>

Page 5
<PAGE>

<TABLE>

<S> <C> <C>
SkyBlaster Software License and Maintenance,
Use of Spacenet's Shared Hub Facilities,
[*] Level Help Desk Support,
[*]

- - Space Segment* - Includes: [*]
[*]-Band Space Segment for the Footprint, non-preemptible and intra-satellite protected**
Inbound: [*]
Outbound: [*]

</TABLE>

* In the event Customer needs additional space segment, Spacenet shall provide
Customer with such space segment at the prices set forth below.

** Space Segment service will be provided on a non-preemptible, intra-satellite
protected [*]-band transponder on a geostationary satellite. "Non-preemptible"
means that the service may not be preempted for business reasons or for purposes
of providing or restoring service to other Spacenet customers or customers of
the Space Segment vendor. "Intra-satellite protected" means that, in the event
of a transponder failure, the satellite operator will attempt to restore service
on the same satellite through the use of available on-board facilities.

OPTIONAL EQUIPMENT

<TABLE>

<S> <C> <C>
IFL Cable Plenum (single run) in place of IFL Cable Non-Plenum (single run)
at time of installation [*]

Additional Required IFL Cable, Non-Plenum (single run) (provision and installation) [*]

Additional IFL Cable, Plenum (single run) (provision and installation) [*]

Conduit (provision and installation) [*]

Line Amplifier (provision and installation) [*]

VSAT Ground Mount with 6 ft. pole [*]

Trenching [*]

Ceiling Mounts for heights of more than 14 feet (provision and installation) [*]

Additional 19" TV with Standard Mount (including installation if installed
at time of initial Site installation) with minimum commitment of 60 months [*]

27" TV with Standard Mount (including installation if installed [*] at time of
initial Site installation) with minimum commitment of 60 months

OPTIONAL SERVICES

De-icing (requires Customer to supply GFI 110 volt outlet within 5 feet of antenna) [*]

[*] [*]

Non-Standard Installation / Optional Antenna Mounts / Optional TV Mounts [*]

Installation Permit Services [*]

Additional Building Penetrations [*]

Deinstallation [*]

</TABLE>

Page 6
<PAGE>

<TABLE>

<S> <C>
Reinstallation [*]

Maintenance Call for Damaged Equipment or other "non-covered" calls T&M, with
[*] minimum if call is during Business hours and [*] minimum if call is other
than during Business Hours

T&M Rates:
Labor Rates Business hours [*]
After business hours and Saturdays [*]
Holidays and Sundays [*]
Materials Rates [*]

Standard VSAT On-Site Maintenance Support, 5 x 8 (9 am to 5 pm,
Mon - Fri Business Days)

Additional [*] outbound satellite capacity [*]

Additional [*] inbound satellite channel [*]

Development and Support of Additional Applications [*]

Site Survey, if required [*]

Canceled Site Installation (Cancellation or Postponement with Two (2) Business
Days Advance Notice or Less) [*] [*]

Expedite Fee for Installations [*]

</TABLE>

ADDITIONAL REQUIREMENTS NOT DETAILED ABOVE SHALL BE QUOTED ON
AN INDIVIDUAL BASIS.

Page 7
<PAGE>

Notices and Points of Contact

SPACENET:

Program Manager: For Payments: Notices:
- ---------------- ------------- --------
<S> <C> <C>
Peter Browne Accounts Receivable Customer Contracts Dept.

SPACENET INC. SPACENET INC. SPACENET INC.

1750 Old Meadow Road P.O. Box 60420 1750 Old Meadow Road
McLean, Virginia 22102 Charlotte, North Carolina 28260 McLean, Virginia 22102
Telephone: (703) 848-1147 Telephone: (703) 848-1557 Telephone: (703) 848-1431
FAX: (703) 848-1441 FAX: (703) 848-1010 FAX: (703) 848-1184

CUSTOMER:

Point of Contact and Notices: Billing Address:
- ----------------------------- ----------------
<S> <C>
Thomas Fay Accounts Payable
Retail Media Systems, Inc. Retail Media Systems, Inc.
633 South Federal Hwy. 633 South Federal Hwy.
4th Floor 4th Floor
Ft. Lauderdale, FL 33301 Ft. Lauderdale, FL 33301
Phone: (954) 525-6464 Phone: (954) 525-6464
FAX: (954) 525-4245 FAX: (954) 525-4245

</TABLE>

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<PAGE>

SECTION B -- GENERAL TERMS AND CONDITIONS

1. TERM

The term of this Agreement ("Agreement Term") shall commence on the date of the
last party to sign on the signature page of this document ("Effective Date") and
shall terminate upon the earlier of (i) the last day of service provided at the
last Site or (ii) ten (10) years from the Effective Date ("Agreement End Date").
Each installed Site hereunder shall have the Minimum Site Service Term set forth
under Network Information in Section A. [*] Any Site having completed its
Minimum Site Service Term may be terminated by Customer by providing at least
sixty (60) days advance notification of termination. For clarification
purposes, deinstallation or deinstallation and reinstallation of a Site from
one location to another location is permitted (at additional charge) provided
that Customer continues to pay the Standard Service Fees for such Site
throughout the Minimum Site Service Term. In instances where Customer
deinstalls and reinstalls a Site, the Minimum Site Service Term shall be
measured from the date of installation of the original Site.

2. ORDERS

A. INITIAL ORDER - The Minimum Site Quantity shall be deemed ordered by Customer
as of the Effective Date and will be shipped and installed within the Minimum
Site Installation Period or such shorter time period as mutually agreed to by
the parties.

B. ADDITIONAL ORDERS - During the Agreement Term and according to the terms set
forth in this Agreement, (i) Customer may order new Sites provided that they
will be installed no later than 4 1/2 years from the Effective Date and (ii)
Customer may order Optional Equipment and Optional Services. The terms and
conditions of this Agreement shall apply to all additional orders.

C. OUT OF SCOPE SERVICES - If Customer desires Spacenet's assistance for such
tasks as adding new applications to the network, network analysis, system
optimization, etc., Customer may make such request by providing details of the
request in writing to the Spacenet program manager. If Spacenet accepts
Customer's request, Spacenet will then respond with a fixed-price quotation for
performing the requested tasks along with an estimate of the time it will take
to perform the tasks. If Customer accepts Spacenet's price and estimate,
Spacenet will then proceed with the tasks. In the event the new application is
required to support the needs of a third party, the parties will mutually
determine the division of costs and revenues pursuant to the terms set forth in
this Agreement.

3. CHARGES AND PAYMENTS

A. PAYMENT TERMS - With respect to each Site, (i) Customer's payment
obligations to Spacenet for the Equipment and Installation component of the
Standard Service will commence [*] after installation of the Site and
continue throughout the Minimum Site Service Term; (ii) Customer's payment
obligations to Spacenet for the Network Operations and Support component of
the Standard Service will commence upon installation of the Site and continue
until the later of (a) expiration of the Minimum Site Service Term and (b)
termination by Customer of service at such Site pursuant to Article 1 above;
and (iii) Customer's payment obligations to Spacenet for the Space Segment
component of the Standard Service will commence upon installation of the
first Site hereunder and continue throughout the Agreement Term. All payments
made under this Agreement shall be in U.S. Dollars. The fees or prices for
Services are as set forth in Section A. Spacenet will bill Customer for
monthly Service charges one (1) month in advance of the month's service due
and payable the last day of the billing calendar month (e.g. September 1
billing for October's service is due and payable September 30), provided that
billing for the first month of Service at a Site will be billed in arrears.
Monthly charges for partial months of Services will be prorated on a thirty
(30) day month basis. Invoicing for Services at each Site shall commence once
the Site is available for transmission service. All other Service charges
will be accrued monthly and billed in arrears due and payable within 30 days
of receipt of Spacenet's invoice. The prices for all other Equipment are set
forth in Section A and are due and payable within 30 days of receipt of
Spacenet's invoice. Spacenet shall invoice Customer for Equipment upon
delivery or installation where Spacenet is to provide installation.

B. LATE PAYMENTS - In the event any fees or charges are not paid in full by
Customer when due, then Spacenet shall provide Customer with written notice
of such non-payment. If Customer fails to cure such non-payment within ten
(10) days after the date of such notice, then Spacenet, in addition to and
not in lieu of its rights under Article 12 ("Termination and Suspension of
Service") below, reserves the right to charge Customer a late payment charge

calculated on the past due balance at the rate of [*] interest per month for
each month or part thereof from the date the payment was due. This late
payment charge will not be imposed on the portion of an invoice which may
reasonably be under dispute by Customer, provided that Customer has paid the
undisputed portion in full and has provided Spacenet with a written
explanation of the disputed amount within 15 days of receipt of Spacenet's
invoice.

C. PRICE VALIDITY - The prices for Services (excluding the Equipment and
Installation component and the Space Segment component of the Standard Service

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<PAGE>

fee) in Section A may be increased by Spacenet each calendar year by the [*].
All Equipment charges in Section A shall remain fixed throughout the
Agreement Term provided that, once annually, Spacenet will review its cost
for the PC (based on a minimum configuration agreed to by the parties) and
will negotiate in good faith with Customer an amendment to the PC portion of
the Standard Service fee (provided no other Standard Service costs have
increased) to reflect any such change in the PC cost and the adjusted price
shall apply to all Site orders placed after the date of such amendment.
Spacenet will not be obligated to disclose its underlying costs to Customer
but shall provide relevant information in good faith.

D. EQUIPMENT PURCHASE OPTION - With respect to each Site ordered under this
Agreement, Customer has the option to purchase from Spacenet for the amounts
specified in Section G (plus any amounts outstanding for Standard Service as of
the date of purchase) all of the Spacenet provided Equipment listed under
Equipment and Installation in Section A at such Site (excluding any software)
used to provide Spacenet's Standard Service hereunder to such Site. In the event
Customer exercises this purchase option with respect to a Site, title to the
Equipment described above shall transfer to Customer upon payment of the
applicable amount (plus any amounts outstanding for Standard Service as of the
date of purchase).

4. TAXES AND FEES

The Service fees and other charges under this Agreement are as set forth in
Section A. These charges exclude all present and future taxes, duties (for any
shipments outside the United States), or fees of any nature, including, but not
limited to federal, state, or local sales or use taxes, fees, excises, property
or gross receipts taxes or fees, telecommunication taxes, license, access, or
universal service fees, export or import fees or other taxes or duties (for any
shipments outside the United States) which may now or hereafter be levied on the
Services provided or on payments made under this Agreement. Any such taxes,
fees, or duties, however denominated, which may now or hereafter be levied on
the Services provided, the Equipment installed, or payments made under this
Agreement, excluding taxes based on Spacenet's net income, shall be paid by
Customer. If at any time Spacenet is required to pay or pays any of these,
Customer shall promptly reimburse Spacenet for such payments including
applicable penalties and interest (other than those imposed due to Spacenet's
negligence), if any. Taxes, late payment charges, and other charges (other than
those imposed due to Spacenet's negligence) will be invoiced following their
accrual. Spacenet agrees to provide reasonable documentation supporting any such
charges. As required by law, Spacenet shall be responsible for preparing and
filing (with the reasonable assistance of Customer when requested by Spacenet)
the U.S. federal, state and local tax returns for the taxes specified above in
connection with Spacenet's Services provided under this Agreement.

5. ASSIGNMENT

Either party may assign its rights and obligations under this Agreement to a
third party only upon receiving the prior written consent of the other party,
which consent may be reasonably conditioned but will not be unreasonably
withheld. The parties agree that no assignments will be made unless the assignee
agrees to accept in full the responsibilities and obligations of the assigning
party.

6. TITLE AND RISK OF LOSS

A. TITLE - Except as provided in paragraph 3(D) above, title to the Equipment
installed or provided by Spacenet under this Agreement shall remain with
Spacenet. Customer shall not move the Equipment, nor permit the Equipment to be
moved, modify the Equipment nor permit the Equipment to be modified, and
Customer shall not permit any liens or encumbrances to be placed upon the
Equipment. Spacenet shall have the right and authority acting in its own name or
the name of Customer to complete and file such documents as it deems necessary
to protect its security interest in or ownership of the Equipment or other
equipment and Customer shall fully cooperate with and support all such filings
by Spacenet.

B. RISK OF LOSS - Risk of loss or damage for Equipment shall pass to Customer
upon installation of the Equipment. Customer shall insure or cause the end-users
of the equipment to insure all Spacenet-owned equipment on Customer's or
end-users' premises against risk of loss or damage due to any cause other than
normal wear and tear, and shall name Spacenet as a loss payee to the extent of
its losses. Proof of such insurance (i) held by Customer and (ii) as
commercially reasonable, held by the end-users of the equipment, and issued by
of an A rated or better carrier shall be made available to Spacenet by Customer
upon request by Spacenet. Customer shall notify Spacenet of any material change
in such insurance coverage or insurance carrier.

7. REMOVAL OF EQUIPMENT

Upon expiration or termination of this Agreement or termination of payment for
service at a Site, Spacenet may elect to remove all or portions of
Spacenet-owned equipment (excluding any equipment that has been paid in full by
Customer pursuant to Section G) that was used to provide services hereunder, and
Customer shall facilitate Spacenet's entry into all applicable premises to
permit Spacenet to remove any such equipment. Spacenet may, upon written notice
to Customer, abandon any Spacenet-owned equipment in place. If Customer wants
Spacenet to remove any equipment (antennas, mounts, etc.) that Spacenet has
elected to abandon in place, Spacenet

Page 10
<PAGE>

will do so on a time and materials basis. Title to abandoned equipment will pass
to Customer. Customer agrees to follow Spacenet's instructions regarding the
removal or disabling of any Spacenet Software contained in equipment that is
abandoned in place.

8. GOVERNING LAW

This Agreement shall be construed and enforced in accordance with, and shall be
governed by, the laws of the United States and of the Commonwealth of Virginia
without regard to principles of conflicts of laws. The parties agree to submit
to the jurisdiction of the state and federal courts sitting in Georgia. Venue
for any claims hereunder shall be a court of competent jurisdiction in or near
Atlanta, Georgia.

9. RESPONSIBILITIES OF THE PARTIES

A. COMPLIANCE AND APPROVALS - Each party shall comply with all applicable
governmental laws, rules and regulations including U.S. export control laws.
Certain specific actions, such as obtaining local permits, landlord consents or
other waivers or consents, may be necessary for Spacenet to install the
Equipment and for Customer to make use of the Services. The responsibilities for
such actions are set forth in Section C under "Site Installations". The
obligations of Customer under this Agreement are not conditioned upon Customer's
receipt of such authorizations or approvals.

B. BACKHAUL - Customer shall be responsible to obtain, maintain, and pay for all
terrestrial communications services and termination equipment required under
Customer's network configuration design. Spacenet shall have no obligations in
connection with said services and equipment.

C. INSURANCE - Each party, at its own expense, will obtain and/or maintain
insurance to cover risks associated with their respective business activities
detailed herein.

D. REPORTS - Spacenet will provide weekly reports which provide information
relating to (i) the status of installation activities including the installation
schedule for the upcoming week and (ii) service outages during the prior
calendar month.

E. PROGRAM MANAGEMENT - Spacenet will provide program management services,
including installation and operational planning, project scheduling and
management of theServices rendered and Equipment provided.

F. STRATEGIC ALLIANCES - The parties will work together in good faith to develop
strategic alliances with PC providers provided that such alliances are in the
best interest of both parties.

10. MARKETING RELATIONSHIP

A. [*]

B. [*]

C. Spacenet will assist Customer in the sale of Customer's programming to
certain existing and prospective Spacenet customers. The parties will negotiate
in good faith the economic division of the costs and revenues associated with
such sale(s). Such sales will not be counted toward the Minimum Site Order
Quantity.

D. Spacenet may help facilitate arrangements in which Customer may use the VSAT
infrastructure of certain existing and prospective Spacenet customers to
distribute Customer's store and forward video application and video streaming
for in-store television entertainment, information and commercial messages or
any additional applications. The parties will negotiate in good faith an amount
to be paid to Spacenet for facilitating such arrangement.

E. [*]

G. [*]

11. PATENT INDEMNITY

A. Spacenet shall, at its sole expense, defend, indemnify, and hold Customer
harmless from and against all costs and liabilities in connection with any
claim, suit or action for infringement of US patents, copyrights, or other
proprietary rights associated with any Equipment, Software, or other Service
provided under this Agreement. Customer agrees to immediately notify Spacenet of
any such action, and agrees to provide information, cooperation, and support
necessary to Spacenet's defense or settlement of the claim; and Customer agrees
that Spacenet has sole authority to assume the defense thereof and/or the
settlement of the claim. Customer shall have the right to be represented in any
suit or action by advisory counsel of Customer's selection and at Customer's
expense.

B. Should the Equipment, Software, or other Service provided or to be provided
under this Agreement become, or in Spacenet's opinion be likely to become, the
subject of a claim of infringement of any United States copyright, patent or
trade secret, Spacenet will use commercially reasonable efforts basis to
exercise one or more of the following options at its sole expense:

(1) Procure for Customer the right to continue using the Equipment, Software, or
other Services;

(2) Replace the same with non-infringing Equipment, Software or other Services;
and/or

(3) Modify the same so as to be non-infringing.

If Spacenet is unable to accomplish options (1) and/or (2) and/or (3), Spacenet
may terminate the Agreement, with no further obligations on the part of either
party as of the effective date of termination except for each party's obligation
to settle all obligations owed to the other party up to the effective date of
termination.

C. Customer agrees that Spacenet's liability for indemnification for patent and
copyright infringement

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<PAGE>

shall not apply to any claim of infringement which may be brought against
Customer to the extent due to:

(1) Customer's modification of the Equipment or its components or of the
Software;

(2) Use of the Equipment or Software with any device added by Customer; or

(3) Customer's use of the Equipment or Software that is inconsistent with that
specified in the Equipment user manuals. Customer further agrees that it
will indemnify Spacenet on the same terms as Spacenet is obligated to
indemnify Customer pursuant to Section A. above, should any claim of
infringement be made against Spacenet because of Customer's use of the
Equipment, Software, or other Services in combination with other apparatus
or software not supplied by Spacenet under this Agreement or Customer's
modification of the Equipment, Software or other Services.

12. LIABILITY OF SPACENET AND CUSTOMER

A. Customer shall defend, indemnify and save Spacenet harmless from and against
injuries, loss or damage to Spacenet's employees or property or to the person or
property of third parties to the extent they are aused by the willful or
negligent acts or omissions of Customer (and all risk of loss and damage to the
property caused by anyone other than Spacenet and its subcontractors while the
property is in Customer's control or custody), and from and against any and all
claims, expenses, or losses (including reasonable attorneys' fees and expenses)
arising out of or in connection with the application or content of Customer's
transmissions through the provided transmission Services.

B. Spacenet shall defend, indemnify and save Customer harmless from and against
injuries, loss or damage to Customer's employees or property or to the person or
property of third parties to the extent they are caused by the willful or
negligent acts or omissions of Spacenet or that of its subcontractors, agents,
or representatives while performing its duties at Customer's Sites.

C. Except for the obligation to defend, indemnify and hold harmless provided
in B above, Spacenet's total liability under this Agreement shall in no case
exceed the recurring charges paid to it by Customer during the [*] immediately
preceding the cause of action. Customer has accepted this limitation of
liability for Services provided hereunder and understands that the price of
the Equipment and Services would be higher if Spacenet were requested to bear
additional liability for damages.

D. Except for the obligation to defend, indemnify and hold harmless provided in
A above and Customer's payment obligations hereunder, Customer's total liability
under this Agreement shall in no case exceed the recurring charges payable to
Spacenet by Customer during the twelve months immediately preceding the cause of
action.

E. EXCEPT AS PROVIDED UNDER LAW, UNDER NO CIRCUMSTANCES SHALL EITHER PARTY BE
LIABLE TO THE OTHER PARTY OR TO ANY THIRD PARTIES FOR INCIDENTAL, INDIRECT,
SPECIAL OR CONSEQUENTIAL DAMAGES OF ANY KIND, INCLUDING LOST PROFITS, LOSS OF
USE OF EQUIPMENT OR SERVICES, OR DAMAGES TO BUSINESS OR REPUTATION ARISING FROM
THE PERFORMANCE OR NON-PERFORMANCE OF ANY ASPECT OF THIS AGREEMENT WHETHER IN
CONTRACT OR TORT OR OTHERWISE, AND WHETHER ADVISORY HAS BEEN MADE OF THE
POSSIBILITY OF SUCH DAMAGES.

E. EXCEPT AS STATED HEREIN, SPACENET PROVIDES NO WARRANTIES, EXPRESS, IMPLIED OR
STATUTORY, INCLUDING BUT NOT LIMITED TO, ANY IMPLIED WARRANTIES OF
MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE RESPECTING SERVICES
PERFORMED, SOFTWARE, OR EQUIPMENT FURNISHED UNDER THIS AGREEMENT.

13. TERMINATION AND SUSPENSION OF SERVICE

A. Either party may terminate this Agreement in the event of material breach by
the other party as determined by an arbitrator if such breach continues for a
period of sixty (60) days after written notice of intention to terminate
describing the breach is given by the non-breaching party and such event of
breach is not remedied within the stated period. Both parties agree to submit to
arbitration in Atlanta, Georia in accordance with the rules and regulations of
the American Arbitration Association in all instances where one party believes
the other has materially breached the Agreement and the non-breaching party
shall not terminate this Agreement until resolution of the matter. Failure of
Customer to order installation of the Minimum Site Quantity due to Customer's
inability to obtain locations for the transmission of its programming will not
constitute a material default subject to termination under this Agreement.
However, Customer's failure to order installation of [*] or more Sites by
December 31, 2000 and a total of [*] or more Sites by December 31, 2001 will
constitute a material default subject to termination under this Agreement.
Notwithstanding the foregoing, Spacenet may, on thirty (30) days' written
notice, suspend or terminate this Agreement due to Customer's non-payment of
charges due. Upon termination for material breach by either party, Customer
shall cease utilizing the Service and shall remit to Spacenet upon receipt of a
final invoice all amounts accrued or due to Spacenet up to and including the
termination date. Customer hereby consents to the jurisdiction of any court or
administrative agency having subject matter jurisdiction in which Spacenet may
elect to bring an injunctive action to require Customer to cease using the
Services at any or all Sites, as applicable, if Customer fails or refuses to do
so after receipt of notice pursuant to this Article.

B. If breach is due to the Customer, then Customer shall, in addition to the
amounts specified in Paragraph A above, pay all applicable amounts due for the
remaining term in accordance with this

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<PAGE>

Agreement, plus deinstallation charges. Either party may pursue any other
remedies existing at law or in equity to the extent consistent with this
Agreement and its governing law. Spacenet and Customer agree that damages to
Spacenet resulting from a termination hereunder are not readily determinable
either at the time of signing of this Agreement or at the time of its
termination and that the amount of the liquidated damages is both necessary and
reasonable. Either party may bring legal action for the violation or breach of
this Agreement, and shall be entitled to recover reasonable attorneys' fees
incurred in enforcing obligations as stated herein.

C. With sixty (60) days notice and if a) at least one year of service has been
rendered, and b) if more than six months remains under the Agreement Term,
Customer may terminate the Services for its network by paying [*] of the total
remaining monthly charges for the (i) Equipment and Installation component of
the Standard Service and (ii) Space Segment component of the Standard Service,
due for the remainder of the Minimum Site Service Term for all installed Sites
(but in no event less than the Minimum Site Quantity) not having completed the
Minimum Site Service Term.

14. FORCE MAJEURE

Neither party shall be liable for failure to perform its obligations under this
Agreement to the extent such failure is due to causes beyond its commercially
reasonable control, including but not limited to externally caused transmission
interference and irreparable facility failure. In the event of a force majeure,
the party invoking this Article shall notify the other party in writing of the
events creating the force majeure and the performance obligations of the parties
will be extended by a period of time equal to the length of the delay caused by
the force majeure; provided, that if any such delay exceeds forty-five (45)
days, then following such forty-five day period either party hereto may
terminate the unperformed portions of this Agreement on ten (10) days' prior
written notice to the other party.

15. CONFIDENTIALITY

A. CONTROLLED INFORMATION - In the course of negotiating and implementing this
Agreement, each party has and will continue to have access to certain
information considered proprietary and confidential by the other party
("Controlled Information"). Each party agrees that, unless written consent is
otherwise granted by the other party, release of, access to, or use of
Controlled Information disclosed by the disclosing party to the receiving party
shall be restricted to those employees and officers of the receiving party's
organization who are advised that it has been received from the disclosing party
under their employer's commitment of confidentiality and who have a need to know
the Controlled Information in order to permit the receiving party, in good
faith, to communicate with the disclosing party for purposes of this Agreement.
The receiving party agrees to use the same degree of care to protect the
confidentiality of the Controlled Information disclosed to it as it uses to
protect its own Controlled Information, but in all events shall use at least a
reasonable degree of care.

B. EXCEPTIONS - The obligations imposed under Article 15.A above shall not apply
to Controlled Information:

a. Which becomes generally available to the public through no wrongful act of
the receiving party;

b. Which is already lawfully in the possession of the receiving party and not
subject to an existing agreement of confidentiality between the parties;

c. Which is received from a third party without restriction and without breach
of this Agreement;

d. Which was independently developed by the receiving party; or

e. Which is released pursuant to the binding order of a government agency or a
court so long as prior to any such release the receiving party provides the
disclosing party with the greatest notice permitted under the circumstances.

C. PROPRIETARY RIGHTS - Customer acknowledges and agrees that all proprietary
rights in the Equipment and Software provided by Spacenet hereunder including
but not limited to patents, copyrights and trademarks, are and shall remain at
all times the exclusive property of Spacenet or its vendors and licensors and
may not be duplicated by Customer or used except pursuant to this Agreement, and
that Customer shall not become entitled to any proprietary rights in any such
Spacenet-provided Equipment and Software. Spacenet acknowledges and agrees that
all proprietary rights in any software provided by Customer hereunder including
but not limited to patents, copyrights and trademarks, are and shall remain at
all times the exclusive property of Customer or its vendors and licensors and
may not be duplicated by Spacenet or used except pursuant to this Agreement, and
that Spacenet shall not become entitled to any proprietary rights in any such
Customer-provided software.

D. PUBLICITY - The subject matter of this Agreement may be disclosed in
advertising or publicity by either party, provided that such disclosure is
approved in writing by the non-disclosing party prior to release for
publication; provided, however that either party may include the name of the
other party in a serial list of customers or vendors (as applicable) of each
others' products and services.

16. SEVERABILITY

In the event any one or more of the provisions of this Agreement shall for any
reason be held to be invalid or unenforceable, the remaining provisions of this
Agreement shall be unimpaired, and upon mutual agreement of the parties the
invalid or unenforceable provision shall be replaced by a valid and enforceable

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<PAGE>

provision which comes as close as lawfully possible to the intention of the
parties.

17. NON-WAIVER

The failure of either party to insist upon strict adherence to any material term
or condition of this Agreement on any occasion shall not be considered a waiver
of any right thereafter to insist upon strict adherence to that term or
condition or any other material term or condition of this Agreement.

18. RELATIONSHIP OF THE PARTIES

This Agreement is not intended by the parties to constitute or create a joint
venture, pooling arrangement, partnership, agency or formal business
organization of any kind. Spacenet and Customer shall be independent contractors
with each other for all purposes at all times and neither party shall act as or
hold itself out as agent for the other unless so designated in a separate
writing signed by the principal, nor shall either party create or attempt to
create liabilities for the other party.

19. NOTICES AND POINTS OF CONTACT

Except as otherwise provided, all important notices or other communications
required or desired to be given or sent in connection with this Agreement shall
be in writing and transmitted to the applicable party by hand delivery or U.S.
certified mail, return receipt requested, postage prepaid. Invoices and other
non-emergency communications may be transmitted via regular U.S. mail or
facsimile.

20. COUNTERPARTS

This Agreement may be executed in counterparts, each of which shall be deemed an
original, but all of which together shall constitute one and the same
instrument.

21. ENTIRE AGREEMENT

This Agreement, including all Sections listed herein, comprises the entire and
exclusive agreement of the parties with respect to the subject matter hereof and
supersedes any and all prior and contemporaneous agreements, understandings,
arrangements, proposals or representations whether written or oral, heretofore
made between the parties hereto and relating to this subject matter. It does
not, however, revoke or rescind any prior agreements for other services or
equipment which may have been executed by the parties. This Agreement may be
modified, changed or amended only by an express written agreement signed by duly
authorized representatives of both parties stating that it is an amendment.
Waivers, or purported waivers, of any provision of this Agreement shall be in
writing and signed by an authorized officer of both parties.

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<PAGE>

SECTION C -- NETWORK IMPLEMENTATION

ORDERING PROCEDURES

A. Content of Site Orders - Customer will notify Spacenet's designated Program
Manager (via purchase orders or other mutually agreed-upon means of
communication) by facsimile (or other mutually agreed upon means of
communication) of specific Sites that it wishes Spacenet to install at least [*]
days prior to the requested installation commencement date.* In such notices,
Customer must include:

- - Street, city, and state where the Equipment will be delivered and
installed;

- - Requested installation date (as outlined within the time frames and
procedures identified in this Agreement);**

- - Name or title and phone number of the person at each Site authorized to
work with Spacenet on all installation activities;

- - Any special instructions for the installation, including deviations to the
standard Equipment configuration specified in Section A; and

- - Customer unit number for the Site.

* Spacenet will use commercially reasonable efforts to complete requested
installations (provided that the total number of installs does not exceed [*]
per month) no later than sixty (60) days from the date Spacenet receives
Customer's order. Both parties understand that the goal is to install between
[*] and [*] Sites a month.

** In all instances where Customer requests a Site installation date that is
less than [*] days from the date Spacenet receives Customer's order and
Spacenet is able to meet such request, Customer shall pay the Expedite Fee for
such Site installation. Notwithstanding the above, Spacenet will, to the extent
practically reasonable, provide a reasonable number of expedited installations
(no more than [*] of the total installed Sites) at no charge in instances where
Customer has a major new opportunity with a chain customer (greater than [*]
Sites for a particular end-user) or a new network that requires an expedited
installation schedule for the first Site or first few Sites in order to
demonstrate the functionality of the system to such chain customer.

B. Purchase Orders - Standard Service, Optional Equipment and Optional Services
may be ordered via Customer's own purchase orders within the lead times provided
by Spacenet which shall be commercially reasonable. However, Customer
understands and agrees that any such purchase orders are to be used only for
purposes of facilitating the ordering of Equipment and Services under this
Agreement, and for providing a purchase order number for Customer's accounting
purposes. Customer agrees that, notwithstanding any statements to the contrary
on Customer's purchase order or other documents, the provision of Equipment and
Services as contemplated in this Agreement shall be governed solely by the terms
and conditions of this Agreement, and that any terms and conditions of
Customer's purchase order or other documents shall be null and void.

SITE INSTALLATIONS

A. STANDARD INSTALLATION - A Standard Installation includes the delivery and
installation of the Equipment set forth under "Standard Service - Equipment and
Installation" in Section A, and includes one (1) wall penetration for the IFL
cable run. The installation process consists of VSAT assembly, installing and
pointing the VSAT antenna, installing the IFL cable, integrating the PC based
DVB receiver, satellite transmitter and PC based [*] interface into the PC
System Unit, installing and connecting the PC System Unit, activating the
Customer provided Software for use with the Spacenet provided Equipment,
installing and connecting the TV using a standard wall or ceiling mount, and
installing and connecting the outdoor electronics. Other

Page 15
<PAGE>

required efforts, such as the installation of cable conduits, trenching, or
non-standard antenna mounts, are outside the scope of a Standard Installation
and subject to quotation.

B. NON-STANDARD INSTALLATION - For any non-standard installation services or
equipment, if the estimated cost of the service or equipment necessary to
complete the installation is equal to or less than [*], no prior approval from
Customer is needed and Spacenet may complete the installation. After completion
of the installation, Spacenet shall provide to Customer a listing of the
non-standard charges. However, if the non-standard installation services or
equipment is estimated to be greater than [*], Spacenet shall not proceed with
the installation unless it receives prior approval from Customer to proceed at
the additional charges.

C. SPACENET RESPONSIBILITIES - As part of the Standard Installation, Spacenet or
its agents will:

- - Obtain all licenses, permits, approvals, authorizations and clearances
required by the FCC for the operation of the Equipment (excluding any
licenses required for Sites located outside the continental United States).

- - Render reasonable assistance by telephone to support Customer's efforts to
secure landlord approvals at each Site.

D. CUSTOMER RESPONSIBILITIES - At each Site, Customer or its agents will:

- - Designate one individual that is authorized to make decisions relating to the
installation of the Equipment at each Site and to interface with Spacenet
during installation.

- - Obtain any landlord approvals required for each Site.

- - Obtain any required building permits, zoning permits, and/or zoning
variances.

- - Pay Spacenet, on a Time and Materials basis, if Spacenet attends zoning
hearings or other public meetings in order to obtain a building or zoning
permit or zoning variance.

- - If requested by Spacenet, use commercially reasonable efforts to provide
building construction drawings for each Site type to the Spacenet
installation manager at least thirty days prior to scheduled commencement of
installation.

- - Provide a suitable secure area for installation of the antenna and all
outdoor and indoor electronics associated with the Equipment.

- - Designate a location for installation of the TV (including type of mount to
be used) and PC System Unit. Such designation should be made prior to the
date of installation if commercially reasonable.

- - Provide electrical supply, data interface cables, and environmental
conditioning requirements as may be required in order to meet
Spacenet-provided specifications and local Building Department codes.
Electrical supply requirements include: (1) a 120 volt single phase
electrical power receptacle within 5 feet of the PC System Unit location,
preferably with a separate 15-Amp circuit breaker; and if antenna de-icing is
provided, an additional 120 volt single phase electrical power receptacle
within 5 feet of the antenna with a separate 15-Amp circuit breaker. The PC
System Unit of the VSAT system shall be located in a Customer designated area
suitable for a personal computer, in a clear space, 18"D x 20"W x 10"H,
adequately ventilated to provide air circulation about the unit (preferably
air-conditioned) and to be free of excessive dust or dirt. (2) a 120 volt
single phase electrical power receptacle, preferably with a separate 15-Amp
circuit breaker, situated in a location such that 12 feet of wiring can be
connected from the TV to the receptacle in a safe and convenient manner
approved by Spacenet. The TV shall be located in a Customer designated area
suitable for a television and located such that 45 feet of wiring can be
connected from the PC System Unit to the TV in a safe and convenient

Page 16
<PAGE>

manner approved by Spacenet, in a clear space, 18"D x 27"W x 27"H, adequately
ventilated to provide air circulation about the TV (preferably
air-conditioned) and to be free of excessive dust or dirt.

- - Subject to Customer's security policies and procedures, provide Spacenet or
its agents with access and egress to the Site and indoor communications
equipment location at all reasonable times for installation and maintenance
of the Equipment. If commercially reasonable, prior to installation, Customer
shall deliver to Spacenet a signed letter from the end-user at the Site
authorizing the installation. The parties recognize that in certain instances
and with respect to Sites for end-users with a minimal number of VSAT Site
locations, Customer may request that the installer visit the Site without
formal written authorization. In such instances, the installer will use
commercially reasonable efforts to get the end-user to sign an authorization
form provided by Customer to the installer (which may be in the form of a
subscription agreement). In the event the installer is unable to obtain the
end-user's signature, the installer will not perform the installation and
Customer will pay Spacenet the Site Survey charge for the attempted install.

- - Pay for any special conveyances (e.g. crane), services, or facilities for
transporting Equipment (e.g., the VSAT antenna) and any materials that cannot
be manually conveyed to the point of installation.

- - Arrange and pay for union labor if the local jurisdiction requires labor
union members to perform or supervise the VSAT installation.

Customer is affirmatively obligated to meet all of the responsibilities set
forth above in this paragraph D. Customer's failure to perform any of such
responsibilities shall not be deemed to be grounds for termination by Spacenet;
provided that Spacenet's nonperformance of its obligations under this Agreement
shall be excused if and to the extent such Spacenet nonperformance results from
Customer's failure to perform its responsibilities. In the event Customer fails
to perform any of such responsibilities, Customer shall be obligated to pay
Spacenet for any Services rendered or Equipment provided with respect to the
Site and shall not be relieved of any of its other obligations under this
Agreement.

E. SCHEDULING INSTALLATIONS

- - For all installations under this Agreement, Spacenet and Customer shall agree
to a mutually acceptable and geographically efficient Site installation
schedule. Spacenet shall plan the specific installation schedule and routing
of the installations.

- - There will be no Site Survey charge applicable if the Spacenet installer is
able to perform an installation on his first visit using one of the standard
antenna mounts. Upon arrival of the Spacenet installers at a Site, if it is
determined that one of the standard antenna mounts cannot be used, or if the
Site is determined to be non-Standard for other reasons, a Site Survey will
be performed at that time instead of the installation activity for the price
specified in Section A, and the installation will be rescheduled to include
the non-standard Equipment and installation activities, subject to Customer's
approval of Spacenet's quotation for any non-standard items or services.

- - Late cancellation or postponement of an installation by Customer, which is
defined as cancellation or postponement less than two (2) business days in
advance of the scheduled installation, will result in a Canceled Site
Installation charge. A Canceled Site Visit charge will be paid if Customer
fails to grant Spacenet access to a site on the scheduled installation date,
or if the site is not ready for a VSAT installation on the scheduled install
date (e.g., site under construction, no A/C power, etc.)

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<PAGE>

SECTION D -- OPERATION AND MAINTENANCE

NETWORK AVAILABILITY COMMITMENT

The transmission services provided by Spacenet to Customer under this Agreement
have an overall Network Availability Commitment as set forth under Network
Information in Section A (calculated by dividing the number of on-line service
minutes by the number of total possible service minutes), averaged over an
annual basis. The Network Availability Commitment will not apply to Sites with
the CD ROM solution alternative. The annual measurement period shall commence
one month after the first [*] Sites have been installed. [*]

The Network Availability Commitment is measured over a 12-month period and
includes the following elements:

VSAT Equipment
TV (except if provided by Customer)
Hub earth station equipment
Satellite transponder
Hub sun transit

Spacenet will be relieved of its Network Availability Commitment to the extent
that any service interruptions are due to:

- Failure or interruption of service due to the failure or
non-performance of any terrestrial backhaul equipment,
connections, or services;

- Action or inaction by Customer, its employees, invitees, third
parties, including, but not limited to, changes in applications,
protocols, or transmission parameters from those tested and
approved by Spacenet;

- Customer-scheduled/approved down-time (maintenance, upgrades,
etc.);

- Breach of this Agreement by Customer;

- Any other cause beyond Spacenet's control, to include but not be
limited to those actions set forth under the Force Majeure
provision of this Agreement; or

- Failure or unavailability of the Customer's Data Center or
equipment not provided by Spacenet.

SITE MAINTENANCE

A. MAINTENANCE DEFINITIONS - Subject to the terms and conditions hereof,
Spacenet shall provide maintenance support for all Equipment provided as part of
this Agreement. Such maintenance shall consist of:

- - Equipment maintenance which includes travel to and from the Site and
technical trouble-shooting to isolate any problems;

Page 18
<PAGE>

- - On-Site repair and replacement, as required, of malfunctioning Equipment;

- - Diagnostic support of malfunctioning Equipment;

- - SkyBlaster Software maintenance; and

- - Coverage during Spacenet's normal Business Hours

"Business Hours" means Monday through Friday (excluding Spacenet holidays), 9:00
a.m. to 5:00 p.m. (local time of the serving field service center).

"Business Day" excludes Saturdays, Sundays and Federal, state and local
holidays. US Federal holidays observed by Spacenet maintenance and service
personnel are:

New Year's Day * Labor Day
President's Day Thanksgiving Day
Memorial Day The day after Thanksgiving Day
Independence Day * Christmas Day *

* If the holiday falls on a Saturday or Sunday, it will be observed on
the nearest Friday or Monday, as observed by Federal employees.

B. MAINTENANCE RESPONSE TIME - Spacenet will respond to Maintenance Calls or
other indications of malfunction by dispatching a service technician to the
Site to repair or replace the defective component unless the trouble can be
otherwise corrected through remote repair. No less than [*] of the time,
Spacenet shall respond to Maintenance Calls no later than [*]. In all other
instances, Spacenet shall respond to maintenance calls on a commercially
reasonable effort basis but no later than [*] Business Days. The average
response time will be based on results experienced during the prior 12-month
period of operation.

C. CUSTOMER'S MAINTENANCE RESPONSIBILITIES - [*]. In order for Spacenet to
respond to maintenance calls from Customer's Central Trouble Reporting Point,
Customer shall assure that an authorized representative shall be available at
the Site to receive the Spacenet maintenance technician(s), including
security escort, if required. In the event the Customer cannot verify that a
representative and/or security escort will be present, Spacenet shall not
dispatch or have dispatched a maintenance technician until such time as the
Customer can verify that a representative shall be available at the Site to
receive the maintenance technician(s) and contacts Spacenet with such
information. Upon dispatch of a maintenance technician, if an authorized
representative is not available at the Site to receive the maintenance
technician(s), including security escort, if required, the Canceled Site
Visit Charge shall apply and the period for Spacenet's calculation of the
service interruption period shall cease until such time as a maintenance
technician is granted access to the Site. For clarification purposes, with
respect to support of additional applications (other than the store and
forward video application and video streaming), the parties will mutually
determine who is responsible for 1st Level support.

D. MAINTENANCE EXCLUSIONS - Spacenet's maintenance obligations under this
Agreement do not include provision of consumable supplies, repair or replacement
of Equipment failures or malfunctions caused by improper installation,
operations, or maintenance, by other than Spacenet authorized representatives,
problems with the Customer provided software, relocation or modification by
Customer or others not under Spacenet's control, failure or interruption of

Page 19
<PAGE>

Customer-provided terrestrial communications or electrical power, accident,
fire, lightning, snow, snow removal, or other hazards beyond normal range of
use, vandalism, trouble calls where no problem is found and the reported problem
does not repeat within five calendar days, or failures or malfunctions resulting
from exposure of the Equipment to conditions beyond its operating conditions.
Any such failures and malfunctions will be repaired on a commercially reasonable
effort basis and billed to Customer on a time and materials basis. Customer
shall grant or have granted access as required for maintenance of the Equipment
during maintenance hours, including appropriate security escort when required.

SOFTWARE LICENSE AND SUPPORT

A. "Software" means any computer program, including any modifications, updates,
or additions, which may be included in or with Spacenet-provided Equipment
(excluding Customer provided software for the Supported Applications and any
other Customer provided software) as object code, or in executable form in any
medium, and related materials such as diagrams, manuals and other documentation
which are for use in the Equipment provided to Customer under this Agreement.

B. By their signature of this Agreement, Spacenet grants to Customer and
Customer accepts a non-exclusive license to use or have used the Software
residing in Spacenet-provided Equipment, but only for the purpose of causing
such Equipment to operate for the provision of transmission services and not
otherwise. Customer shall not permit any third party to gain access to the
Software or transfer the Software to any third party, copy or permit to have
copied the Software, reverse engineer, disassemble, de-compile, or transmit the
Software in any form or by any means. Violation of these restrictions shall
entitle Spacenet to terminate this Software License without liability, take
possession of the Equipment and Software, and terminate this Agreement for
breach. Software is and shall remain the exclusive property of Spacenet or
Spacenet's vendors. No license other than that specifically stated herein is
granted to Customer, and Customer shall have no right under patent, trademark,
copyright, trade secret or other intellectual property of Spacenet or Spacenet's
vendors other than that granted herein.

C. Spacenet's Standard Service fees include Software license and maintenance for
the Agreement Term. During the Agreement Term, Spacenet will provide remedial
software support services so that Spacenet's software operates on the
Spacenet-provided Equipment. For clarity, the parties understand that this
software support consists of software maintenance, fixes, work-arounds, etc.
Software releases or upgrades which provide new product functionality or
features beyond the functionality or features already committed to under this
Agreement may be offered and quoted to Customer as they become available,
including new features and functionality specifically requested by Customer.
Otherwise, for so long as Customer remains current in its payment of all charges
hereunder, there is no additional charge for Software releases or upgrades that
Spacenet may incorporate into its shared hub services to Customer.

D. To the extent Customer remains current in its payments for Standard Service,
Spacenet warrants to Customer that the Spacenet-provided Software is "Year 2000
Capable", meaning that (1) its functionality will not be materially adversely
affected as a result of the date change from 1999 to 2000, including leap year
calculations, provided that all Customer-provided or other non Spacenet-provided
products and equipment used with the Equipment function properly including,
without limitation, properly exchanging date data with the Equipment; and (2) to
the extent applicable to the Equipment's normal operating specifications and
subject to any upper and lower limits in the Equipment's systems design, the
Equipment will accept, store, retrieve, compare and otherwise process dates of
January 1, 2000 and later. This warranty is subject to the limitations set forth
in Article 11 of Section B to this Agreement.

Page 20
<PAGE>

E. With respect to any software provided by Customer for use on the Spacenet
provided Equipment, Customer grants to Spacenet a license to use such software
for all purposes in connection with this Agreement pursuant to the same terms
and conditions set forth above, provided that Customer will be obligated to
provide software support and warrant that the Customer-provided software is Year
2000 Capable for so long as the software is being used on the Spacenet-provided
Equipment.

Page 21
<PAGE>

SECTION E -- TRAFFIC ASSUMPTIONS FOR NETWORK BANDWIDTH

The Network Bandwidth [*]

Outbound:

(1) DATA DISTRIBUTION USING [*] (OR MUTUALLY AGREED TO ALTERNATIVE MULTICAST
SOLUTION). Total weekly transmission of [*] which consists of files with an
average size of [*] (up to a maximum of [*]).

(2) POLLING REQUEST. Twice weekly sequential polling of audit reports. Each
polling request contains up to [*].

Inbound:

(1) [*] (OR MUTUALLY AGREED TO ALTERNATIVE MULTICAST SOLUTION) PROTOCOL TRAFFIC
FOR DATA DISTRIBUTION. As required to download the files to 99% of the
Sites.

(2) POLLING RESPONSE. Each polling request will generate an audit report of
[*].

(3) COMPLIANCE REPORT. Compliance reports of [*] messages will be equally
randomized over 24 hours for all of the Sites.

Page 22
<PAGE>

SECTION F -- DEMARCATION OF SOFTWARE RESPONSIBILITIES

SPACENET SOFTWARE RESPONSIBILITES

NT software
Embedded software and drivers for the transmitter and receiver
TV2VGE software
[*] drivers
Software download and configuration management

CUSTOMER SOFTWARE RESPONSIBILITIES Store and forward video application and
video streaming [*] drivers and application software [*] application
software Software download and configuration management

In order to make the network run reliably, each party will be responsible for
delivering the respective software listed above and will implement a quality
assurance process with respect to such software. Additionally, the parties will
work together in good faith to create a quality assurance process for the
integration of all the software and will work together to integrate the
software, which will result in a reliable, stable and efficient VSAT image
("Image"). Spacenet will be responsible for the manufacture and production of
the PC System Unit which will include the released Image. Any downloads of the
software Image (or changes to the software Image) should be approved by both
parties prior to any download. Within the 45 day period following the Effective
Date, the parties will work together to create a more detailed description of
the demarcation of the software responsibilities.

Both parties will work together in good faith to integrate the [*] (or mutually
agreed to multicast software alternative) with the above listed software and the
PC System Unit in the most efficient manner with respect to bandwidth
consumption and application performance. The parties will work in good faith to
develop a way to support multiple [*] TVs from one server.

For video streaming purposes, Customer shall be responsible for the
configuration and integration of the [*]. Spacenet will be responsible for
the operation of the video server using [*]streaming software solution (or
its mutually agreed to equivalent) for the uplink at the shared hub.

Page 23
<PAGE>

SECTION G -- [*]

Page 24

<PAGE>
Exhibit 21.1

SUBSIDIARIES

PharmaSee L.L.C.

Digital Leasing L.L.C.

Bevision L.L.C.

<PAGE>
Exhibit 23.1

INDEPENDENT AUDITORS' CONSENT

The Board of Directors
RMS Networks, Inc. (formerly Retail Media Systems, Inc.)

We consent to the use of our report included herein and to the references to
our firm under the headings "Experts" and "Selected Consolidated Financial Data"
in the prospectus.

/s/ KPMG LLP

Fort Lauderdale, Florida
April 5, 2000

<PAGE>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
CONSOLIDATED FINANCIAL STATEMENTS OF RMS NETWORKS, INC. (FORMERLY RETAIL MEDIA
SYSTEMS, INC.) AND SUBSIDIARIES FOR THE TWELVE MONTHS ENDED DECEMBER 31, 1999
AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH CONSOLIDATED FINANCIAL
STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000

<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> JAN-01-1999
<PERIOD-END> DEC-31-1999
<CASH> 8,588
<SECURITIES> 0
<RECEIVABLES> 88
<ALLOWANCES> 19
<INVENTORY> 0
<CURRENT-ASSETS> 9,060
<PP&E> 423
<DEPRECIATION> 106
<TOTAL-ASSETS> 9,809
<CURRENT-LIABILITIES> 1,074
<BONDS> 0
0
0
<COMMON> 80
<OTHER-SE> 8,655
<TOTAL-LIABILITY-AND-EQUITY> 9,809
<SALES> 0
<TOTAL-REVENUES> 2,182
<CGS> 0
<TOTAL-COSTS> 1,422
<OTHER-EXPENSES> 3,277
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 68
<INCOME-PRETAX> (2,556)
<INCOME-TAX> 0
<INCOME-CONTINUING> (2,556)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (2,556)
<EPS-BASIC> (0.39)
<EPS-DILUTED> (0.39)

</TABLE>