CONSYGEN INC, SB-2, 2000-09-19

CONSYGEN INC
SB-2, 2000-09-19
PREPACKAGED SOFTWARE

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As filed with the Securities and Exchange Commission on September 19, 2000
Registration No. 333-_________
================================================================================
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM SB-2
REGISTRATION STATEMENT
Under the Securities Act of 1933

CONSYGEN, INC.
--------------------------------------------
(Name of Small Business Issuer in Its Charter)

Texas 7371 76-0260145
------------------------------- ----------------- ----------------------
(State or Other Jurisdiction of (Primary Standard (I.R.S. Employer
Incorporation or Organization) Industrial Identification Number)
Classification
Code Number)

125 South 52nd Street
Tempe, Arizona 85281
(480) 394-9100
-------------------------------------------------------------
(Address and Telephone Number of Principal Executive Offices)

125 South 52nd Street
Tempe, Arizona 85281
----------------------------------------
(Address of Principal Place of Business)

A. Lewis Burridge, President and Chief Executive Officer
ConSyGen, Inc.
125 South 52nd Street
Tempe, Arizona 85281
(480) 394-9100
---------------------------------------------------------
(Name, Address and Telephone Number of Agent For Service)

Copies to:
John G. Nossiff, Jr., Esq.
Brown, Rudnick, Freed & Gesmer P.C.
One Financial Center
Boston, Massachusetts 02111
Tel: (617) 856-8200
Fax: (617) 856-8201

Approximate Date of Commencement of Proposed Sale to the Public: As soon as
practicable after the effective date of this Registration Statement.

If any of the securities being registered on this form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or interest
reinvestment plans, please check the following box. [X]

If this form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, check the following box and
list the Securities Act registration statement number of 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 earlier effective registration statement
for the same offerings. [ ]

If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box.
================================================================================

CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
====================================================================================================
<S> <C> <C> <C> <C>
Title of Each Class Proposed Maximum Proposed Maximum
of Securities to be Amount to Offering Price Aggregate Offering Amount of
Registered be Registered Per Unit(1) Price(1) Registration Fee
----------------------------------------------------------------------------------------------------
Common Stock,
$.003 par value 13,646,000 $0.605 $8,255,830 $2,180
====================================================================================================
</TABLE>

(1) Estimated solely for the purpose of determining the registration fee
pursuant to Rule 457(c) under the Securities Act of 1933. Based upon the
average of the high and low prices of the common stock as quoted on the
National Association of Securities Dealers, Inc's. OTC Bulletin Board on
September 12, 2000.

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 Section 8(a), may
determine.
<PAGE>
PROSPECTUS SUBJECT TO COMPLETION, DATED SEPTEMBER __, 2000

13,646,000 Shares of
Common Stock

CONSYGEN, INC.

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

The selling stockholders listed under the caption "Selling Stockholders" on
page 42 of this prospectus are selling up to 13,646,000 shares of our common
stock, $.003 par value per share, which includes 4,498,000 shares registered for
sale upon the private exercise of outstanding warrants.

The selling stockholders may offer common stock through public or private
transactions at prevailing market prices or at privately negotiated prices. We
will not receive any proceeds from this offering.

Our common stock is quoted on the National Association of Securities
Dealers, Inc's. OTC Bulletin Board under the symbol "CSGI." On September 12,
2000 the last quoted sale price of the common stock was $0.605 per share.

INVESTING IN OUR COMMON STOCK INVOLVES A HIGH DEGREE OF RISK. SEE "RISK
FACTORS", BEGINNING ON PAGE 6.

NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR PASSED UPON THE
ADEQUACY OR ACCURACY OF THE PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.

The date of this prospectus is September __, 2000.
<PAGE>
TABLE OF CONTENTS

Page
----
About this Prospectus .................................................. 3
Prospectus Summary ..................................................... 3
Risk Factors ........................................................... 6
Use of Proceeds ........................................................ 12
Dividend Policy ........................................................ 12
Price Range of Common Stock ............................................ 12
Management's Discussion & Analysis of Financial
Condition & Results of Operations ..................................... 13
Business ............................................................... 19
Management ............................................................. 34
Certain Transactions ................................................... 39
Principal Stockholders ................................................. 40
Selling Stockholders ................................................... 41
Description of Capital Stock ........................................... 44
Shares Eligible for Future Sale ........................................ 46
Plan of Distribution ................................................... 47
Legal matters .......................................................... 47
Experts ................................................................ 47
Additional Information ................................................. 48
Index to Consolidated Financial Statements ............................. F-1

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ABOUT THIS PROSPECTUS

You should rely only on the information contained in this prospectus. We
have not authorized any other person to provide you with different information.
If anyone provides you with different or inconsistent information, you should
not rely on it. We are not making an offer to sell these securities in any
jurisdiction where the offer or sale is not permitted.

PROSPECTUS SUMMARY

THIS SUMMARY HIGHLIGHTS MATERIAL INFORMATION REGARDING OUR COMPANY AND THE
OFFERING CONTAINED IN THIS PROSPECTUS. HOWEVER, 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 CAREFULLY, INCLUDING THE FINANCIAL DATA AND RELATED
NOTES, BEFORE MAKING AN INVESTMENT DECISION.

We conduct business together with our wholly-owned subsidiary, ConSyGen,
Inc., an Arizona corporation, an entity which commenced business in 1979 for the
purpose of developing and marketing business software solutions. In 1993, we
commenced development of an automated software capability to convert client
software applications from mainframes to open systems, which we marketed until
1999. In 1996, we commenced extension of this conversion capability to deal with
the "Year 2000" computer problem. The resulting ConSyGen 2000SM toolset provided
highly-automated date conversions and was used to complete several successful
conversion projects prior to 2000. We have not generated significant revenue
from the toolsets or other related services, and we discontinued marketing of
both services during the 2000 fiscal year.

In 1998, as part of our planning for new products and revenue
opportunities, we introduced a non-software product, the "COUNTERFEIT COPTM".
This device uses an Ultra-Violet light to provide effective protection against
multiple forms of counterfeiting, including the paper consistency of all forms
of U.S. domestic currency, hidden emblems on credit cards, drivers' licenses,
travelers' checks, event tickets, casino chips, and various governmental
documents. We believe that there will be ready market acceptance of this product
in all areas where the potential for counterfeiting exists, based on the
product's accuracy, speed, and ease of use. To market this product, we have
created a Business Product Division, and we have entered into master distributor
relationships with First Data Corporation, GMS Auditing, and Cardservice
International. We are in discussions with several other potential master
distributors with whom we expect additional contracts to be signed early in the
2001 fiscal year.

In 1999, our research determined that a major Internet business opportunity
existed for software which would enable the faster, broader facilitation of
electronic commerce ("e-commerce") transactions, particularly for smaller
merchants. We specifically wanted to develop software to resolve the reluctance
of Internet users to use electronic payment and receipt methods on the Internet
because of their concerns about security and privacy over the Internet. We have
commenced the development of Internet-based software products, generally named
BIZPAY(TM) and the BIZPAY SUITE(TM), which are designed to address these
concerns. These products are described in detail below. We intend to market this
software suite domestically and internationally to companies that participate in
the electronic funds-transfer industry. This concentration on the marketing of
our new software through our strategic partners confirms our new direction as a
specialist software development company, and our transition from supplying
software-related services. Our partners have been selected specifically to
provide the distribution and market penetration required for the widest possible
deployment of our software products. We expect to generate revenue from multiple
sources:

- transaction fees levied on all BIZPAY merchant transactions;
- advertising, particularly from banner advertisements placed on the
transaction emails; and
- interest receivable on the financial `float' of BIZPAY account
balances.

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The design concept behind our technology is to allow every Internet user -
domestically or internationally - to participate in e-commerce in an
easy-to-use, safe and secure environment, and to make shopping and payments for
products and services over the Internet easier, through the use of a personal
BIZPAY account. The BIZPAY software is expected to enable small- to mid-tier
businesses and homegrown businesses to accept credit cards as a form of payment
without incurring the cost or administrative overhead of a traditional credit
card merchant account.

Our BIZPAY SUITE is under development, and we expect to release the first
version over the next several months. We expect this initial version to consist
of:

* BIZPAY - a complete service offering which will enable a buyer to
send, and the seller to receive, payments with the ease of sending and
receiving e-mail.

* BIZPAYESCROW(TM) - a real-time risk analysis and escrow settlement
method, which is particularly important for the real-time auction
business.

* BIZPAYMERCHANT(TM) - the back-end merchant component for small- to
mid-tier businesses. This module will provide to merchants the ability
to accept credit card transactions in the form of e-mail without
requiring the traditional credit card merchant account.

* BIZPAYMALL(TM) - will be a virtual mall with many merchants. It is a
place where a buyer will be able to browse for products and services
and to make purchases using BIZPAY. This "mall" should generate "foot
traffic" (Internet users) for all participating merchants and will
allow a buyer to search for products and services. Every new BIZPAY
consumer will be placed into BIZPAYMALL upon their acceptance of viral
marketing dollars, which are a special financial incentive based on
the new member's joining of BIZPAY and their referral of new members.

We expect to expand the BIZPAY SUITE over the following several months to
include:

* BIZPAYMOBILE(TM) - a complete mobile commerce payment solution for
wireless devices.

* BIZPAYMENU(TM) - will enable a restaurant's business to be conducted
entirely on wireless devices.

* BIZPAYCREDIT(TM)- our brand of credit card.

* BIZPAYPORTAL(TM) - will help to fuel both user and corporate
acceptance of mobile commerce and e-mail-based payment methods.

* BIZPAYAUCTION(TM) - will be an online auction house that brings
sellers and buyers together in a bid/purchase environment.

We are actively marketing and developing our BIZPAY SUITE software. In
addition, we are preparing for the BIZPAY SUITE's introduction in both domestic
and international markets. We are marketing ConSyGen products, including the
BIZPAY SUITE, in Australia, South-East Asia, and in the Central European region
and European Union countries.

In August, 2000, we announced the formation of our Multimedia Productions
Group, a new division focusing specifically on the production and sale of
multimedia presentations built around the most recent computer animation
technology. Initially, we will use current staff resources to provide services
to external clients when there is surplus capacity from internal priorities. If
sales volumes justify expansion, we will increase our staffing to accommodate
such volumes. We believe that we will be able to grow this business as a
profitable adjunct to our existing services. This service does not represent a
change of direction or emphasis from our concentration on the COUNTERFEIT COP
and our BIZPAY products.

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THE OFFERING

We are registering for sale by security holders up to 13,646,000 shares of
our common stock, including 4,498,000 shares registered for sale upon the
private exercise of outstanding warrants. See "Selling Stockholders" on page 42
of this prospectus for details of individual stockholders selling shares under
this prospectus.

FORWARD LOOKING STATEMENTS

This prospectus includes forward-looking statements. We have based these
forward-looking statements on our current expectations and projections about
future events. We identify forward-looking statements with the words "plan",
"expect", "anticipate", "will", "should", and similar expressions. These
forward-looking statements are subject to risks, uncertainties and assumptions
about us which are discussed in the Risk Factors section below as well as
throughout this prospectus. In light of these risks, uncertainties and
assumptions, the forward-looking events discussed in this prospectus might not
occur.

LOCATION

Our offices are located at 125 South 52nd St., Tempe, Arizona 85281. Our
telephone number is 480-394-9100. Our Internet web sites are located at:
www.consygen.com and www.bizpayinternational.com.

5
<PAGE>
RISK FACTORS

YOU SHOULD CAREFULLY CONSIDER THE FOLLOWING FACTORS BEFORE DECIDING TO
INVEST IN THE SHARES OF COMMON STOCK.

WE HAVE A HISTORY OF NET LOSSES AND NEGATIVE CASH FLOWS. IF WE ARE UNABLE
TO BECOME PROFITABLE IT IS UNLIKELY THAT WE WILL BE ABLE TO CONTINUE OUR
OPERATIONS.

We have sustained substantial and recurring losses and negative cash flows
in each of the last three fiscal years ended May 31, 1998, 1999 and 2000. For
these periods, we had aggregate net losses of $15,368,000. For the fiscal year
ended May 31, 2000, we had a net loss of $7,343,000, and for the fiscal year
ended May 31, 1999, we had a net loss of $4,946,000. We are also experiencing a
significant working capital deficiency. Please see the discussion of "Material
Changes in Financial Condition, Liquidity and Capital Resources" contained in
"Management's Discussion and Analysis of Financial Condition and Results of
Operations" of this prospectus.

If we continue to sustain losses and negative cash flow, it is unlikely
that we will be able to continue our operations. Our ability to become
profitable primarily depends on our ability to generate significant revenue and
improve the efficiency of our operations. Specifically, we must be able to
generate substantial sales of our Counterfeit Cop product and complete
development of our BIZPAY products and generate revenue from the sale of our
BIZPAY products, once developed.

WE HAVE BEEN UNABLE TO FUND OUR OPERATIONS WITH INTERNALLY-GENERATED FUNDS
BECAUSE OUR BUSINESS HAS GENERATED NEGATIVE CASH FLOW. WE WILL NEED TO GENERATE
FUNDS INTERNALLY OR RAISE ADDITIONAL CAPITAL TO FUND OUR OPERATIONS DURING THE
2001 FISCAL YEAR.

We have required, and will continue to require, substantial capital to fund
our business operations. We expect to require additional funds to continue or to
extend product development and marketing. We may obtain additional financing
through private placements of debt or equity or through collaborative
arrangements with our partners including, but not limited to, our international
partners. If adequate funds are not available when required or on acceptable
terms, we may be forced to delay, scale back, or eliminate our product
development activities and sales and marketing efforts. If this were to become
necessary, it could adversely affect our business, results of operations and our
financial condition.

THERE IS SUBSTANTIAL DOUBT ABOUT OUR ABILITY TO CONTINUE AS A GOING
CONCERN.

Our auditor's report indicates that certain factors raise substantial
doubt about our ability to continue as a going concern. Our auditors issued a
going concern opinion because:

* we have incurred recurring material losses from operations;
* we have material current debt; and
* we have not generated significant revenue from our new product lines.

We cannot assure you that we will be able to generate internally or raise
sufficient funds to continue our operations, or that our auditor's will not
issue another going concern opinion. Our failure to raise sufficient additional
funds, either through additional financing or continuing operations, will have a
material adverse effect on our business and financial condition and on our
ability to continue as a going concern.

Our consolidated financial statements do not include any adjustments to
reflect the possible future affects on the recoverability and classification of
assets or the amounts and classification of liabilities that may result from our
possible inability to continue our operations.

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WE EXPECT THAT A SUBSTANTIAL NUMBER OF OUR SECURITIES WILL BE SOLD IN THE
MARKET IN THE NEAR FUTURE. THIS COULD CAUSE OUR STOCK PRICE TO DECLINE
SIGNIFICANTLY.

The market price of our common stock could decline significantly if our
existing stockholders sell shares of our common stock in the market after this
offering, or as a result of the perception that such sales could occur. Such
sales also may make it more difficult for us to raise capital in the future at a
time and at a price that we deem appropriate. As of September 12, 2000, we had
approximately 29,978,503 shares of common stock outstanding, which does not
include the 4,613,000 shares issuable upon exercise of outstanding warrants.

Upon the effectiveness of the Registration Statement of which this
prospectus is a part, assuming the prior exercise of the outstanding warrants to
purchase 4,498,000 shares of common stock which are being registered for sale
hereunder, approximately 28,174,841 shares will be freely tradable without
restriction under the Securities Act of 1933, as amended. In addition, subject
to certain volume and other limitations, approximately 5,431,500 shares are
currently eligible for sale under Rule 144, including 5,414,500 shares which are
held by one of our affiliates, and approximately 718,012 shares are eligible for
public sale without registration, pursuant to Rule 144.

As of August 31, 2000, we also had outstanding options to purchase
5,634,321 shares of our common stock at a weighted average exercise price of
approximately $1.283 per share. Further, we have filed Form S-8 Registration
Statements under the Securities Act registering an aggregate of 10,500,000
shares of common stock issuable under our stock option plans, including the
5,634,321 options currently outstanding.

If the convertible debentures were converted as of August 31, 2000, an
additional 3,078,740 shares of our common stock would have been issued.

In addition, in January 2000 we entered into an agreement with a
consultant, Saviar and Spaeth Enterprises. Among other things, the Agreement
provided that we were to issue the consultant warrants to purchase 1,100,000
shares of our common stock, at a weighted average exercise price of $0.43 per
share, in consideration for services to be provided by the consultant. We do not
believe that the consultant fulfilled its obligations under the Agreement and,
accordingly, we have not issued the Warrants to the consultant. The consultant,
through its attorney, has demanded $2.5 million to settle the matter. We do not
believe that the consultant is entitled to $2.5 million. We intend to vigorously
defend any claim made by the consultant, but can give you no assurance as to the
outcome of this dispute, which could result in substantial dilution to our
stockholders.

OUR BUSINESS IS DIFFICULT TO EVALUATE BECAUSE OUR BIZPAY SOFTWARE IS
CURRENTLY UNDER DEVELOPMENT AND IN THE EARLY STAGES OF IMPLEMENTATION. IF WE ARE
UNABLE TO COMPLETE DEVELOPMENT OF OUR BIZPAY SOFTWARE OR A MARKET FOR OUR
PRODUCTS AND SERVICES DOES NOT DEVELOP, WE MAY BE UNABLE TO SUCCESSFULLY
IMPLEMENT OUR BUSINESS STRATEGY.

A market for our products may not develop as anticipated, and we may not
successfully execute our business strategy. We have a limited operating history
upon which you can evaluate our business. Our BizPay software products are
currently in the early stages of development and implementation. Until we
complete development of our new BizPay software products, we will derive
substantially all of our revenues from our Counterfeit Cop business. No further
revenues are expected from the discontinued Year 2000 business, and, although we
expect that revenues from the Counterfeit Cop will grow during fiscal 2001,
these revenues may not be sufficient to enable us to continue to fund our
operations. If we are unable to complete the development of our BizPay products
or if the market does not accept these products, we will have difficulty
generating the revenue we need to continue doing business.

OUR LIMITED OPERATING HISTORY MAKES IT DIFFICULT TO FORECAST OUR FUTURE
REVENUES. ACCORDINGLY, WE MAY ACHIEVE A LEVEL OF REVENUES THAT IS LOWER THAN WE
EXPECT, WHICH WOULD RESULT IN GREATER THAN EXPECTED LOSSES.

As a result of our limited operating history with our Business Products
division, it is difficult to accurately forecast future revenues. We may be
unable to adjust our spending in a timely manner to adjust for any unexpected
revenue shortfall. Also, we have limited meaningful historical financial data
upon which to base planned operating expenses. We base our current and future
expense levels on our operating plans and estimates of future revenue. Revenue
and operating results are difficult to forecast because they generally depend on

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the volume and timing of the orders we receive. As a result, we may be unable to
adjust our spending in a timely manner to adjust for any unexpected revenue
shortfall, which would result in further substantial losses. We may also be
unable to expand our operations in a timely manner to adequately meet customer
demand in excess of our expectations.

OUR HISTORICAL FINANCIAL RESULTS ARE NOT MEANINGFUL TO AN ANALYSIS OF OUR
CURRENT BUSINESS.

The financial data included in this document covers periods prior to the
transition from our Year 2000 business to our new business, which comprises the
introduction of the COUNTERFEIT COP and planning for the introduction of our
BIZPAY software products, which are still under development. Accordingly, our
historical financial data is not necessarily meaningful to an analysis of our
current and future business operations. For example, Year 2000 services
accounted for virtually all of our total revenue during the year ended May 31,
1999 and essentially none of our total revenue during the year ended May 31,
2000. Because we will no longer receive revenues from the Year 2000 operations,
our revenues in future periods will be substantially less than prior periods
unless we are able to replace the lost revenues from the Year 2000 business with
new business.

IN ORDER TO SUSTAIN OUR VIABILITY OVER THE NEXT FEW YEARS, WE WILL NEED TO
DEVELOP NEW PRODUCTS.

The successful development of any new products is dependent on a number of
factors, including our ability to develop acceptable products, to anticipate
future changes and the demands of applicable markets, the retraining or hiring
necessary personnel, and our ability to provide sufficient capital either from
internally generated revenues or external sources to properly fund the
development of new products. Also, if we do not complete the development of new
products, we will need to seek other opportunities to replace the revenues
generated by our Year 2000 and software services businesses.

We have not yet released the initial version of our new BizPay software
product. We may encounter difficulties in completing the BizPay product line or
in expanding such product line once initial development is completed. If we are
unable to complete development of our BizPay product line, we will not be able
to generate the level of revenue we are expecting and may have difficulty
funding our operations. Any failures to anticipate product opportunities in our
market areas, or any delays in developing and releasing new products, could have
a material adverse effect on our business, results of operations and our
financial condition.

IF WE DO NOT RESPOND TO RAPID TECHNOLOGICAL CHANGES, OUR PRODUCTS COULD
BECOME OBSOLETE AND WE COULD LOSE CUSTOMERS.

To be competitive, we must enhance and improve the functionality and
features of our products. If competitors introduce new products and services
embodying new technologies, or if new industry standards and practices emerge,
our existing products and systems may become obsolete. Ongoing development of
our technology entails significant expense and technical risks. The markets for
counterfeit detection devices and for Internet and electronic commerce products
and services are characterized by rapidly changing technologies, resulting in
rapid product obsolescence and short product life-cycles. Accordingly, our
success is dependent on our ability to anticipate technological changes and
business opportunities, and to conditionally identify, obtain and successfully
market new products and services that utilize evolving technologies and that
satisfy customer preferences and industry requirements. We cannot be certain
that present or future competitors will not market products and services which
have actual or perceived advantages over ours or which render our products and
services obsolete or less marketable.

IF WE FAIL TO ESTABLISH AND MAINTAIN A CLEAR ADVANTAGE OVER OUR
COMPETITORS, WE WILL HAVE DIFFICULTY IN CAPTURING OR RETAINING AN ADEQUATE
MARKET SHARE TO ENSURE ACCEPTANCE OF OUR PRODUCTS AND THEIR CONTINUING MARKET
PENETRATION. FAILURE TO COMPETE EFFECTIVELY IN OUR MARKET WILL LEAD TO REDUCED
SALES, WHICH WILL HAVE A MATERIAL ADVERSE EFFECT ON OUR BUSINESS, RESULTS OF
OPERATIONS AND FINANCIAL CONDITION.

The industry in which the COUNTERFEIT COP competes is extremely competitive
and has relatively low barriers to entry. With the COUNTERFEIT COP, we compete
primarily with three main classes of products:

- chemical-based pen-type scanners. The market leader is Money Tester,
although there are several other products, all of which are relatively
inexpensive;

- ultra-violet light-based. There are at least two other products which
compete directly with COUNTERFEIT COP; and

- ink-checking and micro-writing detection.

With BIZPAY, the primary competition is in three major categories:

- `person-to-person' transaction services, such as PayPal.com (X.com),
ProPay.com, PayMe.com, and BillPoint.com (eBay.com). Several of these
competitors have established partner relationships with major banks
and financial institutions, as we are seeking to do with BIZPAY;
however, their concentration is almost exclusively directed to the
individual's requirement to transfer money electronically. BIZPAY is
designed to facilitate the merchant side of an electronic sales
transaction, while also providing full service and protection to the
individual/buyer. We expect that one or more of these competitors will
move to extend their service offering to include merchant features,
but we also believe that we will have a time and market position
advantage due to the planned early release of the merchant features;

- `paper-payment' replacement. Services such as PayMyBills.com and
PayTrust.com (which has American Express and AT&T Ventures among its
backers) are providing an online alternative to check payments. BIZPAY
will not incorporate this feature in its initial release, although we
expect that it will be introduced in later versions; and

- individual service providers. There are several companies which now
market specific functions to other, larger companies - either software
aggregators preparing larger software offerings, or financial groups
seeking to develop their own solution. We believe that most of these
companies are small, with limited funding, and easily absorbed by
larger entities. They provide an innovative and rapidly-growing range
of specialist services.

While all competitive services offer one or more of the three major
e-commerce transactions (person-to-person, consumer-to-business, and
business-to-business), BIZPAY is expected to offer all three.

We expect that BIZPAY will compete successfully with less functional
systems such as PayPal and Ebay's BillPoint, which we believe will present only
a basic level of competition. We are aware that major credit-card processing
companies have sufficient technical capacity to develop an alternative system to
BIZPAY, should they decide to enter this market; to date, most have preferred to
use external developers or to partner with other financial-services groups to
gain size and efficiency advantages. We expect this trend to continue, and we
are seeking to position BIZPAY to benefit from this approach.

We must compete effectively and continually with established products and
services, and we must create and maintain profitable business relationships and
partnerships with major industry participants. We must also provide a service
which is cost-effective and able to discourage competition from other members of
the financial-services industry with substantially stronger financial reserves
than ourselves.

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A FAILURE TO MAINTAIN OUR RELATIONSHIP WITH THE SUPPLIER OF OUR COUNTERFEIT
COP PRODUCT WOULD MATERIALLY AND ADVERSELY AFFECT OUR BUSINESS.

We are dependent upon a third party supplier for the manufacture of our
COUNTERFEIT COP products. Our supplier generally can cancel or modify its
agreement with us upon no or relatively short notice. In addition, any decline
in the quality of our COUNTERFEIT COP products could adversely affect our
reputation. The untimely loss of the manufacturer of our COUNTERFEIT COP, or a
change in any favorable pricing agreements with the manufacturer, would
negatively impact the cash flow we receive from our operations.

IF WE ARE UNABLE TO MANAGE CHANGE AND ANY FUTURE GROWTH, OUR BUSINESS MAY
BE HARMED.

We cannot be certain that our systems, procedures and controls will be
adequate to support any expansion of our operations. Any future growth also will
impose significant added responsibilities on members of our senior management,
including the need to identify, recruit and integrate new senior level managers
and executives. There can be no assurance that such additional management will
be identified or retained by us. If our new management team fails to manage and
grow the changing business lines successfully and profitably, or fails to guide
us in our new strategic direction, there would be a material adverse impact on
our business, results of operations and our financial condition.

Factors affecting our ability to grow internally include, but are not
limited to:

* customer acceptance of our products under development;
* the ability to expand our customer base;
* the ability to expand the products offered;
* continued relationships with certain suppliers;
* the ability to recruit and retain qualified sales personnel; and
* continued access to capital.

THE SUCCESS OF OUR BUSINESS DEPENDS ON THE CONTINUING CONTRIBUTION OF OUR
KEY PERSONNEL, WHOSE KNOWLEDGE OF OUR BUSINESS WOULD BE DIFFICULT TO REPLACE IN
THE EVENT WE LOSE THEIR SERVICES.

The further success of our new strategic direction depends largely on the
skills, experience and performance of some key members of our senior management
and technical personnel, and on our ability to attract, train, motivate and
retain personnel who provide the business strategy, technology, marketing and
creative skills required by our clients. We believe that there is a shortage of,
and significant competition for, professionals with the advance technological
skills necessary to perform the services related to e-commerce products and
services. To address this problem, we have transferred employees from other
technical areas to our e-commerce business, and we are engaged in the necessary
training in new technology and new skills sets applicable to e-commerce
technology. Once trained, such individuals will be in higher demand because of
their new skill-sets. Additionally, not all of our current personnel will be
able to acquire the skills necessary to transition to our new business. We
cannot be certain we will be successful in attracting, transitioning or
retaining qualified technical personnel in the future. The loss of one or more
of our key personnel could have a material adverse effect on our business,
results of operations and financial condition.

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WE HAVE NEVER PAID DIVIDENDS AND WE DO NOT EXPECT TO PAY ANY DIVIDENDS IN
THE NEAR FUTURE. AN INVESTOR SHOULD NOT RELY ON DIVIDENDS TO BE PAID ON THE
COMMON STOCK AS A SOURCE OF INCOME.

We intend to retain any future earnings in order to finance our planned
operations and to implement our business plan. A potential purchaser of the
common stock should not rely on dividends from the common stock offered hereby
as a possible source of income.

THE MARKET PRICE OF OUR COMMON STOCK FLUCTUATES SUBSTANTIALLY. YOU MAY
BE UNABLE TO SELL YOUR COMMON STOCK QUICKLY AT THE CURRENT MARKET PRICE.

The market price of our common stock has been highly volatile and will
likely fluctuate significantly. Attempts to purchase or sell relatively small
amounts of our common stock could cause the market price of our common stock to
fluctuate significantly. Low trading volume levels may also affect our
stockholders' ability to sell shares of our common stock quickly at the current
market price. In addition, sales of substantial amounts of our common stock, or
the perception that such sales could occur, would adversely affect the
prevailing market prices for our common stock. In addition, OTC Bulletin Board
or Nasdaq equity securities trading under five dollars ($5.00) per share which
fail to meet certain minimum net tangible asset or average revenue criteria are
subject to the requirements of the rules relating to "Penny Stocks" under
Section 15(g) of the Exchange Act, which impose additional disclosure
requirements upon broker-dealers in connection with any trades involving such
stock. Such securities may also become subject to Rule 15g-9 under the Exchange
Act, which imposes certain sales practice requirements upon broker-dealers
involving the suitability of customers to buy the stock. The additional burdens
imposed upon broker-dealers should our common stock become subject to such
requirements could discourage them from effecting transactions in our common
stock and/or affect their ability to effect such transactions. In such event,
the market liquidity of our common stock could be materially adversely affected.

OUR RESULTS MAY BE ADVERSELY AFFECTED BY OUR FUTURE INTERNATIONAL
OPERATIONS.

We anticipate that international business will account for a growing
portion of our revenues in 2001, and that it will continue to be a material
component of our success in the future. While there are very substantial areas
of worldwide commonality in Internet-based technologies and practices, there are
special risks inherent in international markets, including:

* unexpected changes in regulatory requirements;
* difficulties in staffing and managing foreign operations;
* political instability;
* potentially adverse tax consequences;
* potentially adverse business customs, practices and norms;
* differences in accounting practices;
* longer payment cycles;
* problems in collecting accounts receivable;
* fluctuations in currency exchange rates; and
* seasonal reductions in business activity during the summer months in
Europe.

Any of these factors could impact adversely the success for our
international operations.

OUR INTELLECTUAL PROPERTY IS SUBJECT TO MISAPPROPRIATION.

Our ability to compete effectively depends to a significant extent on our
ability to protect our proprietary information. We rely primarily upon
confidentiality procedures, trade secrets and trademark and trade-name laws to
protect our intellectual property rights. In addition, we are evaluating whether
to seek patent protection for certain of our intellectual property. We generally

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enter into confidentiality agreements with our customers, key employees and
marketing partners, and generally control access to our technology, software and
other proprietary information. Despite these precautions, it may be possible for
competitors or customers to copy all of or part of our technology, or to obtain
information that we regard as proprietary from us. Furthermore, we cannot be
certain that others will not independently develop technology similar to that
which we are developing or planning. Although we intend to defend our
intellectual property, we cannot be certain that the steps we have taken to
protect our proprietary information will be adequate to prevent misappropriation
of our technology or that our competitors will not independently develop
technologies that are substantially equivalent or superior to ours.

WE MAY BE SUBJECT TO EXTENSIVE GOVERNMENT REGULATION, WHICH COULD HARM
OUR BUSINESS.

Our operations may be subject to various state and federal regulations.
Because electronic commerce in general, and our products and services in
particular, are so new, the application of many of these regulations, including
regulations relating to banking, credit card transactions and Internet
transactions, is uncertain and difficult to interpret. The agencies responsible
for the interpretation and enforcement of these regulations could amend those
regulations or issue new interpretations of existing regulations. It is also
possible that new legislation may be passed that imposes additional burdens. Any
such change could lead to increased operating costs and could also reduce the
convenience and functionality of our products or services, possibly resulting in
reduced market acceptance. In addition, it is possible that new laws and
regulations may be enacted with respect to the Internet, covering issues such as
user privacy, pricing, content, characteristics and quality of products and
services. The adoption of any such laws or regulations may decrease the growth
of the Internet, which could in turn decrease the demand for our products or
services and increase our cost of doing business or could otherwise have a
material adverse effect on our business, financial condition or operating
results.

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USE OF PROCEEDS

We will not receive any proceeds from the sale of the shares of our common
stock registered on the Registration Statement of which this prospectus is a
part.

DIVIDEND POLICY

We have not paid any dividends on our capital stock since our inception.
Our current policy is to retain any future earnings to finance the continuing
development of our business. Any future determination to pay cash dividends will
be at the discretion of the Board of Directors and will be dependent upon our
financial condition, operating results, capital requirements, general business
conditions and such other factors as our Board of Directors deems relevant.

PRICE RANGE OF COMMON STOCK

Our common stock is quoted on the National Association of Securities
Dealers, Inc's. OTC Bulletin Board under the symbol "CSGI." The following table
sets forth the range of high and low sales prices as quoted on the OTC Bulletin
Board by quarter for the last two fiscal years, the first quarter of the current
year, and through September 12, 2000. These quotations reflect inter-dealer
prices, without retail mark-up, mark-down or commission and may not represent
actual transactions.

High Low
---- ---
Fiscal Year Ending May 31, 1999
First Quarter....................................... 4.750 1.031
Second Quarter...................................... 3.000 0.687
Third Quarter....................................... 6.000 0.875
Fourth Quarter...................................... 2.281 0.562

Fiscal Year Ending May 31, 2000
First Quarter....................................... 1.718 0.450
Second Quarter...................................... 0.843 0.406
Third Quarter....................................... 3.437 0.250
Fourth Quarter...................................... 3.000 0.625

Fiscal Year Ending May 31, 2001
First Quarter....................................... 1.375 0.500
Second Quarter (through September 12, 2000)......... 0.687 0.590

The last reported closing sale price of our common stock on the OTC
Bulletin Board on September 12, 2000 was $0.605 per share. As of September 12,
2000, we had approximately 423 stockholders of record. This number does not
include those stockholders whose shares are held in "nominee" or "street" name.

For a discussion on shares of our common stock that are or will become
eligible for future sale in the public market, which may impact the trading
price or trading market for our common stock, please see the discussion
contained under the heading "Shares Eligible for Future Sale" beginning on page
46.

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

YOU SHOULD READ THE FOLLOWING DISCUSSION AND ANALYSIS IN CONJUNCTION WITH
OUR CONSOLIDATED FINANCIAL STATEMENTS AND RELATED NOTES APPEARING ELSEWHERE IN
THIS PROSPECTUS.

OVERVIEW

Historically, we have developed pre-packaged software and proprietary
products and services. However, we have recently moved our specific emphasis to
identifying developing software-related business opportunities and technologies
and providing timely and effective software-based solutions for these
opportunities, while still maintaining our traditional emphasis on high-quality
proprietary products and services. We are no longer marketing our automated
conversion services or our Year 2000 conversion services. We are still capable
of performing both of these services if solicited by clients; however, our
business model has changed and these business opportunities are no longer in
sufficient demand or sufficiently profitable to justify their inclusion in our
service offerings.

We are now marketing the COUNTERFEIT COP through our new Business Products
Division. We have entered into distribution agreements with third parties with
national domestic distribution networks, and we have begun marketing the product
in Europe. We intend to continue the active marketing of this product through
these distribution channels and others that we expect to create in the future.

We are preparing for the introduction over the next several months of the
BIZPAY SUITE software - a new "e-commerce" product, and we are seeking strategic
domestic and international joint venture partners to participate in the
development and launch of this new product line. We are negotiating a joint
venture with an Australian partner and we plan to market the technology on an
international basis.

Due to the lack of profitable operations and difficulties raising
additional capital, we have experienced significant cash flow difficulties.
Since May 31, 1999, we have borrowed approximately $1,200,000, with our office
building serving as collateral on those borrowings. In addition, one of our
directors posted additional collateral to secure our obligations under these
borrowings. We have also raised approximately $1,125,000 through a private sale
of equity securities. Even with these borrowings, we have had difficulties from
time to time in meeting payroll and other operating obligations.

We will continue to attempt to implement our business plan with our
strategic new direction - that is, the marketing and distribution of the
COUNTERFEIT COP and the development and introduction of new products related to
e-commerce. We will require additional capital to move forward on these product
lines and new ventures. We believe that partnerships are highly desirable for
accelerating market penetration and for establishing market dominance, and we
are currently negotiating with several international parties to extend this
approach.

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MATERIAL CHANGES IN RESULTS OF OPERATIONS

COMPARISON OF YEARS ENDED MAY 31, 2000 AND MAY 31, 1999

NET LOSSES. For the year ended May 31, 2000, we incurred a net loss of
approximately $7,343,000, compared with a net loss of $4,946,000 for the year
ended May 31, 1999, an increase of approximately $2,397,000. An explanation of
these losses is set forth below.

REVENUE. For the year ended May 31, 2000, we had revenues of $146,000,
compared to $33,000 for the previous year. The increase in revenue reflects
growth in revenues from sales of the COUNTERFEIT COP product, which increased
from $0 in fiscal 1999 to $146,000 in fiscal 2000. The 1999 revenue amount has
been adjusted from a reported $742,000 to $33,000 for the year ended May 31,
1999 to eliminate the revenues associated with our discontinued Year 2000
software conversion services operation. We are no longer marketing Year 2000
conversion services, and have transferred all of the employees working on these
services to other projects - primarily to the development of the BIZPAY
e-commerce technology.

COST OF SALES. For the year ended May 31, 2000, the primary cost of sales
expense is the cost of obtaining COUNTERFEIT COP units from our supplier. These
costs represent approximately 30% of related revenue for the year ended May 31,
2000. We expect gross margins on the COUNTERFEIT COP to increase in the near
term as we negotiate different pricing structures under new distribution
agreements.

COST OF CONVERSION SERVICES. We no longer market conversion services. For
reporting purposes, it is considered to be a discontinued operation, as shown in
the audited financial statements in this Form SB-2. The conversion service
incurred a net loss of approximately $6,000 in the year ended May 31, 2000.

SOFTWARE RESEARCH AND DEVELOPMENT EXPENSES. For the year ended May 31,
2000, software development expenses were $360,000, compared with $622,000 for
the comparable prior period. The decrease in software development expenses
represents the impact of a deliberate program of cost reduction. However,
certain employees must continue to be dedicated to research and development as
we prepare new products for our new strategic direction. These personnel are
assigned to development of our prospective e-commerce products. We intend to
begin capitalizing certain software development costs when proprietary software
products have reached technological feasibility.

SELLING, GENERAL AND ADMINISTRATIVE EXPENSES. Selling, general and
administrative expenses were $6,262,000 for the year ended May 31, 2000,
compared with $3,956,000 for the previous year, an increase of $2,306,000. The
increase in selling, general and administrative expenses is primarily
attributable to $1,164,000 associated with recognition of the value of employee
stock options under variable awards and to $1,233,000 associated with issuance
of 1,382,000 shares of our common stock to consultants for service provided to
us. We have significantly reduced marketing expenses related to Year 2000
services and the COUNTERFEIT COP, which will now be sold through third-party
distribution channels.

INTEREST EXPENSE. For the year ended May 31, 2000, interest expense was
$663,000, compared with $227,000 for the previous year, an increase of $436,000.
The increase in interest expense is primarily comprised of a $350,000 one-time
charge for liquidated damages arising out of the settlement of our litigation
with the holders of our 6% Convertible Debentures, and an increased level of new
debt which was incurred in the year ended May 31, 2000, with some debt issued at
significant discounts. As notes issued at a discount have maturities of less
than one year, the discount amount has been amortized as interest expense. Our
current Loans Payable carry interest rates of between 1.5% and 2.00% per month,
which has been chargeable only since the inception of the loans late in the 2000
fiscal year. If we do not repay these loans during the 2001 fiscal year, we
expect that interest expense will increase during the 2001 fiscal year.

DEPRECIATION AND AMORTIZATION EXPENSE. For the year ended May 31, 2000,
depreciation and amortization expense was $166,000, compared with $204,000 for
the previous year. The decrease indicates that there has been no major growth in
depreciable items, primarily due to a shortage of operating capital.

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We re-priced numerous options granted to employees in the year ended May
31, 2000. Under the Proposed Interpretation, ACCOUNTING FOR CERTAIN TRANSACTIONS
INVOLVING STOCK COMPENSATION, AN INTERPRETATION OF APB OPINION NO. 25, issued by
the Financial Accounting Standards Board, these constitute variable awards that
may require us to recognize compensation expense. The price of our common stock
has recently been consistently higher than the re-priced exercise price of these
options.

COMPARISON OF YEAR ENDED MAY 31, 1999 TO YEAR ENDED MAY 31, 1998

NET LOSSES. For the year ended May 31, 1999, we incurred net losses of $4.9
million, compared with net losses of $3.1 million for the year ended May 31,
1998. An explanation of these losses is set forth below.

REVENUE. For the year ended May 31, 1999, we had revenues of $742,000,
compared with revenues of $815,000 for the year ended May 31, 1998. We started
the Year 2000 conversion services in fiscal 1998. We are not currently
generating, and do not expect to generate in the future, any significant revenue
from these services.

COST OF CONVERSION SERVICES. For the year ended May 31, 1999, our cost of
conversion services was $774,000 compared with $353,000 for the year ended May
31, 1998. Cost of conversion services consists primarily of personnel costs
directly related to the performance of conversion services by us. Before the
commencement of revenue generating operations, the personnel currently dedicated
to the provision of conversion services were dedicated to software development,
and, accordingly, the costs directly related to such personnel were previously
included in software development expense. The increase in cost of conversion
services is primarily attributable to the re-deployment of personnel, from
software development to the provision of conversion services, and the hiring of
additional personnel.

SOFTWARE RESEARCH AND DEVELOPMENT EXPENSES. For the year ended May 31,
1999, software development costs were $622,000, compared with $1,046,000 for the
year ended May 31, 1998. The decrease in software development expenses are
primarily attributable to our reduction of development work for Year 2000 tools
used in providing Year 2000 conversion services and migration services.

SELLING, GENERAL AND ADMINISTRATIVE EXPENSES. For the year ended May 31,
1999, selling, general and administrative expenses were $3,992,000 compared with
$2,297,000 for the year ended May 31, 1998. During the fiscal year 1999, we
hired 24 sales personnel for sales of Year 2000 services and 15 sales personnel
for the counterfeit Cop product, which accounted for a $1,400,000 increase. The
remaining increase is due to communication and systems support, $200,000, and
various corporate administrative costs, $100,000.

MATERIAL CHANGES IN FINANCIAL CONDITION, LIQUIDITY AND CAPITAL RESOURCES

Since our inception, we have suffered material operating losses and
negative cash flow. We continue to experience an ongoing working capital
deficiency and, since May 31, 1999, cash has come almost exclusively from
borrowings and private sales of our common stock. Although there are now
encouraging signs of increased revenue through sales of COUNTERFEIT COP by our
major distributors, we will continue to require substantial amounts of capital
to meet the demands of our ambitious business plan. In addition to these
projected revenues, we are attempting to raise sufficient capital to meet our
current obligations and to implement our new business plan. Without these
projected revenues and/or the funding that we are seeking, it is unlikely that
we will be able to continue to finance our day-to-day operations.

Our balance of cash and cash equivalents was $3,042 at August 31, 2000,
compared with $3,605 at May 31, 2000. We have an immediate need for additional
capital. We had a working capital deficit of $2,298,000 at May 31, 2000,
compared with a working capital deficit of $2,861,000 at May 31,1999, a $563,000
decrease in the working capital deficit. The decrease in the working capital
deficit is primarily attributable to the conversion of approximately $1,700,000
in principal amount of convertible debentures, that had been classified as a
current liability, into common stock, the reclassification of $1,800,000 in
principal amount of convertible debentures from current liabilities to long-term
debt, and a $251,000 increase in inventories, partially offset by a $1,200,000

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decrease in cash and cash equivalents (including restricted cash), a $285,000
increase in accounts payable, a $353,000 increase in notes payable, a $638,000
increase in accrued payroll and related liabilities and other accrued
liabilities, and a $740,000 increase in the current portion of mortgages
payable. Excluding the effect of the convertible debentures on working capital,
our working capital at May 31, 1999 would have been $640,000, compared to a
working capital deficiency of $2,298,000 at May 31, 2000, representing a
$2,938,000 decrease in working capital, which was primarily attributable to the
factors described above.

Accounts receivable balances increased to $49,000 at May 31, 2000 from
$8,000 at May 31, 1999. The increase is directly attributable to an increase in
sales volumes for the COUNTERFEIT COP at the end of our 2000 fiscal year.

Inventory balances increased to $412,000 at May 31, 2000 from $161,000 at
May 31, 1999. These balances are entirely composed of the COUNTERFEIT COP
product being held for a short period awaiting shipment in satisfaction of
distributor orders. We purchase finished product units directly from a
third-party manufacturer, and we do not intend to hold significant quantities of
these products.

Accrued Liabilities and Accrued Payroll and Related Liabilities increased
to $1,276,000 at May 31, 2000 from $638,000 at May 31, 1999. The increase of
approximately $638,000 is primarily attributable to an increase in accrued
payroll and payroll tax liabilities of approximately $350,000, and a provision
of approximately $220,000 for the balance of the cash amount payable to the
holders of our 6% Convertible Debentures. In general, the increase reflects our
cash deficiency and a general increase in our Trade Payables associated with the
cash deficiency.

We have been experiencing, and expect to continue to experience, negative
cash flow. For the year ended May 31, 2000, our operations used $3,500,000 in
cash, compared to $4,250,000 for the year ended May 31, 1999, a decrease of
$750,000. Our financing activities generated $2,600,000 in cash during the year
ended May 31, 2000, compared to generating $700,000 in cash during the prior
year. The increase in cash from financing activities was primarily attributable
to proceeds from borrowings and equity offerings, including stock option
exercises.

We incurred significant new debt in the year ended May 31, 2000, in the
aggregate amount of approximately $1.2 million. Included in this new debt were
four loans for a total of $665,000, each of which were secured by a collateral
assignment of beneficial interest on our property at 125 S. 52nd St., Tempe,
Arizona 85281. These loans bear interest rates of between 1.5% and 2.0% per
month, and all payment obligations are current. Further, this debt included
$150,000, received in October, 1999 from a loan secured by a mortgage on a
property owned by Robert L. Stewart, an affiliate of ours. This loan bears
interest at 2% per month, and is current. This new debt also included an
aggregate of approximately $381,000 in unsecured, non-interest-bearing loans
during the year ended May 31, 2000, of which approximately $102,000 had been
repaid by May 31, 2000, and a further $10,000 has been repaid since that date.
Approximately $199,000 of the loans was provided by Robert L. Stewart, an
affiliate of ours.

Our auditor's report indicates that certain factors raise substantial doubt
about our ability to continue as a going concern. Our auditors issued a going
concern opinion because:

* we have incurred recurring material losses from operations;
* we have material current debt; and
* we have not generated significant revenue from our new product lines.

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Our consolidated financial statements do not include any adjustments to
reflect the possible future affects on the recoverability and classification of
assets or the amounts and classification of liabilities that may result from our
possible inability to continue our operations.

We have utilized significant resources in research and development and
marketing efforts. Those efforts must continue in order for us to be successful
in the implementation of our new strategic direction. We will use any
internally-generated funds and additional capital from private placements of
equity to meet our obligations and to implement our new strategic direction.

We do not intend to make material capital expenditures in the short term.
However, as discussed above, we will require cash to implement our new strategic
direction.

In June 1999, we entered into an agreement with a third party to purchase
certain technology. The terms of that agreement include an original purchase
price for the software of $600,000. We had estimated at the time of purchase
that an additional $275,000 would be required to complete development of the
software. We paid $180,000 cash at the date of purchase but chose not to make
the $420,000 payment due on July 30, 1999, instead obtaining a 30-day extension
of the July 30, 1999 due date by making a payment of $50,000 against the balance
due. We later made a determination that the software would require significant
additional development above our original estimates and concluded that the
capabilities of the software were misrepresented by the seller. As a result, we
elected not to make the final payment of $370,000 and we have determined not to
proceed with acquisition of the software. We have abandoned the project, and
have made a write-off provision of $230,000 in the year ended May 31, 2000. No
claim has been made against us for the remaining $370,000 payment required under
the Agreement. If such a claim is made against us, we may be required to make
the final payment of $370,000. We do not expect any further obligations or
liabilities from this transaction.

We have an immediate need for additional capital to fund our operations and
to remedy our working capital deficit. We are seeking to raise additional
capital through private offerings and collaborative arrangements. In order to
remedy our working capital deficit and to eliminate our auditor's going concern
opinion, we need to raise approximately $5,500,000 over the next three months.
We cannot assure you that we will be able to raise such additional funds on
acceptable terms, or at all. If we are unable to raise additional capital on a
timely basis, our business will be adversely affected and we may not be able to
continue as a going concern. We are negotiating with a third party to assist us
in raising capital on terms to be determined. In connection with these
negotiations, we agreed to provide such third party a right of first refusal on
our future investment banking business.

In January 2000, we undertook a private offering of our restricted common
stock and warrants to purchase our common stock. This offering was fully
subscribed in the amount of $1,124,500.

Due to our dispute with our debenture holders, scheduled interest payments
have been accrued but not paid. However, we have entered into a Settlement
Agreement with our debenture holders. Provided that we honor our obligations
under the Settlement Agreement and the debentures, which we intend to do, the
settlement will fully and finally resolve the dispute and will allow for all
principal and interest due under the debentures to be converted into common
stock as the debenture holders request such conversion and as permitted under
the debentures. If we default under the Settlement Agreement, the debenture
holders may declare the unconverted portion of the debt immediately payable.

We are involved in certain litigation, as described under the heading
"Business - Legal Proceedings." We cannot give you any assurance regarding the
outcome of such litigation, any of which could have a material adverse effect on
us.

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We have commitments to issue shares of our common stock in excess of the
number of shares we are authorized to issue. We have 29,978,503 shares
outstanding and have committed to issue an additional estimated 13,326,061 upon
exercise of outstanding options, warrants and convertible securities. We
currently have 40,000,000 shares of common stock authorized. We intend to submit
to our shareholders for their approval an amendment to our charter to increase
the number of authorized shares of common stock. If we are unable to fulfill our
obligations to issue shares of common stock in a timely fashion, we could be
subject to substantial liability which could have a material adverse effect on
our liquidity and our ability to continue as a going concern.

IMPACT OF INFLATION

Increases in the inflation rate are not expected to affect our operating
expenses. Although we have no current plans to borrow additional funds, if we
were to do so at variable interest rates, any increase in interest rates would
increase our borrowed funds.

SEASONALITY

Our operations are not affected by seasonal fluctuations, although our cash
flows may at times be affected by fluctuations in the timing for large
contracts.

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BUSINESS

HISTORICAL OVERVIEW

We conduct business together with our wholly-owned subsidiary, ConSyGen,
Inc., an Arizona corporation, an entity which commenced business in 1979 for the
purpose of developing and marketing business software solutions. In 1993, we
commenced development of an automated software capability to convert client
software applications from mainframes to open systems, which we marketed until
1999. In 1996, we commenced extension of this conversion capability to deal with
the "Year 2000" computer problem. The resulting ConSyGen 2000SM toolset provided
highly-automated date conversions and was used to complete several successful
conversion projects prior to 2000. We have not generated significant revenue
from the toolsets or from other related services, and we discontinued marketing
of both services during the 2000 fiscal year.

In 1998, as part of our planning for new products and revenue
opportunities, we introduced a non-software product, the "Counterfeit Cop". This
device uses an Ultra-Violet light to provide effective protection against
multiple forms of counterfeiting, including the paper consistency of all forms
of U.S. domestic currency, hidden emblems on credit cards, driver's licenses,
traveler's checks, event tickets, casino chips, and various governmental
documents. We believe that there will be ready market acceptance of this product
in all areas where the potential for counterfeiting exists, based on the
product's accuracy, speed, and ease of use. To market this product, we have
created a Business Product Division, and we have entered into master distributor
relationships with First Data Corporation, GMS Auditing, and Cardservice
International. We are in discussions with several other potential master
distributors with whom we expect additional contracts to be signed in the 1st
and 2nd quarters of the 2001 fiscal year.

In 1999, our research determined that a major Internet business opportunity
existed for software which would enable the faster, broader facilitation of
electronic commerce ("e-commerce") transactions, particularly for smaller
merchants. We specifically wanted to develop software to resolve the reluctance
of Internet users to use electronic payment and receipt methods on the Internet
because of concerns about security and privacy over the Internet. We have
commenced the development of Internet-based software products, generally named
BIZPAY(TM) and the BIZPAY SUITE(TM), which are designed to address these
concerns. These products are described in detail below. We intend to market this
software suite domestically and internationally to companies that participate in
the electronic funds-transfer industry. This concentration on the marketing of
our new software through our strategic partners confirms our new direction as a
specialist software development company, and our transition from supplying
software-related services. Our partners have been selected specifically to
provide the distribution and market penetration required for the widest possible
deployment of our software products. We expect to generate revenue from multiple
sources:

Our revenue model provides for revenue growth as a function of business,
transaction and membership growth. Our marketing strategy and strategic
partnerships are intended to create a firm operational base and we expect to
capture and to retain a significant market share as this business opportunity
expands.

The design concept behind our technology is to allow every Internet user -
domestically or internationally - to participate in e-commerce in an
easy-to-use, safe and secure environment, and to make shopping and payments for
products and services over the Internet easier through the use of a personal
BIZPAY account. The BIZPAY software is expected to enable small- to mid-tier
businesses and homegrown businesses to accept credit cards as a form of payment
without incurring the cost or administrative overhead of a traditional credit
card merchant account.

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In August, 2000, we announced the formation of our Multimedia Productions
Group, a new division focusing specifically on the production and sale of
multimedia presentations built around the most recent computer animation
technology. Initially, we will use current staff resources to provide services
to external clients when there is surplus capacity from internal priorities. If
sales volumes justify expansion, we will increase our staffing to accommodate
such volumes. We believe that we will be able eventually to grow this business
as a profitable adjunct to our existing services. This service does not
represent a change of direction or emphasis from our concentration on the
COUNTERFEIT COP and our BIZPAY products.

NEW BUSINESS DIRECTION

Our new business direction is focused on two major product types, each of
which is described in detail in the section below:

BIZPAY SUITE: currently under development, this is a tightly-integrated
bundle of software products that are being developed to address a broad business
need within the Internet area of electronic commerce. The first version of this
suite is in preparation for release over the next several months, with the
remaining modules scheduled for completion and subsequent release progressively
thereafter.

COUNTERFEIT COP: a business product which provides extensive and effective
counterfeit detection features for a variety of currency and other financial
instruments in a low-cost, easy-to-use device.

THE BIZPAY SUITE

Currently under development, the BIZPAY SUITE of software solutions is
being developed to enable small- to mid tier businesses, homegrown businesses,
and individual Internet users to participate in electronic commerce without the
requirement, difficulty or expense of opening and maintaining a traditional
credit card merchant account. The objective of the BIZPAY SUITE is to provide a
low-cost, secure and universal method of allowing the greatest range of both
sellers and buyers to participate fully in Internet commerce. This technology
will allow anyone with an e-mail address to participate in e-commerce.

We expect that the BIZPAY SUITE will eventually consist of nine separate
but tightly-integrated modules, each performing a distinct set of functions to
support the suite's overall e-commerce capabilities. BIZPAY, BIZPAYESCROW,
BIZPAYMALL, and BIZPAYMERCHANT are expected to be the first products in the
suite, and we plan to release them over the next several months, with the
remaining modules to be released as they are completed and tested.

BIZPAY is being developed in collaboration with several of the major U.S.
credit-card and transfer payment processing companies, which see it as a
specific solution to two of their major problems:

* the resistance of small merchants to high per-transaction fees, and
* the reluctance of would-be Internet purchasers to use a payment
mechanism that requires the entry or transmission of their credit card
data.

THE BIZPAY SUITE REVENUE MODEL

We expect to generate revenue from multiple sources through the deployment
of the BIZPAY SUITE. Rather than following the typical Internet pattern of
depending entirely on a single revenue source such as advertising revenues, we
expect our sources of revenue to be generated from:

- transaction fees levied on all BIZPAY merchant transactions. This fee
structure will be substantially less than traditional credit-card
processing fees, but is nevertheless expected to represent a reliable
and significant source of profitability;
- advertising, particularly from banner advertisements placed on the
numerous transaction emails that BIZPAY will generate;
- interest receivable on the financial `float' of BIZPAY account
balances.

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Our revenue model provides for revenue growth as a function of business,
transaction and membership growth. Our marketing strategy and strategic
partnerships are intended to create a firm operational base and we expect to
capture and to retain a significant market share as this business opportunity
expands.

BIZPAY

BIZPAY is expected to be the core of the entire suite. Its most basic
service will be to provide an individual cash or credit account, which will
enable the BIZPAY member to send money to, or to receive money from, anyone with
an e-mail address without revealing that individual's credit card details.

When a consumer signs up with BIZPAY (i.e., becomes a member), an
individual online account will be opened in the member's name, and that account
can be used to send or receive money as long as the account is active.
Initially, BIZPAY members will be able to transfer money to and from their
online account by using their credit card. Later, funds will be able to be
applied against a debit account or a BIZPAY line of credit. BIZPAY members will
be able to manage their account through their own BIZPAY home page, called
MYBIZPAYTM. MYBIZPAY will show the status of all account transactions, including
the member's account balance. All transactions into or out of the account will
be initiated and monitored from the individual member's MYBIZPAY page.

We believe that BIZPAY members will be able to make payments safely and
securely online without disclosing their credit card details online, and
merchants will never see any of the confidential details of the BIZPAY member.
In simple terms, once a customer has completed shopping, he/she selects the `pay
by BIZPAY' option at a participating merchant's site. The customer is then
transferred to BIZPAY's site, where the transaction is completed. The merchant
is notified electronically of payment and receives payment upon notification to
BIZPAY. BIZPAY will e-mail the customer to confirm the transaction and shipping
details. This protects for both the merchant and the customer.

Major expected benefits and features of BIZPAY:

* PERSONAL PRIVACY FOR FINANCIAL TRANSACTIONS. Consumers have learned to
be comfortable with Internet e-mail, yet still have trepidation about
relinquishing or transferring credit card information over the
Internet. BIZPAY SUITE will require the account-member's credit card
information only once - during account set-up; thereafter, it
eliminates the credit card security issue, as all transactions are
based on the use of e-mail for payments and receipt of payments.
Sensitive credit card information is never disclosed to the merchant;
nor is credit card information transmitted over the Internet for the
purchase.

* SIGNIFICANT COST AND EFFICIENCY BENEFITS FOR INTERNET MERCHANTS.
Internet transactions will be able to be made without expensive
merchant accounts, and the merchant will have the certainty that the
transaction will be honored, since it will always be transacted
against a BIZPAY account. Since no special or additional software is
required, there is no major cost or technical barrier to membership
for either buyer or seller. We will introduce the service:

- through consumers - initially, by an incentive program and
rewards for word-of-mouth referrals, and

- through merchants - by providing a more fully-featured service
than basic membership at a lower cost than traditional merchant
accounts.

The ease of membership creation at both the consumer and merchant
level is designed to expand our base of users rapidly. Our goal is to
expand this user base to the point where the BIZPAY SUITE is
considered as the industry standard for one-to-one e-commerce.

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* SYSTEM SECURITY. This is fundamental to the success of BIZPAY. The
hardware and software configuration and protections are being designed
to financial institution security standards. All customer records will
be kept on remote servers not connected to the Internet and behind a
series of redundant firewalls monitored around the clock. Two remote
mirror sites, which run live, will provide protection against
disaster, giving the system high operating reliability and redundancy.
Tape backups will provide disaster recovery protection, and all
sessions with customers will be fully-encrypted.

* IDENTITY CONFIRMATION provides added security if a BIZPAY member wants
to make a payment, but is unsure of a recipient's e-mail address. An
e-mail will be sent to the recipient asking them to provide their
street address as proof of identity. Once a response has been
received, the BIZPAY member can accept the confirmation and the money
will be sent. Or, the transaction can be cancelled.

* REQUEST MONEY. BIZPAY members can request money from friends or others
for outstanding debts. BIZPAY members need only provide the person's
name, e-mail address, and amount owed; a personalized bill is
e-mailed. The recipient is notified via e-mail that a bill is waiting
settlement at BIZPAY. The recipient can easily and quickly settle the
bill using BIZPAY's bill payment service.

* EVENT BILLING. Event organizers can use BIZPAY to send statements to
group members as simply as sending an e-mail advice. Group members can
pay for their event tickets with BIZPAY, payments can be credited to
the organization's BIZPAY account, and the organization's MYBIZPAY
page can be used to review collections.

In summary, we believe that BIZPAY will, upon completion of development, be
a complete sales fulfillment service that enables the buyer to send, and the
merchant to receive, payments in the form of e-mail, in an easy to use, safe,
and fully-secure environment. The technology is being designed for traditional
Internet devices, such as personal computers, but will soon be complemented by
BIZPAYMOBILE, our mobile commerce payment solution. BIZPAYMOBILE will provide a
complete mobile commerce payment solution for wireless devices, such as cellular
phones and Personal Data Assistants. It will support transmission protocols such
as Wireless Application Protocols (WAP) and Bluetooth(TM), and will enable
consumers to buy and pay for merchandise or settle auction bids from a
fully-mobile environment.

BIZPAYESCROW

We expect that BIZPAYESCROW will provide a real-time risk analysis and
escrow settlement method - something that is particularly important for the
real-time auction business. The BIZPAY processing system is expected to capture
real-time buying and selling statistics to enable the seller to know the buyer's
payment history and profile, thereby allowing the seller to make an informed
decision regarding the buyer's ability to complete the auction transaction. Once
closed, the transaction can be performed immediately through BIZPAY without any
requirement to open and maintain merchant accounts or to use external funds
transfer mechanisms, and with substantial reduction of financial risk to both
parties.

BIZPAYMERCHANT

BIZPAYMERCHANT will be the back-end merchant component that will enable
individuals or small- to mid-tier businesses wanting to participate in
e-commerce to accept a credit card transaction in the form of an e-mail, without
requiring the traditional credit card merchant account. We believe that there is
a large market of businesses that are currently disengaged from the traditional
merchant credit card account because of prohibitive set-up and transaction
costs. BIZPAYMERCHANT will represent an easy, safe, familiar and comfortable
method of receiving payments for Internet purchases - via e-mail. We expect that
it will support all standard Internet payment protocols, and that it will

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facilitate the entire online purchasing spectrum from the shopping cart
component to the full shopping experience. BIZPAYMERCHANT will enable merchants
to accept payments from buyers using any major/minor credit card including, but
not limited to, Visa, MasterCard, Diners, AMEX, and Discover.

Advantages to BIZPAY merchants are expected to include:

* Reduced merchant costs.

* A higher level of security provided to their customers, as credit card
details are not released online, therefore increasing consumer
confidence.

* A higher level of security provided to the merchant, as all BIZPAY
customers have been qualified, which we expect to result in fewer
chargebacks.

* An ability to target people with online trading accounts and to tag
BIZPAY emails and newsletter with a call to action.

* An ability to customize their advertising schedules so that they now
hit customers as they transfer funds.

* An opportunity to participate in joint marketing promotions.

* An opportunity to become a preferred merchant in the initial frequent
flyer points reward promotion.

* An opportunity to become a preferred merchant if BIZPAYCREDIT becomes
an affiliated frequent flyer program member.

BIZPAYMALL

BIZPAYMALL will represent to the buyer a virtual online mall with many
merchants, a place for the buyer to browse for products and services and to make
purchases using BIZPAY. By its wide range of shopping alternatives and ease of
selection and payment, the mall is expected to generate "foot traffic" (online
viewers and purchasers) for all participating merchants and should facilitate
the shopper's search for products and services. Every new BIZPAY member will be
placed directly into BIZPAYMALL upon their acceptance of viral marketing
dollars.

To merchants of any size, but particularly the targeted small- to mid-tier
merchants, who accept BIZPAY as a form of transaction settlement, BIZPAYMALL is
expected to provide significant dedicated traffic as a prime benefit. The
merchant will be a subscriber to the BIZPAY system, and the site visitors will
be BIZPAY members with available money in their accounts and an easy payment
method in which they should have confidence, arising from the knowledge that
sensitive credit card information is not transmitted as part of the transaction
process. Also, the risk of loss of financial or transaction information inherent
in online commerce is greatly reduced, a significant benefit to both the seller
and the buyer.

THE BIZPAY SUITE - MARKET ANALYSIS

The scope of the BIZPAY SUITE's payment system is not limited to the size
of the existing Internet-based e-commerce market. We believe that there is an
opportunity for application of the BIZPAY SUITE to be effective in other
commercial situations requiring a payment transfer system, because of its
expected ease of use, security, and efficiency. We expect that this improvement
of the payment process should encourage growth in personal business transactions
via the Internet - an area that is either too expensive or too difficult for
potential users to exploit at this time. E-commerce will play a major role in
the early implementation; however, we will use various channels to become a
viable alternative settlement mechanism for other transactions involving funds
transfers.

The BIZPAY SUITE is expected initially to integrate the "Peer-to-Peer"
market for small business e-commerce - that is, the area where any participant
in the market (buyer or seller) can complete financial transactions with any
other participant, irrespective of size or sophistication. We believe that the
Peer-to-Peer payment market for small business is poorly supported, but is
experiencing tremendous growth. Peer-to-Peer market participants are building
customer bases, but are delivering little more than the ability to settle
auction payments, or to send and receive money between friends (e.g., PayPal).

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We believe that this form of payment is limited in function and vision, and that
it will be short-lived. We believe that the BIZPAY SUITE will establish itself
readily in this area because there will be no special status or technical
requirements which will limit a participant's activity or role - a BIZPAY member
can be simultaneously a buyer or a seller, can deal with individuals or with
businesses of any size, and does not need to incur the normal overheads for
these transactions. Additionally, there will be unprecedented security and
protection for both participants in a BIZPAY transaction - as well as the normal
fraud protection provided through credit-card agencies, BIZPAY technology will
ensure that only known and accepted members can participate, and that only
approved and validated transactions may move through the system.

This simple seller/buyer relationship will benefit the small- to mid-tier
business that has found it cost-prohibitive to establish a merchant account
under present cost structures. Surveys show that of the 7+ million businesses
with Web sites, 2.7 million are small businesses. Many of these small businesses
do not conduct online commerce because of the cost of processing through
traditional merchant accounts. BIZPAY is expected to solve this problem by
enabling the small business to "act" like a large business in its ability to
accept payment. The merchant with one account and one gateway has the ability to
accept payments from any consumer with any credit card. The merchant no longer
needs a merchant account for each and every credit card; actually no merchant
credit card account is required.

Many other individuals selling on the Web do not have the ability to accept
credit card payments. We believe that the BIZPAY SUITE will be an ideal payment
solution for these sellers. The entire transaction process is as easy as sending
e-mail; in fact, the fund (payment) notification from the buyer to the seller is
by e-mail. Every online user that has an Internet connection and is
e-mail-enabled has received e-mail. Users are familiar and comfortable with
sending and receiving e-mail; because BizPay transactions are based on e-mail,
we believe that users will become just as familiar and comfortable with its use.
It is estimated that nearly 400 million people will be online by the end of year
2000, and it is expected that virtually all of them will have sent and/or
received e-mail.

E-stats reports that merchants sold about $6 billion worth of consumer
goods over the Internet in 1999, and projects that this figure will increase to
$10 billion in 2000. However, while many Internet users have visited shopping
sites and have `browsed', E-stats reports that only 14% of Internet users have
actually purchased anything online. Fewer still have used their credit card,
despite the fact that credit card membership is on the rise and credit card
usage continues to be a common method of transaction settlement.

We believe that consumer reluctance to make online credit card purchases
indicates lack of consumer confidence and trust that their transactions will be
truly secure. Each credit card member who is also an Internet user is,
therefore, a potential BIZPAY member and customer, because BIZPAY guarantees
that this consumer can make a credit card purchase from an Internet merchant or
individual seller without disclosing sensitive credit card information.

An additional potential market for the BIZPAY SUITE is auction houses - an
estimated 150 sites with over 5 million sellers. Few of these sellers are
equipped to accept credit cards, and so sale transactions are mostly completed
through traditional forms of funds transfer, such as checks, money orders, etc.,
with all of the complications involved in such transactions.

Traditional hard-copy classifieds and Web-based classifieds also present an
enormous potential base of sellers needing a Peer-to-Peer method of accepting
payments without a credit card merchant account.

THE BIZPAY SUITE - MARKET AND SALES STRATEGY

We plan to partner with financial institutions, banks, and card service
companies to recapture the market segment that these companies are losing with
small businesses because of high credit card merchant account fees. We view this
as one of the remaining untapped `sweet spots' of the Internet commerce world.
BIZPAY will be targeted at large Internet Service Providers (ISPs) and large "E"
communities; then, we will direct our members to the ISPs and large "E"
communities and e-malls that accept BIZPAy as a form of payment. ISP and "E"
community members who register with BizPay will receive BIZPAY dollars to spend
at BIZPAYMALL.

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Traditional subscription/renewal/membership companies, such as magazines,
newspapers, tabloids, membership organizations and the like can decrease their
expenses by using BIZPAY as part of their subscription renewal process. Any
subscriber or member who is e-mail-enabled can be notified at renewal time and
the subscriber or member can satisfy the renewal fees through BIZPAY. The
subscription company saves the expense of printed renewal notices, handling, and
postage. It also saves on the costs usually associated with the processing of
payments made by check, money order, and credit card. As BIZPAY payments are
received, they can be posted in real time.

BIZPAY will be introduced to new members at launch through a `viral' (that
is, spread by personal contacts and referrals) marketing approach, which has
worked very successfully with several other similar concepts. As part of this
process, BIZPAY will offer an incentive to all those who register as members of
the service, and a further incentive for any referrals who also register as
members. This incentive will be in the form of a "dollar value" that can be
spent at any merchant accepting BIZPAY. The newly-registered member will be
linked to a BIZPAYMALL to spend this newly-acquired "dollar value." We
anticipate that many of the participating BIZPAY merchants will offer products
and services closely matched to the "dollar value" of the registration
incentive. The new member will quickly understand the BIZPAYMALL concept and the
ease of using BIZPAY to make a purchase.

BIZPAY will initiate a rewards program to generate interest for both the
buyer and the seller - that is, at both ends of the transaction spectrum. Buyers
can accumulate bonus "points" by making purchases from BIZPAY merchants. Buyers
can then redeem accumulated points at BIZPAY merchants for products and
services.

BIZPAYMERCHANT will be promoted as the Internet payment mechanism of
choice. We expect that the viral marketing campaign should provide a base of
customers with a tool for online payments, and merchants will be encouraged to
associate themselves with BIZPAY for the additional selling opportunities.
BIZPAYMERCHANT will target a number of different categories of Merchant,
including:

* Merchants with existing merchant relationships allowing them to accept
credit cards and who are already enabled online;

* Businesses with credit card facilities which are not currently enabled
for payment across the Internet;

* Smaller merchants who currently do not qualify for merchant accounts;

* Providers of offline services looking to streamline their payment
systems through online collection e.g. utilities, magazine
subscription renewals, charities, and

* With the advent of BIZPAYMOBILE, real world merchants (e.g. taxis,
restaurants, and so on).

The benefits of BIZPAYMERCHANT will be:

* Easily installed and at low cost;

* BIZPAYMERCHANT technology is designed to enable all online merchants
for online payment. We expect to provide BIZPAYMERCHANT in the form of
downloadable software for small business. Larger merchants will need
some customization. BIZPAYMERCHANT merchants will pay on a
per-transaction basis, which means that many of the cost barriers to
establishing online payments will be removed;

* Merchants can become payment-enabled almost immediately;

* BIZPAY customers will be qualified, thereby providing a substantial
potential reduction in the merchants' risk of non-payments;

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* BIZPAY customers will be equipped with the tools to undertake secure
electronic commerce;

* The security of the BIZPAY system should increase consumers'
confidence in online shopping and should potentially lead to higher
participation rates; and

* The risk of charge-back is lower. Online merchants suffer from high
charge-back rates; BIZPAY is expected to decrease charge-backs
dramatically.

THE BIZPAY SUITE - COMPETITIVE EDGE

We believe that the BIZPAY SUITE will present a combination of innovative
and valuable features that constitute an advance over competitive products or
services. In particular:

* There is no cost to establish a BIZPAY merchant account;

* BIZPAY fees are lower than `typical' credit card merchant accounts;

* Buyers should feel more secure in the transaction process (e.g.,
credit-card information is not disclosed to merchants for purchases);

* Sellers should feel more secure because the buyer's funds are
pre-approved and available;

* Buyers can track their purchases;

* Sellers can profile their buyers;

* BIZPAYMALL will offer buyers PRECISIONSEARCH(TM)(a future product from
us) for locating and pricing products and services; and

* BIZPAYMALL is expected to offer BIZPAYAUCTION to merchants as a place
to sell distressed or discontinued merchandise.

THE COUNTERFEIT COP

The Counterfeit Cop is a counterfeit detection device. It features an industrial
design for long life, a pressure-sensitive platform for watermark illumination,
and a safe, intense high-quality ultra-violet (UV) bulb for revealing hidden
distinguishing marks. The Counterfeit Cop features 13-watt lamp technology as
opposed to standard 4-watt technology used by competing devices, and the 13-watt
lamp provides a life expectancy equal to that of a long-life 4-watt lamp.

THE COUNTERFEIT COP - MANUFACTURE

To ensure economy of production and to safeguard our unit-level
profitability, we have contracted for the manufacture of the Counterfeit Cop in
China. Quality of manufacture is ensured through product specification and
inspection, and we have provided for alternative manufacturing facilities to
safeguard our inventory and stocking levels as demand increases. We believe that
the security provided over our technology is adequate to protect us from theft
or replication of the technology.

THE COUNTERFEIT COP - FEATURES

CURRENCY DETECTION. Ease of use and effectiveness of detection are
paramount to the public buying this product. For currency, the bill is merely
placed on the pressure-sensitive platform. A bright blue paper glow identifies
the currency as possibly counterfeit. A second check examines the bill's
security thread; on genuine currency, this is illuminated according to specific
denominations ($100 is red, $50 is yellow, and $20 is green). Finally, by
applying pressure to the platform, the watermark becomes easily visible on
genuine currency. Most international currencies have security threads and
watermarks like U.S. currency; therefore, the process of detection is
essentially the same.

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CREDIT CARDS; OTHER ITEMS. Most credit cards have a hologram that becomes
visible under the Counterfeit Cop's UV lamp. These are displayed and validated
by simply placing the item on the unit. Travelers' checks, U.S. Government
checks, passports, driver's licenses, and other forms of identification are
authenticated through the same process of displaying imbedded holograms.

THE COUNTERFEIT COP - MARKET ANALYSIS

According to trend information released by the U.S. Secret Service,
counterfeit crime is expected to reach more than $2 billion in the U.S. alone
during the year 2000, up from $186 million in 1998. We believe that one of the
primary reasons for this dramatic increase is the increasing sophistication and
lower cost of computers and software now being used by counterfeiters.
Counterfeiting in the past was a crime requiring a considerable investment in
time, money, and resources. This is no longer true today. The anticipated
increase of $1.8 billion dramatically emphasizes the ease with which
counterfeiting is now accomplished, and highlights the potential for the scope
of the problem to continue to increase.

The reason for the dramatic increase is due to the recent rise in
"digifeiting" - the making of counterfeit documents on home personal computers.
Consequently, as the price of personal computers continues to drop, we believe
that counterfeiting will increase. Today, counterfeiters are not hampered by the
trial-and-error process of the past; all that is required is a computer, a
scanner, and a bubble-jet printer. With these very accessible tools, they can
easily counterfeit as much money as they wish. We believe that the market
opportunity for counterfeit detection devices is significant, and that it will
continue to grow both domestically and internationally.

The market segment for Counterfeit Cop is any business or organization
currently taking physical payments in a variety of forms, such as cash, credit
cards, travelers checks, and checks. This market segment is very large and
continues to grow every year. With this market growth grows the opportunity for,
and instances of, counterfeiting and the demand for a reliable form of
protection. The Counterfeit Cop is invaluable to any brick-and-mortar business
taking cash or currency, to all banks and financial institutions, and
realistically to any person providing a service or product for monetary
exchange. It is the ultimate proactive approach to deter domestic and foreign
exploitation of counterfeit currency, credit cards, identification, and other
documents.

The potential market has also been extended by recent changes in the
Uniform Commercial Code, where the liability for possessing or passing
counterfeit currency has been shifted from the banks to account holders. These
new laws stress "due diligence" and "comparative negligence", where parties
split the liability and monetary losses based upon their respective levels of
fault. It is, therefore, in the strongest interest of the person handling money
or other negotiable instruments for the public to be able to identify and refuse
receipt of counterfeit currency or instruments at the earliest possible moment
to avert incurring this liability. The Counterfeit Cop is a low-cost,
easy-to-use, effective tool for achieving this control.

THE COUNTERFEIT COP - MARKETING AND SALES STRATEGIES

We intend to engage between five and ten "Master Distributors" in the U.S.,
each of which we expect will be responsible for an agreed minimum quota of units
annually. These Master Distributors are companies which will in turn become
major distributors of the product to their already-established clients, or which
will market the product aggressively through their own sales channels.
Currently, we have three Master Distributors which account for approximately 50%
of our sales:

- First Data Corporation
- GMS Auditing
- Cardservice International

We will use these Master Distributor channels to minimize overhead while
maximizing market penetration. In addition, we have more than forty smaller
distributors, currently accounting for 17% of our sales.

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THE COUNTERFEIT COP - SALES MODEL

We have moved from the direct sales model to a reseller/distribution model.
Marketing has been recently expanded into Europe and Asia. We also plan to add
to our reseller chain through direct marketing, creating partnerships with major
corporate accounts as master distributors.

The Counterfeit Cop is sold to those distributors that are selling products
used in conducting commerce (e.g. credit card terminals, credit card swipe
devices, and point-of-sale devices). Counterfeit Cop complements the other
devices being sold and protects the merchant (seller) against fraudulent
transactions. It is an ancillary device that is useful to banks, financial
institutions, credit card issuers and Point-Of-Sale dealers.

THE COUNTERFEIT COP - COMPETITIVE EDGE

* Easy to use

* Inexpensive

* Patent pending

* 13-watt long life bulb

* Rugged design, lightweight, small footprint

* Comprehensive counterfeit detection:
- Paper quality (bleached or unbleached)
- Watermarks
- Fluorescent color printing
- Opaque security threads
- Alterations
- Handles U.S. currency and financial instruments, including casino
chips, passports, foreign currency, credit cards, and bank notes.

FUTURE PRODUCTS

We understand the competitive market that is inherent within the technology
sector and, consequently, view ongoing research and development as an important
part of our business strategy. We plan to continue to acquire, develop and
market innovative products, in addition to enhancing our current line of
products.

We will also seek to acquire and distribute products that have identified
markets, that have defined technological advantages, and that can be
accommodated readily within our overall business plan and distribution
capability. We do not plan to engage in the development of such products, but we
will actively seek business products which fit our criteria and which can be
acquired without damaging our financial health and introduced without reducing
the effectiveness or profitability of existing products.

In August, 2000, we announced the formation of our Multimedia Productions
Group, a new division focusing specifically on the production and sale of
multimedia presentations built around the most recent computer animation
technology. Initially, we will use current staff resources to provide services
to external clients when there is surplus capacity from internal priorities. If
sales volumes justify expansion, we will increase our staffing to accommodate
such volumes. We believe that we will be able eventually to grow this business
as a profitable adjunct to our existing services. This service does not
represent a change of direction or emphasis from our concentration on the
COUNTERFEIT COP and our BIZPAY products.

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FUTURE OF THE BIZPAY SUITE

We plan to expand the BIZPAY SUITE product set to include specialized
modules which will be known as BIZPAYMOBILE, BIZPAYMENU, BIZPAYCREDIT,
BIZPAYAUCTION and BIZPAYPORTAL. These modules are currently under development or
in planning.

BIZPAYMOBILE will be the complete mobile commerce payment solution for
wireless devices. BIZPAYMALL will accommodate merchants who accept BIZPAY as a
form of transaction settlement. BIZPAYMENU will enable selected businesses to be
conducted entirely on wireless devices. BIZPAYCREDIT will be our brand of credit
card. BIZPAYAUCTION will provide additional value to both the BIZPAYMALL
consumer and merchant, and BIZPAYPORTAL will be introduced to help fuel the
acceptance and adoption of mobile commerce and e-mail based payment methods.

Through the BIZPAY SUITE, our goal is to set a new standard for
convenience, ease of use, security and consumer privacy for Web commerce.

We anticipate that BIZPAYMOBILE will be a complete mobile commerce payment
solution for wireless devices, such as cellular phones and Personal Data
Assistants. It will support Wireless Application Protocols (WAP) and
Bluetooth(TM) protocols and will enable consumers to buy merchandise or settle
auction bids on the run. Although this method of e-commerce is in its embryonic
stage, it is fueled by the major cellular service providers and therefore is
expected to experience high growth. Many foreign (non-USA) countries are
bypassing the traditional e-commerce device mechanism and making the leap
directly to wireless e-commerce.

Based on trends and the acceptance of technology in the public sector,
wireless subscribers and worldwide Web users are expected to continue to grow.
We believe that worldwide Web users will eventually become comfortable with
shopping online for many of their purchases.

We expect that BIZPAYMENU will enable businesses to selectively display
products and services on wireless devices. The consumer will not only be able to
make menu selections, but will also be able to resolve payment, all on their
cellular phone or personal data assistant (PDA). BIZPAYMENU will be a monthly
subscription charged to the merchant. Businesses that would benefit from
BIZPAYMENU include, but are not limited to, restaurants, bagel shops, coffee
shops, fast food drive-ins and drive-throughs.

BIZPAYCREDIT will be our brand of credit card for purchases made at the
traditional retailer. We plan to partner with a major financial institution to
back and issue these credit cards with a BIZPAY batch number.

We believe that BIZPAYAUCTION will satisfy the consumers' thirst for online
auction shopping. In addition it will enable the BIZPAYMALL merchant to garnish
additional visibility, or simply to move discontinued or distressed merchandise.

BIZPAYPORTAL will focus on mobile commerce and e-mail-based payment methods
for the prime purpose of fuelling acceptance and adoption. It will include such
things as new product announcements, software downloads, and message boards.

INTELLECTUAL PROPERTY

We own all of the rights to our technology and products, and we do not rely
on any third party for licenses or product rights.

We have applied for U.S. trademark registration for the "BizPay" name and
we believe that the entire range of BIZPAY-related names would be protected by
such trademark, if issued. All staff working on the development of the BIZPAY
SUITE are under appropriate confidentiality agreements, as also are any external
contacts who need to understand aspects of the technology. The BIZPAY SUITE
technology will be licensed to our business partners, and there is no
requirement for transfer of the technology. Depending on future business
decisions, we may allow one or more of our business partners to assist in code
development; under such circumstances, we will ensure the application of
stringent security controls and protection over our intellectual property. All
software is regularly backed-up and is securely stored to ensure complete
recovery in an emergency.

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<PAGE>
PATENTS

We believe that there are aspects to certain of the modules within the
BIZPAY SUITE that are patentable, and we are exploring this possibility. We also
plan to explore the practicability and effect of making patent filings in other
countries, either to protect us from competition or to facilitate our entry into
specific markets.

We are consulting with our patent attorneys regarding the potential for
filing of one or more patent applications covering certain aspects of the
COUNTERFEIT COP, and are in discussions with our international partners
regarding the practicability of such patent filings in their countries of
operation.

We have filed a U.S. trademark application for the name "ConSyGen's
Counterfeit Cop", and plan to assess with our international partners the
requirements for any international filings.

GOVERNMENT REGULATIONS

COMPETITION

The business products industry, in which the COUNTERFEIT COP competes, is
extremely competitive and has relatively low barriers to entry. With the
COUNTERFEIT COP, we compete primarily with three main classes of products:

- chemical-based pen-type scanners. The market leader is Money Tester,
although there are several other products, all of which are relatively
inexpensive, and there are very low barriers to entry to this market.
We believe that the main difference between these products and the
COUNTERFEIT COP is that they are restricted in function, being able to
detect only a limited set of counterfeit features, and only on paper;

- ultra-violet light-based. There are at least two other products which
compete directly with COUNTERFEIT COP. In each case, we believe that
the COUNTERFEIT COP exceeds the functionality of the other products,
or is easier and more efficient to use, and also provides improvements
in operational performance and life;

- ink-checking and micro-writing detection. We have examined the two
main competitors in this area. As with the ultra-violet competitors,
we believe that these products do not provide the range of detection
functionality or ease of use that is available as standard with the
COUNTERFEIT COP, and each requires multiple steps to gain results
which are less than those provided as standard by the COUNTERFEIT COP.

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<PAGE>
With BIZPAY, the primary competition is in three major categories:

- individual service providers. There are several companies which now
market specific functions to other, larger companies - either software
aggregators preparing larger software offerings, or financial groups
seeking to develop their own solution. We believe that most of these
companies are small, with limited funding, and provide an innovative
and rapidly-growing range of specialist services. On their own, we do
not believe that any of these companies represents a major competitive
threat to BIZPAY.

While all competitive services offer one or more of the three major
e-commerce transactions (parson-to-person, consumer-to-business, and
business-to-business), BIZPAY is expected to offer all three and to incorporate
a wide and distinctive variety of other features which, we believe, will enable
it to exceed any of the alternative products or services in functionality and
features. Additionally, we have deliberately sought to include all of the
standard `links' to other competitive products and developing standards to
ensure that BIZPAY will not become a victim of proprietary technology.

We expect that BIZPAY will compete successfully with less functional
systems such as PayPal and Ebay's BillPoint, which we believe will present only
a basic level of competition. We are aware that major credit-card processing
companies have sufficient technical capacity to develop an alternative system to
BIZPAY, should they decide to enter this market; to date, we believe that most
of these major companies have preferred to use external developers or to partner
with other financial-services groups to gain size and efficiency advantages. We
expect this trend to continue, and we are seeking to position BIZPAY to benefit
from this approach.

BUSINESS PARTNERS

We lack the internal financial resources to single-handedly develop our
products and take them to market, particularly in the face of potential
competition from established business. Therefore, our business philosophy is to
align ourselves as a valuable and indispensable partner with those established
businesses. In the case of the Counterfeit Cop, we have created Master
Distributor relationships with First Data Corporation, GMS Auditing, and
Cardservice International, all of which are major, high-volume distributors of
financial services and related products, and all of which have extensive
networks of clients dependent on their services. We are also in discussions with
several other potential Master Distributors with which we expect additional
contracts to be signed during the 2001 fiscal year. Internationally, we are in
discussions with a major locally-established distributor regarding the marketing
and distribution of the Counterfeit Cop throughout Europe.

BIZPAY presents us with an opportunity to align ourselves with major
worldwide participants in the financial services industry, and to exploit the
relationships begun through our contacts from the Counterfeit Cop. In addition,
our joint venture with Notremos in Australia should enable the creation of a
strong market presence for the BIZPAY technology through South-East Asia.

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<PAGE>
LEGAL PROCEEDINGS

We have been involved in material litigation with holders (the "Debenture
Holders") of our 6% Convertible Debentures Due May 29, 2003 (the "Debentures").
In 1998, the Debenture Holders filed a lawsuit against us based upon our failure
to honor their requests to convert the Debentures to common stock (the
"Debenture Litigation"). In January 1999, the Debenture Holders and other
plaintiffs (together the "Plaintiffs") filed related lawsuits against us and
certain of our former officers, and others, to recover damages for alleged
intentional and calculated defamation (the "Defamation Litigation"). On April
11, 2000, we entered into a definitive Settlement Agreement and Conditional
Release with the Plaintiffs to settle the Debenture Litigation and the
Defamation Litigation. If we honor our obligations under the Settlement
Agreement and the Debentures, the settlement will fully and finally resolve the
Debenture Litigation and the Defamation Litigation. Under the Settlement
Agreement, we have agreed to honor the terms of the Debentures (and the related
common stock purchase warrants) and to convert the principal and accrued
interest on the Debentures into our common stock as the Debenture Holders
request such conversion and as permitted under the Debentures. As of August 31,
2000, approximately $2,241,000 in principal amount of the Debentures has been
converted into shares of our common stock in partial implementation of the
settlement. In addition, we have agreed to pay (in common stock, to be issued as
the Debentures are converted) an additional $350,000 in liquidated damages,
which amount has been accrued in the third quarter of the year ended May 31,
2000. We have agreed to perform additional non-monetary obligations under the
Settlement Agreement and Conditional Release which, while they represent
material terms of the Settlement Agreement, we believe we can successfully
perform without a material adverse financial impact.

On August 10, 1999, Thomas S. Dreaper, a former President and CEO, as
plaintiff ("Mr. Dreaper") filed a lawsuit in the United States District Court
for the State of Nevada, Civil Action s-99-1011-LDG (LRL) (the "First
Complaint") against us and A. Lewis Burridge, our current President and CEO. The
lawsuit alleges the following four causes of action based upon the contract for
indemnification that Mr. Dreaper had with us: (1) declaratory relief, (2) breach
of contract, (3) breach of covenant of good faith and fair dealing, and (4)
equitable estoppel. The claims for indemnification arise out of our decision not
to indemnify Mr. Dreaper or to defend him in connection with litigation brought
against us by the holders of our 6% Convertible Debentures due May 29, 2003. The
debenture litigation has since been settled. Mr. Dreaper is seeking an
unspecified amount of general damages on each cause of action in a sum exceeding
$75,000, and an unspecified amount exceeding $1,000,000 for exemplary and
punitive damages relating to the breach of covenant action.

On March 14, 2000, Mr. Dreaper filed a Motion for Leave to File a
Supplemental Complaint (the "Second Complaint"), to include a claim for breach
of Employment Agreement, with respect to stock options. The Second Complaint
contains the same four causes of action as the First Complaint and further
alleges that our Board of Directors acted to modify his Employment Agreement
with respect to the terms of the exercisability of the share options available
to him under the Employment Agreement.

With respect to the Second Complaint, we believe that there was no breach
of Mr. Dreaper's Employment Agreement. We are unable to estimate the extent of
any liability arising from these actions, although we believe that such
liability will not exceed $150,000, and will possibly be limited to attorneys'
fees, costs and expenses relating to each of Mr. Dreaper's claims. The case is
expected to go to trial in early 2001.

On April 12, 2000, Lender's Services, Inc. ("LSI") filed a lawsuit against
us in the United States District Court for the Western District of Pennsylvania
(Civil Action CV-00-689) alleging five causes of action relating to a Year 2000
conversion project we conducted for LSI: (1) breach of contract for failure to
deliver work product when due, (2) breach of contract for delivery of defective
work product and failure to cure material defects in the work product, (3)
breach of contract for failure to provide a fully functional relational

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<PAGE>
database, (4) unjust enrichment, and (5) negligence. The complaint seeks an
unspecified amount exceeding $75,000 as general damages and amounts of $508,600
for monies paid for product not received and $552,000 as compensation for
additional programming expenses incurred by LSI to correct our alleged errors.
In addition, LSI seeks attorneys' fees, costs and other relief.

On June 12, 2000, we filed an Answer to the Complaint and Counterclaim,
citing the Federal Y2K Act, estoppel, an alternative dispute resolution
mechanism, a cap on damages and contractual limitations on liability as our
affirmative defenses. In addition, our counterclaim contains four counts,
including claims for: (1) account stated, (2) breach of contract (implied in
fact), (3) breach of contract (implied in law), and (4) promissory estoppel, and
seeking payment of unpaid amounts of $97,400, plus interest, costs, and
attorneys' fees. We believe that our services contract does not allow the claim
for additional programming expenses, and that the claim for fee reimbursement is
not valid. We are currently negotiating with LSI regarding an acceptable
resolution to the claim, and we believe that an agreement can be reached in the
near future.

We can give you no assurance concerning the outcome of the above-described
litigation, any of which could have a material adverse effect on us.

PROPERTIES

Our principal administrative, research and development, customer support
and marketing facilities are located in an approximately 10,000 square foot
building at 125 South 52nd Street, Tempe, Arizona 85281 that we acquired in
March 1998 for approximately $800,000 in cash. The property is subject to a Deed
of Trust which secures a $550,000 Promissory Note dated April 6, 1999, payable
to American Savings Life Insurance Company. This property is also subject to a
Trust Agreement, dated November 15, 1999, whereby Daniel B. Hamburg, Lillian
Hamburg, Robert Rehm, and Monte and Betty Meux are second beneficiaries and we
are the first beneficiary. Our interest is encumbered in the aggregate amount of
$1,215,000, representing the above-mentioned Promissory Note and the various
loans made to us by the second beneficiaries.

We believe that our facilities are adequate for our current needs and that
suitable additional space will be available when needed. The condition of the
property is generally good and it is properly insured.

EMPLOYEES

As of August 31, 2000, we had 33 full-time employees, including two in
sales and marketing, nineteen in research, development and support, three in the
Business Products division, and nine in corporate operations and administration.
None of our employees is represented by a collective bargaining agreement. We
believe that our relations with our employees are good. There are no employment
contracts with our non-executive staff.

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<PAGE>
MANAGEMENT

DIRECTORS AND EXECUTIVE OFFICERS

The following table sets forth information regarding our executive officers
and directors:

Name Age Position
---- --- --------

A. Lewis Burridge......... 80 President, Chief Executive Officer and Chairman

John L. Caldwell.......... 60 Director

Jason M. Genet............ 28 Chief Operating Officer

Luther H. Hodges.......... 63 Director

Donald P. Knode........... 77 Director

Andrew Lee................ 51 Director

John D. Roskelley......... 35 Vice President, Business Development

Russell B. Stevenson...... 59 Director

Robert L. Stewart......... 81 Director

Eric J. Strasser.......... 36 Chief Financial Officer

Amelia C. Ulep............ 47 Corporate Secretary

A. LEWIS BURRIDGE. Mr. Burridge joined us as a Director on June 29, 1998,
and has served as President and Chief Executive Officer since March 24, 1999. He
was appointed as Chairman of the Board of Directors on April 19, 2000. Prior to
joining us, he served as an international business consultant from 1995 to 1999,
and worked with Sterling Drug Inc., a pharmaceutical manufacturing and
distribution company, from 1956 to 1985. During this time, Mr. Burridge served
in a variety of positions, including President of Sterling Asia. As President,
he focused on the development of Sterling's manufacturing and marketing
companies throughout Asia for its medical and consumer products in the
Asia-Pacific area. He is currently a Director of Massa, Inc., Trustee/Director
of the Trinity College of Vermont, and Director of the United States-Philippines
Tourism Advisory Council.

JOHN L. CALDWELL. Mr. Caldwell was appointed as a Director on June 24,
1999. Since 1987, he has been President of U.S. Trading & Investing Company
(USTIC), an international business firm that develops foreign markets for
American products, services and technologies and structures business
transactions worldwide.

JASON M. GENET. Mr. Genet joined us as an independent consultant in
December 1998, concentrating on planning and development of our Business
Products Division. In April 1999, he joined us full-time and was promoted to
Managing Director of the Business Products Division. Prior to joining us, he
served until 1995 as a trainer for corporate management for Kenney Corporation,
a manufacturing and distribution company. From 1995 to 1998, he served as a
management consultant for Marks Brothers, a jewelry sales company, providing
business analysis and turnaround consulting services. On January 1, 2000, Mr.
Genet was promoted to Executive Vice President and Chief Operating Officer.

LUTHER H. HODGES. Mr. Hodges was appointed as a Director on June 6, 2000.
Since 1990, he has been Chairman/Publisher of The Santa Fean Magazine, and is an
owner/manager of Santa Fe Hospitality and the Hotel Santa Fe. He has recently
served on a range of government advisory committees in New Mexico, and is a
member of the Arizona Business Leadership Association. In 1979, he served as
Undersecretary of the U.S. Department of Commerce and in 1980 as the First
Deputy Secretary of Commerce. Mr. Hodges has also served on the boards of
numerous community, educational, and corporate organizations, and he has been a
member of the faculty of the University of North Carolina (Chapel Hill) and Duke
University.

DONALD P. KNODE. Mr. Knode was appointed as a Director on December 29,
1999. He worked with Merrill Lynch, Tokyo from 1961 to 1977; during this time,
he pioneered the notion of "American Style" investment banking in Asia, and was
appointed Vice President of Merrill Lynch, Inc. From 1977 to 1995, he worked as

34
<PAGE>
a business consultant, specializing in advising U.S. companies seeking business
and investment opportunities in Japan. From 1995 to 1998, he headed the
Financial Practices Group of Burson Marsteller in Tokyo, providing consultant
and business services to major U.S. companies such as Honeywell, IBM, Microsoft
and Nasdaq doing business in Japan. Since 1998, he has concentrated on providing
personal consulting services in public relations and foreign business practices.

ANDREW LEE. Mr. Lee was appointed as a Director on February 24, 1998. Since
1992, he has been the President and Chief Executive Officer of First Shanghai
Corporation, a merchant bank. He is also President of BOXX International
Corporation, a computer and electronics company, and TowerCom Inc., a software
company. Since 1997, Mr. Lee has been the Co-Chairman of the Board and Co-Chief
Executive Officer of Greater Alliance Corporation, a financial service
corporation. He is also President and a Director of Integrated Transportation
Network Group Inc., a China-based transportation company.

JOHN D. ROSKELLEY. Mr. Roskelley joined us as an independent consultant in
April 1999. In June 1999, he was appointed as Business Development Analyst, with
responsibility for the identification and analysis of new products. He was
promoted to Vice President of Business Development in January 2000. Prior to
this engagement, he had over 8 years experience as a technology consultant,
serving as Consulting Engineer in areas of business development for Vanstar,
MicroAge and Software Spectrum, and as Director of Client Engagements for
Inacom, all of which companies are engaged in software development and
marketing.

RUSSELL B. STEVENSON. Mr. Stevenson was appointed as a Director on July 10,
2000. Since 2000, he has been Executive Vice President and General Counsel of
ARBROS Communications, Inc., a provider of integrated communications services.
From 1996 to 2000, he served as Senior Vice President and General Counsel of
CyberCash, Inc., a provider of software and services for electronic commerce.
Prior to that, he practiced law at Ballard Spahr Andrews & Ingersoll. His law
practice has concentrated on securities and corporate law, with an emphasis on
technology-based companies and venture capital. He has served on the faculty of
George Washington University, and is a member of the bars of the District of
Columbia and the United States Supreme Court.

ROBERT L. STEWART. Mr. Stewart was appointed as a Director on March 24,
1999 and as Chairman of the Board from August 2, 1999 until April 19, 2000.
Prior to this, he had been the Chairman of the Board from 1980 until January
1999 and had served as President and Chief Executive Officer of ConSyGen-Arizona
from 1980 until January 15, 1997. He was also President and Chief Executive
Officer of ConSyGen-Texas from September 5, 1996 to January 15, 1997.

ERIC J. STRASSER. Mr. Strasser joined us as Chief Financial Officer in
February 2000. During the four years before joining us, he founded and sold two
management-consulting companies which focused on consulting in the area of
business and financial systems development. Mr. Strasser's prior experience and
positions include experience as an independent business consultant during 1991
to 1996. From 1985-1987, he was a Senior Auditor for KPMG Peat Marwick, and he
held several positions with Goldman Sachs during 1987-1991, including Vice
President of Accounting and Risk Management.

AMELIA C. ULEP. Mrs. Ulep joined us in July 1991 as a bookkeeper. In
October 1992, she was transferred to the Administrative Department as our
Administrative Secretary. In July 1998, she was promoted to Executive
Administrator. She was appointed Corporate Secretary on June 24, 1999.

ELECTION OF DIRECTORS AND OFFICERS

Our Board of Directors consists of seven members. All directors hold office
until the next annual meeting of stockholders or until successors are duly
elected and qualified. Our executive officers are elected annually by and serve
at the pleasure of the Board of Directors.

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<PAGE>
DIRECTORS' COMPENSATION

Members of our Board of Directors receive a payment of $1,500 plus expenses
for each Board meeting that they attend. On April 19, 2000, the Board resolved
that each non-employee (or, outside) Director would be granted options to
purchase up to 25,000 shares of our common stock at a price of $0.50 per share
under our 2000 Combination Stock Option Plan. For Directors elected after April
19, 2000, 5,000 of these options will be exercisable immediately; the 20,000
balance will be exercisable in twelve equal monthly installments. Board members
serving as of April 19, 2000 were previously granted 10,000 options. On April
19, 2000, these options were accelerated and became immediately exercisable.
These directors were each granted an additional 15,000 options, which become
exercisable in twelve equal monthly installments.

COMMITTEES OF THE BOARD OF DIRECTORS

The Board of Directors has appointed John Caldwell and Donald Knode to
both its audit committee and its compensation committee. The executive committee
members are Luther Hodges and A. Lewis Burridge. No additional payments in cash
or other consideration is made to the committee members for their positions or
activities on these committees.

EXECUTIVE COMPENSATION

The following table sets forth certain information concerning the
compensation awarded to, earned by or paid to each of our Chief Executive
Officer and the only other officer whose total rate of annual salary and bonus
as of May 31, 2000 exceeded $100,000 for all services rendered in all capacities
to us and our subsidiaries.

Long Term
Compensation Awards
Securities
Name and Fiscal Annual Compensation Underlying
Principal Position Year Salary($) Bonus($) Options (#)
------------------ ---- --------- -------- -----------

A. Lewis Burridge 2000 $116,250 -- --
Chairman, President and 1999 $ 22,769 -- 1,010,000
Chief Executive Officer (1)

Jason M. Genet 2000 $ 84,303 -- 495,000
Executive Vice President & 1999 $ 6,225 -- 5,000
Chief Operating Officer (2)

John D. Roskelley 2000 $ 76,022 -- 300,000
Vice President, Business
Development (3)

Eric J. Strasser 2000 $ 25,151 -- 300,000
Chief Financial Officer (4)

----------
(1) Mr. Burridge was appointed President and Chief Executive Officer effective
March 24, 1999.
(2) Mr. Genet joined us on April 5, 1999.
(3) Mr. Roskelley joined us on June 21, 1999.
(4) Mr. Strasser joined us on February 6, 2000.

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<PAGE>
EMPLOYMENT AGREEMENTS

We have prepared Employment Agreements, containing a range of standard
provisions as set out below, with the executive officers listed below. Standard
agreement provisions include:

* initial employment term of five years, automatically extended for
successive five-year periods if neither we nor the officer provides
the other party with notice of termination;

* officer eligibility to receive an annual bonus of up to 100% of base
salary;

* officer eligibility to receive fringe benefits, including monthly
lease payments for an automobile, as may be accorded other executives
under our established plans and programs;

* officer eligibility to receive a non-qualified stock option to
purchase shares of our stock (as listed below);

* in the event we terminate the officer without cause or if the officer
terminates employment for good reason, we must pay to the officer an
amount equal to five times base salary at the time of termination,
plus any bonus awarded but not yet paid and any deferred bonus.
Officer will be entitled to immediate vesting of all restricted stock
and unvested stock options, and we must continue to pay the cost of
health and welfare benefits for a period of five years;

* in the event of the officer's death or termination for cause, we must
pay an amount equal to base salary earned and unpaid as of the date of
termination; and

* in the event of a change in control, the officer shall be entitled to,
among other benefits, a cash payment equal to three times base salary.

Specific terms for each officer's employment agreement are:

Agreement Initial Term Base Salary as Stock
Name Date Date of June 30, 2000 Options
---- ------------ ------------ ---------------- -------
A. Lewis Burridge June 6, 2000 June 6, 2005 $175,000 1,000,000
Jason M. Genet June 6, 2000 June 6, 2005 $150,000 500,000
John D. Roskelley June 6, 2000 June 6, 2005 $ 90,000 300,000
Eric J. Strasser June 6, 2000 June 6, 2005 $100,000 300,000
Amelia C. Ulep June 6, 2000 June 6, 2005 $ 42,000 115,000

STOCK OPTION PLANS

In April 2000, we adopted the ConSyGen 2000 Combination Stock Option Plan.
This Plan was designed to supplement earlier stock option plans, and to increase
the total number of shares available for issuance within our stock option plans
by 5,000,000 to a total of 10,500,000, either as incentive stock options or
non-qualified stock options. As of August 31, 2000, options to purchase
3,685,577 shares of common stock were outstanding or committed for issuance
under the plan. Specific terms for grants under the Plan are in the discretion
of the Board or the Committee. The standard terms provide that employees'
options become exercisable in 48 equal monthly installments. The standard
maximum term for exercising options is ten years.

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<PAGE>
REPORT ON OPTION RE-PRICINGS

On October 1, 1999, the Board determined that certain stock options issued
to our employees had an exercise price significantly higher than the market
value of our common stock. The Board further noted that employees had suffered
materially through our financial difficulties, including failures to meet
payrolls and remuneration commitments. To redress this situation and to reward
the dedication of the employees, the Board approved a re-pricing of all options
granted to that date, including the named executive officers, to an exercise
price of $0.50, the then fair market value of the common stock. 1,072,250 of the
re-priced options were held by named executive officers, and the weighted
average exercise price of such options was $1.49. Subsequent option grants to
new employees have been at the current market price at the date of each grant.

OPTION GRANTS TO EXECUTIVE OFFICERS IN LAST FISCAL YEAR

The following table sets forth the number of options granted to our named
executive officers during the fiscal year ended May 31, 2000.

<TABLE>
<CAPTION>
Individual Grants
-------------------------------------------------
Potential Realizable Value
Number of % of Total at Assumed Annual Rates of
Securities Options Stock Price Appreciation For
Underlying Granted to Exercise Option Term(1)
Options Employees in Price Expiration ----------------------------
Name Granted(#) Fiscal Year $/Share Date 5%($) 10%($)
---- ---------- ----------- ------- ---- ----- ------
<S> <C> <C> <C> <C> <C> <C>
Jason M. Genet 45,000 1.69% $0.50 07/16/09 52,999 97,720
250,000 9.36% $0.50 01/25/10 1,007,082 1,677,651
200,000 7.49% $0.50 02/01/10 531,034 904,816

John D. Roskelley 50,000 1.87% $0.50 07/21/09 81,693 144,890
50,000 1.87% $0.50 01/25/10 201,416 335,530
200,000 7.49% $0.50 02/01/10 531,034 904,816

Eric J. Strasser 300,000 11.23% $0.50 01/28/10 766,253 1,308,980
</TABLE>

----------
(1) The 5% and 10% assumed rates of annual compounded stock price appreciation
are mandated by the rules of the SEC and do not represent our estimate or
projection of future prices of our common stock or of the potential
realizable value of the options granted.

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<PAGE>
AGGREGATED OPTION EXERCISES OF EXECUTIVE OFFICERS IN LAST FISCAL YEAR AND FISCAL
YEAR-END OPTION VALUES

The following table sets forth the aggregated option exercises and the
aggregated number and value of options exercisable and unexercisable by our
named executive officers during the fiscal year ended May 31, 2000.

<TABLE>
<CAPTION>
Number of Securities Value of Unexercised
Shares Underlying Unexercised In-the-Money
Acquired on Value Options at 5/31/00(#) Options at 5/31/00($)
Name Exercise (#) Realized($) Exercisable/Unexercisable Exercisable/Unexercisable(1)
---- ------------ ----------- ------------------------- ----------------------------
<S> <C> <C> <C> <C> <C> <C>
A. Lewis Burridge -- -- 743,333 266,667 673,460 241,600
Jason M. Genet 162,000 89,210 215,930 166,667 273,612 151,000
John D. Roskelley 30,000 24,124 170,000 100,000 154,020 90,600
Eric J. Strasser 35,000 43,750 165,000 100,000 149,490 90,600
</TABLE>

----------
(1) based on the last quoted price of our common stock at $0.906 on May 31,
2000, as quoted on the National Association of Securities Dealers, Inc's.
OTC Bulletin Board.

CERTAIN TRANSACTIONS

In June 2000, the Stewart Family Trust, Robert L. Stewart and various third
parties entered into a stock purchase agreement pursuant to which the Stewart
Family Trust, an affiliate of ours, and Robert L. Stewart, an affiliate of ours,
agreed to sell 1,300,000 shares of our common stock that they held to these
various third parties. In connection with the stock purchase agreement, the
Stewart Family Trust, of which Robert L. Stewart is the trustee, agreed to cause
us to register the 1,300,000 shares. Accordingly, in June 2000, we entered into
a registration rights agreement with the third parties and agreed to register
the 1,300,000 shares of common stock they purchased from the Stewart Family
Trust and Robert L. Stewart. The 1,300,000 shares of our common stock are being
registered for these various third parties on the Registration Statement, of
which this prospectus is a part. We were otherwise contractually obligated
(unrelated to the foregoing transaction) to file the Registration Statement, of
which this prospectus is a part.

In August 2000, Robert L. Stewart, an affiliate of ours, sold privately
150,000 shares of our common stock to a private investor. Mr. Stewart agreed to
cause us to register such shares for sale by such investor under the Securities
Act of 1933, as amended. Such shares are included in the Registration Statement
of which this prospectus is a part. We were otherwise contractually obligated
(unrelated to the foregoing transaction) to file the Registration Statement, of
which this prospectus is a part.

Between August 31 and October 7, 1999, we received an aggregate of
approximately $199,000 in non-interest-bearing, unsecured loans from Robert L.
Stewart, a Director and affiliate.

On October 1, 1999, we received $150,000 in loan proceeds from a third
party. This loan is secured by a mortgage on property owned by Robert L.
Stewart, an affiliate of ours. This loan bears interest at 2% per month.

39
<PAGE>
PRINCIPAL STOCKHOLDERS

The following table sets forth certain information as of August 31, 2000
concerning the beneficial ownership of our common stock by (i) each of our
directors (ii) each of the named executive officers, (iii) each person who is
known by us to beneficially own more than 5% of the outstanding shares of our
common stock and (iv) all executive officers and directors as a group. This
information is based upon information received from or on behalf of the named
individuals. Each person listed has the sole voting and investment power over
the shares listed as beneficially owned, except as may be set forth in footnotes
to the table.

Number of Shares and Nature Percent of
Name of Beneficial Owner (11) of Beneficial Ownership** Class
----------------------------- ------------------------- -----
A. Lewis Burridge 1,010,000 (1) 3.30%
President & Chief Executive Officer
Chairman of the Board

John L. Caldwell 25,000 (2) *
Director

Jason M. Genet 275,500 (3) *
Chief Operating Officer

Luther H. Hodges 18,333 (4) *
Director

Donald P. Knode 25,000 *
Director

Andrew Lee 25,000 (5) *
Director

John D. Roskelley 232,500 (6) *
Vice President, Business Development

Russell B. Stevenson 11,667 (7) *
Director

Robert L. Stewart 5,414,500 (8) 15.46%
Director

Eric J. Strasser 227,500 (9) *
Chief Financial Officer

Rodney R. Schoemann, Sr. 2,336,242 (10) 7.62%
3904 Wheat Drive
Metarie, LA 70002

All executive officers and Directors 7,265,000 23.09%
as a Group (10 persons)

----------
* Less than 1%.
** Unless otherwise noted, each person identified possesses sole voting and
investment power with respect to the shares listed, except to the extent
shared by spouses under applicable law.

(1) Includes 33,333 shares issuable pursuant to immediately-exercisable stock
options.
(2) Includes 1,250 shares issuable pursuant to immediately-exercisable stock
options.
(3) Includes 41,666 shares issuable pursuant to immediately-exercisable stock
options.
(4) Includes 3,334 shares issuable pursuant to immediately-exercisable stock
options.
(5) Includes 1,250 shares issuable pursuant to immediately-exercisable stock
options.
(6) Includes 25,000 shares issuable pursuant to immediately-exercisable stock
options.
(7) Includes 3,334 shares issuable pursuant to immediately-exercisable stock
options.
(8) Includes 1,000,000 shares held by a Hong Kong corporation controlled by Mr.
Stewart.
(9) Includes 25,000 shares issuable pursuant to immediately-exercisable stock
options.
(10) Includes 700,000 shares issuable pursuant to immediately-exercisable
warrants.
(11) Unless otherwise noted, the address of each person in the table is c/o
ConSyGen, Inc., 125 S. 52nd. St., Tempe, Arizona 85281.

40
<PAGE>
SELLING STOCKHOLDERS

The following table sets forth certain information known to us regarding
beneficial ownership of our common stock as of September 12, 2000 by each
selling stockholder who is offering shares of our common stock under this
prospectus.

Unless otherwise noted below, the address of each person in the table is
c/o ConSyGen, Inc., 125 S. 52nd St., Tempe, Arizona 85281, and each person has
the sole voting and investment power over the shares as beneficially owned
except to the extent authority is shared by a spouse under applicable law and
except as set forth in the footnotes to the table.

We have determined beneficial ownership in accordance with the rules of the
SEC. Shares of common stock subject to warrants or options that are either
currently exercisable or exercisable within 60 days of September 12, 2000 are
treated as outstanding for the purpose of computing the percentage ownership of
the option or warrant holder. However, these shares are not treated as
outstanding for the purpose of computing the percentage ownership of any other
person. For purposes of determining the beneficial ownership after the offering,
we have assumed that all selling stockholders will sell all shares that they are
offering. For purposes of calculating the percentage of beneficial ownership
prior to the offering, the number of outstanding shares is 29,978,503. For
purposes of calculating beneficial ownership after the offering, the number of
outstanding shares is 34,476,503 (which includes the shares issuable upon the
exercise of the warrants and registered for sale under this prospectus).

All shares of common stock being offered by selling stockholders are being
registered under this prospectus pursuant to contractual registration rights or
similar obligations on our behalf, or are being registered voluntarily by us.

<TABLE>
<CAPTION>
Beneficial Ownership Prior to Offering Beneficial Ownership After Offering
----------------------------------------- --------------------------------------
Number of
Name of Number of Percentage Shares Number of Percentage Exercisable
Beneficial Owner Shares of Ownership Being Offered Shares of Ownership Warrants**
---------------- ------ ------------ ------------- ------ ------------ ----------
<S> <C> <C> <C> <C> <C> <C>
Donald A. Aviano 222,416 * 187,416 35,000 * 60,000
Howard R. Baer 1,214,135 4.1 % 812,135 402,000 1.2% 260,000
Ruth & Kevin C. Baer 251,472 * 62,472 189,000 * 20,000
Scott E. Baer 127,944 * 124,944 3,000 * 40,000
Michael J. Bernard 104,000 * 104,000 0 * 52,000
Michael S. Block 126,300 * 96,000 30,300 * 48,000
Frank Ciolli 430,000 1.4% 280,000 150,000 * 140,000
Gloria Ciolli 40,000 * 20,000 20,000 * 10,000
Joseph Ciolli 445,800 1.5% 295,800 150,000 * 147,900
Russell Ciolli 41,000 * 16,000 25,000 * 8,000
Horace B. Clegg 20,000 * 20,000 0 * 10,000
Ira S. Gaines 160,000 * 160,000 0 * 80,000
William S. Garrettson 80,000 * 80,000 0 * 40,000
Brent Garrigus 64,472 * 62,472 2,000 * 20,000
Eric Greenwald 31,236 * 31,236 0 * 10,000
Brad Grossman 23,400 * 13,400 10,000 * 6,700
Sandra A. Hewlett 174,921 * 174,921 0 * 56,000
Daniel E. Hill 4,000 * 4,000 0 * 2,000
</TABLE>

41
<PAGE>
<TABLE>
<CAPTION>
Beneficial Ownership Prior to Offering Beneficial Ownership After Offering
----------------------------------------- --------------------------------------
Number of
Name of Number of Percentage Shares Number of Percentage Exercisable
Beneficial Owner Shares of Ownership Being Offered Shares of Ownership Warrants**
---------------- ------ ------------ ------------- ------ ------------ ----------
<S> <C> <C> <C> <C> <C> <C>
Hayden Holland 165,000 * 160,000 5,000 * 80,000
Kurtis D. Hughes 624,719 2.1% 624,719 0 * 200,000
Michael Kim 80,000 * 80,000 0 * 40,000
Paul J. Landry 81,500 * 80,000 1,500 * 40,000
Brock S. Laubhan 330,360 1.1% 312,360 18,000 * 100,000
Nicholas W. Lees 164,944 * 124,944 40,000 * 40,000
Ken Lehman 140,944 * 124,944 16,000 * 40,000
William Ligenza 180,000 * 150,000 30,000 * 0
Joseph D. Lilly 31,236 * 31,236 0 * 10,000
Brian J. Livingston 216,000 * 216,000 0 * 108,000
Megalomania Investments 240,000 * 240,000 0 * 120,000
Megalomania Investments 300,000 * 300,000 0 * 0
Beli & Sharon Merdovic 124,944 * 124,944 0 * 40,000
Govid S. Mirpuri 640,000 2.1% 640,000 0 * 320,000
Monahan Corporation 400,000 1.3% 400,000 0 * 200,000
Murdock Capital Part. 199,910 * 199,910 0 * 64,000
Carl Nachmann 5,400 * 5,400 0 * 2,700
Dennis Nachmann 33,400 * 13,400 20,000 * 6,700
Northeast Investments 368,584 1.2% 368,584 0 * 118,000
Robert J. Onesti 915,843 3.0% 905,843 10,000 * 290,000
David D. Peralta 62,472 * 62,472 0 * 20,000
Diane & Benjamin Peters 100,000 * 100,000 0 * 0
Robert & Diane Peters 50,000 * 50,000 0 * 0
William & Diane Peters 50,000 * 50,000 0 * 0
Thanace D. Pikoulas 600,775 2.0% 599,775 1,000 * 210,000
Katherine Prior 100,000 * 100,000 0 * 0
R & D Chemical Corp. 100,000 * 100,000 0 * 0
Richards Family Trust 212,141 * 124,941 87,200 * 40,000
Arnold Rosenthal 300,000 1.0% 76,000 224,000 * 38,000
August J. Saccoccio 655,955 2.1% 655,955 0 * 210,000
Gladys S. Salzman 281,124 * 281,124 0 * 90,000
Rodney R. Schoemann, Sr.
3904 Wheat Drive
Metarie, LA 70002 2,336,242 7.6% 2,186,517 149,725 * 700,000
Scott's Generations Rest. 60,000 * 60,000 0 * 30,000
Gene Snyder 60,000 * 60,000 0 * 30,000
Alexander Sonkin 40,000 * 40,000 0 * 20,000
Therese & David Sweet 50,000 * 50,000 0 * 0
Therese & Jennifer Sweet 50,000 * 50,000 0 * 0
Therese & Robert Sweet 100,000 * 100,000 0 * 0
Brian T. Timmins 62,472 * 62,472 0 * 20,000
</TABLE>

42
<PAGE>
<TABLE>
<CAPTION>
Beneficial Ownership Prior to Offering Beneficial Ownership After Offering
----------------------------------------- --------------------------------------
Number of
Name of Number of Percentage Shares Number of Percentage Exercisable
Beneficial Owner Shares of Ownership Being Offered Shares of Ownership Warrants**
---------------- ------ ------------ ------------- ------ ------------ ----------
<S> <C> <C> <C> <C> <C> <C>
Steven A. Tseffos 142,444 * 124,944 17,500 * 40,000
Ralph Vossler 281,124 * 281,124 0 * 90,000
Doris Vujea Rev. Trust 50,000 * 50,000 0 * 0
Robert & Cynthia Vujea 100,000 * 100,000 0 * 0
Robert Vujea Rev. Trust 100,000 * 50,000 0 * 0
Robert Vujea, cust. For
Katerina Vujea 50,000 * 50,000 0 * 0
Robert Vujea, cust. For
Matthew Vujea 50,000 * 50,000 0 * 0
Robert Vujea, cust. For
Michael Vujea 50,000 * 50,000 0 * 0
Christopher J. Wells 93,708 * 93,708 0 * 30,000
Arlene West & Burt
Alimansky 279,888 * 249,888 30,000 * 80,000
Robert Williky 40,000 * 40,000 0 * 20,000
</TABLE>

----------
* Less than 1% of our outstanding common stock.
** Number of shares issuable upon the exercise of immediately-exercisable
warrants to purchase shares of our common stock.

43
<PAGE>
DESCRIPTION OF CAPITAL STOCK

Our authorized capital stock consists of 40,000,000 shares of common, $.003
par value per share. We do not have authorization for the issue of preferred
stock.

COMMON STOCK

As of September 12, 2000, there were 29,978,503 shares of common stock
outstanding, held of record by approximately 423 stockholders.

The holders of our common stock are entitled to one vote per share on all
matters to be voted on by stockholders and are entitled to receive such
dividends, if any, as may be declared from time to time by the Board of
Directors from funds legally available therefor. The holders of our common stock
do not have cumulative voting rights in the election of directors. Upon
liquidation or dissolution, the holders of our common stock are entitled to
receive all assets available for distribution to the stockholders. Our common
stock has no preemptive or other subscription rights, and there are no
conversion rights or redemption or sinking fund provisions with respect to such
shares. All of our shares of common stock are fully paid and non-assessable.

REGISTRATION RIGHTS

All of the 13,646,000 shares being registered for sale by the selling
stockholders, including 4,498,000 shares issuable upon exercise of the warrants
which are being registered for sale by certain stockholders, are being
registered voluntarily or pursuant to contractual obligations and registration
rights granted to such selling stockholders.

WARRANTS

As at August 31, 2000, there were outstanding warrants to purchase an
aggregate of 4,613,000 shares of our common stock, including warrants to
purchase 4,498,000 shares of our common stock issued in connection with our
January, 2000 private offering, which shares are being registered for sale by
the Registration Statement of which this prospectus is a part, and additional
outstanding warrants for 115,000 shares of our common stock issuable to the
holders of our 6% Convertible Debentures, which are not included in the
Registration Statement of which this prospectus is a part.

In addition, in January 2000 we entered into an agreement with a
consultant, Saviar and Spaeth Enterprises. Among other things, the Agreement
provided that we were to issue to the consultant warrants to purchase 1,100,000
shares of our common stock, at a weighted average exercise price of $0.43 per
share, in consideration for services to be provided by the consultant. We do not
believe that the consultant fulfilled his obligations under the Agreement and,
accordingly, have not issued the Warrants to the consultant. The consultant,
through its attorney, has demanded $2.5 million to settle the matter. We do not
believe the consultant is entitled to the $2.5 million. We intend to vigorously
defend any claim made by the consultant, but can give you no assurance as to the
outcome of this dispute, which could result in substantial dilution to our
stockholders.

LIMITATION OF OFFICERS' AND DIRECTORS' LIABILITY; INDEMNIFICATION AGREEMENTS

Our Articles of Incorporation, as amended, and By-Laws eliminate, subject
to certain exceptions, the personal liability of our directors to the company or
to our stockholders for monetary damages for breaches of fiduciary duties as
directors to the extent permitted by state law. The Articles of Incorporation
and By-Laws do not provide for the elimination of or any limitation on the
personal liability of a director for intentional misconduct, or in situations
where a director is found not to have acted in good faith or where liability is
prescribed by law. These provisions of the Articles of Incorporation and By-Laws
may limit the remedies available to a stockholder in the event of breaches of
any director's duties to such stockholder or the company.

44
<PAGE>
We have entered into indemnification agreements with each of our directors
and officers. The indemnification agreements provide that we will pay certain
amounts incurred by a director or officer in connection with any civil or
criminal action or proceeding and specifically including actions by or in the
name of the company (derivative suits) where the individual's involvement is by
reason of the fact that he is or was a director or officer. Such amounts
include, to the maximum extent permitted by law, attorney's fees, judgments,
civil or criminal fines, settlement amounts and other expenses customarily
included in connection with legal proceedings. Under the indemnification
agreements, a director or officer will not receive indemnification if he is
found not to have acted in good faith in the reasonable belief that his action
was in the best interests of the company.

TRANSFER AGENT AND REGISTRAR

Our Transfer Agent and Registrar is Interwest Transfer, Inc., Salt Lake
City, Utah.

45
<PAGE>
SHARES ELIGIBLE FOR FUTURE SALE

As of September 12, 2000, we had approximately 29,978,503 shares of common
stock outstanding, which does not include the 4,498,000 shares issuable upon
exercise of outstanding warrants and registered for sale pursuant to the
Registration Statement of which this prospectus is a part.

Upon the effectiveness of the Registration Statement of which this
prospectus is a part, assuming the prior exercise of the outstanding warrants
for which the underlying shares of common stock are being registered for sale
hereunder, approximately 28,174,841 shares will be freely tradable without
restriction under the Securities Act of 1933, as amended. In addition, subject
to certain volume and other limitations, approximately 5,431,500 shares are
currently eligible for sale under Rule 144, including 5,414,500 shares which are
held by one of our affiliates, and approximately 718,012 shares are eligible for
public sale without registration, pursuant to Rule 144.

We have 4,498,000 shares issuable upon exercise of outstanding warrants
under our January, 2000 private offering, which are being registered for sale,
following the private exercise of the warrants, under the Registration Statement
of which this prospectus is a part. The weighted average purchase price of these
outstanding warrants to purchase 4,498,000 shares of our common stock is $1.50
per share. If the convertible debentures were converted as of August 31, 2000,
an additional 3,078,740 shares of our common stock would have been issued. We
also have outstanding options to purchase 5,634,321 shares of our common stock
at a weighted average exercise price of $1.283 per share.

The sale of even a small number of the outstanding shares of common stock
may have a material adverse effect on the quoted price of our common stock. The
sale of any such shares may also have a material adverse effect on our ability
to raise capital and/or materially adversely affect the quoted price of our
common stock.

In general, under Rule 144, a person who has beneficially owned restricted
securities for at least one year would be entitled to sell within any
three-month period a number of shares that does not exceed the greater of:

- one percent of the number of shares of common stock then outstanding,
or
- the average weekly trading volume of the common stock during the four
calendar weeks preceding the sale.

Sales under Rule 144 are also subject to requirements with respect to the
manner of sale, notice and availability of current public information about us.
Under Rule 144(k), a person who is not deemed to have been our affiliate at any
time during the three months preceding a sale, and who has beneficially owned
the shares proposed to be sold for at least two years, is entitled to sell such
shares without complying with the manner of sale, public information, volume
limitations or notice provisions of Rule 144.

46
<PAGE>
PLAN OF DISTRIBUTION

The selling shareholders are selling an aggregate of 13,646,000 shares,
which includes 4,498,000 shares of common stock, which shares are being
registered for sale upon the private exercise of outstanding warrants by the
Registration Statement of which this prospectus is a part.

The price and manner of sale of the shares of our common stock offered by
the selling stockholders under this prospectus are in the sole discretion of the
selling stockholders. The shares of common stock offered under this prospectus
may be offered through any of several methods, such as ordinary brokerage
transactions at market prices or in privately negotiated transactions at prices
agreed upon by the parties. We do not have, nor, to our knowledge, do the
selling stockholders have, any agreement, arrangement or understanding with any
broker or dealer entered into prior to the effective date of the Registration
Statement of which this prospectus is a part with respect to the sale of the
common stock offered under this prospectus.

LEGAL MATTERS

Brown, Rudnick, Freed & Gesmer, Boston, Massachusetts will pass for us upon
certain legal matters in connection with this offering.

EXPERTS

Our consolidated balance sheet as of May 31, 2000, and our consolidated
statements of income, changes in stockholders' equity, and cash flows for the
years ended May 31, 1999 and 2000 included in the Registration Statement and in
this prospectus have been included in reliance on the report of King, Weber and
Associates, P.C., independent accountants, given on the authority of that firm
as experts in accounting and auditing.

On September 22, 1998, we dismissed our independent auditors, Wolinetz,
Gottlieb & Lafazan, P.C. The reason for the dismissal was the inconvenience of
the distance between our offices, which are located in Tempe, Arizona, and the
offices of Wolinetz, Gottlieb & Lafazan, P.C., which are located in Rockville
Centre, New York. Our Board of Directors determined that it was preferable to
engage a local auditing firm.

On September 22, 1998, we executed an engagement letter with our new
auditor, King, Weber & Associates, P.C., certified public accountants, 1400 East
Southern Avenue, Suite 235, Tempe, Arizona 85282. Our stockholders approved
King, Weber & Associates, P.C. at the Annual Meeting of Stockholders held on
November 12, 1998.

The reports of Wolinetz, Gottlieb & Lafazan P.C. for the fiscal year ended
May 31, 1998, the five months ended May 31, 1997, and the fiscal year ended
December 31, 1996 contained no adverse opinion or disclaimer of opinion, and
were not qualified or modified as to uncertainty, audit, scope, or accounting
principles, except that such reports were qualified as to the uncertainty
relating to our ability to continue as a going concern. We had no disagreements
with Wolinetz, Gottlieb & Lafazan, P.C. during any of the above-mentioned fiscal
periods or for the subsequent interim period preceding the engagement of King,
Weber & Associates, P.C. on any matter of accounting principles or practices,
financial statement disclosure, or auditing scope or procedure.

47
<PAGE>
ADDITIONAL INFORMATION

We have filed with the SEC a Registration Statement on Form SB-2 under the
Securities Act of 1933 registering the common stock to be sold in this offering.
As permitted by the rules and regulations of the SEC, this prospectus does not
contain all of the information set forth in the Registration Statement and the
exhibits and schedules filed as part of the Registration Statement. For further
information concerning us or concerning the common stock to be sold in this
offering, please refer to the Registration Statement and the exhibits and
schedules filed as part of this Registration Statement. We also file periodic
reports with the SEC, including quarterly reports, annual reports that include
our audited financial statements, and proxy statements. The Registration
Statement, including all of our periodic reports, may be inspected without
charge at the SEC's principal office at 450 Fifth Street, N.W., Washington, D.C.
20549, and at its regional offices located at Seven World Trade Center, New
York, New York 10007, and 500 West Madison Street, Suite 1400, Chicago, Illinois
60661. You may obtain copies at prescribed rates from the Public Reference Room
of the SEC at 450 Fifth Street, N.W., Washington, D.C. 20549, and you may obtain
more information on the operation of the Public Reference Room by calling the
SEC on (800) SEC-0330. The Securities and Exchange Commission maintains a World
Wide Web site on the Internet that contains Registration Statements, reports,
proxy and information statements and other information regarding registrants
that file electronically with the Securities and Exchange Commission at the
address http://www.sec.gov.

We intend to distribute to our stockholders annual reports containing
consolidated financial statements audited by our independent accountants and
will make available copies of quarterly reports for the first three quarters of
each fiscal year containing unaudited consolidated financial information.

48
<PAGE>
-----------------------------

INDEX TO FINANCIAL STATEMENTS

CONSOLIDATED FINANCIAL STATEMENTS

EXHIBITS

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

YEAR ENDED MAY 31, 2000

ConSyGen, Inc.

TEMPE, ARIZONA

Index to Consolidated Financial Statements

Page Number
-----------

Report of Independent Accountants ................................... F-2

Consolidated Balance Sheets as of
May 31, 2000. ....................................................... F-3

Consolidated Statements of Operations
for year ended May 31, 2000 and May 31, 1999. ....................... F-4

Consolidated Statements of Stockholders' Deficit
for the year ended May 31, 2000 and May 31, 1999. ................... F-5

Consolidated Statements of Cash Flows for
the year ended May 31, 2000 and May 31, 1999. ....................... F-6

Notes to Consolidated Financial Statements .......................... F-8

F-1
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS

The Board of Directors and Stockholders
ConSyGen, Inc.

We have audited the accompanying consolidated balance sheet of ConSyGen, Inc.
and its subsidiary as of May 31, 2000 and the related consolidated statements of
operations, changes in stockholders' equity (deficit), and cash flows for each
of the two years in the period ended May 31, 2000. These financial statements
are the responsibility of the Company's management. Our responsibility is to
express an opinion on these financial statements based on our audit.

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

In our opinion, the financial statements referred to above present fairly, in
all material respects, the consolidated financial position of ConSyGen, Inc. and
its subsidiary as of May 31, 2000, and the consolidated results of their
operations and their cash flows for each of the two years in the period ended
May 31, 2000, in conformity with generally accepted accounting principles.

The accompanying consolidated financial statements have been prepared assuming
that the Company will continue as a going concern. As discussed in Note 1 to the
financial statements, the Company has incurred recurring material losses from
operations, has not generated significant revenue from its new product lines and
has material current debt. These matters raise substantial doubt about the
Company's ability to continue as a going concern. Management's plans in this
regard are described in Note 1. The financial statements do not include any
adjustments that might result from the outcome of this uncertainty.

/s/ KING, WEBER & ASSOCIATES, P.C.

Phoenix, Arizona
August 15, 2000

F-2
<PAGE>
CONSYGEN, INC.
CONSOLIDATED BALANCE SHEET

May 31, 2000
ASSETS ------------
Current Assets:
Cash and Cash Equivalents $ 3,605
Accounts Receivable 49,462
Inventory 412,338
Prepaid Expenses 24,855
Other Current Assets 13,043
------------
Total Current Assets 503,303
------------
Property and Equipment - Net 1,230,928
------------
Other Assets:
Net Debt Issuance Costs 212,676
Other Assets 41,306
------------
Total Other Assets 253,982
------------
Total Assets $ 1,988,213
============

LIABILITIES AND STOCKHOLDERS' DEFICIT

Current Liabilities:
Accounts Payable $ 335,477
Notes Payable 413,369
Accrued Payroll and Related Liabilities 346,825
Other accrued liabilities 929,408
Capital Lease - Current Portion 21,740
Mortgage - Current Portion 754,665
------------
Total Current Liabilities 2,801,484

Convertible Debentures 1,838,000
Capital lease - Long Term Portion 48,828
Mortgage - Long Term Portion 521,508
------------
Total Liabilities 5,209,820
------------
Commitments & Contingencies

Stockholders' Deficit:
Common Stock, $.003 par Value, Authorized
40,000,000 Shares, Issued 24,003,361 72,010
Additional Paid-in Capital 31,171,438
Accumulated Deficit (34,065,055)
Treasury Stock, at cost (70,000 shares) (400,000)
------------
Total Stockholders' Deficit (3,221,607)
------------
Total Liabilities and Stockholders' Deficit $ 1,988,213
============

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

F-3
<PAGE>
CONSYGEN, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS

For The Year Ended May 31,
------------------------------
2000 1999
------------ ------------

Revenues $ 146,424 $ 33,380
------------ ------------
Costs and Expenses:
Cost of Sales 45,228 4,526
Software Research and Development 360,000 622,134
Selling, General and Administrative
Expenses 6,262,267 3,955,674
Interest Expense 663,445 227,046
Depreciation and Amortization 166,626 203,863
------------ ------------
Total Costs and Expenses 7,497,566 5,013,243
------------ ------------
Loss from Operations (7,351,142) (4,979,863)

Interest Income 22,474 131,131
------------ ------------

Loss from Continuing Operations $ (7,328,668) (4,848,732)

Loss from Discontinued Operation (14,154) (97,073)
------------ ------------
Net Loss $ (7,342,822) $ (4,945,805)
============ ============
Loss Per Common Share:
Weighted Average Common Shares Outstanding 17,461,779 15,363,146
============ ============
Basic:
Continuing Operations $ (0.42) $ (0.32)
Discontinued Operations * *
------------ ------------
(0.42) (0.32)
============ ============
Diluted:
Continuing Operations $ (0.42) $ (0.32)
Discontinued Operations * *
------------ ------------
(0.42) (0.32)
============ ============
* - Less than $0.01

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

F-4
<PAGE>
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY (DEFICIT)
FOR THE YEARS ENDED MAY 31, 2000 AND 1999

<TABLE>
<CAPTION>
Common Stock Additional Total
------------------- Paid-In Accumulated Treasury Stockholders'
Shares Amount Capital Deficit Stock Equity (Deficit)
---------- ------- ----------- ------------ --------- ----------------
<S> <C> <C> <C> <C> <C> <C>
Balance - June 1, 1998 15,407,653 $46,223 $25,134,310 $(21,776,428) $(400,000) $ 3,004,105

Issuance of Common Stock -
Stock Options Exercised 67,448 202 89,728 -- -- 89,930

Net Loss -- -- -- (4,945,805) -- (4,945,805)
---------- ------- ----------- ------------ --------- -----------
Balance - May 31, 1999 15,475,101 $46,425 $25,224,038 $(26,722,233) $(400,000) $(1,851,770)

Issuance of Common Stock -
Stock Options Exercised 2,168,363 6,505 606,251 -- -- 612,756

Issued for Cash 4,107,046 12,324 942,176 -- -- 954,500

Conversion of Debentures 1,871,897 5,616 2,002,717 -- -- 2,008,333

Issued to consultant as
consideration for services 50,000 150 54,540 -- -- 54,690

Employee compensation for
stock options granted -- -- 1,164,348 -- -- 1,164,348

Value of options issued to
Consultants -- -- 1,178,358 -- -- 1,178,358

Net Loss -- -- -- (7,342,822) -- (7,342,822)
---------- ------- ----------- ------------ --------- -----------
Balance - May 31, 2000 23,673,307 $71,020 $31,172,428 $(34,065,055) $(400,000) $(3,221,607)
========== ======= =========== ============ ========= ===========
</TABLE>

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

F-5
<PAGE>
CONSYGEN, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS

<TABLE>
<CAPTION>
For The Year Ended May 31,
-----------------------------
2000 1999
----------- -----------
<S> <C> <C>
Cash Flows from Operating Activities:
Net Loss $(7,342,822) $(4,945,805)
Adjustments to Reconcile Net Loss to
Net Cash (Used) by Operating Activities:
Depreciation 182,875 140,962
Stock Issued for Consultants for Services 1,233,048 --
Loss from discontinued operation 14,154 97,073
Value of employee stock options recognized
as compensation expense 1,164,348 --
Write-off of investment in technology 230,000 --
Loss on disposal of property and equipment 6,032 --
Amortization of Debt Issuance Costs 64,400 62,901
Changes in Operating Assets and Liabilities:
Accounts Receivable (49,462) 54,467
Inventory (251,018) (161,320)
Prepaid Expenses and Other Assets (30,081) (22,436)
Accounts Payable 285,151 (62,614)
Accrued Payroll and other Liabilities 984,980 428,716
----------- -----------
Net Cash Provided/(Used) by Continuing Operations (3,508,395) (4,408,056)
Net Cash Provided/(Used) by Discontinued Operations (5,720) 157,001
----------- -----------
Net Cash Provided/(Used) by Operating Activities (3,514,115) (4,251,055)
----------- -----------
Cash Flows from Investing Activities:
Redemption/(purchase) of certificate of deposit as
collateral on letter of credit 467,208 (467,208)
Investment in technology (230,000) --
Proceeds from sale of property and equipment 2,975 --
Purchases of property and equipment (95,561) (240,638)
----------- -----------
Net Cash Provided/(Used) by Investing Activities 144,622 (707,846)
----------- -----------
Cash Flows from Financing Activities:
Payments on Capital Lease Obligations (14,008) 620,640
Proceeds from Sale of Common Stock 954,500 --
Proceeds from Debt Collateralized by Building 740,000 --
Payments on Mortgage Payable (12,827) --
Payments on Notes Payable (72,987) (3,795)
Proceeds of Loans payable -- Related Parties 458,256 --
Payments of Loans payable -- Related Parties (31,900) --
Payments of Debt Financings -- --
Proceeds of Stock Options Exercised 612,756 89,930
----------- -----------
Net Cash Provided/(Used) by Financing Activities 2,633,790 706,775
----------- -----------
Net Increase/(Decrease) in Cash and
Cash Equivalents (735,703) (4,252,126)

Cash and Cash Equivalents -- Beginning of Period 739,308 4,991,434
----------- -----------
Cash and Cash Equivalents -- End of Period $ 3,605 739,308
=========== ===========
</TABLE>

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

F-6
<PAGE>
CONSYGEN, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Continued)

For The Year Ended May 31,
-----------------------------
2000 1999
----------- -----------

Supplemental Cash Flow Information:

Cash Paid for Interest $ 165,458 $ 6,988
=========== ===========
Cash Paid for Income Taxes $ -- $ --
=========== ===========
Supplemental Disclosure of Non-Cash
Financing Activities:

Conversion of Debt $ 1,662,000 $ --
=========== ===========
Issuance of Common Stock as payment of
accrued interest on Convertible Debentures $ 168,351 $ --
=========== ===========

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

F-7
<PAGE>
CONSYGEN, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MAY 31, 2000

NOTE 1 - OPERATIONS AND BASIS OF PRESENTATION

HISTORY OF CONSYGEN, INC.

ConSyGen, Inc., a Texas Corporation ("ConSyGen-Texas'), was incorporated on
September 28, 1988 as C Square Ventures, Inc. ConSyGen-Texas was formed for
obtaining capital in order to take advantage of domestic and foreign business
opportunities, which might have profit potential. On March 16, 1989,
ConSyGen-Texas (then C Square Ventures, Inc.) completed an initial public
offering.

On September 5, 1996, ConSyGen-Texas acquired 100% of the issued and
outstanding shares of ConSyGen, Inc., a privately held Arizona corporation
formed on October 11, 1979 ("ConSyGen-Arizona") ("the acquisition"). On June 25,
1996, International Data Systems, Inc. changed its name to ConSyGen, Inc. In
connection with the acquisition, ConSyGen-Texas issued an aggregate of 9,275,000
shares of its common stock directly to the stockholders of ConSyGen-Arizona in
exchange for all of the issued and outstanding shares of ConSyGen-Arizona (see
Notes 11 and 12). As a result of the acquisition, ConSyGen-Arizona became a
wholly-owned subsidiary of ConSyGen-Texas. The transaction has been treated as a
reverse acquisition (purchase) with ConSyGen-Arizona being the acquirer and
ConSyGen-Texas being the acquired company. Subsequent to the acquisition,
ConSyGen-Texas changed its name to ConSyGen, Inc. ConSyGen-Texas and its
wholly-owned subsidiary ConSyGen-Arizona are hereafter collectively referred to
as the "Company".

DESCRIPTION OF BUSINESS

The Company had previously concentrated its efforts rendering automated
software conversion services, including "year 2000" remediation services. As the
market for those services began to diminish, the Company began research and
development of other software products. The Company also introduced a
counterfeit detection device called the Counterfeit COP. As of May 31, 2000, the
Company has not generated significant revenue from new software products.
Revenue from continuing operations for the year ended May 31, 2000 represents
sales of the Counterfeit COP product. The Company sells the Counterfeit Cop
product to distributors with national distribution channels.

BASIS OF PRESENTATION

The accompanying financial statements have been prepared on a going concern
basis which contemplates the realization of assets and satisfaction of
liabilities in the normal course of business. The Company has suffered material
recurring losses from operations and has had difficulty meeting its short-term
obligations. These factors raise substantial doubt about the Company's ability
to continue as a going concern. Continuation of the Company is dependent on (1)
achieving sufficiently profitable operations and (2) obtaining adequate
financing. The Company has made significant strides towards profitability, and
has three master distributor contracts in place for the Counterfeit Cop.
However, the Company has incurred a cash deficiency of approximately $3,500,000
from operations during the year ended May 31, 2000, and there can be no
assurance that the contracts already in place will support the Company through a
full year of operations. Management is attempting to raise additional capital
from various sources and is positioning the Company to move into other product
lines and technologies. However, there can be no assurances that the Company
will be successful in accomplishing these objectives. The financial statements
do not include any adjustments relating to the recoverability and classification
of assets and liabilities that might be necessary should the Company be unable
to continue as a going concern.

F-8
<PAGE>
CONSYGEN, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MAY 31, 2000

NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

PRINCIPLES OF CONSOLIDATION

The consolidated financial statements include the accounts of
ConSyGen-Texas and its wholly-owned subsidiary, ConSyGen-Arizona. Significant
inter-company accounts and transactions have been eliminated in consolidation.

USE OF ESTIMATES

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

RECLASSIFICATIONS

Certain items in prior year financial statements have been reclassified to
conform to the current period presentation.

REVENUE RECOGNITION

Revenues from fixed-price contracts are principally recognized on
achievement of specified performance milestones negotiated with customers. This
method, which recognizes revenues on substantially the same basis as the
percentage-of-completion method, is used because management considers milestones
to be the best available measure of progress on these contracts. Provision for
estimated losses on uncompleted contracts is made in the period in which such
losses are determinable.

Revenue for "Counterfeit Cop" product sales is recognized upon product
shipment to customers and resellers.

CASH AND CASH EQUIVALENTS

The Company considers all highly liquid investments with a maturity of
three months or less at the time of purchase to be cash equivalents. The
carrying amount of all cash and cash equivalents approximates fair value because
of the short-term maturity of these instruments.

PROPERTY AND EQUIPMENT

Property and equipment is stated at cost, less accumulated depreciation.
Depreciation is computed principally by the straight-line method over the
estimated useful lives of the related assets, which ranges from three to ten
years except real property which is depreciated over 40 years.

DEBT ISSUANCE COSTS

Costs associated with the Company's debt financing transactions have been
capitalized. Such costs are being amortized over the terms of the related
agreements. At May 31, 2000, debt issuance costs are amortized over a 5 to 15
year period.

F-9
<PAGE>
CONSYGEN, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MAY 31, 2000

RESEARCH AND DEVELOPMENT

Research and development expenditures, including the cost of software
development, are expensed as incurred.

INVENTORIES

Inventories consist of units of the Company's "Counterfeit Cop" and work in
process on certain unbilled and unearned service contracts. Counterfeit Cop
inventory is recorded at the lower of cost or market on a FIFO (first-in,
first-out) basis.

STOCK-BASED COMPENSATION

Statements of Financial Accounting Standards No. 123, ACCOUNTING FOR STOCK-BASED
COMPENSATION, ("SFAS 123") established accounting and disclosure requirements
using a fair-value based method of accounting for stock-based employee
compensation. In accordance with SFAS 123, the Company has elected to continue
accounting for stock based compensation using the intrinsic value method
prescribed by Accounting Principles Board Opinion No. 25, "Accounting for Stock
Issued to Employees." The pro forma effect of the fair value method is discussed
in Note 10.

FINANCIAL INSTRUMENTS

Financial instruments consist primarily of cash, accounts receivable, and
obligations under accounts payable, accrued expenses, debentures, notes payable,
mortgage debt and capital lease instruments. The carrying amounts of cash,
accounts receivable, accounts payable and accrued expenses approximate fair
value because of the short maturity of those instruments. The carrying value of
the Company's capital lease arrangements approximates fair value because the
instruments were valued at the retail cost of the equipment at the time the
Company entered into the arrangements. Because the mortgage debt was recently
incurred, the estimated fair value of the mortgage debt approximates the
outstanding principal balance at May 31, 2000. The fair value of the related
party notes payable cannot be estimated because of the affiliated nature of the
agreements. The fair value of the convertible debentures could not be estimated
because of the convertible features of the debentures and the matters discussed
in Note 6.

INCOME TAXES

The Company accounts for income taxes under SFAS No. 109, ACCOUNTING FOR
INCOME TAXES. In accordance with SFAS No. 109, deferred tax assets and
liabilities are established for the temporary differences between the financial
reporting basis and the tax basis of the Company's assets and liabilities at
enacted tax rates expected to be in effect when such amounts are realized or
settled.

F-10
<PAGE>
CONSYGEN, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MAY 31, 2000

LOSS PER SHARE

Net loss per share is calculated using the weighted average number of
shares of common stock outstanding during the year. In 1998, the Company adopted
SFAS No. 128 EARNINGS PER SHARE the effect of which was not material.

Convertible debt (Note 6) and outstanding options (Note 10) were not
considered in the calculation for diluted loss per share for the years ended May
31, 2000 and 1999 because the effect of their inclusion would be anti-dilutive.
The following presents the computation of basic and diluted loss per share from
continuing operations:

<TABLE>
<CAPTION>
(Loss) Shares Per share (Loss) Shares Per share
------ ------ --------- ------ ------ ---------
<S> <C> <C> <C> <C> <C> <C>
Net (Loss) $(7,342,822) $(4,945,805)
Preferred stock dividends -- --
Discontinued operations 14,154 97,073
----------- -----------
Loss from continuing
operations (7,328,668) (4,848,732)

BASIC LOSS PER SHARE

Loss available to common
stockholders $(7,328,668) 17,461,779 $(0.42) $(4,848,732) 15,363,146 $(0.32)
----------- ---------- ------ ----------- ---------- ------
Effect of dilutive securities N/A N/A

DILUTED LOSS PER SHARE $(7,328,668) 17,461,779 $(0.42) $(4,848,732) 15,363,146 $(0.32)
----------- ---------- ------ ----------- ---------- ------
</TABLE>

Debentures convertible to 1,584,673 shares of common stock and options and
warrants to purchase 9,880,102 shares of common stock were outstanding at May
31, 2000. Debentures convertible to 3,051,929 shares of common stock and options
and warrants to purchase 2,109,260 shares of common stock were outstanding at
May 31, 1999. These securities were excluded from the computation of diluted
earnings per share because the effect of their inclusion would be anti-dilutive.

ADVERTISING EXPENSES

The Company expenses its advertising expenses as incurred. Advertising
expense totaled $29,609 and $301,970 for the years end May 31, 2000 and 1999
respectively. Advertising expense is included in selling general and
administration expenses in the accompanying statements of operations.

F-11
<PAGE>
CONSYGEN, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MAY 31, 2000

NOTE 3 - PROPERTY AND EQUIPMENT

Property and equipment consists of the following:

2000
----------
Land $ 152,792
Building and improvements 743,511
Computers 668,560
Furniture and fixtures 141,711
Automobile 20,171
----------
1,726,745

Less: Accumulated depreciation 495,817
----------
$1,230,928
==========

Total property and equipment includes $69,699 under capital leases at May
31, 2000. Related accumulated amortization on these leases was $16,131.

NOTE 4 - NOTES PAYABLE

Notes payable consist of the following:

May 31, 2000
------------
Note payable, bearing interest at 10% per
Annum, no stated maturity and unsecured. $ 30,000

Note payable, non-interest bearing,
payable on demand, and unsecured. As
additional consideration to the lender for
making the loan, the Company issued 25,000
shares of its common stock to the lender. 25,000

Note payable, non-interest bearing,
payable on demand and unsecured. 5,000

Notes payable to officers and directors,
non-interest bearing, payable on demand,
and unsecured. 278,369

Note payable, due January 1, 2000 interest
at 24% per annum, collateralized by a
personal guarantee by a director. 75,000
--------
Total notes payable $413,369
========

F-12
<PAGE>
CONSYGEN, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MAY 31, 2000

NOTE 5 - MORTGAGE

On April 6, 1999, the Company obtained a mortgage on its building for
$550,000. The loan bears interest at 13% and is payable over a 15-year period in
monthly principal and interest payment of $6,959.

In the year ended May 31, 2000, the Company borrowed additional amounts
from outside parties using the building and related land as collateral on such
borrowings. During the year ended May 31, 2000, the Company borrowed $740,000
and provided second mortgages on such amounts. The notes bear interest ranging
from 18% to 24% per annum. These notes also were issued at discounts totaling
$158,776. Due to the short term nature of the debt, the discounts have been
amortized as interest expense in the accompanying statement of operations for
the year ended May 31, 2000.

The following represents future principal payments for mortgages and other
debt for the years ending May 31:

Convertible
Mortgage Notes Payable Debentures Total
-------- ------------- ---------- -----
2001 $ 754,665 $ 413,369 $ -- $1,168,034
2002 16,689 16,689
2003 18,993 1,838,000 1,856,993
2004 21,614 21,614
2005 24,598 24,598
thereafter 439,614 -- -- 439,614
---------- ---------- ---------- ----------
Total 1,276,173 413,369 1,838,000 3,527,542
Less current portion 754,665 413,639 -- 1,168,034
---------- ---------- ---------- ----------
Long-term portion $ 521,508 $ -- $1,838,000 $2,359,508
========== ========== ========== ==========

NOTE 6 - CONVERTIBLE DEBENTURES

On May 29, 1998, the Company completed a private placement of $3,500,000 in
principal amount of convertible debentures. The debentures bear interest at 6%
per annum and have a maturity date of May 29, 2003. The debentures include
warrants to purchase 105,000 shares of the Company's common stock ("Warrant
Shares"). The aggregate net proceeds to the Company after payment of finders'
fees and expenses was approximately $3,200,000. Included in the finders' fees
paid in connection with the placement of the convertible debentures, the Company
issued warrants to purchase 10,000 shares of its common stock.

The Company entered into a dispute with the four debenture holders in
September 1998. The holders submitted requests for conversion of the debentures
and the Company would not honor that request. The dispute had led to claims and
counter claims filed by both parties in Canadian and U.S. courts. On April 11,
2000, the Company entered into a settlement agreement with the debenture holders
settling all claims by all parties. The Company agreed to honor the terms of the
debentures and to pay damages to the debenture holders of $350,000. The damages
may be paid in shares of the Company's common stock. During the year ended May
31, 2000, principal amounts of the debentures totaling $1,662,000 were converted
to 1,548,678 shares of the Company's common stock. Additionally, the Company
issued 323,219 shares of its common stock as payment of accrued interest and
damages.

F-13
<PAGE>
CONSYGEN, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MAY 31, 2000

The debentures are convertible into the Company's common stock at a rate
equal to the lesser of $4.88 per share or 80% of the average closing bid price
of the common stock for the five day period immediately preceding the applicable
conversion date. The warrants are exercisable at a rate of $4.88 per share and
may be exercised as to one third of the Warrant Shares at any time after May 29,
1998, as to another one third, after November 29, 1998, as to the remaining one
third after May 29, 1999. The warrants expire on May 29, 2003.

The debentures may be converted at any time after 120 days from issue by
the holder through the maturity date. Mandatory conversion is effected on the
maturity date if the debentures have not yet been converted as of that date. The
debentures contain certain restrictions on future borrowings, allow for interest
to be paid in additional shares of the Company's common stock. If the remaining
principal amount of the debentures at May 31, 2000 were converted into common
stock at such date, approximately 2.2 million shares of common stock would have
been issued to the debenture holders.

The debt was recorded at the face amount of the debentures. The initial
conversion rate of the debentures and the exercise price of the warrants were at
rates equal to or greater than the quoted market price of the Company's common
stock at the date of issuance. Management believes that there was no value to
ascribe to the warrants at the time of issuance.

The debentures are to be repaid by conversion into common stock except in
the event of default, in which case, repayment is to be made in cash. The
Company has incurred several events of default as defined by the debenture. The
defaults relate to the failure to make interest payments and failure to honor
the holders' request to convert the debentures. Accordingly, as stated in the
debenture agreement, at May 31, 1999, the debt was classified as current. At May
31, 2000, the remaining debt was classified as long-term.

NOTE 7 - COMMITMENTS AND CONTINGENCIES

OPERATING LEASES

The Company leases certain computer equipment under a non-cancelable
operating lease, which expires in 2002. Rental expense under this operating
lease was $4,240 for the year ended May 31, 2000. Future minimum rental
commitments are as follows for the years ended May 31:

2001 $25,437
2002 21,198
-------
Total $46,635
=======

CAPITAL LEASES

The Company leased certain software, computer and other equipment under
capital leases. Future minimum lease payments are as follows for the years ended
May 31:

2001 $32,355
2002 $26,481
2003 $19,215
2004 $12,717
-------
Total $90,768
Less amount representing interest 20,200
-------
Present value of minimum lease payments 70,568
Less current portion 21,740
-------
Long-term portion $48,828
=======

F-14
<PAGE>
CONSYGEN, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MAY 31, 2000

PURCHASE COMMITMENT

The Company has committed to pay certain creditors what are effectively
royalties on the basis of sales of the Counterfeit Cop. On one such agreement,
the Company has committed to a minimum payment of $75,000 regardless of the
sales of the product. The $75,000 is accrued at May 31, 2000.

LEGAL PROCEEDINGS

On August 10, 1999, Thomas S. Dreaper, former President and CEO of
ConSyGen, Inc. served an action which was filed in the United States District
Court for the District of Nevada against the Company and A. Lewis Burridge, its
President and CEO to receive indemnification in regards to lawsuit filed by
ConSyGen $3.5 million debenture holders, reimbursement of expenses he has
incurred, for damages for breach of the indemnification contract in an amount in
excess of $75,000 and exemplary and punitive damages in an amount in excess of
$1,000,000. The claims against the Company by the debenture holders have been
settled. However, the plaintiff continued to make claims against the Company
including the $75,000 discussed above and a claim for 1,000,000 options to
purchase the Company's common stock at $1 per share. The Company intends to
vigorously defend its positions. The case is likely to be scheduled for trial in
2001 but the outcome of this litigation cannot yet be estimated.

The Company entered into a dispute with a customer whereby the customer has
claimed breach of contract for various reasons for services performed by the
Company. The customer has made claims of $1,060,600. The Company agreed to
settle the case by dropping its claim for the $97,400 balance in accounts
receivable due from this customer. The customer made a counter offer to settle
for the balance of the accounts receivable balance plus $100,000. The court has
requested that the parties enter arbitration to settle the matter. The Company
intends to vigorously defend its positions. The outcome of this litigation
cannot yet be estimated.

CONCENTRATION OF CREDIT RISK

The Company's cash, cash equivalents and accounts receivable are subject to
potential credit risk. The Company's cash management and investment policies
restrict investments to highly-liquid investments. The Company's net accounts
receivable includes estimates for uncollectable balances. At May 31, 2000, the
Company has provided an allowance of $97,400 for a single customer.
Approximately 58% of the net accounts receivable balance at May 31, 2000, is
comprised by a balance due from one customer.

NOTE 8 - INCOME TAXES

Deferred income taxes reflect the net tax effects of temporary differences
between the carrying amounts of assets and liabilities for financial reporting
purposes and the amounts used for income tax purposes.

A deferred tax liability of $20,450 existed at May 31, 2000, relating to
book and tax differences in the bases of property and equipment.

F-15
<PAGE>
CONSYGEN, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MAY 31, 2000

A deferred tax asset at May 31, 2000 totaling $11,185,000 was primarily
offset by a valuation allowance of $11,165,000 and the deferred tax liability.
The valuation allowance was provided due to the uncertainty of future
realization of federal and state net operating loss carryforwards that give rise
to approximately $10,630,000 of the deferred tax asset. The balance of the
deferred tax asset relates to differences in book and tax accounting relative to
the compensated absences, deferred compensation to employees related to stock
options totaling $499,496 and allowances on accounts receivable of $55,520. The
Company has federal and state net operating loss carryforwards of $27,024,000 at
May 31, 2000. The federal loss carryforwards expire in 2010 through 2019 and
state loss carryforwards expire 2000 through 2004.

Income taxes for years ended May 31:

2000 1999
---- ----
Current Benefit $ 3,051,000 2,091,000
Deferred Benefit (Provision) (3,051,000) (2,091,000)
----------- ----------
Net income tax provision $ -0- -0-
=========== ==========

The income tax benefit of $3,051,000 and $2,091,000 generated for the years
ended May 31, 2000 and 1999 respectively were offset by increases in the
valuation allowance of $3,051,000 and $2,078,000 respectively. The valuation
allowance was increased due to uncertainties as to the Company's ability to
generate sufficient taxable income to utilize the net operating loss
carryforwards.

A reconciliation for the differences between the effective and statutory
income tax rates is as follows:

2000 1999
-------------------- --------------------
Federal statutory rates $(2,484,181) (34)% $(1,682,604) (34)%
State income taxes (584,413) (8)% (395,907) (8)%
Valuation allowance for
operating loss carryforwards 3,051,216 42% 2,078,818 42%
Other 17,348 --% (307) --%
----------- ---- ----------- ----
Effective rate $ -0- -0-% $ -0- -0-%
=========== ==== =========== ====

NOTE 9 - STOCKHOLDERS' EQUITY (DEFICIT)

TREASURY STOCK

In March 1998, the Company purchased 70,000 shares of its common stock for
$400,000 in cash from a former consultant.

COMMON STOCK

During the year ended May 31, 2000, the Company issued shares of its common
stock to certain consultants as consideration for services rendered by those
consultants. A total of 1,332,000 shares were issued in these transactions upon
exercise of options, and an additional 50,000 shares were issued to a
consultant. The transactions were valued at the trading price of the Company's
common stock at the date on which the transactions were committed. The value of
$1,233,048 represents the trading value net of a 10% discount applied for
trading restrictions on the stock issued.

F-16
<PAGE>
CONSYGEN, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MAY 31, 2000

WARRANTS

The Company has issued warrants to purchase common stock. At May 31, 2000,
there were 115,000 warrants issued in connection with the issuance of the
convertible debentures. These warrants have an exercise price of $5.00 and
expire in 2003.

As part of a private offering commenced in January, 2000, the Company
issued 4,498,000 units, consisting of one share of common stock and one warrant
to purchase one share of common stock at $1.50 per share, with the underlying
shares and warrant shares to be included in a planned registration filing. The
warrant may be terminated by the Company upon at least 30 days prior written
notice to the holder provided, however, that the closing price of the common
stock, as quoted on the OTC Bulletin Board (or such other quotation system or
exchange on which the common stock is then quoted or listed) has exceeded $2.75
for five consecutive days at any time during the ninety days prior to the giving
of written notice by the Company.

NOTE 10 - STOCK OPTIONS

The Company grants stock options from time to time to executives and key
employees. The options are available for grant under several option plans. The
plans generally cover key employees and other "Non-Employee Participants" and
grants typically vest over four years and expire ten years from the date of
grant. The Company has adopted the disclosure-only provisions of Statement of
Financial Accounting Standards No. 123, "Accounting for Stock-Based
Compensation," and continues to account for stock based compensation using the
intrinsic value method prescribed by Accounting Principles Board Opinion No. 25,
"Accounting for Stock Issued to Employees". Accordingly, no compensation cost
has been recognized for the stock options granted with no intrinsic value at the
date of grant. However, during the year ended May 31, 2000, the Company granted
2,202,000 options to certain employees and consultants that had exercise prices
less than the trading value of the underlying common stock at the date of grant.
The resulting compensation expense for the vested portion of those grants, for
the year ended May 31, 2000, was $1,905,813. Had compensation cost for the
Company's stock options been determined based on the fair value at the grant
date for awards in 2000 and 1999, consistent with the provisions of SFAS No.
123, the Company's net loss and loss per share would have been increased to the
pro forma amounts indicated below:

2000 1999
---- ----
Net Loss - as reported $(7,342,822) $(4,945,835)
Net Loss - pro forma $(8,074,485) $(5,857,984)
Basic Loss per share - as reported $ (0.42) $ (0.32)
Basic Loss per share - pro forma $ (0.46) $ (0.38)

Diluted loss per share on a pro forma basis is not presented because the
effect of such would be anti-dilutive.

During the year ended May 31, 2000, the Company repriced options
outstanding to certain employees. There were 1,555,000 options, granted in
previous years that were repriced in the year ended May 31, 2000. The original
exercise price on the repriced options varied from $1.75 to $5.50. The repriced
options all were repriced to $0.50 per share. In accordance with Interpretation
of APB Opinion No. 25, Accounting for Transactions Involving Stock Compensation,
issued by the Financial Accounting Standards Board, these repriced options
constitute variable awards and require the Company to recognize compensation
expense on the basis of the difference between the $0.50 exercise price and the
trading price of the Company's stock to the extent the trading price exceeds the
exercise price of $0.50 at the balance sheet date. As a result of the re-pricing
of these options, the Company has recognized $436,000 in compensation expense
for the year ended May 31, 2000.

F-17
<PAGE>
CONSYGEN, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MAY 31, 2000

Under the provisions of SFAS No. 123, the number of options used to
determine net earnings and earnings per share under a pro forma basis were
proportionately vested options granted of 2,392,000 for the year ended May 31,
2000 and 715,000 proportionately vested options for the year ended May 31, 1998.

The fair value of each option grant is estimated on the date of grant using
the Black-Scholes option-pricing model with the following assumptions for years
ended May 31:

2000 1999
---- ----
Dividend yield None None
Volatility 2.472 2.806
Risk free interest rate 6.00% 5.75%
Expected asset life 5 years 5 years

The Black-Scholes option-pricing model was developed for use in estimating
the fair value of traded options, which have no vesting or transferability
restrictions. These matters were taken into consideration when estimating the
fair value of the Company's options. However, the Company's options have
characteristics significantly different than traded options.

Under the various option plans, the total number of shares of common stock
that may be granted is 10,500,000. At May 31, 2000, 7,311,158 have been granted
under those plans.

The summary of activity for the Company's stock options is presented below:

<TABLE>
<CAPTION>
Weighted Weighte
Average Average
Exercise Exercise
2000 Price 1999 Price
---- ----- ---- -----
<S> <C> <C> <C> <C>
Options outstanding at beginning of year 5,045,354 $1.91 2,633,870 $2.62
Granted 3,957,421 $0.40 2,445,000 $1.53
Exercised (2,170,312) $0.27 (67,448) $1.32
Terminated/Expired (1,565,361) $1.66 (1,455,000) $2.10
Options outstanding at end of year 5,267,102 $1.21 2,658,421 $1.91
Options exercisable at end of year 4,071,786 $1.34 1,994,260 $2.26
Options available for grant at
end of year 1,856,420 813,841

Price per share of options Outstanding $0.50-$4.75 $0.82-$4.75

Weighted average remaining contractual lives 8.2 years 7.6 years

Weighted average fair value of options granted
during the year $ 0.81 $ 0.42
</TABLE>

F-18
<PAGE>
CONSYGEN, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MAY 31, 2000

NOTE 11 - DISCONTINUED OPERATIONS

The Company has not continued to market its Consygen 2000 Conversion
Services. The Company has not historically met its goals for revenue in its
conversion services business. The Company has had numerous contracts for its
conversion services and believes it has successfully completed those contracts.
However, the volume of such services has not met management's expectations nor
has that volume resulted in profitable operations. Therefore the Company
determined that it would abandon its efforts to develop and market the year 2000
conversion services business. The operations for this segment are reflected as
discontinued operations in the accompanying statement of operations. Revenues of
this segment were $214,385 and $708,754 for the years ended May 31, 2000 and
1999 respectively. The Company had no material asset balances directly related
to this business segment other than accounts receivable.

NOTE 12 - PURCHASED SOFTWARE

On June 16, 1999, the Company entered into an agreement with a third party to
acquire certain software. The software was represented to have unique
capabilities related to data base retrieval. The Company acquired the software
in connection with its attempts to move into other product lines including
Internet commerce. The original purchase price for the software was $600,000.
The Company had estimated at the time of purchase that an additional $275,000
would be required to complete development of the software. The Company paid
$180,000 cash at the date of purchase but failed to make the $420,000 payment
due on July 30, 1999. The Company received a 30 day extension of the July 30,
1999 due date by making a payment of $50,000 against the balance due. The
Company later made a determination that the software would require significant
additional development and believed that the capabilities of the software were
misrepresented by the seller. The Company failed to make the final payment of
$370,000 and has written off the software cost of $230,000.

NOTE 13 - SUBSEQUENT EVENTS

Subsequent to May 31, 2000, the Company granted 125,000 options to purchase
the Company's common stock. The options are exercisable at the closing price of
the Company's common stock on the date of grant.

As part of a private offering commenced in January, 2000, the Company issued
4,498,000 units, consisting of one share of common stock and an entitlement of
one warrant for one share of our common stock at $1.50 per share, with the
underlying shares and warrants to be included in a planned registration filing.
The warrant may be terminated by the Company upon at least 30 days prior written
notice to the holder provided, however, that the closing price of the common
stock, as quoted on the OTC Bulletin Board (or such other quotation system or
exchange on which the common stock is then quoted or listed) has exceeded $2.75
for five consecutive days at any time during the ninety days prior to the giving
of written notice by the Company.

NOTE 14 - RELATED PARTY TRANSACTIONS

During the year ended May 31, 2000, the Company borrowed approximately
$193,000 from one of its shareholders and member of the board of directors. The
debt is unsecured and non-interest-bearing. In addition, such person granted an
investor a mortgage on his personal residence to secure a loan of $150,000 to
the Company from such investor.

During the year ended May 31, 2000 the Company made an advance to an
officer in the form of a short-term note receivable in the amount of $38,525,
with a stated interest rate of 8% per annum.

F-19
<PAGE>
====================================== ======================================

YOU SHOULD RELY ONLY ON THE CONSYGEN, INC.
INFORMATION CONTAINED IN THIS
PROSPECTUS. NO DEALER, SALESPERSON, OR 13,646,000 SHARES
OTHER PERSON IS AUTHORIZED TO GIVE
INFORMATION THAT IS NOT CONTAINED IN COMMON STOCK
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. PROSPECTUS
THE INFORMATION CONTAINED IN THIS
PROSPECTUS IS CORRECT ONLY AS OF THE ------------------
DATE OF THIS PROSPECTUS, REGARDLESS OF
THE TIME OF DELIVERY OF THIS
PROSPECTUS OR ANY SALE OF THESE
SECURITIES. September __, 2000

====================================== ======================================
<PAGE>
PART II

INFORMATION NOT REQUIRED IN PROSPECTUS

ITEM 24. INDEMNIFICATION OF DIRECTORS AND OFFICERS

We have entered into indemnification agreements with each of our directors
and officers. The indemnification agreements provide that we will pay certain
amounts incurred by a director or officer in connection with any civil or
criminal action or proceeding and specifically including actions by or in the
name of the company (derivative suits) where the individual's involvement is by
reason of the fact that he is or was a director or officer. Such amounts
include, to the maximum extent permitted by law, attorney's fees, judgments,
civil or criminal fines, settlement amounts and other expenses customarily
included in connection with legal proceedings. Under the indemnification
agreements, a director or officer will not receive indemnification if he is
found not to have acted in good faith in the reasonable belief that his action
was in the best interests of the company.

ITEM 25. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION

Total Expenses
--------------
SEC Registration Fees $ 2,180
Blue Sky Fees and Expenses N/A
Printing Expenses $ 10,000 *
Legal Fees and Expenses $ 90,000 *
Documentation Preparation Fees $ 25,000 *
Accounting Fees $ 25,000 *
Transfer Agent Fees N/A
Miscellaneous Expenses N/A
--------
Total $152,180 *
========

* Estimated

ITEM 26. RECENT SALES OF UNREGISTERED SECURITIES.

During the last three years, the Registrant sold the following securities
without registering the securities under the Securities Act of 1933:

(1) On September 25, 1997, we sold an aggregate of 100,000 shares of our
common stock to two investors for total cash consideration of $560,000. In
connection with this sale, we paid $56,000 in finder's fees. The issuance of the
shares was effected without registration under the Securities Act of 1933, as
amended, in reliance upon the exemption from registration contained in Rule 506
of Regulation D promulgated under the Securities Act.

(2) On September 25, 1997, we also sold an aggregate of 52,000 shares of
our common stock to four investors for total cash consideration of $322,500. In
connection with this sale, we paid $10,000 in finder's fees. The issuance of the
shares was effected without registration under the Securities Act of 1933, as
amended, in reliance upon the exemption from registration contained in Rule 506
of Regulation D promulgated under the Securities Act.

II-1
<PAGE>
(3) On November 4, 1997, we sold an aggregate of 900,000 shares of our
common stock to twelve investors for total cash consideration of $5,276,250. In
connection with this sale, we paid finder's fees in the amount of approximately
$185,000 in cash and 31,500 shares of common stock, valued at $244,125. The
issuance of the shares was effected without registration under the Securities
Act of 1933, as amended, in reliance upon the exemption from registration
contained in Rule 506 of Regulation D promulgated under the Securities Act.

(4) On November 4, 1997, we also issued 30,000 shares of our common stock,
valued at $232,500, to a consultant in consideration for services rendered or to
be rendered under our agreement with the consultant.

(5) On November 4, 1997, we also issued 10,835 shares of our common stock,
and 19,912 shares to directors, in satisfaction for forgiveness of our
indebtedness in the aggregate amount of $250,575.

(6) On May 7, 1998, we sold an aggregate of 4,000 shares of our common
stock to four investors for total cash consideration of $28,000. The issuance of
the shares was effected without registration under the Securities Act of 1933,
as amended, in reliance upon the exemption from registration contained in Rule
506 of Regulation D promulgated under the Securities Act.

(7) On May 29, 1998, we sold $3,500,000 in principal amount of convertible
debentures and warrants to purchase 105,000 shares of common stock for aggregate
net proceeds, after payment of finders' fees and expenses, of approximately
$3,200,000. Included in the finders' fees paid in connection with the
convertible debentures, we issued warrants to purchase an additional 10,000
shares of our common stock. The issuance of the securities was effected without
registration under the Securities Act of 1933, as amended, in reliance upon the
exemption from registration in Rule 506 of Regulation D promulgated under the
Securities Act.

(8) On March 6, 2000, we issued 748,846 shares to Dominion Capital Fund,
Ltd. in response to a conversion request by certain of the debenture holders
under the sale described in paragraph 7 above and the settlement agreement
described under "Legal Matters" on page 47. On April 20, 2000, we issued an
additional 749,202 shares to Sovereign Partners, L.P. and 306,047 shares to
Canadian Advantage, L.P., also in response to a conversion request by certain of
the debenture holders under the same settlement agreement. On May 5, 2000, we
issued 67,797 shares to Dominion Capital Fund, Ltd. in response to a further
conversion request.

(9) From January, 2000 until April, 2000 we sold an aggregate of 4,498,000
units, consisting of one share of common stock and a warrant to purchase one
share of our common stock at an exercise price of $1.50 per share to accredited
and sophisticated investors for total cash consideration of $1,124,500 in a
private placement. Under the terms of this offering, we agreed to issue to the
investors who invested by a certain date an aggregate of 100,000 shares of our
common stock per week commencing January 31, 2000 until a Securities Act
Registration Statement was filed with the Securities and Exchange Commission. As
a result of this agreement, we issued an aggregate of 3,200,000 additional
shares of our common stock.

(10) On May 15, 2000, we issued 50,000 shares of our common stock, valued
at $54,650, to a business consultant in consideration for services provided in
relation to the BIZPAY product. In addition, on August 2, 2000, we issued an
option to purchase 50,000 shares of our common stock at an exercise price of
$0.003 per share to such consultant in consideration for additional services
provided in relation to the BIZPAY product.

II-2
<PAGE>
(11) On April 17, 2000, we issued an option to purchase 1,000,000 shares of
our common stock at an exercise price of $0.003 per share, to a consultant in
consideration for business services provided during 1999. In addition, we
granted an option as of May 31, 2000 to such consultant to purchase 332,000
shares of our common stock at an exercise price of $0.003 per share.

(12) On August 14, 2000, we issued options to purchase an aggregate of
508,000 shares of our common stock at an exercise price of $0.003 per share to a
consultant in consideration for business services provided to such date.

(13) On September 11, 2000, we issued options to purchase an aggregate of
361,000 shares of our common stock at an exercise price of $0.003 per share to a
consultant in consideration for business services provided to such date.

(14) On September 12, 2000, we issued 14,000 shares of our common stock,
valued at $8,470, to a business consultant in consideration for services
provided in relation to investor relations. In addition, on such date we issued
an option to purchase 10,000 shares of our common stock at an exercise price of
$0.003 per share to a consultant in consideration for services provided in
relation to the preparation and filing of statutory reports.

Except as otherwise specified, to the extent that the foregoing
transactions constituted "sales" within the meaning of the Securities Act of
1933, the securities issued in such transactions were not registered under the
Securities Act of 1933 in reliance upon the exemption from registration set
forth in Section 4(2) of the Securities Act of 1933, relating to sales by an
issuer not involving any public offering. None of the foregoing transactions,
either individually or in the aggregate, involved a public offering.

Each of the foregoing transactions, to the extent that they constituted
"sales" within the meaning of the Securities Act of 1933, was exempt under the
applicable exemption based on the following facts: to our knowledge, there was
no general solicitation, there were a limited number of purchasers, the
purchasers were provided with or had access to information about our company,
and either the purchasers or their specific representatives were sophisticated
about business or financial matters; and, as applicable, the purchasers were
"accredited investors" within the meaning of Rule 501 under the Securities Act
of 1933, and we took reasonable steps to ensure that the purchasers were not
underwriters within the meaning of Section 2(11) under the Securities Act of
1933.

II-3
<PAGE>
ITEM 27. EXHIBITS.

II-4
<PAGE>
4.15 Form of Subscription Agreement used in connection with private
placement of 4,498,000 units, consisting of one share of the
Registrant's common stock and a warrant to purchase one share of common
stock, for total cash consideration of $1,124,500.*
4.16 Form of Common Stock Purchase Warrant used in connection with issuance
of warrants to purchase an aggregate of 4,498,000 shares of
Registrant's Common Stock, $0.003 par value.*
4.17 Option Agreement for 1,000,000 shares of the Registrant's common stock,
dated April 17, 2000, issued to consultant, Howard R. Baer.*
5.1 Legal Opinion of Brown, Rudnick, Freed & Gesmer.**
10.7 Registrant's 1996 Non-Qualified Stock Option Plan.(2)
10.8 Registrant's Second Amended and Restated 1997 Non-Qualified Stock
Option Plan.(8)
10.9 Consulting Agreement between the Registrant and M.H. Meyerson & Co.,
Inc. dated August 19, 1996.(5)
10.10 Form of Indemnification Contract between the Registrant and each
executive officer and director of the Registrant.(3)
10.11 Agreement between the Registrant and Carriage House Capital, Inc.,
effective as of September 1, 1997, terminating all existing agreements
between the Registrant and Carriage House Capital, Inc., and its
affiliates.(3)
10.12 Registrant's Form of Settlement Term Sheet between the Registrant and
the Debenture Parties (Thomson Kernaghan, et al).(7)
10.13 Settlement Agreement and Conditional Release between the Registrant and
the Debenture Parties dated April 20, 2000.(9)
10.14 Agreement between the Registrant and Saviar and Spaeth, dated January
11, 2000.*
16 Letter dated September 24, 1998 from Wolinetz, Gottlieb & Lafazan, P.C.
to the Securities and Exchange Commission, filed as Exhibit 16 to the
Registrant's Current Report on Form 8-K dated September 22, 1998 and
incorporated herein by reference.
21 List of Subsidiaries of the Registrant.(9)
23.1 Consent of Brown, Rudnick, Freed & Gesmer (contained in Exhibit 5.1).*
23.2 Consent of King, Weber & Associates, P.C.*
24 Power of Attorney (included on Signature page hereof).*
99.1 Registrant's 2000 Combination Stock Option Plan.(10)

----------
* Filed herewith.
** To be filed by amendment.

II-5
<PAGE>
(6) Filed as an Exhibit, with the same Exhibit number, to the Registrant's
Annual Report on Form 10-K for the year ended May 31, 1998, and
incorporated herein by reference.
(7) Filed as an Exhibit, with the same Exhibit number, to the Registrant's
Annual Report on Form 8-K dated March 22, 2000, and incorporated herein by
reference.
(8) Filed as an Exhibit, with the same Exhibit number, to the Registrant's
Quarterly Report on Form 10-Q for the quarter ended August 31, 1998, and
incorporated herein by reference.
(9) Filed as an Exhibit, with the same Exhibit number, to the Registrant's
Annual Report on Form 10-KSB for the year ended May 31, 2000, and
incorporated herein by reference.
(10) Filed as an Exhibit, with the same Exhibit number, to the Registrant's
Registration Statement on Form S-8, dated May 4, 2000, and incorporated
herein by reference.

ITEM 28. UNDERTAKINGS

(a) The Registrant hereby undertakes:

(1) To file, during any period in which offers or sales are being made, a
post-effective amendment to this Registration Statement:

(i) To include any prospectus required by Section 10(a)(3) of the
Securities Act;
(ii) To reflect in the prospectus any facts or events arising after
the effective date of the Registration Statement (or the most
recent post-effective amendment thereof) which, individually or
in the aggregate, represent a fundamental change in the
information set forth in the Registration Statement;
(iii)To include any material information with respect to the plan of
distribution not properly disclosed in the Registration Statement
or any material change to such information in this Registration
Statement;

PROVIDED, HOWEVER, that paragraphs (a)(1)(i) and (a)(1)(ii) do not
apply if the information required to be included in a post-effective
amendment by those paragraphs is contained in periodic reports filed by the
Registrant pursuant to Section 13 or Section 15 (d) of the Securities
Exchange Act that are incorporated by reference in this Registration
Statement.

(2) That, for the purpose of determining any liability under the
Securities Act, each post-effective amendment shall be deemed to be a
new registration statement relating to the securities offered therein,
and the offering of such securities at the time shall be deemed to be
the initial bona fide offering thereof.

(3) To remove from registration by means of a post-effective amendment any
of the securities being registered which remain unsold at the
termination of the offering.

(e) Insofar as indemnification for liabilities arising under the securities
Act of 1933 (the "Act") may be permitted to directors, officers, and controlling
persons of the small business issuer pursuant to the foregoing provisions, or
otherwise, the small business issuer 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.

II-6
<PAGE>
SIGNATURES

In accordance with the requirements of the Securities Act of 1933, the
Registrant certifies that it has reasonable grounds to believe that it meets all
of the requirements for filing on Form SB-2 and authorized this registration
statement to be signed on its behalf by the undersigned, in the city of Tempe,
state of Arizona, on September 15, 2000.

CONSYGEN, INC.

By: /s/ A. Lewis Burridge
--------------------------------
A. Lewis Burridge, President and
Chief Executive Officer

II-7
<PAGE>
POWER OF ATTORNEY

KNOW ALL MEN BY THESE PRESENTS, that the person whose signature appears
below constitutes and appoints A. Lewis Burridge and Eric J. Strasser and Jason
M. Genet and each of them (with full power to each of them to act alone), his
true and lawful attorneys-in-fact and agents, with full power of substitution
and resubstitution, for him 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 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 he might or could do 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.

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

<TABLE>
<CAPTION>
Signature Title Date
--------- ----- ----
<S> <C> <C>

/s/ A. Lewis Burridge President, Chief Executive Officer and September 14, 2000
---------------------------- Director (Principal Executive Officer)
A. Lewis Burridge

/s/ John L. Caldwell Director September 14, 2000
----------------------------
John L. Caldwell

/s/ Jason M. Genet Executive Vice President and Chief September 14, 2000
---------------------------- Operating Officer
Jason M. Genet

/s/ Luther H. Hodges Director September 15, 2000
----------------------------
Luther H. Hodges

/s/ Donald P. Knode Director September 15, 2000
----------------------------
Donald P. Knode

/s/ Andrew Lee Director September 14, 2000
----------------------------
Andrew Lee

/s/ Russell B. Stevenson Director September 14, 2000
----------------------------
Russell B. Stevenson

/s/ Robert L. Stewart Director September 14, 2000
----------------------------
Robert L. Stewart

/s/ Eric J. Strasser Chief Financial Officer (Principal September 14, 2000
---------------------------- Financial Officer)
Eric J. Strasser
</TABLE>

II-8
<PAGE>
EXHIBIT INDEX

2 Plan of Acquisition between the Registrant and the stockholders of
ConSyGen, Inc., an Arizona corporation, dated August 28, 1996, filed as
Exhibit 2 to the Registrant's Current Report on Form 8-K dated
September 5, 1996 and incorporated herein by reference.
3.1 Articles of Incorporation of the Registrant, as amended.(1)
3.2 Amended and Restated By-Laws of the Registrant.(4)
4.1 Specimen common stock certificate, filed as Exhibit 4.B to the
Registrant's Registration Statement on Form S-18, File No. 33-22900 -
FW, and incorporated herein by reference.
4.2 Form of Common Stock Purchase Warrant used in connection with issuance
of warrants to purchase an aggregate of 1,000,000 shares of the
Registrant's Common Stock, $.003 par value.(2)
4.3 Subscription Agreement used in connection with the Rule 506 sale of
Convertible Debentures in the aggregate principal amount of $3,500,000
(including form of Convertible Debenture, form of Warrant, and form of
Registration Rights Agreement, attached as Exhibits A, B and D,
respectively, to the Subscription Agreement).(6)
4.4 Form of Common Stock Purchase Warrant to purchase an aggregate of
10,000 shares issued in partial payment of finders' fees in connection
with sale of Convertible Debentures in aggregate principal amount of
$3,500,000.(6)
4.5 Form of Subscription Agreement used in connection with Rule 506 sale of
120,000 shares for gross proceeds of $1,080,000.(1)
4.6 Form of Subscription Agreement used in connection with Rule 506 sale of
152,000 shares for gross proceeds of $882,500.(1)
4.7 Form of Common Stock Purchase Warrant to purchase 200,000 shares issued
to consultant, Howard R. Baer, on August 1, 1997.(1)
4.8 Form of Common Stock Purchase Warrant to purchase 100,000 shares issued
to Howard R. Baer's designee, Kevin C. Baer, on August 1, 1997.(1)
4.9 Subscription Agreement used in connection with Rule 506 sale of 900,000
shares for gross proceeds of $5,276,250.(3)
4.10 Form of Subscription Agreement used in connection with issuance of
30,747 shares in payment of indebtedness in the aggregate amount of
$250,575.(3)
4.11 Common Stock Purchase Warrant to purchase 100,000 shares issued to a
consultant's designee, Irvington International Limited, as of November
10, 1997.(3)
4.12 Agreement dated as of July 17, 1998 between the Registrant and Tom S.
Dreaper relating to employment and grant of options to purchase
1,000,000 shares of common stock of the Registrant.(6)
4.13 Agreement entitled "Transfer of Complete Rights in Software Program
between ConSyGen, Inc. and F&M Investments, L.L.C.", filed as Exhibit
4.13 to the Registrant's Current Report on Form 8-K dated July 2, 1999
and incorporated herein by reference.
4.14 Amendment dated August 13, 1998, to 6% Convertible Debenture
Subscription Agreement and related Registration Rights Agreement dated
May 29, 1998, filed as Exhibit 4.13 to the Registrant's Registration
Statement on Form S-3, File No. 333-61869, and incorporated herein by
reference.
4.15 Form of Subscription Agreement used in connection with private
placement of 4,498,000 units, consisting of one share of the
Registrant's common stock and a warrant to purchase one share of common
stock, for total cash consideration of $1,124,500.*
4.16 Form of Common Stock Purchase Warrant used in connection with issuance
of warrants to purchase an aggregate of 4,498,000 shares of
Registrant's Common Stock, $0.003 par value.*
4.17 Option Agreement for 1,000,000 shares of the Registrant's common stock,
dated April 17, 2000, issued to consultant, Howard R. Baer.*
5.1 Legal Opinion of Brown, Rudnick, Freed & Gesmer.**
10.7 Registrant's 1996 Non-Qualified Stock Option Plan.(2)
10.8 Registrant's Second Amended and Restated 1997 Non-Qualified Stock
Option Plan.(8)
10.9 Consulting Agreement between the Registrant and M.H. Meyerson & Co.,
Inc. dated August 19, 1996.(5)
10.10 Form of Indemnification Contract between the Registrant and each
executive officer and director of the Registrant.(3)
10.11 Agreement between the Registrant and Carriage House Capital, Inc.,
effective as of September 1, 1997, terminating all existing agreements
between the Registrant and Carriage House Capital, Inc., and its
affiliates.(3)
<PAGE>
10.12 Registrant's Form of Settlement Term Sheet between the Registrant and
the Debenture Parties (Thomson Kernaghan, et al).(7)
10.13 Settlement Agreement and Conditional Release between the Registrant and
the Debenture Parties dated April 20, 2000.(9)
10.14 Agreement between the Registrant and Saviar and Spaeth, dated January
11, 2000.*
16 Letter dated September 24, 1998 from Wolinetz, Gottlieb & Lafazan, P.C.
to the Securities and Exchange Commission, filed as Exhibit 16 to the
Registrant's Current Report on Form 8-K dated September 22, 1998 and
incorporated herein by reference.
21 List of Subsidiaries of the Registrant.(9)
23.1 Consent of Brown, Rudnick, Freed & Gesmer (contained in Exhibit 5.1).*
23.2 Consent of King, Weber & Associates, P.C.*
24 Power of Attorney (included on Signature page hereof).*
99.1 Registrant's 2000 Combination Stock Option Plan.(10)

----------
* Filed herewith.
** To be filed by amendment.

(1) Filed as an Exhibit, with the same Exhibit number, to the Registrant's
Quarterly Report on Form 10-Q for the quarter ended August 31, 1997, and
incorporated herein by reference.
(2) Filed as an Exhibit, with the same Exhibit number, to the Registrant's
Quarterly Report on Form 10-Q for the quarter ended August 31, 1996, and
incorporated herein by reference.
(3) Filed as an Exhibit, with the same Exhibit number, to the Registrant's
Registration Statement on Form S-1, File No. 333-40649, and incorporated
herein by reference.
(4) Filed as an Exhibit, with the same Exhibit number, to the Registrant's
Quarterly Report on Form 10-Q for the quarter ended February 28, 1998, and
incorporated herein by reference.
(5) Filed as Exhibit No. 10.10 to the Registrant's Annual Report on Form 10-K
for the year ended May 31, 1997, and incorporated herein by reference.
(6) Filed as an Exhibit, with the same Exhibit number, to the Registrant's
Annual Report on Form 10-K for the year ended May 31, 1998, and
incorporated herein by reference.
(7) Filed as an Exhibit, with the same Exhibit number, to the Registrant's
Annual Report on Form 8-K dated March 22, 2000, and incorporated herein by
reference.
(8) Filed as an Exhibit, with the same Exhibit number, to the Registrant's
Quarterly Report on Form 10-Q for the quarter ended August 31, 1998, and
incorporated herein by reference.
(9) Filed as an Exhibit, with the same Exhibit number, to the Registrant's
Annual Report on Form 10-KSB for the year ended May 31, 2000, and
incorporated herein by reference.
(10) Filed as an Exhibit, with the same Exhibit number, to the Registrant's
Registration Statement on Form S-8, dated May 4, 2000, and incorporated
herein by reference.