MULTIMEDIA ACCESS CORP, SB-2/A, 1997-01-17

MULTIMEDIA ACCESS CORP
SB-2/A, 1997-01-17
RADIO & TV BROADCASTING & COMMUNICATIONS EQUIPMENT

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AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON , 1997
REGISTRATION NO. 333-09935

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549
AMENDMENT NO. 4
TO
FORM SB-2
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
MULTIMEDIA ACCESS CORPORATION
(NAME OF SMALL BUSINESS ISSUER IN ITS CHARTER)

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Delaware 3661 75-2528700
(State or Other Jurisdiction Primary Standard (IRS Employer
of Incorporation or Organization) Classification Code Number Identification Number)
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2665 VILLA CREEK DRIVE, SUITE 200, DALLAS, TEXAS 75234
972-488-7200

(Address of principal executive offices and place of business and
telephone number)

GLENN A. NOREM
CHIEF EXECUTIVE OFFICER
MULTIMEDIA ACCESS CORPORATION
2665 VILLA CREEK DRIVE, SUITE 200, DALLAS, TEXAS 75234
972-488-7200
(NAME, ADDRESS AND TELEPHONE NUMBER OF AGENT FOR SERVICE)

Copies to:
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John S. Stoppelman, Esq. Jay Kaplowitz, Esq.
The Stoppelman Law Firm, P.C. Gersten, Savage, Kaplowitz, Fredericks & Curtin, LLP
1749 Old Meadow Road, Suite 610 101 E. 52nd St.
McLean, Virginia 22102-4310 New York, NY 10022-6018
Telephone: (703) 827-7450 Telephone: (212) 752-9700
Telecopier: (703) 827-7455 Telecopier: (212) 752-9713
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Approximate date of proposed sale to the public: As soon as practicable
after the Registration Statement becomes effective

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

If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ]

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

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, check the following box: [X]
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CALCULATION OF REGISTRATION FEE
- ---------------------------------------------------------------------------------------------------------------
TITLE OF EACH CLASS PROPOSED MAXIMUM PROPOSED MAXIMUM
OF SECURITIES TO BE AMOUNT TO BE OFFERING PRICE AGGREGATE AMOUNT OF
REGISTERED REGISTERED PER SHARE(1) OFFERING PRICE REGISTRATION FEE
- ---------------------------------------------------------------------------------------------------------------
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Common Stock, $.0001 par value......... 2,851,977(2)(3) $4.50 $12,833,877 $ 4,426
Redeemable Common Stock Purchase
Warrants ("Public Warrants")........... 2,851,977(4)(5) $0.10 285,198 $ 98
Common Stock issuable upon exercise of
Public Warrants........................ 2,851,977 $3.50 9,981,920 $ 3,442
TOTAL REGISTRATION FEE................. $ 7,966
Paid................................... $12,736
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- ---------------------------------------------------------------------------------------------------------------
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(1) Estimated solely for purposes of calculating the registration fee.

(2) Includes 210,000 Shares which the Representative has the option to purchase
to cover over-allotments, if any.

(3) Includes 1,241,977 shares to be sold by Selling Securityholders.

(4) Includes 210,000 Public Warrants which the Representative has the option to
purchase to cover over-allotments, if any.

(5) Includes 1,241,977 Public Warrants to be sold by Selling Securityholders.

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

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<PAGE>

MULTIMEDIA ACCESS CORPORATION
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CROSS-REFERENCE SHEET SHOWING LOCATION IN PROSPECTUS
OF INFORMATION REQUIRED BY ITEMS OF FORM SB-2

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FORM SB-2 REGISTRATION STATEMENT ITEM AND HEADING LOCATION IN PROSPECTUS
- ----------------------------------------------------- -----------------------------------------------------
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1. Front of Registration Statement and Outside
Front Cover of Prospectus........................ Outside Front Cover Page of Prospectus
2. Inside Front and Outside Back Cover Pages of
Prospectus....................................... Inside Front and Outside Back Cover Pages of
Prospectus
3. Summary Information and Risk Factors............. Prospectus Summary; Risk Factors
4. Use of Proceeds.................................. Use of Proceeds
5. Determination of Offering Price.................. Underwriting
6. Dilution......................................... Dilution
7. Selling Security Holders ........................ *
8. Plan of Distribution............................. Outside Front Cover Page of Prospectus; Underwriting
9. Legal Proceedings................................ Legal Proceedings
10. Directors, Executive Officers, Promoters and
Control Persons ................................. Management; Principal Stockholders; Certain
Transactions
11. Security Ownership of Certain Beneficial Owners
and Management................................... Management
12. Description of Securities ....................... Description of Securities; Underwriting
13. Interests of Named Experts and Counsel .......... Interest of Named Experts and Counsel
14. Disclosure of Commission Position on
Indemnification for Securities Act Liabilities .. Management
15. Organization Within Last Five Years.............. Prospectus Summary
16. Description of Business ......................... Prospectus Summary; Risk Factors; Management's
Discussion and Analysis of Financial Condition and
Results of Operations; Business; Management; Certain
Transactions; Principal Securityholders;
Consolidated Financial Statements
17. Management's Discussion and Analysis or Plan of
Operations ...................................... Management's Discussion and Analysis of Financial
Condition and Results of Operations
18. Description of Property ......................... Business
19. Certain Relationships and Related Transactions .. Certain Transactions
20. Market for Common Equity and Related Stockholder
Matters.......................................... Front Cover Page; Description of Securities
21. Executive Compensation........................... Management
22. Financial Statements............................. Consolidated Financial Statements
23. Change in and Disagreements with Accountants on
Accounting and Financial Disclosure............. Experts
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* See Explanatory Note

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EXPLANATORY NOTE

Two forms of Prospectus are included in this Registration Statement. The
first Prospectus will be used in connection with an underwritten offering of
securities by the Company (the "Company Prospectus"). The second Prospectus will
be used in connection with the sale of securities by certain selling
securityholders from time to time in open market transactions (the "Selling
Securityholders Prospectus"). The Company Prospectus and the Selling
Securityholders Prospectus are substantially identical, except for the alternate
pages for the Selling Securityholders Prospectus included herein which are
labeled "Alternate Page for Selling Securityholders Prospectus." In addition,
what is referred to as "the offering" in the Company Prospectus will be changed
to "the Company Offering" throughout the Selling Securityholders Prospectus.

After this Registration Statement becomes effective, both Prospectuses will
be used in their entirety in connection with the offer and sale of the
respective securities referenced therein.

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SUBJECT TO COMPLETION, DATED , 1997
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PROSPECTUS

MULTIMEDIA ACCESS CORPORATION
1,400,000 SHARES OF COMMON STOCK
1,400,000 REDEEMABLE COMMON STOCK PURCHASE WARRANTS

MultiMedia Access Corporation (the "Company") hereby offers 1,400,000 shares
of Common Stock, $.0001 par value per share (the "Common Stock"), and 1,400,000
Redeemable Common Stock Purchase Warrants ("Public Warrants"). The shares of
Common Stock and the Public Warrants (together, the "Securities") must be
purchased on the basis of one Public Warrant for each share of Common Stock
purchased and will be separately transferable immediately upon issuance. Each
Public Warrant entitles the holder to purchase one (1) share of Common Stock at
$3.50 per share, subject to adjustment under certain circumstances, at any time
commencing six months from the date of this Prospectus through and including
five years from the date of this Prospectus. The Public Warrants are redeemable
by the Company, at any time commencing twelve (12) months from the date of this
Prospectus, upon notice of not less than thirty (30) days, at a price of $.10
per Public Warrant, provided that the closing price or bid price of the Common
Stock for any twenty (20) trading days within a period of thirty (30)
consecutive trading days ending on the fifth (5th) day prior to the day on which
the Company gives notice of redemption has been at least 120% (currently $5.40,
subject to adjustment) of the initial public offering price per share of Common
Stock. It is currently anticipated that initial the public offering price will
be $4.00 to $5.00 per share of Common Stock and $.10 per Public Warrant. See
"Description of Securities."

Prior to this offering, there has been no public market for the Common Stock
or Public Warrants and there can be no assurance that any such market will
develop. It is anticipated that the Common Stock and the Public Warrants will be
quoted on the NASDAQ Small-Cap Market ("NASDAQ") under the symbols "MMAC" and
"MMACW" respectively. For a discussion of the factors considered in determining
the offering prices of the Common Stock and Public Warrants, see "Underwriting."

Concurrently with this offering, the Company is registering 1,241,977 shares
of Common Stock (the "Selling Securityholder Shares"), 1,241,977 Public Warrants
and 1,241,977 shares underlying the Public Warrants to be sold by Selling
Securityholders in a debt retirement and debt for equity exchange which
securities are the subject of two year "lock-up" agreements. The Company will
not receive any of the proceeds of the sale of Common Stock by the Selling
Securityholders, but will receive the proceeds of the exercise of the Public
Warrants by the Selling Securityholders. See "Concurrent Registration of
Securities."
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THE SECURITIES OFFERED HEREBY ARE SPECULATIVE AND INVOLVE A HIGH DEGREE OF
RISK AND IMMEDIATE DILUTION AND SHOULD NOT BE PURCHASED BY INVESTORS
WHO CANNOT AFFORD THE LOSS OF THEIR ENTIRE INVESTMENT. SEE "RISK
FACTORS" AND "DILUTION."
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THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.

----------
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Underwriting
Price Discounts and Proceeds to
to Public Commissions(1) Company(2)
- --------------------------------------------------------------------------------
Per Share.... $4.50 $.45 $4.05
- --------------------------------------------------------------------------------
Per Warrant . $.10 $.01 $.09
- --------------------------------------------------------------------------------
Total(3)..... $6,440,000 $644,000 $5,796,000
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(1) In addition, the Company has agreed to pay to the Representative a 3%
nonaccountable expense allowance and to sell to the Representative, for
nominal consideration, warrants to purchase up to 140,000 shares of Common
Stock and/or up to 140,000 Public Warrants. The Company has agreed to
indemnify the Representative against certain liabilities, including
liabilities under the Securities Act. See "Underwriting."

(2) Before deducting expenses, estimated at $693,200, payable by the Company
including the Representative's nonaccountable expense allowance. The Selling
Securityholders will not bear any of the expenses of this offering.

(3) The Company has granted the Representative an option, exercisable within 45
days from the date of this Prospectus, to purchase up to 210,000 additional
shares of Common Stock and/or 210,000 additional Public Warrants on the same
terms and conditions as set forth above, solely for the purpose of covering
over-allotments. If such option is exercised in full, the Price to Public,
Underwriting Discounts and Commissions and Proceeds to Company will be
$7,406,000, $740,600 and $6,665,400, respectively. See "Underwriting."

The Common Stock and Public Warrants are being offered, subject to prior
sale, when, as and if delivered and accepted by the several Underwriters and
subject to the approval of certain legal matters by counsel and to certain other
conditions. The Underwriters reserve the right to withdraw, cancel or modify the
offering and to reject any order in whole or in part. It is expected that
delivery of certificates representing the Common Stock and Public Warrants
contained therein, will be made against payment therefor at the offices of
Network 1 Financial Securities, Inc. on or about , 1997.

NETWORK 1 FINANCIAL SECURITIES, INC.

The date of this Prospectus is , 1997

[Information contained herein is subject to completion or amendment. A
registration statement relating to these securities has been filed with the
Securities and Exchange Commission. These securities may not be sold nor may
offers to buy be accepted prior to the time the registration statement becomes
effective. This prospectus shall not constitute an offer to sell or the
solicitation of an offer to buy nor shall there be any sale of securities in any
State in which such offer, solicitation or sale would be unlawful prior to
registration or qualification under the securities laws of any such State.]
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[MARKETING DISPLAY]

IN CONNECTION WITH THIS OFFERING, THE UNDERWRITERS MAY OVER-ALLOT OR EFFECT
TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICES OF THE COMPANY'S
COMMON STOCK AND PUBLIC WARRANTS AT LEVELS ABOVE THOSE WHICH MIGHT OTHERWISE
PREVAIL IN THE OPEN MARKET. SUCH TRANSACTIONS MAY BE EFFECTED IN THE NASDAQ
SMALL CAP MARKET OR OTHERWISE. SUCH STABILIZING, IF COMMENCED, MAY BE
DISCONTINUED AT ANY TIME.

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SUMMARY

The following summary is qualified in its entirety by the other information
and consolidated financial statements appearing elsewhere in this Prospectus.
Each prospective investor is urged to read this Prospectus in its entirety.
Unless otherwise indicated all per share data and information in this Prospectus
relating to the number of shares of Common Stock outstanding assumes that the
Representatives' over-allotment option will not be exercised. For an explanation
of certain technical terms used in this Prospectus, see "Glossary."

THE COMPANY

MultiMedia Access Corporation (the "Company") develops and markets advanced
video communications products for the personal computer ("PC") and workstation
marketplaces. Applications include desktop videoconferencing ("DVC"), Internet
and Intranet video communications, video-based training, video surveillance,
distance learning and high quality workgroup video communications. While the
Company sells its core video compression-decompression ("Codec") and video
switching technologies to resellers and systems integrators, its primary
strategy is to develop and market video communications applications using its
technologies.

The Company, in September 1996, entered into a reseller agreement with Unisys
Corporation ("Unisys"), a nationwide systems integrator and reseller, to
purchase and resell the Company's Viewpoint VBX(Trademark). The Viewpoint
VBX(Trademark) is a PC-based video switch which provides workgroup video
communications over existing telephone or network wiring commonly found
throughout office buildings. Unlike commercially available competitive products,
the Viewpoint VBX(Trademark) connects over 100 users per switch and distributes
full-motion video at distances up to 3,500 feet via existing unshielded twisted
pair ("UTP") wiring.

The Company entered into a licensing agreement with Boca Research Inc.
("Boca"), a major modem and PC peripheral supplier, to manufacture and market
the Company's FamilyFone(Trademark) and its ISDN videoconferencing upgrades in
January 1996, and delivered its first video surveillance system to Alcatel
Network Systems Inc. ("Alcatel"), a major communications systems integration
company, in the first quarter of 1996. The Company believes it sells the only
currently available standards-based, multi-algorithm video and audio Codec
product for WindowsNT and is developing a multi-algorithm Codec for Sun
Microsystem ("Sun") workstations.

According to industry sources, the video communications industry is forecast
to be $3.6 billion by 1999 and the emerging desktop segment of that industry is
forecast to exceed $1.2 billion by 1999. The PC dominates the desktop computing
market with 1995 sales of over 57 million units worldwide and an estimated 100
million new PCs projected to be sold annually by 1999. Industry sources estimate
that over 30% of the new PCs sold in 1996 (principally multimedia capable PCs)
will be purchased by consumers for use in the home. The Company believes it has
developed products which position it to benefit from the growth of these markets
and which will have functions, performance and cost to successfully compete in
the rapidly-emerging desktop video communications industry.

PRODUCT FAMILY

The Company currently offers a variety of products with differing video
quality levels: NTSC TV quality with the Viewpoint VBX(Trademark) video switch,
business quality with the Osprey-1000(Trademark) using ISDN lines and consumer
quality video with FamilyFone(Trademark) using modems over ordinary telephone
lines. The resolution and framerate of the video varies with the bandwith of the
communications connection.

Corporate Intranet Video. The Company's Viewpoint-PRO(Trademark) product
enables users to engage in real-time, full-color, full-motion video over their
existing computer networks. The Viewpoint-PRO(Trademark) supports point-to-point
and up to five site multipoint videoconferences. Unlike many currently available
ISDN-based products, the Viewpoint PRO(Trademark) does not require expensive
multipoint control units, which can cost as much as $20,000, to complete a
multipoint videoconference. Viewpoint PRO(Trademark) also comes equipped with
ViewCast(Trademark), a one-to-many broadcasting capability that permits "live"
broadcasts or pre-recorded content to be multicast over an existing corporate
data

<PAGE>

network. Viewpoint PRO(Trademark), combined with optional third-party software,
offers videoconference participants the ability to share a whiteboard or a PC
application. Viewpoint PRO(Trademark) was the first commercial product offering
video multicast using both FTP Software Inc.'s and Microsoft Corporation's
TCP/IP-Multicast PC software.

Consumer Video. The Company believes its FamilyFone(Trademark) product
provides affordable, good quality video communications capabilities to consumers
and small businesses. This product, which operates on standard telephone lines
and 28.8 Kbps (kilobits per second) modems, was introduced by Boca as the
BocaPRO Video Phone Elite in August 1996 at a suggested retail price of $399.
The cost of the product does not include the price of cameras and speakers.

Video Codecs. The Company develops and markets standards-based video and
audio Codec products that enable multimedia applications for PCs and
workstations. The Company's Osprey Codecs capture, digitize, compress, transmit,
receive, decompress and display full-motion video. The Osprey 1000(Trademark) is
compatible with multiple video and audio compression formats for both PCs and
workstations that are equipped with the standard PCI-bus and supports the
Windows NT, Windows 3.1, Windows95, Solaris and UNIX operating systems. The
Company believes the Osprey 1000(Trademark) is the only currently available
standards-based, multi-algorithm video and audio Codec product for the Windows
NT operating system.

The Company is currently developing a version of the Osprey Codec for Sun
workstations equipped with the S-bus. The Company has also developed
SLIC-Video(Trademark), a video capture product that enables Sun workstation
users to view uncompressed, high-quality video and to capture full-motion video
frames. SLIC-Video(Trademark) is compatible with a wide variety of video
applications on existing Sun workstations.

Video Switching Hub and UTP Video Distribution. The Company's Viewpoint
VBX(Trademark) product provides high-quality workgroup video communications with
shared gateways to Wide Area Networks ("WANs") and existing video
teleconferencing room systems. The Viewpoint VBX(Trademark) operates on a
PC-based WindowsNT system and employs a switched architecture to distribute
uncompressed, full-motion video within a building or campus using existing UTP
wiring. The switching architecture can support hundreds of users and allows
point-to-point, multipoint and broadcast modes of operation. The Viewpoint
VBX(Trademark) is compatible with standard NTSC cameras, audio components,
speakerphones, PC video peripherals and other videoconferencing products
produced by third-party manufacturers.

Internet Video. The Company is currently developing and plans to market three
Internet video products and their software players to capitalize on the growing
popularity of the World Wide Web (the "Web"). Subscribers to the Web have sought
improved Internet access capabilities, which has resulted in increased usage of
28.8 Kbps modems, ISDN adapters and cable modems. Improvements in video and
audio compression technology, standards and Internet access have made possible
new forms of motion-video content for Internet publishers and their target
audiences. The Company's products are being designed to take advantage of these
technological developments and target the rapidly- emerging market for Internet
video publishing, Internet video broadcasts and Internet video call centers by
enhancing Internet web pages with audio and motion-video.

Video Surveillance. The Company believes that commercial and residential
video surveillance products represent another strong business opportunity. The
Company delivered its first video surveillance system to Alcatel in the first
quarter of 1996. This industrial surveillance system integrates standard alarm
and sensory devices and allows a central operator to monitor and inspect
hundreds of remote sites over the customer's existing frame relay computer
network. The Company intends to enter into relationships and collaborative
projects with communication system integrators, security system resellers,
distributors and suppliers to capitalize on this market.

The Company believes that the convergence of multimedia PCs, new
standards-based audio and video technologies and increased interest in the
Internet and corporate Intranets combined with PC price levels for such
capabilities will generate a rapid adoption of video communications products and
services. The Company's enabling technologies provide for economical solutions
for adapting existing and new PCs with video communication capabilities.

<PAGE>

The Company was incorporated in Delaware in February 1994 and acquired all of
the issued and outstanding capital stock of its affiliate, Viewpoint Systems,
Inc. ("Viewpoint") in May 1994. Unless otherwise indicated, references in this
Prospectus to the Company include its wholly-owned subsidiaries, Viewpoint,
Videoware, Inc. ("VideoWare"), and Osprey Technologies, Inc. ("Osprey"), all
Delaware corporations. The Company's principal executive offices are located at
2665 Villa Creek Drive, Suite 200, Dallas, Texas 75234, its telephone number is
(972) 488-7200, its fax number is (972) 488-7299 and its Internet address is
www.mmac.com.

<PAGE>
THE OFFERING

Securities Offered................... 1,400,000 shares of Common Stock and
1,400,000 Public Warrants to purchase one
(1) share of Common Stock at $3.50. The
shares of Common Stock and the Public
Warrants must be purchased on the basis
of one Public Warrant for each share of
Common Stock purchased and will be
separately transferable immediately upon
issuance. See "Risk Factors -- Warrants
Redeemable at Nominal Price" and
"Description of Securities."

Common Stock to be Outstanding after
the Offering(1).................... 7,696,291

Warrants to be Outstanding after the 5,623,549
Offering.............................

Terms of the Public
Warrants........................... Each Public Warrant is exercisable at any
time commencing six months from the date
of this Prospectus and entitles the
holder thereof to purchase one share of
Common Stock at a price of $3.50 per
share, subject to adjustment in certain
circumstances, at any time until five
years after the date of this Prospectus.
The Public Warrants are redeemable by the
Company, at any time commencing twelve
months after the date of this Prospectus,
at a price of $.10 per Public Warrant,
upon not less than 30 days prior written
notice to the registered holders of the
Public Warrants, provided that the
closing price or bid price of the Common
Stock equals or exceeds 120% of the
initial public offering price per share
of Common Stock (currently $5.40, subject
to adjustment) for any 20 trading days
within a period of 30 consecutive trading
days ending on the fifth day prior to the
day on which the Company gives notice of
redemption. See "Description of
Securities -- Warrants."

Use of Proceeds...................... The Company intends to use the net
proceeds of this offering for repayment
of outstanding accounts payable and
indebtedness (including amounts due to
affiliates of the Company); marketing and
sales activities; research and
development; and the balance for working
capital and general corporate purposes.
See "Use of Proceeds."

Risk Factors......................... The securities offered hereby are
speculative and involve a high degree of
risk and immediate substantial dilution
and should not be purchased by investors
who cannot afford the loss of their
entire investment. See "Risk Factors" and
"Dilution."

Proposed Nasdaq Symbols.............. Common Stock -- MMAC
Public Warrants -- MMACW
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(1) Includes 608,283 shares of Common Stock issued on the date of this
Prospectus upon the conversion of $2,430,300 principal amount of Convertible
Debt and approximately $367,828 of accrued interest and 633,694 shares of
Common Stock issued on the date of this Prospectus upon the conversion of
$2,915,000 principal amount of Convertible Bridge Debt at the offering price
of the Common Stock and Public Warrants (based on an assumed offering price
of $4.50 per share and $.10 per public warrant). Does not include (i)
1,584,005 shares of Common Stock reserved for issuance upon exercise of
outstanding warrants to purchase common stock, (ii) 140,000 shares of Common
Stock reserved for issuance upon exercise of the Representative's Warrants,
(iii) 140,000 shares of Common Stock reserved for issuance upon exercise of
Representative's Public Warrants issuable upon exercise of Representative's
Warrants, (iv) 909,975 shares of Common Stock reserved for issuance upon
exercise of options available for future grant under the 1995 Option Plan,
(v) 1,090,025 shares of Common Stock reserved for issuance upon exercise of
options granted under the 1995 Option Plan, (vi) 861,333 shares of Common
Stock reserved for issuance upon exercise of options granted under the 1994
Option Plan, (vii) 84,770 shares of Common Stock reserved for issuance upon
exercise of options granted under the 1993 Option Plan, (viii) 45,000 shares
of Common Stock reserved for issuance upon exercise of options granted under
the 1995 Directors Stock Option Plan, (ix) 205,000 shares of Common Stock
reserved for issuance upon exercise of options available for future grant
under the 1995 Directors Stock Option Plan, (x) 250,000 shares of Common
Stock reserved for issuance under the Employee Stock Purchase Plan, (xi)
1,297,567 shares of Common Stock reserved for issuance upon exercise of the
Convertible Debt Warrants, (xii) 1,400,000 shares of Common Stock reserved
for issuance upon exercise of the Public Warrants, and (xiii) 608,283 shares
of Common Stock reserved for issuance upon exercise of Public Warrants
issued on the date of this Prospectus upon conversion of $2,430,300
principal amount of Convertible Debt and approximately $367,828 of accrued
interest and 633,694 shares of Common Stock reserved for issuance upon the
exercise of Public Warrants issued on the date of this Prospectus upon the
conversion of $2,915,000 principal amount of Convertible Bridge Debt at the
offering price of Common Stock and Public Warrants. See "Management's
Discussion and Analysis of Financial Condition and Results of Operations,"
"Management -- Employee Stock Plans," "Description of Securities" and
"Underwriting."

<PAGE>

SUMMARY CONSOLIDATED FINANCIAL INFORMATION

The following summary financial data as of December 31, 1994, December 31,
1995 and September 30, 1996 and for each of the periods ended December 31, 1994
and 1995 and September 30, 1995 and 1996 is derived from the Company's
consolidated financial statements. The following data should be read in
conjunction with the consolidated financial statements of the Company, including
the notes thereto included elsewhere herein. See "Management's Discussion and
Analysis of Financial Condition and Results of Operations" and "Consolidated
Financial Statements."

CONSOLIDATED STATEMENT OF OPERATIONS DATA:

CONSOLIDATED BALANCE SHEET DATA:

<TABLE>
<CAPTION>
DECEMBER 31, SEPTEMBER 30, 1996
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1994 1995
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PRO FORMA
AS
ACTUAL PRO FORMA(2) ADJUSTED(2)(3)
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Working capital (deficit) .... $ (209,143) $(3,891,602) $(4,680,592) $(4,680,592) $5,635,336
Total assets.................. 1,781,055 1,244,766 1,560,096 3,125,096 7,541,449
Total liabilities............. 3,180,807 4,497,330 6,103,043 7,668,043 1,268,468
Stockholders' equity
(deficit)..................... (1,399,752) (3,252,564) (4,542,947) (4,542,947) 6,272,981
</TABLE>
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(1) From Viewpoint's inception through its acquisition by the Company on May 11,
1994, Viewpoint elected to be treated as an S Corporation for federal income
tax purposes and, accordingly, its taxable income or loss was included in
the income tax returns of its shareholders. Viewpoint's status as an S
Corporation was terminated on May 11, 1994.

(2) Gives pro forma effect to transactions subsequent to September 30, 1996 but
prior to the date of this Prospectus consisting of issuance of Convertible
Bridge Debt of $1,565,000. See "Description of Securities" and "Certain
Transactions."

(3) Gives effect, on an as adjusted basis, to the sale of the 1,400,000 shares
of Common Stock and 1,400,000 Public Warrants offered hereby and the initial
application of the estimated net proceeds therefrom. Also gives effect to
the conversion of $2,430,300 of Convertible Debt and accrued interest of
approximately $367,828 and $2,915,000 of Convertible Bridge Debt to Common
Stock. See "Use of Proceeds," "Certain Transactions" and "Description of
Securities."

<PAGE>

RISK FACTORS

The securities offered hereby are speculative and involve a high degree of
risk. Each prospective investor should carefully consider the following risk
factors inherent in and affecting the business of the Company and this offering
before making an investment decision.

Development Stage Company; Limited Operating History; Going Concern
Qualification in Independent Auditor's Report. The Company is a development
stage company and has commenced limited marketing of its products. Accordingly,
the Company has a limited operating history upon which an evaluation of its
prospects can be made. Such prospects must be considered in light of the risks,
expense, delays, problems and difficulties frequently encountered in the
establishment of a new business in an industry characterized by intense
competition, as well as risks encountered in the shift from development to
commercialization of new products based on innovative technologies. The
Company's prospects are dependent upon the successful commercialization of its
products. There can be no assurance that the Company will be able to implement
its business plan or that unanticipated expenses, problems or difficulties,
technical or otherwise, will not result in material delays in its
implementation. The Company's independent auditors have included a going concern
qualification in their audit report on the Company's consolidated financial
statements stating that such financial statements have been prepared assuming
that the Company will continue as a going concern and that, among other things,
the Company's financial condition and losses from operations since inception
raise substantial doubt about the ability of the Company to continue as a going
concern. Statement of Financial Accounting Standards No. 107 ("SFAS 107")
requires an entity to disclose the fair value of financial instruments for which
it is practicable to estimate that value. Management of the Company has
determined that it is not practicable to estimate, in accordance with SFAS 107,
the fair values at December 31, 1995 of its long and short term debt. See
"Management's Discussion and Analysis of Financial Condition and Results of
Operations," "Business" and Note 1 and Note 2 of "Notes to Consolidated
Financial Statements."

Limited Revenue; Significant Losses; Accumulated Deficit. Since inception,
the Company has generated limited revenue, including revenues of $127,531,
$285,354, and $900,446 and incurred significant losses, including losses of
$2,717,421, $5,414,878 and $3,081,082 for the years ended December 31, 1994 and
1995, and the nine months ended September 30, 1996, respectively, and has
continued to incur significant additional losses to date. At September 30, 1996,
cumulative losses since inception through September 30, 1996 were $11,861,511.
Inasmuch as the Company intends to increase its level of activities following
consummation of this offering and will be required to make significant
expenditures in connection with marketing and product development activities,
the Company anticipates that losses will continue for the foreseeable future and
until such time as the Company is able to build an effective marketing and sales
organization, develop a network of independent resellers and achieve market
acceptance of its products. In addition, the Company's future performance will
be subject to a number of business factors beyond the Company's control, such as
technological changes and developments by others and unfavorable general
economic conditions, including downturns in the economy or a decline in the DVC
or PC industries or in targeted commercial markets, which would result in a
reduction or deferral of capital expenditures by prospective customers. There
can be no assurance that the Company will be able to successfully implement its
marketing strategy, generate significant revenues or achieve profitable
operations. See "Management's Discussion and Analysis of Financial Condition and
Results of Operations" and "Consolidated Financial Statements."

Significant Capital Requirements; Dependence on Offering Proceeds; Possible
Need for Additional Financing. The Company's capital requirements in connection
with the design, development and commercialization of its products have been and
will continue to be significant. To date, the Company has been substantially
dependent upon loans from its principal stockholders, as well as private
placements of its debt and equity securities, to finance its working capital
requirements. The Company is dependent on the proceeds of this offering to
commence full-scale marketing activities in connection with its products, to
complete the development of additional product and software applications, and to
fund the Company's working capital requirements. The Company anticipates, based
on currently proposed plans and assumptions relating to its operations, that the
proceeds of this offering will be sufficient to satisfy its contemplated cash
requirements for at least twelve months following the consummation of this
offering.

<PAGE>

In the event that the Company's plans change or prove to be inaccurate or if the
proceeds of this offering prove to be insufficient to fund operations, the
Company could be required to seek additional financing sooner than currently
anticipated or could be required to curtail its activities. The Company has no
current arrangements with respect to, or sources of, additional financing, and
there can be no assurance that existing stockholders will provide any portion of
the Company's future financing requirements. There can be no assurance that any
additional financing will be available to the Company on acceptable terms, or at
all. Additional equity financing may involve substantial dilution to the
interests of the Company's then existing stockholders. See "Use of Proceeds" and
"Certain Transactions."

Technological Factors; Uncertainty of Product Development and
Commercialization. The Company has only recently commenced limited
commercialization of its products for a limited number of users. Accordingly,
there can be no assurance that, upon widespread commercial use, if any, these
products will satisfactorily perform all of the functions for which they have
been designed or that they will operate satisfactorily. The Company intends to
use a portion of the proceeds of this offering in connection with product
refinement and enhancement and the development of additional products. Product
development, commercialization and continued system refinement and enhancement
efforts remain subject to all of the risks inherent in development of new
products based on innovative technologies, including unanticipated delays,
expenses and technical problems or difficulties, as well as the possible
insufficiency of funds to implement development efforts, which could result in
abandonment or substantial change in product commercialization. The Company's
success will be largely dependent upon its products meeting targeted cost and
performance objectives of large-scale production, the Company's ability to adapt
its products to satisfy industry standards and the timely introduction of its
products into the marketplace, among other things. There can be no assurance
that, upon wide-scale commercial introduction, the Company's products and
software applications will satisfy current price or performance objectives, that
unanticipated technical or other problems which would result in increased costs
or material delays in introduction and commercialization will not occur, or that
the Company's products will prove to be sufficiently reliable or durable under
actual operating conditions or otherwise be commercially viable. Software and
other technologies as complex as those incorporated into the Company's systems
may contain errors which become apparent subsequent to widespread commercial
use. Remedying such errors could delay the Company's plans and cause it to incur
additional costs, having a material adverse impact on the Company. See "Business
- -- Products" and "-- Marketing and Sales."

Concentration of Revenue; Dependence on Key Customers; Concentration of
Credit Risk. A substantial portion of the Company's sales are made to a small
number of customers, generally on an open account basis with no collateral
required. There can be no assurance that these customers will maintain their
volume of business with the Company. A loss of the Company's sales to these
customers could have a material adverse effect on the Company's results of
operations unless other customers were found to provide the Company with similar
revenues. The Company performs ongoing credit evaluation of its customers and
maintains reserves for potential credit losses. Although such losses in the
aggregate have not exceeded management's expectations, there can be no assurance
that potential credit losses will not exceed reserves in the future. In
addition, the Company invests its cash and cash equivalents with two financial
institutions, one a Texas commercial bank, and the other a major brokerage
house. Cash balances at the Texas commercial bank are insured by the Federal
Deposit Insurance Corporation up to $100,000 and the brokerage house maintains
accounts in several banks throughout the country and in government securities.
Should either the Texas commercial bank or the brokerage house cease business
operations, there can be no assurance that the Company will not suffer losses.
See "Management's Discussion and Analysis of Financial Condition and Results of
Operations."

Uncertainty of Market Acceptance. The DVC industry is characterized by
emerging and evolving markets and an increasing number of market entrants who
have introduced or are developing an array of new DVC systems. Each of these
entrants is seeking to establish its products as the preferred solution for
desktop video applications. As is typical in the case of emerging and evolving
markets, demand and market acceptance for newly introduced products and services
is subject to a high level of uncertainty. The Company has not yet commenced
significant marketing activities relating to product commercialization and
currently has limited marketing experience and limited financial, personnel and
other resources to undertake extensive marketing activities. The Company has not
conducted and does not

<PAGE>

intend to conduct formal market or concept feasibility studies for its proposed
products. The relatively high cost and less than television broadcast quality
video of DVC systems have, to date, limited the market acceptance of DVC
systems. Consequently, potential customers may elect to utilize other products
which they believe to be more efficient or have other advantages over the
Company's products, or may otherwise be reluctant to purchase the Company's
products. Achieving market acceptance for the Company's products will require
substantial marketing efforts and expenditure of significant funds to create
awareness and demand by potential consumers as to the perceived benefits and
distinctive characteristics of the Company's products. There can be no assurance
that the Company will have available funds or other resources necessary to
achieve such acceptance. See "Business -- Marketing and Sales."

Limited Marketing Capabilities and Experience; Dependence Upon Third-Party
Resellers. The Company has limited marketing experience and has conducted only
limited marketing activities. Although the Company expects to continue to market
directly to certain accounts, the Company intends to use a portion of the
proceeds of this offering to establish a network of resellers, consisting
primarily of value-added resellers ("VARs"), systems integrators and original
equipment manufacturers ("OEMs") with established distribution channels to
market the Company's products and to educate potential resellers to install and
service its systems. The Company's prospects will be significantly affected by
its ability to successfully develop relationships with VARs, systems integrators
and OEMs and upon the marketing efforts of such resellers. While the Company
believes that independent resellers with which it enters into such arrangements
will have an economic motivation to market the Company's products, the time and
resources devoted to these activities generally will be controlled by such
entities and not by the Company. The Company will also be dependent upon such
resellers to provide installation and support services. A decline in the
financial prospects of particular resellers or any of their customers, or
inadequate installation and support services by resellers, could have a material
adverse effect on the Company. In addition, such resellers will likely market
various product lines, including, in some cases, products directly competitive
with the Company's products. The Company has entered into agreements with a
limited number of resellers to distribute its products and has recently entered
into a licensing agreement with Boca to manufacture and market
FamilyFone(Trademark) and related upgrades. There can be no assurance that the
Company will be able, for financial or other reasons, to finalize any additional
third-party distribution or marketing arrangements or that such arrangements, if
finalized, will result in further commercialization of any of the Company's
products. See "Use of Proceeds," "Management's Discussion and Analysis of
Financial Condition and Results of Operations" and "Business -- Marketing and
Sales."

Competition. The market for DVC systems is highly competitive and
characterized by the frequent introduction of new products based upon innovative
technologies. The Company competes with numerous well-established manufacturers
and suppliers of videoconferencing, networking, telecommunications and
multimedia equipment and products, certain of which dominate the existing
video-conferencing market for such products. In addition, the Company is aware
of others that are developing, and in some cases have introduced, new DVC
systems. Most of the Company's competitors possess substantially greater
financial, marketing, personnel and other resources than the Company, have
established reputations relating to product design, development, manufacture,
marketing and service of networking, telecommunications and video products and
have significant budgets to permit them to implement extensive advertising and
promotional campaigns to market new products in response to competitors. Among
the Company's direct competitors are Target Technologies, Inc., VIVO Software,
Inc., Zydacron, Inc., VCON, Ltd., Corel Corporation and Video LAN Technologies,
Inc. In addition, electronics manufacturers such as Intel actively compete for
business in this market. See "Business -- Competition."

Technological Obsolescence; Need to Conform to Industry Standards. The
markets for the Company's products are characterized by rapidly changing
technology and evolving industry standards, often resulting in product
obsolescence or short product lifecycles. Accordingly, the Company's ability to
compete will depend in large part on its ability to introduce its products in a
timely manner, to continually enhance and improve its system and software
products and to maintain development capabilities to anticipate or adapt to
technological changes and advances in the DVC and PC industries, including
ensuring continuing compatibility with evolving industry standards and
technological advances. There can be no assurance that the Company will be able
to compete successfully, that competitors will not

<PAGE>

develop technologies or products that render the Company's products obsolete or
less marketable, or that the Company will be able to keep pace with the
technological demands of the marketplace or successfully enhance and adapt its
products to be compatible with newly developed PC and networking products and
technologies or software products, or satisfy industry standards and the needs
of its consumers and potential consumers. Industry standards covering the
Company's products are being established by, among others, the International
Telecommunications Union. Such standards will provide for acceptable product
performance levels and interoperability and compatibility standards. If such
standards, when adopted, differ from the proposed standards, or are changed
after adoption, customer confidence in, and the market for, the applicable
product could be adversely affected. There can be no assurance that such
standards will remain the same, and if changed, that the Company will be able to
comply with any changed standards. If any product does not comply with the
applicable standards the Company may have to discontinue sales of such product
until such time, if ever, as it is able to modify or redesign its technology. In
addition, the establishment of standards adverse to the Company's system could
provide substantial competitive advantages to manufacturers of other
videoconferencing systems. In particular, the Company's compressed packet video
Codec utilized in the current version of the Viewpoint-PRO(Trademark) system
does not meet the newly proposed applicable standards and the Company will have
to modify or redesign the non-conforming portion of the product. The project to
upgrade the Viewpoint-PRO to the new industry standards will involve the
development of a new product based on a technology derivative of the Company's
Osprey-1000 Codec. The Company estimates that the project will take 8 man-months
to complete at a cost of approximately $70,000. The Company projects that the
upgraded Viewpoint-PRO will be available during 1997. The Research and
Development portion of the Use of Proceeds includes the cost of this project.
See "Business -- Competition."

Dependence Upon Third-Party Manufacturers and Suppliers. The Company has, to
date, engaged small contract manufacturers to supply its products in limited
quantities pursuant to purchase orders. There can be no assurance that its
products can be manufactured reliably on a large-scale basis on commercially
reasonable terms, or at all. In addition, the Company has been and will continue
to be dependent on third parties for the supply and manufacture of all of its
component and electronic parts, including standard and custom-designed
components. The Company generally does not maintain supply agreements with such
third parties but instead purchases components and electronic parts pursuant to
purchase orders in the ordinary course of business. The Company is substantially
dependent on the ability of its third-party manufacturers and suppliers to,
among other things, meet the Company's design, performance and quality
specifications.

Failure by the Company's third-party manufacturers and suppliers to comply
with these and other requirements could have a material adverse effect on the
Company. There can be no assurance that the Company's third-party manufacturers
and suppliers will dedicate sufficient production capacity to meet the Company's
scheduled delivery requirements or that the Company's suppliers or manufacturers
will have sufficient production capacity to satisfy the Company's requirements
during any period of sustained demand. Moreover, the electronics industry from
time to time experiences short supplies of certain high demand components, which
may adversely affect the Company's ability to meet its production schedules.
Furthermore, although the Company owns the designs and dies for its custom
designed components and believes that alternative sources of supply are
available, the Company currently purchases all of its specially designed
components and certain high demand components from sole source suppliers.
Failure of manufacturers or suppliers to supply, or delays in supplying, the
Company with systems or components, or allocations in the supply of certain high
demand components could materially adversely affect the Company's operations and
ability to meet its own delivery schedules on a timely and competitive basis.
See "Business -- Production and Supply."

Broad Discretion in Application of Proceeds. Approximately $832,800 (16.3%)
of the estimated net proceeds from this offering has been allocated to working
capital and general corporate purposes. Accordingly, the Company will have broad
discretion as to the application of such proceeds. "Management's Discussion and
Analysis of Financial Condition and Results of Operations -- Liquidity" and
"Description of Securities."

Offering Benefits Directors and Selling Securityholders; Proceeds to Repay
Indebtedness. The Company will use a portion of the proceeds of this offering to
(i) repay $257,548 principal amount of Secured

<PAGE>

and Demand Notes, including $200,000 payable to Glenn A. Norem, CEO of the
Company and $35,000 payable to G.A. Norem I LP, a partnership managed by Mr.
Norem, plus accrued interest of approximately $13,566 on the Secured and Demand
Notes, (ii) repayment of $247,250 principal amount of Convertible Debt plus
accrued interest of approximately $105,229, (iii) payment of accrued expenses
and trade accounts payable of approximately $420,000 and (iv) payment of accrued
interest on the Convertible Bridge Debt of approximately $62,855. See
"Management's Discussion and Analysis of Financial Condition and Results of
Operations -- Liquidity" and "Description of Securities."

Patents, Trademarks and Proprietary Information. The Company holds a United
States patent covering certain fundamental aspects of the compressed packet
video Codec incorporated into the Viewpoint-PRO(Trademark) system. The Company
may apply for additional patents relating to other aspects of its products and
has applied for trademark registration for the Viewpoint-PRO(Trademark),
ViewCast(Trademark), Osprey-1000(Trademark), SLIC-Video(Trademark),
FamilyFone(Trademark), and WorkFone(Trademark) names, among others. There can be
no assurance as to the breadth or degree of protection which existing or future
patents, if any, may afford the Company, that any patent applications will
result in issued patents, that the Company's patents or trademarks will be
upheld, if challenged, or that competitors will not develop similar or superior
methods or products outside the protection of any patent issued to the Company.
Although the Company believes that its patent and trademarks and the Company's
products do not and will not infringe patents or trademarks or violate the
proprietary rights of others, it is possible that the Company's existing patent
or trademark rights may not be valid or that infringement of existing or future
patents, trademarks or proprietary rights may occur. In the event the Company's
products infringe patents or proprietary rights of others, the Company may be
required to modify the design of its products, change the name of its products
or obtain a license for certain technology. There can be no assurance that the
Company will be able to do so in a timely manner, upon acceptable terms and
conditions, or at all. Failure to do any of the foregoing could have a material
adverse effect upon the Company. In addition, there can be no assurance that the
Company will have the financial or other resources necessary to enforce or
defend a patent infringement or proprietary rights violation action which may be
brought against it. Moreover, if the Company's products infringe patents,
trademarks or proprietary rights of others, the Company could, under certain
circumstances, become liable for damages, which also could have a material
adverse effect on the Company.

The Company also relies on confidentiality agreements with its directors,
employees, consultants and manufacturers and employs various methods to protect
the source codes, concepts, ideas, proprietary know-how and documentation of its
proprietary technology. However, such methods may not afford complete protection
and there can be no assurance that others will not independently develop similar
know-how or obtain access to the Company's know-how or software codes, concepts,
ideas and documentation. Furthermore, although the Company has and expects to
continue to have confidentiality agreements with its directors, employees,
consultants, manufacturers and appropriate vendors, there can be no assurance
that such arrangements will adequately protect the Company's trade secrets. See
"Business -- Patents, Trademarks and Proprietary Information."

Risks Relating to Proposed Expansion; Risks Relating to Foreign Operations.
The Company intends to use the proceeds of this offering to seek to expand its
current level of operations. Successful expansion of the Company's operations
will be dependent, among other things, on the Company's ability to achieve
significant market acceptance for its products, hire and retain skilled
management, marketing, technical and other personnel, establish an effective
sales organization and enter into satisfactory marketing arrangements, secure
adequate sources of supply on a timely basis and on commercially reasonable
terms, and successfully manage growth (including monitoring operations,
controlling costs and maintaining effective quality controls). Although the
Company, as of the date of the Prospectus, has no agreements, understandings or
commitments and is not engaged in any negotiations relating thereto, the Company
could also seek to expand its operations through acquisitions. In such an event,
investors in this offering would not have an opportunity to evaluate the
specific merits or risks of any potential acquisition. In addition, to the
extent the Company enters into foreign markets, the Company will be subject to
all of the risks inherent in foreign trade, including trade restrictions, export
duties and tariffs, fluctuations in foreign currencies and international
political, regulatory and economic developments affecting foreign trade. There
can be no assurance that the Company will be able to successfully expand

<PAGE>

its operations or that the Company will not remain largely dependent on
non-recurring system sales to a limited customer base, which sales will
constitute all or a significant portion of the Company's revenue. See "Use of
Proceeds" and "Business -- Government Regulation."

Possible Fluctuations in Operating Results. The Company's operating results
could vary from period to period as a result of the length of the Company's
sales cycle, as well as from purchasing patterns of potential customers, the
timing of introduction of new products, software applications and product
enhancements by the Company and its competitors, technological factors,
variations in sales by distribution channels, competitive pricing, and generally
nonrecurring system sales. The Company's sales order cycle, which generally
commences at a time a prospective user demonstrates an interest in purchasing
one of the Company's products and ends upon execution of a purchase order with
that customer, could range from one to eighteen months. The period from the
execution of a purchase order until delivery of system components to the
Company, assembly and shipment, at which time the Company recognizes revenue,
may range from approximately one to four months. Although the Company intends to
use a portion of the proceeds of this offering to purchase additional component
parts, which the Company believes may reduce the length of its production and
delivery cycle, there can be no assurance that such factors will not cause
significant fluctuations in operating results in the future. Additionally, the
Company anticipates that upon entering into agreements with resellers for
distribution of the Company's products, of which there can be no assurance, such
distributors may place initial stocking orders for systems, component parts and
software programs, which could also result in material fluctuations in the
Company's operating results. See "Management's Discussion and Analysis of
Financial Condition and Results of Operations" and "Business -- Production and
Supply."

Limitations on Use of Net Operating Loss Carry Forwards. At December 31,
1995, the Company had substantial net operating loss carry forwards for federal
tax purposes available to offset future taxable income. Under Section 382 of the
Internal Revenue Code of 1986, as amended, utilization of prior net operating
loss carry forwards is limited after an ownership change, as defined in Section
382. There can be no assurance that the Company will not in the future be
subject to further significant limitations on the use of its net operating loss
carry forwards. In the event the Company achieves profitable operations, any
significant limitation on the utilization of net operating loss carry forwards
would have the effect of increasing the Company's tax liability and reducing net
income and available cash resources. See "Management's Discussion and Analysis
of Financial Condition and Results of Operations -- Liquidity."

Government Regulation. The Company is subject to regulations relating to
electromagnetic radiation from its products, which impose compliance burdens on
the Company. In the event the Company redesigns or otherwise modifies its
products or completes the development of new products, it will be required to
comply with Federal Communications Commission regulations with respect to such
products prior to their commercialization. There can be no assurance that the
Company will be able to comply with such regulations. In addition, new
legislation and regulations, as well as revisions to existing laws and
regulations at the federal, state and local levels may be proposed in the future
affecting the video communications industries. Such proposals could affect the
Company's operations, result in material capital expenditures, affect the
marketability of its products and limit opportunities for the Company with
respect to modifications of its products or with respect to new or proposed
products or technologies. Expansion into foreign markets may also require the
Company to comply with additional regulatory requirements. The technology
contained in the Company's products may be subject to U.S. export controls.
There can be no assurance that such export controls, either in their current
form or as may be subsequently enacted, will not delay introduction of new
products or limit the Company's ability to distribute products outside of the
United States. Further, various countries may regulate the import of certain
technologies contained in the Company's products. Any such export or import
restrictions, new legislation or regulation or government enforcement of
existing regulations could have a material adverse effect on the Company's
business, operating results and/or financial condition. There can be no
assurance that the Company will be able to comply with additional applicable
laws and regulations without excessive cost or business interruption, if at all,
and failure to comply could have a material adverse effect on the Company. See
"Business -- Government Regulation."

Dependence on Key Personnel. The success of the Company will be largely
dependent on the personal efforts of Glenn A. Norem, its Chief Executive
Officer, and other key personnel. The Company

<PAGE>

entered into a five-year employment agreement with Mr. Norem in February 1994.
All other key personnel, including Philip M. Colquhoun, President of the
Company, William S. Leftwich, Chief Financial Officer of the Company, David T.
Stoner, Vice President of Operations of the Company, Neal S. Page, Vice
President and General Manager of Osprey, A. David Boomstein, Vice President of
Business Development of the Company and Daniel W. Dodson, Vice President of
Marketing of the Company, are "at-will" employees by terms of their employment
agreements. The employment of each such key employee may therefore be terminated
by the officer or the Company at any time, for any reason or no reason. The loss
of the services of Mr. Norem or certain other key employees could have a
material adverse effect on the Company's business and prospects. The Company
plans to obtain "key-man" life insurance on the life of Mr. Norem in the amount
of $1,000,000. The success of the Company is also dependent upon its ability to
hire and retain qualified operational, financial, technical, marketing, sales
and other personnel. There can be no assurance that the Company will be able to
hire or retain such necessary personnel. See "Business -- Employees" and
"Management."

Control by Current Principal Stockholders; Potential Representative's
Influence on the Company Upon Exercise of Right to Designate Board Member. Upon
the consummation of this offering, the officers, directors and existing
stockholders of the Company will beneficially own approximately 81.8% of the
Company's outstanding Common Stock (79.6% if the Representatives' over-allotment
option is exercised in full). While these persons will not individually control
a majority of the shares of Common Stock of the Company, they may be able to
effectively control the decisions on matters including election of all of the
Company's directors, increasing the authorized capital stock, dissolution,
merger or sale of the assets of the Company and generally may be able to direct
the affairs of the Company. In addition, upon consummation of the offering, the
Representative has been granted, for a period of five years, the right to
designate a person to serve as a director of the Company. If the Representative
were to exercise such right, it could be deemed under certain circumstances to
be in a position to assert influence over the Company. See "Management,"
"Principal Stockholders" and "Certain Transactions."

Significant Outstanding Options and Warrants. As of September 30, 1996 there
were outstanding stock options to purchase an aggregate of approximately
2,080,590 shares of Common Stock at exercise prices ranging from $.04 to $4.00
per share and warrants to purchase an aggregate of approximately 1,442,505
shares of Common Stock at prices ranging from $1.00 to $3.00 per share. To the
extent that outstanding options and warrants are exercised, dilution to the
Company's stockholders will occur. Moreover, the terms upon which the Company
will be able to obtain additional equity capital may be adversely affected
because the holders of outstanding options and warrants can be expected to
exercise them at a time when the Company would, in all likelihood, be able to
obtain any needed capital on terms more favorable to the Company than the
exercise terms provided by such outstanding securities. See "Management --
Employee Stock Plans" and "Certain Transactions."

Immediate and Substantial Dilution. Assuming all 1,400,000 shares of Common
Stock offered hereby are sold, this offering will involve an immediate and
substantial dilution of $3.74 (83.1%) per share between the pro forma net
tangible book value per share of Common Stock and the offering price. The
Company believes that the net proceeds of this offering together with available
cash will be sufficient to meet the Company's operating expenses and capital
requirements for at least the next twelve months. The Company anticipates that
additional funding will be required after the use of the net proceeds of this
offering. Such additional funding will likely result in further dilution to the
Company's stockholders. See "Dilution."

No Dividends. The Company has not paid any cash dividends on its Common Stock
and does not expect to declare or pay any cash dividends in the foreseeable
future. Certain of the Company's debt instruments include covenants precluding
the payment of cash dividends until after such debt instruments are repaid. See
"Dividends."

Authorization and Discretionary Issuance of Preferred Stock. The Company's
Certificate of Incorporation authorizes the issuance of "blank check" preferred
stock with such designations, rights and preferences as may be determined from
time to time by the Board of Directors. Accordingly, the Board of Directors is
empowered, without stockholder approval, to issue preferred stock with dividend,
liqui-

<PAGE>

dation, conversion, voting or other rights which could adversely affect the
voting power or other rights of the holders of the Company's Common Stock. In
the event of issuance, the preferred stock could be utilized, under certain
circumstances, as a method of discouraging, delaying or preventing a change in
control of the Company. Although the Company has no present intention to issue
any shares of its preferred stock, there can be no assurance that the Company
will not do so in the future. See "Description of Securities -- Preferred
Stock."

Limitation on Monetary Liability of Officers and Directors to Stockholders.
Section 145 of the General Corporation Law of the State of Delaware contains
provisions entitling directors and officers of the Company to indemnification
from judgments, fines, amounts paid in settlement and reasonable expenses,
including attorney's fees, as the result of an action or proceeding in which
they may be involved by reason of being or having been a director or officer of
the Company provided said officers or directors acted in good faith. Articles
Seven and Ten of the Company's Certificate of Incorporation contain provisions
indemnifying officers and directors of the Company to the fullest extent
permitted by Delaware law. These provisions provide, among other things, that a
director of the Company shall not be liable either to the Company or its
stockholders for monetary damages for breach of fiduciary duty as a director.
The Company has also entered into indemnification agreements with Messrs. Norem,
Leftwich, Colquhoun, Stoner, Dodson, Boomstein, Page, Jobe, and Culp which
provide for indemnification to the fullest extent allowable under the laws of
the State of Delaware. These provisions may limit the ability of the Company's
stockholders to collect on any monetary liability owed to them by an officer or
director of the Company.

Arbitrary Determination of Offering Price. The initial public offering price
of the Common Stock and the exercise price and terms of the Public Warrants have
been determined arbitrarily by negotiations between the Company and the
Representative. Factors considered in such negotiations, in addition to
prevailing market conditions, included the history and prospects for the
industry in which the Company competes, an assessment of the Company's
management, the prospects of the Company, its capital structure and certain
other factors deemed relevant. Therefore, the public offering price of the
Common Stock and the exercise price and terms of the Public Warrants do not
necessarily bear any relationship to established valuation criteria and may not
be indicative of prices that may prevail at any time or from time to time in the
public market for the Common Stock. See "Underwriting."

Shares Eligible for Future Sale; Registration Rights. Upon the consummation
of this offering, the Company will have 7,696,291 shares of Common Stock
outstanding (7,906,291 shares if the Representative's over-allotment option is
exercised in full)(assuming no exercise of outstanding options and warrants). Of
these shares, the 1,400,000 shares sold in this offering (1,610,000 shares if
the Representative's over-allotment option is exercised in full) and the
1,241,977 shares of Common Stock registered concurrently with this Prospectus
being offered pursuant to the Selling Securityholder Prospectus included in the
Registration Statement of which this Prospectus forms a part will be freely
tradeable, subject to "lock-up" agreements (see "Shares Eligible for Future
Sale"), under the Securities Act, except for any shares purchased by an
"affiliate" of the Company (in general, a person who has a control relationship
with the Company), which shares will be subject to the resale limitations of
Rule 144 adopted under the Securities Act. The remaining 5,054,314 shares are
deemed to be "restricted securities," as that term is defined under Rule 144
promulgated under the Securities Act, in that such shares were issued and sold
by the Company in private transactions not involving a public offering and are
not currently part of an effective registration. Except for "lock-up"
agreements, such shares are eligible for sale under Rule 144, or will become so
eligible at various times through October 1996. In addition, the Company has
granted the Representative demand and piggyback registration rights with respect
to the securities issuable upon exercise of the Representative's Warrants.

Under Rule 144, a stockholder who has beneficially owned Restricted Shares
for at least two (2) years (including persons who may be deemed to be
"affiliates" of the Company under Rule 144) may sell within any three (3) month
period a number of shares that does not exceed the greater of: a) one percent
(1%) of the then outstanding shares of a particular class of the Company's
Common Stock as reported on its 10-Q filing, or b) the average weekly volume on
NASDAQ during the four (4) calendar weeks preceding such sale and may only sell
such shares through unsolicited brokers' transactions. A

<PAGE>

stockholder who is not deemed to have been an "affiliate" of the Company for at
least ninety (90) days and who has beneficially owned his shares for at least
three (3) years would be entitled to sell such shares under Rule 144 without
regard to the volume limitations described above.

There has been no public market for the securities of the Company. Sales of
substantial amounts of shares of the Company's Common Stock, pursuant to Rule
144 or otherwise, could adversely affect the market price of the Common Stock,
and consequently make it more difficult for the Company to sell equity
securities in the future at a time and price which the Company deems
appropriate. See "Shares Eligible for Future Sale," "Underwriting," and
"Concurrent Registration of Securities."

NASDAQ Maintenance Requirements; Possible Delisting of Securities from NASDAQ
System; Risks of Low-Priced Stocks. NASDAQ has proposed rule changes increasing
its quantitative listing standards which, if enacted, would make it more
difficult for the Company to maintain compliance with NASDAQ's listing
requirements. If the Company is unable to satisfy NASDAQ's maintenance criteria
in the future, its securities will be subject to being delisted, and trading, if
any, would thereafter be conducted in the over-the-counter market in the
so-called "pink sheets" or the "Electronic Bulletin Board" of the National
Association of Securities Dealers, Inc. ("NASD"). As a consequence of such
delisting, an investor could find it more difficult to dispose of, or to obtain
accurate quotations as to the price of, the Company's securities.

The Securities Enforcement and Penny Stock Reform Act of 1990 requires
additional disclosure relating to the market for penny stocks in connection with
trades in any stock defined as a penny stock. The SEC has adopted regulations
that generally define a penny stock to be any equity security that has a market
price of less than $5.00 per share, subject to certain exceptions. Such
exceptions include any equity security listed on NASDAQ and any equity security
issued by an issuer that has (i) net tangible assets of at least $2,000,000, if
such issuer has been in continuous operation for three years, (ii) net tangible
assets of at least $5,000,000, if such issuer has been in continuous operation
for less than three years, or (iii) average annual revenue of at least
$6,000,000 if such issuer has been in continuous operation for less than three
years. Unless an exception is available, the regulations require the delivery,
prior to any transaction involving a penny stock, of a disclosure schedule
explaining the penny stock market and the risks associated therewith.

In addition, if the Company's securities are not quoted on NASDAQ, or the
Company does not have $2,000,000 in net tangible assets, trading in the Common
Stock would be covered by Rule 15g-9 promulgated under the Securities Exchange
Act of 1934, as amended, (the "Exchange Act") for non-NASDAQ and non-exchange
listed securities. Under such rule, broker/dealers who recommend such securities
to persons other than established customers and accredited investors must make a
special written suitability determination for the purchaser and receive the
purchaser's written agreement to a transaction prior to sale. Securities also
are exempt from this rule if the market price is at least $5.00 per share.

The Company's Common Stock, as of the date of this Prospectus, is not
technically within the definitional scope of a penny stock, and is expected to
be exempt from the definition of penny stock by operation of law because it will
be listed on NASDAQ. However, in the event that the Common Stock were
subsequently to become characterized as a penny stock, the market liquidity for
the Company's securities could be severely affected. In such an event, the
regulations on penny stocks could effectively limit the ability of
broker/dealers to sell the Company's securities and thus the ability of
purchasers of the Company's securities to sell their securities in the secondary
market.

Warrants Redeemable at Nominal Price. The Public Warrants are redeemable by
the Company at any time commencing twelve months from the date of this
Prospectus, for $.10 per Public Warrant upon thirty (30) days prior written
notice, provided that the average closing price or bid price of the Common Stock
for any twenty (20) trading days within the thirty (30) consecutive trading days
ending on the fifth day prior to notice of redemption equals or exceeds $ (120%
of initial public offering price per share of Common Stock). Redemption of the
Public Warrants by the Company could force the holders to exercise the Public
Warrants and pay the exercise price at a time when it may be disadvantageous for
the holders to do so, to sell the Public Warrants at the then current market
price when they might

<PAGE>

otherwise wish to hold the Public Warrants, or to accept the redemption price,
which is likely to be substantially less than the market value of the Public
Warrants at the time of redemption. In the event of the exercise of a
substantial number of Public Warrants within a reasonably short period of time
after the right to exercise commences, the resulting increase in the amount of
Common Stock of the Company in the trading market could substantially affect the
market price of the Common Stock. See "Description of Securities -- Warrants."

Legal Restrictions on Sales of Shares Underlying the Warrants. The Public
Warrants are not exercisable unless, at the time of the exercise, the Company
has a current prospectus covering the shares of Common Stock issuable upon
exercise of the Public Warrants, and such shares have been registered, qualified
or deemed to be exempt under the securities laws of the state of residence of
the exercising holder of the Public Warrants. Although the Company has agreed to
keep a registration statement covering the shares of Common Stock issuable upon
the exercise of the Public Warrants effective for the term of the Public
Warrants, if it fails to do so for any reason, the Public Warrants may be
deprived of value.

The Common Stock and Public Warrants are separately transferable immediately
upon issuance. Purchasers may buy Public Warrants in the aftermarket in, or may
move to, jurisdictions in which the shares underlying the Public Warrants are
not so registered or qualified during the period that the Public Warrants are
exercisable. In this event, the Company would be unable to issue shares to those
persons desiring to exercise their Public Warrants, and holders of Public
Warrants would have no choice but to attempt to sell the Public Warrants in a
jurisdiction where such sale is permissible or allow them to expire unexercised.
See "Description of Securities."

<PAGE>

USE OF PROCEEDS

Assuming the sale of the securities offered hereby (based on an assumed
offering price of $4.50 per share and $.10 per Public Warrant), the net proceeds
to the Company, after deducting estimated underwriting discounts and commissions
and expenses payable by the Company in connection with this offering, are
estimated to be approximately $5,102,800 ($5,943,220 if the Representative's
over-allotment option is exercised in full). The Company expects to use such
proceeds as follows:

<TABLE>
<CAPTION>
APPROXIMATE
APPLICATION OF NET PROCEEDS DOLLAR AMOUNT % OF PROCEEDS
- ------------------------------------------------------------ --------------- ----------------
<S> <C> <C>
Repayment of outstanding accounts payable and
indebtedness(1)............................................. $1,110,000 21.8
Research and development(2) ................................ 1,960,000 38.4
Marketing and sales(3) ..................................... 1,200,000 23.5
Working capital and general corporate purposes(4) ......... 832,800 16.3
--------------- ----------------
Total ................................................... $5,102,800 100.0
=============== ================
</TABLE>

(1) Represents (i) the repayment of $257,548 principal amount of Secured Notes
and Demand Notes plus accrued interest of approximately $13,566, including
$200,000 principal amount of Secured Notes and Demand Notes payable to
Glenn A. Norem, CEO of the Company and $35,000 payable to G.A. Norem I
L.P., a partnership managed by Mr. Norem, (ii) repayment of $247,250
principal amount of Convertible Debt plus accrued interest of $105,229,
(iii) payment of accrued expenses and trade accounts payable of
approximately $420,000, and (iv) payment of accrued interest on the
Convertible Bridge Debt of approximately $62,855. See "Management's
Discussion and Analysis of Financial Condition and Results of Operations --
Liquidity" and "Description of Securities."

(2) Includes amounts associated with continued refinement and enhancement of
the Company's products and amounts associated with the development of
additional products.

(3) Represents anticipated costs associated with marketing and sales
activities, including approximately $250,000 for the cost of print media,
participation in trade shows and direct mailings and approximately $400,000
for the salaries of four additional marketing and sales personnel and three
additional customer support personnel.

(4) Includes amounts for the payment of salaries of executive officers
anticipated to be approximately $385,000 over the 12 months following
consummation of this offering. See "Management," "Certain Transactions" and
"Business -- Production and Supply."

In the event that the Company's plans change or its assumptions change or
prove to be inaccurate or if the proceeds of this offering prove insufficient to
fund operations (due to unanticipated expenses or difficulties or otherwise),
the Company may find it necessary or advisable to reallocate some of the
proceeds within the above-described categories or to use portions thereof for
other purposes or may be required to seek additional financing or curtail its
operations. Future events, including changes in economic or industry conditions
or the Company's planned operations, may require the Company to use proceeds
allocated to working capital for marketing and sales or reallocate proceeds
among the various intended uses if it is determined at a later date that an
increase in such expenditures or reallocation of proceeds is necessary or
desirable. Any such determination would be based on, among other things, whether
and to what extent revenue from systems sales is sufficient to offset operating
expenses and the capital requirements associated with maintaining an inventory
of system components. Alternatively, the Company may use less of the proceeds
for marketing and sales in the event that such initial efforts prove more
successful than anticipated or the Company generates sufficient cash flow from
operations to otherwise fund such efforts.

The Company may, if and when the opportunity arises, use a portion of the
proceeds of this offering allocated to working capital, together with the
issuance of debt or equity securities, to acquire rights to technology and/or
products or to acquire existing companies in businesses the Company believes are
compatible with its business. Any decision to make such an acquisition will be
based upon a variety of factors, including, among others, the purchase price and
other financial terms of the transaction, the business prospects and competitive
position of, and technology or products provided by, the acquisition candidate
and the extent to which any technology or business would enhance the Company's
prospects.

<PAGE>

Potential acquisition candidates may include companies with products or
technologies that are compatible with the Company's products, or that the
Company believes would provide the Company with additional distribution
channels. As of the date of this Prospectus, the Company has no agreements,
understandings or arrangements with respect to any such acquisition. There can
be no assurance that the Company will be able to successfully consummate any
acquisition or successfully integrate any acquired business into its operations.
Investors in this offering will not have an opportunity to evaluate the specific
merits or risks of any acquisition.

The Company believes that the net proceeds of this offering together with
available cash will be sufficient to meet the Company's operating expenses and
capital requirements for at least the next twelve months. The Company
anticipates that additional funding will be required after the use of the net
proceeds of the offering. No assurance can be given that such additional
financing will be available when needed on terms acceptable to the Company, if
at all. See "Risk Factors -- Significant Capital Requirements; Dependence on
Offering Proceeds; Possible Need for Additional Financing."

Proceeds not immediately required for the purposes set forth above will be
invested in short-term, investment-grade, interest-bearing securities.

DIVIDENDS

The Company has never paid cash dividends on its Common Stock. The Board of
Directors does not anticipate paying cash dividends in the foreseeable future as
it intends to retain future earnings to finance the growth of the business. The
payment of future cash dividends will depend on such factors as earnings levels,
anticipated capital requirements, the operating and financial condition of the
Company and other factors deemed relevant by the Board of Directors.

Certain of the Company's debt instruments include covenants precluding
payment of cash dividends until after such debt instruments are repaid.

<PAGE>

DILUTION

The difference between the offering price per share of Common Stock and the
pro forma as adjusted net tangible book value per share of Common Stock after
this offering constitutes the dilution to investors in this offering. Net
tangible book value per share on any given date is determined by dividing the
net tangible book value (total tangible assets less total liabilities) of the
Company on such date by the number of shares of Common Stock outstanding on such
date.

After giving effect to the pro forma adjustments (see Footnote (2) to
"Prospectus Summary -- Summary Consolidated Financial Information"), the pro
forma net tangible book value of the Company at September 30, 1996 was
$(5,005,062), or $(.99) per share of Common Stock. After giving effect to (i)
the sale of 1,400,000 shares of Common Stock and 1,400,000 Public Warrants
offered by the Company hereby (based on an assumed offering price of $4.50 per
share and $.10 per Public Warrant) (less underwriting discounts and commissions
and estimated expenses of this offering) and (ii) the issuance of 1,241,977
shares of Common Stock issued on the date of this Prospectus upon the conversion
of $2,430,300 principal amount of Convertible Debt and approximately $367,828
accrued interest, and upon the conversion of $2,915,000 principal amount of
Convertible Bridge Debt, the pro forma as adjusted net tangible book value of
the Company at September 30, 1996 would have been $5,810,866 or $.76 per share,
representing an immediate increase in pro forma as adjusted net tangible book
value of $1.75 per share to existing stockholders and an immediate dilution of
$3.74 per share (83.1%) to investors. The following table illustrates the
foregoing information with respect to dilution to new investors on a per share
basis:

<TABLE>
<CAPTION>
<S> <C> <C>
Public offering price(1)................................... $4.50
Pro Forma net tangible book value before offering......... $(.99)
Increase attribute to new investors....................... 1.75
--------
Pro Forma as adjusted net tangible book value after
offering.................................................. .76
--------
Dilution to new investors(2)............................... $3.74
========
</TABLE>

(1) Offering price before deduction of estimated expenses of the offering and
underwriting discounts and commissions and exclusive of the purchase price of
$.10 per Public Warrant.

(2) Assumes no exercise of the Representatives' over-allotment option. The
pro forma net tangible book value of Common Stock after the offering and the
Dilution to new investors, assuming the Representatives' overallotment option is
exercised in full, would be approximately $.84 and $3.66 per share,
respectively.

The following table sets forth a comparison of the number of shares of Common
Stock acquired from the Company by the Company's stockholders as of September
30, 1996 on a pro forma basis and by investors in this offering, the percentage
ownership of such shares, the total consideration paid, the percentage of total
consideration paid, and the average price per share:

<TABLE>
<CAPTION>
SHARES PURCHASED TOTAL CONSIDERATION
---------------------- ----------------------- AVERAGE PRICE
NUMBER PERCENT AMOUNT PERCENT PER SHARE
------------ --------- ------------- --------- -------------
<S> <C> <C> <C> <C> <C>
Existing
stockholders......... 5,054,314 78.3 $ 7,662,518 54.9 $1.52
New investors ....... 1,400,000 21.7 6,300,000 45.1 $4.50
------------ --------- ------------- --------- -------------
Total............ 6,454,314 100.0 $13,962,518 100.0
============ ========= ============= =========

</TABLE>

The above table assumes no exercise of the Representatives' over-allotment
option. If the Representatives' over-allotment option is exercised in full, the
new investors will have paid $7,245,000 for 1,610,000 shares of Common Stock,
representing approximately 48.6% of the total consideration, for 24.2% of the
total number of shares of Common Stock outstanding.

<PAGE>

The foregoing table also assumes no exercise of outstanding stock options or
warrants or conversion of convertible debt. As of the date of this Prospectus,
there were (i) outstanding stock options to purchase 51,100 shares of Common
Stock at $.04 per share, 70,000 shares of Common Stock at $.10 per share, 33,670
shares of Common Stock at $.20 per share, 191,800 shares of Common Stock at
$2.20 per share, 130,000 shares of Common Stock at $2.42 per share, 1,240,558
shares of Common Stock at $3.00 per share, 160,000 shares of Common Stock at
$3.30 per share and 204,000 shares of Common Stock at $4.00 per share, (ii)
909,975 shares of Common Stock reserved for issuance upon exercise of options
available for future grant under the 1995 Option Plan, (iii) 1,297,567
Convertible Debt Warrants, (iv) warrants to purchase 1,584,005 shares of common
stock and (v) 2,641,977 Public Warrants. To the extent that these options and
warrants are exercised, there will be further dilution to new investors. See
"Management -- Employee Stock Plans," "Description of Securities" and
"Underwriting."

<PAGE>

CAPITALIZATION

The following sets forth the capitalization of the Company as of September
30, 1996 (A) on an actual basis, (B) pro forma to reflect transactions occurring
after September 30, 1996 but before the date of this Prospectus consisting of
issuance of $1,565,000 aggregate principal amount of Convertible Bridge Debt
(assuming receipt of all Convertible Bridge Debt, $275,000 of which is expected
to be received by the Company on or before January 22, 1997) and (C) pro forma
as adjusted to reflect the issuance and sale of shares of Common Stock and
Public Warrants offered hereby and the initial application of estimated net
proceeds therefrom and issuance of 608,283 shares of Common Stock and 608,283
Public Warrants issued on the date of this Prospectus upon the conversion of
$2,430,300 principal amount of Convertible Debt and approximately $367,828 of
accrued interest and 633,694 shares of Common Stock and 633,694 Public Warrants
issued on the date of this Prospectus upon the conversion of $2,915,000
principal amount of Convertible Bridge Debt (all based on an assumed offering
price of $4.50 per share and $.10 per Public Warrant).

<TABLE>
<CAPTION>
SEPTEMBER 30, 1996
--------------------------------------------
PRO FORMA
AS
ACTUAL PRO FORMA ADJUSTED(1)
-------------- -------------- --------------
<S> <C> <C> <C>
Short-term debt including current portion of long-term
debt.................................................. $ 4,045,258 $ 5,610,258 $ 260,160
============== ============== ==============
Long-term debt........................................... $ 500,000 $ 500,000 $ --
-------------- -------------- --------------
Stockholders' equity:
Preferred stock, $.0001 par value, 5,000,000 shares
authorized, none issued or outstanding................ -- -- --

Common Stock, $.0001 par value, 20,000,000 shares
authorized; 5,315,811 shares issued (actual),
5,315,811 shares issued (pro forma) and 7,957,788
shares issued (pro forma as adjusted)................. 532 532 796
Additional paid-in capital.............................. 6,527,572 6,527,572 17,343,236
Accumulated deficit..................................... (11,059,145) (11,059,145) (11,059,145)
Treasury stock, 261,497 shares, at cost................. (11,906) (11,906) (11,906)
-------------- -------------- --------------
Total stockholders' equity (deficit)..................... (4,542,947) (4,542,947) 6,272,981
-------------- -------------- --------------
Total capitalization..................................... $ (4,042,947) $ (4,042,947) $ 6,272,981
============== ============== ==============
</TABLE>
- ----------

(1) Includes 608,283 shares of Common Stock and 608,283 Public Warrants issued
on the date of this Prospectus upon the conversion of $2,430,300 principal
amount of Convertible Debt and approximately $367,828 of accrued interest
and 633,694 shares of Common Stock and 633,694 Public Warrants issued on
the date of this Prospectus upon the conversion of $2,915,000 principal
amount of Convertible Bridge Debt(all based on an assumed offering price of
$4.50 per share and $.10 per Public Warrant). Does not include (i)
1,584,005 shares of Common Stock reserved for issuance upon exercise of
outstanding warrants to purchase common stock, (ii) 140,000 shares of
Common Stock reserved for issuance upon exercise of the Representative's
Warrants, (iii) 140,000 shares of Common Stock reserved for issuance upon
exercise of Representative's Public Warrants issuable upon exercise of
Representative's Warrants, (iv) 909,975 shares of Common Stock reserved for
issuance upon exercise of options available for future grant under the 1995
Option Plan, (v) 1,090,025 shares of Common Stock reserved for issuance
upon exercise of options granted under the 1995 Option Plan, (vi) 861,333
shares of Common Stock reserved for issuance upon exercise of options
granted under the 1994 Option Plan, (vii) 84,770 shares of Common Stock
reserved for issuance upon exercise of options granted under the 1993
Option Plan, (viii) 45,000 shares of Common Stock reserved for issuance
upon exercise of options granted under the 1995 Directors Stock Option
Plan, (ix) 205,000 shares of Common Stock reserved for issuance upon
exercise of options available for future grant under the 1995 Directors
Stock Option Plan, (x) 250,000 shares of Common Stock reserved for issuance
under the Employee Stock Purchase Plan, (xi) 1,297,567 shares of Common
Stock reserved for issuance upon exercise of the Convertible Debt Warrants,
and (xii) 1,400,000 shares of Common Stock reserved for issuance upon
exercise of the Public Warrants. See "Management's Discussion and Analysis
of Financial Condition and Results of Operations," "Management -- Employee
Stock Plans," "Description of Securities" and "Underwriting."

<PAGE>

SELECTED CONSOLIDATED FINANCIAL DATA

The following selected consolidated financial data have been derived from the
Company's consolidated financial statements. The audited consolidated balance
sheets as of December 31, 1994 and 1995 and the related consolidated statements
of operations, stockholders' equity (deficit) and cash flows for each of the two
years in the period ended December 31, 1995 and the notes thereto appear
elsewhere in this Prospectus. The selected consolidated financial data set forth
below at September 30, 1996 and for the nine months ended September 30, 1995 and
1996 are derived from unaudited consolidated financial statements which appear
elsewhere in this Prospectus and in management's opinion include all adjustments
(consisting only of normal recurring adjustments) necessary for a fair
presentation of financial position and results of operations. The results of
operations for the nine months ended September 30, 1996 are not necessarily
indicative of results of operations to be expected for the full year. The
following data should be read in conjunction with such consolidated financial
statements and "Management's Discussion and Analysis of Financial Condition and
Results of Operations."

CONSOLIDATED STATEMENT OF OPERATIONS DATA:

<TABLE>
<CAPTION>
CUMULATIVE
FROM INCEPTION
NINE MONTHS ENDED SEPTEMBER (NOV. 19, 1992)
YEAR ENDED DECEMBER 31, 30, TO SEPTEMBER 30,
----------------------------- ----------------------------- -----------------
1994 1995 1995 1996 1996
-------------- -------------- -------------- -------------- -----------------
<S> <C> <C> <C> <C> <C>
Net sales.......................... $ 127,531 $ 285,354 $ 244,223 $ 900,446 $ 1,377,407
Cost of goods sold................. 64,363 136,381 112,452 315,437 547,994
-------------- -------------- -------------- -------------- -----------------
Gross profit....................... 63,168 148,973 131,771 585,009 829,413
Operating expenses:
Selling, general and
administrative................... 1,795,485 2,297,497 1,737,201 1,712,494 6,320,012
Research and development.......... 864,847 1,983,310 1,149,333 1,457,001 4,427,001
Depreciation and amortization..... 80,360 439,752 185,789 153,035 704,122
-------------- -------------- -------------- -------------- -----------------
Total operating expenses......... 2,740,692 4,720,559 3,072,323 3,322,530 11,451,185
-------------- -------------- -------------- -------------- -----------------
Other expense (principally
interest)......................... (39,897) (843,292) (568,958) (343,561) (1,239,739)
-------------- -------------- -------------- -------------- -----------------
Net loss(1)........................ $(2,717,421) $(5,414,878) $(3,509,510) $(3,081,082) $(11,861,511)
============== ============== ============== ============== =================
Net loss per share................. $ (0.58) $ (1.06) $ (0.70) $ (0.51)
============== ============== ============== ============== ================
Common and common equivalent
shares outstanding................ 4,706,646 5,124,411 4,999,543 6,000,010
</TABLE>

CONSOLIDATED BALANCE SHEET DATA:

<TABLE>
<CAPTION>
DECEMBER 31,
----------------------------------
1994 1995 SEPTEMBER 30, 1996
----------- ------------ ----------------------------------
<S> <C> <C> <C>
Working capital (deficit) .... $ (209,143) $(3,891,602) $(4,680,592)
Total assets.................. 1,781,055 1,244,766 1,560,096
Total liabilities............. 3,180,807 4,497,330 6,103,043
Stockholders' equity
(deficit)..................... (1,399,752) (3,252,564) (4,542,947)
</TABLE>

(1) From Viewpoint's inception through its acquisition by the Company on May
11, 1994, Viewpoint elected to be treated as an S Corporation for federal
income tax purposes and, accordingly, its taxable income or loss was
included in the income tax returns of its shareholders. Viewpoint's status
as an S Corporation was terminated on May 11, 1994.

<PAGE>

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

GENERAL

MultiMedia Access Corporation, a development stage company, develops and
markets advanced video communications products. The Company delivers
high-performance, low-cost products that integrate video capabilities into
existing desktop computers, applications and networks. The Company delivers
standards-based video solutions to the PC and workstation marketplace. See "Risk
Factors -- Possible Fluctuations in Operating Results."

RESULTS OF OPERATIONS

NINE MONTHS ENDED SEPTEMBER 30, 1996 COMPARED TO NINE MONTHS ENDED SEPTEMBER
30, 1995

Net Sales. Net sales for the nine months ended September 30, 1996 increased
to $900,446 from $244,223 reported for the same period last year. This increase
is the result of an increase in system and product sales for the period,
particularly the Osprey-1000(Trademark) and the Viewpoint VBX(Trademark),
neither of which were available during the first half of 1995 and approximately
$80,000 of consulting and custom programming revenues during the third quarter
of 1996. A substantial portion of the Company's sales are made to a small number
of customers, generally on an open account basis with no collateral required.
The Company performs ongoing credit evaluations of its customers and maintains
reserves of potential credit losses. Such losses in the aggregate have not
exceeded management's expectations.

Cost of Goods Sold. Cost of goods sold increased $202,985 to $315,437 for the
nine months ended September 30, 1996, an increase that primarily is the result
of increased product and system sales. The Company realized an overall gross
margin percentage for the first nine months of 1996 of 65.0% which represents a
substantial increase from the 54.0% experienced during the first nine months of
1995. This increase can be attributed to consulting and custom programming
revenues in 1996 that were substantially greater than the same period in 1995
and which have little or no associated cost of goods sold.

Selling, General and Administrative Expense. Selling, general and
administrative ("SG&A") expense of $1,712,494 for the nine months ended
September 30, 1996 was essentially unchanged from the same period in 1995.

Research and Development Expense. Research and Development expenses increased
$307,668 to $1,457,001 for the nine months ended September 30, 1996 over the
same period in 1995, primarily due to an increase in salary expense, third party
consulting services, facility costs of the Company's North Carolina development
office and an increase in salary expense of its Viewpoint subsidiary. In
general, the increase reflects the expanded development effort required to
expand the Company's product lines. See "Business -- Research and Development."

Other Income (Expense) During the first nine months of 1996, other expense
decreased approximately $225,397 to $343,561 compared to the same period in
1995. This decrease is primarily the result of decreased interest expense,
reflecting an overall decrease in average borrowings at a slightly lower blended
interest rate. See "Certain Transactions."

YEAR ENDED DECEMBER 31, 1995 COMPARED TO YEAR ENDED DECEMBER 31, 1994

Net Sales. Net sales increased $157,823 in 1995 over the prior year to
$285,354 for the year ended December 31, 1995. This increase is primarily
attributed to increased unit sales of the Company's Viewpoint VBX(Trademark) and
Osprey-1000(Trademark) products.

Cost of Goods Sold. Cost of goods sold increased $72,018 to $136,381 for the
year ended December 31, 1995, an increase that primarily reflects the increase
in sales. Over the same periods, the Company's gross profit margin percentage
increased from 49.5% for 1994 to 52.2% for 1995. This increase is the result of
sales of higher margined product and a slight increase in the sales of
consulting and custom programming services.

<PAGE>

Selling, General and Administrative Expense. Selling, general and
administrative expense increased $502,012 to $2,297,497 for the year ended
December 31, 1995. This 28.0% increase over the prior year can be attributed to
increases in employees and consultants, higher occupancy costs and increased
business development, sales and marketing related expenses corresponding to the
introduction of the Viewpoint-PRO(Trademark), Viewpoint VBX(Trademark) and
Osprey-1000(Trademark) product lines in 1995.

Research and Development Expense. The Company's research and development
expense increased $1,118,463 to $1,983,310 in 1995 primarily due to the
establishment of the Company's North Carolina development office. Expenses
related to this office included salaries for newly hired engineers and support
staff and the cost of the office facility and equipment. During 1995, this
development office was engaged in the development of the SLIC-Video(Trademark)
and Osprey-1000(Trademark) products which were introduced in mid-1995 and
late-1995, respectively.

Other Income (Expense). For the year ended December 31, 1995, other expense
increased to $843,292 for the year compared to $39,897 for the year ended
December 31, 1994. This increase was primarily the result of an approximate
$766,402 increase in interest expense for 1995 over 1994, as a result of
additional borrowings pursuant to the Convertible Debt and borrowings pursuant
to the Secured Notes and Demand Notes. See "Certain Transactions."

LIQUIDITY

At September 30, 1996, the Company had a working capital deficit of
$(4,680,592). To date, the Company has been dependent upon loans from its
principal stockholders, as well as private placements of its debt and equity
securities, to finance its working capital requirements.

Net cash used in operating activities for the nine months ended September 30,
1996 was $2,863,323. Increases in inventory were a result of an increase in
production levels to meet anticipated sales.

Cash used in investing activities for the nine months ended September 30,
1996 consisted of $122,080 of capital expenditures. As of the date of this
Prospectus, the Company does not have any material commitments for capital
expenditures.

Cash provided by financing activities for the nine months ended September 30,
1996 was primarily a result of the receipt of the proceeds of the Secured Notes
II in January through February 1996, receipt of the proceeds of the Convertible
Bridge Debt in September 1996 and the private placement of Common Stock during
the second quarter of 1996. At September 30, 1996, the Company had cash of
$21,523.

The Company currently has no plans or agreements to seek loan financing. The
Company may choose to seek additional financing to provide additional working
capital at some time in the future. Such financing may include loans or lines of
credit and could include factoring agreements. However, the Company believes
that the proceeds of the initial public offering will be sufficient to meet its
capital requirements for at least the next twelve months.

The Company's independent auditors have included an explanatory paragraph in
their audit report on the Company's consolidated financial statements stating
that certain factors raise substantial doubt about the Company's ability to
continue as a going concern. This offering is an integral part of the Company's
plan to continue as a going concern. In the event that the Company's plans
change or its assumptions change or prove to be inaccurate or if the proceeds of
this offering prove to be insufficient to fund operations (due to unanticipated
expenses or difficulties or otherwise), the Company may be required to seek
additional financing sooner than currently anticipated. The Company has no
current arrangements with respect to, or sources of, additional financing. There
can be no assurance that existing stockholders will provide any portion of the
Company's future financing requirements. There can be no assurance that any
additional financing will be available to the Company on acceptable terms, or at
all. Additional equity financing may involve substantial dilution to the
Company's then existing stockholders.

<PAGE>

From Viewpoint's inception in November 1992 through December 31, 1993, the
operations of the Company were principally limited to conducting research and
development, limited production operations and marketing of prototype products.
From Viewpoint's inception through its acquisition by the Company on May 11,
1994, Viewpoint elected to be treated as an S Corporation for federal income tax
purposes and, accordingly, its taxable income or loss was included in the income
tax returns of its shareholders. Viewpoint's status as an S Corporation was
terminated on May 11, 1994.

At December 31, 1995, the Company had net operating loss carry forwards for
federal tax purposes of $7,730,000 available to offset future taxable income.
Under Section 382 of the Internal Revenue Code of 1986, as amended, utilization
of prior net operating loss carry forwards is limited after an ownership change,
as defined in Section 382, to an annual amount equal to the value of the loss
corporation's outstanding stock immediately before the date of the ownership
change multiplied by the federal long-term tax-exempt rate. Beginning with 1994,
approximately $790,000 of the carry forward is limited to utilization at a rate
of approximately $300,000 per year. The Company may in the future be subject to
further significant limitations on the use of its net operating loss carry
forwards. In the event the Company achieves profitable operations, any
significant limitation on the utilization of net operating loss carry forwards
would have the effect of increasing the Company's tax liability and reducing net
income and available cash resources. Moreover, Viewpoint terminated its status
as an S Corporation in May 1994, and net operating losses incurred by Viewpoint
prior to such termination will not be available to offset future taxable income
of the Company. See Note 8 of Notes to Consolidated Financial Statements.

CAPITAL RESOURCES

In January 1993, Viewpoint issued to five individuals an aggregate of
$200,000 principal amount of 5% convertible promissory notes ("Notes") due in
January 1994. In connection with the issuance of these notes, Viewpoint issued
warrants to purchase an aggregate of 51,100 shares of Common Stock at an
exercise price of approximately $.02 per share. In June 1993, Viewpoint issued
to one individual an additional $25,000 principal amount 5% convertible
promissory note due June 1994 and warrants to purchase 6,388 shares of Common
Stock at an exercise price of approximately $.50 per share.

In January 1994, holders of $100,000 principal amount of the Notes agreed to
exchange such notes (plus accrued interest of approximately $4,891) for $104,891
aggregate principal amount of 5% convertible promissory notes due January 1995
and warrants to purchase an aggregate of 25,550 shares of Common Stock at an
exercise price of approximately $.50 per share. In April 1994, Viewpoint repaid
the remaining $100,000 principal amount of the 5% convertible promissory notes
issued in January 1993, together with accrued interest thereon.

During 1993, Glenn A. Norem, Chief Executive Officer of the Company, loaned
Viewpoint an aggregate of $90,700 at an annual interest rate of 8%. These loans
were repaid by the Company in November 1994. In connection with these loans,
Viewpoint issued warrants to Mr. Norem to purchase an aggregate of 11,587 shares
of Common Stock at an exercise price of approximately $0.20 per share. Mr. Norem
exercised these warrants in May 1994. In addition, during 1993, G.A. Norem I,
L.P., of which Mr. Norem is the sole general partner, loaned Viewpoint an
aggregate of $35,500 at an annual interest rate of 8%. Viewpoint repaid these
loans in June 1994. In connection with these loans, Viewpoint granted G.A. Norem
I, L.P. a security interest in all of its assets and issued to G.A. Norem I,
L.P. warrants to purchase 4,536 shares of Common Stock at an exercise price of
$.10 per share. G.A. Norem I, L.P. exercised these warrants in May 1994.

In March 1994, the Company issued an aggregate of 996,364 shares of Common
Stock at a price of $2.20 per share, for which it received net proceeds of
$1,917,241.

In September 1994 through January 1995, the Company issued promissory notes
(the "Convertible Debt") in the aggregate principal amount of $2,677,550 (the
"Convertible Debt Financing"). The Convertible Debt bears interest at the rate
of 8% per annum and is, at the option of the holder, (i) due on the earlier of
the closing of an initial public offering of the Company's equity securities in
excess of $2,000,000 or 18 months from the date of issuance or (ii) convertible
into shares of the securities sold in an initial public offering registered
under the Securities Act of 1933, as amended, (the "Securities Act").

<PAGE>

In addition, pursuant to the terms of the Convertible Debt Financing, investors
electing to convert their Convertible Debt into shares of the securities offered
in an initial public offering will receive one Convertible Debt Warrant for each
$2.00 principal amount of Convertible Debt that is converted and investors
electing repayment of the Convertible Debt will receive one Convertible Debt
Warrant for each $3.00 principal amount of Convertible Debt surrendered for
repayment. The Convertible Debt Warrants are exercisable at an exercise price of
$3.00 per share during a three-year period commencing on the date of the closing
of such initial public offering. The Company used the proceeds of the
Convertible Debt Financing for working capital and general corporate purposes.
Holders of $2,430,300 principal amount of Convertible Debt have elected to
convert into the securities offered hereby and holders of $247,250 principal
amount have elected to be repaid from the proceeds of this offering.

In October 1994, the holder of the $25,000 principal amount note issued in
June 1993 agreed to exchange such note (plus accrued interest of approximately
$1,654) and an additional $346 in cash (a total of $27,000) in the Convertible
Debt Financing. In January 1995, the holders of the remaining $104,891 principal
amount of 5% convertible promissory notes issued in January 1994 agreed to
exchange such notes (plus accrued interest of approximately $5,359) in the
Convertible Debt Financing.

From February through April 1995, the Company received gross proceeds of
$1,100,000 in connection with the issuance and sale of $1,100,000 aggregate
principal amount of short-term secured notes (the "Secured Notes"). The Secured
Notes bear interest at the rate of 15% per annum and were due at the earlier of
the closing of an initial public offering by the Company or 90 days from
issuance. As of December 31, 1995, Secured Notes totalling $791,000, plus
accrued interest, were exchanged for equity in the company by issuing one share
of Common Stock for each $3.00 of debt. In addition, pursuant to the exchange,
each consenting holder received a warrant to purchase one share of Common Stock
for each $2.00 exchanged. The warrants are exercisable at $1.00 per share for
three years. Also at December 31, 1995, the remaining holders of the Secured
Notes agreed to exchange their notes for Demand Notes. In return, each such
holder received a warrant to purchase one share of Common Stock for each $3.33
exchanged to Demand Notes. The warrants are exercisable at $1.00 per share for
three years. The Secured Notes are secured by a lien on all then unencumbered
assets of the Company. The Company used the proceeds of the Secured Notes for
working capital and general corporate purposes.

At the time of the Secured Notes transactions, the Company's funds had been
depleted, only limited product sales had occurred and the Company twice had been
forced to abandon its plans for an initial public offering and other equity
financing. Once these funding avenues were abandoned, the Company was left
without sufficient cash to pay its payroll or continue its development
activities. In consideration of these factors, it was estimated by third-party
appraisal that the stock was worth no more than $.50 per share.

In June and July 1995, the Company received gross proceeds of $310,000 in
connection with the issuance and sale of $310,000 aggregate principal amount of
short-term demand notes (the "Demand Notes"). The Demand Notes bear interest at
the rate of 15% per annum. Pursuant to the terms of the Demand Notes, investors
received one warrant to purchase a share of Company Common Stock for each $4.00
of principal. The warrants are exercisable at an exercise price of $1.00 per
share for three years from the date of issuance. As of December 31, 1995, Demand
Notes totalling $250,000, plus accrued interest, were exchanged for equity in
the Company by issuing one share of Common Stock for each $3.00 of debt.
Pursuant to this exchange, each exchanging holder received a warrant to purchase
one share of Common Stock for each $2.00 exchanged. These warrants are
exercisable at $1.00 per share for three years. Also at December 31, 1995, the
remaining holders of the Demand Notes received an additional warrant to purchase
one share of Common Stock for each $3.33 invested as additional compensation for
extension of demand notes. These warrants are exercisable at $1.00 per share for
three years. The Company used the proceeds of the Demand Notes for working
capital and general corporate purposes.

In August and September 1995, the Company issued an aggregate of 833,333
shares of Common Stock at a price of $3.00 per share, for which it received
gross proceeds of $2,500,000.

In January and February 1996, the Company received gross proceeds of $650,000
in connection with the issuance and sale of $650,000 aggregate principal amount
of a second series of short-term secured notes (the "Secured Notes II"). The
Secured Notes II bear interest at a rate of 8-10% per annum and were due 180

<PAGE>

days from issuance. Pursuant to the terms of the Secured Notes II, the investor
was granted warrants to purchase 65,000 shares of Common Stock of the Company at
$3.00 per share for three (3) years from the date of issuance. As of March 31,
1996, the Secured Notes II, plus accrued interest, were converted into equity in
the Company by issuing one share of Common Stock for each $3.00 of debt.

In April through June 1996, the Company issued an aggregate of 304,016 shares
of Common Stock at a price of $3.00 per share, for which it received gross
proceeds of $912,054.

In July 1996, the Company received gross proceeds of $1,000,000 in connection
with the issuance and sale of $1,000,000 aggregate principal amount of a
convertible note (the "Convertible Bridge Debt") to Mr. Fred Kassner, a
shareholder of the Company. The Convertible Bridge Debt bears interest at the
rate of 8% per annum and $500,000 is due the earlier of ten days after the
completion of an initial public offering by the Company or 180 days from
issuance, while the balance of $500,000 is due eighteen months from issuance.
Pursuant to the terms of the Convertible Bridge Debt, the investor received a
warrant to purchase 100,000 shares of Common Stock of the Company. The warrant
is exercisable at a price of $3.00 per share for three years from the date of
issuance. In addition, should the investor elect to convert, the investor will
receive an additional warrant to purchase 100,000 shares of Common Stock at
$3.00 per share for three years from the date of conversion. Mr. Kassner has
agreed to convert this debt into the securities offered hereby at the initial
public offering price per share of Common Stock and $.10 per Public Warrant. The
Representative will receive a commission for this transaction in the amount of
10% of the value of the Convertible Bridge Debt converted to equity.

In September through November 1996, the Company received gross proceeds of
$615,000 in connection with the issuance and sale of $615,000 aggregate
principal amount of a bridge loan (the "Convertible Bridge Debt") to Mr. Robert
Rubin, a shareholder of the Company. The Convertible Bridge Debt bears interest
at the rate of 8% per annum and is due the earlier of ten days after the
completion of an initial public offering by the Company or 180 days from
issuance. Mr. Rubin received a warrant to purchase 61,500 shares of Common Stock
of the Company exercisable at a price of $3.00 per share for three years from
the date of issuance pursuant to the terms of the Convertible Bridge Debt. Mr.
Rubin has agreed to convert this debt into the securities offered hereby at the
initial public offering price per share of Common Stock and $.10 per Public
Warrant. The Representative will receive a commission for this transaction in
the amount of 10% of the value of the Convertible Bridge Debt converted to
equity.

In October 1996, Glenn A. Norem, Chief Executive Officer of the Company,
agreed to defer the receipt of $170,308 principal amount of Secured and Demand
Notes, accrued interest of $13,154 and accrued salary and bonuses of $127,781
until February 1998. The Company has agreed to pay Mr. Norem interest at a rate
of 15% per annum on the deferred amount. In addition, Mr. Norem will be repaid
$200,000 principal amount of Secured and Demand Notes plus accrued interest of
$8,921 on Convertible Debt from the proceeds of this offering. Also, G.A. Norem
I L.P., a partnership managed by Mr. Norem, will be repaid $35,000 principal
amount of Secured and Demand Notes plus accrued interest of $10,068 from the
proceeds of this offering.

In November 1996 through January 1997, the Company received gross proceeds of
$1,025,000 and commitments to pay an additional $275,000 expected to be received
by the Company on or before January 22, 1997 in connection with the issuance and
sale of $1,300,000 aggregate principal amount of additional Convertible Bridge
Debt to Mr. M. Douglas Adkins and Mr. H.T. Ardinger, each shareholders of the
Company. This Convertible Bridge Debt bears interest at the rate of 8% per annum
and is due the earlier of ten days after the completion of an initial public
offering by the Company or 180 days from issuance. The holders of this
Convertible Bridge Debt received warrants to purchase 130,000 shares of Common
Stock of the Company exercisable at a price of $3.00 per share for three years
from the date of issuance pursuant to the terms of the Convertible Bridge Debt.
Messrs. Adkins and Ardinger have each agreed to convert this debt into the
securities offered hereby at the initial public offering price per share of
Common Stock and $.10 per Public Warrant. The Representative will receive a
commission for this transaction in the amount of 10% of the value of the
Convertible Bridge Debt converted to equity.

<PAGE>

BUSINESS

MultiMedia Access Corporation develops and markets advanced video
communications products for the PC and workstation marketplaces. Applications
include desktop videoconferencing, Internet and Intranet video communications,
video-based training, video surveillance, distance learning and high quality
workgroup video communications. While the Company sells its core video Codec and
video switching technologies to resellers and systems integrators, its primary
strategy is to develop and market video communications applications using its
technologies.

The Company, in September 1996, entered into a reseller agreement with
Unisys, a nationwide systems integrator and reseller, to purchase and resell the
Company's Viewpoint VBX(Trademark). The Viewpoint VBX(Trademark) is a PC-based
video switch which provides workgroup video communications over existing
telephone or network wiring commonly found throughout office buildings. Unlike
commercially available competitive products, the Viewpoint VBX(Trademark)
connects over 100 users per switch and distributes full-motion video at
distances up to 3,500 feet via existing UTP wiring.

The Company entered into a licensing agreement with Boca, a major modem and
PC peripheral supplier, to manufacture and market the Company's
FamilyFone(Trademark) and its ISDN videoconferencing upgrades in January 1996
and delivered its first video surveillance system to Alcatel, a major
communications systems integration company, in the first quarter of 1996. The
Company believes it sells the only currently available standards-based,
multi-algorithm video and audio Codec product for WindowsNT and is developing a
multi-algorithm Codec for Sun workstations.

INDUSTRY BACKGROUND

Videoconferencing was introduced in the late 1970s with the establishment of
videoconferencing room systems. To transmit "live" video images (which may
contain over 90 million bits per second of data) over telecommunications lines,
the video data must be digitized and significantly compressed to fit the
capacity of data networks and telephone lines (as low as 28,800 bits per
second). As video data is compressed, redundant data is eliminated. After
transmission, the video image is reconstructed for display at the receiving end.

The quality of the reconstructed image is a function of (1) the
sophistication of the video and audio compression algorithms, (2) the amount of
real-time data which can be transmitted over networks, (3) the power of the
video and audio coder-decoder hardware, and (4) the speed and power of PCs and
workstations.

The Company believes low-cost videoconferencing and other video network
services are now attainable because the performance and capabilities of these
four key elements have recently improved significantly, making video
communications available at reasonable cost.

Videoconferencing room systems use expensive digital lines and permit
communication only between compatible facilities. These systems currently cost
between $20,000 and $100,000 and are typically used by large corporations
primarily for intra-company communication between different locations. The
Company believes that the high cost of videoconferencing room systems and the
logistical problem of scheduling and availability have limited their use to
large corporations.

<PAGE>

resolution and framerate of the video varies with the bandwith of the
communications connection. The Company has designed its products in response to
the increasing demand for low-cost desktop videoconferencing and for real-time
collaborative computing applications using telephone and computer networks. The
Company is also preparing to market video products for the Internet and
corporate Intranets.

CORPORATE INTRANET VIDEO

The Company first demonstrated its packet (TCP/IP-based) network video
technologies on the Internet's MBONE and on corporate Intranets in 1993. The
Company introduced its first commercial product, Viewpoint-PRO(Trademark), one
of the first TCP/IP-based videoconferencing systems designed specifically for
LAN and WAN applications in 1994. This system enables users to engage in
real-time, full-color, full-motion video over their existing computer networks.
Viewpoint-PRO(Trademark) provides both point-to-point and up to five site
multipoint videoconferences. The system does not require expensive MCUs, which
typically cost $20,000 or more, that ISDN-based products require to complete a
multipoint video- conference. Viewpoint-PRO(Trademark) also includes a
one-to-many broadcasting capability called ViewCast(Trademark). With
ViewCast(Trademark), "live" broadcasts, such as corporate briefings or news
broadcasts, or pre-recorded content, such as training videos and product and
services information, can be multicast over an existing corporate data network.
Viewpoint-PRO(Trademark) was the first commercial product offering video
multicast using both FTP Software, Inc.'s and Microsoft Corporation's
TCP/IP-multicast PC software. Each Viewpoint-PRO(Trademark) includes software to
enable a Windows PC with a sound card to receive and display a
ViewCast(Trademark). Viewpoint-PRO(Trademark) bundles, as an option, third-party
collaborative computing software which allows videoconference participants to
share a whiteboard or a PC application.

CONSUMER VIDEO

The Company's FamilyFone(Trademark) and WorkFone(Trademark) products are
expected to provide affordable, good quality video communications capabilities
to consumers, small businesses and corporations over standard telephone lines
with 28.8 Kbps modems and over the Internet. Examples of FamilyFone(Trademark)
uses might include: families and grandparents exchanging "live" video birthday
greetings with each other, college students videoconferencing with their parents
or small office/home office business owners accessing video training courses
over the Internet.

In January 1996, the Company signed a licensing agreement with Boca. In this
multi-year contract, the Company licensed its hardware and related firmware and
application software for videoconferencing over standard telephone lines and
over the Internet. Pursuant to the licensing agreement, the Company receives
license fees for the design and on-going royalties for its firmware and its
videoconferencing applications with every shipment of the BocaPRO Video Phone
Elite, which was introduced by Boca in August 1996 at a suggested retail price
of $399. The Company's prospects will be significantly affected by Boca's
ability to market the product and upon the marketing efforts of Boca's
resellers.

VIDEO CODECS

The Company develops and markets standards-based video and audio Codec
products that enable multimedia applications for both PCs and workstations. The
Osprey Codec captures, digitizes, compresses, transmits, receives, decompresses
and displays full-motion video. The Osprey-1000(Trademark) product line supports
multiple video and audio compression formats for both PCs and workstations which
are equipped with the now standard PCI-bus. The Company is developing the
Osprey-1100(Trademark) multi-algorithm Codec for the existing workstations from
Sun that are equipped with the S-bus. The Company believes it is the only
company currently providing standards-based, multi-algorithm Codec products for
WindowsNT. The Osprey Codecs also support Windows 3.1, Windows95, Solaris and
UNIX operating systems.

SLIC-Video(Trademark) is a video capture product that enables Sun workstation
users to view uncompressed, high-quality video and to capture full-motion video
frames. SLIC-Video(Trademark) software also provides access to closed caption
data which allows key words to act as filters and thereby control video
displayed on the screen. SLIC-Video's(Trademark) compatibility with standard Sun
products allows this product to support a wide variety of video applications on
existing Sun workstations.

<PAGE>

The Company intends to continue to establish strategic product development
alliances with companies whose products and technologies complement the
Company's strategic direction. With rapidly evolving technologies in the areas
of video, audio and networks, the Company intends to engage in strategic
alliances that offer expanding access to key new technologies that can be part
of current and future products.

VIDEO SWITCHING HUB AND UTP VIDEO DISTRIBUTION

The Company's Viewpoint VBX(Trademark) product provides high-quality
workgroup video communications with shared gateways to WANs and legacy video
teleconferencing room systems. The Viewpoint VBX(Trademark), a PC-based video
switch, employs a switched architecture to distribute uncompressed, full-motion
video within a building or campus via existing UTP wiring. Shared wide area
gateways allow other Viewpoint VBX(Trademark) networks to be interconnected and
enable connection to standards-based room or desktop videoconferencing products
from third-party manufacturers. The switching architecture employed by Viewpoint
VBX(Trademark) allows point-to-point, multipoint and broadcast modes of
operation to be supported. Both small workgroups and large building or campus
networks of hundreds of users can be supported.

The Viewpoint VBX(Trademark) product line includes a multimedia switch, WAN
interfaces and desktop components. The multimedia switch utilizes standard PC
components and the Company's video switching technology and software to provide
an expandable solution for video communications within an office building or
campus. Video and audio are distributed with NTSC quality by utilizing the
Company's UTP transceiver technology to send video over existing wiring at
distances of up to 3,500 feet. An existing LAN or telephone system is used only
for non-video communications (control signals) between the multimedia switch and
each user, eliminating overload of the computer network as workgroups are
video-enabled.

The Viewpoint VBX(Trademark) also provides shared-resource access to video
sources and storage devices located anywhere within the network. VCRs, videodisk
players, broadcast or cable TV and Direct Broadcast Satellite (DBS) programming
sources may be connected to the switch over unshielded twisted pair or coaxial
cabling and distributed on-demand to any equipped desktop or room.

Desktop PCs, TV monitors and room audio and video system connections are
accommodated using the UTP transceivers which connect standard NTSC video and
audio devices to existing building wiring systems. Viewpoint VBX(Trademark) is
compatible with standard NTSC cameras, audio components, speakerphones and PC
video peripherals to form a complete solution. The Viewpoint VBX(Trademark)
client software allows users to place calls through a personal or system-wide
dialing directory, to originate and subscribe to "live" video broadcasts, to
access pre-recorded video content or to establish a multipoint videoconference.

INTERNET VIDEO

The Company is developing and plans to market a variety of Internet video
products that take advantage of the growing popularity of the World Wide Web.
The popularity of the Web has resulted in subscribers seeking to improve their
Internet access capabilities which in turn has driven growth in the installed
base of 28.8 Kbps modems, ISDN adapters and cable modems. These improvements in
access along with advances in video and audio compression technology and
standards make possible new forms of motion-video content for Internet
publishers and their target audiences.

The Internet has taken on new dimensions including real-time communication
and entertainment. In both cases, the Company believes video communication
products and technologies will play an important role. While certain types of
information on an Internet Web page can be conveyed with graphics, animation and
static images, others require or are enhanced by audio and motion-video.

The Company is currently developing and plans to market three new Internet
video products and software players (downloaded freely to end-users). Each
product is an enhancement of or modification to existing Company designs, but
incorporates new software and firmware modules. These products address the
rapid-growth, emerging market opportunity for the Internet video publishing,
Internet video broadcasting and Internet video call center applications which
are described below.

<PAGE>

INTERNET VIDEO PUBLISHING

Internet video publishing (or video-on-demand) is currently the most
widespread implementation of video on the Internet. Video publishing refers to
stored-video content, designed to be played back to a user's system in
real-time. The Company believes video publishing is becoming popular because it
is far less technically demanding than "live" video production and transmission.

Internet video publishing entails compressing a video "clip" and storing it
on a server. The user is connected to the server by accessing a Web page that
holds the address for the target video server and then establishing a direct
connection to that server. The Company's video Codec technologies will be
utilized with Internet publishing software applications currently under
development by the Company.

INTERNET VIDEO BROADCASTING

Video broadcasting has recently come to the Internet and is characterized by
one-way "live" audio and motion-video. Video broadcasting presents technical
challenges such as the limited bandwidth and multi-cast capabilities of most Web
sites. However, Internet video broadcasting is well suited to delivering video
to the office (without additional hardware), to distance learning sites and to
special interest broadcast recipients. The Company's proposed products are being
designed to work in conjunction with Web server software to establish
connections between multiple users and a broadcast source.

INTERNET VIDEO CALL CENTER

The Internet video call center is a new concept to the Internet, allowing
one-way "live" video and two-way audio across the Internet. The term "call
center" is used because the technology is well suited to replacing existing call
centers such as help desks, catalog ordering centers, reservation systems
(hotels, airlines) and corporate receptionists. The Company believes that the
entertainment possibilities are also significant. The Internet video call center
has the potential to increase on-line purchases over the Internet. The Company
believes its core technologies can be used in video call center applications and
is in the early stages of product development.

VIDEO SURVEILLANCE

The Company believes that commercial and residential video-based surveillance
products represent another strong business opportunity. The Company is creating
effective solutions for customers that are unique in the marketplace. In the
Company's opinion, today's expensive closed circuit surveillance systems can be
replaced with systems that include more functionality at lower cost. The Company
intends to develop alliances with communication system integrators and security
resellers, distributors and/or suppliers to address this market.

The Company has delivered its first video surveillance system to Alcatel, a
major communications systems integration company in Richardson, Texas. This
industrial surveillance system integrates standard alarm and sensing devices
(e.g. door magnets, motion detectors, cameras, etc.), and allows a central
operator to monitor and inspect hundreds of remote sites over the customer's
existing frame relay computer network.

Following an alarm, the surveillance system selects the appropriate camera
and one of its preset positions and captures 10 frames of full resolution NTSC
video. The system also sends an alarm signal to a central monitoring computer
via a frame relay packet network. The security personnel at the central
monitoring station can then observe the remote alarmed location, via the
network, using the camera's remote pan, tilt and zoom features. The Company
believes that high quality video images will assist security personnel in
verifying the accuracy of alarms and in prosecuting intruders.

The surveillance system delivered to Alcatel is based upon existing
Viewpoint-PRO(Trademark) technology. Another version of the system designed to
operate over phone lines is scheduled to be available in early 1997.

<PAGE>

MARKETING AND SALES

The Company will market its products primarily via third-party resellers
including, but not limited to, OEMs, VARs and system integrators. In addition,
the Company plans to enter into strategic alliances with carriers,
telecommunications suppliers and information providers.

For mass market and high volume products the Company will depend on its major
OEM customers who provide access to significant marketing channels. These OEMs
have established relationships with manufacturers and resellers and will pay
licensing fees and royalties to bring new leading edge products to market. The
Company also intends to establish distribution relationships with resellers and
integrators who service corporate, institutional and government customers. These
relationships are expected to be non-exclusive and may require that these
partners participate in the marketing, advertising and technical support of the
Company's products.

The Company believes its Viewpoint VBX(Trademark) product will have an appeal
to resellers such as PBX suppliers, carriers (including cable companies) and
network equipment suppliers. The Company additionally intends to form strategic
alliances with resellers outside the US, where it is especially important to
partner with entrenched suppliers.

The Company intends to expand its marketing activities over the Internet. The
Company believes its products enable new and inventive ways to sell products
over the Internet. The Company intends to use its own products to increase sales
productivity and to pursue alternate low cost selling strategies. The Company
plans to continue modest trade show participation and advertising in trade
publications.

The Company's Internet related products will be marketed primarily to Web
designers and early sales will be conducted primarily through the Company's Web
page with minimal sales support. The Company plans to bundle its products with
other popular Web development products and/or license its subsystems to
resellers to integrate with their Web development products. Such strategic
business alliances are expected to provide Web developers with a rich array of
innovative capabilities with the familiarity of existing tools.

TARGET MARKETS

The Company's target markets can be defined broadly to be anywhere video
communications can be added as a peripheral to installed desktop computers, or
to narrower vertical markets in distance learning, video-based training,
multimedia authoring, Internet and Intranet broadcasting and surveillance. The
Company believes that the growth of video communications during the late 1990s
will be as significant as the growth of LANs in the 1980s. The Company's
strategy is to provide video communications products which will connect to
available networks, including standard telephone lines, data networks and the
Internet. The Company believes that its video communications products will
enhance the increasing demand for connectivity between today's homes and
offices.

Strategic alliances with large OEMs, communication-oriented system
integrators and other resellers should enhance the Company's ability to supply
video communication products to Fortune 1000 companies, federal and state
governments, PC manufacturers, peripheral suppliers and Internet service
providers.

PRODUCTION AND SUPPLY

The Company builds its current products in small quantities using contract
manufacturers in Texas and North Carolina. The operations personnel in Dallas
are responsible for parts planning, procurement and final test and inspection to
quality standards. While the Company believes its products are not difficult to
manufacture, there can be no assurance that the Company's products can be
manufactured on a wide-scale basis on commercially reasonable terms, or at all.
The Company plans for most high- volume production to be handled through large
OEMs or contract manufacturers.

The Company has been and will continue to be dependent on third parties for
the supply and manufacture of its components and electronic parts, including
standard and custom-designed components. The Company generally does not maintain
supply agreements with such third parties but instead

<PAGE>

purchases components and electronic parts pursuant to purchase orders in the
ordinary course of business. The Company is substantially dependent on the
ability of its third-party manufacturers and suppliers to, among other things,
meet the Company's design, performance and quality specifications.

The electronics industry from time to time experiences short supplies of
certain high demand components, which may adversely affect the Company's ability
to meet its production schedules. Failure of manufacturers or suppliers to
supply, or delays in supplying, the Company with components, or allocations in
the supply of certain high-demand components could adversely affect the
Company's operations and ability to meet delivery schedules on a timely and
competitive basis.

INSTALLATION, SERVICE AND MAINTENANCE

Many of the Company's new products will be customer installable. The Company
plans to contract with independent third parties to provide field installation
and support. The Company also plans to maintain a small technical support group
and will also depend on its resellers to install and service its products.

The Company offers 12 to 36 month limited warranties covering workmanship and
materials, during which period the Company or its resellers will replace parts
or make repairs. The Company also maintains an in-house staff of engineering
personnel and offers telephone support to assist resellers and end-users during
normal business hours.

RESEARCH AND DEVELOPMENT

The Company's development efforts during 1995 were devoted to the design and
development of the Osprey-1000(Trademark) PCI-based multi-algorithm video Codec,
the SLIC-Video(Trademark) video capture card, enhancements to the
Viewpoint-PRO(Trademark), design and integration of the surveillance system
delivered to Alcatel, and the development of the Viewpoint VBX(Trademark) video
switching hub.

Total research and development expense for 1995 was approximately $2.0
million. The 1996 research and development plan calls for approximately $1.9
million in development costs. For the nine months ended September 30, 1996, the
Company incurred approximately $1,457,000 in research and development costs.

The Company utilizes its core technologies to create multiple products aimed
at different markets. Software modularity is a major strategy which allows the
Company to develop different vertical applications using modules and components
previously developed for other products. The Company's products are
characterized by rapidly changing technology and evolving standards, often
resulting in product obsolescence or short product life cycles. Accordingly, the
Company's ability to compete will depend in large part on its ability to
introduce its products in a timely manner, to continually enhance and improve
its hardware and software products and to maintain development capabilities to
adapt to technological changes and advances in the video communications
marketplace. There can be no assurance that competitors will not develop
technologies or products that render the Company's systems obsolete or less
marketable, or that the Company will be able to keep pace with the technological
demands of the marketplace or successfully enhance and adapt its products to be
compatible with newly developed products, technologies and software, or satisfy
industry standards and the needs of its consumers and potential consumers.

COMPETITION

The market for DVC systems is highly competitive and characterized by the
frequent introduction of new products based upon rapidly changing technologies.
The Company competes with numerous well-established manufacturers and suppliers
of videoconferencing, networking, telecommunications and multimedia equipment
and products, some of which dominate certain market segments. In addition, the
Company is aware of others that are developing, and in some cases have
introduced, new DVC systems. Most of the Company's competitors possess
substantially greater financial, marketing, personnel and other resources than
the Company, have established reputations relating to product design, develop-

<PAGE>

ment, manufacture, marketing and service of networking, telecommunications and
video products and have significant budgets to permit them to implement
extensive advertising and promotional campaigns to market new products in
response to competitors. Among the Company's direct competitors are Target
Technologies, Inc., VIVO Software, Inc., Zydacron, Inc., VCON, Ltd., Corel
Corporation and VideoLAN Technologies, Inc. In addition, electronics
manufacturers such as Intel actively compete for business in this market.

PATENTS, TRADEMARKS AND PROPRIETARY INFORMATION

The Company holds a United States patent covering certain fundamental aspects
of the compressed packet video Codec incorporated into the
Viewpoint-PRO(Trademark) system. The Company may apply for additional patents
relating to other aspects of its products. There can be no assurance as to the
breadth or degree of protection which existing or future patents, if any, may
afford the Company, that any patent applications will result in issued patents,
that the Company's patents will be upheld, if challenged, or that competitors
will not develop similar or superior methods or products outside the protection
of any patent issued to the Company.

The Company believes that product recognition is an important competitive
factor and, accordingly, the Company promotes the Viewpoint-PRO(Trademark),
ViewCast(Trademark), MultiView(Trademark), Osprey-1000(Trademark),
SLIC-Video(Trademark), Viewpoint-VBX(Trademark), FamilyFone(Trademark) and
WorkFone(Trademark) names, among others, in connection with its marketing
activities, and has applied for trademark registration for such names. The
Company's use of those marks may be subject to challenge by others, which, if
successful, could have a material adverse effect on the Company.

The Company also relies on confidentiality agreements with its directors,
employees, consultants and manufacturers and employs various methods to protect
the source codes, concepts, ideas, proprietary know-how and documentation of its
proprietary technology. However, such methods may not afford the Company
complete protection, and there can be no assurance that others will not
independently develop similar know-how or obtain access to the Company's
know-how or software codes, concepts, ideas and documentation. Furthermore,
although the Company has and expects to continue to have confidentiality
agreements with its directors, employees, consultants, manufacturers, and
appropriate vendors, there can be no assurance that such arrangements will
adequately protect the Company's trade secrets.

The Company purchases certain components that are incorporated into its
products from third- party suppliers and relies on their assurances that such
components do not infringe on the patents of others. A successful claim against
any components used in the Company's products could affect the ability of the
Company to manufacture, supply and support its products. The Company uses its
best efforts to ensure third party supplied components are non-infringing, but
there can be no assurances against future claims.

GOVERNMENT REGULATION

The Company is subject to regulations relating to electromagnetic radiation
from its products, which impose compliance burdens on the Company. In the event
the Company redesigns or otherwise modifies its products or completes the
development of new products, it will be required to comply with Federal
Communications Commission regulations with respect to such products, of which
there can be no assurance prior to their commercialization. In addition, new
legislation and regulations, as well as revisions to existing laws and
regulations, at the federal, state and local levels may be proposed in the
future affecting the video communications industries. Such proposals could
affect the Company's operations, result in material capital expenditures, affect
the marketability of its products and limit opportunities for the Company with
respect to modifications of its products or with respect to new or proposed
products or technologies. Expansion into foreign markets may also require the
Company to comply with additional regulatory requirements. The technology
contained in the Company's products may be subject to U.S. export controls.
There can be no assurance that such export controls, either in their current
form or as may be subsequently enacted, will not delay introduction of new
products or limit the Company's ability to distribute products outside of the
United States. Further, various countries may

<PAGE>

regulate the import of certain technologies contained in the Company's products.
Any such export or import restrictions, new legislation or regulation or
government enforcement of existing regulations could have a material adverse
effect on the Company's business, operating results and/or financial condition.
There can be no assurance that the Company will be able to comply with
additional applicable laws and regulations without excessive cost or business
interruption, if at all, and failure to comply could have a material adverse
effect on the Company.

EMPLOYEES

As of September 30, 1996, the Company had 35 employees, 4 of whom are in
executive positions, 19 of whom are engaged in engineering, research and
development, 6 of whom are engaged in marketing and sales activities and 6 of
whom are in administration. None of the Company's employees is represented by a
labor union. The Company considers its employee relations to be satisfactory.

FACILITIES

The Company's executive offices and assembly operations and some of its
design and development activities are located in approximately 16,159 square
feet of leased space in Dallas, Texas. The lease expires in September of 1997
and provides for a base annual rent of $143,110. Osprey's design and development
activities are located in approximately 2,783 square feet of leased space in
Cary, North Carolina. The lease expires in December of 1997 and provides for a
base annual rent of $38,334. The Company leases an office suite in Burlingame,
California of approximately 100 square feet on a month-to-month basis for a base
annual rent of $4,800. The Company believes that its facilities are adequate for
its current and reasonably foreseeable future needs and its current facilities
can accommodate expansion, if required.

LEGAL PROCEEDINGS

The Company is not currently a party to any litigation that it believes could
have a material adverse effect on the Company or its business.

<PAGE>

MANAGEMENT

DIRECTORS AND EXECUTIVE OFFICERS

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

<TABLE>
<CAPTION>
NAME AGE POSITION
- ------------------- ----- -----------------------------------------------
<S> <C> <C>
Glenn A. Norem..... 44 Chief Executive Officer and Director
Philip M.Colquhoun. 55 President and Chief Operating Officer
David T. Stoner ... 40 Vice-President of Operations
William S. Leftwich 47 Chief Financial Officer and Assistant
Secretary
Neal S. Page....... 38 Vice President & General Manager
A. David Boomstein. 41 Vice President of Business Development
Daniel W. Dodson .. 34 Vice President of Marketing
William D. Jobe ... 59 Chairman of the Board of Directors
Joe C. Culp........ 63 Director
</TABLE>

Glenn A. Norem has been Chief Executive Officer and a director of the Company
since its inception in February 1994. Mr. Norem has been Chief Executive Officer
of each of the Company's subsidiaries since their respective inceptions. Mr.
Norem has also been Chairman and Chief Executive Officer of Catalyst Financial
Corporation ("Catalyst"), an investment and business advisory firm to
development stage companies in the computer and communications industries, since
its inception in January 1990. From March 1984 to December 1989, Mr. Norem was a
general partner of Berry Cash Southwest Partnership, L.P., a venture capital
partnership. From May 1985 to December 1989, Mr. Norem was a general partner of
InterWest III, L.P., a venture capital partnership and, from 1983 to 1984, he
was Corporate Strategic Business Development Manager at Texas Instruments, Inc.
Mr. Norem began his career with IBM Corporation's System Communications Division
R & D Laboratory. Mr. Norem received a B.S. degree in Electrical
Engineering/Systems Engineering from Southern Illinois University and an M.B.A.
(Finance and Marketing) from the University of Chicago.

Philip M. Colquhoun was appointed President and Chief Operating Officer of
the Company in April 1996. He had been President of Viewpoint Systems, Inc. and
Osprey Technologies, Inc., both subsidiaries of the Company, since November
1995. From August 1994 to October 1995, Mr. Colquhoun was President of the
Connectworks Division of Connectware Inc., a wholly owned subsidiary of AMP Inc.
From September 1991 to August 1994, Mr. Colquhoun served as President and Chief
Executive Officer of Visual Information Technologies Inc., a manufacturer of PC
video, graphics and imaging products, which was sold to Connectware Inc. From
February 1990 to September 1991, he was Senior Vice President of Visual
Information Technologies Inc. From August 1984 to February 1990, Mr. Colquhoun
served Recognition Equipment Inc. in various capacities, including Vice
President Manufacturing, Vice President and General Manager, Special Products
Division and President, Postalogic Division. Mr. Colquhoun was the Vice
President of Finance and Administration for Nixdorf Computer Corporation from
1981 to 1984 and was employed by IBM Corporation from 1961 to 1981 in various
engineering, finance and manufacturing positions.

David T. Stoner joined the Company as Vice President of Operations in August
1996. From August 1994 to August 1996, Mr. Stoner was Vice President of
Engineering for the Connectworks Division of Connectware, Inc., a wholly owned
subsidiary of AMP Inc. From July 1986 to August 1994, Mr. Stoner was employed by
Visual Information Technologies, Inc. ("VITec"), a manufacturer of video,
imaging, and graphics products, which was purchased by Connectware, Inc. At
VITec, Mr. Stoner was responsible for the development of hardware and software
products, and served in various positions including Vice President of
Engineering. From January 1979 to July 1986, Mr. Stoner served in various
engineering positions at Texas Instruments, Inc. Mr. Stoner received his B.S.
degree in Electrical Engineering from the University of Kansas.

William S. Leftwich has been Chief Financial Officer of the Company since
March 1995. From January 1993 to March 1995, Mr. Leftwich served as Chief
Financial Officer, Treasurer and Secretary of Integrated Security Systems, Inc.,
a manufacturer, developer, and distributor of integrated security so-

<PAGE>

lutions. From August 1992 to December 1992, Mr. Leftwich served as Controller of
Thomas Group Holding Company, an affiliate of Integrated Security Systems, Inc.
Mr. Leftwich was self-employed as a financial consultant from January 1992 to
July 1992. From January 1989 to December 1991, Mr. Leftwich served as the Chief
Financial Officer of OKC Limited Partnership, an oil and gas exploration
company. For approximately seven years prior to joining OKC Limited Partnership,
Mr. Leftwich served as Vice President -- Finance for Endevco, Inc., a natural
gas transportation and processing company. Mr. Leftwich is a C.P.A. and received
a B.B.A. from Texas A&M University.

Neal S. Page has been Vice President and General Manager of the Osprey
division of the Company since January 1995. From October 1994 to December 1994,
Mr. Page served as Director of Product Development of the Company. From April
1988 to September 1994, Mr. Page was employed by Sun Microsystems where he held
management positions directing development and strategic relationships for
multimedia technology products. Mr. Page developed advanced graphics and imaging
products at General Electric from 1984 to 1988 and at Data General from 1983 to
1984. Mr. Page holds B.S. and M.S. degrees in Electrical and Computer
Engineering from North Carolina State University.

A. David Boomstein has been Vice President of Business Development since
February 1995. From January 1994 to January 1995, Mr. Boomstein was Vice
President for Desktop Programs at Applied Business Telecommunications, a
consulting and research firm focusing on teleconferencing and multimedia
applications. From January 1989 to December 1993, Mr. Boomstein worked with
Boeing Computer Support Services, Inc. on a mission services contract to the
National Aeronautics and Space Administration designing and installing
videoconferencing systems among NASA's world-wide partners. From December 1984
to December 1988, Mr. Boomstein was Product Marketing Manager for Compression
Labs, Inc.'s Rembrandt Video System. From June 1980 to November 1984, Mr.
Boomstein managed the development and deployment of Citicorp N.A.'s satellite
videoconferencing system. Mr. Boomstein received a B.F.A. in Communication Arts
from the New York Institute of Technology and an M.P.S. in Interactive
Telecommunications from New York University.

Daniel W. Dodson joined the Company as Vice President of Marketing in
February 1996. From October 1994 to February 1996, Mr. Dodson was Director of
Marketing for the Connectworks Division of Connectware, Inc., a wholly owned
subsidiary of AMP Inc. While at Connectware Mr. Dodson was responsible for the
market introduction of hardware and software communications products. From 1983
to October 1994, Mr. Dodson was employed by NorTel (formerly Northern Telecom) a
major manufacturer of telecommunications equipment. At NorTel, Mr. Dodson served
in various positions including marketing manager for desktop videoconferencing
products and senior software designer for digital switching products. Mr. Dodson
received his MBA from Harvard University and his B.S. degree in Computer Science
from North Carolina State University.

William D. Jobe has been Chairman of the Board of the Company since November
1994. Since July 1991, Mr. Jobe has been a private venture capitalist and
computer industry advisor. From June 1990 to July 1991, Mr. Jobe was President
of MIPS Technology Development, a subsidiary of MIPS Computer Systems, Inc., a
supplier of reduced instruction set computing products and technology. From
September 1987 to June 1990, Mr. Jobe was Executive Vice President for Sales,
Marketing and Service of MIPS Computer Systems, Inc. From 1993 through 1995, Mr.
Jobe was Chairman and a director of Great Bear Technology, Inc., a
publicly-traded supplier of interactive multimedia software. Mr. Jobe received a
B.S.M.E. and a M.S.M.E. from Texas A & M University and a P.M.D. from Harvard
Business School.

Joe C. Culp has been a director of the Company since November 1995. Since
1990, Mr. Culp has served as President of Culp Communications Associates,
engaging in senior level consulting in the telecommunications industry. From
1989 to 1990, Mr. Culp was Executive Vice President of Communications
Transmission, Inc., a telecommunications provider. From 1988 to 1989, Mr. Culp
served as President and Chief Executive Officer of LIGHTNET, a fiber optic
telecommunications carrier jointly owned by CSX Corporation and Southern New
England Telecommunications. From 1982 to 1988, Mr. Culp was President,
Telecommunications for Rockwell International. Since 1994, Mr. Culp has served
on the Chairman's Advisory Board of Newbridge Networks a publicly-traded company
and since 1996, has served as a director of IXC Communications, a public
company. Mr. Culp received a B.S.E.E. from the University of Arkansas.

<PAGE>

All directors hold office until the next annual meeting of the stockholders
and the election and qualification of their successors. Executive officers are
elected by the Board of Directors annually and serve at the discretion of the
Board.

Messrs. Norem, Jobe and Culp are members of the Audit and Compensation
Committees of the Board of Directors.

DIRECTOR COMPENSATION

Directors currently receive no cash compensation for serving on the Board of
Directors other than reimbursement of reasonable expenses incurred in attending
meetings. In June 1993, Mr. Jobe was granted an option to purchase 5,110 shares
of Common Stock under the 1993 Stock Option Plan at an exercise price of $0.20
per share. This option is fully vested. In November 1994, Mr. Jobe was granted
an option to purchase 125,000 shares of Common Stock under the 1994 Option Plan,
at an exercise price of $3.00 per share. The option vests as to one quarter of
the shares subject to the option one year from the date of grant and one quarter
of the shares subject to the option each year thereafter subject to acceleration
based on the Company's performance. In November 1995, Mr. Jobe and Mr. Culp were
each granted options to purchase 40,000 shares of Common Stock exercisable $3.00
per share under the 1995 Option Plan for consulting activity in addition to
their director responsibilities. These options vest over a three (3) year
period.

In May 1995, the Company adopted a 1995 Director Option Plan (the "Director
Plan") under which only outside directors are eligible to receive stock options.
The Director Plan provides for the grant of nonstatutory stock options to
directors who are not employees of the Company. A total of 250,000 shares of
Common Stock have been authorized for issuance under the Director Plan. As of
September 30, 1996, options to purchase an aggregate of 25,000 shares at an
exercise price of $3.00 per share had been granted under the Director Plan. Each
non-employee director who joins the Board after May 1, 1995 will automatically
be granted a nonstatutory option to purchase 15,000 shares of Common Stock on
the date upon which such person first becomes a director. In addition, each such
non-employee director will automatically be granted a nonstatutory option to
purchase 10,000 shares of Common Stock upon annual re-election to the Board,
provided the director has been a member of the Board for at least six months
upon the date of re-election. The exercise price of each option granted under
the Director Plan is equal to the fair market value of the Common Stock on the
date of grant. Each initial 15,000 share grant vests at the rate of 25% of the
option shares upon the first anniversary of the date of grant and one
forty-eighth of the option shares per month thereafter, and each annual 10,000
share grant vests at the rate of 25% of the option shares upon the first
anniversary of the date of grant and one forty-eighth of the options shares per
month thereafter, in each case unless terminated sooner upon termination of the
optionee's status as a director or otherwise pursuant to the Director Plan. In
the event of a merger of the Company with or into another corporation or a
consolidation, acquisition of assets or other change in control transaction
involving the Company, each option becomes exercisable unless assumed or an
equivalent option substituted by the successor corporation. Unless terminated
sooner, the Director Plan will terminate in 2005. The Director Plan is currently
administered by the Board of Directors. The Board has authority to amend or
terminate the Director Plan, provided that no such action may impair the rights
of any optionee without the optionee's consent.

EXECUTIVE COMPENSATION

The following table sets forth the cash compensation paid or accrued by the
Company to the Company's Chief Executive Officer and the Company's other
executive officers whose compensation exceeded $100,000 for the fiscal years
ended December 31, 1995, 1994 and 1993.

No other officer received cash compensation in excess of $100,000 in 1993,
1994, or 1995.

<PAGE>
SUMMARY COMPENSATION TABLE

<TABLE>
<CAPTION>
LONG TERM
ANNUAL COMPENSATION COMPENSATION
--------------------------- ------------
NAME AND OPTIONS
PRINCIPAL POSITION FISCAL YEAR SALARY BONUS (IN SHARES)
- ----------------------- ------------- ------------- ------------- ----------
<S> <C> <C> <C> <C>
Glenn A. Norem 1995 $ 90,000 $45,000 (4) -- (1)
Chief Executive Officer....... 1994 91,875 (2) 45,000 (4) 130,000
1993 135,000 (3) -- 51,100

William S. Leftwich 1995 90,000 (5) 15,000 (6) 60,000
Chief Financial Officer....... 1994 -- -- --
1993 -- -- --
200,000
Philip M. Colquhoun 1995 90,000 (7) 3,500 --
President and Chief Operating 1994 -- -- --
Officer....................... 1993 -- --
</TABLE>
- ----------

(1) Does not include warrants to purchase 118,500 shares of Common Stock of the
Company granted to Mr. Norem and Norem I, L.P. in connection with financing
transactions. See "Certain Transactions".

(2) $22,500 of such amount was accrued as of December 31, 1994, of which
$11,250 was paid in 1995. The remaining $11,250 was accrued as of December
31, 1995.

(3) Represents Mr. Norem's salary as President and CEO of Viewpoint prior to
its acquisition by the Company. All of such amount was accrued as of
December 31, 1993; $70,871 of such amount was paid during 1994 and the
remaining $64,129 was accrued as of December 31, 1995.

(4) In September 1996 this amount was exchanged into a note payable to Mr.
Norem due in February 1998.

(5) Represents Mr. Leftwich's annual salary. He assumed his duties with the
Company on March 29, 1995 and earned $67,268 in salary during 1995.

(6) Amount was accrued as of December 31, 1995 and will be paid from the
proceeds of this offering.

(7) Represents Mr. Colquhoun's annual salary. He assumed his duties as
President of the Viewpoint and Osprey subsidiaries on November 1, 1995 and
earned $14,880 in salary during 1995. Mr. Colquhoun assumed the duties of
President and Chief Operating Officer of the Company in April 1996.

The following table provides information concerning options granted to the
executive officers of the Company in 1995.

OPTION GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
% OF TOTAL
OPTIONS GRANTED EXERCISE OR
OPTIONS TO EMPLOYEES IN BASE EXPIRATION
NAME GRANTED FISCAL YEAR PRICE/SHARE DATE
- -------------------- ------------ ---------------- -------------- -------------
<S> <C> <C> <C> <C>
Glenn A. Norem...... -- -- -- --
William S. Leftwich. 60,000 (1) 10.9 $ 3.00 3/26/05
Phillip M. Colquhoun 200,000 (2) 36.4 3.00 10/31/05
</TABLE>
- ----------

(1) 34,000 of these options are currently exercisable. All options will become
immediately exercisable upon a "change in control" of the Company.

(2) 46,666 of these options are currently exercisable. All options will become
immediately exercisable upon a "change in control" of the Company.

EMPLOYMENT AGREEMENTS

The Company has entered into a five-year employment agreement with Glenn A.
Norem, effective February 7, 1994, which provides for his employment as Chief
Executive Officer. The employment agreement provides for an annual base
compensation of $90,000, subject to increases upon review by the Board of

<PAGE>

Directors, and annual bonuses at the discretion of the Board of Directors. In
the event the employment agreement is terminated, (other than "for cause" by the
Company) including for "good reason" by Mr. Norem including in the event of a
"change of control" as defined in the agreement, then Mr. Norem will receive (i)
all accrued salary, bonuses and benefits through the date of such termination;
and (ii) a sum equal in the aggregate to the full amount, discounted by three
percent (3%), of (a) the salary and benefits which Mr. Norem would have
received, at the average rate or rates in effect during the six-month period
immediately prior to termination, and (b) the annual bonus or bonuses which Mr.
Norem would have received, at the rate of his annual bonus for the last full
fiscal year of the Company ending prior to termination, had, with respect to
both (a) and (b), Mr. Norem's employment under the agreement continued through
the full term of the agreement. The employment agreement also contains
provisions granting Mr. Norem certain piggyback and demand registration rights
that require the Company to register under the Securities Act any or all shares
of the Company's Common Stock held by Mr. Norem, or issuable upon exercise of
stock options held by Mr. Norem. The employment agreement is automatically
renewed for successive one year terms unless the Company or Mr. Norem elects not
to renew.

In January 1996, Mr. Norem's employment agreement was amended to increase his
annual base compensation to $135,000 and provide for a minimum bonus of $15,000
per year. Concurrent with the amendment, the Board of Directors granted Mr.
Norem a bonus of $45,000 per year for 1994 and 1995 to be paid only upon the
authorization of the Board of Directors. In September 1996, Mr. Norem's
employment agreement was amended to include a non-compete, non-solicitation, and
non-circumvention agreement with the Company for the duration of his employment
and through the two years immediately following the termination of his
employment with the Company.

Pursuant to the consulting agreement with Catalyst, of which Mr. Norem is
Chairman of the Board and principal stockholder, Catalyst may, in specific cases
approved by the Company's Board of Directors, receive fees in connection with a
merger with or the acquisition of another company previously introduced to the
Company by Catalyst and expressly named in the agreement. Catalyst will be paid
3% of the fair market value of each transaction actually consummated plus has
the right to purchase for $1.00, a three year option to purchase Common Stock of
the Company. The number of shares that this option can purchase will be equal to
3% of the fair market value of the transaction divided by the average fair
market price of the Common Stock of the Company during the one week period
preceding the announcement of the transaction. The Consulting Agreement with
Catalyst was terminated by the Company on September 27, 1996. Despite the
termination, Catalyst remains entitled to receive fees if the Company enters
into a merger or acquisition transaction as described above. The Company has no
plans to enter into such a transaction at this time or for the foreseeable
future.

The Company has also entered into employment agreements with its six other
executive officers: Messrs. Colquhoun, Leftwich, Stoner, Dodson, Boomstein and
Page. These employment agreements provide (i) for annual base compensation of
$90,000, $90,000, $120,000, $85,000, $75,000 and $90,000 respectively; (ii) that
the officer is eligible to participate in the Company's Employee Stock Option
Plans and Executive Bonus Plans; and (iii) that the employment of each officer
with the Company is "at will" and may be terminated by the officer or the
Company at any time, for any reason or no reason.

EMPLOYEE STOCK PLANS

1995 Stock Plan

The 1995 Stock Plan (the "1995 Option Plan") provides for the grant to
employees of the Company of incentive stock options within the meaning of
Section 422 of the Internal Revenue Code of 1986, as amended (the "Code") and
for the grant to employees and consultants of the company of nonstatutory stock
options and stock purchase rights. A total of 2,000,000 shares of Common Stock
have been reserved for issuance under the 1995 Option Plan. As of September 30,
1996, options had been granted to purchase an aggregate of 758,025 shares at an
exercise price of $3.00 per share, 160,000 shares at an exercise price of $3.30
per share and 126,000 shares at an exercise price of $4.00 per share. The 1995
Option Plan may be administered by the Board or a committee approved by the
Board in a manner that complies with Rule 16b-3 promulgated under the Securities
Act. Currently, the 1995 Option Plan is administered by the Board of Directors,
which determines the terms of options and rights granted, exercise price, number
of shares subject to the option or right

<PAGE>

and the exercisability thereof. Options and rights granted under the 1995 Option
Plan are not transferable other than by will or the laws of descent or
distribution, and each option or right is exercisable during the lifetime of the
recipient only by such person. Options that are outstanding under the 1995
Option Plan will remain outstanding until they are exercised or they expire in
accordance with the terms of each option. The exercise price of all incentive
stock options granted under the 1995 Option Plan must be at least equal to the
fair market value of the shares of Common Stock on the date of grant. With
respect to any participant who owns stock possessing more than 10% of the voting
power of all classes of stock of the Company, the exercise price of any
incentive stock option granted must equal at least 110% of the fair market value
on the grant date and the maximum term of the option must not exceed five years.
The term of all other options granted under the 1995 Option Plan may not exceed
ten years. In the event of certain changes in control of the Company, the 1995
Option Plan permits each outstanding option and right to become exercisable in
full or assumed or an equivalent option to be substituted by the successor
corporation. Included are options to purchase 160,000 shares at $3.30 per share
granted to Mr. Norem in January 1996, options to purchase 40,000 shares at $3.00
per share granted to each of Mr. Jobe and Mr. Culp in November 1995, options to
purchase 200,000 shares at $3.00 per share and 50,000 shares at $3.00 per share
granted to Mr. Colquhoun in November 1995 and April 1996, respectively, and
options to purchase 60,000 shares at $3.00 per share and 30,000 shares at $3.00
per share granted to Mr. Leftwich in March 1995 and January 1996, respectively.
The options granted to Messrs. Norem, Colquhoun, and Leftwich vest over a five
year period. The options granted to Messrs. Jobe and Culp vest over a three year
period. See "Executive Compensation" and "Principal Stockholders".

1994 Stock Option Plan

In February 1994, the Board of Directors and stockholders approved the
Company's 1994 Stock Option Plan (the "1994 Option Plan") pursuant to which an
aggregate of 2,000,000 shares of Common Stock were reserved for issuance in
connection with the stock options ("Options") available for grant. The Options
may be granted in either or both of the following: (i) Incentive Stock Options
or (ii) Non-Qualified Stock Options. Non-Qualified Stock Options may be granted
to employees, directors and consultants of the Company.

The 1994 Option Plan was administered by the Board of Directors or, at their
discretion, by a committee which was appointed by the Board to perform such
function. The Board or such committee, as the case may be, within the
limitations of the 1994 Option Plan, determined, among other things, when to
grant Options, the persons to whom Options were to be granted, the number of
shares for each Option, whether Options granted were intended to be Incentive
Stock Options or Non-Qualified Stock Options, the duration and rate of exercise
of each Option, the share purchase price and the manner of exercise, and whether
restrictions such as repurchase rights by the Company were to be imposed on
shares subject to Options.

In connection with Incentive Stock Options the exercise price of each
Incentive Stock Options may not be less than 100% of the fair market value of
the Common Stock on the date of grant (or 110% of fair market value in the case
of an employee holding 10% or more of the outstanding stock of the Company). The
aggregate fair market value of shares for which Incentive Stock Options granted
to any employee are exercisable for the first time by such employee during any
calendar year (pursuant to all stock option plans of the Company and any related
corporation) may not exceed $100,000. Non-qualified Stock Options may be granted
at a price determined by the Board or Committee, but not at less than the par
value of the Common Stock. Stock options granted pursuant to the 1994 Option
Plan will expire not more than ten years from the date of grant (five years in
the case of the Incentive Stock Options granted to persons holding 10% or more
of the voting stock of the Company).

As of September 30, 1996, options had been granted to purchase an aggregate
of 908,016 shares as follows: 70,000 shares at an exercise price of $0.10;
222,633 shares at an exercise price of $2.20; 130,000 shares at an exercise
price of $2.42; and 485,383 shares at an exercise price of $3.00. Included are
options to purchase 130,000 and 125,000 shares at a price of $2.42 and $3.00 per
share, respectively, granted to Messrs. Norem and Jobe in May 1994 and November
1994, respectively, all of which expire in May 1999 and November 1999 and vest
at the rate of 20% per year as to Mr. Norem and 25% per year as to Mr. Jobe
commencing in May 1995 and November 1995, respectively, subject to certain
acceleration provisions. In April 1995, the Board of Directors voted to grant no
further options under the 1994 Option Plan. See "Executive Compensation" and
"Principal Stockholders."

<PAGE>

1993 Stock Option Plan

In May 1994, pursuant to the terms of the acquisition of Viewpoint, the
Company assumed the obligations of Viewpoint's 1993 Stock Option Plan (the "1993
Option Plan"). Stock options to purchase 287,564 shares of Common Stock were
assumed by the Company. Accordingly, the Company reserved 287,564 shares of
Common Stock for issuance pursuant to these outstanding stock options.

Since the assumption of the 1993 Option Plan, stock options to purchase an
aggregate of 178,427 shares have been exercised and stock options to purchase
5,588 shares have been cancelled. Of the remaining options to purchase 103,549
shares of Common Stock as of September 30, 1996, options to purchase 51,100
shares at a price of $.04 per share were granted to Mr. Norem. These options are
fully exercisable and expire in November 1998. In early 1995, the Board of
Directors voted to grant no further options under the 1993 Option Plan. See
"Executive Compensation" and "Principal Stockholders."

1995 Employee Stock Purchase Plan

In May 1995 the Company established an Employee Stock Purchase Plan (the
"ESPP") to provide employees of the Company with an opportunity to purchase
Common Stock through payroll deductions. Under the ESPP, up to 250,000 shares of
Common Stock have been reserved for issuance, subject to certain antidilution
adjustments. The ESPP, by its terms, becomes effective at the time of this
offering. The ESPP is intended to qualify as an employee stock purchase plan
within the meaning of Section 423 of the Internal Revenue Code.

Each offering period will be for a period of six months except the first
offering period under the ESPP will be from the date of this Prospectus through
April 30, 1997. The ESPP terminates in April, 2005. Eligible employees may
participate in the ESPP by authorizing payroll deductions during an offering
period within a percentage range determined by the Board of Directors.
Initially, the amount of authorized payroll deductions will be not more than 10%
of an employee's cash compensation during an offering period, but not more than
$25,000 per year. Amounts withheld from payroll are applied at the end of each
offering period to purchase shares of Common Stock. Participants may withdraw
their contributions at any time before stock is purchased, and in the event of
withdrawal such contributions will be returned to the participants. The purchase
price of the Common Stock is equal to 85% of the lower of (i) the market price
of Common Stock immediately before the beginning of the applicable offering
period or (ii) the market price of Common Stock at the end of each offering
period. All expenses incurred in connection with the implementation and
administration of the ESPP will be paid by the Company.

Director Stock Option Plan

In May 1995, the Company adopted the Director Plan under which outside
directors only are eligible to receive stock options. The Director Plan provides
for the grant of nonstatutory stock options to directors who are not employees
of the Company. See "Management -- Director Compensation."

LIMITATION OF LIABILITY AND INDEMNIFICATION MATTERS

As permitted by the Delaware General Corporation Law, the Company has
included in its Certificate of Incorporation a provision to eliminate the
personal liability of its directors for monetary damages for breach or alleged
breach of their fiduciary duties as directors, subject to certain exceptions. In
addition, the bylaws of the Company provide that the Company is required to
indemnify its officers and directors, employees and agents under certain
circumstances, including those circumstances in which indemnification would
otherwise be discretionary, and the Company is required to advance expenses to
its officers and directors as incurred in connection with proceedings against
them for which they may be indemnified. The bylaws provide that the Company,
among other things, will indemnify such officers and directors, employees and
agents against certain liabilities that may arise by reason of their status or
service as directors, officers, or employees (other than liabilities arising
from willful misconduct of a culpable nature), and to advance their expenses
incurred as a result of any proceeding against them as to which they could be
indemnified. At present, the Company is not aware of any pending or threatened
litigation or proceeding involving a director, officer, employee or agent of the
Company in which indemnification would be required or permitted. The Company
believes that its charter provisions and indemnification agreements are
necessary to attract and retain qualified persons as directors and officers.

<PAGE>

PRINCIPAL STOCKHOLDERS

The following table sets forth information as of September 30, 1996 and as
adjusted to reflect the sale of Common Stock and Public Warrants offered by the
Company hereby, based on information obtained from the persons named below, with
respect to the beneficial ownership of shares of Common Stock by (i) each person
or a group known by the Company to be the owner of more than 5% of the
outstanding shares of Common Stock, (ii) each director, (iii) each executive
officer named in the Summary Compensation Table under the caption "Management",
and (iv) all officers and directors as a group.

<TABLE>
<CAPTION>
PERCENTAGE OF OUTSTANDING
AMOUNT AND SHARES OWNED(2)(3)
NATURE OF -------------------------
NAME AND ADDRESS BENEFICIAL PRIOR TO
OF BENEFICIAL OWNER(1) OWNERSHIP(2) OFFERING AFTER OFFERING
------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Fred Kassner ................... 1,700,397(4) 15.0 12.0
69 Spring Street
Ramsey, NJ 07446
H.T. Ardinger, Jr. ............. 1,327,925(5) 11.7 9.4
9040 Governors Row
Dallas, TX 75247
Robert Moody, Jr. .............. 1,112,842(6) 9.8 7.8
601 Moody National Bank Bldg.
Galveston, TX 77550 ...........
Glenn A. Norem ................. 854,350(7) 7.6 6.0
M. Douglas Adkins............... 741,396(8) 6.6 5.2
1601 Elm Street, #3000
Dallas, TX 75201
Robert Sterling Trust .......... 551,261(9)(10) 4.9 3.9
c/o Thomas E. Brown
1715 West 35th Street
Pine Bluff, AR 71603
Robert Bernardi Trust........... 430,394(11) 3.8 3.0
c/o Richard Bernardi
440 Wood Crest Road
Stratford, PA 19087
William D. Jobe................. 84,414(12) * *
William S. Leftwich ............ 40,000(13) * *
Joe C. Culp .................... 19,930(14) * *
Philip M. Colquhoun............. 46,666(15) * *
David T. Stoner................. --(16) * *
All officers and directors as a
group (nine persons)........... 1,149,072(7)(12)(13)(14)(15)(16)(17) 10.2 8.1

</TABLE>
Messrs. Sterling and Bernardi may be deemed to be "founders" of the Company,
as such term is defined under the federal securities laws.

- ----------

* Less than 1%

(1) Unless otherwise indicated, the address of each individual is c/o the
Company, 2665 Villa Creek Drive, Dallas, Texas 75234.

(2) A person is deemed to be the beneficial owner of securities that can be
acquired by such person within 60 days from the date of this Prospectus
upon the exercise of warrants or options. Each beneficial owner's
percentage ownership is determined by assuming that options or warrants
that are held by such person (but not those held by any other person) and
which are exercisable within 60 days from the date of this Prospectus have
been exercised. Unless otherwise indicated, the Company believes that all
persons named in the table have sole voting and investment power with
respect to all shares of Common Stock beneficially owned by them.

(3) Based on a total of (i) 5,054,314 shares issued and outstanding, (ii)
608,283 shares of Common Stock and 608,283 Public Warrants issued on the
date of this Prospectus upon the conversion of $2,430,300 principal amount
of Convertible Debt and approximately $367,828 accrued interest, and
633,694 shares of Common Stock and 633,694 Public Warrants issued on the
date of this Prospectus upon the conversion of $2,915,000 principal amount
of Convertible Bridge Debt (based on an assumed offering price of $4.50 per
share and $.10 per Public Warrant), (iii) 1,584,005 shares of Common Stock
reserved for issuance upon exercise of outstanding

<PAGE>

warrants to purchase common stock (1,684,005 post-offering), (iv) 1,297,567
shares of Common Stock reserved for issuance upon exercise of the
Convertible Debt Warrants and (v) 888,196 shares of Common Stock reserved
for issuance upon exercise of vested stock options as of September 30,
1996. Does not include (i) 140,000 shares of Common Stock reserved for
issuance upon exercise of the Underwriters' Warrants, and 140,000 shares of
Common Stock reserved for issuance upon exercise of Underwriters' Public
Warrants. See "Management's Discussion and Analysis of Financial Condition
and Results of Operations," "Management -- Employee Stock Plans,"
"Description of Securities" and "Underwriting."

(4) Includes (i) 43,478 shares issuable upon the conversion of Convertible Debt
to equity, (ii) 100,000 shares issuable at $3.00 per share upon exercise of
warrants issued in connection with the conversion of Convertible Debt to
equity, (iii) 65,000 shares issuable at $3.00 per share upon exercise of
warrants issued in connection with the conversion of Secured Notes II to
equity, (iv) 200,000 shares issuable at $3.00 per share upon exercise of
warrants issued in connection with the Convertible Bridge Debt and (v)
217,391 shares issuable upon the conversion of Convertible Bridge Debt to
equity.

(5) Includes (i) 54,501 shares owned by Mr. Ardinger's wife, (ii) warrants to
purchase 120,000 shares at $1.00 per share issued in connection with the
exchange of a Secured Note and a Demand Note for equity, held by either Mr.
Ardinger or his wife, (iii) warrants to purchase 375,000 shares at $3.00
per share issued in connection with the conversion of Convertible Debt to
equity, (iv) 191,858 shares issuable upon the conversion of Convertible
Debt and accrued interest to equity, (v) 37,500 shares issuable at $1.00
per share granted for the issuance of a Demand Note and (vi) 244,565 shares
issuable upon the conversion of Convertible Bridge Debt to equity.

(6) Includes (i) 250,000 shares beneficially owned by Moody Insurance Group,
Inc., of which Mr. Moody is Chairman, President and the sole stockholder,
(ii) warrants to purchase 200,000 shares at $1.00 per share issued in
connection with the exchange of a Secured Note for equity, (iii) 140,591
shares issuable upon the conversion of Convertible Debt and accrued
interest to equity, and (iv) warrants to purchase 275,000 shares at $3.00
per share issued in connection with the conversion of Convertible Debt to
equity.

(7) Includes (i) 51,100 shares issuable at $.04 per share upon the exercise of
options issued under the 1993 Option Plan, (ii) 95,333 shares issuable at
$2.42 per share upon exercise of options issued under the 1994 Option Plan,
(iii) 75,000 shares issuable at $1.00 per share upon exercise of warrants
granted for the exchange of a Secured Note for a Demand Note, (iv) 25,000
shares issuable at $3.00 per share upon exercise of warrants issued for the
repayment of Convertible Debt. and (v) 10,869 shares issuable upon the
conversion of Convertible Debt to equity.

(8) Includes (i) 25,000 shares issuable at $1.00 per share upon the exercise of
warrants granted for the issuance of a Demand Note, (ii) 145,500 shares
issuable at $1.00 per share upon the exercise of warrants in connection
with the exchange of a Secured Note for equity, (iii) 50,000 shares
issuable at $1.00 per share upon exercise of warrants in connection with
the exchange of a Demand Note for equity, (iv) 77,982 shares issuable upon
the conversion of Convertible Debt and accrued interest to equity, (v)
152,500 shares issuable at $3.00 per share upon the exercise of warrants in
connection with the conversion of Convertible Debt to equity and (vi)
38,043 shares issuable upon the conversion of Convertible Bridge Debt to
equity.

(9) Shares subject to the control of Thomas E. Brown, as voting trustee of the
Robert Sterling Trust. On January 24, 1995, Robert M. Sterling, Jr. and
Thomas E. Brown, as voting trustee, entered into a Voting Trust Agreement
covering all capital stock beneficially owned by Mr. Sterling as of January
24, 1995 or subsequently acquired. The voting trustee is entitled,in his
discretion, to vote the shares deposited therewith and also has exclusive
investment control of said shares. The Voting Trust Agreement is
irrevocable and expires on January 20, 1998. Mr. Sterling is the sole
beneficiary of the Voting Trust Agreement.

(10) Includes (i) 58,333 shares issuable at $2.20 per share upon exercise of
options issued under the 1994 Option Plan, (ii) 25,000 shares issuable at
$3.00 per share for the exercise of warrants in connection with the
repayment of Convertible Debt and (iii) 10,869 shares issuable upon the
conversion of Convertible Debt to equity.

(11) Shares subject to the control of Richard Bernardi, as voting trustee of the
Robert Bernardi Trust. On January 20, 1995, Robert P. Bernardi and Richard
Bernardi, as voting trustee, entered into a Voting Trust Agreement covering
all capital stock beneficially owned by Mr. Bernardi as of January 20, 1995
or subsequently acquired. The voting trustee is entitled,in his discretion,
to vote the shares deposited therewith and also has exclusive investment
control of said shares. The Voting Trust Agreement is irrevocable and
expires on January 20, 1998. Mr. Bernardi is the sole beneficiary of the
Voting Trust Agreement.

(12) Includes (i) 60,833 shares issuable at $3.00 per share upon the exercise of
options granted under the 1994 Option Plan and (ii) 15,555 shares issuable
at $3.00 per share upon exercise of options granted under the 1995 Option
Plan, (iii) 5,110 shares issuable at $.20 per share upon exercise of
options granted under the 1993 Plan and (iv) 2,916 shares issuable at $3.00
per share upon exercise of options granted under the 1995 Directors Plan.

(13) Includes 34,000 shares issuable at $3.00 per share upon the exercise of
options issued under the 1994 Option Plan and 6,000 shares issuable at
$3.00 per share upon the exercise of options issued under the 1995 Option
Plan.

(14) Includes 15,555 shares issuable at $3.00 per share upon exercise of options
granted under the 1995 Option Plan and 4,375 shares issuable at $3.00 per
share upon exercise of options granted under the 1995 Directors Plan.

(15) Includes 46,666 shares issuable at $3.00 share upon exercise of options
granted under the 1995 Option Plan.

(16) None of the 100,000 options to purchase Common Stock of the Company at
$4.00 per share have vested as of the date of this Prospectus.

(17) Includes 81,234 and 22,478 shares issuable at $3.00 per share to Mr. Page
and Mr. Boomstein, respectively, upon exercise of options granted under the
1994 and 1995 Option Plans.

<PAGE>

CERTAIN TRANSACTIONS

In December 1992, Viewpoint issued 102,200 shares of Common Stock to Glenn A.
Norem, Chief Executive Officer of the Company, in consideration of $200 and
issued warrants to purchase 511,000 shares of Common Stock at an exercise price
of $.001 per share to Glenn A. Norem as assignee for Catalyst, of which Mr.
Norem was the Chairman, Chief Executive Officer, and sole stockholder, in
consideration for services rendered by Catalyst. Mr. Norem exercised these
warrants in June 1993.

During 1993, Mr. Norem loaned Viewpoint an aggregate of $90,700 at an annual
interest rate of 8%. These loans were repaid by the Company in November 1994. In
connection with these loans Viewpoint issued warrants to Mr. Norem to purchase
an aggregate of 11,587 shares of Common Stock at an exercise price of $0.20 per
share. Mr. Norem exercised these warrants in May 1994.

During 1993 and 1994, G.A. Norem I, L.P., of which Mr. Norem is the sole
general partner, loaned Viewpoint an aggregate of $35,500 at an annual interest
rate of 8%. The Company repaid these loans in June 1994. In connection with
these loans, Viewpoint granted G.A. Norem I, L.P. a security interest on all of
its assets and issued to G.A. Norem I, L.P. warrants to purchase 4,536 shares of
Common Stock at $.10 per share. G.A. Norem I, L.P. exercised these warrants in
May 1994.

In February 1994, the Company issued 650,000 shares of Common Stock to each
of Messrs. Bernardi and Sterling, the Company's founders, for aggregate
consideration of $130. In January 1995, Messrs. Bernardi and Sterling each sold
back to the Company 127,940 shares of Common Stock for aggregate consideration
of $25.58.

In February 1994, the Company entered into five-year consulting agreements
with each of SCG and BCG, each of which agreements provides for annual
compensation of $60,000, subject to increases and annual bonuses at the
discretion of the Board of Directors, and options to purchase 100,000 shares.
The SCG agreement also provided that, at the sole discretion of the Board of
Directors, the Company may pay a fee, not to exceed 6% of the transaction value,
in connection with any acquisition transaction consummated. Mr. Sterling, a
principal stockholder of the Company, is the sole stockholder of SCG, and Mr.
Bernardi, a principal stockholder of the Company, is the sole proprietor of BCG.
The consulting agreements also contain provisions granting Messrs. Sterling and
Bernardi certain piggyback and demand registration rights exercisable at any
time during the term of the consulting agreement. The consulting agreement with
BCG was voluntarily terminated by Mr. Bernardi effective March 15, 1995.

In June 1996, accrued but unpaid consulting fees of $80,000 payable through
April 1996 to SCG pursuant to the consulting agreement were exchanged for Common
Stock of the Company at $3.00 per share. In addition, consulting fees due from
May 1996 through the date of this Prospectus were deferred by Mr. Sterling until
completion of this offering. Pursuant to the consulting agreement, in July 1996
SCG was issued a warrant to purchase 75,000 shares of Common Stock of the
Company exercisable at $3.00 per share.

In March 1994, the Company entered into an agreement with Catalyst. Pursuant
to this agreement, the Company agreed to pay Catalyst a monthly fee of $10,000
for Catalyst's services in seeking suitable acquisition candidates for the
Company. The agreement also provides for a fee in connection with any
transaction consummated pursuant to the agreement. The agreement was terminated,
with respect to the monthly fee, on September 30, 1994 and $11,692 remains
unpaid as of the date of this Prospectus.

In May 1994, the Company acquired all of the outstanding stock and options of
Viewpoint in exchange for 1,100,004 shares of Common Stock and options to
purchase Common Stock. Mr. Norem was President and Chief Executive Officer of
Viewpoint at the time of the acquisition and exchanged his shares and options of
Viewpoint for shares of Common Stock and options of the Company on the same
terms as the other Viewpoint security holders. Of the 198,758 option shares
received by Mr. Norem in May 1994, 68,758 were returned to the Company in
October 1994 at the request of the Company's Board of Directors.

In July and October 1994, the Company sold certain videoconferencing
equipment and software enhancements to Network Imaging Corporation ("NIC") for
$58,260. Mr. Sterling is a former Chairman of NIC and Mr. Bernardi is currently
Chairman of NIC and formerly served as President and Chief Executive Officer of
NIC. Such sales were made on the same terms and conditions and at the same
prices as sales made to disinterested parties during the period in which the
sales occurred.

<PAGE>

From September 1994 through January 1995, in connection with the Convertible
Debt Financing, the Company issued to each of Mr. Norem and Mrs. Elizabeth
Sterling, the wife of Mr. Sterling, $50,000 principal amount of Convertible Debt
and to Messrs. M. Douglas Adkins, Robert Moody, Jr., Fred Kassner and H. T.
Ardinger, each a principal stockholder of the Company, $205,000, $550,000,
$200,000 and $750,000 principal amount of Convertible Debt, respectively. All
issuances were on the same terms and conditions as the other investors in the
Convertible Debt Financing. In addition, the Company issued to the Adkins Family
Partnership, Ltd. $100,000 principal amount of Convertible Debt. Mr. Adkins and
Driftwood Corporation, of which Mr. Adkins is President, are the general
partners of the Adkins Family Partnership, Ltd.

In January 1995, Messrs. Bernardi and Sterling each entered into a Memorandum
of Understanding with the Company in which each agreed to sell to the Company at
par 127,940 shares of the Company's Common Stock as a condition imposed by the
Company's prior underwriter for its participation in the initial filing of the
Company's public offering. Messrs. Sterling and Bernardi also agreed to an
increase in the exercise price of options to purchase 100,000 shares of Common
Stock of the Company from $.10 per share to $2.20 per share for similar
consideration. Mr. Bernardi voluntarily terminated his consulting agreement in
March 1995.

In February through April 1995, in connection with the issuance of Secured
Notes, the Company issued to Messrs. Norem, Moody, Adkins, Ardinger, Mrs. Mary
Ardinger, wife of Mr. Ardinger and G.A. Norem I, L.P., each a principal
stockholder of the Company $254,000, $400,000, $291,000, $45,000, $45,000 and
$35,000 principal amount of Secured Notes, respectively. All issuances were on
the same terms and conditions as the other investors in the Secured Notes. As of
December 31, 1995, Messrs. Moody, Adkins, Ardinger and Mrs. Ardinger exchanged
their respective Secured Notes for Common Stock of the Company at $3.00 per
share. As an incentive to exchange the Secured Notes for equity, Messrs. Moody,
Adkins, Ardinger and Mrs. Ardinger were granted 200,000, 145,500, 22,500 and
22,500 warrants, respectively, to purchase Company Common Stock at $1.00 per
share for three (3) years. Mr. Norem received 85,500 Warrants to exchange his
Secured Notes for a Demand Note. Mr. Norem's Warrants are also priced at $1.00
per share for three (3) years.

In June and July 1995, in connection with the Demand Notes, the Company
issued to Messrs. Ardinger, Adkins, Mrs. Ardinger and Mr. Norem, each a
principal stockholder of the Company, $75,000, $100,000, $75,000 and $60,000
principal amount of Demand Notes, respectively. As an incentive to advance the
Demand Notes, Messrs. Ardinger, Adkins, Mrs. Ardinger and Mr. Norem were granted
18,750, 25,000, 18,750 and 15,000 warrants, respectively, to purchase Company
Common Stock at $1.00 per share for three (3) years. As of December 31, 1995,
Messrs. Ardinger, Adkins and Mrs. Ardinger exchanged their respective Demand
Notes for Common Stock of the Company at $3.00 per share. As an incentive to
exchange the Demand Notes for equity, Messrs. Ardinger, Adkins and Mrs. Ardinger
were granted 37,500, 50,000 and 37,500 Warrants, respectively, to purchase
Company Common Stock at $1.00 per share for three (3) years. Mr. Norem received
18,000 Warrants to purchase Company Common Stock as additional compensation for
extending his Demand Note. Mr. Norem's Warrants are also priced at $1.00 per
share for three (3) years.

In August 1995, the Company authorized a private placement for the issuance
and sale of up to 2,666,667 shares of the Common Stock of the Company at $3.00
per share (the "Regulation D Offering"). For its services as placement agent for
the Regulation D Offering, Network 1 Financial Securities, Inc., one of the
Representatives in this offering, received a commission in the amount of eight
percent (8%) of the gross proceeds of the Regulation D Offering. The gross
proceeds of the Regulation D Offering were $5,425,755 and Network 1 earned
$395,000 in commissions on such proceeds.

In January and February 1996, in connection with the Secured Notes II, the
Company issued to Mr. Fred Kassner, a principal stockholder of the Company,
$650,000 principal amount of Secured Notes II. As an incentive to advance the
Secured Notes II, Mr. Kassner was granted warrants to purchase 65,000 shares of
Common Stock at $3.00 per share for three (3) years. As of March 31, 1996, Mr.
Kassner converted his Secured Notes II to Common Stock of the Company at $3.00
per share.

<PAGE>

In January 1996, Messrs. Norem, Colquhoun and Leftwich received options to
purchase 160,000, 50,000 and 30,000 shares of Common Stock, respectively, under
the 1995 Employee Stock Option Plan, exercisable at $3.30, $3.00 and $3.00 per
share, respectively, vesting over a five-year period subject to acceleration.

In July 1996, the Company received gross proceeds of $1,000,000 in connection
with the issuance and sale of $1,000,000 aggregate principal amount of a
convertible note to Mr. Fred Kassner, a principal shareholder of the Company
(the "Convertible Bridge Debt"). Pursuant to the terms of the Convertible Bridge
Debt, Mr. Kassner received a warrant to purchase 100,000 shares of Common Stock
of the Company. The warrant is exercisable at a price of $3.00 per share for
three years from the date of issuance. In addition, should Mr. Kassner elect to
convert, he will receive an additional warrant to purchase 100,000 shares of
Common Stock at $3.00 per share for three years from the date of conversion. Mr.
Kassner has agreed to convert this debt into the securities offered hereby at
the initial public offering price per share of Common Stock and $.10 per Public
Warrant. The Representative will receive a commission for this transaction in
the amount of 10% of the value of the Convertible Bridge Debt converted to
equity.

In September through November 1996, the Company received gross proceeds of
$615,000 in connection with the issuance and sale of $615,000 aggregate
principal amount of Convertible Bridge Debt to Mr. Robert Rubin, a shareholder
of the Company. Mr. Rubin received a warrant to purchase 61,500 shares of Common
Stock of the Company exercisable at a price of $3.00 per share for three years
from the date of issuance pursuant to the terms of the Convertible Bridge Debt.
Mr. Rubin has agreed to convert this debt into the securities offered hereby at
the initial public offering price per share of Common Stock and $.10 per Public
Warrant. The Representative will receive a commission for this transaction in
the amount of 10% of the value of the Convertible Bridge Debt converted to
equity.

In November 1996 through January 1997, the Company received gross proceeds of
$1,025,000 and commitments to pay an additional $275,000 expected to be received
by the Company on or before January 22, 1997 in connection with the issuance and
sale of an additional $1,300,000 aggregate principal amount of Convertible
Bridge Debt to Mr. M. Douglas Adkins and Mr. H.T. Ardinger, each shareholders of
the Company. The Convertible Bridge Debt bears interest at the rate of 8% per
annum and is due the earlier of ten days after the completion of an initial
public offering by the Company or 180 days from issuance. The holders of the
Convertible Bridge Debt received warrants to purchase 130,000 shares of Common
Stock of the Company exercisable at a price of $3.00 share for three years from
the date of issuance pursuant to the terms of the Convertible Bridge Debt.
Messrs. Adkins and Ardinger have each agreed to convert this debt into the
securities offered hereby at the initial public offering price per share of
Common Stock and $.10 per Public Warrant. The Representative will receive a
commission for this transaction in the amount of 10% of the value of the
Convertible Bridge Debt converted to equity.

All future transactions between the Company and its officers, directors or 5%
stockholders will be on terms no less favorable than could be obtained from
unaffiliated third parties and will be approved by a majority of the independent
disinterested Directors of the Company.

<PAGE>

DESCRIPTION OF SECURITIES

The Company is authorized to issue 20,000,000 shares of Common Stock, $.0001
par value per share and 5,000,000 shares of preferred stock, par value $.0001
per share. As of the date of this Prospectus, the 5,054,314 shares of Common
Stock outstanding are held by 70 holders of record, and no shares of preferred
stock are outstanding.

COMMON STOCK

The holders of Common Stock are entitled to one vote for each share held of
record on all matters to be voted on by stockholders. There is no cumulative
voting with respect to the election of directors, with the result that the
holders of more than 50% of the shares voting for the election of directors can
elect all of the directors. The current shareholders of the Company (including
officers and directors) will continue to own more than 81.8% (or more if they
purchase any of the shares offered hereby) of the shares of Common Stock after
the offering and, accordingly, may be able to effectively elect all of the
Company's directors and control corporate policy. Holders of shares of Common
Stock are entitled to receive dividends when, as and if declared by the Board of
Directors in its discretion, out of funds legally available therefor. In the
event of liquidation, dissolution or winding up of the Company, the holders of
Common Stock are entitled to share ratably in the assets of the Company, if any,
legally available for distribution to them after payment of debts and
liabilities of the Company and after provision has been made for each class of
stock, if any, having liquidation preference over the Common Stock. Holders of
shares of Common Stock have no conversion, preemptive or other subscription
rights, and there are no redemption or sinking fund provisions applicable to the
Common Stock. All of the outstanding shares of Common Stock are, and the shares
of Common Stock offered will be, when issued upon payment of the consideration
set forth in this Prospectus, fully paid and non-assessable.

PREFERRED STOCK

The Company is authorized to issue preferred stock with such designations,
rights and preferences as may be determined from time to time by the Board of
Directors. Accordingly, the Board of Directors is empowered, without stockholder
approval, to issue preferred stock with dividend, liquidation, conversion,
voting or other rights which could adversely affect the voting power or other
rights of the holders of the Company's Common Stock. In the event of issuance,
the preferred stock could be utilized, under certain circumstances, as a method
of discouraging, delaying or preventing a change in control of the Company. The
Company has no present intention to issue any shares of its preferred stock.

WARRANTS

The following is a brief summary of certain provisions of the Public
Warrants, but such summary does not purport to be complete and is qualified in
all respects by reference to the actual text of the warrant agreement (the
"Warrant Agreement") among the Company, the Representative, and Continental
Stock Transfer & Trust Co. (the "Warrant Agent"). A copy of the Warrant
Agreement has been filed as an exhibit to the Registration Statement of which
this Prospectus is a part. As of the date hereof, there are no Public Warrants
outstanding. See "Additional Information."

Exercise Price and Terms. Each Public Warrant entitles the registered holder
thereof to purchase, at any time over a fifty-four month period commencing six
(6) months after the date of this Prospectus, one share of Common Stock at $3.50
per share, subject to adjustment in accordance with the anti-dilution and other
provisions referred to below. The holder of any Public Warrant may exercise such
Public Warrant by surrendering the certificate representing the Public Warant to
the Warrant Agent, with the subscription form thereon properly completed and
executed, together with payment of the exercise price. The Public Warrants may
be exercised at any time in whole or in part at the applicable exercise price
until expiration of the Public Warrants. No fractional shares will be issued
upon the exercise of the Public Warrants.

The exercise price of the Public Warrants bears no relationship to any
objective criteria of value and should in no event be regarded as an indication
of any future market price of the securities offered hereby.

<PAGE>

Adjustments. The holders of the Public Warrants are protected against
dilution of their interests by adjustments, as set forth in the Warrant
Agreement, of the exercise price and the number of shares of Common Stock
purchasable upon the exercise of the Public Warrants upon the occurrence of
certain events, including stock dividends, stock splits, combinations or
reclassification of the Common Stock, or sale by the Company of shares of its
Common Stock or other securities convertible into Common Stock at a price below
the then-applicable exercise price of the Public Warrants. Additionally, an
adjustment would be made in the case of a reclassification or exchange of Common
Stock, consolidation or merger of the Company with or into another corporation
(other than a consolidation or merger in which the Company is the surviving
corporation) or sale of all or substantially all of the assets of the Company in
order to enable warrantholders to acquire the kind and number of shares of stock
or other securities or property receivable in such event by holder of the number
of shares of Common Stock that might otherwise have been purchased upon the
exercise of the Public Warrant.

Redemption Provisions. Commencing twelve (12) months after the date of this
Prospectus, all, but not less than all, of the Public Warrants are subject to
redemption at $0.10 per Public Warrant on not less than thirty (30) days' prior
written notice to the holders of the Public Warrants provided the per share
closing price or bid quotation of the Common Stock as reported on Nasdaq equals
or exceeds $ [120% of the initial public offering price per share of Common
Stock] for any twenty (20) trading days within a period of thirty (30)
consecutive trading days ending on the fifth trading day prior to the date on
which the Company gives notice of redemption. The Public Warrants will be
exercisable until the close of business on the day immediately preceding the
date fixed for redemption in such notice. If any Public Warrant called for
redemption is not exercised by such time, it will cease to be exercisable and
the holder will be entitled only to the redemption price.

Transfer, Exchange and Exercise. The Public Warrants are in registered form
and may be presented to the Warrant Agent for transfer, exchange or exercise at
any time on or prior to their expiration date five (5) years from the date of
this Prospectus, at which time the Public Warrants become wholly void and of no
value. If a market for the Public Warrants develops, the holder may sell the
Public Warrants instead of exercising them. There can be no assurance, however,
that a market for the Public Warrants will develop or continue.

The Public Warrants are not exercisable unless, at the time of the exercise,
the Company has a current prospectus covering the shares of Common Stock
issuable upon exercise of the Public Warrants, and such shares have been
registered, qualified or deemed to be exempt under the securities laws of the
state of residence of the exercising holder of the Public Warrants. Although the
Company will use its best efforts to have all the shares of Common Stock
issuable upon exercise of the Public Warrants registered or qualified on or
before the exercise date and to maintain a current prospectus relating thereto
until the expiration of the Public Warrants, there can be assurance that it will
be able to do so.

The Public Warrants are separately transferable immediately upon issuance.
Although the Public Warrants will not knowingly be sold to purchasers in
jurisdictions in which the Public Warrants are not registered or otherwise
qualified for sale or exemption, purchasers may buy Public Warrants in the
after-market in, or may move to, jurisdictions in which Public Warrants and the
Common Stock underlying the Public Warrants are not so registered or qualified
or exempt. In this event, the Company would be unable lawfully to issue Common
Stock to those persons desiring to exercise their Public Warrants (and the
Public Warrants would not be exercisable by those persons) unless and until the
Public Warrants and the underlying Common Stock are registered, or qualified for
sale in jurisdictions in which such purchasers reside, or any exemption from
registration or qualification exists in such jurisdiction.

Warrantholder Not a Stockholder. The Public Warrants do not confer upon
holders any voting, dividend or other rights as stockholders of the Company.

Modification of Public Warrants. The Company and the Warrant Agent may make
such modifications to the Public Warrants as they deem necessary and desirable
that do not adversely affect the interests of the warrantholders. The Company
may, in its sole discretion, lower the exercise price of the Public Warrants for
a period of not less than thirty (30) days on not less than thirty (30) days'
prior written notice to the warrantholders and the Representative. Modification
of the number of securites

<PAGE>

purchasable upon the exercise of any Public Warrant, the exercise price and the
expiration date with respect to any Public Warrant requires the consent of
two-thirds of the warrantholders. No other modifications may be made to the
Public Warrants, without the consent of two-thirds of the warrantholders.

DELAWARE LAW WITH RESPECT TO BUSINESS COMBINATIONS

As of the date of this Prospectus, the Company will be subject to the State
of Delaware's "business combination" statute, Section 203 of the Delaware
General Corporation Law. In general, such statute prohibits a publicly held
Delaware corporation from engaging in a "business combination" with a person who
is an "interested stockholder" for a period of three years after the date of the
transaction in which that person became an interested stockholder, unless the
business combination is approved in a prescribed manner. A "business
combination" includes a merger, asset sale or other transaction resulting in a
financial benefit to the interested stockholder. An "interested stockholder" is
a person who, together with affiliates, owns (or, within three years prior to
the proposed business combination, did own) 15% or more of the Delaware
corporation's voting stock. The statute could prohibit or delay mergers or other
takeover or change in control attempts with respect to the Company and,
accordingly, may discourage attempts to acquire the Company.

TRANSFER AGENT AND REGISTRAR

The transfer agent and registrar for the Common Stock is Continental Stock
Transfer and Trust Company, 2 Broadway, New York, New York 10004.

REPORTS TO STOCKHOLDERS

The Company intends to furnish its stockholders with annual reports
containing audited financial statements and such other periodic reports as the
Company may determine to be appropriate or as may be required by law.

As of the date of this Prospectus, the Company has registered its Common
Stock and Warrants under the provisions of Section 12(g) of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and the Company has
agreed that it will use its best efforts to continue to maintain such
registration for a minimum of five years from the date of this Prospectus. Such
registration will require the Company to comply with periodic reporting, proxy
solicitation and certain other requirements of the Exchange Act.

<PAGE>

SHARES ELIGIBLE FOR FUTURE SALE

Upon the consummation of this offering, the Company will have 7,696,291
shares of Common Stock outstanding (7,906,291 shares if the Representative's
over-allotment option is exercised in full)(assuming no exercise of outstanding
options and warrants). Of these shares, the 1,400,000 shares sold in this
offering (1,610,000 shares if the Representative's over-allotment option is
exercised in full) and the 1,241,977 shares of Common Stock registered
concurrently with this Prospectus (the "Selling Securityholders Shares") being
offered pursuant to the Selling Securityholder Prospectus included in the
Registration Statement of which this Prospectus forms a part will be freely
tradeable subject to "lock-up" agreements described below under the Securities
Act, except for any shares purchased by an "affiliate" of the Company (in
general, a person who has a control relationship with the Company), which shares
will be subject to the resale limitations of Rule 144 adopted under the
Securities Act. The remaining 5,054,314 shares are deemed to be "restricted
securities," as that term is defined under Rule 144 promulgated under the
Securities Act, in that such shares were issued and sold by the Company in
private transactions not involving a public offering and are not currently part
of an effective registration. Except for the "lock-up" agreements described
below, such shares are eligible for sale under Rule 144, or will become so
eligible at various times through May 1998. In addition, the Company has granted
the Representative demand and piggyback registration rights with respect to the
securities issuable upon exercise of the Representative's Warrants. No
prediction can be made as to the effect, if any, that sales of shares of Common
Stock or even the availability of such shares for sale will have on the market
prices prevailing from time to time. If the holders of the shares eligible for
registration so choose they could require the Company to register all of said
shares at any time.

In general, under Rule 144 as currently in effect, subject to the
satisfaction of certain other conditions, a person, including an affiliate of
the Company (or other persons whose shares are aggregated), who has owned
restricted shares of Common Stock beneficially for at least two years is
entitled to sell, within any three-month period, a number of shares that does
not exceed the greater of 1% of the total number of outstanding shares of the
same class or, if the Common Stock is quoted on NASDAQ, the average weekly
trading volume during the four calendar weeks preceding the sale. A person who
has not been an affiliate of the Company for at least the three months
immediately preceding the sale and who has beneficially owned shares of Common
Stock for at least three years is entitled to sell such shares under Rule 144
without regard to any of the limitations described above.

Except upon the consent of the Representative, all executive officers, all
directors and holders of substantially all of the outstanding stock of the
Company and substantally all holders of any options, warrants or other
securities convertible, exercisable or exchangeable for shares of Common Stock
have agreed not to, directly or indirectly, issue, offer, agree or offer to
sell, sell, transfer, assign, encumber, grant an option for the purchase or sale
of, pledge, hypothecate or otherwise dispose of any beneficial interest in such
securities for a period of twenty-four (24) months following the effective date
of the Registration Statement. The Representative has agreed to release
twenty-five percent (25%) of the securities held by Mr. Robert Bernardi on the
three hundred sixty-sixth (366th) day after the effective date of the
Registration Statement and an additional twenty five percent (25%) every ninety
(90) days thereafter until no securities held by Mr. Bernardi are subject to the
lock-up agreement. Holders of 400,647 of the "restricted securities" have not
agreed not to sell such shares, 160,714 of which will be eligible for sale
under, and subject to, Rule 144 within three months following the date of this
Prospectus. For a period of two years from the date of this Prospectus, the
Company has also agreed not to file any registration statement relating to the
offering or sale of the Company's securities (not including any registration
statement on Form S-8) without the consent of the Representative.

Prior to this offering, there has been no market for the Common Stock and no
prediction can be made as to the effect, if any, that market sales of shares of
Common Stock or the availability of such shares for sale will have on the market
prices prevailing from time to time. Nevertheless, the possibility that
substantial amounts of Common Stock may be sold in the public market may
adversely affect prevailing market prices for the Common Stock and could impair
the Company's ability to raise capital through the sale of its equity
securities.

<PAGE>

UNDERWRITING

The Underwriters named below (the "Underwriters"), for whom Network 1
Financial Securities, Inc. is acting as the representative (in such capacity,
the "Representative"), have severally agreed, subject to the terms and
conditions of the Underwriting Agreement (the "Underwriting Agreement") to
purchase from the Company and the Company has agreed to sell to the Underwriters
on a firm commitment basis, the respective number of Securities set forth
opposite their names:

NUMBER OF
UNDERWRITER SECURITIES
----------------------------------- -------------
Network 1 Financial Securities,Inc.............
-------------

Total................................ 1,400,000
=========

The Underwriters are committed to purchase all the shares of Common Stock and
Public Warrants offered hereby, if any of such securities are purchased. The
Underwriting Agreement provides that the obligations of the several Underwriters
are subject to conditions precedent specified therein.

The Company has been advised by the Representative that the Underwriters
propose initially to offer the Securities to the public at the initial public
offering prices set forth on the cover page of this Prospectus and to certain
dealers at such prices less concessions not in excess of $____ per share and
$____ per Public Warrant. Such dealers may reallow a concession not in excess of
$____ per share and $____ per Public Warrant to certain other dealers. After the
commencement of the offering, the public offering prices, concession and
reallowance may be changed by the Representative.

The Representative has informed the Company that it does not expect sales to
discretionary accounts by the Underwriters to exceed five percent of the
securities offered hereby.

The Company has agreed to indemnify the Underwriters against certain
liabilities, including liabilities under the Securities Act, or to contribute to
payments that the Underwriters may be required to make. The Company has also
agreed to pay to the Representative a non-accountable expense allowance equal to
3% of the gross proceeds derived from the sale of the Securities underwritten,
of which $25,000 has been paid to date.

The Company has granted to the Underwriters an over-allotment option,
exercisable during the forty-five (45) day period from the date of this
Prospectus, to purchase up to an additional 210,000 shares of Common Stock
and/or 210,000 Public Warrants at the initial public offering price per share
and Public Warrant, respectively, offered hereby, less underwriting discounts
and the non-accountable expense allowance. Such option may be exercised only for
the purpose of covering over-allotments, if any, incurred in the sale of the
securities offered hereby. To the extent such option is exercised in whole or in
part, each Underwriter will have a firm commitment, subject to certain
conditions, to purchase the number of the additional securities proportionate to
its initial commitment.

In connection with this offering, the Company has agreed to sell to the
Representative, for nominal consideration, warrants to purchase from the Company
up to 140,000 shares of Common Stock and/or 140,000 Public Warrants (the
"Representative's Warrants"). The Representative's Warrants are initially
exercisable at a price of $ per share of Common Stock and $ per Public Warrant
[120% of the initial public offering price per Public Warrant] for a period of
four (4) years, commencing at the beginning of the second year after their
issuance and sale. The Representative's Warrants are restricted from sale,
transfer, assignment or hypothecation for a period of twelve (12) months from
the date hereof, except to officers of the Representative. The Representative's
Warrants provide for adjustment in the number of shares of Common Stock and
Public Warrants issuable upon the exercise thereof and in the exercise price of
the Representative's Warrants as a result of certain events, including
subdivisions and combinations of the Common Stock. The Representative's Warrants
grant to the holders thereof certain rights of registration for the securities
issuable upon exercise thereof.

<PAGE>

Except upon the consent of the Representative, all executive officers, all
directors and holders of substantially all of the outstanding stock of the
Company and substantially all holders of any options, warrants or other
securities convertible, exercisable or exchangeable for shares of Common Stock
have agreed not to, directly or indirectly, issue, offer, agree or offer to
sell, sell, transfer, assign, encumber, grant an option for the purchase or sale
of, pledge, hypothecate or otherwise dispose of any beneficial interest in such
securities for a period of twenty-four (24) months following the effective date
of the Registration Statement. The Representative has agreed to release
twenty-five percent (25%) of the securities held by Mr. Robert Bernardi on the
three hundred sixty-sixth (366th) day after the effective date of the
Registration Statement and an additional twenty-five percent (25%) every ninety
(90) days thereafter until no securities held by Mr. Bernardi are subject to the
lock-up agreement. An appropriate legend shall be marked on the face of
certificates representing all such securities. The Representative has no present
intention, plan, proposal, arrangement or understanding to engage in any
transactions with the Selling Securityholders with regard to their securities of
the Company or to waive or shorten any lock-ups. If any such transaction is
entered into or any such lock-ups are waived or shortened, to the extent that
the Company is aware of any such transaction or early release and is required to
disclose the same, such information will be disclosed in a timely manner. In
addition, without the consent of the Representative and except pursuant to the
exercise of the Public Warrants and the Representative's Warrants, the Company
has agreed that it, its subsidiaries and affiliates shall not sell or offer for
sale any of their securities commencing the effective date of the Registration
Statement of which this Prospectus is a part for a period of twelve (12) months
thereafter, except pursuant to (i) options outstanding or available for grant
under the Company's option plans existing on the date hereof (and subject to
their issuance at the greater of fair market value and the initial public
offering price per share of Common Stock on the date of grant) and (ii) the
ESPP. The Company has further agreed for a period of twenty-four (24) months
following the effective date of the Registration Statement of which this
Prospectus is a part, not to file a registration statement covering any of its
securities without the prior written consent of the Representative, except (i) a
registration statement covering a maximum of 1,241,977 shares and warrants to
purchase an additional 1,241,977 shares and (ii) a registration statement on
Form S-8 relating to the Company's stock option plans described in the
Registration Statement; provided in each of the foregoing cases, all such
securityholders deliver a lock-up agreement to the Representative as described
above.

The Company has agreed that Network 1 Financial Securities, Inc. may nominate
for election one person to the Company's Board of Directors (which person shall
be reasonably acceptable to the Company) for a period of three (3) years from
the effective date of the Registration Statement and that certain of the
Company's officers, directors and stockholders have agreed to vote their shares
of common stock in favor of such designee. In the event Network 1 Financial
Securities, Inc. elects not to exercise the right, then Network 1 Financial
Securities, Inc. may designate one person to attend meetings of the Company's
Board of Directors as a non-voting advisor (which person shall be reasonably
acceptable to the Company). Such designee shall be entitled to attend all such
meetings of the Company's Board of Directors and to receive all notices and
other correspondence and communications sent by the Company to members of its
Board of Directors. The Company has agreed to reimburse designees of Network 1
Financial Securities, Inc. for their out-of-pocket expenses incurred in
connection with their attendance of meetings of the Company's Board of
Directors.

Prior to this offering, there has been no public market for the Common Stock
or the Public Warrants. Consequently, the initial public offering prices of the
securities has been determined by negotiation between the Company and the
Representative and does not necessarily bear any relationship to the Company's
asset value, net worth or other established criteria of value. The factors
considered in such negotiations, in addition to prevailing market conditions,
included the history of and prospects for the industry in which the Company
competes, an assessment of the Company's management, the prospects of the
Company, its capital structure, the market for initial public offerings and
certain other factors as were deemed relevant.

Upon the exercise of any Public Warrants more than one year after the date of
this Prospectus, which exercise was solicited by the Representative, and to the
extent not inconsistent with the guidelines of the NASD and the Rules and
Regulations of the Commission, the Company has agreed to pay the

<PAGE>

Representative a commission which shall not exceed five percent (5%) of the
aggregate exercise price of such Public Warrants in connection with bona fide
services provided by the Representative relating to any warrant solicitation
undertaken by the Representative. In addition, the individual must designate the
firm entitled to payment of such warrant solicitation fee. However, no
compensation will be paid to the Representative in connection with the exercise
of the Public Warrants if (a) the market price of the Common Stock is lower than
the exercise price, (b) the Public Warrants were held in a discretionary
account, or (c) the exercise of the Public Warrants is not solicited by the
Representative. Unless granted an exemption by the Commission from its Rule
10b-6 under the Exchange Act, the Representative will be prohibited from
engaging in any market-making activities with regard to the Company's securities
for the period from nine (9) business days (or other such applicable periods as
Rule 10b-6 may provide) prior to any solicitation of the exercise of the Public
Warrants until the later of the termination of such solicitation activity or the
termination (by waiver or otherwise) of any right the Representative may have to
receive a fee. As a result, the Representative may be unable to continue to
provide a market for the Common Stock or Public Warrants during certain periods
while the Public Warrants are exercisable. If the Representative has engaged in
any of the activities prohibited by Rule 10b-6 during the periods described
above, the Representative undertakes to waive unconditionally its rights to
receive a commission on the exercise of such Public Warrants.

The foregoing is a summary of the principal terms of the agreements described
above and does not purport to be complete. Reference is made to a copy of each
such agreement which are filed as exhibits to the Registration Statement. See
"Additional Information."

<PAGE>

CONCURRENT REGISTRATION OF SECURITIES

Concurrently with this offering, 1,241,977 shares of Common Stock (the
"Selling Securityholders' Shares"), 1,241,977 Public Warrants (the "Selling
Securityholders' Warrants") and 1,241,977 shares underlying the Selling
Securityholders' Warrants have been registered by the Company under the
Securities Act on behalf of certain of its securityholders (the "Selling
Securityholders"), pursuant to a Selling Securityholders' Prospectus included
within the Registration Statement of which this Prospectus forms a part. The
Selling Securityholders' Shares, the Selling Securityholders Warrants, and the
shares underlying the Selling Securityholders Warrants are not part of this
underwritten offering and all of these shares and warrants may not be sold prior
to 24 months from the date of this Prospectus, in each case, without the prior
written consent of the Representative. The Representative has agreed to release
twenty-five percent (25%) of the securities held by Mr. Robert Bernardi on the
three hundred sixty-sixth (366th) day after the effective date of the
Registration Statement and an additional twenty-five percent (25%) every ninety
(90) days thereafter until no securities held by Mr. Bernardi are subject to the
lock-up agreement. The Company will not receive any of the proceeds from the
sale of the Selling Securityholders' Shares, the Selling Securityholders'
Warrants, or the shares underlying the Selling Securityholders' Warrants, but
will receive proceeds from the exercise of the Selling Securityholders'
Warrants.

INTEREST OF NAMED EXPERTS AND COUNSEL

John S. Stoppelman, a principal of The Stoppelman Law Firm, P.C., counsel to
the Company owns 42,666 shares of Common Stock of the Company, or less than one
percent (1.0%) of the shares outstanding before this offering.

LEGAL MATTERS

The legality of the securities offered hereby will be passed upon for the
Company by The Stoppelman Law Firm, P.C., McLean, Virginia. Gersten, Savage,
Kaplowitz, & Curtin, LLP, New York, NY has acted as counsel for the several
underwriters in connection with this offering.

EXPERTS

The consolidated financial statements of the Company and its subsidiaries
(companies in the development stage) at December 31, 1995 and for the year ended
December 31, 1995, appearing in this Prospectus and Registration Statement have
been audited by Ernst & Young LLP, independent auditors, as set forth in their
report thereon appearing elsewhere herein, and are included in reliance upon
such report given upon the authority of such firm as experts in accounting and
auditing.

The consolidated financial statements of the Company and its subsidiaries
(companies in the development stage) at December 31, 1994 and for the year ended
December 31, 1994, appearing in this Prospectus and Registration Statement have
been audited by Hoffman, Morrison & Fitzgerald, P.C. ("Hoffman"), independent
auditors, as set forth in their report thereon appearing elsewhere herein, and
are included in reliance upon such report given upon the authority of such firm
as experts in accounting and auditing.

The former independent auditor for the Company, Hoffman, Morrison &
Fitzgerald, P.C., was dismissed by the Company on November 3, 1995. Hoffman's
report on the financial statements for the fiscal year ended December 31, 1994
did not contain an adverse opinion or disclaimer of opinion, and, except for an
emphasis paragraph describing substantial doubt about the Company's ability to
continue as a going concern, was not modified as to uncertainty, audit scope or
accounting principles. Management is not aware of any disagreements with Hoffman
on any matter of accounting principles or practices, financial statement
disclosure or auditing scope or procedure through the date of dismissal, which,
if not resolved to Hoffman's satisfaction, would have caused Hoffman to make
reference to the subject matter of the disagreement in connection with its
report.

<PAGE>

ADDITIONAL INFORMATION

The Company has filed with the Commission a registration statement on Form
SB-2 (the "Registration Statement") under the Securities Act with respect to the
Common Stock and Public Warrants offered by this Prospectus. This Prospectus
does not contain all of the information set forth in the Registration Statement,
certain parts of which are omitted in accordance with the rules and regulations
of the Commission. For further information with respect to the Company and this
offering, reference is made to the Registration Statement, including the
exhibits filed therewith, which may be inspected without charge at the
Commission's principal office at 450 Fifth Street, N.W., Washington, D.C. 20549;
at the New York Regional Office, 7 World Trade Center, New York, New York 10048
and at the Midwest Regional Office, Citicorp Center, 500 West Madison Street,
Suite 1400, Chicago, Illinois 60661. Copies of the Registration Statement may be
obtained from the Commission at its principal office and regional office upon
payment of prescribed fees and over the Internet at www.sec.gov. Statements
contained in this Prospectus as to the contents of any contract or other
document are not necessarily complete and, where the contract or other document
has been filed as an exhibit to the Registration Statement, each statement is
qualified in all respects by reference to the applicable document filed with the
Commission.

<PAGE>
GLOSSARY

Algorithm: A step-by-step problem solving or
mathematical procedure.

Asynchronous: That which takes place in different time
frames and is accessed at the user's
convenience.

Bandwidth:

The amount of information that can be
transmitted across an information channel.

Frame Relay: Packet data protocol with less error
correction to speed up communication over
high quality connections.

Intranet: A private Internet.

Internet: A network of computer networks using TCP/IP
protocol.

ISDN: (Integrated Services Digital Network) --
digital network that provides seamless
communication of voice, video and text.

Kilobits A thousand bits; a measure of the rate of
data transmission.

LAN: (Local Area Network) -- a private computer
network connecting computers in the same
building or campus using coaxial cable,
twisted pair or multimode fiber.

MBONE: A portion of the Internet with multimedia
broadcast capability.

Multimedia: A combination of multiple digitized data
types: text, sound, computer-generated
graphics and animations, photographs and
video.

NTSC: The standard for scanning television signals
in the US, Canada and Japan.

Packet: A grouping of data, typically from one to 512
characters in size, which usually represents
one transaction.

PCI-Bus: A fast 32 bit peripheral interface for PC's
and workstations.

Protocol: A set of rules for data communications; a set
of rules and procedures for establishing and
controlling the exchange of data between
computers.

S-Bus: A proprietary high speed peripheral interface
for Sun workstations.

Standards-based A product which is designed to comply with
standards promulgated by a recognized
industry organization.

Switched Architecture: Any network or device in which switching is
present and is used to direct messages from
the sender to the ultimate recipient.

TCP/IP: (Transmission Control Protocol/Internet
Protocol) -- the protocol used for packet
oriented communication between networked
computers.

UTP: (Unshielded Twisted Pair) -- standard
building wiring currently used to transmit
voice (telephone) and data throughout an
office or building.

WAN: (Wide Area Network) -- a voice, data and/or
video network covering a geographic area
larger than a campus, generally linking
multiple smaller networks.

Whiteboard: A shared drawing or graphics session or
capability between two remote computers.

World Wide Web: A very large collection of linked Internet
servers using a standard linking and display
language.

i
<PAGE>

MULTIMEDIA ACCESS CORPORATION AND SUBSIDIARIES
(A Development Stage Company)
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

<TABLE>
<CAPTION>
<S> <C>
Reports of Independent Auditors ............................................................. F-2

Consolidated Balance Sheets at December 31, 1994 and 1995 and September 30, 1996 (Unaudited.. F-4

Consolidated Statements of Operations for the years ended December 31, 1994 and 1995, the
nine months ended September 30, 1995 and 1996 (Unaudited) and Cumulative from Inception
(November 19, 1992) to September 30, 1996 (Unaudited)...................................... F-5

Consolidated Statements of Stockholders' Equity (Deficit) from Inception (November 19, 1992)
to December 31, 1995 and the nine months ended September 30, 1996 (Unaudited) ............. F-6

Consolidated Statements of Cash Flows for the years ended December 31, 1994 and 1995, the
nine months ended September 30, 1995 and 1996 (Unaudited) and Cumulative from Inception
(November 19, 1992) to September 30, 1996 (Unaudited)...................................... F-8

Notes to Consolidated Financial Statements................................................... F-9

</TABLE>

F-1

<PAGE>

REPORT OF INDEPENDENT AUDITORS

The Board of Directors
MultiMedia Access Corporation

We have audited the accompanying consolidated balance sheet of MultiMedia Access
Corporation and subsidiaries (a development stage company) as of December 31,
1995, and the related consolidated statements of operations, stockholders'
equity (deficit) and cash flows for the year then ended. These financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audit.

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

In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the consolidated financial position of
MultiMedia Access Corporation and subsidiaries at December 31, 1995, and the
consolidated results of its operations and its cash flows for the year then
ended 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 which contemplates the
realization of assets and liquidation of liabilities in the normal course of
business. As more fully described in Note 1, the Company is dependent upon the
proceeds from an initial public offering of its common stock or other
alternative financing, has incurred recurring losses from operations and has a
substantial working capital deficiency. These conditions raise substantial doubt
about the Company's ability to continue as a going concern. The consolidated
financial statements do not include any adjustments to reflect the possible
future effects on the recoverability and classification of assets or the amounts
and classification of liabilities that may result from the outcome of this
uncertainty.

Dallas, Texas ERNST & YOUNG LLP
April 5, 1996

F-2

<PAGE>

INDEPENDENT AUDITORS' REPORT

The Board of Directors
MultiMedia Access Corporation and Subsidiaries
Dallas, TX

We have audited the accompanying consolidated balance sheets of MultiMedia
Access Corporation and Subsidiaries (a development stage company) as of December
31, 1994, and the related consolidated statements of operations, stockholders'
equity (deficit) and cash flows for the year then ended. These financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these consolidated statements based
on our audits.

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 consolidated financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the consolidated financial statements.
An audit also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audit provides a reasonable basis
for our opinion.

In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the financial position of MultiMedia Access
Corporation and Subsidiaries as of December 31, 1994, and the results of its
operations and its cash flows for the year then ended, in conformity with
generally accepted accounting principles.

HOFFMAN, DYKES & FITZGERALD, P.C.

March 17, 1995, except for Note 12,
which is as of May 8, 1995
Vienna, Virginia

F-3

<PAGE>

MULTIMEDIA ACCESS CORPORATION AND SUBSIDIARIES
(A DEVELOPMENT STAGE COMPANY)
CONSOLIDATED BALANCE SHEETS

<TABLE>
<CAPTION>
DECEMBER 31,
--------------------------- SEPTEMBER 30,
1994 1995 1996
------------- ------------- ------------
ASSETS (UNAUDITED)
<S> <C> <C> <C>
Current assets:
Cash and cash equivalents........................................ $ 31,360 $ 16,605 $ 21,523
Accounts receivable, less allowance for doubtful accounts (none
at December 31, 1994, $29,647 and $44,196 at December 31, 1995
and September 30, 1996 (unaudited), respectively)............... 36,581 4,564 128,755
Inventory, less reserve (none at December 31, 1994, $220,000 at
December 31, 1995 and $215,000 at September 30, 1996
(unaudited)).................................................... 365,103 197,469 377,313
Prepaid expenses................................................. 36,331 18,971 70,267
Due from debt holder............................................. -- 315,300 --
Deferred charges................................................. 307,115 44,165 324,593
------------- ------------- ---------------
Total current assets........................................... 776,490 597,074 922,451

Property and equipment, net....................................... 534,031 485,700 481,851
Software development costs, net................................... 210,256 143,795 116,689
Deferred charges, net............................................. 151,772 -- 20,833
Deposits.......................................................... 17,829 18,197 18,272
Patent, net....................................................... 90,677 -- --
------------- ------------- ---------------
Total assets................................................... $ 1,781,055 $ 1,244,766 $ 1,560,096
============= ============= ===============
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
Current liabilities:
Accounts payable................................................. $ 432,623 $ 580,160 $ 523,347
Accrued compensation............................................. 253,755 354,268 230,048
Deferred revenue................................................. 17,471 75,513 27,091
Other accrued liabilities........................................ 273,513 370,398 777,299
Short-term debt, officer......................................... -- 364,154 364,154
Short-term debt, other........................................... 8,271 66,633 1,003,554
Current portion of long-term debt................................ -- 2,677,550 2,677,550
------------- ------------- ---------------
Total current liabilities...................................... 985,633 4,488,676 5,603,043
Long-term debt.................................................... 2,195,174 8,654 500,000

Commitments and contingencies

Stockholders' equity (deficit):
Preferred stock, $.0001 par value:
Authorized shares - 5,000,000
Issued shares - none............................................ -- -- --
Common stock, $.0001 par value:
Authorized shares - 20,000,000
Issued and outstanding shares - 3,507,231 at December 31, 1994, 4,721,268 at
December 31, 1995 and 5,315,811 at September 30,
1996 (unaudited)............................................... 350 472 532
Additional paid-in capital....................................... 1,163,274 4,736,933 6,527,572
Stock subscription receivable.................................... (191) -- --
Deficit accumulated during the development stage................. (2,563,185) (7,978,063) (11,059,145)
Treasury stock, 261,497 shares at December 31, 1995 and September
30, 1996 (unaudited)............................................ -- (11,906) (11,906)
------------- ------------- ---------------
Total stockholders' equity (deficit)........................... (1,399,752) (3,252,564) (4,542,947)
------------- ------------- ---------------
Total liabilities and stockholders' equity (deficit)........... $ 1,781,055 $ 1,244,766 $ 1,560,096
============= ============= ===============
</TABLE>

See accompanying notes.

F-4

<PAGE>

MULTIMEDIA ACCESS CORPORATION AND SUBSIDIARIES
(A DEVELOPMENT STAGE COMPANY)
CONSOLIDATED STATEMENTS OF OPERATIONS

FOR THE NINE MONTHS CUMULATIVE
YEAR ENDED DECEMBER 31, ENDED SEPTEMBER 30, FROM
----------------------- ------------------- INCEPTION
(NOVEMBER 19, 1992)
1994 1995 1995 1996 TO SEPTEMBER 30, 1996
---- ---- ---- ---- ---------------------
(UNAUDITED) (UNAUDITED) (UNAUDITED)
<S> <C> <C> <C> <C> <C>
Net sales.......................... $ 127,531 $ 285,354 $ 244,223 $ 900,446 $ 1,377,407
Cost of goods sold................. 64,363 136,381 112,452 315,437 547,994
-------------- -------------- -------------- -------------- ---------------------
Gross profit....................... 63,168 148,973 131,771 585,009 829,413
Operating expenses:
Selling, general and
administrative................... 1,795,485 2,297,497 1,737,201 1,712,494 6,320,012
Research and development.......... 864,847 1,983,310 1,149,333 1,457,001 4,427,001
Depreciation and amortization..... 80,360 439,752 185,789 153,035 704,172
-------------- -------------- -------------- -------------- ---------------------
Total operating expenses......... 2,740,692 4,720,559 3,072,323 3,322,530 11,451,185
-------------- -------------- -------------- -------------- ---------------------
Operating loss..................... (2,677,524) (4,571,586) (2,940,552) (2,727,521) (10,621,772)
Other income (expense):
Dividend and interest income...... 29,215 5,372 1,842 69 34,656
Interest expense.................. (81,503) (847,905) (570,470) (343,630) (1,286,027)
Other............................. 12,391 (759) (330) -- 11,632
-------------- -------------- -------------- -------------- ---------------------
Total other income (expense)..... (39,897) (843,292) (568,958) (343,561) (1,239,739)
-------------- -------------- -------------- -------------- ---------------------
Net loss........................... $(2,717,421) $(5,414,878) $(3,509,510) $(3,081,082) $(11,861,511)
============== ============== ============== ============== =====================
Net loss per share................. $ (0.58) $ (1.06) $ (0.70) $ (0.51)
============== ============== ============== ==============
Weighted average number of common
and common equivalent shares
outstanding....................... 4,706,646 5,124,411 4,999,543 6,000,010
============== ============== ============== ==============
</TABLE>

See accompanying notes.

F-5

<PAGE>

MULTIMEDIA ACCESS CORPORATION AND SUBSIDIARIES
(A DEVELOPMENT STAGE COMPANY)

CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (DEFICIT)
FROM INCEPTION (NOVEMBER 19, 1992) TO DECEMBER 31, 1995
AND THE NINE MONTHS ENDED SEPTEMBER 30, 1996 (UNAUDITED)

COMMON STOCK
--------------------- ACCUMULATED ACCUMULATED
ADDITIONAL STOCK DEFICIT DEFICIT TOTAL
PAID-IN SUBSCRIPTIONS AS AN S AS A C TREASURY STOCKHOLDERS'
SHARES PAR VALUE CAPITAL RECEIVABLE CORPORATION CORPORATION STOCK EQUITY (DEFICIT)
------ --------- ------- ---------- ----------- ----------- ----- ----------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Net loss from inception
(November 19, 1992) to
December 31, 1992........ -- $ -- $ -- $ -- $ (53,925) $ -- $ -- $ (53,925)
------- -------- -------- --------- ---------- --------- ------ -----------
Balance, December 31,
1992 -- -- -- -- (53,925) -- -- (53,925)
Exercise of options...... 194,180 19 361 (342) -- -- -- 38
Exercise of warrants .... 511,000 51 949 (900) -- -- -- 100
Net loss................. -- -- -- -- (594,205) -- -- (594,205)
------- -------- -------- ---------- ---------- --------- ------ -----------
Balance, December 31,1993 705,180 70 1,310 (1,242 (648,130) -- -- (647,992)
Sale of common stock,
February 1994.......... 1,510,000 151 -- -- -- -- -- 151
Sale of common stock
March 1994.............. 996,364 100 1,917,141 -- -- -- -- 1,917,241
Exercise of options...... 25,126 2 535 -- -- -- -- 537
Net loss as an S
Corporation January 1,
1994 to May 10, 1994 .. -- -- -- -- (154,236) -- -- (154,236)
Reclassification of S
Corporation losses upon
merger with Viewpoint .. -- -- (802,366) -- 802,366 -- -- --
Common stock issued,
June 1994............... 10,000 1 21,999 -- -- -- -- 22,000
Exercise of warrants .... 107,261 11 21,670 (844) -- -- -- 20,837
Exercise of options...... 153,300 15 2,985 -- -- -- -- 3,000
Payment of stock
subscriptions........... -- -- -- 1,895 -- -- -- 1,895
Net loss................. -- -- -- -- -- (2,563,185) -- (2,563,185)
----------- ----------- ------------ --------------- ------------- ------------- -------- -----------
Balance, December 31,
1994 3,507,231 350 1,163,274 (191) -- (2,563,185) -- (1,399,752)
</TABLE>

F-6

<PAGE>

MULTIMEDIA ACCESS CORPORATION AND SUBSIDIARIES
(A DEVELOPMENT STAGE COMPANY)

CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (DEFICIT) (CONTINUED)
FROM INCEPTION (NOVEMBER 19, 1992) TO DECEMBER 31, 1995
AND THE NINE MONTHS ENDED SEPTEMBER 30, 1996 (UNAUDITED)

Balance, December 31,
1994 3,507,231 $350 $1,163,274 $ (191) $ -- $ (2,563,185) $ -- $(1,399,752)
Payment of stock
subscriptions........... -- -- -- 191 -- -- -- 191
Repurchase of 255,880
shares of common stock
at par.................. -- -- -- -- -- -- (26) (26)
Sale of common stock,
net of expenses,
September 1995.......... 833,333 83 2,166,811 -- -- -- -- 2,166,894
Satisfaction of trade
receivable for 5,617
shares of common stock . -- -- -- -- -- -- (11,880) (11,880)
Exchange of short-term
debt for common stock,
December 1995........... 380,704 39 1,406,848 -- -- -- -- 1,406,887
Net loss................ -- -- -- -- -- (5,414,878) -- (5,414,878)
----------- ----------- ------------ ---------------------- ------------- ---------- --------------
Balance, December 31,
1995 4,721,268 472 4,736,933 -- -- (7,978,063) (11,906) (3,252,564)
Exchange of short-term
debt for common stock,
net of expenses
(unaudited)............. 221,195 22 571,167 -- -- -- -- 571,189
Sales of common stock,
net of expenses
(unaudited) ............ 304,016 31 896,481 -- -- -- -- 896,512
Exchange of trade
payables for common
stock (unaudited)....... 69,332 7 207,991 -- -- -- -- 207,998
Issuance of warrants
(unaudited)............. -- -- 115,000 -- -- -- -- 115,000
Net loss (unaudited) ... -- -- -- -- -- (3,081,082) -- (3,081,082)
----------- ----------- ------------ ----------- --------- ------------- --------- --------------
Balance, September 30,
1996 (unaudited) 5,315,811 $532 $6,527,572 $ -- $ -- $(11,059,145) $(11,906) $(4,542,947)
=========== =========== ============ =========== ========= ============= =========== ============
</TABLE>

See accompanying notes.

F-7

<PAGE>

MULTIMEDIA ACCESS CORPORATION AND SUBSIDIARIES
(A DEVELOPMENT STAGE COMPANY)
CONSOLIDATED STATEMENTS OF CASH FLOWS

<TABLE>
<CAPTION>
FOR THE NINE MONTHS CUMULATIVE
YEAR ENDED DECEMBER 31, ENDED SEPTEMBER 30, FROM
----------------------------- ------------------------- INCEPTION
(NOVEMBER 19, 1992)
1994 1995 1995 1996 TO SEPTEMBER 30, 1996
----- ----- ------------ -------------- ---------------------
(UNAUDITED) (UNAUDITED) (UNAUDITED)
<S> <C> <C> <C> <C> <C>
Operating activities:
Net loss..................................... $(2,717,421) $(5,414,878) $(3,509,510) $(3,081,082) $(11,861,511)
Adjustments to reconcile net loss to net cash
used in operating activities:
Depreciation of fixed assets................ 50,109 126,443 93,267 114,929 292,305
Amortization of software development........ 0 222,632 69,853 38,106 260,738
Amortization of patent...................... 30,251 90,677 22,669 -- 151,129
Loss on asset dispositions.................. -- 1,955 2,280 -- 1,955
Non-cash charges to interest expense........ -- 264,777 140,125 69,165 333,942
Common stock issued in lieu of cash for
consulting services........................ 22,000 -- -- -- 22,000
Inventory reserve adjustment................ -- 220,000 -- -- 220,000
Write off of deferred charges............... -- 376,633 306,633 -- 376,633
Changes in operating assets and liabilities:
Accounts receivable........................ (19,120) 32,208 (51,496) (124,191) (128,564)
Inventory.................................. (365,103) (52,366) (13,221) (179,844) (597,313)
Prepaid expenses........................... (36,331) 17,360 9,344 (51,296) (70,267)
Due from debt holder....................... -- (315,300) (315,300) 315,300 --
Deferred charges........................... (458,887) 38,089 (326,176) (363,368) (784,166)
Deposits................................... (17,829) (368) 591 (75) (18,272)
Accounts payable........................... 336,723 147,537 92,982 151,185 731,345
Accrued compensation....................... (50,836) 100,513 147,496 (124,220) 230,048
Deferred revenue........................... 1,880 58,042 0 (48,422) 27,091
Other accrued liabilities.................. 200,461 219,696 172,219 420,490 913,699
-------------- -------------- -------------- -------------- ---------------------

Net cash used in operating activities..... (3,024,103) (3,866,350) (3,158,244) (2,863,323) (9,899,208)
-------------- -------------- -------------- -------------- ---------------------

Investing activities:
Purchase of property and equipment........... (532,871) (108,143) (57,637) (111,080) (764,680)
Software development costs................... (210,256) (156,171) (284,560) (11,000) (377,427)
Purchase of patent........................... -- -- -- -- (151,129)
Other........................................ -- 28,076 26,645 -- 28,076
-------------- -------------- -------------- -------------- ---------------------

Net cash used in investing activities..... (743,127) (236,238) (315,552) (122,080) (1,265,160)
-------------- -------------- -------------- -------------- ---------------------

Financing activities:
Net proceeds from issuance (repayment) of
short-term debt............................. (100,000) 1,096,000 1,061,000 1,585,000 2,806,000
Net proceeds from issuance (repayment) of
short-term debt- officer.................... (87,000) 345,000 345,000 -- 345,000
Other........................................ (1,210) (8,270) (6,130) (6,733) (16,213)
Proceeds from issuance of long-term debt..... 2,040,300 500,115 500,115 500,000 3,040,415
Proceeds from exercise of stock options and
warrants.................................... 26,268 -- -- -- 26,406
Purchase of treasury stock................... -- (11,906) (26) -- (11,906)
Net proceeds from sale of common stock....... 1,917,241 2,166,894 2,500,000 912,054 4,996,189
-------------- -------------- -------------- -------------- ---------------------

Net cash provided by financing activities. 3,795,599 4,087,833 4,399,959 2,990,321 11,185,891
-------------- -------------- -------------- -------------- ---------------------

Net increase (decrease) in cash and cash
equivalents.................................. 28,369 (14,755) 926,163 4,918 21,523
Cash and cash equivalents, beginning of
period....................................... 2,991 31,360 31,360 16,605 --
-------------- -------------- -------------- -------------- ---------------------

Cash and cash equivalents, end of period ..... $ 31,360 $ 16,605 $ 957,523 $ 21,523 $ 21,523
============== ============== ============== ============== =====================

</TABLE>

See accompanying notes.

F-8

<PAGE>

MULTIMEDIA ACCESS CORPORATION AND SUBSIDIARIES
(A DEVELOPMENT STAGE COMPANY)

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

(INFORMATION WITH RESPECT TO SEPTEMBER 30, 1996 AND THE NINE MONTH PERIODS
ENDED
SEPTEMBER 30, 1995 AND 1996 IS UNAUDITED.)

1. THE COMPANY AND GOING CONCERN CONSIDERATIONS

The accompanying consolidated financial statements include the accounts of
MultiMedia Access Corporation (MMAC), and its wholly-owned subsidiaries,
Viewpoint Systems, Inc. (Viewpoint), VideoWare, Inc. (VideoWare) and Osprey
Technologies, Inc. (Osprey) (collectively, the Company). MMAC, Viewpoint,
VideoWare and Osprey were incorporated in Delaware in February 1994, November
1992, September 1994 and September 1995, respectively. The Company is a
development stage company engaged in developing and marketing advanced video
communications products that integrate video capabilities into existing desktop
computers, applications and networks. The Company markets its products directly
to end-users, through value-added resellers and computer system integrators,
primarily in the continental United States.

The Company's capital requirements in connection with the design, development
and commercialization of its products have been and will continue to be
significant. To date, the Company has been substantially dependent upon loans
from its principal stockholders, as well as private placements of its debt and
equity securities, to finance its working capital requirements. The Company is
dependent on the proceeds of this offering to commence full-scale marketing
activities in connection with its products, to complete the development of
additional product and software applications and to fund its working capital
requirements. In the event that the Company's plans change or prove to be
inaccurate or if the proceeds of this offering prove to be insufficient to fund
operations, the Company could be required to seek additional financing sooner
than currently anticipated or could be required to curtail or cease its
activities. The Company has no current arrangements with respect to, or sources
of, additional financing and there can be no assurance that existing
stockholders will provide any portion of the Company's future financing
requirements. There can be no assurance that any additional financing will be
available to the Company on acceptable terms, or at all.

Inasmuch as the Company intends to increase its level of activities following
consummation of this offering and will be required to make significant
expenditures in connection with marketing and product development activities,
the Company anticipates that losses will continue for the foreseeable future and
until such time as the Company is able to build an effective marketing and sales
organization, develop a network of independent resellers and achieve market
acceptance of its products.

There can be no assurance that the Company will be able to successfully
implement its marketing strategy, generate significant revenues or achieve
profitable operations.

The accompanying consolidated financial statements have been prepared
assuming that the Company will continue as a going concern. As reflected in the
accompanying consolidated financial statements, the Company incurred significant
losses of $2,717,421 and $5,414,878 during the years ended December 31, 1994 and
1995, respectively, and $3,081,082 during the nine months ended September 30,
1996 (unaudited). These losses, in conjunction with the matters discussed above,
raise substantial doubt about the Company's ability to continue as a going
concern. The consolidated financial statements do not include any adjustments
which might be necessary should the Company be unable to continue as a going
concern.

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

BASIS OF PRESENTATION

In May 1994 the Company acquired Viewpoint in a transaction accounted for as
a pooling of interests (see Note 3). The accompanying consolidated financial
statements include the financial position, results of operations and cash flows
of Viewpoint, as adjusted retroactively to give effect to the pooling of
interests. All material intercompany transactions have been eliminated. No
changes in accounting policies were adopted as a result of the pooling of
interests.

F-9

<PAGE>

MULTIMEDIA ACCESS CORPORATION AND SUBSIDIARIES -
(A Development Stage Company) (Continued)

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

CASH AND CASH EQUIVALENTS

The Company considers all highly liquid investments purchased with an initial
maturity of three months or less to be cash equivalents.

INVENTORY

Inventory consists primarily of purchased electronic components and computer
system products, along with the related documentation manuals and packaging
materials. Inventory is carried at the lower of cost or market. Effective
January 1, 1995, the Company changed its method of costing inventory from the
first-in, first-out method to the standard cost method, which approximates
average cost. This change did not result in any material change in the valuation
of inventory.

PROPERTY AND EQUIPMENT

Property and equipment is recorded at cost. Depreciation is determined using
the straight-line method over the estimated useful lives, generally five years,
of the related assets. Leasehold improvements are amortized over the lives of
the related leases. Expenditures for repairs and maintenance are charged to
operations as incurred; renewals and betterments are capitalized.

SOFTWARE DEVELOPMENT COSTS

Costs of developing new software products and substantial enhancements to
existing software products are expensed as incurred until technological
feasibility has been established, after which time additional costs incurred are
capitalized in accordance with Statement of Financial Accounting Standards No.
86, "Accounting for the Costs of Computer Software to be Sold, Leased, or
Otherwise Marketed." Amortization of capitalized software development costs
begins when products are available for general release to customers, and is
computed using the straight-line method over a period not to exceed three years.
No amount was charged to amortization expense through December 31, 1994, and
$222,632 (including $155,597 to fully amortize remaining costs of the Viewpoint
product line) and $38,106 was charged to amortization expense during the year
ended December 31, 1995 and the nine months ended September 30, 1996
(unaudited), respectively.

PATENT

The Company holds a patent related to its proprietary technology and trade
secrets. The costs associated with obtaining and defending the patent are
amortized on the straight-line basis over its estimated remaining life, not to
exceed five years. During 1995, the Company fully amortized its patent. Total
accumulated amortization of patent costs was $60,452 at December 31, 1994.

REVENUE RECOGNITION

Revenue from the sale of video communication systems and licensing of the
related software is recognized upon shipment to customers. With pre-approval by
a return merchandise authorization, a customer may return undamaged product to
the Company, subject to a 30-day money back guarantee. The Company maintains an
accrued warranty reserve for products which are returned defective during the
warranty period.

NET LOSS PER SHARE

Net loss per share is computed based on the weighted average number of common
and common equivalent shares outstanding. The Company has computed common and
common equivalent shares in determining the number of shares used in calculating
earnings per share for all periods presented pur

F-10

<PAGE>

MULTIMEDIA ACCESS CORPORATION AND SUBSIDIARIES -
(A Development Stage Company) (Continued)

suant to the Securities and Exchange Commission Staff Accounting Bulletin (SAB)
No. 83. SAB No. 83 requires the Company to include all common shares and all
common share equivalents issued in the 12 month period preceding the filing date
of the initial public offering in its calculation of the number of shares used
to determine earnings per share as if the shares had been outstanding for all
periods presented. Options and warrants issued more than 12 months prior to the
initial public offering have been excluded since their effect is antidilutive.

Supplemental loss per share is $1.02 for the year ended December 31, 1995 and
$.49 for the nine months ended September 30, 1996 (unaudited) assuming (1)
issuance of the securities offered by the Company hereby, receipt by the Company
of the net proceeds thereof and use of the proceeds to repay $292,548 and
$377,548 principal amount of secured and demand notes at December 31, 1995 and
September 30, 1996 (unaudited), respectively, and to repay approximately
$247,250 principal amount of convertible debt and (2) weighted average common
and common equivalent shares of 5,244,366 and 6,138,854 for the year ended
December 31, 1995 and the nine months ended September 30, 1996 (unaudited),
respectively.

DEFERRED CHARGES AND OTHER ASSETS

Deferred charges at December 31, 1994 consisted of legal, accounting and
other expenses associated with the private placement of 8% promissory notes,
which were amortized using the straight-line method over the term of the notes.
During 1995, the Company incurred $333,106 of additional legal, accounting and
underwriting costs in connection with a private placement of common stock which
have been charged against the proceeds from the sale of the common stock. During
1995, the Company wrote off deferred charges consisting of legal, accounting,
underwriting and printing costs incurred in connection with a canceled initial
public offering of common stock which resulted in a charge against income of
$376,633. Deferred charges at September 30, 1996 consist of legal, accounting
and other expenses associated with the impending initial public offering, as
well as expenses associated with the issuance of 8% debt in July and September
of 1996.

During September 1995 the Company advanced a debt holder of the Company
$315,300 which was repaid in the first quarter of 1996.

CONCENTRATION OF CREDIT RISK

The Company invests its cash with financial institutions that include a Texas
commercial bank and a commercial brokerage firm. The brokerage firm maintains
accounts in several banks throughout the country and in government securities.
Cash balances at the Texas commercial bank are insured by the Federal Deposit
Insurance Corporation up to $100,000. The Company believes it has no significant
concentration of credit risk.

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 amounts reported in the financial statements and accompanying notes.
Actual results could differ from those estimates.

INCOME TAXES

The Company utilizes the liability method of accounting for income taxes as
set forth in Statement of Financial Accounting Standards No. 109, "Accounting
for Income Taxes." Under this method, deferred tax assets and liabilities are
determined based upon the differences between the financial statement and tax
bases of assets and liabilities, as measured by the enacted tax rates expected
to be in effect when these differences reverse.

F-11

<PAGE>

MULTIMEDIA ACCESS CORPORATION AND SUBSIDIARIES -
(A Development Stage Company) (Continued)

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)

FAIR VALUE OF FINANCIAL INSTRUMENTS

Management expects its pending initial public offering to result in the
conversion to common stock or settlement in cash of its outstanding short-term
and long-term debt. However, as a result of the uncertainties described in Note
1, management believes it is not practicable to determine the fair value of its
short and long term debt in accordance with Statement of Financial Accounting
Standards No. 107.

Interim Financial Information

The consolidated financial statements as of September 30, 1996 and for the
nine months ended September 30, 1995 and 1996 are unaudited and include, in the
opinion of management, all adjustments, consisting of only normal recurring
adjustments, which the Company considers necessary to present fairly the
financial position, results of operations and cash flows of the Company for
those interim periods. The operating results for the nine months ended September
30, 1996 are not necessarily indicative of the results that may be expected for
the full fiscal year.

3. ACQUISITION OF VIEWPOINT

In May 1994, the Company acquired Viewpoint in a transaction accounted for as
a pooling of interests. The Company acquired all of the outstanding common stock
and options to purchase common stock of Viewpoint in exchange for 812,440 shares
of common stock, resulting from the exercise of 194,180 options and 511,000
warrants exercised in 1993 and 107,261 warrants exercised in 1994, and 287,564
stock options to purchase the Company's common stock. This represents an
exchange ratio of .511 of the Company's common shares for each share of
Viewpoint. The options issued in exchange for the Viewpoint options have
exercise prices ranging from $.02 to $.20 a share and expire between September
2003 and May 2004.

A summary of the results of operations of MMAC and Viewpoint for the period
February 1994 through May 1994 and January 1994 through May 1994, respectively,
is as follows:

MMAC VIEWPOINT
------------ ------------
Sales..... $ -- $ 16,077
============ ============
Net loss . $(148,634) $(154,236)
============ ============

4. INVENTORY

Inventory consists of the following:

DECEMBER 31,
-------------------------- SEPTEMBER 30,
1994 1995 1996
---- ---- ----
(UNAUDITED)
Purchased
materials.......... $229,019 $144,986 $239,652
Finished goods..... 136,084 52,483 137,661
---------- ---------- ---------
$365,103 $197,469 $377,313
========== ========== ==========

Results of operations for 1995 reflect a charge of $220,000 for technological
obsolescence of component parts and finished goods associated with one of the
Company's early-developed product lines. Inventory at December 31, 1995 and
September 30, 1996 (unaudited) is presented net of a $220,000 and $215,000
reserve, respectively.

F-12

<PAGE>

MULTIMEDIA ACCESS CORPORATION AND SUBSIDIARIES -
(A Development Stage Company) (Continued)

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)

5. PROPERTY AND EQUIPMENT

Property and equipment, at cost, consists of the following:

<TABLE>
<CAPTION>
DECEMBER 31, SEPTEMBER 30,
-------------------- ------------
1994 1995 1996
---- ---- ----
(UNAUDITED)
<S> <C> <C> <C>
Computer equipment........................ $432,275 $ 455,055 $ 521,305
Software.................................. 39,756 79,552 121,841
Leasehold improvements.................... 36,985 36,985 36,985
Office furniture and equipment............ 75,949 85,090 87,630
---------- ----------- ---------------
584,965 656,682 767,761
Less accumulated depreciation and
amortization........................ (50,934) (170,982) (285,910)
---------- ----------- ---------------
$534,031 $ 485,700 $ 481,851
========== =========== ===============
</TABLE>

6. SHORT-TERM DEBT

Short-term debt consists of the following:

<TABLE>
<CAPTION>
DECEMBER 31, SEPTEMBER 30,
-------------------- ------------
1994 1995 1996
---- ---- ----
(UNAUDITED)
<S> <C> <C> <C>
Officer:
Secured note payable to an officer and
affiliate of the Company, due on demand
with interest at 15%. Collateralized by
all assets of the Company.............. $ -- $364,154 $ 364,154
======== ========== ================
Other:
Secured note payable to an individual
investor, due on demand with interest
at 15%. Collateralized by all assets
of the Company......................... $ -- 22,548 22,548
Convertible secured debt payable to a
principal stockholder of the Company,
due on demand 10 days subsequent to
an initial public offering or 180 days
after date of issue, with interest at 8%.
Collateralized by all assets of the
Company................................. -- -- 500,000
Unsecured notes payable to a stockholder of
the Company, due on demand 10 days
subsequent to an initial public offering
or 180 days after date of issue with
interest at 8%.......................... -- -- 350,000
Unsecured, non-interest bearing note payable
to one of the Company's underwriters ... -- 35,000 120,000

Other..................................... 8,271 9,085 11,006
-------- ---------- ----------------
Total short-term debt, other ............. $8,271 $ 66,633 $1,003,554
======== ========== ================

</TABLE>

Between February and May 1995, the Company issued $1,096,000 of 15% 90-day
secured notes to existing stockholders, an officer and director of the Company
and two individual investors. The secured

F-13

<PAGE>

MULTIMEDIA ACCESS CORPORATION AND SUBSIDIARIES -
(A Development Stage Company) (Continued)

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)

notes were collateralized by all assets of the Company. As an incentive to lend
the secured debt to the Company, an officer and director, and two former
directors of the Company (all three founders and significant stockholders of the
Company), sold 202,750 of their common shares to the lenders at par value. The
excess of the fair market value of the shares of $.50 per share as determined by
independent appraisal sold to the note holders over their purchase price, was
charged to expense over the term of the notes as additional interest expense.

During June and July 1995, $310,000 of 15% unsecured demand notes were issued
to existing stockholders, note holders and an officer and director of the
Company. As an incentive to lend the unsecured debt to the Company, the Company
issued 77,500 three-year warrants to purchase common stock at $1.00 per share to
the lenders. The fair market value of the warrants of $.50 as determined by
independent appraisal, was charged to interest expense over the term of the
notes.

In December 1995, $791,000 of the secured notes and $250,000 of the unsecured
notes, along with accrued interest of $101,109, were exchanged for 380,704
shares of common stock plus 520,500 three-year warrants to purchase common stock
at $1.00 per share. As determined by independent appraisal, the fair market
value of the equity instruments exchanged equaled the carrying value of the debt
and accrued interest and, accordingly, no gain or loss was recorded.

Additionally, in December 1995, in connection with the exchange of secured
notes for demand notes, the Company issued 109,500 three-year warrants to
purchase common stock at $1.00 per share to the holders of the secured and
unsecured notes remaining outstanding. 103,500 of these warrants were issued to
the Company's Chief Executive Officer. Based on an independent appraisal, the
fair market value of these warrants of $.60 per share was charged to interest
expense.

In January and February 1996, the Company issued $650,000 of 10% 90-day
secured notes to an existing stockholder of the Company. As an incentive to
advance these notes, the stockholder was granted the right to receive 65,000
three-year warrants to purchase Company stock at $3.00 per share. Based on an
independent appraisal, the fair market value of these warrants of $.50 per share
was charged to interest expense over the term of the notes.

In July of 1996, the Company issued $500,000 of 8% secured convertible debt
to a principal stockholder of the Company. The convertible debt is due on demand
10 days subsequent to an initial public offering of the Company's equity
securities or 180 days from date of issue. As an incentive to advance these
notes, the stockholder was granted the right to receive 50,000 three-year
warrants to purchase Company stock at $3.00 per share. Based on an independent
appraisal, the fair market value of these warrants of $.50 per share is being
charged to interest expense over the term of the debt.

In September of 1996, the Company issued $350,000 of 8% unsecured notes to an
existing stockholder of the Company. The notes are due on demand 10 days
subsequent to an initial public offering of the Company's equity securities or
180 days from date of issue. As an incentive to advance these notes, the
stockholder was granted the right to receive 50,000 three-year warrants to
purchase Company stock at $3.00 per share. Based on an independent appraisal,
the fair market value of these warrants of $1.00 per share is being charged to
interest expense over the term of the notes.

Interest paid was $11,377, $23,811 and $1,046 for the year ended December 31,
1994 and 1995 and the nine months ended September 30, 1996 (unaudited),
respectively.

F-14

<PAGE>

MULTIMEDIA ACCESS CORPORATION AND SUBSIDIARIES -
(A Development Stage Company) (Continued)

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)

7. LONG-TERM DEBT

Long-term debt consists of the following:

<TABLE>
<CAPTION>
DECEMBER 31,
-------------------- SEPTEMBER 30,
1994 1995 1996
---- ---- ----
(UNAUDITED)
<S> <C> <C> <C>
Convertible notes........................ $2,067,300 $2,567,300 $2,567,300
Short-term notes converted to convertible
notes .. 110,135 110,250 110,250
Convertible secured debt payable to a
principal stockholder of the Company,
due January 1998 with interest at 8%,
collateralized by all assets of the
Company................................ -- -- 500,000
Other.................................... 17,739 8,654 --
------------ ------------ ---------------
2,195,174 2,686,204 3,177,550
Less: current portion of convertible
notes ............................... -- 2,677,550 2,677,550
------------ ------------ ---------------
$2,195,174 $ 8,654 $ 500,000
============ ============ ===============

</TABLE>

In September 1994 the Company began a private placement of convertible debt
(the Agreements) and through March 31, 1995, received $2,567,300. The unsecured
convertible promissory notes, which were sold in units of $10,000, bear interest
at 8% and mature between March 1996 and July 1996. As of December 31, 1995 and
September 30, 1996 all of the convertible notes are scheduled to mature within
twelve months and, therefore, have been classified as a current liability.

The Agreements allow convertible note holders, upon a proposed public
offering of the Company's equity securities with proceeds exceeding $2,000,000,
the right to convert their notes to registered equity securities of the Company
at the public offering price and receive 5,000 three-year warrants to purchase
the Company's common stock at $3.00 per share for each $10,000 unit.
Alternatively, the convertible note holders may elect to request repayment of
their notes from the proceeds of the proposed public offering and receive 3,334
three-year warrants to purchase the Company's common stock at $3.00 for each
$10,000 unit. In June of 1996, holders of $2,430,300 principal amount of the
convertible notes elected to convert into Common Stock and Public Warrants and
holders of $247,250 principal amount elected to be repaid from the proceeds of
this offering. In addition, by virtue of the aforementioned elections,
convertible notes in the amount of $2,677,550, which originally matured between
March and July of 1996, were extended to the closing date of the initial public
offering.

In July of 1996, the Company issued $500,000 of 18-month 8% convertible debt
to a principal stockholder of the Company. As an incentive to advance these
notes, the stockholder was granted 50,000 three-year warrants to purchase
Company stock at $3.00 per share. Based on an independent appraisal, the fair
market value of these warrants of $.50 per share is being charged to interest
expense over the term of the notes.

Effective December 1994, certain short-term debt holders converted their
promissory notes including accrued interest to $110,250 of convertible notes.

F-15

<PAGE>

MULTIMEDIA ACCESS CORPORATION AND SUBSIDIARIES -
(A Development Stage Company) (Continued)

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)

8. INCOME TAXES

Prior to the pooling with the Company which was consummated in May 1994,
Viewpoint had elected to be treated as an S Corporation for federal income tax
purposes. As an S Corporation, the tax effect of Viewpoint's revenues and
expenses were attributed directly to its stockholders on a pass-through basis.
Accordingly, the accompanying consolidated financial statements do not reflect a
provision for income taxes for Viewpoint for any tax reporting period ended
prior to May 1994. Net operating losses and any tax credits generated by
Viewpoint while it was an S Corporation are not available to the Company to
offset taxable income, if any, generated after the change to C Corporation
status. Accordingly, accumulated deficits of $802,366 generated by Viewpoint as
an S Corporation from November 19, 1992 through May 10, 1994, have been
reclassified to additional paid-in capital. Viewpoint's S Corporation election
was terminated effective with the pooling of interests discussed in Note 3.

MMAC, VideoWare and Osprey have been classified as C Corporations since their
inception in February 1994, September 1994 and September 1995, respectively.
Accordingly, the Company has accounted for income taxes for these entities since
their respective dates of inception, and for Viewpoint since May 1994, in
accordance with Statement of Financial Accounting Standards (SFAS) No. 109,
"Accounting for Income Taxes." SFAS No. 109 requires a valuation allowance to be
recorded when it is "more likely than not that some portion or all of the
deferred tax assets will not be realized." In the opinion of management,
realization of the Company's net operating loss carryforward is not reasonably
assured, and a valuation allowance of $1,076,000, $2,966,000 and $4,051,000 has
been provided against deferred tax assets in excess of deferred tax liabilities
in the accompanying consolidated financial statements at December 31, 1994 and
1995 and September 30, 1996 (unaudited), respectively.

The components of the Company's net deferred taxes are as follows:

<TABLE>
<CAPTION>
DECEMBER 31, SEPTEMBER 30,
-------------------- -------------
1994 1995 1996
---- ---- ----
(UNAUDITED)
<S> <C> <C> <C>
Deferred tax assets:
Net operating loss carryforward........................ $ 997,000 $ 2,860,000 $ 3,868,000
Excess of tax over financial statement basis of patent 13,000 45,000 42,000
Accruals deductible for tax purposes when paid......... 160,000 156,000 228,000
-------------- ------------- ---------------
Total deferred tax assets ........................... 1,170,000 3,061,000 4,138,000
Less: valuation allowance............................... (1,076,000) (2,966,000) (4,051,000)
-------------- ------------- ---------------
94,000 95,000 87,000
Deferred tax liabilities:
Excess of financial statement over tax basis of
property and equipment................................ 16,000 42,000 44,000
Excess of financial statement over tax basis of
software development costs............................ 78,000 53,000 43,000
-------------- ------------- ---------------
Total deferred tax liabilities....................... 94,000 95,000 87,000
============== ============= ===============
Net deferred taxes...................................... $ -- $ -- $ --
============== ============= ===============

</TABLE>

F-16

<PAGE>

MULTIMEDIA ACCESS CORPORATION AND SUBSIDIARIES -
(A Development Stage Company) (Continued)

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)

A reconciliation between the federal income tax benefit calculated by
applying U.S. federal statutory rates to net loss and the absence of a tax
benefit reported in the accompanying consolidated financial statements is as
follows:

<TABLE>
<CAPTION>
DECEMBER 31, SEPTEMBER 30,
------------------------ -------------
1994 1995 1996
---- ---- ----
(UNAUDITED)
<S> <C> <C> <C>
U.S. federal statutory rate applied to pretax loss ... $(924,000) $(1,841,000) $(1,047,500)

Accrued compensation and other accruals................ 33,000 2,500 (22,500)
Amortization of patent................................. 6,000 27,500 (2,500)
Depreciation of property and equipment................. (14,500) (27,000) (4,500)
Software development costs for financial reporting
purposes............................................... (71,500) (29,000) 9,000
Viewpoint 1994 S-Corporation loss...................... 48,000 -- --
Net operating loss carryforward not recognized for
financial reporting purposes........................... 918,000 1,714,000 1,034,000
Inventory and doubtful account reserves ............... -- 50,500 3,000
Non-deductible interest expenses....................... -- 90,000 30,500
Other.................................................. 5,000 12,500 500
------------ -------------- ---------------
$ -- $ -- $ --
============ ============== ===============

</TABLE>

The Company has a federal income tax net operating loss carryforward of
approximately $7,400,000 at December 31, 1995. Approximately $2,700,000 of the
carryforward will expire in 2009 and $4,700,000 will expire in 2010. The Company
is subject to limitations existing under Internal Revenue Code Section 382
(Change of Control) relating to the availability of the operating loss
carryforward. Beginning with 1994, approximately $790,000 of the carryforward
that will expire in 2009 is limited to utilization at a rate of approximately
$300,000 per year.

9. STOCKHOLDERS' EQUITY (DEFICIT)

COMMON STOCK

In March 1994 the Company sold 996,364 shares of common stock at a price of
$2.20 per share in a private placement to certain qualified investors. Proceeds
to the Company were $1,917,241 net of related offering costs of $274,759. These
offering costs have been charged against additional paid-in capital in the
accompanying consolidated financial statements.

In September 1995, the Company began a second private placement of up to
2,666,667 shares of common stock to qualified investors. In September 1995, the
Company sold 833,333 shares to an existing stockholder at $3.00 per share.
Proceeds to the Company were $2,166,894 net of related offering costs of
$333,106. The offering costs have been charged against additional paid-in
capital. As described in Note 6, in December 1995 and March 1996, certain
secured and demand note holders of the Company exchanged $1,805,698 of notes and
accrued interest for 601,899 shares of common stock and 520,500 warrants in the
offering. In April through June of 1996, the Company sold 304,016 shares of the
offering to individual investors at $3.00 per share. Proceeds to the Company
were $912,054. Additionally, in May and June of 1996, the Company converted
approximately $208,000 of accounts payable into 69,332 shares of the offering at
$3.00 per share.

F-17

<PAGE>

MULTIMEDIA ACCESS CORPORATION AND SUBSIDIARIES -
(A Development Stage Company) (Continued)

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)

STOCK OPTION PLAN

In April 1995, the Company adopted its 1995 Stock Plan (1995 Stock Option
Plan) under which 2,000,000 shares of the Company's common stock are reserved
for issuance to officers, key employees and consultants of the Company. The
objectives of the stock plan are to attract and retain qualified personnel for
positions of substantial responsibility, and to provide additional incentives to
employees and consultants to promote the success of the Company's business.
Options granted under the plan may be incentive stock options or non-qualified
stock options. The plan is administered by the Board of Directors. The options
are granted at the discretion of the Board of Directors at an option price per
share not less than fair market value, as determined by the Board of Directors,
at the date of grant.

In April 1995, the Company also adopted the 1995 Director Option Plan under
which 250,000 shares of the Company's common stock are reserved for issuance to
outside directors of the Company. The objective of the director plan is to
attract and retain qualified personnel for service as outside directors of the
Company, and to encourage their continued service to the Board. Only
non-qualified stock options may be granted. Grants under the plan are automatic
and nondiscretionary, and are issued at an option price per share not less than
fair market value, as determined the Board of Directors, at the date of grant.

In February 1994 the Company adopted its 1994 Stock Option Plan under which
2,000,000 shares of the Company's common stock were reserved for issuance to
officers, key employees, non-employee directors and consultants of the Company,
pursuant to incentive and non-qualified stock options. Upon the adoption of the
1995 Stock Option Plan, the 1994 Stock Option Plan was terminated as to any
future issuance of options.

Upon the consummation of the pooling of interests between Viewpoint and MMAC
in May 1994, all outstanding stock options of Viewpoint were converted to stock
options of the Company at the pooling exchange ratio of .511 of the Company's
common shares for each share of Viewpoint. The following is a summary of stock
option activity from December 31, 1993 through September 30, 1996. All stock
options issued by Viewpoint have been restated to give effect to the pooling of
interests transaction described in Note 3.

<TABLE>
<CAPTION>
NON-QUALIFIED STOCK OPTIONS INCENTIVE STOCK OPTIONS
------------------------------------- --------------------------
NUMBER PRICE PER NUMBER PRICE PER
OF SHARES SHARE OF SHARES SHARE
------------ ---------------------- ----------- -----------
<S> <C> <C> <C> <C>
Outstanding at December 31, 1993 .... 58,293 $ .20 332,917 $ .02-. 04

Granted.............................. 510,000 .10-3.00 1,127,158 2.20-3.00
Exercised............................ 256 .20 178,171 .02
Canceled............................. -- -- 224,405 .02-2.42
----------- -----------
Outstanding at December 31, 1994 .... 568,037 .10-3.00 1,057,499 .04-3.00

Granted.............................. 143,458 3.00 549,800 3.00
Exercised ........................... -- -- -- --
Canceled ............................ 160,588 2.20-3.00 346,432 2.20-3.00
----------- -----------
Outstanding at December 31, 1995 ... 550,907 .10-3.00 1,260,867 .04-3.00

Granted (unaudited).................. -- 765,400 3.00-4.00
Exercised (unaudited) ............... -- --
Canceled (unaudited)................. 35,833 3.00 460,751 2.20-3.00
-----------
Outstanding at September 30, 1996
(unaudited) ......................... 515,074 $.10-3.00 1,565,516 $.04-4.00
=========== ===========

</TABLE>

F-18

<PAGE>

MULTIMEDIA ACCESS CORPORATION AND SUBSIDIARIES -
(A Development Stage Company) (Continued)

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)

At December 31, 1995, 176,820 non-qualified stock options at prices ranging
from $.20 to $3.00 and 390,256 incentive stock options at prices ranging from
$.04 to $3.00 were exercisable.

WARRANTS

The Company has issued warrants to purchase common stock of the Company in
connection with certain notes payable (as described in Note 6) and as
compensation for services rendered by various consultants, and a financial
consulting firm controlled by an officer, director, and stockholder of the
Company. All warrants issued prior to 1995 have been exercised with the
exception of the rights available to convertible debt holders as described in
Note 7. The following is a summary of warrant activity from December 31, 1993
through September 30, 1996. All warrants issued by Viewpoint have been restated
to reflect the pooling of interests transaction described in Note 3.

WARRANTS
-------------------------------
NUMBER OF PRICE PER
SHARES SHARES
------- -------------
Outstanding at December 31, 1993............. 74,041 $ .02- .50

Granted...................................... 33,220 .20- .50
Exercised.................................... 107,261 .02- .50
-----------
Outstanding at December 31, 1994............. --
Granted...................................... 1,147,500 1.00-3.00
Exercised.................................... -- --
Outstanding at December 31, 1995............. 1,147,500 1.00-3.00
Granted (unaudited).......................... 295,005 3.00
Exercised (unaudited)........................ --
-----------
Outstanding at September 30, 1996 (unaudited) 1,442,505 $ 1.00-3.00
===========

All warrants outstanding at December 31, 1995 were exercisable.

10. COMMITMENTS AND CONTINGENCIES

The Company leases office facilities under non-cancelable operating leases
extending through 1998 with an average monthly rental of $15,432. The landlords
pay all operating costs and real estate taxes associated with the office lease,
which is subject to cost escalation not to exceed 4% annually. The Company is
amortizing the total rent payments over the lease term on a straight-line basis.
Prior to September 1994, the Company leased office facilities under a
month-to-month operating lease with monthly payments ranging from $1,300 to
$2,500. The Company also leases certain office and computer equipment under
non-cancelable operating leases.
OPERATING
LEASES
-----------
Year ended December 31:
1996....................... $210,169
1997....................... 165,030
1998....................... 14,842
-----------
Total minimum lease payments.... $390,041
===========

F-19

<PAGE>

MULTIMEDIA ACCESS CORPORATION AND SUBSIDIARIES -
(A Development Stage Company) (Continued)

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Rent expense was $59,495 and $233,305 for the years ended December 31, 1994
and 1995, respectively, and $187,441 for the nine months ended September 30,
1996 (unaudited).

The Company has entered into an employment contract with its Chief Executive
Officer through February 1999 that provides for a minimum annual salary and
incentives based generally on the Company's performance. The total compensation,
including incentives, which was accrued and included in accrued compensation in
the accompanying consolidated financial statements was $120,428, $112,929 and
$77,781 at December 31, 1994 and 1995 and September 30, 1996 (unaudited),
respectively.

11. RELATED PARTY TRANSACTIONS AND OTHER MATTERS

During 1994 the Company sold certain desktop videoconferencing equipment to a
company which has two directors who are former directors of the Company for
$58,260. Direct product costs associated with the sale aggregated $43,521.

In February 1994 the Company entered into two five-year consulting agreements
with two of its former directors, pursuant to which the Company agreed to pay
monthly consulting fees of $5,000 to each individual. In March 1995 one of these
consulting agreements was canceled with no further liability to the Company. The
Company paid $110,000 in such consulting fees for the year ended December 31,
1994 and $72,500 and $12,500 in consulting fees remained accrued at December 31,
1995 and September 30, 1996 (unaudited), respectively. Consulting fees charged
to expense with respect to the aforementioned agreements were $110,000, $72,500,
and $20,000 for the years ended December 31, 1994 and 1995 and the nine months
ended September 30, 1996 (unaudited), respectively. In June of 1996, the Company
converted $80,000 of accounts payable owed on the remaining consulting agreement
into 26,666 shares of common stock at $3.00 per share. By mutual agreement,
effective May 1, 1996 consulting fees from the remaining consulting contract
were suspended until the effective date of the initial public offering.

In March 1994 the Company entered into a consulting agreement with a company
which is owned by the Chief Executive Officer of the Company. The retainer
portion of this agreement was terminated effective December 31, 1994. Consulting
fees of $35,000, $11,692 and $11,607 were accrued at December 31, 1994 and 1995
and September 30, 1996 (unaudited), respectively. Consulting fees charged to
expense during the year ended December 31, 1994 with respect to this agreement
were $35,000. No amounts were charged to expense during 1995 and $2,503 was
charged to expense during the nine months ended September 30, 1996 (unaudited).
Additionally, $12,500 was paid by the Company in 1995 for services rendered
during 1994. In May of 1996, the Company issued 5,005 three-year warrants to
purchase Company stock at $3.00 per share as consideration for consulting
services rendered during 1996. The fair market value of the warrants of $.50 per
share was determined by independent appraisal.

From October 1994 through January 1995 the Company issued to four principal
stockholders, a principal stockholder and director of the Company and the spouse
of another principal stockholder and former director, convertible debt totaling
$1,905,000 under the terms described in Note 7. Upon completion of the initial
public offering, holders of $1,805,000 principal amount of this convertible debt
have elected to convert their debt into common stock of the Company at the
initial offering price per share and holders of $100,000 principal amount have
elected to be repaid from the proceeds of the offering.

From February through April 1995, the Company issued to five principal
stockholders of the Company secured notes totaling $1,070,000 under the terms
described in Note 6. During December 1995, $781,000 of these secured notes were
exchanged for equity securities of the Company under the terms described in Note
6.

During June and July 1995, the Company issued to three principal stockholders
of the Company demand notes totaling $310,000 under the terms described in Note
6. During December 1995, $250,000 of these secured notes were exchanged for
equity securities of the Company under the terms described in Note 6.

F-20

<PAGE>

MULTIMEDIA ACCESS CORPORATION AND SUBSIDIARIES -
(A Development Stage Company) (Continued)

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)

During July 1996, the Company issued $1,000,000 of secured convertible debt
to a principal stockholder of the Company. The convertible debt bears interest
at 8%. $500,000 of the convertible debt matures on demand 10 days subsequent to
an initial public offering of the Company's equity securities or 180 days from
date of issue, and the balance matures in 18 months. As an incentive to advance
the debt, the stockholder was issued 100,000 three-year warrants to purchase
Company stock at $3.00 per share.

During July 1996, the Company issued to a stockholder and former director of
the Company, 75,000 three-year warrants to purchase Company stock at $3.00 per
share pursuant to the terms of a consulting agreement more fully described in
Note 11.

12. SUBSEQUENT EVENTS (UNAUDITED)

In October 1996, the Chief Executive Officer of the Company agreed to defer
receipt of $164,154 principal amount of Secured and Demand Notes, accrued
interest of $41,154 and accrued salary and bonuses of $127,781 until February
1998. The Company has agreed to pay the Chief Executive Officer interest at a
rate of 15% per annum on the deferred amount. In addition, the Chief Executive
Officer and a partnership he manages will be repaid $235,000 principal amount of
Secured and Demand Notes from the proceeds of this offering.

In October and November 1996, the Company issued $265,000 of 8% unsecured
notes payable to a stockholder of the Company. The notes are due on demand 10
days subsequent to an initial public offering of the Company's equity securities
or 180 days from the date of issue.

In November 1996, the Company issued $300,000 of 8% unsecured notes payable
to two stockholders of the Company. The notes are due on demand 10 days
subsequent to an initial public offering of the Company's equity securities or
180 days from the date of issue.

In December 1996 and January 1997, the Company issued $1,000,000 of 8%
unsecured notes payable to stockholders of the Company in return for gross
proceeds of $725,000 and commitments to pay an additional $275,000 to the
Company. The notes are due on demand 10 days subsequent to an initial public
offering of the Company's equity securities or 180 days from the date of issue.

In January 1997, holders of $2,915,000 (including the $275,000 commitment
discussed above) of secured and unsecured 8% notes payable agreed to convert
their debt into equity securities of the Company in this offering.

F-21

<PAGE>

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

No dealer, salesperson or any
other person has been authorized to
give any information or to make any
representations other than those
contained in this Prospectus, and, if MULTIMEDIA ACCESS
given or made, such information or CORPORATION
representations must not be relied on
as having been authorized by the
Company or the Representative. This
Prospectus does not constitute an
offer to sell or the solicitation of
an offer to buy any security other
than the securities offered by this
Prospectus, or an offer to sell or a
solicitation of an offer to buy any
security by any person in any 1,400,000 SHARES
jurisdiction in which such offer or OF COMMON STOCK AND
solicitation would be unlawful.
Neither the delivery of this
Prospectus nor any sale made hereunder
shall, under any circumstances, imply
that the information in this 1,400,000 REDEEMABLE
Prospectus is correct as of any time COMMON STOCK
subsequent to the date of this PURCHASE WARRANTS
Prospectus.

----

TABLE OF CONTENTS

Page
---------
Prospectus Summary ...................3
Risk Factors .........................8
Use of Proceeds .....................17
Dividends............................18
Dilution ............................19
Capitalization ......................21
Selected Consolidated Financial
Data...............................22
Management's Discussion and Analysis ---------
of Financial Condition and Results
of Operations .....................23 PROSPECTUS
Business ............................28
Management ..........................36 ----------
Principal Stockholders ..............43
Certain Transactions ................45
Description of Securities ...........48
Shares Eligible for Future Sale .....51
Underwriting ........................52
Concurrent Registration of
Securities .......................55
Interest of Named Experts and
Counsel ...........................55
Legal Matters .......................55
Experts .............................55
Additional Information ..............56
Glossary .............................i
Index to Consolidated Financial
Statements..................... F-1

Until --, 1997 (25 days after the
date of this Prospectus), all dealers Network 1 Financial Securities, Inc
effecting transactions in the
registered securities, whether or not
participating in this distribution,
may be required to deliver a
Prospectus. This is in addition to the
obligation of dealers to deliver a
Prospectus when acting as underwriters , 1997
and with respect to their unsold
allotments or subscriptions.

======================================= ====================================
<PAGE>
[ALTERNATE PAGE FOR SELLING SECURITYHOLDERS PROSPECTUS]

SUBJECT TO COMPLETION, DATED NOVEMBER 25, 1996

PROSPECTUS

MULTIMEDIA ACCESS CORPORATION
1,241,977 SHARES OF COMMON STOCK
1,241,977 REDEEMABLE COMMON STOCK PURCHASE WARRANTS

This Prospectus relates to the offer and sale by certain persons (the
"Selling Securityholders") of up to 1,241,977 shares of Common Stock, $.0001 par
value per share (the "Common Stock"), 1,241,977 redeemable common stock purchase
warrants to purchase one (1) share of Common Stock (the "Public Warrants") and
the 1,241,977 shares underlying the Public Warrants of Multimedia Access
Corporation (the "Company"), hereinafter referred to as the "Offering". The
shares offered hereby were issued in connection with a debt retirement and debt
for equity exchange. Each Public Warrant entitles the holder to purchase one (1)
share of Common Stock at $3.50 per share, subject to adjustment under certain
circumstances, at any time commencing one year from the date of this Prospectus
through and including five years from the date of this Prospectus. The Public
Warrants are redeemable by the Company, at any time commencing twelve (12)
months from the date of this Prospectus, upon notice of not less than thirty
(30) days, at a price of $.10 per Public Warrant, provided that the closing
price or bid price of the Common Stock for any twenty (20) trading days within a
period of thirty (30) consecutive trading days ending on the fifth (5th) day
prior to the day on which the Company gives notice of redemption has been at
least 120% (currently $5.40, subject to adjustment) of the initial public
offering price per share of Common Stock. The Company will not receive any of
the proceeds from the sale of such shares of Common Stock and Public Warrants,
and the shares of Common Stock underlying the Public Warrants. To the extent the
Public Warrants and Selling Securityholders Warrants are exercised, the Company
will receive proceeds represented by the exercise price of such Warrants. See
"Selling Securityholders and Plan of Distribution."

Prior to this Offering, there has been no public market for the Common Stock
or Public Warrants and there can be no assurance that any such market will
develop. It is anticipated that the Common Stock and the Public Warrants will be
quoted on the NASDAQ Small-Cap Market ("NASDAQ") under the symbols "MMAC" and
"MMACW" respectively. For a discussion of the factors considered in determining
the offering prices of the Common Stock and Public Warrants, see "Selling
Securityholders and Plan of Distribution."

Concurrently with this Offering, the Company is offering by separate
prospectus 1,400,000 shares of Common Stock (the "Company Offered Shares") and
redeemable warrants to purchase 1,400,000 shares of Common Stock (the "Company
Offered Public Warrants") (the "Company Offering"). See "Concurrent Registation
of Securities."

THE SECURITIES OFFERED HEREBY ARE SPECULATIVE AND INVOLVE A HIGH DEGREE OF
RISK AND IMMEDIATE DILUTION AND SHOULD NOT BE PURCHASED BY INVESTORS
WHO CANNOT AFFORD THE LOSS OF THEIR ENTIRE INVESTMENT. SEE "RISK
FACTORS" AND "DILUTION."

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

The date of this Prospectus is , 1997

[Information contained herein is subject to completion or amendment. A
registration statement relating to htese securities has been filed with the
Securities and Exchange Commission. These securities may not be sold nor may
offers to buy be accepted prior to the time the registration statement becomes
effective. This prospectus shall not constitute an offer to sell or the
solicitation of an offer to buy nor shall there be any sale of securities in any
State in which such offer, solicitation or sale would be unlawful prior to
registration or qualification under the securities laws of any such State.]

<PAGE>
[ALTERNATE PAGE FOR SELLING SECURITYHOLDERS PROSPECTUS]

THE OFFERING

Securities Offered 1,241,977 shares of Common Stock, 1,241,977 Public
Warrants to purchase one (1) share of Common Stock
at $3.50, and the 1,241,977 shares underlying the
Public Warrants. See "Risk Factors -- Warrants
Redeemable at Nominal Price" and "Description of
Securities."

Common Stock to be Outstand-
ing after the Offering(1) 7,696,291

Warrants to be Outstanding
after the Offering 5,623,549

Terms of the Public
Warrants Each Public Warrant is exercisable at any time
commencing one year from the date of this
Prospectus and entitles the holder thereof to
purchase one share of Common Stock at a price of
$3.50 per share, subject to adjustment in certain
circumstances, at any time until five years after
the date of this Prospectus. The Public Warrants
are redeemable by the Company, at any time
commencing twelve months after the date of this
Prospectus, at a price of $.10 per Public Warrant,
upon not less than 30 days prior written notice to
the registered holders of the Public Warrants,
provided that the closing price or bid price of
the Common Stock equals or exceeds 120% the
initial public offering price per share of Common
Stock (currently $5.40, subject to adjustment) for
any 20 trading days within a period of 30
consecutive trading days ending on the fifth day
prior to the day on which the Company gives notice
of redemption. See "Description of Securities --
Warrants."

Risk Factors The securities offered hereby are speculative and
involve a high degree of risk and immediate
substantial dilution and should not be purchased
by investors who cannot afford the loss of their
entire investment. See "Risk Factors" and
"Dilution."

Proposed Nasdaq Symbols Common Stock -- MMAC
Public Warrants -- MMACW
- ----------
(1) Includes 608,283 shares of Common Stock issued on the date of this
Prospectus upon the conversion of $2,430,300 principal amount of
Convertible Debt and approximately $367,828 of accrued interest and
633,694 shares of Common Stock issued on the date of this Prospectus
upon the conversion of $2,915,000 principal amount of Convertible
Bridge Debt at the offering price of the Common Stock and Public
Warrants (based on an assumed offering price of $4.50 per share and
$.10 per public warrant). Does not include (i) 1,584,005 shares of
Common Stock reserved for issuance upon exercise of outstanding
warrants to purchase common stock, (ii) 140,000 shares of Common Stock
reserved for issuance upon exercise of the Representative's Warrants,
(iii) 140,000 shares of Common Stock reserved for issuance upon
exercise of Representative's Public Warrants issuable upon exercise of
Representative's Warrants, (iv) 909,975 shares of Common Stock
reserved for issuance upon exercise of options available for future
grant under the 1995 Option Plan, (v) 1,090,025 shares of Common Stock
reserved for issuance upon exercise of options granted under the 1995
Option Plan, (vi) 861,333 shares of Common Stock reserved for issuance
upon exercise of options granted under the 1994 Option Plan, (vii)
84,770 shares of Common Stock reserved for issuance upon exercise of
options granted under the 1993 Option Plan, (viii) 45,000 shares of
Common Stock reserved for issuance upon exercise of options granted
under the 1995 Directors Stock Option Plan, (ix) 205,000 shares of
Common Stock reserved for issuance upon exercise of options available
for future grant under the 1995 Directors Stock Option Plan, (x)
250,000 shares of Common Stock reserved for issuance under the
Employee Stock Purchase Plan, (xi) 1,297,567 shares of Common Stock
reserved for issuance upon exercise of the Convertible Debt Warrants,
(xii) 1,400,000 shares of Common Stock reserved for issuance upon
exercise of the Public Warrants, and (xiii) 608,283 shares of Common
Stock reserved for issuance upon exercise of Public Warrants issued on
the date of this Prospectus upon conversion of $2,430,300 principal
amount of Convertible Debt and approximately $367,828 of accrued
interest and 633,694 shares of Common Stock reserved for issuance upon
the exercise of Public Warrants issued on the date of this Prospectus
upon the conversion of $2,915,000 principal amount of Convertible
Bridge Debt at the offering price of Common Stock and Public Warrants.
See "Management's Discussion and Analysis of Financial Condition and
Results of Operations," "Management -- Stock Option Plans,"
"Description of Securities -- Convertible Debt Financing" and "Selling
Securityholders and Plan Distribution."

<PAGE>
[ALTERNATE PAGE FOR SELLING SECURITYHOLDERS PROSPECTUS]

RISK FACTORS

Significant Capital Requirements; Dependence on Offering Proceeds; Possible
Need for Additional Financing. The Company's capital requirements in connection
with the design, development and commercialization of its products have been and
will continue to be significant. To date, the Company has been substantially
dependent upon loans from its principal stockholders, as well as private
placements of its debt and equity securities, to finance its working capital
requirements. The Company is dependent on the proceeds of the Company Offering
to commence full-scale marketing activities in connection with its products, to
complete the development of additional product and software applications, and to
fund the Company's working capital requirements. The Company anticipates, based
on currently proposed plans and assumptions relating to its operations, that the
proceeds of the Company Offering will be sufficient to satisfy its contemplated
cash requirements for at least twelve months following the consummation of

<PAGE>
[ALTERNATE PAGE FOR SELLING SECURITYHOLDERS PROSPECTUS]

the Company Offering. In the event that the Company's plans change or prove to
be inaccurate or if the proceeds of the Company Offering prove to be
insufficient to fund operations, the Company could be required to seek
additional financing sooner than currently anticipated or could be required to
curtail its activities. The Company has no current arrangements with respect to,
or sources of, additional financing, and there can be no assurance that existing
stockholders will provide any portion of the Company's future financing
requirements. There can be no assurance that any additional financing will be
available to the Company on acceptable terms, or at all. Additional equity
financing may involve substantial dilution to the interests of the Company's
then existing stockholders. See "Use of Proceeds" and "Certain Transactions."

<PAGE>
[ALTERNATE PAGE FOR SELLING SECURITYHOLDERS PROSPECTUS]

Broad Discretion in Application of Proceeds. Approximately $832,800 (16.3%)
of the estimated net proceeds from the Company Offering has been allocated to
working capital and general corporate purposes. Accordingly, the Company will
have broad discretion as to the application of such proceeds. See "Management's
Discussion and Analysis of Financial Condition and Results of Operations --
Liquidity" and "Description of Securities."

Offering Benefits Directors and Selling Securityholders; Proceeds to Repay
Indebtedness. The Company will use a portion of the proceeds of the Company
Offering to (i) repay $257,548 principal amount of Secured

<PAGE>
[ALTERNATE PAGE FOR SELLING SECURITYHOLDERS PROSPECTUS]

Dependence on Key Personnel. The success of the Company will be largely
dependent on the personal efforts of Glenn A. Norem, its Chief Executive
Officer, and other key personnel. The Company

<PAGE>
[ALTERNATE PAGE FOR SELLING SECURITYHOLDERS PROSPECTUS]

Control by Current Principal Stockholders; Potential Representatives'
Influence on the Company upon Exercise of Right to Designate Board Member. Upon
the consummation of the Company Offering, the officers, directors and existing
stockholders of the Company will beneficially own approximately 81.8% of the
Company's outstanding Common Stock (79.6% if the Representatives' over-allotment
option is exercised in full). While these persons will not individually control
a majority of the shares of Common Stock of the Company, they may be able to
effectively control the decisions on matters including election of all of the
Company's directors, increasing the authorized capital stock, dissolution,
merger or sale of the assets of the Company and generally may be able to direct
the affairs of the Company.

In addition, upon consummation of the offering, the Representative has been
granted, for a period of five years, the right to designate a person to serve as
a director of the Company. If the Representative were to exercise such right, it
could be deemed under certain circumstances to be in a position to assert
influence over the Company. See "Management," "Principal Stockholders" and
"Certain Transactions."

Immediate and Substantial Dilution. Assuming all 1,400,000 shares of Common
Stock offered hereby are sold, the Company Offering will involve an immediate
and substantial dilution of $3.74 (83.1%) per share between the pro forma net
tangible book value per share of Common Stock and the offering price. The
Company believes that the net proceeds of this offering together with available
cash will be sufficient to meet the Company's operating expenses and capital
requirements for at least the next twelve months. The Company anticipates that
additional funding will be required after the use of the net proceeds of this
offering. Such additional funding will likely result in further dilution to the
Company's stockholders. See "Dilution."

<PAGE>
[ALTERNATE PAGE FOR SELLING SECURITYHOLDERS PROSPECTUS]

Shares Eligible for Future Sale; Registration Rights. Upon the consummation
of the Company Offering, the Company will have 7,696,291 shares of Common Stock
outstanding (7,906,291 shares if the Representative's over-allotment option is
exercised in full)(assuming no exercise of outstanding options and warrants). Of
these shares, the 1,400,000 shares sold in the Company Offering (1,610,000
shares if the Representative's over-allotment option is exercised in full) and
the 1,241,977 shares of Common Stock registered concurrently with this
Prospectus being offered pursuant to the Selling Securityholder Prospectus
included in the Registration Statement of which this Prospectus forms a part
will be freely tradeable, subject to "lock-up" agreements (see "Shares Eligible
for Future Sale"), under the Securities Act, except for any shares purchased by
an "affiliate" of the Company (in general, a person who has a control
relationship with the Company), which shares will be subject to the resale
limitations of Rule 144 adopted under the Securities Act. The remaining
5,054,314 shares are deemed to be "restricted securities," as that term is
defined under Rule 144 promulgated under the Securities Act, in that such shares
were issued and sold by the Company in private transactions not involving a
public offering and are not currently part of an effective registration. Except
for "lock-up" agreements, such shares are eligible for sale under Rule 144, or
will become so eligible at various times through October 1996. In addition, the
Company has granted the Representative demand and piggyback registration rights
with respect to the securities issuable upon exercise of the Representative's
Warrants.

<PAGE>
[ALTERNATE PAGE FOR SELLING SECURITYHOLDERS PROSPECTUS]

USE OF PROCEEDS

The Company will not receive any of the proceeds from the sale of the Shares
of Common Stock and Public Warrants by the Selling Securityholders. To the
extent that the Public Warrants are exercised, the Company will receive proceeds
represented by the exercise price of the Public Warrants. Any such proceeds will
be added to the Company's working capital. The net proceeds to the Company from
the sale of the 1,400,000 shares of Common Stock and 1,400,000 Public Warrants
offered pursuant to the Company Offering are estimated to be approximately
$5,102,800 ($5,943,220 if the over-allotment option granted to the
Representative of the Company Offering is exercised in full). The Company
expects to use such proceeds (assuming no exercise of the over-allotment option
granted to the Representative of the Company Offering) as follows:

(1) Represents (i) the repayment of $257,548 principal amount of Secured Notes
and Demand Notes plus accrued interest of approximately $13,566, including
$200,000 principal amount of Secured Notes and Demand Notes payable to
Glenn A. Norem, CEO of the Company and $35,000 payable to G.A. Norem I
L.P., a partnership managed by Mr. Norem, (ii) repayment of $247,250
principal amount of Convertible Debt plus accrued interest of $105,229,
(iii) payment of accrued expenses and trade accounts payable of
approximately $420,000 and (iv) payment of accrued interest on the
Convertible Bridge Debt of approximately $62,855. See "Management's
Discussion and Analysis of Financial Condition and Results of Operations --
Liquidity" and "Description of Securities."

(2) Includes amounts associated with continued refinement and enhancement of
the Company's products and amounts associated with the development of
additional products.

In the event that the Company's plans change or its assumptions change or
prove to be inaccurate or if the proceeds of the Company Offering prove
insufficient to fund operations (due to unanticipated expenses or difficulties
or otherwise), the Company may find it necessary or advisable to reallocate some
of the proceeds within the above-described categories or to use portions thereof
for other purposes or may be required to seek additional financing or curtail
its operations. Future events, including changes in economic or industry
conditions or the Company's planned operations, may require the Company to use
proceeds allocated to working capital for marketing and sales or reallocate
proceeds among the various intended uses if it is determined at a later date
that an increase in such expenditures or reallocation of proceeds is necessary
or desirable. Any such determination would be based on, among other things,
whether and to what extent revenue from systems sales is sufficient to offset
operating expenses and the capital requirements associated with maintaining an
inventory of system components. Alternatively, the Company may use less of the
proceeds for marketing and sales in the event that such initial efforts prove
more successful than anticipated or the Company generates sufficient cash flow
from operations to otherwise fund such efforts.

The Company may, if and when the opportunity arises, use a portion of the
proceeds of the Company Offering allocated to working capital, together with the
issuance of debt or equity securities, to acquire rights to technology and/or
products or to acquire existing companies in businesses the Com

<PAGE>
[ALTERNATE PAGE FOR SELLING SECURITYHOLDERS PROSPECTUS]

pany believes are compatible with its business. Any decision to make such an
acquisition will be based upon a variety of factors, including, among others,
the purchase price and other financial terms of the transaction, the business
prospects and competitive position of, and technology or products provided by,
the acquisition candidate and the extent to which any technology or business
would enhance the Company's prospects. Potential acquisition candidates may
include companies with products or technologies that are compatible with the
Company's products, or that the Company believes would provide the Company with
additional distribution channels. As of the date of this Prospectus, the Company
has no agreements, understandings or arrangements with respect to any such
acquisition. There can be no assurance that the Company will be able to
successfully consummate any acquisition or successfully integrate any acquired
business into its operations. Investors in this offering will not have an
opportunity to evaluate the specific merits or risks of any acquisition.

The Company believes that the net proceeds of the Company Offering together
with available cash will be sufficient to meet the Company's operating expenses
and capital requirements for at least the next twelve months. The Company
anticipates that additional funding will be required after the use of the net
proceeds of the offering. No assurance can be given that such additional
financing will be available when needed on terms acceptable to the Company, if
at all. See "Risk Factors -- Significant Capital Requirements; Dependence on
Offering Proceeds; Possible Need for Additional Financing."

Proceeds not immediately required for the purposes set forth above will be
invested in short-term, investment-grade, interest-bearing securities.

DIVIDENDS

Certain of the Company's debt instruments include covenants precluding
payment of cash dividends until after such debt instruments are repaid.

<PAGE>
[ALTERNATE PAGE FOR SELLING SECURITYHOLDERS PROSPECTUS]

[This Page Intentionally Left Blank]

<PAGE>
[ALTERNATE PAGE FOR SELLING SECURITYHOLDERS PROSPECTUS]

[This Page Intentionally Left Blank]

<PAGE>
[ALTERNATE PAGE FOR SELLING SECURITYHOLDERS PROSPECTUS]

CAPITALIZATION

The following sets forth the capitalization of the Company as of September
30, 1996 (A) on an actual basis, (B) pro forma to reflect transactions occurring
after September 30, 1996 but before the date of this Prospectus consisting of
issuance of $1,565,000 aggregate principal amount of Convertible Bridge Debt
(assuming receipt of all Convertible Bridge Debt, $275,000 of which is expected
to be received by the Company on or before January 22, 1997) and (C) pro forma
as adjusted to reflect the issuance and sale of shares of Common Stock and
Public Warrants offered pursuant to the Company Offering; and the initial
application of estimated net proceeds therefrom and issuance of 608,283 shares
of Common Stock and 608,283 Public Warrants issued on the date of this
Prospectus upon the conversion of $2,430,300 principal amount of Convertible
Debt and approximately $367,828 of accrued interest and 633,694 shares of Common
Stock and 633,694 Public Warrants issued on the date of this Prospectus upon the
conversion of $2,915,000 principal amount of Convertible Bridge Debt (all based
on an assumed offering price of $4.50 per share and $.10 per Public Warrant)

<TABLE>
<CAPTION>
JUNE 30, 1996
--------------------------------------------
PRO FORMA
AS
ACTUAL PRO FORMA ADJUSTED(1)
-------------- -------------- --------------
<S> <C> <C> <C>
Short-term debt, including current portion of long-term
debt.................................................. $ 4,045,258 $ 5,610,258 $ 260,160
============== ============== ==============
Long-term debt........................................... $ 500,000 $ 500,000 $ --
-------------- -------------- --------------
Stockholders' equity:
Preferred stock, $.0001 par value, 5,000,000 shares
autho rized, none issued or outstanding.................. -- -- --
Common Stock, $.0001 par value, 20,000,000 shares
authorized; 5,315,811 shares issued (actual), 5,315,811
shares issued (pro forma) and 7,957,788 shares issued
(pro forma as adjusted)................................ 532 532 796
Additional paid-in capital.............................. 6,527,572 6,527,572 17,343,236
Accumulated deficit..................................... (11,059,145) (11,059,145) (11,059,145)
Treasury stock, 261,497 shares, at cost................. (11,906) (11,906) (11,906)
-------------- -------------- --------------
Total stockholders' equity (deficit)..................... (4,542,947) (4,542,947) 6,272,981
-------------- -------------- --------------
Total capitalization..................................... $ (4,042,947) $ (4,042,947) $ 6,272,981
============== ============== ==============
</TABLE>
- ----------
(1) Includes 608,283 shares of Common Stock and 608,283 Public Warrants issued
on the date of this Prospectus upon the conversion of $2,430,300 principal
amount of Convertible Debt and approximately $367,828 of accrued interest
and 633,694 shares of Common Stock and 633,694 Public Warrants issued on
the date of this Prospectus upon the conversion of $2,915,000 principal
amount of Convertible Bridge Debt(all based on an assumed offering price of
$4.50 per share and $.10 per Public Warrant). Does not include (i)
1,584,005 shares of Common Stock reserved for issuance upon exercise of
outstanding warrants to purchase common stock, (ii) 140,000 shares of
Common Stock reserved for issuance upon exercise of the Representative's
Warrants, (iii) 140,000 shares of Common Stock reserved for issuance upon
exercise of Representative's Public Warrants issuable upon exercise of
Representatives' Warrants, (iv) 909,975 shares of Common Stock reserved for
issuance upon exercise of options available for future grant under the 1995
Option Plan, (v) 1,090,025 shares of Common Stock reserved for issuance
upon exercise of options granted under the 1995 Option Plan, (vi) 861,333
shares of Common Stock reserved for issuance upon exercise of options
granted under the 1994 Option Plan, (vii) 84,770 shares of Common Stock
reserved for issuance upon exercise of options granted under the 1993
Option Plan, (viii) 45,000 shares of Common Stock reserved for issuance
upon exercise of options granted under the 1995 Directors Stock Option
Plan, (ix) 205,000 shares of Common Stock reserved for issuance upon
exercise of options available for future grant under the 1995 Directors
Stock Option Plan, (x) 250,000 shares of Common Stock reserved for issuance
under the Employee Stock Purchase Plan, (xi) 1,297,567 shares of Common
Stock reserved for issuance upon exercise of the Convertible Debt Warrants,
and (xii) 1,400,000 shares of Common Stock reserved for issuance upon
exercise of the Public Warrants. See "Management's Discussion and Analysis
of Financial Condition and Results of Operations," "Management -- Employee
Stock Plans," "Description of Securities -- Convertible Debt Financing" and
"Underwriting."

<PAGE>
[ALTERNATE PAGE FOR SELLING SECURITYHOLDERS PROSPECTUS]

Research and Development Expense. The Company's research and development
expense increased $1,118,463 to $1,983,310 in 1995 primarily due the
establishment of the Company's North Carolina development office. Expenses
related to this office included salaries for newly hired engineers and support
staff and the cost of office facility and equipment. During 1995, this
development office was engaged in the development of the Osprey-1000(Trademark)
and SLIC-Video(Trademark) products introduced in late-1995 and mid-1995,
respectively.

Other Income (Expense). For the year ended December 31, 1995, other income
(expense) increased to ($843,292) for the year compared to ($39,897) for the
year ended December 31, 1994. This increase was primarily the result of an
approximate $766,402 increase in interest expense for 1995 over 1994, as a
result of additional borrowings pursuant to the Convertible Debt and borrowings
pursuant to the Secured Notes and Demand Notes. See "Certain Transactions."

LIQUIDITY

Net cash used in operating activities for the nine months ended September 30,
1996 was $2,863,323. Increases in inventory and accounts payable were a result
of an increase in production levels to meet anticipated sales.

The Company currently has no plans or agreements to seek loan financing. The
Company may choose to seek additional financing to provide additional working
capital at sometime in the future. Such financing may include loans or lines of
credit and could include factoring agreements. However, the Company believes
that the proceeds of the initial public offering will be sufficient to meet its
capital requirements for the next twelve months.

The Company's independent auditors have included an explanatory paragraph in
their audit report on the Company's consolidated financial statements stating
that certain factors raise substantial doubt about the Company's ability to
continue as a going concern. The Company Offering is an integral part of the
Company's plan to continue as a going concern. In the event that the Company's
plans change or its assumptions change or prove to be inaccurate or if the
proceeds of the Company Offering prove to be insufficient to fund operations
(due to unanticipated expenses or difficulties or otherwise), the Company may be
required to seek additional financing sooner than currently anticipated. The
Company has no current arrangements with respect to, or sources of, additional
financing. There can be no assurance that existing stockholders will provide any
portion of the Company's future financing requirements. There can be no
assurance that any additional financing will be available to the Company on
acceptable terms, or at all. Additional equity financing may involve substantial
dilution to the Company's then existing stockholders.

<PAGE>

[ALTERNATE PAGE FOR SELLING SECURITYHOLDERS PROSPECTUS]

PRINCIPAL STOCKHOLDERS

The following table sets forth information as of September 30, 1996 and as
adjusted to reflect the sale of Common Stock and Public Warrants offered by the
Company pursuant to the Company Offering, based on information obtained from the
persons named below, with respect to the beneficial ownership of shares of
Common Stock by (i) each person or a group known by the Company to be the owner
of more than 5% of the outstanding shares of Common Stock, (ii) each director,
(iii) each executive officer named in the Summary Compensation Table under the
caption "Management", and (iv) all officers and directors as a group.

<TABLE>
<CAPTION>
PERCENTAGE OF OUTSTANDING
AMOUNT AND SHARES OWNED(2)(3)
NATURE OF --------------------------------
NAME AND ADDRESS BENEFICIAL PRIOR TO
OF BENEFICIAL OWNER (1) OWNERSHIP (2) OFFERING AFTER OFFERING
---------------------------------------------------------------- --------------------------------
<S> <C> <C> <C>
Fred Kassner ................... 1,600,397(4) 15.0 12.0
69 Spring Street
Ramsey, NJ 07446
H.T. Ardinger, Jr. ............. 1,327,925(5) 11.7 9.4
9040 Governors Row
Dallas, TX 75247
Robert Moody, Jr. .............. 1,112,842(6) 9.8 7.8
601 Moody National Bank Bldg.
Galveston, TX 77550 ...........
Glenn A. Norem ................. 854,350(7) 7.6 6.0
M. Douglas Adkins............... 741,396(8) 6.6 5.2
1601 Elm Street, #3000
Dallas, TX 75201
Robert Sterling Trust .......... 551,261(9)(10) 4.9 3.9
c/o Thomas E. Brown
1715 West 35th Street
Pine Bluff, AR 71603
Robert Bernardi Trust........... 430,394(11) 3.8 3.0
c/o Richard Bernardi
440 Wood Crest Road
Stratford, PA 19087
William D. Jobe................. 84,414(12) * *
William S. Leftwich ............ 40,000(13) * *
Joe C. Culp .................... 19,930(14) * *
Philip M. Colquhoun............. 46,666(15) * *
David T. Stoner................. --(16) * *
All officers and directors as a
group (nine persons)........... 1,429,072(7)(12)(13)(14)(15)(16)(17) 10.2 8.1

</TABLE>

Messrs. Sterling and Bernardi may be deemed to be "founders" of the Company,
as such term is defined under the federal securities laws.

- ----------
* Less than 1%

(1) Unless otherwise indicated, the address of each individual is c/o the
Company, 2665 Villa Creek Drive, Dallas, Texas 75234.

(3) Based on a total of (i) 5,054,314 shares issued and outstanding, (ii)
608,283 shares of Common Stock and 608,283 Public Warrants issued on the
date of this Prospectus upon the conversion of $2,430,300 principal amount
of Convertible Debt and approximately $367,828 accrued interest and 633,694
shares of Common Stock and 633,694 Public Warrants issued on the date of
this Prospectus upon the conversion of $2,915,000 principal amount of
Convertible Bridge Debt (based on an assumed offering price of $4.50 per
share and $.10 per Public Warrant), (iii) 1,584,005 shares of Common Stock
reserved for issuance upon exercise of outstanding warrants to purchase
common stock, (iv) 1,297,567 shares

<PAGE>
[ALTERNATE PAGE FOR SELLING SECURITYHOLDERS PROSPECTUS]

of Common Stock reserved for issuance upon exercise of the Convertible Debt
Warrants and (v) 888,196 shares of Common Stock reserved for issuance upon
exercise of vested stock options as of September 30, 1996. Does not include
(i) 140,000 shares of Common Stock reserved for issuance upon exercise of
the Underwriters' Warrants, and 140,000 shares of Common Stock reserved for
issuance upon exercise of Underwriters' Public Warrants. See "Management's
Discussion and Analysis of Financial Condition and Results of Operations,"
"Management -- Employee Stock Plans," "Description of Securities" and
"Underwriting."

(4) Includes (i) 43,478 shares issuable upon the conversion of Convertible Debt
to equity, (ii) 100,000 shares issuable at $3.00 per share upon exercise of
warrants issued in connection with the conversion of Convertible Debt to
equity, (iii) 65,000 shares issuable at $3.00 per share upon exercise of
warrants issued in connection with the conversion of Secured Notes II to
equity, (iv) 100,000 shares issuable at $3.00 per share upon exercise of
warrants issued in connection with the Convertible Bridge Debt and (v)
217,391 shares issuable upon the conversion of Convertible Bridge Debt to
equity.

(7) Includes (i) 51,100 shares issuable at $.04 per share upon the exercise of
options issued under the 1993 Option Plan, (ii) 95,333 shares issuable at
$2.42 per share upon exercise of options issued under the 1994 Option Plan,
(iii) 75,000 shares issuable at $1.00 per share upon exercise of warrants
granted for the exchange of a Secured Note for a Demand Note, (iv) 25,000
shares issuable at $3.00 per share upon exercise of warrants issued for the
repayment of Convertible Debt and (v) 10,869 shares issuable upon the
conversion of Convertible Debt to equity.

(15) Includes 46,666 shares issuable at $3.00 share upon exercise of options
granted under the 1995 Option Plan.

(16) None of the 100,000 options to purchase Common Stock of the Company at
$4.00 per share have vested as of the date of this Prospectus.

(17) Includes 81,234 and 22,478 shares issuable at $3.00 per share to Mr. Page
and Mr. Boomstein, respectively, upon exercise of options granted under the
1994 and 1995 Option Plans.

<PAGE>
[ALTERNATE PAGE FOR SELLING SECURITYHOLDERS PROSPECTUS]

SHARES ELIGIBLE FOR FUTURE SALE

Upon the consummation of the Company Offering, the Company will have
7,696,291 shares of Common Stock outstanding (7,906,291 shares if the
Representatives' over-allotment option is exercised in full)(assuming no
exercise of outstanding options and warrants). Of these shares, the 1,400,000
shares sold in the Company Offering (1,610,000 shares if the Representatives'
over-allotment option is exercised in full) and the 1,241,977 shares of Common
Stock registered concurrently with this Prospectus (the "Selling Securityholders
Shares") offered hereby will be freely tradeable subject to "lock-up" agreements
described below under the Securities Act, except for any shares purchased by an
"affiliate" of the Company (in general, a person who has a control relationship
with the Company), which shares will be subject to the resale limitations of
Rule 144 adopted under the Securities Act. The remaining 5,054,314 shares are
deemed to be "restricted securities," as that term is defined under Rule 144
promulgated under the Securities Act, in that such shares were issued and sold
by the Company in private transactions not involving a public offering and are
not currently part of an effective registration. Except for the "lock-up"
agreement described below, such shares are eligible for sale under Rule 144, or
will become so eligible at various times through May 1998. In addition, the
Company has granted the Representative demand and piggyback registration rights
with respect to the securities issuable upon exercise of the Representative's
Warrants. No prediction can be made as to the effect, if any, that sales of
shares of Common Stock or even the availability of such shares for sale will
have on the market prices prevailing from time to time. If the holders of the
shares eligible for registration so choose they could require the Company to
register all of said shares at any time.

Except upon the consent of the Representative, all executive officers, all
directors and holders of substantially all of the outstanding stock of the
Company and substantally all holders of any options, warrants or other
securities convertible, exercisable or exchangeable for shares of Common Stock
have agreed not to, directly or indirectly, issue, offer, agree or offer to
sell, sell, transfer, assign, encumber, grant an option for the purchase or sale
of, pledge, hypothecate or otherwise dispose of any beneficial interest in such
securities for a period of twenty-four (24) months following the effective date
of the Registration Statement. The Representative has agreed to release
twenty-five percent (25%) of the securities held by Mr. Robert Bernardi on the
three hundred sixty-sixth (366th) day after the effective date of the
Registration Statement and an additional twenty-five percent (25%) every ninety
(90) days thereafter until no securities held by Mr. Bernardi are subject to the
lock-up agreement. Holders of 400,647 of the "restricted securities" have not
agreed not to sell such shares, 160,714 of which will be eligible for sale
under, and subject to, Rule 144 within three months following the date of this
Prospectus. For a period of two years from the date of this Prospectus, the
Company has also agreed not to file any registration statement relating to the
offering or sale of the Company's securities (not including any registration
statement on Form S-8) without the consent of the Representative.

<PAGE>
[ALTERNATE PAGE FOR SELLING SECURITYHOLDERS PROSPECTUS]

SELLING SECURITYHOLDERS AND PLAN OF DISTRIBUTION

An aggregate of up to 1,241,977 shares of Common Stock, 1,241,977 Public
Warrants and 1,241,977 shares of Common Stock issuable upon the exercise of
Public Warrants may be offered and sold pursuant to this Prospectus by the
Selling Securityholders from time to time as market conditions permit in the
over-the-counter market, or otherwise, at prices and terms then prevailing or at
prices related to the then current market price, or in negotiated transactions
subject to "lock-up" agreements (See "Shares Eligible for Future Sale"). The
Company has agreed to register such shares and warrants under the Securities Act
and to pay all expenses in connection therewith (other than brokerage
commissions and fees and expenses of counsel). Such shares and warrants have
been included in the Registration Statement of which this Prospectus forms a
part. Other than H.T. Ardinger, M. Douglas Adkins, Robert Moody, Jr., and Fred
Kassner, none of the Selling Securityholders beneficially owns 5% or more of the
Company's outstanding Common Stock. See "Principal Stockholders."

Beneficial Ownership of Shares Beneficial
of Common Stock Prior to Sale Beneficial Ownership of
----------------------------- Ownership of Warrants
Public Shares of -------------
Warrant Warrant Common Stock Prior to After
Selling Securityholder Shares Shares Shares Total After Sale(1) Sale Sale
- ----------------------- --------- -------- ---------- ------- --------------- --------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
Robert Gillings....... 78,250 597,650 78,250 74,150 0 675,900 597,650
A. Starke Taylor, Jr.. 95,652 25,000 12,319 132,971 83,333 37,319 25,000
H.T. Ardinger, Jr. ... 795,425 645,000 436,423 1,876,848 359,002 1,081,423 645,000
M. Douglas Adkins .... 352,092 390,500 116,025 858,617 252,371 506,525 390,500
Robert Moody, Jr. .... 632,694 475,000 135,443 1,243,137 497,251 610,443 475,000
Fred Kassner.......... 1,335,397 465,000 260,869 2,061,266 1,074,528 625,869 465,000
Henry Wendt........... 2,471 5,000 2,471 9,942 0 7,471 5,000
William Heim.......... 224,271 50,000 24,271 298,542 200,000 74,271 50,000
Joseph W. Geary....... 53,015 25,000 10,682 88,697 43,333 35,682 25,000
Robert Rubin.......... 170,361 61,500 133,695 365,556 36,666 195,195 61,500

</TABLE>
- ----------
(1) Assumes all of the Selling Securityholders' shares of Common Stock offered
hereby are sold and no additional shares are acquired.

The shares, warrants, and shares underlying such warrants may be sold by one
or more of the following methods: (a) a block trade in which a broker or dealer
so engaged will attempt to sell the shares and/or warrants as agent but may
position and resell a portion of the block as principal to facilitate the
transaction; (b) purchases by a broker or dealer as principal and resale by such
broker or dealer for its account pursuant to this Prospectus; and (c)
face-to-face transactions between sellers and purchasers without a
broker/dealer. In effecting sales, brokers or dealers engaged by the Selling
Securityholders may arrange for other brokers or dealers to participate. Such
brokers or dealers may receive commissions or discounts from Selling
Securityholders in amounts to be negotiated. Such brokers and dealers and any
other participating brokers and dealers may be deemed to be "Underwriters"
within the meaning of the Securities Act in connection with such sales.

<PAGE>
[ALTERNATE PAGE FOR SELLING SECURITYHOLDERS PROSPECTUS]

[THIS PAGE INTENTIONALLY LEFT BLANK]

<PAGE>
[ALTERNATE PAGE FOR SELLING SECURITYHOLDERS PROSPECTUS]

[THIS PAGE INTENTIONALLY LEFT BLANK]

<PAGE>
[ALTERNATE PAGE FOR SELLING SECURITYHOLDERS PROSPECTUS]

CONCURRENT REGISTRATION OF SECURITIES

Concurrently with this offering, 1,400,000 shares of Common Stock (the
"Common Stock") and 1,400,000 Public Warrants (not including representative's
over-allotment option) have been registered by the Company under the Securities
Act of 1933, as amended (the "Securities Act"), pursuant to the Company
Prospectus included within the Registration Statement of which this Prospectus
forms a part. The Common Stock and the Public Warrants may not be sold prior to
24 months from the date of this Prospectus, in each case, without the prior
written consent of the Representative. The Representative has agreed to release
twenty-five percent (25%) of the securities held by Mr. Robert Bernardi on the
three hundred sixty-sixth (366th) day after the effective date of the
Registration Statement and an additional twenty-five percent (25%) every ninety
(90) days thereafter until no securities held by Mr. Bernardi are subject to the
lock-up agreement.

INTEREST OF NAMED EXPERTS AND COUNSEL

LEGAL MATTERS

The legality of the securities offered hereby will be passed upon for the
Company by The Stoppelman Law Firm, P.C., McLean, Virginia. Gersten, Savage,
Kaplowitz, & Curtin, L.L.P., New York, NY has acted as counsel for the several
underwriters in connection with this offering.

EXPERTS

<PAGE>
[ALTERNATE PAGE FOR SELLING SECURITYHOLDERS PROSPECTUS]

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

No dealer, salesperson or any other
person has been authorized to give any
information or to make any
representations other than those
contained in this Prospectus, and, if
given or made, such information or
representations must not be relied on
as having been authorized by the
Company or the Representative. This
Prospectus does not constitute an
offer to sell or the solicitation of MULTIMEDIA ACCESS
an offer to buy any security other CORPORATION
than the securities offered by this
Prospectus, or an offer to sell or a
solicitation of an offer to buy any
security by any person in any
jurisdiction in which such offer or
solicitation would be unlawful.
Neither the delivery of this
Prospectus nor any sale made hereunder
shall, under any circumstances, imply
that the information in this
Prospectus is correct as of any time
subsequent to the date of this 1,241,977 SHARES
Prospectus. OF COMMON STOCK AND

TABLE OF CONTENTS

Page
----

Prospectus Summary ............... 3
Risk Factors ..................... 7 1,241,977 REDEEMABLE
Use of Proceeds .................. 17 COMMON STOCK
Dividends......................... 18 PURCHASE WARRANTS
Capitalization ................... 21
Selected Consolidated Financial
Data .......................... 22
Management's Discussion and
Analysis of Financial Condit-
ion and Results of Operations.. 23
Business ........................ 28
Management ...................... 36
Principal Stockholders .......... 42
Certain Transactions ............ 45
Description of Securities ....... 48
Shares Eligible for Future Sale . 50
Selling Securityholders and Plan
of Distribution ............... 51 --------------------
Concurrent Registration of
Securities ................... 54
Interest of Named Experts and PROSPECTUS
Counsel ....................... 54
Legal Matters ................... 54
Experts ......................... 54 ---------------------
Additional Information .......... 54
Glossary ........................ i
Index to Consolidated Financial
Statements ................... F-1

Until --, 1997 (25 days after the
date of this Prospectus), all dealers
effecting transactions in the
registered securities, whether or not
participating in this distribution,
may be required to deliver a
Prospectus. This is in addition to the
obligation of dealers to deliver a
Prospectus when acting as underwriters
and with respect to their unsold , 1997
allotments or subscriptions.

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

<PAGE>

PART II
INFORMATION NOT REQUIRED IN PROSPECTUS

ITEM 24. INDEMNIFICATION OF DIRECTORS AND OFFICERS

Articles Seven and Ten of the Company's Certificate of Incorporation, contain
the following provisions with respect to indemnification of Directors and
Officers:

SEVENTH. The Corporation shall, to the fullest extent permitted by Section
145 of the General Corporation Law of the State of Delaware, as the same may be
amended and supplemented, indemnify any and all persons whom it shall have power
to indemnify under said section from and against any and all of the expenses,
liabilities or other matters referred to in or covered by said section, and the
indemnification provided for herein shall not be deemed exclusive of any other
rights to which those indemnified may be entitled under any By-Law, agreement,
vote of stockholders or disinterested Directors or otherwise, both as to action
in his official capacity and as to action in another capacity while holding such
office, and shall continue as to a person who has ceased to be director,
officer, employee or agent and shall inure to the benefit of the heirs,
executors and administrators of such a person.

TENTH. To the fullest extent permitted by Delaware General Corporation Law, a
director of the Corporation shall not be personally liable to the Corporation or
its stockholders for monetary damages for breach of fiduciary duty as a
director. Neither any amendment nor repeal of this Article, nor the adopting of
any provision of this Certificate of Incorporation inconsistent with this
Article shall eliminate or reduce the effect of this Article in respect of any
matter occurring, or any cause of action, suit or claim that, but for this
Article would accrue or arise, prior to such amendment, repeal or adoption of an
inconsistent provision.

Section 145 of the General Corporation Law of the State of Delaware contains
provisions entitling directors and officers of the Company to indemnification
from judgments, fines, amounts paid in settlement and reasonable expenses,
including attorney's fees, as the result of an action or proceeding in which
they may be involved by reason of being or having been a director or officer of
the Company provided said officers or directors acted in good faith.

The Company has also entered into indemnification agreements with Messrs.
Norem, Leftwich, Colquhoun, Jobe, and Culp which provide for the indemnification
of said officers and directors to the fullest extent allowable under the laws of
the State of Delaware.

ITEM 25. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION

SEC Registration ............ $ 12,736
NASD Listing Fee ............ 4,000*
NASDAQ Listing Fee .......... 10,000*
Transfer Agent Fee .......... 3,500*
Printing and Engraving Costs 120,000*
Legal Fees and Expenses .... 90,000*
Accounting Fees and Expenses 140,000*
Blue Sky Fees and Expenses . 50,000*
Miscellaneous ............... 69,764
----------
TOTAL .................... $500,000
==========
- ----------
* Estimated.

II-1

<PAGE>

ITEM 26. RECENT SALES OF UNREGISTERED SECURITIES

The following shares of Common Stock were issued by the Company during the
past three years without registering the securities under the Securities Act.
There were no underwriting discounts or commissions paid in connection with the
issuance of any of said securities, except as noted.

The sales of the securities described in the following table were made in
reliance upon Section 4(2) of the Securities Act, which provides exemptions for
transactions not involving a public offering, to the founders of the Company.
With regard to the Company's reliance upon the exemption from registration
provided by Section 4(2) of the Securities Act of the sale of securities
described below, certain inquiries were made by the Company to establish that
such sales qualified for such exemption. In particular, the Company confirmed
that with respect to the exemption claimed under Section 4(2) of the Securities
Act (i) each investor made representations that he or she was sophisticated
and/or an "accredited investor" within the meaning of Regulation D of the
Securities Act in relation to such investments and (ii) each purchaser gave
written assurance of his or her investment intent, and the certificates for the
securities bear a legend accordingly.

NUMBER OF
SHARES OF CONSIDERATION
PURCHASER DATE COMMON STOCK PER SHARE
- ----------------------- -------- -------------- ---------------
Robert P. Bernardi .... 2/2/94 650,000 $0.0001
Robert M. Sterling,
Jr..................... 2/2/94 650,000 0.0001
Herbert Welch.......... 2/2/94 150,000 0.0001
Michael Rakusin........ 2/2/94 60,000 0.0001
--------------
Total................ 1,510,000
==============

NUMBER OF
SHARES OF CONSIDERATION
PURCHASER DATE COMMON STOCK PER SHARE
- -------------------------------- --------- -------------- ---------------
H. J. Partnership .............. 3/16/94 200,000 $2.20
H. T. Ardinger, Jr.............. 3/16/94 250,000 2.20
Michael Robbins................. 3/16/94 10,000 2.20
Fred Kassner.................... 3/16/94 20,000 2.20
Joseph & Pilar Serrano.......... 3/16/94 50,000 2.20
A. Starke Taylor, Jr............ 3/16/94 30,000 2.20
B. Michael Pisani............... 3/16/94 10,000 2.20
Socrates Skiadas................ 3/16/94 50,000 2.20
Robert E. Murello............... 3/16/94 50,000 2.20
Moody Insurance Group, Inc. .... 3/16/94 250,000 2.20
M. Douglas Adkins............... 3/16/94 36,364 2.20
John R. Whitman................. 3/16/94 20,000 2.20
Christian & Erika Brunnschweiler 3/16/94 20,000 2.20
--------
Total......................... 996,364
========

II-2

<PAGE>

The sales of the securities described in the following table were made in
reliance upon Section 4(2) of the Securities Act, which provides exemptions for
transactions not involving a public offering. The sales were made in connection
with the acquisition of Viewpoint by the Company. All of the outstanding Common
Stock and Options of Viewpoint were exchanged for Common Stock and Options of
the Company at an exchange ratio of .511 shares of the Company to one (1) share
of Viewpoint.

NUMBER OF
SHARES OF
PURCHASER DATE COMMON STOCK
- ----------------------------------------------- --------- --------------
Glenn A. Norem ................................ 5/11/94 113,787
Glenn A. Norem assignee for Catalyst Financial
Corporation.................................... 5/11/94 511,000
Michael Nissenbaum............................. 5/11/94 91,980
Robert Arnold.................................. 5/11/94 432
Greg Garcia.................................... 5/11/94 19,164
June Pappas.................................... 5/11/94 25,550
Chris Hann..................................... 5/11/94 12,775
G.A. Norem I L.P............................... 5/11/94 4,536
Gary Motley.................................... 5/11/94 12,776
Newell V. Starks............................... 5/11/94 7,665
Sherri N. Davis................................ 5/11/94 12,775
Richard Penn................................... 5/11/94 153,300*
Glenn A. Norem................................. 5/11/94 51,100*
David Kaufman.................................. 5/11/94 4,259*
Alfred Riccomi................................. 5/11/94 28,560*
Curtis Barlowe................................. 5/11/94 20,108*
William Jobe................................... 5/11/94 5,110*
Minnie Branch.................................. 5/11/94 256*
Michael T. Zimmerman........................... 5/11/94 3,066*
Charles B. Humphreyson......................... 5/11/94 8,624*
Leonard A. Woods............................... 5/11/94 6,388*
Eric Eldridge.................................. 5/11/94 3,066*
Chris Hann..................................... 5/31/94 3,727*
-----------
Total........................................ 1,100,004
===========

* Indicates options to purchase the number of shares indicated. Messrs.
Branch, Zimmerman, Humphreyson, Woods, Eldridge and Hann exercised their
options on 5/31/94. Mr. Penn exercised his options on 10/31/94.

II-3

<PAGE>

The Company sold 10,000 shares of Common Stock on June 29, 1994 in exchange
for consulting services, valued at $22,000, rendered by M.F. Branch Associates,
Inc. The sale was made in reliance upon Section 4(2) of the Securities Act,
which provides exemptions for transactions not involving a public offering.

The sales of the securities described in the following table were made in
reliance upon Regulation D, Rule 506 of the Securities Act, which provides
exemptions for transactions not involving a public offering. With regard to the
Company's reliance upon the exemption from registration provided by Regulation
D, Rule 506 of the Securities Act of the sale of securities described below,
certain inquiries were made by the Company to establish that such sales
qualified for such exemption. In particular, the Company confirmed that with
respect to the exemption claimed under Regulation D, Rule 506 of the Securities
Act (i) each investor made representations that he or she was sophisticated
and/or an "accredited investor" within the meaning of Regulation D of the
Securities Act in relation to such investments and (ii) each purchaser gave
written assurance of his or her investment intent, and the certificates for the
securities bear a legend accordingly.
DOLLAR AMOUNT OF BRIDGE
PURCHASER DATE NOTES PURCHASED
- ------------------------------- ---------- -----------------------
H.T. Ardinger.................. 9/26/94 $ 500,000
Robert Moody, Jr............... 9/27/94 300,000
M. Douglas Adkins.............. 9/28/94 205,000
Fred Kassner................... 9/30/94 200,000
Henry Wendt.................... 10/17/94 10,000
John R. Whitman................ 10/17/94 60,000
Robert Gillings................ 10/21/94 315,300
Elizabeth Sterling............. 10/24/94 50,000
Glenn A. Norem................. 10/24/94 50,000
Richard Pizitz................. 10/24/94 20,000
Michael Pizitz................. 10/24/94 30,000
Greg Garcia.................... 10/26/94 27,000
A. Starke Taylor, Jr........... 10/31/94 50,000
Robert Moody, Jr............... 12/20/94 250,000
Joseph Geary................... 1/10/95 50,000
H.T. Ardinger.................. 1/10/95 250,000
Adkins Family Partnership, Ltd. 1/16/95 100,000
Greg Garcia.................... 1/17/95 27,562.50
June Pappas.................... 1/17/95 55,125
Gary Motley.................... 1/18/95 27,562.50
William Heim................... 1/19/95 100,000
---------------
Total........................ $2,677,550
===============

Holders of $2,430,300 principal amount of convertible debt and approximately
$367,800 of accrued interest have elected to convert these amounts to 608,283
shares of Common Stock and 608,283 Public Warrants (based on an assumed offering
price of $4.50 per share and $0.10 per Public Warrant). The remaining dollar
amount of bridge notes purchased plus accrued interest will be repaid with the
proceeds of this offering.

II-4

<PAGE>

-
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS (Continued)

NUMBER OF
SHARES OF CONSIDERATION
PURCHASER DATE COMMON STOCK PER SHARE
- ----------------------- ---------- -------------- ---------------
Fred Kassner........... 8/4/95 833,333 $3.00
H. T. Ardinger......... 12/31/95 16,504 3.00
M. L. Ardinger......... 12/31/95 16,504 3.00
Doug Adkins............ 12/31/95 107,444 3.00
Robert Moody........... 12/31/95 147,251 3.00
Anthony Bellissimo .... 12/31/95 3,694 3.00
H. T. Ardinger......... 12/31/95 26,747 3.00
M. L. Ardinger......... 12/31/95 26,747 3.00
Doug Adkins............ 4/18/96 35,813 3.00
Fred Kassner........... 3/31/96 221,195 3.00
William Wells.......... 4/18/96 16,750 3.00
David Motley........... 4/18/96 3,333 3.00
Shain McCaig........... 4/18/96 10,000 3.00
Rhett Bently........... 4/18/96 30,000 3.00
James Johnson.......... 4/18/96 10,000 3.00
Craig Noonan........... 4/18/96 3,333 3.00
Jerry S. Harris........ 5/7/96 10,000 3.00
Lanie R. Hughes........ 4/30/96 10,000 3.00
Joseph W. Geary........ 5/24/96 42,333 3.00
John S. Stoppelman .... 6/1/96 42,666 3.00
Robert M. Sterling, Jr. 6/28/96 26,666 3.00
Richard Epstein........ 6/28/96 20,000 3.00
Stanley Epstein........ 6/19/96 5,000 3.00
Joan Etayo............. 6/21/96 16,600 3.00
Paul Ehrlich........... 6/28/96 8,334 3.00
Jared Shaw............. 6/28/96 4,167 3.00
Daniel Kodsi........... 6/28/96 4,167 3.00
A. Starke Taylor....... 6/28/96 53,333 3.00
Richard Friedman....... 6/28/96 20,000 3.00
Robert Rubin........... 6/28/96 36,666 3.00
--------------
Total............... 1,808,580
==============

II-5

<PAGE>

ITEM 27. LIST OF EXHIBITS

<TABLE>
<CAPTION>
EXHIBIT
PAGE NO. DESCRIPTION OF EXHIBIT
- ------------ -----------------------------------------------------------------------------------------
<S> <C>
1........... Form of Underwriting Agreement*
2........... Agreement and Plan of Merger and Reorganization**
3(a)........ Certificate of Incorporation**
3(b)........ Amendment to Certificate of Incorporation**
3(c)........ Restated By-Laws**
4(a)........ Form of Common Stock Certificate*****
4(b)........ Form of Warrant Certificate*****
4(c)........ Form of Warrant Agreement between the Company and Continental Stock Transfer & Trust Company*
4(d)........ Form of Representative's Warrant Agreement*
5........... Opinion of The Stoppelman Law Firm, P.C. on Legality of Securities Being Registered***
9(a)........ Voting Trust Agreement between Robert M. Sterling, Jr. and Thomas E. Brown**
9(b)........ Voting Trust Agreement between Robert P. Bernardi and Richard Bernardi**
9(c)........ Form of Lock-Up Agreement***
9(d)........ Lock-Up Agreement with Robert Sterling Trust***
9(e)........ Lock-Up Agreement with Robert Bernardi Trust***
9(f)........ Lock-Up Agreement with Michael Nissenbaum***
10(a)....... Modified Employment Agreement between the Company and Glenn A. Norem***
10(b)....... Modified Consulting Agreement between the Company and Sterling Capital Group Inc.**
10(c)....... Form of Indemnification Agreement between the Company and Executive Officers and Directors**
10(d)....... 1995 Stock Option Plan**
10(e)....... 1994 Stock Option Plan**
10(f)....... 1993 Viewpoint Stock Plan**
10(g)....... 1995 Director Option Plan**
10(h)....... Lease Agreement between the Company and Metro Squared, L.P.**
10(i)....... Employee Stock Purchase Plan**
10(j)....... Licensing Agreement between the Company and Boca Research, Inc.***
10(k)....... Agreement between the Company and Unisys Corporation***
10(l)....... Employment Agreement between the Company and Philip M. Colquhoun***
10(m)....... Employment Agreement between the Company and William S. Leftwich***
10(n)....... Employment Agreement between the Company and David T. Stoner***
10(o)....... Employment Agreement between the Company and Neal Page***
10(p)....... Employment Agreement between the Company and A. David Boomstein***
10(q)....... Employment Agreement between the Company and Daniel W. Dodson***
10(r)....... Lease between the Company and Burlingame Home Office, Inc.***
10(s)....... Lease between the Company and Family Funds Partnership***
10(t)....... Agreement between the Company and Catalyst Financial Corporation***
10(u)....... Promissory Note by the Company payable to Robert Rubin dated September 5, 1996.*
10(v)....... Promissory Note by the Company payable to M. Douglas Adkins dated November 15, 1996.*
10(w)....... Promissory Note by the Company payable to H.T. Ardinger dated November 15, 1996.*
10(x) ...... Promissory Note by the Company payable to H.T. Ardinger dated January 15, 1997.
10(y) ...... Promissory Note by the Company payable to Adkins Family Partnership, Ltd. dated January 15, 1997.
11.......... Calculation of Net Loss Per Share
16.......... Letter from Hoffman, Morrison, & Fitzgerald, P.C.
21.......... List of Subsidiaries of the Company**
23(a)....... Consent of The Stoppelman Law Firm, P.C.
23(b)....... Consent of Ernst & Young LLP
23(c)....... Consent of Hoffman, Morrison, & Fitzgerald, P.C.
24.......... Power of Attorney (included with signature pages)
</TABLE>
- ----------

* Filed with Amendment 2 dated November 21, 1996.

** Filed with initial filing dated August 9, 1996.

*** Filed with Amendment 1 dated October 4, 1996.

**** The Company has requested confidential treatment of certain portions of
this document and such portions have been redacted from this agreement.

***** Filed with Amendment 3 dated November 25, 1996.

II-6

<PAGE>

ITEM 28. UNDERTAKINGS

A. Certificates

The undersigned registrant hereby undertakes to provide to the Representative
at the closing specified in the underwriting agreement, certificates in such
denominations and registered in such names as required by the underwriter to
permit prompt delivery to each purchaser.

B. Rule 415 Offering

The undersigned Company hereby undertakes:

(1) To file, during any period in which offers or sales are being made, a
post-effective amendment to this Registration Statement to: (i) Include any
prospectus required by Section 10(a)(3) of the Securities Act; (ii) Reflect in
the prospectus any facts or events which, individually or together, represent a
fundamental change in the information in the registration statement and; (iii)
Include any additional or changed material information on the plan of
distribution.

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

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

C. Request for Acceleration of Effective Date

The Company may elect to request acceleration of the effective date of the
Registration Statement under Rule 461 of the Securities Act.

Insofar as indemnification for liabilities arising under the Securities Act
of 1933 (the "Securities 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 Securities Act and is, therefore,
unenforceable.

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

II-7

<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 of filing on Form SB-2 and authorized this registration
statement to be signed on its behalf by the undersigned, in the County of Dallas
in the State of Texas on this 16th day of January, 1997.

Multimedia Access Corporation

By: /s/ Glenn A. Norem
-------------------------------------------
Glenn A. Norem
Chief Executive Officer

KNOW ALL MEN BY THESE PRESENT, that each person whose signature appears below
constitutes and appoints Glenn A. Norem, his true and lawful attorney-in-fact
and agent, with full power of substitution and resubstitution, for him and in
his name, place and stead, in any and all capacities, to sign any and 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 attorney-in-fact and agent, full power and authority to do and perform each
and every act and thing requisite or necessary to be done in and about the
premises, as full to all intents and purposes as he might or could do in person,
hereby ratifying and confirming all that said attorney-in-fact and agent or
either of them or their or his substitute or 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.

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

/s/ Glenn A. Norem Chief Executive Officer January 16, 1997
- -------------------------- and Director
Glenn A. Norem

/s/ William S. Leftwich
- -------------------------- Chief Financial Officer January 16, 1997
William S. Leftwich

/s/ William D. Jobe
- ------------------------- Director January 16, 1997
William D. Jobe

/s/ Joe C. Culp
- ------------------------ Director January 16, 1997
Joe C. Culp

II-8

<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>

SEQUENTIAL
EXHIBIT PAGE
PAGE NO. DESCRIPTION OF EXHIBIT NUMBER
- ------------ ----------------------------------------------------------------------------------------- --------------
<S> <C> <C>
1........... Form of Underwriting Agreement*
2........... Agreement and Plan of Merger and Reorganization**
3.1......... Certificate of Incorporation**
3.2......... Amendment to Certificate of Incorporation**
3.3......... Restated By-Laws**
4.1......... Form of Common Stock Certificate*****
4.2......... Form of Warrant Certificate*****
4.3......... Form of Warrant Agreement between the Company and Continental Stock Transfer & Trust
Company*
4.4......... Form of Representative's Warrant Agreement*
5........... Opinion of The Stoppelman Law Firm, P.C. on Legality of Securities Being Registered***
9.1......... Voting Trust Agreement between Robert M. Sterling, Jr. and Thomas E. Brown**
9.2......... Voting Trust Agreement between Robert P. Bernardi and Richard Bernardi**
9.3......... Form of Lock-Up Agreement***
9.4......... Lock-Up Agreement with Robert Sterling Trust***
9.5......... Lock-Up Agreement with Robert Bernardi Trust***
9.6......... Lock-Up Agreement with Michael Nissenbaum***
10.1........ Modified Employment Agreement between the Company and Glenn A. Norem***
10.2........ Modified Consulting Agreement between the Company and Sterling Capital Group Inc.**
10.3........ Form of Indemnification Agreement between the Company and Executive Officers and
Directors**
10.4........ 1995 Stock Option Plan**
10.5........ 1994 Stock Option Plan**
10.6........ 1993 Viewpoint Stock Plan**
10.7........ 1995 Director Option Plan**
10.8........ Lease Agreement between the Company and Metro Squared, L.P.**
10.9........ Employee Stock Purchase Plan**
10.10....... Licensing Agreement between the Company and Boca Research, Inc.***
10.11....... Agreement between the Company and Unisys Corporation***
10.12....... Employment Agreement between the Company and Philip M. Colquhoun***
10.13....... Employment Agreement between the Company and William S. Leftwich***
10.14....... Employment Agreement between the Company and David T. Stoner***
10.15....... Employment Agreement between the Company and Neal Page***
10.16....... Employment Agreement between the Company and A. David Boomstein***
10.17....... Employment Agreement between the Company and Daniel W. Dodson***
10.18....... Lease between the Company and Burlingame Home Office, Inc.***
10.19....... Lease between the Company and Family Funds Partnership***
10.20....... Agreement between the Company and Catalyst Financial Corporation***
10.21....... Promissory Note by the Company payable to Robert Rubin dated September 5, 1996.*
10.22....... Promissory Note by the Company payable to M. Douglas Adkins dated November 15, 1996.*
10.23....... Promissory Note by the Company payable to H.T. Ardinger dated November 15, 1996.*
10.24 ...... Promissory Note by the Company payable to H.T. Ardinger dated January 15, 1997.
10.25 ...... Promissory Note by the Company payable to Adkins Family Partnership, Ltd. dated January
15, 1997.
11.......... Calculation of Net Loss Per Share
16.......... Letter from Hoffman, Morrison, & Fitzgerald, P.C.
21.......... List of Subsidiaries of the Company**
23.1........ Consent of The Stoppelman Law Firm, P.C.
23.2........ Consent of Ernst & Young LLP
23.3........ Consent of Hoffman, Morrison, & Fitzgerald, P.C.
24.......... Power of Attorney (included with signature pages)
</TABLE>
- ----------
* Filed with Amendment 2 dated November 21, 1996.

** Filed with initial filing dated August 9, 1996.

*** Filed with Amendment 1 dated October 4, 1996.

**** The Company has requested confidential treatment of certain portions of
this document and such portions have been redacted from this agreement.

***** Filed with Amendment 3 dated November 25, 1996.

January 15, 1997

Securities and Exchange Commission
450 Fifth Street, N.W.
Washington, D.C. 20549

Re: Multimedia Access Corporation
Registration Statement

Dear Sir/Madam:

We are corporate and securities counsel to Multimedia Access
Corporation (the "Company"), a Delaware corporation, in connection with the
registration on Form SB-2 of 2,851,977 shares of the Company's Common Stock (the
"Common Stock"), 2,851,977 Redeemable Common Stock Purchase Warrants (the
"Public Warrants"), the 2,851,977 shares of Common Stock underlying the Public
Warrants.

We hereby advise that, in our opinion, the shares of Common Stock, the
Public Warrants and the shares of Common Stock underlying the Public Warrants
have been duly authorized by all necessary corporate acts of the Company, and
when issued, delivered and paid for by the Underwriter, pursuant to the
Underwriting Agreement, will be legally and validly issued, fully-paid and
non-assessable.

We consent to the use of our firm's name under the heading "Legal
Matters" in the Registration Statement, and any amendments thereto, filed with
the Securities and Exchange Commission in connection with the above-referenced
offering.

Very truly yours,

/s/ John S. Stoppelman

John S. Stoppelman

PROMISSORY NOTE

$925,000.00 January 15, 1997

FOR VALUE RECEIVED, the undersigned MultiMedia Access Corporation
("Maker"), a Delaware corporation, promises to pay to the order of H. T.
Ardinger, (with its successors and assigns referred to herein as "Payee"), at
the registered office of Maker in Delaware, or at such other place in Delaware
as Payee may from time to time designate, in lawful money of the United States
of America the principal sum of Nine Hundred Twenty-Five Thousand and No/100
Dollars ($925,000.00), and any other amounts that may be outstanding pursuant to
the terms of this Unsecured Promissory Note (the "Note") together with interest
on the unpaid principal balance hereof from time to time outstanding, until
maturity, at the lesser of (i) eight percent (8%) per annum, or (ii) the Highest
Lawful Rate (as hereinafter defined). Any payments of principal or interest that
become past due shall bear interest at the lesser of (i) fifteen percent (15%)
per annum, or (ii) the Highest Lawful Rate Interest on this Note shall be
computed on the basis of the number of actual days elapsed in a year consisting
of 365 days.

1. Payments. All principal and interest shall be due and payable the
earlier of (i) on demand ten (10) days subsequent the effective date of the
initial public offering of the Maker's securities ("IPO") or (ii) on demand
after 180 days from the date first written above.

2. Prepayments. Maker shall have the right to prepay, in whole or in
part, the principal of this Note at any time without premium or penalty. Any
prepayment will first be applied to any accrued interest, and thereafter to
principal.

3. Time of Essence. time is of the essence with respect to all of
Maker's obligations and agreements under this Note.

4. Events of Default and Remedies. If Maker does not pay any interest
or principal when due under this Note, whether on the scheduled payment date or
otherwise, Payee or other holder of this Note may demand the unpaid balance of
and accrued interest on this Note.

5. No Waiver. No delay on the part of Payee or other holder of this
Note in the exercise of any power or right under this Note, shall operate as a
waiver hereof, nor shall a single or partial exercise of any power or right
preclude other or further exercise thereof or the exercise of any other power or
right. Enforcement by the holder of this Note for the payment hereof shall not
constitute an election by such holder of remedies so as to preclude the exercise
of any other remedy available to such holder.

6. Waiver. Except as otherwise set forth herein, Maker and all
endorsers, sureties, and guarantors hereof hereby jointly and severally waive
all exemption rights under any applicable law, and also waive presentment for
payment, demand, notice of nonpayment, valuation, appraisement, protest, demand,
dishonor, notice of protest, notice of intent to accelerate, notice of
acceleration, and all other notices, and without further notice hereby consent
to renewals, extensions, or partial payments either before or after maturity.

7. Costs of Collection. If this Note is placed in the hands of any
attorney for collection, or is collected by suit or through probate or
bankruptcy proceeding, Maker agrees to pay reasonable attorney's fees and
disbursements in addition to other amounts due.

<PAGE>

8. Severability. The invalidity, or unenforceability in particular
circumstances, of any provision of this Note shall not extend beyond such
provision or such circumstances and no other provision of this Note shall be
affected thereby.

9. Highest Lawful Rate. It is expressly stipulated and agreed to be the
intent of Maker and Payee at all time to comply with the applicable state law
governing the maximum rate or amount of interest payable on or in connection
with this Note (or applicable United States federal law to the extent that it
permits Payee to contract for, charge, take, reserve or receive a greater amount
of interest than under applicable state law). If the applicable law if ever
judicially interpreted so as to render usurious any amount called for under this
Note or under any of the other documents evidencing or relating to this Note or
any part thereof (collectively, the "Agreements"), or contracted for, charged,
taken, reserved or received with respect to the indebtedness evidenced by this
Note which results in Maker having paid any interest in excess of that permitted
by law, then it is Maker's and Payee's express intent that all excess amounts
theretofore collected by Payee be credited on the principal balance of this Note
(or, if this Note has been or would be thereby paid in full, refunded to Maker),
and the provisions of this Note and the other Agreements immediately be deemed
reformed and the amount thereafter collectible hereunder and thereunder reduced,
without the necessity of the of the execution of any new document, so as to
permit the recovery of the fullest amount called for hereunder and thereunder,
while complying in all respects with the applicable law. The right to accelerate
maturity of this Note does not include the right to accelerate any interest
which has not otherwise accrued on the date of such acceleration. All sums paid
or agreed to be paid to Payee for the use, forbearance or detention of the Loan
shall, to the extent permitted by applicable law, be amortized, prorated,
allocated and spread throughout the full term of the Loan until payment in full
so that the rate or amount of interest on account of the Loan does not exceed
the applicable usury ceiling. Notwithstanding any provision contained in this
Note or in any of the other Agreements that permits the compounding of interest,
including without limitation any provision by which any of the accrued interest
is added to the principal amount of this Note, the total amount of interest that
Maker is obligated to Payee is entitled to receive with respect to this Note
shall not exceed the amount calculated on a simple (i.e., non-compounded)
interest basis at the Highest Lawful Rate on principal amounts actually advanced
to or for the account of Maker, including the initial principal amount of this
Note and any advances made pursuant to any of the Agreements (such as for the
payment of taxes, insurance premiums and the like).

10. Business Purposes. Maker hereby represents and warrants to the
holder of this Note that the loan evidenced hereby is a "contract under which
credit is extended for business, commercial investment, or other similar
purpose," and is not a loan for "personal, family, household, or agricultural
use."

11. Warrant Coverage. Upon receipt of the proceeds of this Note by
Maker, Payee will receive a warrant to purchase 92,500 shares of MultiMedia
Access Corporation common stock. The exercise price of said warrant will be
priced at $3.00 per share and the warrant will expire January 15, 2000.

12. Notices. All notices or demands required or permitted hereunder
shall be in writing and shall be deemed given when actually delivered or on the
third business day following the day on which the same shall have been mailed by
registered or certified mail, postage prepaid, addressed as follows:

- 2 -

<PAGE>

If to Maker: MultiMedia Access Corporation
Two Metro Square
2665 Villa Creek Drive
Suite 200
Dallas, Texas 75234
Attn: William S. Leftwich

If to Payee: H. T. Ardinger
9040 Governors Row
Dallas, Texas 75247

Either Maker or Payee may change its respective address or addressee by
giving notice of such change to the other party in the manner provided herein.
For this purpose only, unless and until such written notice is actually
received, the address and addressee specified for each party shall be deemed to
continue on effect for all purposes.

13. GOVERNING LAW. This Note shall be construed in accordance with and
governed by the laws of the State of Texas.

14. Headings. The headings of the sections of this Note are inserted
for convenience only and shall not be deemed to constitute a part thereof.

IN WITNESS WHEREOF, the undersigned has executed this Note to be
effective as of the date first written above.

MAKER:

MultiMedia Access Corporation, a
Delaware corporation

By:
---------------------------------------
William S. Leftwich
Chief Financial Officer

- 3 -

PROMISSORY NOTE

$75,000.00 January 15, 1997

FOR VALUE RECEIVED, the undersigned MultiMedia Access Corporation
("Maker"), a Delaware corporation, promises to pay to the order of Adkins Family
Partnership, Ltd., (with its successors and assigns referred to herein as
"Payee"), at the registered office of Maker in Delaware, or at such other place
in Delaware as Payee may from time to time designate, in lawful money of the
United States of America the principal sum of Seventy-Five Thousand and No/100
Dollars ($75,000.00), and any other amounts that may be outstanding pursuant to
the terms of this Unsecured Promissory Note (the "Note") together with interest
on the unpaid principal balance hereof from time to time outstanding, until
maturity, at the lesser of (i) eight percent (8%) per annum, or (ii) the Highest
Lawful Rate (as hereinafter defined). Any payments of principal or interest that
become past due shall bear interest at the lesser of (i) fifteen percent (15%)
per annum, or (ii) the Highest Lawful Rate Interest on this Note shall be
computed on the basis of the number of actual days elapsed in a year consisting
of 365 days.

3. Time of Essence. Time is of the essence with respect to all of
Maker's obligations and agreements under this Note.

<PAGE>

11. Warrant Coverage. Upon receipt of the proceeds of this Note by
Maker, Payee will receive a warrant to purchase 7,500 shares of MultiMedia
Access Corporation common stock. The exercise price of said warrant will be
priced at $3.00 per share and the warrant will expire January 15, 2000.

- 2 -

<PAGE>

If to Maker: MultiMedia Access Corporation
Two Metro Square
2665 Villa Creek Drive
Suite 200
Dallas, Texas 75234
Attn: William S. Leftwich

If to Payee: Adkins Family Partnerships, Ltd.
M. Douglas Adkins, General Partner
Gardere & Wynne, L.L.P.
3000 Thanksgiving Tower
1601 Elm Street
Dallas, Texas 75201

13. GOVERNING LAW. This Note shall be construed in accordance with and
governed by the laws of the State of Texas.

14. Headings. The headings of the sections of this Note are inserted
for convenience only and shall not be deemed to constitute a part thereof.

IN WITNESS WHEREOF, the undersigned has executed this Note to be
effective as of the date first written above.

MAKER:

MultiMedia Access Corporation, a
Delaware corporation

By:
---------------------------------------
William S. Leftwich
Chief Financial Officer

- 3 -

EXHIBIT 11

MULTIMEDIA ACCESS CORPORATION AND SUBSIDIARIES
(A DEVELOPMENT STAGE COMPANY)

STATEMENT RE: COMPUTATION OF LOSS PER SHARE

<TABLE>
<CAPTION>
FOR THE NINE MONTHS
YEAR ENDED DECEMBER 31, ENDED SEPTEMBER 30,
------------------------------- -------------------------------
1994 1995 1995 1996
--------------- --------------- --------------- ---------------
(UNAUDITED) (UNAUDITED)
<S> <C> <C> <C> <C>
LOSS PER SHARE DATA:

Net loss as reported in the financial statements .. $(2,717,421) $(5,414,878) $(3,509,510) $(3,081,082)
=============== =============== =============== ===============

Weighted average number of common shares
outstanding ...................................... 3,018,610 3,528,536 3,341,116 4,774,326

Common and common equivalent shares issued in the
twelve month period preceding the filing date of
the initial public offering as required by SAB
No. 83:
Common stock ..................................... 602,859 510,698 573,250 140,507
Incentive stock options .......................... 266,356 266,356 266,356 266,356
Non-qualified stock options ...................... 40,208 40,208 40,208 40,208
Warrants ......................................... 778,613 778,613 778,613 778,613
--------------- --------------- --------------- ---------------

Weighted average number of common and common
equivalent shares outstanding as reported in the
financial statements ............................. 4,706,646 5,124,411 4,999,543 6,000,010
=============== =============== =============== ===============

Loss per share as reported in the financial
statements........................................ $ (0.58) $ (1.06) $ (0.70) $ (0.51)
=============== =============== =============== ===============

SUPPLEMENTAL LOSS PER SHARE DATA:

Net loss as reported in the financial statements... $(5,414,878) $(3,081,082)

Interest saved on debt to be retired:
$257,548 of 15% secured debt ..................... 38,632 28,974
$247,250 of 8% convertible debt .................. 19,780 14,835
$35,000 of non-interest debt at 12/31/95 ......... -- --
$120,000 of non-interest debt at 9/30/96 ......... -- --
---------------

Adjusted net loss $(5,356,466) $(3,037,273)
=============== =============== ===============

Weighted average number of common and common
equivalent shares outstanding as reported in the
financial statements ............................. 5,124,411 6,000,010

Shares necessary to pay off debt:
Total proceeds to retire debt of $539,758 at
December 31, 1995 and $624,798 at September 30,
1996 divided by the offering price of $4.50 per
share ........................................... 119,955 138,844

Adjusted weighted average number of shares
outstanding ...................................... 5,244,366 6,138,854
=============== =============== ===============

Supplemental loss per share ....................... $ (1.02) $ (0.49)
=============== =============== ===============
</TABLE>

HOFFMAN, MORRISON & FITZGERALD, P.C.
Certified Public Accountants and Consultants

January 17, 1997

U.S. Securities and Exchange Commission
450 5th Street, NW
Washington, DC 20549

Re: MultiMedia Access Corporation
File #33-9935

Dear Sir/Madam:

We were previously the principal accountant for Multimedia Access Corporation
(the "Company") and under the date March 17, 1995, except for note 12 as to
which the date is May 8, 1995, reported on the consolidated financial statement
of the Company and its subsidiaries for the year ended December 31, 1994. On
November 3, 1995, our appointment as principal accountant was terminated. We
have read the Company's statements included under the caption "Experts" in
amendment number 1 to the above referenced registration statement on Form SB-2
as filed with the Commission on January 17, 1997, and we agree with such
statements.

Very truly yours,

/s/ Hoffman, Morrison & Fitzgerald, P.C.

HOFFMAN, MORRISION & FITZGERALD, P.C.
Certified Public Accountants and Consultants

January 15, 1997

Securities and Exchange Commission
450 Fifth Street, N.W.
Washington, D.C. 20549

Re: Multimedia Access Corporation
Registration Statement

Dear Sir/Madam:

Very truly yours,

/s/ John S. Stoppelman

John S. Stoppelman

EXHIBIT 23B

CONSENT OF INDEPENDENT AUDITORS

We consent to the reference to our firm under the caption "Experts" and to
the use of our report dated April 5, 1996 in the Registration Statement No.
333-09935 (Form SB-2) and related Prospectus of MultiMedia Access Corporation
for the registration of 1,400,000 shares of its common stock and 1,400,000
redeemable common stock purchase warrants.

Dallas, TX
January 15, 1997 ERNST & YOUNG LLP

EXHIBIT 23C

CONSENT OF INDEPENDENT AUDITORS

We consent to the reference to our firm under the caption "Experts" and to
the use of our report dated March 17, 1995, except for note 12, as to which the
date is May 8, 1995 in the Registration Statement No. 333-09935 (Form SB-2) and
related Prospectus of MultiMedia Access Corporation for the registration of
1,400,000 shares of its common stock and 1,400,000 redeemable common stock
purchase warrants.

Vienna, VA
January 15, 1997 HOFFMAN, MORRISON & FITZGERALD, P.C.
(formerly Hoffman, Dykes & Fitzgerald, P.C.)

<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
CONSOLIDATED BALANCE SHEETS OF MULTIMEDIA ACCESS CORPORATION AND SUBSIDIARIES (A
DEVELOPMENT STAGE COMPANY) AS OF DECEMBER 31, 1995 AND SEPTEMBER 30, 1996
(UNAUDITED) AND THE RELATED CONSOLIDATED STATEMENTS OF OPERATIONS FOR THE YEAR
ENDED DECEMBER 31, 1995 AND THE NINE MONTHS ENDED SEPTEMBER 30, 1996
(UNAUDITED), AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL
STATEMENTS.
</LEGEND>
<MULTIPLIER> 1
<CURRENCY> U.S. Dollars

<S> <C> <C>
<PERIOD-TYPE> YEAR 9-MOS
<FISCAL-YEAR-END> DEC-31-1995 DEC-31-1996
<PERIOD-START> JAN-01-1995 JAN-01-1996
<PERIOD-END> DEC-31-1995 SEP-30-1996
<EXCHANGE-RATE> 1 1
<CASH> 16,605 21,523
<SECURITIES> 0 0
<RECEIVABLES> 34,211 172,951
<ALLOWANCES> 29,647 44,196
<INVENTORY> 197,469 377,313
<CURRENT-ASSETS> 597,074 922,451
<PP&E> 656,682 767,761
<DEPRECIATION> 170,982 285,910
<TOTAL-ASSETS> 1,244,766 1,560,096
<CURRENT-LIABILITIES> 4,488,676 5,603,043
<BONDS> 8,654 500,000
0 0
0 0
<COMMON> 472 532
<OTHER-SE> (3,253,036) (4,543,479)
<TOTAL-LIABILITY-AND-EQUITY> 1,244,766 1,560,096
<SALES> 221,139 737,196
<TOTAL-REVENUES> 286,354 900,446
<CGS> 136,381 315,437
<TOTAL-COSTS> 136,381 315,437
<OTHER-EXPENSES> 2,423,062 1,610,036
<LOSS-PROVISION> 28,400 44,135
<INTEREST-EXPENSE> 847,905 343,630
<INCOME-PRETAX> (5,414,878) (3,081,082)
<INCOME-TAX> 0 0
<INCOME-CONTINUING> (5,414,878) (3,081,082)
<DISCONTINUED> 0 0
<EXTRAORDINARY> 0 0
<CHANGES> 0 0
<NET-INCOME> (5,414,878) (3,081,082)
<EPS-PRIMARY> (1.06) (0.51)
<EPS-DILUTED> (1.06) (0.51)

</TABLE>