ENTERACTIVE INC /DE/
S-3/A, 1997-03-18
PREPACKAGED SOFTWARE
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     As filed with the Securities and Exchange Commission on March 18, 1997
                                                     Registration No. 333-22713
    


                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549
                      ------------------------------------

   
                                 AMENDMENT NO. 1
                                       TO
    
                                    FORM S-3
                             REGISTRATION STATEMENT
                                      UNDER
                           THE SECURITIES ACT OF 1933
                      ------------------------------------

                                ENTERACTIVE, INC.
             (Exact name of Registrant as specified in its charter)

                                    Delaware
                         (State or other jurisdiction of
                         Incorporation or organization)

                                   22-3272662
                                (I.R.S. Employer
                             Identification Number)
                        110 West 40th Street, Suite 2100
                            New York, New York 10018
                                 (212) 221-6559
                      ------------------------------------
                   (Address, including zip code, and telephone
                  number, including area code, of Registrant's
                          principal executive offices)

                                Mr. Andrew Gyenes
                                Enteractive, Inc.
                        110 West 40th Street, Suite 2100
                            New York, New York 10018
                                 (212) 221-6559

      (Name, address and telephone number of agent for service of process)

                      ------------------------------------
                                   Copies to:

                              Steven Wolosky, Esq.
                          Kenneth A. Schlesinger, Esq.
                     Olshan Grundman Frome & Rosenzweig LLP
                                 505 Park Avenue
                            New York, New York 10022
                                 (212) 753-7200
                      ------------------------------------

   
         Approximate date of commencement of proposed sale to the public as soon
as practicable after this Registration Statement becomes effective.
    

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

         If the only securities  being registered on this Form are being offered
pursuant to dividend or interest  reinvestment plans, please check the following
box. / /

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

         The  Prospectus  contained  within  this  Registration  Statement  also
relates  to  securities  which  were  registered   pursuant  to  (i)  Form  SB-2
Registration Statement (Registration No. 33-83694),  (ii) Form SB-2 Registration
Statement  (Registration  No.  33-86966),   and  (iii)  Form  SB-2  Registration
Statement (Registration No. 333-2244)
    
                      ------------------------------------

<PAGE>
<TABLE>


                         CALCULATION OF REGISTRATION FEE
===========================================================================================================================
                                                                                            Proposed
                                                                          Proposed          Maximum
                Title of Each Class                                       Maximum          Aggregate
                   of Securities                      Amount To Be     Offering Price       Offering         Amount of
                 To Be Registered                      Registered       Per Security        Price(1)     Registration Fee
- ---------------------------------------------------------------------------------------------------------------------------
<S>                                                     <C>                 <C>          <C>                <C>
Common Stock, $.01 par value                            1,838,701           $2.375(1)    $4,366,914.875     $1,323.31
- ---------------------------------------------------------------------------------------------------------------------------
Common Stock, $.01 par value, issuable upon the
exercise of certain options (the "Options")(2)            682,000(2)        $2.39(3)      $1,632,200          $494.61
- ---------------------------------------------------------------------------------------------------------------------------
Common Stock, $.01 par value, issuable upon             4,200,000
conversion of certain shares of Class A Convertible
Preferred Stock (the "Convertible Preferred Stock")(2)                       $2.375(1)     $9,975,000        $3,022.73
- ---------------------------------------------------------------------------------------------------------------------------
Common Stock, $.01 par value, issuable upon exercise
of certain warrants (the "1996 Warrants")(2)            4,200,000            $4.00(4)     $16,800,000        $5,090.91
- ---------------------------------------------------------------------------------------------------------------------------
1996 Warrants                                           4,200,000              --                   --             --
- ---------------------------------------------------------------------------------------------------------------------------
   
           Total.............................................................................................$9,931.56(5)
    
===========================================================================================================================
</TABLE>


(1)  Estimated  solely for the purpose of calculating the registration fee based
     upon  the  average  of the high and low  price of the  Common  Stock on the
     Nasdaq Stock Market on February 27, 1997.
(2)  Pursuant to Rule 416, additional  securities are being registered as may be
     required  for  issuance  pursuant to the  anti-dilution  provisions  of the
     Options, the Convertible Preferred Stock and the 1996 Warrants.
(3)  Pursuant  to  Rule  457(g),  the  registration  fee for  the  Common  Stock
     underlying  the Options is calculated on the basis of the average  exercise
     price of the Options.
(4)  Pursuant  to  Rule  457(g),  the  registration  fee for  the  Common  Stock
     underlying  the 1996  Warrants is  calculated  on the basis of the exercise
     price of the 1996 Warrants.


   
(5)  This Registration Fee was previously paid. In addition, with respect to (i)
     Registration No.  33-83694,  a Registration Fee of $4,054.82 was previously
     paid in  connection  with the  issuance of (a)  2,300,000  shares of Common
     Stock issuable upon the exercise of  publicly-traded  Common Stock Purchase
     Warrants (the "Common Stock Purchase  Warrants")  and (b) 200,000  warrants
     and the resale of 540,000  shares of Common Stock issuable upon exercise of
     privately-held  warrants or options;  (ii)  Registration  No.  33-86966,  a
     Registration  Fee of $1,258.62 was previously  paid in connection  with the
     issuance of 800,000  shares of Common Stock  issuable  upon the exercise of
     Common Stock Purchase  Warrants;  and (iii)  Registration No.  333-2244,  a
     Registration  Fee of $2,788.23 was previously  paid in connection  with the
     issuance of 2,021,468  shares of Common Stock issuable upon the exercise of
     Common Stock  Purchase  Warrants and the resale of 210,000 shares of Common
     Stock issuable upon the exercise of an option.

     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, as amended,  or until the  Registration  Statement
shall become  effective on such date as the Securities and Exchange  Commission,
acting pursuant to said Section 8(a) may determine.
    

                                       -1-

<PAGE>
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 these  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.

   
                   SUBJECT TO COMPLETION, DATED MARCH 18, 1997
    

PRELIMINARY PROSPECTUS

                        16,992,169 Shares of Common Stock
                               4,400,000 Warrants

                                ENTERACTIVE, INC.

                          Common Stock ($.01 par value)

   
     This  Prospectus  relates to the  reoffer  and  resale by  certain  selling
shareholders  (the "Selling  Shareholders") of an aggregate of 11,870,701 shares
(the "Selling Shareholder Shares") of the Common Stock, $.01 par value per share
(the  "Common  Stock"),  of  Enteractive,  Inc.,  a  Delaware  corporation  (the
"Company") of which (i) 682,000 shares of Common Stock (the "Option Shares") are
issuable upon exercise of certain options (the "Options")  which were granted by
the Company in  connection  with  consulting  services;  (ii) 340,000  shares of
Common  Stock (the "1994  Warrant  Shares")  are  issuable by the  Company  upon
exercise of certain  warrants (the "January 1994 Warrants") which were issued in
connection with a private  placement in January 1994;  (iii) 5,121,468 shares of
Common Stock (the  "Common  Stock  Warrant  Shares") are issuable by the Company
upon  the  exercise  of   publicly-traded   warrants   ("Common  Stock  Purchase
Warrants");  (iv) 200,000 shares of Common Stock (the "Purchase  Option Shares")
are issuable by the Company upon the exercise of certain unit  purchase  options
(the  "Purchase  Options")  previously  issued by the Company to GKN  Securities
Corp.,  or its  designees,  the  underwriter  of the  Company's  Initial  Public
Offering (the "Underwriter");  (v) 200,000 shares of Common Stock (the "Purchase
Option  Warrant  Shares") are issuable to the  Underwriter  upon exercise of the
Purchase Option Warrants (hereinafter  defined),  which Purchase Option Warrants
are issuable upon exercise of the Purchase  Options;  (vi)  4,200,000  shares of
Common  Stock  (the  "Conversion  Shares")  are  issuable  by the  Company  upon
conversion  of  certain  shares  of Class A  Convertible  Preferred  Stock  (the
"Convertible  Preferred Stock") which were issued by the Company to holders (the
"Preferred Stockholders") in connection with the Company's December 1996 Private
Placement (the "1996 Private Placement"); (vii) 4,200,000 shares of Common Stock
(the "1996 Warrant Shares") are issuable by the Company upon exercise of certain
warrants  (the  "1996  Warrants")  granted  by  the  Company  to  the  Preferred
Stockholders  in  connection  with the 1996 Private  Placement;  (viii)  210,000
shares of Common Stock (the "Secondary  Offering Option Shares") are issuable by
the Company upon the exercise of the Underwriter's  Common Stock Purchase Option
(the  "Secondary  Option")  granted to the  Underwriter,  or its  designees,  in
connection with the Company's secondary public offering  consummated in May 1996
("Secondary  Offering")  (ix)  953,237  shares of Common  Stock (the  "Secondary
Shares")  which were  previously  issued by the Company to certain  employees or
former  officers and  employees  of the Company who in turn sold such  Secondary
Shares to certain of the Selling  Shareholders  and (x) 885,464 shares of Common
Stock (the "Employee Shares") issued to certain employees or former employees of
either the Company,  predecessors of the Company,  or Lyriq  International Corp.
("Lyriq").  This Prospectus also relates to (i) 5,121,468 shares of Common Stock
(the "Common Stock Warrant  Shares")  which are issuable by the Company upon the
exercise of publicly-funded warrants (the "Common Stock Purchase Warrant"), (ii)
200,000  warrants (the  "Purchase  Option  Warrants")  which are issuable to the
Underwriter  by the  Company  upon  exercise of the  Purchase  Options and (iii)
4,200,000  1996  Warrants  which were granted to the Preferred  Stockholders  in
connection with the 1996 Private Placement.  The Selling  Shareholder Shares and
the Common Stock Warrant Shares are sometimes collectively referred to herein as
the "Shares".  See "Principal and Selling  Stockholders," "Plan of Distribution"
and "Description of Securities."
    

     The Option  Shares,  the 1994  Warrant  Shares,  the Common  Stock  Warrant
Shares,  the Purchase Option Shares,  the Purchase  Option Warrant  Shares,  the
Conversion  Shares,  the 1996 Warrant Shares,  and the Secondary Offering Option
Shares will be issued if, as and when the Options,  the January  1994  Warrants,
the Common Stock Purchase  Warrants,  the Purchase Options,  the Purchase Option
Warrants,  the Convertible  Preferred Stock, the 1996 Warrants and the Secondary
Option  (which such Option  Shares,  1994 Warrant  Shares,  Common Stock Warrant
Shares,  Purchase  Option Shares,  Purchase  Option Warrant  Shares,  Conversion
Shares,  1996 Warrant  Shares and Secondary  Offering  Option  Shares  underlie,
respectively), are exercised or converted, as the case may be, by the holders

<PAGE>

   
thereof. The Company will receive the proceeds from the exercise of the Options,
the January 1994  Warrants,  the Common Stock  Purchase  Warrants,  the Purchase
Options,  the Purchase  Option  Warrants,  the 1996  Warrants and the  Secondary
Offering  Options,  the net proceeds of which will amount to  $42,786,672 if all
options,  January  1994  Warrants,  Common  Stock  Purchase  Warrants,  Purchase
Options,  Purchase Option  Warrants,  1996 Warrants,  and Secondary  Options are
exercised,  after deducting the estimated expenses of this offering. The Company
will not receive any proceeds from the resale of the Selling  Shareholder Shares
by the Selling Shareholders or upon the conversion of the Convertible  Preferred
Stock.

     The  Company's  Common Stock is publicly  traded on the Nasdaq Stock Market
("Nasdaq")  under the symbol ("ENTR") and on the Boston Stock exchange under the
symbol  ("ENT").  On March 17, 1997, the last sales price of the Common Stock on
Nasdaq was $2.78125.
    

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

                 AN INVESTMENT IN THE SECURITIES OFFERED HEREBY
                INVOLVES A HIGH DEGREE OF RISK AND SHOULD ONLY BE
              MADE BY INVESTORS WHO CAN AFFORD THE RISK OF LOSS OF
                            THEIR ENTIRE INVESTMENT.
             SEE "RISK FACTORS" AND "DILUTION" ON PAGES 7 AND 15 OF
                                THIS PROSPECTUS.

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

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

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

   
         This offering is self-underwritten; neither the Company nor any Selling
Shareholder  has  employed an  underwriter  for the issuance of the Common Stock
Warrant  Shares and the  Purchase  Option  Warrants or the 1996  Warrants  (with
respect to the Company) and the resale of any of the Selling  Shareholder Shares
(with respect to the Selling  Shareholders).  The Company will bear all expenses
of this Offering other than discounts,  concessions or commissions on the resale
of the Selling  Shareholder  Shares and the Purchase Option Warrants or the 1996
Warrants.

         The Selling  Shareholders  have  advised the Company that the resale of
their  Selling  Shareholder  Shares may be effected  from time to time in one or
more transactions in the  over-the-counter  market or the Boston Stock Exchange,
in negotiated  transactions or otherwise at market prices prevailing at the time
of the sale or at prices  otherwise  negotiated.  The Selling  Shareholders  may
effect such transactions by selling the Selling Shareholder Shares to or through
broker-dealers   who  may  receive   compensation  in  the  form  of  discounts,
concessions or commissions from the Selling  Shareholders  and/or the purchasers
of the Selling  Shareholder Shares for whom such broker-dealers may act as agent
or to  whom  they  sell  as  principal,  or  both  (which  compensation  as to a
particular  broker-dealer  may  be in  excess  of  customary  commissions).  Any
broker-dealer   acquiring  the  Selling  Shareholder  Shares  from  the  Selling
Shareholders  may sell such  securities in its normal market making  activities,
through  other   brokers  on  a  principal  or  agency   basis,   in  negotiated
transactions,  to its customers or through a combination  of such methods.  Upon
the exercise of the Purchase  Options,  the Purchase  Warrants  will be publicly
traded along with the Common Stock Purchase  Warrants and may be acquired in the
same manner as the Selling  Shareholder  Shares.  To date, the 1996 Warrants are
not publicly-traded. See "Plan of Distribution."
    

- --------------------------------------------------------------------------------
                   The date of this Prospectus is March , 1997

                                       -2-

<PAGE>
                INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE

         The following  documents,  filed by the Company with the Securities and
Exchange  Commission under the Securities  Exchange Act of 1934, as amended (the
"Exchange Act") are incorporated in this Prospectus by reference:

                  (a) The Company's  Annual Report on Form 10-KSB for the fiscal
         year ended May 31, 1996.

                  (b) The  Company's  Quarterly  Reports on Form  10-QSB for the
         fiscal quarters ended August 31, 1996 and November 30, 1996.

                  (c) The Company's  Current  Report on Form 8-K dated  December
         19, 1996.

                  (d) The description of the Company's Common Stock contained in
         the  Company's  Registration  Statement  on Form  8-A  filed  with  the
         Commission on September 28, 1994.

         All documents filed by the Company pursuant to Section 13(a), 13(c), 14
or 15(d) of the Exchange Act subsequent to the date of this Prospectus and prior
to the  termination  of this  Offering  of the  Shares  of  Common  Stock or the
Purchase  Option  Warrants  offered hereby shall be deemed to be incorporated by
reference in this  Prospectus and to be a part hereof from the date of filing of
such documents.  Any statement contained in a document incorporated or deemed to
be incorporated by reference herein shall be deemed to be modified or superseded
for purposes of this Prospectus to the extent that a statement  contained herein
or in any other  subsequently  filed  document  which also is or is deemed to be
incorporated by reference herein modifies or supersedes such statement. Any such
statement so modified or superseded  shall not be deemed,  except as so modified
or superseded, to constitute a part of this Prospectus.

         The Company  will  provide  without  charge to each person to whom this
Prospectus  is delivered,  on the written or oral request of any such person,  a
copy of any or all of the documents incorporated herein by reference (other than
exhibits to such documents which are not specifically  incorporated by reference
in such  documents).  Written requests for such copies should be directed to Mr.
Kenneth Gruber,  Chief Financial Officer,  110 West 40th Street, Suite 2100, New
York, New York 10018, telephone number (212) 221-6559.

         The Company  intends to furnish its  shareholders  with annual  reports
containing  financial  statements  audited and reported upon by its  independent
accounting  firm,  quarterly  reports  containing  unaudited  interim  financial
information  and such other periodic  reports as the Company may determine to be
appropriate or as may be required by law.

         This  Prospectus  includes  references to trademarks of entities  other
than the Company which have reserved all rights with respect to their respective
trademarks.


                                       -3-

<PAGE>

                                     SUMMARY

         The following summary is qualified in its entirety by reference to, and
should  be read in  conjunction  with,  the more  detailed  information  and the
consolidated  financial  statements  (including  the  notes  thereto)  appearing
elsewhere  in  this  Prospectus  or  incorporated  herein  by  reference.   Each
prospective investor is urged to read this Prospectus in its entirety. There are
currently 6,720 shares of Convertible  Preferred  Stock issued and  outstanding.
The holders of the  Convertible  Preferred Stock have the right, at the holder's
option,  at any time after April 30, 1998, or from time to time  thereafter,  to
convert  each share of  Convertible  Preferred  Stock into such whole  number of
shares of Common  Stock  equal to the  aggregate  stated  value  ($1,250) of the
Convertible  Preferred Stock to be converted  divided by the lesser of (i) $2.00
or (ii) 50% of the average  closing sale price for the Common Stock for the last
ten trading days in the fiscal quarter of the Company prior to such  conversion.
All  information  herein  assumes  that  the  stated  value  of the  Convertible
Preferred  Stock will be divided by $2.00 and  accordingly,  this Prospectus has
been prepared on the basis that  4,200,000  shares of Common Stock may be issued
upon the conversion of the  Convertible  Preferred  Stock.  See  "Description of
Securities--Convertible  Preferred  Stock"  for a  further  description  of  the
Convertible Preferred Stock.

                                   The Company

         Enteractive,    Inc.,   a   Delaware   corporation   (the   "Company"),
headquartered  in New York, New York,  provides  internet  services to companies
seeking to establish or expand their internet or intranet presence and publishes
multimedia titles to the home. Its address is 110 West 40th Street,  Suite 2100,
New  York,  New York  10018 and its  telephone  number  is (212)  221-6559.  Its
Worldwide Web site address is http://www.enteractive.com.

RECENT DEVELOPMENTS

         On  December  4, 1996,  the  Company  entered  into an  agreement  (the
"Enteractive Affiliates Agreement") with USWeb Corporation ("USWeb") pursuant to
which the  Company  has agreed to become a  franchisee  of USWeb and a member of
USWeb's  network of  independent  affiliates  (the "USWeb  Network").  Under the
Affiliates  Agreement,  the Company paid $625,000 for the right to operate USWeb
affiliate  offices in  certain  localities  as  provided  below.  USWeb is a new
venture  which has  raised $17  million  to date,  including  $13  million  from
Softbank,  which owns Comdex and Ziff-Davis  Publishing,  to provide  service to
corporations  establishing a presence on the World Wide Web. USWeb is seeking to
capitalize on the service  opportunities  presented by the increasing use of the
Internet and intranets as commercial tools. The Company has formed a subsidiary,
Enteractive Network Solutions Inc. doing business as USWeb Cornerstone, which is
intended  to  provide  a full  range of  Internet  and  Intranet-based  business
solutions,   including  Website  design,  hosting  and  management,  design  and
implementation of database and e-commerce  solutions,  educational  programs and
Web-related strategic consulting and marketing.

         USWeb is  required  to  obtain  regulatory  approval  under  applicable
franchise  laws with respect to the  Enteractive  Affiliates  Agreement  and the
activities  contemplated thereby. Over the next six months,  Enteractive intends
to establish a USWeb  Affiliate  office in New York and,  subject to  regulatory
approval,  has been  granted  exclusive  rights to develop  new USWeb  Affiliate
offices  in  Long  Island  (Nassau-Suffolk  County),  Philadelphia,   Baltimore,
Stamford, CT, and Bergen County and Newark, N.J. The exclusive rights granted to
the Company are subject to certain  minimum  performance  standards set forth in
the  Enteractive  Affiliates  Agreement.  If the Company is unable to meet these
minimum performance standards, its exclusive rights may be terminated and it may
be liable for  monetary  payment.  The  Company  retains  the right to  rescind,
without  penalty,  if the final  form of the  Enteractive  Affiliates  Agreement
contains any material variation less advantageous to the Company.

         On December 12, 1996, the Company received approximately  $7,872,000 in
net proceeds from the  consummation  of the 1996 Private  Placement  whereby the
Company issued the Convertible Preferred Stock and granted the 1996 Warrants.


                                       -4-

<PAGE>

         In January 1997, as a result of agreements  among the Company,  certain
former  employees and the  Underwriter,  the Company repaid $475,800 of its long
term debt plus related accrued interest.

                                  The Offering



   
Securities Offered by the Company.............  5,121,468  Common Stock  Warrant
                                                Shares,  4,200,000 1996 Warrants
                                                and  200,000   Purchase   Option
                                                Warrants.
    
Securities Offered for resale
by the Selling Shareholders.................... 682,000 Option  Shares;  340,000
                                                1994  Warrant  Shares;   200,000
                                                Purchase Option Shares;  200,000
                                                Purchase  Option Warrant Shares;
                                                4,200,000   Conversion   Shares;
                                                4,200,000  1996  Warrant  Shares
                                                and 210,000  Secondary  Offering
                                                Option Shares. 953,237 Secondary
                                                Shares and 885,464 Employee
                                                Shares.
   

    

Common Stock Outstanding........................7,679,441(1) shares   of  Common
                                                Stock  before  the  exercise  or
                                                conversion,  as the case may be,
                                                of  the  Options,  January  1994
                                                Warrants,  Common Stock Purchase
                                                Warrants,    Purchase   Options,
                                                Purchase    Option     Warrants,
                                                Convertible   Preferred   Stock,
                                                1996   Warrants  and   Secondary
                                                Options,  and 22,832,909  shares
                                                of  Common  Stock  assuming  the
                                                exercise or  conversion,  as the
                                                case  may  be,  of the  Options,
                                                January  1994  Warrants,  Common
                                                Stock     Purchase     Warrants,
                                                Purchase    Options,    Purchase
                                                Option   Warrants,   Convertible
                                                Preferred  Stock,  1996 Warrants
                                                and Secondary Options.

Symbol......................................... Common Stock: ENTR
                                                Common Stock Purchase  Warrants:
                                                ENTRW

Boston Stock Exchange Symbol....................Common Stock: ENT
                                                Common Stock Purchase  Warrants:
                                                ENTW

- --------
 (1) Does not include (i) 1,500,000 shares of Common Stock reserved for issuance
upon exercise of stock  options  which may be granted  under the Company's  1994
Incentive and Non-Qualified Stock Option Plan ("1994 Plan"), of which options to
purchase  1,108,310  shares of Common Stock have been  granted;  (ii)  1,000,000
shares of Common  Stock  reserved for issuance  upon  exercise of stock  options
which may be granted  under the  Company's  1994  Consultant  Stock  Option Plan
("Consultant Plan"), of which options to purchase 333,330 shares of Common Stock
have been granted;  (iii) 150,000  shares of Common Stock  reserved for issuance
under the Company's  1995 Directors  Stock Option Plan  ("Directors  Plan"),  of
which options to purchase 45,000 shares of Common Stock have been granted;  (iv)
682,000  shares of Common Stock  reserved for issuance  upon exercise of certain
other  outstanding  non-qualified  stock  options;  (v) 340,000 shares of Common
Stock  reserved for issuance  upon exercise of the January 1994  Warrants;  (vi)
5,121,468  shares of Common Stock reserved for issuance upon the exercise of the
Common Stock  Purchase  Warrants;  (vii) 200,000 shares of Common Stock reserved
for issuance upon the exercise of the Purchase Option;  (viii) 200,000 shares of
Common Stock reserved for issuance upon exercise of the Purchase  Warrants;  and
(ix) 210,000  shares of Common Stock  reserved for issuance upon the exercise of
the  Secondary  Option;  (x)  4,200,000  shares of Common  Stock  issuable  upon
conversion of the  Convertible  Preferred  Stock;  and (xi) 4,200,000  shares of
Common Stock issuable upon exercise of the 1996 Warrants.

                                       -5-

<PAGE>

                                 Use of Proceeds

   
         The  Company  could  receive up to  $20,485,872  in  proceeds  from the
exercise of the Common Stock Purchase Warrants.  The Company must use any of the
proceeds it receives from the exercise of the Common Stock Purchase Warrants for
the redemption of the Convertible Preferred Stock at a redemption price equal to
1.1  multiplied by the Stated Value  ($1,250).  The Company will not receive any
proceeds  from the  resale of the  Selling  Stockholder  Shares  offered  by the
Selling  Shareholders hereby or for the conversion of the Convertible  Preferred
Stock . However, the Company will receive the proceeds from the exercise of each
of Options, January 1994 Warrants,  Purchase Options,  Purchase Option Warrants,
1996  Warrants and Secondary  Options.  The net proceeds of which will amount to
$22,300,800 if all such securities are exercised,  after deducting the estimated
expenses  of this  offering.  The  balance  of any  proceeds  received  from the
exercise of the Common Stock Purchase  Warrants,  or any other proceeds received
by the  Company  in the  Offering,  will be used  for  expanding  the  Company's
internet services business and title publishing.
    

                                       -6-

<PAGE>

                                  Risk Factors

         The   securities   offered  hereby  involve  a  high  degree  of  risk.
Prospective  investors should carefully consider the following risk factors,  as
well as information contained elsewhere in this Prospectus.

GENERAL RISKS AND RISKS RELATED TO CURRENT FINANCIAL CONDITION

         History  of  Losses;   Change  in  Strategy;   Continuing  Net  Losses;
Accumulated  Deficit. The Company has incurred significant losses. At the end of
1994, the Company  shifted its focus from being  primarily a provider of product
development  services for others to being a developer and publisher of titles in
which the Company maintains a significant ownership interest and, in many cases,
distribution rights. However, the Company continues to incur significant losses.
For the six months ended  November 30, 1996 and the year ended May 31, 1996, the
Company had net losses of $3,503,400 and $10,404,700,  respectively. The Company
had an accumulated deficit of $18,222,200 as of November 30, 1996. In July 1996,
the Company announced a restructuring  whereby certain members of its management
resigned  and  certain  fixed  costs were  reduced as a result of the  Company's
decision  to  focus  its  efforts  on  recreation  and  entertainment  products.
Subsequently,  the Company decided to capitalize on its expertise in on-line and
internet  development to provide on-line and internet  web-site  development and
network  solutions  for  corporations.  Nevertheless,  the Company  expects that
losses will  increase and continue  until such time, if ever, as the Company can
profitably  develop,  produce and  distribute a successful  line of  interactive
multimedia  titles  or  profitably  deliver  network  solutions,   services  and
products.

         Dependence on Management;  Need to Attract  Additional  Personnel.  The
Company is dependent upon the business and technical  expertise of its executive
and  creative  personnel.  In  particular,  the loss of the  services  of Andrew
Gyenes,  the  Chairman of the Board and Chief  Executive  Officer,  could have a
material  adverse  effect  upon  the  Company.  The  Company  has an  employment
agreement  with Mr.  Gyenes  which  expires in October  1997.  The  Company  has
obtained a "key person" insurance policy on the life of Mr. Gyenes in the amount
of  $1,000,000  under which the Company is the  beneficiary.  In  addition,  the
ability to attract and retain highly trained  executives and professionals  with
background  experience  and  knowledge of the  Internet,  intranet and other new
media platforms is critical to the success of the Company. The Company's ability
to develop  its  businesses  will  depend upon its ability to recruit and retain
additional personnel, including engineering, marketing and management personnel.
Competition for qualified personnel is intense and accordingly,  there can be no
assurance  that the Company will be able to retain or hire all of the  necessary
personnel or that the Company may not otherwise  need to change its personnel to
compete in its rapidly changing market.

         Limited  Working  Capital;  Possible  Need  for  Additional  Financing;
Uncertainty  of Capital  Funding.  As of November 30, 1996, the Company had cash
and cash  equivalents of $1,278,400.  In December 1996, the Company  consummated
the  1996  Private  Placement  and  received  approximately  $7,872,000  in  net
proceeds. In January 1997 the Company repaid $475,800 of its long term debt plus
accrued  interest.  The Company expects that its existing capital resources will
enable it to undertake  the  Company's  new strategy and to maintain its current
operations for the next 18 months.  However, based on management's assessment of
the future marketability of its titles and demand for Web related services,  the
Company may  significantly  alter the level of expenses  both within the next 18
months and thereafter.  Moreover,  these funds may not be sufficient to meet the
Company's longer term cash requirements for operations.  The Company may also be
required to obtain additional financing to continue to operate its business. The
Company does not currently have a line of credit. There can be no assurance that
any  additional  financing,  if  required,  will be  available to the Company on
acceptable  terms, if at all. Any inability by the Company to obtain  additional
financing, if required, will have a material adverse effect on the operations of
the Company.


                                       -7-

<PAGE>

RISKS RELATED TO DESIGNING, DEVELOPING, INSTALLING, MAINTAINING AND HOSTING
CORPORATE WEB SITES

         Developing  Market  For  Providing  Network  Solutions,   Products  and
Services;  New Entrants,  USWeb Relationship.  A portion of the Company's future
growth is dependent to a significant  extent upon its ability to derive  revenue
from sales to its  customers of its  "network  related  products and  services,"
which the Company defines as designing, developing,  installing, maintaining and
hosting corporate web sites and networks for internal  communications as well as
external commerce. The market for designing, developing, installing, maintaining
and hosting corporate web sites and networks has only recently begun to develop,
is rapidly evolving,  highly competitive,  and is characterized by an increasing
number of market entrants who have introduced or developed products and services
for communication  and commerce.  Demand and market acceptance for such services
are subject to a high level of  uncertainty  and there can be no assurance  that
commerce and  communication  through such  services  will  continue to grow.  In
connection  with this new  strategy,  the Company has entered  into an agreement
with  US Web  whereby  it is a  franchisee  in a new  franchise  with  no  known
comparable  franchise model and where the market for such franchise is untested.
USWeb has had limited experience as a franchisor and the Company has no previous
experience  as a  franchisee  and the  future  success  of the  Company  will be
dependent in part on the overall  success of the US Web Network,  of which there
can be no assurance. While the Company believes that it can generate revenues as
a franchisee,  there can be no assurance that it can generate revenues or become
profitable in the future.  Finally,  under the terms of the franchise agreement,
the Company can only serve  certain  territories  and there can be no  assurance
that  the  Company  will  be able  to  obtain  additional  franchises  or  serve
additional territories in the future.

         Internet  Services  Competition;  Low Barriers to Entry. The market for
the Company's web site related services is highly competitive. The Company faces
competition  from national and regional  advertising  agencies,  specialized and
integrated  marketing  communication  firms as well as sole  proprietorships and
small businesses in the computer network solutions industry. The Company expects
that new  competitors  that either provide  integrated or  specialized  services
(e.g., corporate identity and packaging,  advertising services or World Wide Web
site  design)  and are  technologically  proficient,  will  emerge  and  will be
competing  with the  Company.  Many of the  Company's  competitors  or potential
competitors have longer operating  histories,  longer client  relationships  and
significantly  greater  financial,  management  and  other  resources  than  the
Company.  Although only a few of these  competitors  have to date offered a full
range of Internet and Intranet  development  and maintenance  services,  several
have  announced  their  intention to offer  comprehensive  Internet and Intranet
solutions.  Furthermore, most of the Company's current and potential competitors
have  longer  operating  histories,  larger  installed  customer  bases,  longer
relationships  with customers and significantly  greater  financial,  technical,
marketing and public  relations  resources  than the Company and could decide to
increase their resource  commitments to the Company's market. In addition,  many
of the Company's  competitors have lower overhead,  more technical expertise and
more  advanced  technology.  To the  extent  that  existing  competitors  or new
competitors cause the Company to lose clients, the Company's business, financial
condition  and  operating  results  could  be  materially   adversely  affected.
Additionally,  the Company has no significant  proprietary technology that would
preclude  or  inhibit   competitors  from  entering  the  integrated   marketing
communication  solutions market.  The Company intends to compete on the basis of
price and the quality of its services. In addition,  the market for Internet and
Intranet  development  is relatively  new and subject to continuing  definition,
and, as a result,  the core business of certain  competitors may better position
them to compete in this market as it matures.  Competition of the type described
above could  materially  adversely  affect the  Company's  business,  results of
operations and financial  condition.  There can be no assurance that existing or
future  competitors will not develop or offer marketing  communication  services
and products  that provide  significant  performance,  price,  creative or other
advantages  over  those  offered  by the  Company,  which  could have a material
adverse  effect on the  Company's  business,  financial  condition and operating
results.

         Uncertain Adoption of the Internet and Intranet as a Medium of Commerce
and  Communications;  Dependence  on the Internet and  Intranet.  The  Company's
ability to derive revenues from providing web-related and network solutions will
depend in part upon industry  demand for Internet and Intranet  services and the
type and quality of  infrastructure  for providing  Internet and Intranet access
and carrying  Internet and Intranet  traffic.  The Internet and Intranet may not
become  efficient,  viable  commercial  marketplaces  because of issues such as,
among other things,  security,  reliability,  cost, ease of use and access,  and
quality of service, and because of inadequate

                                       -8-

<PAGE>

development  of the  necessary  solutions  infrastructure,  such  as a  reliable
computer network or timely development of complementary  products,  such as high
speed modems. If the necessary  infrastructure or complementary products are not
developed  or  the  Internet  and  Intranet  do  not  become  efficient,  viable
commercial  marketplaces,   the  Company's  business,  financial  condition  and
operating results could be materially adversely affected.  Furthermore,  even if
the Internet and Intranet  become  efficient,  viable  commercial  marketplaces,
there can be no assurance that  businesses  will elect to outsource Web site and
Intranet  development  and  maintenance  services.  If such services prove to be
unreliable, ineffective or too expensive, or if software companies develop tools
sufficiently  user-friendly  and  cost-effective  for  nonprofessionals  to use,
enterprises may choose to develop and maintain all or part of their Web sites or
Intranets in-house.

         Management of Growth. The rapid execution  necessary for the Company to
exploit the market for its business  model  requires an  effective  planning and
management  process.  The Company's rapid growth has placed,  and is expected to
continue to place, a significant strain on the Company's managerial, operational
and  financial  resources.  The Company  expects  that  continued  hiring of new
personnel  will be required to support its business.  To manage its growth,  the
Company must  continue to implement  and improve its  operational  and financial
systems  and to  expand,  train and manage its  employee  base.  There can be no
assurance that the Company's systems, procedures or controls will be adequate to
support the Company's  operations or that the Company's  management will be able
to achieve the rapid execution necessary to exploit the market for the Company's
business model. The Company's  future operating  results will also depend on its
ability to expand its Technology  Services,  Marketing and Affiliate  Operations
organizations.  If the  Company  is  unable to manage  growth  effectively,  the
Company's  business,  results or  operations  and  financial  condition  will be
materially adversely affected.

         Uncertain  Acceptance  and  Maintenance  of USWeb  Brand.  The  Company
believes that  establishing and maintaining the USWeb brand is a critical aspect
of its efforts to attract customers and that the importance of brand recognition
will increase due to the increasing number of companies  entering the market for
Internet  and  Intranet  service  provision.  Promotion  of the USWeb brand will
depend  largely  on the  success  of USWeb's  marketing  and the  ability of the
Company and other USWeb  affiliates to provide high  quality,  reliable and cost
effective Web site and Intranet  design,  development and maintenance  services.
Furthermore,  in order to promote the USWeb  brand in  response  to  competitive
pressures, the Company may find it necessary to increase its marketing budget or
otherwise  increase its financial  commitment to creating and maintaining  brand
loyalty among  customers.  If USWeb fails to promote and maintain its brand,  or
incurs  excessive  expenses in an attempt to promote and maintain its brand, the
Company's  business,  results of  operations  and  financial  condition  will be
materially adversely affected.

         Risks Associated with  Acquisitions.  As part of its business strategy,
the Company  expects to make  acquisitions  of, or significant  investments  in,
businesses  that currently  offer  complementary  web site and network  solution
related  services,  products and technologies.  Any such future  acquisitions or
investments   would  be  accompanied  by  the  risks  commonly   encountered  in
acquisitions  of  businesses.  Such  risks  include,  among  other  things,  the
difficulty  of  assimilating  the  operations  and  personnel  of  the  acquired
businesses,  the potential  disruption of the Company's  ongoing  business,  the
inability of management to maximize the financial and strategic  position of the
Company through the successful  incorporation of acquired personnel and clients,
the maintenance of uniform standards,  controls, procedures and policies and the
impairment  of  relationships  with  employees  and  clients  as a result of any
integration  of new  management  personnel.  The  Company  expects  that  future
acquisitions,  if any, could provide for consideration to be paid in cash, stock
or a combination of cash and stock.  There can be no assurance that any of these
acquisitions  will be  consummated.  If an entity is acquired by the Company and
such entity is not efficiently or completely  integrated with the Company,  then
the Company's  business,  financial  condition  and  operating  results could be
materially adversely affected.


                                       -9-

<PAGE>

RISKS RELATED TO DEVELOPING AND PUBLISHING INTERACTIVE MULTIMEDIA PRODUCTS

         Rapid Technological Change;  Competing Computer Platforms;  Emphasis on
CD-ROM.  The market for  recreational  and  entertainment  multimedia  titles is
subject to frequent  and rapid  changes in  technology  resulting in short title
life cycles and rapid price declines.  The Company's  success is dependent upon,
among  other  things,  the  ability  of the  Company  to  achieve  and  maintain
technological   expertise  and  to  continue  to  introduce  quality  titles  by
anticipating  and  reacting  to new  technologies.  The titles  released  by the
Company in 1996 have been for CD-ROM.  Titles  currently  being developed by the
Company are for the CD-ROM, the Internet or commercial on-line platforms,  which
the Company believes are currently the dominant platforms in the industry. There
can be no  assurance,  however,  that such  platforms  will  continue  to be the
dominant industry platforms or that the Company will successfully  integrate its
products into the Internet or commercial  on-line  platforms.  While the Company
anticipates   developing   titles  for  other   platforms  that  achieve  market
acceptance, because the development of titles for a new platform, as well as the
migration  of a title  from one  platform  to  another,  is time  consuming  and
expensive,  a leveling  off or decline in CD-ROM,  the  Internet  or  commercial
on-line  services or any subsequent  change in the dominant  industry  platforms
could have a material  adverse effect on the Company.  In addition,  uncertainty
over which  platform  will become  dominant may impede  product  sales,  and the
emergence of a dominant  platform other than CD-ROM,  the Internet or commercial
on-line  services  could  severely  reduce sales of the  Company's  titles.  The
Company's  success in  marketing  its titles  will  depend  upon its  ability to
anticipate and respond to trends in the emergence of these platforms.

         Dependence on New Titles;  Short Title Life Cycles;  Market Acceptance.
The nature of the  interactive  multimedia  publishing  industry  is such that a
significant  number of titles will be unprofitable and that the revenues derived
from the successful  titles will be used to cover the costs of the  unprofitable
titles.  The Company's success depends on the timely  introduction of successful
new titles  and  sequels or  updates  to  existing  titles to replace  declining
revenues from older titles. The life cycle of a successful title is difficult to
predict  and may be as short as three  months.  In  addition,  each  title is an
individual  artistic work and its commercial success is primarily  determined by
consumer taste,  which is unpredictable  and constantly  changing.  Few consumer
software products achieve sustained market acceptance. The Company believes that
a title achieves market acceptance if it is widely purchased by consumers. There
can be no assurance  that any of the  Company's  new titles will achieve  market
acceptance or that, if accepted,  such acceptance will be sustained for a period
long enough to recoup  costs or realize  profits.  If market  acceptance  is not
sustained,  the Company may be required to write-down  unsold  excess  inventory
and/or accept substantial product returns to maintain its access to distribution
channels  and  accordingly,   the  Company's  results  of  operations  could  be
materially adversely affected.

         Marketing and Distribution  Arrangements;  Competition for Shelf Space.
The Company  generally sells its titles to distributors who then distribute such
titles to retailers or sell its titles directly to retailers. These distributors
typically  can return the  Company's  product at any time for credit  without an
offsetting order.  Accordingly,  the Company may experience  substantial product
returns  which  could  have a material  adverse  affect on its  revenues.  Since
retailers  typically  have a  limited  amount  of shelf  space  and  promotional
resources and there is intense  competition among multimedia software producers,
there can be no assurance  that the Company will gain  adequate  levels of shelf
space and  promotional  support for its titles to generate sales volume.  Due to
increased  competition for limited shelf space,  retailers and  distributors are
increasingly  in a  better  position  to  negotiate  favorable  terms  of  sale,
including  price  discounts  and  product  return  policies.  The Company may be
competing in distribution  against much larger organizations with more influence
over  retailers  and  distributors   and  greater   marketing  and  distribution
resources.  In  addition,  other types of retail  outlets and methods of product
distribution,  such as Internet or on-line  services,  will become  increasingly
important and accordingly, the success of the Company will depend on its ability
to gain access to these channels of distribution. There can be no assurance that
the Company will be successful in the development of its  distribution  networks
or gain such access,  and if the Company is unsuccessful in such  development it
will have a material adverse effect on the results of operations of the Company.

         Software  Competition.  The home recreation and entertainment  software
industry is  intensely  competitive,  and market  acceptance  for the  Company's
titles may be  adversely  affected  by the  introduction  of  similar  titles by
competitors.  The Company  competes against a large number of other companies of
varying  sizes  and  resources.  Many of these  competitors  have  substantially
greater financial, technical and marketing resources than the Company

                                      -10-

<PAGE>
and may be more  successful in securing  shelf space for their titles.  Existing
competitors  may continue to broaden their  product  lines and new  competitors,
including large computer or software manufacturers,  entertainment companies and
educational  publishers,  are  entering  or  increasing  their focus on the home
recreation and entertainment markets, resulting in increased competition for the
Company.  Increased  competition  may  result  in loss of  shelf  space  for the
Company's  titles at retail  stores,  loss of or difficulty  in  recruiting  key
employees and significant price competition, any of which could adversely affect
the Company's operating results.  The Company also faces intense competition for
a  finite  amount  of  discretionary   consumer  spending  for  other  forms  of
entertainment offered by film companies,  record companies,  video companies and
others.

         Seasonal  Business;  Quarterly  Fluctuations.  The home  recreation and
entertainment software business is highly seasonal.  Typically, net revenues are
highest during the last calendar quarter,  decline in the first calendar quarter
and are lowest in the second and third calendar quarters.  This seasonal pattern
is due primarily to the increased  demand for home recreation and  entertainment
software  products during the year-end holiday buying season.  Accordingly,  the
Company's  revenues  from this line of  business  will  reflect  these  seasonal
patterns.  In addition,  quarterly  fluctuations  in  operating  results will be
exacerbated  by  delays  in  new  product  introductions,  the  introduction  of
competitive  products,  the popularity of particular  multimedia platforms and a
variety of other factors relating to the  distribution  and development  process
for the products involved, including software malfunctions in title offerings. A
significant portion of the Company's operating expenses are relatively fixed and
certain expenditures are based on sales forecasts.  If net sales do not meet the
Company's  expectations in a given quarter,  the Company' s operating results or
financial condition could be adversely affected.

         Dependence  on Third  Party  Manufacturers.  The  Company's  titles are
manufactured  by  third-party  manufacturers  and therefore the Company does not
have direct control over the quality of manufacturing. Additionally, some of the
third party  manufacturers may publish competitive titles of their own, to which
preferential treatment may be given. Any of the foregoing would adversely affect
the  Company's  revenues from the sale of its titles.  Management  believes that
current   arrangements   for  the  manufacture  of  the  Company's   titles  are
satisfactory for the Company's anticipated requirements. Nevertheless, there can
be no assurance that in the future the third party manufacturing capacities will
be sufficient  to satisfy the  Company's  requirements,  that  interruptions  or
delays in manufacturing will not adversely affect the Company's  operations,  or
that  alternative  manufacturing  sources  will be  available  to the Company on
commercially  reasonable terms or at all. In particular,  the Company frequently
packages and sells titles in its Picture  Perfect Golf series  together  with an
infrared golf club, which is currently available from only one independent third
party manufacturer.  Occasionally,  the Company has postponed delivery of titles
in its Picture Perfect Golf series as a result of the  manufacturer's  inability
to timely  deliver  the  infrared  golf  club.  While the  Company is seeking to
establish  alternative  sources  which can  produce  the  infrared  golf club or
acquire the rights to manufacture  the infrared golf club currently  utilized in
the Picture  Perfect  Golf series,  there can be no assurance  that such efforts
will be successful.

         Availability and Restrictive Nature of Licenses.  The Company currently
licenses a wide  variety of  intellectual  property  from  others for use in its
titles.  There can be no assurance that the terms of these licenses will survive
the marketing  lives of the titles to which they relate or that the Company will
be able to renew such licenses on commercially  reasonable terms, if at all. The
Company expects to continue to incorporate the  intellectual  property of others
into the  titles  it  develops  in the  future.  As such it will  need to obtain
licenses to use such intellectual  property.  The Company will attempt to obtain
future  licenses  on  commercially  reasonable  terms and with terms of duration
which will survive the lives of the titles to which they relate.  However, there
can be no  assurance  that  the  Company  will  be able to  obtain  licenses  of
sufficient  duration on commercially  reasonable  terms or will be able to renew
existing  licenses on commercially  reasonable terms. The inability to obtain or
renew such  licenses,  as the case may be,  could have an adverse  effect on the
business of the Company.

         Software  Technology;  Lack of Patent Protection.  The Company's future
success will be heavily dependent upon its software technology;  and the Company
will rely on a combination  of contractual  rights,  trade secrets and copyright
laws to  establish  or protect its  technology  in the  countries  where it will
conduct  business.  The Company  currently  does not possess any patent or other
registered intellectual property rights with respect to its software technology,
other than copyrights  with respect to the overall  content of completed  titles
developed by the Company.

                                      -11-

<PAGE>

There can be no  assurance  that the steps  taken by the  Company to protect its
rights will be adequate to deter misappropriation,  especially since the Company
operates  in an  industry  in  which  revenues  are  adversely  affected  by the
unauthorized  reproduction of products for commercial sale, commonly referred to
as  "piracy."  Moreover,  although  the  Company  does  not  believe  that it is
infringing  on the  intellectual  property  rights  of  others,  there can be no
assurance that such infringement claims will not be asserted against the Company
in the  future  and if an  infringement  claim is  successful,  it could  have a
material adverse effect on the Company.  Copyright and other proprietary  rights
to  material  licensed  for use on CD-ROM and other  multimedia  platforms  is a
relatively new area of the law.  Although the Company is not a party to any such
claim,  there is the  possibility  of legal  challenges  in  respect of all such
rights.

RISKS RELATED TO THE CAPITALIZATION OF THE COMPANY

         Authorization  of  Preferred  Stock.  In  addition  to the  Convertible
Preferred  Stock,  the Company's  Board of Directors has the authority,  without
further  action by the  stockholders,  to issue  1,993,280  shares of  Preferred
Stock, in one or more series and to fix the rights, preferences,  privileges and
restrictions  thereof,  including  dividend rights,  conversion  rights,  voting
rights,  terms of redemption,  liquidation  preferences and the number of shares
constituting  any series or the designation of such series.  While no additional
class or series of preferred  stock can be senior to the  Convertible  Preferred
Stock,  the issuance of preferred stock in the future could adversely affect the
voting power of holders of the Company's  Common Stock and could have the effect
of  delaying,  deferring or  preventing a change in control of the Company.  The
Company has no present plan to issue any additional shares of preferred stock.

         No Dividends.  The Company has never paid cash  dividends on the Common
Stock. The Company intends to retain any future earnings to finance its growth.

         Outstanding  Options  and  Warrants.  There are  currently  outstanding
options and warrants to purchase  12,440,108 shares in the aggregate at exercise
prices ranging between $1.75 and $6.60. In addition,  the Convertible  Preferred
Stock may be converted  into 4,200,000  shares of Common Stock.  The exercise of
such options and warrants or the conversion of the  Convertible  Preferred Stock
will have a dilutive effect on the ownership interests of the Company's existing
stockholders.

         Possible  Volatility of Securities  Prices.  The market price of Common
Stock has in the past been, and may in the future  continue to be,  volatile.  A
variety of events, including quarter to quarter variations in operating results,
news  announcements  or the  introduction  of new products by the Company or its
competitors, as well as market conditions in the interactive multimedia industry
or changes in earnings  estimates  by  securities  analysts may cause the market
price of the Common Stock to  fluctuate  significantly.  In addition,  the stock
market in recent years has experienced significant price and volume fluctuations
which have particularly  affected the market prices of equity securities of many
companies that service the software industry and which often have been unrelated
to the operating  performance of such companies.  These market  fluctuations may
adversely affect the price of the Common Stock.

         Indefinite  Amount of Common  Stock  Issuable  upon the  Conversion  of
Preferred Stock. The holders of the Convertible  Preferred Stock have the right,
at the holder's  option,  at any time after April 30, 1997, or from time to time
to thereafter,  to convert each share of Convertible  Preferred  Stock into such
whole  number of shares of Common  Stock  equal to the  aggregate  stated  value
($1,250)  of the  Convertible  Preferred  Stock to be  converted  divided by the
lesser of (i) $2.00 or (ii) 50% of the average closing sale price for the Common
Stock for the last ten trading days in the fiscal  quarter of the Company  prior
to such  conversion.  Accordingly,  if the  price of the  Common  Stock is below
$2.00,  the number of shares that the Company will be required to issue upon the
conversion  of the  Convertible  Preferred  Stock will be  uncertain.  While the
Company  intends  to have  sufficient  authorized  capital  with  respect to the
conversion of the Convertible  Preferred  Stock,  there can be no assurance that
the Company will in fact have a sufficient  amount of authorized Common Stock to
cover all conversions of Convertible Preferred Stock.


                                      -12-

<PAGE>
         New  Proposed  Nasdaq  Regulations.  On November 6, 1996,  the Board of
Directors  of  The  Nasdaq  Stock  Market,  Inc.  approved  changes  to  further
strengthen both the quantitative  and qualitative  standards for issuers listing
on Nasdaq.  While the Company presently meets the proposed new standards,  there
can be no assurance that it will continue to be able to do so. If it should fail
to meet one or more of such  standards,  its  Common  Stock  would be subject to
deletion  from  Nasdaq.  If this should  occur,  trading,  if any, in the Common
Stock, would then continue to be conducted in the over-the-counter market on the
OTC Bulletin Board, an NASD-sponsored  inter-dealer quotation system, or in what
are commonly  referred to as "pink sheets." As a result, an investor may find it
more difficult to dispose of or to obtain  accurate  quotations as to the market
value of the Company's Common Stock.

         Forward   Looking   Statements.   This  Prospectus   contains   certain
forward-looking statements, which are intended to be covered by the safe harbors
created by the Private Securities  Litigation Reform Act of 1995.  Investors are
cautioned that all  forward-looking  statements  involve risks and  uncertainty,
including without limitation, the ability of the Company to provide a full range
of Internet and Intranet-based business solutions. Although the Company believes
that the assumptions,  including the demand for Web-related services, underlying
the  forward-looking  statements  contained  herein are  reasonable,  any of the
assumptions could be inaccurate,  and therefore,  there can be no assurance that
the  forward-looking  statements included in this press release will prove to be
accurate. In light of significant  uncertainties inherent in the forward-looking
statements  included  herein,  the inclusion of such  information  should not be
regarded  as a  representation  by the  Company  or any  other  person  that the
objectives and plans of the Company will be achieved.

                                      -13-

<PAGE>
                                 USE OF PROCEEDS

Exercise of Options,  January 1994  Warrants,  Common Stock  Purchase  Warrants,
Purchase Options, Purchase Option Warrants, 1996 Warrants and Secondary Options.

   
          The Company  could  receive up to  $20,485,872  in  proceeds  from the
exercise of the Common Stock Purchase Warrants.  The Company must use any of the
proceeds it receives from the exercise of the Common Stock Purchase Warrants for
the redemption of the Convertible Preferred Stock at a redemption price equal to
1.1 multiplied by the Stated Value ($1,250).  In addition,  assuming that all of
the Options, January 1994 Warrants,  Purchase Options, Purchase Option Warrants,
1996  Warrants  and  Secondary  Options are  exercised,  the net proceeds to the
Company  upon the  exercise of such  warrants  and options are  estimated  to be
approximately  $22,300,800.  The  balance  of any  proceeds  received  from  the
exercise of the Common Stock Purchase Warrants or any other proceeds received by
the Company in the Offering will be used for  expanding  the Company's  internet
services business and title publishing.
    

CONVERSION OF PREFERRED STOCK

         The Company will not receive any proceeds  from the  conversion  of the
Convertible Preferred Stock.

OFFERING BY SELLING SHAREHOLDERS

   
         The Company  will not receive any of the  proceeds  from the re-sale of
any of the Selling  Stockholder  Shares,  the  Secondary  Shares or the Employee
Shares.  However,  as  described  under "Use of Proceeds -- Exercise of Options,
January  1994  Warrants,  Common  Stock  Purchase  Warrants,  Purchase  Options,
Purchase Option Warrants, 1996 Warrants and Secondary Options," the Company will
receive  approximately  $22,300,800  in net  proceeds  if each  of the  Options,
January 1994 Warrants, Purchase Options, Purchase Option Warrants, 1996 Warrants
and Secondary Options are exercised.
    

                                      -14-

<PAGE>

                                    DILUTION

   
         As of November 30, 1996,  the  unaudited net tangible book value of the
Company was $930,100,  or approximately $.12 per share based on 7,679,441 shares
of Common Stock  outstanding.  Assuming the issuance of an additional  4,200,000
shares of Common Stock upon the conversion of the Convertible  Preferred  Stock,
the pro forma net tangible book value of the Company's  Common Stock at November
30, 1996 would have been  $8,802,200  or  approximately  $.74 per share based on
11,879,441 shares of Common Stock outstanding. Net tangible book value per share
represents the tangible assets of the Company less all  liabilities,  divided by
the number of shares outstanding. Dilution represents the difference between the
price per share of Common Stock paid by the holders of the Options, January 1994
Warrants,  Common Stock Purchase  Warrants,  Purchase  Options,  Purchase Option
Warrants,  1996 Warrants and Secondary Options exercising or converting,  as the
case may be, of all such securities  pursuant to this Offering and the pro forma
net  tangible  book value per share of Common Stock after this  Offering.  After
giving  effect to the sale of the shares of Common  Stock by the Company  hereby
(assuming  the exercise or  conversion,  as the case may be, of all the Options,
January  1994  Warrants,  Common  Stock  Purchase  Warrants,  Purchase  Options,
Purchase  Option  Warrants,  Convertible  Preferred  Stock,  1996  Warrants  and
Secondary  Options,  the  adjusted  net  tangible  book value of the  Company at
November  30,  1996,  would  have  been  $22,832,909  or $2.26 per  share.  This
represents  an immediate  increase in pro forma net tangible book value of $1.52
per share to existing  shareholders  and an  immediate  dilution of (i) $.09 per
share to holders of the January  1994  Warrants  exercising  their  January 1994
Warrants at an average  exercise price of $2.35;  (ii) $.12 per share to holders
of the  Options  exercising  their  Options at $2.38;  (iii)  $1.45 per share to
holders of the Secondary  Options  exercising their Secondary  Options at $3.71;
(iv) $1.74 per share to holders of the Common  Stock  Purchase  Warrants  or the
1996  Warrants  exercising  their  Common  Stock  Purchase  Warrants or the 1996
Warrants  at  $4.00;  (v)  $2.94 per share to  holders  of the  Purchase  Option
Warrants  exercising  their Purchase  Option Warrants at the equivalent of $5.20
per share;  (vi) $4.34 per share to holders of the Purchase  Options  exercising
their Purchase  Options at the equivalent of $6.60 per share (assuming no amount
of the exercise price is attributed to the purchase of the  underlying  Purchase
Option  Warrants).  The following table illustrates this dilution on a per share
basis:
    
<TABLE>
<CAPTION>


<S>                                                              <C>     <C>     <C>     <C>     <C>      <C>
Exercise Price of January 1994 Warrants, Options, Secondary
Options, 1996 Warrants and Common Stock Purchase
Warrants, Purchase Option Warrants and Purchase Options ........ $2.35   $2.38   $3.71   $4.00   $5.20    $6.60

Pro forma net tangible book value per share before offering(1).. $.74    $.74    $.74    $.74    $.74     $.74

Net tangible book value immediately after the exercise of the
January 1994 Warrants, Options,  Secondary Options, 1996
Warrants, Common Stock Purchase Warrants, Purchase
Option Warrants and Purchase Options(2)......................... $.82    $.87    $.91    $2.20   $2.22   $2.26

Adjusted pro forma net tangible book value after this Offering.. $2.26  $2.26   $2.26    $2.26   $2.26   $2.26

Dilution of pro forma net  tangible  book value to  purchasers
of Common  Stock underlying January 1994 Warrants,  Options,
Secondary  Options,  1996 Warrants, Common Stock Purchase
Warrants, Purchase Option Warrants and Purchase Options......... $.09    $.12    $1.45   $1.74   $2.94    $4.34
                                                                 =====   =====   =====   =====   =====    =====
</TABLE>

(1)      Reflects  the  receipt  of the  Net  Proceeds  from  the  1996  Private
         Placement and the conversion of 6,720 shares of  Convertible  Preferred
         Stock into 4,200,000 shares of Common Stock.

(2)      Assumes that all options and warrants  (excluding options granted under
         the 1994 Plan, the Directors  Plan and the Consultant  Plan) which have
         an exercise  price which is less than or equal to the exercise price of
         the warrant or option have been exercised.

                                      -15-

<PAGE>
                              SELLING SHAREHOLDERS

         The following table sets forth (i) the number of shares of Common Stock
owned by each Selling Shareholder at January 31, 1997; (ii) the number of shares
being  offered  for resale  hereby by each  Selling  Shareholder;  and (iii) the
number  and  percentage  of shares of  Common  Stock to be held by each  Selling
Shareholder after the completion of this Offering. Except as otherwise indicated
in the Footnotes to such table,  none of such Selling  Shareholders  has been an
officer, director or employee of the Company for the past three years.


                                      -16-

<PAGE>

<TABLE>
<CAPTION>

                                      Number of Shares of Common                                  Shares of Common Stock
                                  Stock Beneficially Owned Prior to     Shares to be Sold           Beneficially Owned
             Name                            Offering (1)                 in Offering                 After Offering
             ----                            ------------                    --------                ---------------

                                        Number          Percent                                  Number            Percent
                                        ------          -------                                  ------            -------

<S>                                 <C>                  <C>                   <C>                 <C>                <C>
Harvey B. Adams                       50,000 (2)           *                     100,000           0                  0

ALSA, Inc.                             25,000(2)           *                      50,000           0                  0

Wissam Amoudi                          25,000(2)           *                      50,000           0                  0

Barry Rubenstein                    4,418,329(3)         41.2%                 7,268,329           0                  0
68 Wheatley Road
Brookville, NY 11545

Applewood                           1,507,304(4)          16.9                 2,757,304           0                  0
Associates, L.P.
68 Wheatley Road
Brookville, NY 11545

Jan Arnett                            50,000 (2)           *                     100,000           0                  0

B&B Trading Corp.                      25,000(2)           *                      50,000           0                  0
Retirement Plan
Pension Plan

Neil Bellet                            25,000(2)           *                      50,000           0                  0

Robert Bender                          25,000(2)           *                      50,000           0                  0

Mordecai Bluth                         25,000(2)           *                      50,000           0                  0
SEP IRA

Martin G. Bourbonnais                  25,000(2)           *                      50,000           0                  0

Craig Effron                           12,500(2)           *                      25,000           0                  0

Steven Etra                            50,000(2)           *                     100,000           0                  0

David H. Fink                          12,500(2)           *                      25,000           0                  0

Lloyd Goldman                          25,000(2)           *                      50,000           0                  0

Ernest Gottdiener                      25,000(2)           *                      50,000           0                  0

Donald J. Groetch                      12,500(2)           *                      25,000           0                  0
IRA Account

Frank Joy and                          50,000(2)           *                     100,000           0                  0
Charlotte Joy
JTWROS

Daniel A. Kaplan                       12,500(2)           *                      25,000           0                  0

Richard C. Kaufman &                   12,500(2)           *                      25,000           0                  0
Elaine J. Lenart
JTWROS

Norman Kurtz                           25,000(2)           *                      50,000           0                  0

R. Bruce LeBlanc                       25,000(2)           *                      50,000           0                  0

Paul D. Levitt &                       12,500(2)           *                      25,000           0                  0
Leslie S. Levitt
Revocable Trust

Herbert Melslich                       12,500(2)           *                      25,000           0                  0

William J. Rouhana, Jr.                25,000(2)           *                      50,000           0                  0

</TABLE>

                                      -17-

<PAGE>
<TABLE>
<CAPTION>

                                      Number of Shares of Common                                  Shares of Common Stock
                                  Stock Beneficially Owned Prior to     Shares to be Sold           Beneficially Owned
             Name                            Offering (1)                 in Offering                 After Offering
             ----                            ------------                    --------                ---------------

                                        Number          Percent                                  Number            Percent
                                        ------          -------                                  ------            -------

<S>                                 <C>                  <C>                   <C>                 <C>                <C>
Walter Scheuer                        150,000(2)           *                     300,000           0                  0
1993 Charitable Trust

Seneca Ventures                     1,074,503(5)          13.0                 1,424,503           0                  0
68 Wheatley Road
Brookville, NY 11545

Mark Shnitkin                          25,000(2)           *                      50,000           0                  0

Carl E. Siegel                          12,500(2)          *                      25,000           0                  0

TelCom Partners, L.P.                   25,000(2)          *                      50,000           0                  0

Frank K. Turner                         12,500(2)          *                      25,000           0                  0

 21st Century Communications         1,836,522(6)         20.6                 3,036,522           0                  0
- -Foreign Partners, L.P.
c/o Fiduciary Trust (Cayman
Limited)
p.o. Box 1062, One Capital Place
Georgetown, Grand Cayman,
British West Indies

21st Century                         1,836,522(6)         20.6                 1,836,522           0                  0
Communications
Partners, L.P.
767 Fifth Avenue-45th Fl.
New York, NY 10153

21st Century                         1,836,522(6)         20.6                 1,836,522           0                  0
Communications T-E
Partners, L.P.
767 Fifth Avenue
New York, NY 10153

Richard Warren                          12,500 (2)         *                      25,000           0                  0

Charles Warshaw                         25,000(2)          *                      50,000           0                  0

Aaron Wolfson                           37,500 (2)         *                      75,000           0                  0

Abraham Wolfson                         25,000(2)          *                      50,000           0                  0

Wolfson Equities                       412,500(2)         5.1%                   825,000           0                  0
35 Carey Street
Lakewood, New Jersey 08701

Morris Wolfson Family                   25,000(2)          *                      50,000           0                  0
Partnership

Woodland Partners                    1,074,503(7)         13.0                 1,424,503           0                  0
68 Wheatley Road
Brookville, NY 11545

Woodland Venture Fund                1,074,503(8)         13.0                 1,424,503           0                  0
68 Wheatley Road
Brookville, NY 11545

Eli Oxenhorn                          25,500 (9)           *                      25,500           0                  0

Vanwood 72nd Street                    50,000(10)          *                      50,000           0                  0
Associates

Gerald Josephson                       41,250(11)          *                      41,250           0                  0

</TABLE>

                                      -18-

<PAGE>
<TABLE>
<CAPTION>

                                      Number of Shares of Common                                  Shares of Common Stock
                                  Stock Beneficially Owned Prior to     Shares to be Sold           Beneficially Owned
             Name                            Offering (1)                 in Offering                 After Offering
             ----                            ------------                    --------                ---------------

                                        Number          Percent                                  Number            Percent
                                        ------          -------                                  ------            -------

<S>                                    <C>                <C>                  <C>                 <C>                <C>
Nicholas Cowan                         10,000(10)          *                      10,000           0                  0

Sherry Daly                            10,000(10)          *                      10,000           0                  0

 Alan Douglas                           7,500(10)          *                       7,500           0                  0

Richard Flanzer                        12,500(10)          *                      12,500           0                  0

 Invision                               2,500(10)          *                       2,500           0                  0

Harrison Weaver                        35,000(12)          *                      20,000           0                  0

The Continuum Group, Inc.              50,000(10)          *                      50,000           0                  0

Ted Weis                                5,000(10)          *                       5,000           0                  0

 Anthony Kee                            1,750(10)          *                       1,750           0                  0

Jennifer Negri                           1,750(10)         *                       1,750           0                  0

 Curtis Urbina                          1,500(10)          *                       1,500           0                  0

John Levy                                1,000(10)         *                       1,000           0                  0

Robert Audrey                             500(10)          *                         500           0                  0

Alex Miller                               500(10)          *                         500           0                  0

Mark I. Silverman                      42,500(13)          *                      42,500           0                  0

Eng Chye Low                            5,100(13)          *                       5,100           0                  0

Alfred Burg                            4,250 (13)          *                       4,250           0                  0

David Thalheim                         34,000(13)          *                      34,000           0                  0

Cliff Lane                              5,100(13)          *                       5,100           0                  0

Jonathan Robinson                       8,500(13)          *                       8,500           0                  0

Michael Weisman                         7,500(13)          *                      7,500            0                  0

Douglas Schenerdorf                     5,100(13)          *                       5,100           0                  0

Susan Burman                            5,100(13)          *                      5,100            0                  0

Gary Glatter                            5,100(13)          *                       5,100           0                  0

Stanley Blum                           16,150(13)          *                      16,150           0                  0

Irwin Lieber                        3,385,826(14)         33.3                 3,885,826           0                  0

Irwin Schecter                         17,000(13)          *                      17,000           0                  0

Ronald Birnbaum                         8,500(13)          *                       8,500           0                  0

Seymour Cohen                           8,500(13)          *                       8,500           0                  0

Alan Silverman                         17,000(13)          *                      17,000           0                  0

Jay Thalheim                            4,250(13)          *                       4,250           0                  0

Steven Levine                           5,100(13)          *                       5,100           0                  0

Lombard                                17,000(13)          *                      17,000           0                  0

Michael Sofia                          17,000(13)          *                      17,000           0                  0

</TABLE>

                                      -19-

<PAGE>
<TABLE>
<CAPTION>

                                      Number of Shares of Common                                  Shares of Common Stock
                                  Stock Beneficially Owned Prior to     Shares to be Sold           Beneficially Owned
             Name                            Offering (1)                 in Offering                 After Offering
             ----                            ------------                    --------                ---------------

                                        Number          Percent                                  Number            Percent
                                        ------          -------                                  ------            -------

<S>                                  <C>                  <C>                    <C>               <C>                <C>

Northern Union Club                   42,500 (13)          *                      42,500           0                  0

David Nussbaum                         93,900(15)         1.2                     93,900           0                  0

Roger Gladstone                        93,900(15)         1.2                     93,900           0                  0

Robert Gladstone                       93,900(15)         1.2                     93,900           0                  0

GKN Securities Corp.                  236,600(16)         3.0                    236,600           0                  0

Richard Buonocore                     10,200 (17)          *                      10,200           0                  0

Brian Coventry                          2,550(18)          *                       2,550           0                  0

Andrew Lazarus                         7,425 (19)          *                       7,425           0                  0

Deborah Schondorf-Novick                13,500(20)         *                      13,500           0                  0

Neil Betoff                                525(21)         *                         525           0                  0

Wien Securities Corp.                  100,000(22)        1.3                    100,000           0                  0

 Harry Datys                             3,000(22)         *                       3,000           0                  0

Andrea Goldman                           1,500(22)         *                       1,500           0                  0

Lester Rosenkrantz                       3,000(22)         *                       3,000           0                  0

Gordon Freeman                         100,000(23)        1.3                    100,000           0                  0

 Dalewood Associates, L.P.             100,000(23)        1.3                    100,000           0                  0

James McNeil                            75,000(23)         *                      75,000           0                  0

The Marilyn and Barry                1,074,503(24)        13.0                 1,424,503           0                  0
Rubenstein Family Foundation
c/o Barry Rubenstein
68 Wheatley Road
Brookville, NY 11545

Michael Alford                        163,275(25)         2.1                    163,275           0                  0

Ernest Kelly                           46,977(25)          *                      46,977           0                  0

Randal Hajar                          253,561(25)         3.3                    253,561           0                  0

Gary Skiba                            310,867(25)         4.0                    310,867           0                  0

 Revwood Merchant Partners            175,000(26)         2.2                    175,000           0                  0

</TABLE>


(1)      Beneficial  ownership is determined in accordance with the rules of the
         Commission  and  generally  includes  voting or  investment  power with
         respect to securities.  Shares of the Company's Common Stock subject to
         options, warrants and convertible preferred stock currently exercisable
         or convertible,  or exercisable or convertible  within sixty (60) days,
         are deemed  outstanding  for  computing  the  percentage  of the person
         holding  such options or warrants  but are not deemed  outstanding  for
         computing the percentage of any other person.

(2)      Consists of presently  issuable 1996 Warrant  Shares  issuable upon the
         exercise  of the 1996  Warrants.  Does not  include  a like  number  of
         Conversion Shares underlying  Convertible  Preferred Stock which may be
         converted  into Common  Stock at the holder's  option at anytime  after
         April 30, 1998. All of such  Conversion  Shares and 1996 Warrant Shares
         are being offered for resale pursuant to this Prospectus.

                                      -20-

<PAGE>

(3)      Based on  Amendment  Number 3 to a Schedule  13D filed on February  11,
         1997 by Barry  Rubenstein,  Woodland  Venture Fund  ("Woodland  Fund"),
         Seneca Ventures ("Seneca"), Woodland Services Corp. ("Woodland Corp."),
         21st Century  Communications  Partners,  L.P. ("21st  Partners"),  21st
         Century  Communications  T-E Partners,  L.P. ("21st T-E"), 21st Century
         Communications  Foreign  Partners,  L.P. ("21st  Foreign"),  Michael J.
         Marocco, Barry Lewis, John Kornreich,  Harvey Sandler,  Andrew Sandler,
         Barry Fingerhut, Irwin Lieber, Woodland Partners, Applewood Associates,
         L.P. ("Applewood"), Applewood Capital Corp. ("Applewood Capital"), Seth
         Lieber,  Jonathan  Lieber,  Marilyn  Rubenstein,  The Marilyn and Barry
         Rubenstein Family Foundation (the  "Foundation"),  and Brian Rubenstein
         (the  "February  1997  13D"),  Barry  Rubenstein  has  sole  beneficial
         ownership of 332,500 shares of Common Stock  (including  185,000 Option
         Shares).  Mr.  Rubenstein  may  also  be  deemed  to  share  beneficial
         ownership of 4,085,829 shares of Common Stock by virtue of being: (i) a
         stockholder,   officer  and  director  of  InfoMedia  Associates,  Ltd.
         ("InfoMedia") which is a general partner of 21st Partners, 21st T-E and
         21st Foreign which  collectively  hold 1,836,522 shares of Common Stock
         (including  1,250,000  Common Stock Warrant  Shares and/or 1996 Warrant
         Shares); (ii) a trustee of the Foundation which holds 123,237 shares of
         Common Stock (including 20,000 Common Stock Warrant Shares);  and (iii)
         a general partner of each of Applewood,  Seneca,  the Woodland Fund and
         Woodland Partners which hold an aggregate of 2,126,070 shares of Common
         Stock  (including  1,580,000  Common Stock  Warrant  Shares and/or 1996
         Warrant  Shares).  Mr.  Rubenstein  will  also  sell  in  the  Offering
         2,850,000  Conversion Shares which he shares beneficial  ownership with
         the  above  listed  entities.   Mr.  Rubenstein   disclaims  beneficial
         ownership  of all the above  securities,  except  to the  extent of his
         equity interest therein.

(4)      Consists of 1,250,000 1996 Warrant Shares and 257,304 Secondary Shares.
         Does not  include  1,250,000  Conversion  Shares.  All of such  Warrant
         Shares,  Conversion  Shares and Secondary  Shares are being offered for
         resale pursuant to this Prospectus.

(5)      Based on the February 1997 13D, Seneca has sole beneficial ownership of
         207,922  shares of Common  Stock  (including  100,000  shares of Common
         Stock underlying  presently  exercisable Common Stock Purchase Warrants
         or 1996  Warrants).  Seneca  may also be  deemed  to  share  beneficial
         ownership of 866,581 shares of Common Stock  (including  250,000 shares
         of Common Stock underlying presently  exercisable Common Stock Warrants
         or 1996  Warrants)  with the Woodland Fund,  Woodland  Corp.,  Woodland
         Partners, and the Foundation.  In addition,  Seneca has sole beneficial
         ownership of 100,000 Conversion Shares and shares beneficial  ownership
         of 250,000  Conversion  Shares with the above listed  entities,  all of
         which  will be  offered  for  sale in the  Offering.  Seneca  disclaims
         beneficial  ownership of these securities,  except to the extent of its
         equity interest therein.

(6)      Based on the February  1997  Schedule 13D (i) 21st Foreign holds 48,896
         shares of Common Stock  (including  15,974 Secondary  Shares),  114,000
         1996 Warrant Shares and 114,000 Conversion  Shares;  (ii) 21st Partners
         holds  398,490  shares of Common  Stock  (including  118,655  Secondary
         Shares), 847,500 Warrant Shares and 847,500 Conversion Shares and (iii)
         21st T-E  holds  139,136  shares  of  Common  Stock  (including  40,371
         Secondary  Shares),  228,500  Warrant  Shares  and  228,500  Conversion
         Shares.  Beneficial  ownership  as of  February  1, 1997  excludes  the
         Conversion  Shares.  All of the Secondary  Shares,  Warrant  Shares and
         Conversion  Shares  are  being  offered  for  resale  pursuant  to this
         Prospectus.  While the above table  aggregates stock ownership for each
         of 21st Foreign, 21st Partners and 21st T-E, (i) 21st Foreign disclaims
         beneficial  ownership of all Shares held by 21st Partners and 21st T-E,
         (ii) 21st Partners disclaims beneficial ownership of all Shares held by
         21st  Foreign  and 21st T-E and  (iii)  21st T-E  disclaims  beneficial
         ownership of all Shares held by 21st Foreign and 21st Partners.

(7)      Based on the February 1997 13D,  Woodland  Partners has sole beneficial
         ownership  of 100,000  shares of Common Stock  (including  100,000 1996
         Warrant  Shares).  Woodland  Partners  may  also  be  deemed  to  share
         beneficial  ownership  of  974,503  shares of Common  Stock  (including
         250,000 shares of Common Stock underlying presently  exercisable Common
         Stock  Purchase  Warrants or 1996  Warrants)  with the  Woodland  Fund,
         Seneca,  Woodland  Corp.,  and the  Foundation.  In addition,  Woodland
         Partners has sole beneficial ownership of 100,000 Conversion Shares and
         shares beneficial ownership of 250,000 Conversion Shares with the above
         listed entities, all of which will be offered for sale in the Offering.
         Woodland Partners disclaims  beneficial  ownership of these securities,
         except to the extent of its equity interest therein.

(8)      Based on the February 1997 13D, the Woodland  Fund has sole  beneficial
         ownership  of 310,844  shares of Common Stock  (including  150,000 1996
         Warrant  Shares).  The  Woodland  Fund  may  also be  deemed  to  share
         beneficial  ownership  of  763,659  shares of Common  Stock  (including
         200,000  Common Stock  Warrant  Shares) with  Seneca,  Woodland  Corp.,
         Woodland  Partners,  and the  Foundation.  The  Woodland  Fund has sole
         beneficial ownership of 150,000 Conversion Shares and shares beneficial
         ownership of 200,000 shares of Conversion  Shares with the above listed
         entities,  all of which will be offered for sale in the  Offering.  The
         Woodland  Fund  disclaims  beneficial  ownership  of these  securities,
         except to the extent of its equity interest therein.

(9)      Consists of January 1994 Warrant  Shares.  Does not include Shares held
         by Revwood  Merchant  Partners.  Mr.  Oxenhorn  is a partner of Revwood
         Merchant Partners.

(10)     Consists of presenting exercisable Option Shares.

(11)     Consists of 20,000 Option Shares and 21,250 1994 Warrant Shares.

(12)     Mr.  Weaver has been a Director of the  Company  since  December  1993.
         Consists  of 20,000  Option  Shares and 15,000  shares of Common  Stock
         issuable  upon  exercise  of  presently   exercisable  options  granted
         pursuant to the Directors  Plan.  Excludes 50,000 Option Shares held by
         The Continuum Group, Inc., an entity in which Mr. Weaver is a Director,
         which options Mr. Weaver disclaims beneficial ownership.


                                      -21-

<PAGE>


(13)     Consists of 1994 Warrant Shares.

(14)     Based on the  February  1997  13D,  Irwin  Lieber  has sole  beneficial
         ownership of 42,000 shares of Common Stock (including  37,000 shares of
         Common Stock  underlying  presently  exercisable  Common Stock Purchase
         Warrants or January 1994  Warrants).  By virtue of being a stockholder,
         officer and director of InfoMedia  and a general  partner of Applewood,
         Irwin Lieber may be deemed to share  beneficial  ownership of 3,343,826
         shares of Common  Stock  (including  2,500,000  shares of Common  Stock
         underlying presently exercisable Common stock Purchase Warrants or 1996
         Warrants).  In addition,  Mr.  Lieber  shares  beneficial  ownership of
         2,500,000  Conversion  Shares with the above  listed  entities,  all of
         which will be offered for sale in the Offering.  Mr.  Lieber  disclaims
         beneficial  ownership of these securities,  except to the extent of his
         equity ownership therein.

(15)     Consists  of (i)  27,000  presently  issuable  Purchase  Option  Shares
         underlying  Purchase Options;  (ii) 27,000 presently  issuable Purchase
         Option  Warrant  Shares  underlying  Purchase  Option  Warrants,  which
         presently  issuable Purchase Option Warrants underlie Purchase Options;
         and (iii) 39,900 presently  issuable  Secondary  Offering Option Shares
         underlying   Secondary  Option.  The  Purchase  Options  are  presently
         exercisable  until  October  20,  1997  and  the  Secondary  Option  is
         presently  exercisable  until  May 21,  2001  and the  Purchase  Option
         Warrants,  upon grant, would be presently exercisable until October 20,
         1997. All of such Offering Shares are being offered for resale pursuant
         to this  Prospectus.  Excludes Shares held by GKN Securities  Corp. Mr.
         Nussbaum  and  Messrs.  Gladstone  are  Directors  and  Officers of GKN
         Securities  Corp.  and they each disclaim  beneficial  ownership of all
         Shares held by GKN Securities Corp.

(16)     Consists  of (i)  55,500  presently  issuable  Purchase  Option  Shares
         underlying Purchase Options; (ii) 55,500 presently exercisable Purchase
         Option  Warrant  Shares  underlying  Purchase  Option  Warrants,  which
         presently  issuable Purchase Option Warrants underlie Purchase Options;
         (iii)  75,600  presently  issuable  Secondary  Offering  Option  Shares
         underlying  Secondary Options and (iv) 50,000 Secondary Shares.  All of
         such Shares are being offered for resale pursuant to this Prospectus.

(17)     Consists  of  (i)  3,000  presently  issuable  Purchase  Option  Shares
         underlying Purchase Options;  (ii) 3,000 presently exercisable Purchase
         Option Warrant Shares  underlying  Purchase  Option  Warrants and 4,200
         Secondary  Offering Option Shares. All of such Shares are being offered
         for resale pursuant to this Prospectus.

(18)     Consists  of  (i)  750  presently   issuable   Purchase  Option  Shares
         underlying  Purchase  Options;  and  (ii)  750  presently   exercisable
         Purchase Option Warrant Shares underlying  Purchase Option Warrants and
         (iii) 1,050 Secondary  Offering  Option Shares.  All of such Shares are
         being offered for resale pursuant to this Prospectus.

(19)     Consists  of  (i)  1,875  presently  issuable  Purchase  Option  Shares
         underlying Purchase Options,  (ii) 1,875 Purchase Option Warrant Shares
         underlying  Purchase Option Warrants and (iii) 3,675 Secondary Offering
         Option Shares. All of such Shares are being offered for resale pursuant
         to this Prospectus.

(20)     Consists  of  (1)  4,125  presently  issuable  Purchase  Option  Shares
         underlying Purchase Options;  (ii) 4,125 presently exercisable Purchase
         Option Warrant Shares  underlying  Purchase Option Warrants;  and (iii)
         5,250 Secondary  Offering  Option Shares.  All of such Shares are being
         offered for resale pursuant to this Prospectus.

(21)     Consists of 525  Secondary  Offering  Option  Shares,  all of which are
         being offered for resale pursuant to this Prospectus.

(22)     Consists of a like number of Purchase Option Shares and Purchase Option
         Warrant  Shares.  All of such  Shares  are  being  offered  for  resale
         pursuant to this Prospectus.

(23)     Consists of Secondary  Shares all of which are being offered for resale
         pursuant to this Prospectus.

(24)     Based on the February  1997 13D,  the  Foundation  has sole  beneficial
         ownership of 123,237 shares of Common Stock (including 20,000 shares of
         Common Stock  underlying  presently  exercisable  Common Stock Purchase
         Warrants or 1996 Warrants).  In addition,  the Foundation may be deemed
         to share  beneficial  ownership  of  951,266  shares  of  Common  Stock
         (including   350,000  shares  of  Common  Stock  underlying   presently
         exercisable Common Stock Purchase Warrants or 1996 Warrants, Conversion
         Shares and Preferred Shares with Mr. and Ms.  Rubenstein,  the Woodland
         Fund, Seneca,  Woodland Corp. and Woodland  Partners,  all of which are
         being for resale in the Offering.  The Foundation  disclaims beneficial
         ownership  of these  securities,  except to the  extent  of its  equity
         interest therein.

(25)     Consists of Employee Shares.

(26)     Consists of 100,000 Option Shares and 75,000 Secondary Shares.

                                      -22-

<PAGE>

                            DESCRIPTION OF SECURITIES

         The Company is currently  authorized to issue 30,000,000  shares of the
Company's  Common  Stock,  par value $.01 per  share,  and  2,000,000  shares of
preferred  stock,  par value $.01 per  share.  The  Company  has  submitted  for
stockholder approval a proposal which would increase the authorized Common Stock
of the Company from  30,000,000  shares of Common Stock to 50,000,000  shares of
Common  Stock.  As of the  date  of this  Prospectus,  7,679,441  shares  of the
Company's  Common Stock are currently issued and outstanding and 6,720 shares of
Convertible Preferred Stock are issued and outstanding, and after the completion
of this Offering,  assuming the exercise or  conversion,  as the case may be, of
all of the Options,  January 1994  Warrants,  Common  Stock  Purchase  Warrants,
Purchase Options,  Purchase Option Warrants,  Convertible  Preferred Stock, 1996
Warrants and Secondary Options, there will be 22,832,909 shares of the Company's
Common Stock issued and outstanding and no shares of Convertible Preferred Stock
issued and 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  shareholders.  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  voted  can elect all of the
directors  then being  elected at a meeting  at which a quorum is  present.  The
holders of Common  Stock are  entitled  to  receive  dividends  when,  as and if
declared by the Board of Directors 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 all assets remaining  available
for  distribution  to them after payment of liabilities  and after provision has
been made for the  Convertible  Preferred Stock and any other class of stock, if
any, having preference over the Common Stock. Holders of shares of Common Stock,
as such, have no redemption,  preemptive or other subscription rights, and there
are no conversion provisions applicable to the Common Stock.


CONVERTIBLE PREFERRED STOCK

         Stated  Value.  Each share of Preferred  Stock will have a stated value
(the "Stated Value") equal to $1,250.

         Liquidation Preferences. Upon a liquidation of the Company (including a
sale by the  Company  of all or  substantially  all of its assets or a merger or
consolidation  of the Company with another  Company where the Company is not the
surviving  entity),  the assets of the Company available for distribution to the
stockholders of the Company, whether from capital, surplus or earnings, shall be
distributed  in  the  following  order  of  priority:  (i)  the  holders  of the
Convertible  Preferred  Stock  shall  be  entitled  to  receive,  prior  and  in
preference  to any  distribution  to the  holders of any Junior  Securities  (as
defined  below) of the  Company,  an amount  equal to the  product of the Stated
Value  multiplied  by 1.1 for each  share of  Convertible  Preferred  Stock then
outstanding  and  (ii)  the  remaining  assets  of  the  Company  available  for
distribution,  if any, to the  stockholders  of the Company shall be distributed
pro rata to the holders of issued and outstanding shares of Common Stock.

         Ranking.  The  Convertible  Preferred  Stock  will  rank  senior to all
classes and series of capital  stock of the Company now existing or  hereinafter
authorized,  issued or outstanding,  including,  without limitation,  the Common
Stock,  and any other  classes and series of capital stock of the Company now or
hereinafter   authorized,   issued   or   outstanding   (collectively,   "Junior
Securities").  The  Company  will not  issue any class or series of any class of
capital stock which ranks pari passu with the  Convertible  Preferred Stock with
respect to rights on liquidation, dissolution or winding up of the Company.

         Dividends.  The holders of the Convertible Preferred Stock shall not be
entitled to receive any  dividends,  cash or otherwise,  in connection  with the
Preferred Stock. No dividends shall be payable upon any Junior Securities unless
equivalent   dividends,   on  an  as-converted  basis,  are  declared  and  paid
concurrently on the Convertible  Preferred  Stock. No dividends shall be payable
on any other  classes of  preferred  stock  during such time as the  Convertible
Preferred Stock is outstanding.


                                      -23-

<PAGE>

         Conversion.  The holders of the Convertible  Preferred Stock shall have
the right,  at the holder's  option,  at any time after April 30, 1998,  or from
time to time  thereafter,  to convert each share of Convertible  Preferred Stock
into such whole number of shares of Common Stock equal to the  aggregate  Stated
Value of the Convertible  Preferred Stock to be converted  divided by the lesser
of (i) $2.00 or (ii) 50% of the average  closing sale price for the Common Stock
for the last ten trading days in the fiscal quarter of the Company prior to such
conversion  (the  "Conversion  Rate").  The Conversion  Rate of the  Convertible
Preferred  Stock (when  calculated  on the basis of dividing the Stated Value by
$2.00 only) will be subject to  adjustment  to protect  against  dilution in the
event  of  stock  dividends,   stock  splits,   combinations,   subdivision  and
reclassifications.

         Redemption.  (a) At any time and from time to time,  the Company  shall
have the  option  (unless  otherwise  prevented  by law) to redeem  all,  or any
portion of on a pro-rata basis, the Convertible  Preferred  Stock,  upon 30 days
prior  written  notice,  at a redemption  price equal to 1.1  multiplied  by the
Stated Value for each such share of the Convertible Preferred Stock; and (b) the
Company must redeem the  Convertible  Preferred  Stock at 1.1  multiplied by the
Stated Value, in the event the Company  receives  proceeds from (i) the exercise
of any of the Company's  outstanding Common Stock Purchase Warrants, or (ii) any
other equity financing,  provided,  however,  that only 50% of the proceeds from
such other financing will be used to redeem the Convertible  Preferred Stock. If
the proceeds  raised from the exercise of the Common Stock Purchase  Warrants or
such other equity  financing are not sufficient to redeem all of the Convertible
Preferred  Stock,  the  Convertible  Preferred Stock shall be redeemed with such
proceeds on a pro-rata basis.

         Voting.  The  holders  of the  Convertible  Preferred  Stock  shall  be
entitled to vote on all matters  submitted  to the  stockholders.  Each share of
Convertible  Preferred Stock shall have that number of votes equal to the number
of shares of Common  Stock  into which it is then  convertible  as of the record
date  of the  proposed  stockholder  action.  The  holders  of  the  Convertible
Preferred  Stock shall also vote as a separate  class on all  matters  which the
General Corporate Law of the State of Delaware specifically requires the holders
of such Convertible Preferred Stock to vote as a separate class.

OTHER PREFERRED STOCK

         The Company's authorized shares of preferred stock may be issued in one
or more series, and the Board of Directors is authorized, without further action
by the  stockholders,  to designate  the rights,  preferences,  limitations  and
restrictions  of and upon shares of each  series,  including  dividend,  voting,
redemption and conversion  rights. The Board of Directors also may designate par
value,  preferences in  liquidation  and the number of shares  constituting  any
series.  The Company  believes that the availability of preferred stock issuable
in series will provide  increased  flexibility for  structuring  possible future
financings and acquisitions, if any, and in meeting other corporate needs. It is
not possible to state the actual effect of the authorization and issuance of any
series of  preferred  stock upon the rights of holders of Common Stock until the
Board of Directors  determines the specific  terms,  rights and preferences of a
series of preferred  stock.  However,  such effects might  include,  among other
things,  restricting dividends on the Common Stock, diluting the voting power of
the Common Stock, or impairing liquidation rights of such shares without further
action by holders of the Common Stock. In addition, under various circumstances,
the issuance of preferred stock may have the effect of facilitating,  as well as
impeding or discouraging,  a merger, tender offer, proxy contest, the assumption
of  control  by a holder of a large  block of the  Company's  securities  or the
removal  of  incumbent  management.  Issuance  of  preferred  stock  could  also
adversely  effect  the market  price of the Common  Stock.  The  Company  has no
present plan to issue any shares of preferred stock.

1996 WARRANTS

         Each 1996 Warrant will  entitle the  registered  holder to purchase one
share of the Common  Stock at an exercise  price equal to $4.00 per share during
the five year period  commencing  December 12, 1996.  Notwithstanding  any other
provision  set  forth in the  1996  Warrant,  at any time and from  time to time
during  the period  that the  Warrant is  exercisable,  the  Company in its sole
discretion  upon  appropriate  notice to the  registered  holder  may reduce the
exercise  price of the 1996  Warrant or extend the period  during which the 1996
Warrant is exercisable.  No fractional  shares of Common Stock will be issued in
connection  with the exercise of the 1996 Warrants.  Upon exercise,  the Company
will pay the holder the value of any such fractional shares in cash, based

                                      -24-

<PAGE>
upon the market value of the Common Stock at such time. The 1996 Warrants may be
called for redemption by the Company at any time when the Registration Statement
(as defined  herein) is current and effective at a redemption  price of $.01 per
1996 Warrant upon not less than 30 days' prior  written  notice if the last sale
price of the  Common  Stock  has been at least  $10.00  per  share  (subject  to
adjustment in certain  circumstances)  on each of the five  consecutive  trading
days ending on the third day prior to the date on which notice is given.  Unless
extended by the Company at its discretion, the 1996 Warrants will expire at 5:00
p.m, Eastern Standard time, on the fifth anniversary date of the Closing. In the
event a holder of the 1996 Warrants fails to exercise his 1996 Warrants prior to
their  expiration,  such 1996 Warrants  will expire and the holder  thereof will
have no  further  rights  with  respect  to the 1996  Warrants.  A holder of the
Warrants will not have any rights, privileges or liabilities as a stockholder of
the Company prior to exercise of the 1996  Warrants.  The Company is required to
keep reserved a sufficient number of authorized shares of Common Stock to permit
the exercise of the 1996 Warrants.  The exercise price of the 1996 Warrants will
be  subject to  adjustment  to protect  against  dilution  in the event of stock
splits,  stock  dividends,   and  other  combinations  or  recapitalizations  or
distributions to the holders of Common Stock of debt or equity of the Company.

PURCHASE OPTIONS AND PURCHASE OPTION WARRANTS

         The Purchase  Options  entitle the holders  thereof to purchase a unit,
which unit  consists  of (i) one share of Common  Stock;  and (ii) one  Purchase
Option Warrant at an exercise price of $6.60 per Purchase  Option.  The Purchase
Option  Warrants  underlying  the  Purchase  Options are not  redeemable  by the
Company.  The Purchase Options contain  anti-dilution  provisions  providing for
adjustment  of the  exercise  price  upon  the  occurrence  of  certain  events,
including  the issuance of shares of Common Stock at a price per share less than
the exercise  price or the market price of the Common Stock,  or in the event of
any  recapitalization,  reclassification,  stock  dividend,  stock split,  stock
combination or similar  transaction.  The Purchase  Options grant to the holders
thereof certain piggyback and demand rights for periods of seven and five years,
respectively,  from October 20, 1994 with respect to the registration  under the
Securities Act of the securities  directly and indirectly issuable upon exercise
of the Purchase Options.

         During the two-year period  commencing  October 20, 1995, each Purchase
Option  Warrant  entitles  the  holder  thereof  to  purchase  one  share of the
Company's  Common  Stock at an exercise  price of $5.20 per share.  The Purchase
Option Warrants are not redeemable by the Company.  In the event a holder of the
Purchase Option Warrants fails to exercise the Purchase Option Warrants prior to
their  expiration,  the  Purchase  Option  Warrants  will  expire and the holder
thereof  will  have no  further  rights  with  respect  to the  Purchase  Option
Warrants.

SECONDARY OPTIONS

         The Secondary  Options entitle the holders  thereof to purchase,  at an
exercise  price of $3.71 per share,  an  aggregate  of 210,000  shares of Common
Stock through 5/21/2001. The rights granted by the Secondary Options,  including
the exercise  price and the number of shares to be received  upon  exercise may,
upon the  occurrence of certain  specified  events,  be adjusted.  The Secondary
Options grant to the holders thereof certain registration rights with respect to
the  registration  under the  Securities  Act of the Common  Stock  directly and
indirectly issuable upon exercise of the Secondary Options.

COMMON STOCK PURCHASE WARRANTS

         In connection  with the Company's  initial public offering and pursuant
to a Warrant  Agreement  between the Company and  Continental  Stock  Transfer &
Trust  Company as warrant  agent,  the Company  issued  3,100,000  Common  Stock
Purchase  Warrants,  including 800,000 Common Stock Purchase Warrants which were
issued in exchange for 800,000 bridge warrants.

         At the consummation of the Secondary  Offering in May 1996, the Company
issued  2,021,468  Common Stock  Warrants in exchange for warrants or promissory
notes issued in connection  with a January 1996 bridge  financing.  The terms of
such Common Stock Purchase Warrants are provided below.

                                      -25-

<PAGE>

         Until October 20, 1997, each Common Stock Purchase Warrant will entitle
the registered holder to purchase one share of Common Stock at an exercise price
of $4.00 per share. The Common Stock Purchase Warrants are not redeemable by the
Company.  No fractional shares of Common Stock will be issued in connection with
the exercise of the Common Stock Purchase Warrants.  Upon exercise,  the Company
will pay the holder the value of any such fractional  shares in cash, based upon
the market value of the Common Stock at such time.

         Unless  extended by the  Company at its  discretion,  the Common  Stock
Purchase  Warrants will expire at 5:00 p.m., New York time, on October 20, 1997.
In the event a holder of Common Stock  Purchase  Warrants  fails to exercise the
Common  Stock  Purchase  Warrants  prior to their  expiration,  the Common Stock
Purchase Warrants will expire and the holder thereof will have no further rights
with respect to the Common Stock Purchase Warrants.

         A holder of Common Stock  Purchase  Warrants  does not have any rights,
privileges or  liabilities  as a stockholder of the Company prior to exercise of
the Common Stock Purchase Warrants.  The Company is required to keep available a
sufficient number of authorized shares of Common Stock to permit exercise of the
Common Stock Purchase Warrants.

         The exercise price of the Common Stock Purchase Warrants and the number
of shares  issuable  upon  exercise  of the Common  Stock  Purchase  Warrants is
subject  to  adjustment  to  protect  against  dilution  in the  event  of stock
dividends, stock splits,  combinations,  subdivisions and reclassifications.  No
assurance can be given that the market price of the Common Stock will exceed the
exercise  price of the Common  Stock  Purchase  Warrants  at any time during the
exercise period.

JANUARY 1994 WARRANTS

         In January  1994, in connection  with the 1994 Private  Placement,  the
Company  issued January 1994 Warrants to purchase an aggregate of 340,000 shares
of  Common  Stock at an  exercise  price of $2.35  per  share,  all of which are
exercisable at any time prior to January 1999.

         To date,  the Company has not paid any  dividends on its Common  Stock.
The payments of dividends, if any, in the future is within the discretion of the
Board of  Directors  and will depend upon the  Company's  earnings,  its capital
requirements and financial  condition,  and other relevant factors.  The Company
does not intend to declare any dividends in the foreseeable  future, but instead
intends to retain all earnings, if any, for use in the Company's business.

                              PLAN OF DISTRIBUTION

   
         This  offering is  self-underwritten;  the Company has not  employed an
underwriter  for the resale of the  Selling  Shareholder  Shares by the  Selling
Shareholders  or the issuance of the Common Stock Warrant Shares or the Purchase
Option  Warrants  and the 1996  Warrants,  as the case may be, and will bear all
expenses of this Offering.
    

SECONDARY SHARES AND EMPLOYEE SHARES

         The Secondary  Shares and Employees  Shares may be reoffered and resold
for the account of the Selling  Shareholders  from time to time on NASDAQ or the
Boston Stock Exchange, or in negotiated transactions,  at fixed prices which may
be changed or at negotiated  prices.  The Selling  Shareholders  may effect such
transactions  by  selling  shares  to or  through  broker-dealers,  and all such
broker-dealers may receive  compensation in the form of discounts,  concessions,
or commissions from the Selling Shareholders and/or the purchasers of shares for
whom such broker-dealers may act as agent or to whom they sell as principal,  or
both (which compensation as to a particular  broker-dealer might be in excess of
customary commissions).

         Any  broker-dealer  acquiring shares from the Selling  Shareholders may
sell the shares either directly, in its normal market-making activities, through
or to other brokers on a principal or agency basis or to its customers. Any such
sales may be at prices  then  prevailing  in the  over-the-counter  market or at
prices related to such prevailing

                                      -26-

<PAGE>

market prices or at negotiated  prices to its customers or a combination of such
methods.  The Selling Shareholders and any broker-dealers that act in connection
with the sale of the Common Stock hereunder might be deemed to be "underwriters"
within the  meaning of Section  2(11) of the  Securities  Act;  any  commissions
received  by them and any profit on the resale of shares as  principal  might be
deemed to be underwriting  discounts and  commissions  under the Securities Act.
Any  such  commissions,  as well  as  other  expenses  incurred  by the  Selling
Shareholders  and  applicable   transfer  taxes,  are  payable  by  the  Selling
Shareholders.


   

EXERCISE OF OPTIONS,  JANUARY 1994 WARRANTS,  PURCHASE OPTIONS,  PURCHASE OPTION
WARRANTS,  1996  WARRANTS  AND  SECONDARY  OPTIONS  AND  RESALE  OF THE  SELLING
STOCKHOLDER SHARES BY THE HOLDERS THEREOF

         The Options, January 1994 Warrants,  Purchase Options,  Purchase Option
Warrants,   1996  Warrants  and  Secondary   Options  may  be  exercised,   when
exercisable,  at the  discretion of the holder  thereof,  by the delivery to the
Company at its principal executive offices at 110 West 40th Street,  Suite 2100,
New York, New York 10018. Options, January 1994 Warrants,  Common Stock Purchase
Warrants,   Purchase  Options,  Purchase  Option  Warrants,  1996  Warrants  and
Secondary  Options,  accompanied  by an election of exercise  and payment of the
exercise price for each share of Common Stock  purchased in accordance  with the
terms of such Options, January 1994 Warrants,  Purchase Options, Purchase Option
Warrants,  1996 Warrants and Secondary Options, as the case may be. Payment must
be made in the form of cash or check payable to the order of the Company.

         The resale of the Selling  Stockholder  Shares underlying such warrants
or  options  may be  made  in the  same  manner  as  described  under  "Plan  of
Distribution -- Secondary Shares and Employee Shares."

EXERCISE OF COMMON STOCK PURCHASE WARRANTS

         The Common Stock Purchase Warrants may be exercised,  at the discretion
of the holder  thereof,  by  delivery  of the Common  Stock  Purchase  Warrants,
accompanied  by an  election of exercise  and payment of the  exercise  price in
accordance with the terms of the Common Stock Purchase Warrants to the Company's
Warrant Agent, Continental Stock Transfer & Trust Company, 2 Broadway, New York,
New York 10004. Payment must be made in the manner directed by the Warrant Agent
 .
    

CONVERSION OF CONVERTIBLE PREFERRED STOCK.

         The Convertible Preferred Stock may be exercised, when convertible,  at
the  discretion  of the holder  thereof,  by the surrender to the Company at its
principal  executive offices at 110 West 40th Street,  Suite 2100, New York, New
York 10018 the Convertible  Preferred Stock share  certificate or  certificates,
duly  endorsed,  and shall give written  notice to the Company at its  principal
corporate  office,  of the election to convert the same and shall state  therein
the name or names in which the certificate or certificates  for shares of Common
Stock  are to be  issued.  Such  conversion  shall be  deemed  to have been made
immediately  prior to the close of business on the date of such surrender of the
shares of Convertible Preferred Stock to be converted, and the person or persons
entitled to receive the shares of Common  Stock  issuable  upon such  conversion
shall be treated for all purposes as the record holder or holders of such shares
of Common Stock as of such date.

                                  LEGAL MATTERS

         The  legality of the shares of Common Stock  reoffered  hereby has been
passed  upon for the Company and the  Selling  Shareholders  by Olshan  Grundman
Frome & Rosenzweig LLP, New York, New York.

                                     EXPERTS

         The  consolidated   financial  statements  of  Enteractive,   Inc.  and
subsidiaries  as of May 31,  1996,  and for  each of the  years  in the two year
period ended May 31, 1996; have been incorporated by reference herein and in the
registration  statement  in reliance  upon the report of KPMG Peat  Marwick LLP,
independent certified public

                                      -27-

<PAGE>
accountants,  incorporated by reference  herein,  and upon the authority of said
firm as experts in accounting and auditing.

                    INDEMNIFICATION OF OFFICERS AND DIRECTORS

         As permitted by the Delaware  General  Corporation  Law  ("DGCL"),  the
Company's  Certificate  of  Incorporation,   as  amended,  limits  the  personal
liability  of a director  or officer to the  Company  for  monetary  damages for
breach of fiduciary duty of care as a director.  Liability is not eliminated for
(i)  any  breach  of the  director's  duty  of  loyalty  to the  Company  or its
stockholders,  (ii)  acts  or  omissions  not in good  faith  or  which  involve
intentional  misconduct or a knowing violation of law, (iii) unlawful payment of
dividends or stock purchases or redemptions pursuant to Section 174 of the DGCL,
or (iv) any  transaction  from which the director  derived an improper  personal
benefit.

         The Company has also entered into indemnification  agreements with each
of its directors and executive officers. The indemnification  agreements provide
that the  directors and executive  officers will be  indemnified  to the fullest
extent  permitted by applicable law against all expenses  (including  attorneys'
fees),  judgments,  fines and  amounts  reasonably  paid or incurred by them for
settlement in any threatened,  pending or completed action,  suit or proceeding,
including any derivative  action,  on account of their services as a director or
officer  of the  Company  or of any  subsidiary  of the  Company or of any other
company or  enterprise  in which they are serving at the request of the Company.
No  indemnification  will be  provided  under  the  indemnification  agreements,
however, to any director or executive officer in certain limited  circumstances,
including on account of knowingly fraudulent,  deliberately dishonest or willful
misconduct.  To the  extent the  provisions  of the  indemnification  agreements
exceed the  indemnification  permitted by applicable law, such provisions may be
unenforceable  or may be  limited  to the  extent  they are  found by a court of
competent jurisdiction to be contrary to public policy.


                                      -28-

<PAGE>
No dealer, salesman or any other person is authorized to give any information or
to make any  representations  in connection  with this offering not contained in
this Prospectus and, if given or made, such information or representations  must
not be relied upon as having been  authorized  by the Company.  This  Prospectus
does not  constitute  an offer to sell or  solicitation  of any offer to buy any
security other than the Securities offered by this Prospectus or an offer by any
person in any jurisdiction where such an offer or solicitation is not authorized
or  is  unlawful.   The  delivery  of  this  Prospectus  shall  not,  under  any
circumstances,  create any implication that information  herein is correct as of
any time subsequent to its date.

                                TABLE OF CONTENTS

                                                              Page
                                                              ----


Incorporation of Certain Documents
  By Reference.........................................        3
Prospectus Summary.....................................        4
Risk Factors...........................................        7
Use of Proceeds........................................       14
Dilution...............................................       15
Selling Shareholders...................................       17
Description of Securities..............................       23
Plan of Distribution...................................       26
Legal Matters..........................................       27
Experts................................................       27
Indemnification of Officers and Directors..............       28


                        16,992,169 Shares of Common Stock
                               4,400,000 Warrants


                                ENTERACTIVE, INC.




                                   PROSPECTUS



                                 March __, 1997

<PAGE>
                                     PART II

                     INFORMATION NOT REQUIRED IN PROSPECTUS

ITEM 14.          Other Expenses of Issuance and Distribution.

         The following  table sets forth the estimated  costs and expenses to be
borne  by  the  Company  in  connection  with  the  offering  described  in  the
Registration Statement, other than underwriting commissions and discounts.


Registration Fee........................................$9,931.56
Legal Fees and Expenses.................................15,000.00
 Accounting Fees and Expenses...........................10,000.00
Blue Sky Fees and Expenses.............................. 1,000.00
Miscellaneous Expenses..................................14,068.44
        Total........................................... $50,000.00


ITEM 15.          Indemnification of Directors and Officers.

         Except  as  hereinafter  set  forth,  there  is  no  statute,   charter
provision,  by-law,  contract or other  arrangement  under which any controlling
person,  director  or officer of  Enteractive,  Inc.  ("Company")  is insured or
indemnified in any manner against  liability  which he may incur in his capacity
as such.

         The  Certificate  of   Incorporation,   as  amended   ("Certificate  of
Incorporation"), of the Company provides that the Company shall indemnify to the
fullest  extent  permitted  by  Delaware  law any person  whom it may  indemnify
thereunder,  including directors, officers, employees and agents of the Company.
The  pertinent  section  of  Delaware  law is set  forth  below  in  full.  Such
indemnification  (other than as ordered by a court) shall be made by the Company
only upon a determination  that  indemnification  is proper in the circumstances
because the individual met the applicable standard of conduct. Advances for such
indemnification may be made pending such determination. Such determination shall
be made by a majority vote of a quorum consisting of disinterested directors, or
by  independent  legal  counsel  or  by  the  stockholders.   In  addition,  the
Certificate  of  Incorporation  provides  for  the  elimination,  to the  extent
permitted by Delaware law, of personal liability of directors to the Company and
its stockholders for monetary damages for breach of fiduciary duty as directors.

         The Company  obtained a directors  and officers  insurance  and company
reimbursement  policy in the amount of $1,000,000.  The policy insures directors
and officers  against  unindemnified  loss arising from certain wrongful acts in
their  capacities  and would  reimburse  the Company for such loss for which the
Company has lawfully indemnified the directors and officers.

         See the second and third  paragraphs  of Item 28 below for  information
regarding the position of the Securities and Exchange Commission with respect to
the effect of any  indemnification  for liabilities arising under the Securities
Act of 1933, as amended ("Securities Act").

         Section 145 of the General Corporation Law provides as follows:

                  (a) A  corporation  may  indemnify  any person who was or is a
         party or is threatened to be made a party to any threatened, pending or
         completed action, suit or proceeding, whether civil, criminal,

                                      II-1

<PAGE>

         administrative  or investigative  (other than action by or in the right
         of the corporation) by reason of the fact that he is or was a director,
         officer, employee or agent of the corporation,  or is or was serving at
         the  request of the  corporation  as a director,  officer,  employee or
         agent of another  corporation,  partnership,  joint  venture,  trust or
         other  enterprise,   against  expenses  (including   attorneys'  fees),
         judgments, fines and amounts paid in settlement actually and reasonably
         incurred by him in connection  with such action,  suit or proceeding if
         he acted in good faith and in a manner he reasonably  believed to be in
         or not opposed to the best  interests  of the  corporation,  and,  with
         respect to any criminal action or proceeding,  had no reasonable  cause
         to believe his conduct was  unlawful.  The  termination  of any action,
         suit or proceeding by judgment, order, settlement,  conviction, or upon
         a plea of nolo  contendere  or its  equivalent,  shall not,  of itself,
         create a presumption that the person did not act in good faith and in a
         manner which he reasonably believed to be in or not opposed to the best
         interests of the corporation,  and, with respect to any criminal action
         or  proceeding,  had  reasonable  cause to believe that his conduct was
         unlawful.

                  (b) A  corporation  may  indemnify  any person who was or is a
         party or is threatened to be made a party to any threatened, pending or
         completed  action  or suit by or in the  right  of the  corporation  to
         procure a judgment in its favor by reason of the fact that he is or was
         a director, officer, employee or agent of the corporation, or is or was
         serving  at the  request of the  corporation  as a  director,  officer,
         employee or agent of another corporation,  partnership,  joint venture,
         trust or other enterprise against expenses (including  attorneys' fees)
         actually and reasonably  incurred by him in connection with the defense
         or settlement of such action or suit if he acted in good faith and in a
         manner  he  reasonably  believed  to be in or not  opposed  to the best
         interests of the corporation and except that no  indemnification  shall
         be made in  respect  of any  claim,  issue or matter  as to which  such
         person shall have been adjudged to be liable to the corporation  unless
         and only to the extent that the Court of Chancery or the court in which
         such action or suit was brought shall determine upon application  that,
         despite  the   adjudication  of  liability  but  in  view  of  all  the
         circumstances  of the  case,  such  person  is  fairly  and  reasonably
         entitled to indemnity for such expenses  which the Court of Chancery or
         such other court shall deem proper.

                  (c) To the extent that a director,  officer, employee or agent
         of a  corporation  has been  successful  on the merits or  otherwise in
         defense of any action,  suit or proceeding  referred to in  subsections
         (a) and (b) of this  section,  or in  defense  of any  claim,  issue or
         matter therein,  he shall be indemnified  against  expenses  (including
         attorneys' fees) actually and reasonably  incurred by him in connection
         therewith.

                  (d) Any indemnification  under subsections (a) and (b) of this
         section  (unless  ordered by a court) shall be made by the  corporation
         only as  authorized  in the  specific  case upon a  determination  that
         indemnification of the director,  officer,  employee or agent is proper
         in the  circumstances  because he has met the  applicable  standard  of
         conduct  set forth in  subsections  (a) and (b) of this  section.  Such
         determination shall be made (1) by the board of directors by a majority
         vote of a quorum  consisting  of directors who were not parties to such
         action, suit or proceeding,  or (2) if such a quorum is not obtainable,
         or, even if obtainable a quorum of disinterested  directors so directs,
         by  independent  legal  counsel  in a  written  opinion,  or (3) by the
         stockholders.

                  (e) Expenses incurred by an officer or director in defending a
         civil  or  criminal  action,  suit  or  proceeding  may be  paid by the
         corporation in advance of the final disposition of such action, suit or
         proceeding  upon  receipt  of an  undertaking  by or on  behalf of such
         director  or  officer to repay such  amount if it shall  ultimately  be
         determined that he is not entitled to be indemnified by the corporation
         as  authorized  in  this  section.  Such  expenses  incurred  by  other
         employees and agents may be so paid upon such terms and conditions,  if
         any, as the board of directors deems appropriate.

                  (f) The  indemnification  and advancement of expenses provided
         by, or granted pursuant to, the other subsections of this section shall
         not be deemed  exclusive  of any other  rights to which  those  seeking
         indemnification  or  advancement  of expenses may be entitled under any
         bylaw, agreement, vote of

                                      II-2

<PAGE>
         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.

                  (g) A  corporation  shall have power to purchase  and maintain
         insurance  on behalf of any person who is or was a  director,  officer,
         employee  or  agent of the  corporation,  or is or was  serving  at the
         request of the corporation as a director, officer, employee or agent of
         another  corporation,   partnership,  joint  venture,  trust  or  other
         enterprise  against any liability  asserted against him and incurred by
         him in any such capacity, or arising out of his status as such, whether
         or not the  corporation  would have the power to indemnify  him against
         such liability under this section.

                  (h)  For  purposes  of  this   section,   references  to  "the
         corporation" shall include,  in addition to the resulting  corporation,
         any   constituent   corporation   (including   any   constituent  of  a
         constituent)  absorbed  in a  consolidation  or  merger  which,  if its
         separate existence had continued, would have had power and authority to
         indemnify its directors, officers, and employees or agents, so that any
         person who is or was a  director,  officer,  employee  or agent of such
         constituent  corporation,  or is or was  serving at the request of such
         constituent  corporation as a director,  officer,  employee or agent of
         another  corporation,   partnership,  joint  venture,  trust  or  other
         enterprise,  shall stand in the same  position  under this section with
         respect to the resulting or surviving corporation as he would have with
         respect to such constituent  corporation if its separate  existence had
         continued.

                  (i)  For  purposes  of  this  section,  references  to  "other
         enterprises"  shall  include  employee  benefit  plans;  references  to
         "fines"  shall  include  any excise  taxes  assessed  on a person  with
         respect to any employee benefit plan; and references to "serving at the
         request of the  corporation"  shall  include any service as a director,
         officer,  employee or agent of the corporation which imposes duties on,
         or involves  services by, such director,  officer,  employee,  or agent
         with  respect  to  any  employee  benefit  plan,  its  participants  or
         beneficiaries;  and a person who acted in good faith and in a manner he
         reasonably  believed  to be in the  interest  of the  participants  and
         beneficiaries of an employee benefit plan shall be deemed to have acted
         in a manner "not opposed to the best interests of the  corporation"  as
         referred to in this section.

                  (j) The  indemnification  and advancement of expenses provided
         by, or granted  pursuant  to,  this  section  shall,  unless  otherwise
         provided when  authorized or ratified,  continue as to a person who has
         ceased to be a director,  officer, employee or agent and shall inure to
         the  benefit  of the  heirs,  executors  and  administrators  of such a
         person.

         The Company has also agreed to indemnify  each  director and  executive
officer  pursuant to an  Indemnification  Agreement  with each such director and
executive officer from and against any and all expenses, losses, claims, damages
and liability  incurred by such director or executive officer for or as a result
of action taken or not taken while such director or executive officer was acting
in his capacity as a director, officer, employee or agent of the Company.

Item 16.  Exhibits

Exhibit No.
- -----------

**1.1               Form of Underwriting  Agreement by and among the Company and
                    GKN Securities Corp. (the "Underwriter").
***1.2              Form of Underwriting  Agreement by and among the Company and
                    the Underwriter.
**4.1               Form of Common Stock Certificate.
**4.2               Form of  warrant,  as  amended,  issued in  connection  with
                    January 1994 Private Placement.
**4.6               Form of Common Stock Purchase Warrant Certificate.
**4.7               Form of Unit Purchase  Option granted to the  Underwriter or
                    its designees.

                                      II-3

<PAGE>

**4.8               Warrant  Agreement  between  Continental  Stock Transfer and
                    Trust Company and the Company.
 ***4.9             Form  of  Common  Stock  Purchase   Option  granted  to  the
                    Underwriter or its designees.
*4.10               Form of Warrant  issued in connection  with the 1996 Private
                    Placement
*4.11               Certificate of Designation for Class A Convertible Preferred
                    Stock.
   
*5                  Opinion of Olshan Grundman Frome & Rosenzweig LLP.
****23.1            Consent of KPMG Peat Marwick LLP.
    
*23.2               Consent of Olshan Grundman Frome & Rosenzweig LLP,  included
                    in Exhibit 5.


   
____________________
*        Previously Filed
    
**       Incorporated   herein  by  reference  to  the  Company's   Registration
         Statement on Form SB-2 [(Registration No. 33-83694)]
***      Incorporated herein by reference to the Company' Registration Statement
         on Form SB-2 [(Registration No. 333-22444)
   
****     Filed herewith
    

Item 17.  Undertakings.
- --------  -------------

         (a)  Insofar  as  indemnification  for  liabilities  arising  under the
Securities Act of 1933 may be permitted to directors,  officers and  controlling
persons of the Registrant  pursuant to the foregoing  provisions,  or otherwise,
the  Registrant  has been  advised  that in the  opinion of the  Securities  and
Exchange  Commission such  indemnification is against public policy as expressed
in the Act and is,  therefore,  unenforceable.  In the  event  that a claim  for
indemnification  against  such  liabilities  (other  than  the  payment  by  the
Registrant of expenses  incurred or paid by a director,  officer or  controlling
person  of the  Registrant  in the  successful  defense  of an  action,  suit or
proceeding)  is  asserted by such  director,  officer or  controlling  person in
connection with the securities being registered,  the Registrant will, unless in
the opinion of its counsel the matter has been settled by controlling precedent,
submit  to a  court  of  appropriate  jurisdiction  the  question  whether  such
indemnification  by it is against public policy as expressed in the Act and will
be governed by the final adjudication of such issue.

         (b)  The undersigned Registrant hereby undertakes:

                  (1) To file,  during any  period in which  offers or sales are
being made, a post-effective amendment to this registration statement to include
any material information with respect to the plan of distribution not previously
disclosed  in  the  registration  statement  or  any  material  change  to  such
information in the registration statement;

                  (2) That, for the purpose of determining  any liability  under
the Securities Act of 1933, each  post-effective  amendment that contains a form
of prospectus  shall be deemed to a new registration  statement  relating to the
securities  offered  therein,  and the offering of such  securities at that time
shall be deemed to be the initial bona fide offering thereof.

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

                  (4) That, for purposes of determining  any liability under the
Securities  Act of 1933,  the  information  omitted from the form of  prospectus
filed as part of this  Registration  Statement  in  reliance  upon Rule 430A and
contained  in a form of  prospectus  filed by the  Registrant  pursuant  to Rule
424(b)(1) or (4) or 497(h) under the  Securities  Act of 1933 shall be deemed to
be part of this Registration Statement as of the time it was declared effective.


                                      II-4

<PAGE>
         (c) The undersigned  Registrant hereby undertakes that, for purposes of
determining  any liability  under the Securities Act of 1933, each filing of the
Registrant's  annual  report  pursuant to Section  13(a) or Section 15(d) of the
Securities  Exchange  Act of  1934  that is  incorporated  by  reference  in the
Registration  Statement  shall  be  deemed  to be a new  registration  statement
relating to the securities offered therein,  and the offering of such securities
at that time shall be deemed to be the initial bona fide offering thereof.

                                      II-5

<PAGE>

                                   SIGNATURES

   
         Pursuant  to the  requirements  of the  Securities  Act  of  1933,  the
Registrant certifies that it has reasonable grounds to believe that it meets all
of the requirements for filing this  Registration  Statement on Form S-3 and has
duly  caused  this  Registration  Statement  to be signed  on its  behalf by the
undersigned,  thereunto duly  authorized,  in the City of New York, State of New
York on the 17th day of March, 1997.
    

                                             ENTERACTIVE, INC.



   
                                             By:  /s/ Kenneth Gruber
                                                  ----------------------------
                                                  Name:  Kenneth Gruber
                                                 Title:  Chief Financial Officer
    

                                POWER OF ATTORNEY

         Pursuant  to the  requirements  of the  Securities  Act of  1933,  this
Registration  Statement  has been signed below by the  following  persons in the
capacities and on the dates indicated.
<TABLE>
<CAPTION>


             Name                       Title                                          Date
             ----                       -----                                          ----


   
<S>                            <C>                                               <C>
  /s/ Andrew Gyenes            Chairman of the Board and Chief Executive         March 17, 1997
- -----------------------------     Officer (Principal Executive Officer)
Andrew Gyenes

  /s/ Michael Alford           Vice President for Development and Director       March 17, 1997
- -----------------------------                                                             
    
Michael Alford

   
  /s/ Peter Gyenes             Director                                          March 17, 1997
- -----------------------------
    
Peter Gyenes

   
  /s/ Harrison Weaver          Director                                          March 17, 1997
- -----------------------------
    
Harrison Weaver

   
  /s/ Rino Bergonzi            Director                                          March 17, 1997
- -----------------------------
    
Rino Bergonzi

   
 /s/ Kenneth Gruber            Vice President, Chief Financial Officer            March 17, 1997
- -----------------------------  (Principal Financial Officer and Principal
Kenneth Gruber                 Accounting Officer) and Secretary
    

   
/s/ Kenneth Gruber
- ------------------
Kenneth Gruber
Attorney-in-Fact
Power of Attorney
    
</TABLE>

                                      II-6


                              KPMG PEAT MARWICK LLP




The Board of Directors
Enteractive, Inc.:


We consent to the use of our report  incorporated herein (Form S-3) by reference
and to the reference to our firm under the heading "Experts" in the prospectus.



KPMG PEAT MARWICK LLP


New York, New York
March 17, 1997



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