N-VISION INC, SB-2/A, 1996-05-28

N-VISION INC
SB-2/A, 1996-05-28
MISCELLANEOUS AMUSEMENT & RECREATION

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<PAGE>

AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON MAY 28, 1996.

REGISTRATION NO. 333-3098
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------

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

AMENDMENT NO. 3
TO
FORM SB-2

REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
------------------------

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

<TABLE>
<S> <C> <C>
DELAWARE 7999 54-1741313
(State or other jurisdiction (Primary standard (IRS employer
of industrial identification
incorporation or classification code number) number)
organization)
</TABLE>

7680 OLD SPRINGHOUSE ROAD, FIRST FLOOR
MCLEAN, VIRGINIA 22102
(703) 506-8808
(Address, including zip code, and telephone number, including
area code, of Registrant's principal executive offices)

7680 OLD SPRINGHOUSE ROAD, FIRST FLOOR
MCLEAN, VIRGINIA 22102
(703) 506-8808
(Address of principal place of business or intended principal place of business)

DELMAR J. LEWIS, CHAIRMAN OF THE BOARD
N-VISION, INC.
7680 OLD SPRINGHOUSE ROAD, FIRST FLOOR
MCLEAN, VIRGINIA 22102
(703) 506-8808
(Name, address, including zip code, and telephone number, including
area code, of agent for service)
------------------------

COPIES TO:

<TABLE>
<S> <C>
THOMAS T. PROUSALIS, JR., ESQ. STEVEN F. WASSERMAN, ESQ.
1919 Pennsylvania Avenue, N.W. Bernstein & Wasserman, LLP
Suite 800 950 Third Avenue
Washington, D.C. 20006 New York, N.Y. 10022
(202) 296-9400 (212) 826-0730
(202) 296-9403 Fax (212) 371-4730 Fax
</TABLE>

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

APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO PUBLIC:
AS SOON AS PRACTICABLE AFTER THE REGISTRATION STATEMENT BECOMES EFFECTIVE.
------------------------

IF ANY OF THE SECURITIES BEING REGISTERED ON THIS FORM ARE TO BE OFFERED ON
A DELAYED OR CONTINUING BASIS, PURSUANT TO RULE 415 UNDER THE SECURITIES ACT OF
1933, AS AMENDED, CHECK THE FOLLOWING BOX: /X/

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- --------------------------------------------------------------------------------
<PAGE>
CALCULATION OF REGISTRATION FEE

<TABLE>
<CAPTION>
PROPOSED MAXIMUM PROPOSED MAXIMUM
TITLE OF EACH CLASS OF AMOUNT TO OFFERING PRICE AGGREGATE AMOUNT OF
SECURITIES TO BE REGISTERED BE REGISTERED PER SECURITY OFFERING PRICE REGISTRATION FEE
<S> <C> <C> <C> <C>
Common Stock, $.01 Par Value.... 1,495,000 $ 5.00 $7,475,000 $ 2,578
Class A Warrants................ 1,380,000 $ .15 $ 207,000 $ 62
Common Stock, $.01 Par Value,
Underlying Class A Warrants.... 1.380,000 $ 5.50 $7,590,000 $ 2,617
Common Stock, $.01 Par Value,
Offered by Selling
Security-holders............... 750,000 $ 5.00 $3,750,000 $ 1,293
Common Stock $.01, Par Value, in
Underwriter's Purchase
Option......................... 130,000 $ 8.25 $1,072,500 $ 370
Class A Warrants in
Underwriter's Purchase
Option......................... 120,000 $ .25 $ 30,000 $ 10
Common Stock, $.01 Par Value,
Underlying Class A Warrants in
Underwriter's Purchase
Option......................... 120,000 $ 5.50 $ 660,000 $ 228
Total Registration and Fee
(1).......................... $20,784,500 $ 7,167
</TABLE>

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

ii
<PAGE>
N-VISION, INC.
CROSS-REFERENCE SHEET
PURSUANT TO ITEM 501(B)
SHOWING LOCATION IN PROSPECTUS OF INFORMATION
REQUIRED BY ITEMS OF FORM SB-2

<TABLE>
<CAPTION>
REGISTRATION STATEMENT ITEM CAPTION IN PROSPECTUS
- ------------------------------------------------------------- --------------------------------------------------------
<C> <S> <C>
1. Front of Registration Statement and Outside Front
Cover of Prospectus.............................. Facing Page; Cross-Reference Sheet; Prospectus Cover
Page
2. Inside Front and Outside Back Cover Pages of
Prospectus....................................... Prospectus Cover Page; Prospectus Back Cover Page
3. Summary Information and Risk Factors.............. Prospectus Summary; The Company; Risk Factors
4. Use of Proceeds................................... Use of Proceeds
5. Determination of Offering Price................... Risk Factors; Underwriting
6. Dilution.......................................... Dilution and Other Comparative Data
7. Selling Security-holders.......................... Description of Securities; Selling Security-holders
8. Plan of Distribution.............................. Prospectus Cover Page; Underwriting
9. Legal Proceedings................................. Legal Proceedings
10. Directors, Executive Officers, Promoters and
Control Persons.................................. Management; Principal Shareholders
11. Security Ownership of Certain Beneficial Owners
and Management................................... Principal Shareholders
12. Description of Securities......................... Description of Securities
13. Interest of Named Experts and Counsel............. Legal Matters; Experts
14. Disclosure of Commission Position on
Indemnification for Securities Act Liabilities... Certain Transactions
15. Organization Within Five Years.................... Prospectus Summary; Business
16. Description of Business........................... Business
17. Management's Discussion and Analysis or Plan of
Operation........................................ Management's Discussion and Analysis or Plan of
Operation
18. Description of Property........................... Business
19. Certain Relations and Related Transactions........ Certain Transactions
20. Market for Common Equity and Related Stockholder
Matters.......................................... Description of Securities
21. Executive Compensation............................ Management
22. Financial Statements.............................. Financial Statements
23. Changes in and Disagreements With Accountants on
Accounting and Financial Disclosure.............. Not applicable
</TABLE>

iii
<PAGE>
EXPLANATORY NOTE

This registration statement covers the primary offering of securities by
n-Vision, Inc. ("Company") and the offering of securities by certain selling
security-holders ("Selling Security-holders"). The Company is registering, under
the primary prospectus ("Primary Prospectus"), 1,495,000 shares of Common Stock
and 1,380,000 Class A Warrants. The Selling Security-holders are registering,
under an alternate prospectus ("Alternate Prospectus"), 750,000 shares of Common
Stock. The Alternate Prospectus pages, which follow the Primary Prospectus,
contain certain sections which are to be combined with all of the sections
contained in the Primary Prospectus, with the following exceptions: the front
and back cover pages, and the sections entitled "The Offering" and "Selling
Security-holders." In addition, the sections entitled "Concurrent Sales" and
"Plan of Distribution" will be added to the Alternate Prospectus. Furthermore,
all references contained in the Alternate Prospectus to the "offering" shall
refer to the Company's offering of securities under the Primary Prospectus.

iv
<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.
<PAGE>

SUBJECT TO COMPLETION, DATED MAY 28, 1996.

PROSPECTUS
1,300,000 SHARES
1,200,000 CLASS A WARRANTS
N-VISION, INC.

n-Vision, Inc. ("Company"), a Delaware corporation, hereby offers 1,300,000
shares of common stock ("Common Stock"), $.01 par value, at $5.00 per share and
1,200,000 Class A warrants ("Class A Warrants") at $.15 per Class A Warrant. The
shares of Common Stock and Class A Warrants will be separately tradeable
immediately upon the effective date of this offering and may be purchased
separately in varying amounts. See "Description of Securities."
The Class A Warrants shall be exercisable commencing one year after the date
of this Prospectus ("Effective Date"). Each Class A Warrant entitles the holder
to purchase one share of Common Stock at $5.50 per share during the four year
period commencing one year from the Effective Date hereof. The Class A Warrants
are redeemable by the Company for $.05 per Warrant, at any time after
, 1998, upon thirty (30) days' prior written notice, if the average
closing price or bid price of the Common Stock, as reported by the principal
exchange on which the Common Stock is quoted, the Nasdaq SmallCap Market
("Nasdaq") or the National Quotation Bureau, Incorporated, as the case may be,
equals or exceeds $9.00 per share, for any twenty (20) consecutive trading days
within a period of thirty (30) days ending within ten (10) days of the notice of
redemption. Upon thirty (30) days' prior written notice to all holders of the
Class A Warrants, the Company shall have the right to reduce the exercise price
and/or extend the term of the Class A Warrants in compliance with the
requirements of Rule 13e-4 to the extent applicable. See "Description of
Securities."

Also, the registration statement of which this Prospectus forms a part
covers the offering of 750,000 shares of Common Stock owned by three persons who
are nonaffiliated with the Underwriters and the Company, hereinafter
collectively referred to as "Selling Security-holders." The shares of Common
Stock held by the Selling Security-holders may be sold commencing eighteen (18)
months from the date of this Prospectus, subject to earlier release at the sole
discretion of Stratton Oakmont, Inc. ("Stratton Oakmont and Representative"),
and such securities include a legend with such restrictions. Stratton Oakmont
may release the securities held by the Selling Security-holders at any time
after all securities subject to the Over-allotment Option have been sold or such
option has expired. The resale of the securities of the Selling Security-holders
are subject to Prospectus delivery and other requirements of the Securities Act
of 1933, as amended. Sales of such securities in the Over-allotment Option and
the early release of the Selling Security-holder shares, which has occurred in
previous offerings underwritten by Stratton Oakmont, or the potential of such
sales at any time may have an adverse effect on the market prices of the
securities offered hereby. See "Selling Security-holders" and "Underwriting."

The Company has applied for inclusion of the Common Stock and Class A
Warrants on Nasdaq, although there can be no assurances that an active trading
market will develop, even if the securities are accepted for quotation.
Additionally, if the Company's securities are accepted for quotation and active
trading develops, the Company is required to maintain certain minimum criteria
established by Nasdaq, of which there can be no assurance that the Company will
be able to continue to fulfill such criteria. The Company has been advised that
the Company's securities offered hereby will be listed on Nasdaq upon the
Effective Date of this offering under the symbols "NVSN" and "NVSNW." See "Risk
Factors."

Prior to this offering, there has been no public market for the Common Stock
and Class A Warrants. It is currently anticipated that the initial public
offering price will be $5.00 per share of Common Stock and $.15 per Class A
Warrant. The price of the Common Stock, as well as the exercise price of the
Class A Warrants, was arbitrarily determined by negotiations between the Company
and Stratton Oakmont, and do not bear any relationship to the Company's assets,
book value, net worth or results of operations or any other established criteria
of value. For additional information regarding the factors considered in
determining the initial public offering price of the Common Stock and the
exercise price of the Class A Warrants, see "Risk Factors -- Arbitrary Offering
Price," "Description of Securities" and "Underwriting."

The Underwriters from time to time will become market makers and otherwise
effect transactions in the securities of this offering. The Underwriters, if
they participates in the market, may become an influence and thereafter a factor
of increasing importance in the market for the securities. However, there is no
assurance that the Underwriters will or will continue to be a dominating
influence. The prices and liquidity of the securities may be significantly
affected by the degree, if any, of the Underwriters' participation in such
market as a market maker. The Underwriters may discontinue such market making
activities at any time or from time to time.

The Company does not presently file reports and other information with the
Securities and Exchange Commission. However, following completion of this
offering, the Company intends to furnish its stockholders with annual reports
containing audited financial statements and such interim reports, in each case
as it may determine to furnish or as may be required by law.

ON FEBRUARY 28, 1995, STRATTON OAKMONT BECAME SUBJECT TO A COURT-IMPOSED
PERMANENT INJUNCTION TO COMPLY WITH CERTAIN PROCEDURES RECOMMENDED BY AN
INDEPENDENT CONSULTANT ARISING OUT OF THE SETTLEMENT OF A SECURITIES AND
EXCHANGE COMMISSION ("COMMISSION") PROCEEDING. THE FAILURE BY STRATTON OAKMONT
TO COMPLY WITH THE PERMANENT INJUNCTION MAY ADVERSELY AFFECT STRATTON OAKMONT'S
ACTIVITIES IN THAT THE COURT MAY ISSUE A FURTHER ORDER RESTRICTING THE ABILITY
OF STRATTON OAKMONT TO ACT AS A MARKET MAKER OF THE COMPANY'S SECURITIES. SEE
"RISK FACTORS."

AN INVESTMENT IN THE SECURITIES OFFERED HEREBY INVOLVES A HIGH DEGREE OF RISK
AND IMMEDIATE SUBSTANTIAL DILUTION OF THE BOOK VALUE OF THE COMMON STOCK AND
SHOULD BE CONSIDERED ONLY BY PERSONS WHO CAN AFFORD THE LOSS OF THEIR
ENTIRE INVESTMENT. SEE "RISK FACTORS," PAGE 6, AND "DILUTION."

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.

<TABLE>
<CAPTION>
UNDERWRITING DISCOUNTS PROCEEDS TO THE
PRICE TO PUBLIC AND COMMISSIONS (1) COMPANY (2)
<S> <C> <C> <C>
Per Share................................ $5.00 $.50 $4.50
Per Class A Warrant...................... $.15 $.015 $.135
Total.................................... $6,680,000 $668,000 $6,012,000
</TABLE>

(SEE "NOTES," NEXT PAGE)

THE SECURITIES ARE OFFERED BY THE UNDERWRITERS ON A "FIRM COMMITMENT" BASIS
SUBJECT TO PRIOR SALE WHEN, AS AND IF DELIVERED TO AND ACCEPTED BY THE
UNDERWRITERS, AND SUBJECT TO THE UNDERWRITERS' RIGHT TO REJECT ORDERS IN WHOLE
OR IN PART AND TO CERTAIN OTHER CONDITIONS. IT IS EXPECTED THAT DELIVERY OF
CERTIFICATES REPRESENTING THE SECURITIES OF THE OFFERING WILL BE MADE ON OR
ABOUT , 1996.

------------------------------
STRATTON OAKMONT, INC.

The date of this Prospectus is , 1996.
<PAGE>

Flight Simulator Application of the Company's DATAVISOR 10X Very High Resolution
Color HMD
Virtual Reality System. See "Business -- Virtual Reality Products and Systems."

<PAGE>
NOTES

(1) Does not include additional compensation to be received by the Underwriters
in the form of (i) a nonaccountable expense allowance of $195,000 if
1,300,000 shares of Common Stock and $5,400 if 1,200,000 Class A Warrants
are sold (or a total of $230,460 if the Underwriters' Over-allotment Option
is fully exercised); and (ii) an option (exercisable for a period of four
years commencing one year after the date of this Prospectus) entitling the
Underwriters to purchase 130,000 shares of Common Stock and 120,000 Class A
Warrants at $8.25 per share and $.25 per Warrant ("Underwriter's Purchase
Option"). In addition, the Company and the Underwriters have agreed to
indemnity and contribution provisions regarding certain civil liabilities,
including liabilities under the Securities Act of 1933, as amended. See
"Principal Stockholders" and "Underwriting."

(2) Before deducting expenses of this offering payable by the Company, estimated
at $875,000, including the Underwriters' nonaccountable expense allowance.
The Company has agreed to pay all of the expenses related to the
registration of the securities by the Selling Security-holders, which are
included in the expenses of this offering. See "Underwriting."

(3) The Company has granted the Underwriters a 30-day Over-allotment Option from
the date of this Prospectus to purchase up to 195,000 additional shares of
Common Stock and 180,000 Class A Warrants upon the same terms and conditions
as set forth above, solely to cover over-allotments, if any. If such
Underwriters' Over-allotment Option is exercised in full, the total Price to
the Public, Underwriting Discounts and Proceeds to the Company will be
$7,475,000, $747,500 and $6,727,500 respectively. See "Underwriting."

(4) The Company will not receive any of the proceeds from the sale of the
securities offered by the Selling Security-holders. See "Selling
Security-holders" and "Underwriting."

IN CONNECTION WITH THIS OFFERING, THE UNDERWRITERS MAY OVER-ALLOT OR EFFECT
TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICE OF THE SECURITIES AT A
LEVEL ABOVE THAT WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN MARKET. SUCH
TRANSACTIONS MAY BE EFFECTED ON THE NASDAQ SMALLCAP MARKET OR OTHERWISE. SUCH
STABILIZING, IF COMMENCED, MAY BE DISCONTINUED AT ANY TIME. SEE "RISK FACTORS."

THE SECURITIES TO BE SOLD IN THIS OFFERING MAY, IN THE ORDINARY COURSE OF
BUSINESS, BE SOLD ONLY TO CUSTOMERS OF THE UNDERWRITERS, AND THE CONCENTRATION
OF SECURITIES IN CUSTOMERS OF THE UNDERWRITERS MAY ADVERSELY AFFECT THE MARKET
FOR AND LIQUIDITY OF THE COMPANY'S SECURITIES SINCE THE UNDERWRITERS MAY BE THE
ONLY MARKET MAKERS. IN THE EVENT THAT ADDITIONAL BROKER-DEALERS DO NOT MAKE A
MARKET IN THE COMPANY'S SECURITIES AND THE UNDERWRITERS BECOME MARKET MAKERS,
THE UNDERWRITERS MAY BECOME A DOMINATING INFLUENCE ON THE MARKET. NO OTHER
BROKER-DEALER HAS INDICATED THAT IT WILL MAKE A MARKET IN THE COMPANY'S
SECURITIES. THE UNDERWRITERS DO NOT HAVE ANY CURRENT PLANS OR AGREEMENTS TO
OFFER AND/OR SELL ANY OF THE SECURITIES TO A SPECIFIC CUSTOMER OR CUSTOMERS.
SUCH PURCHASERS, AS CUSTOMERS OF THE UNDERWRITERS, SUBSEQUENTLY MAY ENGAGE IN
TRANSACTIONS FOR THE SALE OR PURCHASE OF THE SECURITIES THROUGH AND/OR WITH THE
UNDERWRITERS, ALTHOUGH NO AGREEMENTS OR UNDERSTANDINGS, WRITTEN OR ORAL, EXIST
FOR SUCH TRANSACTIONS, AND SUCH TRANSACTIONS MAY FURTHER ENHANCE THE
UNDERWRITERS' DOMINATING INFLUENCE ON THE MARKET. SEE "RISK FACTORS --
LITIGATION INVOLVEMENT OF STRATTON OAKMONT MAY HAVE ADVERSE CONSEQUENCES --
UNDERWRITERS' INFLUENCE ON THE MARKET MAY HAVE ADVERSE CONSEQUENCES."

AVAILABLE INFORMATION

The Company has filed with the Securities and Exchange Commission
("Commission"), Washington, D.C. 20549, a Registration Statement on Form SB-2,
pursuant to the Securities Act of 1933, as amended, with respect to the
securities offered by this Prospectus. This Prospectus does not contain all of
the information set forth in said Registration Statement, and the exhibits
thereto. For further information with respect to the Company and the securities
offered hereby, reference is made to said Registration Statement and exhibits
which may be inspected without charge at the Commission's principal office at
Judiciary Plaza, 450 Fifth Street, N.W., Washington, D.C. 20549.

The Company intends to furnish its security-holders with annual reports
containing audited financial statements and the audit report of the independent
certified public accountants, and such interim reports as it deems appropriate
or as may be required by law. The Company's fiscal year ends December 31.

The Company will provide without charge to each person who receives this
Prospectus, upon written or oral request of such person, a copy of any of the
information that is incorporated by reference herein (excluding exhibits) by
contacting the Company at 7680 Old Springhouse Road, First Floor, McLean,
Virginia 22102, telephone (703) 506-8808, attention: chief financial officer.

SPECIAL STANDARDS FOR SECURITIES SOLD IN CALIFORNIA

Each California investor, and each transferee thereof who also is a
California investor, must have an annual gross income of at least $65,000 and a
net worth, exclusive of home, furnishings and automobiles, of at least $250,000,
or in the alternative, a net worth exclusive of home, furnishings and
automobiles, of at least $500,000. In addition, an investor's total purchase may
not exceed 10% of such investor's net worth.

3
<PAGE>
PROSPECTUS SUMMARY

THE FOLLOWING SUMMARY IS QUALIFIED IN ITS ENTIRETY BY THE MORE DETAILED
INFORMATION AND FINANCIAL STATEMENTS, INCLUDING NOTES THERETO, APPEARING
ELSEWHERE IN THIS PROSPECTUS. EACH PROSPECTIVE PURCHASER OF THE COMPANY'S
SECURITIES IS URGED TO READ THIS PROSPECTUS IN ITS ENTIRETY.

THE COMPANY

n-Vision, Inc. ("Company"), a Delaware corporation, designs, develops,
manufactures and markets state-of-the-art, proprietary virtual reality ("VR")
products and systems for a variety of commercial, industrial and military
applications. The Company currently has developed five principal VR products and
systems: Datavisor VGA, Datavisor 10m, Datavisor 10x, Datavisor 10XL and Virtual
Binoculars. The Company introduced the first commercially available head mounted
display ("HMD") VR system to achieve over one million pixel (high resolution)
display per eye in monochrome (black and white). The VR or artificial
environment created by the Company's proprietary VR products and systems
utilizes computer hardware and software, including operating systems, simulation
software, computer-aided design ("CAD"), graphics applications, computer-aided
software engineering tools, and database and knowledge base management tools and
systems. Commercial and industrial uses of the Company's VR products and systems
include, but are not limited to, medicine, simulation, training and education,
industrial design and environmental, and entertainment applications. Military
uses include, but are not limited to, flight simulation and strategic simulation
and planning. The Company's VR products and systems are marketed worldwide, but
principally to customers in North America, Europe and the Pacific Rim, E.G.,
U.S. Air Force, NASA Langley Research Center, Martin Marietta, Silicon Graphics,
Inc., UK Defense Research Establishment (Farnborough), Volvo, Volkswagon,
Diamler-Benz, Thomson CSF, KPMG Peat Marwick and Raytheon, among others, none of
which are presently material to the Company. For the year ended December 31,
1995, revenue derived from three customers (E-OIR Measurements, Inc., U.S. Naval
Surface Warfare Center and Solidray Co., Ltd. (Japan)) amounted to approximately
11%, 16% and 10%, respectively, of the Company's total revenue. For the year
ended December 31, 1994, revenue derived from two customers (Division Limited,
U.K. and Media Systems GmbH) amounted to approximately 30% and 25%,
respectively, of the Company's total revenue. The Company intends to use the net
proceeds of this offering to significantly expand its operations and the
development and marketing of its VR products and systems.

The Company was incorporated in the State of Delaware on September 16, 1994.
The principal executive offices and facilities of the Company are located at
7680 Old Springhouse Road, First Floor, McLean, Virginia 22102, and its
telephone number is (703) 506-8808. Unless the context otherwise indicates, the
terms "Company" and "n-Vision" as used in this Prospectus refer to n-Vision,
Inc.

SEE "RISK FACTORS," "MANAGEMENT" AND "CERTAIN TRANSACTIONS" FOR A DISCUSSION
OF CERTAIN FACTORS THAT SHOULD BE CONSIDERED IN EVALUATING THE COMPANY AND ITS
BUSINESS.

4
<PAGE>
THE OFFERING

<TABLE>
<S> <C>
Securities Offered by Company(1)(4)............................ 1,300,000 Shares
1,200,000 Class A Warrants
Securities Offered by Selling Security-holders(2).............. 750,000 Shares
Shares of Common Stock Outstanding Prior to Offering........... 3,950,000 Shares
Shares of Common Stock Outstanding After Offering(3)........... 5,250,000 Shares
Comparative Share Ownership Upon Completion of Offering:
Present Stockholders (3,950,000 Shares)(2)(5)................ 75.23%
Public Stockholders (1,300,000 Shares)(2)(5)................. 24.77%
</TABLE>

<TABLE>
<S> <C>
Use of Net Proceeds of Sale of Securities Offered by Company.... Administrative expenses,
operating costs and
working capital, including
software support and
development, capital
equipment, marketing and
sales, mergers and
acquisitions and the
repayment of debt. See
"Use of Proceeds."
</TABLE>

<TABLE>
<S> <C>
Nasdaq SmallCap Market Symbols.................................. NVSN
NVSNW
</TABLE>

- ------------------------
(1) The Company is offering 1,300,000 shares of Common Stock at $5.00 per share
and 1,200,000 Class A Warrants at $.15 per Class A Warrant. The Class A
Warrants shall be exercisable commencing one year after the date of the
Prospectus. Each Class A Warrant entitles the holder to purchase one share
of Common Stock at $5.50 per share during the four year period commencing
one year from the Effective Date hereof. The Class A Warrants are redeemable
upon certain conditions. Should the Class A Warrants be exercised, of which
there is no assurance, the Company will receive the proceeds therefrom
aggregating up to an additional $6,600,000. See "Description of Securities."

(2) This offering also includes 750,000 shares of Common Stock owned by the
Selling Security-holders. The shares of Common Stock held by the Selling
Security-holders may be sold commencing eighteen (18) months from the date
of this Prospectus, subject to earlier release at the sole discretion of the
Representative, and such securities include a legend with such restrictions.
The Representative may release the securities held by the Selling
Security-holders at any time after all securities subject to the
Over-allotment Option have been sold or such option has expired. The resale
of the securities of the Selling Security-holders are subject to Prospectus
delivery and other requirements of the Securities Act of 1933, as amended.
Sales of such securities or the potential of such sales at any time may have
an adverse effect on the market prices of the securities offered hereby. See
"Certain Transactions," "Description of Securities," "Selling
Security-holders" and "Underwriting."

(3) Assumes no exercise of (i) the Class A Warrants offered hereby; (ii) the
Underwriters' Over-allotment Option to purchase up to 195,000 shares of
Common Stock and 180,000 Class A Warrants; and (iii) the Underwriters'
Purchase Option to purchase up to 130,000 shares of Common Stock and 120,000
Class A Warrants. See "Description of Securities" and "Underwriting."

(4) The public offering price of the Common Stock and the exercise price and
other terms of the Class A Warrants were arbitrarily determined by
negotiations between the Company and the Representative and does not
necessarily relate to the assets, book value or results of operations of the
Company or any other established criteria of value. See "Underwriting."

(5) See "Dilution."

5
<PAGE>
SELECTED FINANCIAL DATA
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)

<TABLE>
<CAPTION>
THREE MONTHS ENDED YEAR ENDED
MARCH 31, DECEMBER 31,
------------------------ ------------------------
1996 1995 1995 1994
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
Statement of Operations Data:
Sales.......................................................... $ 257 $ 218 $ 627 $ 1,492
Income (loss) from operations.................................. (177) (231) (1,369) 152
Net income (loss).............................................. (221) (279) (1,988) 87
Earnings (loss) per common share............................... (.06) (.09) (.62) .02
PRO FORMA net loss per share (1)............................... (.44)
Average number of common shares outstanding (2)................ 3,750 3,150 3,191 3,828
</TABLE>

<TABLE>
<CAPTION>
MARCH 31, 1996
-----------------------------
PRO FORMA(3) AS ADJUSTED(4)
------------- --------------
<S> <C> <C>
Balance Sheet Data:
Working capital (deficiency)..................................................... $ (1,045) $ 4,092
Total assets..................................................................... $ 1,128 $ 5,765
Long-term debt................................................................... $ 0 $ 0
Stockholders' equity (deficit)................................................... $ (934) $ 4,203
</TABLE>

- ------------------------
(1) PRO FORMA net loss per share reflects the PRO FORMA impact of the reduction
in interest expense on debt to be retired from a portion of the proceeds
from sale of the securities offered hereby and the retirement of $1,000,000
of notes payable in exchange for 200,000 shares of common stock in May 1996,
and the additional shares outstanding from which the proceeds would be used
to retire the related debt and the newly issued shares upon conversion.

(2) The average number of shares of Common Stock outstanding is based upon the
number of shares outstanding after a 1.38:1 stock split in March 1996.

(3) PRO FORMA data reflects the historical data derived from the March 31, 1996
financial statements adjusted to reflect the PRO FORMA effect of the April
1996 conversion of $250,000 of convertible notes payable in exchange for
750,000 shares of common stock and the May 1996 retirement of $1,000,000 in
principal of term note payable to Advanced Technology Systems, Inc. in
exchange for 200,000 shares of common stock.

(4) Adjusted to reflect the sale of the securities offered hereby, less
underwriting discounts, the payment by the Company of expenses of this
offering estimated at $875,000, and the use of proceeds to curtail the
amount outstanding on a line of credit with Advanced Technology Systems,
Inc. by $500,000. See "Use of Proceeds."

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RISK FACTORS

THE SECURITIES OFFERED HEREBY ARE SPECULATIVE AND INVOLVE A HIGH DEGREE OF
RISK. ONLY THOSE PERSONS ABLE TO LOSE THEIR ENTIRE INVESTMENT SHOULD PURCHASE
THESE SECURITIES. PROSPECTIVE INVESTORS, PRIOR TO MAKING AN INVESTMENT DECISION,
SHOULD CAREFULLY READ THIS PROSPECTUS AND CONSIDER, ALONG WITH OTHER MATTERS
REFERRED TO HEREIN, THE FOLLOWING RISK FACTORS:

LIMITED OPERATING HISTORY

The Company was incorporated in Delaware on September 16, 1994 and, as such,
faces the risks and problems associated with businesses in their early stages of
development, and the Company has a limited operating history upon which to base
an evaluation of its prospects. Such business prospects should be considered in
light of the risks, expenses and difficulties frequently encountered in the
expansion of a business in an industry characterized by a number of market
entrants and intense competition. See "Business."

BRIDGE FINANCING COSTS WILL NEGATIVELY IMPACT EARNINGS

The Company does not anticipate reporting earnings for the year ended
December 31, 1996 principally as a result of the imputed costs attributable to
the conversion feature granted in contemplation of this offering of three
convertible notes payable in March 1996 aggregating $250,000 at a price
substantially below the offering price of Common Stock in this offering. The
notes were converted into 750,000 shares of common stock in April 1996. The
conversion price per share for the convertible notes payable was granted at a
price substantially below the offering price in this offering due to the
speculative nature of the loans. Financing expense of $3,500,000 related to the
issuance of the 750,000 shares of common stock upon conversion in April 1996
will be accrued during the period from March 29, 1996, the origination date of
the notes, and the date of the offering with a corresponding credit to paid in
capital. Consequently, earnings will be negatively impacted by this cost;
however, net stockholders' equity will not be impacted as the charge to expense
will be offset by a corresponding increase in paid in capital. In addition,
there will be no cash outlay associated with the issuance of such securities.
See "Certain Transactions," "Selling Security-holders" and "Financial
Statements."

NO ASSURANCE OF FUTURE PROFITABILITY OR PAYMENT OF DIVIDENDS

The Company can make no assurances that the future operations of the Company
will result in additional revenues or will be profitable. Should the operations
of the Company be profitable, it is likely that the Company would retain much or
all of its earnings in order to finance future growth and expansion. Therefore,
the Company does not presently intend to pay dividends, and it is not likely
that any dividends will be paid in the foreseeable future. See "Dividend
Policy."

POSSIBLE NEED FOR ADDITIONAL FINANCING

The Company intends to fund its operations and other capital needs for the
next 12 months substantially from the proceeds of this offering, but there can
be no assurance that such funds will be sufficient for these purposes. The
Company may require substantial amounts of the proceeds of this offering for its
future expansion, operating costs and working capital. The Company has made no
arrangements to obtain future additional financing, if required, and there can
be no assurance that such financing will be available, or that it will be
available on acceptable terms. See "Use of Proceeds."

DEPENDENCE ON MAJOR AND FOREIGN CUSTOMERS

For the year ended December 31, 1995, revenue derived from three customers
(E-OIR Measurements, Inc., U.S. Naval Surface Warfare Center and Solidray Co.,
Ltd. (Japan)) amounted to approximately 11%, 16% and 10%, respectively, of the
Company's total revenue. For the year ended December 31, 1994, revenue derived
from two customers (Division Limited, U.K. and Media Systems GmbH) amounted to
approximately 30% and 25%, respectively, of the Company's total revenue.

7
<PAGE>
The dependence on major customers subjects the Company to significant
financial risks in the operation of its business should a major customer
terminate, for any reason, its business relationship with the Company. In
addition, for the years ended December 31, 1995 and 1994, the Company derived
53% and 66% of sales, respectively, from customers outside the United States,
subjecting the Company to significant financial risk stemming from, among
others, factors such as inadequate or limited financial information being
available to assess the creditworthiness of foreign customers. Also, because
such customers are foreign, associated operating and servicing costs are higher
placing a larger demand on the Company's limited resources. In such event, the
financial condition of the Company may be adversely affected and the Company may
be required to obtain additional financing, of which there is no assurance. See
"Business" and "Financial Statements."

POTENTIAL LIABILITY AND POSSIBLE INSUFFICIENCY OF INSURANCE

The Company's virtual reality ("VR") products and systems involve the use of
artificial environments that may subject the user to risk of injury should a
product be used incorrectly or fail. The Company therefore may be exposed to a
significant risk of liability for personal injury. The Company maintains quality
control programs in an attempt to reduce the risk of potential damage to persons
and property and any potential liability associated with the use of its products
and systems. In addition, following the closing of this offering, the Company
intends to maintain $1,000,000 of liability insurance (in the aggregate or per
claim) covering damages resulting from negligent acts, errors, mistakes or
omissions in rendering or failing to render a product or system safe.

The Company endeavors to contractually limit its potential liability to the
amount and terms of its insurance policy. However, the Company is not always
able to obtain such limitations on liability, and such provisions, when
obtained, may not adequately shelter the Company from liability. Consequently, a
partially or completely uninsured claim, if successful and of sufficient
magnitude, may have a material adverse effect on the Company and its financial
condition.

DEPENDENCE ON MANAGEMENT

The Company's success is principally dependent on its current management
personnel for the operation of its business. In particular, Christopher J.
Lewis, the president and chief operating officer of the Company, has played a
significant role in the development and management of the Company, although
there is no assurance that additional managerial assistance will not be
required. The analysis of new business opportunities will be undertaken by or
under the supervision of the management of the Company. The Company has recently
entered into employment agreements with Messrs. Delmar J. Lewis, Christopher J.
Lewis and Robert B. Hamilton. However, if the employment by the Company of
either Messrs. Lewis, Lewis and Hamilton terminates, or they are unable to
perform their duties, the Company may be substantially affected. Prior to the
closing of this offering, the Company intends to obtain key-man life insurance
on Christopher J. Lewis in the amount of $1 million. The Company will be the
owner and beneficiary of the insurance policy. See "Use of Proceeds," "Business"
and "Management."

BENEFITS TO BE RECEIVED BY AFFILIATES ARE SIGNIFICANT

The Company was established in 1988 as a division of Advanced Technology
Systems Inc. ("ATS"), a McLean, Virginia based information technology products
and services company, which is principally owned and controlled by Delmar J.
Lewis, the chairman of the board and a principal stockholder of the Company. The
Company was incorporated in Delaware on September 16, 1994 and acquired all
rights, title and interest in the VR products and systems from ATS for a
purchase price of $1,520,590, of which $500,000 was subsequently forgiven by ATS
in October 1995. The purchase price represents the net expenses incurred by ATS
while the Company was a division of ATS. The balance due to ATS of $1,020,590 is
payable under a promissory note bearing simple annual interest at the rate of
prime plus 1.375%, with semi-annual payments commencing May 1996 extending
through May 2001. This note was retired in May 1996 with a cash payment of
$20,590 and the issuance of 200,000 shares of the Company's common stock. The
Company intends to use $500,000 of the net proceeds from this offering to
curtail a portion of the amount due to ATS under a line of credit between

8
<PAGE>
the Company and ATS. Certain members of the management of the Company have
pledged their securities as collateral for the promissory note and a PRO RATA
portion of the collateralized securities will be released as the note is paid.
See "Certain Transactions."

UNCERTAINTY OF PROPOSED MERGERS AND ACQUISITIONS CAMPAIGN

Following the closing of this offering, the Company intends to use a part of
the net proceeds to engage in a mergers and acquisitions campaign in order to
merge with or acquire companies engaged in a similar or complementary business.
The Company has not entered into any negotiations to merge with or acquire any
such target companies, but the Company has identified several such companies
engaged in a complementary business. The Company can make no assurances that it
will be able to merge with or acquire any companies. Although the Company
intends to utilize up to approximately $500,000 of the net proceeds of this
offering in its mergers and acquisitions activities during the 12 months
following the date of this Prospectus, no assurances can be made that such funds
will enable the Company to expand its base or realize profitable consolidated
operations. In addition, the Company's stockholders may not have the opportunity
to review the financial statements of any of the companies that may be acquired
or have the opportunity to vote on any proposed acquisitions since Delaware law
does not require such review and approval. Should such funds not be utilized in
its mergers and acquisitions activities, the Company intends to utilize the
funds in equal amounts in working capital, capital equipment and marketing and
sales. See "Use of Proceeds."

LITIGATION INVOLVEMENT OF UNDERWRITER MAY HAVE ADVERSE CONSEQUENCES.

RECENT NASD ACTION INVOLVING STRATTON OAKMONT

The Company has been advised by Stratton Oakmont that the NASD (District 10)
filed a complaint (No. C10950081) on October 5, 1995 ("Complaint") against
Stratton Oakmont, Steven Sanders, the head trader of Stratton Oakmont, Daniel M.
Porush, the president of Stratton Oakmont, and Paul F. Byrne, formerly Stratton
Oakmont's director of compliance (collectively, the "Respondents"), alleging
various violations of the NASD Rules of Fair Practice. The complaint consisted
of three causes. The first cause alleged that Stratton Oakmont and Sanders
effected principal retail sales of securities at prices that were fraudulently
excessive. The second cause alleged that Stratton Oakmont and Sanders charged
excessive markups. The third cause alleged that Stratton Oakmont, Porush and
Byrne failed to establish, maintain and enforce reasonable supervisory
procedures designed to assure compliance with the NASD's rules and policies.

On April 15, 1996 the NASD in its decision found all of the Respondents
except Paul Byrne in violation of all three causes and imposed the following
sanctions:

-Sanders was censured, fined $25,000 and was suspended from association with
any member of the NASD in any capacity for a period of one year.

-Stratton Oakmont was censured, fined $500,000 and was required to disgorge
its excess profits to its customers, plus prejudgment interest, totaling
$1,876,205. In addition, Stratton Oakmont was suspended for a period of one
year from effecting any principal retail transactions.

-Porush was censured, fined $250,000 and barred from association with any
member of the NASD in any capacity.

Stratton Oakmont, Porush and Sanders have appealed the NASD's decision
thereby staying imposition of the sanctions.

9
<PAGE>

any price. In such event, the market for and liquidity of the Company's
securities may not exist. It should be noted that although Stratton Oakmont may
not be the sole market maker in the Company's securities, it may likely be the
dominant market maker in the Company's securities. See "Underwriting."

PERMANENT INJUNCTION GRANTED -- STRATTON OAKMONT ENJOINED TO COMPLY WITH
RECOMMENDATIONS OF AN INDEPENDENT CONSULTANT AND AN INDEPENDENT AUDITOR
APPOINTED PURSUANT TO AN ADMINISTRATION ORDER

The Company has been advised by Stratton Oakmont that the Commission
instituted an action on December 14, 1994 in the United States District Court
for the District of Columbia against Stratton Oakmont. The complaint alleged
that Stratton Oakmont was not complying with the Administrative Order entered by
the Commission on March 17, 1994 ("Administrative Order") by failing to adopt
the recommendations of an independent consultant. The Administrative Order was
previously consented to by Stratton Oakmont, without admitting or denying the
findings contained therein, as settlement of an action commenced against
Stratton Oakmont by the Commission in March 1992, which found willful violations
of the anti-fraud provisions of the securities laws such that Stratton Oakmont:

-engaged in fraudulent sales practices;

-engaged in and/or permitted unauthorized trading in customer accounts;

-knowingly and recklessly manipulated the market price of a company's
securities by dominating and controlling the market for those securities;

-made improper and unsupported price predictions with regard to recommended
over-the-counter securities; and

-made material misrepresentations and omissions regarding certain securities
and its experience in the securities industry.

Pursuant to the Administrative Order, Stratton Oakmont was censured and an
independent consultant ("Stratton Consultant") was chosen by the Commission to
advise and consult with Stratton Oakmont and to review and recommend new
supervisory and compliance procedures. The complaint sought:

-to enjoin Stratton Oakmont from violating the Administrative Order;

-an order commanding Stratton Oakmont to comply with the Administrative
Order; and

-to have a Special Compliance Monitor appointed to ensure compliance with
the Administrative Order. Stratton Oakmont claimed that the Stratton
Consultant exceeded his authority under the Administrative Order and had
violated the terms of the Administrative Order.

On February 28, 1995, the court granted the Commission's motion for a
permanent injunction ("Permanent Injunction") and ordered Stratton Oakmont to
comply with the Administrative Order, which required the appointment of an
independent consultant and a separate independent auditor and required that all
recommendations be complied with, including the taping of all telephone
conversations between Stratton Oakmont's brokers and their customers. In
granting the Commission's motion for a Permanent Injunction, the court
determined that Stratton Oakmont's conduct unequivocally demonstrated that there
is a substantial likelihood that it will continue to evade its responsibilities
under the Administrative Order. On April 20, 1995, Stratton Oakmont filed an
appeal to the United States Court of Appeals for the District of Columbia, and
on April 24, 1995 filed a motion to stay the Permanent Injunction pending the
outcome of the appeal. The motion to stay was denied. It is uncertain when a
decision on the appeal will be rendered. The failure by Stratton Oakmont to
comply with the Administrative Order or Permanent Injunction may adversely
effect Stratton Oakmont's activities in that the court may enter a further order
restricting the ability of Stratton Oakmont to act as a market maker of the
Company's securities. The effect of such action may prevent

10
<PAGE>
the holders of the Company's securities from selling such securities since
Stratton Oakmont may be restricted from acting as a market maker of the
Company's securities and, in such event, will not be able to execute a sale of
such securities. Also, if other broker dealers fail to make a market in the
Company's securities, the public security holders may not have anyone to
purchase their securities when offered for sale at any price and the security
holders may suffer the loss of their entire investment.

RECENT STATE ACTIONS INVOLVING STRATTON OAKMONT -- POSSIBLE LOSS OF
LIQUIDITY

As a result of the Permanent Injunction, the states of New Jersey,
Pennsylvania and Indiana have commenced actions seeking, among other things, to
revoke Stratton Oakmont's license to do business in such states. The states of
Alabama, Delaware, North Carolina, South Carolina and Arkansas also have
suspended Stratton Oakmont's license pending a resolution of the proceedings in
those states. The states of Minnesota, Vermont, and Rhode Island have served
upon Stratton Oakmont notices of intent to revoke Stratton Oakmont's license in
such states. In the state of Mississippi, Stratton Oakmont has agreed to a
suspension of its license pending resolution of certain claims and review of its
procedures and practices by the state authorities. In addition, Stratton Oakmont
withdrew its registration in the State of Maryland and notwithstanding, there
may be further administrative action against the firm. The firm withdrew its
registration in Massachusetts with a right to reapply for registration after two
(2) years and agreed to a temporary cessation of business in Utah pending an on-
site inspection and further administrative proceedings. The state of Oregon, as
a result of the Permanent Injunction, has revoked Stratton Oakmont's license
subject to the holding of a hearing to determine definitively Stratton Oakmont's
license status, and Stratton Oakmont, in this proceeding as well as other
proceedings, expects to be able to demonstrate that the Permanent Injunction is
not of a nature as to be a lawful basis to revoke Stratton Oakmont's license
permanently. Finally, Stratton Oakmont has received an order limiting license in
the state of Nebraska. Such proceedings, if ultimately successful, may adversely
affect the market for and liquidity of the Company's securities if additional
broker-dealers do not make a market in the Company's securities. Moreover,
should investors purchase any of the securities in this Offering from Stratton
Oakmont prior to a revocation of Stratton Oakmont's license in their state, such
investors will not be able to resell such securities in such state through
Stratton Oakmont but will be required to retain a new broker-dealer firm for
such purpose. The Company cannot ensure that other broker-dealers will make a
market in the Company's securities. In the event that other broker-dealers fail
to make a market in the Company's securities, the possibility exists that the
market for and the liquidity of the Company's securities may be adversely
affected to such an extent that public security holders may not have anyone to
purchase their securities when offered for sale at any price. In such event, the
market for, and liquidity and prices of the Company's securities may not exist.
It should be noted that although Stratton Oakmont may not be the sole market
maker in the Company's securities, it will most likely be the dominant market
maker in the Company's securities. In addition, in the event that the
Underwriter's license to do business is revoked in the states set forth above,
the Underwriter has advised the Company that it believes the members of the
selling syndicate in this Offering will be able to make a market in the
Company's securities in such states and that such an event will not have a
materially adverse effect on this Offering, although no assurance can be given.
See "Underwriting."

FOR ADDITIONAL INFORMATION REGARDING STRATTON OAKMONT, INVESTORS MAY CALL
THE NATIONAL ASSOCIATION OF SECURITIES DEALERS, INC. AT 1-800-289-9999.

PAUL CARMICHAEL V. STRATTON OAKMONT.

The Company has been advised by Stratton Oakmont that Honorable John E.
Sprizzo, United States Judge for the Southern District of New York, on May 6,
1994 denied the class certification motion in PAUL CARMICHAEL V. STRATTON
OAKMONT, INC., ET AL., Civ. 0720 (JES), of the plaintiff Paul Carmichael. The
class action complaint alleges manipulation and fraudulent sales practices in
connection with a number of securities. The allegations were substantially
similar and involve much of the same time period as the Commission's civil
complaint (discussed above). The Company has further been informed that counsel
for the class action plaintiff is seeking to re-argue the motion for class

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<PAGE>
certification. Should the motion for re-argument be denied, Paul Carmichael may
likely be required to arbitrate his individual claim for the monetary losses in
his security brokerage account before the National Association of Securities
Dealers, Inc. ("NASD").

BROAD DISCRETION IN APPLICATION OF PROCEEDS

The management of the Company has broad discretion to adjust the application
and allocation of the net proceeds of this offering, including funds received
upon exercise of the Class A Warrants, in order to address changed circumstances
and opportunities. As a result of the foregoing, the success of the Company will
be substantially dependent upon the discretion and judgment of the management of
the Company with respect to the application and allocation of the net proceeds
hereof. Pending use of such proceeds, the net proceeds of this offering will be
invested by the Company in temporary, short-term interest-bearing obligations.
See "Use of Proceeds."

UNCERTAIN PROTECTION OF PATENT, TRADEMARK, COPYRIGHT AND PROPRIETARY RIGHTS

The Company currently does not have any patent, trademark or copyright
applications pending. However, the Company may file patent, trademark and
copyright applications relating to certain of the Company's products. If
patents, registered trademarks or copyrights were to be issued, there can be no
assurance as to the extent of the protection that will be granted to the Company
as a result of having such patents, trademarks or copyrights or that the Company
will be able to afford the expenses of any complex litigation which may be
necessary to enforce its proprietary rights. Failure of the Company's proposed
patents, trademark and copyright applications may have a material adverse impact
on the Company's business. Except as may be required by the filing of patent,
trademark and copyright applications, the Company will attempt to keep all other
proprietary information secret and to take such actions as may be necessary to
insure the results of its development activities are not disclosed and are
protected under the common law concerning trade secrets. Such steps will include
the execution of nondisclosure agreements by key Company personnel and may also
include the imposition of restrictive agreements on purchasers of the Company's
products and services. There is no assurance that the execution of such
agreements will be effective to protect the Company, that the Company will be
able to enforce the provisions of such nondisclosure agreements or that
technology and other information acquired by the Company pursuant to its
development activities will be deemed to constitute trade secrets by any court
of competent jurisdiction. See "Business."

SUBSTANTIAL COMPETITION

Businesses in the United States which are engaged in the development and
production of high technology products are characterized by intense and
substantial competition. Almost all of the companies with which the Company
intends to compete are substantially larger and have substantially greater
resources than the Company. It is also likely that other competitors will emerge
in the future. The Company will compete with companies that have greater market
recognition, greater resources and broader capabilities than the Company. As a
consequence, there is no assurance that the Company will be able to successfully
compete in the marketplace. See "Business."

LIMITATION ON DIRECTOR LIABILITY

As permitted by Delaware corporation law, the Company's Certificate of
Incorporation limits the liability of directors to the Company or its
stockholders for monetary damages for breach of a director's fiduciary duty
except for liability in certain instances. As a result of the Company's charter
provision and Delaware law, stockholders may have more limited rights to recover
against directors for breach of fiduciary duty than as existing prior to the
enactment of the law. See "Management -- Limitation on Liability of Directors."

ARBITRARY OFFERING PRICE

There has been no prior public market for the Company's securities. The
price to the public of the securities offered hereby has been arbitrarily
determined by negotiations between the Company and the Underwriter and bears no
relationship to the Company's earnings, book value or any other recognized
criteria of value. The offering price of $5.00 per share is substantially in
excess of the net

12
<PAGE>
tangible book value deficiency of $(.24) per share as of March 31, 1996 and in
excess of the price received by the Company for shares sold in prior
transactions. See "Prospectus Summary -- Selected Financial Data,"
"Underwriting," "Dilution and Other Comparative Data" and "Certain
Transactions."

IMMEDIATE AND SUBSTANTIAL DILUTION

An investor in this offering will experience immediate and substantial
dilution. As of March 31, 1996, the Company had a net tangible book value
deficiency of $(933,830) or $(.24) per share, adjusted to give effect to the
April 1996 conversion of $250,000 of Convertible Notes Payable in exchange for
750,000 shares of common stock and the May 1996 retirement of $1,000,000 in
notes payable upon the issuance of 200,000 shares of common stock. After giving
affect to the sale of the shares offered hereby at an assumed offering price of
$5.00 per share, after deducting underwriting discounts and commissions and
estimated offering expenses, PRO FORMA net tangible book value would have been
$4,203,170 or $.80 per share. The result will be an immediate increase in net
tangible book value per share of $1.04 (433%) to existing stockholders and an
immediate dilution to new investors of $4.20 (84%) per share. See "Dilution."

REQUIREMENTS OF CURRENT PROSPECTUS AND STATE BLUE SKY REGISTRATION IN
CONNECTION WITH THE EXERCISE OF THE CLASS A WARRANTS

The Company will be able to issue the securities offered hereby, shares of
its Common Stock upon the exercise of the Class A Warrants and Underwriter's
Purchase Option only if (i) there is a current Prospectus relating to the
securities offered hereby under an effective Registration Statement filed with
the Securities and Exchange Commission, and (ii) such Common Stock is then
qualified for sale or exempt therefrom under applicable state securities laws of
the jurisdictions in which the various holders of Class A Warrants reside. There
can be no assurance, however, that the Company will be successful in maintaining
a current Registration Statement. After a Registration Statement becomes
effective, it may require updating by the filing of a post-effective amendment.
A post-effective amendment is required (i) anytime after nine months subsequent
to the Effective Date when any information contained in the Prospectus is over
sixteen months old; (ii) when facts or events have occurred which represent a
fundamental change in the information contained in the Registration Statement;
or (iii) when any material change occurs in the information relating to the plan
or distribution of the securities registered by such Registration Statement. The
Company anticipates that this Registration Statement will remain effective for
not more than nine months following the date of this Prospectus or until
, 1997, assuming a post-effective amendment is not filed by the
Company. The Company intends to qualify the sale of the Class A Warrants in a
limited number of states, although certain exemptions under certain state
securities ("Blue Sky") laws may permit the Class A Warrants to be transferred
to purchasers in states other than those in which the Class A Warrants were
initially qualified. Qualification for the exercise or sale of the Class A
Warrants in the states is essential for the establishment of a trading market in
the securities. The Company can make no assurances that it will be able to
qualify its securities in any state. The Company will be prevented, however,
from issuing Common Stock upon exercise of the Class A Warrants in those states
where exemptions are unavailable and the Company has failed to qualify the
Common Stock issuable upon exercise of the Class A Warrants. The Company may
decide not to seek, or may not be able to obtain qualification of the issuance
of such Common Stock in all of the states in which the ultimate purchasers of
the Class A Warrants reside. In such a case, the Class A Warrants of those
purchasers will expire and have no value if such Class A Warrants cannot be
exercised or sold. Accordingly, a trading market, if any, for the Class A
Warrants may be limited because of the Company's obligation to fulfill both of
the foregoing requirements. See "Description of Securities."

ADDITIONAL AUTHORIZED SHARES AVAILABLE FOR ISSUANCE MAY ADVERSELY AFFECT THE
MARKET

The Company is authorized to issue 25,000,000 shares of its Common Stock,
$.01 par value. If all of the 1,300,000 shares of Common Stock offered hereby
are sold, there will be a total of 5,250,000 shares of Common Stock issued and
outstanding. However, the total number of shares of Common Stock issued and
outstanding does not include the exercise of up to 1,200,000 Class A

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<PAGE>

Warrants offered to investors in this offering to purchase up to 1,200,000
shares of the Company's Common Stock. Moreover, the Underwriters have been
granted an option to purchase up to 130,000 shares of Common Stock and 120,000
Class A Warrants in connection with this offering, which has been authorized by
the Company for issuance. After reserving a total of 1,320,000 shares of Common
Stock for issuance upon the exercise of all the Class A Warrants, if all of the
Class A Warrants are exercised, the Company will have at least 18,300,000 shares
of authorized but unissued capital stock available for issuance without further
shareholder approval. As a result, any issuance of additional shares of Common
Stock may cause current shareholders of the Company to suffer significant
dilution which may adversely affect the market for the securities of the
Company. Pursuant to the terms of the Underwriting Agreement, the Company's
stockholders and the Company have agreed not to sell, transfer, assign or issue
any securities of the Company for a period of 24 months from the date of this
Prospectus without the prior consent of the Underwriters. See "Dilution,"
"Description of Securities" and "Underwriting."

LACK OF PRIOR MARKET FOR SECURITIES OF THE COMPANY

No prior market has existed for the securities being offered hereby and no
assurance can be given that a market will develop subsequent to this offering.
The Underwriters may make a market in the securities of the Company upon the
closing of this offering, but there is no assurance that it will be successful
in its efforts.

WARRANTS SUBJECT TO REDEMPTION

The Class A Warrants shall be exercisable commencing one year after the date
of this Prospectus ("Effective Date"). Each Class A Warrant entitles the holder
to purchase one share of Common Stock at $5.50 per share during the four year
period commencing one year from the Effective Date hereof. The Class A Warrants
are redeemable by the Company for $.05 per Warrant, at any time after
, 1998, upon thirty (30) days' prior written notice, if the average
closing price or bid price of the Common Stock, as reported by the principal
exchange on which the Common Stock is quoted, the Nasdaq SmallCap Market or the
National Quotation Bureau, Incorporated, as the case may be, equals or exceeds
$9.00 per share, for any twenty (20) consecutive trading days within a period of
thirty (30) days ending within ten (10) days of the notice of redemption. Upon
thirty (30) days' prior written notice to all holders of the Class A Warrants,
the Company shall have the right to reduce the exercise price and/or extend the
term of the Class A Warrants. Redemption of the Warrants will force holders
thereof to either (i) exercise such Warrants and pay the exercise price at a
time when it may be less than advantageous economically to do so, or (ii) accept
the redemption price, which may be substantially less than the market value
thereof at the time of redemption. Sales of such securities or the potential of
such sales at any time may have an adverse effect on the market prices of the
securities offered hereby. See "Certain Transactions," "Description of
Securities," "Selling Security-holders" and "Underwriting."

The Company intends to qualify the sale of the securities in a limited
number of states, although certain exemptions under certain state securities
("Blue Sky") laws may permit the Warrants to be transferred to purchasers in
states other than those in which the Warrants were initially qualified. The
Company will be prevented, however, from issuing Common Stock upon exercise of
the Warrants in those states where exemptions are unavailable and the Company
has failed to qualify the Common Stock issuable upon exercise of the Warrants.
The Company may decide not to seek, or may not be able to obtain qualification
of the issuance of such Common Stock in all of the states in which the ultimate
purchasers of the Warrants reside. In such case, the Warrants of those
purchasers will expire and have no value if such Warrants cannot be exercised or
sold. Accordingly, the market for the Warrants may be limited because of the
Company's obligation to fulfill the foregoing requirements.

UNDERWRITERS' INFLUENCE ON THE MARKET MAY HAVE ADVERSE CONSEQUENCES

A significant number of securities may be sold to customers of the
Underwriters. Such customers of the Underwriters of this offering subsequently
may engage in transactions for the sale or purchase of such securities through
or with the Underwriters. Although they have no legal obligation to do so,

14
<PAGE>

the Underwriters from time to time in the future will make a market in and
otherwise effect transactions in the Company's securities. To the extent the
Underwriters act as marketmaker in the securities, they may be a dominating
influence in that market. The price and liquidity of such securities may be
affected by the degree, if any, of the Underwriters' participation in the
market, inasmuch as a significant amount of such securities may be sold to
customers of the Underwriters. Such customers, as customers of the Underwriters
of this offering, subsequently may engage in transactions for the sale or
purchase of such securities through or with the Underwriters, although no
agreements or understandings, written or oral, exist for such transactions, and
such transactions may further enhance the Underwriters' dominating influence on
the market. Such market making activities, if commenced, may be discontinued at
any time or from time to time by the Underwriters without obligation or prior
notice. If a dominating influence at such time, the Underwriters' discontinuance
may adversely affect the price and liquidity of the securities.

Further, unless granted an exemption by the Securities and Exchange
Commission to its Rule 10b-6, the Underwriters may be prohibited from engaging
in any market making activities with regard to the Company's securities for the
period from two or nine business days prior to any solicitation of the exercise
of Warrants until the later of the termination of such solicitation activity or
the termination, by waiver or otherwise, of any right that the Underwriters may
have to receive a fee for the exercise of Warrants following the solicitation.
As a result, the Underwriters may be unable to continue to provide a market for
the Company's securities during certain periods while the Warrants are
exercisable, which may adversely affect the price and liquidity of the
securities.

CONTRACTUAL OBLIGATIONS TO UNDERWRITERS MAY REDUCE PROCEEDS AVAILABLE TO THE
COMPANY

The Company has also agreed to pay fees to the Underwriters, aggregating up
to five percent of the consideration involved in the transaction, if the
Underwriters arrange equity financing, debt financing and assistance with
mergers and acquisitions, for the Company other than this offering during a
period of five years after the date of this Prospectus, or if the Underwriters
obtain or are influential in increasing any lines of credit the Company may
have, provided such financing or increase is accepted by the Company. Such fees
will reduce the amount of proceeds available to the Company from such financing
or line of credit. Further, in addition to an ten percent underwriting discount,
the Company has also agreed to pay the Underwriters a nonaccountable expense
allowance of three percent of the gross proceeds of this offering, as well as a
fee of four percent of the exercise price of the Warrants, if certain conditions
are met. To the extent the foregoing compensation is paid from the proceeds of
this offering, the amounts available to the Company, will be reduced. On the
closing date, the Company will sell to the Underwriters for a purchase price of
$100, an option to purchase 130,000 shares of Common Stock and 120,000 Class A
Warrants at 165% of the initial offering prices of $5.00 per share and $.15 per
Warrant, on the date of this Prospectus. See "Underwriting."

EXERCISE OF CLASS A WARRANTS MAY HAVE DILUTIVE EFFECT ON MARKET

The Class A Warrants will provide, during their term, an opportunity for the
holder to profit from a rise in the market price, of which there is no
assurance, with resulting dilution in the ownership interest in the Company held
by the then present stockholders. Holders of the Warrants most likely would
exercise the Warrants and purchase the underlying Common Stock at a time when
the Company may be able to obtain capital by a new offering of securities on
terms more favorable than those provided by such Warrants, in which event the
terms on which the Company may be able to obtain additional capital would be
affected adversely. See "Description of Securities" and "Underwriting."

"PENNY STOCK" REGULATIONS MAY IMPOSE CERTAIN RESTRICTIONS ON MARKETABILITY OF
SECURITIES

The Securities and Exchange Commission ("Commission"), Washington, D.C., has
adopted regulations which generally define "penny stock" to be any equity
security that has a market price (as defined) less than $5.00 per share or an
exercise price of less than $5.00 per share, subject to certain exceptions. Upon
authorization of the securities offered hereby for quotation on the Nasdaq Small
Cap Market ("Nasdaq"), such securities will initially be exempt from the
definition of "penny stock."

15
<PAGE>
If the securities offered hereby are removed from listing by Nasdaq at any time
following the Effective Date, the Company's securities may become subject to
rules that impose additional sales practice requirements on broker-dealers who
sell such securities to persons other than established customers and accredited
investors (generally those persons with assets in excess of $1,000,000 or annual
income exceeding $200,000, or $300,000 together with their spouse). For
transactions covered by these rules, the broker-dealer must make a special
suitability determination for the purchase of such securities and have received
the purchaser's written consent to the transaction prior to the purchase.
Additionally, for any transaction involving a penny stock, unless exempt, the
rules require the delivery, prior to the transaction, of a risk disclosure
document mandated by the Commission relating to the penny stock market. The
broker-dealer also must disclose the commissions payable to both the
broker-dealer and the registered representative, current quotations for the
securities and, if the broker-dealer is the sole market-maker, the broker-dealer
must disclose this fact and the broker-dealer's presumed control over the
market. Finally, monthly statements must be sent disclosing recent price
information for the penny stock held in the account and information on the
limited market in penny stocks. Consequently, the "penny stock" rules may
restrict the ability of broker-dealers to sell the Company's securities and may
affect the ability of purchasers in this offering to sell the Company's
securities in the secondary market.

SHARES ELIGIBLE FOR FUTURE SALE MAY ADVERSELY AFFECT THE MARKET

All of the Company's currently outstanding shares of common stock are
"restricted securities" and, in the future, may be sold upon compliance with
Rule 144, adopted under the Securities Act of 1933, as amended. Rule 144
provides, in essence, that a person holding "restricted securities" for a period
of two years may sell only an amount every three months equal to the greater of
(a) one percent of the Company's issued and outstanding shares, or (b) the
average weekly volume of sales during the four calendar weeks preceding the
sale. The amount of "restricted securities" which a person who is not an
affiliate of the Company may sell is not so limited, since non-affiliates may
sell without volume limitation their shares held for three years if there is
adequate current public information available concerning the Company. Upon the
sale of the securities of this offering, and assuming that there is no exercise
of any issued and outstanding Class A Warrants, the Company will have 5,250,000
shares of its Common Stock issued and outstanding, of which 3,200,000 shares are
"restricted securities." Therefore, during each three month period, beginning in
November 1996, a holder of restricted securities who has held them for at least
the two year period, which began on November 1, 1994, may sell under Rule 144 a
number of shares up to 52,500 shares. Non-affiliated persons who hold for the
three-year period described above may sell unlimited shares once their holding
period is met. Pursuant to the terms of the Underwriting Agreement, the
Company's stockholders and the Company have agreed not to sell, transfer, assign
or issue any securities of the Company for a period of 24 months from the date
of this Prospectus without the prior consent of the Representative.

This offering also includes 750,000 shares of Common Stock owned by the
Selling Security-holders. The shares of Common Stock held by the Selling
Security-holders may be sold commencing eighteen (18) months from the date of
this Prospectus, subject to earlier release at the sole discretion of the
Representative, and such securities include a legend with such restrictions. The
Representative may release the securities held by the Selling Security-holders
at any time after all securities subject to the Over-allotment Option have been
sold or such option has expired. The resale of the securities of the Selling
Security-holders are subject to Prospectus delivery and other requirements of
the Securities Act of 1933, as amended. Sales of such securities in the
Over-allotment Option and the early release of the Selling Security-holder
shares, which has occurred in previous offerings underwritten by the
Representative, or the potential of such sales at any time may have an adverse
effect on the market prices of the securities offered hereby. See "Certain
Transactions," "Selling Security-holders" and "Underwriting."

16
<PAGE>
USE OF PROCEEDS

After deducting underwriting discounts of $668,000 and other expenses of the
offering estimated to be $875,000, assuming an offering price of $5.00 per share
of Common Stock and $.15 per Class A Warrant, the Company will receive net
proceeds from the offering of approximately $5,137,000. These proceeds,
excluding the exercise of any of the Class A Warrants, will be utilized in order
of priority by the Company as listed below for approximately 12 months
substantially as follows:

<TABLE>
<CAPTION>
APPROXIMATE
AMOUNT OF
NET
ADMINISTRATIVE EXPENSES PROCEEDS %
---------- ---------
<S> <C> <C>
Management Compensation(1)............................................. $ 750,000 14.60
Employee Salaries, Office Rent and Overhead(2)......................... 750,000 14.60

OPERATING COSTS AND WORKING CAPITAL
Product Development(3)................................................. 750,000 14.60
Capital Equipment(4)................................................... 750,000 14.60
Marketing and Sales(5)................................................. 750,000 14.60
Working Capital(6)..................................................... 387,000 7.54
Mergers and Acquisitions(7)............................................ 500,000 9.73
Debt retirement(8)..................................................... 500,000 9.73
---------- ---------
TOTAL.............................................................. $5,137,000 100.00
---------- ---------
---------- ---------
</TABLE>

- ------------------------
(1) The officers and employees of the Company intend to receive remuneration as
part of an overall group insurance plan providing health, life and
disability insurance benefits for employees of the Company. The amount
allocable to each individual officer and employee cannot be specifically or
precisely ascertained, but, in any event, will not exceed $25,000 per annum
as to each individual. See "Management -- Remuneration."

(2) Includes annual general and administrative employee salaries, exclusive of
management salaries, associated benefits, related office rent and
miscellaneous office expenses.

(3) Includes annual salaries for technical support personnel.

(4) The Company intends to purchase and/or lease certain additional capital
equipment including, but not limited to, computer hardware/software products
and systems, communication systems, security systems and furniture.

(5) The amount allocated by the Company for marketing and sales includes
marketing materials, advertising, business travel and a significant
expansion of its marketing and sales staff.

(6) Working capital will be utilized by the Company to enhance and, otherwise,
stabilize cash flow during the initial 12 months of operations following the
closing of this offering, such that any shortfalls between operating
revenues and costs will be covered by working capital. Although the Company
prefers to retain its working capital in reserve, the Company may be
required to expend part or all of these proceeds as financial demands
dictate.

(7) Following the closing of this offering, the Company intends to engage in a
mergers and acquisitions campaign in order to merge with or acquire
complementary companies. The Company has not entered into any negotiations
to merge with or acquire any such target companies, but the Company has
identified several such companies engaged in a complementary business. The
Company can make no assurances that it will be able to merge with or acquire
any companies. Although the Company intends to utilize up to approximately
$500,000 in its mergers and acquisitions activities during the 12 months
following the date of this Prospectus, no assurances can be made that such
funds will enable the Company to expand its base or realize profitable
consolidated operations. The ability of the Company to engage in a mergers
and acquisitions campaign in view of the Company's resources is uncertain.
Should such funds not be utilized in its mergers and acquisitions
activities, the Company intends to utilize the funds in equal amounts in
capital equipment and marketing and sales.

(8) The Company was established in 1988 as a division of Advanced Technology
Systems Inc. ("ATS"), a McLean, Virginia based information technology
products and services company, which is principally owned and controlled by
Delmar J. Lewis, the chairman of the board and a principal

17
<PAGE>
stockholder of the Company. The Company was incorporated in Delaware on
September 16, 1994 and acquired all rights, title and interest in the VR
products and systems from ATS for a purchase price of $1,520,590, of which
$500,000 was forgiven by ATS in October 1995. Since the acquisition, ATS has
provided the Company with working capital financing under a line of credit
agreement. As of December 31, 1995, the Company owed $1,127,328 to ATS under
this line of credit. Of this amount, $500,000 is payable from the net
proceeds of this offering.

Although it is uncertain whether the Company's shares of Common Stock will
rise to a level at which the Class A Warrants would be exercised, in the event
subscribers in this offering elect to exercise all of the Class A Warrants
offered herein (not including the Underwriters' Purchase Option), the Company
will realize gross proceeds of approximately $6,600,000. Management anticipates
that the proceeds from the exercise of the Class A Warrants would be contributed
to working capital of the Company. Nonetheless, the Company may at the time of
exercise allocate a portion of the proceeds to any other corporate purposes.
Accordingly, investors who exercise their Class A Warrants will entrust their
funds to management, whose specific intentions regarding the use of such funds
are not presently and specifically known.

The amounts set forth in the use of proceeds merely indicate the proposed
use of proceeds, and actual expenditures may vary substantially from these
estimates depending upon economic conditions and the success, if any, of the
Company's proposed business. The Company is unable to predict the precise period
for which this offering will provide financing, although management believes
that the Company should have sufficient working capital to meet its cash
requirements for approximately 12 months from the date of this Prospectus.
Accordingly, the Company may need to seek additional funds through loans or
other financing arrangements during this period of time. No such arrangements
exist or are currently contemplated and there can be no assurance that they may
be obtained in the future should the need arise.

Pending utilization, management intends to make temporary investment of the
proceeds in bank certificates of deposit, interest-bearing savings accounts,
prime commercial paper or federal government securities.

18
<PAGE>
DILUTION

As of March 31, 1996, the Company had a net tangible book value deficiency
of $(933,830) or $(.24) per share, derived from the Company's balance sheet as
of March 31, 1996, adjusted to give effect to the April 1996 conversion of
$250,000 of convertible notes payable in exchange for 750,000 shares of common
stock and the May 1996 retirement of $1,000,000 in notes payable from the
issuance of 200,000 shares of common stock and using common shares outstanding
prior to the offering. Net tangible book value per share means the tangible
assets of the Company, less all liabilities, divided by the number of shares of
Common Stock outstanding prior to the offering. After giving effect to the sale
of the shares offered hereby at an assumed price of $5.00 per share, after
deducting underwriting discounts and estimated offering expenses, pro forma net
tangible book value would have been $4,203,170 or $.80 per share. The result
will be an immediate increase in net tangible book value per share of $1.04
(433%) to existing shareholders and an immediate dilution to new investors of
$4.20 (84%) per share. As a result, public investors will bear most of the risk
of loss since their shares are being purchased at a cost substantially above the
price that existing shareholders acquired their shares. "Dilution" is determined
by subtracting net tangible book value per share after the offering from the
offering price to investors. The following table illustrates this dilution
assuming no exercise of the over-allotment option:

<TABLE>
<S> <C> <C>
Public offering price of the Common Stock offered hereby....................... $ 5.00
Pro forma net tangible book value deficiency per share, before the
offering.................................................................... $ (.24)
Increase per share attributable to the sale by the Company of the Common
Stock offered hereby........................................................ $ 1.04
---------
Pro forma net tangible book value per share, after the offering................ $ .80
---------
Dilution per share to new investors............................................ $ 4.20
---------
---------
</TABLE>

The above table assumes no exercise of the Class A Warrants, the
Over-allotment Option or the Underwriters' Purchase Option. See "Description of
Securities."

The following table summarizes the investments of all existing stockholders
and new investors after giving effect to the sale of the shares offered hereby
assuming no exercise of the Over-allotment Option:

<TABLE>
<CAPTION>
PERCENTAGE AGGREGATE PERCENT OF AVERAGE
SHARES OF TOTAL CONSIDERATION TOTAL PRICE PER
PURCHASED SHARES PAID(2) INVESTED SHARE
----------- ----------- ------------- ----------- -----------
<S> <C> <C> <C> <C> <C>
Present Stockholders(1)...................................... 3,950,000 75.24% $ 2,166,925 25.00% $ .55
-----
-----
Public Stockholders.......................................... 1,300,000 24.76% $ 6,500,000 75.00% $ 5.00
----------- ----------- ------------- ----------- -----
-----
Total.................................................... 5,250,000 100.00% $ 8,666,925 100.00% $ 1.65
----------- ----------- ------------- ----------- -----
----------- ----------- ------------- ----------- -----
</TABLE>

If the Over-allotment Option is exercised in full, the public stockholders
will have paid $7,475,000 and will hold 1,495,000 shares of Common Stock,
representing 77.53 percent of the total consideration and 27.46 percent of the
total number of outstanding shares of Common Stock. See "Description of
Securities" and "Underwriting."
- ------------------------

(1) This offering also includes 750,000 shares of Common Stock owned by the
Selling Security-holders. The shares of Common Stock held by the Selling
Security-holders may be sold commencing eighteen (18) months from the date
of this Prospectus, subject to earlier release at the sole discretion of the
Representative, and such securities include a legend with such restrictions.
The Representative may release the securities held by the Selling
Security-holders at any time after all securities subject to the
Over-allotment Option have been sold or such option has expired. The resale
of the securities of the Selling Security-holders are subject to Prospectus
delivery and other requirements of the Securities Act of 1933, as amended.
Sales of such securities in the Over-allotment Option and the early release
of the Selling Security-holder shares, which has occurred in previous
offerings underwritten by the Representative, or the potential of such sales
at any time may have an adverse effect on the market prices of the
securities offered hereby. See "Certain Transactions," "Description of
Securities" and "Selling Security-holders."

(2) Consideration paid by present stockholders includes $638,438, the value of
notes receivable for the purchase of 151,300 shares of Common Stock by
Company employees in March 1995.

19
<PAGE>
CAPITALIZATION
(DOLLARS IN THOUSANDS)

The following table sets forth the capitalization of the Company as of March
31, 1996 adjusted to reflect on a PRO FORMA basis the conversion of $250,000 of
convertible notes payable into common stock in April 1996 and the issuance of
200,000 shares of Common Stock in connection with the retirement of notes
payable in May 1996 as if it occurred on March 31, 1996, and as adjusted to
reflect the sale of the shares of Common Stock offered hereby. The table should
be read in conjunction with the Financial Statements, and the notes thereto.

<TABLE>
<CAPTION>
HISTORICAL PRO FORMA (1) AS ADJUSTED(2)
----------- ------------- --------------
<S> <C> <C> <C>
Long-term debt......................................................... $ 1,000 $ -- $ --
----------- ------------- -------
Convertible notes payable.............................................. 250 -- --
Stockholders' equity (deficit)
Common Stock, $.01 par value, 25,000,000 shares authorized, 3,000,000
shares outstanding, historical; 5,250,000 shares outstanding, as
adjusted............................................................ $ 30 $ 40 $ 52
Common Stock subscriptions and notes receivable...................... (712) (712) (712)
Additional paid-in capital............................................. 519 1,759 6,884
Retained deficit....................................................... (2,021) (2,021) (2,021)
----------- ------------- -------
Total stockholders' equity (deficit)............................... $ (2,184) $ (934) $ 4,203
----------- ------------- -------
Total capitalization............................................... $ (934) $ (934) $ 4,203
----------- ------------- -------
----------- ------------- -------
</TABLE>

- ------------------------
(1) Reflects the PRO FORMA effect of issuance of 750,000 shares of Common Stock
upon conversion of $250,000 of convertible notes payable and the issuance of
200,000 shares of Common Stock upon conversion of $1,000,000 in principal on
notes payable in May 1996, as if it had occurred on March 31, 1996.

(2) As adjusted to reflect offering. Assumes no exercise of (i) the Class A
Warrants; (ii) the Underwriters' Over-allotment Option to purchase up to
195,000 shares of Common Stock and 180,000 Class A Warrants; or (iii) the
Underwriters' Purchase Option to purchase up to 130,000 shares of Common
Stock and 120,000 Class A Warrants. See "Description of Securities" and
"Underwriting."

DIVIDEND POLICY

Holders of the Company's Common Stock are entitled to dividends when, as and
if declared by the Board of Directors out of funds legally available therefor.
The Company does not anticipate the declaration or payment of any dividends in
the foreseeable future. The Company intends to retain earnings, if any, to
finance the development and expansion of its business. Future dividend policy
will be subject to the discretion of the Board of Directors and will be
contingent upon future earnings, if any, the Company's financial condition,
capital requirements, general business conditions and other factors. Therefore,
there can be no assurance that any dividends of any kind will ever be paid by
the Company.

20
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION

GENERAL

The Company does not anticipate reporting earnings for the year ended
December 31, 1996 principally as a result of the imputed costs attributable to
the conversion feature granted in contemplation of this offering of three
convertible notes payable in March 1996 aggregating $250,000 at a price
substantially below the offering price of Common Stock in this offering.
Financing expense of $3,500,000 related to the issuance of the 750,000 shares of
common stock upon conversion in April 1996 will be accrued during the period
from March 31, 1996, the origination date of the notes, and the date of the
offering with a corresponding credit to paid in capital. Consequently, earnings
will be negatively impacted by this cost; however, net stockholders' equity will
not be impacted as the charge to expense will be offset by a corresponding
increase in paid in capital. In addition, there will be no cash outlay
associated with the issuance of such securities. See "Certain Transactions,"
"Selling Security-holders" and "Financial Statements."

The dependence on major foreign customers subjects the Company to
significant financial risks in the operation of its business should a major
customer terminate, for any reason, its business relationship with the Company.
Also, because such customers are foreign, associated operating and servicing
costs are higher placing a larger demand on the Company's limited resources. In
such event, the financial condition of the Company may be adversely affected and
the Company may be required to obtain additional financing, of which there is no
assurance. See "Business" and "Financial Statements."

The following discussion and analysis is based upon the activities of
n-Vision, Inc. since November 1, 1994 and the activities of the VR business and
products while it was operated as a division of ATS.

RESULTS OF OPERATIONS

QUARTER ENDED MARCH 31, 1996 COMPARED TO QUARTER ENDED MARCH 31, 1995

For the Quarter Ended March 31, 1996, the Company reported revenue of
$256,753 from the sale of 4 units of its VR products and systems, a 18% increase
compared to the same period ending March 31, 1995 where the Company reported
revenue of $218,302 on the sale of 4 units. The Company's gross margin on sales
increased to 62% in the first quarter of 1996 from 60% in the first quarter of
1995. The increase in sales is attributable to the sale of higher priced
products in 1996. The gross margin was comparable from period to period. As of
March 31, 1996, the Company had a backlog of approximately $125,000.

General and Administrative costs decreased to $168,016 in the first quarter
of 1996 from $184,871 in the first quarter 1995. Marketing and sales expenses
also decreased to $25,646 in the same period 1996 from $58,102 in the same
period 1995. Both decreases were the result of the Company's focus on product
development where costs increased to $141,586 in the first quarter 1996 from
$118,206 in the first quarter 1995.

Interest and financing charges decreased in the three months ended March 31,
1996 to $44,032 from $48,135 in the same period of 1995 due to the forgiveness
of a $500,000 note payable in October 1995 owed by the Company to ATS.

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

For the year ending December 31, 1995 the Company reported revenue of
$626,763 from the sale of 14 units of its VR products and systems, a 58%
decrease from the prior year where the Company

21
<PAGE>

reported revenue of $1,491,800 on the sale of 26 units. The decrease in revenue
was primarily attributable to a build-up in inventory on the shelves of the
Company's overseas distributors resulting in fewer new sales to distributors and
an increase in the provision for products returned from distributors to $185,000
in 1995 from $28,500 in 1994. The Company believes that the inventory build-up
was temporary and will not adversely affect revenue in the future. Furthermore,
a delay in the introduction of the Company's new VR products and systems
offering additional features at a reduced cost, was partially responsible for
the decrease in sales as the Company's customers delayed purchase of the current
products in anticipation of the new products. The Company's gross margin on
sales decreased to 38% in 1995 from 60% in 1994 primarily as a result of the
returns discussed above. Having decreased its emphasis on sales through
distributors in favor of direct marketing to end-users, management does not
anticipate significant sales returns in the future. In addition, with the
emphasis on direct sales to end-users, the dependence on major customers is
significantly reduced, reducing the Company's financial risk in the operation of
its business.

Operating Expenses increased from $742,047 in 1994 to $1,604,894 in 1995 due
to an expansion in the operations of the Company. Product development costs
increased to $556,402, in 1995 from $248,594 in 1994 as a result of the efforts
of the Company to bring its new product lines to market. General administrative
costs increased to $829,085 in 1995 from $358,119 in 1994 in order to support
the expanding operations of the Company. Also included in general and
administrative costs in 1995 is a charge for the value of donated services
rendered by three Company executives who are also stockholders aggregating
$312,500. These services were valued based upon the difference between amounts
paid to each officer in 1995 and the compensation called for in employment
agreements with each of these officers commencing in June 1996. The Company also
incurred an $81,000 charge associated with a provision for an uncollectible
account receivable in 1995. This charge resulted from the Company having sold
product in 1994 to a distributor which became financially distressed in 1995.

Interest and financing expenses increased to $151,316 in 1995 from $27,318
in 1994 as a result of notes associated with the spin-off of the Company and a
line of credit extended to the Company from Advanced Technology Systems, Inc.
("ATS"), a McLean, Virginia based information Technology products and services
company, which is principally owned and controlled by Delmar J. Lewis, the
chairman of the board and a principal stockholder of the Company (see "Liquidity
and Capital Resources"). In addition, in early 1995, the Company incurred
$559,245 in offering costs associated with a proposed offering of securities
which was not successful. As a result, those offering costs were expensed in
1995.

The Company's provision for income taxes for 1995 reflects a tax benefit
derived primarily from the refund of taxes paid in 1994 resulting from the
carryback of a portion of the 1995 net operating loss.

YEAR ENDED DECEMBER 31, 1994 COMPARED TO DECEMBER 31, 1993.

For the year ending December 31, 1994, the Company reported a significant
increase in sales of its VR products and systems resulting in its first year of
profitability. Sales increased to $1,491,800 as compared to $262,223 for the
year ended December 31, 1993 for a 469% increase. The sales increase was the
result of demand for the Company's VR products and systems from newly
established distributors in Germany, Japan, and the United Kingdom as well as
increased demand in the domestic market. During the year ended December 31,
1994, the Company sold 26 units of its products versus three in the prior year.
The Company's gross margin on sales remained constant at approximately 60% in
1994 and 1993.

Operating expenses increased to $742,047 for 1994 from $191,767 in 1993.
Such expenses were the result of increased marketing of the Company's VR
products and systems internationally and an increase in associated
administrative staff needed to support operations. Product development costs
decreased to $248,594 in 1994 from $375,212 in 1993 as a result of completion of
the development of

22
<PAGE>
the Datavisor 10xi. As a result of increased sales and decreased product
development costs, the Company's income from operations was $124,333 for 1994 as
compared to a loss from operations in 1993 of $407,078.

Interest and financing expenses increased to $27,318 in 1994 as a result of
a line of credit extended to the Company following its spin-off from ATS. (See
"Liquidity and Capital Resources.")

LIQUIDITY AND CAPITAL RESOURCES

As of March 31, 1996, the Company has a working capital deficiency of
$1,045,300 and a stockholders' deficit of $2,183,830. In addition, the Company
has used cash in operations since its inception and incurred a significant loss
in 1995. Operations to date have been supported by loans from ATS under a line
of credit agreement. Management believes the Company's liquidity position in
1996 will be adequate to sustain operations for the following reasons:

-ATS has agreed to not demand repayment, if necessary, of amounts advanced
to the Company under the line of credit until January 1, 1997.

-In May 1996, the Company retired $1,000,000 of the principal due under
notes payable to ATS upon the issuance to 200,000 shares of common stock
thereby significantly reducing the Company's debt service requirements.

-Certain officers subject to employment agreements which commence June 1,
1996 have agreed to defer, as necessary, payment of compensation due under
these agreements.

-The Company has a $500,000 line of credit agreement with a bank permitting
advances of up to 70% of outstanding eligible accounts receivable to
finance working capital.

-In March 1996, the Company received $250,000 from convertible notes payable
described in Note E2.

-Management believes new products brought to market in early 1996 will
result in improved operating results and cash flows.

For the years ended December 31, 1995 and 1994, the Company has principally
used cash in its operations. The principal uses of cash in 1995 were increases
in inventories needed for future production due to expansion of the business and
its product offerings and a significant increase in accounts receivable was
experienced in 1994 associated with increased sales volume towards the end of
1995. The Company's sales agreements generally provide for payment terms
requiring payment within 30 days of shipment. However, experience has shown that
payment is at times delayed to 90 days, resulting in the need for working
capital financing. However, in the event cash is needed to finance shortfalls of
cash generated from sales and costs, the Company will continue to borrow amounts
under its line of credit with ATS and its bank line of credit. However, no
assurances can be made that such lines of credit will be sufficient.

The Company has a line of credit with ATS of $1,000,000. ATS has agreed to
fund operations by lending the Company amounts over the limit on the line of
credit. The Company had borrowed $1,071,023 against this line as of December 31,
1995 to meet its on-going cash flow requirements. ATS has agreed not to demand
repayment of interest and principal due on this loan until January 1, 1997. This
offering will allow the Company to curtail the line of credit by $500,000 with
the net proceeds of this offering as well as provide the Company with cash
reserves to finance its operations for the 12 months period following the
closing of this offering.

The Company also has a bank line of credit permitting advances up to the
lesser of $500,000 or 70% of eligible amounts receivable and is guaranteed by
ATS.

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In connection with the acquisition of the virtual reality business from ATS,
the Company also executed a note payable of $500,000 which was due at the
earlier of November 1, 1995, or the date at which the Company receives at least
$1,000,000 in proceeds from a private or public offering of securities. This
note payable was forgiven in October 1995.

The Company's plans for expansion of its product sales include a need for
additional equipment to be used in the assembly and quality control process as
well as equipment needed for continued product development. While the Company
has no firm commitments at the present time for such equipment, the Company
anticipates using a portion of the proceeds estimated to be $750,000 from the
offering for test equipment (E.G., oscilloscopes, spectrum analyzers and video
generators), the purchase of a Silicon Graphics Onyx RE2 (a computer used in the
demonstration and development process which is currently leased by the Company),
electronic design software and equipment for expanded production facilities
(E.G., custom production fixtures and work stations). In addition, while the
Company has recently introduced a number of new products, additional product
development expenditures are anticipated to upgrade existing products and
develop additional products. Such expenditures in 1996 are expected to be
comparable with those incurred in 1995 which were approximately $550,000.

INCOME TAXES

The Company is organized as a C Corporation and pays income taxes based upon
its accrual based taxable income adjusted for differences in the timing of
reporting certain expenses for tax and financial statement purposes.

The Company's income taxes payable, if any, that may arise in the future may
be offset by credits available for certain research and development expenditures
incurred.

As of December 31, 1995, the Company had a net operating loss carry forward
available to offset future taxable income of approximately $450,000 available to
offset future taxable income generated through 2009. In the event of a change in
control of the Company, use of such carryforwards could be reduced.

IMPACT OF INFLATION

The Company does not believe that inflation has had a material adverse
effect on sales or income during the past two years. Increases in supplies or
other operating costs may adversely affect the Company's operations; however,
the Company believes that it may increase prices to offset increases in costs of
goods sold or other operating costs.

SEASONALITY

Based on its limited experience to date, the Company believes that its
future operating results will not be subject to seasonal changes. Such effects,
should they occur, may be apparent in the Company's operating results during a
period of expansion. However, the Company can make no assurances that its
business can be significantly expanded.

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BUSINESS

OVERVIEW

n-Vision, Inc. ("Company"), a Delaware corporation, designs, develops,
manufactures and markets state-of-the-art, proprietary virtual reality ("VR")
products and systems for a variety of commercial, industrial and military
applications. (See Inside Cover Page and Inside Back Page of this Prospectus.)
The Company currently has developed five principal VR products and systems:
Datavisor VGA, Datavisor 10m, Datavisor 10x, Datavisor 10XL and Virtual
Binoculars. The Company introduced the first commercially available head mounted
display ("HMD") VR system to achieve over one million pixel (high resolution)
display per eye in monochrome (black and white). The VR or artificial
environment created by the Company's proprietary VR products and systems
utilizes computer hardware and software, including operating systems, simulation
software, computer-aided design ("CAD"), graphics applications, computer-aided
software engineering tools, and database and knowledge base management tools and
systems. Commercial and industrial uses of the Company's VR products and systems
include, but are not limited to, medicine, simulation, training and education,
industrial design and environmental, and entertainment applications. Military
uses include, but are not limited to, flight simulation and strategic simulation
and planning. The Company's VR products and systems are marketed worldwide, but
principally to customers in North America, Europe and the Pacific Rim, E.G.,
U.S. Air Force, NASA Langley Research Center, Martin Marietta, Silicon Graphics,
Inc., UK Defense Research Establishment (Farnborough), Volvo, Volkswagon,
Diamler-Benz, Thomson CSF, KPMG Peat Marwick and Raytheon, among others, none of
which are presently material to the Company. For the year ended December 31,
1995, revenue derived from three customers (E-OIR Measurements, Inc., U.S. Naval
Surface Warfare Center and Solidray Co., Ltd. (Japan)) amounted to approximately
11%, 16% and 10%, respectively, of the Company's total revenue. For the year
ended December 31, 1994, revenue derived from two customers (Division Limited,
U.K. and Media Systems GmbH) amounted to approximately 30% and 25%,
respectively, of the Company's total revenue. The Company intends to use the net
proceeds of this offering to significantly expand its operations and the
development and marketing of its VR products and systems.

The Company was established in 1988 as a division of Advanced Technology
Systems Inc. ("ATS"), a McLean, Virginia based information technology products
and services company, which is principally owned and controlled by Delmar J.
Lewis, the chairman of the board and a principal stockholder of the Company. The
Company was incorporated in Delaware on September 16, 1994 and acquired all
rights, title and interest in the VR products and systems from ATS for a
purchase price of $1,520,590, of which $500,000 was originally payable in the
form of a note payable. However, the note payable was forgiven by ATS in October
1996. The balance of $1,020,590 is payable under a promissory note bearing
simple annual interest at the rate of prime plus 1.375% with semi-annual
payments commencing in May 1996 extending through May 2001.

VIRTUAL REALITY TECHNOLOGY

Virtual reality is a new paradigm for interaction with computers that allows
persons to view and manipulate graphical representations of data in a completely
intuitive manner. Stimulating the senses of sight, sound and touch
simultaneously, VR envelopes the user in dynamic, computer generated imagery,
and allows a person to interact using simple controls and body motions. For
certain tasks, application of VR interfaces is believed to flatten learning
curves and increase productivity. Vision is our dominant sense and thus
technologies related to display are key to achieving this sense of immersion. VR
products and systems typically employ head mounted displays ("HMDs"). (See
Inside Cover Page and Inside Back Page of this Prospectus.) These devices
combine high resolution miniature image source monitors, wide field-of-view
optics and motion tracking sensors in a unit small and light enough to be worn
on the head. They visually surround the wearer with dynamic three dimensional
imagery, allowing a person to change perspective on the artificial scenes by
simply moving the head. Similarly, VR products and systems attempt to model the
sound and feel of VR scenarios. Digital signal processing techniques, combined
with motion tracking information, can accurately model positional sound sources
in the virtual environment through stereo headphones. Sensory feedback

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devices, built into gloves and bodysuits, affect a persons sense of touch as
they interact with objects in the environment. Most VR applications which rely
on a high-powered computer, graphics software and a tracking or other input
device -- which describes most of the "virtual" applications available today --
fit this description. For example, an architectural VR program shows the rooms
of a building in three dimensions ("3-D"). By moving the mouse, joystick or
tracking device, the user can "walk" through the rooms by pointing in the
direction to move. If the tracking device is head-mounted, the application is
approaching the immersive environment, where the user is surrounded by, or
immersed in, the visual and audio aspects of the created environment.

A virtual environment is created by a sophisticated and powerful combination
of computer hardware, software, electronics and input/output devices. Thus,
early VR development was limited to users with access to such equipment,
primarily the defense and space industries. As computer technology has advanced
and more powerful systems have become available to the average consumer, VR
technology has expanded dramatically. The computing hardware for which VR
applications have been designed ranges from desk-top personal computers to
supercomputers, minicomputers and mainframes. The software includes operating
systems, simulation software, computer-aided design and graphics packages,
computer-aided software engineering ("CASE") tools, database and knowledge base
management systems, and VR development tools. Specialized input devices such as
data-gloves, voice recognition cards, and six degree of freedom position sensors
allow intuitive means of interaction in VR products and systems. A VR product
and system may also include one or more of the old standards in input/output
("I/O") devices: a mouse, knob, joystick, modem, even a keyboard and printer.

Immersive displays are devices which are capable of presenting visual
information to the user in stereo across a large instantaneous field and are
thus capable of driving the visual sense in an extremely realistic manner. They
typically combine miniature computer displays with precision optics and
apparatus for tracking the motions of the head. Though originally developed at
great cost for primarily military applications, wide-spread interest and reduced
cost for key components are making the technology practical and useful in
medicine, simulation, training and education, industrial design and
environmental, and entertainment applications for commercial benefit. These
applications may be roughly divided into two categories: virtual reality and
telepresence.

VR, as outlined above, is a combination of technologies that provides a new
paradigm for interaction with computers. Using immersive displays, advanced
computer graphics, spatial audio hardware and specialized input devices, it is
possible to create an artificial environment where the user perceives and may
interact with generated objects in an intuitive manner. These environments may
be tailored to specific tasks and have been shown to flatten learning curves and
increase productivity in a broad range of applications. Essentially all stimuli
in a VR application are computer-generated. VR concepts and techniques are
employed to convey images, sounds and tactile feedback to the user from a remote
location in the world. Such an application projects the presence of the user to
the remote location, which may be as close as inside the body of the patient on
the operating table or as far away as the bottom of the ocean.

PLAN OF OPERATIONS, MARKETS AND STRATEGY

In 1990, the Company participated in the design and development of the Head
Mounted Display ("HMD") used in the High Alpha Aircraft Cockpit Design Program
at NASA Langley Research Center. The Company delivered a state-of-the-art
electronics unit, in compliance with NASA's demanding specifications. By 1991,
broad general interest in VR was quickly creating a market for commercial HMD
technology. Encouraged by the growing trend and the success of the NASA project,
the Company immediately undertook the development of a second generation HMD
system with a commercial concept, the Datavisor 10m. Completed in early 1992,
the new system offered, at reduced cost, performance and features previously
available only in high cost custom military simulation helmets like the NASA
system.

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The Company's current VR products and systems include: the Datavisor VGA,
Datavisor 10m, Datavisor 10x, Datavisor 10XL and Virtual Binocular. The Company
believes that the Datavisor 10XL is the state-of-the-art HMD product in the
industry, since it incorporates the best available technology and performance.
For example, it is the only commercially available full color HMD to offer
1280x1024 resolution in each eye. The Datavisor VGA is a lower performance,
lower cost product, capable of 640x480 resolution. The Datavisor 10m is a
monochrome device capable of up to 1600x1200 resolution in each eye. The Virtual
Binoculars are a handheld immersive display system that combine high resolution
CRTs and wide field-of-view eyepieces in the familiar form of a pair of
binoculars.

The market for VR applications is limited only by the imagination. However,
the actual market for VR technology in the near future is more limited. The
following industries have been identified by the Company as potential markets
for its VR products and systems:

<TABLE>
<S> <C>
Aerospace Government/Research
Architecture Manufacturing
Automotive Medical
Education Mining
Entertainment Petroleum Energy
Environmental Pharmaceutical
Fashion Telecommunications
Government/Civilian Transportation
Government/Military Utilities
</TABLE>

Determining where current markets are, and what the potential is for the
future, requires discerning which applications and technologies are on the
drawing board, which are in production and which are at the dream stage. Most of
the VR applications described in the technical literature are visions of the
future, which at best may be on the drawing board or have a proof of concept.
Very few are actually available in the consumer marketplace today.

With millions of potential users of VR applications and HMDs in the United
States alone, the Company is focusing on four market segments which are most
likely to use its current products in conjunction with existing or easily
developed applications, yet have a broad enough potential user base to expand as
the prices go down and new products become available:

VR APPLICATIONS IN MEDICINE

Three segments of the medical field in which VR applications have been
prototyped are surgery (endoscopic, laparoscopic and microscopic), radiology
(imaging and radiation oncology) and low vision enhancement.

In the surgical arena, endoscopic and laparoscopic techniques are being used
in a larger percentage of operations each year. The primary advantage of the
endoscopic and laparoscopic techniques, also known as minimally invasive surgery
("MIS"), is the significant reduction in pain, discomfort, length of hospital
stay and recovery time for the patient. New frontiers are continually being
explored in this field, most recently with endoscopic surgery performed from a
distance using a robot. However, the next generation of MIS techniques promises
to become the standard only if surgeons can become skilled in their delivery,
and overall costs are viewed as being comparable to those of surgery using
traditional techniques. Two potential VR applications in MIS would significantly
improve the odds of reaching this goal. If HMDs are incorporated into the
operating room equipment, so that the surgeon can view the operation
stereoscopically, the learning curve would be reduced, as would the time
required during the procedure. As it is easier to learn by doing, and safer for
patients, virtual surgical simulation offers an alternative training method that
will better prepare surgeons in the future. Immersive simulation technology
appears to be the best approach for creating the environment the surgeon needs
to gain the necessary experience to become competent in these evolving
techniques.

Another potential use of HMDs for surgical procedures is in the microsurgery
arena. The primary advantage of using microscopic techniques is the ability to
perform operations with more likelihood of

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success in areas that were previously inaccessible. Having both the 3-D and the
magnification capabilities that the HMDs could provide may significantly reduce
the time and fatigue involved in such procedures.

In radiology, there are approximately 30,000 certified physicians, of whom
approximately 3,000 are radiation oncologists who are treating patients with
chemotherapy and radiation using radiation therapy machines. Currently,
chemotherapy and radiation treatments begin by employing a two-dimensional
display of the tumor area and taking measurements to determine how to direct the
therapy. Frequently, healthy tissue is destroyed in the treatment process along
with the tumor. HMDs could be put to immediate use to provide 3-D displays to
facilitate targeting the tumor. There are approximately 1,000 magnetic resonance
imaging ("MRI") devices currently in use, primarily for diagnosis. Assembling
the data from these and other diagnostic scans into 3-D images and superimposing
them on an HMD could greatly improve the accuracy of chemotherapy and radiation
treatments. Such an implementation of VR technology could also improve the
results and reduce the risks of many other procedures, such as amniocentesis and
prenatal surgery. The initial market would be those facilities with MRI and
radiation units, with potential for expansion to hospitals with surgical
facilities.

Low-vision enhancement is a third potential medical use of VR technology.
There are over 1.5 million low-vision sufferers in the United States. A number
of chronic visual impairments cannot be corrected with glasses, contacts or
surgery. Since most sufferers of low vision experience losses in resolution and
contrast sensitivity, an HMD could be used to help them see better. The
near-term market is limited to the few facilities doing research on low vision,
such as Johns Hopkins University.

Although the Company believes that its VR products and systems have direct
application in the medical field, none of its products and systems have been
sold in this market segment.

VR APPLICATIONS IN SIMULATION AND TRAINING

Simulators are used to create an artificial environment in which to teach
procedures that would be too expensive or dangerous to teach in a real world
situation. Due to the high cost of aircraft equipment and the risk to personnel
in "practicing" for engine or other aircraft failures, or the avoidance of pilot
error, flight simulators were the first practical application of VR technology.
Space exploration and strategic warfare applications soon followed. VR
technology in flight simulators is now an integral part of flight and
spaceflight training.

Another large market is the automobile drivers of America: the 5+ million
people who get their learner's permit or first driver's license each year, the
3.2 million who are injured in an accident and the 1.6 million who are arrested
for driving under the influence of drugs or alcohol. All of these persons could
receive virtual experience in defensive driving and in the potential results of
driver error or driving under the influence. The initial target market would be
the students (over 1.8 million in 1992) in driver education programs in
secondary schools in the United States.

Given forecast reductions in budgets for real world training operations, the
United States Government is strengthening its research and development
investment in advanced simulation technology. The eventual goal is to meet
Department of Defense challenges in training and readiness, operations,
acquisition and test and evaluation with a defense simulation infrastructure
based upon a common interoperable standard protocol that allows seamless
simulation across joint DoD needs. Because VR technology is often the most
realistic means of representing artificial environments to students, it is
playing a central role in the establishment of this training infrastructure. The
Company's products are currently being used in military and civilian training
applications with potentially broad use, e.g.:

-Dismounted infantry simulation (U.S. Army)

-Artillery operation (U.S. Army, Spanish Army)

-Ship Piloting Trainers (Japanese Ministry of Ship Transport)

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-Astronaut Training (NASA)

-Mission Planning and Rehearsal (Cambridge Research, Inc.)

Although the Company believes that its VR products and systems have direct
application in the simulation and training fields, only limited penetration of
this market segment has occurred. Customers have included the U.S. Air Force,
NASA, Martin Marietta and Raytheon, among others, none of which have been
material to the Company.

VR APPLICATIONS IN INDUSTRIAL DESIGN AND THE ENVIRONMENT

There are commercial benefits available from VR applications in a number of
different technical arenas. In an assembly modelling or mock-up application, the
goal is to pull together major components and sub-assemblies of a product in a
virtual space and also to prototype assembly procedures. The process of
real-time interaction with otherwise unwieldy, large assemblies can
significantly reduce costs by identifying design flaws and part-to-part
interaction problems earlier in the design process, resulting in the need for
fewer physical prototypes. Another application of HMDs in assembly line
processes would be to display patterns to show workers were to place material or
wires as a job progresses. Potential customers are those who manufacture complex
large-scale products with many subassemblies, including the machine tool,
aerospace, automotive and ship building industries.

Architectural and urban design, which already relied heavily on
computer-assisted design ("CAD") capabilities, were a natural for early efforts
at VR applications. There is already commercially available software that allows
architects and clients to walk-through a computer-generated three-dimensional
model of planned structures before construction begins. The accredited schools
of architecture in the U.S. and Canada would be the most likely customers for
HMDs and architectural VR applications, followed by the members of the American
Institute of Architects ("AIA") and any members of the 17,000+ architectural
firms or solo practitioners who are not members of the AIA. All of the owners of
the 1.3 million CAD software packages on the market would also be potential
users of the VR walk-through applications.

Image analysis workstations are designed to process image and data streams,
enhancing features of interest, and to present resulting information so that it
can be readily understood by the viewer. Such technology could be incorporated
into a number of systems processing large quantities of data, such as satellite
and ocean survey data. Potential users are agencies and individuals ranging from
the military and intelligence services to search-and-rescue teams, surveyors and
weathermen.

Nuclear plant monitoring and hazardous waste containment are two areas where
VR applications may be utilized. Virtual environment technologies are already
being used in the design and management of waste disposal and storage
facilities. VR applications combined with robotics are being incorporated into
the operation of some toxic waste sites. There are 1,191 toxic waste dumps on
the Superfund National Priorities List that are potential users of VR
technologies to help protect both the environment and workers. VR technologies
also have applications in this arena, particularly in monitoring nuclear
facilities and underground storage tanks. There are 1.6 million underground
storage tanks at 600,000 sites that are subject to Environmental Protection
Agency regulations. By 1998, a cost-effective inspection process is required to
be implemented for ensuring that these sites are not hazards.

Although the Company believes that its VR products and systems have direct
application in the industrial design and environmental fields, only limited
penetration of this market segment has occurred. Customers have included Volvo,
Volkswagon, Diamler-Benz and Thomson CSF, among others, none of which have been
material to the Company.

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VR APPLICATIONS IN ENTERTAINMENT

The entertainment field is by far the largest potential market segment for
VR applications. It includes amusement and theme parks, location-based
entertainment centers, sports, video arcades and home entertainment. The
potential market for VR entertainment packages is substantially the entire
population of the United States.

Amusement and theme parks are a target of developed VR technology, with
Disney leading the way. Most of them already offer simulation-style rides. The
difference is that the user does not get to control the experience, as in a VR
application. Now that Disney World has installed two virtual reality systems at
its nightclub complex, the other parks may soon follow the industry giant's
lead.

A location-based entertainment ("LBE") center typically has one central
theme, such as a starship or a fighter squadron ready room, reflected
consistently throughout the entire environment. There may be different games or
experiences available, but they all fit the common theme. These operations are
targeted at a different demographic group than video arcades, usually the 60+
million young adults ranging in age from 18 to 35, with a significant disposable
income.

In the $4 billion per year sports industry, a number of VR applications have
already been developed, ranging from a virtual batters' cage to a semi-immersive
bobsled simulator. As LBE centers flourish, some will certainly be dedicated to
sports themes. Virtual interfaces for exercise devices could provide virtual
vacations during exercise sessions, from bicycle tours of the Rhine on a
stationary bicycle to mountain climbing in the Rockies on the stair-climbing
machine.

There are more video arcades and billiard parlors introduced in the United
States each year than in any other country. While video arcades appeal more to
the younger age group, billiard parlors are designed to appeal to the upscale
older age group. VR applications in these areas have only recently been
introduced and are being widely received. The 35+ million home entertainment
systems in the United States are also a significant market.

Although the Company believes that its VR products and systems have direct
application in the entertainment field, none of its products and systems have
been sold in this market segment.

VIRTUAL REALITY PRODUCTS AND SYSTEMS

The Company has designed and developed five commercially available VR
products and systems designed to exploit the capabilities of today's
high-performance graphics workstations and simulation hardware to the fullest
extent possible with current technology:

-DATAVISOR 10M High Resolution Monochrome HMD VR Systems

-DATAVISOR 10X Very High Resolution Color HMD VR Systems

-DATAVISOR VGA High Resolution Color HMD VR Systems

-DATAVISOR 10XL Very High Resolution Color HMD VR Systems

-VIRTUAL BINOCULARS

The DATAVISOR 10M is a high resolution monochrome (black and white) HMD VR
system with a wide field of view. The Datavisor 10m combines one inch monochrome
video image sources which deliver high brightness, high contrast images of up to
1280 x 1024 pixels at a refresh rate of 60 Hz. It is fully shielded to dissipate
heat and eliminate electronic interference. The Datavisor 10m uses precision
lenses in a wide angle design to relay the video image from the image source
units to the eyes. The output of each assembly is an infinity focused exit pupil
12mm in diameter with a field of view of 50 degrees, resolution of two arc
minutes per pixel, and brightness of up to 25 foot-Lamberts. The plastic housing
of the unit is adjustable to comfortably fit a range of users and weighs 3.5
lbs. Knobs on the side of the helmet allow for easy adjustment of
inter-pupillary distance and overlap position. The video control unit ("VCU")
relays two channels of video information to the color image sources in the HMD
through 10-foot high mobility cables. The unit is digitally programmable through
a standard

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<PAGE>
interface allowing display parameters, video format select and diagnostic
functions to be controlled by the person wearing the display VIA the user
application. The user controllable display parameters include brightness of the
image, contrast of the image, location of the center point of the image on the
video and size of the image measured vertically in displayed lines and
horizontally by pixels. The VCU is available as a 13" x 5.25" tabletop unit or
in a 19-inch rack-mounted configuration. The Datavisor 10m is offered by the
Company as a lower cost, lower performance alternative to the Datavisor 10x. The
Datavisor 10m incorporates its own computer hardware and software, and comes
fully assembled and ready to operate. Depending on the precise configuration and
volume, the Company offers the Datavisor 10m at a price of approximately $60,000
per unit, which includes a one year warranty and technical service, support and
training.

The DATAVISOR 10X is a very high resolution color HMD VR system with a wide
field of view. (See Inside Cover Page and Inside Back Page of this Prospectus.)
Employing advanced optical, electronic and display components, it is designed to
exploit the capabilities of today's high performance graphics workstations and
simulation hardware to the fullest extent possible with current technology. The
HMD combines miniature full color image sources and precision optical relay
assemblies in a lightweight plastic housing to form a fully integrated,
head-mounted, stereo display unit. At the heart of the system are a pair of
miniature video displays fitted with Tektronix NuColor liquid crystal shutter
devices. The shutters are electronically switchable light filters that allow
only one color of light to pass at any instant. Synchronizing the shutter with
the miniature video, red, green and blue components of each full color video
frame are displayed in a rapid sequence to produce full color images inside the
HMD. They are balanced at ear level on each side of the head and are mu-metal
shielded to eliminate electronic interference. The optical system uses precision
lenses in a wide angle design to relay the video image from the image source
units to the eyes. The output of each assembly is an infinity focused exit pupil
12mm in diameter with a field of view of 50 degrees, resolution of two arc
minutes per pixel, and brightness of up to 25 foot-Lamberts. The plastic housing
of the unit is adjustable to comfortably fit a range of users and weighs 3.5
lbs. Knobs on the sides of the helmet allow for easy adjustment of
inter-pupillary distance and overlap position. The VCU relays two channels of
video information to the color image sources in the HMD through 10' high
mobility cables. The unit is digitally programmable through a standard interface
allowing display parameters, video format select and diagnostic functions to be
controlled by the person wearing the display VIA the user application. The VCU
is available as a 13" x 12" x 5.25" tabletop unit or in a 19 inch rack mounted
configuration. Optional equipment includes position sensors, headphones, a
microphone and a pneumatic bladder fitting system for operating environments
where shocks and rapid motion are encountered. Mounting points for these devices
are molded into the housing. The Datavisor 10x is offered by the Company as the
ultimate very high resolution color HMD VR system and represents the
state-of-the-art of the technology. The Datavisor 10x incorporates its own
computer hardware and software, and comes fully assembled and ready to operate.
Depending on the precise configuration and volume, the Company offers the
Datavisor 10x at a price of approximately $35,000 per unit, which includes a one
year warranty and technical service, support and training.

The DATAVISOR VGA and DATAVISOR 10XL systems employ the same precision
optics and lightweight plastic mechanical system but offer distinct levels of
display performance. Traditionally, VR displays have relied on off-the-shelf,
refractive eyepieces to present LCD or CRT image sources to the eye. While
simple and cost effective, these systems tend to introduce distortion, field
curvature and chromatic aberrations that can, with frequent or extended use,
lead to undesirable physiological effects such as eye strain and headaches.
Datavisor VGA head mounted displays employ reflective collimated windows and
corrective relay lenses to achieve optical tolerances within standards
established by the U.S. Air Force Armstrong Aerospace Medical Research
Laboratory for head mounted displays in extended use applications.

The Datavisor VGA system is arranged mechanically with the image sources and
corrective relay optics balanced on each side of the head at ear level. This
places the system center of gravity within one centimeter of the head's natural
center of gravity and keeps the moment of inertia close to the

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<PAGE>
head. The system does not rely on counterweights or dangling cables to maintain
balance. All optical and electronic components are housed in a durable,
lightweight, moulded shell that incorporates mounting positions for headphones
and tracking sensors. Input and output to the HMD is routed to the rear of the
device along the centerline of the head. The head fitting system is adjustable
for diameter and depth with a pair of ratchets located on the front and top of
the unit.

The Datavisor VGA and Datavisor 10XL are the first commercial immersive
displays to incorporate a calibrated focus adjustment, giving users the ability
to control how far away the virtual environment appears inside the display. The
adjustment is located on the bottom of the unit near the ear and is designed to
be easily manipulated while the unit is in use. Calibrations range from infinity
to one meter. The Datavisor VGA display system is comprised of two one inch CRTs
and a tabletop video control unit. Each channel accepts a standard VGA signal as
input, making it compatible with virtually all PCs and workstations.

The Datavisor 10XL uses the proven Datavisor 10x Video Control Unit ("VCU").
This VCU will accept any field sequential format from 1280x1024 interlaced to
640x480 non-interlaced. The design of the system lends itself to many
capabilities beyond the reach of traditional virtual reality displays. The
collimated window optics allow an undistorted optical path to the eye. This
allows the system to be configured for see-through applications by changing the
fully opaque mirror in front of the eyes to a partially transparent one. For
installations that use retinal tracking, miniature cameras are easily mounted
inside the unit without consuming eye-relief. For customers focused on flight
simulation, the Datavisor VGA display system is also available in flight helmet
configuration with an integrated communications system. The Datavisor VGA and
the Datavisor 10XL incorporate their own computer hardware and software, and
come fully assembled and ready to operate. Depending on the precise
configuration and volume, the Company offers the Datavisor VGA and Datavisor
10XL systems in a price range of approximately $25,000 to $50,000 per unit,
which includes a one year warranty and technical service, support and training.

The VIRTUAL BINOCULARS product has recently been developed by the Company
and is one of the first binoculars developed utilizing VR technology. The
Virtual Binoculars may be fitted with range eyepieces with varying field of view
properties. Standard eyepieces provide 40 degrees, 50 degrees and 63 degrees per
eye. The Virtual Binoculars are available with two levels of display
performance. When use with the cost effective Datavisor VGA display system, the
VCU takes a standard VGA input and provides a crisp 640x480 display. With the
Datavisor 10x display system, the unit has multisync capability and can display
resolutions from 640x480 up to 1280x1024.

The VIRTUAL BINOCULARS product has been designed with support for a variety
of tracking systems. Magnetic, mechanical, optical, ultrasonic or radio schemes
can be used. Internal mounting points can be used for magnetic or radio sensors.
External mounting points provide a platform for sensors that may be readily
removed or require a line of sight to a source. External points can also be
tapped to accept adaptors that will make the displays compatible with mechanical
3D digitizers or virtually any mechanical tracking system. Other mechanical
features include focus adjustment, interpupillary distance adjustment, and
mouse-compatible buttons on the top of the unit. The buttons can be programmed
using any software toolkit that supports mouse gestures and can be used to
control motion in the virtual environment or manipulate objects.

The Virtual Binoculars can be adapted on a custom basis, to simulate
practically any binocular or monocular optical instrument. The system has been
successfully used to simulate field periscopes, riflescopes, spotting scopes and
a number of vehicle mounted sighting systems. The Virtual Binoculars product
incorporates its own computer hardware and software, and comes fully assembled
and ready to operate. Depending on the precise configuration and volume, the
Company offers the Virtual Binoculars at a price of approximately $15,000 per
unit, which includes a one year warranty and technical service, support and
training.

32
<PAGE>
MANUFACTURING, PRODUCTION AND SERVICE

The Company manufactures and assembles its VR products and systems at its
principal facility located at 7680 Old Springhouse Road, First Floor, McLean
Virginia 22102, encompassing approximately 4,800 square feet. The Company's
manufacturing operations consist of assembly, testing, quality control and
system integration of its VR product and system components, subassemblies and
final assemblies, including modifications and the programming of the software
components, and installation of the VR products and systems. The Company's
manufacturing operations utilize a wide variety of electrical and mechanical
components, new materials and other supplies and services. The Company has
developed multiple commercial sources for most components and materials, but it
does use single sources for a limited number of standard and custom components.
While delays in delivery of such single-sourced components may cause delay in
shipments of certain products by the Company at this time, the Company has no
reason to believe that any of the single-source vendors present a significant
risk. Certain components used by the Company, including lenses and video
components must be ordered up to four months in advance to assure timely
delivery. The Company maintains an inventory of these items as it deems
appropriate to service forecasted demand.

The Company provides two levels of service for its products: The basic
one-year warranty on all VR products and systems covers repair or replacement of
the product or system, or any parts or assemblies, for any failure due to
defects in materials or workmanship. The warranty does not cover failure of any
product or system which has been modified without the Company's consent or any
failure due to improper handling, misuse, abuse or misapplications.

In February 1995, the Company entered into an exclusive joint development
and supply agreement with Vivitek Co., Ltd. ("Vivitek"), a Taiwan based advanced
technology company involved in the design, development and manufacturing of
highly advanced display products based on liquid crystal color shutter
technologies. The agreement provides, among other things, that Vivitek will
develop, manufacture and supply the Company, on an exclusive basis, its shutter
technology that will be used in the Company's VR products and systems. The
Company believes that Vivitek's shutter technology is state-of-the-art and may
provide the Company's VR products and systems with certain technological
advantages. However, the Company can make no assurances that any of its VR
products and systems will have a technological or economic advantage over any
competitor's VR products and systems. Dr. Mao-Jin Chern, a director of the
Company, has been the general manager of Vivitek since 1993.

Given the high cost of downtime, it is imperative that any malfunction in
one of the Company's VR products or systems, regardless of cause, be addressed
in the shortest possible time. The Company has technical personnel available 12
hours a day and, following the closing of this offering, intends to have a 24
hour a day "hot line" for service support. The Company's service organization
consists of technicians and engineers reporting to a customer service manager
who is intimately familiar with the Company's VR products and systems.
Additionally, the Company intends to make arrangements with its component
suppliers whereby they may agree to provide technical service specialists within
24 hours should the need arise. Such calls will be coordinated through the
Company's service manager who will be assisted by a full-time service
administrator.

The Company's service personnel have their formal training augmented by
direct participation in testing of the Company's VR products and systems at the
Company's manufacturing facility and also in the installation and acceptance
tests at the customer's facility.

MARKETING AND SALES STRATEGY

The Company's marketing and sales strategy has relied almost exclusively on
presentations and demonstrations at VR product trade shows and follow-up on the
leads obtained. Following the closing of this offering, the Company intends to
significantly expand its marketing and sales staff and efforts. In addition to
increasing the number of such presentations and demonstrations, the Company,
with its expanded marketing and sales force, also intends to pursue arrangements
with distributors and value added resellers ("VARs"), who will also market and
sell the Company's VR products and systems. The first step to such an expansion
is the development and production of marketing and sales literature.

33
<PAGE>
Two parallel activities will be identification of shows and conferences that
would be attended by distributors, VARs and potential customers in the target
niche markets and the categorization of incoming contacts to identify potential
customers, especially in the target niche markets.

The Company has developed a two-pronged strategy to increase sales: using
distributors in the international market and VARs in the United States. At the
same time, the Company intends to increase direct sales with the expansion of
the marketing activities at industry trade shows and conferences, as described
above. The Company has recently entered into non-exclusive distributor
agreements in the United Kingdom, Germany and Japan. The strategy for increasing
sales in the European Union ("EU") and the Pacific Rim is to increase the number
of distributors in the EU and in the Pacific Rim. Accordingly, the Company
intends to enter into agreements with VARs and distributors that are already
active in the VR products and systems marketplace. In addition to increasing
direct sales with VARs and distributors, the Company intends to expand its
federal government sales by placing its products on the appropriate General
Service Administration ("GSA") schedules. The Company also intends to increase
its direct sales by promoting its VR products and systems in publications
covering high-technology industries, E.G., SILICON GRAPHICS WORLD, REAL TIME
GRAPHICS, GOVERNMENT IMAGING, VIRTUAL REALITY NEWS and VR NEWS. The Company also
intends to prepare and distribute press kits at such events to garner editorial
coverage of its VR products and systems. However, the Company can make no
assurances that its marketing and sales strategy will result in any sales of its
VR products and systems.

The dependence on major customers subjects the Company to significant
financial risks in the operation of its business should a major customer
terminate, for any reason, its business relationship with the Company. In such
event, the financial condition of the Company may be adversely affected and the
Company may be required to obtain additional financing, of which there is no
assurance. See "Financial Statements."

PATENT, TRADEMARK, COPYRIGHT AND PROPRIETARY RIGHTS

COMPETITION

The Company is not aware of any other company or organization that has
designed and developed VR products and systems as technologically advanced and
capable for the price as those achieved by the Company, which the Company
believes enables it to effectively compete in the marketplace. However, the
Company is aware of several competitors which promote substitute and similar
technologies. Businesses in the United States which are engaged in the
development and production of high technology products and systems are
characterized by intense and substantial competition. Almost all of the
companies with which the Company intends to compete are substantially larger and
have

34
<PAGE>
substantially greater resources than the Company. It is also likely that other
competitors will emerge in the future. The Company will compete with companies
that have greater market recognition, greater resources and broader capabilities
than the Company. As a consequence, there is no assurance that the Company will
be able to successfully compete in the marketplace.

EMPLOYEES

As of the date of this Prospectus, the Company employs 11 persons, all of
whom are full-time employees. Of these full-time employees, three are engaged in
administration and finance, two in marketing and sales and six in operations and
software development. Within the initial 12 months following the closing of this
offering, the Company intends to hire approximately five additional full-time
employees.

The Company believes that its future success will depend in large part upon
its continued ability to recruit and retain highly qualified technical
personnel. Competition for highly qualified technical personnel is significant,
particularly in the geographic area in which the Company is located. The Company
has never experienced a work stoppage and none of its employees is represented
by a labor organization. Management of the Company considers its relationship
with its employees to be good.

FACILITIES

The Company leases approximately 4,800 square feet for its principal
executive offices and facilities located at 7680 Old Springhouse Road, First
Floor, McLean, Virginia 22102, under a lease which extends through February
1997. The Company intends to expand its offices and facilities to approximately
10,000 square feet in a single facility following the closing of this offering.
The Company's current and proposed facilities are in good condition. Current
base rental for the premises is approximately $1,600 per month and will increase
to approximately $5,000 per month upon the expansion of its offices and
facilities pursuant to an option available to the Company in 1997. The lease
requires the Company to pay certain customary property taxes and operating
expenses.

35
<PAGE>
MANAGEMENT

The officers and directors of the Company are as follows:

<TABLE>
<CAPTION>
NAME TITLE
- -------------------------------- -----------------------------------------
<S> <C>
Delmar J. Lewis Chairman of the Board,
Chief Executive Officer
Christopher J. Lewis President, Chief Operating Officer,
Director
Robert B. Hamilton, C.P.A. Executive Vice President, Chief Financial
Officer, Secretary, Director
Claude H. Rumsey, Jr. Director
Mao-Jin Chern, Ph.D. Director
</TABLE>

Each of the directors of the Company holds office for a one-year period. At
present, the Company's By-laws provide for not less than one director nor more
than nine directors. Currently, there are five directors in the Company. The
By-laws permit the Board of Directors to fill any vacancy, and such director may
serve until the next annual meeting of shareholders or until his successor is
elected and qualified. Officers serve at the discretion of the Board of
Directors. There are no family relationships among any officers or directors of
the Company, except among Delmar J. Lewis and Christopher J. Lewis who are
father and son, respectively. The officers of the Company devote full time to
the business of the Company, except for Delmar J. Lewis who devotes
approximately 50 percent of his time to the business of the Company. See
"Certain Transactions."

In April 1995, the Company amended its By-laws to require a staggered Board
of Directors, such that first class directors are elected for a three year term,
second class directors are elected for a two year term and third class directors
are elected for a one year term. Messrs. Delmar J. Lewis and Rumsey have been
elected as first class directors, Messrs. Christopher J. Lewis and Hamilton have
been elected as second class directors and Dr. Chern has been elected as a third
class director. The effect of the amendment is to strengthen the ability of the
current Board of Directors to maintain a higher degree of control over the
Company than would otherwise be available. As a result, the staggered Board of
Directors of the Company will make the possible takeover of the Company more
difficult at the expense of the stockholders.

The principal occupation and business experience for each officer and
director of the Company for at least the last five years are as follows:

DELMAR J. LEWIS, 65, has been chairman of the board and chief executive
officer of the Company since January 1995. Mr. Lewis has more than 30 years
experience in executive management and the design, development, testing and
implementation of advanced user data systems and large-scale communication
technology. Since 1978, Mr. Lewis has been a founder, chairman of the board,
president and chief executive officer of Advanced Technology Systems, Inc., a
McLean, Virginia based information technology products and services company with
more than 400 employees and approximately $28 million in revenue. Since January
1995, Mr. Lewis has been instrumental in developing and promoting the business
of the Company.

CHRISTOPHER J. LEWIS, 29, has been president and chief operating officer of
the Company since its incorporation in September 1994. Mr. Lewis has significant
experience in the design, development, testing and implementation of highly
advanced computer graphics and virtual reality ("VR") technology with major
research and development institutions. From 1987 to 1989, Mr. Lewis was a
computer scientist at the Naval Research Laboratory, a major research and
development institution, where he gained significant science applications
experience on graphics workstations and supercomputers. From 1989 to 1991, Mr.
Lewis was a research associate at the Research Institute for Advanced Computer
Science at the NASA Ames Research Center, conducting research and development in
a

36
<PAGE>
broad range of scientific applications using computer graphics and VR
technology. From 1991 to 1994, Mr. Lewis managed the Company while it was a
division of Advanced Technology Systems, Inc. Since 1991, Mr. Lewis has been
instrumental in the development and promotion of the business of the Company.
Mr. Lewis holds a B.S. degree (computer science) from George Mason University
and attended graduate school (numerical analysis and computer graphics) at
Stanford University.

ROBERT B. HAMILTON, C.P.A., 56, has been executive vice president, chief
financial officer, secretary and a director of the Company since March 1995. Mr.
Hamilton has substantial experience in management and finance in private
industry and in the public sector. Since 1988, Mr. Hamilton has been a director
of finance and administration of Advanced Technology Systems, Inc., a McLean,
Virginia based information technology products and services company with more
than 400 employees and approximately $28 million in revenues. Since March 1995,
Mr. Hamilton has been instrumental in the development and promotion of the
business of the Company. Mr. Hamilton is a former highly decorated commissioned
combat officer in the U.S. Army, where he later became chief budget officer of
the Fifth United States Army and budget officer for the Office of Chief of
Staff, U.S. Army, where he managed an annual budget of approximately $100
million. Mr. Hamilton is a certified public accountant and holds a B.S. degree
from the U.S. Military Academy at West Point and an M.B.A. degree from the
University of Oklahoma.

CLAUDE H. RUMSEY, JR., 51, has been a director of the Company since its
incorporation in September 1994. Mr. Rumsey has more than 20 years experience in
executive management and the design, development, testing and implementation of
advanced user data systems and large-scale communication technology. Since 1978,
Mr. Rumsey has been executive vice president and a director of Advanced
Technology Systems, Inc., a McLean, Virginia based information technology
products and services company with more than 400 employees and approximately $28
million in revenue. Since September 1994, Mr. Rumsey has been instrumental in
the development and promotion of the business of the Company.

MAO-JIN CHERN, PH.D., 53, has been a director of the Company since March
1995. Dr. Chern has substantial experience in the design, development, testing
and implementation of highly advanced computer graphics and virtual reality
("VR") technology with major aerospace and technology companies. From 1980 to
1993, Dr. Chern held numerous highly technical and management positions with
Hughes Aircraft Company, a Los Angeles, California based major aerospace
company, where he was involved in the development of advanced display systems
for aerospace and automotive applications. Since 1993, Dr. Chern has been the
general manager of Vivitek Co., Ltd., a Taiwan based advanced technology
company, involved in the design, development and manufacturing of highly
advanced display products based on liquid crystal color shutter technologies. In
February 1995, the Company entered into an exclusive joint development and
supply agreement with Vivitek Co., Ltd. to development, manufacture and supply
such liquid crystal color shutter technology to the Company for its VR products
and systems. Since March 1995, Dr. Chern has been instrumental in the
development and promotion of the business of the Company. Dr. Chern holds a B.S.
degree, an M.S. degree and a Ph.D. degree (electrical engineering) from the
University of Minnesota.

LUIS RAMOS-IZQUIERDO, 34, has been director of engineering of the Company
since April 1996, and was an officer of the Company from 1994 to 1996. Mr.
Ramos-Izquierdo has significant experience in the design, development, testing
and implementation of highly advanced optical systems with major research and
development institutions. From 1983 to 1984, Mr. Ramos-Izquierdo was an optical
engineer at the Honeywell Electro-Optics Division, where he gained experience in
holographic interferometry. From 1984 to 1993, Mr. Ramos-Izquierdo was a senior
optical engineer at the NASA Goddard Space Flight Center, where he participated
in the design, development and implementation of optical subsystems for
spacecraft remote sensing instruments used on the Mars Observer spacecraft and
several Space Shuttle missions. From 1993 to 1994, Mr. Ramos-Izquierdo was a
senior

37
<PAGE>
optical engineer at the Hunter Associate Laboratory, a commercial manufacturer
of color measurement instruments. Since November 1994, Mr. Ramos-Izquierdo has
been instrumental in the development and promotion of the business of the
Company. Mr. Ramos-Izquierdo holds a B.S. degree (applied engineering physics)
from Cornell University, an M.S. degree (optics) from the University of
Rochester and an M.B.A. degree from George Washington University.

FRANK S. WODOSLAWSKY, 36, has been director of marketing of the Company
since April 1996, and was an officer of the Company from 1994 to 1996. Mr.
Wodoslawsky has more than 13 years of diversified experience in areas of high
technology product marketing and sales, business development and software
development in the visual simulation, virtual reality and information management
markets. From 1987 to 1990, Mr. Wodoslawsky was a section and project manager
for Logicon, Inc., an Arlington, Virginia based computer hardware and software
development company. From 1990 to 1992, Mr. Wodoslawsky was director of
operations for AMA Systems, Inc., an Alexandria, Virginia based software
development company. From 1993 to 1994, Mr. Wodoslawsky was the eastern region
sales support manager for Ball Imaging, a San Diego, California based producer
of visual simulation supercomputers. Since September 1994, Mr. Wodoslawsky has
been instrumental in the development and promotion of the business of the
Company. Since 1984, Mr. Wodoslawsky has served as a commissioned officer and an
F-16C fighter pilot in the Air National Guard (Andrews AFB, Maryland). Mr.
Wodoslawsky holds a B.S. degree (electrical engineering) from The Citadel and
has attended graduate school (computer science) at Johns Hopkins University.

REMUNERATION

EXECUTIVE COMPENSATION

The following table sets forth remuneration in excess of $100,000 paid by
the Company for the fiscal year ended December 31, 1995 and proposed to be paid
for the fiscal year ended December 31, 1996 to the officers and directors of the
Company:

<TABLE>
<CAPTION>
SUMMARY COMPENSATION TABLE(1)(2)(3)
NAME OF INDIVIDUAL OR ------------------------------------------------
NUMBER OF OTHER ANNUAL
PERSONS IN GROUP POSITION WITH COMPANY YEAR SALARY BONUS COMPENSATION
- -------------------------------- --------------------------------- --------- ----------- --------- -------------
<S> <C> <C> <C> <C> <C>
Delmar J. Lewis Chairman of the Board, Chief 1996 $ 100,000 $ 50,000 $ --
Executive Officer 1995 $ -- $ -- $ --
Christopher J. Lewis President, Chief Operating 1996 $ 100,000 $ 25,000 $ --
Officer, Director 1995 $ 75,000 $ -- $ --
Robert B. Hamilton, C.P.A. Executive Vice President, Chief 1996 $ 100,000 $ 50,000 $ --
Financial Officer, Secretary, 1995 $ -- $ -- $ --
Director
</TABLE>

- ------------------------
(1) The persons named in the table immediately above reflect the management of
the Company as of the date hereof who will receive $100,000 or more PER
ANNUM. Upon the closing of this offering, the Company intends to obtain
key-man term life insurance on Christopher J. Lewis, the president and chief
operating officer of the Company, in the amount of $1 million. The Company
will be the owner and beneficiary of such life insurance policy.

(2) The officers of the Company may receive remuneration as part of an overall
group insurance plan providing health, life and disability insurance
benefits for employees of the Company. The amount allocable to each
individual officer cannot be specifically ascertained, but, in any event,
will not exceed $25,000 as to each individual.

(3) Each director of the Company is entitled to receive reasonable expenses
incurred in attending meetings of the Board of Directors of the Company. The
members of the Board of Directors intend
to meet at least quarterly during the Company's fiscal year, and at such
other times duly called. The Company presently has five directors.

38
<PAGE>
EMPLOYMENT AGREEMENTS

The Company has entered into employment agreements ("Agreements") with
Messrs. Delmar J. Lewis, Christopher J. Lewis and Robert B. Hamilton, C.P.A.,
effective as of June 1, 1996. The Agreements with Delmar J. Lewis and Robert B.
Hamilton will expire on May 31, 1998. The Agreement with Christopher J. Lewis
will expire on May 31, 1999. The Agreements provide for one-year automatic
renewals following the expiration date, unless contrary notice is given by
either party. Messrs. Lewis, Lewis and Hamilton current annual salaries under
the Agreements are $100,000 each. The salaries under the Agreements may be
increased to reflect annual cost of living increases and may be supplemented by
discretionary merit and performance increases as determined by the Board of
Directors of the Company, except that during the first three years following the
effective date of the registration statement with respect to the offering, no
executive's salary may exceed $200,000. Messrs. Lewis, Lewis and Hamilton are
each entitled to an annual bonus of $50,000, $25,000 and $50,000, respectively,
under their Agreements.

The Agreements provide, among other things, for participation in an
equitable manner in any profit-sharing or retirement plan for employees or
executives and for participation in other employee benefits applicable to
employees and executives of the Company. The Agreements provide that the Company
will establish a performance incentive bonus plan providing each executive the
opportunity to earn an annual bonus of up to five percent of the increase in the
Company's operating profit, based upon the attainment of performance goals to be
established by the Board of Directors of the Company. The Agreements further
provide for the use of an automobile, payment of club dues and other fringe
benefits commensurate with their duties and responsibilities. The Agreements
also provide for benefits in the event of disability.

Under Christopher J. Lewis' Agreement, the Company has agreed to purchase a
life insurance policy in the face amount of $1,000,000. The Company will pay the
premium under the life insurance policy, and a portion of the payment may be
treated as taxable income to the insured executive. During the fiscal year, the
Company will pay a premium of approximately $5,000 on the policy. Upon the death
of Mr. Lewis, the Company would be paid from the insurance proceeds an amount
equal to the total premiums it paid under the policy, with the remaining
proceeds to be paid to the deceased executive's designated beneficiary.

LIMITATION ON LIABILITY OF DIRECTORS

The Company's Certificate of Incorporation and By-laws contain provisions
which reduce the potential personal liability of directors for certain monetary
damages and provide for indemnity of directors and other persons. The Company is
unaware of any pending or threatened litigation against the Company, or its
directors, that would result in any liability for which such director would seek
indemnification or similar protection.

Such indemnification provisions are intended to increase the protection
provided directors and, thus, increase the Company's ability to attract and
retain qualified persons to serve as directors. Because directors' liability
insurance is only available at considerable cost and with low dollar limits of
coverage and broad policy exclusions, the Company does not currently maintain a
liability insurance policy for the benefit of its directors although the Company
may attempt to acquire such insurance in the future. The Company believes that
the substantial increase in the number of lawsuits being threatened or filed
against corporations and their directors and the general unavailability of
directors liability insurance to provide protection against the increased risk
of personal liability resulting from such lawsuits have combined to result in a
growing reluctance on the part of capable persons to serve as members of boards
of directors of public companies. The Company also believes that the increased
risk of personal liability without adequate insurance or other indemnity
protection for its directors could result in overcautious and less effective
direction and management of the Company. Although no directors have resigned or
have threatened to resign as a result of the Company's failure to provide
insurance or other indemnity protection from liability, it is uncertain whether
the Company's directors would continue to serve in such capacities if improved
protection from liability were not provided.

39
<PAGE>
The provisions affecting personal liability do not abrogate a director's
fiduciary duty to the Company and its shareholders, but eliminate personal
liability for monetary damages for breach of that duty. The provisions do not,
however, eliminate or limit the liability of a director for failing to act in
good faith, for engaging in intentional misconduct or knowingly violating a law,
for authorizing the illegal payment of a dividend or repurchase of stock, for
obtaining an improper personal benefit, for breaching a director's duty of
loyalty (which is generally described as the duty not to engage in any
transaction which involves a conflict between the interest of the Company and
those of the director) or for violations of the federal securities laws. The
provisions also limit or indemnify against liability resulting from grossly
negligent decisions including grossly negligent business decisions relating to
attempts to change control of the Company.

The provisions regarding indemnification provide, in essence, that the
Company will indemnify its directors against expenses (including attorneys'
fees), judgments, fines and amounts paid in settlement actually and reasonably
incurred in connection with any action, suit or proceeding arising out of the
director's status as a director of the Company, including actions brought by or
on behalf of the Company (shareholder derivative actions). The provisions do not
require a showing of good faith. Moreover, they do not provide indemnification
for liability arising out of willful misconduct, fraud, or dishonesty, for
"short-swing" profits violations under the federal securities laws, or for the
receipt of illegal remuneration. The provisions also do not provide
indemnification for any liability to the extent such liability is covered by
insurance. One purpose of the provisions is to supplement the coverage provided
by such insurance. However, as mentioned above, the Company does not currently
provide such insurance to its directors, and there is no guarantee that the
Company will provide such insurance to its directors in the near future although
the Company may attempt to obtain such insurance.

The provisions diminish the potential rights of action which might otherwise
be available to shareholders by limiting the liability of officers and directors
to the maximum extent allowable under Delaware law and by affording
indemnification against most damages and settlement amounts paid by a director
of the Company in connection with any shareholders derivative action. However,
the provisions do not have the effect of limiting the right of a shareholder to
enjoin a director from taking actions in breach of his fiduciary duty, or to
cause the Company to rescind actions already taken, although as a practical
matter courts may be unwilling to grant such equitable remedies in circumstances
in which such actions have already been taken. Also, because the Company does
not presently have directors' liability insurance and because there is no
assurance that the Company will procure such insurance or that if such insurance
is procured it will provide coverage to the extent directors would be
indemnified under the provisions, the Company may be forced to bear a portion or
all of the cost of any director's claims for indemnification under such
provisions. If the Company is forced to bear the costs for indemnification, the
value of the Company stock may be adversely affected. In the opinion of the
Securities and Exchange Commission, indemnification for liabilities arising
under the Securities Act of 1933 is contrary to public policy and, therefore, is
unenforceable.

40
<PAGE>
PRINCIPAL STOCKHOLDERS

The following table sets forth certain information regarding the Company's
Common Stock owned on the date of this Prospectus and, as adjusted, to reflect
the sale of shares offered by this Prospectus, by (i) each person who is known
by the Company to own beneficially more than five percent of the Company's
common stock; (ii) each of the Company's officers and directors; and (iii) all
officers, directors and principal stockholders as a group:
<TABLE>
<CAPTION>
PERCENTAGE OF SHARES
---------------------------- NUMBER OF
NUMBER OF BEFORE AFTER SHARES
NAME AND ADDRESS(1) POSITION WITH COMPANY SHARES OFFERING OFFERING(2)(3) OFFERED
- -------------------------------- -------------------------------- ----------- ----------- --------------- -----------
<S> <C> <C> <C> <C> <C>
Delmar J. Lewis Chairman of the Board, Chief 1,470,301 37.22 28.01 --
Executive Officer
Christopher J. Lewis President, Chief Operating 620,063 15.70 11.81 --
Officer, Director
Robert B. Hamilton, C.P.A. Executive Vice President, Chief 51,672 1.31 .98 --
Financial Officer, Secretary,
Director
Claude H. Rumsey, Jr. Director 338,216 8.56 6.44 --
Mao-Jin Chern, Ph.D. (4) Director -- -- -- --
Thomas T. Prousalis, Jr., Stockholder 316,750 8.02 6.03 --
Esq. (5)
Ross Portenoy (6) Stockholder 300,000 7.59 -- 300,000
Steven Madden (7) Stockholder 247,500 6.27 -- 247,500
Todd Stone (8) Stockholder 202,500 5.13 -- 202,500
Advanced Technology Systems, Stockholder 200,000 5.06 3.81 --
Inc. (9)
All Officers and Directors as a
Group (7 persons) 2,518,154 63.75 47.96 --

<CAPTION>
NUMBER OF
SHARES
AFTER
NAME AND ADDRESS(1) OFFERING
- -------------------------------- -----------
<S> <C>
Delmar J. Lewis 1,470,301

Christopher J. Lewis 620,063

Robert B. Hamilton, C.P.A. 51,672

Claude H. Rumsey, Jr. 338,216
Mao-Jin Chern, Ph.D. (4) --
Thomas T. Prousalis, Jr., 316,750
Esq. (5)
Ross Portenoy (6) --
Steven Madden (7) --
Todd Stone (8) --
Advanced Technology Systems, 200,000
Inc. (9)
All Officers and Directors as a
Group (7 persons) 2,518,154
</TABLE>

- ------------------------
(1) c/o n-Vision, Inc., 7680 Old Springhouse Road, First Floor, McLean, Virginia
22102.

(2) Does not include the exercise of up to 1,200,000 Class A Warrants offered
herein. The Company is offering 1,300,000 shares of Common Stock at $5.00
per share and 1,200,000 Class A Warrants at $.15 per Warrant. The Class A
Warrants shall be exercisable commencing one year after the effective date
of this Prospectus. Each Class A Warrant entitles the holder to purchase one
share of Common Stock at $5.50 per share during the four year period
commencing one year from the effective date. The Class A Warrants are
redeemable upon certain conditions. Should the Class A Warrants be
exercised, of which there is no assurance, the Company will receive the
proceeds therefrom, aggregating up to an additional $6,600,000. See
"Description of Securities."

(3) This offering also includes 750,000 shares of Common Stock owned by the
Selling Security-holders. The securities held by the Selling
Security-holders may be sold commencing eighteen (18) months from the date
of this Prospectus, subject to earlier release at the sole discretion of the
Representative, and such securities include a legend with such restrictions.
The Representative may release the securities held by the Selling
Security-holders at any time after all securities subject to the
Over-allotment Option have been sold or such option has expired. The resale
of the securities of the Selling Security-holders are subject to Prospectus
delivery and other requirements of the Securities Act of 1933, as amended.
Sales of such securities or the potential of such sales at any time may have
an adverse effect on the market prices of the securities offered hereby. See
"Certain Transactions," "Description of Securities," "Selling
Security-holders" and "Underwriting."

(4) c/o Vivitek Co., Ltd., 29 Industrial East 9th Road, 2nd Floor, Science-based
Industrial Park, Hsinchu, Taiwan, R.O.C.

(5) 1919 Pennsylvania Avenue, N.W., Suite 800, Washington, D.C. 20006. See
"Legal Matters."

(6) 10 Skyline Drive, Plainview, New York 11803. See "Selling Security-holders."

(7) 52-16 Barnett Avenue, Long Island City, New York 11104. See "Selling
Security-holders."

(8) 1 Bensin Drive, Melville, New York 11747. See "Selling Security-holders."

(9) 7915 Jones Branch Drive, Third Floor, McLean, Virginia 22102. See "Certain
Transactions."

41
<PAGE>
CERTAIN TRANSACTIONS

The Company was incorporated in the State of Delaware on September 16, 1994.
The Company has authorized capital of 25,000,000 shares of common stock, $.01
par value. The Company currently has 3,950,000 shares of Common Stock issued and
outstanding. See "Principal Shareholders" and "Description of Securities."

The Company was established in 1988 as a division of Advanced Technology
Systems, Inc. ("ATS"), a McLean, Virginia based information technology products
and services company, which is principally owned and controlled by Delmar J.
Lewis, the chairman of the board and a principal stockholder of the Company. The
Company was incorporated in Delaware on September 16, 1994 and acquired all
rights, title and interest in the VR products and systems from ATS for a
purchase price of $1,520,590, of which $500,000, the premium paid in connection
with the acquisition, was subsequently forgiven by ATS in October 1995. The
purchase price represents the net expenses incurred by ATS while the Company was
a division of ATS, plus a premium of $500,000. The balance of $1,020,590 is
payable under a promissory note bearing simple annual interest at the rate of
prime plus 1.375%, with semi-annual payments commencing May 1996 extending
through May 2001. However, in May 1996, the remaining balance of $1,000,000 due
under this promissory note was retired in exchange for 200,000 shares of the
Company's common stock.

In November 1994 and March 1995, the Company issued 2,400,000 shares of its
Common Stock, which includes a 1.67:1 reverse stock split in May 1995, to 14
persons, including certain officers and directors of the Company, in private
placement transactions for aggregate consideration of $661,655, or $.28 per
share. See "Principal Stockholders" and "Legal Matters."

During the years ended December 31, 1995 and 1994, the Company paid
approximately $85,000 and $94,000, respectively, to a consultant and stockholder
of the Company for services rendered.

In March 1996, the Company caused a 1.38:1 stock split of its shares of
Common Stock resulting in 3,000,000 outstanding shares of Common Stock.

In March 1996, the Company borrowed $250,000 from three nonaffiliated
persons under three separate 8% convertible promissory notes, which were
convertible into a total of 750,000 shares of the Company's Common Stock, at
$.33 per share, at the option of the noteholders.

In April 1996, the three nonaffiliated noteholders under the 8% convertible
promissory notes elected to convert their notes at nominal cost into a total of
750,000 shares of the Company's Common Stock, at $.33 per share, resulting in a
then total of 3,750,000 outstanding shares of Common Stock of the Company. The
750,000 shares of Common Stock are being registered as part of this offering.
See "Selling Security-holders."

All unregistered securities issued by the Company prior to this offering are
deemed "restricted securities" within the meaning of that term as defined in
Rule 144 and have been issued pursuant to certain "private placement" exemptions
under Section 4(2) of the Securities Act of 1933, as amended, and the rules and
regulations as promulgated by the Securities and Exchange Commission,
Washington, D.C. 20549. See "Description of Securities."

The Company has a line of credit with ATS of $1,000,000. ATS has agreed to
fund operations in 1996 utilizing the $1,000,000 line of credit in amounts in
excess of the limit on the credit. As of December 31, 1995 the Company borrowed
$1,071,023 against this line to meet its on-going cash flow requirements. This
offering will allow the Company to pay the outstanding promissory note
obligation of $500,000 with the net proceeds of this offering as well as provide
the Company with cash reserves to finance its operations for the 12 months
period following the closing of this offering. The Company does not expect to
exceed the $1,000,000 limit on the line of credit following the $500,000
curtailment using the proceeds of the offering.

In February 1995, the Company entered into an exclusive joint development
and supply agreement with Vivitek Co., Ltd. ("Vivitek"), a Taiwan based advanced
technology company involved in the

42
<PAGE>
design, development and manufacturing of highly advanced display products based
on liquid crystal color shutter technologies. The agreement provides, among
other things, that Vivitek will develop, manufacture and supply the Company, on
an exclusive basis, its shutter technology that will be used in the Company's VR
products and systems. The Company believes that Vivitek's shutter technology is
state-of-the-art and may provide the Company's VR products and systems with
certain technological advantages. However, the Company can make no assurances
that any of its VR products and systems will have a technological or economic
advantage over any competitor's VR products and systems. Dr. Mao-Jin Chern, a
director of the Company, has been the general manager of Vivitek since 1993.

The Company intends to indemnify its officers and directors to the full
extent permitted by Delaware law. Under Delaware law, a corporation may
indemnify its agents for expenses and amounts paid in third party actions and,
upon court approval in derivative actions, if the agents acted in good faith and
with reasonable care. A majority vote of the Board of Directors, approval of the
shareholders or court approval is required to effectuate indemnification.

Insofar as indemnification for liabilities arising under the Securities Act
of 1933, as amended, may be permitted to officers, directors or persons
controlling the Company, the Company has been advised that, in the opinion of
the Securities and Exchange Commission, Washington, D.C. 20549, such
indemnification is against public policy as expressed in such Act and is,
therefore, unenforceable. In the event that a claim for indemnification against
such liabilities (other than the payment by the Company of expenses incurred or
paid by an officer, director or controlling person of the Company in the
successful defense of any action, suit or proceeding) is asserted by such
officer, director or controlling person in connection with the securities being
registered, the Company will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in such Act and will be governed by the final adjudication
of such issue.

Transactions with affiliates will be on terms no less favorable than may be
obtained from nonaffiliated parties and will be approved by a majority of the
independent and disinterested directors. Any such transactions will be subject
to the approval of a majority of the independent and disinterested members of
the Board of Directors of the Company.

43
<PAGE>
DESCRIPTION OF SECURITIES

COMMON STOCK

The Company is offering 1,300,000 shares of Common Stock at $5.00 per share
and 1,200,000 Class A Warrants at $.15 per Class A Warrant. The shares of Common
Stock and Class A Warrants will be separately tradeable immediately upon the
effective date of this offering and may be purchased separately in varying
amounts.

The authorized capital stock of the Company consists of 25,000,000 shares of
Common Stock, $.01 par value. There are presently 3,950,000 issued and
outstanding shares of Common Stock. Holders of the Common Stock do not have
preemptive rights to purchase additional shares of Common Stock or other
subscription rights. The Common Stock carries no conversion rights and is not
subject to redemption or to any sinking fund provisions. All shares of Common
Stock are entitled to share equally in dividends from sources legally available
therefor when, as and if declared by the Board of Directors and, upon
liquidation or dissolution of the Company, whether voluntary or involuntary, to
share equally in the assets of the Company available for distribution to
stockholders. All outstanding shares of Common Stock are validly authorized and
issued, fully paid and nonassessable, and all shares to be sold and issued as
contemplated hereby, will be validly authorized and issued, fully paid and
nonassessable. The Board of Directors is authorized to issue additional shares
of Common Stock, not to exceed the amount authorized by the Company's
Certificate of Incorporation, and to issue options and warrants for the purchase
of such shares, on such terms and conditions and for such consideration as the
Board may deem appropriate without further stockholder action. The above
description concerning the Common Stock of the Company does not purport to be
complete. Reference is made to the Company's Certificate of Incorporation and
By-laws which are available for inspection upon proper notice at the Company's
offices, as well as to the applicable statutes of the State of Delaware for a
more complete description concerning the rights and liabilities of stockholders.

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

Each holder of Common Stock is entitled to one vote per share on all matters
on which such stockholders are entitled to vote. Since the shares of Common
Stock do not have cumulative voting rights, the holders of more than 50 percent
of the shares voting for the election of directors can elect all the directors
if they choose to do so and, in such event, the holders of the remaining shares
will not be able to elect any person to the Board of Directors.

CLASS A WARRANTS

44
<PAGE>
period of thirty (30) days ending within ten (10) days of the notice of
redemption. Upon thirty (30) days' written notice to all holders of the Class A
Warrants, the Company shall have the right to reduce the exercise price and/or
extend the term of the Class A Warrants.

The Warrants can only be exercised when there is a current effective
registration statement covering the shares of common stock underlying the
Warrants. If the Company does not or is unable to maintain a current effective
registration statement the Warrant holders will be unable to exercise the
Warrants and the Warrants may become valueless. Moreover, if the shares of
common stock underlying the Warrants are not registered or qualified for sale in
the state in which a Warrant holder resides, such holder might not be permitted
to exercise the Warrants.

The Company will deliver Warrant certificates to the purchasers of its
Warrants. Thereafter, Warrant certificates may be exchanged for new certificates
of different denominations, and may be exercised or transferred by presenting
them at the offices of the Transfer Agent. Holders of the Warrants may sell the
Warrants if a market exists rather than exercise them. However, there can be no
assurance that a market will develop or continue as to such Warrants. If the
Company is unable to qualify its common stock underlying such Warrants for sale
in certain states, holders of the Company's Warrants in those states will have
no choice but to either sell such Warrants or allow them to expire.

Each Warrant may be exercised by surrendering the Warrant certificate, with
the form of election to purchase on the reverse side of the Warrant certificate
properly completed and executed, together with payment of the exercise price to
the Warrant Agent. The Warrants may be exercised in whole or from time to time
in part. If less than all of the Warrants evidenced by a Warrant certificate are
exercised, a new Warrant certificate will be issued for the remaining number of
Warrants. Upon the exercise of the Warrants, the shares of Common Stock when
issued will be fully paid and nonassessable.

Holders of the Warrants are protected against dilution of the equity
interest represented by the underlying shares of common stock upon the
occurrence of certain events, including, but not limited to, issuance of stock
dividends. If the Company merges, reorganizes or is acquired in such a way as to
terminate the Warrants, the Warrants may be exercised immediately prior to such
action. In the event of liquidation, dissolution or winding up of the Company,
holders of the Warrants are not entitled to participate in the Company's assets.

For the life of the Warrants, the holders thereof are given the opportunity,
at nominal cost, to profit from a rise in the market price of the common stock
of the Company. The exercise of the Warrants will result in the dilution of the
then book value of the Common Stock of the Company held by the public investors
and would result in a dilution of their percentage ownership of the Company. The
terms upon which the Company may obtain additional capital may be adversely
affected through the period that the Warrants remain exercisable. The holders of
these Warrants may be expected to exercise them at a time when the Company
would, in all likelihood, be able to obtain equity capital on terms more
favorable than those provided for by the Warrants.

Because the Warrants being offered hereby may be transferred, it is possible
that the Warrants may be acquired by persons residing in states where the
Company has not registered, or is not exempt from registration such that the
shares of common stock underlying the Warrants may not be sold or transferred
upon exercise of the Warrants. Warrantholders residing in those states would
have no choice but to attempt to sell their Warrants or to let them expire
unexercised. Also, it is possible that the Company may be unable, for unforeseen
reasons, to cause a registration statement covering the shares underlying the
Warrants to be in effect when the Warrants are exercisable. In that event, the
Warrants may expire unless extended by the Company as permitted by the Warrant
because a registration statement must be in effect, including audited financial
statements for companies acquired, in order for warrantholders to exercise their
Warrants.

The Company will be able to issue the securities offered hereby, shares of
its Common Stock upon the exercise of the Warrants and the Underwriter's
Purchase Option only if (i) there is a current

45
<PAGE>
prospectus relating to the securities offered hereby under an effective
registration statement filed with the Securities and Exchange Commission, and
(ii) such Common Stock is then qualified for sale or exempt therefrom under
applicable state securities laws of the jurisdictions in which the various
holders of Warrants reside. Although the Company intends to maintain a current
registration statement, there can be no assurance, however, that the Company
will be successful in maintaining a current registration statement. After a
registration statement becomes effective, it may require updating by the filing
of a post-effective amendment. A post-effective amendment is required (i)
anytime after nine months subsequent to the Effective Date when any information
contained in the prospectus is over sixteen months old; (ii) when facts or
events have occurred which represent a fundamental change in the information
contained in the registration statement; or (iii) when any material change
occurs in the information relating to the plan or distribution of the securities
registered by such registration statement. The Company anticipates that this
Registration Statement will remain effective for not more than nine months
following the date of this Prospectus or until , 1998, assuming a
post-effective amendment is not filed by the Company, which may be required. The
Company intends to qualify the sale of the Units in a limited number of states,
although certain exemptions under certain state securities ("Blue Sky") laws may
permit the Warrants to be transferred to purchasers in states other than those
in which the Warrants were initially qualified. The Company will be prevented,
however, from issuing Common Stock upon exercise of the Warrants in those states
where exemptions are unavailable and the Company has failed to qualify the
Common Stock issuable upon exercise of the Warrants. The Company may decide not
to seek, or may not be able to obtain qualification of the issuance of such
Common Stock in all of the states in which the ultimate purchasers of the
Warrants reside. In such case, the Warrants of those purchasers will expire and
have no value if such Warrants cannot be exercised or sold. Accordingly, the
market for the Warrants may be limited because of the Company's obligation to
fulfill both of the foregoing requirements.

RESTRICTED SHARES ELIGIBLE FOR FUTURE SALE

Upon completion of this offering, the Company will have 5,250,000 shares of
Common Stock issued and outstanding. Of these shares of Common Stock, 1,300,000
shares are being sold in this offering, in addition to the registration of
750,000 shares of Common Stock on behalf of the Selling Stockholders. Of the
remaining shares, 3,200,000 shares ("Restricted Shares") were issued and sold by
the Company in private transactions in reliance upon certain private placement
exemptions as promulgated by the Securities and Exchange Commission, Washington,
D.C. 20549. See "Selling Security-holders" and "Certain Transactions."

In general, under Rule 144 as currently in effect, a person (or persons
whose shares are aggregated) who has beneficially owned his or her Restricted
Shares for at least two years, including persons who may be deemed "affiliates"
of the Company, as that term is defined under the Act, would be entitled to sell
in broker's transactions within any three month period a number of shares that
does not exceed the greater of one percent of the then outstanding shares of the
Company's common stock, or the average weekly trading volume in the
over-the-counter market in the Company's common stock during the four calendar
weeks preceding such sale. Therefore, during each three month period, beginning
in November 1996, a holder of restricted securities who has held them for at
least a two year period may sell under Rule 144 a number of shares at least
equal to 52,500 shares. A person who is not deemed to have been an affiliate of
the Company at any time during the 90 days preceding a sale, and who has
beneficially owned his or her Restricted Shares for at least three years, would
be entitled to sell such shares under Rule 144 without regard to the volume
limitations described above, provided that certain public information concerning
the Company as required by the Rule is available.

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

46
<PAGE>

Pursuant to the terms of the Underwriting Agreement, the Company's
stockholders and the Company have agreed not to sell, transfer, assign or issue
any restricted shares of Common Stock for a period of 24 months following the
date of this Prospectus without the prior consent of the Representative. The
sale of a significant number of these shares in the public market may adversely
affect prevailing market prices of the Company's securities following this
offering. See "Principal Stockholders" and "Certain Transactions."

No predictions can be made as to the effect, if any, that sales of shares
under Rule 144 or otherwise or the availability of shares for sale will have on
the market, if any, prevailing from time to time. Sales of significant amounts
of the Company's shares of Common Stock pursuant to Rule 144 or otherwise may
adversely affect the market price of the securities offered hereby.

TRANSFER AGENT AND REGISTRAR

The transfer agent and registrar for the securities of the Company is
American Stock Transfer & Trust Company located at 40 Wall Street, New York, New
York 10005.

REPORTS TO SECURITY-HOLDERS

The Company will furnish to holders of its securities annual reports
containing audited financial statements. The Company may issue other unaudited
interim reports to its security-holders as it deems appropriate.

Contemporaneously, with this offering, the Company intends to register its
securities with the Securities and Exchange Commission, Washington, D.C. 20549,
under the provisions of Section 12(g) of the Securities Exchange Act of 1934, as
amended ("Exchange Act"), and, in accordance therewith, the Company will be
required to comply with certain reporting, proxy solicitation and other
requirements of the Exchange Act.

47
<PAGE>
SELLING SECURITY-HOLDERS

The registration statement, of which this Prospectus forms a part, also
covers the registration of 750,000 shares of Common Stock offered by three
persons who are nonaffiliated with the Underwriters and the Company, hereinafter
collectively referred to as "Selling Security-holders," to wit: Messrs. Ross
Portenoy (300,000 shares), Steven Madden (247,500 shares) and Todd Stone
(202,500 shares). The securities held by the Selling Security-holders may be
sold commencing eighteen (18) months from the date of this Prospectus, subject
to earlier release at the sole discretion of the Underwriter, and such
securities include a legend with such restrictions. The Representative may
release the securities held by the Selling Security-holders at any time after
all securities subject to the Over-allotment Option have been sold or such
option has expired. The resale of the securities of the Selling Security-holders
are subject to Prospectus delivery and other requirements of the Securities Act
of 1933, as amended. Sales of such securities or the potential of such sales at
any time may have an adverse effect on the market prices of the securities
offered hereby.

In April 1996, the three nonaffiliated noteholders under the 8% convertible
promissory notes elected to convert their notes into a total of 750,000 shares
of the Company's Common Stock, resulting in a then total of 3,950,000
outstanding shares of Common Stock of the Company. The 750,000 shares of Common
Stock are being registered as part of this offering. See "Selling
Security-holders."

The 750,000 shares of Common Stock are being offered by the Selling
Security-holders under an alternate Prospectus. Prior to making the bridge loan
to the Company, the Selling Security-holders did not own any other securities of
the Company. None of the Selling Security-holders of the Company are otherwise
affiliated with the Company, at the time of making the bridge loan, at the time
of this offering or at any other time. The Company believes that its financial
transactions with the Selling Security-holders served a legitimate business
purpose, I.E., providing needed working capital for the Company, and were fair
and reasonable under the circumstances. The Company's financial transactions
with the Selling Security-holders were managed by the Representative and no
commissions or other remuneration were paid to the Representative in connection
with such transactions. See "Certain Transactions" and "Description of
Securities."

The securities offered hereby may be sold from time to time directly by the
Selling Security-holders. Alternatively, the Selling Security-holders may from
time to time offer such securities through underwriters, dealers and agents. The
distribution of securities by the Selling Security-holders may be effected in
one or more transactions that may take place on the over-the-counter market,
including ordinary broker's transactions, privately-negotiated transactions or
through sales to one or more broker-dealers for resale of such shares as
principals, at market prices prevailing at the time of sale, at prices related
to such prevailing market prices or at negotiated prices. Usual and customary or
specifically negotiated brokerage fees or commissions may be paid by the Selling
Security-holders in connection with such sales of securities. The Selling
Security-holders and intermediaries through whom such securities are sold may be
deemed "underwriters" within the meaning of the Act with respect to the
securities offered, and any profits realized or commissions received may be
deemed underwriting compensation.

At the time a particular offer of securities is made by or on behalf of a
Selling Security-holder, to the extent required, a Prospectus will be
distributed which will set forth the number of shares being offered and the
terms of the offering, including the name or names of any underwriters, dealers
or agents, if any, the purchase price paid by any underwriter for shares
purchased from the Selling Security-holder and any discounts, commissions or
concessions allowed or reallowed or paid to dealers, and the proposed selling
price to the public.

48
<PAGE>
Under the Securities Exchange Act of 1934, as amended ("Exchange Act"), and
the regulations thereto, any person engaged in a distribution of the securities
of the Company offered by this Prospectus may not simultaneously engage in
market-making activities with respect to such securities of the Company during
the applicable "cooling off" period (nine days) prior to the commencement of
such distribution. In addition, and without limiting the foregoing, the Selling
Security-holders will be subject to applicable provisions of the Exchange Act
and the rules and regulations thereunder, including without limitation, Rule
10b-6 and 10b-7, in connection with transactions in such securities, which
provisions may limit the timing of purchases and sales of such securities by the
Selling Security-holders.

Sales of securities by the Selling Security-holders or even the potential of
such sales may likely have an adverse effect on the market prices of the
securities offered hereby. Following the closing of this offering, the publicly
tradeable securities of the Company ("public float"), including this offering,
will be 2,050,000 shares of Common Stock and 1,200,000 Class A Warrants,
provided, however, that 750,000 shares of Common Stock owned by the Selling
Security-holders are not transferable for eighteen (18) months commencing on the
effective date of this Prospectus, or at such earlier date as may be permitted
by the Underwriter, and such securities include a legend with such restrictions.
The Underwriter may release such securities held by the Selling Security-holders
at any time after all securities subject to the Over-allotment Option have been
sold or such option has expired. The resale of the securities of the Selling
Security-holders are subject to Prospectus delivery and other requirements of
the Securities Act of 1933, as amended. Sales of such securities or the
potential of such sales at any time may have an adverse effect on the market
prices of the securities offered hereby. See "Description of Securities" and
"Underwriting."

49
<PAGE>
UNDERWRITING

Subject to the terms and conditions of the underwriting agreement by and
among the Company and Stratton Oakmont ("Underwriting Agreement"), the Company
has agreed to sell to the Underwriters, as set forth below and for whom Stratton
Oakmont is the Representative, 1,300,000 shares of Common Stock and 1,200,000
Class A Warrants on a "firm commitment" basis. The Underwriters have advised the
Company that it proposes to offer the shares of Common Stock at $5.00 per share
and the Class A Warrants at $.15 per Warrant as set forth on the cover page of
this Prospectus and that they may allow to certain dealers who are NASD members
concessions not to exceed $. per share of Common Stock and $. per Class A
Warrant. After the initial public offering, the public offering price,
concession and reallowance may be changed by the Underwriters. The Underwriters
have informed the Company that it does not intend to confirm sales to any
accounts over which it exercises discretionary authority.

<TABLE>
<CAPTION>
NUMBER OF NUMBER OF
UNDERWRITER SHARES CLASS A WARRANTS
- ---------------------------------------------------------------------------------- ----------- ----------------
<S> <C> <C>
Stratton Oakmont, Inc. ........................................................... 1,160,000 1,175,000
Renaissance Financial Securities Corp. ........................................... 140,000 25,000
----------- ----------------
Total......................................................................... 1,300,000 1,200,000
----------- ----------------
----------- ----------------
</TABLE>

In addition to underwriting discounts and commissions of ten percent of the
entire offering, the Underwriters will receive additional compensation in the
form of (i) a nonaccountable expense allowance of $195,000 if 1,300,000 shares
of Common Stock are sold and $5,400 if 1,200,000 Class A Warrants are sold (or a
total of $230,460 if the Underwriters' Over-allotment Option is fully
exercised); and (ii) an option (exercisable for a period of four years
commencing one year after the date of this Prospectus) entitling the
Underwriters to purchase 130,000 shares of Common Stock at $8.25 per share and
120,000 Class A Warrants at $.25 per Warrant ("Underwriters' Purchase Option").

The public offering price of the securities and the exercise price and other
terms of the Warrants were arbitrarily determined by negotiations between the
Company and the Underwriters and do not necessarily relate to the assets, book
value or results of operations of the Company or any other established criteria
of value.

The Company has granted an option to the Underwriters, exercisable during
the 30-day period from the date of this Prospectus, to purchase up to a maximum
of 195,000 additional shares of Common Stock and 180,000 additional Class A
Warrants at the offering price, less the underwriting discount, to cover
over-allotments, if any.

The Underwriting Agreement provides for reciprocal indemnification between
the Company and the Underwriters against certain liabilities in connection with
the Registration Statement, including liabilities under the Securities Act of
1933, as amended ("1933 Act"). Insofar as indemnification for liabilities
arising under the 1933 Act may be provided to officers, directors or persons
controlling the Company, the Company has been informed that in the opinion of
the Securities and Exchange Commission, such indemnification is against public
policy and is therefore unenforceable.

The Company will also pay a warrant solicitation fee to the Underwriters
equal to four percent of the exercise price of the Warrants, aggregating up to
$264,000, to the Underwriter beginning one year from the date of this
Prospectus, if the Underwriters solicit the exercise of such Warrants prior to
the expiration thereof as set forth in the Warrant Agreement, subject to the
Underwriters' compliance with the rules and regulations of the NASD. In
accordance with NASD Notice to Members 81-38, no warrant solicitation fee shall
be paid (i) upon exercise where the market price of the underlying Common Stock
is lower than the exercise price; (ii) for the exercise of warrants held in any
discretionary account; (iii) upon the exercise of warrants where disclosure of
compensation arrangements has not been made in documents provided to customers
both as part of the original offering and at the time of exercise; and (iv) upon
the exercise of warrants in unsolicited transactions. The broker-dealer to

50
<PAGE>

receive the warrant solicitation fee will be designated, in writing, as the
soliciting broker. See "Risk Factors -- Exercise of Class A Warrants May Have
Dilutive Effect on Market and Underwriters' Influence on the Market May Have
Adverse Consequences."

The Company has agreed to sell to the Underwriters, or its designees, for an
aggregate purchase price of $100, an option ("Underwriters' Purchase Option") to
purchase up to an aggregate of 130,000 shares of Common Stock and 120,000 Class
A Warrants. The Underwriters' Purchase Option shall be exercisable during the
four-year period commencing one year after the effective date. The Underwriters'
Purchase Option may not be assigned, transferred, sold or hypothecated by the
Underwriters until 12 months after the effective date of this Prospectus, except
to officers or partners of the Underwriters and selling group members in this
offering. Any profits realized by the Underwriters upon the sale of the
securities issuable upon exercise of the Underwriters' Purchase Option may be
deemed to be additional underwriting compensation. The exercise prices of the
Common Stock and Class A Warrants issuable upon exercise of the Underwriters'
Purchase Option during the period of exercisability shall be 165 percent of the
initial public offering prices of the Common Stock and Class A Warrants. The
exercise price of the warrants in the Underwriters' Purchase Option is $5.50.
The exercise price of the Underwriters' Purchase Option and the number of shares
covered thereby are subject to adjustment in certain events to prevent dilution.
For the life of the Underwriters' Purchase Option, the holders thereof are
given, at a nominal cost, the opportunity to profit from a rise in the market
price of the Company's securities with a resulting dilution in the interest of
other stockholders. The Company may find it more difficult to raise capital for
its business if the need should arise while the Underwriters' Purchase Option is
outstanding. At any time when the holders of the Underwriters' Purchase Option
might be expected to exercise it, the Company would probably be able to obtain
additional capital on more favorable terms.

If the Company enters into a transaction (including a merger, joint venture
or the acquisition of another entity) introduced to the Company by the
Representative, the Company has agreed to pay the Representative a maximum
finder's fee equal to five percent of the first $3,000,000 of consideration
involved in the transaction, four percent of the next $3,000,000, three percent
of the next $2,000,000, two percent of the next $2,000,000 and one percent of
the excess, if any, over $10,000,000.

The Representative has the right to designate a non-director observer to
attend meetings of the Company's Board of Directors for three years from the
date of this offering. The Representative does not have a right to designate or
nominate a director to the Company's Board of Directors. The observer will be
reimbursed for reasonable expenses incurred by him in connection with his
activities.

The foregoing is a summary of all material provisions of the Underwriting
Agreement and the Underwriters' Purchase Option which have been filed as an
exhibit to the Registration Statement of which this Prospectus is a part.

The Company has been advised by Stratton Oakmont that the NASD (District 10)
filed a complaint (No. C10950081) on October 5, 1995 ("Complaint") against
Stratton Oakmont, Steven Sanders, the head trader of Stratton Oakmont, Daniel M.
Porush, the president of Stratton Oakmont, and Paul F. Byrne, formerly the
Underwriter's director of compliance (collectively, the "Respondents"), alleging
various violations of the NASD Rules of Fair Practice. The complaint consisted
of three causes. The first cause alleged that Stratton Oakmont and Sanders
effected principal retail sales of securities at prices that were fraudulently
excessive. The second cause alleged that Stratton Oakmont

51
<PAGE>

and Sanders charged excessive markups. The third cause alleged that Stratton
Oakmont, Porush and Byrne failed to establish, maintain and enforce reasonable
supervisory procedures designed to assure compliance with the NASD's rules and
policies.

On April 15, 1996 the NASD in its decision found all of the Respondents
except Paul Byrne in violation of all three causes and imposed the following
sanctions:

-Sanders was censured, fined $25,000 and was suspended from association with
any member of the NASD in any capacity for a period of one year.

-Porush was censured, fined $250,000 and barred from association with any
member of the NASD in any capacity.

Stratton Oakmont, Porush and Sanders have appealed the NASD's decision
thereby staying imposition of the sanctions.

If the sanctions imposed on Stratton Oakmont are not reversed on appeal,
Stratton Oakmont's ability to act as a market maker of the Company's securities
will be restricted. The Company cannot ensure that other broker dealers will
make a market in the Company's securities. In the event that other broker
dealers fail to make a market in the Company's securities, the possibility
exists that the market for and the liquidity of the Company's securities may be
adversely affected to such an extent that public security holders may not have
anyone to purchase their securities when offered for sale at any price. In such
event, the market for and liquidity of the Company's securities may not exist.
It should be noted that although Stratton Oakmont may not be the sole market
maker in the Company's securities, it may likely be the dominant market maker in
the Company's securities.

The Company has been advised by Stratton Oakmont that the Commission
instituted an action on December 14, 1994 in the United States District Court
for the District of Columbia against Stratton Oakmont. The complaint alleged
that Stratton Oakmont was not complying with the March 17, 1994 Administrative
Order by failing to adopt the recommendations of an independent consultant. The
Administrative Order was previously consented to by Stratton Oakmont, without
admitting or denying the findings contained therein, as settlement of an action
commenced against Stratton Oakmont by the Commission in March 1992, which found
willful violations of the anti-fraud provisions of the securities laws such that
Stratton Oakmont:

-engaged in fraudulent sales practices;

-engaged in and/or permitted unauthorized trading in customer accounts;

-knowingly and recklessly manipulated the market price of a company's
securities by dominating and controlling the market for those securities;

-made improper and unsupported price predictions with regard to recommended
over-the-counter securities; and

-made material misrepresentations and omissions regarding certain securities
and its experience in the securities industry.

Pursuant to the Administrative Order, Stratton Oakmont was censured and the
Stratton Consultant was chosen by the Commission to advise and consult with
Stratton Oakmont and to review and recommend new supervisory and compliance
procedures. The complaint sought:

-a to enjoin Stratton Oakmont from violating the Administrative Order;

-an order commanding Stratton Oakmont to comply with the Administrative
Order; and

52
<PAGE>
-to have a Special Compliance Monitor appointed to ensure compliance with
the Administrative Order. Stratton Oakmont claimed that the Stratton
Consultant exceeded his authority under the Administrative Order and had
violated the terms of the Administrative Order.

On February 28, 1995, the court granted the Commission's motion for the
Permanent Injunction and ordered Stratton Oakmont to comply with the
Administrative Order, which required the appointment of an independent
consultant, and a separate independent auditor and required that all
recommendations be complied with, including the taping of all telephone
conversations between the Stratton Oakmont's brokers and their customers. In
granting the Commission's motion for a Permanent Injunction, the court
determined that Stratton Oakmont's conduct unequivocally demonstrated that there
is a substantial likelihood that it will continue to evade its responsibilities
under the Administrative Order. On April 20, 1995, Stratton Oakmont filed an
appeal to the United States Court of Appeals for the District of Columbia, and
on April 24, 1995 filed a motion to stay the permanent injunction pending the
outcome of the appeal. The motion to stay was denied. It is uncertain when a
decision on the appeal will be rendered. The failure by Stratton Oakmont to
comply with the Administrative Order or Permanent Injunction may adversely
effect Stratton Oakmont's activities in that the court may enter a further order
restricting the ability of Stratton Oakmont to act as a market maker of the
Company's securities. The effect of such action may prevent the holders of the
Company's securities from selling such securities since Stratton Oakmont may be
restricted from acting as a market maker of the Company's securities and, in
such event, will not be able to execute a sale of such securities. Also, if
other broker dealers fail to make a market in the Company's securities, the
public security holders may not have anyone to purchase their securities when
offered for sale at any price and the security holders may suffer the loss of
their entire investment.

53
<PAGE>
do business is revoked in the states set forth above, the Underwriter has
advised the Company that it believes that it will be able to make a market in
the Company's securities in such states and that such an event will not have a
materially adverse effect on this Offering, although no assurance can be given.

DETERMINATION OF PUBLIC OFFERING PRICE

Prior to this offering, there has been no public market for the securities
of the Company. The initial public offering price for the securities and the
exercise price of the Class A Warrants have been determined by negotiations
between the Company and the Underwriters. Among the factors considered in the
negotiations were an analysis of the areas of activity in which the Company is
engaged, the present state of the Company's business, the Company's financial
condition, the Company's prospects, an assessment of management, the general
condition of the securities market at the time of this offering and the demand
for similar securities of comparable companies. The public offering price of the
securities and the exercise prices of the Class A Warrants do not necessarily
bear any relationship to assets, earnings, book value or other criteria of value
applicable to the Company.

LEGAL PROCEEDINGS

n-Vision, Inc. is not a party to any legal proceedings and, to the best of
its information, knowledge and belief, none is contemplated or has been
threatened.

LEGAL MATTERS

The validity of the securities being offered hereby will be passed upon for
the Company by Thomas T. Prousalis, Jr., Esq., 1919 Pennsylvania Avenue, N.W.,
Suite 800, Washington, D.C. 20006. Mr. Prousalis is the beneficial owner of
316,750 shares of Common Stock of the Company. See "Principal Stockholders."
Certain legal matters will be passed upon for the Representative by Bernstein &
Wasserman, LLP, 950 Third Avenue, New York, New York 10022.

EXPERTS

The financial statements of n-Vision, Inc. as of December 31, 1995, included
in the Registration Statement and this Prospectus, have been included herein in
reliance on the report dated April 12, 1996, of Grant Thornton LLP, Independent
Certified Public Accountants, and upon the authority of such firm as experts in
accounting and auditing.

54
<PAGE>
ADDITIONAL INFORMATION

The Company has filed with the Commission an SB-2 Registration Statement
under the Securities Act of 1933, as amended, with respect to the securities
offered by this Prospectus. This Prospectus does not contain all of the
information set forth in the Registration Statement and exhibits, to all of
which reference is hereby made. Statements contained in this Prospectus as to
the contents of any contract or other document referred to are not necessarily
complete; with respect to each such contract or other document filed or
incorporated by reference as an exhibit to the Registration Statement, reference
is made to the exhibit for a more complete description of the matter involved,
and each such statement shall be deemed to be qualified in its entirety by such
reference. All of these documents may be inspected without charge at the public
reference facilities maintained by the Commission at Judiciary Plaza, 450 Fifth
Street, N.W., Room 1024, Washington, D.C. 20549.

55
<PAGE>
INDEX TO FINANCIAL STATEMENTS

<TABLE>
<CAPTION>
PAGE
---------
<S> <C>
Report of Independent Certified Public Accountants...................................................... F-2

Financial Statements
Balance Sheet......................................................................................... F-3
Statements of Operations.............................................................................. F-4
Statements of Stockholders' Deficit................................................................... F-5
Statements of Cash Flows.............................................................................. F-6
Notes to Financial Statements......................................................................... F-7-14
</TABLE>

F-1
<PAGE>
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS

Board of Directors
n-Vision, Inc.

We have audited the accompanying balance sheet of n-Vision, Inc. as of
December 31, 1995, and the related statements of operations, stockholders'
deficit and cash flows for the two years in the period then ended. These
financial statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.

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

In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of n-Vision, Inc. as of
December 31, 1995, and the results of its operations, stockholders' deficit, and
its cash flows for the two years in the period then ended, in conformity with
generally accepted accounting principles.

GRANT THORNTON LLP

McLean, Virginia
April 12, 1996

F-2
<PAGE>
N-VISION, INC.
BALANCE SHEETS

<TABLE>
<CAPTION>
DECEMBER 31,
1995
MARCH 31, 1996 --------------
--------------
(UNAUDITED)
<S> <C> <C>
ASSETS
CURRENT ASSETS
Cash............................................................................ $ 154,123 $ 6,088
Accounts receivable.............................................................
Trade......................................................................... 176,577 129,261
Officer and employee travel advances.......................................... 6,600 6,600
Income tax receivable........................................................... 101,363 101,363
Inventories (Note B2)........................................................... 529,103 497,088
Prepaid expenses................................................................ 5,317 5,295
-------------- --------------
Total current assets........................................................ 973,083 745,695
PROPERTY AND EQUIPMENT
Net of accumulated depreciation (Notes B3 and C)................................ 104,764 44,238
OTHER ASSETS
Organization costs, net of amortization (Note B9)............................... 50,629 53,978
-------------- --------------
$ 1,128,476 $ 843,911
-------------- --------------
-------------- --------------

LIABILITIES AND STOCKHOLDERS' DEFICIT

CURRENT LIABILITIES
Current maturities of note payable to Advanced Technology Systems, Inc. (ATS)
(Note A)....................................................................... $ 20,590 $ 160,000
Line of credit -- ATS (Note A).................................................. 1,127,328 1,071,023
Bank line of credit (Note E).................................................... 115,634 67,237
Accounts payable................................................................ 232,673 309,263
Accrued salaries and vacation................................................... 39,209 41,053
Accrued interest due to ATS (Note A)............................................ 304,871 253,445
Deferred revenue and warranty reserve........................................... 158,558 111,284
Current portion of capital lease obligation (Note E)............................ 19,520 --
-------------- --------------
Total current liabilities................................................... 2,018,383 2,013,305
NOTE PAYABLE -- ATS (Note A)...................................................... 1,000,000 860,590
CAPITAL LEASE OBLIGATION -- net of current portion (Note E)....................... 43,923 --
CONVERTIBLE NOTES PAYABLE (NOTE E)................................................ 250,000 --
STOCKHOLDERS' DEFICIT (Notes A, E and G)
Common stock, $.01 par value; 25,000,000 shares authorized; 3,000,000 issued and
outstanding.................................................................... 30,000 30,000
Common stock subscriptions and notes receivable................................. (711,510) (700,364)
Paid in capital................................................................. 518,886 440,761
Retained earnings (deficit) (note A1)........................................... (2,021,206) (1,800,381)
-------------- --------------
Total stockholders' deficit................................................. (2,183,830) (2,029,984)
-------------- --------------
$ 1,128,476 $ 843,911
-------------- --------------
-------------- --------------
</TABLE>

The accompanying notes are an integral part of this statement.

F-3
<PAGE>
N-VISION, INC.
STATEMENTS OF OPERATIONS

<TABLE>
<CAPTION>
THREE MONTHS ENDED MARCH 31,
YEAR ENDED DECEMBER 31,
---------------------------- -----------------------------
1996 1995 1995 1994
------------- ------------- -------------- -------------
(UNAUDITED)
<S> <C> <C> <C> <C>
Sales (Note B1)..................................... $ 256,753 $ 218,302 $ 626,763 $ 1,491,800
Cost of sales....................................... 98,298 87,760 390,466 598,102
------------- ------------- -------------- -------------
Gross margin.................................... 158,455 130,542 236,297 893,698
Operating expenses
General and administrative........................ 168,016 184,871 829,085 358,119
Marketing and sales............................... 25,646 58,102 219,407 135,334
Product development (Note B7)..................... 141,586 118,206 556,402 248,594
------------- ------------- -------------- -------------
Income (loss) from operations................... (176,793) (230,637) (1,368,597) 151,651
Non-operating expenses
Unrealized offering expenses (Note B4)............ -- -- 559,245 --
Interest expense.................................. 44,032 48,135 151,316 27,318
------------- ------------- -------------- -------------
Income (loss) before income tax expense......... (220,825) (278,772) (2,079,158) 124,333
Income tax benefit (expense) (Notes B6 and D)....... -- -- 91,000 (37,000)
------------- ------------- -------------- -------------
NET INCOME (LOSS)............................... $ (220,825) $ (278,772) $ (1,988,158) $ 87,333
------------- ------------- -------------- -------------
------------- ------------- -------------- -------------
Weighted average shares outstanding (Note B5)....... 3,750,000 3,150,000 3,191,368 3,827,874
------------- ------------- -------------- -------------
------------- ------------- -------------- -------------
Earnings (loss) per share........................... $ (.06) $ (.09) $ (.62) $ .02
------------- ------------- -------------- -------------
------------- ------------- -------------- -------------
PRO FORMA net loss per share giving effect to debt
reduction from planned offering and conversion of
notes payable to equity (Note G3).................. $ (.05) $ (.44)
------------- --------------
------------- --------------
</TABLE>

The accompanying notes are an integral part of these statements.

F-4
<PAGE>
N-VISION, INC.
STATEMENTS OF STOCKHOLDERS' DEFICIT

<TABLE>
<CAPTION>
COMMON STOCK
SUBSCRIPTIONS PAID IN RETAINED
COMMON AND NOTES CAPITAL EARNINGS
STOCK RECEIVABLE (DEFICIENCY) (DEFICIT) TOTAL
--------- ------------ -------------- -------------- --------------
<S> <C> <C> <C> <C> <C>
Balance, January 1, 1994........................... $ -- $ -- $ -- $ (408,220) $ (408,220)
Initial capitalization of n-Vision, Inc. (Notes G1
and G2)........................................... 28,487 (28,487) -- -- --
Acquisition (Note A)............................... -- -- (1,008,664) 508,664 (500,000)
Net income......................................... -- -- -- 87,333 87,333
--------- ------------ -------------- -------------- --------------
Balance, December 31, 1994......................... $ 28,487 $ (28,487) $ (1,008,664) $ 187,777 $ (820,887)
Forgiveness of note payable to Advanced Technology
Systems, Inc. (Note A)............................ -- -- 500,000 -- 500,000
Issuance of stock for notes receivable and related
interest.......................................... 1,513 (671,877) 636,925 -- (33,439)
Provision for compensation for stockholder/officers
contributed services (Note F1).................... -- -- 312,500 -- 312,500
Net loss........................................... -- -- -- (1,988,158) (1,988,158)
--------- ------------ -------------- -------------- --------------
Balance, December 31, 1995......................... 30,000 (700,364) 440,761 (1,800,381) (2,029,984)
Interest for stockholder notes receivable.......... -- (11,146) -- -- (11,146)
Provision for compensation for
stockholders/officers contributed services........ -- -- 78,125 -- 78,125
Net loss........................................... -- -- -- (220,825) (220,825)
--------- ------------ -------------- -------------- --------------
Balance, March 31, 1996............................ $ 30,000 $ (711,510) $ 518,886 $ (2,021,206) $ (2,183,830)
--------- ------------ -------------- -------------- --------------
--------- ------------ -------------- -------------- --------------
</TABLE>

The accompanying notes are an integral part of these statements.

F-5
<PAGE>
N-VISION, INC.
STATEMENTS OF CASH FLOWS

<TABLE>
<CAPTION>
THREE MONTHS ENDED YEAR ENDED DECEMBER
MARCH 31, 31,
-------------------- ----------------------
1996 1995 1995 1994
--------- --------- ----------- ---------
(UNAUDITED)
<S> <C> <C> <C> <C>
Cash flows from operating activities
Net income (loss).................................................................. $(220,825) $(278,772) $(1,988,158) $ 87,333
Adjustments to reconcile net income (loss) to net cash used in operating activities
Provision for compensation for stockholder/officers contributed services........... 78,125 50,000 312,500 --
Depreciation....................................................................... 6,697 20,610 69,151 11,082
Accrued interest on stockholder notes.............................................. (11,146) -- (49,019) --
Changes in assets and liabilities
(Increase) decrease in accounts receivable -- trade.............................. (47,316) 110,991 502,539 (631,800)
(Increase) in income tax receivable.............................................. -- -- (101,363) --
(Increase) decrease in provision for product returns............................. -- -- (28,500) 28,500
Decrease (increase) in officer and employee advances............................. -- -- (788) 848
(Increase) in inventories........................................................ (32,015) (24,887) (235,543) (186,444)
(Increase) in prepaid expenses................................................... (22) (19,275) 13,636 (12,990)
(Increase) in vendor advances.................................................... 0 (6,600)
(Increase) decrease in organization costs........................................ 3,349 0 -- (45,961)
(Increase) decrease in deferred tax asset........................................ 0 (6,439) 28,000 (28,000)
(Decrease) increase in accounts payable.......................................... (76,590) 96,333 297,833 (41,578)
Increase in accrued salaries and vacation........................................ (1,844) 6,271 4,450 17,857
Increase in accrued income taxes................................................. 0 (119,000) (119,000) 119,000
Increase (decrease) in deferred revenue and warranty reserve..................... 47,274 18,193 321,168 (27,399)
--------- --------- ----------- ---------
Total adjustments.............................................................. (33,488) 126,197 1,015,064 (796,885)
--------- --------- ----------- ---------
Net cash used in operating activities.......................................... (254,313) (152,575) (973,094) (709,552)
Cash flows from investing activities
Purchase of property and equipment................................................. (3,780) (16,641) (33,857) (86,968)
Cash flows from financing activities
Increase in deferred IPO costs..................................................... -- (172,429) -- --
Proceeds from issuance of convertible notes payable................................ 250,000 -- -- --
Net increase in amounts due to ATS................................................. 107,731 316,618 791,748 950,574
Increase in bank line of credit.................................................... 48,397 -- 67,237 --
(Increase) decrease in deferred initial public offering costs...................... -- -- 72,039 (72,039)
--------- --------- ----------- ---------
Net cash provided by financing activities...................................... 406,128 144,189 931,024 878,535
--------- --------- ----------- ---------
Net increase in cash and cash equivalents...................................... 148,035 (25,027) (75,927) 82,015
Cash and cash equivalents at beginning of year....................................... 6,088 82,015 82,015 --
--------- --------- ----------- ---------
Cash and cash equivalents at end of year............................................. 154,123 56,988 $ 6,088 $ 82,015
--------- --------- ----------- ---------
--------- --------- ----------- ---------
Cash paid for:
Interest........................................................................... $ -- $ -- $ -- $ --
--------- --------- ----------- ---------
--------- --------- ----------- ---------
Income taxes....................................................................... $ -- $ -- $ 117,000 $ --
--------- --------- ----------- ---------
--------- --------- ----------- ---------
</TABLE>

The accompanying notes are an integral part of these statements.

F-6
<PAGE>
N-VISION, INC.
NOTES TO FINANCIAL STATEMENTS
(UNAUDITED AS TO INTERIM PERIODS)

NOTE A -- ACQUISITION, BASIS OF PRESENTATION, AND LIQUIDITY
n-Vision, Inc. ("Company"), a Delaware corporation, designs, develops,
manufactures and markets state-of-the-art, proprietary virtual reality ("VR")
products and systems for a variety of commercial, industrial and military
applications. The accompanying financial statements include the accounts and
activity of the Company, and the activities of the Company's VR business and
products while it was operated as a division of Advanced Technology Systems,
Inc. ("ATS"), a McLean, Virginia based information technology products and
services company, which is principally owned and controlled by Delmar J. Lewis,
the chairman of the board and a principal stockholder of the Company. n-Vision,
Inc. was incorporated on September 16, 1994 for the purpose of acquiring the VR
business from ATS. The acquisition was completed on November 1, 1994, pursuant
to an Asset Purchase Agreement described below.

1. ACQUISITION OF NET ASSETS

On November 1, 1994, the Company acquired the net assets of the VR business
(comprised primarily of inventory, accounts receivable, property and equipment,
the VR technology, contract rights and a covenant not to compete) from ATS for
$1,520,590. The purchase price was represented by two notes payable with
principal amounts of $500,000 and $1,020,590. In October 1995, the $500,000 note
payable was forgiven by ATS. Interest accrued at prime plus 1.375% through the
date of forgiveness remains payable by the Company. The principal amount of the
note payable of $1,020,590 arose from an existing obligation of the VR business
for net expenses which were funded by ATS and incurred through October 31, 1994.
Terms of the remaining note payable to ATS are as follows:

-$1,020,590 term note payable in semi-annual installments of $80,000
commencing May 1, 1996, with the remaining balance existing May 1, 2001 due
on that date; interest accrues at the prime rate (as published in the WALL
STREET JOURNAL) plus 1.375% (10.375% at December 31, 1995), with the first
interest payment due May 1, 1996. The fair value of this term note payable
is not practicable to determine in as much as the note is between related
parties and market data for comparable instruments cannot be obtained. In
May 1996, the remaining balance of $1,000,000 due under this note was
retired in exchange for 200,000 shares of the Company's common stock.

In accounting for the acquisition, management has applied the relevant
accounting guidance for accounting for leveraged buyouts which permits a new
basis of accounting only when a change in control has occurred. Because ATS'
stockholders have retained an ownership in the Company of approximately 63%, a
change in control of the VR business did not occur. Accordingly, the excess of
the $500,000 purchase price over the net assets acquired (after taking into
account the intercompany obligation of $1,020,590) was charged to paid in
capital deficiency in the accompanying financial statements. Additionally, the
basis of intangible assets acquired comprised principally the VR technology,
contract rights and a covenant not to compete from ATS, have not been recorded
as assets at fair value in the accompanying financial statements. The balance of
the accumulated deficit account at November 1, 1994 was adjusted to paid in
capital deficiency upon the acquisition. Upon the forgiveness of the $500,000
note payable in October 1995, the Company credited paid in capital in the
accompanying financial statements to reflect the forgiveness of debt between
affiliates.

The following is a PRO FORMA statement of operations for the year ended
December 31, 1994 as if the acquisition had been consummated on January 1, 1994,
reflecting additional interest expense related to the notes payable arising from
the acquisition. In addition, the PRO FORMA statement also reflects additional
compensation called for in the employment agreements described in note F1 as if

F-7
<PAGE>
N-VISION, INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
(UNAUDITED AS TO INTERIM PERIODS)

NOTE A -- ACQUISITION, BASIS OF PRESENTATION, AND LIQUIDITY (CONTINUED)
these officers had been employed by the Company since January 1, 1994 at
compensation levels called for in the agreements. This PRO FORMA statement is
not necessarily indicative of the results of operations which would have
actually occurred on January 1, 1994.

<TABLE>
<CAPTION>
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE
DATA)
---------------------------------------
PRO FORMA
HISTORICAL ADJUSTMENTS PRO FORMA
----------- ------------- -----------
<S> <C> <C> <C>
Revenue.................................................... $ 1,491 $ -- $ 1,491
Cost of sales.............................................. (598 ) -- (598 )
Operating expenses......................................... (741 ) (361(a) (1,102 )
----------- ------------- -----------
Loss from operations..................................... 152 (361 ) (209 )
Interest expense........................................... (28 ) (124(b) (152 )
Income tax expense......................................... (37 ) 37(c) --
----------- ------------- -----------
Net loss................................................. $ 87 (448 ) $ (361 )
----------- ------------- -----------
----------- ------------- -----------
PRO FORMA loss per share................................. $ (.15 )
-----------
-----------
</TABLE>

- ------------------------
(a) PRO FORMA effect of additional compensation called for in the employment
agreements described in note E1.

(b) PRO FORMA interest expense on notes payable arising from the acquisition.

2. BORROWINGS FROM ATS

In connection with the acquisition previously described, ATS agreed to
extend the Company a line of credit permitting borrowings up to $1,000,000.
However, ATS has agreed to fund operations, by lending the Company amounts over
the $1,000,000 line of credit limit. Borrowings are due upon demand, or at the
date the Company receives at least $1,000,000 in proceeds from either an initial
public offering of securities or a private offering of securities at which time
a curtailment of $500,000 is due. ATS has agreed not to demand repayment of
interest and principal due on the loan until January 1, 1997. Interest on
advances under the line of credit is payable monthly at a rate of prime plus
1.375% (10.375% as of December 31, 1995). Certain stockholders of the Company
have pledged their shares as collateral for the above notes, and such collateral
will be released PRO RATA as the notes are paid.

3. ALLOCATIONS

In preparing the accompanying 1994 financial statements, management has
included allocations of shared expenses incurred while the VR business was a
division of ATS for general and administrative expenses, including accounting,
human resources and administration of the VR business. Such allocations were
based upon the specific identification of time spent by ATS employees on
activities and matters related to the VR business, plus an allocation of fringe
benefit costs based upon the ratio of total ATS fringe benefit costs to total
ATS payroll cost. In addition, the accompanying 1994 financial statements
include an allocation of interest incurred on ATS' bank line of credit insofar
as borrowings were used to fund operations of the VR business. Management
believes these allocations represent a reasonable charge for expenses incurred
by ATS which are attributable to the VR business

F-8
<PAGE>
N-VISION, INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
(UNAUDITED AS TO INTERIM PERIODS)

NOTE A -- ACQUISITION, BASIS OF PRESENTATION, AND LIQUIDITY (CONTINUED)
while it operated as a division of ATS and reported costs do not differ
materially from costs which would have been incurred on a stand alone basis.
Similar allocations have been made in 1995 through July 1995, at which time the
Company began operations on a stand-alone independent basis.

Fringe benefit expenses incurred by ATS on behalf of the Company's employees
have been allocated based on the percentage of the Company's labor cost as it
relates to ATS total labor cost. In November and December 1994, the Company
reimbursed ATS for administrative services rendered of approximately $24,000.

4. LIQUIDITY

As of March 31, 1996, the Company has a working capital deficiency of
$1,045,300 and a stockholders' deficit of $2,183,830. In addition, the Company
has used cash in operations since its inception and incurred a significant loss
in 1995. Operations to date have been supported principally by loans from ATS
under a line of credit agreement. While no assurances can be given, management
believes the Company's liquidity position in 1996 will be adequate to sustain
operations for the following reasons:

-ATS has agreed not to demand repayment, if necessary, of amounts advanced
to the Company under the line of credit until January 1, 1997.

-In May 1996, the Company retired $1,000,000 of the principal due under
notes payable to ATS upon the issuance of 200,000 shares of common stock
thereby significantly reducing the Company's debt service requirements.

-Certain officers subject to employment agreements which commence June 1,
1996 have agreed to defer, as necessary, payment of compensation due under
these agreements.

-The Company has a $500,000 line of credit agreement with a bank permitting
advances of up to 70% of outstanding eligible accounts receivable to
finance working capital.

-In March 1996, the Company received $250,000 from convertible notes payable
described in Note E2.

-Management believes new products brought to market in early 1996 will
result in improved operating results and cash flows.

NOTE B -- SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The financial statements as of March 31, 1996 and for the three-months ended
March 31, 1996 and 1995 are unaudited; however, in the opinion of management,
all adjustments necessary for a fair presentation of the financial position,
results of operations, and cash flows for these interim periods have been
included. The results for the interim periods ended March 31, 1996 are not
necessarily indicative of the results to be obtained for the full fiscal year.
The significant accounting policies used in the preparation of the accompanying
financial statements are as follows:

1. REVENUE RECOGNITION

Revenue from the sale of VR products is recognized when the products are
shipped. Related estimated warranty costs are provided for at the time of sale.
As of December 31, 1995, other accrued liabilities in the accompanying financial
statements include accrued warranty costs of $27,284. The Company had sales to
customers outside the United States (primarily Europe) comprising $332,144 and
$988,700 for the years ended December 31, 1995 and 1994, respectively.

F-9
<PAGE>
N-VISION, INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
(UNAUDITED AS TO INTERIM PERIODS)

NOTE B -- SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
Currently, the Company has non-exclusive distributor agreements with
companies in the United Kingdom and Japan. The Company performs ongoing credit
evaluations of its customers' financial condition and usually requires no
collateral. The Company's typical sales terms with distributors permit the
distributors to return products for credit against future purchases in certain
circumstances. The financial statements for the years ended December 31, 1995
and 1994 include charges for returns from distributors of $185,000 and $28,500,
respectively, which are reflected as a reduction of sales. As of December 31,
1995, a reserve for returns has not been established as all units sold to
distributors were either returned and accounted for or sold to end users who do
not have the right to return products.

Revenue earned by ATS from reimbursement of the Company's research and
development costs incurred through October 31, 1994, the date the business was
spun-off from ATS (see Note A), has not been reflected in the accompanying
financial statements.

2. INVENTORIES

Inventories are stated at lower of cost or market. Cost is determined by the
first-in, first-out ("FIFO") basis.

Inventories consist of the following:

<TABLE>
<CAPTION>
MARCH 31, DECEMBER 31,
1996 1995
----------- ------------
<S> <C> <C>
Raw materials............................................................... $ 159,438 $ 145,195
Work in process............................................................. 275,717 176,949
Finished goods.............................................................. 123,948 204,944
Reserve for inventory obsolescence.......................................... (30,000) (30,000)
----------- ------------
$ 529,103 $ 497,088
----------- ------------
----------- ------------
</TABLE>

3. PROPERTY AND EQUIPMENT

Property and equipment are stated at cost and are depreciated using the
straight-line method over estimated useful lives of five to seven years.

4. PUBLIC OFFERING COSTS

In early 1995, the Company incurred $559,245 of public offering costs
related to a proposed initial public offering which was not successful. Such
amounts were charged to expense in 1995 because the offering was unsuccessful.
These deferred charges include $100,000 paid for services rendered in connection
with the offering by an attorney who is also a stockholder of the Company.

5. INCOME (LOSS) PER SHARE

Income (loss) per share of Common Stock is computed using weighted average
shares outstanding for each period adjusted retroactively for stock splits and
the effect of the 750,000 shares of common stock issued upon conversion of
convertible notes payable in April 1996. PRO FORMA net loss per share is
computed using the weighted average shares outstanding, as adjusted above, the
200,000 additional shares of common stock issued in May 1996 in exchange for the
retirement of notes payable to ATS, and 100,000 shares representing the shares
to be issued in the Company's proposed public offering, the proceeds of which
will be used to retire a portion of the Company's outstanding line of credit.

F-10
<PAGE>
N-VISION, INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
(UNAUDITED AS TO INTERIM PERIODS)

NOTE B -- SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
6. INCOME TAXES

The Company has provided for income taxes in accordance with Statement of
Financial Accounting Standards No. 109, "Accounting for Income Taxes" (SFAS No.
109). Under the liability method mandated by SFAS No. 109, a deferred tax asset
or liability is recorded on the tax effects of temporary differences between the
tax basis and financial amounts of assets and liabilities. Temporary differences
arise from accrued warranty costs, receivable and inventory reserves and the
liability for paid leave.

7. RESEARCH AND DEVELOPMENT COSTS

Research and development costs consist of labor, materials and overhead
incurred in the development of the VR products. All such costs are expensed in
the period in which they are incurred.

8. CONCENTRATION OF CUSTOMERS

For the year ended December 31, 1995, revenue derived from three customers
(E-OIR Measurement, Inc., U.S. Naval Warfare Center, and Solidray Co., Ltd.
(Japan)) amounted to approximately 11%, 16%, and 10%, respectively, of the
Company's total revenue. For the year ended December 31, 1994, revenue derived
from two customers (Division Limited, U.K. and Media Systems GmbH) amounted to
approximately 30% and 25%, respectively, of the Company's total revenue.

9. ORGANIZATION COSTS

Deferred organizational costs represent fees related to the incorporation of
the Company in September 1994. The costs are amortized over a useful life of
five years. Amortization expense for the years ended December 31, 1995 and 1994
was $12,236 and $797, respectively. Amortization expense for the three-month
periods ended March 31, 1996 and 1995 was $16,332 and $3,308, respectively.

10. USE OF ESTIMATES IN THE PREPARATION OF FINANCIAL STATEMENTS

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

NOTE C -- PROPERTY AND EQUIPMENT
Property and equipment consist of the following:

<TABLE>
<CAPTION>
MARCH 31, DECEMBER 31,
1996 1995
----------- ------------
<S> <C> <C>
Furniture................................................................... $ 16,065 $ 16,065
Equipment................................................................... 118,946 118,946
Property under capitalized leases........................................... 67,223 --
----------- ------------
202,234 135,011
Less accumulated depreciation............................................... 97,470 90,773
----------- ------------
$ 104,764 $ 44,238
----------- ------------
----------- ------------
</TABLE>

The net book value of property under capitalized lease at March 31, 1996 was
$63,487.

F-11
<PAGE>
N-VISION, INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
(UNAUDITED AS TO INTERIM PERIODS)

NOTE D -- INCOME TAXES
Income tax benefit (expense) consists of the following for the year ended
December 31:

<TABLE>
<CAPTION>
1995 1994
----------- ------------
<S> <C> <C>
Current (expense) benefit.................................................... $ 119,000 $ (119,000)
Currently payable tax benefit derived from net operating losses used by ATS
credited to the Company..................................................... -- 54,000
Deferred benefit (expense)................................................... (28,000) 28,000
----------- ------------
$ 91,000 $ (37,000)
----------- ------------
----------- ------------
</TABLE>

The provision for income taxes for the year ended December 31, 1995 does not
bear the normal relationship between pre-tax financial statement income and tax
resulting from the application of statutory tax rates primarily as a result of a
valuation allowance against all deferred tax assets. Following is a
reconciliation for 1994 of the statutory federal income tax rate to effective
rates reflected in the statements of earnings:

<TABLE>
<CAPTION>
1994
--------------------------
TEN MONTHS TWO MONTHS
ENDED ENDED
OCTOBER 31, DECEMBER 31, TOTAL
------------ ------------ -----------
<S> <C> <C> <C>
Pretax income (loss).......................................... $ (168,238) $ 292,571 $ 124,333
------------ ------------ -----------
------------ ------------ -----------
Tax (benefit) at statutory rate............................... $ (57,201) $ 99,474 $ 42,273
State income taxes, net of federal benefit.................... (6,662) 11,586 4,924
Permanent differences......................................... (3,931) (2,111) (6,042)
Effect of graduated tax rates................................. -- (4,155) (4,155)
------------ ------------ -----------
Income tax expense (benefit)................................ $ (67,794) $ 104,794 $ 37,000
------------ ------------ -----------
------------ ------------ -----------
</TABLE>

Deferred tax assets are comprised of the following at December 31, 1995:

<TABLE>
<S> <C>
Net operating loss carryforward....................................... $ 181,851
Inventory obsolescence reserve........................................ (11,700)
Accrued warranty costs................................................ (10,362)
Accrued leave......................................................... (6,001)
Depreciation.......................................................... 566
---------
154,353
Valuation allowance................................................... (154,353)
---------
$ --
---------
---------
</TABLE>

Operating losses of the Company, while it was a division of ATS, have been
reflected in the ATS corporate income tax returns. The related income tax
benefit derived by ATS from reducing its taxable income by the losses has been
presented as an income tax benefit of the division using ATS tax rates, pursuant
to a tax-sharing arrangement between ATS and the Company. The Company has a net
operating loss carryforward as of December 31, 1995 of approximately $450,000
available to offset future tax income generated through 2009. In the event of a
change in control of the Company, the use of all or a portion of this net
operating loss may be limited.

F-12
<PAGE>
N-VISION, INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
(UNAUDITED AS TO INTERIM PERIODS)

NOTE E -- DEBT

1. BANK LINE OF CREDIT

The Company has a bank line of credit permitting the Company to borrow up to
a maximum of $500,000 or 70% of eligible accounts receivable. Interest on
borrowings is payable monthly at the bank's prime rate plus 2 1/2% (11.50% at
December 31, 1995). This line of credit expired on April 30, 1996 and was
extended for a sixty day period pending re-negotiation. The line is
collateralized by all assets of the Company and is guaranteed by Advanced
Technology Systems, Inc. As of December 31, 1995, the Company borrowed $67,237,
an amount in excess of the amount permitted to be borrowed based upon eligible
accounts receivable due to the issuance of a credit to a customer in December
1995. The line of credit balance was curtailed in January 1996 to bring the
amount borrowed within the eligible base. The balance on the line of credit at
March 31, 1996 was $115,634.

2. CONVERTIBLE PROMISSORY NOTES

In March 1996, the Company borrowed $250,000 from three nonaffiliated
persons under three separate 8% convertible Promissory Notes, convertible into
750,000 shares of the Company's Common Stock at the option of the noteholders.
In April 1996, the three noteholders elected to convert their notes into a total
of 750,000 shares of the Company's Common Stock, resulting in a total of
3,750,000 outstanding shares of Common Stock. The newly issued 750,000 shares
are being registered as part of the public offering described in Note G.

Because the conversion feature of these notes was granted at a price
substantially below the $5.00 per share offering price, financing expense of
$3,500,000 will be accrued during the period from the date of the notes payable
and the date of the public offering with a corresponding credit to paid in
capital.

3. CAPITAL LEASE

The Company is committed under a capital lease for computer equipment with
an interest rate of 13%. Future minimum lease payments under the capital lease
is as follows:

<TABLE>
<CAPTION>
CAPITAL
YEAR ENDING DECEMBER 31, LEASES
- --------------------------------------------------------------------------------------------- ---------
<S> <C>
1997......................................................................................... 26,993
1998......................................................................................... 26,993
---------
1999......................................................................................... 2,249
---------
56,235
Less amount representing interest............................................................ (7,347)
---------
Present value of future lease payments....................................................... $ 48,888
---------
---------
</TABLE>

F-13
<PAGE>
N-VISION, INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
(UNAUDITED AS TO INTERIM PERIODS)

NOTE F -- COMMITMENTS

1. EMPLOYMENT AGREEMENTS

The Company has employment agreements with three officers of the Company,
effective as of June 1, 1996. Two of these agreements extend for a period of two
years and the third agreement extends for a period of three years. The Company's
commitment under these agreements is as follows:

<TABLE>
<CAPTION>
YEAR ENDING DECEMBER 31,
- -----------------------------------------------------------------------------------------
<S> <C>
1996..................................................................................... $ 248,000
1996..................................................................................... 425,000
1997..................................................................................... 250,000
1998..................................................................................... 52,000
-------------
$ 975,000
-------------
-------------
</TABLE>

In the accompanying 1995 financial statements, the Company recorded a
provision for compensation expense of $312,500 and a corresponding credit to
stockholders' equity for the value of services rendered by these officers (who
are also stockholders) based upon the difference between the amount paid and the
compensation called for in the above agreements. The accompanying statements of
operations for the three-months ended March 31, 1996 and 1995 reflect a similar
charge of $78,125 and $50,000, respectively.

2. OPERATING LEASES

The Company is obligated under certain noncancelable operating leases for
equipment. The following is a schedule of the approximate future minimum rental
payments required under operating leases with terms of one year or more as of
December 31, 1995:

<TABLE>
<CAPTION>
YEAR ENDING DECEMBER 31,
- ---------------------------------------------------------------------------------------------
<S> <C>
1996......................................................................................... $ 22,599
1997......................................................................................... 7,115
1998......................................................................................... 1,917
1999......................................................................................... 420
---------
$ 32,051
---------
---------
</TABLE>

Total rent expense for the years ended December 31, 1995 and 1994 was
$14,872 and $17,164, respectively. Rent expense for the three-month periods
ended March 31, 1996 and 1995 was $5,657 and $4,056, respectively.

NOTE G -- STOCKHOLDERS' EQUITY

1. INITIAL CAPITALIZATION, STOCK SPLIT AND ISSUANCE

The Company was initially capitalized in November 1994 with 2,847,000 shares
of Common Stock (after giving effect to subsequent splits). The Company received
consideration, comprising $638,438 in cash and notes, due for the issuance of an
additional 151,300 shares of Common Stock in March 1995. The value of the
consideration received for these shares issued was based upon the fair value of
shares offered for sale at the same time by the Company in a proposed public
offering. The Common Stock subscriptions receivable caption in the accompanying
balance sheet represents the amount due to paid in cash as consideration for the
shares outstanding.

F-14
<PAGE>
N-VISION, INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
(UNAUDITED AS TO INTERIM PERIODS)

NOTE G -- STOCKHOLDERS' EQUITY (CONTINUED)
Certain members of the management of the Company and other stockholders have
pledged their securities as collateral for the Company's promissory note
obligation of $1,020,590 to ATS, representing the purchase price of the VR
products and systems from ATS. A PRO RATA portion of the collateralized
securities will be released as the note is paid. This note was retired in May
1996 for cash of $20,590 and the issuance of 200,000 shares of the Company's
common stock.

The accompanying statement of operations includes disclosure of the pro
forma net loss per share for 1995 giving effect to the reduction in interest
expense which would have resulted had the offering occurred January 1, 1995 and
the Company paid down $500,000 in line of credit debt and adjusted for the
100,000 of additional shares issued to generate the proceeds needed for the
curtailment. In addition, the pro forma net loss per share also reflects the
reduction of interest expense from the May 1996 retirement of the ATS note
payable and the related issuance of 200,000 shares of Common Stock as if they
had occurred on January 1, 1995.

2. STOCK SPLIT

In March 1996, a 1.38:1 stock split was effected whereby each shareholder's
interest was increased PRO RATA such that the number of shares of Common Stock
outstanding after the split was 3,000,000. The effect of this split has been
reflected retroactively throughout the accompanying financial statements.

3. INITIAL PUBLIC OFFERING OF SECURITIES

In March 1996, the Company entered into a letter of intent with an
underwriter which sets forth the terms and conditions of a firm commitment
underwriting for the sale of 1,500,000 shares of Common Stock at an offering
price of $5.00 per share and 750,000 Class A Warrants at $.15 per Class A
Warrant. The Class A Warrants shall be exercisable commencing one year after the
date of the Prospectus, entitling the holder to purchase one share of Common
Stock at $5.50 per share during the four year period commencing one year from
the effective date of the offering. These Warrants are also redeemable upon
certain conditions. The offering also includes 750,000 shares of Common Stock
acquired upon the conversion of certain promissory notes into Common Stock in
April 1996 as described in Note E.

NOTE H -- RELATED PARTY TRANSACTIONS
During the years ended December 31, 1995 and 1994, the Company paid
approximately $85,000 and $94,000, respectively, to a consultant and stockholder
of the Company for services rendered. During the year ended December 31, 1995,
the Company paid $25,000 to a company owned by one of its directors for research
and development and purchased inventory from the same company for $5,288.

F-15
<PAGE>

Medical Application of the Company's DATAVISOR 10X Very High Resolution Color
HMD
Virtual Reality System. See "Business -- Virtual Reality Products and Systems."

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

NO DEALER, SALESMAN OR OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATIONS NOT CONTAINED IN THIS PROSPECTUS IN
CONNECTION WITH THE OFFER MADE HEREBY. IF GIVEN OR MADE, SUCH INFORMATION OR
REPRESENTATION MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE COMPANY.
THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER OF ANY SECURITIES OTHER THAN THE
SECURITIES TO WHICH IT RELATES OR AN OFFER TO ANY PERSON IN ANY JURISDICTION IN
WHICH SUCH AN OFFER WOULD BE UNLAWFUL. ANY MATERIAL MODIFICATION OF THE OFFERING
WILL BE ACCOMPLISHED BY MEANS OF AN AMENDMENT TO THE REGISTRATION STATEMENT. IN
ADDITION, THE RIGHT IS RESERVED BY THE COMPANY TO CANCEL ANY CONFIRMATION OF
SALE PRIOR TO THE RELEASE OF FUNDS IF, IN THE OPINION OF THE COMPANY, COMPLETION
OF SUCH SALE WOULD VIOLATE FEDERAL OR STATE SECURITIES LAWS OR A RULE OR POLICY
OF THE NATIONAL ASSOCIATION OF SECURITIES DEALERS, INC., WASHINGTON, D.C. 20006.

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

TABLE OF CONTENTS

<TABLE>
<CAPTION>
PAGE
-----
<S> <C>
Prospectus Summary............................. 4
Risk Factors................................... 7
Use of Proceeds................................ 17
Dilution....................................... 19
Capitalization................................. 20
Dividend Policy................................ 20
Management's Discussion and Analysis or Plan of
Operation..................................... 21
Business....................................... 25
Management..................................... 36
Principal Stockholders......................... 41
Certain Transactions........................... 42
Description of Securities...................... 44
Selling Security-holders....................... 48
Underwriting................................... 50
Legal Proceedings.............................. 54
Legal Matters.................................. 54
Experts........................................ 54
Additional Information......................... 55
Index to Financial Statements.................. F-1
Report of Independent Certified Public
Accountants................................... F-2
</TABLE>

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

UNTIL , 1996 (25 DAYS AFTER THE DATE OF THIS PROSPECTUS), ALL
BROKER-DEALERS EFFECTING TRANSACTIONS IN THE REGISTERED SECURITIES, WHETHER OR
NOT PARTICIPATING IN THIS DISTRIBUTION, MAY BE REQUIRED TO DELIVER A PROSPECTUS.
THIS IS IN ADDITION TO THE OBLIGATION OF DEALERS TO DELIVER A PROSPECTUS WHEN
ACTING AS UNDERWRITERS AND WITH RESPECT TO THEIR UNSOLD ALLOTMENTS OR
SUBSCRIPTIONS.

1,300,000 SHARES
1,200,000 CLASS A WARRANTS

N-VISION, INC.

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

PROSPECTUS

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

STRATTON OAKMONT, INC.

, 1996

- -------------------------------------------
-------------------------------------------
- -------------------------------------------
-------------------------------------------
<PAGE>
PART TWO
INFORMATION NOT REQUIRED IN PROSPECTUS

ITEM 24. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
The Company's Certificate of Incorporation and By-laws contain provisions
which reduce the potential personal liability of directors for certain monetary
damages and provide for indemnity of directors and other persons. The Company is
unaware of any pending or threatened litigation against the Company, or its
directors, that would result in any liability for which such director would seek
indemnification or similar protection.

The provisions affecting personal liability do not abrogate a director's
fiduciary duty to the Company and its shareholders, but eliminate personal
liability for monetary damages for breach of that duty. The provisions do not,
however, eliminate or limit the liability of a director for failing to act in
good faith, for engaging in intentional misconduct or knowingly violating a law,
for authorizing the illegal payment of a dividend or repurchase of stock, for
obtaining an improper personal benefit, for breaching a director's duty of
loyalty (which is generally described as the duty not to engage in any
transaction which involves a conflict between the interest of the Company and
those of the director) or for violations of the federal securities laws. The
provisions also limit or indemnify against liability resulting from grossly
negligent decisions including grossly negligent business decisions relating to
attempts to change control of the Company.

II-1
<PAGE>
actions in breach of his fiduciary duty, or to cause the Company to rescind
actions already taken, although as a practical matter courts may be unwilling to
grant such equitable remedies in circumstances in which such actions have
already been taken. Also, because the Company does not presently have directors'
liability insurance and because there is no assurance that the Company will
procure such insurance or that if such insurance is procured it will provide
coverage to the extent directors would be indemnified under the provisions, the
Company may be forced to bear a portion or all of the cost of any director's
claims for indemnification under such provisions. If the Company is forced to
bear the costs for indemnification, the value of the Company stock may be
adversely affected. In the opinion of the Securities and Exchange Commission,
indemnification for liabilities arising under the Securities Act of 1933 is
contrary to public policy and, therefore, is unenforceable.

ITEM 25. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.

The following is an itemization of expenses, payable from the net proceeds
of the offering, incurred by the Company in connection with the issuance and
distribution of the securities of the Company being offered hereby. All expenses
are estimated except the SEC and NASD Registration and Filing Fees.

<TABLE>
<S> <C>
SEC Registration and Filing Fee (1).............................. $ 7,167
NASD Registration and Filing Fee (1)............................. 2,578
Nasdaq Registration and Filing Fee............................... 10,000
Financial Printing............................................... 160,000
Transfer Agent Fees.............................................. 5,000
Accounting Fees and Expenses..................................... 50,000
Legal Fees and Expenses.......................................... 375,000
Blue Sky Fees and Expenses....................................... 50,000
Underwriter's Nonaccountable Expense Allowance................... 200,400
Miscellaneous.................................................... 14,855
---------
TOTAL........................................................ $ 875,000
---------
---------
</TABLE>

- ------------------------
(1) Paid upon initial filing of this Registration Statement and related
Prospectus.

ITEM 26. RECENT SALES OF UNREGISTERED SECURITIES.

The following information sets forth all securities of the Company sold by
it within the past three years, which securities were not registered under the
Securities Act of 1933, as amended.

The Company was established in 1988 as a division of Advanced Technology
Systems, Inc. ("ATS"), a McLean, Virginia based information technology products
and services company, which is principally owned and controlled by Delmar J.
Lewis, the chairman of the board and a principal stockholder of the Company. The
Company was incorporated in Delaware on September 16, 1994 and acquired all
rights, title and interest in the VR products and systems from ATS for a
purchase price of $1,520,590, of which $500,000 was subsequently forgiven by ATS
in October 1995. The purchase price represents the net expenses incurred by ATS
while the Company was a division of ATS, plus a premium of $500,000. The balance
of $1,020,590 is payable under a promissory note bearing simple annual interest
at the rate of prime plus 1.375%, with semi-annual payments commencing May 1996
extending through May 2001. However, in May 1996, this promissory note was
cancelled in exchange for 200,000 shares of the Company's Common Stock.

In November 1994 and March 1995, the Company issued 2,400,000 shares of its
Common Stock, which includes a 1.67:1 reverse stock split in May 1995, to 14
persons, including certain officers and directors of the Company, in private
placement transactions for aggregate consideration of $676,925. See "Principal
Stockholders" and "Legal Matters."

In March 1996, the Company caused a 1.38:1 stock split of its shares of
Common Stock resulting in 3,000,000 outstanding shares of Common Stock. See
"Certain Transactions."

II-2
<PAGE>
In March 1996, the Company borrowed $250,000 from three nonaffiliated
persons under three separate 8% convertible promissory notes, which were
convertible into a total of 750,000 shares of the Company's Common Stock at the
option of the noteholders. See "Certain Transactions."

In April 1996, the three nonaffiliated noteholders under the 8% convertible
promissory notes elected to convert their notes into a total of 750,000 shares
of the Company's Common Stock, resulting in a then total of 3,750,000
outstanding shares of Common Stock of the Company. The 750,000 shares of Common
Stock are being registered as part of this offering. See "Certain Transactions"
and "Selling Security-holders."

The Company has relied on Section 4(2) of the Securities Act of 1933, as
amended, for its private placement exemption, such that the sales of the
securities were transactions by an issuer not involving any public offering.

Reference is also made hereby to "Certain Transactions," "Dilution,"
"Principal Shareholders" and "Description of Securities" in the Prospectus for
more information with respect to the previous issuance and sale of the Company's
securities.

All of the aforesaid securities have been appropriately marked with a
restricted legend and are "restricted securities," as defined in Rule 144 of the
rules and regulations of the Securities and Exchange Commission, Washington,
D.C. 20549. All of the aforesaid securities were issued for investment purposes
only and not with a view to redistribution, absent registration. All of the
aforesaid persons have been fully informed and advised concerning the
Registrant, its business, financial and other matters. Transactions by the
Registrant involving the sales of these securities set forth above were issued
pursuant to the "private placement" exemptions under the Securities Act of 1933,
as amended, as transactions by an issuer not involving any public offering. The
Registrant has been informed that each person is able to bear the economic risk
of his investment and is aware that the securities were not registered under the
Securities Act of 1933, as amended, and cannot be re-offered or re-sold until
they have been so registered or until the availability of an exemption
therefrom. The transfer agent and registrar of the Registrant will be instructed
to mark "stop transfer" on its ledgers to assure that these securities will not
be transferred absent registration or until the availability of an exemption
therefrom is determined.

ITEM 27. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.

The following is a list of Exhibits marked by an asterisk (*) filed by
n-Vision, Inc. as part of Amendment No. 3 to the SB-2 Registration Statement and
related Prospectus:

<TABLE>
<C> <S>
1.0 Form of Underwriting Agreement.
1.1 Selected Dealers Agreement.
1.2 Agreement Among Underwriters.*
3.0 Certificate of Incorporation, filed September 16, 1994, as amended.
3.2 By-laws, as amended.
4.0 Specimen Copy of Common Stock Certificate.
4.1 Specimen Copy of Class A Warrant Certificate.
4.2 Form of Underwriter's Purchase Option.
4.3 Form of Warrant Agreement.
5.0 Opinion of Thomas T. Prousalis, Jr., Esq. for Registrant.
10.0 Employment Agreement, Delmar J. Lewis.
10.1 Employment Agreement, Christopher J. Lewis.
10.2 Employment Agreement, Robert B. Hamilton, C.P.A.
10.3 Asset Purchase Agreement, dated November 1, 1994.
11.0 Statement re Computation of Earnings Per Share.
24.0 Consent of Thomas T. Prousalis, Jr., Esq. is contained on page II-6 of the
Registration Statement.
</TABLE>

II-3
<PAGE>
<TABLE>
<C> <S>
24.1 Consent of Grant Thornton LLP is contained on page II-7 of the Registration
Statement.
25.0 Power of Attorney appointing Delmar J. Lewis is contained on page II-5 of the
Registration Statement.
</TABLE>

ITEM 28. UNDERTAKINGS

The undersigned Registrant hereby undertakes to provide to participating
broker-dealers, at the closing, certificates in such denominations and
registered in such names as required by the participating broker-dealers, to
permit prompt delivery to each purchaser.

The undersigned Registrant also undertakes:

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

(i) To include any prospectus required by section 10(a)(3) of the
Securities Act of 1933;

(ii)To reflect in the prospectus any facts or events arising after
the effective date of the registration statement (or the most
recent post-effective amendment thereof) which, individually or
in the aggregate, represent a fundamental change in the
information set forth in the registration statement:

(iii)
To include any material information with respect to the plan of
distribution not previously disclosed in the registration
statement or any material change to such information in the
registration statement;

Provided, however, that paragraphs (a)(1)(i) and (a)(1)(ii) do not
apply if the registration statement is on Form S-3 or Form S-8, and
the information required to be included in a post-effective amendment
by those paragraphs is contained in periodic reports filed by the
registrant pursuant to section 13 or section 15(d) of the Securities
Exchange Act of 1934 that are incorporated by reference in the
registration statement.

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

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

II-4
<PAGE>
This Registration Statement consists of the following:

<TABLE>
<C> <S>
1. Facing page.
2. Cross-Reference Sheet.
3. Prospectus.
4. Complete text of Items 24-28 in Part Two of Registration Statement.
5. Exhibits.
6. Signature page.
7. Consents of:
Thomas T. Prousalis, Jr., Esq.
Grant Thornton LLP
</TABLE>

II-5
<PAGE>
SIGNATURES

In accordance with the requirements of the Securities Act of 1933, the
registrant certifies that it has reasonable grounds to believe that it meets all
of the requirements for filing on Form SB-2 and authorized this registration
statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Washington, District of Columbia, on May 28, 1996.

n-VISION, INC.

By:__________DELMAR J. LEWIS__________
Delmar J. Lewis
Chairman of the Board

In accordance with the requirements of the Securities Act of 1933, this
registration statement has been signed by the following persons in the
capacities and on the dates indicated:

<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- ------------------------------------------------------ --------------------------------------- ----------------

<C> <S> <C>
DELMAR J. LEWIS Chairman of the Board,
Delmar J. Lewis Chief Executive Officer May 28, 1996

CHRISTOPHER J. LEWIS* President, Chief Operating Officer,
Christopher J. Lewis Director May 28, 1996

Executive Vice President,
ROBERT B. HAMILTON, C.P.A.* Chief Financial Officer, Controller, May 28, 1996
Robert B. Hamilton, C.P.A. Secretary, Director

CLAUDE H. RUMSEY, JR.*
Claude H. Rumsey, Jr. Director May 28, 1996

MAO-JIN CHERN, PH.D.*
Mao-Jin Chern, Ph.D. Director May 28, 1996

By:DELMAR J. LEWIS*
Delmar J. Lewis
ATTORNEY-IN-FACT
</TABLE>

II-5
<PAGE>
CONSENT OF COUNSEL

The consent of Thomas T. Prousalis, Jr., Esq., 1919 Pennsylvania Avenue,
N.W., Suite 800, Washington, D.C. 20006, to the use of his name in this Form
SB-2 Registration Statement, and related Prospectus, as amended, of n-Vision,
Inc. is contained in his opinion filed as Exhibit 5.0 hereto.

II-6
<PAGE>
CONSENT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS

We have issued our report dated April 12, 1996 accompanying the Financial
Statements of n-Vision, Inc. contained in the Registration Statement and
Prospectus. We consent to the use of the aforementioned report in the
Registration Statement and Prospectus, and to the use of our name as it appears
under the caption "Experts."

GRANT THORNTON LLP

McLean, Virginia
May 16, 1996

II-7
<PAGE>
PROSPECTUS

750,000 SHARES

N-VISION, INC.

This Prospectus relates to the offering of 750,000 shares of Common Stock
offered by three persons who are nonaffiliated with the Company, hereinafter
collectively referred to as "Selling Security-holders," in connection with a
convertible loan to the Company of $250,000 in March 1996. The Common Stock may
not be transferred for eighteen (18) months from the date hereof unless
permitted sooner by Stratton Oakmont, Inc., and such securities include a legend
with such restrictions. Stratton Oakmont, Inc. may release the securities held
by the Selling Security-holders at any time after all securities subject to the
Over-allotment Option have been sold or such option has expired. See
"Description of Securities" and "Selling Security-holders."

The Common Stock offered by this Prospectus may be sold from time to time by
the Selling Security-holders, or by their transferees. No underwriting
arrangements have been entered into by the Selling Security-holders. The
distribution of the securities by the Selling Security-holders may be effected
in one or more transactions that may take place on the over-the-counter market
including ordinary broker's transactions, privately-negotiated transactions or
through sales to one or more dealers for resale of such shares as principals at
market prices prevailing at the time of sale, at prices related to such
prevailing market prices or at negotiated prices. Usual and customary or
specifically negotiated brokerage fees or commissions may be paid by the Selling
Security-holders in connection with sales of such securities.

The Selling Security-holders and intermediaries through whom such securities
may be sold may be deemed "underwriters" within the meaning of the Security Act
of 1933, as amended ("Securities Act") with respect to the securities offered
and any profits realized or commissions received may be deemed underwriting
compensation. The Company has agreed to indemnify the Selling Security-holders
against certain liabilities, including liabilities under the Securities Act.

On the date hereof, the Company commenced pursuant to this registration
statement an initial public offering of 1,300,000 shares of Common Stock and
1,200,000 Class A Warrants. See "Concurrent Sales."

The Company will not receive any of the proceeds from the sale of the
securities by the Selling Security-holders. All costs incurred in the
registration of the securities of the Selling Security-holders are being borne
by the Company. See "Selling Security-holders."

Stratton Oakmont, Inc. and Renaissance Financial Securities Corp.
("Underwriters") from time to time will become market makers and otherwise
effect transactions in the securities of this offering. The Underwriters, if
they participate in the market, may become an influence and thereafter a factor
of increasing importance in the market for the securities. However, there is no
assurance that the Underwriters will or will continue to be a dominating
influence. The prices and liquidity of the securities may be significantly
affected by the degree, if any, of the Underwriters' participation in such
market as a market maker. The Underwriters may discontinue such market making
activities at any time or from time to time.

The Company does not presently file reports and other information with the
Securities and Exchange Commission ("Commission"). However, following completion
of the initial public offering, the Company intends to furnish its stockholders
with annual reports containing audited financial statements and such interim
reports, in each case as it may determine to furnish or as may be required by
law.

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

The date of this Prospectus is , 1996.
<PAGE>
THE OFFERING

<TABLE>
<S> <C>
Securities Offered by Company(1)(4)............................. 1,300,000 Units
1,200,000 Class A Warrants
Securities Offered by Selling Security-holders(2)............... 750,000 Shares
Shares of Common Stock Outstanding Prior to Offering............ 3,950,000 Shares
Shares of Common Stock Outstanding After Offering(3)............ 5,250,000 Shares
Comparative Share Ownership Upon Completion of Offering:
Present Stockholders (3,950,000 Shares)(2)(5)................. 75.24%
Public Stockholders (1,300,000 Shares)(2)(5).................. 24.76%
</TABLE>

<TABLE>
<S> <C>
Use of Net Proceeds of Sale of Securities Offered by Company.... Administrative expenses,
operating costs and
working capital, including
software support and
development, marketing and
sales, mergers and
acquisitions and the
repayment of debt. See
"Use of Proceeds."
</TABLE>

<TABLE>
<S> <C>
Proposed Nasdaq SmallCap Market Symbols......................... NVSN
NVSNW
</TABLE>

- ------------------------
(1) The Company is offering 1,300,000 shares of Common Stock at $5.00 per share
and 1,200,000 Class A Warrants at $.15 per Class A Warrant. Each Unit
consists of two shares of Common Stock and two redeemable Class A Warrants.
The Class A Warrants shall be exercisable commencing one year after the date
of the Prospectus. Each Class A Warrant entitles the holder to purchase one
share of Common Stock at $5.50 per share during the four year period
commencing one year from the Effective Date hereof. The Class A Warrants are
redeemable upon certain conditions. Should the Class A Warrants be
exercised, of which there is no assurance, the Company will receive the
proceeds therefrom aggregating up to an additional $6,600,000. See
"Description of Securities."

(2) This offering also includes 750,000 shares of Common Stock offered by the
Selling Security-holders. The shares of Common Stock held by the Selling
Security-holders may be sold commencing eighteen (18) months from the date
of this Prospectus, subject to earlier release at the sole discretion of the
Stratton Oakmont, Inc., and such securities include a legend with such
restrictions. The Stratton Oakmont, Inc. may release the securities held by
the Selling Security-holders at any time after all securities subject to the
Over-allotment Option have been sold or such option has expired. The resale
of the securities of the Selling Security-holders are subject to Prospectus
delivery and other requirements of the Securities Act of 1933, as amended.
Sales of such securities or the potential of such sales at any time may have
an adverse effect on the market prices of the securities offered hereby. See
"Selling Security-holders."

(4) The public offering price of the Common Stock and the exercise price and
other terms of the Class A Warrants were arbitrarily determined by
negotiations between the Company and Stratton Oakmont, Inc. and do not
necessarily relate to the assets, book value or results of operations of the
Company or any other established criteria of value. See "Underwriting."

(5) See "Dilution."

2
<PAGE>
CONCURRENT SALES

On the date of this Prospectus, a registration statement under the
Securities Act with respect to an underwritten public offering ("Offering") of
1,300,000 shares of Common Stock and 1,200,000 Class A Warrants by the Company
was declared effective by the Securities and Exchange Commission ("Commission"),
Washington, D.C. 20549, and the Company commenced the sale of the securities
offered thereby. Sales of the 750,000 shares of Common Stock under this
Prospectus by the Selling Security-holders or even the potential of such sales
may have an adverse effect on the market price of the Company's securities.

SELLING SECURITY-HOLDERS

The registration statement, of which this Prospectus forms a part, also
covers the registration of 750,000 shares of Common Stock offered by three
persons who are nonaffiliated with the Company, hereinafter collectively
referred to as "Selling Security-holders," to wit: Messrs. Ross Portenoy
(300,000 shares), Steven Madden (247,500 shares) and Todd Stone (202,500
shares). The securities held by the Selling Security-holders may be sold
commencing eighteen (18) months from the date of this Prospectus, subject to
earlier release at the sole discretion of the Underwriters, and such securities
include a legend with such restrictions. The Underwriters may release the
securities held by the Selling Security-holders at any time after all securities
subject to the Over-allotment Option have been sold or such option has expired.
The resale of the securities of the Selling Security-holders are subject to
Prospectus delivery and other requirements of the Securities Act of 1933, as
amended. Sales of such securities or the potential of such sales at any time may
have an adverse effect on the market prices of the securities offered hereby.

The 750,000 shares of Common Stock are being offered by the Selling
Security-holders under an alternate Prospectus. Prior to making the convertible
loan to the Company, the Selling Security-holders did not own any other
securities of the Company. None of the Selling Security-holders of the Company
are otherwise affiliated with the Company, at the time of making the bridge
loan, at the time of this offering or at any other time. The Company believes
that its financial transactions with the Selling Security-holders served a
legitimate business purpose, I.E., providing needed working capital for the
Company, and were fair and reasonable under the circumstances. The Company's
financial transactions with the Selling Security-holders were managed by
Stratton Oakmont, Inc. and no commissions or other remuneration were paid to
Stratton Oakmont, Inc. in connection with such transactions. See "Certain
Transactions" and "Description of Securities."

The securities offered hereby may be sold from time to time directly by the
Selling Security-holders. Alternatively, the Selling Security-holders may from
time to time offer such securities through underwriters, dealers or agents. The
distribution of securities by the Selling Security-holders may be effected in
one or more transactions that may take place on the over-the-counter market,
including ordinary broker's transactions, privately-negotiated transactions or
through sales to one or more broker-dealers for resale of such shares as
principals, at market prices prevailing at the time of sale, at prices related
to such prevailing market prices or at negotiated prices. Usual and customary or
specifically negotiated brokerage fees or commissions may be paid by the Selling
Security-holders in connection with such sales of securities. The Selling
Security-holders and intermediaries through whom such securities are sold may be
deemed "underwriters" within the meaning of the Act with respect to the
securities offered, and any profits realized or commissions received may be
deemed underwriting compensation.

3
<PAGE>
Under the Securities Exchange Act of 1934, as amended ("Exchange Act"), and
the regulations thereto, any person engaged in a distribution of the securities
of the Company offered by this Prospectus may not simultaneously engage in
market-making activities with respect to such securities of the Company during
the applicable "cooling off" period (nine days) prior to the commencement of
such distribution. In addition, and without limiting the foregoing, the Selling
Security-holders will be subject to applicable provisions of the Exchange Act
and the rules and regulations thereunder, including without limitation, Rule
10b-6 and 10b-7, in connection with transactions in such securities, which
provisions may limit the timing of purchases and sales of such securities by the
Selling Security-holders.

Sales of securities by the Selling Security-holders or even the potential of
such sales may likely have an adverse effect on the market prices of the
securities offered hereby. Following the closing of this offering, the publicly
tradeable securities of the Company ("public float"), including this offering,
will be 2,050,000 shares of Common Stock and 1,200,000 Class A Warrants,
provided, however, that 750,000 shares of Common Stock owned by the Selling
Security-holders are not transferable for eighteen (18) months commencing on the
effective date of this Prospectus or at such earlier date as may be permitted by
Stratton Oakmont, Inc., and such securities include a legend with such
restrictions. Stratton Oakmont, Inc. may release such securities held by the
Selling Security-holders at any time after all securities subject to the
Over-allotment Option have been sold or such option has expired. The resale of
the securities of the Selling Security-holders are subject to Prospectus
delivery and other requirements of the Securities Act of 1933, as amended. Sales
of such securities or the potential of such sales at any time may have an
adverse effect on the market prices of the securities offered hereby.

4
<PAGE>
PLAN OF DISTRIBUTION

The securities offered hereby may be sold from time to time directly by the
Selling Security-holders. Alternatively, the Selling Security-holders may from
time to time offer such securities through underwriters, dealers or agents. The
distribution of securities by the Selling Security-holders may be effected in
one or more transactions that may take place on the over-the-counter market,
including ordinary broker's transactions, privately-negotiated transactions or
through sales to one or more broker-dealers for resale of such shares as
principals, including Stratton Oakmont, Inc., at market prices prevailing at the
time of sale, at prices related to such prevailing market prices or at
negotiated prices. Usual and customary or specifically negotiated brokerage fees
or commissions may be paid by the Selling Security-holders in connection with
such sales of securities. The Selling Security-holders and intermediaries
through whom such securities are sold may be deemed "underwriters" within the
meaning of the Securities Act with respect to the securities offered, and any
profits realized or commissions received may be deemed underwriting
compensation.

At the time a particular offer of securities is made by or on behalf of a
Selling Security-holder, to the extent required, a Prospectus will be
distributed which will set forth the number of shares and warrants being offered
and the terms of the offering, including the name or names of any underwriters,
dealers or agents, if any, the purchase price paid by any underwriter for shares
and warrants purchased from the Selling Security-holder and any discounts,
commissions or concessions allowed or reallowed or paid to dealers, and the
proposed selling price to the public.

Under the Securities Exchange Act of 1934, as amended ("Exchange Act"), and
the regulations thereto, any person engaged in a distribution of the securities
of the Company offered by this Prospectus may not simultaneously engage in
market-making activities with respect to such securities of the Company during
the applicable "cooling off" period (nine days) prior to the commencement of
such distribution. In addition, and without limiting the foregoing, the Selling
Security-holders will be subject to applicable provisions of the Exchange Act
and the rules and regulations thereunder, including without limitation, Rule
10b-6 and 10b-7, in connection with transactions in such securities, which
provisions may limit the timing of purchases and sales of such securities by the
Selling Security-holders.

5
<PAGE>
- -------------------------------------------
-------------------------------------------
- -------------------------------------------
-------------------------------------------

NO DEALER, SALESMAN OR OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATIONS NOT CONTAINED IN THIS PROSPECTUS IN
CONNECTION WITH THE OFFER MADE HEREBY. IF GIVEN OR MADE, SUCH INFORMATION OR
REPRESENTATION MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE COMPANY.
THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER OF ANY SECURITIES OTHER THAN THE
SECURITIES TO WHICH IT RELATES OR AN OFFER TO ANY PERSON IN ANY JURISDICTION IN
WHICH SUCH AN OFFER WOULD BE UNLAWFUL. ANY MATERIAL MODIFICATION OF THE OFFERING
WILL BE ACCOMPLISHED BY MEANS OF AN AMENDMENT TO THE REGISTRATION STATEMENT. IN
ADDITION, THE RIGHT IS RESERVED BY THE COMPANY TO CANCEL ANY CONFIRMATION OF
SALE PRIOR TO THE RELEASE OF FUNDS, IF, IN THE OPINION OF THE COMPANY,
COMPLETION OF SUCH SALE WOULD VIOLATE FEDERAL OR STATE SECURITIES LAWS OR A RULE
OR POLICY OF THE NATIONAL ASSOCIATION OF SECURITIES DEALERS, INC., WASHINGTON,
D.C. 20006.

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

TABLE OF CONTENTS

<TABLE>
<CAPTION>
PAGE
-----
<S> <C>
Prospectus Summary............................. 3
Risk Factors................................... 6
Use of Proceeds................................ 16
Dilution....................................... 18
Capitalization................................. 19
Dividend Policy................................ 19
Management's Discussion and Analysis or Plan of
Operation..................................... 20
Business....................................... 24
Management..................................... 35
Principal Stockholders......................... 40
Certain Transactions........................... 41
Description of Securities...................... 43
Selling Security-holders....................... 47
Plan of Distribution...........................
Legal Proceedings.............................. 53
Legal Matters.................................. 53
Experts........................................ 53
Additional Information......................... 53
Index to Financial Statements.................. F-1
Report of Independent Certified Public
Accountants................................... F-2
</TABLE>

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

UNTIL , 1996 (25 DAYS AFTER THE EFFECTIVE DATE OF THIS PROSPECTUS),
ALL BROKER-DEALERS EFFECTING TRANSACTIONS IN THE REGISTERED SECURITIES, WHETHER
OR NOT PARTICIPATING IN THIS DISTRIBUTION, MAY BE REQUIRED TO DELIVER A
PROSPECTUS. THIS IS IN ADDITION TO THE OBLIGATION OF DEALERS TO DELIVER A
PROSPECTUS WITH RESPECT TO THEIR UNSOLD ALLOTMENTS OR SUBSCRIPTIONS.

750,000 SHARES

N-VISION, INC.

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

PROSPECTUS

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

, 1996

- -------------------------------------------
-------------------------------------------
- -------------------------------------------
-------------------------------------------
<PAGE>
<PAGE>
N-VISION, INC.
INDEX TO EXHIBITS

The following is a list of Exhibits marked by an asterisk (*) filed by
n-Vision, Inc. as part of Amendment No. 3 to the SB-2 Registration Statement and
related Prospectus:

<TABLE>
<C> <S> <C>
1.0 Form of Underwriting Agreement.
1.1 Selected Dealers Agreement.
1.2 Agreement Among Underwriters.*
3.0 Certificate of Incorporation, filed September 16, 1994, as amended.
3.2 By-laws, as amended.
4.0 Specimen Copy of Common Stock Certificate.
4.1 Specimen Copy of Class A Warrant Certificate.
4.2 Form of Underwriter's Purchase Option.
4.3 Form of Warrant Agreement.
5.0 Opinion of Thomas T. Prousalis, Jr., Esq. for Registrant.
10.0 Employment Agreement, Delmar J. Lewis.
10.1 Employment Agreement, Christopher J. Lewis.
10.2 Employment Agreement, Robert B. Hamilton, C.P.A.
10.3 Asset Purchase Agreement, dated November 1, 1994.
11.0 Statement re Computation of Earnings Per Share.
24.0 Consent of Thomas T. Prousalis, Jr., Esq. is contained on page II-6 of
the Registration Statement.
24.1 Consent of Grant Thornton LLP is contained on page II-7 of the
Registration Statement.
25.0 Power of Attorney appointing Delmar J. Lewis is contained on page II-5 of
the Registration Statement.
</TABLE>

<PAGE>
May 28, 1996

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

Attn: Russell F. Leone, Esq.
Mail Stop 7-2, Room 7045

Re: n-Vision, Inc.
Amendment No. 3 to Form SB-2
Registration Statement, File No. 333-3098

Dear Mr. Leone:

n-Vision, Inc. ("Company") files herewith Amendment No. 3 ("Amendment") to
its Form SB-2 Registration Statement, and related Prospectus, File No. 333-3098
("Registration Statement"), under the Securities Act of 1933, as amended.

Pursuant to the rules and regulations of the Securities and Exchange
Commission, Washington, D.C. 20549 ("Commission"), enclosed please find for
electronic (EDGAR) filing, as set forth in Regulation S-T, the Company's
Amendment to its Registration Statement.

Please be advised that the offering includes a participating underwriter and
the Registration Statement has been revised accordingly. See Form SB-2
Registration Statement, Registration No. 33-89194, of MVSI, Inc. for a
comparative presentation.

Very truly yours,

Thomas T. Prousalis, Jr.

TTP:dl
Enclosures
cc: n-Vision, Inc.
Bernstein & Wasserman, LLP
Patton Boggs, L.L.P.
Grant Thornton LLP
The Nasdaq Stock Market, Inc.