Offeree:_____________                                     Number: ______________

                    CONFIDENTIAL PRIVATE PLACEMENT MEMORANDUM

                                 FULLCOMM, INC.

                                1,200,000 Shares
                                 of Common Stock
                                 $2.50 Per Share
                         Minimum Purchase: 40,000 Shares

This Confidential Private Placement Memorandum (the "Memorandum") is furnished
on a confidential basis to certain qualified prospective investors in connection
with the private placement (the "Offering" ) of up to 1,200,000 Common Shares
(the "Stock") of Fullcomm, Inc., a New Jersey corporation ("FLCM", "Fullcomm,"
or the "Company").

THE SECURITIES OFFERED HEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT
OF 1933, AS AMENDED (THE "1933 ACT"), OR APPLICABLE STATE SECURITIES LAWS, NOR
HAVE SUCH SECURITIES BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND EXCHANGE
COMMISSION OR ANY STATE SECURITIES ADMINISTRATOR, NOR HAS THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES ADMINISTRATOR PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS MEMORANDUM. ANY REPRESENTATION TO THE CONTRARY IS
UNLAWFUL. THE SERIES A PREFERRED STOCK WILL BE SOLD ONLY TO A LIMITED NUMBER OF
ACCREDITED INVESTORS (AS DEFINED UNDER FEDERAL AND APPLICABLE STATE SECURITIES
LAWS).

--------------------------------------------------------------------------------
                                          Placement Agent  Proceeds to
                         Offering Price   Commission (1)   Company (2)
                         ---------------------------------------------

          Per Share          $ 2.50            $ 0.25        $ 2.25
        Minimum Offering  $ 1,000,000        $ 100,000      $ 900,000
        Maximum Offering  $ 3,000,000        $ 300,000     $ 2,700,000
--------------------------------------------------------------------------------

(1) R.K. Grace & Company (the "Placement Agent") will receive a fee equal to 10%
of the gross proceeds raised in this Offering. The Company has agreed to
indemnify the Placement Agent against certain liabilities, including liabilities
arising under the Securities Act of 1933.

(2) Before deducting expenses of the Offering to be paid by the Company,
estimated at $ 300,000

SEE "DISCUSSION OF RISK FACTORS" FOR INFORMATION THAT SHOULD BE CONSIDERED BY
PROSPECTIVE INVESTORS.

                     Securities Offered Exclusively through

                              R.K. Grace & Company
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                                [GRAPHIC OMITTED]

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Table of Contents:

Memorandum Summary .........................................................   3
Product Applications and Market Opportunity ................................   8
Special Note Regarding Forward-Looking Statements ..........................  11
Risk Factors ...............................................................  11
Risk to Offering ...........................................................  26
Use of Proceeds ............................................................  26
Shares Eligible for Future Sale ............................................  27
Offering ...................................................................  29
Dividend Policy ............................................................  30
Capitalization .............................................................  30
Dilution ...................................................................  31
Management .................................................................  32
Certain Transactions .......................................................  36
Principal Stockholders .....................................................  36
Identity and Compensation of Placement Agent and Legal Council .............  37
Legal Matters ..............................................................  37
Selected Consolidated Financial Data .......................................  38
Management's Discussion of Financial Condition .............................  40
Industry Background ........................................................  44
Fullcomm Solution ..........................................................  66
Marketing ..................................................................  71
Product Development Plan ...................................................  78
Strategic Alliances ........................................................  81
Table: Use of Proceeds .....................................................  87
Statement of Cash Flows ....................................................  88
Notes to Financial Statements ..............................................  89

Subscription Agreement .....................................................  95


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                          PRIVATE PLACEMENT MEMORANDUM

MEMORANDUM SUMMARY

Fullcomm was formed in January 1999 to develop proprietary technology for the
secure transmission of digital media and other data on the Internet. Fullcomm
solutions enable the secure exchange of information among a wide array of
networking systems and provide a framework for a broad range of e-commerce
applications. With the advent of the Internet as a business and entertainment
tool, it is important that business partners and content providers have the
ability to protect their rights and products. Our mission is to be a leading
manufacturer and integrator of hardware and software security solutions for
business applications.

For those who wish to download content from websites or engage in two-way
communication via the Internet, privacy is the key issue. Our technology is
threefold: client-side security hardware, server-side security software, and
authentication party software. These three cooperate in a fashion that
facilitates the secure transmission of any and all digital data via the
Internet. By focusing on the described near-term applications, Fullcomm believes
it can achieve an effective market impact with relatively low development costs.

Digital rights management (DRM) platforms serve as a foundation for providers of
digital information, technology, and commerce services to participate in a
global e-commerce system. DRM technologies manage rights and interests in
digital information. Fullcomm provides consulting, applied research and product
development services related to commercial security and encryption solutions.
These solutions enable the secure exchange of information among a wide array of
information systems and provide a framework for a broad range of transactions.
Fullcomm intends to generate its revenue from licensed technology products,
transaction fees and information services delivered over the Internet, private
Intranets or other networks.

Fullcomm's technology is strategically positioned to reap the benefits of the
exponential growth of online transactions. The size of the markets for the
following applications are expected to range from $2.5 billion to more than $20
billion in the next few years:

      o     E-commerce - greater security for online financial transactions and
            business information;

      o     Audio - distribution of music over the Internet;

      o     Video - distribution of movies and television programming for sale
            or rental online;

      o     Internet Publishing - distribution of books, newspapers, and
            periodicals online;

      o     Software Distribution - enhanced security for the sale or rental of
            software online;

      o     Voice over Internet Protocol Telephony - enhanced security for voice
            communication over the Internet; and

      o     Wireless Data - secure transmission of information for the rapidly
            expanding wireless data market.


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THE FULLCOMM ADVANTAGE

The Fullcomm device has two distinct modes of operational security. The first
mode features security in which copyright protection is the major concern. Here,
a user would have viewing rights, but should, in the interest of preserving
copyrights, be barred from duplicating the data. Users have access to media
(movies, music, books and magazines) over the Internet, but the PC never handles
any unencrypted data.

The benefits of Strong Encryption are enhanced by the external nature of the
hardware device. When supporting media transactions, no unencrypted digital data
is ever presented to the PC or its I/O devices for duplication. Digital data is
streamed from the PC's Internet connection to the Fullcomm device via the USB
port. The PC is simply a transfer point for the encrypted data that the PC is
unable to decipher. The only outputs from the Fullcomm device are analog
signals, which degrade rapidly upon duplication.

The second security mode of operation allows authorized users to access and
manipulate decrypted data files. This includes access from email applications,
word processing and other user applications. In non-media data transfer mode,
the encrypted data is passed through the PC in a similar fashion. This mode
supports corporate information sharing over public and private networks, in
which the unencrypted data is to be accessed on the user's PC. When the user is
validated by the system through authentication certificates at the hardware
device, the device then decrypts the data and allows said user to access the
data from his PC.

The following points represent Fullcomm's advantages over current practices:

      o     Threefold system of hardware device, content server, and
            authentication server working in conjunction provides greater
            security than any stand-alone solution.

      o     Hardware solution for encrypting and decrypting data is more robust
            than software solutions due to limitations of the operating systems;

      o     Authentication servers add security by providing certificates of
            identity for all parties engaged in the digital transaction;

      o     System utilizes Strong Encryption of 128 bits or greater in hardware
            to prevent cracking of digital data;

      o     Security keys are completely concealed in hardware from external
            scrutiny;

      o     Enables concealment of IP addresses inside a firewall; and

      o     External nature of the device on the USB port completely prevents PC
            from accessing any unencrypted digital data;

Specific Applications for Fullcomm's technology include:

E-information - The technology facilitates greater security for e-information
exchange. This includes business-to-business (B2B) and business-to-consumer
(B2C) exchanges, as well as back office information exchange security.
Fullcomm's technology:


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      o     secures sensitive corporate data - by allowing satellite offices to
            securely access home office databases, only parties with Fullcomm
            hardware and software can access sensitive information;

      o     secures EDI transactions in the healthcare/insurance industries;

      o     through its security architecture, allows enhanced control and
            utilization of credit card verification services and other
            E-business security concerns;

      o     Fullcomm technology drastically improves upon the security currently
            available for online stock trading, bank account information and
            related applications;

      o     Software Distribution - The Company's technology facilitates secure
            software distribution via the Internet and substantially enhances
            sales and distribution capabilities for vendors and software
            manufacturers;

      o     Fullcomm technology allows small software companies to compete with
            large software companies because access to shelf space and
            distribution channels are no longer barriers to entry or market
            share; and

      o     The technology enables the direct download and/or rental of software
            via the Internet with appropriate security.

Digital Rights Management - Fullcomm technology prevents digital piracy of
copyrighted media in the following areas:

      o     Audio - the technology allows for the distribution of music over the
            Internet without concern for pirated copies.

      o     The major music labels have been looking for a secure way to
            digitally distribute music via the Internet. Fullcomm technology
            allows record labels to tap the broad reaching distribution
            capabilities of the Internet.

      o     Independent music labels may realize substantial savings from
            decreased advertising and distribution costs. With the ability to
            distribute over the Internet, these smaller labels can gain access
            to broader markets and compete with larger labels for market share
            based on content and service rather than name recognition through
            advertising.

      o     Video - The rapid growth of high bandwidth Internet users and the
            ever-increasing demand for greater bandwidth opens a door to a
            market for video distribution in a similar fashion to that of audio
            distribution. The telecommunications and cable industries are
            attacking the problem of limited bandwidth. As they update the data
            delivery infrastructure, this market can be targeted.

      o     As with Audio, smaller independent studios can cut costs and
            increase market share via the far-reaching distribution capabilities
            of the Internet

      o     Fullcomm's technology allows for the creation of a new market for
            secure on-demand rebroadcast of television programming

      o     Internet publishing - the ability to distribute books, periodicals,
            newspapers and other printed media online and retain distribution
            rights (no piracy)

Communications Security - The technology facilitates secure digital
communications as follows:

      o     Voice over Internet Protocol/IP Telephony - enhances the security of
            voice communication over the Internet;


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      o     Cellular Phones - only authorized parties may have access to
            information, which in cellular markets, this means digital cell
            phones can not be cloned and stolen phones can be denied access to
            cellular networks; and

      o     Wireless Data - enables secure transmission of information for the
            rapidly expanding wireless data market

PRODUCT REALIZATION

Product realization focuses on providing everything required to bring a new
product to market in a timely and cost-effective manner. The primary goal is to
shorten time to market while maintaining quality, achieving the lowest possible
manufacturing cost and ensuring reliability and usability. The key elements of
product realization include:

      o     design;

      o     prototyping;

      o     testing;

      o     certification; and

      o     manufacturing

The Company's first product is a PC-compatible hardware device. The device, in
conjunction with proprietary server-side software, client-side software and
authentication party software achieves two goals:

      o     protects data while in transit; and

      o     protects data from duplication at the consumer's PC

This hardware device satisfies security conditions for both business partners
and content providers by applying security algorithms and making use of the
internal architecture of the PC to facilitate an ultra-secure means of
distribution on the Internet. Furthermore, the architecture in the Fullcomm
device actually improves the overall security of the exchange by protecting the
data at all of its vulnerable points, in hardware, rather than relying on
software protection. This feature allows a great reduction in overall
algorithmic complexity, while improving the quality of the security.

Beyond the technical merits of hardware-based encryption, this approach allows
for substantial simplification into a single chip that comprises all of the
Fullcomm baseline technology. Hardware development, rather than software
development, allows the technology to be reduced to an "ASIC" (Application
Specific Integrated Circuit, or "chip"). This chip will be utilized in digital
accessories and equipment to facilitate secure communication in the same manner
as in the PC device.

PRODUCT DEVELOPMENT PLAN

Fullcomm has devised a Product Development Plan for its proprietary hardware
security device. Initial Prototype development is comprised of three concurrent
stages:


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      o     Prototype Specification and Device Development;

      o     Device Software Development; and

      o     Server Software Development

Fullcomm has organized the Product Development Plan to capitalize on the
Company's research and development activities as soon as benchmark developments
afford further research into market applications. The flexibility of our chosen
design architecture not only allows for enhanced security, but also allows
Fullcomm to choose a modular development format in which stages of development
have concurrent timetables. The benefits of this development plan include:

      o     reducing overall development timetables;

      o     reducing development costs;

      o     rapid proof of base design and concept can swiftly demonstrate the
            merits of Fullcomm's technology in the marketplace;

      o     expeditious development of a revenue generating product; and

      o     the rapid deployment of an initial product

Fullcomm has a contracted design relationship with System Design Group (SDG), of
San Diego, California. SDG provides turnkey project development using its
internal team of hardware and software engineers experienced in everything from
embedded systems to large multi-computer system designs. Fullcomm has structured
the product development plan to make products available as key stages are
completed. The core security module and the media-handling component of the
device are being worked on concurrently, but SDG's design focus is on the core
security module, which will allow for rapid proof of design and concept. This
means faster deployment of a revenue generating product. The media capabilities
will be incorporated in the second stage of development, but greater resources
are being directed to the security module in order to decrease costs and to
bring an application of our technology into the marketplace.


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<TABLE>
<CAPTION>
--------------------------------------------------------------------------------------------------------------
                                  PRODUCT APPLICATIONS AND MARKET OPPORTUNITY
--------------------------------------------------------------------------------------------------------------
     Application          Market Opportunity             Fullcomm Solutions             Target Companies
--------------------------------------------------------------------------------------------------------------
<S>                  <C>                            <C>                            <C>
E-commerce           By 2003, e-commerce            - Secure information           High Volume Internet
                     activities worldwide will        exchange                     Transactors: Amazon,
                     result in transactions worth   - No unauthorized access to    Priceline, Ebay
                     $1.3 trillion, up from $43       sensitive data               Internet brokerage firms:
                     billion in 1998                - Third-party authentication   E-Trade, Ameritrade
                                                      of vendors and clients       Online Banking: Bank of
                                                                                   America, Wells Fargo
--------------------------------------------------------------------------------------------------------------
Audio                Internet music sales will      - Secure music distribution    Sony Music,
                     reach $3.9 billion by 2004,      over the Internet            Universal Polygram Records,
                     up from an estimated $346      - Configurable to any DRM      Independent record labels
                     million in 1999                  solution
                                                    - No client-side duplication
--------------------------------------------------------------------------------------------------------------
Video                Experts predict that video     - Provides secure              Time Warner,
                     on-demand will achieve           Video-on-Demand (VOD) via    Blockbuster Video,
                     revenues of over $5 billion      the Internet or cable        Universal Paramount,
                     by 2005                          system                       Disney,
                                                    - No client-side duplication   MGM
--------------------------------------------------------------------------------------------------------------
Internet             The 1996 retail book market    - Prevents Copyright           Amazon,
Publishing           had revenues of $26 billion,     infringement                 Barnes and Noble,
                     growing at a steady rate of    - Provides a secure means of   NuvoMedia,
                     5% annually. Online book         distribution                 Random House,
                     trade is estimated to                                         McGraw-Hill
                     comprise as much as 25% of
                     this market in five years
--------------------------------------------------------------------------------------------------------------
Software             The market for ERP             - Provides a secure            Microsoft,
Distribution         (enterprise resource             distribution channel         Oracle,
                     planning) software rental is   - Allows for secure software   SAP,
                     expected to reach $6 billion     rental by ensuring limited   Baan
                     by 2002. This market is          use
                     projected to double annually
                     thereafter
--------------------------------------------------------------------------------------------------------------
Voice over           In 1997, IP telephony grew     - Allows for secure means of   Internet Service
Internet Protocol/   to a $150 million business.      communication                Providers (ISPs): America
IP Telephony         By 2000, revenues are                                         Online (AOL), @home
                     projected to reach $2.5                                       Telecommunications: AT&T,
                     billion                                                       MCI Worldcom, Sprint
--------------------------------------------------------------------------------------------------------------
Wireless Data        By 2010, revenues in the       - Allows only authorized       AT&T
                     Wireless data market will        access to networks           Motorola
                     reach $80 billion. By 2005,    - Prohibits interception and   Sprint
                     70% of the businesses in         manipulation of digital      Cellular One
                     developed countries that         data
                     have Wireless networks will
                     have the capability to use
                     Wireless data services
--------------------------------------------------------------------------------------------------------------
</TABLE>


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MARKETING

Fullcomm's expertise allows us to partner with providers of integrated voice and
data communications solutions to small, medium and large-sized business
customers. The team is responsible for overseeing the design and implementation
of scalable and complex internetworks to achieve successful strategies.
Fullcomm's initial product focus is directed towards solutions for e-commerce
enabled networks.

Business-to-business (B2B) e-business is expected to grow to $1.3 trillion in
2003 from $109 billion in 1999, according to market researcher Forrester
Research. E-business, estimated at $40 billion, is 5 times as large as personal
users. By 2003, that figure will balloon to over $1 trillion, or approximately
10% of all U.S. business. By 2006, this might grow to 40% of all U.S. business.
By 2003, over 400,000 US based e-merchants will have a presence on the Internet.

The marketing strategy calls for the demonstration of the baseline technology in
a real world environment. Fullcomm has entered into a binding agreement to
establish a master distributorship with Creative Web Solutions, Inc. (CWS) a
subsidiary of Houston, Texas based Bradmark, Inc. CWS will be responsible for
marketing Fullcomm's initial product, security solutions for the
business-to-business (B2B) applications sector. CWS's team of technologists are
specialists in overseeing all phases of the E-business enabling process. They
are also responsible for consulting with customers, providing technical support
and modifying systems to serve changes in requirements. They can provide
strategic security solutions to businesses focused on developing and or
expanding their electronic commerce. The CWS agreement will allow Fullcomm to
test and refine components of our technology in real application use. This will
allow Fullcomm to realize a fully functional product on a shorter timeline than
otherwise.

CWS is an Internet/Network Security Applications Distributor providing the
Fortune 500 and 1000 companies technically advanced security solutions. Bradmark
is a leading developer and vendor of database management solutions that improve
the availability and performance of mission-critical databases in complex
computing environments. Bradmark has managed the development of commercial
software products, implemented advanced systems in Fortune 500 & 1000 companies
and developed software product strategies. Bradmark has operations in Europe,
South America, India, Australia, the Middle East and Africa.

With more than seventeen years in the database industry, Bradmark has an
established customer base with over 10,000 customers worldwide. This strength
extends to their Authorized Partners Program, giving customers stronger
confidence in their choice of solution providers. CWS/Bradmark will assist
Fullcomm in rolling out its newest solutions and assist us integrating Fullcomm
network solutions into corporate enterprise systems.

Once refinements and production capabilities have reached levels acceptable to
Fullcomm and its customers, other market applications will rapidly be
introduced. The use of the Internet for digital goods is being supported both by
the growing number of business partners and by electronic devices other than the
personal computer, such as set-top boxes, portable music players, mobile phones,
and other hand-held devices. In addition, downloading digital content is
becoming significantly easier


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with the emergence and adoption of broadband technologies including digital
subscriber lines and cable modems, and enhanced compression technologies
including MP3 for music and MPEG-2 for video. The Internet will add to the
existing channels for distributing digital goods on physical media like compact
discs and DVDs.

OFFERING

The Company currently plans to raise up to $3.0 million by selling 1.2 million
shares of Common Stock during this offering. We expect this round of financing
to meet our needs and expectations for the next twelve months as we bring our
prototype solution into live environmental testing. We expect a more substantial
financing to occur within the next twelve months. The proceeds of each round of
financing will fund Fullcomm's continuing and future development programs and
operating activities. The Board of Directors of the Company has authorized
management to raise up to an additional $7.0 million at a price per share of
$2.50.

                      ************************************


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THIS MEMORANDUM CONTAINS FORWARD-LOOKING STATEMENTS BASED ON OUR CURRENT
EXPECTATIONS, ASSUMPTIONS, ESTIMATES AND PROJECTIONS ABOUT FULLCOMM AND OUR
INDUSTRY. THESE FORWARD-LOOKING STATEMENTS INVOLVE RISKS AND UNCERTAINTIES. OUR
ACTUAL RESULTS COULD DIFFER MATERIALLY FROM THOSE ANTICIPATED IN THESE
FORWARD-LOOKING STATEMENTS AS A RESULT OF CERTAIN FACTORS; AS MORE FULLY
DESCRIBED IN THIS SECTION AND ELSEWHERE IN THIS PROSPECTUS. WE UNDERTAKE NO
OBLIGATION TO UPDATE PUBLICLY ANY FORWARD-LOOKING STATEMENTS FOR ANY REASON,
EVEN IF NEW INFORMATION BECOMES AVAILABLE OR OTHER EVENTS OCCUR IN THE FUTURE.

RISK FACTORS

This offering and an investment in our common stock involve a high degree of
risk. In addition to the other information in this Memorandum, the following
risk factors should be considered carefully in evaluating the Company and its
business before purchasing the shares of Common Stock offered by this
Memorandum. This Memorandum contains forward-looking statements that involve
risks and uncertainties. The cautionary statements contained in this Memorandum
should be read as being applicable to all related forward-looking statements
wherever they appear in this Memorandum. The Company's actual results could
differ materially from those discussed here. Important factors that could cause
or contribute to such differences include those discussed below, as well as
those discussed elsewhere in this Memorandum. Our business and results of
operations could be seriously harmed by any of the following risks. The trading
price of our Common Stock could decline due to any of these risks, and you might
lose all or part of your investment.

RISKS RELATED TO OUR BUSINESS

Our business model is new and unproven and we may not succeed in generating
sufficient revenue to sustain or grow our business. The success of our business
depends upon our ability to generate transaction fees in the form of a
percentage of fees charged by our licensees in commercial transactions. However,
our licensees have not yet used our technology in the commercial distribution of
their products and we have not earned any transaction fees under this business
model. If our technology is commercially released the volume of products and
services distributed using our technology may be too small to support or grow
our business. Companies may wish to use other technology based on different
business models, including the payment of a one-time license fee without sharing
in ongoing revenues. If we are unable to generate revenues from transaction
fees, our other revenue sources, consisting of initial license fees and support
fees, may be insufficient to sustain our business.

LIMITED OPERATING HISTORY

We were incorporated in January, 1999 and accordingly, we have a limited
operating history. An investor in our Common Stock must consider the risks and
difficulties frequently encountered by early stage companies in new and rapidly
evolving markets. We also depend on the growing use of


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the Internet for advertising, commerce and communication, and on general
economic conditions. We cannot assure you that our business strategy will be
successful or that we will successfully address these risks. Market acceptance
of our new solutions will depend on the continued emergence of Internet
commerce, communication and advertising, and market demand for our solutions. We
cannot assure you that the market for our new solutions will develop or that
demand for our new solutions will emerge or become sustainable.

ONGOING CONCERN

The Company is considered to be a development stage company with little
operating history. The Company is dependent upon the financial resources of the
Company's management and from the net proceeds of a private placement for its
continued existence. The Company will also be dependent upon its ability to
raise additional capital to complete is research and development, prototype
development, production scheduling, sourcing inventory and its marketing
program, acquire additional equipment, management talent, inventory and working
capital to engage in any profitable business activity. Since its organization,
the Company's activities have been limited to the preliminary development of its
new products, preparation for filing of a patent application, hiring personnel
and acquiring equipment and office space, conducting research and development of
its technology and preparation of documentation and the sale of a private
placement offering.

HISTORY OF LOSSES AND ANTICIPATION OF CONTINUED LOSSES

We incurred net losses of $314,769 for the period from January, 1999 (inception)
through December 7, 1999. We have not achieved profitability and expect to
continue to incur operating losses for the foreseeable future. We expect to
continue to incur significant operating and capital expenditures and, as a
result, we will need to generate significant revenues to achieve and maintain
profitability. Even if we do achieve profitability, we cannot assure you that we
can sustain or increase profitability on a quarterly or annual basis in the
future. If revenues grow slower than we anticipate, or if operating expenses
exceed our expectations or cannot be adjusted accordingly, our business, results
of operations and financial condition will be materially and adversely affected.

QUARTERLY OPERATING RESULTS ARE SUBJECT TO SIGNIFICANT FLUCTUATIONS AND
SEASONALITY

Our revenues and operating results may vary significantly from quarter to
quarter due to a number of factors, not all of which are in our control. These
factors include:

      o     user traffic levels and the number of available impressions on the
            web sites;

      o     changes in the growth rate of Internet usage;

      o     the commitment of budgets to Internet e-commerce;

      o     the mix of revenues from our various Internet e-commerce solutions;

      o     our ability to attract and retain customers and maintain customer
            satisfaction for our existing and future e-commerce businesses;

      o     new sites, services, solutions or products introduced by us or our
            competitors;


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      o     the seasonal timing and uncertainty of sales cycles;

      o     seasonal fluctuations in revenue;

      o     the level of Web and online services usage;

      o     our ability to upgrade and develop our systems and infrastructure
            and attract new personnel in a timely and effective manner;

      o     our ability to successfully integrate operations and technologies
            from acquisitions or other business combinations;

      o     technical difficulties or system downtime affecting the Internet
            generally or the operation of our Web sites; and

      o     economic conditions specific to the Internet as well as general
            economic conditions.

Our revenues for the foreseeable future will remain dependent on Internet
business centers. Such future revenues are difficult to forecast. In addition,
we plan to increase our sales and marketing operations, to expand and develop
content and to upgrade and enhance our technology and infrastructure development
in order to support our growth. We may be unable to adjust spending quickly
enough to offset any unexpected revenue shortfall. If we have a shortfall in
revenues in relation to our expenses, or if our expenses precede increased
revenues, then our business, results of operations and financial condition would
be materially and adversely affected. This would likely affect the market price
of our Common Stock in a manner, which may be unrelated to our long-term
operating performance.

Due to the factors noted above and the other risks discussed in this section,
you should not rely on quarter-to-quarter comparisons of our results of
operations as an indication of future performance. It is possible that in some
future periods our results of operations may be below the expectations of
investors. In this event, the price of our Common Stock may fall.

UNCERTAINTY OF ADDITIONAL FINANCING

We currently anticipate that our available cash resources combined with the net
proceeds from this offering will be sufficient to meet our anticipated working
capital and capital expenditure requirements for at least the 12 months after
the date of this Memorandum. We may need to raise additional funds, however, to
fund more rapid expansion, to develop new or enhance existing services or
products, to respond to competitive pressures or to acquire complementary
products, businesses or technologies. If additional funds are raised through the
issuance of equity or convertible debt securities, the percentage ownership of
our shareholders will be reduced and such securities may have rights,
preferences or privileges senior to those of our existing shareholders. We
cannot assure you that additional financing will be available on terms favorable
to us, or at all. If adequate funds are not available or are not available on
acceptable terms, our ability to fund our expansion, take advantage of
unanticipated opportunities, develop or enhance services or products or
otherwise respond to competitive pressures would be significantly limited. Our
business, results of operations and financial condition could be materially
adversely affected by such limitation.

RAPID TECHNOLOGICAL CHANGE; NEW PRODUCT AND SERVICE INTRODUCTIONS


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The emerging market for network security products and related services is
characterized by rapid technological developments, frequent new product
introductions and evolving industry standards. The emerging nature of this
market and its rapid evolution will require the Company to improve the
performance, features and reliability of its products and services, particularly
in response to competitive offerings, and to be first to market with new
products and services or enhancements to existing products and services. The
success of new product introductions is dependent on several factors, including
proper new product definition and differentiation, timely completion and
introduction of new products, and market acceptance of the Company's new
products and services. The Company may not be successful in developing and
marketing new products and services that respond to competitive and
technological developments and changing customer needs. The failure of the
Company to develop and introduce new products and services successfully on a
timely basis and to achieve market acceptance for such products and services
could have a material adverse effect on the Company's business, financial
condition and results of operations. Even if we develop new products and
services, we may not be successful in the marketplace. In addition, the
introduction of new technologies or advances in techniques for gaining
unauthorized network access could render the Company's existing products
obsolete or unmarketable. For example, any slowdown in the adoption of digital
certificates, or the introduction of any alternative security infrastructures,
because of the introduction of new technologies or otherwise, could have a
material adverse effect on the Company's business, financial condition and
long-term prospects. Advances in techniques by individuals and entities seeking
to gain unauthorized access to networks could expose the Company's existing
products to new and unexpected attacks and require accelerated development of
new products or require the Company to invest resources in products that may not
become profitable. The adoption of new formal standards, or the evolution of new
de facto standards, could require the reconfiguration of the Company's products,
reduce their technical competitiveness or impede their adoption and deployment.
Failure to counter challenges to current products or introduce product offerings
that keep pace with the technological changes introduced by competitors or
persons seeking to breach information security could have a material adverse
effect on the Company's business, financial condition or results of operations.

COMPETITION

Our markets are new, rapidly evolving, and highly competitive, and we expect
this competition to persist and intensify in the future. Our failure to maintain
and enhance our competitive position could reduce our market share and cause our
revenues to grow more slowly than anticipated or not at all. The Company's
products will be targeted at the new and rapidly evolving market for services
related to commercial security and encryption solutions. Although the
competitive environment in this market has yet to develop fully, the Company
anticipates that it will be intensely competitive, subject to rapid change and
significantly affected by new product and service introductions and other market
activities of industry participants.

We encounter current or potential competition from a number of sources,
including:

      o     Cisco Systems, Lucent Technologies, Network Associates, and Novell;.

      o     providers of secure digital distribution technology like AT&T, IBM,
            Microsoft, Liquid Audio, Preview Systems, and Xerox;


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      o     providers of hardware-based content metering and copy protection
            systems, including Sony, Wave Systems, and the 4C Entity, comprised
            of IBM, Intel, Matsushita, and Toshiba; and

      o     operating system manufacturers, including Microsoft or Sun
            Microsystems, that may develop or license digital rights management
            solutions for inclusion in their operating systems.

Potential competitors may bundle their products or incorporate a digital rights
management component into existing products in a manner that discourages users
from purchasing our products. For example, we expect that future releases of
Microsoft's Windows operating system, which manages the programs on a computer,
will include components addressing digital rights management functions.
Furthermore, new competitors or alliances among competitors may emerge and
rapidly acquire significant market share. Our competitors may be able to respond
more quickly to new or emerging technologies and changes in customer
requirements than we do.

Because of the broad functionality of its commercial security and encryption
solutions, the Company competes with vendors offering a wide range of security
products and services. The Company also competes with companies offering
commercial certification authority products and services, such as VeriSign, GTE
Cybertrust Solutions, Xcert, Entrust, Intertrust and IBM in the market for
issuing and maintaining digital certificates for use on public and private
networks. Certain of these companies are primarily service providers rather than
software solution vendors. In addition, the Company expects to compete with
established companies, such as RSA Security and Network Associates, which have
each announced their intention to introduce PKI (public key infrastructure)
products that would be integrated with their other security offerings, as well
as Microsoft Corporation, which has announced its intention to offer a
certificate server product building on its existing security framework in the
near future. In addition, other major networking vendors could, in the future,
bundle digital certificates with their product offerings. The Company also
competes with most major networking device companies and firewall vendors in the
emerging market for providing security across virtual private networks ("VPNs"),
including Check Point Software Technologies, Axent Technologies and others. The
Company expects that competition from established and emerging companies in the
financial and telecommunications industries will also increase in the near term,
and that certain of the Company's primary long-term competitors may not yet have
entered the market. Increased competition could result in pricing pressures,
reduced margins or the failure of the Company's products and services to achieve
or maintain market acceptance, any of which could have a material adverse effect
on the Company's business, financial condition and results of operations.

Many of the Company's current and potential competitors have longer operating
histories, greater name recognition, and significantly greater financial,
technical and marketing resources than the Company. As a result, they may be
able to adapt more quickly to new or emerging technologies and changes in
customer requirements, or to devote greater resources to the promotion and sale
of their products than the Company. Many of these companies have more extensive
customer bases and broader partner relationships that they could leverage,
including relationships with many of our potential partners including third
parties with whom the Company has strategic relationships. These companies also
have significantly more established customer support and professional service
organizations than we do. Accordingly, it is possible that new competitors or
alliances may emerge and rapidly acquire significant market share. In addition,
these companies may adopt aggressive pricing policies. If this were to occur,
the Company's business, financial condition or results of operation could be
materially adversely affected. The Company may also compete for sales of its


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products against potential original equipment manufacturer ("OEM") licensees,
who resell products under their own brand names. The Company contemplates
offering other OEMs licenses to sell products provided under the licensee's own
brand name and therefore may face further competition for sales revenues. The
Company's current and potential competitors may also develop network security
products that are more effective than the Company's current or future products
and the Company's technologies and products may be rendered obsolete by such
developments.

DIGITAL RIGHTS MANAGEMENT

The market for digital rights management solutions is fragmented and marked by
rapid technological change, frequent new product introductions and enhancements,
uncertain product life cycles, and changes in customer demands. To succeed, we
must develop and introduce, in response to customer and market demands, new
releases of our e-commerce solutions that offer features and functionality that
we do not currently provide. Any delays in our ability to develop and release
enhanced or new products could seriously harm our business and operating
results.

DEPENDENCE ON LARGE CUSTOMERS

The Company anticipates that its results of operations in any given period will
continue to depend to a significant extent upon revenues from a small number of
customers. In addition, the Company anticipates that such customers will
continue to vary over time, so that the achievement of the Company's long-term
goals will require the Company to obtain additional significant customers on an
ongoing basis. The failure of the Company to enter into a sufficient number of
large licensing agreements during a particular period could have a material
adverse effect on the Company's business, financial condition and results of
operations.

MANAGEMENT OF GROWTH

The Company anticipates rapid growth that will place significant strain on its
management and resources. The growth in the size and complexity of the Company's
business as well as its customer base is expected to place a significant strain
on the Company's management and operations. In addition, certain of the
Company's senior management have had limited experience in managing pre-publicly
traded companies. The Company anticipates that continued growth, if any, will
require it to recruit and hire a substantial number of new developments,
managerial, finance, sales and marketing and support personnel during 2000. The
Company may not be successful at hiring or retaining such personnel. The
Company's ability to compete effectively and to manage future growth, if any,
will depend on its ability to continue to implement and improve operational,
financial and management information systems on a timely basis and to expand,
train, motivate and manage its work force. The Company's personnel, systems,
procedures and controls may not be adequate to support its operations.

INDUSTRY REGULATION


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Due to the increasing popularity of the Internet and other computer networks, it
is possible that laws and regulations may be enacted covering issues such as
user privacy, pricing, content and quality of products and services. For
example, the Telecommunications Act of 1996 prohibits the transmission over the
Internet of certain types of information and content. The increased attention
focused upon these issues as a result of the adoption of other laws or
regulations may reduce the rate of growth of the Internet and other computer
networks, which in turn could result in decreased demand for the Company's
products or could otherwise have a material adverse effect on the Company's
business, financial condition and results of operations. In addition, the
imposition of governmental regulations requiring the escrow and governmental
recovery of private encryption keys, as has been proposed from time to time by
various law enforcement agencies within the United States government, could have
a substantial chilling effect on the acceptance and use of encryption products
and public networks for secure communications, which, in turn, could result in
decreased demand for the Company's products or could otherwise have a material
adverse effect on the Company's business, financial condition and results of
operations.

Certain of the Company's products are subject to export controls under laws of
the United States, Canada and other countries. There can be no assurance,
however, that the list of products and countries for which exports are
restricted, and the regulatory policies with respect thereto, will not be
revised from time to time. The inability of the Company to obtain required
government approvals under these regulations could materially adversely affect
the ability of the Company to sell products abroad or make products available
for sale via international computer networks such as the Internet. Furthermore,
United States governmental controls on the exportation of encryption products
and technology may in the future restrict the ability of the Company to freely
export some of its products with the most powerful information security
encryption technology. Furthermore, there can be no assurance that foreign
customers will seek export versions of the Company's products. As a result,
foreign competitors subject to less stringent export controls on their products
may be able to compete more effectively than the Company in the global
information security market. There can be no assurance that these factors will
not have a material adverse effect on the Company's business, financial
condition or results of operations. It is also possible that Congress or
individual states could enact laws regulating or taxing Internet commerce. In
addition, several telecommunications companies have petitioned the Federal
Communications Commission to regulate Internet service providers in a manner
similar to long distance telephone carriers and to impose access fees on these
companies. Access fees, sales taxes or any other taxes or fees could increase
the cost of transmitting data over the Internet and reduce the number or amount
of transactions from which we can generate our transaction fees.

COMPETITIVE MARKET FOR TECHNICAL PERSONNEL

The Company's future performance depends, in significant part, upon the
continued service of its key scientific, technical, sales and management
personnel. The loss of the services of one or more of the Company's key
personnel could have a material adverse effect on the Company's business,
financial condition and results of operations. The Company does not maintain key
person life insurance policies on any of its employees. The Company's future
success also depends on its continuing ability to attract and retain highly
qualified scientific, technical, sales and managerial personnel. Competition for
such personnel is intense, particularly in the field of cryptography, and there
can be no assurance that the Company can retain its key scientific, technical,
sales and


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managerial employees or that it can attract, motivate or retain other highly
qualified scientific, technical, sales and managerial personnel in the future.
If the Company cannot retain or is unable to hire such key personnel, the
Company's business, financial condition and results of operations could be
materially adversely affected.

RISKS REGARDING SALES STRATEGY; RELIANCE ON EVOLVING DISTRIBUTION CHANNELS

To sell to its targeted markets, the Company intends to establish a dedicated
partnership program including technology partners, VARs, OEMs, service
providers, development partners, distributors and other technology, marketing
and sales partners. The Company's relationships with these partners have only
been established recently. The Company therefore cannot yet evaluate the degree
to which its partnership programs will facilitate the broad adoption of its
solutions or provide alternate marketing and selling channels for the Company's
products. In addition, the Company may not be able to manage potential conflicts
among channel partners effectively, economic conditions or industry demand may
adversely affect these or other indirect channels and one or more of its
partners may devote greater resources to marketing and supporting the products
of other companies.

If third parties do not deploy our technology and create a market for digital
commerce, our business will be harmed. Relationships with leading content,
technology, and commerce service providers are critical to our success. Our
business and operating results would be harmed to the extent our licensees fail,
in whole or in part, to:

      o     deploy our technology;

      o     develop an infrastructure for the sale and delivery of digital goods
            and services;

      o     generate transaction fees from the sale of digital content and
            services;

      o     develop and deploy new applications; and

      o     promote brand preferences

We need to significantly increase the number of companies that license our
technology to sustain and grow our business.

We will not generate sufficient revenue to grow our business unless we maintain
relationships with existing licensees and significantly increase the number of
companies that license our technology and use it for the sale and management of
digital information and services. We have not yet attracted, and may not in the
future be able to attract, a sufficient number of these companies. Our ability
to attract new licensees will depend on a variety of factors, including the
following:

      o     the performance, reliability and security of our products and
            services;

      o     the scalability of our products and services, including the ability
            to rapidly increase deployment size from a limited number of
            end-users to a very large number of end-users;

      o     the cost-effectiveness of our products and services; and

      o     our ability to market our products and services effectively.


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Our ability to attract new licensees will also depend on the performance of our
initial licensees and our overall success. Many potential licensees may resist
working with us until our licensees', applications and services have been
successfully introduced into the market and have achieved market acceptance. We
may not be able to attract a critical mass of licensees that will develop
products and establish clearinghouses and other commerce services, and our
licensees may not achieve the widespread deployment of users we believe is
necessary for us to become successful.

In addition, we may not be able to establish relationships with important
potential customers if we have already established relationships with their
competitors. Therefore, it is important that we are perceived as a neutral and
trusted technology and service provider. In addition, we require that products
and services operating within our operating utility comply with specifications
administered by us. Potential licensees may be unwilling to be subject to the
control of these specifications.

LICENSING

Digital rights management is an emerging field in which our competitors may
obtain patents or other proprietary rights that would prevent, or limit or
interfere with, our, or our licensees', ability to make, use, or sell products.
Furthermore, companies in the software market are increasingly bringing suits
alleging infringement of their proprietary rights, particularly patent rights.
Our licensees and we could incur substantial costs to defend or settle any
litigation, and intellectual property litigation could force us to do one or
more of the following:

      o     cease selling, incorporating, or using products or services that
            incorporate the infringed intellectual property;

      o     obtain a license from the holder of the infringed intellectual
            property right; or

      o     redesign products or services to avoid infringement.

Our licensees' products and services may be subject to a claim of patent
infringement independent of any infringement by our products. In the future,
however, our licensees or we could be found to infringe upon the patent rights
of E-Data, TAU Systems, TechSearch, or other companies.

The long and complex process of licensing our Commerce hardware and software
solutions could delay the deployment of our technology and harm our business.
Licensing our Commerce hardware and software is a long and complex process. If
initial license fees are delayed or reduced as a result of this process, our
future revenue and operating results could be impaired. Before committing to
license our product, our licensees must generally consider a wide range of
issues including product benefits, installation and infrastructure requirements,
ability to work with existing computer systems, ability to support a large user
base, functionality, security, and reliability. The process of entering into a
licensing agreement with a company typically involves lengthy negotiations. As a
result of our long sales cycle it is difficult for us to predict the quarter in
which a particular prospect might sign a license agreement.

Because our technology must be integrated into the products and services of our
licensees, there will be significant delay between our licensing the Fullcomm
solution and our licensees'


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commercial deployment of their products and services. This will delay our
receipt of transaction fee revenue.

Our success depends upon the deployment of our technology by a potential
licensee in the use and sale of digital content. Our licensees undertake a
lengthy process of integrating our technology into their existing systems or a
new system. Until a licensee deploys our technology, we do not receive
transaction fees from that licensee. We expect that the period between entering
into a licensing arrangement and the time our licensee commercially deploys
applications based on our Commerce solutions will be lengthy and will vary,
which makes it difficult for us to predict when revenue will be recognized.

Fullcomm has only recently agreed to license our products to be used in pilot
programs, making evaluation of our business and prospects difficult. Our
licensees have not yet commercially deployed their applications or services. It
is possible that we or our licensees may uncover serious technical and other
problems resulting in the delay or failure of the commercial deployment of our
licensees' implementation of our Commerce solutions, including problems relating
to security, the ability to support a large user base, and interoperability of
our solutions or the combination of our software and hardware with our
licensees' software and hardware. We may not successfully address any of these
problems and the failure to do so would seriously harm our business and
operating results.

We will integrate third-party software with our software. We would be seriously
harmed if the providers from which we license software ceased to deliver and
support reliable products, enhance their current products, or respond to
emerging industry standards. In addition, the third-party software may not
continue to be available to us on commercially reasonable terms or at all. The
loss of, or inability to maintain or obtain this software, could result in
shipment delays or reductions, or could force us to limit the features available
in our current or future product offerings. Either alternative could seriously
harm our business and operating results.

RISKS ASSOCIATED WITH THE IF INFORMATION SECURITY MARKET

The market for the Company's solutions is at an early stage of development. A
decline in demand for the Company's products, whether as a result of
competition, technology change, the public's perception of the need for security
products, developments in the hardware and software environments in which these
products operate, general economic conditions or other factors, could have a
material adverse effect on the Company's business, financial condition or
results of operations. Continued growth of this market will depend, in large
part, upon the continued expansion of Internet usage and in the number of
organizations adopting or expanding intranets and extranets, the ability of
their respective infrastructures to support an increasing number of users and
services, the public recognition of the potential threat posed by computer
hackers and other unauthorized users and the continued development of new and
improved services for implementation across private and public networks. If the
network systems or complementary products and services are not developed in a
timely manner and, consequently, the market for the Company's products fails to
grow or grows more slowly than the Company currently anticipates, its business,
operating results and financial condition would be materially and adversely
affected.


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A well-publicized actual or perceived breach of network or computer security at
one of the Company's customers, regardless of whether such breach is
attributable to the Company's products, could adversely affect the market's
perception of the Company and the Company's products, and could have an adverse
effect on the Company's business, financial condition or results of operations.
In addition, although the effectiveness of the Company's products is not
dependent upon the secrecy of its proprietary technology or licensed technology,
the public disclosure of its proprietary technology could result in a perception
of breached security and reduced effectiveness of the Company's products, which
could have a material adverse effect on the Company's business, financial
condition or results of operations.

Any significant advance in techniques for decoding or "cracking" encrypted
information could render some or all of the Company's existing products obsolete
or unmarketable. The Company's solutions depend in part on the application of
certain mathematical principles. The security afforded by the Company's
encryption technology is predicated on the difficulty of "factoring" large
numbers and other similarly difficult mathematical problems. If an "easy
factoring" method is developed, the security afforded by the Company's
encryption technology would be reduced or eliminated. There can be no assurance
that such a development will not occur. Moreover, even if no breakthrough in
factoring is discovered, factoring problems can theoretically be solved by
computer systems having sufficient speed and power. If such improved techniques
for decrypting encrypted information are developed or rendered possible by the
increased availability of powerful computing resources, a material adverse
effect on the Company's business, financial condition and results of operations
could result.

DEPENDENCE ON THE INTERNET INFRASTRUCTURE

Our success will depend, in large part, upon the maintenance of the Internet
infrastructure, such as a reliable network backbone with the necessary speed,
data capacity and security, and timely development of enabling products such as
high speed modems, for providing reliable Internet access and services and
improved content. We cannot assure you that the Internet infrastructure will
continue to effectively support the demands placed on it as the Internet
continues to experience increased numbers of users, frequency of use or
increased bandwidth requirements of users. Even if the necessary infrastructure
or technologies are developed, we may have to spend considerable amounts to
adapt our solutions accordingly. Furthermore, the Internet has experienced a
variety of outages and other delays due to damage to portions of its
infrastructure. Such outages and delays could impact the Internet sites of
Internet distributors using our solutions and the level of user traffic on
Internet sites.

RISKS OF ERROR OR FAILURES

Products as complex as those offered by the Company may contain undetected
errors, failures or bugs when first introduced or when new versions are
released; such errors and failures may be detected at any point during the
product life cycle. Many companies offering software products have in the past
discovered failures and bugs in certain of their product offerings and have
experienced delays or lost revenues during the period required to correct these
errors. The computer technology environment is characterized by a wide variety
of standard and non-standard


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configurations that make pre-release testing for programming or compatibility
errors very difficult and time-consuming, especially with the many
configurations and variations of equipment and operating systems in computer
networks. Furthermore, despite testing by the Company and by others, products
may contain errors, failures or bugs that are discovered only after commencement
of commercial shipments by the Company. Errors, failure or bugs in the Company's
products could result in adverse publicity, product returns, loss of or delay in
market acceptance of the Company's products or claims by the customer or others
against the Company. Alleviating such problems could require the Company to make
significant expenditures of capital and resources and could cause interruptions,
delays or cessation of service to the Company's customers. The Company attempts
to limit its liability to customers, including liability arising from a failure
of the security features contained in the Company's products, through
contractual limitations of warranties and remedies. However, some courts have
held similar contractual limitations of liability, or the "shrink-wrap licenses"
in which they sometimes are embodied, to be unenforceable. Accordingly, there
can be no assurance that such limitations will be enforced. The Company does not
currently carry product liability insurance. The processes and methodologies
used by computer hackers to access or sabotage networks and intranets are
rapidly evolving and are generally not recognized until launched against one or
more systems. Therefore, the Company, in most cases, is unable to anticipate the
methodologies or tactics of hackers prior to their implementation. Any
compromise of the security offered by the Company's products, in a single
incident or a series of incidents, could have a material adverse effect on its
business, operating results and financial condition. The publicity surrounding
any security breaches could adversely affect the public perception of the
security offered by the Company's solutions, which in turn could also have a
material adverse effect on its business, financial condition and results of
operations.

INTERNATIONAL SALES RISKS

Although the Company has had no sales outside of the U.S., the Company expects
to increase its sales in international markets. In order to expand international
sales, the Company must establish additional foreign relationships with
additional partners. This expansion will require significant management
attention and financial resources and could have a material adverse effect on
the Company's business, financial condition and results of operations. In
addition, there can be no assurance that the Company will be able to maintain or
increase international market demand for the Company's products and services. A
change in the value of the U.S. dollar relative to foreign currencies could make
the Company's products more expensive and, therefore, potentially less
competitive in those markets and could otherwise adversely affect the Company's
ability to meet its foreign-currency-denominated obligations. Currently, the
Company does not employ currency-hedging strategies to reduce this risk. In
addition, the Company's international business may be subject to a variety of
risks, including difficulties in collecting international accounts receivable or
obtaining U.S. export licenses, potentially longer payment cycles, increased
costs associated with maintaining international marketing efforts, the
introduction of non-tariff barriers and higher duty rates and difficulties in
enforcement of contractual obligations and intellectual property rights. There
can be no assurance that such factors will not have a material adverse effect on
the Company's future international sales and, consequently, on the Company's
business, financial condition or results of operations.


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LIMITED PROTECTION OF PATENTS, PROPRIETARY RIGHTS AND DEPENDENCE ON LICENSED
RIGHTS

The Company relies on a combination of patent, trade secret, copyright and
trademark laws, nondisclosure agreements and contractual provisions to establish
and protect its proprietary rights. The Company attempts to protect its trade
secrets and other proprietary information through agreements with suppliers,
non-disclosure and non-competition agreements with employees and consultants and
other security measures.

There can be no assurance that any such patents will be issued or that any such
additional patents will be sufficiently broad to protect the Company's
technology relating to its information security products. The status of
computer-related patents involves complex legal and factual questions and the
breadth of claims allowed is uncertain. Accordingly, there can be no assurance
that patent applications filed by the Company will result in patents being
issued or that any patents that may be issued to it in the future, will afford
protection against competitors with similar technology, nor can there be any
assurance that patents issued to the Company will not be infringed upon or
designed around by others or that others will not obtain patents that the
Company would need to license or design around. If existing or future patents
containing broad claims are upheld by the courts, the holders of such patents
might be in a position to require the Company to obtain licenses to continue to
use such technology. There can be no assurance that any such licenses that might
be required for the Company's products would be available on reasonable terms,
if at all.

Despite the Company's efforts to protect its proprietary rights, unauthorized
parties may attempt to copy aspects of the Company's products or to obtain and
use information that the Company regards as proprietary. Policing unauthorized
use of the Company's products is difficult, and while the Company is unable to
determine the extent to which piracy of its software products exists, such
piracy can be expected to be a persistent problem, particularly in international
markets and as a result of the growing use of the Internet. Some courts have
held that shrink-wrap licenses, because the licensee does not sign them, are not
enforceable. The Company's trade secrets or confidentiality agreements may not
provide meaningful protection of the Company's proprietary information.
Furthermore, there can be no assurance that others will not independently
develop similar technologies or duplicate any technology developed by the
Company or that the Company's technology will not infringe upon patents of other
rights owned by others. The Company's inability to protect its proprietary
rights could have a material adverse effect on the Company's business, financial
condition or results of operations. Further, the Company may be subject to
additional risk as it enters into transactions in countries where intellectual
property laws are not well developed or are poorly enforced. Legal protections
of the Company's rights may be ineffective in such countries, and technology
developed in such countries may not be protectable in jurisdictions where
protection is ordinarily available.

As the number of information security products in the industry increases and the
functionality of these products further overlaps, software developers and
publishers may increasingly become subject to claims of infringement or
misappropriation of the intellectual property or proprietary rights of others.
There can be no assurance that third parties will not assert infringement or
misappropriation claims against the Company in the future with respect to
current or future products.


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Any claims or litigation, with or without merit, to defend or enforce the
Company's intellectual property could be costly and could result in a diversion
of management's attention, which could have a material adverse effect on the
Company's business, financial condition or results of operations. Adverse
determinations in such claims or litigation could also have a material adverse
effect on the Company's business, financial condition or results of operations.

INDUSTRY-RELATED RISKS

E-commerce

We depend on the widespread acceptance of commerce in digital information over
the Internet. These methods for distribution of digital information may not be
commercially accepted for a number of reasons, including:

      o     failure to develop the necessary infrastructure for communication of
            digital information and for payment processing;

      o     failure to develop or deploy enabling technologies, including
            compression or broadband technology necessary for distribution of
            particular digital content over the Internet;

      o     reduced demand for paid digital content due to the widespread
            availability of free content online and the ability to use and
            distribute this content without restriction; and

      o     insufficient speed, access, and server reliability, as well as
            lengthy download time for content.

If standards for digital rights management are not adopted or complied with,
content providers may delay distributing content until they are confident that
the technology by which the content is to be distributed will be commercially
accepted. Standards for the distribution of various digital contents might not
develop or might be found to violate antitrust laws or fair use of copyright
policies. In addition, the failure to develop a standard among device
manufacturers may affect the market for digital goods and services. As a result,
consumers may delay purchasing products and services that include our technology
if they are uncertain of commercial acceptance of the standards with which our
technology complies. Consequently, if a standard format for the secure delivery
of content on the Internet is not adopted, or if the standards are not
compatible with our digital rights management technology, our business and
operating results would likely be harmed.

Digital music commerce over the Internet:

Acceptance and use of the Internet for commercial distribution of digital
content may not continue to develop at recent rates, and a sufficiently broad
base of consumers may not adopt, and continue to use, the Internet and other
online services as a medium for digital commerce. Because our transaction fees
will be derived from digital commerce transactions, if digital commerce is not
accepted for any reason, our revenues would not grow sufficiently and our
business and operating results would be significantly harmed.

We currently devote a significant portion of our time, resources, and attention
pursuing partnerships and business within the music industry. As a result, if
digital music commerce over the Internet


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does not develop, our business and operating results could be significantly
harmed. A number of factors could delay or prevent the development of digital
music commerce. These factors include:

      o     music content providers' inability to attract significant music
            artists, record labels, and recordings to be distributed in their
            format;

      o     lack of development and adoption of compression technology to
            facilitate digital delivery of music or related information like
            music videos; and

      o     lack of development and adoption of consumer devices that are able
            to play downloaded digital music.

Regulation regarding patient confidentiality in Healthcare

The confidentiality of patient records and the circumstances under which such
information may be used or released are subject to substantial regulation by
state and federal laws and regulations. Regulations governing electronic health
data transmissions are evolving rapidly and are often unclear and difficult to
apply. The Health Insurance Portability and Accountability Act of 1996 requires
the Secretary of Health and Human Services to adopt national standards for
certain types of electronic healthcare information transactions and the data
elements used in such transactions, and to adopt standards to ensure the
integrity and confidentiality of such information.

We could be subject to extensive regulation relating to the confidentiality and
release of patient records and other health care industry issues. Additional
legislation governing the distribution of medical records has been proposed at
both the state and federal level. It may be expensive to implement security or
other measures designed to comply with any new legislation. Moreover, Fullcomm
may be restricted or prevented from delivering patient records electronically.


                               ******************


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RISKS TO OFFERING

WE WILL HAVE DISCRETION AS TO THE USE OF THE PROCEEDS OF THIS OFFERING

We intend to use the net proceeds from this offering to:

      o     to expand our management and technologists teams;

      o     enhance our products and services;

      o     improve our network infrastructure; and

      o     fund our marketing activities; and

      o     expand our sales force;

      o     make strategic investments and acquisitions, if appropriate; and

      o     fund general corporate purposes.

We are not required to use the net proceeds for the purposes described above.
Our management will therefore have significant flexibility in applying the net
proceeds of this offering, including ways in which stockholders shareholders may
disagree. In addition, because of the number and variability of factors that
determine our use of the net proceeds, we may apply such net proceeds in ways
that may vary substantially from our current intentions. The failure of
management to apply such funds effectively could have a material adverse effect
on our business, financial condition and results of operations.

NO PUBLIC MARKET; POSSIBLE VOLATILITY OF STOCK PRICE

Prior to this Offering, there has been no public market for the Common Stock,
and there can be no assurance that an active trading market will develop or be
sustained after the Offering or that the market price of the Common Stock will
not decline below the initial offering price. The initial offering price will be
determined by negotiations among the Company and the Representatives of the
Underwriters. See "Underwriting" for a discussion of the factors to be
considered in determining the initial public offering price. The trading value
of the Common Stock is likely to be highly volatile and may be significantly and
adversely affected by factors such as actual or anticipated fluctuations in the
Company's operating results, announcements of technological innovations, new
products or new contracts by the Company or its competitors, developments with
respect to patents, copyrights or propriety rights, conditions and trends in the
software industry, changes in financial estimates by securities analysts,
general market conditions and other factors. The public equity markets have from
time to time experienced significant price and volume fluctuations that have
particularly affected the market prices for the stock of technology companies as
a group but have been unrelated to the performance of particular companies.
These broad market fluctuations, as well as shortfalls in sales or earnings as
compared with securities analysts' expectations, changes in such analysts'
recommendations or projections and general economic and market conditions, may
materially and adversely affect the market price of the Common Stock.


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SHARES ELIGIBLE FOR FUTURE SALE

Sales of substantial amounts of shares of Common Stock in the public market
following the Offering could adversely affect the market price of the Common
Stock. All of the Company's directors, officers and stockholders, as well as all
holders of options to purchase Common Stock, have agreed, pursuant to lock-up
agreements with the Representatives of the Underwriters or, in the case of the
option holders, pursuant to stock option agreements with the Company
(collectively, the "Lock-Up Agreements"), not to offer, sell, contract to sell
or otherwise dispose of their shares of Common Stock for three years after the
date of the Memorandum. Promptly following the consummation of the Offering, the
Company intends to register an aggregate of shares of Common Stock issuable
under its stock plans. The Company is unable to predict the effect that sales
made under Rule 144, or otherwise, may have on the then prevailing market price
of the Common Stock. Following the Offering, the holders of the advisors' shares
of Common Stock are entitled to certain piggyback and demand registration rights
with respect to such shares. By exercising their registration rights, such
holders could cause a large number of shares to be registered and sold in the
public market. Sales pursuant to Rule 144 or other exemptions from registration,
or pursuant to registration rights, may have an adverse effect on the market
price for the Common Stock and could impair the Company's ability to raise
capital through an offering of its equity securities.

NO PRIOR MARKET AND DETERMINATION OF OFFERING PRICE

There has not been a public market for our Common Stock. We cannot predict the
extent to which investor interest in Fullcomm will lead to the development of a
trading market or how liquid that market might become. The initial offering
price for the shares will be determined by negotiations between us and the
representatives of the Underwriters and may not be indicative of prices that
will prevail in the trading market.

POSSIBLE VOLATILITY OF STOCK PRICE

The stock market has experienced significant price and volume fluctuations, and
the market prices of technology companies, particularly Internet-related
companies, have been highly volatile. Investors may not be able to resell their
shares at or above the initial offering price. In the past, following periods of
volatility in the market price of a company's securities, securities class
action litigation has often been instituted against such a company. Such
litigation could result in substantial costs and a diversion of management's
attention and resources.

DILUTION AND ABSENCE OF DIVIDENDS

The offering price of our Common Stock is substantially higher than the net
tangible book value per share of the Common Stock immediately after this
offering. Therefore, if you purchase our Common Stock in this offering you will
incur immediate dilution of approximately $2.45 in the net tangible book value
per share of Common Stock from the price you pay for such Common Stock (based
upon an assumed offering price of $2.50 per share). The exercise of outstanding
options


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Fullcomm


and warrants may result in further dilution. We have never declared or paid any
cash dividends on our capital stock. We do not currently anticipate paying cash
dividends in the foreseeable future.

BROAD DISCRETION IN USE OF PROCEEDS

We intend to use the net proceeds from the sale of the Common Stock offered
hereby for brand promotion, expansion of sales and marketing, working capital
and general corporate purposes, including channel expansion and content
development, expansion and/or relocation of our offices and possible
acquisitions. Accordingly, management will have significant flexibility in
applying the net proceeds of this offering. The failure of management to apply
such funds effectively could have a material adverse effect on our business,
results of operations and financial condition.

NO PUBLIC MARKET

The shares of the Company's Common Stock offered hereby are restricted
securities under the Securities Act of 1933, as amended (the "Securities Act")
and applicable state securities laws, and prospective investors should be
prepared to hold such securities for an indefinite period. Such securities may
not be resold unless they are subsequently registered under the Securities Act
and applicable state securities laws, or through exemptions from such laws.
Other than pursuant to certain registration rights and certain rights of
participation in future offerings granted to certain holders of the Common
Stock, the Company has no obligation to register any securities of the Company
or include other parties in future offerings.

MERGER

The Company intends to consummate a merger (the "Contessa Merger") with Contessa
Corporation, a Delaware corporation ("Contessa"). Contessa is a publicly held
corporation whose stock is traded on the OTC Bulletin Board. The Merger is
contingent upon a number of conditions, which both parties hope to have met in a
reasonable timeframe.

CONCENTRATION OF OWNERSHIP BY MANAGEMENT AND EXISTING SHAREHOLDERS

Currently, the Company's executive officers, directors and affiliated entities
together beneficially own approximately 98.2% of the outstanding shares of the
Company's Common Stock. As a result, these shareholders, acting together, will
be able to control matters requiring approval by the shareholders of the
Company, including the election of directors. Such a concentration of ownership
may have the effect of delaying or preventing a change in control of the
Company, including transactions in which the shareholders might otherwise
receive a premium for their shares over then current market prices.

RISK OF LOSS


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In view of the risks involved in the Company's business venture, the securities
offered hereunder should not be purchased by any person or entity that cannot
afford to risk the chance of the entire investment becoming worthless.

THE OFFERING

Shares offered by Fullcomm
Minimum ..............................................   400,000 shares
Maximum .............................................. 1,200,000 shares

Shares outstanding prior to this offering ............ 4,600,000 shares

The net proceeds will be used for working capital and general corporate
purposes, which will include meeting the Company's regulatory net capital
requirements, capital expenditures, improve our network infrastructure,
increasing capacity, international expansion, management, and technologists
teams, the development and marketing of new products and services and funding
potential acquisitions

                                                             Per Share
                                                             ---------
Initial offering price                                       $ 2.50
Underwriting discount                                        $ 0.25
Proceeds, before expenses, to Fullcomm                       $ 2.25

USE OF PROCEEDS

The net proceeds to Fullcomm from the sale of the shares of Common Stock offered
hereby are estimated to be $ 2.57 million assuming an offering price of $ 2.50
per share, after deducting the estimated underwriting discount and offering
expenses payable by Fullcomm.

Fullcomm presently intends to use a portion of the net proceeds from this
offering to expand its research and development, promote its brand, and expand
sales and marketing. The balance of the net proceeds of this offering will be
used for working capital and general corporate purposes, including channel
expansion and content development, expansion and/or relocation of its offices
and possible acquisitions. Fullcomm believes opportunities may exist to expand
its current business through acquisitions and may utilize a portion of the
proceeds for such purpose. In addition, Fullcomm may consider acquisitions of
complementary businesses. Fullcomm is not currently a party to any contracts or
letters of intent with respect to any acquisitions, and there can be no
assurance that any of Fullcomm's expansion plans will be realized or, if
realized, will prove profitable for Fullcomm. Pending such uses, the net
proceeds of this offering will be invested in short-term, interest-bearing,
investment-grade securities.


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DIVIDEND POLICY

Fullcomm has never declared or paid any cash dividends on its capital stock.
Fullcomm presently intends to retain future earnings, if any, to finance the
expansion of its business and does not expect to pay any cash dividends in the
foreseeable future.

CAPITALIZATION

The following table sets forth Fullcomm's capitalization as of December 31, 1999
(i) on an actual basis, (ii) on a pro forma basis to reflect (a) the sale of
1,200,000, shares of (iii) on a pro forma as adjusted basis to reflect the
estimated net proceeds from the sale of the Common Stock offered by Fullcomm at
an assumed offering price of $2.50 per share, after deducting the estimated
underwriting discount and offering expenses payable by Fullcomm. Please see "Use
of Proceeds". You should read this information together with Fullcomm's
Consolidated Financial Statements and the Notes thereto appearing on pages 38
and 89.

                                                  December 31, 1999
                                      -----------------------------------------
                                                             Pro Forma
                                                            As Adjusted
                                         Actual              /Offering
                                                       Maximum        Minimum
                                      -----------    -----------    -----------
Stockholder's equity:

Common stock; no par value,
10,000,000 shares authorized and
4,600,000 issued. After offering,
5,800,000 issued ..................         4,600          5,800          5,000

Additional paid-in capital ........       245,615      2,814,412      1,055,215

Deficit Accumulated During
Development Stage .................      (314,769)      (314,769)      (314,769)

Total shareholder's equity ........       (64,533)     2,499,622        740,425
                                      -----------    -----------    -----------

Total capitalization ..............   $   (64,533)   $ 2,499,643    $   740,446
                                      -----------    -----------    -----------


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DILUTION

The pro forma net tangible book value of Fullcomm as of December 31, 1999 was
$ 17,950 or approximately $ 0 per share of Common Stock. Pro forma net tangible
book value per share represents the amount of Fullcomm's total tangible assets
less total liabilities and minority interest, divided by the pro forma number of
shares of Common Stock outstanding. After giving effect to the sale of the
Common Stock offered by Fullcomm hereby at an assumed offering price of $ 2.50
per share, and after deducting the estimated underwriting discount and offering
expenses payable by Fullcomm, the pro forma net tangible book value of Fullcomm,
as adjusted, as of December 31, 1999 would have been approximately $ 2.5
million, or $0.43 per pro forma share of Common Stock. This represents an
immediate increase in net tangible book value of $0.43 per share to Fullcomm's
existing stockholders and an immediate dilution in net tangible book value of
$2.06 per share to new investors of Common Stock in this offering. If the
offering price is higher or lower, the dilution to the new investors will be
greater or less, respectively. The following table illustrates this per share
dilution:

Assumed offering price ................................................  $ 2.50
Pro forma net tangible book value per share prior to this offering ....  $(0.00)
Increase per share attributable to this offering ......................  $ 0.44
Adjusted pro forma net tangible book value per share after this offering $ 0.44
Dilution per share to new investors ...................................  $ 2.06

The following table summarizes, on a pro forma basis, as of December 31, 1999,
the number of shares of Common Stock purchased from Fullcomm, the total
consideration provided to Fullcomm and the average price per share provided by
existing stockholders and by investors purchasing shares in this offering. The
calculation below is based on an assumed offering price of $ 2.50 per share,
before deducting the estimated underwriting discount and offering expenses
payable by Fullcomm.


SHARES PURCHASED
                                                                  AVERAGE
                                                                  PRICE
                         NUMBER      PERCENT      AMOUNT          PER SHARE
                         ---------   -------     -----------      ------
Existing stockholders .  4,600,000*     79.3%    $   312,750      $ 0.07
New investors .........  1,200,000      20.7%    $ 3,000,000      $ 2.50
                         ---------      ----     -----------      ------
   Total ..............  5,800,000     100.0%    $ 3,312,750      $ 0.57


* A special dividend of 15,750 common shares will be paid to the various
shareholders who participated in the Company's earlier private placement. This
will increase this common share allotment category from 84,250 to 100,000
shares.


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DIRECTORS AND EXECUTIVE OFFICERS:

The following table sets forth the executive officers, directors and key
employees of Fullcomm, their ages and the positions held by them:

NAME                            AGE         POSITION
--------------------------------------------------------------------------------

Richard T. Case .............   50         Chief Executive Officer and Director

Brendan G. Elliot ...........   23         President, Chief Technology Officer
                                           and Director

Wayne H. Lee ................   25         Executive Vice President

Patrick M. Leach ............   23         Vice President

Brad Tashenberg .............   53         Director


MANAGEMENT

Experienced and Innovative Management:

Richard T. Case, Chief Executive Officer and Director. Mr. Case, 50, has over 28
years of executive line management experience with Fortune 500 companies and as
a management consultant. He has served as a consultant since 1981 to numerous
industries in the area of raising capital, turnarounds, strategic planning,
acquisitions and mergers, operational analysis, product development, strategic
marketing, international market development, organizational behavior, and
culture change. Prior to that, he was a senior executive with three Fortune 500
companies, Baxter Laboratories, Corning Glass Works and American Hospital Supply
Corporation, where he served as Director of New Business Development,
responsible for acquisition and mergers. Through his leadership, the company
successfully made the transition through the government healthcare program
enforcing DRG's (limiting reimbursement) and instituted an online computerized
inventory management system called ASAP, which is the standard in the industry.
Recently, Mr. Case located, negotiated, and completed Definitive Agreements with
12 acquisition targets for a roll-up in the Office Supply industry.

Mr. Case holds an MBA degree from the University of Southern California where he
graduated with a 4.0 GPA, first in the class; and a BS degree in Management and
Finance from Bradley University. Mr. Case is a published author, has hosted a
weekly business radio program, has received The Wall Street Journal Achievement
Award, and is listed in Who's Who in American Business.

Brendan G. Elliott, Co-founder, President, Chief Technology Officer and
Director, has been involved with Fullcomm since his initial conception of the
core technologies. Prior to founding


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Fullcomm, Mr. Elliott had worked at the Princeton University Civil Engineering
and Operations Research Lab. His expertise in the computer science and
encryption fields has helped him to lead research and development activities for
the company. Mr. Elliott graduated from Princeton University with a degree in
computer science.

Wayne H. Lee, Co-founder and Executive Vice President, has been involved with
Fullcomm since initial product conception. His understanding of the product and
the applicable markets has helped to shape the business and marketing strategies
of the company to date. Prior to joining Fullcomm, Mr. Lee had worked for the
Hyundai Corporation in Seoul, South Korea and interned at Merrill Lynch in New
York. Mr. Lee graduated from Princeton University with a degree in economics.

Patrick M. Leach, Vice President, has made considerable, meaningful
contributions to the design of the device. He has played a pivotal role in
directing Fullcomm's research and development activities. Prior to joining
Fullcomm, Mr. Leach worked for Arthur Andersen as an IT consultant. Mr. Leach
graduated from Princeton University with a degree in electrical engineering.

Directors

C. Bradley Tashenberg, Director. C.E.O, President and C.O.B. of Bradmark. Since
founding the Company in 1981, Mr. Tashenberg has been responsible for the
development and marketing of several highly successful products in
Hewlett-Packard's HP3000 mid-ranged computer market. These products include the
original DBGeneral product, which is used as a support to HP's IMAGE database,
an indexing technology product, and a disk space management product. Prior to
Bradmark, Mr. Tashenberg was Corporate Director of MIS at Schlegal Corporation
and Program Supervisor at Comptek Research where he developed the Barrister 300,
which became the market leader in the legal industry from 1972 through 1980. In
addition, Mr. Tashenberg is a recognized expert in the field of distributed data
processing where he has authored two books on the subject, both of which were
published by the AMACOM division of American Management Association. HP
purchased 1,500 copies of his books entitled, "Distributed Processing Systems:
The End of the Mainframe?" for their internal management, sales, and large
account executives. Mr. Tashenberg holds a B.S. in Mathematics and a M.S. in
Economics from the State University of New York.


Scientific Advisory Board

The Company is currently in the process of selecting members for its Scientific
Advisory Board. The first member is Dr. Edward W. Felten, an Assistant Professor
of Computer Science at Princeton University. Dr. Felten is a nationally
recognized expert on encryption and network security. His testimony in the
Microsoft Trial as a consultant to the Department of Justice recently put him in
the national spotlight. His academic endeavors and professional consulting
experience place him in a unique position to help the Company develop its
technology. Currently, Dr. Felten is providing consulting services to the
company and Fullcomm looks forward to his continuing involvement in our product
development process and his valuable input and understanding of relevant
technologies.


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DIRECTOR COMPENSATION

Directors currently do not receive a stated salary from Fullcomm for their
service as members of the board of directors, although by resolution of the
board, they may receive a fixed sum and reimbursement for expenses in connection
with the attendance at board and committee meetings. We currently do not provide
additional compensation for committee participation or special assignments of
the board of directors. From time to time, some of our directors will receive
grants of options to purchase shares of common stock.


EXECUTIVE COMPENSATION

The following table sets forth the total compensation to be paid or accrued for
the year ended December 31, 1999 to our Chief Executive Officer and to each of
our most highly compensated executive officers, other than the Chief Executive
Officer.

SUMMARY COMPENSATION TABLE
                                     LONG-TERM COMPENSATION

NAME AND PRINCIPAL POSITION          SALARY ($)        BONUS ($)
---------------------------          ----------        ---------

Richard T. Case                      $ 120,000         $ 24,000
Chief Executive Officer

Brendan G. Elliot                    $  60,000         $ 10,000
President

Wayne H. Lee                         $  60,000         $ 10,000
Executive Vice President


EMPLOYMENT AGREEMENTS AND ANCILLARY AGREEMENTS

Case Employment Agreement the agreement between Fullcomm and Richard Case which
shall provide, inter alia, the following: (i) $10,000 cash compensation per
month, the payment of which shall be deferred to the satisfaction of the
condition subsequent that not less than $1,000,000 in financing shall have been
received by the post-merger entity, (ii) a term of two years, (iii) payment of
175,000 shares or an option therefore which will be vested immediately and shall
be exercisable for upon the decision of the Board and nominal consideration, and
(iv) termination, with or without the giving of 30 days notice.

Fullcomm will enter into employment agreements with Brendan G. Elliott and
Wayne. H. Lee for a term of not less than two (2) years. The Board of Directors
will soon conclude these negotiations.


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Tashenberg Consulting Agreement an agreement to C. Bradley Tashenberg pursuant
to which Bradley Tashenberg (i) acts as director for two (2) years, and (ii)
provides consulting services to Fullcomm, Inc. and which entitles him to 50,000
shares.

Creekmoore Consulting Agreement is an agreement to Gregory Creekmoore pursuant
to which Gregory Creekmoore (i) provides consulting services to Fullcomm, Inc.
and which shall entitle him to 50,000 shares.

R.K. Grace Agreements the agreements entered into by Fullcomm and one or more
affiliates of R.K. Grace and Company consisting of a (i) Memorandum of
Understanding: Placement Agent and Financial Advisory Engagement dated January
4, 2000 between Fullcomm and R.K. Grace and Company, and (ii) a Consulting
Agreement between Grace Securities, Inc. and Fullcomm dated as of December 27,
1999, (iii) payment of 175,000 option shares to be exercised at $2.75 for seven
years.


OPTION GRANTS IN CURRENT FISCAL YEAR

The following table sets forth grants of stock options for the year ending
September 30, 2000 to our Chief Executive Officer and our most highly
compensated executive officers, other than our Chief Executive Officer. We have
never granted any stock appreciation rights. The potential realizable value is
calculated based on the term of the option at its time of grant. It is
calculated assuming that the fair market value of common stock on the date of
grant appreciates at the indicated annual rate compounded annually for the
entire term of the option and that the option is exercised and sold on the last
day of its term for the appreciated stock price. These numbers are calculated
based on the requirements of the Securities and Exchange Commission and do not
reflect our estimate of future stock price growth.

NAME AND PRINCIPAL POSITION             Option Shares
---------------------------             -------------

Richard T. Case                            175,000
Chief Executive Officer

Brendan G. Elliot                          100,000*
President

Wayne H. Lee                               100,000 *
Executive Vice President

* Fullcomm will enter into option agreements with Brendan G. Elliott and Wayne.
H. Lee for a term of not less than two (2) years. The Board of Directors will
soon conclude these negotiations.

The Board of Directors will engage R.K. Grace & Company for the design and
administration of an Employee Stock Option Program for the new employees as part
of a comprehensive benefits program.


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CERTAIN TRANSACTIONS

In 1999, our directors, officers and 5% stockholders, and their affiliates
purchased common stock as follows (prior to offering):


                                      NUMBER OF
                                      SHARES OF        PURCHASE
                                      COMMON           PRICE PER
NAME OF INVESTOR:                     STOCK             SHARE          %
-----------------                     -----             -----         ---

Brendan G. Elliot ...............   1,800,000           $ .013       39.1

Philip 0. Escaravage ............   1,575,000           $ .013       34.2

Wayne H. Lee ....................   1,125,000           $ .013       24.5

Various other shareholders ......     100,000           $ 2.50        2.2
                                    -------------------------------------

Total: ..........................   4,600,000           $ 0.07      100.0


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IDENTITY AND COMPENSATION OF PLACEMENT AGENT AND LEGAL COUNSEL


The placement agent for the Stock and financial advisor to the Company is R. K.
Grace & Company, 1101 Brickell Ave. South 5th Floor, Miami, Florida 33131 (the
"Agent/Advisor"). The Agent/Advisor will receive, as a result of the sale of the
Stock described herein: (a) a fee equal to 10% of the gross proceeds of the sale
of the Stock; (b) warrants for the purchase of shares of Stock equal to 10% of
the number of shares placed (such warrants are exercisable at a price of $2.75
per share for a period of seven years); and (c) a non-accountable expense
allowance of 2% of the gross proceeds of the sale of the Stock (plus additional
reimbursement for printing, travel and related expenses). The Agent/Advisor and
legal counsel have the right to register their shares if the Company registers
shares (so-called "piggyback" registration rights). The Agent/Advisor also has
demand registration rights.

Legal counsel for the Company is Buchanan Ingersoll Professional Corporation,
500 College Road East, Princeton, New Jersey 08540.

The Company's financial reports are maintained by: Thomas P. Monahan, C.P.A.,
208 Lexington Avenue, Paterson, New Jersey 07502


DOMICILE

Fullcomm, Inc. is located at 11 Chambers Street, Princeton, NJ 08542. Phone:
(609) 252-0657, Fax (609) 252-0655. Fullcomm's web address is www.fullcomm.com,
which is hosted by TAGE Multimedia Productions. TAGE can be located at
www.tage.com.


LEGAL PROCEEDINGS

We are not involved in any pending or, to our knowledge, threatened legal
proceedings. We may from time to time become a party to various legal
proceedings arising in the ordinary course of business.


                               ****************************


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SUMMARY FINANCIAL DATA

The following tables summarize the financial data for our business. You should
read this information with the discussion in "Management's Discussion and
Analysis of Financial Condition and Results of Operations" and our financial
statements and notes to those statements included elsewhere in this memorandum.


SELECTED FINANCIAL DATA

STATEMENT OF OPERATIONS:

Period from January 15, 1999 (INCEPTION) to December 31, 1999
(audited)


   Revenue                                                                  $-0-

    Costs of goods sold                                                      -0-
                                                                             ---

    Gross profit                                                             -0-

   Operations:
    General and administrative                                          295,163
    Research and development                                             18,000
    Depreciation and amortization                                         1,622
                                                                          -----
    Total expense                                                       314,785

   Loss from operations                                                (314,785)


   Other income and expenses
    Interest income                                                         562
    Interest expenses                                                      (546)
                                                                           -----
   Total other Income                                                        16
   Net income (loss)                                                  $(314,769)
                                                                      =========
   Net income (loss) per share-basic                                     $(0.07)
   Number of shares outstanding-basic                                 4,600,000


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          BALANCE SHEET
          DECEMBER 31, 1999
                                          Assets
          Current assets
           Cash and cash equivalents                                      1,439
                                                                          -----
           Total current assets                                           1,439

          Property and equipment-net                                     14,594

          Other assets
           Patent costs                                                   1,917
                                                                          -----
          Total other assets                                              1,917
                                                                          -----
          Total assets                                                  $17,950
                                                                        =======


                           Liabilities and Stockholders' Equity

          Current liabilities
           Accounts payable and accrued expenses                        $57,168
           Loan payable                                                  25,315
                                                                         ------
           Total current liabilities                                     82,483


          Stockholders' equity
           Common Stock authorized 10,000,000 shares, no par value      250,236
           each.
           At December 31, 1999, there are 4,600,000 shares outstanding
          Retained earnings deficit                                    (314,769)
                                                                       ---------
          Total stockholders' equity                                    (64,533)
                                                                        --------
          Total liabilities and stockholders' equity                     $17,950
                                                                         =======


                              *****************************


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MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS FOR THE PERIOD FROM INCEPTION, January 15, 1999 TO DECEMBER 31, 1999


The following discussion relates to the results of our operations to date, and
our financial condition. This memorandum contains forward looking statements
relating to our Company's future economic performance, plans and objectives of
management for future operations, projections of revenue mix and other financial
items that are based on the beliefs of, as well as assumptions made by and
information currently known to, our management. The words "expects, intends,
believes, anticipates, may, could, should" and similar expressions and
variations thereof are intended to identify forward-looking statements. The
cautionary statements set forth in this section are intended to emphasize that
actual results may differ materially from those contained in any forward looking
statement.

Development Stage Activities

The Company has been a development stage enterprise from its inception January
15, 1999 to December 31, 1999. The Company is a development stage company that
was organized as a successor to Fullcomm, LLC ("Fullcomm") to commercially
exploit technology developed in connection with the secure transmission of
digital media and other data on the Internet.

During this period, management devoted the majority of its efforts to initiating
the research and development, prototype development, production scheduling,
sourcing inventory and its marketing program, acquire additional equipment,
management talent, inventory and working capital to engage in any profitable
business activity. Since its organization, the Company's activities have been
limited to the preliminary development of its new products, preparation for
filing of a patent application, hiring personnel and acquiring equipment and
office space, conducting research and development of its technology and
preparation of documentation and the sale of a private placement offering. These
activities were funded by the Company's management and investments from
stockholders. The Company has not yet generated sufficient revenues during its
limited operating history to fund its ongoing operating expenses, repay
outstanding indebtedness, or entirely fund its research and product development
activities. There can be no assurance that development of the Company's products
will be completed and fully tested in a timely manner and within the budget
constraints of management and that the Company's marketing research will provide
a profitable path to utilize the Company's marketing plans. Further investments
into the Company's technology, marketing research as defined in the Company's
operating plan will significantly reduce the cost of development, preparation,
and processing of purchases and orders by enabling the Company to effectively
compete in the electronic market place.

During this developmental period, the Company has been financed through
officer's loans with a balance of $25,315 from Philip O. Escaravage and an
entity that is controlled by him, The Umbrella Project, Inc. The Company also
financed its activities through the sale of shares of common stock aggregating
of $60,000 to certain officer's and directors and the sale of shares of common
stock through a private placement with net proceeds of $190,236.


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Results of Operations for the period from inception to December 31, 1999

For the period from inception to December 31, 1999, the Company has not
generated any sales. The Company's general and administrative costs aggregated
approximately $295,163 for the period from inception to December 31, 1999. These
expenditures represent: salaries and payroll taxes of $93,675, telephone expense
of $4,633, professional fees of $123,865, rent of $13,080 and office and
computer expense of $59,910.


Liquidity and Capital Resources

As of December 31, 1999, the Company's cash balance was $1,439, and the
Company's working capital was a negative $81,044. As of December 31, 1999, the
Company had a tax loss carry-forward of $314,769 to offset future taxable
income. There can be no assurance, however, that the Company will be able to
take advantage of any or all of such tax loss carry-forward, if at all, in
future fiscal years.


Financing Needs

To date, the Company has not generated any revenues. The Company has not been
profitable since inception, may incur additional operating losses in the future,
and may require additional financing to continue the development and
commercialization of its technology. While the Company does not expect to
generate significant revenues from the sale of products in the near future, the
Company may enter into licensing or other agreements with marketing and
distribution partners that may result in license fees, revenues from contract
research, or other related revenue.

The Company expects its capital requirements to increase significantly over the
next several years as it commences new research and development efforts,
undertakes new product developments, increases sales and administration
infrastructure and embarks on developing in-house business capabilities and
facilities. The Company's future liquidity and capital funding requirements will
depend on numerous factors, including, but not limited to, the levels and costs
Of the Company's research and development initiatives and the cost and timing of
the expansion of the Company's sales and marketing efforts.

The Company anticipates that it will be able to fund operations over the next
twelve- (12) months. To enable the Company to fund its research and development
and commercialization efforts, including the hiring of additional employees, the
Company in the process of offering additional shares of its common stock.


REVENUE RECOGNITION

Fullcomm believes that it will generate revenue from licensed technology
products, transaction fees and information services delivered over the Internet,
private Intranets or other networks. Which include fees from:


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      o  licensing solutions;
      o  network and user transaction fees; and
      o  performing development and consulting services


We believes it will generate network-based services revenue from fixed fee
subscription arrangements, which is recognized ratably over the term of the
applicable agreement, and from arrangements that are priced on a per-transaction
or per-user basis, which is recognized as the services are performed. Revenue
from development projects is recognized on a percentage-of-completion basis or
as such services are performed, depending on the terms of the contract. Revenue
from development and consulting services is recognized as the services are
performed.

Hardware and software systems are licensed under the terms of substantially
standard nonexclusive and nontransferable agreements, which generally have a
noncancelable minimum term of six years and provide for an initial license
charge and a monthly license charge. The initial license charge grants a right
to use the software system available at the time the license is signed. The
monthly license charge, which covers the right to use during the term of the
agreement. Customers wishing to acquire perpetual rights to use the Company's
software may enter into additional agreements to acquire such rights.

Licensing Agreements

We are targeting relationships that could establish our solutions in several
large markets, including entertainment, business information, and publishing. A
significant part of our licensing efforts will be focused on adoption of our
technology by the music industry, as we believe it will be an early implementer
of DRM technology. We believe that, if our general purpose solutions are adopted
in the music market, we will be positioned to have our platform adopted in
additional entertainment markets, including games, audio books, and video, and
other markets, including business information and publications.

We have four basic types of license agreements: commerce service licenses,
business licenses, applications licenses and alliance agreements. These
agreements provide different rights and technology depending on the commercial
plans of our partners. Initial license fees received from these agreements may
vary in amount depending on factors such as partner commitments, scope of the
license as it relates to commercial markets, territory, and term of agreement.
Examples of partner commitments may include deploying licensed products within a
specified time frame, exclusively using portions of our software, and using and
publicly promoting us as the partner's preferred digital rights management
technology.

We will license our technology to our partners to build digital commerce
services and applications. In addition, we intend to leverage our partners'
activities as they bring in their own partners and customers. While we may
receive initial license fees from our partners, over time we anticipate that our
revenues will be derived primarily from transaction fees from our partners' and
their customers' commercial deployment of applications and services.

Our license fees will be negotiated based on the terms and conditions of each
individual agreement and take into account the scope of the license, the term,
and the other commitments made by our


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partners that provide strategic value to us. In connection with our strategy to
promote widespread deployment of our solutions, we anticipate receiving an
initial license fee for our Commerce solutions in the form of a minority equity
position in the licensee. The value of the license fee will be determined based
on the estimated fair value of the underlying equity securities received. In the
future, we may enter into other equity payment arrangements.

Our success depends on significantly increasing the number of companies that
license our technology and use it for the sale and management of digital content
and services.


OPERATING EXPENSES

In view of the rapidly changing nature of our industry and our new and unproven
business model, we believe that period-to-period comparisons of revenues and
operating results are not necessarily meaningful and should not be relied upon
as indications of future performance. In addition, our business model is new and
unproven and has not succeeded in generating sufficient revenue to sustain or
grow our business. We also operate in an intensely competitive market for highly
qualified technical, sales and marketing, and management personnel and
periodically make salary and other compensation adjustments to retain and hire
employees. We anticipate that our operating expenses will increase in future
quarters. We expect to incur additional losses for at least the next several
years. As a result, we will need to generate significant additional revenue to
achieve and maintain profitability. In addition, we have limited and delayed
insight on consumer trends and sales, which makes prediction of our future
revenues difficult.

We anticipate that research and development, sales and marketing, and general
and administrative expenses will increase in absolute dollars as a result of new
hires and related personnel costs. Sales and marketing spending is expected to
increase as a result of our spending on branding, trade shows, advertising, and
promotion.

Research and Development

Research and development expenses consist principally of salaries and related
personnel expenses, consultant fees, and the cost of software used in product
development. Research and development expenses are expensed to operations as
incurred. We believe that continued investment in research and development is
critical to attaining our strategic product objective and we expect these
expenses to increase significantly in absolute dollars in future periods.

Sales and Marketing

Sales and marketing expenses consist of salaries and related expenses for
personnel engaged in direct sales, partner development, marketing, field service
support, consultant fees and advertising, promotional material, and trade show
exhibit expenses. We expect sales and marketing expenses to increase in absolute
dollars due to planned growth of our sales and partner development
organizations, including the establishment of additional offices in domestic and
international locales, and aggressive implementation of advertising and
promotional programs.


                      **********************************


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INDUSTRY BACKGROUND

The Internet has emerged not only as the fastest growing communications medium
in history, but also as one of the most efficient distribution channels for
commerce. According to International Data Corporation, total worldwide Internet
commerce spending was $50.4 billion in 1998 and is estimated to grow to $1.3
trillion in 2003. International Data Corporation further estimates that
worldwide Internet commerce spending per online buyer will grow from $1,635 in
1998 to $7,216 per year in 2003 representing a compound annual growth rate of
70%. E-business (business-to-business transactions), estimated at $40 billion,
is 5 times as large as personal users. By 2003, that figure will balloon to over
$1 trillion, or approximately 10% of all U.S. business. By 2006, this might grow
to 40% of all U.S. business. By 2003, over 400,000 US based e-merchants will
have a presence on the Internet.

For the past three years, the Internet has enabled consumers to quickly find the
lowest prices for goods such as books, CDs, toys and electronics, and order them
instantly. Now old-line manufacturers, including Boeing and GM and Ford, are
exploring ways to use the Internet the same way.

Online marketplaces are gaining popularity because they enable companies to
better monitor prices and product availability, thereby cutting costs.
Corporations are now beginning to rush headlong into the market for automating
their purchases of supplies and drive costs down. Business-management software
makers like Oracle, SAP of Germany, Ariba and Commerce One sell software that
links companies to their suppliers on a computer network that it manages instead
of allowing customers to build their own trading communities that they monitor
and control. Oracle, in particular, thinks it can win more customers by selling
software that organizes both direct and indirect procurement, or purchasing for
materials necessary for the manufacture of their products as well as unrelated
supplies for the office or factory floor.

The Internet has become a dominant force. It is a source of information and
entertainment that offers over 3 billion websites. Estimates of on-line computer
users range from 150-million to 200-million. Based on current trends and
industry growth patterns, that figure could reach more than 300-million users in
less than five years. (Source: U.S. Department of Commerce).

While most Internet commerce to date has involved the delivery of physical goods
like books and compact discs ordered online, the Internet is poised to become a
leading distribution channel for digital goods as well. Today, most content is
in, or can be easily put into, digital form. This content includes music,
videos, games, software, publications, business information including patient
recordkeeping, and images. The Internet can be used to disseminate this digital
information efficiently to broad audiences without geographic boundaries, and
can eliminate many of the traditional costs associated with manufacturing,
packaging, and distribution. The use of the Internet for digital goods is being
supported both by the growing number of households and businesses connected to
the Internet, and by electronic devices other than the personal computer, such
as set-top boxes, portable music players, mobile phones, and other hand-held
devices, all of which are becoming connected to the Internet. In addition,
downloading digital content is becoming significantly easier with the emergence
and adoption of broadband technologies including digital subscriber lines and
cable modems, and enhanced compression technologies including MP3 for


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music and MPEG-2 for video. The Internet will add to the existing channels for
distributing digital goods on physical media like compact discs and DVDs.

The characteristics that make the Internet ideal for distributing digital goods
also make it ideal for pirating and misusing them. Digital goods, if not
protected and managed, can be easily copied without any degradation in quality,
altered and defaced, and distributed with the touch of a button to a large
number of recipients. These threats are increased by advances in broadband and
compression technologies, wider uses of portable devices, and wider availability
of re-writeable compact disc and DVD devices. As the number of users connected
to the Internet and the amount of digital information transmitted over the
Internet increases, these users and this information become more vulnerable to
parties who wish to interfere with the integrity of digital information and
digital transactions.


E-INFORMATION SECURITY

      o     secures sensitive corporate data - allows satellite offices to
            securely access home office databases. Only parties with Fullcomm
            hardware and software can access sensitive information
      o     secures EDI transactions in the healthcare/insurance industries
      o     the security architecture allows enhanced control and utilization of
            credit card verification services and other E-business security
            concerns
      o     Fullcomm technology drastically improves upon the security currently
            available for online stock trading, bank account information and
            related applications
      o     Internet Publishing - The ability to distribute books, periodicals,
            and newspapers online and retain distribution rights(no piracy)
      o     Software Distribution - The Company's technology facilitates and
            substantially enhances sales and distribution capabilities for
            vendors and software manufacturers
      o     Fullcomm technology allows small software companies to compete with
            large software companies because access to shelf space and
            distribution channels are no longer barriers to entry or market
            share
      o     the technology enables the direct download and/or rental of software
            via the Internet with appropriate security


HEALTHCARE INDUSTRY OVERVIEW

Healthcare costs in the United States have risen dramatically over the past two
decades and now represent approximately $1.0 trillion or 14% of the annual gross
domestic product. Federal and state governments, insurance carriers and other
third-party payors have moved aggressively to control these rising costs. One of
the ways in which these entities have managed rising costs has been to employ
alternative reimbursement models to replace the fee-for-service reimbursement
model, which has been the traditional basis for payment for healthcare services.
Such alternative reimbursement models include managed care, fixed-fee and
capitated models of reimbursement. The result of these generally more
restrictive reimbursement practices has been a dramatic increase in the
complexity of accounting, billing and collecting payment for healthcare
services. To address


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these challenges, healthcare providers are increasingly utilizing information
technology, including practice management systems. While spending for
information technology within the healthcare industry has historically been
below that of other industries, healthcare information technology expenditures
are expected to grow from $13.6 billion in 1997 to $21.0 billion by 2000.
Although the practice management segment of the healthcare industry has
historically lagged behind the healthcare industry as a whole in spending for
information technology, expenditures on practice management systems have grown
at a compound annual rate of approximately 26% from 1993 through 1997 and are
projected to grow at a comparable rate through 2000. Practice management systems
include a range of software products and services for physicians and other
healthcare providers. Most practice management systems provide several common
functions, including practice administration functions, such as patient
scheduling; financial functions, such as patient billing and receivables
management; and may include clinical functions, such as preventative care
notification. Beyond these common three functions, the continued evolution of
information and telecommunication technologies has led to the development of
electronic commerce tools for integration with practice management systems.
These tools can help to improve a healthcare practice's cash flow by
facilitating EDI, thereby enabling more accurate and rapid submission of claims
to third-party payors and more rapid receipt of corresponding reimbursements.
Currently, nearly half of the total health claims submitted in the United States
annually are processed manually. Paper claims require more time and are
significantly more expensive to prepare, file and process than electronically
submitted claims. Recent industry statistics suggest that the combined cost to
payors and providers of processing a manual claim total approximately 15% of
the average claim amount. EDI transactions, on the other hand, can be processed
directly with third-party payors or channeled through processing clearinghouses
at significantly lower costs to the provider and the payor. Because of these
significant cost savings, some payors are beginning to require practitioners to
submit reimbursement claims electronically. Providers have also recognized a
growing need for decision support tools that access and analyze the increasing
volume of financial and clinical information generated by their practices. As
the continued evolution of managed care requires physicians to be "at risk" for
the costs associated with providing healthcare services, individual physicians
will need advanced information technology to aggregate and evaluate financial
and clinical information in an effort to manage their practices more efficiently
and profitably. The practice management systems industry in the United States is
highly fragmented, with a large number of relatively small, regionally focused
companies and few national vendors. Most of these smaller competitors lack the
financial and technical resources to develop, effectively market and support the
advanced software products demanded by the marketplace. Many of these vendors
are increasingly willing to combine with larger practice management systems
vendors that have substantially greater financial, technical and managerial
resources.


Regulation regarding patient confidentiality

The healthcare industry is highly regulated and is subject to changing
political, economic and regulatory influences. These factors affect the
purchasing practices and operation of healthcare organizations. Changes in
current healthcare financing and reimbursement systems could cause us to make
unplanned modifications of applications or services, or result in delays or
cancellations of orders or in the revocation of endorsement of Fullcomm's
solutions and applications by healthcare participants. Federal and state
legislatures have periodically considered programs to reform or amend the U.S.
healthcare system at both the federal and state level. These programs may
contain


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proposals to increase governmental involvement in healthcare, lower
reimbursement rates or otherwise change the environment in which healthcare
industry participants operate. Healthcare industry participants may respond by
reducing their investments or postponing investment decisions.

The applicability to the Internet of existing laws in various jurisdictions
governing issues such as property ownership, sales and other taxes, libel and
personal privacy is uncertain and may take In years to resolve. Demand for
Fullcomm solutions and applications may be affected by additional regulation of
the Internet. For example, until recently Health Care Financing Administration
guidelines prohibited transmission of Medicare eligibility information over the
Internet.

The confidentiality of patient records and the circumstances under which such
information may be in used or released are subject to substantial regulation by
state and federal laws and regulations. Regulations governing electronic health
data transmissions are evolving rapidly and are often unclear and difficult to
apply. The Health Insurance Portability and Accountability Act of 1996 ("HIPAA),
requires the Secretary of Health and Human Services to adopt national standards
for certain types of electronic healthcare information transactions and the data
elements used in such transactions, and to adopt standards to ensure the
integrity and confidentiality of such information.

We will be subject to extensive regulation relating to the confidentiality and
release of patient records and other health care industry issues. Additional
legislation governing the distribution of medical records has been proposed at
both the state and federal level. It may be expensive to implement security or
other measures designed to comply with any new legislation. Moreover, Fullcomm
may be restricted or prevented from delivering patient records electronically.

E-HealthCare from HealthCare Service Providers (HCSP)

The adoption of Internet solutions by healthcare participants will require the
acceptance of a new way of conducting business and exchanging information. The
healthcare industry, in particular, relies on legacy systems that may be unable
to benefit from Fullcomm's Internet-based platform. To maximize the benefits of
HCSP platforms', healthcare participants must be willing to allow sensitive
information to be stored in HCSPs databases. Providers can process transactions
for healthcare participants that maintain information on their own proprietary
databases. However, the benefits of HCSP connectivity and sophisticated
information management solution are limited under these circumstances. Customers
using legacy and client-server systems may refuse to adopt new systems when they
have made extensive investment in hardware, software and training for older
systems.

E-commerce transaction platforms and industry relationships will enable a key
strategic goal of offering a comprehensive, integrated Web-based solution for
the administrative, communications and information needs of the healthcare
industry;

      o     providers of end-to-end Internet solutions to the healthcare
            industry will be in a better position to achieve increased
            subscriber penetration among physicians. payors, providers and other
            healthcare industry participants
      o     expanding connected network of customers and strategic partners;
      o     increasing transaction volume;


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      o     broadening offerings of Internet-based healthcare-related
            transactions services, and creating enhanced cross-selling
            opportunities;
      o     increasing the speed at which Internet transaction processing
            streamlines inefficient manual and paper-based processes; and
      o     enhancing the quality and depth of patient-doctor communications

Information Services - core software products enable transaction-based EDI
functions, including patient billing and insurance claims submission and
remittance. The use of EDI can improve a healthcare practice's cash flow by
enabling more accurate and rapid submission of claims to third-party payors and
more rapid receipt of corresponding reimbursements. EDI services currently
include the following:

      o     Electronic Patient Billing--electronically submits patient billing
            information from practices by dial-up modem or via the Internet to
            independent national clearinghouses which process, print and mail
            invoices and provide billing reports to the practice;
      o     Electronic Claims Submission--electronically submits insurance
            claims from practices to payors, either directly or through
            independent national clearinghouses; and
      o     Electronic Claims Remittance--electronically remits insurance
            payment and automatically posts explanation of benefits into the
            practice management system.

Competition includes:

      o     healthcare information software vendors, including McKessonHBOC and
            Shared Medical Systems;
      o     healthcare electronic data interchange companies, including ENVOY a
            subsidiary of Quintiles Transnational Corp., and National Data; and
      o     large information technology consulting service providers, including
            Andersen Consulting, IBM and EDS.


DIGITAL RIGHTS MANAGEMENT (DRM)

DRM is needed across all content industries, including music, video, games,
software, publications, business information, and images, and by all of the
constituencies in these industries. These constituencies, including artists,
authors, producers, publishers, and distributors, are all concerned about
protecting and managing their rights in digital content. All parties want to
receive royalties for copyrighted materials. Artists and authors want to protect
the integrity of their works. Consumers want easy transparent access to good
content but are concerned about protecting their privacy. Producers, publishers,
and distributors want to structure and optimally manage their business models.

DRM applies too more than content industries. The Internet is becoming a
principal means for digital interaction among organizations and individuals. A
vast amount of data about organizations and individuals is digitized on
computers, sent over networks, and stored in electronic form. Much of this
information is confidential and proprietary, including trade secrets, supply
chain and product information. Some of this information is also personal in
nature, including financial and medical


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records. This information is gathered, stored, and exchanged among many
entities, including corporations, governments, schools, hospitals, and
individuals. These organizations and individuals need to manage their digital
rights in the flow of proprietary and personal information, so that only the
appropriate people can use the information. DRM is also useful for protecting
rights, as these information flows become more automated, in trading, brokering,
regulatory compliance and other industries.

Current computing environments and security techniques are not designed to
provide sufficient protection and management of digital rights. Historically,
computers, networks, and operating systems were designed primarily for creating,
processing, and distributing information. Similarly, security technologies
evolved to protect computers and networks from the outside environment and to
protect information during a point-to-point transmission, not to protect
information and rights once information has been received and properly accessed
by a user. In commercial transactions in current computing environments,
information is generally stored and transactions are processed at remote
mainframes or servers, even when it is less efficient, because the client and
other parts of the environment do not provide adequate protection and security.
As a result, these security technologies either do not consider an authorized
user as a potential threat, or fail to provide sufficient mechanisms to prevent
the improper use of information. With digital commerce, the threat comes not
only from the outside--a hacker trying to break into the protected computer or
decrypt an encrypted transmission. The threat comes also from the inside--a user
may be authorized initially to access digital information but performs an
unauthorized act, such as making or distributing copies. Moreover, the
requirement for centralized transaction processing and information storage is
less efficient, harder to scale, and more constrained in use than systems that
distribute secure processing.

Current techniques for DRM that are built on these centralized securities
approaches generally only provide secure digital distribution. For example,
these techniques generally lack the ability to persistently manage digital
information, especially when offline, and essentially allow only a limited
number of inflexible business relationships that are predetermined by the
technology provider. These techniques usually require online interaction, which
increases costs, limits consumer convenience, and makes some business models
uneconomical.

A new computing technology is required to address all of these concerns--one
that, when distributed over a vast array of computers and devices, consistently
protects and manages rights related to digital information and processes, online
and offline, wherever this information and these processes may occur. Creators,
publishers, distributors, service providers, governments and other institutions,
and users must have the ability both to create and associate rights and rules
that persistently apply to digital information and processes, and to modify the
rights and rules, if permitted, even after the information is distributed. These
rights and rules might represent information regarding ownership, access,
payment, promotion, warranty, privacy, and other elements of commerce in
information. When these rights and rules are based on a common foundation, they
can form a basis for an interoperable global system for digital commerce.


Need for secure transactions


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The very openness and accessibility that have stimulated the adoption and growth
of public and private networks create threats to the privacy and integrity of
information that is transmitted across or stored on them. According to a 1997
industry survey, 70% of consumers and businesses surveyed cited security
concerns as the principal impediments to a broader use of the Internet for
commercial applications. Key consumer security concerns include merchant
impersonation, fraud and the risk that third parties may intercept and use
personal information such as credit card numbers, all of which may inhibit the
broader adoption of electronic commerce. Businesses relying on public and
private networks for internal communications risk the theft, loss, alteration or
dissemination of confidential data, loss of reputation and economic loss through
fraud. Threats to corporate data security arise both from external sources such
as competitors and computer hackers, as well as internal sources, such as
curious or disgruntled employees and contractors. According to a recent FBI
report, among U.S. enterprises reporting that they had experienced computer
security breaches, the average financial losses from internal breaches were
significantly higher than the losses sustained from external breaches. These
business risks have driven the demand for effective and robust network and
information security products.

The security risks associated with communications and commerce over public and
private networks have accentuated the need for information security solutions
that address the five critical network security needs:

      o     Access control--only authorized users should access, view or modify
            certain data;
      o     Confidentiality--data in transit over the network or in storage
            should not be disclosed to unauthorized persons;
      o     Integrity--data should not be altered or compromised by unauthorized
            manipulation;
      o     Authentication--the identity of the data sender should be verified;
      o     Non-repudiation--the sender of a transmission should not be able to
            deny or repudiate the transmission

A wide range of products and services have been introduced to address one or
more of these five critical network security needs. For example, access control
is provided by products such as firewalls and password tokens, which limit
network access only to users having recognized addresses or entering recognized
passwords, but are limited in their flexibility and do not address such
requirements as confidentiality, integrity, authentication and non-repudiation.
Encryption devices and programs provide confidentiality, but are
device-dependent and do not address issues of access control, integrity,
authentication and non-repudiation. The lack of flexibility and scalability
inherent in these solutions has led to the development of public key encryption
and digital certification systems combined in a public key infrastructure, which
can address all five critical network security needs.


PUBLIC KEY SECURITY

A public key infrastructure uses encryption algorithms in combination with
authentication and verification technology offered by digital certificates to
provide the user with a secure and reliable means of communicating and effecting
transactions over public and private networks.

Public key encryption


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Digital messages are encrypted and decrypted using a cipher or key. Public key
encryption systems assign each user a pair of linked keys: a "public" key, which
the user provides to others, and a "private" key, which the user keeps secret. A
user wishing to send a secure transmission encrypts the transmission using the
recipient's public key. To decode the transmission, the recipient uses a private
key that is uniquely able to decode messages encoded with his or her
corresponding public key. Thus, the successful exchange of encrypted messages
using a public key system requires that message senders have the public keys for
all recipients to whom they desire to send messages, and that the recipients
decode messages with their own private keys. Public key encryption provides a
high level of data security, and thus addresses an enterprise's need for
confidentiality of electronic transmissions. However, because encryption alone
does not give the recipient of a message any information about the sender or
ensure that a message is not altered en route, the requirements for access
control, integrity, authentication and non-repudiation are not satisfied.

Digital certification
The ability to ensure access control, authentication and non-repudiation of
digital transmissions can be achieved with digital certification systems, which
enable a recipient to verify that a message originates from the expected sender.
These systems use public and private keys to create a special file called a
digital signature. This signature is encoded using the sender's private key.
Upon receipt of the message, the recipient obtains a copy of the sender's public
key from a directory established by a trusted administrator (a "Certification
Authority" or "CA"), which verifies that the message originated from the
expected sender. Digital certificates thus function as electronic passports that
not only authenticate their owners' identities and verify their owners'
membership in certain organizations, but also establish their owners' authority
to engage in a given transaction. Digital signature and certification technology
can also be used to ensure the integrity of a message by enclosing an encrypted
summary or "hash" of the message with the sender's digital signature. When the
signature and hash are decrypted using the sender's public key supplied by the
CA, the system can automatically detect whether the message was altered since it
was signed.

Market acceptance
Because of its security benefits, digital certification has gained significant
market acceptance, particularly in sectors in which information security is
critical, such as government, finance, health care and telecommunications.
Industry sources believe that by 2000 digital certificates will be nearly as
widely adopted by the general public as e-mail is today. At least 40 U.S.
states, as well as the U.S. and Canadian governments and the European Union have
adopted or are considering digital signature statutes that recognize the legal
validity of digitally signed documents. In addition, the banking industry's
Secure Electronic Transaction (SET) standard for Internet credit card purchases,
as well as the Internet secure packet transmission standard (IPsec) adopted by
most firewall, routing and access vendors, depend on digital certification.

Need for a public key infrastructure
The increasing acceptance of digital certificates has given rise to numerous
products and services that issue digital certificates or that are digital
certificate-ready. However, the mere issuance of digital certificates does not
ensure that a user's access is properly monitored, that privileges associated
with access are accurately and currently defined, or that the certificates in
question have not been withdrawn or replaced. Indeed, the proliferation of users
and certificates greatly complicates management of these issues, which are
critical to maintaining an effective security environment across and between
enterprises. To address these needs, enterprises must have a


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robust public key infrastructure that supplements certificate issuance functions
with full life cycle management of public keys, including issuance,
authentication, storage, retrieval, backup, recovery, updating and revocation,
in an easy-to-use, cost-effective manner.

Moreover, unless digital certificates can be easily utilized on a consistent and
reliable basis across multiple applications (such as e-mail, browser, electronic
commerce, electronic forms and remote access), organizations will face the
challenge and cost of maintaining a separate security infrastructure for each
application, requiring separate keys and certificates, multiple passwords and
inconsistent or incomplete security implementations. Furthermore, any PKI must
be able to support an enterprise's security requirements as the enterprise
grows, business functions are altered and underlying IT technologies evolve. To
be effective, a public key infrastructure must be able to accommodate a large
number of users and integrate diverse computing resources into a consolidated,
reliable and secure computing environment that meets the five critical network
security needs of access control, confidentiality, authentication, integrity and
non-repudiation. Achievement of these goals requires a highly functional and
flexible public key infrastructure for the management of network security
features across an enterprise and between organizations.

Promote widespread deployment

We have designed our client technology and our licensing structure to achieve
efficient and rapid deployment. Our technology is designed so those consumers
can conveniently activate it. It is also designed so that it can be flexibly
deployed by our partners through a variety of means, including digital download,
optical disk distribution, and pre-installation. We will also work with our
partners to develop business models that promote rapid deployment, for example,
superdistribution, which allows users to drive deployment through redistribution
of content.


VIRTUAL PRIVATE NETWORKS

Using Managed IP Security (IPSec) with Virtual Private Networking (VPN) service
will enable users to efficiently provide branch offices, traveling executives
and telecommuters with secure, high-speed access to mission-critical
applications on their Intranet. VPNs will enable Fullcomm to extend globally
secure connectivity to corporate partners and suppliers.

Virtual Private Networks is the logical next step as companies expand the reach
of their private networks to remote workers, distributors, and suppliers.
Leading industry analysts say that over the next five years, businesses will
spend more than $14 billion on managed VPN services for both IP-centric
customers as well as private data networking customers migrating to VPNs.

VPN features are available today and include IPSec and Managed Tunneling
Services that support both Layers 2 Tunneling Protocol (L2TP) or Point-to-Point
Tunneling Protocol (PPTP). Professional services delivered through AT&T
Solutions Network Professional Services and AT&T's Alliance Channel Program also
are available to help implement and support these VPN features.

Internet Protocol Security (IPSec) provides businesses with a highly secure,
scalable, and interoperable means to globally connect end users across multiple
networks and service providers. IPSec is a set of protocols defined by the
Internet Engineering Task Force (IETF) that helps ensure


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the confidentiality, integrity, and authenticity of data communications across a
public network. They use digital certificates, which are needed to prevent data
from being tampered with or viewed by unauthorized users. This fully IPSec
compliant offer provides global end-to-end encryption and simultaneous access
during the same dial session to both the public Internet, as well as secured
private networks.

Layer 2 Tunneling Protocol (L2TP) is an IETF standard that enables users to
connect to private networks over the public Internet using "tunneling." A tunnel
works by "wrapping" one data packet inside another so it can be routed over the
Internet to a private network. Once it reaches its destination, the packet is
"unwrapped" and handed off to the private network. L2TP for VPN service is
network-based and will allow customers around the world to use the public
Internet to make their private network applications available to remote users
and trusted third parties. This service will ease customer network management by
supporting privately administered IP addresses, by securely authenticating the
source and destination of each tunnel, and by providing quality of service
routing for tunneled traffic.

Point-to-Point Tunneling Protocol (PPTP) service is client-based and provides
businesses with additional tunneling options. Similar to L2TP service, it allows
customers to use the public Internet to access private network resources using
multiple transport protocols, such as Novell's Internetwork Packet Exchange
(IPX) and NETBIOS. It also helps increase network security with optional data
encryption technology and by limiting access too only authorized users.

A recent report from the Phillips Group-InfoTech projects the U.S. wholesale
network services market could grow at an average annual growth rate of 24
percent to reach $ 116 billion in revenue by 2003 up from $39 billion in 1998.
The surge, according to the Parsippany, NJ-based research and consulting firm,
will be driven primarily by Internet Protocol (IP) related wholesale volume.
Three key sectors account for increases in IP related wholesale volumes,
according to the study. The rapid growth of wireless wholesale services, driven
by Internet access, will jump from $500 million in 1998 to $5,500 million in
2003, expanding by a factor of eleven. The second biggest IP Wholesale growth
rate will be among new entrants to the industry, known as competitive local
exchange carriers (CLECs). These firms posted total wholesale revenues of $250
million in 1998 but in five years, CLEC revenues are anticipated to multiply
ten-fold, to $2.62 billion in 2003. The third biggest IP Wholesale rate of
growth originates from Packet/Cell-based network service provider services
(NSPs), which includes the delivery of IP Telephony. NSP revenues will jump from
$2.0 billion in 1999, to $20.4 billion in 2003.

Five emerging business models are empowering new players who are both creating
and taking advantage of the transformation of bandwidth usage. These include the
following models and leading companies who have adopted these models:

Network service providers (NSPs) furnish network services and applications
hosting centers. Examples of prominent NSPs include AT&T), MCI/WorldCom QUEST,
Williams Communication and Level 3.

Content delivery providers (CDPs) deliver broadband Internet content in
innovative approaches that overcome some of the throughput capabilities of the
current Internet. Some of the leading CDPs include Adero, Akamai Tech Inc.,
iBEAM, Intervu and Sandpiper.


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Applications service providers (ASPs) offer applications over the network to
businesses and end-users as networking costs have plummeted and acquiring and
retaining trained IT staff has become more difficult. Examples of ASPs include
Digex, Oracle Corp and SAP Ag.

Headquarters Providers (HQPs) consist of large enterprise businesses that have
adopted wholesale like characteristics to serve their internal constituents as
well as their external suppliers and customers.

Broadband content providers (BCPs) create and deliver broadband content
including event broadcasting and depend upon the network service providers and
the content delivery providers to insure effective delivery of their content.
Examples of BCPs include Excite@Home, MSNBC, Broadcast.com, and Intertainer.com.
These new business models are helping to accelerate an already explosive growth
in wholesale telecom services.


AUDIO

      o     Audio - allows for the distribution of music over the Internet
            without concern for pirated copies
      o     The major music labels have been looking for a secure way to
            digitally distribute music via the Internet. Fullcomm technology
            allows record labels to tap the broad reaching distribution
            capabilities of the Internet
      o     Independent music labels can realize substantial savings from
            decreased advertising and distribution costs. With the ability to
            distribute over the Internet, these smaller labels can gain access
            to broader markets and compete with larger labels for market share
            based on content and service rather than name recognition through
            advertising


Digital Recordings

With the many recent advancements in technology, such as the personal CD burner
attached to PCs, depriving Media owners of royalties is a simple proposition.
Billions of dollars are lost annually in the music industry alone. The illegal
use and distribution of copyrighted information is a major concern on the
Internet.

Pirating of audio and video is not a new concept to recording labels and movie
studios that had previously written off those losses as inconsequential in the
long term. In the past, pirated copies were less of a concern because analog
copies (e.g. audiocassette tapes and VHS tapes) have a limited use life - each
use degrades the quality of the tape. Also, the quality of copies degrade very
quickly when "generations" separate the original/master from the copy -
essentially, a copy of an original has noticeably degraded quality versus the
original and each "generation" away is much more degraded. Using VHS as an
example, the second generation of copies is practically incapable of being
viewed. This general premise holds true for all analog formats of media.

Digital copies of information are inherently different. Each digital copy is a
perfect copy of the original. Due to error checking technology and the use of
standard systems and protocols, each digital copy is a master copy.
Technological advances, such as the incredible growth in personal


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computing power and the all time low cost and high availability of data storage
methods, have now made duplicating digital information very simple and
inexpensive. Media owners must now wrestle with a dilemma. To utilize the
fundamental strengths of the Internet as a distribution method, they put their
media at risk of piracy. This is a huge concern because One pirated digital copy
is the entire world needs to make an unlimited number of copies.

These security concerns were initially unforeseeable. To plan for this security
issue, companies would have had to know the future of technology years before
the technology even existed, and furthermore, that the Internet was going to
grow into what it is today.

Only recently have companies begun to capitalize on this sensitive security
issue concerning the Internet. Our competitors' ideas consist of using limited
technology to provide a short-term solution to a long-term problem. These
"solutions," primarily software-based, have arisen due to concern for current
business, but that does not change the fact that all static software-based
security measures are vulnerable and can be compromised.

Fullcomm has a vision of how to provide an integrated solution that removes the
limitations that are inherent in software-based programs. By offering a dynamic
hardware interface, Fullcomm can grant the desired security in a range of
applications, from complete security for c-commerce activity and on-line banking
to digital media over the Internet that cannot be illegallyi distributed.
Instead of several solutions for one problem, Fullcomm offers one complete
solution for a host of problems. Given our product's flexibility and the host of
functions it can perform, virtually every corporation that uses the Internet as
an interface to their consumers would benefit from the integration of Fullcomm's
technology. In addition to complete security, the use of our delivery system
offers benefits of greatly reduced distribution, packaging, and inventory costs
versus current methods of media and software delivery. These savings could be
passed directly to the consumers, making our system the preferred method for
consumers to purchase goods and services.

The current trends in the markets that Fullcomm intends to focus on are
unprecedented exponential growth models. Fullcomm proposes to profit from the
existing markets of c-commerce, wireless data transmission, on-line banking and
Voice over Internet Protocol by providing unparalleled security measures. With
the planned emergence of multimedia data (video-on-demand, music distribution,
etc.) over the Internet net, Fullcomm has already anticipated its involvement
and has configurations of our device which can be easily adapted to provide
security for these new and emerging services.

These ideas are not five to ten years away, but are currently becoming reality.
Every high tech company is continually creating and changing their own vision of
the Internet and taking steps to bring their vision to fruition. Integration of
Fullcomm's proprietary technology will ensure the security of all future
Internet transactions and preserve the rights of media owners, proprietary
content providers, and private individuals.

Recent events in the music industry provide the most visible example of an
industry facing the problem of protecting and managing its rights related to
digital information. A technology called MP3 that compresses music with
near-compact disc quality has rapidly become recognized as a major threat to the
industry. With readily available MP3-enabled software, music can be copied from
compact discs into computers, compressed to under 10% of its former size,
redistributed,


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played, and even copied back onto a blank compact disc for private use or
pirated resale. Songs in the MP3 format can be moved from personal computers to
new portable consumer devices and can then be played through headphones or
stereo speakers. Every compact disc published and distributed is at risk of
being copied. Already, many popular titles have been digitized in MP3 form
multiple times across the Internet and a new channel of direct MP3 distribution
is emerging.


THE RECORDED MUSIC INDUSTRY

The recorded music industry represents one of the largest opportunities for
online digital delivery and commerce. According to the International Federation
of the Phonographic Industry (IFPI), worldwide-recorded music sales represented
a $38.7 billion market in 1998. The United States music industry, which
represents nearly one-third of worldwide-recorded music sales, encompasses more
than 200,000 professional musicians, 7,500 record labels, 100 distributors,
4,000 independent retailers and millions of consumers. The recorded music
industry has operated under the same basic business model for many years.
Typically, record companies sign artists to exclusive contracts under which the
record companies develop and promote artists' music. The companies then sell
this recorded music through wholesale and retail distribution channels to
consumers. In addition, there are millions of amateur musicians who do not have
access to distribution through traditional channels.

Net music

The growing popularity of music on the Internet, combined with recent technology
advances, has made the Internet a compelling medium for digital music delivery.
Forrester Research has estimated that sales of recorded music through digital
transmission will grow from less than l% of all recorded music sales in the
United States in 1999 to 7% of these sales in 2003.

The Internet presents a significant opportunity for the rapid and cost-effective
distribution, promotion and sale of recorded music. Music is one of the most
popular topics on the Internet as reflected by the increasing number of
music-related websites and the growth of online sales of compact discs. To date,
online-recorded music sales have occurred primarily through the purchase of
compact discs through online retailers. Forrester Research expects online
vendors such as Amazon.com Inc. and CDnow Inc. to drive total online sales of
compact discs in the United States from an estimated $890 million in 1999 to an
estimated $6.7 billion in 2003. These online retailers generally do not take
physical custody of recordings, but rather refer their orders to fulfillment
houses that are responsible for shipping the compact discs to customers. The
popularity of online buying is also forcing traditional retailers to sell
recorded music using the Internet, either through their own websites or in the
future through in-store kiosks.

Advances in digital compression technologies now allow the transmission of
near-compact disc quality audio over the Internet. Due to the size of the
transmitted files, most digital music transmitted to date has been song samples
used by online retailers to allow shoppers to preview music. More recently, new
websites such as Liquid Audio.com have begun to offer "full length," three to
four minute, single music recordings for transmission and storage in compressed
formats.

Liquid Audio also has business-to-business aspirations, as an Internet
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protection middleman for musicians and their labels, including Atlantic, Arista,
Bad Boy, Beyond, BMG, Capitol, Dreamworks, Elektra, EMI, Hollywood, MCA,
Polydor, RCA, Reprise, Universal, Virgin, Wind-Up, Windham Hill and Warner Bros.
Tower Records also uses Liquid Audio for its digital download system. In
addition, Liquid Audio runs the syndicated Liquid Music Network, a site with
links to music-related Web sites and retailers that also includes a music
catalog where consumers can download songs for $1.99 each. (Liquid Audio skims a
25-cent distribution fee off the transaction; the artist or record company gets
$1; and the Web site gets the rest.)

Several audio compression standards are currently used, including AAC, AC-3 and
mp3. To date, most digital music downloads have been promotional in nature.
Recorded music sales delivered through digital transmission have been minimal,
but are expected to reach 7% of all United States recorded music sales by 2003,
according to Forrester Research. Several manufacturers have introduced or
announced plans to introduce portable devices, such as the Rio from Diamond
Multimedia and the Lyra from Thomson Consumer Electronics, that will play
downloaded digital music.

The Major Labels

Five major global record companies--BMG Entertainment, EMI Music, Sony
Corporation, Universal Music Group and Warner Communications Inc.-- and their
numerous affiliated labels account for more than 80% of all recorded music sales
worldwide. Each of these companies is organized worldwide on a geographic basis,
with each local subsidiary having control over distribution within its
territory. These companies invest significant resources in infrastructure to
support their operations. They are vertically integrated and operate recording,
manufacturing, distribution warehousing, and sales and marketing organizations.

In order to grow our business, we need to see an increase in the number of
websites, including websites operated by music retailers, that use our
technology to digitally deliver recorded music. To increase the number of
websites, we must encourage the following:

      o     offer competitive products and services that meet industry
            standards;
      o     attract more music content;
      o     make it easy and cost-effective for music-related websites to sell
            digital music;
      o     develop relationships with online retailers, music websites, online
            communities, broadband providers and Internet broadcasters; and
      o     develop relationships with international music websites, retailers
            and broadband providers.
      o     competition for consumers from traditional retailers as well as
            providers of online music services;
      o     the announcement and introduction of new products and services by us
            and our competitors;

      o     our ability to increase the number of websites that will use our
            platform for digital music delivery; and
      o     the timing of our partners' introduction of new products and
            services for digital music sales.

In addition, other factors may also affect us. Some of these factors are within
our control and others are outside of our control including:


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      o     market adoption and growth of sales of digitally downloaded recorded
            music over the Internet;
      o     our ability to attract significant numbers of music recordings to be
            syndicated in our format;
      o     market acceptance of new and enhanced versions of our products and
            services;
      o     our ability to provide reliable and scalable service, including our
            ability to avoid potential system failures; and
      o     the price and mix of products and services we offer.


We believe record companies will remain reluctant to distribute their recorded
music digitally unless they are satisfied that the digital delivery of their
music over the Internet will not result in the unauthorized copying and
distribution of that music. If record companies do not believe that recorded
music can be securely delivered over the Internet, they will not allow the
digital distribution of their recorded music and they might not have sufficient
content to attract consumers.

Our success will depend on growth in consumer acceptance of new a platform as a
method for digital delivery of recorded music over the Internet. Factors that
might influence market acceptance of our solution include the following, over
which we have little or no control:

      o     the availability of sufficient bandwidth on the Internet to enable
            consumers to download digital recorded music rapidly and easily;
      o     the willingness of consumers to invest in computer technology that
            facilitates the downloading of digital music;
      o     the cost of time-based Internet access;
      o     the number and variety of digital recordings available for purchase
            through other online digital delivery companies, digital music
            websites or through traditional physical delivery of recordings;
      o     the availability of portable devices to which digital recorded music
            can be transferred;
      o     the fidelity and quality of the sound of the digital recorded music;
            and
      o     the level of consumer comfort with the process of downloading and
            paying for digital music over the Internet, including ease of use
            and lack of concern about transaction security.

If standards for the secure digital delivery of recorded music are not adopted,
the piracy concerns of record companies and artists might not be satisfied, and
they might not use our platform for digital delivery of their music because
other digital recorded music formats, such as mp3, do not contain mechanisms for
tracking the source or ownership of digital recordings. Users are able to
download and distribute unauthorized or "pirated" copies of copyrighted recorded
music over the Internet. This piracy is a significant concern to record
companies and artists, and is the reason many record companies and artists are
reluctant to digitally deliver their recorded music over the Internet. The
Secure Digital Music Initiative (SDMI) is a committee formed by the Recording
Industry Association of America (RIAA) to propose a standard format for the
secure digital delivery and use of recorded music. If a standard format is not
adopted, however, pirated copies of recorded music will continue to be available
on the Internet, and record companies and artists might not permit the digital
delivery of their music. Additionally, as long as pirated recordings are
available, many


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consumers will choose free pirated recordings rather than paying for legitimate
recordings. Accordingly, if a standard format for the secure digital delivery of
music is not adopted, our business might be harmed.

New digital playback devices

We believe that the market for digital recorded music delivered over the
Internet will not develop significantly until consumers are able to enjoy this
music other than solely through the use of a personal computer. Several consumer
electronics companies have introduced or announced plans to introduce devices
that will allow digital music delivered over the Internet to be played away from
the personal computer. If companies fail to introduce additional devices,
consumers do not adopt these devices or our products and services are
incompatible with these devices, our business would be harmed. In addition,
digital music can be transferred to a compact disc, but that transfer requires a
compact disc recorder (CD-R). Many desktop computer manufacturers offer CD-Rs in
their computers. If companies do not continue to offer CD-Rs in their computers,
consumers do not adopt CD-Rs or our products and services are incompatible with
CD-Rs, our business might be harmed.

Our solution is based on an open technical architecture, which means that it is
designed to support multiple leading digital music formats, including mp3 (an
audio compression format developed by the Fraunhofer Institut) and Dolbyi AC-3
(an audio compression format developed by Dolby Laboratories, Inc.). These
formats use compression technology to reduce the size of audio files,
facilitating the digital delivery of music over the Internet.

Challenges of Digital Music Delivery and Commerce over the Internet

Music consumers increasingly want both to hear recorded music in real time on
their computers and to store these recordings for later playback on portable
devices as well as computers. But, as downloading music from the Internet has
become increasingly popular, music content copyright owners, including the major
record companies, have expressed concerns about unauthorized copying, or
"pirating," of copyrighted sound recordings. Many compression technologies,
including the basic MP3 standard specification, lack copy protection. This can
result in the unauthorized downloading and replication of digital music. The
major recording industry association, the Recording Industry Association of
America (RIAA), has formed a committee, the Secure Digital Music Initiative
(SDMI), to propose a standard for the secure digital distribution and use of
recorded music.

The e-commerce market for downloadable-recorded music is just emerging and there
is limited availability of digital music on the Internet. The major record
companies to date have engaged only in limited efforts to sell recorded music
through digital transmission. The Internet as a commerce medium presents several
challenges to the record companies, including the ability to comply with
geographical territorial restrictions and copyright and trading concerns. Most
artists, restricted by their existing contracts with record companies, have not
been able to take advantage of selling their music over the Internet directly to
consumers. Retailers have had success selling compact discs online, but have not
had a way to integrate the sale of digital recorded music into existing online
stores.

Standards


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We believe that a successful solution for digital music commerce must
incorporate technical and industry standards. Secure Digital Music Initiative
(SDMI) is sponsored by the RIAA to develop an open standard for the secure
digital delivery and use of recorded music. Over 200 companies are participating
in this effort. To date, this effort has focused on requirements for consumer
portable music devices, such as the Diamond Rio hand-held player.

There is an industry initiative to develop a standard for an open form of the
mp3 format that supports authentication functions. These functions will protect
consumers by providing visual confirmation that downloaded MP3 or other digital
recorded music files are authentic. Digital recorded music formatted in this
manner will play on all standard MP3 players and will additionally contain
information identifying the copyright owner and the encoder. The copyright owner
can also provide Internet links for additional promotions. These features are
not found in standard MP3 files. This initiative has received support from 48
other companies, including MP3.com, Diamond Multimedia, MediaOne Group, Inc. and
Fraunhofer Institut.

Secure Portable Player Protocol (SP3). The SP3 initiative is intended to provide
an open technical architecture and reference specification for portable digital
music playback devices that satisfy music industry and technology industry
requirements. Any SP3-compatible digital music would be able to be played on any
compliant device while unauthorized copies would not be able to be played.

Fraunhofer is the developer of the leading digital audio encoder and encoding
technology, on the specifications for the SP3 standard. Texas Instruments is
developing a reference design for a consumer playback device based on this
specification.

Component Technologies. The architecture begins with component technologies,
which include watermarking, audio compression and a multi-format distribution
container.

Watermarking embeds indelible and inaudible digital information into the audio
waveform. The embedded information is useful for identifying and tracking audio
usage and cannot be removed without destroying the recorded music.

Audio compression reduces the bandwidth required to stream and download music
over network connections. New Dolby Digital technology (AC-3) have been
optimized for online music distribution.

Multi-format distribution containers. This container structure is designed to
permit extension to other media types such as video. The container is optimized
for music distribution and includes multiple images that can be used to preview
and purchase media content in multiple formats and at multiple resolutions.

Secure Protocols. The industry has created secure protocols for communication
between all parts of the system. Secure communications are necessary to prevent
theft of content as it moves through the system. Secure links exist between the
Server and content creation tools for publishing, for consumer downloading, and
for transaction reporting.


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Device Interfaces. The industry has developed the Secure Portable Player
Protocol (SP3), which provides a set of security interfaces and techniques for
next generation portable devices. SP3 has been developed as an open
specification for use by many device manufacturers. SP3 is consistent with the
goals of the SDMI and is intended to be compatible with the specification that
results from the SDMI.

Passports. A digital identification system that permits consumers to move their
music to multiple machines while still providing anti-piracy protections.

We believe that our technology architecture and our advanced stage of
development and deployment provide distinct competitive advantages. We are
currently developing new digital music delivery products. The advantages of our
technology are summarized below:

      o     Superior Audio Quality. We believe consumers will pay for quality
            music, and we believe that we can consistently provide superior
            audio quality for digital music. We will employ specific techniques
            and optimize industry algorithms to improve sound quality. We
            believe that our use of standardized compression algorithms such as
            MPEG, AAC and MP3 provides greater compatibility than proprietary
            audio compression solutions.

      o     Effective Copyright Management. Artists and labels have been
            reluctant to embrace digital distribution of music given the current
            lack of copyright management technologies. The industry is
            developing technology to address the copyright management issue for
            online music distribution. Our security technologies protect content
            from the time it is created to the time it is consumed. These
            technologies include secure communication protocols that allow
            content creators to publish and manage their content in the
            distribution system. They have also developed specific anti-piracy
            technology such as watermarking that embeds unique identification
            information in the recorded music.

      o     Automated Production and Publication. The industry is creating
            technologies that improve the efficiency of online music
            distribution and reduce operating costs. Content encoding systems
            allows for formatting large amounts of quality audio content for
            online use in a timely and cost effective manner.


VIDEO

      o     The rapid growth of high bandwidth Internet users and the
            ever-increasing demand for greater bandwidth opens a door to a
            market for video distribution in a similar fashion to that of audio
            distribution. The telecommunications and cable industries are
            attacking the problem of limited bandwidth. As they update the data
            delivery infrastructure, this market can be targeted
      o     As with Audio, smaller independent studios can cut costs and
            increase market share via the far-reaching distribution capabilities
            of the Internet
      o     Fullcomm's technology allows for the creation of a new market for
            secure on-demand rebroadcast of television programming


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INTERACTIVE TELEVISION

Technological advances, coupled with demand for advanced information services,
will continue to push television and PC convergence. Frost & Sullivan reports
that said set-top type devices already make up a $2 billion market. In another
report, Jupiter Communications said the sector would generate revenue of $l0
billion by 2004.

Computing can enhance the video, not replace the video, and to bring to
consumers either convenience or better entertainment value. Driving the
transformation of television are the same big trends that have hit the personal
computer industry -- smaller and faster computer chips, the growth of the
Internet and higher-speed, bigger-bandwidth communications services.

Microsoft jumped into TV-based technology when it bought WebTV Networks in 1997
for $425 million. It has since invested in companies like AT&T Corp., which is
now the No. I cable operator in the United States. The software giant has spent
an estimated $15 billion on a variety of investments in cable systems and
satellite. Microsoft has pushed Windows CE, its operating system for smaller
devices, into set-top boxes, the hardware that sits on a TV and connects it the
cable network. Such boxes are at the heart of the convergence of television and
the Internet. Microsoft is also creating turnkey packages of hardware and
software to sell to cable operators who want to set up their own branded
versions of the service.

Microsoft archrival Oracle Inc., is a direct competitor with a company set up as
Network Computer, conceived as a maker of dumbed-down Internet-linked PCs, but
which has morphed into an $8 billion company aimed at all non-PC computing --
with television systems playing a prominent role. AOL, Sun Microsystems Inc. and
Lucent Technologies Inc. are also investors.

AT&T Corp. now the largest operator of TV cable operations, has invested in a
range of technologies aimed at pushing digital television and a television
version of its partially owned AtHome Inc. cable modem service for PCs.
Satellite and cable television companies in general are building and buying
services that let customers interact with programs and commercials.

The biggest high-tech impact on TV has come from the DVD technology.
Manufacturers have sold an estimated 5 million units and personal television
player products like Tivo Inc.'s Tivo device and Replay Networks Inc.'s
ReplayTV. Tivo and ReplayTV take advantage of leaps in computer disk storage
power to offer add-on services like program pausing, on-screen television
listings and stored data linked to recorded programs. The next wave of
electronic appliances will link televisions more closely to the Internet. This
will allow for direct orders to the Internet during television commercials, or
music and video downloads by the same route. Wink Communications Inc., newly
launched FutureTV and OpenTV Corp. are among those introducing tools to tighten
the Internet/television convergence. They will provide services that give users
a personalized smart-card-enabled television service with video and audio on
demand, along with complete Internet services. That allows simultaneous
television viewing and Internet surfing to expand Blockbuster's traditional
video rental business to an entertainment service delivered through TiVo. The
companies will work together to develop and deploy a video on demand like
service that will enable TiVo subscribers to obtain a selection of movies for
viewing through their TiVo receivers.


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The cable industry has united around a single approach to delivering packet
voice services over its networks, driving forward Internet protocol (IP)
telephony on a uniform platform as early as mid-2000.

In early fall, the Packet Cable group at Cable Television Laboratories Inc.
issued a final set of phase one draft specifications for IP telephony that uses
a cable-adapted form of multimedia gateway control protocol (MGCP) as the
linchpin to its distributed intelligence architecture, postponing for a second
phase the endorsement of the call control architecture that had been heavily
promoted by AT&T Corp. In all, there are 13 protocol specifications tied to
creating a first-line IP voice capability over cable's hybrid fiber/cable
networks, including several that are part of the second-generation cable modem
standard known as data over cable service interface specification.

The achievement of consensus on a broadband packet communications architecture
is closely linked to technology that is winning wide support outside cable
should boost vendors' ability to deliver cable-specific products quickly and
cost effectively. NCS (network-based call signaling) is the best approach to
early deployment of packet telephony technology for the cable-adapted MGCP
architecture. A uniform, interoperable platform with multivendor support will
soon take shape. As companies begin the refinements to the technology that are
needed for cable to market a standards-compliant system. Cable companies are
moving aggressively to deploy VoIP voice services in the near term. This has
implications for the ability of the cable system to deliver voice-enhanced
services over standard-compliant devices in the future. A set-top box that uses
NCS, will be able to make the adjustments without having to upgrade the whole
system.

This will enable AT&T to offer IP voice as a toll-quality, first-line option to
the mass residential market. Cable operators recognize they must finally
leverage their infrastructure. Interactive TV is now being deployed, not trialed
and tested. AT&T will be rolling out interactive content, services, and
applications, through AT&T-BIS (Broadband and Internet Services).


DIGITAL CABLE - NEW PRODUCTS AND SERVICES

By upgrading existing cable systems, operators will be able to expand the array
of services and advanced products they can offer to their customers. Using
digital technology, they plan to offer additional channels on their existing
service tiers, create new service tiers, introduce multiplexing of premium
services and increase the number of pay-per-view channels. Operators also plan
to add digital music services and interactive program guides. In addition to
these expanded cable services, they also plan to provide advanced services
including high-speed Internet access and interactive services. Many cable
operators have entered into agreements with several providers of high-speed
Internet and other interactive services, including EarthLink Network, Inc., High
Speed Access Corp., WorldGate Communications, Inc., Wink Communications, Inc.
and At Home Corporation.

They have adopted the hybrid fiber optic/coaxial architecture, referred to as
the HFC architecture, as the standard for many ongoing systems upgrades. The HFC
architecture combines the use of fiber optic cable, which can carry hundreds of
video, data and voice channels over extended distances, with coaxial cable,
which requires a more extensive signal amplification in order to obtain the
desired transmission levels for delivering channels. In most systems, they
connect fiber optic cable to individual nodes serving an average of 800 homes or
commercial buildings. A node


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is a single connection to a cable system's main, high-capacity fiber optic cable
that is shared by a number of customers. Coaxial cable is then connected from
each node to the individual homes or buildings. We believe that this network
design provides high capacity and superior signal quality, and will enable them
to provide the newest forms of telecommunications services to their customers.

The primary advantages of HFC architecture over traditional coaxial cable
networks include: increased channel capacity of cable systems; reduced number of
amplifiers in cascade, which are needed to increase signal capacity, from the
headend to the home, resulting in improved signal quality and reliability;
reduced number of homes that need to be connected to an individual node,
improving the capacity of the network to provide high-speed Internet service and
reducing the number of households affected by disruptions in the network; and
sufficient dedicated bandwidth for two-way services, which avoids reverse signal
interference problems that can otherwise occur when you have two-way
communication capability. The HFC architecture will enable them to offer new and
enhanced services including additional channels and tiers, expanded pay-per-view
options, high-speed Internet access, wide area network, which permits a network
of computers to be connected together beyond an area, point-to-point data
services, which can switch data links from one point to another, and digital
advertising insertion.

The upgrades will facilitate their new services in two primary ways: Greater
bandwidth allows them to send more information through their systems. This
provides cable networks with the "space" to provide new services in addition to
current services. As a result, operators will be able to roll out digital cable
programming in addition to existing analog channels offered to customers who do
not wish to subscribe to a package of digital services. Enhanced design
configured for two-way communication with the customer allows them to provide
cable Internet services without telephone support and other interactive
services, such as an interactive program guide, impulse pay-per-view, and
video-on-demand, that cannot be offered without upgrading the bandwidth capacity
of their systems. This HFC architecture will also position them to offer cable
telephony services in the future, using either Internet protocol technology or
switch-based technology, another method of linking communications.


System Configuration

Cable and telecommunications companies have existing hybrid fiber optic-coaxial
cable lines connected to subscribers' homes. The integrated digital cable unit
would be supported on this private network, utilizing the high bandwidth of the
hybrid fiber-coax. Both the encryption content servers and the authentication
servers would sit in the central office of the cable company and perform the
necessary protocols prior to streaming data transmission.

Both the internet-ready PC compatible unit and the stand-alone unit would work
in the context of the public Internet or in a private network (LAN/WAN) using
Internet Protocols. Individual servers or groups of servers would function in
the same configuration as the servers in the basic device configuration. Various
methods of connection to these networks would be possible, allowing great
flexibility and expansion capability for these systems.


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INTERNET TELEPHONY (VoIP)

Internet telephony is a relatively new technology that allows people to
communicate using the Internet as the carrier rather than traditional telephone
lines. The Internet can now carry telephone like communications. The technology
allows calls made over traditional long-distance lines to be rerouted through
the Internet, thereby making long distance calls free except for the cost of
Internet access. Internet access is charged on a flat fee basis typically as a
monthly subscription fee. There are no per minute toll charges. Competition in
the Internet Service Provider (ISP) market is driving down the subscription
rates and keeping the flat rate structure in place. It is estimated that there
will be as many as 15 million Internet telephony users by the year 2001.
Revenues for the Internet Telephony business market are expected to grow to over
$2 billion by the end of 2001. It is also estimated that the total traffic for
Internet telephony will reach 250 billion conversation minutes by 2005.

Voice over Internet Protocol (VoIP) Technology for Internet appliances.

The market for information appliances, devices that process information without
a computer, is going to be phenomenal, as is the sub $1,000 computer. It is
estimated that over 15 million households will be accessing the Internet from
non-computer devices. These new products offer corporations increased
productivity and cost savings and enable traditional and new generation telcos a
more affordable and powerful communications services to customers. Revenue
growth is triggered by factors such as toll-bypass or toll reduction
capabilities, rapid product quality improvement, spreading interoperability, the
need for multimedia communications and the integration of voice and data
networks into a single network.


WIRELESS DATA

Accessing the Internet via cellular networks is becoming ever more common. The
introduction of a host of cellular telephones and personal digital assistants
with Internet accessibility clearly indicates the future of the cellular data
market. Fullcomm's technology enables secure voice communication and information
exchange over wireless networks. The functionality of our hardware device will
be reduced to an ASIC as the development process continues, and this chip can be
installed in Internet appliances


                       ***********************************


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DILUTION

The pro forma net tangible book value of Fullcomm as of December 31, 1999 was
$ 17,950 or approximately $ 0 per share of Common Stock. Pro forma net tangible
book value per share represents the amount of Fullcomm's total tangible assets
less total liabilities and minority interest, divided by the pro forma number of
shares of Common Stock outstanding. After giving effect to the sale of the
Common Stock offered by Fullcomm hereby at an assumed offering price of $ 2.50
per share, and after deducting the estimated underwriting discount and offering
expenses payable by Fullcomm, the pro forma net tangible book value of Fullcomm,
as adjusted, as of December 31, 1999 would have been approximately $ 2.5
million, or $0.43 per pro forma share of Common Stock. This represents an
immediate increase in net tangible book value of $0.43 per share to Fullcomm's
existing stockholders and an immediate dilution in net tangible book value of
$2.06 per share to new investors of Common Stock in this offering. If the
offering price is higher or lower, the dilution to the new investors will be
greater or less, respectively. The following table illustrates this per share
dilution:

Assumed offering price ................................................  $ 2.50
Pro forma net tangible book value per share prior to this offering ....  $(0.00)
Increase per share attributable to this offering ......................  $ 0.44
Adjusted pro forma net tangible book value per share after this offering $ 0.44
Dilution per share to new investors ...................................  $ 2.06

The following table summarizes, on a pro forma basis, as of December 31, 1999,
the number of shares of Common Stock purchased from Fullcomm, the total
consideration provided to Fullcomm and the average price per share provided by
existing stockholders and by investors purchasing shares in this offering. The
calculation below is based on an assumed offering price of $ 2.50 per share,
before deducting the estimated underwriting discount and offering expenses
payable by Fullcomm.


SHARES PURCHASED
                                                                  AVERAGE
                                                                  PRICE
                         NUMBER      PERCENT      AMOUNT          PER SHARE
                         ---------   -------     -----------      ------
Existing stockholders .  4,600,000*     79.3%    $   312,750      $ 0.07
New investors .........  1,200,000      20.7%    $ 3,000,000      $ 2.50
                         ---------      ----     -----------      ------
   Total ..............  5,800,000     100.0%    $ 3,312,750      $ 0.57


* A special dividend of 15,750 common shares will be paid to the various
shareholders who participated in the Company's earlier private placement. This
will increase this common share allotment category from 84,250 to 100,000
shares.


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DIRECTORS AND EXECUTIVE OFFICERS:

The following table sets forth the executive officers, directors and key
employees of Fullcomm, their ages and the positions held by them:

NAME                            AGE         POSITION
--------------------------------------------------------------------------------

Richard T. Case .............   50         Chief Executive Officer and Director

Brendan G. Elliot ...........   23         President, Chief Technology Officer
                                           and Director

Wayne H. Lee ................   25         Executive Vice President

Patrick M. Leach ............   23         Vice President

Brad Tashenberg .............   53         Director


MANAGEMENT

Experienced and Innovative Management:

Richard T. Case, Chief Executive Officer and Director. Mr. Case, 50, has over 28
years of executive line management experience with Fortune 500 companies and as
a management consultant. He has served as a consultant since 1981 to numerous
industries in the area of raising capital, turnarounds, strategic planning,
acquisitions and mergers, operational analysis, product development, strategic
marketing, international market development, organizational behavior, and
culture change. Prior to that, he was a senior executive with three Fortune 500
companies, Baxter Laboratories, Corning Glass Works and American Hospital Supply
Corporation, where he served as Director of New Business Development,
responsible for acquisition and mergers. Through his leadership, the company
successfully made the transition through the government healthcare program
enforcing DRG's (limiting reimbursement) and instituted an online computerized
inventory management system called ASAP, which is the standard in the industry.
Recently, Mr. Case located, negotiated, and completed Definitive Agreements with
12 acquisition targets for a roll-up in the Office Supply industry.

Mr. Case holds an MBA degree from the University of Southern California where he
graduated with a 4.0 GPA, first in the class; and a BS degree in Management and
Finance from Bradley University. Mr. Case is a published author, has hosted a
weekly business radio program, has received The Wall Street Journal Achievement
Award, and is listed in Who's Who in American Business.

Brendan G. Elliott, Co-founder, President, Chief Technology Officer and
Director, has been involved with Fullcomm since his initial conception of the
core technologies. Prior to founding


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Fullcomm, Mr. Elliott had worked at the Princeton University Civil Engineering
and Operations Research Lab. His expertise in the computer science and
encryption fields has helped him to lead research and development activities for
the company. Mr. Elliott graduated from Princeton University with a degree in
computer science.

Wayne H. Lee, Co-founder and Executive Vice President, has been involved with
Fullcomm since initial product conception. His understanding of the product and
the applicable markets has helped to shape the business and marketing strategies
of the company to date. Prior to joining Fullcomm, Mr. Lee had worked for the
Hyundai Corporation in Seoul, South Korea and interned at Merrill Lynch in New
York. Mr. Lee graduated from Princeton University with a degree in economics.

Patrick M. Leach, Vice President, has made considerable, meaningful
contributions to the design of the device. He has played a pivotal role in
directing Fullcomm's research and development activities. Prior to joining
Fullcomm, Mr. Leach worked for Arthur Andersen as an IT consultant. Mr. Leach
graduated from Princeton University with a degree in electrical engineering.

Directors

C. Bradley Tashenberg, Director. C.E.O, President and C.O.B. of Bradmark. Since
founding the Company in 1981, Mr. Tashenberg has been responsible for the
development and marketing of several highly successful products in
Hewlett-Packard's HP3000 mid-ranged computer market. These products include the
original DBGeneral product, which is used as a support to HP's IMAGE database,
an indexing technology product, and a disk space management product. Prior to
Bradmark, Mr. Tashenberg was Corporate Director of MIS at Schlegal Corporation
and Program Supervisor at Comptek Research where he developed the Barrister 300,
which became the market leader in the legal industry from 1972 through 1980. In
addition, Mr. Tashenberg is a recognized expert in the field of distributed data
processing where he has authored two books on the subject, both of which were
published by the AMACOM division of American Management Association. HP
purchased 1,500 copies of his books entitled, "Distributed Processing Systems:
The End of the Mainframe?" for their internal management, sales, and large
account executives. Mr. Tashenberg holds a B.S. in Mathematics and a M.S. in
Economics from the State University of New York.


Scientific Advisory Board

The Company is currently in the process of selecting members for its Scientific
Advisory Board. The first member is Dr. Edward W. Felten, an Assistant Professor
of Computer Science at Princeton University. Dr. Felten is a nationally
recognized expert on encryption and network security. His testimony in the
Microsoft Trial as a consultant to the Department of Justice recently put him in
the national spotlight. His academic endeavors and professional consulting
experience place him in a unique position to help the Company develop its
technology. Currently, Dr. Felten is providing consulting services to the
company and Fullcomm looks forward to his continuing involvement in our product
development process and his valuable input and understanding of relevant
technologies.


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DIRECTOR COMPENSATION

Directors currently do not receive a stated salary from Fullcomm for their
service as members of the board of directors, although by resolution of the
board, they may receive a fixed sum and reimbursement for expenses in connection
with the attendance at board and committee meetings. We currently do not provide
additional compensation for committee participation or special assignments of
the board of directors. From time to time, some of our directors will receive
grants of options to purchase shares of common stock.


EXECUTIVE COMPENSATION

The following table sets forth the total compensation to be paid or accrued for
the year ended December 31, 1999 to our Chief Executive Officer and to each of
our most highly compensated executive officers, other than the Chief Executive
Officer.

SUMMARY COMPENSATION TABLE
                                     LONG-TERM COMPENSATION

NAME AND PRINCIPAL POSITION          SALARY ($)        BONUS ($)
---------------------------          ----------        ---------

Richard T. Case                      $ 120,000         $ 24,000
Chief Executive Officer

Brendan G. Elliot                    $  60,000         $ 10,000
President

Wayne H. Lee                         $  60,000         $ 10,000
Executive Vice President


EMPLOYMENT AGREEMENTS AND ANCILLARY AGREEMENTS

Case Employment Agreement the agreement between Fullcomm and Richard Case which
shall provide, inter alia, the following: (i) $10,000 cash compensation per
month, the payment of which shall be deferred to the satisfaction of the
condition subsequent that not less than $1,000,000 in financing shall have been
received by the post-merger entity, (ii) a term of two years, (iii) payment of
175,000 shares or an option therefore which will be vested immediately and shall
be exercisable for upon the decision of the Board and nominal consideration, and
(iv) termination, with or without the giving of 30 days notice.

Fullcomm will enter into employment agreements with Brendan G. Elliott and
Wayne. H. Lee for a term of not less than two (2) years. The Board of Directors
will soon conclude these negotiations.


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Tashenberg Consulting Agreement an agreement to C. Bradley Tashenberg pursuant
to which Bradley Tashenberg (i) acts as director for two (2) years, and (ii)
provides consulting services to Fullcomm, Inc. and which entitles him to 50,000
shares.

Creekmoore Consulting Agreement is an agreement to Gregory Creekmoore pursuant
to which Gregory Creekmoore (i) provides consulting services to Fullcomm, Inc.
and which shall entitle him to 50,000 shares.

R.K. Grace Agreements the agreements entered into by Fullcomm and one or more
affiliates of R.K. Grace and Company consisting of a (i) Memorandum of
Understanding: Placement Agent and Financial Advisory Engagement dated January
4, 2000 between Fullcomm and R.K. Grace and Company, and (ii) a Consulting
Agreement between Grace Securities, Inc. and Fullcomm dated as of December 27,
1999, (iii) payment of 175,000 option shares to be exercised at $2.75 for seven
years.


OPTION GRANTS IN CURRENT FISCAL YEAR

The following table sets forth grants of stock options for the year ending
September 30, 2000 to our Chief Executive Officer and our most highly
compensated executive officers, other than our Chief Executive Officer. We have
never granted any stock appreciation rights. The potential realizable value is
calculated based on the term of the option at its time of grant. It is
calculated assuming that the fair market value of common stock on the date of
grant appreciates at the indicated annual rate compounded annually for the
entire term of the option and that the option is exercised and sold on the last
day of its term for the appreciated stock price. These numbers are calculated
based on the requirements of the Securities and Exchange Commission and do not
reflect our estimate of future stock price growth.

NAME AND PRINCIPAL POSITION             Option Shares
---------------------------             -------------

Richard T. Case                            175,000
Chief Executive Officer

Brendan G. Elliot                          100,000*
President

Wayne H. Lee                               100,000 *
Executive Vice President

* Fullcomm will enter into option agreements with Brendan G. Elliott and Wayne.
H. Lee for a term of not less than two (2) years. The Board of Directors will
soon conclude these negotiations.

The Board of Directors will engage R.K. Grace & Company for the design and
administration of an Employee Stock Option Program for the new employees as part
of a comprehensive benefits program.


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CERTAIN TRANSACTIONS

In 1999, our directors, officers and 5% stockholders, and their affiliates
purchased common stock as follows (prior to offering):


                                      NUMBER OF
                                      SHARES OF        PURCHASE
                                      COMMON           PRICE PER
NAME OF INVESTOR:                     STOCK             SHARE          %
-----------------                     -----             -----         ---

Brendan G. Elliot ...............   1,800,000           $ .013       39.1

Philip 0. Escaravage ............   1,575,000           $ .013       34.2

Wayne H. Lee ....................   1,125,000           $ .013       24.5

Various other shareholders ......     100,000           $ 2.50        2.2
                                    -------------------------------------

Total: ..........................   4,600,000           $ 0.07      100.0


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IDENTITY AND COMPENSATION OF PLACEMENT AGENT AND LEGAL COUNSEL


The placement agent for the Stock and financial advisor to the Company is R. K.
Grace & Company, 1101 Brickell Ave. South 5th Floor, Miami, Florida 33131 (the
"Agent/Advisor"). The Agent/Advisor will receive, as a result of the sale of the
Stock described herein: (a) a fee equal to 10% of the gross proceeds of the sale
of the Stock; (b) warrants for the purchase of shares of Stock equal to 10% of
the number of shares placed (such warrants are exercisable at a price of $2.75
per share for a period of seven years); and (c) a non-accountable expense
allowance of 2% of the gross proceeds of the sale of the Stock (plus additional
reimbursement for printing, travel and related expenses). The Agent/Advisor and
legal counsel have the right to register their shares if the Company registers
shares (so-called "piggyback" registration rights). The Agent/Advisor also has
demand registration rights.

Legal counsel for the Company is Buchanan Ingersoll Professional Corporation,
500 College Road East, Princeton, New Jersey 08540.

The Company's financial reports are maintained by: Thomas P. Monahan, C.P.A.,
208 Lexington Avenue, Paterson, New Jersey 07502


DOMICILE

Fullcomm, Inc. is located at 11 Chambers Street, Princeton, NJ 08542. Phone:
(609) 252-0657, Fax (609) 252-0655. Fullcomm's web address is www.fullcomm.com,
which is hosted by TAGE Multimedia Productions. TAGE can be located at
www.tage.com.


LEGAL PROCEEDINGS

We are not involved in any pending or, to our knowledge, threatened legal
proceedings. We may from time to time become a party to various legal
proceedings arising in the ordinary course of business.


                               ****************************


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SUMMARY FINANCIAL DATA

The following tables summarize the financial data for our business. You should
read this information with the discussion in "Management's Discussion and
Analysis of Financial Condition and Results of Operations" and our financial
statements and notes to those statements included elsewhere in this memorandum.


SELECTED FINANCIAL DATA

STATEMENT OF OPERATIONS:

Period from January 15, 1999 (INCEPTION) to December 31, 1999
(audited)


   Revenue                                                                  $-0-

    Costs of goods sold                                                      -0-
                                                                             ---

    Gross profit                                                             -0-

   Operations:
    General and administrative                                          295,163
    Research and development                                             18,000
    Depreciation and amortization                                         1,622
                                                                          -----
    Total expense                                                       314,785

   Loss from operations                                                (314,785)


   Other income and expenses
    Interest income                                                         562
    Interest expenses                                                      (546)
                                                                           -----
   Total other Income                                                        16
   Net income (loss)                                                  $(314,769)
                                                                      =========
   Net income (loss) per share-basic                                     $(0.07)
   Number of shares outstanding-basic                                 4,600,000


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          BALANCE SHEET
          DECEMBER 31, 1999
                                          Assets
          Current assets
           Cash and cash equivalents                                      1,439
                                                                          -----
           Total current assets                                           1,439

          Property and equipment-net                                     14,594

          Other assets
           Patent costs                                                   1,917
                                                                          -----
          Total other assets                                              1,917
                                                                          -----
          Total assets                                                  $17,950
                                                                        =======


                           Liabilities and Stockholders' Equity

          Current liabilities
           Accounts payable and accrued expenses                        $57,168
           Loan payable                                                  25,315
                                                                         ------
           Total current liabilities                                     82,483


          Stockholders' equity
           Common Stock authorized 10,000,000 shares, no par value      250,236
           each.
           At December 31, 1999, there are 4,600,000 shares outstanding
          Retained earnings deficit                                    (314,769)
                                                                       ---------
          Total stockholders' equity                                    (64,533)
                                                                        --------
          Total liabilities and stockholders' equity                     $17,950
                                                                         =======


                              *****************************


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MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS FOR THE PERIOD FROM INCEPTION, January 15, 1999 TO DECEMBER 31, 1999


The following discussion relates to the results of our operations to date, and
our financial condition. This memorandum contains forward looking statements
relating to our Company's future economic performance, plans and objectives of
management for future operations, projections of revenue mix and other financial
items that are based on the beliefs of, as well as assumptions made by and
information currently known to, our management. The words "expects, intends,
believes, anticipates, may, could, should" and similar expressions and
variations thereof are intended to identify forward-looking statements. The
cautionary statements set forth in this section are intended to emphasize that
actual results may differ materially from those contained in any forward looking
statement.

Development Stage Activities

The Company has been a development stage enterprise from its inception January
15, 1999 to December 31, 1999. The Company is a development stage company that
was organized as a successor to Fullcomm, LLC ("Fullcomm") to commercially
exploit technology developed in connection with the secure transmission of
digital media and other data on the Internet.

During this period, management devoted the majority of its efforts to initiating
the research and development, prototype development, production scheduling,
sourcing inventory and its marketing program, acquire additional equipment,
management talent, inventory and working capital to engage in any profitable
business activity. Since its organization, the Company's activities have been
limited to the preliminary development of its new products, preparation for
filing of a patent application, hiring personnel and acquiring equipment and
office space, conducting research and development of its technology and
preparation of documentation and the sale of a private placement offering. These
activities were funded by the Company's management and investments from
stockholders. The Company has not yet generated sufficient revenues during its
limited operating history to fund its ongoing operating expenses, repay
outstanding indebtedness, or entirely fund its research and product development
activities. There can be no assurance that development of the Company's products
will be completed and fully tested in a timely manner and within the budget
constraints of management and that the Company's marketing research will provide
a profitable path to utilize the Company's marketing plans. Further investments
into the Company's technology, marketing research as defined in the Company's
operating plan will significantly reduce the cost of development, preparation,
and processing of purchases and orders by enabling the Company to effectively
compete in the electronic market place.

During this developmental period, the Company has been financed through
officer's loans with a balance of $25,315 from Philip O. Escaravage and an
entity that is controlled by him, The Umbrella Project, Inc. The Company also
financed its activities through the sale of shares of common stock aggregating
of $60,000 to certain officer's and directors and the sale of shares of common
stock through a private placement with net proceeds of $190,236.


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Results of Operations for the period from inception to December 31, 1999

For the period from inception to December 31, 1999, the Company has not
generated any sales. The Company's general and administrative costs aggregated
approximately $295,163 for the period from inception to December 31, 1999. These
expenditures represent: salaries and payroll taxes of $93,675, telephone expense
of $4,633, professional fees of $123,865, rent of $13,080 and office and
computer expense of $59,910.


Liquidity and Capital Resources

As of December 31, 1999, the Company's cash balance was $1,439, and the
Company's working capital was a negative $81,044. As of December 31, 1999, the
Company had a tax loss carry-forward of $314,769 to offset future taxable
income. There can be no assurance, however, that the Company will be able to
take advantage of any or all of such tax loss carry-forward, if at all, in
future fiscal years.


Financing Needs

To date, the Company has not generated any revenues. The Company has not been
profitable since inception, may incur additional operating losses in the future,
and may require additional financing to continue the development and
commercialization of its technology. While the Company does not expect to
generate significant revenues from the sale of products in the near future, the
Company may enter into licensing or other agreements with marketing and
distribution partners that may result in license fees, revenues from contract
research, or other related revenue.

The Company expects its capital requirements to increase significantly over the
next several years as it commences new research and development efforts,
undertakes new product developments, increases sales and administration
infrastructure and embarks on developing in-house business capabilities and
facilities. The Company's future liquidity and capital funding requirements will
depend on numerous factors, including, but not limited to, the levels and costs
Of the Company's research and development initiatives and the cost and timing of
the expansion of the Company's sales and marketing efforts.

The Company anticipates that it will be able to fund operations over the next
twelve- (12) months. To enable the Company to fund its research and development
and commercialization efforts, including the hiring of additional employees, the
Company in the process of offering additional shares of its common stock.


REVENUE RECOGNITION

Fullcomm believes that it will generate revenue from licensed technology
products, transaction fees and information services delivered over the Internet,
private Intranets or other networks. Which include fees from:


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      o  licensing solutions;
      o  network and user transaction fees; and
      o  performing development and consulting services


We believes it will generate network-based services revenue from fixed fee
subscription arrangements, which is recognized ratably over the term of the
applicable agreement, and from arrangements that are priced on a per-transaction
or per-user basis, which is recognized as the services are performed. Revenue
from development projects is recognized on a percentage-of-completion basis or
as such services are performed, depending on the terms of the contract. Revenue
from development and consulting services is recognized as the services are
performed.

Hardware and software systems are licensed under the terms of substantially
standard nonexclusive and nontransferable agreements, which generally have a
noncancelable minimum term of six years and provide for an initial license
charge and a monthly license charge. The initial license charge grants a right
to use the software system available at the time the license is signed. The
monthly license charge, which covers the right to use during the term of the
agreement. Customers wishing to acquire perpetual rights to use the Company's
software may enter into additional agreements to acquire such rights.

Licensing Agreements

We are targeting relationships that could establish our solutions in several
large markets, including entertainment, business information, and publishing. A
significant part of our licensing efforts will be focused on adoption of our
technology by the music industry, as we believe it will be an early implementer
of DRM technology. We believe that, if our general purpose solutions are adopted
in the music market, we will be positioned to have our platform adopted in
additional entertainment markets, including games, audio books, and video, and
other markets, including business information and publications.

We have four basic types of license agreements: commerce service licenses,
business licenses, applications licenses and alliance agreements. These
agreements provide different rights and technology depending on the commercial
plans of our partners. Initial license fees received from these agreements may
vary in amount depending on factors such as partner commitments, scope of the
license as it relates to commercial markets, territory, and term of agreement.
Examples of partner commitments may include deploying licensed products within a
specified time frame, exclusively using portions of our software, and using and
publicly promoting us as the partner's preferred digital rights management
technology.

We will license our technology to our partners to build digital commerce
services and applications. In addition, we intend to leverage our partners'
activities as they bring in their own partners and customers. While we may
receive initial license fees from our partners, over time we anticipate that our
revenues will be derived primarily from transaction fees from our partners' and
their customers' commercial deployment of applications and services.

Our license fees will be negotiated based on the terms and conditions of each
individual agreement and take into account the scope of the license, the term,
and the other commitments made by our


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partners that provide strategic value to us. In connection with our strategy to
promote widespread deployment of our solutions, we anticipate receiving an
initial license fee for our Commerce solutions in the form of a minority equity
position in the licensee. The value of the license fee will be determined based
on the estimated fair value of the underlying equity securities received. In the
future, we may enter into other equity payment arrangements.

Our success depends on significantly increasing the number of companies that
license our technology and use it for the sale and management of digital content
and services.


OPERATING EXPENSES

In view of the rapidly changing nature of our industry and our new and unproven
business model, we believe that period-to-period comparisons of revenues and
operating results are not necessarily meaningful and should not be relied upon
as indications of future performance. In addition, our business model is new and
unproven and has not succeeded in generating sufficient revenue to sustain or
grow our business. We also operate in an intensely competitive market for highly
qualified technical, sales and marketing, and management personnel and
periodically make salary and other compensation adjustments to retain and hire
employees. We anticipate that our operating expenses will increase in future
quarters. We expect to incur additional losses for at least the next several
years. As a result, we will need to generate significant additional revenue to
achieve and maintain profitability. In addition, we have limited and delayed
insight on consumer trends and sales, which makes prediction of our future
revenues difficult.

We anticipate that research and development, sales and marketing, and general
and administrative expenses will increase in absolute dollars as a result of new
hires and related personnel costs. Sales and marketing spending is expected to
increase as a result of our spending on branding, trade shows, advertising, and
promotion.

Research and Development

Research and development expenses consist principally of salaries and related
personnel expenses, consultant fees, and the cost of software used in product
development. Research and development expenses are expensed to operations as
incurred. We believe that continued investment in research and development is
critical to attaining our strategic product objective and we expect these
expenses to increase significantly in absolute dollars in future periods.

Sales and Marketing

Sales and marketing expenses consist of salaries and related expenses for
personnel engaged in direct sales, partner development, marketing, field service
support, consultant fees and advertising, promotional material, and trade show
exhibit expenses. We expect sales and marketing expenses to increase in absolute
dollars due to planned growth of our sales and partner development
organizations, including the establishment of additional offices in domestic and
international locales, and aggressive implementation of advertising and
promotional programs.


                      **********************************


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INDUSTRY BACKGROUND

The Internet has emerged not only as the fastest growing communications medium
in history, but also as one of the most efficient distribution channels for
commerce. According to International Data Corporation, total worldwide Internet
commerce spending was $50.4 billion in 1998 and is estimated to grow to $1.3
trillion in 2003. International Data Corporation further estimates that
worldwide Internet commerce spending per online buyer will grow from $1,635 in
1998 to $7,216 per year in 2003 representing a compound annual growth rate of
70%. E-business (business-to-business transactions), estimated at $40 billion,
is 5 times as large as personal users. By 2003, that figure will balloon to over
$1 trillion, or approximately 10% of all U.S. business. By 2006, this might grow
to 40% of all U.S. business. By 2003, over 400,000 US based e-merchants will
have a presence on the Internet.

For the past three years, the Internet has enabled consumers to quickly find the
lowest prices for goods such as books, CDs, toys and electronics, and order them
instantly. Now old-line manufacturers, including Boeing and GM and Ford, are
exploring ways to use the Internet the same way.

Online marketplaces are gaining popularity because they enable companies to
better monitor prices and product availability, thereby cutting costs.
Corporations are now beginning to rush headlong into the market for automating
their purchases of supplies and drive costs down. Business-management software
makers like Oracle, SAP of Germany, Ariba and Commerce One sell software that
links companies to their suppliers on a computer network that it manages instead
of allowing customers to build their own trading communities that they monitor
and control. Oracle, in particular, thinks it can win more customers by selling
software that organizes both direct and indirect procurement, or purchasing for
materials necessary for the manufacture of their products as well as unrelated
supplies for the office or factory floor.

The Internet has become a dominant force. It is a source of information and
entertainment that offers over 3 billion websites. Estimates of on-line computer
users range from 150-million to 200-million. Based on current trends and
industry growth patterns, that figure could reach more than 300-million users in
less than five years. (Source: U.S. Department of Commerce).

While most Internet commerce to date has involved the delivery of physical goods
like books and compact discs ordered online, the Internet is poised to become a
leading distribution channel for digital goods as well. Today, most content is
in, or can be easily put into, digital form. This content includes music,
videos, games, software, publications, business information including patient
recordkeeping, and images. The Internet can be used to disseminate this digital
information efficiently to broad audiences without geographic boundaries, and
can eliminate many of the traditional costs associated with manufacturing,
packaging, and distribution. The use of the Internet for digital goods is being
supported both by the growing number of households and businesses connected to
the Internet, and by electronic devices other than the personal computer, such
as set-top boxes, portable music players, mobile phones, and other hand-held
devices, all of which are becoming connected to the Internet. In addition,
downloading digital content is becoming significantly easier with the emergence
and adoption of broadband technologies including digital subscriber lines and
cable modems, and enhanced compression technologies including MP3 for


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music and MPEG-2 for video. The Internet will add to the existing channels for
distributing digital goods on physical media like compact discs and DVDs.

The characteristics that make the Internet ideal for distributing digital goods
also make it ideal for pirating and misusing them. Digital goods, if not
protected and managed, can be easily copied without any degradation in quality,
altered and defaced, and distributed with the touch of a button to a large
number of recipients. These threats are increased by advances in broadband and
compression technologies, wider uses of portable devices, and wider availability
of re-writeable compact disc and DVD devices. As the number of users connected
to the Internet and the amount of digital information transmitted over the
Internet increases, these users and this information become more vulnerable to
parties who wish to interfere with the integrity of digital information and
digital transactions.


E-INFORMATION SECURITY

      o     secures sensitive corporate data - allows satellite offices to
            securely access home office databases. Only parties with Fullcomm
            hardware and software can access sensitive information
      o     secures EDI transactions in the healthcare/insurance industries
      o     the security architecture allows enhanced control and utilization of
            credit card verification services and other E-business security
            concerns
      o     Fullcomm technology drastically improves upon the security currently
            available for online stock trading, bank account information and
            related applications
      o     Internet Publishing - The ability to distribute books, periodicals,
            and newspapers online and retain distribution rights(no piracy)
      o     Software Distribution - The Company's technology facilitates and
            substantially enhances sales and distribution capabilities for
            vendors and software manufacturers
      o     Fullcomm technology allows small software companies to compete with
            large software companies because access to shelf space and
            distribution channels are no longer barriers to entry or market
            share
      o     the technology enables the direct download and/or rental of software
            via the Internet with appropriate security


HEALTHCARE INDUSTRY OVERVIEW

Healthcare costs in the United States have risen dramatically over the past two
decades and now represent approximately $1.0 trillion or 14% of the annual gross
domestic product. Federal and state governments, insurance carriers and other
third-party payors have moved aggressively to control these rising costs. One of
the ways in which these entities have managed rising costs has been to employ
alternative reimbursement models to replace the fee-for-service reimbursement
model, which has been the traditional basis for payment for healthcare services.
Such alternative reimbursement models include managed care, fixed-fee and
capitated models of reimbursement. The result of these generally more
restrictive reimbursement practices has been a dramatic increase in the
complexity of accounting, billing and collecting payment for healthcare
services. To address


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these challenges, healthcare providers are increasingly utilizing information
technology, including practice management systems. While spending for
information technology within the healthcare industry has historically been
below that of other industries, healthcare information technology expenditures
are expected to grow from $13.6 billion in 1997 to $21.0 billion by 2000.
Although the practice management segment of the healthcare industry has
historically lagged behind the healthcare industry as a whole in spending for
information technology, expenditures on practice management systems have grown
at a compound annual rate of approximately 26% from 1993 through 1997 and are
projected to grow at a comparable rate through 2000. Practice management systems
include a range of software products and services for physicians and other
healthcare providers. Most practice management systems provide several common
functions, including practice administration functions, such as patient
scheduling; financial functions, such as patient billing and receivables
management; and may include clinical functions, such as preventative care
notification. Beyond these common three functions, the continued evolution of
information and telecommunication technologies has led to the development of
electronic commerce tools for integration with practice management systems.
These tools can help to improve a healthcare practice's cash flow by
facilitating EDI, thereby enabling more accurate and rapid submission of claims
to third-party payors and more rapid receipt of corresponding reimbursements.
Currently, nearly half of the total health claims submitted in the United States
annually are processed manually. Paper claims require more time and are
significantly more expensive to prepare, file and process than electronically
submitted claims. Recent industry statistics suggest that the combined cost to
payors and providers of processing a manual claim total approximately 15% of
the average claim amount. EDI transactions, on the other hand, can be processed
directly with third-party payors or channeled through processing clearinghouses
at significantly lower costs to the provider and the payor. Because of these
significant cost savings, some payors are beginning to require practitioners to
submit reimbursement claims electronically. Providers have also recognized a
growing need for decision support tools that access and analyze the increasing
volume of financial and clinical information generated by their practices. As
the continued evolution of managed care requires physicians to be "at risk" for
the costs associated with providing healthcare services, individual physicians
will need advanced information technology to aggregate and evaluate financial
and clinical information in an effort to manage their practices more efficiently
and profitably. The practice management systems industry in the United States is
highly fragmented, with a large number of relatively small, regionally focused
companies and few national vendors. Most of these smaller competitors lack the
financial and technical resources to develop, effectively market and support the
advanced software products demanded by the marketplace. Many of these vendors
are increasingly willing to combine with larger practice management systems
vendors that have substantially greater financial, technical and managerial
resources.


Regulation regarding patient confidentiality

The healthcare industry is highly regulated and is subject to changing
political, economic and regulatory influences. These factors affect the
purchasing practices and operation of healthcare organizations. Changes in
current healthcare financing and reimbursement systems could cause us to make
unplanned modifications of applications or services, or result in delays or
cancellations of orders or in the revocation of endorsement of Fullcomm's
solutions and applications by healthcare participants. Federal and state
legislatures have periodically considered programs to reform or amend the U.S.
healthcare system at both the federal and state level. These programs may
contain


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proposals to increase governmental involvement in healthcare, lower
reimbursement rates or otherwise change the environment in which healthcare
industry participants operate. Healthcare industry participants may respond by
reducing their investments or postponing investment decisions.

The applicability to the Internet of existing laws in various jurisdictions
governing issues such as property ownership, sales and other taxes, libel and
personal privacy is uncertain and may take In years to resolve. Demand for
Fullcomm solutions and applications may be affected by additional regulation of
the Internet. For example, until recently Health Care Financing Administration
guidelines prohibited transmission of Medicare eligibility information over the
Internet.

The confidentiality of patient records and the circumstances under which such
information may be in used or released are subject to substantial regulation by
state and federal laws and regulations. Regulations governing electronic health
data transmissions are evolving rapidly and are often unclear and difficult to
apply. The Health Insurance Portability and Accountability Act of 1996 ("HIPAA),
requires the Secretary of Health and Human Services to adopt national standards
for certain types of electronic healthcare information transactions and the data
elements used in such transactions, and to adopt standards to ensure the
integrity and confidentiality of such information.

We will be subject to extensive regulation relating to the confidentiality and
release of patient records and other health care industry issues. Additional
legislation governing the distribution of medical records has been proposed at
both the state and federal level. It may be expensive to implement security or
other measures designed to comply with any new legislation. Moreover, Fullcomm
may be restricted or prevented from delivering patient records electronically.

E-HealthCare from HealthCare Service Providers (HCSP)

The adoption of Internet solutions by healthcare participants will require the
acceptance of a new way of conducting business and exchanging information. The
healthcare industry, in particular, relies on legacy systems that may be unable
to benefit from Fullcomm's Internet-based platform. To maximize the benefits of
HCSP platforms', healthcare participants must be willing to allow sensitive
information to be stored in HCSPs databases. Providers can process transactions
for healthcare participants that maintain information on their own proprietary
databases. However, the benefits of HCSP connectivity and sophisticated
information management solution are limited under these circumstances. Customers
using legacy and client-server systems may refuse to adopt new systems when they
have made extensive investment in hardware, software and training for older
systems.

E-commerce transaction platforms and industry relationships will enable a key
strategic goal of offering a comprehensive, integrated Web-based solution for
the administrative, communications and information needs of the healthcare
industry;

      o     providers of end-to-end Internet solutions to the healthcare
            industry will be in a better position to achieve increased
            subscriber penetration among physicians. payors, providers and other
            healthcare industry participants
      o     expanding connected network of customers and strategic partners;
      o     increasing transaction volume;


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      o     broadening offerings of Internet-based healthcare-related
            transactions services, and creating enhanced cross-selling
            opportunities;
      o     increasing the speed at which Internet transaction processing
            streamlines inefficient manual and paper-based processes; and
      o     enhancing the quality and depth of patient-doctor communications

Information Services - core software products enable transaction-based EDI
functions, including patient billing and insurance claims submission and
remittance. The use of EDI can improve a healthcare practice's cash flow by
enabling more accurate and rapid submission of claims to third-party payors and
more rapid receipt of corresponding reimbursements. EDI services currently
include the following:

      o     Electronic Patient Billing--electronically submits patient billing
            information from practices by dial-up modem or via the Internet to
            independent national clearinghouses which process, print and mail
            invoices and provide billing reports to the practice;
      o     Electronic Claims Submission--electronically submits insurance
            claims from practices to payors, either directly or through
            independent national clearinghouses; and
      o     Electronic Claims Remittance--electronically remits insurance
            payment and automatically posts explanation of benefits into the
            practice management system.

Competition includes:

      o     healthcare information software vendors, including McKessonHBOC and
            Shared Medical Systems;
      o     healthcare electronic data interchange companies, including ENVOY a
            subsidiary of Quintiles Transnational Corp., and National Data; and
      o     large information technology consulting service providers, including
            Andersen Consulting, IBM and EDS.


DIGITAL RIGHTS MANAGEMENT (DRM)

DRM is needed across all content industries, including music, video, games,
software, publications, business information, and images, and by all of the
constituencies in these industries. These constituencies, including artists,
authors, producers, publishers, and distributors, are all concerned about
protecting and managing their rights in digital content. All parties want to
receive royalties for copyrighted materials. Artists and authors want to protect
the integrity of their works. Consumers want easy transparent access to good
content but are concerned about protecting their privacy. Producers, publishers,
and distributors want to structure and optimally manage their business models.

DRM applies too more than content industries. The Internet is becoming a
principal means for digital interaction among organizations and individuals. A
vast amount of data about organizations and individuals is digitized on
computers, sent over networks, and stored in electronic form. Much of this
information is confidential and proprietary, including trade secrets, supply
chain and product information. Some of this information is also personal in
nature, including financial and medical


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records. This information is gathered, stored, and exchanged among many
entities, including corporations, governments, schools, hospitals, and
individuals. These organizations and individuals need to manage their digital
rights in the flow of proprietary and personal information, so that only the
appropriate people can use the information. DRM is also useful for protecting
rights, as these information flows become more automated, in trading, brokering,
regulatory compliance and other industries.

Current computing environments and security techniques are not designed to
provide sufficient protection and management of digital rights. Historically,
computers, networks, and operating systems were designed primarily for creating,
processing, and distributing information. Similarly, security technologies
evolved to protect computers and networks from the outside environment and to
protect information during a point-to-point transmission, not to protect
information and rights once information has been received and properly accessed
by a user. In commercial transactions in current computing environments,
information is generally stored and transactions are processed at remote
mainframes or servers, even when it is less efficient, because the client and
other parts of the environment do not provide adequate protection and security.
As a result, these security technologies either do not consider an authorized
user as a potential threat, or fail to provide sufficient mechanisms to prevent
the improper use of information. With digital commerce, the threat comes not
only from the outside--a hacker trying to break into the protected computer or
decrypt an encrypted transmission. The threat comes also from the inside--a user
may be authorized initially to access digital information but performs an
unauthorized act, such as making or distributing copies. Moreover, the
requirement for centralized transaction processing and information storage is
less efficient, harder to scale, and more constrained in use than systems that
distribute secure processing.

Current techniques for DRM that are built on these centralized securities
approaches generally only provide secure digital distribution. For example,
these techniques generally lack the ability to persistently manage digital
information, especially when offline, and essentially allow only a limited
number of inflexible business relationships that are predetermined by the
technology provider. These techniques usually require online interaction, which
increases costs, limits consumer convenience, and makes some business models
uneconomical.

A new computing technology is required to address all of these concerns--one
that, when distributed over a vast array of computers and devices, consistently
protects and manages rights related to digital information and processes, online
and offline, wherever this information and these processes may occur. Creators,
publishers, distributors, service providers, governments and other institutions,
and users must have the ability both to create and associate rights and rules
that persistently apply to digital information and processes, and to modify the
rights and rules, if permitted, even after the information is distributed. These
rights and rules might represent information regarding ownership, access,
payment, promotion, warranty, privacy, and other elements of commerce in
information. When these rights and rules are based on a common foundation, they
can form a basis for an interoperable global system for digital commerce.


Need for secure transactions


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The very openness and accessibility that have stimulated the adoption and growth
of public and private networks create threats to the privacy and integrity of
information that is transmitted across or stored on them. According to a 1997
industry survey, 70% of consumers and businesses surveyed cited security
concerns as the principal impediments to a broader use of the Internet for
commercial applications. Key consumer security concerns include merchant
impersonation, fraud and the risk that third parties may intercept and use
personal information such as credit card numbers, all of which may inhibit the
broader adoption of electronic commerce. Businesses relying on public and
private networks for internal communications risk the theft, loss, alteration or
dissemination of confidential data, loss of reputation and economic loss through
fraud. Threats to corporate data security arise both from external sources such
as competitors and computer hackers, as well as internal sources, such as
curious or disgruntled employees and contractors. According to a recent FBI
report, among U.S. enterprises reporting that they had experienced computer
security breaches, the average financial losses from internal breaches were
significantly higher than the losses sustained from external breaches. These
business risks have driven the demand for effective and robust network and
information security products.

The security risks associated with communications and commerce over public and
private networks have accentuated the need for information security solutions
that address the five critical network security needs:

      o     Access control--only authorized users should access, view or modify
            certain data;
      o     Confidentiality--data in transit over the network or in storage
            should not be disclosed to unauthorized persons;
      o     Integrity--data should not be altered or compromised by unauthorized
            manipulation;
      o     Authentication--the identity of the data sender should be verified;
      o     Non-repudiation--the sender of a transmission should not be able to
            deny or repudiate the transmission

A wide range of products and services have been introduced to address one or
more of these five critical network security needs. For example, access control
is provided by products such as firewalls and password tokens, which limit
network access only to users having recognized addresses or entering recognized
passwords, but are limited in their flexibility and do not address such
requirements as confidentiality, integrity, authentication and non-repudiation.
Encryption devices and programs provide confidentiality, but are
device-dependent and do not address issues of access control, integrity,
authentication and non-repudiation. The lack of flexibility and scalability
inherent in these solutions has led to the development of public key encryption
and digital certification systems combined in a public key infrastructure, which
can address all five critical network security needs.


PUBLIC KEY SECURITY

A public key infrastructure uses encryption algorithms in combination with
authentication and verification technology offered by digital certificates to
provide the user with a secure and reliable means of communicating and effecting
transactions over public and private networks.

Public key encryption


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Digital messages are encrypted and decrypted using a cipher or key. Public key
encryption systems assign each user a pair of linked keys: a "public" key, which
the user provides to others, and a "private" key, which the user keeps secret. A
user wishing to send a secure transmission encrypts the transmission using the
recipient's public key. To decode the transmission, the recipient uses a private
key that is uniquely able to decode messages encoded with his or her
corresponding public key. Thus, the successful exchange of encrypted messages
using a public key system requires that message senders have the public keys for
all recipients to whom they desire to send messages, and that the recipients
decode messages with their own private keys. Public key encryption provides a
high level of data security, and thus addresses an enterprise's need for
confidentiality of electronic transmissions. However, because encryption alone
does not give the recipient of a message any information about the sender or
ensure that a message is not altered en route, the requirements for access
control, integrity, authentication and non-repudiation are not satisfied.

Digital certification
The ability to ensure access control, authentication and non-repudiation of
digital transmissions can be achieved with digital certification systems, which
enable a recipient to verify that a message originates from the expected sender.
These systems use public and private keys to create a special file called a
digital signature. This signature is encoded using the sender's private key.
Upon receipt of the message, the recipient obtains a copy of the sender's public
key from a directory established by a trusted administrator (a "Certification
Authority" or "CA"), which verifies that the message originated from the
expected sender. Digital certificates thus function as electronic passports that
not only authenticate their owners' identities and verify their owners'
membership in certain organizations, but also establish their owners' authority
to engage in a given transaction. Digital signature and certification technology
can also be used to ensure the integrity of a message by enclosing an encrypted
summary or "hash" of the message with the sender's digital signature. When the
signature and hash are decrypted using the sender's public key supplied by the
CA, the system can automatically detect whether the message was altered since it
was signed.

Market acceptance
Because of its security benefits, digital certification has gained significant
market acceptance, particularly in sectors in which information security is
critical, such as government, finance, health care and telecommunications.
Industry sources believe that by 2000 digital certificates will be nearly as
widely adopted by the general public as e-mail is today. At least 40 U.S.
states, as well as the U.S. and Canadian governments and the European Union have
adopted or are considering digital signature statutes that recognize the legal
validity of digitally signed documents. In addition, the banking industry's
Secure Electronic Transaction (SET) standard for Internet credit card purchases,
as well as the Internet secure packet transmission standard (IPsec) adopted by
most firewall, routing and access vendors, depend on digital certification.

Need for a public key infrastructure
The increasing acceptance of digital certificates has given rise to numerous
products and services that issue digital certificates or that are digital
certificate-ready. However, the mere issuance of digital certificates does not
ensure that a user's access is properly monitored, that privileges associated
with access are accurately and currently defined, or that the certificates in
question have not been withdrawn or replaced. Indeed, the proliferation of users
and certificates greatly complicates management of these issues, which are
critical to maintaining an effective security environment across and between
enterprises. To address these needs, enterprises must have a


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robust public key infrastructure that supplements certificate issuance functions
with full life cycle management of public keys, including issuance,
authentication, storage, retrieval, backup, recovery, updating and revocation,
in an easy-to-use, cost-effective manner.

Moreover, unless digital certificates can be easily utilized on a consistent and
reliable basis across multiple applications (such as e-mail, browser, electronic
commerce, electronic forms and remote access), organizations will face the
challenge and cost of maintaining a separate security infrastructure for each
application, requiring separate keys and certificates, multiple passwords and
inconsistent or incomplete security implementations. Furthermore, any PKI must
be able to support an enterprise's security requirements as the enterprise
grows, business functions are altered and underlying IT technologies evolve. To
be effective, a public key infrastructure must be able to accommodate a large
number of users and integrate diverse computing resources into a consolidated,
reliable and secure computing environment that meets the five critical network
security needs of access control, confidentiality, authentication, integrity and
non-repudiation. Achievement of these goals requires a highly functional and
flexible public key infrastructure for the management of network security
features across an enterprise and between organizations.

Promote widespread deployment

We have designed our client technology and our licensing structure to achieve
efficient and rapid deployment. Our technology is designed so those consumers
can conveniently activate it. It is also designed so that it can be flexibly
deployed by our partners through a variety of means, including digital download,
optical disk distribution, and pre-installation. We will also work with our
partners to develop business models that promote rapid deployment, for example,
superdistribution, which allows users to drive deployment through redistribution
of content.


VIRTUAL PRIVATE NETWORKS

Using Managed IP Security (IPSec) with Virtual Private Networking (VPN) service
will enable users to efficiently provide branch offices, traveling executives
and telecommuters with secure, high-speed access to mission-critical
applications on their Intranet. VPNs will enable Fullcomm to extend globally
secure connectivity to corporate partners and suppliers.

Virtual Private Networks is the logical next step as companies expand the reach
of their private networks to remote workers, distributors, and suppliers.
Leading industry analysts say that over the next five years, businesses will
spend more than $14 billion on managed VPN services for both IP-centric
customers as well as private data networking customers migrating to VPNs.

VPN features are available today and include IPSec and Managed Tunneling
Services that support both Layers 2 Tunneling Protocol (L2TP) or Point-to-Point
Tunneling Protocol (PPTP). Professional services delivered through AT&T
Solutions Network Professional Services and AT&T's Alliance Channel Program also
are available to help implement and support these VPN features.

Internet Protocol Security (IPSec) provides businesses with a highly secure,
scalable, and interoperable means to globally connect end users across multiple
networks and service providers. IPSec is a set of protocols defined by the
Internet Engineering Task Force (IETF) that helps ensure


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the confidentiality, integrity, and authenticity of data communications across a
public network. They use digital certificates, which are needed to prevent data
from being tampered with or viewed by unauthorized users. This fully IPSec
compliant offer provides global end-to-end encryption and simultaneous access
during the same dial session to both the public Internet, as well as secured
private networks.

Layer 2 Tunneling Protocol (L2TP) is an IETF standard that enables users to
connect to private networks over the public Internet using "tunneling." A tunnel
works by "wrapping" one data packet inside another so it can be routed over the
Internet to a private network. Once it reaches its destination, the packet is
"unwrapped" and handed off to the private network. L2TP for VPN service is
network-based and will allow customers around the world to use the public
Internet to make their private network applications available to remote users
and trusted third parties. This service will ease customer network management by
supporting privately administered IP addresses, by securely authenticating the
source and destination of each tunnel, and by providing quality of service
routing for tunneled traffic.

Point-to-Point Tunneling Protocol (PPTP) service is client-based and provides
businesses with additional tunneling options. Similar to L2TP service, it allows
customers to use the public Internet to access private network resources using
multiple transport protocols, such as Novell's Internetwork Packet Exchange
(IPX) and NETBIOS. It also helps increase network security with optional data
encryption technology and by limiting access too only authorized users.

A recent report from the Phillips Group-InfoTech projects the U.S. wholesale
network services market could grow at an average annual growth rate of 24
percent to reach $ 116 billion in revenue by 2003 up from $39 billion in 1998.
The surge, according to the Parsippany, NJ-based research and consulting firm,
will be driven primarily by Internet Protocol (IP) related wholesale volume.
Three key sectors account for increases in IP related wholesale volumes,
according to the study. The rapid growth of wireless wholesale services, driven
by Internet access, will jump from $500 million in 1998 to $5,500 million in
2003, expanding by a factor of eleven. The second biggest IP Wholesale growth
rate will be among new entrants to the industry, known as competitive local
exchange carriers (CLECs). These firms posted total wholesale revenues of $250
million in 1998 but in five years, CLEC revenues are anticipated to multiply
ten-fold, to $2.62 billion in 2003. The third biggest IP Wholesale rate of
growth originates from Packet/Cell-based network service provider services
(NSPs), which includes the delivery of IP Telephony. NSP revenues will jump from
$2.0 billion in 1999, to $20.4 billion in 2003.

Five emerging business models are empowering new players who are both creating
and taking advantage of the transformation of bandwidth usage. These include the
following models and leading companies who have adopted these models:

Network service providers (NSPs) furnish network services and applications
hosting centers. Examples of prominent NSPs include AT&T), MCI/WorldCom QUEST,
Williams Communication and Level 3.

Content delivery providers (CDPs) deliver broadband Internet content in
innovative approaches that overcome some of the throughput capabilities of the
current Internet. Some of the leading CDPs include Adero, Akamai Tech Inc.,
iBEAM, Intervu and Sandpiper.


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Applications service providers (ASPs) offer applications over the network to
businesses and end-users as networking costs have plummeted and acquiring and
retaining trained IT staff has become more difficult. Examples of ASPs include
Digex, Oracle Corp and SAP Ag.

Headquarters Providers (HQPs) consist of large enterprise businesses that have
adopted wholesale like characteristics to serve their internal constituents as
well as their external suppliers and customers.

Broadband content providers (BCPs) create and deliver broadband content
including event broadcasting and depend upon the network service providers and
the content delivery providers to insure effective delivery of their content.
Examples of BCPs include Excite@Home, MSNBC, Broadcast.com, and Intertainer.com.
These new business models are helping to accelerate an already explosive growth
in wholesale telecom services.


AUDIO

      o     Audio - allows for the distribution of music over the Internet
            without concern for pirated copies
      o     The major music labels have been looking for a secure way to
            digitally distribute music via the Internet. Fullcomm technology
            allows record labels to tap the broad reaching distribution
            capabilities of the Internet
      o     Independent music labels can realize substantial savings from
            decreased advertising and distribution costs. With the ability to
            distribute over the Internet, these smaller labels can gain access
            to broader markets and compete with larger labels for market share
            based on content and service rather than name recognition through
            advertising


Digital Recordings

With the many recent advancements in technology, such as the personal CD burner
attached to PCs, depriving Media owners of royalties is a simple proposition.
Billions of dollars are lost annually in the music industry alone. The illegal
use and distribution of copyrighted information is a major concern on the
Internet.

Pirating of audio and video is not a new concept to recording labels and movie
studios that had previously written off those losses as inconsequential in the
long term. In the past, pirated copies were less of a concern because analog
copies (e.g. audiocassette tapes and VHS tapes) have a limited use life - each
use degrades the quality of the tape. Also, the quality of copies degrade very
quickly when "generations" separate the original/master from the copy -
essentially, a copy of an original has noticeably degraded quality versus the
original and each "generation" away is much more degraded. Using VHS as an
example, the second generation of copies is practically incapable of being
viewed. This general premise holds true for all analog formats of media.

Digital copies of information are inherently different. Each digital copy is a
perfect copy of the original. Due to error checking technology and the use of
standard systems and protocols, each digital copy is a master copy.
Technological advances, such as the incredible growth in personal


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computing power and the all time low cost and high availability of data storage
methods, have now made duplicating digital information very simple and
inexpensive. Media owners must now wrestle with a dilemma. To utilize the
fundamental strengths of the Internet as a distribution method, they put their
media at risk of piracy. This is a huge concern because One pirated digital copy
is the entire world needs to make an unlimited number of copies.

These security concerns were initially unforeseeable. To plan for this security
issue, companies would have had to know the future of technology years before
the technology even existed, and furthermore, that the Internet was going to
grow into what it is today.

Only recently have companies begun to capitalize on this sensitive security
issue concerning the Internet. Our competitors' ideas consist of using limited
technology to provide a short-term solution to a long-term problem. These
"solutions," primarily software-based, have arisen due to concern for current
business, but that does not change the fact that all static software-based
security measures are vulnerable and can be compromised.

Fullcomm has a vision of how to provide an integrated solution that removes the
limitations that are inherent in software-based programs. By offering a dynamic
hardware interface, Fullcomm can grant the desired security in a range of
applications, from complete security for c-commerce activity and on-line banking
to digital media over the Internet that cannot be illegallyi distributed.
Instead of several solutions for one problem, Fullcomm offers one complete
solution for a host of problems. Given our product's flexibility and the host of
functions it can perform, virtually every corporation that uses the Internet as
an interface to their consumers would benefit from the integration of Fullcomm's
technology. In addition to complete security, the use of our delivery system
offers benefits of greatly reduced distribution, packaging, and inventory costs
versus current methods of media and software delivery. These savings could be
passed directly to the consumers, making our system the preferred method for
consumers to purchase goods and services.

The current trends in the markets that Fullcomm intends to focus on are
unprecedented exponential growth models. Fullcomm proposes to profit from the
existing markets of c-commerce, wireless data transmission, on-line banking and
Voice over Internet Protocol by providing unparalleled security measures. With
the planned emergence of multimedia data (video-on-demand, music distribution,
etc.) over the Internet net, Fullcomm has already anticipated its involvement
and has configurations of our device which can be easily adapted to provide
security for these new and emerging services.

These ideas are not five to ten years away, but are currently becoming reality.
Every high tech company is continually creating and changing their own vision of
the Internet and taking steps to bring their vision to fruition. Integration of
Fullcomm's proprietary technology will ensure the security of all future
Internet transactions and preserve the rights of media owners, proprietary
content providers, and private individuals.

Recent events in the music industry provide the most visible example of an
industry facing the problem of protecting and managing its rights related to
digital information. A technology called MP3 that compresses music with
near-compact disc quality has rapidly become recognized as a major threat to the
industry. With readily available MP3-enabled software, music can be copied from
compact discs into computers, compressed to under 10% of its former size,
redistributed,


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played, and even copied back onto a blank compact disc for private use or
pirated resale. Songs in the MP3 format can be moved from personal computers to
new portable consumer devices and can then be played through headphones or
stereo speakers. Every compact disc published and distributed is at risk of
being copied. Already, many popular titles have been digitized in MP3 form
multiple times across the Internet and a new channel of direct MP3 distribution
is emerging.


THE RECORDED MUSIC INDUSTRY

The recorded music industry represents one of the largest opportunities for
online digital delivery and commerce. According to the International Federation
of the Phonographic Industry (IFPI), worldwide-recorded music sales represented
a $38.7 billion market in 1998. The United States music industry, which
represents nearly one-third of worldwide-recorded music sales, encompasses more
than 200,000 professional musicians, 7,500 record labels, 100 distributors,
4,000 independent retailers and millions of consumers. The recorded music
industry has operated under the same basic business model for many years.
Typically, record companies sign artists to exclusive contracts under which the
record companies develop and promote artists' music. The companies then sell
this recorded music through wholesale and retail distribution channels to
consumers. In addition, there are millions of amateur musicians who do not have
access to distribution through traditional channels.

Net music

The growing popularity of music on the Internet, combined with recent technology
advances, has made the Internet a compelling medium for digital music delivery.
Forrester Research has estimated that sales of recorded music through digital
transmission will grow from less than l% of all recorded music sales in the
United States in 1999 to 7% of these sales in 2003.

The Internet presents a significant opportunity for the rapid and cost-effective
distribution, promotion and sale of recorded music. Music is one of the most
popular topics on the Internet as reflected by the increasing number of
music-related websites and the growth of online sales of compact discs. To date,
online-recorded music sales have occurred primarily through the purchase of
compact discs through online retailers. Forrester Research expects online
vendors such as Amazon.com Inc. and CDnow Inc. to drive total online sales of
compact discs in the United States from an estimated $890 million in 1999 to an
estimated $6.7 billion in 2003. These online retailers generally do not take
physical custody of recordings, but rather refer their orders to fulfillment
houses that are responsible for shipping the compact discs to customers. The
popularity of online buying is also forcing traditional retailers to sell
recorded music using the Internet, either through their own websites or in the
future through in-store kiosks.

Advances in digital compression technologies now allow the transmission of
near-compact disc quality audio over the Internet. Due to the size of the
transmitted files, most digital music transmitted to date has been song samples
used by online retailers to allow shoppers to preview music. More recently, new
websites such as Liquid Audio.com have begun to offer "full length," three to
four minute, single music recordings for transmission and storage in compressed
formats.

Liquid Audio also has business-to-business aspirations, as an Internet
distribution and copyright-


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protection middleman for musicians and their labels, including Atlantic, Arista,
Bad Boy, Beyond, BMG, Capitol, Dreamworks, Elektra, EMI, Hollywood, MCA,
Polydor, RCA, Reprise, Universal, Virgin, Wind-Up, Windham Hill and Warner Bros.
Tower Records also uses Liquid Audio for its digital download system. In
addition, Liquid Audio runs the syndicated Liquid Music Network, a site with
links to music-related Web sites and retailers that also includes a music
catalog where consumers can download songs for $1.99 each. (Liquid Audio skims a
25-cent distribution fee off the transaction; the artist or record company gets
$1; and the Web site gets the rest.)

Several audio compression standards are currently used, including AAC, AC-3 and
mp3. To date, most digital music downloads have been promotional in nature.
Recorded music sales delivered through digital transmission have been minimal,
but are expected to reach 7% of all United States recorded music sales by 2003,
according to Forrester Research. Several manufacturers have introduced or
announced plans to introduce portable devices, such as the Rio from Diamond
Multimedia and the Lyra from Thomson Consumer Electronics, that will play
downloaded digital music.

The Major Labels

Five major global record companies--BMG Entertainment, EMI Music, Sony
Corporation, Universal Music Group and Warner Communications Inc.-- and their
numerous affiliated labels account for more than 80% of all recorded music sales
worldwide. Each of these companies is organized worldwide on a geographic basis,
with each local subsidiary having control over distribution within its
territory. These companies invest significant resources in infrastructure to
support their operations. They are vertically integrated and operate recording,
manufacturing, distribution warehousing, and sales and marketing organizations.

In order to grow our business, we need to see an increase in the number of
websites, including websites operated by music retailers, that use our
technology to digitally deliver recorded music. To increase the number of
websites, we must encourage the following:

      o     offer competitive products and services that meet industry
            standards;
      o     attract more music content;
      o     make it easy and cost-effective for music-related websites to sell
            digital music;
      o     develop relationships with online retailers, music websites, online
            communities, broadband providers and Internet broadcasters; and
      o     develop relationships with international music websites, retailers
            and broadband providers.
      o     competition for consumers from traditional retailers as well as
            providers of online music services;
      o     the announcement and introduction of new products and services by us
            and our competitors;

      o     our ability to increase the number of websites that will use our
            platform for digital music delivery; and
      o     the timing of our partners' introduction of new products and
            services for digital music sales.

In addition, other factors may also affect us. Some of these factors are within
our control and others are outside of our control including:


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      o     market adoption and growth of sales of digitally downloaded recorded
            music over the Internet;
      o     our ability to attract significant numbers of music recordings to be
            syndicated in our format;
      o     market acceptance of new and enhanced versions of our products and
            services;
      o     our ability to provide reliable and scalable service, including our
            ability to avoid potential system failures; and
      o     the price and mix of products and services we offer.


We believe record companies will remain reluctant to distribute their recorded
music digitally unless they are satisfied that the digital delivery of their
music over the Internet will not result in the unauthorized copying and
distribution of that music. If record companies do not believe that recorded
music can be securely delivered over the Internet, they will not allow the
digital distribution of their recorded music and they might not have sufficient
content to attract consumers.

Our success will depend on growth in consumer acceptance of new a platform as a
method for digital delivery of recorded music over the Internet. Factors that
might influence market acceptance of our solution include the following, over
which we have little or no control:

      o     the availability of sufficient bandwidth on the Internet to enable
            consumers to download digital recorded music rapidly and easily;
      o     the willingness of consumers to invest in computer technology that
            facilitates the downloading of digital music;
      o     the cost of time-based Internet access;
      o     the number and variety of digital recordings available for purchase
            through other online digital delivery companies, digital music
            websites or through traditional physical delivery of recordings;
      o     the availability of portable devices to which digital recorded music
            can be transferred;
      o     the fidelity and quality of the sound of the digital recorded music;
            and
      o     the level of consumer comfort with the process of downloading and
            paying for digital music over the Internet, including ease of use
            and lack of concern about transaction security.

If standards for the secure digital delivery of recorded music are not adopted,
the piracy concerns of record companies and artists might not be satisfied, and
they might not use our platform for digital delivery of their music because
other digital recorded music formats, such as mp3, do not contain mechanisms for
tracking the source or ownership of digital recordings. Users are able to
download and distribute unauthorized or "pirated" copies of copyrighted recorded
music over the Internet. This piracy is a significant concern to record
companies and artists, and is the reason many record companies and artists are
reluctant to digitally deliver their recorded music over the Internet. The
Secure Digital Music Initiative (SDMI) is a committee formed by the Recording
Industry Association of America (RIAA) to propose a standard format for the
secure digital delivery and use of recorded music. If a standard format is not
adopted, however, pirated copies of recorded music will continue to be available
on the Internet, and record companies and artists might not permit the digital
delivery of their music. Additionally, as long as pirated recordings are
available, many


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consumers will choose free pirated recordings rather than paying for legitimate
recordings. Accordingly, if a standard format for the secure digital delivery of
music is not adopted, our business might be harmed.

New digital playback devices

We believe that the market for digital recorded music delivered over the
Internet will not develop significantly until consumers are able to enjoy this
music other than solely through the use of a personal computer. Several consumer
electronics companies have introduced or announced plans to introduce devices
that will allow digital music delivered over the Internet to be played away from
the personal computer. If companies fail to introduce additional devices,
consumers do not adopt these devices or our products and services are
incompatible with these devices, our business would be harmed. In addition,
digital music can be transferred to a compact disc, but that transfer requires a
compact disc recorder (CD-R). Many desktop computer manufacturers offer CD-Rs in
their computers. If companies do not continue to offer CD-Rs in their computers,
consumers do not adopt CD-Rs or our products and services are incompatible with
CD-Rs, our business might be harmed.

Our solution is based on an open technical architecture, which means that it is
designed to support multiple leading digital music formats, including mp3 (an
audio compression format developed by the Fraunhofer Institut) and Dolbyi AC-3
(an audio compression format developed by Dolby Laboratories, Inc.). These
formats use compression technology to reduce the size of audio files,
facilitating the digital delivery of music over the Internet.

Challenges of Digital Music Delivery and Commerce over the Internet

Music consumers increasingly want both to hear recorded music in real time on
their computers and to store these recordings for later playback on portable
devices as well as computers. But, as downloading music from the Internet has
become increasingly popular, music content copyright owners, including the major
record companies, have expressed concerns about unauthorized copying, or
"pirating," of copyrighted sound recordings. Many compression technologies,
including the basic MP3 standard specification, lack copy protection. This can
result in the unauthorized downloading and replication of digital music. The
major recording industry association, the Recording Industry Association of
America (RIAA), has formed a committee, the Secure Digital Music Initiative
(SDMI), to propose a standard for the secure digital distribution and use of
recorded music.

The e-commerce market for downloadable-recorded music is just emerging and there
is limited availability of digital music on the Internet. The major record
companies to date have engaged only in limited efforts to sell recorded music
through digital transmission. The Internet as a commerce medium presents several
challenges to the record companies, including the ability to comply with
geographical territorial restrictions and copyright and trading concerns. Most
artists, restricted by their existing contracts with record companies, have not
been able to take advantage of selling their music over the Internet directly to
consumers. Retailers have had success selling compact discs online, but have not
had a way to integrate the sale of digital recorded music into existing online
stores.

Standards


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We believe that a successful solution for digital music commerce must
incorporate technical and industry standards. Secure Digital Music Initiative
(SDMI) is sponsored by the RIAA to develop an open standard for the secure
digital delivery and use of recorded music. Over 200 companies are participating
in this effort. To date, this effort has focused on requirements for consumer
portable music devices, such as the Diamond Rio hand-held player.

There is an industry initiative to develop a standard for an open form of the
mp3 format that supports authentication functions. These functions will protect
consumers by providing visual confirmation that downloaded MP3 or other digital
recorded music files are authentic. Digital recorded music formatted in this
manner will play on all standard MP3 players and will additionally contain
information identifying the copyright owner and the encoder. The copyright owner
can also provide Internet links for additional promotions. These features are
not found in standard MP3 files. This initiative has received support from 48
other companies, including MP3.com, Diamond Multimedia, MediaOne Group, Inc. and
Fraunhofer Institut.

Secure Portable Player Protocol (SP3). The SP3 initiative is intended to provide
an open technical architecture and reference specification for portable digital
music playback devices that satisfy music industry and technology industry
requirements. Any SP3-compatible digital music would be able to be played on any
compliant device while unauthorized copies would not be able to be played.

Fraunhofer is the developer of the leading digital audio encoder and encoding
technology, on the specifications for the SP3 standard. Texas Instruments is
developing a reference design for a consumer playback device based on this
specification.

Component Technologies. The architecture begins with component technologies,
which include watermarking, audio compression and a multi-format distribution
container.

Watermarking embeds indelible and inaudible digital information into the audio
waveform. The embedded information is useful for identifying and tracking audio
usage and cannot be removed without destroying the recorded music.

Audio compression reduces the bandwidth required to stream and download music
over network connections. New Dolby Digital technology (AC-3) have been
optimized for online music distribution.

Multi-format distribution containers. This container structure is designed to
permit extension to other media types such as video. The container is optimized
for music distribution and includes multiple images that can be used to preview
and purchase media content in multiple formats and at multiple resolutions.

Secure Protocols. The industry has created secure protocols for communication
between all parts of the system. Secure communications are necessary to prevent
theft of content as it moves through the system. Secure links exist between the
Server and content creation tools for publishing, for consumer downloading, and
for transaction reporting.


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Device Interfaces. The industry has developed the Secure Portable Player
Protocol (SP3), which provides a set of security interfaces and techniques for
next generation portable devices. SP3 has been developed as an open
specification for use by many device manufacturers. SP3 is consistent with the
goals of the SDMI and is intended to be compatible with the specification that
results from the SDMI.

Passports. A digital identification system that permits consumers to move their
music to multiple machines while still providing anti-piracy protections.

We believe that our technology architecture and our advanced stage of
development and deployment provide distinct competitive advantages. We are
currently developing new digital music delivery products. The advantages of our
technology are summarized below:

      o     Superior Audio Quality. We believe consumers will pay for quality
            music, and we believe that we can consistently provide superior
            audio quality for digital music. We will employ specific techniques
            and optimize industry algorithms to improve sound quality. We
            believe that our use of standardized compression algorithms such as
            MPEG, AAC and MP3 provides greater compatibility than proprietary
            audio compression solutions.

      o     Effective Copyright Management. Artists and labels have been
            reluctant to embrace digital distribution of music given the current
            lack of copyright management technologies. The industry is
            developing technology to address the copyright management issue for
            online music distribution. Our security technologies protect content
            from the time it is created to the time it is consumed. These
            technologies include secure communication protocols that allow
            content creators to publish and manage their content in the
            distribution system. They have also developed specific anti-piracy
            technology such as watermarking that embeds unique identification
            information in the recorded music.

      o     Automated Production and Publication. The industry is creating
            technologies that improve the efficiency of online music
            distribution and reduce operating costs. Content encoding systems
            allows for formatting large amounts of quality audio content for
            online use in a timely and cost effective manner.


VIDEO

      o     The rapid growth of high bandwidth Internet users and the
            ever-increasing demand for greater bandwidth opens a door to a
            market for video distribution in a similar fashion to that of audio
            distribution. The telecommunications and cable industries are
            attacking the problem of limited bandwidth. As they update the data
            delivery infrastructure, this market can be targeted
      o     As with Audio, smaller independent studios can cut costs and
            increase market share via the far-reaching distribution capabilities
            of the Internet
      o     Fullcomm's technology allows for the creation of a new market for
            secure on-demand rebroadcast of television programming


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INTERACTIVE TELEVISION

Technological advances, coupled with demand for advanced information services,
will continue to push television and PC convergence. Frost & Sullivan reports
that said set-top type devices already make up a $2 billion market. In another
report, Jupiter Communications said the sector would generate revenue of $l0
billion by 2004.

Computing can enhance the video, not replace the video, and to bring to
consumers either convenience or better entertainment value. Driving the
transformation of television are the same big trends that have hit the personal
computer industry -- smaller and faster computer chips, the growth of the
Internet and higher-speed, bigger-bandwidth communications services.

Microsoft jumped into TV-based technology when it bought WebTV Networks in 1997
for $425 million. It has since invested in companies like AT&T Corp., which is
now the No. I cable operator in the United States. The software giant has spent
an estimated $15 billion on a variety of investments in cable systems and
satellite. Microsoft has pushed Windows CE, its operating system for smaller
devices, into set-top boxes, the hardware that sits on a TV and connects it the
cable network. Such boxes are at the heart of the convergence of television and
the Internet. Microsoft is also creating turnkey packages of hardware and
software to sell to cable operators who want to set up their own branded
versions of the service.

Microsoft archrival Oracle Inc., is a direct competitor with a company set up as
Network Computer, conceived as a maker of dumbed-down Internet-linked PCs, but
which has morphed into an $8 billion company aimed at all non-PC computing --
with television systems playing a prominent role. AOL, Sun Microsystems Inc. and
Lucent Technologies Inc. are also investors.

AT&T Corp. now the largest operator of TV cable operations, has invested in a
range of technologies aimed at pushing digital television and a television
version of its partially owned AtHome Inc. cable modem service for PCs.
Satellite and cable television companies in general are building and buying
services that let customers interact with programs and commercials.

The biggest high-tech impact on TV has come from the DVD technology.
Manufacturers have sold an estimated 5 million units and personal television
player products like Tivo Inc.'s Tivo device and Replay Networks Inc.'s
ReplayTV. Tivo and ReplayTV take advantage of leaps in computer disk storage
power to offer add-on services like program pausing, on-screen television
listings and stored data linked to recorded programs. The next wave of
electronic appliances will link televisions more closely to the Internet. This
will allow for direct orders to the Internet during television commercials, or
music and video downloads by the same route. Wink Communications Inc., newly
launched FutureTV and OpenTV Corp. are among those introducing tools to tighten
the Internet/television convergence. They will provide services that give users
a personalized smart-card-enabled television service with video and audio on
demand, along with complete Internet services. That allows simultaneous
television viewing and Internet surfing to expand Blockbuster's traditional
video rental business to an entertainment service delivered through TiVo. The
companies will work together to develop and deploy a video on demand like
service that will enable TiVo subscribers to obtain a selection of movies for
viewing through their TiVo receivers.


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The cable industry has united around a single approach to delivering packet
voice services over its networks, driving forward Internet protocol (IP)
telephony on a uniform platform as early as mid-2000.

In early fall, the Packet Cable group at Cable Television Laboratories Inc.
issued a final set of phase one draft specifications for IP telephony that uses
a cable-adapted form of multimedia gateway control protocol (MGCP) as the
linchpin to its distributed intelligence architecture, postponing for a second
phase the endorsement of the call control architecture that had been heavily
promoted by AT&T Corp. In all, there are 13 protocol specifications tied to
creating a first-line IP voice capability over cable's hybrid fiber/cable
networks, including several that are part of the second-generation cable modem
standard known as data over cable service interface specification.

The achievement of consensus on a broadband packet communications architecture
is closely linked to technology that is winning wide support outside cable
should boost vendors' ability to deliver cable-specific products quickly and
cost effectively. NCS (network-based call signaling) is the best approach to
early deployment of packet telephony technology for the cable-adapted MGCP
architecture. A uniform, interoperable platform with multivendor support will
soon take shape. As companies begin the refinements to the technology that are
needed for cable to market a standards-compliant system. Cable companies are
moving aggressively to deploy VoIP voice services in the near term. This has
implications for the ability of the cable system to deliver voice-enhanced
services over standard-compliant devices in the future. A set-top box that uses
NCS, will be able to make the adjustments without having to upgrade the whole
system.

This will enable AT&T to offer IP voice as a toll-quality, first-line option to
the mass residential market. Cable operators recognize they must finally
leverage their infrastructure. Interactive TV is now being deployed, not trialed
and tested. AT&T will be rolling out interactive content, services, and
applications, through AT&T-BIS (Broadband and Internet Services).


DIGITAL CABLE - NEW PRODUCTS AND SERVICES

By upgrading existing cable systems, operators will be able to expand the array
of services and advanced products they can offer to their customers. Using
digital technology, they plan to offer additional channels on their existing
service tiers, create new service tiers, introduce multiplexing of premium
services and increase the number of pay-per-view channels. Operators also plan
to add digital music services and interactive program guides. In addition to
these expanded cable services, they also plan to provide advanced services
including high-speed Internet access and interactive services. Many cable
operators have entered into agreements with several providers of high-speed
Internet and other interactive services, including EarthLink Network, Inc., High
Speed Access Corp., WorldGate Communications, Inc., Wink Communications, Inc.
and At Home Corporation.

They have adopted the hybrid fiber optic/coaxial architecture, referred to as
the HFC architecture, as the standard for many ongoing systems upgrades. The HFC
architecture combines the use of fiber optic cable, which can carry hundreds of
video, data and voice channels over extended distances, with coaxial cable,
which requires a more extensive signal amplification in order to obtain the
desired transmission levels for delivering channels. In most systems, they
connect fiber optic cable to individual nodes serving an average of 800 homes or
commercial buildings. A node


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is a single connection to a cable system's main, high-capacity fiber optic cable
that is shared by a number of customers. Coaxial cable is then connected from
each node to the individual homes or buildings. We believe that this network
design provides high capacity and superior signal quality, and will enable them
to provide the newest forms of telecommunications services to their customers.

The primary advantages of HFC architecture over traditional coaxial cable
networks include: increased channel capacity of cable systems; reduced number of
amplifiers in cascade, which are needed to increase signal capacity, from the
headend to the home, resulting in improved signal quality and reliability;
reduced number of homes that need to be connected to an individual node,
improving the capacity of the network to provide high-speed Internet service and
reducing the number of households affected by disruptions in the network; and
sufficient dedicated bandwidth for two-way services, which avoids reverse signal
interference problems that can otherwise occur when you have two-way
communication capability. The HFC architecture will enable them to offer new and
enhanced services including additional channels and tiers, expanded pay-per-view
options, high-speed Internet access, wide area network, which permits a network
of computers to be connected together beyond an area, point-to-point data
services, which can switch data links from one point to another, and digital
advertising insertion.

The upgrades will facilitate their new services in two primary ways: Greater
bandwidth allows them to send more information through their systems. This
provides cable networks with the "space" to provide new services in addition to
current services. As a result, operators will be able to roll out digital cable
programming in addition to existing analog channels offered to customers who do
not wish to subscribe to a package of digital services. Enhanced design
configured for two-way communication with the customer allows them to provide
cable Internet services without telephone support and other interactive
services, such as an interactive program guide, impulse pay-per-view, and
video-on-demand, that cannot be offered without upgrading the bandwidth capacity
of their systems. This HFC architecture will also position them to offer cable
telephony services in the future, using either Internet protocol technology or
switch-based technology, another method of linking communications.


System Configuration

Cable and telecommunications companies have existing hybrid fiber optic-coaxial
cable lines connected to subscribers' homes. The integrated digital cable unit
would be supported on this private network, utilizing the high bandwidth of the
hybrid fiber-coax. Both the encryption content servers and the authentication
servers would sit in the central office of the cable company and perform the
necessary protocols prior to streaming data transmission.

Both the internet-ready PC compatible unit and the stand-alone unit would work
in the context of the public Internet or in a private network (LAN/WAN) using
Internet Protocols. Individual servers or groups of servers would function in
the same configuration as the servers in the basic device configuration. Various
methods of connection to these networks would be possible, allowing great
flexibility and expansion capability for these systems.


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INTERNET TELEPHONY (VoIP)

Internet telephony is a relatively new technology that allows people to
communicate using the Internet as the carrier rather than traditional telephone
lines. The Internet can now carry telephone like communications. The technology
allows calls made over traditional long-distance lines to be rerouted through
the Internet, thereby making long distance calls free except for the cost of
Internet access. Internet access is charged on a flat fee basis typically as a
monthly subscription fee. There are no per minute toll charges. Competition in
the Internet Service Provider (ISP) market is driving down the subscription
rates and keeping the flat rate structure in place. It is estimated that there
will be as many as 15 million Internet telephony users by the year 2001.
Revenues for the Internet Telephony business market are expected to grow to over
$2 billion by the end of 2001. It is also estimated that the total traffic for
Internet telephony will reach 250 billion conversation minutes by 2005.

Voice over Internet Protocol (VoIP) Technology for Internet appliances.

The market for information appliances, devices that process information without
a computer, is going to be phenomenal, as is the sub $1,000 computer. It is
estimated that over 15 million households will be accessing the Internet from
non-computer devices. These new products offer corporations increased
productivity and cost savings and enable traditional and new generation telcos a
more affordable and powerful communications services to customers. Revenue
growth is triggered by factors such as toll-bypass or toll reduction
capabilities, rapid product quality improvement, spreading interoperability, the
need for multimedia communications and the integration of voice and data
networks into a single network.


WIRELESS DATA

Accessing the Internet via cellular networks is becoming ever more common. The
introduction of a host of cellular telephones and personal digital assistants
with Internet accessibility clearly indicates the future of the cellular data
market. Fullcomm's technology enables secure voice communication and information
exchange over wireless networks. The functionality of our hardware device will
be reduced to an ASIC as the development process continues, and this chip can be
installed in Internet appliances


                       ***********************************


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THE FULLCOMM SOLUTION

The Fullcomm device has two distinct modes of operational security. The first
mode features security in which copyright protection is the major concern. Here,
a user would have viewing rights, but should, in the interest of preserving
copyrights, be barred from duplicating the data. Users have access to media
(movies, music, books and magazines) over the Internet, but the PC never handles
any unencrypted data.

The benefits of Strong Encryption are enhanced by the external nature of the
hardware device. When supporting media transactions, no unencrypted digital data
is ever presented to the PC or its I/0 devices for duplication. Digital data is
streamed from the PC's Internet connection to the Fullcomm device via the USB
port. The PC is simply a transfer point for the encrypted data that the PC is
unable to decipher. The only outputs from the Fullcomm device are analog
signals, which degrade rapidly upon duplication.

The second security mode of operation allows authorized users to access and
manipulate decrypted data files. This includes access from email applications,
word processing and other user applications. In non-media data transfer mode,
the encrypted data is passed through the PC in a similar fashion. This mode
supports corporate information sharing over public and private networks, in
which the unencrypted data is to be accessed on the user's PC. When the user is
validated by the system through authentication certificates at the hardware
device, the device then decrypts the data and allows said user to access the
data from his PC.

The following points represent Fullcomm's advantages over current practices:

      o     Hardware solution for encrypting and decrypting data is more robust
            than software solutions due to limitations of the operating systems;
      o     External nature of the device on the USB port completely prevents PC
            from accessing any unencrypted digital data;
      o     Authentication servers add security by providing certificates of
            identity for all parties engaged in the digital transaction;
      o     System utilizes Strong Encryption of 128 bits or greater in hardware
            to prevent cracking of digital data for trillions of years;
      o     Security keys are completely concealed in hardware from external
            scrutiny; and
      o     Threefold system of hardware device, content server, and
            authentication server working in conjunction provides greater
            security than any stand-alone solution.

Discussion of Proprietary Encryption Technology-Products under Development

Fullcomm's first product is a hardware security device for the high bandwidth
(amount of data transmitted per unit time) Internet-accessible PC user. This
device, in conjunction with Fullcomm's proprietary software, will facilitate a
greater degree of security on the Internet. With our first product, Fullcomm
proposes to:

      o     Provide content security for multiple media types and formats; and


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      o     Authenticate transactions through Trusted Third Party software

Most online security is currently achieved through software-based encryption.
The effectiveness of this software-based protection is diminished daily as its
potential for compromise grows. "Internet anarchists" (those who would abuse the
infrastructure for their own gain) increase their capacity for destructive
behavior as the PC grows in computational power. From both a practical and
technical point of view, the conclusion is clear: for the Internet to remain an
effective tool and resource, it must not only become broader and faster, but
more secure as well. Furthermore, it is becoming clear that the solution to this
security dilemma lies not in software, but in hardware protection.

The solution that Fullcomm has developed is comprised of three parts: first, the
"server-side" protection (protection for the computer that runs a website);
second, the "client-side" protection (protection for the home Internet user
connecting to a website); and third, the "authentication party" (whose job it is
to sanction the secure interaction). Both client-side and server-side protection
is absolutely necessary to achieve proper security conditions. The approach for
each is inherently different.

The difference between server-side and client-side protection is based on the
following premise. A website proprietor, distributing his own copyrighted or
licensed material from his website in a legal fashion is free to make as many
duplicates of his digital material as is necessary. In contrast, the client who
connects to the website cannot be allowed to make multiple copies of the
material he receives from the server. If the client can make and keep copies, he
can distribute them illegally on his own. Thus, if the website is run by a
recording label that wishes to distribute copyrighted music via the Internet,
the recording label has an interest in two things: first, that no amount of
Internet eavesdropping will allow a "third party" (someone not directly involved
in the client-server connection) to obtain digital copies of the music; and
second, that the client (the user who receives the data) cannot make digital
copies of the music he receives during the transaction.

Fullcomm's client-side device, in conjunction with the Company's proprietary
server-side software and authentication party software, applies mathematical
concepts and logical algorithms to achieve levels of security which are
virtually unseen today in digital mass media. A server, properly configured to
meet Fullcomm specifications and running Fullcomm server encryption software,
could distribute "streaming data" (music, movies or other data which is served
up on-demand) to a client's PC equipped with the Fullcomm device with full
assurance that the digital "conversation" is completely secure. This means the
following: first, no third party can observe and comprehend the conversation;
and second, each party knows with certainty that the other is who he claims to
be. Using widely accepted practices and algorithms, including 128-bit (or larger
bit-size) encryption and various documented security protocols, truly secure
communication can be achieved. Furthermore, by using a hardware device on the
client-side, the security can be achieved so the client cannot produce a viable
digital copy of the conversation. Thus, if the "conversation" is a copyrighted
movie or song being distributed online, the copyright owner can proceed with the
knowledge that the viewer cannot make a copy and distribute it illegally.

Fullcomm's client-side device can also be utilized for secure two-way
communication with no additional application engineering. This technology,
utilized in both VoIP and IP Telephony, can be implemented in a fashion very
similar to current telephone communication. The difference is that, in the case
of VoIP, the Internet becomes the carrier for the communication data as opposed
to


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the current infrastructure where telephone lines carry the data. Another crucial
distinction is that the Company's device converts voice data to a digital
format, which allows for much better compression, reducing bandwidth. In
essence, Fullcomm's technology reduces the premium on voice communication
between any two individuals, while increasing security.

Fullcomm's client-side technology, in conjunction with server-side software and
authentication party software, can be used to facilitate the secure transmission
of any and all sensitive data. This means that, with no additional application
engineering, the Company's technology can facilitate secure Internet credit card
transactions, secure online banking, secure online stock trades, or any other
interactions which require meaningful security.

In summary, the Company's technology is threefold: client-side security
hardware, server-side security software, and authentication party software.
These three cooperate in a fashion that facilitates the secure transmission of
any and all digital data via the Internet. By focusing on the described
near-term applications, the Company can achieve an effective market impact with
relatively low development costs.

Unique Features and Benefits

Today, most intellectual property right protection and data protection on the
Internet is facilitated by a combination of client-side software and minimal
hardware protection. This leaves media vulnerable to certain client-side
copyright violations. Fullcomm hardware is engineered to obviate the need for
cumbersome software, freeing the client's CPU (central processing unit) to
handle routine tasks while still completely facilitating secure communication.
Furthermore, the architecture in the Fullcomm device actually improves the
overall security of the exchange by protecting the data at all of its vulnerable
points, in hardware, rather than relying on software protection. This feature
allows a great reduction in overall algorithmic complexity, while improving the
quality of the security.

Beyond the technical merits of hardware-based encryption, this approach allows
for substantial simplification into a single chip that comprises all of the
Fullcomm baseline technology. Hardware development, rather than software
development, allows the technology to be reduced to an "ASIC" (Application
Specific Integrated Circuit, or "chip"). This chip will be utilized in digital
accessories and equipment to facilitate secure communication in the same manner
as in the PC device.

Applications of Fullcomm Technology

The device under construction currently has Data, Audio, Video, and VoIP
capabilities. Fullcomm has identified these applications of our product to be
the initial focus of our Market Strategy and Product Development Plan.

Our development strategy for the device design allows for minimal application
engineering necessary to bring other applications online. Fullcomm's forward
looking product development plan also allows for all the functionality of our
first product device to be reduced to a chip to be


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utilized in various internet appliances and other devices for secure digital
information and media transfer. Fullcomm has targeted the following applications
of our device for commercialization:

      o     E-commerce - greater security for online transactions
      o     Audio - distribution of music over the Internet
      o     Video - distribution of movies and television programming for sale
            or rental
      o     Internet Publishing - distribution of books, newspapers, and
            periodicals online
      o     Software Distribution - enhanced security for the sale or rental of
            software online
      o     Voice over Internet Protocol/IP Telephony - enhanced security for
            voice communication over the Internet
      o     Wireless Data - secure transmission of information for the rapidly
            expanding wireless data market

E-commerce: the technology facilitates greater security for e-commerce
applications;

      o     secures corporate data and other sensitive information;
      o     enhanced security for online stock trading, bank account information
            and related applications;
      o     the security architecture allows enhanced control and utilization of
            credit card verification services; and
      o     healthcare transactions including financial transactions, patient
            recordkeeping and privacy;

Audio: the distribution of music over the Internet without concern for pirated
copies

      o     large recording labels and independent music labels can realize
            substantial savings from decreased advertising, distribution costs
            and gain access to broader markets

Video: the rapid growth of high bandwidth Internet users and the ever-increasing
demand for greater bandwidth opens a door to a market for video distribution in
a similar fashion to that of audio distribution. The telecommunications and
cable industries are attacking the problem of limited bandwidth as they update
the data delivery infrastructure.

      o     cable providers can leverage their advanced broadband networks by
            offering new and advanced communications services to its residential
            and commercial customers;
      o     smaller independent studios can cut costs and increase market share
            via the far-reaching distribution capabilities of the Internet; and
      o     technology allows for the creation of a new market for secure
            on-demand rebroadcast of television programming

Internet Publishing: the ability to distribute books, periodicals, and
newspapers online

Software Distribution: the Company's technology facilitates and substantially
enhances sales and distribution capabilities for vendors and software
manufacturers;


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      o     enables the direct download and/or rental of software via the
            Internet with appropriate security;
      o     Fullcomm technology allows small software companies to compete with
            large software companies because access to shelf space and
            distribution channels are no longer barriers to entry or market
            share

VoIP/IP Telephony: enhances the security of voice communication over the
Internet. Packet-based transmission is the key to the Internet. The same premise
holds true internationally. The timing is right for entrepreneurs with technical
expertise and innovative marketing ideas to capture significant market share of
long distance traffic from countries around the world with deregulation,
increasing competition and the minimal or no interference from government
regulation.

Wireless Data: enables secure wireless transmission of information for the
rapidly expanding wireless data market


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MARKETING STRATEGY

Fullcomm's expertise allows us to partner with providers of integrated voice and
data communications solutions to small, medium and large-sized business
customers. The team is responsible for overseeing the design and implementation
of scalable and complex internetworks to achieve successful strategies.
Fullcomm's initial product focus is directed towards solutions for e-commerce
enabled networks.

Business-to-business (B2B) e-business is expected to grow to $1.3 trillion in
2003 from $109 billion in 1999, according to market researcher Forrester
Research. E-business, estimated at $40 billion, is 5 times as large as personal
users. By 2003, that figure will balloon to over $1 trillion, or approximately
10% of all U.S. business. By 2006, this might grow to 40% of all U.S. business.
By 2003, over 400,000 US based e-merchants will have a presence on the Internet.

The marketing strategy calls for the demonstration of the baseline technology in
a real world environment. Fullcomm has entered into a binding agreement to
establish a master distributorship with Creative Web Solutions, Inc. (CWS) a
subsidiary of Houston, Texas based Bradmark, Inc. CWS will be responsible for
marketing Fullcomm's initial product, security solutions for the Business-to
business (B2B) applications sector. CWS's team of technologists are specialists
in overseeing all phases of the E-business enabling process. They are also
responsible for consulting with customers, providing technical support and
modifying systems to serve changes in requirements. They can provide strategic
security solutions to businesses focused on developing and or expanding their
electronic commerce. The CWS agreement will allow Fullcomm to test and refine
components of our technology in real application use in a pre-selected Fortune
500 company. This should allow Fullcomm to realize a fully functional product on
a shorter timeline than otherwise.

Once refinements and production capabilities have reached levels acceptable to
Fullcomm and its customers, other market applications will rapidly be
introduced. The Internet can be used to disseminate this digital information
efficiently to broad audiences. The use of the Internet for digital goods is
being supported both by the growing number of households and businesses
connected to the Internet, and by electronic devices other than the personal
computer, such as set-top boxes, portable music players, mobile phones, and
other hand-held devices. In addition, downloading digital content is becoming
significantly easier with the emergence and adoption of broadband technologies
including digital subscriber lines and cable modems, and enhanced compression
technologies including MP3 for music and MPEG-2 for video. The Internet will add
to the existing channels for distributing digital goods on physical media like
compact discs and DVDs.

E-commerce

Fullcomm's technology allows for the secure exchange of sensitive information
via the Internet. Consumers can be assured that sensitive information is only in
the hands of authorized parties.

      o     Partner with multiple ISP's and portal sites for consumer base and
            distribution of our hardware;


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      o     Partner receives a percentage of sales of device attributable to
            them and the use of our security system;
      o     Benefit to ISP and portal customers: hardware security device to
            protect sensitive information and access to the products and
            services available from Fullcomm's device;
      o     License the use of our product to high traffic Internet merchants:
      o     Online brokerage firms - Ameritrade, E-trade, and Datek;
      o     Auction sites - Ebay and Priceline;
      o     Merchant networks - Commerce One and FreeMarkets;
      o     In exchange for the use of our security hardware system and a
            percentage of device sales, the partners and licensees promote the
            products and services available with the Fullcomm device;
      o     We receive revenue from device sales, authentication fees, and a
            percentage of transactions

Audio

Fullcomm's technology allows for secure music distribution over the Internet;

      o     Partner with major record labels to protect media content (SonyMusic
            Group, Universal Music Group EMI Polygram, etc.)
      o     Partner receives a percentage of sales of device attributable to
            them and the use of our security system
      o     Benefit to record labels: secure method of music distribution via
            the Internet - only authorized parties have access to media and the
            media can not be digitally copied
      o     Partner with multiple ISP's and portal sites for consumer base and
            distribution of our hardware
      o     Benefit to ISP and portal customers: hardware security device to
            protect sensitive information and access to the products and
            services available from Fullcomm's device
      o     In exchange for the use of our security hardware system and a
            percentage of device sales, the partners and licensees promote the
            products and services available with the Fullcomm device
      o     We receive revenue from device sales, authentication fees, and a
            percentage of transactions

Video

      o     Partner with major movie studios for media content (Time/Warner,
            Disney, Universal Paramount, and Sony/MCA)
      o     Partner receives a percentage of sales of device attributable to
            them and the use of our security system
      o     Benefit to movie studios: secure method of on demand video
            distribution via the Internet or cable system - only authorized
            parties have access to media and the media can not be digitally
            copied
      o     Partner with high bandwidth ISP's and/or cable companies (AT&T,
            Roadrunner - subsidiary of Time Warner, @Home) and portal sites for
            consumer base and distribution of our hardware


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      o     Benefit to ISP and portal customers: hardware security device to
            protect sensitive information and access to the products and
            services available from Fullcomm's device
      o     In exchange for the use of our security hardware system and a
            percentage of device sales, the partners and licensees promote the
            products and services available with the Fullcomm device
      o     We receive revenue from device sales, authentication fees, and a
            percentage of transactions

Internet Publishing

      o     Partner with major publishers (Random House, McGraw-Hill and Time
            /Warner) for media content
      o     Partner receives a percentage of sales of device attributable to
            them and the use of our security system
      o     Benefit to major publishers: secure method of on demand distribution
            via the Internet - only authorized parties have access to content
      o     Partner with multiple ISP's and portal sites for consumer base and
            distribution of our hardware (key partners might be Amazon or Barnes
            and Noble)
      o     Benefit to ISP and portal customers: hardware security device to
            protect sensitive information and access to the products and
            services available from Fullcomm's device
      o     In exchange for the use of our security hardware system and a
            percentage of device sales, the partners and licensees promote the
            products and services available with the Fullcomm device
      o     We receive revenue from device sales, authentication fees, and a
            percentage of transactions

Software Distribution

      o     Partner with major software publishers
      o     Partner receives a percentage of sales of device attributable to
            them and the use of our security system
      o     Partner with multiple ISP's and portal sites for consumer base and
            distribution of our hardware
      o     In exchange for the use of our security hardware system and a
            percentage of device sales, the partner(s) and licensee(s) promote
            the products and services available with the Fullcomm device
      o     We receive revenue from device sales, authentication fees, and a
            percentage of transactions

VoIP/IP Telephony

      o     Partner with major telecommunications company
      o     Partner receives a percentage of sales of device attributable to
            them and the use of our security system
      o     Partner with multiple ISP's and portal sites for consumer base and
            distribution of our hardware


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      o     In exchange for the use of our security hardware system and a
            percentage of device sales, the partner(s) and licensee(s) promote
            the products and services available with the Fullcomm device
      o     We receive revenue from device sales, authentication fees, and a
            percentage of transactions and possible advertising revenues from
            GUI browser advertising space

Wireless Data

      o     Partner with major cellular communications providers (Sprint, AT&T,
            etc.) and cellular appliance manufacturers (Nokia, Qualcomm, 3Com,
            etc.)
      o     Fullcomm sells chips to be included in cellular appliances
      o     Fullcomm provides highest level of security for digital
            communication systems
      o     Our security system can guarantee that only authorized
            communications occur on the cellular networks (Fullcomm secured
            appliances can not be cloned)
      o     Cellular service providers can recapture revenues lost from
            unauthorized use of networks
      o     Consumers enjoy secure communications and the knowledge that only
            authorized partial access any sensitive information
      o     In exchange for the use of our hardware security system, the
            partners and licensees promote the products and services available
            with the Fullcomm device
      o     We receive revenue from chip sales and authentication

LIMITATIONS OF EXISTING TECHNOLOGIES

Software-based Encryption

Software-based encryption has been around for many years. It involves the use of
static algorithms to encrypt various forms of digital data. Originally, the two
trusted parties involved in a secure exchange were concerned with a hostile
third party. The new generation of software-based encryption focuses on another
aspect where the receiving party is viewed as a potentially hostile party where
digital media distribution is concerned. Inability to control client-side
duplication of data translates to lost revenues if the digital data is
copyrighted material, which is then illegally distributed. However, there is an
inherent flaw in using software-based encryption to protect digital media. This
flaw stems from the fact that unencrypted data may be inadvertently allowed to
reside on the client's PC.

Digital Rights Management (DRM) platforms are the trusted exchange of
intellectual property in digital form over the Internet or other electronic
media. DRM is an application of software-based encription that incorporates some
form of third party authentication. DRM uses encryption to secure a file, and
allows the tracking of the distribution of digital media through both PC and
portable devices. The claim of DRM platforms is that, while files may be copied,
companies will be allowed to ensure royalties for any digital copyrighted
material.

Presently, the technology for securing transactions and content on the Internet
relies on software-based protection (Microsoft, Intel, Liquid Audio, and
Intertrust). In these software systems, the host


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computer operating system (OS) and central processing unit (CPU) handle security
procedures. The main limitation of this system is the inherent exposure and
insecure environment of the personal computer architecture. In PC architectures,
the CPU is directly connected to the PCI (peripheral component interface) bus
via the motherboard. By design, the PCI bus is openly shared with all input and
output devices such as the hard drive, the Ethernet/modem card, and other data
sharing devices and ports. This architecture makes the PC a very versatile data
processing tool, but leaves significant vulnerability to unauthorized access to
sensitive or copyrighted data after decryption. For instance, digital media or
other E-commerce data used by the CPU may be transferred to any of the devices
on the PCI bus, where it could be read and duplicated. The distribution of this
information on the PCI bus depends on the commands of the operating system,
which itself may not be secure against cryptanalysis attacks.

Furthermore, the operating system itself may be the ultimate culprit in software
security breaches. In a multitasking environment, where the CPU handles many
jobs at once, the OS may suspend an important security operation in order to
handle another task. When this occurs, the OS writes all of the suspended task's
data to disk. In the case of a security operation, this data includes sensitive
keys, which may then reside on the user's hard drive for any length of time,
vulnerable to scrutiny by anyone with disk access. This scenario does not even
consider a hacker's direct involvement, which would compound security risks by
exploiting these vulnerabilities. In the final analysis, "Software encryption is
scary... the whole thing is dicey at best." (Bruce Schneier, Applied
Cryptography, 2nd ed., p.179)

One implementation of software-based encryption allows the encrypted file to
reside on the hard drive of the machine, to be decrypted as necessary by the
CPU. With inadequate key lengths, the encrypted data is susceptible to a
known-ciphertext attack, where it could be decrypted by a brute-force
cryptanalysis. Shorter key lengths make a successful cryptanalysis attempt much
more likely by orders of magnitude. Even without successful cryptanalysis, the
file would eventually be vulnerable in the manner described previously.

Microsoft's Windows Media Rights Management is explicitly a software solution
for encoding content to prevent the end user from copying it. This software
solution inherently has all the same compromises that any software encryption
solution has. Dependence on the computer's operating system and the open
architecture of the computer hardware make software encryption solutions a poor
choice to safe guard content. Microsoft fully admits that a sufficiently
dedicated hacker could recover the decrypted media content and goes on to
explain how he could do this by redirecting the output to another file.
Additionally, the encryption would take days to crack by brute force with a
supercomputer, perhaps much less for a trained cryptanalyst. As PC's become more
powerful, the distinction between desktop computers and "super" computers is not
as pronounced. PC's now have the capability to rapidly attack encryption methods
with brute-force techniques. Between this potential vulnerability in the
encryption itself and the admitted hole in the media player that is open to
hackers, Microsoft's Windows Media Rights Management is virtually useless.

Intel's Software Security System is explicitly a software solution for encoding
content to prevent the end user from copying it. Intel guards the system against
hacking through an agent that performs integrity-checking of the software.
However, this agent could also be hacked, thereby compromising the security
system as a whole. Thus, the software is just "tamper-resistant," not
tamper-proof. Intel describes "manufacturing" millions of software security
components. These


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are just randomly assigned keys and identifiers used in just about any
encryption system. In summary, Intel's software security system is just another
method of software encryption, which is dicey at best.

Liquid Audio, Inc. is one company that uses the hard drive to store the
encrypted data. The data is encrypted, but its digital watermark, which
represents the security safeguard, can be duplicated back to the hard drive by a
hacker after the file is decrypted, as the watermark only serves to identify
piracy of the digital file. This watermark is essentially an inaudible
manipulation of the digital file that serves as a unique identifier for that
file after unauthorized digital duplication. The watermark does not necessarily
serve to prevent unauthorized duplication. Liquid Audio does use RSA encryption
to protect the file, but both encryption on the server side and decryption on
the client side is software based, potentially making the file vulnerable to
duplication at the user's PC.

The digital watermark, though it proves authenticity, does not provide the
security that has been demanded by the mainstream music industry. Once a file
has been downloaded, it can be reformatted and placed on a compact disc. Liquid
Audio not only acknowledges this, but also even endorses this idea. The homepage
clearly states... "download, and burn your tracks to CD." By producing and
distributing legitimate MP3 files with the "Genuine Music" mark, Liquid Audio is
only able to allow consumers to distinguish between pirated MP3 files and
legitimate music. Based on this evidence, it appears that Liquid Audio cannot
prevent the piracy of legitimate music on the consumer's end.

Authentication Technology

Authentication typically involves the exchange of digital certificates between
two parties. This allows both parties the assurance that each is who they say
they are. A recent development in online security is the use of a trusted third
party, which has opened a new market of transaction authentication. This trusted
third party verifies the identity of both users, making the verification result
known to the involved parties.

Managed PKI systems for digital certificates and authentication (Entrust
Technologies, Inc, VeriSign, Inc., and Reciprocal, Inc.) also use software-based
encryption and are likewise more susceptible to cryptanalysis than
hardware-based methods. Entrust, VeriSign, and Reciprocal have established PKI
systems and Fullcomm's technology is fully interoperable with the PKI
infrastructure and key distribution systems. Reciprocal has a partnership in
place with Intertrust, and they license Intertust's DRM technology platform.
When these companies decide to provide the next level of security, Fullcomm's
device can be easily integrated into their schemes and will provide unparalleled
security.

Hardware-based Encryption

Wave Systems Corporation have proposed one method of hardware-based encryption,
but their hardware is integrated into and controlled by the PC itself. This
leaves open the vulnerabilities of the operating system as discussed in
Software-based Encryption. Also, the static encryption schemes used in this
hardware present the same opportunities to known-ciphertext attacks as described
previously. This static encryption was specifically chosen to make electronic
transactions


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simpler by restricting authentication to the client side, but this compromises
the inherent security of the system as a whole.

Wave System's hardware-based technology is vulnerable to the type of attacks
that exploit the open architecture of the PC. While the security of the chip
itself may be extremely robust, at some point after decryption, sensitive media
data will be transferred through the PC architecture without protection. Though
the effort required to mount an attack exploiting these weaknesses may be
greater than compared to software-based protection; the payoff - a pristine
digital master - is well worth it to hackers.

Another drawback of the Wave Embassy system is its trusted client authentication
process. This system allows offline authentication of content use. What this
really means is periodic batch authentication of all usage, which occurred since
the last batch authentication. This is a halfway solution, which leaves
loopholes for clever rights/usage infringement. A would-be pirater could obtain
a number of protected files, make use of them off-line, then "accidentally"
erase or damage the chip's memory, thus erasing a record of the use. With enough
determination, a skilled hacker could even accomplish this without permanently
damaging the chip. Again, this type of attack may be costly, but the payoff
justifies the investment. Additionally, the client authentication system
restricts security protocols to static encryption, which is not nearly as secure
as dynamic or per-use encryption.

The Wave Embassy System's shortcomings, while applicable to all sensitive data
transmitted through the embassy system, are most evident in audio and video
media. An examination of Wave's media partners reveals a heavy emphasis on
software providers, and a conspicuous lack of well-known audio/video providers.
The reason for this is clear - the Embassy system was initially designed for
purposes other than securing media. Media protection was apparently added as an
afterthought, perhaps as a reaction to the digital media crisis in the record
industry. Fullcomm's technology has been designed for digital media protection
from conception, while still incorporating a host of other applications, many of
which are claimed by Wave as well. Furthermore, the security enhancements
achieved by Fullcomm's device in media protection also enhance security in these
other applications.

Fullcomm's technology integrates encryption and decryption modules in a hardware
device external to the PC, where it is secure from the system buses. The dynamic
keys used in Fullcomm's system would take trillions of years of brute-force
cryptanalysis to crack if trillions of dollars were spent up-front on the
effort. Authentication by a server outside the hardware device combined with the
decryption in the PC-external device makes this level of strong encryption
possible.


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PRODUCT DEVELOPMENT PLAN

Fullcomm has organized the product development plan to capitalize on the
Company's research and development activities as soon as benchmark developments
afford further research into market applications. The flexibility of our chosen
design architecture not only allows for enhanced security, but also allows
Fullcomm to choose a modular development format in which stages of development
have concurrent timetables. The benefits of this development plan include:

      o     reducing overall development timetables;
      o     reducing development costs;
      o     rapid proof of base design and concept;
      o     can swiftly demonstrate the merits of Fullcomm's technology in the
            marketplace;
      o     expeditious development of a revenue generating product; and
      o     allows for a rapid deployment of an initial product

Fullcomm has structured the product development plan to make products available
as key stages are completed. The core security module and the media-handling
component of the device are being worked on concurrently, but SDG's design focus
is on the core security module, which should allow for rapid proof of design and
concept. This means faster deployment of a revenue-generating product. Fullcomm
believes that the media module will rapidly come online in the second stage of
development, but greater resources are being directed to the security module in
order to decrease costs and to bring an application of our technology into the
marketplace.

Fullcomm has identified three stages of the initial phase of product development
in order to construct a fully integrated hardware and software system for the
secure distribution of media over the Internet. The goals for each stage, to be
performed concurrently, are described below:

Prototype Specification and Device Development;

      o     to design and construct a prototype that integrates data decryption
            and media decoding in a single peripheral hardware device; and
      o     to engineer this device to be compatible with all digital media
            types and flexible to accommodate different encryption algorithms

Device Software Development;

      o     to develop software that will enable the hardware device to operate
            and interface with the host PC operating system; and
      o     to design user interface software for control of the device from the
            operating system

Server Software Development

      o     to develop software that will enable an internet server to establish
            a secure connection with the hardware device; and
      o     to implement various encryption algorithms to preserve flexibility
            for continued security improvements


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Product Development Plan - Prototype Specification

The following identifies the summary Prototype Specification and Device
Development activities of Fullcomm. Based on the concept design and the ongoing
discourse and research provided by our design team, System Design Group, the
device prototype will feature the following block components:

      o     Encryption/Decryption Module
      o     Authentication Module/Compression Decoding Device
      o     FLASH Decryption Library
      o     Audio/Video Output Stage
      o     Micro-controller and USB Interface
      o     Telephone Controller/ Digitizer
      o     Random Number Generator
      o     Keyboard Input

The integration of the above modules should result in a device that performs
data decryption and media decoding while retaining the necessary flexibility in
both digital media format and encryption capability. Development of the USB
Interface will allow the device to be easily connected to the host computer. The
Audio/Video Output Stage will be constructed to allow flexibility in connection
to external monitors, amplifiers, and speakers. The Telephone Controller/
Digitizer will allow an external telephone to connect securely to another party
over the Internet.

Device Software Development

In conjunction with the activities from the Prototype Specification and Device
Development, software to interface the device with the host computer will be
developed. This software will be developed as four components:

      o     Client Operation Software
      o     Client Control Software-Audio Data
      o     Client Control Software-Video Data
      o     Client Control Software-Telephone Interface

The integration of these four components will allow the hardware device to
interface with the host PC operating system. The Client Operation Software will
function as a driver for the device, allowing the PC to control the data flow.
The Client Control Software for the various media types and devices will enable
a graphical user interface (GUI) to allow easy on-screen control of the device
functions.

Server Software Development

In conjunction with the activities from the Prototype Specification and Device
Development, software to provide server-side authentication, encryption, and
transmission will be developed. The following three components will comprise the
software for the Internet media server:


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      o     Server Configuration Software
      o     Server Encryption/Decryption Software
      o     Server Authentication Software

In addition to the integration of these three components, the following piece of
software is necessary for the initialization of a secure connection with the
hardware device:

      o     Trusted Third Party (FTP) Authentication Software

The Trusted Third Party, participating in the appropriate protocol with the
Internet server and the hardware device, facilitates the necessary
authentication steps prior to data transmission for a secure connection. The
software for both the Internet server and the TTP will be flexible such that
improved security algorithms can be implemented as they are conceived.


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STRATEGIC ALLIANCES

[LOGO]

SYSTEM DESIGN GROUP

Fullcomm has a contract design relationship with System Design Group (SDG), of
San Diego, CA, an operating unit of Vanteon. SDG provides turnkey project
development using its internal team of hardware and software engineers
experienced in everything from embedded systems to large multi-computer system
designs.

Areas of expertise include communications, graphics, printers, computer vision,
embedded systems, high-speed RISC designs, FPGA, ASIC and software development
for RTOS, Win 95, Win NT, Windows CE, UNIX and Solaris. System Design Group is
unique in its ability to provide a full range of engineering, design and
manufacturing services to its customers. System Design Group is an expert at
shortening time to market while maintaining quality, achieving the lowest
possible manufacturing cost and ensuring reliability and usability.

As a contract engineering and manufacturing firm, System Design Group provides
cost-effective implementation, experienced project management, highly skilled
engineers, state-of-the-art design techniques and tools and worldwide regulatory
support. This all leads to a successful product that meets or exceeds
expectations.

By using proven processes, strict timing analysis, and a well-defined design
review process, SDG can take our design from concept to completion in a minimum
amount of time with reduced risk.

Software Design Sandards:

      o     Strict design processes and procedures -- a complete and thorough
            specification;
      o     Design Review of System Architecture and Code;
      o     Coding and Source Control Standards;
      o     Documentation Standards; and
      o     Web Based Bug Tracking

Hardware Design Standards:

      o     Strict design processes and procedures--complete a thorough
            specification;
      o     Pre-layout design review--Functional, Timing, Signal Quality, EMC,
            DC/AC loading, Pin-out, Mechanical constraints;
      o     Post-layout design review--Review for Correctness, EMC, Signal
            Quality;
      o     Schematic and BOM Standards;
      o     Documentation Standards; and


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      o     Design for Manufacturing (DFM)

Mechanical and industrial design

System Design Group provides complete mechanical and industrial design support
as a key component of Product Realization:

      o     Ergonomic evaluation;
      o     Conceptual drawing;
      o     Mock-ups
      o     Tolerance analysis
      o     Loading analysis,
      o     DFA, DFM and Functionality view
      o     Rapid prototyping (stereolithography) to verify form, fit, function
            early in and throughout design process
      o     Dedicated testbeds for early functional testing of critical
            components
      o     Tooling
      o     Production

Manufacturing support

SDG delivers a comprehensive manufacturing solution including prototypes and
initial manufacturing runs. Manufacturing services include:

      o     parts purchasing
      o     kitting
      o     board fabrication
      o     functional testing
      o     assembly
      o     burn-in
      o     test and delivery

Design for High-Volume Manufacturing

SDG has several customers that manufacture in VERY high-volumes. SDG designs to
support manufacturability. We understand how placement and part types can affect
the quality and cost of volume manufacturing. SDG designs to increase yields and
reduce cost. SDG has worked with many of the largest device manufacturers and
has specific experience with;

      o     Hewlett-Packard
      o     Rockwell Semiconductor
      o     Iomega
      o     Sony
      o     Intergraph
      o     Chips & Technology


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      o     Ericsson
      o     Sun Microsystems
      o     Xilinx
      o     Alterra
      o     Tektronix

MARKETING AGREEMENT

[LOGO]

CREATIVE WEB SOLUTIONS

Fullcomm has entered into a binding agreement to establish a master
distributorship with Creative Web Solutions, Inc. (CWS) a subsidiary of Houston,
Texas based Bradmark, Inc. CWS will be responsible for marketing Fullcomm's
initial product, security solutions for the business-to-business (B2B)
applications sector. Fullcomm selected CWS's team of technologists are
specialists in overseeing all phases of the e-business enabling process. They
are also responsible for consulting with customers, providing technical support
and modifying systems to serve changes in requirements. They can provide
strategic security solutions to businesses focused on developing and or
expanding their electronic commerce. The CWS agreement will allow Fullcomm to
test and refine components of our technology in real application use. This will
allow Fullcomm to realize a fully functional product on a shorter timeline than
otherwise.

CWS, Inc. a subsidiary of Bradmark, Inc. is a Houston, Texas based
Internet/Network Security Applications Distributor providing Fortune 500 and
1000 companies with technically advanced security solutions:

      o     Network monitoring and blocking tools; and
      o     Server based Internet access management

Gregory Creekmore is responsible for corporate development, strategic
marketing, development of Channel partnerships and new products. CWS was formed
as a partnership between C. Bradley Tashenberg, a Director and Mr. Creekmore,
also affiliated with Bradmark.


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BRADMARK, INC.

Bradmark is a leading developer and vendor of database management solutions that
improve the availability and performance of mission-critical databases in
complex computing environments. Bradmark has managed the development of
commercial software products, implemented advanced systems in Fortune 500 & 1000
companies and developed software product strategies. Bradmark has operations in
Europe, South America, India, Australia, the Middle East and Africa.

With more than seventeen years in the database industry, Bradmark has an
established customer base with over 10,000 customers worldwide. This strength
extends to their Authorized Partners Program, giving customers stronger
confidence in their choice of solution providers. Bradmark will assist Fullcomm
in rolling out its newest solutions and assist us integrating Fullcomm network
solutions in a corporate enterprise system. Bradmark will market Fullcomm's
business--to-business security solutions for the business applications sector
exclusively to the Fortune 500.

BRADMARK'S FAMILY OF PRODUCTS SOFTWARE TOOLS FOR DISTRIBUTED SYSTEMS

      o     Application development;
      o     Creation of client/server performance tools:
      o     Rapid Application Deployment (RAD);
      o     Customer Management Solutions;
      o     Network Services;
      o     Scalable Internet solutions;
      o     IT Planning: and
      o     Interactive Solutions.

In the distributed systems area, Bradmark's flagship product, DBGeneral, has
three core modules with extensive capabilities: Enterprise Monitoring Module,
Database Administration Module and the Tuning Module. Solutions for HP 3000
systems include; DBGeneral for IMAGE and Allbase, MPE Command Center 2000,
DBAudit, Disk Space Manager and Superdex.

DBGeneral Enterprise Monitoring Module provides customers the ability to
continually monitor databases at the core of their business applications.

DBGeneral Database Administration Module leverages scarce DBA resources by
reducing the level of database expertise required to prevent unexpected
downtime, and increase space efficiency and performance.

DBGeneral Thinning Module increases Application Developer and DBA customer's
ability to have the greatest positive impact on performance by identifying SQL
statements which have the greatest impact on performance and providing the
facility to explain and tune those statements.

BRADMARK AUTHORIZED PARTNER PROGRAM


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As the developer of advanced, high quality, database and system management
tools, Bradmark recognizes the need to have resources closer to its partners to
provide the highest levels of sales and support. Through the Bradmark Authorized
Partner program, qualified organizations gain unique access to Bradmark programs
and tools to support their efforts in this critical information systems area.
Bradmark places a high value on members of our Authorized Partner program. To
support our new relationship, the Bradmark Authorized Partner program provides
access to marketing programs, services and products that will help make Fullcomm
more successful in the market place.

Partner Types

The Bradmark Authorized Partner program is comprised of four partner types:
Marketing Alliances, Developers, Solution Providers and Consultants. Each
partner has a unique set of needs, so the Bradmark Authorized Partner program is
tailored accordingly.

Marketing Alliances

Strategic Marketing Alliances are partnership opportunities where influential
market leaders share a common vision and understanding of how the synergy
between each Company's products provide customers with a compete solution.

Developer

The Developer program shares the information and technology required to
integrate with or to extend Bradmark's product technology.

Solution Provider

The Solution Provider program allows partners to address customer needs by
packaging individual products or integrating third-party products with Bradmark
technology to deliver a complete solution to the end-user. The Solution Provider
program includes resellers, systems integrators and companies who embed Bradmark
technology as a component into their own hardware, software, and/or service
offering. This "Win-Win" program expands the reach of Bradmark while allowing
partners to grow their business and increase their profits.

Consultants

Consultants require access to information and hands-on experience with products
in order to make independent, well-informed decisions. The Consulting program
provides the training and information necessary to provide analysis, design, and
implementation services for Bradmark products.

Specialized Support

Without adequate access to the products, training and support, efforts to
deliver Bradmark products would be less than the standards expected. Bradmark
has developed program features to give hands-on knowledge and ongoing, immediate
support to be responsive to customers and the market.

      o     Account Support - expertise in the development of database and
            system management tools.


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      o     Product Discounts - copies of the Bradmark products are available at
            a discount to support demonstration and development needs.
      o     Training - available for all products to bring staff up to a level
            of proficiency to sell, deliver and support the products you
            represent.
      o     Technical Support - access to the technical support organization
            provides the immediate assistance needed to resolve issues and make
            implementations and efforts successful.

Marketing Support

Critical to increasing prospect and customer awareness is the effort of an
effective marketing program. Bradmark will support its Authorized Partners with
these program features:

      o     Dedicated Marketing Resources - to generate marketing plans that
            outline programs designed to meet business objectives.
      o     Trade Show Support - promoting an Authorized Partner and supporting
            efforts to promote Bradmark, can help the Company gain exposure in
            the marketplace. Assistance can consist of anything from creating
            marketing materials to working a booth.
      o     Direct Mail Providing - programs that keep prospects and customers
            educated and excited about products, generating increased sales and
            support opportunities.
      o     Lead Generation - will work with Qualified Partners to generate
            leads through joint partner marketing activities.
      o     Marketing Materials - a distinct logo identifying a Bradmark
            Authorized Partner to a complete brochure showing the strength of
            products and services, Bradmark will assist in creating the most
            effective marketing materials to promote products and services.

FUTURE DEVELOPMENT ACTIVITIES

After completion of the initial phase of development, continuous improvements
will be sought to enhance the versatility of the product:

Video Secondary Surface Support

The prototype will feature a simple multiplexer switch to change video modes
from PC to streaming video. Adding secondary surface support will enable the
user to watch streaming video in a scaleable window on the computer desktop.
This mode will create a smoother user interface and allow multitasking while
viewing the video. A full screen mode will still be supported.

Network Traffic Routing

In the prototype, network traffic is routed from the PC to the device through
the USB connection. Routing the high-bandwidth Internet media directly into the
hardware device will simplify viewing of streaming video and audio. Fullcomm's
device would then effectively function as a network card for the host PC,
simplifying configuration and reducing internal PC complexity.


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                                 FULLCOMM, INC.

                                 USE OF PROCEEDS

Item                                                                      Amount

Salaries                                                              $  546,110
Payroll Taxes and Benefits                                               109,222
Legal Fees - General and Patent                                          140,000
Research & Development                                                   868,000
Office Equipment Leases                                                   25,500
Capital Items                                                             89,000
Recruiting                                                                25,500
Outside Product Testing                                                   40,000
Fundraising Fees                                                         460,000
Facility Costs                                                            82,200
Other Operating Expenses                                                 259,700
                                                                      ----------

                                                                      $2,654,232
                                                                      ==========


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                                 FULLCOMM, INC.

                             STATEMENT OF CASH FLOWS

         FOR THE PERIOD FROM INCEPTION, JANUARY 15, 1999 TO DECEMBER 31,
                                      1999

<TABLE>
<S>                                                                       <C>
CASH FLOWS FROM OPERATING ACTIVITIES

 Net income (loss)                                                        $(314,769)
Adjustments to reconcile net loss to cash used in operating activities
 Depreciation                                                                 1,622
 Accounts payable and accrued expenses                                       57,168
                                                                          ---------
TOTAL CASH FLOWS FROM OPERATIONS                                           (255,979)

CASH FLOWS FROM FINANCING ACTIVITIES
 Loan payable                                                                25,315
 Sale of common stock-net of offering expenses                              250,236
                                                                          ---------
TOTAL CASH FLOWS FROM FINANCING ACTIVITIES                                  275,551

CASH FLOWS FROM INVESTING ACTIVITIES

 Patent costs                                                                (1,917)
 Purchase of fixed assets                                                    16,216)
                                                                          ---------
TOTAL CASH FLOWS FROM INVESTING ACTIVITIES                                  (18,133)

NET INCREASE (DECREASE) IN CASH                                               1,439
CASH BALANCE BEGINNING OF PERIOD                                                -0-
CASH BALANCE END OF PERIOD                                                $   1,439

Non cash activities
Issuance of shares of common stock in consideration for consulting fees   $ 200,000
                                                                          =========
</TABLE>

                 See accompanying notes to financial statements


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NOTES TO FINANCIAL STATEMENTS

Note 1 - Formation of Company and Issuance of Common Stock

      a. Formation of the Company

Fullcomm, Inc. (the "Company") was formed under the laws of the State of New
Jersey on January 15, 1999 and authorized to issue to 10,000,000 shares of
common stock, no par value.

      b. Description of Company

The Company is a development stage company that was organized as a successor to
Fullcomm, LLC ("Fullcomm") to commercially exploit technology developed in
connection with the secure transmission of digital media and other data on the
Internet.

      c. Issuance of Shares of Common Stock

In January 1999, the Company sold an aggregate of 4.5 million shares of common
stock for an aggregate of cash consideration of $60,000 or $0.013 per share.

As of December 31, 1999, the Company sold 84,250 shares of common stock through
a private placement at $3.00 per share for an aggregate consideration of
$250,000 less offering costs aggregating $59,764 for net proceeds of $190,236.

A special dividend of 15,750 common shares was paid to the various shareholders
who participated in the Company's earlier private placement. This will increase
this common share allotment category from 84,250 to 100,000 shares.

Note 2-Summary of Significant Accounting Policies

      a. Basis of Financial Statement Presentation

      The accompanying financial statements have been prepared on a going
concern basis, which contemplates the realization of assets and the satisfaction
of liabilities in the normal course of business. The Company incurred net losses
of $314,769 for the period from inception, January 15, 1999, December 31, 1999.
These factors indicate that the Company's continuation, as a going concern is
dependent upon its ability to obtain adequate financing. The Company is
anticipating that with the completion of a private placement and with the
increase in working capital, the Company will be able to complete the research
and development and bring into production its technology and experience an
increase in sales. The Company will require substantial additional funds to
finance its business activities on an ongoing basis and will have a continuing
long-term need to obtain additional financing. The Company's future capital
requirements will depend on numerous factors including, but not limited to,
continued progress developing its source of inventory, continued research and
development and initiating marketing penetration. The Company plans to engage in
such ongoing financing efforts on a continuing basis.


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      The financial statements presented at December 31, 1999 consist of the
balance sheet as at December 31, 1999 and the statements of operations, cash
flows and stockholders equity for the period from inception, January 15, 1999,
to December 31, 1999.

      b. Cash and Cash Equivalents

      Cash and Cash Equivalents - Temporary investments with maturity of less
than three months when purchased are treated as cash

      d. Loss Per Share:

      Basic loss per common share is computed by dividing the loss by the
weighted average number of common shares outstanding during the period. During
the period from inception on January 15, 1999 through December 31, 1999, there
were no dilutive securities outstanding.

      e. Revenue recognition

      Revenue is recognized when products are shipped or services are rendered.

      f. Research and Development Expenses

      Research and development expenses are charged to operations when incurred.

      g. Patent Costs

      Costs incurred to acquire exclusive licenses of patentable technology or
costs incurred to patent technologies are capitalized and amortized over the
shorter of a five year period or the term of the license or patent. The portion
of these amounts determined to be attributable to patents is amortized over
their remaining lives and the remainder is amortized over the estimated period
of benefit but not more than 40 years on a straight-line basis.

      h. Use of Estimates

      The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that effect 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.

      i. Asset Impairment

      The Company adopted the provisions of SFAS No. 121, Accounting for the
impairment of long-lived assets and for long-lived assets to be disposed of
effective January 1, 1996. SFAS No. 121 requires impairment losses to be
recorded on long-lived assets used in operations when indicators of impairment
are present and the estimated undercounted cash flows to be generated by those
assets are less than the assets' carrying amount. SFAS No. 121 also addresses
the accounting for long-lived


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assets that are expected to be disposed of. Long-lived assets and certain
identifiable intangibles are reviewed for impairment whenever events or changes
in circumstances indicate that full recoverability is questionable. There was no
effect of such adoption on the Company's financial position or results of
operations.

      j. Significant Concentration of Credit Risk

      At December 31, 1999, the Company has concentrated its credit risk by
maintaining deposits in several banks. The maximum loss that could have resulted
from this risk totaled $-0- which represents the excess of the deposit
liabilities reported by the banks over the amounts that would have been covered
by the federal insurance.

      k. Recent Accounting Standards

      Accounting for Derivative Instruments and Hedging Activities

      Statement of Financial Accounting Standards No. 133, "Accounting for
Derivative Instruments and Hedging Activities" (SFAS 133) was issued in June
1998. It is effective for all fiscal years beginning after June 15, 1999. The
new standard requires companies to record derivatives on the balance sheet as
assets or liabilities, measured at fair value. Gains or losses resulting from
changes in the values of those derivatives would be accounted for depending on
the use of the derivatives and whether they qualify for hedge accounting. The
key criterion for hedge accounting is that the hedging relationship must be
highly effective in achieving offsetting changes in fair value or cash flows.
The Company does not currently engage in derivative trading or hedging activity.
The Company will adopt SFAS 133 in the fiscal year ending December 31, 2000,
although no impact on operating results or financial position is expected.

      Note 3 - Transfer of Assets

      The Company entered into an Agreement and Plan of Merger (the "Agreement")
on May 14, 1999 which was consummated on May 18, 1999, with Fullcomm, pursuant
to which the Company exchanged all the membership interests in Fullcomm for an
aggregate of 4,500,000 shares of common stock of the Company. The shares of
common stock were divided amongst the Members of Fullcomm in the same ratio as
the Membership interests.

      The transaction has been accounted for as a transfer and is accounted for
at historical cost as if a pooling of interests had occurred with the recording
of the net assets acquired at their historical book value. The financial
statements of the Company have been retroactively restated to include the
combined statements of operations and cash flows for the period from inception,
May 13, 1999, to December 31, 1999 and the statements of operations and cash
flows of Fullcomm, L.L.C. for the period from January 15, 1999 to December 31,
1999.

Note 4 - Related Party transactions

      a. Leased Office Space


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      The Company has entered into a sub lease agreement with Phillip 0.
Escaravage for the lease of office space located at 11 Chambers Street,
Princeton, New Jersey for a monthly rent of $ 2,400 per month.

      Rent paid pursuant to this lease agreement for the period from inception
to December 31, 1999 is $13,080.

      b. Officer Salaries

      No officer has received a salary in excess of $100,000.

      c. Loan Payable-Shareholder

      On December 10, 1999, Philip 0. Escaravage and an entity that is
controlled by him The Umbrella Project, Inc., pursuant to a short term loan
agreement loaned an aggregate of $25,000 to the Company due within one year from
date and with interest at prime plus 2%. As of December 31, 1999, the balance
due is $25,000 with accrued interest of $315.

Note 5 - Property Plant and Equipment

      Property Plant and Equipment consists of the following at December 31,
1999:

             Furniture and fixtures                     16,216
             Less accumulated depreciation               1,622
                                                       -------
             Property Plant and Equipment-net          $14,594
                                                       =======

Note 6 - Income Taxes

      The Company provides for the tax effects of transactions reported in the
financial statements. The provision if any, consists of taxes currently due plus
deferred taxes related primarily to differences between the basis of assets and
liabilities for financial and income tax reporting. The deferred tax assets and
liabilities, if any, represent the future tax return consequences of those
differences, which will either be taxable or deductible when the assets and
liabilities are recovered or settled. As of December 31, 1999, the Company had
no material current tax liability, deferred tax assets, or liabilities to impact
on the Company's financial position because the deferred tax asset related to
the Company's net operating loss carry forward and was fully offset by a
valuation allowance.

      At December 31, 1999, the Company has net operating loss carry forwards
for income tax purposes of $314,769. These carry forward losses are available
to offset future taxable income, if any, and expire in the year 2010. The
Company's utilization of this carry forward against future taxable income may
become subject to an annual limitation due to a cumulative change in ownership
of the Company of more than 50 percent.

      The components of the net deferred tax asset as of December 31, 1999 are
as follows:


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       Deferred tax asset:
       Net operating loss carry forward                       $ 107,021
       Valuation allowance                                    $(197,021)
                                                              ---------
       Net deferred tax asset                                     $ -0-

      The Company recognized no income tax benefit for the loss generated for
the year ended May 31, 1998 and 1999.

      The Company recognized no income tax benefit from the loss generated for
the period from inception, January 15, 1999 to December 31, 1999. SFAS No. 109
requires that a valuation allowance be provided if it is more likely than not
that some portion or all of a deferred tax asset will not be realized. The
Company's ability to realize benefit of its deferred tax asset will depend on
the generation of future taxable income. Because the Company has yet to
recognize significant revenue from the sale of its products, the Company
believes that a full valuation allowance should be provided.

Note 7 - Commitments and Contingencies

      a. Engineering Services Agreement

      On April 29, 1999, the Company entered into an agreement with System
Design Group ("SDG") whereby, SDG is contracted to provide the Company with a
project specifications document for the Company's Internet Media Security board
that will detail the functionality of certain items under development. The cost
of the project is $18,000. The work product of SDG is the property of the
Company.

      As of December 31, 1999, the Company has paid an aggregate of $9,000.

      b. Marketing Consulting Agreement

      On August 11, 1999, The Company entered into a marketing consulting
agreement with The Management Network Group, Inc. for a daily consulting fee of
$1,850 plus out of pocket expenses, subject to adjustments for other services.

      As of December 31, 1999, the Company has paid an aggregate of $2,955.

      c. Financial Consulting Agreement

      On May 12, 1999, the Company entered into a financial consulting agreement
with Steven Katz & Associates, Inc. to provide strategic, financing and/or its
management to the Company for an hourly fee of $255 per hour plus out of pocket
expenses.

      As of December 31, 1999, the Company has paid an aggregate of $33,329.


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Note 8 - Business and Credit Concentrations

      The amount reported in the financial statements for cash approximates fair
market value. Because the difference between cost and the lower of cost or
market is immaterial, no adjustment has been recognized and investments are
recorded at cost.

Note 9 - Development Stage Company

      The Company is considered to be a development stage company with little
operating history. The Company is dependent upon the financial resources of the
Company's management and from the net proceeds of a private placement for its
continued existence. The Company will also be dependent upon its ability to
raise additional capital to complete is research and development, prototype
development, production scheduling, sourcing inventory and its marketing
program, acquire additional equipment, management talent, inventory and working
capital to engage in any profitable business activity. Since its organization,
the Company's activities have been limited to the preliminary development of its
new products, filing of a patent application, hiring personnel and acquiring
equipment and office space, conducting research and development of its
technology and preparation of documentation and the sale of a private placement
offering.


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                        ACCREDITED INVESTOR QUESTIONNAIRE

To: Fullcomm, Inc.
    11 Chambers Street
    Princeton, New Jersey 08542

Gentlemen:

      The undersigned understands that it is contemplated that shares of common
stock will be offered (the "Offering") by Fullcomm, Inc. (the "Company"), which
shares will not be registered under the Securities Act of 1933, as amended (the
"Securities Act"). The undersigned also understands that in order to assure that
the Offering will be exempt from registration under the Securities Act, you must
have reasonable grounds to believe, prior to making a sale, that each
prospective investor is an "accredited investor" (as defined in Regulation D
under the Securities Act).

      The undersigned makes the following representations for the purposes of
determining whether the undersigned falls within the definition of an
"accredited investor":

INSTRUCTIONS: Please check any of the appropriate blocks for any statement that
              applies to you:

|_|   The undersigned is any natural person whose individual net worth, or joint
net worth with that person's spouse, at the time of his purchase exceeds
$1,000,000, and the undersigned has no reason to believe that such net worth
will decrease.

|_|   The undersigned is any natural person who had an individual income in
excess of $200,000 in each of the two most recent years or joint income with
that person's spouse in excess of $300,000 in each of those years and has a
reasonable expectation of reaching the same income level in the current year.

|_|   The undersigned is any director, executive officer or general partner of
the issuer of the securities being offered or sold, or any director, executive
officer, or general partner of a general partner of that issuer.

|_|   The undersigned is any bank as defined in Section 3(a)(2) of the
Securities Act or any savings and loan association or other institution as
defined in Section 3(a)(5)(A) of the Securities Act whether acting in its
individual or fiduciary capacity; any broker dealer registered pursuant to
Section 15 of the Securities Exchange Act of 1934; any insurance company as
defined in Section 2(13) of the Securities Act; any investment company
registered under the Investment Company Act of 1940 or a business development
company as defined in Section 2(a)(48) of that Act; any Small Business
Investment Company licensed by the U.S. Small Business Administration under
Section 301(c) or (d) of the Small Business Investment Act of 1958; any plan
established and maintained by a state, its political subdivisions, or any agency
or instrumentality of a state or its political subdivisions, for the benefit of
its employees, if such plan has total assets in excess of $5,000,000; any
employee benefit plan within the meaning of the Employee Retirement Income
Security Act of 1974, if the investment decision is made by a plan fiduciary, as
defined in Section 3(21) of such Act, which is either a bank, savings and loan
association, insurance company, or registered investment adviser, or if the
employee benefit plan has total assets in excess of $5,000,000, or, if a
self-directed plan, with investment decisions made solely by persons that are
accredited investors.

|_|   The undersigned is any private business development company as defined in
Section 202(a)(22) of the Investment Advisers Act of 1940.


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|_|   The undersigned is any organization described in Section 501(c)(3) of the
Internal Revenue Code, corporation, Massachusetts or similar business trust, or
partnership, not formed for the specific purpose of acquiring the securities
offered, with total assets in excess of $5,000,000.

|_|   The undersigned is any trust with total assets in excess of $5,000,000,
not formed for the specific purpose of acquiring the securities offered, whose
purchase is directed by a sophisticated person as described in Rule
506(b)(2)(ii).

|_|   The undersigned is any entity in which all the equity owners are
accredited investors.

All of the foregoing answers, which I have provided to the questions above, are
true, correct and complete to the best of my knowledge.


Date:____________________               ________________________________________
                                        Signature of Investor

                                        ________________________________________
                                        Please Print Name

                                        ________________________________________
                                        Street Address

                                        ________________________________________
                                        City, State and Zip Code

                                        ________________________________________
                                        Social Security Number

EXECUTION OF THIS DOCUMENT DOES NOT INDICATE ANY INTENT TO PURCHASE THE SHARES
OFFERED IN THE PRIVATE PLACEMENT MEMORANDUM


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                         COMMON STOCK PURCHASE AGREEMENT

      COMMON STOCK PURCHASE AGREEMENT (this "Agreement"), dated as of
_________________________, 2000, by and between Fullcomm, Inc., a New Jersey
corporation (the "Corporation"), and ________________________ (the "Purchaser").

                                   WITNESSETH:

      WHEREAS, the Corporation desires to sell, transfer and assign to the
Purchaser, and the Purchaser desires to purchase from the Corporation,
___________ shares (the "Shares") of the Corporation's common stock, no par
value (the "Common Stock"), at a price per share of $2.50 (the "Purchase
Price"); and

      WHEREAS, the Company is entering into similar Common Stock Purchase
Agreements with other purchasers who are purchasing Common Stock on the
identical terms as set forth herein for an aggregate offering amount to all
purchasers of a minimum of $500,000 and a maximum of $3,000,000, consisting of
an aggregate of a minimum of 200,000 shares of Common Stock and a maximum of
1,200,000 shares of Common Stock, and whose rights shall vest on a pari passu
basis with the Purchasers herein;

      NOW, THEREFORE, in consideration of the promises and the mutual covenants
contained herein, the parties hereto, intending to be legally bound, hereby
agree as follows:

                                    SECTION I

                  PURCHASE, SALE AND REGISTRATION OF THE SHARES

      A. Purchase and Sale. Subject to the terms and conditions of this
Agreement and on the basis of the representations, warranties, covenants and
agreements herein contained, the Corporation hereby agrees to sell, transfer,
assign and convey the Shares to the Purchaser, and the Purchaser agrees to
purchase, acquire and accept the Shares from the Corporation.

      B. Purchase Price. The aggregate purchase price for the Shares to be paid
by the Purchaser to the Corporation is an aggregate of $_________________ (the
"Aggregate Purchase Price"). The Aggregate Purchase Price shall be paid in cash
by the Purchaser to the Corporation on the Closing Date (as defined below).

      C. Price Protection. Upon the issuance or sale by the Corporation of any
additional Common Stock or Common Stock equivalents within a period of thirty
(30) days following the Closing Date, other than options or warrants currently
outstanding as of the date of this Agreement, for a consideration per share less
than the Purchase Price (the "Reduced Purchase Price"), the Purchase Price
shall, upon such issuance or sale, be reduced to the amount of consideration per
share received by the Corporation for such stock. Pursuant thereto, the
Corporation shall immediately issue such additional shares of Common Stock to
the Purchaser at the Reduced Purchase Price (the "Additional Shares"), such that
the Shares purchased hereunder plus the Additional Shares, shall equal the
Aggregate Purchase Price.

      D.

                                   SECTION II
                     REPRESENTATIONS, WARRANTIES, COVENANTS
                        AND AGREEMENTS OF THE CORPORATION

      The Corporation represents and warrants to, and covenants and agrees with,
the Purchaser, as of the date hereof, that:


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      A. Organization: Good Standing. The Corporation is a corporation duly
organized, validly existing and in good standing under the laws of the State of
New Jersey and has full corporate power and authority to own its properties and
to conduct the business in which it is now engaged.

      B. Authority. The Corporation has the full corporate power, authority and
legal right to execute and deliver this Agreement and to perform all of its
obligations and covenants hereunder, and no consent or approval of any other
person or governmental authority is required therefore. The execution and
delivery of this Agreement by the Corporation, the performance by the
Corporation of its obligations and covenants hereunder and the consummation by
the Corporation of the transactions contemplated hereby have been duly
authorized by all necessary corporate action. This Agreement constitutes a valid
and legally binding obligation of the Corporation, enforceable against the
Corporation in accordance with its terms.

      C. No Legal Bar; Conflicts. Neither the execution and delivery of this
Agreement, nor the consummation of the transactions contemplated hereby,
violates any provision of the Certificate of Incorporation, as amended, or
By-Laws of the Corporation or any law, statute, ordinance, regulation, order,
judgment or decree of any court or governmental agency, or conflicts with or
results in any breach of any of the terms of or constitutes a default under or
results in the termination of or the creation of any lien pursuant to the terms
of any contract or agreement to which the Corporation is a party or by which the
Corporation or any of its assets is bound.

      D. Non-Assessable Shares. The Shares being issued hereunder have been duly
authorized and, when issued to the Purchaser for the consideration herein
provided, will be validly issued, fully paid and non-assessable.

                                   SECTION III
                     REPRESENTATIONS, WARRANTIES, COVENANTS
                         AND AGREEMENTS OF THE PURCHASER

      The Purchaser represents and warrants to, and covenants and agrees with,
the Corporation, as of the date hereof, that:

A. Organization (if applicable). The Purchaser is, and as of the Closing will
be, duly organized, validly existing and in good standing under the laws of its
jurisdiction of organization.

B. Authorization. The Purchaser has, and as of the Closing will have, all
requisite power and authority to execute, deliver and perform this Agreement and
to consummate the transactions contemplated hereby. The execution, delivery and
performance of this Agreement, and the consummation of the transactions
contemplated hereby, have been duly and validly authorized by all necessary
action on the part of the Purchaser. This Agreement has been duly executed and
delivered by the Purchaser and constitutes its legal, valid and binding
obligation, enforceable against the Purchaser in accordance with its terms,
except as the enforceability thereof may be limited by bankruptcy, insolvency or
other similar laws affecting the enforceability of creditors' rights in general
or by general principles of equity.

C. No Legal Bar; Conflicts. Neither the execution and delivery of this
Agreement, nor the consummation by the Purchaser of the transactions
contemplated hereby, violates any law, statute, ordinance, regulation, order,
judgment or decree of any court or governmental agency applicable to the
Purchaser, or violates, or conflicts with, any contract, commitment, agreement,
understanding or arrangement of any kind to which the Purchaser is a party or by
which the Purchaser is bound.

D. No Litigation. No action, suit or proceeding against the Purchaser relating
to the consummation of any of the transactions contemplated by this Agreement
nor any governmental action against the Purchaser seeking to delay or enjoin any
such transactions is pending or, to the Purchaser's knowledge, threatened.

E. Investment Intent. The Purchaser (i) is an accredited investor within the
meaning of Rule 501(a) under the Securities Act, (ii) is aware of the limits on
resale imposed by virtue of the nature of the transactions contemplated by this
Agreement, specifically the restrictions imposed by Rule 144 of the Securities


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Act, and is aware that the certificates representing the Purchaser's respective
ownership of Common Stock will bear related restrictive legends and (iii) except
as otherwise set forth herein, is acquiring the shares of the Corporation
hereunder without registration under the Securities Act in reliance on the
exemption from registration contained in Section 4(2) of the Securities Act
and/or Rule 506 promulgated pursuant to Regulation D of the Securities Act, for
investment for its own account, and not with a view toward, or for sale in
connection with, any distribution thereof, nor with any present intention of
distributing or selling such shares. The Purchaser represents that the
Accredited Investor Questionnaire is true and complete in all respects. The
Purchaser has been given the opportunity to ask questions of, and receive
answers from, the officers of the Corporation regarding the Corporation, its
current and proposed business operations and the Common Stock, and the officers
of the Corporation have made available to the Purchaser all documents and
information that the Purchaser has requested relating to an investment in the
Corporation. The Purchaser has been represented by competent legal counsel in
connection with its purchase of the Common Stock and acknowledges that the
Corporation has relied upon the Purchaser's representations in this Section 3 in
offering and selling Common Stock to the Purchaser.

F. Economic Risk; Restricted Securities. The Purchaser recognizes that the
investment in the Common Stock involves a number of significant risks. The
foregoing, however, does not limit or modify the representations, warranties and
agreements of the Corporation in Section 2 of this Agreement or the right of
the Purchaser to rely thereon. The Purchaser is able to bear the economic risks
of an investment in the Common Stock for an indefinite period of time, has no
need for liquidity in such investment and, at the present time, can afford a
complete loss of such investment.

G. Access to Information. The Purchaser has received a copy of the following
documents:

(i) The Company's Business Plan; and

(ii) The Company's Private Placement Memorandum.

The Purchaser represents that it has not received any information about the
Company other than what has been disclosed in the documents set forth above.

H. Suitability. The Purchaser has carefully considered, and has, to the extent
the Purchaser deems it necessary, discussed with the Purchaser's own
professional legal, tax and financial advisers the suitability of an investment
in the Common Stock for the Purchaser's particular tax and financial situation,
and the Purchaser has determined that the Common Stock is a suitable investment.

I. Legend. The Purchaser acknowledges that the certificates evidencing the
Shares will bear the following legend:

THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED, OR ANY STATE SECURITIES LAW. THE SHARES HAVE
BEEN ACQUIRED FOR INVESTMENT AND MAY NOT BE PLEDGED, HYPOTHECATED, SOLD OR
TRANSFERRED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT FOR THE SHARES
UNDER SUCH ACT OR AN OPINION OF COUNSEL TO THE ISSUER THAT REGISTRATION IS NOT
REQUIRED UNDER THE ACT.

                                   SECTION IV

                      THE CLOSING AND CONDITIONS TO CLOSING

      A. Time and Place of the Closing. The closing shall be held at the offices
of Buchanan Ingersoll Professional Corporation, 650 College Road East,
Princeton, New Jersey 08540, on __________________________, 2000 (the "Closing
Date"), or such other time and place as the Corporation and the Purchaser may
mutually agree.


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      B. Delivery by the Corporation. Delivery of the Shares shall be made by
the Corporation to the Purchaser on the Closing Date by delivering a certificate
representing the Shares with an executed stock power, each such certificate to
be accompanied by any requisite documentary or transfer tax stamps.

      C. Delivery by the Purchaser. On or before the Closing Date, the Purchaser
shall deliver to the Corporation the entire Aggregate Purchase Price by check or
by wire transfer to an account specified in writing to Purchaser by the
Corporation.

      D. Other Conditions to Closing. As of the Closing Date, all requisite
action by the Corporation's Board of Directors and shareholders shall have been
taken pursuant to the By-Laws of the Corporation.

                                    SECTION V

                                  MISCELLANEOUS

      A. Entire Agreement. This Agreement contains the entire agreement between
the parties hereto with respect to the transactions contemplated hereby, and no
modification hereof shall be effective unless in writing and signed by the party
against which it is sought to be enforced.

      B. Invalidity, Etc. If any provision of this Agreement, or the application
of any such provision to any person or circumstance, shall be held invalid by a
court of competent jurisdiction, the remainder of this Agreement, or the
application of such provision to persons or circumstances other than those as to
which it is held invalid, shall not be affected thereby.

      C. Headings. The headings of this Agreement are for convenience of
reference only and are not part of the substance of this Agreement.

      D. Binding Effect. This Agreement shall be binding upon and inure to the
benefit of the parties hereto and their respective successors and assigns.

      E. Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of New Jersey applicable in the case of
agreements made and to be performed entirely within such State.

      F. Dispute Resolution. The parties to this Agreement individually and on
behalf of the Corporation agree to arbitrate all disputes or differences
hereunder or arising from their roles as shareholders, directors or officers
thereof. Such submission to arbitration shall be a condition precedent to the
bringing of any action, suit or proceeding by any such shareholder, director or
officer, either individually or on behalf of the Corporation. All of such
differences or disputes shall be settled and finally determined by arbitration
in the township of Princeton, New Jersey, according to the Rules of American
Arbitration Association (the "AAA") now in force or hereafter adopted, by
arbitrators selected by the AAA.

      G. Counterparts. This Agreement may be executed in one or more identical
counterparts, each of which shall be deemed an original but all of which
together will constitute one and the same instrument.


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IN WITNESS WHEREOF, this Common Stock Purchase Agreement has been duly executed
by the parties hereto as of the date first above written.

CORPORATION                             PURCHASER

FULLCOMM, INC.

By: Brendan G. Elliott, President       Name: __________________________________

                                        Address: _______________________________

                                        Date: __________________________________


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<PAGE>

             Supplement to Confidential Private Placement Memorandum

                                 FULLCOMM, INC.
                                1,200,000 Shares
                                 of Common Stock
                                 $2.50 Per Share

                         Minimum Purchase: 40,000 Shares

      As of January 28, 2000, an Amended and Restated Merger Agreement and Plan
of Merger (the "Merger Agreement") was entered into by and among Contessa
Corporation, a Delaware corporation ("Contessa"), certain stockholders of
Contessa, Fullcomm, Inc., a New Jersey corporation (the "Company"), certain
shareholders of the Company and Fullcomm Acquisition Corp., a Delaware
corporation and wholly-owned subsidiary of Contessa ("Fullcomm Acquisition").
Pursuant to the Merger Agreement, on March 1, 2000, the parties closed the
Merger whereby the Company merged with and into Fullcomm Acquisition (the
"Merger") and became a wholly-owned subsidiary of Contessa. Contessa is a
publicly held corporation, registered with the U.S. Securities and Exchange
Commission, whose common stock has been admitted for trading on the OTC Bulletin
Board. Contessa's public filings arc available on the SEC website, www.sec.org,
through the SEC's computerized database.

      Contessa intends to change its name to "Fullcomm Technologies, Inc." In
addition, Contessa intends to engage one or more market makers to provide
liquidity for its shares. There is no assurance at this time that such
arrangements can be concluded, or that if successful, an active trading market
will develop. A pro forma balance sheet which shows the combined assets and
liablities is presented at Tab 3.

      As consideration for their agreement to approve the Merger and surrender
their ownership interests in the Company, each holder of the Company's common
stock, no par value, received one share of Contessa common stock, par value
$0.00l per share, for each share of the Company's common stock held by each such
holder ("Merger Shares"). In the event this Offering is closed, the investors
hereunder will receive shares of Contessa common stock in lieu of the Company's
common stock. As a result of the Merger, the shareholders of Contessa prior to
the Merger now hold 3,000,000 shares of Contessa's common stock and the
shareholders of the Company received 4,601,100 shares of Contessa's common
stock. Additionally, Contessa issued shares of its common stock in consideration
for various employment, consulting and other agreements which include: (i)
175,000 shares to C. Bradley Tashenberg in connection with his consulting
services to the Company, (ii) 175,000 shares to Gregory Creekmore in connection
with his consulting services to the Company, (iii) an option to purchase 175,000
shares to Richard T. Case, the Company's Chief Executive Officer, in connection
with his employment agreement with the Company, (iv) Warrants to purchase
175,000 shares to Grace Securities, Inc. in connection with its consulting
services to the Company, (v) a number of stock purchase warrants equal to 10% of
the shares sold pursuant to this private placement to R. K. Grace & Company in
connection with its memorandum of understanding with regard to providing the
Company with various financial, advisory and investment banking services and
(vi) such number of shares underlying the Company's Stock Option Plan as
approved by the Company's Board of Directors and shareholders.
<PAGE>

                              CONTESSA CORPORATION
                          (A DEVELOPMENT STAGE COMPANY)
               NOTES TO PROFORMA CONSOLIDATED FINANCIAL STATEMENTS
                                  MARCH 1, 2000

balance sheet of Fullcomm at December 31, 1999 and the statements of operations,
stockholders equity and cash flows for the year ended December 31, 1999.

      b. Cash and cash equivalents

      The Company treats temporary investments with a maturity of less than
three months as cash when purchased with cash.

      c. Loss Per Share:

      Basic loss per common share is computed by dividing the loss by the
weighted average number of common shares outstanding during the period. For the
year ended December 31, 1999, there were no dilutive securities outstanding.
The calculation of the shares used in computing basic and diluted EPS include
the shares of common stock issued for the sale of GBDR, the stock dividend and
the shares issued for the reverse merger.

      Shares used in calculating basic and diluted net income per share were as
follows:

                                         March 1,
                                           2000
                                         --------

Total number common
shares outstanding                      8,136,100
                                        ---------

Shares used in calculating
per share amounts--Diluted              8,136,100
                                        =========

      d. Use of Estimates

      The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that effect 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.

      e. Significant Concentration of Credit Risk

      At December 31, 1999, the Company has concentrated its credit risk by
maintaining deposits in several banks. The maximum loss that could have resulted
from this risk totaled $-0-
<PAGE>

                              CONTESSA CORPORATION
                          (A DEVELOPMENT STAGE COMPANY)
               NOTES TO PROFORMA CONSOLIDATED FINANCIAL STATEMENTS
                                  MARCH 1, 2000

which represents the excess of the deposit liabilities reported by the banks
over the amounts that would have been covered by the federal insurance.

      f. Research and Development Expenses

      Research and development expenses are charged to operations when incurred.

      g. Patent Costs

      Costs incurred to acquire exclusive licenses of patentable technology or
costs incurred to patent technologies are capitalized and amortized over the
shorter of a five year period or the term of the license or patent. The portion
of these amounts determined to be attributable to patents is amortized over
their remaining lives and the remainder is amortized over the estimated period
of benefit but not more than 40 years on a straight line basis.

      h. Comprehensive Income

      On January 1, 1998, the Company adopted Statements of Financial Accounting
Standards for reporting and presentation of comprehensive income and its
components an a full set of financial statements. The statement requires only
additional disclosures in the consolidated financial statements; it does not
affect the Company's financial position or results of operations. No relevant
effects resulted from the application from the application of this statement.

      Note 3 - Discontinued Operations

      On February 23, 2000, the Company transferred to Pietro Bortolatti,
project manager the assets related to GBDR in consideration for his assumption
of all related liabilities and return of the 562,500 shares of common stock used
to purchase GBDR. The transaction was treated as a sale of assets net of related
liabilities with the gain on the transfer accounted for as discontinued
operations.

      Note 4 - Transfer of Assets

The Company is a development stage company that was organized as a predecessor
to Fullcomm, LLC ("Fullcomm") to commercially exploit technology developed in
connection with the secure transmission of digital media and other data on the
Internet.

      Fullcomm, Inc. entered into an Agreement and Plan of Merger (the
"Agreement") on May 14, 1999 which was consummated on May 18, 1999, with
Fullcomm, LLC, pursuant to
<PAGE>

                              CONTESSA CORPORATION
                          (A DEVELOPMENT STAGE COMPANY)
               NOTES TO PROFORMA CONSOLIDATED FINANCIAL STATEMENTS
                                  MARCH 1, 2000

which the Company exchanged all the membership interests in Fullcomm, Inc. for
an aggregate of 4,536,75 shares of common stock of the Company. The shares of
common stock were divided amongst the Members of Fullcomm, LLC in the same ratio
as the Membership interests.

      The transaction has been accounted for as a transfer and is accounted for
at historical cost as if a pooling of interests had occurred with the recording
of the net assets acquired at their historical book value. The financial
statements of the Fullcomm, Inc. have been retroactively restated to include the
combined statements of operations and cash flows for the period from inception,
May 13, 1999, to December 31, 1999 and the statements of operations and cash
flows of Fullcomm, L.L.C. for the period from January 15, 1999 to December 31,
1999.

      Note 5 - Property, Plant and Equipment

      Property Plant and Equipment consists of the following at December 31,
1999:

            Furniture and fixtures              16,216
            Less accumulated depreciation        1,622
                                               -------
            Property Plant and Equipment-net   $14,594
                                               =======

      Note 6 - Related Party transactions

      a. Leased Office Space

      Fullcomm has entered into a sub lease agreement with Phillip 0. Escaravage
for the lease of office space located at 11 Chambers Street, Princeton, New
Jersey for a monthly rent of $2,400 per month.

      Rent paid pursuant to this lease agreement for the period from inception
to December 31, 1999 is $13,080.

      b. Officer Salaries

      No officer has received a salary in excess of $100,000.

      c. Loan Payable-Shareholder

      On December 10, 1999, Philip 0. Escaravage and an entity that is
controlled by him The Umbrella Project, Inc., pursuant to a short term loan
agreement loaned an aggregate of $25,000 to the Company due within one year from
date and with interest at prime plus 2%. As of December 31, 1999, the balance
due is $25,000 with accrued interest of $315.

      Note 7 - Preferred Stock
<PAGE>

                              CONTESSA CORPORATION
                          (A DEVELOPMENT STAGE COMPANY)
               NOTES TO PROFORMA CONSOLIDATED FINANCIAL STATEMENTS
                                  MARCH 1, 2000

      The Board of Directors of the Company has the authority to establish and
designate any shares of stock in series or classes and to fix any variations in
the designations, relative rights, preferences and limitations between series as
it deems appropriate, by a majority vote.

      The preferred stock may be issued in series, each of which may vary, as
determined by the board of directors, as to the designation and number of shares
in such series, voting power of the holders thereof, dividend rate, redemption
terms and prices, voluntary and involuntary liquidation preferences, and
conversion rights and sinking fund requirements, if any, of such series.

      The number of shares of preferred stock outstanding at December 31, 1999
and March 1, 2000 is -0- and -0- respectively.

      Note 8 - Income Taxes

      The Company provides for the tax effects of transactions reported in the
financial statements. The provision if any, consists of taxes currently due plus
deferred taxes related primarily to differences between the basis of assets and
liabilities for financial and income tax reporting. The deferred tax assets and
liabilities, if any represent the future tax return consequences of those
differences, which will either be taxable or deductible when the assets and
liabilities are recovered or settled. As of March 1, 2000, the Company had no
material current tax liability, deferred tax assets, or liabilities to impact on
the Company's financial position because the deferred tax asset related to the
Company's net operating loss carryforward and was fully offset by a valuation
allowance.

      At March 1, 2000, the Company has net operating loss carry forwards for
income tax purposes of $314,999. This carryforward is available to offset future
taxable income, if any, and expires in the year 2010. The Company's utilization
of this carryforward against future taxable income may become subject to an
annual limitation due to a cumulative change in ownership of the Company of more
than 50 percent.

      The proforma components of the net deferred tax asset as of March 1, 2000
are as follows:

     Deferred tax asset:

         Net operating loss carry forward              $ 105,752
         Valuation allowance                           $(105,752)
                                                       ---------
         Net deferred tax asset                        $     -0-

      The Company recognized no income tax benefit for the loss generated in the
period from inception, March 7, 1996, to December 31, 1999.
<PAGE>

                              CONTESSA CORPORATION
                          (A DEVELOPMENT STAGE COMPANY)
               NOTES TO PROFORMA CONSOLIDATED FINANCIAL STATEMENTS
                                 MARCH 1, 2000

      SEAS No. 109 requires that a valuation allowance be provided if it is more
likely than not that some portion or all of a deferred tax asset will not be
realized. The Company's ability to realize benefit of its deferred tax asset
will depend on the generation of future taxable income. Because the Company has
yet to recognize significant revenue from the sale of its products, the Company
believes that a full valuation allowance should be provided.

      Note 9 - Commitments and Contingencies

      a. Engineering Services Agreement

      On April 29, 1999, Fullcomm entered into an agreement with System Design
Group ("SDG") whereby, SDG is contracted to provide Fullcomm with a project
specifications document for the Fullcomm's Internet Media Security board that
will detail the functionality of certain items under development. The cost of
the project is $18,000. The work product of SDG is the property of Fullcomm.

      As of December 31, 1999, Fullcomm has paid an aggregate of $9,000.

      b. Marketing Consultant Agreement

      On August 11 1999. Fullcomm entered into a marketing consulting agreement
with The Management Network Group, Inc. for a daily consulting fee of $2,000 per
day plus out of pocket expenses, subject to adjustments for other services.

      As of December 31, 1999, Fullcomm has paid an aggregate of $2,955.

      c. Financial Consulting Agreement

      On May 12, 1999, Fullcomm entered into a financial consulting agreement
with Steven Katz & Associates, Inc. to provide strategic, financing and/or its
management to Fullcomm for an hourly fee of $255 per hour plus out of pocket
expenses.

      As of December 31, 1999, Fullcomm has paid an aggregate of $33,329.

      d. Stock Dividend

      Subsequent to December 31, 1999, Fullcomm's board of directors passed a
resolution that upon the consummation of the Fullcomm's second private placement
of Fullcomm's shares
<PAGE>

                              CONTESSA CORPORATION
                          (A DEVELOPMENT STAGE COMPANY)
               NOTES TO PROFORMA CONSOLIDATED FINANCIAL STATEMENTS
                                  MARCH 1, 2000

of common stock, each investor in Fullcomm's first private placement will be
entitled to receive an additional number of shares of Fullcomm's shares of
common stock equal to 20% of their current holdings. Such shares have not been
issued, but if and when the second private placement closes, such investors will
be entitled to receive shares of Contessa Corporation as a result of the merger.
The aggregate number of shares to be issued is 16,850.

      As of March 1, 2000, the Company has reserved 16,550 shares of common
stock pending completion of the private placement by the Company.

      Note 10 - Business and Credit Concentrations

      The amount reported in the financial statements for cash approximates fair
market value. Because the difference between cost and the lower of cost or
market is immaterial, no adjustment has been recognized and investments are
recorded at cost.

      Note 11 - Development Stage Company

      The Company is considered to be a development stage company with little
operating history. The Company is dependent upon the financial resources of the
Company's management and from the net proceeds of a private placement for its
continued existence. The Company will also be dependent upon its ability to
raise additional capital to complete is research and development, prototype
development, production scheduling, sourcing inventory and its marketing
program, acquire additional equipment, management talent, inventory and working
capital to engage in any profitable activity. Since its organization, the
Company's activities have been limited to the preliminary development of its new
products, filing of a patent application, hiring personnel and acquiring
equipment and office space, conducting research and development of its
technology and preparation of documentation and the sale of a private placement
offering.