AMENDMENT NO. 1

                                       TO

                           LOAN AND SECURITY AGREEMENT


                  AMENDMENT  NO.  1 to Loan and  Security  Agreement  dated  and
effective  as of the 23rd day of October 1998 (the  "Amendment")  by and between
Compu-DAWN, Inc., a Delaware Corporation ("Lender") and LocalNet Communications,
Inc., a Florida corporation ("Borrower").

                                    RECITALS

                  WHEREAS,  Lender and Borrower entered into a Loan and Security
Agreement dated October 6, 1998 (the "Loan and Security  Agreement") pursuant to
which Lender agreed to loan up to $500,000 to Borrower.

                  WHEREAS,  Borrower  desires to borrow  from  Lender and Lender
desires  to loan to  Borrower  up to an  additional  amount  of  $500,000  or an
aggregate of up to $1,000,000 in principal.

                  WHEREAS,  Lender  and  Borrower  desire  to amend the Loan and
Security Agreement upon the terms and conditions set forth herein.

                  NOW,   THEREFORE,   in   consideration   of   the   respective
representations, warranties, agreements and covenants in this Amendment, and for
other good and valuable  consideration,  the receipt and sufficiency of which is
hereby acknowledged,  and subject to the conditions contained in this Amendment,
the parties intending to be legally bound, hereby agree as follows:

                                    SECTION 1
                                   DEFINITIONS

1.   Capitalized  terms used but not  defined  herein,  shall have been  meaning
     ascribed to them in the Loan and Security Agreement.


                                    SECTION 2
                                   AMENDMENTS

2.1  Section  1.1(m)  of the Loan  and  Security  Agreement  is  amended  in its
     entirety to read as follows: ""Loan" shall mean each loan or any other loan
     or loans made by Lender to Borrower pursuant to this Agreement as amended."

2.2  Section  1.1  (n)(ii)  of the Loan and  Security  Agreement  is  amended to
     replace the word "Note" for the phrase "Secured Promissory Note."


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2.3  Section  1.1(o)  of the Loan  and  Security  Agreement  is  amended  in its
     entirety to read as follows:  " "Notes" shall mean (A) The $500,000 Secured
     Promissory Note dated October 6, 1998 executed by Borrower  pursuant to the
     terms of the Loan  and  Security  Agreement  and (B) the  $500,000  Secured
     Promissory  Note of even date (the  "Second  Note")  executed  by  Borrower
     pursuant to the terms of the Loan and Security Agreement as amended hereby,
     collectively and singly.

2.4  The amount  provided for in Section 2.1 of the Loan and Security  Agreement
     is amended to read One Million  Dollars  ($1,000,000)  and the defined term
     "Amount" shall mean such $1,000,000.

2.5  The date  "September  __,  1999" in  section  2.2 of the Loan and  Security
     Agreement is amended to October 6, 1999."

2.6  Section 3.2 of the Loan and  Security  Agreement is amended in its entirety
     to read as follows:

                  "Pledge of Securities. As additional security to ensure prompt
                  payment and  performance of all  Obligations,  Rudy C. Theale,
                  Jr., the Chief Executive  Officer of the Borrower,  and Robert
                  E. Turner, IV (collectively, the "Pledgors"), have each agreed
                  to pledge his  respective  equity  interest in the Borrower as
                  more  particularly set forth under the terms and conditions of
                  the Pledge Agreement."

2.7  Section  5.5 of the Loan and  Security  Agreement  is amended to change the
     reference to Schedule 3.1 therein to Schedule  5.5,  which  Schedule 5.5 is
     attached hereto.

2.8  Section 8.10 of the Loan and Security Agreement is amended to eliminate the
     phrase ", subject to the provisions of an Intercreditor Agreement among the
     Lender, [Beacon] and the Borrower of even date herewith."

2.9  Section 11.1(b) of the Loan and Security  Agreement shall be amended to add
     the phrase "or any other agreement between Lender and Borrower" between the
     phrases "other Loan Document" and "or any loan or lease" in the second line
     of Section 11.1 (b).

2.10 In Section 12.1 (a) of the Loan and Security Agreement is amended such that
     the phrase the "companion  Pledge Agreement" means the Pledge Agreements of
     the Pledgors jointly and severally.

2.11 Section 12.1 (c) of the Loan and Security  Agreement  shall be amended such
     that  reference  therein to Schedule 3.1 shall be Schedule  12.1(c),  which
     Schedule 12.1(c) is attached hereto.



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                                    SECTION 3
                        ADDITIONAL CONDITIONS TO ADVANCES

3.1  In addition to the conditions set forth in Sections 2.6 and 2.7 of the Loan
     and  Security  Agreement,  Lender's  obligation  to make each Advance on or
     after  the  date  hereof  is  conditioned  upon,  and is  subject  to,  the
     fulfillment of each of the following conditions. Lender shall have received
     each of the following, in form and substance satisfactory to Lender:

     (a)  The duly executed copy of the Second Note.

     (b)  An  amendment  to  the  Boca  Research,  Inc.  ("Boca")  Subordination
          Agreement  pursuant to which Boca agrees to  subordinate  any security
          interest  it may  have  in the  Collateral  to  Compu-DAWN's  security
          interest in such  Collateral to the extent of the principal  amount of
          at least  $1,000,000  (plus any amount which Lender is required to pay
          to Boca pursuant to a guaranty  under a Tripartite  Agreement  between
          Lender,  Borrower and Boca of even date) plus interest accrued thereon
          plus any  costs  incurred  by the  Lender  in the  collection  of such
          amounts.

     (c)  A duly executed Pledge Agreement from Robert E. Turner, IV, along with
          all of the  certificates  representing  his capital  stock in Borrower
          together   with  a  stock  power   executed  in  blank,   which  stock
          certificates  and stock power shall be  delivered  to the escrow agent
          named in such Pledge  Agreement  (the Escrow  Agent")  pursuant to the
          terms of such Pledge Agreement.

     (d)  A duly executed  Amendment No. 1 to the Pledge Agreement  between Rudy
          C. Theale and  Lender,  together  with a stock  power  relating to his
          stock  certificates  representing  his pledged LocalNet Common Shares,
          which stock certificates were previously delivered to the Escrow Agent
          pursuant to the terms of such Pledge Agreement.

     (e)  A Consulting  Agreement between Borrower and Lender pursuant to which,
          among other things,  Compu-DAWN will act as Borrower's exclusive agent
          to    negotiate    agreements    between    Borrowers    and   certain
          telecommunication  services  providers  and  Borrower  will  guarantee
          certain payments by certain telecommunication providers to Lender.

     (f)  Certified copy of all corporate (including stockholder,  if required),
          action taken by Borrower to authorize  (a) this  Amendment to the Loan
          and Security Agreement,  (b) the Borrowings pursuant to this Amendment
          and (c) the execution, delivery and performance in accordance with the
          respective terms of this Amendment and any other document execution in
          connection with this  Amendment.

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     (g)  An  agreement  between  UniDial  Incorporated  ("UniDial")  and Lender
          providing  for  UniDial  to pay  Compu-DAWN  an  amount  equal to five
          percent (5%) of the amount upon which  commissions  payable by UniDial
          to Borrower  under an Agent's  Agent  between  UniDial and Borrower is
          determined.


       [Rest of Page is Intentionally Left Blank. Signature Page follows]

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                  IN WITNESS  WHEREOF,  Borrower and Lender have  executed  this
Amendment by the duly authorized officers as of the date first above written.


                                         LENDER:

ATTEST:                                  Compu-DAWN, Inc.


_____________________________            By: /s/ Mark Honigsfeld
                                            ------------------------------------
                                            Mark Honigsfeld
                                            Chief Executive Officer


                                         BORROWER:

ATTEST:                                  LocalNet Communications, Inc.


                                         By:/s/ Rudy C. Theale, Jr.   
-----------------                          ------------------------------------
                                            Rudy C. Theale, Jr.
                                            Chief Executive Officer








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                                  Schedule 5.5


All Account Debtors of Borrower




<PAGE>

                               Schedule 12.1 (c)


See Schedule 5.5




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