<PAGE>

                                    UNITED STATES
                          SECURITIES AND EXCHANGE COMMISSION
                                Washington, D.C. 20549

                                      FORM 10-Q

/X/  QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES 
     EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 1998

                                          or

/ /  TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
     EXCHANGE ACT OF 1934

For the transition period from____________________ to ________________________

Commission File Number: 000-22721

                               CAPITAL DIMENSIONS, INC.
                (Exact name of registrant as specified in its charter)

                   Minnesota                                      52-1139951
       (State or other jurisdiction of                        (I.R.S. Employer 
        incorporation or organization)                       Identification No.)

7831 Glenroy Road, Suite 480, Minneapolis, MN                     55439-3132
 (Address of principal executive offices)                         (Zip Code)

                                   (612) 831-2025
                (Registrant's telephone number, including area code)

              Two Appletree Square, Suite 335, Bloomington, MN  55425
               (Former name, former address and former fiscal year, 
                             if changed since last report)

     Indicate by check mark whether the registrant (1) has filed all reports 
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 
1934 during the preceding 12 months (or for such shorter period that the 
registrant was required to file such reports), and (2) has been subject to 
such filing requirements for the past 90 days.             /X/ Yes        / / No

                 APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY
                    PROCEEDINGS DURING THE PRECEDING FIVE YEARS:

     Indicate by check mark whether the registrant has filed all documents and
reports required to be filed by Sections 12, 13 or 15(d) of the Securities
Exchange Act of 1934 subsequent to the distribution of securities under a plan
confirmed by a court.                                     / / Yes         / / No

                        APPLICABLE ONLY TO CORPORATE ISSUERS:

     As of March 31, 1998, the Company had outstanding 1,725,438 shares of 
Common Stock, no par value per share.

<PAGE>

                                  TABLE OF CONTENTS

<TABLE>
<CAPTION>
                                                                            PAGE
                                                                            ----
<S>           <C>                                                          <C>
PART I.        FINANCIAL INFORMATION:

Item 1.        Condensed Consolidated Financial Statements (Unaudited):       3

                 Condensed Consolidated Statements of Income
                   Three Months ended March 31, 1997 and 1998 and
                   Nine Months ended March 31, 1997 and 1998                  3

                 Condensed Consolidated Balance Sheets
                   June 30, 1997 and March 31, 1998                           4

                 Condensed Consolidated Statements of Cash Flows
                   Nine months ended March 31, 1997 and 1998                  5

                 Notes to Condensed Consolidated Financial Statements       6-7

Item 2.        Management's Discussion and Analysis of Financial
                 Condition and Results of Operations                       8-10

PART II.   OTHER INFORMATION                                                 11
</TABLE>


                                          2
<PAGE>

                           PART I.-- FINANCIAL INFORMATION


ITEM 1. CONDENSED CONSOLIDATED FINANCIAL STATEMENTS


                               CAPITAL DIMENSIONS, INC.
                     CONDENSED CONSOLIDATED STATEMENTS OF INCOME
                                     (UNAUDITED)

<TABLE>
<CAPTION>
                                                             Three Months                           Nine Months 
                                                            Ended March 31,                        Ended March 31,
                                                    ----------------------------          ------------------------------
                                                         1997               1998                1997                1998
                                                    ---------         ----------          ----------          ----------
                                                            (Dollars in thousands, except share and per share data)
<S>                                               <C>                <C>                 <C>                 <C>
Interest income                                      $   840             $   704             $ 1,862             $ 1,650
Operating expenses:
  Interest expense                                       194                 227                 370                 729
  General and administrative expense                     230                 285                 667                 904
  Offering costs                                           -                   -                   -                 253
  Other operating expense                                 30                  18                  46                  33
                                                   ---------           ---------           ---------           ---------
Total operating expenses                                 454                 531               1,083               1,920
                                                   ---------           ---------           ---------           ---------
Net operating income (loss)                              386                 173                 779                (270)
Gains on investments in small business 
 concerns:
  Realized                                              (214)                 27                 (95)                114
  Unrealized                                           1,491                 173               1,509                 297
                                                   ---------           ---------           ---------           ---------
Income (loss) before income taxes                      1,662                 373               2,192                 141
Income/excise taxes                                      676                  19                 893                  19
                                                   ---------           ---------           ---------           ---------
Net income (loss)                                        986                 354               1,299                 122
Dividends on preferred stock to SBA                       (4)                  -                  56                   -
                                                   ---------           ---------           ---------           ---------
Net income (loss) applicable to common stock         $   990             $   354             $ 1,243             $   122
                                                   ---------           ---------           ---------           ---------
                                                   ---------           ---------           ---------           ---------
Basic earnings per common share                      $   .60             $   .21             $   .78             $   .07
                                                   ---------           ---------           ---------           ---------
                                                   ---------           ---------           ---------           ---------
Diluted earnings per common share                    $   .54             $   .19             $   .71             $   .07
                                                   ---------           ---------           ---------           ---------
                                                   ---------           ---------           ---------           ---------
Weighted average common shares outstanding 
 (basic)                                           1,638,147           1,725,438           1,599,114           1,721,771
                                                   ---------           ---------           ---------           ---------
                                                   ---------           ---------           ---------           ---------
Weighted average common shares outstanding 
 (assuming dilution)                               1,849,908           1,898,083           1,761,681           1,897,649
                                                   ---------           ---------           ---------           ---------
                                                   ---------           ---------           ---------           ---------
</TABLE>

              See notes to condensed consolidated financial statements.

                                          3

<PAGE>

                               CAPITAL DIMENSIONS, INC.
                        CONDENSED CONSOLIDATED BALANCE SHEETS
                                     (UNAUDITED)

<TABLE>
<CAPTION>
                                                     June 30,         March 31,
                                                      1997              1998
                                                   ---------         ---------
                                                      (Dollars in thousands)
<S>                                                <C>               <C>
                                        ASSETS:
Investments in small business concerns at 
 fair value (note 3)
  Stocks                                           $   7,621         $   7,661
  Debt securities                                     13,285             6,876
  Loans                                                3,766             9,462
                                                   ---------         ---------
Total investments in small business concerns          24,672            23,999
Cash and cash equivalents                              4,424             3,907
Other assets                                           1,192             1,151
                                                   ---------         ---------
Total assets                                       $  30,288         $  29,057
                                                   ---------         ---------
                                                   ---------         ---------

                       LIABILITIES AND STOCKHOLDERS' EQUITY:

SBA financing                                      $  12,154         $  10,840
Other liabilities                                        712               519
                                                   ---------         ---------
Total liabilities                                     12,866            11,359

STOCKHOLDERS' EQUITY:
Liquidating interest under repurchase agreement        2,525                 -
Common stock                                           1,446             1,502
Additional paid-in capital                             8,572            11,195
Retained earnings                                      4,879             5,001
                                                   ---------         ---------
Total stockholders' equity                            17,422            17,698
                                                   ---------         ---------
Total liabilities and stockholders' equity         $  30,288         $  29,057
                                                   ---------         ---------
                                                   ---------         ---------
</TABLE>

              See notes to condensed consolidated financial statements.

                                          4
<PAGE>

                               CAPITAL DIMENSIONS, INC.
                   CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
                                     (UNAUDITED)

<TABLE>
<CAPTION>
                                                                                  Nine Months
                                                                                Ended March 31,
                                                                       ------------------------------
                                                                           1997                  1998
                                                                       --------              --------
                                                                            (Dollars in thousands)
<S>                                                                    <C>                  <C>
Net cash (used by) provided by operating activities                    $  (455)              $   813

Cash flow from investing activities:
  Investments in small business concerns                                (3,025)               (1,943)
  Collections on debt securities and loans                                 767                 2,211
                                                                       -------               -------
    Total cash (used by) provided by investing activities               (2,258)                  268

Cash flow from financing activities:
  Proceeds from SBA note payable                                         5,301                     -
  Payments on note payable to SBA                                         (381)               (1,654)
  Issuance of common stock                                                   8                    56
  Dividends paid on SBA 4% redeemable preferred stock                      (66)                    -
  Redemption of SBA 4% redeemable preferred stock                       (3,000)                    -
                                                                       -------               -------
    Total cash provided by (used by) financing activities                1,862                (1,598)

Net decrease in cash and cash equivalents                                 (851)                 (517)

Cash and cash equivalents at beginning of period                         3,878                 4,424
                                                                       -------               -------
Cash and cash equivalents at end of period                             $ 3,027               $ 3,907
                                                                       -------               -------
                                                                       -------               -------
</TABLE>

              See notes to condensed consolidated financial statements.


                                          5
<PAGE>

                               CAPITAL DIMENSIONS, INC.
           NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
                                (DOLLARS IN THOUSANDS)

1.   BASIS OF PRESENTATION

     The accompanying unaudited condensed consolidated financial statements have
     been prepared in accordance with generally accepted accounting principles
     and the rules and regulations of the Securities and Exchange Commission for
     interim financial statements.  Accordingly, the interim statements do not
     include all of the information and disclosures required for annual
     financial statements.  In the opinion of the Company's management, all
     adjustments (consisting solely of adjustments of a normal, recurring
     nature) necessary for a fair presentation of these interim results have
     been included.  These financial statements and related notes should be read
     in conjunction with the audited financial statements and notes thereto
     included in the Company's Annual Report on Form 10-K for the year ended
     June 30, 1997.  The balance sheet at June 30, 1997 has been derived from
     the audited financial statements included in the Annual Report on 
     Form 10-K. The results for the interim period ended March 31, 1998 are 
     not necessarily indicative of the results to be expected for the entire 
     year.

     In 1997, the Financial Accounting Standards Board issued Statement No. 128,
     "Earnings per Share."  Statement 128 replaced the calculation of primary
     and fully diluted earnings per share with basic and diluted earnings per
     share.  Unlike primary earnings per share, basic earnings per share
     excludes any dilutive effects of options, warrants and convertible
     securities.  Diluted earnings per share is very similar to the previously
     reported fully diluted earnings per share.  All earnings per share amounts
     for all periods have been presented, where appropriate, restated to conform
     to the Statement 128 requirements.

2.   INCOME TAXES AND POTENTIAL DIVIDEND

     The Company anticipates that it will qualify, and will elect, to be taxed
     as a regulated investment company ("RIC") under Subchapter M of the
     Internal Revenue Code for the fiscal year ending June 30, 1998.  Under
     Subchapter M, the Company generally will be eligible to be taxed as a 
     pass-through entity.  

     If the Company meets the qualifications of Subchapter M, it must make an
     election to be taxed under Subchapter M status and distribute a minimum of
     90% of its net income from dividends and interest.  In addition, the
     Company may chose to distribute up to 100% of its net income from dividends
     and interest and up to 100% of its realized gains on investment.  If this
     occurs, and the distribution is made within the allowed time frame
     following the end of its fiscal year ending June 30, 1998, the Company will
     not be subject to corporate income tax in fiscal 1998.  Accordingly, the
     Company has not recorded an income tax provision for the three or nine
     months ended March 31, 1998.  To the extent that less than 98% of these
     amounts are distributed, the Company will be taxed at normal corporate tax
     rates plus a 4% excise tax on the undistributed portion.  The Company
     recorded $19,000 in excise tax due to undistributed earnings.

     If the Company is unable to meet the requirements of Subchapter M, a tax
     provision equal to approximately 41% of income before tax would be
     necessary.  If at any time during the current fiscal year it becomes
     apparent that the Company will not be able to meet the requirements of
     Subchapter M, the Company will record, in the period during which it
     becomes apparent, a provision for income taxes equal to approximately 41%
     of year-to-date income before tax at that time.  This could significantly
     impact the reported net income amount in a future fiscal quarter.

                                          6

<PAGE>

3.   INVESTMENTS IN SMALL CONCERNS

     Investments were valued at estimated fair value of $24,672 at June 30,
     1997, and $23,999 at March 31, 1998. The costs of those investments were:

<TABLE>
<CAPTION>
                                      June 30, 1997      March 31, 1998
                                      -------------      --------------
    <S>                              <C>                <C>
     Stocks                             $  4,486            $  4,355
     Debt Securities                      13,285               7,276
     Loans                                 4,302               9,472
                                        --------            --------
                                        $ 22,073            $ 21,103
                                        --------            --------
                                        --------            --------
</TABLE>

4.   VALUATION OF INVESTMENTS 

     The Company records its investments at estimated fair value as determined
     by the Board of Directors.  Realization of the carrying value of
     investments is subject to future developments relating to investee
     companies.

     Among the factors considered by the Board of Directors in determining the
     fair value of investments are the cost of the investment to the Company,
     developments since the acquisition of the investment, the financial
     condition and operating results of the investee, the long-term potential of
     the business of the investee, the value of the underlying collateral, and
     other factors generally pertinent to the valuation of investments.  There
     is no public market for any of the investments.  The Board, in making its
     evaluation, has relied on financial data of investees and, in many
     instances, on estimates by the management of the Company and of the
     investee companies as to the potential effect of future developments.  Due
     to the nature of the Company's investments, the valuations could differ
     materially in the near term.

5.   MERGER AGREEMENT WITH MEDALLION FINANCIAL CORPORATION

     On March 6, 1998, the Company entered into a merger agreement with
     Medallion Financial Corporation.  The Merger Agreement provides that the
     Merger will be consummated if the approval of the CDI shareholders required
     therefor is obtained and all other conditions to the Merger are satisfied
     or waived.  Upon consummation of the Merger, CDI will become a wholly owned
     subsidiary of Medallion.  

     Upon consummation of the Merger, each outstanding share of CDI Common Stock
     will be automatically converted into and represent that number of shares of
     Medallion Common Stock equal to the quotient obtained by dividing (x)
     $15.50 by (y) the average closing sale prices per share of Medallion Common
     Stock on the NASDAQ National Market for the 20 trading days which
     immediately precede the business day immediately preceding the Closing
     Date, provided, however, that if such average exceeds $26.00, the divisor
     shall be $26.00, and if such average is less than $23.50, the divisor shall
     be $23.50.  Cash will be paid in lieu of fractional shares.

6.   NEW ACCOUNTING STANDARDS

     In June 1997, the Financial Accounting Standards Board issued Statement of
     Financial Accounting Standards (SFAS) NO. 131, DISCLOSURES ABOUT SEGMENTS
     OF AN ENTERPRISE AND RELATED INFORMATION, which will be effective for the
     Company beginning July 1, 1998.  SFAS No. 131 redefines how operating
     segments are determined and requires disclosure of certain financial and
     descriptive information about a company's operating segments.  The Company
     does not anticipate the adoption of SFAS No. 131 will have a significant
     effect on its disclosures.

                                          7
<PAGE>

ITEM 2.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
         OF OPERATIONS

OVERVIEW

     The Company's principal investment objectives are to achieve a high 
level of income from both interest on loans and debt securities, generally 
referred to as "debt investments" and long-term appreciation in the value of 
equity interests in its portfolio companies.  The Company's debt investments 
are typically secured, have relatively high fixed interest rates, and are 
accompanied by warrants to purchase equity securities of the borrower.  In 
addition to interest on debt investments, the Company also typically collects 
an origination fee on each debt investment.

     The Company's financial performance is composed of four primary 
elements. The first is "income before gains (losses) on investments," which 
is the difference between the Company's income from interest and fees and its 
total operating expenses, including interest expense.  Interest income is 
earned on debt investments and the temporary investment of funds available 
for investment in portfolio companies, which are presented in the Company's 
balance sheets as cash equivalents.  The second element is "realized gains 
(losses) on investments," which is the difference between the proceeds 
received from the disposition of portfolio assets in the aggregate during the 
period and the cost of such portfolio assets.  The third element is the 
"change in unrealized appreciation (depreciation) of investment," which is 
the net change in the estimated fair values at the beginning of the period or 
the cost of such portfolio assets, if purchased during the period.  
Generally, "realized gains (losses) on investment" and "changes in unrealized 
appreciation (depreciation) of investments" are inversely related.  When an 
appreciated asset is sold to realize a gain, a decrease in unrealized 
appreciation occurs when the gain associated with the asset is transferred 
from the "unrealized" category to the "realized" category.  Conversely, when 
a loss is realized by the sale or other disposition of a depreciated 
portfolio asset, the reclassification of the loss from "unrealized" to 
"realized" causes an increase in net unrealized appreciation and an increase 
in realized loss.  The fourth element is "tax expense."  The Company intends 
to qualify for taxation under Subchapter M for its fiscal year ending June 
30, 1998. 

RESULTS OF OPERATIONS 

THREE MONTHS ENDED MARCH 31, 1998 AND 1997

     INTEREST INCOME.  During the three months ended March 31, 1998, the 
Company earned interest on debt investments of $704,000, a 16% decrease from 
the $840,000 earned during the same period in 1997.  This decrease in 
interest income resulted primarily from decreases in the average dollar 
amount of outstanding debt investments and an increase in the dollar amount 
of debt investments on non-accrual status during the three months ended March 
31, 1998, as compared to the three months ended March 31, 1997.  There were 
no material changes in the average interest rate earned.  The Company's debt 
investments (at cost) decreased 16% to $16.8 million at March 31, 1998 from 
$20 million at March 31, 1997.

     INTEREST EXPENSE.  The Company's interest expense, which related to SBA 
financing, was $227,000 for the three months ended March 31, 1998, a 17% 
increase over the $194,000 for the comparable period in 1997.  The change in 
interest expense is directly related to the level of debt leverage from the 
SBA, which was $10.8 million as of March 31, 1998, and $9.3 million as of 
March 31, 1997.

     GENERAL AND ADMINISTRATIVE EXPENSES.  General and administrative 
expenses totaled $285,000 for the quarter ended March 31, 1998, a 24% 
increase from $230,000 for the comparable quarter in 1997.  The increase was 
due to additional staff and public company expenses.  General and 
administrative expenses as a percentage of total assets was 4.0% and 3.3% 
(annualized) for the respective periods.

                                          8

<PAGE>

     REALIZED GAINS (LOSSES).  The Company's net realized gains (losses) on 
investment were $27,000 and ($214,000) for the three months ended March 31, 
1998 and 1997, respectively.  The gain was the result of the sale of equity 
investments.  The loss was the result of recognizing losses on investments.

     CHANGE IN UNREALIZED APPRECIATION (DEPRECIATION) OF INVESTMENTS.  For 
the three months ended March 31, 1998 and 1997, the Company recorded net 
unrealized appreciation of investments of $173,000 and $1.5 million, 
respectively.  These changes are the result of the Company's revaluation of 
its portfolio in accordance with its valuation policy to reflect the change 
in estimated fair value of each of its portfolio assets.

     INCOME/EXCISE TAXES.  The Company did not record a federal or state 
income tax provision during the three months ended March 31, 1998 due to its 
expected Subchapter M election (see Financial Statements note 2).  The 
Company did record $19,000 of excise tax related to delayed earnings 
distribution.  During the comparable period in 1997 the Company incurred 
$676,000 of income tax expense (an effective rate of 41%).

NINE MONTHS ENDED MARCH 31, 1998 AND 1997

     INTEREST INCOME.  During the nine months ended March 31, 1998, the 
Company earned interest on debt investments of $1.7 million, a 10% decrease 
from the $1.9 million earned during the same period in 1997.  This decrease 
in interest income resulted primarily from decreases in the total investments 
and in the dollar amount of outstanding investments on accrual status during 
the applicable periods.  There were no material changes in the average 
interest rate earned. The Company's debt investments (at cost) decreased 16% 
to $16.8 million at March 31, 1998 from $ 20 million at March 31, 1997. 

     INTEREST EXPENSE.  The Company's interest expense, which related to SBA 
financing, was $729,000 for the nine months ended March 31, 1998, a 97% 
increase over the $370,000 for the comparable period in 1997.  The change in 
interest expense is directly related to the timing of the receipt of debt 
leverage and the level of debt leverage from the SBA, which was $10.8 million 
as of March 31, 1998, and $9.3 million as of March 31, 1997.

     GENERAL AND ADMINISTRATIVE EXPENSES.  General and administrative 
expenses totaled $904,000 for nine months ended March 31, 1998, a 35.5% 
increase over the $667,000 for the comparable period in 1997.  The increase 
was due to a charge related to the acceleration of two directors' stock 
option vesting dates, additional staff, and public company expenses.  General 
and administrative expenses as a percentage of total assets was 4.1% and 3.4% 
(annualized) for the respective periods.  

     OFFERING COSTS.  Offering costs of $253,000, related to an unsuccessful 
equity offering, were expensed during the nine months ended March 31, 1998.

     REALIZED GAINS (LOSSES).  The Company's net realized gains (losses) on 
investment were $114,000 and ($95,000) for the nine months ended March 31, 
1998 and 1997, respectively.  The gain was the result of the sale of equity 
investments.  The loss was the result of recognizing losses on investments.

     CHANGE IN UNREALIZED APPRECIATION (DEPRECIATION) OF INVESTMENTS.  For 
the nine months ended March 31, 1998 and 1997, the Company recorded net 
unrealized appreciation of investments of $297,000 and $1.5 million, 
respectively.  These changes are the result of the Company's revaluation of 
its portfolio in accordance with its valuation policy to reflect the change 
in estimated fair value of each of its portfolio assets. 

     INCOME/EXCISE TAXES.  The Company did not record a federal or state 
income tax provision during the nine months ended March 31, 1998 due to its 
expected Subchapter M election (see Financial Statements note 2).  The 
Company did record $19,000 of excise tax related to delayed earnings 
distribution.  During the comparable period in 1997 the Company incurred 
$893,000 (an effective rate of 41%).

                                          9
<PAGE>

FINANCIAL CONDITION, LIQUIDITY AND CAPITAL RESOURCES

     At March 31, 1998, the Company had $3.9 million in cash and cash 
equivalents.  The Company's principal sources of capital to fund its 
portfolio growth have been borrowings through the SBA-sponsored SBIC 
debenture program, principal payments on debt investments, and sales of the 
Company's equity positions in certain portfolio companies.  Principal 
payments made to the Company on its debt investments were $2,211,000 and 
$767,000 during the nine months ended March 31, 1998 and 1997, respectively.  
For the fourth quarter of fiscal 1998, the expected principal payments owed 
to the Company on existing debt investments are $19,000.  Cash proceeds from 
the sale of investments were $940,000 and $115,000 for the nine months ended 
March 31, 1998 and 1997, respectively.  Cash proceeds from the sale of 
investments during the fourth quarter of fiscal 1998 are expected to exceed 
$914,000.

     The Company borrowed $2.0 million from the SBA in March 1996, $5.5 
million in December 1996 and $3.0 million in June 1997.  These borrowings are 
evidenced by three debentures which bear interest at 7.08%, 7.08%, and 7.07%, 
respectively.   Interest only is payable semi-annually, with maturities of 
$7.5 million in 2006 and $3.0 million in 2007, and can be prepaid without 
penalty after five years.  The Company repaid $1.4 million to the SBA on 
February 6, 1998, which was the outstanding balance of an 8.375 % interest, 
fully amortizing loan that was to mature on April 1, 2,000.  Repayment of the 
loan terminated a 3% preferred stock buyback agreement with the SBA.  Total 
indebtedness of the Company to the SBA as of March 31, 1998 was $10.8 
million.  Based on the Company's leverageable capital (as defined by the 
SBA), at March 31, 1998, the Company was eligible to borrow from the SBA up 
to a total of $16.4 million.

     The Company made debt investments of $1.9 million and $3 million during 
the nine months ended March 31, 1998 and 1997, respectively.

     The Company does not currently have a line of credit or revolving credit 
facility.  As of March 31, 1998, the Company did not have any outstanding 
commitments to provide financing.  The Company continues to review new 
investment requests, and expects to make additional commitments during the 
fourth quarter of fiscal 1998.

                                          10
<PAGE>

                             PART II -- OTHER INFORMATION

ITEM 1. NOT APPLICABLE

ITEM 2. NOT APPLICABLE

ITEM 3. NOT APPLICABLE

ITEM 4. NOT APPLICABLE

ITEM 5. NOT APPLICABLE

ITEM 6. NOT APPLICABLE



                                      SIGNATURES


     Pursuant to the requirements of the Securities Exchange Act of 1934, the 
registrant has duly caused this report to be signed on its behalf by the 
undersigned thereunto duly authorized.

                                       CAPITAL DIMENSIONS, INC.
                                             (Registrant)

May __, 1998                           
                                       ---------------------------------------
                                       Thomas F. Hunt, Jr.
                                       President and Chief Executive Officer


May __, 1998                           
                                       ---------------------------------------
                                       Dean R. Pickerell
                                       Executive Vice President and
                                       Chief Financial Officer



                                          11