Document:

STOCK PURCHASE AGREEMENT

      THIS STOCK PURCHASE AGREEMENT (this  "Agreement"),  dated as of November
, 2005, by and among  Compliance  Systems  Corporation  ("Purchaser")  and the
undersigned shareholders ("Sellers").

                                   RECITALS:

      WHEREAS,  Sellers  are the owner of  5,000,000  shares of the issued and
outstanding Common Stock,  $0.001 par value per share, as set forth on Exhibit
A attached  hereto  (the  "Stock") of GSA  Publications  Inc.,  a  corporation
organized under the laws of Nevada (the "Company").

      WHEREAS,  Sellers desire to sell, and Purchaser desires to purchase, the
Stock pursuant to the terms and conditions set froth in this Agreement.

      NOW, THEREFORE,  for and In consideration of the foregoing premises, the
promises  and  covenants  set forth  herein,  and for other good and  valuable
consideration,  the receipt and adequacy of which is hereby acknowledges,  the
parties hereto, intending to be legally bound, hereby agree as follows:

                                   ARTICLE I
                                 SALE OF STOCK

            Section  1.1 Sale of Stock.  Subject  to the terms and  conditions
herein  stated,  Sellers  agree to  sell,  assign,  transfer  and  deliver  to
Purchaser  on the Closing Date (as defined  below),  and  Purchaser  agrees to
purchase  from  Sellers on the Closing  Date,  all of the shares of Stock (the
"Stock Sale"). The certificates  representing  ownership of the Stock shall be
duly endorsed in blank,  or accompanied by medallion  guaranteed  stock powers
duly executed in blank, by the Sellers.

            Section 1.2 Price.  In exchange  for the delivery of the Shares as
set forth in Section  1.1.  hereof,  the  Purchaser  shall pay to Sellers  the
aggregate  amount  of Eight  Thousand  and  Three  Hundred  and  Thirty  Three
Dollars ($8,333) (the "Purchase Price  Consideration")  at the Closing Date in
a manner set forth on Schedule 1.2.

            Section  1.3   Closing.   The  closing  of  the  Stock  Sale  (the
"Closing")  shall  take place on  November  4,  2005,  or as may be  otherwise
agreed to by the  parties in  writing,  and shall take place at such place and
time as the parties  shall  agree.  Such time and date are herein  referred to
as the  "Closing  Date." In the event that the Closing  does not take place by
November 11, 2005,  any party hereto may void this  Agreement by notifying the
other parties in writing.  Notwithstanding  the foregoing,  the parties hereto
shall have the right to mutually  extend the Closing  Date past  November  11,
2005.

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                                  ARTICLE II
           REPRESENTATIONS AND WARRANTIES OF SELLERS AND THE COMPANY

            The Sellers and the  Company,  jointly and  severally,  represents
and warrants to the Purchaser as follows:

            Section 2.1 Status of Company.  The Company is a corporation  duly
organized,  validly existing, and in good standing under the laws of the State
of Nevada,  and is  licensed  or  qualified  as a foreign  corporation  in all
states in which the nature of its  business or the  character  or ownership of
its properties makes such licensing or qualification necessary.

                        Section 2.2 Liabilities and Contracts.  The Company
has no outstanding liability or obligation of any nature whatsoever (whether
absolute, accrued, contingent or otherwise and whether due or to become
due).  The Company is not a party to, nor are the Company's assets or
securities bound or affected by, any Contract except for Contracts under
which the Company has no further rights or obligations because the Contract
has been fully performed or validly and irrevocably terminated.

            Section 2.3  Ownership  of Stock.  Seller is the lawful  owners of
the Stock to be sold to the  Purchaser or its  designees and shall be free and
clear of all liens,  encumbrances,  restrictions  and claims of every kind and
character,  other than any of the foregoing  arising from actions by Purchaser
(collectively,  "Encumbrances")  as of  the  Closing  Date.  The  delivery  to
Purchaser  of the Stock  pursuant to the  provisions  of this  Agreement  will
transfer  to  Purchaser  valid  title  thereto,  free and clear of any and all
Encumbrances.

            Section 2.4 Authorization  and Validity of Agreement.  Sellers has
full power and authority  (corporate or otherwise) to execute and deliver this
Agreement,  to perform their  obligations  hereunder,  and to  consummate  the
transactions  contemplated  hereby.  This Agreement has been duly executed and
delivered by Sellers  and,  assuming  the due  execution of this  Agreement by
Purchaser,  is a valid and  binding  obligation  of the  Sellers,  enforceable
against the Sellers in  accordance  with its terms,  except to the extent that
its  enforceability  may be  subject  to  applicable  bankruptcy,  insolvency,
reorganization  and similar  laws  affecting  the  enforcement  of  creditors'
rights generally and to general equitable principles.

            Section 2.5 Consents and Approvals;  No Violations.  The execution
and  delivery  of this  Agreement,  any  ancillary  agreement  executed by the
Company or the  Sellers,  and the  consummation  by the Sellers of the sale of
the  Stock as  contemplated  herein  and the other  transactions  contemplated
hereby:  (a) will not violate the provisions of the Articles of  Incorporation
or Bylaws of the Company, (b) will not violate any statute,  rule, regulation,
order or decree of any public  body or  authority  by which the  Sellers,  the
Company  or any  subsidiary  is  bound or by  which  any of  their  respective
properties  or assets are bound,  (c) will not  require  any filing  with,  or
permit,  consent  or  approval  of, or the giving of any notice to, any United
States  governmental  or regulatory  body,  agency or authority on or prior to

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the  Closing  Date,  and (d) will not  result in a  violation  or  breach  of,
conflict  with,  constitute  (with or  without  due notice or lapse of time or
both) a  default  (or give  rise to any  right of  termination,  cancellation,
payment or  acceleration)  under, or result in the creation of any Encumbrance
upon any of the  properties  or  assets of the  Sellers,  the  Company  or any
subsidiary  thereof,  any of the terms,  conditions or provisions of any note,
bond, mortgage,  indenture,  license,  franchise,  permit,  agreement,  lease,
franchise  agreement  or any  other  instrument  or  obligation  to which  the
Sellers,  the Company or any subsidiary  thereof is a party,  or by which they
or any of their respective properties or assets may be bound.

            Section 2.6 Capital Stock.  (a) The Company is authorized to issue
75,000,000  shares of Common  Stock,  $0.001  par  value per  share,  of which
50,000,000  shares are issued and outstanding as of the date hereof.  All such
outstanding  shares have been duly authorized and validly issued and are fully
paid and  nonassessable.  The Company is not authorized to issue any shares of
Preferred Stock. There are no outstanding  subscriptions,  options,  warrants,
rights, calls,  commitments,  conversion rights, rights of exchange,  plans or
other  agreements  providing for the purchase,  issuance or sale of any shares
of the capital stock of the Company.

            (b) The Company is  currently  quoted on the Pink Sheets under the
symbol  "GSAP.PK"  on an  unsolicited  basis  which  allows for some  specific
trades to be made and the  Company  is not  aware of any  issues  which  would
affect the current status of its Common Stock.  Prior to Closing,  the Company
intends to have a market  maker  submit a 15c211  application  to the National
Association  of Securities  Dealers (the "NASD") to have the Company's  Common
Stock  approved for  quotation on the Pink  Sheets.  The Company,  its current
affiliates  and  subsidiaries,  if  any,  and the  Sellers  agree  to  provide
whatever  assistance  is  necessary  after the  closing to have the  Company's
stock quoted on the Pink Sheets.  Sellers,  Purchaser  and the Company  hereby
acknowledge and agree that David Gonzalez,  Esq. shall hold the Purchase Price
Consideration  in an  escrow  (the  "Escrow")  until  such  time  as:  (i) the
Company's  Common  Stock is  approved  by the NASD for  quotation  on the Pink
Sheets,  (ii) there are no stop orders in effect or contemplated  with respect
thereto,  (iii) no facts  exist  which  may give rise to the  existence  of an
Encumbrance  against such Shares, (iv) the Company has fully complied will all
applicable  securities  laws and  regulations,  and (v) the  Company is not in
default  of  any  of  its   obligations   thereunder.   All  other  terms  and
conditions  concerning the Escrow shall be mutually agreed upon by the Sellers
and the Purchaser.

            Section 2.7 Subsidiaries.  The Company has no subsidiaries.

            Section 2.8  Indebtedness.  At Closing,  the Company  will have no
Indebtedness of any kind (including  contingent  obligations,  tax assessments
and  unusual  forward  or  long-term   commitments).   For  purposes  of  this
Agreement,  the term  "Indebtedness"  shall mean any obligation for payment by
the Company to any third party,  including without limitation,  the following:
(i) any  obligation  owed for all or any part of the purchase price of capital
assets, (ii) accounts payable included in current liabilities  outstanding for
more than one hundred  twenty  (120) days and  incurred in respect of property
purchased in the ordinary course of business,  (iii) any  obligations  secured
by any lien in respect of property  even though the person owning the property
has not assumed or become liable for the payment of such obligation,  (iv) any
guarantee  with  respect  to any  of the  foregoing  indebtedness  of  another
person, and (v) obligations in respect of letters of credit.

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            Section 2.9 Litigation.

            (a)   There  are  no  (i)  actions,  suits  or  legal,  equitable,
arbitrative or administrative  proceedings  pending, or threatened against the
Company or the Sellers, (ii) judgments,  injunctions, writs, rulings or orders
by any governmental entity against the Company or the Seller.

            (b)   No current officer,  director,  affiliate or person known to
the Sellers or the Company to be the record or  beneficial  owner of in excess
of five percent (5%) of the Company's  Common Stock, or any person known to be
an  associate  of any of the  foregoing  is a party  adverse to the Company or
Sellers or has a  material  interest  adverse to the  Company or Seller in any
material pending legal proceeding.

            Section  2.10 Tax  Returns.  The Company has filed in correct form
all tax  returns of every  nature  required to be filed by it and has paid all
taxes as shown on such returns and all assessments,  fees and charges received
by it to the  extent  that such  taxes,  assessments,  fees and  charges  have
become  due.  The  Company  has also paid all taxes  which do not  require the
filing  of  returns  and which are  required  to be paid by it. To the  extent
that tax  liabilities  have accrued,  but have not become  payable,  they have
been adequately reflected as liabilities on the books of Company.

            Section 2.11 Accuracy of Information.  None of the representations
and warranties of Seller or the Company  contained  herein or in the documents
and  information  furnished by them at any time to the  Purchaser,  whether in
connection with this Agreement,  the Purchaser's due diligence  examination of
the Company  and Seller in  connection  herewith,  or  otherwise,  contain any
misstatement  of fact,  or omits any fact  necessary  to make such  statement,
document or information not misleading.

            Section 2.12  Resignation of Officers and Directors.  Effective on
the Closing  Date,  all officers,  directors and employees of the Company,  if
any,  shall have resigned as such and the Company and its  shareholders  shall
have appointed  Dean Garfinkel as President and Director and Barry  Brookstein
as Secretary, Treasurer and Director.

                       Section 2.13.  Commitments.  At Closing, the Company
is not obligated under any any contract, commitment, agreement or otherwise;
and

                        Section 2.14 Financial Transactions.  At Closing, the
Company has not entered into any financial transaction or any other
transaction except as set forth on the audited  financial statements for the
period ending October 31, 2005, which statements have been delivered to the
Purchaser prior to the Closing.

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                                    ARTICLE III
                 REPRESENTATIONS  AND WARRANTIES OF PURCHASER

            The Purchaser  represents  and warrants to the Company and Sellers
as follows:

            Section 3.1 Consents and Approvals;  No Violations.  The execution
and delivery of this  Agreement,  any of the ancillary  documents  executed by
Purchaser,  and the consummation of the transactions  contemplated hereby: (i)
will not violate any statute, rule, regulation,  order or decree of any public
body or  authority  by which  any  Purchaser  is bound or by which  any of its
properties  or assets are bound,  (ii) will not  require any filing  with,  or
permit,  consent  or  approval  of,  or the  giving  of  any  notice  to,  any
governmental  or  regulatory  body,  agency  or  authority  on or prior to the
Closing Date, and (iii) will not result in a violation or breach of,  conflict
with,  constitute  (with or  without  due  notice  or lapse of time or both) a
default (or give rise to any right of  termination,  cancellation,  payment or
acceleration)  under, or result in the creation of any Encumbrance upon any of
the properties or assets of any Purchaser  under any of the terms,  conditions
or provisions of any note,  bond,  mortgage,  indenture,  license,  franchise,
permit,  agreement,  lease,  franchise  agreement or any other  instrument  or
obligation  to  which  Purchaser  is a  party,  or by  which  it or any of its
properties or assets may be bound.

            Section 3.2 Purchase for  Investment.  Purchaser and their assigns
or  designees  are  acquiring  the Stock  solely  for their  own  account  for
investment   purposes   only  and  not  with  a  view  toward  any  resale  or
distribution  thereof.  Purchaser  agrees  that  the  Stock  may not be  sold,
transferred,  offered for sale, pledged, hypothecated or otherwise disposed of
without  registration  thereof under the  Securities  Act of 1933, as amended,
except  pursuant to an exemption  therefrom,  and without  compliance with the
securities laws of other  jurisdictions,  to the extent applicable.  Purchaser
and  their  assigns  or  designees  have  such  knowledge  and  experience  in
financial and business  matters that they are capable of evaluating the merits
and risks of its purchase of the Stock.  Purchaser  confirms  that the Company
and Sellers have made available to Purchaser the  opportunity to ask questions
of the  officers  and  management  employees  of the  Company  and to  acquire
additional  information  about the  business  and  financial  condition of the
Company and its subsidiaries, if any.

            Section 3.3 Available  Funds.  Purchaser  will have on the Closing
Date sufficient funds to perform all of its obligations  under this Agreement,
including,  without  limitation,  to tender payment to Sellers of the Purchase
Price Consideration.

            Section 3.4  Litigation.  There is no action,  suit or proceeding,
at law or in equity by any person or any arbitration or any  administrative or
other proceeding  before any governmental body or  instrumentality  or agency,
pending or, to the knowledge of the  Purchaser,  threatened in writing,  which
is reasonably likely to have a material adverse effect on Purchaser's  ability
to consummate the Stock Sale and the other  transactions  contemplated by this
Agreement.

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      Section 3.5 Accuracy of  Information.  None of the  representations  and
warranties of Purchaser  contained  herein or in the documents and information
furnished by it at any time to the Sellers,  whether in  connection  with this
Agreement or otherwise,  contain any  misstatement  of fact, or omits any fact
necessary to make such statement, document or information not misleading.

      Section  3.6   Consulting   Fees.  At  Closing,   Purchaser   agrees  to
cause the         following        to        be         transferred         to
Knightsbridge Capital ("Knightsbridge")  or its  designee(s),  as  payment  in
full for any and  all services  rendered to  Purchaser by  Knightsbridge,  its
members,   managers,   employees  and   affiliates   in  connection   with the
negotiation  and  consummation  of  the  transactions  contemplated under this
Agreement  and that certain Stock Purchase  Agreement by and between Purchaser
and Cary Chan of even date  herewith:  (i) Two  Million Five Hundred  Thousand
(2,500,000)  shares of the Company's  Common  Stock that has been purchased by
the  Purchaser,   and  (ii) Twenty-Five   Thousand  Dollars  ($25,000).   Said
payments  shall be deemed to fully satisfy and complete  discharge any and all
obligations  that  Purchaser,  its officers,  directors and employees  have to
Knightsbridge,  its members, managers,  employees,  affiliates and designee(s)
under   that   certain   letter    agreement   by   and   between    Purchaser
and Knightsbridge dated August 18, 2005.

                                  ARTICLE IV
                              CERTAIN AGREEMENTS

            Section 4.1  Reasonable  Best Efforts.  Each of the parties hereto
agrees to use its reasonable  best efforts to take, or cause to be taken,  all
action to do or cause to be done,  and to assist and cooperate  with the other
party  hereto  in  doing,  all  things  necessary,   proper  or  advisable  to
consummate and make effective,  in the most  expeditious  manner  practicable,
the transactions  contemplated by this Agreement,  including,  but not limited
to, the  following:  (i)  obtaining  of all  necessary  waivers,  consents and
approvals from  governmental  or regulatory  agencies or  authorities  and the
making  of all  necessary  registrations  and  filings  and the  taking of all
reasonable  steps as may be  necessary  to obtain any approval or waiver from,
or  to  avoid  any  action  or  proceeding  by,  any  governmental  agency  or
authority,  (ii)  obtaining of all  necessary  consents,  approvals or waivers
from third parties,  if any, and (iii)  defending of any lawsuits or any other
legal  proceedings,  whether  judicial  or  administrative,  challenging  this
Agreement  or  the  consummation  of  the  transactions  contemplated  hereby,
including,  without  limitation,  seeking  to have any  temporary  restraining
order entered by any court or administrative authority vacated or reversed.

                                   ARTICLE V
                      CONDITIONS TO PURCHASER'S OBLIGATIONS

      The  purchase  of  the  Stock  by  Purchaser  on  the  Closing  Date  is
conditioned upon the  satisfaction or waiver,  at or prior to the consummation
of the Stock Sale, of the following conditions:

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            Section  5.1  Truth  of   Representations   and  Warranties.   The
representations  and  warranties of Sellers and the Company  contained in this
Agreement  or in  any  agreement,  document,  exhibit  or  schedule  delivered
pursuant  hereto  shall be true and  correct in all  respects on and as of the
Closing  Date  with  the  same  effect  as  though  such  representations  and
warranties  have been made on and as of such date  (except to the extent  that
any such  representation  and warranty is stated in this  Agreement to be made
as of a specific  date, in which case such  representation  and warranty shall
be true and correct as of such specified date).

            Section  5.2  Performance  of  Agreements.  Each  and  all  of the
agreements  of the Sellers and the Company to be  performed at or prior to the
Closing Date  pursuant to the terms  hereof shall have been duly  performed in
all respects,  and the Sellers and the Company  Purchaser shall have delivered
to Purchaser a certificate, dated as of the Closing Date, to such effect.

            Section 5.3 No Injunction.  No court or other  government  body or
public  authority  shall have  issued an order  which  shall then be in effect
restraining or prohibiting  the  completion of the  transactions  contemplated
hereby.

            Section 5.4 No Litigation.  There shall not be any action, suit or
proceeding  pending or threatened that seeks to: (i) make the  consummation of
the  transactions   contemplated  hereby  illegal  or  otherwise  restrict  or
prohibit  consummation  thereof,  or (ii) require the divestiture by Purchaser
of  shares  of stock or of any  business,  assets  or  property  of any of its
subsidiaries or affiliates,  or impose any material  limitation on the ability
of any of them to conduct  their  business  or to own or  exercise  control of
such  assets,   properties  or  stock  and  which,  in  either  case,  in  the
reasonable,   good  faith   determination   of  Purchaser  has  a  significant
likelihood of having a material adverse effect on Purchaser.

            Section 5.5 Delivery of Books and Records.  Sellers  shall deliver
true and complete  copies of all books and records of the Company,  including,
without   limitation,   minute  books,   certified  copies  of  organizational
documents (e.g., Articles of Incorporation,  Bylaws, etc.),  accountant's work
papers,  stock transfer books and ledgers, a certified  shareholder list dated
as of a date within five (5) days of the Closing  Date,  a current DTC report,
and all other operational and administrative records.

            Section 5.6 Additional  Documents.  Sellers will have delivered or
caused the Company to deliver to Purchaser  the  documents  set forth below in
form and substance  reasonably  satisfactory to counsel for Purchaser,  to the
effect that: (i) medallion  guaranteed stock powers and/or stock transfers for
the Sellers in a form  acceptable  to the  transfer  agent for the Company and
Purchaser,  and (ii) any further  document as may be  reasonably  requested by
counsel to Purchaser in order to substantiate  any of the  representations  or
warranties of the Company or the Sellers set forth herein.

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                                   ARTICLE VI
                      CONDITIONS TO SELLER'S OBLIGATIONS

            The  sale of the  Stock  by the  Sellers  on the  Closing  Date is
conditioned  upon  satisfaction or waiver,  at or prior to the consummation of
the Stock Sale, of the following conditions:

            Section  6.1  Truth  of   Representations   and  Warranties.   The
representations  and warranties of Purchaser contained in this Agreement or in
any agreement,  document,  exhibit or schedule delivered pursuant hereto shall
be true and correct in all  material  respects  on and as of the Closing  Date
with the same effect as though such  representations  and  warranties had been
made  on  and  as  of  such  date   (except  to  the  extent   that  any  such
representation  and  warranty is stated in this  Agreement  to be made as of a
specific  date, in which case such  representation  and warranty shall be true
and correct as of such specified date).

            Section  6.2  Performance  of  Agreements.  Each  and  all  of the
agreements  of  Purchaser  to be  performed  at or prior to the  Closing  Date
pursuant to the terms hereof shall have been duly  performed in all  respects,
and Purchaser  shall have delivered to Sellers a certificate,  dated as of the
Closing Date, to such effect.

            Section 6.3 No Injunction.  No court or other  government  body or
public  authority  shall have  issued an order  which  shall then be in effect
restraining or prohibiting  the  completion of the  transactions  contemplated
hereby.

                                  ARTICLE VII
                 SURVIVAL OF REPRESENTATIONS; INDEMNIFICATION

            Section 7.1 Survival of  Representations.  The representations and
warranties  set forth in this  Agreement  shall survive for one year after the
Closing Date,  except that the  representations  and  warranties  set forth in
Section 2.3, 2.9 and 2.10 hereof shall survive indefinitely.

            Section 7.2 Indemnities.

            (a)   The Sellers  hereby  agrees to indemnify  and hold  harmless
Purchaser  (including  its  officers,  directors,   shareholders,   employees,
counsel,  representatives,  subsidiaries  and  affiliates,  if  any),  and the
Company and its  subsidiaries,  if any,  from and against any and all damages,
claims,   losses  and  expenses  (including  reasonable  attorneys'  fees  and
expenses)  (collectively,  "Damages") actually suffered or paid by any of such
persons  as a  result  of the  breach  of this  Agreement,  including  but not
limited to any  representation  or warranty made by any Sellers or the Company
in this Agreement or in connection with the transactions  contemplated in this
Agreement.  To the  extent  that  Sellers'  undertakings  as set forth in this
Section  7.2(a) may be  unenforceable,  Sellers shall  contribute  the maximum
amount that they are  permitted  to  contribute  under  applicable  law to the
payment and  satisfaction of all Damages  incurred by the parties  entitled to
indemnification hereunder.

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            (b)   Purchaser  hereby  agrees to indemnify and hold harmless the
Sellers  (including  their  counsel  and   representatives)   against  Damages
actually  suffered  or paid by  Sellers  as a  result  of the  breach  of this
Agreement,  including but not limited to any  representation  or warranty made
by the  Purchaser in this  Agreement or in  connection  with the  transactions
contemplated   in  this   Agreement.   To  the  extent  that  the   Purchaser'
undertakings  set  forth in this  Section  7.2(b)  may be  unenforceable,  the
Purchaser and the Company shall  contribute  the maximum  amount that they are
permitted to contribute  under  applicable law to the payment and satisfaction
of all Damages incurred by the parties entitled to indemnification hereunder.

            (c)   Any party  seeking  indemnification  under this  Article VII
(an "Indemnified  Party") shall give each party from whom  indemnification  is
being sought (each,  an  "Indemnifying  Party") notice of any matter for which
such Indemnified Party is seeking  indemnification,  stating the amount of the
Damages,  if known,  and  method of  computation  thereof,  and  containing  a
reference to the  provisions of this  Agreement in respect of which such right
of  indemnification  is claimed or arises.  The obligations of an Indemnifying
Party under this Article VII with  respect to Damages  arising from any claims
of any third party which are subject to the  indemnification  provided  for in
this Article VII  (collectively,  "Third Party  Claims")  shall be governed by
and contingent upon the following  additional terms and conditions:  (i) if an
Indemnified  Party shall  receive,  after the Closing Date,  initial notice of
any Third Party  Claim,  the  Indemnified  Party  shall give the  Indemnifying
Party  notice of such Third Party Claim within such time frame as is necessary
to allow for a timely  response  and in any event  within  thirty (30) days of
the receipt by the Indemnified Party of such notice;  provided,  however, that
the failure to provide such timely  notice shall not release the  Indemnifying
Party from any of its obligations  under this Article VII except to the extent
the  Indemnifying  Party is materially  prejudiced  by such failure;  (ii) the
Indemnifying  Party  shall be  entitled  to assume and  control the defense of
such Third Party Claim at its expense and through  counsel of its choice if it
gives notice of its intention to do so to the Indemnified  Party within thirty
(30) days of the receipt of such notice from the Indemnified Party;  provided,
however,  that if there exists or is reasonably  likely to exist a conflict of
interest that would make it  inappropriate  in the judgment of the Indemnified
Party (upon  advice of counsel)  for the same  counsel to  represent  both the
Indemnified  Party and the  Indemnifying  Party,  then the  Indemnified  Party
shall  be  entitled  to  retain  its  own  counsel,  at  the  expense  of  the
Indemnifying  Party,  provided  that the  Indemnified  Party and such  counsel
shall  contest such Third Party  Claims in good faith;  (iii) in the event the
Indemnifying  Party  exercises the right to undertake any such defense against
any such Third Party  Claim as provided  above,  the  Indemnified  Party shall
cooperate  with the  Indemnifying  Party in such defense and make available to
the Indemnifying  Party, at the Indemnifying  Party's expense,  all witnesses,
pertinent  records,  materials  and  information  in the  Indemnified  Party's
possession or under the  Indemnified  Party's control  relating  thereto as is

                                       9
<PAGE>

reasonably  required  by  the  Indemnifying  Party;  (iv)  in  the  event  the
Indemnified  Party is, directly or indirectly,  conducting the defense against
any such Third Party Claim,  the  Indemnifying  Party shall cooperate with the
Indemnified  Party in such  defense  and  make  available  to the  Indemnified
Party, at the  Indemnifying  Party's  expense,  all such  witnesses,  records,
materials and information in the Indemnifying  Party's possession or under the
Indemnifying  Party's control  relating  thereto as is reasonably  required by
the  Indemnified  Party;  (v) the  Indemnifying  Party shall not,  without the
written consent of the Indemnified  Party,  (1) settle or compromise any Third
Party Claim or consent to the entry of any judgment  which does not include as
an  unconditional  term  thereof the  delivery by the claimant or plaintiff to
the  Indemnified  Party of a written  release from all liability in respect of
such Third Party Claim,  or (2) settle or compromise  any Third Party Claim in
any manner that may adversely affect the Indemnified  Party; and (vi) no Third
Party Claim which is being  defended in good faith by the  Indemnifying  Party
or which is being defended by the Indemnified  Party as provided above in this
Section 7.2(c) shall be settled by the  Indemnified  Party without the written
consent of the Indemnifying Party.

                                 ARTICLE VIII
                                 MISCELLANEOUS

            Section 8.1  Expenses.  The parties  hereto shall pay all of their
own expenses  relating to the  transactions  contemplated  by this  Agreement,
including,  without  limitation,  the fees and  expenses  of their  respective
counsel, financial advisors and accountants.

            Section 8.2 Governing Law; Jurisdiction.

            (a)   The interpretation  and construction of this Agreement,  and
all  matters  relating  hereto,  shall be governed by the laws of the State of
Nevada without giving effect to the principles of conflicts of laws thereof.

            (b)   Each of the parties hereto  consents to the  jurisdiction of
the  federal  and state  courts of the State of New York or State of Nevada in
any such  action  or  proceeding  and  waives  any  objection  to  venue  laid
therein.

            Section  8.3  Captions.  The Article  and  Section  captions  used
herein are for reference  purposes  only,  and shall not in any way affect the
meaning or interpretation of this Agreement.

            Section 8.4 Notices. Any notice or other  communications  required
or permitted  hereunder shall be sufficiently  given if delivered in person or
sent  by  telecopy  or by  registered  or  certified  mail,  postage  prepaid,
addressed as follows:

            If to Purchaser:

            Compliance Systems Corporation
            90 Pratt Oval
            Glen Cove, New York 11542

                                       10
<PAGE>

            With a Copy to:

            Kirkpatrick & Lockhart Nicholson Graham, LLP
            201 S. Biscayne Blvd., Suit 2000
            Miami, Florida 33131
            Attention: Clayton E. Parker, Esq.

            If to  Sellers:

            Tangerine Communications

or such other  address or number as shall be  furnished in writing by any such
party, and such notice or communication  shall be deemed to have been given as
of the date so delivered, sent by telecopy or mailed.

            Section 8.5 Parties in Interest;  Assignment.  This  Agreement may
not be  transferred,  assigned,  pledged or  hypothecated by any party hereto,
other than by operation of law,  except that  Purchaser  may assign all or any
of its obligations  and/or rights hereunder,  or this entire Agreement,  to an
affiliate  without  the prior  consent  of the  Sellers or the  Company.  This
Agreement  shall be binding upon and shall inure to the benefit of the parties
hereto and their respective successors and permitted assigns.

            Section 8.6  Counterparts.  This  Agreement may be executed in two
or more  counterparts,  all of  which  taken  together  shall  constitute  one
instrument.  This  Agreement  may be  executed  using  the  signatures  of the
parties hereto transmitted via facsimile machine or other electronic means.

            Section  8.7  Entire  Agreement.  This  Agreement,  including  the
exhibits,  schedules and other documents  referred to herein which form a part
hereof and ancillary documents hereto contain the entire  understanding of the
parties  hereto  with  respect  to the  subject  matter  contained  herein and
therein.  This Agreement  supersedes all prior  agreements and  understandings
between  the  parties  with  respect  to such  subject  matter  other than the
Confidentiality Agreement.

            Section 8.8 Third Party  Beneficiaries.  Each party hereto intends
that this  Agreement  shall not benefit or create any right or cause of action
in or on behalf of any person other than the parties hereto.

            Section  8.9  Specific  Performance.  It is agreed that the rights
granted  to the  parties  hereunder  are of a  special  and  unique  kind  and
character  and  that,  if  there  is a breach  by any  party  of any  material
provision  of this  Agreement,  the other  party  would not have any  adequate
remedy at law.  It is  expressly  agreed,  therefore,  that the  rights of the
parties  hereunder may be enforced by an action for specific  performance  and
other equitable relief without the parties posting a bond.

            Section  8.10  Further  Assurances.  Each  of the  parties  hereto
shall execute and deliver any and all additional  papers,  documents and other
assurances,  and shall do any and all acts and things reasonably  necessary in
connection  with the performance of their  obligations  hereunder and to carry
out the intent of the parties hereto.

                                       11
<PAGE>

            Section  8.11  Waiver.  The  waiver  by a  party  of a  breach  or
threatened  breach  of  this  Agreement  by the  other  parties  shall  not be
construed as a waiver of any subsequent breach by such other parties.

            Section 8.12  Amendments.  No provision of this  Agreement  may be
modified,  waived or discharged unless such waiver,  modification or discharge
is  approved  by the  parties  hereto and agreed to in writing  signed by such
parties.

            Section 8.13 Validity.  The invalidity or  unenforceability of any
provision of this  Agreement  shall not affect the validity or  enforceability
of any other  provision  of this  Agreement,  which shall remain in full force
and effect.

            Section 8.14 Severability.  If any term,  condition,  or provision
of this Agreement shall be found to be illegal or  unenforceable to any extent
for any reason,  such provision shall be modified or deleted so as to make the
balance of this Agreement,  as modified,  valid and enforceable to the fullest
extent permitted by applicable law.

            Section  8.15  Knowledge  of Rights and Duties.  The parties  have
carefully  reviewed  and  completely  read  all  of  the  provisions  of  this
Agreement   and   understand   their   rights,    duties,    obligations   and
responsibilities  hereunder.  The  parties  acknowledge  that they  enter into
this Agreement of their own free will.

            Section  8.16  Attorneys'   Fees.  In  any  action  or  proceeding
brought to enforce any  provision of this  Agreement,  or where any  provision
herein is  validly  asserted  as a  defense,  the  prevailing  party  shall be
entitled to recover reasonable  attorneys' fees, including attorneys' fees for
any appeal and costs  incurred  in  bringing  such  action or  proceeding,  in
addition to any other available  remedy.  A party shall be deemed to have been
successful  if such action or claim is concluded  pursuant to a court order or
final  judgment  which is not subject to appeal,  a  settlement  agreement  or
dismissal of the principal claims.

       [SIGNATURE PAGE FOLLOWS; REMAINDER OF PAGE INTENTIONALLY BLANK]

                                       12
<PAGE>

      IN WITNESS  WHEREOF,  each of the  parties  hereto has caused this Stock
Purchase  Agreement  to  be  executed  by  their  respective  duly  authorized
representative, all as of the day and year first above written.

PURCHASER:
COMPLIANCE SYSTEMS CORPORATION

By:
    --------------------------
Print Name:
            ------------------------
Its:
     -------------------------

SELLERS:

---------------------
WINNER RICH

---------------------
IMTIAZ RAZACK

---------------------
SHARON DA COSTA

---------------------
RAMKRISHNA SINGH

---------------------
LUTHER JAO

---------------------
HARRY JAO

---------------------
AMIT SANKHALA

---------------------
JESSIKA PRASAD

GSA  COMMUNICATIONS,   INC.,  but
only for the  limited  purpose of
affirming   the   representations
and   warranties   set  forth  in
this agreement by the Company
By:
    --------------------------
Print Name:
            ------------------------
Its:
     -------------------------

KNIGHTSBRIDGE  CAPITAL,  but only
for  the   limited   purpose   of
affirming  and  agreeing  to  the
provisions  set forth in  Section
3.6 of the agreement
By:
    --------------------------
Print Name:
            ------------------------
Its:
     -------------------------

                                       13SECURITIES PURCHASE AGREEMENT

         THIS  SECURITIES  PURCHASE  AGREEMENT (this  "Agreement"),  dated as of
March 8, 2006, by and among COMPLIANCE SYSTEMS CORPORATION, a Nevada corporation
(formerly know as GSA Publishing,  Inc.) (the "Company"),  and the Buyers listed
on  Schedule  I  attached  hereto  (individually,   a  "Buyer"  or  collectively
"Buyers").

                                    RECITALS:

         WHEREAS, the Company and the Buyer(s) are executing and delivering this
Agreement in reliance upon an exemption from securities registration pursuant to
Section 4(2) and/or Rule 506 of Regulation D ("Regulation  D") as promulgated by
the U.S. Securities and Exchange Commission (the "SEC") under the Securities Act
of 1933, as amended (the "Securities Act").

         WHEREAS,  the  Company  has  issued  to the  Buyer  and the  Buyer  has
purchased from the Company a Secured Convertible  Debenture on November 30, 2005
(the "November Debenture") for a purchase price of $600,000. The entire purchase
price of $600,000 was paid by the Holder on November  30,  2005.  As of the date
hereof, the outstanding  principal on the November Debenture equals $600,000 and
all accrued interest has been paid.

         WHEREAS,  as of the date hereof,  the Buyer is the beneficial  owner of
the November  Debenture.  The Buyer desires to surrender the November  Debenture
for  conversion  into the  convertible  debentures  and to  purchase  additional
convertible  debentures as outlined  below for the total  purchase  price of One
Million Dollars ($1,000,000).

         WHEREAS,  the parties  desire  that,  upon the terms and subject to the
conditions  contained herein,  the Company shall issue and sell to the Buyer, as
provided  herein,  and  the  Buyer  shall  purchase  up to One  Million  Dollars
($1,000,000) of secured convertible  debentures (the "Convertible  Debentures"),
which shall be convertible  into shares of the Company's common stock, par value
$0.001 (the "Common  Stock") (as converted,  the  "Conversion  Shares") of which
$600,000 shall be purchased for consideration  solely consisting of surrendering
the November  Debenture,  and Four Hundred Thousand Dollars  ($400,000) shall be
purchased by additional  funding by the Buyer for a total of One Million Dollars
($1,000,000)  within  five (5)  business  days  following  the date  hereof (the
"Closing") for a total purchase price of up to One Million Dollars  ($1,000,000)
(the "Purchase Price").

         WHEREAS,  contemporaneously  with the  execution  and  delivery of this
Agreement, the parties hereto are executing and delivering a Registration Rights
Agreement  substantially (the "Investor Registration Rights Agreement") pursuant
to which the Company has agreed to provide certain registration rights under the
Securities  Act and the rules  and  regulations  promulgated  there  under,  and
applicable state securities laws.

         WHEREAS,  contemporaneously  with the  execution  and  delivery of this
Agreement,  the parties hereto are executing and delivering a Security Agreement
and each wholly  owned  subsidiary  of the  Company is entering  into a Security
Agreement  (collectively the "Security Agreement") pursuant to which the Company
and its  subsidiaries  have agreed to provide  the Buyer a security  interest in
Pledged Collateral (as this term is defined in the Security Agreement) to secure
the  Company's   obligations  under  the  Transaction  Documents  or  any  other
obligations of the Company to the Buyer.

<PAGE>

         WHEREAS,  contemporaneously  with the  execution  and  delivery of this
Agreement,  the parties  hereto are executing and delivering a Pledge and Escrow
Agreements  (the  "Issuer  Pledge and Escrow  Agreement")  pursuant to which the
Company  has agreed to  provide  the Buyer a security  interest  in the  Pledged
Shares (as this term is defined in the Issuer  Pledge and Escrow  Agreement)  to
secure the Company's  obligations  under the Transaction  Documents or any other
obligations of the Company to the Buyer.

         WHEREAS,  contemporaneously  with the  execution  and  delivery of this
Agreement,  the  parties  hereto,  Barry  Brookstein,  and  Dean  Garfinkel  are
executing and  delivering a Insider Pledge and Escrow  Agreements  (collectively
the "Pledge and Escrow  Agreement")  pursuant  to which the Dean  Garfinkel  and
Barry  Brookstein  have agreed to provide  the Buyer a security  interest in the
Pledged  Shares (as this term is defined in the Pledge and Escrow  Agreement) to
secure the Company's  obligations  under the Transaction  Documents or any other
obligations of the Company to the Buyer.

         WHEREAS,  contemporaneously  with the  execution  and  delivery of this
Agreement,  the parties hereto are executing and delivering Irrevocable Transfer
Agent Instructions (the "Irrevocable Transfer Agent Instructions").

         NOW,  THEREFORE,  for and in  consideration of the mutual covenants and
other agreements contained in this Agreement the Company and the Buyer(s) hereby
agree as follows:

            1. PURCHASE AND SALE OF CONVERTIBLE DEBENTURES.

                  (a)  Purchase  of  Convertible  Debentures.   Subject  to  the
satisfaction  (or waiver) of the terms and  conditions of this  Agreement,  each
Buyer  agrees,  severally  and not jointly,  to purchase at each Closing and the
Company  agrees to sell and issue to each Buyer,  severally and not jointly,  at
the  Closing,   Convertible   Debentures  in  amounts   corresponding  with  the
Subscription Amount set forth opposite each Buyer's name on Schedule I hereto.

                  (b) Closing Date.  The Closing of the purchase and sale of the
Convertible  Debentures  shall take place at 10:00 a.m. Eastern Standard Time on
the fifth (5th) business day following the date hereof,  subject to notification
of  satisfaction  of the conditions to the First Closing set forth herein and in
Sections  6 and 7 below  (or such  later  date as is  mutually  agreed to by the
Company and the Buyer(s)) (the "Closing  Date").  The Closing shall occur on the
respective Closing Dates at the offices of Yorkville Advisors,  LLC, 3700 Hudson
Street,  Suite 3700,  Jersey  City,  New Jersey 07302 (or such other place as is
mutually agreed to by the Company and the Buyer(s)).

                  (c) Form of Payment.  Subject to the satisfaction of the terms
and  conditions  of this  Agreement,  on the Closing  Date,  (i) the Buyer shall
deliver to the Company in such aggregate proceeds for the Convertible Debentures
to be issued and sold to such  Buyer(s),  and (ii) the Company  shall deliver to
each Buyer,  Convertible Debentures which such Buyer(s) is purchasing in amounts
indicated  opposite  such Buyer's name on Schedule I, duly executed on behalf of
the Company.

                                       2
<PAGE>

            2. BUYER'S REPRESENTATIONS AND WARRANTIES.

         Each Buyer represents and warrants, severally and not jointly, that:

                  (a)   Investment   Purpose.   Each  Buyer  is  acquiring   the
Convertible Debentures and, upon conversion of Convertible Debentures, the Buyer
will  acquire  the  Conversion  Shares  then  issuable,  for its own account for
investment only and not with a view towards,  or for resale in connection  with,
the public sale or distribution thereof,  except pursuant to sales registered or
exempted  under the  Securities  Act;  provided,  however,  that by  making  the
representations  herein,  such  Buyer  reserves  the  right  to  dispose  of the
Conversion  Shares at any time in  accordance  with or pursuant to an  effective
registration statement covering such Conversion Shares or an available exemption
under the Securities Act.

                  (b) Accredited  Investor Status.  Each Buyer is an "Accredited
Investor" as that term is defined in Rule 501(a)(3) of Regulation D.

                  (c) Reliance on Exemptions.  Each Buyer  understands  that the
Convertible  Debentures are being offered and sold to it in reliance on specific
exemptions from the registration requirements of United States federal and state
securities  laws and that the  Company  is  relying  in part  upon the truth and
accuracy of, and such Buyer's compliance with, the representations,  warranties,
agreements, acknowledgments and understandings of such Buyer set forth herein in
order to determine the  availability  of such  exemptions and the eligibility of
such Buyer to acquire such securities.

                  (d) Information.  Each Buyer and its advisors (and his or, its
counsel),  if any,  have  been  furnished  with all  materials  relating  to the
business,  finances  and  operations  of the Company and  information  he deemed
material to making an informed investment decision regarding his purchase of the
Convertible  Debentures and the Conversion Shares,  which have been requested by
such  Buyer.  Each  Buyer  and its  advisors,  if any,  have been  afforded  the
opportunity  to ask  questions of the Company and its  management.  Neither such
inquiries nor any other due diligence  investigations conducted by such Buyer or
its advisors,  if any, or its representatives shall modify, amend or affect such
Buyer's right to rely on the Company's  representations and warranties contained
in  Section  3  below.  Each  Buyer  understands  that  its  investment  in  the
Convertible Debentures and the Conversion Shares involves a high degree of risk.
Each Buyer is in a position regarding the Company, which, based upon employment,
family relationship or economic bargaining power, enabled and enables such Buyer
to obtain information from the Company in order to evaluate the merits and risks
of this investment. Each Buyer has sought such accounting, legal and tax advice,
as it has  considered  necessary to make an informed  investment  decision  with
respect to its  acquisition  of the  Convertible  Debentures  and the Conversion
Shares.

                  (e) No Governmental  Review.  Each Buyer  understands  that no
United States  federal or state agency or any other  government or  governmental
agency  has  passed  on  or  made  any  recommendation  or  endorsement  of  the
Convertible  Debentures or the Conversion Shares, or the fairness or suitability
of the investment in the Convertible  Debentures or the Conversion  Shares,  nor
have such authorities  passed upon or endorsed the merits of the offering of the
Convertible Debentures or the Conversion Shares.

                                       3
<PAGE>

                  (f) Transfer or Resale.  Each Buyer understands that except as
provided in the Investor  Registration  Rights  Agreement:  (i) the  Convertible
Debentures have not been and are not being  registered  under the Securities Act
or any state securities laws, and may not be offered for sale, sold, assigned or
transferred  unless (A) subsequently  registered  thereunder,  or (B) such Buyer
shall have  delivered  to the  Company an opinion  of  counsel,  in a  generally
acceptable  form,  to the effect that such  securities  to be sold,  assigned or
transferred may be sold,  assigned or transferred  pursuant to an exemption from
such  registration  requirements;  (ii)  any  sale  of such  securities  made in
reliance  on Rule 144 under the  Securities  Act (or a successor  rule  thereto)
("Rule  144")  may be made  only in  accordance  with the  terms of Rule 144 and
further,  if Rule 144 is not  applicable,  any resale of such  securities  under
circumstances  in which the seller (or the person through whom the sale is made)
may be deemed to be an  underwriter  (as that term is defined in the  Securities
Act) may require  compliance  with some other exemption under the Securities Act
or the rules and  regulations  of the SEC  thereunder;  and  (iii)  neither  the
Company nor any other person is under any obligation to register such securities
under the  Securities  Act or any state  securities  laws or to comply  with the
terms and conditions of any exemption thereunder. The Company reserves the right
to place stop transfer  instructions against the shares and certificates for the
Conversion Shares.

                  (g) Legends.  Each Buyer  understands that the certificates or
other instruments  representing the Convertible Debentures and or the Conversion
Shares shall bear a restrictive  legend in substantially the following form (and
a  stop  transfer   order  may  be  placed   against   transfer  of  such  stock
certificates):

            THE SECURITIES  REPRESENTED BY THIS  CERTIFICATE  HAVE NOT
            BEEN  REGISTERED  UNDER  THE  SECURITIES  ACT OF 1933,  AS
            AMENDED,   OR  APPLICABLE   STATE   SECURITIES  LAWS.  THE
            SECURITIES   HAVE  BEEN  ACQUIRED  SOLELY  FOR  INVESTMENT
            PURPOSES AND NOT WITH A VIEW TOWARD  RESALE AND MAY NOT BE
            OFFERED  FOR SALE,  SOLD,  TRANSFERRED  OR ASSIGNED IN THE
            ABSENCE OF AN  EFFECTIVE  REGISTRATION  STATEMENT  FOR THE
            SECURITIES  UNDER THE  SECURITIES ACT OF 1933, AS AMENDED,
            OR  APPLICABLE  STATE  SECURITIES  LAWS,  OR AN OPINION OF
            COUNSEL, IN A GENERALLY ACCEPTABLE FORM, THAT REGISTRATION
            IS  NOT  REQUIRED  UNDER  SAID  ACT  OR  APPLICABLE  STATE
            SECURITIES LAWS.

The  legend set forth  above  shall be removed  and the  Company  within two (2)
business days shall issue a certificate without such legend to the holder of the
Conversion  Shares upon which it is stamped,  if, unless  otherwise  required by
state securities laws, (i) in connection with a sale  transaction,  provided the
Conversion  Shares are registered under the Securities Act or (ii) in connection
with a sale transaction,  after such holder provides the Company with an opinion
of counsel,  which opinion shall be in form,  substance and scope  customary for
opinions  of counsel in  comparable  transactions,  to the effect  that a public
sale,  assignment  or  transfer  of the  Conversion  Shares may be made  without
registration under the Securities Act.

                                       4
<PAGE>

                  (h) Authorization,  Enforcement.  This Agreement has been duly
and validly authorized,  executed and delivered on behalf of such Buyer and is a
valid and binding  agreement of such Buyer  enforceable  in accordance  with its
terms,  except as such  enforceability  may be limited by general  principles of
equity  or  applicable  bankruptcy,  insolvency,   reorganization,   moratorium,
liquidation  and other  similar laws  relating to, or affecting  generally,  the
enforcement of applicable creditors' rights and remedies.

                  (i)  Receipt of  Documents.  Each Buyer and his or its counsel
has  received  and  read  in  their  entirety:   (i)  this  Agreement  and  each
representation,  warranty  and covenant set forth  herein,  and the  Transaction
Documents;  (ii) all due diligence and other information necessary to verify the
accuracy and completeness of such representations, warranties and covenants; and
(iii) answers to all questions each Buyer submitted to the Company  regarding an
investment  in the  Company;  and  each  Buyer  has  relied  on the  information
contained  therein and has not been furnished any other  documents,  literature,
memorandum or prospectus.

                  (j) Due  Formation  of  Corporate  and  Other  Buyers.  If the
Buyer(s) is a  corporation,  trust,  partnership  or other entity that is not an
individual  person,  it has been  formed  and  validly  exists  and has not been
organized for the specific purpose of purchasing the Convertible  Debentures and
is not prohibited from doing so.

                  (k) No Legal Advice From the Company. Each Buyer acknowledges,
that it had the  opportunity  to  review  this  Agreement  and the  transactions
contemplated  by this Agreement with his or its own legal counsel and investment
and tax advisors.  Each Buyer is relying solely on such counsel and advisors and
not  on  any  statements  or  representations  of  the  Company  or  any  of its
representatives  or agents for legal,  tax or investment  advice with respect to
this  investment,  the  transactions  contemplated  by  this  Agreement  or  the
securities laws of any jurisdiction.

                  (l) No Buyer makes any  representation  or warranty  regarding
the Company's  ability to  successfully  become a public  company or to have any
registration  statement filed by the Company pursuant to the Registration Rights
Agreement or otherwise  declared  effective by the SEC. The Company has the sole
obligation  to make any and all such  filings  as may be  necessary  to become a
public company and to have any registration  statement declared effective by the
SEC.

            3. REPRESENTATIONS AND WARRANTIES OF THE COMPANY.

      The Company  represents and warrants to each of the Buyers that, except as
set forth in the Disclosure Schedule attached as Exhibit A hereto:

                  (a)  Organization  and  Qualification.  The  Company  and  its
subsidiaries  are  corporations  duly  organized  and  validly  existing in good
standing under the laws of the jurisdiction in which they are incorporated,  and
have the requisite corporate power to own their properties and to carry on their
business as now being  conducted.  Each of the Company and its  subsidiaries  is
duly  qualified as a foreign  corporation to do business and is in good standing
in every  jurisdiction in which the nature of the business conducted by it makes
such  qualification  necessary,  except to the extent  that the failure to be so
qualified or be in good standing would not have a material adverse effect on the
Company and its subsidiaries taken as a whole.

                                       5
<PAGE>

                  (b)   Authorization,   Enforcement,   Compliance   with  Other
Instruments.  (i) The Company has the requisite corporate power and authority to
enter into and perform  this  Agreement,  the Security  Agreement,  the Investor
Registration  Rights Agreement,  the Irrevocable  Transfer Agent Agreement,  the
Pledge and Escrow  Agreements,  the Issuer Pledge and Escrow Agreement,  and any
related agreements  (collectively the "Transaction  Documents") and to issue the
Convertible  Debentures and the Conversion  Shares in accordance  with the terms
hereof and thereof, (ii) the execution and delivery of the Transaction Documents
by the  Company  and the  consummation  by it of the  transactions  contemplated
hereby  and  thereby,  including,   without  limitation,  the  issuance  of  the
Convertible  Debentures the Conversion  Shares and the  reservation for issuance
and the issuance of the Conversion  Shares  issuable upon conversion or exercise
thereof,  have been duly  authorized by the Company's  Board of Directors and no
further  consent or  authorization  is  required  by the  Company,  its Board of
Directors or its  stockholders,  (iii) the Transaction  Documents have been duly
executed and delivered by the Company, (iv) the Transaction Documents constitute
the valid and binding obligations of the Company enforceable against the Company
in accordance with their terms,  except as such enforceability may be limited by
general   principles   of   equity   or   applicable   bankruptcy,   insolvency,
reorganization,   moratorium,  liquidation  or  similar  laws  relating  to,  or
affecting  generally,  the  enforcement of creditors'  rights and remedies.  The
authorized  officer of the Company executing the Transaction  Documents knows of
no reason why the Company  cannot file the  registration  statement  as required
under the Investor Registration Rights Agreement or perform any of the Company's
other  obligations  under such  documents.  (c)  Capitalization.  As of the date
hereof the  authorized  capital  stock of the Company  consists  of  500,000,000
shares of Common Stock and no shares of  Preferred  Stock,  of which  50,000,000
shares of Common  Stock are  issued  and  outstanding.  All of such  outstanding
shares have been validly issued and are fully paid and nonassessable.  No shares
of Common Stock are subject to preemptive  rights or any other similar rights or
any liens or encumbrances  suffered or permitted by the Company.  As of the date
of this Agreement, (i) there are no outstanding options, warrants, scrip, rights
to subscribe to, calls or commitments of any character  whatsoever  relating to,
or securities  or rights  convertible  into,  any shares of capital stock of the
Company or any of its subsidiaries, or contracts, commitments, understandings or
arrangements  by which the Company or any of its  subsidiaries  is or may become
bound to issue  additional  shares of capital stock of the Company or any of its
subsidiaries  or options,  warrants,  scrip,  rights to  subscribe  to, calls or
commitments  of any  character  whatsoever  relating to, or securities or rights
convertible  into,  any  shares of  capital  stock of the  Company or any of its
subsidiaries,  (ii) except for the November Debenture,  there are no outstanding
debt  securities and (iii) there are no agreements or  arrangements  under which
the Company or any of its  subsidiaries is obligated to register the sale of any
of  their   securities   under  the  Securities  Act  (except  pursuant  to  the
Registration  Rights  Agreement) and (iv) there are no outstanding  registration
statements  and there are no  outstanding  comment  letters  from the SEC or any
other  regulatory  agency.  There are no  securities or  instruments  containing
anti-dilution  or similar  provisions  that will be triggered by the issuance of
the  Convertible  Debentures  as  described in this  Agreement.  The Company has
furnished  to the Buyer true and  correct  copies of the  Company's  Articles of
Incorporation,  as amended and as in effect on the date hereof (the "Articles of
Incorporation"),  and the Company's Bylaws, as in effect on the date hereof (the
"Bylaws"),  and the terms of all securities  convertible into or exercisable for
Common Stock and the material  rights of the holders  thereof in respect thereto
other than stock options issued to employees and consultants.

                                       6
<PAGE>

                  (d) Issuance of  Securities.  The  Convertible  Debentures are
duly authorized and, upon issuance in accordance with the terms hereof, shall be
duly issued,  fully paid and  nonassessable,  are free from all taxes, liens and
charges with respect to the issue thereof.  The Conversion  Shares issuable upon
conversion of the Convertible  Debentures have been duly authorized and reserved
for issuance.  Upon  conversion or exercise in accordance  with the  Convertible
Debentures  the  Conversion   Shares  will  be  duly  issued,   fully  paid  and
nonassessable.

                  (e) No Conflicts.  The execution,  delivery and performance of
the Transaction  Documents by the Company and the consummation by the Company of
the transactions  contemplated  hereby will not (i) result in a violation of the
Articles of  Incorporation,  any  certificate of designations of any outstanding
series of preferred  stock of the Company or the Bylaws or (ii) conflict with or
constitute  a default  (or an event  which with  notice or lapse of time or both
would  become a default)  under,  or give to others  any rights of  termination,
amendment,   acceleration  or  cancellation  of,  any  agreement,  indenture  or
instrument to which the Company or any of its subsidiaries is a party, or result
in a  violation  of  any  law,  rule,  regulation,  order,  judgment  or  decree
(including  federal and state  securities laws and regulations and the rules and
regulations  of The  National  Association  of  Securities  Dealers  Inc.'s  OTC
Bulletin Board on which the Common Stock is quoted) applicable to the Company or
any of its  subsidiaries or by which any property or asset of the Company or any
of  its  subsidiaries  is  bound  or  affected.  Neither  the  Company  nor  its
subsidiaries  is in violation of any term of or in default under its Articles of
Incorporation or Bylaws or their organizational charter or Bylaws, respectively,
or  any  material  contract,  agreement,  mortgage,   indebtedness,   indenture,
instrument,  judgment,  decree  or  order  or any  statute,  rule or  regulation
applicable to the Company or its  subsidiaries.  The business of the Company and
its subsidiaries is not being conducted, and shall not be conducted in violation
of any material law, ordinance, or regulation of any governmental entity. Except
as  specifically  contemplated  by this  Agreement  and as  required  under  the
Securities  Act and any  applicable  state  securities  laws, the Company is not
required to obtain any consent, authorization or order of, or make any filing or
registration with, any court or governmental  agency in order for it to execute,
deliver  or  perform  any of its  obligations  under  or  contemplated  by  this
Agreement or the  Registration  Rights  Agreement in  accordance  with the terms
hereof  or  thereof.   All  consents,   authorizations,   orders,   filings  and
registrations  which the Company is required to obtain pursuant to the preceding
sentence  have been  obtained or effected  on or prior to the date  hereof.  The
Company and its  subsidiaries  are unaware of any facts or  circumstance,  which
might give rise to any of the foregoing.

                  (f) Financial  Statements.  As of their respective  dates, the
financial  statements of the Company (the  "Financial  Statements")  for the two
most recently  completed fiscal years and any subsequent interim period complied
as to form in all material respects with applicable accounting  requirements and
the  published  rules and  regulations  of the SEC with  respect  thereto.  Such
financial  statements have been prepared in accordance  with generally  accepted
accounting principles, consistently applied, during the periods involved (except
(i) as may be otherwise  indicated  in such  Financial  Statements  or the notes
thereto, or (ii) in the case of unaudited interim statements, to the extent they
may exclude  footnotes or may be condensed or summary  statements)  and,  fairly
present in all material respects the financial position of the Company as of the
dates thereof and the results of its  operations  and cash flows for the periods
then ended  (subject,  in the case of unaudited  statements,  to normal year-end
audit adjustments). No other information provided by or on behalf of the Company
to the Buyer,  including,  without limitation,  information  referred to in this
Agreement,  contains any untrue  statement of a material  fact or omits to state
any material  fact  necessary in order to make the  statements  therein,  in the
light of the circumstances under which they were made, not misleading.

                                       7
<PAGE>

                  (g)  Absence  of  Litigation.   There  is  no  action,   suit,
proceeding,  inquiry  or  investigation  before or by any court,  public  board,
government  agency,  self-regulatory  organization  or body  pending  against or
affecting the Company,  the Common Stock or any of the  Company's  subsidiaries,
wherein an  unfavorable  decision,  ruling or finding  would (i) have a material
adverse effect on the transactions contemplated hereby (ii) adversely affect the
validity or  enforceability  of, or the  authority  or ability of the Company to
perform  its  obligations   under,  this  Agreement  or  any  of  the  documents
contemplated  herein,  or (iii) have a material  adverse effect on the business,
operations,  properties,  financial  condition or results of  operations  of the
Company and its subsidiaries taken as a whole.

                  (h)   Acknowledgment   Regarding   Buyer's   Purchase  of  the
Convertible Debentures. The Company acknowledges and agrees that the Buyer(s) is
acting solely in the capacity of an arm's length  purchaser with respect to this
Agreement  and  the  transactions   contemplated  hereby.  The  Company  further
acknowledges that the Buyer(s) is not acting as a financial advisor or fiduciary
of the Company (or in any similar  capacity)  with respect to this Agreement and
the transactions contemplated hereby and any advice given by the Buyer(s) or any
of their respective  representatives or agents in connection with this Agreement
and the transactions  contemplated  hereby is merely  incidental to such Buyer's
purchase of the  Convertible  Debentures or the Conversion  Shares.  The Company
further  represents to the Buyer that the Company's  decision to enter into this
Agreement has been based solely on the independent evaluation by the Company and
its representatives.

                  (i) No General  Solicitation.  Neither the Company, nor any of
its affiliates, nor any person acting on its or their behalf, has engaged in any
form of general  solicitation  or general  advertising  (within  the  meaning of
Regulation D under the Securities  Act) in connection  with the offer or sale of
the Convertible Debentures or the Conversion Shares.

                  (j) No Integrated  Offering.  Neither the Company,  nor any of
its  affiliates,  nor any person acting on its or their behalf has,  directly or
indirectly,  made any offers or sales of any security or solicited any offers to
buy any security,  under  circumstances  that would require  registration of the
Convertible  Debentures or the  Conversion  Shares under the  Securities  Act or
cause this offering of the Convertible Debentures or the Conversion Shares to be
integrated  with prior  offerings by the Company for purposes of the  Securities
Act.

                  (k)  Employee  Relations.  Neither  the Company nor any of its
subsidiaries  is involved in any labor  dispute  nor,  to the  knowledge  of the
Company or any of its subsidiaries,  is any such dispute threatened. None of the
Company's or its subsidiaries'  employees is a member of a union and the Company
and its subsidiaries believe that their relations with their employees are good.

                                       8
<PAGE>

                  (l)  Intellectual   Property  Rights.   The  Company  and  its
subsidiaries  own or possess  adequate rights or licenses to use all trademarks,
trade names, service marks, service mark registrations,  service names, patents,
patent  rights,  copyrights,   inventions,  licenses,  approvals,   governmental
authorizations,  trade secrets and rights  necessary to conduct their respective
businesses as now conducted.  The Company and its  subsidiaries  do not have any
knowledge of any  infringement by the Company or its  subsidiaries of trademark,
trade name rights, patents,  patent rights,  copyrights,  inventions,  licenses,
service names, service marks, service mark registrations,  trade secret or other
similar  rights of others,  and, to the  knowledge  of the  Company  there is no
claim,  action or proceeding being made or brought against,  or to the Company's
knowledge,  being threatened against, the Company or its subsidiaries  regarding
trademark,  trade name, patents, patent rights, invention,  copyright,  license,
service names, service marks, service mark registrations,  trade secret or other
infringement;  and the Company and its  subsidiaries are unaware of any facts or
circumstances which might give rise to any of the foregoing.

                  (m)  Environmental  Laws. The Company and its subsidiaries are
(i) in compliance with any and all applicable foreign,  federal, state and local
laws and regulations  relating to the protection of human health and safety, the
environment  or  hazardous  or  toxic   substances  or  wastes,   pollutants  or
contaminants ("Environmental Laws"), (ii) have received all permits, licenses or
other approvals required of them under applicable  Environmental Laws to conduct
their  respective  businesses  and  (iii) are in  compliance  with all terms and
conditions of any such permit, license or approval.

                  (n) Title.  Any real property and facilities  held under lease
by the Company and its subsidiaries are held by them under valid, subsisting and
enforceable leases with such exceptions as are not material and do not interfere
with the use made and proposed to be made of such  property and buildings by the
Company and its subsidiaries.

                  (o) Insurance.  The Company and each of its  subsidiaries  are
insured by insurers of recognized financial  responsibility  against such losses
and risks and in such  amounts  as  management  of the  Company  believes  to be
prudent  and  customary  in  the   businesses  in  which  the  Company  and  its
subsidiaries  are engaged.  Neither the Company nor any such subsidiary has been
refused any insurance coverage sought or applied for and neither the Company nor
any such  subsidiary has any reason to believe that it will not be able to renew
its existing  insurance  coverage as and when such coverage expires or to obtain
similar  coverage  from  similar  insurers as may be  necessary  to continue its
business at a cost that would not materially and adversely affect the condition,
financial or otherwise,  or the earnings,  business or operations of the Company
and its subsidiaries, taken as a whole.

                  (p)  Regulatory  Permits.  The  Company  and its  subsidiaries
possess all  material  certificates,  authorizations  and permits  issued by the
appropriate  federal,  state or  foreign  regulatory  authorities  necessary  to
conduct  their  respective  businesses,  and  neither  the  Company nor any such
subsidiary has received any notice of proceedings  relating to the revocation or
modification of any such certificate, authorization or permit.

                                       9
<PAGE>

                  (q) Internal Accounting Controls.  The Company and each of its
subsidiaries  maintain a system of internal  accounting  controls  sufficient to
provide  reasonable  assurance that (i)  transactions are executed in accordance
with  management's  general or specific  authorizations,  (ii)  transactions are
recorded  as  necessary  to  permit  preparation  of  financial   statements  in
conformity with generally accepted  accounting  principles and to maintain asset
accountability,  and (iii) the recorded  amounts for assets is compared with the
existing  assets at reasonable  intervals and  appropriate  action is taken with
respect to any differences.

                  (r) No Material Adverse Breaches, etc. Neither the Company nor
any of its  subsidiaries  is subject to any  charter,  corporate  or other legal
restriction,  or any judgment,  decree,  order,  rule or regulation which in the
judgment of the  Company's  officers  has or is expected in the future to have a
material  adverse  effect on the  business,  properties,  operations,  financial
condition,   results  of   operations   or  prospects  of  the  Company  or  its
subsidiaries.  Neither the Company nor any of its  subsidiaries  is in breach of
any  contract or  agreement  which  breach,  in the  judgment  of the  Company's
officers,  has or is expected to have a material adverse effect on the business,
properties,  operations, financial condition, results of operations or prospects
of the Company or its subsidiaries.

                  (s) Tax Status.  The Company and each of its  subsidiaries has
made and filed all federal and state income and all other tax  returns,  reports
and declarations required by any jurisdiction to which it is subject and (unless
and only to the extent  that the Company  and each of its  subsidiaries  has set
aside on its books provisions  reasonably adequate for the payment of all unpaid
and unreported taxes) has paid all taxes and other governmental  assessments and
charges  that are  material  in amount,  shown or  determined  to be due on such
returns,  reports and  declarations,  except those being contested in good faith
and has set aside on its books provision  reasonably adequate for the payment of
all taxes for periods  subsequent to the periods to which such returns,  reports
or declarations  apply. There are no unpaid taxes in any material amount claimed
to be due by the taxing authority of any  jurisdiction,  and the officers of the
Company know of no basis for any such claim.

                  (t) Certain  Transactions.  Except (i) as noted in the Budget,
(ii) arm's-length  transactions  pursuant to which the Company makes payments in
the ordinary  course of business upon terms no less  favorable  than the Company
could obtain from third parties,  or (iii) the grant of stock options  disclosed
in the Disclosure Schedule, none of the officers, directors, or employees of the
Company is presently a party to any transaction with the Company (other than for
services  as  employees,  officers  and  directors),   including  any  contract,
agreement or other  arrangement  providing for the  furnishing of services to or
by,  providing for rental of real or personal  property to or from, or otherwise
requiring payments to or from any officer,  director or such employee or, to the
knowledge of the Company, any corporation, partnership, trust or other entity in
which any officer,  director, or any such employee has a substantial interest or
is an officer, director, trustee or partner.

                  (u) Fees and  Rights  of First  Refusal.  The  Company  is not
obligated to offer the securities  offered hereunder on a right of first refusal
basis or otherwise to any third parties  including,  but not limited to, current
or former shareholders of the Company,  underwriters,  brokers,  agents or other
third parties.

                                       10
<PAGE>

                  (v) The Company  acknowledges that the Buyer is relying on the
representations  and  warranties  made by the  Company  hereunder  and that such
representations and warranties are a material inducement to the Buyer purchasing
the Convertible  Debentures.  The Company further acknowledges that without such
representations  and warranties of the Company made  hereunder,  the Buyer would
not enter into this Agreement.

            4. COVENANTS.

                  (a) Best  Efforts.  Each party  shall use its best  efforts to
timely  satisfy  each of the  conditions  to be  satisfied  by it as provided in
Sections 6 and 7 of this Agreement.

                  (b) Form D. The Company  agrees to file a Form D with  respect
to the Conversion  Shares as required  under  Regulation D and to provide a copy
thereof to each Buyer  promptly  after such  filing.  The Company  shall,  on or
before the  Closing  Date,  take such  action as the  Company  shall  reasonably
determine is necessary to qualify the Conversion  Shares, or obtain an exemption
for the Conversion Shares for sale to the Buyers at the Closing pursuant to this
Agreement  under  applicable  securities or "Blue Sky" laws of the states of the
United  States,  and shall  provide  evidence of any such action so taken to the
Buyers on or prior to the Closing Date.

                  (c) Reporting  Status.  Commencing on the effectiveness of the
Registration  Statement  and until the  earlier  of (i) the date as of which the
Buyer(s) may sell all of the Conversion Shares without  restriction  pursuant to
Rule 144(k) promulgated under the Securities Act (or successor thereto), or (ii)
the date on which (A) the Buyer(s) shall have sold all the Conversion Shares and
(B)  none of the  Convertible  Debentures  are  outstanding  (the  "Registration
Period"),  the Company shall file in a timely manner all reports  required to be
filed with the SEC pursuant to the Exchange Act and the  regulations  of the SEC
thereunder, and the Company shall not terminate its status as an issuer required
to file reports under the Exchange Act even if the Exchange Act or the rules and
regulations thereunder would otherwise permit such termination.

                  (d) Use of Proceeds.  The Company  will use the proceeds  from
the sale of the Convertible Debentures for general corporate and working capital
purposes in a manner  consistent  with the uses described in the budget attached
hereto as Exhibit B (the "Budget").  The Company,  in its discretion and without
prior  consent of or notice to the Buyers,  may deviate up to ten percent  (10%)
for any single line item described in the Budget.

                  (e)  Reservation of Shares.  The Company shall take all action
reasonably  necessary  to at all times have  authorized,  and  reserved  for the
purpose of issuance, such number of shares of Common Stock as shall be necessary
to effect the issuance of the Conversion Shares. If at any time the Company does
not have  available  such  shares of Common  Stock as shall from time to time be
sufficient to effect the conversion of all of the Conversion Shares, the Company
shall call and hold a special meeting of the shareholders within sixty (60) days
of such  occurrence,  for the sole  purpose of  increasing  the number of shares
authorized. The Company's management shall recommend to the shareholders to vote
in favor of  increasing  the  number  of  shares  of  Common  Stock  authorized.
Management  shall also vote all of its shares in favor of increasing  the number
of authorized shares of Common Stock.

                                       11
<PAGE>

                  (f) Listings or  Quotation.  The Company  shall,  concurrently
with the effectiveness of the registration statement filed with the SEC pursuant
to the Investor  Registration Rights Agreement,  secure the listing or quotation
of its Common Stock (including,  without limitation, the Conversion Shares) upon
a   national   securities   exchange,   automated   quotation   system   or  the
Over-The-Counter Bulletin Board ("OTCBB") maintained by the National Association
of Securities Dealers,  Inc. The Company shall maintain the listing or quotation
of the  Common  Stock  for so long as the Buyer is the  beneficial  owner of any
Common Stock or Conversion Shares (whether obtained or to be obtained under this
Agreement),  the  Convertible  Debentures  or any other  agreement  between  the
Company  and  the  Buyer.   The  Company  shall   maintain  the  Common  Stock's
authorization  for  quotation  on the  OTCBB.  It shall  be an event of  default
hereunder if the Company  fails to strictly  comply with its  obligations  under
this Section 4(f).

                  (g) Fees and  Expenses.  Each of the Company and the  Buyer(s)
shall pay all costs and expenses  incurred by such party in connection  with the
negotiation,   investigation,   preparation,   execution  and  delivery  of  the
Transaction Documents.  The Company shall pay Yorkville Advisors LLC a fee equal
to $40,000 at the Closing.

                  (h) The Company shall be solely  responsible  for the contents
of the Registration  Statement,  prospectus or other filing made with the SEC or
otherwise  used in the  offering  of the  Company's  securities  (except as such
disclosure  relates  solely to the Buyer and then only to the  extent  that such
disclosure  conforms with  information  furnished in writing by the Buyer to the
Company),  even if the Buyer or its agents as an  accommodation  to the  Company
participate  or  assist  in the  preparation  of  such  Registration  Statement,
prospectus  or other SEC filing.  The Company shall retain its own legal counsel
to review,  edit,  confirm and do all things such  counsel  deems  necessary  or
desirable  to such  Registration  Statement,  prospectus  or other SEC filing to
ensure that it does not contain an untrue  statement or alleged untrue statement
of material  fact or omit or alleged to omit a material  fact  necessary to make
the  statements  made  therein,  in light of the  circumstances  under which the
statements were made, not misleading.

                  (i)  Corporate  Existence.  So long as any of the  Convertible
Debentures  remain  outstanding,  the Company  shall not directly or  indirectly
consummate  any  merger,  reorganization,  restructuring,  reverse  stock  split
consolidation,  sale of all or substantially  all of the Company's assets or any
similar  transaction  or  related   transactions  (each  such  transaction,   an
"Organizational  Change") unless,  prior to the  consummation an  Organizational
Change, the Company obtains the written consent of each Buyer. In any such case,
the Company will make appropriate provision with respect to such holders' rights
and interests to insure that the provisions of this Section 4(h) will thereafter
be applicable to the Convertible Debentures.

                  (j) Transactions  With Affiliates.  So long as any Convertible
Debentures are  outstanding,  the Company shall not, and shall cause each of its
subsidiaries  not to, enter into,  amend,  modify or  supplement,  or permit any
subsidiary  to  enter  into,   amend,   modify  or  supplement   any  agreement,
transaction,  commitment,  or  arrangement  with any of its or any  subsidiary's
officers,  directors,  person who were  officers or directors at any time during
the previous two (2) years,  stockholders who beneficially own five percent (5%)
or more of the  Common  Stock,  or  Affiliates  (as  defined  below) or with any
individual  related by blood,  marriage,  or adoption to any such  individual or
with any entity in which any such entity or individual  owns a five percent (5%)
or more beneficial  interest (each a "Related Party"),  except for (a) customary
employment  arrangements  and benefit  programs  on  reasonable  terms,  (b) any
investment  in an  Affiliate  of the Company,  (c) any  agreement,  transaction,
commitment,  or arrangement on an arm's-length  basis on terms no less favorable
than  terms  which  would  have been  obtainable  from a person  other than such
Related Party, (d) any agreement, transaction,  commitment, or arrangement which
is approved by a majority of the  disinterested  directors of the  Company;  for
purposes  hereof,  any  director  who is also an officer  of the  Company or any
subsidiary of the Company shall not be a disinterested  director with respect to
any such agreement,  transaction,  commitment,  or arrangement.  "Affiliate" for
purposes hereof means,  with respect to any person or entity,  another person or
entity that, directly or indirectly,  (i) has a ten percent (10%) or more equity
interest  in that person or entity,  (ii) has ten  percent  (10%) or more common
ownership with that person or entity,  (iii) controls that person or entity,  or
(iv) shares common  control with that person or entity.  "Control" or "controls"
for  purposes  hereof  means that a person or entity  has the  power,  direct or
indirect, to conduct or govern the policies of another person or entity.

                                       12
<PAGE>

                  (k) Transfer Agent. The Company  covenants and agrees that, in
the event that the Company's agency  relationship with the transfer agent should
be  terminated  for any reason  prior to a date which is two (2) years after the
Closing Date,  the Company shall  immediately  appoint a new transfer  agent and
shall  require that the new transfer  agent execute and agree to be bound by the
terms of the Irrevocable Transfer Agent Instructions (as defined herein).

                  (l)  Restriction on Issuance of the Capital Stock.  So long as
any Convertible  Debentures are outstanding,  the Company shall not, without the
prior written consent of the Buyer(s),  (i) issue or sell shares of Common Stock
or Preferred Stock without  consideration or for a consideration  per share less
than the fair market value of the Common Stock determined  immediately  prior to
its issuance,  (ii) issue any warrant,  option, right, contract,  call, or other
security  instrument  granting the holder  thereof,  the right to acquire Common
Stock without consideration or for a consideration less than such Common Stock's
fair market value  determined  immediately  prior to it's issuance,  (iii) enter
into any security  instrument granting the holder a security interest in any and
all assets of the  Company,  except in  connection  with the Company  leasing or
purchasing  office  equipment,  computer and networking  equipment,  co-location
equipment  and  other  equipment  and  supplies  in the  ordinary  course of the
Company's  business,  provided  such  equipment  and  supplies  do  not,  in the
aggregate,  exceed fifty thousand  dollars  ($50,000.00) per annum, or (iv) file
any registration statement on Form S-8.

                  (m) Lock-up  Agreement.  On the date hereof, the Company shall
obtain from each officer and director of the Company a lock-up  agreement.  Such
lock-up agreement shall prohibit sales of the Company's Common Stock for so long
as any portion of the Convertible Debenture is outstanding.

                  (n) No Payment of Management Fees.  Except as disclosed in the
Budget,  the Company  shall not make any  payments of (i)  salaries,  management
fees,  commissions  or any other  remuneration  to officers or  directors of the
Company or any person or entity  that is an  "affiliate"  of any such  person or
entity (the "Management Group") or (ii) on any notes,  accounts payable or other
obligations  or  liabilities  owed to any member of  Management  Group until the
Registration  Statement has been  effective (as declared by the  Securities  and
Exchange  Commission)  for a  period  of at  least  90  days  (the  "Prohibition
Period").

                                       13
<PAGE>

                  (o) No Indebtedness.  For so long as the Convertible Debenture
is outstanding,  the Company shall not incur any indebtedness for borrowed money
or become a guarantor or otherwise contingently liable for any such indebtedness
except for (i) trade  payables or  purchase  money  obligations  incurred in the
ordinary course of business,  or (ii) amounts not to exceed one hundred thousand
dollars ($100,000).

                  (p) No Other Registration Statements. Except for the filing of
the  registration  statements  contemplated in this  transaction (the "Permitted
Registration  Statements"),   for  so  long  as  the  Convertible  Debenture  is
outstanding, the Company shall not file any other registration statements on any
form  (including  but not limited to forms S-1,  SB-2,  S-3 and S-8) without the
prior written consent of the Buyer.  Further, the Company shall not register for
sale or resale of any  shares of  capital  stock in the  Permitted  Registration
Statements other than the capital stock beneficially owned by the Buyer or to be
issued to the Buyer upon conversion of the Convertible  Debentures,  exercise of
warrants or issuance  under the Standby  Equity  Distribution  Agreement of even
date herewith.

                  (q) Neither the  Buyer(s)  nor any of its  affiliates  have an
open short position in the Common Stock of the Company,  and the Buyer(s) agrees
that it shall not, and that it will cause its  affiliates  not to, engage in any
short sales of or hedging  transactions with respect to the Common Stock as long
as any  Convertible  Debenture or warrants to purchase the Warrant  Shares shall
remain outstanding.

            5. TRANSFER AGENT INSTRUCTIONS.

                  (a) The Company  shall issue the  Irrevocable  Transfer  Agent
Instructions to its transfer agent irrevocably  appointing David Gonzalez,  Esq.
as the Company's agent for purpose of having certificates issued,  registered in
the name of the Buyer(s) or its respective nominee(s), for the Conversion Shares
representing  such amounts of  Convertible  Debentures as specified from time to
time  by the  Buyer(s)  to  the  Company  upon  conversion  of  the  Convertible
Debentures, for interest owed pursuant to the Convertible Debenture, and for any
and all Liquidated Damages (as this term is defined in the Investor Registration
Rights  Agreement).  David  Gonzalez,  Esq.  shall  be paid a cash  fee of Fifty
Dollars ($50) for every occasion they act pursuant to the  Irrevocable  Transfer
Agent Instructions.  The Company shall not change its transfer agent without the
express written  consent of the Buyer(s),  which may be withheld by the Buyer(s)
in its sole discretion. Prior to registration of the Conversion Shares under the
Securities  Act,  all  such  certificates  shall  bear  the  restrictive  legend
specified  in Section  2(g) of this  Agreement.  The  Company  warrants  that no
instruction other than the Irrevocable  Transfer Agent Instructions  referred to
in this Section 5, and stop transfer instructions to give effect to Section 2(g)
hereof  (in the case of the  Conversion  Shares  prior to  registration  of such
shares  under the  Securities  Act) will be given by the Company to its transfer
agent and that the Conversion  Shares shall otherwise be freely  transferable on
the books and  records  of the  Company as and to the  extent  provided  in this
Agreement  and the  Investor  Registration  Rights  Agreement.  Nothing  in this
Section 5 shall  affect in any way the  Buyer's  obligations  and  agreement  to
comply with all applicable  securities laws upon resale of Conversion Shares. If
the Buyer(s) provides the Company with an opinion of counsel, in form, scope and
substance  customary for opinions of counsel in comparable  transactions  to the
effect that  registration  of a resale by the Buyer(s) of any of the  Conversion
Shares is not required  under the  Securities  Act, the Company shall within two
(2) business days instruct its transfer agent to issue one or more  certificates
in such name and in such  denominations  as specified by the Buyer.  The Company
acknowledges  that  a  breach  by it of its  obligations  hereunder  will  cause
irreparable  harm to the  Buyer by  vitiating  the  intent  and  purpose  of the
transaction contemplated hereby. Accordingly,  the Company acknowledges that the
remedy  at law for a breach  of its  obligations  under  this  Section 5 will be
inadequate  and  agrees,  in the event of a breach or  threatened  breach by the
Company  of the  provisions  of this  Section  5,  that  the  Buyer(s)  shall be
entitled,  in  addition  to  all  other  available  remedies,  to an  injunction
restraining any breach and requiring  immediate  issuance and transfer,  without
the necessity of showing  economic  loss and without any bond or other  security
being required.

                                       14
<PAGE>

            6. CONDITIONS TO THE COMPANY'S OBLIGATION TO SELL.

         The  obligation  of  the  Company  hereunder  to  issue  and  sell  the
Convertible  Debentures  to the  Buyer(s)  at the  Closings  is  subject  to the
satisfaction,  at or  before  the  Closing  Dates,  of  each  of  the  following
conditions,  provided that these  conditions  are for the Company's sole benefit
and may be waived by the Company at any time in its sole discretion:

                  (a) Each Buyer shall have executed the  Transaction  Documents
and delivered them to the Company.

                  (b) The Buyer(s)  shall have  delivered the Purchase Price for
Convertible  Debentures in respective amounts as set forth next to each Buyer as
outlined on Schedule I attached hereto by wire transfer of immediately available
U.S. funds pursuant to the wire instructions provided by the Company.

                  (c) The  representations  and warranties of the Buyer(s) shall
be true and correct in all material  respects as of the date when made and as of
the Closing  Dates as though made at that time (except for  representations  and
warranties  that  speak as of a  specific  date),  and the  Buyer(s)  shall have
performed,  satisfied and complied in all material  respects with the covenants,
agreements and conditions required by this Agreement to be performed,  satisfied
or complied with by the Buyer(s) at or prior to the Closing Dates.

            7. CONDITIONS TO THE BUYER'S OBLIGATION TO PURCHASE.

                  (a) The  obligation of the Buyer(s)  hereunder to purchase the
Convertible  Debentures  at the  Closing is subject to the  satisfaction,  at or
before the Closing Date, of each of the following conditions:

                        (i) The  Company  shall have  executed  the  Transaction
Documents and delivered the same to the Buyer(s).

                        (ii) The  representations  and warranties of the Company
shall be true and correct in all  material  respects  (except to the extent that
any  of  such   representations  and  warranties  is  already  qualified  as  to
materiality  in  Section  3  above,  in which  case,  such  representations  and
warranties  shall be true and correct without further  qualification)  as of the
date when made and as of the Closing  Date as though  made at that time  (except
for  representations  and  warranties  that speak as of a specific date) and the
Company shall have  performed,  satisfied and complied in all material  respects
with the covenants,  agreements and conditions  required by this Agreement to be
performed,  satisfied or complied with by the Company at or prior to the Closing
Date. If requested by the Buyer,  the Buyer shall have  received a  certificate,
executed by the  President of the Company,  dated as of the Closing Date, to the
foregoing effect and as to such other matters as may be reasonably  requested by
the  Buyer  including,  without  limitation  an update  as of the  Closing  Date
regarding the representation contained in Section 3(c) above.

                                       15
<PAGE>

                        (iii) The Company  shall have  executed and delivered to
the  Buyer  a  Convertible  Debentures  in the  amount  of One  Million  Dollars
($1,000,000).

                        (iv) The  Buyer(s)  shall  have  received  an opinion of
counsel from in a form satisfactory to the Buyer(s).

                        (v) The Company  shall have  provided to the  Buyer(s) a
certificate of good standing from the secretary of state from the state in which
the company is incorporated.

                        (vi) The  Company  or the Buyer  shall have filed a form
UCC-1 or such other forms as may be required to perfect the Buyer's  interest in
the Pledged Property as detailed in the Security Agreement dated the date hereof
and provided proof of such filing to the Buyer(s).

                        (vii) Barry  Brookstein  and Dean  Garfinkel  shall have
delivered  to the  Escrow  Agent  the  Pledged  Shares  as well as any  transfer
documents as required pursuant to the Pledge and Escrow Agreement.

                        (viii) The Company  shall have  provided to the Buyer an
acknowledgement,   to  the  satisfaction  of  the  Buyer,   from  the  Company's
independent  certified  public  accountants  as to its  ability to  provide  all
consents  required in order to file a registration  statement in connection with
this transaction.

                        (ix)  The  Company   shall  have  reserved  out  of  its
authorized  and unissued  Common Stock,  solely for the purpose of effecting the
conversion of the Convertible  Debentures,  shares of Common Stock to effect the
conversion of all of the Conversion Shares then outstanding.

                        (x) The Irrevocable Transfer Agent Instructions, in form
and  substance  satisfactory  to the  Buyer,  shall have been  delivered  to and
acknowledged in writing by the Company's transfer agent.

                                       16
<PAGE>

            8. INDEMNIFICATION.

                  (a) In consideration of the Buyer's  execution and delivery of
this  Agreement and  acquiring the  Convertible  Debentures  and the  Conversion
Shares  hereunder,  and in addition to all of the  Company's  other  obligations
under this  Agreement,  the Company  shall defend,  protect,  indemnify and hold
harmless the Buyer(s) and each other holder of the  Convertible  Debentures  and
the  Conversion  Shares,  and all of their  officers,  directors,  employees and
agents  (including,  without  limitation,  those retained in connection with the
transactions   contemplated  by  this  Agreement)   (collectively,   the  "Buyer
Indemnitees")  from and against any and all  actions,  causes of action,  suits,
claims, losses, costs, penalties, fees, liabilities and damages, and expenses in
connection  therewith  (irrespective  of whether any such Buyer  Indemnitee is a
party  to the  action  for  which  indemnification  hereunder  is  sought),  and
including  reasonable   attorneys'  fees  and  disbursements  (the  "Indemnified
Liabilities"),  incurred by the Buyer Indemnitees or any of them as a result of,
or arising  out of, or relating  to (a) any  misrepresentation  or breach of any
representation  or  warranty  made  by  the  Company  in  this  Agreement,   the
Convertible  Debentures  or the Investor  Registration  Rights  Agreement or any
other certificate,  instrument or document  contemplated hereby or thereby,  (b)
any breach of any covenant,  agreement or obligation of the Company contained in
this  Agreement,  or the  Investor  Registration  Rights  Agreement or any other
certificate,  instrument or document  contemplated hereby or thereby, or (c) any
cause of action,  suit or claim  brought or made  against  such  Indemnitee  and
arising  out of or  resulting  from  the  execution,  delivery,  performance  or
enforcement  of this  Agreement or any other  instrument,  document or agreement
executed pursuant hereto by any of the parties hereto, any transaction  financed
or to be financed in whole or in part, directly or indirectly, with the proceeds
of the  issuance  of the  Convertible  Debentures  or the status of the Buyer or
holder  of the  Convertible  Debentures  the  Conversion  Shares,  as a Buyer of
Convertible  Debentures  in  the  Company.  To the  extent  that  the  foregoing
undertaking  by the Company  may be  unenforceable  for any reason,  the Company
shall make the maximum  contribution to the payment and  satisfaction of each of
the Indemnified Liabilities, which is permissible under applicable law.

                  (b) In consideration  of the Company's  execution and delivery
of this Agreement, and in addition to all of the Buyer's other obligations under
this Agreement, the Buyer shall defend, protect, indemnify and hold harmless the
Company and all of its officers,  directors,  employees  and agents  (including,
without   limitation,   those  retained  in  connection  with  the  transactions
contemplated by this Agreement)  (collectively,  the "Company Indemnitees") from
and against any and all Indemnified  Liabilities  incurred by the Indemnitees or
any of  them  as a  result  of,  or  arising  out  of,  or  relating  to (a) any
misrepresentation  or  breach  of any  representation  or  warranty  made by the
Buyer(s)  in this  Agreement,  instrument  or  document  contemplated  hereby or
thereby  executed by the Buyer,  (b) any breach of any  covenant,  agreement  or
obligation  of  the  Buyer(s)   contained  in  this   Agreement,   the  Investor
Registration  Rights Agreement or any other certificate,  instrument or document
contemplated  hereby  or  thereby  executed  by the  Buyer,  or (c) any cause of
action,  suit or claim brought or made against such Company  Indemnitee based on
material  misrepresentations  or due to a material  breach and arising out of or
resulting  from the  execution,  delivery,  performance  or  enforcement of this
Agreement,  the Investor  Registration Rights Agreement or any other instrument,
document or agreement  executed pursuant hereto by any of the parties hereto. To
the extent that the foregoing undertaking by each Buyer may be unenforceable for
any reason,  each Buyer shall make the maximum  contribution  to the payment and
satisfaction of each of the Indemnified Liabilities,  which is permissible under
applicable law.

                                       17
<PAGE>

            9. GOVERNING LAW: MISCELLANEOUS.

                  (a)  Governing  Law. This  Agreement  shall be governed by and
interpreted  in  accordance  with the laws of the  State of New  Jersey  without
regard to the principles of conflict of laws. The parties further agree that any
action between them shall be heard in Hudson County,  New Jersey,  and expressly
consent  to the  jurisdiction  and venue of the  Superior  Court of New  Jersey,
sitting in Hudson County and the United States  District  Court for the District
of New Jersey sitting in Newark,  New Jersey for the  adjudication  of any civil
action asserted pursuant to this Paragraph.

                  (b)  Counterparts.  This  Agreement  may be executed in two or
more identical  counterparts,  all of which shall be considered one and the same
agreement and shall become effective when  counterparts have been signed by each
party and  delivered  to the other  party.  In the event any  signature  page is
delivered  by  facsimile  transmission,  the party  using such means of delivery
shall  cause  four  (4)  additional  original  executed  signature  pages  to be
physically  delivered to the other party  within five (5) days of the  execution
and delivery hereof.

                  (c)  Headings.   The  headings  of  this   Agreement  are  for
convenience   of   reference   and  shall  not  form  part  of,  or  affect  the
interpretation of, this Agreement.

                  (d) Severability.  If any provision of this Agreement shall be
invalid   or   unenforceable   in   any   jurisdiction,   such   invalidity   or
unenforceability  shall  not  affect  the  validity  or  enforceability  of  the
remainder  of  this   Agreement  in  that   jurisdiction   or  the  validity  or
enforceability of any provision of this Agreement in any other jurisdiction.

                  (e) Entire Agreement,  Amendments.  This Agreement  supersedes
all other prior oral or written  agreements  between the Buyer(s),  the Company,
their  affiliates and persons acting on their behalf with respect to the matters
discussed  herein,  and this  Agreement and the  instruments  referenced  herein
contain  the entire  understanding  of the parties  with  respect to the matters
covered  herein and therein  and,  except as  specifically  set forth  herein or
therein,  neither the Company nor any Buyer makes any representation,  warranty,
covenant or  undertaking  with  respect to such  matters.  No  provision of this
Agreement may be waived or amended other than by an instrument in writing signed
by the party to be charged with enforcement.

                  (f)  Notices.  Any  notices,   consents,   waivers,  or  other
communications  required  or  permitted  to be  given  under  the  terms of this
Agreement  must be in writing and will be deemed to have been delivered (i) upon
receipt, when delivered personally; (ii) upon confirmation of receipt, when sent
by  facsimile;  (iii)  three (3) days after being sent by U.S.  certified  mail,
return  receipt  requested,  or (iv) one (1) day after deposit with a nationally
recognized  overnight  delivery service,  in each case properly addressed to the
party to  receive  the  same.  The  addresses  and  facsimile  numbers  for such
communications shall be:

                                       18
<PAGE>

If to the Company, to:     Compliance Systems Corporation
                           90 Pratt Oval
                           Glen Cove, NY 11542
                           Attention:  Dean Garfinkel
                           Telephone:  (516) 656-5155
                           Facsimile:  (516) 676-2420

With a copy to:            Kirkpatrick & Lockhart Nicholson Graham, LLP
                           201 South Biscayne Boulevard, Suite 2000
                           Miami, Florida 33131
                           Attention:  Clayton E. Parker, Esq.
                           Telephone:  (305) 539-3306
                           Facsimile:  (305) 328-7095

      If to the  Buyer(s),  to its address and  facsimile  number on Schedule I,
with copies to the Buyer's  counsel as set forth on Schedule I. Each party shall
provide five (5) days' prior written  notice to the other party of any change in
address or facsimile number.

                  (g)  Successors and Assigns.  This Agreement  shall be binding
upon and inure to the benefit of the parties and their respective successors and
assigns.  Neither the Company nor any Buyer shall  assign this  Agreement or any
rights or obligations  hereunder  without the prior written consent of the other
party hereto.

                  (h) No Third Party  Beneficiaries.  This Agreement is intended
for the benefit of the parties hereto and their respective  permitted successors
and  assigns,  and is not for the  benefit of, nor may any  provision  hereof be
enforced by, any other person.

                  (i)  Survival.  Unless  this  Agreement  is  terminated  under
Section 9(l), the representations and warranties of the Company and the Buyer(s)
contained  in  Sections  2 and 3, the  agreements  and  covenants  set  forth in
Sections 4, 5 and 9, and the indemnification  provisions set forth in Section 8,
shall  survive the Closing for a period of two (2) years  following  the date on
which the  Convertible  Debentures  are converted in full. The Buyer(s) shall be
responsible  only  for  its  own  representations,  warranties,  agreements  and
covenants hereunder.

                  (j)  Publicity.  The Company and the  Buyer(s)  shall have the
right to  approve,  before  issuance  any  press  release  or any  other  public
statement  with  respect to the  transactions  contemplated  hereby  made by any
party; provided,  however, that the Company shall be entitled, without the prior
approval of the Buyer(s),  to issue any press release or other public disclosure
with respect to such transactions  required under applicable securities or other
laws or  regulations  (the  Company  shall use its best  efforts to consult  the
Buyer(s) in connection  with any such press  release or other public  disclosure
prior to its release and  Buyer(s)  shall be provided  with a copy  thereof upon
release thereof).

                  (k) Further  Assurances.  Each party shall do and perform,  or
cause to be done and  performed,  all such  further  acts and things,  and shall
execute and deliver all such other  agreements,  certificates,  instruments  and
documents,  as the other party may reasonably  request in order to carry out the
intent and accomplish the purposes of this Agreement and the consummation of the
transactions contemplated hereby.

                                       19
<PAGE>

                  (l) Termination.  In the event that the Closing shall not have
occurred with respect to the Buyers on or before five (5) business days from the
date  hereof  due to the  Company's  or  the  Buyer's  failure  to  satisfy  the
conditions  set forth in Sections 6 and 7 above (and the  non-breaching  party's
failure to waive such unsatisfied  condition(s)),  the non-breaching party shall
have the option to terminate this Agreement with respect to such breaching party
at the close of  business  on such date  without  liability  of any party to any
other party;  provided,  however,  that if this  Agreement is  terminated by the
Company  pursuant to this Section 9(l),  the Company  shall remain  obligated to
reimburse  the Buyer(s) for the fees and  expenses of  Yorkville  Advisors,  LLC
described in Section 4(g) above.

                  (m)  No  Strict  Construction.   The  language  used  in  this
Agreement  will be deemed to be the  language  chosen by the  parties to express
their mutual intent, and no rules of strict construction will be applied against
any party.

          [SIGNATURE PAGE FOLLOWS; REMAINDER PAGE INTENTIONALLY BLANK]

                                       20
<PAGE>

      IN WITNESS WHEREOF, the Buyers and the Company have caused this Securities
Purchase Agreement to be duly executed as of the date first written above.

                                    COMPANY:
                                    COMPLIANCE SYSTEMS CORPORATION

                                    By: ________________________________
                                    Name:  Dean Garfinkel
                                    Title: Chairman

                                       21
<PAGE>

                                    EXHIBIT A

                               DISCLOSURE SCHEDULE

      3.    REPRESENTATIONS AND WARRANTIES OF THE COMPANY

            (c)   Capitalization.  As of the date hereof, the authorized capital
stock of the  Company  consists  of  500,000,000  shares of Common  Stock and no
shares of Preferred Stock, of which 50,000,000 shares of Common Stock are issued
and outstanding.

            In August 2004, the Company entered into a consulting agreement with
Leonard Neuhaus for his services in connection with obtaining suitable financing
for the Company.  Under the terms of the consulting agreement,  Mr. Neuhaus will
receive:  (x) a fee equal to 5% of the  initial  $1  million  of gross  proceeds
received by the Company or its  subsidiaries,  with such fee to be paid entirely
in cash; and (y) a fee equal to 5% of any amounts in excess of the $1 million of
gross proceeds received by the Company or its subsidiaries,  with such fee to be
paid 50% in cash and 50% in common stock of the Company.  All fees shall be paid
at the closing of the transaction to which they relate.  The share price for all
fees to be paid to Mr.  Neuhaus in the form of common  stock of the Company will
be equal to the conversion price paid by Montgomery Equity Partners, Ltd. to the
Company in connection with  Montgomery's  conversion of any principal  amount in
excess  of the  initial  $1  million  debenture  issued  by the  Company  or any
successor to  Montgomery.  If there is more than one such  conversion,  then the
conversion  price for purposes of calculating  the fee to be paid to Mr. Neuhaus
under the cosnulting agreement will be the last one in time. Notwithstanding the
foregoing, in its sole and absolute discretion, the Company may pay Mr. Neuhaus'
fee as calculated above entirely in the form of cash. All common stock issued to
Mr.  Neuhaus as a fee under the  consulting  agreement  in  connection  with any
transaction  with Montgomery will either be registered and freely tradable or be
included and  registered  for resale  pursuant to the Securities Act of 1933, as
amended, in the first registration  statement filed by the Company following the
transaction with /Montgomery for which such fees were earned.

            As of the date hereof,  there are  outstanding  warrants to purchase
580,000 shares of Common Stock at $1.50 per share. These warrants will expire on
September 30, 2008.

            Please refer to Schedule F-1 below for a list of the Company's  debt
securities.

            (t)   Certain Transactions. Dean Garfinkel and Alison Garfinkel each
loaned the Company  $125,000.  Barry M. Brookstein  loaned the Company $750,000,
and his  wholly-owned  company,  Spirits  Management,  Inc.,  loaned the Company
$125,000.  In addition,  monies totaling $500,000 were borrowed from Amanuensis,
an independent third-party,  with Barry M. Brookstein acting as an intermediary.
Although Mr.  Brookstein is President of Tele-Serv Inc.,  Telemax Co., Inc., and
Phone-Tel New Corp., he is not a shareholder of any of these companies.

<PAGE>

      4.    COVENANTS

            (d)   Use of Proceeds. Please refer to Exhibit H attached hereto for
the Company's Budget, which details the proposed use of Proceeds by the Company.

                                       2
<PAGE>

                                  Schedule F-1

                         COMPLIANCE SYSTEMS CORPORATION
                           SCHEDULE OF DEBT SECURITIES
                               AS OF MARCH 8, 2006

                                                                 BALANCE
                                                               ------------

Secured Debt (UCC's Filed):
  Notes Payable - Robert Lippe                                    27,794.00

  Capitalized Leases Payable:
    Dell Financial Services                                        7,452.00
    Bank of the West                                              29,898.00
    GE Capital                                                    19,518.00
    Axis Capital Inc.                                             12,885.00
    M&T Credit Services LLC                                       13,884.00
    Netbank Business Finance (formerly Republic Leasing)          24,392.00
    US Bancorp                                                    29,346.00
  Total Leases Payable                                           137,375.00

  Secured Lease - Ford Credit                                      5,850.00

Total Secured Debt                                               171,019.00
                                                               ------------

                                                                 BALANCE
                                                               ------------

UNSECURED DEBT:
  AMGRO                                                           13,420.00
  Brad Friedman                                                   50,000.00
  Henry Ponzio                                                   237,500.00
  HSBC Bank                                                      100,000.00
  Phone-Tel New Corp                                             163,376.00
  Spirits Management Inc.                                        163,376.00
  Tele-Serv Inc.                                                 108,917.00
  Telmax Co. Inc.                                                108,917.00
  Amanuensis Ltd.                                                500,000.00
  Spirits Management Inc.                                         11,826.00
  Alison Garfinkel                                               125,000.00
  Dean Garfinkel                                                 125,000.00
  Barry M. Brookstein                                            750,000.00
  Stock Repurchase Payable to Alison Garfinkel                    82,800.00
  Spirits Management Inc.                                        125,000.00

Total Unsecured Debt                                           2,665,132.00
                                                               ------------
Total                                                          2,877,147.00
                                                               ============

                                       3
<PAGE>

                                    EXHIBIT B

                                     BUDGET

                      [TO BE MANUALLY INSERTED AT CLOSING]

                                       4
<PAGE>

                                   SCHEDULE I

                               SCHEDULE OF BUYERS

<TABLE>
<CAPTION>
                                                                        ADDRESS/FACSIMILE           AMOUNT OF
                NAME                       SIGNATURE                     NUMBER OF BUYER           SUBSCRIPTION
--------------------------------   ----------------------------   ------------------------------   ------------
<S>                                <C>                            <C>                               <C>
Montgomery Equity Partners, Ltd.   By:   Yorkville Advisors, LLC  101 Hudson Street - Suite 3700    $1,000,000
                                   Its:  General Partner          Jersey City, NJ  07303
                                                                  Facsimile: (201) 985-8266

                                   By:
                                   Name: Mark Angelo
                                   Its:  Portfolio Manager

With a copy to:                    David Gonzalez, Esq.           101 Hudson Street - Suite 3700
                                                                  Jersey City, NJ 07302
                                                                  Facsimile:  (201) 985-8266
</TABLE>

                                       5

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