Filed Pursuant to Rule 424(b)(1)
Registration No. 333-27587

1,500,000 Shares

[GRAPHIC OMITTED]

Common Stock

Prior to this offering, there has been no public market for the Common
Stock and there can be no assurance that any such market will develop. The
Common Stock will be quoted on the Nasdaq National Market under the symbol
"RIMS." For a discussion of the factors considered in determining the initial
public offering price, see "Underwriting."
---------------------
THE SECURITIES OFFERED HEREBY ARE SPECULATIVE AND INVOLVE A HIGH DEGREE OF RISK
AND IMMEDIATE SUBSTANTIAL DILUTION AND SHOULD NOT BE PURCHASED BY INVESTORS WHO
CANNOT AFFORD THE LOSS OF THEIR ENTIRE INVESTMENT. SEE "RISK FACTORS"
COMMENCING ON PAGE 8 AND "DILUTION" ON PAGE 16.
---------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS
A CRIMINAL OFFENSE.

================================================================================
Price Underwriting Proceeds
to Discounts and to
Public Commissions(1) Company(2)
- --------------------------------------------------------------------------------
Per Share ...... $6.50 $.52 $5.98
- --------------------------------------------------------------------------------
Total(3) ...... $9,750,000 $780,000 $8,970,000
================================================================================

(1) Does not include additional compensation to be received by BlueStone
Capital Partners, L.P. ("BlueStone"), Coleman and Company Securities, Inc.
and Oscar Gruss & Son Incorporated, as representatives of the several
Underwriters (the "Representatives"), in the form of (i) an accountable
expense allowance of up to $180,000 payable to BlueStone and (ii) warrants
to purchase up to 150,000 shares of Common Stock (the "Representatives'
Warrants"). The Company has also agreed to indemnify the Underwriters
against certain liabilities, including liabilities under the Securities
Act of 1933, as amended. See "Underwriting."

(2) Before deducting expenses payable by the Company, estimated at $500,000
(not including BlueStone's accountable expense allowance).

(3) The Company has granted to the Representatives an option, exercisable
within 45 days from the date of this Prospectus, to purchase up to 225,000
additional shares of Common Stock on the same terms set forth above,
solely for the purpose of covering over-allotments, if any. If the
Representatives' over-allotment option is exercised in full, the total
Price to Public, Underwriting Discounts and Commissions and Proceeds to
Company will be $11,212,500, $897,000, and $10,315,500, respectively. See
"Underwriting."

The shares of Common Stock are being offered, subject to prior sale, when,
as and if delivered to and accepted by the Underwriters and subject to approval
of certain legal matters by counsel and to certain other conditions. The
Underwriters reserve the right to withdraw, cancel or modify the offering and
to reject any order in whole or in part. It is expected that delivery of
certificates representing the shares of Common Stock will be made against
payment therefor at the offices of BlueStone Capital Partners, L.P., 575 Fifth
Avenue, New York, New York 10017, on or about July 1, 1997.

BlueStone Capital Partners, L.P.
Coleman and Company Securities, Inc.
Oscar Gruss & Son Incorporated

The date of this Prospectus is June 26, 1997.

ROBOCOM
AUTOMATED WAREHOUSE MANAGEMENT SYSTEMS

[Four pictures of warehouse operations connected to a picture of a computer
keyboard.]

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

AVAILABLE INFORMATION

As of the date of this Prospectus, the Company will become subject to the
reporting requirements of the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), and, in accordance therewith, will file reports, proxy
statements and other information with the Securities and Exchange Commission
(the "Commission"). The Company intends to furnish its shareholders with annual
reports containing audited financial statements and such other periodic reports
as the Company deems appropriate or as may be required by law.
-----------------

CERTAIN PERSONS PARTICIPATING IN THIS OFFERING MAY ENGAGE IN TRANSACTIONS,
ON NASDAQ, IN THE OVER-THE-COUNTER MARKET OR OTHERWISE, WHICH STABILIZE,
MAINTAIN OR OTHERWISE AFFECT THE MARKET PRICE OF THE COMMON STOCK.
SPECIFICALLY, THE UNDERWRITERS MAY OVER-ALLOT IN CONNECTION WITH THIS OFFERING
AND MAY BID FOR AND PURCHASE SHARES OF COMMON STOCK IN THE OPEN MARKET. FOR A
DESCRIPTION OF THESE ACTIVITIES, SEE "UNDERWRITING."

PROSPECTUS SUMMARY

The following summary is qualified in its entirety by reference to, and
should be read in conjunction with, the more detailed information and financial
statements, including the notes thereto, contained elsewhere in this
Prospectus. Each prospective investor is urged to read this Prospectus in its
entirety. Unless otherwise indicated, the information contained in this
Prospectus, including per share data and information relating to the number of
shares outstanding, gives retroactive effect to the 1.88-for-one split of the
Common Stock effected on May 15, 1997 and assumes no exercise of the
Representatives' over-allotment option to purchase up to 225,000 additional
shares of Common Stock. See "Underwriting" and Note 8 of Notes to Financial
Statements.

This Prospectus contains forward-looking statements that involve risks and
uncertainties. The Company's actual results may differ materially from the
results discussed in the forward-looking statements. Factors that might cause
such a difference include, but are not limited to, those discussed in "Risk
Factors."

The Company

Robocom Systems Inc. (the "Company") develops, markets and supports
advanced warehouse management software solutions that enable companies to
realize significant cost savings by automating their warehouse operations. The
Company's primary product, Robocom Inventory Management System ("RIMS") .2001,
is a customer-configurable software solution that enables a company's warehouse
to respond to a customer order with greater accuracy and in a more timely
manner, thereby turning the warehouse into a competitive advantage. RIMS.2001
operates in an open system environment and interfaces with an organization's
existing information systems infrastructure. In addition to providing RIMS.2001
software licenses, the Company provides installation, design and maintenance
services and related hardware when required by the customer. The Company
believes that customers that have implemented the RIMS.2001 solution have
realized increased customer satisfaction directly related to timely and
accurate receipt of shipments.

Until recently, the warehouse has received little attention from corporate
management as an area in which greater efficiency could be introduced into a
business organization. However, in recent years, an increasingly competitive
global business environment has created pressure for companies to reduce costs,
enhance product quality and reduce customer response times. To enhance
performance, many companies are reviewing and investing in improvements to
their supply chain: the mission critical process of moving raw materials and
finished goods from initial material procurement to end-customer fulfillment.
Further, companies are finding increased competitive benefits by integrating
supply chain operations with enterprise resource planning ("ERP") systems.

Because the warehouse is often considered the "hub" of the supply chain,
housing both raw materials and finished goods, warehouse operations are often
the focal point of supply chain management and ERP solutions. According to
industry sources, the supply chain management / ERP software solutions market
was estimated to be in excess of $4.5 billion in 1996 and is projected to grow
at an annual compounded growth rate of 30% throughout the end of the decade.
Similarly, the warehouse management system market is large, yet remains
relatively untapped. Industry analysts estimate that there are 550,000
warehouses in the United States (with as many outside the United States), of
which only 10% are employing some level of automation. Given the increased
awareness of the benefits of improving warehouse operations, the Company
believes, based upon its recent experience with current and potential
customers, that manufacturers and suppliers are seeking a cost-effective
solution for automating and integrating the diversified processes of a
warehouse.

Historically, warehouse management solutions were custom-developed by
internal management information system departments or outsourced to third-party
software developers and were not cost efficient to implement. In contrast,
RIMS.2001, an "off-the-shelf" solution first introduced in June 1994, requires
little,

if any, modification in most warehouse environments. RIMS.2001 is designed to
be implemented in approximately four months, which is a significantly shorter
time period than that required to implement the customized warehouse management
systems that have historically been available. In addition, the full
functionality, scalability and affordability (the average RIMS.2001 solution is
priced at $200,000) of RIMS.2001 enable the Company to target small and
mid-size companies as well as Fortune 500 companies with the same product. The
Company has experienced increasing bookings for RIMS.2001 evidenced by its
sales of six and 12 RIMS.2001 systems for fiscal year 1995 and for the first
nine months of fiscal 1997, respectively.

The Company's objective is to become the premier worldwide provider of
automated warehouse management solutions. To achieve this objective, the
Company intends to develop strategic alliances with complementary solution
providers and technology partners. The Company has entered into its first such
alliance with QAD, Inc. ("QAD"), a leading provider of global supply chain
management and ERP solutions. This relationship provides for co-marketing and
technology-sharing benefits and provides the Company access to QAD's large,
worldwide customer base and distributor network. In addition to strategic
alliances, the Company will continue to establish direct and indirect global
sales channels. Currently, the Company has established relationships with
distributors in Canada, the United Kingdom, Mexico, Brazil and Argentina. The
Company intends to achieve market differentiation through vertical market
expertise and has targeted food manufacturers and distributors with the first
of its industry-specific RIMS adaptations (known as RIMS.Food), which is
pre-configured to address the unique requirements of this market.

RIMS.2001 technology is the result of the Company's extensive experience
in commercial and military materials handling applications. Building on its 15
years of industry expertise, the Company has developed a fully operational,
customer-configurable, standard software solution that captures best practice
methodologies used in warehouse operations. The RIMS.2001 solution reduces
costs, improves customer service and productivity by controlling and directing
activity and functions within the warehouse operating area, including
receiving, storage, order selection, packing, loading and shipping. RIMS.2001
utilizes radio frequency communications and bar coding to provide real time
management validation and tracking of all warehouse activities. RIMS.2001
operates in an open system environment allowing customers to use various
operating systems, operate on multiple hardware platforms and run with multiple
relational database management systems, such as Oracle and Progress.

The Company sells products through a direct sales force in the United
States and through distributors in other parts of the world. Sales and
marketing personnel are located at the Company's headquarters in Massapequa,
New York and in field offices in Pittsburgh, Pennsylvania, Cranston, Rhode
Island, Atlanta, Georgia and Ann Arbor, Michigan. The Company currently has
over 30 customers, including ConAgra Refrigerated Foods Companies, Inc.,
Consolidated Edison Company of New York, Inc., Osram Sylvania Inc., Crown
Equipment Corporation and Moen Incorporated, of which several have installed
the Company's warehouse solutions in multiple sites.

The Company was incorporated in the State of New York on June 30, 1982.
The Company's executive offices are located at 511 Ocean Avenue, Massapequa,
New York 11758. The Company's telephone number at that address is (516)
795-5100.

Pending S Corporation Termination

Since June 1990, the Company has been treated for Federal and New York
state income tax purposes as an S Corporation under Subchapter S of the
Internal Revenue Code and New York law. As a result of the Company's status as
an S Corporation, the Company's existing shareholders, rather than the Company,
were taxed directly on the earnings of the Company for Federal and state
corporate income tax purposes during such period, whether or not such earnings
were distributed to them. As of the date of this Prospectus, however, the
Company is terminating its status as an S Corporation and will hereafter become
subject to federal and state income taxes at applicable C Corporation rates.

As of February 28, 1997, the Company's undistributed S Corporation
earnings totaled $4,110,593 (for financial statement purposes). In April and
May 1997, the Company distributed $382,500 and $517,500, respectively, of its
previously undistributed S Corporation earnings to its current shareholders. As
of the date of this Prospectus, in connection with the Company's conversion
from an S Corporation to a C Corporation, the Company is declaring a final
distribution of $1,600,000 of its undistributed S Corporation earnings to its
current shareholders (the "Final S Corporation Distribution").

The Company intends to pay the Final S Corporation Distribution out of the
proceeds from, and on the consummation of, this offering. Purchasers in this
offering will not receive any portion of the Final S Corporation Distribution.
See "Use of Proceeds," "Management's Discussion and Analysis of Financial
Condition and Results of Operations" and Note 8 of Notes to Financial
Statements.

The Offering

Common Stock offered .................. 1,500,000 shares
Common Stock to be outstanding after the
offering .............................. 3,467,984 shares (1)(2)
Use of proceeds ........................ For software development costs, to establish
and equip domestic and international sales
offices, for payment of the Final S Corpora-
tion Distribution, for repayment of bank
indebtedness, and for working capital and
other general corporate purposes. See "Use of
Proceeds."
Nasdaq National Market symbol ......... RIMS

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(1) Includes 31,584 restricted shares of Common Stock issued to a consultant to
the Company on May 1, 1997 for various accounting and administrative
services (the "May 1997 Shares").

(2) Does not include (i) 210,000 shares of Common Stock reserved for issuance
upon the exercise of stock options granted on the date of this Prospectus,
and 115,000 shares of Common Stock reserved for issuance upon the exercise
of options available for future grant, under the Company's 1997 Stock
Option and Long-Term Incentive Compensation Plan (the "Option Plan") and
(ii) 150,000 shares of Common Stock reserved for issuance upon the
exercise of the Representatives' Warrants. See "Management -- Option Plan"
and "Underwriting."

Summary Financial Information

Set forth below is certain summary financial information for the periods
and as of the dates indicated. This information is derived from, and should be
read in conjunction with, the financial statements of the Company, including
the notes thereto, appearing elsewhere in this Prospectus.

(Dollars in thousands, except per share data)

Nine Months Ended
Year Ended May 31, ------------------------------
--------------------------------------- February 29, February 28,
1994 1995 1996 1996 1997
----------- ----------- ----------- -------------- -------------

Statements of Operations Data: (unaudited)
Total revenues .................. $ 4,130 $ 6,813 $ 6,964 $ 4,684 $ 5,085
Net income (loss) ............... (1,106) 744 1,125 134 958
Pro Forma Unaudited State-
ments of Operations Data(1):
Pro forma provision (benefit) for
income taxes .................. (465) 313 473 56 402
Pro forma net income(loss) ...... (641) 431 652 78 556
Pro forma net income (loss) per
share(2) ........................ $ (.28) $ .19 $ .28 $ .03 $ .24
Pro forma weighted average shares
outstanding(2) .................. 2,296,199 2,296,199 2,310,299 2,296,199 2,352,599

February 28, 1997
----------------------------------------
May 31, Pro As
1996 Actual Forma(3) Adjusted(3) (4)
--------- -------- ---------- ----------------

Balance Sheet Data:
Cash and cash equivalents ...... $ 604 $ 66 $ 366 $ 5,506
Working capital (deficit) ...... 630 875 (25) 6,665
Total assets ..................... 4,637 5,418 5,718 10,858
Total current liabilities ...... 1,465 1,271 2,471 921
Total liabilities ............... 1,465 1,271 3,709 2,159
Total shareholders' equity ...... 3,172 4,147 2,009 8,699

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(1) Prior to the date of this Prospectus, the Company was an S Corporation and
was not subject to Federal or state corporate income taxes (other than
California, New Jersey and New York franchise taxes). The pro forma
statements of operations data reflects a pro forma provision for income
taxes as if the Company had been subject to Federal and state corporate
income taxes for all periods presented. The pro forma provision for income
taxes represents a combined Federal and state tax rate of 42%. See
"Management's Discussion and Analysis of Financial Condition and Results
of Operations" and Notes 1 and 8 of Notes to Financial Statements.

(2) Includes the May 1997 Shares and assumes that 384,615 of the shares of
Common Stock being offered hereby were outstanding during the periods
indicated, which represents the approximate number of shares of Common
Stock being sold by the Company in this offering to fund the payment of S
Corporation distributions made in April and May 1997 of $382,500 and
$517,500, respectively, and the Final S Corporation Distribution of
$1,600,000. See Note 1 of Notes to Financial Statements.

(3) Adjusted to give retroactive effect to (i) borrowings under the Company's
line of credit (the "Line of Credit" ) with The Bank of New York (the
"Bank") in the aggregate amount of $1,200,000 during the period commencing
on March 1, 1997 and ending as of the date of this Prospectus, (ii) the
issuance

of the May 1997 Shares, (iii) the net deferred income tax liability
(reflecting the net tax effects of temporary differences between the
carrying amounts of assets and liabilities for financial reporting purposes
and the amount used for income tax purposes) that will be recorded as a
result of the Company's termination, as of the date of this Prospectus, of
its S Corporation status (estimated at $1,238,000 as of February 28, 1997),
and (iv) S Corporation distributions effected in April and May 1997 in the
amount of $382,500 and $517,500, respectively, out of the Company's
undistributed S Corporation earnings (which earnings aggregated $4,110,593
as of February 28, 1997). Does not give effect to the as yet undetermined
additional S Corporation earnings generated by the Company during the
period commencing on March 1, 1997 and ending as of the date of this
Prospectus. See Notes 7 and 8 of Notes to Financial Statements.

(4) Adjusted to give retroactive effect to the sale of the 1,500,000 shares of
Common Stock offered hereby and the anticipated application of the
estimated net proceeds therefrom, including for (i) the repayment of all
outstanding borrowings under the Line of Credit, and (ii) the Company's
distribution to its current shareholders of the Final S Corporation
Distribution. See "Use of Proceeds."

RISK FACTORS

In addition to the other information set forth in this Prospectus,
prospective investors should carefully consider the following risk factors
before purchasing the shares of Common Stock offered hereby.

Technological Changes; Need to Continue to Develop Software Enhancements

The markets for the Company's software are characterized by rapidly
changing technologies, evolving industry standards, changes in customer
requirements and frequent new product introductions, applications and
enhancements. The introduction by competitors of products embodying new
technologies and the emergence of new industry standards could adversely affect
the Company's ability to sell its software applications. While the Company has
competed favorably with its competitors by continually developing enhancements
for its RIMS.2001 product, one of the industry's first "off-the-shelf"
warehouse inventory management products, competitors have developed or are in
the process of developing products that offer similar features. Although
historically the timing of the introduction of upgrades or enhancements to the
Company's software applications has not had a material adverse effect on the
business, results of operations or financial condition of the Company, there
can be no assurance that these circumstances will continue in the future. The
Company expects that the continued development of competing software products
by competitors will require that the Company develop new and/or enhanced
applications on an ongoing basis to meet the competitive demands of these
markets. The Company's sales and profitability in the past have resulted to a
significant extent from its ability to anticipate or react quickly to its
customers' needs and to develop and introduce new and enhanced applications.
The Company's continued ability to adapt to customer needs and technological
change will be a significant factor in maintaining or improving its competitive
position and its prospects for growth. However, there can be no assurance that
the Company will be able to continue to develop and introduce new and/or
enhanced products or to respond otherwise appropriately to changing customer
needs.

Product Concentration

The Company derives substantially all of its revenues from licenses of
RIMS.2001 software and from related system implementation, engineering and
other services, computer hardware sales and maintenance provided by the Company
to its RIMS.2001 customers. These licenses and related services, sales and
maintenance revenues are expected to continue to account for substantially all
of the Company's revenues for the foreseeable future. A decline in the demand
or prices for the Company's products or services, whether as a result of new
product introductions or price competition from competitors, technological
change, failure of the Company's products to address customer requirements or
otherwise, could have a material adverse affect on the Company's business,
operating results and financial condition. See "Business -- Products and
Services," "-- Product Development" and "-- Competition".

Potential Fluctuations in Quarterly Results

The Company has experienced in the past, and may experience in the future,
significant quarter-to-quarter fluctuations in its operating results. Factors
such as the timing of the introduction of software enhancements and upgrades by
the Company or the Company's competitors, customer acceptance of software
applications, software development costs, announcements or changes in pricing
policies by competitors, the timing of orders, the length of the Company's
sales cycle, the mix of domestic versus international revenues, the existence
of product errors or "bugs", the unanticipated cancellation or delay of
significant license agreements, the hiring and training of additional staff and
general economic conditions could contribute to this variability of quarterly
results. In addition, quarterly revenues and operating results are highly
dependent on the volume and timing of new RIMS.2001 system installations during
the quarter, the extent of modifications required in connection with such
installations and, to a lesser extent, maintenance revenues. Because the
Company's staffing and operating expenses are based upon anticipated revenue
levels and a high percentage of the Company's costs are fixed in the short
term, small variations in the timing of recognition of specific revenues can
cause significant variations in operating results from quarter to quarter. As a
result of these and other factors, the Company believes that its quarterly
operating results will vary in the future and period-to-period comparisons of
its financial results may not be meaningful and should not be relied upon as
indications of future performance. The growth in revenues

recently experienced by the Company is not necessarily indicative of future
results. In addition, fluctuations in operating results may result in
volatility in the price of the Common Stock as it is likely that, following the
consummation of this offering, in some future fiscal quarter, the Company's
operating results will be below the expectations of public market analysts and
investors. In such event, the price of the Common Stock may be adversely
affected. See "Management's Discussion and Analysis of Financial Condition and
Results of Operations -- Fluctuations in Operating Results."

Uncertainties Relating to Recent Financial Results

The Company has not yet completed its financial statements for the fiscal
year ended May 31, 1997. While the Company anticipates that revenues for the
fiscal year ended May 31, 1997 will equal or exceed revenues for the fiscal
year ended May 31, 1996, no assurance can be given that net income and pro
forma net income for fiscal 1997 will equal or exceed the results experienced
for the prior fiscal year.

Dependence Upon Principal Customers

Due to the size of most orders and the need for differing amounts of
customization for each installation, the Company historically has obtained
orders from a relatively small number of new customers each fiscal quarter. As
a result, individual customers have often accounted for more than 10% of total
revenues in a particular fiscal period. For the fiscal year ended May 31, 1995,
the Company had two customers that accounted for approximately 34% and 13% of
total revenues. For the fiscal year ended May 31, 1996, the Company had three
customers that accounted for approximately 15%, 14% and 12% of total revenues.
For the nine months ended February 28, 1997, the Company had two customers that
accounted for approximately 21% and 16% of total revenues. Because of the
nature of the Company's business operations, the Company anticipates that
customers that account for more than 10% of total revenues for a fiscal period
will vary from period to period depending on the status and timing of
significant orders by a particular customer or customers for any given fiscal
period. The inability to replace certain customers could cause the Company's
revenues and operating results to fluctuate from period to period and could
have a material adverse impact on the Company's business. See "Business --
Customers."

Dependence on Key Personnel

The Company's continued success will depend largely upon the continued
services of its executive officers, in particular Irwin Balaban, its Chairman,
President and Chief Executive Officer, Lawrence B. Klein, its Executive Vice
President - Marketing and Sales, Steven Kuhl, its Vice President - Product
Development, and Robert O'Connor, its Vice President - Systems Development, as
well as other key sales, marketing, financial, technical service and
engineering personnel. The loss of service of any one or more of these key
employees could have a material adverse effect on the Company's business,
results of operations and financial condition. Although the Company has applied
for key-man life insurance in the amount of $1,500,000 on the life of each of
Messrs. Balaban and Klein, the proceeds of any such insurance may not be
sufficient to compensate the Company for the loss of their services.
Furthermore, the Company does not have and does not intend to obtain key-man
life insurance on the life of Messrs. Kuhl or O'Connor or any of its other
personnel. The future success of the Company also will depend upon its ability
to attract and retain additional highly-skilled personnel, particularly sales
representatives and systems engineers. Because of the technical sophistication
of the Company's products and the computing environments in which they operate,
sales employees, field technical support and other personnel who join the
Company generally require advanced technical knowledge and significant training
to perform competently. Competition for such personnel is intense, and there
can be no assurance that the Company will be successful in retaining its
existing key personnel and in attracting and retaining the personnel it
requires in the future. See "Business -- Employees" and "Management."

Risks Associated with Continued Growth
and Possible Acquisitions

In view of the recent historical and anticipated future expansion of its
business, the Company remains vulnerable to a variety of business risks
generally associated with rapidly growing companies. The Company's current
growth plans may place significant pressures on the Company's management,
working capital, financial and

management control systems and staff as such growth will require development
and operation of a significantly larger business over a broader geographical
area. The failure to maintain or upgrade financial and management control
systems, to recruit additional staff or to respond effectively to difficulties
encountered during growth could have a material adverse effect on the Company's
business, results of operations or financial condition. Although the Company
has taken steps to ensure that its systems and controls are adequate to address
its current and anticipated needs, including the recent hiring of a Vice
President - Finance and Chief Financial Officer, and is attempting to recruit
additional staff, there can be no assurance that the Company will be able to
achieve its expansion goals or that, if it continues to grow, it will be able
effectively to manage its growth, anticipate and satisfy all of the changing
demands and requirements that such growth will impose upon it or achieve
greater operating income or profitability. In addition, although, as of the
date of this Prospectus, the Company has no agreements, understandings or
commitments, and is not engaged in any definitive negotiations, relating
thereto, the Company could also seek to expand its operations by entering into
additional strategic alliances with third-
parties relating to the exploitation of the Company's technologies and/or by
acquiring other software companies or businesses, such as freight determination
systems and shipment manifest systems. In addition, although the Company has no
current intention to do so, it could in the future consider and enter into such
transactions with related parties if approved by a majority of the independent,
disinterested directors of the Company. While the Board of Directors has
adopted a policy providing that any transactions between the Company and any of
its officers, directors and/or 5% shareholders will be on terms no less
favorable to the Company than would be obtained from independent third parties
and will be approved by a majority of the independent directors, under New York
law, various forms of business combinations can be effected without shareholder
approval. Accordingly, investors in this offering will, in all likelihood,
neither receive nor otherwise have the opportunity to evaluate any financial or
other information that may be made available to the Company in connection with
any potential joint venture arrangement or business acquisition and will be
dependent upon the Company's management to select, structure and consummate any
such arrangements and/or acquisitions in a manner consistent with the Company's
business objectives. Although the Company will endeavor to evaluate the risks
inherent in a particular joint venture arrangement or acquisition, there can be
no assurance that the Company will properly ascertain or assess all significant
and pertinent risk factors prior to its consummation of such a transaction.
Moreover, to the extent the Company does effect a joint venture or acquisition,
there can be no assurance that the Company will be able successfully to
integrate into its operations any business that it may form or acquire. Any
inability to do so, particularly in instances in which the Company has made
significant capital investments, could have a material adverse effect on the
Company.

Risks Related to International Revenues and Operations

Prior to fiscal 1997, the Company did not have any international revenues
(revenues from outside the United States). During the first nine months of
fiscal 1997, international revenues represented approximately 1.9% of the
Company's total revenues. The Company is attempting to expand it presence in
European, Central American, South American, Asian and Australian markets and
expects that revenues from international licenses and related services, in
total dollar volume and as a percentage of the Company's total revenues, will
increase significantly. Since January 1996, the Company has entered into
reseller agreements with five foreign resellers, and the Company expects to
open its first two international sales and support offices in Europe and
Australia within the next 12 months. There are a number of risks inherent in
the Company's current and proposed international business activities, including
unexpected changes in regulatory requirements, tariffs and other trade
barriers, costs and risks of localizing products for foreign countries, longer
accounts receivable payment cycles, potentially adverse tax consequences,
limits on repatriation of earnings and the burdens of complying with a wide
variety of foreign laws. Additionally, the Company does not engage in hedging
activities to protect against the risk of currency fluctuations. Fluctuations
in currency exchange rates could cause sales denominated in U.S. dollars to
become relatively more expensive to customers in a particular country, leading
to a reduction in sales or profitability in that country. Also, such
fluctuations could cause sales denominated in foreign currencies to affect a
reduction in the current U.S. dollar revenues derived from sales in a
particular country. Furthermore, future international activity may result in
increased foreign currency denominated sales and, in such event, gains and
losses on the conversion to U.S. dollars of accounts receivable and accounts
payable arising from international operations may contribute significantly to
fluctuations in the Company's results of operations. The financial stability of
foreign markets could also affect the Company's international revenues. In
addition, revenues of

the Company earned in various countries where the Company does business may be
subject to taxation by more than one jurisdiction, thereby adversely affecting
the Company's earnings. There can be no assurance that such factors will not
have an adverse effect on the revenues from the Company's future international
sales and, consequently, the Company's results of operations. See "Management's
Discussion and Analysis of Financial Condition and Results of Operations" and
"Business -- Sales and Marketing."

Competition

The market for warehouse management and distribution software and related
services is highly competitive, and the Company expects competition to increase
in the future. The Company believes that historically the market for warehouse
management and distribution software could be characterized primarily by the
size of the customer or the complexity of the customer's warehouse handling
environment, and that the Company's competitors tend to focus their products
and marketing efforts toward a limited number of these market segments. Over
recent years, however, the market for warehouse management systems increasingly
has been characterized by the industry in which the customer competes. The
Company initially focused its software development and marketing efforts on
potential customers that required large, complex systems with significant
amounts of customization. The Company has a large number of competitors and
believes that its primary competitors in the market for the larger, more
complex systems are McHugh Freeman and Associates, Manhattan Associates and
Catalyst International, Inc., each of which provides complete warehouse
management and distribution software. In addition, certain well-known computer
manufacturers or software developers, such as SAP, J.D. Edwards, BAAN and
PeopleSoft, offer integrated manufacturing or accounting software packages that
include a warehouse management component. With the introduction in June 1994 of
RIMS.2001, the Company believes that it was one of the first to offer a
standard, "off-the-shelf" system that requires little, if any, modification
prior to installation in most warehouse environments. Some of the Company's
competitors have greater name recognition, more extensive engineering,
manufacturing and marketing capabilities and significantly greater financial,
technological and personnel resources than the Company. The Company's future
success will depend to a significant degree upon its ability to remain
competitive in the areas of software development, technology, marketing and
distribution, while operating within the constraints imposed by its financial
and other resources. Price has not historically been a major factor in the
market for the Company's RIMS.2001 solution, and increased competition could
result in price reductions and loss of market share, which would adversely
affect the Company's business, results of operations or financial condition.
The Company believes that the principal competitive factors affecting the
market served by the Company include vendor and product reputation, product
functionability and features, vertical market expertise, ease of use, quality
of support, product quality, performance and price. There can be no assurance
that the Company will be able to compete successfully in the future with
existing or new competitors. See "Business -- Product Development" and "--
Competition."

Control by Current Management

Upon consummation of this offering, the officers and directors of the
Company as a group will beneficially own approximately 55.8% of the outstanding
shares of Common Stock. Accordingly, such persons, acting together, will
continue to be able to control the Company and direct its affairs, including
the election of all of the Company's directors, and cause an increase in the
Company's authorized capital or the dissolution, merger or sale of the Company
or substantially all of its assets. Furthermore, such control could preclude
any unsolicited acquisition of the Company and, consequently, adversely affect
the market price of the Common Stock. See "Principal Shareholders."

Security Interests Granted in Assets

As of the date of this Prospectus, the Company had approximately
$1,550,000 outstanding under the Line of Credit, all of which is payable on a
demand basis. All of the Company's assets are pledged to the Bank as
collateral. In the event of a default by the Company on its obligations under
the Line of Credit, the Bank could declare the Company's indebtedness to be
immediately due and payable and foreclose on the Company's assets. Although the
Company intends to use a portion of the proceeds of this offering to repay all
amounts outstanding under the Line of Credit, the Company expects to continue
to utilize borrowing availability under the Line of Credit (or similar
facilities obtained in the future) in the ordinary course of business. There
can be no assurance that the Company will be able to continue to comply with
the terms of its loan agreements with the Bank. See "Use of Proceeds" and
"Management's Discussion and Analysis of Financial Condition and Results of
Operations."

Reliance Upon Certain Licensed Third-Party Software

Certain technology used in the Company's products is licensed from third
parties, generally on a nonexclusive basis. The Company believes that there are
alternative sources for each of the material components of technology licensed
by the Company from third parties. However, the termination of any such
licenses, or the failure of the third party licensors to adequately maintain or
update their products, could result in delay in the Company's ability to ship
certain of its software applications while it seeks to implement technology
offered by alternative sources. Any required replacement licenses could prove
costly. Also, any such delay, to the extent it becomes extended or occurs at or
near the end of a fiscal quarter, could result in a material adverse effect on
the Company's quarterly results of operations. While it may be necessary or
desirable in the future to obtain other licenses relating to one or more of the
Company's products or relating to current or future technologies, there can be
no assurance that the Company will be able to do so on commercially reasonable
terms or at all. See "Business -- Products."

Potential for Undetected Errors

The Company's software applications, like software products generally, may
contain undetected errors or "bugs" when introduced, or as new, enhanced or
industry-specific versions are released. While, to date, the Company's current
applications have not experienced any significant post-release software errors
or bugs, there can be no assurance that such problems will not occur in the
future, particularly as the Company expands its product offerings to meet the
needs of specific industries and its products or product enhancements become
more complex and sophisticated. Any such defective software may cause delays in
product introduction or shipments, require design modifications that could
adversely affect the Company's competitive position, result in a loss of or
delay in market acceptance of the Company's products or cause an increase in
maintenance costs, any of which could adversely affect the Company's operating
results. See "Business."

Risks Relating to Intellectual Property Protection

The Company's success and ability to compete is dependent in part upon its
proprietary technology. While the Company relies on trademark, trade secret and
copyright law to protect its technology, the Company believes that factors such
as the technological and creative skills of its personnel, new product
developments, frequent product enhancements, name recognition and reliable
product maintenance are more essential to establishing and maintaining a
technology leadership position. The Company presently has no patents or patent
applications pending. There can be no assurance that others will not develop
technologies that are similar or superior to the Company's technology. The
source code for the Company's proprietary software is protected both as a trade
secret and as a copyrighted work. Despite these precautions, it may be possible
for a third party to copy or otherwise obtain and use the Company's products or
technology without authorization, or to develop similar technology
independently. In addition, effective copyright and trade secret protection may
be unavailable or limited in certain foreign countries. Despite the Company's
efforts to protect its proprietary rights, unauthorized parties may attempt to
copy aspects of the Company's products or to obtain and use information that
the Company regards as proprietary. Policing unauthorized use of the Company's
software applications is difficult. There can be no assurance that the steps
taken by the Company will prevent misappropriation of its technology or that
such agreements will be enforceable. In addition, the technology industry is
characterized by the existence of an increasing number of patents and frequent
litigation based on allegations of patent infringement. Consequently, although
the Company believes that its products and technology do not infringe upon the
rights of third parties, from time to time, third parties may claim exclusive
patent, copyright and other intellectual property rights to technologies or
trademarks that are important to the Company. There can be no assurance that
third parties will not assert infringement claims against the Company, that
assertions by such parties will not result in costly litigation, or that the
Company would prevail in any such litigation or be able to license any valid
and infringed patents or trademarks from third parties on commercially
reasonable terms. In addition, litigation may be necessary in the future to
enforce the Company's intellectual property rights, to protect the Company's
trade secrets, to determine the validity and scope of the proprietary rights of
others, or to defend against claims of infringement or invalidity. Such
litigation could result in substantial costs and diversion of resources and
could have a material adverse effect on the Company's business, operating
results or financial condition. See "Business -- Proprietary Rights, Licenses
and Pricing."

Immediate and Substantial Dilution

Investors participating in this offering will experience immediate and
substantial dilution, and present shareholders will receive a material increase
in the net tangible book value of their shares of Common Stock. After giving
effect to this offering and the use of the net proceeds therefrom, and certain
other transactions effected by the Company after February 28, 1997, the
Company's net tangible book value as of February 28, 1997 would have been
$5,480,485, or $1.58 per share. This represents an immediate dilution in net
tangible book value of $4.92 (76%) per share to investors in this offering. See
"Dilution."

Effect of Certain Charter Provisions; Limitation of Liability of Directors;
Antitakeover Effects of New York Law

The Board of Directors has the authority to issue up to 1,000,000 shares
of Preferred Stock in one or more series, and to determine the prices, rights,
preferences, privileges and restrictions, including voting rights, of the
shares within each series without any further vote or action by shareholders.
The Company has no current plans to issue shares of Preferred Stock. However,
the rights of the holders of Common Stock will be subject to, and may be
adversely affected by, the rights of the holders of any Preferred Stock that
may be issued in the future. The issuance of Preferred Stock, while providing
flexibility in connection with possible acquisitions and other corporate
activities, could have the effect of making it more difficult for a third party
to acquire control of the Company. Further, certain anti-takeover provisions of
New York law could delay or make more difficult a change of control of the
Company. While such provisions are intended to enable the Board of Directors to
maximize shareholder value, they may have the effect of discouraging takeovers
that could be in the best interest of certain shareholders. There can be no
assurance that such provisions will not have an adverse effect on the market
value of the Company's stock in the future. In addition, the Company's charter
provides that its directors shall not be personally liable to the Company or
its shareholders for monetary damages in the event of a breach of fiduciary
duty to the extent permitted by New York law. See "Description of Securities."

No Dividends Anticipated

The Company intends to retain all future earnings for use in the
development of its business and does not anticipate paying any cash dividends
in the foreseeable future. See "Dividend Policy."

No Prior Underwritings

BlueStone was formed as a broker-dealer in March 1996. Although its
principals have had experience in the underwriting of securities in their
capacities with other broker-dealers, this offering constitutes the first
public offering for which BlueStone, the managing underwriter, has acted as a
managing underwriter. The Company has agreed, among other things, that for the
12-month period following the date of this Prospectus, it will not without the
prior written consent of BlueStone, directly or indirectly, sell, offer for
sale, transfer, pledge or otherwise dispose of any securities of the Company,
and that for a period of two years following the date of this Prospectus, if so
requested by BlueStone, it will nominate and use its best efforts to elect a
designee of BlueStone as a director of the Company. See "Underwriting."

No Prior Market for Common Stock; Possible Volatility of Stock Price

Prior to this offering, there has been no public market for the Common
Stock, and there can be no assurance that an active trading market will develop
or be sustained in the future or that the market price of the Common Stock will
not decline below the initial public offering price. The initial public
offering price of the Common Stock was determined by negotiations between the
Company and the representatives of the Underwriters and may not be indicative
of the market price of the Common Stock after this Offering. From time to time
after this offering, there may be significant volatility in the market price
for the Common Stock. Quarterly operating results of the Company or companies
within the same or similar industry segments, changes in general conditions in
the economy, the financial markets or the technology industry, adverse press or
news announcements, or other developments affecting the Company or its
competitors, could cause the market price of the Common Stock to fluctuate
substantially. In addition, in recent years, the stock market has experienced
significant price and volume fluctuations. This volatility has affected the
market prices of securities issued by many companies for reasons unrelated to
their operating performance. See "Underwriting."

Shares Eligible for Future Sale

Upon consummation of this offering, the Company will have outstanding
3,467,984 shares of Common Stock. Of these shares, the 1,500,000 shares sold in
this offering will be freely tradable without restriction or further
registration under the Securities Act, except for any of such shares held by
"affiliates" of the Company. The remaining 1,967,984 shares of Common Stock,
which are held by the existing shareholders, are "restricted securities" within
the meaning of Rule 144 promulgated under the Securities Act (the "Restricted
Shares") and may not be sold in the absence of registration under the
Securities Act unless an exemption from registration is available, including
the exemption contained in Rule 144. All of the Restricted Shares are subject
to one-year lockup agreements with BlueStone. Upon expiration of such lockup
agreements, 1,880,000 of the Restricted Shares will be immediately eligible for
sale in the public market under Rule 144(k) by persons other than "affiliates,"
without restriction, and an additional 87,984 shares will become eligible for
sale in the public market at various times in accordance with Rule 144. Sales,
or the possibility of sales, of substantial amounts of Common Stock held by the
Company's existing shareholders could have an adverse impact on the market
price of the Common Stock and could impair the Company's ability to raise
equity capital in the future. See "Principal Shareholders" "Description of
Securities," "Shares Eligible for Future Sale" and "Underwriting."

USE OF PROCEEDS

The net proceeds to the Company from the sale of the 1,500,000 shares of
Common Stock offered hereby are estimated to be approximately $8,290,000
($9,635,500 if the Representatives' over-allotment option is exercised in full)
after deducting the underwriting discount and estimated offering expenses.

The Company intends to use approximately $2,500,000 of the net proceeds of
this offering to fund a portion of its software development costs over the next
24 months. Development projects currently in process or under consideration by
management include Internet/intranet interfaces and Windows NT porting for
RIMS.2001, a RIMS.2001 enhancement to manage the shipping process of products
or materials that have been picked by a RIMS.2001 system, and a trailer/trailer
yard management system. See "Business -- Product Development."

The Company intends to use approximately $2,500,000 of the net proceeds to
establish up to six additional domestic and four international sales and
support offices over the next 24 months, including payment of the costs of
capital improvements, capital equipment, management and support personnel and
additional regionally-
focused advertising. The Company expects that it will open its first additional
domestic sales and support office in the first quarter of fiscal 1998 and that
it will open one additional domestic and two international sales and support
offices by the end of fiscal 1998. See "Business -- Sales and Marketing."

The Company will use $1,600,000 of the net proceeds to make the Final S
Corporation Distribution to its existing shareholders.

From the net proceeds of this offering, the Company also intends to repay
all amounts outstanding under the Line of Credit, of which approximately
$1,550,000 was outstanding as of the date of this Prospectus. The Line of
Credit currently bears interest at the prime rate per annum, is payable on
demand and expires on September 30, 1997, is secured by substantially all of
the Company's assets and is guaranteed by Messrs. Balaban, Klein and Goldman.
As of the date of this Prospectus, the Company had $300,000 available under the
Line of Credit. The Line of Credit has been used primarily for S Corporation
distributions to the Company's shareholders and for working capital purposes,
including expenses relating to this offering. Amounts repaid by the Company
under the Line of Credit with the proceeds of this offering may subsequently be
reborrowed by the Company. The Company intends to continue to maintain the Line
of Credit or similar credit facilities after the consummation of this offering.
See "Management's Discussion and Analysis of Financial Condition and Results of
Operations -- Liquidity and Capital Resources" and Note 7 of Notes to Financial
Statements.

The Company intends to use the balance of the net proceeds and any
proceeds from the exercise of the Representatives' over-allotment option for
working capital and general corporate purposes. A portion of the proceeds may
also be used to acquire or invest in complementary businesses or products or
otherwise to obtain the right to use complementary technologies that broaden or
enhance the Company's current product offerings. There are no current
agreements or negotiations with respect to any potential acquisition,
investment or other such transaction. Pending such uses, the net proceeds to
the Company from this offering will be placed in interest-
bearing bank accounts or invested in short-term, interest-bearing, investment
grade securities.

The Company believes that its existing capital resources and the net
proceeds of this offering will be sufficient to maintain its current and
planned operations through fiscal 1999.

DIVIDEND POLICY

From June 1, 1990 to the date of this Prospectus, the Company was an S
Corporation for Federal and New York state income tax purposes. As a result,
during and for such period, the net income of the Company for Federal and
certain state income tax purposes was reported by, and taxed directly to, the
Company's shareholders rather than the Company. As an S Corporation, the
Company made distributions in the form of cash dividends to its shareholders,
including $382,500 and $517,500 in April 1997 and May 1997, respectively, and
will make the Final S Corporation Distribution to such shareholders in the
amount of $1,600,000 out of the proceeds of this offering. The Company
currently intends to retain all future available earnings, if any, for the
development and growth of its business and, therefore, does not anticipate
paying any cash dividends in the foreseeable future.

DILUTION

The difference between the initial public offering price per share of
Common Stock and the net tangible book value per share of Common Stock after
this offering constitutes the dilution to investors in this offering. Net
tangible book value per share on any given date is determined by dividing the
net tangible book value of the Company (total tangible assets less total
liabilities) on such date by the number of then outstanding shares of Common
Stock.

At February 28, 1997, net tangible book value of the Company was $928,485,
or $.48 per share. After giving retroactive effect to (i) borrowings under the
Line of Credit in the aggregate amount of $1,200,000 during the period
commencing on March 1, 1997 and ending as of the date of this Prospectus, (ii)
S Corporation distributions effected in April and May 1997 in the aggregate
amount of $900,000, (iii) the recording, as of the date of this Prospectus, of
the one-time net deferred income tax liability generated as a result of the
Company's termination of its S Corporation status (estimated at $1,238,000 as
of February 28, 1997), and (iv) the Company's issuance of the May 1997 Shares,
the pro forma net tangible book value (deficit) of the Company at February 28,
1997 would have been ($1,209,515), or ($.61) per share. After also giving
effect to the sale of the 1,500,000 shares of Common Stock offered hereby and
the receipt and anticipated application of the estimated net proceeds
therefrom, including for the repayment of all outstanding borrowings under the
Line of Credit and the distribution of the Final S Corporation Distribution,
the as adjusted net tangible book value of the Company at February 28, 1997
would have been $5,480,485, or $1.58 per share, representing an immediate
increase in net tangible book value of $2.19 per share to existing shareholders
and an immediate dilution of $4.92 (76%) per share to investors in this
offering.

The following table illustrates the foregoing information with respect to
dilution to new investors on a per share basis:

Initial public offering price ................................. $ 6.50
Net tangible book value before pro forma adjustments ......... $ .48
Decrease attributable to pro forma adjustments ............... (1.09)
------
Pro Forma net tangible book value before this offering ...... (.61)
Increase attributable to investors in this offering ......... 2.19
------
Adjusted net tangible book value after this offering ............ 1.58
-------
Dilution to investors in this offering ........................ $ 4.92
=======

The following table sets forth, with respect to existing shareholders and
the investors in this offering, a comparison of the number of shares of Common
Stock purchased from the Company, the percentage ownership of such shares, the
aggregate consideration paid, the percentage of total consideration paid, and
the average price paid per share.

Shares Purchased Total Consideration Average Price
-------------------------- ---------------------------------
Number Percentage Amount Percentage Per Share
----------- ------------ ------------------ ------------ --------------

Existing Shareholders ...... 1,967,984 56.7% $ 269,712(1) 2.7% $ .14
New Investors ............... 1,500,000 43.3 9,750,000 97.3 $ 6.50
---------- ------ ------------- ------
3,467,984 100.0% $ 10,019,712 100.0%
========== ====== ============= ======

- ------------
(1) Includes an aggregate of $6,000 in cash paid by Messrs. Balaban, Klein and
Goldman and $263,712 for services rendered by a consultant for various
accounting and administrative services and by two key employees of the Company.

The foregoing table assumes no exercise of the Representatives'
over-allotment option. If such option is exercised in full, the new investors
will have paid $11,212,500 for 1,725,000 shares of Common Stock, representing
approximately 97.7% of the total consideration for 46.7% of the total number of
shares outstanding. In addition, computations set forth in the above table
exclude an aggregate of 325,000 shares of Common Stock reserved for issuance
upon the exercise of options granted or available for future grant under the
Option Plan and the 150,000 shares of Common Stock reserved for issuance upon
the exercise of the Representatives' Warrants. See "Management -- Option Plan"
and "Underwriting."

CAPITALIZATION

The following table sets forth as of February 28, 1997 (i) the actual
capitalization of the Company, (ii) the pro forma capitalization of the Company
after giving effect to certain transactions effected after February 28, 1997
and (iii) the pro forma capitalization of the Company as adjusted to reflect
the sale of the 1,500,000 shares of Common Stock offered hereby and the
anticipated application of the estimated net proceeds therefrom.

February 28, 1997
---------------------------------------------
Pro As
Actual Forma(1) Adjusted(1)(2)
------------ ------------ ---------------

Debt
Bank borrowings ................................. $ 350,000 $ 1,550,000 $ --
---------- ---------- ----------
Shareholders' Equity
Common Stock, $.01 par value; 10,000,000 shares
authorized; 1,936,400 shares issued and out-
standing (actual); 1,967,984 shares issued and
outstanding (pro forma); 3,467,984 shares
issued and outstanding as adjusted (3) ......... $ 19,364 $ 19,680 $ 34,680
Preferred Stock, $.01 par value; 1,000,000 shares
authorized; none issued or outstanding ......... -- -- --
Additional paid in capital ..................... 89,436 262,832 8,537,832
Retained earnings .............................. 4,110,593 1,972,593 372,593
Deferred compensation ........................... (72,000) (245,712) (245,712)
---------- ---------- ----------
Total shareholders' equity .................. 4,147,393 2,009,393 8,699,393
---------- ---------- ----------
Total capitalization ........................ $4,497,393 $3,309,393 $8,699,393
========== ========== ==========

- ------------
(1) Gives retroactive effect to (i) borrowings under the Line of Credit during
the period commencing on March 1, 1997 and ending as of the date of this
Prospectus in the aggregate amount of $1,200,000, (ii) the Company's
issuance of the May 1997 Shares, (iii) the recording, as of the date of
this Prospectus, of the net deferred income tax liability generated as a
result of the Company's termination of its S Corporation status (estimated
at $1,238,000 as of February 28, 1997), and (iv) S Corporation
distributions effected in April and May 1997 in the aggregate amount of
$900,000. Does not give effect to the as yet undetermined additional S
Corporation earnings generated by the Company during the period commencing
as of March 1, 1997 and ending as of the date of this Prospectus. See
"Management's Discussion and Analysis of Financial Condition and Results
of Operations" and Notes 7 and 8 of Notes to Financial Statements.

(2) Gives retroactive effect to the sale of the 1,500,000 shares of Common
Stock offered hereby and the anticipated application of the estimated net
proceeds therefrom, including for (i) the repayment of all outstanding
borrowings under the Line of Credit, and (ii) the Final S Corporation
Distribution. See "Management's Discussion and Analysis of Financial
Condition and Results of Operations."

(3) Does not include (i) 325,000 shares reserved for issuance upon exercise of
options granted or available for future grant under the Option Plan and
(ii) 150,000 shares of Common Stock reserved for issuance upon exercise of
the Representatives' Warrants. See "Management -- Option Plan" and
"Underwriting."

SELECTED FINANCIAL DATA

The following selected financial data for each of the fiscal years in the
three-year period ended May 31, 1996, as of the end of the fiscal year ended
May 31, 1996, 1995 and 1994 and for and as of the end of the nine month period
ended February 28, 1997, is derived from the financial statements of the
Company, which statements have been audited by Ernst & Young LLP, independent
auditors, whose report thereon is included elsewhere herein. The selected
financial data presented for and as of the end of the nine month period ended
February 29, 1996 are unaudited and were prepared by management of the Company
on the same basis as the audited financial statements of the Company included
elsewhere herein and, in the opinion of the Company, include all adjustments
(consisting of normal recurring adjustments) necessary to present fairly the
information set forth therein. The selected financial data for the nine month
period ended February 28, 1997 is not necessarily indicative of the results to
be expected for the full year. The selected financial data should be read in
conjunction with the financial statements of the Company and the related notes
thereto and "Management's Discussion and Analysis of Financial Condition and
Results of Operations" included elsewhere in this Prospectus.

(Dollars in thousands, except per share data)

Nine Months Ended
Year Ended May 31, ------------------------------
---------------------------------------- February 29, February 28,
1994 1995 1996 1996 1997
------------ ----------- ----------- -------------- -------------
(unaudited)

Statements of Operations Data:
Total revenues ........................ $4,130 $6,813 $6,984 $4,684 $5,085
Gross margin ........................... 2 2,065 2,209 956 1,766
Selling, general and administrative
expenses .............................. 1,093 1,275 1,075 815 784
Net income (loss) ..................... (1,106) 744 1,125 134 958
Pro forma Unaudited Statements of
Operations Data(1):
Pro forma provision (benefit) for income
taxes ................................. (465) 313 473 56 402
Pro forma net income(loss) ............ $ (641) $ 431 $ 652 $ 78 $ 556
Pro forma net income (loss) per share(2) $ (.28) $ .19 $ .28 $ .03 $ .24
Pro forma weighted average shares
outstanding(2) ........................ 2,296,199 2,296,199 2,310,299 2,296,199 2,352,599

May 31, 1996 February 28, 1997
-------------- ------------------
Balance Sheet Data:
Cash and cash equivalents ...... $ 604 $ 66
Working capital .................. 630 875
Total assets ..................... 4,637 5,418
Total current liabilities ...... 1,465 1,271
Total liabilities ............... 1,465 1,271
Total shareholders' equity ...... 3,172 4,147

- ------------
(1) Prior to the date of this Prospectus, the Company was an S Corporation and
not subject to Federal or state corporate income taxes (other than
California, New Jersey and New York franchise taxes). The pro forma
statement of operations data reflects a pro forma provision for income
taxes as if the Company had been subject to Federal and state corporate
income taxes for all periods. The pro forma provision for income taxes
represents a combined Federal and state tax rate of 42%. See "Management's
Discussion and Analysis of Financial Condition and Results of Operations"
and Notes 1 and 8 of Notes to Financial Statements.

MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Overview

The Company's principal activities include marketing and support of
comprehensive warehouse management software systems. In addition to its core
business, the Company also provides, to a limited extent, system integration
services in support of office client server systems. The Company licenses its
RIMS warehouse management systems and, in connection with its other system
integration services, certain third-party software products; it provides
related services (including customization and modification, project management,
training and implementation) and maintenance support; and it sells related
third-party hardware products. The Company has achieved annual increases in
revenues in the last three fiscal years due primarily to the development and
deployment of its standard RIMS.2001 product in fiscal 1995. Prior to such
time, the Company's revenues were principally derived from highly-customized
RIMS warehouse systems and adaptations that required substantial modifications
to meet the functionality required by customers. Over the past three fiscal
years, the Company's results of operations increased from a net loss of
$1,105,686 in fiscal 1994 to net income of $1,125,117 in fiscal 1996. In
addition, since the Company's introduction of the standard RIMS.2001 product in
fiscal 1995, the rate of RIMS.2001 installations has increased from a total of
six installations in the year ended May 31, 1995 to 12 installations in the
nine months ended February 28, 1997. The Company expects RIMS.2001 and related
revenues to continue to account for a substantial portion of the Company's
revenue for the remainder of fiscal 1997 and for the foreseeable future. As a
result, the Company's future operating results are significantly dependent upon
continued market acceptance of RIMS.2001 and enhancements thereto. In addition,
since a substantial portion of the Company's revenues in any fiscal period are
derived from relatively few sales of RIMS.2001, both the number of new sales of
RIMS.2001 and the timing of orders for, and installations of, new systems in
any fiscal period, has caused and is expected to continue to cause, significant
fluctuations in revenue from period to period.

The Company's revenues are derived from software license fees, fees for
services, sales of hardware and maintenance fees. Software license fees include
revenue from the licensing of the Company's proprietary RIMS.2001 software and
revenue from the sublicensing of certain third-party software. Software license
fee revenue is recorded when the software has been delivered, the license
agreement with the customer has been executed and collection of the resulting
receivable is deemed probable. Service revenues are derived from project
management, customization and modification of licensed software, training,
on-site support and implementation services. Service revenues are recorded
using the percentage of completion method of accounting. Hardware revenues are
derived from the Company's resale of a variety of third-party hardware products
on behalf of other manufacturers, including computer hardware, radio frequency
equipment, bar code printers and other peripherals. Such revenues are
recognized when the title to such hardware passes to the customer. Customers
typically enter into one-year maintenance agreements with the Company upon the
completion of the software installation and pay maintenance fees monthly. The
Company recognizes revenue from each maintenance agreement ratably over the
period covered by the agreement, but is only required to perform maintenance
services as and when they are requested by the customer. Historically, all of
the Company's customers have entered into, and substantially all of the
Company's customers have renewed, maintenance agreements with the Company. In
all periods presented, the Company recognized revenues in accordance with the
American Institute of Certified Public Accountants Statement of Position 91-1,
"Software Revenue Recognition."

The Company's total revenues in any period are substantially dependent
upon a relatively small number of large sales. Revenues from the Company's five
largest customers in each of fiscal 1994, 1995 and 1996 and the nine months
ended February 28, 1997 accounted for approximately 67%, 70%, 56% and 55% of
total revenues, respectively. The Company expects that this downward trend will
continue as the Company further penetrates the market with its RIMS.2001
products.

Costs of revenues have been derived from the cost of software
modification, system implementation and other services, hardware and
maintenance support. Costs of services and costs of maintenance consist
primarily of labor costs for customer support, including personnel costs, and
costs relating to subcontracted services and overhead. Typically, costs of
maintenance associated with the Company's standard maintenace contract decrease

over the life of the maintenance contract. The number of programmers and
service and support personnel employed by the Company was 32, 25, 27 and 37 at
May 31, 1994, 1995 and 1996 and February 28, 1997, respectively. Some
programmers also function as engineers in the development of software, as
described below. The reduction in the number of employees in fiscal 1995 from
fiscal 1994 was due to the nonrenewal of government contracts (which are
typically awarded to the lowest bidder) relating to several pre-RIMS.2001
warehouse management systems. Cost of hardware consists primarily of the cost
of hardware sold by the Company on behalf of other manufacturers.

Amortization of software development costs consists of the amortization of
costs of engineering personnel and related development expenses, such as the
development of software tools and documentation, capitalized starting at the
point technological feasibility is demonstrated. The Company believes that a
significant level of investment in software development is essential to achieve
and maintain a market leadership position. The Company expended $844,244,
$464,477, $815,908 and $1,045,342 in fiscal 1994, 1995 and 1996 and the nine
months ended February 28, 1997, respectively, for software development costs.
The Company employed 17, 14, 15 and 18 software development employees at May
31, 1994, 1995 and 1996 and February 28, 1997, respectively, some of which also
functioned as programmers for the installation or modification of the Company's
software. The reduction in the number of such employees in fiscal 1995 from
fiscal 1994 was also due to the nonrenewal of government contracts for
nonstandard warehouse management systems, as described above. The increase in
the amortization of software development costs was due primarily to the
commencement of amortization of capitalized software development costs for
RIMS.2001 (Version 3.1) in January 1996, the month in which such version was
first available for sale. Statement of Financial Accounting Standard No. 86,
"Accounting for the Costs of Computer Software to be Sold, Leased or Otherwise
Marketed," requires capitalization of software development costs from the point
of technological feasibility to the point of a salable product. RIMS.2001 has
been technologically feasible since 1992 and salable since the beginning of
fiscal 1995. The Company's current and planned product development efforts are
directed at enhancing and improving RIMS.2001. The Company believes that a
significant level of investment for software development is required to remain
competitive. Accordingly, the Company anticipates that the dollar amount of the
amortization of software development expenses will increase. As a percentage of
total revenue, however, the Company anticipates that amortization of software
development expenses will decrease as revenues increase.

Selling, general and administrative expenses consist primarily of salaries
for sales, marketing, administrative, executive and financial personnel,
commissions paid to sales personnel and travel and promotional expenses. The
sales and marketing, general and administrative staff consisted of 15 employees
at each of May 31, 1994, 1995 and 1996 and February 28, 1997. The Company
believes that its selling, general and administrative expenses will increase in
dollar amounts in the future as the Company expands its sales and marketing
staff and as the Company experiences higher costs associated with being a
public company; however, the Company anticipates that such expense will
decrease as a percentage of total revenues as revenues increase.

Results of Operations:

The following table sets forth, for the periods indicated, certain
statement of operations data:

(In thousands)

Nine months ended
Year ended May 31, ------------------------------
-------------------------------- February 29, February 28,
1994 1995 1996 1996 1997
----------- ------- -------- -------------- -------------
(unaudited)

Revenue:
Software license fees ............ $ 415 $ 505 $ 970 $ 321 $ 899
Services ........................ 2,299 3,382 3,195 2,375 1,621
Hardware ........................ 976 2,068 1,793 1,212 1,729
Maintenance ..................... 440 858 1,006 776 836
-------- ------ ------- ------ ------
Total revenues .................. 4,130 6,813 6,964 4,684 5,085
-------- ------ ------- ------ ------
Cost of revenue:
Cost of license fees ............ 34 34 63 18 96
Cost of services .................. 3,108 2,622 2,302 2,083 1,015
Cost of hardware .................. 771 1,534 1,399 926 1,329
Cost of maintenance ............... 215 261 680 473 554
-------- ------ ------- ------ ------
Total cost of revenues ............ 4,128 4,451 4,444 3,500 2,994
-------- ------ ------- ------ ------
Amortization of software development
costs ........................... -- 297 311 229 325
-------- ------ ------- ------ ------
Gross margin ..................... 2 2,065 2,209 955 1,766
Selling, general & administrative
expenses ........................ 1,093 1,275 1,076 815 784
-------- ------ ------- ------ ------
Income (loss) from operations ...... (1,091) 790 1,133 140 982
Interest expense, net ............ 15 46 8 6 24
-------- ------ ------- ------ ------
Net income (loss) .................. $ (1,106) $ 744 $1,125 $ 134 $ 958
======== ====== ======= ====== ======

Comparison of Nine Months Ended February 29, 1996 and February 28, 1997

Revenue. Total revenue increased by approximately 9% from $4,684,412 in the
nine months ended February 29, 1996 to $5,084,852 in the nine months ended
February 28, 1997. Software license fees increased by approximately 180% during
the 1997 period as compared to the 1996 period, primarily due to the increase in
RIMS.2001 software licenses from five during the nine months ended February 29,
1996 to 12 during the nine months ended February 28, 1997 and the payment by one
customer during the latter period of a significant non- refundable master
license fee. Services revenues decreased by approximately 32% for the fiscal
1997 period as compared to the 1996 period, primarily due to the decreasing
level of services required for the installation of highly-configured,
pre-RIMS.2001 systems originally contracted for prior to fiscal 1995. Hardware
revenues increased by approximately 43% during the fiscal 1997 period as
compared to the 1996 period, primarily due to increased sales of hardware by the
Company in connection with its system installations. Maintenance revenues
increased by approximately 8% for the fiscal 1997 period, primarily due to the
larger number of maintenance contracts in operation during such period.

Cost of Revenues. Total cost of revenues decreased by approximately 14%
from $3,499,782 in the nine months ended February 29, 1996 to $2,993,972 in the
nine months ended February 28, 1997. As a percentage of revenue, total cost of
revenues decreased from approximately 75% in the 1996 period to approximately
59% in the fiscal 1997 period. The decrease primarily related to higher license
fee revenues discussed above, which have minimal direct related costs, and
higher services revenues due to increased modifications and training services
during the 1997 period.

Amortization of Software Development Costs. Amortization of software
development costs increased by approximately 42% from $228,750 in the nine
months ended February 29, 1996 to $324,769 in the nine months ended February
28, 1997. The increase was due to the commencement of amortization of
capitalized software development costs for RIMS.2001 (Version 3.1) in January
1996, the date such version was first available for

sale. As a percentage of revenue, the amortization of software development
costs were approximately 6% in the nine months ended February 28, 1997 and 5%
in the nine months ended February 29, 1996.

Selling, General and Administrative Expenses. Selling, general and
administrative expenses decreased by approximately 4% from $815,020 in the nine
months ended February 29, 1996 to $784,441 in the nine months ended February
28, 1997. As a percentage of revenue, selling, general and administrative
expenses decreased from approximately 17% for the 1996 period to approximately
15% for the 1997 period. The decrease was primarily due to lower administrative
salaries resulting from the retirement of one of the Company's executive
officers and decreased selling expenses in the latter period.

Interest Expense, net. Interest expense was $42,367 in the nine months
ended February 28, 1997, an increase of $10,917 or approximately 35% from
$31,450 in the nine months ended February 29, 1996. The increase was primarily
due to higher interest rates on balances related to loans from officers in
fiscal 1997 as compared to fiscal 1996 and to interest on bank borrowings in
fiscal 1997.

Comparison of Fiscal Years Ended May 31, 1995 and May 31, 1996

Revenue. Total revenue increased by approximately 2% from $6,813,307 in
the year ended May 31, 1995 to approximately $6,964,097 in the year ended May
31, 1996. Software license fees increased by approximately 92% in fiscal 1996
as compared to fiscal 1995, primarily due to the payment by one customer in
fiscal 1996 of a significant non-refundable license fee. Services revenues
decreased by approximately 6% in fiscal 1996 as compared to fiscal 1995,
primarily due to the completion in fiscal 1995 of installations for two
customers requiring significant modifications. Hardware revenues decreased by
approximately 13% in fiscal 1996 as compared to fiscal 1995, primarily due to
the completion in fiscal 1995 of a large pre-RIMS.2001 system with a
significant hardware component. Maintenance revenues increased by approximately
17% in fiscal 1996 as compared to fiscal 1995, due primarily to the
commencement of additional maintenance agreements.

Cost of Revenues. Total cost of revenues remained relatively constant at
$4,450,949 in fiscal 1995 and $4,444,119 in fiscal 1996. As a percentage of
revenue, total cost of revenues decreased from approximately 65% in fiscal 1995
to approximately 64% in fiscal 1996 primarily due to the significant
non-refundable license fee referred to above with minimal related costs, offset
by the expiration in late fiscal 1995 of three pre-RIMS.2001 customers'
maintenance contracts, all of which had relatively low related maintenance
costs.

Amortization of Software Development Costs. Amortization of software
development costs increased approximately 5% from $296,997 in fiscal 1995 to
$311,321 in fiscal 1996. The increase was due to the commencement of
amortization of capitalized software development costs for RIMS.2001 (Version
3.1) in January 1996, the date such version was first available for sale. As a
percentage of revenue, the amortization of software development costs remained
constant at approximately 4% in the years ended May 31, 1995 and 1996.

Selling, General and Administrative Expenses. Selling, general and
administrative expenses decreased by approximately 16% from $1,275,134 in
fiscal 1995 to $1,075,309 in fiscal 1996. As a percentage of revenue, selling,
general and administrative expenses decreased from approximately 19% in fiscal
1995 to approximately 15% in fiscal 1996. The decrease is due to lower pension
costs reflected in fiscal 1996 as a result of the reduction in personnel and
lower administrative salaries and related expenses.

Interest Expense, net. Interest expense was $38,575 in fiscal 1996, a
decrease of $18,309 or approximately 32% from approximately $56,884 in fiscal
1995, primarily because outstanding bank borrowings in fiscal 1995 were
entirely repaid by the end of such period and there were no bank borrowings
during fiscal 1996.

Comparison of Fiscal Years Ended May 31, 1994 and May 31, 1995

Revenue. Total revenue increased by approximately 65% from $4,129,838 in
fiscal 1994 to $6,813,307 in fiscal 1995. Software license fees increased by
approximately 22% from fiscal 1994 to fiscal 1995, primarily due to the
licensing of five RIMS.2001 systems in fiscal 1995 as compared to none in
fiscal 1994, which increase was partially offset by lower non-RIMS.2001 license
fees in fiscal 1995. Services revenues increased by approximately 47% in fiscal
1995, primarily due to significant modifications required by the one
non-RIMS.2001 and

two RIMS.2001 systems installed during fiscal 1995 as compared to the
modifications required by the two non- RIMS.2001 systems installed during
fiscal 1994, as well as to the fact that three additional RIMS.2001 systems
were installed in fiscal 1995 as compared to none in fiscal 1994. Hardware
revenues increased by approximately 112% in fiscal 1995, primarily due to the
sale of a significant amount of hardware to one non-RIMS.2001 system customer
in fiscal 1995. Maintenance revenues increased by approximately 95% in fiscal
1995, due primarily to the significant maintenance contract entered into with
that same customer upon completion of its system installation.

Cost of Revenues. Total cost of revenues increased by approximately 8%
from $4,127,523 in fiscal 1994 to $4,450,949 in fiscal 1995. As a percentage of
revenue, total cost of revenues decreased from 100% in fiscal 1994 to
approximately 65% in fiscal 1995. During fiscal 1994, the contracts with the
Company's primary customer, the government, expired and were not renewed
because the award of such contracts was given to the lowest bidder. The higher
costs of revenue in fiscal 1994 related to numerous modifications for the
government which the Company was unable to recover. In addition, in June 1994,
the Company released RIMS.2001 for sale which reflects a lower cost of revenue
relative to total revenue as compared with the cost of revenue relative to
total revenue in fiscal 1994, primarily related to the modification of software
on government contracts.

Amortization of Software Development Costs. The amortization of software
development costs began in June 1994 when RIMS.2001 was first available for
sale. Amortization of software development costs was $296,997, or approximately
4% of revenue, in fiscal 1995.

Selling, General and Administrative Expenses. Selling, general and
administrative expenses increased by approximately 17% from $1,092,713 in
fiscal 1994 to $1,275,134 in fiscal 1995. The increase was primarily due to
higher advertising costs and other selling expenses in fiscal 1995. As a
percentage of revenue, selling, general and administrative expenses decreased
from approximately 26% in fiscal 1994 to approximately 19% in fiscal 1995.

Interest Expense, net. Interest expense was approximately $56,884 in
fiscal 1995, an increase of $39,384 or approximately 225% from $17,500 in
fiscal 1994, primarily because bank borrowings and loans payable to officers
were made in mid-fiscal 1994. The loans payable to officers were outstanding
for all of fiscal 1995.

Fluctuations in Operating Results

The Company's quarterly revenues and operating results have varied
significantly in the past and are likely to vary substantially from quarter to
quarter in the future, depending upon a number of factors, such as the length
of the Company's sales cycle, the unanticipated cancellation of significant
license agreements, the timing of new version releases by the Company and its
competitors, budgeting cycles of the Company's customers, demand for the
Company's software, software life cycles, introduction and acceptance of new
software by the Company and its competitors, the size and timing of customer
orders, changes in the proportion of revenues attributable to software license
fees versus services, changes in the level of operating expenses and general
economic conditions. In addition, a significant portion of the Company's
revenues has been derived from relatively few sales of licenses for RIMS.2001,
and, consequently, the timing of such sales has caused material fluctuations in
the Company's operating results. Accordingly, the Company believes that
period-to-period comparisons of its results of operations are not necessarily
meaningful and should not be relied upon as an indication of future
performance.

Because the Company recognizes a significant portion of revenues over the
installation period of the system (which, although designed to be completed in
approximately four months, generally ranges from four to eight months in
duration as a result of the customer's scheduling requirements) and because
installation commences promptly after execution of the related license
agreement, the Company does not maintain a significant backlog. Software
license fees for each quarter depend in part on orders for which implementation
has begun during that quarter and on license agreements under implementation
that were executed in prior quarters. The sales cycle for RIMS.2001 typically
ranges from four to six months, and contract signing may be delayed for a
number of reasons, including customer budgetary constraints and internal
authorization reviews. In addition, delays in the completion of a contract may
require that the revenues associated with such contract be recognized over a
longer period. Consequently, the Company's business, results of operations or
financial condition for a quarter could be materially adversely affected by
implementation delays.

The Company is in the initial stages of developing pre-configured,
industry-specific versions of RIMS.2001 for use in certain vertical markets.
The Company believes that if it is able to successfully introduce and obtain
market acceptance of pre-configured versions of RIMS.2001, such versions would
reduce its quarterly fluctuations in operating results because such products
would enable the Company to sell its systems to a greater number of customers.
The RIMS.Food product, which was introduced in May 1997, was the first of these
industry specific versions. There can be no assurance, however, that these
additional products will be successfully developed or that they will gain
market acceptance. See "Business --Product Development."

Liquidity and Capital Resources

Over the last three years, the Company has funded its operations primarily
through cash generated from operations, bank borrowings and loans from
officers. The Company's Line of Credit, which expires on September 30, 1997,
provides for borrowings of up to $2,000,000. Amounts outstanding under the Line
of Credit are payable on demand and are collateralized by the assets of the
Company. Borrowings bear interest at the prime rate (8.5% at May 15, 1997).
Repayment is personally guaranteed by Messrs. Balaban, Klein and Goldman. The
Line of Credit has been used primarily for S Corporation distributions to the
Company's shareholders and for working capital purposes. Outstanding amounts
under the Line of Credit aggregated $350,000 and $1,550,000 at February 28,
1997 and June 15, 1997, respectively. The Company intends to repay the
outstanding indebtedness under the Line of Credit with a portion of the
proceeds of this offering. In the future, however, the Company intends to
re-borrow against this or a subsequent line of credit. The Company also has a
$150,000 standby letter of credit with the Bank, which is being utilized as
collateral for a vendor and expires on December 31, 1997. The letter of credit
reduces the available portion of the Line of Credit.

Net cash provided by operating activities was $657,150, $1,278,812 and
$847,064 in fiscal 1995 and 1996 and the nine months ended February 28, 1997,
respectively. Cash flows from operations increased in fiscal years 1995 and
1996 due primarily to the higher net income generated over the previous years.
Cash generated from operating activities in the nine months ended February 28,
1997 was generated primarily from higher net income offset by the increase in
accounts receivable. This increase in accounts receivable was due to a
significant delivery of equipment and related services for two customers in
late February 1997. Net cash used in operating activities was $429,301 in
fiscal 1994. Cash flows from operations were lower in 1994 due to the net loss
of $1,105,686 offset by the decrease in accounts receivable and the increased
costs incurred and income recognized in excess of billings on uncompleted
contracts.

The Company expended $844,244, $464,477, $815,908 and $1,045,342 in fiscal
1994, 1995, and 1996 and the nine months ended February 28, 1997, respectively,
for software development costs. The Company did not have any material
commitments for software development costs as of February 28, 1997. Any such
costs will be financed through working capital and proceeds received by the
Company from this offering.

As of February 28, 1997, the Company had $65,670 in cash and temporary
investments and working capital of $875,205.

Management believes that the net proceeds from the sale of Common Stock in
this offering, cash flow from operations, existing cash and temporary
investments, and amounts available under the Line of Credit will be sufficient
to meet the Company's currently anticipated working capital and software
development requirements through fiscal 1999. The Company's working capital
needs in fiscal 1998 include approximately $1,000,000 to establish additional
domestic and international sales and support offices and approximately
$1,000,000 for software development costs.

Termination of S Corporation Status

As a result of terminating the Company's S Corporation status as of the
date of this Prospectus, the Company will be required to record a one-time,
non-cash charge against earnings for deferred income taxes. This charge will
occur in the year ending May 31, 1998. If this charge had been recorded at
February 28, 1997, the amount would have been approximately $1,238,000. The
Company expects that, following the termination of its S Corporation status,
its combined Federal and state income tax rate will be 42%.

Inflation and Seasonality

The Company does not believe its operations have been materially affected
by inflation. The Company's business is not seasonal.

BUSINESS

The Company develops, markets and supports advanced warehouse management
software solutions that enable companies to realize significant cost savings by
automating their warehouse operations. The Company's primary product,
RIMS.2001, is a customer-configurable software solution that enables a
company's warehouse to respond to a customer order with greater accuracy and in
a more timely manner, thereby turning the warehouse into a competitive
advantage. RIMS.2001 operates in an open system environment and interfaces with
an organization's existing information systems intrastructure. In addition to
providing RIMS.2001 software licenses, the Company provides installation,
design and maintenance services and related hardware when required by the
customer. The Company believes that customers that have implemented the
RIMS.2001 solution have realized increased customer satisfaction directly
related to timely and accurate receipt of shipments.

Industry Background

In recent years, a number of business trends have converged to change the
historical relationships among retailers, manufacturers and suppliers, and
distributors. Increasing globalization of the marketplace has resulted in
greater geographic diversity of supply and production facilities and has
increased competition as more suppliers are offering a greater range of product
offerings at multiple price levels. In addition, a number of trends in
retailing, including shorter product life cycles, a significant increase in the
number and variety of product offerings, an increase in buying power resulting
from the evolution of the retailer from the small local store to the large
regional or national department store chain, specialty store chain or
"superstore" chain, and the emergence of a more informed and price conscious
consumer, have put increased pressure on retailers to reduce expenses to remain
competitive. Consequently, retailers are seeking to reduce inventory management
costs by selecting suppliers that can respond to "just-in-time" purchasing and
"quick response" delivery techniques that enable the retailer to better match
product inventory to actual customer demand. Retailers and other vendors also
are increasingly demanding that their suppliers comply with standards for
electronic data interchange ("EDI"), electronic commerce and very specific
labeling requirements.

As a result of these trends, manufacturers and suppliers are experiencing
significant pressures to satisfy customer demands for improved product delivery
and reduced delivery times. Historically, manufacturers have organized their
businesses primarily to increase manufacturing efficiency and output. However,
as major customers shift the burden of inventory management to the manufacturer
or distributor, manufacturers and distributors have refocused their business
process re-engineering efforts to evaluate the service and value provided to
customers from existing operations and are seeking alternatives for
streamlining the warehousing and distribution process. The need to satisfy
customer demand for more effective and efficient order fulfillment has caused
manufacturers to seek greater control over the entire supply chain to minimize
materials inventories, ensure the timing of deliveries from suppliers, reduce
manufacturing cycle times, minimize finished goods inventories, maximize the
efficiency of warehousing and transportation systems and provide superior
response times to customers.

Retailers, manufacturers and suppliers, and distributors are increasingly
recognizing that significant cost savings can be achieved through warehouse
computerization and automation. An effective warehouse management system will
reduce costs and assist in improving customer service by achieving the
following objectives:

o Reduction of Errors. Receiving, stocking and picking errors are common in
a manual paper-based warehouse. An automated warehouse management system
is self-checking and ensures virtually 100% accuracy for every
transaction.

o Improvement of Inventory Accuracy. The self-checking nature of an
automated warehouse management system ensures inventory accuracy and
eliminates the costly series of manual checks and backtracking that
results when the inventory on the books and the physical inventory in a
warehouse do not match. As a result of the poor accuracy in paper-based
warehouses, costly physical inventories need be taken to reconcile the
system inventory to the actual inventory. The inherent accuracy and cycle
counting features of a warehouse management system eliminate the need for
a physical inventory.

o Improved Space Utilization. A warehouse management system tracks all
warehouse locations and can direct where each product can best be stored
for maximum space utilization.

o Increased Productivity. A warehouse management system maximizes the time
operators spend adding value to the distribution process, filling orders
and receiving goods. System direction minimizes search time and dispatches
operators and pickers to the best task given the equipment and current
location. A warehouse management system also gives the warehouse control
of the workload and provides visibility into the entire range of tasks
that need be performed within a given time period.

o Improved Labor Management and Reporting. Paperwork in a warehouse for
picking and stocking drastically hampers productivity. Paperless warehouse
management system applications provide real-time information, reduce the
possibility for data entry errors and information delays and improve
productivity. In addition, a warehouse management system has vast
reporting capabilities because every transaction is recorded. In
paper-based warehouses, the only method available for tracking
productivity and performance is a manual log that is time consuming to
keep, susceptible to error and is only as good as the information each
operator provides.

o Support of Customer EDI Requirements. Retailers and other vendors are
increasingly demanding that their suppliers comply with standards for EDI,
electronic commerce and specific labeling and packaging requirements. A
warehouse management system can provide special bar-code labeling and can
track any value-added packaging operations required.

o Integration. Manufacturers require warehouse activities to integrate
with their manufacturing and accounting systems. Such levels of data
processing and system integration require a capable, highly integrated
warehouse management system solution.

Initial warehouse automation software systems developed in the early 1980s
only produced "batch" picking, shipping, receiving and product movement reports
that detailed the expected merchandise handling operations for an entire day.
These systems provided initial improvements in warehouse efficiencies, but were
unable to respond quickly to unexpected circumstances, such as unscheduled
shipments or scheduled shipments that did not arrive, damaged goods that could
not be shipped when scheduled, and products stored in incorrect locations.

During the 1980s, automatic identification (primarily bar coding) became
widely accepted, and the cost of computer platforms supporting the initial
warehouse automation systems dropped as mini-computers and personal computers
were introduced and gained acceptance in the business workplace. In addition,
radio frequency hardware technology was introduced that first enabled software
designers to develop warehouse automation software that utilizes a local radio
network installed in the customer's warehouse to connect hand-held and
forklift-mounted mobile data terminals with the warehouse's central computer.
This development made possible software systems that manage a warehouse
dynamically in "real time" rather than batch mode. Real-time systems offer many
advantages over batch mode systems, including the ability to adapt to
unexpected circumstances, such as "rush" orders, late or unexpected in-bound
shipments, and incorrectly located merchandise; the ability to conduct partial
inventory counts while the warehouse remains fully operational; and the ability
to improve employee productivity by directing each worker to the next task to
be performed based upon the worker's current location and the location and
priority of the task.

Initially, warehouse management systems were custom-developed by internal
management information system (MIS) departments or third-party software
developers. These early custom-developed systems were often based on
proprietary operating systems, written in second and third generation
programming languages and very specific to the user's current methods of
operation. As cost and time overruns became commonplace, the finished system
often exceeded budget, fell behind schedule and was incapable of adapting to
change as the business developed. As computer hardware prices declined and
less-costly minicomputers, personal computers and computer networks replaced
mainframes in the workplace, it became desirable for computer applications to
be written in a manner that allowed the application to be transported from one
computer to another. The emergence of open system technology addressed this
problem and evolved into the preferred platform for many software applications,
including warehouse management systems, manufacturing supervisory control and
many different data collection applications. Open systems are based on industry
standards, permit the integration of multi-
vendor hardware and software components and are designed to accommodate new
components and technology as they become available. The Company believes that
it was one of the first suppliers of an open system warehouse management
system.

The proliferation of open system technologies in the early 1990s and the
availability of software development tool sets has led to the recent
development of custom configurable off-the-shelf products. Recent improvements
in software design, computer hardware, warehouse equipment and radio frequency
technology have enabled warehouse management software developers, such as the
Company, to design and install more affordable systems with increased
functionality.

According to an industry analyst, at December 31, 1996, there were more
than 550,000 domestic warehouses and distribution centers, of which no more
than 10% were employing some level of automation. The Company believes that the
increasing need of manufacturers and distributors to satisfy customer demand
for more effective and efficient order fulfillment will continue the trend of
manufacturers and distributors to seek the benefits of a state-of-the-art
warehouse management system.

Strategy

The Company's objective is to continue to be a leading provider of
warehouse management software solutions and services and to expand its presence
worldwide. To achieve these objectives, the Company has adopted the following
strategies:

o Strategic Alliances. The Company intends to supplement its marketing
efforts by aligning itself with complementary solutions providers and
technology partners. Strategic alliances also will assist the Company in
keeping pace with technological developments of the major software and
hardware vendors and, in certain instances, provide the Company with
product development services. The Company has entered into a strategic
alliance with QAD, Inc., a leading provider of global supply chain
management and enterprise resource management solutions. This relationship
includes co-marketing and technology-
sharing arrangements and provides the Company access to a very large
existing customer base. Through similar alliances, the Company expects to
gain greater exposure and acceptance of its products and services. See "--
Sales and Marketing."

o New Product Development. The Company intends to continue to produce a
quality warehouse management system product that meets client expectations
in terms of functionality, flexibility, procurement cost, implementation
cost and ongoing maintenance cost. The Company believes that the RIMS
product line meets these expectations and will continue to do so as the
product evolves. The Company is committed to continuous product
improvement through a software development program that is driven by
industry focus groups and customer input. The Company intends to continue
to utilize its industry, customer and supplier relationships to keep
abreast of emerging standards, protocols and application programming
interfaces as such trends are introduced and gain market acceptance. The
Company believes that Internet-
based applications will be the next significant technology change in the
warehouse management system industry. Development is currently underway
for RIMS.2001 enhancements that will utilize this technology. The Company
believes that a portable, open, Java(CR)-based, multi-tiered, front-end
application architecture will supplant the traditional proprietary
client/server technology employed by its competitors. See "-- Products and
Service," "-- Third Party Hardware Products," and "-- Product
Development."

o Establish Vertical Market Concentration. By tailoring RIMS.2001 to
support the uniqueness of certain targeted markets, the Company believes
it will have a competitive advantage in selling to prospective customers
in the same industry in which similar functional and implementation issues
arise. The Company believes that the expertise developed in each of these
vertical markets also will further contribute to its standard RIMS.2001
product. In the development of RIMS.Food, the Company established a focus
group consisting of current and potential clients in the food
manufacturing and distribution industry. This focus group provided
direction, guidance and partial funding for the development of RIMS.Food.
The Company intends to replicate this process to establish itself in other
vertical markets and has identified the following vertical markets as
additional targets: automotive, consumer products, petro chemical
products, public utilities and pharmaceutical products. See "-- Product
Development."

o International Expansion. The Company intends to establish itself in the
international business market. In this regard, the Company has established
formal relationships with distributors in Canada, the United Kingdom,
Mexico, Brazil and Argentina that are established systems integrators with
large customer

bases in their respective regions. The Company intends to establish
additional international relationships and to strategically locate sales
and support offices worldwide to support its distributors as the number of
foreign distributors expands. See "-- Sales and Marketing."

o Training, Implementation and Support. A key to the success of a warehouse
management system supplier is its ability to provide the necessary
services and expertise required to effectively implement a complex
warehouse management system. The Company believes that the efficiency of
its implementation process will allow the Company to increase sales to
prospective customers seeking standard, configurable software solutions
and enable the Company to increase its market share with respect to its
competitors. The Company intends to continue to develop and improve its
services organization and its innovative conference room pilot program to
ensure a continued simple and efficient implementation process for its
customers. See "-- Service and Maintenance" and "-- Sales and Marketing."

Products

The Company's principal product, RIMS.2001, is a full-featured,
state-of-the-art warehouse management solution. The Company also markets
RIMS.Food, which is a modified version of RIMS.2001 that was recently developed
and is targeted at fresh and frozen food manufacturers and distributors. The
RIMS.2001 product line is a highly scaleable, highly configurable and flexible
product with baseline functionality and features sufficient for most warehouse
installations. The strength of RIMS.2001 is its adaptability to varied
environments without modification. RIMS.2001 is generally sold as an entire
turnkey solution that provides the Company's customers with both the software
and the hardware, if requested, necessary for a comprehensive warehouse
management system.

As a standard, "off-the-shelf," highly-configurable software system,
RIMS.2001 is designed to be deployed in approximately four months and to
achieve measurable cost savings for customers. The efficiency of implementing
the Company's software solutions results from the open systems architecture of
RIMS.2001, which runs on various operating platforms and uses either Oracle or
Progress database management system software, and the Company's extensive
experience in developing warehouse management systems. The Company believes
that its customers recognize cost savings throughout the warehousing and
distribution processes as a result of increases in worker productivity,
efficiencies in space utilization, increases in inventory accuracy, increases
in lot number controls, product expiration date controls and product
serialization controls, and the elimination of costly shipping errors through
the use of bar code technology.

RIMS.2001

RIMS.2001 is a responsive software application designed to manage an
entire warehouse operation. As a user configurable solution, RIMS.2001
incorporates numerous warehousing practices and strategies as standard
capability. RIMS.2001 is an open systems solution that is not restricted to any
particular equipment or computer system. As such, the application software has
been installed on numerous hardware platforms and database management systems.
RIMS.2001 can interface with an organization's current materials handling
equipment and transactions-based systems and is easily integrated with customer
or third party purchasing, electronic data exchange, bar coding, accounting,
manufacturing resource planning ("MRP") and enterprise resource planning
("ERP") applications. RIMS.2001 also utilizes radio frequency communications
and bar coding to provide real-
time management, validation and tracking of all warehouse activities. RIMS.2001
directs personnel and equipment and manages the inventory, space, radio
terminals, bar code scanners and printers in the warehouse in an efficient and
cost effective manner.

RIMS.2001 is a comprehensive application that manages the receiving, put
away, outbound order processes, and general warehouse operations. With each
warehouse process, RIMS.2001 provides a variety of tactical choices that can be
user defined to a customer's specific requirements and needs and that are
designed to maximize efficiency. Major system functions include:

o Receiving. The receiving process provides control over the receipt of
inventory through scanning the bar codes of incoming product to ensure
accuracy of inventory in the warehouse. This process facilitates the
receipt of purchase orders, transfer orders, advanced shipping notices and
customer returns. The receiving process supports pre-storage activities,
such as returned goods processing and quality assurance inspection.

o Putaway Process. The putaway process ensures that all inventory is stored
in the most efficient location available based on pre-configured
management strategies. The Company or the customer will configure the
system to implement the customer's unique business demands, assigning
locations based on the customer's parameters with consideration given to
product characteristics, product velocity, demand codes, delivery and
shipping requirements, storage devices and cross-docking strategies.

o Picking and Shipping. The RIMS.2001 outbound order process analyzes each
order to determine the most efficient packing, loading and shipping
procedures. The order processing function is configured to match each
customer's management strategies. The outbound order process includes,
among other features, order selection, allocation, picking, loading and
shipping.

o Management. The general warehouse operations process manages the
availability of space and the movement of warehouse personnel, inventory
and material handling equipment through information shared by management
and warehouse employees. The real-time information and product flexibility
allows a customer to test or implement different strategies to maximize
productivity and efficiency. The system allows customers to combine
multiple tasks into a single job assignment, such as grouping a put-
away and picking assignment into one trip. RIMS.2001 facilitates cycle
counting, automatic replenishment, product moves, inventory control and
consolidation, labor tracking, system security, space utilization, vehicle
management and rewarehousing.

RIMS.Food

RIMS.Food is a specialized application of RIMS.2001 targeted at the food
industry. This product includes all of the basic features and benefits of the
base RIMS.2001 product, and is the first product created by the Company to
focus on a particular vertical market. RIMS.Food is pre-configured to address
the unique requirements of the food industry. Key features include: specialized
processing, such as date triggers (sell by date, cure date, use by date, freeze
date, etc.), enhanced lot tracking, and industry-specific bar coding.

Service and Maintenance

In addition to licensing of RIMS.2001, the Company offers certain services
and maintenance agreements to its customers. Services provided by the Company
include project management, product customization, configuration support,
training and implementation support.

Maintenance is not provided as part of the Company's license agreement;
however, the Company offers turnkey maintenance services for the RIMS.2001
software and certain hardware components of the system under a separate
maintenance agreement. Maintenance agreements are typically initiated at the
time of implementation, are renewable annually, and entitle the customer to
telephone support, software upgrades, installation assistance and priority
problem resolution, including software fixes. Maintenance fees are typically a
percentage of the license fees (excluding hardware), with additional fees for
extended hours. If elected by the customer, maintenance support is offered
24-hours per day, seven days per week. In the event a customer does not enter
into a maintenance agreement with the Company, it would still be entitled to
software fixes for reported problems during the first year of its system's
installation, pursuant to the one-year warranty provided to the Company's
customers in connection with the standard RIMS.2001 license fee; however, to
date, all RIMS.2001 customers have entered into a maintenance agreement with
the Company after system implementation.

The Company has several groups responsible for offering services and
maintenance to ensure customer satisfaction, including Software Engineering,
Product Support, Training and Customer Support. The Company's Software
Engineering Group offers a structured implementation program that typically
lasts two to three months and begins with the development of joint business
scenarios between the Company and the customer. This process consists of
training, business scenario development, configuration of the software, the
conference room pilot program, project management and implementation support
services. The conference room pilot program enables the Company and the
customer to model warehouse management operations and resolve operating issues
prior to live implementation. The Company's Product Support Group is
responsible for managing and installing operational systems, hardware,
networks, communication links and relational database management systems.
Further, the Company offers training to its customers for its RIMS products.
Standard training for RIMS includes three courses over three to four weeks. The
Configuration course explains basic RIMS terminology and methodology related to
system configuration and setup. The Supervisors course provides warehouse
management the

training necessary to effectively control and monitor the facility. The
Operators course is a hands-on training course for warehouse workers
concentrating in the execution of RIMS-related tasks. Customized courses are
also made available on request. A Train-the-Trainer course provides information
and materials to third-party trainers who will perform the future RIMS
training. A RIMS Internals course is designed to provide technical personnel
with knowledge of the software design and internal operations of the RIMS
system. The Company offers extensive customer support to its maintenance
customers, including a 24-hour help line.

In those cases in which the standard RIMS.2001 product cannot meet the
customers needs, the Company can enter into contracts to perform certain
modifications to the baseline product.

Third Party Hardware Products

The Company's RIMS.2001 products use an open architecture that enables
customers to use various operating systems, operate on multiple hardware
platforms and interoperate with many third party software applications and
legacy systems. This open system capability enables customers to continue using
their existing computer resources and to choose among a wide variety of
existing and emerging computer hardware and peripheral technologies.

In conjunction with virtually all sales of RIMS.2001, the Company resells
a variety of hardware products developed by third parties, including computer
hardware, radio frequency terminal networks, bar code printers and scanners,
and other peripherals. In addition, the Company resells computer hardware and
network devises in support of office client server systems. The Company resells
all third-party products pursuant to agreements with the products'
manufacturers or through distributor authorized reseller agreements pursuant to
which the Company is entitled to purchase products at discount prices and to
receive technical support in connection with product installations and
subsequent product malfunctions. The RIMS.2001 hardware-related agreements
generally permit the Company to resell the third-parties' products to any
RIMS.2001 user in the United States. The Company anticipates that its foreign
distributors or other third party vendors will sell any hardware or peripherals
required in connection with the sale of RIMS.2001 outside of the United States.
The Company anticipates that sales of third-party products will decrease in
importance and as a percentage of revenues over time as sales of the Company's
software licenses and services increase.

Other Sales and Services

In addition to its RIMS.2001 systems, the Company designs, implements,
installs and supports computer systems networks and office software on a
limited basis. Customers range from Fortune 100 companies with sophisticated
fault-tolerant, inter-networking, high connectivity needs, to medium- and
small-size companies requiring implementation and support of a workgroup local
area network. The Company provides entire turnkey software solutions,
consulting, systems analysis and custom training on almost any application to
be run on a network. The Company is fully equipped to support most
"off-the-shelf" software applications written for Novell, NT or UNIX, and
offers its customers a full range of support services, ranging from the
resolution of a specific application problem to a full software support
contract encompassing any or all of its customer applications. The Company is a
single source provider due to its ability to (i) install hardware and
application software for local area networks, (ii) configure, upgrade and
maintain such systems, and (iii) provide training relating to such systems to
its customers.

Customers

The Company targets its marketing efforts primarily on manufacturers,
distributors, retailers and wholesalers in the food processing, consumer
products, petro chemical products, public utilities and pharmaceutical sectors,
as well as other high-volume wholesalers. As of May 31, 1997, the Company had
licensed RIMS.2001 to 22 customers operating a total of 29 warehouses.

Customer orders for the Company's RIMS.2001 products over the last two
fiscal years and the first nine months of fiscal 1997 have ranged from
approximately $50,000 to over $2 million. Due to the size of most orders and
the need for differing amounts of modification for each installation, the
Company historically has obtained orders from a relatively small number of new
customers each fiscal quarter. As a result, individual cus-

tomers have often accounted for more than 10% of total revenues in a particular
fiscal period. For the fiscal year ended May 31, 1995, the Company had two
customers that accounted for approximately 34% and 13% of total revenues. For
the fiscal year ended May 31, 1996, the Company had three customers that
accounted for approximately 15%, 14% and 12% of total revenues. For the nine
months ended February 28, 1997, the Company had two customers that accounted
for approximately 21% and 16% of total revenues. Because of the nature of the
Company's business operations, the Company anticipates that customers that
account for more than 10% of total revenues for a fiscal period will vary from
period to period depending on the status and timing of significant orders by a
particular customer or customers in any given fiscal period. However, as sales
of the standard RIMS.2001 product increase and the average dollar amount of
system orders decreases, the Company expects that the number of customers
accounting for more than 10% of total revenues for a fiscal period will
decline.

Sales and Marketing

The Company currently markets its products and services primarily through
a direct sales force in North America and directly and indirectly in other
parts of the world. The Company conducts comprehensive marketing programs that
include telemarketing, public relations, direct mail, advertising, seminars,
trade shows and ongoing customer communications programs. Sales and marketing
personnel are located at the Company's headquarters in Massapequa, New York and
in field offices located in Atlanta, Georgia, Ann Arbor, Michigan, Pittsburgh,
Pennsylvania and Cranston, Rhode Island. The Company expects to use a portion
of the proceeds of this offering to upgrade and expand its existing field
offices and to open two additional North American sales and support offices in
fiscal 1998, which offices will likely be located in Chicago and Los Angeles.
The Company also expects to use a portion of the proceeds of this offering to
open in fiscal 1998 its first two international sales and support offices,
which offices will likely be located in Europe and Australia.

The Company obtains sales leads through advertising, seminars, trade shows
and relationships with industry consultants. A typical sales cycle begins with
the generation of a sales lead or the receipt of a request for proposal ("RFP")
from a prospective customer or his representative. After qualification of the
sales lead and analysis of the prospective customer's requirements, a formal
proposal in response to the RFP is prepared. The proposal generally describes
how RIMS.2001 is expected to meet the RFP requirements and associated costs.
Product demonstrations are often conducted at the prospective customer's
facilities using realistic data and scenarios. Site visits to other RIMS.2001
installations are also encouraged by the Company's sales staff. While the sales
cycle varies substantially from customer to customer, it typically ranges from
three to six months for a standard system and from six to 12 months for a
system requiring substantial modification The Company expects that the sales
cycle for the standard RIMS.2001 system will be reduced to 60 to 90 days as the
system becomes more widely known through increased advertising.

The Company often employs an innovative conference room pilot approach for
potential new customers. The potential customer is offered a fully-functioning
RIMS.2001 system for configuration, evaluation and analysis. The client
executes the RIMS.2001 application by working hands-on with a test machine in a
controlled environment at its own headquarters. The conference room pilot
offers a unique opportunity to confront issues that a customer might otherwise
face in the actual operation of its warehouse, and to work with the Company to
solve potential problems prior to full-scale system implementation. The Company
believes this program is instrumental in establishing client confidence and
promoting additional awareness of the broad functionality of the RIMS system.
The conference room pilot also enables potential customers to define additional
requirements for modification and provides mutual assurance to the Company and
the customer that any defined modifications are, in fact, needed. A client fee
and the costs of the necessary training services are charged to the potential
customer in connection with this program. At the conclusion of the pilot
period, the customer has the option to request a full refund of any license
fees paid. To date, no customer has requested a refund.

In addition, the Company has developed a standardized, comprehensive and
detailed implementation plan to guide new customers smoothly from contract
signing to system startup. Experienced project managers utilize this plan to
ensure that projects are completed effectively and within budget. Depending on
the experience level of the customer and the ease of host integration, a first
time customer will be placed on a plan that ranges from 16 to 24 weeks past
contract signing. Subsequent sites can typically be implemented four to eight
weeks apart.

The Company intends to supplement its marketing efforts by aligning itself
with complimentary solutions providers and technology partners. Strategic
alliances also assist the Company in keeping pace with technological
developments of the major software and hardware vendors and, in certain
instances, provide the Company with product development services. The Company
has entered into a strategic alliance with QAD, Inc., the developer of the
MFG/PRO ERP system. This relationship includes co-marketing and
technology-sharing arrangements, and will provide the Company access to a very
large existing customer base. Purchasers of the MFG/PRO ERP system may be
linked to RIMS.2001 through an application program interface module that
contains software of the Company as an integral component. The integration of
the Company's software into the application program interface assures
purchasers of the MFG/PRO ERP system that any future upgrades to the system
will also upgrade the warehouse management system of such customer if such
customer has RIMS.2001 in place. A purchaser of an MFG/PRO ERP system that is
not linked to RIMS.2001 will not receive the benefit of this upgrade
capability. Currently, RIMS.2001 is the only available warehousing solution
that conforms with the MFG/PRO ERP system application program interface and
provides upgrade capability. This upgrade capability provides customers with a
significant cost savings by eliminating the customer's need to adjust
interfaces to maintain the integrity between MFG/PRO ERP system and RIMS.2001.

The Company intends to establish itself in the international business
market and currently markets RIMS.2001 through resellers located in Canada,
South America, Mexico and the United Kingdom. These resellers are established
systems integrators with large customer bases in their respective regions. The
Company's agreements with such resellers are not exclusive, except for the
Company's agreement with its United Kingdom reseller, which is exclusive in the
United Kingdom and Ireland and non-exclusive in Scandinavia and Germany. The
Company intends to establish additional non-exclusive international resellers
in Europe, Africa, the Middle East, Asia and Australia. As the number of
foreign resellers expands, the Company intends to strategically locate sales
and support offices throughout the world to support these distributors.

In the first nine months of fiscal 1997, approximately 1.9% of the
Company's revenues were generated outside the United States. The Company
expects that international sales will significantly increase as it adds
additional international resellers and opens Company-owned international sales
and support offices. There are a number of risks inherent in the Company's
current and proposed international business activities. There can be no
assurance that such factors will not have an adverse effect on the revenues
from the Company's future international sales and, consequently, on the
Company's results of operations.

Product Development

The Company seeks to offer an extensive, integrated product line that
provides complete warehouse management functionality to warehouses worldwide.
To effect this strategy, the Company intends to continue to introduce new
modules, upgraded functionality and enhancements to existing products.

The Company, through its development and support personnel, works closely
with its customers and prospective customers to determine their requirements
and to design enhancements and new products to meet customer needs. Using the
focus group approach and input from the user community, the Company's steering
committee will select suitable enhancements for inclusion in future releases of
RIMS.2001. Software development is funded by Company funds and, to a lesser
extent, customer funds. Product improvements are often initiated by customer
funding of modifications that can be incorporated into the standard package.
Customers benefit by funding enhancements that improve the baseline product
through lower maintenance costs and future ability to upgrade. All Company
product development is performed by its employees. The Company's capitalized
software development costs were $844,244, $464,477, $815,908 and $1,045,342 in
fiscal 1994, 1995 and 1996 and the first nine months of fiscal 1997,
respectively.

The original version of RIMS.2001 was introduced in June 1994 (Version
3.0). The Company plans to undertake continuous product improvement to ensure
competitiveness. New modules and features are being added and the Company's
goal is to release two new versions per year. In May 1997, the Company released
Version 3.4, and Version 3.5 is scheduled for release in the third calendar
quarter of 1997.

Warehouses for different vertical markets often require different features
and functionality. In addition to modifying standard RIMS.2001 product, the
Company is in the initial stages of developing pre-configured ver-

sions of RIMS.2001 that the Company anticipates will address the needs of
specific vertical markets. The Company believes that the expertise developed in
each of these vertical markets also will further contribute to its standard
RIMS.2001 product. The RIMS.Food product, which was introduced in May 1997, was
the first of these versions. In the development of RIMS.Food, the Company
established a focus group consisting of current and potential clients in the
food manufacturing and distribution industry. The focus group provided
direction, guidance and partial funding for the development of RIMS.Food. The
Company intends to replicate this process to establish itself in other vertical
markets and, upon development of each industry-specific version of RIMS.2001,
to hire a dedicated sales force to market such product within the applicable
vertical market. The Company has initially targeted the automotive, consumer
products, petro chemical products, public utilities and pharmaceutical products
industries as additional markets for an industry-specific RIMS.2001 product,
and intends to introduce its next industry-specific product in the fourth
quarter of fiscal 1998.

The Company is continuing its software development efforts by designing
enhancements to RIMS.2001 using Internet and intranet-based technology,
including enhancements based on a combination of the Java language and HTML
(hypertext markup language). By incorporating this technology into RIMS.2001,
authorized users on the World Wide Web will be able to access information in
any RIMS.2001 World Wide Web-enabled server, utilizing standard World Wide Web
browsers. For example, a RIMS.2001 customer will be able to permit its
authorized users to access its RIMS.2001 data repository via the World Wide
Web, which will reduce the burden on its customer service department because
the status of orders and the location of inventory for an order may be
monitored directly by the authorized user (i.e., a retail customer or plant
manager). The Company's development of an Intranet-based application (Java and
HTML) will permit warehouse management and related activity (e.g. customer
service) to be performed entirely through World Wide Web browsers within the
confines of the client organization. This architecture will permit access to
data from authorized users via a familiar browser interface. Scalability and
ease of maintenance are additional benefits of this architecture.

There can be no assurance that the development of these product
enhancements will be completed successfully or that they will include the
features required to achieve market acceptance. The introduction of each new
release of RIMS.2001 has resulted in enhancements of earlier releases as the
new releases offer improved features and functionality over prior versions.
Since the Company continues to offer earlier releases of RIMS.2001, to service,
support and provide maintenance on such earlier releases and to make new
releases of RIMS.2001 available to customers, the obsolescence of earlier
releases has not had and is not expected to have a material impact on the
Company's results of operations or financial condition. Delays or difficulties
associated with introductions of new features, modules and products could have
a material adverse effect on the Company's business, results of operations or
financial condition.

Competition

The market for warehouse management and distribution software and related
services is intensely competitive and is characterized by rapid changes in
technology and user needs and the frequent introduction of new products and
product enhancements. The Company's competitors and potential market entrants
range from small, privately-held firms to large national and international
organizations with more extensive technical staffs and technological resources,
larger marketing and sales organizations, and greater financial resources than
the Company. The Company also competes with software applications developed by
the internal management information system departments of its potential
customers. The Company, however, believes that potential customers increasingly
will purchase software applications from outside vendors, including the
Company, due to high development costs, poor support, the lack of comparable
functionality and inconsistent or delayed development schedules.

The Company believes that historically the market for warehouse management
and distribution software could be characterized by the size of the customer or
the complexity of the customer's warehouse handling environment. Competitors in
the high end of the market offered turnkey systems that typically integrated
all aspects of hardware, software and services related to the warehouse
management system, including real-time labor management functionality, labor
planning, tracking and management functionality, integrated host system
communications, modular software development, material handling device control,
automated storage equipment control, inbound/outbound traffic management, and
full receiving, putaway/storage, order processing, picking,

shipping, inventory control and management reporting functionality. Middle
market competitors differ from high end competitors primarily by offering
systems with limited hardware flexibility, little or no management, labor and
storage reporting, little or no radio frequency functionality and reduced
hardware and software costs. Middle market systems generally provide excellent
tracking and control, but do not actively help to manage the warehouse
operation. At the lower end of the market, competitors tend to specialize in a
specific aspect of warehouse functionality, such as receipts tracking,
warehouse data collection tasks or carousel control, and have smaller technical
and development staffs.

The Company believes that, unlike most of its competitors, it can compete
effectively in both the high end and middle segments of the market due to the
scaleability, flexibility, configurability, functionality and price of
RIMS.2001. The Company has a large number of competitors in these markets and
believes that its primary competitors in these markets are McHugh Freeman and
Associates, Manhattan Associates and Catalyst International, Inc., each of
which provides complete warehouse management and distribution software. In
addition, certain well-known computer manufacturers and software developers,
such as SAP AG, J.D. Edwards & Co., BAAN Company N.V. and PeopleSoft, Inc.,
offer integrated manufacturing or accounting software packages that include a
warehouse management component. Many of the Company's competitors have greater
name recognition, more extensive engineering, management and marketing
capabilities and significantly greater financial, technological and personnel
resources that the Company.

Over the last few years, as software developers began to develop software
for more than one customer in the same industry, the market for warehouse
management systems has increasingly been characterized by the industry in which
the customer competes. By tailoring RIMS.2001 to support the unique features of
certain targeted markets, the Company believes it will have a competitive
advantage in selling prospective customers in the same industry in which
similar functionality and implementation issues arise. The Company has
identified the foods, automotive, consumer products, petro chemical products,
public utilities and pharmaceutical products markets as its target markets, and
has developed RIMS.Food as a specialized application of RIMS.2001 targeted at
the food industry.

The Company believes that the competitive factors affecting its markets
include features such as openness, scalability, ability to integrate with third
party products, functionality, adaptability, ease of use, product reputation,
quality, performance, price, customer service and support, effectiveness of
sales and marketing efforts and company reputation. Although the Company
believes that it currently competes favorably with respect to such factors,
there can be no assurance that the Company can maintain its competitive
position against current and potential competitors, especially those with
greater financial, marketing, service, support, technical and other resources
than the Company.

Proprietary Rights, Licenses and Pricing

The Company relies on a combination of contract, copyright, trademark,
trade secret laws, and other measures to protect its proprietary information.
The Company does not have any software patents or patent applications. Trade
secret and copyright laws afford only limited protection. The Company believes
that, because of the rapid pace of technological change in the computer
software industry, trade secret and copyright protection are less significant
in affecting the Company's business, results of operations or financial
condition than factors such as the knowledge, ability and experience of the
Company's employees, frequent product enhancements and timeliness and quality
of support services.

The Company generally sells its products to its customers under a
non-transferable perpetual license. The Company generally licenses its products
solely for the customers' internal operations and only at designated sites. The
Company also makes available multi-site licenses and enterprise licenses.
Domestic multi-site licenses are discounted from the first license fee for the
second site and beyond. Enterprise licenses are structured as a one time fee
with unlimited usage, plus a nominal fee as additional sites are installed with
the software. Licensing of RIMS.2001 is concurrent user based. Discounts are
generally applied for multi-site licenses. International license fees tend to
be slightly higher and are structured by region.

The Company does not provide source code to the customer under its
licenses. The Company believes that providing source code increases the
likelihood of misappropriation or other misuse of the Company's intellec-

tual property. The Company has, however, entered into source code escrow
agreements with certain customers whereby source code is made available to a
customer. This is a common practice in the software industry. Under the terms
of the Company's license agreements, the Company generally owns all
modifications to its software that are implemented for a customer.

The Company is not aware of any case in which its products, trademarks or
other proprietary rights infringe the property rights of third parties, but has
not performed any independent investigations to determine whether such
infringement exists. Accordingly, there can be no assurance that third parties
will not assert infringement claims against the Company in the future with
respect to current or future products or that any such assertion may not
require the Company to enter into royalty arrangements or result in litigation.
As the number of software products in the industry increases and the
functionality of these products further overlap, the Company believes that
software developers may become increasingly subject to infringement claims. Any
such claims, with or without merit, can be time consuming and expensive to
defend.

Employees

As of June 15, 1997, the Company had 49 employees. The Company had five
employees primarily in management and administration, 18 in product
development, eight in software services, eight in customer support, and ten in
sales and marketing. The Company's employees are not represented by any
collective bargaining organization and the Company has never experienced a work
stoppage. The Company considers its relations with its employees to be
satisfactory.

Facilities

The Company's headquarters are located in Massapequa, New York in
approximately 10,000 square feet of office space that is leased from Robocom
Properties, Inc., a corporation of which the shareholders are currently
officers or directors of the Company. The annual rental on the corporate
headquarters is $168,000 (excluding operating expenses, insurance, property
taxes and assessments), subject to increases based upon fluctuations in the
prime rate, as published in the Wall Street Journal. The lease expires on
December 31, 2010. See "Certain Transactions."

The Company also leases approximately 2,000 square feet in Teaneck, New
Jersey. The lease expires on January 1, 2002 and may be extended by the Company
for an additional five-year period. The lease has an annual rental rate of
$33,297 (excluding operating expenses, insurance, property taxes and
assessments).

The Company believes that its existing facilities are sufficient for its
operations, although it intends to open additional sales and support offices in
the future with a portion of the proceeds of this offering.

MANAGEMENT

Directors and Executive Officers

The executive officers and directors of the Company are as follows:

Name Age Position
- -------------------------- ----- -------------------------------------------------------------------------

Irwin Balaban ............ 65 Chairman of the Board, President and Chief Executive Officer
Lawrence B. Klein ...... 63 Executive Vice President - Marketing and Sales, Secretary and a Director
Steven Kuhl ............ 38 Vice President - Product Development
Robert O'Connor ......... 38 Vice President - Systems Development
Elizabeth A. Burke ...... 37 Vice President - Finance, Chief Financial Officer and Treasurer
Herbert Goldman ......... 66 Director
Barry J. Gordon ......... 51 Director

Irwin Balaban, a co-founder of the Company, has been Chairman of the
Board, President and Chief Executive Officer of the Company since 1983. Prior
to founding the Company, Mr. Balaban was the Manager of Logistics for the
Systems Management Division of Sperry Corporation.

Lawrence B. Klein, a co-founder of the Company, has been Executive Vice
President - Marketing and Sales and a director of the Company since October
1991. Prior thereto, Mr. Klein served as Vice President - Automated Factory
Systems and Sales of the Company from July 1987 to October 1991. Prior to
founding the Company, Mr. Klein was an Engineering Section Manager of Computer
Applications Equipment and Facilities at Sperry Corporation.

Steven Kuhl has been Vice President - Product Development of the Company
since October 1991. Prior thereto, Mr. Kuhl served as a Programming Manager of
the Company from 1983 to October 1991. Prior to joining the Company, Mr. Kuhl
was employed in various positions by Sperry Corporation, including systems
analyst, programming and programming group leader.

Robert O'Connor has been Vice President - Systems Development of the
Company since October 1991. Prior thereto, Mr. O'Connor served as a Programming
Manager of the Company from 1983 to October 1991. Prior to joining the Company,
Mr. O'Connor was employed as a programming group leader by Sperry Corporation.

Elizabeth A. Burke has been Vice President - Finance, Chief Financial
Officer and Treasurer of the Company since April 1997. From July 1994 to
January 1996, Ms. Burke was Vice President of Finance/Controller of Marvel
Comics Group, a division of Marvel Entertainment Group, Inc. ("Marvel"). From
November 1991 to July 1994, Ms. Burke was Corporate Controller of Marvel. From
1981 to November 1991, Ms. Burke was employed at Arthur Andersen LLP.

Herbert Goldman, a co-founder of the Company, has been a director of the
Company since 1983 and a consultant to the Company since his retirement in July
1996. Prior to his retirement, Mr. Goldman had been Executive Vice President -
Operations of the Company since October 1991.

Barry J. Gordon has been a director of the Company since May 1997. Since
1980, Mr. Gordon has been President and a director of American Fund Advisors,
Inc., a money management firm, and has served as Chairman of the Board of that
company since 1987. In addition, Mr. Gordon is a director of Hain Pure Food
Corp., a publicly traded specialty foods product company, a director of
Skylands Park Management, Inc., a publicly traded owner of a minor league
baseball stadium, a director of Winfield Capital Corp., a publicly traded SBIC,
and President of the John Hancock Global Technology Fund, a mutual fund
specializing in telecommunications and technology securities. Mr. Gordon is
also the Chairman and Chief Executive Officer of the general partner

of a limited partnership that owns the New Jersey Cardinals, a Class "A" minor
league affiliate of the St. Louis Cardinals. Mr. Gordon is also Chairman and
Chief Executive Officer of the general partner of the limited partnership that
owns the Norwich Navigators, a Class "AA" minor league affiliate of the New
York Yankees.

All directors hold office until the next annual meeting of shareholders
and until their successors have been duly elected and qualified. Executive
officers are elected by, and serve at the discretion of, the Board of
Directors.

The Company has agreed, for a period of two years following the date of
this Prospectus, if so requested by BlueStone, to nominate and use its best
efforts to elect a designee of BlueStone as a director of the Company or, at
BlueStone's option, as a non-voting advisor to the Company's Board of
Directors. The Company's officers, directors and shareholders have agreed to
vote their shares of Common Stock in favor of such designee. BlueStone has not
yet exercised its right to designate such a person.

The Company has applied for and intends to obtain key man life insurance
on the life of each of Messrs. Balaban and Klein in the amount of $1,500,000.

Key Employees

Judy Frenkel has been Manager of Systems Analysis of the Company since
September 1992. Prior thereto, Ms. Frenkel was a Senior Systems Analyst at the
Company from October 1988 to September 1992 and a Systems Analyst at the
Company from April 1986 to October 1988.

Chung-Hsin Lee has been the Manager of Software Development of the Company
since November 1994. Prior thereto, Mr. Lee served as the technical leader in
the development of radio frequency (RF) subsystems for the Company's products
from September 1985 to November 1994.

Richard L. Wilkins has been Director of Sales of the Company since January
1994. From 1990 to January 1994, Mr. Wilkins was Director of New Product
Development and Marketing of Fairbanks Scales, Inc., a manufacturer of
commercial scales and weighing systems.

Martin Liebross has been Director of Network Systems Group of the Company
since September 1993. From August 1989 to September 1993, Mr. Liebross was
President of Soma Lan Technologies, Inc., a computer network integrator.

Committees of the Board of Directors

Upon the consummation of this offering, the Board of Directors intends to
establish an Audit Committee and a Compensation Committee. The Audit Committee
will recommend to the Board of Directors the engagement of independent
certified public accountants and review the audit engagement, including the
scope and results of the Company's accounting and control procedures and the
accuracy of its system of internal accounting and control procedures. The
Compensation Committee will review and make recommendations to the Company's
Board of Directors relating to the compensation of executives of the Company
and administer the Company's stock option and incentive plans. A majority of
the members of the Audit Committee and all of the members of the Compensation
Committee will be non-employee directors.

Directors' Compensation

Each non-employee director receives $500 for each Board meeting attended
and is reimbursed for all out-
of-pocket expenses incurred in connection with attendance at meetings of the
Board or any committee thereof. In connection with the adoption of the Option
Plan in May 1997, the Board of Directors authorized the grant on the date of
this Prospectus to each non-employee director of five-year options to purchase
5,000 shares of Common Stock at the initial public offering price per share.

Executive Compensation

The following table sets forth the cash compensation paid by the Company
for services rendered during the fiscal year ended May 31, 1997 to each
executive officer who received total compensation in excess of $100,000 (the
"Named Executive Officers"):

Summary Compensation Table

Long-Term
Compensation
Annual Awards
Compensation Other -------------
Name and ----------------------- Annual LTIP All Other
Principal Position Salary Bonus Compensation(1) Payouts($) Compensation(2)
- -------------------------- ------------- ------- ----------------- ------------- ----------------

Irwin Balaban ............ $146,250(3) -- $13,188 -- $2,925
President and Chief
Executive Officer
Lawrence B. Klein ...... $127,257(4) -- $11,976 -- $2,545
Executive Vice President
-- Marketing and Sales

- ------------
(1) Represents amounts paid for automobile expenses and certain nonaccountable
expenses.

(2) Represents matching contributions made by the Company pursuant to the
Company's 401(k) Plan.

(3) Reflects a continuing voluntary reduction in salary from fiscal 1995 of
$48,750.

(4) Reflects a continuing voluntary reduction in salary from fiscal 1995 of
$42,419.

The Company did not grant any stock options to the Named Executive
Officers during the fiscal year ended May 31, 1997.

Compensation Committee Interlocks and Insider Participation

The Company did not have a compensation committee during the fiscal year
ended May 31, 1997. Messrs. Balaban, Klein and Goldman each participated in
deliberations concerning executive officer compensation. Upon the consummation
of this offering, the Board of Directors intends to establish a Compensation
Committee. All of the members of the Compensation Committee will be
non-employee directors. No executive officer of the Company serves as a member
of the board of directors or compensation committee of any entity that has one
or more executive officers serving as a member of the Company's Board of
Directors.

Employment and Consulting Agreements

The Company has entered into employment agreements with Messrs. Balaban,
Klein, Kuhl and O'Connor. Each employment agreement is effective as of May 15,
1997, and has a three-year term. Under each employment agreement, the employee
receives an annual base salary and is entitled to participate in all benefit
programs generally available to executive officers of the Company.

Pursuant to their respective employment agreements, Mr. Balaban serves as
President and Chief Executive Officer of the Company and receives an annual
base salary of $230,000; Mr. Klein serves as Vice President - Marketing and
Sales of the Company and receives an annual base salary of $195,000; Mr. Kuhl
serves as Vice President - Product Development of the Company and receives an
annual base salary of $120,000; and Mr. O'Connor serves as Vice President -
Systems Development of the Company and receives an annual base salary of
$120,000. On November 30 of each year, commencing November 30, 1998, each
employee's base salary will automatically increase by 10%.

Under the employment agreements, each employee was granted, as of the date
of this Prospectus, incentive stock options under the Option Plan to purchase
shares of Common Stock. Messrs. Balaban and Klein received options to purchase
50,000 and 45,000 shares, respectively, at $7.15 per share, and each of Messrs.
Kuhl and

O'Connor received options to purchase 30,000 shares at $6.50 per share. The
options granted to Messrs. Balaban and Klein fully vest after one year and the
options granted to Messrs. Kuhl and O'Connor vest equally over three years. All
options expire on the fifth anniversary of the date of grant.

In their employment agreements, each of Messrs. Balaban, Klein, Kuhl and
O'Connor has agreed that during the term of his employment agreement and for a
period of one year thereafter (in the event of termination of employment for
other than "cause" or "good reason" ) or two years thereafter (in the event of
termination of employment for "cause"), he will not, without the prior written
consent of the Company, compete with the Company by engaging in any capacity in
any business which is competitive with the business of the Company.

On May 15, 1997, Herbert Goldman, a director of the Company, entered into
a three-year consulting agreement with the Company to provide consulting
services with respect to new product development and related technical matters.
Pursuant to this agreement, Mr. Goldman will be paid an annual retainer of
$12,000 plus a per diem of $1,000 for each day Mr. Goldman performs consulting
services at the Company's request. In addition, on the date of this Prospectus,
Mr. Goldman will be granted five-year stock options to purchase up to 15,000
shares of Common Stock at a purchase price equal to $7.15 per share. During the
period from July 1, 1996 to May 15, 1997, Mr. Goldman received compensation
aggregating approximately $7,415 for providing consulting services under an
informal consulting arrangement with the Company. See "Certain Transactions."

Option Plan

Effective May 15, 1997, the Company adopted the 1997 Stock Option and
Long-Term Incentive Compensation Plan (the "Option Plan") for the purpose of
attracting, retaining and maximizing the performance of executive officers and
key employees and consultants. The Company has reserved 325,000 shares of
Common Stock for issuance under the Option Plan. The Option Plan has a term of
ten years. The Option Plan provides for the grant of "incentive stock options"
within the meaning of Section 422 of the Internal Revenue Code of 1986, as
amended, non-statutory stock options, stock appreciation rights and restricted
stock awards. It is contemplated that the Option Plan will eventually be
administered by a Compensation Committee of the Board of Directors (the
"Compensation Committee"), which Committee has not yet been created. The
exercise price for non-statutory stock options may be equal to or less than 100
percent of the fair market value of shares of Common Stock on the date of
grant. The exercise price for incentive stock options may not be less than 100
percent of the fair market value of shares of Common Stock on the date of grant
(110 percent of fair market value in the case of incentive stock options
granted to employees who hold more than ten percent of the voting power of the
Company's issued and outstanding shares of Common Stock).

Options granted under the Option Plan may not have a term of more than a
ten-year period (five years in the case of incentive stock options granted to
employees who hold more than ten percent of the voting power of the Company's
Common Stock) and generally vest over a three-year period. Options generally
terminate three months after the optionee's termination of employment by the
Company for any reason other than death, disability or retirement, and are not
transferable by the optionee other than by will or the laws of descent and
distribution.

The Option Plan also provides for grants of stock appreciation rights
("SARs"), which entitle a participant to receive a cash payment, equal to the
difference between the fair market value of a share of Common Stock on the
exercise date and the exercise price of SAR. The exercise price of any SAR
granted under the Option Plan will be determined by the Board of Directors in
its discretion at the time of the grant. SARs granted under the Option Plan may
not be exercisable for more than a ten year period. SARs generally terminate
one month after the grantee's termination of employment by the Company for any
reason other than death, disability or retirement. Although the Board of
Directors has authority to grant SARs, it does not have any present plans to do
so.

Restricted stock awards, which are grants of shares of Common Stock that
are subject to a restricted period during which such shares may not be sold,
assigned, transferred, made subject to a gift, or otherwise disposed of, or
mortgaged, pledged or otherwise encumbered, may also be made under the Option
Plan. At this time, the Board of Directors has not granted, and does not have
any plans to grant, restricted shares of Common Stock.

As of the date of this Prospectus, options to purchase 210,000 shares of
Common Stock have been granted under the Option Plan, including five-year
options to purchase 50,000, 45,000 and 15,000 shares at an exercise price equal
to $7.15 per share, subject to adjustment, granted to Messrs. Balaban, Klein
and Goldman, respectively, and five-year options to purchase 30,000, 30,000,
30,000, 5,000 and 5,000 shares at an exercise price equal to $6.50 per share,
subject to adjustment, granted to Ms. Burke and Messrs. Kuhl, O'Connor, Goldman
and Gordon, respectively.

401(k) Plan

The Company maintains the Robocom Systems Inc. 401(k) Savings Plan (the
"401(k) Plan"). The 401(k) Plan is a tax-qualified plan covering Company
employees who, as of the enrollment eligibility dates under the 401(k) Plan,
have attained age 21 and completed at least six months of service with the
Company. Participants may make elective deferrals that are fully vested at all
times. The Company makes a matching contribution in an amount equal to 50% of
each participant's elective deferrals and may also make additional
discretionary contributions. Employer contributions are 20% vested after two
years of service, 40% vested after three years of service, 60% vested after
four years of service, 80% vested after five years of service and 100% vested
after six years of service. Matching contributions to the 401(k) Plan have been
made by the Company on behalf of the executive officers in 1996 as indicated
above in the Summary Compensation Table. Benefits will normally be distributed
to an employee upon (i) the employee's retirement, (ii) the employee's death or
disability, (iii) the termination of the employee's employment with the
Company, (iv) the termination of the 401(k) Plan or (v) a requested in service
withdrawal or withdrawal due to financial hardship.

Pension Plan

The Company maintains the Robocom System Inc. Pension Plan and Trust (the
"Pension Plan"). The Pension Plan covers all employees of the Company (other
than sales personnel) who have attained age 21 and completed at least one year
of service with the Company as of the enrollment eligibility dates under the
Pension Plan. The Company makes an annual contribution to the Pension Plan on
behalf of employees based upon the age of the employee at such time. The
Pension Plan targets a retirement benefit of approximately 25% of an employee's
income at age 65. The Pension Plan is fully funded by the Company. Benefits are
20% vested after two years of service, 40% vested after three years of service,
60% vested after four years of service, 80% vested after five years of service
and 100% vested after six years of service. Vested benefits will normally be
distributed to an employee upon (i) the employee's retirement, (ii) the
employee's death or disability or (iii) the employee's termination of
employment.

PRINCIPAL SHAREHOLDERS

The following table sets forth as of the date of this Prospectus, and as
adjusted to reflect the sale of the 1,500,000 shares offering hereby, certain
information known to the Company concerning the beneficial ownership of the
Common Stock by (i) each person known by the Company to own beneficially more
than 5% of the outstanding Common Stock, (ii) each director of the Company,
(iii) each Named Executive Officer and (iv) all directors and executive
officers of the Company as a group:

Name and Address of Number of Shares Percentage of Outstanding
Beneficial Owner (1) Beneficially Owned(2) Shares Beneficially Owned(2)
- -------------------- ----------------------- -----------------------------------
Before Offering After Offering
----------------- ---------------

Irwin Balaban ............................................. 564,000 28.7% 16.3%
Herbert Goldman(3) .......................................... 564,000 28.7 16.3
Lawrence B. Klein .......................................... 564,000 28.7 16.3
Barry J. Gordon ............................................. -- -- --
All executive officers and directors as a group (7 persons). 1,936,400 98.4 55.8

- ------------
(1) Unless otherwise indicated, the address of each beneficial owner is c/o
Robocom Systems Inc., 511 Ocean Avenue, Massapequa, New York 11758.

(2) Except as indicated in the footnotes to this table, the Company believes
that all persons named in the table have sole voting and investment power
with respect to all Common Stock shown as beneficially owned by them. In
accordance with the rules of the Commission, a person or entity is deemed
to be the beneficial

owner of Common Stock that can be acquired by such person or entity within
60 days upon the exercise of options or warrants or other rights to acquire
Common Stock. Each beneficial owner's percentage ownership is determined by
assuming that options and warrants that are held by such person (but not
those held by any other person) and which are exercisable within 60 days
have been exercised. The inclusion herein of such shares listed as
beneficially owned does not constitute an admission of beneficial ownership.
Percentages herein assume a base of 1,967,984 shares of Common Stock
outstanding as of the date of this Prospectus and a base of 3,467,984 shares
of Common Stock outstanding immediately after the consummation of this
offering.

(3) Consists of 564,000 shares held by the Herbert & Naomi J. Goldman Living
Trust, Herbert and Naomi J. Goldman, trustees.

CERTAIN TRANSACTIONS

The Company leases approximately 10,000 square feet of office space, which
functions as its corporate headquarters, in Massapequa, New York, pursuant to a
lease between the Company and Robocom Properties Inc. ("Robocom Properties")
that expires on December 31, 2010. The shareholders of Robocom Properties are
Messrs. Balaban, Goldman, Klein, Kuhl and O'Connor. The total rental expense
paid by the Company to Robocom Properties in each of the fiscal years ended
May 31, 1994, 1995 and 1996 was $168,000, which amounts were paid in equal
monthly installments of $14,000. Since June 1, 1996, the Company has continued
to pay, and through December 1997 will pay, rent in monthly installments of
$14,000 to Robocom Properties. Commencing January 1, 1998, the annual base
rental of $168,000 payable under the lease will be adjusted each year by the
ratio of the prime rate as published in the Wall Street Journal on January 2 of
such year to the prime rate as published in the Wall Street Journal on January
2, 1997, which was 8.25%. However, the parties have agreed that rent will not
be less than $14,000 per month. The Company believes that these rental terms
are at least as favorable to the Company as could be obtained from an
unaffiliated third party.

Herbert Goldman, a director of the Company, has been acting as a
consultant to the Company since his retirement as Executive Vice President -
Operations of the Company effective July 1, 1996. During the period from July
1, 1996 to May 15, 1997, Mr. Goldman received compensation aggregating
approximately $7,415 for his consulting services. On May 15, 1997, the Company
and Mr. Goldman entered into a three-year agreement pursuant to which Mr.
Goldman will continue to provide consulting services to the Company on an
as-needed basis. See "Management -- Employment and Consulting Agreements."

The Company made distributions to its shareholders of $850,000 in fiscal
1993, did not make any such distributions in fiscal 1994, 1995 or 1996 and made
distributions to its shareholders aggregating $900,000 in the fourth quarter of
fiscal 1997. In addition, the Company will pay the Final S Corporation
Distribution of $1,600,000 using a portion of the net proceeds to be received
by the Company in this offering. In June 1997, the Company entered into an
indemnity agreement with its current shareholders pursuant to which the Company
will indemnify its current shareholders against additional income taxes
resulting from adjustments made (as a result of a final determination made by a
competent tax authority) to the taxable income reported by the Company as an S
Corporation for periods prior to this offering, but only to the extent those
adjustments result in a decrease in income taxes otherwise payable by the
Company.

Between November 1993 and January 1997, Irwin Balaban, Lawrence B. Klein
and Herbert Goldman made demand loans to the Company from time to time in the
aggregate amounts of $265,000, $115,000 and $265,000, respectively. Interest
rates on the loans ranged from 6% per annum to 8% per annum. All of such loans
were paid in full in January 1997.

Each of Messrs. Balaban, Klein and Goldman has personally guaranteed the
Company's Line of Credit.

Future transactions, if any, between the Company and any of its officers,
directors and/or 5% shareholders will be on terms no less favorable to the
Company than would be obtained from independent third parties and will be
approved by a majority of the independent, disinterested directors of the
Company.

DESCRIPTION OF SECURITIES

The following statements do not purport to be complete and are qualified
in their entirety by reference to the detailed provisions of the Company's
Amended and Restated Certificate of Incorporation and By-Laws, copies of which
have been filed as exhibits to the Registration Statement of which this
Prospectus forms a part.

General

The Company is authorized to issue 10,000,000 shares of Common Stock, par
value $.01 per share, and 1,000,000 shares of Preferred Stock, par value $.01
per share (the "Preferred Stock"). As of the date of this Prospectus, 1,967,984
shares of Common Stock are issued and outstanding and held of record by eight
shareholders (of which an aggregate of 87,984 shares held by three shareholders
are subject to forfeiture upon termination of their employment and/or
consulting services prior to specified dates), and no shares of Preferred Stock
are issued and outstanding. Upon the consummation of this offering, there will
be 3,467,984 shares of Common Stock outstanding and no shares of Preferred
Stock outstanding.

Common Stock

The holders of Common Stock have the right to one vote per share on all
matters submitted to a vote of holders of Common Stock. The holders of Common
Stock do not have preemptive or cumulative voting rights and are entitled to
dividends when, as and if declared by the Board of Directors. In the event of
liquidation, dissolution or winding up of the Company, after payment has been
made to the holders of Preferred Stock, if any, for the full amount to which
they are entitled, each holder of Common Stock will be entitled to share
ratably in the assets of the Company legally available for distribution to the
holders of Common Stock. The outstanding shares of Common Stock have been duly
authorized and validly issued and are fully paid and nonassessable.

Preferred Stock

The Board of Directors of the Company, without further shareholder action,
may issue shares of Preferred Stock in any number of series and may establish
as to each series the designation and number of shares to be issued and the
relative rights and preferences of the shares of each series, including
provisions regarding voting powers, redemption, dividend rights, rights upon
liquidation and conversion rights, any or all of which may be greater than the
rights of the Common Stock. The issuance of shares of Preferred Stock by the
Board of Directors could adversely affect the rights of holders of Common Stock
by, among other matters, delaying or preventing a change in control of the
Company or making removal of management more difficult. Additionally, the
issuance of Preferred Stock may have the effect of decreasing the market price
of the Common Stock.

Limitations on Directors' and Officers' Liability

The Company's Amended and Restated Certificate of Incorporation limits the
liability to the Company of individual directors for certain breaches of their
fiduciary duty to the Company. The effect of this provision is to eliminate the
liability of directors for monetary damages arising out of their failure,
through negligent or grossly negligent conduct, to satisfy their duty of care,
which requires them to exercise informed business judgment. The liability of
directors under the federal securities laws is not affected. A director may be
liable for monetary damages only if a claimant can show a breach of the
individual director's duty of loyalty to the Company, a failure to act in good
faith, intentional misconduct, a knowing violation of the law, an improper
personal benefit or an illegal dividend or stock purchase.

The Company's Amended and Restated Certificate of Incorporation also
provides that each director or officer of the Company serving as a director or
officer shall be indemnified and held harmless by the Company to the fullest
extent authorized by the New York Business Corporation Law (the "NYBCL"),
against all expense, liability and loss (including attorney fees, judgments,
fines, Employee Retirement Income Security Act, excise taxes or penalties and
amounts paid or to be paid in settlement) reasonably incurred or suffered by
such person in connection therewith.

New York Anti-Takeover Law and Certain Charter and By-law Provisions

Subsequent to this offering, the Company, as a New York corporation, will
be subject to the provisions of Section 912 of the NYBCL if and for so long as
it has a class of securities registered under Section 12 of the Exchange Act,
at least 25% of its total employees are employed primarily within New York or
at least 250 employees are so employed and at least 10% of the Company's voting
stock is owned beneficially by residents of the State of New York. The Company
expects to meet these tests and, accordingly, to be subject to Section 912 of
the NYBCL following completion of this offering. Section 912 of the NYBCL
provides, with certain exceptions, that a New York corporation may not engage
in a "business combination" (e.g., a merger, consoli-

dation, recapitalization or disposition of stock) with any "interested
shareholder" for a period of five years from the date that such person first
became an interested shareholder unless: (a) the transaction resulting in a
person becoming an interested shareholder, or the business combination, was
approved by the board of directors of the corporation prior to that person
becoming an interested shareholder, (b) the business combination is approved by
the holders of a majority of the outstanding voting stock not beneficially
owned by such interested shareholder, or (c) the business combination meets
certain valuation requirements for the stock of the New York corporation. An
"interested shareholder" is defined as any person that (a) is the beneficial
owner of 20% or more of the outstanding voting stock of a New York corporation
or (b) is an affiliate or associate of the corporation that at any time during
the prior five years was the beneficial owner, directly or indirectly, of 20%
or more of the corporation's then outstanding voting stock. These provisions
are likely to impose greater restrictions on an unaffiliated shareholder than
on the existing shareholders, who will continue to own a majority of the Common
Stock after this offering.

Transfer Agent and Registrar

The Company's transfer agent and registrar for the Common Stock is
Continental Stock Transfer & Trust Company, 2 Broadway, New York, New York
10004.

SHARES ELIGIBLE FOR FUTURE SALE

Upon the consummation of this offering, 3,467,984 shares of Common Stock
will be issued and outstanding, of which the 1,500,000 shares offered hereby
will be freely tradeable without restriction or further registration under the
Securities Act, except that any shares purchased by "affiliates" of the Company
(as defined in Rule 144 promulgated under the Securities Act) will be subject
to the resale limitations of Rule 144.

The remaining 1,967,984 shares of Common Stock outstanding are deemed
"restricted securities," as that term is defined under Rule 144, and may only
be sold pursuant to an effective registration statement under the Securities
Act, in compliance with the exemption provisions of Rule 144 or pursuant to
another exemption under the Securities Act. Such restricted shares of Common
Stock will become eligible for sale, under Rule 144, subject to certain volume
and manner of sale limitations prescribed by Rule 144 and to the contractual
restrictions described below, at various times commencing 90 days following the
date of this Prospectus. All of the Company's officers, directors and
shareholders have agreed with BlueStone that until 12 months after the date of
this Prospectus, they will not, without the prior written consent of BlueStone,
directly or indirectly, sell, offer for sale, transfer, pledge or otherwise
dispose of, any securities of the Company or exercise any registration rights
relating to any securities of the Company. In addition, 87,984 shares of Common
Stock are subject to contract restrictions on transfer that terminate during
the fiscal year ended May 31, 2000.

In general, under Rule 144 as currently in effect, a person (or persons
whose shares are aggregated), including a person who may be deemed an
"affiliate" of the Company, who has beneficially owned restricted securities
for at least one year is entitled to sell, within any three-month period, a
number of shares that does not exceed the greater of (i) 1% of the then
outstanding shares of Common Stock or (ii) the average weekly trading volume of
the Common Stock during the four calendar weeks preceding the date on which
notice of such sale was filed under Rule 144. Sales under Rule 144 are also
subject to certain requirements as to the manner of sale, notice and the
availability of current public information about the Company. A person who is
not deemed to have been an affiliate of the Company at any time during the 90
days preceding a sale by such person, and who has beneficially owned the
restricted shares for at least two years, is entitled to sell such shares under
Rule 144 without regard to any of the restrictions described above.

UNDERWRITING

The underwriters named below (collectively, the "Underwriters"), for which
BlueStone Capital Partners, L.P. ("BlueStone"), Coleman and Company Securities,
Inc. and Oscar Gruss & Son Incorporated are acting as representatives (the
"Representatives"), have agreed severally, not jointly, subject to the terms
and conditions contained in the underwriting agreement between the Company and
the Underwriters (the "Underwriting Agreement"), to purchase from the Company,
and the Company has agreed to sell to the several Underwriters, the 1,500,000
shares of Common Stock offered hereby. The number of shares of Common Stock
that each Underwriter has agreed to purchase is set forth opposite its name
below:

Underwriter Number of Shares
------------- -----------------
BlueStone Capital Partners, L.P. ......... 490,000
Coleman and Company Securities, Inc. ...... 215,000
Oscar Gruss & Son Incorporated ............ 215,000
Cowen & Company ........................... 100,000
EVEREN Securities, Inc. .................. 100,000
Gerard Klauer Mattison & Co., Inc. ...... 40,000
Janney Montgomery Scott Inc. ............ 40,000
Mesirow Financial, Inc. .................. 40,000
Needham & Company, Inc. .................. 40,000
Rodman & Renshaw, Inc. .................. 40,000
Roney & Co. L.L.C. ........................ 40,000
Stephens Inc. ........................... 40,000
Unterberg Harris ........................... 40,000
ISG Capital Markets, LLC .................. 10,000
Laidlaw Equities, Inc. .................. 10,000
H.J. Meyers & Co., Inc. .................. 10,000
Prime Charter Ltd. ........................ 10,000
Trautman Kramer & Company, Inc. ......... 10,000
Ormes Capital Markets, Inc. ............... 10,000
----------
Total .......................................... 1,500,000
==========

The Underwriters are committed on a "firm commitment" basis to purchase
and pay for all of the shares of Common Stock offered hereby (other than shares
offered pursuant to the over-allotment option) if any shares are purchased. The
shares of Common Stock are being offered by the Underwriters, subject to prior
sale, when, as and if delivered to and accepted by the Underwriters and subject
to approval of certain legal matters by counsel and to certain other
conditions.

Through the Representatives, the several Underwriters have advised the
Company that they propose to offer the shares of Common Stock to the public at
the public offering price set forth on the cover page of this Prospectus. The
Underwriters may allow to certain dealers who are members of the National
Association of Securities Dealers, Inc. ("NASD") concessions, not in excess of
$.31 per share, of which not in excess of $.10 per share may be reallowed to
other dealers who are members of the NASD. After the commencement of the
offering, the public offering price, concessions and reallowance may be
changed.

The Company has granted the Representatives an option, exercisable for 45
days following the date of this Prospectus, to purchase up to 225,000
additional shares of Common Stock at the public offering price set forth on the
cover page of this Prospectus, less the underwriting discounts and commissions.
The Representatives may exercise this option in whole or, from time to time, in
part, solely for the purpose of covering over-allotments, if any, made in
connection with the sale of the shares of Common Stock offered hereby.

The Company has agreed to pay to BlueStone individually, and not as a
representative of the Underwriters, an accountable expense allowance of up to
$180,000, $50,000 of which has been paid as of the date of this Prospectus. The
Company has also agreed to pay all expenses in connection with qualifying the
shares of Common Stock offered hereby for sale under the laws of such states as
the Representatives may designate, including expenses of counsel retained for
such purpose by the Representatives.

The Company has agreed to issue to the Representatives and their
designees, for an aggregate of $150, the Representatives' Warrants to purchase
up to 150,000 shares of Common Stock, at an exercise price of $7.80 per share
(120% of the public offering price per share). The Representatives' Warrants
may not be sold, transferred, assigned, pledged or hypothecated for one year
following the date of this Prospectus, except to the officers and partners of
the Representatives or the Underwriters or members of the selling group, and
are exercisable at any time, and from time to time, during the four-year period
commencing one year following the date of this Prospectus (the "Warrant
Exercise Term"). During the Warrant Exercise Term, the holders of the
Representatives' Warrants are given, at nominal cost, the opportunity to profit
from a rise in the market price of the Common Stock. To the extent that the
Representatives' Warrants are exercised or exchanged, dilution to the interests
of the Company's shareholders will occur. Further, the terms upon which the
Company will be able to obtain additional equity capital may be adversely
affected since the holders of the Representatives' Warrants can be expected to
exercise them at a time when the Company would, in all likelihood, be able to
obtain any needed capital on terms more favorable to the Company than those
provided in the Representatives' Warrants. Any profit realized by the
Representatives on the sale of the Representatives' Warrants or the underlying
shares of Common Stock may be deemed additional underwriting compensation.
Subject to certain limitations and exclusions, the Company has agreed to
register, at the request of the holders of a majority of the Representatives'
Warrants and at the Company's expense, the Representatives' Warrants and the
shares of Common Stock underlying the Representatives' Warrants under the
Securities Act on one occasion during the Warrant Exercise Term and to include
such Representatives' Warrants and such underlying shares in any appropriate
registration statement that is filed by the Company during the seven years
following the date of this Prospectus.

The Company has agreed, for a period of two years following the date of
this Prospectus, if so requested by BlueStone, to nominate and use its best
efforts to elect a designee of BlueStone as a director of the Company, or, at
BlueStone's option, as a non-voting advisor to the Company's Board of
Directors. The Company's officers, directors and shareholders have agreed to
vote their shares of Common Stock in favor of such designee. BlueStone has not
yet exercised its right to designate such a person.

All of the Company's officers, directors and shareholders have agreed
that, for the 12-month period following the date of this Prospectus, they will
not, without the prior written consent of BlueStone, directly or indirectly,
sell, offer for sale, transfer, pledge or otherwise dispose of, any securities
of the Company or exercise any registration rights relating to any securities
of the Company.

The Representatives have informed the Company that the Underwriters do not
intend to confirm sales in excess of 3% of the number of shares of Common Stock
offered hereby to discretionary accounts.

The Company has agreed to indemnify the Underwriters against certain civil
liabilities in connection with the Registration Statement of which this
Prospectus forms a part, including liabilities under the Securities Act.

Prior to this offering, there has been no public market for the Common
Stock. Consequently, the initial public offering price of the shares of Common
Stock has been determined by negotiation between the Company and the
Representatives and is not necessarily related to the Company's asset value,
net worth or other established criteria of value. Among the factors considered
in determining the offering price were the Company's financial condition and
prospects, management, market prices of similar securities of comparable
publicly-traded companies, certain financial and operating information of
companies engaged in activities similar to those of the Company and the general
condition of the securities market.

In order to facilitate the offering, the Underwriters may engage in
transactions that stabilize, maintain or otherwise affect the price of the
Common Stock. Specifically, the Representatives may over-allot in connection
with the offering, creating a short position in the Common Stock for their own
accounts. In addition, to cover over-allotments or to stabilize the price of
the Common Stock, the Underwriters may bid for, and purchase, shares of Common
Stock in the open market. Underwriters may also reclaim selling concessions
allowed to a dealer for distributing the shares of Common Stock in the
offering, if the Underwriters repurchase previously distributed shares of
Common Stock in transactions to cover short positions, in stabilization
transactions or otherwise. Any of these activities may stabilize or maintain
the market price of the Common Stock above independent market levels. The
Underwriters are not required to engage in these activities, and may
discontinue any of these activities at any time.

LEGAL MATTERS

Certain legal matters with respect to the validity of the issuance of the
Common Stock will be passed upon for the Company by Pryor, Cashman, Sherman &
Flynn, New York, New York. Certain legal matters will be passed upon for the
Underwriters by Tenzer Greenblatt LLP, New York, New York.

EXPERTS

The financial statements of the Company at February 28, 1997 and May 31,
1994, 1995 and 1996, and for the nine-month period ended February 28, 1997 and
each of the three years ended May 31, 1996 included in this Prospectus and in
the Registration Statement of which this Prospectus forms a part have been
audited by Ernst & Young LLP, independent auditors, as set forth in their
report thereon, appearing elsewhere herein, and are included in reliance upon
such report given upon the authority of such firm as experts in accounting and
auditing.

AVAILABLE INFORMATION

The Company has filed with the Securities and Exchange Commission (the
"Commission") a Registration Statement on Form SB-2 under the Securities Act
with respect to the shares of Common Stock offered hereby. This Prospectus,
which constitutes a part of the Registration Statement, omits certain
information contained in the Registration Statement, and reference is made to
the Registration Statement and the exhibits and schedules thereto for further
information with respect to the Company and the shares of Common Stock offered
hereby. Statements contained herein concerning the provisions of any documents
are not necessarily complete, and in each instance reference is made to the
copy of such document filed as an exhibit to the Registration Statement or
previously filed with the Commission. Each such statement is qualified in its
entirety by such reference. As of the date of this Prospectus, the Company will
become subject to the informational requirements of the Exchange Act and the
rules and regulations thereunder, and in accordance therewith, will file
reports, proxy and information statements, and other information with the
Commission. The Registration Statement, including exhibits and schedules filed
therewith, and the Company's reports, proxy and information statements, and
other information filed by the Company with the Commission may be inspected
without charge at the Public Reference Room of the Commission, 450 Fifth
Street, N.W., Room 1024, Washington, D.C. 20549 or at its Regional Offices
located at Room 1400, 500 West Madison Street, Chicago, Illinois 60661 and 7
World Trade Center, 13th Floor, New York, New York 10048, and copies of all or
any part of the Registration Statement may be obtained from such offices at
prescribed rates. The Commission maintains a Web site that will contain
reports, proxy and information statements and other information regarding the
Company. The address of such Web site is http://www.sec.gov.

INDEX TO FINANCIAL STATEMENTS

Report of Independent Auditors............................................................ F-2

Balance Sheets as of May 31, 1994, 1995 and 1996 and February 28, 1997 (audited) ....... F-3

Statements of Operations for the years ended May 31, 1994, 1995 and 1996 (audited), and
for the nine-month periods ended February 29, 1996 (unaudited) and February 28, 1997
(audited) .............................................................................. F-4

Statements of Shareholders' Equity for the years ended May 31, 1994, 1995 and 1996, and
for the nine-month period ended February 28, 1997 (audited) ............................ F-5

Statements of Cash Flows for the years ended May 31, 1994, 1995 and 1996 (audited), and
for the nine-month periods ended February 29, 1996 (unaudited) and February 28, 1997
(audited) ........................................................................... F-6

Notes to Financial Statements ............................................................ F-7

F-1

REPORT OF INDEPENDENT AUDITORS

To the Board of Directors and Shareholders
Robocom Systems Inc.

We have audited the accompanying balance sheets of Robocom Systems Inc. as of
February 28, 1997, May 31, 1996, 1995 and 1994, and the related statements of
operations, shareholders' equity and cash flows for the nine month period ended
February 28, 1997 and for each of the three years in the period ended May 31,
1996. These financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these financial
statements based on our audits.

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

In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Robocom Systems Inc. at
February 28, 1997 and May 31, 1996, 1995 and 1994, and the results of its
operations, and its cash flows for the nine month period ended February 28, 1997
and each of the three years in the period ended May 31, 1996 in conformity with
generally accepted accounting principles.

Ernst & Young LLP

Melville, New York
May 16, 1997

F-2

ROBOCOM SYSTEMS INC.

BALANCE SHEETS

May 31,
----------------------------------------------- February 28,
1994 1995 1996 1997
------------- ------------- --------------- --------------

Assets
Current assets:
Cash and cash equivalents ..................... $ 183,371 $ 176,294 $ 603,948 $ 65,670
Accounts receivable, less allowance for
doubtful accounts of $0 in 1994, $27,000 in
1995, $47,064 in 1996 and $18,940 in 1997...... 716,464 546,299 665,500 1,203,047
Costs incurred and income recognized in
excess of billings on uncompleted con-
tracts ....................................... 353,313 553,242 823,357 873,410
Other current assets ........................... 34,811 5,685 1,300 3,913
------------ ------------ ------------ ------------
Total current assets ........................... 1,287,959 1,281,520 2,094,105 2,146,040

Property and equipment, net ..................... 52,258 32,218 13,818 47,730
Software development costs, net .................. 1,826,268 1,993,748 2,498,335 3,218,908
Other assets .................................... -- -- 30,250 5,550
------------ ------------ ------------ ------------
Total assets .................................... $ 3,166,485 $ 3,307,486 $ 4,636,508 $ 5,418,228
============ ============ ============ ============

Liabilities and Shareholders' Equity
Current liabilities:
Bank notes payable ........................... $ 200,000 $ -- $ -- $ 350,000
Accounts payable .............................. 609,438 390,397 376,888 452,607
Accrued expenses .............................. 163,033 97,872 400,322 297,141
Billings on uncompleted contracts in
excess of related costs and income rec-
ognized ....................................... 211,409 92,114 42,328 171,087
Loans payable to officers ..................... 650,000 650,000 645,000
Due to Robocom Properties ..................... 30,000 30,250 -- --
------------ ------------ ------------ ------------
Total current liabilities ........................ 1,863,880 1,260,633 1,464,538 1,270,835
------------ ------------ ------------ ------------
Shareholders' equity:
Common stock, $.01 par value;
10,000,000 shares authorized; 1,880,000 shares
issued and outstanding at May 31, 1994 and May
31, 1995 and 1,936,400 at May 31, 1996 and
February 28, 1997 ............................. 18,800 18,800 19,364 19,364
Additional paid-in capital ..................... -- -- 89,436 89,436
Retained earnings .............................. 1,283,805 2,028,053 3,153,170 4,110,593
Deferred compensation ........................ -- -- (90,000) (72,000)
------------ ------------ ------------ ------------
Total shareholders' equity ..................... 1,302,605 2,046,853 3,171,970 4,147,393
------------ ------------ ------------ ------------
Total liabilities and shareholders' equity ...... $ 3,166,485 $ 3,307,486 $ 4,636,508 $ 5,418,228
============ ============ ============ ============
See accompanying notes.

F-3

ROBOCOM SYSTEMS INC.

STATEMENTS OF OPERATIONS

Nine month
Year ended period ended
May 31, ------------------------------
----------------------------------------------- February 29, February 28,
1994 1995 1996 1996 1997
--------------- ------------- ------------- -------------- -------------
(Unaudited)

Revenues:
Software license fees ........... $ 415,158 $ 504,929 $ 969,789 $ 321,409 $ 899,466
Services .......................... 2,299,081 3,382,470 3,194,817 2,375,354 1,620,786
Hardware .......................... 976,073 2,068,164 1,793,053 1,211,556 1,729,021
Maintenance ....................... 439,526 857,744 1,006,438 776,093 835,579
------------ ---------- ---------- ---------- ----------
Total revenues .................... 4,129,838 6,813,307 6,964,097 4,684,412 5,084,852
------------ ---------- ---------- ---------- ----------
Cost of Revenues:
Cost of license fees................ 34,073 34,073 63,403 17,535 96,236
Cost of services ................... 3,107,248 2,621,836 2,301,954 2,083,067 1,014,615
Cost of hardware ................... 770,935 1,533,585 1,398,786 926,088 1,329,495
Cost of maintenance ................ 215,267 261,455 679,976 473,092 553,626
------------ ---------- ---------- ---------- ----------
Total cost of revenues ............. 4,127,523 4,450,949 4,444,119 3,499,782 2,993,972
Amortization of software develop-
ment costs ........................ -- 296,997 311,321 228,750 324,769
------------ ---------- ---------- ---------- ----------
4,127,523 4,747,946 4,755,440 3,728,532 3,318,741
------------ ---------- ---------- ---------- ----------
Gross margin ..................... 2,315 2,065,361 2,208,657 955,880 1,766,111
Selling, general and administrative
expenses ........................ 1,092,713 1,275,134 1,075,309 815,020 784,441
------------ ---------- ---------- ---------- ----------
(1,090,398) 790,227 1,133,348 140,860 981,670
Interest and dividend income ...... 2,212 10,905 30,344 24,949 18,120
Interest expense .................. (17,500) (56,884) (38,575) (31,450) (42,367)
------------ ---------- ---------- ---------- ----------
Net income (loss) .................. (1,105,686) 744,248 1,125,117 134,359 957,423
Pro forma unaudited provision
(benefit) for income taxes ...... (464,388) 312,584 472,549 56,431 402,118
------------ ---------- ---------- ---------- ----------
Pro forma unaudited net income
(loss) ........................... $ (641,298) $ 431,664 $ 652,568 $ 77,928 $ 555,305
============ ========== ========== ========== ==========
Pro forma unaudited net income
(loss) per share .................. $ (.28) $ .19 $ .28 $ .03 $ .24
============ ========== ========== ========== ==========
Pro forma unaudited weighted
average shares outstanding ...... 2,296,199 2,296,199 2,310,299 2,296,199 2,352,599
============ ========== ========== ========== ==========
See accompanying notes.

F-4

ROBOCOM SYSTEMS INC.

STATEMENTS OF SHAREHOLDERS' EQUITY

Common Stock
---------------------------------------
Par Value
Shares No Par $.01
----------- ----------- -----------

Balance, May 31, 1993 ..................... 1,000,000 $ 6,000 $ --
Effect for stock split and recapitalization 880,000 (6,000) 18,800
--------- -------- --------
Net loss .................................... -- -- --
Balance, May 31, 1994 ..................... 1,880,000 -- 18,800
--------- -------- --------
Net income ................................. -- -- --
Balance, May 31, 1995 ..................... 1,880,000 -- 18,800
Net income ................................. -- -- --
Deferred compensation ..................... 56,400 -- 564
---------- -------- --------
Balance, May 31, 1996 ..................... 1,936,400 -- 19,364
Net income ................................. -- -- --
Amortization of deferred compensation......... -- -- --
--------- -------- --------
Balance, February 28, 1997 .................. 1,936,400 $ -- $19,364
========== ======== ========

Total
Additional Paid Retained Deferred Shareholders'
In Capital Earnings Compensation Equity
----------------- --------------- -------------- ------------

Balance, May 31, 1993 ..................... $ -- $ 2,402,291 $ -- $ 2,408,291
Effect for stock split and recapitalization -- (12,800) -- --
Net loss .................................... -- (1,105,686) -- (1,105,686)
--------- ------------ --------- ------------
Balance, May 31, 1994 ..................... -- 1,283,805 -- 1,302,605
Net income ................................. -- 744,248 -- 744,248
--------- ------------ --------- ------------
Balance, May 31, 1995 ..................... -- 2,028,053 -- 2,046,853
Net income ................................. 1,125,117 -- 1,125,117
Deferred compensation ..................... 89,436 -- (90,000) --
--------- ------------ ---------- ------------
Balance, May 31, 1996 ..................... 89,436 3,153,170 (90,000) 3,171,970
Net income ................................. -- 957,423 -- 957,423
Amortization of deferred compensation ........ -- -- 18,000 18,000
--------- ------------ ---------- ------------
Balance, February 28, 1997 .................. $ 89,436 $ 4,110,593 $ (72,000) $ 4,147,393
========= ============ ========== ============
See accompanying notes.

F-5

ROBOCOM SYSTEMS INC.

STATEMENTS OF CASH FLOWS

Nine month
period ended
Year ended May 31, ---------------------------
--------------------------------------------- February 29, February 28,
1994 1995 1996 1996 1997
-------------- -------------- -------------- ------------- -------------
(Unaudited)

OPERATING ACTIVITIES
Net income (loss) .................................... $ (1,105,686) $ 744,248 $ 1,125,117 $ 134,359 $ 957,423
Adjustments to reconcile net income (loss) to net
cash provided by (used in) operating activities:
Depreciation ....................................... 20,046 20,040 18,400 15,030 11,088
Amortization of software development costs ......... -- 296,997 311,321 228,750 324,769
Amortization of deferred compensation expense ..... -- -- -- -- 18,000
Provision (credit) for bad debts .................. -- 27,000 20,064 -- (28,124)
Changes in operating assets and liabilities:
Accounts receivable .............................. 275,074 143,165 (139,265) (344,626) (509,423)
Costs incurred and income recognized in excess
of billings on uncompleted contracts ............ 430,682 (199,929) (270,115) 264,024 (50,053)
Other current assets .............................. (19,358) 29,126 4,385 4,532 (2,613)
Accounts payable ................................. (91,262) (219,041) (13,509) 110,783 75,719
Accrued expenses ................................. (54,953) (65,161) 302,450 267,373 (103,181)
Billings on uncompleted contracts in excess of
related costs and income recognized ............ 116,156 (119,295) (49,786) 82,733 128,759
Other assets ....................................... -- -- (30,250) (30,250) 24,700
------------- ---------- ------------ ---------- ------------
Net cash provided by (used in) operating activities (429,301) 657,150 1,278,812 732,708 847,064
INVESTING ACTIVITIES ------------- ---------- ------------ ---------- ------------
Software development costs ........................... (844,244) (464,477) (815,908) (390,892) (1,045,342)
Capital expenditures .............................. -- -- -- -- (45,000)
Sale of investments ................................. 7,598 -- -- -- --
Refund of security deposit ........................... 30,000 -- -- -- --
------------- ---------- ------------ ---------- ------------
Net cash used in investing activities ............... (806,646) (464,477) (815,908) (390,892) (1,090,342)
------------- ---------- ------------ ---------- ------------
FINANCING ACTIVITIES
Net borrowings (payments) of bank note payable ...... 200,000 (200,000) -- -- 350,000
Net proceeds (repayments) of officer loans ......... 650,000 -- (5,000) (5,000) (645,000)
Net (payment to) proceeds from Robocom Properties .... 30,000 250 (30,250) (30,250) --
------------- ---------- ------------ ---------- ------------
Net cash used in provided by financing activities..... 880,000 (199,750) (35,250) (35,250) (295,000)
------------- ---------- ------------ ---------- ------------
(Decrease) increase in cash and cash equivalents ..... (355,947) (7,077) 427,654 306,566 (538,278)
Cash and cash equivalents at beginning of period ... 539,318 183,371 176,294 176,294 603,948
------------- ---------- ------------ ---------- ------------
Cash and cash equivalents at end of period ......... $ 183,371 $ 176,294 $ 603,948 $ 482,860 $ 65,670
============= ========== ============ ========== ============
Supplemental disclosures of cash flow information
Cash paid for interest .............................. $ 0 $ 58,134 $ 38,700 $ 38,700 $ 58,492
============= ========== ============ ========== ============
See accompanying notes.

F-6

ROBOCOM SYSTEMS INC.

NOTES TO FINANCIAL STATEMENTS

(Information pertaining to the nine month period ended February 29, 1996 is
unaudited)

Robocom Systems Inc. (the "Company") was incorporated in June 1982 in the
State of New York. The Company is engaged in the development and marketing of
automated warehouse management systems and related software which is used by
various commercial enterprises primarily located in the United States. Since
June 1994, the Company licenses and installs its proprietary software product
RIMS.2001 which is an "off-the-
shelf" inventory management system. The Company also provides related services,
including modification, project management, training, implementation support,
maintenance and the sale of hardware and third party software.

1. Significant Accounting Policies

Use of Estimates

The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the amounts reported in the financial statements and
accompanying notes. Actual results could differ from those estimates.

Concentration of Credit Risk

The Company's customer base is comprised of relatively few large customers
in diversified industries. Ongoing credit evaluations of its customers'
financial condition are made and generally no collateral is required. For the
year ended May 31, 1994, the Company had three customers that accounted for 19%,
19% and 18% of total revenues. For the year ended May 31, 1995, the Company had
two customers that accounted for 34% and 13% of total revenues. For the year
ended May 31, 1996, the Company had three customers that accounted for 15%, 14%
and 12% of total revenues. For the nine month period ended February 29, 1996,
the Company had three customers that accounted for 18%, 15% and 11% of total
revenues. For the nine month period ended February 28, 1997, the Company had two
customers that accounted for 21% and 16% of total revenues. Management does not
believe significant credit risk exists at February 28, 1997.

Carrying Value of Financial Instruments

The carrying value of the Company's financial instruments, such as cash and
temporary investments and bank notes payable approximate their fair values.

Revenue Recognition

The Company's revenues are derived from software license fees, fees for
services, sales of hardware and maintenance contracts. Software license fees
include revenue from the licensing of the Company's proprietary RIMS.2001
software and revenue from the sublicensing of certain third-party software.
Software license fee revenue is recorded when the software has been delivered,
the license agreement with the customer has been executed, and collection of the
resulting receivable is deemed probable. Service revenues are derived from
project management, customization and modification of licensed software,
training, on-site support and implementation services. Service revenues are
recorded using the percentage of completion method of accounting. Accordingly,
revenue is recognized in the ratio that costs incurred bears to estimated total
costs. Adjustments to cost estimates are made periodically, and losses expected
to be incurred on contracts in progress are charged to operations in the period
such losses are determined. The aggregate of costs incurred and income
recognized on uncompleted contracts in excess of related billings is shown as a
current asset, and the aggregate of billings on uncompleted contracts in excess
of related costs incurred and income recognized is shown as a current liability.
Hardware revenues are derived from the sale of products of other manufacturers,
including computer hardware, radio frequency equipment, bar code printers and
other peripherals. Such revenues are recognized when title to such hardware
passes to the customer. Customers typically enter into one-year maintenance
agreements with the Company upon the completion of the software installation and
pay maintenance fees monthly. The Company recognizes revenue from each
maintenance agreement ratably over the period covered by the agreement, but is

F-7

ROBOCOM SYSTEMS INC.

NOTES TO FINANCIAL STATEMENTS -- (Continued)

(Information pertaining to the nine month period ended February 29, 1996 is
unaudited)

1. Significant Accounting Policies -- (Continued)

only required to perform maintenance services as and when they are requested by
the customer. The Company recognized revenues, in all periods presented, in
accordance with the American Institute of Certified Public Accountants Statement
of Position 91-1, "Software Revenue Recognition."

Software Development Costs

Software development costs have been capitalized in accordance with
Statement of Financial Accounting Standards No. 86, "Accounting for the Costs of
Computer Software to be Sold, Leased, or Otherwise Marketed". The capitalization
of these costs begins when a product's technological feasibility has been
established, and ends when the product is available for general release to
customers. The establishment of technological feasibility and the ongoing
assessment of recoverability of capitalized software development costs require
considerable judgment by management with respect to certain external factors,
including, but not limited to, technological feasibility, anticipated future
gross revenues, estimated economic life, and changes in software and hardware
technologies. The Company capitalizes software development costs associated with
each subsequent enhancement of its product upon the achievement of technological
feasibility. Software development costs, including enhancements, are amortized
using the straight-line method over five to seven years or the
expected life of the product, whichever is less. Research and development costs
incurred prior to the establishment of technological feasibility are expensed
as incurred. Such amounts for the periods presented are not significant.

Cash and Cash Equivalents

The Company considers all highly liquid investments with a maturity of
three months or less at the time of purchase to be cash equivalents.

Property and Equipment

Property and equipment are recorded at cost and are depreciated using the
straight-line method over the estimated useful lives (three to five years).

Pro Forma Net Income (Loss) Per Share

Pro forma net income (loss) per share is based on the weighted average
number of shares of common stock outstanding during the period. For purposes of
such computation, the common stock issuance subsequent to February 28, 1997 is
treated as outstanding for all periods presented. In addition, the weighted
average number of shares includes the portion of the shares being offered by the
Company that would be necessary to fund the distribution of undistributed S
Corporation earnings (an estimated $2,500,000 at February 28, 1997) based on an
assumed initial public offering price of $6.50 per share. See Note 8.

Income Taxes

Effective June 1, 1990, the Company elected to operate under Subchapter S
of the Internal Revenue Code and, consequently, is not subject to Federal and
certain state income taxes. The shareholders include their proportionate share
of the Company's taxable income (loss) in their personal tax returns for Federal
and certain state income tax purposes. Concurrent with the closing of the
Offering (see Note 8), the Company will terminate its status as an S Corporation
and will become subject to Federal and state income taxes. The pro forma
information presented on the statements of income reflects a provision (benefit)
for such income taxes at an effective rate of 42%.

Advertising Costs

Advertising costs are expensed as incurred, and for each of the years ended
May 31, 1994, 1995 and 1996 and for the nine month periods ended February 29,
1996 and February 28, 1997 amounted to approximately $13,000, $84,000, $146,000,
$111,000 and $41,000, respectively.

F-8

ROBOCOM SYSTEMS INC.

NOTES TO FINANCIAL STATEMENTS -- (Continued)

(Information pertaining to the nine month period ended February 29, 1996 is
unaudited)

2. Capital Stock

Recapitalization

In fiscal 1995, the Company effected a recapitalization of its common stock
whereby the Company's 200 shares authorized, 100 shares outstanding, no par
value common stock was exchanged for 2,000,000 shares authorized, 1,000,000
shares outstanding, $.01 par value common stock, prior to giving effect to the
stock split described in Note 8.

Deferred Compensation

In February 1996, the Company issued 56,400 common shares to certain
employees under a restricted stock agreement. Compensation expense, representing
the fair value ($90,000) of the common shares issued to these employees, will be
recognized ratably over the five year vesting period.

3. Detail of Certain Balance Sheet Accounts

Property and Equipment, net

Property and equipment, net, consist of the following:

May 31,
------------------------------------ February 28,
1994 1995 1996 1997
---------- ---------- ---------- -------------

Equipment ........................... $143,810 $130,028 $130,028 $167,028
Furniture and fixtures ............ 90,162 81,062 81,062 89,062
--------- --------- --------- ---------
233,972 211,090 211,090 256,090
Less accumulated depreciation ...... 181,714 178,872 197,272 208,360
--------- --------- --------- ---------
$ 52,258 $ 32,218 $ 13,818 $ 47,730
========= ========= ========= =========

Software Development Costs, net

Software development costs, net, consist of the following:

May 31,
------------------------------------------ February 28,
1994 1995 1996 1997
------------ ------------ ------------ -------------

Software development costs ......... $1,826,268 $2,290,745 $3,106,653 $ 4,151,995
Less accumulated amortization ...... -- 296,997 608,318 933,087
----------- ----------- ----------- ------------
$1,826,268 $1,993,748 $2,498,335 $ 3,218,908
=========== =========== =========== ============

Accrued Expenses

Accrued expenses consist of the following:

May 31,
-------------------------------------- February 28,
1994 1995 1996 1997
----------- ---------- ----------- -------------

Payroll and related taxes ......... $ 145,533 $ 81,622 $ 141,197 $ 95,141
Customer deposits and other ...... 17,500 16,250 259,125 202,000
---------- --------- ---------- ----------
$ 163,033 $ 97,872 $ 400,322 $ 297,141
========== ========= ========== ==========

F-9

ROBOCOM SYSTEMS INC.

NOTES TO FINANCIAL STATEMENTS -- (Continued)

(Information pertaining to the nine month period ended February 29, 1996 is
unaudited)

4. Employee Benefit Plans

The Company has a noncontributory defined contribution pension plan and a
401(k) defined contribution plan. These plans cover virtually all full-time
employees subject to certain age and service requirements. It is the Company's
policy to fund the noncontributory plan to the extent of the maximum allowable
contribution, in accordance with IRS guidelines and other relevant legal
requirements. Under the terms of the 401(k) plan, the Company will match 50% of
an employee's contribution up to 4% of the participating employee's
compensation. Pension expense for each of the years ended May 31, 1994, 1995 and
1996 and for the nine month periods ended February 29, 1996 and February 28,
1997 amounted to approximately $146,000, $125,000, $16,000, $6,000 and $55,000,
respectively.

5. Related Party Transactions

The Company leases its principal facilities from Robocom Properties, Inc.
("Properties"). The shareholders of Properties are generally the same as those
of the Company. The Company has paid to Properties rent at a rate of $168,000
per year.

6. Lease Commitments

The Company is obligated, under noncancellable operating leases covering
its facilities (Note 5) and certain equipment and automobiles, to pay minimum
annual rentals of approximately:

Remainder of fiscal 1997 $ 59,000
1998 228,000
1999 213,000
2000 208,000
2001 206,000
2002 173,000
2003 and thereafter 1,484,000
-----------
$2,571,000
===========

Total rental expense for each of the years ended May 31, 1994, 1995 and 1996 and
for the nine month periods ended February 29, 1996 and February 28, 1997
amounted to approximately $175,000, $197,000, $174,000, $128,000 and $140,000,
respectively.

7. Bank Note Payable and Loans Payable to Officers

Bank Note Payable

At February 28, 1997, the Company had a line of credit facility with a bank
which provided for maximum borrowings of $1,000,000 and which was due to expire
on December 31, 1997. Amounts outstanding under the line of credit were
evidenced by a note payable to the bank, were collateralized by the Company's
assets and were personally guaranteed by the Company's principal shareholders.
Interest was payable at the bank's prime interest rate plus 1/2% (8.75% at
February 28, 1997). At February 28, 1997, borrowings outstanding under the line
of credit were $350,000. The Company made no borrowings under this agreement
during fiscal 1996. In fiscal 1995 and 1994, the Company had a $750,000 line of
credit facility with the bank. Interest was payable at the bank's prime rate
plus 1/2% (9.50% at May 31, 1995). The Company made no borrowings under this
agreement during fiscal 1995.

On March 14, 1997, the Company borrowed an additional $150,000 which was
combined with the outstanding balance of $350,000 into a note payable of
$500,000. Interest was payable at the bank's prime interest rate plus 1/2%. The
note was due on June 11, 1997.

F-10

ROBOCOM SYSTEMS INC.

NOTES TO FINANCIAL STATEMENTS -- (Continued)

(Information pertaining to the nine month period ended February 29, 1996 is
unaudited)

7. Bank Note Payable and Loans Payable to Officers -- (Continued)

On April 11, 1997, the Company borrowed an additional $300,000 which was
combined with the outstanding balance of $500,000 into a note payable of
$800,000. Interest was payable at the prime interest rate plus 1/2%. The note
was due on August 11, 1997.

On May 15, 1997, the bank increased the Company's line of credit to
$2,000,000. The outstanding balance of $800,000 of the above facility was rolled
into this new line of credit, at which time the Company borrowed an additional
$500,000. Borrowings under the line of credit facility, which expires on
September 30, 1997, are due upon demand. Interest is payable at the prime
interest rate (8.50% at May 15, 1997). Amounts outstanding under the line of
credit are collateralized by the Company's assets and are personally guaranteed
by the Company's principal shareholders. The amount available under the line of
credit is reduced by a $150,000 standby letter of credit with the same bank,
which is being utilized as collateral for a vendor and which expires on December
31, 1997.

Loans Payable to Officers

During fiscal 1994, the Company borrowed $650,000, unsecured, from its
principal shareholders. In fiscal 1995, repayments of $5,000 were made. The
remaining loan balance of $645,000 was entirely repaid in January 1997. Such
loans bore interest at 6% in fiscal 1994, 1995 and 1996 and 8% in fiscal 1997.
Interest expense related to the loans payable to officers for each of the years
ended May 31, 1994, 1995 and 1996 and for the nine month periods ended February
29, 1996 and February 28, 1997 amounted to approximately $17,500, $39,000,
$39,000, $29,000 and $40,000, respectively.

8. Planned Events Subsequent to February 28, 1997

The Company is in the process of filing a Registration Statement with the
Securities and Exchange Commission in connection with the offering by the
Company of 1,500,000 shares of common stock for sale to the public (the
"Offering"). In contemplation of the Offering, subsequent to February 28, 1997,
the Company consummated the following:

Common Stock Split

Effective May 15, 1997, the Board of Directors and shareholders voted to
effect a 1.88-for-1 split of the Company's common stock in the form of a common
stock dividend. All share amounts have been restated to reflect the stock split.

Issuance of Common Shares

On May 1, 1997, 31,584 shares of common stock were issued to a consultant
of the Company who performs various accounting and administrative services.
These shares have certain restrictions as to transferability. The estimated fair
value of the stock (which management believes to be 85% of the initial offering
price in the Offering) will be accounted for as consulting expense and will be
recognized ratably over the three year restricted period.

Deferred Income Taxes

Upon termination of the Company's S Corporation status, the Company will be
required to record a one-time, non-cash charge against earnings for noncurrent
deferred income taxes. If this charge had been recorded at February 28, 1997,
the amount would have been approximately $1,238,000, which primarily relates to
temporary differences for software development costs.

Shareholder Distributions

The Company made distributions to its shareholders in the amount of
$382,500 and $517,500 on April 11, 1997 and May 16, 1997, respectively, and
contemplates an additional distribution of $1,600,000 after the closing of the
Offering. Prior to making the Final S Corporation Distribution, the Company will
enter into an indemnity agreement with its current shareholders pursuant to
which the Company will idemnify its current shareholders against additional
income taxes resulting from adjustments made (as a result of a final
determination made by a competent tax authority) to the taxable income reported
by the Company as an S Corporation for periods prior to the Offering, but only
to the extent those adjustments result in a decrease in income taxes otherwise
payable by the Company.

F-11

ROBOCOM SYSTEMS INC.

NOTES TO FINANCIAL STATEMENTS -- (Continued)

(Information pertaining to the nine month period ended February 29, 1996 is
unaudited)

8. Planned Events Subsequent to February 28, 1997 -- (Continued)

The following table presents unaudited pro forma distribution payable and
shareholders' equity at February 28, 1997 which include adjustments for all of
the events (other than the pro forma effects of the offering itself) described
above:

Pro Forma
Distribution Payable
and Shareholders'
Equity February 28,
February 28, 1997 1997
--------------------- ------------------

Distribution payable ............... $ -- $ 2,500,000
============ ============
Shareholders' equity:
Common stock ..................... $ 19,364 $ 19,680
Additional paid-in capital ...... 89,436 262,832
Retained Earnings ............... 4,110,593 372,593
Deferred Compensation ............ (72,000) (245,712)
------------ ------------
Total shareholders' equity ......... $ 4,147,393 $ 409,393
============ ============

Capital Stock

Effective May 15, 1997, the Company's Board of Directors and shareholders
approved an amendment to the Company's Certificate of Incorporation to increase
the authorized shares from 2,000,000 to 10,000,000 and to authorize 1,000,000
shares of par value $.01 preferred stock. The terms and conditions of the
preferred stock, of which no shares have been issued, will be set by the Board
of Directors of the Company.

Stock Option Plan

Effective May 15, 1997, the Board of Directors and shareholders approved
the Company's Stock Option and Long-term Incentive Compensation Plan for the
issuance of up to 325,000 shares of the Company's common stock at an exercise
price equal to the prevailing market price on the grant date. These options will
contain a vesting schedule to be determined at the date of grant. The Company
contemplates granting options to purchase 210,000 shares of common stock in
connection with the offering.

F-12

[CHART]

AUTOMATED WAREHOUSE MANAGEMENT

RECEIVING RIMS DIRECTED PICKING
DIRECTED PUTAWAY 2001 CYCLE COUNTING
REPLENISHMENT ROBOCOM'S LABOR MANAGEMENT
CROSS DOCKING INVENTORY SHIPPING
MANAGEMENT
SYSTEM

HOST CONVEYOR MULTI-VENDER
INTERFACE SORTATION RADIO FREQUENCY
SUPPORT SYSTEM SUPPORT
SUPPORT

- -- IMPLEMENTATION SUPPORT, 24 HR. HELP DESK
-- PROJECT MANAGEMENT
-- TRAINING

==============================================================================

No dealer, sales representative, or other person has been authorized to
give any information or to make any representation in connection with this
offering not contained in this Prospectus, and if given or made, such
information or representation must not be relied upon as having been authorized
by the Company or any Underwriter. This Prospectus does not constitute an offer
to sell or a solicitation of an offer to buy any securities other than the
securities offered by this Prospectus, or an offer to sell or a solicitation of
an offer to by any securities by anyone in any jurisdiction in which such offer
or solicitation is not authorized or would be unlawful. Neither the delivery of
this Prospectus nor any sale made hereunder shall, under any circumstances,
create any implication that information contained herein is correct as of any
time subsequent to the date hereof.

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

TABLE OF CONTENTS

Page
-----
Prospectus Summary ..................... 3
Risk Factors ........................... 8
Use of Proceeds ..................... 15
Dividend Policy ..................... 15
Dilution .............................. 16
Capitalization ........................ 18
Selected Financial Data ............... 19
Management's Discussion and Analysis of
Financial Condition and Results of
Operations ........................ 20
Business .............................. 26
Management ........................... 37
Principal Shareholders ............... 41
Certain Transactions .................. 42
Description of Securities ............ 42
Shares Eligible for Future Sale ...... 44
Underwriting ........................ 45
Legal Matters ........................ 46
Experts .............................. 47
Available Information ............... 47
Index to Financial Statements ......... F-1

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

Until July 21, 1997 (25 days after the date of this Prospectus), all
dealers effecting transactions in the Common Stock, whether or not participating
in this distribution, may be required to deliver a Prospectus. This is in
addition to the obligation of dealers to deliver a Prospectus when acting as
underwriters and with respect to their unsold allotments or subscriptions.

==============================================================================

1,500,000 Shares
Robocom Systems Inc.
Common Stock

----------
PROSPECTUS
----------

BlueStone Capital Partners, L.P.
Coleman and Company Securities, Inc.
Oscar Gruss & Son Incorporated

June 26, 1997

===============================================================================