SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES EXCHANGE ACT OF 1934

Filed by the Registrant [x]

Filed by a party other than the Registrant [   ]

Check the appropriate box:


[ ]   Preliminary Proxy Statement
[ ]   Confidential, for Use of the Commission Only (as permitted by Rule 
      14a-6(e)(2))
[X]   Definitive Proxy Statement
[ ]   Definitive Additional Materials
[ ]   Soliciting Material Pursuant toss.240.14a-11(c) orss.240.14a-12

      
                                RAMP CORPORATION
                                ----------------
                (Name of Registrant as Specified in Its Charter)


    (Name of Person(s) Filing Proxy Statement, if other than the Registrant)

Payment of Filing Fee (Check the appropriate box):

[X]  No fee required

[ ]  Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11

     1)   Title of each class of securities to which transaction applies:

     2)   Aggregate number of securities to which transaction applies:

     3)   Per unit  price  or other  underlying  value of  transaction  computed
          pursuant to Exchange  Act Rule 0-11 (Set forth the amount on which the
          filing fee is calculated and state how it was determined):

     4)   Proposed maximum aggregate value of transaction:

     5)   Total fee paid:

[ ]  Fee paid previously with preliminary materials.

[ ]  Check  box  if any part of the fee is offset as provided  by  Exchange  Act
     Rule  0-11(a)(2)  and identify the filing for which the  offsetting fee was
     paid  previously.  Identify the previous filing by  registration  statement
     number, or the Form or Schedule and the date of its filing.

     1)   Amount Previously Paid:

     2)   Form, Schedule or Registration Statement No.:

     3)   Filing Party:

     4)   Date Filed:






                             [RAMP CORPORATION LOGO]


                                                    March 16, 2005


Dear Stockholder:


     You are  cordially  invited to attend the Special  Meeting of  Stockholders
(the  "Special  Meeting")  of Ramp  Corporation,  a  Delaware  corporation  (the
"Company") to be held on Monday, April 11, 2005 at 10:00 a.m. local time at
the principal offices of Ramp Corporation,  33 Maiden Lane, 5th Floor, New York,
New York 10038.


     I am  pleased  to  report  that,  after  several  months  of  effort,  your
management  and directors  have  successfully  completed a private  placement of
convertible  debentures  and warrants of the  Company.  The Company has received
gross proceeds of $2.0 million,  before transaction fees and expenses,  upon the
first  closing of the  private  placement  occurring  in  January  2005 and will
receive the remaining $2.0 million upon receipt of stockholder approval to issue
the shares of our common stock upon  conversion of  convertible  debentures  and
warrants to be sold upon the second closing.  The second closing is also subject
to other  conditions  precedent,  including prior  registration of the shares of
common stock with the Securities and Exchange Commission.

     At the Special  Meeting,  you will be asked to  consider  and vote upon the
following proposals: (i) to ratify the sale and issuance of shares of our common
stock in  connection  with our March 2004 private  placement of common stock and
July 2004 private placement of convertible  notes and warrants,  (ii) to approve
the sale and  issuance  of shares of our  common  stock in  connection  with our
December 2004 private placement of convertible  notes, (iii) to approve the sale
and  issuance of our common stock and  warrants in  connection  with our January
2005 private  placement of 8% convertible  redeemable  debentures,  common stock
purchase warrants and additional investment rights, (iv) to approve an amendment
to our 2005 Stock  Incentive Plan to increase the number of shares of our common
stock issuable thereunder,  and (v) to ratify the appointment of BDO Seidman LLP
as our  independent  registered  public  accountants  for the fiscal year ending
December 31, 2004.

     The formal Notice of Special  Meeting of  Stockholders  and Proxy Statement
accompanying  this letter more fully  describes  the  business to be acted upon.
AFTER CAREFUL  CONSIDERATION,  THE COMPANY'S  BOARD OF DIRECTORS HAS UNANIMOUSLY
APPROVED EACH OF THE PROPOSALS AND RECOMMENDS THAT YOU VOTE FOR EACH PROPOSAL.

     Please submit your Proxy over the Internet, by telephone, or sign, date and
return your Proxy card as promptly as possible in the enclosed envelope for your
convenience  whether  or not you plan to attend the  meeting.  If you attend the
meeting, you may still vote in person if you so desire.

                                            Sincerely,

                                            Andrew Brown
                                            Chairman of the Board
                                            President and Chief Executive
                                            Officer






     YOUR VOTE IS CRITICAL, NO MATTER HOW MANY OR HOW FEW SHARES YOU OWN.

     SO THAT YOUR COMMON STOCK WILL BE REPRESENTED AT THE SPECIAL MEETING IN THE
EVENT  YOU ARE NOT  PERSONALLY  PRESENT,  PLEASE  SUBMIT  YOUR  PROXY  OVER  THE
INTERNET, BY TELEPHONE,  OR DATE, SIGN AND RETURN PROMPTLY THE ENCLOSED PROXY IN
THE ENVELOPE PROVIDED. EXECUTION OF THE PROXY WILL NOT AFFECT YOUR RIGHT TO VOTE
IN PERSON IF YOU ARE PRESENT AT THE MEETING.







                                RAMP CORPORATION
                            33 MAIDEN LANE, 5TH FLOOR
                            NEW YORK, NEW YORK 10038
                                 _______________

                    NOTICE OF SPECIAL MEETING OF STOCKHOLDERS
                        TO BE HELD MONDAY, APRIL 11, 2005


                                 _______________


     NOTICE IS HEREBY GIVEN that a Special Meeting of Stockholders (the "Special
Meeting") of RAMP CORPORATION,  a Delaware corporation (the "Company"),  will be
held at the offices of the Company  located at 33 Maiden  Lane,  5th Floor,  New
York,  New York  10038,  on  Monday,  April 11, 2005, at 10:00 A.M., to consider
and act upon the following:


     1.   to  ratify  the  sale  and  issuance  of  shares  of  common  stock in
          connection with the March,  2004 private placement of common stock and
          July, 2004 private placement of convertible notes and warrants;

     2.   to  approve  the  sale and  issuance  of  shares  of  common  stock in
          connection  with the December,  2004 private  placement of convertible
          promissory notes in the aggregate principal amount of $452,000;

     3.   to  approve  the  sale and  issuance  of  shares  of  common  stock in
          connection with the January,  2004 private placement of 8% convertible
          redeemable  debentures,  common stock purchase warrants and additional
          investment  rights  in  the  aggregate   principal  amount  of  up  to
          $4,000,000;

     4.   to approve an amendment to the Company's 2005 Stock  Incentive Plan to
          increase the number of shares of common stock issuable thereunder from
          5,500,000 to 15,500,000; and

     5.   to  ratify  the  appointment  of  BDO  Seidman,   LLP  as  independent
          registered  public  accountants  of the  Company  for the fiscal  year
          ending December 31, 2004.

     The  foregoing  items of  business  are more fully  described  in the Proxy
Statement  accompanying this Notice. OUR BOARD OF DIRECTORS  RECOMMENDS THAT YOU
VOTE "FOR" EACH OF THE PROPOSALS DESCRIBED IN THIS PROXY STATEMENT.

     A Proxy Statement and form of Proxy are enclosed herewith.  Only holders of
record of  Common  Stock at the  close of  business  on  February  11,  2005 are
entitled  to  receive  notice of, and to attend,  the  Special  Meeting  and any
adjournments  thereof. At least 10 days prior to the Special Meeting, a complete
list of the  stockholders  entitled to vote will be available for  inspection by
any stockholder, for any purpose germane to the Special Meeting, during ordinary
business  hours,  at the  offices  of the  Company.  If you do not  expect to be
present at the Special Meeting,  you are requested to fill in, date and sign the
enclosed Proxy, which is solicited by the Board of Directors of the Company, and
to mail it promptly in the enclosed envelope.  If you received a proxy card with
a web site address and voting  codes,  you may choose to vote on the Internet at
the web  site  indicated  or  telephonically.  If you vote by  telephone  or the
Internet,  you do not need to return the proxy card. In the event you attend the
Special  Meeting in person,  you may, if you desire,  revoke your Proxy and vote
your shares in person.

                                        By Order of the Board of Directors



Dated: March 16, 2005                          Ron Munkittrick
                                                Secretary








--------------------------------------------------------------------------------
                                    IMPORTANT
THE RETURN OF YOUR SIGNED PROXY AS PROMPTLY AS POSSIBLE WILL GREATLY  FACILITATE
ARRANGEMENTS  FOR THE  SPECIAL  MEETING.  NO POSTAGE IS REQUIRED IF THE PROXY IS
RETURNED IN THE ENVELOPE  ENCLOSED FOR YOUR CONVENIENCE AND MAILED IN THE UNITED
STATES.  IF YOU RECEIVED A PROXY CARD WITH A WEB SITE ADDRESS AND VOTING  CODES,
WE URGE YOU TO VOTE ON THE INTERNET AT THE WEB SITE INDICATED OR  TELEPHONICALLY
TO  ENSURE  THAT YOUR  VOTE IS  RECORDED  WITHOUT  MAIL  DELAYS.  IF YOU VOTE BY
TELEPHONE OR THE INTERNET YOU DO NOT NEED TO RETURN THE PROXY CARD.
--------------------------------------------------------------------------------






                                RAMP CORPORATION
                            33 MAIDEN LANE, 5TH FLOOR
                            NEW YORK, NEW YORK 10038
                    ________________________________________


                                 PROXY STATEMENT
                         SPECIAL MEETING OF STOCKHOLDERS
                             MONDAY, APRIL 11, 2005
                    ________________________________________


         This Proxy Statement is furnished in connection  with the  solicitation
of proxies by the Board of Directors of Ramp Corporation, a Delaware corporation
(the  "Company"),  to be voted at the  Special  Meeting of  Stockholders  of the
Company (the "Special Meeting") which will be held at the offices of the Company
located at 33 Maiden Lane, 5th Floor, New York, New York 10038, on Monday, April
11,  2005,  at 10:00  A.M.,  local time,  and any  adjournment  or  adjournments
thereof,  for the  purposes  set forth in the  accompanying  Notice  of  Special
Meeting of Stockholders and in this Proxy Statement.

         The principal executive offices of the Company are located at 33 Maiden
Lane, 5th Floor,  New York, New York 10038.  The approximate  date on which this
Proxy  Statement  and  accompanying  Proxy  will  first  be  sent  or  given  to
stockholders is March 16, 2005.


         A Proxy,  in the  enclosed  form,  which  is  properly  executed,  duly
returned to the Company and not  revoked  will be voted in  accordance  with the
instructions  contained  therein  and, in the absence of specific  instructions,
will be voted in favor of the proposals  and in accordance  with the judgment of
the person or persons  voting the Proxy on any other  matter that may be brought
before the Special  Meeting.  Each such Proxy granted may be revoked at any time
thereafter  by writing to the  Secretary  of the  Company  prior to the  Special
Meeting,  by execution and delivery of a subsequent  proxy or by attendance  and
voting in person at the Special Meeting, except as to any matter or matters upon
which,  prior to such  revocation,  a vote shall have been cast  pursuant to the
authority  conferred by such Proxy. The cost of soliciting proxies will be borne
by the Company.  Following the mailing of the proxy  materials,  solicitation of
proxies may be made by officers and  employees of the Company,  or anyone acting
on their behalf, by mail, telephone, telegram or personal interview. The Company
may,  but is not  obligated,  to  use  the  services  of  Georgeson  Shareholder
Communications Inc. to aid in the solicitation of proxies. The Company estimates
that the fee for such services should not exceed approximately  $25,000.  Banks,
brokers,  nominees,  and other custodians and fiduciaries will be reimbursed for
their reasonable  out-of-pocket  expenses in forwarding  soliciting  material to
their principals.

                                VOTING SECURITIES

         Stockholders of record as of the close of business on February 11, 2005
(the  "Record  Date") will be entitled to notice of, and to vote at, the Special
Meeting or any adjournments  thereof.  On the Record Date, there were 12,022,909
outstanding  shares of the Company's  common  stock,  $0.001 par value per share
("Common  Stock").  Each holder of Common Stock is entitled to one vote for each
share held by such holder.  The presence,  in person or by proxy, of the holders
of a  majority  of the  outstanding  shares  of  Common  Stock is  necessary  to
constitute a quorum at the Special  Meeting.  Proxies  submitted  which  contain
abstentions  and broker  non-votes will be deemed present at the Special Meeting
for determining the presence of a quorum.

         Shares  abstaining with respect to any matter will be considered  votes
represented,  entitled  to vote and cast with  respect  to that  matter.  Shares
subject to broker  non-votes  with respect to any matter will be 


                                       -1-


considered not voted with respect to that matter. Since an affirmative vote of a
majority of the shares of Common Stock  present,  in person or by proxy,  at the
Special Meeting is required to approve  Proposals 1, 2, 3, 4 and 5,  abstentions
will have the same effect as a vote  "against"  Proposals  1, 2, 3, 4 and 5, and
broker non-votes will have no effect.

                 SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS

         The  following  table  sets  forth,  as  of  March  4,  2005,   certain
information  regarding the ownership of voting securities of the Company by each
stockholder  known to the  management  of the  Company to be (i) the  beneficial
owner of more than 5% of the Company's  Common Stock,  (ii) the directors of the
Company,  (iii) the  current  executive  officers of the  Company,  and (iv) all
directors and executive officers of the Company as a group.

Name and Address of Beneficial            Shares Beneficially        Percentage
Owner(1)                                       Owned (2)              of Class
--------------------------------------------------------------------------------
Andrew Brown (3)                                724,523                 5.4%
Blue Valley Ltd.  (4)                         1,114,824                 8.1%
Cherry Blossom Ltd  (5)                       1,241,850                 9.0%
Forum Managers Ltd.  (6)                        901,761                 6.7%
Lakeview Properties Ltd.  (7)                   901,761                 6.7%
Norfolk Ltd.  (8)                             1,110,886                 8.1%
Jeffrey A. Stahl, MD (9)                         71,132                   *
Louis E. Hyman (10)                             483,625                 3.7%
Steven C. Berger (11)                            67,798                   *
Steven A. Shorr (12)                             68,352                   *
Tony Soich (13)                                  67,798                   *
Ron Munkittrick (14)                            428,883                 3.3%
Directors and executive officers,
   as a group (7 persons)                     1,912,111                 13.2%
___________________
* Represents beneficial ownership of less than one percent.

(1)  Unless otherwise  indicated,  the address for each of the beneficial owners
     is c/o Ramp Corporation, 33 Maiden Lane, New York, New York 10038.

(2)  "Beneficial ownership" is defined in the regulations promulgated by the SEC
     as having or  sharing,  directly  or  indirectly  (1) voting  power,  which
     includes  the  power to vote or to direct  the  voting,  or (2)  investment
     power,  which includes the power to dispose or to direct the disposition of
     shares of the Common Stock of the Company.  The  definition  of  beneficial
     ownership includes shares underlying options or warrants to purchase common
     stock, or other securities  convertible  into common stock,  that currently
     are  exercisable  or  convertible  or  that  will  become   exercisable  or
     convertible  within  60  days.  Unless  otherwise  indicated,  the  Company
     believes that the  beneficial  owner has sole voting and  investment  power
     based upon the information furnished by such owners.



                                      -2-


(3)  Includes (a) 24,167  shares  issuable  upon  exercise of warrants,  and (b)
     696,190 shares issuable upon exercise of stock options  exercisable  within
     60 days from the date of the table.  Does not include warrants  issuable to
     Mr. Brown under his employment agreement whereby Mr. Brown will be entitled
     to purchase up to  one-nineteenth  of the outstanding  shares of our common
     stock,  at an exercise  price to be determined by the Company in accordance
     with his employment agreement.

(4)  Includes 211,372 shares issuable upon exercise of warrants.  The address of
     the holder is Burbage House, 83-85 Curtain Road, London EC2A 3BS.

(5)  Includes 235,456 shares issuable upon exercise of warrants.  The address of
     the holder is 20 McCallum Street, 10-03 Asia Chambers, Singapore 069046.

(6)  Includes 170,900 shares issuable upon exercise of warrants.  The address of
     the holder is 7 Globe House, 15 Fitzroy Mews, London, UK.

(7)  Includes 170,900 shares issuable upon exercise of warrants.  The address of
     the holder is 21 Leigh Street, London WC1H 9QX.

(8)  Includes 211,372 shares issuable upon exercise of warrants.  The address of
     the holder is 20 McCallum Street, 12-03 Asia Chambers, Singapore 069046.

(9)  Consists  of  71,132  shares   issuable  upon  exercise  of  stock  options
     exercisable within 60 days from the date of the table.

(10) Consists  of (a) 833  shares  held by Mr.  Hyman  and his  wife of which he
     shares dispositive power, (b) 833 shares issuable upon exercise of warrants
     held by Mr.  Hyman and his  wife,  and (c)  481,959  shares  issuable  upon
     exercise of stock options  exercisable  within 60 days from the date of the
     table.

(11) Consists  of  67,798  shares   issuable  upon  exercise  of  stock  options
     exercisable within 60 days from the date of the table.

(12) Includes 67,798 shares issuable upon exercise of stock options  exercisable
     within 60 days from the date of the table.

(13) Consists  of  67,798  shares   issuable  upon  exercise  of  stock  options
     exercisable within 60 days from the date of the table.

(14) Consists  of  428,883  shares  issuable  upon  exercise  of  stock  options
     exercisable within 60 days from the date of the table.




                                      -3-




                   ACTIONS TO BE TAKEN AT THE SPECIAL MEETING

     -----------------------------------------------------------------------
                                   PROPOSAL 1

                    TO RATIFY THE SALE AND ISSUANCE OF SHARES
                       OF COMMON STOCK IN CONNECTION WITH
                THE MARCH 2004 PRIVATE PLACEMENT OF COMMON STOCK
                       AND JULY 2004 PRIVATE PLACEMENT OF
                         CONVERTIBLE NOTES AND WARRANTS
     ----------------------------------------------------------------------

TERMS AND CONDITIONS OF THE MARCH 2004 PRIVATE PLACEMENT AND JULY 2004 PRIVATE 
PLACEMENT

         On March 4, 2004 (the  "March  2004  Private  Placement"),  the Company
entered  into  a  Common  Stock  and  Warrant  Purchase  Agreement  (the  "March
Agreement")  with Hilltop  Services Ltd.  ("Hilltop"),  an accredited  investor.
Under the terms of the March  Agreement,  the Company sold and issued to Hilltop
an aggregate of 10,869,565  pre-split  shares of Common Stock for gross proceeds
to the Company in the amount of  $5,000,000,  representing  a purchase  price of
$0.46  cents per share (the  "Purchase  Price").  In  addition  to the shares of
Common Stock, the Company issued to Hilltop warrants to purchase an aggregate of
2,173,913  pre-split shares of Common Stock exercisable at $0.80 cents per share
for a term of five years.  Under the March  Agreement,  the Company agreed that,
during the period  commencing  on the closing  date  through and  including  the
period ending forty-five days following the date a registration  statement which
includes the shares and warrants issued to Hilltop is declared  effective by the
Securities and Exchange Commission,  or SEC (the "New Transaction Period"),  the
Company would not enter into a subsequent offer or sale of its Common Stock with
a third party at a price below the Purchase Price. If the Company entered into a
transaction  at a purchase  price per share less than the Purchase  Price during
the New Transaction  Period,  the Company would be required to issue  additional
shares of common stock to Hilltop at an adjusted  purchase price equal to eighty
percent (80%) of the lowest  conversion  price applicable under the terms of the
new transaction (the "Adjusted Purchase Price").

         At the  time of the  March  2004  Private  Placement  the  Company  had
158,268,163  pre-split shares of Common Stock issued and outstanding.  The March
2004 Private Placement  represented  approximately  6.8% of the Company's issued
and outstanding shares.

         On April 22, 2004 the Company filed a  registration  statement with the
SEC to  register  the shares and  warrants  sold  which,  following a review and
comment period with the SEC, was declared  effective by the SEC on July 9, 2004.
Due to the delay in the  effectiveness  of the  registration  statement  and the
Company's need to continue to pay its creditors and finance its  operations,  on
July 14, 2004 (the "July 2004 Private  Placement"),  the Company  entered into a
Note and Warrant Purchase Agreement (the "Note Purchase Agreement") with each of
Cottonwood Ltd.  ("Cottonwood") and Willow Bend Management Ltd. ("Willow Bend"),
each an accredited investor. Under the terms of the Note Purchase Agreement, the
Company  issued to each of Cottonwood  and Willow Bend a convertible  promissory
note in the  principal  amount of  $2,100,000,  at an interest  rate of six (6%)
percent due January 14, 2005. Each  promissory note was convertible  into shares
of Common Stock at an initial  conversion price of $0.30 cents per share and was
secured by a first  priority  lien against all of the assets and property of the
Company if the average  closing  sale price of Common  Stock for any ten trading
days prior to  forty-five  days  following the closing was less than $0.15 cents
per share. In addition to the convertible promissory note, the Company issued to
each of Cottonwood and Willow Bend warrants exercisable into 4,683,823 pre-split
shares of Common Stock at an exercise price of $0.11 cents per share (the "$0.11
Cent Warrants"),  warrants exercisable into 4,683,823 pre-split shares of Common
Stock  at an  exercise  price  of  $0.15  cents  per  share,  (the  "$0.15  Cent
Warrants"), warrants exercisable into 4,683,823 pre-split shares of Common Stock
at an exercise 



                                      -4-


price of $0.35  cents  per share  (the  "$0.35  Cent  Warrants"),  and  warrants
exercisable into 4,683,823 pre-split shares of Common Stock at an exercise price
of $0.40 cents per share (the "$0.40 Cent Warrants" and  collectively  the "July
Warrants"). The July Warrants were exercisable for a term of one year.

         As a result of the closing of the transactions  contemplated  under the
Note Purchase  Agreement,  the Adjusted Purchase Price under the March Agreement
was reduced to $.088 cents per share, representing 80% of $0.11 cents. Under the
terms of a letter agreement, dated July 14, 2004, by and between the Company and
Hilltop,  in  consideration  for  Hilltop's  consent  to the July  2004  Private
Placement and the  termination  of any and all  anti-dilution  rights of Hilltop
under  the  March  Agreement,  the  Company  issued to  Hilltop  (i)  24,130,435
pre-split  shares of Common  Stock,  (ii) a convertible  promissory  note in the
aggregate principal amount of $1,920,000 convertible into shares of Common Stock
at an initial  conversion  price of $0.30  cents per share,  and (iii)  warrants
exercisable into 4,282,354 pre-split shares of Common Stock at an exercise price
of $0.11 cents per share,  warrants  exercisable into 4,282,354 pre-split shares
of  Common  Stock at an  exercise  price  of $0.15  cents  per  share,  warrants
exercisable into 4,282,354 pre-split shares of Common Stock at an exercise price
of $0.35  cents per share and  warrants  exercisable  into  4,282,354  pre-split
shares  of  Common  Stock  at  an  exercise  price  of  $0.40  cents  per  share
(collectively,  the "Hilltop  Warrants").  The Hilltop Warrants were exercisable
for a term of one year.

         Redwood Capital Partners, Inc. ("Redwood") performed financial advisory
services for the Company in connection with the July 2004 Private Placement.  In
connection with such services, in addition to payment of a cash fee of $320,000,
the  Company  agreed  to issue to  Redwood  warrants  exercisable  into  350,000
pre-split shares of common stock exercisable at $0.11 cents per share,  warrants
exercisable into 350,000  pre-split shares of common stock  exercisable at $0.15
cents per share,  warrants  exercisable into 350,000  pre-split shares of common
stock exercisable at $0.35 cents per share and warrants exercisable into 350,000
pre-split  shares  of  common  stock   exercisable  at  $0.40  cents  per  share
(collectively,  the "Redwood Warrants"). The Redwood Warrants have a term of one
year.

         At the  time of the  July  2004  Private  Placement,  the  Company  had
179,677,864  pre-split shares of Common Stock issued and  outstanding.  The July
2004 Private Placement  represented  approximately 13.4% of the Company's issued
and outstanding  shares of Common Stock issued to Hilltop in connection with its
anti-dilution  provisions  and  approximately  15.6% of shares  of common  stock
underlying July Warrants,  Hilltop  Warrants and Redwood Warrants at an exercise
price below the market price of the common stock at the time of the transaction.

         The Company  agreed to register  the shares of Common  Stock  issued to
Hilltop, the shares of Common Stock underlying the convertible  promissory notes
and warrants  issued to each of  Cottonwood,  Willowbend  and  Hilltop,  and the
shares  of  Common  Stock  underlying  the  warrants  issued  to  Redwood  on  a
registration  statement filed with the SEC on August 20, 2004. The  registration
statement was declared effective by the SEC on September 27, 2004.

         In October,  2004, in order to continue  operations  and pay creditors,
the  Company  entered  into a letter  agreement  with  each of  Willow  Bend and
Cottonwood,  to reduce  the  exercise  price of  outstanding  July  Warrants  to
purchase an aggregate of  37,470,584  pre-split  shares of Common Stock from the
various  exercise  prices to $.0325  cents per  share.  In  connection  with the
exercise  of July  Warrants to purchase an  aggregate  of  25,262,096  pre-split
shares of Common Stock,  the noteholders  agreed to reduce  principal  amount of
outstanding  notes of  $571,018  and to pay cash  proceeds to the Company in the
amount of $250,000.

         In October,  2004,  the Company  entered into a letter  agreement  with
Hilltop,  to reduce  the  exercise  price of  outstanding  Hilltop  Warrants  to
purchase an aggregate of 17,129,416  pre-split  shares of 



                                      -5-


Common  Stock to $.0325  cents per share.  In  connection  with the  exercise of
warrants to purchase  an  aggregate  of  12,631,048  pre-split  shares of Common
Stock, the noteholder  agreed to reduce principal amount of outstanding notes of
$410,509.

         In November, 2004, the Company agreed with the convertible note holders
to reduce the exercise price of outstanding warrants to purchase an aggregate of
16,706,856  pre-split  shares  of Common  Stock to $.015  cents  per  share.  In
connection with the exercise of warrants to purchase all of the shares of Common
Stock, the note holders agreed to reduce  principal amount of outstanding  notes
of $250,602.84.

         In November, 2004, the Company agreed with the convertible note holders
to reduce the conversion price of outstanding  convertible  notes to purchase an
aggregate of 20,400,000  pre-split shares of Common Stock,  from $0.30 cents per
share to $0.015 cents per share.  In connection  with the conversion of notes to
purchase  shares of Common  Stock,  the note  holders  agreed to a reduction  of
principal amount of outstanding  notes of $306,000.  The terms and conditions of
each of the  agreements  constituting  the March 2004 Private  Placement are set
forth on exhibits 4.34,  4.35 and 4.36 of the Company's Form 10-K for the fiscal
year ended December 31, 2003, as filed with the SEC on April 14, 2004. The terms
and  conditions  of each of the  agreements  constituting  the July 2004 Private
Placement  are set forth on  exhibits  4.1  through  4.16,  4.19 and 4.23 of the
Company's  Registration  Statement  on Form S-3, as filed with the SEC on August
23, 2004.

REASONS FOR THE MARCH 2004 PRIVATE PLACEMENT AND JULY 2004 PRIVATE PLACEMENT

         The  principal  reasons  for each of the  March,  2004 and  July,  2004
private  placements were to obtain additional  capital critical to the Company's
ability to continue its operations and pay creditors.

REASONS FOR STOCKHOLDER APPROVAL

         The  Company's  Common Stock is listed on the American  Stock  Exchange
("AMEX").  In order to approve the listing of additional shares of Common Stock,
AMEX Company Guide Section 713 requires  stockholder approval in connection with
a  transaction  other than a public  offering  involving  the sale,  issuance or
potential issuance by the issuer of common stock (or securities convertible into
common stock) equal to 20% or more of presently  outstanding stock for less than
the greater of book or market value of the stock.

         Although the March 2004 Private  Placement did not involve the issuance
or  potential  issuance  by the  Company  of shares of Common  Stock  that would
represent 20% or more of the then outstanding  Common Stock at below the greater
of the book or market  value of the Common  Stock,  upon review of the July 2004
Private  Placement,  it was determined by AMEX that the two transactions must be
aggregated  under the AMEX rules,  thereby  exceeding  the 20%  threshold  on an
aggregate  basis. As a result,  and as part of its  determination  to accept the
Company's   compliance  plan  to  continue  its  AMEX  listing,   AMEX  requires
stockholder  ratification  of the completed  private  placements  and subsequent
agreements with the investors.

         If the  stockholders  do not approve  this  Proposal  1, the  Company's
shares of Common Stock would be subject to potential  delisting  proceedings  by
AMEX.  In such  event,  the  liquidity  of the Common  Stock  could be  severely
restricted which could have a material adverse effect on the market value of our
Common Stock and the ability of stockholders to sell Common Stock.



                                      -6-


EFFECT OF THE PRIVATE PLACEMENTS ON EXISTING STOCKHOLDERS

         Advantages.  Prior to voting, each stockholder should consider the fact
that the private placements provided additional financing which was vital to the
Company's  efforts to continue  operations and pay creditors.  Each  stockholder
should  consider the fact that, at the time of the  transactions,  the Company's
capital resources were severely limited.  Moreover,  approval of this Proposal 1
will enable the Company to continue its listing on AMEX.

         Disadvantages. The private placements had a significant dilutive effect
on our stockholders.  Our stockholders'  aggregate percentage ownership declined
significantly  as a result of the  private  placements.  The number of shares of
Common Stock issued pursuant to the private placements  significantly  increased
the  number  of  shares  of  Common  Stock  outstanding.  This  means  that  our
stockholders owned a smaller  percentage  interest in the Company as a result of
the closing of the private placements as set forth below.

         Dilution  to  Stockholders  as a  result  of  the  March  2004  Private
Placement and July 2004 Private Placement

         For purposes of  illustration,  a stockholder  who owned  approximately
5.0% of our  outstanding  shares of  Common  Stock on March 4,  2004,  would own
approximately  4.68% of our  outstanding  shares  of  Common  Stock  immediately
following the March 2004 Private Placement, and would own approximately 4.62% of
our  outstanding  shares of Common Stock  immediately  following  the March 2004
Private  Placement,  assuming  full  exercise  of the  outstanding  warrants  to
purchase  2,173,913  pre-split  shares of Common  Stock issued in the March 2004
Private Placement.

         A stockholder who owned approximately 5.0% of our outstanding shares of
Common  Stock  as of  July  14,  2004,  would  own  approximately  4.0%  of  our
outstanding  shares of Common Stock immediately  following the July 2004 Private
Placement,   assuming  conversion  of  the  convertible  notes,  and  would  own
approximately 3.21% of our shares of Common Stock outstanding  immediately after
the July 2004  Private  Placement,  assuming  full  exercise of the  warrants to
purchase  56,000,000  pre-split  shares of Common  Stock issued in the July 2004
Private Placement.

         Potential  Dilution to Stockholders as a result of each of the December
2004 Private Placement and January 2005 Private Placement

         A stockholder who owned approximately 5.0% of our outstanding shares of
Common Stock on March 4, 2004, would own the following  percentage of our Common
Stock following each private placement set forth in this Proxy Statement:

          o  approximately  2.82% of our  shares  of  Common  Stock  outstanding
          immediately  following  the  July  2004  Private  Placement,  assuming
          conversion of the convertible  notes and full exercise of the warrants
          to purchase 56,000,000 pre-split shares of Common Stock;

          o  approximately  2.10% of our  outstanding  shares  of  Common  Stock
          immediately  following the December 2004 Private  Placement,  assuming
          full  exercise of warrants  to purchase  227,506  shares of our Common
          Stock and conversion of an aggregate of $546,014 outstanding principal
          and interest on the convertible  notes at an initial  conversion price
          of $2.40 per share; and

          o  approximately  1.19% of our  shares  of  Common  Stock  outstanding
          immediately following the January 2005 private placement, assuming (a)
          full exercise of the warrants to purchase  1,666,667  shares of Common
          Stock,  (b) full  exercise  of the  additional  investment  rights  to
          purchase  Convertible  Debentures in the aggregate principal amount of
          $1,320,000 initially convertible at $2.40 per share, (c) full exercise
          of  additional  investment  rights to  purchase  warrants  to purchase


                                      -7-


          550,000 shares of Common Stock, and (d) full exercise by our financial
          advisor of warrants to purchase 116,666 shares of Common Stock.

VOTE REQUIRED

         Ratification of the transactions  described in this Proposal 1 requires
the  affirmative  vote of a majority of the  outstanding  shares of Common Stock
present in person or represented by proxy at the Special Meeting and entitled to
vote at the  Special  Meeting.  Abstentions  will have the same  effect as votes
against the  proposal  and broker  non-votes  will have no effect.  The Board of
Directors recommends a vote "FOR" approval of the Proposal.

                THE BOARD OF DIRECTORS RECOMMENDS YOU VOTE "FOR"
                 RATIFICATION OF EACH OF THE MARCH 2004 PRIVATE
                   PLACEMENT AND JULY 2004 PRIVATE PLACEMENT




                                      -8-



--------------------------------------------------------------------------------
                                   PROPOSAL 2

                  TO APPROVE THE SALE AND ISSUANCE OF SHARES OF
                         COMMON STOCK IN CONNECTION WITH
                     THE DECEMBER 2004 PRIVATE PLACEMENT OF
                       CONVERTIBLE NOTES IN THE AGGREGATE
                          PRINCIPAL AMOUNT OF $452,000

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

TERMS AND CONDITIONS OF THE DECEMBER 2004 PRIVATE PLACEMENT

         On December 2, 2004,  pursuant to a Note Purchase  Agreement (the "Note
Agreement"),  the Company issued  convertible  promissory notes (the "Notes") in
the aggregate principal amount of $400,000,  bearing interest at the rate of six
percent (6.0%) per annum, due March 1, 2005, to each of Platinum  Partners Value
Arbitrage Fund L.P.,  Briarwood  Investments and Design  Investments Ltd., three
institutional  accredited investors (the "December 2004 Private Placement").  In
connection  with the  December  2004  Private  Placement,  the Company  issued a
convertible  promissory  note in the  principal  amount of $52,000 to Harborview
Capital  Management  LLC as an advisory fee on the same terms and  conditions as
the  institutional  investors.  As part of the terms and  conditions of the Note
Agreement, the Company issued to the investors an aggregate of 480,000 shares of
Common Stock and the financial  advisor  received 48,000 shares of Common Stock.
BY LETTER AGREEMENT DATED JANUARY 11, 2005 (THE "LETTER AGREEMENT"), EACH OF THE
INVESTORS  AND THE FINANCIAL  ADVISOR  AGREED NOT TO VOTE THEIR SHARES OF COMMON
STOCK ON THIS  PROPOSAL 2 AT THE SPECIAL  MEETING OR SELL THEIR SHARES OF COMMON
STOCK UNLESS AND UNTIL STOCKHOLDER APPROVAL OF THIS PROPOSAL 2 HAS BEEN OBTAINED
AT THE SPECIAL MEETING.

         The Notes  provide  that one hundred and twenty  percent  (120%) of the
outstanding principal amount is automatically  convertible into those securities
of the Company  issued in any  subsequent  transaction by the Company with gross
proceeds  to the  Company  of a  minimum  of  $1,000,000  ("Triggering  Event").
Interest  on the  notes is  payable  in cash or those  securities  issued by the
Company in a  subsequent  transaction.  As a result of the January  2005 Private
Placement  transaction  set forth in Proposal 3 below,  the amount of  $546,014,
equal to one hundred and twenty percent (120%) of the outstanding  principal and
interest amount of the Notes,  was  automatically  converted into 8% convertible
redeemable  notes,  which notes have an initial  conversion price of $2.40 cents
per share, initially convertible into 227,506 shares of common stock, and common
stock  purchase  warrants to purchase an aggregate  of 227,506  shares of Common
Stock at an initial exercise price of $2.40 per share.

         Under the Note  Agreement,  the Company is  obligated  to register  for
resale the  securities  issuable upon  conversion of the notes and the shares of
Common Stock issuable to the investors on its next registration  statement filed
with the SEC.

         At the time of the  December  2004 Private  Placement,  the Company had
5,310,013 post-split shares of Common Stock issued and outstanding. The December
2004 Private Placement  represented  approximately 14.2% of the Company's issued
and outstanding shares of Common Stock.

REASONS FOR THE DECEMBER 2004 PRIVATE PLACEMENT

         The  principal  reasons  for  the  private  placement  were  to  obtain
additional  capital critical to the Company's ability to continue its operations
and pay creditors.  The private placement was entered into as 



                                      -9-


a bridge financing negotiated as part of its strategy to obtain significant long
term financing for the Company within the next thirty to sixty day period.

REASONS FOR STOCKHOLDER APPROVAL

         AMEX  Company  Guide  Section  713  requires  stockholder  approval  in
connection with a transaction  other than a public offering  involving the sale,
issuance  or  potential  issuance by the issuer of common  stock (or  securities
convertible  into common  stock) equal to 20% or more of  presently  outstanding
stock for less than the greater of book or market value of the stock.

         By letter  dated  January 21, 2005 from AMEX to the  Company,  AMEX has
previously  approved the listing of 528,000 shares of Common Stock issued by the
Company to the  investors and financial  advisor under the Note  Agreement.  The
total  number of shares of Common  Stock  that may be issued by the  Company  in
connection  with the December 2004 Private  Placement is dependent  upon,  among
other things,  whether the  convertible  notes are converted or the warrants are
exercised, whether the principal or interest on the convertible notes is paid in
cash or shares of Common  Stock and the market price of the Common Stock used in
calculating any such payments, and whether or not the redemption or antidilution
adjustment provisions of the convertible notes and/or warrants come into effect.
Pursuant to the Letter Agreement, the investors and the financial advisor agreed
not to vote, or sell their shares of Common Stock unless stockholder approval is
obtained for the Company.

         As of the Record Date for this Meeting,  none of the convertible  notes
had been  converted  into  Common  Stock,  none of the  warrants  issued  to the
investors had been  exercised and no principal or interest  amount has been paid
in shares of Common  Stock.  The  Company  currently  intends to satisfy  future
principal and interest due on the  convertible  notes in shares of Common Stock.
Since the private  placement  described in this  Proposal 2,  together  with the
private  placement  described in Proposal 3, involves the potential  issuance by
the  Company  of shares of Common  Stock  equal to 20% or more of the  Company's
outstanding Common Stock at below the greater of the book or market value of the
Common Stock,  stockholder  approval of the private  placement is required.  The
Company is asking its stockholders to approve this Proposal 2 so that all shares
of Common Stock issuable upon conversion of the  convertible  notes and exercise
of warrants will be eligible for listing on the AMEX.

         If the  stockholders  do not approve this Proposal 2, the Company would
not be  permitted  to issue shares of Common Stock which equal or exceed the 20%
threshold and the Company would be forced to pay the convertible  notes in cash,
thereof  severely  impacting the Company's  ability to fund its  operations.  To
avoid this result,  the Company may be required to voluntarily delist from AMEX.
In such event,  the  liquidity of the Common Stock could be severely  restricted
and such  restrictions  could have a material adverse effect on the market value
of our Common Stock.

EFFECT OF THE PRIVATE PLACEMENT ON EXISTING STOCKHOLDERS

         Advantages.  Before voting,  each stockholder  should consider the fact
that the private placement provided additional  financing which was vital to the
Company's efforts to continue operations.  Each stockholder should also consider
the fact that the Company's current capital resources are limited.

         Disadvantages.  The private  placement has had and, if the  convertible
notes are converted and warrants are exercised,  will have a dilutive  effect on
our  current  stockholders.   Our  current  stockholders'  aggregate  percentage
ownership will decline  significantly as a result of the private placement.  The
number of shares issued  pursuant to the private  placement  will  substantially
increase the number of shares of Common Stock currently outstanding.  This means
that our current  stockholders  will own a smaller  interest in the Company as a
result of the private placement as set forth below.



                                      -10-


         All shares of Common Stock issuable  pursuant to the private  placement
will be entitled  to  registration  rights.  Consequently,  if these  shares are
registered,  the shares may be freely transferable without restriction under the
Securities Act of 1933, as amended,  absent other  securities law  restrictions.
Such free transferability could materially and adversely affect the market price
of our  Common  Stock if a  sufficient  number  of such  shares  are sold in the
market.

         Dilution to Stockholders as a result of the December 2004 Private 
Placement

         For purposes of  illustration,  a stockholder  who owned  approximately
5.0% of our  outstanding  shares of Common  Stock on  December  2,  2004,  owned
approximately  4.38% of our outstanding shares of Common Stock immediately after
the December 2004 Private  Placement,  and would own approximately  4.22% of our
shares of Common Stock  outstanding  immediately after the December 2004 private
placement,  assuming full exercise of the warrants to purchase 227,506 shares of
common  stock and  conversion  of the  $546,014  of  outstanding  principal  and
interest of the notes issued in the December 2004 Private Placement at $2.40 per
share.

         Potential Dilution to Stockholders as a result of the January 2005 
Private

         A stockholder who owned approximately 5.0% of our outstanding shares of
Common Stock on December 2, 2004, would own approximately 2.40% of our shares of
Common  Stock  outstanding   immediately  following  the  January  2005  Private
Placement,  assuming  (a) full  exercise of the  warrants to purchase  1,666,667
shares of Common Stock, (b) full exercise of the additional investment rights to
purchase Convertible  Debentures in the aggregate principal amount of $1,320,000
initially  convertible  at $2.40 per  share,  (c) full  exercise  of  additional
investment  rights to purchase  warrants to  purchase  550,000  shares of Common
Stock,  and (d) full  exercise  by our  financial  advisor  of the  warrants  to
purchase 116,666 shares of Common Stock.

         Potential Dilution to Stockholders as a result of Lower Conversion 
Prices

         In addition to the foregoing  dilution,  the following table summarizes
the number of shares of Common Stock issuable by the Company upon  conversion of
the Notes, assuming a conversion price of $1.80 per share, a conversion price of
$1.20 per share and a conversion  price of $0.60 cents per share. The table also
reflects the resulting  beneficial  ownership of the Company's Common Stock by a
stockholder  owning 5% of the  Company's  outstanding  shares  of  Common  Stock
immediately prior to and after the conversion at each price.



------------------------- ---------------------- ------------------------------- -------------------------------
Conversion Price per      No. of Shares          Ownership prior to conversion   Ownership after conversion
share                     Issuable
------------------------- ---------------------- ------------------------------- -------------------------------
                                                                          
$1.80                     303,341                5%                              4.17%
------------------------- ---------------------- ------------------------------- -------------------------------
$1.20                     455,011                5%                              4.07%
------------------------- ---------------------- ------------------------------- -------------------------------
$0.60                     910,023                5%                              3.81%
------------------------- ---------------------- ------------------------------- -------------------------------


         Potential Dilution Effect of Short Sales by Investors in Notes

         As a result of the conversion of the Notes into Convertible  Debentures
set forth in  Proposal  3 of this  Proxy  Statement,  the  Notes  are  currently
convertible  by the  investors or  redeemable  by the Company at a floating rate
that may be below the market price of the Common Stock at the time of conversion
or  



                                      -11-


redemption.  As a result, the lower our Common Stock price at the time the Notes
are  converted  or  redeemed,  the greater  number of shares of Common Stock the
holder  shall  receive.  To the extent the holders  sell their  shares of Common
Stock in the public marketplace, the Common Stock price may decrease as a result
of the  additional  shares in the  marketplace.  This could allow the holders to
receive  a  greater  number  of  shares  of  Common  Stock  upon  conversion  or
redemption, the sales of which could further depress the Common Stock price. The
significant  downward  pressure on the price of the Common  Stock as the holders
acquire and sell  material  amounts of our Common  Stock could  encourage  short
sales by the holders and other  stockholders in which the  short-sellers  borrow
Common Stock and sell the borrowed stock at the current market price in the hope
of buying it in the future at a lower price.  This short selling  activity could
place further downward pressure on the price of our Common Stock. The agreements
governing the Notes and  Convertible  Debentures do not contain  prohibitions on
short selling activities by the holders of such securities.

SUMMARY OF MATERIAL TERMS OF THE DECEMBER 2004 PRIVATE PLACEMENT

         Additional Securities upon Conversion

         The Note Agreement  provides  that, if the automatic  conversion of the
Notes into other  securities  issued by the Company in a subsequent  transaction
occurs,  the Company  shall,  upon such  conversion,  pay to the  investors  and
financial  advisor an  additional  aggregate  amount of $90,400,  payable to the
investors  and financial  advisor in proportion to the amount of their  purchase
price  through  the  issuance  by the  Company to the  investors  of  additional
securities in the transaction,  on the same terms and conditions as set forth in
the  transaction.  This premium  payment shall result in additional  dilution to
existing stockholders.

         Representations and Warranties

         The Note  Agreement  contains  representations  and  warranties  by the
Company relating to, among other things,  capitalization,  due  authorization of
the issuance and sale of the Notes,  SEC filings and financial  statements,  the
lack of material adverse changes and material  breaches,  defaults or violations
in the Company's charter documents,  statutes,  court or governmental  orders or
material  contracts  resulting  from the Company's  signing or completion of the
private  placement.   The  Note  Agreement  also  contains  representations  and
warranties  by the investors  relating to, among other  things,  their status as
accredited investors, investment intent, and due authorization.

         Registration Rights

         The  Company has agreed to register at its expense the shares of Common
Stock issued and issuable upon conversion of the Notes, on the next registration
statement the Company filed with the SEC and to use its best efforts to have the
registration  statement  declared  effective  by the SEC  within 90 days of such
filing date. The Company has agreed to keep the registration statement effective
until  the  earlier  of (i) the  date  upon  which  all  shares  covered  by the
registration statement have been sold, or (ii) the date when all such shares may
be sold without any restriction under Rule 144 of the Securities Act of 1933. In
the event the Company fails to file the registration statement within the period
contemplated by the Note Agreement or the registration statement is not declared
effective  within the  contemplated  90 days,  the Company has agreed to pay the
investors  liquidated  damages  equal to 1% of their  initial  investment in the
notes for each 30 day period (or portion thereof) for which the Company is late.
The Company has also agreed pay all expenses  associated with each registration,
including  filing and printing fees,  counsel and accounting  fees and expenses,
listing fees and other reasonable fees.



                                      -12-


VOTE REQUIRED

         Approval of the  issuance of the shares of Common  Stock  described  in
this Proposal 2 requires the  affirmative  vote of a majority of the outstanding
shares of common stock present in person or  represented by proxy at the Special
Meeting and entitled to vote at the Special  Meeting.  Abstentions will have the
same effect as votes  against the  proposal  and broker  non-votes  will have no
effect. The Board of Directors recommends a vote "FOR" approval of the Proposal.

                THE BOARD OF DIRECTORS RECOMMENDS YOU VOTE "FOR"
           APPROVAL OF THE DECEMBER 2004 PRIVATE PLACEMENT TRANSACTION


















                                      -13-





--------------------------------------------------------------------------------
                                   PROPOSAL 3

           TO APPROVE THE SALE AND ISSUANCE OF SHARES OF COMMON STOCK
          IN CONNECTION WITH THE JANUARY 2005 PRIVATE PLACEMENT OF 8%
            CONVERTIBLE REDEEMABLE DEBENTURES, COMMON STOCK PURCHASE
           WARRANTS AND ADDITIONAL INVESTMENT RIGHTS IN THE AGGREGATE
                      PRINCIPAL AMOUNT OF UP TO $4,000,000
--------------------------------------------------------------------------------

TERMS AND CONDITIONS OF THE JANUARY 2005 PRIVATE PLACEMENT

         On January 12, 2005,  the Company  entered  into a securities  purchase
agreement  ("Securities  Purchase  Agreement") with DKR Soundshore Oasis Holding
Fund Ltd.,  Harborview  Master Fund, L.P. and Platinum  Partners Value Arbitrage
Fund, L.P., each an institutional investor, pursuant to which the Company agreed
to sell,  and the  investors  agreed  to  purchase,  8%  convertible  redeemable
debentures ("Convertible Debentures") in the aggregate principal amount of up to
$4,000,000  and  five-year  warrants  ("January  Warrants")  to  purchase  up to
1,666,667  shares of common  stock at an  initial  exercise  price of $2.40 (the
"January 2005 Private  Placement").  The Convertible  Debentures are convertible
into Common Stock at an initial  conversion  price of $2.40.  A first closing of
$2,000,000  occurred on January 13, 2005 ("First  Closing") and a second closing
of $2,000,000 shall occur upon the completion of closing conditions set forth in
the Securities Purchase Agreement ("Second  Closing").  The Company is obligated
to redeem  one-fifth of the  principal  and interest  amount on the  Convertible
Debentures in cash or, at the option of the Company,  shares of Common Stock, on
the first day of each month,  commencing on the earlier of (a) May 12, 2005, and
(b) the  first  date  following  the 20th day after  the  effective  date of the
registration  statement  registering  for resale the  securities  issuable  upon
conversion of the Convertible  Debentures and exercise of January Warrants,  and
ending upon the full  redemption of the Convertible  Debentures.  If the Company
elects to make  redemption  payments in shares of Common  Stock,  the  principal
amount is convertible  based upon a conversion  price equal to the lesser of the
initial  conversion price, or 85% of the average of the three lowest closing bid
prices for the  Company's  Common Stock  during the 20 trading days  immediately
prior to the monthly  redemption  date.  The Company is also obligated to pay 8%
interest on the outstanding  principal on the Convertible  Debentures (i) on the
effective date on which the Convertible  Debentures are converted into shares of
Common Stock of the Company,  (ii) on each monthly  redemption  date or (iii) on
the maturity date, at the interest conversion rate.

         Assuming the maximum amount of $4,000,000 is purchased, the Company has
agreed  to issue to the  investors  additional  investment  rights  to  purchase
additional  Convertible  Debentures in the aggregate  principal  amount of up to
$1,320,000  along with five year  warrants to purchase an  aggregate  of 550,000
shares of the Company's  Common Stock,  on the same terms and  conditions as the
original Convertible Debentures and January Warrants.

         As a  result  of the  First  Closing  and as set  forth in  Proposal  2
described in this Proxy Statement,  previously  issued and outstanding  notes of
the Company in the aggregate principal amount of $452,000,  plus interest in the
amount of $3,614,  are  automatically  convertible  into one  hundred and twenty
percent  (120%) of principal  amount of  Convertible  Debentures,  together with
January  Warrants,  of the Company  having the same terms and  conditions as set
forth above. Upon each closing, in addition to a cash fee equal to eight percent
(8%) of the gross  proceeds,  the  Company's  financial  advisor is  entitled to
receive a warrant to purchase  seven  percent (7%) of the shares of Common Stock
issued or issuable upon conversion or exercise of the Convertible Debentures and
January  Warrants  at an initial  conversion  and  exercise  price of $2.40.  In
addition,  the Company must pay the financial advisor a cash commission 



                                      -14-


equal to 3% of the gross  proceeds  received by the Company upon the exercise of
the  January  Warrants  issued to the  investors  in the  January  2005  Private
Placement.

         The Company  has agreed to register  with the SEC 125% of the shares of
common  stock  issuable  upon  conversion  of principal  and interest  under the
Convertible  Debentures and upon exercise of the January Warrants.  In the event
that the Company fails to file a registration statement with the SEC by February
3,  2005,  or in the  event  such  registration  statement  is filed  but is not
declared  effective  by the SEC by April  30,  2005,  then the  Company  will be
obligated to pay the holders of the registrable  securities  liquidated  damages
equal  to 1.5% of  their  total  investment  for each 30 day  period  until  the
registration statement is filed or declared effective. The Company has agreed to
keep the registration statement effective until the earlier of (i) the date upon
which all shares covered by the  registration  statement have been sold, or (ii)
the  date  when  all  such  shares  are  eligible  to  be  sold  without  volume
restrictions under Rule 144(k) of the Securities Act of 1933.

         At the time of the  January  2005  Private  Placement,  the Company had
6,522,615  shares of Common Stock issued and  outstanding.  Assuming the initial
conversion price of the Convertible Debentures and exercise price of the January
Warrants  of  $2.40,  the  First  Closing  of  January  2005  Private  Placement
represented  approximately  25.5% of the Company's issued and outstanding shares
of Common Stock.

REASONS FOR THE PRIVATE PLACEMENT

         The Company submitted a compliance plan with AMEX to retain its listing
on the AMEX.  The  compliance  plan was accepted  subject to periodic  review by
AMEX. As part of its plan, the Company submitted quarterly  projections relating
to, among other things,  stockholders equity of the Company. The Company entered
into the January 2005 Private  Placement in furtherance of its compliance  plan,
and to enhance the Company's liquidity,  strengthen our balance sheet and obtain
additional capital critical to the Company's ability to continue its operations.
Pursuant to the terms of the January  2005 Private  Placement  we are  generally
prohibited from raising additional  financing through the issuance of securities
during the period from the First Closing  through the period ending 65 days from
the effective date of a registration  statement,  which could significantly harm
our ability to continue operations if the Second Closing does not occur.

REASONS FOR STOCKHOLDER APPROVAL

         AMEX Company Guide requires  stockholder  approval in connection with a
transaction  other  than a public  offering  involving  the  sale,  issuance  or
potential issuance by the issuer of common stock (or securities convertible into
common stock) equal to 20% or more of presently  outstanding stock for less than
the greater of book or market value of the stock.

         The number of shares of Common  Stock  outstanding  on January 12, 2005
was 6,522,615.  At the First Closing,  the Company issued a principal  amount of
$2,000,000 of Convertible  Debentures initially  convertible into 833,333 shares
of Common Stock, plus January Warrants exercisable into 833,333 shares of Common
Stock at an exercise  price of $2.40 per share,  for an  aggregate  of 1,666,666
shares of Common  Stock.  If the Second  Closing  occurs,  the  Company  will be
required to issue an additional number of shares of Common Stock upon conversion
of notes and exercise of warrants which would exceed the 19.99%  threshold.  The
total  number of shares of Common  Stock  that may be issued by the  Company  in
connection  with the January 2005 Private  Placement  is dependent  upon,  among
other things,  whether the  Convertible  Debentures are converted or the January
Warrants are  exercised,  whether the principal and interest on the  Convertible
Debentures is paid in cash or shares of Common Stock and the market price of the
Common  Stock used in  calculating  any such  payments,  and  whether or not the


                                      -15-


redemption or antidilution  adjustment provisions of the Convertible  Debentures
and/or January  Warrants come into effect.  Pursuant to the Securities  Purchase
Agreement,  the Company  agreed to seek  stockholder  approval  of the  possible
issuance to the investors of shares of Common Stock in excess of the AMEX 19.99%
share limitation.

         As of the  Record  Date  for  this  Meeting,  none  of the  Convertible
Debentures had been converted  into Common Stock,  none of the January  Warrants
issued to the investors had been  exercised and no principal or interest  amount
has been paid in shares  of Common  Stock.  The  Company  currently  intends  to
satisfy  future  principal  and interest due on the  Convertible  Debentures  in
shares of Common Stock.

         Since the private  placement  described in this Proposal 3 involves the
potential issuance by the Company of shares of Common Stock that would represent
more than 20% of the  outstanding  Common Stock at below the greater of the book
or  market  value of the  Common  Stock,  stockholder  approval  of the  private
placement is required. We are asking our shareholders to approve this Proposal 3
so that all shares of Common Stock issuable upon  conversion of the  Convertible
Debentures and exercise of the January  Warrants will be eligible for listing on
the AMEX.

         If the  stockholders  do not  approve  this  Proposal 3, and if we were
required,  pursuant  to the  terms  of the  Convertible  Debenture  and  January
Warrants,  to issue shares of Common Stock which  exceed the 20%  threshold,  we
would be required to redeem the Convertible  Debentures in cash. We currently do
not have available cash to redeem the Convertible  Debentures.  If we are unable
to raise adequate cash, we could be subject to delisting proceedings by AMEX. If
we are  delisted by AMEX,  the  liquidity  of the Common Stock could be severely
restricted  and such  restrictions  could have a material  adverse effect on the
market value of our Common Stock.

EFFECT OF THE PRIVATE PLACEMENT ON EXISTING STOCKHOLDERS

         Advantages.  Prior to voting, each stockholder should consider the fact
that the private  placement  will provide  additional  financing,  which will be
critically important to our efforts to continue our operations. Each stockholder
should consider the fact that our current capital  resources are limited.  If we
do not have  stockholder  approval,  we will be  unable  to  effect  the  Second
Closing.  Later  financing may not be available,  or may be available but not on
the same acceptable terms and conditions.

         Disadvantages. The private placement will have a dilutive effect on our
current stockholders.  Our current stockholders'  aggregate percentage ownership
will decline  significantly as a result of the private placement.  The number of
shares issued pursuant to the private placement will increase  substantially the
number of shares of Common  Stock  currently  outstanding.  This  means that our
current  stockholders  will own a smaller interest in the Company as a result of
the private placement.

         All  shares  of  Common  Stock  issuable  upon  the  conversion  of the
Convertible  Debentures  and issuable upon the exercise of the January  Warrants
will be entitled  to  registration  rights.  Consequently,  if these  shares are
registered,  the shares may be freely transferable without restriction under the
Securities Act of 1933, as amended,  absent other  securities law  restrictions.
Such free transferability could materially and adversely affect the market price
of our  Common  Stock if a  sufficient  number  of such  shares  are sold in the
market.

         Dilution to Stockholders as a result of the January 2005 Private 
Placement

         For purposes of  illustration,  a stockholder  who owned  approximately
5.0% of our  outstanding  shares of Common Stock on January 12, 2005,  would own
approximately  3.98% of the outstanding  shares of our Common Stock  immediately
following  the January 2005 Private  Placement,  assuming the maximum  amount of
$4,000,000 of Convertible  Debentures is sold, and would own approximately 2.95%
of our shares of Common  Stock  outstanding  immediately  after the January 2005
Private  Placement,  assuming  



                                      -16-


(i) full exercise of the warrants to purchase  1,666,667 shares of Common Stock,
(ii) full exercise of the additional  investment rights to purchase  Convertible
Debentures in the aggregate principal amount of $1,320,000 initially convertible
at $2.40 per share,  (iii) full  exercise  of  additional  investment  rights to
purchase  warrants to purchase  550,000  shares of Common  Stock,  and (iv) full
exercise by our financial  advisor of the warrants to purchase 116,666 shares of
Common Stock.

         Potential Dilution to Stockholders as a result of Lower Redemption or 
Conversion Prices

         In addition to the foregoing  dilution,  the following table summarizes
the number of shares of Common Stock issuable by the Company upon  conversion or
redemption of the  Convertible  Debentures,  assuming a conversion or redemption
price of $1.80 per share,  $1.20 per share and $0.60 cents per share.  The table
also reflects the resulting  beneficial  ownership of the Company's Common Stock
by a stockholder  owning 5% of the Company's  outstanding shares of Common Stock
immediately prior to or after the conversion or redemption at each price.



------------------------- ---------------------- ------------------------------- --------------------------------
Conversion or             No. of Shares          Ownership prior to conversion   Ownership after conversion or  
Redemption Price per      Issuable               or redemption                   redemption
share
------------------------- ---------------------- ------------------------------- --------------------------------
                                                                          
$1.80                     2,955,555              5%                              2.76%
------------------------- ---------------------- ------------------------------- --------------------------------
$1.20                     4,433,333              5%                              2.45%
------------------------- ---------------------- ------------------------------- --------------------------------
$0.60                     8,866,666              5%                              1.84%
------------------------- ---------------------- ------------------------------- --------------------------------


         Potential Dilution Effect of Short Sales by Investors in Convertible 
Debentures

         The  Convertible   Debentures  are  convertible  by  the  investors  or
redeemable  by the Company at a floating rate that may be below the market price
of the Common Stock at the time of conversion or  redemption.  As a result,  the
lower  our  Common  Stock  price  at the  time the  Convertible  Debentures  are
converted or redeemed,  the greater  number of shares of Common Stock the holder
shall  receive.  To the extent the holders  sell their shares of Common Stock in
the public  marketplace,  the Common Stock price may decrease as a result of the
additional shares in the marketplace.  This could allow the holders to receive a
greater  number of shares of Common Stock upon  conversion  or  redemption,  the
sales of which could  further  depress the Common Stock price.  The  significant
downward  pressure on the price of the Common  Stock as the holders  acquire and
sell  material  amounts of our Common Stock could  encourage  short sales by the
holders and other  stockholders in which the  short-sellers  borrow Common Stock
and sell the borrowed stock at the current market price in the hope of buying it
in the future at a lower price.  This short selling activity could place further
downward pressure on the price of our Common Stock. The agreements governing the
Convertible Debenture do not contain prohibitions on short selling activities by
the holders of such securities.

DESCRIPTION OF THE PROPOSAL

         The Board is requesting  that the  stockholders  of the Company approve
the  issuance of shares of Common Stock upon  conversion  or  redemption  of the
Convertible  Debentures  and upon exercise of the January  Warrants,  as well as
such  additional  shares of Common Stock that may be issued  pursuant to certain
anti-dilution  provisions  of the  Convertible  Debentures  or in  lieu  of cash
interest payments.



                                      -17-


SUMMARY OF MATERIAL TERMS OF THE JANUARY 2005 PRIVATE PLACEMENT

         The Securities  Purchase  Agreement,  Convertible  Debenture,  Warrant,
Additional  Investment  Right and  Registration  Rights  Agreement have has been
filed with the SEC as exhibits 10.1 10.2, 10.3, 10.4 and 10.5, respectively,  to
the Company's  Form 8-K filed on January 14, 2005. The following is a materially
complete summary of the transaction documents.

         8% Convertible Debenture

         If the Second Closing  occurs,  the Company will issue to the investors
Convertible  Debentures  in the aggregate  principal  amount of up to $4,000,000
bearing  interest at the rate of eight percent (8.0%) per annum, due December 1,
2005  payable on each  conversion  date,  the  maturity  date,  and each monthly
redemption date, at the Company's  option,  in cash or shares of Common Stock at
the interest  conversion rate. The interest  conversion rate means the lesser of
(a) the  conversion  price and (b) 90% of the  lesser of the  average  of the 10
closing prices immediately prior to the applicable  interest payment date or the
date such shares are issued and  delivered,  if later than the interest  payment
date.

         Subject to limitations on ownership by the investors,  the  Convertible
Debentures are convertible into shares of Common Stock at any time at the option
of the investors at an initial conversion price of $2.40.

         Interest on the Convertible Debentures may be payable in cash or shares
of Common  Stock or a  combination  thereof at the  discretion  of the  Company;
provided,  however, that payment in shares of Common Stock may only occur if all
of the equity conditions under the Convertible  Debentures are met. All past due
accrued and unpaid  interest  to be paid shall  entail a late fee at the rate of
eighteen percent (18%) per annum,  which would accrue daily,  from the date such
interest is due through and including the date of payment.

         Negative Covenants

         So long as any  principal  amount under the  Convertible  Debentures is
outstanding, the Company shall not:

         o     enter  into,  create,  incur,  assume  or  suffer  to  exist  any
               indebtedness  or liens of any kind,  on or with respect to any of
               its  property  or assets now owned or  hereafter  acquired or any
               interest  therein  or any  income or  profits  therefrom  that is
               senior to, or pari passu with (for purposes of clarification, any
               security  interest  of any kind  shall be  deemed a lien  that is
               senior to the Convertible  Debentures and therefore  prohibited),
               in any respect,  the Company's  obligations under the Convertible
               Debentures;
              
         o     amend its certificate of  incorporation,  bylaws or other charter
               documents so as to adversely  affect any rights of the holders of
               the Convertible Debentures;
              
         o     repay,  repurchase  or offer to repay,  repurchase  or  otherwise
               acquire  more than a de  minimis  number of shares of its  Common
               Stock or other equity  securities other than as to the conversion
               shares to the extent  permitted or required  under the Securities
               Purchase  Agreement or as otherwise  permitted by the  Securities
               Purchase Agreement; or
              
         o     enter into any agreement with respect to any of the foregoing.
              
         Events of Default

         Under the Convertible Debenture, the following events constitute events
of  default  of the  Company,  accelerating  the  payment  by the  Company  of a
mandatory prepayment amount:  default in the 


                                      -18-


payment of principal or interest or liquidated  damages,  material  default of a
covenant or agreement in the Convertible  Debenture or other material agreement,
breach of a representation or warranty, commencement of bankruptcy or insolvency
proceedings,  failure of the Common  Stock to be  eligible  for  quotation  on a
national  exchange or quotation system or the OTC Bulletin Board and the failure
of the registration statement to have been declared effective on or prior to 180
calendar days after the closing date.

         Warrants

         In addition  to the  Convertible  Debentures  and  assuming  the Second
Closing  occurs,  the Company will issue to the  investors  January  Warrants to
purchase an aggregate of 1,666,666  shares of Common Stock. The January Warrants
will have a term of five  years and will be  exercisable  at an  exercise  price
equal to $2.40 per share.

         During the period that the January Warrants will be outstanding, except
for certain  exempt  issuances,  if the Company  shall offer,  sell or otherwise
issue any  securities at an effective  price per share of Common Stock less than
the exercise  price,  then the exercise  price of the January  Warrants shall be
reduced on a weighted average basis. This provision shall apply for any warrants
issued in connection  with any  additional  investment  right  exercised by such
investor.

         Registration

         The Company  has agreed to  register  the Common  Stock  issuable  upon
conversion of the Convertible Debentures and exercise of the January Warrants by
filing a registration statement with the SEC within 20 days of the First Closing
(as defined below) and to have the registration  statement declared effective by
the SEC within 90 days of such closing date.  The Company has agreed to keep the
registration  statement  effective  until the earlier of (i) the date upon which
all shares  covered by the  registration  statement  have been sold, or (ii) the
date when all such shares are  eligible to be sold without  volume  restrictions
under Rule 144(k) of the  Securities Act of 1933. In the event the Company fails
to file the  registration  statement  within 20 days of the closing  date or the
registration  statement is not declared effective within 90 days of such closing
date,  the Company has agreed to pay the investors  liquidated  damages equal to
1.5% of their total  investment for each 30 day period (or portion  thereof) for
which  the  Company  is late.  The  Company  has also  agreed  pay all  expenses
associated with each  registration,  including filing and printing fees, counsel
and accounting fees and expenses,  costs associated with clearing the securities
for sale  under  applicable  state  securities  laws,  listing  fees  and  other
reasonable fees.

         Closing

         The First  Closing  for an  aggregate  amount of up to  $2,000,000  has
occurred.  The Second Closing for an aggregate  amount of $2,000,000 shall occur
within  3  trading  days  of the  date  following  the  date  that  the  initial
registration  statement filed by the Company in connection with the Agreement is
first declared effective by the SEC.

         Conditions to Second Closing

         The Second  Closing of the  private  placement  is  conditioned  on the
satisfaction of various conditions, among others:

         o     the accuracy in all material respects of the  representations and
               warranties;
             


                                      -19-


         o     compliance   with  the  Company's   obligations,   covenants  and
               agreements prior to closing;
             
         o     delivery of customary closing documents including  debentures and
               warrants;
             
         o     no event which could have a material  adverse effect with respect
               to the Company;
             
         o     the Company shall have filed a  registration  statement  with the
               SEC which has been declared  effective on or before the six month
               anniversary of the date of the Securities  Purchase Agreement and
               no event of default shall have occurred under the debenture.
             
         Representations and Warranties

         The  Securities   Purchase  Agreement  contains   representations   and
warranties by the Company relating to, among other things,  its  capitalization,
due  authorization,  the issuance  and sale of the  Convertible  Debentures  and
January Warrants,  the Company's SEC filings and financial statements,  the lack
of material adverse changes and material breaches, defaults or violations in the
Company's charter documents,  statutes, court or governmental orders or material
contracts  resulting  from the  Company's  signing or  completion of the private
placement, and the Company's tax matters,  intellectual property, litigation and
insurance   coverage.   The   Securities   Purchase   Agreement   also  contains
representations and warranties by the investors relating to, among other things,
their status as accredited or institutional investors.

         Participation in Future Financings

         The Securities  Purchase  Agreement provides that, from the date of the
agreement  until  the two  year  anniversary  of the  First  Closing,  upon  any
financing  by the Company or any of its  subsidiaries  of Common Stock or Common
Stock  equivalents other than an exempt issuance of securities by the Company (a
"Subsequent Financing"), each investor shall have the right to participate in up
to  100%  of the  Subsequent  Financing.  If  such  investors  do not  elect  to
participate  in a Subsequent  Financing for a minimum of 25% of the  outstanding
securities, the right to participate in Subsequent Financings shall terminate.

        Prohibition on Certain Financings

         The Securities  Purchase  Agreement provides that, from the date of the
Securities  Purchase Agreement until 65 days following the effective date of the
registration  statement,  the  Company  shall not issue  securities  except  for
certain exempt  issuances of securities.  Also,  from the date of the Securities
Purchase Agreement until no investor holds Convertible  Debentures,  the Company
shall be  prohibited  from  effecting  or  entering  into any  variable  rate or
floating  rate  transactions,  including  transactions  with  repricing or reset
provisions.  Unless  shareholder  approval is obtained  and deemed  effective by
AMEX,  the  Company  shall  not  issue  any  securities  which  would  cause any
adjustment  of the  conversion  price to the extent the  holders of  Convertible
Debentures  would not be permitted to convert their  Convertible  Debentures and
exercise their January Warrants.

DETERMINATION  BY  THE COMPANY NOT  TO  SEEK STOCKHOLDER APPROVAL OF EQUITY LINE
FINANCING

         Concurrently with the Company's  entering into the January 2005 Private
Placement, the Company entered into a securities purchase agreement (the "Equity
Line  Agreement")  with each of Yokuzuna  Holdings and  Harborview  Master Fund,
L.P.,  two  institutional   investors,   whereby,  subject  to  certain  closing
conditions and other  criteria  being met, such  investors  agreed to provide an
equity line of credit to the Company (the "Equity Line  Financing")  to purchase
from the Company an aggregate amount


                                      -20-



of up to  $25,000,000  through  the  issuance  of shares of Common  Stock by the
Company to the investors.  Since at least one of the investors  which is a party
to the Equity Line Agreement also owns Convertible Debentures with a fluctuating
conversion or redemption price, the investor could potentially  affect the terms
on which the investor could  purchase the shares of Common Stock  underlying the
Equity Line Financing through conversion or redemption of Convertible Debentures
and the  sale of  shares  of  Common  Stock  acquired  following  conversion  or
redemption of the Convertible Debentures into the public marketplace. Therefore,
the investor is considered  not to be  irrevocably  bound to purchase  shares of
Common Stock and the Equity Line  Financing  does not  constitute a viable means
for the Company to obtain capital under current  interpretations  of the federal
securities laws by the SEC relating to "equity line" financing arrangements.  As
a result,  the Company  will not be able to register  the shares of Common Stock
underlying  the  Equity  Line  Financing  or draw down under the line of credit.
Therefore the Company has  determined  not to seek  stockholder  approval of the
Equity Line  Financing at this time.  Although  there can be no assurances  that
this will occur, the Company may determine to seek  stockholder  approval of the
Equity  Line  Financing  in the  future in the event the  investors  who own the
Convertible  Debentures  no  longer  own  any of  these  securities  or if a new
investor  unaffiliated  with the current  investors agrees to participate in the
Equity Line Financing.



VOTE REQUIRED

         Approval of the transactions  described in this Proposal 3 requires the
affirmative vote of a majority of the outstanding shares of Common Stock present
in person or represented by proxy at the Special Meeting and entitled to vote at
the Special Meeting.  Abstentions will have the same effect as votes against the
proposal  and  broker  non-votes  will have no  effect.  The Board of  Directors
recommends a vote "FOR" approval of the Proposal.

                THE BOARD OF DIRECTORS RECOMMENDS YOU VOTE "FOR"
           APPROVAL OF THE JANUARY 2005 PRIVATE PLACEMENT TRANSACTION




                                      -21-





       ------------------------------------------------------------------
                                   PROPOSAL 4

          APPROVAL OF AN AMENDMENT TO THE 2005 STOCK INCENTIVE PLAN TO
         INCREASE THE NUMBER SHARES OF COMMON STOCK ISSUABLE THEREUNDER
       ------------------------------------------------------------------

         On September 15, 2004, the Board of Directors adopted,  and on November
18, 2004 the  stockholder's  approved,  the Company's 2005 Stock  Incentive Plan
(the  "2005  Plan").  The 2005 Plan was  designed  to provide  an  incentive  to
employees  (including  directors  and  officers  who  are  employees),   and  to
consultants  and  directors who are not employees of the Company and to offer an
additional inducement in obtaining the services of such persons.  Moreover,  the
2005 Plan was  designed  to  compensate  both  current or former  employees  and
consultants of the Company to whom the Company had commitments or obligations.

INCREASE  OF  THE  NUMBER OF COMMON SHARES OF COMMON STOCK RESERVED FOR ISSUANCE
UNDER THE 2005 PLAN

         The Company is  proposing to amend the 2005 Plan to increase the number
of shares of Common Stock available for issuance (the  "Amendment").  Currently,
the aggregate  number of shares  available for issuance  under the 2005 Plan was
limited to 5,500,000 shares of Common Stock.

         During  the  period  from  November  18,  2004  (the  date on which the
approval of the current  maximum  number of shares  available for issuance under
the Plan was based) to the Record Date,  an  aggregate  of  5,500,000  shares of
Common  Stock  have been  issued  or  reserved  for  issuance  to the  Company's
employees, consultants and directors through restricted stock awards or reserved
for the  exercise of options,  thereby  reducing  the number of shares of Common
Stock  currently  available for issuance under the Plan by this same number.  An
additional  3,144,807  shares of Common Stock have been approved for issuance to
the Company's  employees,  consultants and directors  through  restricted  stock
awards or  reserved  for the  exercise  of  options  by the  Company's  board of
directors,  subject to  stockholder  approval of this Proposal 4 to increase the
number of shares of Common Stock available for issuance under the 2005 Plan. The
aggregate  number of  8,644,807  shares  of Common  Stock,  which  includes  the
5,500,000  shares  of  Common  Stock   previously   approved  by  the  Company's
stockholders,  is set forth under the New Plan Benefits table on page 29 of this
Proxy Statement.

         Accordingly,  as of March 4, 2005,  there are no shares of Common Stock
available  for the grant of  restricted  stock awards and options under the 2005
Plan.

         Shareholders  will be asked to approve a  resolution  to amend the 2005
Plan to increase the number of shares available for issuance under the 2005 Plan
by an additional 10,000,000 shares of Common Stock. If the Amendment is approved
by  shareholders,  an  aggregate  of  15,500,000  shares of Common Stock will be
outstanding  or reserved for issuance or available  for issuance  under the 2005
Stock Incentive Plan.

RATIONALE  FOR  THE  AMENDMENT TO  INCREASE THE SHARES OF COMMON STOCK AVAILABLE
UNDER THE 2005 PLAN

         The Company is highly  dependent on its  employees due to the nature of
its business, particularly as it relates to the source code of its products, the
comprehension  of  which  resides  in our  current  employees,  as  well  as the
experience of other key employees  through their efforts in our nascent industry


                                      -22-


of healthcare connectivity.  Recently, the Company has been unable to adequately
compensate  its employees in cash in a timely  manner,  and has also had many of
its current and former employees  voluntarily agree to salary  reductions.  As a
result of our  reductions  in force,  there was  significant  uncertainty  among
existing  employees with respect to the stability of their own  employment  with
the Company. The 2005 Plan was and is a vital part of imbuing our employees with
an ongoing  sentiment of long-term  potential  and value of their  efforts.  The
extraordinary  circumstances the Company is facing has required a high degree of
dedication and commitment from its employees, for which the 2005 Plan was and is
the only potential  source of meaningful  and  appropriate  compensation.  Quite
simply,  much of the potential value  represented by the Company's  products and
opportunities  would  be  greatly  diminished  or  permanently  harmed,  if  its
remaining employees could not be granted  appropriate  incentives to remain with
the Company.  In addition to the  Company's  employees,  the Company  desires to
utilize  restricted  stock  awards to  compensate  third party  consultants  who
effectively  market our products on a performance basis. This will save costs to
the Company as an alternative to payment in cash which may not be available,  or
may be available through the issuance of securities of the Company at a discount
to market prices,  making such issuances more expensive than direct issuances to
consultants to satisfy  contractual  obligations of the Company to such persons.
In  addition,  payment of our  consultants  in shares of Common Stock aligns its
interests with the Company's and such  consultants have a vested interest in the
Company's  future  success.  Finally,  the rules of the American  Stock Exchange
require any issuances of shares to  consultants of the Company to be approved by
stockholders.

         The following is a materially complete summary of the 2005 Plan.

SHARES SUBJECT TO THE STOCK INCENTIVE PLAN AND ELIGIBILITY

         The 2005 Plan currently  authorizes the issuance of stock  appreciation
rights  ("SARs")  and the grant of options  and  restricted  stock  related to a
maximum of up to five million five hundred  thousand  (5,500,000)  shares of the
Company's issued and outstanding shares of Common Stock,  including the issuance
of any SARs,  options or restricted stock to employees  (including  officers and
directors  who are  employees),  and to  consultants  and  directors who are not
employees of the Company,  and to current and former employees of the Company to
whom the Company has commitments or obligations. If this Proposal 4 is approved,
the maximum  shares of Common Stock shall be  increased to fifteen  million five
hundred  thousand  (15,500,000)  shares.  Notwithstanding  the maximum number of
shares of the Company's  Common Stock available under the 2005 Plan, the Company
shall not grant SAR's,  options or restricted stock to its employees  (including
officers and directors who are  employees)  and  consultants in excess of thirty
(30%)  percent  of the  Company's  outstanding  shares  of  common  stock,  on a
fully-diluted,  as converted basis, including conversion of convertible notes or
exercise of warrants outstanding. Upon expiration, cancellation,  termination or
forfeiture  of stock grants or options,  the shares of the Common Stock  subject
thereto will again be available for grant under the 2005 Plan.

TYPE OF AWARD

         The  following  awards  ("Awards")  may be granted under the 2005 Plan:
stock options which are either  incentive  stock  options  ("ISOs"),  within the
meaning of Section 422 of the  Internal  Revenue  Code of 1986,  as amended (the
"Code"),  or nonqualified  stock options which do not qualify as ISOs ("NQSOs"),
SARs and  Common  Stock  which may or may not be  subject  to  contingencies  or
restrictions. ISOs, however, may only be granted to employees. The Company makes
no  representations  or warranties as to the  qualification  of any option as an
"incentive stock option" under the Code.



                                      -23-


ADMINISTRATION

         The 2005  Plan  will be  administered  by a  committee  of the Board of
Directors  consisting of at least three members of the Board (the  "Committee").
It is  intended  that  at  least  two (2)  members  of the  Committee  will be a
"non-employee  director" within the meaning of Rule 16b-3 (as the same may be in
effect and interpreted  from time to time, "Rule 16b-3")  promulgated  under the
Securities  Exchange Act of 1934, as amended (the  "Exchange  Act").  It is also
intended  that at least two (2)  members of the  Committee  will be an  "outside
director" within the meaning of Section 162(m) of the Code.

         Among other things, the Committee is empowered to determine, within the
express  limits  contained  in the 2005 Plan:  the  employees,  consultants  and
directors  who shall be granted  Awards;  the type of Award to be  granted;  the
times when an Award shall be granted; the number of shares of Common Stock to be
subject to each Award; the term of each option and SAR; the date each option and
SAR shall become  exercisable;  whether an option or SAR shall be exercisable in
whole or in installments and, if in installments, the number of shares of Common
Stock to be subject  to each  installment,  whether  the  installments  shall be
cumulative,  the date each installment shall become  exercisable and the term of
each  installment;  whether to accelerate  the date of exercise of any option or
SAR or  installment  thereof;  whether shares of Common Stock may be issued upon
the  exercise  of an option as partly  paid and,  if so, the dates  when  future
installments  of the  exercise  price  shall  become due and the amounts of such
installments;  the exercise price of each option and the base price of each SAR;
the  price,  if any,  to be paid for a share  Award;  the form of payment of the
exercise price of an option; the form of payment upon exercise of a SAR; whether
to  restrict  the sale or other  disposition  of a stock  Award or the shares of
Common  Stock  acquired  upon the  exercise  of an option or SAR and,  if so, to
determine whether such  contingencies and restrictions have been met and whether
and under what conditions to waive any such contingency or restriction;  whether
and under what  conditions  to subject all or a portion of the grant or exercise
of an  option  or SAR,  the  vesting  of a stock  Award or the  shares  acquired
pursuant  to the  exercise  of an option or SAR to the  fulfillment  of  certain
contingencies or restrictions,  including without  limitation,  contingencies or
restrictions  relating to entering into a covenant not to compete,  to financial
objectives and/or to the period of continued employment of the Award holder, and
to determine  whether such  contingencies or restrictions have been met; whether
an Award  holder is  disabled;  the  amount,  if any,  necessary  to satisfy the
obligation to withhold taxes or other amounts;  the fair market value of a share
of Common Stock;  with the consent of the Award  holder,  to cancel or modify an
Award,  pursuant to the terms of the Plan and the Code; to prescribe,  amend and
rescind rules and regulations relating to the Plan; and to approve any provision
which  under Rule 16b-3  requires  the  approval  of the Board of  Directors,  a
committee of  non-employee  directors or the  stockholders  to be exempt (unless
otherwise  specifically  provided  herein).  The Committee is also authorized to
prescribe, amend and rescind rules and regulations relating to the 2005 Plan and
to make all other  determinations  necessary or advisable for  administering the
2005 Plan and to construe each contract ("Contract") entered into by the Company
with an Award holder under the 2005 Plan.

TERMS AND CONDITIONS OF OPTIONS

         Options  granted  under the 2005 Plan will be subject  to,  among other
things, the following terms and conditions:

         (a)      The exercise  price of each option will be  determined  by the
                  Committee;  provided,  however,  that the exercise price of an
                  ISO may not be less than the fair  market  value of the Common
                  Stock on the date of grant (110% of such fair market  value if
                  the  optionee  owns (or is deemed to own) more than 10% of the
                  voting power of the Company).



                                      -24-


         (b)      Options may be granted for terms  determined by the Committee;
                  provided,  however,  that the term of an ISO may not exceed 10
                  years (5 years if the optionee owns (or is deemed to own) more
                  than 10% of the voting power of the Company).

         (c)      The maximum number of shares of Common Stock for which options
                  and SARs may be granted to an employee in any calendar year is
                  1,000,000.  In addition,  the  aggregate  fair market value of
                  shares  with  respect  to  which  ISOs  may be  granted  to an
                  employee which are  exercisable  for the first time during any
                  calendar year may not exceed $100,000.

         (d)      The  exercise  price of each  option is  payable  in full upon
                  exercise  or,  if  the   applicable   Contract   permits,   in
                  installments  over a maximum six month period.  Payment of the
                  exercise  price of an  option  may be made in cash,  certified
                  check or, if the applicable Contract permits, in mature shares
                  of Common Stock or any combination thereof.

         (e)      If eligible,  an optionee who uses previously  acquired shares
                  of Common Stock to exercise a prior option  granted  under the
                  Plan shall  automatically be granted an option to purchase the
                  same  number of shares so used;  provided,  however,  that the
                  exercise  price of the new  option  shall  be the fair  market
                  value  of the  Common  Stock  on the date of grant of such new
                  option;  and further  provided that if the prior option was an
                  ISO and at the time the new option is  granted,  the  optionee
                  owns (or is deemed to own) more than 10% of the  voting  power
                  of the Company,  the exercise price of the new option shall be
                  110% of the fair market  value of the Common Stock on the date
                  of grant of such new  option  and its terms  shall not  exceed
                  five years.

         (f)      Options  may not be  transferred  other than by will or by the
                  laws of descent and distribution,  and may be exercised during
                  the  optionee's  lifetime only by him or her (or by his or her
                  legal representative).

TERMS AND CONDITIONS OF SARS

         SARs  may be  granted  by the  Committee,  in its sole  discretion,  to
employees (including officers and directors who are employees),  consultants to,
and outside directors of the Company.  A SAR entitles the holder to be paid upon
exercise,  in cash,  check or by shares of Common  Stock,  as  determined by the
Committee,  the excess (if any) of the fair market value of the shares of Common
Stock  on the date of  exercise  over the  base  price  of such  shares.  If the
Contract so provides,  such amount may be  multiplied  by a  performance  factor
which meets the  requirements  of the Code.  The base price is determined by the
Committee  upon grant,  but it may not be less than the fair market value of the
Common  Stock  on the  grant  date.  The  term of any SAR is  determined  by the
Committee, but may not exceed ten years.

RESTRICTED STOCK AWARDS

         The  Committee  may from time to time,  in its sole  discretion,  grant
shares of Common Stock to current and former employees  (including  officers and
directors who are employees) of, or  consultants  to, the Company,  which may or
may not be subject to such  contingencies  and  restrictions as set forth in the
applicable Contract. Upon issuance of the shares, the Award holder is considered
to be the record  owner of the shares  and,  subject  to the  contingencies  and
restrictions,  if  any,  set  forth  in the  Award,  has  all  the  rights  of a
shareholder.  The  shares  shall  vest  in  the  Award  holder  when  all of the
restrictions and contingencies,  if any, lapse.  Accordingly,  the Committee may
require  that such shares be held by the  Company,  together  with a stock power
duly endorsed in blank by the Award  holder,  until the shares vest in the Award
holder.

                                      -25-


TERMINATION OF RELATIONSHIP

         Except as may otherwise be provided in the applicable  Contract,  if an
Award  holder's  relationship  with the Company as an employee or  consultant is
terminated  for any  reason  (other  than the death or  disability  of the Award
holder),  the option or SAR may be exercised,  to the extent  exercisable at the
time of termination of such relationship, within three months thereafter, but in
no event  after the  expiration  of the term of the  option or SAR.  If an Award
holder's  relationship  is  terminated  for any reason  (including  the death or
disability of the Award holder),  the Award shall cease any further  vesting and
the unvested portion shall be forfeited to the Company without consideration. If
the relationship  was terminated  either for cause or without the consent of the
Company, the option or SAR will terminate immediately.  In the case of the death
of a holder while an employee or consultant (or, generally,  within three months
after termination of such relationship,  or within one year after termination of
such relationship by reason of disability),  except as otherwise provided in the
Contract, his or her legal representative or beneficiary may exercise the option
or SAR, to the extent  exercisable  on the date of death,  within one year after
such date,  but in no event  after the  expiration  of the term of the option or
SAR. Except as may otherwise be provided in the applicable Contract, an optionee
whose  relationship  with the  Company  was  terminated  by reason of his or her
disability may exercise the option or SAR, to the extent exercisable at the time
of such termination, within one year thereafter, but not after the expiration of
the term of the  option.  The  holder  shall  have no right  to  continue  as an
employee, consultant or director of the Company or interfere in any way with any
right of the Company to terminate  the holder's  relationship  to the Company at
any time for any reason whatsoever without liability to the Company.

WITHHOLDING

         The  Company may  withhold  cash  and/or  shares of Common  Stock to be
issued under an Award or upon exercise of an option or SAR,  having an aggregate
value equal to the amount which the Company  determines is necessary to meet its
obligations  to withhold any federal,  state and/or local taxes or other amounts
incurred by reasons of the grant,  vesting,  exercise or disposition of an Award
or the  disposition  of underlying  shares of Common Stock.  Alternatively,  the
Company may require the Award holder to pay the Company  such  amount,  in cash,
promptly upon demand.

ADJUSTMENT IN EVENT OF CAPITAL CHANGES

         Appropriate  adjustments  will be made in the number and kind of shares
available  under the 2005 Plan, in the number and kind of shares subject to each
outstanding  option or SAR and the  exercise or base  prices of such  options or
SARs,  any  contingency  based on the number or kind of shares  and the  maximum
number of options and SARs that may be granted to an  employee  in any  calendar
year,  in the  event of any  change in the  Common  Stock by reason of any stock
dividend, spinoff, split-up,  combination,  reclassification,  recapitalization,
merger in which the Company is the surviving corporation,  exchange of shares or
the like. In the event of (a) the liquidation or dissolution of the Company,  or
(b) a  merger  in  which  the  Company  is not the  surviving  corporation  or a
consolidation,  (c) any transaction (or series of related transactions) in which
(i) more than 50% of the  outstanding  Common Stock is  transferred or exchanged
for other  consideration  or (ii) shares of Common Stock in excess of the number
of shares of Common Stock outstanding  immediately preceding the transaction are
issued (other than to stockholder of the Company with respect to their shares of
stock in the Company),  any outstanding  options or SARs and unvested restricted
stock awards shall  terminate upon the earliest of any such event,  unless other
provision is made therefor in the transaction or the applicable contract.



                                      -26-


DURATION AND AMENDMENT OF THE 2005 PLAN

         No ISO  may  be  granted  under  the  2005  Plan  after  the  ten  year
anniversary of the date of adoption of the 2005 Plan. The Board of Directors may
at any time terminate or amend the 2005 Plan; provided,  however,  that, without
the approval of the Company's stockholders, no amendment may be made which would
(a)  except  as a  result  of the  anti-dilution  adjustments  described  above,
increase  the  maximum  number  of shares  available  for the grant of Awards or
increase  the  maximum  number  of  options  or SARs that may be  granted  to an
employee in any year, (b) change the  eligibility  requirements  for persons who
may receive Awards or (c) make any change for which applicable law,  regulation,
ruling or  interpretation  by the applicable  governmental  agency or regulatory
authority  requires  stockholder  approval.  No  termination  or  amendment  may
adversely  affect the rights of an Award holder with  respect to an  outstanding
Award without the holder's consent.

FEDERAL INCOME TAX TREATMENT

         The  following  is  a  general   summary  of  the  federal  income  tax
consequences  under current tax law of options,  SARs and restricted  stock.  It
does not  purport to cover all of the special  rules,  including  special  rules
relating to the exercise of an option with  previously-acquired  shares,  or the
state or local income or other tax consequences  inherent in the grant,  vesting
or  disposition  of an Award or the ownership or  disposition  of the underlying
shares of Common Stock.

         An optionee will not recognize  taxable  income for federal  income tax
purposes upon the grant of an option or SAR.

         Upon the  exercise of a NQSO,  the  optionee  will  recognize  ordinary
income in an amount equal to the excess, if any, of the fair market value of the
shares acquired on the date of exercise over the exercise price thereof, and the
Company will  generally be entitled to a deduction for such amount at that time.
If the optionee later sells shares acquired  pursuant to the exercise of a NQSO,
he or she will recognize long-term or short-term capital gain or loss, depending
on the  period  for  which the  shares  were  held.  Long-term  capital  gain is
generally  subject to more  favorable  tax  treatment  than  ordinary  income or
short-term capital gain.

         Upon the exercise of an ISO, the optionee  will not  recognize  taxable
income. If the optionee disposes of the shares acquired pursuant to the exercise
of an ISO more  than two  years  after  the date of grant and more than one year
after the  transfer of the shares to him or her,  the  optionee  will  recognize
long-term  capital  gain or loss  and the  Company  will  not be  entitled  to a
deduction.  However, if the optionee disposes of such shares within the required
holding period,  all or a portion of the gain will be treated as ordinary income
and the Company will generally be entitled to deduct such amount.

         In addition to the federal income tax consequences  described above, an
optionee may be subject to the alternative  minimum tax, which is payable to the
extent it  exceeds  the  optionee's  regular  tax.  For this  purpose,  upon the
exercise of an ISO,  the excess of the fair market  value of the shares over the
exercise price therefor is an adjustment  which  increases  alternative  minimum
taxable income. In addition, the optionee's basis in such shares is increased by
such excess for purposes of computing the gain or loss on the disposition of the
shares for alternative  minimum tax purposes.  If an optionee is required to pay
an  alternative  minimum  tax, the amount of such tax which is  attributable  to
deferral  preferences  (including  the ISO  adjustment)  is  allowed as a credit
against the optionee's  regular tax liability in subsequent years. To the extent
the credit is not used, it is carried forward.



                                      -27-


         Upon the exercise of a SAR, the Award  holder will  recognize  ordinary
income  in an  amount  equal to the  amount  payable  by the  Company  upon such
exercise, and the Company will generally be entitled to a deduction therefor.

         An employee, consultant or director who receives a grant of stock which
is subject to a substantial risk of forfeiture will generally recognize ordinary
income equal to the fair market  value of the stock at the time the  restriction
lapses.  Alternatively,  the Award  holder may elect to be taxed on the value of
unrestricted  stock at the time of grant. The Company is generally entitled to a
deduction  equal to the amount  required  to be  included in income by the Award
holder.

EQUITY COMPENSATION PLAN INFORMATION

           The following table provides  information about our Common Stock that
may be issued upon the exercise of options,  warrants and rights under our stock
incentive plans.



                                                                                                              (c)
                                             (a)                                                     Number of securities
                                    Number of Securities                                            remaining available for
                                     to be issued upon                     (b)                   future issuance under equity
                                        exercise of            Weighted average exercise              compensation plans
                                    outstanding options,      price of outstanding options,         (excluding securities
Plan Category                       warrants and rights           warrants and rights                  in Column (a))
--------------------------------- ------------------------- --------------------------------- ---------------------------------

                                                                                                          
Equity compensation
plans approved by security                     3,580,562                 $2.34                                     0
holders

Equity compensation
plans not approved by security              N/A                           N/A                                N/A    
holders



         In addition to the issuance of Common  Stock under our stock  incentive
plans  set forth in the above  table,  we have  entered  into  restricted  stock
agreements  to  issue  restricted  shares  of  common  stock  and  stock  option
agreements to issue an aggregate of 3,144,807  shares of common stock underlying
stock  options to certain  of our  current  executive  officers,  employees  and
consultants  which are  subject  to the  vesting  provisions  contained  in each
agreement and stockholder approval.  These obligations shall be paid through the
issuance of restricted  shares of Common Stock or options to be issued under the
2005 Plan following stockholder approval of the Amendment.

         The following  table sets forth the number of restricted  shares of our
Common Stock and shares of our Common Stock  underlying  options which have been
granted  to each of our  executive  officers,  executive  officers  as a  group,
non-executive  directors as a group, and  non-executive  officers and employees,
including  consultants,  as a group  under our 2005 Stock  Incentive  Plan as of
March 4, 2005.  As a result of the grants set forth  below,  the total number of
shares of Common Stock  reserved for issuance  under the 2005 Plan is 8,644,807,
of which  5,500,000  shares of Common  Stock have been  previously  approved  by
stockholders.




                                      -28-







                  NEW PLAN BENEFITS - 2005 STOCK INCENTIVE PLAN



-------------------------------------- ------------------------- ------------------- --------------------- --------------------
NAME AND POSITION                      NUMBER OF SHARES          EXERCISE PRICE      NUMBER OF SHARES OF   DOLLAR VALUE OF
                                       UNDERLYING OPTIONS        OF OPTIONS          COMMON STOCK          COMMON STOCK
-------------------------------------- ------------------------- ------------------- --------------------- --------------------
                                                                                                             
ANDREW M. BROWN                                1,353,383              $1.14                  N/A                   N/A
Chairman of the Board, President &
Chief Executive Officer
-------------------------------------- ------------------------- ------------------- --------------------- --------------------
RON MUNKITTRICK                                  902,256              $1.14                  N/A                   N/A
Chief Financial Officer
-------------------------------------- ------------------------- ------------------- --------------------- --------------------
LOUIS E. HYMAN                                   986,842              $1.14                  N/A                   N/A
Chief Technology Officer
-------------------------------------- ------------------------- ------------------- --------------------- --------------------
EXECUTIVE OFFICER GROUP (3 persons)            3,242,481              $1.14                  N/A                   N/A
-------------------------------------- ------------------------- ------------------- --------------------- --------------------
NON-EXECUTIVE DIRECTOR GROUP (4                  563,912              $1.14                  N/A                   N/A
persons)
-------------------------------------- ------------------------- ------------------- --------------------- --------------------
NON-EXECUTIVE OFFICER AND EMPLOYEE               210,000               (1)                4,628,414                (2)
GROUP
(INCLUDING CONSULTANTS)
-------------------------------------- ------------------------- ------------------- --------------------- --------------------


(1)      The  exercise  price is equal to the fair  market  value of the  Common
         Stock on the date of grant.

(2)      The value of the Common  Stock is equal to the fair market value of the
         Common Stock on the date of issuance.

REQUIRED VOTE


         Approval of the  amendment  to increase  the number of shares of Common
Stock available for issuance under the 2005 Plan requires the  affirmative  vote
of the holders of a majority of the shares of Common Stock present, in person or
by  proxy,  at the  Meeting  and  entitled  to  vote on  this  proposal.  If the
Replenishment  is not approved by  stockholders,  the 2005 Plan will still be in
effect at current levels.


                THE BOARD OF DIRECTORS RECOMMENDS YOU VOTE "FOR"
           APPROVAL OF THE AMENDMENT TO THE 2005 STOCK INCENTIVE PLAN



                                      -29-








--------------------------------------------------------------------------------
                                   PROPOSAL 5

  RATIFICATION OF THE APPOINTMENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTANTS
--------------------------------------------------------------------------------

         BDO Seidman, LLP served as the Company's independent  registered public
accountants  for the fiscal years ended December 31, 2003 and December 31, 2004.
Prior to the engagement of BDO Seidman, LLP as our independent registered public
accountants,  the Company's  independent  registered public  accountants for the
fiscal year ended  December 31, 2002 was Ehrhardt  Keefe Steiner & Hottman,  PC.
During the two years  ended  December  31,  2002 and  through  the date of their
dismissal by the Company,  the Company had no "reportable  events", as such term
is defined in Item 304(a)(1)(v) of Regulation S-K.

         It is proposed  that the  stockholders  ratify the  appointment  by the
Board  of  Directors  of BDO  Seidman,  LLP  as  independent  registered  public
accountants for the Company for the 2004 fiscal year.

         Approval  by  the   stockholders  of  the  appointment  of  independent
registered  public  accountants is not required but the Board deems it desirable
to submit this  matter to the  stockholders.  If a majority of the Common  Stock
present  and  entitled  to vote at the  Special  Meeting  should not approve the
selection of BDO Seidman,  LLP, the selection of independent  registered  public
accountants will be reconsidered by the Board of Directors.

AUDIT FEES

         BDO Seidman, LLP billed us $380,000 for services rendered for the audit
of our annual consolidated  financial statements for fiscal 2003 included in our
Form 10-K and the reviews of the financial statements included in our Forms 10-Q
for fiscal 2003. No fees were paid to BDO Seidman, LLP in fiscal 2002.

AUDIT-RELATED FEES

         For fiscal  2003,  BDO  Seidman,  LLP billed us $150,000  for  services
rendered for assurance,  consultations  and related services that are reasonably
related to the performance of the audit or review of the financial statements of
the  Company,  including  audits and  reviews  of the  financial  statements  of
Frontline. No fees were paid to BDO Seidman, LLP in fiscal 2002.

TAX FEES

         For fiscal  2003,  BDO  Seidman,  LLP billed us  $50,000  for  services
rendered in connection with tax consultation and compliance for the Company.  No
fees were paid to BDO Seidman, LLP in fiscal 2002.

ALL OTHER FEES

         There  were no other  fees paid to BDO  Seidman,  LLP during the fiscal
year ended December 31, 2003.

         In  connection  with the  revised  standards  for  independence  of the
Company's independent registered public accountants  promulgated by the SEC, the
Audit  Committee  has  considered  whether  the  provision  of such  services is
compatible  with  maintaining  the  independence  of BDO  Seidman,  LLP  and 



                                      -30-


has determined that such services are compatible with the continued independence
of BDO Seidman, LLP.

         It is our practice that all services  provided to us by our independent
registered public accountants be pre-approved by our Audit Committee. No part of
our independent  auditor services related to Audit Related Fees, Tax Fees or All
Other Fees  listed  above was  approved by the audit  committee  pursuant to the
exemption from pre-approval  provided by paragraph  (c)(7)(i)(C) of Rule 2-01 of
Regulation S-X.

REQUIRED VOTE

         Ratification  of the  appointment of BDO Seidman,  LLP as the Company's
independent  registered  public  accountants  requires the affirmative vote of a
majority of the shares present in person or by proxy at the Special Meeting.



                        THE BOARD OF DIRECTORS RECOMMENDS
             THAT YOU VOTE "FOR" THE RATIFICATION OF THE APPOINTMENT
                             OF BDO SEIDMAN, LLP AS
            INDEPENDENT REGISTERED PUBLIC ACCOUNTANTS OF THE COMPANY



                                      -31-




                                 OTHER BUSINESS

         The Board of Directors has no other  business to be brought  before the
Special Meeting. No other business may properly come before the Special Meeting.

                              STOCKHOLDER PROPOSALS

         The Company  intends to hold its 2005 Annual Meeting of Stockholders on
or about June 30, 2005. Any stockholder  proposal intended to be included in the
Company's proxy statement and form of proxy for  presentation at the 2005 Annual
Meeting of  Stockholders  (the "2005  Meeting")  pursuant  to Rule 14a-8  ("Rule
14a-8"),  as  promulgated  under the  Securities  Exchange Act of 1934,  must be
received  by the Company not later than  February 1, 2005.  As to any  proposals
submitted  for  presentation  at the 2005 Meeting  outside the processes of Rule
14a-8,  the  proxies  named in the form of proxy  for the 2005  Meeting  will be
entitled to exercise discretionary authority on that proposal unless the Company
receives notice of the matter on or before May 17, 2005.  However,  even if such
notice is timely received, such proxies nevertheless may be entitled to exercise
discretionary authority on that matter to the extent permitted by Securities and
Exchange Commission regulations.

         Any stockholder  proposals,  as well as any questions relating thereto,
should be directed to the Secretary of the Company at 33 Maiden Lane,  New York,
New York 10038.

                                       By Order of the Board of Directors



                                       Andrew Brown
                                       Chairman of the Board
                                       President and Chief Executive Officer


March 16, 2005





                                      -32-




PROXY                                                                      PROXY
-----                                                                      -----

                                RAMP CORPORATION

                 (SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS)


         The undersigned  holder of Common Stock of RAMP  CORPORATION,  revoking
all proxies  heretofore  given,  hereby  constitutes  and appoints Andrew Brown,
Proxy,  with full power of  substitution,  for the  undersigned and in the name,
place and stead of the undersigned,  to vote all of the undersigned's  shares of
said  stock,  according  to the  number  of votes  and with all the  powers  the
undersigned  would  possess if  personally  present,  at the Special  Meeting of
Stockholders  of RAMP  CORPORATION,  to be held at the  offices  of the  Company
located at 33 Maiden Lane,  New York,  New York on Monday,  April 11,  2005,  at
10:00 A.M., and at any adjournments or postponements thereof.


         The undersigned  hereby  acknowledges  receipt of the Notice of Meeting
and Proxy  Statement  relating to the  meeting  and hereby  revokes any proxy or
proxies heretofore given.

         Each  properly  executed  Proxy  will be voted in  accordance  with the
specifications  made on the reverse side of this Proxy and in the  discretion of
the Proxies on any other matter that may properly come before the meeting. Where
no choice is specified, this Proxy will be voted FOR Proposals 1, 2, 3, 4 and 5.

            PLEASE MARK, DATE AND SIGN THIS PROXY ON THE REVERSE SIDE


__________________     _______________      PLEASE MARK YOUR CHOICE LIKE     |X|
  ACCOUNT NUMBER            COMMON          THIS IN BLUE OR BLACK INK:

                           Will attend the meeting |_|

                  THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR
                           PROPOSALS 1, 2, 3, 4 AND 5





(1)      to ratify the sale and issuance of shares   FOR     AGAINST    ABSTAIN 
         of common stock in connection with the                                 
         March 2004 private placement of common      |_|       |_|        |_|   
         stock and July 2004 private placement of                               
         convertible notes and warrants.                                        
                                                                                
(2)      to approve the sale and issuance of         FOR     AGAINST    ABSTAIN
         shares of common stock in connection with                             
         the December 2004 private placement of      |_|       |_|        |_|  
         convertible promissory notes in the                                   
         aggregate principal amount of $452,000.                               
                                                                               
(3)      to approve the sale and issuance of         FOR     AGAINST    ABSTAIN 
         shares of common stock in connection with                              
         the January 2005 private placement of 8%    |_|       |_|        |_|   
         convertible redeemable debentures, common                              
         stock purchase warrants and additional                                 
         investment rights in the aggregate                                     
         principal amount of up to $4,000,000.       

(4)      to approve an amendment to the Company's    FOR     AGAINST    ABSTAIN 
         2005 Stock Incentive Plan to increase the                              
         number of shares of Common Stock issuable   |_|       |_|        |_|   
         thereunder from 5,500,000 to 15,500,000.                               
                                                                                
(5)      to ratify the appointment of BDO Seidman,   FOR     AGAINST    ABSTAIN
         LLP as independent registered public                                   
         accountants of the Company for the fiscal   |_|       |_|        |_|   
         year ending December 31, 2004.                                         
                                                                                
                                                                                
                                                     

                                        Dated  _____________________, 2005
                                        ________________________________
                                        ________________________________
                                                       Signature(s)
                                        (Signatures  should  conform to names as
                                        registered.  For jointly  owned  shares,
                                        each owner should sign.  When signing as
                                        attorney,    executor,    administrator,
                                        trustee,   guardian   or  officer  of  a
                                        corporation, please give full title.)

                 PLEASE MARK AND SIGN ABOVE AND RETURN PROMPTLY