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

                                   FORM 10-QSB

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

                  For the quarterly period ended March 31, 1996

                         Commission file number: 0-27862

                            REALITY INTERACTIVE, INC.
             (Exact name of registrant as specified in its charter)

             MINNESOTA                               41-1781991
  State or other jurisdiction of           I.R.S. Employer Identification No.
  incorporation of organization

            SUITE 300
      11200 WEST 78TH STREET
  EDEN PRAIRIE, MINNESOTA 55344                     (612) 996-6777
  Address of principal executive offices       Registrant's telephone number

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

At May 23, 1996, 4,676,857 shares of registrant's $.01 par value Common Stock
were outstanding.

         Transitional Small Business Issuer Format       Yes           |X|  No

                                FORM 10-QSB INDEX

PART I  -  FINANCIAL INFORMATION

Item 1.  Financial Statements.......................................................................3

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

PART II -  OTHER INFORMATION

Item 4.  Submission of Matters to a Vote of Security Holders.......................................11

Item 6.  Exhibits and Reports on Form 8-K..........................................................12

SIGNATURES.........................................................................................13

EXHIBIT INDEX......................................................................................14

                         SAFE HARBOR STATEMENT UNDER THE
                PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995

         This Quarterly Report on Form 10-QSB contains forward-looking
statements within the meaning of Section 27A of the Securities Act of 1933, as
amended, and Section 21E of the Securities Exchange Act of 1934, as amended.
These forward-looking statements involve risks and uncertainties that may cause
the Company's actual results to differ materially from the results discussed in
the forward-looking statements. Factors that might cause such differences
include, but are not limited to, the uncertainty in growth of a development
stage company; limited growth of the market for multimedia education and
training products; lack of market acceptance of the Company's products;
inability of the Company to expand its marketing capability; inability of the
Company to diversify its product offerings; failure of the Company to respond to
evolving industry standards and technological changes; inability of the Company
to meet its future additional capital requirements; inability of the Company to
compete in the business education and training industry; loss of key management
personnel; inability to retain subject matter experts; failure of the Company to
secure adequate protection for the Company's intellectual property rights; and
the Company's exposure to product liability claims. The forward-looking
statements are qualified in their entirety by the cautions and risk factors set
forth in Exhibit 99.1, under the caption "Cautionary Statement," to this
Quarterly Report on Form 10-QSB for the quarter ended March 31, 1996.

                         PART I - FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

                            REALITY INTERACTIVE, INC.
                          (A DEVELOPMENT STAGE COMPANY)
                                  BALANCE SHEET

                                                                          March 31,     December 31,
                                                                            1996           1995
                                                                         -----------    -----------
ASSETS                                                                   (Unaudited)
                                                                                          
Current assets:
    Cash and cash equivalents                                            $ 1,257,741    $   118,916
    Accounts receivable                                                       81,343         18,237
    Inventory                                                                 35,190         28,359
    Prepaid expenses                                                         220,591          8,312
                                                                         -----------    -----------
        Total current assets                                               1,594,865        173,824
                                                                         -----------    -----------
Fixed assets, net                                                            433,503        269,852
Restricted cash                                                              119,000        119,000
Other assets                                                                  16,780         14,116
                                                                         -----------    -----------
        Total assets                                                     $ 2,164,148    $   576,792
                                                                         ===========    ===========

 LIABILITIES, MANDATORILY REDEEMABLE PREFERRED 
    STOCK AND STOCKHOLDERS'EQUITY (DEFICIT)
Current liabilities:
    Accounts payable                                                     $   243,075    $   188,623
    Accrued liabilities                                                      106,284         90,417
    Capitalized lease obligation                                               9,201         14,127
    Notes payable                                                                  0        201,002
    Convertible notes payable, net                                         2,588,701              0
    Other current liabilities                                                  3,175              0
                                                                         -----------    -----------
        Total current liabilities                                          2,950,436        494,169
Long-term liabilities                                                              0              0
                                                                         -----------    -----------
        Total liabilities                                                  2,950,436        494,169
                                                                         -----------    -----------
Mandatorily redeemable convertible preferred stock, $.01 par value,
    5,000,000 shares authorized; 726,900 shares outstanding                2,125,962      2,125,962
                                                                         -----------    -----------

Stockholders' equity (deficit):
    Common stock, $.01 par value, 20,000,000 shares authorized;
        1,643,611 shares outstanding                                          16,436         16,436
    Additional paid-in capital                                             1,720,397      1,384,397
    Accumulated deficit during the development stage                      (4,649,083)    (3,444,172)
                                                                         -----------    -----------
        Total stockholders' equity (deficit)                              (2,912,250)    (2,043,339)
                                                                         -----------    -----------
        Total liabilities, mandatorily redeemable preferred stock and
           stockholders' equity (deficit)                                $ 2,164,148    $   576,792
                                                                         ===========    ===========

              See accompanying notes to the financial statements.

                            REALITY INTERACTIVE, INC.
                          (A DEVELOPMENT STAGE COMPANY)
                             STATEMENT OF OPERATIONS
                                   (UNAUDITED)

                                                                         Three months ended
                                                                             March 31,
                                                                       1996            1995
                                                                    -----------    -----------
                                                                                     
Revenues                                                            $   122,809    $     3,290
Cost of revenues                                                         23,852            537
                                                                    -----------    -----------
Gross profit                                                             98,957          2,753
                                                                    -----------    -----------

Operating expenses:
    Sales and marketing                                                 432,320        140,423
    Research and development                                            346,337        243,968
    General and administrative                                          278,113        173,262
                                                                    -----------    -----------
        Total operating expenses                                      1,056,770        557,653
                                                                    -----------    -----------

Operating loss                                                         (957,813)      (554,900)
                                                                    -----------    -----------
Other income (expense):
    Interest income (expense), net                                     (172,356)           819
    Debt offering costs                                                 (74,741)             0
                                                                    -----------    -----------
        Total other income (expense)                                   (247,097)           819
                                                                    -----------    -----------
        Net loss                                                    $(1,204,910)   $  (554,081)
                                                                    ===========    ===========

Net loss per common and common equivalent share                     $     (0.73)   $     (0.34)
                                                                    ===========    ===========
Weighted average common and common equivalent shares                  1,643,611      1,643,611
                                                                    ===========    ===========

SUPPLEMENTARY DATA:
Supplemental net loss per common and common equivalent share        $     (0.32)
                                                                    ===========
Supplemental weighted average common and common equivalent shares     2,938,304
                                                                    ===========

See accompanying notes to the financial statements.

                            REALITY INTERACTIVE, INC.
                          (A DEVELOPMENT STAGE COMPANY)
                             STATEMENT OF CASH FLOWS
                                   (UNAUDITED)

                                                                              Three months ended
                                                                                   March 31,
                                                                              1996           1995
                                                                           -----------    -----------
CASH FLOWS FROM OPERATING ACTIVITIES:
                                                                                             
    Net loss                                                               $(1,204,910)   $  (554,081)
    Reconciliation of net loss to net cash used by operating activities:
        Depreciation and amortization                                           30,000         17,076
        Noncash interest expense related to warrants                           124,702              0
    Changes in assets and liabilities:
        Accounts receivable                                                    (63,106)        (2,114)
        Inventory                                                               (6,831)       (32,732)
        Prepaid expenses                                                      (212,279)         3,822
        Accounts payable                                                        54,452        (10,376)
        Accrued liabilities                                                     19,041             32
                                                                           -----------    -----------
            Net cash used by operating activities                           (1,258,931)      (578,373)
                                                                           -----------    -----------
CASH FLOWS FROM INVESTING ACTIVITIES:
    Purchase of fixed assets, net of retirements                              (193,651)       (36,190)
    Purchase of other assets                                                    (2,665)             0
    Sale of short-term investment                                                    0         30,000
                                                                           -----------    -----------
            Net cash used by investing activities                             (196,316)        (6,190)
                                                                           -----------    -----------
CASH FLOWS FROM FINANCING ACTIVITIES:
    Repayments of capital lease obligation                                      (4,926)        (6,926)
    Proceeds from convertible note payable                                   2,800,000        100,000
    Repayment of notes payable                                                (201,002)             0
                                                                           -----------    -----------
            Net cash provided by financing activities                        2,594,072         93,074
                                                                           -----------    -----------
Net cash provided (used) during period                                       1,138,825       (491,489)

CASH AND CASH EQUIVALENTS:
    Beginning of period                                                        118,916        527,461
                                                                           -----------    -----------
    End of period                                                          $ 1,257,741    $    35,972
                                                                           ===========    ===========

SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
    Cash paid for interest                                                 $    57,672    $     1,100
                                                                           ===========    ===========

See accompanying notes to the financial statements.

                            REALITY INTERACTIVE, INC.
                          (A DEVELOPMENT STAGE COMPANY)
                          NOTES TO FINANCIAL STATEMENTS
                                 MARCH 31, 1996
                                   (UNAUDITED)
NOTE 1.      BASIS OF PRESENTATION

The accompanying unaudited financial statements of Reality Interactive, Inc.
(the "Company") have been prepared in accordance with generally accepted
accounting principles for interim financial information. In the opinion of
management, the interim financial statements include adjustments necessary for a
fair presentation of the results of operations for the interim periods
presented. Operating results for the three months ended March 31, 1996 are not
necessarily indicative of the operating results to be expected for the year
ending December 31, 1996.

Certain information and footnote disclosures normally included in financial
statements in accordance with generally accepted accounting principles have been
omitted. The statements should be read in conjunction with the Company's annual
financial statements included in its Registration Statement on Form SB-2

NOTE 2.      SUPPLEMENTARY LOSS PER SHARE DATA

Supplementary Loss per Share Data reflects adjustments for: (i) the issuance of
567,793 shares of Common Stock in connection with the repayment/conversion of
convertible debt from certain net proceeds received from the Company's initial
public offering ("IPO") that closed on April 16, 1996 (ii) the conversion of
726,900 shares of Series A Convertible Preferred Stock into Common Stock that
occurred in connection with the IPO and (iii) the decrease of net loss by
$182,373 and $74,741 for interest expense and debt offering costs, respectively,
related to the issuance of convertible debt. These adjustments were made as
though these transactions had occurred on January 1, 1996.

Common stock equivalents, consisting of shares of Common Stock which might be
issued upon exercise of stock options and warrants, are not included in weighted
average common shares outstanding in periods where losses are reported since
their inclusion would be anti-dilutive. For purposes of the Company's recent
IPO, loss per common share was calculated pursuant to Securities and Exchange
Commission Staff Accounting Bulletin No. 83 ("SAB 83"). SAB 83 requires the
inclusion of certain common stock equivalents in the calculation of weighted
average common shares outstanding even if their inclusion is anti-dilutive.

NOTE 3.      SUBSEQUENT FINANCING TRANSACTIONS

On January 19, 1996, the Company closed a $2,800,000 convertible bridge note
financing (the "Bridge Notes") in a private placement, resulting in net proceeds
to the Company of $2,626,570 after payment of agent's commissions and related
expenses. The Bridge Notes provided for interest at 10% per annum and matured on
the earlier of July 31, 1996 or 30 days after the effective date of an IPO. In
connection with this financing, the Company also issued detachable warrants to
purchase a total of 560,000 shares of common stock to the purchasers of the
Bridge Notes. The Bridge Notes were convertible into common stock at a price
equal to $3.94, which was 75% of $5.25 (the per share value assigned to the
Common Stock at the time of the IPO). On May 10, 1996, 30 days after the
effective date of the IPO, the Company made payments totaling $2,861,281 to
repay the Bridge Notes, including accrued interest of $86,285. Approximately
$25,000 of the Bridge Notes were converted to Common Stock. The Company will
recognize an extraordinary loss of approximately $220,000 in its second quarter
ending June 30, 1996 as a result of the early repayment of its bridge note
financing.

On April 10, 1996, the Company's IPO for 2,200,000 units was declared effective
by the SEC. Each unit sold consisted of one share of Common Stock and one
Redeemable Common Stock Purchase Warrant to purchase one share of Common Stock.
The sale of such units resulted in gross proceeds of $12,650,000 and net
proceeds of $11,331,750 after payment of the underwriting discount and related
expenses. The net proceeds will be used for sales and marketing, repayment of
bridge debt financing, research and development, purchase of equipment and
working capital.

On May 15, 1996, the Company issued an additional 100,000 units to its
underwriter to cover over-allotments, resulting in gross proceeds of $575,000
and net proceeds of $514,625 after payment of the underwriting discount and
related expenses.

ITEM 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF
              FINANCIAL CONDITION AND RESULTS OF OPERATION

OVERVIEW

      Reality Interactive, Inc. (the "Company") was formed in May 1994 to
design, develop and market interactive multimedia learning software products
primarily for sale to Fortune 2000 companies. The Company is a development stage
company and, as a result, has undergone significant changes since its inception
as the focus of the Company's activities has shifted from organization to
product design and development to sales and marketing. Accordingly, the
Company's revenue and expenses for the periods presented below are not
necessarily indicative of future results.

      The Company has been unprofitable since its inception and expects to incur
operating losses at least through 1997. During the period from May 24, 1994
(inception) through March 31, 1996, the Company incurred cumulative losses of
$4,649,083. The Company expects its operating expenses to continue to increase
as it continues to develop new products and increase its sales and marketing
efforts. To become profitable, the Company must significantly increase revenues
from its initial product, the ISO 9000 Registration Series, and must continue to
introduce new products to the market. Future operating results will depend upon
many factors, including the demand for the Company's products, the level of
product and price competition, the Company's success in developing its direct
sales force and indirect distribution channels, general economic conditions and
the ability of the Company to develop and market new products and to control
costs.

RESULTS OF OPERATIONS

      The following table sets forth, for the periods indicated, certain
statement of operations data as a percentage of revenues.

                                        Three months ended
                                            March 31,
                                        1996        1995
                                       -------     -------
Revenues                                   100%        100%
Cost of revenues                            19          16
                                       -------     -------
Gross profit                                81          84
                                       -------     -------

Operating expenses:
    Sales and marketing                    352       4,268
    Research and development               282       7,415
    General and administrative             227       5,266
                                       -------     -------
        Total operating expenses           861      16,949
                                       -------     -------

Operating loss                            (780)    (16,865)
                                       -------     -------
Other income (expense):
    Interest income (expense), net        (140)         25
    Debt offering costs                    (61)          0
                                       -------     -------
        Total other income (expense)      (201)         25
                                       -------     -------
        Net loss                          (981)%   (16,840)%
                                       =======     =======

     REVENUES. Revenues were $122,809 for the quarter ended March 31, 1996, a
3,633% increase from revenues of $3,290 for the quarter ended March 31, 1995.
The revenue increase was due primarily to the availability of all five titles of
the Company's initial product, ISO 9000 Registration Series, which was released
as a complete series in August 1995, compared to the availability and sale of
only one title of the ISO 9000 Registration Series during the first quarter of
1995. Also contributing to the revenue increase was the addition of five direct
sales employees in December 1995 and January 1996 and two telesales employees in
January 1996. During the remainder of 1996, the Company expects revenues to
increase as new direct sales employees are added, new sales channel partners are
identified and new products are introduced.

     GROSS PROFIT. The decrease in gross profit to 81% of revenues in the first
quarter of 1996 from 84% of revenues in the first quarter of 1995 was primarily
due to royalties paid to the American Society of Quality Control ("ASQC"), a
sales channel for the Company. The Company began paying royalties to ASQC in May
1995 when both parties entered into a three-year joint marketing and
distribution agreement (the "Agreement") for the ISO 9000 Registration Series.
The Agreement also involves co-labeling of the product.

     OPERATING EXPENSES. The Company's operating expenses for the first quarter
of 1996 were $1,056,770, a 90% increase from operating expenses of $557,653 in
the first quarter of 1995. This increase in operating expenses between the first
quarter of 1996 and 1995 was due primarily to the following:

(a)  Sales and marketing expenses were $432,320 for the first quarter of 1996
     compared to $140,423 for the first quarter of 1995, a 208% increase. This
     increase was due primarily to the addition of 11 new direct sales,
     telesales and marketing positions and the expansion of direct marketing
     programs. The Company expects its sales and marketing expenses to increase
     as it adds additional direct sales employees and begins to market new
     products currently being developed.

(b)  Research and development expenses were $346,337 for the first quarter of
     1996 compared to $243,968 for the first quarter of 1995, a 42% increase.
     This increase was attributed to the hiring of additional employees to
     develop three new products, the QS-9000 Compliance Series, a multi-title
     product dealing with automotive quality standards, the ISO 14000
     Conformance Series, a multi-title product dealing with environmental
     management standards and Pollution Prevention, a one-title product dealing
     with the key concepts of a pollution prevention program. The Company began
     developing the ISO 14000 Conformance Series in August 1995, the QS-9000
     Compliance Series in January 1996 and Pollution Prevention in February
     1996. The Company expects its research and development expenses to increase
     as it advances further into the development cycle of the products currently
     under development and begins to develop new products.

(c)  General and administrative expenses were $278,113 for the first quarter of
     1996 compared to $173,262 for the first quarter of 1995, a 61% increase.
     This increase was due primarily to the addition of one position in
     accounting and finance, increased rent expense related to a larger office,
     additional depreciation expense on a higher level of fixed assets and
     increases in professional fees. The Company expects that its general and
     administrative expenses will increase as it looks to hire additional
     accounting staff, expand its office space and incurs costs associated with
     being a public company.

     OTHER INCOME (EXPENSE). The Company's net other expense was $247,097 for
the first quarter of 1996 compared to net other income of $819 for the first
quarter of 1995. This difference was primarily the result of expenses associated
with the Company's convertible bridge note financing, which resulted in cash
interest expense during the first quarter of 1996 of $57,671, noncash interest
expense of $124,702 related to detachable warrants and amortization expense of
$74,741 related to the expensing of prepaid costs the Company incurred to obtain
the bridge note financing. The Company also realized interest income of $10,017
in the first quarter of 1996 from the investment of bridge note proceeds.

     NET LOSS. Net loss was $1,204,910 for the first quarter of 1996, compared
to a net loss of $554,081 for the first quarter of 1995. The Company expects to
continue to incur losses for at least the next two years as it continues to
undertake substantial expenditures to develop its products and to increase its
sales and marketing efforts.

LIQUIDITY AND CAPITAL RESOURCES

The Company's cash and cash equivalents were $1,257,741 as of March 31, 1996,
compared to $118,916 as of December 31, 1995. The increase in cash and cash
equivalents was attributed to the convertible bridge note financing from January
1996, which resulted in net proceeds of $2,626,570. The decrease in cash and
cash equivalents subsequent to the receipt of the net proceeds from the
convertible bridge note financing was due primarily to the net loss from
operations, acquisition of fixed assets totaling approximately $196,000 and
repayment of notes payable totaling approximately $201,000. See Note 3 for
further information on financing transactions subsequent to March 31, 1996.

      Although the Company anticipates that it will experience operating losses
and negative cash flow from operations at least through 1997, and the Company
does not currently have bank financing available, the Company believes that its
current cash balances, increased by proceeds from its initial public offering,
will be sufficient to meet its working capital and capital expenditure needs at
least through 1997. Thereafter, the Company may need to raise additional funds
to finance its operations. In addition, to the extent the Company's revenues do
not meet management's expectations, or the Company's growth exceeds management's
expectations, the Company may require additional financing prior to the end of
1997. There can be no assurance that debt or equity financing would be available
on favorable terms or at all.

                           PART II - OTHER INFORMATION

ITEM 4.       SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

         On February 16, 1996, the Company held a special shareholders' meeting
to vote upon four proposals relating to the Company's initial public offering
(the "IPO"). These four proposals are described below. All four proposals were
approved.

         The first matter voted upon was a proposal to amend the certificate
fixing shares for the Company's Series A Convertible Preferred Stock (the
"Preferred Stock") to lower the public offering price at which such shares are
mandatorily converted to Common Stock from $6.00 to $4.50. This proposal
required the affirmative vote of a majority of the outstanding shares of Common
Stock, voting separately as a class, and the affirmative vote of a majority of
the outstanding shares of Preferred Stock, voting separately as a class, in
order for it to be approved. The holders of Common Stock approved this proposal
by the following vote: 1,191,091 For, 0 Against, 422,520 Withheld, and 30,000
Abstained. The holders of Preferred Stock approved this proposal by the
following vote: 483,732 For, 0 Against, 243,168 Withheld, and 0 Abstained.

         The second matter voted upon was a proposal to amend and restate the
Company's Amended Articles of Incorporation simultaneously with the closing of
the IPO to increase the number of shares of authorized capital stock and to
eliminate the Preferred Stock after the outstanding shares of this series are
converted into Common Stock. This proposal required the affirmative vote of a
majority of the outstanding shares of the Company's capital stock, voting
together as a class, and the affirmative vote of a majority of the outstanding
shares of Common Stock, voting separately as a class, in order for it to be
approved. The holders of all outstanding shares of the Company's capital stock
approved this proposal by the following vote: 1,704,824 For, 0 Against, 665,687
Withheld, and 0 Abstained. The holders of Common Stock approved this proposal by
the following vote: 1,221,091 For, 0 Against, 422,520 Withheld, and 0 Abstained.

         The third matter voted upon was a proposal to approve the Company's
1996 Directors' Stock Option Plan. The fourth matter voted upon was a proposal
to amend the Company's 1994 Stock Incentive Plan to increase the number of
shares reserved for issuance upon the conversion of options issued under such
plan from 300,000 shares to 700,000 shares. The third and fourth proposals voted
upon each required the affirmative vote of a majority of the outstanding shares
of the Company's capital stock, voting together as a class, in order for them to
be approved. The holders of all outstanding shares of the Company's capital
stock approved the third proposal by the following vote: 1,614,824 For, 90,000
Against, 665,687 Withheld, and 0 Abstained. The holders of all outstanding
shares of the Company's capital stock approved the fourth proposal by the
following vote: 1,674,824 For, 30,000 Against, 665,687 Withheld, and 0
Abstained.

ITEM 6.       EXHIBITS AND REPORTS ON FORM 8-K

              (a)   Exhibits

EXHIBIT NO.   DESCRIPTION

     10.1           First Amendment to Joint Marketing and Distribution 
                    Agreement between Reality Interactive, Inc. and American 
                    Society for Quality Control, Inc., dated May 1, 1996

    +10.2           Joint Marketing and Distribution Agreement between Reality 
                    Interactive, Inc. and American Society for Quality Control, 
                    Inc., dated May 17, 1996

     27.1           Financial Data Schedules

     99.1           Cautionary Statement

+    Pursuant to Rule 24b-2 of the Securities and Exchange Act of 1934,
     confidential portions of Exhibit 10.2 have been deleted and filed
     separately with the Securities and Exchange Commission pursuant to a
     request for confidential treatment.

(b) Reports on      Form 8-K

                    No Reports on Form 8-K were filed during the quarter
                    ended March 31, 1996

                                   SIGNATURES

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

                            REALITY INTERACTIVE, INC.

Dated: May 21, 1996                          By     /s/ Paul J. Wendorff
                                                --------------------------------
                                                          Paul J. Wendorff
                                                    Its Chief Executive Officer

Dated: May 21, 1996                          By     /s/ Wesley W. Winnekins
                                                -------------------------------
                                                       Wesley W. Winnekins
                                                    Its Chief Financial Officer

                                  EXHIBIT INDEX

Exhibit
  No.        Description                                               Page No.

 10.1      First Amendment to Joint Marketing and Distribution
           Agreement between Reality Interactive, Inc. and American
           Society for Quality Control, Inc., dated May 1, 1996........

+10.2      Joint Marketing and Distribution Agreement between Reality
           Interactive, Inc. and American Society for Quality
           Control, Inc., dated May 17, 1996...........................

 27.1      Financial Data Schedules....................................

 99.1      Cautionary Statement........................................

+    Pursuant to Rule 24b-2 of the Securities and Exchange Act of 1934,
     confidential portions of Exhibit 10.2 have been deleted and filed
     separately with the Securities and Exchange Commission pursuant to a
     request for confidential treatment.

EXHIBIT 10.1 - FIRST AMENDMENT TO JOINT MARKETING AND
                          DISTRIBUTION AGREEMENT

                  THIS FIRST AMENDMENT TO JOINT MARKETING AND DISTRIBUTION
AGREEMENT ("First Amendment") is entered into as of May 1, 1996 between REALITY
INTERACTIVE, INC., a Minnesota corporation ("RII"), and AMERICAN SOCIETY FOR
QUALITY CONTROL, INC., a New York corporation ("ASQC").

                                    RECITALS

         WHEREAS, RII and ASQC have entered into a Joint Marketing and
Distribution Agreement, dated as of May 10, 1995, (the "Agreement"), with
respect to the marketing and distribution in North America of the ISO 9000
Registration Series (the "Product"), as more fully described therein; and

         WHEREAS, RII and ASQC wish to amend the Agreement to permit RII to use
the trademarks and tradenames of ASQC in connection with sales worldwide of the
Product, including any of the titles comprising the Product, along with
clarifications to the Agreement.

         NOW, THEREFORE, in consideration of the recitals and the mutual
agreements and acknowledgments made in the Agreement and in this First
Amendment, the parties hereby agree as follows:

         1. CONTINUING EFFECT. Except to the extent modified or amended by this
First Amendment, the Agreement shall continue to be in full force and effect.

         2. TERRITORY. RII's and ASQC's Territory has been expanded to include
the whole world.

         3. USE OF ASQC TRADEMARKS AND ADVERTISING IN THE TERRITORY. RII may
advertise and use the trademarks and tradenames of ASQC, including without
limitation inclusion of ASQC's silkscreened trademark and logo on the Product
and on the packaging for the Product (the "Marks"), for normal advertising,
promotion, marketing and sales of the Product by RII in the Territory. In
addition, RII shall not (i) use the Marks to incur any obligation or
indebtedness on behalf of ASQC, (ii) use the Marks as part of its corporate or
other legal name, or (iii) mortgage, pledge or in any way encumber the rights
granted to RII with respect to use of the Marks.

         4. CLARIFICATION. For purposes of clarification, the parties desire to
set forth the following interpretations of the Agreement:

         (a). it is understood by the parties that RII and its other approved
distributor may appoint as many independent sales agents in North America as RII
determines in its sole discretion; and

         (b) it is understood by the parties that RII may appoint as many sales
agents, sales representatives, resellers and distributors in territories outside
of North America as RII determines in its sole discretion; and

         (c) ASQC has granted a non-exclusive, perpetual and paid-up license to
RII to include a digital copy of the North American language version of ISO
9000, known as ANSI/ISO/ASQC Q9000, in the Product.

         (d) the Distribution Fee and Sales Credit section of the Agreement
(EXHIBIT B) will apply to the whole world.

         IN WITNESS WHEREOF, the parties hereto have caused this First Amendment
to be executed as of the date written above.

REALITY INTERACTIVE, INC.                  AMERICAN SOCIETY FOR QUALITY
                                           CONTROL, INC.

BY    /s/   Wesley W. Winnekins            BY     /s/   Brian J. LeHouillier

ITS   Chief Financial Officer              ITS    Director Programs & Operations

EXHIBIT 10.2 - JOINT MARKETING AND DISTRIBUTION AGREEMENT

           THIS AGREEMENT is being entered into as of this 17th day of May,
1996, between REALITY INTERACTIVE, INC., a Minnesota corporation with its
principal office at Suite 300, 11200 West 78th Street, Eden Prairie, Minnesota
55344 ("RII") and AMERICAN SOCIETY FOR QUALITY CONTROL INC., a New York
corporation, with its principal place of business at 611 East Wisconsin Avenue,
Milwaukee, Wisconsin 53201 ("ASQC").

                                    RECITALS

         WHEREAS, RII is the producer and publisher of a certain automotive
quality control standards product published in electronic digital format and
known as QS-9000 Compliance Series (the "Series");

         WHEREAS, the Series will be comprised of four separate titles
(individually, the "Title") as follows:

         Starting the QS-9000 Process
         Managing the QS-9000 Process
         Building and Implementing the QS-9000 Quality System
         Auditing the QS-9000 Quality System

         The Titles and Series are collectively referred to herein as the
"Product";

         WHEREAS, ASQC promotes, markets and distributes quality control
training materials including CD-ROM multimedia products;

         WHEREAS, ASQC desires to act as a consignment seller of the Product and
to sell the Product through its distribution channels; and

         WHEREAS, RII is willing to grant ASQC the right to sell the Product on
consignment and to allow ASQC a Distribution Fee in accordance with the terms
and conditions as set forth herein.

                                   AGREEMENTS

         NOW, THEREFORE, in consideration of the recitals and the mutual
agreements and acknowledgments made herein, the parties agree as follows:

         1. APPOINTMENT. RII grants to ASQC the nonexclusive right, under the
terms of this Agreement, to promote and sell the Products in the Territory (as
defined below) and to bill customers for such sales and to collect the
receivables. ASQC may not copy or modify the Product nor may ASQC remove any
original contents from the Product package nor repackage the Product without the
prior written consent of RII.

         2. TERRITORY. The Territory shall be worldwide. ASQC and RII shall have
the right to sell the Product throughout the Territory either directly, or
through appointed independent sales representatives. RII shall also have the
right to appoint other distributors to sell the Product in the Territory,
provided ASQC consents to the appointment, which consent shall not be
unreasonably withheld. The other distributors appointed by RII shall have the
right to sell the product through independent sales representatives.

         3. PRICE. RII retains the right to establish the retail price of any
Title and of the Series (the "Retail Price") and to adjust the Retail Price from
time to time upon ninety (90) days written notice to ASQC. ASQC shall not adjust
the Retail Price without the prior written consent of RII, which consent RII may
withhold in its sole discretion. The initial Retail Price for each of the Titles
and the Series is set forth in Exhibit A hereto. If RII appoints another
distributor in the Territory, or sells the Product through independent sales
representatives, RII will not establish or permit retail prices for sales by
that distributor, sales representatives or any representatives appointed by
them, which are lower than the Retail Price for sales by ASQC. If RII makes
direct sales, RII will not make such sales at a price lower than the Retail
Price for sales by ASQC.

         4. ORDERS BY ASQC. ASQC may place orders for the Product in such
quantities as ASQC reasonably believes are necessary. Orders shall be placed in
writing and must be placed at least seven (7) business days prior to the
requested shipment date. RII shall make every reasonable effort to insure the
shipment of the Product on or before ASQC's requested shipment date.

         5. SHIPMENT. Packages containing the Product and any applicable RII
literature or documentation shall be shipped to ASQC F.O.B. to a warehouse
designated by ASQC. RII shall not insert any special or extraordinary materials,
including, but not limited to mail order or other promotional material in, or
affix any special or extraordinary stickers or other items without obtaining
ASQC's prior written consent. As used in this paragraph "special or
extraordinary" shall mean printed material, inserts, stickers or other
promotional material (i) not used by RII in or on its general release of any
Title or of the Series, or (ii) that quotes a suggested wholesale, retail, or
special price for any Title or for the Series.

         6. MARKETING POLICIES; PRODUCT SUPPORT. The parties will develop a
mutually acceptable marketing plan. ASQC agrees to use its best efforts to sell
the Products in the Territory. ASQC will promptly respond to any inquiries for
the purchase of Products that are forwarded to ASQC by RII. ASQC will maintain
reasonable inventory levels of Products at one or more facilities. RII will
provide all customers access to complete technical support for all Products and
maintain a responsive customer support function.

         7. DISTRIBUTION FEE AND SALES CREDIT. ASQC shall be entitled to a
Distribution Fee on each unit of the Product which it sells to a customer. The
amount of the Distribution Fee shall be calculated as described on Exhibit B and
based on ASQC's Net Receipts. RII shall pay ASQC a Sales Credit on each unit of
the Product which it sells to a customer, which Sales Credit shall be calculated
as described on Exhibit B hereto and based on RII's Net Receipts. As used
herein, "Net Receipts" means the net revenues of ASQC or RII, as the case may
be, actually received from sales of the Product by any means or distribution
channels, including sales by sales representatives, distributors and sales
representatives appointed by distributors, exclusive of demonstration or
promotional copies, returns, postage, freight or other actual shipping charges.

         8. PAYMENT. On or before the 30th day after the end of each month
during the term of this Agreement, ASQC and RII shall each submit to the other,
in a mutually acceptable format, an accurate and complete report of the units of
the Product sold and Net Receipts for the Product during the previous month.
ASQC's statement shall be accompanied by ASQC's payment in the amount of its Net
Receipts reduced by the Distribution Fee, and RII's statement shall be
accompanied by RII's payment in the amount of the Sales Credit. All payments
will be made in U.S. dollars.

         9. TITLE, INSURANCE AND OTHER EXPENSES. Title to the Products shall be
vested in RII at all times until passed directly to the customer. Title and risk
of loss shall pass to the customer at such time as ASQC delivers the Products to
the customer. RII shall keep the Products insured against such risks and in such
amounts and according to such other terms as it may from time to time determine.

         10. QUALITY AND WARRANTIES. RII warrants that the optical media on
which the Product is distributed is free from defects in materials and
workmanship. EXCEPT AS SPECIFICALLY PROVIDED IN THE PRECEDING SENTENCE, RII
MAKES NO WARRANTY OR REPRESENTATION, EITHER EXPRESS OR IMPLIED, WITH RESPECT TO
THE PRODUCT, INCLUDING ITS CONTENT, QUALITY, PERFORMANCE, MERCHANTABILITY OR
FITNESS FOR A PARTICULAR PURPOSE. If a Product fails to meet this limited
warranty, ASQC's sole and exclusive remedy is replacement or, at RII's option,
refund of the purchase price. This section shall not limit RII's liability under
sections 14, 16, and 21 below, with respect to intellectual property rights and
indemnification. RII shall extend its standard warranty to purchasers of the
Product, a copy of which is attached as Exhibit C, in the form in which it
appears on the Product Registration Card packaged with the Product. ASQC shall
not represent that RII makes any warranty other than this standard warranty.

         11. USE OF RII TRADEMARKS AND ADVERTISING IN THE TERRITORY. ASQC may
advertise and use the trade names, trademarks, images, likenesses or other
information which is attached hereto as Exhibit D ("Approved Materials"), for
normal advertising and promotion within the Territory. Upon reasonable notice,
RII may withdraw or modify such authorization. All use of any Approved Materials
in any marketing and promotion, including but not limited to advertisements and
packaging, shall contain such trademark or other notice of attribution as may be
specified by RII from time to time.

         12. USE OF ASQC TRADEMARKS AND ADVERTISING IN THE TERRITORY. RII may
advertise, and use the tradenames, trademarks, images, likenesses or other
information which is attached hereto as Exhibit E, on the Product and on the
packaging for the Product, for normal advertising, promotion, marketing and
sales of the Product by RII in the Territory. Upon reasonable notice, ASQC may
withdraw or modify this authorization.

         13. LIMITATION ON USE OF THE MARKS BY RII. RII shall use the Marks only
in the approved format. RII shall not adopt, use or attempt to register any
modifications of the Marks or combinations of the Marks with any other Marks
without the prior written approval of ASQC. In addition, RII shall not (i) use
the Marks to incur any obligation or indebtedness on behalf of ASQC, (ii) use
the Marks as part of its corporate or other legal name, or (iii) mortgage,
pledge or in any way encumber the rights granted to RII with respect to use of
the Marks.

         14. OWNERSHIP AND PROPRIETARY RIGHTS. RII represents and warrants that
(i) it has all rights in and to copyrights, trade secrets and trademarks
associated with the Product under this Agreement, including those in Exhibit E,
(ii) the use of the literary and artistic materials and ideas contained or
embodied in the Product, containers and advertising materials, if any, furnished
to ASQC by RII in accordance with the terms of this Agreement, will not violate
any law, or infringe upon, or violate any rights of any person, firm or
corporation, and (iii) RII has no knowledge of any litigation, proceeding or
claim pending or threatened against RII which may materially affect RII's rights
in and to the Product, or the works and performances embodied thereon, the
copyrights pertaining thereto, or the rights, licenses and privileges granted to
ASQC hereunder.

         15. RIGHTS TO INCLUDE ANSI/ISO/ASQC Q9000 IN PRODUCT. ASQC shall grant
to RII a non-exclusive, perpetual and paid-up license to electronically imbed
the North American language version for ISO 9000, known as ANSI/ISO/ASQC Q9000,
in the Product.

         16. ROYALTIES AND OTHER PAYMENTS. RII shall be solely responsible for
and shall make any payments required to be made to any individual, entity or
group representing authors of the Product, participants in the production of the
works or performances embodied on the Product, and publishers or other persons
having legal or contractual rights of any kind to participate in the receipts of
such works or performances as a result of the transaction contemplated by this
Agreement.

         17. RIGHTS BELONGING TO RII. ASQC acknowledges that all intellectual
property rights to the Product belong to RII or its licensers, as the case may
be. ASQC will not alter the Product or any portion thereof, including the
packaging, and will not remove RII's copyright notices, restricted rights
legends, or any other notices from the Product or documentation.

         18. COVENANTS OF ASQC AND RII. Each party covenants and represents that
(i) except with the prior written approval of the other, it shall make no
representations or warranties on behalf of the other in connection with the
distribution of the Product, (ii) they will market the Product only in a manner
consistent with the marketing policies determined in accordance with section 6,
(iii) they will maintain accurate books of accounts in connection with any sales
made by them pursuant to this Agreement, and (iv) they will insure that any
sales representatives, distributors or sales representatives appointed by
distributors will comply with these covenants.

         19. EXCHANGE OF INFORMATION. ASQC will provide to RII, on a monthly
basis and in a mutually acceptable format, a list of purchasers of the Product,
including the name of the purchaser, the shipment address of the purchaser and
the Title or Titles or Series purchased.

         20. TAXES. ASQC shall be responsible for any taxes (including, but not
limited to, sales, use, excise, telecommunications and gross receipts taxes) and
other similar charges now or in the future imposed upon ASQC or any person or
entity retained by it in connection with any aspect of its performance of this
Agreement, exclusive of any taxes imposed directly on RII. The foregoing does
not affect the definition of Net Receipts in section 7.

         21. INDEMNIFICATION BY RII. RII will indemnify and hold harmless ASQC,
its officers, employees and agents, from and against all loss, damages,
liability, and expense, including attorney fees, incurred by reason of any
claims, actions, suits or governmental investigations or proceedings, brought
against or involving them or any of them, and which (i) relate to or arise out
of a breach by RII of its warranties under sections 14 and 16 relating to
intellectual property rights, or (ii) are brought by a third party and arise out
of a claimed defect in the Product or a claim that the Products fail to meet
warranties, representations or specifications made by RII.

         22. INDEMNIFICATION BY ASQC. ASQC will indemnify and hold harmless RII,
its officers, employees and agents, harmless from and against all loss, damages,
liability, and expense, including attorney fees, incurred by reason of any
claims, actions, suits or governmental investigations or proceedings, brought
against or involving them or any of them, and which relate to or arise out of a
breach by ASQC of its covenants under sections 17, 18 and 20.

         23. TERM AND TERMINATION. The term of this Agreement is three years
from the date of its execution. The term may be extended by mutual consent of
the parties. This Agreement may not be terminated by either party during its
term except for good cause. Good cause shall mean a material breach of this
Agreement. Notwithstanding the foregoing, neither party may terminate for cause
unless it notified the other party of any alleged material breach in writing and
the breach has not been cured within 30 days from such notice. Notwithstanding
any other provisions of this paragraph, this Agreement will terminate
automatically in the event either party ceases to do business in the event of
either party's bankruptcy, insolvency, or assignment for the benefit of
creditors, and RII or ASQC may terminate this Agreement effective immediately
upon notice to the other party in the event of the conviction of, or commission
by, the other party or any principal officer, shareholder, employee or any
partner of the other party of any crime which may adversely affect the goodwill
or reputation of RII or ASQC. Upon termination of this Agreement, ASQC shall
return all of the Product and Documentation, as well as copies of promotional
materials, marketing literature, written information and reports pertaining to
the Product and that have been supplied by RII. Neither party shall advertise,
market, sell or distribute the Product, directly or through distributors, or
through sales representatives after termination of this Agreement by using the
other party's trademarks, as attached hereto as Exhibits D and E.

         24. RELATIONSHIP OF PARTIES. During the term of this Agreement, the
relationship between RII and ASQC is that of independent contractors. Under no
circumstances shall any of the employees of one party be deemed the employees of
the other for any purpose.

         25. CONFIDENTIALITY. Any specifications, samples, computer programs,
technical information, lists of customers or potential customers or other
proprietary business information or data, written, oral or otherwise, disclosed
by one party to the other ("Confidential Information") shall remain the property
of the disclosing party. The parties agree to hold all such Confidential
Information in strict confidence and not to disclose same to any third party
without the disclosing party's prior written consent. Upon expiration or
termination of this Agreement, each party shall return to the other all such
Confidential Information in its possession.

         26. NOTICE. All notices shall be in writing and will be delivered
personally, by confirmed facsimile transmission, by certified mail, or overnight
courier, to the addresses specified below:

         If to ASQC:                American Society for Quality Control, Inc.
                                    611 East Wisconsin Avenue
                                    Milwaukee, WI 53201
                                    Attn: Brian J. LeHouillier
                                    Director, Programs and Operations
                                    Telephone:  (414) 272-8575
                                    Fax:  (414) 272-1734

         If to RII:                 Reality Interactive, Inc.
                                    Suite 300
                                    11200 West 78th Street
                                    Eden Prairie, Minnesota 55344
                                    Attn: Wesley W. Winnekins, CFO
                                    Telephone:  (612) 996-6777
                                    Fax:  (414) 996-6799

Notice will be effective only upon receipt.

         27. MISCELLANEOUS.

         (a) SURVIVAL OF OBLIGATIONS. The parties agree that the obligations
imposed by 21, 22 and 25 will survive the termination of this Agreement.

         (b) ELECTION OF REMEDY AND WAIVER. The exercise of one right or remedy
hereunder will not constitute an election or preclude either party from
exercising or pursuing all other rights or remedies available to them under the
law or as provided herein. The failure of either party at any time to require
performance by the other part of any provision hereof will in no way affect the
right to require such performance at any time thereafter, nor will the waiver by
either party of a breach of any provision hereof constitute a waiver of any
succeeding breach of the same or any other provision, or constitute a waiver of
the provision itself.

         (c) ASSIGNMENT, AMENDMENT AND SEVERABILITY. Neither this Agreement nor
any rights hereunder or interest herein may be assigned by either party without
the prior consent of the other, except to a parent, subsidiary or affiliate of
the assigning party. This Agreement and the Exhibits hereto constitute the
entire agreement regarding the subject matter contained in this Agreement
between RII and ASQC and may not be substituted, varied or abridged in any
manner, except as provided herein, unless by written amendment executed by an
authorized agent or officer of ASQC and an authorized officer of RII. In the
event any provision of this Agreement is found to be void or unenforceable, all
remaining provisions of this Agreement will remain in full force and effect.

         (d) GOVERNING LAW. This Agreement and the relationship between the
parties hereto will be governed by and construed in accordance with the internal
laws of the State of Wisconsin.

         (e) TERMINATION OF PRIOR AGREEMENT. This Agreement and the Exhibits
hereto terminates and supersedes all prior and contemporaneous agreements,
written or oral, or created by a course of dealing, if any, between the parties
with respect to the subject matter contained in this Agreement.

         (f) ARBITRATION. All disputes arising out of this Agreement and
relating to any relationships created hereby will be subject to binding
arbitration. The party seeking arbitration must serve the other party by
certified mail with a written demand for arbitration setting forth the question
for arbitration. Arbitration will be held before a single arbitrator in
Milwaukee, Wisconsin, if arbitration is sought by RII or in Minneapolis,
Minnesota if arbitration is sought by ASQC. Arbitration will be pursuant to the
rules of the American Arbitration Association, except as modified by this
Agreement. In no event may the arbitrator award punitive damages. The prevailing
party will be entitled to reimbursement from the other party for all expenses,
costs and attorneys' fees incurred in the arbitration. The parties consent to
the jurisdiction of the state and federal courts in Milwaukee, Wisconsin and the
state and federal courts in Minneapolis, Minnesota, as the case may be, for any
action to enforce the award of the arbitrator.

IN WITNESS WHEREOF, the parties have caused the Agreement to be executed as of
the date written above.

REALITY INTERACTIVE, INC.             AMERICAN SOCIETY FOR QUALITY
                                      CONTROL, INC.

BY  /s/  Wesley W. Winnekins          BY  /s/   Brian J. LeHouillier

ITS  Chief Financial Officer          ITS Director Programs & Operations

                                    EXHIBIT A
                  REALITY INTERACTIVE QS-9000 COMPLIANCE SERIES
                                PRICING SCHEDULE

- ---------------------------------------------------------------------
QS-9000 Compliance Series                              Unit Price
- ---------------------------------------------------------------------

Starting the QS-9000 Process                                    $995

Managing the QS-9000 Process                                    $995

Building and Implementing the QS-9000 Quality System            $995

Auditing the QS-9000 Qaulity System                             $995

QS-9000 Compliance Series  (4-CD set)                         $3,595
- ---------------------------------------------------------------------

                                    EXHIBIT B

1.0      ASQC DISTRIBUTION FEE

         ASQC will calculate a distribution fee based on Net Receipts (as
defined in Section 8). The fee schedule is calculated as follows:

         ASQC NET RECEIPTS          DISTRIBUTION FEE

         $0 - $1.8M                       (***)%
         $1.8M +                          (***)%

2.0      RII SALES CREDIT

         RII will calculate a Sales Credit based on Net Receipts (as defined in
Section 8). The credit schedule is calculated as follows:

         RII NET RECEIPTS            SALES CREDIT
         $0- 1.8M                          (***)%
         $1.8M +                           (***)%

***  Denotes confidential information that has been omitted from the exhibit and
     filed separately, accompanied by a confidential treatment request, with the
     Securities and Exchange Commission pursuant to Rule 24b-2 of the Securities
     Exchange Act of 1934.

                                    EXHIBIT C

                                STANDARD WARRANTY

         Licensor warrants that the optical media on which the Product is
distributed is free from defects in materials and workmanship. Licensor will
replace defective media at no charge, provided you return the defective item
with dated proof of payment to Licensor within ninety (90) days of the date of
delivery. This is your sole and exclusive remedy for any breach of warranty.
EXCEPT AS SPECIFICALLY PROVIDED ABOVE, LICENSOR MAKES NO WARRANTY OR
REPRESENTATION, EITHER EXPRESSED OR IMPLIED, WITH RESPECT TO THE PRODUCT,
INCLUDING ITS CONTENT, QUALITY, PERFORMANCE, MERCHANTABILITY, OR FITNESS FOR A
PARTICULAR PURPOSE. IN NO EVENT WILL LICENSOR BE LIABLE FOR DIRECT, INDIRECT,
SPECIAL; INCIDENTAL OR CONSEQUENTIAL DAMAGES ARISING OUT OF THE USE OR INABILITY
TO USE THE PRODUCT OR DOCUMENTATION. EVEN IF ADVISED OF THE POSSIBILITY OF SUCH
DAMAGES. IN NO CASE SHALL LICENSOR'S LIABILITY EXCEED THE AMOUNT OF THE LICENSE
FEE PAID. THE WARRANTY AND REMEDIES SET FORTH ABOVE ARE EXCLUSIVE AND IN LIEU OF
ALL OTHERS, ORAL OR WRITTEN, EXPRESS OR IMPLIED. Some states do not allow the
exclusion or limitation of implied warranties or limitation of liability for
incidental or consequential damages, so that the above limitation or exclusion
may not apply to you.

                                    EXHIBIT D
                                 RII TRADEMARKS

                         [LOGO] REALITY INTERACTIVE (TM)

                    REAL TOOLS FOR ACCELERATED LEARNING (TM)

                         [LOGO] REALITY INTERACTIVE (TM)
                    REAL TOOLS FOR ACCELERATED LEARNING (TM)

                                    EXHIBIT E
                                 ASQC TRADEMARKS

                                 [LOGO] ASQC(R)

                         [LOGO] ASQC AUTOMOTIVE DIVISION

EXHIBIT 99.1

                              CAUTIONARY STATEMENT

         Reality Interactive, Inc. (the "Company"), or persons acting on behalf
of the Company, or outside reviewers retained by the Company making statements
on behalf of the Company, or underwriters, from time to time make, in writing or
orally, "forward-looking statements" within the meaning of Section 27A of the
Securities Act of 1933, as amended, and Section 21E of the Securities Exchange
Act of 1934, as amended. When used in conjunction with an identified
forward-looking statement, this Cautionary Statement is for the purpose of
qualifying for the "safe harbor" provisions of such sections and is intended to
be a readily available written document that contains factors which could cause
results to differ materially from such forward-looking statements. These factors
are in addition to any other cautionary statements, written or oral, which may
be made or referred to in connection with any such forward-looking statement.

         The following matters, among others, may have a material adverse effect
on the business, financial condition, liquidity, results of operations or
prospects, financial or otherwise, of the Company. Reference to this Cautionary
Statement in the context of a forward-looking statement or statements shall be
deemed to be a statement that any or more of the following factors may cause
actual results to differ materially from those in such forward-looking statement
or statements:

         DEVELOPMENT STAGE COMPANY. The Company was incorporated in May 1994,
first began to ship the complete series of its initial product in August 1995,
and accordingly, has only a limited history of operations. The Company's
prospects for success must be considered in light of the problems, expenses,
difficulties, complications and delays frequently encountered in connection with
the formation and development of a new business in a competitive industry. In
addition, due to the uncertainty in growth of a development stage company and
the rate of change in the industry perceived by the Company, the Company is
uncertain of the time frame or amount of funding required to accomplish its
business objectives.

         DEVELOPING MARKET; MARKET ACCEPTANCE. The market for educating and
training businesses has historically been served by consultants, instructor-led
training and training publications such as books, manuals and tapes. Currently,
there is little use of interactive multimedia education and training products by
businesses, and many of the Company's potential customers do not own or have
access to multimedia compatible equipment. The Company's future success will
depend upon, among other factors, the extent to which companies acquire
multimedia equipment compatible with the Company's products and adopt and use
interactive multimedia education and training programs. In addition, the
Company's success will depend in part on its ability to market and sell multiple
copies of its products to large corporate customers. In the event that adoption
and use of multimedia equipment compatible with the Company's products do not
become widespread, the number of potential customers of the Company will be
limited. There can be no assurance that the Company's products or the prices the
Company charges for its products will be acceptable to the market or that the
Company will be able to sell multiple copies to large corporate customers.

         LIMITED MARKETING CAPABILITY. The Company currently has a small sales
and marketing staff and limited number of strategic alliances relating to
distribution of its products. There can be no assurance that the Company will be
able to build a suitable sales force or enter into satisfactory marketing
alliances with third parties, or that its sales and marketing efforts will be
successful.

         DEPENDENCE ON DIVERSIFICATION OF PRODUCT OFFERINGS. The Company
currently has a limited number of product offerings, and purchasers of the
Company's products are not required to purchase additional products.
Accordingly, the Company's products represent non-recurring revenue sources, and
the success of the Company is dependent, in part, on its ability to develop
sustained demand for its current products and to develop and sell additional
products. There can be no assurance that the Company will be successful in
developing and maintaining such demand or in developing and selling additional
products.

         DEPENDENCE ON EVOLVING INDUSTRY STANDARDS. The Company's initial
product offerings prepare businesses for adherence to worldwide management
standards. The failure of the Company to enhance its products in a timely manner
to changes in the standards, the lack of public acceptance of such standards or
the delay in introduction of or enhancement to such standards would materially
adversely affect the Company's operations.

         TECHNOLOGICAL CHANGE. The industry in which the Company competes is
characterized by rapid technological change. The introduction of products
embodying new technology can render existing products and product formats
obsolete and unmarketable. The Company's success will depend on its ability to
anticipate changes in technology and to develop and introduce new and enhanced
products in a timely manner in response to technological changes, or if products
or product enhancements by the Company do not achieve market acceptance, the
Company's business would be materially adversely affected.

         FUTURE ADDITIONAL CAPITAL REQUIREMENTS; NO ASSURANCE FUTURE CAPITAL
WILL BE AVAILABLE. If the Company is unable to generate substantial revenues
from its operations or if the Company's expenses exceed expectations, the
Company will likely require additional funds to meet its capital requirements.
The Company does not currently have available bank financing. The Company may be
required to raise additional funds through public or private financings,
including equity financings, or through collaborative arrangements. There can be
no assurance that additional financing would be available on favorable terms, or
at all. If funding is not available when needed or on acceptable terms, the
Company may be forced to curtail its operations significantly or cease
operations and abandon its business entirely.

         COMPETITION. The business education and training industry is highly
competitive. A large number of companies are currently developing interactive,
multimedia-based training, educational and instructional aids. Competitors also
include national, regional and local accounting firms engaged in industrial
consulting and instructor-led training and companies which market training tools
such as books, videos and audio tapes. Some of the Company's existing
competitors, as well as a number of potential competitors, have larger technical
staffs, more established marketing and sales organizations, and greater
financial resources than the Company. There can be no assurance the Company will
be able to compete successfully with such companies, or at all.

         FLUCTUATIONS IN OPERATING RESULTS. The Company's future operating
results may vary substantially from quarter to quarter. At its current stage of
operations, the Company's quarterly revenues and results of operations may be
materially affected by the timing of the development and market acceptance of
the Company's products. Generally, operating expenses will be higher during
periods in which product development costs are incurred and marketing efforts
are commenced. Due to these and other factors, including the general economy,
stock market conditions and announcements by the Company or its competitors, the
market price of the securities offered hereby may be highly volatile.

         DEPENDENCE ON KEY PERSONNEL; LACK OF EMPLOYMENT AND NONCOMPETITION
AGREEMENTS. The success of the Company is dependent in large part upon the
ability of the Company to attract and retain key management and operating
personnel. Qualified individuals are in high demand and are often subject to
competing offers. In the future, the Company will need to hire additional
skilled personnel in the areas of research and development, sales and marketing.
There can be no assurance that the Company will be able to attract and retain
the qualified personnel needed for its business. The Company has no employment
or noncompetition agreements with any of its management or other personnel.

         DEPENDENCE ON ABILITY TO RETAIN SUBJECT MATTER EXPERTS. The Company's
product development strategy requires the Company to retain third-party subject
matter experts to perform research and development functions by providing
accurate and informative content for the Company's products. There can be no
assurance that the Company will be able to continue to attract and retain
qualified subject matter experts required to develop new products and enhance
existing products. The inability of the Company to attract and retain such
experts could have a material adverse effect on the Company and its prospects.

         INTELLECTUAL PROPERTY. The Company regards its multimedia products as
proprietary and relies primarily on a combination of statutory and common law
copyright, trademark and trade secret laws, customer licensing agreements,
employee and third-party nondisclosure agreements and other methods to protect
its proprietary rights. Despite these precautions, it may be possible for a
third party to copy or otherwise obtain or use the Company's products or
technology without authorization, or to develop similar products or technology
independently. If unauthorized use or copying of the Company's product were to
occur to any substantial degree, the Company's business and results of
operations could be materially adversely affected. There can be no assurance
that the Company's means of protecting its proprietary rights will be adequate
or that the Company's competitors will not independently develop similar
products.

         The Company believes that developers of multimedia products may
increasingly be subject to such claims as the number of products and competitors
in the industry grows and the functionality of such products in the industry
overlaps. Any such claim, with or without merit, could result in costly
litigation and could have a material adverse effect on the Company.

         LACK OF PRODUCT LIABILITY INSURANCE. The Company may face a risk of
exposure to product liability claims in the event that use of its products is
alleged to have resulted in damage to its customers. The Company does not
currently carry product liability insurance. There can be no assurance that such
insurance will be available on commercially reasonable terms, or at all, or that
such insurance, even if obtained, would adequately cover any product liability
claim. A product liability or other claim with respect to uninsured liabilities
or in excess of insured liabilities could have a material adverse effect on the
business and prospects of the Company.

 5

                   3-MOS
                          DEC-31-1996
                               MAR-31-1996
                                       1,257,741
                                         0
                                   81,343
                                         0
                                     35,190
                             1,594,865
                                         581,009
                                 147,506
                               2,164,148
                        2,950,436
                                              0
                        2,125,962
                                          0
                                        16,436
                                 (2,928,686)
                 2,164,148
                                        122,809
                               122,809
                                           23,852
                                   98,593
                             1,056,770
                                     0
                             172,356
                            (1,204,910)
                                         0
                        (1,204,910)
                                       0
                                      0
                                            0
                               (1,204,910)
                                    (.73)
                                        0