<SUBMISSION>
<ACCESSION-NUMBER>0000950116-01-500736
<TYPE>SB-2/A
<PUBLIC-DOCUMENT-COUNT>14
<FILING-DATE>20010821
<FILER>
<COMPANY-DATA>
<CONFORMED-NAME>DIGITAL DESCRIPTOR SYSTEMS INC
<CIK>0000927454
<ASSIGNED-SIC>7372
<IRS-NUMBER>232770048
<STATE-OF-INCORPORATION>DE
<FISCAL-YEAR-END>1231
</COMPANY-DATA>
<FILING-VALUES>
<FORM-TYPE>SB-2/A
<ACT>33
<FILE-NUMBER>333-59888
<FILM-NUMBER>1720607
</FILING-VALUES>
<BUSINESS-ADDRESS>
<STREET1>2010F CABOT BLVD WEST
<CITY>LANGHORNE
<STATE>PA
<ZIP>19047
<PHONE>2157520963
</BUSINESS-ADDRESS>
<MAIL-ADDRESS>
<STREET1>2010 F CABOT BLVD WEST
<CITY>LANGHORNE
<STATE>PA
<ZIP>19047
</MAIL-ADDRESS>
</FILER>
<DOCUMENT>
<TYPE>SB-2/A
<SEQUENCE>1
<FILENAME>sb-2.txt
<DESCRIPTION>SB-2/A
<TEXT>
<PAGE>



                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                    Form SB-2
                                 Amendment No. 2

                             Registration Statement
                                      Under
                           The Securities Act of 1933

                        Digital Descriptor Systems, Inc.
                 (Name of small business issuer in its charter)

<TABLE>
<CAPTION>
         Delaware                           7373                        23-2770048
         --------                           ----                       -----------
  <S>                                <C>                            <C>
 (State or other jurisdiction of    (Primary Standard Industrial     (I.R.S. Employer
 incorporation or organization)      Classification Code Number)    Identification No.)



446 Lincoln Highway, Fairless Hills, PA                                    19030
-----------------------------------------------------------------------------------------
(Address of principal executive offices)                                 (Zip code)
</TABLE>


         Registrant's Address and Telephone number, including area code:

                                 Garrett U. Cohn
                             Chief Executive Officer
                               446 Lincoln Highway
                            Fairless Hills, PA 19030
                                 (267) 580-1075

            (Name, address and telephone number of Agent for Service)

                          Copies of communications to:

                              Owen Naccarato, Esq.
                             Naccarato & Associates
                           19600 Fairchild, Suite 260
                            Irvine, California 92612
                                 (949) 851-9261

Approximate date of commencement of proposed sale to the public: As soon as
practicable after the registration statement becomes effective.

If any of the securities being registered on this Form are to be offered on a
delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, check the following box. [X]

If this Form is filed to register additional securities for an offering pursuant
to Rule 462(b) under the Securities Act, check the following box and list the
Securities Act registration statement number of the earlier effective
registration statement for the same offering. [ ]


<PAGE>


If this Form is a post-effective amendment filed pursuant to Rule 462(c) under
the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ]

If this Form is a post-effective amendment filed pursuant to Rule 462(d) under
the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ]

If delivery of the prospectus is expected to be made pursuant to Rule 434, check
the following box. [ ]

<TABLE>
<CAPTION>
Calculation of registration fee

--------------------------- --------------- -------------- -------------- ------------ -------------- ---------------
Title of each class of      Amount to be    Proposed       Proposed       Exercise     Proceeds to    Amount of
securities to be            registered      maximum        maximum        price per    the Company    registration
registered                                  offering       aggregate      share (9)                   fee
                                            price per      offering
                                            share          price
--------------------------- --------------- -------------- -------------- ------------ -------------- ---------------
<S>                         <C>                 <C>          <C>               <C>          <C>         <C>
Common  Shares, par value   21,200,000 (1)      $.08 (7)    $1,696,000                                   $424.00
$.001 underlying secured
convertible debenture

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

Common  Shares, par value
$.001 underlying  a          1,428,571 (2)      $.18 (8)      $257,143                                    $64.29
convertible debenture

Common  Shares, par value
$.001 underlying a             214,286 (3)      $.18 (8)       $38,571                                     $9.64
convertible debenture

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

Shares underlying warrants   1,400,000 (4)                                    $.036        $50,400        $12.60
                            ------------

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

Common Shares                1,000,000 (5)      $.18 (8)                                                  $45.00
$.001 pare value               473,000 (6)      $.18 (8)                                                  $21.29

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

Total registration fee      25,715,857                                                                   $576.81 (10)

--------------------------- --------------- -------------- -------------- ------------ -------------- ---------------
</TABLE>

                                       2


<PAGE>

(1)  Common stock issuable upon the conversion of an aggregate of $400,000 in
     convertible debentures issued in connection with the December 23, 2000 and
     March 9, 2001 financing to various investors, plus $400,000 in convertible
     debentures to be issued on the tenth trading day following the effective
     date of this registration statement.
(2)  Common Stock issuable upon the conversion of a $100,000 convertible
     debenture issued in April 2001. See "Selling Shareholders."
(3)  Common Stock issuable upon the conversion of a $15,000 convertible
     debenture issued in April 2001. See "Selling Shareholders."
(4)  Common stock issuable upon conversion of warrants issued in connection with
     the December 23, 2000 (400,000 warrants) and March 9, 2001 (200,000
     warrants) financing to various investors, plus 800,000 warrants to be
     issued on the tenth trading day following the effective date of this
     registration statement.
(5)  Represents restricted shares issued for services. See "Selling
     Shareholders."
(6)  Represents restricted shares issued for consulting services. See "Selling
     Shareholders."
(7)  Estimated solely for the purpose of  calculating  the  registration fee
     pursuant to Rule 457(c) and (g) of the Securities Act of 1933, as amended
     (the "Securities Act"); based on the price of $.08 as per the terms
     indicated in Section 4 (c)(i) of the Convertible Debenture.
(8)  Estimated solely for the purpose of calculating the registration fee
     pursuant to Rule 457(c) and (g) of the Securities Act of 1933, as amended
     (the "Securities Act"); using the average of the high and low prices
     reported for the company's Common Stock as of April 20, 2001 and rule
     457(g)(1) with respect to the various shares issued for consulting
     services. See "Selling Shareholders."
(9)  Estimated solely for the purpose of calculating the registration fee
     pursuant to Rule 457(g) of the Securities Act of 1933, as amended (the
     "Securities Act"); based on the terms of the warrant agreements.
(10) $569.61 previously paid with original filing on May 1, 2001 registration
     no. 333- 59888

                              ---------------------
The registrant hereby amends this registration statement on such date or dates
as may be necessary to delay its effectiveness date until the registrant shall
file a further amendment which specifically states that this registration
statement shall thereafter become effective in accordance with section 8(a) of
the Securities Act of 1933, as amended, or until the registration statement
shall become effective on such date as the Securities and Exchange Commission,
acting pursuant to said section 8(a), may determine.


                                        3


<PAGE>



         This prospectus is not an offer to sell these securities and is not an
offer to buy these securities in any state where such an offer or sale is not
permitted.

                  Subject to completion, dated August 21, 2001

                        Digital Descriptor Systems, Inc.

                        25,715,857 Shares of common stock

         o        The 25,715,857 shares of Common Stock offered by this
                  Prospectus are being offered for resale by the stockholders
                  listed in the section of this Prospectus called "Selling
                  Security Holders". We will not receive any proceeds from the
                  sale of these shares. We will receive proceeds from the
                  exercise of warrants, the underlying shares of which we are
                  registering in this Prospectus, by the selling security
                  holders, which proceeds would be used for general corporate
                  purposes. As of the date of this Prospectus, the warrants have
                  not been exercised.

         o        Our Common Stock is traded on the OTC Bulletin Board under the
                  symbol "DDSI.OB".

         o        July 31, 2001, the closing bid price of our Common Stock on
                  the OTC Bulletin Board was $0.14.

The securities offered in this Prospectus involve a high degree of risk. You
should carefully consider the factors described under the heading "Risk Factors"
beginning on page 9 of this Prospectus.

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


Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved these securities, or determined if this
Prospectus is truthful or complete. Any representation to the contrary is a
criminal offense.




                                        4
<PAGE>


<TABLE>
<CAPTION>
                                Table of Contents


--------------------------------------------------------------------------------------------------------- ----------
                                             Section Title                                                Page No.
--------------------------------------------------------------------------------------------------------- ----------
<S>                                                                                                       <C>
Summary of Information in the Prospectus                                                                   6
--------------------------------------------------------------------------------------------------------- ----------
Risk Factors                                                                                               9
--------------------------------------------------------------------------------------------------------- ----------
Use of Proceeds                                                                                           13
--------------------------------------------------------------------------------------------------------- ----------
Price Range of Common Stock                                                                               13
--------------------------------------------------------------------------------------------------------- ----------
Our Dividend Policy                                                                                       14
--------------------------------------------------------------------------------------------------------- ----------
Management's Discussion and Analysis of Financial Condition and Results of Operations                     14
--------------------------------------------------------------------------------------------------------- ----------
Our Business                                                                                              18
--------------------------------------------------------------------------------------------------------- ----------
Management                                                                                                28
--------------------------------------------------------------------------------------------------------- ----------
Executive Compensation                                                                                    29
--------------------------------------------------------------------------------------------------------- ----------
Certain Relationships and Related Transactions                                                            32
--------------------------------------------------------------------------------------------------------- ----------
Security Ownership of Certain Beneficial Owners and Management                                            32
--------------------------------------------------------------------------------------------------------- ----------
Description of Securities                                                                                 33
--------------------------------------------------------------------------------------------------------- ----------
Selling Stockholders                                                                                      37
--------------------------------------------------------------------------------------------------------- ----------
Plan of Distribution                                                                                      39
--------------------------------------------------------------------------------------------------------- ----------
Legal Proceedings                                                                                         41
--------------------------------------------------------------------------------------------------------- ----------
Experts                                                                                                   41
--------------------------------------------------------------------------------------------------------- ----------
Legal Matters                                                                                             41
--------------------------------------------------------------------------------------------------------- ----------
Other Available Information                                                                               41
--------------------------------------------------------------------------------------------------------- ----------
Financial Statements                                                                                      42
--------------------------------------------------------------------------------------------------------- ----------
Indemnification                                                                                           46
--------------------------------------------------------------------------------------------------------- ----------
</TABLE>




                                        5
<PAGE>




                               Prospectus Summary

This Prospectus summary highlights selected information contained in this
Prospectus. To understand this offering fully, you should read the entire
document carefully. Please pay particular attention to the section entitled
"Risk Factors" and the section entitled "Financial Statements".

Unless otherwise indicated, this Prospectus assumes that any of our outstanding
options or warrants have not been exercised into shares of our Common Stock.

                        Digital Descriptor Systems, Inc.

Digital Descriptor Systems, Inc.("DDSI"), a Delaware corporation incorporated in
1994, is the successor to Compu-Color, Inc., an Iowa corporation. The operations
of DDSI were started as a division of ASI Computer systems, Inc. of Waterloo
Iowa in 1986. Compu-Color, Inc. was formed in July 1989 and as of July 1, 1989
purchased the assets of the Compu-Color division of ASI Computer Systems, Inc.

DDSI develops, assembles and markets computer installations, consisting of
hardware and software, which capture video and scanned images, digitize the
image, link the digitized images to text and store the image and text on a
computer database which allows for transmitting the image and text by computer
or over telephone transmission lines to remote locations.

Imaging technology enables computers to record, store and retrieve both textual
information and visual images. The common problem in imaging technology is how
to record, store, process and retrieve information and images within the same
system. DDSI's software programs utilize technology to link the textual
information with the images so that customers can record and retrieve related
text and images. DDSI originally developed the software to address the
information retrieval problems of tax assessors. DDSI subsequently adapted the
software for use by law enforcement agencies and management of jail facilities.
DDSI's software also addresses different information retrieval needs such as
reproducing line ups and producing housing badges (jails), bar coded wristbands
for identification which facilitates movement within jails and courts and
storing and retrieving hand written and computer generated document images
within arrest records.

DDSI anticipates that in the future it will need to adapt its imaging technology
software to new uses, such as security devices, employee and school
identification systems and access control systems. These potential applications
are currently in the discussion phase and there are no Company resources
budgeted for them at this time.

The principal product of DDSI is the Compu-Capture(R) Law Enforcement Program,
which is marketed to law enforcement agencies and jail facilities. The program
captures a video or scanned image (mug shot) of a subject that is stored by
computer application along with the booking record, physical description and
other pertinent information about the subject. Compu-Capture(R) was introduced
into the market in 1989. Since that time, DDSI has installed approximately 350
systems in 46 states in the United States, Europe, South America, Canada, Mexico
and Bahamas. During the year ended December 31, 2000, 1999 and 1998, 93%, 95%
and 99%, respectively, of DDSI's revenues were to domestic customers.

DDSI has marketed the Compu-Color(R) Assessor Program that combines digitized
images from videotapes or photographs of real estate with buildings or other
improvements, together with




                                        6
<PAGE>

relevant tax assessment information. Compu-Color(R) was introduced in 1986. The
program was designed for use by local tax assessors as a method of maintaining a
visual record of all assessed improved properties that can be rapidly accessed
with the relevant textual information. The Compu-Color Assessor Program
contributed approximately two percent of DDSI's revenues in 1999. The market for
this product is minimal, therefore, DDSI has withdrawn from this portion of the
market place.

<TABLE>
<CAPTION>
                                  The Offering

<S>                                         <C>
Securities Offered                          25,715,857 Selling Security Holder Shares

Common Stock Outstanding:
    Prior to the Offering                   21,279,612 Shares as of July 31, 2001
    After the Offering                      45,522,469 Shares

Offering Price                              The selling shareholders can sell the shares at any price.

Use of Proceeds                             Our company will not receive any proceeds upon the issuance of the
                                            Common Stock that is the subject of this registration.  However, DDSI
                                            received $200,000 on December 29, 2000 and $200,000 on March 9, 2001
                                            as bridge funding through the issuance of Convertible Debentures
                                            pursuant to the  "First Amendment to Secured Convertible Debenture
                                            Purchase Agreement" dated March 5, 2001 and the original agreement
                                            (the "Secured Convertible Debenture Purchase Agreement") dated
                                            December 28, 2000.  DDSI is scheduled to receive approximately
                                            another $400,000 in convertible debentures within three days after
                                            the effectiveness of this registration statement from the issuance of
                                            Convertible Debentures.  If all the warrants in this offering are
                                            exercised, the gross proceeds to us from the exercise of warrants
                                            will be approximately $50,400.  DDSI intends to use the net proceeds
                                            for working capital and expand existing operations.

Market for our Common Stock:                Our Common Stock trades on the Over-the Counter Bulletin Board, also
                                            called OTCBB, under the trading symbol "DDSI.OB". The market for our
                                            common stock is highly volatile. We can provide no assurance that
                                            there will be a market in the future for our Common Stock.
</TABLE>




                                        7
<PAGE>




                          Summary Financial Information

The summary historical financial data should be read in conjunction with the
financial statements (and notes thereto) of our Company and the "Management's
Discussion and Analysis of Financial Condition and Results of Operations"
included elsewhere in this Prospectus.
<TABLE>
<CAPTION>

                                              Six Months Ended June                       Year ended December 31
                                            2001                2000                    2000                 1999
                                            -------------------------                   --------------------------
<S>                                         <C>               <C>                       <C>               <C>
Net sales                                   $   725,258   $ 1,407,338                   $ 3,026,458     $2,847,183
Cost of revenues                                269,788       803,177                     1,615,286        987,931
General and administrative                      917,244       790,886                     1,843,336      1,593,846
Sales and marketing                             306,561       417,420                       917,381        984,691
Research and development                        140,094       248,420                       536,350        429,599
Depreciation                                    120,666        50,595                       162,330         75,553
Other (income) expense, net                     274,543        (4,931)                      (18,173)       (18,920)
Net Loss                                    $(1,303,638)  $  (898,229)                  $(2,030,052)   $(1,205,517)
                                            =========================                   ==========================

Weighted average Common
    Shares outstanding                       21,274,779    17,722,649                    18,557,547      10,934,900
                                             ========================                   ===========================


Basic loss per share                        $      (.06)  $      (.05)                  $      (.11)   $      (.11)
                                            =========================                   ==========================


Current Assets                              $ 1,282,517   $ 1,360,519                   $ 1,000,415    $ 1,207,385
Total Assets                                  1,946,855     2,210,346                   $ 1,783,044    $ 2,049,383
Current Liabilities                           2,633,471     1,487,011                   $ 1,732,306    $ 1,603,885
Total Liabilities                             2,659,101     1,487,011                   $ 1,760,932    $ 1,603,885
Shareholders' equity (deficit)              $  (712,246)  $   723,335                   $    22,112    $   445,498
</TABLE>




                                        8
<PAGE>




                                  Risk Factors

An investment in our securities involves a high degree of risk. In addition to
the other information in this prospectus, you should carefully consider the
following risk factors before investing in our securities. If any of the
following risks were to actually occur, Digital Descriptor Systems, Inc.'s
business would likely suffer. Consequently, the price of Digital Descriptor
Systems, Inc.'s common stock could decline, and investors may lose all or part
of their investment in Digital Descriptor Systems, Inc.'s common stock.

Continuing operating losses and need for financing.


For the six months ended June 30, 2001 and for years ending December 31, 2000,
1999 and 1998 Digital Descriptor Systems, Inc. ("DDSI"), had operating losses of
$1,303,638, $2,030,052, $1,205,517 and 1,331,391, respectively. The Company has
never been profitable and continues to incur losses from operations. There can
be no assurance that sufficient revenue, income and cash flows will be generated
to support DDSI's operations or that DDSI will ever operate profitably. DDSI is
dependent upon receipt of the net proceeds from the current financing to finance
the continued operations of DDSI and will need additional financing to fund its
future operations and development of new products.


DDSI is dependent on its ability to attract new customers

Once a customer has purchased a system from DDSI, the revenues from that
customer will decline significantly and will consist primarily of maintenance
fees and upgrades to the system unless the customer expands the system or DDSI
develops new products for the system. DDSI is dependent on its ability to
attract new customers or develop new products to market to existing customers.
DDSI's ability to make sales both to new customers and existing customers will
be significantly affected by DDSI's development of new products and upgrading of
existing products to reflect current technology and DDSI's ability to price
products competitively.

Customer purchasing restrictions.

DDSI is in highly competitive and speculative areas of business, each of which
involves a substantial degree of risk. Economic and political conditions and
competition in the industry will affect the success of DDSI. Law enforcement and
taxing jurisdictions are subject to political, fiscal and budgetary constraints
and purchases of DDSI's products may be delayed substantially due to these
political and budgetary processes. The nature of the public sector market and
the government procurement process are expected to result in an irregular and
unpredictable revenue stream for DDSI. DDSI's performance in any one quarter is
not necessarily indicative of sales trends or future performance. Large
procurements by a single customer, allow DDSI to record significant revenues
only during the term of procurement.

Public contract requirements can preclude sales.

DDSI's Compu-Capture(R) product is being marketed primarily to law enforcement
agencies. As public agencies, these prospective purchasers are subject to public
contract requirements that vary from one jurisdiction to another. Some public
contract requirements may be onerous or even impossible for DDSI to satisfy,
such as large bonding requirements, and DDSI may be precluded from making sales
in these jurisdictions. In addition, public contracts frequently are awarded
only after a formal competitive bidding process. This process to date has been,







                                        9
<PAGE>


and may continue to be, protracted. Even following contract award, significant
delays in contract implementation are possible.

Compu-Scan 3000 FBI certification.

Under federal regulation, law enforcement agencies in the United States may only
utilize fingerprint systems that have passed an extensive FBI certification
process. As a result any inkless fingerprint system developed by DDSI must pass
the FBI certification process before it can be distributed to law enforcement
agencies in the United States.

On July 25th, DDSI awarded a contract to DBA Systems, a division of Titan
Systems Corp., for technical assistance in achieving compliance with the FBI
certification process and anticipate resubmitting the device to the FBI for
certification during the 4th quarter of 2001.

There are no assurances by the Company that the FBI will certify this technology
and device.

The success of DDSI depends significantly upon the efforts of the President

The success of DDSI depends significantly upon the efforts of the President,
Garrett U. Cohn. See "Management". The loss of services of Mr. Cohn would likely
have a materially adverse effect on the business and the future prospects of
DDSI. DDSI is the beneficiary of life insurance policies in the amount of
$2,000,000 on the life of Garrett U. Cohn.

DDSI must continually advance its technology

The ability of DDSI to compete successfully in the digitized imaging market
which is characterized by rapidly changing technology, will depend in part upon
its ability to continually advance its technology and to develop new
applications and designs for its products.

DDSI's reliance upon sub-contractors can impair product installations.

Because DDSI's product applications are components of larger systems
applications, DDSI frequently must rely upon sub-contractors to supply hardware
and software used in the complete system installations. If the sub-contractors'
ability to implement the installation of their component is impaired, DDSI's
ability to successfully complete the project would be delayed or impaired.

The issuance of these shares will result in dilution.

The issuance of these shares will have a dilutive effect on our common stock and
may lower our stock price. We have reserved a significant number of shares of
our common stock for issuance upon the conversion of convertible debentures, and
the exercise of our warrants.

As of this offering we have outstanding $400,000 of convertible debentures that
can be converted into shares of our Common Stock. Within three trading days
after the effective date of this registration additional debentures amounting to
the remaining $400,000 will be issued. The number of shares we will issue upon
the conversion of these debentures fluctuates with our Common Stock market
price, cannot be determined until the day of conversion. Additionally, there is
no limit on the number of shares of our Common Stock that may be issued upon the
conversion of these convertible debentures.






                                        10
<PAGE>

Certain terms and conditions must be met at the time of the closing of the
$400,000 convertible note that is to be to be issued within three trading days
after the effective date of this registration statement. These terms and
conditions are summarized as follows:

      o The representations and warranties given by the company are still valid
        at the time of funding i.e.,
           i)   DDSI is in good standing under the laws of the state of
                Delaware,
           ii)  the financing transaction is property authorized by the DDSI
                Board of Directors and that the debentures are issued free of
                encumbrances,
           iii) that there are adequate authorized shares available to convert
                the debentures as provided by the financing agreement,
           iv)  all disclosures provided by DDSI regarding DDSI, its business
                and the current financing are true and DDSI did not omit any
                statement that an investor may find significant.
      o The registration statement shall be declared effective by August 31,
        2001,
      o DDSI has not broken any laws or incurred any other event which would
        prevent this registration statement from becoming effective,
      o The trading of DDSI's stock on the OTC Bulletin Board has not been
        suspended,
      o DDSI has not had in excess of 33% of its voting securities acquired.

These convertible debentures have a conversion price that is the lesser of (1)
$0.08 and (2) 50% of the average of the lowest three inter-day prices (which
need not occur on consecutive trading days) during the twenty trading days
immediately preceding the applicable conversion date. Thus, the debentures will
be converted at prices below the current market price on the conversion date. If
conversions of the debentures occur, shareholders may be subject to an immediate
dilution in their per share net tangible book value. Two hundred thousand
dollars ($200,000) of the convertible debentures may be converted into Common
Stock at any time prior to their maturity date of December 28, 2001, with the
remaining two hundred thousand dollars ($200,000) convertible at any time prior
to their maturity date of March 4, 2002.


As of March 5, 2001, we had outstanding a total of 600,000 warrants to purchase
our Common Stock. 400,000 of these warrants have at an exercise price equal to
 .036 per share. These warrants can be exercised at any time through December 28,
2003. 200,000 of these warrants have an exercise price equal to the lesser of
(i) $.036 per share and (ii) the average of the lowest three (3) closing sale
prices for the Common Stock during the twenty (20) trading days immediately
prior to the closing date. These warrants can be exercised any time through and
including March 4, 2004. Additionally, 800,000 warrants with an exercise price
equal to the lesser of (i) $.036 per share and (ii) the average of the lowest
three (3) closing sale prices for the Common Stock during the twenty (20)
trading days immediately prior to the closing date will be issued within three
trading days after the effective date of this registration.


As of March 5, 2000 DDSI has reserved for 200% of the minimum number of shares
of Common Stock, which would be issuable upon conversion in full of the
debentures, amounting to 10,000,000 shares of authorized and unissued common
stock. These reserve amounts are our good faith estimate of the number of shares
that DDSI believes the Company needs to reserve. DDSI can provide no assurance
as to how many shares DDSI will ultimately need to issue upon the conversion of
the debentures. If DDSI is required to issue additional shares DDSI will be
required to file an additional registration statement for those shares, a
process which will be costly and time consuming. The issuance of these shares
will dilute our common stock per share net tangible book value and may result in
a decline in our stock price.



                                       11
<PAGE>


Examples of how declines in DDSI's stock price of 25%, 50% and 75% would affect
the number of shares required to convert the convertible debentures included in
the $800,000 financing are as follows (assuming a $.16 market price):


o        25% decline in stock price:

         A 25% drop in DDSI's stock price would result in a debenture conversion
         rate of $.06 cents. To convert the $800,000 of convertible debentures
         would require 13,333,333 shares of DDSI common stock.

o        50% decline in stock price:

         A 50% drop in DDSI's stock price would result in a debenture conversion
         rate of $.04 cents. To convert the $800,000 of convertible debentures
         would require 20,000,000 shares of DDSI common stock.

o        75% decline in stock price

         A 75% drop in DDSI's stock price would result in a debenture conversion
         rate of $.02 cents. To convert the $800,000 of convertible debentures
         would require 40,000,000 shares of DDSI common stock.

         This registration statement is registering 21,200,000 shares to provide
         for the conversion of the $800,000 in convertible debentures. A drop in
         stock price of greater than 50% would require DDSI to register more
         shares to provide for the conversion of these convertible debentures.


You may have difficulties trading and obtaining quotations on "penny stock"
issues.

The shares of common stock offered are for "penny stocks" as defined in the
Exchange Act. These shares are traded in the over-the-counter market on the OTC
Bulletin Board. As a result, an investor may find it more difficult to dispose
of or obtain accurate quotations as to the price of the shares of the common
stock being registered. In addition, the "penny stock" rules adopted by the SEC
under the Exchange Act make the sale of the shares of the common stock subject
to certain regulations, which impose sales practice requirements on
broker-dealers. For example, broker-dealers selling such securities must, prior
to effecting the transaction, provide their customers with a document that
discloses the risks of investing in such securities. Furthermore, if the person
purchasing the securities is someone other than an accredited investor or an
established customer of the broker-dealer, the broker-dealer must also approve
the potential customer's account by obtaining information concerning the
customer's financial situation, investment experience and investment objectives.
The broker-dealer must also make a determination whether the transaction is
suitable for the customer and whether the customer has sufficient knowledge and
experience in financial matters to be reasonably expected to be capable of
evaluating the risk of transactions in such securities. Accordingly, the SEC's
rules may limit the number of potential purchasers of the shares of the common
stock.

If DDSI can meet the listing requirements in the future, management intends to
apply to include the shares of the Common Stock being registered hereby for
quotation on The NASDAQ Small Cap Market operated by The NASDAQ Stock Market.
Our Common Stock has not yet been approved for quotation on The NASDAQ Small Cap
Market and there can be no assurance that an active trading market will develop
or if such market is developed that it will be sustained.


                                       12


<PAGE>


The NASDAQ Stock Market recently approved changes to the standards for companies
to become listed on The NASDAQ Small Cap Market, including, without limitation,
new corporate governance standards, a new requirement that companies seeking
listing have net tangible assets of $4,000,000, market capitalization of
$50,000,000 or net income of $750,000 and other qualitative requirements. If we
are unable to satisfy the requirements for quotation on the NASDAQ Small Cap
Market, trading in the common stock being registered hereby would continue to be
conducted on the OTC Bulletin Board. Even if the shares of the Common Stock are
listed for quotation on The NASDAQ Small Cap Market, the market price of the
shares must remain above $4.00 per share or else such shares will be subject to
the "penny stock" rules of the Commission discussed above. If the market price
of such shares falls below $1.00 per share, such shares will be delisted from
The NASDAQ Small Cap Market and will once again be quoted on the OTC Bulletin
Board.

Resale restrictions on transferring "penny stocks".

Various state securities laws impose restrictions on transferring "penny stocks"
and as a result, investors in the Common Stock may have their ability to sell
their shares of the Common Stock impaired. For example, the Utah Securities
Commission prohibits brokers from soliciting buyers for "penny stocks", which
makes selling them more difficult.

Proceeds from the financing to be used for General Working Capital.

DDSI has allocated a portion of the net proceeds of this financing for use to
pay outstanding payables and as working capital. As to such funds, investors
will be relying on the judgment and discretion of DDSI's management without
specific information as to the uses that are proposed to be made of such funds.
See "Use of Proceeds."

Forward-Looking Statements and Associated Risks.

Management believes that this Prospectus contains forward-looking statements,
including statements regarding, among other items, DDSI's future plans and
growth strategies and anticipated trends in the industry in which DDSI operates.
These forward-looking statements are based largely on DDSI's control. Actual
results could differ materially from these forward-looking statements as a
result of factors described herein, including, among others, regulatory or
economic influences. In light of these risks and uncertainties, there can be no
assurance that the forward-looking information should not be regarded as a
representation by DDSI or any other person that the objectives and plans of DDSI
will be achieved.

                                 Use of Proceeds

DDSI will not receive any proceeds upon the issuance of the Common Stock. That
is the subject of this registration. However, DDSI received $200,000 on December
29, 2000 and $200,000 on March 9, 2001 as bridge funding through the issuance of
Convertible Debentures pursuant to the "First Amendment to Secured Convertible
Debenture Purchase Agreement" dated March 5, 2001 and the original agreement
dated December 28, 2000. DDSI is scheduled to receive approximately another
$400,000 within ten days after the effectiveness of this registration statement
from the issuance of Convertible Debentures. If all the warrants in this
offering are exercised, the gross proceeds to us from the exercise of warrants
will be approximately $50,400. DDSI intends to use the net proceeds for working
capital.

                                       13



<PAGE>



                           Price Range of Common Stock

DDSI's Common Stock has been quoted on the OTC:BB since July 7, 1997 under the
symbol "DDSI". As of November 4, 1999 DDSI's shares traded on the pink sheets;
however, the Company returned to trading on the OTC Bulletin Board effective
February 23, 2001. The following table set forth, the high and low bid prices
for the Common Stock for the quarters indicated. As of December 31, 2000 there
were 2,192 shareholders of record. The source of the quotes is AOL Ticker.


<TABLE>
<CAPTION>

                                                                                Common Stock
                                                                                  Bid Price
                                                                       -------------------------------

<S>                                                                    <C>                         <C>
Calendar Year 1999                                                      Low                      High
------------------                                                     -----                    ------
First Quarter                                                          $0.50                     $1.25
Second Quarter                                                         $0.39                     $0.93
Third Quarter                                                          $0.26                     $0.42
Fourth Quarter                                                         $0.12                     $0.30

Calendar Year 2000                                                      Low                      High
------------------                                                     -----                    ------
First Quarter                                                          $0.21                     $0.48
Second Quarter                                                         $0.25                     $0.39
Third Quarter                                                          $0.21                     $0.35
Fourth Quarter                                                         $0.06                     $0.22


Calendar Year 2001                                                      Low                      High
------------------                                                     -----                    ------
First Quarter                                                          $0.12                     $0.40
Second Quarter                                                         $0.12                     $0.20
</TABLE>




As of July 31, 2001, there were approximately 21,279,612 shares of Common Stock
issued and outstanding.


                               Our Dividend Policy

DDSI anticipates that for the foreseeable future, earnings will be retained for
the development of is business. Accordingly, DDSI does not anticipate paying
dividends on the Common Stock in the foreseeable future. The payment of future
dividends will be at the sole discretion of DDSI's Board of Directors and will
depend the Company's general business condition.


            Management's Discussion and Analysis or Plan of Operation

Plan of Operations

The short-term objective of the Company is to continue to expand the sale and
acceptance of its core business solutions by adding more sales personnel and
demonstrating at more trade exhibits. The Company also is pursuing the FBI
certification and roll out of the Compu-Scan 3000 fingerprint capturing device
in order to capitalize on its unique patent pending technology. There are no
assurances by the Company that the FBI will certify this technology and device.
Such certification is not required to sell this device for commercial
(non-government) applications.

The Company's long-term objectives are to obtain enough products to sell into
its basic business market--Criminal Justice -- so that sales will expand
adequately to allow for profits. Three such new products are the Compu-Scan
3000, FMS (Fingerprint Matching System), and Compu-Capture lite.

                                       14


<PAGE>


The FMS (Fingerprint Matching System) is a product that we licensed from Harris
Corporation (NYSE: "HAR"), Melbourne, FL to sell its product to the criminal
justice field. The Company anticipates additional development costs of
approximately $100,000 in 2001, which is required to prepare this product for
market. The FMS will need to be integrated as part of the Company's software
offerings and will also be introduced to large-project integrators. On February
15, 2000, the Company introduced the FMS to the criminal justice industry. The
Company also plans to develop a sales channel into the Federal government.

The Company believes that it will reach profitability during the first half of
year 2002. The Company estimates that it will need to raise $2,000,000 in the
next 12 months to cover its operating costs until it can reach positive cash
flow and profitability. The Company may need to raise funds through the sale of
its common stock or issuance of convertible notes, if funds provided by
operations fall short. This estimate considers current operating and marketing
dollars plus the remaining costs required to complete for market both the
Compu-Scan and FMS solutions. There is no guarantee that DDSI will be able to
raise the required funds through the sale of its Common Stock or issuance of
convertible notes.

One key to the Company reaching profitability is the approval of the Compu-Scan
product. Though the Company cannot guarantee a date when the Compu-Scan will
receive certification, we are hopeful that the approval will be given sometime
within the next six months. We estimate that the Compu-Scan would add one
million dollars in revenues in the first twelve months on the market growing to
three million dollars in revenues during the second twelve months.

In conjunction with bringing the Compu-Scan 3000 online, the Company is doing
the following in its effort to reach profitability:

     o    Cut costs in areas that add the least value to DDSI.
     o    Derive funds through investigating business alliances with other
          companies who may wish to license the Compu-Scan device.
     o    Increase revenues through the introduction of a scaled down version of
          our Compu-Capture product. The Compu-Capture lite is a low cost
          product and will open up a greater portion of the criminal justice
          market place for potential sales.

Results of Operations
Six Months June 30, 2001 Compared to the Six Months Ended June 30, 2000


Revenues for the six months ended June 30, 2001 of $725,258 decreased $682,080
or 48% from the six months ended June 30, 2000. The Company generates its
revenues through software licenses, hardware, post customer support arrangements
and other services. The decrease in the Company's revenue for software and
hardware during the period is attributed to a trend that the Company has noticed
in a decrease in the sales of the SI-3000 product. Maintenance revenues
decreased $35,819 or 12% from the six months ended primarily due to a decrease
in the Company's customer's entering into such arrangements and the revenue
sharing agreement with Itx on maintenance of the SI-3000 product line. Other
revenues consist of sales of supplies that the Company makes available to its
customers, such as wristbands, ID cards and print packs. More customers ordered
such items in the six months ended June 30, 2001 versus June 30, 2000, which
accounted for the modest increase. Cost of goods decreased $533,389 or 66% due
to the decrease in revenues and was reduced to 37% of total revenues from 57% in
the same period a year earlier. Overall the gross profit percentage per sale
increased to 63% from 43% in the same period a year earlier. Both the lower cost
of sales and the higher gross margin are attributed to the decrease in sales of
SI-3000


                                       15


<PAGE>



Costs and expenses decreased $276,571 or 12% during the six months ended June
30, 2001 versus the six months ended June 30, 2000. The decrease is due
primarily to the decrease in cost of goods mentioned above, offset by an
increase in general and administrative expenses of $126,358 or 16% due primarily
to consulting expenses incurred for stock issuances. Other expenses also
increase $279,474 due to interest expense in connection with the convertible
debentures.

The net loss for the Company increased 45% for the six months ending June 30,
2001 to $1,303,638 from $898,229 for the six months ending June 30, 2000. This
was principally due to the decrease in revenues during the period.


Year Ended December 31, 2000 Year Ended December 31, 1999

Revenues for the year ended December 31, 2000, $3,026,458, increased by 6% from
1999. The Company attributes this to the fact that the SI-3000 product line had
an increase in sales and the upgrade to Compu-Capture was completed. The Company
generates its revenues through software licenses, hardware, post customer
support arrangements and other services. The increase in the Company's software
fees during the period is attributed to the continued increase in the sales of
the SI-3000 product. Maintenance revenues increased $44,315 or 8% from the prior
period primarily due to an increase in the Company's customer's entering into
such arrangements. Other revenues consist of sales of supplies that the Company
makes available to its customers, such as wristbands, ID cards and print packs.
Fewer customers ordered such items in the year ended December 31, 2000 versus
1999, which accounted for the decrease of $97,878 or 61%. The Company's gross
profit decreased 24% during the year ending December 31, 2000 versus the year
ending December 31, 1999, due to an increase in sales of the SI-3000 product
line which has lower margins. Overall the gross profit percentage per sale
decreased 19%.

Costs and expenses increased $376,455 or 12% during the year ended December 31,
2000 versus the year ended December 31, 1999. This increase is due to an
increase in general and administrative expenses in the amount of $249,490.
Additionally, research and development costs increased in the amount of $106,751
due principally to the continued upgrading of the

Company's core software packages to 32 bit code. Costs of revenues during this
period increased as a result of the corresponding increase in revenues as
described above.

The net loss for the Company increased 68% for the year ending December 31, 2000
to $2,030,052 from $1,205,517 for the year ending December 31, 1999. This was
principally due to a lower percentage increase of revenues than the percentage
increase of costs and expenses during the year.

Net cash used in operating activities for the years ended December 31, 2000 and
1999 was $1,334,167 and $866,542, respectively. The change in cash from
operating activities of $467,625 was principally due to the increase in the net
loss for 2000.

Net cash provided by (used in) investing activities was $57,348 and ($699,570)
for the years ended December 31, 2000 and 1999 respectively, reflecting a change
of $756,918. This change was a result of decreased software development costs of
$413,604 in 2000, the purchase of furniture and equipment of $30,325 and
proceeds from the sale of restricted cash of $99,548.

Net cash provided by financing activities was $1,302,473 and $1,664,716 for the
years ended December 31, 2000 and 1999, respectively, reflecting a change of
$362,243. This decrease was

                                       16


<PAGE>



principally due to less proceeds received from the issuance of the Company's
common stock in the 2000 year.

Year Ended December 31, 1999 vs. Year Ended December 31, 1998

Revenues for the year ended December 31, 1999 were $2,847,183 versus $2,659,701
for the year ended December 31,1998, an increase of $187,482 or 7%. The Company
generates its revenues through software licenses, hardware, post customer
support arrangements and other services. The increase in the Company's software
and hardware revenues fees year over year is attributed to the continued
increase in the sales of the SI-3000 product line and an increase in revenues
relating to an upgrade of Compu-Capture. Maintenance revenues increased $49,625
or 10% from the prior year primarily from an increase in the Company's
customer's entering into such arrangements. Other revenues consist of sales of
supplies that the Company makes available to its customers, such as wristbands,
ID cards and print packs. Fewer customers ordered such items in the year ended
December 31, 1999 versus the year ended December 31, 1998, which accounted for
the decrease of $204,326 or 56%. Gross profit as a percentage of revenues
modestly decreased from 66% to 65% from fiscal year 1998 to fiscal year 1999.
Costs and expenses increased $61,068 or 2% during the year ended December 31,
1999 versus the year ended December 31, 1998. This increase was principally due
to a modest increase in general and administrative costs of $150,973,
principally due to an increase in professional fees. This increase was offset by
a decrease in research and development costs of $187,386 or 30%. During 1999,
the Company capitalized $413,604 of software development costs relating to
Compu-Scan, as technological feasibility was reached, thus accounting for the
decrease in research and development costs from 1998 to 1999. Sales and
marketing costs increased by $92,412 or 10% from 1998 to 1999 principally due to
the hiring of additional sales personnel. Depreciation and amortization
decreased by $59,082 or 43% from 1998 to 1999. This decrease is principally due
to the amortization of intangible assets in the amount of $50,000 during 1998,
which was not recurring in 1999.

Liquidity and Capital Resources

The Company's revenues have been insufficient to cover the cost of revenues and
operating expenses. Therefore, the Company has been dependent on private
placements of its common stock and issuance of convertible notes in order to
sustain operations. In addition, there can be no assurances that the proceeds
from private or other capital will continue to be available, or that revenues
will increase to meet the Company's cash needs, or that a sufficient amount of
the Company's common stock or other securities can or will be sold or that any
common stock purchase options/warrants will be exercised to fund the operating
needs of the Company.

June 30, 2001

Net cash used in operating activities for the six months ended June 30, 2001 and
2000 was $360,113 and $898,229, respectively. The change in cash from operating
activities of $538,116 was principally due to the increase in the net loss for
the 2001 first six months of $405,409 and by other changes in operating assets
and liabilities.


Net cash used in investing activities was $9,433 and $28,709 for the six months
ended June 30, 2001 and 2000, respectively, reflecting a change of $19,276. This
change is due to lesser purchases of furniture and equipment in the six months
ended June 30, 2001.

                                       17

<PAGE>


Net cash provided by financing activities was $320,435 and $1,164,066 for the
six months ended June 30, 2001 and 2000, respectively, reflecting a change of
$843,631. This decrease was principally due to less proceeds received from the
issuance of the Company's common stock in the first six months of 2001 versus
the first six months of 2000.

December 31, 2000

At December 31, 2000, the Company had assets of $1,783,044 compared to
$2,049,383 on December 31, 1999, a decrease of $266,339 and stockholders' equity
of $22,112 on December 31, 2000 compared to a stockholders' equity of $445,498
on December 31, 1999, a decrease of $423,386. This decrease in stockholders'
equity for the year ended December 31, 2000 resulted from the issuance of the
Company's common stock totaling $1,164,006 offset by the net loss for the year
ended December 31, 2000 of $2,030,052.

As of December 31, 2000, the Company had a negative working capital of $731,891,
a change of $335,391 from a negative working capital of $396,500 at December 31,
1999, which was primarily a result of a decrease in cash and restricted cash of
$73,894 and an increase in accounts payable and accrued expenses of $384,421 and
an increase in convertible debentures of $200,000.

Other Events


During May 2001, DDSI issued a convertible note for $40,000 with simple interest
accruing at the annual rate of 10%. The Holder shall have the right to convert
the principal and interest due under the notes into shares of the Company's
Common Stock at a conversion price that shall be equal to 50% of the mean price
of Common Stock for the ten (10) trading days prior to notice of conversion per
share. The note and underlying shares are not being registered in this document.

During April 2001, DDSI issued two convertible notes for $100,000 and $15,000
respectively with simple interest accruing at the annual rate of 10%. Interest
payable on the Notes shall be payable quarterly commencing June 30, 2001. The
Holder shall have the right to convert the principal amount and interest due
under the notes into Shares of the DDSI's Common Stock at a conversion price
that shall be equal to 50% of the mean price of Common Stock for the ten (10)
trading days prior to notice of conversion per share.

During March 2001, DDSI issued two convertible notes for $200,000 each, with
simple interest accruing at the annual rate of 12%, in March 2001. Interest
payable on the Notes shall be payable quarterly commencing June 30, 2001. The
Holder shall have the right to convert the principal amount and interest due
under the notes into Shares of the DDSI's Common Stock. DDSI also issued Common
Stock purchase warrants to the note holders for the right to purchase 200,000
shares of Common Stock of DDSI at the lesser of i) $.036 per share, and ii) the
average of the three (3) closing sales prices for the Common Stock during the
twenty (20) days immediately prior to the closing date.

The intrinsic value of the beneficial conversion features relating to these
convertible notes has been allocated to paid in capital.

It is anticipated that these convertible debentures will be converted into
shares in accordance with the terms of these debentures.



                                       18


<PAGE>



                                  Our Business

DDSI develops, assembles and markets computer installations, consisting of
hardware and software, which capture video and scanned images, digitize the
image, link the digitized images to text and store the image and text on a
computer database which allows for transmitting the image and text by computer
or over telephone transmission lines to remote locations.

Imaging technology enables computers to record, store and retrieve both textual
information and visual images. The common problem in imaging technology is how
to record, store, process and retrieve information and images within the same
system. DDSI's software programs utilize technology to link the textual
information with the images so that customers can record and retrieve related
text and images. DDSI originally developed the software to address the
information retrieval problems of tax assessors. DDSI subsequently adapted the
software for use by law enforcement agencies and management of jail facilities.
DDSI's software also addresses different information retrieval needs such as
reproducing line ups and producing housing badges (jails), bar coded wristbands
for identification which facilitates movement within jails and courts and
storing and retrieving hand written and computer generated document images
within arrest records.

DDSI anticipates that in the future it will need to adapt its imaging technology
software to new uses, such as security devices, employee and school
identification systems and access control systems. These potential applications
are currently in the discussion phase and there are no Company resources
budgeted for them at this time.

The principal product of DDSI is the Compu-Capture(R) Law Enforcement Program,
which is marketed to law enforcement agencies and jail facilities. The program
captures a video or scanned image (mug shot) of a subject that is stored by
computer application along with the booking record, physical description and
other pertinent information about the subject. Compu-Capture(R) was introduced
into the market in 1989. Since that time, DDSI has installed approximately 350
systems in 46 states in the United States, Europe, South America, Canada, Mexico
and Bahamas. During the year ended December 31, 2000, 1999 and 1998, 93%, 95%
and 99%, respectively, of DDSI's revenues were to domestic customers.

DDSI has marketed the Compu-Color(R) Assessor Program that combines digitized
images from videotapes or photographs of real estate with buildings or other
improvements, together with relevant tax assessment information. Compu-Color(R)
was introduced in 1986. The program was designed for use by local tax assessors
as a method of maintaining a visual record of all assessed improved properties
that can be rapidly accessed with the relevant textual information. The
Compu-Color Assessor Program contributed approximately two percent of DDSI's
revenues in 1999. The market for this product is minimal, therefore, DDSI has
withdrawn from this portion of the market place.

                              Product and Services

Digital Descriptor Systems, Inc. provides hardware and software computer
installations to law enforcement agencies, which installations utilize digitized
video and scanned images and text in order to record and retrieve information.
DDSI has developed and utilizes computer programs that digitize videotaped or
scanned images to a computer program medium and provide for rapid


                                       19


<PAGE>


retrieval of the information together with related textual information
pertaining to the property or subject.

Compu-Capture(R)
Compu-Capture(R) is the law enforcement application of DDSI's system which
combines digitized image and textual information. The system has been developed
primarily for the criminal justice market, including law enforcement, jail and
correctional facilities.

Information is entered into the Compu-Capture(R) system at the time a subject is
booked or enters the facility. A video image of the subject, a "mug shot", is
taken by the booking officer. One problem experienced by law enforcement
agencies in booking subjects is the risk to officers as a result of the physical
movement and transportation of subjects during the booking process. The
Compu-Capture(R) system allows the law enforcement agency to complete more than
one stage in the booking process, such as entering booking information and
taking a mug shot, at one location. In addition, the Compu-Capture(R) system
reduces the time needed to take and process mug shots and improves the quality
of the mug shot. The booking officer can preview each mug shot image on the
computer screen before processing and storing the image to insure accuracy and
clarity. Once an acceptable image is obtained, the booking officer can rapidly
store the image through the computer application, along with the booking record,
physical characteristics and other pertinent text material.

The information entered into the Compu-Capture(R) system can include names,
aliases, physical characteristics, such as size, hair color, facial scars or
physical deformities, and fingerprint codes. The Compu-Capture(R) systems allow
the officer conducting a search to assign priorities or values to physical
characteristics for the computer's search of the database of existing subjects.
Features that are difficult to disguise or alter, such as facial scars, can be
assigned higher values than other characteristics such as hair color or facial
hair. In the requested search, the Compu-Capture(R) system produces images that
meet or exceed the suggested requirements of the Department of Justice National
Crime Information Commission 2000 ("NCIC" 2000), the standard adopted by Federal
Bureau of Investigation for the quality of mug shots and their transmission. The
NCIC does not certify or otherwise approve any mug shot systems.

Once entered into the Compu-Capture(R) system, the visual image and textual
material can be utilized in a variety of ways. Mug shots can be retrieved on the
computer screen or printed individually, with or without text information, or as
part of a computer generated line-up. The digitized mug shot and information can
be transmitted to remote locations by telephone line or radio frequency or
through computer networks and can be retrieved rapidly from central and/or
remote locations.

To date, DDSI has installed approximately 350 Compu-Capture(R) systems.

The Compu-Capture(R) system's technology can be used in commercial applications
that are unrelated to law enforcement. DDSI believes that versions of this
system are suitable for security or access control, identification cards with
photographs for employee identification, voter registration cards, national
welfare identification cards, drivers' licenses, all with or without the use of
fingerprints and/or signatures. The various products that DDSI currently
provides are as follows:

Compu-Capture(R) 2000
Compu-Capture(R) 2000 (CPC2000) is DDSI's stand alone application. This version
of the Compu-Capture(R) product line contains its own database and can function
on its own without

                                       20

<PAGE>


integration to an existing records or jail management system. The database
allows for the capture of basic demographic system. The database allows physical
characteristics. This information can then be sorted for quick and easy
retrieval of a particular record or various records with similar
characteristics. CPC2000 can be used on a stand alone Personal Computer or
networked together. The price range for the Compu-Capture (R) 2000 is $12,000 to
$45,000. The price range varies depending on the size of the system ordered and
the jurisdictions specific requirements.

Compu-Capture(R) 2000/FE
Compu-Capture(R) 2000/FE is DDSI's "front end" product that image-enables any
host based records or jail management system. The advantage to this product is
it eliminates multiple databases and duplicate data entry from one system to
another. The price range for the Compu-Capture (R) 2000/FE $16,000 to $50,000.
The price range varies depending on the size of the system ordered and the
jurisdictions specific requirements.

Compu-Capture(R) 2000/API
DDSI is the only Company to offer its API's to system integrators with client
server applications. A systems integrator can make calls to these API's and
build a seamless interface from their records or jail management system to
DDSI's imaging system. The benefit for the end user is a self contained product
that has a consistent look and feel, eliminating the need to learn the
functionality of two separate systems. The price range for the Compu-Capture(R)
2000/API $16,000 to $50,000. The price range varies depending on the size of the
system ordered and the jurisdictions specific requirements.

Compu-Capture(R) lite
DDSI has developed a "lite" version of its software to address the needs of
smaller agencies of the arresting market. The "lite" version will provide an
entry-level system that the jurisdictions can build upon. The base price for the
Compu-Capture(R) lite is $3995.

Compu-Sketch
The Compu-Sketch product is a composite sketching program, that allows an
individual with little to no artistic ability to draw a sketch of a persons face
as described by the witness. The program contains an interactive witness module
that asks the witness basic questions which are then used to create the
composite face. The application consists of over 40,000 features, that when
combined can create millions of different looking suspects. The user simply
selects a description of each face part from a menu and the system will then
assemble the parts to complete the composite. The user can manipulate each part
and/or add accessories, such as hats, jewelry and facial hair. The Compu-Sketch
is presently installed in approximately 500 jurisdictions worldwide. The base
price for the Compu-Sketch(R) $2495.

Compu-Scene
The Compu-Scene program makes accident and crime scene drawings easy. The
application uses a computer aided drafting program to compose the drawings with
simple drag-n-drop technology to place the specialized drawings or templates.
DDSI has created hundreds of templates including; weapons, body parts,
furniture, vehicles, shrubs, street signs, etc. The user simply draws a room or
intersection to scale with the CAD program and then simply drops in the
pre-drawn templates to complete the scene.

SI-3000
DDSI's management believes that the type and amount of information a company,
agency or jurisdiction collects and generates is growing at a fast pace. The
variety of information collected



                                       21

<PAGE>


includes hand written documents, computer generated reports, mugshots,
fingerprints, photographs, video and digital images. DDSI believes that most
agencies have their information stored in multiple formats and locations and is
generally maintained in a stand-alone environment (i.e. in file cabinets and
non-networked computer databases). In order for the information to be useful, it
must be accurate and easily accessible throughout the agency. Without an
integrated information management strategy, data integrity suffers while
productivity diminishes. DDSI believes that today's technology trend is moving
towards client server applications in an open environment (i.e. allowing access
to information stored at multiple locations) because system server applications
provides agencies with a method to share data while driving computing costs
down.

SI-3000 is an information management strategy that capitalized on the above
referenced technology trend. The SI-3000 provides companies and agencies the
opportunity to purchase products and services that will move them in the
direction of "paperless environment".

The SI-3000 product creates an "Electronic file folder" that integrates hand
written documents, computer reports, photos, fingerprints, signatures and data
into a central repository. Once the information is indexed, it becomes
accessible to the end user in a multitude of ways, all with a single easy to use
interface. In addition, SI-3000 can be easily customized by non-programming
personnel. This provides a significant competitive advantage in the
labor-intensive systems integration business. The price for the SI-3000 $45,000
to $285,000. which is reflected by the scalability of the final design and
multi-jurisdictional requirements, i.e. state or county correctional locations.

Compu-Color(R) Assessor Program
The Compu-Color(R) Assessor Program has recently been discontinued by DDSI. A
lack of a national imaging standard has made this an unprofitable product to
carry. This product applies imaging technology to produce digitized images
related to textual information for use in tax assessment jurisdictions. Tax
assessors generally maintain pictures of all properties with buildings or other
improvements within their jurisdictions. The Compu-Color(R) Assessor Program
allows an assessor's office to electronically maintain this picture as part of a
computer system that links the image with relevant text about the property. The
image and text can be retrieved and viewed together on the computer screen or
printed out on an attached printer.

The Compu-Color(R) system processes a video or photographic image of improved
properties and stores the image to a computerized record, together with relevant
information from the assessor's records with respect to the improved properties.
The program can create a hard copy picture of the image, including images of any
comparable improved properties.

As an additional service that was provided for assessor's offices interested in
purchasing the Compu-Color(R) system, DDSI will process and store the assessor's
existing files on a Compu-Color(R) system. This service will enable assessors to
have all records on the same computerized system.

                             Maintenance and Support

 In addition to the installation of DDSI's systems in an agency (tax assessor or
law enforcement), DDSI trains the personnel of the agency in the use and
operation of the system. After installation, DDSI provides maintenance and
support for a limited period of time. DDSI also offers its customers ongoing
maintenance and support plus updates of the software, for an annual


                                       22

<PAGE>


fee. Over ninety percent (90%) of DDSI's customers purchase ongoing maintenance
and support at the time of installation of the system.

                                  New Products

FMS  ("Fingerprint Matching System")
In February of 2000, DDSI secured a royalty license from Harris
Corporation, Melbourne, Florida for a software suite called PowerMatch(TM) that
enables the end user to capture, digitize, store, retrieve and/or match or sort
fingerprints. The Harris agreement provides DDSI with a worldwide, non-exclusive
license to use the Power Match Software (FMS). The FMS is a fingerprint matching
solution and can be utilized either as a stand alone unit or in conjunction with
the Compu-Scan Device.

 DDSI renamed the software FMS ("Fingerprint Matching System"). DDSI has the
license for the systems use in the criminal justice field. The license calls for
DDSI to pay a sliding scale royalty fee to Harris Corporation on FMS gross
sales. To date no FMS sales have occurred.

The current Compu-Capture(R), Compu-Scan 3000 and SI 3000 can be integrated with
this software. It performs its matching, storage and capturing functions under
the FBI approved AINSI-NIST and NCIC 2000 regulations. This software has several
superior features that allows it to be installed on NT servers as well as PCs,
for example and thus is very flexible in jurisdiction's size. Since it is
completely scalable (from 500 to 500,000 files), DDSI can offer it for large
national databases such as voter registration, drivers license or national
security identification systems. Many of the current installed jurisdictions of
DDSI can use a positive ID system integrated to their mugshot and records
management modules.

The Company's current sales force will offer FMS along with the current
products. Additional sales personnel will be added as sales acceptance is
achieved.

Compu-Scan 3000
The Company entered into in a development contract with ISC/US (Fort Lauderdale,
FL and Hamburg, Germany), an engineering firm having a specialized background in
fingerprint technology, to develop a computerized inkless, non-contact
fingerprint capture device called the Compu-Scan 3000. The commercialization of
this technology has been the primary focus of the Company's development
activities. Under this agreement, the Company granted ISC/US the funds (non
reimbursable) to develop the Compu-Scan 3000 based on certain specification
requirements provided by DDSI. The development process of the Compu-Scan 3000
will not be deemed complete until FBI certification is achieved. In return, the
Company has worldwide rights to sell this product without a royalty fee. FBI
certification will be necessary to sell the Compu-Scan 3000 device to the state,
local and federal jurisdictions, but such certification is not required to sell
the device for commercial (non government) uses.

DDSI plans to distribute the Compu-Scan, a non-contact inkless direct reader
fingerprint system in conjunction with its Compu-Capture(R) products.
Additionally, DDSI intends to market the non-contact inkless fingerprint system
for commercial applications, such as in the security and biometric systems
industry, which can incorporate the product in access control devices. DDSI's
non-contact inkless fingerprint system electronically reads and creates a
digital image of a fingerprint. Competitive contact inkless fingerprint capture
devices record fingerprint images by rolling (contacting) the fingers of a
subject on the surface of an optical assembly, creating an optical image of the
fingerprint. The optical image is then converted into a digital image by a
photo-imaging detector. In contrast, though DDSI's non-contact device operates
in a similar


                                       23

<PAGE>



manner, there is no direct contact by the finger to the device. The Compu-Scan
captures the fingerprint in the following manner: the finger is placed over an
opening in the Compu-Scan which projects a light onto the suspended finger upon
which a camera captures the resulting reflected fingerprint image.

Under federal regulation, law enforcement agencies in the United States may only
utilize fingerprint systems that have passed an extensive FBI certification
process. As a result any inkless fingerprint system developed by DDSI must pass
the FBI certification process before it can be distributed to law enforcement
agencies in the United States. DDSI can supply an inkless non-contact
fingerprint system prior to FBI certification for commercial business use, for
example, for ATM machines, biometric identification for Universities, libraries,
access control and any such commercial application, which does not require a
rolled fingerprint match.


On July 25th, DDSI awarded a contract to DBA Systems, a division of Titan
Systems Corp., for technical assistance in achieving compliance with the FBI
certification process and anticipate resubmitting the device to the FBI for
certification during the 4th quarter of 2001. There are no assurances by the
Company that the FBI will certify this technology and device.


Marketing

Law Enforcement Applications
DDSI markets and sells its Law enforcement product line through an internal
sales force, an independent dealer network and vendors of compatible software
applications.

DDSI employs three full-time employees in sales, marketing or sales management.
Leads are generated by DDSI's marketing department and followed up by the
salesmen, who sell directly to the end user. The employees also work with sales
employees of other vendors in making sales calls and proposals.

Additionally, DDSI markets its Law Enforcement products through vendors of
compatible software application such as IBM Business Partners and other hardware
suppliers. See below "IBM and other Partners" for more detail.

DDSI anticipates that its future marketing strategy for its Law Enforcement
products will focus on expanding the quality and size of sales to law
enforcement agencies and jail facilities of its existing Compu-Capture(R)
program and new compatible products in the same field, such as Compu-Sketch and
Compu-Scene and the new LiveScan (Compu-Scan 3000) device. In its latest survey
conducted by the Law Enforcement Management and Administrative Statistics
(LEMAS) program of the Bureau of Justice Statistics of the United States
Department of Justice (the "LEMAS Survey"), of a nationally representative
sample of state and local police departments indicated that there are
approximately 17,000 state and local law enforcement agencies. Of those
agencies, 52% of the agencies surveyed, employing 90% of all sworn officers,
were using one or more types of computers. Of local police departments surveyed,
30% use computers for criminal investigations, criminal histories and Uniform
Crime Reports. DDSI believes that as law enforcement agencies become more
familiar with available technology, and agencies like the FBI continue to
require certain standards of reporting crimes (NCIC2000), the market for
products using computer technology, such as Compu-Capture(R), Compu-Scan and
Compu-Capture(R) lite will increase.


                                       24



<PAGE>


Customers
DDSI maintains a continuing relationship with its customers based upon support
services and periodic upgrades of the Compu-Capture(R) line and Compu-Sketch
software. Although the major revenue-generating event is the initial
installation and any significant expansion of that installation, the annual
sales of maintenance support services, which DDSI performs subsequent to the
installation, generates approximately 17% of the installed software license fee.

DDSI also relies on maintaining ongoing relationships with vendors, especially
IBM Business Partners, for continuing sales introductions to new customers. DDSI
has concentrated on expanding the compatibility of its Compu-Capture(R) system
with more computer software applications in order to expand the number of
vendors that may recommend DDSI's products.

Business Alliances
Currently approximately one-half of the revenues from DDSI's sales are generated
from business alliance relationships. For example, one such business alliance is
with IBM. IBM establishes a business alliance with certain vendors that sell
software applications that are compatible with IBM hardware. To increase its
sales through these alliances, DDSI has directed a portion of its research and
development efforts in the last five years to developing software interfaces
which enable the Compu-Capture(R) program to operate in conjunction with various
records and jail management applications and other law enforcement programs
using IBM compatible hardware. DDSI believes that part of its growth will
continue to come through these business alliances.

DDSI has recently begun exploring the market for its products in the European,
South and Central American and other international markets. DDSI is also working
in conjunction with IBM to develop some of these countries by displaying and
making its products available by IBM at their Electronic Institute for
Government, located in Washington D.C. and Shanghai, China. This facility brings
in IBM sales personnel and end users from around the world to preview IBM's
entire Public Sector offerings. IBM has duplicated this facility in Shanghai,
China and has ordered and installed a similar display to demonstrate DDSI's
products there.

Greater Penetration of Existing Customers
In addition to seeking new customers, the Company has recently established a
marketing program to focus on the existing customer base, which is potentially
over 1,000 agencies. The Company believes with this addition that it can now
capitalize and generate increased revenues from its existing customers.

Due to the high market penetration by the Company's strategic alliances, the
Company believes that it will be able to eliminate the formal bid process in
many jurisdictions where such strategic alliances are located. In these cases,
add-on or complimentary products can be purchased directly through the incumbent
vendor. This will help to expedite the normally long sales cycle and to
eliminate the costly and time-consuming proposal process.

Strategic Acquisitions and Alliances
Depending on the availability of funds, DDSI intends to continue developing
software interfaces to make its products compatible with new and expanded
versions of systems offered by strategic alliances and other vendors of criminal
justice software. DDSI believes that expanding the number of law enforcement
systems with which the Compu-Capture(R) and Compu-Color(R) systems are
compatible will assist DDSI in maintaining its competitiveness.

                                       25



<PAGE>


Sales by Geographic Area

During the fiscal years ended December 31, 2000, 1999 and 1998, 93%, 95% and
99%, respectively, of DDSI's revenues have been from domestic customers. The
sales for 2000, 1999 and 1998 were $205,953, $150,209 and $6,104, or an
aggregate for these years of approximately $362,266.

Competition

DDSI has multiple solutions being sold to the Criminal Justice market with its
competitive position varying by product.

DDSI's Compu-Capture(R) system (video imaging mug shot solution), currently has
two national competitors, Printrak Inc., Anaheim, CA (recently purchased by
Motorola which has approximately 200 video mug shot installations, and ImageWare
Systems of San Diego, California, which has approximately 65 installations.

The Compu-Scan 3000 Livescan device is not yet available to the industry and
consequently is behind its two main competitors, Digital Biometrics, Inc
(recently merged with Visionics), and Identix Incorporated market inkless
computerized fingerprint capture systems on a national basis and each have
received FBI certification. Both companies are publicly held corporations and
have been marketing their fingerprint systems for several years. DDSI intends to
market its Compu-Scan 3000 inkless fingerprint system in conjunction with its
Compu-Capture(R) system as well as in a network or a stand-alone mode.

The Compu-Sketch is a computerized, non-artistic, professional composite system.
Though there is significant competition is this field, DDSI believes that the
Compu-Sketch provides an easier system to use plus offers a larger database than
its competitors.

DDSI's Compu-Scene product is not individually marketed. DDSI carries it in
order to provide to its customers a more complete package of products.

The SI-3000 Systems Integration solution has no direct competitors. The SI-3000
is marketed to large multi-jurisdiction counties.

The FMS solution resembles other fingerprint capture, store, retrieve and
compare software, but is different in both the size of the database it can store
and search, and in the scalability of hardware requirements. DDSI plans to sell
the FMS as a stand-alone matching solution as well as to integrators, and
intends to package it with its Compu-Scan system.

Motorola's (NYSE:MOT) entrance into the Criminal Justice field by the purchase
of Printrak Inc., offers a suite of solutions from data transmission to MDT
(patrol cars) through bookings, fingerprint capture, mug shots and related
systems. Printrak's products are centered around records management, jail
management and AFIS solutions. AFIS is a large computerized installation used
generally at the state level, that compares fingerprints that are entered into
the system from different jurisdictions and identifies those prints within hours
versus days and weeks when done by hand. Printrak's main product by dollar
volume is AFIS. DDSI believes that Motorola would most likely specialize in
large installations, where as DDSI's target is the small and medium size
markets. Thus, we believe Motorola's entrance into the industry should have a
minimal negative affect on our Company and management believes Motorola's
entrance into the field will help advance product knowledge to the digitized
imaging market.

                                       26


<PAGE>


DDSI believes its inkless non-contact technology is a superior technology
compared to the older generation inkless contact method. Our approach does away
with the expensive cost of replacing the glass platen as a result of wear and
tear, and the smearing of oily residue from fingers placed on the platen and
other contact related problems. In addition, DDSI's device provides for officer
safety by limiting physical contact (the positioning of suspects fingers by
holding his hand in place) with the suspect in the fingerprint capture sequence.
DDSI's inkless non-contact device is substantially smaller than the inkless
contact device (the size of two VCR's for the non-contact devices compared to
the size of a standard refrigerator for the contact device). The Compu-Scan 3000
also has no moving parts and therefore does not need frequent recalibration as
do the inkless contact devices. The price of the Company's device will range
between $25,000 and $45,000 depending on final configuration.

Suppliers

DDSI has sold most of its systems for use on IBM or other manufacturers'
personal computers. However, DDSI's programs are compatible with the IBM AS400
or IBM clones and also products of other computer manufacturers. The peripheral
equipment used in connection with DDSI's system, such as video equipment, can be
provided by a wide range of manufacturers. As a result DDSI is not dependent on
any particular supplier or raw material.

Government Regulation or Government Approval

Most law enforcement agencies purchasing new or upgraded or expanded systems
require that the system meet the requirements of NCIC2000, ANSI-NIST standards
and standards issued by the National Crime Information Commission and by the
FBI. All DDSI products and solutions where required to meet these requirements.

The FBI has developed an extensive certifying process that an inkless
fingerprint system must pass before the FBI will accept cards produced by that
system. ISC/US, has agreed to grant DDSI the right to distribute an inkless
fingerprint system that has not been certified by the FBI. While there is no
assurance that the Compu-Scan inkless fingerprint system will successfully
complete the FBI certification process, the system produces fingerprint cards
similar in quality and type to other fingerprint systems that have been approved
by the FBI. DDSI believes that its Compu-Scan 3000 inkless fingerprint system
will meet the requirements of the FBI certification process and has recently
completed the submission process.

ISC/US is a Delaware Corporation located in Ft. Lauderdale, Florida, and is not
related to any government agency. ISC/US also has development offices in
Hamburg, Germany.

Research and Development

DDSI is currently engaged in a development contract with ISC/US, an engineering
firm with a specialized background in fingerprint technology, to develop a
computerized non-contact inkless fingerprint capture device called the
Compu-Scan 3000. Under this agreement, DDSI paid ISC/US $635,000 in funds (non
reimbursable) to develop the Compu-Scan 3000 with DDSI receiving worldwide
marketing and production rights to this product. This engagement will be in
effect until FBI certification is received on Compu-Scan 3000. The agreement
provides that there is no royalty payment involved. FBI certification will be
necessary to sell the Compu-Scan device to the United States state, local and
federal jurisdictions; however, FBI certification is not required to sell the
device for commercial uses. FBI certification is a multi-step process. The

                                       27



<PAGE>

Company has successfully completed the application process, however there can be
no assurance that the FBI will certify this technology and device.

While there are current products that deploy inkless technology, none have the
capabilities or the footprint (approximately one-tenth the size of current
competitive products) that the DDSI LiveScan will have upon introduction.

                        Patents, Trademarks and Licenses

DDSI has one patent application, number 09/08/800, for a "Device and Method for
Scanning and Mapping a Surface", which was filed in October 1998. The primary
use of the device is a contactless fingerprinting system.

DDSI owns the proprietary rights to the software used in the Compu-Capture(R)
and Compu-Color(R) programs. In addition, DDSI owns the rights to the trademarks
"Compu-Capture(R)", "Compu-Color(R)" and "Compu-Scan(R)" both trademarks have
been registered with the United States Patent and Trademark Office.

The following names are trademarked by DDSI and are nationally recognized by our
marketplace and associated with DDSI: Compu-Capture 2000, Compu-Scan,
Compu-Scene, Compu-Color, Compu-Sketch, SI3000, Compu-Capture 2000 FE and
Compu-Capture Activex32.
                                  Other Events


During January 2001 through June 2001, the Company granted 1,268,000 shares of
restricted common stock for services performed. Such shares were valued at the
fair market value on the date the shares were granted in the amount of $186,530.


On July 25, 2001, DDSI announced a contract award to Titan Systems Corporation,
DBA Division for technical assistance in achieving compliance with the FBI
certification process. DBA will assist DDSI in the requirements for Appendix F
Certification of it's patent pending Compu-Scan contact-less fingerprint device.

On May 22, 2001, DDSI announced that it shifted its focus from the SI 3000 to
the products which management believe will bring DDSI to profitability, namely,
Compu-Scan, the FMS software and its traditional core products.

May 22, 2001, DDSI also announced that it received responses from the FBI
regarding it February 15, 2001 submission to the FBI of its patent pending
Compu-Scan Live Scan device. These comments contained engineering inquires which
DDSI will respond to within the next 120 days,

On May 17, 2001, DDSI announced an agreement with an internet based financial
communications consulting and marketing firm AFC Ventures.com. AFC will provide
marketing, M & A consulting, investor relations and corporate communications
services to DDSI.

On February 26, 2001, the Company announced the approval for the Company's
Common Stock to return to the OTC Bulletin Board.

                                       28



<PAGE>


On February 15, 2001, the Company announced the completion of its latest
submission to the FBI of its patent pending Compu-Scan 3000 Live Scan device for
FBI certification.

                                    Employees

DDSI employs a total of 12 full time employees and 1 part time employee.

                                   Management

The Company's current officers and directors consist of the following persons:

Name                       Age      Position with Company
----                       ---      ---------------------


Garrett U. Cohn            62       President, Chief Executive Officer,
                                    Treasurer and Director
Michael Ott*               48       Vice President and Director
Myrna L. Cohn Ph.d.        61       Director
Michael Pellegrino         51       Chief Financial Officer
Randolph W. Hall           41       Vice President
Robert Gowell              33       Director
John J. Boyle              62       Director


   * Mr. Ott resigned as a member of the Board of Directors effective
     February 26, 2001. He also resigned as an Officer effective March 30, 2001.

Garrett U. Cohn has been President, Chief Executive Officer, Treasurer and a
Director of the Company since July, 1994. Garrett Cohn graduated from the
University of Iowa, Iowa City, Iowa in 1961. His degrees were in Philosophy with
a minor in Business. He went into in the merchandise promotion business and
designed many national programs for Playboy, Shell Oil Company, Standard Oil
Company, American Express, Polaroid Corporation, Fingerhut Manufacturing and
many other clients. He was awarded national recognition by developing the
largest selling single piece of promotional luggage during the years 1983 to
1986 and was featured in Money Magazine. Following his successful direct
merchandising activities, he became President of Rockford Tool Company,
Hillside, Illinois which he rescued from bankruptcy and later sold to an
investment group. He then returned to his family's business and developed the
computer imaging ability into a national video imaging division of ASI Computers
called Compu-Color Inc. In 1995, a public Company named Digital Descriptors
Systems Inc. was formed.

Michael Ott was a Vice President of Sales for the Company since July, 1994 and a
Director of the Company since August, 1994. Mr. Ott was previously employed by
Compu-Color, Inc. as sales manager since its incorporation in 1989. Prior to
that time he was sales manager for the Compu-Color division of ASI Computer
Systems, Inc. since 1986.


Myrna L. Cohn, Ph.d. has been President of Cohn Management Systems, Inc. since
1986. Cohn Management Systems, Inc. is a consulting Company wholly owned by Dr.
Cohn that specializes in the management of organizational transition and change
in mid-sized corporations. Dr. Cohn is the sole employee and in 1997 performed
consulting services on behalf of the Company. Prior to organizing Cohn
Management Systems, Inc., Dr. Cohn was a management consultant for various
companies and was a professor a Loyola University, Chicago, IL.. Dr. Cohn has
been a Director of the Company since August, 1994.

                                       29


<PAGE>


Michael Pellegrino joined the Company in 1995. He is the Vice President, Chief
Financial Officer, Secretary and a Director of the Company. For eleven years
prior, Mr. Pellegrino was vice president and CFO of Software Shop Systems, Inc.
and for six years earlier as Director of Financial Systems for ADP. Mr.
Pellegrino has a Bachelors degree in accounting from MSU and a Masters in
Finance from Rutgers University, after which he worked at Touche Ross for 3
years.

Randolph W. Hall joined the Company as the Vice President of Operations in 1996.
Prior to joining the Company, Mr. Hall successfully launched and subsequently
sold his ownership share of a Company that marketed a records management system
for law enforcement agencies called Protocal. Mr. Hall has a degree in Computer
Science plus five years of programming experience as well as being the Regional
and Training Manager for a software provider servicing a 10 state region.


John J. Boyle is currently a principal in a privately held company known as
BMMD. He retired after completing 15 years with IBM working in a wide variety of
Public Safety Marketing engagements for the IBM Client Server Group as a Public
Safety Consultant and Customer Solution Executive. Prior to joining IBM, he was
employed by the Greenburgh Police Department, New York for 20 years. He was a
FBI National Academy Graduate 129th Session.

Robert Gowell was a Deputy U.S. Marshal for over 10 years, and worked out of the
New York and Pennsylvania offices. He retired effective January 31, 2001. He
earned his B.S. in Management and Finance from the City University of New York.
He is currently working on his MBA at Kutztown University


                             Executive compensation

The following table summarizes the compensation earned and paid by the Company
to each Officer and to all Executive Officers as a group for services rendered
in all capacities during the year ended December 31, 2000:

                           Summary Compensation Table


<TABLE>
<CAPTION>
                                                                                Long Term Compensation

                   Annual Compensation                            Awards                Payouts__________
(a)               (b)       (c)     (d)       (e)         (f)           (g)              (h)          (I)
Name                                         Other                   Securities                        All
and                                         Annual     Restricted    Underlying                        Other
Principal                                   Compen       Stock        Options/           LTIP         Compen
Position Year             Salary    Bonus   sation($)   Award($)      Sar (#)         Payouts($)     sation ($)
-----------------------------------------------------------------------------------------------------------------
<S>               <C>       <C>        <C>     <C>         <C>         <C>                  <C>         <C>
Garrett Cohn
President/CEO     2000   $160,000     0       $0           0             0                0              0
Secretary         2000          0     0        0           0             0                0              0

Michael Ott,
V.P/Director      2000    110,000     0        0           0             0                0              0

Michael J.        2000    110,000     0        0           0             0                0              0
Pellegrino
V.P./Director

Randy Hall        2000     75,000     0        0           0             0                0              0
V.P.
Total:                   $455,000    $0       $0          $0             0               $0             $0
All Executive Officers
As a Group               $455,000    $0       $0          $0             0               $0             $0
</TABLE>



                                       30


<PAGE>



Options/Sar Grants in Last Fiscal Year

<TABLE>
<CAPTION>

                                       Number of              % of Total
                                      Securities             Options/SARS
                                      Underlying             Granted to
                                     Options/SARS           Employees in    Exercise or Base
Name                                   Granted               Fiscal Year       Price ($/Sh)      Expiration Date
------------------------------------------------------------------------------------------------------------------------------------
<S>                                   <C>                       <C>               <C>             <C>   <C>
Garrett U. Cohn, CEO                  350,000                   41.52%            $0.10           12/15/10
Michael J. Pellegrino, CFO            150,000                   17.79%             0.10           12/15/10
Randy Hall, VP Operations             150,000                   17.79%             0.10           12/15/10
</TABLE>


Aggregated Option/Sar Exercises

         None exercised


                              Employment Agreements


Garrett U. Cohn, President, Chief Executive Officer and Director. In July, 1994
the Company entered into a 5 year employment agreement with Mr. Cohn which
entitled him to a base salary of $150,000 per year which may at the Board of
Directors discretion adjust his base salary (but not below $150,000 per year) or
grant a bonus. Though past the five-year period, the present employment
agreement is to remain in affect until a new employment agreement is drafted. In
the interim, Mr. Cohn was granted an increase in his annual base salary of
$10,000, making his new base salary $160,000. The Company shall also furnish Mr.
Cohn with an automobile and automobile expenses. In addition, Mr. Cohn has
received non accountable expense allowances of $11,000, $49,713 and $81,450
in 2000, 1999 and 1998 respectively.

Michael J. Pellegrino, Vice President, Chief Financial Officer and Director. In
July, 1998, the Company entered into a two year employment agreement with Mr.
Pellegrino, which entitled him to a base salary of $110,000 per year which may
at the Board of Directors discretion adjust his base salary (but not below
$110,000 per year). Though past the two-year period, this employment agreement
is to remain in affect until a new employment agreement is drafted. Mr.
Pellegrino is also entitled to participate in the Annual Management Bonus Plan.
As a participant in the Annual Management Bonus Plan, Mr. Pellegrino will be
eligible to receive bonuses, based on performance, in any amount from 0% to 100%
of the Base Salary. In addition, Mr. Pellegrino shall participate in the
Management Equity Incentive Plan. As a participant in the Management Equity
Incentive Plan, Mr. Pellegrino will be eligible to receive options, which vest
over a period of time from the date of the option's issue, to purchase common
shares of the Company. The Company shall grant to Mr. Pellegrino, within ninety
days of the date of the Agreement, options to purchase such number of common
shares of the Company equal to 1% of the number of common shares of the Company
outstanding on the date of the Agreement (subject to the vesting and the
satisfaction of the other terms and conditions of such options). The Company may
also grant to the Employee, following the first anniversary of the date of the
Agreement and at the sole discretion of the Board of Directors, options to
purchase such number of common shares of the Company equal to 0.25% of the
number of common shares of the Company outstanding on the date of the Agreement
(subject to the vesting and the satisfaction of the other terms and conditions
of such options).

Michael Ott, Vice President of Sales and Director. In July, 1998, the Company
entered into a two year employment agreement with Mr. Ott, which entitled him to
a base salary of $110,000 per year which may at the Board of Directors
discretion adjust his base salary (but not below $110,000 per year). Though past
the two-year period, this employment agreement is to remain in

                                       31


<PAGE>


affect until a new employment agreement is drafted. Mr. Ott is also entitled to
participate in the Annual Management Bonus Plan. As a participant in the Annual
Management Bonus Plan, Mr. Ott will be eligible to receive bonuses, based on
performance, in any amount from 0% to 100% of the Base Salary. In addition, Mr.
Ott shall participate in the Management Equity Incentive Plan. As a participant
in the Management Equity Incentive Plan, Mr. Ott will be eligible to receive
options, which vest over a period of time from the date of the option's issue,
to purchase common shares of the Company. The Company shall grant to Mr. Ott,
within ninety days of the date of the Agreement, options to purchase such number
of common shares of the Company equal to 1% of the number of common shares of
the Company outstanding on the date of the Agreement (subject to the vesting and
the satisfaction of the other terms and conditions of such options). The Company
may also grant to the Employee, following the first anniversary of the date of
the Agreement and at the sole discretion of the Board of Directors, options to
purchase such number of common shares of the Company equal to 0.25% of the
number of common shares of the Company outstanding on the date of the Agreement
(subject to the vesting and the satisfaction of the other terms and conditions
of such options).

        * Mr. Ott resigned from the Company effective March 30, 2001
          The Company has instituted a search for a replacement for Mr. Ott

Randolph Hall, Vice President of Operations. In July, 1998, the Company entered
into a two year employment agreement with Mr. Hall, which entitled him to a base
salary of $75,000 per year which may at the Board of Directors discretion adjust
his base salary (but not below $75,000 per year). Though past the two-year
period, this employment agreement is to remain in affect until a new employment
agreement is drafted. Mr. Hall is also entitled to participate in the Annual
Management Bonus Plan. As a participant in the Annual Management Bonus Plan, Mr.
Hall will be eligible to receive bonuses, based on performance, in any amount
from 0% to 100% of the Base Salary. In addition, Mr. Hall shall participate in
the Management Equity Incentive Plan. As a participant in the Management Equity
Incentive Plan, Mr. Hall will be eligible to receive options, which vest over a
period of time from the date of the option's issue, to purchase common shares of
the Company. The Company shall grant to Mr. Hall, within ninety days of the date
of the Agreement, options to purchase such number of common shares of the
Company equal to 1% of the number of common shares of the Company outstanding on
the date of the Agreement (subject to the vesting and the satisfaction of the
other terms and conditions of such options). The Company may also grant to the
Employee, following the first anniversary of the date of the Agreement and at
the sole discretion of the Board of Directors, options to purchase such number
of common shares of the Company equal to 0.25% of the number of common shares of
the Company outstanding on the date of the Agreement (subject to the vesting and
the satisfaction of the other terms and conditions of such options).

                    Employee and Director Stock Option Plans


The Company adopted the 1994 Stock Option Plan, (restated in 1997) ( the "Plan")
in order to attract and retain qualified personnel. In October 1998, the Board
of Directors voted to amend the plan but has not formally established the
amended plan to date and will not do so this fiscal year. However, under the
proposed 1998 Plan, the Compensation Committee of the Board of Directors in its
discretion may grant stock options (either incentive or non-qualified stock
options) to officers and employees. The terms and conditions upon which the
options may be exercised will be set out in the Plan. The Plan is intended to
provide a method whereby employees of the Company and others who are making and
are expected to make substantial contributions to the successful management and
growth of the Company are offered an opportunity to acquire Common Stock as an
incentive to remain with the Company and advance


                                       32

<PAGE>


its interests. Therefore, to date, no options have been granted under the 1998
plan and none will be until the plan is formalized some time during the next
fiscal year. On August 31, 1999, the Company granted bonuses to various officers
and employees in the form of 902,500 options for shares of the Company's Common
Stock, fully vested, with an exercise price of $0.37 per share. On December 15,
2000, the Company granted to various officers and employees 843,000 options for
shares of the Company's Common Stock, fully vested, with an exercise price of
$0.10 per share, the then fair market value of the underlying shares.


                            Compensation of Directors

The Directors who are employees of the Company receive no compensation for their
services as Directors, either on an annual basis or for each meeting. Directors
are not reimbursed for any expenses they may incur in attending meetings of the
Board of Directors. Directors who are not an employee of the Company, receive
$1,000 for each Board of Directors meeting attended.

                 Certain Relationships and Related Transactions

During April 1996, the Company loaned Mr. Cohn $125,000. Interest is accrued on
this amount at one point over prime and was payable together with the principal
on August 13, 1999. Accrued interest on this loan was $40,525 at December 31,
2000. Subsequently, the Company's Board of Directors agreed to extend the
maturity date of this note indefinitely. The note continues to accrue interest.


As of July 26, 2001, the Company's Audit Committee consists of John J. Boyle,
Robert Gowell and Myrna Cohn, who is not an outside director.


The Company's Audit Committee will review any future transactions with
affiliates and make its recommendation to the Board of Directors to ensure such
transactions are at arms length.

The Company's Board will follow the advice of the Audit Committee on
transactions that could have the potential appearance of not being at arms
length transaction.


         Security Ownership of Certain Beneficial Owners and Management

The following table sets forth current information relating to the beneficial
ownership of the Common Stock of the Company by (i) each person owning
beneficially more than 5 percent of the outstanding shares of Common Stock, (ii)
each Director of the Company and (iii) all Executive Officers and directors of
the Company as a group: Percentage of beneficial ownership is based upon
20,011,612 shares of common stock outstanding at December 31, 2000.

                                       33



<PAGE>


                                              Beneficial Ownership
Name and Address                                 of Common Stock
Of Beneficial Owner                No. of Shares (3)     Prior to This Offering
-------------------                -----------------     ----------------------

Garrett U. Cohn
249 Willow Parkway
Buffalo Grove, IL 60089             1,862,000 (1)                  9.3%

Michael Pellegrino
33 Maple Lane
Brielle, NJ 08730                     335,000                      1.7%


Michael Ott*
26415 212th Avenue
Delhi, IA 52223                       215,000                      1.0%

Randolph Hall
505 Northridge Rd.
Collegeville, PA 19426                313,000                      1.6%

Myrna Cohn Ph.d.
249 Willow Parkway
Buffalo Grove, IL  60089               15,000                       .7%

Norman Cohn
200 Pine Tree Road
Radnor, PA 19087                      940,000                      4.7%

All Officers & Directors
As a Group                          3,680,000(2)                  13.2%


-----------------
*Was a Director at December 31, 2000.

(1)  Garrett U. Cohn owns 142,000 shares of stock. In addition, Mr. Cohn has the
     right to vote 940,000 shares of stock held of record by Norman Cohn
     pursuant to a Voting Trust Agreement described below, and, as a result of
     such voting rights, such shares are included in the shares shown as
     beneficially owned by Garrett U. Cohn.

(2)  Of the total Officers and Director's shares, 53,000 shares are options
     which are 10 year options with a three-year vesting period, vesting 1/3
     each year with a strike price of thirty-three cents ($0.33). Also included
     is a ten-year option for 15,000 shares that vest over four years at a
     strike price of three dollars and eighty-one cents ($3.81). Additionally,
     there are 110,000 options which are 10 year options that vest over 4 years
     a strike price of $3.30. The remaining 1,480,000 options are 10 year
     options that are fully vested at varying strike prices.

(3)  Includes all options which are exercisable within the next sixty (60) days.

Under the terms of the Voting Trust Agreement dated April 19, 1995, between
Norman Cohn and Garrett U. Cohn, as Trustee, Norman Cohn has transferred to the
trust 940,000 shares of Common Stock of the Company, representing all of the
shares of Common Stock owned by him. Under the terms of the Voting Trust
Agreement, Garrett U. Cohn, as the Trustee, has the right to vote the stock in
the Voting Trust, except as to certain actions, including, but not limited to,
any amendment to the certification of incorporation of the Company, merger or
sale of substantially all of the assets of the Company or any action which will
cause a dilution in the outstanding shares of Common Stock. The term of the
Voting Trust is 10 years and shall terminate in April, 2005.

There are no arrangements known to the Company that at a later date may result
in a change in control of the Company.


                                       34


<PAGE>


                            Description of Securities
General

The Company was incorporated on June 13, 1994 in Delaware. The Company has
authorized of 50,000,000 shares of Common Stock at $.001 par value, of which
21,279,612 shares are issued and outstanding at June 5, 2001, plus 1,000,000
authorized shares of $.01 par value per share Preferred Stock and no preferred
shares are issued and outstanding at July 31, 2001. The Company has authorized
outstanding Class A and Class B Warrants numbering one million four hundred
eighty-three thousand and seven hundred fifty (1,483,750) of each class. The
Class A Warrants have an exercise price of $1.00 per share and expire on August
15, 2002. The Class B Warrants have an exercise price of $1.50 per share and
expire on August 15, 2002. The Company has reserved an equal amount of shares
against these warrants.

Each holder of Common Stock is entitled to receive ratable dividends, if any, as
may be declared by the Board of Directors out of funds legally available for the
payment of dividends. As of the date of this Offering Circular, the Company has
not paid any dividends on its Common Stock, and none are contemplated in the
foreseeable future. It is anticipated any earnings that may be generated from
operations of the Company will be used to finance the growth of the Company.

Holders of Common Stock are entitled to one vote for each share held of record.
There are no cumulative voting rights in the election of directors. Thus the
holders of more than 50% of the outstanding shares of Common Stock can elect all
of the directors of the Company if they choose to do so. No one shareholder
beneficially owns more than 50% of the Company's Common Stock. A total of
14,380,127 shares of Common Stock were outstanding as of December 31, 1999.

The holders of Common Stock will have no preemptive, subscription, conversion or
redemption rights. Upon liquidation, dissolution or winding-up of the Company,
the holders of the Common Stock are entitled to receive pro rata the assets of
the Company.

Redeemable Class A Warrants and Redeemable Class B Warrants

The outstanding shares of 21,279,612 as of July 31, 2001 excludes the authorized
and unissued Common Redeemable Class A and Class B Warrants numbering one
million four hundred eighty-three thousand and seven hundred fifty (1,483,750)
of each class. These warrants are publicly traded with the price generally
holding steady at $.02 per warrant.

Redeemable Class A Warrants

Each Class A Warrant entitles the holder to purchase one share of Common Stock
for a period of four years commencing August 15, 1996, subject to earlier
redemption, and will be exercisable at a price of $1.00 a unit. During July 2000
the Class A Warrants' expiration date was extended to August 15, 2002. The Class
A Warrants are subject to redemption by the Company at any time on not less then
30 days written notice, at a price of $0.10 per Warrant, provided that the per
share closing bid price of the Common Stock exceeds 175% of the exercise price
for at least 20 consecutive trading days. For these purposes, the closing bid
price of the Common Stock shall be determined by the closing bid price as
reported by NASDAQ so long as the Common Stock is quoted on NASDAQ and if the
Common Stock is listed on a national securities exchange, shall


                                       35

<PAGE>



be determined by the last reported sale price on the primary exchange on which
the Common Stock is traded. Holders of Class A Warrants will automatically
forfeit all rights hereunder except the right to receive the $0.10 redemption
per Warrant unless the Warrants are exercised before they are redeemed.

Redeemable Class B Warrants

Each Class B Warrant entitles the holder to purchase one share of Common Stock
for a period of four years commencing August 15, 1996, subject to earlier
redemption, and will be exercisable at a price of $1.50 a unit. During July
2000, the Class B Warrants' expiration date was extended to August 15, 2002. The
Class B Warrants are subject to redemption by the Company at any time on not
less then 30 days written notice, at a price of $0.10 per Warrant, provided that
the per share closing bid price of the Common Stock exceeds 200% of the exercise
price for at least 20 consecutive trading days. For these purposes, the closing
bid price of the Common Stock shall be determined by the closing bid price as
reported by NASDAQ so long as the Common Stock is quoted on NASDAQ and if the
Common Stock is listed on a national securities exchange, shall be determined by
the last reported sale price on the primary exchange on which the Common Stock
is traded. Holders of Class A Warrants will automatically forfeit all rights
hereunder except the right to receive the $0.10 redemption per Warrant unless
the Warrants are exercised before they are redeemed.


The holders of Warrants ("Warrant holders") are not entitled to vote, receive
dividends, or exercise any of the rights of holders of shares of Common Stock
for any purpose. In addition, the Company has a right to increase the Warrant
Exercise Price upon not less than 20 days' prior notice to the Warrant holders
if the Company extends the exercise period of the Warrants beyond the four year
period.


                                       36




<PAGE>




                         Shares Eligible for Future Sale

As of July 31, 2001, DDSI had 21,279,612 shares of Common Stock outstanding.
Sales of a substantial number of shares of DDSI's Common Stock in the public
market following this offering could adversely affect the market price of the
Common Stock. DDSI is registering with this document 25,715,857 shares of common
stock for resale, all of which will be freely tradable without restriction or
further registration under the Securities Act. This includes:

     o    10,600,000 shares representing the conversion of the 12% debentures at
          a price of $.08 per share
     o    10,600,000 shares representing reserve shares that may be needed to
          account for market fluctuations in the price of the common stock prior
          to the conversion of the debentures
     o    3,115,857 of other selling shareholders
     o    1,400,000 warrants to be registered in connection with the secured
          convertible debenture purchase agreement.

Selling Shareholders

The Shares being offered for sale by our Selling Stockholders are issuable
pursuant to the "First Amendment to Secured Convertible Debenture Purchase
Agreement" dated March 5, 2001 and the original agreement dated December 28,
2000 (hereafter referred to as the "Financing Agreements").

This Offering is being made pursuant to the exemption from the registration
provisions of the Securities Act of 1933, as amended, afforded by Rule 506 of
Regulation D promulgated there under.

Recent Financing

 The Financing Agreements provides for the issuance of $800,000 of convertible
debentures that can be converted into shares of our Common Stock. Bridge funding
of $400,000 in convertible notes has been issued with the remaining $400,000 in
convertible notes to be issued within ten trading days after the effective date
of this registration statement. The number of shares we will issue upon the
conversion of these debentures fluctuates with our Common Stock market price,
cannot be determined until the day of conversion. There is no limit on the
number of shares of our common stock that may be issued upon the conversion of
these convertible debentures. These convertible debentures have a conversion
price that is the lesser of (1) $0.08 and (2) 50% of the average of the lowest
three inter-day prices (which need not occur on consecutive trading days) during
the twenty trading days immediately preceding the applicable conversion date.
Thus, the debentures will be converted at prices below the current market price
on the conversion date.


The $400,000 in convertible notes to be issued within three trading days after
the effective date of this registration statement, as stated above, have a
conversion price that is the lesser of (1) $0.08 and (2) 50% of the average of
the lowest three inter-day prices (which need not occur on consecutive trading
days) during the twenty trading days immediately preceding the applicable
conversion date. Thus, the debentures will be converted at prices below the
current market price on the conversion date.


                                       37



<PAGE>



Certain terms and conditions must be met at the time of the closing of the
$400,000 convertible note that is to be to be issued within three trading days
after the effective date of this registration statement. These terms and
conditions are summarized as follows:


     o    The representations and warranties given by the company are still
          valid at the time of funding i.e.,
               v)   DDSI is in good standing under the laws of the state of
                    Delaware,
               vi)  the financing transaction is property authorized by the DDSI
                    Board of Directors and that the debentures are issued free
                    of encumbrances,
               vii) that there are adequate authorized shares available to
                    convert the debentures as provided by the financing
                    agreement,
              viii) all disclosures provided by DDSI regarding DDSI, its
                    business and the current financing are true and DDSI did not
                    omit any statement that an investor may find significant.

     o    The registration statement shall be declared effective by August 31,
          2001,

     o    DDSI has not broken any laws or incurred any other event which would
          prevent this registration statement from becoming effective,
     o    The trading of DDSI's stock on the OTC Bulletin Board has not been
          suspended,
     o    DDSI has not had in excess of 33% of its voting securities acquired .


If conversions of the debentures occur, shareholders may be subject to an
immediate dilution in their per share net tangible book value. The current
convertible debentures may be converted into Common Stock at any time prior to
their maturity date which is two years from date of execution.

The Financing Agreements provides for the issuing of 1,400,000 warrants to
purchase our Common Stock. 400,000 of the warrants have been issued on December
28, 2000 with an exercise price equal to $.036 and can be exercised at any time
through December 28, 2003. 200,000 of the warrants have been issued on March 4,
20001 with an exercise price equal to the lesser of (i) $.036 per share and (ii)
the average of the lowest three closing sale prices for the Common Stock during
the twenty trading days immediately prior to the closing date, and can be
exercised any time through March 4, 2004. Additionally, 800,000 warrants with an
exercise price equal to the lesser of (i) $.036 per share and (ii) the average
of the lowest three (3) closing sale prices for the Common Stock during the
twenty (20) trading days immediately prior to the closing date will be issued
within three trading days after the effective date of this registration.



As of March 5, 2001, DDSI has reserved for 200% of the minimum number of shares
of common stock which would be issuable upon conversion in full of the
debentures, amounting to 10,000,000 shares of authorized and unissued common
stock. These reserve amounts are our good faith estimate of the number of shares
that DDSI believe DDSI need to reserve. DDSI can provide no assurance as to how
many shares DDSI will ultimately need to issue upon the conversion of the
debentures. If DDSI are required to issue additional shares DDSI will be
required to file an additional registration statement for those shares, a
process which will be costly and time consuming. The issuance of these shares
will dilute our common stock per share net tangible book value and may result in
a decline in our stock price.


Examples of how declines in DDSI's stock price of 25%, 50% and 75% would affect
the number of shares required to convert the convertible debentures included in
the $800,000 financing are as follows (assuming a $.16 market price):


                                       38

<PAGE>



o        25% decline in stock price:

         A 25% drop in DDSI's stock price would result in a debenture conversion
         rate of $.06 cents. To convert the $800,000 of convertible debentures
         would require 13,333,333 shares of DDSI common stock.

o        50% decline in stock price:

         A 50% drop in DDSI's stock price would result in a debenture conversion
         rate of $.04 cents. To convert the $800,000 of convertible debentures
         would require 20,000,000 shares of DDSI common stock.

o        75% decline in stock price

         A 75% drop in DDSI's stock price would result in a debenture conversion
         rate of $.02 cents. To convert the $800,000 of convertible debentures
         would require 40,000,000 shares of DDSI common stock.

         This registration statement is registering 21,200,000 shares to provide
         for the conversion of the $800,000 in convertible debentures. A drop in
         stock price of greater than 50% would require DDSI to register more
         shares to provide for the conversion of these convertible debentures.



                              Selling Shareholders

The table below sets forth information concerning the sale of shares of Common
Stock by the Selling Stockholders. The table reflects: (1) the number of shares
issuable upon conversion of debentures pursuant to the Financing Agreements and
(2) shares issuable upon exercise of warrants pursuant to the Financing
Agreements. We will not receive any proceeds from the resale of the common stock
by the Selling Stockholders. We will receive proceeds from the exercise of the
warrants. Assuming all the shares registered below are sold by the Selling
Stockholders, none of the Selling Stockholders will continue to own any shares
of our Common Stock.

The following table also sets forth the name of each person who is offering
shares of common stock by this prospectus, the number of shares of common stock
beneficially owned by each person, the number of shares of common stock that may
be sold in this offering and the number of shares of common stock each person
will own after the offering, assuming they sell all of the shares offered.
Beneficial ownership is determined in accordance with SEC rules and generally
includes voting or investment power with respect to securities. Common shares
that are issuable upon the exercise of outstanding options, warrants,
convertible Preferred Stock or other purchase rights, to the extent exercisable
within 60 days of the date of this Prospectus, are treated as outstanding for
purposes of computing each Selling Shareholder's percentage ownership of
outstanding common shares.


                                       39

<PAGE>


<TABLE>
<CAPTION>

                                    Shares Beneficially                Shares              Shares Beneficially
                                    Owned                              Offered             After Offering
Selling                             Prior to the                       For                 If All Offered
Stockholder (1)                     Offering (2)                       Sale (3)            Shares Are Sold (3)
---------------                     --------------------------         ---------           ---------------------------
                                    Number of Shares   Percentage (4)                      Number of Shares
<S>                                       <C>       <C>    <C>           <C>        <C>    <C>              <C>
AJW Partners, LLC (5)                     2,275,668 (7)    4.999%        11,800,000 (8)    0                0%
New Millennium Capital Partners, LLC (6)  2,275,668 (7)    4.999%        11,800,000 (8)    0                0%
Ralph G. Hallenbeck IRA                   1,428,571        3.14%          1,428,571        0                0%
About Face Communications (9)               343,000        0.75%            343,000        0                0%
Anthony Vollaro                             214,286        0.47%            214,286        0                0%
NIR Group (10)                              105,000        0.23%            105,000        0                0%
David C. Likes                               25,000        0.05%             25.000        0                0%
                                          ---------                      ----------

Total                                     6,667,193                      25,715,857
</TABLE>

         The number and percentage of shares beneficially owned is determined in
accordance with Rule 13d-3 of the Securities Exchange Act of 1934, and the
information is not necessarily indicative of beneficial ownership for any other
purpose. Under such rule, beneficial ownership includes any shares as to which
the selling stockholder has sole or shared voting power or investment power and
also any shares which the selling stockholder has the right to acquire within 60
days. The actual number of shares of common stock issuable upon the conversion
of the debentures and exercise of the debenture warrants is subject to
adjustment depending on, among other factors, the future market price of the
common stock, and could be materially less or more than the number estimated in
the table.


(1)      No Selling Stockholder has held any position or office, or has had any
         material relationship with us or any of our affiliates within the past
         three years. AJW Partners was issued 3,108,742 shares of DDSI common
         stock between June 10, 1999 and April 27, 2000, pursuant to a
         Regulation A registration (file no. 24-4032).
         New Millennium Capital was issued 2,108,740 shares of DDSI common stock
         between June 10, 1999 and April 27, 2000, pursuant to a Regulation A
         registration (file no. 24-4032).
(2)      Assumes that all convertible debentures have been converted and that
         all warrants have been exercised into common stock.
(3)      Assumes no sales are effected by the Selling Stockholder during the
         offering period other than pursuant to this offering and that all
         shares offered will be issued and sold.
(4)      Percentages are based on 45,522,469 shares of our Common Stock
         outstanding including all shares offered in this registration statement
         as of May 24, 2001.
(5)      In accordance with Rule 13d-3 under the Securities Exchange Act of
         1934, SMS Group, LLC may be deemed a control person of the shares owned
         by such entity. Corey S. Ribotsky is the fund manager of SMS Group,
         LLC.
(6)      In accordance with Rule 13d-3 under the Securities Exchange Act of
         1934, First Street Manager II, LLC may be deemed a control person of
         the shares owned by such entity. Corey S. Ribotsky and Glenn A.
         Arbeitman are the fund managers of First Street Manager II, LLC.
(7)      Represents shares of common stock issuable upon conversion of
         debentures or exercise of warrants of the selling shareholder, at an
         assumed conversion price of $0.08 per share and at an exercise price of
         $.036 per warrant. Because the number of shares of common stock
         issuable upon conversion of the debentures is dependent in part upon
         the market price of the common stock prior to a conversion, the actual
         number of shares of common stock that will be issued upon conversion
         will fluctuate daily and cannot be determined at this time. However,
         the selling shareholder has contractually agreed to restrict its
         ability to convert its debentures or exercise its warrants and receive
         shares of our common stock such that the number of shares of common
         stock held by it and its affiliates after such conversion or exercise
         exceed 4.99% of the then issued and outstanding shares of common stock
         following such conversion or exercise.

                                       40



<PAGE>

(8)      Includes 200% of the shares issuable on conversion of the debentures,
         based on the market price of our common stock on April 20, 2001, as
         required by our agreement with the selling shareholder. The number of
         shares of common stock issuable upon conversion of the debentures is
         dependent in part upon the market price of the common stock prior to a
         conversion, the actual number of shares of common stock that will be
         issued in respect of such conversions and, consequently, offered for
         sale under this registration statement, cannot be determined at this
         time. As a result of the contractual agreement not to exceed 4.99%
         beneficial ownership, the selling shareholder does not believe it is a
         control person as defined in the Securities Exchange Act of 1934 or is
         required to file a Schedule 13D.
(9)      Principal is Scott Gallagher who has not held any position or office,
         or has had any material relationship with us or any of our affiliates
         within the past three years.
(10)     Principals are Corey S. Ribotsky and Glenn A. Arbeitman.

                              Plan of Distribution

The selling stockholders and any of their pledges, assignees, and
successors-in-interest may, from time to time, sell any or all of their shares
of common stock on any stock exchange, market, or trading facility on which the
shares are traded or in private transactions. These sales may be at fixed or
negotiated prices. There is no assurance that the selling stockholders will sell
any or all of the Common Stock in this offering. The selling stockholders may
use any one or more of the following methods when selling shares:

          o    Ordinary brokerage transactions and transactions in which the
               broker-dealer solicits purchasers.

          o    Block trades in which the broker-dealer will attempt to sell the
               shares as agent but may position and resell a portion of the
               block as principal to facilitate the transaction.

          o    Purchases by a broker-dealer as principal and resale by the
               broker-dealer for its own account.

          o    An exchange distribution following the rules of the applicable
               exchange

          o    Privately negotiated transactions

          o    Short sales or sales of shares not previously owned by the seller

          o    Broker-dealers may agree with the selling stockholders to sell a
               specified number of such shares at a stipulated price per share

          o    A combination of any such methods of sale or any other lawful
               method

          o    The Selling stockholders may also engage in:

          o    Short selling against the box, which is making a short sale when
               the seller already owns the shares.

          o    Buying puts, which is a contract whereby the person buying the
               contract may sell shares at a specified price by a specified
               date.

          o    Selling under Rule 144 under the Securities Act, if available,
               rather than under this prospectus.

                                       41



<PAGE>


          o    Other transactions in our securities or in derivatives of our
               securities and the subsequent sale or delivery of shares by the
               stockholder.

          o    Pledging shares to their brokers under the margin provisions of
               customer agreements. If a selling stockholder defaults on a
               margin loan, the broker may, from time to time, offer to sell the
               pledged shares.

Broker-dealers engaged by the selling stockholders may arrange for other
brokers-dealers to participate in sales. Broker-dealers may receive commissions
or discounts from selling stockholders in amounts to be negotiated. If any
broker-dealer acts as agent for the purchaser of shares, the broker-dealer may
receive commission from the purchaser in amounts to be negotiated. The selling
stockholders do not expect these commissions and discounts to exceed what is
customary in the types of transactions involved.

The selling stockholders and any broker-dealers or agents that are involved in
selling the shares may be considered to be "underwriters" within the meaning of
the Securities Act for such sales. An underwriter is a person who has purchased
shares from an issuer with a view towards distributing the shares to the public.
In such event, any commissions received by such broker-dealers or agents and any
profit on the resale of the shares purchased by them may be considered to be
underwriting commissions or discounts under the Securities Act.

We are required to pay all fees and expenses incident to the registration of the
shares in this offering. However, we will not pay any commissions or any other
fees in connection with the resale of the common stock in this offering. We have
agreed to indemnify the selling shareholders and their officers, directors,
employees and agents, and each person who controls any selling shareholder, in
certain circumstances against certain liabilities, including liabilities arising
under the Securities Act. Each selling shareholder has agreed to indemnify the
Company and its directors and officers in certain circumstances against certain
liabilities, including liabilities arising under the Securities Act.

If we are notified by the selling stockholder that they have a material
arrangement with a broker-dealer for the resale of the common stock, then we
would be required to amend the registration statement of which this prospectus
is a part, and file a prospectus supplement to describe the agreements between
the selling stockholder and the broker-dealer.

                                Legal Proceedings

Our Company is not a party to any material pending legal proceedings and, to the
best of its knowledge, no such action by or against the Company has been
threatened.

                                     Experts

The financial statements of Digital Descriptor Systems, Inc. at December 31,
2000 and 1999, and for each of the two years in the period ended December 31,
2000, appearing in the Prospectus and Registration Statement have been audited
by Ernst & Young LLP, independent auditors, as set forth in their report thereon
(which contains an explanatory paragraph describing conditions that raise a
substantial doubt about the Company's ability to continue as a going concern as
described in Note 2 to the financial statements) appearing elsewhere herein, and
are included in reliance upon such report given upon the authority of such firm
as experts in accounting and auditing.

                                       42


<PAGE>



                                  Legal Matters

Legal matters concerning the issuance of shares of common stock offered in this
registration statement will be passed upon by Owen Naccarato, Attorney at Law.
Owen Naccarato does beneficially own shares of the company.

                           Other Available Information

We are subject to the reporting requirements of the Securities and Exchange
Commission (the "commission"). With the filing of our December 31, 2000 Form
10KSB,we file periodic reports, proxy statements and other information with the
commission under the Securities Exchange Act of 1934. We will provide without
charge to each person who receives a copy of this prospectus, upon written or
oral request, a copy of any information that is incorporated by reference in
this Prospectus (not including exhibits to the information that is incorporated
by reference unless the exhibits are themselves specifically incorporated by
reference). Requests should be directed to: Garrett Cohn

We have filed a registration statement on Form SB-2 under the Securities Act of
1933 Act with the Commission in connection with the securities offered by this
Prospectus. This Prospectus does not contain all of the information that is the
registration statement, you may inspect without charge, and copy our filings, at
the public reference room maintained by the Commission at 450 Fifth Street, N.W.
Washington, D.C. 20549. Copies of this material may also be obtained from the
Public Reference Section of the Commission at 450 Fifth Street, N.W. Washington,
D.C. 20549, at prescribe rates.

Information about the public reference room is available from the commission by
calling 1-800-SEC-0330.

The commission maintains a web site on the Internet that contains reports, proxy
and information statements and other information regarding issuers that file
electronically with the commission. The address of the site is www.sec.gov.
Visitors to the site may access such information by searching the EDGAR archives
on this web site.

You should rely only on the information contained in this Prospectus. We have
not authorized anyone to provide you with any information that is different.

The selling security holders are offering to sell, and seeking offers to buy,
shares of common stock only in jurisdictions where such offers and sales are
permitted.

The information contained in this Prospectus is accurate only as of the date of
this prospectus.

                              Financial Statements

Our Financial Statements begin on page F-1

                                       43


<PAGE>
                         Index to Financial Statements





                                    Contents


Report of Independent Auditors...............................................F-1

Audited Financial Statements

Balance Sheets...............................................................F-2
Statements of Operations.....................................................F-3
Statements of Shareholders' Equity...........................................F-4
Statements of Cash Flows.....................................................F-5
Notes to Financial Statements................................................F-6




<PAGE>










                         Report of Independent Auditors


The Board of Directors and Shareholders
Digital Descriptor Systems, Inc.

We have audited the accompanying balance sheets of Digital Descriptor Systems,
Inc. as of December 31, 2000 and 1999, and the related statements of operations,
shareholders' equity, and cash flows for the years then ended. These financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.

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

In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Digital Descriptor Systems,
Inc. as of December 31, 2000 and 1999, and the results of its operations and its
cash flows for the years then ended, in conformity with accounting principles
generally accepted in the United States.

The accompanying financial statements have been prepared assuming that Digital
Descriptor Systems, Inc. will continue as a going concern. As discussed in Note
2 to the financial statements, the Company has never been profitable and
continues to incur losses from operations and anticipates that it will require
additional debt and/or equity financing in 2001, which may not be readily
available. These matters raise substantial doubt about the Company's ability to
continue as a going concern. Management's plans relating to these matters are
described in Note 2. The financial statements do not include any adjustments
that might result from the outcome of this uncertainty.




                                                     /s/ Ernst & Young LLP


Philadelphia, Pennsylvania
March 23, 2001



                                                                             F-1


<PAGE>



                        Digital Descriptor Systems, Inc.

                                 Balance Sheets




<TABLE>
<CAPTION>
                                                                                  December 31              June 30
                                                                              2000          1999             2001
                                                                         ---------------------------    -------------
                                                                                                         (Unaudited)
<S>                                                                      <C>                <C>           <C>
Assets
Current assets:
   Cash                                                                  $    202,877   $    177,223    $    153,766
   Restricted cash                                                             10,452        110,000          10,452
   Investment                                                                   1,000          1,000           1,000
   Accounts receivable, less allowance for uncollectible accounts
     of $114,000 and $213,000 in 2000 and 1999, and
     $96,000 (unaudited) in 2001, respectively                                526,292        856,595         530,919
   Inventory                                                                   22,596         48,693          42,987
   Prepaid expenses                                                             8,698         13,874         213,242
   Debt discount and deferred financing costs                                 228,500              -         330,241
                                                                         ---------------------------    -------------
Total current assets                                                        1,000,415      1,207,385       1,282,517

   Note receivable - officer                                                  165,525        153,650         171,462
   Software development costs, at cost                                        413,604        413,604         367,648
   Furniture and equipment, at cost, net                                      172,046        267,685         100,832
   Deposits and other assets                                                   31,454          7,059          24,396
                                                                         ---------------------------    -------------
Total assets                                                             $  1,783,044   $  2,049,383    $  1,946,855
                                                                         ===========================    =============

Liabilities and shareholders' equity
Current liabilities:
   Accounts payable                                                      $    481,163   $    121,137    $    582,693
   Accrued expenses                                                           189,209        164,814          46,468
   Deferred income                                                            854,787      1,317,934       1,442,732
   Current portion of equipment loan                                            7,147              -           6,578
   Convertible debentures                                                     200,000              -         555,000
                                                                         ---------------------------    -------------
Total current liabilities                                                   1,732,306      1,603,885       2,633,471

Equipment loan                                                                 28,626              -          25,630
                                                                         ---------------------------    -------------
Total liabilities                                                           1,760,932      1,603,885       2,659,101

Shareholders' equity (deficit):
   Preferred stock, $.01 par value: authorized shares - 1,000,000;
     issued and outstanding shares - none
   Common stock, $.001 par value: authorized shares - 50,000,000;
     issued and outstanding shares - 20,011,612 and 14,380,127 at
     December 31, 2000 and 1999, respectively, and 21,279,612
     (unaudited) at June 30, 2001                                              20,011         14,380          21,279
   Additional paid-in capital                                              14,544,579     12,957,544      15,112,591
   Unearned compensation                                                            -        (14,000)              -
   Accumulated deficit                                                    (14,542,478)   (12,512,426)    (15,846,116)
                                                                         ---------------------------    -------------
Total shareholders' equity (deficit)                                           22,112        445,498        (712,246)
                                                                         ---------------------------    -------------
Total liabilities and shareholders' equity (deficit)                     $  1,783,044   $  2,049,383    $  1,946,855
                                                                         ===========================    =============
</TABLE>


See accompanying notes.

                                                                             F-2


<PAGE>


                        Digital Descriptor Systems, Inc.

                            Statements of Operations





<TABLE>
<CAPTION>
                                                          Year ended December 31        Six months ended June 30
                                                            2000           1999            2001           2000
                                                       ---------------------------    ---------------------------
                                                                                               (Unaudited)
<S>                                                    <C>              <C>           <C>              <C>
Revenues:
   Software                                            $  2,060,499   $  1,189,439    $    341,311   $    590,224
   Hardware                                                 229,525        722,040          48,574        371,578
   Maintenance                                              583,349        539,034         268,918        304,737
   Consulting                                                91,249        236,956          34,500        113,237
   Other                                                     61,836        159,714          31,955         27,562
                                                       ---------------------------    ---------------------------
                                                          3,026,458      2,847,183         725,258      1,407,338

Costs and expenses:
   Cost of revenues                                       1,615,286        987,931         269,788        803,177
   General and administrative                             1,843,336      1,593,846         917,244        790,886
   Sales and marketing                                      917,381        984,691         306,561        417,420
   Research and development                                 536,350        429,599         140,094        248,420
   Depreciation                                             162,330         75,553         120,666         50,595
   Other (income) expense, net                              (18,173)       (18,920)        274,543         (4,931)
                                                       ---------------------------    ---------------------------
                                                          5,056,510      4,052,700       2,028,896      2,305,567
                                                       ---------------------------    ---------------------------
Net loss                                               $ (2,030,052)  $ (1,205,517)   $ (1,303,638)  $   (898,229)
                                                       ===========================    ===========================

Net loss per common share (basic and diluted)          $       (.11)  $       (.11)   $       (.06)  $      (0.05)
                                                       ===========================    ===========================

Weighted average number of common shares
   outstanding (basic and diluted)                       18,557,547     10,934,900      21,174,779     17,722,649
                                                       ===========================    ===========================
</TABLE>




See accompanying notes.

                                                                             F-3

<PAGE>



                        Digital Descriptor Systems, Inc.

                       Statements of Shareholders' Equity


<TABLE>
<CAPTION>
                                                                                  Additional
                                                       Common                     Paid-in       Unearned    Accumulated
                                                       Shares       Amount        Capital     Compensation    Deficit       Total
                                                   ---------------------------------------------------------------------------------
<S>                                                  <C>          <C>         <C>              <C>           <C>            <C>
Balance at December 31, 1998                         7,891,128    $  7,891     $11,299,317   $ (38,000)  $(11,306,909)  $   (37,701)
   Issuance of common shares in connection with a
     Reg. A Offering, net of offering costs          6,488,999       6,489       1,658,227           -              -     1,664,716
   Amortization of unearned compensation                     -           -               -      24,000              -        24,000
   Net loss                                                  -           -               -           -     (1,205,517)   (1,205,517)
                                                   ---------------------------------------------------------------------------------
Balance at December 31, 1999                        14,380,127      14,380      12,957,544     (14,000)   (12,512,426)      445,498
   Issuance of common shares in connection with a
     Reg. A Offering, net of offering costs          4,426,485       4,426       1,159,640           -              -     1,164,066
   Issuance of common stock for services             1,205,000       1,205         259,895           -              -       261,100
   Debt discount relating to the beneficial
     conversion feature on convertible debentures
     and issuance of warrants                                -           -         167,500           -              -       167,500
   Amortization of unearned compensation                     -           -               -      14,000              -        14,000
   Net loss                                                  -           -               -           -     (2,030,052)   (2,030,052)
                                                   ---------------------------------------------------------------------------------
Balance at December 31, 2000                        20,011,612      20,011      14,544,579           -    (14,542,478)       22,112
                                                   ---------------------------------------------------------------------------------
   Issuance of common stock for services (unaudited) 1,268,000       1,268         213,012           -              -       214,280
   Debt discount relating to the beneficial
     conversion feature on convertible
     securities (unaudited)                                  -           -         355,000           -              -       355,000
   Net loss (unaudited)                                      -           -               -           -     (1,303,638)   (1,303,638)
                                                   ---------------------------------------------------------------------------------
Balance at June 30, 2001 (unaudited)                21,279,612    $ 21,279     $15,112,591           -   $(15,846,116)  $  (712,246)
                                                   =================================================================================
</TABLE>


See accompanying notes.

                                                                             F-4
<PAGE>



                        Digital Descriptor Systems, Inc.

                            Statements of Cash Flows



<TABLE>
<CAPTION>
                                                                          Year ended December 31          Six months ended June 30
                                                                          2000              1999          2001              2000
                                                                       ----------------------------    ----------------------------
                                                                                                                (Unaudited)
<S>                                                                    <C>              <C>            <C>              <C>
Cash flows from operating activities:
Net loss                                                               $(2,030,052)     $(1,205,517)   $(1,303,638)     $  (898,229)
Adjustments to reconcile net loss to net cash used in operating
   activities:
     Depreciation                                                          162,330           75,553        120,666           50,595
     Compensation expense in connection with issuance of common stock      261,100                -        186,530                -
     Amortization of debt discount                                               -                -        284,259                -
     Amortization of unearned compensation                                  14,000           24,000              -           12,000
     Changes in operating assets and liabilities:
       Accounts receivable                                                 330,303           32,588         (4,627)         152,533
       Inventory                                                            26,097             (969)       (20,301)             (69)
       Prepaid expenses, deposits and other assets                         (19,219)          14,524       (169,736)         (28,185)
       Accounts payable                                                    360,026         (143,538)       101,530           45,625
       Accrued expenses                                                     24,395           71,700       (142,741)        (102,082)
       Deferred income                                                    (463,147)         265,117        587,945          (60,417)
                                                                       ----------------------------    ----------------------------
Net cash used in operating activities:                                  (1,334,167)        (866,542)      (360,113)        (828,229)

Cash flows from investing activities:
Purchase of furniture and equipment                                        (30,325)        (164,091)        (3,496)         (22,771)
Increase in officer note receivable                                        (11,875)         (11,875)        (5,937)          (5,938)
Increase in software development costs                                           -         (413,604)             -                -
Proceeds from sale of restricted cash                                       99,548                -              -                -
Purchase of short-term investments, including restricted cash                    -         (110,000)             -                -
                                                                       ----------------------------    ----------------------------
Net cash provided by (used in) investing activities                         57,348         (699,570)        (9,433)         (28,709)

Cash flows from financing activities:
Net proceeds from issuance of Common Stock                               1,164,066        1,664,716              -        1,164,066
Proceeds from the issuance of convertible debentures                       200,000                -        355,000                -
Deferred financing costs                                                   (61,000)               -        (31,000)               -
Repayment of equipment loan                                                   (593)               -         (3,565)               -
                                                                       ----------------------------    ----------------------------
Net cash provided by financing activities                                1,302,473        1,664,716        320,435        1,164,066
                                                                       ----------------------------    ----------------------------
Net increase in cash                                                        25,654           98,604        (49,111)         307,128
Cash at beginning of year                                                  177,223           78,619        202,877          287,223
                                                                       ----------------------------    ----------------------------
Cash at end of year                                                    $   202,877      $   177,223    $   153,766      $   594,351
                                                                       ============================    ============================

Supplemental disclosure of cash flow information:
   Cash paid during the year for interest                              $     1,775      $     5,615    $   233,517      $     1,748
                                                                       ============================    ============================
   Acquisition of equipment with loan                                  $    36,366      $         -    $         -      $         -
                                                                       ============================    ============================
   Debt discount in connection with convertible debentures and
     issuance of warrants                                              $   167,500      $         -    $   355,000      $         -
                                                                       ============================    ============================
   Conversion of debentures and related accrued interest to
     Common Stock                                                      $         -      $   229,970    $         -      $         -
                                                                       ============================    ============================
</TABLE>


See accompanying notes.


                                                                             F-5


<PAGE>





                        Digital Descriptor Systems, Inc.

                          Notes to Financial Statements

                                December 31, 2000

1. Business


Digital Descriptor Systems, Inc. incorporated in Delaware in 1994, develops,
assembles and markets computer installations consisting of hardware and
software, which capture video and scanned images, link the digitized images to
text and store the images and text on a computer database and transmit this
information to remote locations. The principal product of the Company is the
Compu-Capture Law Enforcement Program, which is marketed to law enforcement
agencies and jail facilities and generated the majority of the Company's
revenues during the years ended December 31, 2000 and 1999 and for the six
months ended June 30, 2001 and 2000. Substantially all of the Company's revenues
are derived principally from U.S. government agencies.


2. Accounting Policies

Basis of Financial Statement Presentation


The financial statements of the Company have been prepared assuming the Company
will continue as a going concern, which contemplates the realization of assets
and the satisfaction of liabilities in the normal course of business.
Accordingly, the financial statements do not include any adjustments that might
be necessary should the Company be unable to continue in existence. The Company
has never been profitable and has incurred substantial losses from operations of
approximately $2,030,000 and $1,206,000 during the years ended December 31, 2000
and 1999, respectively and $1,304,000 (unaudited) for the six months ended June
30, 2001. Losses from operations are continuing through 2001 and the Company
anticipates that it will require additional financing in 2001, which may not be
readily available. These factors raise substantial doubt about the Company's
ability to continue as a going concern. The Company's plans include expanding
the sale and acceptance of its core business solutions by hiring additional
sales resources and increased marketing activities. The Company is also pursuing
FBI Certification and introduction to the marketplace of the Compu-Scan 3000
fingerprint-capturing device.




                                                                             F-6

<PAGE>


                        Digital Descriptor Systems, Inc.

                    Notes to Financial Statements (continued)


2. Accounting Policies (continued)

Basis of Financial Statement Presentation (continued)

Management is also actively working to raise capital through the sale of its
common stock and the exercise of its common stock purchase warrants and options
in the next twelve months to cover its operating costs. Additionally, the
following plans have been put in place to continue as a going concern: cutting
costs in areas that add the least value to the Company; deriving funds through
the establishment of business alliances with other companies who may wish to
license the Compu-Scan device; and increasing revenues through the introduction
of a scaled down version of the Compu-Capture product. There can be no
assurances that management will be successful in these planned capital raising
efforts or cost-cutting measures.

Use of Estimates

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


Interim Financial Information

The consolidated financial statements and disclosures included herein for the
six months ended June 30, 2001 and 2000 are unaudited. These financial
statements and disclosures have been prepared by the Company in accordance with
accounting principles generally accepted in the United States for interim
financial information. Accordingly, they do not include all of the information
and footnotes required by accounting principles generally accepted in the United
States for complete financial statements. In the opinion of management, all
adjustments (consisting of adjustments of a normal and recurring nature)
considered necessary have been included. Operating results for the six month
periods ended June 30, 2001 and 2000 are not necessarily indicative of the
results that may be expected for the year ended December 31, 2001.


Inventory

Inventory is stated at the lower of cost (first-in, first-out method) or market.

Revenue Recognition

The Company derives revenue from the sale of hardware, software, post customer
support (PCS), and other related services. PCS includes telephone support, bug
fixes, and rights to upgrades on a when-and-if-available basis. Other related
services include basic consulting and training. Included with the hardware is
software that is not considered to be incidental. Revenue from transactions with
customers where the software component is not considered to be incidental is
allocated between the hardware and software components based on the relative
fair value of the respective components.


                                                                             F-7



<PAGE>


                        Digital Descriptor Systems, Inc.

                    Notes to Financial Statements (continued)

2. Accounting Policies (continued)

Revenue Recognition (continued)

The Company also derives revenue from the sale of software without a related
hardware component. Revenue allocable to software components is further
allocated to the individual deliverable elements of the software portion of the
arrangement such as PCS and other services. In arrangements that include rights
to PCS for the software and/or other services, the software component
arrangement fee is allocated among each deliverable based on the relative fair
value of each of the deliverables determined using vendor-specific objective
evidence, which has been established by the separate sales of these
deliverables.

The Company recognizes the revenue allocable to hardware and software licenses
upon delivery of the product to the end-user, unless the fee is not fixed or
determinable or collectibility is not probable. If collectibility is not
considered probable, revenue is recognized when the fee is collected. Revenue
allocable to PCS is recognized on a straight-line basis over the period the PCS
is provided. Revenue allocable to other services is recognized as the services
are provided.

Furniture and Equipment

Furniture and equipment are recorded at cost. Depreciation is computed using the
straight-line method over the estimated useful lives of the related assets
ranging from 2 to 5 years.

Fair Value of Financial Instruments

The carrying value of cash and cash equivalents, accounts receivable, note
receivable, accounts payable, accrued expenses and convertible debentures
approximates their fair value based on the liquidity of these financial
instruments or based on their short-term nature.

                                                                             F-8



<PAGE>

                        Digital Descriptor Systems, Inc.

                    Notes to Financial Statements (continued)


2. Accounting Policies (continued)

Software Development Costs

The Company capitalizes software development costs after technological
feasibility of the software is established and through the product's
availability for general release to the Company's customers. Technological
feasibility of the Company's software development costs is determined when the
planning, designing, coding, and testing activities are completed, and the
Company has established that the product can be produced to meet its design
specifications. All costs incurred in the research and development of new
software products and costs incurred prior to the establishment of technological
feasibility are expensed as incurred. During 1999, $413,604 was capitalized as
software development costs in connection with the Company's new product entitled
Compu-Scan, a computerized inkless fingerprint device. During 2000, the Company
submitted this product for approval to the FBI. As of March 2001, the Company
believes the product meets the necessary specifications and is available for
general release to customers.


Amortization of software development costs is calculated as the greater of the
amount computed using (i) the ratio that current gross revenues for a product
bear to the total of current and anticipated future gross revenues of that
product or (ii) the straight-line method over the remaining estimated economic
life of the product, including the period being reported on. Amortization of
such costs will commence when the software becomes available for general release
to customers. Amortization expense of $11,489 and $45,956 was recorded during
the three and six month periods ended June 30, 2001. The Company reviews the
unamortized software development costs at each balance sheet date and, if
necessary, will write down the balance to net realizable value if the
unamortized costs exceed the net realizable value of the asset.


Income Taxes

The Company provides for income taxes under the liability method. Deferred
income taxes reflect the net tax effects of temporary differences between
carrying amounts of assets and liabilities for financial reporting purposes and
the amounts used for income tax purposes. Such differences result from
differences in the timing of recognition by the Company of certain expenses, and
the periods of depreciation of certain assets.



                                                                             F-9


<PAGE>

                        Digital Descriptor Systems, Inc.

                    Notes to Financial Statements (continued)


2. Accounting Policies (continued)

Accounting for Stock Options

Financial Accounting Standards Board issued Statement No. 123 (SFAS 123),
"Accounting for Stock-Based Compensation." SFAS 123 provides companies with a
choice to follow the provisions of SFAS 123 in determination of stock-based
compensation expense or to continue with the provisions of Accounting Principles
Board Opinion No. 25 (APB 25). The Company has elected to follow the provisions
of APB 25. Under APB 25, if the exercise price of the Company's stock options
equals or exceeds the market price of the underlying Common Stock on the date of
grant, no compensation expense is recognized. The effect of applying SFAS 123 to
the Company's stock-based awards results in net loss and net loss per common
share that are disclosed on a pro forma basis in Note 6.

Net Loss Per Common Share

Basic loss per share is calculated by dividing the net loss by the weighted
average common shares outstanding for the period. Diluted loss per share is
calculated by dividing the net loss by the weighted average common shares
outstanding of the period plus the dilutive effect of common stock equivalents.
No exercise of common stock equivalents were assumed during any period because
the assumed exercise of these securities would be antidilutive.

Concentration of Credit Risk

Financial instruments which potentially subject the Company to a concentration
of credit risk principally consist of cash, accounts receivable and a note
receivable. Concentration of credit risk, with respect to accounts and note
receivable, is limited due to the Company's credit evaluation process. The
Company does not require collateral from its customers. The Company sells its
principal products to end users and distributors principally in the United
States.


                                                                            F-10

<PAGE>


                        Digital Descriptor Systems, Inc.

                    Notes to Financial Statements (continued)


2. Accounting Policies (continued)

Long-Lived Assets

The Company evaluates impairment of its intangible and other long-lived assets
in accordance with Statement of Financial Accounting Standards No. 121,
"Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to
Be Disposed Of." In making such determination, management compares the estimated
future cash flows, on an undiscounted basis, of the underlying operations or
assets with their carrying value to determine if any impairment exists. If
impairment exists, any adjustment is determined by comparing the carrying amount
to the fair value of the impaired asset.

Impact of Recent Accounting Pronouncements

In June 1999, the Financial Accounting Standards Board issued Statement No. 133,
"Accounting for Derivatives and Hedging Activities" (SFAS 133), which
established accounting and reporting standards for derivative instruments,
including certain derivative instruments embedded in other contracts
(collectively referred to as derivatives), and for hedging activities. SFAS 133
is effective for fiscal years beginning after June 15, 2000. Under SFAS 133,
accounting for changes in fair value of a derivative depends on its intended use
and destination. The Company will adopt SFAS 133 during the first quarter of
2001. Because the Company has never used or currently intends to use
derivatives, management does not anticipate that adoption of this new standard
will have a significant impact on the results of operations or the financial
position of the Company.

3. Furniture and Equipment

Furniture and equipment consists of the following:


                                            December 31            June 30, 2001
                                      2000               1999       (unaudited)
                                    ----------------------------   -------------

Furniture and fixtures              $186,705          $186,705       $186,705
Computer equipment                   271,449           242,289        274,945
Vehicles                              59,049            22,682         59,049
Leasehold improvements                34,977            33,813         34,977
                                    ----------------------------     ---------
                                     552,180           485,489        555,676
Less accumulated depreciation        380,134           217,804        455,294
                                    ----------------------------     ---------
                                    $172,046          $267,685       $100,382
                                    ============================     =========




                                                                            F-11


<PAGE>

                        Digital Descriptor Systems, Inc.

                    Notes to Financial Statements (continued)


4. Debt

Convertible Debentures

During December 2000, the Company issued $200,000 of convertible debentures to
two investors. The debentures mature on December 28, 2001 and accrue interest at
12% per annum. The holder has the right to convert the debentures to common
shares at any time through maturity at a conversion price the lessor of: $0.08
per share or 50% of the average of the lowest three trading prices during the 20
days preceding the conversion date. The debenture holders also received warrants
to purchase 400,000 common shares at an exercise price of $0.036 per share at
any time before December 28, 2003. The estimated fair value of the warrants of
$40,000 and the intrinsic value of the beneficial conversion feature of $127,500
have been allocated to paid-in capital. This resulting debt discount plus the
$61,000 of financing charges will be amortized over the term of the debentures
in 2001. The debentures are collateralized by substantially all of the Company's
assets.

During February 1999 through April 1999, the Company issued $225,000 of
convertible debentures to 12 investors. These short-term debentures required
interest at 12% per annum. The holder had the option of receiving payment at the
end of a 50-day period or to convert the debenture to common shares of the
Company at a specified conversion price. The $225,000 of debentures plus accrued
interest of $4,970 were converted to 766,567 common shares in connection with a
Reg. A Offering (Note 9).

Equipment Loan

During 2000, the Company entered into a $36,366 automobile loan, maturing in
November 2005. The loan requires monthly installments of $620, including
interest at .9%. The loan is collateralized by the automobile. Future maturities
of the loan are $7,147 in 2001, $7,211 in 2002 and $7,277 in 2003, $7,342 in
2004, and $6,796 in 2005.


                                                                            F-12



<PAGE>


                        Digital Descriptor Systems, Inc.

                    Notes to Financial Statements (continued)


5. Commitments

The Company leases certain facilities, vehicles and office equipment under
operating lease agreements that expire through various dates through 2005.
Rental expense under such operating leases was approximately $126,000 and
$108,000 during the years ended December 31, 2000 and 1999, respectively. Future
minimum lease payments at December 31, 2000 are as follows:

             2001                              $120,200
             2002                               115,400
             2003                               118,300
             2004                               111,600
             2005                                54,700

6. Stock Option and Other Plans

The Company maintains the 1994 Restated Stock Option Plan (the 1994 Plan)
pursuant to which the Company reserved 5,000,000 shares of common stock. The
options granted have a term of ten years and are issued at or above the fair
market value of the underlying shares on the grant date. The Company also
maintains the 1996 Director Option Plan (the Director Plan) pursuant to which
the Company reserved 200,000 shares of common stock. Under the Director Plan,
each outside director is automatically granted an option to purchase 15,000
shares of common stock (first option) upon adoption of the Director Plan or the
date such person becomes a director. Every year thereafter, each outside
director is automatically granted an option to purchase 1,000 shares (subsequent
option) on each date of the annual meeting if a minimum of six months were
served on the Board of Directors. Options granted under the Director Plan are
issued at or above the fair market value of the underlying shares on the grant
date. A portion of the first option vests at the six-month anniversary of the
date of the grant and continues over a four-year period. Subsequent options vest
on the first anniversary of the grant date. The options expire ten years from
the date of the grant.



                                                                            F-13



<PAGE>

                        Digital Descriptor Systems, Inc.

                    Notes to Financial Statements (continued)


6. Stock Option and Other Plans (continued)

The following is a summary of option activity under all plans:


<TABLE>
<CAPTION>

                                                                                                        Weighted
                                                             1996                         Total          Average
                                                           Director                      Number of      Exercise
                                              1994 Plan      Plan          Other         Options          Price
                                           ----------------------------------------------------------------------

<S>                                            <C>           <C>              <C>        <C>         <C>
Outstanding at December 31, 1998               182,000       33,812             -        215,812     $.33-$3.81
   Granted                                           -            -       902,500        902,500            .37
   Canceled                                     (3,000)           -        (6,000)        (9,000)    $.33-$ .37
                                           ----------------------------------------------------------------------
Outstanding at December 31, 1999               179,000       33,812       896,500      1,109,312     $.33-$3.81
                                           ----------------------------------------------------------------------
   Granted                                     843,000            -             -        843,000           $.10
   Canceled                                          -            -        (7,500)        (7,500)           .37
                                           ----------------------------------------------------------------------
Outstanding at December 31, 2000 and
   June 30, 2001                             1,022,000       33,812       889,000      1,944,812     $.10-$3.81
                                           ----------------------------------------------------------------------
Exercisable options at December 31,
   2000                                        971,498       33,812       889,000      1,894,310
                                           ========================================================
Exercisable options at June 30,
   2001 (Unaudited)                            997,820       33,812       889,000      1,920,632
                                           ========================================================
</TABLE>


At December 31, 2000, the remaining contractual life of outstanding options was
9 years.

Pro forma information regarding net loss and net loss per common share
determined as if the Company accounted for stock options granted under the fair
value method of SFAS 123 is as follows:



<TABLE>
<CAPTION>
                                                        December 31                                  June 30
                                                   2000                1999                  2001                2000
                                            ------------------------------------      ------------------------------------
                                                                                                    (Unaudited)
<S>                                            <C>               <C>                    <C>                   <C>
Net loss:
   As reported                                   $(2,030,052)      $(1,205,517)          $(1,303,638)        $  (898,229)
   Pro forma                                      (2,103,563)      $(1,427,271)          $(1,377,149)        $(1,009,106)

Net loss per share:
   As reported                                   $      (.11)      $      (.11)          $     (0.06)        $     (0.05)
   Pro forma                                     $      (.12)      $      (.13)          $     (0.07)        $     (0.06)

</TABLE>



                                                                            F-14


<PAGE>


                        Digital Descriptor Systems, Inc.

                    Notes to Financial Statements (continued)


6. Stock Option and Other Plans (continued)

The Company estimated the fair value of stock options at the date of grant by
using a Black-Scholes option pricing model with the following weighted-average
assumptions for grants in 2000 and 1999, as follows: risk-free interest rate of
5.5% for all years; expected life of the option of 5 years; no expected cash
dividend payments on common stock, and volatility factors of the expected market
price of the Company's common stock of: 1.033 and .879, respectively.

The Black-Scholes option valuation model was developed for use in estimating the
fair value of traded options which have no vesting restrictions and are fully
transferable. As noted above, the Company's stock options are vested over an
extended period. In addition, option models require the input of highly
subjective assumptions including future stock price volatility. Because the
Company's stock options have characteristics significantly different from those
of traded options, and because changes in the subjective assumptions can
materially affect the fair value estimates, in management's opinion, the
Black-Scholes model does not necessarily provide a reliable measure of the fair
value of the Company's stock options.

During 1997, the Company adopted the Consultants and Advisors Compensation Plan
(the Plan). Persons eligible under this Plan include any consultant or advisor
of the Company who has provided bona fide services to the Company, except for
services provided in connection with the offer or sale of securities in an
equity transaction. The Company reserved 300,000 shares of common stock for
issuance under this Plan of which 211,357 shares have been awarded through
December 31, 2000. Awards may be granted in the form of stock options or stock
grants. No awards shall be made after December 31, 2001. The Company has not
awarded any stock options or stock grants under this Plan since 1998.

7. Income Taxes

At December 31, 2000 and 1999, the Company had federal net operating loss
carryforwards of approximately $9,271,000 and $7,633,000, respectively, to
offset future federal taxable income expiring in various years through 2020. The
Company also has state net operating loss carryforwards of $456,000 and
$409,000, respectively, to offset future state taxable income expiring in
various years through 2020. At December 31, 2000 and 1999, the Company recorded
a deferred tax asset of $3,318,232 and $3,005,120, respectively, which were
reduced by a valuation allowance in the same amount as the realization of these
deferred tax assets are not certain.

                                                                            F-15


<PAGE>

                        Digital Descriptor Systems, Inc.

                    Notes to Financial Statements (continued)


7. Income Taxes (continued)

The timing and extent in which the Company can utilize future tax deductions in
any year may be limited by provisions of the Internal Revenue Code regarding
changes in ownership of corporations due to certain ownership changes of the
Company.

The tax effects of temporary differences that give rise to significant portions
of deferred tax assets and deferred tax liabilities are as follows:

                                                           December 31
                                                      2000             1999
                                                  ------------------------------
Deferred tax assets:
   Net operating loss carryforwards               $3,453,113        $3,003,756
   Bad debt reserves                                  43,519            81,455
   Inventory reserves                                    200             1,454
   Accrued expenses                                    1,755                 -
   Depreciation                                            -            35,066
   Unearned compensation                                   -            40,830
                                                  ------------------------------
Total deferred tax assets                          3,498,587         3,162,561

Deferred tax liabilities:
   Software development                             (157,441)         (157,441)
   Depreciation                                      (22,914)                -
                                                  ------------------------------
Total deferred tax asset                           3,318,232         3,005,120
Valuation allowance                               (3,318,232)       (3,005,120)
                                                  ------------------------------
Net deferred tax asset                            $        -        $        -
                                                  ==============================

8. Note Receivable - Officer


During 1996, the Company loaned the President of the Company $125,000 evidenced
by a promissory note. The note bore interest at the prime rate plus 1%, and was
payable together with the principal on August 13, 1999. The Company's Board of
Directors agreed to extend the maturity date of this note indefinitely. At
December 31, 2000 and 1999 and June 30, 2001, accrued interest, included in the
note receivable in the accompanying balance sheet was $40,525, $28,650 and
$46,462 (unaudited), respectively.



                                                                            F-16



<PAGE>

                        Digital Descriptor Systems, Inc.

                    Notes to Financial Statements (continued)


9. Equity Transactions

During 2000, the Company issued 1,205,000 shares of restrictive common stock for
services performed. The Company recorded a charge for the issuance of such
shares during 2000 of $261,100, based on the fair market value of the Company's
common stock on the date of the stock grant.

During 1999, the Company offered up to 11,000,000 shares of its common stock at
an offering price of $.30 per share for a total proceeds of $3,300,000 in a
Regulation A offering. The minimum subscription was $10,000 for 33,344 shares.
Through December 31, 1999, 6,488,999 shares were sold generating net proceeds of
$1,664,716 ($1,946,699 less offering costs of $281,983). During 2000, an
additional 4,426,485 shares were sold generating net proceeds of $1,164,066
($1,327,944 less offering costs of $163,878).

In connection with the Company's initial public offering in 1995, the Company
issued to each unit holder one Redeemable Class A Warrant and one Redeemable
Class B Warrant. The Warrants were immediately detachable and separately
transferable. Each Class A Warrant entitled the holder to purchase one share of
common stock for $6.00 subject to adjustment, during the four-year period
commencing one year from the date of the offering. Each Class B Warrant entitled
the holder to purchase one share of common stock for $7.25 subject to
adjustment, during the four-year period commencing one year from the date of the
offering. The Class A and Class B Warrants are subject to redemption by the
Company at any time, (within 30 days notice) at $.10 per warrant provided that
the per share closing bid price of the common stock exceeds 175% of the exercise
price for the Class A Warrant, and 200% of the exercise price for the Class B
Warrant, for at least 20 consecutive trading days. During July 2000, the
Company's Board of Directors reduced the exercise price of the Class A Warrants
from $6.00 to $1.00, and reduced the exercise price of the Class B Warrants from
$7.50 to $1.50. The expiration date for the Class A and Class B Warrants was
extended from August 15, 2000 to August 15, 2002. At December 31, 2000, there
are 1,483,750 Redeemable Class A Warrants outstanding and 1,483,750 Redeemable
Class B Warrants outstanding.



                                                                            F-17



<PAGE>

                        Digital Descriptor Systems, Inc.

                    Notes to Financial Statements (continued)


9. Equity Transactions (continued)

During July 1994, the Chairman was granted the right to purchase 119,999 shares
of Common Stock at $.001 per share in connection with an employment agreement.
The Company recorded $120,000 in unearned compensation, based on the fair value
of the restricted stock at the date of issuance. Such unearned compensation has
amortized to expense in the statement of operations over the period of the
employment agreement. Amortization expense of $14,000 and $24,000 was recorded
during the years ended December 31, 2000 and 1999, respectively.

10. Shares Reserved for Future Issuance

At December 31, 2000, the Company has the following common shares reserved for
issuance:

Common stock options available to grant                            4,144,188
Common stock options outstanding                                   1,944,812
Common stock purchase rights                                         119,999
Class A warrants outstanding                                       1,483,750
Class B warrants outstanding                                       1,483,750
Common stock available for grant:
    Employee stock purchase plan                                     100,000
    Consultants and advisors compensation plan                        88,643
Convertible debentures                                             2,500,000
                                                                  ----------
                                                                  11,865,142
                                                                  ==========

11. Subsequent Events

During January 2001 through March 2001, the Company issued $200,000 of
convertible debentures to two investors. These debentures mature on March 4,
2002 and accrue interest at 12% per annum. The holder has the right to convert
the debentures to common shares at any time through maturity at the conversion
price as described in Note 4. The debenture holders received warrants to
purchase 200,000 common shares at an exercise price the lesser of: $.036 per
share or the average of the lowest three trading prices during the 20 days
preceding the exercise date. The intrinsic value of the beneficial conversion
feature relating to these debentures of $200,000 has been allocated to paid in
capital. The resulting debt discount and deferred financing costs of $31,000
will be amortized over the term of the debentures. The debentures are
collateralized by substantially all of the Company's assets. The Company has
revised its estimate of the intrinsic value of the beneficial conversion
features of these convertible debentures to be $200,000.

During March 2001, the Company granted 1,100,000 shares of restricted common
stock for services performed. Such shares were valued at the fair market value
in the amount of $155,750 on the date the shares were granted.









                                                                            F-18
<PAGE>




12. Subsequent Events (Unaudited)

During April 2001, the Company issued two convertible notes for $100,000 and
$15,000, and one convertible note in May 2001 for $40,000 respectively, with
interest accruing at the annual rate of 10% interest on these Notes shall be
payable quarterly commencing June 30, 2001. The holder has the right to convert
the debentures and interest accrued into shares of the Company's Common Stock at
a conversion price per share that shall be on amount equal to 50% of the mean
average price of the Common Stock for the ten (10) trading days prior to notice
of conversion per share. The intrinsic value of the beneficial conversion
features relating to the convertible debentures issued in 2001 of $155,000 has
been allocated to paid in capital. This resulting debt discount will be
amortized over the term of the debentures.

In April 2001, the Company granted 168,000 shares of restricted common stock for
services. Such shares were valued at the fair market value on the date the
shares were granted in the amount of $30,780.




                                                                            F-19



<PAGE>




Part II.   Information Not Required In Prpspectus

                    Indemnification of Directors and Officer

The Company's Certificate of Incorporation provides that a director of the
Company shall not be liable to the Company or its stockholders for monetary
damages for breach of fiduciary duty as a director.

The Company's Certificate of Incorporation provides that the Company shall
indemnify to the fullest extent permitted by law any person made or threatened
to be made a party to any action, suit or proceeding, whether criminal, civil,
administrative or investigative (a "legal action"), whether such legal Action be
by or in the right of the corporation or otherwise, by reason of the fact that
such person is or was a director or officer of the Company, or serves or served
at the request of the Company as a director or officer, of another corporation,
partnership, joint venture, trust or any other enterprise. In addition, the
Company's Certificate of Incorporation provides for indemnification of any
person made or threatened to be made a party to any Legal Action by reason of
the fact that such person is or was a director or officer of the Company and is
or was serving as a fiduciary of, or otherwise rendering to, any employee
benefit plan of or relating to the Company. The indemnification obligation of
the Company in the Certificate of Incorporation is permitted under Section 145
of the General Corporation Law of the State of Delaware.

Insofar as indemnification for liabilities arising under the Securities Act of
1933 (the "Act") may be permitted to directors, officers and controlling persons
of the Company pursuant to the foregoing provisions, or otherwise, the Company
has been advised that in the opinion of the Securities and Exchange Commission
such indemnification is against public policy as expressed in the Act and is,
therefore unenforceable.

                   Other Expenses of Issuance and Distribution

Related to the securities being registered. The expenses shall be paid by the
Registrant.

SEC Registration Fee                $       433.80
Printing and Engraving Expenses     $     2,000.00
Legal Fees and Expenses             $    55,000.00
Accounting Fees and Expenses        $    30,000.00
Transfer Agent Fees                 $     2,000.00
Blue Sky Fees                       $     2,000.00
Consulting Fees                     $    80,000.00
Miscellaneous                       $     5,000.00
                                    --------------
Total                               $   176,433.80



                                      II-1


<PAGE>



                     Recent Sales of Unregistered Securities

A total of 10,915,484 shares of common stock, par value $.001 (the "Shares"),
were issued by the Company from June 1999 through May 2000, for cash or services
rendered to the Company, absent registration under the Securities Act. These
shares were offered pursuant to the exemption provided by Regulation A where
such offering price was valued at $.30 per share.

From September through December 2000, the Company issued 1,205,000 restricted
shares of its common stock for services performed. These shares were valued at
market price and represented fair value for services rendered. These shares were
issued pursuant to the exemption provided for under Section 4(2) of the
Securities Act of 1933, as amended, as a "transaction not involving a public
offering."

During March 2001, the Company issued $200,000 of convertible debentures to two
investors. These debentures mature on March 4, 2002 and accrue interest at 12%
per annum. The holder has the right to convert the debentures to common shares
at any time through maturity at the conversion price as described in the
agreement. The debenture holders received warrants to purchase 200,000 common
shares at an exercise price the lesser of: $0.36 per share or the average of the
lowest three trading prices during the 20 days preceding the exercise date. The
debentures are collateralized by substantially all of the Company's assets.

During January through March 2001, the Company granted 1,100,000 shares of
restricted common stock for services performed. Such shares were valued at the
fair market value on the date the shares were granted.

During April 2001, the Company granted 168,000 shares of restricted common stock
for services performed. Such shares were valued at the fair market value on the
date the shares were granted.


During April 2001, DDSI issued two convertible notes for $100,000 and $15,000
respectively with simple interest accruing at the annual rate of 10%. Interest
payable on the Notes shall be payable quarterly commencing June 30, 2001. The
Holder shall have the right to convert the principal amount and interest due
under the notes into Shares of the DDSI's Common Stock at a conversion price
that shall be equal to 50% of the mean price of Common Stock for the ten (10)
trading days prior to notice of conversion per share.

During May 2001, DDSI issued a convertible note for $40,000 with simple interest
accruing at the annual rate of 10%. The Holder shall have the right to convert
the principal and interest due under the notes into shares of the Company's
Common Stock at a conversion price that shall be equal to 50% of the mean price
of Common Stock for the ten (10) trading days prior to notice of conversion per
share. The note and underlying shares are not being registered in this document.



                                      II-2


<PAGE>


<TABLE>
<CAPTION>
         Exhibits
Exhibit
Number            Description
------            -----------

<S>               <C>
2.1  *            Certificate of Incorporation of the Company.  Incorporated June 13, 1994.
2.2  *            Restated Articles of Incorporation of the Issuer, May 21, 1997.
2.3  *            Amended Articles of Incorporation.
2.4  *            By-Laws of the Company.
4.1. ***          Form of Warrant Agreement with Form of Warrant Election to Purchase
4.1.1             Executed Warrant Agreement with AJW Partners, LLC
4.1.2             Executed Warrant Agreement with New Millennium Capital Partners II, LLC
5.1  *            Form of Voting Trust Agreement between Norman Cohn and Garrett U. Cohn.
5.1.1***          Legal Opinion to Investors
5.1.2             Opinion re: Legality
6.18 *            Security Agreement and Note dated as of August 14, 1996 in the principal
                  Amount of $125,000 made by Garrett U. Cohn in favor of the Company.
6.2  *            Resolution to Security Agreement between Norman Cohn and Garrett U. Cohn.
6.3  *            Employee 1997 Stock Option Plan adopted by the Board of Directors February 24, 1998
                  and subject to stockholder ratification.
6.5  *            Warrant Agreement dated April 19, 1995 between the Company and Jay Teitlebaum.
6.6  *            Warrant Agreement dated June 16, 1995 between the Company and Norman Cohn.
                  Incorporated by reference: Form 10-KSB, period December 31,
                  1996, File No. 0-26604, Exhibit 4.4.
6.7  *            Lease for the Premises dated May 16, 2000.
6.8  *            Cohn Employment and Non-competition Agreement of Garrett U. Cohn dated July 7, 1994.
                  Incorporated by reference:  Form 10-KSB, period December 31, 1996,
                  File No. 0-26604, Exhibit 10.1.
6.9  *            Employment Agreement for Michael Pellegrino.
6.9.1*            Employment Agreement for Michael Ott.
6.9.2*            Employment Agreement for Randolph Hall.
10.1 **           Software License and Royalty Agreement between Company and Harris Corporation
10.2 **           Agreement for Development of Finger/Slap Scanner Product between the Company and
                             ISC/U.S., Inc.
10.3***           Form of Secured Convertible Debenture Purchase Agreement (December 28, 2000)
10.3.1            Executed Secured Convertible Debenture Purchase Agreement
10.4***           Form of First Amendment to Secured Convertible Debenture Purchase Agreement
                  (March 5, 2001)
10.5***           Form of 12% Convertible Debenture
10.5.1            Executed 12% Convertible Debenture with AJW Partners, LLC
10.5.2            Executed 12% Convertible Debenture with New Millennium Capital Partners
                  II, LLC
10.6***           Form of Registration Rights Agreement
10.6.1            Executed Registration Rights Agreement
10.7***           Form of Security Agreement
10.8***           Form of 10% Convertible Debenture
10.8.1            10% Convertible Note to Robert Gowell
10.9              Escrow Agreement
10.9.1            Transfer Agent Instructions
10.10             Contract with DBA Systems, a Division of Titan Industries
10.11             Executed Second Amendement to Secured Convertible Debenture
                  Purchase Agreement
16.0 *            Letter re change in certifying accountant.
23.1***           Consent of Counsel, Owen Naccarato (included in Exhibit 5.1.2)
23.2              Consent of Ernst & Young LLP
</TABLE>

*  Previously filed on Form 10-SB September 20, 2000, File No. 0-26604
** Previously filed on Form 10-SB/A November 17, 2000, File No. 0-26604
***Previously filed on Form SB-2 May 1, 2001, File No. 333-59888


                                      II-3




<PAGE>



UNDERTAKINGS

The undersigned registrant hereby undertakes that it will:

Undertaking  (a)

(1) File, during any period in which it offers or sells securities, a
post-effective amendment to this registration statement to:

     (i)   Include any prospectus required by section 10(a)(3) of the Securities
Act of 1933;

     (ii) Reflect in the prospectus any facts or events which, individually or
together, represent a fundamental change in the information set forth in the
registration statement; and arising after the effective date of the registration
statement (or the most recent post-effective amendment thereof) which,
individually or in the aggregate, represent a fundamental change in the
information set forth in the registration statement Notwithstanding the
foregoing, any increase or decrease in volume of securities offered (if the
total dollar value of securities offered would not exceed that which was
registered) and any deviation from the low or high end of the estimated maximum
offering range may be reflected in the form of prospectus filed with the
Commission pursuant to Rule 424(b) ('230.424(b) of this chapter) if, in the
aggregate, the changes in volume and price represent no more than a 20% change
in the maximum aggregate offering price set forth in the "Calculation of the
Registration Fee" table in the effective registration statement.

     (iii) Include any additional or changed material information on the plan of
distribution.

(2) For determining any liability under the Securities Act, treat each
post-effective amendment as a new registration statement of the securities
offered, and the offering of the securities at that time to be the initial bona
fide offering.

(3) File a post-effective amendment to remove from registration any of the
securities that remain unsold at the end of the offering.

Undertaking (e)

                                 Indemnification

     Insofar as indemnification for liabilities arising under the Securities Act
of 1933 (the "Act") may be permitted to directors, officers and controlling
persons of the small business issuer pursuant to the foregoing provisions, or
otherwise, the small business issuer has been advised that in the opinion of the
Securities and Exchange Commission such indemnification is against public policy
as expressed in the Act and is, therefore, unenforceable.

In the event that a claim for indemnification against such liabilities (other
than the payment by the small business issuer of expenses incurred or paid by a
director, officer or controlling person of the small business issuer in the
successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the small business issuer will, unless in the opinion of its counsel
the matter has been settled by controlling precedent, submit to a court of
appropriate jurisdiction the question whether such indemnification by it is
against public policy as expressed in the Securities Act and will be governed by
the final adjudication of such issue.

                                      II-4



<PAGE>



Signatures

In accordance with the requirements of the Securities Act of 1933, the
registrant certifies that it has reasonable grounds to believe that it meets all
of the requirements of filing on Form SB-2 and authorized this registration
statement to be signed on its behalf by the undersigned, in the City of Fairless
Hills, PA 19030.

<TABLE>
<CAPTION>

Registrant:       Digital Descriptor Systems, Inc.

Signature                                   Title                               Date
---------                                   -----                               -----


<S>                                         <C>                                 <C>
By:      /s/Garrett U. Cohn                 Chief Executive Officer,            August 21, 2001
         ---------------------------        Director - Chairman
         Garrett U. Cohn



In accordance with the requirements of the Securities Act of 1933, this
registration statement was signed by the following persons in the capacities and
on the dates indicated:


Signature                                   Title                               Date
---------                                   -----                               ----


By:      /s/Garrett U. Cohn                 Chief Executive Officer,            August 21, 2001
         ---------------------------        Director - Chairman
         Garrett U. Cohn

By:      /s/ Michael Pellegrino             Chief Financial Officer,            August 21, 2001
         ------------------------           Secretary and Director
         Michael Pellegrino

By:      /s/ Myrna L. Cohn  Ph.D            Director                            August 21, 2001
         -----------------------
         Myrna L. Cohn  Ph.D.

By:      /s/ Robert Gowell                  Director                            August 21, 2001
         ------------------
         Robert Gowell

By:      /s/ John J. Boyle                  Director                            August 21, 2001
         ------------------
         John J. Boyle

</TABLE>



                                      II-5

</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-4.1.1
<SEQUENCE>3
<FILENAME>ex4-1_1.txt
<DESCRIPTION>EX-4.1.1
<TEXT>
<PAGE>

                                                                   Exhibit 4.1.1

NEITHER THESE SECURITIES NOR THE SECURITIES INTO WHICH THESE SECURITIES ARE
EXERCISABLE HAVE BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION OR
THE SECURITIES COMMISSION OF ANY STATE IN RELIANCE UPON AN EXEMPTION FROM
REGISTRATION UNDER SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"),
AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO AN EFFECTIVE
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO AN AVAILABLE
EXEMPTION FROM THE REGISTRATION REQUIREMENTS THEREUNDER AND IN COMPLIANCE WITH
APPLICABLE STATE SECURITIES OR BLUE SKY LAWS AS EVIDENCED A LEGAL OPINION OF
COUNSEL TO THE TRANSFEROR TO SUCH EFFECT, THE SUGGESTION OF WHICH SHALL BE
REASONABLY ACCEPTABLE TO THE COMPANY.

                        DIGITAL DESCRIPTOR SYSTEMS, INC.

                                     WARRANT
Warrant No.1                                            Dated: December 28, 2000

         Digital Descriptor Systems, Inc., a Delaware corporation (the
"Company"), hereby certifies that, for value received, AJW Partners, LLC or its
registered assigns ("Holder"), is entitled, subject to the terms set forth
below, to purchase from the Company up to a total of 200,000 shares of common
stock, $0.001 par value per share (the "Common Stock"), of the Company (each
such share, a "Warrant Share" and all such shares, the "Warrant Shares") at an
exercise price equal to $.036 per share (as adjusted from time to time as
provided in Section 8, the "Exercise Price"), at any time and from time to time
from and after the date hereof and through and including December 28, 2003 (the
"Expiration Date"), and subject to the following terms and conditions:

                  1. Registration of Warrant. The Company shall register this
Warrant, upon records to be maintained by the Company for that purpose (the
"Warrant Register"), in the name of the record Holder hereof from time to time.
The Company may deem and treat the registered Holder of this Warrant as the
absolute owner hereof for the purpose of any exercise hereof or any distribution
to the Holder, and for all other purposes, and the Company shall not be affected
by notice to the contrary.

                  2. Registration of Transfers and Exchanges.

                  (a) The Company shall register the transfer of any portion of
this Warrant in the Warrant Register, upon surrender of this Warrant, with the
Form of Assignment attached hereto duly completed and signed, to the Transfer
Agent, the Escrow Agent or to the Company at its address for notice set forth in
Section 12. Upon any such registration or transfer, a new warrant

<PAGE>

to purchase Common Stock, in substantially the form of this Warrant (any such
new warrant, a "New Warrant"), evidencing the portion of this Warrant so
transferred shall be issued to the transferee and New Warrant evidencing the
remaining portion of this Warrant not so transferred, if any, shall be issued to
the transferring Holder. The acceptance of the New Warrant by the transferee
thereof shall be deemed the acceptance of such transferee of all of the rights
and obligations of a holder of a Warrant.

                  (b) This Warrant is exchangeable, upon the surrender hereofby
the Holder to the office of the Company at its address for notice set forth in
Section 12 for one or more New Warrants, evidencing in the aggregate the right
to purchase the number of Warrant Shares which may then be purchased hereunder.
Any such New Warrant will be dated the date of such exchange.

3.       Duration and Exercise of Warrants.

                  (a) This Warrant shall be exercisable by the registered Holder
on any business day before 5:00 P.M., New York City time, at any time and from
time to time on or after the date hereof to and including the Expiration Date.
At 5:00 P.M., New York City time on the Expiration Date, the portion of this
Warrant not exercised prior thereto shall be and become void and of no value.
Prior to the Expiration Date, the Company may not call or otherwise redeem this
Warrant.
                  (b) Upon delivery of an executed Form of Election to Purchase,
together with the grid attached hereto as Annex A duly completed and signed, to
the Escrow Agent at its address set forth in the Escrow Agreement and the
Company at its address for notice set forth in Section 12 and upon payment of
the Exercise Price to the Company multiplied by the number of Warrant Shares
that the Holder intends to purchase hereunder, in the manner provided hereunder,
all as specified by the Holder in the Form of Election to Purchase, the Escrow
Agent shall promptly (but in no event later than 3 business days after the Date
of Exercise (as defined herein) issue or cause to be issued and cause to be
delivered to or upon the written order of the Holder and in such name or names
as the Holder may designate, a certificate for the Warrant Shares issuable upon
such exercise, free of restrictive legends except (i) either in the event that a
registration statement covering the resale of the Warrant Shares and naming the
Holder as a selling stockholder thereunder is not then effective or the Warrant
Shares are not freely transferable without volume restrictions pursuant to Rule
144(k) promulgated under the Securities Act of 1933, as amended (the "Securities
Act"), or (ii) if this Warrant shall have been issued pursuant to a written
agreement between the original Holder and the Company, as required by such
agreement. Any person so designated by the Holder to receive Warrant Shares
shall be deemed to have become holder of record of such Warrant Shares as of the
Date of Exercise of this Warrant. The Company shall, upon request of the Holder,
if available, use its best efforts to deliver Warrant Shares hereunder
electronically through the Depository Trust Corporation or another established
clearing corporation performing similar functions. To effect an exercise
hereunder, the Holder shall not be required to physically surrender this Warrant
to the Company unless all the Warrant Shares have been exercised. Exercises
hereunder shall have the effect of lowering the number of Warrant Shares in an
amount equal to the applicable exercise, which shall be evidenced by entries set
forth in the Exercise Schedule. The Holder and the Company shall maintain
records showing the number of Warrant Shares exercised


                                       -2-


<PAGE>



and the date of such exercises. In the event of any dispute or discrepancy, the
records of the Holder shall be controlling and determinative in the absence of
manifest error. The Holder and any assignee, by acceptance of this Warrant,
acknowledge and agree that, by reason of the provisions of this paragraph,
following exercise of a portion of this Warrant, the number of shares issuable
upon exercise of this Warrant may be less than the amount stated on the face
hereof.

                           A "Date of Exercise" means the date on which the
Escrow Agent shall have received the Form of Election to Purchase completed and
duly signed.

                           (c) This Warrant shall be exercisable, either in its
entirety or, from time to time, for a portion of the number of Warrant Shares.

                  4. Piggyback Registration Rights. This Warrant is subject to
the piggyback registration rights granted under the Registration Rights
Agreement and such piggyback registration rights shall continue until all of the
Holder's Warrant Shares have been sold in accordance with an effective
registration statement or upon the Expiration Date. The Company will pay all
registration expenses in connection therewith.

                  5. Payment of Taxes. The Company will pay all documentary
stamp taxes attributable to the issuance of Warrant Shares upon the exercise of
this Warrant; provided, however, that the Company shall not be required to pay
any tax which may be payable in respect of any transfer involved in the
registration of any certificates for Warrant Shares or Warrants in a name other
than that of the Holder. The Holder shall be responsible for all other tax
liability that may arise as a result of holding or transferring this Warrant or
receiving Warrant Shares upon exercise hereof.

                  6. Replacement of Warrant. If this Warrant is mutilated, lost,
stolen or destroyed, the Company shall issue or cause to be issued in exchange
and substitution for and upon cancellation hereof, or in lieu of and
substitution for this Warrant, a New Warrant, but only upon receipt of evidence
reasonably satisfactory to the Company of such loss, theft or destruction and
indemnity, if requested, satisfactory to it. Applicants for a New Warrant under
such circumstances shall also comply with such other reasonable regulations and
procedures and pay such other reasonable charges as the Company may prescribe.

                  7. Reservation of Warrant Shares. The Company covenants that
it will at all times reserve and keep available out of the aggregate of its
authorized but unissued Common Stock, solely for the purpose of enabling it to
issue Warrant Shares upon exercise of this Warrant as herein provided, the
number of Warrant Shares which are then issuable and deliverable upon the
exercise of this entire Warrant, free from preemptive rights or any other actual
contingent purchase rights of persons other than the Holder (taking into account
the adjustments and restrictions of Section 8). The Company covenants that all
Warrant Shares that shall be so issuable and deliverable shall, upon issuance
and the payment of the applicable Exercise Price in accordance with the terms
hereof, be duly and validly authorized, issued and fully paid and nonassessable.



                                       -3-


<PAGE>



                  8. Certain Adjustments. The Exercise Price and number of
Warrant Shares issuable upon exercise of this Warrant are subject to adjustment
from time to time as set forth in this Section 8.

                           (a) If the Company, at any time while this Warrant is
outstanding,(i) shall pay a stock dividend (except scheduled dividends paid on
outstanding preferred stock as of the date hereof which contain a stated
dividend rate) or otherwise make a distribution or distributions on shares of
its Common Stock or on any other class of capital stock payable in shares of
Common Stock, (ii) subdivide outstanding shares of Common Stock into a larger
number of shares, or (iii) combine outstanding shares of Common Stock into a
smaller number of shares, the Exercise Price shall be multiplied by a fraction
of which the numerator shall be the number of shares of Common Stock (excluding
treasury shares, if any) outstanding before such event and of which the
denominator shall be the number of shares of Common Stock (excluding treasury
shares, if any) outstanding after such event. In such event, the number of
Warrant shares issuable under this Warrant shall be equitably adjusted to
reflect such event (e.g. in the event of a 2:1 stock split of the Common Stock,
the number of Warrant shares shall be increased to twice the number available
for purchase prior to the record date for such stock split). Any adjustment made
pursuant to this Section shall become effective immediately after the record
date for the determination of stockholders entitled to receive such dividend or
distribution and shall become effective immediately after the effective date in
the case of a subdivision or combination, and shall apply to successive
subdivisions and combinations.

                           (b) In case of any reclassification of the Common
Stock or any compulsory share exchange pursuant to which the Common Stock is
converted into other securities, cash or property, then the Holder shall have
the right thereafter to exercise this Warrant only into the shares of stock and
other securities and property receivable upon or deemed to be held by holders of
Common Stock following such reclassification or share exchange, and the Holder
shall be entitled upon such event to receive such amount of securities or
property equal to the amount of Warrant Shares such Holder would have been
entitled to had such Holder exercised this Warrant immediately prior to such
reclassification or share exchange. The terms of any such reclassification or
share exchange shall include such terms so as to continue to give to the Holder
the right to receive the securities or property set forth in this Section 8(b)
upon any exercise following any such reclassification or share exchange.

                           (c) If the Company, at any time while this Warrant is
outstanding, shall distribute to all holders of Common Stock (and not to holders
of this Warrant) evidences of its indebtedness or assets or rights or warrants
to subscribe for or purchase any security (excluding those referred to in
Sections 8(a), (b) and (d)), then in each such case the Exercise Price shall be
determined by multiplying the Exercise Price in effect immediately prior to the
record date fixed for determination of stockholders entitled to receive such
distribution by a fraction of which the denominator shall be the Exercise Price
determined as of the record date mentioned above, and of which the numerator
shall be such Exercise Price on such record date less the then fair market value
at such record date of the portion of such assets or evidence of indebtedness so
distributed applicable to one outstanding share of Common Stock as determined by
the Company's independent certified public accountants that regularly examines
the financial statements of the Company (an "Appraiser").

                                       -4-

<PAGE>

                           (d) If the Company or any subsidiary thereof, as
applicable with respect to Common Stock Equivalents (as defined below), at any
time while this Warrant is outstanding, shall issue shares of Common Stock or
rights, warrants, options or other securities or debt that is convertible into
or exchangeable for shares of Common Stock ("Common Stock Equivalents")
entitling any Person to acquire shares of Common Stock, at a price per share
less than the Exercise Price (if the holder of the Common Stock or Common Stock
Equivalent so issued shall at any time, whether by operation of purchase price
adjustments, reset provisions, floating conversion, exercise or exchange prices
or otherwise, or due to warrants, options or rights issued in connection with
such issuance, be entitled to receive shares of Common Stock at a price less
than the Exercise Price, such issuance shall be deemed to have occurred for less
than the Exercise Price), then, at the option of the Holder, the Exercise Price
shall be replaced with the conversion, exchange or purchase price for such
Common Stock or Common Stock Equivalents (including any reset provisions
thereof) at issue. Such adjustment shall be made whenever such Common Stock or
Common Stock Equivalents are issued. The Company shall notify the Holder in
writing, no later than the business day following the issuance of any Common
Stock or Common Stock Equivalent subject to this section, indicating therein the
applicable issuance price, or of applicable reset price, exchange price,
conversion price and other pricing terms

                           (e) In case of any (1) merger or consolidation of
the Company with or into another Person, or (2) sale by the Company of more than
one-half of the assets of the Company (on a book value basis) in one or a series
of related transactions, the Holder shall have the right thereafter to (A)
exercise this Warrant for the shares of stock and other securities, cash and
property receivable upon or deemed to be held by holders of Common Stock
following such merger, consolidation or sale, and the Holder shall be entitled
upon such event or series of related events to receive such amount of
securities, cash and property as the Common Stock for which this Warrant could
have been exercised immediately prior to such merger, consolidation or sales
would have been entitled or (B) in the case of a merger or consolidation, (x)
require the surviving entity to issue common stock purchase warrants equal to
the number Warrant Shares to which this Warrant then permits, which newly
warrant shall be identical to this Warrant, and (y) simultaneously with the
issuance of such warrant, the Holder of such warrant shall have the right to
exercise such warrant only into shares of stock and other securities, cash and
property receivable upon or deemed to be held by holders of Common Stock
following such merger or consolidation or (C) require the surviving entity from
such merger, acquisition or business combination to pay to the Holder, in cash,
the Black Scholes value of this Warrant. In the case of clause (B), the exercise
price for such new warrant shall be based upon the amount of securities, cash
and property that each share of Common Stock would receive in such transaction
and the Exercise Price of this Warrant immediately prior to the effectiveness or
closing date for such transaction. The terms of any such merger, sale or
consolidation shall include such terms so as continue to give the Holder the
right to receive the securities, cash and property set forth in this Section
upon any conversion or redemption following such event. This provision shall
similarly apply to successive such events.

                           (f) For the purposes of this Section 8, the following
clauses shall also be applicable:




                                       -5-


<PAGE>



                                    (i) Record Date. In case the Company shall
take a record of the holders of its Common Stock for the purpose of entitling
them (A) to receive a dividend or other distribution payable in Common Stock or
in securities convertible or exchangeable into shares of Common Stock, or (B) to
subscribe for or purchase Common Stock or securities convertible or exchangeable
into shares of Common Stock, then such record date shall be deemed to be the
date of the issue or sale of the shares of Common Stock deemed to have been
issued or sold upon the declaration of such dividend or the making of such other
distribution or the date of the granting of such right of subscription or
purchase, as the case may be.

                                    (ii) Treasury Shares. The number of shares
of Common Stock outstanding at any given time shall not include shares owned or
held by or for the account of the Company, and the disposition of any such
shares shall be considered an issue or sale of Common Stock.

                           (g) All calculations under this Section 8 shall be
made to the nearest cent or the nearest 1/100th of a share, as the case may be.

                           (h) Whenever the Exercise Price is adjusted pursuant
to Section 8(c) above, the Holder, after receipt of the determination by the
Appraiser, shall have the right to select an additional appraiser (which shall
be a nationally recognized accounting firm), in which case the adjustment shall
be equal to the average of the adjustments recommended by each of the Appraiser
and such appraiser. The Holder shall promptly mail or cause to be mailed to the
Company, a notice setting forth the Exercise Price after such adjustment and
setting forth a brief statement of the facts requiring such adjustment. Such
adjustment shall become effective immediately after the record date mentioned
above.

                           (i)      If:

                                    (i)     the Company shall declare a dividend
                                            (or any other distribution) on its
                                            Common Stock; or

                                    (ii)    the Company shall declare a special
                                            nonrecurring cash dividend on or a
                                            redemption of its Common Stock; or

                                    (iii)   the Company shall authorize the
                                            granting to all holders of the
                                            Common Stock rights or warrants to
                                            subscribe for or purchase any shares
                                            of capital stock of any class or of
                                            any rights; or

                                    (iv)    the approval of any stockholders of
                                            the Company shall be required in
                                            connection with any reclassification
                                            of the Common Stock, any
                                            consolidation or merger to which the
                                            Company is a party, any sale or
                                            transfer of all or substantially all
                                            of the assets of the Company, or any
                                            compulsory share exchange whereby
                                            the Common Stock is converted into
                                            other securities, cash or property;
                                            or

                                       -6-

<PAGE>



                                    (v)     the Company shall authorize the
                                            voluntary dissolution, liquidation
                                            or winding up of the affairs of the
                                            Company,

then the Company shall cause to be mailed to each Holder at their last addresses
as they shall appear upon the Warrant Register, at least 20 calendar days prior
to the applicable record or effective date hereinafter specified, a notice
stating (x) the date on which a record is to be taken for the purpose of such
dividend, distribution, redemption, rights or warrants, or if a record is not to
be taken, the date as of which the holders of Common Stock of record to be
entitled to such dividend, distributions, redemption, rights or warrants are to
be determined or (y) the date on which such reclassification, consolidation,
merger, sale, transfer or share exchange is expected to become effective or
close, and the date as of which it is expected that holders of Common Stock of
record shall be entitled to exchange their shares of Common Stock for
securities, cash or other property deliverable upon such reclassification,
consolidation, merger, sale, transfer, share exchange, dissolution, liquidation
or winding up; Qrovided, however, that the failure to mail such notice or any
defect therein or in the mailing thereof shall not affect the validity of the
corporate action required to be specified in such notice.

                           (j) Upon each adjustment of the Exercise Price
pursuant to Section 8 hereof, the number of shares of Common Stock purchasable
upon exercise of this Warrant shall be adjusted to the number of shares of
Common Stock, calculated to the nearest one-hundredth of a share, obtained by
(i) multiplying the number of shares of Common Stock purchasable immediately
prior to such adjustment upon the exercise of this Warrant by the Exercise Price
in effect prior to such adjustment, and (ii) dividing the product so obtained by
the Exercise Price in effect after such adjustment of the Exercise Price.

                  9. Payment of Exercise Price. The Holder shall pay the
Exercise Price in one of the following manners:

                           (a)      Cash Exercise. The Holder may deliver
immediately available funds; or

                           (b)      Cashless Exercise. At any time after the
earlier to occur of the Effectiveness Date (as defined in the Registration
Rights Agreement) and the date the initial registration statement filed pursuant
to the Registration Rights Agreement is declared effective by the Commission,
when a registration statement covering the resale of the Warrant Shares and
naming the Holder as a selling stockholder thereunder is not then effective,
then the Holder may indicate in the Form of Election to Purchase its election to
utilize a "net" or "cashless" exercise to pay for Warrant Shares, and the
Company shall issue to the Holder the number of Warrant Shares determined as
follows:

                             X = Y [(A-B)/A] where:

                                       -7-




<PAGE>



                                            X = the number of Warrant Shares
                                            to be issued to the Holder.

                                            Y = the number of Warrant Shares
                                            with respect to which this Warrant
                                            is being exercised.

                                            A = the average of the closing sale
                                            prices of the Common Stock for the
                                            five (5) trading days immediately
                                            prior to (but not including) the
                                            Date of Exercise.

                                            B = the Exercise Price.

For purposes of Rule 144 promulgated under the Securities Act, it is intended,
understood and acknowledged that the Warrant Shares issued in a cashless
exercise transaction shall be deemed to have been acquired by the Holder, and
the holding period for the Warrant Shares shall be deemed to have been
commenced, on the issue date.

                  10.      Certain Exercise Restrictions.

                           (a)      A Holder may not exercise this Warrant to
the extent such exercise would result in the Holder, together with any affiliate
thereof, beneficially owning (as determined in accordance with Section 13(d) of
the Securities Exchange Act of 1934, as amended (the "Exchange Act") and the
rules promulgated thereunder) in excess of 4.999% of the then issued and
outstanding shares of Common Stock, including shares issuable upon such exercise
and held by such Holder after application of this Section. Since the Holder will
not be obligated to report to the Company the number of shares of Common Stock
it may hold at the time of an exercise hereunder, unless the exercise at issue
would result in the issuance of shares of Common Stock in excess of 4.999% of
the then outstanding shares of Common Stock without regard to any other shares
which may be beneficially owned by the Holder or an affiliate thereof, the
Holder shall have the authority and obligation to determine whether the
restriction contained in this Section will limit any particular exercise
hereunder and to the extent that the Holder determines that the limitation
contained in this Section applies, the determination of which portion of this
Warrant is exercisable shall be the responsibility and obligation of the Holder.
If the Holder has delivered a Form of Election to Purchase for a number of
Warrant Shares that, without regard to any other shares that the Holder or its
affiliates may beneficially own, would result in the issuance in excess of the
permitted amount hereunder, the Company shall notify the Holder of this fact and
shall honor the exercise for the maximum portion of this Warrant permitted to be
exercised on such Date of Exercise in accordance with the periods described
herein and, at the option of the Holder, either keep the portion of the Warrant
tendered for exercise in excess of the permitted amount hereunder for future
exercises or return such excess portion of the Warrant to the Holder. The
provisions of this Section may be waived by a Holder (but only as to itself and
not to any other Holder) upon not less than 61 days prior notice to the Company.
Other Holders shall be unaffected by any such waiver.

                                       -8-

<PAGE>


                           (b)      A Holder may not exercise this Warrant to
the extent such exercise would result in the Holder, together with any affiliate
thereof, beneficially owning (as determined in accordance with Section 13(d) of
the Exchange Act and the rules promulgated thereunder) in excess of 9.999% of
the then issued and outstanding shares of Common Stock, including shares
issuable upon such exercise and held by such Holder after application of this
Section. Since the Holder will not be obligated to report to the Company the
number of shares of Common Stock it may hold at the time of an exercise
hereunder, unless the exercise at issue would result in the issuance of shares
of Common Stock in excess of 9.999% of the then outstanding shares of Common
Stock without regard to any other shares which may be beneficially owned by the
Holder or an affiliate thereof, the Holder shall have the authority and
obligation to determine whether the restriction contained in this Section will
limit any particular exercise hereunder and to the extent that the Holder
determines that the limitation contained in this Section applies, the
determination of which portion of this Warrant is exercisable shall be the
responsibility and obligation of the Holder. If the Holder has delivered a Form
of Election to Purchase for a number of Warrant Shares that, without regard to
any other shares that the Holder or its affiliates may beneficially own, would
result in the issuance in excess of the permitted amount hereunder, the Company
shall notify the Holder of this fact and shall honor the exercise for the
maximum portion of this Warrant permitted to be exercised on such Date of
Exercise in accordance with the periods described herein and, at the option of
the Holder, either keep the portion of the Warrant tendered for exercise in
excess of the permitted amount hereunder for future exercises or return such
excess portion of the Warrant to the Holder. The provisions of this Section may
be waived by a Holder (but only as to itself and not to any other Holder) upon
not less than 61 days prior notice to the Company. Other Holders shall be
unaffected by any such waiver.

                  11. Fractional Shares. The Company shall not be required to
issue or cause to be issued fractional Warrant Shares on the exercise of this
Warrant. The number of full Warrant Shares which shall be issuable upon the
exercise of this Warrant shall be computed on the basis of the aggregate number
of Warrant Shares purchasable on exercise of this Warrant so presented. If any
fraction of a Warrant Share would, except for the provisions of this Section, be
issuable on the exercise of this Warrant, the Company shall pay an amount in
cash equal to the Exercise Price multiplied by such fraction.

                  12. Notices. Any and all notices or other communications or
deliveries hereunder shall be in writing and shall be deemed given and effective
on the earliest of (i) the date of transmission, if such notice or communication
is delivered via facsimile at the facsimile telephone number specified in this
Section prior to 5:00 p.m. (New York City time) on a business day, (ii) the
business day after the date of transmission, if such notice or communication is
delivered via facsimile at the facsimile telephone number specified in this
Section later than 5:00 p.m. (New York City time) on any date and earlier than
11:59 p.m. (New York City time) on such date, (iii) the business day following
the date of mailing, if sent by nationally recognized overnight courier service,
or (iv) upon actual receipt by the party to whom such notice is required to be
given. The addresses for such communications shall be: (i) if to the Company, to
446 Lincoln Highway, Fairless Hills, P A 19030 facsimile: (267) 580-1090,
attention: Michael J. Pellegrino, or (ii) if to the Holder, to the Holder at the
address or facsimile number appearing on the Warrant Register or such other
address or facsimile number as the Holder may provide to the Company in
accordance with this Section.


                                       -9-

<PAGE>

                  13. Warrant Agent. The Company shall serve as warrant agent
under this Warrant. Upon thirty (30) days' notice to the Holder, the Company may
appoint a new warrant agent. Any corporation into which the Company or any new
warrant agent may be merged or any corporation resulting from any consolidation
to which the Company or any new warrant agent shall be a party or any
corporation to which the Company or any new warrant agent transfers
substantially all of its corporate trust or shareholders services business shall
be a successor warrant agent under this Warrant without any further act. Any
such successor warrant agent shall promptly cause notice of its succession as
warrant agent to be mailed (by first class mail, postage prepaid) to the Holder
at the Holder's last address as shown on the Warrant Register.

                  14. Miscellaneous.

                           (a)      This Warrant shall be binding on and inure
to the benefit of the parties hereto and their respective successors and
assigns. This Warrant may be amended only in writing signed by the Company and
the Holder and their successors and assigns.

                           (b)      Subject to Section 14(a), above, nothing in
this Warrant shall be construed to give to any person or corporation other than
the Company and the Holder any legal or equitable right, remedy or cause under
this Warrant. This Warrant shall inure to the sole and exclusive benefit of the
Company and the Holder.

                           (c)      The corporate laws of the State of Delaware
shall govern all issues concerning the relative rights of the Company and its
stockholders. All other questions concerning the construction, validity,
enforcement and interpretation of this Warrant shall be governed by and
construed and enforced in accordance with the internal laws of the State of New
York, without regard to the principles of conflicts of law thereof. The Company
and the Holder hereby irrevocably submit to the exclusive jurisdiction of the
state and federal courts sitting in the City of New York, borough of Manhattan,
for the adjudication of any dispute hereunder or in connection herewith or with
any transaction contemplated hereby or discussed herein, and hereby irrevocably
waives, and agrees not to assert in any suit, action or proceeding, any claim
that it is not personally subject to the jurisdiction of any such court, or that
such suit, action or proceeding is improper. Each of the Company and the Holder
hereby irrevocably waives personal service of process and consents to process
being served in any such suit, action or proceeding by receiving a copy thereof
sent to the Company at the address in effect for notices to it under this
instrument and agrees that such service shall constitute good and sufficient
service of process and notice thereof. Nothing contained herein shall be deemed
to limit in any way any right to serve process in any manner permitted by law.
Each party irrevocably waives, to the fullest extent permitted by applicable
law, any and all right to trial by jury in any legal proceeding arising out of
or relating to this Agreement or the transactions contemplated hereby. If either
party shall commence an action or proceeding to enforce any provisions of this
Warrant, then the prevailing party in such action or proceeding shall be
reimbursed by the other party for its' attorneys fees and other costs and
expenses incurred with the investigation, preparation and prosecution of such
action or proceeding.

                           (d)      The headings herein are for convenience
only, do not constitute a part of this Warrant and shall not be deemed to limit
or affect any of the provisions hereof.

                                      -10-

<PAGE>

                           (e)      In case anyone or more of the provisions of
this Warrant shall be invalid or unenforceable in any respect, the validity and
enforceability of the remaining terms and provisions of this Warrant shall not
in any way be affected or impaired thereby and the parties will attempt in good
faith to agree upon a valid and enforceable provision which shall be a
commercially reasonable substitute therefor, and upon so agreeing, shall
incorporate such substitute provision in this Warrant.

                  [REMAINDER OF PAGE INTENTIONALLY LEFT BLANK,
                             SIGNATURE PAGE FOLLOWS]
















                                       -11-


<PAGE>



                  IN WITNESS WHEREOF, the Company has caused this Warrant to be
duly executed by its authorized officer as of the date first indicated above.


                                              DIGITAL DESCRIPTOR SYSTEMS, INC.



                                              By: /s/Michael J. Pellegrino
                                                  -------------------------
                                              Name: Michael J. Pellegrino
                                              Title:   Chief Financial Officer



<PAGE>



                          FORM OF ELECTION TO PURCHASE

(To be executed by the Holder to exercise  the right to purchase  shares of
Common Stock under the Warrant to which this form applies, issued by Digital
Descriptor Systems, Inc. ("Digital")

To Digital Descriptor Systems, Inc.:

The undersigned hereby irrevocably elects to purchase _________________shares of
common stock, $0.001 par value per share, of Digital (the "Common Stock") and,
if such Holder is not utilizing the cashless exercise provisions set forth in
this Warrant, encloses herewith $______ in cash, certified or official bank
check or checks, which sum represents the aggregate Exercise Price (as defined
in the Warrant) for the number of shares of Common Stock to which this Form of
Election to Purchase relates, together with any applicable taxes payable by the
undersigned pursuant to the Warrant.

The undersigned requests that certificates for the shares of Common Stock
issuable upon this exercise be issued in the name of

                                          PLEASE INSERT SOCIAL SECURITY
                                          OR TAX IDENTIFICATION NUMBER


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


---------------------------------------------------------------------------
                         (Please print name and address)



Dated:  __________, ____              Name of Holder:

                                         (Print)____________________________

                                         (By)______________________________
                                         (Name:)
                                         (Title:)
                                         (Signature must conform in all respects
                                         to name of holder as specified on the
                                         face of the Warrant)










<PAGE>

                               FORM OF ASSIGNMENT

           [To be completed and signed only upon transfer of Warrant)

         FOR VALUE RECEIVED, the undersigned hereby sells, assigns and transfers
unto ________________________________the right represented by the within Warrant
to purchase _________shares of Common Stock of Digital Descriptor Systems, Inc.
to which the within Warrant relates and appoints _______________ attorney to
transfer said right on the books of Digital Descriptor Systems, Inc. with full
power of substitution in the premises.

Dated:

---------------, ------



                                       -------------------------------------
                                       (Signature must conform in all respects
                                       to name of holder as specified on the
                                       face of the Warrant)


                                       --------------------------------------
                                       Address of Transferee

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

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





In the presence of:


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









<PAGE>



                                     Annex A
<TABLE>
<CAPTION>


-------------------------------- ----------------------------- ----------------------------- -----------------------------
             Date                      Number of Warrant              Number of Warrant             Number of Warrant
                                    Shares Available to be            Shares Exercised             Shares Remaining to
                                          Exercised                                                    be Exercised
-------------------------------- ----------------------------- ----------------------------- -----------------------------
<S>     <C>                      <C>                               <C>                          <C>


















-------------------------------- ----------------------------- ----------------------------- -----------------------------
</TABLE>

















</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-4.1.2
<SEQUENCE>4
<FILENAME>ex4-1_2.txt
<DESCRIPTION>EX-4.1.2
<TEXT>
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                                                                   Exhibit 4.1.2

NEITHER THESE SECURITIES NOR THE SECURITIES INTO WHICH THESE SECURITIES ARE
EXERCISABLE HAVE BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION OR
THE SECURITIES COMMISSION OF ANY STATE IN RELIANCE UPON AN EXEMPTION FROM
REGISTRATION UNDER SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"),
AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO AN EFFECTIVE
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO AN AVAILABLE
EXEMPTION FROM THE REGISTRATION REQ UlREMENTS THERE UND ER AND IN CO MPLIAN CE
WITH APPLICABLE ST ATE SECURITIES OR BLUE SKY LA WS AS EVIDENCED A LEGAL OPINION
OF COUNSEL TO THE TRANSFEROR TO SUCH EFFECT, THE SUGGESTION OF WHICH SHALL BE
REASONABL Y ACCEPT ABLE TO THE COMPANY.

                        DIGITAL DESCRIPTOR SYSTEMS, INC.

                                     WARRANT
Warrant No.2                                            Dated: December 28, 2000

         Digital Descriptor Systems, Inc., a Delaware corporation (the
"Company"), hereby certifies that, for value received, New Millennium Capital
Partners II, LLC or its registered assigns ("Holder"), is entitled, subject to
the terms set forth below, to purchase from the Company up to a total of 200,000
shares of common stock, $0.001 par value per share (the "Common Stock"), of the
Company ( each such share, a "Warrant Share" and all such shares, the "Warrant
Shares") at an exercise price equal to $.036 per share (as adjusted from time to
time as provided in Section 8, the "Exercise Price"), at any time and from time
to time from and after the date hereof and through and including December
28,2003 (the "Expiration Date"), and subject to the following terms and
conditions:

         1.  Registration of Warrant. The Company shall register this Warrant,
upon records to be maintained by the Company for that purpose (the "Warrant
Register"), in the name of the record Holder hereof from time to time. The
Company may deem and treat the registered Holder of this Warrant as the absolute
owner hereof for the purpose of any exercise hereof or any distribution to the
Holder, and for all other purposes, and the Company shall not be affected by
notice to the contrary.

         2.  Registration of Transfers and Exchanges.

             (a) The Company shall register the transfer of any portion of this
Warrant in the Warrant Register, upon surrender of this Warrant, with the Form
of Assignment attached hereto duly completed and signed, to the Transfer Agent,
the Escrow Agent or to the Company at its address for notice set forth in
Section 12. Upon any such registration or transfer, a new warrant to purchase
Common Stock, in substantially the form of this Warrant (any such new warrant, a

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"New Warrant"), evidencing the portion of this Warrant so transferred shall be
issued to the transferee and New Warrant evidencing the remaining portion of
this Warrant not so transferred, if any, shall be issued to the transferring
Holder. The acceptance of the New Warrant by the transferee thereof shall be
deemed the acceptance of such transferee of all of the rights and obligations of
a holder of a Warrant.

             (b) This Warrant is exchangeable, upon the surrender hereofby the
Holder to the office of the Company at its address for notice set forth in
Section 12 for one or more New Warrants, evidencing in the aggregate the right
to purchase the number of Warrant Shares which may then be purchased hereunder.
Any such New Warrant will be dated the date of such exchange.

         3.  Duration and Exercise of Warrants.

             (a) This Warrant shall be exercisable by the registered Holder on
any business day before 5:00 P.M., New York City time, at any time and from time
to time on or after the date hereof to and including the Expiration Date. At
5:00 P.M., New York City time on the Expiration Date, the portion of this
Warrant not exercised prior thereto shall be and become void and of no value.
Prior to the Expiration Date, the Company may not call or otherwise redeem this
Warrant.

             (b) Upon delivery of an executed Form of Election to Purchase,
together with the grid attached hereto as Annex A duly completed and signed, to
the Escrow Agent at its address set forth in the Escrow Agreement and the
Company at its address for notice set forth in Section 12 and upon payment of
the Exercise Price to the Company multiplied by the number of Warrant Shares
that the Holder intends to purchase hereunder, in the manner provided hereunder,
all as specified by the Holder in the Form of Election to Purchase, the Escrow
Agent shall promptly (but in no event later than 3 business days after the Date
of Exercise (as defined herein>> issue or cause to be issued and cause to be
delivered to or upon the written order of the Holder and in such name or names
as the Holder may designate, a certificate for the Warrant Shares issuable upon
such exercise, free of restrictive legends except (i) either in the event that a
registration statement covering the resale of the Warrant Shares and naming the
Holder as a selling stockholder thereunder is not then effective or the Warrant
Shares are not freely transferable without volume restrictions pursuant to Rule
144(k) promulgated under the Securities Act of 1933, as amended (the "Securities
Act"), or (ii) if this Warrant shall have been issued pursuant to a written
agreement between the original Holder and the Company, as required by such
agreement. Any person so designated by the Holder to receive Warrant Shares
shall be deemed to have become holder of record of such Warrant Shares as of the
Date of Exercise of this Warrant. The Company shall, upon request of the Holder,
if available, use its best efforts to deliver Warrant Shares hereunder
electronically through the Depository Trust Corporation or another established
clearing corporation performing similar functions. To effect an exercise
hereunder, the Holder shall not be required to physically surrender this Warrant
to the Company unless all the Warrant Shares have been exercised. Exercises
hereunder shall have the effect of lowering the number of Warrant Shares in an
amount equal to the applicable exercise, which shall be evidenced by entries set
forth in the Exercise Schedule. The Holder and the Company shall maintain
records showing the number of Warrant Shares exercised


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and the date of such exercises. In the event of any dispute or discrepancy, the
records of the Holder shall be controlling and determinative in the absence of
manifest error. The Holder and any assignee, by acceptance of this Warrant,
acknowledge and agree that, by reason of the provisions of this paragraph,
following exercise of a portion of this Warrant, the number of shares issuable
upon exercise of this Warrant may be less than the amount stated on the face
hereof.

         A "Date of Exercise" means the date on which the Escrow Agent shall
have received the Form of Election to Purchase completed and duly signed.

             (c) This Warrant shall be exercisable, either in its entirety or,
from time to time, for a portion of the number of Warrant Shares.

         4.  Piggyback Registration Rights. This Warrant is subject to the
piggyback registration rights granted under the Registration Rights Agreement
and such piggyback registration rights shall continue until all of the Holder's
Warrant Shares have been sold in accordance with an effective registration
statement or upon the Expiration Date. The Company will pay all registration
expenses in connection therewith.

         5.  Payment of Taxes. The Company will pay all documentary stamp taxes
attributable to the issuance of Warrant Shares upon the exercise of this
Warrant; provided, however, that the Company shall not be required to pay any
tax which may be payable in respect of any transfer involved in the registration
of any certificates for Warrant Shares or Warrants in a name other than that of
the Holder. The Holder shall be responsible for all other tax liability that may
arise as a result of holding or transferring this Warrant or receiving Warrant
Shares upon exercise hereof.

         6.  Replacement of Warrant. If this Warrant is mutilated, lost, stolen
or destroyed, the Company shall issue or cause to be issued in exchange and
substitution for and upon cancellation hereof, or in lieu of and substitution
for this Warrant, a New Warrant, but only upon receipt of evidence reasonably
satisfactory to the Company of such loss, theft or destruction and indemnity, if
requested, satisfactory to it. Applicants for a New Warrant under such
circumstances shall also comply with such other reasonable regulations and
procedures and pay such other reasonable charges as the Company may prescribe.

         7.  Reservation of Warrant Shares. The Company covenants that it will
at all times reserve and keep available out of the aggregate of its authorized
but unissued Common Stock, solely for the purpose of enabling it to issue
Warrant Shares upon exercise of this Warrant as herein provided, the number of
Warrant Shares which are then issuable and deliverable upon the exercise of this
entire Warrant, free from preemptive rights or any other actual contingent
purchase rights of persons other than the Holder (taking into account the
adjustments and restrictions of Section 8). The Company covenants that all
Warrant Shares that shall be so issuable and deliverable shall, upon issuance
and the payment of the applicable Exercise Price in accordance with the terms
hereof, be duly and validly authorized, issued and fully paid and nonassessable.



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         8.  Certain Adjustments. The Exercise Price and number of Warrant
Shares issuable upon exercise of this Warrant are subject to adjustment from
time to time as set forth in this Section 8.

             (a) If the Company, at any time while this Warrant is
outstanding,(i) shall pay a stock dividend (except scheduled dividends paid on
outstanding preferred stock as of the date hereof which contain a stated
dividend rate) or otherwise make a distribution or distributions on shares of
its Common Stock or on any other class of capital stock payable in shares of
Common Stock, (ii) subdivide outstanding shares of Common Stock into a larger
number of shares, or (iii) combine outstanding shares of Common Stock into a
smaller number of shares, the Exercise Price shall be multiplied by a fraction
of which the numerator shall be the number of shares of Common Stock (excluding
treasury shares, if any) outstanding before such event and of which the
denominator shall be the number of shares of Common Stock ( excluding treasury
shares, if any) outstanding after such event. In such event, the number of
Warrant shares issuable under this Warrant shall be equitably adjusted to
reflect such event (e.g. in the event of a 2: 1 stock split of the Common Stock,
the number of Warrant shares shall be increased to twice the number available
for purchase prior to the record date for such stock split). Any adjustment made
pursuant to this Section shall become effective immediately after the record
date for the determination of stockholders entitled to receive such dividend or
distribution and shall become effective immediately after the effective date in
the case of a subdivision or combination, and shall apply to successive
subdivisions and combinations.

             (b) In case of any reclassification of the Common Stock or any
compulsory share exchange pursuant to which the Common Stock is converted into
other securities, cash or property, then the Holder shall have the right
thereafter to exercise this Warrant only into the shares of stock and other
securities and property receivable upon or deemed to be held by holders of
Common Stock following such reclassification or share exchange, and the Holder
shall be entitled upon such event to receive such amount of securities or
property equal to the amount of Warrant Shares such Holder would have been
entitled to had such Holder exercised this Warrant immediately prior to such
reclassification or share exchange. The terms of any such reclassification or
share exchange shall include such terms so as to continue to give to the Holder
the right to receive the securities or property set forth in this Section 8(b)
upon any exercise following any such reclassification or share exchange.

             (c) If the Company, at any time while this Warrant is outstanding,
shall distribute to all holders of Common Stock (and not to holders of this
Warrant) evidences of its indebtedness or assets or rights or warrants to
subscribe for or purchase any security ( excluding those referred to in Sections
8(a), (b) and (d)), then in each such case the Exercise Price shall be
determined by multiplying the Exercise Price in effect immediately prior to the
record date fixed for determination of stockholders entitled to receive such
distribution by a fraction of which the denominator shall be the Exercise Price
determined as of the record date mentioned above, and of which the numerator
shall be such Exercise Price on such record date less the then fair market value
at such record date of the portion of such assets or evidence of indebtedness so
distributed applicable to one outstanding share of Common Stock as determined by
the Company's independent certified public accountants that regularly examines
the financial statements of the Company (an "Appraiser").

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             (d) If the Company or any subsidiary thereof, as applicable with
respect to Common Stock Equivalents (as defined below), at any time while this
Warrant is outstanding, shall issue shares of Common Stock or rights, warrants,
options or other securities or debt that is convertible into or exchangeable for
shares of Common Stock ("Common Stock Equivalents") entitling any Person to
acquire shares of Common Stock, at a price per share less than the Exercise
Price (if the holder of the Common Stock or Common Stock Equivalent so issued
shall at any time, whether by operation of purchase price adjustments, reset
provisions, floating conversion, exercise or exchange prices or otherwise, or
due to warrants, options or rights issued in connection with such issuance, be
entitled to receive shares of Common Stock at a price less than the Exercise
Price, such issuance shall be deemed to have occurred for less than the Exercise
Price), then, at the option of the Holder, the Exercise Price shall be replaced
with the conversion, exchange or purchase price for such Common Stock or Common
Stock Equivalents (including any reset provisions thereof) at issue. Such
adjustment shall be made whenever such Common Stock or Common Stock Equivalents
are issued. The Company shall notify the Holder in writing, no later than the
business day following the issuance of any Common Stock or Common Stock
Equivalent subject to this section, indicating therein the applicable issuance
price, or of applicable reset price, exchange price, conversion price and other
pricing terms

             (e) In case of any ( 1) merger or consolidation of the Company with
or into another Person, or (2) sale by the Company of more than one-half of the
assets of the Company (on a book value basis) in one or a series of related
transactions, the Holder shall have the right thereafter to (A) exercise this
Warrant for the shares of stock and other securities, cash and property
receivable upon or deemed to be held by holders of Common Stock following such
merger, consolidation or sale, and the Holder shall be entitled upon such event
or series of related events to receive such amount of securities, cash and
property as the Common Stock for which this Warrant could have been exercised
immediately prior to such merger, consolidation or sales would have been
entitled or (B) in the case of a merger or consolidation, (x) require the
surviving entity to issue common stock purchase warrants equal to the number
Warrant Shares to which this Warrant then permits, which newly warrant shall be
identical to this Warrant, and (y) simultaneously with the issuance of such
warrant, the Holder of such warrant shall have the right to exercise such
warrant only into shares of stock and other securities, cash and property
receivable upon or deemed to be held by holders of Common Stock following such
merger or consolidation or (C) require the surviving entity from such merger,
acquisition or business combination to pay to the Holder, in cash, the Black
Scholes value of this Warrant. In the case of clause (B), the exercise price for
such new warrant shall be based upon the amount of securities, cash and property
that each share of Common Stock would receive in such transaction and the
Exercise Price of this Warrant immediately prior to the effectiveness or closing
date for such transaction. The terms of any such merger, sale or consolidation
shall include such terms so as continue to give the Holder the right to receive
the securities, cash and property set forth in this Section upon any conversion
or redemption following such event. This provision shall similarly apply to
successive such events.

             (f) For the purposes of this Section 8, the following clauses shall
also be applicable:




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                 (i) Record Date. In case the Company shall take a record of the
holders of its Common Stock for the purpose of entitling them (A) to receive a
dividend or other distribution payable in Common Stock or in securities
convertible or exchangeable into shares of Common Stock, or (B) to subscribe for
or purchase Common Stock or securities convertible or exchangeable into shares
of Common Stock, then such record date shall be deemed to be the date of the
issue or sale of the shares of Common Stock deemed to have been issued or sold
upon the declaration of such dividend or the making of such other distribution
or the date of the granting of such right of subscription or purchase, as the
case may be.

                 (ii) Treasury Shares. The number of shares of Common Stock
outstanding at any given time shall not include shares owned or held by or for
the account of the Company, and the disposition of any such shares shall be
considered an issue or sale of Common Stock.

             (g) All calculations under this Section 8 shall be made to the
nearest cent or the nearest 1/100th of a share, as the case may be.

             (h) Whenever the Exercise Price is adjusted pursuant to Section
8(c) above, the Holder, after receipt of the determination by the Appraiser,
shall have the right to select an additional appraiser (which shall be a
nationally recognized accounting firm), in which case the adjustment shall be
equal to the average of the adjustments recommended by each of the Appraiser and
such appraiser. The Holder shall promptly mail or cause to be mailed to the
Company, a notice setting forth the Exercise Price after such adjustment and
setting forth a brief statement of the facts requiring such adjustment. Such
adjustment shall become effective immediately after the record date mentioned
above.

             (i) If:

                 (i)   the Company shall declare a dividend (or any other
                       distribution) on its Common Stock; or

                 (ii)  the Company shall declare a special nonrecurring cash
                       dividend on or a redemption of its Common Stock; or

                 (iii) the Company shall authorize the granting to all holders
                       of the Common Stock rights or warrants to subscribe for
                       or purchase any shares of capital stock of any class or
                       of any rights; or

                 (iv)  the approval of any stockholders of the Company shall be
                       required in connection with any reclassification of the
                       Common Stock, any consolidation or merger to which the
                       Company is a party, any sale or transfer of all or
                       substantially all of the assets of the Company, or any
                       compulsory share exchange whereby the Common Stock is
                       converted into other securities, cash or property; or

                                       -6-

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                 (v)   the Company shall authorize the voluntary dissolution,
                       liquidation or winding up of the affairs of the Company,

then the Company shall cause to be mailed to each Holder at their last addresses
as they shall appear upon the Warrant Register, at least 20 calendar days prior
to the applicable record or effective date hereinafter specified, a notice
stating (x) the date on which a record is to be taken for the purpose of such
dividend, distribution, redemption, rights or warrants, or if a record is not to
be taken, the date as of which the holders of Common Stock of record to be
entitled to such dividend, distributions, redemption, rights or warrants are to
be determined or (y) the date on which such reclassification, consolidation,
merger, sale, transfer or share exchange is expected to become effective or
close, and the date as of which it is expected that holders of Common Stock of
record shall be entitled to exchange their shares of Common Stock for
securities, cash or other property deliverable upon such reclassification,
consolidation, merger, sale, transfer, share exchange, dissolution, liquidation
or winding up; Qrovided, however, that the failure to mail such notice or any
defect therein or in the mailing thereof shall not affect the validity of the
corporate action required to be specified in such notice.

             (j) Upon each adjustment of the Exercise Price pursuant to Section
8 hereof, the number of shares of Common Stock purchasable upon exercise of this
Warrant shall be adjusted to the number of shares of Common Stock, calculated to
the nearest one-hundredth of a share, obtained by (i) multiplying the number of
shares of Common Stock purchasable immediately prior to such adjustment upon the
exercise of this Warrant by the Exercise Price in effect prior to such
adjustment, and (ii) dividing the product so obtained by the Exercise Price in
effect after such adjustment of the Exercise Price.

         9.  Payment of Exercise Price. The Holder shall pay the Exercise Price
in one of the following manners:

             (a) Cash Exercise. The Holder may deliver immediately available
funds; or

             (b) Cashless Exercise. At any time after the earlier to occur of
the Effectiveness Date (as defined in the Registration Rights Agreement) and the
date the initial registration statement filed pursuant to the Registration
Rights Agreement is declared effective by the Commission, when a registration
statement covering the resale of the Warrant Shares and naming the Holder as a
selling stockholder thereunder is not then effective, then the Holder may
indicate in the Form of Election to Purchase its election to utilize a "net" or
"cashless" exercise to pay for Warrant Shares, and the Company shall issue to
the Holder the number of Warrant Shares determined as follows:


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                 X = Y [(A-B)/A] where:

                 X = the number of Warrant Shares to be issued to the Holder.

                 Y = the number of Warrant Shares with respect to which this
                 Warrant is being exercised.

                 A = the average of the closing sale prices of the Common Stock
                 for the five (5) trading days immediately prior to (but not
                 including) the Date of Exercise.

                 B = the Exercise Price.

For purposes of Rule 144 promulgated under the Securities Act, it is intended,
understood and acknowledged that the Warrant Shares issued in a cashless
exercise transaction shall be deemed to have been acquired by the Holder, and
the holding period for the Warrant Shares shall be deemed to have been
commenced, on the issue date.

         10. Certain Exercise Restrictions.

             (a) A Holder may not exercise this Warrant to the extent such
exercise would result in the Holder, together with any affiliate thereof,
beneficially owning (as determined in accordance with Section 13(d) of the
Securities Exchange Act of 1934, as amended (the "Exchange Act") and the rules
promulgated thereunder) in excess of 4.999% of the then issued and outstanding
shares of Common Stock, including shares issuable upon such exercise and held by
such Holder after application of this Section. Since the Holder will not be
obligated to report to the Company the number of shares of Common Stock it may
hold at the time of an exercise hereunder, unless the exercise at issue would
result in the issuance of shares of Common Stock in excess of 4.999% of the then
outstanding shares of Common Stock without regard to any other shares which may
be beneficially owned by the Holder or an affiliate thereof, the Holder shall
have the authority and obligation to determine whether the restriction contained
in this Section will limit any particular exercise hereunder and to the extent
that the Holder determines that the limitation contained in this Section
applies, the determination of which portion of this Warrant is exercisable shall
be the responsibility and obligation of the Holder. If the Holder has delivered
a Form of Election to Purchase for a number of Warrant Shares that, without
regard to any other shares that the Holder or its affiliates may beneficially
own, would result in the issuance in excess of the permitted amount hereunder,
the Company shall notify the Holder of this fact and shall honor the exercise
for the maximum portion of this Warrant permitted to be exercised on such Date
of Exercise in accordance with the periods described herein and, at the option
of the Holder, either keep the portion of the Warrant tendered for exercise in
excess of the permitted amount hereunder for future exercises or return such
excess portion of the Warrant to the Holder. The provisions of this Section may
be waived by a Holder (but only as to itself and not to any other Holder) upon
not less than 61 days prior notice to the Company. Other Holders shall be
unaffected by any such waiver.

             (b) A Holder may not exercise this Warrant to the extent such
exercise would result in the Holder, together with any affiliate thereof,
beneficially owning (as determined in accordance with Section 13( d) of the

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Exchange Act and the rules promulgated thereunder) in excess of 9.999% of the
then issued and outstanding shares of Common Stock, including shares issuable
upon such exercise and held by such Holder after application of this Section.
Since the Holder will not be obligated to report to the Company the number of
shares of Common Stock it may hold at the time of an exercise hereunder, unless
the exercise at issue would result in the issuance of shares of Common Stock in
excess of 9.999% of the then outstanding shares of Common Stock without regard
to any other shares which may be beneficially owned by the Holder or an
affiliate thereof, the Holder shall have the authority and obligation to
determine whether the restriction contained in this Section will limit any
particular exercise hereunder and to the extent that the Holder determines that
the limitation contained in this Section applies, the determination of which
portion of this Warrant is exercisable shall be the responsibility and
obligation of the Holder. If the Holder has delivered a Form of Election to
Purchase for a number of Warrant Shares that, without regard to any other shares
that the Holder or its affiliates may beneficially own, would result in the
issuance in excess of the permitted amount hereunder, the Company shall notify
the Holder of this fact and shall honor the exercise for the maximum portion of
this Warrant permitted to be exercised on such Date of Exercise in accordance
with the periods described herein and, at the option of the Holder, either keep
the portion of the Warrant tendered for exercise in excess of the permitted
amount hereunder for future exercises or return such excess portion of the
Warrant to the Holder. The provisions of this Section may be waived by a Holder
(but only as to itself and not to any other Holder) upon not less than 61 days
prior notice to the Company. Other Holders shall be unaffected by any such
waiver.

         11. Fractional Shares. The Company shall not be required to issue or
cause to be issued fractional Warrant Shares on the exercise of this Warrant.
The number of full Warrant Shares which shall be issuable upon the exercise of
this Warrant shall be computed on the basis of the aggregate number of Warrant
Shares purchasable on exercise of this Warrant so presented. If any fraction of
a Warrant Share would, except for the provisions of this Section, be issuable on
the exercise of this Warrant, the Company shall pay an amount in cash equal to
the Exercise Price multiplied by such fraction.

         12. Notices. Any and all notices or other communications or deliveries
hereunder shall be in writing and shall be deemed given and effective on the
earliest of (i) the date of transmission, if such notice or communication is
delivered via facsimile at the facsimile telephone number specified in this
Section prior to 5:00 p.m. (New York City time) on a business day, (ii) the
business day after the date of transmission, if such notice or communication is
delivered via facsimile at the facsimile telephone number specified in this
Section later than 5 :00 p.m. (New York City time) on any date and earlier than
11 :59 p.m. (New York City time) on such date, (iii) the business day following
the date of mailing, if sent by nationally recognized overnight courier service,
or (iv) upon actual receipt by the party to whom such notice is required to be
given. The addresses for such communications shall be: (i) if to the Company, to
446 Lincoln Highway, Fairless Hills, P A 19030 facsimile: (267) 580-1090,
attention: Michael J. Pellegrino, or (ii) if to the Holder, to the Holder at the
address or facsimile number appearing on the Warrant Register or such other
address or facsimile number as the Holder may provide to the Company in
accordance with this Section.


                                       -9-

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         13. Warrant Agent. The Company shall serve as warrant agent under this
Warrant. Upon thirty (30) days' notice to the Holder, the Company may appoint a
new warrant agent. Any corporation into which the Company or any new warrant
agent may be merged or any corporation resulting from any consolidation to which
the Company or any new warrant agent shall be a party or any corporation to
which the Company or any new warrant agent transfers substantially all of its
corporate trust or shareholders services business shall be a successor warrant
agent under this Warrant without any further act. Any such successor warrant
agent shall promptly cause notice of its succession as warrant agent to be
mailed (by first class mail, postage prepaid) to the Holder at the Holder's last
address as shown on the Warrant Register.

         14. Miscellaneous.

             (a) This Warrant shall be binding on and inure to the benefit of
the parties hereto and their respective successors and assigns. This Warrant may
be amended only in writing signed by the Company and the Holder and their
successors and assigns.

             (b) Subject to Section 14(a), above, nothing in this Warrant shall
be construed to give to any person or corporation other than the Company and the
Holder any legal or equitable right, remedy or cause under this Warrant. This
Warrant shall inure to the sole and exclusive benefit of the Company and the
Holder.

             (c) The corporate laws of the State of Delaware shall govern all
issues concerning the relative rights of the Company and its stockholders. All
other questions concerning the construction, validity, enforcement and
interpretation of this Warrant shall be governed by and construed and enforced
in accordance with the internal laws of the State of New York, without regard to
the principles of conflicts of law thereof. The Company and the Holder hereby
irrevocably submit to the exclusive jurisdiction of the state and federal courts
sitting in the City of New York, borough of Manhattan, for the adjudication of
any dispute hereunder or in connection herewith or with any transaction
contemplated hereby or discussed herein, and hereby irrevocably waives, and
agrees not to assert in any suit, action or proceeding, any claim that it is not
personally subject to the jurisdiction of any such court, or that such suit,
action or proceeding is improper. Each of the Company and the Holder hereby
irrevocably waives personal service of process and consents to process being
served in any such suit, action or proceeding by receiving a copy thereof sent
to the Company at the address in effect for notices to it under this instrument
and agrees that such service shall constitute good and sufficient service of
process and notice thereof. Nothing contained herein shall be deemed to limit in
any way any right to serve process in any manner permitted by law. Each party
irrevocably waives, to the fullest extent permitted by applicable law, any and
all right to trial by jury in any legal proceeding arising out of or relating to
this Agreement or the transactions contemplated hereby. If either party shall
commence an action or proceeding to enforce any provisions of this Warrant, then
the prevailing party in such action or proceeding shall be reimbursed by the
other party for its' attorneys fees and other costs and expenses incurred with
the investigation, preparation and prosecution of such action or proceeding.

             (d) The headings herein are for convenience only, do not constitute
a part of this Warrant and shall not be deemed to limit or affect any of the
provisions hereof.

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             (e) In case anyone or more of the provisions of this Warrant shall
be invalid or unenforceable in any respect, the validity and enforceability of
the remaining terms and provisions of this Warrant shall not in any way be
affected or impaired thereby and the parties will attempt in good faith to agree
upon a valid and enforceable provision which shall be a commercially reasonable
substitute therefor, and upon so agreeing, shall incorporate such substitute
provision in this Warrant.

                  [REMAINDER OF PAGE INTENTIONALLY LEFT BLANK,
                             SIGNATURE PAGE FOLLOWS]






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                  IN WITNESS WHEREOF, the Company has caused this Warrant to be
duly executed by its authorized officer as of the date first indicated above.


                                               DIGITAL DESCRIPTOR SYSTEMS, INC.



                                               By: /s/Michael J. Pellegrino
                                                   ------------------------
                                               Name: Michael J. Pellegrino
                                               Title:   Chief Financial Officer



<PAGE>



                          FORM OF ELECTION TO PURCHASE

(To be  executed by the Holder to exercise the right to purchase shares of
Common Stock under the Warrant to which this form applies, issued by Digital
Descriptor Systems, Inc. ("Digital")

To Digital Descriptor Systems, Inc.:

The undersigned hereby irrevocably elects to purchase _________________shares of
common stock, $0.001 par value per share, of Digital (the "Common Stock") and,
if such Holder is not utilizing the cashless exercise provisions set forth in
this Warrant, encloses herewith $______ in cash, certified or official bank
check or checks, which sum represents the aggregate Exercise Price (as defined
in the Warrant) for the number of shares of Common Stock to which this Form of
Election to Purchase relates, together with any applicable taxes payable by the
undersigned pursuant to the Warrant.

The undersigned requests that certificates for the shares of Common Stock
issuable upon this exercise be issued in the name of

                                          PLEASE INSERT SOCIAL SECURITY
                                          OR TAX IDENTIFICATION NUMBER


                                           _____________________________


--------------------------------------------------------------------------------
                         (Please print name and address)



Dated:__________, ____             Name of Holder:

                                        (Print)_________________________________

                                        (By)____________________________________
                                        (Name:)
                                        (Title:)
                                        (Signature must conform in all respects
                                        to name of holder as specified on the
                                        face of the Warrant)















<PAGE>

                               FORM OF ASSIGNMENT

           [To be completed and signed only upon transfer of Warrant)

         FOR VALUE RECEIVED, the undersigned hereby sells, assigns and transfers
unto ________________________________the right represented by the within Warrant
to purchase _________shares of Common Stock of Digital Descriptor Systems, Inc.
to which the within Warrant relates and appoints _______________ attorney to
transfer said right on the books of Digital Descriptor Systems, Inc. with full
power of substitution in the premises.

Dated:

_______________, ______


                                   __________________________________________
                                   (Signature must conform in all respects
                                   to name of holder as specified on the face
                                   of the Warrant)


                                   __________________________________________
                                   Address of Transferee

                                   __________________________________________

                                   __________________________________________





In the presence of:

_________________________





<PAGE>



                                     Annex A

<TABLE>
<CAPTION>

------------------------------------------------------------------------------------------------------------
                    Number of Warrant Shares      Number of Warrant Shares       Number of Warrant Shares
       Date        Available to be Exercised              Exercised             Remaining to be Exercised
------------------------------------------------------------------------------------------------------------
<S>                        <C>                            <C>                          <C>


















------------------------------------------------------------------------------------------------------------
</TABLE>

</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-5.1.2
<SEQUENCE>5
<FILENAME>ex5-1_2.txt
<DESCRIPTION>EX-5.1.2
<TEXT>
<PAGE>




                                                                   Exhibit 5.1.2

                                Owen M. Naccarato
                                 Attorney At Law
                           19600 Fairchild, Suite 260
                            Irvine, California 92612
               Telephone (949) 851-9261 Telecopier (949) 851-9262
--------------------------------------------------------------------------------

December 27, 2000

New Millennium Capital Partners II, LLC
155 1st Street, Suite B
Mineola, NY 11501

AJW Partners, LLC
155 1st Street, Suite B
Mineola, NY 11501

Re: Secured Convertible Debenture Purchase Agreement: Digital Descriptor
Systems, Inc.

Ladies and Gentlemen:

         I have acted as counsel to Digital Descriptor systems, Inc. ("the
Company"), a corporation incorporated under the laws of the State of Delaware,
in connection with the proposed issuance and sale of the Company's 12%
Convertible Debentures (the "Debentures") pursuant to the Secured Convertible
Debenture Purchase Agreement (the "Purchase Agreement"), dated the date hereof
between the Company and New Millennium Capital Partners II, LLC and AJW
Partners, LLC, (collectively referred to as the "Buyers")..

         In connection with rendering the opinions set forth herein, I have
examined the Transaction Documents as defined in the Purchase Agreement, the
Company's Certificate of Incorporation, and its Bylaws, each as amended to date,
the proceedings of the Company's Board of Directors taken in connection with
entering into the Purchase Agreement and such other documents, agreements and
records as I deemed necessary to render the opinions set forth below.

         In conducting my examination, I have assumed the following: (i) that
each of the Transaction Documents have been executed by each of the parties
thereto in the same form as the forms which we have examined, (ii) the
genuineness of all signatures, the legal capacity of natural persons, the
authenticity and accuracy of all documents submitted to us as originals, and the
conformity to originals of all documents submitted to us as copies, (iii) that
each of the Transaction Documents have been duly and validly authorized,
executed, and delivered by the party or parties thereto, and (iv) that each of
the Transaction Documents constitutes the valid and binding agreement of the
party or parties thereto, enforceable against such party or parties in
accordance with the Transaction Documents' terms .

         Based upon and subject to the foregoing, we are of the opinion that:

                  1. Each of the Company and its Subsidiaries organized in the
United States is a corporation, duly incorporated, validly existing and in good
standing under the laws of Delaware, the jurisdiction of its incorporation, with
the requisite corporate power and authority to own and use its properties and
assets and to carryon its business as currently conducted. Each of the Company
and its Subsidiaries is duly qualified to do business and is in good standing as
a foreign corporation in each jurisdiction in which the nature of the business
conducted or property owned by it makes such qualification necessary.

                                       1

<PAGE>


                  2. The Company has the requisite corporate power and authority
to enter into and to consummate the transactions contemplated by each of the
Transaction Documents and otherwise to carry out its obligations hereunder. The
execution and delivery of each of the Transaction Documents by the Company and
the consummation by it of the transactions contemplated thereby have been duly
authorized by all necessary action on the part of the Company. Each of the
Transaction Documents has been duly executed and delivered by the Company and
constitutes the legal, valid and binding obligation of the Company enforceable
against the Company in accordance with its terms, except as such enforceability
may be limited by applicable bankruptcy, insolvency, reorganization, moratorium,
liquidation or similar laws relating to, or affecting generally the enforcement
of, creditors' rights and remedies or by other equitable principles of general
application.

                  3. No shares of Common Stock, are entitled to preemptive or
similar rights. Except as specifically disclosed in Schedule 2.1(c) to the
Purchase Agreement or as a result of the purchase and sale of the Debentures and
the Warrants, there are no outstanding options, warrants, script rights to
subscribe to, calls or commitments of any character whatsoever relating to,
securities, rights or obligations convertible into or exchangeable for, or
giving any person any right to subscribe for or acquire any shares of Common
Stock, or contracts, commitments, understandings, or arrangements by which the
Company or any Subsidiary is or may become bound to issue additional shares of
Common Stock, or securities or rights convertible or exchangeable into shares of
Common Stock.

                  4. The Debentures and the Warrants have been duly authorized
and, when paid for and issued in accordance with the terms of the Purchase
Agreement shall have been validly issued, fully paid and nonassessable.

                  5. The Company has duly authorized and reserved for issuance
such number of Underlying Shares as are issuable upon conversion of the
Debentures, as payment of interest thereon, and upon exercise of the Warrants as
required pursuant to the terms of the Purchase Agreement, the Debentures and the
Warrants , respectively. When issued by the Company in accordance with the terms
of the Purchase Agreement, the Debentures and the Warrants, the Underlying
Shares will be validly issued, fully paid and nonassessable.

                  6. The execution, delivery and performance of the Transaction
Documents by the Company and the consummation by the Company of the transactions
contemplated by such agreements do not and will not (i) conflict with or violate
any provision of its or any of its Subsidiary's Certificates of Incorporation or
Bylaws, (ii) conflict with, or constitute a default (or an event which with
notice or lapse of time or both would become a default) under, or give to others
any rights of termination, amendment, acceleration or cancellation of, (A) any
agreement, indenture or other written instrument relating to indebtedness of the
Company or a Subsidiary thereof or instrument to which the Company or a
Subsidiary thereof is a party attached as an exhibit to the SEC Documents and
(B) to our knowledge, any other agreement, indenture or other written instrument
relating to indebtedness of the Company or a Subsidiary thereof or instrument to
which the Company or a Subsidiary thereof is a party, (iii) result in a
violation of any law, rule or regulation of any governmental authority,
regulatory body, stock market or trading facility to which the Company is
subject, or by which any property or asset of the Company is bound or affected,
or (iv) result in any violation of any order, judgment, injunction, decree or
other restriction of which we have knowledge of any court or governmental
authority. To our knowledge, the business of the Company is not being conducted
in violation of any law, ordinance or regulation of any governmental authority.

                                       2

<PAGE>


                  7. Other than the Required Approvals, neither the Company nor
any Subsidiary is required to obtain any consent, waiver, authorization or order
of, or make any filing or registration with, any court or other Federal, state,
local or other governmental authority or other person in connection with the
execution, delivery and performance by the Company of the Transaction Documents.

                  8. The security interests and liens intended to be created by
the Security Agreement in the collateral secured by the Security Agreement have
been created and constitute valid, enforceable and, subject to the filings of
the UCC financing statements on Form-1 in the jurisdiction of Bucks County ,
Pennsylvania and with the Secretary of State of Pennsylvania, perfected first
priority security interests in and liens on the collateral covered thereby in
your favor, upon the terms therein purported to be granted. To the best of our
knowledge such collateral is not subject to any other liens and encumbrances or
other rights, options or claims of any kind.

                  9. Assuming the accuracy of the representations and warranties
of the Company set forth in Section 2.1 of the Purchase Agreement and of the
Purchaser set forth in Section 2.2 of the Purchase Agreement, the offer,
issuance and sale of the Debentures and the Warrants and the offer, issuance and
sale of the Underlying Shares to the Purchasers pursuant to the Purchase
Agreement, the Debentures and the Warrants, are exempt from the registration
requirements of the Securities Act pursuant to Regulation D of the Securities
Act of 1933 ("as amended").



Truly yours,



-------------------
/s/Owen Naccarato



                                       3

</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10.3.1
<SEQUENCE>6
<FILENAME>ex10-3_1.txt
<DESCRIPTION>EX-10.3.1
<TEXT>
<PAGE>

                                                                 Exhibit 10.3.1





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




                SECURED CONVERTIBLE DEBENTURE PURCHASE AGREEMENT

                                      Among

                        DIGITAL DESCRIPTOR SYSTEMS, INC.

                                       and

                         THE INVESTORS SIGNATORY HERETO

                          Dated as of December 28, 2000




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























<PAGE>



         SECURED CONVERTIBLE DEBENTURE PURCHASE AGREEMENT (this "Agreement"),
dated as of December 28, 2000, among Digital Descriptor Systems, Inc., a
Delaware corporation (the "Company"), and the investors signatory hereto (each
such investor is a "Purchaser" and all such investors are, collectively, the
"Purchasers").

         WHEREAS, subject to the terms and conditions set forth in this
Agreement and in accordance with ss. 4(2) under the Securities Act of 1933, as
amended (the "Securities Act"), and Rule 506 promulgated thereunder, the Company
desires to issue and sell to the Purchasers and the Purchasers, severally and
not jointly, desire to purchase from the Company, (i) an aggregate principal
amount of $600,000 of the Company's 12% Secured Convertible Debentures, due
twelve months from issuance, which shall be in the form of Exhibit A (the
"Debentures"), which are convertible into shares of the Company's common stock,
$0.001 par value per share (the "Common Stock"), and (ii) certain Warrants (as
defined in Section 1.1(a)(ii) hereof). As used herein, Debentures shall include
all "Additional Debentures" (as hereinafter defined).

         NOW, THEREFORE, IN CONSIDERATION of the mutual covenants contained in
this Agreement, and for other good and valuable consideration the receipt and
adequacy of which are hereby acknowledged, the Company and the Purchasers agree
as follows:


                                    ARTICLE I
                                PURCHASE AND SALE

1.1      The Closing: Settlement Dates

         (a) (i) Subject to the terms and conditions set forth in this
Agreement, the Company shall issue and sell to the Purchasers and the Purchasers
shall, severally and not jointly, purchase from the Company, to be paid and
issued on settlement dates described in this Section 1.1 herein, the Debentures
for an aggregate purchase price of $600,000. The closing of the purchase and
sale of the Debentures (the "Closing") shall take place at the offices of
Robinson Silverman Pearce Aronsohn & Herman LLP ("Robinson Silverman"), 1290
Avenue of the Americas, New York, New York 10104, on the first funding date
described in Section 1.1(a)(ii).

                  (ii) On the date of execution of this Agreement (the "Closing
Date"), the parties shall deliver or shall cause to be delivered the following:
(A) the Company shall deliver to each Purchaser: (1) Debentures registered in
the name of such Purchaser in the aggregate principal amount of 33.33% of the
purchase price indicated below such Purchaser's name on the signature page to
this Agreement, (2) a Common Stock purchase warrant, in the form of Exhibit D,
registered in the name of such Purchaser, pursuant to which such Purchaser shall
have the right to acquire, for every one Dollar ($1) of the principal amount of
the Debentures acquired by it hereunder, two shares of Common Stock, upon the
terms and conditions set forth therein (collectively, the "Warrants"), (3) the
legal opinion of Owen M. Naccarato, Esq., outside counsel to the Company, in the
form of Exhibit C, (4) an executed Registration Rights Agreement, dated the date
hereof, among the Company and the Purchasers, in the form of Exhibit B (the
"Registration Rights Agreement"), (5)Transfer Agent Instructions in the form of
Exhibit E delivered to and acknowledged in writing by




<PAGE>



the Company's transfer agent (the "Transfer Agent Instructions"), and (6) an
executed Security Agreement, dated the date hereof, among the Company and the
Purchasers, in the form of Exhibit E (the "Security Agreement); and (B) each
Purchaser will deliver to the Company: (1) 33.33% of the purchase price
indicated below such Purchaser's name on the signature page to this Agreement in
United States dollars in immediately available funds by wire transfer to an
account designated in writing by the Company for such purpose, and (2) executed
originals of this Agreement, the Registration Rights Agreement and Security
Agreement.

                           (iii) If each of the conditions set forth in Section
1.1 (b ), other than the condition in Section 1.1(b)(iii), have been either
satisfied by the Company or waived by each Purchaser, then on the tenth (10th)
Trading Day ( "First Additional Funding Date"), as contemplated in Section
1.1(b)(A) the Company will, against delivery of the amounts set forth in clause
(B) in this paragraph, deliver to each Purchaser, Debentures in the aggregate
principal amount of 16.67% of the purchase price indicated below such
Purchaser's name on the signature page to this Agreement (the "First Additional
Debentures"), and (B) each Purchaser will deliver to the Company, 16.67% of the
purchase price indicated below such Purchaser's name on the signature page to
this Agreement in United States Dollars in immediately available funds by wire
transfer to an account designated in writing by the Company for such purpose.

                           (iv) If each of the conditions set forth in Section
1.1(b), have been either satisfied by the Company or waived by each Purchaser,
then on the fifth(5th) Trading Day ("Second Additional Funding Date") after the
Effective Date (as defined herein), (A) the Company will, against delivery of
the amounts set forth in clause (B) in this paragraph, deliver to each
Purchaser, Debentures in the aggregate principal amount of 50% of the purchase
price indicated below such Purchaser's name on the signature page to this
Agreement (the "Second Additional Debentures"), and (B) each Purchaser will
deliver to the Company, 50% of the purchase price indicated below such
Purchaser's name on the signature page to this Agreement in United States
Dollars in immediately available funds by wire transfer to an account designated
in writing by the Company for such purpose. The First Additional Debentures and
Second Additional Debentures are collectively referred to as ("Additional
Debentures") and the First Additional Funding Date and Second Additional Funding
Date are collectively referred to as ("Additional Funding Dates").

                  (b) Conditions precedent to the purchase of Additional
Debentures. Notwithstanding anything to the contrary contained in this
Agreement, the obligation of a Purchaser to purchase the securities described in
Section 1.1(a)(iii) and (iv) above is subject to the satisfaction by the Company
or waiver by each Purchaser of each of the following conditions as of each
Additional Funding Date:


                           (i) Accuracy of the Company's Representations and
Warranties. The representations and warranties of the Company contained in this
Agreement shall be true and correct as of the date when made and as of each
Additional Funding Date as though made on and as each Additional Funding Date
(other than representations and warranties which relate to a specific



                                       -2-



<PAGE>



date, which shall not include representations and warranties relating to the
"date hereof" which representations and warranties shall be true as of such
specific date);

                           (ii) Performance by the Company. The Company shall
have timely performed, satisfied and complied with all covenants, agreements and
conditions required by the Transaction Documents to be performed, satisfied or
complied with by the Company between the Closing Date and each Additional
Funding Date and no Event (as defined in the Registration Rights Agreement)
shall have occurred which has not been cured;

                           (iii) Underlying Shares Registration Statement. The
Underlying Shares Registration Statement (as hereinafter defined) shall have
been declared effective under the Securities Act by the Securities and Exchange
Commission (the "Commission") by the 90th day following the Closing Date and
shall have remained effective at all times from the date the Commission first
declared it effective (the "Effective Date") through the Second Additional
Funding Date, not subject to any actual or threatened stop order or subject to
any actual or threatened suspension at any time during such period;

                           (iv) No Injunction. Since the Closing Date, no
statute, rule, regulation, executive order, decree, ruling or injunction shall
have been enacted, entered, promulgated, amended, modified or endorsed by any
court of governmental authority of competent jurisdiction or governmental
authority, stock market or trading facility which prohibits the consummation of
any of the transactions contemplated by the Transaction Documents or makes
impracticable the transactions contemplated thereby;

                           (v) Adverse Changes. Since the Closing Date, no event
or series of events which reasonably would be expected to have or result in a
Material Adverse Effect shall have occurred;


                           and

                           (vi) Change of Control. No Change of Control in the
Company shall have occurred. "Change of Control" means the occurrence of any of
(A) an acquisition after the date hereof by an individual or legal entity or
"group" (as described in Rule 13d-5(b)(I) promulgated under the Exchange Act) of
in excess of 33% of the voting securities of the Company, (B) a replacement of
more than one-half of the members of the Company's board of directors which is
not approved by those individuals who are members of the board of directors on
the date hereof in one or a series of related transactions, (C) the merger of
the Company with or into another entity, consolidation or sale of all or
substantially all of the assets of the Company in one or a series of related
transactions or (D) the execution by the Company of an agreement to which the
Company is a party or by which it is bound, providing for any of the events set
forth above in (A), (B) or (C).

                           (viii) Registration of Securities. Pursuant to
Section 12(b) or Section 12(g) (as applicable), of the Securities Exchange Act
of 1934, as amended ("Exchange Act"), the Company shall have: (i) filed a
registration statement on Form 10 with the Commission and any


                                       -3-

<PAGE>


applicable national securities exchange, (ii) such registration statement shall
have been declared effective by the Commission and remained effective as of each
Additional Funding Date and (iii) the Common Stock shall be eligible for
quotation and be quoted for trading on the OTC Bulletin Board ("OTC").

                           (ix) Compliance Certificate. The Company shall have
delivered to each Purchaser on each Additional Funding Date, a certificate,
signed by the President of the Company, stating that all applicable conditions
specified in Section 1.1 (b) have been fulfilled and stating that there shall
have been no adverse change in the business, affairs, prospects, operations,
properties, assets or condition of the Company since the date of the Closing
Date (provided, however, that such certificate shall not preclude Purchasers
from making their own determination as to such compliance, and that such
certificate shall not cure compliance defaults) and that the UCC's in the
Security Agreement are in full force and effect, and granting the Purchasers
with a first priority.

                  1.2 Certain Defined Terms. For purposes of this Agreement,
"Conversion Price," "Original Issue Date" and "Trading Day" shall have the
meanings set forth in the Debentures; "Business Day" shall mean any day except
Saturday, Sunday and any day which shall be a federal legal holiday in the
United States or a day on which banking institutions in the State of New York or
the Commonwealth of Pennsylvania are authorized or required by law or other
governmental action to close. A "Person" means an individual or corporation,
partnership, trust, incorporated or unincorporated association, joint venture,
limited liability company, joint stock company, government (or an agency or
subdivision thereof) or other entity of any kind.

                                   ARTICLE II
                         REPRESENTATIONS AND WARRANTIES

         2.1 Representations and Warranties of the Company. The Company hereby
makes the following representations and warranties to the Purchasers:

                  (a) Organization and Qualification. The Company is a
corporation duly incorporated, validly existing and in good standing under the
laws of the State of Nevada with the requisite corporate power and authority to
own and use its properties and assets and to carry on its business as currently
conducted. The Company has no subsidiaries other than as set forth in Schedule
2.1(a) (collectively the "Subsidiaries"). Each of the Subsidiaries is an entity,
duly incorporated or otherwise organized, validly existing and in good standing
under the laws of the jurisdiction of its incorporation or organization (as
applicable), with the requisite power and authority to own and use its
properties and assets and to carry on its business as currently conducted. Each
of the Company and the Subsidiaries is duly qualified to do business and is in
good standing as a foreign corporation or other entity in each jurisdiction in
which the nature of the business conducted or property owned by it makes such
qualification necessary, except where the failure to be so qualified or in good
standing, as the case may be, could not, individually or in the aggregate, (x)
adversely affect the legality, validity or enforceability of the Securities (as
defined below) or any of this Agreement, the Registration Rights Agreement, the
Security Agreement, the Transfer Agent Instructions or the Warrants
(collectively, the "Transaction Documents"), (y) have or result in a material
adverse effect on the results of operations, assets, prospects, or condition
(financial or otherwise) of the Company and the Subsidiaries, taken as a whole,
or (z) adversely

                                       -4-

<PAGE>



impair the Company's ability to perfonu fully on a timely basis its obligations
under any of the Transaction Documents (any of (x), (y) or (z), a "Material
Adverse Effect").

                  (b) Authorization: Enforcement. Subject to the effectiveness
of the Company's Form 10 registration statement as described in Section
1.1(b)(viii), the Company has the requisite corporate power and authority to
enter into and to consummate the transactions contemplated by each of the
Transaction Documents and otherwise to carry out its obligations thereunder.
Subject to the effectiveness of the Company's Form 10 registration statement as
described in Section 1.1 (b)(viii), the execution and delivery of each of the
Transaction Documents by the Company and the consummation by it of the
transactions contemplated thereby have been duly authorized by all necessary
action on the part of the Company and no further action is required by the
Company. Each of the Transaction Documents has been duly executed by the Company
and, when delivered in accordance with the terms hereof, will constitute the
valid and binding obligation of the Company enforceable against the Company in
accordance with its terms. Neither the Company nor any Subsidiary is in
violation of any of the provisions of its respective certificate or articles of
incorporation, by-laws or other organizational or charter documents.

                  (c) Capitalization. The number of authorized, issued and
outstanding capital stock of the Company is set forth in Schedule 2.1(c). No
shares of Common Stock are entitled to preemptive or similar rights, nor is any
holder of the securities of the Company entitled to preemptive or similar rights
arising out of any agreement or understanding with the Company by virtue of any
of the Transaction Documents. Except as a result of the purchase and sale of the
Debentures and the Warrants and except as disclosed in Schedule 2.1(c), there
are no outstanding options, warrants, script rights to subscribe to, calls or
commitments of any character whatsoever relating to, or securities, rights or
obligations convertible into or exchangeable for, or giving any Person any right
to subscribe for or acquire, any shares of Common Stock, or contracts,
commitments, understandings, or arrangements by which the Company or any
Subsidiary is or may become bound to issue additional shares of Common Stock, or
securities or rights convertible or exchangeable into shares of Common Stock.
The issue and sale of the Underlying Shares (as hereinafter defined) will not
obligate the Company to issue shares of Common Stock or other securities to any
person other than the Purchaser and will not result in a right of any holder of
Company securities to adjust the exercise or conversion or reset price under
such securities.

                  (d) Issuance of the Debentures and the Warrants. The
Debentures will be duly and validly issued, free and clear of all liens,
encumbrances and rights of first refusal of any kind (collectively, "Liens"). On
the date hereof, the Company will have (and will, at all times while Debentures
and the Warrants are outstanding, maintain) an adequate reserve of duly
authorized shares of Common Stock, reserved for issuance to the holders of such
Debentures and Warrants, to enable it to perform its conversion, exercise and
other obligations under this Agreement. Such number of reserved and available
shares of Common Stock shall not be less than the sum of 200% of the number of
shares of Common Stock which would be issuable upon (i) conversion in full of
the Debentures assuming such conversion occurred on the Original Issue Date, and
the Debentures remain outstanding for one year and all interest is paid in
shares of Common Stock and (ii) exercise in full of the Warrants. All such
authorized shares of Common Stock shall be duly reserved for issuance to the
holders of the Debentures and the Warrants. The shares of Common Stock issuable


                                       -5-

<PAGE>

upon conversion of the Debentures and upon exercise of the Warrants are
collectively referred to herein as the "Underlying Shares." All Underlying
Shares shall be duly reserved for issuance to the holders of the Debentures and
the Warrants. The Debentures, the Warrants and the Underlying Shares are
collectively referred to herein as, the "Securities."

                  (e) No Conflicts. The execution, delivery and performance of
the Transaction Documents by the Company and the consummation by the Company of
the transactions contemplated thereby do not and will not (i) conflict with or
violate any provision of the Company's or any Subsidiary's certificate or
articles of incorporation, bylaws or other charter documents (each as amended
through the date hereof), or (ii) subject to obtaining the Required Approvals
(as defined below), conflict with, or constitute a default (or an event which
with notice or lapse of time or both would become a default) under, or give to
others any rights of termination, amendment, acceleration or cancellation (with
or without notice, lapse of time or both) of, any agreement, credit facility,
debt or other instrument ( evidencing a Company or Subsidiary debt or otherwise)
or other understanding to which the Company or any Subsidiary is a party or by
which any property or asset of the Company or any Subsidiary is bound or
affected, or (iii) result in a violation of any law, rule, regulation, order,
judgment, injunction, decree or other restriction of any court or governmental
authority to which the Company or a Subsidiary is subject (including federal and
state securities laws and regulations)" or by which any property or asset of the
Company or a Subsidiary is bound or affected; except in the case of each of
clauses (ii) and (iii), as could not, individually or in the aggregate, have or
result in a Material Adverse Effect. The business of the Company is not being
conducted in violation of any law, ordinance or regulation of any governmental
authority, except for violations which, individually or in the aggregate, could
not have or result in a Material Adverse Effect.

                  (f) Filings. Consents and Approvals. Neither the Company nor
any Subsidiary is required to obtain any consent, waiver, authorization or order
of, give any notice to, or make any filing or registration with, any court or
other federal, state, local or other governmental authority or other Person in
connection with the execution, delivery and performance by the Company of the
Transaction Documents, other than (i) the filings required pursuant to Section
3.10, (ii) the filing with the Commission of a registration statement meeting
the requirements set forth in the Registration Rights Agreement and covering the
resale of the Underlying Shares by the Purchasers (the "Underlying Shares
Registration Statement"), (iii) the Form 10 registration statement as described
in Section 1.1 (b)(viii), (iv) applicable Blue Sky filings, and (v) in all
other cases where the failure to obtain such consent, waiver, authorization or
order, or to give such notice or make such filing or registration could not have
or result in, individually or in the aggregate, a Material Adverse Effect
(collectively, the "Required Approvals").

                  (g) Litigation: Proceedings. There is no action, suit,
inquiry, notice of violation, proceeding or investigation pending or, to the
knowledge of the Company, threatened against or affecting the Company or any of
its Subsidiaries or any of their respective properties before or by any court,
arbitrator, governmental or administrative agency or regulatory authority
(federal, state, county, local or foreign) (collectively, an "Action") which (i)
adversely affects or challenges the legality, validity or enforceability of any
of the Transaction Documents or the Securities or (ii) could, if there were an
unfavorable decision, individually or in the aggregate, have or result in a

                                       -6-


<PAGE>



Material Adverse Effect. Neither the Company nor any Subsidiary, nor any
director or officer thereof, is or has been the subject of any Action involving
a claim of violation of or liability under federal or state securities laws or a
claim of breach of fiduciary duty. The Company does not have pending before the
Commission any request for confidential treatment of information and the Company
has no knowledge of any expected such request that would be made prior to the
Effectiveness Date (as defined in the Registration Rights Agreement). There has
not been, and to the best of the Company's knowledge there is not pending or
contemplated, any investigation by the Commission involving the Company or any
current or former director or officer of the Company.

                  (h) No Default or Violation. Neither the Company nor any
Subsidiary (i) is in default under or in violation of (and no event has occurred
which has not been waived which, with notice or lapse of time or both, would
result in a default by the Company or any Subsidiary under), nor has the Company
or any Subsidiary received notice of a claim that it is in default under or that
it is in violation of, any indenture, loan or credit agreement or any other
agreement or instrument to which it is a party or by which it or any of its
properties is bound, (ii) is in violation of any order of any court, arbitrator
or governmental body, or (iii) is in violation of any statute, rule or
regulation of any governmental authority, in each case of clauses (i), (ii) or
(iii) above, except as could not individually or in the aggregate, have or
result in a Material Adverse Effect. The security interests granted to the
Purchasers pursuant to the Security Agreement and Intellectual Property Security
Agreement will convey and grant to the Purchasers a first priority security
interest in all of the Collateral (as such term is defined in such Agreements).

                  (i) Private Offering. Assuming the accuracy of the
representations and warranties of the Purchasers set forth in Sections
2.2(b)-(g), the offer, issuance and sale of the Securities to the Purchasers as
contemplated hereby are exempt from the registration requirements of the
Securities Act. Neither the Company nor any Person acting on its behalf has
taken or is, to the knowledge of the Company, contemplating taking any action
which could subject the offering, issuance or sale of the Securities to the
registration requirements of the Securities Act including soliciting any offer
to buy or sell the Securities by means of any form of general solicitation or
advertising.

                  (j) Financial Statements. The financial statements of the
Company provided to the Purchaser complies in all material respects with
applicable accounting requirements and the rules and regulations of the
Commission with respect thereto as in effect at that time. Such financial
statements have been prepared in accordance with generally accepted accounting
principles applied on a consistent basis during the periods involved ("GAAP"),
except as may be otherwise specified in such financial statements or the notes
thereto, and fairly present in all material respects the financial position of
the Company and its consolidated subsidiaries as of and for the dates thereof
and the results of operations and cash flows for the periods then ended,
subject, in the case of unaudited statements, to normal, immaterial, year-end
audit adjustments. Since [],2000, except as specifically disclosed to the
Purchaser, (a) there has been no event, occurrence or development that has or
that could result in a Material Adverse Effect,(b) the Company has not incurred
any liabilities (contingent or otherwise) other than (x) liabilities incurred in
the ordinary course of business consistent with past practice and (y)
liabilities not required to be reflected in the Company's financial statements
pursuant to GAAP, (c) the Company has not altered its method of accounting or
the identity of its auditors and (d) the Company has not declared or made any
payment or


                                       -7-

<PAGE>



distribution of cash or other property to its stockholders or officers or
directors (other than in compliance with existing Company stock option plans)
with respect to its capital stock, or purchased, redeemed (or made any
agreements to purchase or redeem) any shares of its capital stock.

                  (k) Investment Company. The Company is not, and is not an
Affiliate (as defined in Rule 405 under the Securities Act) of, an "investment
company" within the meaning of the Investment Company Act of 1940, as amended.

                  (l) Certain Fees. No fees or commissions will be payable by
the Company to any broker, financial advisor or consultant, finder, placement
agent, investment banker, bank or other Person with respect to the transactions
contemplated by this Agreement. The Purchasers shall have no obligation with
respect to any fees or with respect to any claims made by or on behalf of other
Persons for fees of a type contemplated in this Section that may be due in
connection with the transactions contemplated by this Agreement. The Company
shall indemnify and hold harmless the Purchasers, their employees, officers,
directors, agents, and partners, and their respective Affiliates, from and
against all claims, losses, damages, costs (including the costs of preparation
and attorney's fees) and expenses suffered in respect of any such claimed or
existing fees, as such fees and expenses are incurred.

                  (m) Solicitation Materials. Neither the Company nor any Person
acting on the Company's behalf has solicited any offer to buy or sell the
Securities by means of any form of general solicitation or advertising.

                  (n) Exclusivity. The Company shall not issue and sell the
Debentures or the Warrants to any Person other than the Purchasers without the
specific prior written consent of the Purchasers.

                  (o) Seniority. No indebtedness of the Company is senior to the
Debentures in right of payment, whether with respect to interest or upon
liquidation or dissolution, or otherwise.

                  (p) Patents and Trademarks. The Company and its Subsidiaries
have rights to use, all patents, patent applications, trademarks, trademark
applications, service marks, trade names, copyrights, licenses and rights which
are necessary or material for use in connection with their respective businesses
and which the failure to so have would have a Material Adverse Effect
(collectively, the "Intellectual Property Rights"). Neither the Company nor any
Subsidiary are the holders of any patents or trademarks and neither has filed
any applications thereunder. Neither the Company nor any Subsidiary has received
a written notice that the Intellectual Property Rights used by the Company or
its Subsidiaries violates or infringes upon the rights of any Person. To the
best knowledge of the Company, all such Intellectual Property Rights are
enforceable and there is no existing infringement by another Person of any of
the Intellectual Property Rights. In the event that while the Debentures are
outstanding the Company or a Subsidiary ever owns patents, trademarks or should
make an application therefore, then the Company shall promptly execute and
cooperate to cause to be filed with the Patent and Trademark Office an
Intellectual Property Security Agreement in the form to be prepared by
Purchasers to provide the Purchasers a first priority lien on all such
intellectual property.


                                       -8-
<PAGE>

                  (q) Registration Rights: Rights of Participation. Except as
set forth on Schedule 202} to the Registration Rights Agreement, the Company has
not granted or agreed to grant to any Person any rights (including "piggy-back"
registration rights) to have any securities of the Company registered with the
Commission or any other governmental authority which has not been satisfied.
Except as set forth on Schedule 6(b) to the Registration Rights Agreement, no
Person has any right of first refusal, preemptive right, right of participation,
or any similar right to participate in the transactions contemplated by the
Transaction Documents.

                  (r) Regulatory Permits. The Company and its Subsidiaries
possess all certificates, authorizations and permits issued by the appropriate
federal, state or foreign regulatory authorities necessary to conduct their
respective businesses, except where the failure to possess such permits could
not, individually or in the aggregate, have or result in a Material Adverse
Effect ("Material Permits"), and neither the Company nor any such Subsidiary has
received any notice of proceedings relating to the revocation or modification of
any Material Permit.

                  (s) Title. The Company and the Subsidiaries have good and
marketable title in fee simple to all real property owned by them which is
material to the business of the Company and its Subsidiaries and good and
marketable title in all personal property owned by them which is material to the
business of the Company and its Subsidiaries, in each case free and clear of all
Liens, except for Liens granted to the Purchasers pursuant to the Security
Agreement and for other Liens as do not materially affect the value of such
property and do not interfere with the use made and proposed to be made of such
property by the Company and its Subsidiaries. Any real property and facilities
held under lease by the Company and its Subsidiaries are held by them under
valid, subsisting and enforceable leases of which the Company and its
Subsidiaries are in compliance and do not interfere with the use made and
proposed to be made of such property and buildings by the Company and its
Subsidiaries.

                  (t) Labor Relations. No material labor problem exists or, to
the knowledge of the Company, is imminent with respect to any of the employees
of the Company.

                  (u) Disclosure. The Company confirms that neither it nor any
other Person acting on its behalf has provided any of the Purchasers or its
agents or counsel with any information that constitutes or might constitute
material non-public information. The Company understands and confirms that the
Purchasers shall be relying on the foregoing representations in effecting
transactions in securities of the Company. All disclosure provided to the
Purchasers regarding the Company, its business and the transactions contemplated
hereby, including the Schedules to this Agreement, furnished by or on behalf of
the Company are true and correct and do not contain any untrue statement of a
material fact or omit to state any material fact necessary in order to make the
statements made therein, in light of the circumstances under which they were
made, not misleading.

                  (v) Solvency. Based on the financial condition of the Company
as of the Closing Date, (i) the Company's fair saleable value of its assets
exceeds the amount that will be required to be paid on or in respect of the
Company's existing debts and other liabilities (including known contingent
liabilities) as they mature; (ii) the Company's assets do not constitute
unreasonably small capital to carry on its business for the current fiscal year
as now conducted and as proposed to be

                                       -9-



<PAGE>



conducted including its capital needs taking into account the particular capital
requirements of the business conducted by the Company, and projected capital
requirements and capital availability thereof; and (iii) the current cash flow
of the Company, together with the proceeds the Company would receive, were it to
liquidate all of its assets, after taking into account all anticipated uses of
the cash, would be sufficient to pay all amounts on or in respect of its debt
when such amounts are required to be paid. The Company does not intend to incur
debts beyond its ability to pay such debts as they mature (taking into account
the timing and amounts of cash to be payable on or in respect of its debt).

                  (w) Application of Takeover Protections. The Company and its
Board of Directors have taken all necessary action, if any, in order to render
inapplicable any control share acquisition, business combination, poison pill
(including any distribution under a rights agreement) or other similar
anti-takeover provision under the Company's Certificate of Incorporation (or
similar charter documents) or the laws of its state of incorporation that is or
could become applicable to the Purchasers as a result of the Purchasers and the
Company fulfilling their obligations or exercising their rights under the
Transaction Documents, including without limitation the Company's issuance of
the Securities and the Purchasers' ownership of the Securities.

         2.2 Representations and Warranties of the Purchasers. Each Purchaser
hereby for itself and for no other Purchaser represents and warrants to the
Company as follows:

                  (a) Organization: Authority. Such Purchaser is an entity duly
organized, validly existing and in good standing under the laws of the
jurisdiction of its organization with the requisite corporate or partnership
power and authority to enter into and to consummate the transactions
contemplated by the Transaction Documents and otherwise to carry out its
obligations thereunder. The purchase by such Purchaser of the Securities
hereunder has been duly authorized by all necessary action on the part of such
Purchaser. Each of Transaction Documents has been duly executed by such
Purchaser, and when delivered by such Purchaser in accordance with the terms
hereof, will constitute the valid and legally binding obligation of such
Purchaser, enforceable against it in accordance with its terms.

                  (b) Investment Intent. Such Purchaser is acquiring the
Securities as principal for its own account for investment purposes only and not
with a view to or for distributing or reselling such Securities or any part
thereof, without prejudice, however, to such Purchaser's right, subject to the
provisions of this Agreement, the Registration Rights Agreement and the Warrant,
at all times to sell or otherwise dispose of all or any part of such Securities
pursuant to an effective registration statement under the Securities Act or
under an exemption from such registration and in compliance with applicable
federal and state securities laws. Nothing contained herein shall be deemed a
representation or warranty by such Purchaser to hold the Securities for any
period of time. Such Purchaser is acquiring the Securities hereunder in the
ordinary course of its business. Such Purchaser does not have any agreement or
understanding, directly or indirectly, with any person to distribute the
Securities.



                                      -10-



<PAGE>



                  (c) Purchaser Status. At the time such Purchaser was offered
the Securities, it was, and at the date hereof it is an "accredited investor" as
defined in Rule 501(a) under the Securities Act.

                  (d) Experience of such Purchaser. Such Purchaser, either alone
or together with its representatives, has such knowledge, sophistication and
experience in business and financial matters so as to be capable of evaluating
the merits and risks of the prospective investment in the Securities, and has so
evaluated the merits and risks of such investment.

                  (e) Ability of such Purchaser to Bear Risk of Investment. Such
Purchaser is able to bear the economic risk of an investment in the Securities
and, at the present time, is able to afford a complete loss of such investment.

                  (f) Access to Information. Such Purchaser acknowledges that it
has reviewed the Disclosure Materials and has been afforded (i) the opportunity
to ask such questions as it has deemed necessary of, and to receive answers
from, representatives of the Company concerning the terms and conditions of the
offering of the Securities and the merits and risks of investing in the
Securities; (ii) access to information about the Company and the Company's
financial condition, results of operations, business, properties, management and
prospects sufficient to enable it to evaluate its investment; and (iii) the
opportunity to obtain such additional information which the Company possesses or
can acquire without unreasonable effort or expense that is necessary to make an
informed investment decision with respect to the investment and to verify the
accuracy and completeness of the information contained in the Disclosure
Materials. Neither such inquiries nor any other investigation conducted by or on
behalf of such Purchaser or its representatives or counsel shall modify, amend
or affect such Purchaser's right to rely on the truth, accuracy and completeness
of the Disclosure Materials and the Company's representations and warranties
contained in the Transaction Documents.

                  (g) General Solicitation. Such Purchaser is not purchasing the
Securities as a result of or subsequent to any advertisement, article, notice or
other communication regarding the Securities published in any newspaper,
magazine or similar media or broadcast over television or radio or presented at
any seminar or any other general solicitation or general advertisement.

                  (h) Reliance. Such Purchaser understands and acknowledges that
(i) the Securities are being offered and sold to it without registration under
the Securities Act in a private placement that is exempt from the registration
provisions of the Securities Act and (ii) the availability of such exemption,
depends in part on, and the Company will rely upon the accuracy and truthfulness
of, the foregoing representations and such Purchaser hereby consents to such
reliance.

                  The Company acknowledges and agrees that no Purchaser makes or
has made any representations or warranties with respect to the transactions
contemplated hereby other than those specifically set forth in this Section 2.2.

                                      -11-





<PAGE>



                                   ARTICLE III
                         OTHER AGREEMENTS OF THE PARTIES

         3.1 Transfer Restrictions. (a) The Securities may only be disposed of
pursuant to an effective registration statement under the Securities Act, to the
Company or pursuant or to an available exemption from or in a transaction not
subject to the registration requirements of the Securities Act, and in
compliance with any applicable federal and state securities laws. In connection
with any transfer of Securities other than pursuant to an effective registration
statement or to the Company, except as otherwise set forth herein, the Company
may require the transferor thereof to provide to the Company an opinion of
counsel selected by the transferor, the form and substance of which opinion
shall be reasonably satisfactory to the Company, to the effect that such
transfer does not require registration of such transferred Securities under the
Securities Act. Any such transferee shall agree in writing to be bound by the
terms of this Agreement and shall have the rights of a Purchaser under this
Agreement and the Registration Rights Agreement.

                  (b) The Purchasers agree to the imprinting, so long as is
required by this Section 3.1(b), of the following legend on the Securities:

         NEITHER THESE SECURITIES NOR THE SECURITIES INTO WHICH THESE SECURITIES
ARE [CONVERTIBLE] [EXERCISABLE] HA VE BEEN REGISTERED WITH THE SECURITIES AND
EXCHANGE COMMISSION OR THE SECURITIES COMMISSION OF ANY STATE IN RELIANCE UPON
AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE
"SECURITIES ACT"), AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT
TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO
AN AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE
REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND IN ACCORDANCE WITH
APPLICABLE STATE SECURITIES LAWS AS EVIDENCED BY A LEGAL OPINION OF COUNSEL TO
THE TRANSFEROR TO SUCH EFFECT, THE SUBSTANCE OF WHICH SHALL BE REASONABLY
ACCEPTABLE TO THE COMP ANY.

         Underlying Shares shall not contain the legend set forth above nor any
other legend if the conversion of Debentures or the exercise of the Warrants, as
the case may be, occurs at any time while an Underlying Shares Registration
Statement is effective under the Securities Act or the holder is relying on Rule
144 promulgated under the Securities Act ("Rule 144") in connection with the
resale of such Underlying Shares, or in the event there is not an effective
Underlying Shares Registration Statement, and Rule 144 is not then available for
resale of the Underlying Shares, at such time as such legend is not required
under applicable requirements of the Securities Act (including, without
limitation, judicial interpretations and pronouncements issued by the staff of
the Commission). The Company shall cause its counsel to issue the legal opinion
included in the Transfer Agent Instructions to the Company's transfer agent on
the Effective Date. The Company agrees that following the Effective Date, it
will, no later than three Trading Days following the delivery by a Purchaser to
the Company of a certificate or certificates representing such Underlying Shares
issued with a restrictive legend, deliver to such Purchaser certificates
representing such Underlying Shares which shall be free from all restrictive and
other legends. The Company may not

                                      -12-




<PAGE>



make any notation on its records or give instructions to any transfer agent of
the Company which enlarge the restrictions of transfer set forth in this
Section.

         3.2 Acknowledgment of Dilution. The Company acknowledges that the
issuance of Underlying Shares upon the conversion of the Debentures and the
exercise of the Warrants will result in dilution of the outstanding shares of
Common Stock, which dilution may be substantial under certain market conditions.

         3.3 Furnishing of Information. After the Closing Date, and thereafter,
for as long as the Purchasers own Securities, the Company covenants to timely
file (or obtain extensions in respect thereof and file within the applicable
grace period) all reports required to be filed by the Company after the date
hereof pursuant to Section 13(a) or 15(d) of the Exchange Act. As long as the
Purchasers own Securities, if the Company is not required to file reports
pursuant to such sections, it will prepare and furnish to the Purchasers and
make publicly available in accordance with Rule 144(c) promulgated under the
Securities Act such information as is required for the Purchasers to sell the
Securities under Rule 144 promulgated under the Securities Act. The Company
further covenants that it will take such further action as any holder of
Securities may reasonably request, all to the extent required from time to time
to enable such Person to sell Underlying Shares without registration under the
Securities Act within the limitation of the exemptions provided by Rule 144
promulgated under the Securities Act, including causing its attorneys to render
and deliver any legal opinion required in order to permit a Purchaser to receive
Underlying Shares free of all restrictive legends and to subsequently sell
Underlying Shares under Rule 144 upon receipt of a notice of an intention to
sell or other form of notice having a similar effect. Upon the request of any
such Person, the Company shall deliver to such Person a written certification of
a duly authorized officer as to whether it has complied with such requirements.

         3.4 Integration. The Company shall not, and shall use its best efforts
to ensure that, no Affiliate of the Company shall, sell, offer for sale or
solicit offers to buy or otherwise negotiate in respect of any security (as
defined in Section 2 of the Securities Act) that would be integrated with the
offer or sale of the Securities in a manner that would require the registration
under the Securities Act of the sale of the Securities to the Purchasers.

         3.5 Increase in Authorized Shares. If on any date the Company would be,
if a notice of conversion or exercise (as the case may be) were to be delivered
on such date, precluded from issuing (a) 200% of the number of Underlying Shares
as would then be issuable upon a conversion in full of the Debentures and (b )
the number of Underlying Shares issuable upon exercise in full of the Warrants
(the "Current Required Minimum"), in either case, due to the unavailability of a
sufficient number of authorized but unissued or reserved shares of Common Stock,
then the Board of Directors of the Company shall promptly prepare and mail to
the stockholders of the Company proxy materials requesting authorization to
amend the Company's certificate or articles of incorporation to increase the
number of shares of Common Stock which the Company is authorized to issue to at
least such number of shares as reasonably requested by the Purchasers in order
to provide for such number of authorized and unissued shares of Common Stock to
enable the Company to comply with its issuance, conversion exercise and
reservation of shares obligations as set forth in this Agreement, the Debentures
and the Warrants (the sum of (x) the number of shares


                                      -13-



<PAGE>



of Common Stock then outstanding plus all shares of Common Stock issuable upon
exercise of all outstanding options, warrants and convertible instruments, and
(y) the Current Required Minimum, shall be a reasonable number). In connection
therewith, the Board of Directors shall (a) adopt proper resolutions authorizing
such increase, (b) recommend to and otherwise use its best efforts to promptly
and duly obtain stockholder approval to carry out such resolutions (and hold a
special meeting of the stockholders no later than the earlier to occur of the
sixtieth (60th) day after delivery of the proxy materials relating to such
meeting and the ninetieth (90th) day after request by a holder of Securities to
issue the number of Underlying Shares in accordance with the terms hereof and
(c) within five (5) Business Days of obtaining such stockholder authorization,
file an appropriate amendment to the Company's certificate or articles of
incorporation to evidence such increase.

         3.6 Reservation and Listing of Underlying Shares. (a) The Company shall
(i) in the time and manner required by any national securities exchange, market,
trading or quotation facility on which the Common Stock is then traded, prepare
and file with such national securities exchange, market, trading or quotation
facility on which the Common Stock is then traded an additional shares listing
application covering a number of shares of Common Stock which is not less than
the Initial Minimum, (ii) take all steps necessary to cause such shares of
Common Stock to be approved for listing on any such national securities
exchange, market or trading or quotation facility on which the Common Stock is
then listed as soon as possible thereafter, and (iii) provide to the Purchasers
evidence of such listing, and the Company shall maintain the listing of its
Common Stock thereon. If the number of Underlying Shares issuable upon (x)
conversion in full of the then outstanding Debentures and (y) exercise in full
of the then unexercised portion of the Warrants, exceeds eighty-five percent
(85%) of the number of Underlying Shares previously listed on account thereof
with any such required exchanges, then the Company shall take the necessary
actions to immediately list a number of Underlying Shares as equals no less than
the then Current Required Minimum.

                  (b) The Company shall maintain a reserve of shares of Common
Stock for issuance upon conversion of the Debentures in full and upon exercise
in full of the Warrants in accordance with this Agreement, in such amount as may
be required to fulfill its obligations in full under the Transaction Documents,
which reserve shall equa1 no less than the then Current Required Minimum.

         3.7 Conversion and Exercise Procedures. The Transfer Agent
Instructions, the Conversion Notice (as defined in the Debentures) and the Form
of Election to Purchase (as defined in the Warrants) sets forth the totality of
the procedures with respect to the conversion of the Debentures and the exercise
of the Warrants, including the form of legal opinion, if necessary, that shall
be rendered to the Company's transfer agent and such other information and
instructions as may be reasonably necessary to enable the Purchasers to convert
their Debentures and their Warrants, as the case may be.

         3.8 Conversion and Exercise Obligations of the Company. The Company
shall honor conversions of the Debentures and exercise of the Warrants and shall
deliver Underlying Shares in accordance with the respective terms, conditions
and time periods set forth in the Debentures and the Warrants.

                                      -14-



<PAGE>



         3.9 Subsequent Financing: Limitation on Registrations. (a) From the
date hereof through the ninetieth (90th) Trading Day following the Effective
Date, the Company will not offer, sell, grant any option to purchase, or
otherwise dispose of (or announce any offer, sale, grant or any option to
purchase or other disposition) any of its or its Affiliates' equity or equity
equivalent securities (including the issuance of any debt or other instrument at
any time over the life thereof convertible into or exchangeable for Common
Stock) other than to the Purchasers.

                  (b) The Company shall not, directly or indirectly, offer,
sell, grant any option to purchase, or otherwise dispose of (or announce any
offer, sale, grant or any option to purchase or other disposition) any of its
equity or equity-equivalent securities or securities of any of its Affiliates
that are exchangeable or convertible (directly or indirectly) for shares of
Common Stock, including the issuance of any debt or other instrument at any time
over the life thereof convertible into or exchangeable for Common Stock
(collectively, a "Subsequent Placement") from the date hereof until the
expiration of the l80th Trading Day after the Effective Date, unless (A) the
Company delivers to each of the Purchasers a written notice (the "Subsequent
Placement Notice") of its intention to effect such Subsequent Placement, which
Subsequent Placement Notice shall describe in reasonable detail the proposed
terms of such Subsequent Placement, the amount of proceeds intended to be raised
thereunder, the Person with whom such Subsequent Placement shall be effected,
and attached to which shall be a term sheet or similar document relating thereto
and (B) such Purchaser shall not have notified the Company by 6:30 p.m. (New
York City time) on the tenth Trading Day after its receipt of the Subsequent
Placement Notice of its willingness to provide (or to cause its sole designee to
provide), subject to completion of mutually acceptable documentation, financing
to the Company on the same terms set forth in the Subsequent Placement Notice.
If the Purchasers shall fail to notify the Company of their intention to enter
into such negotiations within such time period, the Company may effect the
Subsequent Placement substantially upon the terms and to the Persons (or
Affiliates of such Persons) set forth in the Subsequent Placement Notice;
provided, that the Company shall provide the Purchasers with a second Subsequent
Placement Notice, and the Purchasers shall again have the right of first refusal
set forth above in this paragraph (a), if the Subsequent Placement subject to
the initial Subsequent Placement Notice shall not have been consummated for any
reason on the terms set forth in such Subsequent Placement Notice within thirty
(30) Trading Days after the date of the initial Subsequent Placement Notice with
the Person (or an Affiliate of such Person) identified in the Subsequent
Placement Notice. If the Purchasers shall indicate a willingness to provide
financing in excess of the amount set forth in the Subsequent Placement Notice,
then each Purchaser shall be entitled to provide financing pursuant to such
Subsequent Placement Notice up to an amount equal to such Purchaser's pro-rata
portion of the aggregate number of Securities purchased by such Purchaser under
this Agreement, but the Company shall not be required to accept financing from
the Purchasers in an amount in excess of the amount set forth in the Subsequent
Placement Notice.

                  (c) Except for (x) Underlying Shares, (y) other "Registrable
Securities" (as such term is defined in the Registration Rights Agreement) to be
registered, and securities of the Company permitted pursuant to Section 6(c) of
the Registration Rights Agreement to be registered, in the Underlying Shares
Registration Statement in accordance with the Registration Rights Agreement, and
(z) Common S tock permitted to be issued pursuant to Section 3.9(e), the Company
shall not, for a period of not less than ninety (90) Trading Days after the
Effective Date, without the

                                      -15-



<PAGE>



prior written consent of the Purchasers, register any securities of the Company.
Any days after the Effective Date that a Purchaser is unable to sell Underlying
Shares under the Underlying Shares Registration Statement shall be added to such
ninety (90) Trading Day period.

                  (d) With respect to Section 3.9(a) and (b), the ninety (90)
and one hundred and eighty (180) Trading Day periods shall be extended for the
number of Trading Days following the Effective Date during such period (A) in
which trading in the Common Stock is suspended by any securities exchange or
market or quotation system on which the Common Stock is then listed, or (B)
during which the Underlying Shares Registration Statement is not effective, or
(C) during which the prospectus included in the Underlying Shares Registration
Statement may not be used by the holders thereof for the resale of Underlying
Shares.

                  (e) The restrictions contained in Section 3.9(a), and (b)
shall not apply to (i) the granting of options or warrants to employees,
officers and directors of the Company, and the issuance of Common Stock upon
exercise of such options or warrants granted under any stock option plan
heretofore or hereinafter duly adopted by the Company and (ii) and (ii)
issuances of Common Stock pursuant to a Strategic Transaction (as defined
herein). A "Strategic Transaction" shall mean a transaction or relationship in
which the Company issues shares of Common Stock to a Person which is, itself or
through its subsidiaries, an operating company in a business related to the
business of the Company and in which the Company receives material benefits in
addition to the investment of funds, but shall not include a transaction in
which the Company is issuing securities primarily for the purpose of raising
capital or to an entity whose primary business is investing in securities.

         3.10 Certain Securities Laws Disclosures: Publicity. The Company shall:
(i) on the Closing Date, issue a press release reasonably acceptable to the
Purchasers disclosing the transactions contemplated hereby, (ii) file with the
Commission a Report on Form 8-K disclosing the transactions contemplated hereby
within ten Business Days after the Closing Date, and (iii) timely file with the
Commission a Form D promulgated under the Securities Act. The Company shall, no
less than two Business Days prior to the filing of any disclosure required by
clauses (ii) and (iii) above, provide a copy thereof to the Purchasers for their
review. The Company and the Purchasers shall consult with each other in issuing
any other press releases or otherwise making public statements or filings and
other communications with the Commission or any regulatory agency or stock
market or trading facility with respect to the transactions contemplated hereby
and neither party shall issue any such press release or otherwise make any such
public statement, filings or other communications without the prior written
consent of the other, except that if such disclosure is required by law or stock
market regulation, in which such case the disclosing party shall promptly
provide the other party with prior notice of such public statement, filing or
other communication. Notwithstanding the foregoing, the Company shall not
publicly disclose the names of the Purchasers, or include the names of the
Purchasers in any filing with the Commission, or any regulatory agency, trading
facility or stock market without the prior written consent of the Purchasers,
except to the extent such disclosure (but not any disclosure as to the
controlling Persons thereof) is required by law or stock market regulations, in
which case the Company shall provide the Purchasers with prior notice of such
disclosure.



                                      -16-



<PAGE>



         3.11 Use of Proceeds. The Company shall use the net proceeds from the
sale of the Securities hereunder for working capital purposes and not for the
satisfaction of any portion of the Company's debt (other than payment of trade
payables in the ordinary course of the Company's business and prior practices),
to redeem any Company equity or equity-equivalent securities or to settle any
outstanding litigation.

         3.12 Reimbursement. So long as Purchasers have complied with the terms
and conditions of this Agreement, if any Purchaser becomes involved in any
capacity in any action, proceeding or investigation brought by or against any
Person, including stockholders of the Company, solely as a result of acquiring
the Securities under this Agreement, the Company will reimburse such Purchaser
for its reasonable legal and other expenses (including, but not limited to, the
cost of any investigation, preparation or travel) incurred in connection
therewith, as such expenses are incurred. The reimbursement obligations of the
Company under this paragraph shall be in addition to any liability which the
Company may otherwise have, shall extend upon the same terms and conditions to
any Affiliates of the Purchasers who are actually named in such action,
proceeding or investigation, and partners, directors, agents, employees and
controlling persons (if any), as the case may be, of the Purchasers and any such
Affiliate, and shall be binding upon and inure to the benefit of any successors,
assigns, heirs and personal representatives of the Company, the Purchasers and
any such Affiliate and any such Person. The Company also agrees that neither the
Purchasers nor any such Affiliates, partners, directors, agents, employees or
controlling persons shall have any liability to the Company or any Person
asserting claims on behalf of or in right of the Company solely as a result of
acquiring the Securities under this Agreement.

         3.13 Non-Disclosure of Non-Public Information (a) The Company shall not
disclose non-public information to the Purchasers or their advisors or
representatives unless prior to disclosure of such information the Company
identifies such information as being non-public information and the Purchasers
enter into a non-disclosure agreement in form mutually acceptable to the Company
and the Purchasers.

                  (b) The Company represents that it does not disseminate
non-public information to any investors who purchase stock in the Company in a
public offering, to money managers or to securities analysts. Notwithstanding
the foregoing or anything herein to the contrary, the Company will immediately
notify the Purchasers of any event or the existence of any circumstance (without
any obligation to disclose the specific event or circumstance) of which it
becomes aware, which, if not disclosed in the prospectus included in the
Underlying Shares Registration Statement would cause such prospectus to include
a material misstatement or to omit a material fact required to be stated therein
in order to make the statements, therein in light of the circumstances in which
they were made, not misleading.

         3.14 Shareholder Rights Plan. No claim will be made or enforced by the
Company or any other Person that any Purchaser is an "Acquiring Person" under
any shareholders rights plan or similar plan or arrangement in effect or
hereafter adopted by the Company, or that any Purchaser could be deemed to
trigger the provisions of any such plan or arrangement, by virtue of receiving
Securities or shares of Common Stock under the Transaction Documents.


                                      -17-



<PAGE>



                                   ARTICLE IV
                                  MISCELLANEOUS

         4.1 Fees and Expenses. At the Closing, the Company shall reimburse the
Purchasers for their legal fees and expenses incurred in connection with the
preparation and negotiation of the Transaction Documents by paying to Robinson
Silverman $30,000 for the preparation and negotiation of the Transaction
Documents. The amount contemplated by the immediately preceding sentence shall
be retained by the Purchasers and shall not be delivered to the Company at the
Closing. Other than the amount contemplated herein, and except as otherwise
specified in the Registration Rights Agreement and the Security Agreement, each
party shall pay the fees and expenses of its advisers, counsel, accountants and
other experts, if any, and all other expenses incurred by such party incident to
the negotiation, preparation, execution, delivery and performance of this
Agreement. The Company shall pay all stamp and other taxes and duties levied in
connection with the issuance of the Securities.

         4.2 Entire Agreement: Amendments. The Transaction Documents, together
with the Exhibits and Schedules thereto and Transfer Agent Instructions, contain
the entire understanding of the parties with respect to the subject matter
hereof and supersede all prior agreements and understandings, oral or written,
with respect to such matters, which the parties acknowledge have been merged
into such documents, exhibits and schedules.

         4.3 Notices. Any and all notices or other communications or deliveries
required or permitted to be provided hereunder shall be in writing and shall be
deemed given and effective on the earliest of (i) the date of transmission, if
such notice or communication is delivered via facsimile at the facsimile
telephone number specified in this Section prior to 5:00 p.m. (New York City
time) on a Business Day, (ii) the Business Day after the date of transmission,
if such notice or communication is delivered via facsimile at the facsimile
telephone number specified in this Agreement later than 5:00p.m. (New York City
time) on any date and earlier than 11:59 p.m. (New York City time) on such date,
(iii) the Business Day following the date of mailing, if sent by U.S. nationally
recognized overnight courier service, or (iv) upon actual receipt by the party
to whom such notice is required to be given. The address for such notices and
communications shall be as follows:


If to the Company:                  Digital Descriptor Systems, Inc.
                                    446 Lincoln Highway
                                    Fairless Hills, P A 19030
                                    Facsimile No.: (267) 580-1090
                                    Attn: Michael J. Pellegrino

With copies to:                     Owen M. Naccarato, Esq.
                                    19600 Fairchild, Suite 260
                                    Irvine, CA 92612
                                    Facsimile No.: (949) 851-9262
                                    Attn: Owen M. Naccarato, Esq.



                                      -18-

<PAGE>

If to a Purchaser:                  To the address set forth under such
                                    Purchaser's name on the signature pages
                                    hereto.

or such other address as may be designated in writing hereafter, in the same
manner, by such Person.

         4.4 Amendments: Waivers. No provision of this Agreement may be waived
or amended except in a written instrument signed, in the case of an amendment,
by both the Company and each of the Purchasers or, in the case of a waiver, by
the party against whom enforcement of any such waiver is sought. No waiver of
any default with respect to any provision, condition or requirement of this
Agreement shall be deemed to be a continuing waiver in the future or a waiver of
any other provision, condition or requirement hereof, nor shall any delay or
omission of either party to exercise any right hereunder in any manner impair
the exercise of any such right accruing to it thereafter.

         4.5 Headings. The headings herein are for convenience only, do not
constitute a part of this Agreement and shall not be deemed to limit or affect
any of the provisions hereof.

         4.6 Successors and Assigns. This Agreement shall be binding upon and
inure to the benefit of the parties and their successors and permitted assigns.
The Company may not assign this Agreement or any rights or obligations hereunder
without the prior written consent of the Purchasers. The Purchasers may not
assign this Agreement or any of the rights or obligations hereunder without the
consent of the Company; however this provision shall not limit any Purchaser's
right to transfer Securities accrued hereunder or transfer or assign rights
under the Registration Rights Agreement.

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

         4.8 Governing Law. All other questions concerning the construction,
validity, enforcement and interpretation of this Agreement shall be governed by
and construed and enforced in accordance with the internal laws of the State of
New York, without regard to the principles of conflicts of law thereof. Each
party hereby irrevocably submits to the exclusive jurisdiction of the state and
federal courts sitting in the City of New York, borough of Manhattan, for the
adjudication of any dispute hereunder or in connection herewith or with any
transaction contemplated hereby or discussed herein (including with respect to
the enforcement of the any of the Transaction Documents), and hereby irrevocably
waives, and agrees not to assert in any suit, action or proceeding, any claim
that it is not personally subject to the jurisdiction of any such court, that
such suit, action or proceeding is improper. Each party hereby irrevocably
waives personal service of process and consents to process being served in any
such suit, action or proceeding by mailing a copy thereof via registered or
certified mail or overnight delivery (with evidence of delivery) to such party
at the address in effect for notices to it under this Agreement and agrees that
such service shall constitute good and sufficient service of process and notice
thereof. Nothing contained herein shall be deemed to limit in any way any right
to serve process in any manner permitted by law.


                                      -19-



<PAGE>



         4.9 Survival. The representations, warranties, agreements and covenants
contained herein shall survive the Closing and the delivery, exercise and
conversion of the Warrants or the Debentures, as the case may be.

         4.10 Execution. This Agreement may be executed in two or more
counterparts, all of which when taken together shall be considered one and the
same agreement and shall become effective when counterparts have been signed by
each party and delivered to the other party, it being understood that both
parties need not sign the same counterpart. In the event that any signature is
delivered by facsimile transmission, such signature shall create a valid and
binding obligation of the party executing (or on whose behalf such signature is
executed) the same with the same force and effect as if such facsimile signature
page were an original thereof.

         4.11 Severability. In case anyone or more of the provisions of this
Agreement shall be invalid or unenforceable in any respect, the validity and
enforceability of the remaining terms and provisions of this Agreement shall not
in any way be affecting or impaired thereby and the parties will attempt to
agree upon a valid and enforceable provision which shall be a reasonable
substitute therefor, and upon so agreeing, shall incorporate such substitute
provision in this Agreement.

         4.12 Remedies. In addition to being entitled to exercise all rights
provided herein or granted by law, including recovery of damages, each of the
Purchasers will be entitled to specific performance of the obligations of the
Company under the Transaction Documents. The parties hereto agree that monetary
damages may not be adequate compensation for any loss incurred by reason of any
breach of its obligations described in the foregoing sentence and hereby agrees
to waive in any action for specific performance of any such obligation the
defense that a remedy at law would be adequate.

         4.13 Independent Nature of Purchasers' Obligations and Rights. The
obligations of each Purchaser under any Transaction Document is several and not
joint with the obligations of any other Purchaser and no Purchaser shall be
responsible in any way for the performance of the obligations of any other
Purchaser under any Transaction Document. Nothing contained herein or in any
Transaction Document, and no action taken by any Purchaser pursuant thereto,
shall be deemed to constitute the Purchasers as a partnership, an association,
ajoint venture or any other kind of entity, or create a presumption that the
Purchasers are in any way acting in concert with respect to such obligations or
the transactions contemplated by the Transaction Document. Each Purchaser shall
be entitled to independently protect and enforce its rights, including without
limitation the rights arising out of this Agreement or out of the other
Transaction Documents, and it shall not be necessary for any other Purchaser to
be joined as an additional party in any proceeding for such purpose.



                   [REMAINDER OF PAGE INTENTIONALLY LEFT BLANK
                            SIGNATURE PAGES FOLLOWS]


                                      -20-



<PAGE>



                  IN WITNESS WHEREOF, the parties hereto have caused this
Secured Convertible Debenture Purchase Agreement to be duly executed by their
respective authorized signatories as of the date first indicated above.


                                DIGITAL DESCRIPTOR SYSTEMS, INC.




                                By:  /s/Michael J. Pellegrino
                                     ---------------------------
                                Name: Michael J. Pellegrino
                                Title: Chief Financial Officer


                   [REMAINDER OF PAGE INTENTIONALLY LEFT BLANK
                      SIGNATURE PAGE FOR PURCHASER FOLLOWS]

























                                      -21-


<PAGE>




                           AJW PARTNERS II, LLC
                           By: SMS Group, LLC




                           By. /s/Corey S. Ribotsky
                               ------------------------------
                           Name:  Corey S. Ribotsky
                           Title:

                           Purchase Price for Debentures: $300,000


                           Address for Notice:
                           AJW Partners II, LLC
                           155 First Street
                           Suite B
                           Mineola, New York 11501
                           Facsimile No.: (516) 739-7115
                           Attn: Corey S. Ribotsky


 With copies to:           Robinson Silverman Pearce Aronsohn & Berman LLP
                           1290 Avenue of the Americas
                           New York, NY 10104
                           Facsimile No.: (212) 541-4630 and (212) 541-1432
                           Attn: Eric L. Cohen, Esq.



















                                      -22-

<PAGE>

                                NEW MILLENNIUM CAPITAL PARTNERS II, LLC
                                By: First Street Manager II, LLC




                                By. /s/Glenn A. Arbeitman
                                    ------------------------
                                Name:  Glenn A. Arbeitman
                                Title:

                                Purchase Price for Debentures: $300,000


                                Address for Notice:
                                New Millennium Capital Partners II, LLC
                                155 First Street
                                Suite B
                                Mineola, New York 11501
                                Facsimile No.: (516) 739-7115
                                Attn: Glenn A. Arbeitman


       With copies to:          Robinson Silverman Pearce Aronsohn & Berman LLP
                                1290 Avenue of the Americas
                                New York, NY 10104
                                Facsimile No.: (212) 541-4630 and (212) 541-1432
                                Attn: Eric L. Cohen, Esq.





















                                      -23-


</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10.5.1
<SEQUENCE>7
<FILENAME>ex10-5_1.txt
<DESCRIPTION>EX-10.5.1
<TEXT>
<PAGE>


                                                                  Exhibit 10.5.1

        NEITHER THIS DEBENTURE NOR THE SECURITIES INTO WHICH THIS DEBENTURE IS
        CONVERTIBLE HAVE BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE
        COMMISSION OR THE SECURITIES COMMISSION OF ANY STATE IN RELIANCE UPON AN
        EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED
        (THE "SECURITIES ACT"), AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD
        EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE
        SECURITIES ACT OR PURSUANT TO AN AVAILABLE EXEMPTION FROM, OR IN A
        TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE
        SECURITIES ACT AND IN ACCORDANCE WITH APPLICABLE STATE SECURITIES LAWS,
        AS EVIDENCED BY A LEGAL OPINION OF COUNSEL TO THE TRANSFEROR TO SUCH
        EFFECT, THE SUBSTANCE OF WHICH SHALL BE REASONABLY ACCEPTABLE TO THE
        COMPANY .


No.1                                                                    $100,000

                        DIGITAL DESCRIPTOR SYSTEMS, INC.
                        12% SECURED CONVERTIBLE DEBENTURE
                              DUE DECEMBER 28, 2001

         THIS DEBENTURE is one of a series of duly authorized and issued
debentures of Digital Descriptor Systems, Inc., a Delaware corporation, having a
principal place of business at 446 Lincoln Highway, Fairless Hills, PA 19030
(the "Company"), designated as its 12% Secured Convertible Debentures, due
December 28, 2001, in the aggregate principal amount of Six Hundred Thousand
Dollars ($600,000) (the "Debentures").

         FOR VALUE RECEIVED, the Company promises to pay to AJW Partners, LLC or
its registered assigns (the "Holder"), the principal sum of $100,000, on
December 28, 2001 or such earlier date as the Debentures are required or
permitted to be repaid as provided hereunder (the "Maturity Date") and to pay
interest to the Holder on the aggregate unconverted and then outstanding
principal amount of this Debenture at the rate of 12% per annum, payable on a
quarterly basis on March 31, June 30, September 30 and December 31 of each year
while such Debentures are outstanding commencing on December 31, 2000 and on
each Conversion Date (as defined herein) ( each an "Interest Payment Date") for
such principal amount, commencing on the earlier to occur of a Conversion Date
for such principal amount and March 31, 2001, in cash or shares of Common Stock
(as defined in Section 6). Subject to the terms and conditions herein, the
Holder may elect to receive interest hereunder in shares of Common Stock or
cash. If interest is paid by the Company in shares of its Common Stock, then the
number of shares of Common Stock issuable on account of such interest shall
equal the cash amount of such interest on such Interest Payment Date divided by
the Conversion Price (as defined below) on such date.

<PAGE>

Interest shall be calculated on the basis on a 360-day year and shall accrue
daily commencing on the Original Issue Date (as defined in Section 6) until
payment in full of the principal sum, together with all accrued and unpaid
interest and other amounts which may become due hereunder, has been made.
Interest hereunder will be paid to the Person (as defined in Section 6) in whose
name this Debenture is registered on the records of the Company regarding
registration and transfers of Debentures (the "Debenture Register"). All overdue
accrued and unpaid interest to be paid in cash hereunder shall entail a late fee
at the rate of 15% per annum ("Late Fee") (or such lower maximum amount of
interest permitted to be charged under applicable law) which will accrue daily,
from the date such interest is due hereunder through and including the date of
payment, payable in cash or, at the option of the Holder, in shares of Common
Stock. If such Late Fee is paid by the Company in shares of its Common Stock,
then the number of shares of Common Stock issuable on account of such Late F ee
shall equal the cash amount of such Late Fee on such Late Fee payment date
divided by the Conversion Price on such date.

         This Debenture is subject to the following additional provisions:

         Section 1. This Debenture is exchangeable for an equal aggregate
principal amount of Debentures of different authorized denominations, as
requested by the Holder surrendering the same. No service charge will be made
for such registration of transfer or exchange.

         Section 2. This Debenture has been issued subject to certain investment
representations of the original Holder set forth in the Purchase Agreement (as
defined in Section 6) and may be transferred or exchanged only in compliance
with the Purchase Agreement. Prior to due presentment to the Company for
transfer of this Debenture, the Company and any agent of the Company may treat
the Person ( as defined in Section 6) in whose name this Debenture is duly
registered on the Debenture Register as the owner hereof for the purpose of
receiving payment as herein provided and for all other purposes, whether or not
this Debenture is overdue, and neither the Company nor any such agent shall be
affected by notice to the contrary .

         Section 3.  Events of Default.

                 (a) "Event of Default", wherever used herein, means anyone of
the following events (whatever the reason and whether it shall be voluntary or
involuntary or effected by operation of law or pursuant to any judgment, decree
or order of any court, or any order, rule or regulation of any administrative or
governmental body):

                     (i) any default in the payment of the principal of,
         interest (including any Late Fees) on or liquidated damages in respect
         of, any Debentures, free of any claim of subordination, as and when the
         same shall become due and payable (whether on a Conversion Date or the
         Maturity Date or by acceleration or otherwise);

                     (ii) the Company shall fail to observe or perform any other
         covenant, agreement or warranty contained in, or otherwise commit any
         breach of any of the Transaction Documents (as defined in Section
         6),and such failure or breach shall not have been remedied within five
         days after the date on which notice of such failure or breach shall
         have been given;


                                      -2-
<PAGE>

                     (iii) the Company or any of its subsidiaries shall
         commence, or there shall be commenced against the Company or any such
         subsidiary a case under any applicable bankruptcy or insolvency laws as
         now or hereafter in effect or any successor thereto, or the Company
         commences any other proceeding under any reorganization, arrangement,
         adjustment of debt, relief of debtors, dissolution, insolvency or
         liquidation or similar law of any jurisdiction whether now or hereafter
         in effect relating to the Company or any subsidiary thereof or there is
         commenced against the Company or any subsidiary thereof any such
         bankruptcy, insolvency or other proceeding which remains undismissed
         for a period of 60 days; or the Company or any subsidiary thereof is
         adjudicated insolvent or bankrupt; or any order of relief or other
         order approving any such case or proceeding is entered; or the Company
         or any subsidiary thereof suffers any appointment of any custodian or
         the like for it or any substantial part of its property which continues
         undischarged or unstayed for a period of 60 days; or the Company or any
         subsidiary thereof makes a general assignment for the benefit of
         creditors; or the Company shall fail to pay, or shall state that it is
         unable to pay, or shall be unable to pay, its debts generally as they
         become due; or the Company or any subsidiary thereof shall call a
         meeting of its creditors with a view to arranging a composition,
         adjustment or restructuring of its debts; or the Company or any
         subsidiary thereof shall by any act or failure to act expressly
         indicate its consent to, approval of or acquiescence in any of the
         foregoing; or any corporate or other action is taken by the Company or
         any subsidiary thereof for the purpose of effecting any of the
         foregoing;

                     (iv) the Company shall default in any of its obligations
         under any other Debenture or any mortgage, credit agreement or other
         facility, indenture agreement, factoring agreement or other instrument
         under which there may be issued, or by which there may b~ secured or
         evidenced any indebtedness for borrowed money or money due under any
         long term leasing or factoring arrangement of the Company in an amount
         exceeding $100,000, whether such indebtedness now exists or shall
         hereafter be created and such default shall result in such indebtedness
         becoming or being declared due and payable prior to the date on which
         it would otherwise become due and payable;

                     (v) the Common Stock shall not be eligible for quotation on
         and quoted for trading on the OTC Bulletin Board ("OTC") or listed for
         trading on the Nasdaq SmallCap Market, New York Stock Exchange,
         American Stock Exchange or the Nasdaq National Market (each, a
         "Subsequent Market") and shall not again be eligible for and quoted or
         listed for trading thereon within five Trading Days;

                     (vi) the Company shall be a party to any Change of Control
         Transaction ( as defined in Section 6), shall agree to sell or dispose
         all or in excess of 33% of its assets in one or more transactions
         (whether or not such sale would constitute a Change of Control
         Transaction), or shall redeem or repurchase more than a de minimis
         number of shares of Common Stock or other equity securities of the
         Company (other than redemptions of Underlying Shares (as defined in
         Section 6));


                                      -3-
<PAGE>

                     (vii ) an Underlying Shares Registration Statement (as
         defined in Section 6) shall not have been declared effective by the
         Commission (as defined in Section 6) on or prior to the 120th day after
         the Original Issue Date;

                     (viii) if, during the Effectiveness Period (as defined in
         the Registration Rights Agreement (as defined in Section 6>>, the
         effectiveness of the Underlying Shares Registration Statement lapses
         for any reason or the Holder shall not be permitted to resell
         Registrable Securities (as defined in the Registration Rights
         Agreement) under the Underlying Shares Registration Statement, in
         either case, for more than five consecutive Trading Days or an
         aggregate of eight Trading Days (which need not be consecutive Trading
         Days);

                     (ix) an Event (as defined in the Registration Rights
         Agreement) shall not have been cured to the satisfaction of the Holder
         prior to the expiration of thirty days from the Event Date ( as defined
         in the Registration Rights Agreement) relating thereto ( other than an
         Event resulting from a failure of an Underlying Shares Registration
         Statement to be declared effective by the Commission on or prior to the
         120th day after the Original Issue Date, which shall be covered by
         Section 3(a)(vii));

                     (x) the Company shall fail for any reason to deliver
         certificates to a Holder prior to the third Trading Day after a
         Conversion Date pursuant to and in accordance with Section 4(b) or the
         Company shall provide notice to the Holder, including by way of public
         announcement, at any time, of its intention not to comply with requests
         for conversions of any Debentures in accordance with the terms hereof;

                     (xi) if the registration statement on Form 10 filed by the
         Company with with the Commission pursuant to Sections 12(b) or 12(g)
         (as applicable) of the Exchange Act is not declared effective by
         February 15, 2001 or if after the registration statement is declared
         effective, such effectiveness of the registration statement lapses for
         any reason for more than five consecutive Trading Days;

                     (xii) the Company shall fail for any reason to deliver the
         payment in cash pursuant to a Buy-In (as defined herein) within five
         days after notice is claimed delivered hereunder; or

         (b) If any Event of Default occurs and is continuing, the full
principal amount of this Debenture (and, at the Holder's option all other
Debentures then held by such Holder), together with interest and other amounts
owing in respect thereof, to the date of acceleration shall become at the
Holder's election, immediately due and payable in cash, provided however, that
if the Company informs the Holder that it will be unable to pay the amounts due
in cash, the Holder may request payment of such amounts in stock, provided that
if Holder declines to permit payment in securities, such payment in full shall
be nonetheless due and owed in cash. The number of shares of Common Stock
issuable in payment thereof shall be determined by dividing the aggregate amount
due to the Holder by the Conversion Price. The aggregate amount payable upon an
Event of Default shall be equal to the sum of (i) the Mandatory Prepayment
Amount (as defined in Section 6) plus (ii) the product of (A) the number of


                                      -4-
<PAGE>

Underlying Shares issued in respect of conversions hereunder within thirty days
of the date of a declaration of an Event of Default and then held by the Holder
and (B) the Per Share Market Value (as defined in Section 6) on the date
prepayment is due or the date the full prepayment price is paid, whichever is
greater. Interest shall accrue on the prepayment amount hereunder from the
seventh day after such amount is due (being the date of an Event of Default)
through the date of prepayment in full thereof at the rate of 15% per annum (or
such lesser maximum amount that is permitted to be paid by applicable law), to
accrue daily from the date such payment is due hereunder through and including
the date of payment. All Debentures and Underlying Shares for which the full
prepayment price hereunder shall have been paid in accordance herewith shall
promptly be surrendered to or as directed by the Company. The Holder need not
provide and the Company hereby waives any presentment, demand, protest or other
notice of any kind, and the Holder may immediately and without expiration of any
grace period enforce any and all of its rights and remedies hereunder and all
other remedies available to it under applicable law. Such declaration may be
rescinded and annulled by Holder at any time prior to payment hereunder and the
Holder shall have all rights as a Debenture holder until such time, if any, as
the full payment under this Section shall have been received by it. No such
rescission or annulment shall affect any subsequent Event of Default or impair
any right consequent thereon.

         Section 4.  Conversion.

                 (a) (i) Conversion at Option of Holder. (A) This Debenture
shall .be convertible into shares of Common Stock at the option of the Holder,
in whole or in part at any time and from time to time, after the Original Issue
Date (subject to the limitations on conversion set forth in Section 4(a)(ii)
hereof). The number of shares of Common Stock issuable upon a conversion
hereunder equals the sum of (i) the quotient obtained by dividing (x) the
outstanding principal amount of this Debenture to be converted by (y) the
Conversion Price (as defined herein), and (ii) the amount equal to (I) the
product of (x) the outstanding principal amount of this Debenture to be
converted and (y) the product of (1) the quotient obtained by dividing .12 by
360 and (2) the number of days for which such principal amount was outstanding,
divided by (II) the Conversion Price on the Conversion Date, provided, that if
the Holder shall have elected to receive the interest due on a Conversion Date
in cash, subsection (ii) shall not be used in the calculation of the number of
shares of Common Stock issuable upon a conversion hereunder .

                     (B) The Holder shall effect conversions by delivering to
the Company and the Escrow Agent a completed notice in the form attached hereto
as Exhibit A (a "Conversion Notice"), including a completed Conversion Schedule
in the form of Schedule 1 to the Conversion Notice (on each Conversion Date, the
"Conversion Schedule"). The Conversion Schedule shall set forth the remaining
principal amount of this Debenture and all accrued and unpaid interest thereon
subsequent to the conversion at issue. The date on which a Conversion Notice is
delivered is the "Conversion Date." Unless the Holder is converting the entire
principal amount outstanding under this Debenture, the Holder is not be required
to physically surrender this Debenture to the Company or Escrow Agent in order
to effect conversions. Subject to Section 4(b), each Conversion Notice, once
given, shall be irrevocable. Conversions hereunder shall have the effect of
lowering the outstanding principal amount of this Debenture plus all accrued and
unpaid interest thereon in an amount equal to the applicable conversion, which
shall Conversion Schedule. The Holder and the Company shall maintain records


                                      -5-
<PAGE>

showing the principal amount converted and the date of such conversions. In the
event of any dispute or discrepancy, the records of the Holder shall be
controlling and determinative in the absence of manifest error.

                 (ii) Certain Conversion Restrictions.

                     (A) A Holder may not convert Debentures or receive shares
of Common Stock as payment of interest hereunder to the extent such conversion
or receipt of such interest payment would result in the Holder, together with
any affiliate thereof, beneficially owning (as determined in accordance with
Section l3(d) of the Exchange Act and the rules promulgated thereunder) in
excess of 4.999% of the then issued and outstanding shares of Common Stock,
including shares issuable upon conversion of, and payment of interest on, the
Debentures held by such Holder after application of this Section. Since the
Holder will not be obligated to report to the Company the number of shares of
Common Stock it may hold at the time of a conversion hereunder, unless the
conversion at issue would result in the issuance of shares of Common Stock in
excess of 4.999% of the then outstanding shares of Common Stock without regard
to any other shares which may be beneficially owned by the Holder or an
affiliate thereof, the Holder shall have the authority and obligation to
determine whether the restriction contained in this Section will limit any
particular conversion hereunder and to the extent that the Holder determines
that the limitation contained in this Section applies, the determination of
which portion of the principal amount of Debentures are convertible shall be the
responsibility and obligation of the Holder. If the Holder has delivered a
Conversion Notice for a principal amount of Debentures that, without regard to
any other shares that the Holder or its affiliates may beneficially own, would
result in the issuance in excess of the permitted amount hereunder, the Company
shall notify the Holder of this fact and shall honor the conversion for the
maximum principal amount permitted to be converted on such Conversion Date in
accordance with the periods described in Section 4(b) and, at the option of the
Holder, either retain any principal amount tendered for conversion in excess of
the permitted amount hereunder for future conversions or return such excess
principal amount to the Holder. The provisions of this Section may be waived by
a Holder (but only as to itself and not to any other Holder) upon not less than
61 days prior notice to the Company. Other Holders shall be unaffected by any
such waiver.

                     (B) A Holder may not convert Debentures or receive shares
of Common Stock as payment of interest hereunder to the extent such conversion
or receipt of such interest payment would result in the Holder, together with
any affiliate thereof, beneficially owning (as determined in accordance with
Section 13(d) of the Exchange Act and the rules promulgated thereunder) in
excess of 9.999% of the then issued and outstanding shares of Common Stock,
including shares issuable upon conversion of, and payment of interest on, the
Debentures held by such Holder after application of this Section. Since the
Holder will not be obligated to report to the Company the number of shares of
Common Stock it may hold at the time of a conversion hereunder, unless the
conversion at issue would result in the issuance of shares of Common Stock in
excess of 9.999% of the then outstanding shares of Common Stock without regard
to any other shares which may be beneficially owned by the Holder or an
affiliate thereof, the Holder shall have the authority and obligation to
determine whether the restriction contained in this Section will limit any
particular conversion hereunder and to the extent that the Holder determines
that the limitation contained in this Section applies, the determination of
which portion of the principal amount of Debentures are be evidenced by entries


                                      -6-
<PAGE>

set forth in the convertible shall be the responsibility and obligation of the
Holder. If the Holder has delivered a Conversion Notice for a principal amount
of Debentures that, without regard to any other shares that the Holder or its
affiliates may beneficially own, would result in the issuance in excess of the
permitted amount hereunder, the Company shall notify the Holder of this fact and
shall honor the conversion for the maximum principal amount permitted to be
converted on such Conversion Date in accordance with the periods described in
Section 4(b) and, at the option of the Holder, either retain any principal
amount tendered for conversion in excess of the permitted amount hereunder for
future conversions or return such excess principal amount to the Holder. The
provisions of this Section may be waived by a Holder (but only as to itself and
not to any other Holder) upon not less than 61 days prior notice to the Company.
Other Holders shall be unaffected by any such waiver.

                 (b) (i) Not later than three Trading Days after any Conversion
Date, (i) the Escrow Agent is hereby authorized and directed to deliver to the
Holder a certificate or certificates which shall be free of restrictive legends
and trading restrictions (other than those required by Section 3.1(b) of the
Purchase Agreement) representing the number of shares of Common Stock issuable
upon such conversion in accordance with the terms hereof (if there is no Escrow
Agent for such purpose or for any reason there are insufficient shares of Common
Stock deposited with the Escrow Agent for delivery to the Holder upon conversion
hereunder, the Corporation will deliver to the Holder within three Trading Days
the shares of Common Stock being acquired upon the conversion), and (ii) if the
Holder has elected to receive accrued interest in cash, the Company will deliver
to the Holder a bank check, payable to Holder, in the amount of accrued and
unpaid interest. If requested by a Holder, the Company and the Escrow Agent will
use their best efforts to deliver conversion shares electronically through the
Depository Trust Corporation or another established clearing corporation
performing similar functions. If shares of Common Stock issuable following a
Conversion Notice are not delivered to or as directed by the Holder by the third
Trading Day after a Conversion Date, the Holder shall be entitled by written
notice to the Escrow Agent and the Company at any time on or before its receipt
of such shares, to rescind such conversion, in which event the Company shall
immediately return to the Holder a Debenture in principal amount equal to the
principal amount, interest and all other amounts due in respect of the
Conversion Notice (provided the Holder is converting the entire principal amount
outstanding under this Debenture).

                     (ii) If the Escrow Agent fails to comply with the delivery
requirements, the Company is still liable for compliance. If the Company or
Escrow Agent fails for any reason to deliver to the Holder such certificate or
certificates pursuant to Section 4(b)(i) by the third Trading Day after the
Conversion Date, the Company shall pay to such Holder, in cash, as liquidated
damages and not as a penalty, $5,000 for each Trading Day after such third
Trading Day until such certificates are delivered. Nothing herein shall limit a
Holder's right to pursue actual damages or declare an Event of Default pursuant
to Section 3 herein for the Company's failure to deliver certificates
representing shares of Common Stock upon conversion within the period specified
herein and such Holder shall have the right to pursue all remedies available to
it at law or in equity including, without limitation, a decree of specific
performance and/or injunctive relief. The exercise of any such rights shall not
prohibit the Holders from seeking to enforce damages pursuant to any other
Section hereof or under applicable law. Further, if the Company shall not have
delivered any cash due in respect of conversions of Debentures or as payment of
interest thereon by the third Trading Day after the Conversion Date, the Holder
may, by notice to the Company, require the Company to issue shares of Common


                                      -7-
<PAGE>

Stock pursuant to Section 4(c), except that for such purpose the Conversion
Price applicable thereto shall be the lesser of the Conversion Price on the
Conversion Date and the Conversion Price on the date of such Holder demand. Any
such shares will be subject to the provision of this Section.

                     (iii) In addition to any other rights available to the
Holder, if the Company or Escrow Agent fails for any reason to deliver to the
Holder such certificate or certificates pursuant to Section 4(b)(i) by the third
Trading Day after the Conversion Date, and if after such third Trading Day the
Holder purchases (in an open market transaction or otherwise) Common Stock to
deliver in satisfaction of a sale by such Holder of the Underlying Shares which
the Holder anticipated receiving upon such conversion (a "Buy-In"), then the
Company shall (A) pay in cash to the Holder (in addition to any remedies
available to or elected by the Holder) the amount by which (x) the Holder's
total purchase price (including brokerage commissions, if any) for the Common
Stock so purchased exceeds (y) the product of ( 1) the aggregate number of
shares of Common Stock that such Holder anticipated receiving from the
conversion at issue multiplied by (2) the market price of the Common Stock at
the time of the sale giving rise to such purchase obligation and (B) at the
option of the Holder, either reissue Debentures in principal amount equal to the
principal amount of the attempted conversion or deliver to the Holder the number
of shares of Common Stock that would have been issued had the Company timely
complied with its delivery requirements under Section 4(b)(i). For example, if
the Holder purchases Common Stock having a total purchase price of $11,000 to
cover a Buy-In with respect to an attempted conversion of Debentures with
respect to which the market price of the Underlying Shares on the date of
conversion was a total of $10,000 under clause (A) of the immediately preceding
sentence, the Company shall be required to pay the Holder $1,000. The Holder
shall provide the Company written notice indicating the amounts payable to the
Holder in respect of the Buy-In. Notwithstanding anything contained herein to
the contrary, if a Holder requires the Company to make payment in respect of a
Buy- In for the failure to timely deliver certificates hereunder and the Company
timely pays in full such payment, the Company shall not be required to pay such
Holder liquidated damages under Section 4(b)(ii) in respect of the certificates
resulting in such Buy-In.

                 (c) (i) The conversion price (the "Conversion Price") in
effect on any Conversion Date shall be the lesser of(l) $0.08 (the "Initial
Conversion Price"), and (2) 50% of the average of the lowest three inter-day
trading prices (which need not occur on consecutive Trading Days) during the ten
Trading Days immediately preceding the applicable Conversion Date (which may
include Trading Days prior to the Original Issue Date ), provided, that such ten
Trading Day period shall be extended for the number of Trading Days during such
period in which (A) trading in the Common Stock is suspended by, or not traded
on, the OTC or a Subsequent Market on which the Common Stock is then listed, or
(B) after the date declared effective by the Commission, the Underlying Shares
Registration Statement is either not effective or the Prospectus included in the
Underlying Shares Registration Statement may not be used by the Holder for the
resale of Underlying Shares.

                     (ii) If the Company, at any time while the Debentures are
outstanding, (a) shall pay a stock dividend or otherwise make a distribution or
distributions on shares of its Common Stock or any other equity or equity
equivalent securities payable in shares of Common Stock, (b) subdivide
outstanding shares of Common Stock into a larger number of shares, (c) combine


                                      -8-
<PAGE>

(including by way of reverse stock split) outstanding shares of Common Stock
into a smaller number of shares, or ( d) issue by reclassification of shares of
the Common Stock any shares of capital stock of the Company, then the Initial
Conversion Price shall be multiplied by a fraction of which the numerator shall
be the number of shares of Common Stock ( excluding treasury shares, if any)
outstanding before such event and of which the denominator shall be the number
of shares of Common Stock outstanding after such event. Any adjustment made
pursuant to this Section shall become effective immediately after the record
date for the determination of stockholders entitled to receive such dividend or
distribution and shall become effective immediately after the effective date in
the case of a subdivision, combination or re-classification.

                     (iii) If the Company, at any time while Debentures are
outstanding, shall issue rights, options or warrants to all holders of Common
Stock (and not to Holders) entitling them to subscribe for or purchase shares of
Common Stock at a price per share less than the Per Share Market Value at the
record date mentioned below, then the Conversion Price shall be multiplied by a
fraction, ofwhich the denominator shall be the number of shares of the Common
Stock (excluding treasury shares, ifany) outstanding on the date of issuance of
such rights or warrants plus the number of additional shares of Common Stock
offered for subscription or purchase, and of which the numerator shall be the
number of shares of the Common Stock (excluding treasury shares, if any)
outstanding on the date of issuance of such rights or warrants plus the number
of shares which the aggregate offering price of the total number of shares so
offered would purchase at such Per Share Market Value. Such adjustment shall be
made whenever such rights or warrants are issued, and shall become effective
immediately after the record date for the determination of stockholders entitled
to receive such rights, options or warrants. However, upon the expiration of any
such right, option or warrant to purchase shares of the Common Stock the
issuance of which resulted in an adjustment in the Conversion Price pursuant to
this Section, if any such right, option or warrant shall expire and shall not
have been exercised, the Conversion Price shall immediately upon such expiration
be recomputed and effective immediately upon such expiration be increased to the
price which it would have been (but reflecting any other adjustments in the
Conversion Price made pursuant to the provisions of this Section after the
issuance of such rights or warrants) had the adjustment of the Conversion Price
made upon the issuance of such rights, options or warrants been made on the
basis of offering for subscription or purchase only that number of shares of the
Common Stock actually purchased upon the exercise of such rights, options or
warrants actually exercised.

                     (iv) If the Company or any subsidiary thereof, as
applicable with respect to Common Stock Equivalents (as defined below), at any
time while Debentures are outstanding, shall issue shares of Common Stock or
rights, warrants, options or other securities or debt that are convertible into
or exchangeable for shares of Common Stock ("Common Stock Equivalents")
entitling any Person to acquire shares of Common Stock, at a price per share
less than the Conversion Price (if the holder of the Common Stock or Common
Stock Equivalent so issued shall at any time, whether by operation of purchase
price adjustments, reset provisions, floating conversion, exercise or exchange
prices or otherwise, or due to warrants, options or rights per share which is
issued in connection with such issuance, be entitled to receive shares of Common
Stock at a price per share which is less than the Conversion Price, such
issuance shall be deemed to have occurred for less than the Conversion Price),
then, at the sole option of the Holder, the Conversion Price shall be adjusted
to mirror the conversion, exchange or purchase price for such Common Stock or


                                      -9-
<PAGE>

Common Stock Equivalents (including any reset provisions thereof) at issue. Such
adjustment shall be made whenever such Common Stock or Common Stock Equivalents
are issued. The Company shall notify the Holder and the Escrow Agent in writing,
no later than the business day following the issuance of any Common Stock or
Common Stock Equivalent subject to this section, indicating therein the
applicable issuance price, or of applicable reset price, exchange price,
conversion price and other pricing terms. No adjustment under this Section shall
be made as a result of (i) issuances of Common Stock or Common Stock Equivalents
to the extent disclosed in Schedule 2.1 ( c ) to the Purchase Agreement, (ii)
issuances and exercises of options to purchase shares of Common Stock issued for
compensatory purposes pursuant to any of the Company's stock option or stock
purchase plans, or (iii) exercises under the Warrants ( as defined in the
Purchase Agreement).

                     (v) If the Company, at any time while Debentures are
outstanding, shall distribute to all holders of Common Stock (and not to
Holders) evidences of its indebtedness or assets or rights or warrants to
subscribe for or purchase any security, then in each such case the Conversion
Price at which Debentures shall thereafter be convertible shall be determined by
multiplying the Conversion Price in effect immediately prior to the record date
fixed for determination of stockholders entitled to receive such distribution by
a fraction of which the denominator shall be the Per Share Market Value
determined as of the record date mentioned above, and of which the numerator
shall be such Per Share Market Value on such record date less the then fair
market value at such record date of the portion of such assets or evidence of
indebtedness so distributed applicable to one outstanding share of the Common
Stock as determined by the Board of Directors in good faith. In either case the
adjustments shall be described in a statement provided to the Holders of the
portion of assets or evidences of indebtedness so distributed or such
subscription rights applicable to one share of Common Stock. Such adjustment
shall be made whenever any such distribution is made and shall become effective
immediately after the record date mentioned above.

                     (vi) In case of any reclassification of the Common Stock or
any compulsory share exchange pursuant to which the Common Stock is converted
into other securities, cash or property, the Holders shall have the right
thereafter to, at their option, (A) convert the then outstanding principal
amount, together with all accrued but unpaid interest and any other amounts then
owing hereunder in respect of this Debenture only into the shares of stock and
other securities, cash and property receivable upon or deemed to be held by
holders of the Common Stock following such reclassification or share exchange,
and the Holders of the Debentures shall be entitled upon such event to receive
such amount of securities, cash or property as the shares of the Common Stock of
the Company into which the then outstanding principal amount, together with all
accrued but unpaid interest and any other amounts then owing hereunder in
respect of this Debenture could have been converted immediately prior to such
reclassification or share exchange would have been entitled or (B) require the
Company to prepay the aggregate of its outstanding principal amount of
Debentures, plus all interest and other amounts due and payable thereon, at a
price determined in accordance with Section 3(b ). The entire prepayment price
shall be paid in cash. This provision shall similarly apply to successive
reclassifications or share exchanges.


                                      -10-
<PAGE>

                     (vii) All calculations under this Section 4 shall be made
to the nearest cent or the nearest 1/100th of a share, as the case may be. No
adjustments in either the Conversion Price or the Initial Conversion Price shall
be required if such adjustment is less than $0.01, provided, however, Initial
Conversion Price shall be required if such adjustment is less than $0.01,
provided, however, that any adjustments which by reason of this Section are not
required to be made shall be carried forward and taken into account in any
subsequent adjustment.

                     (viii) Whenever either the Initial Conversion Price or the
Conversion Price is adjusted pursuant to any of Section 4(c)(ii) -(v), the
Company shall promptly mail to each Holder a notice setting forth the Initial
Conversion Price or Conversion Price (as applicable) after such adjustment and
setting forth a brief statement of the facts requiring such adjustment.

                     (ix) If(A) the Company shall declare a dividend (or any
other distribution) on the Common Stock; (B) the Company shall declare a special
nonrecurring cash dividend on or a redemption of the Common Stock; (C) the
Company shall authorize the granting to all holders of the Common Stock rights
or warrants to subscribe for or purchase any shares of capital stock of any
class or of any rights; (D) the approval of any stockholders of the Company
shall be required in connection with any reclassification of the Common Stock,
any consolidation or merger to which the Company is a party, any sale or
transfer of all or substantially all of the assets of the Company, of any
compulsory share exchange whereby the Common Stock is converted into other
securities, cash or property; (E) the Company shall authorize the voluntary or
involuntary dissolution, liquidation or winding up of the affairs of the
Company; then, in each case, the Company shall cause to be filed at each office
or agency maintained for the purpose of conversion of the Debentures, and shall
cause to be mailed to the Holders at their last addresses as they shall appear
upon the stock books of the Company, at least 20 calendar days prior to the
applicable record or effective date hereinafter specified, a notice stating (x)
the date on which a record is to be taken for the purpose of such dividend,
distribution, redemption, rights or warrants, or if a record is not to be taken,
the date as of which the holders of the Common Stock of record to be entitled to
such dividend, distributions, redemption, rights or warrants are to be
determined or (y) the date on which such reclassification, consolidation,
merger, sale, transfer or share exchange is expected to become effective or
close, and the date as of which it is expected that holders of the Common Stock
of record shall be entitled to exchange their shares of the Common Stock for
securities, cash or other property deliverable upon such reclassification,
consolidation, merger, sale, transfer or share exchange, provided, that the
failure to mail such notice or any defect therein or in the mailing thereof
shall not affect the validity of the corporate action required to be specified
in such notice. Holders are entitled to convert Debentures during the 20-day
period commencing the date of such notice to the effective date of the event
triggering such notice.

                     (x) In case of any (1) merger or consolidation of the
Company with or into another Person, or (2) sale by the Company of more than
one-half of the assets of the Company in one or a series of related
transactions, a Holder shall have the right to (A) exercise any rights under
Section 3(b), (B) convert its aggregate principal amount of Debentures then
outstanding into the shares of stock and other securities, cash and property
receivable upon or deemed to be held by holders of Common Stock following such
merger, consolidation or sale, and such Holder shall be entitled upon such event
or series of related events to receive such amount of securities, cash and
property as the shares of Common Stock into which such aggregate principal
amount of Debentures could have been converted immediately prior to such merger,


                                      -11-
<PAGE>

consolidation or sales would have been entitled, or (C) in the case of a merger
or consolidation, require the surviving entity to issue to the Debentures then
held by such Holder, plus all accrued and unpaid interest and other amounts
owing thereon, which newly issued convertible debentures shall have terms
identical (including with respect to conversion) to the terms of this Debenture,
and shall be entitled to all of the rights and privileges of a Holder of
Debentures set forth herein and the agreements pursuant to which the Debentures
were issued. In the case of clause (C), the conversion price applicable for the
newly issued shares of convertible preferred stock or convertible debentures
shall be based upon the amount of securities, cash and property that each share
of Common Stock would receive in such transaction and the Conversion Price in
effect immediately prior to the effectiveness or closing date for such
transaction. The terms of any such merger, sale or consolidation shall include
such terms so as to continue to give the Holders the right to receive the
securities, cash and property set forth in this Section upon any conversion or
redemption following such event. This provision shall similarly apply to
successive such events.

                 (d) The Company covenants that it will at all times reserve and
keep available out of its authorized and unissued shares of Common Stock solely
for the purpose of issuance upon conversion of the Debentures and payment of
interest on the Debentures, each as herein provided, free from preemptive rights
or any other actual contingent purchase rights of persons other than the
Holders, not less than such number of shares of the Common Stock as shall
(subject to any additional requirements of the Company as to reservation of such
shares set forth in the Purchase Agreement) be issuable (taking into account the
adjustments and restrictions of Section 4(b ))upon the conversion of the
outstanding principal amount of the Debentures and payment of interest
hereunder. The Company covenants that all shares of Common Stock that shall be
so issuable shall, upon issue, be duly and validly authorized, issued and fully
paid, nonassessable and, if the Underlying Shares Registration Statement has
been declared effective under the Securities Act, registered for public sale in
accordance with such Underlying Shares Registration Statement.

                 (e) Upon a conversion hereunder the Company shall not be
required to issue stock certificates representing fractions of shares of the
Common Stock, but may if otherwise permitted, make a cash payment in respect of
any final fraction of a share based on the Per Share Market Value at such time.
If the Company elects not, or is unable, to make such a cash payment, the Holder
shall be entitled to receive, in lieu of the final fraction of a share, one
whole share of Common Stock.

                 (f) The issuance of certificates for shares of the Common Stock
on conversion of the Debentures shall be made without charge to the Holders
thereof for any documentary stamp or similar taxes that may be payable in
respect of the issue or delivery of such certificate, provided that the Company
shall not be required to pay any tax that may be payable in respect of any
transfer involved in the issuance and delivery of any such certificate upon
conversion in a name other than that of the Holder of such Debentures so
converted and the Company shall not be required to issue or deliver such
certificates unless or until the person or persons requesting the issuance
thereof shall have paid to the Company the amount of such tax or shall have
established to the satisfaction of the Company that such tax has been paid.

                 (g) Any and all notices or other communications or deliveries
to be provided by the Holders hereunder, including, without limitation, any
Conversion Notice, shall be in writing and delivered personally, by facsimile,
sent by a nationally recognized overnight courier service or sent by certified
or registered mail, postage prepaid, addressed to the Company, at 446 Lincoln
Highway, Fairless Hills, PA 19030, Facsimile No.: (267) 580-1090, attention:
Michael J. Pellegrino, or such other address or facsimile number as the Company


                                      -12-
<PAGE>

may specify for such purposes by notice to the Holders delivered in accordance
with this Section, with a copy to (other than for Conversion Notices) Owen
Naccarato, Esq., Facsimile No.: (949) 851-9262, Attn: Owen Naccarato, Esq. Any
and all notices or other communications or deliveries to be provided by the
Company hereunder shall be in writing and delivered personally, by facsimile,
sent by a nationally recognized overnight courier service or sent by certified
or registered mail, postage prepaid, addressed to each Holder at the facsimile
telephone number or address of such Holder appearing on the books of the
Company, or if no such facsimile telephone number or address appears, at the
principal place of business of the Holder. Any notice or other communication or
deliveries hereunder shall be deemed given and effective on the earliest of (i)
the date of transmission, if such notice or communication is delivered via
facsimile at the facsimile telephone number specified in this Section prior to
5:00 p.m. (New York City time), (ii) the date after the date of transmission, if
such notice or communication is delivered via facsimile at the facsimile
telephone number specified in this Section later than 5:00 p.m. (New York City
time) on any date and earlier than 11 :59 p.m. (New York City time) on such
date, (iii) four days after deposit in the United States mail, (iv) the Business
Day following the date of mailing, if sent by nationally recognized overnight
courier service, or (v) upon actual receipt by the party to whom such notice is
required to be given.

         Section 5.  Optional Prepayment. During the first 30 days following the
Original Issue Date, the Company shall have the right to prepay all or any
portion of the outstanding principal amount of this Debenture for which
Conversion Notices have not previously been delivered by delivery of the
prepayment price to the Holder together with a written accounting of the
principal amount to be prepaid plus other amounts owing thereon. The prepayment
price applicable to prepayments under this Section must accompany the notice of
intention to prepay. The prepayment price shall equal 130% of the principal
amount of the Debentures to be prepaid, and all unpaid and accrued interest
thereon. Upon receipt of the prepayment price for a prepayment under this
Section, the Holder shall, (i) if such prepayment is only for a portion of the
principal amount then outstanding under this Debenture, promptly deliver to the
Company a revised Conversion Schedule reflecting such prepayment or (ii) if such
prepayment is for the entire then outstanding principal amount under this
Debenture, promptly deliver this Debenture, marked paid in full. The Holder need
not deliver any Debentures and shall still have rights as a Debenture holder
until the full prepayment price hereunder is properly received by it.

         Section 6.  Definitions. For the purposes hereof, the following terms
shall have the following meanings:

         "Business Day" means any day except Saturday, Sunday and any day which
shall be a federal legal holiday in the United States or a day on which banking
institutions in the State of New York or Commonwealth of Pennsylvania are
authorized or required by law or other government action to close.

         "Change of Control Transaction" means the occurrence of any of(i) an
acquisition after the date hereof by an individual or legal entity or "group"
(as described in Rule 13d-5(b )(1 ) promulgated under the Exchange Act) of
effective control


                                      -13-
<PAGE>

(whether through legal or beneficial ownership of capital stock of the Company,
by contract or otherwise) of in excess of 33% of the voting securities of the
Company, (ii) a replacement at one time or over time of more than one-half of
the members of the Company's board of directors which is not approved by a
majority of those individuals who are members of the board of directors on the
date hereof (or by those individuals who are serving as members of the board of
directors on any date whose nomination to the board of directors was approved by
a majority of the members of the board of directors who are members on the date
hereof), (iii) the merger of the Company with or into another entity that is not
wholly-owned by the Company, consolidation or sale of 50% or more of the assets
of the Company in one or a series of related transactions, or (iv) the execution
by the Company of an agreement to which the Company is a party or by which it is
bound, providing for any of the events set forth above in (i), (ii) or (iii).

         "Commission" means the Securities and Exchange Commission.

         "Common Stock" means the common stock, $0.001 par value per share, of
the Company and stock of any other class into which such shares may hereafter
have been reclassified or changed.

         "Exchange Act" means the Securities Exchange Act of 1934, as amended.

         "Mandatory Prepayment Amount" for any Debentures shall equal the sum of
(i) the greater of(A) 130% of the principal amount of Debentures to be prepaid,
plus all accrued and unpaid interest thereon, and (B) the principal amount of
Debentures to be prepaid, plus all accrued and unpaid interest thereon, divided
by the Conversion Price on (x) the date the Mandatory Prepayment Amount is
demanded or otherwise due or (y) the date the Mandatory Prepayment Amount is
paid in full, whichever is less, multiplied by the Per Share Market Value on (x)
the date the Mandatory Prepayment Amount is demanded or otherwise due or (y) the
date the Mandatory Prepayment Amount is paid in full, whichever is greater, and
(ii) all other amounts, costs, expenses and liquidated damages due in respect of
such Debentures.

         "Original Issue Date" shall mean the date of the first issuance of the
Debentures regardless of the number of transfers of any Debenture and regardless
of the number of instruments which may be issued to evidence such Debenture.

         "Per Share Market Value" means on any particular date (a) the closing
bid price per share of Common Stock on such date on the Subsequent Market on
which the shares of Common Stock are then listed or quoted (as reported by
Bloomberg L.P. at 4:15 PM (New York time) for the closing sales price for
regular session trading on such day), or if there is no such price on such date,
then the closing bid price on the Subsequent Market on the date nearest
preceding such date (as reported by Bloomberg L.P. at 4:15 PM (New York time)
for the closing sales price for regular session trading on such day), or (b) if
the shares of Common Stock are not then listed or quoted on a Subsequent Market,
the closing bid price for a share of Common Stock in the OTC, as reported by the
National Quotation Bureau Incorporated or similar organization or agency
succeeding to its functions of reporting prices) at the close of business on
such date, or (c) if the shares of Common Stock are not then reported by the


                                      -14-
<PAGE>

National Quotation Bureau Incorporated (or similar organization or agency
succeeding to its functions of reporting prices), then the average of the "Pink
Sheet" quotes for the relevant conversion period, as determined in good faith by
the Holder, or (d) if the shares of Common Stock are not then publicly traded
the fair market value of a share of Common Stock as determined by an Appraiser
selected in good faith by the Holders of a majority in interest of the principal
amount of Debentures then outstanding.

         "Person" means a corporation, an association, a partnership,
organization, a business, an individual, a government or political subdivision
thereof or a governmental agency.

         "Purchase Agreement" means the Secured Convertible Debenture Purchase
Agreement, dated December [ ], 2000, to which the Company and the original
Holder are parties, as amended, modified or supplemented from time to time in
accordance with its terms.

         "Registration Rights Agreement" means the Registration Rights
Agreement, dated as of the Original Issue Date, to which the Company and the
original Holder are parties, as amended, modified or supplemented from time to
time in accordance with its terms.

         "Securities Act" means the Securities Act of 1933, as amended, and the
rules and regulations promulgated thereunder.

         "Trading Day" means (a) a day on which the shares of Common Stock are
traded on the OTC or on such Subsequent Market on which the shares of Common
Stock are then listed or quoted, or (b) if the shares of Common Stock are not
listed on a Subsequent Market, a day on which the shares of Common Stock are
traded in the over-the-counter market, as reported by the OTC, or (c) if the
shares of Common Stock are not quoted on the OTC, a day on which the shares of
Common Stock are quoted in the over-the-counter market as reported by the
National Quotation Bureau Incorporated (or any similar organization or agency
succeeding its functions of reporting prices); provided, that in the event that
the shares of Common Stock are not listed or quoted as set forth in (a), (b) and
(c) hereof, then Trading Day shall mean any day except a Business Day.

         "Transaction Documents" shall have the meaning set forth in the
Purchase Agreement.

         "Underlying Shares" means the shares of Common Stock issuable upon
conversion of Debentures or as payment of interest in accordance with the terms
hereof.

         "Underlying Shares Registration Statement" means a registration
statement meeting the requirements set forth in the Registration Rights
Agreement, covering among other things the resale of the Underlying Shares and
naming the Holder as a "selling stockholder" thereunder.

         Section 7. Except as expressly provided herein, no provision of this
Debenture shall alter or impair the obligation of the Company, which is absolute
and unconditional, to pay the principal of, interest and liquidated damages (if
any) on, this Debenture at the time, place, and rate, and in the coin or
currency, herein prescribed. This Debenture is a direct obligation of the
Company. This Debenture ranks pari passu with all other Debentures now or
hereafter issued under the terms set forth


                                      -15-
<PAGE>

herein. As long as there are Debentures outstanding, the Company shall not and
shall cause it subsidiaries not to, without the consent of the Holders, (i)
amend its certificate of incorporation, bylaws or other charter documents so as
to adversely affect any rights of the Holders; (ii) repay, repurchase or offer
to repay, repurchase or otherwise acquire shares of its Common Stock or other
equity securities other than as to the Underlying Shares to the extent permitted
or required under the Transaction Documents; or (iii) enter into any agreement
with respect to any of the foregoing. The Company may only voluntarily prepay
the outstanding principal amount on the Debentures in accordance with Section 5
hereof.

         Section 8. This Debenture shall not entitle the Holder to any of the
rights of a stockholder of the Company, including without limitation, the right
to vote, to receive dividends and other distributions, or to receive any notice
of, or to attend, meetings of stockholders or any other proceedings of the
Company, unless and to the extent converted into shares of Common Stock in
accordance with the terms hereof.

         Section 9. If this Debenture shall be mutilated, lost, stolen or
destroyed, the Company shall execute and deliver, in exchange and substitution
for and upon cancellation of a mutilated Debenture, or in lieu of or in
substitution for a lost, stolen or destroyed debenture, a new Debenture for the
principal amount of this Debenture so mutilated, lost, stolen or destroyed but
only upon receipt of evidence of such loss, theft or destruction of such
Debenture, and of the ownership hereof, and indemnity, if requested, all
reasonably satisfactory to the Company.

         Section 10. No indebtedness of the Company is senior to this Debenture
in right of payment, whether with respect to interest, damages or upon
liquidation or dissolution or otherwise. The Company will not and will not
permit any of its subsidiaries to, directly or indirectly, enter into, create,
incur, assume or suffer to exist any indebtedness 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 in any
respect to the Company's obligations under the Debentures.

         Section 11. This Debenture shall be governed by and construed in
accordance with the laws of the State of New York, without giving effect to
conflicts of laws thereof. The Company and the Holder hereby irrevocably submits
to the exclusive jurisdiction of the state and federal courts sitting in the
City of New York, Borough of Manhattan, for the adjudication of any dispute
hereunder or in connection herewith or with any transaction contemplated hereby
or discussed herein, and hereby irrevocably waives, and agrees not to assert in
any suit, action or proceeding, any claim that it is not personally subject to
the jurisdiction of any such court, or that such suit, action or proceeding is
improper. Each of the Company and the Holder hereby irrevocably waives personal
service of process and consents to process being served in any such suit, action
or proceeding by receiving a copy thereof sent to the Company at the address in
effect for notices to it under this instrument and agrees that such service
shall constitute good and sufficient service of process and notice thereof.
Nothing contained herein shall be deemed to limit in any way any right to serve
process in any manner permitted by law. Nothing contained herein shall be deemed
to limit in any way any right to serve process in any manner permitted by law.
Each party irrevocably waives, to the fullest extent permitted by applicable
law, any and all right to trial by jury in any legal proceeding arising out of
or relating to this Agreement or the transactions contemplated hereby. If either
party shall commence an action or proceeding to enforce any provisions of a


                                      -16-
<PAGE>

Transaction Document, then the prevailing party in such action or proceeding
shall be reimbursed by the other party for its' attorneys fees and other costs
and expenses incurred with the investigation, preparation and prosecution of
such action or proceeding.

         Section 12. Any waiver by the Company or the Holder of a breach of any
provision of this Debenture shall not operate as or be construed to be a waiver
of any other breach of such provision or of any breach of any other provision of
this Debenture. The failure of the Company or the Holder to insist upon strict
adherence to any term of this Debenture on one or more occasions shall not be
considered a waiver or deprive that party of the right thereafter to insist upon
strict adherence to that term or any other term of this Debenture. Any waiver
must be in writing.

         Section 13. If any provision of this Debenture is invalid, illegal or
unenforceable, the balance of this Debenture shall remain in effect, and if any
provision is inapplicable to any person or circumstance, it shall nevertheless
remain applicable to all other persons and circumstances. If it shall be found
that any interest or other amount deemed interest due hereunder shall violate
applicable laws governing usury, the applicable rate of interest due hereunder
shall automatically be lowered to equal the maximum permitted rate of interest.
The Company covenants (to the extent that it may lawfully do so) that it shall
not at any time insist upon, plead, or in any manner whatsoever claim or take
the benefit or advantage of, any stay, extension or usury law or other law which
would prohibit or forgive the Company from paying all or any portion of the
principal of or interest on the Debentures as contemplated herein, wherever
enacted, now or at any time hereafter in force, or which may affect the
covenants or the performance of this indenture, and the Company (to the extent
it may lawfully do so) hereby expressly waives all benefits or advantage of any
such law, and covenants that it will not, by resort to any such law, hinder,
delay or impeded the execution of any power herein granted to the Holder, but
will suffer and permit the execution of every such as though no such law has
been enacted.

         Section 14. Whenever any payment or other obligation hereunder shall be
due on a day other than a Business Day, such payment shall be made on the next
succeeding Business Day.

         Section 15. The payment obligations under this Debenture and the
obligations of the Company to the Holder arising upon the conversion of all or
any of the Debentures in accordance with the provisions hereof are secured
pursuant to the Security Agreement (as defined in the Purchase Agreement).

                   [REMAINDER OF PAGE INTENTIONALLY LEFT BLANK
                             SIGNATURE PAGE FOLLOWS]


                                      -17-
<PAGE>

IN WITNESS WHEREOF, the Company has caused this Secured Convertible Debenture to
be duly executed by a duly authorized officer as of the date first above
indicated.


                        DIGITAL DESCRIPTOR SYSTEMS, INC.



                                                  By: /s/Michael J. Pellegrino
                                                      ------------------------
                                                  Name: Michael J. Pellegrino
                                                  Title: Chief Financial Officer

<PAGE>

                                    EXHIBIT A
                              NOTICE OF CONVERSION


The undersigned hereby elects to convert principal and, if specified, interest
under the 12% Secured Convertible Debenture of the Company due twelve months
from issuance into shares of common stock, $0.001 par value per share (the
"Common Stock"), of Digital Descriptor Systems, Inc. (the "Company") according
to the conditions hereof, as of the date written below. If shares are to be
issued in the name of a person other than the undersigned, the undersigned will
pay all transfer taxes payable with respect thereto and is delivering herewith
such certificates and opinions as reasonably requested by the Company in
accordance therewith. No fee will be charged to the holder for any conversion,
except for such transfer taxes, if any.

Conversion calculations:          ______________________________________________
                                  Date to Effect Conversion


                                  ______________________________________________
                                  Principal Amount of Debentures to be Converted

                                  Payment of Interest in Kind     [ ] Yes [ ] No
                                  If yes, $ of________  Interest Accrued on
                                  Account of Conversion at Issue

                                  ______________________________________________
                                  Number of shares of Common Stock to be Issued

                                  ______________________________________________
                                  Applicable Conversion Price

                                  ______________________________________________
                                  Signature

                                  ______________________________________________
                                  Name

                                  ______________________________________________
                                  Address

<PAGE>

Schedule 1

                               CONVERSION SCHEDULE

                        Digital Descriptor Systems, Inc.

 12% Secured Convertible Debentures due December [ ], 2001, in the aggregate
   principal amount of $600,000 issued by Digital Descriptor Systems, Inc. This
   Conversion Schedule reflects conversions made under Section 4(a)(i) of the
                          above referenced Debentures.

                                     Dated:


================================================================================
                                              Aggregate
                                              Principal
                                               Amount
                                              Remaining
                                            Subsequent to
                                             Conversion
  Date of Conversion                        (or original
 (or for first entry,        Amount of        Principal
 Original Issue Date)       Conversion         Amount)          Company Attest
--------------------------------------------------------------------------------

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10.5.2
<SEQUENCE>8
<FILENAME>ex10-5_2.txt
<DESCRIPTION>EX-10.5.2
<TEXT>
<PAGE>

                                                                  Exhibit 10.5.2

        NEITHER THIS DEBENTURE NOR THE SECURITIES INTO WHICH THIS DEBENTURE IS
        CONVERTIBLE HAVE BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE
        COMMISSION OR THE SECURITIES COMMISSION OF ANY STATE IN RELIANCE UPON AN
        EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED
        (THE "SECURITIES ACT"), AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD
        EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE
        SECURITIES ACT OR PURSUANT TO AN AVAILABLE EXEMPTION FROM, OR IN A
        TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE
        SECURITIES ACT AND IN ACCORDANCE WITH APPLICABLE STATE SECURITIES LAWS,
        AS EVIDENCED BY A LEGAL OPINION OF COUNSEL TO THE TRANSFEROR TO SUCH
        EFFECT, THE SUBSTANCE OF WHICH SHALL BE REASONABLY ACCEPTABLE TO THE
        COMPANY .


No.2                                                                    $100,000

                        DIGITAL DESCRIPTOR SYSTEMS, INC.
                        12% SECURED CONVERTIBLE DEBENTURE
                              DUE DECEMBER 28, 2001

         THIS DEBENTURE is one of a series of duly authorized and issued
debentures of Digital Descriptor Systems, Inc., a Delaware corporation, having a
principal place of business at 446 Lincoln Highway, Fairless Hills, PA 19030
(the "Company"), designated as its 12% Secured Convertible Debentures, due
December 28, 2001, in the aggregate principal amount of Six Hundred Thousand
Dollars ($600,000) (the "Debentures").

         FOR VALUE RECEIVED, the Company promises to pay to New Millennium
Capital Partners II, LLC or its registered assigns (the "Holder"), the principal
sum of $100,000, on December 28, 2001 or such earlier date as the Debentures are
required or permitted to be repaid as provided hereunder (the "Maturity Date")
and to pay interest to the Holder on the aggregate unconverted and then
outstanding principal amount of this Debenture at the rate of 12% per annum,
payable on a quarterly basis on March 31, June 30, September 30 and December 31
of each year while such Debentures are outstanding commencing on December 31,
2000 and on each Conversion Date (as defined herein) ( each an "Interest Payment
Date") for such principal amount, commencing on the earlier to occur of a
Conversion Date for such principal amount and March 31, 2001, in cash or shares
of Common Stock (as defined in Section 6). Subject to the terms and conditions
herein, the Holder may elect to receive interest hereunder in shares of Common
Stock or cash. If interest is paid by the Company in shares of its Common Stock,
then the number of shares of Common Stock issuable on account of such interest
shall equal the cash amount of such interest on such Interest Payment Date
divided by the Conversion Price (as defined below) on such date.

<PAGE>

Interest shall be calculated on the basis on a 360-day year and shall accrue
daily commencing on the Original Issue Date (as defined in Section 6) until
payment in full of the principal sum, together with all accrued and unpaid
interest and other amounts which may become due hereunder, has been made.
Interest hereunder will be paid to the Person (as defined in Section 6) in whose
name this Debenture is registered on the records of the Company regarding
registration and transfers of Debentures (the "Debenture Register"). All overdue
accrued and unpaid interest to be paid in cash hereunder shall entail a late fee
at the rate of 15% per annum ("Late Fee") (or such lower maximum amount of
interest permitted to be charged under applicable law) which will accrue daily,
from the date such interest is due hereunder through and including the date of
payment, payable in cash or, at the option of the Holder, in shares of Common
Stock. If such Late Fee is paid by the Company in shares of its Common Stock,
then the number of shares of Common Stock issuable on account of such Late F ee
shall equal the cash amount of such Late Fee on such Late Fee payment date
divided by the Conversion Price on such date.

         This Debenture is subject to the following additional provisions:

         Section 1.  This Debenture is exchangeable for an equal aggregate
principal amount of Debentures of different authorized denominations, as
requested by the Holder surrendering the same. No service charge will be made
for such registration of transfer or exchange.

         Section 2.  This Debenture has been issued subject to certain
investment representations of the original Holder set forth in the Purchase
Agreement (as defined in Section 6) and may be transferred or exchanged only in
compliance with the Purchase Agreement. Prior to due presentment to the Company
for transfer of this Debenture, the Company and any agent of the Company may
treat the Person ( as defined in Section 6) in whose name this Debenture is duly
registered on the Debenture Register as the owner hereof for the purpose of
receiving payment as herein provided and for all other purposes, whether or not
this Debenture is overdue, and neither the Company nor any such agent shall be
affected by notice to the contrary .

         Section 3.  Events of Default.

                 (a) "Event of Default", wherever used herein, means anyone of
the following events (whatever the reason and whether it shall be voluntary or
involuntary or effected by operation of law or pursuant to any judgment, decree
or order of any court, or any order, rule or regulation of any administrative or
governmental body):

                     (i) any default in the payment of the principal of,
         interest (including any Late Fees) on or liquidated damages in respect
         of, any Debentures, free of any claim of subordination, as and when the
         same shall become due and payable (whether on a Conversion Date or the
         Maturity Date or by acceleration or otherwise);

                     (ii) the Company shall fail to observe or perform any other
         covenant, agreement or warranty contained in, or otherwise commit any
         breach of any of the Transaction Documents (as defined in Section
         6),and such failure or breach shall not have been remedied within five


                                      -2-
<PAGE>

         days after the date on which notice of such failure or breach shall
         have been given;

                     (iii) the Company or any of its subsidiaries shall
         commence, or there shall be commenced against the Company or any such
         subsidiary a case under any applicable bankruptcy or insolvency laws as
         now or hereafter in effect or any successor thereto, or the Company
         commences any other proceeding under any reorganization, arrangement,
         adjustment of debt, relief of debtors, dissolution, insolvency or
         liquidation or similar law of any jurisdiction whether now or hereafter
         in effect relating to the Company or any subsidiary thereof or there is
         commenced against the Company or any subsidiary thereof any such
         bankruptcy, insolvency or other proceeding which remains undismissed
         for a period of 60 days; or the Company or any subsidiary thereof is
         adjudicated insolvent or bankrupt; or any order of relief or other
         order approving any such case or proceeding is entered; or the Company
         or any subsidiary thereof suffers any appointment of any custodian or
         the like for it or any substantial part of its property which continues
         undischarged or unstayed for a period of 60 days; or the Company or any
         subsidiary thereof makes a general assignment for the benefit of
         creditors; or the Company shall fail to pay, or shall state that it is
         unable to pay, or shall be unable to pay, its debts generally as they
         become due; or the Company or any subsidiary thereof shall call a
         meeting of its creditors with a view to arranging a composition,
         adjustment or restructuring of its debts; or the Company or any
         subsidiary thereof shall by any act or failure to act expressly
         indicate its consent to, approval of or acquiescence in any of the
         foregoing; or any corporate or other action is taken by the Company or
         any subsidiary thereof for the purpose of effecting any of the
         foregoing;

                     (iv) the Company shall default in any of its obligations
         under any other Debenture or any mortgage, credit agreement or other
         facility, indenture agreement, factoring agreement or other instrument
         under which there may be issued, or by which there may b~ secured or
         evidenced any indebtedness for borrowed money or money due under any
         long term leasing or factoring arrangement of the Company in an amount
         exceeding $100,000, whether such indebtedness now exists or shall
         hereafter be created and such default shall result in such indebtedness
         becoming or being declared due and payable prior to the date on which
         it would otherwise become due and payable;

                     (v) the Common Stock shall not be eligible for quotation on
         and quoted for trading on the OTC Bulletin Board ("OTC') or listed for
         trading on the Nasdaq SmallCap Market, New York Stock Exchange,
         American Stock Exchange or the Nasdaq National Market (each, a
         "Subsequent Market") and shall not again be eligible for and quoted or
         listed for trading thereon within five Trading Days;

                     (vi) the Company shall be a party to any Change of Control
         Transaction ( as defined in Section 6), shall agree to sell or dispose
         all or in excess of 33% of its assets in one or more transactions
         (whether or not such sale would constitute a Change of Control
         Transaction), or shall redeem or repurchase more than a de minimis
         number of shares of Common Stock or other equity securities of the
         Company (other than redemptions of Underlying Shares (as defined in
         Section 6));


                                      -3-
<PAGE>

                     (vii) an Underlying Shares Registration Statement (as
         defined in Section 6) shall not have been declared effective by the
         Commission (as defined in Section 6) on or prior to the 120th day after
         the Original Issue Date;

                     (viii) if, during the Effectiveness Period (as defined in
         the Registration Rights Agreement (as defined in Section 6>>, the
         effectiveness of the Underlying Shares Registration Statement lapses
         for any reason or the Holder shall not be permitted to resell
         Registrable Securities (as defined in the Registration Rights
         Agreement) under the Underlying Shares Registration Statement, in
         either case, for more than five consecutive Trading Days or an
         aggregate of eight Trading Days (which need not be consecutive Trading
         Days);

                     (ix) an Event (as defined in the Registration Rights
         Agreement) shall not have been cured to the satisfaction of the Holder
         prior to the expiration of thirty days from the Event Date ( as defined
         in the Registration Rights Agreement) relating thereto ( other than an
         Event resulting from a failure of an Underlying Shares Registration
         Statement to be declared effective by the Commission on or prior to the
         120th day after the Original Issue Date, which shall be covered by
         Section 3(a)(vii));

                     (x) the Company shall fail for any reason to deliver
         certificates to a Holder prior to the third Trading Day after a
         Conversion Date pursuant to and in accordance with Section 4(b) or the
         Company shall provide notice to the Holder, including by way of public
         announcement, at any time, of its intention not to comply with requests
         for conversions of any Debentures in accordance with the terms hereof;

                     (xi) if the registration statement on Form 10 filed by the
         Company with with the Commission pursuant to Sections 12(b) or 12(g)
         (as applicable) of the Exchange Act is not declared effective by
         February 15, 2001 or if after the registration statement is declared
         effective, such effectiveness of the registration statement lapses for
         any reason for more than five consecutive Trading Days;

                     (xii) the Company shall fail for any reason to deliver the
         payment in cash pursuant to a Buy-In (as defined herein) within five
         days after notice is claimed delivered hereunder; or

         (b) If any Event of Default occurs and is continuing, the full
principal amount of this Debenture (and, at the Holder's option all other
Debentures then held by such Holder), together with interest and other amounts
owing in respect thereof, to the date of acceleration shall become at the
Holder's election, immediately due and payable in cash, provided however, that
if the Company informs the Holder that it will be unable to pay the amounts due
in cash, the Holder may request payment of such amounts in stock, provided that
if Holder declines to permit payment in securities, such payment in full shall
be nonetheless due and owed in cash. The number of shares of Common Stock
issuable in payment thereof shall be determined by dividing the aggregate amount
due to the Holder by the Conversion Price. The aggregate amount payable upon an
Event of Default shall be equal to the sum of (i) the Mandatory Prepayment
Amount (as defined in Section 6) plus (ii) the product of (A) the number of


                                      -4-
<PAGE>

Underlying Shares issued in respect of conversions hereunder within thirty days
of the date of a declaration of an Event of Default and then held by the Holder
and (B) the Per Share Market Value (as defined in Section 6) on the date
prepayment is due or the date the full prepayment price is paid, whichever is
greater. Interest shall accrue on the prepayment amount hereunder from the
seventh day after such amount is due (being the date of an Event of Default)
through the date of prepayment in full thereof at the rate of 15% per annum (or
such lesser maximum amount that is permitted to be paid by applicable law), to
accrue daily from the date such payment is due hereunder through and including
the date of payment. All Debentures and Underlying Shares for which the full
prepayment price hereunder shall have been paid in accordance herewith shall
promptly be surrendered to or as directed by the Company. The Holder need not
provide and the Company hereby waives any presentment, demand, protest or other
notice of any kind, and the Holder may immediately and without expiration of any
grace period enforce any and all of its rights and remedies hereunder and all
other remedies available to it under applicable law. Such declaration may be
rescinded and annulled by Holder at any time prior to payment hereunder and the
Holder shall have all rights as a Debenture holder until such time, if any, as
the full payment under this Section shall have been received by it. No such
rescission or annulment shall affect any subsequent Event of Default or impair
any right consequent thereon.

         Section 4.  Conversion.

                 (a) (i) Conversion at Option of Holder. (A) This Debenture
shall .be convertible into shares of Common Stock at the option of the Holder,
in whole or in part at any time and from time to time, after the Original Issue
Date (subject to the limitations on conversion set forth in Section 4(a)(ii)
hereof). The number of shares of Common Stock issuable upon a conversion
hereunder equals the sum of (i) the quotient obtained by dividing (x) the
outstanding principal amount of this Debenture to be converted by (y) the
Conversion Price (as defined herein), and (ii) the amount equal to (I) the
product of (x) the outstanding principal amount of this Debenture to be
converted and (y) the product of (1) the quotient obtained by dividing .12 by
360 and (2) the number of days for which such principal amount was outstanding,
divided by (II) the Conversion Price on the Conversion Date, provided, that if
the Holder shall have elected to receive the interest due on a Conversion Date
in cash, subsection (ii) shall not be used in the calculation of the number of
shares of Common Stock issuable upon a conversion hereunder .

                     (B) The Holder shall effect conversions by delivering to
the Company and the Escrow Agent a completed notice in the form attached hereto
as Exhibit A (a "Conversion Notice"), including a completed Conversion Schedule
in the form of Schedule 1 to the Conversion Notice (on each Conversion Date, the
"Conversion Schedule"). The Conversion Schedule shall set forth the remaining
principal amount of this Debenture and all accrued and unpaid interest thereon
subsequent to the conversion at issue. The date on which a Conversion Notice is
delivered is the "Conversion Date." Unless the Holder is converting the entire
principal amount outstanding under this Debenture, the Holder is not be required
to physically surrender this Debenture to the Company or Escrow Agent in order
to effect conversions. Subject to Section 4(b), each Conversion Notice, once
given, shall be irrevocable. Conversions hereunder shall have the effect of
lowering the outstanding principal amount of this Debenture plus all accrued and
unpaid interest thereon in an amount equal to the applicable conversion, which
shall Conversion Schedule. The Holder and the Company shall maintain records
showing the principal amount converted and the date of such conversions. In the
event of any dispute or discrepancy, the records of the Holder shall be
controlling and determinative in the absence of manifest error.


                                      -5-
<PAGE>

                     (ii)  Certain Conversion Restrictions.

                           (A) A Holder may not convert Debentures or receive
shares of Common Stock as payment of interest hereunder to the extent such
conversion or receipt of such interest payment would result in the Holder,
together with any affiliate thereof, beneficially owning (as determined in
accordance with Section l3(d) of the Exchange Act and the rules promulgated
thereunder) in excess of 4.999% of the then issued and outstanding shares of
Common Stock, including shares issuable upon conversion of, and payment of
interest on, the Debentures held by such Holder after application of this
Section. Since the Holder will not be obligated to report to the Company the
number of shares of Common Stock it may hold at the time of a conversion
hereunder, unless the conversion at issue would result in the issuance of shares
of Common Stock in excess of 4.999% of the then outstanding shares of Common
Stock without regard to any other shares which may be beneficially owned by the
Holder or an affiliate thereof, the Holder shall have the authority and
obligation to determine whether the restriction contained in this Section will
limit any particular conversion hereunder and to the extent that the Holder
determines that the limitation contained in this Section applies, the
determination of which portion of the principal amount of Debentures are
convertible shall be the responsibility and obligation of the Holder. If the
Holder has delivered a Conversion Notice for a principal amount of Debentures
that, without regard to any other shares that the Holder or its affiliates may
beneficially own, would result in the issuance in excess of the permitted amount
hereunder, the Company shall notify the Holder of this fact and shall honor the
conversion for the maximum principal amount permitted to be converted on such
Conversion Date in accordance with the periods described in Section 4(b) and, at
the option of the Holder, either retain any principal amount tendered for
conversion in excess of the permitted amount hereunder for future conversions or
return such excess principal amount to the Holder. The provisions of this
Section may be waived by a Holder (but only as to itself and not to any other
Holder) upon not less than 61 days prior notice to the Company. Other Holders
shall be unaffected by any such waiver.

                           (B) A Holder may not convert Debentures or receive
shares of Common Stock as payment of interest hereunder to the extent such
conversion or receipt of such interest payment would result in the Holder,
together with any affiliate thereof, beneficially owning (as determined in
accordance with Section 13(d) of the Exchange Act and the rules promulgated
thereunder) in excess of 9.999% of the then issued and outstanding shares of
Common Stock, including shares issuable upon conversion of, and payment of
interest on, the Debentures held by such Holder after application of this
Section. Since the Holder will not be obligated to report to the Company the
number of shares of Common Stock it may hold at the time of a conversion
hereunder, unless the conversion at issue would result in the issuance of shares
of Common Stock in excess of 9.999% of the then outstanding shares of Common
Stock without regard to any other shares which may be beneficially owned by the
Holder or an affiliate thereof, the Holder shall have the authority and
obligation to determine whether the restriction contained in this Section will
limit any particular conversion hereunder and to the extent that the Holder
determines that the limitation contained in this Section applies, the
determination of which portion of the principal amount of Debentures are be


                                      -6-
<PAGE>

evidenced by entries set forth in the convertible shall be the responsibility
and obligation of the Holder. If the Holder has delivered a Conversion Notice
for a principal amount of Debentures that, without regard to any other shares
that the Holder or its affiliates may beneficially own, would result in the
issuance in excess of the permitted amount hereunder, the Company shall notify
the Holder of this fact and shall honor the conversion for the maximum principal
amount permitted to be converted on such Conversion Date in accordance with the
periods described in Section 4(b) and, at the option of the Holder, either
retain any principal amount tendered for conversion in excess of the permitted
amount hereunder for future conversions or return such excess principal amount
to the Holder. The provisions of this Section may be waived by a Holder (but
only as to itself and not to any other Holder) upon not less than 61 days prior
notice to the Company. Other Holders shall be unaffected by any such waiver.

                 (b) (i) Not later than three Trading Days after any Conversion
Date, (i) the Escrow Agent is hereby authorized and directed to deliver to the
Holder a certificate or certificates which shall be free of restrictive legends
and trading restrictions (other than those required by Section 3.1(b) of the
Purchase Agreement) representing the number of shares of Common Stock issuable
upon such conversion in accordance with the terms hereof (if there is no Escrow
Agent for such purpose or for any reason there are insufficient shares of Common
Stock deposited with the Escrow Agent for delivery to the Holder upon conversion
hereunder, the Corporation will deliver to the Holder within three Trading Days
the shares of Common Stock being acquired upon the conversion), and (ii) if the
Holder has elected to receive accrued interest in cash, the Company will deliver
to the Holder a bank check, payable to Holder, in the amount of accrued and
unpaid interest. If requested by a Holder, the Company and the Escrow Agent will
use their best efforts to deliver conversion shares electronically through the
Depository Trust Corporation or another established clearing corporation
performing similar functions. If shares of Common Stock issuable following a
Conversion Notice are not delivered to or as directed by the Holder by the third
Trading Day after a Conversion Date, the Holder shall be entitled by written
notice to the Escrow Agent and the Company at any time on or before its receipt
of such shares, to rescind such conversion, in which event the Company shall
immediately return to the Holder a Debenture in principal amount equal to the
principal amount, interest and all other amounts due in respect of the
Conversion Notice (provided the Holder is converting the entire principal amount
outstanding under this Debenture).

                     (ii) If the Escrow Agent fails to comply with the delivery
requirements, the Company is still liable for compliance. If the Company or
Escrow Agent fails for any reason to deliver to the Holder such certificate or
certificates pursuant to Section 4(b)(i) by the third Trading Day after the
Conversion Date, the Company shall pay to such Holder, in cash, as liquidated
damages and not as a penalty, $5,000 for each Trading Day after such third
Trading Day until such certificates are delivered. Nothing herein shall limit a
Holder's right to pursue actual damages or declare an Event of Default pursuant
to Section 3 herein for the Company's failure to deliver certificates
representing shares of Common Stock upon conversion within the period specified
herein and such Holder shall have the right to pursue all remedies available to
it at law or in equity including, without limitation, a decree of specific
performance and/or injunctive relief. The exercise of any such rights shall not
prohibit the Holders from seeking to enforce damages pursuant to any other
Section hereof or under applicable law. Further, if the Company shall not have
delivered any cash due in respect of conversions of Debentures or as payment of
interest thereon by the third Trading Day after the Conversion Date, the Holder
may, by notice to the Company, require the Company to issue shares of Common


                                      -7-
<PAGE>

Stock pursuant to Section 4( c ), except that for such purpose the Conversion
Price applicable thereto shall be the lesser of the Conversion Price on the
Conversion Date and the Conversion Price on the date of such Holder demand. Any
such shares will be subject to the provision of this Section.

                     (iii) In addition to any other rights available to the
Holder, if the Company or Escrow Agent fails for any reason to deliver to the
Holder such certificate or certificates pursuant to Section 4(b)(i) by the third
Trading Day after the Conversion Date, and if after such third Trading Day the
Holder purchases (in an open market transaction or otherwise) Common Stock to
deliver in satisfaction of a sale by such Holder of the Underlying Shares which
the Holder anticipated receiving upon such conversion (a "Buy-In"), then the
Company shall (A) pay in cash to the Holder (in addition to any remedies
available to or elected by the Holder) the amount by which (x) the Holder's
total purchase price (including brokerage commissions, if any) for the Common
Stock so purchased exceeds (y) the product of ( 1) the aggregate number of
shares of Common Stock that such Holder anticipated receiving from the
conversion at issue multiplied by (2) the market price of the Common Stock at
the time of the sale giving rise to such purchase obligation and (B) at the
option of the Holder, either reissue Debentures in principal amount equal to the
principal amount of the attempted conversion or deliver to the Holder the number
of shares of Common Stock that would have been issued had the Company timely
complied with its delivery requirements under Section 4(b)(i). For example, if
the Holder purchases Common Stock having a total purchase price of $11,000 to
cover a Buy-In with respect to an attempted conversion of Debentures with
respect to which the market price of the Underlying Shares on the date of
conversion was a total of $10,000 under clause (A) of the immediately preceding
sentence, the Company shall be required to pay the Holder $1,000. The Holder
shall provide the Company written notice indicating the amounts payable to the
Holder in respect of the Buy-In. Notwithstanding anything contained herein to
the contrary, if a Holder requires the Company to make payment in respect of a
Buy- In for the failure to timely deliver certificates hereunder and the Company
timely pays in full such payment, the Company shall not be required to pay such
Holder liquidated damages under Section 4(b)(ii) in respect of the certificates
resulting in such Buy-In.

                 (c) (i) The conversion price (the "Conversion Price") in
effect on any Conversion Date shall be the lesser of(l) $0.08 (the "Initial
Conversion Price"), and (2) 50% of the average of the lowest three inter-day
trading prices (which need not occur on consecutive Trading Days) during the ten
Trading Days immediately preceding the applicable Conversion Date (which may
include Trading Days prior to the Original Issue Date ), provided, that such ten
Trading Day period shall be extended for the number of Trading Days during such
period in which (A) trading in the Common Stock is suspended by, or not traded
on, the OTC or a Subsequent Market on which the Common Stock is then listed, or
(B) after the date declared effective by the Commission, the Underlying Shares
Registration Statement is either not effective or the Prospectus included in the
Underlying Shares Registration Statement may not be used by the Holder for the
resale of Underlying Shares.

                     (ii) If the Company, at any time while the Debentures are
outstanding, (a) shall pay a stock dividend or otherwise make a distribution or
distributions on shares of its Common Stock or any other equity or equity
equivalent securities payable in shares of Common Stock, (b) subdivide
outstanding shares of Common Stock into a larger number of shares, (c) combine


                                      -8-
<PAGE>

(including by way of reverse stock split) outstanding shares of Common Stock
into a smaller number of shares, or ( d) issue by reclassification of shares of
the Common Stock any shares of capital stock of the Company, then the Initial
Conversion Price shall be multiplied by a fraction of which the numerator shall
be the number of shares of Common Stock ( excluding treasury shares, if any)
outstanding before such event and of which the denominator shall be the number
of shares of Common Stock outstanding after such event. Any adjustment made
pursuant to this Section shall become effective immediately after the record
date for the determination of stockholders entitled to receive such dividend or
distribution and shall become effective immediately after the effective date in
the case of a subdivision, combination or re-classification.

                     (iii) If the Company, at any time while Debentures are
outstanding, shall issue rights, options or warrants to all holders of Common
Stock (and not to Holders) entitling them to subscribe for or purchase shares of
Common Stock at a price per share less than the Per Share Market Value at the
record date mentioned below, then the Conversion Price shall be multiplied by a
fraction, ofwhich the denominator shall be the number of shares of the Common
Stock (excluding treasury shares, ifany) outstanding on the date of issuance of
such rights or warrants plus the number of additional shares of Common Stock
offered for subscription or purchase, and of which the numerator shall be the
number of shares of the Common Stock (excluding treasury shares, if any)
outstanding on the date of issuance of such rights or warrants plus the number
of shares which the aggregate offering price of the total number of shares so
offered would purchase at such Per Share Market Value. Such adjustment shall be
made whenever such rights or warrants are issued, and shall become effective
immediately after the record date for the determination of stockholders entitled
to receive such rights, options or warrants. However, upon the expiration of any
such right, option or warrant to purchase shares of the Common Stock the
issuance of which resulted in an adjustment in the Conversion Price pursuant to
this Section, if any such right, option or warrant shall expire and shall not
have been exercised, the Conversion Price shall immediately upon such expiration
be recomputed and effective immediately upon such expiration be increased to the
price which it would have been (but reflecting any other adjustments in the
Conversion Price made pursuant to the provisions of this Section after the
issuance of such rights or warrants) had the adjustment of the Conversion Price
made upon the issuance of such rights, options or warrants been made on the
basis of offering for subscription or purchase only that number of shares of the
Common Stock actually purchased upon the exercise of such rights, options or
warrants actually exercised.

                     (iv) If the Company or any subsidiary thereof, as
applicable with respect to Common Stock Equivalents (as defined below), at any
time while Debentures are outstanding, shall issue shares of Common Stock or
rights, warrants, options or other securities or debt that are convertible into
or exchangeable for shares of Common Stock ("Common Stock Equivalents")
entitling any Person to acquire shares of Common Stock, at a price per share
less than the Conversion Price (if the holder of the Common Stock or Common
Stock Equivalent so issued shall at any time, whether by operation of purchase
price adjustments, reset provisions, floating conversion, exercise or exchange
prices or otherwise, or due to warrants, options or rights per share which is
issued in connection with such issuance, be entitled to receive shares of Common
Stock at a price per share which is less than the Conversion Price, such
issuance shall be deemed to have occurred for less than the Conversion Price),
then, at the sole option of the Holder, the Conversion Price shall be adjusted
to mirror the conversion, exchange or purchase price for such Common Stock or


                                      -9-
<PAGE>

Common Stock Equivalents (including any reset provisions thereof) at issue. Such
adjustment shall be made whenever such Common Stock or Common Stock Equivalents
are issued. The Company shall notify the Holder and the Escrow Agent in writing,
no later than the business day following the issuance of any Common Stock or
Common Stock Equivalent subject to this section, indicating therein the
applicable issuance price, or of applicable reset price, exchange price,
conversion price and other pricing terms. No adjustment under this Section shall
be made as a result of (i) issuances of Common Stock or Common Stock Equivalents
to the extent disclosed in Schedule 2.1 (c) to the Purchase Agreement, (ii)
issuances and exercises of options to purchase shares of Common Stock issued for
compensatory purposes pursuant to any of the Company's stock option or stock
purchase plans, or (iii) exercises under the Warrants (as defined in the
Purchase Agreement).

                     (v) If the Company, at any time while Debentures are
outstanding, shall distribute to all holders of Common Stock (and not to
Holders) evidences of its indebtedness or assets or rights or warrants to
subscribe for or purchase any security, then in each such case the Conversion
Price at which Debentures shall thereafter be convertible shall be determined by
multiplying the Conversion Price in effect immediately prior to the record date
fixed for determination of stockholders entitled to receive such distribution by
a fraction of which the denominator shall be the Per Share Market Value
determined as of the record date mentioned above, and of which the numerator
shall be such Per Share Market Value on such record date less the then fair
market value at such record date of the portion of such assets or evidence of
indebtedness so distributed applicable to one outstanding share of the Common
Stock as determined by the Board of Directors in good faith. In either case the
adjustments shall be described in a statement provided to the Holders of the
portion of assets or evidences of indebtedness so distributed or such
subscription rights applicable to one share of Common Stock. Such adjustment
shall be made whenever any such distribution is made and shall become effective
immediately after the record date mentioned above.

                     (vi) In case of any reclassification of the Common Stock or
any compulsory share exchange pursuant to which the Common Stock is converted
into other securities, cash or property, the Holders shall have the right
thereafter to, at their option, (A) convert the then outstanding principal
amount, together with all accrued but unpaid interest and any other amounts then
owing hereunder in respect of this Debenture only into the shares of stock and
other securities, cash and property receivable upon or deemed to be held by
holders of the Common Stock following such reclassification or share exchange,
and the Holders of the Debentures shall be entitled upon such event to receive
such amount of securities, cash or property as the shares of the Common Stock of
the Company into which the then outstanding principal amount, together with all
accrued but unpaid interest and any other amounts then owing hereunder in
respect of this Debenture could have been converted immediately prior to such
reclassification or share exchange would have been entitled or (B) require the
Company to prepay the aggregate of its outstanding principal amount of
Debentures, plus all interest and other amounts due and payable thereon, at a
price determined in accordance with Section 3(b ). The entire prepayment price
shall be paid in cash. This provision shall similarly apply to successive
reclassifications or share exchanges.


                                      -10-
<PAGE>

                     (vii) All calculations under this Section 4 shall be made
to the nearest cent or the nearest 1/100th of a share, as the case may be. No
adjustments in either the Conversion Price or the Initial Conversion Price shall
be required if such adjustment is less than $0.01, provided, however, Initial
Conversion Price shall be required if such adjustment is less than $0.01,
provided, however, that any adjustments which by reason of this Section are not
required to be made shall be carried forward and taken into account in any
subsequent adjustment.

                     (viii) Whenever either the Initial Conversion Price or the
Conversion Price is adjusted pursuant to any of Section 4(c)(ii) -(v), the
Company shall promptly mail to each Holder a notice setting forth the Initial
Conversion Price or Conversion Price (as applicable) after such adjustment and
setting forth a brief statement of the facts requiring such adjustment.

                     (ix) If(A) the Company shall declare a dividend (or any
other distribution) on the Common Stock; (B) the Company shall declare a special
nonrecurring cash dividend on or a redemption of the Common Stock; (C) the
Company shall authorize the granting to all holders of the Common Stock rights
or warrants to subscribe for or purchase any shares of capital stock of any
class or of any rights; (D) the approval of any stockholders of the Company
shall be required in connection with any reclassification of the Common Stock,
any consolidation or merger to which the Company is a party, any sale or
transfer of all or substantially all of the assets of the Company, of any
compulsory share exchange whereby the Common Stock is converted into other
securities, cash or property; (E) the Company shall authorize the voluntary or
involuntary dissolution, liquidation or winding up of the affairs of the
Company; then, in each case, the Company shall cause to be filed at each office
or agency maintained for the purpose of conversion of the Debentures, and shall
cause to be mailed to the Holders at their last addresses as they shall appear
upon the stock books of the Company, at least 20 calendar days prior to the
applicable record or effective date hereinafter specified, a notice stating (x)
the date on which a record is to be taken for the purpose of such dividend,
distribution, redemption, rights or warrants, or if a record is not to be taken,
the date as of which the holders of the Common Stock of record to be entitled to
such dividend, distributions, redemption, rights or warrants are to be
determined or (y) the date on which such reclassification, consolidation,
merger, sale, transfer or share exchange is expected to become effective or
close, and the date as of which it is expected that holders of the Common Stock
of record shall be entitled to exchange their shares of the Common Stock for
securities, cash or other property deliverable upon such reclassification,
consolidation, merger, sale, transfer or share exchange, provided, that the
failure to mail such notice or any defect therein or in the mailing thereof
shall not affect the validity of the corporate action required to be specified
in such notice. Holders are entitled to convert Debentures during the 20-day
period commencing the date of such notice to the effective date of the event
triggering such notice.

                     (x) In case of any (1) merger or consolidation of the
Company with or into another Person, or (2) sale by the Company of more than
one-half of the assets of the Company in one or a series of related
transactions, a Holder shall have the right to (A) exercise any rights under
Section 3(b), (B) convert its aggregate principal amount of Debentures then
outstanding into the shares of stock and other securities, cash and property
receivable upon or deemed to be held by holders of Common Stock following such
merger, consolidation or sale, and such Holder shall be entitled upon such event
or series of related events to receive such amount of securities, cash and
property as the shares of Common Stock into which such aggregate principal


                                      -11-
<PAGE>

amount of Debentures could have been converted immediately prior to such merger,
consolidation or sales would have been entitled, or (C) in the case of a merger
or consolidation, require the surviving entity to issue to the Debentures then
held by such Holder, plus all accrued and unpaid interest and other amounts
owing thereon, which newly issued convertible debentures shall have terms
identical (including with respect to conversion) to the terms of this Debenture,
and shall be entitled to all of the rights and privileges of a Holder of
Debentures set forth herein and the agreements pursuant to which the Debentures
were issued. In the case of clause (C), the conversion price applicable for the
newly issued shares of convertible preferred stock or convertible debentures
shall be based upon the amount of securities, cash and property that each share
of Common Stock would receive in such transaction and the Conversion Price in
effect immediately prior to the effectiveness or closing date for such
transaction. The terms of any such merger, sale or consolidation shall include
such terms so as to continue to give the Holders the right to receive the
securities, cash and property set forth in this Section upon any conversion or
redemption following such event. This provision shall similarly apply to
successive such events.

         (d) The Company covenants that it will at all times reserve and keep
available out of its authorized and unissued shares of Common Stock solely for
the purpose of issuance upon conversion of the Debentures and payment of
interest on the Debentures, each as herein provided, free from preemptive rights
or any other actual contingent purchase rights of persons other than the
Holders, not less than such number of shares of the Common Stock as shall
(subject to any additional requirements of the Company as to reservation of such
shares set forth in the Purchase Agreement) be issuable (taking into account the
adjustments and restrictions of Section 4(b ))upon the conversion of the
outstanding principal amount of the Debentures and payment of interest
hereunder. The Company covenants that all shares of Common Stock that shall be
so issuable shall, upon issue, be duly and validly authorized, issued and fully
paid, nonassessable and, if the Underlying Shares Registration Statement has
been declared effective under the Securities Act, registered for public sale in
accordance with such Underlying Shares Registration Statement.

         (e) Upon a conversion hereunder the Company shall not be required to
issue stock certificates representing fractions of shares of the Common Stock,
but may if otherwise permitted, make a cash payment in respect of any final
fraction of a share based on the Per Share Market Value at such time. If the
Company elects not, or is unable, to make such a cash payment, the Holder shall
be entitled to receive, in lieu of the final fraction of a share, one whole
share of Common Stock.

         (f) The issuance of certificates for shares of the Common Stock on
conversion of the Debentures shall be made without charge to the Holders thereof
for any documentary stamp or similar taxes that may be payable in respect of the
issue or delivery of such certificate, provided that the Company shall not be
required to pay any tax that may be payable in respect of any transfer involved
in the issuance and delivery of any such certificate upon conversion in a name
other than that of the Holder of such Debentures so converted and the Company
shall not be required to issue or deliver such certificates unless or until the
person or persons requesting the issuance thereof shall have paid to the Company
the amount of such tax or shall have established to the satisfaction of the
Company that such tax has been paid.


                                      -12-
<PAGE>

         (g) Any and all notices or other communications or deliveries to be
provided by the Holders hereunder, including, without limitation, any Conversion
Notice, shall be in writing and delivered personally, by facsimile, sent by a
nationally recognized overnight courier service or sent by certified or
registered mail, postage prepaid, addressed to the Company, at 446 Lincoln
Highway, Fairless Hills, PA 19030, Facsimile No.: (267) 580-1090, attention:
Michael J. Pellegrino, or such other address or facsimile number as the Company
may specify for such purposes by notice to the Holders delivered in accordance
with this Section, with a copy to (other than for Conversion Notices) Owen
Naccarato, Esq., Facsimile No.: (949) 851-9262, Attn: Owen Naccarato, Esq. Any
and all notices or other communications or deliveries to be provided by the
Company hereunder shall be in writing and delivered personally, by facsimile,
sent by a nationally recognized overnight courier service or sent by certified
or registered mail, postage prepaid, addressed to each Holder at the facsimile
telephone number or address of such Holder appearing on the books of the
Company, or if no such facsimile telephone number or address appears, at the
principal place of business of the Holder. Any notice or other communication or
deliveries hereunder shall be deemed given and effective on the earliest of (i)
the date of transmission, if such notice or communication is delivered via
facsimile at the facsimile telephone number specified in this Section prior to
5:00 p.m. (New York City time), (ii) the date after the date of transmission, if
such notice or communication is delivered via facsimile at the facsimile
telephone number specified in this Section later than 5:00 p.m. (New York City
time) on any date and earlier than 11 :59 p.m. (New York City time) on such
date, (iii) four days after deposit in the United States mail, (iv) the Business
Day following the date of mailing, if sent by nationally recognized overnight
courier service, or (v) upon actual receipt by the party to whom such notice is
required to be given.

         Section 5. Optional Prepayment. During the first 30 days following the
Original Issue Date, the Company shall have the right to prepay all or any
portion of the outstanding principal amount of this Debenture for which
Conversion Notices have not previously been delivered by delivery of the
prepayment price to the Holder together with a written accounting of the
principal amount to be prepaid plus other amounts owing thereon. The prepayment
price applicable to prepayments under this Section must accompany the notice of
intention to prepay. The prepayment price shall equal 130% of the principal
amount of the Debentures to be prepaid, and all unpaid and accrued interest
thereon. Upon receipt of the prepayment price for a prepayment under this
Section, the Holder shall, (i) if such prepayment is only for a portion of the
principal amount then outstanding under this Debenture, promptly deliver to the
Company a revised Conversion Schedule reflecting such prepayment or (ii) if such
prepayment is for the entire then outstanding principal amount under this
Debenture, promptly deliver this Debenture, marked paid in full. The Holder need
not deliver any Debentures and shall still have rights as a Debenture holder
until the full prepayment price hereunder is properly received by it.

         Section 6. Definitions. For the purposes hereof, the following terms
shall have the following meanings:

"Business Day" means any day except Saturday, Sunday and any day which shall be
a federal legal holiday in the United States or a day on which banking
institutions in the State of New York or Commonwealth of Pennsylvania are
authorized or required by law or other government action to close.

"Change of Control Transaction" means the occurrence of any of(i) an acquisition
after the date hereof by an individual or legal entity or "group" (as described
in Rule 13d-5(b )(1) promulgated under the Exchange Act) of effective control


                                      -13-
<PAGE>

(whether through legal or beneficial ownership of capital stock of the Company,
by contract or otherwise) of in excess of 33% of the voting securities of the
Company, (ii) a replacement at one time or over time of more than one-half of
the members of the Company's board of directors which is not approved by a
majority of those individuals who are members of the board of directors on the
date hereof (or by those individuals who are serving as members of the board of
directors on any date whose nomination to the board of directors was approved by
a majority of the members of the board of directors who are members on the date
hereof), (iii) the merger of the Company with or into another entity that is not
wholly-owned by the Company, consolidation or sale of 50% or more of the assets
of the Company in one or a series of related transactions, or (iv) the execution
by the Company of an agreement to which the Company is a party or by which it is
bound, providing for any of the events set forth above in (i), (ii) or (iii).

         "Commission" means the Securities and Exchange Commission.

         "Common Stock" means the common stock, $0.001 par value per share, of
the Company and stock of any other class into which such shares may hereafter
have been reclassified or changed.

         "Exchange Act" means the Securities Exchange Act of 1934, as amended.

         "Mandatory Prepayment Amount" for any Debentures shall equal the sum of
(i) the greater of(A) 130% of the principal amount of Debentures to be prepaid,
plus all accrued and unpaid interest thereon, and (B) the principal amount of
Debentures to be prepaid, plus all accrued and unpaid interest thereon, divided
by the Conversion Price on (x) the date the Mandatory Prepayment Amount is
demanded or otherwise due or (y) the date the Mandatory Prepayment Amount is
paid in full, whichever is less, multiplied by the Per Share Market Value on (x)
the date the Mandatory Prepayment Amount is demanded or otherwise due or (y) the
date the Mandatory Prepayment Amount is paid in full, whichever is greater, and
(ii) all other amounts, costs, expenses and liquidated damages due in respect of
such Debentures.

         "Original Issue Date" shall mean the date of the first issuance of the
Debentures regardless of the number of transfers of any Debenture and regardless
of the number of instruments which may be issued to evidence such Debenture.

         "Per Share Market Value" means on any particular date (a) the closing
bid price per share of Common Stock on such date on the Subsequent Market on
which the shares of Common Stock are then listed or quoted (as reported by
Bloomberg L.P. at 4:15 PM (New York time) for the closing sales price for
regular session trading on such day), or if there is no such price on such date,
then the closing bid price on the Subsequent Market on the date nearest
preceding such date (as reported by Bloomberg L.P. at 4:15 PM (New York time)
for the closing sales price for regular session trading on such day), or (b) if
the shares of Common Stock are not then listed or quoted on a Subsequent Market,
the closing bid price for a share of Common Stock in the OTC, as reported by the
National Quotation Bureau Incorporated or similar organization or agency
succeeding to its functions of reporting prices) at the close of business on
such date, or (c) if the shares of Common Stock are not then reported by the


                                      -14-
<PAGE>

National Quotation Bureau Incorporated (or similar organization or agency
succeeding to its functions of reporting prices), then the average of the "Pink
Sheet" quotes for the relevant conversion period, as determined in good faith by
the Holder, or (d) if the shares of Common Stock are not then publicly traded
the fair market value of a share of Common Stock as determined by an Appraiser
selected in good faith by the Holders of a majority in interest of the principal
amount of Debentures then outstanding.

         "Person" means a corporation, an association, a partnership,
organization, a business, an individual, a government or political subdivision
thereof or a governmental agency.

         "Purchase Agreement" means the Secured Convertible Debenture Purchase
Agreement, dated December [ ], 2000, to which the Company and the original
Holder are parties, as amended, modified or supplemented from time to time in
accordance with its terms.

         "Registration Rights Agreement" means the Registration Rights
Agreement, dated as of the Original Issue Date, to which the Company and the
original Holder are parties, as amended, modified or supplemented from time to
time in accordance with its terms.

         "Securities Act" means the Securities Act of 1933, as amended, and the
rules and regulations promulgated thereunder.

         "Trading Day" means (a) a day on which the shares of Common Stock are
traded on the OTC or on such Subsequent Market on which the shares of Common
Stock are then listed or quoted, or (b) if the shares of Common Stock are not
listed on a Subsequent Market, a day on which the shares of Common Stock are
traded in the over-the-counter market, as reported by the OTC, or (c) if the
shares of Common Stock are not quoted on the OTC, a day on which the shares of
Common Stock are quoted in the over-the-counter market as reported by the
National Quotation Bureau Incorporated (or any similar organization or agency
succeeding its functions of reporting prices); provided, that in the event that
the shares of Common Stock are not listed or quoted as set forth in (a), (b) and
(c) hereof, then Trading Day shall mean any day except a Business Day.

         "Transaction Documents" shall have the meaning set forth in the
Purchase Agreement.

         "Underlying Shares" means the shares of Common Stock issuable upon
conversion of Debentures or as payment of interest in accordance with the terms
hereof.

         "Underlying Shares Registration Statement" means a registration
statement meeting the requirements set forth in the Registration Rights
Agreement, covering among other things the resale of the Underlying Shares and
naming the Holder as a "selling stockholder" thereunder. Section 7. Except as
expressly provided herein, no provision of this Debenture shall alter or impair
the obligation of the Company, which is absolute and unconditional, to pay the
principal of, interest and liquidated damages (if any) on, this Debenture at the
time, place, and rate, and in the coin or currency, herein prescribed. This
Debenture is a direct obligation of the Company. This Debenture ranks pari passu
with all other Debentures now or hereafter issued under the terms set forth


                                      -15-
<PAGE>

herein. As long as there are Debentures outstanding, the Company shall not and
shall cause it subsidiaries not to, without the consent of the Holders, (i)
amend its certificate of incorporation, bylaws or other charter documents so as
to adversely affect any rights of the Holders; (ii) repay, repurchase or offer
to repay, repurchase or otherwise acquire shares of its Common Stock or other
equity securities other than as to the Underlying Shares to the extent permitted
or required under the Transaction Documents; or (iii) enter into any agreement
with respect to any of the foregoing. The Company may only voluntarily prepay
the outstanding principal amount on the Debentures in accordance with Section 5
hereof.

         Section 8. This Debenture shall not entitle the Holder to any of the
rights of a stockholder of the Company, including without limitation, the right
to vote, to receive dividends and other distributions, or to receive any notice
of, or to attend, meetings of stockholders or any other proceedings of the
Company, unless and to the extent converted into shares of Common Stock in
accordance with the terms hereof.

         Section 9. If this Debenture shall be mutilated, lost, stolen or
destroyed, the Company shall execute and deliver, in exchange and substitution
for and upon cancellation of a mutilated Debenture, or in lieu of or in
substitution for a lost, stolen or destroyed debenture, a new Debenture for the
principal amount of this Debenture so mutilated, lost, stolen or destroyed but
only upon receipt of evidence of such loss, theft or destruction of such
Debenture, and of the ownership hereof, and indemnity, if requested, all
reasonably satisfactory to the Company.

         Section 10. No indebtedness of the Company is senior to this Debenture
in right of payment, whether with respect to interest, damages or upon
liquidation or dissolution or otherwise. The Company will not and will not
permit any of its subsidiaries to, directly or indirectly, enter into, create,
incur, assume or suffer to exist any indebtedness 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 in any
respect to the Company's obligations under the Debentures.

         Section 11. This Debenture shall be governed by and construed in
accordance with the laws of the State of New York, without giving effect to
conflicts of laws thereof. The Company and the Holder hereby irrevocably submits
to the exclusive jurisdiction of the state and federal courts sitting in the
City of New York, Borough of Manhattan, for the adjudication of any dispute
hereunder or in connection herewith or with any transaction contemplated hereby
or discussed herein, and hereby irrevocably waives, and agrees not to assert in
any suit, action or proceeding, any claim that it is not personally subject to
the jurisdiction of any such court, or that such suit, action or proceeding is
improper. Each of the Company and the Holder hereby irrevocably waives personal
service of process and consents to process being served in any such suit, action
or proceeding by receiving a copy thereof sent to the Company at the address in
effect for notices to it under this instrument and agrees that such service
shall constitute good and sufficient service of process and notice thereof.
Nothing contained herein shall be deemed to limit in any way any right to serve
process in any manner permitted by law. Nothing contained herein shall be deemed
to limit in any way any right to serve process in any manner permitted by law.
Each party irrevocably waives, to the fullest extent permitted by applicable
law, any and all right to trial by jury in any legal proceeding arising out of
or relating to this Agreement or the transactions contemplated hereby. If either
party shall commence an action or proceeding to enforce any provisions of a


                                      -16-
<PAGE>

Transaction Document, then the prevailing party in such action or proceeding
shall be reimbursed by the other party for its' attorneys fees and other costs
and expenses incurred with the investigation, preparation and prosecution of
such action or proceeding.

         Section 12. Any waiver by the Company or the Holder of a breach of any
provision of this Debenture shall not operate as or be construed to be a waiver
of any other breach of such provision or of any breach of any other provision of
this Debenture. The failure of the Company or the Holder to insist upon strict
adherence to any term of this Debenture on one or more occasions shall not be
considered a waiver or deprive that party of the right thereafter to insist upon
strict adherence to that term or any other term of this Debenture. Any waiver
must be in writing.

         Section 13. If any provision of this Debenture is invalid, illegal or
unenforceable, the balance of this Debenture shall remain in effect, and if any
provision is inapplicable to any person or circumstance, it shall nevertheless
remain applicable to all other persons and circumstances. If it shall be found
that any interest or other amount deemed interest due hereunder shall violate
applicable laws governing usury, the applicable rate of interest due hereunder
shall automatically be lowered to equal the maximum permitted rate of interest.
The Company covenants (to the extent that it may lawfully do so) that it shall
not at any time insist upon, plead, or in any manner whatsoever claim or take
the benefit or advantage of, any stay, extension or usury law or other law which
would prohibit or forgive the Company from paying all or any portion of the
principal of or interest on the Debentures as contemplated herein, wherever
enacted, now or at any time hereafter in force, or which may affect the
covenants or the performance of this indenture, and the Company (to the extent
it may lawfully do so) hereby expressly waives all benefits or advantage of any
such law, and covenants that it will not, by resort to any such law, hinder,
delay or impeded the execution of any power herein granted to the Holder, but
will suffer and permit the execution of every such as though no such law has
been enacted.

         Section 14. Whenever any payment or other obligation hereunder shall be
due on a day other than a Business Day, such payment shall be made on the next
succeeding Business Day. Section 15. The payment obligations under this
Debenture and the obligations of the Company to the Holder arising upon the
conversion of all or any of the Debentures in accordance with the provisions
hereof are secured pursuant to the Security Agreement (as defined in the
Purchase Agreement).

                   [REMAINDER OF PAGE INTENTIONALLY LEFT BLANK
                             SIGNATURE PAGE FOLLOWS]


                                      -17-
<PAGE>

IN WITNESS WHEREOF, the Company has caused this Secured Convertible Debenture to
be duly executed by a duly authorized officer as of the date first above
indicated.


                        DIGITAL DESCRIPTOR SYSTEMS, INC.



                                              By: /s/Michael J. Pellegrino
                                                  ------------------------
                                                  Name: Michael J. Pellegrino
                                                  Title: Chief Financial Officer

<PAGE>

                                    EXHIBIT A
                              NOTICE OF CONVERSION


The undersigned hereby elects to convert principal and, if specified, interest
under the 12% Secured Convertible Debenture of the Company due twelve months
from issuance into shares of common stock, $0.001 par value per share (the
"Common Stock"), of Digital Descriptor Systems, Inc. (the "Company") according
to the conditions hereof, as of the date written below. If shares are to be
issued in the name of a person other than the undersigned, the undersigned will
pay all transfer taxes payable with respect thereto and is delivering herewith
such certificates and opinions as reasonably requested by the Company in
accordance therewith. No fee will be charged to the holder for any conversion,
except for such transfer taxes, if any.

Conversion calculations:          ______________________________________________
                                  Date to Effect Conversion


                                  ______________________________________________
                                  Principal Amount of Debentures to be Converted

                                  Payment of Interest in Kind [ ] Yes [ ] No
                                    If yes, $ of________ Interest Accrued on
                                    Account of Conversion at Issue

                                  ______________________________________________
                                  Number of shares of Common Stock to be Issued

                                  ______________________________________________
                                  Applicable Conversion Price

                                  ______________________________________________
                                  Signature

                                  ______________________________________________
                                  Name

                                  ______________________________________________
                                  Address

<PAGE>

Schedule 1

                               CONVERSION SCHEDULE

                        Digital Descriptor Systems, Inc.

   12% Secured Convertible Debentures due December [ ], 2001, in the aggregate
  principal amount of $600,000 issued by Digital Descriptor Systems, Inc. This
     Conversion Schedule reflects conversions made under Section 4(a)(i) of
                        the above referenced Debentures.

                                     Dated:


================================================================================
                                             Aggregate
                                             Principal
                                              Amount
                                            Remaining
   Date of                                 Subsequent to
  Conversion                                 Conversion
(or for first                              (or original
entry, Original          Amount of           Principal
  Issue Date)           Conversion            Amount)            Company Attest
--------------------------------------------------------------------------------

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10.6.1
<SEQUENCE>9
<FILENAME>ex10-6_1.txt
<DESCRIPTION>EX-10.6.1
<TEXT>
<PAGE>


                                                                  Exhibit 10.6.1

                          REGISTRATION RIGHTS AGREEMENT

                  This Registration Rights Agreement (this "Agreement") is made
and entered into as of December 28, 2000, among Digital Descriptor Systems,
Inc., a Delaware corporation (the "Company"), and the investors signatory hereto
(each such investor is a "Purchaser" and all such investors are, collectively,
the "Purchasers").

                  This Agreement is made pursuant to the Secured Convertible
Debenture Purchase Agreement, dated as of the date hereof among the Company and
the Purchasers (the "Purchase Agreement").

                  The Company and the Purchasers hereby agree as follows:

         1.       Definitions

                  Capitalized terms used and not otherwise defined herein that
are defined in the Purchase Agreement shall have the meanings given such terms
in the Purchase Agreement. As used in this Agreement, the following terms shall
have the following meanings:

                  "Affiliate" means, with respect to any Person, any other
Person that directly or indirectly controls or is controlled by or under common
control with such Person. For the purposes of this definition, "control," when
used with respect to any Person, means the possession, direct or indirect, of
the power to direct or cause the direction of the management and policies of
such Person, whether through the ownership of voting securities, by contract or
otherwise; and the terms of "affiliated," "controlling" and "controlled" have
meanings correlative to the foregoing.

                  "Business Day" means any day except Saturday, Sunday and any
day which shall be a legal holiday or a day on which banking institutions in the
State of New York or the Commonwealth of Pennsylvania generally are authorized
or required by law or other government actions to close.

                  "Closing Date" shall have the meaning set forth in the
Purchase Agreement.

                  "Commission" means the Securities and Exchange Commission.

                  "Common Stock" means the Company's common stock, $0.001 par
value, or such securities in to which that such stock shall hereafter be
reclassified.

                  "Debentures" means the Convertible Debentures issued to the
Purchasers in accordance with the Purchase Agreement.



<PAGE>


                  "Effectiveness Date" means with respect to the initial
Registration Statement required to be filed hereunder, the 90th day following
the Closing Date and, with respect to any additional Registration Statements
which may be required pursuant to Section 3(c), the ninetieth (90th) day
following the date that notice of the requirement to file such additional
Registration Statement is provided.

                  "Effectiveness Period" shall have the meaning set forth in
Section 2(a).

                  "Exchange Act" means the Securities Exchange Act of 1934, as
amended.

                  "Filing Date" means the 30th day following the Closing Date
and with respect to any additional Registration Statements which may be required
pursuant to Section 3(c), the 30th day following the date that notice of the
requirement to be filed such additional Registration Statement is provided.

                  "Holder" or "Holders" means the holder or holders, as the case
may be, from time to time of Registrable Securities.

                  "Indemnified Party" shall have the meaning set forth in
Section 5(c).

                  "Indemnifying Party" shall have the meaning set forth in
Section 5(c).

                  "Losses" shall have the meaning set forth in Section 5(a).

                  "Person" means an individual or a corporation, partnership,
trust, incorporated or unincorporated association, joint venture, limited
liability company, joint stock company, government (or an agency or political
subdivision thereof) or other entity of any kind.

                  "Proceeding" means an action, claim, suit, investigation or
proceeding (including, without limitation, an investigation or partial
proceeding, such as a deposition), whether commenced or threatened.

                  "Prospectus" means the prospectus included in the Registration
Statement (including, without limitation, a prospectus that includes any
information previously omitted from a prospectus filed as part of an effective
registration statement in reliance upon Rule 430A promulgated under the
Securities Act), as amended or supplemented by any prospectus supplement, with
respect to the terms of the offering of any portion of the Registrable
Securities covered by the Registration Statement, and all other amendments and
supplements to the Prospectus, including post-effective amendments, and all
material incorporated by reference or deemed to be incorporated by reference in
such Prospectus.

                  "Registrable Securities" means the shares of Common Stock
issuable upon conversion in full of the Debentures and exercise in full of the
Warrants.


                                      -2-
<PAGE>



                  "Registration Statement" means the registration statement and
any additional registration statements contemplated by Section 3(c), including
(in each case) the Prospectus, amendments and supplements to such registration
statement or Prospectus, including pre- and post-effective amendments, all
exhibits thereto, and all material incorporated by reference or deemed to be
incorporated by reference in such registration statement.

                  "Rule 144" means Rule 144 promulgated by the Commission
pursuant to the Securities Act, as such Rule may be amended from time to time,
or any similar rule or regulation hereafter adopted by the Commission having
substantially the same effect as such Rule.

                  "Rule 415" means Rule 415 promulgated by the Commission
pursuant to the Securities Act, as such Rule may be amended from time to time,
or any similar rule or regulation hereafter adopted by the Commission having
substantially the same effect as such Rule.

                  "Rule 424" means Rule 424 promulgated by the Commission
pursuant to the Securities Act, as such Rule may be amended from time to time,
or any similar rule or regulation hereafter adopted by the Commission having
substantially the same effect as such Rule.

                  "Securities Act" means the Securities Act of 1933, as amended,
and the rules and regulations promulgated thereunder.

                  "Special Counsel" means one special counsel to the Holders,
for which the Holders will be reimbursed by the Company pursuant to Section 4.


         2.       Shelf Registration

                  (a) On or prior to each Filing Date, the Company shall prepare
and file with the Commission a "Shelf" Registration Statement covering the
resale of all Registrable Securities for an offering to be made on a continuous
basis pursuant to Rule 415. The Registration Statement shall be on Form SB-2
(except if the Company is not then eligible to register for resale the
Registrable Securities on Form SB-2, in which case such registration shall be on
another appropriate form and shall contain (except if otherwise directed by the
Holders) the "Plan of Distribution" attached hereto as Annex A. The Company
shall use its best efforts to cause the Registration Statement to be declared
effective under the Securities Act as promptly as possible after the filing
thereof, but in any event prior to the Effectiveness Date, and shall use its
best efforts to keep such Registration Statement continuously effective under
the Securities Act until the date which is two years after the date that such
Registration Statement is declared effective by the Commission or such earlier
date when all Registrable Securities covered by such Registration Statement have
been sold or may be sold without volume restrictions pursuant to Rule 144(k)
(the "Effectiveness Period").

                  (b) The initial Registration Statement to be filed hereunder
shall include (but not be limited to) a number of shares of Common Stock equal
to no less than the sum of(i) 200% of the number of shares of Common Stock
issuable upon conversion in full of the principal amount of Debentures assuming
(1) the full $600,000 of Debentures is issued on the Closing Date, (2) the
conversion of the full $600,000 of Debentures occurred on the Closing Date, (3)
one full year of interest had accrued on the Debentures and all such interest is
paid in shares ofCommon Stock and (4) the Conversion Price equaled the lessor of
(a) $0.08 and (b) 50% of the average of the lowest three inter-day prices (which
need not occur on consecutive Trading Days) during the ten Trading Days
immediately preceding the Closing Date and (ii) exercise in full of the
Warrants.

                                      -3-
<PAGE>


                  (c) If (a) a Registration Statement is not filed on or prior
to its Filing Date (if the Company files such Registration Statement without
affording the Holder the opportunity to review and comment on the same as
required by Section 3(a) hereof, the Company shall not be deemed to have
satisfied this clause (a)), or (b) the Company fails to file with the Commission
a request for acceleration in accordance with Rule 461 promulgated under the
Securities Act, within five days of the date that the Company is notified
(orally or in writing, whichever is earlier) by the Commission that a
Registration Statement will not be "reviewed," or not subject to further review,
or (c) a Registration Statement filed hereunder is not declared effective by the
Commission on or prior to its Effectiveness Date, or (d) after a Registration
Statement is filed with and declared effective by the Commission, such
Registration Statement ceases to be effective as to all Registrable Securities
to which it is required to relate at any time prior to the expiration of the
Effectiveness Period without being succeeded within ten Business Days by an
amendment to such Registration Statement or by a subsequent Registration
Statement filed with and declared effective by the Commission, or (e) the Common
Stock shall not be quoted on the OTC Bulletin Board or shall be delisted or
suspended from trading on the New York Stock Exchange, American Stock Exchange,
the Nasdaq National Market or the Nasdaq Smallcap Market (each, a "Subsequent
Market") for more than three Trading Days (which need not be consecutive Trading
Days), or (f) the conversion rights of the Holders pursuant to the Debentures
are suspended for any reason, or (g) an amendment to a Registration Statement is
not filed by the Company with the Commission within ten Business Days of the
Commission's notifying the Company that such amendment is required in order for
such Registration Statement to be declared effective (any such failure or breach
being referred to as an "Event," and for purposes of clauses (a), (c), (f) the
date on which such Event occurs, or for purposes of clause (b) the date on which
such five day period is exceeded, or for purposes of clauses (d) and (g) the
date which such ten Business Day-period is exceeded, or for purposes of clause
(e) the date on which such three Trading Day-period is exceeded, being referred
to as "Event Date"), then, on each such Event Date and every monthly anniversary
thereof until the applicable Event is cured, the Company shall pay to each
Holder an amount in cash, as liquidated damages and not as a penalty, equal to
2.0% of the purchase price paid by such Holder pursuant to the Purchase
Agreement, or at the Holder's option, in shares of Common Stock. If the Holder
elects to receive such liquidated damages in shares of Common Stock, then the
number of shares issuable to such Holder shall be determined based upon a price
which is equal to the average of the three lowest inter-day trading prices (as
reported by Bloomberg Information Services) during the ten Trading Days
immediately preceding the Event Date or the monthly anniversary thereof. If the
Company fails to pay any liquidated damages pursuant to this Section in full
within seven days after the date payable, the Company will pay interest thereon
at a rate of 15% per annum (or such lesser maximum amount that is permitted to
be paid by applicable law) to the Holder, accruing daily from the date such
liquidated damages are due until such amounts, plus all such interest thereon,
are paid in full. The liquidated damages pursuant to the terms hereof shall
apply on a pro-rata basis for any portion of a month prior to the cure of an
Event.

                                      -4-
<PAGE>


         3.       Registration Procedures

                  In connection with the Company's registration obligations
hereunder, the Company shall:

                  (a) Not less than five Business Days prior to the filing of
each Registration Statement or any related Prospectus or any amendment or
supplement thereto (including any document that would be incorporated or deemed
to be incorporated therein by reference), the Company shall, (i) furnish to the
Holders and their Special Counsel copies of all such documents proposed to be
filed, which documents (other than those incorporated or deemed to be
incorporated by reference) will be subject to the review of such Holders and
their Special Counsel, and (ii) cause its officers and directors, counsel and
independent certified public accountants to respond to such inquiries as shall
be necessary, in the reasonable opinion of respective counsel to conduct a
reasonable investigation within the meaning of the Securities Act. The Company
shall not file the Registration Statement or any such Prospectus or any
amendments or supplements thereto to which the Holders of a majority of the
Registrable Securities and their Special Counsel shall reasonably object,
provided, the Company is notified of such objection no later than 3 Business
Days after the Holders have been so furnished copies of such documents.

                  (b) (i) Prepare and file with the Commission such amendments,
including post-effective amendments, to the Registration Statement and the
Prospectus used in connection therewith as may be necessary to keep the
Registration Statement continuously effective as to the applicable Registrable
Securities for the Effectiveness Period and prepare and file with the Commission
such additional Registration Statements in order to register for resale under
the Securities Act all of the Registrable Securities; (ii) cause the related
Prospectus to be amended or supplemented by any required Prospectus supplement,
and as so supplemented or amended to be filed pursuant to Rule 424; (iii)
respond as promptly as reasonably possible, and in any event within ten Business
Days, to any comments received from the Commission with respect to the
Registration Statement or any amendment thereto and as promptly as reasonably
possible provide the Holders true and complete copies of all correspondence from
and to the Commission relating to the Registration Statement; and (iv) comply in
all material respects with the provisions of the Securities Act and the Exchange
Act with respect to the disposition of all Registrable Securities covered by the
Registration Statement during the applicable period in accordance with the
intended methods of disposition by the Holders thereof set forth in the
Registration Statement as so amended or in such Prospectus as so supplemented.

                  (c) File additional Registration Statements if the number of
Registrable Securities at any time exceeds 85% of the number of shares of Common
Stock then registered in all their existing Registration Statements hereunder
which additional Registration Statement shall cover 120% or more of the number
of unregistered Registrable Securities.

                                      -5-

<PAGE>



                  (d) Notify the Holders of Registrable Securities to be sold
and their Special Counsel as promptly as reasonably possible (and, in the case
of (i)(A) below, not less than five Business Days prior to such filing) and (if
requested by any such Person) confirm such notice in writing no later than one
Business Day following the day (i)(A) when a Prospectus or any Prospectus
supplement or post-effective amendment to the Registration Statement is proposed
to be filed; (B) when the Commission notifies the Company whether there will be
a "review" of such Registration Statement and whenever the Commission comments
in writing on such Registration Statement (the Company shall provide true and
complete copies thereof and all written responses thereto to each of the
Holders); and (C) with respect to the Registration Statement or any
post-effective amendment, when the same has become effective; (ii) of any
request by the Commission or any other Federal or state governmental authority
for amendments or supplements to the Registration Statement or Prospectus or for
additional information; (iii) of the issuance by the Commission of any stop
order suspending the effectiveness of the Registration Statement covering any or
all of the Registrable Securities or the initiation of any Proceedings for that
purpose; (iv) if at any time any of the representations and warranties of the
Company contained in any agreement contemplated hereby ceases to be true and
correct in all material respects; (v) of the receipt by the Company of any
notification with respect to the suspension of the qualification or exemption
from qualification of any of the Registrable Securities for sale in any
jurisdiction, or the initiation or threatening of any Proceeding for such
purpose; and (vi) of the occurrence of any event or passage of time that makes
the financial statements included in the Registration Statement ineligible for
inclusion therein or any statement made in the Registration Statement or
Prospectus or any document incorporated or deemed to be incorporated therein by
reference untrue in any material respect or that requires any revisions to the
Registration Statement, Prospectus or other documents so that, in the case of
the Registration Statement or the Prospectus, as the case may be, it will not
contain any untrue statement of a material fact or omit to state any material
fact required to be stated therein or necessary to make the statements therein,
in light of the circumstances under which they were made, not misleading.

                  (e) Promptly deliver to each Holder and their Special Counsel,
without charge, as many copies of the Prospectus or Prospectuses (including each
form of prospectus) and each amendment or supplement thereto as such Persons may
reasonably request. The Company hereby consents to the use of such Prospectus
and each amendment or supplement thereto by each of the selling Holders in
connection with the offering and sale of the Registrable Securities covered by
such Prospectus and any amendment or supplement thereto.

                  (f) Prior to any public offering of Registrable Securities,
use its best efforts to register or qualify or cooperate with the selling
Holders and their Special Counsel in connection with the registration or
qualification (or exemption from such registration or qualification) of such
Registrable Securities for offer and sale under the securities or Blue Sky laws
of such jurisdictions within the United States as any Holder requests in
writing, to keep each such registration or qualification (or exemption
therefrom) effective during the Effectiveness Period and to do any and all other
acts or things necessary or advisable to enable the disposition in such
jurisdictions of the Registrable Securities covered by a Registration Statement;
provided, that the Company shall not be required to qualify generally to do
business in any jurisdiction where it is not then so qualified or subject the
Company to any material tax in any such jurisdiction where it is not then so
subject.

                  (g) Cooperate with the Holders to facilitate the timely
preparation and delivery of certificates representing Registrable Securities to
be delivered to a transferee pursuant to a Registration Statement, which
certificates shall be free, to the extent permitted by the Purchase Agreement,
of all restrictive legends, and to enable such Registrable Securities to be in
such denominations and registered in such names as any such Holders may request.

                                      -6-
<PAGE>


                  (h) Upon the occurrence of any event contemplated by Section
3(d)(vi), as promptly as reasonably possible, prepare a supplement or amendment,
including a post-effective amendment, to the Registration Statement or a
supplement to the related Prospectus or any document incorporated or deemed to
be incorporated therein by reference, and file any other required document so
that, as thereafter delivered, neither the Registration Statement nor such
Prospectus will contain an untrue statement of a material fact or omit to state
a material fact required to be stated therein or necessary to make the
statements therein, in light of the circumstances under which they were made,
not misleading.

                  (i) Comply with all applicable rules and regulations of the
Commission.

                  4. Registration Expenses. All fees and expenses incident to
the performance of or compliance with this Agreement by the Company shall be
borne by the Company whether or not any Registrable Securities are sold pursuant
to the Registration Statement. The fees and expenses referred to in the
foregoing sentence shall include, without limitation, (i) all registration and
filing fees (including, without limitation, fees and expenses (A) with respect
to filings required to be made with any Subsequent Market on which the Common
Stock is then listed for trading, and (B) in compliance with applicable state
securities or Blue Sky laws (including, without limitation, fees and
disbursements of counsel for the Company in connection with Blue Sky
qualifications or exemptions of the Registrable Securities and determination of
the eligibility of the Registrable Securities for investment under the laws of
such jurisdictions as requested by the Holders)), (ii) printing expenses
(including, without limitation, expenses of printing certificates for
Registrable Securities and of printing prospectuses requested by the Holders),
(iii) messenger, telephone and delivery expenses, (iv) fees and disbursements of
counsel for the Company and Special Counsel for the Holders and (v) fees and
expenses of all other Persons retained by the Company in connection with the
consummation of the transactions contemplated by this Agreement.

                                      -7-

<PAGE>


         5.       Indemnification

                  (a) Indemnification by the Company. The Company shall,
notwithstanding any termination of this Agreement, indemnify and hold harmless
each Holder, the officers, directors, agents, brokers (including brokers who
offer and sell Registrable Securities as principal as a result of a pledge or
any failure to perform under a margin call of Common Stock), investment advisors
and employees of each of them, each Person who controls any such Holder (within
the meaning of Section 15 of the Securities Act or Section 20 of the Exchange
Act) and the officers, directors, agents and employees of each such controlling
Person, to the fullest extent permitted by applicable law, from and against any
and all losses, claims, damages, liabilities, costs (including, without
limitation, costs of preparation and attorneys' fees) and expenses
(collectively, "Losses"), as incurred, arising out of or relating to any untrue
or alleged untrue statement of a material fact contained in the Registration
Statement, any Prospectus or any form of prospectus or in any amendment or
supplement thereto or in any preliminary prospectus, or arising out of or
relating to any omission or alleged omission of a material fact required to be
stated therein or necessary to make the statements therein (in the case of any
Prospectus or form of prospectus or supplement thereto, in light of the
circumstances under which they were made) not misleading, except to the extent,
but only to the extent, that (1) such untrue statements or omissions are based
solely upon information regarding such Holder furnished in writing to the
Company by such Holder expressly for use therein, or to the extent that such
information relates to such Holder or such Holder's proposed method of
distribution of Registrable Securities and was reviewed and expressly approved
in writing by such Holder expressly for use in the Registration Statement, such
Prospectus or such form of Prospectus or in any amendment or supplement thereto
or (2) in the case of an occurrence of an event of the type specified in Section
3(d)(ii)-(vi), the use by such Holder of an outdated or defective Prospectus
after the Company has notified such Holder in writing that the Prospectus is
outdated or defective and prior to the receipt by such Holder of the Advice
contemplated in Section 6(e). The Company shall notify the Holders promptly of
the institution, threat or assertion of any Proceeding of which the Company is
aware in connection with the transactions contemplated by this Agreement.

                  (b) Indemnification by Holders. Each Holder shall, severally
and not jointly, indemnify and hold harmless the Company, its directors,
officers, agents and employees, each Person who controls the Company (within the
meaning of Section 15 of the Securities Act and Section 20 of the Exchange Act),
and the directors, officers, agents or employees of such controlling Persons, to
the fullest extent permitted by applicable law, from and against all Losses (as
determined by a court of competent jurisdiction in a final judgment not subject
to appeal or review) arising solely out of or based solely upon any untrue
statement of a material fact contained in any Registration Statement, any
Prospectus, or any form of prospectus, or in any amendment or supplement
thereto, or arising solely out of or based solely upon any omission of a
material fact required to be stated therein or necessary to make the statements
therein not misleading to the extent, but only to the extent, that such untrue
statement or omission is contained in any information so furnished in writing by
such Holder to the Company specifically for inclusion in such Registration
Statement or such Prospectus or to the extent that (1) such untrue statements or
omissions are based solely upon information regarding such Holder furnished in
writing to the Company by such Holder expressly for use therein, or to the

                                      -8-
<PAGE>

extent that such information relates to such Holder or such Holder's proposed
method of distribution of Registrable Securities and was reviewed and expressly
approved in writing by such Holder expressly for use in the Registration
Statement, such Prospectus or such form of Prospectus or in any amendment or
supplement thereto or (2) in the case of an occurrence of an event of the type
specified in Section 3(d)(ii)-(vi), the use by such Holder of an outdated or
defective Prospectus after the Company has notified such Holder in writing that
the Prospectus is outdated or defective and prior to the receipt by such Holder
of the Advice contemplated in Section 6(e). In no event shall the liability of
any selling Holder hereunder be greater in amount than the dollar amount of the
net proceeds received by such Holder upon the sale of the Registrable Securities
giving rise to such indemnification obligation.

                  (c) Conduct of Indemnification Proceedings. If any Proceeding
shall be brought or asserted against any Person entitled to indemnity hereunder
(an "Indemnified Party"), such Indemnified Party shall promptly notify the
Person from whom indemnity is sought (the "Indemnifying Party") in writing, and
the Indemnifying Party shall assume the defense thereof, including the
employment of counsel reasonably satisfactory to the Indemnified Party and the
payment of all fees and expenses incurred in connection with defense thereof;
provided, that the failure of any Indemnified Party to give such notice shall
not relieve the Indemnifying Party of its obligations or liabilities pursuant to
this Agreement, except (and only) to the extent that it shall be finally
determined by a court of competent jurisdiction (which determination is not
subject to appeal or further review) that such failure shall have proximately
and materially adversely prejudiced the Indemnifying Party.

                  An Indemnified Party shall have the right to employ separate
counsel in any such Proceeding and to participate in the defense thereof, but
the fees and expenses of such counsel shall be at the expense of such
Indemnified Party or Parties unless: (1) the Indemnifying Party has agreed in
writing to pay such fees and expenses; or (2) the Indemnifying Party shall have
failed promptly to assume the defense of such Proceeding and to employ counsel
reasonably satisfactory to such Indemnified Party in any such Proceeding; or (3)
the named parties to any such Proceeding (including any impleaded parties)
include both such Indemnified Party and the Indemnifying Party, and such
Indemnified Party shall have been advised by counsel that a conflict of interest
is likely to exist if the same counsel were to represent such Indemnified Party
and the Indemnifying Party (in which case, if such Indemnified Party notifies
the Indemnifying Party in writing that it elects to employ separate counsel at
the expense of the Indemnifying Party, the Indemnifying Party shall not have the
right to assume the defense thereof and such counsel shall be at the expense of
the Indemnifying Party). The Indemnifying Party shall not be liable for any
settlement of any such Proceeding effected without its written consent, which
consent shall not be unreasonably withheld. No Indemnifying Party shall, without
the prior written consent of the Indemnified Party, effect any settlement of any
pending Proceeding in respect of which any Indemnified Party is a party, unless
such settlement includes an unconditional release of such Indemnified Party from
all liability on claims that are the subject matter of such Proceeding.

                  All fees and expenses of the Indemnified Party (including
reasonable fees and expenses to the extent incurred in connection with
investigating or preparing to defend such Proceeding in a manner not
inconsistent with this Section) shall be paid to the Indemnified Party, as
incurred, within ten Business Days of written notice thereof to the Indemnifying
Party (regardless of whether it is ultimately determined that an Indemnified
Party is not entitled to indemnification hereunder; provided, that the
Indemnifying Party may require such Indemnified Party to undertake to reimburse
all such fees and expenses to the extent it is finally judicially determined
that such Indemnified Party is not entitled to indemnification hereunder).

                                      -9-
<PAGE>


                  (d) Contribution. If a claim for indemnification under Section
5(a) or 5(b) is unavailable to an Indemnified Party (by reason of public policy
or otherwise), then each Indemnifying Party, in lieu of indemnifying such
Indemnified Party, shall contribute to the amount paid or payable by such
Indemnified Party as a result of such Losses, in such proportion as is
appropriate to reflect the relative fault of the Indemnifying Party and
Indemnified Party in connection with the actions, statements or omissions that
resulted in such Losses as well as any other relevant equitable considerations.
The relative fault of such Indemnifying Party and Indemnified Party shall be
determined by reference to, among other things, whether any action in question,
including any untrue or alleged untrue statement of a material fact or omission
or alleged omission of a material fact, has been taken or made by, or relates to
information supplied by, such Indemnifying Party or Indemnified Party, and the
parties' relative intent, knowledge, access to information and opportunity to
correct or prevent such action, statement or omission. The amount paid or
payable by a party as a result of any Losses shall be deemed to include, subject
to the limitations set forth in Section 5(c), any reasonable attorneys' or other
reasonable fees or expenses incurred by such party in connection with any
Proceeding to the extent such party would have been indemnified for such fees or
expenses if the indemnification provided for in this Section was available to
such party in accordance with its terms.

                  The parties hereto agree that it would not be just and
equitable if contribution pursuant to this Section 5(d) were determined by pro
rata allocation or by any other method of allocation that does not take into
account the equitable considerations referred to in the immediately preceding
paragraph. Notwithstanding the provisions of this Section 5(d), no Holder shall
be required to contribute, in the aggregate, any amount in excess of the amount
by which the proceeds actually received by such Holder from the sale of the
Registrable Securities subject to the Proceeding exceeds the amount of any
damages that such Holder has otherwise been required to pay by reason of such
untrue or alleged untrue statement or omission or alleged omission.

                  The indemnity and contribution agreements contained in this
Section are in addition to any liability that the Indemnifying Parties may have
to the Indemnified Parties.

         6.       Miscellaneous

                  (a) Amendments and Waivers. The provisions of this Agreement,
including the provisions of this sentence, may not be amended, modified or
supplemented, and waivers or consents to departures from the provisions hereof
may not be given, unless the same shall be in writing and signed by the Company
and the Holders of at least two-thirds of the then outstanding Registrable
Securities. Notwithstanding the foregoing, a waiver or consent to depart from
the provisions hereof with respect to a matter that relates exclusively to the
rights of Holders and that does not directly or indirectly affect the rights of
other Holders may be given by Holders of at least a majority of the Registrable
Securities to which such waiver or consent relates; provided, however, that the
provisions of this sentence may not be amended, modified, or supplemented except
in accordance with the provisions of the immediately preceding sentence.

                                     -10-
<PAGE>


                  (b) No Inconsistent Agreements. Neither the Company nor any of
its subsidiaries has entered, as of the date hereof, nor shall the Company or
any of its subsidiaries, on or after the date of this Agreement, enter into any
agreement with respect to its securities that would have the effect of impairing
the rights granted to the Holders in this Agreement or otherwise conflicts with
the provisions hereof. Except as and to the extent specified in Schedule 6(b)
hereto, neither the Company nor any of its subsidiaries has previously entered
into any agreement granting any registration rights with respect to any of its
securities to any Person.

                  (c) No Piggyback on Registrations. Except as and to the extent
specified in Schedule 6(b) hereto, neither the Company nor any of its security
holders (other than the Holders in such capacity pursuant hereto) may include
securities of the Company in the Registration Statement other than the
Registrable Securities, and the Company shall not after the date hereof enter
into any agreement providing any such right to any of its security holders.

                  (d) Compliance. Each Holder covenants and agrees that it will
comply with the prospectus delivery requirements of the Securities Act as
applicable to it in connection with sales of Registrable Securities pursuant to
the Registration Statement.

                  (e) Discontinued Disposition. Each Holder agrees by its
acquisition of such Registrable Securities that, upon receipt of a notice from
the Company of the occurrence of any event of the kind described in Sections
3(d)(ii), 3(d)(iii), 3(d)(iv), 3(d)(v) or 3(d)(vi), such Holder will forthwith
discontinue disposition of such Registrable Securities under the Registration
Statement until such Holder's receipt of the copies of the supplemented
Prospectus and/or amended Registration Statement contemplated by Section 3(h),
or until it is advised in writing (the "Advice") by the Company that the use of
the applicable Prospectus may be resumed, and, in either case, has received
copies of any additional or supplemental filings that are incorporated or deemed
to be incorporated by reference in such Prospectus or Registration Statement.
The Company may provide appropriate stop orders to enforce the provisions of
this paragraph.

                  (f) Piggy-Back Registrations. If at any time during the
Effectiveness Period there is not an effective Registration Statement covering
all of the Registrable Securities and the Company shall determine to prepare and
file with the Commission a registration statement relating to an offering for
its own account or the account of others under the Securities Act of any of its
equity securities, other than on Form S-4 or Form S-8 (each as promulgated under
the Securities Act) or their then equivalents relating to equity securities to
be issued solely in connection with any acquisition of any entity or business or
equity securities issuable in connection with stock option or other employee
benefit plans, then the Company shall send to each Holder written notice of such
determination and, if within fifteen days after receipt of such notice, any such
Holder shall so request in writing, the Company shall include in such
registration statement all or any part of such Registrable Securities such
holder requests to be registered.

                                     -11-
<PAGE>


                  (g) Notices. Any and all notices or other communications or
deliveries required or permitted to be provided hereunder shall be in writing
and shall be deemed given and effective on the earliest of (i) the date of
transmission, if such notice or communication is delivered via facsimile at the
facsimile telephone number specified in this Section prior to 6:30 p.m. (New
York City time) on a Business Day, (ii) the Business Day after the date of
transmission, if such notice or communication is delivered via facsimile at the
facsimile telephone number specified in this Agreement later than 6:30 p.m. (New
York City time) on any date and earlier than 11:59 p.m. (New York City time) on
such date, (iii) the Business Day following the date of mailing, if sent by
nationally recognized overnight courier service, or (iv) upon actual receipt by
the party to whom such notice is required to be given. The address for such
notices and communications shall be as follows:

                  If to the Company:            Digital Descriptor Systems, Inc.
                                                446 Lincoln Highway
                                                Fairless Hills, PA 19030
                                                Facsimile No.:  267-580-1090
                                                Attn: Michael J. Pellegrino

                  With copies to:               Owen M. Naccarato, Esq.
                                                19600 Fairchild, Suite 260
                                                Irvine, CA  92612
                                                Facsimile No.: (949) 851-9262
                                                Attn: Owen M. Naccarato, Esq.

                  If to a Purchaser:            To the address set forth under
                                                such Purchaser's name on the
                                                signature pages hereto.

         If to any other Person who is then the registered Holder:

                                                To the address of such Holder
                                                as it appears in the stock
                                                transfer books of the Company

or such other address as may be designated in writing hereafter, in the same
manner, by such Person.

                  (h) Successors and Assigns. This Agreement shall inure to the
benefit of and be binding upon the successors and permitted assigns of each of
the parties and shall inure to the benefit of each Holder. The Company may not
assign its rights or obligations hereunder without the prior written consent of
each Holder. Each Holder may assign their respective rights hereunder in the
manner and to the Persons as permitted under the Purchase Agreement.


                                     -12-
<PAGE>



                  (i) Counterparts. This Agreement may be executed in any number
of counterparts, each of which when so executed shall be deemed to be an
original and, all of which taken together shall constitute one and the same
Agreement. In the event that any signature is delivered by facsimile
transmission, such signature shall create a valid binding obligation of the
party executing (or on whose behalf such signature is executed) the same with
the same force and effect as if such facsimile signature were the original
thereof.

                  (j) Governing Law. All questions concerning the construction,
validity, enforcement and interpretation of this Agreement shall be governed by
and construed and enforced in accordance with the internal laws of the State of
New York, without regard to the principles of conflicts of law thereof. Each
party hereby irrevocably submits to the exclusive jurisdiction of the state and
federal courts sitting in the City of New York, borough of Manhattan, for the
adjudication of any dispute hereunder or in connection herewith or with any
transaction contemplated hereby or discussed herein, and hereby irrevocably
waives, and agrees not to assert in any suit, action or proceeding, any claim
that it is not personally subject to the jurisdiction of any such court, that
such suit, action or proceeding is improper. Each party hereby irrevocably
waives personal service of process and consents to process being served in any
such suit, action or proceeding by mailing a copy thereof to such party at the
address in effect for notices to it under this Agreement and agrees that such
service shall constitute good and sufficient service of process and notice
thereof. Nothing contained herein shall be deemed to limit in any way any right
to serve process in any manner permitted by law.

                  (k) Cumulative Remedies. The remedies provided herein are
cumulative and not exclusive of any remedies provided by law.

                  (l) Severability. If any term, provision, covenant or
restriction of this Agreement is held by a court of competent jurisdiction to be
invalid, illegal, void or unenforceable, the remainder of the terms, provisions,
covenants and restrictions set forth herein shall remain in full force and
effect and shall in no way be affected, impaired or invalidated, and the parties
hereto shall use their reasonable efforts to find and employ an alternative
means to achieve the same or substantially the same result as that contemplated
by such term, provision, covenant or restriction. It is hereby stipulated and
declared to be the intention of the parties that they would have executed the
remaining terms, provisions, covenants and restrictions without including any of
such that may be hereafter declared invalid, illegal, void or unenforceable.

                  (m) Headings. The headings in this Agreement are for
convenience of reference only and shall not limit or otherwise affect the
meaning hereof.

                                     -13-

<PAGE>


                  (n) Independent Nature of Purchasers' Obligations and Rights.
The obligations of each Purchaser hereunder is several and not joint with the
obligations of any other Purchaser hereunder, and no Purchaser shall be
responsible in any way for the performance of the obligations of any other
Purchaser hereunder. Nothing contained herein or in any other agreement or
document delivered at any closing, and no action taken by any Purchaser pursuant
hereto or thereto, shall be deemed to constitute the Purchasers as a
partnership, an association, a joint venture or any other kind of entity, or
create a presumption that the Purchasers are in any way acting in concert with
respect to such obligations or the transactions contemplated by this Agreement.
Each Purchaser shall be entitled to protect and enforce its rights, including
without limitation the rights arising out of this Agreement, and it shall not be
necessary for any other Purchaser to be joined as an additional party in any
proceeding for such purpose.


                   [REMAINDER OF PAGE INTENTIONALLY LEFT BLANK
                           SIGNATURE PAGES TO FOLLOW]


                                     -14-

<PAGE>




                  IN WITNESS WHEREOF, the parties have executed this
Registration Rights Agreement as of the date first written above.

                                    DIGITAL DESCRIPTOR SYSTEMS, INC.



                                    By:  /s/ Michael J. Pellegrino
                                         --------------------------
                                         Name:Michael J. Pellegrino
                                         Title:  Chief Financial Officer






                   [REMAINDER OF PAGE INTENTIONALLY LEFT BLANK
                     SIGNATURE PAGES OF PURCHASER TO FOLLOW]









                                     -15-


<PAGE>




                          AJW PARTNERS, LLC
                          By: SMS Group, LLC


                          By:_____________________________________
                             Name: Corey S. Ribotsky
                             Title:


                          Address for Notice:

                          AJW Partners, LLC
                          155 First Street
                          Suite B
                          Mineola, New York 11501
                          Facsimile No.:  (516) 739-7115


                          With copies to:
                          Robinson Silverman Pearce Aronsohn & Berman LLP
                          1290 Avenue of the Americas
                          New York, NY  10104
                          Facsimile No.:  (212) 541-4630 and (212) 541-1432
                          Attn: Eric L. Cohen, Esq.




                                     -16-


<PAGE>




                            NEW MILLENNIUM CAPITAL PARTNERS II, LLC
                            By: First Street Manager II, LLC


                            By:_____________________________________
                               Name: Glenn A. Arbeitman
                               Title:


                            Address for Notice:

                            New Millennium Capital Partners II, LLC
                            155 First Street
                            Suite B
                            Mineola, New York 11501
                            Facsimile No.:  (516) 739-7115


                            With copies to:
                            Robinson Silverman Pearce Aronsohn & Berman LLP
                            1290 Avenue of the Americas
                            New York, NY  10104
                            Facsimile No.:  (212) 541-4630 and (212) 541-1432
                            Attn: Eric L. Cohen, Esq.





                                     -17-

<PAGE>



                                                                        Annex A


                              Plan of Distribution

         The Selling Stockholders and any of their pledgees, assignees and
successors-in-interest may, from time to time, sell any or all of their shares
of Common Stock on any stock exchange, market or trading facility on which the
shares are traded or in private transactions. These sales may be at fixed or
negotiated prices. The Selling Stockholders may use any one or more of the
following methods when selling shares:

o        ordinary brokerage transactions and transactions in which the
         broker-dealer solicits purchasers;

o        block trades in which the broker-dealer will attempt to sell the shares
         as agent but may position and resell a portion of the block as
         principal to facilitate the transaction;

o        purchases by a broker-dealer as principal and resale by the
         broker-dealer for its account;

o        an exchange distribution in accordance with the rules of the applicable
         exchange;

o        privately negotiated transactions;

o        short sales;

o        broker-dealers may agree with the Selling Stockholders to sell a
         specified number of such shares at a stipulated price per share;

o        a combination of any such methods of sale; and

o        any other method permitted pursuant to applicable law.

         The Selling Stockholders may also sell shares under Rule 144 under the
Securities Act, if available, rather than under this prospectus.

         The Selling Stockholders may also engage in short sales against the
box, puts and calls and other transactions in securities of the Company or
derivatives of Company securities and may sell or deliver shares in connection
with these trades. The Selling Stockholders may pledge their shares to their
brokers under the margin provisions of customer agreements. If a Selling
Stockholder defaults on a margin loan, the broker may, from time to time, offer
and sell the pledged shares. The Selling Stockholders have advised the Company
that they have not entered into any agreements, understandings or arrangements
with any underwriters or broker-dealers regarding the sale of their shares other
than ordinary course brokerage arrangements, nor is there an underwriter or
coordinating broker acting in connection with the proposed sale of shares by the
Selling Stockholders.


                                     -18-
<PAGE>



         Broker-dealers engaged by the Selling Stockholders may arrange for
other brokers-dealers to participate in sales. Broker-dealers may receive
commissions or discounts from the Selling Stockholders (or, if any broker-dealer
acts as agent for the purchaser of shares, from the purchaser) in amounts to be
negotiated. The Selling Stockholders do not expect these commissions and
discounts to exceed what is customary in the types of transactions involved.

         The Selling Stockholders and any broker-dealers or agents that are
involved in selling the shares may be deemed to be "underwriters" within the
meaning of the Securities Act in connection with such sales. In such event, any
commissions received by such broker-dealers or agents and any profit on the
resale of the shares purchased by them may be deemed to be underwriting
commissions or discounts under the Securities Act.

         The Company is required to pay all fees and expenses incident to the
registration of the shares, including fees and disbursements of counsel to the
Selling Stockholders. The Company has agreed to indemnify the Selling
Stockholders against certain losses, claims, damages and liabilities, including
liabilities under the Securities Act.



                                     -19-


</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10.8.1
<SEQUENCE>10
<FILENAME>ex10-8_1.txt
<DESCRIPTION>EX-10.8.1
<TEXT>
<PAGE>

                              10% CONVERTIBLE NOTE

$40,000

                           Date of Issue: May 7, 2001

Digital Descriptor Systems, Inc. (a Delaware corporation) (hereinafter referred
to as the "Company" or "Borrower") is indebted and, for value received, herewith
promises to pay to:

                                  ROBERT GOWELL

or to his order, (together with any assignee, jointly or severally, the "Holder"
or "Lender") on the date which is six (6) months following the date of issue
(the "Original Due Date"), unless later extended by the Lender, in his sole
discretion, by Lender delivering written notice to Borrower within five (5)
business days prior to the Original Due Date of his desire to extend such
maturity, which notice shall contain the new maturity date which shall not be
more than 180 days following the Original Due Date (the "Due Date"), the sum of
FORTY THOUSAND DOLLARS ($40,000), or, if less, so much thereof as may be
outstanding from time to time (the "Principal Amount") and to pay interest on
the Principal Amount at the rate of Ten percent (10%) per annum as provided
herein. In furtherance thereof, and in consideration of the premises, covenants,
promises, representations and warranties hereinafter set forth the Borrower
hereby agrees as follows:

         1.   Interest. Interest on the Principal Amount outstanding from time
              to time shall accrue at the rate of 10% per annum, shall be based
              on a year of 360 days and shall be payable on the Original Due
              Date, or if Lender extends such date, the Due Date. Overdue
              principal and interest on the Note shall, to the extent permitted
              by applicable law, bear interest at the rate of 10% per annum. All
              payments of both principal and interest, shall be made at the
              address of the Holder hereof as it appears in the books and
              records of the Borrower, or at such other place as may be
              designated by the Holder hereof. Payments of both principal and
              interest are to be made in lawful money of the United States.

         2.   Maturity. If not converted by the Holder as hereinafter set forth,
              this Note shall mature on the Original Due Date or if Lender
              extends such Date, the Due Date at which time all then remaining
              unpaid principal, interest and any other charges then due
              hereunder shall be due and payable in full.

         3.   Prepayment. The principal amount hereof, together with interest
              thereon, may be prepaid, in whole or in part, prior to the
              scheduled maturity of this Note without premium or penalty. The
              Holder's conversion rights under paragraph 4 shall be extinguished
              if and to the extent that the Note is paid before the Holder gives
              its "Conversion Notice," as the term is defined in paragraph 4.

         4.   Conversion Right. The Holder of this Note shall have the right at
              Holder's sole option, at any time after the date which is thirty
              (30) days prior to the Original Due Date, or at any time during
              any extension of maturity

<PAGE>

              provided by Lender in accordance with the first paragraph of this
              Note, to convert all or, in multiples of $5,000, any part of this
              Note into such number of fully paid and nonassessable shares of
              common stock, $.001 par value, of the Company (the "Common Stock")
              as shall be provided herein. The Holder may exercise the
              conversion right by giving written notice (the "Conversion
              Notice") to Borrower of the exercise of such right and stating the
              name or names in which the stock certificate or stock certificates
              for the shares of Common Stock are to be issued and the address to
              which such certificates shall be delivered. The Conversion Notice
              shall be accompanied by a duly executed assignment of the portion
              of the Note that Holder desires to convert. The number of shares
              of Common Stock that shall be issuable upon conversion of the Note
              or any portion thereof shall equal the face amount of the Note or
              portion thereof divided by the Conversion Price as defined below
              and in effect on the date the Conversion Notice is given.
              Conversion shall be deemed to have been effected on the date the
              Conversion Notice is given (the "Conversion Date"). Within ten
              (10) business days after receipt of the Conversion Notice,
              Borrower shall issue and deliver by hand against a signed receipt
              therefor or by United States registered mail return receipt
              requested, to the address designated in the Conversion Notice, a
              stock certificate or stock certificates of Borrower representing
              the number of shares of Common Stock to which Holder is entitled
              and (if applicable) a check or cash in payment of all interest
              accrued and unpaid on the Note up to and including the Conversion
              Date unless Holder elects to apply such interest to the Conversion
              Price in accordance with Section 4(c) below. The conversion rights
              will be governed by the following provisions:

              (a)  Conversion Price: On the issue date hereof and until such
         time as an adjustment shall occur, the Conversion Price per share shall
         be an amount equal to 50% of the mean average price of the common stock
         of the Borrower for the ten (10) trading days prior to notice of
         conversion per share; provided, however, that the Conversion Price
         shall be subject to adjustment at the times, and in accordance with the
         provisions, as follows:

                   i) Adjustment of Issuance of Shares at less than the
                   Conversion Price: If and whenever any shares of Additional
                   Common Stock (as defined below) shall be issued by the
                   Company (the "Stock Issue Date") for a consideration per
                   share less than the Conversion Price, then in each such case
                   the Conversion Price shall be reduced to a new Conversion
                   Price in amount equal to the consideration per share received
                   by the Company for the shares of Additional Common Stock then
                   issued; and, in the case of shares issued without
                   consideration, the initial Conversion Price shall be reduced
                   in amount and the number of shares issued upon conversion
                   shall be increased in an amount so as to maintain for the
                   Holder the right to convert the Note into shares equal in
                   amount to the same percentage interest in the Common Stock of
                   the Company as existed for the Holder immediately preceding
                   the Stock Issue Date.

                   ii) Sale of Shares: In the event of the issuance of shares of
                   Additional Common Stock for a consideration part or all of
                   which shall be cash, the amount of the cash consideration


                                       2
<PAGE>

                   therefor shall be deemed to be the amount of the cash
                   received by the Company for such shares, after any
                   compensation or discount in the sale, underwriting or
                   purchase thereof by underwriters or dealers or others
                   performing similar services or for any expenses incurred in
                   connection therewith.

                   iii) Reclassification of Shares: In case of the
                   reclassification of securities into shares of Common Stock,
                   the shares of Common Stock issued in such reclassification
                   shall be deemed to have been issued for a consideration other
                   than cash. Shares of Additional Common Stock issued by way of
                   dividend or other distribution on any class of stock of the
                   Company shall be deemed to have been issued without
                   consideration.

                   iv) Split-up or Combination of Shares: In the event issued
                   and outstanding shares of Common Stock shall be subdivided or
                   split up into a greater number of shares of the Common Stock,
                   the Conversion Price shall be proportionately decreased, and
                   in the event issued and outstanding shares of Common Stock
                   shall be combined into a smaller number of shares of Common
                   Stock, the Conversion Price shall be proportionately
                   increased, such increase or decrease, as the case may be,
                   becoming effective at the time of record of the split-up or
                   combination, as the case may be.

                   v) Additional Common Stock: The term "Additional Common
                   Stock" herein shall mean all shares of Common Stock hereafter
                   issued by the Company (including Common Stock held in the
                   treasury of the Company), except Common Stock issued upon the
                   conversion of any portion of the Note.

              (b)  Adjustment for Mergers, Consolidations, Etc.:

                   i) In the event of distribution to all Common Stock holders
                   of any stock, indebtedness of the Company or assets
                   (excluding cash dividends or distributions from retained
                   earnings) or other rights to purchase securities or assets,
                   then, after such event, the Note will be convertible into the
                   kind and amount of securities, cash and other property which
                   the Holder of the Note would have been entitled to receive if
                   the Holder owned the Common Stock issuable upon conversion of
                   the Note immediately prior to the occurrence of such event.

                   ii) In the event of any capital reorganization,
                   reclassification of the stock of the Company (other than a
                   change in par value or as a result of a stock dividend,
                   subdivision, split up or combination of shares), or
                   consolidation or merger of the Company with or into another
                   person or entity (other than a consolidation or merger in
                   which the Company is the continuing corporation and which
                   does not result in any change in the Common Stock) or of the
                   sale, exchange, lease, transfer or other disposition of all
                   or substantially all of the properties and assets of the
                   Company as an entirety or the participation by the Company in
                   an exchange of shares as the corporation the stock of which
                   is to be acquired, this Note shall be convertible into the


                                       3
<PAGE>

                   kind and number of shares of stock or other securities or
                   property of the Company (or of the corporation resulting from
                   such consolidation or surviving such merger or to which such
                   properties and assets shall have been sold, exchanged,
                   leased, transferred or otherwise disposed, or which was the
                   corporation whose securities were exchanged for those of the
                   Company), to which the Holder of the Note would have been
                   entitled to receive if the Holder owned the Common Stock
                   issuable upon conversion of the Note immediately prior to the
                   occurrence of such event. The provisions of the foregoing
                   sentences of this Section 4(b)(ii) shall similarly apply to
                   successive reorganizations, reclassifications,
                   consolidations, mergers, sales, exchanges, leases, transfers
                   or other dispositions or other share exchanges.

                   iii) Notice of Adjustment: (A) In the event the Company shall
                   propose to take any action which shall result in an
                   adjustment in the Conversion Price, the Company shall give
                   notice to the Holder, which notice shall specify the record
                   date, if any, with respect to such action and the date on
                   which such action is to take place. Such notice shall be
                   given on or before the earlier of thirty (30) days before the
                   record date or the date which such action shall be taken.
                   Such notice shall also set forth all facts material to the
                   effect of such action on the Conversion Price and the number,
                   kind or class of shares or other securities or property which
                   shall be deliverable or purchasable upon the occurrence of
                   such action or deliverable upon conversion of this Note. (B)
                   Following completion of an event wherein the Conversion Price
                   shall be adjusted, the Company shall furnish to the Holder a
                   statement, signed by the Chief Executive Officer of the
                   Company, of the facts creating such adjustment and specifying
                   the resultant adjusted Conversion Price then in effect.

              (c) The Holder may, at his sole option, apply any accrued interest
         and/or principal outstanding on the Conversion Date towards the
         Conversion Price.

         5.   Reservation of Shares. Borrower warrants and agrees that it shall
              at all times reserve and keep available, free from preemptive
              rights, sufficient authorized and unissued, or of treasury, shares
              of Common Stock to effect conversion of this Note upon the terms
              and conditions contained herein.

         6.   Registration Rights. The Borrower has filed a Registration
              Statement on Form SB-2 under the United States Security Act of
              1933 and has included this Convertible Note and the underlying
              common stock thereunder from transfer by the Holder except if and
              unless the shares are duly registered for sale pursuant to the
              Securities Act of 1993, as amended, or the transfer is duly exempt
              from registration.

         7.   Taxes. The Borrower shall pay any documentary or other
              transactional taxes attributable to the issuance or delivery of
              this Note or the shares of Common Stock issued upon conversion by
              the Holder (excluding any federal, state or local income taxes and


                                       4
<PAGE>

              any franchise taxes or taxes imposed upon the Holder by the
              jurisdiction, or any political subdivision thereof, under which
              such Holder is organized or is qualified to do business).

         8.   Default.

              (a)  Event of Default: An "Event of Default" shall exist if any
              one or more of the following events (herein collectively called
              "Events of Default") shall occur and be continuing:

                   i) Borrower shall fail to pay (or shall state in writing an
                   intention not to pay or its inability to pay), when due or no
                   later than 10 days thereof, any installment of interest on or
                   principal of, the Note or any fee, expense or other payment
                   required hereunder;

                   ii) Any representation or warranty made under this Note shall
                   prove to be untrue or inaccurate in any material respect as
                   of the date on which such representation or warranty is made;

                   iii) Default in the performance of any of the covenants or
                   agreements of Borrower contained under the Note, which
                   default is not remedied within thirty (30) days after written
                   notice thereof to Borrower from Lender, provided that such
                   thirty (30) day grace period shall not apply to default of
                   any payment requirement or notice covenant made by Borrower;

                   iv) Borrower and/or its subsidiaries and/or affiliates, if
                   any, shall (A) apply for or consent to the appointment of a
                   receiver, trustee, custodian, intervenor or liquidator of
                   itself, or of all or substantially all, of its assets, (B)
                   file a voluntary petition in bankruptcy, admit in writing
                   that it is unable to pay its debts as they become due or
                   generally not pay its debts as they become due, (C) make a
                   general assignment for the benefit of creditors, (D) file a
                   petition or answer seeking reorganization of an arrangement
                   with creditors or to take advantage of any bankruptcy or
                   insolvency laws, (E) file an answer admitting the material
                   allegations of, or consent to, or default in answering, a
                   petition filed against it in any bankruptcy, reorganization
                   or insolvency proceeding, or (F) take corporate action for
                   the purpose of effecting any of the foregoing;

                   v) An involuntary petition or complaint shall be filed
                   against Borrower or any of its subsidiaries, if any, seeking
                   its bankruptcy or reorganization or the appointment of a
                   receiver, custodian, trustee, intervenor or liquidator, or
                   all or substantially all of Borrower's assets, and such
                   petition or complaint shall not have been dismissed within
                   sixty (60) days of the filing thereof or an order, order for
                   relief judgement or decree shall be entered by any court of
                   competent jurisdiction or other competent authority approving
                   a petition or complaint seeking reorganization of Borrower or
                   its subsidiary, if any, or appointing a receiver, custodian,
                   trustee, intervenor or liquidator of such person, or of all
                   or substantially all of such person' assets; or


                                       5
<PAGE>

                   vi) The failure of Borrower to issue and deliver shares of
                   Common Stock as provided herein upon conversion of the Note.

              (b)  Remedies upon Event of Default: If an Event of Default shall
              have occurred and be continuing, then Lender may exercise any one
              or more of the following rights and remedies:

                   i) declare the unpaid Principal Amount of, and all interest
                   then accrued but unpaid on, the Note and any other
                   liabilities hereunder to be forthwith due and payable,
                   whereupon the same shall forthwith become due and payable
                   without presentment, demand, protest, notice of default,
                   notice of acceleration or of intention to accelerate or other
                   notice of any kind, all of which Borrower hereby expressly
                   waives, anything contained herein or in the Note to the
                   contrary notwithstanding in which event the Lender may, in
                   its sole discretion, immediately exercise its conversion
                   rights provided for in Section 4 hereof,

                   ii) reduce any claim to judgment, and/or;

              (c)  Remedies Nonexclusive: Each right, power or remedy of the
              Holder upon the occurrence of any Event of Default as provided for
              in this Note or now or hereafter existing at law or in equity or
              by statute shall be cumulative and concurrent and shall be in
              addition to every other right, power or remedy provided for in
              this Note or now or hereafter existing at law or in equity or by
              statute, and the exercise or beginning of the exercise by the
              Holder of any one or more of such rights, powers or remedies shall
              not preclude the simultaneous or later exercise by the Holder of
              any or all such other rights, powers or remedies.

              (d)  Expenses: Upon the occurrence of a Default or an Event of
              Default, which occurrence is not cured within the applicable grace
              period, if any provided therefor, Borrower agrees to pay and shall
              pay all costs and expenses (including Lender's attorney's fees and
              expenses) reasonably incurred by Lender in connection with the
              preservation and enforcement of Lender's rights under the Note.

         9.   Failure to Act and Waiver. No failure or delay by the Holder to
              require the performance of any term or terms of this Note or nor
              to exercise any right, or any remedy shall constitute a waiver of
              any such term or of any right or of any default, nor shall such
              delay or failure preclude the Holder from exercising any such
              right, power or remedy at any later time or times. By accepting
              payment after the due date of any amount payable under this Note,
              the Holder shall not be deemed to waive the right either to
              require payment when due of all other amounts payable, or to later
              declare a default for failure to effect such payment of any such
              other amount. The failure of the Holder of this Note to give
              notice of any failure or breach of the Borrower under the Note
              shall not constitute a waiver of any right or remedy in respect of
              such continuing failure or breach or any subsequent failure or
              breach.


                                       6
<PAGE>

         10.  Consent to Jurisdiction. The Borrower hereby agrees and consents
              that any action, suit or proceeding arising out of this Note may
              be brought in any appropriate court in the State of Illinois
              including the United States District Court for the Northern
              District of Illinois, or in any other court having jurisdiction
              over the subject matter, all at the sole election of the Holder
              hereof, and by the issuance and execution of this Note the
              Borrower irrevocably consents to the jurisdiction of each such
              court. Borrower irrevocably consents to the service of any
              complaint, summons, notice or other process relating to any action
              or proceeding by delivery thereof to it by hand or by any other
              manner provided for in Section 11 hereof.

         11.  Notices. All notices and communications under this Note shall be
              in writing and shall be either delivered in person and accompanied
              by a signed receipt therefor, or mailed first-class United States
              certified mail return receipt requested, postage prepaid, and
              addressed as follows; (i) if to the Borrower at 446 Lincoln
              Highway, Fairless Hills, Pennsylvania 19030; and, (ii) if to the
              Holder of this Note, to the address (a) of such Holder as it
              appears on the books of the Borrower if, or (b) in the case of a
              partial assignment to one or more Holder(s), to the Lender's agent
              for notice, if applicable. Any notice of communication shall be
              deemed given and received as of the date of such delivery of
              delivered; or if mailed, then three days after the date of
              mailing.

         12.  GOVERNING LAW. THIS NOTE SHALL BE GOVERNED BY AND CONSTRUED AND
              ENFORCED IN ACCORDANCE WITH THE LAWS OF COMMONWEALTH OF
              PENNSYLVANIA.

                                      * * *

         IN WITNESS WHEREOF, the undersigned Borrower have caused this Note to
be duly executed under its corporate seal on the date of issue above stated.

                                    BORROWER

Address for Notice                          Digital Descriptor Systems, Inc.

                                            By: /s/ Garrett U. Cohn
                                                --------------------------------
                                            Title:  President

                                            Attest by: /s/ Michael J. Pellegrino
                                                       -------------------------
                                            Title:  Secretary


                                       7
<PAGE>

                                    EXHIBIT A

                              NOTICE OF CONVERSION

(To be Executed by the Registered Holder
in order to Convert the Debenture)

The undersigned hereby elects to convert the attached Debenture into shares of
common stock, $0.001 par value per share (the "Common Stock"), of Digital
Descriptor Systems, Inc. (the "Company") according to the conditions hereof, as
of the date written below. If shares are to be issued in the name of a person
other than the undersigned, the undersigned will pay all transfer taxes payable
with respect thereto and is delivering herewith such certificates and opinions
as reasonably requested by the Company in accordance therewith. No fee will be
charged to the bolder for any conversion, except for such transfer taxes, if
any.

Conversion calculations:

                                  Date to Effect Conversion

                                  Principal Amount of Debentures to be Converted

                                  Payment of Interest in Kind  [ ] Yes  [ ] No
                                  If yes, $_______ of Interest Accrued on
                                  Account of Conversion at Issue

                                  Number of shares of Common Stock to be issued

                                  Applicable Conversion Price

                                  Signature

                                  Name

                                  Address


                                       8

</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10.9
<SEQUENCE>11
<FILENAME>ex10-9.txt
<DESCRIPTION>EX-10.9
<TEXT>
<PAGE>

                                                                    Exhibit 10.9

                                ESCROW AGREEMENT


         THIS ESCROW AGREEMENT (this "Agreement"), dated as of December __,
2000, is entered into by and among Digital Descriptor Systems, Inc., a Delaware
corporation (the "Company"), AJW Partners, LLC, ("AJW"), New Millennium Capital
Partners II, LLC, ("New Millennium" and together with AJW, the "Purchasers", and
each a "Purchaser") and Owen Naccarato, Esq., as escrow agent (the "Escrow
Agent").

                                   WITNESSETH:

         WHEREAS, pursuant to that certain Secured Convertible Debenture
Purchase Agreement, dated as of the date hereof, between the Company and the
Purchasers (the "Purchase Agreement"), the Company proposes to sell $600,000
aggregate gross proceeds of the Company's 12% Secured Convertible Debentures
("Debentures") which are convertible into shares of the Company's common stock
(the "Common Stock") to the Purchasers on the terms and conditions set forth in
the Purchase Agreement;

         WHEREAS, capitalized terms used and not otherwise defined herein that
are defined in the Purchase Agreement shall have the meanings given such terms
in the Purchase Agreement or Debenture;

         WHEREAS, simultaneously herewith, the Escrow Agent shall receive a
fully executed copy of each Transaction Document;

         WHEREAS, pursuant to the Purchase Agreement, simultaneously herewith,
the Company shall deliver to the Escrow Agent Certificates of Common Stock in an
amount equal to [ ], which represents the sum of (i) 200% of the number of
shares of Common Stock which would be issuable upon the conversion in full of
the Debentures assuming such conversion occurred on the Original Issue Date, the
Debentures remain outstanding for one year and such conversion occurred at a
price equal to the lessor of (a) $0.08 and (b) 50% of the average of the lowest
three inter-day prices (which need not occur on consecutive Trading Days) during
the ten Trading Days immediately preceding the Closing Date, and (ii) exercise
in full of the Warrants (the "Escrowed Stock Certificates"); and

         WHEREAS, the Escrowed Stock Certificates are to be held by the Escrow
Agent in escrow and distributed to the Company and/or the Purchasers in
accordance with the terms and conditions hereinafter set forth.

         NOW, THEREFORE, it is hereby agreed as follows:

<PAGE>

         A. Appointment of Escrow Agent; Delivery of Escrowed Stock.

            1. The Escrow Agent is hereby appointed as escrow agent by the
parties hereto strictly in accordance with the terms and provisions of this
Agreement and the Escrow Agent hereby accepts such appointment.

            2. Simultaneously with the execution of this Agreement, the Company
shall deliver to the Escrow Agent the Escrowed Stock Certificates undated and
issued in blank. For all purposes under this Agreement, the Escrowed Stock
Certificates may be maintained in either paper or electronic form.

         B. Release of Escrowed Stock.

            1. Upon receipt of a Notice of Conversion in the form of Exhibit A
annexed hereto executed by the Purchaser (which Notice of Conversion shall have
been simultaneously delivered to the Company by the Purchaser), the Escrow Agent
is authorized and directed by the parties hereto to immediately date the
Escrowed Stock Certificate(s) as of the date thereof and deliver to such
Purchaser the Escrowed Stock Certificate(s) representing the "Number of Shares
of Common Stock to be Issued" as shown on such Notice of Conversion. No
signature approval or other documentation shall be required to effect such
delivery, and Escrow Agent's obligations hereunder shall not be affected by any
contrary instructions by the Company.

            2. Upon receipt of a Form of Election to Purchase in the form of
Exhibit B annexed hereto executed by the Purchaser (which Form of Election to
purchase shall have been simultaneously delivered to the Company by the
Purchasers), the Escrow Agent is authorized immediately to date the Escrowed
Stock Certificate(s) as of the date thereof and deliver to such Purchaser the
Escrowed Stock Certificate(s) representing the number of shares of Common Stock
to be purchased as shown on such Form of Election to Purchase. No signature
approval or other documentation shall be required to effect such delivery, and
Escrow Agent's obligations hereunder shall not be affected by any contrary
instructions by the Company.

            3. In the event that the Purchasers do not convert the Debentures in
full and exercise the Warrant in full, upon receipt by the Escrow Agent of
written notice from each of the Company and each Purchaser, the Escrow Agent
shall immediately deliver the remaining Escrowed Stock Certificates held in
escrow to the Company.

         C. Escrowed Stock Certificates. The Company and each Purchaser hereby
agree that:

            1. unless and until delivered upon the conversion of the Debentures
or exercise of the Warrants, as the case may be, the Escrowed Stock Certificates
(i) are not transferable by any person, (ii) do not represent outstanding shares
of Common Stock, and (iii) confer no rights of any nature whatsoever on the
Purchasers, including, without limitation, voting rights or any shareholder
rights.

<PAGE>

            2. upon delivery of the Escrowed Stock Certificates by the Escrow
Agent to the Purchasers, each Escrowed Stock Certificate shall represent the
number of validly issued, fully-paid, nonassessable shares of Common Stock shown
on the face thereof, with all the rights otherwise pertaining to the Common
Stock.
         D. Escrow Agent.

            1. The Escrow Agent shall have no duties or responsibilities other
than those expressly set forth herein. The Escrow Agent shall have no duty to
enforce any obligation of any party to this Agreement to make any delivery, or
to direct or cause any delivery to be made, or to enforce any obligation of any
party to this Agreement to perform any other act. The Escrow Agent shall be
under no liability to the other parties hereto or to anyone else, by reason of
any failure on the part of any party hereto or any other signatory of any
document or any other person to perform such person's obligation under any such
document. Except for amendments to this Agreement referred to below, the Escrow
Agent shall not be obligated to recognize any agreement between any or all of
the persons referred to herein, including but not limited to the Purchase
Agreement, notwithstanding that references thereto may be made herein and
whether or not it has knowledge thereof.

            2. The Escrow Agent shall not be liable to the other parties hereto
or to anyone else for any action taken or omitted by it, or any action suffered
by it to be taken or omitted, in good faith and in the exercise of its own best
judgment. The Escrow Agent may rely conclusively and shall be protected in
acting upon any order, notice, demand, certificate, opinion or advice of counsel
chosen by the Escrow Agent, which counsel shall not be associated with either
the Company or the Purchasers, statement, instrument, report or other paper or
document (not only as to its due execution and the validity and effectiveness of
its provisions, but also as to the truth and acceptability of any information
therein contained) which is believed by the Escrow Agent to be genuine and to be
signed or presented by the proper person or persons. The Escrow Agent shall not
be bound by any notice or demand, or any waiver, modification, termination or
rescission of this Agreement or any of the terms hereof, unless evidenced by a
writing delivered to the Escrow Agent signed by the proper party or parties and,
if the duties or rights of the Escrow Agent are affected, unless it shall give
its prior written consent thereto.

            3. The Escrow Agent shall not be responsible for the sufficiency or
accuracy of the form of, or the execution, validity, value or genuineness of,
any document or property received, held or delivered by it hereunder, or of any
signature or endorsement thereon, or for any lack of endorsement thereon, or for
any description therein, nor shall the Escrow Agent be responsible or liable to
the other parties hereto or to anyone else in any respect on account of the
identity, authority, or rights of the persons executing or delivering or
purporting to execute or deliver any document or property or this Agreement.

            4. Each of the parties hereto, jointly and severally, agrees to
release and hold Escrow Agent and each of its officers, employees and agents
harmless from, and indemnify Escrow Agent and each of its officers, employees
and agents against, any loss, liability, and expense (including attorneys' fees
and expenses) suffered or incurred pursuant to any claim or demand of any of

<PAGE>

them or any third party arising out of or in connection with the provisions of
this Escrow Agreement or with the administration of its duties hereunder, except
for claims for damages arising out of the negligence or willful misconduct of
Escrow Agent. In no event shall the Escrow Agent be liable for indirect,
punitive, special or consequential damages. The foregoing indemnities shall
survive the resignation of Escrow Agent or the termination of this Escrow
Agreement. Upon its delivery or release of all of the Escrowed Stock
Certificates in accordance with this Agreement, or its resignation pursuant to
Section 6, the Escrow Agent shall be discharged of all further obligations
hereunder.

            5. Escrow Agent shall permit the independent public accountants or
other authorized representatives of the Company and the Purchasers, from time to
time at reasonable times and upon reasonable notice, to confirm the existence of
the Escrowed Stock Certificates and the number of shares of Common Stock
represented thereby then held under this Agreement.

         E. Escrow Agent Expenses. The fees and expenses of the Escrow Agent for
its services under this Escrow Agreement, as set forth on Exhibit C, shall be
paid by the Company.

         F. Termination; Resignation.

            1. This Agreement shall terminate on the final disposition of the
Escrowed Stock Certificates in accordance with the terms hereof provided that
the rights of the Escrow Agent and the obligations of the other parties hereto
under Sections 4, 5 or 7 shall survive the termination hereof.

            2. The Escrow Agent may resign at any time by giving written notice
thereof to the other parties hereto, but such resignation shall not become
effective until a successor escrow agent shall have been appointed and shall
have accepted such appointment in writing. Upon receiving such notice of
resignation, Purchasers holding a majority of the Escrowed Share Certificates
shall promptly appoint a successor Escrow Agent (which shall not be a Purchaser
or any affiliate of a Purchaser) by written instrument, a copy of which shall be
delivered to the resigning Escrow Agent. If the parties shall fail to make such
appointment within thirty (30) days after receipt of Escrow Agent's notice of
resignation, the resigning Escrow Agent may apply to any court of competent
jurisdiction for the appointment of a successor.

         G. Jurisdiction. Each of the other parties hereto hereby irrevocably
consents to the venue and jurisdiction of the courts of the State of New York
and of any Federal court located in such State in connection with any action,
suit or other proceeding arising out of or relating to this Agreement or any
action taken or omitted hereunder, and waives personal service of any summons,
complaint or other process and agrees that the service thereof may be made by
certified or registered mail directed to such person at such person's address
for purposes of notices hereunder.

         H. Notices. Any and all notices or other communications or deliveries
required or permitted to be provided hereunder shall be in writing and shall be
deemed given and effective on the earliest of (i) the date of transmission, if
such notice or communication is delivered via facsimile at the facsimile

<PAGE>

telephone number specified in this Section prior to 6:30 p.m. (New York City
time) on a Business Day, (ii) the Business Day after the date of transmission,
if such notice or communication is delivered via facsimile at the facsimile
telephone number specified in this Agreement later than 6:30 p.m. (New York City
time) on any date and earlier than 11:59 p.m. (New York City time) on such date,
(iii) the Business Day following the date of mailing, if sent by U.S. nationally
recognized overnight courier service, or (iv) upon actual receipt by the party
to whom such notice is required to be given. The address for such notices and
communications shall be as follows:

<PAGE>

         If to the Escrow Agent, to:     Owen Naccarato, Esq.
                                         19600 Fairchild, Suite 260
                                         Irvine, CA 92612
                                         Facsimile No.: (949) 851-9262

         If to the Company, to:          Digital Descriptor Systems, Inc.
                                         446 Lincoln Highway
                                         Fairless Hills, PA 19030
                                         Facsimile No.: [ ]
                                         Attn: [ ]

         With copies to:                 [                ]
                                         [                ]
                                         [                ]
                                         Facsimile No.: ( ) [           ]
                                         Attn:[                ]

         If to the Purchasers, to:       AJW Partners, LLC
                                         155 First Street, Suite B
                                         Mineola, New York 11501
                                         Facsimile No.: (516) 739-7115
                                         Attn: Corey S. Ribotsky


         and:                            New Millennium Capital Partners II, LLC
                                         155 First Street, Suite B
                                         Mineola, New York 11501
                                         Facsimile No.: (516) 739-7115
                                         Attn: Glenn A. Arbeitman

         With copies to:                 Robinson Silverman Pearce Aronsohn &
                                         Berman LLP
                                         1290 Avenue of the Americas
                                         New York, NY  10104
                                         Facsimile No.: (212) 541-4630 and
                                           (212) 541-1432
                                         Attn: Eric L. Cohen, Esq.

or such other address as may be designated in writing hereafter, in the same
manner, by such Person.

         I. Miscellaneous.

            1. This Agreement shall be binding on and inure to the benefit of
all parties hereto and may not be modified or amended orally, but only in a
writing signed by all parties hereto.

<PAGE>

            2. If any term, condition or provision of this Agreement, or the
application thereof to any circumstance or party hereto, shall ever be held to
be invalid or unenforceable, then in each such event the remainder of this
Agreement or the application of such term, condition or provision to any other
circumstance or party hereto (other than those as to which it shall be invalid
or unenforceable) shall not be thereby affected, and each term, condition and
provision hereof shall remain valid and enforceable to the fullest extent
permitted by law.

            3. This Agreement may be executed in any number of facsimile or
original counterparts, each counterpart for all purposes being deemed an
original, and all such counterparts shall together constitute only one and the
same Agreement.

            4. This Agreement shall be construed without regard to any
presumption or other rule requiring construction against the party causing such
instrument to be drafted. The terms "hereby", "hereof", "hereto", "hereunder"
and any similar terms, as used in this Agreement, refer to this Agreement in its
entirety and not only to this particular portion of this Agreement where the
term is used. The word "person" shall mean any natural person, partnership,
corporation, government and any other form of business or legal entity. All
words or terms used in this Agreement, regardless of the number or gender in
which they are used, shall be deemed to include any other number and any other
gender as the context may require. This Agreement shall not be admissible in
evidence to construe the provision of any prior agreement. The rule of ejusdem
generis shall not be applicable herein to limit a general statement, which is
followed by or referable to an enumeration of specific matters, to matters
similar to the matters specifically mentioned.

            5. This Agreement and the rights and obligations hereunder of the
Escrow Agent may be assigned by the Escrow Agent only to a successor to its
entire business. This Agreement shall be binding upon and inure to the benefit
of each party's respective permitted successors, heirs and permitted assigns. No
other person shall acquire or have any rights under or by virtue of this
Agreement. This Agreement may not be changed orally or modified, amended or
supplemented without an express written agreement executed by the Escrow Agent
and the other parties hereto. This Agreement is intended to be for the sole
benefit of the parties hereto, and (subject to the provisions of this Section
9(e) their respective successors, heirs and assigns, and none of the provisions
of this Agreement are intended to be, nor shall be construed to be, for the
benefit of any third person.

            6. The Agreement shall be governed by and construed in accordance
with the laws of the internal laws of the State of New York. The representations
and warranties contained in this Agreement shall survive the execution and
delivery hereof and any investigation made by any party. The headings in this
Agreement are for purposes of reference only and shall not limit or otherwise
affect any of the terms hereof.

<PAGE>

         IN WITNESS WHEREOF, the parties hereto have executed and delivered this
Agreement as of the date first above written.



                                         Owen Nacarrato, Esq.


                                         /s/ Owen Nacarrato
                                         ---------------------------------------
                                         Title: Escrow Agent



                                         DIGITAL DESCRIPTOR SYSTEMS, INC.

                                         By: /s/ Michael J. Pellegrino
                                             -----------------------------------
                                             Name:  Michael J. Pellegrino
                                             Title: Chief Financial Officer


                                         AJW PARTNERS, LLC
                                         By: SMS Group, LLC

                                         By: /s/ Corey S. Ribotsky
                                             -----------------------------------
                                             Name: Corey S. Ribotsky
                                             Title:

                                         NEW MILLENNIUM CAPITAL PARTNERS II, LLC
                                         By: First Street Manager II, LLC

                                         By: /s/ Glenn A. Arbeitman
                                             -----------------------------------
                                             Name: Glenn A. Arbeitman
                                             Title:

<PAGE>

                                    Exhibit A

                              Notice of Conversion

(To be Executed by the Registered Holder
in order to Convert the Debenture)

The undersigned hereby elects to convert the attached Debenture into shares of
common stock, $0.001 par value per share (the "Common Stock"), of Digital
Descriptor Systems, Inc. (the "Company") according to the conditions hereof, as
of the date written below. If shares are to be issued in the name of a person
other than the undersigned, the undersigned will pay all transfer taxes payable
with respect thereto and is delivering herewith such certificates and opinions
as reasonably requested by the Company in accordance therewith. No fee will be
charged to the holder for any conversion, except for such transfer taxes, if
any.

Conversion calculations:
                             ___________________________________________________
                             Date to Effect Conversion

                             ___________________________________________________
                             Principal Amount of Debentures to be Converted

                             Payment of Interest in Kind    [ ] Yes  [ ] No
                               If yes, $ _______ of Interest Accrued on Account
                               of Conversion at Issue

                             ___________________________________________________
                             Number of shares of Common Stock to be Issued

                             ___________________________________________________
                             Applicable Conversion Price

                             ___________________________________________________
                             Signature

                             ___________________________________________________
                             Name

                             ___________________________________________________
                             Address

<PAGE>

                     Schedule 1 to the Notice of Conversion

                               Conversion Schedule

                        Digital Descriptor Systems, Inc.
           12% Convertible Debentures due twelve months from issuance

                                     Dated:


================================================================================
                                              Aggregate
                                              Principal
                                               Amount
                                              Remaining
                                            Subsequent to
                                             Conversion
  Date of Conversion                        (or original
 (or for first entry,        Amount of        Principal
 Original Issue Date)       Conversion         Amount)          Company Attest
--------------------------------------------------------------------------------

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

<PAGE>



                                    Exhibit B

                          Form of Election to Purchase

(To be executed by the Holder to exercise the right to purchase shares of Common
Stock under the Warrant to which this form applies, issued by Digital Descriptor
Systems, Inc. ("Digital"))

To Digital Descriptor Systems, Inc.:

         The undersigned hereby irrevocably elects to purchase _____________
shares of common stock, $0.001 par value per share, of Digital (the "Common
Stock") and, if such Holder is not utilizing the cashless exercise provisions
set forth in this Warrant, encloses herewith $________ in cash, certified or
official bank check or checks, which sum represents the aggregate Exercise Price
(as defined in the Warrant) for the number of shares of Common Stock to which
this Form of Election to Purchase relates, together with any applicable taxes
payable by the undersigned pursuant to the Warrant.

         The undersigned requests that certificates for the shares of Common
Stock issuable upon this exercise be issued in the name of

                                                PLEASE INSERT SOCIAL SECURITY OR
                                                TAX IDENTIFICATION NUMBER

                                                ________________________________

________________________________________________________________________________
                         (Please print name and address)




Dated:________________,______     Name of Holder:



                                  (Print)_______________________________________

                                  (By:)_________________________________________
                                  (Name:)
                                  (Title:)
                                  (Signature must conform in all respects to
                                  name of holder as specified on the face of the
                                  Warrant)

<PAGE>

                                    Exhibit C

                                Escrow Agent Fees

</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10.9.1
<SEQUENCE>12
<FILENAME>ex10-9_1.txt
<DESCRIPTION>EX-10.9.1
<TEXT>
<PAGE>

                                                                  Exhibit 10.9.1


                           TRANSFER AGENT INSTRUCTIONS


Ladies and Gentlemen:

         Reference is made to that certain Secured Convertible Debenture
Purchase Agreement (the "Purchase Agreement") among Digital Descriptor Systems,
Inc., a Delaware corporation (the "Company"), and the buyers named therein (the
"Holders") pursuant to which the Company is issuing to the Holders its 12%
Secured Convertible Debentures due December [ ], 2001 (the "Debentures"), and
certain Common Stock purchase warrants (the "Warrants") which shall be
convertible and exercisable, respectively, into shares of the Company's Common
Stock, $.001 par value per share (the "Common Stock"). The shares of Common
Stock issuable upon conversion of the Debentures and payment of interest thereon
and exercise of the Warrants, are collectively referred to herein as "Underlying
Shares. " The number of Underlying Shares to be reserved for this transaction
are approximately 7,500,000.

         This letter shall serve as our irrevocable authorization and direction
to you (provided that you are the transfer agent for the Company with respect to
its Common Stock at such time) to issue Underlying Shares from time to time upon
notice from the Company to issue such Underlying Shares. Such notice shall be
signed by two officers of the Company. So long as you have previously received
(x) an opinion of the Company's outside counsel substantially in the form of
Exhibit I attached hereto (which the Company shall direct be delivered to you by
such outside counsel upon the effectiveness of the registration statement
covering resales of Underlying Shares) stating that a registration statement
covering resales of Underlying Shares has been declared effective by the
Securities and Exchange Commission under the Securities Act of 1933, as amended,
and that Underlying Shares may be issued (or reissued if they have been issued
at a time when there was not such an effective registration statement) or resold
without any restrictive legend (the "Opinion") and (y) a copy of such
registration statement, then certificates representing Underlying Shares shall
not bear any legend restricting transfer of Underlying Shares thereby and should
not be subject to any stop-transfer restriction. Provided, however, that if you
have not previously received a copy of the Opinion and such registration
statement, then the certificates representing Underlying Shares shall bear the
following legend:

         THESE SECURITIES HAVE NOT BEEN REGISTERED WITH THE SECURITIES AND
         EXCHANGE COMMISSION OR THE SECURITIES COMMISSION OF ANY STATE IN
         RELIANCE UPON AN EXEMPTION FROM REGISTRATION ACT"), AND, ACCORDINGLY,
         MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION
         STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO AN AVAILABLE
         EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION
         REQUIREMENTS OF THE SECURITIES ACT AND IN ACCORDANCE WITH APPLICABLE
         STATE SECURITIES LAWS AS EVIDENCED BY A LEGAL OPINION OF COUNSEL TO THE
         TRANFEROR TO SUCH EFFECT, THE SUBSTANCE OF WHICH SHALL BE REASONABLY
         ACCEPTABLE TO THE COMPANY.
<PAGE>

and, provided, further, that the Company may, from time to time, notify you to
place stop-transfer restrictions on the certificates for Underlying Shares in
the event, but only in the event, a registration statement covering Underlying
Shares is subject to amendment for events then current.

         Please be advised that the Holders have relied upon this instruction
letter as an inducement to enter into the Purchase Agreement and, accordingly,
the Holders are a third party beneficiary to these instructions.

         Please execute this letter in the space indicated to acknowledge your
agreement to act in accordance with these instructions.


                                        Very truly yours,

                                        DIGITAL DESCRIPTOR SYSTEMS, INC.



                                        /s/Michael J. Pellegrino
                                        --------------------------
                                        Name:  Michael J. Pellegrino
                                        Title: Chief Financial Officer




ACKNOWLEDGED AND AGREED:


/s/ R. Berkhammer
-----------------
Name: R. Berkhammer
Title: Vice President

                                      -2 -

</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10
<SEQUENCE>13
<FILENAME>ex10-10.txt
<DESCRIPTION>EXHIBIT 10.10
<TEXT>
<PAGE>

<TABLE>
<CAPTION>
                                                                   Exhibit 10.10


DDSI                                             Purchase Order No. 01-155
446 Lincoln Highway          COPY
Fairless Hills, PA 19030
267 580-727-1075 fax 267 580-1090

===================================================  PURCHASE ORDER   ==============================================================

|---------Vendor------------------------------|           |----------Ship To---------------|
| Name    Titan Systems Corp/DBA Sys Division |           | Name    DDSI                   |
| Address 1200 W. Woody Burke Rd PO Box 550   |           | Address 446 LINCOLN HIGHWAY    |
| City    Melbourne   St FL  ZIP 32902-0550   |           | City FAIRLESS HILL St PA 129030|
| Phone   321 727-0660                        |           | Phone 267 580-1075             |
|---------------------------------------------|           |--------------------------------|
<S>            <C>         <C>                                                              <C>               <C>
Qty            Units                     Description                                        Unit Price        TOTAL
 1              LOT        Time and Materials Subcontract IAW attached                     $101,974.74    $101,974.74
                           Statement of Work (SOW)
                           Seller and Buyer agree this Purchase Contract instrument in
                           its entirety consists of the following, which is not
                           heretofore, is hereby incorporated and made part hereto:

                           1) Original Purchase Contract No. 01-155
                           2) DBA Proposal for IAFIS Appendix F Certification
                           of the CS3000 and the SOW included therein.
                           dated 21 June 2001.
                           3) Additional Terms and Conditions (Attachment B)
                           4) DDSI General Provisions-Commercial (Rev 6/01)
                           Attachment C
                           5) The estimated period of performance for this effort is
                           15 weeks commencing from the effective date of this
                           Purchase Contract

                                                                                             Sub Total    $101,974.74
      |-----------  Payment Details  ----------------|                             Shipping & Handling
      |              O   Check                       |
      |              O   Cash                        |                               Taxes  State
      |             (O)  Account No.                 |                                                  |-------------|
      |              O   Credit Card                 |                                            TOTAL | $101,974.74 |
      |                                              |                                                  |-------------|
      |             Name                             |
      |              CC#                             |
      |                      Exp Date                |
      |----------------------------------------------|

      |-----------  Shipping Date  ----------------|
      |                                            |
      |                                            |
      |                                            |
      |--------------------------------------------|
====================================================================================================================================

      |-----------  Approval  ----------------|      |---------------------------------------|
      |                                       |      | Date                 6/27/2001        |
      |                                       |      | Order No        ______________        |
      |                                       |      | Sales Rep       ______________        |
      |                                       |      | Ship Via        ______________        |
      |                                       |      |                                       |
      |---------------------------------------|      |---------------------------------------|


      |-----------  Notes/Remarks -----------------------------------------------------------|
      |                                                                                      |
      |                                                                                      |
      |                                                                                      |
      |--------------------------------------------------------------------------------------|


</TABLE>


<PAGE>

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






                        Digital Descriptor Systems, Inc.
                          Proposal for IAFIS Appendix F
                          Certification of the CS3000




                                  Prepared by:

                            Titan Systems Corporation
                              DBA Systems Division
                             1200 S. Woody Burke Rd.
                            Melbourne, FL 32901-0550


               --------------------------------------------------
                           USE AND DISCLOSURE OF DATA

                 The information contained in this document shall
                 not be duplicated or distributed without written
                 permission from Titan Systems Corporation, DBA
                 Systems Division, P.O. Drawer 550, Melbourne,
                 Florida 32901-0550.
               --------------------------------------------------






                               Date: 21 June 2001


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

<PAGE>



1. Introduction

Titan Systems Corporation, DBA Systems Division (heretofore referred to as DBA
Systems) is pleased to submit a Time and Material Proposal to assist Digital
Descriptor Systems, Inc (DDSI) with obtaining the FBI's Integrated Automation
Fingerprint Identification System (IAFIS) IQS Appendix F Certification on the
CS3000 Live Scan System. Preliminary review of supplied imagery, hardware and
ancillary data has resulted in the belief that Appendix F Certification is
achievable. Even though we believe the unit is certifiable, our concerns suggest
the effort be phased to mitigate cost risk to DDSI. This proposal contains our
best estimate of the expected costs, recognizing however, that additional
funding and hours may be necessary if the required results are not obtained
within the scoped effort. DBA Systems is required to gain authorization from
DDSI for any out of scope effort.

DBA Systems has been associated with precision image scanning systems for twenty
years and would be pleased to work with DDSI on CS3000 Certification. The
personnel associated with the program have been affiliated with Precision Law
Enforcement, Aerial, Non-Destructive Test and Medical Scanning Systems for
greater than 20 years. We feel we have the expertise necessary to obtain
certification with minimal Cost and Design changes.

The next section provides a Statement-of-Work (SOW) for two consecutive phases
toward CS3000 certification. Sufficient detail is provided to ensure mutual
understanding of the proposed tasks. Section 3 lists the Customer Furnished
Equipment (CFE) that will be required during the course of the program. Section
4 summarizes the corresponding costs, labor and materials associated with each
phase of the program. At the completion of Phase 1, the associated effort for
the subsequent phase(s) will be reevaluated to maximize visibility and minimize
cost risk.

This effort will be performed within DBA Systems Division, Melbourne facility.
Phase 1 is expected to last approximately 7 weeks. Phase 2 is potentially more
complex and will last about 8 weeks. This ensures sufficient time for CS3000
review, modification, data submittal and certification.

It should be noted that this proposal is chiefly concerned with certification of
a demonstration unit and recognizes that additional design changes may be
required to provide a true operational product. The tasks and cost associated
with designing a manufacturable product are not within the scope of this
proposal but DBA Systems desires to maintain a role in the design, development
and manufacturing of such a product if certification and market conditions
warrant it.

<PAGE>

2. Statement of Work

Phase 1 of the program has three main objectives.

The First Objective is to develop a plan for establishing IQS Appendix F
acceptance criteria for the CS3000 device with Mitre and the FBI. This will
include development of a test document that describes the tests, methodology,
and acceptance criteria and as necessary a technical explanation of the test
legitimacy. The test document will be submitted to DDSI for review and upon
mutual agreement, DBA will submit it to Mitre and the FBI for evaluation. DBA
will confer with Mitre and the FBI, and rework the document as required, until
an agreement for acceptance is reached.

The Second Objective is to characterize the system with regard to physical and
systematic capability. This effort, which will be performed in parallel with
objective 1, will support determining the capabilities and limitation within the
CS3000. Specifically, the following will be determined:

         a. Camera to Camera Physical Relationships to support geometric and
            stitching capability/limitations

         b. Individual Cameras Field of View (FOV) & Depth of Field with the
            given optics to support geometric and MTF capability/limitations

The Third Objective will be to incorporate an Illumination Test Jig and
potentially diffuse the current illumination system to improve illumination
uniformity. Improved Illumination Uniformity should provide the following:

         a. Ridge data being distinguishable over the entire FOV for each
            individual camera. This will enable the resultant imagery to
            correlate directly with existing databases generated with inked
            based capture devices (i.e. FBI).

         b. Improved viewing of ridge information (i.e. pores, junctions) by the
            user especially across the boundary between the two imaging cameras.

         c. Determination of Illumination Uniformity and Signal to Noise Ratio
            (SNR) with regard to the IAFIS requirement

         d. Improved ability to refine the system capability with regard to
            Image Stitching, Geometry and MTF

The Fourth Objective in Phase 1 is familiarization with the post processing
algorithms to gain insight into algorithm performance under different image
capture conditions. Understanding the processes will provide the following:

         a. Knowledge of the Histogram Equalization Process will aid in
            determining the contrast sensitivity and limits within the system.

         b. Knowledge of the Projection Algorithm will aid in determining
            geometric accuracy and potentially image quality (i.e. forward or
            reverse image mapping).

<PAGE>

         c. Knowledge of the Stitching Algorithm will aid in determining the
            geometric accuracy and potential impacts to System MTF.

The objective upon completion of Phase 1 will be Uniformity & SNR compliance to
the requirement. In addition, Geometric and MTF capability will be understood
sufficiently prior to Phase 2 commencement. At this point, complete review of
the test results will be performed and a report written that describes and
summarizes the findings. A review will be held with DDSI to determine how best
to proceed.

Phase 2 of the program is associated with Image Stitching and Certification of
Geometry and MTF. Preliminary review of the CS3000 Systems MTF, Depth of Field,
Spatial Resolution and Collimating Grid Projector Spacing indicates that
Appendix F Certification is feasible. Based upon Norm Nil's comments, we believe
it will be necessary to generate a couple of cylindrical test fixtures that the
Ronchi and MTF Targets can be mounted to during image capture. Utilization of
this methodology will verify the accuracy of post processing algorithms,
systematic performance, calibration gird, etc. It is currently believed that for
data submittal to the FBI, supporting technical information will be necessary to
establish a high level of confidence that the system and algorithms perform as
required. Familiarization with the algorithms at this time will minimize
schedule and performance risk during the FBI's review of the CS3000 System's
test data results. The results of Phase 2 will be:

         a. Submittal and support of Geometric Data for certification

         b. Submittal and support of MTF Data for certification

         c. A Final Report to DDSI summarizing the program

The above efforts do assume that the basic algorithms and hardware are adequate
to support certification of the CS3000. Hardware changes will be made, where
feasible, to improve system performance. This proposal does not include any
level of effort for software development by DBA Systems engineers. Changes to
Post Processing Algorithms, if required, are assumed to be the responsibility of
DDSI with DBA Systems providing recommendations. However, DBA Systems can
support algorithm development with additional funding and the approval of DDSI.

Status Reporting and Billing

DBA Systems will provide a brief weekly status update, via email, that will
include a summary of the tasks worked or completed and the number of hours
charged to the job (by labor category). On a monthly basis, DBA Systems will
provide a billing statement for services rendered during that period.

</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10
<SEQUENCE>14
<FILENAME>ex10-11.txt
<DESCRIPTION>EXHIBIT 10.11
<TEXT>
<PAGE>
                                                                   Exhibit 10.11


                                SECOND AMENDMENT

                                       TO

                SECURED CONVERTIBLE DEBENTURE PURCHASE AGREEMENT

                                      AMONG

                        DIGITAL DESCRIPTOR SYSTEMS, INC.

                                       AND

                         THE INVESTORS SIGNATORY HERETO






                           Dated as of August 10, 2001


<PAGE>

         SECOND AMENDMENT TO SECURED DEBENTURE PURCHASE AGREEMENT ("Second
Amendment") dated as of August 10, 2001, among Digital Descriptor Systems, Inc.,
a Delaware corporation (the "Company"), and the investors signatory hereto (each
such investor is a "Purchaser" and all such investors are, collectively, the
"Purchasers").

                                   WITNESSETH:

                  WHEREAS, as of December 28, 2000, the Company and Purchasers
entered into a Secured Convertible Debenture Purchase Agreement (the "Original
Agreement"), which, among other things, provides that, subject to the terms and
conditions set forth in the Original Agreement and in accordance with ss.4(2)
under the Securities Act and Rule 506 promulgated thereunder, the Company would
issue and sell to Purchasers and the Purchasers, severally and not jointly,
would purchase the Debentures and Warrants from the Company; and

                  WHEREAS, pursuant to the terms of the Original Agreement, as
of December 28, 2000, the Company and the Purchasers delivered the following:
(A) the Company executed and delivered a (i) Debenture in the principal amount
of $100,000 to each Purchaser (each, an "Original Debenture" and collectively,
the "Original Debentures"), (ii) Warrant to purchase 200,000 shares of Common
Stock to each Purchaser, (iii) direction letter to the Company's transfer agent
(the "Original Direction Letter"); and (B) the Company and Purchasers executed
and delivered a (i) registration rights agreement (the "Original Registration
Rights Agreement"), and (ii) a security agreement (the "Original Security
Agreement"); and (C) each Purchaser paid $100,000 to the Company; and

                  WHEREAS, subject to the terms and conditions set forth in a
First Amendment to the Original Agreement and in accordance with ss.4(2) of the
Securities Act and Rule 506 promulgated thereunder, the Company and Purchasers
desire to (A) amend the (i) Original Agreement to increase the aggregate
purchase price for the Debentures to $800,000 (the "New Aggregate Purchase
Price") and to provide that, subject to the amendments set forth herein, the
First Additional Funding Date will be the date hereof, (ii) Original
Registration Rights Agreement to reflect new time periods and the New Aggregate
Purchase Price, (iii) Original Security Agreement and Original Direction Letter
to reflect the New Aggregate Purchase Price; and (B) issue allonges to the
Original Debentures to reflect the New Aggregate Purchase Price, and

                  WHEREAS, pursuant to the terms of the First Amendment to the
original Agreement, as of March 5, 2001, the Company and the Purchasers
delivered the following: (A) the Company executed and delivered a (i) Debenture
in the principal amount of $100,000 to each Purchaser (each, an "Original
Debenture" and collectively, the "Original Debentures"), (ii) Warrant to
purchase 200,000 shares of Common Stock to each Purchaser, (iii) direction
letter to the Company's transfer agent (the "Original Direction Letter"); and
(B) the Company and Purchasers executed and delivered a (i) registration rights
agreement (the "Amended Registration Rights Agreement"), and (ii) a security
agreement (the "Amended Security Agreement"); and (C) each Purchaser paid
$100,000 to the Company; and

                  WHEREAS, subject to the terms and conditions set forth in this
Second Amendment to the Original Agreement and in accordance with ss.4(2) of the
Securities Act and Rule 506 promulgated thereunder, the Company and Purchasers
desire to (A) amend the Original Agreement to change the date of the issuance of
the final convertible debenture of $400,000 to be issued upon the effective date
of the applicable registration statement.

                                      -1-
<PAGE>

                  NOW, THEREFORE, IN CONSIDERATION of the mutual covenants
contained in the First Amendment, and for other good and valuable consideration
the receipted adequacy of which are hereby acknowledged, the Company and
Purchasers agree as follows:

                  A. Defined Terms. All defined terms used in this Second
Amendment, including the defined terms used in the preliminary clauses hereto,
which are not otherwise defined herein shall have the meanings ascribed to them
in the Original Agreement.

                  B. Amendments to Original Agreement. The Company and
Purchasers hereby agree that the Original Agreement is amended as follows:

                     1. Section 1.1(a) of the Original Agreement is hereby
amended as follows:

                        (i)  the reference in subsection (iv) to "then on the
                             tenth (10th) Trading Day ("Second Additional
                             Funding Date") after the Effectivenenss Date, ),
                             (A) the Company will, against delivery of the
                             amounts set forth in clause (B) in this paragraph,
                             deliver to each Purchaser, Debentures in the
                             aggregate principal amount of 50% of the purchase
                             price indicated below such Purchaser's name on the
                             signature page to this Agreement" shall be deleted
                             and substituted therefore with the following:

                             "then upon the third (3rd) Trading Day ("Second
                             Additional Funding Date") after the Effectiveness
                             Date (as defined herein), (A) the Company will,
                             against delivery of the amounts set forth in clause
                             (B) in this paragraph, deliver to each Purchaser,
                             Debentures in the aggregate principal amount of 50%
                             of the purchase price indicated below such
                             Purchaser's name on the signature page to this
                             Agreement" .

                        2. Section 1.1(b)(i) of the Original Agreement and First
Amendment is hereby amended as follows:

                        (i)  Subsection (iii) is hereby amended by deleting the
                             words " June 11, 2001" and by substituting
                             therefore the words "August 31st".

                  C. Representation of Company. To induce Purchasers to enter
into this Second Amendment and to consummate the funding on the Second
Additional Funding Date, the Company hereby represents and warrants to the
Purchasers that no event has occurred or failed to occur which by itself or with
the giving of notice or the passage of time, or both, would constitute a default
or event of default under the Original Agreement, the Debentures or any of the
Transaction Documents.

                                      -2-
<PAGE>

                  The Company also hereby represents and warrants to the
Purchasers that all the conditions necessary for the second funding to occur
have occurred have been satisfied, as laid out in this document.

                  D. Fees. There will be no fees in connection with the
preparation of this Second Amendment and any related documentation.

                  E. No Other Changes. Except as expressly set forth in this
Second Amendment, the terms and conditions of the Original Agreement and First
Amendment remain in full force and effect, unmodified and unchanged.

                  IN WITNESS WHEREOF, the parties hereto have caused this Second
Amendment to be duly executed by their respective signatory as of the date first
indicated above.

                               DIGITAL DESCRIPTOR SYSTEMS, INC.


                               By: /s/ Michael J. Pellegrino
                                 ----------------------------------------------
                                 Michael J. Pellegrino, Chief Financial Officer

                               PURCHASERS:

                               AJW Partners, LLC
                               By: SMS Group, LLC, Manager



                               By: /s/ Corey S. Ribotsky
                                 ----------------------------------
                                        Corey S. Ribotsky

                               New Millennium Capital Partners II, LLC
                               By: First Street Manager II, LLC, Manager



                               By: /s/ Glenn A. Arbeitman
                                 ----------------------------------
                                        Glenn A. Arbeitman




                                      -3-

</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-23
<SEQUENCE>15
<FILENAME>ex23-2.txt
<DESCRIPTION>EX-23-2
<TEXT>
<PAGE>

                                                                    Exhibit 23.2

                         CONSENT OF INDEPENDENT AUDITORS


We consent to the reference to our firm under the caption "Experts" and to the
use of our report dated March 23, 2001, in Amendment No. 2 to the Registration
Statement (Form SB-2 No. 333-59888) and related Prospectus of Digital Descriptor
Systems, Inc. dated August 21, 2001.



                                                     /s/ Ernst & Young LLP


Philadelphia, Pennsylvania
August 21, 2001




</TEXT>
</DOCUMENT>
</SUBMISSION>
