<PAGE>

                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                    Form SB-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.)

</TABLE>

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


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

                              Michael J. Pellegrino
                      President and Chief Operating 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. [ ]

         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. [ ]


<PAGE>

Calculation of registration fee
<TABLE>
<CAPTION>

--------------------------------------------------------------------------------------------------------------------
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 (1)                   fee
                                              price per      offering
                                              share (1)      price
--------------------------------------------------------------------------------------------------------------------
<C>                            <C>              <C>         <C>               <C>            <C>             <C>
Common  Shares, par value
$.001 underlying secured       80,000,000(2)    $.02        $1,600,000                                    $147.20
convertible debenture           1,820,634(3)    $.02        $   36,413                                    $  3.35
--------------------------------------------------------------------------------------------------------------------
Shares underlying               4,800,000(4)                                  $.02         $ 96,000       $  8.83
warrants                          111,000(5)                                  $.02         $  2,220       $   .20
--------------------------------------------------------------------------------------------------------------------
Restricted Common Shares
par value $.001                11,403,207(6)    $.02        $  228,064                                    $ 20.98
--------------------------------------------------------------------------------------------------------------------

--------------------------------------------------------------------------------------------------------------------
Total Registration Fee         98,134,841                                                                 $180.57
--------------------------------------------------------------------------------------------------------------------
</TABLE>

(1)  Estimated solely for the purpose of determining the registration fee
(2)  Common stock issuable upon conversion of an aggregate of $500,000 in
     convertible debentures issued in connection with a December 31, 2001
     financing to various investors, plus $300,000 in convertible debentures to
     be issued within the tenth trading day following the effective date of this
     registration statement.
(3)  Common stock issuable upon conversion of a $40,000 convertible note issued
     in May, 2001.
(4)  Common stock issuable upon the conversion of warrants issued in connection
     with the December 31, 2001 financing.
(5)  Common stock issuable upon the conversion of warrants issued in connection
     with the May, 2001 convertible note.
(6)  Restricted Common stock issued with registration rights.

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

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.

                                       2
<PAGE>

     The information in this prospectus is not complete and may be changed. We
     may not sell these securities until the registration statement filed with
     the Securities and Exchange Commission is effective. This prospectus is not
     an offer to sell these securities and is not soliciting an offer to buy
     these securities in any state where the offer or sale is not permitted.

     PROSPECTUS
     February 13, 2002


                        Digital Descriptor Systems, Inc.

                        98,134,841 Shares of common stock


o    The 98,134,841 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".

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

o    February 1, 2002 the closing bid price of our Common Stock on the OTC
     Bulletin Board was $0.02.



--------------------------------------------------------------------------------
This investment involves a high degree of risk. See the "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.

                                       3
<PAGE>

                                Table of Contents

<TABLE>
<CAPTION>

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

                                             Section Title                                              Page No.
------------------------------------------------------------------------------------------------------------------
<S>                                                                                                        <C>
Summary of Information in the Prospectus                                                                   5
Risk Factors                                                                                               7
Use of Proceeds                                                                                           12
Price Range of Common Stock                                                                               13
Our Dividend Policy                                                                                       13
Management's Discussion and Analysis of Financial Condition and Results of Operations                     15
Our Business                                                                                              20
Management                                                                                                27
Executive Compensation                                                                                    29
Certain Relationships and Related Transactions                                                            32
Security Ownership of Certain Beneficial Owners and Management                                            32
Description of Securities                                                                                 33
Selling Stockholders                                                                                      38
Plan of Distribution                                                                                      40
Legal Proceedings                                                                                         41
Experts                                                                                                   41
Legal Matters                                                                                             41
Other Available Information                                                                               41
Financial Statements                                                                                      42
Indemnification                                                                                           43
------------------------------------------------------------------------------------------------------------------
</TABLE>


                                       4
<PAGE>

                               Prospectus Summary

This summary contains all material terms of the 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"), located at 446 Lincoln Highway,
Fairless Hills, PA,19030, phone number (267) 580-1075, was originally formed as
Compu-Color, Inc., in 1989 and was incorporated in Delaware in 1994.

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.

Technological innovations
-------------------------

Imaging technology enables computers to record, store and retrieve both textual
information and visual images. DDSI's software programs utilize technology to
link textual information with images so that customers can record and retrieve
related text and images. 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. (see "Our Business" page 20).

Products
--------

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. (see "Our Business" page 20).


DDSI's also markets its Fingerprint Matching System (FMS) and its Identity On
Demand System to both commercial and criminal justice markets. (see "Our
Business" page 22).


<TABLE>
<CAPTION>
The Offering

<S>                                   <C>
Securities                    Offered 98,134,841 Selling Security Holder Shares (see "Selling
                              Shareholders" page 28) of which 11,403,207 shares have previously been
                              issued as restricted stock


Common Stock Outstanding:     Prior to the Offering   49,905,610    Shares as of February 1, 2002
                              After the Offering     136,637,244    Shares

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

Use of Proceeds               This prospectus relates to shares of our common stock that may be
                              offered and sold from time to time by the selling stockholders. We
                              will not receive any proceeds from the sale of shares by the selling
                              shareholders. However, we will receive proceeds upon the exercise of
                              any warrants that may be exercised by the selling shareholders. These
                              funds will be used for ongoing operations.
</TABLE>

                                                 5
<PAGE>

<TABLE>
<CAPTION>
<S>                           <C>
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>

                                                 6
<PAGE>

                                  Risk Factors


An investment in shares of DDSI's common stock involves a high degree of risk.
You should carefully consider the following information about these risks,
together with the other information contained in this prospectus, before you
decide to buyDDSI's common stock. If any of the following risks actually occur,
DDSI's business would likely suffer. In these circumstances, the market price of
DDSI's common stock could decline, and you may lose all or part of the money you
paid to buy DDSI's common stock.


Risks Relating to our Business:
-------------------------------

DDSI has sustained continuing losses making it a risky investment.

DDSI incurred a loss for the year ending December 31, 2000 of $2,030,052 and a
loss of $1,205,517 in the year ending December 31, 1999, plus a loss of
$1,902,781 for the nine month period ending September 30, 2001. DDSI does not
anticipate realizing a profit during the next fiscal year.

Our financial statements highlights that we have a working capital deficiency
of $731,891 at December 31, 2000 and $1,329,774 at September 30, 2001, plus
recurring losses from operations raise substantial doubt about our ability to
continue as a going concern. Therefore investment in DDSI is at risk of being
lost. The consolidated financial statements do not include any adjustments that
might result from the outcome of this activity.

Here are some of the factors that may affect the future profitability of our
business:

     o    The ability to develop new products to sell to the current customer
          base
     o    Establishing new outlets for sales of the current solutions and
          products.
     o    The acceptance of its modified criminal justice software solutions by
          the commercial market.

DDSI may not be able to obtain sufficient capital to fund our operations and, as
a result, we may cut back or discontinue operations or limit our business
strategies.

While we will need significant additional capital in the near future, we may be
unable to obtain funding for our operations on favorable terms, or at all. If
adequate funds are not available, we may be required to cut back on one or more
of our production locations, sales, marketing or distribution programs or plans;
or reduce operating expenses, or attempt to obtain funds through strategic
alliances that may require us to relinquish rights to our technologies or
products.

Our future capital requirements will depend on many factors, including:

     o    the progress of production of product, sales, marketing and
          distribution efforts;

     o    the progress in filing for and obtaining regulatory approvals;

     o    the market acceptance of our products;

     o    the levels of administrative and legal expenses; and competitive
          products.

In addition, future financing may be increasingly difficult to obtain due to
such factors as our unfavorable operating history and results, the level of risk
associated with our business and business plans, increases in our vulnerability
to general economic conditions, and increased stockholder dilution. Debt
financing, if available, may have several negative effects on our future
operations, including:

     o    a portion of our cash flow from operations will be dedicated to
          payment of principal and interest and this would reduce the funds
          available for operations and capital expenditures;

                                       7
<PAGE>

     o    increased debt burdens will substantially increase our vulnerability
          to adverse changes in general economic and competitive conditions; and

     o    we may be subject to restrictive debt covenants and other conditions
          in our debt instruments that may limit our capital expenditures, limit
          our expansion or future acquisitions, and restrict our ability to
          pursue our business strategies.

DDSI's ability to produce revenue 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. Thus DDSI's ability to produce revenue is
dependent on the following:

     o    its ability to attract new customers

     o    its ability to develop new products and upgrade of existing products
          to reflect current technology

     o    its ability to price products competitively.

Purchases of DDSI's products can be delayed due to political and budgetary
processes within Law enforcement jurisdictions, which can hamper DDSI's ability
to operate.

Law enforcement 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. This irregular and unpredictable
revenue stream makes it difficult for the business to operate smoothly.

Satisfying public contract requirements can preclude sales, which may limit
DDSI's ability to succeed.

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,
and may continue to be, protracted.

The Compu-Scan 3000 may never achieve FBI certification, which could limit our
success.

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 contactless and 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.

Each time DDSI has submitted the Compu-Scan for certification, the FBI has
requested additional information. This has resulted in DDSI's decision to
redesign the Compu-Scan. There are no assurances by the Company that the FBI
will certify this latest technology and device.

During December 2001, the Company revised its anticipated certification date for
its Compu-Scan product indefinitely after its submission was not accepted by the
FBI. Additionally, there are no assurances that the FBI will ever certify the
technology. As such, and since the Company is unable to forecast any revenues
from the product, the Company has written off the remaining investment in
Software Development of $298,714 in the fourth quarter of 2001.

                                       8
<PAGE>

If DDSI defaults in one of the conditions to the debenture agreement, at the
note holder's option, the full principal amount of the debenture(s) together
with interest and other amounts owed may become immediately due and payable in
cash. If this event were to occur, it would probably result in the shut down of
DDSI's operations.

     DDSI would be in default if any one of the following occurs:

          (i)    failure in making a payment of the principal and interest;
          (ii)   files for bankruptcy or insolvency;
          (iii)  defaults in any of its other debt obligations;
          (iv)   DDSI's Common Stock shall not be eligible for quotation and
                 trading on the OTC Bulletin Board;
          (iii)  DDSI sells or disposes all or in excess of 33% of its assets in
                 one or more transactions;
          (v)    this registration statement shall not have been declared
                 effective by the Commission on or prior to April 30, 2002;
          (iv)   if the effectiveness of the Underlying Shares Registration
                 Statement lapses;
          (viii) the Company shall fail to deliver certificates to a Holder
                 within three days of conversion request.

We are presently in compliance with all conditions of the debenture agreement
and anticipate that we will stay in compliance with the conditions while this
prospectus is in use.

We have a "Going-Concern Qualification" in our certifying accountant's financial
statement report, which may make capital raising more difficult and may require
us to scale back or cease operations.

The report of our auditors includes a going concern qualification which
indicates an absence of obvious or reasonably assured sources of future funding
that will be required by us to maintain ongoing operations. To date we have
successfully funded DDSI by attracting additional equity investments and issues
of debt. We believe that our ongoing efforts will continue to successfully fund
operations until positive cash flow is attained. However, there is no guarantee
that our efforts will be able to attract additional necessary equity and/or debt
investors. If we are unable to obtain this additional funding, we may not be
able to continue operations. Additionally, we have a net worth deficit as of our
latest balance sheet date. This deficit indicates that we will be unable to meet
our future obligations unless additional funding sources are obtained. To date
we have been able to obtain funding and meet our obligations in a timely manner.
However, if in the future we are unsuccessful in attracting new sources of
funding then we will be unable to continue in business.

DDSI's operating expenses for the third quarter of 2001 ran approximately
$523,846 with cash outflows of approximately $174,615 a month. A temporary cut
back in operations would lower the expenses dramatically, however, cash outflow
would still remain approximately $51,700 to $60,000 a month. Absent a plan to
obtain the necessary funds to maintain DDSI during a temporary shutdown, DDSI
would have to terminate all operations.


Risks Relating to our Stock:
----------------------------

The issuance of these shares will result in dilution.

There are a large number of shares underlying our convertible notes and warrants
that may be available for future sale and the sale of these shares may depress
the market price of our common stock and may cause substantial dilution to our
existing stockholders.

                                       9
<PAGE>

As of February 1, 2001, we had 49,905,610 shares of common stock issued and
outstanding, notes outstanding that are convertible into 22,000,000 shares of
common stock at current market prices, and outstanding warrants to purchase
400,000 shares of common stock plus included in the current financing, notes
convertible into 40,000,000 shares of common stock and warrants to purchase
2,400,000 shares of common stock. In addition, the number of shares of common
stock issuable upon conversion of the outstanding convertible notes and
debentures may increase if the market price of our stock declines. All of the
shares, including all of the shares issuable upon conversion of the notes and
debentures and upon exercise of our warrants, may be sold without restriction.
The sale of these shares may adversely affect the market price of our common
stock. The issuance of shares upon conversion of the convertible notes and
debentures and exercise of outstanding warrants will also cause immediate and
substantial dilution to our existing stockholders and may make it difficult to
obtain additional capital.

The following gives examples of the number of shares that would be issued if all
the debentures of December 31, 2001 were converted at one time at prices
representing 70%, 50% and 25% of the current market price (assuming a market
price of $0.02):

     o    70% of current stock price:

          DDSI's stock converted at 70% of current stock price would result in a
          debenture conversion rate of $.014 cents. To convert the $965,000 of
          convertible debentures would require 68,928,571 shares of DDSI's
          common stock, or 191% of DDSI's current outstanding shares.

     o    50% of current stock price:

          DDSI's stock converted at 50% of current stock price would result in a
          debenture conversion rate of $.01 cents. To convert the $965,000 of
          convertible debentures would require 96,500,000 shares of DDSI's
          common stock, or 268% of DDSI's current outstanding shares.

     o    25% of current stock price

          DDSI's stock converted at 25% of current stock price would result in a
          debenture conversion rate of $.005 cents. To convert the $965,000 of
          convertible debentures would require 193,000,000 shares of DDSI's
          common stock, or 536% of DDSI's current outstanding shares.

          A drop in stock price of greater than 51% would require DDSI to
          register more shares to provide for the conversion of these
          convertible debentures.

DDSI's overhang affect of the selling shareholders resale of their securities on
the market could result in lower stock prices when converted

Overhang can translate into a potential decrease in DDSI's market price per
share. The common stock underlying unconverted debentures represents overhang.
These debentures are converted into common stock at a discount to the market
price providing the debenture holder the ability to sell his or her stock at or
below market and still make a profit. If the share volume cannot absorb the
discounted shares,DDSI's market price per share will likely decrease. As the
market price decreases, each subsequent conversion will require a larger
quantity of shares.

Currently DDSI has reserved 200% of the estimated maximum number of shares of
common stock which would be issuable upon conversion in full of the debentures
and warrants in the current financing, amounting to 84,800,000 shares of
authorized and unissued common stock. These reserve amounts are our good faith
estimate of the number of shares that we believe we need to reserve. We can
provide no assurance as to how many shares we will ultimately need to issue upon
the conversion of the debentures. If we are required to issue additional shares,
we will be required to file an additional registration statement for those
shares.

Short selling common stock by warrant and debenture holders may drive down the
market price of our stock.

                                       10
<PAGE>

Warrant and debenture holders may sell shares of DDSI's common stock on the
market before exercising the warrant or converting the debenture. The stock is
usually offered at or below market since the warrant and debenture holders
receive stock at a discount to market. Once the sale is completed the holders
exercise or convert a like dollar amount of shares. If the stock sale lowered
the market price, upon exercise or conversion, the holders would receive a
greater number of shares then they would have absent the short sale. This
pattern may result in the spiraling down of our stock's market price.

DDSI's common stock is subject to the "Penny Stock" rules of the SEC and the
trading market in our securities is limited, which makes transactions in our
stock cumbersome and may reduce the value of an investment in our stock.

Our shares of Common Stock are "penny stocks" as defined in the Exchange Act,
which 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
hereby. In addition, the "penny stock" rules adopted by the Commission under the
Exchange Act subject the sale of the shares of the Common Stock 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. Included in this document are the following:

     o    The bid and offer price quotes for the penny stock, and the number of
          shares to which the quoted prices apply.
     o    The brokerage firm's compensation for the trade.
     o    The compensation received by the brokerages firm's salesperson for the
          trade.

In addition, the brokerage firm must send the investor:

     o    Monthly account statement that gives an estimate of the value of each
          penny stock in your account.
     o    A written statement of your financial situation and investment goals.

Legal remedies which may be available to you are as follows:

o    If penny stocks are sold to you in violation of your rights listed above,
     or other federal or state securities laws, you may be able to cancel your
     purchase and get your money back.
o    If the stocks are sold in a fraudulent manner, you may be able to sue the
     persons and firms that caused the fraud for damages.
o    If you have signed an arbitration agreement, however, you may have to
     pursue your claim through arbitration.

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 Commission's rules may limit the number of
potential purchasers of the shares of the Common Stock.

Resale restrictions on transferring "penny stocks" are sometimes imposed by some
states, which may make transactions in our stock cumbersome and may reduce the
value of an investment in our stock.

                                       11
<PAGE>

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.

Information about forward-looking statements
--------------------------------------------

This Prospectus contains certain forward-looking statements, which involve
substantial risks and uncertainties. These forward-looking statements can
generally be identified because the context of the statement includes words such
as "may," "will," "except," "anticipate," "intend," "estimate," "continue,"
"believe," or other similar words. Similarly, this prospectus also contains
forward-looking statements about our future. Forward-looking statements include
statements about our:

Plans, Objectives, Goals, Strategies, Expectations for the future, Future
performance and events, Underlying assumptions for all of the above and Other
statements which are not statements of historical facts.

These forward-looking statements involve risks and uncertainties, which could
cause our actual results to materially differ from our forward-looking
statements. We make these forward-looking statements based on our analysis of
internal and external historical trends, but there can be no assurance that we
will achieve the results set forth in these forward-looking statements. Our
forward-looking statements are expressed in good faith and we believe that there
is a reasonable basis for us to make them.

In addition to other factors discussed in this prospectus, the following are
important factors that could cause our actual results to materially differ from
our forward-looking statements:

     -    Our ability to respond to changes in the marketplace
     -    Competitive factors
     -    The availability of financing on terms and conditions acceptable to us
     -    The availability of personnel with the appropriate technical skills

We have no obligation to update or revise these forward-looking statements to
reflect future events.

Use of proceeds
---------------

DDSI will not receive any of the proceeds from the sale of the shares of common
stock offered by the selling stockholders under this prospectus. If all
warrants, being registered, to purchase the shares of common stock offered for
resale in this offering were exercised, DDSI would receive aggregate gross
proceeds of approximately $98,220.

The proceeds, if any, that DDSI receives from the exercise of warrants will be
used for working capital in support of the growing business and seeking
certification of the Compu-Scan 3000.

The foregoing represents DDSI's current best estimate of our use of the proceeds
derived from the exercise of the warrants to purchase the shares of common stock
offered in this prospectus, if any, based upon our present plans, the state of
our business operations and current conditions in the industry in which we
operate. DDSI reserves the right to change the use of the proceeds if
unanticipated developments in our business, business opportunities, or changes
in economic, regulatory or competitive conditions, make shifts in the
allocations of proceeds necessary or desirable.

                                       12
<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, 2001 there
were approximately 2,500 shareholders of record. The source of the quotes is AOL
Ticker.

<TABLE>
<CAPTION>
                                                                                Common Stock
                                                                                  Bid Price
                                                                       -------------------------------
Calendar Year 1999                                                      Low                      High
------------------                                                     -----                     -----
<S>                                                                    <C>                       <C>
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
Third Quarter                                                          $0.06                     $0.19
Fourth Quarter                                                         $0.03                     $0.28
</TABLE>

As of February 1, 2002, there were approximately 49,905,610 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 its 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.

                                       13
<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>

                                              Nine Months Ended September                    Year ended December 31
                                               2001                 2000                   2000                  1999
                                              ---------------------------                  --------------------------
<S>                                           <C>             <C>                          <C>            <C>
Net sales                                     $ 1,152,801     $ 2,197,007                  $ 3,026,458    $ 2,847,183
Cost of revenues                                  434,510       1,192,714                    1,615,286        987,931
General and administrative                      1,320,601       1,421,279                    1,843,336      1,593,846
Sales and marketing                               362,605         656,883                      917,381        984,691
Research and development                          284,818         363,433                      536,350        429,599
Depreciation                                      189,055          75,953                      162,330         75,553
Other (income) expense, net                       463,993          (8,099)                     (18,173)       (18,920)
Net Loss                                      $(1,902,781)    $(1,505,156)                  (2,030,052)    (1,205,517)
                                              ===========     ===========                   ==========     ==========

Weighted average Common
  Shares outstanding                           21,708,767      18,083,970                   18,557,547     10,934,900
                                              ===========     ===========                   ==========     ==========

Basic loss per share                          $     (0.09)    $     (0.08)                  $     (.11)    $     (.11)
                                              ===========     ===========                   ==========     ==========

Current Assets                                $ 1,711,900     $   835,305                   $1,000,415     $1,207,385
Total Assets                                    2,311,087       1,659,447                    1,783,044      2,049,383
Current Liabilities                             3,041,674       1,321,039                    1,732,306      1,603,885
Total Liabilities                               3,064,898       1,321,039                    1,760,932      1,603,885
Shareholders' equity (deficit)                $  (753,811)        338,408                   $   22,112     $  445,498
</TABLE>

                                       14
<PAGE>

            Management's Discussion and Analysis or Plan of Operation

Plan of Operations
------------------

The short-term objectives of DDSI are the following:

     1.   The short-term objective of the Company is to continue to expand the
          sale and acceptance of its core solutions by offering new and
          synergistic biometric security products to its installed base in the
          criminal justice market. The Company's objective is to expand with
          these, and additional products, into much larger commercial and
          federal markets.

DDSI's long-term objectives are as follows:

     1.   To obtain enough products to sell into its basic business
          market--Criminal Justice -- so that DDSI can generate sales adequate
          enough to allow for profits. Three such new products are the
          Compu-Scan 3000, FMS (Fingerprint Matching System), and Compu-Capture
          lite.

     2.   Continue pursuing the FBI certification of the Compu-Scan 3000
          fingerprint capturing device. This would include redesigning the slap
          unit of the Compu-Scan to capture a palm print as well as a
          fingerprint. In addition consideration will be given to the creation
          of a contactless single digit reader that would not require FBI
          certification. There is no guarantee that the company will be able to
          raise sufficient funding to complete this project or that it will ever
          be able to meet FBI certification.

DDSI believes that it will not reach profitability until the year 2003. Over the
next twelve months, Management is of the opinion that sufficient working capital
will be obtained from operations and external financing to meet the Company's
liabilities and commitments as they become payable. The Company has in the past
successfully relied on private placements of common stock securities, bank debt,
loans from private investors and the exercise of common stock warrants in order
to sustain operations. A recent financing has been obtained and the underlying
shares are being registered in this registration statement (see "Selling
shareholders" and "Recent financing" on page 35).

DDSI 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    Derive funds through investigating business alliance with other
          companies who may wish to license the FMS SDK inclusive of new
          industry verticals.
     o    Increase revenues through the introduction of Compu-Capture in the
          K-12 marketplace for the creation of ID cards.
     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
---------------------

The Company has incurred continuing losses throughout the fourth quarter of 2001
and, although the Company has not yet completed the closing of its fourth
quarter, they expect to report a loss of approximately $2.7 million for the year
ended December 31, 2001. The Company does not expect to be profitable throughout
2002.

                                       15
<PAGE>

Nine Months September 30, 2001 Compared to the Nine Months Ended September 30,
2000

Revenues for the nine months ended September 30, 2001 of $1,152,801 decreased
$1,044,206 or 48% from the nine months ended September 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 decrease in the
sales of the SI-3000 product, which the Company has ceased to actively sell.
Maintenance revenues decreased $127,575 or 24% from the nine months ended
September 30, 2000 primarily due to a decrease in the Company's customers
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 nine months
ended September 30, 2001 versus September 30, 2000, which accounted for the
modest increase. Cost of goods decreased $758,204 or 64% due to the decrease in
revenues and was reduced to 37% of total revenues from 54% 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.

Costs and expenses decreased $646,581 or 17% during the nine months ended
September 30, 2001 versus the nine months ended September 30, 2000. The decrease
is due primarily to the strict cost containment measures the Company has put in
place and the dismissal of the sales staff. Non-operating expenses increased
$80,423 due to the amortization of the capitalization development expense of the
Compu-Scan device. Other expenses also increased $440,444 due to interest
expense in connection with the convertible debentures issued in 2000 and in the
nine months ended September 30, 2001.

The net loss for the Company increased 26% for the nine months ending September
30, 2001 to $1,902,781 from $1,505,156 for the nine months ending September 30,
2000. This was principally due to the decrease in revenues 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 customers 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.

                                       16
<PAGE>

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 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.

September 30, 2001 and 2000
---------------------------

Net cash used in operating activities for the nine months ended September 30,
2001 and 2000 was $671,731 and $1,088,313, respectively. The change in cash from
operating activities in 2001 versus 2000 of $416,582 was principally due to the
increase in the net loss for the 2001 first nine months ended September 30, 2001
versus 2000 of $397,625, as well as due to amortization of debt discount of
$440,444 for the nine months ended September 30, 2001, offset by other changes
in operating assets and liabilities.

Net cash used in investing activities was $2,220 and $33,702 for the nine months
ended September 30, 2001 and 2000, respectively, reflecting a change of $31,482.
This change is due to lesser purchases of furniture and equipment in the nine
months ended September 30, 2001.

                                       17
<PAGE>

Net cash provided by financing activities was $628,646 and $1,164,066 for the
nine months ended September 30, 2001 and 2000, respectively, reflecting a change
of $535,420. This decrease was principally due to zero proceeds received from
the issuance of the Company's common stock in the first nine months of 2001,
versus $1,164,066 received in the first nine months of 2000. The Company did
receive proceeds of $755,000 in convertible debentures during the nine months
ended September 30, 2001.

December 31, 2000 and 1999
--------------------------

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

1.   During October 2001 through January 2002, the remaining $165,000 of the
convertible debentures issued in December 2000, as well as $160,000 of the
convertible debentures issued in March 2001 were converted into 10,551,280
shares of common stock. Additionally, accrued interest relating to these notes
was converted into an additional 2,512,494 shares of common stock.

2.   During December 2001 through January 2002, the Company granted 2,920,831
shares of Common Stock to certain parties for consulting services performed and
to be performed. Such shares were valued at the fair market value on the date
granted.

3.   During October through December 2001, DDSI issued common stock via
Subscription Agreements to various individuals. The Subscription Agreements
provided for the purchase of up to 13,333,333 shares of common stock of DDSI at
$0.03 per share, in $10,000.00 (u.s.) blocks, equaling 333,333 shares per block,
for an aggregate total of $400,000. Through January 2002, the company has raised
$240,000 through these agreements and has issued 7,999,996 shares of common
stock.

4.   On December 31, 2001, DDSI issued three convertible debentures for an
aggregate amount of $500,000, with simple interest accruing at the annual rate
of 12%. These debentures are due December 31, 2002. Interest payable on the
Debentures shall be paid quarterly commencing March 30, 2002. The holders shall
have the right to convert the principal amount and interest due under the
debentures into shares of DDSI's common stock. The conversion price in effect on
any Conversion Date shall be the lesser of (1) $.043 and (2) 50% of the average
of the lowest three inter-day sales prices of the Common Stock during the twenty
Trading Days immediately preceding the applicable Conversion Date. The shares
that will be issued upon conversion of these debentures are being registered for
resale purposes by this registration statement. DDSI also issued common stock
purchase warrants for the right to purchase 1,500,000 shares of Common Stock of
DDSI at an exercise price per share equal to the lesser of (i) $.02 and (ii) the
average of the lowest three inter-day sales prices during the twenty (20)
Trading Days immediately prior to exercise.

It is anticipated that the $ 500,000 of convertible debentures will be converted
into shares in accordance with the terms of these debentures.

                                       18
<PAGE>

5.   Within ten days subsequent to the effectiveness of this registration
statement, DDSI will issue three convertible debentures for an aggregate amount
of $300,000, with simple interest accruing at the annual rate of 12%. These
debentures will be due one year after the date of issuance. . The Holder shall
have the right to convert the principal amount and interest due under the
debentures into shares of DDSI's common stock. The conversion price in effect on
any Conversion Date shall be the lesser of (1) $0.043, and (2) 50% of the
average of the lowest three inter-day sales prices of the Common Stock during
the twenty Trading Days immediately preceding the applicable Conversion Date.
DDSI will also issue additional common stock purchase warrants for the right to
purchase 900,000 shares of Common Stock of DDSI at an exercise price per share
equal to the lesser of (i) $.02 and (ii) the average of the lowest three
inter-day sales prices during the twenty (20) Trading Days immediately prior to
exercise. The shares that will be issued upon conversion of these debentures are
being registered for resale purposes by this registration statement.

Certain terms and conditions must be met at the time of the closing of the
$300,000 in convertible debentures that are to be to be issued within two
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 properly 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 on or prior to
          April 30, 2002,
     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.

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

                                       19
<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.

Product and Services
--------------------

Compu-Capture(R)

DDSI's principal product is the Compu-Capture(R) law enforcement program. This
program 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, including a video image of the subject, a "mug
shot". 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.

Once the data is entered into the Compu-Capture(R) system, the visual image and
textual material can be utilized in a variety of ways. The officer conducting a
search can 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. 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.

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.

The Compu-Capture(R) system's technology can also be used in commercial
applications that are unrelated to law enforcement, such as 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.

                                       20
<PAGE>

The following versions of the Compu-Capture offered are as follows:

Compu-Capture(R) 32

Compu-Capture(R) 32 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 integration into law enforcement existing records or a jail
management system. The database allows for the capture of basic demographic
information such as physical characteristics. This information can then be
sorted for quick and easy retrieval of a particular record or various records
with similar characteristics. The CPC32 can be used on a Personal Computer or
networked together.

Compu-Capture(R) ActiveX32

Compu-Capture(R) ActiveX32 is a fully functioning executable product that
image-enables any host based records or jail management system without costly
integration. The advantage to this product is it eliminates multiple databases
and duplicate data entry from one system to another.

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.

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.

Compu-Scene

The Compu-Scene program uses a computer aided drafting program to compose
drawings with simple drag-n-drop technology, making accident and crime scene
drawings easy. The user simply draws a room or intersection to scale with the
CAD (Computer Assisted Design) program and then simply drops in the pre-drawn
templates to complete the scene.

Maintenance and Support

In addition to the installation of DDSI's systems, DDSI trains the personnel of
the system purchaser in the use and operation of the system. 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 fee.

New Products

Identify On Demand System:

The Identity On Demand System is a secure biometric ID application to be used in
buildings, small airports, offices, factories, apartments, etc. in order to
identify and verify individuals. The "Identify on Demand" system provides for a
PVC card to contain three or four lines of descriptive data, a full color photo,
and options for fingerprints, signature, magnetic stripe or barcode
applications. "Identify On Demand" is expandable to include fingerprint
matching, use as an access control card, as well as the ability to integrate
data and images to other software.

                                       21
<PAGE>

FMS  ("Fingerprint Matching System")

In December of 2001, DDSI secured a royalty license from AuthenTec Inc.,
Melbourne, Florida, for a software suite called PowerMatch(TM) ("FMS") that
enables the end user to capture, digitize, store, retrieve and/or match or sort
fingerprints, and can be utilized either as a stand alone unit or in conjunction
with the Compu-Scan Device. DDSI subsequently renamed the software FMS
("Fingerprint Matching System"). The agreement provides DDSI with a worldwide,
non-exclusive license to sell the Power Match Software (FMS). Previously the
company had a limited license with Harris Corporation (NYSE:HAR) allowing for
sales to only the criminal justice market. AuthenTec Inc. owned all the rights
to PowerMatch (FMS). The company added all commercial markets to its licensing
arrangements by contract with AuthenTec Inc. To date two FMS sales have
occurred.

The FMS performs its matching, storage and capturing functions under the FBI
approved AINSI-NIST and NCIC 2000 regulations and the Compu-Capture(R) and
Compu-Scan 3000 can be integrated with this software. 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 or to small jails.

Compu-Scan 3000

The Compu-Scan, a non-contact inkless direct reader fingerprint system. During
1998, 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. 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. There are two parts to the
Compu-Scan unit; one is the single finger roll unit, which includes the "rolled"
fingerprints of the individual fingers and the other is a slap unit, which
captures the four fingers simultaneously from each hand and then the two thumbs.

The Compu-Scan electronically reads and creates a digital image of a
fingerprint. Contact inkless fingerprint capture devices typically 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,
and then converts the optical image into a digital image by a photo-imaging
detector. The Compu-Scan operates in a similar manner, but without direct
contact by the finger to the device. The Compu-Scan captures the fingerprint by
placing the finger 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 however, 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.

In On July 25th, 2000, DDSI awarded a contract to DBA Systems, a division of
Titan Systems Corp., for technical assistance in achieving compliance with the
FBI certification process.

                                       22
<PAGE>

After discussions with Titan and other parties, it was recommended that DDSI
replace the system lens and possibly recast the structure of the single finger
roll unit to fit the new lens in order to meet FBI certification requirements.
Upgrading, testing and redesigning the Compu-Scan to meet FBI requirements could
take an additional 12 to 18 months, and will require additional funding of at
least $400,000.

The FBI has recently made available an acceptable palm print capture image. With
the possibility of enhancing the Compu-Scan slap unit (as discussed above), and
with the heightened awareness of homeland security resulting from the events of
September 11, 2001, DDSI put a temporary hold on modifying its present
Compu-Scan system and started researching what it would take to enhance its
present system to be able to scan both a fingerprint and/or a palm print plus
meet FBI Appendix F requirements. This research is anticipated to be completed
by September/October 2002. It is estimated that this additional research will
require $200,000 funding to complete; however, more exact costing will be
forthcoming following lens testing results.

If the research information results are favorable, DDSI will redesign the unit
for FBI certification and commercial production. This should occur during the
third or fourth quarter of 2002. If the research is unsuccessful, DDSI intends
to continue with the original design of the fingerprint slap unit.

During December 2001, the Company revised its anticipated certification date for
its Compu-Scan product indefinitely after its submission was not accepted by the
FBI. Additionally, there are no assurances that the FBI will ever certify the
technology. As such, and since the Company is unable to forecast any revenues
from the product, the Company has written off the remaining investment in
Software Development of $298,714 in the fourth quarter of 2001.

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 (3) 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.

                                       23
<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.

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: Seek 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) systems are compatible will assist DDSI
in maintaining its competitiveness.

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. Foreign
sales for 2000, 1999 and 1998 were $205,953, $150,209 and $6,104, or an
aggregate for these years of approximately $362,266.

                                       24
<PAGE>

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 and ImageWare Systems of San Diego, California.

The Compu-Scan 3000 when certified, will have three main competitors, CrossMatch
(recently received F certification), 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.

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 FMS solution resembles other fingerprint capture, store, retrieval 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 entered into the Criminal Justice field by the purchasing Printrak
Inc., and 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.

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
and other mainframe and mini 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 were required to meet these requirements.

                                       25
<PAGE>

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.

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

As mentioned above (see page 23), DDSI has put a temporary hold on modifying its
present Compu-Scan system and started research on what it would take to upgrade
the present system to be able to scan both fingerprints and a palm print with
the slap unit, plus meeting FBI image requirements. This research should be
completed by September/October 2002. Titan Corporation is assisting DDSI in this
research.

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)
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.

Important Events

On January 29, 2002, the Company announced a major reorganization of DDSI's
management team. Mr. Robert Gowell was appointed as CEO and Co-Chairman of the
Board of Directors. Mr. Michael J. Pellegrino will serve as President and Chief
Operating Officer of the Company in addition to his current position as CFO. Mr.
Randolph Hall was appointed as Vice President of Sales.

On January 23, 2002 DDSI announced the appointment of Anthony Shupin, Vincent
Moreno, Michael J. Pellegrino and Robert Gowell to the Company's Board of
Directors. The Company also announced the resignation of Ms. Myrna Marks-Cohn,
Ph.D, from the Board of Directors.

On January 3, 2002, the company announced a new and expanded agreement with
privately held Authentec, Inc. to sell its Finger Print Matching System (FMS) to
commercial markets. DDSI had previously only held the rights to sell FMS to the
criminal justice markets.

On December 5, 2001, DDSI announced the formation of a new advisory board. The
focus of the new board will be to assist and advise management of the company in
all areas of its business.

On November 26, 2001, the Company announced the completion of recently awarded
contracts to integrate solutions in Haverhill and Stoneham, Massachusetts. The
contracts totaled $52,000 and provide over $2,000 annually in maintenance fees.

                                       26
<PAGE>

On November 15, 2001, DDSI announced the first non-criminal justice market sale
of its new Fingerprint Matching System (FMS), which was acquired by a county's
Department of Health and Human Services (HHS) for the purposes of identifying
and tracking its homeless population.

On November 2, 2001, the Company announced the signing of a development contract
for the Compu-Capture Enterprise Suite (CCES), with Pennsylvania-based IT
developer, ImageVision.Net (IMV). CCES will incorporate DDSI's FMS and
Compu-Scan 3000 systems as well as Document Imaging, Workflow and Facial
Recognition Software.

On October 29, 2001, DDSI announced the availability of its new "Identify On
Demand" secure ID product, an ID System for the commercial market. This product
was developed by integrating FMS' core technology with the Compu-Capture(R) core
technology.

On October 11, 2001 the Company announced the first FMS sale for Bucks County,
PA and the Bucks County Correctional facility in Doylestown, PA. This marks the
first installation in the criminal justice market of DDSI's new Fingerprint
Matching Solution (FMS) and is scheduled for installation by the end of next
quarter.

On September 25, 2001, DDSI announced an agreement with Mr. Rudy Hallenbeck,
President of SOLVPRO Inc., a privately held high tech consulting firm, to
leverage DDSI products and technology into major contracts. The Company believes
SOLVPRO will bring to DDSI essential big project capability and partnering
knowledge which will complement DDSI's proprietary products and solutions.

On September 19, 2001, the Company announced the availability of its Fingerprint
Matching System, the only fully scalable fingerprint identification system in
the world designed to take full advantage of the Windows NT/2000 environment.

On September 18, 2001, DDSI announced that the Company received its first
purchase order for its livescan fingerprint capture device. This initial order
is scheduled to be delivered in early 2002.

Employees

DDSI employs a total of 8 full time employees and 2 part time employees.

Management

As indicated earlier, the Board of Directors approved a major management
restructuring on January 25, 2002. Mr. Robert Gowell was appointed as CEO and
Co-Chairman of the Board of Directors. Mr. Michael J. Pellegrino will serve as
President and Chief Operating Officer of the Company in addition to his current
position as CFO. Mr. Randolph Hall was appointed as Vice President of Sales.

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

<TABLE>
<CAPTION>
Name                                Age     Position with Company
----                                ---     ---------------------
<S>                                 <C>
Robert Gowell                       34      Co-Chairman, Chief Executive Officer and Director
Michael Pellegrino                  51      President, Chief Operating Officer and Chief Financial Officer
Garrett U. Cohn                     63      Co-Chairman and Director
Anthony Shupin                      47      Director
Vincent Moreno                      59      Director
Randolph W. Hall                    43      Vice President
</TABLE>

Robert Gowell was appointed Co-Chairman and Chief Executive Officer on January
25, 2002. He is a retired Deputy U.S. Marshal who has worked out of the New York
and Pennsylvania offices. 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.

                                       27
<PAGE>

Michael Pellegrino joined the Company in 1995. On January 25, 2002 he was
appointed President, Chief Operating Officer and 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. Prior to that he was a
regional controller for Capital Cities/ABS for four years and for seven 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.

Garrett U. Cohn has been a Director of the Company since July, 1994. Prior to
the change in management that took place effective January 25, 2002, Mr. Cohn
served as President and Chief Executive Officer. 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.

Anthony Shupin's experience includes over 20 years of executive management,
sales and marketing management and project and program management with
technology computing, aerospace and professional services companies. As a
Business Development Executive in the Communications and Media practice at
Deloitte Consulting, Mr. Shupin directed activities and resources targeted at
strategic global accounts. Prior to Deloitte, he served as Vice President of
John Richard Associates, Inc. a management consulting firm specialized in
telecommunications. His background also includes roles as Director of
International Business Development at Space Imaging, L.P. where responsibilities
included supervising the International Groundstation Network and establishing
global strategic relationships concerning the acquisition and distribution of
high resolution satellite imagery. Mr. Shupin has also served as Vice President,
Sales and Marketing at Remark Industries, Inc., which marketed and manufactured
products such as on-line lottery and electronic gaming devices, medical
monitoring and analysis devices. Prior to Remark Industries, he held management
and account management positions at Wang Laboratories and Xerox Corporation in
Princeton, New Jersey. A graduate of Colby College, Waterville, Maine, Mr.
Shupin has extended his education at Rutgers University, Cook College in
Geographic Information Systems and Remote Sensing training. He has been an
invited speaker at various international symposiums and has published articles
regarding market analysis and access, education and technical assessment.

Vincent Moreno provides DDSI with over 30 years of experience from a technical
and business environment, with the past 23 years at the executive management
level. He served as Vice President of Technology for ADP for 13 years. For six
years, as President and CEO, he ran Mainstem Corporation, a national provider of
software services. Most recently, he is President and General Manager of PayPlus
Software, Inc., a provider of payroll software to the Professional Employer
Organization marketplace. Mr. Moreno is adept in setting strategic direction and
is experienced in the reengineering of corporate operating units. As a member of
the board, he brings guidance, direction, and vision to the Companies' strategic
planning.

Randolph W. Hall joined the Company as the Director of Marketing in 1996 and in
1999 assumed the position of Vice President of Operations. Mr. Hall was
appointed Vice President of Sales on January 25, 2002. Prior to joining the
Company, Mr. Hall successfully launch and subsequently sold his ownership share
of a Company that marketed a records management system for local law enforcement
agencies. Before that Mr. Hall served as the Regional Installation and Training
Manager for a national solution provider of law enforcement systems. Mr. Hall
has a degree in Computer Science and is currently pursuing his Bachelors in
Business Administration from Ursinus College.

                                       28
<PAGE>

An overview of changes that occurred with the DDSI Board of Directors is as
follows: Mr. Robert Gowell, Mr. John Boyle and Mr. Charles Saphos were elected
as members of DDSI's Board of Directors on July 26, 2001. Mr. Saphos resigned
from the Board on July 26, 2001. Both Mr. Gowell and Mr. Boyle resigned as
Directors effective December 19, 2001. Mr. Martin was appointed as a DDSI Board
Member on December 11, 2001 and resigned from the Board effective January 3,
2002. Dr. Myrna Marks-Cohn resigned from the DDSI Board of Directors effective
January 14, 2002. Mr. Robert Gowell was reappointed to the Board of Directors on
January 15, 2002. Mr. Anthony Shupin, Mr. Vincent Moreno and Mr. Michael
Pellegrino were appointed to the Board of Directors on January 15, 2002.

                             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     1998    $160,000    0       0            0             0                  0              0
                  1999    $160,000    0       0            0             0                  0              0
                  2000    $160,000    0       0            0             0                  0              0
Michael J.        1998    $109,000    0       0            0             0                  0              0
  Pellegrino      1999    $109,000    0       0            0             0                  0              0
    V/P           2000    $110,000    0       0            0             0                  0              0
Michael Ott,      1998    $110,000    0       0            0             0                  0              0
V.P/ Director     1999    $110,000    0       0            0             0                  0              0
                  2000    $110,000    0       0            0             0                  0              0
Randy Hall        1998    $ 70,000    0       0            0             0                  0              0
    V/P           1999    $ 70,000    0       0            0             0                  0              0
                  2000    $ 73,500    0       0            0             0                  0              0
</TABLE>

*    Mr. Cohn resigned as President and Chief Executive Officer effective
     January 25, 2002.
**   Mr. Ott resigned from the Company effective March 30, 2001

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>
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
*    Mr. Cohn resigned as President and Chief Executive Officer effective
     January 25, 2002.

                                       29
<PAGE>


                              Employment Agreements

On January 25, 2002, the Board of Directors approved a management
reorganization. The Board of Directors are in the process of appointing members
to the Audit Committee and Compensation Committee, at which time they will
recommend and approve a new compensation package and employment agreement for
Michael Pellegrino and Randolph Hall.

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.

Mr. Cohn resigned as President and Chief Executive Officer effective January 25,
2002.

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).

Mr. Pellegrino was appointed as President and Chief Operating Officer effective
January 25, 2002.

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 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

                                       30
<PAGE>

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 $73,500 per year which may at the Board of Directors discretion adjust
his base salary (but not below $73,500 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).

Mr. Hall was appointed as Vice President of Sales effective January 25, 2002.

                    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 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.

                                       31
<PAGE>

                 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.

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
49,905,610 shares of common stock outstanding at February 1, 2002.

                                                        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)               3.7%

Michael Pellegrino
33 Maple Lane
Brielle, NJ 08730                     335,000                   0.7%

Michael Ott**
26415 212th Avenue
Delhi, IA 52223                       215,000                   0.4%

Randolph Hall
505 Northridge Rd.
Collegeville, PA 19426                398,000                   0.8%

Robert P. Martin
521-5th Avenue W., #1104
Seattle, WA  98119                  3,099,000(2)                6.2%

Robert Gowell
264 Susquehanna Trail
Allentown, PA  18104                1,931,634                   3.9%

Myrna Cohn Ph.D.**
249 Willow Parkway
Buffalo Grove, IL  60089               15,000                   0.006%

Norman Cohn
200 Pine Tree Road
Radnor, PA 19087                      940,000                   1.9%

All Officers & Directors
As a Group                          8,795,634(3)               17.6%

**Was a Director at December 31, 2000.

                                       32
<PAGE>

(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)  Mr. Martin holds 2,399,000 in direct holdings and 700,000 in indirect
     holdings. Mr. Martin resigned from the Board of Directors on January 3,
     2002.

(3)  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.

                            Description of Securities
General
-------

As of the date of this registration statement, the Company has authorized of
150,000,000 shares of Common Stock at $.001 par value, of which 49,905,610
shares are issued and outstanding at February 1, 2002, plus 1,000,000 authorized
shares of $.01 par value per share Preferred Stock and no preferred shares are
issued and outstanding at June 5, 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.

The following is a description of the securities of DDSI taken from provisions
of our Company's Articles of Incorporation and By-laws, each as amended. The
following description is a summary and is qualified in its entirety by the above
referenced provisions of the Articles of Incorporation and By-laws as currently
in effect. The following description includes all material provisions of the
applicable sections of the underlying documents in the summary.

                                       33
<PAGE>

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.

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 49,905,610 as of January 29, 2002 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 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.

                                       34
<PAGE>

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.

Change in Control
-----------------

There are not provisions in the Articles of Incorporation or Bylaws that would
delay, defer or prevent a change in control of Digital Descriptor Systems, Inc.

Penny Stock Disclosure Requirements:
-----------------------------------

See discussion in risk factor section, page 11, with the heading "Penny Stock
issues may be difficult for an investor to dispose of."

Warrants and Options:
---------------------

In December, 2001, DDSI issued warrants to purchase 1,500,000 common shares at
an exercise price the lesser of $.02 per share or the average of the lowest
three inter-day sales prices during the twenty (20) Trading Days immediately
prior to exercise. The Warrant provides that in no event shall the holder
beneficially own more than 4.999% of our outstanding common stock.

Ten days after the effectiveness of this registration statement, DDSI will issue
additional common stock purchase warrants for the right to purchase 900,000
shares of Common Stock of DDSI at an exercise price per share equal to the
lesser of (i) $.02 and (ii) the average of the lowest three inter-day sales
prices during the twenty (20) Trading Days immediately prior to exercise. The
Warrant provides that in no event shall the holder beneficially own more than
4.999% of our outstanding common stock.

Shares Eligible for Future Sale

On the date of this offering, DDSI has 49,905,610 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 98,184,841
shares of common stock for resale (of which 11,403,207 have been previously
issued as restricted stock), all of which will be freely tradable without
restriction or further registration under the Securities Act. This includes:

o    80,000,000 shares representing the conversion of the aggregate of $800,000
     of 12% debentures at a price of $.02 per share (includes 40,000,000 reserve
     shares).
o    1,820,834 shares representing the conversion of a $25,000 at 10 percent
     interest debenture and 111,000 at a price of $.015 per share.
o    4,911,000 shares underlying warrants to be registered in connection with
     the above convertible debentures.
o    11,403,207 shares of other selling shareholders

Selling Shareholders
--------------------

The Shares being offered for resale by our Selling Stockholders are issuable in
accordance with ss. 4(2) and Rule 506 under the Securities Act of 1933, as
amended (the "Securities Act"),

The offering includes shares required pursuant to a certain convertible
debenture date May 7, 2001 and the secured convertible debenture purchase
agreement dated December 31, 2001. Additionally, certain shares are being
offered for sale by our Selling Stockholders with piggyback registration rights.

                                       35
<PAGE>

Recent Financing
----------------

On December 31, 2001, DDSI entered into a Securities Purchase Agreement (the
"Agreement") that calls for the issuance of $800,000 of 12% Convertible
Debentures that can be converted into shares of common stock. Bridge funding of
$500,000 has been issued on December 31, 2001 with a maturity date of December
31, 2002, with the remaining $300,000 in convertible debentures to be issued the
tenth trading day after the effectiveness of this registration statement. The
debentures are convertible (plus related interest expense) into the Company's
common stock at the lesser of (1) $0.043, and (2) 50% of the average of the
lowest three inter-day sales prices of the Common Stock during the twenty
Trading Days immediately preceding the applicable Conversion Date. In
conjunction with the financing 1,500,000 warrants to purchase common stock have
been issued and 900,000 warrants to purchase shares of common stock are to be
issued the tenth trading day after the effectiveness of this registration
statement.

     Certain terms and conditions must be met at the time of the closing of the
$300,000 convertible debenture that is to be to be issued within ten 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 within ninety
          days of filing,

     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 .

The warrants to be issued are each exercisable at an exercise price per share of
the lesser of (1) $0.02, and (2) 50% of the average of the lowest three trading
prices during the twenty trading days immediately preceding the conversion date.
Interest on the debentures is payable on a quarterly basis on March 31, June 30,
September 30 and December 31 of each year while such debentures are outstanding
and on each date of conversion, whichever occurs earlier. Interest may be paid,
at our option, in cash or common stock. Any debentures outstanding one year
after execution, automatically convert into shares of our common stock at the
then applicable conversion price unless, there is not an effective registration
statement covering the underlying securities, or there are not enough shares
authorized or reserved for issuance of the shares upon conversion. The
debentures are redeemable under certain circumstances.

                                       36
<PAGE>

Each holder of the 12% convertible debenture may not convert its securities into
shares of the Company's common stock if after the conversion, such holders,
together with any of its affiliates, would beneficially own over 4.999% of the
outstanding shares of the Company's common stock. This percent ownership
restriction may be waived by each holder on not less than 61 days' notice to the
Company. Since the number of shares of the Company's common stock issuable upon
conversion of the debentures will change based upon fluctuations of the market
price of the Company's common stock prior to a conversion, the actual number of
shares of the Company's common stock that will be issued under the debentures,
and consequently the number of shares of the Company's common stock that will be
beneficially owned by AJW Partners, New Millennium Capital Partners II and
Bristol Investment Fund, Ltd. cannot be determined at this time. Because of this
fluctuating characteristic, we agreed to register a number of shares of the
Company's common stock that exceeds the number of the Company's shares of common
stock currently beneficially owned by AJW Partners, New Millennium Capital
Partners II and Bristol Investment Fund, Ltd. The number of shares of the
Company's common stock listed in the table below as being beneficially owned by
AJW Partners, New Millennium Capital Partners II and Bristol Investment Fund,
Ltd. includes the shares of the Company's common stock that are issuable to AJW
Partners, New Millennium Capital Partners and Bristol Investment Fund, Ltd.
subject to the 4.999% limitation, upon conversion of their debentures and
exercise of their warrants. However, the 4.999% limitation would not prevent AJW
Partners, New Millennium Capital Partners and Bristol Investment Fund, Ltd. from
acquiring and selling in excess of 4.999% of the Company's common stock through
a series of conversions and sales under the debentures and acquisitions and
sales under the warrants.

                                       37
<PAGE>

                              SELLING SHAREHOLDERS

The table below sets forth information concerning the resale of shares of Common
Stock by the Selling Stockholders. 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.

<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 Percentage
<S>                                               <C>              <C>          <C>        <C>            <C>           <C>
AJW Partners, LLC (1)(6)                          6,755,488        4.999%       21,200,000 (5)            0             0%
New Millennium Capital Partners, LLC (2)(6)       6,755,488        4.999%       21,200,000 (5)            0             0%
Bristol Investment Fund, Ltd. (3)(6)              6,755,488        4.999%       42,400,000 (5)            0             0%
Robert Martin (10)                                1,300,000        0.961%        1,300,000                0             0%
Waikiki Beach Activities, Ltd. (10)(7)              700,000        0.518%          700,000                0             0%
Michael Gurin (10)                                  666,666        0.493%          666,666                0             0%
Vann Warren (10)                                    333,333        0.247%          333,333                0             0%
Barry Colman (10)                                   333,333        0.247%          333,333                0             0%
Steve Adams (10)                                    500,000        0.370%          500,000                0             0%
Majel Carroll  (10)                                 333,333        0.247%          333,333                0             0%
Al Schibi (10)                                      333,333        0.247%          333,333                0             0%
Al Schili, Jr. (10)                                 333,333        0.247%          333,333                0             0%
Kenneth Ripley  (10)                                666,666        0.493%          666,666                0             0%
Patrick V. Bonsignore (10)                          666,666        0.493%          666,666                0             0%
Ed Boot (10)                                        500,000        0.370%          500,000                0             0%
Anthony Vallaro (10)                                500,000        0.370%          500,000                0             0%
Stanley Horn (10)                                   333,333        0.247%          333,333                0             0%
Baron Taylor (10)                                   500,000        0.370%          500,000                0             0%
Robert Gowell (9)                                 1,931,634        1.429%        1,931,634                0             0%
Rudy Hallenbeck (9)                               1,252,069        0.926%        1,252,069                0             0%
Anthony Vallaro (9)                                 246,471        0.182%          246,471                0             0%
About Face Communications (8)(9)                  1,150,000        0.851%        1,150,000                0             0%
Stuart Beck (9)                                     394,671        0.292%          394,671                0             0%
The NIR Group (9)                                   360,000        0.263%          360,000                0             0%
</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.

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 with
the exception of Robert Martin and Robert Gowell. Mr. Martin was a Director in
2002 for approximately one month before resigning and Mr. Gowell recently was
placed on the Board of Director by the present DDSI Board to fill a vacancy.

                                       38
<PAGE>

     None of the selling shareholders are broker-dealers or affiliates of
broker-dealers.

     (1)  In accordance with Rule 13d-3 under the Securities Exchange Act of
          1934, Mr. Corey S. Ribotsky may be deemed a control person of the
          shares owned by such entity. AJW Partners, LLC is a private investment
          fund that is owned by all its investors and managed by SMS Group, LLC
          of which Corey S. Ribotsky is the fund manager.

     (2)  In accordance with Rule 13d-3 under the Securities Exchange Act of
          1934, Mr. Glenn A. Arbeitman and Mr. Corey S. Ribotsky may be deemed
          control persons of the shares owned by such entity. New Millennium
          Capital Partners II, LLC is a private investment fund that is owned by
          all its investors and managed by First Street Manager II, LLC, of
          which Mr. Glenn A. Arbeitman and Mr. Corey S. Ribotsky are the fund
          managers.

     (3)  In accordance with Rule 13d-3 under the Securities Exchange Act of
          1934, Mr. Paul Kessler and Ms. Diana Kessler may be deemed the control
          person of the shares owned by such entity. Bristol Investment Fund,
          Ltd is a private investment fund that is owned by all its investors
          and managed by Bristol DLP. LLC. Bristol DLP. LLC, of which Mr. Paul
          Kessler and Ms. Diana Kessler are the fund managers, has investment
          control over the shares listed by Bristol Investment Fund, Ltd.

     (4)  Percentages are based on 136,637,244 shares of our common stock
          outstanding (includes the shares in this Offering) as of January 29,
          2002.

     (5)  Pursuant to the Registration Rights Agreement between us and the
          debenture holders, we are required to register such number of shares
          of common stock equal to the sum of (i) 200% of the number of shares
          of common stock issuable upon conversion in full of their debentures,
          assuming for such purposes that all interest is paid in shares of our
          common stock, that the Debentures are outstanding for one year and
          that such conversion occurred at a price as s804pecified in the
          debentures respective agreements and (ii) the number of shares of
          Common Stock issuable upon exercise in full of the warrants. As a
          result of the contractual agreement not to exceed 4.999% 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.

     (6)  Independent third party who invested in our December 31, 2001 bridge
          financing. In connection with our bridge financing of $500,000, we
          issued convertible debentures and warrants to purchase 1,500,000
          shares of our common stock. The selling shareholder is deemed an
          "underwriter" within the meaning of Section 2(11) of the Securities
          Act of 1933.

     (7)  The principal of this company is Robert P. Martin.

     (8)  Represents shares issued for services performed. The principal of this
          company is Scott Gallagher.

     (9)  Represents restricted shares issued for services performed with
          registration rights.

     (10) Represents private placement shares issued pursuant to Regulation D,
          Sec 506, the the Securities Act of 1933 (as "amended").


                                       39
<PAGE>

                              Plan of Distribution

The selling stockholders 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 any other lawful method

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    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.

                                       40
<PAGE>

Because the following selling shareholders are "underwriters" within the meaning
of Section 2(11) of the Securities Act, they will be subject to the prospectus
delivery requirements:

     o    AJW Partners, LLC
     o    New Millennium Capital Partners, LLC
     o    Bristol Investment Fund, Ltd.

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 then ended, appearing in this
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.

                                  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 not beneficially own shares of the company.

                           Other Available Information

We are subject to the reporting requirements of the Securities and Exchange
Commission (the "commission"). 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.

                                       41
<PAGE>

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.

                                       42


<PAGE>





                          Index to Financial Statments



                                    Contents

<TABLE>
<CAPTION>

<S>                                                                                                      <C>
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
</TABLE>





<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                 September 30
                                                              2000              1999                 2001
                                                              ---------------------------        -------------
                                                                                                 (Unaudited)
<S>                                                           <C>               <C>              <C>
Assets
Current assets:
   Cash                                                       $ 202,877         $ 177,223           $ 157,572
   Restricted cash                                               10,452           110,000                   -
   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             555,731
   Inventory                                                     22,596            48,693              47,987
   Prepaid expenses                                               8,698            13,874             335,554
   Debt discount and deferred financing costs                   228,500                 -             614,056
                                                             ----------------------------         -----------
Total current assets                                          1,000,415         1,207,385           1,711,900
   Note receivable - officer                                    165,525           153,650             174,431
   Software development costs, at cost                          413,604           413,604             333,181
   Furniture and equipment, at cost, net                        172,046           267,685              67,180
   Deposits and other assets                                     31,454             7,059              24,395
                                                             ----------------------------         -----------
Total assets                                                 $1,783,044       $ 2,049,383          $2,311,087
                                                             ============================         ===========
Liabilities and shareholders' equity
Current liabilities:
   Accounts payable                                          $  481,163       $   121,137          $  657,040
   Accrued expenses                                             189,209           164,814             169,303
   Deferred income                                              854,787         1,317,934           1,403,136
   Current portion of equipment loan                              7,147                 -               7,195
   Convertible debentures                                       200,000                 -             805,000
                                                             ----------------------------         -----------
Total current liabilities                                     1,732,306         1,603,885           3,041,674
Equipment loan                                                   28,626                 -              23,224
                                                             ----------------------------         -----------
Total liabilities                                             1,760,932         1,603,885           3,064,898

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, 50,000,000 and 150,000,000 at December
      31, 2000 and 1999 and at September 30, 2001
      respectively; issued and outstanding shares -
      20,011,612 and 14,380,127 at December 31, 2000
      and 1999, respectively, and 25,771,009 (unaudited)
      at September 30, 2001                                      20,011            14,380              25,771
   Additional paid-in capital                                14,544,579        12,957,544          15,615,677
   Unearned compensation                                              -           (14,000)                  -
   Accumulated deficit                                      (14,542,478)      (12,512,426)        (1,6445,259
                                                             ----------------------------         -----------
Total shareholders' equity (deficit)                             22,112           445,498            (753,811)
                                                             ----------------------------         -----------
Total liabilities and shareholders' equity (deficit)        $ 1,783,044       $ 2,049,383         $ 2,311,087
                                                             ============================         ===========
</TABLE>

See accompanying notes.
                                       F-2




<PAGE>


                        Digital Descriptor Systems, Inc.
                            Statements of Operations



<TABLE>
<CAPTION>


                                                       Year ended December 31                Nine months ended September 30
                                                       2000              1999                      2001           2000
                                                     ---------------------------               ---------------------------
                                                                                                       (Unaudited)
<S>                                                  <C>               <C>                       <C>          <C>
Revenues:
   Software                                          $ 2,060,499       $ 1,189,439               $ 591,066    $ 957,189
   Hardware                                              229,525           722,040                  68,325      451,621
   Maintenance                                           583,349           539,034                 396,674      524,249
   Consulting                                             91,249           236,956                  55,468      224,935
   Other                                                  61,836           159,714                  41,268       39,013
                                                     -----------------------------             -------------------------
                                                       3,026,458         2,847,183               1,152,801    2,197,007
                                                     -----------------------------             -------------------------
Costs and expenses:
   Cost of revenues                                    1,615,286           987,931                 434,510    1,192,714
   General and administrative                          1,843,336         1,593,846               1,320,601    1,421,279
   Sales and marketing                                   917,381           984,691                 362,605      656,883
   Research and development                              536,350           429,599                 284,818      363,433
   Depreciation                                          162,330            75,553                 189,055       75,953
   Other (income) expense, net                           (18,173)          (18,920)                463,993       (8,099)
                                                     -----------------------------             -------------------------
                                                       5,056,510         4,052,700               3,055,582    3,702,163
                                                     -----------------------------             -------------------------

Net loss                                             $(2,030,052)      $(1,205,517)            $(1,902,781) $(1,505,156)
                                                     =============================             =========================

Net loss per common share (basic and diluted)        $      (.11)      $      (.11)            $      (.09) $     (0.08)
                                                     =============================             =========================

Weighted average number of common shares
outstanding (basic and diluted)                       18,557,547        10,934,900              21,708,767   18,083,970
                                                     =============================             =========================


</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)     1,618,000   1,618     265,162             -              -       266,780
  Debt discount relating to the beneficial
     conversion feature on convertible
     securities (unaudited)                                     -       -     705,000             -              -       705,000
  Conversion of Debentures into common stock            4,141,397   4,142     150,936             -              -       155,078
  Net loss (unaudited)                                          -       -           -             -     (1,902,781)   (1,902,781)
                                                     ---------------------------------------------------------------------------
Balance at September 30, 2001 (unaudited)              25,771,009 $25,771 $15,665,677             -   $(16,445,259)   $ (753,811)
                                                     ===========================================================================

</TABLE>

See accompanying notes.

                                       F-4







<PAGE>




                        Digital Descriptor Systems, Inc.
                            Statements of Cash Flows
<TABLE>
<CAPTION>


                                                       Year ended December 31           Nine months ended September 30
                                                       2000              1999               2001             2000
                                                     ----------------------------       ------------------------------
                                                                                                           (Unaudited)
<S>                                                  <C>               <C>              <C>               <C>
Cash flows from operating activities:
Net loss                                             $(2,030,052)      $(1,205,517)     $(1,902,781)      $(1,505,156)
Adjustments to reconcile net loss to net cash
 used in operating activities:
  Depreciation                                           162,330            75,553          189,055            75,953
  Compensation expense in connection with
     issuance of common stock                            261,100                -           266,781           220,000
   Amortization of debt discount                              -                 -           440,444                 -
   Amortization of unearned compensation                  14,000            24,000                -            14,000
   Accrued Interest converted into Common Stock               -                 -             5,077                 -
   Changes in operating assets and liabilities:
         Accounts receivable                             330,303            32,588          (29,439)          398,918
         Inventory                                        26,097              (969)         (25,391)           19,038
         Prepaid expenses, deposits and other assets     (19,219)           14,524         (319,797)          (19,221)
         Accounts payable                                360,026          (143,538)         175,877            43,927
         Accrued expenses                                 24,395            71,700          (19,906)         (127,130)
         Deferred income                                (463,147)          265,117          548,349          (199,640)
                                                      ----------------------------          -------------------------
Net cash used in operating activities:                (1,334,167)         (866,542)        (671,731)       (1,088,313)

Cash flows from investing activities:
Purchase of furniture and equipment                      (30,325)         (164,091)          (3,766)          (24,796)
Increase in officer note receivable                      (11,875)          (11,875)          (8,906)           (8,906)
Increase in software development costs                        -           (413,604)               -                 -
Proceeds from sale of restricted cash                     99,548                 -           10,452                 -
Purchase of short-term investments,
   including restricted cash                                   -          (110,000)                -                -
                                                      ----------------------------       ----------------------------
Net cash provided by (used in) investing activities       57,348          (699,570)          (2,220)          (33,702)

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                 -          755,000                 -
Deferred financing costs                                 (61,000)                -         (121,000)                -
Repayment of equipment loan                                 (593)                -           (5,354)                -
                                                      ----------------------------       ----------------------------
Net cash provided by financing activities              1,302,473         1,664,716          628,646         1,164,066
                                                      ----------------------------       ----------------------------
Net increase (decrease) in cash                           25,654            98,604          (45,305)           42,051
Cash at beginning of period                              177,223            78,619          202,877           177,223
                                                      ----------------------------       ----------------------------
Cash at end of period                                  $ 202,877         $ 177,223        $ 157,572         $ 219,274
                                                      ============================       ============================
Supplemental disclosure of cash flow information:
   Cash paid during the period for interest              $ 1,775           $ 5,615        $     360           $ 1,748
                                                      ============================        ===========================
Acquisition of equipment with loan                      $ 36,366                 -                -                 -
                                                      ============================        ===========================
Debt discount in connection with convertible
   debentures and issuance of warrants                 $ 167,500                 -        $ 705,000                 -
                                                     ============================        ============================
Conversion of debentures and related accrued
   interest to Common Stock                                    -         $ 229,970        $ 155,078                 -
                                                      ============================       ============================
</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 nine
months ended September 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 $1,903,000 (unaudited) for the nine months ended
September 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 financial statements and disclosures included herein for the nine months
ended September 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 nine months
ended September 30, 2001 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 $80,423 was recorded during the nine month
period ended September 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.

See note 12 - "Events Subsequent to the Date of the Report of Independent
Auditors."


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:

<TABLE>
<CAPTION>

                                           December 31                          September30, 2001
                                      2000             1999                        (unaudited)
                                    -------------------------                     -------------
<S>                                 <C>              <C>                             <C>
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                        (488,496)
                                    -------------------------                       ---------
                                    $172,046         $267,685                       $  67,180
                                    =========================                       =========

</TABLE>

                                      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 into 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 0.9%. 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 September 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 September
         30, 2001 (Unaudited)       1,006,625          33,812     889,000    1,929,437
                                    ==================================================
</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                       September 30
                                        2000             1999               2001            2000
                                    ------------------------------------ -----------------------------
                                                                                (Unaudited)
<S>                                 <C>              <C>               <C>              <C>
Net loss:
         As reported                $(2,030,052)     $(1,205,517)      $(1,902,781)     $(1,505,156)
         Pro forma                   (2,103,563)     $(1,427,271)      $(1,902,781)     $(1,671,472)

Net loss per share:
         As reported                    $ (.11)           $ (.11)          $ (0.09)         $ (0.08)
         Pro forma                      $ (.12)           $ (.13)          $ (0.09)         $ (0.09)
</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 September 30, 2001, accrued interest, included in
the note receivable in the accompanying balance sheet was $40,525, $28,650 and
$49,431 (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. Events Subsequent to Date of the Report of Independent Auditors (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.

During September 2001, the Company issued $400,000 of convertible debentures to
two investors. These debentures mature on September 30, 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
note agreement. The debenture holders received warrants to purchase 800,000
common shares at an exercise price the lesser of: $0.036 per share or the
average of the lowest three trading prices during the 20 days preceding the
exercise date. Such warrants expire September 30, 2004. The debentures are
collateralized by substantially all of the Company's assets. The intrinsic value
of the beneficial conversion feature of $350,000 has been allocated to paid in
capital.

During September 2001, $35,000 of the convertible debentures issued in December
2000 were converted into 1,000,000 shares of Common Stock.

During September 2001, the holder of the $100,000 note issued in April 2001
converted the note into 1,428,571 shares of free trading Common Stock and
1,252,069 shares of restricted stock. The conversion price was valued at $.03895
per share in accordance with the agreement terms.

During September 2001, the $15,000 note issued in April 2001 was also converted
into 214,286 shares of free trading Common Stock and 246,471 shares of
restricted stock. The conversion price for this transaction was valued at $.034
per share in accordance with the agreement terms

During the quarter ended September 30, 2001, the Company granted 350,000 shares
of restricted Common Stock to certain parties in connection with raising capital
and for services performed. Such shares were valued at the fair market value
on the date the shares were granted.

During October 2001 through January 2002, the remaining $165,000 of the
convertible debentures issued in December 2000, as well as $160,000 of the
convertible debentures issued in March 2001 were converted into 10,551,280
shares of common stock. Additionally, accrued interest relating to these notes
was converted into an additional 2,512,494 shares of common stock.

During December 2001 through January 2002, the Company granted 2,920,831 shares
of Common Stock to certain parties for consulting services performed and to be
performed. Such shares were valued at the fair market value on the date granted.

During October through December 2001, DDSI issued common stock via Subscription
Agreements to various individuals. The Subscription Agreements provided for the
purchase of up to 13,333,333 shares of common stock of DDSI at $0.03 per share,
in $10,000.00 (u.s.) blocks, equaling 333,333 shares per block, for an aggregate
total of $400,000. Through January 2002, the company has raised $240,000 through
these agreements and has issued 7,999,996 shares of common stock.

During December 2001, the Company revised its anticipated certification date for
its Compu-Scan product after its submission was not accepted by the FBI.
Additionally, there are no assurances that the FBI will ever certify the
technology. As such, and since the Company is unable to forecast any revenues
from the product, the Company has written off the remaining investment in
software development of $298,714 in the fourth quarter of 2001.

On December 31, 2001, DDSI issued three convertible debentures for an aggregate
amount of $500,000, with simple interest accruing at the annual rate of 12%.
These debentures are due December 31, 2002. Interest payable on the Debentures
shall be paid quarterly commencing March 30, 2002. The holders shall have the
right to convert the principal amount and interest due under the debentures into
shares of DDSI's common stock. The conversion price in effect on any Conversion
Date shall be the lesser of (1) $.043 and (2) 50% of the average of the lowest
three inter-day sales prices of the Common Stock during the twenty Trading Days
immediately preceding the applicable Conversion Date. The shares that will be
issued upon conversion of these debentures are being registered for resale
purposes by this registration statement. DDSI also issued common stock purchase
warrants for the right to purchase 1,500,000 shares of Common Stock of DDSI at
any exercise price per share equal to the lesser of (i) $.02 and (ii) the
average of the lowest three inter-day sales prices during the twenty (20)
Trading Days immediately prior to exercise.

                                      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                        $     490.12
Printing and Engraving Expenses             $   5,000.00
Legal Fees and Expenses                     $  10,000.00
Accounting Fees and Expenses                $  15,000.00
Transfer Agent Fees                         $   5,000.00
Blue Sky Fees                               $   1,000.00
Miscellaneous                               $   5,000.00
                                            ------------
Total                                       $  41,490.12


                                      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 December 2000, the Company issued $200,000 of convertible debentures to
two investors. These 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.

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, 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 at 10% per annum. 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 an 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.

During September 2001, the Company issued $400,000 of convertible debentures to
two investors. These debentures mature on September 30, 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
note agreement. The debenture holders received warrants to purchase 800,000
common shares at an exercise price the lesser of: $0.036 per share or the
average of the lowest three trading prices during the 20 days preceding the
exercise date. Such warrants expire September 30, 2004. The debentures are
collateralized by substantially all of the Company's assets.

During September 2001, $35,000 of the convertible debentures issued in December
2000 were converted into 1,000,000 shares of Common Stock.

During September 2001, the holder of the $100,000 note issued in April 2001
converted the note into 1,428,571 shares of free trading Common Stock and
1,252,069 shares of restricted stock. The conversion price was valued at $.03895
per share in accordance with the agreement terms.

During September 2001, the $15,000 note issued in April 2001 was also converted
into 214,286 shares of free trading Common Stock and 246,471 shares of
restricted stock. The conversion price for this transaction was valued at $.034
per share in accordance with the agreement terms

                                      II-2
<PAGE>

During the quarter ended September 30, 2001, the Company granted 350,000 shares
of restricted common stock to certain parties in connection with raising capital
and for services performed. Such shares were valued at the fair market value of
the date the shares were granted.

During October 2001 through January 2002, the remaining $165,000 of the
convertible debentures issued in December 2000, as well as $160,000 of the
convertible debentures issued in March 2001 were converted into 10,551,280
shares of common stock. Additionally, accrued interest relating to these notes
was converted into an additional 2,512,494 shares of common stock.

During December 2001 through January 2002, the Company granted 2,920,831 shares
of Common Stock to certain parties for consulting services performed and to be
performed. Such shares were valued at the fair market value on the date granted.

During October through December 2001, DDSI issued common stock via Subscription
Agreements to various individuals. The Subscription Agreements provided for the
purchase of up to 13,333,333 shares of common stock of DDSI at $0.03 per share,
in $10,000.00 (u.s.) blocks, equaling 333,333 shares per block, for an aggregate
total of $400,000. Through January 2002, the company has raised $240,000 through
these agreements and has issued 7,999,996 shares of common stock.

On December 31, 2001, DDSI issued three convertible debentures for an aggregate
amount of $500,000, with simple interest accruing at the annual rate of 12%.
These debentures are due December 31, 2002. Interest payable on the Debentures
shall be paid quarterly commencing March 30, 2002. The holders shall have the
right to convert the principal amount and interest due under the debentures into
shares of DDSI's common stock. The conversion price in effect on any Conversion
Date shall be the lesser of (1) $.043 and (2) 50% of the average of the lowest
three inter-day sales prices of the Common Stock during the twenty Trading Days
immediately preceding the applicable Conversion Date. The shares that will be
issued upon conversion of these debentures are being registered for resale
purposes by this registration statement. DDSI also issued common stock purchase
warrants for the right to purchase 1,500,000 shares of Common Stock of DDSI at
an exercise price per share equal to the lesser of (i) $.02 and (ii) the average
of the lowest three inter-day sales prices during the twenty (20) Trading Days
immediately prior to exercise.

It is anticipated that the $ 500,000 of convertible debentures will be converted
into shares in accordance with the terms of these debentures.

                                      II-3
<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.
2.3.1             Amended Articles of Incorporation dated October 9, 2001
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
4.2               Executed Stock Purchase Warrant Agreement with AJW Partners LLC
4.2.1             Executed Stock Purchase Warrant Agreement with New Millennium Capital Partners II LLC
4.2.2             Executed Stock Purchase Warrant Agreement with Bristol Investment Fund, Ltd.
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
5.1.3             Legal Opinion to Investors
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.
10.2.1            Software License and Royalty Agreement between Company and AuthenTec
10.3***           Form of Secured Convertible Debenture Purchase Agreement (December 28, 2000)
10.3.1****        Executed Secured Convertible Debenture Purchase Agreement
10.3.2            Executed Securities 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
10.5.3            Executed Secured Convertible Debenture with AJW Partners LLC
10.5.4            Executed Secured Convertible Debenture with New Millennium Capital Partners II LLC
10.5.5            Executed Secured Convertible Debenture with Bristol Investment Fund, Ltd.
10.6***           Form of Registration Rights Agreement
10.6.1****        Executed Registration Rights Agreement
10.6.2            Executed Registration Rights Agreement
10.7***           Form of Security Agreement
10.7.1            Executed 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
10.9.2            Executed Escrow Agreement
10.9.3            Transfer Agent Instructions
10.10****         Contract with DBA Systems, a Division of Titan Industries
10.11****         Executed Second Amendment to Secured Convertible Debenture Purchase Agreement
10.12             Form of Private Placement Subscription 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 independent auditors, 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
****  Previously filed on Form SB-2, Amendment 2, August 29, 2001,
      File No. 333-59888


                                      II-4


<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-5

<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.




Registrant:       Digital Descriptor Systems, Inc.
<TABLE>
<CAPTION>

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

<S>                                              <C>                                         <C>
By:      /s/Michael J. Pellegrino           President, Chief Operating Officer         February 13, 2002
         ---------------------------        Director
         Michael J. Pellegrino
</TABLE>


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:
<TABLE>
<CAPTION>


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

<S>                                                <C>                                        <C>
By:      /s/Robert Gowell                   Chief Executive Officer                    February 13, 2002
         ------------------                 Director - Co-chairman
         Robert Gowell


By:      /s/ Garrett U. Cohn                Director - Co-chairman                     February 13, 2002
         -------------------
         Garrett U. Cohn


By:      /s/ Michael J. Pellegrino          President, Chief Financial Officer         February 13, 2002
         -------------------------          Director
         Michael J. Pellegrino


By:      /s/ Anthony Shupin                 Director                                   February 13, 2002
         ------------------
         Anthony Shupin


By:      /s/ Vincent Moreno                 Director                                   February 13, 2002
         ------------------
         Vincent Moreno

</TABLE>



                                      II-6

