1

   AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON DECEMBER 12, 2000

                                                              FILE NO. 333-48020

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

                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                   ----------

                                 POST-EFFECTIVE
                                 AMENDMENT NO. 1
                                       TO
                                    FORM S-1

             REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933

                                   ----------

                           CORNICHE GROUP INCORPORATED
             (Exact name of registrant as specified in its charter)

            DELAWARE                                 6770                             22-2343568
                                                                          
(State or other jurisdiction of          (Primary standard industrial             (I.R.S. employer
 incorporation or organization)           classification code number)            identification no.)

                           610 SOUTH INDUSTRIAL BLVD.
                                    SUITE 220
                               EULESS, TEXAS 76040
                                 (817) 283-4250
                   (Address, including zip code, and telephone
                  number, including area code, of registrant's
                          principal executive offices)

                                   ----------

                                ROBERT F. BENOIT
                             CHIEF EXECUTIVE OFFICER
                           610 SOUTH INDUSTRIAL BLVD.
                                    SUITE 220
                               EULESS, TEXAS 76040
                                 (817) 283-4250
            (Name, address, including zip code, and telephone number,
                   including area code, of agent for service)

                                   ----------

                          Copies of communications to:

                                  DAVID H. ODEN
                              HAYNES AND BOONE, LLP
                         1600 NORTH COLLINS, SUITE 2000
                             RICHARDSON, TEXAS 75080
                                 (972) 680-7550

                                   ----------

        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. [ ]

                         CALCULATION OF REGISTRATION FEE

==================================================================================================================================
                                                                 PROPOSED MAXIMUM
                                           AMOUNT TO BE         OFFERING PRICE PER        PROPOSED MAXIMUM            AMOUNT OF
TITLE OF SECURITIES TO BE REGISTERED      REGISTERED (1)              SHARE           AGGREGATE OFFERING PRICE    REGISTRATION FEE
- ----------------------------------------------------------------------------------------------------------------------------------
                                                                                                     
Common Stock, par value $0.001              19,844,585                $1.22                 $24,210,394                $6,392
==================================================================================================================================

(1)  Pursuant to Rule 416(a) under the Securities Act, this Registration
     Statement also covers such additional shares of our common stock as may
     become issuable pursuant to antidilution adjustments.

(2)  Based upon the average of the high and low prices of the Registrant's
     common stock on the NASDAQ Over-the-Counter Bulletin Board on October 12,
     2000, pursuant to Rule 457(c) under the Securities Act of 1933.

      THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE 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 COMMISSION, ACTING PURSUANT TO SAID
SECTION 8(a), MAY DETERMINE.

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PROSPECTUS

                                19,844,585 SHARES

                           CORNICHE GROUP INCORPORATED
                                  COMMON STOCK
                           $0.001 PAR VALUE PER SHARE

                                   ----------

      This prospectus relates to the sale of 19,844,585 shares of Corniche Group
Incorporated common stock, $0.001 par value, 15,844,585 of which are being sold
by certain selling stockholders and 4,000,000 of which are being sold by
Corniche.

      The common stock is quoted on the National Association of Securities
Dealers' Over-the-Counter Bulletin Board under the symbol CNGI. On November 8,
2000, the last reported sales price for our common stock as reported on the
Over-the-Counter Bulletin Board was $1.03.

See "Risk Factors" beginning on page 2 to read about factors you should consider
before buying shares of our common stock.

NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY OTHER REGULATORY BODY HAS
APPROVED OR DISAPPROVED OF THESE SECURITIES OR PASSED UPON THE ACCURACY OR
ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL
OFFENSE.

                The date of this prospectus is November 9, 2000.

   3

                                TABLE OF CONTENTS

                                                                                                               PAGE

Prospectus Summary................................................................................................1
Risk Factors......................................................................................................2
Risks Related to Our Reinsurance Business.........................................................................4
This Prospectus Contains Forward-looking Statements...............................................................6
Use of Proceeds...................................................................................................7
Plan of Distribution .............................................................................................7
Dividend Policy...................................................................................................7
Capitalization....................................................................................................8
Selected Consolidated Financial Data..............................................................................9
Management's Discussion and Analysis of Financial Condition and Results of Operations............................10
Business.........................................................................................................13
Management.......................................................................................................15
Related Party Transactions.......................................................................................20
Principal and Selling Stockholders...............................................................................21
Description of Capital Stock.....................................................................................23
Legal Matters....................................................................................................24
Experts..........................................................................................................24
Where You Can Find Additional Information........................................................................25
Index to Consolidated Financial Statements......................................................................F-1

      You should rely only on the information contained in this prospectus. We
have not authorized anyone to provide you with different information. If anyone
provides you with different or inconsistent information, you should not rely on
it. We and the Selling Stockholders are not making an offer to sell these
securities in any jurisdiction where the offer or sale is not permitted. You
should assume that the information appearing in this prospectus is accurate only
as of the date on the front cover of this prospectus. Our business, financial
condition, results of operations and prospects may have changed since that date.

      As used in this prospectus, unless the context otherwise requires, "we,"
"us," "our" or "Corniche" collectively refers to Corniche Group Incorporated.

   4

                               PROSPECTUS SUMMARY

      This summary highlights information that we believe is especially
important concerning our business and this offering of common stock. It does not
contain all of the information that may be important to your investment
decision. You should read the entire prospectus, including "Risk Factors" and
our financial statements and related notes, before deciding to invest in our
common stock.

                                    CORNICHE

      We are a development stage company that is engaged in two businesses: the
sale to consumers of warranty service contracts on automobiles and consumer
products, and the property/casualty reinsurance business. We have developed a
web site on the Internet, WarrantySuperstore.com, to market warranty service
contracts directly to consumers. We intend to market service contracts solely
over the Internet.

      With regard to the reinsurance business, our wholly owned subsidiary is
licensed as an insurance company in the Cayman Islands. We accept reinsurance
from domestic U.S. insurance companies. Once this subsidiary is sufficiently
capitalized, we intend to request the insurance carriers providing contractual
liability coverage on our service contracts to share (by way of reinsurance) a
portion of the risk with our insurance subsidiary.

      Our principal executive office is located at 610 South Industrial
Boulevard, Suite 220, Euless, Texas 76040. Our telephone number is (817)
283-4250.

                                  THE OFFERING

                                              
Common stock offered by selling stockholders:    15,844,585 shares

Common stock offered by the Company...........   4,000,000 shares

Common stock outstanding:
                  Prior to this offering:        22,472,971(1)
                  After this offering:           26,472,971(1)(2)

Use of proceeds:..............................   Assuming that all 4,000,000 shares offered by the
                                                 Company in this offering are sold, we estimate that
                                                 we will receive net proceeds of approximately
                                                 $9,800,000 from the sale of 4,000,000 shares of
                                                 common stock. We intend to use the net proceeds we
                                                 receive:

                                                           o        to fund marketing and sales
                                                                    efforts; and

                                                           o        for working capital and other
                                                                    general corporate purposes.

Nasdaq Over-the-Counter Bulletin Board
symbol:                                          CNGI

- ----------

         (1) Does not include 175,000 shares of common stock reserved for
issuance under our stock option plans and 79,000 shares issuable upon exercise
of currently outstanding warrants, but assumes full conversion of all the
outstanding Series B convertible redeemable preferred stock.

         (2) Of the shares being offered for sale in this offering, 14,222,971
shares of common stock are currently outstanding. 8,250,000 shares are issuable
upon the conversion of currently outstanding shares of Series B convertible
redeemable preferred stock. The remaining 4,000,000 shares are being offered by
Corniche in this offering.

                                        1
   5

                                  RISK FACTORS

         Investing in our common stock involves a substantial risk. You should
consider carefully the risks and uncertainties described below before deciding
to buy our common stock. If any of the following risks or uncertainties occurs,
our business could be adversely affected. In this event, the trading price of
our common stock could decline, and you could lose all or part of your
investment.

             RISKS RELATED TO OUR WARRANTY SERVICE CONTRACT BUSINESS

IF WE CANNOT MEET OUR FUTURE CAPITAL REQUIREMENTS, OUR BUSINESS WILL SUFFER.

         Since the time of the reorganization of the Company in May 1998, we
have experienced operating losses. To date, we have funded our operations from
the sale of our stock. There can be no assurance that we will be able to achieve
profitability.

         We expect that we will need to raise additional funds in the future
through debt or equity financings to:

         o        fund operating losses;

         o        expand our business operations, including our warranty service
                  contract business;

         o        take advantage of opportunities, including acquisitions of
                  complementary businesses or technologies;

         o        develop new products; or

         o        respond to economic and competitive pressures.

         Future additional financing may not be available on terms favorable to
us, if at all. If adequate funds are not available or are not available on
acceptable terms, our operating results and financial condition may suffer, and
our stock price may decline.

OUR BUSINESS AND PROSPECTS DEPEND ON DEMAND FOR AND MARKET ACCEPTANCE OF THE
INTERNET AS A MEDIUM OF COMMERCE AND THE DEVELOPMENT OF THE INTERNET'S
INFRASTRUCTURE.

         Use of the Internet for retrieving, sharing and transferring
information among businesses, consumers, suppliers and partners has increased
substantially in recent years, and our success will depend in large part on
continued growth in the use of the Internet. Critical issues concerning the use
of the Internet and e-commerce, including security, reliability, cost, ease of
access, quality of service, regulatory initiatives and necessary increases in
bandwidth availability, remain unresolved and are likely to affect the
development of the market for our services. The adoption of the Internet for
information retrieval and exchange, commerce and communications generally will
require the continued increase in the acceptance of the Internet as a medium for
conducting business and exchanging information. Demand for, and market
acceptance of, the Internet are subject to a high level of uncertainty and are
dependent on a number of factors, including:

         o        the growth in consumer access to, and acceptance of, new
                  interactive technologies;

         o        concerns regarding the security of e-commerce transactions;

         o        the development of technologies that facilitate interactive
                  communication; and

         o        increases in user bandwidth and connectivity.

         If the Internet develops more slowly than expected as a commercial or
business medium, our business and prospects will not grow.

         THERE IS NO ASSURANCE THAT THE PUBLIC WILL ACCEPT THE INTERNET AS A
MEDIUM OF COMMERCE FOR THE PURCHASE OF WARRANTY SERVICE CONTRACTS.

         We market warranty service contracts solely over the Internet. To date,
our sales of warranty service contracts has been minimal. There is no assurance
that consumers in significant numbers will accept the Internet as a medium for
the sale of warranty service contracts.

WE DEPEND ON OUR KEY PERSONNEL TO MANAGE OUR BUSINESS EFFECTIVELY IN A RAPIDLY
CHANGING MARKET, AND IF WE ARE UNABLE TO RETAIN OUR KEY EMPLOYEES, OUR ABILITY
TO COMPETE COULD BE HARMED.

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   6

         Our future operating results will depend in significant part upon the
continued services of our executive officers and support personnel who have
industry experience and relationships that we will rely on in implementing our
business plan. We face competition for qualified personnel. The loss of the
services of any of our key employees could negatively impact our ability to sell
our service. This could have a material adverse effect on our future results of
operations and financial condition.

THE MARKET IN WHICH WE OPERATE IS HIGHLY COMPETITIVE AND WE MAY BE UNABLE TO
COMPETE SUCCESSFULLY AGAINST NEW ENTRANTS AND ESTABLISHED COMPANIES WITH GREATER
RESOURCES.

         The warranty service contract market is relatively new, intensely
competitive, highly fragmented and rapidly changing. We have experienced and
expect to experience increased competition. Many of our current competitors, as
well as a number of our potential competitors, have longer operating histories,
greater name recognition and substantially greater financial, technical and
marketing resources than we do. Some of our current or potential competitors
have the financial resources to withstand substantial price competition.
Moreover, many of our competitors have more extensive customer bases, broader
customer relationships and broader industry alliances that they could use to
their advantage in competitive situations. Our competitors may be able to
respond more quickly than we can to changes in the warranty service contract
market. Some of our current or potential competitors may enter into strategic
relationships or combine their service offerings with other business service or
consumer products providers in a manner that may make Internet sales for us more
difficult.

         As competition in the warranty service contract market continues to
intensify, new solutions may come to market. We are aware of other companies
that are focusing or may in the future focus significant resources on developing
services that will compete directly with our WarrantySuperStore.com web site.
Increased competition could result in:

         o        price and revenue reductions and lower profit margins;

         o        increased cost of service from telecommunications providers;
                  and

         o        loss of customers.

         Any one of the above could materially and adversely affect our
business, financial condition and results of operations.

                RISKS RELATED TO LEGAL AND REGULATORY UNCERTAINTY

THE IMPOSITION OF A SALES TAX FOR INTERNET COMMERCE TRANSACTIONS MAY DISCOURAGE
ONLINE SHOPPING AND RESULT IN DECREASED INTERNET COMMERCE WEB SITE TRAFFIC,
WHICH IN TURN COULD DECREASE THE DEMAND FOR OUR SERVICE.

         In 1998, the U.S. federal government enacted legislation prohibiting
states or other local authorities from imposing new taxes on Internet commerce
for a three-year period, ending on October 1, 2001. This period has been
extended for an additional year. A number of trade groups and government
entities have publicly stated their objections to this tax moratorium and have
argued for its repeal. There can be no assurance that future laws will not
impose taxes or other regulations on Internet commerce, or that the moratorium
will not be repealed, or that it will be renewed when it expires. The occurrence
of any of these events could substantially impair the growth of Internet
commerce, which, in turn, would decrease the demand for our warranty service
contracts.

OUR OPERATING RESULTS COULD BE IMPAIRED IF WE BECOME SUBJECT TO BURDENSOME
GOVERNMENT REGULATIONS AND INCREASED LEGAL REQUIREMENTS CONCERNING THE INTERNET.

         Laws and regulations relating to the Internet remain largely unsettled,
even in areas where there has been some legislative action. However, due to the
increasing popularity and use of the Internet, additional laws and regulations
may be adopted with respect to the Internet, relating to:

         o        user privacy;

         o        content;

         o        copyrights;

         o        communications services;

         o        characteristics and quality of products and services; and

         o        online advertising and marketing.

                                       3
   7

         The adoption of additional laws or regulations, both domestically and
abroad, may decrease the popularity or impede the expansion of the Internet and
could seriously harm our business. A decline in the popularity or growth of the
Internet could decrease demand for our service. Moreover, the applicability of
existing laws to the Internet is uncertain with regard to many important issues,
including property ownership, intellectual property, export of encryption
technology, libel and personal privacy. The application of laws and regulations
from jurisdictions whose laws do not currently apply to our business, or the
application of existing laws and regulations to the Internet and other online
services, could also harm our business. It may take years to determine whether
and how existing and future laws and regulations apply to us.

                    RISKS RELATED TO OUR REINSURANCE BUSINESS

         In connection with our reinsurance business, we are accepting risks
from direct insurance underwriters. As a result, our reinsurance business is
subject to the same risks and economic factors that could affect a direct
insurer.

THE NATURE OF THE INSURANCE BUSINESS.

         The insurance business is cyclical in nature. It has historically been
characterized by periods of relatively high levels of price competition, less
restrictive underwriting standards and generally low premium rates, followed by
periods of capital shortages resulting in a lack of insurance availability,
relatively low levels of competition, more selective underwriting of risks and
relatively high premium rates. The unpredictability and competitive nature of
the insurance industry have contributed to significant quarter-to-quarter and
year-to-year fluctuations in underwriting results and net income. We cannot
predict if, or when, the market conditions for the insurance industry, including
the product lines that we insure, will change. Our profitability is affected by
many factors, including not only rate competition, but also severity and
frequency of claims, fluctuations in interest rates that affect investment
returns, regulation, court decisions, natural disasters, the legislative
climate, and general economic conditions and trends, such as inflationary
pressures that may affect the adequacy of reserves, all of which are
substantially beyond our control.

         One of the distinguishing features of the insurance industry is that
prices are set before costs are known because rates for individual policies are
determined before losses for the policies are reported. Changes in statutory and
case law can dramatically affect the liability associated with known risks after
the insurance policy is in place. The number of competitors and the similarity
of products offered, as well as regulatory constraints, limit the ability of
insurance companies such as us to increase prices in response to declines in
profitability. In addition, during periods of high interest rates, some
insurance companies may be willing to absorb underwriting losses to generate
funds for investment, thereby prolonging low premium rates which are not
adequate to cover underwriting losses and expenses. As a result of these
factors, we may experience significantly lower premiums in the future.

         Most insurance underwriting decisions are based on assumptions about
events that will occur over a period of future years and are generally based on
actuarial projections and historical data reflecting the collective experience
of large groups of insureds. The actuarial projections may not accurately
predict the aggregate obligations of any given insurer.

THE COMPETITION IN THE INDUSTRY IN WHICH WE COMPETE.

         The insurance industry is highly competitive. Many of our reinsurance
competitors have more established national and international reputations and
substantially greater financial resources and market share than Corniche.

THE ADEQUACY OF OUR LOSS RESERVES.

         We are required to maintain adequate reserves to cover our estimated
ultimate liability for losses as of the end of each accounting period. These
reserves are estimates of what we expect our ultimate settlement and
administration of claims will cost, and are based on facts and circumstances
then known, predictions of future events, estimates of future trends in claims
severity and other variable, subjective factors. No method is available to
estimate precisely the ultimate liability. In recent years, a number of courts
have issued decisions expanding civil liability. These decisions have resulted
in higher damage awards to injured parties. In many cases, these decisions have
also resulted in liability and increased losses to insurance companies. In
addition, we rely on policy language, developed by us and by others, to exclude
or limit coverage.

                                       4
   8

Any court ruling that this language is invalid or unenforceable could materially
adversely affect our financial position. This possibility of expansion of
insurers' liability either through new concepts of liability or a refusal to
accept restrictive policy language has added to the inherent uncertainty of
reserving for losses. Although management believes that adequate provision has
been made for loss reserves, the establishment of appropriate reserves is an
inherently uncertain process, and there can be no assurance that ultimate losses
will not exceed our loss reserves and have a material adverse effect on our
results of operations and financial condition. If our reserves become
inadequate, we will be required to increase reserves with a corresponding
increase in losses incurred and reduction in our net income and stockholders'
equity in the period in which the deficiency is identified.

INSURANCE RATINGS.

         We compete with other reinsurance companies on the basis of a number of
factors, including the rating assigned by A.M. Best. A.M. Best's letter ratings
range from A++ (Superior) to C- (Weak) with A++ being highest. A.M. Best ratings
are based upon factors relevant to policyholders, agents, insurance brokers and
intermediaries and are not directed to the protection of investors.

         Our reinsurance subsidiary is currently rated A+ by A.M. Best. There
can be no assurance that the rating will not be changed in subsequent periodic
reviews by A.M. Best. Any rating downgrade below B+ could have a material
adverse effect on our results of operations and our ability to effectively
compete in the marketplace.

           RISKS RELATING TO THE SECURITIES MARKETS AND THIS OFFERING

OUR STOCK PRICE MAY BE VOLATILE, WHICH COULD RESULT IN LITIGATION AGAINST
CORNICHE AND SUBSTANTIAL LOSSES FOR INVESTORS PURCHASING SHARES IN THIS
OFFERING.

         Our stock price may fluctuate in a manner unrelated or disproportionate
to our performance. The following factors could cause the market price of our
common stock in the public market to fluctuate significantly from the price paid
by investors in this offering:

         -        the addition or departure of key Corniche personnel;

         -        variations in our quarterly operating results;

         -        announcements by us or our competitors of new services or
                  enhancements, acquisitions, distribution partnerships, joint
                  ventures or capital commitments;

         -        sales of our common stock or other securities in the future;

         -        changes in market valuations of similar, publicly traded
                  companies; and

         -        fluctuations in stock market prices and volumes.

VOLATILITY IN THE MARKET PRICE OF OUR COMMON STOCK MAY PREVENT INVESTORS FROM
BEING ABLE TO SELL THEIR COMMON STOCK AT OR ABOVE OUR CURRENT PRICE.

         In the past, class action litigation has often been brought against
companies following periods of volatility in the market price of those
companies' common stock. We may become involved in this type of litigation in
the future. Litigation is often expensive and diverts management's attention and
resources, which could materially adversely affect our business and results of
operations.

INSIDERS WILL CONTINUE TO HAVE SUBSTANTIAL CONTROL OVER CORNICHE AFTER THIS
OFFERING AND COULD LIMIT YOUR ABILITY TO INFLUENCE THE OUTCOME OF KEY
TRANSACTIONS, INCLUDING CHANGES OF CONTROL.

         The holders of our Series B preferred stock and our executive officers,
directors and entities affiliated with them beneficially owned approximately 40%
of our outstanding voting stock prior to this offering. Even after this
offering, these stockholders, if acting together, could be able to influence
significantly all matters requiring the approval of our stockholders, including
the election of directors and the approval of mergers or other business
combination transactions.

THERE MAY BE SALES OF A SUBSTANTIAL AMOUNT OF OUR COMMON STOCK AFTER THIS
OFFERING THAT COULD CAUSE OUR STOCK PRICE TO FALL.

                                       5
   9

         Our current stockholders hold a substantial number of shares, which
they are able to sell in the public market at any time. Sales of a substantial
number of shares of our common stock within a short period of time after this
offering could cause our stock price to fall. In addition, the sale of these
shares could impair our ability to raise capital through the sale of additional
stock.

               THIS PROSPECTUS CONTAINS FORWARD-LOOKING STATEMENTS

         This prospectus contains statements about future events and
expectations that are "forward-looking statements." Any statement in this
prospectus that is not a statement of historical fact may be deemed to be a
forward-looking statement. These forward-looking statements address, among other
things:

         -        the development and management of our business;

         -        our anticipated revenue, expense levels, liquidity and capital
                  resources and operating losses;

         -        the success of our marketing efforts;

         -        our ability to attract customers;

         -        the extent of acceptance of our services;

         -        the market opportunity and trends in the market for our
                  services;

         -        our ability to compete;

         -        our future capital expenditures and needs; and

         -        other statements, including statements containing words such
                  as "may," "might," "could," "would," "anticipate," "believe,"
                  "plan," "estimate," "project," "expect," "seek," "intend" and
                  other similar words that signify forward-looking statements.

         These statements may be found in the sections of the prospectus
entitled "Prospectus Summary," "Risk Factors," "Management's Discussion and
Analysis of Financial Condition and Results of Operations" and "Business" and in
this prospectus generally.

         We have based these forward-looking statements on our current
expectations and projections about future events. However, our actual results
could differ materially from those anticipated in these forward-looking
statements as a result of risks facing us, including risks stated in "Risk
Factors," or faulty assumptions on our part. For example, assumptions that could
cause actual results to vary materially from future results include, but are not
limited to:

         -        our ability to generate customer demand for our services;

         -        the development of our target market and market opportunities;

         -        changes or advances in technology;

         -        trends in regulatory, legislative and judicial developments;
                  and

         -        the extent of competition.

         These forward-looking statements are made as of the date of this
prospectus. We assume no obligation to update them or to explain the reasons why
actual results may differ. In light of these risks, uncertainties and
assumptions, the forward-looking events discussed in this prospectus might not
occur.

                                       6
   10

                                 USE OF PROCEEDS

         Corniche will not receive any of the proceeds from the common stock
offered by the selling stockholders. Assuming that all 4,000,000 shares offered
by Corniche in this offering are sold at an assumed offering price of $2.50 per
share, we estimate that we will receive net proceeds of approximately $9,800,000
from the sale. We intend to use the net proceeds we receive:

         -        to fund marketing and sales efforts; and

         -        for working capital and other general corporate purposes.

         We will retain broad discretion in the allocation of the net proceeds
of this offering. In addition, we may use a portion of the net proceeds to
acquire or invest in businesses that are complementary to our business. We
currently do not have any commitments or agreements for any acquisitions or
investments of this kind.

                              PLAN OF DISTRIBUTION

         The common stock offered hereby may be sold directly by Corniche and
each selling stockholder or indirectly through agents, dealers or underwriters
from time to time in one or more transactions on the Nasdaq Over-the-Counter
Bulletin Board or any exchanges on which the common stock is then listed, or in
privately negotiated transactions at prices related to market prices, at
negotiated prices or fixed prices. The selling stockholders will bear all
discounts and commissions paid to broker-dealers in connection with the sale of
their common stock. Other offering expenses will be borne by Corniche.

                                 DIVIDEND POLICY

         We have never declared or paid any cash dividends on our common stock.
We do not expect to pay cash dividends on our common stock in the foreseeable
future. We currently intend to retain our future earnings, if any, to fund the
development and growth of our business. Future dividends, if any, will be
determined by our board of directors and will depend upon our results of
operations, financial condition, and capital expenditure plans, as well as other
factors that our board of directors considers relevant.

                                       7
   11

                                 CAPITALIZATION

The following table sets forth as of June 30, 2000, (a) the "actual"
capitalization of the Company and (b) the "as adjusted" capitalization of the
Company after giving effect to the issuance of 4,000,000 shares of common stock
being offered by Corniche at an assumed offering price of $2.50 per share.

                                                               June 30, 2000
                                                       ------------------------------

                                                          Actual         As Adjusted
                                                       ------------      ------------

Total current liabilities                              $    499,334      $    499,334
Deferred revenues                                      $    587,766      $    587,766
Long-term debt                                         $     64,116      $     64,116
Series A $0.07 convertible preferred stock,
     stated value - $1.00 per share
     authorized - 1,000,000 shares
     outstanding - 694,974 shares                                        $    694,974
Series B convertible redeemable preferred              $    694,974
     stock, $.01 par value, authorized, issued                           $      8,250
     and outstanding - 825,000 shares                  $      8,250
Common stock $.001 par value,
     authorized - 30,000,000 shares
     Issued: actual - 14,222,971 shares                      14,223                --
             as adjusted - 18,222,971 shares                     --            18,223(1)
Additional paid-in capital                                8,806,734        18,602,734(1)
Accumulated deficit                                      (4,911,517)       (4,911,517)
                                                          3,917,690        13,691,217
                                                       ------------      ------------

                                                       $  5,763,880      $ 15,563,876
                                                       ============      ============

 (1)      Reflects the receipt of $9,800,000 in net proceeds from the issuance
          of 4,000,000 shares of common stock at an assumed offering price of
          $2.50 per share, after deducting estimated offering expenses of
          $200,000.

                                       8
   12

                      SELECTED CONSOLIDATED FINANCIAL DATA

The following table sets forth summary financial data of the Company (i) for
each of the six month periods ended June 30, 2000, and 1999, (ii) for the year
ended December 31, 1999, (iii) for the period from April 1, 1998, through
December 31, 1998, and (iv) for the years ended March 31, 1998, 1997, and 1996.
The historical financial data for the year ended December 31, 1999, and for the
nine months ended December 31, 1998, are derived from the audited financial
statements of Corniche, which were audited by Weinick Sanders Leventhal & Co.,
LLP, independent certified public accountants, are included elsewhere in this
prospectus. The historical financial data for the years ended March 31, 1998,
1997, and 1996 are derived from the audited financial statements of Corniche,
which were audited by Simontacchi & Company, LLP, independent certified public
accountants. The audited financial statements for Corniche for the year ended
March 31, 1998, are included elsewhere in this Prospectus. The summary financial
data should be read in conjunction with both the Company's financial statements
and the notes thereto and "Management's Discussion and Analysis of Financial
Condition and Results of Operations" included elsewhere in this Prospectus. The
financial data for the six month periods ended June 30, 2000, and 1999, are
unaudited, but, in the opinion of management, reflect all adjustments
(consisting only of normal recurring adjustments) necessary for a fair
presentation of results for the interim periods. The operating results for
interim periods are not necessarily indicative of results for the full fiscal
year.

                                                                                                       NINE MONTHS
                                                        SIX MONTHS ENDED              YEAR ENDED          ENDED
                                                            JUNE 30,                 DECEMBER 31,      DECEMBER 31,
                                                 ------------------------------      ------------      ------------
                                                     2000              1999              1999              1998
                                                 ------------      ------------      ------------      ------------

OPERATING DATA:
    CONTINUING OPERATIONS:
      Earned revenues                            $    275,549      $         --      $     12,854      $         --
      Direct costs                                    106,580                --             7,557                --
      Gross profit                                    168,969                --             5,297                --
      Operating expenses                              824,041           999,763         1,060,668           428,157
      Operating loss                                 (655,072)         (999,763)       (1,055,371)         (428,157)
      Interest income (expense)                        86,620             5,965           (56,965)           25,206
      Loss from continuing operations
          before preferred dividend                  (566,792)         (993,798)       (1,112,336)         (402,951)
      Preferred dividend                               24,370           (28,714)          (57,172)          (44,642)
                                                 ------------      ------------      ------------      ------------
    Loss from continuing operations                  (581,162)       (1,022,512)       (1,169,508)         (447,593)
                                                 ------------      ------------      ------------      ------------

    DISCONTINUED OPERATIONS:
      Loss from discontinued
          operations                                       --                --                --                --
      Excess of UK subsidiary
          cumulative loss over
          investment                                       --                --                --                --
                                                 ------------      ------------      ------------      ------------
Net income (loss) per common share               $   (581,162)     $ (1,022,512)     $ (1,169,508)     $   (447,593)
                                                 ============      ============      ============      ============
PER SHARE DATA:
    Net income (loss) per common share:
      Continuing operations                      $      (0.04)     $      (0.16)     $      (0.17)     $      (0.07)
      Discontinued operations                              --                --                --                --
                                                 ------------      ------------      ------------      ------------
                                                 $      (0.04)     $      (0.16)     $      (0.17)     $      (0.07)
                                                 ============      ============      ============      ============

Weighted average number of common
    shares outstanding                             13,820,536         6,377,357         6,905,073         6,367,015
                                                 ============      ============      ============      ============

                                                               YEARS ENDED MARCH 31,
                                                 ------------------------------------------------
                                                     1998              1997              1996
                                                 ------------      ------------      ------------

OPERATING DATA:
    CONTINUING OPERATIONS:
      Earned revenues                            $         --      $         --      $         --
      Direct costs                                         --                --                --
      Gross profit                                         --                --                --
      Operating expenses                              221,602           251,583           257,073
      Operating loss                                 (221,602)         (251,583)         (257,073)
      Interest income (expense)                        17,804           (17,373)             (600)
      Loss from continuing operations
          before preferred dividend                  (203,798)         (268,956)         (260,715)
      Preferred dividend                              (60,067)          (63,648)          (62,795)
                                                 ------------      ------------      ------------
    Loss from continuing operations                  (263,865)         (332,604)         (323,510)
                                                 ------------      ------------      ------------

    DISCONTINUED OPERATIONS:
      Loss from discontinued
          operations                                       --                --        (3,432,032)
      Excess of UK subsidiary
          cumulative loss over
          investment                                       --                --         5,466,636
                                                 ------------      ------------      ------------
Net income (loss) per common share               $   (263,865)     $   (332,604)     $  1,711,094
                                                 ============      ============      ============
PER SHARE DATA:
    Net income (loss) per common share:
      Continuing operations                      $      (0.05)     $      (0.14)     $      (0.14)
      Discontinued operations                              --                --              0.88
                                                 ------------      ------------      ------------
                                                 $      (0.05)     $      (0.14)     $       0.74
                                                 ============      ============      ============

Weighted average number of common
    shares outstanding                              5,165,272         2,412,278         2,300,289
                                                 ============      ============      ============

                                                          June 30, 2000
                                                 -------------------------------
                                                    Actual        As Adjusted(1)
                                                 ------------     --------------

Balance sheet data:
    Working capital                              $  4,624,638     $  9,424,638
    Total assets                                    5,763,880       10,563,880
    Long-term debt and unearned                       651,882          651,882
      revenues
    Series A convertible preferred                    694,974          694,974
      stock
    Convertible redeemable preferred                3,917,690       13,691,217
      stock, common stock and other
           stockholders' equity

(1)      Gives effect to the sale of 4,000,000 shares of common stock being
         offered hereby, at $2.50 per share, net of estimated offering costs of
         $200,000.

                                       9
   13

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

     You should read the following discussion and analysis when you read the
consolidated financial statements and the related notes included in this
prospectus.

OVERVIEW

     PLAN OF OPERATION

     We have relied solely on the proceeds from the sales of securities in
October 1997, May 1998, May 1999, December 1999, and during the six months ended
June 30, 2000, for the primary source of our funds. These funds were and will be
utilized to fund our operating expenses. Management anticipates we will require
additional funds from future sales of our securities and/or other financing
alternatives to fund our future operational costs and at the same time fully
develop our service contract sales and insurance businesses.

     On September 30, 1998, we acquired Stamford Reinsurance Company Ltd., which
was then an inactive foreign corporation that is licensed in the Cayman Islands
as a casualty and property insurer. In the fourth quarter of 1999, Stamford
commenced underwriting as a reinsurer. Also in the fourth quarter, we commenced
sales of our automotive vehicle and consumer products service contracts through
our website.

     Our plan of operation for the next 12 months is principally to continue our
endeavors to establish ourselves in the vehicle and consumer products service
contract business through our Internet web site, www.warrantysuperstore.com, and
to continue to seek additional property/casualty reinsurance opportunities for
our wholly owned reinsurance company, Stamford Reinsurance Co. Ltd.

     RESULTS OF OPERATIONS

     SIX MONTHS ENDED JUNE 30, 2000, COMPARED TO SIX MONTHS ENDED JUNE 30, 1999.

     Sales. We did not generate any operating revenues until the fourth quarter
of fiscal 1999, when our reinsurance subsidiary commenced generating premium
revenues and the Company began the sale of its service contracts.

     Cost of Sales. In the six months ended June 30, 2000, Stamford continued
reinsuring contractual liability insurance policies from one United States
carrier that is rated "A-" Excellent by A.M. Best. This insurance generated
approximately $536,000 in premiums, of which $296,000 was unearned at June 30,
2000. Policy acquisition costs were $67,000 of which $49,000 was expensed in the
six months ended June 30, 2000. Income from operations in the six months ended
June 30, 2000, was $169,000 of which $5,000 is management's estimate of incurred
by not reported losses at June 30, 2000. Our sales of extended service contracts
for new and used service contracts for new and used automotive vehicles in the
six months ended June 30, 2000, generated $28,600 in revenues of which $10,000
was recognized within the current period with the balance deferred over the life
of the contract. Direct costs associated with the sale of the service contracts
are being recognized pro rata over the length of the contract.

     General and Administrative. General and administrative costs decreased by
17.6% to $824,000 for the six months ended June 30, 2000, compared to $1,000,000
for the six months ended June 30, 1999. For the three months ended June 30,
2000, general and administrative costs decreased by 17.3% to $497,000 compared
to $601,000 for the comparable period in 1999. The decreases are primarily
attributable to reduced website development costs.

     Interest Income and Interest Expense. Interest income increased 1416.7% to
$91,000 for the six months ended June 30, 2000, compared to $6,000 for the six
months ended June 30, 1999. For the three months ended June 30, 2000, interest
income increased 3600% to $55,000 compared to $1,500 for the comparable period
in 1999. Interest expense increased $4,600 for the six months and $2,400 for the
three months ended June 30, 2000, from $-0- for the both periods in 1999. The
increase in interest income and interest expense is the result of the cash, cash
equivalents, and investments used to fund the Company's increased operating
costs in the current period and the incidence of debt in a prior period.

     Preferred Stock Dividend. The accrued preferred stock dividend of $24,000
in June 2000 is $5,000 less than the $29,000 accrued during the same period in
1999 principally because of the reduction of the average number of Series A
preferred stock outstanding in the current year.

                                       10
   14

     Net Loss. Net loss for the six months ended June 30, 2000 decreased 43.2%
to $581,000 from the comparable loss of $1,023,000 incurred in 1999. For the
three months ended June 30, 2000, the net loss decreased 37.7% to $382,000 from
the comparable loss of $613,000 in 1999. These decreases are a result of the
reasons cited above.

     YEAR ENDED DECEMBER 31, 1999, COMPARED TO THE YEAR ENDED DECEMBER 31, 1998.

     Sales. We did not generate any operating revenues until the fourth quarter
of fiscal 1999, when our reinsurance subsidiary commenced generating premium
revenues and we began the sale of our service contracts.

     Cost of Sales. Stamford in the quarter ended December 1999 began reinsuring
contractual liability reinsurance policies from one United States carrier that
is rated "A-" Excellent by A.M. Best. This reinsurance generated approximately
$300,000 in premiums, of which $288,000 was unearned at December 31, 1999.
Policy acquisition costs were $38,000 of which $2,000 was expensed in the
current period. Losses charged to operations in the current period were $5,112
of which $5,000 is management's estimate of incurred but not reported losses at
December 31, 1999. Corniche commenced the sales of the extended service
contracts for new and used automotive vehicles in the last quarter of 1999,
generating $11,000 in revenues of which $400 was recognized in 1999 with the
balance deferred over the life of the contract. Direct costs associated with the
sale of the service contracts are being recognized pro rata over the length of
the contract. Since neither we nor our subsidiary generated any revenues in
1998, no meaningful comparative analysis can be made.

     General and Administrative. General and administrative costs for 1999
aggregating $1,071,000 as compared to $481,000 for the 12 months ended December
31, 1998. The increase of $590,000 (122.7%) is attributable to increases in (i)
advertising of $253,000 in 1999 (ii) payroll and related employment costs of
$173,000 to $257,000 in 1999, (iii) website development of $98,000 to $140,000
and (iv) depreciation and amortization of $78,000 to $83,000 in 1999.

     Interest Income and Interest Expense. Interest income decreased $30,000
(78.9%) from $38,000 in the 12 months ended December 31, 1998, to $8,000 for the
year ended December 31, 1999. Interest expense increased from $1,000 in the 12
months ended December 31, 1998, to $65,000 for the year ended December 31, 1999.
The reduction in interest income and increase in interest expense is the result
of the cash, cash equivalents, and investments used to fund our increased
operating costs for the year ended December 31, 1999, and the incurrence of debt
of $98,000 to fund property asset additions.

     Preferred Stock Dividend. The accrued preferred stock dividend of $57,000
in 1999 is $3,000 less than the $60,000 accrued during the 12 months ended
December 31, 1998, principally because of the reduction of the average number of
Series A preferred shares outstanding for the year ended December 31, 1999.

     Net Loss. Net loss for fiscal 1999 increased $676,000 (133.9%) to
$1,180,000 from the comparable loss of $504,000 incurred during the 12 months
ended December 31, 1998, for the reasons cited above.

     LIQUIDITY AND CAPITAL RESOURCES

     We have committed to acquire computer hardware and software and to develop
an Internet website for approximately $1,500,000 of which $1,000,000 has been
expended through June 30, 2000. Although we are not contractually obligated to
fulfill the remaining $500,000 of the project, we intend to do so over the next
one to two years as and if funding permits. If successful, the project will
enable us to fully utilize the Internet in the sales, advertising, marketing and
collections of our warranty service contract business. There can be no assurance
that we will have the funds available to fund the hardware and/or software we
will require to successfully develop this project nor can there be assurance
that if it is developed such project will aid in the intended results of
additional revenues.

     The Certificate of Designation for our Series A preferred stock states that
at any time after December 1, 1999, any holder of Series A preferred stock may
require us to redeem his shares of Series A preferred stock (if there are funds
with which we may legally do so) at a price of $1.00 per share. Notwithstanding
the foregoing redemption provisions, if any dividends on the Series A preferred
stock are past due, no shares of Series A preferred stock may be redeemed by us
unless all outstanding shares of Series A preferred stock are simultaneously
redeemed. The holders of Series A preferred stock may convert their Series A
preferred stock into shares of our common stock at a price of $5.20 per share.
At June 30, 2000, 694,971 shares of Series A preferred stock were outstanding.
If the preferred stockholders do not convert their shares into

                                       11
   15

common stock, and if we were required to redeem any significant number of shares
of Series A preferred stock, our financial condition would be materially
affected.

     INFLATION

     Inflation has not had a significant effect on our operations or financial
position and management believes that the future effects of inflation on our
operations and financial position will be insignificant.

                                       12
   16

                                    BUSINESS

OUR STRATEGY

     We are in the process of putting into place a strategic and operational
business plan to establish ourselves in the warranty service contract business
and the reinsurance industry.

     WARRANTYSUPERSTORE.COM WEB SITE

     We have developed a web site on the Internet to market warranty service
contracts on automobiles and consumer products. Our web site is called
WarrantySuperstore.com. Through this web site, we plan to sell our products and
services directly to consumers.

     We are currently offering warranty service contracts for automobiles (new
and used), office equipment, consumer electronics, home appliances, lawn and
garden equipment, and computers.

     We intend to advertise our web site through print, radio, and television
advertising and links from other Internet sites. We do not currently intend to
have distribution channels for our products and services other than the
Internet.

     We offer our products and services in states that permit program marketers
to be the obligor on warranty service contracts. Currently, this represents
approximately 40 states for automobile service contracts and most states for
other service contracts. We now anticipate that the obligor on warranty service
contracts sold on WarrantySuperstore.com will be a third party warranty company.
We are responsible for marketing, booking sales, collecting payment for warranty
service contracts, reporting and paying premiums to a reinsurance carrier, and
providing information to the reinsurance carrier's appointed claims
administrator.

     Although we will manage most functions for the warranty service contracts,
we will not administer the claim functions. The reinsurance carrier has
appointed a claims administrator to administer the claims functions, including
payment of claims. We are in the process of establishing an electronic data
processing interface with the claims administrator and to report details
regarding the contracts to the reinsurance carrier.

     Great American Insurance Company is providing contractual liability
reinsurance covering the obligations to repair or replace the products covered
by the service contracts.

     We intend to provide customer analysis reports to retailers on a fee basis.
We believe that it will be able to develop market research questionnaires and
produce market research reports based on database information collected through
sales on WarrantySuperstore.com.

     We expect to use WarrantySuperstore.com to generate advertising revenues.
We plan to sell banner page advertisements on its web site and to sell
advertisements on a preferred client list basis.

     REINSURANCE ACTIVITIES

     Stamford Reinsurance Company, Ltd. ("Stamford") is a wholly owned
subsidiary of ours chartered under the laws of the Cayman Islands. Stamford is
licensed to conduct business as an reinsurance company in the Cayman Islands and
as a reinsurance company throughout the U.S. Stamford began generating revenues
in the fourth quarter of 1999.

     When Stamford is sufficiently capitalized, we intend to request the
reinsurance carriers providing contractual liability coverage on our warranty
service contracts to share (via reinsurance) a portion of the risk with
Stamford. Our ability to influence the reinsurance carriers to direct
reinsurance business to Stamford will depend on our negotiating strength, which,
in turn, will depend on the success of WarrantySuperstore.com. Stamford's
ability to reinsure our warranty service contract business will largely depend
on the primary reinsurance carriers' willingness to cede reinsurance to
Stamford.

     Our long-range plans for Stamford depend on Stamford's growth and
development of greater financial stability. If Stamford's operations are
successful, then we intend to cause Stamford to seek additional reinsurance
opportunities that are

                                       13
   17

not related to us. Stamford may use reinsurance brokers to identify other
reinsurance opportunities. We may also consider any appropriate opportunities to
sell Stamford that may arise.

     DOMESTIC LICENSING

     As an offshore reinsurance company, Stamford is permitted to function as a
reinsurance company in the U.S. As such, it can reinsure U.S. reinsurance
companies. Our long-range strategy is to identify and acquire a property and
casualty reinsurance carrier that holds state licenses. If we acquire a domestic
reinsurance carrier, we plan to use the carrier to serve as a specialty insurer
in niche commercial markets that are under served by standard reinsurance
carriers.

     OTHER INFORMATION

     We are party to an investment advisory agreement AIG Global Investment
Corporation under which AIG Global will function as investment advisor and
manager of our investment assets. AIG Global provides management services to all
affiliated reinsurance companies of American International Group and other third
party institutions worldwide.

EMPLOYEES

     At September 30, 2000, we employed six full-time personnel.

PROPERTIES

     We lease approximately 4,100 square feet of office space at 610 South
Industrial Boulevard, Euless, Texas. Monthly rental under the lease is $4,175.
The lease expires in July 2001. We do not own any real property.

                                       14
   18

                                   MANAGEMENT

DIRECTORS AND EXECUTIVE OFFICERS

     The following table presents information with respect to our directors and
executive officers.

              NAME                         AGE                      POSITION(s)
              ----                         ---                      -----------

     James J. Fyfe                          45     Chairman of the Board of Directors
     Robert F. Benoit                       42     Director and Chief Executive Officer
     Robert H. Hutchins                     71     Director and President
     John L. King                           56     Vice President, Chief Financial Officer
     David H. Boltz                         42     Vice President, Chief Information Officer
     Paul L. Harrison                       38     Director
     Joseph P. Raftery                      57     Director

     JAMES F. FYFE has served as a director of Corniche since May 1995. He
became Chairman of the Board in April 2000. From May 1995 until May 1998, Mr.
Fyfe served as Vice President and Chief Operating Officer of Corniche. Mr. Fyfe
has been a director of Machine Vision Holdings, Inc., an intelligent automation
technology software company, since January 1998 and of Transmedia Asia Pacific,
Inc., a member benefit loyalty marketing company, since October 1999. From
August 1996 to August 1997, Mr. Fyfe was an outside director of Medical Laser
Technologies, Inc.

     ROBERT F. BENOIT has served as Chief Executive Officer since September 1999
and Secretary since June 1999. He was Executive Vice President and Chief
Operating Officer from February 1999 to September 1999. From May 1996 to
February 1999, Mr. Benoit was a business analyst at Warrantech Automotive, Inc.,
a service contract provider, in Euless, Texas, where he served as project leader
for Internet applications. From October 1995 to May 1996, Mr. Benoit served as
the corporate accounting manager responsible for the non-bank subsidiaries of
Shawmut Bank, National Association.

     ROBERT H. HUTCHINS has served as a director and the President and Principal
Financial Officer of Corniche since May 1998. Mr. Hutchins was employed by
Warrantech Automotive, Inc. as National Claims Manager, from May 1995 to May
1998. Prior to joining Warrantech, he spent 45 years in the property and
casualty reinsurance industry in various executive and management positions.

     JOHN L. KING has served as the Vice President, Chief Financial Officer
since June 2000. From January 1996 to June 2000, Mr. King was an independent
business consultant. From May 1993 to December 1995, Mr. King was the Chief
Financial Officer for Advacare, Inc., a health care billings company based in
Dallas, Texas. From April 1989 to April 1993, Mr. King served as the business
unit controller for a division of Conner Peripherals, Inc., based in Orlando,
Florida.

     DAVID H. BOLTZ, PH.D. has served as Vice President, Chief Information
Officer since June 2000. From May of 1991 to June 2000, Dr. Bolt was an
independent business consultant operating as Language Engineering Services,
where he was engaged in providing business technology consulting services and
information management services to numerous firms in the Dallas/Ft. Worth
metroplex.

     PAUL L. HARRISON was elected as a director of Corniche in June 2000. He has
been a director of Transmedia Europe, Inc., a member benefit loyalty marketing
company in London, England, since June 1996. Mr. Harrison was also President,
Principal Financial and Accounting Officer and Secretary of Transmedia Asia
Pacific, Inc., also a member benefit loyalty marketing company in London,
England, until October 1999. From May 1994 until June 1997, he was a business
and financial consultant to Transmedia Europe, Inc.

     JOSEPH P. RAFTERY was also elected as a director of Corniche in June 2000.
He has been an independent business consultant since 1998. From 1990 to 1998,
Mr. Raftery was Chairman and a member of the Board of Directors and President of
BankAmerica Insurance Group, Inc., a subsidiary of BankAmerica Corp. based in
San Diego, California.

                                       15
   19

TERMS OF OFFICE

     Members of the board are elected at each annual meeting of stockholders, to
serve one year terms or until their successors are elected and qualified or
their earlier resignation or removal. Our executive officers are elected
annually by the board and serve at the discretion of the board until their
successors are elected and qualified or their earlier resignation or removal.

BOARD COMMITTEES

     Our Board of Directors has established two committees: the Audit Committee,
and the Compensation Committee.

     The Audit Committee is responsible for recommending to the Board of
Directors the engagement of our independent auditors and reviewing with the
independent auditors the scope and results of the audits, our internal
accounting controls, audit practices, and the professional services furnished by
the independent auditors. The current members of the Audit Committee are Messrs.
Fyfe, Harrison and Raftery.

     The Compensation Committee is responsible for reviewing and approving all
compensation arrangements for our senior executive officers. The current members
of the Compensation Committee are Messrs. Benoit, Harrison and Raftery.

COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION

     Our Board of Directors established the Compensation Committee in June 2000.
Prior to establishing the Compensation Committee, our Board of Directors as a
whole performed the functions delegated to the Compensation Committee. No
current or former member of our Compensation Committee has served as a member of
the board of directors or compensation committee of any entity that has one or
more executive officers serving as a member of our Board of Directors or
Compensation Committee.

COMPENSATION OF DIRECTORS

     Pursuant to the 1998 Independent Director Compensation Plan, each director
who is not an officer or employee of Corniche is entitled to receive
compensation of $2,500 per calendar quarter plus 500 shares of common stock per
calendar quarter of board service, in addition to reimbursement of travel
expenses. Outside directors are entitled to be compensated for committee service
at $500 per calendar quarter plus 125 shares of common stock per calendar
quarter. No directors' fees are payable to Corniche employees who serve as
directors. Corniche deferred the payment of directors' fees for service during
the year ended December 31, 1999.

     All directors are entitled to receive options to purchase 1,500 shares of
common stock each May under Corniche's 1992 Stock Option Plan for Directors.

EXECUTIVE COMPENSATION

     In February 1998, Corniche changed its fiscal year end from March 31 to
December 31. Consequently, the executive compensation information presented
below relates to the period from April 1, 1998, through December 31, 1999. Mr.
Hutchins, Corniche's President and former Principal Financial Officer, was
Corniche's only executive officer as of December 31, 1998, who received
compensation from Corniche during the nine-month period then ended. Mr. Hutchins
and Robert F. Benoit were Corniche's only executive officers during 1999. Except
for Mr. Hutchins' service in 1998, neither of them was an employee of Corniche
during any prior fiscal year. The table below sets forth information concerning
the compensation of Hutchins and Benoit for services in all capacities to
Corniche for the nine months ended December 31, 1998, and the year ended
December 31, 1999.

                           SUMMARY COMPENSATION TABLE

                                                                        ANNUAL COMPENSATION
                                                               -------------------------------------
                NAME AND PRINCIPAL POSITION                    YEAR           SALARY        OTHER(2)
                ---------------------------                    ----           ------        --------
                                                                                 
         Robert H. Hutchins                                    1997                --             --
            President and Principal Financial Officer          1998(1)     $   49,038     $    3,200
                                                               1999        $   85,000     $    4,000

                                       16
   20

                                                                        ANNUAL COMPENSATION
                                                               -------------------------------------
                NAME AND PRINCIPAL POSITION                    YEAR           SALARY        OTHER(2)
                ---------------------------                    ----           ------        --------
                                                                                 
         Robert A. Benoit                                      1997                --             --
            Chief Executive Officer, Executive Vice            1998                --             --
            President, and Secretary                           1999(3)     $   62,019     $    4,000

- ----------

     (1)  From May 18, 1998, when Mr. Hutchins first joined Corniche, to
          December 31, 1998.

     (2)  Represents an automobile allowance.

     (3)  From February 15, 1999, when Mr. Benoit first joined Corniche, to
          December 31, 1999.

OPTION/SAR GRANTS IN LAST FISCAL YEAR

     The following table sets forth information concerning grants of stock
options to the named executive officers during 1999. All options granted to
executive officers in the last fiscal year were granted under the 1998 Employees
Incentive Stock Option Plan. The percent of the total options set forth below is
based on an aggregate of 175,000 options granted to one employee during the year
ended December 31, 1999. All options were granted at the fair market value on
the date of grant as determined by our board of directors and are immediately
exercisable.

     The 5% and 10% assumed annual rates of compounded stock price appreciation
are mandated by the rules of the Securities and Exchange Commission. There can
be no assurance that the actual stock price appreciation over the 10-year option
term will be at the assumed 5% and 10% levels or at any other defined level.
Unless the market price of the common stock appreciates over the option term, no
value will be realized from the option grants. The potential realizable value is
calculated by assuming that the fair market value of the common stock on the
date of grant of the options appreciates over the exercise price at the
indicated rate for the entire term of the option and that the option is
exercised at the exercise price and the resulting shares sold on the last day at
the appreciated price.

                                                  INDIVIDUAL GRANTS                                 POTENTIAL REALIZABLE
                          ----------------------------------------------------------------            VALUE AT ASSUMED
                                                                                                    ANNUAL RATES OF STOCK
                            NUMBER OF         % OF TOTAL        EXERCISE                             PRICE APPRECIATION
                           SECURITIES        OPTIONS/SARS       OR BASE                                FOR OPTION TERM
                           UNDERLYING         GRANTED TO         PRICE                           ---------------------------
                          OPTIONS/SARS       EMPLOYEES IN        (PER           EXPIRATION
                             GRANTED          FISCAL YEAR        SHARE)            DATE              5%               10%
                          ------------       ------------      ----------       ----------       ----------       ----------
                                                                                               
Robert F. Benoit               75,000                43%       $    1.097        2/15/2009       $  105,000       $  132,500
                              100,000                57%       $    1.000        9/27/2009       $  127,900       $  161,000

AGGREGATE OPTION EXERCISES IN 1999 AND FISCAL YEAR-END OPTION VALUES

     None of the named executive officers exercised any stock options during
1999.

     The following table sets forth as of December 31, 1999, for each of the
named executive officers:

     o    the total number of unexercised options to purchase our common stock;
          and

     o    the value of options that were in-the-money at December 31, 1999.

                                                 NUMBER OF SECURITIES
                                                UNDERLYING UNEXERCISED           VALUE OF UNEXERCISED
                                                  OPTIONS AT FISCAL              IN-THE-MONEY OPTIONS
                                                       YEAR-END                   AT FISCAL YEAR-END
                   NAME                      (EXERCISABLE/UNEXERCISABLE)      (EXERCISABLE/UNEXERCISABLE)
                   ----                      ---------------------------      ---------------------------
                                                                        
Robert F. Benoit........................              175,000/-                           -/-

                                       17
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BENEFIT PLANS

     1992 STOCK OPTION PLAN

     In April 1992, Corniche adopted the 1992 Stock Option Plan to provide for
the granting of options to directors. According to the terms of this plan, each
director is granted options to purchase 1,500 shares each year. The maximum
amount of Corniche's common stock that may be granted under this plan is 20,000
shares. Options are exercisable at the fair market value of the common stock on
the date of grant and have five-year terms.

     1998 EMPLOYEE INCENTIVE STOCK OPTION PLAN

     Under the 1998 Plan, the maximum aggregate number of shares which may be
issued under options is 3,000,000 shares of common stock. The aggregate fair
market value (determined at the time the option is granted) of the shares for
which incentive stock options are exercisable for the first time under the terms
of the 1998 Plan by any eligible employee during any calendar year cannot exceed
$100,000. The option exercise price of each option is 100% of the fair market
value of the underlying stock on the date the options are granted, except that
no option will be granted to any employee who, at the time the option is
granted, owns stock possessing more than 10% of the total combined voting power
of all classes of stock of the Corporation or any subsidiary unless (a) at the
time the options are granted, the option exercise price is at least 110% of the
fair market value of the shares of common stock subject to the options and (b)
the option by its terms is not exercisable after the fifth anniversary of the
date on which the option is granted.

     The 1998 Plan is administered by the Compensation Committee of the Board of
Directors. In 1999, options to acquire 100,000 common shares at $1.00 per share
and options to acquire 75,000 common shares at $1.097 were granted to an
officer. Additionally, an option to acquire 25,000 common shares at $0.6875 per
share was granted to a consultant. In June 2000, options to acquire 100,000
common shares at $1.88 per share and options to acquire 100,000 common shares at
$1.94 per share were granted to two officers.

EMPLOYMENT AGREEMENTS

     ROBERT F. BENOIT

     Effective June 26, 2000, we entered into an employment agreement with Mr.
Benoit. This employment agreement has a three-year term and provides that Mr.
Benoit receive a base salary of $100,000 per year. Mr. Benoit also receives a
$6,000 automobile allowance per year. Additionally, Mr. Benoit is eligible to
receive a performance bonus at the sole discretion of our board of directors.
Mr. Benoit is also entitled to reimbursement for business or entertainment
expenses and other expenses and he may participate in all employee benefit
plans, severance plans, health insurance plans, deferred compensation plans,
incentive plans and other plans as may be available to our other employees,
subject to the terms of those programs. If we terminate Mr. Benoit's employment
without cause or he resigns for good reason, as both terms are defined in his
employment agreement, we will pay Mr. Benoit a severance payment equal to 18
months base salary and performance bonus for the term of his employment
agreement and Mr. Benoit will retain all rights to his vested stock options,
among other things described in his employment agreement. Mr. Benoit has agreed,
pursuant to his employment agreement, not to compete with us during his
employment and for a period of two years following termination of his
employment. Further, Mr. Benoit has agreed not to disclose any of our
confidential information at any time during or subsequent to his employment with
us, other than pursuant to our policies regarding disclosure. In addition, Mr.
Benoit has agreed not to solicit our employees for a period of 18 months
following termination of his agreement.

     DAVID H. BOLTZ

     Effective June 26, 2000, we entered into an employment agreement with Mr.
Boltz. This employment agreement has a three-year term and provides that Mr.
Boltz receive a base salary of $75,000 per year. Additionally, Mr. Boltz is
eligible to receive a performance bonus at the sole discretion of our board of
directors. Mr. Boltz is also entitled to reimbursement for business or
entertainment expenses and other expenses and he may participate in all employee
benefit plans, severance plans, health insurance plans, deferred compensation
plans, incentive plans and other plans as may be available to our other
employees, subject to the terms of those programs. If we terminate Mr. Boltz's
employment without cause or he resigns for good reason, as both terms are
defined in his employment agreement, we will pay Mr. Boltz a severance payment
equal to

                                       18
   22

18 months base salary and performance bonus for the term of his employment
agreement and Mr. Boltz will retain all rights to his vested stock options,
among other things described in his employment agreement. Mr. Boltz has agreed,
pursuant to his employment agreement, not to compete with us during his
employment and for a period of two years following termination of his
employment. Further, Mr. Boltz has agreed not to disclose any of our
confidential information at any time during or subsequent to his employment with
us, other than pursuant to our policies regarding disclosure. In addition, Mr.
Boltz has agreed not to solicit our employees for a period of 18 months
following termination of his agreement.

     JOHN L. KING

     Effective June 26, 2000, we entered into an employment agreement with Mr.
King. This employment agreement has a three-year term and provides that Mr. King
receive a base salary of $75,000 per year. Additionally, Mr. King is eligible to
receive a performance bonus at the sole discretion of our board of directors.
Mr. King is also entitled to reimbursement for business or entertainment
expenses and other expenses and he may participate in all employee benefit
plans, severance plans, health insurance plans, deferred compensation plans,
incentive plans and other plans as may be available to our other employees,
subject to the terms of those programs. If we terminate Mr. King's employment
without cause or he resigns for good reason, as both terms are defined in his
employment agreement, we will pay Mr. King a severance payment equal to 18
months base salary and performance bonus for the term of his employment
agreement and Mr. King will retain all rights to his vested stock options, among
other things described in his employment agreement. Mr. King has agreed,
pursuant to his employment agreement, not to compete with us during his
employment and for a period of two years following termination of his
employment. Further, Mr. King has agreed not to disclose any of our confidential
information at any time during or subsequent to his employment with us, other
than pursuant to our policies regarding disclosure. In addition, Mr. King has
agreed not to solicit our employees for a period of 18 months following
termination of his agreement.

                                       19
   23

                           RELATED PARTY TRANSACTIONS

     Other than the compensation and other arrangements described in
"Management," and the transactions described below, since January 1, 1997 there
has not been, nor is there currently proposed, any transaction or series of
similar transactions to which we were or will be a party:

     o   in which the amount involved exceeded or will exceed $60,000; and

     o   in which any director, executive officer, holder of more than 5% or our
         common stock on an as-converted basis or any member of their immediate
         family had or will have a direct or indirect material interest.

     We believe that each of the transactions described below were on terms no
less favorable than could have been obtained from unaffiliated third parties.
All future transactions between Corniche and any director or executive officer
will be subject to approval by a majority of the disinterested members of our
board of directors.

STOCK SALES TO DIRECTORS, OFFICERS AND 5% STOCKHOLDERS

     On March 4, 1998, we entered into a Stock Purchase Agreement with Joel San
Antonio, Robert H. Hutchins (a director and President of Corniche) and certain
other individuals acquiring an aggregate of 765,000 shares of a Series B
convertible redeemable preferred stock, par value $0.01 per share. Mr. San
Antonio purchased 710,000 shares of Series B convertible redeemable preferred
stock at $0.10 per share, for total consideration of $71,000 and Mr. Hutchins
purchased 15,000 shares of Series B convertible redeemable preferred stock at
$0.10 per share, for total consideration of $1,500. Assuming the full conversion
of the Series B convertible preferred stock into common stock, Mr. San Antonio
is the beneficial owner of 4,852,500 shares of common stock, over 20% of the
voting power of our voting stock.

AGREEMENTS WITH DIRECTORS, EXECUTIVE OFFICERS AND 5% STOCKHOLDERS

     From May 1998 to September 1999, Mr. San Antonio served as Chairman of the
Board of Directors of Corniche. Mr. San Antonio is the Chairman of the Board and
Chief Executive Officer of Warrantech Corporation. Warrantech is the claims
administrator for our warranty service contracts. Under this arrangement we
report all claims to Warrantech and pay $25 per claim to Warrantech.

STOCK OPTIONS GRANTED TO DIRECTORS, EXECUTIVE OFFICERS AND 5% STOCKHOLDERS

     Since 1997, we have granted the following options to purchase our common
stock to our directors, executive officers and stockholders who beneficially own
5% or more of our common stock. In 1999, options to acquire 100,000 common
shares at $1.00 per share and options to acquire 75,000 common shares at $1.097
per share were granted to Robert F. Benoit, a director and Chief Executive
Officer of Corniche. In May 1997, James J. Fyfe (Chairman of the Board of
Directors of Corniche) was granted an option to acquire 1,500 common shares at
$0.3125 per share under the 1992 Plan. In June 2000, John L. King (Vice
President and Chief Financial Officer of Corniche) was granted options to
acquire 100,000 common shares at $1.88 per share and David H. Boltz (Vice
President and Chief Information Officer) was granted options to acquire 100,000
common shares at $1.94 per share.

                                       20
   24

                       PRINCIPAL AND SELLING STOCKHOLDERS

     The following table shows the number and percentage of outstanding shares
of Corniche's common stock beneficially owned as of September 30, 2000, by (i)
each of our directors and executive officers, (ii) all of our directors and
officers as a group, (iii) all persons that we know to be beneficial owners of
5% or more of any class of our voting capital stock, and (iv) each selling
stockholder. Unless otherwise noted, each person listed in the table has sole
voting and investment power with respect to the shares indicated as beneficially
owned by that person. The table assumes that everyone listed below has converted
all of their shares of convertible preferred stock into shares of common stock.
For a description of Corniche's convertible preferred stock, see "Description of
Capital Stock."

                                                                  COMMON SHARES                                COMMON SHARES
                                                                   OWNED BEFORE                                 OWNED AFTER
                                                                     OFFERING                                   OFFERING (1)
                                                             ------------------------                    ------------------------
                                                                                         COMMON SHARES
NAME AND ADDRESS OF BENEFICIAL OWNER                           AMOUNT      % OF CLASS     TO BE SOLD       AMOUNT      % OF CLASS
- ------------------------------------                         ----------    ----------    -------------   ----------    ----------
                                                                                                        
Robert F. Benoit                                                  5,000             *        5,000.00            --            --
James J. Fyfe (2)(3)                                            107,500             *      107,500.00            --            --
Paul L. Harrison                                                     --            --              --            --            --
Robert H. Hutchins (2)(4)                                       150,000             *      150,000.00            --            --
Joseph P. Raftery                                                    --            --              --            --            --
All Officers and Directors as a Group (5 Persons)               262,500           1.1%     262,500.00            --            --

Glen Aber (2)                                                   150,000             *      150,000.00            --            --
Naomi Anne Aboud                                                 40,000             *       40,000.00            --            --
Adler Corporation PTY, Ltd.                                     937,500           4.1%     937,500.00            --            --
Advanced Balanced International Investment Strategies N.V       625,000           2.7%     625,000.00            --            --
Placido Amendolia                                                20,000             *       20,000.00            --            --
Balanced International Investment Strategies (BIIS) N.V         625,000           2.7%     625,000.00            --            --
Michael Barrasso                                                 60,000             *       60,000.00            --            --
Dr. Richard Berger                                               20,000             *       20,000.00            --            --
Anthony J. Blazej                                                 2,500             *        2,500.00            --            --
Dr. Craig Bloom                                                  10,000             *       10,000.00            --            --
William J. Bozsnyak                                               5,000             *        5,000.00            --            --
William J. Bozsnyak & Beverly J. Brook-Bozsnyak                  30,000             *       30,000.00            --            --
Cappadocia Limited(2)                                           100,000             *      100,000.00            --            --
Paul M. Cervino                                                  20,000             *       20,000.00            --            --
Jan R. Culp                                                      10,000             *       10,000.00            --            --
Andrew Darmstadter                                               20,000             *       20,000.00            --            --
Herbert P. Decordova                                             20,000             *       20,000.00            --            --
Roland A. Desilva                                                20,000             *       20,000.00            --            --
Dr. C. Durbak                                                    30,000             *       30,000.00            --            --
George N. Faris                                                  27,778             *       27,778.00            --            --
Michael Edward Fitzgerald                                        80,000             *       80,000.00            --            --
Robert Franco                                                    12,500             *       12,500.00            --            --
Dominick Fusco                                                    2,500             *        2,500.00            --            --
PICTEC & CIE (5)                                              2,925,000            13%   2,925,000.00            --            --

General & Private Funds Management PTY, Ltd.
PTY, Ltd.                                                        10,000             *       10,000.00            --            --
Ronald F. Glime (2)                                             502,500           2.2%     502,500.00            --            --
Robert C. Gmuer                                                 100,000             *      100,000.00            --            --
Lou Hammer                                                        2,500             *        2,500.00            --            --
Hamo PTY, Ltd.                                                   50,000             *       50,000.00            --            --
Headline Securities, Ltd.                                       625,000           2.7%     625,000.00            --            --
Maryellen Gussack-Hochstein                                      10,000             *       10,000.00            --            --
Mark Ian Horrocks                                               312,500           1.3%     312,500.00            --            --
A.R. Kerr                                                        62,500             *       62,500.00            --            --
Justin and Sharen Kolnick                                        10,000             *       10,000.00            --            --
Joseph Longo                                                     10,000             *       10,000.00            --            --

                                       21
   25

                                                                  COMMON SHARES                                COMMON SHARES
                                                                   OWNED BEFORE                                 OWNED AFTER
                                                                     OFFERING                                   OFFERING (1)
                                                             ------------------------                    ------------------------
                                                                                         COMMON SHARES
NAME AND ADDRESS OF BENEFICIAL OWNER                           AMOUNT      % OF CLASS     TO BE SOLD       AMOUNT      % OF CLASS
- ------------------------------------                         ----------    ----------    -------------   ----------    ----------
                                                                                                        
Edward J. Madden                                                 11,111             *       11,111.00            --            --
Connor Michael Maloney                                          105,000             *      105,000.00            --            --
Peter & Alisa Metzner, Trustees, Metzner Family Trust            15,000             *       15,000.00            --            --
Frontier Investments Limited(2)                               1,800,000             8%   1,800,000.00            --            --

Steven Miner                                                      2,500             *        2,500.00            --            --
OIC Nominees Limited(2)                                         100,000             *      100,000.00            --            --
Keith Parker                                                     58,056             *       58,056.00            --            --
Colin Pomfret                                                    20,000             *       20,000.00            --            --
Pritdown PTY, Ltd.                                               40,000             *       40,000.00            --            --
Alex Pusco                                                      312,500           1.3%     312,500.00            --            --
Peter and Margaret Ranieri                                       10,000             *       10,000.00            --            --
Michael Salpeter (2)                                            500,000           2.2%     500,000.00            --            --
Joel San Antonio (2)(6)                                       4,852,500          21.5%   4,852,500.00            --            --

Mark Seigerman                                                    2,500             *        2,500.00            --            --
Edward Spindel                                                   55,556             *       55,556.00            --            --
Michael R. Spindel                                               55,556             *       55,556.00            --            --
Charles G. Stiene                                                 2,500             *        2,500.00            --            --
Larry Targan                                                     10,000             *       10,000.00            --            --
Bradley Vidgeon                                                  43,750             *       43,750.00            --            --
Bradley D. Weber                                                 10,000             *       10,000.00            --            --
Joel Weissman                                                    10,000             *       10,000.00            --            --
Grant White                                                      50,000             *       50,000.00            --            --
Sam Wolkowicki                                                   27,778             *       27,778.00            --            --

- ----------

*    less than 1%.

(1)  For the purposes of this table, it is assumed that all common shares to be
     registered will be sold in this offering.

(2)  All of the shares included in the table represent common stock issuable
     upon conversion of Series B convertible redeemable preferred stock.

(3)  Includes: 3,000 shares of common stock issuable upon exercise of currently
     exercisable stock options; and 100,000 shares issuable upon conversion of
     10,000 shares of Series B convertible redeemable preferred stock.

(4)  Includes: 150,000 shares issuable upon conversion of 15,000 shares of
     Series B convertible redeemable preferred stock held by Mr. Hutchins and
     his wife as co-trustees of a living trust for the benefit of their
     children.

(5)  The address of PICTEC & CIE is B.D. Georges-Favon 29, Geneva 1204,
     Switzerland.

(6)  Mr. San Antonio's address is c/o Corniche Group Incorporated, 610 South
     Industrial Boulevard, Euless, Texas 76040. According to Amendment No. 2 to
     Schedule 13D filed by Mr. San Antonio in August 2000, Mr. San Antonio has
     sole power to vote and to direct the disposition of 4,850,000 of the shares
     included in the table. He shares voting and dispositive power with respect
     to 1,100,000 shares included in the table, which are issued to his wife,
     children, mother, and brother.

                                       22
   26

                         DESCRIPTION OF CAPITAL STOCK

GENERAL

      The authorized capital stock of Corniche consists of 75,000,000 shares of
common stock, $0.001 par value per share, 14,222,971 of which are outstanding.
As of September 30, 2000, there were 694,974 shares of Series A convertible
preferred stock outstanding, and 825,000 shares of Series B convertible
redeemable preferred stock outstanding. The following statements are brief
summaries of certain provisions relating to Corniche's capital stock.

SERIES A CONVERTIBLE PREFERRED STOCK

      The Series A preferred stock has a liquidation value of $1 per share, is
nonvoting and convertible into common stock at a price of $5.20 per share.
Holders of Series A preferred stock are entitled to receive cumulative cash
dividends of $0.07 per share, per year, payable semi-annually. Corniche can call
the Series A preferred stock at a price of $1.05 per share, plus accrued and
unpaid dividends. In addition, if the closing price of our common stock exceeds
$13.80 per share for any 20 consecutive trading days, we can call the Series A
preferred stock at a price equal to $0.01 per share, plus accrued and unpaid
dividends. The Certificate of Designation for the Series A preferred stock also
states that at any time after December 1, 1999, the holders of the Series A
preferred stock may require us to redeem their shares of Series A preferred
stock (if there are funds with which we may do so) at a price of $1.00 per
share. Notwithstanding any of the foregoing redemption provisions, if any
dividends on the Series A preferred stock are past due, we may not redeem any
shares of Series A preferred stock unless all outstanding shares of Series A
preferred stock are simultaneously redeemed.

SERIES B CONVERTIBLE REDEEMABLE PREFERRED STOCK

      The Series B preferred stock carries a zero coupon and each share of the
Series B preferred stock is convertible into 10 shares of our common stock. The
holder of a share of the Series B preferred stock is entitled to ten times any
dividends paid on the common stock, as well as 10 votes per share, voting as one
class with the common stock.

      The holder of each share of Series B preferred stock has the right, at the
holder's option (but not if the share is called for redemption), to convert the
share into 10 fully paid and non-assessable shares of common stock. The
conversion rate is subject to adjustment as stipulated in the Series B Stock
Purchase Agreement. Upon liquidation, the Series B Stock would be junior to our
Series A preferred stock and would share ratably with the common stock with
respect to liquidating distributions.

COMMON STOCK

      Holders of common stock are entitled to one vote for each share held on
all matters submitted to a vote of stockholders. Cumulative voting is not
permitted with respect to the election of directors, with the result that the
holders of more than 50% of the shares voted in the election of directors can
elect all of the directors. Holders of common stock are entitled to receive
ratably such dividends, if any, as may be declared by the board of directors of
Corniche out of funds legally available therefor. Upon the liquidation,
dissolution or winding up of Corniche, the holders of common stock are entitled
to receive ratably the net assets of Corniche after payment of all debts and
liabilities and liquidation preferences of outstanding shares of preferred
stock. Holders of common stock have no preemptive, subscription, redemption or
conversion rights.

WARRANTS

      As of September 30, 2000, we have issued warrants to purchase 79,000
shares of common stock in connection with certain financings and to certain
other persons who provided services to Corniche. The exercise prices of these
warrants range from $3.20 to $27.50.

DELAWARE ANTI-TAKEOVER LAW AND CERTAIN CHARTER AND BYLAW PROVISIONS

      Certain provisions of Delaware law and our amended certificate of
incorporation and amended bylaws could make our acquisition, by means of a
tender offer, a proxy contest or otherwise, more difficult and could also make
the removal of incumbent officers and directors more difficult. These
provisions, summarized below, are expected to discourage certain types of
coercive takeover practices and inadequate takeover bids and to encourage
persons seeking to acquire control of us to negotiate with us first.

                                       23
   27

We believe that the benefits of increased protection of our potential ability to
negotiate with the proponent of an unfriendly or unsolicited proposal to acquire
or restructure us outweigh the disadvantages of discouraging such proposals
because, among other things, negotiation of such proposals could result in an
improvement of their terms.

     SECTION 203

     We are subject to the provisions of Section 203 of the Delaware General
Corporation Law. In general, the statute prohibits us from engaging in a
business combination with an interested stockholder for a period of three years
after the date that the stockholder became an interested stockholder, unless:

     o    prior to the date that the stockholder became an interested
          stockholder, the transaction or business combination that resulted in
          the stockholder becoming an interested stockholder is approved by the
          Board of Directors;

     o    upon consummation of the transaction that resulted in the stockholder
          becoming an interested stockholder, the interested stockholder owns at
          least 85% of our outstanding voting stock at the time the transaction
          commenced, excluding those shares owned by persons who are directors
          and also officers, and employee stock plans in which employee
          participants do not have the right to determine confidentially whether
          shares held subject to the plan will be tendered in a tender or
          exchange offer; or

     o    on or after the date the stockholder became an interested stockholder,
          the business combination is approved by our Board of Directors and
          authorized at an annual or special meeting of stockholders, and not by
          written consent, by the affirmative vote of at least 66 2/3% of our
          outstanding voting stock that is not owned by the interested
          stockholder.

     Generally, a "business combination" includes a merger, asset or stock sale,
or other transaction resulting in a financial benefit to the stockholder.
Subject to certain exceptions, an "interested stockholder" is any entity or
person beneficially owning 15% or more of our voting stock and any entity or
person affiliated with or controlling or controlled by that entity or person.

LIMITATIONS ON DIRECTORS' AND OFFICERS' LIABILITY AND INDEMNIFICATION

     Our amended certificate of incorporation and amended bylaws also provide
that we shall have the power to indemnify our directors, officers, employees and
other agents to the fullest extent authorized by the Delaware General
Corporation Law. As a result of these provisions, we and our stockholders may be
unable to obtain monetary damages from a director for breach of his or her duty
of care.

     We believe that the provisions in our amended certificate of incorporation
and amended bylaws are necessary to attract and retain qualified persons as
directors and officers.

TRANSFER AGENT AND REGISTRAR

     The transfer agent and registrar for the common stock is Continental Stock
Transfer & Trust Company.

                                  LEGAL MATTERS

     Certain legal matters in connection with the sale of the shares of common
stock offered hereby will be passed upon for Corniche by Haynes and Boone, LLP.

                                     EXPERTS

     The consolidated financial statements of Corniche at December 31, 1999 and
for the year then ended appearing in this prospectus and registration statement
have been audited by Weinick Sanders Leventhal & Co., LLP ("Weinick"),
independent auditors, as set forth in their report thereon appearing elsewhere
herein, and are included in reliance upon such report given upon the authority
of such firm as experts in accounting and auditing.

     The consolidated financial statements of Corniche at March 31, 1997 and
1998 and for the fiscal years then ended appearing in this prospectus and
registration statement have been audited by Simontacchi & Company, P.A.
("Simontacchi"), independent

                                       24
   28

auditors, as set forth in their report thereon appearing elsewhere herein, and
are included in reliance upon such report given upon the authority of such firm
as experts in accounting and auditing.

     Simontacchi's report on Corniche's financial statements for the fiscal
years ended March 31, 1997 expressed an unqualified opinion on those financial
statements based upon their audits, but included paragraphs noting a
"substantial doubt about Corniche's ability to continue as a going concern"
based upon the several matters summarized in such reports.

     On August 12, 1998, Corniche and Simontacchi terminated their
client-auditor relationship. The reports of Simontacchi on the financial
statements of Corniche for the prior two fiscal years contained no adverse
opinion or disclaimer of opinion and were not qualified or modified as to
uncertainty, audit scope or accounting principles. Corniche's Board of Directors
participated in and approved the decision to change the independent accountants.
In connection with its audits for the prior two fiscal years and through August
12, 1998, there were no disagreements with Simontacchi on any matter of
accounting principles or practices, financial statement disclosure or auditing
scope or procedure, which disagreements, if not resolved to the satisfaction of
Simontacchi, would have caused Simontacchi to make reference thereto in its
report on the financial statements for such years. No "reportable events" as
describe under Item 304(a)(1)(v) of Regulation S-K occurred during the prior two
fiscal years.

      Corniche simultaneously engaged Weinick as its new independent accountants
as of August 12, 1998. Such appointment was approved by Corniche's Board of
Directors. Corniche had not consulted with Weinick regarding any matters or
events set forth in Item 304(a)(2)(i) and (ii) of Regulation S-K.

                    WHERE YOU CAN FIND ADDITIONAL INFORMATION

      The prospectus constitutes a part of the registration statement on Form
S-1, together with all amendments, supplements, schedules and exhibits to the
registration statement, referred to as the registration statement, which we have
filed with the Securities and Exchange Commission with respect to the common
stock offered in this prospectus. This prospectus does not contain all of the
information in the registration statement. For further information about us and
our securities, see the registration statement and its exhibits. This prospectus
contains a description of the material terms and features of some material
contracts, reports or exhibits to the registration statement required to be
disclosed. However, as the descriptions are summaries of the contracts, reports
or exhibits, we urge you to refer to the copy of each material contract, report
and exhibit attached to the registration statement. Copies of the registration
statement and the exhibits to the registration statement, as well as the
periodic reports, proxy statements and other information we will file with the
SEC, may be examined without charge in the Public Reference Section of the
Securities and Exchange Commission, 450 Fifth Street, N.W. Room 1024,
Washington, DC 20549, and the Securities and Exchange Commission's regional
offices located at 500 West Madison Street, Suite 1400, Chicago, IL 60661, and 7
World Trade Center, 13th Floor, New York, NY 10048 or on the Internet at
http://www.sec.gov. You can get information about the operation of the Public
Reference Room by calling the Securities and Exchange Commission at
1-800-SEC-0330. Copies of all or a portion of the registration statement can be
obtained from the Public Reference Section of the Securities and Exchange
Commission upon payment of prescribed fees. In addition, the Securities and
Exchange Commission maintains a web site which provides online access to
periodic reports, proxy and information statements and other information
regarding registrants that file electronically with the Securities and Exchange
Commission at the address http://www.sec.gov.

      We are subject to the information and reporting requirements of the
Securities Exchange Act of 1934 and file periodic reports, proxy statements and
other information with the Securities and Exchange Commission. We send an annual
report to stockholders and any additional reports or statements required by the
Securities and Exchange Commission. The annual report to stockholders contains
financial information that has been examined and reported on, with an opinion
expressed by an independent public accountant.

                                       25
   29
                   CORNICHE GROUP INCORPORATED AND SUBSIDIARY

                                      INDEX

                                                                                                        PAGE NO.
                                                                                                        --------
                                                                                                     
REPORTS OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS .................................................   F-2, F-3

FINANCIAL STATEMENTS:

         Consolidated Balance Sheets at December 31, 1999 and 1998 ..................................   F-4

         Statements of Operations
           For the Year Ended December 31, 1999 (Consolidated) and
           For the Nine Months Ended December 31, 1998 (Consolidated) and
           For the Year Ended March 31, 1998 ........................................................   F-5

         Statements of Convertible Redeemable Preferred Stock, Common Stock,
           Other Stockholders' Equity and Accumulated Deficit For the Year Ended
           December 31, 1999 (Consolidated) and For the Nine Months Ended
           December 31, 1998 (Consolidated) and
           For the Year Ended March 31, 1998.........................................................   F-6

         Statements of Cash Flows
           For the Year Ended December 31, 1999 (Consolidated) and
           For the Nine Months Ended December 31, 1998 (Consolidated) and
           For the Year Ended March 31, 1998 ........................................................   F-7, F-8

Notes to Financial Statements .......................................................................   F-9 - F-24

Schedule II - Valuation of Qualifying Accounts
         For the Year Ended December 31, 1999 (Consolidated) and
         For the Nine Months Ended December 31, 1998 (Consolidated) and
         For the Year Ended March 31, 1998 ..........................................................   F-25

         Consolidated Balance Sheets at June 30, 2000 and 1999 ......................................   F-26

         Statements of Operations
           For the Six Months ended June 30, 2000 (Consolidated) and
           For the Six Months ended June 30, 1999 (Consolidated).....................................   F-28

         Statements of Convertible Redeemable Preferred Stock,
           Common Stock, Other Stockholders' Equity and Accumulated Deficit
           For the Six Months ended June 30, 2000 (Consolidated) and
           For the Six Months ended June 30, 1999 (Consolidated).....................................   F-29

         Statements of Cash Flows
           For the Six Months ended June 30, 2000 (Consolidated) and
           For the Six Months ended June 30, 1999 (Consolidated).....................................   F-30

Notes to Consolidated Financial Statements...........................................................   F-32

   30

                [WEINICK SANDERS LEVENTHAL & CO., LLP LETTERHEAD]

                          INDEPENDENT AUDITOR'S REPORT

To the Stockholders and Board of Directors
Corniche Group Incorporated

We have audited the accompanying consolidated balance sheets of Corniche Group
Incorporated and Subsidiary as at December 31, 1999 and 1998, and the related
statements of operations, redeemable preferred stock, common stock, other
stockholders' equity and accumulated deficit, and cash flows for the year ended
December 31, 1999 and for the nine months ended December 31, 1998. These
consolidated financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these consolidated
financial statements based on our audits.

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

In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the financial position of Corniche Group
Incorporated and Subsidiary as at December 31, 1999 and 1998, and the results of
their operations and their cash flows for the year ended December 31, 1999 and
for the nine months ended December 31, 1998, in conformity with generally
accepted accounting principles. Also, in our opinion, the related financial
statements schedules for the year ended December 31, 1999 and for the nine
months ended December 31, 1998, when considered in relation to the basic
financial statements taken as a whole, presents fairly, in all material
respects, the information set forth therein.

                                       /s/ WEINICK SANDERS LEVENTHAL & CO., LLP

New York, New York
January 28, 2000 (Except as to a portion of Note 8 (b) to which the date is
February 15, 2000)

                                       F-2
   31

                     [SIMONTACCHI & COMPANY, LLP LETTERHEAD]

                          INDEPENDENT AUDITOR'S REPORT

To the Stockholders and Board of Directors
Corniche Group Incorporated

We have audited the accompanying statements of operations, redeemable preferred
stock, common stock, other stockholders' equity and accumulated deficit, and
cash flows of Corniche Group Incorporated for the year ended March 31, 1998. Our
audit also included the financial statement schedule for the year ended March
31, 1998. These financial statements and the financial statement schedule are
the responsibility of the Company's management. Our responsibility is to express
an opinion on these financial statements based on our audit.

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

In our opinion, the financial statements referred to above present fairly, in
all material respects, the results of the operations and the cash flows of
Corniche Group Incorporated for the year ended March 31, 1998 in conformity with
generally accepted accounting principles. Also, in our opinion, the related
financial statement schedule for the year ended March 31, 1998, when considered
in relation to the basic financial statements taken as a whole, presents fairly,
in all material respects, the information set forth therein.

                                                  /s/ SIMONTACCHI & COMPANY, LLP

Fairfield, New Jersey
July 10, 1998

                                       F-3
   32
                   CORNICHE GROUP INCORPORATED AND SUBSIDIARY

                          CONSOLIDATED BALANCE SHEETS

                                                                                             December 31,
                                                                                     ----------------------------
                                                                                         1999            1998
                                                                                     ------------    ------------
                                                                                               
Current assets:
  Cash and equivalents                                                               $  1,639,473    $    206,313
  Marketable securities                                                                 2,733,319         628,175
  Prepaid expenses                                                                         71,622              --
                                                                                     ------------    ------------
        Total current assets                                                            4,444,414         834,488

Property and equipment, net                                                               655,002          40,781
Deferred acquisition costs                                                                 41,946              --
License, net of accumulated amortization                                                   16,777          17,997
Other assets                                                                               12,525          12,525
                                                                                     ------------    ------------

                                                                                     $  5,170,664    $    905,791
                                                                                     ============    ============

             LIABILITIES, STOCKHOLDERS' EQUITY AND (CAPITAL DEFICIENCY)

Current liabilities:
  Dividends payable - preferred stock                                                $    288,334    $    236,981
  Accounts payable, accrued expenses
    and other current liabilities                                                         561,870         133,941
  Current portion of long-term debt                                                        22,662           4,649
                                                                                     ------------    ------------
        Total current liabilities                                                         872,866         375,571

Unearned revenues                                                                         298,801              --
                                                                                     ------------    ------------

Long-term debt                                                                             76,591           9,262
                                                                                     ------------    ------------

Series A Convertible Preferred Stock:
  Series A $0.07 cumulative convertible
    preferred stock - stated value - $1.00 per share, authorized - 1,000,000
    shares, outstanding - 810,054 shares at December 31, 1999
    and 828,765 shares at December 31, 1998                                               810,054         828,765
                                                                                     ------------    ------------

Convertible Redeemable Preferred Stock, Common Stock,
    Other Stockholders' Equity and (Accumulated Deficit):
  Preferred stock - authorized - 5,000,000 shares, Series B convertible
  redeemable preferred stock, $.01 par value
    Authorized issued and outstanding - 825,000 shares                                      8,250           8,250

    Common stock, $.001 par value, authorized - 30,000,000 shares
      Issued and outstanding - 12,513,127 at December 31, 1999                             12,513              --
                                                  - 6,369,968 at December 31, 1998             --           6,370
    Additional paid-in capital                                                          7,421,944       2,838,420
    Accumulated deficit                                                                (4,330,355)     (3,160,847)
                                                                                     ------------    ------------
        Total convertible redeemable preferred
          stock, common stock, other stockholders'
          equity and (accumulated deficit)                                              3,112,352        (307,807)
                                                                                     ------------    ------------

                                                                                     $  5,170,664    $    905,791
                                                                                     ============    ============

                See accompanying notes to financial statements.

                                      F-4
   33
                   CORNICHE GROUP INCORPORATED AND SUBSIDIARY

                            STATEMENT OF OPERATIONS

                                      For the Year    For the Nine    For the Year
                                         Ended        Months Ended        Ended
                                      December 31,    December 31,      March 31,
                                          1999            1998            1998
                                      ------------    ------------    ------------
                                     (Consolidated)  (Consolidated)
                                                             
Earned revenues                       $     12,854    $         --    $         --

Direct costs                                 7,557              --              --
                                      ------------    ------------    ------------

Gross profit                                 5,297              --              --

General and administrative expenses      1,060,668         428,157         221,602
                                      ------------    ------------    ------------

Operating loss                          (1,055,371)       (428,157)       (221,602)

Interest income (expense), net             (56,965)         25,206          17,804
                                      ------------    ------------    ------------

Net loss before preferred dividend      (1,112,336)       (402,951)       (203,798)

Preferred dividend                         (57,172)        (44,642)        (60,067)
                                      ------------    ------------    ------------

Net loss                              $ (1,169,508)   $   (447,593)   $   (263,865)
                                      ============    ============    ============

Net loss per share of common stock    $      (0.17)   $      (0.07)   $      (0.05)
                                      ============    ============    ============

Weight average number of
  common shares outstanding              6,905,073       6,367,015       5,165,272
                                      ============    ============    ============

                See accompanying notes to financial statements.

                                      F-5
   34
                   CORNICHE GROUP INCORPORATED AND SUBSIDIARY

      STATEMENTS OF CONVERTIBLE REDEEMABLE PREFERRED STOCK, COMMON STOCK,
               OTHER STOCKHOLDERS' EQUITY AND ACCUMULATED DEFICIT

                    FOR THE YEAR ENDED DECEMBER 31, 1999 AND
                FOR THE NINE MONTHS ENDED DECEMBER 31, 1998 AND
                       FOR THE YEAR ENDED MARCH 31, 1998

                                                    Series B
                                                   Convertible
                                                 Preferred Stock                 Common Stock             Additional
                                           ---------------------------   ----------------------------      Paid-In
                                              Shares         Amount         Shares          Amount         Capital
                                           ------------   ------------   ------------    ------------    ------------
                                                                                          
Balance at April 1, 1997                             --             --      2,630,378    $      2,630    $  1,090,493
Issuance of common stock for cash,
  net of related costs of $184,500                   --             --      3,940,000           3,940       1,781,560
Retirement of treasury stock                         --             --       (218,100)           (218)       (204,492)
Conversion of Series A convertible
  preferred stock into common
  stock                                              --             --          2,953               3          15,356
Series A convertible preferred
  stock dividend                                     --             --             --              --              --
Net loss before preferred
  stock dividend                                     --             --             --              --              --
                                           ------------   ------------   ------------    ------------    ------------

Balance at March 31, 1998                            --             --      6,355,231           6,355       2,682,917
Adjustments to common stock                          --             --          2,212               2              (2)
Issuance of Series B convertible
  preferred stock for cash                      765,000          7,650             --              --          68,850
Issuance of Series B convertible
  preferred stock for services
  rendered                                       60,000            600             --              --           5,400
Conversion of Series A convertible
  preferred stock into common stock                  --             --         12,525              13          81,255
Series A convertible preferred
  stock dividend                                     --             --             --              --              --
Net loss before preferred
  stock dividend                                     --             --             --              --              --
                                           ------------   ------------   ------------    ------------    ------------

Balance at December 31, 1998                    825,000          8,250      6,369,968           6,370       2,838,420
Issuance of common stock for
  interest and services rendered                     --             --         55,000              55          57,664
Issuance of common stock for
  indebtedness                                       --             --        208,738             209         252,973
Issuance of common stock for
  cash, net of offering costs                        --             --      5,875,835           5,876       4,248,360
Conversion of Series A convertible
  preferred stock into common stock                  --             --          3,586               3          24,527
Series A convertible stock dividends                 --             --             --              --              --
Net loss before preferred stock dividend             --             --             --              --              --
                                           ------------   ------------   ------------    ------------    ------------

Balance at December 31, 1999                    825,000   $      8,250     12,513,127    $     12,513    $  7,421,944
                                           ============   ============   ============    ============    ============

                                                  Treasury Stock
                                           ----------------------------    Accumulated
                                              Shares          Amount         Deficit          Total
                                           ------------    ------------    ------------    ------------
                                                                               
Balance at April 1, 1997                       (218,100)   $(   204,710)   $( 2,449,389)   $( 1,560,976)
Issuance of common stock for cash,
  net of related costs of $184,500                   --              --              --       1,785,500
Retirement of treasury stock                    218,100         204,710              --              --
Conversion of Series A convertible
  preferred stock into common
  stock                                              --              --              --          15,359
Series A convertible preferred
  stock dividend                                     --              --         (60,067)        (60,067)
Net loss before preferred
  stock dividend                                     --              --        (203,798)       (203,798)
                                           ------------    ------------    ------------    ------------

Balance at March 31, 1998                            --              --      (2,713,254)        (23,982)
Adjustments to common stock                          --              --              --              --
Issuance of Series B convertible
  preferred stock for cash                           --              --              --          76,500
Issuance of Series B convertible
  preferred stock for services
  rendered                                           --              --              --           6,000
Conversion of Series A convertible
  preferred stock into common stock                  --              --              --          81,268
Series A convertible preferred
  stock dividend                                     --              --         (44,642)        (44,642)
Net loss before preferred
  stock dividend                                     --              --        (402,951)       (402,951)
                                           ------------    ------------    ------------    ------------

Balance at December 31, 1998                         --              --      (3,160,847)       (307,807)
Issuance of common stock for
  interest and services rendered                     --              --              --          57,719
Issuance of common stock for
  indebtedness                                       --              --              --         253,182
Issuance of common stock for
  cash, net of offering costs                        --              --              --       4,254,236
Conversion of Series A convertible
  preferred stock into common stock                  --              --              --          24,530
Series A convertible stock dividends                 --              --         (57,172)        (57,172)
Net loss before preferred stock dividend             --              --      (1,112,336)     (1,112,336)
                                           ------------    ------------    ------------    ------------

Balance at December 31, 1999                         --    $         --    $( 4,330,355)   $  3,112,352
                                           ============    ============    ============    ============

                See accompanying notes to financial statements.

                                      F-6
   35
                   CORNICHE GROUP INCORPORATED AND SUBSIDIARY

                            STATEMENTS OF CASH FLOWS

                                                                             For the Year    For the Nine    For the Year
                                                                                Ended        Months Ended        Ended
                                                                             December 31,    December 31,      March 31,
                                                                                 1999            1998            1998
                                                                             ------------    ------------    ------------
                                                                            (Consolidated)  (Consolidated)
                                                                                                    
Cash flows from operating activities:
  Net loss                                                                   $ (1,169,508)   $   (447,593)   $   (263,865)
                                                                             ------------    ------------    ------------
  Adjustments to reconcile net loss to
      net cash used in operating activities:
    Common shares and Series B preferred
      shares issued for interest expense
      and for services rendered                                                    57,719           6,000              --
    Series A preferred stock dividends                                             57,172          44,642          60,067
    Depreciation and amortization                                                  82,338           3,435             388
    Unearned revenues                                                             298,801              --              --
    Increase (decrease) in cash flows as
        a result of changes in asset and liability account balances net of
        effects from purchase of Stamford Insurance Company, Ltd.:
      Deferred acquisition costs                                                  (41,946)             --              --
      Prepaid expenses and other receivables                                      (71,622)            179             821
      Other assets                                                                     --         (12,525)             --
      Accounts payable, accrued expenses
        and other current liabilities                                             422,929          82,729         (67,014)
                                                                             ------------    ------------    ------------
  Total adjustments                                                               805,391         124,460          (5,738)
                                                                             ------------    ------------    ------------

Net cash used in operating activities                                            (364,117)       (323,133)       (269,603)
                                                                             ------------    ------------    ------------

Cash flows from investing activities:
  Investment in marketable securities                                          (2,105,144)       (628,175)             --
  Acquisition of property assets                                                 (442,157)        (25,745)             --
  Acquisition of subsidiary                                                            --         (37,000)             --
                                                                             ------------    ------------    ------------
Net cash used in investment activities                                         (2,547,301)       (690,920)             --
                                                                             ------------    ------------    ------------

Cash flows from financing activities:
  Net proceeds from issuance
    of capital stock                                                            4,254,236          76,500       1,785,500
  Net proceeds from long-term debt                                                 89,264              --              --
  Payments of capital lease obligations                                            (3,922)         (3,995)             --
  Net repayments of notes payable                                                      --              --        (400,000)
                                                                             ------------    ------------    ------------
Net cash provided by financing activities                                       4,339,578          72,505       1,385,500
                                                                             ------------    ------------    ------------

Net increase (decrease) in cash                                                 1,428,160        (941,548)      1,115,897

Cash balance acquired with
  purchase of subsidiary                                                               --          18,797              --

Cash and cash equivalents
  at beginning of period                                                          206,313       1,129,064          13,167
                                                                             ------------    ------------    ------------

Cash and cash equivalents
  at end of period                                                           $  1,634,473    $    206,313    $  1,129,064
                                                                             ============    ============    ============

                See accompanying notes to financial statements.

                                      F-7
   36
                   CORNICHE GROUP INCORPORATED AND SUBSIDIARY

                      STATEMENTS OF CASH FLOWS (Continued)

                                              For the Year   For the Nine   For the Year
                                                  Ended      Months Ended      Ended
                                              December 31,   December 31,     March 31,
                                                  1999           1998           1998
                                              ------------   ------------   ------------
                                             (Consolidated) (Consolidated)
                                                                   
Supplemental Disclosures of Cash
    Flow Information:
  Cash paid during the period

    Income taxes                              $         --   $         --   $         --
                                              ============   ============   ============

    Interest                                  $     35,193   $        886   $      4,181
                                              ============   ============   ============

Supplemental Schedules of Noncash
    Investing and Financing Activities:

  Issuance of common stock for interest       $     27,719   $         --   $         --
                                              ============   ============   ============

  Issuance of preferred and common
    stock for services rendered               $     30,000   $      6,000   $         --
                                              ============   ============   ============

  Property assets acquired under
    capital lease obligations                 $         --   $     17,806   $         --
                                              ============   ============   ============

  Net accrual of dividends on
    Series A preferred stock                  $     51,353   $     28,517   $     60,067
                                              ============   ============   ============

  Series A preferred stock and
    dividends thereon converted to
    common stock and additional
    paid-in capital upon conversion           $     24,530   $     81,268   $     15,359
                                              ============   ============   ============

  Issuance of common stock for indebtedness   $    253,182   $         --   $         --
                                              ============   ============   ============

                See accompanying notes to financial statements.

                                      F-8
   37

                   CORNICHE GROUP INCORPORATED AND SUBSIDIARY

                          NOTES TO FINANCIAL STATEMENTS

                      AS AT DECEMBER 31, 1999 AND 1998 AND
                     FOR THE YEARS ENDED DECEMBER 31, 1999,
                 FOR THE NINE MONTHS ENDED DECEMBER 31, 1998 AND
                        FOR THE YEAR ENDED MARCH 31, 1998

NOTE 1 - THE COMPANY.

                  Corniche Group Incorporated (hereinafter referred to as the
           "Company" or "CGI") as a result of a reverse acquisition with
           Corniche Distribution Limited and its Subsidiaries ("Corniche"), was
           engaged in the retail sale and wholesale distribution of stationery
           products and related office products, including office furniture, in
           the United Kingdom. In February 1996, the Company was placed in
           receivership by its creditors. Through March 1998, the Company had no
           activity.

                  On March 4, 1998, the Company entered into a Stock Purchase
           Agreement ("Agreement"), approved by the Company's stockholders on
           May 18, 1998, with certain individuals (the "Initial Purchasers")
           whereby the Initial Purchasers acquired an aggregate of 765,000
           shares of a newly created Series B Convertible Redeemable Preferred
           Stock, par value $0.01 per share. Thereafter the Initial Purchasers
           have been endeavoring to establish for the Company new business
           operations in the property and casualty specialty insurance and the
           service contract markets.

                  On September 30, 1998, the Company acquired all of the capital
           stock of Stamford Insurance Company, Ltd. ("Stamford") from
           Warrantech Corporation for $37,000 in cash in a transaction accounted
           for as a purchase. Warrantech's chairman is the former chairman of
           the Company. Stamford was charted under the Laws of, and is licensed
           to conduct business as an insurance company by, the Cayman Islands.
           Although Stamford has incurred expenses since its inception, it first
           generated revenues in the fourth quarter of 1999.

                                      F-9
   38

NOTE 1 - THE COMPANY. (Continued)

                  The unaudited consolidated combined results of operations, on
           a pro forma basis as though Stamford has been acquired at the
           beginning of each period, is as follows:

                     For the Nine    For the Years
                     Months Ended       Ended
                     December 31,      March 31,
                         1998            1998
                     ------------    ------------
                               
Net sales            $         --    $         --
                     ------------    ------------

Costs and expenses        511,335         232,824
                     ------------    ------------

Net loss             $   (527,991)   $   (268,321)
                     ============    ============

Net loss per share   $      (0.08)   $      (0.05)
                     ============    ============

                  At December 31, 1999 and 1998, Stamford's total net assets
           consisted of the following:

                                         December 31,
                                 ---------------------------
                                     1999           1998
                                 ------------   ------------
                                          
Assets:
  Cash and equivalents           $    384,849   $    155,806
  Deferred acquisition costs           35,568             --
  Licenses, net of accumulated
    depreciation                       16,777         17,997
                                 ------------   ------------
                                      437,194        173,803

Liabilities:
  Current liabilities                   5,021            879
  Unearned premiums                   288,086             --
                                 ------------   ------------
                                      293,107            879
                                 ------------   ------------

Net assets                       $    144,087   $    172,924
                                 ============   ============

NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES.

           (a) Basis of Presentation:

                  On February 4, 1999, the Board of Directors approved a
           resolution to change the Company's fiscal year-end from March 31, to
           December 31. The accompanying financial statements as at and for the
           year ended December 31, 1999 reflect the consolidated financial
           position and consolidated results of operations and cash flows of the
           Company and its wholly-owned subsidiary, Stamford, for the year ended
           December 31, 1999.

                                      F-10
   39

NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES.

           (a) Basis of Presentation: (Continued)

                  The financial statements as at and for the nine months ended
           December 31, 1999 reflect the consolidated financial position and
           consolidated results of operations and cash flows of the Company for
           the nine months ended December 31, 1998 and its wholly-owned
           subsidiary from its acquisition on September 30, 1998 to December 31,
           1998. The financial statements for the year ended March 31, 1998
           reflect the financial position and results of operations and cash
           flows of the Company for the year then ended. All material
           intercompany transactions have been eliminated in consolidation.

           (b) Cash Equivalents:

                  Short-term cash investments which have a maturity of ninety
           days or less when purchased are considered cash equivalents in the
           statement of cash flows.

           (c) Estimates:

                  The preparation of financial statements in conformity with
           generally accepted accounting principles requires management to make
           estimates and assumptions that affect certain reported amounts and
           disclosures. Accordingly, actual results could differ from those
           estimates.

           (d) Concentrations of Credit-Risk:

                  Financial instruments that potentially subject the Company to
           significant concentrations of credit risk consist principally of cash
           and marketable securities. The Company places it domestic operations
           cash accounts with high credit quality financial institutions which
           at times may be in excess of the FDIC insurance limit. The Company's
           subsidiary places its cash in the Cayman Island subsidiaries of
           domestic banks whose net worth exceeds $100,000,000. The Company's
           marketable securities are primarily comprised of investments in
           municipal bank funds. The Company employs the services of an
           investment advisor to assist in monitoring its investments.

           (e) Marketable Securities:

                  Marketable securities are classified as trading securities and
           are reported at market value at December 31, 1999 and 1998 which
           approximates cost.

                                      F-11
   40

NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES.

           (f) Property and Equipment: (Continued)

                  The cost of property and equipment is depreciated over the
           estimated useful lives of the related assets of 5 to 7 years. The
           cost of computer software programs is amortized over their estimated
           useful lives of five years. Depreciation is computed on the
           straight-line method. Repairs and maintenance expenditures which do
           not extend original asset lives are charged to income as incurred.

           (g) Intangibles:

                  The excess of the purchase price for the capital stock of
           Stamford over the net assets acquired has been attributed to the
           subsidiary's license to conduct business as an insurance carrier in
           the Cayman Islands. Amortization charged to operations in fiscal 1999
           was $1,220 and in the nine months ended December 31, 1998 was $305.

           (h) Income Taxes:

                  The Company adopted SFAS 109, "Accounting for Income Taxes",
           which recognizes (a) the amount of taxes payable or refundable for
           the current year and, (b) deferred tax liabilities and assets for the
           future tax consequences of events that have been recognized in an
           enterprise's financial statement or tax returns. There is no
           difference as to financial and tax basis of assets and liabilities.

           (i) Fair Value of Financial Statements:

                  The Company adopted Statement of Financial Accounting
           Standards No. 121 ("SFAS No. 121"), "Accounting for the Impairment of
           Long-Lived Assets and for Long-Lived Assets to be Disposed of". The
           statement requires that the Company recognizes and measures
           impairment losses of long-lived assets, certain identifiable
           intangibles, value long-lived assets to be disposed of and long-term
           liabilities. At December 31, 1999 and 1998, the carrying values of
           the Company's other assets and liabilities approximate their
           estimated fair values.

           (j) Advertising Costs:

                  The Company expenses advertising costs as incurred.
           Advertising costs amounted to $252,983 in fiscal 1999 and none for
           the nine months ended December 31, 1998 and year ended March 31,
           1998.

                                      F-12
   41

NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES.

           (k) Earnings Per Share:

                  The Company adopted Statement of Financial Accounting
           Standards No. 128, "Earnings Per Share," in the year ended March 31,
           1998. Basic earnings per share is based on the weighted effect of all
           common shares issued and outstanding, and is calculated by dividing
           net income available to common stockholders by the weighted average
           shares outstanding during the period. Diluted earnings per share,
           which is calculated by dividing net income available to common
           stockholders by the weighted average number of common shares used in
           the basic earnings per share calculation plus the number of common
           shares that would be issued assuming conversion of all potentially
           dilutive securities outstanding, is not presented as it is
           anti-dilutive in all periods.

           (l) Recently Issued Accounting Pronouncements:

                  The Financial Accounting Standards Board issued Statement of
           Financial Accounting Standards No. 130 - "Reporting Comprehensive
           Income", No. 131 - "Disclosures about Segments of an Enterprise and
           Related Information", No. 132 - "Employer's Disclosures about Pension
           and Other Postretirement Benefits" and No. 133 - "Accounting for
           Derivative Instruments and Hedging Activities". Management does not
           believe that the effect of implementing these new standards will be
           material to the Company's financial position, results of operations
           and cash flows.

           (m) Revenue Recognition:

                  Stamford is a property and casualty reinsurance company
           writing reinsurance coverages for one domestic carrier's consumer
           products service contracts. The domestic carrier is rated "A-"
           Excellent by A.M. Best.

                  Premiums are recognized on a pro rata basis over the policy
           term. The deferred policy acquisition costs are the net cost of
           acquiring new and renewal insurance contracts. These costs are
           charged to expense in proportion to net premium revenue recognized.

                  The provisions for losses and loss-adjustment expenses
           includes an amount determined from loss reports on individual cases
           and an amount, based on past experience for losses incurred but not
           reported. Such liabilities are necessarily based on estimates, and
           while management believes that the amount is adequate, the ultimate
           liability may be in excess of or less than the amounts provided. The
           methods for making such estimates and for estimates and for
           establishing the resulting liability are continually reviewed, and
           any adjustments are reflected in earnings currently.

                  The parent company sells via the Internet directly to
           consumers automotive vehicle services contracts. The Company
           recognizes revenue ratably over the length of the contract. The
           Company purchases insurance to fully cover any losses under the
           service contracts from the domestic carrier referred to above. The
           insurance premium and other costs related to the sale are amortized
           over the contract.

                                      F-13
   42

NOTE 3 - PROPERTY AND EQUIPMENT.

                             Property and equipment consists of the following:

                                              December 31,
                                      ---------------------------
                                          1999           1998
                                      ------------   ------------
                                               
Computer equipment                    $    116,660   $      3,906
Furniture and fixtures                      23,266         23,266
Computer software                          582,585             --
                                      ------------   ------------
                                           722,511         27,172
Less:  Accumulated depreciation             77,896          2,713
                                      ------------   ------------
                                           644,615         24,459
                                      ------------   ------------

Lease property under capital lease:
  Office equipment                          17,806         17,806
Less:  Accumulated depreciation              7,419          1,484
                                      ------------   ------------
                                            10,387         16,322
                                      ------------   ------------

                                      $    655,002   $     40,781
                                      ============   ============

                  Depreciation and amortization charged to operations was
           $81,118, $3,130 and $388, for the year ended December 31, 1999, for
           the nine months ended December 31, 1998 and for the year ended March
           31, 1998, respectively.

                  The estimated present value of the capital lease obligations
           at December 31, 1999 reflects imputed calculated at 12.7% and 19.32%.
           The obligations are payable in equal monthly installments through
           January 2002 as follows:

        Years Ending
        December 31,
        ------------
                              
            2000                 $  7,115
            2001                    5,181
            2002                      317
                                 --------
                                   12,613
Amount representing interest        2,630
                                 --------

Present value of minimum
  lease payments                    9,983
Present value of minimum lease
  payments due within one year      5,392
                                 --------

Present value of minimum lease
  payments due after one year    $  4,591
                                 ========

                  The aggregate maturities of the present value of the minimum
           lease obligations is as follows:

       Years Ending
       December 31,
       ------------
                        
           2000            $5,392
           2001             4,294
           2002               297
                           ------

                           $9,983
                           ======

                                      F-14
   43

NOTE 4 - ACCOUNTS PAYABLE, ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES.

                  Accounts payable, accrued expenses and other current
           liabilities consist of the following at:

                                             December 31,
                                     ---------------------------
                                         1999           1998
                                     ------------   ------------
                                              
Accrued offering costs               $    419,120   $         --
Accrued professional fees                  41,534         80,000
Advertising                                69,427             --
Other                                      26,789         11,956
Due to related party (see Note 10)             --         41,985
Accrued claims losses                       5,000             --
                                     ------------   ------------

                                     $    556,870   $    133,941
                                     ============   ============

NOTE 5 - NOTES PAYABLE.

                  During the period January 1997 through April 30, 1997, the
           Company engaged in a private offering of securities pursuant to Rule
           506 of Regulation D of the Securities Act of 1993, as amended. The
           offering consists of up to 19 units being sold at an offering price
           of $25,000 per unit. Each unit consists of one $25,000 face amount
           90-day, 8% promissory note and one redeemable common stock purchase
           warrant to purchase 60,000 shares of the Company's common stock at a
           price of $.50 per share during a period of three years from issuance.
           The offering of up to $475,000 was conducted on a "best efforts"
           basis through Robert M. Cohen & Co. ("RMCC"). In connection with such
           offering, RMCC was paid sales commissions equal to 10% of the
           purchase price of each unit sold or $2,500 per unit.

                  The notes payable relating to the above offering were paid in
           full and the warrants were simultaneously redeemed during the year
           ended March 31, 1998 with funds generated from the sale of stock (see
           Note 8).

                  In October 1999 the Company sold to accredited investors 10
           units of its promissory notes and common stock for $25,025 each. Each
           unit was comprised of a 5% interest bearing $25,000 note and 25,000
           shares. The variance between the fair market value of the 25,000
           common shares issued in the aggregate of $27,969 and the cash
           received of $250 was deemed to be additional interest and was charged
           to operations over the life of the notes. The notes were repaid in
           full in December 31, 1999. At December 31, 1999, accrued interest on
           the notes of $3,025 remained outstanding and was repaid in January,
           2000. The effective weighted average interest rate of the notes
           during the period they were outstanding was 49.2%.

                                      F-15
   44

NOTE 6 - LONG-TERM DEBT.

                  Long-term debt consists of the following at December 31, 1999
           and 1998:

                                                  1999           1998
                                              ------------   ------------
                                                       
Capital lease obligations (see Note 3)        $      9,983   $     13,911

Note payable - bank - in equal monthly
  installments of $2,043 including interest
  at 8-3/4%. The notes are collateralized
  by computer equipment having an
  undepreciated cost of $78,927                     89,270             --
                                              ------------   ------------

                                                    99,253         13,911
Portion payable within one year                     22,662          4,649
                                              ------------   ------------

                                              $     76,591   $      9,262
                                              ============   ============

                         The aggregate maturities of the obligations is as
           follows:

         Years Ending
         December 31,
         ------------
                         
             2000           $22,662
             2001            23,459
             2002            20,616
             2003            22,525
             2004             9,991
                            -------

                            $99,253
                            =======

NOTE 7 - SERIES A CONVERTIBLE PREFERRED STOCK.

                  In connection with the settlement of a securities class action
           litigation in 1994, the Company issued 1,000,000 shares of Series A
           $0.07 Convertible Preferred Stock (the "Series A Preferred Stock")
           with an aggregate value of $1,000,000. The following summarizes the
           terms of Series A Preferred Stock as more fully set forth in the
           Certificate of Designation. The Series A Preferred Stock has a
           liquidation value of $1 per share, is non-voting and convertible into
           common stock of the Company at a price of $5.20 per share. Holders of
           Series A Preferred Stock are entitled to receive cumulative cash
           dividends of $0.07 per share, per year, payable semi-annually. Until
           November 30, 1999 the Series A Preferred Stock was callable by the
           Company at a price of $1.04 per share, plus accrued and unpaid
           dividends, and thereafter at a price of $1.05 per share, plus accrued
           and unpaid dividends. In addition, if the closing.

                                      F-16
   45

NOTE 7 - SERIES A CONVERTIBLE PREFERRED STOCK. (Continued)

           price of the Company's common stock exceeds $13.80 per share for a
           period of 20 consecutive trade days, the Series A Preferred Stock is
           callable by the Company at a price equal to $0.01 per share, plus
           accrued and unpaid dividends. The Certificate of Designation for the
           Series A Preferred Stock also states that at any time after December
           1, 1999 the holders of the Series A Preferred Stocks may require the
           Company to redeem their shares of Series A Preferred Stock (if there
           are funds with which the Company may do so) at a price of $1.00 per
           share. Notwithstanding any of the foregoing redemption provisions, if
           any dividends on the Series A Preferred Stock are past due, no shares
           of Series A Preferred Stock may be redeemed by the Company unless all
           outstanding shares of Series A Preferred Stock are simultaneously
           redeemed. During the year ended December 31, 1999, 18,711 shares of
           Series A Preferred Stock were converted into 3,586 shares of common
           stock. During the nine months ended December 31, 1998, 65,143 shares
           of the Series A Preferred Stock were converted into 12,525 shares of
           common stock. During the year ended March 31, 1998, holders of 15,359
           shares of the Series A Preferred Stock converted such shares into
           2,953 shares of the Company's common stock. At December 31, 1999,
           810,054 shares of Series A Preferred Stock were outstanding, and
           accrued dividends on these outstanding shares are $288,334.

NOTE 8 - STOCKHOLDER'S EQUITY.

           (a) Series B Convertible Redeemable Preferred Stock:

                  On March 4, 1998, the Company entered into a Stock Purchase
           Agreement ("Agreement"), approved by the Company's stockholders on
           May 18, 1998, with certain individuals (the "Initial Purchasers")
           whereby the Initial Purchasers and two other persons acquired an
           aggregate of 825,000 shares of a newly created Series B Convertible
           Redeemable Preferred Stock ("Series B Stock"), par value $0.01 per
           share.

                  Pursuant to the Agreement and subsequent transactions, the
           Initial Purchasers acquired 765,000 shares of Series B Stock for
           $76,500 in cash. The Company incurred certain legal expenses of the
           Initial Purchasers equaling approximately $50,000 in connection with
           the transaction. In addition, the Company issued 50,000 shares of
           Series B Stock to a consultant as compensation valued at $5,000 for
           his assistance to the Company in the identification and review of
           business opportunities and this transaction and for his assistance in
           bringing the transaction to fruition. Additionally, the Company
           issued 10,000 shares of Series B Stock to James Fyfe as compensation
           valued at $1,000 for his work in bringing this transaction to
           fruition. These issuances diluted the voting rights of the then
           existing stockholders by approximately 57%. The total authorized
           shares of Series B Convertible Redeemable Preferred Stock are
           825,000.

                                      F-17
   46

NOTE 8 - STOCKHOLDER'S EQUITY. (Continued)

           (a) Series B Convertible Redeemable Preferred Stock: (Continued)

                  The following summarizes the terms of the Series B Stock whose
           terms are more fully set forth in the Certificate of Designation. The
           Series B Stock carries a zero coupon and each share of the Series B
           Stock is convertible into ten shares of the Company's common stock.
           The holder of a share of the Series B Stock is entitled to ten times
           any dividends paid on the common stock and such stock has ten votes
           per share and vote as one class with the common stock. Accordingly,
           the Initial Purchasers have sufficient voting power to elect all of
           the Board of Directors. However, the Initial Purchasers are required
           to vote in favor of Mr. Fyfe or his designee as a director of the
           Corporation through June 30, 2000.

                  The holder of any share of Series B Convertible Redeemable
           Preferred Stock has the right, at such holder's option (but not if
           such share is called for redemption), exercisable on or after
           September 30, 2000, to convert such share into ten (10) fully paid
           and non-assessable shares of common stock (the "Conversion Rate").
           The Conversion Rate is subject to adjustment as stipulated in the
           Agreement. Upon liquidation, the Series B Stock would be junior to
           the Corporation's Series A Preferred Stock and would share ratably
           with the common stock with respect to liquidating distributions.

                  Since, the Company raised in excess of $2,500,000 in fiscal
           1999 from the sale of its common shares and the Company's common
           shares maintained a minimum closing bid price in excess of $2.00 per
           shares for 10 consecutive trading days, then the Company's right,
           pursuant to the terms of the Agreement and the Certificate of
           Designation to repurchase or redeem such shares of Series B Stock
           from the holders for total consideration of $0.10 per share was
           eliminated.

           (b) Common Stock:

                  On May 15, 1997, the Company commenced a private securities
           offering pursuant to Rule 506 of Regulation D of the Securities Act
           of 1933, as amended, of up to 400 units, each unit consisting of
           10,000 shares of common stock being offered at a price of $5,000 per
           unit. The Company used a placement agent for such offering who
           received a sales commission equal to 10% of the offering price of
           each unit sold. In connection with the offering, 369 units were sold
           for gross receipts of $1,845,000 from which the agent was paid a
           commission $184,500 for net of $1,660,500 to the Company.

                                      F-18
   47

NOTE 8 - STOCKHOLDER'S EQUITY. (Continued)

           (b) Common Stock: (Continued)

                  In March 1998, the Company sold 250,000 shares of common stock
           at $.50 per share realizing $125,000.

                  The stockholders at the annual meeting held on May 18, 1998,
           approved the reduction of the par value of the common stock from
           $0.10 per share to $0.001 per share.

                  Commencing in May 1999 through July 1999, the Company sold
           688,335 shares of its common stock to accredited investors for
           $538,492 net of offering costs. In December 1999, accredited
           investors purchased 5,187,500 shares of the Company's common stock
           for $3,715,744, net of offering costs. Through February 15, 2000,
           additional investors acquired 1,676,250 shares of the Company's
           common stock for approximately $1,206,000, net of offering costs.

                  The Company in 1999 issued 5,000 shares of its common stock
           whose fair value was $5,000 to its President as a signing bonus which
           was charged to operations at the time of issuance. The Company also
           issued in 1999, 25,000 shares of its common stock whose fair value
           was $25,000 at the date of issuance to a public relations consultant
           for future services. The arrangement with the consultant was
           terminated in 1999 and the fair value of the shares was charged to
           operations in 1999.

           (c) Warrants:

                  The Company has issued common stock purchase warrants from
           time to time to investors in private placements, certain vendors,
           underwriters, and directors and officers of the Company.

                  A total of 101,308 shares of common stock are reserved for
           issuance upon exercise of warrants as of December 31, 1998 and March
           31, 1998. Of these outstanding warrants, warrants for 9,375 common
           shares at $46.40 per share expired in April 1999. The remaining
           warrants to acquire 91,933 common shares at exercise prices ranging
           from $3.20 to $8.10 per share were granted in March 1995 to certain
           directors, officers and employees who converted previously
           outstanding stock options under the 1986 Plan into warrants on
           substantially the same terms as the previously held stock options,
           except the warrants were immediately vested. During fiscal 1999,
           warrants to acquire 22,308 common shares at prices ranging from $3.90
           to $46.40 per share expired. No warrants were exercised during any of
           the periods presented. A total of 79,000 shares of common stock are
           reserved for issuance upon exercise of outstanding warrants as of
           December 31, 1999 at prices ranging from $3.20 to $27.50 and expiring
           through October 2004.

                                      F-19
   48

NOTE 8 - STOCKHOLDER'S EQUITY. (Continued)

           (d) Stock Option Plans:

                  The Company has two stock option plans. The 1998 Stock Option
           Plan provides for the grant of options to purchase shares of the
           Company's common stock to employees. The 1992 Stock Option Plan
           provides for the grant of options to directors.

                  In April 1992, the Company adopted the 1992 Stock Option Plan
           to provide for the granting of options to directors. According to the
           terms of this plan, each director is granted options to purchase
           1,500 shares each year. The maximum amount of the Company's common
           stock that may be granted under this plan is 20,000 shares. Options
           are exercisable at the fair market value of the common stock on the
           date of grant and have five year terms.

                  Under the 1998 Plan, the maximum aggregate number of shares
           which may be issued under options is 300,000 shares of common stock.
           The aggregate fair market value (determined at the time the option is
           granted) of the shares for which incentive stock options are
           exercisable for the first time under the terms of the 1998 Plan by
           any eligible employee during any calendar year cannot exceed
           $100,000. The option exercise price of each option is 100% of the
           fair market value of the underlying stock on the date the options are
           granted, except that no option will be granted to any employee who,
           at the time the option is granted, owns stock possessing more than
           10% of the total combined voting power of all classes of stock of the
           Corporation or any subsidiary unless (a) at the time the options are
           granted, the option exercise price is at least 110% of the fair
           market value of the shares of common stock subject to the options and
           (b) the option by its terms is not exercisable after the expiration
           of five years from the date such option is granted.

                                      F-20
   49

NOTE 8 - STOCKHOLDER'S EQUITY. (Continued)

           (d) Stock Option Plans: (Continued)

                  The 1998 Plan is administered by a committee of disinterested
           directors of the Board of Directors of the Corporation ("Option
           Committee"). In 1999, options to acquire 100,000 common shares at
           $1.00 per share were granted to an officer and an option to acquire
           25,000 common shares at $0.6875 per share was issued to a consultant
           were granted under the 1998 Plan. In May 1997, a director was granted
           an option to acquire 1,500 common shares at $0.3125 per share were
           granted under the 1992 Plan.

                  Information with respect to options under the 1992 and 1998
           Stock Option Plans is summarized as follows:

                                                                   For the Nine
                               For the Year Ended                  Months Ended                    For the Year Ended
                               December 31, 1999                 December 31, 1998                   March 31, 1998
                        -------------------------------   -------------------------------   -------------------------------
                            Shares           Prices           Shares           Prices           Shares           Prices
                        --------------   --------------   --------------   --------------   --------------   --------------
                                                                                           
Outstanding at
  beginning of period            3,000   $0.31 to $0.41            3,000   $  .31 to $.41            1,500   $         0.41
Granted                        125,000   $0.69 to $1.00               --               --            1,500   $         0.31
Converted                           --               --               --               --               --               --
Expired                             --               --               --               --               --               --
Exercised                           --               --               --               --               --               --
                        --------------   --------------   --------------   --------------   --------------   --------------

Outstanding at
  end of period                128,000   $0.31 to $1.00            3,000   $  .31 to $.41            3,000   $  .31 to $.41
                        ==============   ==============   ==============   ==============   ==============   ==============

                  Outstanding options expire 90 days after termination of
           holder's status as employee or director. At December 31, 1999 and
           1998, options to acquire 3,000 common shares were exercisable at
           prices ranging from $0.31 to $0.41 per share. The Company has 332,000
           shares available for grant under all plans.

                  All options were granted at an exercise price equal to the
           fair value of the common stock at the grant date. Therefore, in
           accordance with the provisions of APB Opinion No. 25 related to fixed
           stock options, no compensation expense is recognized with respect to
           options granted or exercised. Under the alternative fair-value based
           method defined in SFAS No. 123, the fair value of all fixed stock
           options on the grant date would be recognized as expense over the
           vesting period. Assuming the fair market value of the stock at the
           date of grant to be $.3125 per share in May 1996, $.40625 per share
           in May 1997, $.6875 in January 1999 and $1.00 per share in September
           1999, the life of the options to be from three to ten years, the
           expected volatility at 200%, expected dividends are none, and the
           risk-free interest rate of 10%, the Company would have recorded
           compensation expense of $7,750 for the year ended December 31, 1999
           as calculated by the Black-Scholes option pricing model. As such,
           pro-forma net loss and loss per share would be as follows:

                                      F-21
   50

NOTE 8 - STOCKHOLDER'S EQUITY. (Continued)

           (d) Stock Option Plans: (Continued)

                          
Net loss as reported         $ (1,169,508)
Additional compensation             7,750
                             ------------

Adjusted net loss            $ (1,177,258)
                             ============

Loss per share as reported   $      (0.17)
                             ============

Adjusted loss per share      $      (0.17)
                             ============

                  As the number of options granted at December 31, 1998 and
           March 31, 1998 is immaterial, recognizing the expense would not have
           a material effect on the Company's financial statements for the nine
           months ended December 31, 1998 and the year ended March 31, 1998.

NOTE 9 - INCOME TAXES.

                  The Company has received permission from the Internal Revenue
           Service to change its taxable year-end from March 31, to December 31,
           effective with the December 31, 1998 period.

                  The differences between income taxes computed using the
           statutory federal income tax rate and that shown in the financial
           statements are summarized as follows:

                                                                      For the Nine
                                   For the Year Ended                 Months Ended                For the Year Ended
                                    December 31, 1999               December 31, 1998               March 31, 1998
                              ----------------------------    ----------------------------   ----------------------------
                                     (Consolidated)                   Consolidated
                                                                                           
Loss before income taxes
  and preferred dividend      $ (1,112,336)         %         $   (402,951)         %        $   (203,798)         %
                              ============    ------------    ============    ------------   ============    ------------

Computed tax benefit at
  statutory rate              $   (378,000)          (34.0)   $   (137,000)          (34.0)  $    (69,300)          (34.0)

Compensatory element of
  common stock issuances            19,600             1.8              --              --             --              --

Foreign subsidiary loss not
  subject to U.S. taxes              9,800             0.9             300              --             --              --

Net operating loss
  valuation reserve                348,600            31.3         136,700            34.0         69,300            34.0
                              ------------    ------------    ------------    ------------   ------------    ------------

Total tax benefits            $         --              --    $         --              --   $         --              --
                              ============    ============    ============    ============   ============    ============

                  There are no significant differences between the financial
           statement and tax basis of assets and liabilities and, accordingly,
           no deferred tax provision/benefit is required.

                                      F-22
   51

NOTE 9 - INCOME TAXES. (Continued)

                  The Tax Reform Act of 1986 enacted a complex set of rules
           limiting the utilization of net operating loss carryforwards to
           offset future taxable income following a corporate ownership change.
           The Company's ability to utilize its NOL carryforwards is limited
           following a change in ownership in excess of fifty percentage points
           during any three year period. Upon receipt of the proceeds from the
           last foreign purchasers of the Company's common stock in January
           2000, common stock ownership changed in excess of 50% during the
           three year period then ended. The utilization of the Company's net
           operating loss carryforward at December 31, 1999 of $2,063,000 was
           not negatively impacted by this ownership change. The future tax
           benefit of the net operating loss carryforward aggregated $701,000 at
           December 31, 1999 has been fully reserved as it is not more likely
           than not that the Company will be able to use the operating loss in
           the future.

NOTE 10 - COMMITMENTS, CONTINGENCIES AND OTHER.

           (a) Leases:

                  Commencing in August 1998, the Company entered into short-term
           operating leases for its general office space and certain office
           equipment. Prior to August 1998, the Company did not incur rent
           expense as it was inactive. Rent expense charged to operations for
           the year ended December 31, 1999 and for the nine months ended
           December 31, 1998 was $63,162 and $23,000 and none for the year ended
           March 31, 1998. Future minimum annual rent commitments under
           operating leases as of December 31, 1999 are as follows:

       Years Ending
       December 31,
       ------------
                            
            2000               $54,000
            2001                33,000
            2002                 3,000
                               -------

       Total minimum
       annual rentals          $90,000
                               =======

         (b) Web Site:

                  At December 31, 1998, a liability in the amount of $41,985 was
           owed to Warrantech Corporation, an affiliate, for expenses associated
           with a Web Site that were incurred by the Company. They are included
           in accounts payable, accrued expenses and other current liabilities
           in the accompanying financial statements. The affiliate had paid the
           vendors on the Company's behalf for their services.

                                      F-23
   52

NOTE 10 - COMMITMENTS, CONTINGENCIES AND OTHER. (Continued)

           (c) Investment Contract:

                  The Corporation has entered into an investment advisory
           agreement with AIG Global Investment Corporation ("AIG") under which
           AIG will function as investment advisor and manager of all the
           Corporation's investable assets. AIG provides management services to
           all affiliated insurance companies of American International Group
           and other third-party institutions on a world-wide basis.

           (d) Year 2000:

                  Although the Company has had limited operations through
           December 31, 1999, it recognized the need to ensure that its
           operations will not be adversely effected by Year 2000 software or
           hardware failures. The Company in developing its software and
           hardware made certain that all its systems were compliant with Year
           2000 requirements. The Company has not experienced any adverse
           computer hardware or software effect to date. If, despite the
           Company's effects under its Year 2000 related failures affecting the
           Company from outside sources, management at the present time does not
           believe the impact will be substantial.

                                      F-24
   53

                   CORNICHE GROUP INCORPORATED AND SUBSIDIARY

                                   SCHEDULE II

                        VALUATION AND QUALIFYING ACCOUNTS

                   Col. A                          Col. B                Col. C                 Col. D         Col. E
                   ------                       ------------   ---------------------------   ------------   ------------
                                                                        Additions
                                                               ---------------------------
                                                   Balance      Charged to    Acquisition                     Balance
                                                  Beginning     Costs and          of         Deductions     at end of
                                                  of Period      Expenses     Subsidiaries     Describe        Period
                                                ------------   ------------   ------------   ------------   ------------
                                                                                             
For the year ended March 31, 1998:
  Reserve against notes receivable in default   $     75,000   $         --   $         --   $         --   $     75,000

For the nine months ended December 31, 1998:
  Reserve against notes receivable in default         75,000             --             --             --         75,000

For the year ended December 31, 1999:
  Reserve against notes receivable in default         75,000             --             --             --         75,000

                                      F-25
   54
                   CORNICHE GROUP INCORPORATED AND SUBSIDIARY

                           CONSOLIDATED BALANCE SHEETS
                                   (Unaudited)

                                     ASSETS

                                                June 30,     December 31,
                                                  2000           1999
                                              ------------   ------------
                                                       
Current assets:
  Cash and equivalents                        $  1,082,014   $  1,639,473
  Marketable securities                          3,765,618      2,733,319
  Prepaid expenses and other current assets        276,340         71,622
                                              ------------   ------------
        Total current assets                     5,123,972      4,444,414

Property and equipment, net                        579,055        655,002
Deferred acquisition costs                          32,161         41,946
License, net of accumulated amortization            16,167         16,777
Other assets                                        12,525         12,525
                                              ------------   ------------

                                              $  5,763,880   $  5,170,664
                                              ============   ============

                 See accompanying notes to financial statements.

                                      F-26
   55

                   CORNICHE GROUP INCORPORATED AND SUBSIDIARY

                     CONSOLIDATED BALANCE SHEETS (Continued)
                                   (Unaudited)

                      LIABILITIES AND STOCKHOLDERS' EQUITY

                                                                                June 30,      December 31,
                                                                                  2000            1999
                                                                              ------------    ------------
                                                                                        
Current liabilities:
  Dividends payable - preferred stock                                         $    271,742    $    288,334
  Accounts payable, accrued expenses
    and other current liabilities                                                  203,903         561,870
  Current portion of long-term debt                                                 23,689          22,662
                                                                              ------------    ------------
        Total current liabilities                                                  499,334         872,866
                                                                              ------------    ------------

Unearned revenues                                                                  587,766         298,801
                                                                              ------------    ------------

Long-term debt                                                                      64,116          76,591
                                                                              ------------    ------------

Series A Convertible Preferred Stock: Series A $0.07 cumulative convertible
  preferred stock - stated value - $1.00 per share, authorized - 1,000,000
  shares, outstanding - 694,974 shares at June 30, 2000 and
  810,054 shares at December 31, 1999                                              694,974         810,054
                                                                              ------------    ------------

Convertible Redeemable Preferred Stock,
    Common Stock, Other Stockholders'
    Equity and Accumulated Deficit:
  Preferred stock - authorized - 5,000,000 shares Series B convertible
    redeemable preferred stock, $0.1 par value, authorized, issued
    and outstanding - 825,000 shares                                                 8,250           8,250
  Common stock, $.001 par value, authorized -
    75,000,000 shares, issued and outstanding -
    14,222,971 shares at June 30, 2000 and
    12,513,127 shares at December 31, 1999                                          14,223          12,513
  Additional paid-in capital                                                     8,806,734       7,421,944
  Accumulated deficit                                                           (4,911,517)     (4,330,355)
                                                                              ------------    ------------

        Total convertible redeemable preferred stock,
          common stock, other stockholders' equity                               3,917,690       3,112,352
                                                                              ------------    ------------

                                                                              $  5,763,880    $  5,170,664
                                                                              ============    ============

                 See accompanying notes to financial statements.

                                      F-27
   56

                   CORNICHE GROUP INCORPORATED AND SUBSIDIARY

                      CONSOLIDATED STATEMENTS OF OPERATIONS
                                   (Unaudited)

                                         For the Six                    For the Three
                                         Months Ended                   Months Ended
                                           June 30,                        June 30,
                                 ----------------------------    ----------------------------
                                     2000            1999            2000            1999
                                 ------------    ------------    ------------    ------------
                                                                     
Earned revenues                  $    275,549    $         --    $    129,949    $         --

Direct costs                          106,580              --          63,080              --
                                 ------------    ------------    ------------    ------------

Gross profit                          168,969              --          66,869              --

General and administrative
  expenses                            824,041         999,763         496,765         600,641
                                 ------------    ------------    ------------    ------------

Operating loss                       (655,072)       (999,763)       (429,896)       (600,641)
                                 ------------    ------------    ------------    ------------

Other income (expense):
  Unrealized gain on
    marketable securities              11,660              --           7,478              --
  Interest income                      91,259           5,965          54,958           1,512
  Interest expense                     (4,639)             --          (2,399)             --
                                 ------------    ------------    ------------    ------------
Total other income (expense)           98,280           5,965          60,037           1,512
                                 ------------    ------------    ------------    ------------

Loss before preferred dividend       (556,792)       (993,798)       (369,859)       (599,129)

Preferred dividend                     24,370          28,714          12,162          14,268
                                 ------------    ------------    ------------    ------------

Net loss                         $   (581,162)   $ (1,022,512)   $   (382,021)   $   (613,397)
                                 ============    ============    ============    ============

Net loss per share of
  common stock                   $      (0.04)   $      (0.16)   $      (0.03)   $      (0.10)
                                 ============    ============    ============    ============

Weighted average number of
  common shares outstanding        13,820,536       6,377,357      14,211,840       6,380,997
                                 ============    ============    ============    ============

                 See accompanying notes to financial statements.

                                      F-28
   57

                   CORNICHE GROUP INCORPORATED AND SUBSIDIARY

CONSOLIDATED STATEMENTS OF CONVERTIBLE REDEEMABLE PREFERRED STOCK, COMMON STOCK,
               OTHER STOCKHOLDERS' EQUITY AND ACCUMULATED DEFICIT

                     FOR THE SIX MONTHS ENDED JUNE 30, 2000
                                   (Unaudited)

                                        Series B
                                       Convertible
                                     Preferred Stock             Common Stock        Additional
                                  -------------------      ----------------------     Paid-In       Accumulated
                                   Shares      Amount        Shares        Amount     Capital        Deficit          Total
                                  ---------    ------      ------------  ---------   ----------     ------------   ------------
                                                                                                
Balance - January 1, 2000         825,000      $8,250       12,513,127    $12,513    $7,421,944     $(4,330,355)    $  3,112,352

Issuance of common stock for
  cash, net of offering costs          --          --        1,676,250      1,676     1,205,094              --        1,206,770

Issuance of common stock for
  services rendered                    --          --            2,000          2         5,873              --            5,875

Conversion of Series A
  Convertible Preferred
  Stock into Common Stock              --          --           22,094         22       156,020              --          156,042

Series A Convertible
  Stock dividends                      --          --               --         --            --         (24,370)         (24,370)

Net loss before preferred
  stock dividend                       --          --               --         --            --        (556,792)        (556,792)

Shares to be issued for
  services rendered                    --          --            9,500         10        17,803              --           17,813
                                  -------      ------       -----------  --------    ----------     ------------     ------------

Balance - June 30, 2000           825,000      $8,250       14,222,971    $14,223    $8,806,734     $(4,911,517)    $  3,917,690
                                  =======      ======       ==========    =======    ==========     ============     ============

                 See accompanying notes to financial statements.

                                      F-29
   58

                   CORNICHE GROUP INCORPORATED AND SUBSIDIARY

                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                                   (Unaudited)

                                                             For the Six
                                                             Months Ended
                                                               June 30,
                                                      ---------------------------
                                                          2000           1999
                                                      ------------   ------------
                                                               
Cash flows from operating activities:
  Net loss                                            $   (581,162)  $ (1,022,512)
                                                      ------------   ------------
  Adjustments to reconcile net loss to net
      cash used in operating activities:
    Unrealized gain on marketable securities               (11,660)            --
    Issuance of common stock for
      services rendered                                     23,688             --
    Series A preferred stock dividends                      24,370         28,714
    Depreciation and amortization                           76,557         10,866
    Unearned revenues                                      288,965             --
    Deferred acquisition costs                               9,785             --
    Increase (decrease) in cash flows as
        a result of changes in asset and
        liability account balances:
      Prepaid expenses and other current assets           (204,718)       (22,464)
      Accounts payable, accrued expenses
        and other current liabilities                     (357,967)       107,325
                                                      ------------   ------------
  Total adjustments                                       (150,980)       124,441
                                                      ------------   ------------

Net cash used in operating activities                     (732,142)      (898,071)
                                                      ------------   ------------

Cash flows from investing activities:
  (Increase) decrease in marketable securities          (1,020,639)       545,689
  Acquisition of property assets                                --       (103,618)
                                                      ------------   ------------
Net cash provided by (used in) investment activities    (1,020,639)       442,071
                                                      ------------   ------------

Cash flows from financing activities:
  Net proceeds from issuance of capital stock - net      1,206,770        556,527
  Payments of capital lease obligations                     (2,944)        (2,328)
  Proceeds from notes payable                                   --         97,336
  Repayments of notes payable                               (8,504)            --
                                                      ------------   ------------
Net cash provided by financing activities                1,195,322        651,535
                                                      ------------   ------------

Net increase (decrease) in cash                           (557,459)       195,535

Cash and cash equivalents at beginning of period         1,639,473        206,313
                                                      ------------   ------------

Cash and cash equivalents at end of period            $  1,082,014   $    401,848
                                                      ============   ============

                       See notes to financial statements.

                                      F-30
   59

                   CORNICHE GROUP INCORPORATED AND SUBSIDIARY

                CONSOLIDATED STATEMENTS OF CASH FLOWS (Continued)
                                   (Unaudited)

                                                                For the Six
                                                                Months Ended
                                                                  June 30,
                                                         --------------------------
                                                             2000          1999
                                                         ------------  ------------
                                                                 
Supplemental Disclosures of Cash Flow Information:
  Cash paid during the period:

    Income taxes                                         $         --  $         --
                                                         ============  ============

    Interest                                             $      4,639  $        719
                                                         ============  ============

Supplemental Schedules of Noncash Financing Activities:

  Series A Preferred Stock and dividends thereon
    converted to common stock and additional
    paid-in capital upon conversion                      $    156,020  $     28,714
                                                         ============  ============

  Issuance of common stock for
    services rendered                                    $     23,688  $         --
                                                         ============  ============

                       See notes to financial statements.

                                      F-31
   60

                   CORNICHE GROUP INCORPORATED AND SUBSIDIARY

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                                  JUNE 30, 2000
                                   (Unaudited)

NOTE 1 - THE COMPANY.

                  Corniche Group Incorporated (hereinafter referred to as the
         "Company" or "CGI") as a result of a reverse acquisition with Corniche
         Distribution Limited and its Subsidiaries ("Corniche"), was engaged in
         the retail sale and wholesale distribution of stationery products and
         related office products, including office furniture, in the United
         Kingdom. In February 1996, the Company was placed in receivership by
         its creditors. Through March 1998, the Company had no activity.

                  On March 4, 1998, the Company entered into a Stock Purchase
         Agreement ("Agreement"), approved by the Company's stockholders on May
         18, 1998, with certain individuals (the "Initial Purchasers") whereby
         the Initial Purchasers acquired an aggregate of 765,000 shares of a
         newly created Series B Convertible Redeemable Preferred Stock, par
         value $0.01 per share. Thereafter the Initial Purchasers have been
         endeavoring to establish for the Company new business operations in the
         property and casualty specialty insurance and the service contract
         markets.

                  On September 30, 1998, the Company acquired all of the capital
         stock of Stamford Insurance Company, Ltd. ("Stamford") from Warrantech
         Corporation for $37,000 in cash in a transaction accounted for as a
         purchase. Warrantech's chairman is the former chairman of the Company.
         Stamford was charted under the Laws of, and is licensed to conduct
         business as an insurance company by, the Cayman Islands. Although
         Stamford has incurred expenses since its inception, it first generated
         revenues in the fourth quarter of 1999.

                                      F-32
   61

NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES.

         (a)      Basis of Presentation:

                  The accompanying unaudited financial statements have been
         prepared in accordance with generally accepted accounting principles
         for interim financial information and with the instructions for Form
         10-Q and Article 10 of Regulation S-X. Accordingly, they do not include
         all of the information and footnotes required by generally accepted
         accounting principles for complete financial statements. In the opinion
         of management, the statements contain all adjustments (consisting only
         of normal recurring accruals) necessary to present fairly the financial
         position as of June 30, 2000 and the results of operations and cash
         flows for the six and three months ended June 30, 2000 and 1999. The
         results of operations for the six and three months ended June 30, 2000
         and 1999 are not necessarily indicative of the results to be expected
         for the full year.

                  The December 31, 1999 balance sheet has been derived from the
         audited financial statements at that date included in the Company's
         annual report on Form 10-K. These unaudited financial statements should
         be read in conjunction with the financial statements and notes thereto
         included in the Company's annual report on Form 10-K.

         (b)      Cash Equivalents:

                  Short-term cash investments which have a maturity of ninety
         days or less when purchased are considered cash equivalents in the
         statement of cash flows.

         (c)      Estimates:

                  The preparation of financial statements in conformity with
         generally accepted accounting principles requires management to make
         estimates and assumptions that affect certain reported amounts and
         disclosures. Accordingly, actual results could differ from those
         estimates.

         (d)      Concentrations of Credit-Risk:

                  Financial instruments that potentially subject the Company to
         significant concentrations of credit risk consist principally of cash
         and marketable securities. The Company places its domestic operations
         cash accounts with high credit quality financial institutions, which at
         times may be in excess of the FDIC insurance limit. The Company's
         subsidiary places its cash in the Cayman Island subsidiaries of
         domestic banks whose net worth exceeds $100,000,000. The Company's
         marketable securities are primarily comprised of investments in
         municipal bank funds. The Company employs the services of an investment
         advisor to assist in monitoring its investments.

                                      F-33
   62

NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES. (Continued)

         (e)      Marketable Securities:

                  Marketable securities are classified as trading securities and
         are reported at market value at December 31, 1999. At June 30, 2000,
         the market value of securities exceeded their cost by $11,660. The
         market value of the investment approximated cost at December 31, 1999.

         (f)      Property and Equipment:

                  The cost of property and equipment is depreciated over the
         estimated useful lives of the related assets of 5 to 7 years. The cost
         of computer software programs is amortized over their estimated useful
         lives of five years. Depreciation is computed on the straight-line
         method. Repairs and maintenance expenditures which do not extend
         original asset lives are charged to income as incurred.

         (g)      Intangibles:

                  The excess of the purchase price for the capital stock of
         Stamford over the net assets acquired has been attributed to the
         subsidiary's license to conduct business as an insurance carrier in the
         Cayman Islands. Amortization charged to operations in the six months
         ended June 30, 2000 and 1999 was $610, in each period, and for the
         three months ended March 31, 2000 and 1999 was $305, in each period.

         (h)      Income Taxes:

                  The Company adopted SFAS 109, "Accounting for Income Taxes",
         which recognizes (a) the amount of taxes payable or refundable for the
         current year and, (b) deferred tax liabilities and assets for the
         future tax consequences of events that have been recognized in an
         enterprise's financial statement or tax returns. There is no difference
         as to financial and tax basis of assets and liabilities.

         (i)      Fair Value of Financial Statements:

                  The Company adopted Statement of Financial Accounting
         Standards No. 121 ("SFAS No. 121"), "Accounting for the Impairment of
         Long-Lived Assets and for Long-Lived Assets to be Disposed of". The
         statement requires that the Company recognizes and measures impairment
         losses of long-lived assets, certain identifiable intangibles, value
         long-lived assets to be disposed of and long-term liabilities. At June
         30, 2000 and December 31, 1999, the carrying values of the Company's
         other assets and liabilities approximate their estimated fair values.

                                      F-34
   63

NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES. (Continued)

         (j)      Advertising Costs:

                  The Company expenses advertising costs as incurred.
         Advertising costs amounted to $282,521 and $276,752 for the six and
         three months ended June 30, 2000 and none for the six and three months
         ended June 30, 1999.

         (k)      Earnings Per Share:

                  The Company adopted Statement of Financial Accounting
         Standards No. 128, "Earnings Per Share". Basic earnings per share is
         based on the weighted effect of all common shares issued and
         outstanding, and is calculated by dividing net income available to
         common stockholders by the weighted average shares outstanding during
         the period. Diluted earnings per share, which is calculated by dividing
         net income available to common stockholders by the weighted average
         number of common shares that would be issued assuming conversion of all
         potentially dilutive securities outstanding, is not presented as it is
         anti-dilutive in all periods.

         (l)      Recently Issued Accounting Pronouncements:

                  The Financial Accounting Standards Board issued Statement of
         Financial Accounting Standards No. 130 - "Reporting Comprehensive
         Income", No. 131 - "Disclosures about Segments of an Enterprise and
         Related Information", No. 132 - "Employer's Disclosures about Pension
         and Other Postretirement Benefits" and No. 133 - "Accounting for
         Derivative Instruments and Hedging Activities". Management does not
         believe that the effect of implementing these new standards will be
         material to the Company's financial position, results of operations and
         cash flows.

         (m)      Revenue Recognition:

                  Stamford is a property and casualty reinsurance company
         writing reinsurance coverages for one domestic carrier's consumer
         products service contracts. The domestic carrier is rated "A-"
         Excellent by A.M. Best.

                  Premiums are recognized on a pro rata basis over the policy
         term. The deferred policy acquisition costs are the net cost of
         acquiring new and renewal insurance contracts. These costs are charged
         to expense in proportion to net premium revenue recognized.

                                      F-35
   64

NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES. (Continued)

         (m)      Revenue Recognition: (Continued)

                  The provisions for losses and loss-adjustment expenses include
         an amount determined from loss reports on individual cases and an
         amount based on past experience for losses incurred but not reported.
         Such liabilities are necessarily based on estimates, and while
         management believes that the amount is adequate, the ultimate liability
         may be in excess of or less than the amounts provided. The methods for
         making such estimates and for establishing the resulting liability are
         continually reviewed, and any adjustments are reflected in earnings
         currently.

                  The parent company sells via the Internet directly to
         consumers automotive vehicle services contracts. The Company recognizes
         revenue ratably over the length of the contract. The Company purchases
         insurance to fully cover any losses under the service contracts from
         the domestic carrier referred to above. The insurance premium and other
         costs related to the sale are amortized over the contract.

NOTE 3 - PROPERTY AND EQUIPMENT.

                  Property and equipment consists of the following:

                                       June 30,    December 31,
                                         2000          1999
                                     ------------  ------------
                                             
Computer equipment                   $    116,660  $    116,660
Furniture and fixtures                     23,266        23,266
Computer software                         582,585       582,585
                                     ------------  ------------
                                          722,511       722,511
Less:  Accumulated depreciation           150,875        77,896
                                     ------------  ------------
                                          571,636       644,615
                                     ------------  ------------

Lease property under capital lease:
  Office equipment                         17,806        17,806
Less:  Accumulated depreciation            10,387         7,419
                                     ------------  ------------
                                            7,419        10,387
                                     ------------  ------------

                                     $    579,055  $    655,002
                                     ============  ============

                  Depreciation and amortization charged to operations was
         $76,577 and $10,866 for the six months ended June 30, 2000 and 1999,
         respectively, and $38,269 and $3,580 for the three months ended June
         30, 2000 and 1999, respectively.

                                      F-36
   65

NOTE 3 - PROPERTY AND EQUIPMENT. (Continued)

                  The estimated present value of the capital lease obligations
         at June 30, 2000 reflects imputed calculated at 12.7% and 19.32%. The
         obligations are payable in equal monthly installments through February
         2002 as follows:

         Years Ending
           June 30,
         ------------
                             
             2001               $    5,750
             2002                    2,721
                                ----------
                                     8,471
Amount representing interest         1,431
                                ----------

Present value of minimum
  lease payments                     7,040
Present value of minimum lease
  payments due within one year       5,519
                                ----------

Present value of minimum lease
  payments due after one year   $    1,521
                                ==========

                  The aggregate maturities of the present value of the minimum
         lease obligation is as follows:

    Years Ending
      June 30,
    ------------
                             
        2001                    $5,519
        2002                     1,521
                                ------

                                $7,040
                                ======

NOTE 4 - ACCOUNTS PAYABLE, ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES.

                  Accounts payable, accrued expenses and other current
         liabilities consist of the following at:

                             June 30,    December 31,
                               2000          1999
                           ------------  ------------
                                   
Accrued offering costs     $         --  $    419,120
Accrued professional fees        43,006        41,534
Advertising                      30,000        69,427
Insurance                         7,118            --
Other                           118,779        26,789
Accrued claims losses             5,000         5,000
                           ------------  ------------

                           $    203,903  $    561,870
                           ============  ============

                                      F-37
   66

NOTE 5 - NOTES PAYABLE.

                  In October 1999, the Company sold to accredited investors 10
         units of its promissory notes and common stock for $25,025 each. Each
         unit was comprised of a 5% interest bearing $25,000 note and 25,000
         shares. The variance between the fair market value of the 25,000 common
         shares issued in the aggregate of $27,969 and the cash received of $250
         was deemed to be additional interest and was charged to operations over
         the life of the notes. The notes were repaid in full in December 31,
         1999. At December 31, 1999, accrued interest on the notes of $3,025
         remained outstanding and was repaid in January, 2000.

NOTE 6 - LONG-TERM DEBT.

                  Long-term debt consists of the following at June 30, 2000 and
         December 31, 1999:

                                               June 30,    December 31,
                                                 2000          1999
                                             ------------  ------------
                                                     
Capital lease obligations                    $      7,040  $      9,983

Note payable - bank - in equal monthly
  installments of $2,043 including interest
  at 8-3/4%. The notes are collateralized
  by computer equipment having an
  undepreciated cost of $78,927                    80,765        89,270
                                             ------------  ------------

                                                   87,805        99,253
Portion payable within one year                    23,689        22,662
                                             ------------  ------------

                                             $     64,116  $     76,591
                                             ============  ============

                  The aggregate maturities of the obligations are as follows:

    Years Ending
      June 30,
    ------------
                          
        2001                 $23,689
        2002                  21,347
        2003                  21,631
        2004                  21,138
                             -------

                             $87,805
                             =======

                                      F-38
   67

NOTE 7 - SERIES A CONVERTIBLE PREFERRED STOCK.

                  In connection with the settlement of a securities class action
         litigation in 1994, the Company issued 1,000,000 shares of Series A
         $0.07 Convertible Preferred Stock (the "Series A Preferred Stock") with
         an aggregate value of $1,000,000. The following summarizes the terms of
         the Series A Preferred Stock as more fully set forth in the
         Certificates of Designation. The Series A Preferred Stock has a
         liquidation value of $1 per share, is non-voting and convertible into
         common stock of the Company at a price of $5.20 per share. Holders of
         Series A Preferred Stock are entitled to receive cumulative cash
         dividends of $0.07 per share, per year, payable semi-annually. Until
         November 30, 1999 the Series A Preferred Stock was callable by the
         Company at a price of $1.04 per share, plus accrued and unpaid
         dividends, and thereafter at a price of $1.05 per share, plus accrued
         and unpaid dividends. In addition, if the closing price of the
         Company's common stock exceeds $13.80 per share for a period of 20
         consecutive trade days, the Series A Preferred Stock is callable by the
         Company at a price equal to $0.01 per share, plus accrued and unpaid
         dividends. The Certificate of Designation for the Series A Preferred
         Stock also states that at any time after December 1, 1999 the holders
         of the Series A Preferred Stocks may require the Company to redeem
         their shares of Series A Preferred Stock (if there are funds with which
         the Company may do so) at a price of $1.00 per share. Notwithstanding
         any of the foregoing redemption provisions, if any dividends on the
         Series A Preferred Stock are past due, no shares of Series A Preferred
         Stock may be redeemed by the Company unless all outstanding shares of
         Series A Preferred Stock are simultaneously redeemed. During the year
         ended December 31, 1999, 18,711 shares of Series A Preferred Stock were
         converted into 3,586 shares of common stock. During the six months
         ended June 30, 2000, holders of 115,080 shares of the Series A
         Preferred Stock converted such shares into 22,094 shares of the
         Company's common stock. At June 30, 2000 and December 31, 1999, 694,974
         and 810,054 shares of Series A Preferred Stock were outstanding,
         respectively. At June 30, 2000 and 1999, and accrued dividends on these
         outstanding shares were $271,742 and $288,334, respectively.

NOTE 8 - STOCKHOLDERS' EQUITY.

         (a)      Series B Convertible Redeemable Preferred Stock:

                  On March 4, 1998, the Company entered into a Stock Purchase
         Agreement ("Agreement"), approved by the Company's stockholders on May
         18, 1998, with certain individuals (the "Initial Purchasers") whereby
         the Initial Purchasers and two other persons acquired an aggregate of
         825,000 shares of a newly created Series B Convertible Redeemable
         Preferred Stock ("Series B Stock"), par value $0.01 per share.

                                      F-39
   68

NOTE 8 - STOCKHOLDERS' EQUITY. (Continued)

         (a)      Series B Convertible Redeemable Preferred Stock: (Continued)

                  Pursuant to the Agreement and Subsequent transactions, the
         Initial Purchasers acquired 765,000 shares of Series B Stock for
         $76,500 in cash. The Company incurred certain legal expenses of the
         Initial Purchasers equaling approximately $50,000 in connection with
         the transaction. In addition, the Company issued 50,000 shares of
         Series B Stock to a consultant as compensation valued at $5,000 for his
         assistance to the Company in the identification and review of business
         opportunities and this transaction and for his assistance in bring the
         transaction to fruition. Additionally, the Company issued 10,000 shares
         of Series B Stock to James Fyfe as compensation valued at $1,000 for
         his work in bringing this transaction to fruition. These issuances
         diluted the voting rights of the then existing stockholders by
         approximately 57%. The total authorized shares of Series B Convertible
         Redeemable Preferred Stock is 825,000.

                  The following summarizes the terms of the Series B Stock whose
         terms are more fully set forth in the Certificate of Designation. The
         Series B Stock carries a zero coupon and each share of the Series B
         Stock is convertible into ten shares of the Company's common stock. The
         holder of a share of the Series B Stock is entitled to ten times any
         dividends paid on the common stock and such stock has ten votes per
         share and vote as one class with the common stock. Accordingly, the
         Initial Purchasers have sufficient voting power to elect all of the
         Board of Directors. However, the Initial Purchasers are required to
         vote in favor of Mr. Fyfe or his designee as a director of the
         Corporation through June 30, 2000.

                  The holder of any share of Series B Convertible Redeemable
         Preferred Stock has the right, at such holder's option (but not if such
         share is called for redemption), exercisable on or after September 30,
         2000, to convert such share into ten (10) fully paid and non-assessable
         shares of common stock (the "Conversion Rate"). The Conversion Rate is
         subject to adjustment as stipulated in the Agreement. Upon liquidation,
         the Series B Stock would be junior to the Corporation's Series A
         Preferred Stock and would share ratably with the common stock with
         respect to liquidating distributions.

                  Since, the Company raised in excess of $2,500,000 in fiscal
         1999 from the sale of its common shares and the Company's common shares
         maintained a minimum closing bid price in excess of $2.00 per shares
         for 10 consecutive trading days, then the Company's right, pursuant to
         the terms of the Agreement and the Certificate of Designation to
         repurchase or redeem such shares of Series B Stock from the holders for
         total consideration of $0.10 per share was eliminated.

                                      F-40
   69

NOTE 8 - STOCKHOLDERS' EQUITY. (Continued)

         (b)      Common Stock:

                  On May 15, 1997, the Company commenced a private securities
         offering pursuant to Rule 506 of Regulation D of the Securities Act of
         1933, as amended, of up to 400 units, each unit consisting of 10,000
         shares of common stock being offered at a price of $5,000 per unit. The
         Company used a placement agent for such offering who received a sales
         commission equal to 10% of the offering price of each unit sold. In
         connection with the offering, 369 units were sold for gross receipts of
         $1,845,000 from which the agent was paid a commission of $184,500 for
         net of $1,660,500 to the Company.

                  In March 1998, the Company sold 250,000 shares of common stock
         at $.50 per share realizing $125,000.

                  The stockholders at the 1998 annual meeting approved the
         reduction of the par value of the common stock from $0.10 per share to
         $0.001 per share.

                  The stockholders at the 2000 annual meeting approved amending
         the authorized common stock to 75 million shares from 30 million
         shares.

                  Commencing in May 1999 through July 1999, the Company sold
         688,335 shares of its common stock to accredited investors for $538,492
         net of offering costs. In December 1999, accredited investors purchased
         5,187,500 shares of the Company's common stock for $3,715,744, net of
         offering costs. During the six months ended June 30, 2000, the Company
         sold 1,676,250 shares of common stock at $.80 per share realizing
         $1,206,770, net of offering costs.

                  The Company in 1999 issued 5,000 shares of its common stock
         whose fair value was $5,000 to its President as a signing bonus, which
         was charged to operations at the time of issuance. The Company also
         issued in 1999, 25,000 shares of its common stock whose fair value was
         $25,000 at the date of issuance to a public relations consultant for
         future services. The arrangement with the consultant was terminated in
         1999 and the fair value of the shares was charged to operations in
         1999.

                  During the quarter ended June 30, 2000, the Company issued
         2000 shares of its common stock to a consultant for promotional
         activities amounting to $5,875.

                                      F-41
   70

NOTE 8 - STOCKHOLDERS' EQUITY. (Continued)

         (c)      Warrants:

                  The Company has issued common stock purchase warrants from
         time to time to investors in private placements, certain vendors,
         underwriters, and directors and officers of the Company.

                  A total of 101,308 shares of common stock are reserved for
         issuance upon exercise of warrants as of December 31, 1998 and March
         31, 1998. Of these outstanding warrants, warrants for 9,375 common
         shares at $46.40 per share expired in April 1999. The remaining
         warrants to acquire 91,933 common shares at exercise prices ranging
         from $3.20 to $8.10 per share were granted in March 1995 to certain
         directors, officers and employees who converted previously outstanding
         stock options under the 1986 Plan into warrants on substantially the
         same terms as the previously held stock options, except the warrants
         were immediately vested. During the fiscal 1999, warrants to acquire
         22,308 common shares at prices ranging from $3.90 to $46.40 per share
         expired. No warrants were exercised during any of the periods
         presented. A total of 79,000 shares of common stock are reserved for
         issuance upon exercise of outstanding warrants as of December 31, 1999
         at prices ranging from $3.20 to $27.50 and expiring through October
         2004.

         (d)      Stock Options Plans:

                  The Company has two stock option plans. The 1998 Employee
         Incentive Stock Option Plan provides for the grant of options to
         purchase shares of the Company's common stock to employees. The 1992
         Stock Option Plan provides for the grant of options to directors.

                                      F-42
   71

NOTE 8 - STOCKHOLDERS' EQUITY. (Continued)

         (d)      Stock Options Plans: (Continued)

                  In April 1992, the Company adopted the 1992 Stock Option Plan
         to provide for the granting of options to directors. According to the
         terms of this plan, each director is granted options to purchase 1,500
         shares each year. The maximum amount of the Company's common stock that
         may be granted under this plan is 20,000 shares. Options are
         exercisable at the fair market value of the common stock on the date of
         grant and have five year terms.

                  Under the 1998 Plan, the maximum aggregate number of shares
         which may be issued under options has been amended to 3,000,000 from
         300,000 shares of common stock. The aggregate fair market value
         (determined at the time the option is granted) of the shares for which
         incentive stock options are exercisable for the first time under the
         terms of the 1998 Plan by any eligible employee during any calendar
         year cannot exceed $100,000. The option exercise price of each option
         is 100% of the fair market value of the underlying stock on the date of
         the options are granted, except that no option will be granted to any
         employee who, at the time the option is granted, owns stock possessing
         more than 10% of the total combined voting power of all classes of
         stock of the Corporation or any subsidiary unless (a) at the time the
         options are granted, the option exercise price is at least 110% of the
         fair market value of the shares of common stock subject to the options
         and (b) the option by its terms is not exercisable after the expiration
         of five years from the date such option is granted.

                  The 1998 Plan will be administered by a committee of
         disinterested directors of the Board of Directors of the Corporation
         ("Option Committee"). In 1999, options to acquire 100,000 common shares
         at $1.00 per share were granted to an officer and an option to acquire
         25,000 common shares at $0.6875 per share was issued to a consultant
         were granted under the 1998 Plan. In May 1997, a director was granted
         an option to acquire 1,500 common shares at `$0.3125 per share were
         granted under the 1992 Plan. In February 2000, the Company's CEO was
         granted an option to acquire 75,000 common shares of $1.10 per share in
         the 1998 plan.

                  Information with respect to options under the 1992 and
         1998 Stock Option Plans is summarized as follows:

                                        For the Six Months Ended June 30,
                                       2000                            1999
                          ------------------------------  ------------------------------
                              Shares          Prices          Shares          Prices
                          --------------  --------------  --------------  --------------
                                                              
Outstanding at beginning
  of period                      128,000  $0.31 to $1.00           3,000  $0.31 to $0.40
                                          ==============                  ==============

Options issued                    75,000  $         1.10              --
                          --------------  ==============  --------------

Outstanding at end
  of period                      203,000  $0.31 to $1.10           3,000  $0.31 to $0.40
                          ==============  ==============  ==============  ==============

                                      F-43
   72

NOTE 8 - STOCKHOLDERS' EQUITY. (Continued)

         (d)      Stock Options Plans: (Continued)

                  Outstanding options expire 90 days after termination of
         holder's status as employee or director.

                  All options were granted at an exercise price equal to the
         fair value of the common stock at the grant date. Therefore, in
         accordance with the provisions of APB Opinion No. 25 related to fixed
         stock options, no compensation expense is recognized with respect to
         options granted or exercised. Under the alternative fair-value based
         method defined in SFAS No. 123, the fair value of all fixed stock
         options on the grant date would be recognized as expense over the
         vesting period. Assuming the fair market value of the stock at the date
         of grant to be $.3125 per share in May 1996, $.40625 per share in May
         1997, $.6875 in January 1999 and $1.00 per share in September 1999, the
         life of the options to be from three to ten years, the expected
         volatility at 200%, expected dividends are none, and the risk-free
         interest rate of 10%, the Company would have recorded compensation
         expense of $10,523 for the six months ended June 30, 2000 and $1,938
         for the three months ended June 30, 2000 as calculated by the
         Black-Scholes option pricing model. As such, pro-forma net loss and
         loss per share would be as follows:

                             For the Six    For the Three
                             Months Ended    Months Ended
                            June 30, 2000   June 30, 2000
                            -------------   -------------
                                      
Net loss as reported        $    (581,162)  $    (382,021)
Additional compensation            10,523           1,938
                            -------------   -------------

                            $    (591,685)  $    (383,959)
                            =============   =============

Loss per share as reported  $       (0.04)  $       (0.03)
                            =============   =============

Adjusted loss per share     $       (0.04)  $       (0.03)
                            =============   =============

                  As the number of options granted at December 31, 1998 and
         March 31, 1998 is immaterial, recognizing the expense would not have a
         material effect on the Company's financial statements for the three
         months and six months ended June 30, 1999.

                                      F-44
   73

NOTE 9 - INCOME TAXES.

                  The Company has received permission from the Internal Revenue
         Service to change its taxable year-end from March 31, to December 31,
         effective with the December 31, 1998 period.

                  The differences between income taxes computed using the
         statutory federal income tax rate and that shown in the financial
         statements are summarized as follows:

                                      For the Six Months Ended June 30,
                             -------------------------------------------------
                                      2000 %                    1999 %
                             -----------------------   -----------------------
                                                        
Loss before income taxes
  and preferred dividend     $  556,792           --   $ (993,798)          --
                             ==========   ==========   ==========   ==========

Computed tax benefit at
  statutory rate             $ (189,300)       (34.0)  $ (337,900)       (34.0)

Foreign subsidiary income
  not subject to U.S. taxes     (49,700)        (9.2)      (7,560)         (.8)

Net operating loss
  valuation reserve             239,000         43.2      345,460         34.8
                             ----------   ----------   ----------   ----------

Total tax benefits           $       --           --   $       --           --
                             ==========   ==========   ==========   ==========

                  There are no significant differences between the financial
         statement and tax basis of assets and liabilities and, accordingly, no
         deferred tax provision/benefit is required.

                  The Tax Reform Act of 1986 enacted a complex set of rules
         limiting the utilization of net operating loss carryforwards to offset
         future taxable income following a corporate ownership change. The
         Company's ability to utilize its NOL carryforwards is limited following
         a change in ownership in excess of fifty percentage points during any
         three year period. Upon receipt of the proceeds from the last foreign
         purchasers of the Company's common stock in January 2000, common stock
         ownership changed in excess of 50% during the three year period then
         ended. The utilization of the Company's net operating loss carryforward
         at December 31, 1999 of $2,063,000 was not negatively impacted by this
         ownership change. The future tax benefit of the net operating loss
         carryforward aggregated $701,000 at December 31, 1999 has been fully
         reserved as it is not more likely than not that the Company will be
         able to use the operating loss in the future.

                                      F-45
   74

NOTE 10 - COMMITMENTS, CONTINGENCIES AND OTHER.

         (a)      Leases:

                  Commencing in August 1998, the Company entered into short-term
         operating leases for its general office space and certain office
         equipment. Prior to August 1998, the Company did not incur rent expense
         as it was inactive. Rent expense charged to operations for the six and
         three months ended June 30, 2000 and 1999 was $25,050 and $12,525,
         respectively in each period. Future minimum annual rent commitments
         under operating leases as of June 30, 2000 are as follows:

     Years Ending
       June 30,
     ------------
                           
         2001                 $50,000
         2002                   4,167
                              -------

                              $54,167
                              =======

         (b)      Investment Contract:

                  The Corporation has entered into an investment advisory
         agreement with AIG Global Investment Corporation ("AIG") under which
         AIG will function as investment advisor and manager of all the
         Corporation's investable assets. AIG provides management services to
         all affiliated insurance companies of American International Group and
         other third-party institutions on a world-wide basis.

         (c)      Year 2000:

                  Although the Company has had limited operations through
         December 31, 1999, it recognized the need to ensure that its operations
         will not be adversely effected by Year 2000 software or hardware
         failures. The Company in developing its software and hardware made
         certain that all its systems were compliant with Year 2000
         requirements. The Company has not experienced any adverse computer
         hardware or software effect to date. If, despite the Company's effects
         under its Year 2000 related failures affecting the Company from outside
         sources, management at the present time does not believe the impact
         will be substantial.

                                      F-46
   75

                                     PART II

                   INFORMATION NOT REQUIRED IN THE PROSPECTUS

ITEM 13. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION

     The following table sets forth the various expenses and costs expected to
be incurred in connection with the issuance and distribution of the securities
to be registered. All of the amounts shown are estimated, except for the
Securities and Exchange Commission registration fee.

                                                             
Securities and Exchange Commission registration fee ........     $      6,392
Legal fees and expenses ....................................           50,000
Accounting fees and expenses ...............................           50,000
Miscellaneous expenses .....................................           93,708
                                                                 ------------
     Total .................................................     $    200,000
                                                                 ============

ITEM 14. INDEMNIFICATION OF OFFICERS AND DIRECTORS

     Section 145 of the Delaware General Corporation Law provides that a
corporation has the power to indemnify a director, officer, employee or agent of
the corporation and certain other persons serving at the request of the
corporation in related capacities against amounts paid and expenses incurred in
connection with an action or proceeding to which he is or is threatened to be
made a party by reason of such position, if the person shall have acted in good
faith and in a manner he reasonably believed to be in or not opposed to the best
interests of the corporation, and, in any criminal proceeding, if the person had
no reasonable cause to believe his conduct was unlawful; provided that, in the
case of actions brought by or in the right of the corporation, no
indemnification shall be made with respect to any matter as to which the person
shall have been adjudged to be liable to the corporation unless and only to the
extent that the adjudicating court determines that indemnification is proper
under the circumstances.

     Article X of the amended Certificate of Incorporation (the "Certificate")
of Corniche Group Incorporated ("Corniche") provides that no director of
Corniche shall be personally liable to Corniche or its stockholders for monetary
damage for breach of fiduciary duty as a director, except for liability

     o    for any breach of the director's duty of loyalty to Corniche or its
          stockholders,

     o    for acts or omissions not in good faith or which involve intentional
          misconduct or a knowing violation of law,

     o    under Section 174 of the Delaware General Corporation Law, or

     o    for any transaction from which the director derived any improper
          personal benefit.

     Article VI of the amended Certificate also provides that Corniche's Board
of Directors has the power on behalf of Corniche to indemnify any person, other
than a director, officer, employee, or agent of Corniche made a party to any
action, suit or proceeding by reason of the fact that he is or was a director,
officer, employee or agent of Corniche.

     Article V of Corniche's amended bylaws (the "Bylaws") provides that
Corniche may indemnify any and all persons who it shall have power to indemnify
against any and all expenses, liabilities or other matters to the fullest extent
authorized under Delaware law.

     Corniche has directors' and officers' liability insurance covering its
directors and officers.

ITEM 15. RECENT SALES OF UNREGISTERED SECURITIES

     Summarized below are issuances of securities by Corniche that have occurred
since September 30, 1997, that were not registered under the Securities Act.
None of the following transactions involved any underwriters, underwriter
discounts or commissions, or any public offering, and Corniche believes that
each transaction was exempt from the registration requirements

                                      II-1
   76

of the Securities Act by virtue of Section 4(2) thereof, Regulation D
promulgated thereunder or Rule 701 pursuant to compensatory benefit plans and
contracts relating to compensation as provided under Rule 701. The recipients in
these transactions represented their intention to acquire the securities for
investment only and not with a view to or for sale in connection with any
distribution thereof, and appropriate legends were affixed to the share
certificates and instruments issued in the transactions.

         COMMON STOCK / SERIES B CONVERTIBLE REDEEMABLE PREFERRED STOCK

                                     TITLE AND AMOUNT OF                                             CONSIDERATION
           DATE SOLD                      SECURITIES                    PURCHASER                      RECEIVED
           ---------                 -------------------                ---------                    -------------

March 1998                       250,000 shares of common      A group of 2 accredited       An aggregate amount of
                                 stock                         investors                     $125,000

May 1998                         875,000 shares of Series B    A group of 6 accredited       An aggregate amount of
                                 convertible redeemable        investors                     $87,500
                                 preferred stock

January 1999                     25,000 shares of common       A consultant                  Consulting services valued
                                 stock                                                       at $25,000

February 1999                    5,000 shares of common stock  Robert H. Benoit, President   Signing bonus valued at
                                                                                             $5,000

May 1999 - July 1999             688,335 shares of common      A group of 27 accredited      An aggregate amount of
                                 stock                         investors                     $619,499.90

October - November 1999          250,000 shares of common      A group of 10 accredited      An aggregate amount of
                                 stock                         investors                     $250,000

December 1999 - April 2000       6,863,750 shares of common    A group of 18 accredited      An aggregate amount of
                                 stock                         investors                     $5,491,000

August 2000                      5,000 shares of common stock  A group of 2 accredited       Consulting services valued
                                                               investors                     at $9,250

August 2000                      4,500 shares of common stock  James J. Fyfe, Chairman of    Consulting services valued
                                                               the Board of Directors        at $8,325

STOCK OPTIONS

     o    Pursuant to Corniche's 1998 Stock Plan, between September 30, 1997,
          and the date hereof, Corniche granted options to four employees and
          one consultant to purchase an aggregate of 403,000 shares of its
          common stock at exercise prices ranging from $.31 to $1.097 per share.

ITEM 16. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES

     (a)  Exhibits:

     The exhibits are as set forth in the Exhibit Index.

     (b)  Financial Statement Schedules:

          No financial statement schedules are filed because the required
     information is not applicable or is included in the financial statements or
     related notes.

                                      II-2
   77

ITEM 17. UNDERTAKINGS

     The undersigned registrant hereby undertakes:

          (1) To file, during any period in which offers or sales are being
     made, a post-effective amendment to this registration statement:

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

               (ii) To reflect in the prospectus any facts of events 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) if, in the aggregate
               offering price set forth in the "Calculation of Registration Fee"
               table in the effective registration statement.

               (iii) To include any material information with respect to the
               plan of distribution not previously disclosed in the registration
               statement or any material change to such information in the
               registration statement.

          (2) That, for the purpose of determining any liability under the
     Securities Act of 1933, each such post- effective amendment shall be deemed
     to be a new registration statement relating to the securities offered
     therein, and the offering of such securities at that time shall be deemed
     to be in the initial bona fide offering thereof.

          (3) For determining liability under the Securities Act of 1933, 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.

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

          (5) To remove from registration by means of a post-effective amendment
     any of the securities being registered which remain unsold at the
     termination of the offering.

          (6) For purposes of determining any liability under the Securities Act
     of 1933, the information omitted from the form of prospectus filed as part
     of this Registration Statement in reliance upon Rule 430A and contained in
     a form of prospectus filed by Corniche pursuant to Rule 424(b)(1) or (4) or
     497(h) under the Securities Act shall be deemed to be part of this
     Registration Statement as of the time it was declared effective.

          (7) For the purpose of determining any liability under the Securities
     Act of 1933, each post-effective amendment that contains a form of
     prospectus shall be deemed to be a new Registration Statement relating to
     the securities offered therein and the offering of such securities at that
     time shall be deemed to be the initial bona fide offering thereof.

     Insofar as indemnification for liabilities arising under the Securities Act
may be permitted to directors, officers and controlling persons of Corniche
pursuant to the foregoing provisions, or otherwise, Corniche has been advised
that in the opinion of the Securities and Exchange Commission such
indemnification is against public policy as expressed in the Securities Act and
is, therefore, unenforceable. If a claim for indemnification against such
liabilities (other than the payment by Corniche of expenses incurred or paid by
a director, officer or controlling person of Corniche 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, then
Corniche 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 is against public policy as expressed in
the Act and will be governed by the final adjudication of such issue.

                                      II-3
   78

                                   SIGNATURES

     Pursuant to the requirements of the Securities Act of 1933, Corniche has
duly caused this Registration Statement to be signed on its behalf by the
undersigned, hereunto duly authorized, in the City of Euless, State of Texas as
of December 9, 2000.

                                        CORNICHE GROUP INCORPORATED

                                        By:  /s/ Robert F. Benoit
                                           ------------------------------------
                                            Robert F. Benoit
                                            Chief Executive Officer

                                POWER OF ATTORNEY

     Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities indicated as of December 9, 2000.

                   NAME                                         TITLE                               DATE
                   ----                                         -----                               ----

/s/ Robert F. Benoit                              Chief Executive Officer, Director           December 9, 2000
- ------------------------------------
           Robert F. Benoit

/s/ Robert H. Hutchins                                   President, Director                  December 9, 2000
- ------------------------------------
           Robert H. Hutchins

/s/ John L. King                               Vice President, Chief Financial Officer        December 9, 2000
- ------------------------------------
           John L. King

/s/ James J. Fyfe                                Chairman of the Board of Directors           December 9, 2000
- ------------------------------------
           James J. Fyfe*

/s/ Paul L. Harrison                                          Director                        December 9, 2000
- ------------------------------------
           Paul L. Harrison*

/s/ Joseph P. Raftery                                         Director                        December 9, 2000
- ------------------------------------
           Joseph P. Raftery*

     *    By Robert F. Benoit, Attorney In Fact

                                      II-4
   79

                                INDEX TO EXHIBITS

          EXHIBIT
          NUMBER                                             EXHIBIT TITLE
          -------                                            -------------
                       
            3              (a)  Certificate of Incorporation filed September 18, 1980 (1)

                           (b)  Amendment to Certificate filed September 29, 1980 (1)

                           (c)  Amendment to Certificate of Incorporation filed July 28, 1983 (2)

                           (d)  Amendment to Certificate of Incorporation filed February 10, 1984 (2)

                           (e)  Amendment to Certificate of Incorporation filed March 31, 1986 (3)

                           (f)  Amendment to Certificate of Incorporation filed March 23, 1987 (4)

                           (g)  Amendment to Certificate of Incorporation filed June 12, 1990 (5)

                           (h)  Amendment to Certificate of Incorporation filed September 27, 1991 (6)

                           (i)  Certificate of Designation filed November 12, 1994 (7)

                           (j)  Amendment to Certificate of Incorporation filed September 2, 1995 (1)

                           (k)  Certificate of Designation for the Series B Preferred Stock dated May 18, 1998 (12)

                           (l)  By-laws of the Corporation, as amended on April 25, 1991 (6)

                           (m)  Amendment to Certificate of Incorporation dated May 18, 1998 (12)

            4              (a)  1992 Stock Option Plan (8)

                           (b)  Form of 1992 Incentive Stock Option Agreement, previously filed

                           (c)  Form of 1992 Non-Qualified Stock Option Agreement, previously filed

                           (d)  Stock Purchase Agreement dated as of January 30, 1997 by and among the Company, the Bank
                                of Scotland and 12 buyers (10)

                           (e)  Mutual Release dated as of January 30, 1997 by and among the Company, James Fyfe and the
                                Bank of Scotland (10)

                           (f)  Stock Purchase Agreement, dated as of March 4, 1998, between the Company and the Initial
                                Purchasers named therein (12)

                           (g)  1998 Employees Stock Option Plan (12)

                           (h)  Form of 1998 Incentive Stock Option Agreement, previously filed

                           (i)  Form of 1998 Non-Qualified Stock Option Agreement, previously filed

                           (j)  1998 Independent Director Compensation Plan, previously filed

            5              (a)  Opinion of Haynes and Boone, LLP, filed herewith

                                      II-5
   80

          EXHIBIT
          NUMBER                                             EXHIBIT TITLE
          -------                                            -------------
                       
           10              (a)  Employment Agreement by and between the Company and Robert F. Benoit, dated February 15,
                                1999, previously filed

                           (b)  Employment Agreement by and between the Company and John L. King, dated June 27, 2000,
                                previously filed

                           (c)  Employment Agreement by and between the Company and David H. Boltz, dated June 26, 2000,
                                previously filed

                           (d)  Lease Agreement by and between Shoal Creek No. 2, L.L. and the Company dated July 7,
                                1998, filed herewith

           23              (a)  Consent of Weinick Sanders Leventhal & Co., LLP, previously filed

                           (b)  Consent of Simontacchi & Company, LLP, previously filed

           27              (a)  Financial Data Schedule, previously filed

Notes:

     (1)  Filed with the Securities and Exchange Commission as an exhibit,
          numbered as indicated above, to our registration statement on Form
          S-18, File No. 2-69627, which exhibit is incorporated here by
          reference.

     (2)  Filed with the Securities and Exchange Commission as an exhibit,
          numbered as indicated above, to our registration statement on Form
          S-288712, which exhibit is incorporated here by reference.

     (3)  Filed with the Securities and Exchange Commission as an exhibit,
          numbered as indicated above, to our registration statement on Form
          S-2, File No. 33-4458, which exhibit is incorporated here by
          reference.

     (4)  Filed with the Securities and Exchange Commission as an exhibit,
          numbered as indicated above, to our annual report on Form 10-K for the
          year ended September 30, 1987, which exhibit is incorporated here by
          reference.

     (5)  Filed with the Securities and Exchange Commission as an exhibit,
          numbered as indicated above, to our registration statement on Form
          S-3, File No. 33-42154, which exhibit is incorporated here by
          reference.

     (6)  Filed with the Securities and Exchange Commission as an exhibit,
          numbered as indicated above, to our registration statement on Form
          S-1, File No. 33-42154, which exhibit is incorporated here by
          reference.

     (7)  Filed with the Securities and Exchange Commission as an exhibit,
          numbered as indicated above, to our registration statement on Form
          10-K for the year ended September 30, 1994, which exhibit is
          incorporated here by reference.

     (8)  Filed with the Securities and Exchange Commission as an exhibit,
          numbered as indicated above, to our proxy statement dated March 30,
          1992, which exhibit is incorporated here by reference.

     (9)  Filed with the Securities and Exchange Commission as an exhibit,
          numbered as indicated above, to our current report on Form 8-K, dated
          April 5, 1995, which exhibit is incorporated here by reference.

     (10) Filed with the Securities and Exchange Commission as an exhibit,
          numbered as indicated above, to our annual report on Form 10-K for the
          year ended March 31, 1996, which exhibit is incorporated here by
          reference.

     (11) Filed with the Securities and Exchange Commission as an exhibit,
          numbered as indicated above, to our annual report on Form 10-K/A for
          the year ended March 31, 1996, which exhibit is incorporated here by
          reference.

     (12) Filed with the Securities and Exchange Commission as an exhibit,
          numbered as indicated above, to our proxy statement dated April 23,
          1998, which exhibit is incorporated here by reference.

                                      II-6

   1

                                                                    EXHIBIT 5(a)

                              HAYNES AND BOONE, LLP
                           901 Main Street, Suite 3100
                               Dallas, Texas 75202
                                  214.651.5000

                                November 9, 2000

Corniche Group Incorporated
610 South Industrial Blvd.
Suite 220
Euless, Texas 76040

Re:      Corniche Group Incorporated Registration Statement on Form S-1

Gentlemen:

We have acted as counsel to Corniche Group Incorporated, a Delaware corporation
(the "Company"), in connection with the preparation of the Company's
Registration Statement on Form S-1 (Registration No. 333-48020) and the
amendments thereto (the Registration Statement, as amended, is hereinafter
referred to as the "Registration Statement") filed with the Securities and
Exchange Commission under the Securities Act of 1933, as amended (the
"Securities Act"). The Registration Statement relates to the offer and sale by
the Company of up to 19,844,585 shares of its Common Stock, par value $0.001 per
share ("Common Stock"). The opinions expressed herein relate solely to, are
based solely upon and are limited exclusively to, the internal substantive laws
of the State of Texas, the General Corporation Laws of the State of Delaware and
applicable federal laws of the United States of America.

In connection therewith, we have examined and relied upon the original, or
copies certified to our satisfaction, of (i) the Amended Certificate of
Incorporation of the Company (the "Certificate of Incorporation"), and the
Amended Bylaws of the Company (the "Bylaws"); (ii) the minutes and records of
the corporate proceedings of the Company with respect to the issuance by the
Company of the shares of Common Stock; (iii) the Registration Statement and all
exhibits thereto and (iv) such other documents and instruments as we have deemed
necessary for the expression of the opinions contained herein.

In making the foregoing examinations, we have assumed the genuineness of all
signatures and the authenticity of all documents submitted to us as originals,
and the conformity to original documents of all documents submitted to us as
certified or photostatic copies thereof. As to various questions of fact
material to this opinion, where such facts have not been independently
established, and as to the content and form of certain minutes, records,
resolutions and other documents or writings of the Company, we have relied, to
the extent we have deemed reasonably appropriate, upon representations or
certificates of officers of the Company or governmental officials. Finally, we
have assumed that all formalities required by the Company's Certificate of
Incorporation, Bylaws and the Delaware General Corporation Law will be complied
with when the shares of Common Stock are issued.

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Corniche Group Incorporated
November 9, 2000
Page 2

Based upon the foregoing, and having due regard for such legal considerations as
we deem relevant, we are of the opinion that the shares of Common Stock, upon
receipt by the Company of the full consideration for the shares of Common Stock,
will, when sold, be validly issued, fully paid and nonassessable.

We hereby consent to the filing of this opinion with the Securities and Exchange
Commission as Exhibit 5(a) to the Registration Statement, and to the reference
to our firm under the caption "Legal Matters" in the prospectus constituting a
part of such Registration Statement. In giving such consent, we do not hereby
admit that we are in the category of persons whose consent is required under
Section 7 of the Securities Act.

Very truly yours,

/s/ Haynes and Boone, LLP

Haynes and Boone, LLP

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                                                                   EXHIBIT 10(d)

                                 LEASE AGREEMENT

                                MADE THIS DAY THE

                              7th DAY OF JULY, 1998

                                     BETWEEN

                             SHOAL CREEK NO. 2, L.C.

                                       AND

                           CORNICHE GROUP INCORPORATED

                                    AS TENANT

                                       IN

                                610 S. INDUSTRIAL
                                  EULESS, TEXAS

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                                TABLE OF CONTENTS

Description                                                                                                    Page
- -----------                                                                                                    ----

ARTICLE 1 TERM AND POSSESSION.....................................................................................3

ARTICLE 2 RENT....................................................................................................5

ARTICLE 3 SECURITY DEPOSIT........................................................................................8

ARTICLE 4 OCCUPANCY AND USE.......................................................................................8

ARTICLE 5 UTILITIES AND SERVICES..................................................................................9

ARTICLE 6 REPAIRS, MAINTENANCE, ALTERATIONS AND IMPROVEMENTS.....................................................10

ARTICLE 7 DAMAGE, FIRE AND CASUALTY..............................................................................12

ARTICLE 8 CONDEMNATION...........................................................................................13

ARTICLE 9 LIENS..................................................................................................13

ARTICLE 10 TAXES ON TENANT'S PROPERTY............................................................................14

ARTICLE 11 SUBLETTING AND ASSIGNING..............................................................................14

ARTICLE 12 TRANSFERS BY LANDLORD.................................................................................15

ARTICLE 13 DEFAULT...............................................................................................16

ARTICLE 14 NOTICES...............................................................................................18

ARTICLE 15 MISCELLANEOUS PROVISIONS..............................................................................19

EXHIBITS

EXHIBIT "A" FLOOR PLAN...........................................................................................25
EXHIBIT "B" ACCEPTANCE OF PREMISES AMENDMENT.....................................................................26
EXHIBIT "C" AGREEMENT FOR CONSTRUCTION...........................................................................27
EXHIBIT "D" RULES AND REGULATIONS................................................................................28
EXHIBIT "E" RENEWAL OPTION.......................................................................................31
EXHIBIT "F" BASIC RENTAL SCHEDULE................................................................................32
EXHIBIT "G" PARKING..............................................................................................33

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                                 LEASE AGREEMENT

THIS Lease Agreement ("Lease") is made this 17th day of June, 1988 between Shoal
Creek No. 2, L.C., a Texas Limited Liability Company hereinafter called
"Landlord," and Corniche Group Incorporated hereinafter called "Tenant."

                                LEASE OF PREMISES

In consideration of the mutual covenants herein, Landlord hereby leases to
Tenant and Tenant hereby leases from Landlord, subject to all the terms and
conditions hereinafter set forth those certain premises (hereinafter called the
"Premises") set forth in Item 2 of the Basic Lease Provisions and shown on the
drawings attached hereto and made a part hereof as Exhibit "A." Exhibits A
through H are also attached hereto and incorporated herein. The office building
in which the Premises are located, the land on which the office building is
situated, the parking area and all improvements and appurtenances to the
building, are referred to collectively herein as the "Building."

                             BASIC LEASE PROVISIONS

1.       Building Address: 610 S. Industrial, Euless, Texas

2.       Suite(s): 200 Floor(s): 2nd Floor

         Rentable Area: 4,175 square feet   Usable Area: 3,630 square feet

         Total Rentable Area of Building: 40,000 square feet

         Tenant's Building Expense Percentage: .104% (See Article 2)

4.       (a) Basic Annual Rent: $50,100.00 ($12.00 per rentable square foot)

         (b) Basic Monthly Rent: $4,175.00

         (c) Tenant's Operating Expense Stop: Actual building operating expenses
         for Premises in calendar year Lease commences.

5.       Term: (3) three years and (0) zero months

6.       Target Commencement Date: August 1, 1998

7.       Expiration Date: July 31, 2001

8.       Security Deposit: $12,525.00 payable on Lease execution to be credited
         on the 12th and 24th months of the Lease term and the remainder
         $4,175.00 to be used as the security deposit. First months rent due
         upon move-in.

9.       Broker(s): C&G Management and PultsOnCor

10.      Permitted Use: General Office Purposes

11.      Addresses for notices due under this Lease:

         LANDLORD:                                            TENANT:

         Shoal Creek No. 2, L.C.                     Corniche Group Incorporated
         16901 North Dallas Parkway                  610 S. Industrial Blvd.
         Suite 126                                   Suite 200
         Dallas, Texas 75248                         Euless, Texas

                                    ARTICLE I
                               TERM AND POSSESSION

SECTION 1.01. COMMENCEMENT AND EXPIRATION. The term of this Lease shall be the
period of time specified in Item 5 of the Basic Lease Provisions, adjusted as
provided below. The term shall commence on the Target Commencement Date shown in
Item 6 of the Basic Lease Provisions or such later date as the Premises

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shall be tendered to Tenant as set forth below, or such earlier date as Tenant
takes possession or commences use of the Premises for any purpose, including
construction. The term of this Lease shall expire, without notice to Tenant, on
the Expiration Date (as defined below). If the Lease commences on any day other
than the first day of a calendar month, the term of the Lease shall be extended
by that part of that month necessary to cause the expiration of the term to be
on the last day of a calendar month. The dates of commencement ("Commencement
Date") and expiration ("Expiration Date"), shall be documented by Landlord and
Tenant by execution of an "Acceptance of Premises Amendment" attached hereto as
Exhibit "B" and made a part hereof.

SECTION 1.02. CONSTRUCTION OF LEASE SPACE IMPROVEMENTS AND POSSESSION. Landlord
will perform or cause to be performed the work as described in Exhibit "C", in
accordance with the terms of said Exhibit "C", in a good and workmanlike manner
and in compliance with applicable law, subject to events and delays beyond its
control for which Landlord will not be liable to Tenant in any way. In the event
any delays beyond the control of Landlord cause a delay in the tendering of the
Premises, of sixty (60) days after Tenant's execution of this Lease, Tenant
shall have the right to terminate this Lease as its sole remedy. Landlord will
tender the Premises to Tenant by providing fifteen days prior written notice of
the day on which Landlord's work is scheduled to be completed. Upon delivery of
possession of the Premises to Tenant, Landlord and Tenant shall execute the
above-mentioned Acceptance of Premises Amendment, which, besides fixing the
Commencement Date and Expiration Date, will contain acknowledgments that Tenant
has accepted the Premises and their condition, and that the Premises and the
Building are satisfactory in all respects except for minor "punch list" items
agreed to in writing by Landlord and Tenant, which Landlord will remedy. If
Tenant takes possession of the Premises, Tenant shall be deemed to have accepted
the Premises even though the Acceptance of Premises Amendment may not have been
executed.

In the event Tenant requires work in the Premises and Landlord does not perform
or cause the performance of that work ("Non-Standard Work" ), Landlord's notice
of tender of the Premises shall specify the day on which possession could have
been taken if Landlord had performed or caused the performance of the
Non-Standard Work. The Commencement Date in such a case shall be the earlier of
the date of completion of Tenant's Non-Standard Work or the date on which
possession could have been taken if Landlord had performed the Non-Standard
Work, notwithstanding that such Non-Standard Work may not be completed by Tenant
on such date.

SECTION 1.03. SURRENDER OF PREMISES. Upon the expiration or earlier termination
of this Lease, or upon the exercise by Landlord of its right to re-enter the
Premises without terminating this Lease, Tenant shall immediately surrender the
Premises and all keys to the Premises to Landlord, together with all
alterations, improvements and other property as provided elsewhere herein, in
good order, condition and repair, except for ordinary wear and tear, and damage
by fire or other casualty, provided that at Landlord's written request Tenant
shall remove at its expense any physical additions and/or alterations to the
Premises made subsequent to the Commencement Date by Tenant or at Tenant's
request if at the time Landlord granted its consent to such addition or
alteration Landlord advised Tenant that Landlord's consent to the addition or
alteration was conditioned upon Tenant's removal of the addition or alteration
at the termination of the Lease. Tenant shall, at its expense, promptly repair
any damage caused by removal of any other improvements requested by Landlord as
aforesaid, and shall restore the Premises to the condition existing prior to the
installation of the items removed. If Tenant fails to surrender the Premises in
the condition aforesaid, then Landlord may restore the Premises to such a
condition at Tenant's expense. Upon the expiration or earlier termination of
this Lease, Tenant will, at the option of Landlord, execute a Release of Lease
and Waiver of Claim, in recordable form, containing Tenant's release of all its
interest in the Premises.

SECTION 1.04. HOLDING OVER. In the event Tenant, or any party under Tenant
claiming rights to this Lease, retains possession of the Premises after the
expiration or earlier termination of this Lease, such possession shall be an
unlawful detainer, and no tenancy or interest shall result from such possession;
such parties shall be

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subject to eviction and removal, and Tenant or any such party shall pay Landlord
as rent for the period of such holdover an amount equal to one and one-half
times the highest rental rate (including Additional Rent, as adjusted in Section
2.02.A.1 hereof) provided for in this Lease. Tenant shall also pay any and all
damages sustained by Landlord as a result of such holdover. Tenant will vacate
the Premises and deliver same to Landlord immediately upon Tenant's receipt of
notice from Landlord to so vacate. This provision shall not be deemed to waive
Landlord's right to re-entry or any other right hereunder or at law. The rent
during such holdover period shall be payable to Landlord on demand. No holding
over by Tenant, whether with or without consent of Landlord, shall operate to
extend this Lease.

                                    ARTICLE 2
                                      RENT

SECTION 2.01. BASIC RENT. Tenant shall pay as Basic Rent for the Premises the
annual sum shown in Item 4(a) of the Basic Lease Provisions. The Basic Rent
shall be payable in equal monthly installments (as shown in Item 4(b) of the
Basic Lease Provisions) in advance, without demand, deduction or setoff, except
as provided for herein, commencing on the Commencement Date (subject to the
provisions of Section 2.02.0 hereof) and continuing on the first day of each
calendar month thereafter. If the term of this Lease commences on a day other
than the first day of a calendar month, the rent for such partial month shall be
prorated in the proportion that the number of days (including the Commencement
Date) this Lease is in effect during such partial month bears to the number of
days in that calendar month.

SECTION 2.02. ADDITIONAL RENT.

A.       Definitions. For purposes of this Section 2.02, the following
         definitions shall apply:

1.       "Additional Rent" shall mean the sum of "Tenant's Proportionate Share
         of Building Operating Expenses," as deemed in Section 2.02.A.4 hereof.

2.       "Building Operating Expenses" shall mean all of Landlord's costs and
         expenses paid or incurred in operating and maintaining the Building for
         a particular calendar year or portion thereof as determined by Landlord
         in accordance with generally accepted accounting principles, including
         all additional costs and expenses of operation and maintenance of the
         Building which Landlord determines that it would have paid or incurred
         during such year, grossed up to 100% occupancy for the Building.
         Building Operating Expenses shall include by way of illustration but
         not limitation: insurance premiums; water, sewer, electrical and other
         utility charges; service and other charges incurred in the operation
         and maintenance of the elevators and the heating; ventilation and
         air-conditioning system; cleaning and other janitorial services; tools
         and supplies; repair costs; landscape maintenance costs; security
         services; license, permit and inspection fees; management fees and
         expenses; wages and related benefits payable to employees relating
         thereto; legal services; accounting services; trash removal: parking
         maintenance and operating costs; all other costs and expenses which
         would generally be regarded as operating and maintenance costs and
         expenses, including those which would normally be amortized over a
         period not to exceed five (5) years; all taxes, assessments and
         governmental charges of any kind and nature whatsoever lawfully levied
         or assessed against the Building and paid or incurred by Landlord for a
         particular calendar year or portion thereof; and any fees, expenses and
         costs incurred by Landlord in its efforts to ensure a fair and
         equitable tax burden on the Building or to contest the validity of any
         assessments, levies or tax rates. There shall also be included in
         Building Operating Expenses the cost of any capital improvement made to
         the Building by Landlord after the date of this Lease which is required
         under any governmental law or regulation or ordinance that was not
         applicable to the Building at the time it was constructed, or was
         applicable

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         at the time of the Lease and has been amended or regulations have been
         issued thereon, amortized over such period as Landlord shall reasonably
         determine, together with an amount equal to interest at the rate of 8%
         per annum on the unamortized balance.

         If Landlord shall install a labor-saving device or other equipment
         which improves the operating efficiency of any system within the
         Building and thereby reduces Building Operating Expenses, the Landlord
         may add to Building Operating Expenses in each year during the useful
         life of such installed device or equipment an amount equal to the
         annual amortization allowance of the cost of such installed device or
         equipment as determined in accordance with applicable regulations of
         the Internal Revenue Service or generally accepted accounting
         principles, together with an amount equal to interest at the rate of 8%
         per annum on the unamortized balance thereof, provided, however, that
         the amount of such allowance and interest shall not exceed the annual
         cost or expense reduction attributed by Landlord to such installed
         device or equipment; and further provided, that in no event shall such
         allowance and interest increase Tenant's Additional Rent over what it
         would have been if such labor-saving device or other equipment had not
         been installed. Building Operating Expenses shall expressly exclude the
         following items:

         (a)      the cost of repairs made by Landlord resulting from damage,
                  destruction or condemnation of all or a portion of the
                  Building;

         (b)      the cost of preparing space in the Building for occupancy by
                  tenants;

         (c)      book depreciation on the Building;

         (d)      any amount paid for services rendered and/or materials
                  furnished to the Building to any person or entity which is in
                  excess of that which would have been reasonably paid by
                  Landlord in an arms-length transaction;

         (e)      the cost of any repair made by Landlord to remedy damage
                  caused by or resulting from the negligence of Landlord or its
                  agents, servants or employees;

         (f)      ground rent, if any;

         (g)      interest and principal amortization on mortgages presently
                  encumbering or hereafter encumbering the Property and charges
                  and fees incurred by Landlord in connection with the
                  procurement and recording of such mortgages;

         (h)      rent and additional rent paid by Landlord for its office space
                  in the Building or elsewhere and incidental expenses relating
                  to such office space;

         (i)      damages paid by Landlord and costs of litigation in connection
                  with actions by tenants for Landlord's negligence or claimed
                  breaches by it of its contractual obligations with such
                  tenants if such tenant prevails;

         (j)      the cost of repairs made by Landlord resulting from damage,
                  destruction or condemnation of all or a portion of the
                  Building, only to the extent Landlord receives insurance
                  proceeds or condemnation awards with respect thereto;

         (k)      to the extent that any employee of Landlord performs work or
                  services other than for the Building, the reasonably allocable
                  portion of his compensation with respect to work not performed
                  in connection with the Building; and

         (l)      the cost of any work or services rendered or performed by
                  Landlord for the benefit of any other tenant in the Building
                  to the extent such work or services are in excess of those to
                  be afforded or rendered to Tenant under this Lease.

3.       "Building Expense Percentage" shall mean the percentage specified in
         Item 3 of the Basic Lease Provisions, This percentage is determined by
         dividing Rentable area in the Premises, as specified in Item 2 of the
         Basic Lease Provisions by the total Rentable Area in the Building.

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4.       "Tenant's Proportionate Share of Building Operating Expenses" shall be
         the dollar amount, if any, by which the product of Tenant's Building
         Expense Percentage multiplied by The Building Operating Expenses
         exceeds Tenant's Operating Expense Stop as specified in Item 4(c) of
         the Basic Lease Provisions.

B.       Payment Obligation. In addition to the Basic Rent specified in this
         Lease, Tenant shall pay to Landlord as Additional Rent for the
         Premises, in each calendar year or partial calendar year during the
         term of this lease, an amount equal to Tenant's Proportionate Share of
         Building Operating Expenses for such calendar year.

1.       Payment of Additional Rent. Tenant's Additional Rent shall be estimated
         by Landlord, in a reasonable manner and such estimate shall not be more
         than 105% of the actual operating expenses for the prior year (however
         the foregoing cap on the estimate shall not constitute a cap on the
         actual amount due), and written notice thereof shall be given to Tenant
         at least thirty (30) days prior to the Commencement Date or the
         beginning of each calendar year, as the case may be, or as soon
         thereafter as is reasonably possible. For any such remainder of the
         calendar year after the Commencement Date, Tenant shall pay to Landlord
         each month, at the same time the Basic Rent is due, an amount equal to
         the amount of such estimated Additional Rent for the remainder of such
         calendar year divided by the number of months remaining in such year,
         and for each calendar year thereafter, Tenant shall pay to Landlord
         each month, at the same time the Basic Rent is due, an amount equal to
         one-twelfth (1/12) of the estimated annual Additional Rent due.

2.       Revisions in Estimated Additional Rent. If Building Operating Expenses
         increase during a calendar year, Landlord may revise the Estimated
         Additional Rent during such year by giving Tenant written notice to
         that effect, and thereafter Tenant shall pay to Landlord, in each of
         the remaining months of such year, an additional amount equal to the
         amount of such increase in the estimated Additional Rent divided by the
         number of months remaining in such year.

3.       Adjustments to Actual Additional Rent. Within ninety (90) days after
         the end of each calendar year or as soon thereafter as is reasonably
         possible, Landlord shall prepare and deliver to Tenant a statement
         showing Tenant's actual Additional Rent. Within thirty (30) days after
         receipt of the aforementioned statement, Tenant shall pay to Landlord,
         or Landlord shall credit against the next Additional Rent payment or
         payments due from Tenant, as the case may be, the difference between
         Tenant's actual Additional Rent for the preceding calendar year and the
         estimated Additional Rent paid by Tenant during such year.

C.       Rent. The Basic Rent, the Additional Rent, and all other sums required
         to be paid by Tenant hereunder, including any sums due for construction
         in the Premises, are sometimes collectively referred to as, and shall
         constitute, "Rent". Rent shall be paid by Tenant when due, without
         prior demand therefor, and without deduction or setoff unless otherwise
         specifically provided herein, at the office of the building manager or
         at such other place as Landlord may designate.

         In the event any installment of Rent under this Lease shall not be paid
         when due, then further Rent in the amount of Ten Cents (.10) per each
         dollar so overdue may be charged by Landlord in consideration of
         Landlord's administration expense and time consumed incident to the
         handling of such overdue installment or Rent. Acceptance of such
         further Rent shall in no event constitute a waiver of Tenant's default
         with respect to such overdue amount, nor prevent Landlord from
         exercising any of the other rights and remedies granted hereunder.

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D.       Deposit - First Month's Rent. Tenant shall deposit with Landlord, on
         execution of this Lease, a sum equal to one full month's total rent
         installment as set forth in Item 4(b) of the Basic Lease Provisions
         which shall be credited to the first installment(s) of basic Rent and
         Additional Rent due hereunder.

                                    ARTICLE 3
                                SECURITY DEPOSIT

Tenant has paid or will pay Landlord the sum set forth in Item 8 of the Basic
Lease Provisions as security for the performance of the terms hereof by Tenant.
Tenant shall not be entitled to interest thereon. If Tenant defaults with
respect to any provision of this Lease, and fails to cure same within any
applicable cure period or grace period, if any, Landlord may, but shall not be
required to, use, apply or retain all or part of this security deposit for the
payment of any Rent or any other sum in default, or for the payment of any other
amount which Landlord may spend or become obligated to spend by reason of
Tenant's default, or to compensate Landlord for any other loss or damage which
Landlord may suffer by reason of Tenant's default, including, without
limitation, costs and attorneys' fees incurred by Landlord to recover possession
of the Premises. If any portion of said deposit is so used or applied, Tenant
shall, within five (5) days of demand therefor, deposit cash with Landlord in an
amount sufficient to restore the security deposit to its original amount and
Tenant's failure to do so shall constitute a default hereunder by Tenant. If
Tenant shall fully and faithfully perform every provision of this Lease to be
performed by it, the security deposit shall be returned to Tenant within thirty
(30) days of the Expiration Date.

                                    ARTICLE 4
                                OCCUPANCY AND USE

SECTION 4.01. USE OF PREMISES. The Premises shall be used solely for the purpose
specified in Item 10 of the Basic Lease Provisions. Tenant will not use, occupy
or permit the use or occupancy of the Premises for any purpose which is
forbidden by law, ordinance or governmental or municipal regulation or order, or
which may be dangerous to life, limb or property, or permit the maintenance of
any public or private nuisance, or do or permit any other thing which may
disturb the quiet enjoyment of any other tenant of the Building; or keep any
substance or carry on or permit any operation which might emit offensive odors
or conditions into other portions of the Building: or at any time sell,
purchase, or give away, or permit, except with Landlord's prior written
approval, the sale, purchase, or gift of food in any form by or to any of
Tenant's agents or employees or other parties in the Premises; or use any
apparatus which might make undue noise or set up vibrations in the Building; or
permit anything to be done which would increase the fire and extended coverage
insurance rate on the Building or contents, and if there is any increase in such
rate by reason of acts of Tenant, then Tenant agrees to pay such increase
promptly upon demand therefor by Landlord. Payment by Tenant of any such rate
increase shall not be a waiver of Tenant's duty to comply herewith.

SECTION 4.02. RULES AND REGULATIONS. Tenant shall comply with all rules and
regulations set forth in Exhibit "D" attached hereto and forming a part hereof,
Landlord shall have the right at all times to change such rules and regulations
or to amend them in any reasonable manner. All changes and amendments will be
sent by Landlord to Tenant in writing and shall be thereafter carried out and
observed by Tenant. Landlord shall apply such rules and regulations against all
Tenants in a uniform manner.

SECTION 4.03. SIGNS. Tenant shall not inscribe, paint, affix or display any
signs, advancements or notices on or in the Building, except for such tenant
identification information as Landlord permits to be included or shown on the
directory in the main lobby and adjacent to the access door or doors to the
Premises.

SECTION 4.04. ACCESS. Landlord or its authorized agents shall at any and all
reasonable times have the right

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to enter the Premises to inspect the same, to supply janitorial service or any
other service to be provided by Landlord to Tenant hereunder, to show the
Premises to prospective lenders, purchasers or tenants, to alter, improve or
repair the Premises or any other portion of the Building, all without being
deemed guilty of an eviction of Tenant and without abatement of Rent, and may
for that purpose erect scaffolding and other necessary structures where
reasonably required by the character of the work to be performed, provided the
business of Tenant shall be interfered with as little as is reasonably
practicable. Tenant hereby waives any claim for damages for any injury or
inconvenience to or interference with Tenant's business any loss of occupancy or
quiet enjoyment of the Premises, and any other loss occasioned thereby. For each
of the aforesaid purposes, Landlord shall at all times have and retain a key
with which to unlock all of the doors in, upon and about the Premises, excluding
Tenant's vaults and safes. Landlord shall have the right to use any and all
means which Landlord may deem proper to open any door(s) in an emergency without
liability therefor. Tenant shall not change Landlord's lock system or in any way
prohibit Landlord from entering the Premises.

SECTION 4.05. QUIET POSSESSION. Upon Tenant's paying the Rent reserved hereunder
and observing and performing all of the covenants, conditions and provisions on
Tenant's part to be observed and performed hereunder, Tenant shall have the
quiet possession of the Premises for the entire term of this Lease, subject to
all of the provisions of this Lease.

                                    ARTICLE 5
                             UTILITIES AND SERVICES

SECTION 5.01. SERVICES TO BE PROVIDED. Provided Tenant is not in default
hereunder, Landlord agrees to furnish or cause to be furnished to the Premises
the utilities and services described below, subject to the conditions and in
accordance with the standards set forth herein;

A.       Landlord shall provide automatic elevator facilities on Monday through
         Friday from 6:45 a.m. to 7:00 p.m. and on Saturdays from 8 a.m. to 1
         p.m., holidays excepted, and have at least one elevator available for
         use at all other times.

B.       Monday through Sunday from 5:00 a.m. to 11:00 p.m. Landlord shall
         ventilate the Premises and furnish heat or air conditioning, at such
         temperatures and in such amounts as Landlord deems standard, when, in
         the judgment of Landlord, it is required for the comfortable occupancy
         of the Premises, subject to any governmental requirements or standards
         relating to, among other things, energy conservation. Upon request,
         Landlord shall make available at Tenant's expense after-hours heat or
         air conditioning. The minimum charge and the hourly rate for the use of
         after hours heat or air conditioning shall be determined from time to
         time by Landlord and confirmed in writing to Tenant. Subject to the
         foregoing, Tenant shall have access to the Premises 24 hours per day,
         seven days per week.

C.       Landlord shall furnish to the Premises at all times, subject to
         interruptions beyond Landlord's control, electric current as required
         by the building standard office lighting and outlets. Tenant's use of
         electric current shall at no time exceed the capacity of the feeders to
         the Building or the risers or wiring installation. Tenant shall not
         install or use or permit the installation or use of any computer or
         electronic data processing equipment or similar machines of high
         electrical consumption greater than 110-115 volts in the Premises,
         without the prior written consent of Landlord, which consent shall not
         be unreasonably withheld. Should such consent be granted by Landlord,
         electrical consumption in the Premises, or in that portion of the
         Premises affected by such installation, will, at Landlord's option, be
         separately metered. All costs associated with any such separate
         metering required by Landlord, including but not limited to

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         installation of any separate metering devices and the costs of all
         electrical consumption generated thereon, shall be borne by Tenant.

D.       Landlord shall furnish water for drinking, cleaning and lavatory
         purposes only.

E.       Landlord shall provide janitorial services to the Premises, comparable
         to that provided in other similar office buildings in the Dallas/Ft.
         Worth area, provided the Premises are used exclusively as offices.

SECTION 5.02. ADDITIONAL SERVICES. Landlord may impose a reasonable charge for
any utilities and services, including without limitation, air conditioning,
electrical current, and water, provided by Landlord by reason of any substantial
use of the Premises at any time other than the hours set forth above or for any
use beyond what Landlord agrees herein to furnish or because of special
electrical, cooling and ventilating needs created by Tenant's hybrid telephone
equipment, computers and other similar equipment or uses.

SECTION 5.03. TENANT'S OBLIGATION. Tenant agrees to cooperate fully at all times
with Landlord and to abide by all regulations and requirements which Landlord
may prescribe for the use of the above utilities and services. Any failure to
pay any excess costs as described above upon demand by Landlord shall constitute
a breach of the obligation to pay Rent under this Lease and shall entitle the
Landlord to the rights herein granted for such breach.

SECTION 5.04. SERVICE INTERRUPTION. Landlord shall not be liable for, and Tenant
shall not be entitled to, any abatement or reduction of Rent by reason of
Landlord's failure to maintain temperature or electrical constancy levels or to
furnish any of the foregoing services when such failure is caused by accident,
breakage, repairs, strikes, lockouts or other labor disturbance or labor dispute
of any character, governmental regulation, moratorium or other government;
action, inability by exercise of reasonable diligence to obtain electricity,
water or fuel, or by any other cause beyond Landlord's reasonable control. Nor
shall any such failure, stoppage or interruption of any such service be
construed as an eviction of Tenant, or relieve Tenant from the obligation to
perform any covenant or agreement herein, and in no event shall Landlord be
liable for damage to persons or property, or in default hereunder, as a result
of such failure, stoppage or interruption of any such service. In the event of
any failure, stoppage or interruption thereof, however, Landlord shall use
reasonable diligence to resume service promptly.

SECTION 5.05. MODIFICATIONS. Notwithstanding anything herein above to the
contrary, Landlord reserves the right from time to time to make reasonable and
nondiscriminatory modifications to the above standards for utilities and
services.

                                    ARTICLE 6
               REPAIRS, MAINTENANCE, ALTERATIONS AND IMPROVEMENTS

SECTION 6.01. REPAIR AND MAINTENANCE OF THE BUILDING. Landlord shall provide for
the cleaning and maintenance of the public portions of the Building. Unless
otherwise expressly stipulated herein, Landlord shall not be required to make
any improvements or repairs of any kind or character on the Premises during the
term of this Lease, except repairs to the exterior walls, corridors, windows,
roof, other structural elements and equipment of the Building, plumbing,
electrical or other mechanical devices, and such additional maintenance as may
be necessary because of damage by persons other than Tenant, its agents,
employees, invitees or visitors. Landlord shall not be liable to Tenant for
losses due to theft or burglary or for damages done by unauthorized persons on
the Premises.

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SECTION 6.02. IMPROVEMENTS AND ALTERATIONS.

A.       Landlord's sole construction obligation under this Lease is as set
         forth in the Agreement for Construction attached hereto as Exhibit "C"
         and incorporated herein by this reference.

B.       Landlord shall have the right at any time to change arrangement,
         location and/or size of entrances or passageways, doors and doorways,
         and corridors, elevators, stairs, toilets or other public parts of the
         Building and, upon giving Tenant reasonable notice thereof, to change
         the name, number or designation by which the Building is commonly
         known.

C.       Tenant shall not make any alterations, additions or improvements to the
         Premises without the prior written consent of Landlord which consent
         shall not be unreasonably withheld. Should Landlord's consent be
         granted, any such alterations, additions or improvements made by Tenant
         shall be at Tenant's sole cost and expense. Any contractor or person
         making such improvements must first be approve in writing by Landlord,
         all such alterations, additions or improvements (except movable
         furniture and trade fixtures) shall become the property of Landlord,
         and unless Landlord requires Tenant to remove such alterations and
         additions pursuant to Section 1.03 herein, shall be surrendered with
         the Premises, as a part thereof, at the expiration or earlier
         termination of this Lease. All work performed by Tenant or it's
         contractor shall conform to applicable governmental laws, rules and
         regulations.

SECTION 6.03. LANDLORD'S OPTION TO REPAIR. Landlord may, at its option and at
the cost and expense of Tenant, unless covered by Landlord's insurance, repair
or replace any damage or injury done to the Building or any part thereof caused
by Tenant, Tenant's agents, employees, licensees, invitees or visitors. Tenant
shall pay the cost thereof, plus interest thereon as provided in Section 15.13
herein, to Landlord on demand. Tenant further agrees to maintain and keep the
interior of the Premises in good repair and condition at Tenant's expense.
Tenant agrees not to commit or allow any waste or damage to be committed on any
portion of the Premises.

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                                    ARTICLE 7
                            DAMAGE, FIRE AND CASUALTY

SECTION 7.01. TOTAL OR PARTIAL DESTRUCTION OF THE BUILDING OR PREMISES.
If the Building is totally destroyed by fire or other casualty or if the
Premises or the building are so damaged that rebuilding or repairs cannot be
completed within one hundred eighty (180) days after the date of such damage, or
determined by Landlord and Tenant. Landlord or Tenant may at its option
terminate this Lease, in which event the Rent shall be abated during the
unexpired portion of this Lease effective on the date of such damage. If the
Building or the Premises are damaged by fire or other casualty covered by
Landlord's insurance, but only to such extent that rebuilding or repairs can be
completed within one hundred eighty (180) days after the date of such damage or
if the damage should be more serious but Landlord does not elect to terminate
this Lease, in either such event Landlord shall within thirty (30) days after
the date of such damage shall proceed with reasonable diligence to restore the
Building and/or Premises to substantially the same condition in which it was
immediately prior to the happening of the casualty, except that Landlord shall
not be required to rebuild, repair or replace any part of the furniture,
equipment, fixtures and other improvements which may have been placed by Tenant
or other tenants within the Building or Premises. Landlord shall allow Tenant a
fair diminution of rent during the time the Premises are unfit for occupancy. In
the event any mortgagee under a deed of trust, security agreement or mortgage on
the Building should require that the insurance proceeds be used to retire the
mortgage debt, Landlord shall have no obligation to rebuild and this Lease shall
terminate upon notice to Tenant. The insurance which shall carried by Landlord
pursuant to Section 7.04 hereof and by Tenant pursuant to 7.03. B hereof shall
be for the sole benefit of the party carrying such insurance and under its sole
control.

SECTION 7.02. TENANT'S RESPONSIBILITIES.

A. If the building or the Premises shall be damaged by fire or other casualty
resulting from the fault or policy form with a minimum limit of liability of
$1,000,000.00 in respect to injuries, death or property damage, and (b) Worker's
Compensation insurance in form and amounts as required by law.

SECTION 7.04. LANDLORD'S INSURANCE. Landlord shall at all times during the term
of this Lease, maintain in effect a policy or policies of insurance covering the
Building (excluding property required to be insured by Tenant) in such amounts
as Landlord may from time to time determine, but at least covering the
replacement cost of the Building, providing protection against loss or damage by
fire, explosion or other hazards and contingencies together with insurance
against sprinkler damage, vandalism and malicious mischief, and such other risks
as Landlord may from time to time determine and with any such deductibles as
Landlord may from time to time determine. Landlord reserves the right to self
insure the Building.

Any insurance provided for in this Section 7.04 may be effected by a policy or
policies of blanket insurance, covering additional items or locations or
assureds, provided that the requirements of this Paragraph are otherwise
satisfied. Tenant shall have no rights in any policy or policies maintained by
Landlord and shall not, by reason of payment by Tenant, as part of the Building
Operating Expenses, of its prorata share of the Landlord's premium for the
insurance, be entitled to be a named insured thereunder.

SECTION 7.05. WAIVER OF SUBROGATION. Landlord and Tenant hereby waive any rights
each may have against the other, on account of any loss or damage occasioned to
Landlord or Tenant, as the case may be, their respective property, the Premises,
its contents or to the other portion of the Building arising from any risk
generally covered by fire and extended coverage insurance. The parties hereto
each, on behalf of their respective insurance companies insuring the property of
either Landlord or Tenant against any such loss, waive any right of subrogation
that it may have against Landlord or Tenant, as the case may be. Each party to
the Lease agrees immediately to give to each such insurance company written
notification of the terms of the mutual waivers

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contained in this paragraph, and to have said insurance policies properly
endorsed, if necessary, to prevent the invalidation of said insurance coverage
by reason of said waivers.

                                    ARTICLE 8
                                  CONDEMNATION

In the event the Building, or any portion thereof necessary, in the sole opinion
of Landlord, to the continued efficient and/or economically feasible use of the
Building shall be taken or condemned in whole or in part for public purposes, or
sold to a condemning authority to prevent taking, then the term of this Lease
shall, at the option of the Landlord, forthwith cease and terminate, and the
Landlord shall receive the entire award for land and buildings; Tenant hereby
expressly assigns to Landlord any and all right, title and interest of Tenant
now or hereafter arising in and to any such award. Tenant shall have the right
to recover from such authority, but not from Landlord, only any compensation as
may be awarded to Tenant on account of moving and relocation expenses and
depreciation to and removal of Tenant's physical property.

                                    ARTICLE 9
                                      LIENS

Tenant shall keep the premises free from any liens arising out of any work
performed, materials negligence of Tenant, or the agents, employees, licensees
or invitees of Tenant (except as set forth in Section 7.05), such damage shall
be repaired by and at the expense of Tenant, unless covered by Landlord's
insurance, under the direction and supervision of Landlord, and Rent shall
continue without abatement.

B.       Except for that portion, if any, of Landlord's gross negligence or
         willful misconduct not waived by Tenant, Tenant covenants that Landlord
         shall not be liable for any damage or liability of any kind or for any
         injury to or death of persons or damage to property of Tenant or any
         other person during the term of this Lease, including consequential
         loss or damage from any cause whatsoever by reason of the construction,
         use, occupancy or enjoyment of the Premises by Tenant or any person
         therein or holding under Tenant or by or through the acts or omissions
         of other tenants of the Building or Landlord. Tenant hereby agrees, as
         part of the material consideration for this Lease, to indemnify and
         save Landlord harmless from all claims, actions demands, costs and
         expenses and liability whatsoever, including reasonable attorneys'
         fees, on account of any such real or claimed damage or liability, and
         from all liens, claims and demands occurring in, on or at the Premises,
         or arising out of the construction, use, occupancy or enjoyment or the
         Premises and its facilities, or any repairs or alterations which Tenant
         may make upon the Premises.

SECTION 7.03. TENANT'S INSURANCE. Tenant covenants and agrees that from and
after the date of delivery of the Premises from Landlord to Tenant, Tenant will
carry and maintain, at its sole cost and expense, the following, types of
insurance, in the amounts specified and in the form hereinafter provided, as
follows:

A.       Commercial General Liability Insurance on an occurrence policy form
         covering the Premises and Tenant's use thereof against claims for
         bodily injury or death and property damage occurring upon, in or about
         the Premises, such insurance to insure both Landlord and Tenant and to
         afford protection to the limit of not less than $1,000,000.00 each
         occurrence in respect to injuries, death or property damage to any
         number of persons arising out of any one occurrence. Such insurance
         shall name Landlord as additional insured and shall provide that it is
         primary insurance. This insurance coverage shall extend to any
         liability of Tenant arising out of the indemnities provided for in
         Section 7.02.

B.       Tenant Improvements and Property Insurance covering all leasehold
         improvements, heating, ventilating

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         and air-conditioning equipment installed by reason of Tenant's
         Non-Standard Work, fixtures installed by or at the expense of Tenant;
         and personal property in, on or upon the Premises, in an amount not
         less than 100% of full replacement cost thereof.

C.       Worker's Compensation in statutory amounts and Employer's Liability in
         an amount not less than $100,000.

Tenant agrees to provide Landlord, on or prior to the Commencement Date, with
certificates of such insurance evidencing the specified types and amounts of
insurance required above and to permit Landlord at all reasonable times to
inspect the policies or insurance required herein. Landlord shall receive thirty
(30) calendar days written notice from the insurer prior to any cancellation or
material change of coverage referenced in Article 7.

Tenant shall require any third party vendor or contractor performing work on the
Premises to carry and maintain at no expense to Landlord: (a) Commercial General
Liability Insurance on an occurrence furnished, or obligations incurred by or
for Tenant. In the event that Tenant shall not, within thirty (30) days
following the imposition of any such lien, cause the same to be released of
record by payment or posting of a proper bond, Landlord shall have, in addition
to all other remedies provided herein and by law, the right but not the
obligation, to cause the same to be released by such means as it shall deem
proper, including payment of or defense against the claim giving rise to such
lien. All sums paid by Landlord and all expenses incurred by it in connection
therewith shall create automatically an obligation of Tenant to pay, on demand,
an equivalent amount, plus interest thereon as provided in Section 15.13 herein,
as Rent. No work which Landlord permits Tenant to perform in the Premises shall
be deemed to be for the immediate use and benefit of Landlord so that no
mechanics or other lien shall be allowed against the estate of Landlord by
reason of its consent to such work.

                                   ARTICLE 10
                           TAXES ON TENANT'S PROPERTY

Tenant shall be liable for and shall pay, prior to their becoming delinquent,
any and all taxes and assessments levied against any personal property or trade
or other fixtures placed by Tenant in or about the Premises, including any
additional real estate taxes or assessments which Building by reason of Tenant's
requirements for work in the Premises.

                                   ARTICLE 11
                            SUBLETTING AND ASSIGNING

Tenant shall not assign this Lease, or allow it to be assigned, in whole or in
part, by operation of law or otherwise or mortgage or pledge the same, or sublet
the Premises or any part thereof or permit the Premises to be occupied by any
firm, person, partnership or corporation or any combination thereof, other than
Tenant or Tenant's parent company or subsidiaries, without the prior written
consent of Landlord which shall nor be unreasonably withheld. In no event shall
any assignment or sublease ever release Tenant from any obligation or liability
hereunder. No assignee or subleasee of the Premises or any portion thereof may
assign or sublet the Premises or any portion thereof. Consent by Landlord to one
or more assignments or subletting shall not operate as a waiver of Landlord's
rights as to any subsequent assignments and/or sublettings. All reasonable legal
fees and expenses incurred by Landlord in connection with any assignment or
sublease proposed by Tenant will be the responsibility of Tenant and will be
paid by Tenant within five (5) days of receipt of an invoice from Landlord. In
addition, Tenant will pay to Landlord an administrative overhead fee of $500.00
in consideration for Landlord's review of any requested assignment or sublease.

Tenant hereby irrevocably authorizes and directs any such subtenant, upon
receipt of a written notice from

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Landlord stating that a default exists in the performance of Tenant's
obligations under this Lease, to pay to Landlord the rents due and to become due
under the sublease. Tenant agrees that such subtenant shall have the right to
rely upon any such statement and request from Landlord, and that such subtenant
shall pay such rents to Landlord without any obligation or right to inquire as
to whether such default exists and notwithstanding any notice from or claim from
Tenant to the contrary. Tenant shall have no right or claim against said
subtenant or Landlord for any such rents so paid by said subtenant to Landlord.

Any subtenant shall, by reason of entering into a sublease under this Lease, be
deemed, for the benefit of Landlord, to have assumed and agreed to conform and
comply with each and every obligation herein to be performed by Tenant other
than such obligations as are contrary to or inconsistent with provisions
contained in a sublease to which Landlord has expressly consented in writing. In
lieu of accepting the subleases, Landlord has the option to terminate this lease
at their sole discretion.

In the event Tenant shall default in the performance of its obligations under
this Lease, Landlord at its option and without any obligation to do so, may
require any subtenant to attorn to Landlord, in which event Landlord shall
undertake the obligations of Tenant under such sublease from the time of the
exercise of said option to the termination of such sublease; provided, however,
Landlord shall not be liable for any prepaid rents or security deposit paid by
such subtenant to Tenant or for any other prior defaults or Tenant under such
sublease.

If the rent due and payable by any assignee or subleasee under any such
permitted assignment or sublease (or a combination of the rent payable under
such assignment or sublease plus any bonus or any other consideration therefor
or any payment, incident thereto) exceeds the Rent payable under the Lease for
such space, Tenant shall pay to Landlord all such excess rent and other excess
consideration within ten (10) days following receipt thereof by Tenant.

                                   ARTICLE 12
                              TRANSFERS BY LANDLORD

SECTION 12.01. SALE OF THE BUILDING. In the event of a sale, assignment,
transfer or conveyance by Landlord of all of the Building, the same shall
operate to release Landlord from any and all liability under this Lease arising
after the date of such sale, assignment, transfer or conveyance. If any security
deposit has been made by Tenant, Landlord shall either transfer such security
deposit to the purchaser, or give a credit in the amount of the security
deposit, thereupon Landlord shall be discharged from any further liability in
reference thereto.

SECTION 12.02. SUBORDINATION AND ATTORNMENT.

A.       This Lease is subject and subordinate to any lease wherein Landlord is
         the tenant and to the liens of any and all mortgage or deeds of trust,
         regardless of whether such lease, mortgages or deeds of trust now exist
         or may hereafter be created with regard to all or any part of the
         Building, and to any and all advances to be made thereunder, and to the
         interest thereon, and all modifications, consolidations, renewals,
         replacements and extensions thereof. Tenant also agrees that any
         lessor, mortgagee or trustee may elect to have this Lease prior to any
         lease or lien of its mortgage or deed of trust, and in the event of
         such election and upon notification by such lessor, mortgagee or
         trustee to Tenant to that effect, this Lease shall be deemed prior to
         the said lease, mortgage or deed of trust, whether this Lease is dated
         prior to or subsequent to the date of said lease, mortgage or trust
         deed.

B.       Tenant shall, in the event of the sale, assignment, transfer or
         conveyance of Landlord's interest in the

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         Premises (except in a sale-leaseback financing transaction), or in the
         event of the termination of any lease in a sale-leaseback financing
         transaction wherein Landlord is the lessee, attorn to and recognize
         such purchaser or assignee or mortgagee as Landlord under this Lease.

C.       Tenant shall, in the event of any proceedings brought for the
         foreclosure of, or in the event of the exercise of the power of sale
         under, any mortgage or deed of trust covering the Promises, attorn to
         and recognize such purchaser or assignee or mortgagee as Landlord under
         this Lease.

D.       The above subordination and attornment clauses shall be self-operative
         and no further instruments of subordination or attornment need be
         required by any mortgagee, trustee, lessor, purchaser or assignee. In
         confirmation thereof, Tenant agrees that, upon the request of Landlord,
         or any such lessor, mortgagee, trustee, purchaser or assignee, Tenant
         shall execute and deliver whatever instruments may be required for such
         purposes and to carry out the intent of this Section.

                                   ARTICLE 13
                                     DEFAULT

SECTION 13.01. DEFAULTS BY TENANT. The occurrence of any of the events described
in subsections 13.011 through 13.018 shall constitute a default by Tenant under
this Lease.

13.011. FAILURE TO PAY RENT. With respect to any payment of Rent not made by
Tenant when due, the failure by Tenant to make such payment to Landlord within
five (5) business days after Tenant receives written notice specifying that the
payment was not made when due.

13.012. FAILURE TO PERFORM. Except for a failure covered by subsection 13.011
above, any failure by Tenant to observe and perform any provision of this Lease
to be observed or performed by Tenant where such failure continues for thirty
(30) days after written notice to Tenant, provided that if such failure cannot
be cured within said thirty (30) day period, Tenant shall not be in default
hereunder so long as Tenant commences curative action within such thirty (30)
day period, diligently and continuously pursues the curative action and fully
and completely cures the failure within sixty (60) days after such written
notice to Tenant.

13.013. BANKRUPTCY, INSOLVENCY, ETC. Tenant or any guarantor of Tenant's
obligations hereunder (hereinafter called "Guarantor") whether one (1) or more,
(i) cannot meet its obligations as they become due, (ii) becomes or is declared
insolvent according to any law, (iii) makes a transfer in fraud of creditors
according to any applicable law, (iv) assigns or conveys all or a substantial
portion of its property for the benefit of creditors or (v) Tenant or Guarantor
files a petition for relief under the Federal Bankruptcy Code or any other
present or future federal or state insolvency, bankruptcy or similar law
(collectively, "applicable bankruptcy law"); a receiver or trustee is appointed
for Tenant or Guarantor or its property; the interest of Tenant or Guarantor
under this Lease is levied on under execution or under other legal process; any
involuntary petition is filed against Tenant or Guarantor under applicable
bankruptcy law; or any action is taken to reorganize or modify Tenant's or
Guarantor capital structure if either Tenant or Guarantor be a corporation or
other entity (provided that no such levy, execution, legal process or petition
filed against Tenant or Guarantor Shall constitute a breach of this Lease if
Tenant or Guarantor shall vigorously contest the same by appropriate proceedings
and shall remove or vacate the same within ninety (90) days from the date of its
creation, service or filing).

13.014. ABANDONMENT. The abandonment of the Premises by Tenant.

13.015. VACATION. The vacating of the Premises by Tenant, which shall be
conclusively presumed if Tenant is absent from the Premises for ten (10)
consecutive days or more or if Tenant shall fail to move into or take

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possession of the Premises within ten (10) days after the date on which Rent is
to commence under the terms of this Lease.

13.016. LOSS OF RIGHT TO DO BUSINESS. If Tenant is a corporation or limited
partnership, Tenant fails to maintain its right to do business in the State of
Texas or fails to pay any applicable annual franchise taxes as and when same
become finally due and payable.

13.017. DISSOLUTION OR LIQUIDATION. If Tenant is a corporation or partnership,
Tenant dissolves or liquidates or otherwise fails to maintain its corporate or
partnership structure, as applicable.

13.018. FINANCIAL STATEMENT. The discovery by Landlord that any financial
statement given to Landlord by Tenant, or its successor in interest or by any
guarantor of Tenant's obligation hereunder, was materially false.

With respect to the defaults described in subsections 13.013 through 13.018,
Landlord shall be obligated to leave Tenant written notices of default and
Tenant shall have thirty (30) days to cure such defaults.

SECTION 13.02. REMEDIES OF LANDLORD. Upon the occurrence of any event of default
specified in this Lease, Landlord, at its option, may have one or more of the
following remedies, in addition to all other rights and remedies provided at law
or in equity:

A.       Landlord may terminate this Lease and without further notice repossess
         the Premises and be entitled to recover all damages incurred by
         Landlord by reason of Tenant's default including, but not limited to, a
         sum of money equal to the total of (1) the cost of recovering the
         Premises, (2) the unpaid Rent earned at the time of termination, plus
         interest thereon, (3) Late Charges on unpaid Rent and accrued interest
         thereon, (4) the balance of the Rent for the remainder of the term, (5)
         costs of reletting and refurbishing, and (6) any other sum of money and
         damages owed by Tenant to Landlord.

B.       Landlord may immediately terminate Tenant's right of possession of the
         Premises but not terminate the Lease, and without notice or demand
         enter upon the Premises or any part thereof and take absolute
         possession of the same, expel or remove Tenant and any other person or
         entity who may be occupying the Premises, by force if necessary, change
         the locks, and at Landlord's option. Landlord may relet the Premises or
         any part thereof for such terms and such rents as Landlord may
         reasonably elect. In the event Landlord shall elect to so relet, then
         rent received by Landlord from such reletting shall be applied first,
         to the payment of any indebtedness other than Rent due hereunder from
         Tenant to Landlord, second, to the payment of any cost of such
         reletting, including, without limitation, refurbishing costs and
         leasing, commissions, and third, to the payment of Rent due and unpaid
         hereunder, and Tenant shall satisfy and pay any deficiency upon demand
         therefor from time to time. Any entry into and possession of the
         Premises by Landlord under this Article shall be without liability or
         responsibility for damages to Tenant and shall not be in lieu of or in
         substitution for any other rights of Landlord hereunder or at law or in
         equity Tenant further agrees that Landlord may file suit to recover any
         sums due under the terms of this Article and that no recovery of any
         portion due Landlord hereunder shall be any defense to any subsequent
         action brought for any amount not therefore reduced to judgment in
         favor of Landlord. reletting of the Premises shall not be construed as
         an election on the part of Landlord to terminate this Lease and,
         notwithstanding any such reletting without termination, Landlord may at
         any time thereafter elect to terminate this Lease for such previous
         breach.

Tenant shall pay any Landlord's costs, charges and expenses, including the fees
of legal counsel, agents and others retained by Landlord, incurred in enforcing
Tenant's obligations hereunder or incurred by Landlord in any litigation,
negotiation or transaction in which Tenant causes Landlord to become involved or
concerned, including,

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but not limited to, all attorney's fees and any other costs and expenses
incurred in the preparation and service of notices of default and consultations
in connection therewith, whether or not a legal action is subsequently commenced
in connection with such default.

SECTION 13.03. LANDLORD'S LIEN AND SECURITY INTEREST. To assure payment of Rent
and all other sums due hereunder and which may become due hereafter, and to
assure faithful performance of all other covenants of this Lease, Tenant hereby
grants to Landlord an express contract lien on and security interest in and to
all present and future receivables of Tenant and all property, chattels or
merchandise now or hereafter owned by Tenant which may be placed on the
Premises, including, but not limited to, all equipment, inventory and fixtures
now owned or hereafter acquired. Landlord's lien and security interest shall
continue in such property of Tenant so long as Tenant is indebted to Landlord
under the terms of this Lease, regardless of whether the Tenant moves from the
Premises or such property is removed from the Premises. Landlord's lien and
security interest also extends to all proceeds of any insurance which may accrue
to Tenant by reason of damage or destruction of any such property. Landlord
shall have all the rights and remedies of a secured party under the Texas
Business and Commerce Code and other laws of Texas, and this lien and security
interest may be foreclosed as provided in the Texas Business and Commerce Code
or by judicial process. Tenant will be in default under this security agreement
at such time as Tenant may be in default under this Lease, said events of
default having been described in other parts of this Lease. The use of one
foreclosure procedure shall not be a bar to foreclosure by any other procedure.
Tenant shall execute all security agreements, financing statements and other
documents as required by Landlord to secure Landlord's rights established
herein. The lien and security interest herein granted shall be cumulative of and
in addition to any statutory lien rights in favor of Landlord, now or hereafter
existing.

SECTION 13.04. DEFAULTS BY LANDLORD. Except as otherwise provided in this Lease,
Landlord shall be in default under this Lease if Landlord fails to perform any
of its obligations hereunder and said failure continues for a period of thirty
(30) days after written notice thereof from Tenant to Landlord (unless such
failure cannot reasonably be cured within thirty (30) days and Landlord shall
have commenced to cure said failure within said thirty (30) days and continues
diligently to pursue the curing of the same). If Landlord shall be in default
under this Lease and, if as a consequence of such default, Tenant shall recover
a money judgment against Landlord, such judgment shall be satisfied only out of
the right, title and interest of Landlord in the Building as the same may then
be encumbered and Landlord shall not be liable for any deficiency. In no event
shall Tenant have the right to levy execution against any property of Landlord
other than its interest in the Building as herein before expressly provided.

                                   ARTICLE 14
                                     NOTICES

All notices which Landlord or Tenant may be required, or may desire, to serve on
the other shall be in writing and may be served, as an alternative to personal
service, by depositing the same with the U. S. Postal Service, by registered or
certified mail, postage prepaid, addressed as follows: (i) to Landlord at the
address set forth in Item 11 of the Basic Lease Provisions; and (ii) prior to
the Commencement Date of this Lease, to Tenant at the address set forth in Item
11 of the Basic Lease Provisions and (iii) after the Commencement Date, to
Tenant at the Premises. Any notices by mail as aforesaid shall be deemed
delivered, served and given two (2) business days after deposit of the same with
the U. S. Postal Service. The addresses stated above shall be effective for all
notices to the respective parties until written notice of a change of address is
given pursuant to the provisions hereof.

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                                   ARTICLE 15
                            MISCELLANEOUS PROVISIONS

SECTION 15.01. ESTOPPEL CERTIFICATE. Tenant shall, upon the request of the
Landlord or any first mortgagee of Landlord, without additional consideration,
deliver an Estoppel Certificate, containing the following information and
statements, if true:

A.       This Lease is in full force and effect, amount of rental then payable,
         with rent paid through the specified date;

B.       This Lease has not been modified or amended; and

C.       Landlord is not in default and Landlord has fully performed all of
         Landlord's obligations hereunder, and any such further consents and
         instruments of a similar nature evidencing the agreement of Tenant to
         the mortgage or other hypothecation by Landlord of the revesionary
         interest of Landlord thereunder as may be reasonably requested by
         Landlord or any mortgagee of Landlord.

D.       Tenant is in possession of the Premises, and not in default.

E.       Such other information and/or statements as Landlord shall reasonably
         request.

SECTION 15.02. RELOCATION. In the event Landlord decides to utilize the Premises
for other purposes during the term of this Lease, Tenant agrees to relocate to
other space in the Building provided such other space is comparable in size and
finish to the Premises. Landlord shall pay reasonable out-of-pocket expenses of
any such relocation, including the expenses of moving and reconstruction of all
Tenant-furnished and Land-furnished improvements. In the event of such
relocation, this Lease shall continue in full force and effect without any
change in the terms or other conditions, but with the new location substituted
for the old location set forth in Item 2 of the Basic Lease Provisions and on
Exhibit "A". Landlord acknowledges that it may only relocate Tenant one time
during the term of this Lease and will give Tenant ninety (90) days notice prior
to the proposed relocation.

SECTION 15.03. WAIVER. No waiver by Landlord of any provision of this Lease or
of any breach of Tenant hereunder shall be deemed to be a waiver of any other
provision hereof, or of any subsequent breach by Tenant of the same or any other
provision. Landlord's consent to or approval of any act by Tenant requiring
Landlord's consent or approval shall not be deemed to render unnecessary the
obtaining of Landlord's consent to or approval of any subsequent act of Tenant.
No act or thing done by Landlord or Landlord's agents during the term of this
Lease shall be deemed an acceptance of a surrender of the Premises, unless done
in writing signed by Landlord. The delivery of the keys to any employee or agent
of Landlord shall not operate as a termination of the Lease or a surrender of
the Premises. The acceptance of any Rent by Landlord following a breach of this
Lease by Tenant shall not constitute a waiver by Landlord of such breach or any
other breach unless such waiver is expressly stated in writing signed by
Landlord.

SECTION 15.04. INSOLVENCY OR BANKRUPTCY. In no event shall this Lease be
assigned or assignable by operation of law and in no event shall this Lease be
an asset of Tenant in any receivership, bankruptcy, insolvency or reorganization
proceeding.

SECTION 15.05. APPLICABLE LAWS. This Lease shall be governed by and construed
pursuant to the laws of the state in which the building is located.

SECTION 15.06. COMMON FACILITIES PARKING. Tenant shall have the non-exclusive
right, in

                                       19
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common with others, to the use of common entrances, lobbies, elevators, ramps,
drives, stairs and similar access and serviceways and other common facilities in
and adjacent to the Building, subject to such rules and regulations as may be
adopted by the Landlord.

SECTION 15.07. SUCCESSORS AND ASSIGNS. Except as otherwise provided in this
Lease, all of the covenants, conditions and provisions of this Lease shall be
binding upon and shall inure to the benefit of the parties hereto and their
respective heirs, personal representatives, successors and assigns.

SECTION 15.08. BROKERS. Tenant warrants that it has had no dealings with any
real estate broker or agent in connection with the negotiation of this Lease,
excepting only the broker(s) named in item 8 of the Basic Lease Provisions, and
that it knows of no other real estate broker(s) or agent(s) who is (are) or
might be entitled to a commission in connection with this Lease. Tenant agrees
to indemnify and hold harmless Landlord from and against any liability or claim,
whether meritorious or not, arising in respect to broker(s) not so named.

SECTION 15.09. SEVERABILITY. If any provision of this Lease or the application
thereof to any person or circumstances shall be invalid or unenforceable to any
extent, the remainder of this Lease and the application of such provisions to
other persons or circumstances shall not be affected thereby and shall be
enforced to the greatest extent permitted by law.

SECTION 15.10. NAME. Tenant shall not, without the written consent of Landlord,
use the name of the Building for any purpose other than as the address of the
business to be conducted by Tenant in the Premises, and in no event shall Tenant
acquire any rights in or to such names.

SECTION 15.11. EXAMINATION OF LEASE. Submission of this instrument for
examination or signature by Tenant does not constitute a reservation of or
option for lease, and it is not effective as a Lease or otherwise until
execution by and delivery to both Landlord and Tenant.

SECTION 15.12. INTEREST OF TENANT'S OBLIGATIONS. Any amount due from Tenant to
Landlord which is not paid when due shall bear interest at the highest rate
allowed by law from the date such payment is due until paid, but the payment of
such interest shall not excuse or cure the default.

SECTION 15.13. TIME. Time is of the essence in this Lease and in each and all of
the provisions hereof.

 SECTION 15.14. DEFINED TERMS AND MARGINAL READINGS. The words "Landlord" and
"Tenant" as used herein shall include the plural as well as singular. If more
than one person is named as Tenant, the obligations of such persons are joint
and several. The headings and titles to the articles of this Lease are not a
part of this Lease shall have no effect upon the construction or interpretation
of any part hereof.

SECTION 15.15. CORPORATE AUTHORITY. If Tenant executes this Lease as a
corporation, each of the persons executing this Lease on behalf of Tenant does
hereby personally covenant and warrant that Tenant is a duly authorized and
existing corporation, that Tenant has and is qualified to do business in the
state in which the Building is located, that the corporation has full right and
authority to enter into this Lease, and that each person signing on behalf of
the corporation was authorized to do so.

SECTION 15.16. FORCE MAJEURE. Whenever a period of time is herein prescribed for
action to be taken by Landlord, or Tenant, other than the payment of rent,
Landlord or Tenant shall not be liable or responsible for, and there shall be
excluded from the computation for any such period of time, any delays due to
strikes, riots, acts of God, shortages of labor or materials, war, governmental
laws, regulations or restrictions or any other causes of any kind whatsoever
which are beyond the control of Landlord.

                                       20
   21

SECTION 15.17. RECORDING. This lease shall not be recorded. However, Landlord
shall have the right to record a short form or memorandum thereof, at Landlord's
expense, at any time during the term hereof, and Tenant agrees to join in the
execution thereof if requested.

SECTION 15.18. RENT TAX. If applicable in the jurisdiction where the Premises
are situated, Tenant shall pay and be liable for all rental, sales and use taxes
or other similar taxes, if any, levied or imposed by any city, state, county or
other governmental body having authority, such payments to be in addition to all
other payments required to be paid to Landlord by Tenant under the terms of this
Lease. Any such payment shall be paid concurrently with the payment of the Rent
upon which such tax is based.

SECTION 15.19. HAZARDOUS OR TOXIC MATERIALS.

A.       Prohibition on placement or disposal. Tenant shall not knowingly
         incorporate into, use or otherwise place or dispose of at the leased
         Premises or in the Building or Project any toxic or hazardous materials
         in concentrations or levels sufficient that by the then-applicable EPA,
         OSHA or other applicable governmental standards cause the specific
         materials so identified to be classified or identified as toxic or
         hazardous materials except for the limited purposes of use and storage
         only where (i) such materials are in small quantities, properly labeled
         and contained (ii) such materials are handled and disposed of in
         accordance with the highest accepted industry standards for safety,
         storage, use and disposal (iii) such materials are for use in the
         ordinary course of business (i.e., as with office or cleaning
         supplies), (iv) notice of and a copy of the current material safety
         data sheet is provided to Landlord for each such hazardous or toxic
         material and (v) such materials are used, transported, stored, handled
         and disposed of in accordance with all applicable governmental laws,
         rules and regulations and Tenant has secured the necessary permits, if
         any, Landlord shall not knowingly dispose of at the leased Premises,
         Building or the Project any toxic or hazardous materials in
         concentrations or Levels sufficient that by then applicable EPA, OSHA
         or other applicable governmental standards cause the specific Materials
         so identified to be classified or identified as toxic or hazardous
         materials and shall otherwise deal with all toxic or hazardous
         materials at the leased Premises, Building or Project in a manner that
         will not materially and adversely affect Tenant's access, use or
         occupancy of the leased Premises and that any redemption or controls at
         the leased Premises will be in accordance with all applicable
         governmental laws, rules and regulations. If Landlord or Tenant ever
         has knowledge of the presence in the leased Premises or the-Building or
         the Project of such toxic or hazardous materials which affect the
         leased Premises, the party having knowledge shall notify the other
         party thereof in writing; promptly after obtaining such knowledge. For
         purposes of this Lease, hazardous or toxic materials shall mean
         hazardous or toxic chemicals or any materials or wastes containing
         hazardous or toxic chemicals at levels or content which cause such
         materials or wastes to be classified as hazardous or toxic as then
         prescribed by the prevalent industry practice and standards or by the
         then current levels or content as set from time to time by EPA or OSHA
         or as defined under 29 CFR 1910 OR 29 CFR 1925 or other applicable
         governmental laws, rules and regulations.

B.       Tenant's Covenants to Remove. If Tenant or its employees, agents, or
         contractors shall ever violate the provisions of Paragraph (b) or (c)
         above (that apply to Tenant regarding toxic or hazardous materials), or
         if Tenant's acts, negligence, breach of this provision or business
         operations directly and materially expand the scope of or materially
         worsen any contamination from toxic or hazardous materials, then Tenant
         shall clean-up, remove and dispose of the material causing the
         violation, in compliance with all applicable governmental standards,
         laws, rules and regulations and repair any damage to the leased
         Premises or Building within such period of time as may be reasonable
         under the circumstances after written notice by Landlord, provided that
         such work shall commence not later than thirty (30) days from such
         notice and be diligently and continuously carried to completion by
         Tenant or Tenant's designated

                                       21
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         contractors. Tenant shall notify Landlord of its method, time and
         procedure for any clean-tip or removal of toxic or hazardous materials
         under this provision, and Landlord shall have the right to require
         reasonable changes in such method, time or procedure or to require the
         same to be done after normal business hours or when the Building is
         otherwise closed (i.e., weekends or holidays).

C.       Inspections. Landlord shall have the right to periodically inspect,
         take samples for testing and otherwise investigate the leased Premises
         for the presence of hazardous or toxic materials including such studies
         and investigations, tests and surveys, and engage such specialists as
         Landlord deems appropriate to fairly evaluate the leased Premises and
         any risk from hazardous or toxic materials. In connection with any
         inspections, samples, surveys or tests to be performed by Landlord,
         Landlord shall not unreasonably interfere with Tenant's business
         operations at the leased Premises and Shall repair any damage to
         Tenant's property, inventory or fixtures damaged as a result of such
         inspections, samples, surveys or tests and shall furnish Tenant on
         request with a true and complete copy of any resulting report, survey
         or study.

D.       The purpose of the hazardous substance surveys is to indicate the
         presence or absence of toxic or hazardous materials (as defined
         hereafter) at the Building housing the leased Premises ("Building")
         based on the present levels or content of said toxic or hazardous
         materials as presently set by the U.S. Environmental Protection Agency
         ("EPA") or the U.S. Occupational Safety and Health Administration
         ("OSHA"). Landlord makes no representations or warranties whatsoever to
         Tenant regarding: (i) the hazardous substance surveys [including,
         without limitation, the contents, accuracy and/or scope thereof and
         Landlord has informed Tenant that said hazardous substance surveys are
         not comprehensive surveys of the Building for all forms of hazardous or
         toxic materials, including but not limited to asbestos containing
         materials, and cannot be relied upon as a representation that there are
         no hazardous or toxic materials at the leased Premises or Building,
         whether addressed therein or not], or (ii) the presence or absence of
         toxic or hazardous materials in, at, or under the leased Premises, the
         Building, or the Project. Tenant: (x) shall not rely on and Tenant
         hereby represents to Landlord that it has not relied on the hazardous
         substance surveys, the same having been provided for informational
         purposes only and (y) acknowledges that Tenant will make or has made
         such studies and investigations, will conduct or has conducted such
         tests and surveys, and will engage or has engaged such specialists as
         Tenant deems appropriate to fairly evaluate the leased Premises and any
         risks from hazardous or toxic materials.

Tenant shall furnish Landlord with a complete and legible copy of any study,
report, test, survey or investigation performed by or on behalf of Tenant at any
time involving the leased Premises and shall fully restore all areas and
improvements where samples were taken or work performed and repair all damage
resulting from any of the same and shall indemnify and hold Landlord harmless
from and against all claims, actions, liabilities, damages, losses, injuries or
deaths in connection with or arising out of or from any inspection, testing,
sampling, or similar or dissimilar activity conducted by Tenant, Tenant's agents
or contractors at the leased Premises or the Building for hazardous or toxic
materials, whether under this Paragraph or otherwise under or in connection with
this Lease.

SECTION 15.20. REMEDIES NOT EXCLUSIVE. Each of the rights, remedies and benefits
provided by this Lease shall be cumulative and shall not be exclusive of any
other of said rights, remedies and benefits or of any other rights, remedies,
and benefits allowed by law.

SECTION 15.21. RELATIONSHIP OF THE PARTIES. Nothing herein contained shall be
deemed or construed as creating the relationship of principal and agent or of
partnership or joint venture between parties hereto; it being understood and
agreed that neither the method of computing rent nor any provision contained
herein nor any acts of the parties hereto shall be deemed to create any
relationship between the parties other than that of Landlord and Tenant.

                                       22
   23

SECTION 15.22 NONLIABILITY OF LANDLORD. Landlord shall not be responsible or
liable to Tenant for any loss or damage that may be occasioned by or through the
acts or omissions of persons occupying adjoining areas or any part of the area
adjacent to or connected with the Premises or any part of the Building or for
any loss or damage resulting to Tenant or his property from theft or failure of
the security systems in the Building and hazardous waste contamination, or for
any damage or loss of property within the Premises from any cause other than
solely by reason of the gross negligence or willful act of Landlord, and no such
occurrence shall be deemed to be an actual or constructive eviction from the
Premises or result in an abatement or rental.

SECTION 15.23. THEFT OR BURGLARY. Landlord shall not be liable to Tenant for
losses to Tenant's property or personal injury caused by criminal acts or entry
by unauthorized persons into the Premises or the Building. Tenant agrees to
indemnify, defend and hold Landlord harmless therefrom.

SECTION 15.24. NOTICE OF TERMINATION. Notwithstanding any provision of law or
any judicial decision to the contrary, no notice shall be required to terminate
the term of this Lease, or extension hereof, on the date herein specified, and
the term hereof shall expire on the date herein provided without notice being
required from either party.

SECTION 15.25. CONDITION PRECEDENT. Tenant shall deliver to Landlord certified
copies of its year end financial statements for its last three (3) fiscal years
for Landlord's review and approval within five (5) business days of Landlord's
request for same.

SECTION 15.26. GUARANTOR. In the event that there is a guarantor of this Lease,
said guarantor shall be a guarantor of payment under this Lease, and shall have
the same obligations as Tenant under this Lease.

SECTION 15.27. NO OFFER. Preparation of this Lease by Tenant or Landlord's agent
and submission of same to Tenant shall not be deemed an offer to tenant to
lease. This lease shall become binding upon Landlord and Tenant only when fully
executed by both parties.

SECTION 15.28. ENTIRE AGREEMENT. This Lease contains all the agreements of the
parties hereto with respect to any matter covered or mentioned in this Lease,
and to prior agreement, understanding or representation pertaining to any such
matter shall be effective for any purpose. No provision of this Lease may be
amended or added to except by any agreement in writing signed by the parties
hereto or their respective successors in interest.

         IN WITNESS WHEREOF, the parties hereto have executed this Lease,
consisting of the forgoing provisions and Articles 1 through 15, together with
all Exhibits attached hereto and incorporated herein by this reference, as of
the date first above written.

TENANT:   CORNICHE GROUP INCORPORATED

BY:
          ---------------------------------

NAME:
          ---------------------------------
TITLE:
          ---------------------------------

DATE:
          ---------------------------------

ATTEST:
          ---------------------------------
TITLE:
          ---------------------------------
DATE:
          ---------------------------------

                                       23
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LANDLORD: SHOAL CREEK NO. 2, L.C., a Texas Limited Liability Company

BY:
          ---------------------------------

NAME:     Anthony Cimino
TITLE:    Vice President

DATE:
          ---------------------------------

ATTEST:
          ---------------------------------
TITLE:
          ---------------------------------
DATE:
          ---------------------------------

                                       24
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                                   EXHIBIT "A"
                                   FLOOR PLAN

                                       25
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                                  EXHIBIT "B"
                        ACCEPTANCE OF PREMISES AMENDMENT

This amendment to the Lease for space in the Building, executed on the 7th day
of July, 1998, between Shoal Creek No. 2, L.C., a Texas Limited Liability
Company as Landlord and Corniche Group Incorporated, as Tenant.

Landlord and Tenant hereby agree that:

1.       Except for those items shown on the attached "punch list", which
         Landlord will remedy within fifteen (15) days hereof, Landlord has
         fully completed the construction work required under the terms of the
         lease and the Agreement for Construction attached hereto, and Tenant
         accepts the Premises in their present condition and further accepts the
         premises as suitable for the Tenant's intended purposes.

2.       The Premises are tenantable, the Landlord has no further obligation for
         construction (except as specified above), and Tenant acknowledges that
         both the Building and the Premises are satisfactory in all respects.

3.       The Commencement Date of the Lease is hereby agreed to be the 1st day
         of August, 1998.

4.       The Expiration Date of the Lease is hereby agreed to be the 31st day of
         July, 2001.

TENANT:   CORNICHE GROUP INCORPORATED

By:

NAME:
          ---------------------------------
TITLE:
          ---------------------------------

LANDLORD: SHOAL CREEK NO. 2, L.C. a Texas Limited Liability Company

BY:
          ---------------------------------

NAME:    Anthony Cimino
TITLE:   Vice President

                                       26
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                                   EXHIBIT "C"
                           AGREEMENT FOR CONSTRUCTION

Shoal Creek No. 2. L.C., Limited Liability Company ("Landlord") and Corniche
Group Incorporated ("Tenant") simultaneously with the execution of this
Agreement for Construction ("Agreement") are executing a Lease for space (the
"Premises") in Fountainview Office Building (the "Building"). The Premises are
described in the Lease.

As further inducement, each to the other, to enter into the Lease (which is
hereby incorporated by reference to the extent the provisions of this Agreement
apply thereto) and in consideration of the mutual covenants herein, Landlord and
Tenant mutually agree as follows:

1.       The Landlord agrees to normal building standard tenant finishout.

                                       27
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                                   EXHIBIT "D"
                              RULES AND REGULATIONS

The following standards shall be observed by Tenant for the mutual safety,
cleanliness and convenience of all occupants of the Building, and shall apply,
where applicable, to the Premises, the building, the parking area, the land
situated beneath the Building and appurtenances thereto:

1.       Tenant shall not use the Premises or the Building to sell any items or
         services at retail price or cost without written approval of Landlord.
         The sale of services for stenography, typewriting, blueprinting,
         duplicating, and similar businesses shall not be conducted from or
         within the Premises or Building for the service or accommodation of
         occupants of the Building without prior written consent of the
         Landlord. Tenant shall not conduct any auction on the Premises. Tenant
         shall not store goods, wares or merchandise on the Premises, except for
         Tenant's own personal use.

2.       Sidewalks, halls, doorways, vestibules, passageways, stairwells and
         other similar areas shall not be obstructed or used by Tenant for a
         purpose other than ingress and egress to and from the Premises and
         Building.

3.       Flammable, explosive or other hazardous liquids and materials shall not
         be brought on the Premises or into the Building without prior written
         consent of Landlord.

4.       Tenant shall not make any alterations or improvements to the Premises
         without the written consent of the Landlord which consent shall not be
         unreasonably withheld. All improvements and the methods of installing
         and constructing, such improvements must be approved in writing by the
         Landlord prior to Commencement of installation and/or construction.
         Should Tenant require telegraphic, telephonic, annunciation or other
         communication service, Landlord will direct the electrician where and
         how wires are to be introduced and placed, and none shall be introduced
         or placed except as Landlord shall direct. All contractors and
         technicians performing work for Tenant within the Building shall be
         referred to Landlord for approval before performing such work. Tenant
         agrees to pay Landlord a fee equal to fifteen percent (15%) of the cost
         of such alterations, additions or improvements for Landlord's
         super-vision or review of same. All work performed by Tenant or its
         contractor shall conform to applicable governmental laws, rules and
         regulations.

5.       Movement into or out of the Building of freight, furniture, office
         equipment or other material for dispatch or receipt by Tenant which
         requires movement through public corridors or lobbies or entrances to
         the Building shall be limited to the use of service elevators only and
         shall be done at hours and in a manner approved by Landlord for such
         purposes from time to time. Only licensed commercial movers shall be
         used for the purpose of moving freight, furniture or office equipment
         to and from the Premises and Building. All hand trucks shall be
         equipped with rubber tires and rubber side guards.

6.       Requests by Tenant for building services, maintenance or repair shall
         be made in writing to the office of the Building Manager.

7.       Tenant shall not change locks or install additional locks on doors
         without prior written consent of Landlord. Tenant shall not make or
         cause to be made duplicates of keys procured from Landlord without
         prior approval of Landlord. All keys to the Premises shall be
         surrendered to Landlord upon termination of tenancy.

8.       Tenant shall give prompt notice to the office of the Building Manager
         of any damage to or defects in

                                       28
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         plumbing, electrical fixtures or heating and cooling equipment.
         Liquids, or other materials or substances which will cause injury to
         the plumbing, shall not be put into the lavatories, water closets or
         other plumbing fixtures by Tenant, its agents, employees or invitees,
         and damages resulting to such fixture or appliances from misuse by
         Tenant or Tenant's agents, employees or invitees shall be paid by
         Tenant, and Landlord shall not in any case be liable therefor.

9.       No food shall be prepared in or distributed from Tenant's office
         without prior written approval of the Building Manager. Vending
         machines or dispensing machines of any kind will not be placed in the
         Premises by Tenant unless prior written approval has been obtained from
         Landlord.

10.      Landlord shall have the power to prescribe the weight and position of
         safes, filing cabinets, or other heavy equipment which may overstress
         any portion of a floor. Any damage done to the Building by the improper
         placing of heavy items which overstress the floor will be repaired at
         the sole expense of Tenant. Tenant shall notify the Building Manager
         when safes or other heavy equipment are taken in or out of the
         Building, and the moving shall be done under the supervision of the
         Building manager after written permission from Landlord. Persons
         employed to move such property must be acceptable to Landlord.

11.      Tenant shall cooperate with Building employees in keeping the Premises
         neat and clean. Nothing shall be swept or thrown into the corridors,
         halls, elevator shafts or stair-ways.

12.      Tenant, its employees, or agents, or anyone else who desires to enter
         the Building after normal working hours, will be required to identify
         themselves and to sign in upon entry and sign out upon leaving, giving
         the location during their stay and their time of arrival and departure.
         The Building will normally be open for business from 7 a.m. until 6
         p.m. Monday through Friday and 8 a.m. until 1 p.m. on Saturdays,
         holidays excepted.

13.      Prior written approval, which shall be at Landlord's sole discretion,
         must be obtained for installation of any solar screen material, window
         shades, blinds, drapes, awnings, window ventilators, or other similar
         equipment and any window treatment of any kind whatsoever. Landlord
         will control all internal lighting that may be visible from the
         exterior of the Building and shall have the right to change any
         unapproved lighting, without notice to Tenant at Tenant's expense.

14.      No sign, advertisement, notice or handbill shall be exhibited,
         distributed, painted or affixed by Tenant on, about or from any part of
         the Premises or the Building without the prior written consent of the
         Landlord. Landlord will provide and maintain a directory in the
         Building, and no other directory shall be permitted.

15.      Tenant shall not make or permit any improper, objectionable or
         unpleasant noises or odors in the Building, nor shall tenant permit the
         operation of any machinery or equipment in the Premises that could in
         any way annoy any other tenant in the building, nor shall Tenant
         otherwise interfere in any way with other tenants or persons having
         business with them.

16.      Corridor doors, when not in use, shall be kept closed.

17.      No portion of the Premises or the Building shall at any time be used or
         occupied as sleeping or lodging quarters.

18.      Tenant shall place solid pads under all rolling chairs.

                                       29
   30

19.      Tenant agrees to cooperate and assist Landlord in the prevention of
         canvassing, soliciting and peddling within the Building.

20.      Animals or birds shall not be kept in or about the Premises or the
         Building.

21.      Tenant shall comply with parking rules and regulations as may be posted
         and distributed from time to time. For purposes of this Lease, all
         parking spaces on the surface parking lot established as such on the
         land adjoining the Building will be marked reserved parking unless
         specifically identified as either "Handicapped" or "Visitor".

22.      At no time shall tenant have more than 1 person per 150 square feet of
         usable space for any particular lease or addendum to that lease.

23.      Landlord reserves the right to rescind any of these rules and
         regulations and to make such other further rules and regulations as in
         its judgment shall from time to time be needed for the safety,
         protection, care and cleanliness of the Building, the operation
         thereof, the preservation of good order therein and the protection and
         comfort of the tenants and their agents, employees and invitees, which
         rules and regulations, when made and written notice thereof is given to
         a tenant, shall be binding upon it in like manner as if originally
         herein prescribed.

                                       30
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                                   EXHIBIT "E"
                                 RENEWAL OPTION

Option to Renew: Provided that Tenant's not in default after expiration of any
applicable cure period of any of the terms, conditions, or covenants of this
Lease. Tenant, but not any subtenant of Tenant, shall have an option (the
"Option") to extend the term of this Lease for one (1) additional term of three
(3) years (the "Renewal Term") commencing on the first day next succeeding the
Expiration Date upon the same terms, conditions and provisions as are provided
for in this Lease (other than the provisions of this Section except that the
fixed annual rent payable pursuant to this Lease for the Renewal Term shall be
the fair market rent for the demised premises (hereinafter "FMV") on the
thirtieth (30th) monthly anniversary date of the Commencement Date (hereinafter
"Rent Appraisal Date").

The FMV shall be determined by the mutual written agreement of Landlord and
Tenant. In the event that Landlord and Tenant shall not have reached mutual
agreement as to the FMV on or before the twentieth (20th) day following the Rent
Appraisal Date, but Landlord's determination of the FMV is less than 10 percent
(10%) greater than Tenant's determination of the FMV (which respective
determinations shall be based on blind written bids submitted at the end of the
twenty (20) day period by each of Landlord and Tenant to the other), the FMV
will be the average of Landlord's and Tenant's respective determinations.

In the event that Landlord and Tenant shall not have reached mutual agreement as
to the FMV on or before the twentieth (20th) day following the Rent Appraisal
Date and Landlord's determination of the FMV is more than 10 percent (10%)
greater than Tenant's determination of the FMV, then Landlord and Tenant each
shall, no later than the thirtieth (30th) day following the Rent Appraisal Date,
select a Real Estate Appraiser, as hereinafter defined. If either party shall
fail to so appoint a Real Estate Appraiser, the one Real Estate appraiser so
appointed shall proceed to determine the FMV. In the event that the Real Estate
Appraisers selected by Landlord and Tenant agree as to the FMV, said
determination shall be binding on Landlord and Tenant.

In the event that the Real Estate Appraisers selected by Landlord and Tenant
cannot agree as to the FMV on or before the sixtieth (60th) day following the
Rent Appraisal Date, then said Real Estate Appraisers shall jointly select a
third Real Estate Appraiser, provided that if they cannot agree on the third
Real Estate Appraiser on or before the seventy-fifth (75th) day following the
Rent Appraisal Date, then said third Real Estate Appraiser shall be selected in
accordance with the rules prescribed by the American Arbitration Association in
Dallas, Texas (or any successor thereto). The FMV shall then be determined by
the third Real Estate Appraiser no later than the ninetieth (90th) day following
the Rent Appraisal Date and said determination shall be binding on Landlord and
Tenant.

The term "Real Estate Appraiser" shall mean a fit and impartial person having
not less than five (5) years experience as an appraiser of leasehold estates
relating to first class office space in the Dallas, Texas vicinity. The
appraisal shall be conducted in accordance with the provisions of this Section
and, to the extent not inconsistent herewith, in accordance with the prevailing
rules of the American Arbitration Association in Dallas, Texas or any successor
thereto. In rendering such decision the Real Estate Appraiser(s) shall not add
to, subtract from or otherwise modify the provision of this Lease. The fees and
expenses of the Real Estate Appraiser selected by Landlord and Tenant shall be
shared equally by Landlord and Tenant.

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                                   EXHIBIT "F"
                              BASIC RENTAL SCHEDULE

This Exhibit "F" is made a part of that certain Lease Agreement dated July 7,
1998, by and between Corniche Group Incorporated, Tenant, and Shoal Creek No. 2,
L.C., (a Texas Limited Liability Company), Landlord, with respect to the
Premises known as Suite 220 in Fountainview Office Building.

Tenant shall pay basic monthly rental in accordance with the following schedule
for the term of this lease.

1.       Monthly Payment Schedule:

PERIOD                     RATE/SQ. FT.              MONTHLY RENT      ANNUAL RENT
- ------                     ------------              ------------      -----------
                                                           
August 1, 1998 thru           12.00                    $4,175.00        $50,100.00
July 31, 2001

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                                   EXHIBIT "G"
                                     PARKING

This exhibit is made a part of that certain Lease Agreement dated July 7, 1998,
by and between, Corniche Group Incorporated, Tenant and Shoal Creek No. 2, L.C.,
a Texas Limited Liability Company, Landlord, with respect to the Premises known
as Suite 220 Fountainview Office Building. Landlord shall make available to
Tenant at the commencement of the term of this Lease the use of the following
parking spaces for the primary term of this Lease:

Type of Parking                     Number of Spaces          Monthly Rental
- ---------------                     ----------------          --------------
                                                        
Unreserved Surface Parking                        15                  $ 0.00

All parking spaces on the surface parking lot established as such on the land
adjoining the Building is available to Tenant or Licensee and their customers
and guests and employees on the first come, first use basis, except that no
Tenant or Licensee or employee or a Tenant or Licensee shall park in any space
specifically marked for the use of "Visitors Only" or "Bank Customers Only."
Provided however, if for any reason Landlord fails or unable to provide parking
space to Tenant or Licensee or Tenant or Licensee is not permitted to utilize
parking space in such parking facilities for all or any portion of such vehicles
at any time during the initial term of any lease from office space in the
Building by Tenant or Licensee's employer, or any renewals or extensions
thereof, such fact shall never be deemed to be such a default by Landlord as to
permit Tenant to terminate its lease, either in whole or by part. Landlord and
Tenant or Licensee shall equitably adjust parking charges paid by Tenant or
Licensee during any such period for which Tenant or Licensee does not have use
of the parking spaces, or any portion thereof, specified herein. The monthly
parking fees stated above shall be subject to change on a month-to-month basis,
provided that the monthly fees for comparable parking spaces are a market rate
applied uniformly to all Tenants or Licensees. Nothing herein shall obligate
Tenant or Licensee to use or retain any parking spaces on other than a
month-to-month, and Tenant or Licensee may, by thirty (30) days advance written
notice to Landlord, surrender one or more parking space to Landlord and have no
further liability for the rent therefor specified.

It is hereby agreed and understood that Landlord's sole obligation hereunder is
to make Parking Lot available to Tenant. Tenant's right to park vehicles on the
Property shall be subject to compliance with the rules and regulations
promulgated from time to time by the Operator and Building Manager and shall be
subject to termination for violation of any such rules or regulations upon
notice from the Operator or Landlord. Landlord shall have no liability
whatsoever for any property damage and/or personal injury which might occur as a
result of, or in connection with, the use of the Parking Lot by Tenant, its
employees, agents, invitees and licensees, and Tenant hereby agrees to indemnify
and hold Landlord and the Operator harmless from and against any and all costs,
claims, expenses, and/or causes or action which Landlord may incur in connection
with or arising out of Tenant's use of Parking Lot.

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