Brite-Strike Tactical Illumination Products Inc – ‘424B3’ on 8/7/96

As of:  Wednesday, 8/7/96   ·   Accession #:  912057-96-16529   ·   File #:  333-04655

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Prospectus   —   Rule 424(b)(3)
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Document/Exhibit                   Description                      Pages   Size 

 1: 424B3       Prospectus                                           189   1.11M 

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[KELLY RUSSELL LETTERHEAD]

                                                                  August 1, 1996

Dear Kelly Russell Studios, Inc. Shareholder:                                   

    I  am pleased to invite you to attend the Special Meeting of Shareholders of
Kelly Russell Studios, Inc., which will be  held on Monday, August 26, 1996,  at
10:00  a.m., local  time, at  the Minneapolis  Athletic Club,  615 Second Avenue
South, Twelfth Floor, Minneapolis, Minnesota. At  the meeting you will be  asked
to  consider and vote  upon a Final  Amended and Restated  Agreement and Plan of
Reorganization (the "Merger Agreement") by and among Kelly Russell Studios, Inc.
("Kelly Russell"), Global One Distribution & Merchandising Inc. ("Global  One"),
OSP  Publishing,  Inc.  ("OSP"),  OSP's subsidiary,  The  Button  Exchange, Ltd.
("BEx"), OSP's shareholders,  Joseph C.  Angard and  Michael A.  Malm (the  "OSP
Shareholders"), and the wholly owned subsidiaries of Global One (the "Global One
Subsidiaries").  Pursuant to the Merger Agreement,  Kelly Russell will be merged
(the "KRSI Merger") with  and into KRSI  Acquisition Corp. ("KRSI  Acquisition")
which  is a wholly owned subsidiary of Global One. Immediately prior to the KRSI
Merger, OSP  and BEx  will be  reorganized as  subsidiaries of  Global One  (the
"Reorganization").  In  connection  with the  transactions  contemplated  by the
Merger Agreement, Global One has  received subscriptions to purchase  $6,756,351
(4,504,234  shares) of its common stock, $0.01  par value per share (the "Global
One Common Stock") in  a private placement (the  "Private Placement"). The  KRSI
Merger,  the Reorganization  and the Private  Placement, the closing  of each of
which is conditioned upon the closing of  the others, are referred to herein  as
the  "Transactions." If the Transactions  are consummated, KRSI Acquisition will
change its name  to and operate  its business as  "Kelly Russell Studios,  Inc."
Kelly  Russell shareholders will receive one share of Global One Common Stock in
exchange for each two shares of Kelly  Russell Common Stock held at the time  of
the  KRSI Merger. Any Kelly Russell shareholder entitled to receive a fractional
share will receive one whole  share of Global One Common  Stock in lieu of  such
fractional  share. Options and  warrants to purchase  Kelly Russell Common Stock
will become  options  and  warrants  to purchase  Global  One  Common  Stock  on
substantially  the same  terms and subject  to the same  conditions, except that
such options and warrants shall be adjusted as to number and exercise price. See
"The KRSI Merger, the Reorganization and  the Private Placement -- Treatment  of
Kelly Russell Options and Warrants."                                            

    The  attached Proxy Statement/Prospectus is intended to provide you with the
information that will  enable you to  make an informed  decision regarding  your
vote on the proposed KRSI Merger. It also serves as a Prospectus for Global One,
describing your investment in Global One if the KRSI Merger is approved and your
shares  of Kelly  Russell Common  Stock are exchanged  for shares  of Global One
Common Stock.  A  copy  of  the  Merger  Agreement  is  attached  to  the  Proxy
Statement/Prospectus   as  Appendix  A.  I  urge  you  to  carefully  read  this
information before voting on the proposed KRSI Merger.                          

    THE  BOARD  OF  DIRECTORS  OF  KELLY  RUSSELL  BELIEVES  THAT  THE  PROPOSED
TRANSACTION  IS  FAIR  AND  IN  THE BEST  INTERESTS  OF  KELLY  RUSSELL  AND ITS
SHAREHOLDERS AND UNANIMOUSLY  RECOMMENDS APPROVAL OF  THE MERGER AGREEMENT.  The
Board believes that the KRSI Merger will, among other things, give Kelly Russell
shareholders  the  opportunity  to  continue  their  equity  participation  on a
tax-free basis  in  a larger,  more  diversified  enterprise which  has  a  more
extensive distribution network.                                                 

    The Board of Directors of Kelly Russell have retained the investment banking
firm  The Equisource Group to advise it  with respect to the consideration to be
received in  the KRSI  Merger. The  Equisource Group  has advised  the Board  of
Directors  that, in its opinion,  the consideration to be  received by the Kelly
Russell shareholders pursuant to the Merger  Agreement is fair from a  financial
point   of   view.  A   copy  of   the   opinion  is   attached  to   the  Proxy
Statement/Prospectus as Appendix B.                                             

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    The Merger Agreement must be  approved by the holders  of a majority of  the
outstanding  shares of Kelly Russell  Common Stock. Your vote  on this matter is
very important. We  urge you to  carefully review the  enclosed material and  to
return your proxy promptly.                                                     

    WHETHER  OR NOT  YOU PLAN  TO ATTEND THE  MEETING, PLEASE  SIGN AND PROMPTLY
RETURN YOUR PROXY CARD IN THE ENCLOSED POSTAGE-PAID ENVELOPE. IF YOU ATTEND  THE
MEETING,  YOU MAY VOTE  IN PERSON IF  YOU WISH, EVEN  THOUGH YOU HAVE PREVIOUSLY
RETURNED YOUR PROXY.                                                            

              Sincerely,

                     George J. Vrabeck
                           CHIEF EXECUTIVE OFFICER

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KELLY RUSSELL STUDIOS, INC. 
2905 NORTHWEST BOULEVARD, #220
PLYMOUTH, MINNESOTA 55441 

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

NOTICE OF SPECIAL MEETING OF SHAREHOLDERS 
TO BE HELD AUGUST 26, 1996

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

To the Shareholders of Kelly Russell Studios, Inc.:                             

    A Special Meeting of the Shareholders of Kelly Russell Studios, Inc. ("Kelly
Russell") will  be held  at the  Minneapolis Athletic  Club, 615  Second  Avenue
South,  Twelfth Floor,  Minneapolis, Minnesota, on  Monday, August  26, 1996, at
10:00 a.m., local time, to:                                                     

    1.  Consider and act upon a proposal to approve a Final Amended and Restated
       Agreement and Plan of Reorganization (the "Merger Agreement"), a copy  of
       which  is  included  as  Appendix  A  to  the  Proxy Statement/Prospectus
       accompanying this Notice.  Pursuant to  the Merger  Agreement: (a)  Kelly
       Russell will be merged (the "KRSI Merger") with and into KRSI Acquisition
       Corp.,   a  wholly  owned   subsidiary  of  Global   One  Distribution  &
       Merchandising Inc. ("Global One"), which  will change its name to  "Kelly
       Russell Studios, Inc." and (b) holders of Kelly Russell common stock, par
       value  $.01 per  share ("Kelly Russell  Common Stock"),  will receive one
       share of Global One common stock,  par value $.01 per share ("Global  One
       Common Stock"), for each two shares of Kelly Russell Common Stock held at
the time of the KRSI Merger.                                      

    2.   Transact such other  business as may properly  come before this Special
Meeting or any adjournment thereof.                               

    Only shareholders of record as  shown on the books  of Kelly Russell at  the
close  of business on July 19, 1996 are entitled to notice of and to vote at the
Meeting or any adjournments thereof.                                            

    Record and beneficial  owners of shares  of Kelly Russell  Common Stock  are
entitled  to dissent from the KRSI Merger  and to receive the payment determined
in a judicial proceeding if they comply with certain procedures specified in the
Minnesota Business  Corporation  Act and  described  in the  accompanying  Proxy
Statement/Prospectus.  A  copy of  Sections 302A.471  and  302A.473 of  said Act
relating to dissenters' rights is attached to the Proxy Statement/Prospectus  as
Appendix C.                                                                     

                                      BY ORDER OF THE BOARD OF DIRECTORS

                  THOMAS R. KING
             SECRETARY

August 1, 1996                                                                  

WHETHER OR NOT YOU PLAN TO ATTEND THE SPECIAL MEETING, PLEASE 
COMPLETE, SIGN AND DATE THE ENCLOSED PROXY CARD AND MAIL IT 
PROMPTLY IN THE ENCLOSED PROXY RETURN ENVELOPE, WHICH REQUIRES
NO POSTAGE IF MAILED IN THE UNITED STATES 

SHAREHOLDERS SHOULD NOT SEND ANY STOCK
CERTIFICATES WITH THE PROXY CARD

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PROXY STATEMENT/PROSPECTUS

                                                                [Download Table]
                                                                              
Kelly Russell Studios, Inc.       Global One Distribution & Merchandising Inc.
2095 Northwest Boulevard, #220    5548 Lindbergh Lane                         
Plymouth, Minnesota 55441         Bell, California 90201-6410                 
Telephone: (612) 553-9992         Telephone: (213) 980-4300                   

Proxy Statement for               Prospectus for shares                       
Meeting of Shareholders           issuable in KRSI Merger                     
to be held on August 26, 1996                                                 

    Global  One  Distribution  &  Merchandising  Inc.,  a  Delaware  corporation
("Global One"), has filed this Prospectus  of Global One and Proxy Statement  of
Kelly  Russell Studios, Inc. ("Kelly Russell")  with the Securities and Exchange
Commission (the "Commission") as  part of a Registration  Statement on Form  S-4
(the  "Registration  Statement"), pursuant  to the  Securities  Act of  1933, as
amended (the  "Securities  Act"). The  Registration  Statement registers  up  to
2,645,756  shares of common  stock, $.01 par  value, of Global  One ("Global One
Common Stock"), issuable to shareholders  of Kelly Russell upon consummation  of
the  merger ("the KRSI Merger") of Kelly  Russell with and into KRSI Acquisition
Corp. ("KRSI Acquisition"), a wholly owned subsidiary of Global One, pursuant to
the terms of the Final Amended and Restated Agreement and Plan of Reorganization
(the "Merger  Agreement")  between and  among  Kelly Russell,  Global  One,  OSP
Publishing,  Inc. ("OSP"), OSP's subsidiary,  The Button Exchange, Inc. ("BEx"),
the current shareholders of OSP, Joseph C. Angard and Michael A. Malm (the  "OSP
Shareholders"), and the wholly owned subsidiaries of Global One (the "Global One
Subsidiaries").  Immediately  prior  to  the  KRSI  Merger,  OSP  and  BEx  will
reorganize by merger  with and into  OSP Acquisition Corp.  and BEx  Acquisition
Corp., respectively, (the "Reorganization"). In connection with the transactions
contemplated  by the Merger Agreement, Global  One has received subscriptions to
purchase $6,756,351 (4,504,234 shares) of Global  One Common Stock in a  private
placement  (the "Private  Placement"). The  subscription period  for the Private
Placement ended on  May 28,  1996. Subscribers  have committed  to purchase  the
Private  Placement shares subject  only to the  closing of the  KRSI Merger. The
Private Placement will be consummated  concurrently with the Reorganization  and
the  KRSI Merger at  a single closing (the  "Closing") to take  place as soon as
practicable following the approval of the  KRSI Merger by the requisite vote  of
the  Kelly Russell shareholders at the Meeting. A portion of the proceeds of the
Private Placement will be used to pay an accrued cash dividend of $1,750,000  to
the  OSP Shareholders  and an additional  dividend of  approximately $600,000 to
permit the OSP Shareholders to pay their respective tax liabilities incurred  as
a result of OSP's operating results during 1995 since, prior to the Closing, OSP
has  been taxed as an S Corporation. The KRSI Merger, the Reorganization and the
Private Placement, the closing of each of which is conditioned upon the  closing
of the others, are referred to herein as the "Transactions."                    

    If  the Transactions are consummated, KRSI  Acquisition will change its name
to "Kelly Russell Studios, Inc." and  will conduct its business under such  name
as a wholly owned subsidiary of Global One. Kelly Russell's shareholders will be
entitled  to receive one share of Global One Common Stock for each two shares of
Kelly Russell Common Stock held  at the time of  the KRSI Merger. Following  the
KRSI Merger, assuming no Kelly Russell shareholders dissent from the KRSI Merger
and  without giving effect to the possible  exercise of the options and warrants
to purchase Global One Common Stock which will be outstanding following the KRSI
Merger, the Kelly Russell shareholders,  OSP Shareholders and Private  Placement
investors  will own  15.7%, 49.6%  and 34.7%,  respectively, of  the outstanding
shares of Global One Common Stock.                                              

    This Proxy Statement/Prospectus  is being furnished  to the shareholders  of
Kelly  Russell in connection  with the solicitation  of proxies by  the Board of
Directors of Kelly  Russell for use  at the Special  Meeting of Shareholders  of
Kelly  Russell to be  held on August  26, 1996 (the  "Meeting"). At the Meeting,
Kelly Russell  Shareholders  will be  asked  to (i)  consider  and vote  upon  a
proposal  to approve the Merger Agreement; and (ii) transact such other business
as may properly come before the Meeting. Kelly Russell shareholders will have  a
right to dissent from the KRSI Merger and receive the fair value of their shares
if  they comply with certain procedures  described herein. See "The KRSI Merger,
the  Reorganization  and   the  Private  Placement   --  Rights  of   Dissenting
Shareholders."                                                                  

    This Proxy Statement/Prospectus also serves as Global One's Prospectus under
the  Securities Act with  respect to the  issuance of up  to 2,645,756 shares of
Global One Common Stock  pursuant to the Merger  Agreement more fully  described
herein.                                                                         

    This  Proxy Statement/Prospectus  does not cover  any resales  of Global One
Common Stock received  by Kelly  Russell Shareholders upon  consummation of  the
proposed  KRSI  Merger  pursuant  to  the Merger  Agreement,  and  no  person is
authorized to make any use of this Proxy Statement/Prospectus in connection with
any such resale or in connection with the offer or sale of any other securities.

    The consummation  of  the KRSI  Merger  is subject  to  the receipt  of  the
approval  of the shareholders  of Kelly Russell,  as well as  the fulfillment of
certain  other   conditions,   as   more   fully   described   in   this   Proxy
Statement/Prospectus.  See "The KRSI Merger,  the Reorganization and the Private
Placement  --  Conditions   to  Consummation   of  the  KRSI   Merger  and   the
Reorganization; -- Amendment, Waiver and Termination of the Merger Agreement; --
Regulatory Approvals."                                                          

    This  Proxy  Statement/Prospectus  is  being first  mailed  or  delivered to
shareholders of Kelly Russell on or about August 2, 1996.                       

THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE  
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE  SECURITIES   
COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS 
PROXY  STATEMENT/PROSPECTUS.  ANY REPRESENTATION
TO        THE CONTRARY IS A CRIMINAL OFFENSE.   

THE DATE OF THIS PROXY STATEMENT/PROSPECTUS IS AUGUST 1, 1996.

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TABLE OF CONTENTS 

                                                                [Download Table]
                                                                                
AVAILABLE INFORMATION                                                           

SUMMARY...................................................................     1

RISK FACTORS OF GLOBAL ONE DISTRIBUTION & MERCHANDISING INC...............    14
  Reliance on License Agreements..........................................    14
  Market Acceptance of Licensed Properties................................    15
  Seasonality and Fluctuations in Operating Results.......................    15
  Risk of Continued Operating Losses of Kelly Russell.....................    15
  Concentrated Customer Base..............................................    16
  Dependence on Key Personnel.............................................    16
  Control by Existing Shareholders........................................    16
  No Assurance of Public Market...........................................    16
  Possible Insufficiency of Working Capital...............................    16
  Anti-takeover Effect of Undesignated Preferred Stock....................    17
  Material Returns of Unsold Products.....................................    17

GENERAL INFORMATION REGARDING THE MEETING.................................    17

THE KRSI MERGER, THE REORGANIZATION AND THE PRIVATE PLACEMENT.............    19
  General.................................................................    19
  Effective Time of the KRSI Merger and the Reorganization................    19
  Background of the KRSI Merger and the Reorganization....................    19
  The Private Placement...................................................    22
  Kelly Russell Reasons for the KRSI Merger; Recommendation of the Kelly        
   Russell Board of Directors.............................................    22
  The Company's Reasons for The KRSI Merger and the Reorganization........    22
  Operations and Management After the Transactions........................    23
  Kelly Russell's Financial Advisors......................................    24
  Vote Required to Approve the KRSI Merger................................    27
  Conversion of Kelly Russell Common Stock in the KRSI Merger.............    27
  Treatment of Kelly Russell Options and Warrants.........................    27
  Conversion of OSP Common Stock and Warrants in the Reorganization.......    28
  Treatment of Common Stock, Options and Warrants of Global One following       
   the KRSI Merger........................................................    28
  Exchange of Certificates in the KRSI Merger.............................    28
  Conduct of Business Pending the KRSI Merger and the Reorganization......    29
  Conditions to Consummation of the KRSI Merger and the Reorganization....    29
  Amendment, Waiver and Termination of the Merger Agreement...............    30
  Expenses and Fees.......................................................    31
  Representation and Warranties...........................................    31
  Interests of Certain Persons in the KRSI Merger.........................    32
  Limitation on Negotiations..............................................    33
  Resale of Global One Common Stock.......................................    33
  Accounting Treatment of the KRSI Merger.................................    34
  Certain Federal Income Tax Consequences.................................    34
  Indemnification.........................................................    35
  Regulatory Approvals....................................................    35
  Rights of Dissenting Shareholders.......................................    35

MARKET PRICE OF AND DIVIDENDS ON OSP COMMON STOCK, GLOBAL ONE COMMON STOCK      
 AND KELLY RUSSELL COMMON STOCK...........................................    38
  Market Information......................................................    38

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                                                                [Download Table]
                                                                                
  Shareholders............................................................    39
  Dividends...............................................................    39

COMPARISON OF THE RIGHTS OF HOLDERS OF GLOBAL ONE COMMON STOCK AND KELLY        
 RUSSELL COMMON STOCK.....................................................    40
  Global One..............................................................    40
  Kelly Russell...........................................................    41
  Comparison of Kelly Russell Common Stock and Global One Common Stock....    41
  Meetings of Shareholders................................................    42
  Action without Meetings of Shareholders.................................    42
  Dividends and Repurchases of Stock......................................    42
  Inspection Rights.......................................................    42
  Amendments to Charter...................................................    43
  Amendment of By-laws....................................................    43
  Preemptive Rights.......................................................    43
  Directors...............................................................    43
  Personal Liability of Directors.........................................    44
  Indemnification.........................................................    44
  Control Share Acquisitions..............................................    45
  Business Combinations...................................................    45
  Rights of Dissenting Shareholders.......................................    45

UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL STATEMENTS...............    46

S CORPORATION DISTRIBUTIONS...............................................    53

CAPITALIZATION............................................................    53

SELECTED CONSOLIDATED FINANCIAL DATA OSP PUBLISHING, INC.                       
 AND SUBSIDIARIES.........................................................    55

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF      
 OPERATIONS OF THE COMPANY................................................    56
  General.................................................................    56
  Results of Operations...................................................    57
  Discontinued Operations.................................................    59
  Liquidity and Capital Resources.........................................    64
  Effects of Inflation....................................................    66
  Seasonality.............................................................    66

BUSINESS OF GLOBAL ONE....................................................    68

BUSINESS OF THE COMPANY...................................................    68
  General.................................................................    68
  Business Strategy.......................................................    69
  Overview of the Licensed Merchandise Industry...........................    69
  Competition.............................................................    70
  Products and Operating Subsidiaries.....................................    70
  Licensing...............................................................    71
  Design and Development..................................................    74
  Manufacturing...........................................................    74
  Sales and Marketing.....................................................    74
  Returns Policy..........................................................    76
  Backlog.................................................................    76
  Government Regulation; Tariffs and Duties...............................    76
  Employees...............................................................    76
  Properties..............................................................    76

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                                                                [Download Table]
                                                                                
  Legal Proceedings.......................................................    76
  Trademarks..............................................................    76

MANAGEMENT OF GLOBAL ONE..................................................    77
  Directors and Executive Officers........................................    77
  Compensation of Board of Directors......................................    78
  Executive Compensation..................................................    79
  Employment Agreements...................................................    79
  Certain Relationships and Related Transactions..........................    80
  Security Ownership of Certain Beneficial Owners and Management of Global      
   One (Pro Forma)........................................................    81

KELLY RUSSELL STUDIOS, INC. SELECTED FINANCIAL DATA.......................    83

KELLY RUSSELL STUDIOS, INC. MANAGEMENT'S DISCUSSION AND ANALYSIS OF             
 FINANCIAL CONDITION AND RESULTS OF OPERATIONS............................    84
  General.................................................................    84
  Results of Operations...................................................    85
  Seasonality.............................................................    89
  Liquidity and Capital Resources.........................................    89

BUSINESS OF KELLY RUSSELL STUDIOS, INC....................................    91
  Products................................................................    92
  Marketing and Distribution..............................................    94
  License Agreements and Trademarks.......................................    94
  Product Supply and Production...........................................    95
  Competition.............................................................    96
  Employees...............................................................    96
  Environment.............................................................    96
  Seasonality.............................................................    96
  Description of Property.................................................    96
  Legal Proceedings.......................................................    97

PRINCIPAL SHAREHOLDERS AND MANAGEMENT OF KELLY RUSSELL....................    97
  Certain Relationships and Related Transactions..........................    98

LEGAL MATTERS.............................................................    98

EXPERTS...................................................................    98

INDEX TO FINANCIAL STATEMENTS.............................................   F-1

PART II -- INFORMATION NOT REQUIRED IN PROSPECTUS.........................  II-1

SIGNATURES................................................................   S-1

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AVAILABLE INFORMATION 

    This  Proxy Statement/Prospectus is a prospectus  of Global One delivered in
compliance with  the  Securities  Act.  Global  One  has  filed  a  Registration
Statement  on Form  S-4 under the  Act with  the Commission with  respect to the
shares of Global  One Common  Stock to  be issued  in connection  with the  KRSI
Merger.  As permitted by the rules and regulations of the Commission, this Proxy
Statement/ Prospectus omits  certain information contained  in the  Registration
Statement on file with the Commission. For further information pertaining to the
securities  offered  hereby, reference  is made  to the  Registration Statement,
including the exhibits filed as a part thereof.                                 

    Kelly Russell is subject to the informational requirements of the Securities
Exchange Act  of 1934,  as  amended (the  "Exchange  Act"), and,  in  accordance
therewith,   files  reports,   proxy  and  information   statements,  and  other
information with the Commission. The Registration Statement filed by Global One,
as well  as reports,  proxy and  information statements,  and other  information
filed by Kelly Russell pursuant to the Exchange Act, can be inspected and copied
at  the public reference  facilities maintained by the  Commission at Room 1024,
Judiciary Plaza, 450 Fifth  Street, N.W., Washington, D.C.  20549, and are  also
available  for inspection and copying at  the regional offices of the Commission
located in Chicago, (Suite  1400, Northwestern Atrium  Center, 500 West  Madison
Street, Chicago, Illinois 60661) and New York (7 World Trade Center, Suite 1300,
New  York, New  York 10048). Copies  of such  documents can also  be obtained at
prescribed rates by writing to the Public Reference Section of the Commission at
450 Fifth Street, Room 1024, N.W., Washington, D.C. 20549 at prescribed rates.  

    Global One  will furnish  its shareholders  with annual  reports  containing
audited  financial statements  and an  opinion thereon  expressed by independent
public accountants and with  quarterly reports for the  first three quarters  of
each fiscal year containing unaudited summary financial information.            

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SUMMARY 

    THE  FOLLOWING IS A BRIEF SUMMARY OF CERTAIN INFORMATION CONTAINED ELSEWHERE
IN THIS PROXY STATEMENT/PROSPECTUS AND  IN THE DOCUMENTS INCORPORATED HEREIN  BY
REFERENCE.  CERTAIN CAPITALIZED TERMS USED IN THIS SUMMARY ARE DEFINED ELSEWHERE
IN THIS PROXY STATEMENT/PROSPECTUS.  REFERENCE IS MADE TO,  AND THIS SUMMARY  IS
QUALIFIED  IN ITS ENTIRETY  BY, THE MORE DETAILED  INFORMATION CONTAINED IN THIS
PROXY  STATEMENT/PROSPECTUS,   THE   APPENDICES  HERETO,   AND   THE   DOCUMENTS
INCORPORATED  IN THIS PROXY STATEMENT/ PROSPECTUS  BY REFERENCE. AS USED IN THIS
PROXY STATEMENT/PROSPECTUS, "THE  COMPANY" REFERS TO  OSP AND ITS  SUBSIDIARIES,
STANLEY  DESANTIS, INC.  ("SDI") AND BEX,  ON A CONSOLIDATED  BASIS, WHILE "OSP"
REFERS TO OSP PUBLISHING, INC., ON  AN UNCONSOLIDATED BASIS, UNLESS THE  CONTEXT
INDICATES OTHERWISE.                                                            

DESCRIPTION OF THE TRANSACTIONS 

    The Boards of Directors of Kelly Russell Studios, Inc. ("Kelly Russell") and
OSP  Publishing, Inc.  (the "Company")  have determined that  it is  in the best
interests of  their  respective corporations  and  shareholders to  combine  the
businesses  of the two  corporations within a  single group of  companies and to
concurrently raise additional equity capital for the combined businesses.       

    To effectuate these  transactions, a  new Delaware  corporation, Global  One
Distribution  & Merchandising Inc.  ("Global One"), has  been formed, and Global
One has formed  three subsidiary Delaware  corporations, KRSI Acquisition  Corp.
("KRSI   Acquisition"),  OSP  Acquisition  Corp.  ("OSP  Acquisition")  and  BEx
Acquisition Corp. ("BEx  Acquisition"). (KRSI Acquisition,  OSP Acquisition  and
BEx  Acquisition are referred  to herein as the  "Global One Subsidiaries"). The
parties have entered  into a Final  Amended and Restated  Agreement and Plan  of
Reorganization  dated May 28, 1996  effective as of March  27, 1996, between and
among Kelly Russell,  Global One,  OSP, OSP's subsidiary,  The Button  Exchange,
Ltd.  ("BEx"), OSP's shareholders  and the Global  One Subsidiaries (the "Merger
Agreement"), pursuant to which OSP will be merged with and into OSP  Acquisition
(the  "OSP Merger"), BEx will be merged  with and into BEx Acquisition (the "BEx
Merger"), and Kelly Russell will be  merged with and into KRSI Acquisition  (the
"KRSI  Merger"). The OSP Merger and the BEx Merger, which will occur immediately
prior to the KRSI Merger, are referred to herein as the "Reorganization."       

    In connection with the foregoing, Global One has received subscriptions  for
4,504,234  shares  of its  common  stock, $0.01  par  value ("Global  One Common
Stock") in a private placement at $1.50 per share (the "Private Placement"). The
subscription period for the Private Placement  ended on May 28, 1996. The  gross
proceeds  from the  Private Placement will  be $6,756,351. The  KRSI Merger, the
Reorganization and  the Private  Placement,  the closing  of  each of  which  is
conditioned  on  the  closing of  the  others,  are referred  to  herein  as the
"Transactions." The Transactions will  be consummated at  a single closing  (the
"Closing")  to take place as  soon as practicable following  the approval of the
KRSI Merger  by the  requisite vote  of the  Kelly Russell  shareholders at  the
Meeting.                                                                        

    A  portion of the proceeds  of the Private Placement will  be used to pay an
accrued cash dividend of $1,750,000 to Joseph C. Angard and Michael A. Malm (the
"OSP Shareholders"). In addition, if and to  the extent that OSP's cash flow  is
insufficient  to make  such payment,  a portion of  the proceeds  of the Private
Placement will be used to pay  an additional dividend of approximately  $600,000
to  permit the OSP Shareholders to pay their respective tax liabilities incurred
as a result of OSP's operating results during 1995 since, prior to the  Closing,
OSP has been taxed as an S Corporation. Global One will also use $375,000 of the
proceeds  of the Private Placement to repay outstanding subordinated debt of the
Company. After  deducting expenses  of the  Transactions of  approximately  $2.2
million, the approximately $1.8 million balance of the proceeds from the Private
Placement  will be used  for working capital purposes.  See "Unaudited Pro Forma
Condensed Combined Financial Statements."                                       

    At the Closing,  KRSI Acquisition will  change its name  to and conduct  its
business  under the  name "Kelly  Russell Studios,  Inc.," OSP  Acquisition will
change its name to "OSP Publishing, Inc.," and                                  

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BEx Acquisition  will  change  its name  to  "BEx  Corp." As  a  result  of  the
Transactions,  Global One will  become a holding company  for Kelly Russell, OSP
and BEx. OSP's subsidiary, SDI will continue to operate as a subsidiary of OSP. 

    Following the  closing  of the  Transactions,  there is  anticipated  to  be
outstanding  12,993,509 shares of Global One  Common Stock held approximately as
follows:(1)                                                                     

                                                        [Enlarge/Download Table]

GROUP                                                                       AGGREGATE SHARES  PERCENTAGE 
--------------------------------------------------------------------------  ----------------  -----------
                                                                                                         
OSP Shareholders..........................................................        6,448,088        49.6% 
Former Kelly Russell shareholders.........................................        2,041,187        15.7% 
New Investors in the Private Placement....................................        4,504,234        34.7% 
                                                                            ----------------  -----------
Total.....................................................................       12,993,509       100.0% 

    In addition, following the closing of the Transactions, there is anticipated
to be outstanding warrants, options and other rights (both vested and  unvested)
to  acquire 3,143,033 shares of Global One Common Stock, consisting of rights to
acquire 1,285,000 shares to be granted  to the officers and directors of  Global
One  under the 1996 Stock Option Plan, 1,254,063 shares to be held by or granted
to financial advisors  and placement agents  to Global One  or OSP, and  603,970
shares to be held by holders of rights to acquire Kelly Russell Common Stock.   
------------------------                                                        

(1)  Assumes that no Kelly Russell shareholders dissent from the KRSI Merger, no
    effect is  given  to  options  and warrants  to  be  outstanding  after  the
    Effective  Time, and no outstanding options or warrants to acquire shares of
    OSP Common Stock  or Kelly Russell  Common Stock are  exercised or  canceled
prior to the Effective Time.                                            

                                                                [Download Table]
                                                                                
                          PARTIES TO THE TRANSACTIONS                           
KELLY RUSSELL...................  Kelly Russell is a Minnesota corporation which
                                  was incorporated in 1992.                     
                                  Kelly Russell creates, markets and distributes
                                  sports  and entertainment related  art for the
                                  collectible market.  Kelly  Russell's  primary
                                  strategy  is to use its collection of original
                                  art to create innovative, affordable  products
                                  with    an   artistic    look,   quality   and
                                  presentation  that  differentiates  them  from
                                  other  entertainment products, such as posters
                                  and trading  cards. Kelly  Russell focuses  on
                                  products  with a wide range of appeal that can
                                  be quickly created, produced and sold  through
                                  mass  merchants,  distributors  and  specialty
                                  retail stores. Almost  all of Kelly  Russell's
                                  products   are   produced   and   sold   under
                                  non-exclusive  licenses  from  major  national
                                  sports  franchises and  their related players'
                                  association. In 1995, Kelly Russell introduced
                                  and expanded its licensing agreements for  the
                                  movie, music, and television product line.    
                                  Kelly    Russell's   principal   offices   and
                                  corporate headquarters  are  located  at  2095
                                  Northwest  Blvd.,  Plymouth,  Minnesota 55441,
                                  telephone: (612) 553-9992.                    
GLOBAL ONE......................  Global  One  is  a  corporation  formed  under
                                  Delaware law to serve as a holding company for
                                  OSP  and its subsidiaries, SDI and BEx, and to
                                  acquire Kelly Russell through KRSI Acquisition
                                  in the KRSI Merger. Following the Closing, the
                                  business  of  Global  One  will  be  conducted
                                  through  the Global One  Subsidiaries and SDI,
                                  each of which conducts a distinct business.   
                                  Global One's principal  offices and  corporate
                                  headquarters will be located at 5548 Lindbergh
                                  Street, Bell, California 90201-6410,          
                                  telephone: (213) 980-4300.                    

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THE COMPANY.....................  OSP  was formed in  1989. Although the Company
                                  is unable  to obtain  published financial  and
                                  other  data  with  respect  to  production and
                                  sales volumes of its competitors the  majority
                                  of  which are private companies, the Company's
                                  management believes, based on their experience
                                  and knowledge of the licensed poster industry,
                                  that OSP is the largest domestic publisher  of
                                  licensed   posters.   With  annual   sales  of
                                  approximately $25  million, OSP  accounts  for
                                  25% to 33% of a total annual production volume
                                  in  the domestic  licensed poster  business of
                                  between $75  and $100  million. The  Company's
                                  management  further  believes,  based  on  its
                                  knowledge of  the  licensed  poster  industry,
                                  that the Company's next largest competitor has
                                  annual sales of approximately $20 million. OSP
                                  develops   and  markets  posters,  framed  and
                                  unframed wall  decor,  Wallet Cards  and  Book
                                  Bites,  each  of which  incorporates primarily
                                  licensed images  and  characters  from  motion
                                  pictures, television, animation, music, sports
                                  and  popular  culture. OSP's  subsidiary, SDI,
                                  develops and markets licensed and non-licensed
                                  T-shirts, sweatshirts, hats, boxer shorts  and
                                  mugs.  OSP's  other subsidiary,  BEx, develops
                                  and markets licensed and non-licensed buttons,
                                  key rings and stickers.                       
                                  The Company's principal offices and  corporate
                                  headquarters  are  located  at  5548 Lindbergh
                                  Lane, Bell, California 90201-6410,  telephone:
                                  (213) 980-4300.                               

THE GLOBAL ONE SUBSIDIARIES.....  The Global One Subsidiaries, KRSI Acquisition,
                                  OSP   Acquisition  and  BEx  Acquisition,  are
                                  Delaware corporations  recently  organized  by
                                  Global  One for  the purpose  of effecting the
                                  KRSI Merger and the Reorganization. The Global
                                  One Subsidiaries have  no material assets  and
                                  have  not engaged in  any activities except in
                                  connection with the Transactions.             

                      KELLY RUSSELL SHAREHOLDERS' MEETING                       

TIME, DATE, AND PLACE OF                                                        
 MEETING........................  A special  meeting  of shareholders  of  Kelly
                                  Russell  will be  held on August  26, 1996, at
                                  10:00 a.m.,  local  time, at  the  Minneapolis
                                  Athletic   Club,  615   Second  Avenue  South,
                                  Twelfth  Floor,  Minneapolis,  Minnesota  (the
                                  "Meeting").                                   
PURPOSE OF THE MEETING..........  The  purpose of the Meeting is to consider and
                                  vote upon  a  proposal to  approve  the  Final
                                  Amended  and  Restated Agreement  and  Plan of
                                  Reorganization dated May 28, 1996 effective as
                                  of March  27, 1996  (the "Merger  Agreement"),
                                  attached  hereto as Appendix A, providing for,
                                  among other things, the KRSI Merger with  KRSI
                                  Acquisition as the surviving corporation. KRSI
                                  Acquisition   will  change  its  name  to  and
                                  conduct its  business  under the  name  "Kelly
                                  Russell   Studios,   Inc."  Other   terms  and
                                  provisions related to the KRSI Merger are  set
                                  forth  in the Merger  Agreement and summarized
                                  in this Proxy Statement/ Prospectus.          

RECORD DATE.....................  Only holders of record of Kelly Russell Common
                                  Stock at  the close  of business  on July  19,
                                  1996  (the "Record Date"), will be entitled to
                                  notice of and  to vote at  the Meeting or  any
                                  adjournment or adjournments thereof.          

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VOTE REQUIRED...................  The  affirmative  vote  by  the  holders  of a
                                  majority of  the outstanding  shares of  Kelly
                                  Russell  Common Stock  is required  to approve
                                  the Merger Agreement. As  of the record  date,
                                  4,082,373 shares of Kelly Russell Common Stock
                                  were outstanding and entitled to vote. Of such
                                  shares, 477,166 shares (approximately 10.7% of
                                  the  shares entitled  to vote  at the Meeting)
                                  are held by  directors and executive  officers
                                  of  Kelly Russell, all  of whom have indicated
                                  they plan to vote in favor of approval of  the
                                  Merger Agreement.                             

                                  Global  One  and  KRSI  Acquisition  have each
                                  already taken such corporate action to approve
                                  the Merger  Agreement  as  is  required  under
                                  Delaware   law.  See  "The  KRSI  Merger,  the
                                  Reorganization and  the Private  Placement  --
                                  Vote Required to Approve the KRSI Merger."    

DISSENTERS' RIGHTS..............  Under  Minnesota law, holders of Kelly Russell
                                  Common Stock who give  proper notice to  Kelly
                                  Russell  and do not vote  in favor of the KRSI
                                  Merger, have the right to receive in cash  the
                                  "fair  value"  of their  Kelly  Russell Common
                                  Stock in  lieu  of  Global  One  Common  Stock
                                  pursuant  to  the KRSI  Merger. See  "The KRSI
                                  Merger, the  Reorganization  and  the  Private
                                  Placement -- Rights of Dissenting             
                                  Shareholders."                                

                         DESCRIPTION OF THE KRSI MERGER                         
GENERAL.........................  Upon  consummation of  the KRSI  Merger, Kelly
                                  Russell will  be  merged with  and  into  KRSI
                                  Acquisition,   thereby  causing  the  separate
                                  existence of Kelly Russell to cease.  Promptly
                                  after  the KRSI Merger,  KRSI Acquisition will
                                  change its name  to and  conduct its  business
                                  under  the name "Kelly  Russell Studios, Inc."
                                  Each two shares of Kelly Russell Common  Stock
                                  outstanding  immediately  prior  to  the  KRSI
                                  Merger will be converted  into one share  (the
                                  "Conversion   Ratio")  of  Global  One  Common
                                  Stock. The  Conversion  Ratio  is  subject  to
                                  appropriate adjustment in the event of a stock
                                  split,   combination,   dividend,   or   other
                                  distribution  of  shares  of  the  Global  One
                                  Common  Stock prior  to the  Effective Time of
                                  the   KRSI   Merger.   Persons   entitled   to
                                  fractional  shares of Global  One Common Stock
                                  upon such  conversion shall  receive one  full
                                  share  of  Common Stock  in lieu  thereof. See
                                  "The KRSI Merger,  the Reorganization and  the
                                  Private Placement."                           

EFFECTIVE TIME OF THE KRSI                                                      
 MERGER.........................  The  KRSI Merger  shall become  effective upon
                                  the filing of Certificates of Merger with  the
                                  Secretary  of State of  Delaware and Secretary
                                  of State of Minnesota (the "Effective  Time"),
                                  which  is  expected  to occur  as  promptly as
                                  practicable following approval  of the  Merger
                                  Agreement  by the requisite  vote of the Kelly
                                  Russell shareholders and  the satisfaction  or
                                  waiver  of  the other  conditions to  the KRSI
                                  Merger.   See    "The   KRSI    Merger,    the
                                  Reorganization  and  the Private  Placement --
                                  Effective Time  of  the KRSI  Merger  and  the
                                  Reorganization"    and   "--   Conditions   to
                                  Consummation  of  the  KRSI  Merger  and   the
                                  Reorganization."                              

BACKGROUND OF THE KRSI MERGER...  The  terms  of  the Merger  Agreement  are the
                                  result of  arm's-length  negotiations  between
                                  representatives  of OSP and  Kelly Russell. In
                                  September  1995,   Kelly   Russell   initiated
                                  discussions  with  OSP  regarding  a  possible
                                  business  combination.  In  various   meetings
                                  taking  place  from  September  1995  to March
                                  1996,  representatives   of  OSP   and   Kelly

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                                  Russell continued their respective            
                                  investigations  of  the  other's  business and
                                  discussions regarding  a possible  merger.  In
                                  March   1996,  the  Kelly   Russell  Board  of
                                  Directors received a preliminary opinion  from
                                  The  Equisource  Group  ("Equisource")  to the
                                  effect that  the proposed  merger is  fair  to
                                  Kelly  Russell  shareholders from  a financial
                                  point of  view  and  the  Board  of  Directors
                                  authorized  management  to  proceed  with  the
                                  transaction. On March 27, 1996, OSP and  Kelly
                                  Russell executed the initial merger agreement.
                                  On  March  27,  1996, Kelly  Russell  issued a
                                  press release regarding the execution of  that
                                  merger  agreement. Certain revisions were made
                                  to  that  merger  agreement  to  reflect   the
                                  Reorganization,  and a  final Merger Agreement
                                  was executed on May 28, 1996.                 
                                  See "The KRSI  Merger, the Reorganization  and
                                  the   Private  Placement  --  Kelly  Russell's
                                  Reasons for the KRSI Merger; Recommendation of
                                  the Kelly Russell Board  of Directors; --  The
                                  Company's  Reasons for the KRSI Merger and the
                                  Reorganization;   and   --   Kelly   Russell's
                                  Financial Advisors."                          

CONDITIONS TO KRSI MERGER.......  The  respective obligations  of Kelly Russell,
                                  the  Company,  Global  One,  the  Global   One
                                  Subsidiaries   and  the  OSP  Shareholders  to
                                  consummate the  KRSI  Merger  are  subject  to
                                  satisfaction at or prior to the Effective Time
                                  of  a number of conditions, including, but not
                                  limited to: (i) the  closing by Global One  of
                                  the  Private Placement with  gross proceeds of
                                  at least $6,000,000; and  (ii) the closing  of
                                  the  Reorganization. See "The KRSI Merger, the
                                  Reorganization and  the Private  Placement  --
                                  Conditions  to Consummation of the KRSI Merger
                                  and the Reorganization."                      
REASONS FOR THE KRSI MERGER.....  In reaching  its  conclusions to  approve  the
                                  Merger Agreement and to recommend the approval
                                  of  the Merger Agreement  by the Kelly Russell
                                  shareholders,  the  Kelly  Russell  Board   of
                                  Directors considered Kelly Russell's inability
                                  to compete effectively with the Company in the
                                  entertainment  industry; Kelly  Russell's lack
                                  of  effective  distribution  capability;   the
                                  competitive  disadvantages  of  Kelly  Russell
                                  products; projected losses for 1996 even  with
                                  a  significant increase in sales; the need for
                                  additional  financing;   the   advantages   of
                                  combining  the Company's  marketing, sales and
                                  licensing  expertise   with  Kelly   Russell's
                                  sports licenses and systems expertise; and the
                                  likelihood  that without additional financing,
                                  Kelly Russell's ability to continue as a going
                                  concern was uncertain. The Kelly Russell Board
                                  of Directors  also considered  the opinion  of
                                  Equisource  stating  that the  KRSI  Merger is
                                  fair from  a financial  point of  view to  the
                                  shareholders of Kelly Russell.                
                                  THE  BOARD OF  DIRECTORS OF  KELLY RUSSELL HAS
                                  UNANIMOUSLY APPROVED THE KRSI MERGER, AND  THE
                                  BOARD  RECOMMENDS  THAT  THE  SHAREHOLDERS  OF
                                  KELLY RUSSELL VOTE  IN FAVOR  OF THE  PROPOSAL
                                  SUBMITTED FOR CONSIDERATION AT THE MEETING.   
                                  See  "The KRSI Merger,  the Reorganization and
                                  the  Private  Placement  --  Kelly   Russell's
                                  Reasons  for the Merger; Recommendation of the
                                  Kelly  Russell  Board  of  Directors;  --  The
                                  Company's  Reasons for the KRSI Merger and the
                                  Reorganization;   and   --   Kelly   Russell's

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                                  Financial  Advisors."  For information  on the
                                  interests  of  certain  persons  in  the  KRSI
                                  Merger,    see    "The   KRSI    Merger,   the
                                  Reorganization and  the Private  Placement  --
                                  Interests  of  Certain  Persons  in  the  KRSI
                                  Merger."                                      

KELLY RUSSELL'S FINANCIAL                                                       
 ADVISORS.......................  Equisource was  retained by  Kelly Russell  to
                                  act  as a  financial advisor  to the  Board of
                                  Directors in connection with the KRSI  Merger.
                                  Equisource  presented its opinion to the Board
                                  of Directors  that  the  consideration  to  be
                                  received  by  Kelly  Russell  shareholders  in
                                  connection with  the KRSI  Merger is  fair  to
                                  such  shareholders from  a financial  point of
                                  view.  The   opinion  of   Equisource,   which
                                  contains  information  as  to  the assumptions
                                  made, matters  considered  and the  scope  and
                                  limitations  on the review  undertaken, is set
                                  forth   as   Appendix   B   to   this    Proxy
                                  Statement/Prospectus and should be read in its
                                  entirety.    See   "The   KRSI   Merger,   the
                                  Reorganization and  the Private  Placement  --
                                  Kelly Russell's Financial Advisors."          

MARKETS AND MARKET PRICES.......  Global One has filed an application to include
                                  the  Global  One  Common Stock  on  the Nasdaq
                                  SmallCap  Market  under  the  symbol   "GOGO."
                                  However,  there can be  no assurance that such
                                  application will be approved or that a  market
                                  for  Global  One  Common Stock  will  exist or
                                  develop upon completion of the KRSI Merger, or
                                  if developed, will be maintained. In the event
                                  Global One's application  is not approved,  it
                                  is  anticipated  that  the  Global  One Common
                                  Stock will be  quoted for trading  on the  OTC
                                  Bulletin   Board   or  in   the   Pink  Sheets
                                  maintained by the  National Quotation  Bureau,
                                  Inc. See "Market Price of and Dividends on OSP
                                  Common  Stock,  Global  One  Common  Stock and
                                  Kelly   Russell   Common   Stock   --   Market
                                  Information."                                 

                                  Under  the  Merger  Agreement,  the Conversion
                                  Ratio will not change based upon any change in
                                  the  market  price  of  Kelly  Russell  Common
                                  Stock.  Therefore, the  consideration received
                                  by Kelly Russell shareholders does not reflect
                                  the trading  price  of  Kelly  Russell  Common
                                  Stock  as of  the Effective  Time of  the KRSI
                                  Merger.   See    "The   KRSI    Merger,    the
                                  Reorganization  and  the Private  Placement --
                                  Conversion of  Kelly Russell  Common Stock  in
                                  the KRSI Merger."                             

CERTAIN FEDERAL INCOME TAX                                                      
 CONSEQUENCES...................  Global  One has received an opinion of counsel
                                  from Manatt, Phelps & Phillips, LLP, that  the
                                  KRSI  Merger  will  be treated  as  a tax-free
                                  reorganization within the meaning of  Sections
                                  368(a)(1)(A)  and 368(a)(2)(D) of the Internal
                                  Revenue Code of 1986, as amended (the "Code").
                                  Kelly Russell, Global One and KRSI Acquisition
                                  will each be a  "party to the  reorganization"
                                  within  the meaning  of Section  368(b) of the
                                  Code.                                         

                                  In the view of counsel,  no gain or loss  will
                                  be  recognized  by the  shareholders  of Kelly
                                  Russell  upon  their  receipt  of  Global  One
                                  Common  Stock  in  exchange  for  their  Kelly
                                  Russell Common  Stock. See  "The KRSI  Merger,
                                  the  Reorganization and  the Private Placement
                                  -- Certain Federal Income Tax Consequences."  

TERMINATION PROVISIONS..........  The Merger Agreement may be terminated at  any
                                  time  prior  to  the  Effective  Time,  either
                                  before  or  after   approval  of  the   Merger
                                  Agreement by the Kelly Russell shareholders by
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                                  either  party  if  the  KRSI  Merger  is   not
                                  effected by August 31, 1996, and by either OSP
                                  or  Kelly Russell in the  event of a breach of
                                  the Merger Agreement  or other  circumstances.
                                  See  "The KRSI Merger,  the Reorganization and
                                  the Private Placement -- Amendment, Waiver and
                                  Termination of the Merger Agreement."         

                                  In  the   event   the  Merger   Agreement   is
                                  terminated because: (i) the Effective Time has
                                  not occurred on or before August 31, 1996 as a
                                  result  of a material  breach by Kelly Russell
                                  of the  Merger Agreement;  or (ii)  the  Kelly
                                  Russell  shareholders fail to approve the KRSI
                                  Merger, Kelly Russell will be obligated to pay
                                  liquidated damages in  the amount of  $250,000
                                  to  the Company.  Kelly Russell  has delivered
                                  $125,000  to  an  escrow  agent  the  ("Escrow
                                  Agent")   and  is  obligated   to  deliver  an
                                  additional $125,000  to the  Escrow Agent.  In
                                  the  event the Merger  Agreement is terminated
                                  as described above,  the escrow  agent may  be
                                  obligated  to deliver the  escrow funds to the
                                  Company  as   liquidated  damages   for   such
                                  termination.                                  

                                  In  addition, Kelly Russell,  the Company, and
                                  Global  One  have  agreed  not  to   initiate,
                                  solicit  or  knowingly encourage  any proposal
                                  that competes with the transaction            
                                  contemplated by the Merger Agreement. However,
                                  the Kelly  Russell  Board  of  Directors  may,
                                  subject  to  certain  conditions,  (i) furnish
                                  information to or  enter discussions with  any
                                  person  that makes an  unsolicited proposal to
                                  acquire  Kelly  Russell;   (ii)  comply   with
                                  Exchange  Act requirements;  or (iii) withhold
                                  or   modify   its   recommendation   to    the
                                  shareholders  to approve  the KRSI  Merger, in
                                  order to comply with  the Board of  Directors'
                                  fiduciary  duties to the  shareholders. In the
                                  event the  Kelly  Russell Board  of  Directors
                                  withholds  or  modifies its  recommendation to
                                  its shareholders,  and  Kelly  Russell  enters
                                  into  an agreement  to consummate  a competing
                                  transaction to the Merger Agreement within one
                                  year after such  withdrawal or failure,  Kelly
                                  Russell   shall  pay  OSP  $500,000  in  cash,
                                  including the  $250,000 held  pursuant to  its
                                  escrow  obligations described  above. See "The
                                  KRSI  Merger,  the   Reorganization  and   the
                                  Private  Placement  --  Amendment,  Waiver and
                                  Termination of the Merger Agreement."         

ACCOUNTING TREATMENT............  The KRSI Merger  will be  accounted for  under
                                  the  purchase  method  of  accounting  and the
                                  Reorganization will be accounted for under the
                                  pooling method  of accounting.  See "The  KRSI
                                  Merger,  the  Reorganization  and  the Private
                                  Placement -- Accounting Treatment of the  KRSI
                                  Merger."                                      

TREATMENT OF STOCK OPTIONS AND                                                  
 WARRANTS.......................  After  the Effective Time, all of the options,
                                  warrants and rights  to acquire Kelly  Russell
                                  Common  Stock  as of  the Effective  Time will
                                  continue   to   have   and   be   subject   to
                                  substantially  the same  terms and conditions,
                                  except that (i) each such option, warrant  and
                                  right will be fully vested and exercisable for
                                  that  number  of shares  of Global  One Common
                                  Stock which  equals the  number of  shares  of
                                  Kelly  Russell  Common Stock  covered  by such
                                  option, warrant and right immediately prior to
                                  the Effective  Time  divided by  two  (2)  and
                                  rounded  up to  the nearest  whole number; and
                                  (ii) the exercise price  per share under  each
                                  such option, warrant and right shall equal the
                                  exercise  price in effect immediately prior to
                                  the Effective Time multiplied  by two (2)  and

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                                  rounded  to  the nearest  cent. See  "The KRSI
                                  Merger, the  Reorganization  and  the  Private
                                  Placement   --  Treatment   of  Kelly  Russell
                                  Options and Warrants."                        

INTEREST OF CERTAIN PERSONS IN                                                  
 THE KRSI MERGER................  Mr. George Vrabeck, a director, President  and
                                  Chief  Executive Officer of Kelly Russell, has
                                  entered  into  an  employment  agreement  with
                                  Global  One, providing  that upon consummation
                                  of the Transactions, Mr. Vrabeck will serve as
                                  an Executive Vice  President for  a three  (3)
                                  year  term at an initial base annual salary of
                                  $200,000, plus  bonuses  and  other  benefits,
                                  including  a grant of options to acquire up to
                                  300,000 shares of Global  One Common Stock  at
                                  $1.50  per share. Mr.  Vrabeck will retain his
                                  current options  to  purchase  up  to  200,000
                                  shares  of Kelly Russell Common Stock which at
                                  the Effective  Time  shall be  converted  into
                                  options  to purchase 100,000  shares of Global
                                  One Common Stock.  See "The  KRSI Merger,  the
                                  Reorganization  and  the Private  Placement --
                                  Treatment  of   Kelly  Russell   Options   and
                                  Warrants" and "-- Interests of Certain Persons
                                  in  the KRSI Merger" and "Management of Global
                                  One -- Directors  and Executive Officers"  and
                                  "-- Employment Agreements."                   

                                  Mr. Thomas R. King has served as a director of
                                  Kelly Russell since March 1995 and Mr. King is
                                  a  shareholder  at Fredrikson  &  Byron, P.A.,
                                  which has  served as  legal counsel  to  Kelly
                                  Russell,  including matters in connection with
                                  the  KRSI   Merger.  Immediately   after   the
                                  Effective Time, Mr. King will be a director of
                                  Global   One.  See   "The  KRSI   Merger,  the
                                  Reorganization and  the Private  Placement  --
                                  Interests  of  Certain  Persons  in  the  KRSI
                                  Merger," and  "Management  of  Global  One  --
                                  Directors and Executive Officers."            

                                  Miller,  Johnson  &  Kuehn,  Incorporated  has
                                  entered into a Placement Agent Agreement  with
                                  Global   One.   D.B.   Johnson,   a  principal
                                  shareholder of Kelly Russell, is an  affiliate
                                  of  Miller, Johnson & Kuehn, Incorporated. See
                                  "Business of Kelly Russell Studios, Inc."  and
                                  "Principal   Shareholders  and  Management  of
                                  Kelly Russell."                               

                                  Immediately  following  consummation  of   the
                                  Transactions,  the  OSP Shareholders  will own
                                  beneficially approximately 50% of Global One's
                                  outstanding   stock.    In    addition,    the
                                  consummation  of the KRSI Merger is contingent
                                  upon the closing by Global One of the  Private
                                  Placement.  A portion  of the  proceeds of the
                                  Private Placement  will  be  used  to  pay  an
                                  accrued cash dividend of $1,750,000 to the OSP
                                  Shareholders  and  an  additional  dividend of
                                  approximately  $600,000  to  permit  the   OSP
                                  Shareholders   to  pay  their  individual  tax
                                  liabilities incurred  as  a  result  of  OSP's
                                  operating  results during 1995 since, prior to
                                  the Closing,  OSP  has  been  taxed  as  an  S
                                  Corporation.                                  
REGULATORY APPROVAL.............  Global  One and Kelly Russell are not aware of
                                  any  government  or  regulatory   requirements
                                  relating to consummation of the KRSI Merger or
                                  the  proposals to be considered at the Meeting
                                  other than compliance with applicable  federal
                                  and  state  securities  laws.  See  "The  KRSI
                                  Merger, the  Reorganization  and  the  Private
                                  Placement -- Regulatory Approvals."           

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                       DESCRIPTION OF THE REORGANIZATION                        
GENERAL.........................  Pursuant   to   the   Merger   Agreement,   in
                                  connection with the  KRSI Merger, the  Company
                                  will  be merged with  and into OSP Acquisition
                                  and BEx  will  be  merged with  and  into  BEx
                                  Acquisition. Promptly after the Reorganization
                                  and  KRSI  Merger,  OSP  Acquisition  and  BEx
                                  Acquisition will change their respective names
                                  to, and  conduct their  respective  businesses
                                  under,  the names  "OSP Publishing,  Inc." and
                                  "The Button Exchange, Inc." Each share of  OSP
                                  Common  Stock issued  and outstanding  at such
                                  time will  be  converted  into  the  right  to
                                  receive  the  number of  shares of  Global One
                                  Common Stock equal to the number determined by
                                  dividing the sum of (a) fifty percent (50%) of
                                  the amount  of  fully  diluted  Kelly  Russell
                                  shares  plus  (b)  the  amount  of  Global One
                                  Common Stock issued  in the Private  Placement
                                  not  in excess of 4,000,000, by the sum of (y)
                                  the number  of  shares  of  OSP  Common  Stock
                                  outstanding immediately prior to the Effective
                                  Time  and  (z)  the number  of  shares  of OSP
                                  Common Stock that would be issued  immediately
                                  prior   to  the  Effective  Time  if  all  the
                                  outstanding warrants,  options and  any  other
                                  rights   to  acquire  OSP  Common  Stock  were
                                  exercised at  such  time. Each  share  of  BEx
                                  Common  Stock  issued and  outstanding  at the
                                  effective time  of  the  BEx  Merger  will  be
                                  canceled  and cease  to be  outstanding. (This
                                  will result in  approximately 3,941.37  shares
                                  of  Global One  Common Stock  being issued for
                                  each share of OSP Common Stock.) See "The KRSI
                                  Merger, the  Reorganization  and  the  Private
                                  Placement."                                   

EFFECTIVE TIME OF THE                                                           
 REORGANIZATION.................  The  Reorganization  will be  deemed  to occur
                                  immediately prior to the Effective Time of the
                                  KRSI Merger, and  will be  effective upon  the
                                  filing  of  Certificates  of  Merger  with the
                                  Secretaries  of   State  of   the  States   of
                                  Delaware, California and Michigan. Such filing
                                  are   expected   to  occur   as   promptly  as
                                  practicable following approval  of the  Merger
                                  Agreement  by the requisite  vote of the Kelly
                                  Russell shareholders and  the satisfaction  or
                                  waiver of the conditions to the               
                                  Reorganization.  See  "The  KRSI  Merger,  the
                                  Reorganization and  the Private  Placement  --
                                  Conditions  to Consummation of the KRSI Merger
                                  and the Reorganization."                      

BACKGROUND OF THE                                                               
 REORGANIZATION.................  On March  27,  1996,  OSP  and  Kelly  Russell
                                  executed    an   initial   merger   agreement.
                                  Subsequent   to   such   date,   the   parties
                                  reevaluated   the  planned  structure  of  the
                                  resulting  entity  and  determined  that   the
                                  optimal  corporate structure would be for OSP,
                                  BEx  and   Kelly   Russell   to   operate   as
                                  wholly-owned  subsidiaries  of  a newly-formed
                                  holding company, Global One,  and for each  of
                                  the   corporations   to  be   incorporated  in
                                  Delaware.  On   May  28,   1996,  the   Merger
                                  Agreement  was amended and restated to reflect
                                  the agreement of the parties to merge OSP, BEx
                                  and  Kelly   Russell  into   the  Global   One
                                  Subsidiaries.                                 

                      DESCRIPTION OF THE PRIVATE PLACEMENT                      

GENERAL.........................  In   connection  with  the   KRSI  Merger  and
                                  Reorganization, Global One  has solicited  and
                                  received  subscriptions  for  the  purchase of
                                  4,504,234 shares  of  its common  stock  in  a
                                  private  placement  at  $1.50  per  share. The
                                  subscription period for the Private  Placement
                                  ended on May 28,                              

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                                  1996.  The KRSI Merger, the Reorganization and
                                  the Private Placement are each conditioned  on
                                  the   closing  of  the   others  and  will  be
                                  consummated at a single closing to take  place
                                  as  soon as practicable following the approval
                                  of the KRSI  Merger by the  requisite vote  of
                                  the Kelly Russell shareholders at the Meeting.

BACKGROUND OF THE PRIVATE                                                       
 PLACEMENT......................  In   anticipation  of  the   KRSI  Merger  and
                                  Reorganization,  Global   One  undertook   the
                                  Private   Placement   in   order   to  provide
                                  additional  working  capital  to  Global  One,
                                  reduce  its  subordinated debt  and to  pay an
                                  accrued dividend to the OSP Shareholders.  The
                                  Private   Placement  is  expected  to  provide
                                  Global   One    with   gross    proceeds    of
                                  approximately  $6.8 million,  and net proceeds
                                  of approximately $1.8 million after paying the
                                  $1.75 million dividend,  repaying $375,000  of
                                  subordinated  debt,  taking  into  account the
                                  approximately $2.2 million in costs related to
                                  the  Transactions  and  paying  an  additional
                                  dividend  of approximately  $600,000 to permit
                                  the  OSP  Shareholders  to  pay  certain   tax
                                  liabilities  incurred  as  a  result  of OSP's
                                  operating results during 1995 since, prior  to
                                  Closing,   OSP   has  been   taxed  as   an  S
                                  Corporation.                                  

COMPARISON OF RIGHTS OF GLOBAL ONE SHAREHOLDERS AND KELLY RUSSELL SHAREHOLDERS

    Global One and Kelly Russell are  incorporated under the laws of the  States
of   Delaware  and  Minnesota,   respectively.  The  rights   of  Kelly  Russell
shareholders are currently governed by  the Restated Articles of  Incorporation,
as  amended and Bylaws, of Kelly Russell.  Upon consummation of the KRSI Merger,
Kelly Russell  shareholders will  become shareholders  of Global  One and  their
rights  as such will be governed by  the Certificate of Incorporation and Bylaws
of Global One. See  "Comparison of the  Rights of Holders  of Global One  Common
Stock and Kelly Russell Common Stock."                                          

RECENT PRICES OF GLOBAL ONE COMMON STOCK AND KELLY RUSSELL COMMON STOCK 

    From  March 1994 to June 10, 1996,  Kelly Russell Common Stock traded on the
Nasdaq SmallCap Market under the symbol  "KRSI." Since June 10, 1996, the  Kelly
Russell  Common Stock has traded on the OTC Bulletin Board. The shares of Global
One Common Stock prior to the Effective Time will not be publicly traded on  any
exchange  or Nasdaq.  Application has  been made  for inclusion  of Global One's
Common Stock  issuable to  Kelly  Russell shareholders  on the  Nasdaq  SmallCap
Market,  upon consummation of  the KRSI Merger  under the symbol  "GOGO". In the
event Global  One's application  is not  approved, it  is anticipated  that  the
Global  One Common Stock will be quoted for trading on the OTC Bulletin Board or
in the Pink Sheets maintained by  the National Quotation Bureau, Inc. See  "Risk
Factors  of  Global One  Distribution &  Merchandising Inc.  -- No  Assurance of
Public Market."                                                                 

    On March 26, 1996, the last  business day immediately proceeding the  public
announcement  of  the proposed  KRSI Merger,  the closing  sale price  for Kelly
Russell Common Stock  as reported on  the Nasdaq SmallCap  Market was $2.44  per
share. The Conversion Ratio will not change based upon any changes in the market
prices  of Kelly Russell Common Stock prior to the Effective Time. See "The KRSI
Merger, the  Reorganization and  the Private  Placement --  Conversion of  Kelly
Russell Common Stock in the KRSI Merger."                                       

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SUMMARY SELECTED CONSOLIDATED FINANCIAL DATA
OSP PUBLISHING, INC. AND SUBSIDIARIES 

                                                        [Enlarge/Download Table]

                                                                                                                 THREE MONTHS     
                                                                                                                    ENDED         
                                                                    YEARS ENDED DECEMBER 31,                      MARCH 31,       
                                                      -----------------------------------------------------  -------------------- 
                                                        1991       1992       1993       1994       1995       1995       1996    
                                                      ---------  ---------  ---------  ---------  ---------  ---------  --------- 
                                                                         (IN THOUSANDS, EXCEPT PER SHARE DATA)   (UNAUDITED)      
                                                                                                                                  
CONSOLIDATED STATEMENT OF OPERATIONS DATA:                                                                                        
  Sales.............................................. $  16,173  $  17,126  $  38,108  $  42,168  $  38,228  $   7,421  $   8,941 
  Cost of sales......................................     9,304      9,297     22,335     25,140     21,647      4,092      5,270 
                                                      ---------  ---------  ---------  ---------  ---------  ---------  --------- 
  Gross profit.......................................     6,869      7,829     15,773     17,028     16,581      3,329      3,671 
  Operating expenses.................................     5,770      7,143     13,797     16,636     15,172      3,503      3,805 
                                                      ---------  ---------  ---------  ---------  ---------  ---------  --------- 
  Income (loss) from operations......................     1,099        686      1,976        392      1,409       (174)      (134)
  Interest expense...................................       562        429        605        685        841        173        267 
                                                      ---------  ---------  ---------  ---------  ---------  ---------  --------- 
  Income (loss) from continuing operations........... $     537  $     257  $   1,371  $    (293) $     568  $    (347) $    (401)
                                                      ---------  ---------  ---------  ---------  ---------  ---------  --------- 
                                                      ---------  ---------  ---------  ---------  ---------  ---------  --------- 

PRO FORMA INCOME FROM CONTINUING OPERATIONS DATA (1,                                                                              
 2):                                                                                                                              
  Income (loss) before income taxes, minority                                                                                     
   interest and discontinued operations, as                                                                                       
   reported.......................................... $     537  $     257  $   1,371  $    (293) $     568  $    (347) $    (401)
  Pro forma provision (benefit) for income taxes                                                                                  
   (2)...............................................       255        266        344        (43)       114        (70)       (85)
                                                      ---------  ---------  ---------  ---------  ---------  ---------  --------- 
  Pro forma net income (2)........................... $     282  $      (9) $   1,027  $    (250) $     454  $    (277) $    (316)
                                                      ---------  ---------  ---------  ---------  ---------  ---------  --------- 
                                                      ---------  ---------  ---------  ---------  ---------  ---------  --------- 

PER SHARE DATA:                                                                                                                   
  Pro forma (loss) income from continuing operations                                                                              
   per share.........................................                                             $    0.06  $   (0.03) $   (0.04)
                                                                                                  ---------  ---------  --------- 
                                                                                                  ---------  ---------  --------- 
  Weighted average shares outstanding (3)............                                                 8,037      8,036      8,037 
                                                                                                  ---------  ---------  --------- 
                                                                                                  ---------  ---------  --------- 

                                                        [Enlarge/Download Table]

                                                                                                            AS OF MARCH
                                                                      AS OF DECEMBER 31,                        31,    
                                                     -----------------------------------------------------  -----------
                                                       1991       1992       1993       1994       1995        1996    
                                                     ---------  ---------  ---------  ---------  ---------  -----------
                                                                               (IN THOUSANDS)               (UNAUDITED)
                                                                                                                       
CONSOLIDATED BALANCE SHEET DATA (1):                                                                                   
  Working capital (deficiency)...................... $   2,141  $   1,587  $   2,337  $    (197) $   3,312   $   3,285 
  Total assets......................................     6,439      6,427     13,464     13,841     11,698      13,933 
  Total debt, including current portion.............     5,219      2,896      5,129      6,724      5,989       7,143 
  Shareholders' equity (deficiency)................. $  (1,075) $     266  $     637  $  (1,408) $  (1,299)  $  (1,853)

------------------------------                                                  
(1)  In  December 1994,  the Company  determined to  discontinue its  Top Banana
division. See "Management's Discussion and                              
    Analysis of Financial Condition and Results of Operations of the Company  --
    Discontinued  Operations"  and Note  12 of  Notes to  Consolidated Financial
Statements.                                                             

(2) The Company has been taxed as an S Corporation for federal and state  income
    tax  purposes  since  1989. Pro  forma  income  taxes, pro  forma  loss from
    continuing operations, and  pro forma  loss from  continuing operations  per
    share  reflect the pro forma effect of income taxes as if OSP had been taxed
    as a  C Corporation  for all  periods presented.  Upon consummation  of  the
    Transactions,  Global One will be subject to federal and state income taxes.
See "S Corporation Distributions."                                      

(3) Assumes  as outstanding,  during each  of the  periods indicated,  1,393,550
    shares  of  the shares  being  offered by  Global  One, which  represent the
    approximate number of shares  deemed to be  sold by Global  One to fund  the
    $1,750,000   S   Corporation  distribution   described  in   "S  Corporation
    Distributions."  See  also  Note  13  of  Notes  to  Consolidated  Financial
Statements.                                                             

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SUMMARY SELECTED FINANCIAL DATA 
KELLY RUSSELL STUDIOS, INC. 

                                                        [Enlarge/Download Table]

                                                                                           THREE MONTHS ENDED  
                                                    YEARS ENDED DECEMBER 31,                   MARCH 31,       
                                         -----------------------------------------------  -------------------- 
                                         1992 (1)      1993        1994         1995        1995       1996    
                                         ---------  ----------  -----------  -----------  ---------  --------- 
                                                                                              (UNAUDITED)      
                                                                                                               
STATEMENT OF OPERATIONS DATA:                                                                                  
  Net sales............................  $ 187,766  $2,242,685  $ 2,767,196  $ 2,813,999  $ 512,863  $ 778,614 
  Cost of sales........................    117,479   1,231,651    4,217,646    2,553,181    277,404    452,738 
                                         ---------  ----------  -----------  -----------  ---------  --------- 
  Gross profit (loss)..................     70,287   1,011,034   (1,450,450)     260,818    235,459    325,876 
  Operating expenses...................    221,998   1,196,125    3,734,527    2,133,939    451,950    708,401 
                                         ---------  ----------  -----------  -----------  ---------  --------- 
  Operating loss.......................   (151,711)   (185,091)  (5,184,977)  (1,873,121)  (216,491)  (382,525)
  Other income.........................     --          --          119,395       40,079     --         --     
  Interest expense.....................     (1,690)    (53,151)    (150,448)      (7,218)    --         (2,024)
                                         ---------  ----------  -----------  -----------  ---------  --------- 
  Loss before income taxes and                                                                                 
   extraordinary item..................   (153,401)   (238,242)  (5,216,030)  (1,840,260)  (216,491)  (384,549)
  Extraordinary item...................     --          --          --           296,994    246,697     --     
                                         ---------  ----------  -----------  -----------  ---------  --------- 
  Net income (loss)....................  $(153,401) $ (238,242) $(5,216,030) $(1,543,266) $  30,206  $(384,549)
                                         ---------  ----------  -----------  -----------  ---------  --------- 
                                         ---------  ----------  -----------  -----------  ---------  --------- 

NET LOSS PER COMMON SHARE:                                                                                     
  Loss before extraordinary item.......  $   (0.04) $    (0.07) $     (1.79) $     (0.52) $   (0.07) $   (0.09)
  Extraordinary item...................     --          --          --              0.08       0.08     --     
                                         ---------  ----------  -----------  -----------  ---------  --------- 
  Net income (loss) per common share...  $   (0.04) $    (0.07) $     (1.79) $     (0.44) $    0.01  $   (0.09)
                                         ---------  ----------  -----------  -----------  ---------  --------- 
                                         ---------  ----------  -----------  -----------  ---------  --------- 
  Weighted average number of common and                                                                        
   common equivalent shares                                                                                    
   outstanding.........................  2,054,600   2,054,600    2,900,383    3,540,965  3,286,765  4,082,373 

                                                        [Enlarge/Download Table]

                                                                 AT DECEMBER 31,                              
                                                 -----------------------------------------------              
                                                   1992        1993        1994         1995                  
                                                 ---------  ----------  -----------  -----------  AT MARCH 31,
                                                                                                  ------------
                                                                                                      1996    
                                                                                                  ------------
                                                                                                  (UNAUDITED) 
                                                                                                              
BALANCE SHEET DATA:                                                                                           
  Current assets................................ $ 364,809  $1,545,998  $ 1,831,596  $ 1,542,351   $1,119,005 
  Total assets..................................   368,911   1,904,096    2,049,312    1,857,285    1,397,329 
  Current liabilities...........................   431,123   2,192,550    1,703,493      833,840      758,433 
  Total liabilities.............................   431,123   2,192,550    1,703,493      833,840      758,433 
  Accumulated deficit...........................  (153,401)   (391,643)  (5,607,673)  (7,150,939)  (7,535,488)
  Shareholders' equity (deficit)................   (62,212)   (288,454)     345,819    1,023,445      638,896 

------------------------------                                                  
(1) Kelly Russell was formed in 1992.                                           

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UNAUDITED PRO FORMA SELECTED CONDENSED COMBINED FINANCIAL DATA

    The  following table sets forth selected  unaudited pro forma data regarding
the operating  results and  financial  position of  Global  One based  upon  the
historical  financial data of OSP  and Kelly Russell as  if the Transactions had
been consummated at January 1, 1995. The  pro forma data set forth below  should
be read in conjunction with the unaudited pro forma condensed combined financial
statements  included  elsewhere  herein.  See  "Unaudited  Pro  Forma  Condensed
Combined Financial Statements."                                                 

                                                        [Enlarge/Download Table]

                                                                             YEAR ENDED      THREE MONTHS ENDED 
                                                                          DECEMBER 31, 1995    MARCH 31, 1996   
                                                                          -----------------  -------------------
                                                                          (IN THOUSANDS, EXCEPT PER SHARE DATA) 
                                                                                                                
STATEMENT OF OPERATIONS DATA:                                                                                   
Pro Forma Combined:                                                                                             
  Net sales..............................................................  $    41,042         $     9,720      
  Gross profit...........................................................       16,842               3,997      
  Operating expenses.....................................................       17,600               4,602      
  Operating loss.........................................................         (758)               (605)     
  Interest expense.......................................................          848                 269      
  Loss before extraordinary item.........................................       (1,732)               (987)     
PRO FORMA NET LOSS DATA:                                                                                        
  Pro forma loss before extraordinary item...............................  $    (1,923)        $      (835)     
  Pro forma loss before extraordinary item per share.....................        (0.15)              (0.06)     
  Pro forma weighted average shares outstanding..........................       12,994(1)           12,994(1)   



                                                                                               MARCH 31, 1996   
                                                                                             -------------------
                                                                                                                
BALANCE SHEET DATA:                                                                                             
  Assets.................................................................                      $    21,479      
  Liabilities............................................................                           16,169      
  Shareholders' equity...................................................                            5,310      

------------------------                                                        
(1) Assumes  the issuance  of 2,041,187  shares of  Global One  Common Stock  to
    effect  the KRSI Merger as well as 4,504,234 shares deemed to be sold in the
Private Placement.                                                      

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RISK FACTORS OF 
GLOBAL ONE DISTRIBUTION & MERCHANDISING INC.

    Global  One and  Kelly Russell recommend  that you review  this entire Proxy
Statement/Prospectus in detail and that you pay careful attention to the matters
discussed below.                                                                

    This Proxy Statement/Prospectus  contains forward-looking statements  within
the meaning of the "safe harbor" provisions of the Private Securities Litigation
Reform  Act of 1995. Reference is made  in particular to the descriptions of the
Company's plans  and objectives  for future  operations, assumptions  underlying
such  plans and objectives, potential future circumstances and developments, and
other statements that do not consist of historical or current facts included in,
among other  sections, "Summary,"  "Risk Factors  of Global  One Distribution  &
Merchandising   Inc.,"  "Unaudited   Pro  Forma   Condensed  Combined  Financial
Statements," "Management's Discussion  and Analysis of  Financial Condition  and
Results  of Operations of the Company," "Business of Global One," "Kelly Russell
Studios, Inc. Management's  Discussion and Analysis  of Financial Condition  and
Results  of  Operations"  and "Business  of  Kelly Russell  Studios,  Inc." Such
discussion is  qualified by  the inherent  risks and  uncertainties  surrounding
future expectations generally, and also may materially differ from the Company's
actual  future operations involving any one or  more of such matters and subject
areas. Factors which could  cause such results to  differ materially from  those
described  in the forward-looking  statements also include,  but are not limited
to, those risk factors set forth below.                                         

RELIANCE ON LICENSE AGREEMENTS                                                  

    Global One's business will be  substantially dependent upon its  development
of  products that bear the names, likenesses, colors and other identifying marks
of characters and  images that  are licensed  to Global One  (or to  one of  its
subsidiaries). Substantially all of the Company's consolidated net sales in 1995
were   attributable  to  products  incorporating  some  licensed  material.  The
Company's license  agreements generally  limit  both the  products that  can  be
manufactured  and  the territory  in which  they  can be  marketed. Most  of the
Company's major licenses are non-exclusive, and  there can be no assurance  that
major licensors will not in the future grant competing licenses. Also, licensors
typically  retain  the  right  to  approve  the  designs  and  uses  of products
manufactured by the Company. Such approvals are typically in the licensors' sole
discretion and may  be time-consuming,  as approvals are  generally required  at
each  stage of the design and development  process. See "Business of The Company
-- Design and Development."                                                     

    The Company's licenses generally are for a period of two years. As a  result
of  changing consumer  preferences, in any  given year a  particular license may
account for a substantial  portion of the Company's  consolidated net sales.  In
addition,  the  license  agreements  typically  provide  that  the  licensor may
terminate the  license  in the  event  of the  licensee's  failure to  submit  a
prototype  of  a licensed  product within  a specified  time period,  failure to
complete manufacturing of  a licensed  product within a  specified time  period,
failure  to meet marketing or shipping dates  specified in a license, failure to
actively continue marketing and distribution of a design or style, default under
any provisions of the license to  provide statements of account and/or  payments
or  any other obligations of  the licensee, the bankruptcy  or insolvency of the
licensee, a change in control of the licensee without the prior written  consent
of  the licensor or late payment of  license royalties. To date, the Company has
not suffered early termination of any of its major licenses. On many  occasions,
however,  the Company has not paid royalties to licensors on a timely basis and,
accordingly, certain licenses could be subject to termination. See "Management's
Discussion and Analysis of Financial Condition and Results of Operations of  The
Company  -- Liquidity and Capital Resources."  The non-renewal or termination of
one or more of the Company's major licenses could have a material adverse effect
on the Company. Also, as a result of increased competition for licenses,  Global
One may, in the future, be required to pay licensors higher royalties and higher
minimum  guaranteed payments  in order to  obtain attractive  properties for the
development of existing and new product  lines. See "Business of The Company  --
Products and Operating Subsidiaries" and "-- Licensing."                        

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    Products  created  under licenses  from  Disney Enterprises  Inc. ("Disney")
accounted for approximately 22% of  the Company's consolidated net sales  during
1995.  The Company's licenses from Disney,  among others, are non-exclusive. The
loss of the Company's licenses with Disney  or the grant by Disney of  competing
licenses would have a material adverse effect on the Company's operations.      

MARKET ACCEPTANCE OF LICENSED PROPERTIES                                        

    The  successful marketing  of Global  One's products  will generally require
Global One to  anticipate and  evaluate the popularity  of licensed  properties,
most  of which are media related, before commercial introduction of the property
in which a licensed character appears.  As most of the Company's promotional  or
trend  products are typically marketed successfully only for a limited period of
time, the success of the Company's marketing program has been dependent upon its
ability to continually  acquire new,  popular promotional  licenses and  develop
successful  products tied  to such licenses.  For example,  the Company recently
obtained licenses relating to Disney's film,  "THE HUNCHBACK OF NOTRE DAME"  and
Twentieth  Century Fox's film,  "INDEPENDENCE DAY." Whether  such films, and the
licensed merchandise based on  such films, are  successful, cannot be  predicted
with  any certainty. There can  be no assurance that Global  One will be able to
successfully develop new products or be  able to secure licenses for  additional
characters and images that will achieve a degree of popularity comparable to the
Company's  existing licensed material. See "Business  of The Company -- Products
and Operating Subsidiaries" and "-- Licensing."                                 

SEASONALITY AND FLUCTUATIONS IN OPERATING RESULTS                               

    It is expected that sales of Global One's promotional products will tend  to
be  seasonal,  due to  the  seasonality of  major  film releases.  The Company's
consolidated net  sales  recorded  during  the second  quarter  of  1995,  as  a
percentage  of the  Company's annual sales  in 1995, were  32.9%. Although films
that are anticipated to  be major hits  are often released  in the summer,  film
distribution  companies frequently release  major films in  the autumn or during
the holidays.  As  a  result,  Global  One's  operating  results  may  fluctuate
substantially from quarter to quarter, as revenues and results of operations may
be  materially affected  by the timing  of development,  introduction and market
acceptance of its products.  Product development and  marketing costs are  often
incurred  in  periods  before any  revenues  are  recognized from  the  sales of
products. Operating costs have been higher during periods in which such  product
development  costs  are  incurred  and  marketing  efforts  are  commenced. Such
fluctuation in  sales  typically result  in  corresponding fluctuations  in  the
Company's  profitability, which is anticipated to similarly affect Global One in
the foreseeable future. See "Management's  Discussion and Analysis of  Financial
Condition and Results of Operations of The Company -- Seasonality." There can be
no assurance that the fluctuations in the Company's sales and profitability will
not negatively affect the market's perception and valuation of the Common Stock.

RISK OF CONTINUED OPERATING LOSSES OF KELLY RUSSELL                             

    Kelly  Russell's sales and marketing  strategy has been largely unsuccessful
from its inception  as planned growth  in sales volume  and profitability  never
materialized.  As a result, Kelly Russell's Board of Directors reorganized Kelly
Russell  and  has  taken  restructuring  charges  reflecting  various   changes,
including  hiring  new management,  revising Kelly  Russell's business  plan and
operations, discontinuing sales  of certain product  lines, eliminating  certain
distribution  channels  and  substantially reducing  its  numbers  of employees.
Notwithstanding these  efforts, Kelly  Russell has  never shown  a profit  since
inception.  In their  report accompanying  Kelly Russell's  financial statements
included elsewhere herein, Kelly  Russell's independent auditors have  indicated
that  the losses suffered by Kelly Russell to date and accumulated deficit raise
substantial doubt about Kelly Russell's ability to continue as a going  concern.
Global   One  believes  that  the  acquisition  of  Kelly  Russell  presents  an
opportunity for  Global  One  to  increase immediately  the  array  of  products
available  to customers of the Company  and to enter the sports-related licensed
products business  through acquisition  of  Kelly Russell's  existing  licenses.
Additionally,  Global  One  believes that  it  will be  well-positioned  to more
effectively promote the sale  of Kelly Russell's  products through Global  One's
current distribution channels and that the                                      

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combined  operations will  result in  greater diversification  opportunities and
enhanced market penetration. However, no assurances can be given that Global One
will be able to operate Kelly Russell profitably following the KRSI Merger.     

CONCENTRATED CUSTOMER BASE                                                      

    The five largest customers of the Company accounted for approximately 30% of
consolidated net  sales  during 1995.  Sales  to  two of  those  customers,  The
Musicland Group, Inc. ("Musicland") and K-Mart, each accounted for approximately
10%  of net sales during  1995. During the first  quarter of 1996, the Company's
five largest  customers  accounted for  approximately  42% of  consolidated  net
sales. Two of those customers, Maurice's and Sears, accounted for 15% and 11% of
consolidated net sales in the first quarter. The Company does not have long-term
contracts  with any of  its major customers.  The termination by  one or more of
such customers  of its  relationship  with the  Company  could have  a  material
adverse  effect  upon Global  One. See  "Business  of The  Company --  Sales and
Marketing."                                                                     

DEPENDENCE ON KEY PERSONNEL                                                     

    Global One's business will be dependent  upon the expertise and services  of
Joseph  C. Angard and Michael A. Malm,  its Chairman and Chief Executive Officer
and Chief Operating  Officer, respectively.  Messrs. Angard and  Malm have  each
entered  into three-year employment agreements with Global One commencing at the
Closing of the Transactions. Under  their employment agreements, Messrs.  Angard
and  Malm will be required to devote substantially all of their business time to
Global One and are precluded from competing  with Global One during the term  of
the  agreements. See  "Management of Global  One --  Employment Agreements." The
loss of the services of either or both  of Messrs. Angard and Malm could have  a
material adverse effect upon Global One.                                        

CONTROL BY EXISTING SHAREHOLDERS                                                

    Immediately  after consummation  of the  Transactions, the  OSP Shareholders
will own beneficially approximately 50% of Global One's outstanding Common Stock
through  trusts  that  will  be  established   by  Mr.  Angard  and  Mr.   Malm,
respectively.  It is anticipated that,  prior to the Effective  Time of the KRSI
Merger, the trusts will enter into an agreement pursuant to which the trustee of
Mr. Angard's trust will be  given a proxy entitling  Mr. Angard's trust to  vote
all of the shares owned by Mr. Malm's trust. Accordingly, acting in concert, the
OSP  Shareholders will, as a practical matter, have the ability to determine the
election of all  of Global  One's directors and,  in general,  to determine  the
outcome  of corporate  transactions or  other matters  submitted for stockholder
approval, without the approval of Global One's other stockholders. These matters
include mergers, consolidations, the sale of all or substantially all of  Global
One's assets or a change in control of Global One.                              

NO ASSURANCE OF PUBLIC MARKET                                                   

    To  date, there has been  no trading in the  Global One Common Stock. Global
One has filed  an application  to include  the Global  One Common  Stock on  the
Nasdaq  SmallCap  Market commencing  at the  Effective  Time. Miller,  Johnson &
Kuehn, Incorporated ("MJK") has indicated its intention to make a market in  the
Global  One Common Stock on the  Nasdaq SmallCap Market, effective upon approval
of the Global  One Common  Stock for quotation  on the  Nasdaq SmallCap  Market.
However,  there can be  no assurance that  such application will  be approved or
that, following the  KRSI Merger, an  active trading market  for the Global  One
Common  Stock will develop  or be sustained.  In addition, if  and to the extent
that MJK or another securities  firm determines to make  a market in the  Global
One  Common Stock, the market maker would  be under no obligation to continue to
make a market and could discontinue such activity at any time.                  

POSSIBLE INSUFFICIENCY OF WORKING CAPITAL                                       

    Global One's  business  strategy  provides  for  further  expansion  of  its
business for which additional capital may be required. There can be no assurance
that   the  expansion  of  the  Global   One's  business  will  be  successfully
implemented. In addition, while the Company has been able to establish a working
capital line  of  credit  and  subordinated debt  financing,  there  can  be  no
assurance that Global One will                                                  

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be   able  to  maintain  such  relationships   or  to  establish  new  financing
arrangements on satisfactory  terms. The inability  to obtain necessary  working
capital  could  have  a  material  adverse effect  on  Global  One's  results of
operations. See "Management's Discussion and Analysis of Financial Condition and
Results of Operations of The Company -- Liquidity and Capital Resources."       

ANTI-TAKEOVER EFFECT OF UNDESIGNATED PREFERRED STOCK                            

    Global One's authorized  capital consists  of 50,000,000  shares of  capital
stock,  of which 30,000,000 shares are designated as Common Stock and 20,000,000
shares are undesignated preferred stock ("Preferred Stock"). Upon completion  of
the Transactions, Global One will have no outstanding shares of Preferred Stock,
and  there is  no current  plan to  designate or  issue any  shares of Preferred
Stock. Nevertheless, Global One's Board of Directors has the power to issue  any
or  all of these shares of unissued  stock, including the authority to establish
the rights and preferences of the unissued Preferred Stock, without  shareholder
approval.  Among other consequences, the power  to issue additional stock and to
establish separate  classes  or  series  of  Preferred  Stock  may,  in  certain
circumstances,  deter  or discourage  take-over  attempts and  other  changes in
control of Global One not approved by the Board of Directors of Global One.  See
"Comparison  of  the Rights  of Holders  of  Global One  Common Stock  and Kelly
Russell Common Stock -- Global One."                                            

MATERIAL RETURNS OF UNSOLD PRODUCTS                                             

    The Company  has  accepted product  exchanges  for credit  from  its  retail
accounts  on all posters,  framed wall decor,  buttons and key  chains for which
there is  a  paid  invoice.  The  Company obtains  a  credit  on  royalties  and
commissions   paid  on  product  exchanges.  Exchanges  are  not  accepted  from
distributors.  In  general,  T-shirts  are  not  returnable,  except  where  the
merchandise is flawed. During 1995, the average returns rate was 12%. Management
believes  that this  policy with  respect to  exchanges for  credit ensures that
unsuccessful titles will  be replaced in  a timely manner  with titles that  may
generate current sales. However, no assurances can be given that Global One will
not experience material returns in the future or that Global One will be able to
replace  unsuccessful titles with successful ones,  either of which could have a
material adverse effect on Global One's results of operations.                  

GENERAL INFORMATION REGARDING THE MEETING 

    This Proxy Statement/Prospectus  is being furnished  to the shareholders  of
Kelly  Russell in connection with the solicitation  by the Board of Directors of
Kelly Russell of proxies  to be voted at  the Meeting to be  held on August  26,
1996.  All information in this Proxy  Statement/Prospectus with respect to Kelly
Russell has been furnished by Kelly Russell and all information with respect  to
Global  One, the Company and  the Global One Subsidiaries  has been furnished by
the Company.                                                                    

    At the Meeting,  Kelly Russell shareholders  will be asked  to consider  and
vote  upon the  approval of  the Merger Agreement,  providing for  the merger of
Kelly Russell  with and  into KRSI  Acquisition, a  wholly owned  subsidiary  of
Global  One. KRSI Acquisition shall change its  name to and conduct its business
under the name "Kelly Russell Studios, Inc."  A copy of the Merger Agreement  is
attached as Appendix A to this Proxy Statement/Prospectus.                      

    THE  BOARD OF DIRECTORS  OF KELLY RUSSELL HAS  UNANIMOUSLY APPROVED THE KRSI
MERGER. The Board  of Directors  of Global One  and KRSI  Acquisition have  each
approved  the KRSI Merger and the issuance  of shares of Global One Common Stock
in the KRSI  Merger. See "The  KRSI Merger, the  Reorganization and the  Private
Placement  -- Background of the KRSI  Merger and the Reorganization." Applicable
Minnesota law requires that Kelly Russell shareholders approve the KRSI Merger. 

    Pursuant to the  Merger Agreement,  upon effectiveness of  the KRSI  Merger,
each two outstanding shares of Kelly Russell Common Stock will be converted into
the  right to receive one  share of Global One Common  Stock. In lieu of issuing
fractional  shares,   Global   One   will  issue   one   additional   share   of

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Global  One  Common Stock  to each  holder who  would be  entitled to  receive a
fractional share.  See "The  KRSI  Merger, the  Reorganization and  the  Private
Placement  -- General; -- Conversion  of Kelly Russell Common  Stock in the KRSI
Merger; and -- Exchange of Certificates in the KRSI Merger."                    

    The close of business on July 19, 1996 (the "Record Date") has been fixed as
the Record Date for determination of  the holders of Kelly Russell Common  Stock
who  are entitled to notice of and to  vote at the Meeting or at any adjournment
thereof. Kelly Russell has only one  class of capital stock outstanding,  Common
Stock,  $.01 par value  per share. As  of the Record  Date, there were 4,082,373
shares of  Kelly Russell  Common  Stock outstanding  held by  approximately  127
holders  of record. Based  on information which Kelly  Russell has obtained from
its transfer agent, there  are approximately 630  shareholders of Kelly  Russell
Common  Stock whose  stock is  held either  in nominee  name and/or  street name
brokerage accounts. The holders of record on the Record Date of shares of  Kelly
Russell  Common Stock  are entitled to  one vote  per share at  the Meeting. The
presence at the Meeting in  person or by proxy of  the holders of a majority  of
the  outstanding shares  of Kelly  Russell Common  Stock entitled  to vote shall
constitute a quorum for the transaction of business. The affirmative vote of the
holders of a majority of the outstanding shares of Kelly Russell Common Stock is
required  for  approval  of  the  KRSI   Merger.  See  "The  KRSI  Merger,   the
Reorganization  and the Private  Placement -- Vote Required  to Approve the KRSI
Merger."                                                                        

    A proxy  card  is enclosed  for  use  by Kelly  Russell  shareholders.  Such
shareholders  are solicited on behalf of the Board of Directors of Kelly Russell
to SIGN AND RETURN THE  PROXY CARD IN THE  ACCOMPANYING ENVELOPE. No postage  is
required  if  mailed  within  the  United  States.  QUESTIONS  OR  REQUESTS  FOR
ASSISTANCE IN COMPLETING AND SUBMITTING PROXY  CARDS MAY BE DIRECTED TO  WILLIAM
J.  RIGHEIMER,  CHIEF FINANCIAL  OFFICER  OF KELLY  RUSSELL,  AT THE  ADDRESS OR
TELEPHONE NUMBER LISTED ON THE COVER OF THIS PROXY STATEMENT/PROSPECTUS.        

    All properly executed proxies  not revoked will be  voted at the Meeting  in
accordance  with  the  instructions  contained  therein.  Proxies  containing no
instructions will  be voted  in favor  of approval  of the  Merger Agreement.  A
shareholder  who has  executed and returned  a proxy  may revoke it  at any time
before it is voted, but only by executing and returning a proxy bearing a  later
date  or, by giving written notice of revocation to an officer of Kelly Russell.
Abstentions will be  treated as  shares present  for purposes  of determining  a
quorum  for the Meeting but will have the same effect as a vote against approval
of the Merger Agreement. If a broker or other record holder or nominee indicates
on a proxy that it does not have direction or authority as to certain shares  to
vote  on the Merger  Agreement, those certain  shares will not  be considered as
present at the Meeting with respect to the vote on the Merger Agreement.        

    If any  other  matters  are  properly presented  for  consideration  at  the
Meeting,  the persons named in the enclosed  form of proxy and acting thereunder
will have  discretion to  vote on  such matters  in accordance  with their  best
judgment.                                                                       

    THE  BOARD  OF  DIRECTORS  OF  KELLY  RUSSELL  STUDIOS  RECOMMENDS  THAT THE
SHAREHOLDERS VOTE  FOR THE  APPROVAL  OF THE  MERGER  AGREEMENT. See  "The  KRSI
Merger,  the Reorganization  and the Private  Placement --  Interests of Certain
Persons in  the KRSI  Merger" for  a discussion  of conflicts  of interest  that
certain  directors and  members of management  have in connection  with the KRSI
Merger.                                                                         

    SHAREHOLDERS SHOULD  NOT  SEND THEIR  STOCK  CERTIFICATES WITH  THEIR  PROXY
CARDS.                                                                          

    In  addition to the solicitation  of proxies by use  of mail, the directors,
officers or regular  employees of  Kelly Russell may,  but without  compensation
other  than  their  regular  compensation,  solicit  proxies  personally  or  by
telephone or  facsimile. Such  directors,  officers and  employees will  not  be
additionally  compensated, but  may be  reimbursed for  reasonable out-of-pocket
expenses in connection  with such solicitation.  Each of Kelly  Russell and  the
Company shall pay the expenses and fees of their respective counsel, accountants
and  financial advisors in connection with  the preparation of this Registration

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Statement and the Proxy Statement/Prospectus. Kelly Russell and the Company have
agreed to share  equally all expenses  relating to the  printing and mailing  of
this Proxy Statement/Prospectus and the filing of it with the Commission and the
costs and fees of the Exchange Agent.                                           

    The  mailing  of this  Proxy Statement/Prospectus  to shareholders  of Kelly
Russell is expected to commence on or about August 2, 1996.                     

THE KRSI MERGER, THE REORGANIZATION AND THE PRIVATE PLACEMENT 

    SET FORTH  BELOW IS  A BRIEF  DESCRIPTION  OF CERTAIN  TERMS OF  THE  MERGER
AGREEMENT  AND RELATED  MATTERS. THIS  DESCRIPTION IS  COMPLETE IN  ALL MATERIAL
RESPECTS, BUT SHOULD BE READ IN CONJUNCTION WITH THE MERGER AGREEMENT, WHICH  IS
ATTACHED HERETO AS APPENDIX A AND IS INCORPORATED BY REFERENCE HEREIN.          

GENERAL                                                                         

    Kelly Russell, Global One, the Company, the OSP Shareholders, and the Global
One  Subsidiaries have entered into the  Merger Agreement, which provides, among
other things, that Kelly Russell will at  the Effective Time be merged with  and
into  KRSI Acquisition, and immediately prior  to the Effective Time the Company
will be merged with  and into OSP  Acquisition and BEx will  be merged with  and
into  BEx Acquisition. Promptly after the effective time of the KRSI Merger (the
"Effective Time"), KRSI  Acquisition, OSP Acquisition  and BEx Acquisition  will
change their respective names to, and conduct their respective businesses under,
the  names "Kelly Russell Studios, Inc.," "OSP Publishing, Inc." and "The Button
Exchange, Inc.,"  respectively. Each  two outstanding  shares of  Kelly  Russell
Common  Stock will be converted at the  Effective Time into the right to receive
one share of  Global One Common  Stock. In  addition, each share  of OSP  Common
Stock  issued and  outstanding immediately prior  to the Effective  Time will be
converted into the right to receive 3,941.37 shares of Global One Common Stock."

EFFECTIVE TIME OF THE KRSI MERGER AND THE REORGANIZATION                        

    As soon as  practicable after  the conditions  to consummation  of the  KRSI
Merger  described below  have been  satisfied or  waived, and  unless the Merger
Agreement has been terminated as provided below (i) certificates of merger  will
be  filed with the Secretaries of State of the States of Delaware and Minnesota,
at which time the KRSI Merger will become effective, (ii) certificates of merger
will be  filed with  the Secretaries  of State  of the  States of  Delaware  and
California  to effect the  OSP Merger and  (iii) certificates of  merger will be
filed with the Secretaries of  State of the States  of Delaware and Michigan  to
effect the BEx Merger. It is presently contemplated that the Effective Time will
be as soon as practicable after approval of the Merger Agreement at the Meeting.

BACKGROUND OF THE KRSI MERGER AND THE REORGANIZATION                            

    The   terms  of  the  Merger  Agreement   are  the  result  of  arm's-length
negotiations between  representatives  of  Kelly Russell  and  Global  One.  The
following  is a  brief discussion of  the background of  these negotiations, the
KRSI Merger and the Transactions.                                               

    During December 1994, after recording  a charge to operations of  $1,100,000
and  using cash in operating  activities in excess of  $3,700,000 in 1994, Kelly
Russell's Board of Directors hired  new management and completely revised  Kelly
Russell's  business  plan  and  operations.  See  "Kelly  Russell  Studios, Inc.
Management's Discussion  and  Analysis of  Financial  Condition and  Results  of
Operations."                                                                    

    Although  Kelly Russell's operations improved in 1995, anticipated sales and
profitability  failed  to  materialize.  Kelly  Russell's  sales  improved  only
nominally while its losses were reduced from $5,216,000 in 1994 to $1,543,000 in
1995.  In  addition, Kelly  Russell  used in  excess  of $2,200,000  of  cash in
operating activities in 1995.                                                   

    In February 1996, Kelly Russell took steps to reduce operating costs through
the termination of several employees and limiting the number of sports images it
would market. In its Form 10-KSB for                                            

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1995, Kelly  Russell  reported that  it  had explored  various  alternatives  to
generate  acceptable revenue growth  without success, and that  it would need to
obtain additional debt or  equity financing in order  to finance its  operations
through 1996.                                                                   

    In  September 1995,  George Vrabeck,  President of  Kelly Russell, contacted
Joseph Angard, President of the Company, to discuss whether the Company would be
interested in  being  acquired by  Kelly  Russell. Messrs.  Vrabeck  and  Angard
discussed the entertainment and sports licensing industry, exchanged their views
on  the  future  direction  of  entertainment  and  sports  licensing,  and then
discussed the possible advantages of  combining the two businesses. They  agreed
that it would be prudent for both companies to continue merger discussions.     

    In  October 1995, Mr. Angard authorized Mr. Vrabeck to contact the Company's
financial advisor, Tamarix  Capital Corporation ("Tamarix").  Mr. Vrabeck and  a
representative  of  Tamarix  had  a preliminary  discussion  about  the possible
combination of Kelly  Russell and  the Company. Following  this discussion,  Mr.
Vrabeck met with the Board of Directors of Kelly Russell on October 16, 1995 and
communicated  to  the  Board  of  Directors  his  reasons  for  instituting  the
discussions and the extent of the discussions with Mr. Angard and the  Company's
financial  advisor.  The  reasons  presented  by Mr.  Vrabeck  to  the  Board of
Directors as follows:                                                           

        1.  Kelly Russell could not compete in the entertainment market with the
Company because of the Company's licensing capabilities and contacts;   

        2.  Kelly Russell's  ability to expand sales  at an acceptable level  is
limited because it lacked sufficient distribution capabilities;         

        3.   Kelly Russell's original  art concept has a  better look, but it is
    expensive and  not  sufficiently  better  than  photograph  art  to  prevent
imitations;                                                             

        4.    Because  of  Kelly  Russell's  cost  structure,  it  cannot assure
profitability in 1996 even with a significant increase in sales;        

        5.  Kelly  Russell will require  additional debt or  equity funding,  or
both, to continue operations, and such funding cannot be assured; and   

        6.   The  combination of  the Company's  marketing, sales  and licensing
    expertise with Kelly  Russell's sports  licenses should result  in a  strong
sales driven company.                                                   

    The  Board of Directors  authorized Mr. Vrabeck  to continue the discussions
and agreed to retain Equisource as Kelly Russell's investment banker to  provide
the  Board with a fairness opinion that a merger with The Company would be fair,
from a financial point of view, to Kelly Russell shareholders.                  

    In early November  1995, Mr.  Vrabeck went to  California to  meet with  Mr.
Angard  and to  tour the  Company's facilities.  After inspecting  the Company's
California facility, Mr. Vrabeck and Mr.  Angard discussed the product lines  of
the  Company and Kelly Russell.  Mr. Vrabeck suggested to  Mr. Angard that Kelly
Russell's sport licenses and original art capability together with the Company's
entertainment licenses  and  strong  distribution  network  would  result  in  a
combined  company uniquely positioned for expansion.  Mr. Angard and Mr. Vrabeck
agreed that it  was in the  interest of both  companies to continue  discussions
about a possible combination of the Company and Kelly Russell.                  

    On  November 28, 1995, the Kelly Russell Board of Directors had a meeting at
which Kelly  Russell's management  presented certain  financial projections  for
Kelly  Russell.  Projections for  1995 and  1996  showed significant  losses and
negative cash flow. The Board expressed its disappointment with the  projections
and  began discussing  alternatives for Kelly  Russell to avoid  or minimize the
impact of  the projected  losses, including  the possible  combination of  Kelly
Russell  and the Company. The  Board of Directors agreed  that Kelly Russell and
the Company had definite synergies and that Kelly Russell would have  difficulty
competing    with    the    Company    in    the    entertainment    arena.   In

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November 1995, representatives of Equisource, Kelly Russell and Kelly  Russell's
legal  counsel  visited the  Company's California  facilities to  commence Kelly
Russell's due diligence investigation of the Company.                           

    On December 16, 1995, a representative of Equisource made a presentation  to
the  Kelly  Russell  Board of  Directors  regarding the  Company's  business and
indicated that the Company was interested in Kelly Russell's sports licenses and
original art,  its access  to Target  stores and  its management.  Concurrently,
representatives of Equisource and Tamarix began to discuss the specific terms of
a  combination of Kelly  Russell and the  Company. The Equisource representative
explained that  the  Company has  sales  of about  $40,000,000,  entrepreneurial
management,  strong  marketing  and  had  achieved  a  strong  position  in  the
entertainment licensing business.  The Equisource  representative also  reviewed
with  the Board  of Directors  the Company's  projected results  for 1996.  If a
combination of the Company and Kelly Russell were to occur, the Company proposed
that approximately  57%  of the  combined  company would  be  owned by  the  OSP
Shareholders, approximately 21% would be owned by Kelly Russell shareholders and
the  remaining 22%  of the  shares would  be sold  to new  investors. Equisource
advised the Kelly  Russell Board  of Directors that  the Company  was seeking  a
binding  letter of intent,  but the Kelly Russell  Board of Directors determined
that it was in the interest of both parties to proceed directly to a  definitive
agreement.                                                                      

    In  December 1995, representatives of Kelly  Russell and Equisource met with
representatives of Tamarix  to negotiate  the terms  of a  combination of  Kelly
Russell  and  the Company.  On December  27,  1995, the  Kelly Russell  Board of
Directors held  a  meeting via  telephone  conference. The  Board  of  Directors
reviewed  a  proposed term  sheet for  a  combination of  Kelly Russell  and the
Company. Extensive discussions  took place about  proposed warrants,  employment
agreements,  timing, outside financing,  the form of  a definitive agreement and
other matters.  Following  the discussion,  the  Board of  Directors  authorized
Equisource  to  submit  the  term  sheet  and,  if  accepted,  to  proceed  with
negotiation of  a  definitive  agreement,  subject to  Board  of  Directors  and
shareholder  approval. In late December 1995, representatives of the Company and
Tamarix visited Kelly Russell's Minneapolis facilities to inspect the  operation
and business of Kelly Russell and begin due diligence.                          

    Through January and early February 1996, Mr. Vrabeck made three trips to the
Company's  offices in California to continue negotiations and to discuss how the
combined companies  could cooperate  prior  to the  merger  and how  they  would
operate after the merger. In late February 1996, representatives of the Company,
Tamarix  and the Company's legal counsel and accountants continued the Company's
due diligence investigation of Kelly Russell in Minneapolis.                    

    On February 20,  1996, the  Kelly Russell Board  of Directors  met. Also  in
attendance  at  the meeting  were representatives  of  Miller, Johnson  & Kuehn,
Incorporated ("MJK"). Lower than projected sales from November through  February
had  resulted  in a  cash shortage  for Kelly  Russell. The  MJK representatives
informed the  Board  of  Directors  that  MJK  would  be  reluctant  to  provide
additional  funding  to  Kelly  Russell. The  directors  expressed  their strong
concerns about Kelly Russell's financial position and its ability to continue to
fund operations. The Board of  Directors instructed Kelly Russell management  to
immediately  reduce costs and authorized management to use the Company to assist
with sales  distribution. The  Board  of Directors  reiterated its  interest  in
moving as quickly as possible to a Merger Agreement.                            

    In March, 1996, the Equisource representative advised the Board of Directors
that  the proposed combination of Kelly Russell and the Company was fair, from a
financial point  of  view, to  the  Kelly Russell  shareholders.  After  further
negotiations with representatives of the Company, the parties signed the initial
merger  agreement.  On March  27,  1996, Kelly  Russell  issued a  press release
announcing the execution  of a merger  agreement between Kelly  Russell and  the
Company.  Subsequent to such date, the parties reevaluated the planned structure
of the  resulting  entity  contemplated  in the  initial  merger  agreement  and
determined  that the  optimal corporate structure  for the parties  would be for
OSP, BEx  and  Kelly  Russell  to operate  as  wholly-owned  subsidiaries  of  a
newly-formed holding company and for each of the corporations to be incorporated
in Delaware. Therefore, on May 28, 1996,                                        

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the  Merger  Agreement  was  amended  and restated  to  reflect  changes  in the
structure of the transaction pursuant to which the parties agreed to merge  OSP,
BEx and Kelly Russell into the Global One Subsidiaries.                         

    On  May 1, 1996, the Board of  Directors of Kelly Russell reviewed the final
terms of  the Merger  Agreement  with OSP,  reviewed  in detail  the  Equisource
fairness  opinion documentation  and ratified  and confirmed  the initial merger
agreement executed by Kelly Russell and OSP on March 27, 1996. On May 22,  1996,
by  written action, the  Kelly Russell Board of  Directors reviewed and approved
the Merger Agreement.                                                           

THE PRIVATE PLACEMENT                                                           

    In anticipation of the KRSI Merger and Reorganization, Global One  undertook
the  Private Placement in order to  provide additional working capital to Global
One and to pay an accrued dividend to OSP Shareholders. The Private Placement is
expected to provide to  Global One net proceeds  of approximately $1.8  million,
after paying the $1.75 million dividend, repaying $375,000 of subordinated debt,
taking  into  account the  approximately $2.2  million in  costs related  to the
Transactions and  paying an  additional dividend  of approximately  $600,000  to
permit  the OSP Shareholders to pay their respective tax liabilities incurred as
a result of OSP's operating results during 1995. The subscription period for the
Private Placement  ended  on  May  28,  1996.  The  Private  Placement  will  be
consummated concurrently with the Reorganization and the KRSI Merger at a single
closing  to take place as soon as practicable following the approval of the KRSI
Merger by the requisite vote of the Kelly Russell shareholders at the Meeting.  

KELLY RUSSELL REASONS FOR THE KRSI MERGER; RECOMMENDATION OF THE KELLY RUSSELL  
BOARD OF DIRECTORS                                                              

    The Kelly Russell Board of Directors believes that the KRSI Merger is in the
best interests of Kelly Russell  shareholders and unanimously recommends to  its
shareholders   that  they  vote  FOR  approval  of  the  Merger  Agreement.  See
"--Interests of  Certain  Persons  in  the KRSI  Merger"  for  a  discussion  of
conflicts  of interest that certain directors  and members of management have in
connection with  the  KRSI Merger.  In  reaching these  conclusions,  the  Kelly
Russell  Board of  Directors considered  the continuing  financial and operation
problems affecting Kelly Russell as well  as the opportunities presented by  the
proposed  KRSI Merger. The Board of  Directors recognized that Kelly Russell has
not been  able to  effectively  compete in  the  entertainment market  with  the
Company  because of the Company's licensing capabilities and contacts. Moreover,
the Board  of  Directors reasoned  that  Kelly Russell's  lack  of  distribution
capabilities  has hindered its  ability to expand sales  to an acceptable level.
Although Kelly Russell's original art concept results in an attractive  product,
the Board of Directors concluded that the expense of such products and inability
to  prevent  imitations  are  disadvantages. The  Board  of  Directors  was also
concerned about Kelly Russell's ability to continue independent operations given
its financial  condition.  Even with  a  significant increase  in  sales,  Kelly
Russell could not be assured of profitability in 1996 due to its cost structure.
Moreover  Kelly  Russell  will  require significant  additional  debt  or equity
funding, or both, to continue its operations, and the Board of Directors had  no
assurance  that  such funding  would  be available.  In  light of  the foregoing
operational and financial  difficulties, the Board  of Directors concluded  that
the   proposed  combination  with  the   Company  could  provide  an  attractive
alternative for  the  Kelly  Russell's  shareholders.  The  Board  of  Directors
believes  that the shareholders will benefit from the synergies that result from
the combination of the Company's  marketing, sales and licensing expertise  with
Kelly  Russell's sports' licenses.  These factors, together  with the opinion of
Equisource stating that the KRSI Merger is fair, from a financial point of view,
to the shareholders of Kelly Russell,  are the key reasons underlying the  Board
of   Directors'  decision  to   approve  the  transaction   and  recommend  that
shareholders approve as well.  See "-- Kelly  Russell's Financial Advisors"  and
"Market  Price of and Dividends on OSP Common Stock, Global One Common Stock and
Kelly Russell Common Stock."                                                    

THE COMPANY'S REASONS FOR THE KRSI MERGER AND REORGANIZATION                    

    The Company's management believes that OSP is the largest domestic publisher
and  distributor  of  licensed  posters.  In  addition,  the  Company  develops,
publishes and distributes an extensive product                                  

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line  of  novelty and  gift  items, including  framed  and unframed  wall decor,
buttons, key chains, stickers,  movie scripts, T-shirts and  hats, all of  which
are  licensed products. Currently, the Company's only significant involvement in
the sports-related  licensed products  industry consists  of distributing  other
licensee's  posters. The Company believes that  expansion of this segment of the
market into publication and distribution of its own licensed products represents
a significant business opportunity and is a natural complement to the  Company's
existing product lines.                                                         

    The  Company  believes  that the  KRSI  Merger presents  the  opportunity to
combine the  complementary  product lines  of  the existing  businesses  of  the
Company  and Kelly Russell. The  KRSI Merger will enable  Global One to increase
immediately the  array of  products  available to  customers  and to  enter  the
sports-related licensed products business through acquisition of Kelly Russell's
existing  licenses. Additionally, the  Company believes that  Global One will be
well-positioned to more effectively promote the sale of Kelly Russell's products
through the  Company's  current distribution  channels,  and that  the  combined
operations  will result  in greater  diversification opportunities  and enhanced
market penetration. The Company  believes that the  shareholders of the  Company
and  Kelly Russell will benefit from the synergies achieved as a result of using
the  Company's  existing  distribution  channels   to  market  the  sports   and
entertainment  products  that Kelly  Russell  licenses. Kelly  Russell's current
shareholder base  will also  enable Global  One to  achieve more  immediate  and
widespread  dissemination of the Global One Common Stock as Global One positions
itself for future growth as a public company.                                   

    The Company is undertaking the Reorganization principally in connection with
the KRSI Merger. The  Company believes, in  light of the  KRSI Merger, that  the
reincorporation  of OSP and BEx as Delaware corporations and the organization of
these companies and  Kelly Russell  as wholly-owned subsidiaries  of Global  One
affords  the  combined entities  with  an advantageous  corporate  structure and
additional flexibility to manage future growth and transactions, compared with a
combination of these companies  into one surviving  entity. However, Global  One
will  in the future continue to evaluate  such structure and whether it would be
more favorable to reorganize or combine one or more of its subsidiaries.        

OPERATIONS AND MANAGEMENT AFTER THE TRANSACTIONS                                

    Global One's business strategy  is to generate  revenue and earnings  growth
through   successful  additional  market  penetration  with  existing  products,
acquisitions and  the introduction  of new  product lines  which complement  and
supplement existing product lines that can be sold through the Company's current
channels  of distribution. See  "Business of The  Company -- Business Strategy."
Following the Transactions,  Global One  will conduct its  business through  its
wholly  owned subsidiaries: OSP  Publishing, Inc., Kelly  Russell Studios, Inc.,
BEx  Corp.  and  OSP  Publishing,  Inc.'s  majority-owned  subsidiary,   Stanley
DeSantis,  Inc. It is anticipated that additional subsidiaries may be added as a
result of future acquisitions of other  companies and/or product lines that  are
consistent  with  Global  One's business  and  growth strategy.  Global  One may
conduct its various businesses either  through operating subsidiaries of  Global
One or through separate operating divisions of Global One or its subsidiaries.  

    The  Merger Agreement provides  that, immediately after  the Effective Time,
the directors of Global One shall be Joseph C. Angard, Michael A. Malm, Mark  S.
Hauser  and  Thomas  R.  King.  The  Merger  Agreement  further  provides  that,
immediately after the Effective  Time, the officers of  Global One shall be  the
initial  officers of  Global One,  plus George  J. Vrabeck,  who shall  serve as
Executive Vice President. Joseph C. Angard will serve as Chairman of the  Board,
Chief  Executive Officer and President of Global One; Michael A. Malm will serve
as Chief  Operating Officer  of Global  One  and President  of OSP;  Stanley  J.
DeSantis will serve as President of SDI; Christopher B. Lucas will serve as Vice
President-Finance  and Chief Financial Officer of  Global One; and Michael Berin
will serve as Vice President for Sales of OSP. Messrs. Angard, Malm, Vrabeck and
DeSantis will enter into employment agreements at or prior to the Effective Time
of the KRSI Merger  on the terms  described under "Management  of Global One  --
Employment Agreements."                                                         

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KELLY RUSSELL'S FINANCIAL ADVISORS                                              

    Kelly  Russell has retained Equisource to provide an opinion to the Board of
Directors as to the fairness  of the consideration to  be received by the  Kelly
Russell  shareholders  in  connection with  the  KRSI Merger.  Equisource  is an
investment banking firm continually engaged  in the valuation of businesses  and
their  securities in connection with mergers, acquisitions, sales of securities,
and valuation for estate, corporate and other purposes. Equisource was  selected
by  Kelly Russell  on the basis  of its  familiarity with the  industry in which
Kelly Russell and the Company operate.                                          

    As described  above  under  "--  Background  of  the  KRSI  Merger  and  the
Reorganization,"  a  representative  of  Equisource  assisted  Kelly  Russell in
negotiating the terms  of the KRSI  Merger and  in evaluating the  Company as  a
merger   candidate.  In  March  1996,  Equisource  preliminarily  advised  Kelly
Russell's Board of Directors that, subject to completion of its formal  analysis
supporting  the merger terms,  Equisource believed that  the consideration to be
received in the KRSI Merger  is fair to the  Kelly Russell shareholders from  an
financial  point  of view.  In  April 1996,  Equisource  delivered to  the Board
members a  Confidential Memorandum  setting forth  the methodology  employed  to
support its opinion together with information supporting the opinion. On May 28,
1996  Equisource  delivered  to  the  Board  of  Directors  Equisource's written
opinion. A copy of the  May 28, 1996 opinion is  attached as Appendix B to  this
Proxy Statement/Prospectus.                                                     

    No  limitations were imposed on Equisource with  respect to the scope of its
investigation. Equisource  relied, without  independent verification,  upon  the
accuracy,  completeness and fairness of all  the financial and other information
provided by  Kelly  Russell and  the  Company  or otherwise  made  available  to
Equisource  for purposes of  its opinion. Equisource was  not furnished with any
independent appraisal  of the  assets or  liabilities of  Kelly Russell  or  the
Company.  In addition, Equisource  does not express any  opinion with respect to
the Private Placement or  the Reorganization to be  completed as a condition  to
the Closing of the KRSI Merger.                                                 

    For  purposes of  its opinion, Equisource  reviewed: (i)  the initial merger
agreement and  the Merger  Agreement; (ii)  historical financial  statements  of
Kelly Russell and the Company; (iii) certain financial and operating information
for  the  Company, including  forecasts provided  by  the Company;  (iv) certain
financial  and  operating  information  relating  to  Kelly  Russell,  including
forecasts  internally provided by Kelly  Russell's management; (v) public market
price information and trading  volumes for the Kelly  Russell Common Stock  from
March 31, 1994 to April 3, 1996; (vi) the operating results, financial condition
and  market performance  of various companies  with publicly  traded stock which
Equisource deemed to be engaged in  businesses similar to Kelly Russell and  the
Company;   and  (vii)  such  other  information,  analyses,  investigations  and
financial, economic  and market  criteria as  Equisource deemed  relevant.  With
respect to the financial forecasts for the Company and Kelly Russell provided by
the  Company's and  Kelly Russell's  managements, upon  their advice, Equisource
assumed for purposes of its opinion that such forecasts were reasonably prepared
reflecting the best available estimates and judgments of the Company's and Kelly
Russell's managements as to the future performance of the respective  companies,
and  that they  form a  reasonable basis  upon which  Equisource could  form its
opinion. Neither  the  Company nor  Kelly  Russell publicly  discloses  internal
management  forecasts  of the  type provided  to  Equisource in  connection with
Equisource's review  of the  proposed transaction  and such  forecasts were  not
prepared  with a view toward public disclosure. In addition, such forecasts were
based upon numerous  variables and  assumptions that  are inherently  uncertain,
including,   without  limitation,  factors  related   to  general  economic  and
competitive conditions.  Accordingly, actual  results could  vary  significantly
from  those set forth in such forecasts. Equisource has assumed no liability for
such forecasts.                                                                 

    In conducting the  review and  in performing the  analyses described  below,
Equisource  did  not  attribute  any particular  weight  to  any  information or
analysis considered  by it  but rather  made qualitative  judgements as  to  the
significance  and relevance of each factor and analysis. Accordingly, Equisource
believes that  the  information reviewed  and  the analysis  conducted  must  be
considered as a                                                                 

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whole  and that considering any portion  of such information or analysis without
considering all of such  information and analysis could  create a misleading  or
incomplete view of the process underlying the opinion.                          

    Equisource  utilized  various valuation  methods to  determine the  value of
Kelly Russell  apart  from the  KRSI  Merger. Equisource  analyzed  the  trading
history  of Kelly Russell Common Stock including its price and trading volume to
determine (i) the relative reasonableness of  the market price of Kelly  Russell
Common  Stock and (ii)  whether the market  value of Kelly  Russell Common Stock
provided a  valid  basis  for  determining the  fairness  of  the  KRSI  Merger.
Equisource  analyzed  the  trading history  of  Kelly  Russell in  light  of the
following information:                                                          

        1.  The limited  trading volume of Kelly  Russell Common Stock which  is
largely conducted by a single market maker;                             

        2.  The issuance of Units (consisting of one share of Common Stock and a
    Warrant  to purchase  one share  of Common Stock)  at $1.00  per Unit during
    Kelly Russell's  first quarter  in  1995 while  the  market price  of  Kelly
Russell Common Stock traded at prices exceeding $2.875 per share;       

        3.    Confidential  information  provided by  Kelly  Russell,  which was
    subsequently disclosed in April,  1996 in Kelly  Russell's Annual Report  on
    Form  10-KSB  for  the  year  ended  December  31,  1995.  Such confidential
    information included preliminary  results of operations  for the year  ended
    December  31, 1995, analysis  of the sufficiency  of Kelly Russell's working
    capital and its  need for additional  working capital in  order to  continue
    operations,  and the  intention of  Kelly Russell's  independent auditors to
    include an  explanatory paragraph  relating to  Kelly Russell's  ability  to
continue as a going concern.                                            

In  light  of the  information above,  Equisource  concluded that  quoted market
prices for Kelly Russell Common Stock were not reasonable and did not provide  a
valid  basis for determining  the fairness of the  proposed transaction to Kelly
Russell shareholders.                                                           

    To  determine  the  value  of  Kelly  Russell,  Equisource  considered   the
information  in  the preceding  paragraph,  reviewed Kelly  Russell's historical
performance, reviewed management  projections for  fiscal year  ended 1996,  and
made subjective evaluations as to the value of licenses held by Kelly Russell.  

    Equisource  conducted discussions with  Kelly Russell's management regarding
Kelly Russell's projected performance for fiscal year 1996, and Kelly  Russell's
ability  to  continue as  a going  concern in  light of  its inability  to raise
additional working  capital.  Kelly  Russell  projected  an  operating  loss  of
approximately $525,000 on sales of $5,000,000 for fiscal year ended December 31,
1996.  Such projection  assumed that Kelly  Russell raised at  least $500,000 in
additional working capital. Kelly Russell management informed Equisource that it
had not secured a source for additional financing and that there was a risk that
Kelly Russell would not be able to obtain financing from any source as a  result
of Kelly Russell's historical and projected performance. As a result, Equisource
concluded that, without additional working capital Kelly Russell may not be able
to  continue as going concern and  fully exploit its licenses, which constitutes
the basis of its business.                                                      

    Finally, Equisource reviewed and made  a subjective determination as to  the
value  of licenses held by Kelly  Russell. Equisource concluded that because the
licenses held by Kelly Russell are generally non-transferable, except in limited
circumstances, their  value to  Kelly  Russell apart  from  the KRSI  Merger  or
similar  transaction is limited, due to Kelly Russell's inability to continue to
exploit the  value  of the  licenses.  Although  Equisource did  not  conduct  a
detailed  appraisal of all of Kelly  Russell's assets, Equisource estimated that
the net realizable value of Kelly Russell  in the event of liquidation would  be
less  than $1,000,000,  or less than  $0.25 per share  for currently outstanding
Kelly Russell Common Stock.                                                     

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    Based on its analysis of the information above and various valuation methods
discussed below, Equisource determined that the value of the consideration to be
paid to Kelly  Russell shareholders  in the KRSI  Merger ranges  from $0.65  per
share  to $1.03 per share,  which is substantially less  than the public trading
price of $2.44  per share  on the  day preceding  the announcement  of the  KRSI
Merger. Equisource estimated the value of Kelly Russell immediately prior to the
announcement of the KRSI Merger to be less than $0.65 per share.                

    CONCURRENT  PRIVATE  PLACEMENT.    The Merger  Agreement  provides  that the
obligations of Kelly  Russell and  the Company  under the  Merger Agreement  are
subject to the condition, among others, that Global One shall have completed the
Private  Placement with  gross proceeds of  at least $6,000,000.  Global One has
received subscriptions from a limited number of accredited investors to  acquire
$6,756,351 (4,504,234 shares) of Global One Common Stock at a price of $1.50 per
share. In the KRSI Merger, each Kelly Russell shareholder will receive one share
of  Global One Common Stock for every  two shares of Kelly Russell Common Stock.
Using the price paid for each share of Global One Common Stock subscribed for in
the Private  Placement, the  Kelly Russell  Common Stock  currently  outstanding
would  have an  assumed value of  $0.75 per  share. In comparison,  on March 26,
1996, the last business day immediately preceding the public announcement of the
KRSI Merger, the closing sale price  for Kelly Russell Common Stock as  reported
on  the Nasdaq SmallCap Market was $2.44 per share and on May 28, 1996, the date
the final  Merger Agreement  was  executed, the  closing  sale price  for  Kelly
Russell Common Stock was $2.25 per share.                                       

    COMPARABLE  PUBLIC COMPANIES.  Equisource  reviewed and compared information
on eight public  companies it consider  to be engaged  in similar businesses  to
KRSI and OSP, together with general industry information, to develop a pro forma
stand  alone  valuation of  OSP as  a  public Company.  Based on  this analysis,
Equisource determined a  pro forma value  of $17,100,000 for  OSP. To  calculate
this  value, Equisource applied  a multiple of  20 to adjusted  1995 earnings of
$750,000, giving this result  a weighting of  80%. Equisource discounted  future
earnings  for 1996 by 30%  and applied the same  multiple to the discounted 1996
earnings, weighting this result  at 20%. To arrive  at adjusted net earnings  of
$750,000  for 1995, Equisource added $800,000 to the pre-tax income shown in the
preliminary audit, representing various extraordinary and nonrecurring expenses,
including owner compensation,  and have  assumed a  net additional  tax cost  of
$450,000  to reflect  income tax  treatment as  a C  corporation. Assuming Kelly
Russell has no immediate impact on  the earnings of the surviving company  after
the  KRSI Merger, the implied value of  Global One under this valuation approach
would be approximately $1.30 per share,  or $0.65 per share for Kelly  Russell's
currently outstanding shares.                                                   

    DISCOUNTED CASH FLOW ANALYSIS.  Equisource also reviewed estimated operating
results  for OSP for 1996 and 1997, as provided by OSP management, and applied a
discounted cash flow analysis  to calculate a present  value of $27,081,000.  To
account  for risk inherent in projections, Equisource applied a discount rate of
30% to 1996 and 1997 estimated earnings and a multiple of 15 times 1997 earnings
to arrive  at this  valuation. Equisource  assumed that  the projected  earnings
include  the addition  of Kelly  Russell's operations.  This method  indicates a
value of approximately $2.05 per share,  or $1.03 per share for Kelly  Russell's
currently outstanding shares.                                                   

    PROJECTED  MARKET  PRICES.   In addition  to  the above  analysis Equisource
projected per share prices for Global One common stock using estimated 1996  and
1997  earnings, discounted  at 30%, with  various multiples within  the range of
existing and projected industry performance. At  a multiple of 15 the  indicated
prices would be $1.50 per share at the end of 1996 and $1.83 at the end of 1997.
At  a multiple of 20 the prices would be $2.00 and $2.45 per share at the end of
1996 and 1997, respectively, and at a  multiple of 25 the prices would be  $2.50
and $3.06 per share at the end of 1996 and 1997, respectively.                  

    Based  on its analysis, Equisource  concluded that the consideration offered
to Kelly Russell shareholders in connection with the KRSI Merger is fair from  a
financial point of view to the Kelly                                            

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Russell  shareholders. Equisource believes its analysis supports this conclusion
even at the lower  valuations established by its  analysis due to the  difficult
financial  position of  Kelly Russell  when considered  apart from  the proposed
transaction.                                                                    

    On October 16, 1995, Kelly Russell entered into Financial Advisory Agreement
with Equisource that required payment of a non-reimbursable retainer of  $15,000
which  was paid on execution of the agreement and also provided for payment of a
fee to  Equisource  contingent  upon  the closing  of  a  transaction  described
therein.  Upon  the Closing,  Equisource  will be  paid  a fee  of  $365,000. In
addition to the cash fee, Equisource  will receive warrants for the purchase  of
up  to 275,000 shares of  Global One Common Stock at  an exercise price of $1.50
per share.                                                                      

    Since Equisource  is  entitled to  a  substantial fee  contingent  upon  the
Closing of the KRSI Merger, Equisource's determination as to the fairness of the
KRSI  Merger to the Kelly  Russell shareholders may have  been influenced by the
financial advantages to Equisource  which would result from  the Closing of  the
KRSI  Merger. A completely  objective financial advisor  may have made different
assumptions or conducted a  different analysis than those  made or conducted  by
Equisource  and may have reached  different conclusions. Nevertheless, the Board
of Directors  of  Kelly Russell  believes  that  shareholders may  rely  on  the
Equisource  fairness opinion  because the Board  believes that  the analysis set
forth in such opinion  is reasonable and persuasive.  Factors considered by  the
Board   in  reaching  this  determination  include,  but  are  not  limited  to,
Equisource's  use   of   multiples   consistent   with   those   applicable   to
publicly-traded  companies deemed  similar to  the Company,  Equisource's use of
discount rates  which  the  Board  judged  to  be  reasonable  given  the  risks
associated  with the Company's  business, Equisource's use  of valuation methods
which the  Board considered  appropriate  and the  expertise and  reputation  of
Equisource.                                                                     

VOTE REQUIRED TO APPROVE THE KRSI MERGER                                        

    Approval  of the KRSI Merger requires the affirmative vote of the holders of
a majority of the outstanding shares of Kelly Russell Common Stock. Each  holder
of  Kelly Russell Common Stock outstanding as  of the Record Date is entitled to
one vote for each share held. On the Record Date, there were 4,082,373 shares of
Kelly  Russell  Common  Stock  outstanding.  Of  such  shares,  477,166   shares
(approximately  10.7% of the  outstanding shares of  Kelly Russell Common Stock)
are held by directors and executive officers of Kelly Russell, all of whom  have
indicated they plan to vote in favor of approval of the Merger Agreement.       

CONVERSION OF KELLY RUSSELL COMMON STOCK IN THE KRSI MERGER                     

    At  the Effective Time, each two shares of Kelly Russell Common Stock issued
and outstanding immediately prior thereto, will be automatically converted  into
the  right to receive  one share (the  "Conversion Ratio") of  Global One Common
Stock. The  total  number  of  Global  One  shares  issuable  to  Kelly  Russell
shareholders  in  the  KRSI Merger  will  represent approximately  15.7%  of the
approximately 12,993,509  shares  of  Global  One  Common  Stock  that  will  be
outstanding  after consummation  of the KRSI  Merger, assuming  no Kelly Russell
shareholders dissent from  the KRSI Merger,  no effect is  given to options  and
warrants  to be outstanding after the KRSI Merger, and no outstanding options or
warrants to  acquire shares  of the  Common Stock  of the  Company ("OSP  Common
Stock")  or Kelly Russell  Common Stock are  exercised or canceled  prior to the
Effective Time.                                                                 

TREATMENT OF KELLY RUSSELL OPTIONS AND WARRANTS                                 

    After the Effective Time, all of the options and warrants to purchase  Kelly
Russell  Common Stock will continue to have  and be subject to substantially the
same terms and  conditions, except that  (i) each such  option and warrant  will
become  fully vested and be exercisable for  that number of shares of Global One
Common Stock which  equals the number  of shares of  Kelly Russell Common  Stock
covered  by  such option  and warrant  immediately prior  to the  Effective Time
divided by two  (2) and rounded  up to the  nearest whole number;  and (ii)  the
exercise  price per  share under  each such option  and warrant  shall equal the
exercise price before the KRSI Merger multiplied  by two (2) and rounded to  the
nearest cent.                                                                   

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CONVERSION OF OSP COMMON STOCK AND WARRANTS IN THE REORGANIZATION               

    The  OSP Merger and the BEx Merger will be effected immediately prior to the
Effective Time of the  KRSI Merger. Each  share of OSP  Common Stock issued  and
outstanding  at the effective time of the  OSP Merger will be converted into the
right to receive the number  of shares of Global One  Common Stock equal to  the
Exchange  Ratio. The Exchange Ratio means  the number determined by dividing the
sum of (a)  fifty percent (50%)  of the  amount of fully  diluted Kelly  Russell
shares  plus (b)  the amount of  Global One  Common Stock issued  in the Private
Placement not in excess of 4,000,000, by the sum of (y) the number of shares  of
OSP Common Stock outstanding immediately prior to the Effective Time and (z) the
number  of shares of OSP Common Stock  that would be issued immediately prior to
the Effective Time if all the outstanding warrants, options and any other rights
to acquire OSP  Common Stock  were exercised  at such  time. Each  share of  BEx
Common Stock issued and outstanding at the effective time of the BEx Merger will
be  canceled  and cease  to be  outstanding.  All of  the outstanding  rights to
purchase OSP Common Stock  outstanding at the effective  time of the OSP  Merger
will  be converted into the  right to acquire shares  of Global One Common Stock
substantially on the same terms and conditions according to the above formula.  

    Pursuant to the above formula, at the Effective Time, it is anticipated that
the Exchange Ratio will be 3,941.374 (based on 1,636 shares of OSP Common  Stock
outstanding  immediately  prior to  the Effective  Time),  and therefore  of the
approximately 12,993,509  shares  of  Global  One  Common  Stock  that  will  be
outstanding  after consummation  of the KRSI  Merger, 6,448,088  shares or 49.6%
will be held by the OSP Shareholders, 2,041,187 shares or 15.7% will be held  by
the  Kelly Russell shareholders, and  4,504,234 shares or 34.7%  will be held by
the  investors  in  the  Private  Placement,  assuming  that  no  Kelly  Russell
shareholders  dissent from the  KRSI Merger, no  effect is given  to options and
warrants to be outstanding after the KRSI Merger, and no outstanding options  or
warrants  to acquire shares OSP  Common Stock or Kelly  Russell Common Stock are
exercised or canceled prior to the Effective Time.                              

TREATMENT OF COMMON STOCK, OPTIONS AND WARRANTS OF GLOBAL ONE FOLLOWING THE KRSI
MERGER                                                                          

    Each share of  Global One  Common Stock issued  and outstanding  immediately
prior  to the Effective Time  of the KRSI Merger  will remain outstanding. There
are no Global One options and warrants outstanding.                             

EXCHANGE OF CERTIFICATES IN THE KRSI MERGER                                     

    As soon  as  possible  after  the  Effective  Time,  Norwest  Bank  National
Association  (the "Exchange  Agent") will mail  a letter of  transmittal to each
holder of  record of  Kelly  Russell Common  Stock which  evidenced  outstanding
shares  of Kelly Russell immediately prior to  the Effective Time. The letter of
transmittal will include  instructions regarding the  surrender of  certificates
representing  shares of Kelly Russell Common  Stock in exchange for certificates
representing shares of Global One Common  Stock. Upon surrender to the  Exchange
Agent  of one or  more Kelly Russell  Common Stock certificates  from the record
holder, the Exchange Agent shall deliver to such holder one or more certificates
representing the appropriate number  of Global One shares  of Common Stock  such
holder has the right to receive pursuant to the KRSI Merger.                    

    No  Common Stock certificates  representing fractional shares  of Global One
Common Stock will be issued and no Global One dividend, stock split or  interest
will  relate to any fractional share. No fractional share interests will entitle
the owner thereof to vote or to any rights of a shareholder. In lieu of any such
fractional share, each  holder who  would be  entitled to  receive a  fractional
share  shall  receive one  additional share  of Global  One Common  Stock. KELLY
RUSSELL SHAREHOLDERS  ARE  REQUESTED NOT  TO  SURRENDER THEIR  CERTIFICATES  FOR
EXCHANGE UNTIL SUCH LETTER OF TRANSMITTAL AND INSTRUCTIONS ARE RECEIVED BY THEM.
After  the Effective Time and until surrendered as provided above, Kelly Russell
Common Stock certificates will be deemed to represent only the right to  receive
Global  One Common  Stock. The  holder of certificates  will not  be entitled to
receive dividends  or  any  other  distributions  from  Global  One  until  such
Certificates are so surrendered.                                                

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CONDUCT OF BUSINESS PENDING THE KRSI MERGER AND THE REORGANIZATION              

    Pursuant to the Merger Agreement, Kelly Russell, the Company, Global One and
the  Global One Subsidiaries have agreed that, prior to the Effective Time, each
will carry on its respective businesses  in the ordinary course consistent  with
past  practice, use its  reasonable best efforts to  preserve intact its present
business organization and  relationships with third  parties and keep  available
the services of its present officers and employees.                             

    In  addition,  Kelly Russell,  the Company,  Global One  and the  Global One
Subsidiaries have  each  agreed  that,  except as  contemplated  by  the  Merger
Agreement, prior to the Effective Time each will not, directly or indirectly, do
any  of the following without the prior  written consent of the other: (i) amend
its articles of  incorporation, certificate  of incorporation,  bylaws or  other
comparable  charter or organizational documents; (ii)  declare, set aside or pay
any dividends or make any distributions in respect of any of its capital  stock;
except the Company may declare a distribution to the OSP Shareholders in the sum
of  $1,750,000 and an additional amount anticipated to be approximately $600,000
for the payment  of the OSP  Shareholders' tax liability  for fiscal year  ended
December  31,  1995;  (iii)  acquire  or agree  to  acquire  (a)  by  merging or
consolidating with, or by purchasing a substantial portion of the assets of, any
business or any corporation or other business organization or division  thereof,
or  (b) any assets that are material individually or in the aggregate to each of
them, other than in the ordinary course of business; (iv) sell, lease,  license,
mortgage  or  otherwise  encumber or  subject  to  any lien  or  dispose  of any
properties or assets; (v) incur any indebtedness for borrowed money or guarantee
any such indebtedness  of another  person, issue  or sell  any debt  securities,
guarantee  any debt securities  of another person,  enter into a  "keep well" or
other agreement to maintain any financial statement condition of another  person
or  make any  other loans  or capital contribution  or investments  in any other
person, other than  to their  respective businesses or  employees in  accordance
with  past practice; (vi) make  or agree to make  any new capital expenditure or
expenditures which, individually, is in excess of $50,000 or, in the  aggregate,
are  in excess of  $100,000; (vii) make  any material tax  election or settle or
compromise any material tax liability; (viii) pay, discharge, settle or  satisfy
any  claims, liabilities  or obligations, other  than in the  ordinary course of
business consistent  with past  practice  or agree  to  modify in  any  material
respect,  any confidentiality, standstill or similar agreements to which each is
a party;  (ix) except  in the  ordinary  course of  business, modify,  amend  or
terminate  any material  contracts or  agreements to  which each  is a  party or
waive, lease  or  assign any  material  rights or  claims;  (x) enter  into  any
contracts,   agreements,   arrangements  or   understandings  relating   to  the
distribution, sale  or marketing  by third  parties of  any of  its products  or
products  licensed by it, except in the ordinary course of business; (xi) except
as required to  comply with  applicable law, or  as contemplated  by the  Merger
Agreement  adopt,  enter into,  terminate or  amend  any bonus,  profit sharing,
thrift, compensation,  stock  option,  restricted  stock,  pension,  retirement,
deferred  compensation or other plan, trust  arrangement or fund for the benefit
or welfare of any director, officer  or current or former employee, or  increase
in  any  manner  the compensation  or  benefits of,  or  pay any  bonus  to, any
director, officer or employee, except in  the normal course of business, or  pay
any  benefit not  provided under  a employee benefit  plan, or  grant any awards
under bonus, incentive, performance or other compensation plan or arrangement or
employee benefit plan (including the grant of stock options) or take any  action
to  fund or in any way secure the  payment of compensation or benefits under any
employee plan, contract or employee benefits plan; (xii) make any change in  any
method  of accounting,  accounting practice  or policy,  other than  required by
generally accepted accounting principles; or (xiii) authorize any of, or  commit
or agree to take any of the foregoing actions.                                  

CONDITIONS TO CONSUMMATION OF THE KRSI MERGER AND THE REORGANIZATION            

    The  respective  obligations  of  Kelly  Russell  and  KRSI  Acquisition  to
consummate the  KRSI Merger  are subject  to  satisfaction at  or prior  to  the
Effective  Time of a  number of conditions,  including, but not  limited to, the
following, any  or all  of  which may  be waived  by  mutual agreement  by  both
parties, in whole or in part, to the extent permitted by applicable law: (i) the
approval  by the  Kelly Russell shareholders  of the Merger  Agreement; (ii) the
closing by Global One of  the Private Placement of  its Common Stock raising  at
least  $6,000,000 in gross proceeds;  (iii) all authorizations, consents, orders
or approvals  of, or  declarations or  filings with,  or expiration  of  waiting
periods imposed by any                                                          

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governmental  entity shall have  been filed, expired or  been obtained; (iv) the
Registration Statement on Form S-4 pertaining to the KRSI Merger shall have been
declared  effective  by  the  Securities   and  Exchange  Commission;  (v)   the
consummation  of the KRSI  Merger and any other  transaction contemplated by the
KRSI Merger shall not be  prohibited by any injunction or  order of a court  and
there  shall not have been any action  taken that makes consummation of the KRSI
Merger illegal; and (vi) no action shall have been taken, and no statute,  rule,
regulation  or order shall  have been enacted, promulgated,  or issued or deemed
applicable to any part of the KRSI Merger by any governmental entity which would
make the consummation  of the  KRSI Merger illegal  or render  Kelly Russell  or
Global One unable to consummate the KRSI Merger.                                

    The  separate obligation of  Kelly Russell to consummate  the KRSI Merger is
also subject to the satisfaction of a number of additional conditions, including
the following, any or all  of which may be waived  by Kelly Russell in its  sole
discretion:  (i) each of the representations  and warranties of Global One, BEx,
the Company and the OSP Shareholders contained in the Merger Agreement shall  be
true  and correct in all respects as of  the date of the Merger Agreement and as
of the Closing, as though made as  of the Closing; (ii) Global One, the  Company
and  BEx  shall have  performed or  complied  in all  material respect  with all
agreements and covenants  required by the  Merger Agreement to  be performed  or
complied  with by each of  them on or prior to  the Effective Time; (iii) Global
One, the Company and BEx shall have obtained or received consents, approvals and
authorizations from certain licensors  and other third  parties; and (iv)  Kelly
Russell  shall have  received a fairness  opinion from Equisource  to the effect
that the KRSI Merger and other transactions contemplated in the Merger Agreement
are fair to the shareholders of Kelly Russell from a financial point of view.   

    The respective obligations  of the Company  and BEx to  consummate the  KRSI
Merger  are subject to the satisfaction of a number of conditions, including but
not limited to the following, any or all  of which may be waived by the  Company
and BEx in their sole discretion: (i) each of the representations and warranties
of  Kelly Russell contained in the Merger Agreement shall be true and correct in
all respects as of the  date of the Merger Agreement  and as of the Closing,  as
though  made  as of  the Closing;  (ii)  Kelly Russell  shall have  performed or
complied in all material respects with all agreements and covenants required  by
the  Merger Agreement to  be performed or  complied with by  Kelly Russell on or
prior to  the Closing;  (iii)  Kelly Russell  shall  have obtained  or  received
consents,  approvals and authorizations  from certain licensors  and other third
parties; and (vi) the Company shall have received a letter from Kelly  Russell's
independent  auditors or legal counsel  with respect to the  number of shares of
Kelly Russell  Common  Stock authorized  for  issuance in  the  Kelly  Russell's
minutes  and  the number  of shares  of  Kelly Russell  Common Stock  subject to
options and warrants to purchase them.                                          

AMENDMENT, WAIVER AND TERMINATION OF THE MERGER AGREEMENT                       

    Any of the terms and  conditions of the Merger  Agreement may be amended  by
written  agreement of the  parties at any  time before or  after approval of the
Merger Agreement  by  Kelly Russell  shareholders;  provided, however,  that  no
amendment  may be made  to the Merger  Agreement attached hereto  as Appendix A,
that would reduce the amount or change the type of consideration received by the
shareholders of  Kelly Russell  or the  Company upon  consummation of  the  KRSI
Merger, without shareholders' approval.                                         

    At  any time  prior to  the Effective Time,  Kelly Russell,  Global One, the
Company, the OSP Shareholders  and the Global One  Subsidiaries may: (i)  extend
the  time for the performance of any obligation  or other act of any other party
hereto,  (ii)  waive  any  inaccuracy  in  the  representations  and  warranties
contained  herein or in any document delivered pursuant to the Merger Agreement,
and (iii) waive  compliance with  any agreement  or condition  contained in  the
Merger Agreement. Agreements to extensions or waivers must be in writing.       

    The  Merger Agreement may be  terminated at any time  prior to the Effective
Time; either before or after approval  of the Merger Agreement by Kelly  Russell
shareholders:  (a) by mutual  written consent of Kelly  Russell and the Company;
(b)  by   Kelly   Russell   or   the   Company,   (i)   if   for   any   reason,

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the Effective Time has not occurred by August 31, 1996, or (ii) if any law makes
consummation  of the KRSI Merger  illegal or prohibited, or  (iii) if a court or
government entity issues an order, decree or ruling prohibiting the KRSI  Merger
and  such order, decree or  ruling became final and  unappealable; (c) by Global
One, (i) if Kelly  Russell's Board of Directors  withdraws, modifies or  changes
its   recommendation  of  the  KRSI  Merger,  (ii)  Kelly  Russell  receives  an
unsolicited competing proposal or tender offer or exchange offer for 25% or more
of Kelly Russell outstanding shares and its Board of Directors, either fails  to
terminate discussions with the proposal maker, accepts or takes no position with
respect  to  such proposal  or  offer, or  (iii)  any person  or  group acquires
beneficial ownership or the right to acquire beneficial ownership of 25% or more
of the then outstanding shares  of Kelly Russell; (d)  by Kelly Russell, if  its
Board  of  Directors  shall have  recommended  to its  shareholders  a competing
proposal; (e)  by either  Kelly Russell  or the  Company, if  the Kelly  Russell
shareholders  shall have failed to approve the KRSI Merger and Merger Agreement;
or (f)  by  the  Company  or  Kelly  Russell  upon  a  material  breach  of  any
representation,  warranty, covenant, or  agreement on the part  of the other set
forth in the  Merger Agreement which  has not been  cured or is  not curable  by
August 31, 1996.                                                                

    Under  certain  circumstances, Kelly  Russell  may become  obligated  to pay
liquidated damages in the amount of $250,000 to the Company. Such  circumstances
include: (i) the Effective Time has not occurred on or before August 31, 1996 as
a  result of material breach  of the Merger Agreement  by Kelly Russell; or (ii)
the failure of  Kelly Russell shareholders  to approve the  KRSI Merger. In  the
event  the  Company  receives  such liquidated  damages,  the  Company,  the OSP
Shareholders, Global One  and the  Global One  Subsidiaries may  not pursue  any
other  remedies  or  law or  equity  against  Kelly Russell.  Kelly  Russell has
delivered to the Escrow  Agent $125,000 and is  obligated to deliver the  Escrow
Agent  an additional $125,000, pursuant to an escrow agreement providing for the
delivery of such  funds to  the Company in  the event  the circumstances  listed
above should occur. See "-- Limitation on Negotiations."                        

EXPENSES AND FEES                                                               

    Fees  and expenses and out-of-pocket expenses incurred by Kelly Russell, the
Company and Global One  will be borne  by the party  that incurs such  expenses.
Additionally, all costs and expenses related to printing, filing and mailing the
Proxy Statement/Prospectus and all SEC and other regulatory filing fees incurred
in  connection with  the Proxy  Statement/Prospectus shall  be borne  equally by
Kelly Russell and the Company.                                                  

REPRESENTATION AND WARRANTIES                                                   

    The Merger Agreement contains various representations and warranties of  the
parties thereto. The Company, Global One and the Global One Subsidiaries jointly
and  severally represent  and warrant  as to  (i) their  corporate organization,
standing and power; (ii) their  respective subsidiaries; (iii) their  respective
authority  to execute  and deliver the  Merger Agreement  and its enforceability
with respect to the  Company, Global One and  the Global One Subsidiaries;  (iv)
the  absence  of  the  need  of  the Company,  Global  One  and  the  Global One
Subsidiaries to obtain approval or consent  by any governmental entity; (v)  the
non-contravention  of any articles or by-laws of the Company, Global One and the
Global One Subsidiaries, any law, judgment  or decree, or a breach or  violation
of  any agreement, license or creation of any lien on any assets of the Company,
Global One and the Global One Subsidiaries as a result of their execution of the
Merger Agreement; (vi) its capitalization;  (vii) the accuracy of the  Company's
financial  statements, and books and records;  (viii) the disclosure of material
transactions among Global One, the Company  and the Global One Subsidiaries  and
their affiliates and subsidiaries; (ix) the conduct of the Company's business in
the ordinary course, and the absence of certain changes since December 31, 1995;
(x)  pending or threatened litigation; (xi) payment of taxes; (xii) ownership of
particular assets; (xiii) the absence of certain labor disputes; (xiv) existence
of certain employee benefit plans and compliance with applicable laws; (xv)  the
possession  of all required licenses and  permits and compliance by the Company,
Global One and the Global One Subsidiaries with applicable laws; (xvi) existence
and fees of  brokers, finders and  investment bankers employed  by the  Company,
Global  One or the Global One Subsidiaries;  (xvii) the required vote of the OSP
Shareholders  necessary  to  approve  the  KRSI  Merger;  (xviii)  environmental
matters; (xix) the                                                              

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existence  and enforceability  of the Company's,  Global One's  and Global One's
Subsidiaries and their respective subsidiaries' intellectual property; (xx)  the
enforceability  and validity of material agreements  and the absence of defaults
under such agreements;  and (xxi)  insurance. The OSP  Shareholders jointly  and
severally  make representations and  warranties to (i),  (iii), (vi), (ix), (x),
(xvii) and (xviii) above.                                                       

    The Merger  Agreement  includes  representations  and  warranties  by  Kelly
Russell  as  to (i)  its corporate  organization, standing  and power;  (ii) its
authority to execute  and deliver  the Merger Agreement  and its  enforceability
with respect to Kelly Russell; (iii) the absence of the need of Kelly Russell to
obtain   approval   or   consent   by   any   governmental   entity;   (iv)  the
non-contravention of any articles or by-laws of Kelly Russell any law,  judgment
or decree, or a breach or violation of any agreement, license or creation of any
lien  on any assets of Kelly Russell as a result of Kelly Russell's execution of
the Merger  Agreement;  (v)  its  capitalization; (vi)  the  accuracy  of  Kelly
Russell's  financial  statements, information  contained  in certain  filings by
Kelly Russell  with the  SEC, and  books and  records; (vii)  the disclosure  of
material transactions among Kelly Russell and its affiliates; (viii) the conduct
of  Kelly Russell's business in the ordinary  course, and the absence of certain
changes since  December 31,  1995; (ix)  pending or  threatened litigation;  (x)
payment  of taxes;  (xi) ownership  of particular  assets; (xii)  the absence of
certain labor disputes; (xiii) existence  of certain employee benefit plans  and
compliance  with applicable laws; (xiv) the  possession of all required licenses
and permits and compliance by Kelly Russell with applicable laws; (xv) existence
and fees of brokers,  finder and investment bankers  employed by Kelly  Russell;
(xvi)  the required vote of Kelly  Russell shareholders necessary to approve the
KRSI  Merger;   (xvii)  environmental   matters;  (xviii)   the  existence   and
enforceability   of   Kelly   Russell's   intellectual   property;   (xix)   the
enforceability and validity of material  agreements and the absence of  defaults
under such agreements; and (xx) insurance.                                      

INTERESTS OF CERTAIN PERSONS IN THE KRSI MERGER                                 

EMPLOYMENT AGREEMENT WITH CERTAIN EXECUTIVE OFFICERS                    

    Mr.  Vrabeck will enter  into an employment agreement  with Global One which
provides for  the commencement  of an  employment relationship  with Global  One
immediately after the Effective Time (the "Vrabeck Employment Agreement"). Under
the  terms  of  the  Vrabeck  Employment  Agreement,  Mr.  Vrabeck  will provide
full-time services to  Global One as  Executive Vice President  for a three  (3)
year  term beginning at the  Effective Time. During the  period of Mr. Vrabeck's
employment, Global One shall pay him an initial base salary of $200,000, plus  a
bonus  equal to $25,000 annually and additional  bonus of up to $25,000 annually
if he attains certain performance targets  established by the Global One  Board.
In  addition, Global One shall issue to Mr. Vrabeck, options to purchase 300,000
shares of Common stock of the Company at $1.50 per share. Mr. Vrabeck shall also
be entitled to an automobile  allowance, annual vacation, health and  disability
insurance  provided by  Global One. If  Mr. Vrabeck is  terminated without cause
during the term  of his employment,  Mr. Vrabeck shall  be provided a  severance
payment  in the amount  of his base  salary, plus his  prorated guaranteed bonus
amount, continuous health insurance  coverage during the  remaining term of  the
Employment Agreement and immediate vesting of all unvested stock options granted
to  him. Mr. Vrabeck will  retain his current options  to purchase up to 200,000
shares of  Kelly Russell  Common Stock  which  at the  Effective Time  shall  be
converted  into options to  purchase 100,000 shares of  Global One Common Stock.
See "-- Treatment of Kelly Russell Options and Warrants."                       

    Global One has also agreed to  enter into employment agreements with  Joseph
C.  Angard, Michael A. Malm and Stanley  DeSantis. See "Management of Global One
-- Employment Agreements."                                                      

SERVICE AS A MEMBER OF GLOBAL ONE'S BOARD OF DIRECTORS                  

    Thomas R. King has served  as a director of  Kelly Russell since March  1995
and  Mr. King is a shareholder of Fredrikson  & Byron, P.A., which has served as
legal counsel to Kelly Russell, including  legal matters in connection with  the
KRSI   Merger.   Immediately   after   the  Effective   Time,   Mr.   King  will

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become a director of Global One. As a  director of Global One, Mr. King will  be
paid  an annual retainer of  $5,000, plus $1,500 per  board or committee meeting
attended, and annually will receive options  to purchase 5,000 shares of  Global
One Common Stock at an exercise price of $1.50 per share.                       

DIRECTORS' AND OFFICERS' INDEMNIFICATION AND INSURANCE                  

    The  Merger  Agreement  provides that  prior  to the  Effective  Time, Kelly
Russell shall  obtain directors'  and officers'  insurance coverage  to  provide
coverage  of the Company's and Global  One's officers and directors with respect
to claims  that may  be  asserted by  Kelly  Russell shareholders  or  creditors
arising in connection with the KRSI Merger.                                     

    Global  One and its shareholders  agree to keep in  effect the provisions in
Global One's  by-laws  with  respect  to exculpation  of  director  and  officer
liability  and indemnification  to the  fullest extent  permitted under Delaware
law. Global One agrees  to obtain directors' and  officers' insurance that  will
provide for a minimum of $5 million of coverage for any claim.                  

    Also,  at the  Effective Time, Global  One shall  enter into indemnification
agreements with each person who  is a director or  officer of Kelly Russell  and
the  Company  immediately  prior  to  the Effective  Time,  for  the  purpose of
indemnifying such person to the fullest extent permitted by Delaware law.       

AGREEMENTS WITH KELLY RUSSELL SHAREHOLDERS                              

    Global One entered into a Placement  Agent Agreement with MJK dated May  17,
1996.  Pursuant to  the Placement  Agent Agreement,  MJK served  as an  agent of
Global One in connection with  the Private Placement, the successful  completion
of  which is  a condition to  consummation of  the KRSI Merger.  At the Closing,
assuming that all  subscription proceeds are  received by Global  One, MJK  will
receive  commissions in the amount of  $610,635 and warrants to purchase 407,090
shares of Global One Common Stock at  $1.50 per share, as well as  reimbursement
of  its legal expenses in an amount estimated  to be not more than $10,000. D.B.
Johnson, a principal shareholder of Kelly  Russell, is an affiliate of MJK.  See
"Business  of  Kelly  Russell  Studios, Inc."  and  "Principal  Shareholders and
Management of Kelly Russell -- Certain Relationships and Related Transactions." 

LIMITATION ON NEGOTIATIONS                                                      

    The Merger Agreement provides that Kelly Russell, the Company and Global One
shall not and their respective officers, directors, agents and affiliates  shall
not  directly  or  indirectly  solicit,  encourage  or  authorize  any  inquiry,
proposals, offer  or possible  offer from  any person  relating to  any  merger,
consolidation,  or  other  combination,  acquisition or  purchase  of  all  or a
substantial portion of the assets of, or any equity interest in, Kelly  Russell,
the  Company or Global One: however, Kelly Russell may under certain conditions,
including receipt of a written opinion of legal counsel to Kelly Russell stating
that the Kelly Russell Board of Directors has a fiduciary obligations to do  so,
provide  any person with information, assistance or negotiate with such person a
proposal, offer or possible offer. In the  event that the Board of Directors  of
Kelly  Russell withholds or modifies its recommendation to its shareholders, the
KRSI Merger is  not consummated and  Kelly Russell enters  into an agreement  to
consummate  a competing transaction within one year after the Board's withdrawal
or modification, Kelly Russell shall pay the Company $500,000 in cash, including
the $250,000 held in escrow as liquidated damages. See "-- Amendment, Waiver and
Termination of the Merger Agreement."                                           

RESALE OF GLOBAL ONE COMMON STOCK                                               

    The Global  One Common  Stock issued  pursuant to  the KRSI  Merger will  be
freely  transferable under the  Securities Act, except for  shares issued to any
Kelly Russell shareholder who may be deemed to be an affiliate (an  "Affiliate")
of Kelly Russell and/or Global One for purposes of Rule 145 under the Securities
Act.   Affiliates  would  include  persons  (including  executive  officers  and
directors) who control, are controlled by, or are under common control with  (i)
Global  One or Kelly Russell at the time of the Meeting or (ii) Global One at or
after the Effective Time.                                                       

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    Rule 145 promulgated by the SEC under the Securities Act restricts the  sale
of Global One Common Stock received in the KRSI Merger by Affiliates and certain
of  their family  members and related  parties. Generally, during  the two years
following the Effective Time, Affiliates of Kelly Russell, provided they are not
Affiliates of Global One, may publicly  resell Global One Common Stock  received
by  them in the KRSI Merger, subject to  certain limitations as to the amount of
Global One Common Stock  sold by them  in any three-month period  and as to  the
manner  of sale. After the two-year period, such Affiliates of Kelly Russell who
are  not  Affiliates  of  Global  One  may  resell  their  shares  without  such
restrictions  so  long  as there  is  adequate current  public  information with
respect to Global One as required by Rule 144. Persons who become Affiliates  of
Global  One prior  to, at or  after the  Effective Time may  publicly resell the
Global One Common Stock received by them  in the KRSI Merger subject to  similar
limitations  and subject to  certain filing requirements  specified in Rule 144.
The ability of Affiliates to resell  shares of Global One Common Stock  received
in  the KRSI Merger under Rule 144 or 145 as summarized herein generally will be
subject to Global One having  satisfied its Exchange Act reporting  requirements
for  specified  periods prior  to the  time  of sale.  Affiliates also  would be
permitted to resell Global One Common Stock received in the KRSI Merger pursuant
to an  effective registration  statement  under the  Securities Act  or  another
available exemption from the Securities Act registration requirements.          

    THIS  PROXY STATEMENT/PROSPECTUS  DOES NOT COVER  ANY RESALES  OF GLOBAL ONE
COMMON STOCK RECEIVED BY PERSONS  WHO MAY BE DEEMED  TO BE AFFILIATES OF  GLOBAL
ONE OR KELLY RUSSELL.                                                           

ACCOUNTING TREATMENT OF THE KRSI MERGER                                         

    The KRSI Merger will be treated as a "purchase" for accounting and financial
reporting  purposes. Global  One will allocate  the purchase price  based on the
fair value of the assets acquired and the liabilities assumed. Goodwill  arising
from   the  KRSI  Merger  is  expected  to  be  amortized  over  10  years.  The
Reorganization will  be treated  as  a "pooling"  for accounting  and  financial
reporting purchases.                                                            

CERTAIN FEDERAL INCOME TAX CONSEQUENCES                                         

    THE  FOLLOWING  DISCUSSION  SUMMARIZES  THE  OPINION  OF  MANATT,  PHELPS  &
PHILLIPS, LLP TO THE COMPANY, KELLY RUSSELL, AND THE KELLY RUSSELL  SHAREHOLDERS
AS  TO CERTAIN TAX MATTERS,  AND IS COMPLETE IN  ALL MATERIAL RESPECTS. IT DEALS
ONLY WITH FEDERAL INCOME TAXES AND DOES  NOT DEAL WITH EVERY FEDERAL INCOME  TAX
ASPECT  OF THE  KRSI MERGER.  IT DOES  NOT DISCUSS  ANY STATE,  LOCAL OR FOREIGN
INCOME OR OTHER  TAXES. TAXPAYERS IN  SPECIAL CATEGORIES MAY  HAVE UNIQUE  RULES
APPLICABLE TO THEM THAT THIS DISCUSSION DOES NOT ADDRESS.                       

    Global  One will not apply  for a ruling from  the IRS regarding the federal
income tax consequences of the KRSI Merger. In recent years the IRS has  greatly
restricted  the issuance of private rulings  in the case of corporate formations
and  reorganizations.  Global  One   believes  that,  as   a  result  of   these
restrictions,  it is unlikely that the IRS  would issue a private ruling in this
case.                                                                           

    Global One  has  received  an  opinion of  counsel  from  Manatt,  Phelps  &
Phillips, LLP, that holders of Kelly Russell Common Stock who receive Global One
Common Stock in exchange for their Kelly Russell Common Stock will not recognize
gain  or loss as a result of receipt of Global One Common Stock, will tack their
holding periods for the  Kelly Russell Common Stock  in computing their  holding
periods for Global One Common Stock (assuming they hold the Kelly Russell Common
Stock  as capital  assets), and  will take  a substituted  basis for  Global One
Common Stock computed by reference to  the basis for their Kelly Russell  Common
Stock.  In the  opinion of counsel,  no gain or  loss will be  recognized at the
corporate level as a result of the KRSI Merger.                                 

    The view of counsel  of the transactions outlined  above is consistent  with
published  and private rulings  of the IRS.  Nevertheless, no absolute assurance
can be  given that  the IRS  will be  willing to  view the  transaction in  this
manner.                                                                         

    Kelly Russell also has a net operating loss carry forward for federal income
tax  purposes.  It  may  have  built-in loss  assets  as  well.  However,  it is
anticipated that the KRSI Merger will result in an                              

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"ownership change" for  Kelly Russell  which will restrict  the use  of the  net
operating loss carry forward and the built-in losses to offset income of members
of the Global One group of corporations after the Closing of the Transactions.  

INDEMNIFICATION                                                                 

    Global  One, the Company  and the OSP Shareholders  have agreed to indemnify
Kelly Russell  against  any damages,  losses,  costs and  expenses  incurred  in
connection  with any material breach by Global  One, the Company, the Global One
Subsidiaries or the OSP Shareholders of any of their respective representations,
warranties or covenants in  the Merger Agreement. Kelly  Russell may not  assert
claims for indemnification unless and until the aggregate of such claims exceeds
$50,000,  and any such claim must be asserted within one year from the Effective
Time of the KRSI Merger. Similarly, Kelly Russell has agreed to indemnify Global
One, the Company and the OSP Shareholders against all damages, losses, costs and
expenses incurred in connection with any material breach by Kelly Russell of any
of its representations, warranties and covenants in the Merger Agreement. Global
One,  the  Company  and  OSP  Shareholders   may  not  assert  any  claims   for
indemnification  against Kelly  Russell unless and  until the  aggregate of such
claims exceeds $50,000, and any such claim must be asserted within one year from
the Effective Time of the KRSI Merger.                                          

REGULATORY APPROVALS                                                            

    Kelly Russell  and  the  Company  are  not  aware  of  any  governmental  or
regulatory  requirements  relating to  consummation of  the  KRSI Merger  or the
proposals to be considered  at the Kelly Russell  meeting other than  compliance
with applicable federal and state securities laws.                              

RIGHTS OF DISSENTING SHAREHOLDERS                                               

    The  following discussion of the law  pertaining to dissenters' rights under
the Minnesota  Business Combination  Act ("MBCA")  is complete  in all  material
respects,  but  should be  read in  conjunction  with the  full text  of Section
302A.471 and 302A.473 of the MBCA  attached to this Proxy Statement as  APPENDIX
C.  ANY SHAREHOLDER WHO WISHES TO EXERCISE SUCH DISSENTERS' RIGHTS OR WHO WISHES
TO PRESERVE HIS OR HER RIGHT TO DO SO SHOULD REVIEW THE FOLLOWING DISCUSSION AND
APPENDIX C CAREFULLY  BECAUSE FAILURE  TO TIMELY  AND PROPERLY  COMPLY WITH  THE
PROCEDURES  SPECIFIED WILL  RESULT IN THE  LOSS OF DISSENTERS'  RIGHTS UNDER THE
MBCA.                                                                           

PROCEDURE TO PRESERVE DISSENTERS' RIGHTS                                

    Under Minnesota law, any  holder of Kelly Russell  Common Stock who  follows
the  procedures set forth  in Section 302A.473  of the MBCA  will be entitled to
receive payment in cash of the "fair value" of such shareholder's shares.       

    Under Section 302A.473  of the MBCA,  if a corporation  calls a  shareholder
meeting  at which a plan of merger to which such corporation is a party is to be
voted upon, the notice of the meeting must inform each shareholder of the  right
to dissent and must include a copy of sections 302A.471 and 302A.473 of the MBCA
and  a brief description of  the procedures to be  followed under such sections.
This Proxy Statement/Prospectus constitutes such  notice to the shareholders  of
Kelly  Russell and the applicable statutory  provisions of the MBCA are attached
to this Proxy Statement/Prospectus as APPENDIX C.                               

    The Merger Agreement must be  approved by the holders  of a majority of  the
outstanding  shares of Kelly  Russell Common Stock. A  shareholder who wishes to
exercise dissenters' rights must file with Kelly Russell before the vote on  the
Merger  Agreement a  written notice of  intent to  demand the fair  value of the
shares owned by such shareholder and must not vote his or her shares in favor of
the Merger Agreement.                                                           

    The "fair  value of  the shares"  means the  value of  the shares  of  Kelly
Russell immediately before the Effective Time of the KRSI Merger.               

    After  the proposed KRSI Merger has been approved by the Kelly Russell Board
and the Kelly Russell shareholders, Kelly Russell must send a written notice  to
all shareholders who have not voted                                             

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their  shares in  favor of the  Merger Agreement  and who have  filed with Kelly
Russell before the vote on  the Merger Agreement a  written notice of intent  to
demand  the fair value of the shares  owned by such shareholder. The notice from
Kelly Russell must contain:                                                     

        (1) The  address to  which  a demand  for  payment and  certificates  of
    certified  shares must be  sent in order  to obtain payment  and the date by
which they must be received;                                            

        (2) Any restrictions on transfer  of uncertified shares that will  apply
after the demand for payment is received;                               

        (3)  A form to be used to certify  the date on which the shareholder, or
    the beneficial owner on whose behalf the shareholder dissents, acquired  the
shares or an interest in them and to demand payment; and                

        (4)  A copy of  sections 302A.471 and  302A.473 of the  MBCA and a brief
description of the procedures to be followed under such sections.       

    In order  to receive  the fair  market  value of  the shares,  a  dissenting
shareholder  must demand payment and deposit  certificated shares or comply with
any restrictions on transfer of uncertificated  shares within 30 days after  the
notice  was given, but the  dissenter retains all other  rights of a shareholder
until the KRSI Merger takes effect.                                             

    A shareholder may not assert dissenters' rights  as to less than all of  the
shares  registered  in  the  name of  the  shareholder,  unless  the shareholder
dissents with respect to all the  shares that are beneficially owned by  another
person  but registered in the name of the shareholder and discloses the name and
address of each beneficial  owner on whose behalf  the shareholder dissents.  In
that  event, the rights of the dissenter will  be determined as if the shares as
to which the shareholder has dissented  and the other shares were registered  in
the names of different shareholders.                                            

    A  beneficial  owner  of  shares  who  is  not  the  shareholder  may assert
dissenters' rights with  respect to  shares held  on behalf  of such  beneficial
owner,  and  will be  treated as  a  dissenting shareholder  under the  terms of
sections 302A.471 and  302A.473 of  the MBCA,  if the  beneficial owner  submits
written  consent of  the shareholder holding  such beneficial  owner's shares to
Kelly Russell at the time of or before the assertion of the rights.             

PROCEDURES FOLLOWING AN ASSERTION OF DISSENTERS' RIGHTS                 

    After the KRSI Merger takes effect, or after Kelly Russell receives a  valid
demand  for  payment,  whichever is  later,  Kelly  Russell must  remit  to each
dissenting shareholder who  has not  voted his  or her  shares in  favor of  the
proposed  KRSI Merger and  has filed with  Kelly Russell before  the vote on the
proposed KRSI Merger a written notice of intent to demand the fair value of  the
shares  owned by such shareholder, the amount  Kelly Russell estimates to be the
fair value of the  shares, plus interest ("interest"  commences five days  after
the  Effective Time of the KRSI Merger up  to and including the date of payment,
calculated at a rate provided under  Minnesota law for interest on verdicts  and
judgments), accompanied by:                                                     

        (1)  Kelly Russell's  balance sheet  and statement  of operations  for a
    fiscal year ending not more than 16 months before the Effective Time of  the
    KRSI   Merger,  together   with  the  latest   available  interim  financial
statements;                                                             

        (2) An estimate by Kelly Russell of  the fair value of the shares and  a
    brief description of the procedures to be followed in demanding supplemental
payment.                                                                

        (3)  A copy of sections  302A.471 and 302A.473 of  the MBCA, and a brief
    description of  the  procedures to  be  followed in  demanding  supplemental
payment.                                                                

    Kelly  Russell may withhold the above-described remittance from a person who
was not a shareholder on  the date the Merger  Agreement was first announced  to
the  public or who is dissenting on behalf  of a person who was not a beneficial
owner   on   that   date.   If   such   dissenter   has   not   voted   his   or

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her shares in favor of the proposed KRSI Merger and has filed with Kelly Russell
before  the vote on the proposed Merger  Agreement a written notice of intent to
demand the fair  value of the  shares owned by  such shareholder, Kelly  Russell
must  forward  to  such  dissenter  the  materials  described  in  the preceding
paragraph, a statement of reason for withholding the remittance, and an offer to
pay to such dissenter the amount listed in the materials if the dissenter agrees
to accept that amount in full satisfaction. Such dissenter may decline the offer
and demand payment of  such dissenter's own  estimate of the  fair value of  the
shares,  plus interest,  by written  notice to Kelly  Russell. Failure  to do so
entitles such dissenter  only to  the amount  offered. If  such dissenter  makes
demand, the procedures, costs, fees and expenses described below for petitioning
the court shall apply.                                                          

    If  Kelly Russell fails  to remit payment  within 60 days  of the deposit of
certificates or the imposition of  transfer restrictions on uncertified  shares,
it  must return all deposited certificates and cancel all transfer restrictions.
However, Kelly Russell may require deposit or restrict transfer at a later  time
and again give notice that contains:                                            

        (1)  The  address to  which  a demand  for  payment and  certificates of
    certified shares must be  sent in order  to obtain payment  and the date  by
which they must be received;                                            

        (2)  Any  restrictions on  transfer of  uncertificated shares  that will
apply after the demand for payment is received;                         

        (3) A form to be used to  certify the date on which the shareholder,  or
    the  beneficial owner on whose behalf the shareholder dissents, acquired the
shares or an interest in them and to demand payment; and                

        (4) A copy of  sections 302A.471 and  302A.473 of the  MBCA and a  brief
description of the procedures to be followed under such sections.       

    If  a dissenter believes that  the amount remitted by  Kelly Russell is less
than the fair value of the shares plus interest, the dissenter may give  written
notice  to Kelly Russell  of the dissenter's  own estimate of  the fair value of
shares, plus interest, within 30 days after Kelly Russell mails the  remittance,
and  demand payment  of the difference  (a "Demand"). Otherwise,  a dissenter is
entitled only to the amount remitted by Kelly Russell.                          

    If Kelly Russell receives a Demand, it must, within 60 days after  receiving
the Demand, either pay to the dissenter the amount demanded, or an amount agreed
to  by the  dissenter after discussion  with Kelly  Russell, or file  in court a
petition requesting that the court determine the fair value of the shares,  plus
interest. The petition must be filed in Hennepin County, Minnesota. The petition
must  name as parties all dissenters who made  a Demand and who have not reached
agreement with  Kelly Russell.  The jurisdiction  of the  court is  plenary  and
exclusive.  The court  may appoint appraisers,  with powers  and authorities the
court deems proper, to receive evidence on and recommend the amount of the  fair
value  of  the  shares. The  court  must  determine whether  the  shareholder or
shareholders in question have  fully complied with  the requirements of  section
302A.473  of the MBCA, and  must determine the fair  value of the shares, taking
into account  any and  all factors  the court  finds relevant,  computed by  any
method  or combination of methods that the court, in its discretion, sees fit to
use, whether or not used by Kelly Russell  or by a dissenter. The fair value  of
the  shares as determined by the court  is binding on all shareholders, wherever
located. A dissenter is entitled  to judgment for the  amount by which the  fair
value  of the  shares as  determined by  the court,  plus interest,  exceeds the
amount, if any,  remitted by Kelly  Russell, but  shall not be  liable to  Kelly
Russell  for the amount,  if any, by which  the amount, if  any, remitted to the
dissenter exceeds the fair value of the shares as determined by the court,  plus
interest.                                                                       

    The  court must  determine the  costs and  expenses of  any appraisers  of a
proceeding under the preceding paragraph, including the reasonable expenses  and
compensation  of any  appraisers appointed by  the court, and  must assess those
costs and expenses against Kelly Russell, except that the court may assess  part
or  all of those costs and expenses against a dissenter whose Demand is found to
be arbitrary, vexatious, or not in good faith.                                  

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    If the court  finds that Kelly  Russell has failed  to comply  substantially
with section 302A.473 of the MBCA, the court may assess all fees and expenses of
any  experts or attorneys as the court  deems equitable. These fees and expenses
may also be assessed against a person who has acted arbitrarily, vexatiously, or
not in good  faith in bringing  the proceeding, and  may be awarded  to a  party
injured by those actions.                                                       

    The court may award, in its discretion, fees and expenses to an attorney for
the dissenters out of the amount awarded to the dissenters, if any.             

MARKET PRICE OF AND DIVIDENDS ON OSP COMMON STOCK, GLOBAL 
ONE COMMON STOCK AND KELLY RUSSELL COMMON STOCK 

MARKET INFORMATION                                                              

OSP AND GLOBAL ONE                                                      

    To date, there has been no trading in the OSP Common Stock or the Global One
Common  Stock. Global  One has  filed an application  to include  the Global One
Common Stock on  the Nasdaq SmallCap  Market under the  symbol "GOGO."  However,
there  can  be no  assurance that  such  application will  be approved  or that,
following this offering,  an active  trading market  for the  Global One  Common
Stock  will develop or  be sustained. Miller, Johnson  & Kuehn, Incorporated has
indicated its intention to make a market  in the Global One Common Stock on  the
Nasdaq  Small Cap Market, effective upon approval of the Global One Common Stock
for quotation on the Nasdaq SmallCap Market.  If and to the extent that MJK,  or
another  securities firm determines  to make a  market in the  Global One Common
Stock, the market  maker would  be under  no obligation  to continue  to make  a
market  and could  discontinue such  activity at any  time. In  the event Global
One's application is not approved, it is anticipated that the Global One  Common
Stock will be quoted for trading on the OTC Bulletin Board or in the Pink Sheets
maintained by the National Quotation Bureau, Inc.                               

KELLY RUSSELL                                                           

    From  March 1994 to June 10, 1996, the Kelly Russell Common Stock was traded
in the over-the-counter market  and quoted on the  Nasdaq SmallCap Market  under
the symbol "KRSI." Since June 10, 1996, Kelly Russell Common Stock has traded on
the  OTC Bulletin  Board. Prior to  March 1994,  there was no  public market for
Kelly Russell Common Stock. The following table sets forth the high and low  bid
prices  of Kelly Russell Common Stock for  the periods indicated. The Nasdaq bid
quotations represent interdealer prices, without retail mark-ups, mark-downs  or
commissions, and may not necessarily represent actual transactions.             

                                                                [Download Table]

YEAR ENDING DECEMBER 31, 1996                 HIGH           LOW   
----------------------------------------    --------       --------
                                                                   
First Quarter...........................    $  4 1/8       $  2 7/8
Second Quarter*.........................    $  2 3/4       $  1 1/2



YEAR ENDED DECEMBER 31, 1995                  HIGH           LOW   
----------------------------------------    --------       --------
                                                                   
First Quarter...........................    $  3           $  2 1/4
Second Quarter..........................       3 7/8          3    
Third Quarter...........................       4              3 7/8
Fourth Quarter..........................       4              3 7/8


YEAR ENDED DECEMBER 31, 1994                  HIGH           LOW   
----------------------------------------    --------       --------
                                                                   
First Quarter (3/24/94 - 3/31/94).......    $  4 1/2       $  3 3/4
Second Quarter..........................       5              4 1/4
Third Quarter...........................       5 1/4          4    
Fourth Quarter..........................       4 7/8          2 1/4

    On  July 31, 1996, the closing bid for Kelly Russell Common Stock was $1.875
per share.                                                                      

*Since June 10, 1996, Kelly Russell Common Stock has traded on the OTC  Bulletin
Board.                                                                          

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    Management  of  Kelly  Russell  believes  that  the  prices  at  which Kelly
Russell's Common Stock  trades does  not accurately  reflect the  fair value  of
Kelly  Russell's Common Stock.  The volume of trading  in Kelly Russell's Common
Stock in the public  market is limited  and is conducted  largely by one  market
maker,  Miller Johnson & Kuehn, Incorporated ("MJK"). As a result, Kelly Russell
believes the market  has been inefficient  in arriving at  an accurate value  of
Kelly  Russell's Common Stock. In support  of management's belief, Kelly Russell
sold Units  (consisting of  one share  of  Kelly Russell  Common Stock  and  one
warrant  to acquire one share of Kelly Russell Common Stock at an exercise price
of $2.00 per share) in a private offering undertaken from December 1994  through
March  1995  at $1.00  per  Unit, although  the  quoted market  price  for Kelly
Russell's Common Stock  at that  time, as  reported by  Nasdaq SmallCap  Market,
ranged  from a high of $4.00 to a low of $2.875 per share. It was the conclusion
of Kelly Russell's Board of Directors, in consultation with MJK, which acted  as
agent  in the private  placement, that such  pricing was necessary  to raise the
financing needed for Kelly Russell, given the difficult financial  circumstances
facing Kelly Russell.                                                           

SHAREHOLDERS                                                                    

GLOBAL ONE                                                              

    As  of the date  hereof, there are  2 shareholders of  the Global One Common
Stock and the OSP Common Stock.                                                 

KELLY RUSSELL                                                           

    At the Record Date there were 4,082,373 shares of Kelly Russell Common Stock
outstanding held by approximately 127 record holders. Based on information which
Kelly Russell has obtained from its Transfer Agent, there are approximately  630
shareholders  of  Kelly Russell  Common  Stock, whose  stock  is held  either in
nominee name and/or street name brokerage accounts.                             

DIVIDENDS                                                                       

OSP AND GLOBAL ONE                                                      

    Prior to the  OSP Merger, the  Company has  been taxed as  an S  Corporation
under  the Internal Revenue Code of 1986,  as amended, and has declared and paid
cash dividends on the OSP Common Stock. See "S Corporation Distributions." Prior
to the Closing, the  Company expects to  declare a cash  dividend on its  Common
Stock, in the aggregate amount of $1,750,000, to the S Corporation shareholders,
Joseph  C. Angard and Michael  A. Malm. Global One  intends to pay this dividend
promptly following consummation of  the KRSI Merger using  some of the  proceeds
from the Private Placement. In addition a portion of the proceeds of the Private
Placement  will be used to pay  an additional dividend of approximately $600,000
to permit the OSP Shareholders' to pay their respective tax liabilities incurred
as a result  of OSP's  operating results generated  during 1995.  See "The  KRSI
Merger,   the  Reorganization  and  the   Private  Placement  --  Conditions  to
Consummation of the KRSI Merger and the Reorganization."                        

    Except for the dividends  payable as described  in the preceding  paragraph,
for  the  foreseeable  future,  Global  One does  not  intend  to  pay  any cash
dividends. Global  One presently  expects to  retain its  earnings, if  any,  to
finance the development and expansion of its business. The payment by Global One
of  cash dividends,  if any,  on the Global  One Common  Stock in  the future is
subject to the discretion of the Board of Directors.                            

    Global One's ability to pay dividends  is subject to restrictions set  forth
in  the Delaware General Corporation Law.  The Delaware Corporation Law provides
that  a  Delaware  corporation  may  pay   dividends  either  (i)  out  of   the
corporation's  surplus (as  defined in  Delaware law),  or (ii)  if there  is no
surplus, out of the corporation's net profits  for the fiscal year in which  the
dividend is declared and/or the preceding fiscal year.                          

    Pursuant  to Section  2115 of  the California  General Corporation  Law (the
"California GCL"),  under  certain  circumstances,  certain  provisions  of  the
California  GCL may be applied to  foreign corporations qualified to do business
in   California   notwithstanding   the   law   of   the   jurisdiction    where

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the  corporation is  incorporated. Such corporations  are referred  to herein as
"QUASI-California" corporations. Global One will be qualified to do business  in
the  State of  California. Section  2115 is  applicable to  foreign corporations
which have more than half of their shareholders residing in California and  more
than  half of their  business deriving from  California. Global One's Management
believes  that  more  than  half   Global  One's  shareholders  reside   outside
California,  and  that  Global  One  would  therefore  not  be  deemed  to  be a
QUASI-California  corporation.  If   Global  One   were  determined   to  be   a
QUASI-California  corporation, however, it would  have to comply with California
law with respect to,  among other things,  distributions to shareholders.  Under
the California GCL, a corporation is prohibited from paying dividends unless (i)
the  retained earnings of the corporation  immediately prior to the distribution
exceeds the  amount of  the distribution;  (ii) the  assets of  the  corporation
exceed  1  1/4  times  its  liabilities; or  (iii)  the  current  assets  of the
corporation exceed  its current  liabilities,  but if  the average  pre-tax  net
earnings  of the corporation before interest expense for the two years preceding
the distribution was less than the  average interest expense of the  corporation
for  those years, the current assets of  the corporation must exceed 1 1/4 times
its current liabilities.                                                        

KELLY RUSSELL                                                           

    Kelly Russell has  never paid or  declared any cash  dividends on the  Kelly
Russell  Common Stock and does not intend  to pay dividends on the Kelly Russell
Common Stock prior to the Effective Time.                                       

COMPARISON OF THE RIGHTS OF HOLDERS OF GLOBAL ONE 
COMMON STOCK AND KELLY RUSSELL COMMON STOCK 

    Upon consummation of the KRSI Merger, holders of Kelly Russell Common  Stock
will  receive shares of Global One Common Stock. Set forth below is a summary of
(i) the material features of the Kelly  Russell Common Stock and the Global  One
Common  Stock;  and (ii)  the  material differences  between  the rights  of the
holders of Kelly  Russell Common Stock  and the Global  One Common Stock.  These
summaries  are qualified in their entirety by reference to the charter documents
and other instruments of Kelly Russell and Global One that create the rights  of
the security holders.                                                           

GLOBAL ONE                                                                      

    Global  One  is  authorized by  its  Certificate of  Incorporation  to issue
30,000,000 shares of  Global One Common  Stock and 20,000,000  shares of  serial
preferred stock, $.01 par value. As of the date hereof, two shares of Global One
Common Stock were issued and outstanding and no shares of serial preferred stock
were issued or outstanding.                                                     

    At  the effective  time of  the OSP  Merger, the  outstanding shares  of OSP
Common Stock  held of  record by  the OSP  Shareholders will  be converted  into
6,448,088  shares of Global One Common Stock, and the warrant to purchase shares
of OSP Common Stock  currently outstanding will be  converted into a warrant  to
purchase  197,069 shares of Global  One Common Stock for  a price of $.01269 per
share.                                                                          

    Holders of Global One Common Stock will  be entitled to one vote, in  person
or  by proxy, for  each share of Global  One Common Stock held  of record in the
shareholder's name on  the books  of Global  One as of  the record  date on  any
matter  submitted to the  vote of the shareholders.  Global One's Certificate of
Incorporation does  not  provide  for  cumulative  voting  in  the  election  of
directors. Each share of Global One Common Stock has the same rights, privileges
and  preferences as every other share and will share equally in the Global One's
net assets upon liquidation or dissolution. Global One Common Stock will have no
preemptive, conversion or redemption rights  or sinking fund provisions and  all
of  the issued and outstanding  shares of Global One  Common Stock, when issued,
will be fully paid and nonassessable.                                           

    Upon consummation of the KRSI Merger, Global One will assume Kelly Russell's
rights and obligations under the Kelly Russell Stock Option Plan and each of the
outstanding options  previously granted  under the  Kelly Russell  Stock  Option
Plan.  As a  result of  this assumption,  the optionee  shall have  the right to
purchase one share  of Global  One Common  Stock for  each two  shares of  Kelly
Russell                                                                         

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Common Stock the optionee was entitled to purchase prior to the KRSI Merger. See
"The  KRSI Merger, the Reorganization and  the Private Placement -- Treatment of
Kelly Russell Options and Warrants."                                            

    The Board  of Directors  of Global  One, without  shareholder approval,  may
authorize  one or  more classes  of serial  preferred stock  with preferences or
voting rights that may adversely affect the rights of holders of the Global  One
Common  Stock.  Although it  is  not possible  to  state the  actual  effect any
issuance of serial  preferred stock  might have upon  the rights  of holders  of
Global  One  Common Stock,  the  issuance of  serial  preferred stock  might (i)
restrict dividends on Global One Common Stock if preferred stock dividends  have
not  been paid; (ii) dilute  the voting power and  equity interest of holders of
Global One Common Stock to the extent that any preferred stock series has voting
rights or is convertible into Global One Common Stock; or (iii) prevent  current
holders  of Global  One Common Stock  from participating in  Global One's assets
upon liquidation until any liquidation preferences granted to the holders of the
serial preferred  stock  are satisfied.  In  addition, the  issuance  of  serial
preferred   stock  may,  under   certain  circumstances,  have   the  effect  of
discouraging an  attempt  to change  control  of  Global One  by,  for  example,
creating  voting impediments  to the  approval of  the mergers  or other similar
transactions involving  Global One.  Global One's  Board of  Directors does  not
presently intend to issue any serial preferred stock.                           

    Shareholders  are entitled to  dividends when, as and  if declared by Global
One's Board of  Directors out  of funds  legally available  therefor (and  after
satisfaction  of the prior rights of  holders of outstanding preferred stock, if
any), subject to  certain restrictions on  payment of dividends  imposed by  the
Delaware  General Corporation Law.  See "Comparison of the  Rights of Holders of
Global One  Common  Stock  and  Kelly Russell  Common  Stock  --  Dividends  and
Repurchases of Stock."                                                          

    Following  consummation of the KRSI Merger, the transfer agent and registrar
for the Global One Common Stock will be Norwest Bank Minnesota, N.A.            

KELLY RUSSELL                                                                   

    Kelly Russell's authorized  capital stock consists  of 10,000,000 shares  of
Common  Stock, $.01  par value,  of which 4,082,373  shares of  Common Stock are
currently outstanding. Holders of Kelly Russell Common Stock have no preemptive,
subscription, redemption or conversion  rights. Cumulative voting for  directors
is  not permitted. The holders of the Kelly Russell Common Stock are entitled to
one vote per  share on  all matters  submitted to  a vote  of shareholders.  All
shares  of Kelly Russell Common Stock are entitled to share equally in dividends
from sources legally available therefor, when,  as and if declared by the  Board
of  Directors  and, upon  liquidation or  dissolution  of Kelly  Russell whether
voluntary or  involuntary, to  share  equally in  the  assets of  Kelly  Russell
available  for distribution to shareholders. Kelly Russell has never paid a cash
dividend on the Kelly Russell Common Stock and does not intend to pay  dividends
in  the foreseeable future.  Kelly Russell's present intention  is to retain all
future earnings for  use in  its business. All  shares of  Kelly Russell  Common
Stock  presently  outstanding are  fully paid  and  nonassessable. The  Board of
Directors is  authorized to  issue  additional shares  of Kelly  Russell  Common
Stock, but not to exceed the amount authorized by the Articles of Incorporation,
and to issue options and warrants for the purchase of such shares, on such terms
and  conditions and  for such  consideration as  the Board  may deem appropriate
without further shareholder action.                                             

    The transfer  agent and  registrar for  the Kelly  Russell Common  Stock  is
Norwest Bank Minnesota, N.A.                                                    

COMPARISON OF KELLY RUSSELL COMMON STOCK AND GLOBAL ONE COMMON STOCK            

    As  a result of the KRSI Merger,  holders of Kelly Russell Common Stock will
become holders of  Global One  Common Stock.  Such persons  will have  different
rights  as shareholders  of Global  One than they  had as  shareholders of Kelly
Russell.   These   differences   are   due    to   (i)   differences   in    the

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respective  charters  and  by-laws of  Kelly  Russell  and Global  One  and (ii)
differences between  the  corporate  laws  of  Delaware,  where  Global  One  is
incorporated  and  by whose  laws  it is  governed,  and the  corporate  laws of
Minnesota, where Kelly Russell is incorporated and by whose laws it is governed.

    The following is a  summary of certain  significant differences between  the
charter  documents  of Kelly  Russell and  Global  One and  between the  laws of
Minnesota and Delaware. This summary is complete in all material respects.      

MEETINGS OF SHAREHOLDERS                                                        

    Minnesota law provides that meetings of  shareholders may be called by:  (i)
the chief executive officer; (ii) the chief financial officer; (iii) two or more
directors;  (iv) shareholders  holding 10%  or more of  the voting  power of all
shares entitled to vote (except that the voting power needed to demand a meeting
to directly or  indirectly effect  a business combination  is 25%);  or (v)  any
other  person authorized in  the articles or by-laws.  The Kelly Russell By-laws
provide that meetings of shareholders may  be called only by the parties  listed
in  items  (i)  through  (iv)  above. Delaware  law  provides  that  meetings of
shareholders may be called only by the  directors or by any other person as  may
be  authorized by the corporation's certificate of incorporation or by-laws. The
Global One certificate and By-laws provide that special meetings of shareholders
may be  called only  by  a majority  of Global  One's  Board of  Directors,  the
Chairman,  Vice-Chairman or President. No other person shall be entitled to call
special meetings.                                                               

ACTION WITHOUT MEETINGS OF SHAREHOLDERS                                         

    Global One's Bylaws provide that any action  that may be taken at an  annual
or  special meeting of  the shareholders may  be taken without  a meeting by the
consent of  shareholders holding  at least  the  number of  shares as  would  be
required  to approve such action at an  annual or special meeting, provided that
notice of such  action is  given to  shareholders who  have not  voted upon  the
matter.  Global One's two largest shareholders,  Joseph C. Angard and Michael A.
Malm, will beneficially own, in the  aggregate, approximately 50% of the  Global
One  Common Stock outstanding  immediately after the Effective  Time of the KRSI
Merger through  trusts that  will be  established by  Mr. Angard  and Mr.  Malm,
respectively.  It is  anticipated that the  trusts will enter  into an agreement
pursuant to  which the  trustee of  Mr. Angard's  trust will  be given  a  proxy
entitling  Mr. Angard's  trust to  vote all  of the  shares owned  by Mr. Malm's
trust. Under  Delaware law,  except  as otherwise  provided in  a  corporation's
certificate  of incorporation or bylaws,  corporate action requiring shareholder
approval may be taken  upon the vote  of a majority  of the shares  outstanding.
Therefore,  the OSP Shareholders will have the ability to approve most corporate
actions without the necessity of a shareholder meeting.                         

DIVIDENDS AND REPURCHASES OF STOCK                                              

    The Kelly  Russell Board  of  Directors, under  Minnesota law,  may  declare
dividends  without shareholder approval so long  as the corporation will be able
to  pay  its  debts  in  the  ordinary  course  of  business  after  making  the
distribution. Delaware law permits a corporation, in general, to declare and pay
dividends  out of surplus or out of net profits for the current and/or preceding
fiscal year, and, in general, to redeem or repurchase shares of its stock if the
capital of the  corporation is not  impaired and such  redemption or  repurchase
will  not impair  the capital  of the corporation.  The directors  of a Delaware
corporation may be jointly and severally liable to the corporation for a willful
or negligent violation of such provisions of Delaware law.                      

INSPECTION RIGHTS                                                               

    Under Minnesota law,  a shareholder  has an "absolute  right," upon  written
demand,  to examine the  following corporate documents:  (i) the share register;
(ii) records of all proceedings of shareholders for the last three years;  (iii)
records  of all  proceedings of  the board  for the  last three  years; (iv) the
corporation's  articles  and  all  amendments  currently  in  effect;  (v)   the
corporation's  bylaws  and  all  amendments currently  in  effect;  (vi) certain
financial statements and  the financial  statement for the  most recent  interim
period  prepared  in  the  course  of  the  operation  of  the  corporation  for
distribution to the  shareholders or  to a governmental  agency as  a matter  of
public record; (vii) reports made to                                            

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shareholders  generally within the  last three years; (viii)  a statement of the
names and usual business addresses of its directors and principal officers; (ix)
voting trust agreements; (x) shareholder control agreements; and (xi) a copy  of
agreements,  contracts, or  other arrangements  or portions  of them  fixing the
rights of a class or series of securities issued by the company. Under  Delaware
law, shareholders, upon the demonstration of a proper purpose, have the right to
inspect  a corporation's  stock ledger,  shareholder list,  and other  books and
records.                                                                        

AMENDMENTS TO CHARTER                                                           

    Minnesota law provides that the Kelly Russell Articles may be amended by the
holders of a majority of the voting power of the shares present at a meeting  of
shareholders,  unless a  greater proportion  is required  by such  Articles. The
Kelly Russell Articles do not require a greater proportion. Under Delaware  law,
charter  amendments require the  approval of the  directors and the  vote of the
holders of a majority of the outstanding  stock and a majority of each class  of
stock  outstanding  and  entitled  to  vote  thereon  as  a  class,  unless  the
certificate of  incorporation  requires a  greater  proportion. The  Global  One
Certificate  provides that approval of the  majority of the voting power present
at a meeting of shareholders is required to amend the Global One Certificate.   

AMENDMENT OF BY-LAWS                                                            

    Minnesota law provides that the Kelly Russell By-laws may be amended by  the
holders  of a majority of the voting power of the shares present at a meeting of
shareholders, unless  a  greater  proportion is  specified.  The  Kelly  Russell
By-laws  provide that such  By-laws may be  amended by the  Kelly Russell Board,
subject to the  power of  Kelly Russell shareholders  to change  or repeal  such
By-laws.  The Kelly Russell  By-laws provide that the  Kelly Russell Board shall
not make or  alter any  By-Laws fixing a  quorum for  meetings of  shareholders,
prescribing  procedures for removing directors or filling vacancies on the Kelly
Russell Board,  or fixing  the  number of  directors or  their  classifications,
qualifications or terms of office. Under Delaware law, the power to adopt, amend
or repeal by-laws lies in shareholders entitled to vote; provided, however, that
any  corporation may, in  its certificate of incorporation,  confer the power to
adopt, amend  or repeal  by-laws  upon the  directors.  The Global  One  By-laws
provide that the Global One Board has the power to amend the Global One By-laws,
and  that Global One  shareholders may not  amend the Global  One By-laws except
upon the affirmative vote of  a majority of the holders  of record of shares  of
voting  stock entitled to be cast by the  holders of all of the then outstanding
shares of voting stock.                                                         

PREEMPTIVE RIGHTS                                                               

    The Kelly Russell Articles  and the Global  One Certificate deny  preemptive
rights to shareholders of Kelly Russell and Global One, respectively.           

DIRECTORS                                                                       

    Under  Minnesota law and the governing documents of Kelly Russell, directors
hold office until the  next annual meeting of  shareholders of the election  and
qualification of their successors.                                              

    The  Global One By-laws provide  that the Global One  Board shall consist of
not less than  one nor  more than  nine members and  that such  number shall  be
determined initially by the Incorporator and thereafter by the Global One Board.
Global One's certificate provides that the directors shall be divided into three
classes, the members of each class to serve for a term of three years. One class
will  serve until the First Annual Meeting  of Shareholders (Class I); one class
will serve until the Second Annual  Meeting of Shareholders (Class II); and  one
class will serve until the Third Annual Meeting of Shareholders (Class III), and
in all cases, until their respective successors are duly elected and qualified. 

    The  Global One By-laws provide that any  increase or decrease in the number
of directors, whether instituted by the  directors or by the shareholders at  an
annual meeting, be apportioned among the classes so as to maintain, as nearly as
possible,  an equal number of  directors in each class.  A vacancy on the Global
One Board requires  the majority vote  of the remaining  directors to fill  such
vacancy.                                                                        

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    The  Global One Certificate and By-law provisions with respect to the Global
One Board were designed to ensure continuity of the Global One Board to  promote
the  long-term goals of and orderly changes  in control of the Global One Board.
These provisions could,  however, operate  to discourage  or prevent  takeovers,
including  mergers, tender offers or proxy contests, or changes in management of
Global One which are proposed to be effected without approval of the Global  One
Board,  whether or  not such  takeover or change  in control  are detrimental to
Global One or  its shareholders. The  Global One By-law  provisions could  delay
shareholders  who are not in agreement with the policies of the Global One Board
from removing a  majority of the  Global One  Board for two  years, unless  such
shareholders could show cause to justify such removal.                          

PERSONAL LIABILITY OF DIRECTORS                                                 

    Article Eleventh of the Global One Certificate, in conjunction with Delaware
law,  will limit or eliminate a director's personal liability to the corporation
or its  shareholders for  breach of  fiduciary duty.  Such provision  will  not,
however, limit or eliminate a director's monetary liability for: (i) a breach of
the director's duty of loyalty; (ii) acts or omissions not in good faith or that
involve  intentional  misconduct  or a  knowing  violation of  law;  (iii) under
Section 174 of the Delaware GCL, as the same exists or hereafter may be amended,
or; (iv) any transaction  from which the director  derived an improper  personal
benefit.  Minnesota law generally permits  a Minnesota corporation's articles to
eliminate or limit  a director's personal  liability to the  corporation or  its
shareholders  for  monetary  damages for  breaches  of  a director's  duty  as a
director.  However,  the  articles  cannot   deprive  the  corporation  or   its
shareholders of the right to enjoin transactions which violate a director's duty
of  care. Moreover, the  articles cannot limit  liability for any  breach of the
director's duty of loyalty, for  transactions resulting in an improper  personal
benefit  to the  director or  for acts or  omissions not  in good  faith or that
involve intentional  misconduct or  a  knowing violation  of law.  In  addition,
liability  for illegal  dividends, stock  repurchases or  other distributions to
shareholders or  for violations  of Minnesota's  securities statutes  cannot  be
limited.  The Kelly Russell  By-laws provide that  Kelly Russell shall indemnify
directors to the extent permitted under Minnesota law.                          

INDEMNIFICATION                                                                 

    Article  7   of   the  Kelly   Russell   By-laws  provides   for   mandatory
indemnification of directors, officers, employees and agents of Kelly Russell to
the full extent permitted by Minnesota law. Minnesota law provides for mandatory
indemnification  of a  person acting  in an official  capacity on  behalf of the
corporation (including a director,  officer, employee or  agent) if such  person
acted in good faith, received no improper personal benefit, acted in a manner he
reasonably  believed  to be  in  or not  opposed to  the  best interests  of the
corporation and, in the case of  a criminal proceeding, had no reasonable  cause
to believe his conduct was unlawful.                                            

    Delaware  law  permits, but  does not  require,  a corporation  to indemnify
officers, directors,  employees  or  agents  and  expressly  provides  that  the
indemnification provided for under Delaware law shall not be deemed exclusive of
any   indemnification  right   under  any   by-law,  vote   of  shareholders  or
disinterested directors,  or  otherwise. Delaware  law  permits  indemnification
against  expenses and  certain other  liabilities arising  out of  legal actions
brought or threatened against such persons for their conduct on behalf of Global
One, provided that each such person acted in good faith and in a manner that  he
reasonably  believed was in or not opposed to Global One's best interests and in
the case  of a  criminal proceeding,  had  no reasonable  cause to  believe  his
conduct  was unlawful. Delaware law does  not allow indemnification of directors
in the case of an action by or in the right of Global One (including shareholder
derivative suits)  unless  the  directors  successfully  defend  the  action  or
indemnification is ordered by the court.                                        

    Global  One's By-laws provide  for mandatory indemnification  of each person
who is or was a director, officer,  employee or agent of the corporation, or  is
or  was  serving at  the  request of  the  corporation as  a  director, officer,
employee or agent  of another  corporation or other  entity to  the full  extent
permitted  by the Delaware  GCL. In addition,  Global One intends  to enter into
indemnification agreements with its officers and directors.                     

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    However, insofar  as  indemnification  for  liabilities  arising  under  the
Securities  Act may be permitted to  directors, officers and controlling persons
of Kelly Russell and Global One, Kelly Russell and Global One have been  advised
that in the opinion of the SEC, such indemnification is against public policy as
expressed in the 1933 Act and is, therefore, unenforceable.                     

CONTROL SHARE ACQUISITIONS                                                      

    Kelly  Russell is  subject to  the Minnesota  Control Share  Acquisition Act
("MCSAA"). The MCSAA provides that any person (an "acquiring person")  proposing
to  make a "control share acquisition"  must disclose certain information to the
target corporation  and the  target corporation's  shareholders must  thereafter
approve  the control share acquisition or certain  of the shares acquired in the
control share acquisition shall not have  voting rights and shall be subject  to
redemption  by the  target corporation  for a  specified period  of time  at the
market value of such shares. A "control share acquisition" is an acquisition  of
shares  of an issuing  public corporation which results  in the acquiring person
having voting power that exceeds one  of the following thresholds: (i) at  least
20  percent but less than 33 1/3 percent;  (ii) at least 33 1/3 percent but less
than or equal  to 50 percent;  and (iii) over  50 percent. The  definition of  a
"control  shares acquisition"  specifically excludes acquisition  of shares from
the corporation  issuing such  shares,  and acquisitions  pursuant to  plans  of
merger  or exchange which  are approved by the  shareholders of the corporation.
The MCSAA applies  to a  control share acquisition  with respect  to an  issuing
public  corporation unless  otherwise expressly  provided in  the issuing public
corporation's  articles  of  incorporation  or   in  by-laws  approved  by   the
shareholders.  The Kelly Russell Articles do not provide that the MCSAA will not
apply to  Kelly Russell.  There are  no  provisions of  Delaware law  which  are
analogous to the MCSAA.                                                         

BUSINESS COMBINATIONS                                                           

    The  MBCA  provides  that Kelly  Russell  may  not engage  in  any "business
combination" with any "interested shareholder"  or affiliate or associate of  an
interested  shareholder  for  a  period  of  four  years  after  the  interested
shareholder's "share acquisition date" unless either the business combination or
the acquisition of shares by the interested shareholder on his share acquisition
date is approved by a disinterested committee of the Kelly Russell Board  before
such  interested  shareholder's share  acquisition  date. The  Delaware Business
Combination Act ("DBCA") restricts  publicly-held corporations from engaging  in
any  "business combination"  with any  "interested shareholder"  or affiliate or
associate of an "interested shareholder" for a period of three years, after  the
date  on which such person becomes  an "interested shareholder" unless (i) prior
to such  date the  board of  directors approved  the "business  combination"  or
transaction  making the shareholder  "interested," or (ii)  upon consummation of
such transaction  the  "interested  shareholder"  owned  at  least  85%  of  the
outstanding voting stock, or (iii) the "business combination" is approved by the
board  and by the two-thirds vote of the shares (exclusive of the shares held by
the "interested shareholder") at a meeting.                                     

    For purposes  of the  MBCA, an  "interested shareholder"  is a  10% or  more
beneficial  owner of voting  shares of such  corporation, or a  person who is an
associate and an affiliate  of the corporation  and who at  any time within  the
four  year period preceding  the date in  question was a  10% or more beneficial
owner of voting shares  of such corporation.  An "interested shareholder"  under
the  DBCA is the beneficial owner of 15% or more of the outstanding voting stock
or was at any time within the preceding three years such a holder.              

    The MBCA and DBCA  apply to any business  combination of a corporation  with
any   interested  shareholder  unless  otherwise   expressly  provided  in  such
corporation's articles of  incorporation or  by-laws, or  other restrictions  on
applicability  exist  as  set  forth  in  the  DBCA.  Neither  the  Articles  or
Certificate nor the  By-laws of Kelly  Russell or Global  One provide that  such
corporation will not be subject to the MBCA or the DBCA, respectively.          

RIGHTS OF DISSENTING SHAREHOLDERS                                               

    Under  Section 302A.473  of the MBCA,  if a corporation  calls a shareholder
meeting to approve a merger  to which such corporation is  a party, the sale  of
substantially  all  of  the  assets  of the  corporation,  or  in  certain other
circumstances, the notice  of the meeting  must inform each  shareholder of  the

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right  to dissent from such  action and must include  a copy of section 302A.471
and section 302A.473 of the MBCA and a brief description of the procedure to  be
followed  under such sections. A shareholder  who wishes to exercise dissenters'
rights in such circumstances is entitled to demand the fair value of the  shares
owned by such shareholder.                                                      

    Under  Delaware law, shareholders have the  right, in some circumstances, to
dissent from mergers and consolidations by  demanding payment in cash for  their
shares  equal to the fair value (excluding any appreciation or depreciation as a
consequence or in expectation  of the transaction),  as determined by  agreement
with  the corporations or by an independent appraiser appointed by a court in an
action timely brought by the dissenters. No appraisal rights exist, however, for
shares listed on a national securities exchange  or held of record by more  than
2,000 shareholders unless the certificate of incorporation provides otherwise or
the  shareholders  receive  anything other  than:  (i)  shares of  stock  of the
corporation surviving  or  resulting from  such  merger or  consolidation;  (ii)
shares  of stock  of any other  corporation which  at the effective  date of the
merger or consolidation will be either listed on a national securities  exchange
or  held  of record  by  more than  2,000 shareholders;  (iii)  cash in  lieu of
fractional shares of the corporation described in the foregoing clauses (i)  and
(ii); or (iv) any combination of (i), (ii) or (iii).                            

UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL STATEMENTS 

    The  following unaudited pro forma  condensed combined financial information
gives effect to the Transactions as if it had occurred as of January 1, 1995 for
the unaudited pro  forma condensed  combined statement of  operations and  other
financial  data and as of March 31, 1996 for purposes of the unaudited pro forma
condensed combined balance sheet data.                                          

    The Unaudited  Pro  Forma Condensed  Combined  Financial Statements  do  not
purport  to present  the actual financial  position or results  of operations of
Global One had the transactions and  events assumed therein in fact occurred  on
the  dates  specified, nor  are they  necessarily indicative  of the  results of
operations that may be achieved in the future. The Unaudited Pro Forma Condensed
Combined Financial Statements are based  on certain assumptions and  adjustments
described  in the notes to the  Unaudited Pro Forma Condensed Combined Financial
Statements and  should be  read  in conjunction  therewith  and with  "The  KRSI
Merger,  the Reorganization and the Private Placement," "Management's Discussion
and Analysis of Financial  Condition and Results of  Operations of The  Company"
and  "Kelly  Russell  Studios,  Inc.  Management's  Discussion  and  Analysis of
Financial Condition and  Results of Operations"  and the Consolidated  Financial
Statements  of  The Company  and  Kelly Russell  and  the related  notes thereto
included elsewhere in this Proxy Statement/ Prospectus.                         

    Unaudited pro forma condensed combined financial information reflecting  the
Transactions is provided below using the purchase method of accounting.         

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GLOBAL ONE DISTRIBUTION & MERCHANDISING INC.
UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENTS OF OPERATIONS 
THREE MONTHS ENDED MARCH 31, 1996 
(IN THOUSANDS, EXCEPT PER SHARE DATA) 

    The   following  Unaudited  Pro  Forma   Condensed  Combined  Statements  of
Operations set forth continuing operations of  the Company for the three  months
ended March 31, 1996, as if the Transactions had occurred as of January 1, 1995.
The  Unaudited Pro Forma  Condensed Combined Statements  of Operations would not
necessarily reflect the results of operations  that would have been attained  if
the  Transactions had been  consummated at the beginning  of the year presented.
The following Unaudited Pro Forma Condensed Combined Statements of Operations do
not reflect cost savings that may result from the Transactions.                 

                                                        [Enlarge/Download Table]

                                                                             HISTORICAL                             
                                                               HISTORICAL      KELLY        PRO FORMA     PRO FORMA 
                                                                 COMPANY      RUSSELL      ADJUSTMENTS    COMBINED  
                                                               -----------  ------------  -------------  -----------
                                                                                                                    
NET SALES.....................................................  $   8,941    $      779     $             $   9,720 
COST OF SALES.................................................      5,270           453                       5,723 
                                                               -----------  ------------          ---    -----------
GROSS PROFIT..................................................      3,671           326             0         3,997 
OPERATING EXPENSES:                                                                                                 
  Warehouse and selling.......................................      2,352                                     2,352 
  General and administrative..................................      1,453           709            88(1)      2,250 
                                                               -----------  ------------          ---    -----------
    Total operating expenses..................................      3,805           709            88         4,602 
                                                               -----------  ------------          ---    -----------
OPERATING LOSS................................................       (134)         (383)          (88)         (605)
INTEREST EXPENSE..............................................        267             2                         269 
                                                               -----------  ------------          ---    -----------
LOSS BEFORE INCOME TAXES AND MINORITY INTEREST................       (401)         (385)          (88)         (874)
INCOME TAX PROVISION..........................................         67                                        67 
                                                               -----------  ------------          ---    -----------
LOSS BEFORE MINORITY INTEREST.................................       (468)         (385)          (88)         (941)
MINORITY INTEREST.............................................         46                                        46 
                                                               -----------  ------------          ---    -----------
NET LOSS......................................................  $    (514)   $     (385)    $     (88)    $    (987)
                                                               -----------  ------------          ---    -----------
                                                               -----------  ------------          ---    -----------

                                                        [Enlarge/Download Table]
                                                                                             
PRO FORMA NET LOSS DATA:                                                                     
Loss before income taxes and minority interest................................. $    (874)   
Pro forma benefit for income taxes.............................................       (85)(3)
Minority interest..............................................................        46    
                                                                                ------------ 
Pro forma net loss............................................................. $    (835)   
                                                                                ------------ 
                                                                                ------------ 
PRO FORMA NET LOSS PER SHARE:                                                                
Pro forma net loss............................................................. $   (0.06)   
                                                                                ------------ 
                                                                                ------------ 
Pro forma weighted average shares outstanding..................................    12,994(2) 
                                                                                ------------ 
                                                                                ------------ 

See accompanying notes to Unaudited Pro Forma Condensed Combined Financial
Statements. 

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GLOBAL ONE DISTRIBUTION & MERCHANDISING INC.
UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENTS OF OPERATIONS 
YEAR ENDED DECEMBER 31, 1995
(IN THOUSANDS, EXCEPT PER SHARE DATA) 

    The  following  Unaudited  Pro   Forma  Condensed  Combined  Statements   of
Operations  set forth  continuing operations of  the Company for  the year ended
December 31, 1995, as if  the Transactions had occurred  as of January 1,  1995.
The  Unaudited Pro Forma  Condensed Combined Statements  of Operations would not
necessarily reflect the results of operations  that would have been attained  if
the  Transactions had been  consummated at the beginning  of the year presented.
The following Unaudited Pro Forma Condensed Combined Statements of Operations do
not reflect cost savings that may result from the Transactions.                 

                                                        [Enlarge/Download Table]

                                                                           HISTORICAL                             
                                                               HISTORICAL    KELLY        PRO FORMA     PRO FORMA 
                                                                COMPANY     RUSSELL      ADJUSTMENTS    COMBINED  
                                                               ---------  ------------  -------------  -----------
                                                                                                                  
NET SALES..................................................... $  38,228   $    2,814     $             $  41,042 
COST OF SALES.................................................    21,647        2,553                      24,200 
                                                               ---------  ------------       ------    -----------
GROSS PROFIT..................................................    16,581          261             0        16,842 
OPERATING EXPENSES:                                                                                               
  Warehouse and selling.......................................    10,201                                   10,201 
  General and administrative..................................     4,971        2,134           294(1)      7,399 
                                                               ---------  ------------       ------    -----------
    Total operating expenses..................................    15,172        2,134           294        17,600 
                                                               ---------  ------------       ------    -----------
OPERATING INCOME (LOSS).......................................     1,409       (1,873)         (294)         (758)
                                                               ---------  ------------       ------    -----------
OTHER (INCOME) EXPENSE:                                                                                           
  Other Income................................................                    (40)                        (40)
  Interest Expense............................................       841            7                         848 
                                                               ---------  ------------       ------    -----------
INCOME (LOSS) BEFORE INCOME TAXES, MINORITY INTEREST AND                                                          
 EXTRAORDINARY ITEM...........................................       568       (1,840)         (294)       (1,566)
INCOME TAX BENEFIT............................................       (77)                                     (77)
                                                               ---------  ------------       ------    -----------
INCOME (LOSS) BEFORE MINORITY INTEREST AND EXTRAORDINARY                                                          
 ITEM.........................................................       645       (1,840)         (294)       (1,489)
MINORITY INTEREST.............................................       243                                      243 
                                                               ---------  ------------       ------    -----------
INCOME (LOSS) BEFORE EXTRAORDINARY ITEM....................... $     402   $   (1,840)    $    (294)    $  (1,732)
                                                               ---------  ------------       ------    -----------
                                                               ---------  ------------       ------    -----------

                                                        [Enlarge/Download Table]
                                                                                            
PRO FORMA NET LOSS DATA:                                                                    
Loss before income taxes, minority interest and extraordinary item............. $  (1,566)  
Pro forma provision for income taxes...........................................       114(3)
Minority interest..............................................................       243   
                                                                                ------------
Pro forma net loss before extraordinary item................................... $  (1,923)  
                                                                                ------------
                                                                                ------------
PRO FORMA NET LOSS PER SHARE:                                                               
Pro forma net loss before extraordinary item................................... $   (0.15)  
                                                                                ------------
                                                                                ------------
Pro forma weighted average shares outstanding..................................    12,994(2)
                                                                                ------------
                                                                                ------------

See accompanying notes to Unaudited Pro Forma Condensed Combined Financial
Statements. 

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GLOBAL ONE DISTRIBUTION & MERCHANDISING INC.
UNAUDITED COMPARATIVE PER SHARE DATA
(IN THOUSANDS, EXCEPT PER SHARE DATA) 

    The following  summary of  comparative  per share  data sets  forth  certain
historical  information for  the Company  and Kelly  Russell, certain  pro forma
information for Global One after giving effect to the KRSI Merger as a  purchase
for  accounting purposes, as if the KRSI  Merger had been consummated at January
1, 1995 and equivalent pro forma information for Kelly Russell based on the  pro
forma  Global One  information. No cash  dividends were paid  during the periods
presented.                                                                      

                                                                [Download Table]

                                                 YEAR ENDED      THREE MONTHS ENDED
                                              DECEMBER 31, 1995    MARCH 31, 1996  
                                              -----------------  ------------------
                                                                                   
HISTORICAL:                                                                        
OSP                                                                                
  Net income (loss) (3)......................      $  0.06            $ (0.05)     
  Weighted average shares outstanding........        8,037              8,037      
  Period-end book value (4)..................      $ (0.16)           $ (0.23)     
  Period-end shares outstanding..............        6,448              6,448      

Kelly Russell                                                                      
  Net loss before extraordinary item.........      $ (0.52)           $ (0.09)     
  Weighted average shares outstanding........        3,541              4,082      
  Period-end book value (4)..................      $  0.25            $  0.16      
  Period-end shares outstanding..............        4,082              4,082      

PRO FORMA COMBINED (5):                                                            
Global One                                                                         
  Net loss before extraordinary item.........      $ (0.15)           $ (0.06)     
  Weighted average shares outstanding........       12,994             12,994      
  Period-end book value (4)..................      $  0.45            $  0.41      
  Period-end shares outstanding..............       12,994             12,994      

Pro forma combined                                                                 
  Equivalent Kelly Russell share (6)                                               
    Net loss before extraordinary item.......      $ (0.07)           $ (0.03)     
    Period-end book value (4)................      $  0.23            $  0.20      

See accompanying notes to Unaudited Pro Forma Condensed Combined Financial
Statements. 

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GLOBAL ONE DISTRIBUTION & MERCHANDISING INC.
UNAUDITED PRO FORMA CONDENSED COMBINED BALANCE SHEET
AS OF MARCH 31, 1996
(IN THOUSANDS, EXCEPT PER SHARE DATA) 

    The following  Unaudited Pro  Forma Condensed  Combined Balance  Sheet  sets
forth  historical balance sheet information for the Company and Kelly Russell at
March 31, 1996.                                                                 

ASSETS

                                                        [Enlarge/Download Table]

                                                                              AT MARCH 31, 1996                   
                                                           -------------------------------------------------------
                                                                       HISTORICAL                                 
                                                           HISTORICAL    KELLY          PRO FORMA       PRO FORMA 
                                                            COMPANY     RUSSELL        ADJUSTMENTS      COMBINED  
                                                           ---------  ------------  -----------------  -----------
                                                                                                                  
CURRENT ASSETS:                                                                                                   
  Cash and cash equivalents..............................  $     378   $       38   $   1,831(7)        $   2,247 
  Accounts receivable -- trade, net of allowance for                                                              
   doubtful accounts.....................................      5,958          514                           6,472 
  Inventories............................................      4,992          276                           5,268 
  Prepaid royalty advances...............................        716          133                             849 
  Prepaid expenses and other current assets..............        366          158                             524 
  Deferred income tax asset..............................         38                      795(8)              833 
                                                           ---------  ------------    -------          -----------
      Total current assets...............................     12,448        1,119       2,626              16,193 
PROPERTY AND EQUIPMENT, Net..............................      1,184          278                           1,462 
GOODWILL, Net............................................        141                    3,523(9)            3,664 
DEPOSITS.................................................        160                                          160 
                                                           ---------  ------------    -------          -----------
TOTAL....................................................  $  13,933   $    1,397   $   6,149           $  21,479 
                                                           ---------  ------------    -------          -----------
                                                           ---------  ------------    -------          -----------

                                       LIABILITIES AND SHAREHOLDERS' EQUITY                                       

CURRENT LIABILITIES:                                                                                              
  Accounts payable.......................................  $   4,253   $      541                       $   4,794 
  Accrued expenses.......................................      1,211          168                           1,379 
  Royalties payable......................................      2,059           49                           2,108 
  Due to customers.......................................        205                                          205 
  Income taxes payable...................................        300                                          300 
  Current maturities of:                                                                                          
    Capitalized lease obligations........................         85                                           85 
    Subordinated long-term debt..........................      1,050                     (375)(7)             675 
                                                           ---------  ------------    -------          -----------
      Total current liabilities..........................      9,163          758        (375)              9,546 
                                                           ---------  ------------    -------          -----------
REVOLVING LINE OF CREDIT.................................      4,022                                        4,022 
CAPITALIZED LEASE OBLIGATIONS............................        129                                          129 
SUBORDINATED LONG-TERM DEBT..............................      1,857                                        1,857 
MINORITY INTEREST........................................        615                                          615 
COMMITMENTS AND CONTINGENCIES                                                                                     
SHAREHOLDERS' EQUITY (DEFICIENCY):                                                                                
  Common stock...........................................      1,263           41          24(10)(7)        1,328 
  Additional paid-in capital.............................        112        8,133         520(11)(7)        8,765 
  Accumulated deficit....................................     (3,228)      (7,535)      5,980(8)           (4,783)
                                                           ---------  ------------    -------          -----------
      Total shareholders' equity (deficiency)............     (1,853)         639       6,524               5,310 
                                                           ---------  ------------    -------          -----------
TOTAL....................................................  $  13,933   $    1,397   $   6,149           $  21,479 
                                                           ---------  ------------    -------          -----------
                                                           ---------  ------------    -------          -----------

See accompanying notes to Unaudited Pro Forma Condensed Combined Financial
Statements. 

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NOTES TO UNAUDITED PRO FORMA
CONDENSED COMBINED FINANCIAL STATEMENTS 
(IN THOUSANDS, EXCEPT SHARE DATA) 

(1) Represents the amortization of the excess of purchase price over net  assets
acquired assuming a ten year life.                                      

(2) Assumes for all periods presented the issuance of 2,041,187 shares of Global
    One  Common Stock  to effect  the KRSI Merger,  as well  as 4,504,234 shares
deemed to be sold in the Private Placement.                             

(3) Assumes pro forma  treatment of income  taxes for OSP being  treated as a  C
    Corporation. See Note 10 to OSP's audited consolidated financial statements.

(4)  Based on the actual or pro forma number of shares outstanding at the end of
the respective period.                                                  

(5) Assumes a Conversion Ratio of 0.5 shares of Global One Common Stock for each
    share of  Kelly Russell  Common Stock  as  well as  application of  the  net
proceeds from completion of the Transactions.                           

(6)  Represents the pro  forma equivalent of  one share of  Kelly Russell Common
    Stock calculated by  multiplying pro forma  Global One data  by the  assumed
    Conversion  Ratio of 0.5 shares of Global One Common Stock for each share of
Kelly Russell Common Stock.                                             

(7) The proceeds from the Private Placement will be used as follows:            

                                                                [Download Table]
                                                                              
Proceeds from issuance of common stock.............................  $   6,756
Less Transaction costs.............................................      2,200
                                                                     ---------
                                                                         4,556
Payment of S Corporation distribution..............................      1,750
Estimated dividend to the OSP Shareholders for actual tax                     
 liabilities.......................................................        600
Repayment of subordinated debt.....................................        375
                                                                     ---------
Cash for working capital...........................................  $   1,831
                                                                     ---------
                                                                     ---------

(8) Reflects the following:                                                     

                                                                [Download Table]
                                                                               
Declaration of a dividend payable to the OSP Shareholders..........  $  (1,750)
Estimated dividend to the OSP Shareholders for actual tax                      
 liabilities.......................................................       (600)
Recognition of OSP deferred income tax assets from change to C                 
 Corporation.......................................................        795 
Elimination of Kelly Russell accumulated deficit...................      7,535 
                                                                     --------- 
                                                                     $   5,980 
                                                                     --------- 
                                                                     --------- 

(9) The  acquisition of  Kelly Russell  will  be accounted  for as  a  purchase,
    applying  the provisions of Accounting Principles  Board Opinion No. 16. The
    total purchase  cost  will  be  allocated  to  Kelly  Russell's  assets  and
    liabilities  based on their relative fair values as of the Effective Time of
    the KRSI Merger,  based on  valuations and other  studies that  are not  yet
    complete.  Accordingly, the excess of the  purchase cost over the historical
    book value of the net  assets acquired has not  yet been fully allocated  to
    the  individual assets  and liabilities acquired.  Management believes there

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NOTES TO UNAUDITED PRO FORMA
CONDENSED COMBINED FINANCIAL STATEMENTS (CONTINUED) 
(IN THOUSANDS, EXCEPT SHARE DATA) 
    will be no significant change in  the allocation of the purchase price  once
    the  final analysis is  completed. Therefore, the  excess purchase cost over
the net assets acquired has been allocated to goodwill.                 

                                                                [Download Table]
                                                                              
Purchase cost of equity............................................  $   3,062
Plus OSP's portion of costs associated with the Merger.............        535
Less book value of net assets acquired at March 31, 1996, net of              
 KRSI's portion of costs associated with the Merger of $565........         74
                                                                     ---------
Cost in excess of net assets acquired..............................  $   3,523
                                                                     ---------
                                                                     ---------

    Merger and Offering costs consist  principally of legal and accounting  fees
    for  KRSI and OSP, printing costs  and investment banking costs. These costs
    have been allocated between the cost of new equity, acquisition of KRSI  and
KRSI's costs of selling its business which will be expensed by KRSI.    

(10) Reflects the following:                                                    

                                                                [Download Table]
                                                                             
Common Stock issued to effect the KRSI Merger........................ $   20 
Common Stock issued in the Private Placement.........................     45 
Elimination of Kelly Russell Common Stock............................    (41)
                                                                         --- 
                                                                      $   24 
                                                                         --- 
                                                                         --- 

(11) Reflects the following:                                                    

                                                                [Download Table]
                                                                               
Common Stock issued to effect the KRSI Merger......................  $   3,042 
Common Stock issued in the Private Placement.......................      6,711 
Transaction costs associated with the KRSI Merger, the                         
 Reorganization and the Private Placement..........................     (1,100)
Elimination of Kelly Russell additional paid-in capital............     (8,133)
                                                                     --------- 
                                                                     $     520 
                                                                     --------- 
                                                                     --------- 

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S CORPORATION DISTRIBUTIONS 

    The  Company has been taxed  as an S Corporation  under the Internal Revenue
Code of 1986,  as amended, since  1989. As a  result of the  Company being an  S
Corporation,  the taxable  income of the  Company generally has  been taxed, for
federal and state income purposes, directly to the OSP Shareholders rather  than
to the Company. The State of California imposes a corporate level state tax on S
corporations  at the reduced rate  of 1.5%. The Company  makes a distribution to
the OSP  Shareholders to  pay shareholder  level  taxes, and  the amount  to  be
distributed  to  pay such  taxes  for 1995  is  anticipated to  be approximately
$600,000. Such dividend is  expected to be paid  following the Closing from  the
proceeds of the Private Placement.                                              

    The  Company  has paid  distributions in  the  past and  a portion  has been
reinvested through the purchase of additional shares of OSP Common Stock by  the
OSP  Shareholders.  The Company  has declared  a final  distribution to  the OSP
Shareholders in the amount of $1,750,000 which  is to be paid from the  proceeds
of the Private Placement following the Closing. This distribution is expected to
be  in excess of the undistributed cumulative income that has been taxed or will
be taxable to the shareholders.                                                 

CAPITALIZATION

    The following table sets forth the capitalization of the Company as of March
31, 1996, and of Global One, pro forma to give effect to the consummation of the
KRSI Merger  and  pro  forma  as  adjusted to  give  pro  forma  effect  to  the
consummation of the Transactions (in thousands).                                

                                                        [Enlarge/Download Table]

                                                                                          AS OF MARCH 31, 1996  
                                                                                        ------------------------
                                                                                                   PRO FORMA AS 
                                                                                         ACTUAL      ADJUSTED   
                                                                                        ---------  -------------
                                                                                                                
Subordinated debt...................................................................... $   1,050  $     675(1) 
Capitalized leases.....................................................................        85         85    
                                                                                        ---------  -------------
  Total short-term obligations.........................................................     1,135        760(1) 
                                                                                        ---------  -------------
Subordinated debt......................................................................     1,857      1,857    
Revolving line of credit...............................................................     4,022      4,022    
Capitalized leases.....................................................................       129        129    
                                                                                        ---------  -------------
  Total long-term obligations..........................................................     6,008      6,008    
                                                                                        ---------  -------------
Shareholders' equity:                                                                                           
  Common stock.........................................................................     1,263      1,328(2) 
  Additional paid-in capital...........................................................       112      8,765(3) 
  Accumulated deficit..................................................................    (3,228)    (4,783)(4)
                                                                                        ---------  -------------
    Total shareholders' (deficiency) equity............................................    (1,853)     5,310    
                                                                                        ---------  -------------
    Total capitalization............................................................... $   5,290  $  12,078    
                                                                                        ---------  -------------
                                                                                        ---------  -------------

------------------------                                                        
(1)  Represents repayment of $375,000 of  subordinated debt from the proceeds of
the Private Placement.                                                  

(2) Reflects the following:                                                     

                                                        [Enlarge/Download Table]

                                                                                   PRO FORMA 
                                                                                  AS ADJUSTED
                                                                                  -----------
                                                                                             
OSP Common Stock -- par value....................................................  $   1,263 
Common Stock issued to effect the KRSI Merger....................................         20 
Common Stock issued to effect the Private Placement..............................         45 
                                                                                  -----------
                                                                                   $   1,328 
                                                                                  -----------
                                                                                  -----------

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(3) Reflects the following:                                                     

                                                                [Download Table]
                                                                              
OSP additional paid-in capital...................................   $     112 
Common Stock issued to effect the KRSI Merger....................       3,042 
Common Stock issued to effect the Private Placement..............       6,711 
Less transaction costs associated with the Private Placement.....      (1,100)
                                                                   -----------
                                                                    $   8,765 
                                                                   -----------
                                                                   -----------

(4) Reflects the following:                                                     

                                                                [Download Table]
                                                                              
The Company accumulated deficit..................................   $  (3,228)
Declaration of a dividend payable to the OSP Shareholders........      (1,750)
Estimated dividend to the OSP shareholders for their actual tax               
 liabilities.....................................................        (600)
Recognition of Company deferred income tax assets from change to              
 C corporation...................................................         795 
                                                                   -----------
                                                                    $  (4,783)
                                                                   -----------
                                                                   -----------

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SELECTED CONSOLIDATED FINANCIAL DATA
OSP PUBLISHING, INC. AND SUBSIDIARIES 

    The following  selected  consolidated  financial  data  should  be  read  in
conjunction with the Company's consolidated financial statements and the related
notes  and with "Management's Discussion and Analysis of Financial Condition and
Results of Operations of  the Company" included  elsewhere herein. The  selected
consolidated balance sheet data presented below for the years ended December 31,
1994  and 1995  and of the  consolidated statement of  operations data presented
below for the years ended December 31, 1993, 1994 and 1995 are derived from  the
consolidated  financial  statements of  the  Company included  elsewhere herein,
which  financial  statements  have  been  audited  by  Deloitte  &  Touche  LLP,
independent  certified  public  accountants. The  selected  consolidated balance
sheet data presented below as of  December 31, 1993, are derived from  financial
statements  of  the  Company not  included  herein  which have  been  audited by
Deloitte & Touche  LLP, independent certified  public accountants. The  selected
consolidated balance sheet data presented below as of December 31, 1991 and 1992
and consolidated statement of operation data presented below for the years ended
December  31, 1991 and 1992 are derived from financial statements of the Company
audited by the  other auditors  not included herein.  The selected  consolidated
balance  sheet  data as  of March  31,  1996 and  the consolidated  statement of
operations data for the  three months ended  March 31, 1995  and 1996 have  been
derived   from  the  Company's   unaudited  consolidated  financial  statements.
Operating results  for  the  three  months  ended March  31,  1996  may  not  be
indicative  of the results that may be expected for the year ending December 31,
1996 or any future period.                                                      

                                                        [Enlarge/Download Table]

                                                                                             THREE MONTHS  
                                                                                             ENDED MARCH   
                                                        YEARS ENDED DECEMBER 31,                 31,       
                                               -------------------------------------------  -------------- 
                                                1991     1992     1993     1994     1995     1995    1996  
                                               -------  -------  -------  -------  -------  ------  ------ 
                                                          (IN THOUSANDS, EXCEPT PER SHARE DATA)            
                                                                                             (UNAUDITED)   
                                                                                                           
CONSOLIDATED STATEMENT OF OPERATIONS DATA:                                                                 
  Net Sales..................................  $16,173  $17,126  $38,108  $42,168  $38,228  $7,421  $8,941 
  Cost of sales..............................    9,304    9,297   22,335   25,140   21,647   4,092   5,270 
                                               -------  -------  -------  -------  -------  ------  ------ 
  Gross profit...............................    6,869    7,829   15,773   17,028   16,581   3,329   3,671 
  Operating expenses.........................    5,770    7,143   13,797   16,636   15,172   3,503   3,805 
                                               -------  -------  -------  -------  -------  ------  ------ 
  Income (loss) from operations..............    1,099      686    1,976      392    1,409    (174)   (134)
  Interest expense...........................      562      429      605      685      841     173     267 
                                               -------  -------  -------  -------  -------  ------  ------ 
  Income (loss) from continuing operations...  $   537  $   257  $ 1,371  $  (293) $   568  $ (347) $ (401)
                                               -------  -------  -------  -------  -------  ------  ------ 
                                               -------  -------  -------  -------  -------  ------  ------ 
PRO FORMA INCOME FROM CONTINUING OPERATIONS                                                                
 DATA (1, 2):                                                                                              
  Income (loss) before income taxes, minority                                                              
   interest and discontinued operations, as                                                                
   reported..................................  $   537  $   257  $ 1,371  $  (293) $   568  $ (347) $ (401)
  Pro forma provision (benefit) for income                                                                 
   taxes (2).................................      255      266      344      (43)     114     (70)    (85)
                                               -------  -------  -------  -------  -------  ------  ------ 
  Pro forma net income (2)...................  $   282  $    (9) $ 1,027  $  (250) $   454  $ (277) $ (316)
                                               -------  -------  -------  -------  -------  ------  ------ 
                                               -------  -------  -------  -------  -------  ------  ------ 
PER SHARE DATA:                                                                                            
  Pro forma (loss) income from continuing                                                                  
   operations per share......................                                      $  0.06  $(0.03) $(0.04)
                                                                                   -------  ------  ------ 
                                                                                   -------  ------  ------ 
  Weighted average shares outstanding (3)....                                        8,037   8,036   8,037 
                                                                                   -------  ------  ------ 
                                                                                   -------  ------  ------ 

                                                                [Download Table]

                                           AS OF DECEMBER 31,                AS OF  
                               ------------------------------------------  MARCH 31,
                                1991     1992    1993     1994     1995      1996   
                               -------  ------  -------  -------  -------  ---------
                                                  (IN THOUSANDS)                    
                                                                                    
CONSOLIDATED BALANCE SHEET                                                          
 DATA (1):                                                                          
  Working capital                                                                   
   (deficiency)............... $ 2,141  $1,587  $ 2,337  $  (197) $ 3,312   $ 3,285 
  Total assets................   6,439   6,427   13,464   13,841   11,698    13,933 
  Total debt, including                                                             
   current portion............   5,219   2,896    5,129    6,724    5,989     7,143 
  Shareholders' equity                                                              
   (deficiency)............... $(1,075) $  266  $   637  $(1,408) $(1,299)  $(1,853)

------------------------------                                                  
(1) In  December 1994,  the Company  determined to  discontinue its  Top  Banana
    division.  See "Management's Discussion and  Analysis of Financial Condition
    and Results of  Operations of  The Company --  Discontinued Operations"  and
Note 12 of Notes to Consolidated Financial Statements.                  

(2)  The Company has been taxed as an S Corporation for federal and state income
    tax purposes  since  1989. Pro  forma  income  taxes, pro  forma  loss  from
    continuing  operations, and  pro forma  loss from  continuing operations per
    share reflect the pro  forma effect of  income taxes as  if the Company  had
    been  taxed as a C Corporation  for all periods presented. Upon consummation
    of the Transactions, Global One will be subject to federal and state  income
taxes. See "S Corporation Distributions."                               

(3)  Assumes as  outstanding, during  each of  the periods  indicated, 1,393,550
    shares of the shares being offered  by Global One in the Private  Placement,
    which represent the approximate number of shares deemed to be sold by Global
    One  to  fund  the $1,750,000  S  Corporation distribution  described  in "S
    Corporation Distributions." See "S Corporation Distributions" and Note 13 of
Notes to Consolidated Financial Statements.                             

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

GENERAL                                                                         

    The  following discussion is  intended to provide  information to facilitate
the understanding and assessment  of significant changes  and trends related  to
the  financial condition of the Company and  the results of its operations. This
discussion and analysis should be read in conjunction with the Company's audited
consolidated financial  statements  and  the notes  thereto  included  elsewhere
herein.                                                                         

    The  business of the Company is conducted  through OSP, SDI and BEx, each of
which  conducts  a   distinct  business.  OSP   develops  and  markets   posters
incorporating  primarily licensed  images and  characters from  motion pictures,
television, animation, music, sports  and popular culture. Non-licensed  posters
published  by OSP  included generic  posters, WalletCards,  BookBites-TM-, movie
scripts and  framed and  unframed  wall decor  of  models, cars,  airplanes  and
popular  phrases. SDI develops  and markets licensed  and non-licensed T-shirts,
sweatshirts, hats, boxer shorts and mugs. BEx develops and markets licensed  and
non-licensed buttons, key rings and stickers. See "Business of The Company."    

    The  Company derives a  significant portion of  its revenues from properties
which have  demonstrated  continuing market  appeal  year after  year,  such  as
Disney's  and Warner Bros.' standard characters, including MICKEY MOUSE and BUGS
BUNNY, television programs, Playboy's  PLAYMATE OF THE  YEAR and classic  icons,
such  as Marilyn Monroe  and the Doors ("Standard  Properties"). During the last
three years, OSP has experienced increased sales of products attributable to its
Standard Properties due to the wider distribution of display racks to retailers.
Approximately 3,500 new display racks were put in service in 1994 and 3,000  new
display  racks were put in service in 1995. Additional revenues are derived each
year from other promotional  products associated with  hit films and  television
shows   which  generally  have   a  much  shorter   product  life  ("Promotional
Properties").  The  Company  attempts  to  identify  and  acquire  licenses  for
Promotional Properties to capitalize on popular culture trends. However, whether
or  not a Promotional Property achieves significant sales depends on a number of
factors that are out of the control of the Company, including marketing  efforts
by licensors and the appeal of such Promotional Properties to the target market.
Management  believes that to  date, Promotional Properties  have accounted for a
larger  percentage  of  SDI's  and  BEx's  revenues  than  Standard  Properties.
Accordingly,  variations in the Company's revenues from year to year are largely
attributable to  the success  achieved by  Promotional Properties  in any  given
year.  The Company's business strategy includes  increasing its core business on
Standard Properties as  a percentage of  net sales by  increasing the number  of
display  racks supplied  to mass  retailers, increasing  the number  of Standard
Properties and  expanding  its international  business.  Management  anticipates
continuing   fluctuations  from  year  to  year  to  the  extent  the  Company's
Promotional Products achieve  success in any  given year. See  "Business of  The
Company  -- Business Strategy." No assurances can be given that the Company will
be successful in these efforts.                                                 

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RESULTS OF OPERATIONS                                                           

    The following tables set forth the net sales, total cost of sales and  gross
profit  of OSP, SDI, BEx  and the Company, for the  three months ended March 31,
1995 and 1996 and for the years ended December 31, 1993, 1994 and 1995.         

                                                        [Enlarge/Download Table]

                                                                     FOR THE THREE MONTHS ENDED MARCH 31,        
                                                             ----------------------------------------------------
                                                                       1995                       1996           
                                                             -------------------------  -------------------------
                                                               AMOUNT      % OF SALES     AMOUNT      % OF SALES 
                                                             -----------  ------------  -----------  ------------
                                                                            (DOLLARS IN MILLIONS)                
                                                                                                                 
Net Sales                                                                                                        
  OSP.......................................................  $     5.2        100.0%    $     4.6        100.0% 
  SDI.......................................................        1.5        100.0           4.1        100.0  
  BEx.......................................................        0.7        100.0           0.2        100.0  
                                                                    ---                        ---               
  Company...................................................  $     7.4        100.0     $     8.9        100.0  
                                                                    ---                        ---               
                                                                    ---                        ---               

Cost of Goods Sold                                                                                               
  OSP.......................................................  $     2.1         40.4     $     1.8         39.1  
  SDI.......................................................        0.8         53.3           2.4         58.5  
  BEx.......................................................        0.3         42.9           0.1         50.0  
                                                                    ---                        ---               
  Company...................................................  $     3.2         43.2     $     4.3         48.3  
                                                                    ---                        ---               
                                                                    ---                        ---               

License and royalty expense                                                                                      
  OSP.......................................................        0.7         13.5           0.6         13.0  
  SDI.......................................................        0.2         13.3           0.3          7.3  
  BEx.......................................................        0.0          0.0           0.0          0.0  
                                                                    ---                        ---               
  Company...................................................  $     0.9         12.2     $     0.9         10.1  
                                                                    ---                        ---               
                                                                    ---                        ---               

Total Cost Of Sales                                                                                              
  OSP.......................................................  $     2.8         53.8     $     2.4         52.2  
  SDI.......................................................        1.0         66.7           2.7         65.9  
  BEx.......................................................        0.3         42.9           0.1         50.0  
                                                                    ---                        ---               
  Company...................................................  $     4.1         55.4     $     5.2         58.4  
                                                                    ---                        ---               
                                                                    ---                        ---               

Gross Profit                                                                                                     
  OSP.......................................................  $     2.4         46.2     $     2.2         47.8  
  SDI.......................................................        0.5         33.3           1.4         34.1  
  BEx.......................................................        0.4         57.1           0.1         50.0  
                                                                    ---                        ---               
  Company...................................................  $     3.3         44.6     $     3.7         41.6  
                                                                    ---                        ---               
                                                                    ---                        ---               

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                                                        [Enlarge/Download Table]

                                                                        FOR THE YEARS ENDED DECEMBER 31,                        
                                                 -------------------------------------------------------------------------------
                                                           1993                       1994                       1995           
                                                 -------------------------  -------------------------  -------------------------
                                                   AMOUNT      % OF SALES     AMOUNT      % OF SALES     AMOUNT      % OF SALES 
                                                 -----------  ------------  -----------  ------------  -----------  ------------
                                                                              (DOLLARS IN MILLIONS)                             
                                                                                                                                
Net Sales                                                                                                                       
  OSP...........................................  $    19.5        100.0%    $    23.6        100.0%    $    25.2        100.0% 
  SDI...........................................       15.5        100.0          11.1        100.0          10.1        100.0  
  BEx...........................................        3.1        100.0           7.5        100.0           2.9        100.0  
                                                      -----                      -----                      -----               
  Company.......................................  $    38.1        100.0     $    42.2        100.0     $    38.2        100.0  
                                                      -----                      -----                      -----               
                                                      -----                      -----                      -----               

Cost of Goods Sold                                                                                                              
  OSP...........................................  $     7.7         39.5     $     9.7         41.1     $     9.8         38.9  
  SDI...........................................        8.6         55.5           6.8         61.3           5.9         58.4  
  BEx...........................................        1.1         35.5           2.9         38.7           1.3         44.8  
                                                      -----                      -----                      -----               
  Company.......................................  $    17.4         45.7     $    19.4         46.0     $    17.0         44.5  
                                                      -----                      -----                      -----               
                                                      -----                      -----                      -----               

License and Royalty Expense                                                                                                     
  OSP...........................................  $     3.0         15.4     $     3.7         15.7     $     3.5         13.9  
  SDI...........................................        1.5          9.7           1.2         10.8           0.9          8.9  
  BEx...........................................        0.4         12.9           0.9         12.0           0.3         10.3  
                                                      -----                      -----                      -----               
  Company.......................................  $     4.9         12.9     $     5.8         13.7     $     4.7         12.3  
                                                      -----                      -----                      -----               
                                                      -----                      -----                      -----               

Total Cost of Sales                                                                                                             
  OSP...........................................  $    10.7         54.9     $    13.4         56.8     $    13.3         52.8  
  SDI...........................................       10.1         65.2           8.0         72.1           6.8         67.3  
  BEx...........................................        1.5         48.4           3.8         50.7           1.6         55.2  
                                                      -----                      -----                      -----               
  Company.......................................  $    22.3         58.5     $    25.2         59.7     $    21.7         56.8  
                                                      -----                      -----                      -----               
                                                      -----                      -----                      -----               

Gross Profit                                                                                                                    
  OSP...........................................  $     8.8         45.1     $    10.2         43.2     $    11.9         47.2  
  SDI...........................................        5.4         34.8           3.1         27.9           3.3         32.7  
  BEx...........................................        1.6         51.6           3.7         49.3           1.3         44.8  
                                                      -----                      -----                      -----               
  Company.......................................  $    15.8         41.4     $    17.0         40.3     $    16.5         43.2  
                                                      -----                      -----                      -----               
                                                      -----                      -----                      -----               

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    The following  tables sets  forth the  percentage of  net sales  of  certain
income  and expense items for the three months ended March 31, 1995 and 1996 and
for the years ended December 31, 1993, 1994 and 1995.                           

                                                        [Enlarge/Download Table]

                                                                              PERCENTAGE OF                         
                                                                                NET SALES                           
                                                                            THREE MONTHS ENDED     PERIOD TO PERIOD 
                                                                                MARCH 31,          PERCENTAGE CHANGE
                                                                         ------------------------  -----------------
                                                                            1995         1996        1995 VS. 1996  
                                                                         -----------  -----------  -----------------
                                                                                                                    
Net sales...............................................................     100.0%       100.0%           20.3%    
Cost of goods sold......................................................      43.2         48.3            34.4     
License and royalty expense.............................................      12.2         10.1           --        
Gross profit............................................................      44.6         41.6            12.1     
Warehouse and selling expenses..........................................      30.2         26.3             4.9     
General and administrative..............................................      17.0         16.3            15.2     
Operating income........................................................      (2.3)        (1.5)           23.3     
Interest expense........................................................       2.3          3.0            54.9     
Minority interest in (income) loss of subsidiaries......................       0.5         (0.5)         (221.7)    
Net income..............................................................      (2.4)        (5.8)         (190.4)    

                                                        [Enlarge/Download Table]

                                                                     PERCENTAGE OF                                      
                                                                       NET SALES                    PERIOD TO PERIOD    
                                                                      YEAR ENDED                   PERCENTAGE CHANGE    
                                                                     DECEMBER 31,               ------------------------
                                                         -------------------------------------   1993 VS.     1994 VS.  
                                                            1993         1994         1995         1994         1995    
                                                         -----------  -----------  -----------  -----------  -----------
                                                                                                                        
Net sales...............................................     100.0%       100.0%       100.0%        10.8%        (9.5)%
Cost of goods sold......................................      45.7         46.0         44.5         11.5        (12.4) 
License and royalty expense.............................      12.9         13.7         12.3         18.4        (19.0) 
Gross profit............................................      41.4         40.3         43.2          7.6         (2.9) 
Warehouse and selling expenses..........................      23.2         25.7         26.7         22.4         (5.8) 
General and administrative expenses.....................      13.0         13.8         13.0         17.4        (14.5) 
Operating income........................................       5.2          0.8          3.5        (80.2)       259.5  
Interest expense........................................       1.6          1.6          2.2         13.3         22.7  
Minority interest in (income) loss of subsidiaries......      (1.0)         0.4         (0.6)       139.2       (264.2) 
Income before discontinued operations...................       1.5         (0.6)         1.1       (146.2)       255.5  
Discontinued operations.................................       0.3         (1.8)       --          (689.2)       --     
Net income..............................................       2.1         (2.4)         1.1       (226.8)       139.1  

DISCONTINUED OPERATIONS                                                         

    In 1991,  the  Company  started  the Top  Banana  division  which  primarily
developed  and marketed licensed  children's electronic banks  and clocks, which
were manufactured exclusively  in the Far  East. In December  1994, the  Company
decided  to wind down the division due to large losses attributable primarily to
the financing of Top Banana's working  capital needs through letters of  credit,
excessive  time to source products  from the Far East  and a distribution system
that was  distinct  from  its  distribution system  for  posters,  T-shirts  and
buttons. This process was substantially completed in 1995.                      

    The  loss from discontinued operations was $770,000 on sales of $3.5 million
in 1994 compared to income of $131,000 on sales of $2.6 million in 1993. Of  the
loss from discontinued operations recognized during 1994, $424,000 was due to an
operating  loss and $346,000  was due to  the estimated loss  on disposal of the
operation. No additional  loss from  discontinued operations  was recognized  in
1995  as the reserve  for loss on  disposal established in  1994 was sufficient.
These operations have  been accounted for  as a discontinued  operation for  all
periods presented.                                                              

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    THREE MONTHS ENDED MARCH 31, 1996 COMPARED WITH THREE MONTHS ENDED MARCH 31,
1995                                                                            

    The  Company's net sales increased $1.5  million, or 20.5%, during the first
quarter of 1996 compared  to the first quarter  of 1995. This increase  resulted
primarily  from a $2.6 million increase in sales  by SDI that more than offset a
$600,000 decrease in sales by OSP and  a $500,000 decrease in sales by BEx.  The
173.3%  increase in  SDI's sales  is principally  due to  the popularity  of the
Anheuser-Busch licenses ("I LOVE YOU, MAN" and FROGS). The 11.5% decrease in OSP
sales is related to the significant sales generated in the first quarter of 1995
by LEGENDS OF  THE FALL-Brad  Pitt and LION  KING. BEx's  sales decreased  71.4%
compared  to the first quarter of 1995 primarily to due to the reorganization of
the Company's management,  redirection of  the marketing and  sales effort,  and
relocation of the Company's operations.                                         

    Cost of goods sold increased $1.1 million, or 34.4%, in the first quarter of
1996 to $4.3 million compared with $3.2 million in the first quarter of 1995. As
a percentage of net sales, cost of goods increased to 48.3% in the first quarter
of  1996 from 43.2%  in the first quarter  of 1995. The  Company's cost of goods
increased primarily because SDI, which typically  has the highest cost of  goods
sold,  comprised 46.1% of the Company's total sales in the first quarter of 1996
compared to 20.3% in the first quarter of 1995.                                 

    OSP's cost of goods  sold decreased $300,000, or  14.3%, to $1.8 million  in
the  first  quarter of  1996  from $2.1  million in  the  first quarter  of 1995
primarily due to slightly lower printing and paper costs.                       

    SDI's cost  of goods  sold increased  by $1.6  million, or  200.0%, to  $2.4
million in the first quarter of 1996 from $800,000 in the first quarter of 1995.
SDI's  cost of goods sold as a percentage  of sales in the first quarter of 1996
was 58.5%  compared to  53.3% in  the first  quarter of  1995. SDI's  net  sales
increased  significantly,  thereby contributing  to  the large  increase  in the
overall cost  of goods  sold.  The increase  in  the cost  of  goods sold  as  a
percentage  is  primarily due  to  the increase  in  sales of  products  to mass
retailers, which are typically sold at  a lower price compared to specialty  and
gift retailers.                                                                 

    BEx's cost of goods sold decreased by $200,000, or 66.7%, to $100,000 in the
first  quarter of 1996 compared to $300,000  in the first quarter of 1995. BEx's
cost of goods  sold as a  percentage of sales  increased to 50.0%  in the  first
quarter  of  1996 from  42.9%  in the  first quarter  of  1995 due  primarily to
decreased efficiency as a result of  the relocation of the Company's  operations
and reorganization of management.                                               

    License  and royalty expense, as a percentage of sales decreased to 10.1% in
the first quarter of  1996 from 12.2% in  the first quarter of  1995 due to  the
increase  in sales of products under lower royalty rate licenses as a percentage
of total sales of  licensed products. OSP's royalty  rate decreased to 13.0%  in
the  first quarter of 1996 from 13.5% in the first quarter of 1995 due primarily
from an $850,000 decrease in sales for Disney licenses which have higher royalty
rates. SDI's royalty rate decreased  to 7.3% in the  first quarter of 1996  from
13.3% in the first quarter 1995 primarily due to the addition of a license which
has  a lower royalty rate than most  of SDI's film and television licenses. This
license generated $2.1 million in sales, or  51.2%, of SDI's total sales in  the
first quarter of 1996.                                                          

    Warehouse  and selling expenses increased $110,000, or 4.9%, to $2.4 million
in the first quarter  of 1996 from  $2.3 million in the  first quarter of  1995.
Factors  contributing  to  this increase  included  an increase  of  $234,000 in
commissions and an  increase of  $59,000 in  freight by  SDI due  to the  173.3%
increase  in sales.  These increases  were offset  by BEx's  overall decrease of
$173,000 in warehouse  and selling  expenses. This  decrease is  related to  BEx
moving  its  warehouse  operation  into OSP's  facility.  Warehouse  and selling
expenses as a percentage  of sales decreased  to 26.3% in  the first quarter  of
1996 from 30.2% in the first quarter of 1995.                                   

    General and administrative expenses increased by $191,000, or 15.2%, to $1.5
million  in the first quarter of 1996 from  $1.3 million in the first quarter of
1995, due primarily  to an increase  of $68,000 in  legal, accounting and  other
professional fees and a bonus to the President of SDI of $149,000. Additionally,
reductions  in general and administrative expense were due to the BEx relocation
which accounted for a $31,000 decrease in costs.                                

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    Operating loss decreased $40,000, or 23.3%, in the first of quarter 1996  to
$134,000  compared to $174,000 in the first  of quarter 1995. As a percentage of
sales, operating loss decreased  to 1.5% in the  first quarter of 1996  compared
with  2.3% of sales in the first quarter of 1995. The decrease in operating loss
was attributable  to the  lower  operating expenses  as  a percentage  of  sales
discussed above.                                                                

    Interest  expense increased $95,000,  or 54.9%, to $268,000  in the first of
quarter 1996  from  $173,000 in  the  first quarter  of  1995. The  increase  in
interest  expense was due  primarily to an increase  in the contractual interest
rate charged  on  the  outstanding  borrowings  by OSP  and  BEx  prior  to  the
refinancing  of the credit  line in February  1996. Additionally, SDI's interest
expense increased due to additional  factoring of accounts receivable  resulting
from the increase in first quarter sales.                                       

    The Company's income tax provision in the first quarter of 1996 was $67,000,
compared with an income tax benefit of $133,000 recorded in the first quarter of
1995,  an increase of  $200,000. The tax  provision in 1996  was attributable to
increased net  income at  SDI and  no recognition  of a  tax benefit  for  BEx's
operating  losses  which  had  been  recorded  in  1995  due  to  available  tax
carrybacks.                                                                     

    The Company's net  loss increased $337,000,  or 190.4%, to  $514,000 in  the
first  quarter of 1996 compared with a loss  of $177,000 in the first quarter of
1995. As a percentage of  sales, the net loss was  5.8% in the first quarter  of
1996 compared to 2.4% in the first quarter 1995.                                

YEAR ENDED DECEMBER 31, 1995 COMPARED WITH YEAR ENDED DECEMBER 31, 1994 

    The  Company's  net  sales  decreased $3.9  million,  or  9.3%,  during 1995
compared with  1994.  This  decrease  resulted primarily  from  a  $4.6  million
decrease in sales by BEx and a $956,000 decrease in sales by SDI which more than
offset  a $1.6 million increase  in sales by OSP. The  61.1% decrease in the BEx
sales was principally due to BEx not having a uniquely popular licensed property
to generate sales during 1995, as contrasted  to sales of products based on  THE
LION  KING  and  MIGHTY MORPHIN  POWER  RANGERS  licenses in  1994.  OSP's sales
increased 6.8%  in  1995  from 1994  primarily  due  to new  products  and  more
retailers  selling its products. In 1995, SDI's sales decreased 9.0% because SDI
did not have a  licensed property that generated  broad appeal to customers  who
purchase from mass retailers.                                                   

    Cost  of goods sold  decreased $2.4 million,  or 12.4%, to  $17.0 million in
1995 compared to $19.4 million in 1994, due primarily to the decrease in cost of
goods as  a percentage  of sales  of OSP  and SDI,  which more  than offset  the
increase  in the cost of goods as a  percentage of sales of BEx. As a percentage
of net sales, cost of  goods sold dropped from 46.0%  in 1994 to 44.5% in  1995.
The  Company's cost of goods as a  percentage of sales improved since OSP, which
has the lowest cost of  goods as a percentage of  sales, comprised 66.0% of  the
Company's total net sales in 1995, compared with 55.9% in 1994.                 

    Although  OSP's cost of goods  sold increased by $160,000,  or 1.7%, to $9.8
million in 1995 from $9.7 million in  1994, OSP's cost of goods as a  percentage
of  sales decreased from 41.1%  in 1994 to 38.9%  in 1995, primarily because OSP
sold more products and was able to charge more for its products by selling  them
directly  to retailers rather than through  distributors. In 1995, the amount of
sales to retailers was 70.9% of total OSP sales, compared to 68.0% of total  OSP
sales in 1994.                                                                  

    SDI's cost of goods decreased by $944,000, or 13.8%, to $5.9 million in 1995
from  $6.8 million in 1994. SDI's cost of goods as a percentage of sales in 1995
was 58.4% compared to 61.3% in 1994. Although SDI's net sales decreased, thereby
contributing to a decrease in  the overall cost of  goods sold, the decrease  in
the  cost of goods  as a percentage  of sales was  largely attributable to SDI's
ability to sell more of its products to specialty and gift retailers at a higher
price than it would typically obtain from sales to mass retailers. During  1995,
SDI  sold approximately 70% of  its products to specialty  and gift retailers in
1995, compared to approximately 60% in 1994.                                    

    BEx's cost of goods decreased by $1.6 million, or 55.2%, to $1.3 million  in
1995  from $2.9 million in 1994. However, BEx's cost of goods as a percentage of
sales in 1995 was 44.8% compared to 38.7% in                                    

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1994. The increase  in the cost  of goods as  a percentage of  sales was due  to
continued  selling of BEx's products at low prices as part of a concerted effort
to reduce excess inventory levels, and since a significant amount of BEx's sales
were at  a  lower  price to  OSP,  for  inclusion of  BEx's  products  in  OSP's
integrated product displays, rather than directly to retailers.                 

    License  and royalty expense decreased $1.1 million or 19.8% to $4.7 million
in 1995 from  $5.8 million in  1994. As  a percentage of  sales, royalties  were
12.3%  in 1995,  compared with 13.7%  in 1994. This  was due to  the increase in
sales of products  under lower royalty  rate licenses as  a percentage of  total
sales  of licensed products. The most  significant royalty reduction occurred in
OSP, despite an increase in sales of $1.6 million. OSP's royalties decreased  by
approximately  $200,000 in  1995 compared with  1994. As a  percentage of sales,
OSP's royalty rate decreased to 13.9% in 1995 from 15.7% in 1994, primarily  due
to  a reduction in sales of products  created under higher royalty rate licenses
such as  Disney  and  Nike.  As  a percentage  of  sales,  these  two  licensors
represented  26.6% of  OSP sales in  1995, compared  with 44.3% of  OSP sales in
1994. Sales under Disney  licenses decreased in 1995  because the popularity  of
the  POCAHONTAS licensed merchandise in 1995 was  not as great as the popularity
of THE LION KING  licensed merchandise in  1994. The Company  did not renew  the
license  to  sell  Nike products.  In  addition, OSP  increased  distribution of
competitors's products, for which it does not pay royalties.                    

    Warehouse and selling expenses decreased $623,000, or 5.8%, to $10.2 million
in 1995  from $10.8  million in  1994. Factors  contributing to  this  reduction
included  a decrease of  $458,000 in commissions  and a decrease  of $160,000 in
freight expenses. Because these expenses are generally directly related to sales
volume, warehouse  and  selling  expenses  remained  relatively  constant  as  a
percentage of sales, at 26.7% in 1995, compared with 25.7% in 1994. During 1995,
the  Company  consolidated  its  warehouse operations  in  its  Bell, California
facilities, and it is anticipated that  this consolidation will have the  effect
of  decreasing warehouse and  selling expenses as  a percentage of  sales in the
future.                                                                         

    General and administrative expenses decreased by $842,000, or 14.5%, to $5.0
million in 1995 compared with $5.8 million in 1994, due primarily to a  decrease
of $494,000 in salaries and related employee expenses, a decrease of $203,000 in
legal,  accounting and other professional fees and a decrease of $263,000 in the
bad debt provision, which decreases were offset by a $134,000 increase in  other
outside  services.  The decrease  reflects  certain one  time  expenses incurred
during 1994,  including bonuses  paid to  the  Presidents of  SDI and  BEx,  and
additional  legal expenses relating to an  abandoned attempt to acquire a poster
distributor. As  a  percentage of  sales,  general and  administrative  expenses
decreased slightly, from 13.8% of sales in 1994 to 13.0% of sales in 1995.      

    Operating  income  increased by  $1.0 million,  or 259.5%,  in 1995  to $1.4
million in 1995  compared with $392,000  in 1994, despite  the 9.3% decrease  in
sales.  The increase in operating income was attributable to the lower operating
expenses discussed above. As a  percentage of sales, operating income  increased
to 3.7%, compared with 0.9% of sales in 1994.                                   

    Interest  expense increased  $156,000, or  22.8%, to  $841,000 in  1995 from
$685,000 in  1994. The  increase in  interest expense  was due  primarily to  an
increase  in the contractual interest rate charged  on the borrowings by OSP and
BEx due to  their violation  of certain  covenants under  their loan  agreement.
Additionally,  total  outstanding  borrowings  were  higher  in  1995, including
subordinated debt  issued in  the  fourth quarter.  As  a percentage  of  sales,
interest expense was 2.2% of sales in 1995, compared with 1.6% of sales in 1994.
The  credit line was refinanced in February  1996. See "-- Liquidity and Capital
Resources."                                                                     

    OSP has a 79% interest  in BEx and a 51%  interest in SDI. Accordingly,  the
minority  shareholders' interest in income of the subsidiaries has the effect of
reducing the  Company's net  income  when a  subsidiary  is profitable.  When  a
subsidiary  is  unprofitable, a  portion of  the  loss may  be allocated  to the
minority interest, if  the minority  shareholder's basis  in his  stock has  not
already  been reduced to zero. In  1995, BEx had a loss  of $329,000 and SDI had
net income of $556,000. After allocating a portion of                           

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these amounts  to the  minority interest,  the minority  interest in  income  of
subsidiaries  on a consolidated basis was $243,000 in 1995, which had the effect
of reducing the Company's consolidated net income by the same amount. Global One
will acquire 100% of the shares of BEx in connection with the Reorganization.   

    OSP has been  taxed as an  S Corporation  for federal and  state income  tax
purposes  since 1989.  Pro forma  income taxes,  pro forma  loss from continuing
operations, and pro forma loss from continuing operations per share reflect  the
pro forma effect of income taxes as if OSP had been taxed as a C Corporation for
all periods presented. Upon consummation of the Transactions, Global One will be
subject to federal and state income taxes. See "S Corporation Distributions."   

    Net  income increased to $403,000  in 1995 compared with  a net loss of $1.0
million in  1994. This  increase was  the  result of  decreased cost  of  goods,
royalties  and operating expenses discussed above  and the absorption in 1994 of
the discontinued operations. As  a percentage of sales,  net income was 1.1%  of
sales in 1995, compared with a loss of 2.4% of sales in 1994.                   

YEAR ENDED DECEMBER 31, 1994 COMPARED WITH YEAR ENDED DECEMBER 31, 1993 

    The  Company's  net  sales increased  $4.1  million, or  10.7%,  during 1994
compared with  1993.  This  increase  resulted primarily  from  a  $4.4  million
increase  in sales by BEx and a $4.1 million increase in sales by OSP which more
than offset a $4.4 million decrease in  sales by SDI. The increase in OSP's  and
BEx's  sales was principally  due to the  sale of merchandise  based on THE LION
KING and MIGHTY MORPHIN POWER RANGERS licenses and the continued expansion  into
the mass retailers and other retail chains in 1994. The decrease in sales at SDI
in  1994 was due  to the reduction in  the popularity of  the BEAVIS & BUTT-HEAD
license.                                                                        

    Cost of goods sold increased $2.0 million or 11.0% to $19.4 million in  1994
from  $17.4 million in  1993, due primarily to  the increase in  net sales. As a
percentage of sales, the  Company's cost of  goods however, remained  relatively
constant at 46.0% in 1994, compared with 45.7% in 1993.                         

    OSP's  cost  of goods  sold increased  by  $2.0 million,  or 25.5%,  to $9.7
million in 1994 from $7.7 million in 1993. As a percentage of sales, OSP's  cost
of  goods increased from  39.5% in 1993  to 41.1% in  1994, primarily because of
increased material costs, product mix and the distribution of other  publisher's
products.  To a lesser  extent, OSP sold  a slightly larger  percentage of OSP's
products to mass retailers at a lower price.                                    

    SDI's cost of goods decreased by $1.8 million, or 20.9%, to $6.8 million  in
1994 from $8.6 million in 1993. However, as a percentage of sales, SDI's cost of
goods  in 1994 was 61.3%  compared to 55.5% in  1993 primarily because of higher
material costs and the sale of a lower percentage of SDI's products to specialty
and gift retailers at a higher price. During 1994, SDI sold approximately 60% of
its products to specialty and gift  retailers, compared to approximately 80%  in
1993.                                                                           

    BEx's cost of goods increased by $1.8 million, or 156.9%, to $2.9 million in
1994  from $1.1 million in  1993. As a percentage of  sales, BEx's cost of goods
increased to 38.7% in 1994 from 35.5% in 1993. The increase in the cost of goods
as a percentage of sales was due to the use of outside manufacturers to  produce
BEx's products, compared to 1993 when a larger percentage of BEx's products were
manufactured in-house.                                                          

    License and royalty expense increased $880,000, or 18.0%, to $5.8 million in
1994  from $4.9 million in  1993. As a percentage  of sales, the average royalty
rate increased from 12.9%  in 1993 to  13.7% in 1994. In  1994, OSP's and  BEx's
royalties  increased  approximately $670,000  and $480,000,  respectively, while
SDI's royalties decreased $270,000. The  reason for the increased royalty  rates
was  the  increased sale  of higher  royalty rate  products. Sales  under Disney
licenses increased in  1994 because  the popularity  of THE  LION KING  licensed
merchandise  was greater than the popularity of the ALADDIN licensed merchandise
in 1993.                                                                        

    Warehouse and selling expenses increased by $2.0 million, or 22.4%, to $10.8
million in 1994 from $8.8 million in  1993. This was due primarily to  increases
of approximately $500,000 in warehouse                                          

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salaries,  $300,000 in repairs  and maintenance, $661,000  in sales salaries and
$284,000 in freight-out expense.  The predominant reason for  the increase as  a
percentage  of sales  was the addition  of a  Vice President of  Sales and other
management and support staff.  As a percentage of  sales, warehouse and  selling
expenses were 25.7% of sales in 1994, compared with 23.2% of sales in 1993.     

    General  and  administrative expenses  increased $860,000  or 17.4%  to $5.8
million in 1994 from $5.0 million in 1993. As a percentage of sales, general and
administrative expenses were 13.8% of sales in 1994 compared with 13.0% of sales
in 1993. The increase  in general and  administrative expenses reflects  certain
expenses  incurred during 1994, including bonuses  paid to the Presidents of SDI
and BEx  of  $510,000,  an increase  of  $330,000  in the  bad  debt  provision.
Additionally, a bonus of $833,000 was paid to the President of SDI in 1993. This
amount,  however,  was largely  offset  by an  overall  increase in  salaries of
$898,000 in 1994.                                                               

    Operating income decreased $1.6  million or 80.2% to  $392,000 in 1994  from
$2.0  million in 1993. As  a percentage of sales,  operating income decreased to
0.9% of sales in 1994, compared with 5.2% in 1993. The decrease was attributable
to the  higher  operating expenses  discussed  above, despite  the  10.7%  sales
increase.                                                                       

    Interest  expense  increased  $80,000  or 13.2%  to  $685,000  in  1994 from
$605,000 in 1993. As a percentage of sales, interest expense remained relatively
constant at  1.6% of  sales in  both 1994  and 1993.  Although interest  expense
remained  relatively  constant  overall,  OSP's  interest  expense  increased by
$152,000 in 1994 due to continued reliance on its line of credit to finance  its
growth, while SDI's and BEx's interest expense decreased by $56,000 and $16,000,
respectively.                                                                   

    In  1994, BEx had  a net income of  $57,000 and SDI had  a loss of $327,000.
After allocating  a portion  of  these amounts  to  the minority  interest,  the
minority  interest in loss of subsidiaries on a consolidated basis was $148,000,
which had the effect of increasing the Company's consolidated net income by  the
same amount.                                                                    

    The  Company incurred a loss  of $1.0 million or 2.4%  of sales in 1994 from
income of $813,000 or 2.1% of sales in 1993. This decrease was the result of the
higher royalty rates and  increased operating expenses  discussed above and  the
loss due to discontinued operations. See "-- Discontinued Operations."          

LIQUIDITY AND CAPITAL RESOURCES                                                 

    At  March 31, 1996, working capital was approximately $3.3 million. Net cash
used in operating activities  during the three months  ended March 31, 1996  was
approximately  $800,000 due primarily to a loss of $514,000 in the first quarter
of 1996, an increase of $665,000 in accounts receivable, an increase of $921,000
in inventory and offset by an increase in accounts payable of $1.2 million.  Net
cash  provided  by  financing  activities  during  the  three  months  ended was
approximately $1.1 million due primarily to increased borrowings of $1.2 million
under its credit facilities.                                                    

    In February 1996, OSP and BEx arranged  a line of credit, with a  three-year
term,  in the  amount of  $7.5 million at  an interest  rate of  1.75% above the
reference rate which was collateralized by substantially all of OSP's and  BEx's
assets.  See Note 6 of Notes to  Consolidated Financial Statements. At April 30,
1996, OSP and BEx had $3.0  million outstanding and $60,000 available under  the
credit  line. OSP  and BEx  are currently  in compliance  with the  terms of the
credit agreement.  At April  30, 1996,  SDI's borrowing  availability under  its
factoring agreement was $1.1 million.                                           

    At  December  31,  1995,  working  capital  was  approximately  $3.3 million
compared to  a deficit  of $197,000  at  December 31,  1994. This  increase  was
primarily  the result of improved operations and the refinancing of $2.8 million
of short-term borrowings into long-term  financing and the private placement  of
$750,000  in subordinated  debt. See Note  6 of Notes  to Consolidated Financial
Statements of OSP.                                                              

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    During 1995, net  cash provided  by operating  activities was  approximately
$1.5  million primarily  due to  net income and  minority interest  in income of
subsidiaries of $403,000  and $243,000, respectively,  $430,000 in  depreciation
and  amortization,  $1.1 million  decrease in  accounts receivable  and $885,000
decrease in inventory.  These items more  than offset the  decrease in  accounts
payable,  accrued  expenses  and  royalties payable  of  $799,000,  $384,000 and
$837,000, respectively.                                                         

    Net cash used in investing activities was approximately $609,000 during 1995
as a  result of  capital  expenditures for  tenant improvements,  furniture  and
display racks, and equipment at the Company's headquarters. See "Business of the
Company  -- Properties." During 1995, net  cash used in financing activities was
approximately $1.1 million primarily as a  result of payments on revolving  line
of  credit and dividends paid of  $1.4 million and $793,000, respectively, which
more than offset the  borrowing on long-term subordinated  debt of $750,000  and
issuance  of  $500,000 of  common  stock resulting  from  the reinvestment  of a
portion of dividends paid to shareholders.                                      

    The Company's  working capital  requirements generally  peak in  the  second
quarter  of each year as its production  increases in order to coincide with the
release of  summer  movies. Typically,  the  Company's sales  during  the  first
quarter are generally lower than at other times during the year, and the Company
experiences  a loss during the first quarter. See " -- Seasonality." During this
period, the Company's primary sources of liquidity have been its line of  credit
and  extended  credit terms  allowed  by its  vendors. See  Note  6 of  Notes to
Consolidated Financial Statements of OSP.                                       

    Due to the failure of the Company's Top Banana division to achieve projected
sales in  the  fourth  quarter  of  1994, the  Company  did  not  experience  an
anticipated increase in accounts receivable to support advances under its credit
agreement  in  order to  finance its  1995  first quarter  operations. See  " --
Discontinued Operations." In addition, at December 31, 1994, the Company was  in
violation  of all  of its  bank covenants under  its loan  agreement. The lender
declared the Company in technical default in June 1995, although the Company did
not have a payment default under the loan agreement.                            

    As a  result of  the violations,  the lender  reduced the  advance rate  and
increased  the interest rate charged on borrowings. The lender agreed to forbear
from proceeding against the  collateral and approved  monthly amendments to  the
original  credit  agreement.  Since  the  Company  did  not  have  adequate cash
reserves, it  was delinquent  on royalty  payments  and was  unable to  pay  its
obligations  on a current basis. The Company was able to continue its operations
at that time  due largely  to the  willingness of  its vendors  to extend  trade
credit  and its licensors not to terminate licenses for the Company's failure to
make royalty payments. The loan matured as of August 1995, and was renewed on  a
monthly  basis  which resulted  in increases  in the  interest rate  charged and
reductions in  the  advance rate  permitted.  During 1995,  the  largest  amount
outstanding  under  the  loan  agreement was  $5.9  million.  The  interest rate
increased from 1.75% over prime to 8.25% over prime during 1995.                

    Due to the strength of the summer  film releases in 1995, in particular  the
POCAHONTAS  and BATMAN  licenses, the  Company returned  to profitability within
several months.  Due to  improved cash  flow,  the Company  began to  repay  its
obligations on a current basis.                                                 

    However,  due to the leveraged nature of the Company's capital structure and
the reduction in advance rates by the Company's lender, the Company continued to
operate under a restricted cash flow.  Therefore, in November 1995, the  Company
negotiated  an infusion of $750,000 of subordinated debt from one of its vendors
for its working  capital needs. See  Note 7 of  Notes to Consolidated  Financial
Statements  of OSP.  During the fourth  quarter, the  Company began negotiations
with several lenders to  obtain a new  credit facility in  order to replace  the
month to month extensions provided by the Company's then current loan agreement.
In addition, the Company retained a financial advisor to seek additional sources
of equity capital.                                                              

    SDI  sells substantially all of its accounts  receivable to a factor under a
continuing contract,  cancelable upon  written  notice given  60 days  prior  to
expiration.  In most cases, the  factor approves the credit,  and the account is
sold without recourse. In cases in which the factor does not approve the credit,
SDI bears the risk. At December 31, 1995, the receivables that were at the  risk
of SDI were                                                                     

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approximately  $251,000.  At  December 31,  1995,  amounts due  from  the factor
included in accounts receivable-trade were  $822,000. The factor, to the  extent
of  any financing provided, holds a security interest in all accounts receivable
and property of SDI.                                                            

    As a result of the Private Placement, Global One will net approximately $2.0
million after paying the accrued $1.75 million dividend to the OSP Shareholders,
$375,000  of  subordinated  debt,  $2.2   million  for  costs  related  to   the
Transactions  and an additional dividend of approximately $400,000 to permit the
OSP Shareholders to pay their respective tax liabilities incurred as a result of
OSP's operating results during 1995 and  that portion of 1996 prior to  Closing.
The Company believes that the new credit facility, together with the anticipated
net  proceeds of the Private  Placement, will be sufficient  to fund its working
capital requirements for  the remainder  of 1996. Additional  financing will  be
required   to  provide  for  any  business  or  product  line  acquisitions  and
significant expansion  of  Global  One's international  business.  In  addition,
Global One's business plan anticipates that Global One will seek to increase its
distribution  of  products  directly to  mass  retailers. See  "Business  of the
Company -- Business Strategy." The extent  to which Global One is successful  in
achieving  its business plan will depend on  the availability of capital for the
purchase of additional display  racks to place  in retail establishments.  There
can be no assurance that such additional financing will be available.           

EFFECTS OF INFLATION                                                            

    Global  One's management believes that inflation will not have a significant
effect on the Global One's operations.                                          

SEASONALITY                                                                     

    The Company has historically had higher net sales as a percentage of  annual
sales in the second quarter. In 1995, the Company recorded 32.9% of its sales in
the  second quarter. Management  believes that the  Company's seasonal sales are
primarily due to the seasonal release  of major films which correspond to  sales
of  promotional  products  related  to  such  films.  Although  films  that  are
anticipated to be major hits are often released in the summer, film distribution
companies frequently release major films in  the autumn or during the  holidays.
Such fluctuations in sales typically result in corresponding fluctuations in the
Company's  profitability  which is  anticipated to  continue in  the foreseeable
future. See "Risk  Factors of Global  One Distribution &  Merchandising Inc.  --
Seasonality and Fluctuations in Operating Results."                             

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    The  following table  sets forth the  quarterly results of  operation of the
Company for the two years  ended December 31, 1994 and  1995, and for the  three
months ended March 31, 1996.                                                    

                                                        [Enlarge/Download Table]

                                                                     QUARTER ENDED                                
                                                  ----------------------------------------------------            
                                                   MARCH 31,   JUNE 30,   SEPTEMBER 30,  DECEMBER 31,     TOTAL   
                                                     1994        1994         1994           1994         1994    
                                                  -----------  ---------  -------------  -------------  --------- 
                                                                     (IN THOUSANDS)                               
                                                                                                                  
QUARTERLY FINANCIAL INFORMATION:                                                                                  
  Net sales......................................  $   7,100   $  13,741   $    12,165     $   9,162    $  42,168 
  Gross profit...................................      2,813       5,500         5,070         3,645       17,028 
  Operating expenses.............................      3,220       4,880         4,464         4,072       16,636 
  Income (loss) from operations..................       (407)        620           606          (427)         392 
  Interest expense...............................        129         160           198           198          685 
  Income (loss) before income taxes..............       (536)        460           408          (625)        (293)
  Pro forma provision (benefit) for income                                                                        
   taxes.........................................        (79)         68            60           (92)         (43)
                                                  -----------  ---------  -------------  -------------  --------- 
  Pro forma income (loss) from continuing                                                                         
   operations....................................  $    (457)  $     392   $       348     $    (533)   $    (250)
                                                  -----------  ---------  -------------  -------------  --------- 
                                                  -----------  ---------  -------------  -------------  --------- 

                                                        [Enlarge/Download Table]

                                                         QUARTER ENDED                                            
                                      ----------------------------------------------------               QUARTER  
                                       MARCH 31,   JUNE 30,   SEPTEMBER 30,  DECEMBER 31,     TOTAL    ENDED MARCH
                                         1995        1995         1995           1995         1995      31, 1996  
                                      -----------  ---------  -------------  -------------  ---------  -----------
                                                              (IN THOUSANDS)                                      
                                                                                                                  
Net sales............................  $   7,422   $  12,566    $   9,242      $   8,998    $  38,228   $   8,941 
Gross profit.........................      3,329       5,566        3,807          3,879       16,581       3,671 
Operating expenses...................      3,503       4,333        3,682          3,654       15,172       3,805 
Income (loss) from operations........       (174)      1,233          125            225        1,409        (134)
Interest expense.....................        173         209          220            239          841         267 
Income (loss) before income taxes....       (347)      1,024          (95)           (14)         568        (401)
Pro forma provision (benefit) for                                                                                 
 income taxes........................        (70)        206          (19)            (3)         114         (85)
                                      -----------  ---------  -------------  -------------  ---------  -----------
Pro forma income (loss) from                                                                                      
 continuing operations...............  $    (277)  $     818    $     (76)     $     (11)   $     454   $    (316)
                                      -----------  ---------  -------------  -------------  ---------  -----------
                                      -----------  ---------  -------------  -------------  ---------  -----------

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BUSINESS OF GLOBAL ONE

    Global  One was incorporated in  the state of Delaware  on April 23, 1996 to
serve as a holding company for the Company and its subsidiaries, and to  acquire
Kelly  Russell through KRSI  Acquisition. Global One  organized three subsidiary
corporations under  the laws  of the  state of  Delaware: OSP  Acquisition,  BEx
Acquisition,  and KRSI  Acquisition. Immediately prior  to the  KRSI Merger, OSP
will be merged with  and into OSP  Acquisition and BEx will  be merged with  and
into  BEx Acquisition. At the  Effective Time of the  KRSI Merger, Kelly Russell
will be merged with  and into KRSI Acquisition.  The subsidiaries of Global  One
following  the Closing will  be "OSP Publishing,  Inc.," "Kelly Russell Studios,
Inc.," and "BEx Corp.,"  respectively. SDI will continue  to be a subsidiary  of
OSP Publishing, Inc. following the Transactions.                                

    To date, Global One has not conducted any business except in connection with
the Transactions.                                                               

BUSINESS OF THE COMPANY 

GENERAL                                                                         

    The Company was incorporated in the State of California in 1989. The Company
has  elected S corporation status and, consequently, the Company's earnings have
been taxed  at the  shareholder level.  As  a result  of the  Transactions,  the
Company will no longer qualify as an S Corporation.                             

    The Company designs and produces licensed trend merchandise which it markets
for  sale in gift and stationary stores, video stores, music stores, toy stores,
bookstores  and  mass  retailers.  The  Company  products  consist  of  posters,
T-shirts,  framed and  unframed wall  decor, buttons,  key chains,  stickers and
collectible movie scripts. Substantially all  of the Company's net sales  during
1995  were attributable to products  incorporating some licensed material. These
products incorporate  primarily  licensed  images  and  characters  from  motion
pictures, television, comic books, music, sports and popular culture. Management
believes  that the Company is the  leading domestic publisher and distributor of
licensed posters, and a leading  distributor of licensed T-shirts, buttons,  key
chains, stickers and collectible movie scripts.                                 

    The  Company  's  licenses  encompass over  200  properties,  including: (i)
Disney's THE HUNCHBACK  OF NOTRE  DAME, POCAHONTAS  and THE  LION KING  animated
movies,  MICKEY UNLIMITED  characters and  HOME IMPROVEMENT  television program;
(ii) Warner Bros.'s  LOONEY TUNES  characters and  BAYWATCH television  program;
(iii) other television programs, including FRIENDS, MELROSE PLACE, SEINFELD, and
BEAVIS  & BUTT-HEAD; (iv) other motion pictures, including FLIPPER, INDEPENDENCE
DAY, PULP  FICTION  and  BABE;  and (v)  various  musicians  and  personalities,
including  Madonna, Boyz II Men, The  Doors, Marilyn Monroe and Whitney Houston.
See "-- Operations and Licensing."                                              

    The Company's business is conducted through OSP and OSP's subsidiaries,  SDI
and  BEx. OSP publishes licensed and non-licensed posters, and also manufactures
Book Bites-TM-, Wallet Cards, movie scripts and other trend gift items. See  "--
Products  and  Operating  Subsidiaries."  SDI  designs  and  markets  a  line of
T-shirts, sweatshirts, hats and other apparel to department and specialty stores
and other retail outlets, including mass  merchants, based on both licensed  and
non-licensed  designs. See "-- Products and Operating Subsidiaries." BEx designs
and markets licensed and non-licensed buttons, stickers, key rings and  magnets.
See "-- Products and Operating Subsidiaries."                                   

    The  Company's products incorporate designs created  by its staff of artists
and approved  by the  licensor. See  "--  Design and  Development." All  of  the
Company's  products are produced according to its specifications by unaffiliated
manufacturers   located    in    the    greater   Los    Angeles    area.    See
"-- Manufacturing."                                                             

    The   Company's  products   are  sold   primarily  through   in-house  sales
representatives and multi-line independent sales representatives and secondarily
through distributors  to a  diversified  group of  over 45,000  retail  outlets,
primarily in the mass merchandise, gift, music, bookstore, toy, grocery, framing
and  video markets. The Company's customers include K-Mart, Wal-Mart, Musicland,
Walden Books,                                                                   

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Blockbuster Entertainment, Toys R' Us and J.C. Penney. K-Mart and Musicland each
accounted for 10% of the Company's  net sales during 1995. International  sales,
which are conducted primarily through a network of distributors, comprised 5% of
total sales during 1995. See "-- Sales and Marketing."                          

BUSINESS STRATEGY                                                               

    Global  One's business strategy  is to generate  revenue and earnings growth
through further penetration of  domestic and international  markets for sale  of
the  Company's existing products, and the introduction of new product lines that
complement and supplement existing product lines  which can be sold through  the
same channels of distribution.                                                  

    To  accomplish its strategic objectives, Global One may seek to: (i) acquire
producers of  other lines  of trend  merchandise; (ii)  increase sales  to  mass
retailers;  (iii) further  expand into  international markets;  (iv) develop and
introduce new and ancillary product categories utilizing existing licenses;  (v)
continue  to acquire licenses from licensors with whom the Company currently has
relationships  and  from  new  licensors;  (vi)  enter  into  partnerships  with
retailers  to develop  new products;  (vii) develop  relationships with "anchor"
retailers who will commit to purchase items in new product categories and (viii)
develop and expand sales of products through "tie in" or "premium" sales. Global
One may engage in future strategic  acquisitions if and when such  opportunities
arise. It has no present understandings or agreements concerning any acquisition
or  merger, however, and is  not presently negotiating with  respect to any such
matter, other than the proposed KRSI Merger.                                    

    Management believes that  the KRSI Merger  will provide additional  licensed
products, particularly sports-related merchandise, for sale in markets presently
served  by  the  Company  and  will  enable  Global  One  to  pursue  new market
opportunities.  It  is  anticipated  that,  following  the  KRSI  Merger,  Kelly
Russell's  products will continue  to be sold by  Kelly Russell's existing sales
organization and will also be promoted through Global One's sales force.        

OVERVIEW OF THE LICENSED MERCHANDISE INDUSTRY                                   

    Royalties on sales of  licensed merchandise provide  an important source  of
supplemental  revenue for licensors,  primarily in the  entertainment and sports
industries. According to THE LICENSING LETTER, sales of licensed merchandise  in
the  U.S.  and Canada  in 1994  were approximately  $102.2 billion.  The Company
operates in  the trend,  novelty or  gift segment  of the  licensed  merchandise
industry  which management believes accounted for approximately $27.0 billion in
sales in the U.S.  and Canada in  1994. Management believes  that the growth  in
sales  of licensed  merchandise during  the past  five years  is principally the
result of  the  rapid growth  and  globalization  of the  U.S.  motion  picture,
television, music and sports industries, during this period. Management believes
that  a continuation of  these trends and the  continued domination of worldwide
markets by the U.S. film  and entertainment industries will provide  significant
opportunities   for  future   expansion  of  international   sales  of  licensed
merchandise.                                                                    

    Management believes that trend, novelty and gift items, such as the products
marketed by the Company,  have a high turnover  rate and provide retailers  with
higher  returns per square foot than most other retail merchandise. The low cost
of production of the Company's products  permit retailers to sell such  products
at  lower price points that appeal to a wide range of consumers. Disposable wall
products incorporating standard characters, such as MICKEY MOUSE and BUGS BUNNY,
classic icons, such as Marilyn Monroe  and James Dean, contemporary and  classic
musicians, such as Alanis Morrissette and The Doors, or hit films and television
productions,  such as  THE LION  KING and  FRIENDS, are  an inexpensive  way for
consumers, particularly children, teens and young adults, to express  themselves
and identify with their favorite aspects of popular culture. Retailers that sell
the  Company's  merchandise frequently  utilize  integrated product  displays to
generate a higher volume of "impulse sales" of licensed promotional products.   

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COMPETITION                                                                     

    Management believes that OSP is currently the leading domestic publisher  of
licensed  posters. OSP's primary  competitors in the  poster publishing business
are Day Dream Publishing, Inc., Western Graphics, Inc., Portal Publications  Co.
and  Funky  Enterprises.  Although the  Company  is unable  to  obtain published
financial and other  data with respect  to production and  sales volumes of  its
competitors,  most of which are private companies, based on their experience and
knowledge of the  licensed poster  industry, the  Company's management  believes
that  OSP, with annual  sales of $25 million,  accounts for 25%  to 33% of total
annual production volume in the licensed poster industry of between $75  million
and  $100  million.  The Company's  management  further believes,  based  on its
knowledge of  the licensed  poster  industry, that  the Company's  next  largest
competitor  has annual sales  of approximately $20 million.  The Company and its
four major competitors collectively  account for an estimated  80% share of  the
market for licensed posters.                                                    

    The   Company  competes  for  licenses  with  other  producers  of  licensed
merchandise on the basis  of its multiple product  categories, such as  posters,
T-shirts,  framed and  unframed wall  decor, buttons,  stickers, key  chains and
collectible movie  scripts.  Management believes  the  use of  multiple  product
categories,  which  often  can be  sold  through  the same  retail  facility, is
attractive to licensors because  it provides a  more efficient distribution  and
more  royalties based upon a popular licensed property. In addition, the Company
offers a large  and diversified  distribution network. The  variety of  products
offered by the Company, the quality and experience of its art department and its
strong  relationships  with key  licensors and  major  studios have  enabled the
Company to acquire a portfolio of approximately 200 major licenses.             

    The Company competes for retail floor space on the basis of its portfolio of
licenses, which allow it to offer the greatest selection of titles. The  Company
has  approximately 1,100 shelf keeping units  ("SKUs") while its competitors are
believed to offer only between 200 and 400 SKUs. The Company has in place 18,000
poster racks of varying  sizes at its customers,  and the Company's sales  staff
provides  ordering and  stocking services.  In addition,  the Company's multiple
product lines enable it  to provide retailers  with integrated product  displays
incorporating  each  subsidiaries'  products,  thus  offering  retailers  a more
effective way to capitalize on a popular trend.                                 

PRODUCTS AND OPERATING SUBSIDIARIES                                             

    The Company publishes and distributes licensed posters, T-shirts, framed and
unframed wall decor, buttons, key chains, stickers and collectible movie scripts
through OSP, SDI and  BEx. Substantially all of  the Company's net sales  during
1995  were  attributed to  products  incorporating some  licensed  material. The
following table sets forth the Company's net sales by subsidiary:               

                                                        [Enlarge/Download Table]

                                                                                                   THREE MONTHS ENDED MARCH
                                               YEAR ENDED DECEMBER 31,                                       31,           
                     ----------------------------------------------------------------------------  ------------------------
                               1993                      1994                      1995                      1995          
                     ------------------------  ------------------------  ------------------------  ------------------------
                       AMOUNT          %         AMOUNT          %         AMOUNT          %         AMOUNT          %     
                     -----------  -----------  -----------  -----------  -----------  -----------  -----------  -----------
                                                                                                                           
OSP.................  $    19.5        51.2%    $    23.6        55.9%    $    25.2        66.0%    $     5.2        70.3% 
SDI.................       15.5        40.7          11.1        26.3          10.1        26.4           1.5        20.3  
BEx.................        3.1         8.1           7.5        17.8           2.9         7.6           0.7         9.4  
                          -----       -----         -----       -----         -----       -----           ---       -----  
Company.............  $    38.1       100.0%    $    42.2       100.0%    $    38.2       100.0%    $     7.4       100.0% 
                          -----       -----         -----       -----         -----       -----           ---       -----  
                          -----       -----         -----       -----         -----       -----           ---       -----  



                               1996                                                                                        
                     ------------------------                                                                              
                       AMOUNT          %                                                                                   
                     -----------  -----------                                                                              
                                                                                                                           
OSP.................  $     4.6        51.7%                                                                               
SDI.................        4.1        46.1                                                                                
BEx.................        0.2         2.2                                                                                
                            ---       -----                                                                                
Company.............  $     8.9       100.0%                                                                               
                            ---       -----                                                                                
                            ---       -----                                                                                

OSP                                                                     

    OSP develops and markets posters incorporating primarily licensed images and
characters from  motion  pictures,  television, animation,  music,  and  popular
culture.   OSP's  product  lines  are  designed  principally  around  four  main
categories  of  consumers:  pre-teens,  teens,  college  students  and   adults.
Non-licensed  posters published by OSP include  generic posters of models, cars,
airplanes and popular phrases.  OSP's typical poster consists  of a color  image
printed on 23"x 35", 80 lb. paper.                                              

    OSP  also develops and markets  products utilizing licensed and non-licensed
material, including Wallet Cards, Book Bites-TM-, movie scripts and other  trend
gift  items to independent retailers. Wallet  Cards are informative cards shaped
like credit cards  and Book Bites-TM-  are die-cut bookmarks  bearing images  of
OSP's licensed characters.                                                      

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    In  order to  expand OSP's  products aimed  at adults,  OSP developed AVALON
EDITIONS-TM- in March 1995 and CLASSIC COMMEMORATIVES-TM- in August 1995. AVALON
EDITIONS-TM- and CLASSIC COMMEMORATIVES-TM- are contemporary framed and unframed
wall  decor  lithographed  on  premium   grade,  museum  weight  paper.   AVALON
EDITIONS-TM-  feature reproductions of favorite  fine art pieces, generic themes
and humorous  renditions  of  fine art.  CLASSIC  COMMEMORATIVES-TM-  are  newly
created  proprietary art featuring standard  licensed characters, such as MICKEY
MOUSE. OSP's main poster  and trend product lines  generally retail for  between
$5.00  and $10.00  each, while  movie scripts,  AVALON EDITIONS-TM-  and CLASSIC
COMMEMORATIVES-TM- generally retail for approximately $20.00 each.              

    OSP's five largest licensors based on 1995 net sales were Disney (26% of net
sales), Warner Bros./ LCA (19%), Sony (9%), Winterland Productions (6%), and  No
Fear  (4%).  OSP's leading  products  during the  past  12 months  have included
posters and  other items  based on  characters and  images from  THE LION  KING,
POCAHONTAS,  LOONEY TUNES, Marvel Comics and  D.C. Comics, various musical acts,
including Madonna and the  Doors, and the  No Fear brand.  During 1996, OSP  has
introduced  or intends to introduce new posters  based on THE HUNCHBACK OF NOTRE
DAME,  SPACE  JAM,   FLIPPER,  BANANAS  IN   PAJAMAS,  Alanis  Morrissette   and
INDEPENDENCE DAY.                                                               

SDI                                                                     

    SDI  designs and  markets licensed  and non-licensed  T-shirts, sweatshirts,
mugs, hats and boxer shorts in the $20.00 and under retail price range for  sale
primarily  in  department stores,  such  as J.C.  Penney,  gift shops  and music
stores, such  as  Musicland,  apparel  stores,  such  as  Miller's  Outpost  and
Spencers,  and  mass  retailers  such  as  Wal-Mart  and  K-Mart.  Such products
generally retail at the $15.00 price level.                                     

    SDI's five largest  licensors based  on 1995 net  sales were  Anheuser-Busch
(24.4%), Fox Television (17.4%), Disney (11.7%), Viacom (11.7%) and MTV Networks
(7.0%).  SDI's leading products during the past 12 months have included T-shirts
and other items based on  characters and images from Anheuser-Busch's  Budweiser
beer  commercials ("I LOVE YOU, MAN"  and BULLFROGS), Disney's HOME IMPROVEMENT,
BEAVIS & BUTT-HEAD and  FRIENDS. During 1996, SDI  has introduced or intends  to
introduce new products based on INDEPENDENCE DAY and X-FILES, among others.     

BEX                                                                     

    BEx  designs and  markets licensed and  non-licensed buttons,  key rings and
stickers for sale  as novelty  and impulse  purchase items  in a  wide range  of
retail stores, including gift-oriented card shops, mass merchandisers, music and
video  stores and convenience stores.  Non-licensed products include buttons and
key rings  bearing phrases  or slogans,  seasonal buttons  and  tourist/souvenir
buttons  targeted at  specific regions. Retail  prices for  BEx's products range
from $1.29 to $3.99. Sales  of buttons accounted for 45%  of BEx's net sales  in
1995 and key rings accounted for 33% of BEx's net sales. Other products produced
by BEx include licensed and non-licensed stickers and magnets.                  

    BEx's four largest licensors based on 1995 net sales were Disney (26% of net
sales), Warner Bros./ LCA (25%), Jim Benton (13%) and Viacom (7%). BEx's leading
products  during the past 12 months have  included items based on characters and
images from POCAHONTAS, BAYWATCH and FRIENDS. During 1996, BEx has introduced or
intends to introduce new products based on THE HUNCHBACK OF NOTRE DAME,  BANANAS
IN PAJAMAS and LOONEY TUNES standard characters.                                

LICENSING                                                                       

    The  Company's licenses  permit the Company  to produce  and market products
based on characters and images which already possess their own popular  identity
through  media exposure  such as  television, films,  cartoons, comic  books and
music. Most licenses permit the Company to develop multiple products through its
various operating  subsidiaries.  In  addition  to licenses  for  sales  in  the
domestic market, the Company is increasingly pursuing international licenses for
sales  in Canada,  Europe, and  the Pacific  Rim. International  rights exist in
approximately 10% of all licenses.                                              

    Licensed products include  Promotional Properties,  Standard Properties  and
seasonal  properties. Promotional Properties  include products containing scenes
or images connected with a current film,                                        

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television program or popular  performer, such as THE  HUNCHBACK OF NOTRE  DAME,
HOME  IMPROVEMENT  and Madonna.  Standard Properties  include products  based on
standard characters, including MICKEY MOUSE and LOONEY TUNES characters such  as
BUGS  BUNNY, TAZ,  FOGHORN LEGHORN and  MARVIN THE  MARTIAN. Seasonal properties
include products consisting of characters or  images with a holiday or  seasonal
theme.  Standard Properties typically generate  relatively consistent sales over
time while Promotional  Properties typically  involve higher  initial sales  but
shorter  product  life-spans.  Licensed  promotional  products  are  those  that
accompany a major  promotional campaign,  typically timed to  coincide with  the
theatrical or video release of a large-budget film. Generally, three to six such
promotional campaigns occur during a fiscal year, and the shelf life of licensed
promotional  products  is  typically  60-120  days.  Seasonal  products  provide
additional sales during  holiday periods. Sales  of Promotional Properties  also
tend  to be  seasonal, due  to the seasonality  of major  theatrical releases of
films. Film studios  typically release the  majority of major  films during  the
months of May through September, which has historically resulted in higher sales
volumes by the Company during this period. The second and third quarters of 1995
and 1994 accounted for 57.0% and 61.4% respectively, of total annual sales.     

    The  successful marketing  of Promotional Properties  generally requires the
Company to anticipate and evaluate  the popularity of licensed properties,  most
of  which are media related, and to capitalize on the success of such properties
in a timely manner. A determination to acquire a license must frequently be made
before the commercial introduction of the property in which a licensed character
appears. The licensing staff must evaluate many criteria, including the  actors,
script,  actual  footage, demographics  and the  licensor's marketing  budget to
determine whether  to  acquire a  new  license. As  Promotional  Properties  are
typically  marketed successfully only for a  limited period of time, the success
of the Company's marketing program is dependent upon its ability to  continually
acquire  new, popular  promotional licenses.  As the  industry leader, potential
licensors typically contact the Company directly to negotiate a new license,  in
most  cases 6 to 18 months  before release of a film  or other project. In cases
where the Company does  not own a  license for a hit  property, the Company  may
seek to distribute such products for its competitors.                           

    Royalties  to the Company's licensors typically range from 10% to 25% of net
sales, with an average consolidated royalty rate of 12.3% in 1995, 13.7% in 1994
and 12.9% in  1993. Royalty  rates during  1995 for sales  by OSP,  SDI and  BEx
averaged 13.9%, 8.9% and 10.3% of net sales, respectively. Royalty rates tend to
be  lower to  the extent  sales are  made directly  to retailers  rather than to
distributors. See  "--  Sales  and Marketing."  License  arrangements  generally
require the payment of non-refundable advances and guaranteed minimum royalties.
As  a  result of  increased competition  for  licenses, Global  One may,  in the
future, be  required  to  pay  licensors higher  royalties  and  higher  minimum
guaranteed  payments  in order  to  obtain attractive  properties  for marketing
through its existing and new product lines.                                     

    It is customary in the licensing industry to provide for the verification of
royalty payments to licensors  through audits of sales  records on demand. As  a
result  of such audits, royalty  obligations may be subject  to adjustment. As a
result of 1994  audits, the  Company and the  licensors discovered  that over  a
period  of several years, certain royalties had been miscalculated. In addition,
management believes that a significant amount  of adverse audit findings in  the
past  were  attributable to  errors  in data  entry  with respect  to applicable
royalty rates, depending  on the territory  into which sales  were made and  the
nature  of customers  as distributors or  retailers. Adjustments  due to adverse
audit  findings  applicable  to  1994  and  1993  were  $143,000  and  $148,000,
respectively.   These  amounts  are  reflected  in  the  Company's  Consolidated
Financial Statements.  The  Company's  management information  system  has  been
revised  to  require the  advance identification  of customers,  territories and
royalty rates to avoid data entry  errors in the future. However, no  assurances
can  be given that  adverse audit findings will  not be found  in the future, or
that material adjustments  will not be  required, either of  which could have  a
material adverse effect on Global One's results of operations.                  

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    Typically,  the  Company's licenses  are for  a period  of two  years. Major
licensors in  the entertainment  and  media industries  generally do  not  grant
exclusive  licenses, and most of the Company's major licenses are non-exclusive.
Management believes  that major  licensors generally  do not  grant  competitive
licenses  within a territory largely due to the limited life-span of promotional
properties, the transaction  costs associated with  granting duplicate  licenses
and  the fact that distribution by a single company builds better demand for the
product. However, no assurances can be given that such licensors will not  grant
competing licenses in the future. Management believes that the Company maintains
excellent relationships and an excellent reputation with its licensors.         

    The  Company's portfolio of  over 200 major  licenses includes the following
properties:                                                                     

DISNEY ENTERPRISES INC.                                                         
-  The Hunchback of Notre Dame                                                  
-  Mickey Unlimited                                                             
-  Pocahontas                                                                   
-  The Lion King                                                                
-  Disney Babies                                                                
-  101 Dalmatians                                                               

WARNER BROS./LCA                                                                
-  Looney Tunes                                                                 
-  Space Jam                                                                    
-  Films & Television                                                           

ANIMATION                                                                       
-  Marvel Comics                                                                
-  D.C. Comics                                                                  
-  Superman                                                                     
-  The Adventures of Batman & Robin                                             
-  Betty Boop                                                                   
-  Aeon Flux                                                                    
-  Peanuts                                                                      

TELEVISION                                                                      
-  The X-Files                                                                  
-  Bananas in Pajamas                                                           
-  Baywatch                                                                     
-  Star Trek: Original Series                                                   
-  Beavis & Butt-head                                                           
-  Melrose Place                                                                
-  Friends                                                                      
-  Lois & Clark: The New Adventures                                             

BRANDS                                                                          
-  No Fear                                                                      
-  Budweiser                                                                    
-  Hawaiian Tropic                                                              
-  Caesars' Palace                                                              
-  Maui & Sons                                                                  

FILMS                                                                           
-  Flipper                                                                      
-  Barb Wire                                                                    
-  Pulp Fiction                                                                 
-  Batman Forever                                                               
-  Legends of the Fall                                                          
-  Babe                                                                         
-  Desperado                                                                    
-  Ace Ventura II                                                               
-  Independence Day                                                             
-  Casper                                                                       
-  Star Trek Generations                                                        
-  Goldeneye                                                                    
-  Forrest Gump                                                                 
-  The Wizard of Oz                                                             
-  Mission Impossible                                                           
-  Gone With The Wind                                                           

WINTERLAND PRODUCTIONS                                                          
-  Alanis Morrisette                                                            
-  The Doors                                                                    
-  Boyz II Men                                                                  
-  Madonna                                                                      
-  Jerry Garcia                                                                 
-  Led Zeppelin                                                                 
-  Weezer                                                                       
-  Freddie Mercury                                                              
-  Marilyn Manson                                                               
-  Michael Bolton                                                               
-  Hole                                                                         
-  Reba McEntyre                                                                
-  Beastie Boys                                                                 
-  Whitney Houston                                                              
-  Jimi Hendrix                                                                 
-  The Who's Tommy                                                              
-  Ice T                                                                        
-  Bruce Lee                                                                    

PERSONALITIES                                                                   
-  Babe Ruth                                                                    
-  Martin Luther King                                                           
-  James Dean                                                                   
-  The Doors                                                                    
-  Marilyn Monroe                                                               
-  Pamela Anderson                                                              
-  Lou Gehrig                                                                   
-  Claudia Schiffer                                                             
-  Bob Marley                                                                   
-  Jenny MacCarthy                                                              
-  Selena                                                                       
-  Elvis                                                                        
-  Bruce Lee                                                                    

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DESIGN AND DEVELOPMENT                                                          

    The imagery for the  Company's products is custom  designed from concept  to
final  art by the Company's  staff of 12 in-house  artists and freelance artists
utilizing computerized  design  techniques.  The  art  department  also  designs
integrated  retail displays utilizing the licensed properties. The Company's art
department is equipped  with state-of-the art  production facilities,  providing
the  Company total quality control over the entire production process, including
the actual layout and design of products.                                       

    Artwork for  licensed  products is  typically  subject to  approval  by  the
licensor.  Licensors also typically  retain the right  to approve any packaging,
promotional material  or  advertising  used  in  connection  with  a  particular
license.  Such approval is  in the licensors'  sole discretion and  may be time-
consuming. In many cases, the  Company's artists utilize style guides  furnished
by  the licensor. Where style guides are not available, the art department staff
reads scripts or reviews film  clips to gain insight  into the personality of  a
character.  Artists create concept  sketches that are  presented to the licensor
for discussion  and direction  before  final art  work is  prepared.  Management
believes  that the  art department's  experience in  working with  the Company's
licensors enables  department  staff  to  prepare  illustrations,  sketches  and
drawings  that are more likely  to be acceptable to  the licensor, and that this
experience provides  the  Company with  an  advantage over  other  producers  of
licensed  products  because the  Company is  typically able  to produce  a final
product that satisfies  the approval criteria  of the Company's  licensors in  a
more timely fashion than other producers.                                       

MANUFACTURING                                                                   

    The   Company  manufactures  substantially  all   of  its  products  through
unaffiliated manufacturers located  in the greater  Los Angeles area.  Decisions
relating  to  the  choice  of  manufacturer  are  based  on  price,  quality  of
merchandise, reliability  and  the  ability  to  meet  timing  requirements  for
delivery. OSP is a party to a contract with a poster printer which obligates OSP
to  utilize the  printer for at  least $3.8  million in printing  work at market
rates  through  June  30,   1997,  which  amount   is  expected  to   constitute
approximately  60%  of total  outside  printing costs  during  the term  of such
contract. OSP's  management  believes  that  numerous  other  manufacturers  are
available to produce its products should its existing manufacturers be unable to
do  so, and that Global One would be  able to obtain high quality merchandise at
competitive prices without significant delays. However, the inability of  Global
One to meet its delivery requirements could result in the termination of some of
its  licenses and no assurances can be  given that this will not occur. Finished
products are  returned  to  the  Company's  Bell,  California  warehouse,  where
products  are packaged for final distribution. Posters are distributed either in
rolled form, shrink-wrapped  on poster  board to  retailers or  shipped flat  on
pallets  to  distributors.  The  minimum poster  purchase  for  manufacturing is
typically 4,000 units, and average poster manufacturing orders during 1995  were
8,000 units.                                                                    

    The principal raw materials used in the production and sale of the Company's
products  are paper products, finished T-shirts  and plastics. Raw materials are
generally purchased by the manufacturers  who deliver completed products to  the
Company.  Paper  products  and plastics  are  typically produced  in  the United
States, while finished T-shirts are produced both domestically and in East Asia.
In certain circumstances, the Company  purchases paper and shrink wrap  directly
for  the  packaging  of its  finished  products.  The Company  believes  that an
adequate supply of raw  materials used in the  manufacture and finishing of  its
products  are  readily  available  from  existing  and  alternative  sources  at
reasonable prices.                                                              

SALES AND MARKETING                                                             

    The Company distributes its products directly to retailers primarily through
approximately 80 to 100 commissioned in-house and multi-line, independent  sales
representatives, and through 10 distributors, in the United States. A network of
over  100 distributors are used to sell  products to Canada, Europe, Japan, Hong
Kong, Australia, New Zealand, Mexico and South America. Approximately 75% of net
sales are directly to retailers, including corporate buyers for national  chains
and  individual stores, and  25% of net  sales are to  distributors. OSP's sales
force reports to three regional managers,                                       

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who are under the direction of OSP's  Vice President of Sales. SDI and BEx  each
have  independent sales  representatives who  sell their  products. In addition,
OSP's sales representatives sell SDI and BEx merchandise.                       

    The Company  distributes  to  over 45,000  retail  accounts  worldwide.  The
Company's  management believes  that no  single retailer  or group  of retailers
accounts for a significant portion of the market for licensed posters,  T-shirts
and  buttons. The Company's distribution channels include general retail stores,
gift and  print shops,  video and  record  stores, toy  stores, comic  book  and
baseball  card stores, mass retailers,  department stores, supermarkets, framing
shops, drug stores, mail-order and home shopping company and school book  clubs.
International sales comprised 5% of total sales during 1995.                    

    The  Company distributes its  products to the  following chain stores, among
others:                                                                         

                                                                [Download Table]

MASS MARKET        MUSIC/VIDEO                       GIFT/TOY/BOOK     
                                                                       
K-Mart             Musicland                         Toys R' Us        
Meijer             Transworld                        Kay Bee Toys      
Target             Wherehouse                        Claire's Boutiques
Wal-Mart           Tower Records                     Waldenbooks       
Fred Meyer         Blockbuster                       Spencers          
Shopco             Hollywood Video                   Coach House Gifts 



                                                     CRAFT             
DRUG/SUPERMARKET   DEPARTMENT STORE/HOME SHOPPING    STORES/CATALOGS   
                                                                       
Osco's             Macy's                            Michael's         
Payless            J.C. Penney                       Aaron Brothers    
Albertson's        QVC                               Standard Brands   
Smiths             Home Shopping Network             Fingerhut         
Randalls           Hammacher & Schlemmer             Deck the Walls    

    The Company  has placed  over  18,000 proprietary  poster display  racks  of
various  sizes  in retail  establishments. The  Company's sales  force typically
visits retailers  every  one to  six  weeks to  ensure  that display  racks  are
adequately  stocked  with  the  Company's  products,  and  to  offer promotional
materials and integrated  product displays  for upcoming  releases. The  Company
participates  in the electronic  data interchange ("EDI")  program maintained by
many of its largest  customers, including Toys R'  Us, Wal-Mart, K-Mart,  Target
and  J.C. Penney. The EDI program allows  the Company to monitor store inventory
and schedule  production  to  meet anticipated  reorders,  which  are  generally
fulfilled  within 3  days. Additionally, the  Company has  expanded its in-store
service capabilities by offering a custom retail management system, which tracks
both promotional program and individual product sales, enabling the Company  and
the retailer to more accurately evaluate sales per square foot and annual sales.
This  enables the Company to maximize the productivity of each individual retail
location.                                                                       

    The  Company  also  sells  its  products  through  mail-order  catalogs  and
promotional   and  merchandising   tie-ins  with  fast-food   chains  and  other
organizations. The  Company  has established  a  special premium  and  promotion
department  to focus  on such sales.  Premium sales  typically involve nonretail
sales of properties to promotional  partners of a licensor, including  companies
such  as Food Maker (Jack-in-the-Box) and Pillsbury, often in conjunction with a
rebate or other special pricing.  Premium sales constituted approximately 5%  of
OSP's  net sales during 1995. The Company's management believes that the premium
department will account for a larger  percentage of sales during 1996.  However,
no  assurances can  be given  that premium  sales will  constitute a significant
percentage of Global One's net sales in the future.                             

    The Company has also secured the rights from Sprint to distribute  telephone
cards  with licensed graphics as a new  premium product. In addition, Global One
is considering establishing a website on the Internet with full color images  of
Global One's products as an additional catalog-type distribution channel for its
products.                                                                       

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RETURNS POLICY                                                                  

    The Company accepts product exchanges for credit from its retail accounts on
all  posters,  buttons  and  key  chains for  which  there  is  a  paid invoice.
Management believes that the  Company's policy of  exchanges for credit  ensures
that  unsuccessful titles will be replaced  with titles that may generate sales.
During 1995, the average returns rate  was 12%. The Company generally obtains  a
credit on royalties and commissions paid on product exchanges. Exchanges are not
accepted from distributors, framers, international or premium sales. In general,
T-shirts are not returnable, except where the merchandise is flawed.            

BACKLOG                                                                         

    Due  to  the  promotional nature  of  the Company's  licensed  products, the
limited selling period for  promotional materials and  the Company's ability  to
quickly  fill  orders,  the  Company's  customers  order  backlog  has  not been
material.                                                                       

GOVERNMENT REGULATION; TARIFFS AND DUTIES                                       

    In the United  States, the Company  is subject to  the provisions of,  among
other  laws, the Federal  Consumer Product Safety Act  and the Federal Hazardous
Substances Act  (the  "Acts"). The  Acts  empower the  Consumer  Product  Safety
Commission   (the  "Consumer   Commission")  to   protect  the   public  against
unreasonable risks of injury associated  with consumer products, including  toys
and other articles. Some of the Company's products may be deemed to be toys. The
Consumer  Commission has the authority to exclude from the market articles which
are found to be hazardous and can require a manufacturer to repair or repurchase
such articles  under  certain  circumstances.  Any  such  determination  by  the
Consumer  Commission is subject to court review. Violations of the Acts may also
result in civil and  criminal penalties. Similar laws  exist in some states  and
cities  in the United States and in  many jurisdictions throughout the world. In
addition, the Company  maintains product  liability insurance in  the amount  of
$2,000,000.                                                                     

EMPLOYEES                                                                       

    As  of December 31, 1995, the Company had 142 full time employees, including
30 employees at BEx and 38 employees  at SDI. During periods of high  production
volume (May through September), the Company typically hires up to 100 additional
temporary  employees to  assist in production.  The Company's  employees are not
covered by  any  collective  bargaining agreements.  The  Company  believes  its
relationship with its employees is satisfactory.                                

PROPERTIES                                                                      

    The  Company  is  headquartered in  a  105,000 square  foot  leased facility
located at 5548  Lindbergh Lane,  Bell, California  90201. The  majority of  the
Company's  operations,  such as  corporate  offices, in-house  sales  staff, art
department,  accounting  and  warehouse  operations,  including  all  of   OSP's
operations and BEx's administrative and warehousing functions, are based at such
location.  BEx also  leases approximately  3,000 square  feet of  offices at 200
Diversion, Rochester, Michigan 48307. SDI conducts all of its operations out  of
approximately  20,000 square feet  of leased office space  at 10615 Vanowen St.,
Burbank, CA 91505.                                                              

LEGAL PROCEEDINGS                                                               

    The Company is from time to time a party to routine litigation incidental to
its business. Based upon the advice of its counsel, management does not  believe
that  the outcome of any litigation, individually or in the aggregate, will have
a material adverse  effect on Global  One's results of  operations or  financial
condition.                                                                      

TRADEMARKS                                                                      

    The  Company utilizes  several trademarks and  logos in  connection with the
marketing and sale of  its products. The Company  believes that the strength  of
the Company's trademarks and logos are of considerable value to its business and
intends    to   continue    to   protect   them.    At   May    1,   1996,   the

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Company had one United States registered trademark and applications pending  for
an  additional  three  trademarks.  To  management's  knowledge,  none  of these
trademarks is the subject of a legal proceeding.                                

MANAGEMENT OF GLOBAL ONE

DIRECTORS AND EXECUTIVE OFFICERS                                                

    Global One's By-laws provide for from one to nine directors, with the  exact
number  to  be determined,  from time  to time,  by resolution  of the  Board of
Directors. Currently, there are  two directors of Global  One, Joseph C.  Angard
and Michael A. Malm. Upon consummation of the Transactions, the Merger Agreement
requires the Board to increase the size of the Board to four and to appoint Mark
S.  Hauser  and Thomas  R.  King to  fill  the vacancies  created.  Global One's
Certificate of Incorporation states that the Board of Directors shall be divided
into three classes of  directors, with the directors  in each class elected  for
three-year  staggered terms except  for the initial directors.  The terms of the
Board will expire at the annual meetings of shareholders in 1997, 1998 and 1999.
Officers will  serve at  the pleasure  of  the Board  of Directors,  subject  to
restrictions  set forth  in employment  agreements to  be entered  into. See "--
Employment Agreements." Set forth below  is certain information with respect  to
the  two persons who  are currently directors  of Global One,  and the two other
persons who will be directors and executive officers of Global One following the
Transactions.                                                                   

    JOSEPH C. ANGARD,  55, is a  Class III Director,  Chairman, Chief  Executive
Officer  and President  of Global  One. Mr.  Angard is  also Chairman  and Chief
Executive Officer of OSP. Mr. Angard  joined OSP, formerly One Stop Posters,  in
1983  as an  independent consultant  to acquire  licenses and  advise on product
development. In 1989, Mr. Angard led the senior management buyout of OSP.  Prior
to  joining One  Stop Posters,  Mr. Angard served  as director  of licensing for
Entertainment Merchandise  Marketing Corp.,  a tour  merchandising company.  His
experience  also  includes  over  eight  years  with  national  talent agencies,
including William  Morris  and  International Creative  Management.  Mr.  Angard
received a B.A. degree in English and History from Syracuse University.         

    MARK S. HAUSER, 38, will be a Class II Director of Global One. Mr. Hauser is
a founder and Managing Director of Tamarix Capital Corporation, an international
investment  and merchant  banking firm.  Previously, Mr.  Hauser was  a Managing
Director at  Hauser,  Richard &  Company  and Ocean  Capital  Corporation,  both
private  international investment banking firms.  Prior to joining Ocean Capital
Corporation in 1986, Mr. Hauser was a corporate finance and banking attorney  at
the New York office of Rogers & Wells. Before joining Rogers & Wells, Mr. Hauser
worked  as a corporate and tax solicitor for  Simons & Baffsky in Sydney and for
Simmons & Simmons in  London. Mr. Hauser is  Vice Chairman of Holmes  Protection
Group,  a security alarm systems company; a Director of ICC Technologies, a high
technology air conditioner manufacturer; a  Director of EA Industries, Inc.,  an
electronic  contract manufacturing  company; and  a Director  of Direct Language
Communications, Inc., a multilingual communications services company. Mr. Hauser
is a member of the New York Bar  and is admitted to practice law as a  solicitor
to  the Supreme Court of New South Wales  in Australia. He has economics and law
degrees from Sydney University and a Master of Law degree from the London School
of Economics and Political Science.                                             

    THOMAS R. KING, 55, has  served as a director  of Kelly Russell since  March
1995 and upon consummation of the Transactions will serve as a Class II Director
of  Global One. Mr. King is a shareholder of Fredrikson & Byron, P.A., which has
served as general counsel to Kelly Russell including legal matters in connection
with the Transactions. Mr. King has been engaged in the private practice of  law
since  1965.  Mr. King  serves  as a  director  of Sunrise  Resources,  Inc. and
DataKey, Inc.                                                                   

    MICHAEL MALM, 33,  is a Class  III Director and  Chief Operating Officer  of
Global  One and President  of OSP. Mr. Malm  joined One Stop  Posters in 1984 as
Director of Sales and was promoted to  Vice President of Sales and Marketing  in
1987. Under his management, the Company established a                           

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national  sales network which contributed to  the growth of the Company's retail
account base. Prior to 1984,  Mr. Malm founded and  owned Golden Era Posters,  a
college   poster  distribution  company.  Mr.  Malm  studied  economics  at  the
University of Southern California.                                              

    STANLEY DESANTIS,  42,  is  the  President of  Stanley  DeSantis,  Inc.  Mr.
DeSantis  is an accomplished actor and designer. Mr. DeSantis has been designing
successful apparel  for  over twenty  years.  His design  credits  include:  the
costume  graphics for the Los Angeles Olympics ceremonies, the 1984 Presidential
Inauguration, and  the  100th anniversary  of  Coca-Cola. Mr.  DeSantis  founded
Stanley DeSantis, Inc. in 1972. Mr. DeSantis graduated with a B.A. in Performing
Arts from New York University.                                                  

    GEORGE  J. VRABECK, 34, will serve as Executive Vice President of Global One
after the Closing. Mr. Vrabeck has served as Kelly Russell's President and as  a
director  since November 1994 and as  its Chief Executive Officer since February
1996. Mr. Vrabeck also served as its Chief Financial Officer from March 1995  to
February 1996, as Chief Executive Officer from November 1994 to October 1995 and
as  Chief Operating Officer from October 1994  to November 1994 and from October
1995 to February  1996. Mr. Vrabeck  served as President  of Minneapolis  Coffee
Corporation,  a group  of specialty coffee  retail stores, from  January 1991 to
July 1994. He was an associate with Morgan Stanley & Co. Inc., an  international
investment  banking firm, from  June 1989 to  January 1991, and  he was a Senior
Staff Member, of Ernst & Young from June 1983 to July 1987. Mr. Vrabeck is a CPA
and received  his  M.B.A.  from  the  University  of  Michigan,  J.D.  from  the
University  of  Minnesota Law  School and  B.S. in  accounting from  Long Island
University.                                                                     

    CHRISTOPHER B.  LUCAS, 43,  will  be Vice  President  of Finance  and  Chief
Financial Officer of Global One. Mr. Lucas joined OSP in 1993 as Vice President,
Finance and Chief Financial Officer of OSP. Immediately prior to joining OSP, he
worked  as  a  consultant  providing  financial  and  operational  assistance to
emerging growth  businesses.  From 1990  to  1992,  Mr. Lucas  worked  for  Exel
Financial,  as Vice  President, providing  expansion and  acquisition capital to
growth companies. From 1986 to 1990 he  served as Vice President of Finance  and
Administration at Peripheral Systems, Inc., a hardware/ software integrator. Mr.
Lucas  earned his M.B.A.  at the University  of Southern California  and B.S. in
Mechanical Engineering from the University of California, Los Angeles.          

    MIKE BERIN, 44, is currently and will continue to be Vice President of Sales
of OSP. Mr. Berin joined  OSP in 1993. Mr.  Berin is responsible for  overseeing
all  sales  operations.  From 1985  to  1993, Mr.  Berin  was a  Partner  at M&A
Marketing, a  distributor of  posters,  video, and  other licensed  products  to
supermarkets,  drug stores, and mass retailers.  Prior to 1985, Mr. Berin worked
for his  family's wholesale  clothing  business as  well  as for  Adderton  Food
Brokerage.  Mr.  Berin graduated  with a  B.A.  in Business  Administration from
Miami-Dade College.                                                             

COMPENSATION OF BOARD OF DIRECTORS                                              

    It is Global One's  intention to pay fees  to its non-officer directors  for
serving  on  the  Board of  Directors  and  for their  attendance  at  Board and
committee meetings. Global One will pay each non-officer director a retainer  of
$5,000  per annum, plus  $1,500 per board or  committee meeting attended. Global
One will not pay directors who  are also executive officers for attending  Board
or committee meetings.                                                          

    In addition, non-officer directors will receive annual grants of 5,000 stock
options  under  the  Stock  Option  Plan.  Non-officer  directors  will  also be
reimbursed for expenses incurred on behalf of Global One.                       

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EXECUTIVE COMPENSATION                                                          

SUMMARY OF CASH AND CERTAIN OTHER COMPENSATION                          

    The following  table  sets  forth  certain  summary  information  concerning
compensation paid or accrued by OSP for the fiscal year ended December 31, 1995,
to or on behalf of the five executive officers of OSP whose compensation in 1995
exceeded  $100,000. George J. Vrabeck, President  and Chief Executive Officer of
Kelly Russell will,  upon consummation  of the  Closing, serve  as Global  One's
Executive Vice President. See "-- Directors and Executive Officers."            

SUMMARY COMPENSATION TABLE

                                                        [Enlarge/Download Table]

                                                             ANNUAL COMPENSATION               
                                              -------------------------------------------------
                                                                                   ALL OTHER   
NAME AND PRINCIPAL POSITION                     YEAR       SALARY       BONUS     COMPENSATION 
--------------------------------------------  ---------  -----------  ---------  --------------
                                                                                               
Joseph C. Angard -- Chairman and Chief             1995  $   250,000  $  24,787   $   1,588(1) 
 Executive Officer                                                                             
Michael A. Malm -- President                       1995      250,000     --           3,254(1) 
Michael Berin -- Vice President/Sales              1995      150,000     --           5,400(2) 
Christopher B. Lucas -- Vice President --          1995      125,000     --           2,938(1) 
 Finance, Chief Financial Officer                                                              
Stanley DeSantis -- President, Stanley             1995      250,000     73,000       3,918(1) 
 DeSantis, Inc.                                                                                

------------------------                                                        
(1) Represents the value of a company leased automobile.                        
(2) Represents a $3,000 auto allowance and a $2,400 home office allowance.      

EMPLOYMENT AGREEMENTS                                                           

    Effective  upon  the  Closing,  Global One  has  entered  into  a three-year
employment agreement with Joseph C. Angard as Chairman, Chief Executive  Officer
and  President,  pursuant to  which Mr.  Angard  will receive  a base  salary of
$275,000 per year plus the  ability to earn a bonus  of up to $137,500 per  year
based  upon performance  criteria established by  the Board of  Directors at the
beginning of each year. In addition, Global One will grant to Mr. Angard options
to purchase up to 300,000 shares of Global One Common Stock at $1.50 per  share,
vesting  in the amount  of 100,000 options  per year at  the end of  each of the
first three years  during the  term of the  agreement and  exercisable for  five
years from the time of vesting.                                                 

    Effective  upon  the  Closing,  Global One  has  entered  into  a three-year
employment agreement with Michael A. Malm  as Chief Operating Officer of  Global
One  and President of OSP, pursuant to which Mr. Malm will receive a base salary
of $275,000 per year plus the ability to earn a bonus of up to $82,500 per  year
based  upon performance  criteria established by  the Board of  Directors at the
beginning of each year. In addition, Global  One will grant to Mr. Malm  options
to  purchase up to 300,000 shares of Global One Common Stock at $1.50 per share,
vesting in the  amount of 100,000  options per year  at the end  of each of  the
first  three years  during the  term of the  agreement and  exercisable for five
years from the time of vesting.                                                 

    The Company has entered  into an agreement  (the "DeSantis Agreement")  with
Stanley  DeSantis, President  of SDI, which  contemplates that  the parties will
execute a longform agreement incorporating  the terms of the DeSantis  Agreement
and that Mr. DeSantis will enter into a four-year employment agreement with SDI.
Pursuant  to the DeSantis Agreement, Mr. DeSantis  will receive a base salary of
$250,000 per year plus the ability to earn a bonus based upon the achievement of
specified net sales by SDI. Mr. DeSantis  will be President and have control  of
the  operations and management  of SDI, subject  to the control  of the Board of
Directors of SDI as to matters required by  law to be approved by the Board.  In
addition,   the   DeSantis   Agreement   provides   that   Mr.   DeSantis   will

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have the option, subject  to terms and conditions,  to repurchase the  Company's
51% interest in SDI at a price to be determined based on the previous four years
of  operating income  at SDI.  A similar  repurchase option  is provided  to the
Company if Mr.  DeSantis elects to  offer his  49% interest to  the Company.  In
addition,  the  DeSantis  Agreement  provides that  DeSantis  will  accrue stock
options to purchase OSP Common Stock to  begin vesting in the event the  Company
accepts  DeSantis' offer  of his  interest in  SDI. Such  options will terminate
should Mr.  DeSantis  exercise his  repurchase  option. The  DeSantis  Agreement
further  provides that Mr. DeSantis will  receive certain royalties, including a
2% royalty for any original artwork created by Mr. DeSantis and a 3% royalty for
the Company's use  of the  Stanley DeSantis  brand name  in the  event that  the
Company  has  purchased  Mr.  DeSantis'  interest in  SDI  and  Mr.  DeSantis is
terminated or elects not to renew his contract with SDI.                        

    Effective upon  the  Closing,  Global  One has  entered  into  a  three-year
employment  agreement  with  George  J.  Vrabeck  as  Executive  Vice President,
pursuant to which Mr. Vrabeck  will receive a base  salary of $200,000 per  year
plus  a guaranteed bonus of $25,000 payable 90  days after the end of the fiscal
year, plus the ability  to earn an  additional bonus of up  to $25,000 per  year
based  upon performance  criteria established by  the Board of  Directors at the
beginning of  each year.  In addition,  Global  One will  grant to  Mr.  Vrabeck
options to purchase up to 300,000 shares of Global One Common Stock at $1.50 per
share,  with 100,000 options  vesting per year at  the end of  each of the first
three years during the term of the agreement and exercisable for five years from
the time of vesting.                                                            

    Effective upon the Closing,  Global One will grant  to Mr. Lucas options  to
purchase  up to 250,000  shares of Global  One Common Stock  at $1.50 per share,
with 100,000 options vesting  immediately and 150,000 vesting  in the amount  of
50,000  options per year on each of the first three anniversaries of the date of
the grant and exercisable for five years from the time of vesting.              

    Effective upon the Closing,  Global One will grant  to Mr. Berin options  to
purchase  up to 125,000  shares of Global  One Common Stock  at $1.50 per share,
with 50,000 options  vesting immediately  and 75,000  vesting in  the amount  of
25,000  per year  on each of  the first three  anniversaries of the  date of the
grant and exercisable for five years from the time of vesting.                  

    In addition  to  the benefits  described  above for  Messrs.  Angard,  Malm,
DeSantis, Vrabeck, Lucas and Berin, each of the agreements referenced above will
provide   for  certain  benefits  to  the  employees,  including  an  automobile
allowance, reimbursement  of business  expenses, vacation  time, life  insurance
premium payments and disability benefits.                                       

CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS                                  

    Pyramid  Licensing is a corporation of which Global One's Chairman and Chief
Executive Officer  and  Global  One's  Chief  Operating  Officer  are  the  sole
shareholders. Pyramid Licensing represents licensors of properties, some of whom
may  in the future license such properties to Global One. The Company has agreed
to guarantee Pyramid's performance  under a lease agreement  and to pay some  of
its  expenses. The annual amount  of the lease is  $46,000, and the Company has,
through June 30, 1996, paid $53,000  in expenses, mainly salaries, on behalf  of
Pyramid  Licensing. Although no definitive proposal has been discussed or agreed
upon, it is possible  that Pyramid Licensing may  become a subsidiary of  Global
One at some point after the Closing.                                            

    In  addition, pursuant  to the DeSantis  Agreement Mr.  DeSantis has granted
Pyramid Licensing a right of first refusal to represent Mr. DeSantis with regard
to any original artwork and  to pay Pyramid Licensing  a commission of 30%  plus
reimbursement  of expenses for domestic  use and a commission  equal to 10% plus
any foreign agent's commission, not to exceed 40%, for international use.       

    Global One's Chairman  and Chief  Executive Officer  has a  26% interest  in
Press  One, a  printing company, the  majority of  which is owned  by the former
owner of the Company. The  Company purchased approximately $997,000,  $1,355,000
and  $917,000  of printing  services  from Press  One  in 1995,  1994  and 1993,
respectively. As of December 31, 1995  and 1994, the Company owed  approximately
$278,000 and $423,000, respectively to Press One.                               

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    OSP  has an agreement with an  outside agency of sales representatives which
provides marketing services to OSP. Pursuant to such agreement, the agency  paid
a  consulting fee to Joseph C. Angard and  Michael A. Malm based upon the amount
of commissions paid to the agency by OSP. During 1995, approximately $11,500 and
$86,000 were paid by the agency to Messrs. Angard and Malm, respectively,  under
such  arrangement. It is  anticipated that this agreement  will be terminated by
OSP prior to the Reorganization.                                                

    OSP has entered  into an  agreement (the "Tamarix  Agreement") with  Tamarix
Capital  Corporation ("Tamarix"), a  company of which Mark  S. Hauser, a nominee
for director of Global One, is a principal. Under the Tamarix Agreement, Tamarix
assisted OSP with, among other things, the Private Placement and will receive  a
fee  equal to  5% of  the gross  proceeds raised  in the  Private Placement plus
warrants to purchase Global One Common Stock  at an exercise price of $1.50  per
share  in an  amount equal  to 5% of  the shares  owned by  the OSP Shareholders
immediately after the Closing.                                                  

    OSP has entered into agreements (the "Advisory Agreements") with Tamarix and
Mr. Hauser (the "Advisors") commencing at the Effective Time and continuing  for
periods  of 12  months and  36 months,  respectively, unless  sooner terminated,
pursuant to  which  the Advisors  will  continue to  provide  general  financial
advisory  services to OSP and Global  One. Under the Advisory Agreements, Global
One will (a) pay Mr. Hauser $7,500 per month, (b) grant Mr. Hauser a warrant  to
purchase 52,500 shares of Global One Common Stock at an exercise price of $1.50,
per share, and (c) pay certain success fees, if any, to Tamarix, including (i) a
cash  fee equal to 2% of the amount  of funds raised or committed or obligations
assumed through a financing plus warrants equal to 2% of such amount at the same
price per share and (ii) a cash fee equal to 1% of the consideration paid in  an
acquisition.                                                                    

SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT OF GLOBAL ONE    
(PRO FORMA)                                                                     

    The   following  table  provides   information  concerning  the  anticipated
beneficial ownership, as of  the Effective Time, of  Global One Common Stock  by
(i)  persons anticipated by Global One to own  more than 5% of Global One Common
Stock as of  the Effective Time,  (ii) each anticipated  director and  executive
officer  of Global One as of the Effective Time and (iii) all such directors and
executive officers as a group.                                                  

                                                        [Enlarge/Download Table]

                                                               NUMBER OF SHARES                 
                                                                 BENEFICIALLY        PERCENT    
                                                                  OWNED (1)          OF CLASS   
                                                             --------------------  ------------ 
                                                                                                
Joseph C. Angard -- Chairman, Chief Executive Officer                                           
 and President                                                     6,448,088(2)          49.6%  
Michael A. Malm -- Director and Chief Operating Officer            1,805,465(3)          13.9%  
Mark S. Hauser -- Director                                           379,904(4)           2.8%  
Thomas R. King -- Director                                             8,000(5)         *       
George J. Vrabeck -- Executive Vice President                        100,000(6)         *       
Christopher B. Lucas -- Vice President of Finance                                               
 and Chief Financial Officer                                          100,000    (7)      *     
Directors and Executive Officers as a Group (6 individuals)         7,035,992             54.2 %

------------------------                                                        
*  Less than 1% of the outstanding shares of Common Stock.                    

(1) Shares not actually outstanding are  deemed to be beneficially owned if  the
    individual  has  the right  to acquire  such shares  within 60  days. Shares
    deemed beneficially owned by virtue of an individual's right to acquire them
    are also treated as  outstanding when calculating the  percent of the  class
    owned  by such individual or  any group in which  the individual is included
    (including Directors  and  Officers  as  a group)  but  not  for  any  other
individual.                                                             

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(2)  Includes 1,805,465 shares owned by Michael  A. Malm. It is anticipated that
    prior to  the  Effective  Time of  the  KRSI  Merger, trusts  that  will  be
    established  by Mr.  Angard and Mr.  Malm, respectively, will  enter into an
    agreement pursuant to which the trustee of Mr. Angard's trust will be  given
    a  proxy entitling Mr. Angard's trust to vote all of the shares owned by Mr.
Malm's trust.                                                           

(3) It is  anticipated that  prior to  the Effective  Time of  the KRSI  Merger,
    trusts  that will be  established by Mr. Angard  and Mr. Malm, respectively,
    will enter into an agreement pursuant  to which the trustee of Mr.  Angard's
    trust  will be given a proxy entitling Mr. Angard's trust to vote all of the
shares owned by Mr. Malm's trust.                                       

(4) Includes  warrants to  purchase 52,500  shares of  Global One  Common  Stock
    issued  pursuant to the  terms of his Financial  Advisory Agreement with OSP
    and  warrants  to  purchase  322,404   shares  issued  to  Tamarix   Capital
Corporation, a Company of which Mr. Hauser is a principal.              

(5)  Includes options to purchase 15,000 shares  of KRSI Common Stock which will
    be fully  vested and  converted into  options to  purchase 7,500  shares  of
    Global  One Common Stock and the vested  portion of options to be granted to
  Mr. King pursuant to the formula provisions of the 1996 Stock Option Plan.

(6) Represents options  to purchase 200,000  shares of KRSI  Common Stock  which
    will  be fully vested and converted  into options to purchase 100,000 shares
    of Global One Common  Stock and options granted  to Mr. Vrabeck pursuant  to
the terms of his employment agreement under the 1996 Stock Option Plan. 

(7)  Total represents the vested portion of options to purchase shares of Global
    One Common Stock  to be granted  to Mr.  Lucas under the  1996 Stock  Option
Plan.                                                                   

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KELLY RUSSELL STUDIOS, INC. 
SELECTED FINANCIAL DATA 

    The following selected financial data should be read in conjunction with the
Kelly Russell financial statements and the related notes and with "Kelly Russell
Studios,  Inc. Management's Discussion  and Analysis of  Financial Condition and
Results of Operations"  included elsewhere  herein. The  selected balance  sheet
data presented below as of December 31, 1994 and 1995 and the selected statement
of  operations data presented below for the  years ended December 31, 1993, 1994
and 1995 are  derived from the  financial statements of  Kelly Russell  included
elsewhere  herein, which financial  statements have been  audited by McGladrey &
Pullen, LLP, independent  auditors. The  selected balance  sheet data  presented
below  as of December 31, 1992 and 1993 and the selected statement of operations
data presented  below for  the year  ended December  31, 1992  are derived  from
financial  statements  of Kelly  Russell not  included  herein, which  have been
audited by McGladrey & Pullen,  LLP, independent auditors. The selected  balance
sheet  data as of  March 31, 1996 and  the statement of  operations data for the
three months  ended  March  31, 1995  and  1996  have been  derived  from  Kelly
Russell's unaudited financial statements. Operating results for the three months
ended  March 31, 1996 may not be indicative of the results of Kelly Russell that
may be expected for the year ending December 31, 1996 or any future period.     

                                                        [Enlarge/Download Table]

                                                                                                  THREE MONTHS ENDED  
                                                          YEARS ENDED DECEMBER 31,                    MARCH 31,       
                                              -------------------------------------------------  -------------------- 
                                               1992 (1)       1993        1994         1995        1995       1996    
                                              -----------  ----------  -----------  -----------  ---------  --------- 
                                                                                                     (UNAUDITED)      
                                                                                                                      
STATEMENT OF OPERATIONS DATA:                                                                                         
  Net sales.................................   $ 187,766   $2,242,685  $ 2,767,196  $ 2,813,999  $ 512,863  $ 778,614 
  Cost of sales.............................     117,479    1,231,651    4,217,646    2,553,181    277,404    452,738 
                                              -----------  ----------  -----------  -----------  ---------  --------- 
  Gross profit (loss).......................      70,287    1,011,034   (1,450,450)     260,818    235,459    325,876 
  Operating expenses........................     221,998    1,196,125    3,734,527    2,133,939    451,950    708,401 
                                              -----------  ----------  -----------  -----------  ---------  --------- 
  Operating loss............................    (151,711)    (185,091)  (5,184,977)  (1,873,121)  (216,491)  (382,525)
  Other income..............................      --           --          119,395       40,079     --         --     
  Interest expense..........................      (1,690)     (53,151)    (150,448)      (7,218)    --         (2,024)
                                              -----------  ----------  -----------  -----------  ---------  --------- 
  Loss before income taxes and extraordinary                                                                          
   item.....................................    (153,401)    (238,242)  (5,216,030)  (1,840,260)  (216,491)  (384,549)
  Extraordinary item........................      --           --          --           296,994    246,697     --     
                                              -----------  ----------  -----------  -----------  ---------  --------- 
  Net income (loss).........................   $(153,401)  $ (238,242) $(5,216,030) $(1,543,266) $  30,206  $(384,549)
                                              -----------  ----------  -----------  -----------  ---------  --------- 
                                              -----------  ----------  -----------  -----------  ---------  --------- 

NET LOSS PER COMMON SHARE:                                                                                            
  Loss before extraordinary item............   $   (0.04)  $    (0.07) $     (1.79) $     (0.52) $   (0.07) $   (0.09)
  Extraordinary item........................      --           --          --              0.08       0.08     --     
                                              -----------  ----------  -----------  -----------  ---------  --------- 
  Net income (loss) per common share........   $   (0.04)  $    (0.07) $     (1.79) $     (0.44) $    0.01  $   (0.09)
                                              -----------  ----------  -----------  -----------  ---------  --------- 
                                              -----------  ----------  -----------  -----------  ---------  --------- 
  Weighted average number of common and                                                                               
   common equivalent shares outstanding.....   2,054,600    2,054,600    2,900,383    3,540,965  3,286,765  4,082,373 

                                                        [Enlarge/Download Table]

                                                                      AT DECEMBER 31,                              
                                                      -----------------------------------------------              
                                                        1992        1993        1994         1995                  
                                                      ---------  ----------  -----------  -----------  AT MARCH 31,
                                                                                                           1996    
                                                                                                       ------------
                                                                                                       (UNAUDITED) 
                                                                                                                   
BALANCE SHEET DATA:                                                                                                
  Current assets..................................... $ 364,809  $1,545,998  $ 1,831,596  $ 1,542,351   $1,119,005 
  Total assets.......................................   368,911   1,904,096    2,049,312    1,857,285    1,397,329 
  Current liabilities................................   431,123   2,192,550    1,703,493      833,840      758,433 
  Total liabilities..................................   431,123   2,192,550    1,703,493      833,840      758,433 
  Accumulated deficit................................  (153,401)   (391,643)  (5,607,673)  (7,150,939)  (7,535,488)
  Shareholder's equity (deficit).....................   (62,212)   (288,454)     345,819    1,023,445      638,896 

------------------------------                                                  
(1) Kelly Russell was formed in 1992.                                           

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KELLY RUSSELL STUDIOS, INC. MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATION 

GENERAL                                                                         

    Kelly Russell commenced operations in January 1992 as a specialty retail art
gallery. Its  first products  were  original paintings  and sketches  of  famous
athletes  and memorable sporting events.  Those works of art  were later used to
produce limited  edition lithographic  prints. In  the fourth  quarter of  1992,
Kelly  Russell  shifted  its primary  focus  to  products for  mass  markets and
introduced the Legends  and Superstars  framed product  line. In  the summer  of
1993,  Kelly Russell began  selling an unframed,  lower cost and autograph-ready
version of  the Legends  and Superstars  product line.  Kelly Russell  assembled
finished  product  from  components  purchased  from  third  parties,  including
original artwork, lithographic prints, frames, mats, glass and other  production
materials.                                                                      

    In  March  1994,  Kelly  Russell successfully  completed  an  initial public
offering. Kelly Russell  received net proceeds  of $5,580,108 from  the sale  of
1,477,750  shares of  Common Stock  and from the  issuance of  699,986 shares of
Common Stock  on the  conversion of  certain debt  and the  exercise of  certain
warrants.                                                                       

    In  1994, Kelly Russell expended significant resources to expand its product
offerings, to  increase its  market  presence and  number  of customers  and  to
develop   its  assembly  operations.  However,   Kelly  Russell's  strategy  was
unsuccessful and the planned growth in sales volume and profitability failed  to
materialize.  In November  and December 1994,  the Board of  Directors hired new
management and revised  Kelly Russell's  business plan and  operations to  focus
solely  on  the creation,  marketing  and sales  of  limited edition  sports art
collectibles through mass merchants,  distributors and specialty retail  stores.
Beginning  in January  1995, Kelly  Russell (i)  closed its  original sports art
gallery and retail store,  (ii) discontinued the sales  of its software  product
and   ceramic  coffee  mug  lines  developed   and  introduced  in  1994,  (iii)
substantially reduced the  number of  print images  in its  product lines,  (iv)
began  outsourcing  its  assembly,  shipping  and  warehousing  activities,  (v)
eliminated certain major  channels of  distribution previously  utilized by  the
Company,  (vi) eliminated  most of  its employee  sales force  and increased the
utilization of outside sales representatives; and (vii) eliminated its  practice
of  offering guaranteed return privileges to certain customers. In December 1994
Kelly Russell  recorded  a  charge  to  operations  totaling  $2,458,876  for  a
write-down of certain assets and for the reorganization of the business.        

    In  1995, Kelly  Russell expanded its  product lines outside  the sports art
collectibles in an effort  to increase revenues to  a level where  profitability
could  be achieved. The most significant new product items include popular print
images in the  entertainment industry,  including movie,  music and  television.
Additionally,  Kelly Russell introduced a small group of wild life images. Kelly
Russell also focused its sales  and marketing efforts on establishing  long-term
customer  relationships with national and  regional retailers. Kelly Russell was
successful in  establishing  initial  or improved  customer  relationships  with
certain  retail chains.  However, to date  those retail chains  have not carried
Kelly Russell's products in all of their  stores and there is no assurance  that
they  will continue to carry Kelly  Russell's products or expand distribution to
additional stores.                                                              

    Although these  new  strategies resulted  in  improved operations  in  1995,
anticipated  sales levels  and profitability  failed to  materialize. Management
believes this failure to  increase sales levels was  primarily because only  the
images of the top few athletes of any given sport resulted in significant sales.
Kelly  Russell still lacks  a firmly established  distribution system and retail
sales were flat in  the fourth quarter of  1995. Accordingly, during the  fourth
quarter  of 1995 Kelly Russell recorded  a charge to operations of approximately
$640,000 relating to increased allowances  for inventory obsolescence and  sales
returns.                                                                        

    In  the first  quarter of 1996,  Kelly Russell's Board  of Directors further
revised its business  plan and operations  to reduce operating  costs. In  1996,
Kelly  Russell plans to produce and distribute  a more limited number of images,
primarily just the  top few athletes  of any  given sport. The  product line  in

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1996  will include approximately 100 different  images, down from the 300 images
offered during  1995.  Additionally, in  1996  Kelly Russell  will  continue  to
increase  channels of distribution  with existing and  new national and regional
retail customers.  Kelly  Russell also  changed  contractors for  its  assembly,
warehousing  and  shipping function  in January  1996. Management  believes that
alternate contractors are  available in  the event  Kelly Russell  is unable  to
obtain services from their current contractor.                                  

    In  connection with this  restructuring, Kelly Russell  recorded a charge to
1995 operations of  approximately $186,000  for the  write-down of  inventories,
prepaid  licensing rights  and original art  work, all relating  to print images
which will not be aggressively sold during 1996. Kelly Russell also reduced  the
number  of employees and accepted the  resignation of its former Chief Executive
Officer in February  1996. Management  believes its new  business strategy  will
reduce losses and improve cash flow during 1996.                                

    Kelly  Russell  has  explored various  alternatives  to  generate acceptable
revenue growth as  a stand-alone  company without success.  Management of  Kelly
Russell  believes that combining Kelly Russell's sport licenses and original art
capability with OSP's strong distribution network will provide OSP with  another
large  market and potential  for further expansion.  Management of Kelly Russell
believes that the KRSI Merger will therefore give Kelly Russell's shareholders a
significant stake in a company with exciting growth prospects.                  

    However, if the KRSI Merger is not approved by Kelly Russell's  shareholders
or  not completed for any other reason, management believes it will be necessary
for Kelly Russell  to obtain  significant debt  or equity  financing to  finance
operations through 1996. If management is unsuccessful in its financing efforts,
Kelly Russell may not be able to continue as a going concern and would be forced
to  sell off  significant assets, file  for protection  under federal bankruptcy
laws or liquidate the business.                                                 

RESULTS OF OPERATIONS                                                           

    THREE MONTHS ENDED MARCH 31, 1996 COMPARED WITH THREE MONTHS ENDED MARCH 31,
1995                                                                            

    Sales for the three months ended  March 31, 1996 were $778,614, compared  to
$512,863  for the three months ended March 31, 1995, representing an increase of
52%. Management attributes the  increase in sales  primarily to orders  obtained
from national mass merchant accounts.                                           

    Cost  of goods sold  totaled $338,503 for  the three months  ended March 31,
1996, representing 43% of net sales, compared to $220,884, or 43%, of net  sales
for  the three months ended March 31, 1995. Kelly Russell's management currently
anticipates that cost of goods sold  will be in the range  of 43% to 47% of  net
sales  in 1996,  based on  currently estimated  levels of  payments for original
artwork and photographic resources.                                             

    License and royalty expenses paid to third parties totaled $114,235, or 15%,
of net sales for the three months  ended March 31, 1996, compared to $56,520  or
11%  of net sales for the three months ended March 31, 1995. License and royalty
expenses for the three months ended March  31, 1995 were reduced due to  credits
received  as a result of  items returned to Kelly  Russell that were recorded as
sold in 1994. Management currently anticipates that license and royalty expenses
will be approximately 15% to 18% of net sales in the future.                    

    Operating expenses increased to  $708,401 for the  three months ended  March
31,  1996, from $451,950 for three months  ended March 31, 1995, representing an
increase of $256,451, or 57%. This increase is primarily due to (i) an  $118,025
increase  in  advertising, promotions  and services  to increase  saleability of
Kelly Russell's products, (ii)  a $55,283 increase in  wages and payroll  taxes,
(iii) a $24,935 increase in commissions paid to outside sales representatives as
a  result of  the increase  in sales, (iv)  an $11,728  increase in depreciation
relating to  purchase  of  displays in  1995,  and  (v) a  $43,643  increase  in
accounting  and legal  expenses relating  to the  pending OSP  transaction which
expenses are expected to increase during Kelly Russell's second quarter.        

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    Kelly Russell has incurred $2,024 of  interest expense in the first  quarter
of  1996 which  relates to  finance charges  paid to  vendors who  have extended
payments  terms  to   Kelly  Russell.   Kelly  Russell  did   not  utilize   any
interest-bearing debt in the first quarter of 1995.                             

    Kelly  Russell incurred a loss of $384,549  for the three months ended March
31, 1996 despite the increase in sales and reduction in cost of goods sold as  a
percentage of net sales. While Kelly Russell's sales are anticipated to increase
in  1996 compared  to 1995,  Kelly Russell  does not  expect that  sales will be
sufficient for Kelly Russell to be profitable in the next three quarters of 1996
or for the year.                                                                

YEAR ENDED DECEMBER 31, 1995 COMPARED WITH YEAR ENDED DECEMBER 31, 1994 

    Net sales  for 1995  increased by  1.7% percent  to $2,813,999  compared  to
$2,767,196  in  1994.  During  1995,  Kelly  Russell  discontinued  its previous
practice  of  selling  to  various  grocery  and  newsstand  customers  and  was
successful  in opening  distribution channels  into large  national and regional
retail chains. The top two customers in 1995 accounted for approximately 20%  of
net  sales, whereas  the top two  in 1994 accounted  for 7% of  net sales. Kelly
Russell was also successful in acquiring several entertainment related  licenses
and  began implementing its movie, music  and television product line. Net sales
in 1995 was comprised primarily of sales of Kelly Russell's framed and  unframed
products, with approximately 93% bearing sports related images and the remaining
having  entertainment  related  themes. Net  sales  in 1994  was  also comprised
primarily of framed and unframed art, all of which bore sports images. Sales  of
discontinued  product line items,  such as software  and ceramic mugs, comprised
approximately 3% of 1994 net sales.                                             

    Net sales  for  1995  fell  below  management's  expectations.  Contributing
factors to the disappointing sales level in 1995 included the fact that only the
images  of the top few  athletes of any given  sport resulted in any significant
sales. This experience has led management to further reduce the number of  print
images  they will offer in  the future. Also adversely  affecting 1995 sales was
the lack of  a firmly established  distribution system and  overall soft  retail
sales.                                                                          

    Previously,  Kelly Russell granted  certain of their  customers the right to
return all unsold products. This practice was eliminated in early 1995. However,
Kelly Russell has accepted returns of product in circumstances where  management
has  a particular  advantage in  doing so. Kelly  Russell's net  sales include a
provision for future sales returns  totaling approximately $110,000 at  December
31,  1995 compared to  $384,000 at December  31, 1994. A  $110,000 allowance for
sales returns was established in the fourth quarter of 1995 to reflect known and
anticipated credits negotiated in the first quarter of 1996 with certain  retail
customers  that did not experience  a desired level of  sales of Kelly Russell's
product during the holiday season.                                              

    Cost of goods  sold totaled $1,961,648  in 1995, representing  69.7% of  net
sales for the year, compared to $3,456,857, or 124.9%, of net sales in 1994. The
$1,495,209,  or 43.3%,  decrease in  cost of  goods sold  for 1995  is primarily
attributable to the 1994  year-end charges to inventory  in connection with  the
reorganization  of  Kelly  Russell's  business plan.  Also,  during  1995, Kelly
Russell completely  outsourced its  assembly  and warehousing  activities  which
reduced  the costs of  manufacturing Kelly Russell's  products. In January 1996,
Kelly Russell changed contractors for  these services. Management believes  that
alternative  contractors are available  in the event Kelly  Russell is unable to
obtain services from their current contractor.                                  

    After experiencing lower than expected sales levels in the fourth quarter of
1995, Kelly Russell recorded a  charge to operations of approximately  $640,000,
of  which (i) $520,000 related to  write-offs and allowances for inventory which
proved unsalable at  any significant levels  and, (ii) $110,000  related to  the
provision  for sales returns discussed above. The inventory obsolescence charges
relate  primarily  to  prints  and   finished  goods  inventories  produced   in
anticipation of the fourth quarter sales that did not materialize. Most of Kelly
Russell's  prints  of athletes  are  time sensitive  because  of the  changes in
uniforms and player trades that frequently  occur between seasons. As a  result,
many  of  these prints  are not  salable  in any  significant quantities  in the
following sport season and must be written  off if the fourth quarter sales  are
below  management's expectations  and large quantities  of carryover inventories
exist. In addition,  after further  revising its  business plan  to produce  and

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distribute  a more limited number of images,  Kelly Russell recorded a charge to
operations of approximately $186,000, of which approximately $80,000 related  to
an  additional allowance for inventory related to print images which will not be
aggressively sold during 1996.                                                  

    License and royalty expenses  paid to third  parties, including payments  to
artists for artwork not owned by Kelly Russell, totaled $591,533, or 21%, of net
sales  in 1995 compared to  $760,784 or 27.5% of net  sales in 1994. License and
royalty expenses include amounts  paid for guaranteed  minimum license fees  and
write-down  charges  of approximately  $174,000 and  $52,000  in 1995  and 1994,
respectively, to reduce several licenses to net realizable value.               

    Operating expenses decreased to $2,133,939 in 1995 from $3,734,527 in  1994,
representing  a decrease of $1,600,588, or 42.9%. This decrease is primarily due
to a concerted effort to reduce operating costs including reductions as follows:
(i) cutting advertising  expenditures by  $567,000; (ii)  decreasing trade  show
expenses  by $461,000; (iii) reducing shipping and mailing by $295,000; and (iv)
curtailing travel and entertainment expenditures by $155,000. During the  fourth
quarter  of  1995, Kelly  Russell charged  operations  for $100,000  relating to
accrued litigation  costs  representing management's  estimate  of the  cost  of
settling  certain  outstanding  claims  against  Kelly  Russell.  The litigation
accrual was made as required by SFAS No. 5, CONTINGENCIES, since it was probable
that a loss had been incurred. The accrual was based on management's estimate of
the ultimate loss to  be incurred. These litigation  claims were settled in  May
1996 for $133,000.                                                              

    Interest  expense totaled $7,218 in 1995, compared to $150,448 in 1994. This
decrease is  primarily  attributable  to Kelly  Russell  recording  $120,000  of
noncash  financing expense  in January 1994  in connection with  the issuance of
warrants to the participating promissory noteholders for the purchase of  60,000
shares  of Common Stock at $1 per  share. Additionally, the decrease in interest
expense is attributable  to Kelly  Russell's higher financing  needs during  the
first  quarter of 1994 to  fund the growth in sales,  pending the receipt of the
funds from the initial public offering.                                         

    In 1995, Kelly Russell recorded extraordinary income of $296,994  reflecting
reductions  in trade payables received in negotiating the settlement of past due
balances owed to certain vendors at December 31, 1994.                          

YEAR ENDED DECEMBER 31, 1994 COMPARED WITH YEAR ENDED DECEMBER 31, 1993 

    Net sales for  1994 increased  by 23.4%  percent to  $2,767,196 compared  to
$2,242,685  in  1993.  The primary  reasons  for  the sales  growth  include (i)
increased spending for advertising, (ii) increased participation in trade  shows
and  special events to  promote Kelly Russell's products,  (iii) the addition of
new customers, (iv) the continued expansion  of the Legends and Superstars  line
from  baseball  to  other sports,  and  (v)  the introduction  of  new products,
including ceramic coffee mugs and computer screen savers. However, net sales for
1994 fell significantly  short of management  expectations. Management  believed
Kelly  Russell's strategies  to distribute product  at the  retail level through
magazine distributors  and  grocery  stores  and the  use  of  guaranteed  sales
practices  for  these customers  was  unsuccessful. Kelly  Russell  utilized the
guaranteed sales program in 1993 and 1994  to assist in the introduction of  its
products  to new customers and in new geographic regions. Kelly Russell recorded
a reserve for estimated returns at the time of shipment and its management  made
further  adjustments at the end of each quarter to reflect additional facts that
became known through contact with its customers and other sources. However,  the
poor  fourth quarter 1994 sales and lack of sales at the retail level during the
1994 Holiday  Season resulted  in a  large charge  to operations  in the  fourth
quarter of 1994, primarily because management's estimates of the returns reserve
was  insufficient. The new management team hired in December 1994 eliminated the
guaranteed sales program  in early  1995. Kelly  Russell's net  sales reflect  a
reduction  for sales returns totaling approximately $901,000 in 1994 compared to
approximately  $15,000  in   1993.  Additionally,   Kelly  Russell   experienced
significant  returns of Major League Baseball and National Hockey League product
which management believed adversely affected Kelly Russell's sales in 1994.     

    Cost of goods sold  totaled $3,456,857 in 1994,  representing 124.9% of  net
sales  for the  year, compared to  $860,863 or 38.4%  of net sales  in 1993. The
$2,595,994, or 301.6%, increase in cost of                                      

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goods sold  for 1994  was primarily  attributable to  year-end charges  totaling
$1,370,000,  principally  for  inventory  shrinkage,  valuation  adjustments and
obsolescence,  and   charges  totaling   $1,088,876  in   connection  with   the
reorganization  of Kelly Russell's business plan.  The fourth quarter charges of
$1,370,000 include  (i) a  $670,000 charge  for inventory  obsolescence, (ii)  a
$390,000  charge  for inventory  shrinkage  and valuation  adjustments,  (iii) a
$166,000 charge  for  bad debts,  and  (iv) a  $144,000  charge for  returns  on
guaranteed  sales. The obsolescence  charges related primarily  to raw materials
purchased in anticipation  of significantly  higher sales  levels than  achieved
during  the year and to raw materials  purchased in anticipation of new products
that were  not  developed. The  charge  for inventory  shrinkage  and  valuation
adjustments  relate to  book to physical  inventory adjustments  at December 31,
1994 attributable to quantity and pricing differences that arose throughout 1994
due to  problems with  the  inventory control  procedures. These  problems  were
subsequently  resolved in  1995. The charge  for bad debts  relate to collection
difficulties with  certain of  its smaller  customers. In  early 1995,  the  new
management  team significantly improved the  credit and collection policies. The
reorganization  charges  principally  included  (i)  the  write-off  of  prints,
finished  products and  photographic resources that  were not  utilized in Kelly
Russell's product  line in  1995,  (ii) the  write-off of  capitalized  software
development  costs and finished  goods inventories for  Kelly Russell's computer
screen saver and ceramic coffee mug products, (iii) the write-off of the cost of
certain original artwork as  a result of Kelly  Russell's decision to close  its
art gallery and retail store operations, and (iv) the write-off of certain costs
associated with Kelly Russell's assembly operations which were closed in January
1995.  The reorganization charge includes a $997,288 charge to cost of sales and
a $91,588 charge to operating expenses. The charge to cost of sales includes (i)
inventory write-offs totaling $320,000, (ii) write-offs of original artwork held
for resale totaling $450,395, (iii) write-off of photographic resources totaling
$101,904, (iv) write-off of capitalized  software development costs of  $72,740,
and  (v) $52,249 for prepaid license fees and other related costs. The charge to
operating expenses  includes  a $51,588  write-off  of equipment  and  leasehold
improvements  and a $40,000 lease termination  fee. Kelly Russell did not record
any employee  termination  benefits  or  other  exit costs  as  a  part  of  the
reorganization  charge, since  management believed  such costs  were immaterial.
Additionally, the  increase in  cost of  goods sold  was attributable  to  Kelly
Russell  recording sales returns  allowances as a reduction  of sales without an
offsetting reduction of cost of  goods sold. To a  lesser extent, cost of  goods
sold  increased because  of higher production  costs attributable  to the larger
assembly operation opened in early 1994  and because of the higher sales  volume
for the year.                                                                   

    License  and royalty expenses  paid to third  parties, including payments to
artists for artwork not owned by Kelly Russell, totaled $760,789 or 27.5% of net
sales in 1994 compared to  $370,788 or 16.5% of net  sales in 1993. License  and
royalty expenses for 1994 included amounts paid for minimum license fees and for
reorganization  charges totaling $52,249 relating  to the elimination of certain
products from Kelly Russell's 1995 product line.                                

    Operating expenses increased to $3,734,527 in 1994 from $1,196,125 in  1993,
representing  an increase of $2,538,402 or 212%. This increase was primarily due
to the  utilization of  the  net proceeds  from  the successful  initial  public
offering  in March 1994 to increase the national market awareness of its product
line  and  to  increase  the   customer  base.  Marketing  expenses,   primarily
representing  advertising, trade  shows and  travel and  entertainment expenses,
increased to  $1,519,659 in  1994 compared  to  $418,163 in  1993. To  a  lesser
extent, the 1994 increase in operating expenses was attributable to the addition
of  office  and  production  personnel,  increased  product  development  costs,
software consulting fees and professional fees relating to operating as a public
company and the year-end reorganization charges.                                

    Interest expense totaled $150,448 in 1994 compared to $53,151 in 1993.  This
increase  was  primarily attributable  to  Kelly Russell  recording  $120,000 of
noncash financing expense  in January 1994  in connection with  the issuance  of
warrants  to the participating promissory noteholders for the purchase of 60,000
shares of Common Stock at $1  per share. Additionally, the increase in  interest
expense  is attributable  to Kelly Russell's  higher financing  needs during the
first quarter of 1994 to  fund the growth in sales,  pending the receipt of  the
funds from the initial public offering.                                         

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    Other income totaled $119,395 in 1994, representing a gain of $85,978 on the
cancellation of the Common Stock of two former officer/shareholders and interest
earned totaling $33,417 on the unutilized proceeds from the public offering.    

SEASONALITY                                                                     

    Kelly  Russell  generated  approximately  $1,095,000  (38.9%)  and  $986,000
(35.6%) of its net sales in the  fourth quarter of 1995 and 1994,  respectively.
Management  believes  Kelly Russell  will continue  to experience  a significant
percentage of future sales in the  fourth quarter holiday buying season for  the
foreseeable future.                                                             

LIQUIDITY AND CAPITAL RESOURCES                                                 

    In  February 1996, Kelly  Russell restructured its business  in an effort to
improve income and cash  flows from operations. Kelly  Russell is also  pursuing
plans to combine its operations with the Company and its subsidiaries in 1996 by
merging  with  a wholly-owned  subsidiary of  Global One.  However, if  the KRSI
Merger is not consummated,  management believes it will  be necessary for  Kelly
Russell  to obtain debt or equity  financing to finance operations through 1996.
If management is unsuccessful in its financing efforts, Kelly Russell may not be
able to continue as a going concern and would be forced to sell off  significant
assets,  file  for protection  under federal  bankruptcy  laws or  liquidate the
business.                                                                       

    In anticipation  of  future costs  the  Company may  incur  as a  result  of
consummating  the transaction contemplated  by the Merger  Agreement and working
capital needs,  the  Company  entered  into a  Combined  Account  Factoring  and
Security  Agreement on April 8, 1996  (the "Factoring Agreement") with Principal
Resources, LLC, an  affiliate of  one of the  Company's principal  shareholders.
Pursuant  to this Factoring Agreement, the Company agreed to assign its accounts
receivable for cash. As of May 20, 1996, the Company has assigned $191,000 worth
of accounts receivable for approximately  $130,000 and may assign an  additional
$470,000  worth of accounts  receivable for $330,000.  The Company believes that
the Factoring  Agreement is  on terms  no less  favorable than  could have  been
obtained from unaffiliated third parties.                                       

    Even  if  Kelly  Russell  obtains  sufficient  financing,  its  success will
nevertheless be dependent upon the effectiveness of the recent restructuring  in
increasing  sales and managing  costs. The restructuring  changes in management,
production,  product  distribution  and  operations  undertaken  in  the  recent
restructuring  have not  been in effect  sufficiently long  to demonstrate their
efficacy in correcting Kelly Russell's  financial condition. Kelly Russell  can,
therefore,  provide no assurance that its new business plan will be effective in
significantly improving Kelly Russell's financial results in 1996 or thereafter.

    Kelly Russell had cash of $37,962  and working capital of $360,572 at  March
31,  1996, as compared  to cash of  $257,618 and working  capital of $708,511 at
December 31, 1995. Cash flow used  in operating activities totaled $119,656  for
the  three months ended March  31, 1996, primarily due  to the operating loss as
offset partially by the normal first  quarter reduction in trade receivables  as
customers  made  payments  on  their  fourth  quarter  holiday  shipments  and a
reduction in the amount  of inventory purchases.  Kelly Russell's first  quarter
sales are typically substantially less than its fourth quarter sales.           

    At December 31, 1995, Kelly Russell had net working capital of approximately
$708,000 compared to $128,000 at December 31, 1994. The principal reason for the
increase  in  net  working  capital was  the  successful  completion  of private
placements of its  Common Stock  in 1995  which netted  proceeds of  $2,217,361.
These  proceeds were primarily utilized to  finance the net loss from operations
of $1,873,121 and to reduce trade payables. Kelly Russell currently has no  bank
debt  but has  recently entered  into arrangements  to obtain  financing through
factoring of receivables.                                                       

SOURCES OF FUNDS                                                        

    Kelly Russell's primary  source of funds  in 1995 and  1994 was through  the
sale  of Common  Stock in an  initial public  offering in March  1994, a private
placement of Common Stock in December  1994 through March 1995, and through  the
exercise    of   warrants   during    May   to   September    1995.   Prior   to

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1994, the principal source of  funds was through bank  debt and the issuance  of
promissory  notes.  Since inception  in 1992,  Kelly Russell  has relied  on the
following sources of funds to finance its operations and growth:                

        PARTICIPATING PROMISSORY  NOTES.    Kelly  Russell  issued  $300,000  of
    participating  promissory notes during the  period from October 1992 through
    March 1993.  The  debt proceeds  were  utilized  by Kelly  Russell  to  fund
    operations  and to  obtain the bank  financing. These  notes were unsecured,
    paid interest at 7 percent and were  subordinated to all bank debt of  Kelly
    Russell.  The  purchasers  of the  participating  promissory  notes received
    300,000 warrants to purchase Common Stock  of Kelly Russell at the price  of
    $1  per share. In January 1994, the purchasers received an additional 60,000
    warrants to purchase Common Stock at $1  per share in return for the  waiver
    of   certain  rights  upon  Kelly  Russell's  issuance  of  the  convertible
    debentures and subsequent repayment  of the participating promissory  notes,
as discussed below.                                                     

        BANK  AGREEMENTS.   Kelly Russell had  working capital  financing from a
    bank in the form  of a $1,000,000 revolving  line of credit agreement  until
    March  31, 1994 when amounts under the line of credit were paid in full. The
    line of credit  was subsequently terminated.  Advances under this  agreement
    were  limited based on  eligible receivables and  committed purchase orders,
    were due upon demand,  bore interest at  2 percent over  the prime rate  and
    were secured by substantially all of Kelly Russell's assets and the personal
guarantees of certain officers/shareholders.                            

        CONVERTIBLE  DEBENTURES.  In January 1994, Kelly Russell issued $900,000
    of 7% convertible debentures.  The proceeds were  utilized to repay  certain
    indebtedness,  including $300,000 of participating  promissory notes, and to
    fund operations. The  debentures were  unsecured, were  subordinated to  all
    bank  debt and were due  in February 1995. The  debentures were converted to
    399,986 shares of Common Stock upon the successful completion of the initial
public offering in March 1994.                                          

        INITIAL PUBLIC  OFFERING.   In March  1994, Kelly  Russell received  net
    proceeds of $4,380,108 upon the issuance of 1,477,750 shares of Common Stock
    at  $3.50 per share. Kelly Russell  received an additional $300,000 upon the
    exercise of warrants  for the issuance  of 300,000 shares  of common  stock.
    Kelly  Russell utilized $1,050,000 of the  net proceeds to immediately repay
    the outstanding bank debt. The remainder  of the net proceeds were  utilized
    during  the  period  from April  1994  to  mid-November 1994  to  fund Kelly
    Russell's business plan and operations. By mid-November 1994, Kelly  Russell
was in need of additional financing.                                    

        PRIVATE  OFFERING.  In December 1994,  Kelly Russell commenced a private
    offering of Units, each Unit consisting of  one share of Common Stock and  a
    warrant to purchase one share of Common Stock, at a price of $1 per Unit, to
    fund  its current  cash shortfall and  future operations.  In December 1994,
    Kelly Russell issued 285,000  Units and received  net proceeds of  $229,055.
    From  January  1,  1995 through  March  27,  1995, Kelly  Russell  issued an
    additional 641,000 Units for net proceeds of $569,450. From May 1995 through
    September 1995, Kelly Russell received additional net proceeds of $1,647,911
    from the  corresponding exercise  of warrants  for the  purchase of  926,000
shares of Common Stock.                                                 

USES OF FUNDS                                                           

    Kelly  Russell's  primary  use  of funds  has  been  to  finance operations,
principally for sales and marketing activities, for working capital requirements
resulting from continued net losses  and from the growth  in net sales, for  the
purchase  of inventories and for the  purchase of original artwork, photographic
resources and equipment. Net cash used in operating activities was $2,206,265 in
1995 and $3,701,426 in 1994, reflecting Kelly Russell's net losses of $1,543,266
in 1995 and $5,216,030 in 1994.                                                 

    Currently, Kelly Russell's standard credit terms to its customers are net 30
days, except Kelly Russell  granted product return  rights to certain  customers
during 1994 and the latter part of 1993. Although Kelly Russell has discontinued
this   practice,   Kelly   Russell   has   accepted   returns   of   product  in

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circumstances  where management  has found a  particular advantage  in doing so.
Kelly Russell  has  recorded an  allowance  for  sales returns  of  $110,000  at
December  31, 1995. Management  believes its allowances for  sales returns to be
adequate at December 31, 1995.                                                  

    Kelly Russell's original  artwork is  created by  independent artists  under
contract  to Kelly  Russell. The  original artwork  is utilized  for the printed
lithographs in  Kelly  Russell's  product  line.  Kelly  Russell's  purchase  of
original  artwork  totaled  approximately  $264,000  in  1995  and approximately
$329,000 in  1994.  Management expects  original  artwork purchases  will  total
approximately  $150,000  in  1996. In  January  1995, Kelly  Russell  closed its
original sports art gallery and retail store. Beginning in December 1994,  Kelly
Russell  began including the cost  of original artwork in  the cost of its print
inventories. Kelly Russell's year-end restructuring charge in 1995 includes  the
write-off of original artwork costs totaling approximately $65,000.             

    Purchases  of photographic resources totaled  approximately $156,000 in 1995
and approximately $70,000 in 1994.  Kelly Russell anticipates that purchases  of
photographic resources will be approximately $150,000 in 1996.                  

    Kelly  Russell purchased  equipment totaling approximately  $222,000 in 1995
and $290,000 in 1994. The 1995  purchases principally relate to the purchase  of
various display racks and office equipment. In January 1995, Kelly Russell began
outsourcing  its assembly, shipping and warehousing operations to a third party,
to which Kelly Russell paid approximately $253,000 in 1995. Additionally,  Kelly
Russell executed a new lease agreement for its executive offices during 1995 and
relocated  to 2905  Northwest Boulevard,  Suite 220,  Plymouth, Minnesota, where
Kelly Russell leases approximately 6,200 square feet of office space.           

BUSINESS OF KELLY RUSSELL STUDIOS, INC. 

    Kelly Russell was  incorporated under  Minnesota law  on July  31, 1992,  to
acquire  the business of a  partnership which had been  engaged in the creation,
assembly, marketing and distribution of products bearing realistic sports images
since January 1992. After completing the acquisition on November 12, 1992, Kelly
Russell increased  net sales  from approximately  $188,000 for  the fiscal  year
ended  December 31, 1992, to approximately  $2,243,000 for the fiscal year ended
December 31, 1993.  In March 1994,  Kelly Russell completed  its initial  public
offering of 1,477,750 shares of Common Stock and the related issuance of 699,986
shares  of Common Stock on the conversion of certain debt for total net proceeds
of $5,580,108.                                                                  

    During 1994,  Kelly Russell  expended significant  resources to  expand  its
product  offerings, increase  its market  presence and  number of  customers and
develop its  assembly operations.  The  product line  was  expanded in  1994  to
include  software and  ceramic coffee mugs.  However, of  more significance, was
Kelly Russell's increase  in the number  of print images  in its product  lines.
Kelly  Russell's strategy was unsuccessful as the planned growth in sales volume
and profitability failed to materialize.  Accordingly, Kelly Russell recorded  a
charge to 1994 fourth quarter operations of approximately $1,370,000 relating to
increased allowances for inventory obsolescence, bad debts and sales returns.   

    In  November and December 1994, Kelly Russell's Board of Directors hired new
management and revised  Kelly Russell's  business plan and  operations to  focus
solely  on the creation, marketing  and sales of limited  editions of sports art
collectibles through mass merchants,  distributors and specialty retail  stores.
Beginning  in January  1995, Kelly  Russell (i)  closed its  original sports art
gallery and retail store,  (ii) discontinued sales of  its software product  and
ceramic  coffee mug lines developed and  introduced in 1994, (iii) substantially
reduced the number of print images in its product lines, (iv) began  outsourcing
its  assembly, shipping and warehousing activities, (v) eliminated certain major
channels of distribution previously utilized  by Kelly Russell, (vi)  eliminated
most  of its employee sales force and increased the utilization of outside sales
representatives, and (vii) eliminated its practice of offering guaranteed return
privileges to certain customers. In December 1994, Kelly Russell also recorded a
charge to  operations of  approximately  $1.1 million  in connection  with  this
reorganization  of the business.  See "Kelly Russell  Studios, Inc. Management's
Discussion and Analysis of Financial Condition and Results of Operations."      

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    In 1995, Kelly  Russell expanded its  product lines outside  the sports  art
collectibles  in an effort  to increase revenues to  a level where profitability
could be achieved. The most significant new product items include popular  print
images  in the  entertainment industry,  including movie,  music and television.
Additionally, Kelly Russell  introduced a small  group of wild  life images.  In
1995, Kelly Russell also focused its sales and marketing efforts on establishing
long-term  customer relationships  with national  and regional  retailers. Kelly
Russell  was   successful  in   establishing   initial  or   improved   customer
relationships  with certain retail chains. However,  to date those retail chains
have not carried Kelly Russell's products in all of their stores and there is no
assurance that they will  continue to carry Kelly  Russell's products or  expand
distribution to additional stores.                                              

    Although  these  new strategies  resulted  in improved  operations  in 1995,
anticipated sales levels and profitability failed to materialize. Kelly  Russell
management  believes this failure to increase sales levels was primarily because
only the  images  of  the top  few  athletes  of any  given  sport  resulted  in
significant  sales, Kelly Russell still  lacks a firmly established distribution
system and retail  sales were flat  in the  fourth quarter of  1995. During  the
fourth  quarter  of  1995, Kelly  Russell  recorded  a charge  to  operations of
approximately  $640,000   relating  to   increased  allowances   for   inventory
obsolescence and, to a lesser extent, sales returns.                            

    In  February 1996, the Board of  Directors further revised its business plan
and operations  to reduce  operating  costs. In  1996,  Kelly Russell  plans  to
produce  and distribute a more limited number  of images, primarily just the top
few athletes  of  any  given  sport.  The product  line  in  1996  will  include
approximately  100 different  images, down  from the  300 images  offered during
1995. Additionally, in 1996 Kelly Russell will continue to increase channels  of
distribution with existing and new national and regional retail customers.      

    In  connection with this  restructuring, Kelly Russell  recorded a charge to
1995 operations of  approximately $186,000  for the  write-down of  inventories,
pre-paid  licensing rights  and original artwork,  all relating  to print images
which will not be aggressively sold during 1996. Kelly Russell also reduced  the
number  of employees and accepted the  resignation of its former Chief Executive
Officer. Kelly Russell management believes its new business strategy will result
in improved results of operations and cash flow during 1996. Nevertheless, Kelly
Russell anticipates that it will incur significant losses and that it will  need
significant  debt or equity  financing by year  end if the  Transactions are not
closed.                                                                         

PRODUCTS                                                                        

    Kelly   Russell    creates,    markets   and    distributes    sports    and
entertainment-related  art for  the collectible market.  Kelly Russell's primary
strategy is  to  use  its  collection of  original  art  to  create  innovative,
affordable  products  with  an  artistic  look,  quality  and  presentation that
differentiates them  from  other entertainment  products,  such as  posters  and
trading  cards. Kelly Russell  focuses on products  with a wide  range of appeal
that  can  be  quickly  created,  produced  and  sold  through  mass  merchants,
distributors and specialty retail stores. Almost all of Kelly Russell's products
are  produced and sold  under non-exclusive licenses  from major national sports
franchises and  their  related players'  associations.  In 1995,  Kelly  Russell
introduced  and  expanded  its licensing  agreements  for the  movie,  music and
television product line.                                                        

    LEGENDS AND SUPERSTARS-TM-.   The Legends and Superstars  product is a  wall
hanging  that measures approximately 11" x 14" and consists of a framed mat with
three openings.  The largest  opening  displays a  lithographic print  of  Kelly
Russell's  original art. The two smaller openings contain a photographic picture
and biographical information  or a  brief description  of the  pictured item  or
personality. Each piece is individually numbered.                               

    The  framed  Legends and  Superstars  product was  designed  for memorabilia
consumers who prefer higher priced,  higher quality products than trading  cards
and  posters. However, at  a suggested retail  price of $19.99  to $24.99, it is
priced below many other memorabilia items.                                      

    In response to  the anticipated  demand for a  lower priced  version of  its
Legends and Superstars product, Kelly Russell introduced an unframed, "autograph
ready" version of that product line in the                                      

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summer  of 1993. The  unframed product is  substantially the same  as the framed
product, except that it is shrink wrapped rather than framed. The plastic shrink
wrap makes it easier for purchasers to remove the product from the packaging and
have it autographed or personalized. If desired, the product can then be  framed
at the owner's expense.                                                         

    The  autograph ready  Legends and Superstars  products sell  for a suggested
retail price of $9.99 to $12.99. At that price Kelly Russell believes that  this
product  is more likely to  be purchased in multiple  quantities than the framed
product which is believed to be a more traditional gift item.                   

    During 1996, Kelly Russell will offer approximately 100 different images  in
both  the framed and autograph-ready Legends  and Superstars product lines, down
from  300  images  offered  during  1995.  The  number  of  images  offered   is
periodically  adjusted due to seasonality and customer demand. The sales in 1995
were comprised primarily of sales of these products.                            

    LIMITED EDITION  LITHOGRAPHS.   Kelly Russell  historically made  full  size
lithographic  prints from certain  pieces of its  original art collection. Those
prints were made on high quality stock and were sold in limited editions.  Kelly
Russell currently is not emphasizing this aspect of its business.               

    ORIGINAL  ART.    Kelly Russell  presently  owns  a collection  of  over 300
original works of art  produced by independent artists.  See "-- Product  Supply
and  Production." At December 31,  1995, Kelly Russell has  expensed the cost of
its original artwork except for the cost attributable to lithographic prints  in
raw  material and finished  goods inventories. Most of  the pieces are realistic
depictions of  famous  athletes. Kelly  Russell  management believes  that  this
artistic  dimension is a key factor  that distinguishes Kelly Russell's products
from other entertainment related products.                                      

    Although Kelly Russell has made limited efforts to market original paintings
from its existing collection, sales of these paintings have been negligible  and
are not expected to add materially to Kelly Russell's revenues in the future.   

    Kelly  Russell will continue to commission and purchase additional pieces of
art for the development of additional products. The emphasis of those  purchases
is  to update the collection to include recently popular sports personalities or
events. Kelly Russell is required, by the  terms of certain of its licenses,  to
produce  products that contain a minimum number of different athletes during the
terms of the licenses. Kelly Russell is also required to obtain the approval  of
the licensors of new images before they are marketed. See "-- License Agreements
and Trademarks."                                                                

    NEW  PRODUCT DEVELOPMENT.   Kelly Russell  intends to focus  its new product
development on expanding and updating the images in its existing product  lines.
Kelly  Russell believes that its ability to quickly introduce images of recently
popular subject matter, such  as the star  athletes in the  World Series or  the
Super Bowl, is important to maintaining the commercial viability of these lines.
When  necessary, Kelly  Russell has  been able  to create,  obtain approval from
licensors, produce  and  ship products  with  new  images within  six  weeks  of
identifying the new subject matter. The more typical time frame is approximately
two  months from  conception to delivery.  If new licenses  are necessary, Kelly
Russell's  ability  to  introduce  new  product  may  be  slowed  significantly.
Obtaining  a new license may require from two  months to a year. See "-- License
Agreements and Trademarks."                                                     

    During 1995, Kelly Russell  acquired several entertainment related  licenses
and  began  implementing its  movie, music  and  television product  line. Kelly
Russell believes that  the addition of  these products will  expand its  current
customer  base. Kelly Russell  also tested product  lines which included various
wildlife images as well as sports  team images. In February 1996, Kelly  Russell
concluded that the limited appeal and, in the case of wildlife images, different
marketing challenges presented by these products resulted in the failure of both
of  these product lines. Therefore, Kelly  Russell has selected a limited number
of these  images to  continue selling  and has  discontinued production  of  all
remaining team image and wildlife images.                                       

    The  expansion  of  Kelly  Russell's product  lines  may  require additional
license rights from  persons controlling  the subject  images. There  can be  no
assurance    that    Kelly    Russell    will   be    able    to    create   any

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new products  that  can be  successfully  marketed and  sold  or, even  if  such
products  are created,  that Kelly  Russell will  be able  to timely  obtain the
necessary licenses  relating  to these  products  on terms  favorable  to  Kelly
Russell, if at all. See "-- License Agreements and Trademarks."                 

MARKETING AND DISTRIBUTION                                                      

    Kelly    Russell   markets   its    products   through   independent   sales
representatives, two in-house sales employees,  and, as of February 1996,  Kelly
Russell  hired a  national sales  organization to  manage Kelly  Russell's sales
functions. Kelly Russell markets to  national and regional retailers  (including
mass  merchant  retailers,  department  stores,  specialty  retailers,  discount
retailers, and  toy stores),  distributors  of sports  memorabilia and  a  cable
television programming network. Kelly Russell also promotes its products through
various  advertising  programs  which  may  include  retailers.  Kelly Russell's
representatives also attend  trade shows  related to  Kelly Russell's  business.
Kelly  Russell also advertised  its products through  sports magazines and other
print advertising and anticipates  continuing this practice  on a limited  basis
during 1996.                                                                    

    In  1995, Kelly  Russell's framed  products were sold  to a  number of major
retail chains, such  as J.C. Penney,  although not every  store in these  chains
carried  Kelly Russell's products.  During 1995, Kelly  Russell concentrated its
efforts on opening  distribution channels  into retail  chains and  establishing
initial sales programs with these chains. To date, these chains have not carried
Kelly  Russell's products in all  of their stores and  there can be no assurance
that they will continue sales in those stores currently offering Kelly Russell's
products or that they will expand their distribution of Kelly Russell's products
to other stores.  Kelly Russell's strategy  in 1996 is  to increase its  current
channels of distribution to include both new retail chains and additional stores
of mass merchant retailers with whom Kelly Russell has existing relationships.  

    In  1995, net  sales to Musicland  represented 12.4% of  Kelly Russell's net
sales, whereas in  1994, net sales  to J.C. Penney  represented 16.5%. No  other
customers  represented more  than 10%  of Kelly Russell's  net sales  in 1995 or
1994. Kelly Russell expects that it  will have an even greater concentration  of
sales  to significant customers in  1996, the loss of any  of which could have a
material adverse effect on Kelly Russell.                                       

    Commissions  paid  to  Kelly  Russell's  independent  sales  representatives
generally  range from  5% to  10% of net  sales. Kelly  Russell's in-house sales
employees are paid a base salary only.                                          

    During 1994 and preceding years,  Kelly Russell attempted to distribute  its
products  through channels, such as grocery  and drug stores, which required the
right to return all unsold product  to Kelly Russell, freight prepaid, for  full
credit  against the  purchase price of  such returns. Kelly  Russell recorded an
allowance of $384,000 at  December 31, 1994 for  these potential returns.  Kelly
Russell  no longer  grants its  customers the  automatic right  to return unsold
product,  but  Kelly  Russell  has  accepted  returns  of  product  in   certain
circumstances.  Accordingly, Kelly Russell  has recorded an  allowance for sales
returns totaling $110,000  at December  31, 1995, which  management believes  is
adequate to fairly reflect the financial impact of any potential returns.       

LICENSE AGREEMENTS AND TRADEMARKS                                               

    Kelly  Russell's ability  to produce  and distribute  products depicting any
image owned or  controlled by  a third party  (including all  images subject  to
copyright,  trademark  or other  protection) is  primarily dependent  upon Kelly
Russell's ability  to obtain  rights under  license agreements  with such  third
parties. More particularly, the production or distribution of products depicting
the  image  of any  personality or  any  team, league,  or organization  logo or
trademark requires  a  license  from the  person,  team,  league,  entertainment
company  or  organization whose  image,  logo or  trademark  is being  used. For
example, to commercialize  the image of  a professional baseball  player in  his
uniform, Kelly Russell is required to obtain two licenses, one from Major League
Baseball  Players Association ("MLBPA")  and another from  Major League Baseball
Properties ("MLBP").                                                            

    Kelly Russell  presently has  non-exclusive  license agreements  with  MLBP,
MLBPA,  Major League Baseball  Properties Canada Inc.,  National Football League
Properties, Inc., National Football League Players, Inc., National Hockey League
Enterprises, Inc., National Hockey League Enterprises Canada                    

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Inc., National  Hockey  League  Players' Association,  the  National  Basketball
Association,  several drivers  and their sponsors,  several individual athletes,
the estates of several deceased athletes, and several entertainment companies or
related organizations. Kelly  Russell's business is  largely dependent upon  its
ability to continue to obtain and maintain these existing licenses and to obtain
additional  licenses necessary for the expansion  of its activities. Even if new
licenses can be obtained  to expand Kelly Russell's  activities, the process  of
obtaining  these licenses may greatly delay Kelly Russell's ability to introduce
new products.                                                                   

    Kelly Russell's agreement with the various players, players' associations or
entertainment companies may enable  Kelly Russell to  use an individual's  name,
picture,  facsimile signature, biographical description or entertainment related
title or  logo.  Pursuant to  the  terms of  these  licenses, Kelly  Russell  is
permitted  to  produce  and  sell,  in  the  United  States,  the  original art,
lithographs, framed and  unframed Legends and  Superstars products and  original
art posters. A very limited number of the agreements allow Kelly Russell to sell
the  subject  products outside  the  United States.  All  of these  licenses are
non-exclusive and, accordingly, the various licensors are free to grant  similar
licenses  to  other licensees.  Each  agreement provides  for  the payment  of a
royalty based on a percentage of net sales of licensed products, the majority of
which are subject to a minimum guaranteed royalty. Some of these agreements also
require advance royalty payments. The amount of royalties paid by Kelly  Russell
for  products sold generally ranges from 9% to  23% of net sales. For the fiscal
years ended December 31,  1994 and 1995, Kelly  Russell incurred licensing  fees
aggregating  approximately $761,000 and $592,000, respectively, for the right to
produce and market products requiring licenses.                                 

    The  terms  of  these  licenses  extend  for  one  to  three  year  periods.
Substantially  all of the licenses from the estates of deceased athletes expired
on December 31, 1995  and were renewed in  1996. These agreements are  generally
renewable  for one year periods,  unless notice is given  by either party to the
agreements not to renew. The majority of the licenses from the various  leagues,
players  associations and entertainment companies  expire between 1996 and 1998.
Some of the licenses contain renewal provisions which provide for additional one
year extensions as long as Kelly Russell has fulfilled its obligations under the
agreements, upon notice or upon written agreement between the parties. As  Kelly
Russell  believes  that it  has fulfilled  its  obligations under  these license
agreements  and   considers  its   relationships  with   the  various   players'
associations  and leagues to be good,  Kelly Russell expects these agreements to
be renewed as scheduled. Kelly Russell also believes that it has obtained and is
currently in  material compliance  with all  licenses necessary  to produce  and
market  its existing  products and intends  to seek additional  licenses, as and
when necessary, to permit Kelly Russell to distribute future products.  Although
there  can be no assurance that, in the  future, new licenses will be granted to
Kelly Russell for future products, Kelly Russell has, in the past, been able  to
obtain new licenses on terms acceptable to it. The inability of Kelly Russell to
renew existing licenses and/or acquire additional licenses would have a material
adverse effect on Kelly Russell's ability to continue its business operations.  

    Kelly  Russell  has  registered  the  trademarks  "Kelly  Russell  Studios,"
"Legends and  Superstars" and  its "KR"  stylized logo  with the  United  States
Patent  and Trademark  Office. Kelly  Russell has  also applied  to register the
trademark "KRSI" with the United States Patent and Trademark Office.            

PRODUCT SUPPLY AND PRODUCTION                                                   

    Substantially all of Kelly Russell's  collection of original art is  created
by  independent artists. Kelly Russell believes that the quality of its original
art collection is essential to its business and it strives to associate with the
best artists  available on  a commercially  reasonable basis.  Typically,  Kelly
Russell  identifies  the subject  matter and,  from time  to time,  provides the
artist with  reference materials  or other  information from  which the  art  is
created. If the art is acceptable to Kelly Russell, Kelly Russell may or may not
purchase  the art,  but will seek  an agreement  with the artist  on terms which
generally provide Kelly Russell with the right to reproduce the original art for
the production of  Kelly Russell's products.  The terms of  the agreements  vary
from  artist  to  artist. Kelly  Russell  made payments  to  artists aggregating
approximately $372,000 and $264,000 in 1994 and 1995, respectively.             

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    The photographs used in Kelly Russell's Legends and Superstars product lines
and as the  basis for  original artwork  are usually  obtained from  independent
photographers, photo studios or directly from the major sports franchises. Kelly
Russell  purchases the  right to  use those photographs  and, in  1994 and 1995,
respectively, made payments aggregating  approximately $70,000 and $156,000  for
photographs and other related costs. The foregoing increase is due to production
of original artwork which uses multiple photographs.                            

    Kelly  Russell's  staff designs  Kelly Russell's  products and  collects the
statistics and writes  the descriptions  that are  included in  the Legends  and
Superstars products. The printed lithographs, picture frames, matting, glass and
other  production  materials  are  provided  to  Kelly  Russell  by  independent
contractors and are available from  multiple sources. During 1994 and  preceding
years,  Kelly Russell's employees assembled its products. In 1995, Kelly Russell
utilized an independent contractor to assemble, warehouse and ship its products.
Kelly Russell purchased services of approximately $253,000 from this  contractor
during  1995.  In  January 1996,  Kelly  Russell changed  contractors  for these
services. Kelly  Russell management  believes that  alternative contractors  are
available  in the  event Kelly  Russell is  unable to  obtain services  from its
current contractor.                                                             

COMPETITION                                                                     

    With respect  to  Kelly Russell's  Legends  and Superstars  products,  Kelly
Russell  believes that it  competes on two different  levels. The framed product
competes with other entertainment collectibles  and memorabilia, in addition  to
lower cost artwork and lithographs in general. The autograph ready product sells
at a lower price point and competes with sports trading cards and less expensive
sports collectibles and memorabilia. Kelly Russell's autograph-ready Legends and
Superstars product is priced higher than most sports trading cards.             

    Kelly  Russell believes that it must compete  on the basis of providing high
quality, innovative products that can  be profitably sold at affordable  prices.
Customer  service is also believed to be  an important competitive factor in the
sale of product through mass merchandising. Many of Kelly Russell's competitors,
at all levels, are  believed to have substantially  greater financial and  other
resources  than  Kelly Russell.  Direct competitors  with similar  product lines
include OSP Publishing, Inc.  and Dream Team Collectibles,  Inc. In the area  of
sports  trading cards,  those competitors  include Topps,  Inc.; The  Upper Deck
Company; Fleer Corp.; and  The Scoreboard, Inc. The  licenses pursuant to  which
Kelly  Russell produces its  products are non-exclusive and  do not assure Kelly
Russell of any competitive advantage.                                           

EMPLOYEES                                                                       

    As of  March 22,  1996,  Kelly Russell  employed  14 full-time  persons.  No
employees  of Kelly Russell are subject to collective bargaining agreements, and
Kelly Russell considers its relations with its employees to be satisfactory.    

ENVIRONMENT                                                                     

    Kelly Russell  believes that  it  is in  material compliance  with  existing
federal,  state  and  local  regulations  relating  to  the  protection  of  the
environment. Such environmental regulations  have not had  a material impact  on
Kelly Russell's capital expenditures, earnings or competitive position.         

SEASONALITY                                                                     

    In  the years ended on December 31, 1994 and 1995, Kelly Russell experienced
seasonal fluctuations because a  large percentage, 35.6% and  38.9% in 1994  and
1995, respectively, of its net sales were generated in the fourth quarter of the
year during the holiday buying season. Kelly Russell is attempting to reduce the
seasonality  of its business  with products which  management believes will also
sell well during  the first  three quarters of  the fiscal  year. Kelly  Russell
expects  however,  that at  least  some seasonal  aspects  of its  business will
continue in the foreseeable future.                                             

DESCRIPTION OF PROPERTY                                                         

    Kelly Russell  executed a  new  lease agreement  for its  executive  offices
during  1995 and  relocated to  2905 Northwest  Boulevard, Suite  220, Plymouth,
Minnesota, where Kelly Russell leases approximately 6,200 square feet of  office
space.   That   lease   extends  through   May   31,  2001   and   provides  for

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monthly rent of approximately $7,000, including certain operating costs. Because
Kelly Russell  engages  an  outside  contractor to  produce  and  warehouse  its
products,  Kelly Russell currently does not  require any production or warehouse
space.                                                                          

LEGAL PROCEEDINGS                                                               

    Kelly Russell is not currently a party to nor is any of its property subject
to any material legal proceedings.                                              

PRINCIPAL SHAREHOLDERS AND MANAGEMENT OF KELLY RUSSELL

    The following table provides information as of March 28, 1996 concerning the
beneficial ownership of Kelly Russell Common Stock by (i) persons known by Kelly
Russell to own more than 5% of Kelly Russell Common Stock, (ii) each director of
Kelly Russell, (iii) the  named executive officers  in the Summary  Compensation
Table,  and (iv)  all directors  and executive  officers as  a group.  Except as
otherwise indicated,  the  persons named  in  the  table have  sole  voting  and
investment  power with respect to all shares of Kelly Russell Common Stock owned
by them.                                                                        

                                                        [Enlarge/Download Table]

                                                             NUMBER OF SHARES                 
NAME (AND ADDRESS OF 5%                                        BENEFICIALLY         PERCENT   
OWNER) OR IDENTITY OF GROUP                                     OWNED (1)        OF CLASS (1) 
---------------------------------------------------------  --------------------  -------------
                                                                                              
George J. Vrabeck........................................          100,000(2)           2.4%  
Timothy G. Rath..........................................          310,000(3)           7.2   
John J. Egart............................................           22,666(4)          *      
James C. Hawley..........................................           13,500(4)          *      
Thomas R. King...........................................            6,000(4)          *      
Aaron Boxer TTEE.........................................          407,000             10.0   
Aaron Boxer Rev. Trust                                                                        
5500 Wayzata Blvd., #800                                                                      
Minneapolis, MN 55416                                                                         
D. B. Johnson............................................          314,356(5)           7.5   
5500 Wayzata Blvd., #800                                                                      
Minneapolis, MN 55416                                                                         
All Executive Officers and Directors as a Group (6                                            
 Individuals)............................................          477,166(6)          10.7   

------------------------                                                        
*  Less than 1% of the outstanding shares of Common Stock.                    

(1) Under the rules of the SEC, shares not actually outstanding are deemed to be
    beneficially owned by  an individual  if such  individual has  the right  to
    acquire the shares within 60 days. Pursuant to such SEC Rules, shares deemed
    beneficially  owned by virtue  of an individual's right  to acquire them are
    also treated as outstanding when calculating the percent of the class  owned
    by  such individual and when  determining the percent owned  by any group in
which the individual is included.                                       

(2) Includes 100,000 shares which may be purchased by Mr. Vrabeck upon  exercise
of a currently exercisable option.                                      

(3) Includes  250,000 shares which may be purchased by Mr. Rath upon exercise of
a currently exercisable option.                                         

(4) Includes 6,000 shares which  may be purchased upon  exercise of a  currently
exercisable option.                                                     

(5) Includes  60,000 shares held by family members and 83,356 shares that may be
 purchased by Mr. Johnson upon exercise of currently exercisable warrants.

(6) Includes 378,000 shares which  may be purchased  upon exercise of  currently
exercisable options.                                                    

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CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS                                  

    On  December 24, 1994, Kelly Russell  entered into an Underwriting Agreement
with Miller, Johnson &  Kuehn, Incorporated ("MJK"), of  which D. B. Johnson,  a
principal  shareholder  of  Kelly  Russell, is  an  affiliate.  Pursuant  to the
Underwriting Agreement,  MJK  served as  the  underwriter of  Kelly  Russell  in
connection  with  the public  offering  and sale  of  1,477,750 shares  of Kelly
Russell Common Stock, which sale was  completed on March 31, 1994. MJK  received
discounts  and commissions in  the amount of $517,213  and five-year warrants to
purchase 45,389 shares of Kelly Russell Common Stock at $4.20 per share, as well
as a nonaccountable expense allowance in the amount of $51,721. The warrants  to
purchase   45,389  shares  of  Kelly  Russell  Common  Stock  were  subsequently
transferred to MJK's affiliates, including  Mr. Johnson, who received a  warrant
to purchase 14,468 shares of Kelly Russell Common Stock.                        

    On  December 29, 1994,  Kelly Russell entered into  an Agency Agreement with
MJK. Pursuant to  the Agency  Agreement, MJK served  as the  exclusive agent  of
Kelly Russell in connection with the sale of 926,000 units, each unit consisting
of  one share  of Common  Stock and a  warrant to  purchase one  share of Common
Stock, which sale was completed on  March 31, 1995. MJK received commissions  in
the  amount of $92,600 and five-year warrants to purchase 92,600 shares of Kelly
Russell Common Stock at $2.00 per share,  as well as reimbursement of its  legal
expenses  in the amount  of $25,000. The  warrants to purchase  92,600 shares of
Kelly Russell Common  Stock were subsequently  transferred to MJK's  affiliates,
including Mr. Johnson, who received a warrant to purchase 34,725 shares of Kelly
Russell Common Stock.                                                           

    In  May 1995, Kelly Russell entered into  an agreement with MJK, whereby MJK
served as the exclusive agent of  Kelly Russell in connection with the  exercise
of  warrants issued  as part  of the  units in  the private  placement described
above. Between the period  of May 31,  1995 and September  1, 1995, warrants  to
purchase  926,000 shares of  Kelly Russell Common Stock  were exercised at $2.00
per share. MJK  received commissions  in the  amount of  $185,200 and  five-year
warrants to purchase an aggregate of 92,600 shares of Kelly Russell Common Stock
at $2.00 per share, of which warrants to purchase 72,100 shares of Kelly Russell
Common  Stock were subsequently  transferred to MJK's  affiliates, including Mr.
Johnson, who  received a  warrant to  purchase 34,725  shares of  Kelly  Russell
Common Stock.                                                                   

LEGAL MATTERS 

    The  legality of the shares  of Global One Common Stock  to be issued to the
Kelly Russell shareholders pursuant to the Transactions will be passed upon  for
Global One by Manatt, Phelps & Phillips, LLP, Los Angeles California. The Merger
Agreement provides that as a condition to the KRSI Merger, Global One shall have
received  a letter  from Kelly Russell's  independent auditors  or legal counsel
indicating (i) the number of shares of Kelly Russell Common Stock that have been
authorized for issuance by the Board of Directors or Kelly Russell as set  forth
in the minutes in the Kelly Russell minute book and (ii) the number of shares of
Kelly Russell Common Stock subject to warrants and options to purchase them that
have been authorized by the Board of Directors.                                 

EXPERTS 

    The consolidated financial statements of OSP Publishing, Inc. as of December
31,  1995 and for each of the three  years in the period ended December 31, 1995
included elsewhere  in  this Proxy  Statement/Prospectus  have been  audited  by
Deloitte  & Touche LLP, independent auditors, as stated in their report, and are
included herein  in reliance  upon the  report  of such  firm given  upon  their
authority as experts in accounting and auditing.                                

    The  financial statements of Kelly  Russell as of December  31, 1995 and for
the three-year period ended December 31, 1995 included herein have been  audited
by McGladrey & Pullen, LLP, independent auditors, as stated in their report, and
are  included herein in reliance  upon the report of  such firm given upon their
authority as experts in auditing and accounting.                                

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INDEX TO FINANCIAL STATEMENTS 

                                                                [Download Table]

                                                                            PAGE
                                                                            ----
                                                                                
OSP PUBLISHING, INC.                                                            
Independent Auditors' Report..............................................   F-2
Financial Statements                                                            
  Consolidated Balance Sheets as of March 31, 1996 (unaudited), December        
   31, 1995 and 1994......................................................   F-3
  Consolidated Statements of Operations for the Three Months Ended March        
   31, 1996 and 1995 (unaudited) and for the Years Ended December 31,           
   1995, 1994 and 1993....................................................   F-5
  Consolidated Statements of Shareholders' Equity for the Three Months          
   Ended March 31, 1996 (unaudited) and for the Years Ended December 31,        
   1995, 1994 and 1993....................................................   F-7
  Consolidated Statements of Cash Flows for the Three Months Ended March        
   31, 1996 and 1995 (unaudited) and for the Years Ended December 31,           
   1995, 1994 and 1993....................................................   F-8
  Notes to Consolidated Financial Statements..............................  F-10

All schedules are omitted because the required information
is not applicable or is included in the Financial 
Statements of OSP Publishing, Inc.
and the related notes.

                                                                [Download Table]
                                                                                
KELLY RUSSELL STUDIOS, INC.                                                     
Report of Independent Auditors............................................  F-20
Audited Financial Statements                                                    
  Balance Sheets as of December 31, 1994 and 1995.........................  F-21
  Statements of Operations for the Years Ended December 31, 1993, 1994 and      
   1995...................................................................  F-22
  Statements of Shareholders' Equity for the Years Ended December 31,           
   1993, 1994 and 1995....................................................  F-23
  Statements of Cash Flows for the Years Ended December 31, 1993, 1994 and      
   1995...................................................................  F-24
  Notes to Financial Statements...........................................  F-25
Unaudited Financial Statements                                                  
  Balance Sheet as of March 31, 1996......................................  F-34
  Statements of Operations for the Three Months Ended March 31, 1995, and       
   1996...................................................................  F-35
  Statement of Cash Flows for the Three Months Ended March 31, 1995 and         
   1995...................................................................  F-36
  Notes to Financial Statements...........................................  F-37

Financial Statements of Global One are not presented herein 
because Global One has no assets and liabilities
and has not conducted any business other
than of an organizational nature. 

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INDEPENDENT AUDITORS' REPORT

To the Stockholders of                                                          
OSP Publishing, Inc.:                                                           

    We  have  audited  the  accompanying  consolidated  balance  sheets  of  OSP
Publishing, Inc. and subsidiaries  (the "Company") as of  December 31, 1995  and
1994,  and  the  related consolidated  statements  of  operations, stockholders'
(deficiency) equity, and cash flows  for each of the  three years in the  period
ended  December 31, 1995.  These financial statements  are the responsibility of
the Company's management. Our responsibility is  to express an opinion on  these
financial statements based on our audits.                                       

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

    In our opinion,  such consolidated financial  statements present fairly,  in
all  material  respects,  the financial  position  of OSP  Publishing,  Inc. and
subsidiaries at December 31, 1995 and 1994, and the results of their  operations
and  their cash flows for  each of the three years  in the period ended December
31, 1995 in conformity with generally accepted accounting principles.           

    As discussed in Note 1 to the consolidated financial statements, the Company
changed its method of accounting for  income taxes effective January 1, 1993  to
conform with Statement of Financial Accounting Standards No. 109.               

                         DELOITTE & TOUCHE LLP

Long Beach, California                                                          
April 5, 1996 (May 24, 1996 as to Note 14)                                      

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OSP PUBLISHING, INC. AND SUBSIDIARIES 
CONSOLIDATED BALANCE SHEETS 
ASSETS (NOTES 7 AND 8)

                                                        [Enlarge/Download Table]

                                                                                            DECEMBER 31,         
                                                                                   ------------------------------
                                                                                        1995            1994     
                                                                   MARCH 31, 1996  --------------  --------------
                                                                   --------------                                
                                                                    (UNAUDITED)                                  
                                                                                                                 
CURRENT ASSETS:                                                                                                  
  Cash and cash equivalents (Note 1).............................  $      377,778  $       74,828  $      288,404
  Accounts receivable -- trade, net of allowance for doubtful                                                    
   accounts and returns of $1,374,361 at March 31, 1996,                                                         
   $1,644,697 in 1995 and $962,666 in 1994 (Notes 1 and 3).......       5,958,176       5,248,459       5,309,304
  Inventories (Notes 1 and 4)....................................       4,991,559       4,066,012       3,903,027
  Prepaid royalty advances (Note 1)..............................         715,948         555,236         794,049
  Prepaid expenses and other current assets......................         366,533         152,147         278,421
  Deferred income tax asset (Notes 1 and 11).....................          38,191          38,191         216,907
  Net assets of discontinued operations (Note 13)................                                       1,834,084
                                                                   --------------  --------------  --------------
      Total current assets.......................................      12,448,185      10,134,873      12,624,196

PROPERTY AND EQUIPMENT, Net (Notes 1, 5 and 9)...................       1,184,094       1,185,799         847,502

GOODWILL, Net of accumulated amortization of $50,752, $43,390 and                                                
 $6,240 at March 31, 1996, December 31, 1995 and 1994,                                                           
 respectively (Note 1)...........................................         141,131         148,493         185,643

DEPOSITS.........................................................         159,657         229,311         183,189
                                                                   --------------  --------------  --------------

TOTAL............................................................  $   13,933,067  $   11,698,476  $   13,840,530
                                                                   --------------  --------------  --------------
                                                                   --------------  --------------  --------------

                                                                     (CONTINUED)

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OSP PUBLISHING, INC. AND SUBSIDIARIES 
CONSOLIDATED BALANCE SHEETS (CONTINUED) 
LIABILITIES AND STOCKHOLDERS' DEFICIENCY

                                                        [Enlarge/Download Table]

                                                                                            DECEMBER 31,          
                                                                                   ------------------------------ 
                                                                                        1995            1994      
                                                                   MARCH 31, 1996  --------------  -------------- 
                                                                   --------------                                 
                                                                    (UNAUDITED)                                   
                                                                                                                  
CURRENT LIABILITIES:                                                                                              
  Accounts payable...............................................  $    4,253,333  $    3,002,207  $    3,425,893 
  Accrued expenses...............................................       1,210,570       1,026,089       1,372,508 
  Royalties payable (Note 1).....................................       2,059,097       1,918,129       2,755,400 
  Due to customers (Note 1)......................................         204,880         251,903         192,062 
  Income taxes payable (Note 1)..................................         300,520         240,380         453,025 
  Revolving line of credit (Note 7)..............................                                       4,249,069 
  Current maturities of:                                                                                          
    Capitalized lease obligations (Note 9).......................          84,787          85,003          73,349 
    Subordinated long-term debt (Note 8).........................       1,050,000         300,000         300,000 
                                                                   --------------  --------------  -------------- 
      Total current liabilities..................................       9,163,187       6,823,711      12,821,306 
                                                                   --------------  --------------  -------------- 
REVOLVING LINE OF CREDIT (Note 7)................................       4,021,526       2,816,595        --       
CAPITALIZED LEASE OBLIGATIONS,                                                                                    
 Less current maturities (Note 9)................................         129,634         149,302         197,784 
SUBORDINATED LONG-TERM DEBT,                                                                                      
 Less current maturities (Note 8)................................       1,856,904       2,638,364       1,903,708 
MINORITY INTEREST (Note 1).......................................         614,679         569,277         326,222 
COMMITMENTS AND CONTINGENCIES (Notes 7 and 9)                                                                     
STOCKHOLDERS' DEFICIENCY (Note 1):                                                                                
  Common stock, no par value; authorized, 30,000,000 shares;                                                      
   issued and outstanding, 1,636, 1,636 and 1,454 shares at March                                                 
   31, 1996 and in 1995 and 1994, respectively...................       1,262,500       1,262,500         762,500 
  Additional paid-in capital.....................................         112,500         112,500         112,500 
  Accumulated deficit............................................      (3,227,863)     (2,673,773)     (2,283,490)
                                                                   --------------  --------------  -------------- 
      Total stockholders' deficiency.............................      (1,852,863)     (1,298,773)     (1,408,490)
                                                                   --------------  --------------  -------------- 
TOTAL............................................................  $   13,933,067  $   11,698,476  $   13,840,530 
                                                                   --------------  --------------  -------------- 
                                                                   --------------  --------------  -------------- 

                                                                     (CONCLUDED)

See accompanying notes to consolidated financial statements.

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OSP PUBLISHING, INC. AND SUBSIDIARIES 
CONSOLIDATED STATEMENTS OF OPERATIONS 

                                                        [Enlarge/Download Table]

                                                       THREE MONTHS ENDED                                                  
                                                           MARCH 31,                    YEARS ENDED DECEMBER 31,           
                                                   --------------------------  ------------------------------------------- 
                                                       1996          1995          1995           1994           1993      
                                                   ------------  ------------  -------------  -------------  ------------- 
                                                          (UNAUDITED)                                                      
                                                                                                                           
NET SALES (Note 1)...............................  $  8,940,658  $  7,421,551  $  38,227,958  $  42,168,322  $  38,107,907 
                                                   ------------  ------------  -------------  -------------  ------------- 
COST OF SALES:                                                                                                             
  Cost of goods sold.............................     4,347,317     3,180,377     17,016,038     19,368,726     17,444,199 
  License and royalty expense....................       922,206       911,891      4,630,843      5,771,188      4,890,729 
                                                   ------------  ------------  -------------  -------------  ------------- 
    Total cost of sales..........................     5,269,523     4,092,268     21,646,881     25,139,914     22,334,928 
                                                   ------------  ------------  -------------  -------------  ------------- 
GROSS PROFIT.....................................     3,671,135     3,329,283     16,581,077     17,028,408     15,772,979 
                                                   ------------  ------------  -------------  -------------  ------------- 
OPERATING EXPENSES (Note 1):                                                                                               
  Warehouse and Selling..........................     2,351,868     2,241,773     10,200,344     10,823,310      8,844,038 
  General and administrative.....................     1,452,981     1,261,816      4,971,249      5,812,983      4,953,002 
                                                   ------------  ------------  -------------  -------------  ------------- 
    Total operating expenses.....................     3,804,849     3,503,589     15,171,593     16,636,293     13,797,000 
                                                   ------------  ------------  -------------  -------------  ------------- 
OPERATING INCOME (LOSS)..........................      (133,714)     (174,306)     1,409,484        392,115      1,975,939 
INTEREST EXPENSE (Notes 7, 8 and 9)..............       267,659       172,871        841,173        685,294        604,584 
                                                   ------------  ------------  -------------  -------------  ------------- 
INCOME (LOSS) BEFORE INCOME TAXES, MINORITY                                                                                
 INTEREST, DISCONTINUED OPERATIONS AND CUMULATIVE                                                                          
 EFFECT OF CHANGE IN ACCOUNTING PRINCIPLE........      (401,373)     (347,177)       568,311       (293,179)     1,371,355 
INCOME TAX (BENEFIT) PROVISION (Notes 1 and                                                                                
 11).............................................        67,323      (132,820)       (77,336)       115,617        429,109 
                                                   ------------  ------------  -------------  -------------  ------------- 
INCOME (LOSS) BEFORE MINORITY INTEREST,                                                                                    
 DISCONTINUED OPERATIONS AND CUMULATIVE EFFECT OF                                                                          
 CHANGE IN ACCOUNTING PRINCIPLE..................      (468,696)     (214,357)       645,647       (408,796)       942,246 
MINORITY INTEREST IN (INCOME) LOSS OF                                                                                      
 SUBSIDIARIES....................................       (45,420)       37,308       (243,055)       148,048       (378,041)
                                                   ------------  ------------  -------------  -------------  ------------- 
INCOME (LOSS) BEFORE DISCONTINUED OPERATIONS AND                                                                           
 CUMULATIVE EFFECT OF CHANGE IN ACCOUNTING                                                                                 
 PRINCIPLE.......................................      (514,116)     (177,049)       402,592       (260,748)       564,205 
DISCONTINUED OPERATIONS (Note 13):                                                                                         
  Income (loss) from operations of discontinued                                                                            
   operation, less applicable income tax                                                                                   
   (benefit) expense of ($6,454) and $4,896 for                                                                            
   the years ended December 31, 1994 and 1993,                                                                             
   respectively..................................                                                  (423,814)       130,650 
  Loss on disposal of discontinued operation,                                                                              
   less applicable income tax benefit of                                                                                   
   $5,268........................................                                                  (345,951)               
                                                   ------------  ------------  -------------  -------------  ------------- 
    Total discontinued operations................                                                  (769,765)       130,650 
                                                   ------------  ------------  -------------  -------------  ------------- 

                                                                     (CONTINUED)

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CONSOLIDATED STATEMENTS OF OPERATIONS (CONTINUED) 

                                                        [Enlarge/Download Table]

                                                          THREE MONTHS ENDED                                                  
                                                              MARCH 31,                    YEARS ENDED DECEMBER 31,           
                                                      --------------------------  ------------------------------------------- 
                                                          1996          1995          1995           1994           1993      
                                                      ------------  ------------  -------------  -------------  ------------- 
                                                             (UNAUDITED)                                                      
                                                                                                                              
INCOME (LOSS) BEFORE CUMULATIVE EFFECT OF CHANGE IN                                                                           
 ACCOUNTING PRINCIPLE................................ $   (514,116) $   (177,049) $     402,592  $  (1,030,513) $     694,855 
CUMULATIVE EFFECT OF CHANGE IN ACCOUNTING PRINCIPLE                                                                           
 (Note 1)............................................                                                                 118,084 
                                                      ------------  ------------  -------------  -------------  ------------- 
NET INCOME (LOSS).................................... $   (514,116) $   (177,049) $     402,592  $  (1,030,513) $     812,939 
                                                      ------------  ------------  -------------  -------------  ------------- 
                                                      ------------  ------------  -------------  -------------  ------------- 
PRO FORMA NET INCOME (LOSS) DATA (Note 11):                                                                                   
  Income (loss) before income taxes, as reported..... $   (401,373) $   (347,177) $     568,311  $    (293,179) $   1,371,355 
  Pro forma (benefit) provision for income taxes.....      (85,114)      (70,421)       113,836        (43,273)       344,325 
  Minority interest in (income) loss of                                                                                       
   subsidiaries......................................      (45,420)       37,308       (243,055)       148,048       (378,041)
  Discontinued operations, as reported...............                                                 (758,043)       135,546 
  Pro forma tax effect of discontinued operations....                                                 (295,627)        54,218 
                                                      ------------  ------------  -------------  -------------  ------------- 
    Pro forma net income (loss)...................... $   (361,679) $   (239,448) $     211,420  $    (564,274) $     730,317 
                                                      ------------  ------------  -------------  -------------  ------------- 
                                                      ------------  ------------  -------------  -------------  ------------- 
PRO FORMA INCOME (LOSS) PER SHARE (Note 14):                                                                                  
  Income (loss) from continuing operations........... $      (0.04) $      (0.03) $        0.06                               
  Minority interest in (income) loss of                                                                                       
   subsidiaries......................................        (0.01)                       (0.03)                              
                                                      ------------  ------------  -------------                               
    Pro forma net income (loss)...................... $      (0.05) $      (0.03) $        0.03                               
                                                      ------------  ------------  -------------                               
                                                      ------------  ------------  -------------                               
  Weighted average shares outstanding................    8,036,602     8,036,207      8,036,602                               
                                                      ------------  ------------  -------------                               
                                                      ------------  ------------  -------------                               

                                                                     (CONCLUDED)

See accompanying notes to consolidated financial statements.

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OSP PUBLISHING, INC. AND SUBSIDIARIES 
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' (DEFICIENCY) EQUITY

                                                        [Enlarge/Download Table]

                                                                               RETAINED        NOTE                  
                                             COMMON STOCK       ADDITIONAL     EARNINGS     RECEIVABLE               
                                         ---------------------    PAID-IN    (ACCUMULATED       --                   
                                          SHARES      AMOUNT      CAPITAL      DEFICIT)    STOCKHOLDER      TOTAL    
                                         ---------  ----------  -----------  ------------  ------------  ----------- 
                                                                                                                     
BALANCE, JANUARY 1, 1993................     1,250  $   62,500   $ 112,500    $  170,622    $ (125,000)  $   220,622 
Issuance of common stock................       204     700,000                                               700,000 
Dividends...............................                                      (1,096,464)                 (1,096,464)
Net Income..............................                                         812,939                     812,939 
                                         ---------  ----------  -----------  ------------  ------------  ----------- 
BALANCE, DECEMBER 31, 1993..............     1,454     762,500     112,500      (112,903)     (125,000)      637,097 
Issuance of common stock................                                                                             
Dividends...............................                                      (1,140,074)                 (1,140,074)
Repayment of note receivable (Note 6)...                                                       125,000       125,000 
Net loss................................                                      (1,030,513)                 (1,030,513)
                                         ---------  ----------  -----------  ------------  ------------  ----------- 
BALANCE, DECEMBER 31, 1994..............     1,454     762,500     112,500    (2,283,490)                 (1,408,490)
Issuance of common stock................       182     500,000                                               500,000 
Dividends...............................                                        (792,875)                   (792,875)
Net Income..............................                                         402,592                     402,592 
                                         ---------  ----------  -----------  ------------  ------------  ----------- 
BALANCE, DECEMBER 31, 1995..............     1,636   1,262,500     112,500    (2,673,773)                 (1,298,773)
Dividends (unaudited)...................                                         (39,974)                    (39,974)
Net loss (unaudited)....................                                        (514,116)                   (514,116)
                                         ---------  ----------  -----------  ------------  ------------  ----------- 
BALANCE, MARCH 31, 1996.................     1,636  $1,262,500   $ 112,500    $(3,227,863)               $(1,852,863)
                                         ---------  ----------  -----------  ------------  ------------  ----------- 
                                         ---------  ----------  -----------  ------------  ------------  ----------- 

See accompanying notes to consolidated financial statements.

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OSP PUBLISHING, INC. AND SUBSIDIARIES 
CONSOLIDATED STATEMENTS OF CASH FLOWS 

                                                        [Enlarge/Download Table]

                                                      THREE MONTHS ENDED                                               
                                                           MARCH 31,                  YEARS ENDED DECEMBER 31,         
                                                   -------------------------  ---------------------------------------- 
                                                       1996         1995          1995          1994          1993     
                                                   ------------  -----------  ------------  ------------  ------------ 
                                                          (UNAUDITED)                                                  
                                                                                                                       
CASH FLOWS FROM OPERATING ACTIVITIES:                                                                                  
  Net income (loss)............................... $   (514,116) $  (177,049) $    402,592  $ (1,030,513) $    812,939 
  Adjustments to reconcile net income (loss) to                                                                        
   net cash provided by (used in) operating                                                                            
   activities:                                                                                                         
    Depreciation and amortization.................       89,393      104,261       429,665       400,775       318,356 
    Loss (gain) on sale of property and                                                                                
     equipment....................................                                   1,894           298          (596)
    Minority interest in (income) loss of                                                                              
     subsidiaries.................................       45,402      (37,308)      243,055      (148,048)      378,041 
    Deferred income taxes.........................                                 178,716       (81,970)      (16,853)
    Loss on disposal of discontinued operations...                                               345,951               
    Cumulative effect of accounting change........                                                            (118,084)
  Changes in operating assets and liabilities:                                                                         
    Accounts receivable -- trade..................     (665,578)     885,424     1,127,398       179,180    (3,401,383)
    Inventories...................................     (920,516)     664,058       885,297      (492,874)   (2,825,677)
    Prepaid royalty advances......................     (160,712)    (131,473)      238,813      (416,345)      (43,758)
    Prepaid expenses and other current assets.....     (214,386)    (354,274)      131,704      (122,047)       18,921 
    Due from affiliates...........................                                               326,907        29,992 
    Accounts payable..............................    1,236,382      148,948      (798,639)    1,106,388     1,087,186 
    Accrued expenses..............................      147,904      (54,112)     (383,989)     (276,834)    1,085,165 
    Royalties payable.............................      140,968     (538,260)     (837,271)      395,602     1,448,304 
    Due to customers..............................      (47,023)       6,201        59,841       (29,953)     (174,668)
    Income taxes payable..........................       60,140     (132,820)     (212,645)     (154,909)      563,220 
                                                   ------------  -----------  ------------  ------------  ------------ 
      Net cash (used in) provided by operating                                                                         
       activities.................................     (802,142)     383,596     1,466,431         1,308      (838,895)
                                                   ------------  -----------  ------------  ------------  ------------ 
CASH FLOWS FROM INVESTING ACTIVITIES:                                                                                  
  Purchase of property and equipment..............      (78,175)     (49,350)     (621,901)     (370,551)     (295,941)
  Proceeds from sale of property and equipment....                                  20,973         2,283         1,525 
  Goodwill........................................                                                 6,434      (141,883)
  Deposits........................................       69,654       43,429        (8,054)      (81,343)      (56,757)
                                                   ------------  -----------  ------------  ------------  ------------ 
      Net cash used in investing activities.......       (8,521)      (5,921)     (608,982)     (443,177)     (493,056)
                                                   ------------  -----------  ------------  ------------  ------------ 

                                                                     (CONTINUED)

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OSP PUBLISHING, INC. AND SUBSIDIARIES 
CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED) 

                                                        [Enlarge/Download Table]

                                                      THREE MONTHS ENDED                                               
                                                           MARCH 31,                  YEARS ENDED DECEMBER 31,         
                                                   -------------------------  ---------------------------------------- 
                                                       1996         1995          1995          1994          1993     
                                                   ------------  -----------  ------------  ------------  ------------ 
                                                          (UNAUDITED)                                                  
                                                                                                                       
CASH FLOWS FROM FINANCING ACTIVITIES:                                                                                  
  Payments on capital lease obligations..........  $    (19,884) $   (19,527) $    (80,332) $   (119,336) $    (86,311)
  Borrowings from revolving line of credit.......     1,204,931                                4,332,454     4,315,866 
  Payments on revolving line of credit...........                   (400,000)   (1,432,474)   (2,516,596)   (2,152,655)
  Borrowings on subordinated long-term debt......                                  750,000                             
  Payments on subordinated long-term debt........       (31,460)      (3,138)      (15,344)     (223,983)     (353,544)
  Dividends paid.................................       (39,974)     (91,957)     (792,875)   (1,140,074)   (1,096,464)
  Issuance of common stock.......................                                  500,000                     700,000 
  Repayment of note receivable from                                                                                    
   stockholder...................................                                                125,000               
  Minority interest in subsidiary................                                                               96,230 
                                                   ------------  -----------  ------------  ------------  ------------ 
      Net cash provided by (used in) financing                                                                         
       activities................................     1,113,613     (514,622)   (1,071,025)      457,465     1,423,122 
                                                   ------------  -----------  ------------  ------------  ------------ 
NET INCREASE (DECREASE) IN CASH AND CASH                                                                               
 EQUIVALENTS.....................................       302,950     (136,947)     (213,576)       15,596        91,171 
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD...        74,828      288,404       288,404       272,808       181,637 
                                                   ------------  -----------  ------------  ------------  ------------ 
CASH AND CASH EQUIVALENTS, END OF PERIOD.........  $    377,778  $   151,457  $     74,828  $    288,404  $    272,808 
                                                   ------------  -----------  ------------  ------------  ------------ 
                                                   ------------  -----------  ------------  ------------  ------------ 
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:                                                                      
  Cash paid (received) during the period for:                                                                          
    Interest.....................................  $    158,955  $   210,897  $    752,172  $    646,227  $    349,852 
    Income taxes.................................  $      7,000               $    (43,407) $     67,500  $     39,000 

SUPPLEMENTAL DISCLOSURE OF NONCASH INVESTING AND FINANCING TRANSACTIONS --      

Capital lease obligations of $43,504 and $117,400 were incurred when the Company
entered  into agreements  for the  purchase of new  equipment in  1995 and 1994,
respectively.                                                                   

                                                                     (CONCLUDED)

See accompanying notes to consolidated financial statements.

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OSP PUBLISHING, INC. AND SUBSIDIARIES 

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(INFORMATION WITH RESPECT TO THE THREE MONTHS ENDED 
MARCH 31, 1996 AND 1995 IS UNAUDITED) 

1.  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES                                  

    ORGANIZATION   --  OSP  Publishing,  Inc.   ("OSP")  and  subsidiaries  (the
"Company") design and produce licensed  trend merchandise which they market  for
sale in gift and stationary stores, video stores, music stores, toy stores, book
stores  and mass retailers. The Company's products consist of posters, T-shirts,
framed wall decor, buttons, key chains, stickers, and collectible movie scripts.
These products incorporate primarily licensed images and characters from  motion
pictures, television, comic books, music, sports and popular culture.           

    PRINCIPLES OF CONSOLIDATION -- The consolidated financial statements include
the accounts of OSP, its division, Top Banana (which was discontinued in 1994 --
see Note 13), its 79%-owned subsidiary, Button Exchange, Ltd., and its 51%-owned
subsidiary, Stanley DeSantis, Inc., which was acquired during 1993. All material
intercompany  transactions  have been  eliminated  in consolidation.  A minority
interest is held by one officer of each subsidiary (see Note 12).               

    INTERIM  PERIOD  PRESENTATION  --   The  unaudited  consolidated   financial
statements  as of and  for the three months  ended March 31,  1996 and 1995 have
been prepared on  the same basis  as the audited  financial statements  included
herein.  In  the  opinion  of management,  such  unaudited  financial statements
include all adjustments (consisting of only normal recurring accruals) necessary
for a fair presentation.  The results of operations  for the three months  ended
March  31, 1996 are not  necessarily indicative of results  that may be expected
for the year ending December 31, 1996 or in any future period.                  

    USE OF ESTIMATES --  The preparation of  financial statements in  conformity
with  generally accepted accounting principles requires the Company's management
to make estimates and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets  and liabilities at the date  of
the  financial  statements and  the reported  amounts  of revenues  and expenses
during the reporting period. Actual results could differ from those estimates.  

    FAIR VALUE OF FINANCIAL INSTRUMENTS  -- The Company's financial  instruments
consist  primarily of accounts receivable and payable, and debt instruments. The
carrying values of all financial  instruments, other than debt instruments,  are
representative  of their fair values due to their short maturities. The carrying
values of  the Company's  bank debt  instruments are  considered to  approximate
their  fair values because the interest rates  of these instruments are based on
variable  reference  rates.   Management  believes  that   the  fair  value   of
subordinated  debt would  not differ significantly  from the  carrying amount at
March 31, 1996 and at December 31, 1995 and 1994.                               

    CASH  AND  CASH  EQUIVALENTS  --   The  Company  considers  all   investment
instruments  purchased  with a  maturity  of three  months  or less  to  be cash
equivalents.                                                                    

    CONCENTRATION OF  CREDIT  RISK --  Financial  instruments that  subject  the
Company  to credit risk consist  primarily of accounts receivable. Concentration
of credit risk with respect to accounts receivable is generally diversified  due
to  the large number of entities composing the Company's customer base and their
geographic dispersion. The  Company performs ongoing  credit evaluations of  its
customers and maintains an allowance for potential credit losses.               

    SIGNIFICANT  LICENSORS  AND  CUSTOMERS  --  OSP's  largest  licensor, Disney
Enterprises, Inc., represented approximately  22%, 31% and 22%  of net sales  of
products in 1995, 1994 and 1993, respectively, and represented less than 10% and
approximately  23% of net  sales for the  three months ended  March 31, 1996 and
1995, respectively. Another licensor represented approximately 23% of net  sales
for the three months ended March 31, 1996. Sales to two customers each accounted
for approximately                                                               

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OSP PUBLISHING, INC. AND SUBSIDIARIES 

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

(INFORMATION WITH RESPECT TO THE THREE MONTHS ENDED 
MARCH 31, 1996 AND 1995 IS UNAUDITED) 

1.  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)                      
10% of net sales during 1995, sales to two customers accounted for approximately
15% and 11% of net sales for the three months ended March 31, 1996, and sales to
one  customer accounted for approximately 11% of  net sales for the three months
ended March 31, 1995.                                                           

    INVENTORIES  --  Inventories,  consisting  primarily  of  posters,  buttons,
T-shirts  and trend gift items, are valued at  the lower of cost or market, with
cost determined on the first-in, first-out method.                              

    ROYALTIES -- The Company  has entered into  license agreements with  various
companies  requiring payment of royalties. At the inception of the license term,
minimum royalty payments are accounted  for as prepaid royalties. These  prepaid
royalties  are  charged to  operations  based on  the  related product  sales or
license term.                                                                   

    PROPERTY AND  EQUIPMENT  --  Property  and equipment  are  stated  at  cost.
Depreciation  is provided  for by  the straight-line  method over  the estimated
useful lives of the related assets, which range from two to ten years. Leasehold
improvements are amortized on a straight-line  basis over the term of the  lease
or estimated useful life, whichever is shorter.                                 

    GOODWILL  -- Goodwill from the acquisition of the Company's two subsidiaries
represents the excess cost  over the fair  value of net  assets acquired and  is
being  amortized over  useful lives  ranging from  five to  ten years  using the
straight-line method. The Company periodically reviews the value of its goodwill
to determine if an impairment has occurred. The Company bases its  determination
on  the performance,  on an  undiscounted basis,  of the  underlying businesses.
Based on its  review, the Company  does not  believe that an  impairment of  its
goodwill has occurred.                                                          

    In March 1995, the Financial Accounting Standards Board issued Statement No.
121,  "Accounting for  the Impairment  of Long-Lived  Assets and  for Long-Lived
Assets to Be Disposed Of."  The adoption of this  statement in the three  months
ended  March  31, 1996  did not  have  an effect  on the  Company's consolidated
financial statements.                                                           

    NET SALES -- Revenue  is recognized when goods  are originally shipped.  The
Company  allows customers to  return purchased goods only  in exchange for other
goods. Customer credits for goods returned but not yet exchanged for other goods
are included  in the  accompanying  balance sheet  as  "Due to  customers."  The
Company  provides for  estimated returns  when the  products are  shipped to its
customers.                                                                      

    INCOME TAXES  -- OSP  has elected  to be  treated as  an S  Corporation  for
federal  and California state income tax  purposes. Pursuant to these elections,
the income of OSP  is included in  the income tax  returns of its  stockholders.
Consequently,  no  provision  for  federal  income  taxes  is  recorded  in  the
accompanying financial statements for OSP. However, under California state  law,
an  income  tax  equal  to 1.5%  of  income  before  tax is  imposed  upon  an S
corporation and is provided for in the accompanying financial statements.       

    The Company's  subsidiaries, Stanley  DeSantis,  Inc. and  Button  Exchange,
Ltd.,  are C Corporations,  under which provisions for  federal and state income
taxes are recorded.                                                             

    Effective January  1,  1993,  the Company  adopted  Statement  of  Financial
Accounting  Standards  ("SFAS") No.  109, "Accounting  for Income  Taxes," which
requires an asset and liability  approach to financial accounting and  reporting
for  income  taxes.  Deferred income  tax  assets and  liabilities  are computed
annually for differences between the financial statement and income tax bases of
assets and liabilities that will result in taxable or deductible amounts in  the
future.  Such deferred income tax asset  and liability computations are based on
enacted   tax    laws   and    rates   applicable    to   periods    in    which

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OSP PUBLISHING, INC. AND SUBSIDIARIES 

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

(INFORMATION WITH RESPECT TO THE THREE MONTHS ENDED 
MARCH 31, 1996 AND 1995 IS UNAUDITED) 

1.  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)                      
the  differences are expected to affect taxable income. A valuation allowance is
established, when necessary, to reduce deferred income tax assets to the  amount
expected to be realized. Income tax expense is the tax payable or refundable for
the  period plus or  minus the change  during the period  in deferred income tax
assets and liabilities.                                                         

    The cumulative effect as of January 1, 1993 as a result of adopting SFAS No.
109 was $118,084 and is included in  net income for the year ended December  31,
1993.                                                                           

    RECLASSIFICATIONS  -- Certain reclassifications  have been made  to 1994 and
1993 amounts to conform to the 1995 presentation.                               

2.  ACQUISITION AGREEMENT AND FORMATION OF HOLDING COMPANY                      
    On March 27,  1996 the Company  entered into an  agreement to acquire  Kelly
Russell Studios, Inc. ("Kelly Russell"), a publicly-traded entity. The Company's
stockholders have formed Global One Distribution and Merchandising Inc. ("Global
One")  to serve as a holding company for OSP and its subsidiaries and to acquire
Kelly Russell. Each two outstanding shares of Kelly Russell common stock will be
exchanged for one share of Global One stock. Global One also plans to complete a
private placement of common stock for approximately $6.7 million and intends  to
register  the Global One common  stock issued in exchange  for the Kelly Russell
common stock with the Securities and Exchange Commission.                       

3.  ACCOUNTS RECEIVABLE                                                         
    The Company's subsidiary, Stanley DeSantis, Inc., sells substantially all of
its accounts receivable to a factor under a continuing contract, cancelable upon
written notice. In most cases, the factor approves the credit and the account is
sold without recourse. In cases in which the factor does not approve the credit,
Stanley DeSantis, Inc. bears the risk. At March 31, 1996, December 31, 1995  and
1994,  the  receivables  that  were at  the  Company's  risk  were approximately
$207,000, $251,000 and $117,000, respectively.  At March 31, 1996, December  31,
1995  and 1994, amounts due from factor included in accounts receivable -- trade
were $2,095,463, $821,730 and $363,316, respectively. The factor, to the  extent
of  any financing provided, holds a security interest in all accounts receivable
and property of Stanley DeSantis, Inc.                                          

4.  INVENTORIES                                                                 
Inventories consist of the following:                                   

                                                        [Enlarge/Download Table]

                                                                         DECEMBER 31,        
                                                                 ----------------------------
                                                                     1995           1994     
                                                    MARCH 31,    -------------  -------------
                                                      1996                                   
                                                  -------------                              
                                                   (UNAUDITED)                               
                                                                                             
Products in process.............................. $   1,267,376  $     659,657  $   1,113,291
Finished products................................     3,569,824      3,159,953      2,714,313
Packaging materials..............................       154,359        246,402         75,423
                                                  -------------  -------------  -------------
                                                  $   4,991,559  $   4,066,012  $   3,903,027
                                                  -------------  -------------  -------------
                                                  -------------  -------------  -------------

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OSP PUBLISHING, INC. AND SUBSIDIARIES 

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

(INFORMATION WITH RESPECT TO THE THREE MONTHS ENDED 
MARCH 31, 1996 AND 1995 IS UNAUDITED) 

5.  PROPERTY AND EQUIPMENT                                                      
Property and equipment consist of the following:                        

                                                        [Enlarge/Download Table]

                                                                         DECEMBER 31,        
                                                                 ----------------------------
                                                                     1995           1994     
                                                    MARCH 31,    -------------  -------------
                                                      1996                                   
                                                  -------------                              
                                                   (UNAUDITED)                               
                                                                                             
Computer equipment............................... $     656,938  $     600,138  $     498,782
Machinery and equipment..........................       495,887        495,887        449,721
Furniture and fixtures...........................       377,034        359,808        345,936
Leasehold improvements...........................       468,597        462,597         55,609
Vehicles.........................................        81,165         81,165         88,665
                                                  -------------  -------------  -------------
                                                      2,079,621      1,999,595      1,438,713
Less accumulated depreciation and amortization...       895,527        813,796        591,211
                                                  -------------  -------------  -------------
Property and equipment, net...................... $   1,184,094  $   1,185,799  $     847,502
                                                  -------------  -------------  -------------
                                                  -------------  -------------  -------------

    Included in the above is equipment  under capitalized leases in the  amounts
of  approximately $384,731, $422,263 and  $379,000 with accumulated depreciation
of approximately $170,409, $186,245 and $102,000 at March 31, 1996, December 31,
1995 and 1994, respectively.                                                    

6.  NOTE RECEIVABLE -- STOCKHOLDER                                              
    In 1992, the Company sold 1,002,444 shares of common stock to an officer  of
the  Company in exchange for a $125,000  note receivable, which bore interest at
the rate of 6.62% per annum, payable in annual principal installments of $31,250
commencing January  3, 1994  through 1997.  On January  1, 1994,  this note  was
repaid with proceeds received from a dividend declared by the Company.          

7.  REVOLVING LINE OF CREDIT                                                    
    In February 1996, the Company refinanced its outstanding line of credit with
a bank with another financial institution. The refinanced line of credit expires
in February 1999 and provides for maximum borrowings of $7,500,000, subject to a
borrowing  base of approximately 75% of  eligible accounts receivable and 45% of
eligible finished goods inventory, as defined. The outstanding balance under the
refinanced line  of  credit bears  interest  at a  bank's  prime rate  (8.5%  at
December  31,  1995)  plus 1.75%  and  is  payable monthly.  The  agreement also
provides for $200,000 for standby letters of credit which may be drawn upon  and
reduce  the available borrowings under the  line of credit. The borrowings under
the refinanced line  of credit are  collateralized by substantially  all of  the
assets  of the Company and a certificate of deposit held by a third party, in an
amount of at least $500,000,  to be held at a  bank designated by the  financial
institution.  The refinanced line of credit line is personally guaranteed by the
principal stockholders and  contains various restrictive  covenants including  a
current  ratio requirement, minimum level of  tangible net worth, and limits the
incurrence of  additional indebtedness,  capital  expenditures and  payments  of
distributions.                                                                  

8.  SUBORDINATED LONG-TERM DEBT                                                 
    Subordinated  long-term debt is  payable to the former  owner of the Company
and is collateralized by all of the Company's assets. Interest is calculated  at
prime  plus 2%  per annum, unless  prime plus 2%  shall equal or  exceed 10% per
annum, in  which case  interest shall  accrue at  the higher  of (1)  the  prime
interest  rate, or  (2) 10% per  annum. The  Company is required  to pay monthly
principal payments of  $25,000 plus  accrued interest  until July  15, 1997,  at
which time the remaining principal                                              

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OSP PUBLISHING, INC. AND SUBSIDIARIES 

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

(INFORMATION WITH RESPECT TO THE THREE MONTHS ENDED 
MARCH 31, 1996 AND 1995 IS UNAUDITED) 

8.  SUBORDINATED LONG-TERM DEBT (CONTINUED)                                     
balance is due. The note is due on demand if there is a sale of more than 50% of
the  Company's outstanding stock. The note  is subordinated to all business debt
now or hereinafter incurred by the Company.                                     

    In addition, the Company obtained in October and November 1995  subordinated
debt  financing from a vendor totaling $750,000, which bears interest at 10% per
annum. Interest is payable monthly, and  the principal is due January 1997.  The
borrowings are collateralized by a security interest in all of the assets of the
Company.                                                                        

    The  Company also entered into a minimum purchase agreement with the vendor,
whereby it agreed to purchase or procure a minimum of 75% of its total  printing
from the vendor, and the minimum amount payable to the vendor for printing shall
not be less than $2,500,000 per year.                                           

    Future  minimum payments  of subordinated  long-term debt  are summarized as
follows:                                                                        

                                                        [Enlarge/Download Table]

                                  YEAR ENDING                                                 
                                 DECEMBER 31,                                                 
-------------------------------------------------------------------------------               
                                                                                              
  1996.........................................................................  $   1,050,000
  1997.........................................................................      1,856,904
                                                                                 -------------
    Total......................................................................  $   2,906,904
                                                                                 -------------
                                                                                 -------------

9.  CAPITALIZED LEASE OBLIGATIONS                                               
    The Company has  various capitalized  lease obligations  payable in  monthly
installments  of $9,438, including interest at  rates ranging from 7.5% to 17.3%
per annum. The capitalized  lease obligations are due  at various dates  through
September  1999 and are collateralized by property and equipment. Future minimum
lease payments are as follows:                                                  

                                                        [Enlarge/Download Table]

                            YEAR ENDING DECEMBER 31,                                          
---------------------------------------------------------------------------------             
                                                                                              
  1996...........................................................................  $   110,884
  1997...........................................................................      109,410
  1998...........................................................................       57,200
  1999...........................................................................        3,939
                                                                                   -----------
                                                                                       281,433
Less amount representing interest................................................       47,128
                                                                                   -----------
Net minimum lease payments.......................................................      234,305
Less amount due in one year......................................................       85,003
                                                                                   -----------
Long-term obligations under capital leases.......................................  $   149,302
                                                                                   -----------
                                                                                   -----------

10. COMMITMENTS AND CONTINGENCIES                                               

    LEASES -- The Company leases facilities and equipment from nonaffiliated and
affiliated parties under  noncancelable operating leases  expiring through  June
2005.  Amounts  paid  to affiliated  parties  during  1995, 1994  and  1993 were
approximately $66,000, $194,000 and $153,000, respectively. For the three months
ended March 31, 1995 the amount paid was $38,000.                               

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OSP PUBLISHING, INC. AND SUBSIDIARIES 

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

(INFORMATION WITH RESPECT TO THE THREE MONTHS ENDED 
MARCH 31, 1996 AND 1995 IS UNAUDITED) 

10. COMMITMENTS AND CONTINGENCIES (CONTINUED)                                   
    Future minimum  rental commitments  (excluding  taxes, insurance  and  other
occupancy expenses) under noncancelable leases are as follows:                  

                                                        [Enlarge/Download Table]

YEAR ENDING                                                                                   
DECEMBER 31,                                                                                  
-------------------------------------------------------------------------------               
                                                                                              
  1996.........................................................................  $     559,720
  1997.........................................................................        499,049
  1998.........................................................................        465,198
  1999.........................................................................        445,620
  2000.........................................................................        465,855
  Thereafter...................................................................      2,261,721
                                                                                 -------------
    Total......................................................................  $   4,697,163
                                                                                 -------------
                                                                                 -------------

    Rent expense was approximately $525,000, $367,000 and $392,000 for the years
ended  December 31, 1995, 1994 and 1993, respectively, and $131,000 and $100,000
for the three months ended March 31, 1996 and 1995, respectively.               

    STOCK PURCHASE WARRANTS -- The Company  issued stock warrants on August  28,
1989  to a nonaffiliated party to purchase 50 shares of stock for $50 per share.
The warrants  may be  exercised  at any  time and  expire  August 27,  1996.  No
warrants have been exercised through March 31, 1996.                            

    OTHER  -- The Company is involved in litigation arising in the normal course
of business.  It is  the opinion  of  management that  the disposition  of  such
actions  will  not  materially  affect  the  financial  position  or  results of
operations of the Company.                                                      

11. INCOME TAXES AND PRO FORMA INCOME TAXES                                     
The components of income tax expense are as follows:                    

                                                        [Enlarge/Download Table]

                                                   THREE MONTHS ENDED                                            
                                                        MARCH 31,                YEARS ENDED DECEMBER 31,        
                                                 -----------------------  -------------------------------------- 
                                                   1996         1995          1995         1994         1993     
                                                 ---------  ------------  ------------  -----------  ----------- 
                                                       (UNAUDITED)                                               
                                                                                                                 
Current:                                                                                                         
  Federal....................................... $  46,657  $    (92,049) $   (250,359) $   125,174  $   542,483 
  State.........................................    20,666       (40,771)       (5,693)      72,413      164,081 
                                                 ---------  ------------  ------------  -----------  ----------- 
                                                    67,323      (132,820)     (256,052)     197,587      706,564 
                                                 ---------  ------------  ------------  -----------  ----------- 
Deferred:                                                                                                        
  Federal.......................................                               151,314      (69,904)     (11,072)
  State.........................................                                27,402      (12,066)      (5,781)
                                                 ---------  ------------  ------------  -----------  ----------- 
                                                                               178,716      (81,970)     (16,853)
Less income taxes netted against capital                                                                         
 contributions to the Company's subsidiaries....                                                         260,602 
                                                 ---------  ------------  ------------  -----------  ----------- 
    Total....................................... $  67,323  $   (132,820) $    (77,336) $   115,617  $   429,109 
                                                 ---------  ------------  ------------  -----------  ----------- 
                                                 ---------  ------------  ------------  -----------  ----------- 

    Deferred income tax  assets of approximately  $187,000 consist primarily  of
state  net operating  loss carryforwards  and allowances  for doubtful accounts,
sales returns and inventory. Such amount is included in the accompanying balance
sheet   net    of    approximately    $49,000    of    deferred    income    tax

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OSP PUBLISHING, INC. AND SUBSIDIARIES 

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

(INFORMATION WITH RESPECT TO THE THREE MONTHS ENDED 
MARCH 31, 1996 AND 1995 IS UNAUDITED) 

11. INCOME TAXES AND PRO FORMA INCOME TAXES (CONTINUED)                         
liabilities   resulting  primarily  from  state  income  taxes  and  income  tax
deductions for prepaid  assets that have  not been expensed  for book  purposes.
Additionally,  a valuation  allowance for  deferred tax  assets of approximately
$100,000 has been recorded for the Button Exchange subsidiary as a result of its
continuing operating losses.                                                    

    The Company's effective income tax  rate differs from the federal  statutory
income  tax  rate due  primarily to  OSP's being  taxed as  an S  corporation as
discussed in Note 1 and the valuation allowance on certain deferred tax assets. 

    In 1993, the Company and a minority stockholder of the Company's subsidiary,
Button Exchange,  Ltd.,  contributed  capital to  that  subsidiary  through  the
forgiveness of certain indebtedness in a taxable transaction.                   

    The  following information reflects the pro  forma effect on income taxes as
if OSP's earnings  from continuing operations  had been subject  to federal  and
state income taxes as a C Corporation for all periods presented:                

                                                        [Enlarge/Download Table]

                                                   THREE MONTHS ENDED                                            
                                                       MARCH 31,                 YEARS ENDED DECEMBER 31,        
                                                ------------------------  -------------------------------------- 
                                                   1996         1995          1995         1994         1993     
                                                ----------  ------------  ------------  ----------  ------------ 
                                                      (UNAUDITED)                                                
                                                                                                                 
Current:                                                                                                         
  Federal...................................... $    6,366  $    (83,412) $    264,417  $   13,511  $    579,328 
  State........................................      2,820       (36,946)      117,117      32,705       147,539 
                                                ----------  ------------  ------------  ----------  ------------ 
                                                     9,186      (120,358)      381,534      46,216       726,867 
Deferred:                                                                                                        
  Federal......................................    (74,046)       40,202      (196,484)    (69,263)      (93,074)
  State........................................    (20,254)        9,735       (71,214)    (20,226)      (28,866)
                                                ----------  ------------  ------------  ----------  ------------ 
                                                   (94,300)       49,937      (267,698)    (89,489)     (121,940)
Less income taxes netted against capital                                                                         
 contributions to the Company's subsidiaries...                                                          260,602 
                                                ----------  ------------  ------------  ----------  ------------ 
    Total...................................... $  (85,114) $    (70,421) $    113,836  $  (43,273) $    344,325 
                                                ----------  ------------  ------------  ----------  ------------ 
                                                ----------  ------------  ------------  ----------  ------------ 

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OSP PUBLISHING, INC. AND SUBSIDIARIES 

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

(INFORMATION WITH RESPECT TO THE THREE MONTHS ENDED 
MARCH 31, 1996 AND 1995 IS UNAUDITED) 

11. INCOME TAXES AND PRO FORMA INCOME TAXES (CONTINUED)                         
    The  pro forma income  tax provision on  earnings from continuing operations
subject to income taxes differs from  the statutory federal income tax rate  due
to the following:                                                               

                                                        [Enlarge/Download Table]

                                               THREE MONTHS ENDED MARCH                                          
                                                         31,                     YEARS ENDED DECEMBER 31,        
                                              --------------------------  -------------------------------------- 
                                                  1996          1995          1995         1994         1993     
                                              ------------  ------------  ------------  ----------  ------------ 
                                                     (UNAUDITED)                                                 
                                                                                                                 
Federal income taxes at the statutory rate... $   (136,467) $   (118,040) $    193,226  $  (99,681) $    466,261 
State income taxes, net of federal benefit...      (12,691)        8,422        25,265      11,119        50,163 
Permanent differences........................        7,603        17,264        36,254      45,289      (172,099)
Losses for which no benefit was recognized...       56,441                                                       
Prior year overaccrual (underaccrual)........                     21,934      (140,909)                          
                                              ------------  ------------  ------------  ----------  ------------ 
                                              $    (85,114) $    (70,421) $    113,836  $  (43,273) $    344,325 
                                              ------------  ------------  ------------  ----------  ------------ 
                                              ------------  ------------  ------------  ----------  ------------ 

    Pro  forma income taxes related to  discontinued operations differs from the
statutory rate primarily due to the state income taxes, net of federal benefit. 

    The Company will terminate the S Corporation election at the closing of  the
acquisition  of  Kelly  Russell and  the  private placement  offering,  and will
recognize a deferred tax asset representing the cumulative temporary differences
as of the termination  date. Had the termination  of the S Corporation  election
occurred  on March 31, 1996, December 31,  1995 and 1994, the Company would have
recorded a net deferred tax asset as follows:                                   

                                                        [Enlarge/Download Table]

                                                                                               DECEMBER 31,      
                                                                                         ------------------------
                                                                                            1995         1994    
                                                                             MARCH 31,   -----------  -----------
                                                                               1996                              
                                                                            -----------                          
                                                                            (UNAUDITED)                          
                                                                                                                 
Deferred tax assets:                                                                                             
  Allowance for sales returns..............................................  $ 338,639   $   464,328  $   129,931
  Allowance for doubtful accounts..........................................    197,477       170,797      101,166
  Inventory reserve........................................................    228,215       228,215      154,390
  Inventory capitalization.................................................    116,910       112,201      104,834
  Other....................................................................     10,796        10,796       14,725
                                                                            -----------  -----------  -----------
                                                                               892,037       986,337      505,046
                                                                            -----------  -----------  -----------
Deferred tax liabilities -- State deferrals................................     59,271        59,271       29,005
                                                                            -----------  -----------  -----------
Net deferred tax asset.....................................................  $ 832,766   $   927,066  $   476,041
                                                                            -----------  -----------  -----------
                                                                            -----------  -----------  -----------

12. RELATED PARTY TRANSACTIONS                                                  
    During January 1994, in  exchange for the  release from certain  guarantees,
the  Company received  2,900 additional shares  of Button  Exchange, Ltd. common
stock from a minority stockholder, increasing its ownership to 79%.             

    The Company's principal stockholder has a 26% equity interest in Press  One,
a  printing  company majority  owned by  the  former owner  of the  Company. The
Company purchased approximately  $997,000, $1,355,000 and  $917,000 of  printing
services from Press One in 1995, 1994 and 1993,                                 

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OSP PUBLISHING, INC. AND SUBSIDIARIES 

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

(INFORMATION WITH RESPECT TO THE THREE MONTHS ENDED 
MARCH 31, 1996 AND 1995 IS UNAUDITED) 

12. RELATED PARTY TRANSACTIONS (CONTINUED)                                      
respectively.  For the three months  ended March 31, 1996  and 1995, the amounts
paid were $131,000 and  $280,000, respectively. As of  March 31, 1996,  December
31,  1995  and  1994,  the Company  owed  approximately  $152,000,  $278,000 and
$423,000, respectively, to Press One.                                           

    The Company's  principal  stockholder  is  also  a  shareholder  in  Pyramid
Licensing  which represents  licensors of properties,  some of  whom may license
such properties to OSP. OSP has guaranteed Pyramid Licensing's performance under
a lease agreement  for which  the annual commitment  is $46,000.  For the  three
months  ended  March  31,  1996,  OSP has  also  paid  certain  expenses, mainly
salaries, totaling approximately $16,000.                                       

    The former owner  of the Company  owned the main  facilities from which  the
Company  conducted its operations. These  facilities were under operating leases
that expired December 31, 1994. The  Company moved its main facilities in  April
1995 to their present location whose lease is with an unaffiliated entity.      

    The  Company pays commissions to an outside agency of sales representatives.
The outside agency pays to the OSP Shareholders a consulting fee on the basis of
commissions received from the Company.  The Company paid $639,384, $751,315  and
$491,585  of  commissions  to  the  outside  agency  in  1995,  1994  and  1993,
respectively. For the three  months ended March 31,  1996 and 1995, the  amounts
paid were $45,523 and $75,828, respectively.                                    

    In  addition, the Company  has advanced funds  to its majority stockholders,
who in turn advanced the funds to certain affiliated companies. During 1994, the
balance of these advances,  $324,998, was repaid with  proceeds received in  the
form of a dividend from the Company.                                            

13. DISCONTINUED OPERATIONS                                                     
    During  fiscal 1994, the Company committed to a formal plan to phase out and
dispose of its division, Top Banana, a distributor of licensed battery  operated
electronic  products. The  phase-out and ultimate  sale of  the remaining assets
have been substantially completed as of February 1996.                          

    The  loss  on  disposition  of  the  division  has  been  accounted  for  as
discontinued  operations. Revenues of the division  for 1995, 1994 and 1993 were
$1,174,000, $3,532,000 and $2,586,000, respectively, and $521,000 for the  three
months ended March 31, 1995.                                                    

14. PRO FORMA NET INCOME PER SHARE                                              
    In  connection with the organization of Global  One as the parent company of
OSP, the shareholders of OSP are expected to receive 6,448,088 shares of  common
stock  of Global One in  exchange for the common  stock outstanding at March 31,
1996. The  pro  forma weighted  average  shares outstanding  assumes  that  this
exchange  had occurred throughout  the periods presented,  includes the dilutive
common equivalent shares from stock  warrants (using the treasury stock  method)
and also gives effect to 1,393,550 shares deemed to be outstanding. These shares
represent  the approximate number of shares deemed to be sold by the Company (at
the net  offering  proceeds  of $1.26  per  share)  to fund  the  S  corporation
distribution  of $1,750,000 that is expected to be declared prior to the closing
of the Kelly Russell acquisition and private placement offering and will be paid
from the proceeds of  the offering. Common and  common equivalent shares  issued
during  the 12-month period prior to the proposed offering have been included in
the calculation using the treasury stock method as if they were outstanding  for
all periods presented.                                                          

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OSP PUBLISHING, INC. AND SUBSIDIARIES 

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

(INFORMATION WITH RESPECT TO THE THREE MONTHS ENDED 
MARCH 31, 1996 AND 1995 IS UNAUDITED) 

15. SUBSEQUENT EVENTS                                                           

    The  Company anticipates  that it  will enter  into an  arrangement with the
minority  shareholder  and  President  of  its  51%  owned  subsidiary,  Stanley
DeSantis,  Inc. The arrangement  will provide that the  President has an option,
subject to terms and conditions, to purchase  the 51% of the Common Stock  owned
by  the  Company at  a price,  determined based  on the  previous four  years of
operating income of  Stanley DeSantis,  Inc. The arrangement  will also  contain
bonus provisions for the President.                                             

    On May 23, 1996, the Company entered into an agreement with the former owner
of  the  Company and  holder of  the  subordinated long-term  debt to  allow the
Company to prepay by August 31, 1996 the outstanding balance of the subordinated
debt at a discount of 30%. The agreement also allows for prepayments  subsequent
to  August 31, 1996 with  the discount rate declining by  1% per month until the
payment is received.                                                            

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INDEPENDENT AUDITOR'S REPORT

To the Board of Directors and Shareholders                                      
Kelly Russell Studios, Inc.                                                     
Plymouth, Minnesota                                                             

    We  have audited the  accompanying balance sheets  of Kelly Russell Studios,
Inc. (Kelly  Russell)  as  of  December  31, 1994  and  1995,  and  the  related
statements  of operations, shareholders' equity, and  cash flows for each of the
three years in the  period ended December 31,  1995. These financial  statements
are  the responsibility of Kelly Russell's  management. Our responsibility is to
express an opinion on these 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 financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence  supporting
the  amounts and disclosures in the financial statements. An audit also includes
assessing the  accounting  principles used  and  significant estimates  made  by
management,  as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.          

    In our opinion, the financial  statements referred to above present  fairly,
in all material respects, the financial position of Kelly Russell as of December
31, 1994 and 1995, and the results of its operations and its cash flows for each
of  the three years  in the period  ended December 31,  1995, in conformity with
generally accepted accounting principles.                                       

    The accompanying financial statements have been prepared assuming that Kelly
Russell will continue as a going concern. As discussed in Note 10, Kelly Russell
has suffered  significant losses  to  date and  has  an accumulated  deficit  of
$7,150,939,  which  raises substantial  doubt about  Kelly Russell's  ability to
continue as a  going concern.  Management's plans  in regard  to these  matters,
including  the restructuring of Kelly Russell, are  described in Notes 9 and 10.
The financial  statements  do  not  include  any  adjustments  relating  to  the
recoverability  and classification of reported asset  amounts or the amounts and
classification of  liabilities  that  might  result from  the  outcome  of  this
uncertainty.                                                                    

                           McGLADREY & PULLEN, LLP

Minneapolis, Minnesota                                                          
March 11, 1996                                                                  

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KELLY RUSSELL STUDIOS, INC. 
BALANCE SHEETS
DECEMBER 31, 1994 AND 1995
ASSETS (NOTE 9) 

                                                        [Enlarge/Download Table]

                                                                                        1994            1995      
                                                                                   --------------  -------------- 
                                                                                                                  
Current Assets                                                                                                    
  Cash and cash equivalents....................................................... $      403,840  $      257,618 
  Trade receivables, less allowances 1994 $560,000; 1995 $161,000 (Note 7)........        704,723         709,988 
  Inventories (Note 2)............................................................        666,321         372,370 
  Prepaid expenses:                                                                                               
    Licensing rights..............................................................         37,826         175,945 
    Other.........................................................................         18,886          26,430 
                                                                                   --------------  -------------- 
        Total current assets......................................................      1,831,596       1,542,351 

Equipment, net of accumulated depreciation 1994 $44,583; 1995 $114,060............        217,716         314,934 
                                                                                   --------------  -------------- 
                                                                                   $    2,049,312  $    1,857,285 
                                                                                   --------------  -------------- 
                                                                                   --------------  -------------- 

                                       LIABILITIES AND SHAREHOLDERS' EQUITY                                       

Current Liabilities                                                                                               
  Accounts payable (Note 11)...................................................... $    1,415,605  $      597,649 
  Accrued expenses:                                                                                               
    Accrued litigation costs (Notes 8 and 12).....................................       --               100,000 
    Other.........................................................................         82,632          79,130 
  License fees payable............................................................        205,256          57,061 
                                                                                   --------------  -------------- 
        Total current liabilities.................................................      1,703,493         833,840 
                                                                                   --------------  -------------- 
Commitments and Contingencies (Notes 8 and 12)                                                                    
Shareholders' Equity (Notes 3, 5, 6, and 9)                                                                       
  Common stock, $0.01 par value; 10,000,000 shares authorized; issued and                                         
   outstanding 2,514,736 shares in 1994 and 4,082,373 shares in 1995..............         25,147          40,824 
  Additional paid-in capital......................................................      5,933,227       8,133,560 
  Deferred compensation expense...................................................         (4,882)       --       
  Accumulated deficit.............................................................     (5,607,673)     (7,150,939)
                                                                                   --------------  -------------- 
                                                                                          345,819       1,023,445 
                                                                                   --------------  -------------- 
                                                                                   $    2,049,312  $    1,857,285 
                                                                                   --------------  -------------- 
                                                                                   --------------  -------------- 

See Notes to Financial Statements.

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KELLY RUSSELL STUDIOS, INC. 
STATEMENTS OF OPERATIONS
YEARS ENDED DECEMBER 31, 1993, 1994 AND 1995

                                                        [Enlarge/Download Table]

                                                                        1993            1994            1995      
                                                                    -------------  --------------  -------------- 
                                                                                                                  
Net sales (Note 7)................................................. $   2,242,685  $    2,767,196  $    2,813,999 
                                                                    -------------  --------------  -------------- 
Cost of sales (Note 9):                                                                                           
  Cost of goods sold...............................................       860,863       3,456,857       1,961,648 
  License and royalty expenses.....................................       370,788         760,789         591,533 
                                                                    -------------  --------------  -------------- 
    Total cost of sales............................................     1,231,651       4,217,646       2,553,181 
                                                                    -------------  --------------  -------------- 
    Gross profit (loss)............................................     1,011,034      (1,450,450)        260,818 
Operating expenses (Note 9)........................................     1,196,125       3,734,527       2,133,939 
                                                                    -------------  --------------  -------------- 
    Operating loss.................................................      (185,091)     (5,184,977)     (1,873,121)
Other income.......................................................      --               119,395          40,079 
Interest expense...................................................       (53,151)       (150,448)         (7,218)
                                                                    -------------  --------------  -------------- 
    Loss before income taxes and extraordinary item................      (238,242)     (5,216,030)     (1,840,260)
Federal and state income taxes (Note 4)                                  --              --              --       
                                                                    -------------  --------------  -------------- 
    Loss before extraordinary item.................................      (238,242)     (5,216,030)     (1,840,260)
Extraordinary item (Note 11).......................................      --              --               296,994 
                                                                    -------------  --------------  -------------- 
    Net loss....................................................... $    (238,242) $   (5,216,030) $   (1,543,266)
                                                                    -------------  --------------  -------------- 
                                                                    -------------  --------------  -------------- 
Net loss per common share:                                                                                        
  Loss before extraordinary item................................... $       (0.07) $        (1.79) $        (0.52)
  Extraordinary item...............................................      --              --                  0.08 
                                                                    -------------  --------------  -------------- 
    Net loss per common share...................................... $       (0.07) $        (1.79) $        (0.44)
                                                                    -------------  --------------  -------------- 
                                                                    -------------  --------------  -------------- 
Weighted average number of common and common equivalent shares                                                    
 outstanding.......................................................     2,054,600       2,900,383       3,540,965 

See Notes to Financial Statements.

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KELLY RUSSELL STUDIOS, INC. 
STATEMENTS OF SHAREHOLDERS' EQUITY
YEARS ENDED DECEMBER 31, 1993, 1994 AND 1995

                                                        [Enlarge/Download Table]

                                                                   COMMON STOCK      ADDITIONAL    DEFERRED                  
                                                               --------------------   PAID-IN    COMPENSATION   ACCUMULATED  
                                                                SHARES     AMOUNT     CAPITAL       EXPENSE       DEFICIT    
                                                               ---------  ---------  ----------  -------------  ------------ 
                                                                                                                             
Balance, December 31, 1992...................................    700,000  $   7,000  $   84,189   $   --         $ (153,401) 
  Issuance of common stock at $1.00 per share on April 1,                                                                    
   1993, in exchange for services............................     12,000        120      11,880       --             --      
  Net loss...................................................     --         --          --           --           (238,242) 
                                                               ---------  ---------  ----------  -------------  ------------ 
Balance, December 31, 1993...................................    712,000      7,120      96,069       --           (391,643) 
  Issuance of 25,000 employee options to purchase common                                                                     
   stock at $2.25 per share on January 20, 1994 (Note 5).....     --         --          18,750       (18,750)       --      
  Issuance of 400,000 incentive options to purchase common                                                                   
   stock at $2.48 per share on January 20, 1994 (Note 5).....     --         --         207,950      (207,950)       --      
  Issuance of warrants for the purchase of 60,000 shares of                                                                  
   common stock for $1.00 per share in January 1994 (Note                                                                    
   3)........................................................     --         --         120,000       --             --      
  Issuance of 240,000 shares of restricted common stock on                                                                   
   February 25, 1994 (Note 5)................................    240,000      2,400     717,600      (720,000)       --      
  Issuance of common stock for $1.00 per share upon exercise                                                                 
   of warrants on March 31, 1994 (Note 3)....................    300,000      3,000     297,000       --             --      
  Issuance of common stock at $3.50 per share on March                                                                       
   31,1994, net of offering expenses of $792,017.............  1,477,750     14,777   4,365,331       --             --      
  Conversion of $900,000 of convertible debentures into                                                                      
   common stock on March 31, 1994 (Note 3)...................    399,986      4,000     896,000       --             --      
  Issuance of common stock at $1.00 per share on December 30,                                                                
   1994, net of offering expenses of $55,945 (Note 9)........    285,000      2,850     226,205       --             --      
  Forfeiture of 9,000 employee options (Note 5)..............     --         --          (6,750)        6,750        --      
  Forfeiture of 400,000 options to purchase common stock                                                                     
   (Notes 5 and 9)...........................................     --         --        (207,950)      207,950        --      
  Forfeiture of 240,000 shares of restricted common stock                                                                    
   (Note 9)..................................................   (240,000)    (2,400)   (717,600)      720,000        --      
  Forfeiture of 660,000 shares of common stock (Note 9)......   (660,000)    (6,600)    (79,378)      --             --      
  Noncash compensation expense...............................     --         --          --             7,118        --      
  Net loss...................................................     --         --          --           --         (5,216,030) 
                                                               ---------  ---------  ----------  -------------  ------------ 
Balance, December 31, 1994...................................  2,514,736     25,147   5,933,227        (4,882)   (5,607,673) 
  Issuance of common stock at $1.00 per share in February and                                                                
   March 1995, net of offering expenses of $71,550...........    641,000      6,410     563,040       --             --      
  Issuance of common stock upon exercise of warrants, at                                                                     
   $2.00 per share in May to September 1995, net of offering                                                                 
   expenses of $204,089......................................    926,000      9,260   1,638,651       --             --      
  Issuance of common stock upon exercise of stock options....        637          7         443       --             --      
  Forfeiture of employee options and noncash compensation                                                                    
   expense...................................................     --         --          (1,801)        4,882        --      
  Net loss...................................................     --         --          --           --         (1,543,266) 
                                                               ---------  ---------  ----------  -------------  ------------ 
Balance, December 31, 1995...................................  4,082,373  $  40,824  $8,133,560   $   --         $(7,150,939)
                                                               ---------  ---------  ----------  -------------  ------------ 
                                                               ---------  ---------  ----------  -------------  ------------ 



                                                                  TOTAL                                                      
                                                               -----------                                                   
                                                                                                                             
Balance, December 31, 1992...................................  $   (62,212)                                                  
  Issuance of common stock at $1.00 per share on April 1,                                                                    
   1993, in exchange for services............................       12,000                                                   
  Net loss...................................................     (238,242)                                                  
                                                               -----------                                                   
Balance, December 31, 1993...................................     (288,454)                                                  
  Issuance of 25,000 employee options to purchase common                                                                     
   stock at $2.25 per share on January 20, 1994 (Note 5).....      --                                                        
  Issuance of 400,000 incentive options to purchase common                                                                   
   stock at $2.48 per share on January 20, 1994 (Note 5).....      --                                                        
  Issuance of warrants for the purchase of 60,000 shares of                                                                  
   common stock for $1.00 per share in January 1994 (Note                                                                    
   3)........................................................      120,000                                                   
  Issuance of 240,000 shares of restricted common stock on                                                                   
   February 25, 1994 (Note 5)................................      --                                                        
  Issuance of common stock for $1.00 per share upon exercise                                                                 
   of warrants on March 31, 1994 (Note 3)....................      300,000                                                   
  Issuance of common stock at $3.50 per share on March                                                                       
   31,1994, net of offering expenses of $792,017.............    4,380,108                                                   
  Conversion of $900,000 of convertible debentures into                                                                      
   common stock on March 31, 1994 (Note 3)...................      900,000                                                   
  Issuance of common stock at $1.00 per share on December 30,                                                                
   1994, net of offering expenses of $55,945 (Note 9)........      229,055                                                   
  Forfeiture of 9,000 employee options (Note 5)..............      --                                                        
  Forfeiture of 400,000 options to purchase common stock                                                                     
   (Notes 5 and 9)...........................................      --                                                        
  Forfeiture of 240,000 shares of restricted common stock                                                                    
   (Note 9)..................................................      --                                                        
  Forfeiture of 660,000 shares of common stock (Note 9)......      (85,978)                                                  
  Noncash compensation expense...............................        7,118                                                   
  Net loss...................................................   (5,216,030)                                                  
                                                               -----------                                                   
Balance, December 31, 1994...................................      345,819                                                   
  Issuance of common stock at $1.00 per share in February and                                                                
   March 1995, net of offering expenses of $71,550...........      569,450                                                   
  Issuance of common stock upon exercise of warrants, at                                                                     
   $2.00 per share in May to September 1995, net of offering                                                                 
   expenses of $204,089......................................    1,647,911                                                   
  Issuance of common stock upon exercise of stock options....          450                                                   
  Forfeiture of employee options and noncash compensation                                                                    
   expense...................................................        3,081                                                   
  Net loss...................................................   (1,543,266)                                                  
                                                               -----------                                                   
Balance, December 31, 1995...................................  $ 1,023,445                                                   
                                                               -----------                                                   
                                                               -----------                                                   

See Notes to Financial Statements.

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KELLY RUSSELL STUDIOS, INC. 
STATEMENTS OF CASH FLOWS
YEARS ENDED DECEMBER 31, 1993, 1994 AND 1995

                                                        [Enlarge/Download Table]

                                                                                           1993            1994      
                                                                                      --------------  -------------- 
                                                                                                                     
Cash Flows From Operating Activities                                                                                 
  Net loss........................................................................... $     (238,242) $   (5,216,030)
  Adjustments to reconcile net loss to net cash used in operating activities:                                        
    Depreciation.....................................................................          6,106          58,006 
    Amortization.....................................................................          9,372          44,956 
    Loss on sale of equipment........................................................       --              --       
    Provision for trade receivable allowances........................................         15,000         540,000 
    Provision for obsolete inventories...............................................       --               670,000 
    Restructuring charges (Note 9)...................................................       --             1,088,876 
    Gain on cancellation of common stock (Note 9)....................................       --               (85,978)
    Noncash expense..................................................................       --               127,118 
    Gain on settlement of accounts payable...........................................       --              --       
    Changes in assets and liabilities:                                                                               
      Trade receivables..............................................................       (556,683)       (645,977)
      Inventories....................................................................       (974,459)     (1,065,173)
      Prepaid expenses...............................................................        (45,047)        (29,550)
      Accounts payable and accrued expenses..........................................        497,181         825,112 
      License fees payable...........................................................        182,863         (12,786)
                                                                                      --------------  -------------- 
        Net cash used in operating activities........................................     (1,103,909)     (3,701,426)
                                                                                      --------------  -------------- 
Cash Flows From Investing Activities                                                                                 
  Purchase of equipment..............................................................        (43,187)       (290,229)
  Proceeds from sale of equipment....................................................       --              --       
  Software development costs.........................................................       --               (81,832)
                                                                                      --------------  -------------- 
        Net cash used in investing activities........................................        (43,187)       (372,061)
                                                                                      --------------  -------------- 
Cash Flows From Financing Activities                                                                                 
  Proceeds on sale of common stock and warrants......................................       --             4,909,163 
  Excess of outstanding checks over bank balance.....................................         36,383         (36,383)
  Net borrowings (repayments) on bank financing agreements...........................        957,000        (957,000)
  Borrowings (repayment) of participating promissory notes...........................        100,000        (300,000)
  Proceeds from subordinated debentures..............................................       --               900,000 
  Repayment of officer/shareholder advances..........................................       --               (48,000)
                                                                                      --------------  -------------- 
        Net cash provided by financing activities....................................      1,093,383       4,467,780 
                                                                                      --------------  -------------- 
        Net increase (decrease) in cash and cash equivalents.........................        (53,713)        394,293 
Cash and Cash Equivalents                                                                                            
  Beginning..........................................................................         63,260           9,547 
                                                                                      --------------  -------------- 
  Ending............................................................................. $        9,547  $      403,840 
                                                                                      --------------  -------------- 
                                                                                      --------------  -------------- 
Supplemental Disclosures of Cash Flow Information                                                                    
  Cash payments for interest......................................................... $       30,802  $       47,493 
Supplemental Schedule of Noncash Investing and Financing Activities                                                  
  Conversion of subordinated debentures to 399,986 shares of common stock............ $     --        $      900,000 
  Issuance of 12,000 shares of common stock in settlement of accounts payable........         12,000        --       
  Accounts payable incurred for purchase of equipment................................       --              --       


                                                                                           1995                      
                                                                                      --------------                 
                                                                                                                     
Cash Flows From Operating Activities                                                                                 
  Net loss........................................................................... $   (1,543,266)                
  Adjustments to reconcile net loss to net cash used in operating activities:                                        
    Depreciation.....................................................................         90,427                 
    Amortization.....................................................................            164                 
    Loss on sale of equipment........................................................         17,867                 
    Provision for trade receivable allowances........................................        152,276                 
    Provision for obsolete inventories...............................................        853,153                 
    Restructuring charges (Note 9)...................................................        186,543                 
    Gain on cancellation of common stock (Note 9)....................................       --                       
    Noncash expense..................................................................          4,882                 
    Gain on settlement of accounts payable...........................................       (296,994)                
    Changes in assets and liabilities:                                                                               
      Trade receivables..............................................................       (157,541)                
      Inventories....................................................................       (638,224)                
      Prepaid expenses...............................................................       (253,348)                
      Accounts payable and accrued expenses..........................................       (474,009)                
      License fees payable...........................................................       (148,195)                
                                                                                      --------------                 
        Net cash used in operating activities........................................     (2,206,265)                
                                                                                      --------------                 
Cash Flows From Investing Activities                                                                                 
  Purchase of equipment..............................................................       (172,367)                
  Proceeds from sale of equipment....................................................         16,400                 
  Software development costs.........................................................       --                       
                                                                                      --------------                 
        Net cash used in investing activities........................................       (155,967)                
                                                                                      --------------                 
Cash Flows From Financing Activities                                                                                 
  Proceeds on sale of common stock and warrants......................................      2,216,010                 
  Excess of outstanding checks over bank balance.....................................       --                       
  Net borrowings (repayments) on bank financing agreements...........................       --                       
  Borrowings (repayment) of participating promissory notes...........................       --                       
  Proceeds from subordinated debentures..............................................       --                       
  Repayment of officer/shareholder advances..........................................       --                       
                                                                                      --------------                 
        Net cash provided by financing activities....................................      2,216,010                 
                                                                                      --------------                 
        Net increase (decrease) in cash and cash equivalents.........................       (146,222)                
Cash and Cash Equivalents                                                                                            
  Beginning..........................................................................        403,840                 
                                                                                      --------------                 
  Ending............................................................................. $      257,618                 
                                                                                      --------------                 
                                                                                      --------------                 
Supplemental Disclosures of Cash Flow Information                                                                    
  Cash payments for interest......................................................... $        7,218                 
Supplemental Schedule of Noncash Investing and Financing Activities                                                  
  Conversion of subordinated debentures to 399,986 shares of common stock............ $     --                       
  Issuance of 12,000 shares of common stock in settlement of accounts payable........       --                       
  Accounts payable incurred for purchase of equipment................................         49,545                 

See Notes to Financial Statements.

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KELLY RUSSELL STUDIOS, INC. 
NOTES TO FINANCIAL STATEMENTS 

1.  NATURE OF BUSINESS AND SIGNIFICANT ACCOUNTING POLICIES                      

    NATURE  OF BUSINESS -- Kelly Russell  Studios, Inc. (Kelly Russell) creates,
assembles,  markets,  and   distributes  products   bearing  realistic   sports,
entertainment,  and wildlife images. Kelly Russell  has a collection of original
art and  uses  those proprietary  images  to create  innovative  and  affordable
products.  Substantially all of  Kelly Russell's products  are produced and sold
under nonexclusive  licenses  from  the  players'  associations  that  represent
professional  athletes and from the  organizations that represent the respective
leagues and their member teams,  entertainment companies, and others. Sales  are
made  to customers, primarily retailers and specialty stores, located throughout
the United  States.  Kelly Russell  grants  credit  to its  customers  on  terms
established  on an individual basis. Kelly Russell's sales have been seasonal in
nature as approximately 40, 36, and 39 percent of net sales have occurred in the
fourth quarter of 1993, 1994, and 1995, respectively.                           

 A summary of the Kelly Russell's significant accounting policies follows:

    BASIS OF FINANCIAL  STATEMENT PRESENTATION AND  ACCOUNTING ESTIMATES --  The
financial  statements have been  prepared in conformity  with generally accepted
accounting principles.  In preparing  the  financial statements,  management  is
required  to make estimates and assumptions  that affect the reported amounts of
assets and liabilities and disclosure of contingent assets and liabilities as of
the date of the balance sheet and  revenues and expenses for the period.  Actual
results  could  differ from  those estimates.  See  the accounting  policies for
revenue recognition,  inventory,  and licensing  and  royalty expenses  for  the
estimation   process  relating  to  sales   returns  and  allowances,  inventory
obsolescence, and prepaid licenses.                                             

    REVENUE RECOGNITION -- Kelly Russell  recognizes sales at the time  products
are  shipped to customers. Kelly Russell records an allowance for returns at the
shipment date  and makes  further revisions  in such  allowances, if  necessary,
based  on subsequent facts. During 1993  and 1994, Kelly Russell granted certain
customers the right  to return unsold  products. This policy  was eliminated  in
1995.  Also, trade receivables include an  allowance for doubtful accounts which
management has  estimated based  on  an evaluation  of the  uncollectibility  of
existing trade receivables and prior collection experience. At December 31, 1994
and  1995, Kelly Russell has  recorded an allowance for  returns of $384,000 and
$110,000, respectively, and an allowance  for doubtful accounts of $176,000  and
$51,000, respectively.                                                          

    CASH  AND  CASH  EQUIVALENTS --  Cash  in  excess of  daily  requirements is
invested in money market funds with  maturities of less than three months.  Such
investments  are deemed to be cash equivalents for purposes of the statements of
cash flows.                                                                     

    Kelly Russell maintains cash in bank  deposit accounts which, at times,  may
exceed federally insured limits. Kelly Russell has not experienced any losses in
such accounts.                                                                  

    INVENTORIES  -- Inventories are stated at  the lower of standard cost (which
approximates average cost) or market. Inventories consist of finished goods  and
component  parts manufactured by  third parties, including  prints, mats, glass,
and frames.  Kelly  Russell  has  recorded  a  reserve  for  potential  obsolete
inventory  based primarily  on management's estimate  of future  sales levels of
products in inventory.                                                          

    LICENSING AND ROYALTY  EXPENSES --  Prepaid licensing  rights represent  the
prepayment  of  license and  royalty fees  to  third parties,  including various
players' associations that represent  professional athletes, organizations  that
represent   the  respective  leagues  and   their  member  teams,  entertainment
companies, and the estates of other athletes. Licensing agreements provide Kelly
Russell the  ability  to produce  and  distribute products  depicting  specified
images  owned or approved by these third parties. These agreements generally are
for periods of one  to three years and  contain minimum license provisions.  The
prepaid  licensing rights are generally amortized  based on the per unit license
or                                                                              

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KELLY RUSSELL STUDIOS, INC. 
NOTES TO FINANCIAL STATEMENTS (CONTINUED) 

1.  NATURE OF BUSINESS AND SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)          
royalty cost provided  in the individual  contract. Additionally, Kelly  Russell
increases  the amortization of  prepaid licenses for  those agreements where the
estimated future unit sales is expected to be less than minimum levels  required
under  the  related licenses.  License fees  payable represents  amounts payable
under these agreements.                                                         

    DEPRECIATION -- Equipment  is stated at  cost and is  depreciated using  the
straight-line method over estimated useful lives of three to five years.        

    INCOME  TAXES -- Deferred  taxes are provided on  a liability method whereby
deferred tax  assets are  recognized for  deductible temporary  differences  and
operating  loss and  tax credit carryforwards  and deferred  tax liabilities are
recognized for  taxable temporary  differences.  Temporary differences  are  the
differences between the reported amounts of assets and liabilities and their tax
bases.  Deferred tax assets  are reduced by  a valuation allowance  when, in the
opinion of management, it is  more likely than not that  some portion or all  of
the  deferred  tax  assets  will  not  be  realized.  Deferred  tax  assets  and
liabilities are adjusted for the effects of changes in tax laws and rates on the
date of enactment.                                                              

    NET LOSS PER COMMON  SHARE -- Net  loss per common  share is computed  based
upon the weighted average number of common shares and dilutive common equivalent
shares  outstanding.  Pursuant  to  Securities  and  Exchange  Commission  Staff
Accounting  Bulletin  No.  83,  common  stock  issued  and  to  be  issued   for
consideration below the initial public offering price during the 12-month period
preceding  the date of the initial filing of the registration statement has been
included  in  the  calculation  of  common  equivalent  shares,  as  if  it  was
outstanding for all periods presented up through March 31, 1994, the date of the
initial public offering.                                                        

    FAIR  VALUE OF FINANCIAL INSTRUMENTS --  At December 31, 1995, Kelly Russell
adopted  Financial  Accounting  Standards   Board  (FASB)  Statement  No.   107,
DISCLOSURES ABOUT FAIR VALUE OF FINANCIAL INSTRUMENTS, which requires disclosure
of fair value information about financial instruments, whether or not recognized
in  the  balance sheet,  for which  it  is practicable  to estimate  that value.
Statement No. 107  excludes certain financial  instruments and all  nonfinancial
instruments  from its disclosure requirements. The  aggregate fair values of the
financial instruments would not represent the underlying value of Kelly Russell.

    The financial statements include the following financial instruments:  cash,
trade  accounts  receivable,  accounts  payable, and  license  fees  payable. At
December 31, 1995, no separate comparison of fair values versus carrying  values
is  presented  for the  aforementioned  financial instruments  since  their fair
values are  not  significantly  different  than  their  balance  sheet  carrying
amounts.                                                                        

    RECENTLY  ISSUED ACCOUNTING STANDARDS  -- The FASB  has issued Statement No.
121 (SFAS  121), ACCOUNTING  FOR THE  IMPAIRMENT OF  LONG-LIVED ASSETS  AND  FOR
LONG-LIVED  ASSETS  TO BE  DISPOSED OF.  This statement  is effective  for Kelly
Russell's year  ending  December 31,  1996.  SFAS 121  requires  recognition  of
impairment  of long-lived assets in the event  the net book value of such assets
exceeds the future undiscounted cash flows attributable to such assets.         

    The FASB has issued Statement No. 123 (SFAS 123), ACCOUNTING FOR STOCK-BASED
COMPENSATION. This  statement  is  effective for  Kelly  Russell's  year  ending
December  31, 1996. SFAS 123 establishes a fair value-based method of accounting
for stock-based  compensation  plans  and  encourages,  but  does  not  require,
entities  to adopt that  method in place  of APB Opinion  No. 25, ACCOUNTING FOR
STOCK ISSUED  TO  EMPLOYEES,  which uses  an  intrinsic  value-based  accounting
method.  Kelly Russell does not intend to  adopt SFAS 123 in measuring expenses.
However, Kelly Russell must present pro forma net income (loss) and related  per
share  amounts as if SFAS  123 had been adopted, and  such pro forma amounts are
expected to reflect  higher amounts  of expenses  than amounts  reported in  the
financial statements.                                                           

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KELLY RUSSELL STUDIOS, INC. 
NOTES TO FINANCIAL STATEMENTS (CONTINUED) 

1.  NATURE OF BUSINESS AND SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)          
    RECLASSIFICATIONS  --  Certain  of  the  1993  and  1994  amounts  have been
reclassified to conform with the 1995 presentation. These reclassifications  had
no effect on net loss or shareholders' equity.                                  

2.  INVENTORIES                                                                 
The components of inventories at December 31 are as follows:            

                                                        [Enlarge/Download Table]

                                                                                 1994          1995    
                                                                             -------------  -----------
                                                                                                       
Raw materials............................................................... $   1,206,555  $   565,716
Finished goods..............................................................       449,766      146,825
                                                                             -------------  -----------
                                                                                 1,656,321      712,541
Less inventory allowance....................................................       990,000      340,171
                                                                             -------------  -----------
                                                                             $     666,321  $   372,370
                                                                             -------------  -----------
                                                                             -------------  -----------

3.  FINANCING AGREEMENTS                                                        

    PARTICIPATING  PROMISSORY NOTES --  In January 1994,  Kelly Russell repaid 7
percent participating promissory notes totaling $300,000 in connection with  the
issuance  of the convertible debentures described below. In connection with this
transaction, the  holders of  the participating  promissory notes  were  granted
60,000 warrants to purchase common stock of Kelly Russell at $1.00 per share. In
1994,  Kelly  Russell recorded  financing expense  of  $120,000 relating  to the
issuance of these warrants. The warrants are subject to antidilution  provisions
and expire February 1998.                                                       

    CONVERTIBLE DEBENTURES -- In January and February 1994, Kelly Russell issued
$900,000 of convertible debentures. These debentures bore interest at 7 percent,
were  subordinated  to  the bank  debt,  and  were due  in  January  1995. These
debentures were converted into 399,986 shares of Kelly Russell common stock upon
the successful completion of the initial public offering in March 1994.         

4.  INCOME TAXES                                                                
    Income tax  expense (benefit)  differs from  the federal  statutory rate  as
follows:                                                                        

                                                        [Enlarge/Download Table]

                                                                      YEARS ENDED DECEMBER 31          
                                                              ---------------------------------------- 
                                                                 1993          1994           1995     
                                                              ----------  --------------  ------------ 
                                                                                                       
Tax provision at statutory rate.............................. $  (81,000) $   (1,773,000) $   (525,000)
State income taxes, net of federal tax effect................    (15,000)       (105,000)      (92,000)
Nondeductible expenses.......................................     14,000           6,000         7,000 
Change in valuation allowance for deferred tax assets........     82,000       1,872,000       856,000 
Effect of change of tax rates on deferred taxes..............     --            --            (246,000)
                                                              ----------  --------------  ------------ 
                                                              $   --      $     --        $    --      
                                                              ----------  --------------  ------------ 
                                                              ----------  --------------  ------------ 

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KELLY RUSSELL STUDIOS, INC. 
NOTES TO FINANCIAL STATEMENTS (CONTINUED) 

4.  INCOME TAXES (CONTINUED)                                                    
Net deferred tax assets consist of the following:                       

                                                        [Enlarge/Download Table]

                                                                                   DECEMBER 31         
                                                                           ----------------------------
                                                                               1994           1995     
                                                                           -------------  -------------
                                                                                                       
Deferred tax assets:                                                                                   
  Net operating loss carryforwards........................................ $   1,387,000  $   2,570,000
  Inventory allowances....................................................       356,000        140,000
  Trade receivable allowances.............................................       201,000         65,000
  Other...................................................................        15,000         40,000
                                                                           -------------  -------------
                                                                               1,959,000      2,815,000
Less valuation allowance..................................................     1,959,000      2,815,000
                                                                           -------------  -------------
                                                                           $    --        $    --      
                                                                           -------------  -------------
                                                                           -------------  -------------

    At  December 31, 1994 and 1995, Kelly Russell recorded a valuation allowance
on the deferred  tax assets to  reduce the  total to an  amount that  management
believes  will ultimately  be realized.  Realization of  deferred tax  assets is
dependent  upon  sufficient  future  taxable  income  during  the  period   that
deductible  temporary differences and carryforwards are expected to be available
to reduce taxable income.                                                       

    At  December  31,  1995,  Kelly   Russell  had  net  operating  loss   (NOL)
carryforwards available to reduce future taxable income expiring as follows:    

                                                        [Enlarge/Download Table]

                                 YEAR EXPIRING                                                
-------------------------------------------------------------------------------               
                                                                                              
  2008.........................................................................  $     225,000
  2009.........................................................................      3,697,000
  2010.........................................................................      2,504,000
                                                                                 -------------
                                                                                 $   6,426,000
                                                                                 -------------
                                                                                 -------------

    As  a result  of the changes  in stock  ownership during 1994  and 1995, the
amount of  net operating  loss carryforward  that may  be utilized  annually  is
limited.  In addition, the  planned merger (see  Note 12) may  further limit the
annual availability of the NOL carryforwards.                                   

5.  STOCK OPTIONS                                                               
    Kelly Russell  has a  stock  plan pursuant  to  which restricted  stock  and
options for up to 750,000 shares of common stock have been reserved for issuance
under  the plan and may be granted to employees and directors. These options may
be either incentive stock options  or nonstatutory stock options. All  incentive
options  must be granted at no less than 100 percent of the fair market value of
the stock on the  date of the  grant, or 110 percent  for employees owning  more
than  10 percent of Kelly Russell Common stock. All nonstatutory options must be
granted at no less than  85 percent of fair market  value on the date of  grant.
The  options expire at varying dates not to exceed ten years from the grant date
and are not transferable.                                                       

    In November 1995, Kelly Russell established the 1995 Consultant Stock Option
Plan pursuant to  which stock and  options for  up to 150,000  shares of  common
stock  have been  reserved for  issuance under  the Plan  and may  be granted to
outside consultants.                                                            

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KELLY RUSSELL STUDIOS, INC. 
NOTES TO FINANCIAL STATEMENTS (CONTINUED) 

5.  STOCK OPTIONS (CONTINUED)                                                   
A summary of outstanding stock options under both plans is as follows:  

                                                        [Enlarge/Download Table]

                                                                                            NUMBER OF  
                                                                            PRICE RANGE      SHARES    
                                                                           --------------  ----------- 
                                                                                                       
Outstanding at December 31, 1993.......................................... $     --            --      
  Granted.................................................................    2.25 - 2.48      425,000 
  Canceled................................................................    2.25 - 2.48     (409,000)
                                                                           --------------  ----------- 
Outstanding at December 31, 1994..........................................    2.25 - 2.48       16,000 
  Granted.................................................................    1.50 - 2.50    1,489,000 
  Canceled................................................................           2.25     (416,363)
  Exercised...............................................................           2.25         (637)
                                                                           --------------  ----------- 
Outstanding at December 31, 1995.......................................... $  1.50 - 2.50    1,088,000 
                                                                           --------------  ----------- 
                                                                           --------------  ----------- 

As of December 31, 1995, 135,800 options were exercisable.              

6.  STOCK WARRANTS                                                              
    In February  and March  1995,  Kelly Russell  granted warrants  to  purchase
641,000  shares of common stock at $2.00  per share in connection with a private
placement of common stock.  In addition, Kelly Russell  granted warrants to  the
selling  agent of this private placement for  the purchase of a total of 185,200
shares of common stock at $2.00 per share.                                      

    A summary of  the outstanding stock  warrants follows, for  which shares  of
Kelly  Russell's common stock have been reserved  for issuance (see also Notes 3
and 9):                                                                         

                                                        [Enlarge/Download Table]

                                                                                            NUMBER OF  
                                                                             PRICE RANGE      SHARES   
                                                                            --------------  ---------- 
                                                                                                       
Outstanding at December 31, 1992...........................................          $1.00     250,000 
  Granted..................................................................           1.00     110,000 
                                                                            --------------  ---------- 
Outstanding at December 31, 1993...........................................           1.00     360,000 
  Granted..................................................................    1.00 - 4.20     418,889 
  Canceled.................................................................           1.00    (300,000)
                                                                            --------------  ---------- 
Outstanding at December 31, 1994...........................................    1.00 - 4.20     478,889 
  Granted..................................................................           2.00     797,700 
  Exercised................................................................           2.00    (926,000)
                                                                            --------------  ---------- 
Outstanding at December 31, 1995...........................................   $1.00 - 4.20     350,589 
                                                                            --------------  ---------- 
                                                                            --------------  ---------- 

As of December 31, 1995, 165,839 warrants were exercisable.             

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KELLY RUSSELL STUDIOS, INC. 
NOTES TO FINANCIAL STATEMENTS (CONTINUED) 

7.  MAJOR CUSTOMERS AND SUPPLIER                                                

    MAJOR CUSTOMERS -- Net sales  for 1993, 1994 and  1995 include sales to  the
following  major  customers,  together  with  the  receivables  due  from  those
customers:                                                                      

                                                        [Enlarge/Download Table]

                                                                      NET SALES              
                                                        -------------------------------------
                                                           1993         1994         1995    
                                                        -----------  -----------  -----------
                                                                                             
Customer                                                                                     
  A.................................................... $    *       $   456,078  $   226,377
  B....................................................      *            *           348,246
  C....................................................     410,411       *            *     
  D....................................................     275,850       *            *     
                                                        -----------  -----------  -----------
                                                        $   686,261  $   456,078  $   574,623
                                                        -----------  -----------  -----------
                                                        -----------  -----------  -----------

------------------------                                                        
*Net sales were not significant for period presented.                           

                                                        [Enlarge/Download Table]

                                                                      TRADE RECEIVABLE   
                                                                          BALANCE        
                                                                     AS OF DECEMBER 31   
                                                                   ----------------------
                                                                     1994        1995    
                                                                   ---------  -----------
                                                                                         
Customer                                                                                 
  A............................................................... $  49,917  $    37,229
  B...............................................................    --          154,144
                                                                   ---------  -----------
                                                                   $  49,917  $   191,373
                                                                   ---------  -----------
                                                                   ---------  -----------

    MAJOR SUPPLIER -- In 1995, Kelly Russell utilized an independent  contractor
to   assemble,  warehouse,  and  ship  its  products.  Kelly  Russell  purchased
approximately $253,000 from this contractor during 1995. In January 1996,  Kelly
Russell  changed  contractors  for  those  services.  Management  believes  that
alternative contractors are available  in the event Kelly  Russell is unable  to
obtain services from their current contractor.                                  

8.  COMMITMENTS AND CONTINGENCIES                                               

    LEASES  -- Kelly  Russell leases its  office facility  under a noncancelable
agreement which expires May 2001. The  lease requires additional payments for  a
proportionate  share of real  estate taxes and  operating expenses. In addition,
Kelly Russell leases certain equipment under noncancelable operating leases with
varying monthly  payments to  July 1997.  Approximate future  minimum  payments,
exclusive of other costs, required under these operating leases are as follows: 

                                                        [Enlarge/Download Table]

                                  YEARS ENDING                                                
                                   DECEMBER 31                                                
---------------------------------------------------------------------------------             
                                                                                              
  1996...........................................................................  $    87,300
  1997...........................................................................       80,000
  1998...........................................................................       63,200
  1999...........................................................................       63,200
  2000...........................................................................       63,200
  Thereafter.....................................................................       26,300
                                                                                   -----------
                                                                                   $   383,200
                                                                                   -----------
                                                                                   -----------

    Total  rent  expense was  approximately $78,000,  $177,000, and  $95,000 for
1993, 1994 and 1995, respectively.                                              

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KELLY RUSSELL STUDIOS, INC. 
NOTES TO FINANCIAL STATEMENTS (CONTINUED) 

8.  COMMITMENTS AND CONTINGENCIES (CONTINUED)                                   
    LICENSE AGREEMENTS -- Kelly Russell has entered into license agreements with
various organizations that represent the  major sports leagues and their  member
teams,  players' associations, entertainment companies, and others which provide
Kelly Russell the ability to produce  and distribute products with images  owned
or  approved by these third parties.  These agreements generally are for periods
of one to three years and contain minimum license provisions. Approximate future
minimum payments required under these agreements are as follows:                

                                                        [Enlarge/Download Table]

                                  YEARS ENDING                                                
                                   DECEMBER 31                                                
---------------------------------------------------------------------------------             
                                                                                              
  1996...........................................................................  $   355,000
  1997...........................................................................      270,000
  1998...........................................................................       62,000
                                                                                   -----------
                                                                                   $   687,000
                                                                                   -----------
                                                                                   -----------

    LITIGATION -- Kelly Russell is subject to legal proceedings and claims which
arise in  the  ordinary  course  of its  business.  Kelly  Russell  has  accrued
approximately  $100,000 as of  December 31, 1995,  which represents management's
estimate of the cost of settling certain of those claims.                       

9.  RESTRUCTURING, REORGANIZATION OF THE COMPANY, AND FOURTH QUARTER ADJUSTMENTS

    1995 restructuring and fourth quarter adjustments -- In December 1995, Kelly
Russell recorded charges to operations of approximately $926,000 relating to the
write-down of certain assets in the fourth quarter and a restructuring of  Kelly
Russell.                                                                        

    1995  FOURTH QUARTER ADJUSTMENTS  -- After experiencing  lower than expected
sales levels  in  the  fourth  quarter,  Kelly  Russell  recorded  a  charge  to
operations  of  approximately  $640,000  relating  to  increased  allowances for
inventory obsolescence and sales returns. In addition, Kelly Russell recorded  a
liability  of $100,000  for estimated  costs associated  with various litigation
matters (see Note 8).                                                           

    1995 BUSINESS RESTRUCTURING -- On  February 20, 1996, Kelly Russell  revised
its business plan and operations to produce and distribute a more limited number
of  print images. Accordingly, Kelly Russell  recorded a restructuring charge of
approximately $186,000  relating  to  the  write-down  of  inventories,  prepaid
licensing rights, and original artwork. Additionally, Kelly Russell accepted the
resignation  of the  Chief Executive  Officer and  terminated several employees.
Kelly Russell has not recorded any  employee termination benefits or other  exit
costs  as a  part of  the restructuring  charge, since  management believes such
costs will be immaterial.                                                       

    1994 reorganization  and fourth  quarter adjustments  -- In  December  1994,
Kelly  Russell  recorded  charges  to  operations  of  approximately  $2,460,000
relating to  the  write-down of  certain  assets in  the  fourth quarter  and  a
reorganization of Kelly Russell.                                                

    1994  FOURTH QUARTER ADJUSTMENTS -- In November 1994, the Board of Directors
terminated the  employment  agreements  with  its  two  principal  officers  and
founding  shareholders.  The terminated  officers/shareholders agreed  to, among
other things, return to Kelly Russell  900,000 shares of Kelly Russell's  common
stock  held  by  them,  including 240,000  shares  of  restricted  common stock.
Additionally, the  termination  required  the  forfeiture  and  cancellation  of
400,000  stock  options outstanding  to the  officers/shareholders. Compensation
expense related to the restricted common stock and stock options of $246,317 was
recorded during the first three quarters  of 1994. The compensation expense  was
reversed  in  the  fourth  quarter  of  1994  as  a  result  of  the  return and
cancellation of these securities. Additionally, Kelly Russell recorded a gain of
$85,978 to other income upon cancellation of these shares.                      

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KELLY RUSSELL STUDIOS, INC. 
NOTES TO FINANCIAL STATEMENTS (CONTINUED) 

9.  RESTRUCTURING, REORGANIZATION OF THE COMPANY, AND FOURTH QUARTER            
ADJUSTMENTS (CONTINUED)                                                 
    During the  fourth  quarter  of  1994, Kelly  Russell  recorded  charges  to
operations  totaling $1,370,000 relating to  increased allowances for returns on
guaranteed sales,  bad debts,  inventory obsolescence,  and inventory  valuation
adjustments.  This fourth quarter adjustment should have been partially recorded
in the earlier quarters of 1994.                                                

    1994 BUSINESS REORGANIZATION -- During the quarter ended December 31,  1994,
Kelly  Russell  hired  two  new  officers  and  revised  its  business  plan and
operations to focus  solely on  the creation,  marketing, and  sales of  limited
edition  art collectibles  through mass  merchants, distributors,  and specialty
retail stores. Kelly Russell discontinued the sales of its software and  ceramic
mug  lines and decreased the  number of print images  in its product line. Sales
from the discontinued product lines  were approximately $116,000 in 1994.  Kelly
Russell  also  began outsourcing  its  assembly and  warehousing  activities and
eliminated most  of  its  employee  sales  force.  In  addition,  Kelly  Russell
eliminated  its  practice of  offering guaranteed  return privileges  to certain
customers. As a result  of the reorganization, management  recorded a charge  of
$1,088,876  to operations, of  which $997,288 was  included in cost  of sales to
write off assets and other costs no longer usable or realizable.                

10. GOING CONCERN CONSIDERATIONS                                                
    The accompanying financial statements have been prepared in conformity  with
generally  accepted  accounting  principles, which  contemplate  continuation of
Kelly Russell  as a  going  concern. Kelly  Russell  has suffered  losses  since
inception totaling $7,150,939. In addition, Kelly Russell consumed $2,206,265 of
cash  in operating activities during 1995. In order for Kelly Russell to realize
its investments in its assets and meet its obligations when due, it must  attain
a  level  of operations  which  will provide  sustained  positive cash  flow. As
discussed in Notes 9 and 12, Kelly  Russell has restructured its business in  an
effort  to improve income and  cash flow from operations  and has plans to merge
with another company during 1996. However, there is no assurance Kelly Russell's
financial  performance  will  improve,  or  that  the  planned  merger  will  be
consummated. Therefore, there is substantial doubt about Kelly Russell's ability
to  continue as  a going  concern. The financial  statements do  not include any
adjustments relating to the recoverability and classification of recorded  asset
amounts  or the amounts and classification of liabilities that might result from
the outcome of these uncertainties.                                             

11. EXTRAORDINARY ITEM                                                          
    During 1995, Kelly Russell  settled and paid the  past due accounts  payable
balances  with  certain  vendors  for  less  than  amounts  owed,  resulting  in
extraordinary income  of  $296,994.  There  is  no  income  tax  effect  on  the
extraordinary income because of Kelly Russell's net operating loss.             

12. SUBSEQUENT EVENTS (UNAUDITED)                                               

    MERGER  -- On May 28,  1996, Kelly Russell entered  into a Final Amended and
Restated Agreement  and Plan  of Reorganization  ("Merger Agreement")  with  OSP
Publishing,  Inc. ("OSP"),  its subsidiary,  The Button  Exchange, Ltd. ("BEx"),
OSP's shareholders, Global One Distribution & Merchandising Inc. ("Global  One")
and  its  subsidiaries. Pursuant  to the  Merger  Agreement, Kelly  Russell will
combine its operations with OSP,  its subsidiary Stanley DeSantis, Inc.  ("SDI")
and  BEx.  OSP is  a publisher  of  licensed posters,  SDI develops  and markets
licensed and nonlicensed T-shirts, sweatshirts,  boxer shorts and mugs, and  BEx
develops  and markets licensed and nonlicensed  buttons, key rings and stickers.
To effectuate this  reorganization, a  new corporation, Global  One, a  Delaware
corporation  has  been  formed, and  Global  One has  formed  three wholly-owned
Delaware  subsidiaries,  KRSI  Acquisition   Corp.  ("KRSI  Acquisition"),   OSP
Acquisition   Corp.  ("OSP  Acquisition"),  and   BEx  Acquisition  Corp.  ("BEx
Acquisition"). As part of the reorganization, Kelly Russell will be merged  with
and into KRSI Acquisition, KRSI Acquisition being the surviving company, and OSP
and  BEx  will be  merged with  and  into OSP  Acquisition and  BEx Acquisition,
respectively. As a result, Global                                               

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KELLY RUSSELL STUDIOS, INC. 
NOTES TO FINANCIAL STATEMENTS (CONTINUED) 

12. SUBSEQUENT EVENTS (UNAUDITED) (CONTINUED)                                   
One will be the holding company  for the operations formerly conducted by  Kelly
Russell,   OSP,  SDI  and  BEx.  Following  consummation  of  the  merger,  KRSI
Acquisition will change its name and conduct its business under the name  "Kelly
Russell Studios, Inc."                                                          

    Kelly  Russell's shareholders  will receive one  share of  Global One Common
Stock for  every two  shares  of Kelly  Russell's  Common Stock  outstanding  at
closing.  The  closing  of  the  Merger Agreement  will  be  subject  to various
conditions, including approval of the merger by Kelly Russell's shareholders  at
a  special meeting and the successful placement  of at least 4,000,000 shares of
Global One Common Stock at $1.50 per share. Kelly Russell currently  anticipates
that  the special meeting of shareholders will  be held sometime in August 1996.
In connection with the merger, Kelly Russell has delivered $125,000 to an escrow
account and  is  obligated to  deposit  an  additional $125,000  in  the  escrow
account.  In the event the Merger Agreement  is terminated by Kelly Russell, the
escrow agent may be obligated to deliver the escrowed funds to OSP as liquidated
damages for such termination.                                                   

    STOCK OPTIONS -- A summary of outstanding  stock options as of May 15,  1996
follows:                                                                        

                                                                [Download Table]

                                  PRICE RANGE    NUMBER OF SHARES 
                                 --------------  -----------------
                                                                  
Outstanding at December 31,                                       
 1995..........................  $  1.50 - 2.50        1,088,000  
  Granted......................            0.75          125,000  
  Cancelled....................     1.50 - 2.50         (355,650) 
                                 --------------  -----------------
Outstanding at May 15, 1996....  $  0.75 - 2.50          857,350  
                                 --------------  -----------------
                                 --------------  -----------------

    LITIGATION  --  In  May  1996,  Kelly  Russell  settled  certain outstanding
litigation for $133,000. (See Note 8).                                          

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KELLY RUSSELL STUDIOS, INC. 
CONDENSED BALANCE SHEET 
ASSETS

                                                        [Enlarge/Download Table]

                                                                                                   MARCH 31, 1996 
                                                                                                   -------------- 
                                                                                                    (UNAUDITED)   
                                                                                                                  
Current assets                                                                                                    
  Cash............................................................................................ $       37,962 
  Trade receivables, less allowances of $71,000...................................................        514,163 
  Inventories.....................................................................................        276,597 
  Prepaid and other expenses......................................................................         57,656 
  Prepaid licensing rights........................................................................        132,627 
  Escrow deposit..................................................................................        100,000 
                                                                                                   -------------- 
    Total current assets..........................................................................      1,119,005 
                                                                                                   -------------- 
Property & equipment                                                                                              
  Property and equipment, net of accumulated depreciation of $143,240.............................        278,324 
                                                                                                   -------------- 
    Total assets.................................................................................. $    1,397,329 
                                                                                                   -------------- 
                                                                                                   -------------- 

                                       LIABILITIES AND SHAREHOLDERS' EQUITY                                       

Current liabilities                                                                                               
  Accounts payable................................................................................ $      541,425 
  Accrued expenses................................................................................        167,927 
  License fees payable............................................................................         49,081 
                                                                                                   -------------- 
    Total current liabilities.....................................................................        758,433 
                                                                                                   -------------- 
Shareholders' equity                                                                                              
  Common stock, par value $.01; authorized 10,000,000 shares; 4,082,373 shares issued and                         
   outstanding....................................................................................         40,824 
  Additional paid in capital......................................................................      8,133,560 
  Deferred compensation expense...................................................................       --       
  Accumulated deficit.............................................................................     (7,535,488)
                                                                                                   -------------- 
    Total shareholders' equity....................................................................        638,896 
                                                                                                   -------------- 
    Total liabilities and shareholders' equity.................................................... $    1,397,329 
                                                                                                   -------------- 
                                                                                                   -------------- 

See notes to condensed financial statements (unaudited).

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KELLY RUSSELL STUDIOS, INC. 
CONDENSED STATEMENTS OF OPERATIONS

                                                        [Enlarge/Download Table]

                                                                                           THREE MONTHS ENDED    
                                                                                        ------------------------ 
                                                                                         MARCH 31,    MARCH 31,  
                                                                                           1995         1996     
                                                                                        -----------  ----------- 
                                                                                              (UNAUDITED)        
                                                                                                                 
Net sales.............................................................................. $   512,863  $   778,614 
Cost of sales:                                                                                                   
  Cost of goods sold...................................................................     220,884      338,503 
  License and royalty expenses.........................................................      56,520      114,235 
                                                                                        -----------  ----------- 
    Total cost of sales................................................................     277,404      452,738 
                                                                                        -----------  ----------- 
  Gross profit.........................................................................     235,459      325,876 
Operating expenses.....................................................................     451,950      708,401 
                                                                                        -----------  ----------- 
    Operating loss.....................................................................    (216,491)    (382,525)
Net interest income (expense)..........................................................     --            (2,024)
                                                                                        -----------  ----------- 
    Net loss before income taxes and extraordinary item................................    (216,491)    (384,549)
Federal and state income taxes.........................................................     --           --      
                                                                                        -----------  ----------- 
    Net loss before extraordinary item.................................................    (216,491)    (384,549)
Extraordinary item.....................................................................     246,697      --      
                                                                                        -----------  ----------- 
    Net income (loss).................................................................. $    30,206  $  (384,549)
                                                                                        -----------  ----------- 
                                                                                        -----------  ----------- 
Net income (loss) per common and common equivalent shares:                                                       
  Net loss before extraordinary item................................................... $     (0.07) $     (0.09)
  Extraordinary item...................................................................        0.08      --      
                                                                                        -----------  ----------- 
    Net income (loss).................................................................. $      0.01  $     (0.09)
                                                                                        -----------  ----------- 
                                                                                        -----------  ----------- 
Weighted average number of common and common equivalent shares outstanding.............   3,286,765    4,082,373 
                                                                                        -----------  ----------- 
                                                                                        -----------  ----------- 

See notes to condensed financial statements (unaudited).

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KELLY RUSSELL STUDIOS, INC. 
CONDENSED STATEMENTS OF CASH FLOWS

                                                        [Enlarge/Download Table]

                                                                                           THREE MONTHS ENDED     
                                                                                       -------------------------- 
                                                                                        MARCH 31,     MARCH 31,   
                                                                                           1995          1996     
                                                                                       ------------  ------------ 
                                                                                              (UNAUDITED)         
                                                                                                                  
Cash flows from operating activities:                                                                             
  Net income (loss)................................................................... $     30,206  $   (384,549)
  Adjustments to reconcile net income (loss) to net cash used in operating                                        
   activities:........................................................................                            
    Depreciation......................................................................       22,281        34,009 
    Provision for trade receivable allowances.........................................     (230,000)      (89,667)
    Provision for obsolete inventories................................................     (706,000)         (633)
    Gain (loss) on disposal of assets.................................................      --              2,601 
    Noncash compensation expense, net.................................................         (392)      --      
    Changes in assets and liabilities:                                                                            
      Trade receivables...............................................................      407,191       285,492 
      Inventories.....................................................................      702,340        96,406 
      Prepaid and other expenses......................................................       (2,276)      (31,226)
      Prepaid licensing rights........................................................       19,334        43,318 
      Accounts payable and accrued expenses...........................................     (543,879)      (67,427)
      License fee payable.............................................................     (205,256)       (7,980)
                                                                                       ------------  ------------ 
        Net cash used in operating activities.........................................     (506,451)     (119,656)
                                                                                       ------------  ------------ 
Cash flows from investing activities:                                                                             
  Purchase of equipment...............................................................       (5,958)      --      
  Escrow deposit......................................................................      --           (100,000)
                                                                                       ------------  ------------ 
        Net amount used in investing activities.......................................       (5,958)     (100,000)
                                                                                       ------------  ------------ 
Cash flows from financing activities:                                                                             
  Proceeds from sale of common stock, net of expenses.................................      569,450       --      
                                                                                       ------------  ------------ 
        Net cash provided by financing activities.....................................      569,450       --      
                                                                                       ------------  ------------ 
        Net increase (decrease) in cash...............................................       57,041      (219,656)
Cash:                                                                                                             
  Beginning...........................................................................      403,840       257,618 
                                                                                       ------------  ------------ 
  Ending.............................................................................. $    460,881  $     37,962 
                                                                                       ------------  ------------ 
                                                                                       ------------  ------------ 

See notes to condensed financial statements (unaudited) 

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KELLY RUSSELL STUDIOS, INC. 
NOTES TO CONDENSED FINANCIAL STATEMENTS 

1.  UNAUDITED INTERIM RESULTS                                                   
    The  accompanying  condensed balance  sheet as  of March  31, 1996,  and the
condensed statements of operations  and cash flows for  the three month  periods
ended  March  31, 1995  and 1996,  respectively, are  unaudited and  reflect all
adjustments, consisting  of  only normal  recurring  adjustments which,  in  the
opinion of management, are necessary for a fair statement of financial position,
results  of operations and cash flows for the periods presented. These financial
statements are  condensed  and  do  not  include  all  information  required  by
generally  accepted accounting principles.  These condensed financial statements
should be read in conjunction with Kelly Russell's year ended December 31,  1995
audited  financial statements and  notes thereto. The  operating results for the
interim periods are not  necessarily indicative of the  operating results to  be
expected for a full fiscal year.                                                

2.  INVENTORIES                                                                 
The components of inventory as of March 31, 1996 are as follows:        

                                                                [Download Table]
                                                                            
Raw materials...................................................  $ 485,208 
Finished goods..................................................    130,926 
Less inventory allowance........................................   (339,537)
                                                                  --------- 
                                                                  $ 276,597 
                                                                  --------- 
                                                                  --------- 

3.  NET INCOME (LOSS) PER SHARE                                                 
    Net  income (loss)  per share  is computed  based upon  the weighted average
number of common shares and dilutive common equivalent shares outstanding.      

4.  BUSINESS TRANSACTIONS                                                       
    On March 28, 1996, Kelly Russell  entered into a Final Amended and  Restated
Agreement  and Plan of Reorganization  ("Merger Agreement") with OSP Publishing,
Inc.  ("OSP"),  its  subsidiary,  The  Button  Exchange,  Ltd.  ("BEx"),   OSP's
shareholders,  Global One Distribution  & Merchandising Inc.  ("Global One") and
its subsidiaries. Pursuant to the  Merger Agreement, Kelly Russell will  combine
its  operations with OSP, its subsidiary  Stanley DeSantis, Inc. ("SDI") and The
Button Exchange ("BEx"). OSP  is a publisher of  licensed posters, SDI  develops
and  markets licensed  and nonlicensed  T-shirts, sweatshirts,  boxer shorts and
mugs, and BEx develops and markets  licensed and nonlicensed buttons, key  rings
and  stickers. To effectuate this reorganization,  a new corporation, Global One
Distribution & Merchandising,  Inc. ("Global One"),  a Delaware corporation  has
been formed, and Global One has formed three wholly-owned Delaware subsidiaries,
KRSI  Acquisition  Corp.  ("KRSI  Acquisition"),  OSP  Acquisition  Corp.  ("OSP
Acquisition"), and BEx  Acquisition Corp.  ("BEx Acquisition"). As  part of  the
reorganization,  Kelly Russell  will be merged  with and  into KRSI Acquisition,
KRSI Acquisition being  the surviving company,  and OSP and  BEx will be  merged
with  and into OSP  Acquisition and BEx Acquisition,  respectively. As a result,
Global One will be the holding company for the operations formerly conducted  by
Kelly  Russell, OSP,  SDI and  BEx. Following  consummation of  the merger, KRSI
Acquisition will change its name and conduct its business under the name  "Kelly
Russell Studios, Inc."                                                          

    Kelly  Russell's shareholders  will receive one  share of  Global One Common
Stock for  every two  shares  of Kelly  Russell's  Common Stock  outstanding  at
closing.  The  closing  of  the  Merger Agreement  will  be  subject  to various
conditions, including approval of the merger by Kelly Russell's shareholders  at
a  special meeting and the successful placement  of at least 4,000,000 shares of
Global One Common Stock at $1.50 per share. Kelly Russell currently  anticipates
that  the special meeting of shareholders will  be held sometime in August 1996.
In connection with the merger, Kelly Russell has delivered $125,000 to an escrow
account and  is  obligated to  deposit  an  additional $125,000  in  the  escrow
account.  In the event the Merger Agreement  is terminated by Kelly Russell, the
escrow agent may be obligated to deliver the escrowed funds to OSP as liquidated
damages for such termination.                                                   

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                                                                      APPENDIX A
--------------------------------------------------------------------------------

FINAL AMENDED AND RESTATED
AGREEMENT AND PLAN OF REORGANIZATION

AMONG 

GLOBAL ONE DISTRIBUTION & MERCHANDISING INC.

KELLY RUSSELL STUDIOS, INC.,

KRSI ACQUISITION CORP., 

OSP PUBLISHING, INC., 

O.S.P. ACQUISITION CORP., 

THE BUTTON EXCHANGE, LTD.,

BEX ACQUISITION CORP.,

JOSEPH C. ANGARD

AND 

MICHAEL A. MALM 

DATED MAY 28, 1996, 
EFFECTIVE AS OF MARCH 27, 1996

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

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TABLE OF CONTENTS 

                                                        [Enlarge/Download Table]

                                                                                                              PAGE   
                                                                                                              -----  
                                                                                                                     
ARTICLE I -- DEFINITIONS.....................................................................................       2
ARTICLE II -- THE MERGERS.................................................................................          7
 2.1       The Mergers.......................................................................................       7
 2.2       Certificates of Merger; Effective Time............................................................       7
 2.3       Effect of the Mergers.............................................................................       7
 2.4       Closing...........................................................................................       7
 2.5       Certificates of Incorporation; By-laws............................................................       8
 2.6       Directors and Officers............................................................................       8
ARTICLE III -- CONVERSION OR CANCELLATION OF SECURITIES; EXCHANGE OF CERTIFICATES............................        
                                                                                                                    8
 3.1       Conversion or Cancellation of Securities..........................................................       8
 3.2       Rights of Holders of OSP and KRSI Common Stock....................................................       8
 3.3       Exchange of Certificates..........................................................................       9
ARTICLE IV -- THE OFFERING...................................................................................       9
ARTICLE V -- REPRESENTATIONS AND WARRANTIES OF GLOBAL ONE, OSP AND THE OSP SHAREHOLDERS......................        
                                                                                                                   10
 5.1       Corporate Existence and Power.....................................................................      10
 5.2       OSP and Global One Subsidiaries...................................................................      10
 5.3       Corporate Authorizations..........................................................................      10
 5.4       Governmental Authorization........................................................................      11
 5.5       Non-Contravention.................................................................................      11
 5.6       Capitalization....................................................................................      12
 5.7       Financial Statements..............................................................................      13
 5.8       Books and Records.................................................................................      13
 5.9       Contracts with Related Parties....................................................................      13
 5.10      Absence of Certain Changes or Events..............................................................      13
 5.11      Litigation........................................................................................      14
 5.12      Taxes.............................................................................................      14
 5.13      Title to Assets...................................................................................      15
 5.14      Labor Matters.....................................................................................      15
 5.15      Employee Benefit Plans............................................................................      15
 5.16      Compliance with Laws..............................................................................      16
 5.17      Brokers...........................................................................................      16
 5.18      Vote Required.....................................................................................      16
 5.19      Environmental Matters.............................................................................      17
 5.20      Trademarks, Patents and Copyrights................................................................      17
 5.21      Contracts and Other Agreements....................................................................      17
 5.22      Insurance.........................................................................................      18
 5.23      Disclosure........................................................................................      19
ARTICLE VI -- REPRESENTATIONS AND WARRANTIES OF KRSI.........................................................      19
 6.1       Corporate Existence and Power.....................................................................      19
 6.2       KRSI Subsidiaries.................................................................................      19
 6.3       Corporate Authorization...........................................................................      19
 6.4       Governmental Authorization........................................................................      19
 6.5       Non-Contravention.................................................................................      20
 6.6       Capitalization....................................................................................      20
 6.7       SEC Documents.....................................................................................      21
 6.8       KRSI's Books and Records..........................................................................      21
 6.9       KRSI Contracts with Related Parties...............................................................      21
 6.10      Absence of Certain Changes or Events..............................................................      21

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                                                                                                              PAGE   
                                                                                                              -----  
     6.11  Litigation........................................................................................      22
                                                                                                                     
     6.12  Taxes.............................................................................................      23
     6.13  Title to Assets...................................................................................      23
     6.14  Labor Matters.....................................................................................      23
     6.15  Employee Benefit Plans............................................................................      23
     6.16  Compliance with Laws..............................................................................      24
     6.17  Brokers...........................................................................................      24
     6.18  Vote Required.....................................................................................      24
     6.19  Environmental Matters.............................................................................      25
     6.20  Trademarks, Patents and Copyrights................................................................      25
     6.21  Contracts and Other Agreements....................................................................      25
     6.22  Insurance.........................................................................................      26
     6.23  Disclosure........................................................................................      27
ARTICLE VII -- COVENANTS RELATING TO CONDUCT OF BUSINESS.....................................................      27
     7.1   Conduct of Business by Global One and OSP.........................................................      27
     7.2   Conduct of Business by KRSI.......................................................................      29
     7.3   Other Action......................................................................................      31
     7.4   No Solicitation of Transactions...................................................................      31
ARTICLE VIII -- ADDITIONAL AGREEMENTS.....................................................................         32
 8.1       Preparation of Registration Statement and the Proxy Statement; Shareholders' Meeting..............      32
 8.2       Information Supplied by Global One and OSP........................................................      33
 8.3       Information Supplied by KRSI......................................................................      33
 8.4       Access to Information.............................................................................      33
 8.5       Confidentiality...................................................................................      33
 8.6       Public Announcements..............................................................................      34
 8.7       Appropriate Action; Consents; Filings.............................................................      34
 8.8       State Statutes....................................................................................      35
 8.9       Directors' and Officers' Indemnification and Insurance............................................      36
 8.10      Escrow Payments...................................................................................      36
 8.11      Employment Contracts..............................................................................      37
 8.12      Indemnification...................................................................................      37
ARTICLE IX -- CONDITIONS TO THE MERGERS......................................................................      38
 9.1       Conditions of the Parties' Obligations to Effect the KRSI Merger..................................      38
 9.2       Conditions of Obligation of KRSI..................................................................      39
 9.3       Conditions of Obligation of OSP...................................................................      40
ARTICLE X -- TERMINATION, AMENDMENT AND WAIVER...............................................................      41
10.1       Termination.......................................................................................      41
10.2       Consequences of Termination.......................................................................      42
10.3       Amendment.........................................................................................      43
10.4       Waiver............................................................................................      43
ARTICLE XI -- GENERAL PROVISIONS.............................................................................      43
11.1       Survival of Representations and Warranties........................................................      43
11.2       Notices...........................................................................................      43
11.3       Entire Agreement..................................................................................      43
11.4       Severability......................................................................................      43
11.5       Successors and Assigns............................................................................      44
11.6       Parties in Interest...............................................................................      44
11.7       Enforcement.......................................................................................      44
11.8       Governing Law.....................................................................................      44
11.9       Counterparts; Effectiveness.......................................................................      44

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FINAL AMENDED AND RESTATED
AGREEMENT AND PLAN OF REORGANIZATION

                                                                [Download Table]
                                                                            
DATE:     May 28, 1996, Effective as of March 27, 1996                      

PARTIES:  Global One Distribution & Merchandising Inc.        ("Global One")
          O.S.P. Acquisition Corp.                       ("OSP Acquisition")
          KRSI Acquisition Corp.                        ("KRSI Acquisition")
          BEx Acquisition Corp.                          ("BEx Acquisition")
          5548 Lindbergh Lane                                               
          Bell, CA 90201-6410                                               
          Facsimile Number: (213) 263-9419                                  

          Kelly Russell Studios, Inc.                               ("KRSI")
          2905 Northwest Boulevard, Suite 220                               
          Plymouth, MN 55441                                                
          Facsimile Number: (612) 553-9960                                  

          OSP Publishing, Inc.                                       ("OSP")
          5548 Lindbergh Lane                                               
          Bell, CA 90201-6410                                               
          Facsimile Number: (213) 263-9419                                  

          The Button Exchange, Ltd.                                  ("BEx")
          200 Diversion Street, #G11                                        
          Rochester, MI 48307                                               
          Facsimile Number: (313) 650-7809                                  

          Joseph C. Angard                                        ("Angard")
          OSP Publishing, Inc.                                              
          5548 Lindbergh Lane                                               
          Bell, CA 90201-6410                                               
          Facsimile Number: (213) 263-9258                                  

          Michael A. Malm                                           ("Malm")
          OSP Publishing, Inc.                                              
          5548 Lindbergh Lane                                               
          Bell, CA 90201-6410                                               
          Facsimile Number: (213) 263-9419                                  

RECITALS:                                                                       

    A.   KRSI creates, markets and distributes products bearing realistic sports
images.                                                                         

    B.  OSP and  its subsidiaries manufacture,  publish and distribute  licensed
posters, buttons, T-shirts and other apparel and gift items.                    

    C.   Angard and Malm  are the sole shareholders of  both OSP and Global One,
and OSP owns 79% of the outstanding shares of BEx.                              

    D.  The Boards of Directors of Global One, KRSI, KRSI Acquisition, OSP,  OSP
Acquisition,  BEx and  BEx Acquisition  have determined that  it is  in the best
interests of their respective companies and their shareholders to combine  their
respective  businesses under  common management  and to  raise additional equity
capital through Global One.                                                     

    E.  On March 27, 1996, OSP, KRSI, Angard and Malm entered into an  Agreement
and  Plan  of Reorganization  (the "Original  Agreement")  to effect  a proposed
merger of  KRSI  with  and  into  OSP.  Subsequent  thereto,  the  parties  have
determined  that it is in  their respective best interests  to amend and restate
such agreement pursuant to Section 10.3 thereof to provide that: (i) OSP will be
merged                                                                          

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with and into OSP Acquisition with  OSP Acquisition being the surviving  entity;
(ii)  KRSI will be merged  with and into KRSI  Acquisition with KRSI Acquisition
being the  surviving  entity;  (iii)  BEx  will be  merged  with  and  into  BEx
Acquisition  with BEx Acquisition  being the surviving  entity; (iv) Global One,
OSP Acquisition, KRSI Acquisition,  BEx and BEx Acquisition  will be parties  to
the  amended and restated agreement; and (iv) Global One will issue a minimum of
4,000,000 additional shares of Global One  Common Stock, all upon the terms  and
subject  to the conditions of this Final Amended and Restated Agreement and Plan
of Reorganization.                                                              

AGREEMENT:                                                                      

    The parties  hereto, each  intending to  be legally  bound, agree  that  the
Original Agreement is hereby amended in its entirety and restated as follows:   

ARTICLE I -- DEFINITIONS

    As  used herein, the following  words and terms shall  have the meanings set
forth below:                                                                    

    1.1    The  "Acquisition  Companies"   shall  mean  KRSI  Acquisition,   OSP
Acquisition and BEx Acquisition.                                                

1.2  "Angard" shall mean Joseph C. Angard.                              

1.3  "BEx" shall mean The Button Exchange, Ltd., a Michigan corporation.

    1.4    "BEx  Acquisition"  shall  mean  BEx  Acquisition  Corp.,  a Delaware
corporation and wholly-owned subsidiary of Global One.                          

    1.5   "BEx  Merger"  shall  mean  the  merger  of  BEx  with  and  into  BEx
Acquisition, as further described in Section 2.1(i)(B) hereto.                  

    1.6   "BEx Certificates of Merger"  shall mean the documents attached hereto
as Exhibit 1.6.                                                                 

    1.7  "BEx  Shares" shall mean  the issued and  outstanding shares of  common
stock, $1.00 par value, of BEx.                                                 

  1.8  "CGCL" shall mean the California General Corporation Law, as amended.

    1.9  "Closing" shall mean the closing of the Mergers as discussed in Section
2.4 below.                                                                      

1.10  "Closing Date" shall mean the date on which the Closing occurs.   

1.11  "Code" shall mean the Internal Revenue Code of 1986, as amended.  

    1.12   "Competing Transaction"  shall mean any of  the following (other than
the transactions  contemplated hereby):  (i)  any merger,  consolidation,  share
exchange,  business combination,  or other similar  transaction involving Global
One, OSP,  KRSI  or BEx,  (ii)  any  sale, lease,  exchange,  mortgage,  pledge,
transfer  or other disposition of 50% or more  of the assets of Global One, OSP,
any of their  respective subsidiaries or  KRSI, taken  as a whole,  in a  single
transaction  or series  of transactions,  other than  in the  ordinary course of
business, (iii) any tender offer or exchange offer for 50% or more of the Global
One Shares, the OSP Shares  or the KRSI Shares or  the filing of a  registration
statement  under the  Securities Act  in connection  therewith, (iv)  any person
having  acquired  beneficial  ownership  or  the  right  to  acquire  beneficial
ownership of, or any "group" (as such term is defined under Section 13(d) of the
Exchange  Act and the rules and  regulations promulgated thereunder) having been
formed which beneficially owns or has the right to acquire beneficial  ownership
of,  50% or more of the Global One Shares,  the OSP Shares or the KRSI Shares or
(v) any public announcement of  a proposal, plan or intention  to do any of  the
foregoing  or any  agreement to engage  in any  of the foregoing  other than any
transaction contemplated herein.                                                

 1.13  "DGCL" shall mean the Delaware General Corporation Law, as amended.

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    1.14  "Effective  Time" shall  mean the time  that the  KRSI Merger  becomes
effective pursuant to Section 2.2 below.                                        

    1.15    "Environment Laws"  shall mean  all federal,  state and  local laws,
rules, regulations, ordinances and orders  that purport to regulate the  release
of  hazardous  substances or  other materials  into  the environment,  or impose
requirements relating to environmental protection.                              

    1.16  "ERISA"  shall mean  the Employee  Retirement Income  Security Act  of
1974, as amended.                                                               

1.17  "Escrow Agent" shall mean Manatt, Phelps & Phillips, LLP.         

    1.18   "Escrow  Agreement" shall  mean that  certain Escrow  Agreement dated
March 27, 1996 by and among KRSI, OSP  and the Escrow Agent, to hold the  escrow
payments made by KRSI referred to in Section 8.10 below.                        

    1.19    "Evaluation  Materials"  shall mean  any  business  and/or technical
information of the Other Party or  any of its subsidiaries designated orally  or
in  writing as "Confidential" or  "Proprietary" (or in like  words) or of a type
typically regarded as confidential or proprietary, whether or not so designated,
including, but not  limited to, systems,  processes, formulae, data,  functional
specifications,   computer   programs,   blueprints,   know-how,   improvements,
discoveries,  developments,  designs,  inventions,  techniques,  new   products,
marketing  and advertising methods, supplier agreements, customer lists, pricing
policies, financial information, projections, forecasts, strategies, budgets  or
other information related to its business or its customers.                     

    1.20   "Exchange  Act" shall  mean the Securities  Exchange Act  of 1934, as
amended.                                                                        

1.21  "Exchange Agent" shall mean Norwest Bank National Association.    

    1.22  "Exchange Ratio" shall mean the number determined by dividing the  sum
of  (a) fifty percent (50%) of the amount  of Fully Diluted KRSI Shares plus (b)
the amount of New Global  One Shares not in excess  of 4,000,000, by the sum  of
(y) the number of OSP Shares immediately prior to the Effective Time and (z) the
number  of shares of OSP Common Stock  that would be issued immediately prior to
the Effective Time if all the  holders of outstanding warrants, options and  any
other rights to acquire OSP Common Stock were exercised immediately prior to the
Effective Time.                                                                 

    1.23  "Fully Diluted KRSI Shares" shall mean the number of shares determined
by  adding (a) all KRSI  Shares immediately prior to  the Effective Time and (b)
all of the shares of KRSI Common Stock that would be issued immediately prior to
the Effective Time  if all of  the outstanding warrants,  options and any  other
rights  to acquire  KRSI Common  Stock were  exercised immediately  prior to the
Effective Time (excluding any warrants being issued to the OSP Financial Advisor
and the KRSI Financial Advisor and any other warrants being issued in connection
with the transactions contemplated herein).                                     

    1.24  "Global One" shall mean Global One Distribution & Merchandising  Inc.,
a Delaware corporation.                                                         

    1.25   "Global One Common Stock" shall mean the common stock, $.01 value, of
Global One.                                                                     

    1.26  "Global One Plans" shall  mean all employee benefit plans (as  defined
in  Section 3(3) of ERISA), if any, which  Global One or any of its subsidiaries
maintains or to which Global One or any of its subsidiaries contributes.        

    1.27  "Global One  Shares" shall mean all  issued and outstanding shares  of
Global One Common Stock.                                                        

    1.28   "Governmental Entity" shall mean any federal, state, local or foreign
governmental  body,   agency,   official   or   authority   (including   courts,
administrative agencies, commissions, self-regulatory agencies or authorities or
other governmental authority or instrumentality).                               

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    1.29  "Hazardous Materials" means any "hazardous waste" as defined in either
the  United States Resource Conservation and Recovery Act or regulations adopted
pursuant to said  act, any  "hazardous substances" or  "hazardous materials"  as
defined  in the United States Comprehensive Environmental Response, Compensation
and Liability Act and, to the extent not included in the foregoing, any  medical
waste.                                                                          

    1.30   "Knowledge"  shall mean  actual knowledge  of a  fact or constructive
knowledge if a reasonably prudent person in a like position would have known  or
should  have known, the fact. In the  case of a corporate party hereto knowledge
shall be limited  to the  aggregate knowledge  of all  of the  officers of  such
corporation.                                                                    

    1.31     "KRSI"  shall  mean  Kelly   Russell  Studios,  Inc.,  a  Minnesota
corporation.                                                                    

    1.32   "KRSI Acquisition"  shall  mean KRSI  Acquisition Corp.,  a  Delaware
corporation and wholly-owned subsidiary of Global One.                          

    1.33  "KRSI Certificates of Merger" shall mean the documents attached hereto
as Exhibit 1.33.                                                                

    1.34   "KRSI Common  Stock" shall mean the  common stock of  KRSI with a par
value of $.01 per share.                                                        

1.35  "KRSI Financial Advisor" shall mean The Equisource Group.         

    1.36   "KRSI Merger"  shall  mean the  merger of  KRSI  with and  into  KRSI
Acquisition, as further described in Section 2.1(ii) hereto.                    

    1.37   "KRSI  Plans" shall  mean all employee  benefit plans  (as defined in
Section 3(3) of ERISA)  which KRSI or  any of its  subsidiaries maintains or  to
which KRSI or any of its subsidiaries contributes.                              

    1.38    "KRSI SEC  Documents" shall  mean  all required  reports, schedules,
forms, statements and other documents filed or required to be filed by KRSI with
the SEC since December 31, 1992.                                                

    1.39  "KRSI  Shares" shall mean  all issued and  outstanding shares of  KRSI
Common Stock.                                                                   

    1.40   "Lien"  shall mean  any pledge,  claim, lien,  charge, encumbrance or
security interest of any nature whatsoever.                                     

1.41  "Malm" shall mean Michael A. Malm.                                

    1.42  "Material Adverse Effect" when  used with respect to any entity  means
(a)  a material  adverse effect  on the  business, assets  (including intangible
assets), liabilities, financial condition, results of operations or prospects of
such entity and its subsidiaries, if any, taken as a whole, or on the ability of
such entity  or  any of  its  subsidiaries  following the  consummation  of  the
Reorganization  to continue the business of such entity and its subsidiaries, if
any, taken as a whole, substantially as currently conducted (without the loss of
any material rights), or (b) a material impairment in the ability of such entity
or any of its subsidiaries to perform any of their respective obligations  under
this Agreement or to consummate any portion of the Reorganization.              

   1.43  "MIBCA" shall mean the Michigan Business Corporation Act, as amended.

    1.44  "MNBCA" shall mean the Minnesota Business Corporation Act, as amended.

    1.45   "Mergers"  shall mean  the KRSI  Merger, the  OSP Merger  and the BEx
Merger.                                                                         

    1.46  "New Global  One Shares" shall  mean the shares  of Global One  Common
Stock issued in the Offering.                                                   

    1.47  "Offering" shall mean the offering of up to 4,666,667 Shares of Global
One Common Stock at $1.50 per share as more fully described herein.             

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    1.48   "OSP" shall mean OSP  Publishing, Inc., a California corporation, and
unless the context otherwise requires, its successor, OSP Acquisition.          

    1.49   "OSP Acquisition"  shall mean  O.S.P. Acquisition  Corp., a  Delaware
corporation and wholly-owned subsidiary of Global One.                          

    1.50   "OSP Affiliated Group" shall mean OSP, each of the entities listed on
Schedule 5.2 hereto, any other subsidiaries  and each member of any  affiliated,
consolidated,  combined or unitary group of which OSP or any of its subsidiaries
is a member.                                                                    

    1.51  "OSP Certificates of Merger" shall mean the documents attached  hereto
as Exhibit 1.51.                                                                

    1.52   "OSP  Common Stock" shall  mean the common  stock of OSP  with no par
value.                                                                          

1.53  "OSP Financial Advisor" shall mean Tamarix Capital Corporation.   

    1.54  "OSP Financial Statements"  shall mean the balance sheets,  statements
of operations, statements of changes in shareholders' equity, statements of cash
flows,  reports thereon  by OSP's  independent auditors,  if any,  and any notes
thereto, which are referred to in Section 5.7 below.                            

    1.55   "OSP  Merger"  shall  mean  the merger  of  OSP  with  and  into  OSP
Acquisition, as further described in Section 2.1(i)(A) hereto.                  

    1.56   "OSP  Plans" shall  mean all  employee benefit  plans (as  defined in
Section 3(3) of  ERISA) which OSP  or any  of its subsidiaries  maintains or  to
which OSP or any of its subsidiaries contributes.                               

1.57  "OSP Shareholders" shall mean collectively Angard and Malm.       

    1.58   "OSP  Shares" shall  mean all  issued and  outstanding shares  of OSP
Common Stock, and  "OSP Share" shall  mean one outstanding  share of OSP  Common
Stock.                                                                          

    1.59   "Other Party"  or "Other Parties,"  when used with  reference to KRSI
shall mean Global  One, OSP and  their respective subsidiaries,  when used  with
respect  to OSP  or Global  One, shall mean  KRSI, unless  the context otherwise
requires.                                                                       

    1.60  "Proxy Statement" shall mean the  proxy statement to be filed by  KRSI
pursuant to the provisions of Section 8.1 below.                                

    1.61   "Registration Statement" shall mean  the registration statement to be
filed by Global One on Form S-4 pursuant to the provisions of Section 8.1 below.

    1.62  "Reorganization"  shall mean the  combination of the  Mergers and  the
Offering.                                                                       

1.63  "SEC" shall mean the Securities and Exchange Commission.          

 1.64  "Securities Act" shall mean the Securities Act of 1933, as amended.

    1.65   "Shareholders' Meeting" shall mean the meeting of the shareholders of
KRSI to be called to approve the KRSI Merger and this Agreement.                

    1.66    "State  Takeover   Laws"  shall  mean   any  state  "control   share
acquisition," "anti-takeover" or other similar statutes and regulations.        

    1.67    "Taxes" shall  mean all  federal, state,  local and  foreign income,
property, sales, excise and other taxes, tariffs or governmental charges of  any
nature  whatsoever, including any interest,  penalties or additions with respect
thereto.                                                                        

ARTICLE II -- THE MERGERS 

    2.1  THE MERGERS.  Upon the terms and subject to the conditions set forth in
this Agreement, (i)  immediately prior to  the Effective Time  (A) OSP shall  be
merged  with and into OSP Acquisition in  accordance with the CGCL and the DGCL,
whereupon the separate existence  of OSP shall cease  and OSP Acquisition  shall
continue  as the  surviving corporation,  and (B) BEx  shall be  merged with and

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into BEx Acquisition in  accordance with the MIBCA  and the DGCL, whereupon  the
separate  existence of BEx shall cease and BEx Acquisition shall continue as the
surviving corporation; and (ii) at the Effective Time KRSI shall be merged  with
and  into KRSI Acquisition in accordance with  the MNBCA and the DGCL, whereupon
the separate existence of KRSI shall  cease and KRSI Acquisition shall  continue
as the surviving corporation.                                                   

    2.2   CERTIFICATES OF MERGER; EFFECTIVE TIME.   As soon as practicable after
satisfaction or, to the extent permitted hereunder, waiver of all conditions  to
the  Mergers set forth in  Article IX below, the  parties hereto shall cause (i)
the KRSI Merger to be consummated by filing the KRSI Certificates of Merger with
the Secretary of State of the State  of Minnesota and the Secretary of State  of
the  State of Delaware, and make all other filings or recordings required by the
MNBCA and  the DGCL  in connection  with the  KRSI Merger  and the  transactions
contemplated  by this Agreement; (ii) the OSP Merger to be consummated by filing
the OSP Certificates  of Merger  with the  Secretary of  State of  the State  of
California  and the Secretary  of State of  the State of  Delaware, and make all
other filings or recordings required by the CGCL and the DGCL in connection with
the OSP Merger and  the transactions contemplated by  this Agreement; and  (iii)
the  BEx Merger to be consummated by  filing the BEx Certificates of Merger with
the Secretary of State of  the State of Michigan and  the Secretary of State  of
the  State of Delaware, and make all other filings or recordings required by the
MIBCA and  the DGCL  in connection  with  the BEx  Merger and  the  transactions
contemplated  by this Agreement. Each of the KRSI Merger, the OSP Merger and the
BEx Merger  shall  become  effective (a)  at  the  later of  such  time  as  the
applicable  Certificates of Merger are duly  filed with the Secretaries of State
of the applicable  states, or (b)  at such later  time as may  be agreed by  the
parties in writing and specified in the applicable Certificates of Merger.      

    2.3    EFFECT OF  THE  MERGERS.   From and  after  the Effective  Time, KRSI
Acquisition shall possess all the rights, privileges, powers and franchises  and
be  subject to all of the restrictions, disabilities and duties of KRSI and KRSI
Acquisition, as provided under the MNBCA and DGCL, OSP Acquisition shall possess
all the rights, privileges, powers and franchises  and be subject to all of  the
restrictions,  disabilities and duties  of OSP and  OSP Acquisition, as provided
under the  CGCL and  DGCL, and  BEx Acquisition  shall possess  all the  rights,
privileges,  powers and  franchises and be  subject to all  of the restrictions,
disabilities and duties of BEx and BEx Acquisition, as provided under the  MIBCA
and DGCL.                                                                       

    2.4   CLOSING.  The  Closing will take place  at 10:00 a.m. on  a date to be
specified by the parties, which  shall be no later  than the third business  day
after  satisfaction or waiver of all of  the conditions set forth in Article IX,
at the offices of  Manatt, Phelps & Phillips,  LLP, in Los Angeles,  California,
unless another date, time or place is agreed to in writing by all of the parties
hereto.                                                                         

2.5  CERTIFICATES OF INCORPORATION; BY-LAWS.                            

        (a)   Immediately  after   the  Effective  Time,   the  certificates  of
    incorporation of  Global  One, KRSI  Acquisition,  OSP Acquisition  and  BEx
    Acquisition  shall be in substantially the forms attached hereto as Exhibits
    2.5(a)-1, 2.5(a)-2, 2.5(a)-3  and 2.5(a)-4,  respectively, until  thereafter
amended as provided by law and such certificates of incorporation.      

        (b)  Immediately after  the Effective Time,  the by-laws  of Global One,
    KRSI  Acquisition,  OSP  Acquisition  and   BEx  Acquisition  shall  be   in
    substantially  the  forms attached  hereto  as Exhibits  2.5(b)-1, 2.5(b)-2,
    2.5(b)-3 and 2.5(b)-4, respectively, until thereafter amended as provided by
    law, the applicable certificate of incorporation of the relevant corporation
and such by-laws.                                                       

    2.6   DIRECTORS  AND OFFICERS.    The  persons specified  in  Exhibit  2.6-1
attached  hereto  shall be  the directors  of Global  One immediately  after the
Effective Time,  each to  hold  office in  accordance  with the  certificate  of
incorporation of Global One as of the Effective Time and for the terms set forth
in  the by-laws of Global One as of  the Effective Time and specified in Exhibit
2.6 hereto, and the officers of Global One immediately after the Effective  Time
shall  be  the persons  specified in  Exhibit  2.6-2, in  each case  until their
respective successors are duly elected or appointed and qualified.              

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ARTICLE III -- CONVERSION OR CANCELLATION 
OF SECURITIES; EXCHANGE OF CERTIFICATES 

    3.1  CONVERSION OR CANCELLATION OF SECURITIES.  By virtue of the Mergers and
without any action on the part of the holders of any of the OSP Shares, the KRSI
Shares or the BEx Shares, and subject to Section 3.3(b) below:                  

        (a) immediately prior to  the Effective Time, (i)  each OSP Share as  of
    such  time shall be converted into the right to receive the number of shares
    of Global One Common Stock  equal to the Exchange  Ratio, and (ii) each  BEx
    Share  as of such  time shall be  canceled and the  holders thereof shall be
entitled to no consideration except as set forth in this Agreement; and 

        (b) as of the Effective Time,  each KRSI Share immediately prior to  the
    Effective  Time shall be converted into  one-half share of Global One Common
Stock.                                                                  

    3.2  RIGHTS  OF HOLDERS  OF OSP AND  KRSI COMMON  STOCK.  On  and after  the
Effective  Time  and  until  surrendered for  exchange,  each  outstanding stock
certificate which immediately  prior to  the Mergers represented  shares of  OSP
Common  Stock and KRSI Common Stock shall  be deemed for all purposes, except as
provided in Section 3.3(b) below, to evidence ownership of and to represent  the
number  of whole shares of Global One Common Stock into which such shares of OSP
Common Stock or  KRSI Common  Stock shall have  been converted,  and the  record
holder  of  such outstanding  certificate shall,  after  the Effective  Time, be
entitled to vote the shares of Global One Common Stock into which such shares of
OSP Common Stock or KRSI Common Stock  shall have been converted on any  matters
on  which the  holders of  record of  Global One  Common Stock,  as of  any date
subsequent to the  Effective Time,  shall be entitled  to vote.  In any  matters
relating to such certificates, Global One may rely conclusively upon the records
of shareholders maintained by OSP and KRSI containing the names and addresses of
the  holders of record of OSP Common Stock or KRSI Common Stock, as appropriate,
at the Effective Time.                                                          

3.3  EXCHANGE OF CERTIFICATES.                                          

        (a) EXCHANGE OF SHARES. At the Closing, Global One shall deliver to  the
    Exchange  Agent the number of shares of Global One Common Stock to which the
    holders of the OSP Shares and  KRSI Shares are entitled pursuant to  Section
    3.1  above, to be held  and distributed by the  Exchange Agent in accordance
    with the terms of an  agreement by and between  Global One and the  Exchange
    Agent  and  the terms  of  this Agreement.  As  soon as  possible  after the
    Closing, the Exchange Agent shall deliver to all the shareholders of  record
    of  OSP and KRSI as  of the Effective Time a  transmittal letter in form and
    substance satisfactory to Global  One and the  Exchange Agent. Upon  receipt
    from  the  holders  of the  OSP  Shares and  KRSI  Shares of  the  letter of
    transmittal duly executed by such holder, the certificates representing  the
    OSP  Shares and KRSI Shares for cancellation and such other documents as may
    reasonably be  required by  the  Exchange Agent,  the Exchange  Agent  shall
    deliver to such holder one or more certificates representing the appropriate
    number of shares of Global One Common Stock. The shares of Global One Common
    Stock  issued upon  the surrender  for exchange of  the OSP  Shares and KRSI
    Shares in accordance  with the  terms hereof shall  be deemed  to have  been
    issued  in full satisfaction of all rights  pertaining to the OSP Shares and
KRSI Shares exchanged therefor.                                         

        (b)  NO  FRACTIONAL  SHARES.  No  certificates  or  scrip   representing
    fractional  shares  of Global  One  Common Stock  shall  be issued  upon the
    surrender for exchange of the  certificates representing the OSP Shares  and
    KRSI  Shares, and such fractional share interests will not entitle the owner
    thereof to  vote  or  to  any  rights of  a  shareholder  of  OSP  or  KRSI.
    Notwithstanding  any other provision  of this Agreement,  each holder of OSP
    Shares or KRSI Shares  who would otherwise have  been entitled to receive  a
    fraction  of a share of  Global One Common Stock  (after taking into account
    all certificates representing OSP  Shares or KRSI  Shares delivered by  such
    holder)  shall receive, in lieu thereof,  one additional share of Global One
Common Stock.                                                           

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ARTICLE IV -- THE OFFERING

    Subsequent to March 27,  1996, the date as  of which the Original  Agreement
was  executed, Global One,  with the assistance  of OSP and  KRSI, commenced the
Offering.  Global  One  retained  the  services  of  Miller,  Johnson  &  Kuehn,
Incorporated ("MJK") and Cruttenden Roth Incorporated ("CR") as placement agents
and entered into agreements with such firms with respect to the Offering. A copy
of  the agreement entered into with MJK (the "MJK Agreement") is attached hereto
as Exhibit 4.1. The  agreement with CR  has not been reduced  to writing but  is
anticipated to be substantially similar to the MJK Agreement except with respect
to  the referral fees.  The parties hereto  each consent to  Global One entering
into such agreements and the payment  of all fees, expenses and commissions  set
forth therein. In the Offering, subscriptions for 4,504,234 Global One Shares or
$6,756,351  have  been received  and  accepted by  Global  One. The  Offering is
expected to close simultaneously with the Closing.                              

ARTICLE V -- REPRESENTATIONS AND WARRANTIES OF GLOBAL ONE,
OSP AND THE OSP SHAREHOLDERS

    Except as  set forth  in and  qualified by  the schedules  attached  hereto,
Global   One  and  OSP,  jointly  and   severally,  hereby  make  the  following
representations and warranties to KRSI, and except as set forth in and qualified
by the schedules attached hereto,  the OSP Shareholders, jointly and  severally,
hereby  make the representations and warranties  set forth in Sections 5.1, 5.3,
5.6, 5.9, 5.10, 5.17 and 5.18 below to KRSI.                                    

    5.1   CORPORATE EXISTENCE  AND POWER.    As of  the date  hereof, OSP  is  a
corporation  duly incorporated, validly existing and  in good standing under the
laws of the State of California, Global One is a corporation duly  incorporated,
validly  existing and in good standing under  the laws of the State of Delaware,
and BEx  is  a corporation  duly  incorporated,  validly existing  and  in  good
standing  under the laws of the State of  Michigan. OSP, Global One and BEx each
have all corporate powers  required to carry on  their respective businesses  as
now conducted. OSP, Global One and BEx are each duly qualified to do business as
foreign  corporations and  are in good  standing in each  jurisdiction where the
character of their respective properties owned  or leased by them or the  nature
of  their respective activities  makes such qualification  necessary, except for
those jurisdictions  where the  failure to  be  so qualified  would not  have  a
Material  Adverse Effect  on OSP or  Global One.  The copies of  the articles of
incorporation and by-laws of OSP which have been delivered to KRSI by OSP are as
of the date hereof true and complete copies of the articles of incorporation and
by-laws of  OSP. The  certificate of  incorporation attached  hereto as  Exhibit
2.5(a)-1  is as of  the date hereof, and  will be as of  the Effective Time, the
certificate of incorporation of Global One,  and the by-laws attached hereto  as
Exhibit  2.5(b)-1, is  as of the  date hereof, and  will be as  of the Effective
Time, the by-laws of Global One.                                                

    5.2   OSP AND  GLOBAL ONE  SUBSIDIARIES.   Schedule  5.2 hereto  lists  each
subsidiary   of  OSP  and   Global  One,  together   with  its  jurisdiction  of
incorporation or organization. All  the outstanding shares  of capital stock  of
each   such  subsidiary  have  been  validly  issued  and  are  fully  paid  and
nonassessable and, except as set forth on  Schedule 5.2 hereto, owned by OSP  or
Global  One, as appropriate, free and clear of any Liens. Except for the capital
stock of  their subsidiaries,  neither  OSP nor  Global  One owns,  directly  or
indirectly,  any capital stock  or other ownership  interest in any corporation,
partnership, joint venture or other entity. Immediately prior to the BEx Merger,
OSP will own all of the oustanding shares of capital stock of BEx.              

5.3  CORPORATE AUTHORIZATIONS.                                          
        (a) The  execution, delivery  and performance  by OSP  and BEx  of  this
    Agreement   and  the  consummation  by  OSP  and  BEx  of  the  transactions
    contemplated hereby are  within their respective  corporate powers and  have
    been  duly authorized by all  necessary corporate action on  the part of OSP
    and BEx, including without limitation approval of the OSP Shareholders. This
Agreement                                                               

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    has been duly and  validly executed and  delivered by OSP,  BEx and the  OSP
    Shareholders  and constitutes a valid and  binding agreement of OSP, BEx and
the OSP Shareholders enforceable in accordance with its terms.          

        (b) The  execution,  delivery and  performance  by Global  One  and  the
    Acquisition  Companies of this Agreement and  the consummation by Global One
    and the Acquisition  Companies of the  transactions contemplated hereby  are
    within their corporate powers and have been duly authorized by all necessary
    corporate  action on the  part of Global One  and the Acquisition Companies.
    This Agreement has been  duly and validly executed  and delivered by  Global
    One  and  the  Acquisition Companies  and  constitutes a  valid  and binding
    agreement of  Global  One  and  the  Acquisition  Companies  enforceable  in
accordance with its terms.                                              

    5.4  GOVERNMENTAL AUTHORIZATION.  The execution, delivery and performance by
Global One, OSP, BEx, the Acquisition Companies and the OSP Shareholders of this
Agreement  and the consummation of the OSP  Merger and the BEx Merger require no
action by or in respect of, or  filing with, any Governmental Entity other  than
(a) the filing of the OSP Certificates of Merger in accordance with the CGCL and
DGCL,  (b) the filing of  the BEx Certificates of  Merger in accordance with the
MIBCA  and  DGCL,  (c)  compliance  with  any  applicable  requirements  of  the
Securities  Act, (d) compliance with any applicable requirements of the Exchange
Act, (e) compliance with the rules or regulations of NASDAQ, (f) compliance with
the securities laws of  various states and  (g) any action  or filing which  the
failure  to obtain or make  would not, individually or  in the aggregate, have a
Material Adverse Effect on any party hereto.                                    

    5.5  NON-CONTRAVENTION.  The  execution, delivery and performance by  Global
One,  OSP,  BEx, the  Acquisition  Companies and  the  OSP Shareholders  of this
Agreement  does  not,  and  the  consummation  by  Global  One,  OSP,  BEx,  the
Acquisition  Companies and the OSP Shareholders of the transactions contemplated
hereby will not, (a) contravene or  conflict with the articles of  incorporation
or  by-laws of  OSP or BEx  or the  certificates of incorporation  or by-laws of
Global One or any of the Acquisition Companies, (b) assuming compliance with the
matters referred  to  in Section  5.4  above,  contravene or  conflict  with  or
constitute  a  violation  of any  provision  of any  law,  regulation, judgment,
injunction, order or decree binding upon  or applicable to Global One, OSP,  any
of  their  respective  subsidiaries or  the  OSP Shareholders,  other  than such
contravention, conflicts or violations which  would not, individually or in  the
aggregate, have a Material Adverse Effect on any party hereto, (c) assuming that
the  consents listed on Schedule 5.5 hereto  are obtained prior to the Effective
Time, constitute a breach or violation of, or a default under or give rise to  a
right of termination, cancellation or acceleration of any right or obligation of
Global  One, OSP  or any of  their respective subsidiaries  or to a  loss of any
benefit to which  Global One,  OSP or any  of their  respective subsidiaries  is
entitled  under any  provision of, any  agreement, contract  or other instrument
binding upon Global  One, OSP  or any of  their respective  subsidiaries or  any
license,  franchise, permit or  other similar authorization  held by Global One,
OSP  or  any  of  their  respective  subsidiaries,  other  than  such  breaches,
violations,  defaults, rights or losses which  would not, individually or in the
aggregate, have a Material Adverse Effect on Global One or OSP, or (d) result in
the creation or imposition of any Lien on any asset of Global One, OSP or any of
their respective subsidiaries, other than any such creation or imposition  which
would  not, individually or in the aggregate,  have a Material Adverse Effect on
Global One or OSP. Schedule 5.5 hereto  sets forth a true, complete and  correct
list  of all consents,  approvals and authorizations required  to be obtained by
Global One, OSP and  their respective subsidiaries from  any third party  (other
than  as otherwise expressly  contemplated by Section 5.4  of this Agreement) in
connection with  this  Agreement,  the  OSP  Merger,  the  BEx  Merger  and  the
transactions  contemplated hereby where the failure of  Global One or OSP or any
of  their  respective   subsidiaries  to  obtain   such  consent,  approval   or
authorization,  individually or in the aggregate,  would have a Material Adverse
Effect on any party hereto.                                                     

5.6  CAPITALIZATION.                                                    
        (a) As  of the  date hereof,  (i) the  authorized capital  stock of  OSP
    consists   of  30,000,000  shares  of  Common  Stock,  and  (ii)  there  are
outstanding 1,636 shares of OSP Common Stock and a                      

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    warrant to purchase  up to 50  shares of OSP  Common Stock. All  outstanding
    shares  of OSP Common Stock are  duly authorized, validly issued, fully paid
    and nonassessable, and issued in compliance with all applicable federal  and
    state securities laws. Except as set forth in this Section 5.6(a), there are
    outstanding  (a) no shares of OSP Common Stock or other voting securities of
    OSP, (b) no securities of OSP convertible into or exchangeable for shares of
    OSP Common Stock or voting securities of OSP and (c) no options, warrants or
    other rights to acquire  from OSP, and  no obligation of  OSP to issue,  any
    capital   stock,  voting  securities  or   securities  convertible  into  or
    exchangeable for capital  stock or voting  securities of OSP.  There are  no
    outstanding  obligations of OSP  to repurchase, redeem  or otherwise acquire
    any OSP Common Stock. As of the date hereof, all of the shares of OSP Common
    Stock are  owned by  the OSP  Shareholders free  and clear  from all  Liens.
    Immediately  prior to the  Effective Time, all  of the shares  of OSP Common
    Stock will be owned  by the OSP  Shareholders free and  clear of all  Liens,
    except  to the extent  that the warrant to  purchase up to  50 shares of OSP
    Common Stock referred to in this  Section 5.6(a) has been exercised  between
the date hereof and the Effective Time.                                 

        (b)  As of the date  hereof, (i) the authorized  capital stock of Global
    One consists of 30,000,000 shares of  Common Stock and 20,000,000 shares  of
    Preferred  Stock, (ii)  there are outstanding  two (2) shares  of Global One
    Common Stock. All outstanding  shares of Global One  are, and all shares  of
    Global  One Common Stock which may  be issued pursuant to the Reorganization
    will be, when issued in accordance  with the terms hereof, duly  authorized,
    validly  issued, fully paid and nonassessable, and issued in compliance with
    all applicable federal  and state securities  laws. Except as  set forth  in
    this  Section  5.6(b), there  are outstanding  (a) no  shares of  Global One
    Common Stock or other voting securities of Global One, (b) no securities  of
    Global  One convertible into or exchangeable for shares of Global One Common
    Stock or voting  securities of Global  One and (c)  no options, warrants  or
    other  rights to acquire from Global One, and no obligation of Global One to
    issue, any capital stock, voting  securities or securities convertible  into
    or  exchangeable for capital stock or voting securities of Global One. There
    are no  outstanding  obligations of  Global  One to  repurchase,  redeem  or
otherwise acquire any Global One Common Stock.                          

5.7  FINANCIAL STATEMENTS.                                              
        (a)  OSP has furnished KRSI true and complete copies of its consolidated
    balance  sheets,  statements  of   operations,  statements  of  changes   in
    shareholders'  equity and statements of cash  flows together with the report
    thereon by Deloitte & Touche LLP, OSP's independent auditors, for its fiscal
    years ended December 31, 1993, December 31, 1994 and December 31, 1995.  The
    OSP  Financial  Statements  have  been,  and  any  OSP  Financial Statements
    delivered to KRSI for  subsequent periods will  be, prepared in  conformance
    with  generally accepted accounting principles applied on a basis consistent
    with prior  periods, and  fairly  present and  will  fairly present  in  all
    material  respects the financial condition of OSP and its subsidiaries as of
    the represented dates thereof and the results of OSP's and its subsidiaries'
operations for the periods covered thereby.                             

        (b) Global One,  OSP Acquisition, KRSI  Acquisition and BEx  Acquisition
    (i)   have  been  organized  solely  for   the  purposes  of  effecting  the
    Reorganization and  the transactions  contemplated by  this Agreement,  (ii)
    have  not conducted any business and will  not, prior to the Effective Time,
    conduct any business other than  incident to their formation, the  execution
    and  delivery of this Agreement and the Original Agreement, the Offering and
    the other transactions contemplated  by this Agreement,  and (iii) have  no,
    and prior to the Closing will have no, assets, liabilities or obligations of
    any nature other than those incident to their formation and pursuant to this
    Agreement,  the Original Agreement, the  Offering and the other transactions
contemplated by this Agreement.                                         

    5.8   BOOKS  AND RECORDS.    The books  of  account and  records  (including
customer  order files, employment records, licensing records, employment records
and  production  and  manufacturing  records)  of  Global  One,  OSP  and  their
respective subsidiaries are complete, true and correct in all material respects.

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    5.9   CONTRACTS WITH RELATED  PARTIES.  Except as  disclosed on Schedule 5.9
hereto, there  are no  material agreements  or contracts  by, between  or  among
Global  One, OSP or any  of their respective subsidiaries,  on the one hand, and
any officers,  directors or  shareholders of  Global One,  OSP or  any of  their
respective subsidiaries, on the other hand.                                     

    5.10     ABSENCE  OF  CERTAIN  CHANGES  OR  EVENTS.    Except  as  expressly
contemplated by this  Agreement, since December  31, 1995, OSP  and each of  its
subsidiaries  has conducted its business only  in the ordinary course, and there
has not been:                                                                   

        (a) any event, occurrence or development of a state of circumstances  or
    facts  which  has  had  a Material  Adverse  Effect  on OSP  or  any  of its
subsidiaries;                                                           

        (b) any declaration, setting aside or  payment of any dividend or  other
    distribution  with  respect  to  any  shares of  OSP  Common  Stock,  or any
    repurchase, redemption or other acquisition by OSP of any outstanding shares
    of OSP Common Stock or other securities of, or other ownership interests in,
OSP, except as described in Schedule 5.10(b) hereto;                    

        (c) any split, combination or  reclassification of any OSP Common  Stock
    or any issuance or the authorization of any issuance of any other securities
    in  respect of,  in lieu  of, or  in substitution  for shares  of OSP Common
Stock;                                                                  

        (d) any  incurrence,  assumption or  guarantee  by  OSP or  any  of  its
    subsidiaries  of  any  indebtedness for  borrowed  money other  than  in the
    ordinary course of business and in amounts and on terms consistent with past
    practices (including  any such  borrowings under  its existing  bank  credit
facility) except as described in Schedule 5.10(d) hereto;               

        (e)  any  damage, destruction  or other  casualty  loss (whether  or not
    covered by insurance)  affecting the business  assets of OSP  or any of  its
    subsidiaries  which,  individually or  in the  aggregate,  has had  or would
    reasonably be expected to have a Material Adverse Effect on OSP or any  such
subsidiary;                                                             

        (f) any change in any method of accounting or accounting practice by OSP
    or any of its subsidiaries, except for any such change required by reason of
a concurrent change in generally accepted accounting principles; or     

        (g)  (i) any grant, except pursuant to  agreements in effect on the date
    of this Agreement and disclosed in Schedule 5.10(g) hereto, of any  material
    severance  or termination pay to any director, officer or employee of OSP or
    any of its subsidiaries, (ii) the entering into of any material  employment,
    deferred  compensation or other  similar agreement (or  any amendment to any
    such existing agreement) with  any director, officer or  employee of OSP  or
    any  of its  subsidiaries, except  as contemplated  in Section  8.11 hereto,
    (iii) any material increase in benefits payable under any existing severance
    or termination pay policies or employment  agreements or (iv) other than  in
    the ordinary course of business consistent with past practices, any material
    increase  in  compensation, bonus  or other  benefits payable  to directors,
officers or employees of OSP or any of its subsidiaries.                

    5.11  LITIGATION.  Except as disclosed in Schedule 5.11 hereto, there is  no
action,  suit, investigation or proceeding pending  against or, to the knowledge
of Global  One,  OSP,  BEx  and the  OSP  Shareholders,  threatened  against  or
affecting, Global One, OSP or any of their respective subsidiaries or properties
(other  than any  such suit, action  or proceeding  challenging the transactions
contemplated by this Agreement or any provision of this Agreement or seeking  to
restrain  or prohibit  the consummation of  the Mergers) that,  if determined or
resolved adversely to Global One, OSP or any such subsidiary (in accordance with
the plaintiff's demands, if applicable), individually or in the aggregate, would
reasonably be expected to have a Material  Adverse Effect on Global One, OSP  or
any such subsidiary.                                                            

    5.12    TAXES.   Except  as set  forth  in Schedule  5.12,  each of  the OSP
Affiliated Group has filed all material  tax returns and reports required to  be
filed   by   it   and   has   paid   (or   OSP   has   paid   on   its   behalf)

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all of the Taxes required to be paid by it (other than Taxes, the failure to pay
which would  not, individually  or in  the aggregate,  have a  Material  Adverse
Effect  on OSP), and the  most recent financial statements  contained in the OSP
Financial Statements reflect an adequate reserve for all material Taxes  payable
by OSP and its subsidiaries for all taxable periods and portions thereof through
the  date of such financial statements. No  deficiencies for any Taxes have been
proposed, asserted or assessed against Global One, OSP, any of their  respective
subsidiaries or any member of the OSP Affiliated Group (other than deficiencies,
the  liability for  which would  not, individually or  in the  aggregate, have a
Material Adverse  Effect on  Global One,  OSP or  any such  subsidiary), and  no
requests  for waivers of the  time to assess any Taxes  are pending. None of the
assets or properties of Global One, OSP or any of their respective  subsidiaries
is  subject to any tax lien (other than liens  for Taxes that are not yet due or
that are being contested  in good faith by  appropriate proceedings) except  for
liens which would not, individually or in the aggregate, have a Material Adverse
Effect on Global One, OSP or any such subsidiary.                               

    5.13   TITLE TO  ASSETS.  As of  the dates of  the respective balance sheets
that are part of  the OSP Financial Statements,  OSP and its subsidiaries  owned
and  will own  the assets  reflected therein as  of such  dates. As  of the date
hereof and immediately prior to the time of the KRSI Merger, Global One and  its
subsidiaries  shall hold title to their respective  assets free and clear of all
Liens, except as disclosed in Schedule 5.13 hereto.                             

    5.14  LABOR MATTERS.   Neither Global One, OSP  nor any of their  respective
subsidiaries  is a party  to any collective bargaining  agreement or other labor
union contract applicable to persons employed by Global One, OSP or any of their
respective subsidiaries.                                                        

5.15  EMPLOYEE BENEFIT PLANS.                                           

        (a) There are  no Global One  Plans. Schedule 5.15  hereto sets forth  a
    list  of  all OSP  Plans.  Except for  the OSP  Plans,  with respect  to all
    employees and former  employees of OSP  or any of  its subsidiaries and  all
    dependents  and beneficiaries  of such  employees and  former employees, (i)
    neither OSP nor  any of  its subsidiaries  maintains or  contributes to  any
    nonqualified   deferred  compensation  or  retirement  plans,  contracts  or
    arrangements, (ii)  neither OSP  nor any  of its  subsidiaries maintains  or
    contributes  to  any qualified  defined  contribution plans  (as  defined in
    Section 3(34) of ERISA,  or Section 414(i) of  the Code), (iii) neither  OSP
    nor  any  of  its subsidiaries  maintains  or contributes  to  any qualified
    defined benefit  plans (as  defined in  Section 3(35)  of ERISA  or  Section
    414(j)  of  the Code)  and  (iv) neither  OSP  nor any  of  its subsidiaries
    maintains or contributes to any  employee welfare benefit plans (as  defined
in Section 3(1) of ERISA).                                              

        (b)  The OSP Plans comply in all material respects with the requirements
    of ERISA and the Code, except for such failures to comply which individually
    or in the  aggregate could  not reasonably be  expected to  have a  Material
Adverse Effect on OSP.                                                  

        (c)  OSP has delivered to  KRSI true and complete  copies of (i) all OSP
    Plans, (ii) the most recent determination letter, if any, received by OSP or
    any of its subsidiaries from the Internal Revenue Service regarding the  OSP
    Plans (iii) the most recent financial statements and annual report or return
    for  the OSP Plans  and (iv) the most  recently prepared actuarial valuation
reports for the OSP Plans, if any.                                      

        d)  Neither  OSP nor any  of its subsidiaries  contributes (and has  not
    ever contributed) to any multi-employer plan, as defined in Section 3(37) of
    ERISA.  Neither OSP nor any of its  subsidiaries has any actual or potential
    liabilities under  Section  4201  of  ERISA  for  any  complete  or  partial
    withdrawal   from  a  multi-employer  plan.  Neither  OSP  nor  any  of  its
    subsidiaries has  any actual  or potential  liability for  death or  medical
    benefits  after separation  from employment,  other than  (i) death benefits
    under the OSP Plans (whether or not  subject to ERISA) and (ii) health  care
continuation benefits described in Section 4980B of the Code.           

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        (e)  Neither OSP nor any of its subsidiaries nor any of their respective
    directors, officers,  employees  or other  "fiduciaries,"  as such  term  is
    defined  in Section  3(21) of ERISA,  has committed any  breach of fiduciary
    responsibility imposed by ERISA or any other applicable law with respect  to
    the  OSP Plans which would subject OSP or any of its subsidiaries, or any of
    their respective directors,  officers or employees,  to any liability  under
    ERISA  or any applicable law, which  liability would have a Material Adverse
Effect on OSP.                                                          

        (f) Neither OSP nor any of  its subsidiaries has incurred any  liability
    for any tax or civil penalty or any disqualification of any employee benefit
    plan  (as defined in  Section 3(3) of  ERISA) imposed by  Sections 4980B and
    4975 of the Code and  Part 6 of Title I  and Section 502(i) of ERISA,  which
liability would have a Material Adverse Effect on OSP.                  

    5.16   COMPLIANCE WITH LAWS.   Except as disclosed  on Schedule 5.16 hereto,
neither Global  One, OSP  nor any  of their  respective subsidiaries  (a) is  in
violation  of,  nor has  it  violated, any  applicable  provisions of  any laws,
statutes, ordinances or  regulations or  (b) has  received any  notice from  any
Governmental  Entity or any  other person that  Global One, OSP  or any of their
respective subsidiaries  is in  violation of,  or has  violated, any  applicable
provisions  of any laws, statutes, ordinances or regulations, except in the case
of clauses (a) and (b), for violations, individually or in the aggregate,  which
have  not had and  could not reasonably  be expected to  have a Material Adverse
Effect on Global One, OSP  or any such subsidiary. Each  of Global One, OSP  and
their  respective  subsidiaries has  all permits,  licenses and  franchises from
Governmental Entities required to conduct  its business as now being  conducted,
except for such permits, licenses and franchises the absence of which would not,
individually  or in the aggregate, have a Material Adverse Effect on Global One,
OSP or such subsidiaries.                                                       

    5.17  BROKERS.   Except as set  forth in Schedules 4.1  and 5.17 hereto,  no
broker,  investment banker, financial advisor or other person is entitled to any
broker's, finder's, financial advisor's  or other similar  fee or commission  in
connection  with  the transactions  contemplated  by this  Agreement  based upon
arrangements made  by  or  on  behalf  of  Global  One,  OSP,  their  respective
subsidiaries  or  the OSP  Shareholders  and not  entered  into pursuant  to the
provisions of this Agreement. The fees and expenses of the OSP Financial Advisor
will be paid by Global One. OSP has  provided KRSI with a true and correct  copy
of  the fee  agreement among  OSP, the  OSP Shareholders  and the  OSP Financial
Advisor.                                                                        

    5.18  VOTES REQUIRED.  The affirmative votes of a majority of the votes that
holders of the  outstanding Global One  Shares, OSP Shares  and BEx Shares,  and
holders  of the outstanding  shares of common  stock of each  of the Acquisition
Companies, are entitled to cast at meetings called for the purpose of  approving
the Mergers and this Agreement are the only votes of holders of capital stock of
Global  One, OSP and their respective  subsidiaries that are required to approve
the Mergers, this Agreement and the transactions contemplated hereby.           

    5.19    ENVIRONMENTAL  MATTERS.    Global  One,  OSP  and  their  respective
subsidiaries  are  in compliance  with all  Environmental  Laws, except  for any
noncompliance that, either singly or in  the aggregate, would not be  reasonably
likely  to have a Material Adverse Effect on Global One, OSP or their respective
subsidiaries. Global One and  OSP have previously furnished  to KRSI a true  and
correct  list of  all Hazardous Materials,  if any, generated,  used, handled or
stored by Global One,  OSP or any of  their respective subsidiaries, the  proper
disposal of which would require a material expenditure by Global One, OSP or any
of  their  respective  subsidiaries. Global  One  and OSP  have  previously made
available to KRSI copies of all documents, if any, concerning any  environmental
or  health and safety matter adversely affecting Global One, OSP or any of their
respective  subsidiaries  and  copies  of  any  environmental  audits  or   risk
assessments,  site  assessments,  documentation regarding  off-site  disposal of
Hazardous Materials, spill  control plans and  material correspondence with  any
Governmental Entity regarding the foregoing.                                    

    5.20    TRADEMARKS,  PATENTS AND  COPYRIGHTS.    Global One,  OSP  and their
respective subsidiaries own, or possess adequate licenses or other valid  rights
to use, all patents, patent rights, trademarks,                                 

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trademark  rights, trade  names, trade  name rights,  copyrights, service marks,
service mark rights, trade secrets,  applications to register and  registrations
for,  the  foregoing  patents,  trademarks, service  marks,  know-how  and other
proprietary rights  and information  used  in connection  with the  business  of
Global One, OSP and their respective subsidiaries as currently conducted, and no
assertion  or claim has been made in  writing challenging the validity of any of
such rights. The conduct of the business of Global One, OSP and their respective
subsidiaries as  currently conducted  does  not conflict  in  any way  with  any
patent,  patent rights, license,  trademark, trademark right,  trade name, trade
name right, service  mark, copyright  or other  proprietary right  of any  other
person,  neither Global  One, OSP nor  any of their  respective subsidiaries has
received a claim  or threat that  any such conflict  exists, and no  litigation,
claim,  suit, action, proceeding, or complaint concerning the foregoing has been
filed or is ongoing. Except  as set forth in  Schedule 5.20 hereto, Global  One,
OSP  and their respective subsidiaries have the unencumbered right to sell their
products and services (whether now offered  for sale or under development)  free
from any royalty or other obligations to any third parties.                     

    5.21   CONTRACTS AND OTHER AGREEMENTS.   All contracts and agreements listed
on Schedule  5.21 hereto  are valid,  existing, in  full force  and effect,  and
binding  upon Global One, OSP or their  respective subsidiaries, as the case may
be, and to the best knowledge of Global One, OSP and BEx, binding upon the other
parties thereto in accordance  with their terms, and  Global One, OSP and  their
respective  subsidiaries have paid in  full or accrued all  amounts now due from
them thereunder  and  have  satisfied in  full  or  provided for  all  of  their
liabilities  and  obligations  thereunder  which are  presently  required  to be
satisfied or provided for, and are not in default under any of them, nor, to the
best knowledge of Global One,  OSP, BEx and the  OSP Shareholders, is any  other
party  to any such contract  or other agreement in  default thereunder, nor does
any condition exist that with notice or lapse of time or both would constitute a
default thereunder. Schedule  5.21 hereto  sets forth  a list  of the  following
contracts  and  other  agreements to  which  Global  One, OSP  or  any  of their
respective subsidiaries is a  party or by  or to which they  or their assets  or
properties are bound or subject:                                                

        (a)  any agreement that individually  requires aggregate expenditures by
    Global One, OSP or any of their  respective subsidiaries in any one year  of
more than $50,000;                                                      

        (b) any indenture, trust agreement, loan agreement or note that involves
    or  evidences  outstanding  indebtedness,  obligations  or  liabilities  for
borrowed money in excess of $50,000;                                    

        (c) any lease, sublease, installment purchase or similar arrangement for
    the purchase,  use  or occupancy  of  real  or personal  property  (i)  that
    individually  requires aggregate expenditures  by Global One,  OSP or any of
    their respective subsidiaries in any one year of more than $50,000, or  (ii)
    pursuant to which Global One, OSP or any of their respective subsidiaries is
    the  lessor of any  real property which  has rentals over  $50,000 per year,
    together with the date of termination of such leases, the name of the  other
   party and the annual rental payments required to be made under such leases;

        (d)  any agreement of  surety, guarantee or  indemnification, other than
    (i) an  agreement  in  the  ordinary course  of  business  with  respect  to
    obligations  in an amount not in  excess of $50,000, or (ii) indemnification
provisions contained in leases not otherwise required to be disclosed;  

        (e) any agreement,  including without  limitation employment  agreements
    and  bonus plans, relating to the compensation of, or obligating Global One,
    OSP or any of their respective  subsidiaries to make payments (whether  such
    payments  are  fixed  in  amount  or  contingent)  to,  (i)  officers,  (ii)
    employees, (iii) former  employees, (iv) consultants,  (v) advisors or  (vi)
any person who was promised such payments;                              

        (f)  any agreement  containing covenants  of Global  One, OSP  or any of
    their respective subsidiaries not to compete in any line of business, in any
    geographic area or with any person or  covenants of any other person not  to
    compete  with Global One, OSP or any of their respective subsidiaries in any
    line of business of Global One, OSP or any of their respective subsidiaries.

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        (g) any agreement granting or restricting  the right of Global One,  OSP
    or  any of their respective subsidiaries to  use a trade name, trade mark or
logo;                                                                   

        (h)  any  agreement  with  any  customer  or  supplier  that  cannot  be
    terminated without penalty in excess of $10,000 by Global One, OSP or any of
their respective subsidiaries within 90 days; and                       

(i) any franchise, licensing or development agreement.          

    True  and complete copies of  all of the contracts  and other agreements set
forth in Schedule 5.21 hereto  (or required to be  set forth therein) have  been
previously provided to KRSI.                                                    

    5.22   INSURANCE.  Schedule 5.22 attached hereto contains a complete listing
of all policies of insurance maintained by Global One, OSP and their  respective
subsidiaries  as of the date hereof and  at all times during the 24-month period
ending on the date hereof. All such policies of insurance are in full force  and
effect,  and true and correct copies of all such policies of insurance have been
previously provided to KRSI.                                                    

    5.23  DISCLOSURE.  To the best knowledge of Global One, OSP, BEx and the OSP
Shareholders,  all  material  facts   relating  to  the  business,   operations,
properties,   assets,  liabilities  (contingent  or  otherwise),  and  financial
condition of  Global  One,  OSP  and their  respective  subsidiaries  have  been
disclosed  to KRSI in or in connection with this Agreement. The representations,
warranties and statements made by Global One, OSP, BEx and the OSP  Shareholders
in  this  Agreement and  in the  certificates delivered  pursuant hereto  do not
contain any untrue statement  of a material fact,  and, when taken together,  do
not  omit to  state any  material fact  necessary to  make such representations,
warranties and statements, in  light of the circumstances  under which they  are
made, not misleading.                                                           

ARTICLE VI - REPRESENTATIONS AND WARRANTIES OF KRSI 

    KRSI   represents  and  warrants  to  Global  One,  OSP,  BEx  and  the  OSP
Shareholders that,  except  as set  forth  in  and qualified  by  the  schedules
attached hereto:                                                                

    6.1     CORPORATE  EXISTENCE  AND  POWER.     KRSI  is  a  corporation  duly
incorporated, validly existing and in good standing under the laws of the  State
of  Minnesota, and has all corporate powers required to carry on its business as
now conducted. KRSI is  duly qualified to do  business as a foreign  corporation
and is in good standing in each jurisdiction where the character of the property
owned  or leased by it or the  nature of its activities makes such qualification
necessary, except for those jurisdictions where  the failure to be so  qualified
would  not have a Material Adverse Effect on KRSI. The copies of the articles of
incorporation and by-laws of KRSI which have  been delivered to OSP by KRSI  are
true and complete copies of the articles of incorporation and by-laws of KRSI.  

    6.2    KRSI SUBSIDIARIES.   KRSI  has  no subsidiaries.  KRSI does  not own,
directly or indirectly,  any capital stock  or other ownership  interest in  any
corporation, partnership, joint venture or other entity.                        

    6.3   CORPORATE  AUTHORIZATION.   Subject to  obtaining the  approval of the
shareholders of KRSI at the  Shareholders' Meeting, the execution, delivery  and
performance  by  KRSI of  this Agreement  and  the consummation  by KRSI  of the
transactions contemplated  hereby  to  be  consummated  by  it  are  within  its
corporate powers and have been duly authorized by all necessary corporate action
on  the part  of KRSI.  This Agreement  has been  duly and  validly executed and
delivered by  KRSI  and  constitutes  a valid  and  binding  agreement  of  KRSI
enforceable in accordance with its terms.                                       

    6.4  GOVERNMENTAL AUTHORIZATION.  The execution, delivery and performance by
KRSI  of  this  Agreement  and  the consummation  by  KRSI  of  the transactions
contemplated hereby to be consummated by them require no action by or in respect
of, or filing with,  any Governmental Entity  other than (a)  the filing of  the
KRSI  Certificates  of  Merger  in  accordance  with  the  MNBCA  and  DGCL, (b)
compliance  with  any  applicable  requirements  of  the  Securities  Act,   (c)
compliance  with any applicable requirements of the Exchange Act, (d) compliance
with the rules or regulations of                                                

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NASDAQ, (e) compliance with  the securities laws of  various states and (f)  any
action  or filing which the failure to obtain or make would not, individually or
in the aggregate, have a Material Adverse Effect on any party hereto.           

    6.5  NON-CONTRAVENTION.  The execution, delivery and performance by KRSI  of
this  Agreement  does not,  and  the consummation  by  KRSI of  the transactions
contemplated hereby will not,  (a) contravene or conflict  with the articles  of
incorporation or by-laws of KRSI, (b) assuming compli-                          
ance  with the matters referred to in  Section 6.4 above, contravene or conflict
with or  constitute  a  violation  of any  provision  of  any  law,  regulation,
judgment,  injunction, order or decree binding  upon or applicable to KRSI other
than such contraventions, conflicts or violations which would not,  individually
or  in the aggregate,  have a Material  Adverse Effect on  any party hereto, (c)
assuming that the consents listed on  Schedule 6.5 hereto are obtained prior  to
the  Effective Time, constitute a breach or  violation of, or a default under or
give rise to a right of  termination, cancellation or acceleration of any  right
or  obligation of KRSI  or to a  loss of any  benefit to which  KRSI is entitled
under any provision of, any agreement, contract or other instrument binding upon
KRSI or any license,  franchise, permit or other  similar authorization held  by
KRSI,  other than  such breaches, violations,  defaults, rights  or losses which
would not, individually or in the  aggregate, have a Material Adverse Effect  on
KRSI,  or (d) result in the  creation or imposition of any  Lien on any asset of
KRSI, other than any such creation  or imposition which would not,  individually
or  in the aggregate, have a Material  Adverse Effect on KRSI. Schedule 6.5 sets
forth a  true,  complete  and  correct  list  of  all  consents,  approvals  and
authorizations  required to be obtained by KRSI from any third party (other than
as otherwise  expressly  contemplated  by  Section 6.4  of  this  Agreement)  in
connection   with  this  Agreement,  the  Reorganization  and  the  transactions
contemplated hereby where the failure of  KRSI to obtain such consent,  approval
or  authorization,  individually  or in  the  aggregate, would  have  a Material
Adverse Effect on KRSI.                                                         

    6.6   CAPITALIZATION.   The authorized  capital stock  of KRSI  consists  of
10,000,000  shares of KRSI Common Stock. As of the date of this Agreement, there
are outstanding 4,082,373 shares of  KRSI Common Stock. As  of the date of  this
Agreement,  KRSI has reserved 1,207,939 shares of KRSI Common Stock for issuance
to upon  exercise  of  outstanding  employee  and  director  stock  options  and
outstanding  warrants to purchase  shares of KRSI  Common Stock. All outstanding
shares of KRSI Common Stock are duly authorized, validly issued, fully paid  and
nonassessable  and issued  in compliance with  all applicable  federal and state
securities laws. The KRSI Common Stock  is registered pursuant to Section  12(g)
of  the Exchange  Act. Except as  set forth in  this Section or  on Schedule 6.6
attached hereto and except for changes since the date hereof resulting from  the
exercise, cancellation or exchange of currently outstanding options and warrants
listed  on Schedule  6.6 hereto,  there are  outstanding (a)  no shares  of KRSI
Common Stock  or other  voting securities  of KRSI,  (b) no  securities of  KRSI
convertible  into  or  exchangeable  for  shares  of  capital  stock  or  voting
securities of KRSI and (c) no options or other rights to acquire from KRSI,  and
no  obligation  of  KRSI  to  issue, any  capital  stock,  voting  securities or
securities  convertible  into  or  exchangeable  for  capital  stock  or  voting
securities  of KRSI. There are no outstanding obligations of KRSI to repurchase,
redeem or otherwise acquire any KRSI Common Stock.                              

    6.7   SEC  DOCUMENTS.   KRSI  has  filed  all KRSI  SEC  Documents  and  has
previously  provided  to  OSP copies  of  all  SEC comment  letters  received in
connection therewith.  As of  their  respective dates,  the KRSI  SEC  Documents
complied  as  to form  in all  material  respects with  the requirements  of the
Securities Act, or  the Exchange  Act, as  the case may  be, and  the rules  and
regulations  of  the  SEC promulgated  thereunder  applicable to  such  KRSI SEC
Documents, and none of the KRSI SEC Documents contained any untrue statement  of
a  material  fact or  omitted to  state a  material fact  required to  be stated
therein or necessary in order  to make the statements  therein, in light of  the
circumstances  under which they were made,  not misleading. Except to the extent
that information  contained  in  any  KRSI SEC  Document  has  been  revised  or
superseded  by a  later-filed KRSI  SEC Document,  filed and  publicly available
prior to the date of this Agreement, as  of the date of this Agreement, none  of
the  KRSI SEC  Documents contains  any untrue  statement of  a material  fact or

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omits to state any material fact required  to be stated therein or necessary  in
order  to make the statements therein, in light of the circumstances under which
they were made, not misleading. The financial statements of KRSI included in the
KRSI SEC Documents complied as of their respective dates of filing with the  SEC
as  to form in all material respects with applicable accounting requirements and
the published rules and regulations of  the SEC with respect thereto, have  been
prepared in accordance with generally accepted accounting principles (except, in
the case of unaudited statements, as permitted by the Exchange Act) applied on a
consistent  basis during the periods involved (except as may be indicated in the
notes thereto) and fairly present the financial position of KRSI as of the dates
thereof and the results of their operations and cash flows for the periods  then
ended  (subject, in the  case of unaudited statements,  to normal year-end audit
adjustments). Except as to the extent that information contained in any KRSI SEC
Document has been  revised or  superseded by  a later-filed  KRSI SEC  Document,
filed and publicly available prior to the date of this Agreement, and except for
liabilities  and  obligations  incurred  in  the  ordinary  course  of  business
consistent with past  practice, KRSI has  no liabilities or  obligations of  any
nature   (whether  accrued,  absolute,  contingent  or  otherwise)  required  by
generally accepted accounting principles to be  set forth on a balance sheet  of
KRSI  or in  the notes  thereto which, individually  or in  the aggregate, could
reasonably be expected to have a Material Adverse Effect on KRSI.               

    6.8  KRSI'S BOOKS AND RECORDS.  The books of account and records  (including
customer  order files, employment records, licensing records, employment records
and production and manufacturing records) of KRSI are complete, true and correct
in all material respects.                                                       

    6.9  KRSI CONTRACTS WITH RELATED  PARTIES.  Except as disclosed on  Schedule
6.9  hereto or in  the KRSI SEC  Documents, there are  no material agreements or
contracts by, between  or among KRSI  and any of  KRSI's officers, directors  or
shareholders.                                                                   

    6.10  ABSENCE OF CERTAIN CHANGES OR EVENTS.  Except as disclosed in the KRSI
SEC Documents, and except as expressly contemplated by this Agreement, since the
date  of the most recent  audited financial statements included  in the KRSI SEC
Documents, KRSI has  conducted its  business only  in the  ordinary course,  and
there has not been:                                                             

        (a)  any event, occurrence or development of a state of circumstances or
facts which has had a Material Adverse Effect on KRSI;                  

        (b) any declaration, setting aside or  payment of any dividend or  other
    distribution  with  respect  to any  shares  of  KRSI Common  Stock,  or any
    repurchase, redemption  or  other acquisition  by  KRSI of  any  outstanding
    shares  of  KRSI Common  Stock or  other securities  of, or  other ownership
interests in, KRSI;                                                     

        (c) any split,  combination or  reclassification of any  of KRSI  Common
    Stock  or any  issuance or  the authorization of  any issuance  of any other
    securities in respect of, in lieu of  or in substitution for shares of  KRSI
Common Stock;                                                           

        (d)  any incurrence, assumption or guarantee by KRSI of any indebtedness
    for borrowed money  other than  in the ordinary  course of  business and  in
    amounts  and on  terms consistent  with past  practices (including  any such
    borrowings under its existing bank  credit facility) except as described  in
Schedule 6.10(d) hereto;                                                

        (e)  any  damage, destruction  or other  casualty  loss (whether  or not
    covered  by  insurance)  affecting  the  business  assets  of  KRSI   which,
    individually or in the aggregate, has had or would reasonably be expected to
have a Material Adverse Effect on KRSI;                                 

        (f)  any change  in any method  of accounting or  accounting practice by
    KRSI, except for any such change  required by reason of a concurrent  change
in generally accepted accounting principles; or                         

        (g)  (i) any grant, except pursuant to  agreements in effect on the date
    of this  Agreement and  disclosed  in a  Schedule  hereto, of  any  material
severance or termination pay to any director,                           

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    officer  or  employee  of  KRSI,  (ii) the  entering  into  of  any material
    employment,  deferred  compensation  or  other  similar  agreement  (or  any
    amendment  to any  such existing  agreement) with  any director,  officer or
    employee of KRSI, (iii) any material increase in benefits payable under  any
    existing  severance or termination pay  policies or employment agreements or
    (iv) other than  in the  ordinary course  of business  consistent with  past
    practices,  any material increase  in compensation, bonus  or other benefits
payable to directors, officers or employees of KRSI.                    

    6.11  LITIGATION.  Except as disclosed in the KRSI SEC Documents or Schedule
6.11 attached  hereto, there  is no  action, suit,  investigation or  proceeding
pending  against or, to the knowledge  of KRSI, threatened against or affecting,
KRSI or any of its  properties (other than any  such suit, action or  proceeding
challenging  the  transactions  contemplated  by this  Agreement  or  seeking to
restrain or prohibit the consummation of  any part of the Reorganization)  that,
if  determined or resolved adversely to KRSI (in accordance with the plaintiff's
demands, if applicable), individually or  in the aggregate, would reasonably  be
expected to have a Material Adverse Effect on KRSI.                             

    6.12   TAXES.  KRSI has filed  all material tax returns and reports required
to be filed by it and has paid all of the Taxes required to be paid by it (other
than Taxes,  the  failure  to  pay  which would  not,  individually  or  in  the
aggregate,  have  a  Material  Adverse  Effect on  KRSI),  and  the  most recent
financial statements contained  in the  KRSI SEC Documents  reflect an  adequate
reserve  for all  material Taxes  payable by  KRSI for  all taxable  periods and
portions thereof through the date of such financial statements. No  deficiencies
for  any Taxes have been proposed, asserted or assessed against KRSI (other than
deficiencies, the  liability  for  which  would  not,  individually  or  in  the
aggregate,  have a Material Adverse Effect on KRSI), and no requests for waivers
of the time to assess any Taxes are pending. None of the assets or properties of
KRSI is subject to any tax lien (other than liens for Taxes that are not yet due
or that are being contested in good faith by appropriate proceedings) except for
liens which would not, individually or in the aggregate, have a Material Adverse
Effect on KRSI.                                                                 

    6.13  TITLE TO  ASSETS.  As  of the dates of  the respective balance  sheets
that  are part  of the KRSI  SEC Documents, KRSI  owned and will  own the assets
reflected thereon  as of  such  dates. As  of  the date  hereof  and as  of  the
Effective Time, KRSI shall hold title to its assets free and clear of all Liens,
except as described in Schedule 6.13 hereto.                                    

    6.14   LABOR  MATTERS.   KRSI is  not a  party to  any collective bargaining
agreement or other labor union contract applicable to persons employed by KRSI. 

6.15  EMPLOYEE BENEFIT PLANS.                                           

        (a) Schedule 6.15 hereto sets forth a list of all KRSI Plans. Except for
    the KRSI Plans, with respect to  all employees and former employees of  KRSI
    and all dependents and beneficiaries of such employees and former employees,
    (i)  KRSI  does  not maintain  or  contribute to  any  nonqualified deferred
    compensation or retirement plans, contracts or arrangements, (ii) KRSI  does
    not  maintain or contribute to any  qualified defined contribution plans (as
    defined in Section  3(34) of ERISA,  or Section 414(i)  of the Code),  (iii)
    KRSI  does not maintain or contribute to any qualified defined benefit plans
    (as defined in Section  3(35) of ERISA  or Section 414(j)  of the Code)  and
    (iv)  KRSI does not  maintain or contribute to  any employee welfare benefit
plans (as defined in Section 3(1) of ERISA).                            

        (b) The KRSI Plans comply in all material respects with the requirements
    of ERISA and the Code, except for such failures to comply which individually
    or in the  aggregate could  not reasonably be  expected to  have a  Material
Adverse Effect on KRSI.                                                 

        (c)  KRSI has delivered to OSP true  and complete copies of (i) all KRSI
    Plans, (ii) the most recent determination  letter, if any, received by  KRSI
    or  any of its subsidiaries from  the Internal Revenue Service regarding the
    KRSI Plans, (iii) the most recent financial statements and annual report  or
    return  for the  KRSI Plans and  (iii) the most  recently prepared actuarial
valuation reports for the KRSI Plans, if any.                           

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        (d) KRSI  does not  contribute (and  has not  ever contributed)  to  any
    multi-employer  plan, as  defined in Section  3(37) of ERISA.  KRSI does not
    have any actual or potential liabilities under Section 4201 of ERISA for any
    complete or partial  withdrawal from  a multi-employer plan.  KRSI does  not
    have  any actual or potential liability  for death or medical benefits after
    separation from employment,  other than  (i) death benefits  under the  KRSI
    Plans  (whether or not  subject to ERISA) and  (ii) health care continuation
benefits described in Section 4980B of the Code.                        

        (e) Neither KRSI nor any of its directors, officers, employees or  other
    "fiduciaries",  as  such term  is  defined in  Section  3(21) of  ERISA, has
    committed any breach  of fiduciary  responsibility imposed by  ERISA or  any
    other applicable law with respect to the KRSI Plans which would subject KRSI
    or  KRSI  Acquisition, or  any of  their  respective directors,  officers or
    employees to  any  liability  under  ERISA  or  any  applicable  law,  which
   liability would have a Material Adverse Effect on KRSI or KRSI Acquisition.

        (f)  KRSI has not incurred any liability for any tax or civil penalty or
    any disqualification of  any employee  benefit plan (as  defined in  Section
    3(3)  of ERISA) imposed by Sections 4980B and 4975 of the Code and Part 6 of
    Title I and Section 502(i) of  ERISA, which liability would have a  Material
Adverse Effect on KRSI.                                                 

    6.16   COMPLIANCE WITH LAWS.  Except  as disclosed in the KRSI SEC Documents
or on  Schedule 6.16  hereto,  KRSI (a)  is  not in  violation  of, nor  has  it
violated,  any  applicable  provisions  of  any  laws,  statutes,  ordinances or
regulations and (b) has not received any notice from any Governmental Entity  or
any  other person that KRSI is in  violation of, or has violated, any applicable
provisions of any laws, statutes, ordinances or regulations, except in the  case
of  clauses (a) and (b), for violations, individually or in the aggregate, which
have not had and  could not reasonably  be expected to  have a Material  Adverse
Effect. KRSI has all permits, licenses and franchises from Governmental Entities
required  to  conduct  its business  as  now  being conducted,  except  for such
permits, licenses and franchises the absence of which would not, individually or
in the aggregate, have a Material Adverse Effect on KRSI.                       

    6.17  BROKERS.  Except for discounts, commissions and expenses in connection
with the  Offering, no  broker, investment  banker, financial  advisor or  other
person,  other  than the  KRSI Financial  Advisor is  entitled to  any broker's,
finder's, financial advisor's or other  similar fee or commission in  connection
with  the transactions  contemplated by  this Agreement  based upon arrangements
made by  or on  behalf of  KRSI. The  fees and  expenses of  the KRSI  Financial
Advisor  will be  paid by  Global One.  KRSI has  provided OSP  with a  true and
correct copy of the fee agreement between KRSI and the KRSI Financial Advisor.  

    6.18   VOTE  REQUIRED.    The  affirmative  votes  of  the  holders  of  the
outstanding  KRSI  Shares  and  outstanding  shares  of  common  stock  of  KRSI
Acquisition to be described in the Proxy Statement are the only votes of holders
of capital  stock of  KRSI and  KRSI Acquisition  required to  approve the  KRSI
Merger, this Agreement and the transactions contemplated hereby.                

    6.19   ENVIRONMENTAL MATTERS.  KRSI  is in compliance with all Environmental
Laws, except for  any noncompliance  that, either  singly or  in the  aggregate,
would  not be reasonably likely to have  a Material Adverse Effect on KRSI. KRSI
has previously  furnished  to OSP  a  true and  correct  list of  all  Hazardous
Materials  generated, used,  handled or stored  by KRSI, the  proper disposal of
which will require any  material expenditure by KRSI.  KRSI has previously  made
available  to OSP copies of all documents concerning any environmental or health
and safety  matter adversely  affecting  KRSI and  copies of  any  environmental
audits  or risk assessments, site  assessments, documentation regarding off-site
disposal of Hazardous Materials, spill control plans and material correspondence
with any Governmental Entity regarding the foregoing.                           

    6.20  TRADEMARKS, PATENTS AND COPYRIGHTS.  KRSI owns, or possesses  adequate
licenses  or other valid rights to  use, all patents, patent rights, trademarks,
trademark rights, trade  names, trade  name rights,  copyrights, service  marks,
service   mark   rights,   trade   secrets,   applications   to   register   and

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registrations for, the  foregoing patents, trademarks,  service marks,  know-how
and  other  proprietary  rights  and information  used  in  connection  with the
business of KRSI as currently conducted, and no assertion or claim has been made
in writing challenging the validity  of any of such  rights. The conduct of  the
business  of KRSI as currently  conducted does not conflict  in any way with any
patent, patent rights,  license, trademark, trademark  right, trade name,  trade
name  right, service  mark, copyright  or other  proprietary right  of any other
person, KRSI has received no claim or threat that any such conflict exists,  and
no  litigation,  claim, suit,  action, proceeding,  or complaint  concerning the
foregoing has been filed  or is ongoing.  Except as set  forth in Schedule  6.20
hereto,  KRSI  has the  unencumbered  right to  sell  its products  and services
(whether now offered  for sale or  under development) free  from any royalty  or
other obligations to any third parties.                                         

    6.21   CONTRACTS AND OTHER AGREEMENTS.   All contracts and agreements listed
on Schedule 6.21 hereto are valid,  existing, in full force and effect,  binding
upon  KRSI and  to the best  knowledge of  KRSI, binding upon  the other parties
thereto in accordance with their terms, and KRSI has paid in full or accrued all
amounts now due from them thereunder and have satisfied in full or provided  for
all  of its liabilities and obligations  thereunder which are presently required
to be satisfied or provided for, and is  not in default under any of them,  nor,
to  the best knowledge of KRSI, is any other party to any such contract or other
agreement in default thereunder, nor does  any condition exist that with  notice
or  lapse of time or  both would constitute a  default thereunder. Schedule 6.21
hereto sets forth  a list  of the following  contracts and  other agreements  to
which KRSI is a party or by or to which it or its assets or properties are bound
or subject:                                                                     

        (a)  any agreement that individually  requires aggregate expenditures by
KRSI in any one year of more than $50,000;                              

        (b) any indenture, trust agreement, loan agreement or note that involves
    or  evidences  outstanding  indebtedness,  obligations  or  liabilities  for
borrowed money in excess of $50,000;                                    

        (c) any lease, sublease, installment purchase or similar arrangement for
    the  purchase,  use  or occupancy  of  real  or personal  property  (i) that
    individually requires aggregate expenditures by KRSI in any one year of more
    than $50,000, or  (ii) pursuant  to which  KRSI is  the lessor  of any  real
    property  which has rentals over $50,000 per year, together with the date of
    termination of  such leases,  the name  of the  other party  and the  annual
rental payments required to be made under such leases;                  

        (d)  any agreement of  surety, guarantee or  indemnification, other than
    (i) an  agreement  in  the  ordinary course  of  business  with  respect  to
    obligations  in an amount not in  excess of $50,000, or (ii) indemnification
provisions contained in leases not otherwise required to be disclosed;  

        (e) any agreement,  including without  limitation employment  agreements
    and bonus plans, relating to the compensation of, or obligating KRSI to make
    payments  (whether such payments are fixed  in amount or contingent) to, (i)
    officers, (ii)  employees, (iii)  former  employees, (iv)  consultants,  (v)
advisors or (vi) any person who was promised such payments;             

        (f)  any agreement  containing covenants of  KRSI not to  compete in any
    line of business, in any geographic area or with any person or covenants  of
  any other person not to compete with KRSI in any line of business of KRSI.

        (g)  any agreement granting  or restricting the  right of KRSI  to use a
trade name, trade mark or logo;                                         

        (h)  any  agreement  with  any  customer  or  supplier  that  cannot  be
    terminated  without penalty in excess of $10,000 by KRSI within ninety days;
and                                                                     

(i) any franchise, licensing or development agreement.          

True and complete copies of all of the contracts and other agreements set  forth
in  Schedule  6.21  hereto (or  required  to  be set  forth  therein)  have been
previously provided to OSP.                                                     

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    6.22  INSURANCE.  Schedule 6.22 attached hereto contains a complete  listing
of all policies of insurance maintained by KRSI as of the date hereof and at all
times  during the twenty-four month  period ending on the  date hereof. All such
policies of insurance are in full force and effect, and true and correct  copies
of all such policies of insurance have been previously provided to OSP.         

    6.23    DISCLOSURE.   To  the best  knowledge  of KRSI,  all  material facts
relating  to   the  business,   operations,  properties,   assets,   liabilities
(contingent  or otherwise), and financial condition of KRSI and its subsidiaries
have been  disclosed  to  OSP in  or  in  connection with  this  Agreement.  The
representations, warranties and statements made by KRSI in this Agreement and in
the  certificates delivered pursuant hereto do  not contain any untrue statement
of a material fact, and, when taken together, do not omit to state any  material
fact necessary to make such representations, warranties and statements, in light
of the circumstances under which they are made, not misleading.                 

ARTICLE VII --COVENANTS RELATING TO CONDUCT OF BUSINESS 

    7.1   CONDUCT OF BUSINESS BY GLOBAL ONE  AND OSP.  Except as contemplated by
this Agreement  and except  for an  agreement dated  May 10,  1996 entered  into
between  OSP and Tamarix Capital Corporation and an agreement dated May 10, 1996
entered into between OSP  and Mark D.  Hauser, or as  described in Schedule  7.1
attached  hereto, from the date hereof until the Effective Time, Global One, OSP
and their respective subsidiaries shall  conduct their respective businesses  in
the  ordinary  course consistent  with past  practice and  shall use  their best
efforts to preserve intact their  business organizations and relationships  with
third  parties and to keep available the  services of their present officers and
employees. Without limiting the generality of the foregoing, except as  provided
in  this Agreement  or Schedule  7.1, from the  date hereof  until the Effective
Time, neither Global One, OSP nor any of their respective subsidiaries will, and
the OSP  Shareholders  will not  permit  Global  One, OSP  or  their  respective
subsidiaries to, without the prior written approval of KRSI:                    

        (a)  amend the certificates of incorporation or by-laws of Global One or
    the Acquisition Companies, or  the articles of  incorporation or by-laws  of
OSP or BEx;                                                             

        (b)  declare,  set aside  or pay  any  dividends on,  or make  any other
    distributions (whether  in  cash, stock  or  property) in  respect  of,  any
    capital  stock of Global One,  OSP or any of  their subsidiaries, except for
    distributions required for the payment of Angard's and Malm's respective tax
    liabilities for the  year ended December  31, 1995 and  for the period  from
    January  1, 1996  through the Closing  computed in a  manner consistent with
past practices;                                                         

        (c) acquire or agree to acquire (i) by merging or consolidating with, or
    by purchasing  a substantial  portion of  the  assets of,  or by  any  other
    manner,  any portion of the assets of,  or by any other manner, any business
    or  any  corporation,  partnership,  joint  venture,  association  or  other
    business  organization or division thereof except  in the ordinary course of
    business consistent with past practice or (ii) any assets that are material,
    individually or  in  the  aggregate,  to Global  One,  OSP  or  BEx,  except
    purchases  of inventory in  the ordinary course  of business consistent with
past practice;                                                          

        (d) sell, lease, license, mortgage  or otherwise encumber or subject  to
    any  Lien or otherwise dispose of any of its properties or assets, except in
    the ordinary course of business consistent  with past practice. As has  been
    previously  disclosed to KRSI, discussions are ongoing with Stanley DeSantis
    regarding the ownership of Stanley DeSantis Inc. Common Stock. If and to the
    extent that OSP proposes to enter into an agreement that would result in any
    change in the ownership of Stanley  DeSantis Inc. Common Stock prior to  the
    Effective  Time, OSP  will so  advise KRSI. Any  such agreement  will not be
    entered into  without  KRSI's prior  written  consent, which  shall  not  be
unreasonably withheld;                                                  

        (e) (i)  incur any indebtedness for borrowed money or guarantee any such
    indebtedness  of  another  person,  issue or  sell  any  debt  securities or
    warrants or other rights to acquire  any debt securities of Global One,  OSP
    or  any  of  their  respective  subsidiaries,  or  any  of  their respective

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    securities, guarantee any debt securities of another person, enter into  any
    "keep well" or other agreement to maintain any financial statement condition
    of  another person or enter into  any arrangement having the economic effect
    of any of the  foregoing, except for short-term  borrowings incurred in  the
    ordinary  course of business consistent with past practice, or (ii) make any
    loans, advances or capital  contributions to, or  investments in, any  other
    person,  other than (A) Global One, OSP or BEx, or (B) advances to employees
in accordance with past practice;                                       

        (f) make or agree  to make any new  capital expenditure or  expenditures
    which,  individually, is in excess  of $50,000 or, in  the aggregate, are in
excess of $100,000;                                                     

        (g) make any material tax election or settle or compromise any  material
tax liability;                                                          

        (h)  pay,  discharge,  settle  or  satisfy  any  claims,  liabilities or
    obligations  (absolute,  accrued,  asserted  or  unasserted,  contingent  or
    otherwise),  other than the payment,  discharge, settlement or satisfaction,
    in the  ordinary course  of business  consistent with  past practice  or  in
    accordance  with their terms,  of liabilities reflected  or reserved against
    in, or contemplated by, the most recent OSP Financial Statements or incurred
    in the ordinary course of business  consistent with past practice, or  waive
    any  material benefits of, or  agree to modify in  any material respect, any
    confidentiality, standstill or similar agreements  to which Global One,  OSP
or any of their respective subsidiaries is a party;                     

        (i)  except  in  the  ordinary  course  of  business,  modify,  amend or
    terminate any material contract or agreement to which Global One, OSP or any
    of their respective subsidiaries is a party or waive, release or assign  any
material rights or claims;                                              

        (j)      enter   into  any   contracts,   agreements,   arrangements  or
    understandings relating  to the  distribution, sale  or marketing  by  third
    parties  of any products of, or products licensed by, Global One, OSP or any
    of their respective subsidiaries, except in the ordinary course of  business
consistent with past practice;                                          

        (k)  except as required to comply  with applicable law, (i) adopt, enter
    into, terminate or  amend any bonus,  profit sharing, thrift,  compensation,
    stock  option, restricted stock,  pension, retirement, deferred compensation
    or other plan, trust arrangement or fund  for the benefit or welfare of  any
    director, officer or current or former employee, (ii) increase in any manner
    the  compensation or fringe benefits of, or  pay any bonus to, any director,
    officer or employee (except for normal increases or bonuses in the  ordinary
    course of business consistent with past practice), (iii) pay any benefit not
    provided  for under an  OSP Plan, (iv)  except as permitted  in clause (ii),
    grant  any  awards  under  any   bonus,  incentive,  performance  or   other
    compensation  plan or arrangement or OSP  Plan (including the grant of stock
    options, stock appreciation  rights, stock  based or  stock related  awards,
    performance   units  or  restricted  stock,   or  the  removal  of  existing
    restrictions in any OSP Plans or agreement or awards made thereunder) or (v)
    take any  action  to  fund  or  in any  other  way  secure  the  payment  of
    compensation  or benefits  under any  employee plan,  agreement, contract or
arrangement or OSP Plan;                                                

        (l) make any change in any  method of accounting or accounting  practice
    or  policy  other  than  those  required  by  generally  accepted accounting
principles; or                                                          

        (m) authorize any of, or commit or  agree to take any of, the  foregoing
actions.                                                                

    7.2   CONDUCT OF BUSINESS BY KRSI.  Except as contemplated by this Agreement
or as described in Schedule 7.2 attached hereto, from the date hereof until  the
Effective  Time,  KRSI  shall  conduct  its  business  in  the  ordinary  course
consistent with past practice and shall use its best efforts to preserve  intact
its  business organizations  and relationships  with third  parties and  to keep
available the services of its  present officers and employees. Without  limiting
the  generality of  the foregoing,  except as provided  in this  Agreement or in
Schedule 7.2, from  the date  hereof until the  Effective Time,  KRSI will  not,
without the prior written approval of Global One:                               

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        (a)  amend its  articles of  incorporation, by-laws  or other comparable
charter or organizational documents;                                    

        (b) declare,  set aside  or pay  any  dividends on,  or make  any  other
    distributions  (whether in cash, stock or  property) in respect of, any KRSI
Common Stock;                                                           

        (c) acquire or agree to acquire (i) by merging or consolidating with, or
    by purchasing  a substantial  portion of  the  assets of,  or by  any  other
    manner,  any portion of the assets of,  or by any other manner, any business
    or  any  corporation,  partnership,  joint  venture,  association  or  other
    business  organization or division thereof except  in the ordinary course of
    business consistent with past practice or (ii) any assets that are material,
    individually or in the aggregate, to KRSI, except purchases of inventory  in
the ordinary course of business consistent with past practice;          

        (d)  sell, lease, license, mortgage or  otherwise encumber or subject to
    any Lien or otherwise dispose of any of its properties or assets, except  in
the ordinary course of business consistent with past practice;          

        (e) (i)  incur any indebtedness for borrowed money or guarantee any such
    indebtedness  of  another  person,  issue or  sell  any  debt  securities or
    warrants or other rights to  acquire any debt securities  of KRSI or any  of
    its  securities, guarantee any debt securities of another person, enter into
    any "keep  well" or  other  agreement to  maintain any  financial  statement
    condition  of  another  person  or enter  into  any  arrangement  having the
    economic effect of any  of the foregoing,  except for short-term  borrowings
    incurred  in the ordinary course of  business consistent with past practice,
    or (ii) make any loans, advances or capital contributions to, or investments
    in, any other person, other than (A) to KRSI or (B) advances to employees in
accordance with past practice;                                          

        (f) make or agree  to make any new  capital expenditure or  expenditures
    which,  individually, is in excess  of $50,000 or, in  the aggregate, are in
excess of $100,000;                                                     

        (g) make any material tax election or settle or compromise any  material
tax liability;                                                          

        (h)  pay,  discharge,  settle  or  satisfy  any  claims,  liabilities or
    obligations  (absolute,  accrued,  asserted  or  unasserted,  contingent  or
    otherwise),  other than the payment,  discharge, settlement or satisfaction,
    in the  ordinary course  of business  consistent with  past practice  or  in
    accordance  with their terms,  of liabilities reflected  or reserved against
    in, or contemplated by, the most recent balance sheet contained in the  KRSI
    SEC Documents or incurred in the ordinary course of business consistent with
    past  practice, or waive any material benefits of, or agree to modify in any
    material respect, any confidentiality,  standstill or similar agreements  to
which KRSI is a party;                                                  

        (i)  except  in  the  ordinary  course  of  business,  modify,  amend or
    terminate any material  contract or agreement  to which KRSI  or any of  its
    subsidiaries  is a party or waive, release  or assign any material rights or
claims;                                                                 

        (j)     enter   into   any  contracts,   agreements,   arrangements   or
    understandings  relating  to the  distribution, sale  or marketing  by third
    parties of KRSI's or any of its subsidiaries' products or products  licensed
    by  KRSI  except in  the ordinary  course of  business consistent  with past
practice;                                                               

        (k) except as required to comply  with applicable law, (i) adopt,  enter
    into,  terminate or amend  any bonus, profit  sharing, thrift, compensation,
    stock option, restricted stock,  pension, retirement, deferred  compensation
    or  other plan, trust arrangement or fund  for the benefit or welfare of any
    director, officer or current or former employee, (ii) increase in any manner
    the compensation or fringe benefits of,  or pay any bonus to, any  director,
    officer  or employee (except for normal increases or bonuses in the ordinary
    course of business consistent with past practice), (iii) pay any benefit not
    provided for under  a KRSI Plan,  (iv) except as  permitted in clause  (ii),
    grant   any  awards  under  any   bonus,  incentive,  performance  or  other
    compensation plan or arrangement or KRSI Plan (including the grant of  stock
    options,  stock appreciation  rights, stock  based or  stock related awards,
    performance  units  or  restricted  stock,   or  the  removal  of   existing

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    restrictions  in any KRSI  Plans or agreement or  awards made thereunder) or
    (v) take  any action  to fund  or in  any other  way secure  the payment  of
    compensation  or benefits  under any  employee plan,  agreement, contract or
arrangement or KRSI Plan;                                               

        (l) make any change in any  method of accounting or accounting  practice
    or  policy  other  than  those  required  by  generally  accepted accounting
principles; or                                                          

        (m) authorize any of, or commit or  agree to take any of, the  foregoing
actions.                                                                

    7.3   OTHER ACTION.  Global One, OSP, BEx and KRSI shall not, and Global One
and OSP  shall not  permit any  of their  respective subsidiaries  to, take  any
action that would, or that could reasonably be expected to, result in (i) any of
the  representations and  warranties of such  party set forth  in this Agreement
that  are  qualified  as  to  materiality  becoming  untrue,  (ii)  any  of  the
representations  and warranties that are not so qualified becoming untrue in any
material respect or (iii) any of the conditions to the Mergers and  consummation
of the transactions contemplated by this Agreement set forth in Article IX below
not  being  satisfied  (subject  to KRSI's  right  to  take  action specifically
permitted by Section 7.4 below).                                                

    7.4  NO SOLICITATION OF TRANSACTIONS.  Global One, OSP, BEx and KRSI  shall,
and  shall each direct and use  their respective commercially reasonable efforts
to  cause   their  respective   officers,  directors,   employees,  agents   and
representatives  (including, without limitation, any investment banker, attorney
or accountant retained by it) not  to initiate, solicit or knowingly  encourage,
directly or indirectly (including by way of furnishing non-public information or
assistance),  or take any other action to facilitate knowingly, any inquiries or
the making of any  proposal that constitutes, or  may reasonably be expected  to
lead  to, any  Competing Transaction, or  enter into or  continue discussions or
negotiations with any person  or entity in furtherance  of such inquiries or  to
obtain   a  Competing  Transaction,  or  agree   to  or  endorse  any  Competing
Transaction, or  authorize  any  of  their  respective  officers,  directors  or
employees  or any investment banker,  financial advisor, attorney, accountant or
other representative retained by them to  take any such action, and Global  One,
OSP,  BEx and KRSI shall  notify each other of  all inquiries or proposals which
such party may receive relating  to any of such matters  and if such inquiry  or
proposal  is in writing, shall deliver to the other party a copy of such inquiry
or proposal; provided, however, that nothing contained in this Section 7.4 shall
prohibit the Board of Directors of  KRSI from (i) furnishing information to,  or
entering  into discussions or negotiations with, any person or entity that makes
an unsolicited,  bona  fide proposal  to  acquire  KRSI pursuant  to  a  merger,
consolidation, share exchange, business combination, tender or exchange offer or
other  similar transaction or to acquire a  substantial portion of the assets of
KRSI if,  and only  to the  extent  that, (A)  the Board  of Directors  of  KRSI
determines,  which determination  is supported by  a written  legal opinion from
counsel for KRSI reasonably acceptable to OSP, in good faith that such action is
necessary for the Board of Directors of KRSI to comply with its fiduciary duties
to the shareholders  of KRSI under  applicable law and  (B) prior to  furnishing
such  information to,  or entering into  discussions or  negotiations with, such
person or entity, KRSI (1) provides written notice to OSP to the effect that  it
is furnishing information to, or entering into discussions or negotiations with,
such  person or  entity, (2)  receives from  such person  or entity  an executed
agreement to  the  effect that  such  person or  entity  will not  disclose  any
confidential   information  of  KRSI  and  (3)  subject  to  the  terms  of  any
confidentiality agreement to which KRSI is a party on the date hereof, keeps OSP
informed of  the  status  (but  not  the  terms)  of  any  such  discussions  or
negotiations,  (ii) complying with Rule 14e-2 promulgated under the Exchange Act
with regard  to  a  tender  or  exchange offer  or  (iii)  failing  to  make  or
withdrawing  or modifying its recommendation referred to in Section 8.1(b) below
following the  making of  a  proposal that  constitutes,  or may  reasonably  be
expected  to lead to, a Competing Transaction  if the Board of Directors of KRSI
determines, which determination  is supported  by a written  legal opinion  from
counsel for KRSI reasonably acceptable to OSP, in good faith that such action is
necessary for the Board of Directors of KRSI to comply with its fiduciary duties
to the shareholders of KRSI under applicable law. In the event that the Board of
Directors  of KRSI fails to make or  withdraws its recommendation referred to in
Section 8.1(b) below and KRSI enters into an agreement to consummate a Competing
Transaction within one year after such failure                                  

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or withdrawal, KRSI shall upon the earlier of the consummation of such Competing
Transaction or the termination of such binding agreement pay to OSP $500,000  in
cash.  Any  amounts paid  to  OSP by  the Escrow  Agent  pursuant to  the Escrow
Agreement shall reduce the amount of the payment to be made by KRSI to OSP under
the preceding sentence.                                                         

ARTICLE VIII -- ADDITIONAL AGREEMENTS 

    8.1    PREPARATION  OF  REGISTRATION  STATEMENT  AND  THE  PROXY  STATEMENT;
SHAREHOLDERS' MEETING.                                                          
        (a)  As soon  as practicable following  the date of  this Agreement, (i)
    KRSI shall prepare and file with the SEC the Proxy Statement relating to the
    approval by the holders  of KRSI Common  Stock of the  KRSI Merger and  this
    Agreement  and  (ii) Global  One shall  prepare  and file  with the  SEC the
    Registration Statement for the purpose  of registering the shares of  Global
    One  Common  Stock to  be  issued in  the KRSI  Merger,  in which  the Proxy
    Statement will be included as a prospectus. The parties hereto shall provide
    to each other all information reasonably  requested by the Other Parties  in
    order  to permit  the Other  Parties to comply  with the  provisions of this
    Section 8.1.  Each  of  Global  One and  KRSI  shall  use  all  commercially
    reasonable  efforts to  have the  Registration Statement  declared effective
    under the Securities Act as promptly as practicable after such filing.  KRSI
    will use its commercially reasonable efforts to cause the Proxy Statement to
    be  mailed to the shareholders of KRSI  as promptly as practicable after the
Registration Statement is declared effective under the Securities Act.  

        (b) KRSI  will,  as soon  as  practicable  following the  date  of  this
    Agreement,  establish a  record date (which  will be as  soon as practicable
    following the  date of  this  Agreement) for,  duly  call, give  notice  of,
    convene and hold the Shareholders' Meeting; provided, however, that KRSI may
    postpone or adjourn the Shareholders' Meeting to a date no later than August
    31, 1996, in order to facilitate the satisfaction of the condition set forth
    in  Section  9.1(a)  below.  KRSI  will,  through  its  Board  of Directors,
    recommend  to  its  shareholders  approval  of  the  KRSI  Merger  and  this
    Agreement,  except to the extent  that the Board of  Directors of KRSI shall
    have withdrawn or modified its approval or recommendation of the KRSI Merger
and this Agreement as permitted by Section 7.4 above.                   

    8.2  INFORMATION SUPPLIED BY GLOBAL ONE  AND OSP.  Global One, OSP and  BEx,
jointly  and  severally,  warrant and  represent  that none  of  the information
supplied or  to be  supplied  by Global  One, OSP  or  any of  their  respective
subsidiaries  specifically for  inclusion or  incorporation by  reference in the
Registration Statement or  Proxy Statement  will, at the  time the  Registration
Statement or Proxy Statement is filed with the SEC, at any time it is amended or
supplemented  and at  the time  it becomes  effective under  the Securities Act,
contain any untrue statement of  a material fact or  omit to state any  material
fact  required to be stated therein or necessary to make the statements therein,
in light of the circumstances under which they are made, not misleading.        

    8.3  INFORMATION SUPPLIED BY KRSI.   KRSI warrants and represents that  none
of the information supplied or to be supplied by KRSI specifically for inclusion
or  incorporation by reference in the  Registration Statement or Proxy Statement
will, at the time  the Registration Statement or  Proxy Statement is filed  with
the  SEC, at any time it  is amended or supplemented and  at the time it becomes
effective under the Securities Act, contain  any untrue statement of a  material
fact  or  omit to  state  any material  fact required  to  be stated  therein or
necessary to make the  statements therein, in light  of the circumstances  under
which they are made, not misleading.                                            

    8.4   ACCESS TO  INFORMATION.  Subject  to Section 8.5  below, from the date
hereof to  the  Effective Time,  KRSI,  Global  One, OSP  and  their  respective
subsidiaries  shall each  provide to  the others  access to  all information and
documents which the other may reasonably request regarding the business, assets,
liabilities, employees and other aspects of the other party and their respective
subsidiaries, other than the  information and documents that  in the opinion  of
such other party's legal counsel may not be disclosed under applicable law.     

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    8.5   CONFIDENTIALITY.   None of the parties  hereto shall release, publish,
reveal or disclose, directly  or indirectly, any Evaluation  Material of any  of
the  Other Parties,  except (a) to  such of its  directors, officers, employees,
financial advisors,  legal counsel,  accountants or  other agents,  advisors  or
representatives  as shall require access thereto on a need-to-know basis for the
purpose of the transactions contemplated  by this Agreement, including,  without
limitation,  for purposes of  providing information to  prospective investors in
the Offering, so long as such persons are informed by the revealing party of the
confidential nature of  such information and  are directed by  it to treat  such
information  confidentially,  (b)  to  such  third  parties  as  are  reasonably
necessary to  obtain  the  consents  and approvals  from  such  parties  to  the
transactions  contemplated by this  Agreement so long as  such third parties are
informed by the revealing party of  the confidential nature of such  information
and  are directed by it  to treat such information  confidentially, and (c) with
the prior  written consent  of the  Other Party,  and then  only to  the  extent
specified  in such consent. The parties agree to take all reasonable precautions
to safeguard the confidentiality of the Evaluation Material. None of the parties
hereto shall  make,  or  permit  to  be  made,  except  in  furtherance  of  the
transactions  contemplated by this Agreement, any copies, abstracts or summaries
of the Evaluation Material of any  of the Other Parties and their  subsidiaries.
In  addition, all such Evaluation Material shall be used solely for the purposes
of the  investigations contemplated  by  Section 8.4  above,  and shall  not  be
otherwise  used to the  detriment of any  Other Party or  its subsidiaries or in
competition with  any  Other Party  or  its subsidiaries.  The  restrictions  on
disclosure  of information contained  in this Section  8.5 do not  extend to any
item of information that (i)  is publicly known at  the time of its  disclosure,
(ii)  is  lawfully received  from  a third  party  not bound  in  a confidential
relationship to  any Other  Party or  its subsidiaries,  (iii) is  published  or
otherwise  made known to the public by any Other Party or its subsidiaries, (iv)
was generated  independently before  its receipt  from any  Other Party  or  its
subsidiaries or (v) is required to be disclosed pursuant to a governmental order
or  decree  or other  legal  requirement to  produce  or disclose  such  item of
information, provided that upon receiving notice  that any such order or  decree
is  being  sought  or  that  any  such  legal  requirement  is  applicable, such
corporation shall  promptly  give the  Other  Parties notice  thereof  and  such
corporation  shall cooperate with the Other Parties' efforts, if any, to contest
the issuance  of  such  order  or  decree  or  the  application  of  such  legal
requirement.  Upon  written  request,  the parties  shall  return  all writings,
documents and materials containing Evaluation Material. Each of Global One,  OSP
and  KRSI understand that the Other Parties  will not have an adequate remedy at
law for a  breach or  threatened breach  by the revealing  party or  any of  its
subsidiaries  of the terms  of this Section 8.5,  and each corporation therefore
agrees that if there is  any such breach or  threatened breach, any Other  Party
may,  in addition  to any  other legal  or equitable  remedies available  to it,
obtain an injunction or restraining order to enjoin the Other Parties or any  of
their subsidiaries from the breach or threatened breach of this Section 8.5.    

    8.6  PUBLIC ANNOUNCEMENTS.  OSP and KRSI will consult with the Other Parties
before  issuing any press release or making any public statement with respect to
this Agreement and the  transactions contemplated hereby and,  except as may  be
required by applicable law or any listing agreement with any national securities
exchange,  will  not  issue any  such  press  release or  make  any  such public
statement prior to such consultation.                                           

8.7  APPROPRIATE ACTION; CONSENTS; FILINGS.                             

        (a) Global One, OSP, BEx, the OSP Shareholders and KRSI shall use  their
    respective  best efforts to (i) take, or  cause to be taken, all appropriate
    action, and  do,  or cause  to  be done,  all  things necessary,  proper  or
    advisable  under applicable law or required  to be taken by any Governmental
    Entity or otherwise  to consummate the  Reorganization and the  transactions
    contemplated  by this Agreement as promptly as practicable, (ii) obtain from
    any  Governmental  Entities  any   consents,  licenses,  permits,   waivers,
    approvals,  authorizations  or orders  required to  be  obtained or  made by
    Global One, OSP, any of their respective subsidiaries or KRSI in  connection
    with  the authorization,  execution and delivery  of this  Agreement and the
    consummation of the transactions contemplated hereby, and (iii) as  promptly
as practicable, make all necessary filings,                             

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    and  thereafter make  any other required  submissions, with  respect to this
    Agreement and the Reorganization required under (A) the Securities Act,  the
    Exchange  Act and any other applicable  federal or state securities laws and
    (B) any other applicable  law; provided that Global  One, OSP, BEx and  KRSI
    shall  cooperate with each other  in connection with the  making of all such
    filings, including  providing copies  of  all such  documents to  the  Other
    Parties  and their advisors prior to filing and, if requested, to accept all
    reasonable  additions,  deletions   or  changes   suggested  in   connection
    therewith.  Global One,  OSP, BEx and  KRSI shall use  their reasonable best
    efforts to furnish  to the Other  Parties all information  required for  any
    application or other filing to be made pursuant to the rules and regulations
    of  any applicable law (including all information required to be included in
    the Registration Statement and the  Proxy Statement) in connection with  the
transactions contemplated by the Reorganization and this Agreement.     

        (b)  (i) Global One,  OSP, their respective  subsidiaries and KRSI shall
    give any notices to third parties, and use their reasonable best efforts  to
    obtain   any  third  party   consents,  (A)  necessary   to  consummate  the
    Reorganization and  the transactions  contemplated  by this  Agreement,  (B)
    disclosed  or required to be disclosed in the schedules to this Agreement or
    (C) required to  prevent a  Material Adverse Effect  on Global  One, OSP  or
KRSI.                                                                   

        (ii) In the event that Global One, OSP, their respective subsidiaries or
    KRSI  shall fail to  obtain any third party  consent described in subsection
    (b)(i) above,  Global One,  OSP or  KRSI, as  appropriate, shall  use  their
    reasonable  best  efforts,  and  shall  take  any  such  actions  reasonably
    requested by the  Other Parties, to  minimize any adverse  effect on  Global
    One,  OSP,  their respective  subsidiaries  and KRSI,  and  their respective
    businesses, resulting, or which could reasonably be expected to result after
the Effective Time, from the failure to obtain any such consent.        

        (c) From the  date of this  Agreement until the  Effective Time,  Global
    One,  OSP  and KRSI  shall each  promptly  notify the  Other Parties  of any
    pending or, to the knowledge of such party, threatened action, proceeding or
    investigation by any Governmental Entity or any other person (i) challenging
    or seeking material  damages in  connection with the  Reorganization or  the
    transactions  contemplated by this Agreement or  (ii) seeking to restrain or
    prohibit the consummation of the Reorganization or otherwise limit the right
    of KRSI or, to the knowledge of such first party, any subsidiary of KRSI  to
    own  or operate all or any portion of the businesses or assets of OSP, which
    in either case  is reasonably likely  to have a  Material Adverse Effect  on
KRSI.                                                                   

        (d)  Each party shall execute and deliver  on and after the execution of
    this Agreement such further  documents and instruments  and take such  other
    actions  as  the  Other  Parties may  reasonably  request  to  implement and
   effectuate the purposes of and transactions contemplated by this Agreement.

    8.8  STATE STATUTES.  If any State Takeover Laws shall become applicable  to
the  transactions contemplated  by this Agreement,  each of Global  One, OSP and
KRSI, as the case  may be, and  their respective Boards  of Directors shall  use
their  reasonable best efforts to grant such  approvals and take such actions as
are necessary so  that the transactions  contemplated by this  Agreement may  be
consummated  as  promptly  as  practicable on  the  terms  contemplated  by this
Agreement and otherwise to  minimize the effects of  such State Takeover Law  on
the  transactions contemplated by this Agreement.  Nothing herein shall limit or
affect KRSI in taking actions specifically permitted by Section 7.4 above.      

8.9  DIRECTORS' AND OFFICERS' INDEMNIFICATION AND INSURANCE.            

        (a) Prior  to  the  Effective  Time, KRSI  shall  use  its  commercially
    reasonable  efforts to obtain directors' and officers' insurance coverage in
    form and substance reasonably  acceptable to OSP,  the OSP Shareholders  and
    Global  One to provide for coverage of the directors and officers of OSP and
    Global  One  with  respect  to  claims  that  may  be  asserted  by   KRSI's
    shareholders  or  creditors  arising  in  connection  with  the transactions
contemplated by this Agreement.                                         

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        (b) The parties hereto shall use their respective best efforts to  cause
    Global  One to  keep in  effect provisions  in its  by-laws with  respect to
    exculpation of director  and officer  liability and  indemnification to  the
    fullest  extent  permitted under  the DGCL,  which  provisions shall  not be
    amended, repealed or otherwise modified except as required by applicable law
    or  except  to  make  changes  permitted  by  law  that  would  enlarge  the
    exculpation  or  rights  of  indemnification  thereunder.  In  addition, the
    parties hereby acknowledge and agree that Global One will obtain  directors'
    and  officers' insurance for  the directors and officers  of Global One that
    will provide for  a minimum  of $5 million  of coverage  for any  individual
claim.                                                                  

        (c)  At the Effective Time, Global  One shall enter into indemnification
    agreements in form and  substance reasonably satisfactory  to KRSI, OSP  and
    their  respective officers and directors with  each person who is a director
    and officer of KRSI or OSP immediately  prior to the Effective Time for  the
    purpose  of indemnifying such persons to  the fullest extent permitted under
the DGCL.                                                               

        (d) Global  One  shall  reimburse  all  expenses,  including  reasonable
    attorneys'  fees, incurred by  any person required  to enforce the indemnity
    and other obligations of Global One under this Section 8.9 if such person is
    entitled  to   reimbursements   under  the   by-laws,   the  DGCL   or   any
indemnification agreement.                                              

        (e) The directors and officers referred to in Section 8.9(c) above shall
    be  third party beneficiaries of this Section 8.9, and the rights under this
    Section 8.9 shall be  in addition to any  other rights under Minnesota  law,
    Delaware  law or otherwise. In addition,  the directors and officers of KRSI
    referred to in Section  8.9(c) above shall be  third party beneficiaries  of
    the representations, warranties and covenants of Global One, OSP and the OSP
    Shareholders  made  in this  Agreement, and  the  directors and  officers of
    Global One and OSP referred to in Section 8.9(c) above shall be third  party
    beneficiaries  of the representations, warranties and covenants of KRSI made
    in this Agreement. This  Section 8.9 shall survive  the consummation of  the
Mergers and the Reorganization.                                         

8.10  ESCROW PAYMENTS.                                                  

        (a)  KRSI  has delivered  to the  Escrow  Agent the  sum of  one hundred
thousand dollars ($100,000) to be held pursuant to the Escrow Agreement.

        (b) Promptly after the date of  execution of this Agreement, but in  any
    event  prior to the Shareholders' Meeting,  KRSI shall deliver to the Escrow
 Agent an additional sum of one hundred fifty thousand dollars ($150,000).

    8.11   EMPLOYMENT  CONTRACTS.    The  parties  shall  use  their  respective
reasonable  best efforts to cause Global  One to enter into employment contracts
to be effective as of the Effective Time with George J. Vrabeck, Angard and Malm
in substantially the form attached hereto as Exhibits 8.11-1, 8.11-2 and 8.11-3,
respectively.                                                                   

8.12  INDEMNIFICATION.                                                  

        (a)  INDEMNIFICATION BY GLOBAL ONE AND OSP.  Subject to the  limitations
    set  forth  in  Section  8.12(b)  below, Global  One  and  OSP,  jointly and
    severally, shall indemnify  and hold  KRSI harmless  at all  times from  and
    after  the date  of this  Agreement against and  in respect  of all damages,
    losses, costs and expenses (including  reasonable attorney fees) which  KRSI
    may  suffer or incur in connection with any material breach by Global One or
    OSP of any of their  respective representations, warranties or covenants  in
this Agreement.                                                         

        (b)   LIMITATION  OF LIABILITY OF  GLOBAL ONE  AND OSP.   KRSI shall not
    assert any claim under  Section 8.12(a) above unless  and until such  claims
    exceed  an aggregate  of $50,000 and  any claim under  Section 8.12(a) above
    must  be  asserted  within   one  year  from  the   Effective  Time  or   be

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    forever  barred. The rights of KRSI with respect to any claims arising under
    Section 8.12(a) above shall be limited  to recovery of actual losses,  costs
and expenses (including reasonable attorney fees).                      

        (c)     INDEMNIFICATION  BY  THE  OSP  SHAREHOLDERS.    Subject  to  the
    limitations set  forth  in  Section 8.12(d)  below,  the  OSP  Shareholders,
    jointly  and severally, shall indemnify and  hold KRSI harmless at all times
    from and after  the date of  this Agreement  against and in  respect of  all
    damages,  losses, costs  and expenses  (including reasonable  attorney fees)
    which KRSI may suffer or incur in connection with any material breach by the
    OSP Shareholders of any of  their respective representations, warranties  or
covenants in this Agreement.                                            

        (d)   LIMITATION OF LIABILITY  OF THE OSP SHAREHOLDERS.   KRSI shall not
    assert any claim under  Section 8.12(c) above unless  and until such  claims
    exceed  an aggregate  of $50,000 and  any claim under  Section 8.12(c) above
    must be  asserted within  one year  from the  Effective Time  or be  forever
    barred.  The rights of KRSI with respect to any claims arising under Section
    8.12(c) above  shall be  limited to  recovery of  actual losses,  costs  and
expenses (including reasonable attorney fees).                          

        (e)   INDEMNIFICATION BY KRSI.  Subject  to the limitations set forth in
    Section 8.12(f) below, KRSI shall indemnify and hold Global One, OSP and the
    OSP Shareholders  harmless at  all times  from and  after the  date of  this
    Agreement, against and in respect of all losses, damages, costs and expenses
    (including  reasonable  attorney  fees) which  Global  One, OSP  or  the OSP
    Shareholders may suffer or incur in  connection with any material breach  by
    KRSI  of  any  of  its  representations,  warranties  or  covenants  in this
Agreement.                                                              

        (f)  LIMITATION  OF LIABILITY  OF KRSI.   Global  One, OSP  and the  OSP
    Shareholders  shall not assert any claim  under Section 8.12(e) above unless
    and until such  claims exceed an  aggregate of $50,000  and any claim  under
    Section  8.12(e) above must  be asserted within one  year from the Effective
    Time or  be forever  barred.  The rights  of Global  One,  OSP and  the  OSP
    Shareholders  with respect to any claims arising under Section 8.12(e) above
    shall be limited to recovery of actual losses, costs and expenses (including
reasonable attorney fees).                                              

        (g)  THIRD PARTY CLAIMS.   If a claim by  a third party is made  against
    any  of  the indemnified  parties,  and if  any  of the  indemnified parties
    intends to seek  indemnity with  respect to  such claim  under this  Section
    8.12, such indemnified party shall promptly notify the indemnifying party of
    such claim. The indemnifying party shall have thirty (30) days after receipt
    of  the above-mentioned  notice to  undertake, conduct  and control, through
    counsel of  such  party's  own  choosing (subject  to  the  consent  of  the
    indemnified party, such consent not to be unreasonably withheld) and at such
    party's  expense, the settlement or defense of it, and the indemnified party
    shall cooperate with the indemnifying party in connection with such efforts;
    provided that: (i) the indemnifying party shall not by this Agreement permit
    to exist any lien, encumbrance or other adverse charge upon any asset of any
    indemnified party, (ii) the indemnifying party shall permit the  indemnified
    party to participate in such settlement or defense through counsel chosen by
    the  indemnified party, provided that the  fees and expenses of such counsel
    shall be borne by  the indemnified party, and  (iii) the indemnifying  party
    shall  agree promptly to reimburse the indemnified party for the full amount
    of any loss resulting  from such claim and  all related expense incurred  by
    the  indemnified party pursuant to this Section. So long as the indemnifying
    party is reasonably contesting any such claim in good faith, the indemnified
    party shall not pay or settle any such claim. If the indemnifying party does
    not notify the indemnified  party within thirty (30)  days after receipt  of
    the  indemnified party's notice  of a claim of  indemnity under this Section
    that such  party  elects  to  undertake  the  defense  of  such  claim,  the
    indemnified  party shall have the right to contest, settle or compromise the
    claim in the exercise of the indemnified party's exclusive discretion at the
expense of the indemnifying party.                                      

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ARTICLE IX -- CONDITIONS TO THE MERGERS 

    9.1  CONDITIONS OF THE PARTIES' OBLIGATIONS TO EFFECT THE KRSI MERGER.   The
respective  obligations  of KRSI  Acquisition and  KRSI  to consummate  the KRSI
Merger are subject  to the  satisfaction, on  or prior  to the  Closing, of  the
following conditions:                                                           

        (a)   SHAREHOLDER  APPROVAL.  This  Agreement and the  KRSI Merger shall
    have been approved by the affirmative vote  of the holders of a majority  of
    shares of outstanding KRSI Common Stock in accordance with the MNBCA and the
articles of incorporation and by-laws of KRSI.                          

        (b)   THE OFFERING.   The Offering  shall have been  completed in such a
    manner that Global One  shall have received,  or shall receive  simultaneous
  with the Closing, gross proceeds from the Offering of at least $6,000,000.

        (c)    GOVERNMENTAL  ENTITY APPROVALS.    All  authorizations, consents,
    orders or approvals of,  or declarations or filings  with, or expiration  of
    waiting  periods  imposed  by,  any Governmental  Entity  necessary  for the
    consummation of the transactions contemplated  by this Agreement shall  have
been filed, expired or been obtained.                                   

        (d)     REGISTRATION  STATEMENT;  PROXY  STATEMENT.    The  Registration
    Statement shall have become effective under the Securities Act and shall not
    be the subject of any stop order or proceedings seeking a stop order and the
    Proxy  Statement  shall  not  at  the  Effective  Time  be  subject  to  any
proceedings commenced or threatened by the SEC.                         

        (e)   NO  INJUNCTIONS OR  RESTRAINTS.   No temporary  restraining order,
    preliminary  or  permanent   injunction  or  other   order  issued  by   any
    Governmental  Entity of competent jurisdiction  nor other legal restraint or
    prohibition preventing the  consummation of the  Mergers, the Offering,  the
    Reorganization or any other transaction contemplated by this Agreement shall
be in effect.                                                           

        (f)   STATUTES.  No action shall  have been taken, and no statute, rule,
    regulation or order shall have been enacted, promulgated or issued or deemed
    applicable to  any part  of the  Reorganization by  any Governmental  Entity
    which  would (i)  make the  consummation of  any part  of the Reorganization
    illegal or (ii) render OSP, BEx or KRSI unable to consummate any portion  of
the Reorganization, except for any waiting period provisions.           

(g) The BEx Merger and the OSP Merger shall have been completed.

    9.2  CONDITIONS OF OBLIGATION OF KRSI.  The obligation of KRSI to consummate
the KRSI Merger is subject to the satisfaction, upon or prior to the Closing, of
the following conditions, unless waived by KRSI.                                

        (a)  REPRESENTATIONS AND WARRANTIES.  The representations and warranties
    of  Global  One,  BEx,  OSP  and the  OSP  Shareholders  set  forth  in this
    Agreement, without regard to any qualification or reference to immateriality
    or "Material Adverse Effect," shall be  true and correct in all respects  as
    of  the Closing Date, as  though made on and as  of such date (provided that
    those representations or warranties made as  of a particular date need  only
    be  true and correct  as of such  date), except for  any inaccuracies which,
    individually or  in the  aggregate, have  not  had, and  would not  have,  a
    Material  Adverse Effect  on Global One,  OSP or any  of their subsidiaries;
    provided, however, that  there shall  be deemed not  to be  such a  Material
    Adverse Effect to the extent that such effect is the result of conditions or
    factors  affecting the economy generally or the industry in which Global One
    or OSP operates or the result  of the announcement of the Reorganization  or
    actions   taken  in  contemplation  thereof.  KRSI  shall  have  received  a
    certificate signed on behalf  of Global One by  the chief executive  officer
    and  chief financial  officer of  Global One to  such effect  with regard to
    Global One, and a certificate signed on behalf of OSP by the chief executive
    officer and chief  financial officer of  OSP to such  effect with regard  to
OSP.                                                                    

        (b)   PERFORMANCE OF OBLIGATIONS OF GLOBAL ONE AND OSP.  Global One, OSP
    and BEx shall have  performed in all material  respects all obligations  and
covenants required to be performed by                                   

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    them  under this Agreement prior to or as of the Closing Date, unless waived
    in writing by  KRSI, and KRSI  shall have received  a certificate signed  on
    behalf  of Global One by the chief executive officer and the chief financial
    officer of  Global One  to such  effect with  regard to  Global One,  and  a
    certificate  signed on behalf of OSP by  the chief executive officer and the
chief financial officer of OSP to such effect with regard to OSP.       

        (c)  CONSENTS.  The consents, approvals and authorizations described (or
    required to be described) on Schedule 5.5 hereto shall have been obtained in
    form and  in substance  reasonably  satisfactory to  KRSI, except  for  such
    consents,  approvals and authorizations with respect to which the failure to
    obtain would not have  a Material Adverse Effect  on Global One, OSP,  their
respective subsidiaries or the Acquisition Companies.                   

        (d)  FAIRNESS OPINION.  KRSI shall have received from the KRSI Financial
    Advisor  an opinion  in form and  substance reasonably  satisfactory to KRSI
    that the merger  of KRSI  and KRSI  Acquisition and  the other  transactions
    contemplated  by  the  Reorganization and  this  Agreement are  fair  to the
    shareholders of KRSI from a financial point of view; provided, however, that
    the condition set forth in this Section 9.2(d) shall be deemed satisfied  if
    KRSI  fails  to  use  all commercially  reasonable  efforts  to  obtain such
fairness opinion.                                                       

    9.3  CONDITIONS OF OBLIGATION OF  KRSI ACQUISITION.  The obligation of  KRSI
Acquisition  to effect the KRSI  Merger is subject to  the satisfaction, upon or
prior to  the  Closing, of  the  following  conditions, unless  waived  by  KRSI
Acquisition:                                                                    

        (a)  REPRESENTATIONS AND WARRANTIES.  The representations and warranties
    of  KRSI set forth in this Agreement, without regard to any qualification or
    reference to immateriality or "Material  Adverse Effect," shall be true  and
    correct  in all respects as of the Closing Date, as though made on and as of
    such date (provided that  those representations or warranties  made as of  a
    particular  date need only be true and  correct as of such date), except for
    any inaccuracies which, individually or in the aggregate, have not had,  and
    would  not have, a Material Adverse  Effect on KRSI; provided, however, that
    there shall be deemed not to be such a Material Adverse Effect to the extent
    that such  effect is  the  result of  conditions  or factors  affecting  the
    economy  generally or the industry  in which KRSI operates  or the result of
    the announcement of the Mergers  or actions taken in contemplation  thereof.
    OSP  shall have received a certificate signed on behalf of KRSI by the chief
 executive officer and the chief financial officer of KRSI to such effect.

        (b)  PERFORMANCE OF OBLIGATIONS OF  KRSI.  KRSI shall have performed  in
    all material respects all obligations and covenants required to be performed
    by  them under  this Agreement prior  to or  as of the  Closing Date, unless
    waived in writing  by OSP and/or  the OSP Shareholders,  and OSP shall  have
    received  a  certificate signed  on behalf  of KRSI  by the  chief executive
officer and the chief financial officer of KRSI to such effect.         

        (c) CONSENTS.  The consents, approvals and authorizations described  (or
    required  to be described on Schedules 5.5  and 6.5 hereto) on Schedules 5.5
    and 6.5 hereto  shall have been  obtained in form  and substance  reasonably
    satisfactory  to OSP, except for such consents, approvals and authorizations
    with respect  to which  the failure  to  obtain would  not have  a  Material
Adverse Effect on KRSI or KRSI Acquisition.                             

        (d)  REVIEW OF KRSI SECURITIES.   OSP shall have  received a letter from
    KRSI's independent auditors or  legal counsel indicating  (i) the number  of
    shares  of KRSI Common Stock  that have been authorized  for issuance by the
    board of directors of KRSI  as set forth in the  minutes in the KRSI  minute
    book  and (ii) the number of shares of KRSI Common Stock subject to warrants
    and options  to purchase  them that  have been  authorized by  the board  of
directors of KRSI as set forth in the minutes in the KRSI minute book.  

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ARTICLE X -- TERMINATION, AMENDMENT AND WAIVER

    10.1   TERMINATION.  This Agreement may be terminated and the Reorganization
may be abandoned at  any time prior to  the Effective Time, notwithstanding  any
requisite  approval of this Agreement and the Reorganization by the shareholders
of KRSI:                                                                        

(a) by mutual written consent of KRSI and OSP; or               

        (b) by either KRSI  or OSP if  either (i) the  Effective Time shall  not
    have  occurred on  or before  August 31,  1996; provided,  however, that the
    right to terminate this  Agreement under this Section  10.1(b) shall not  be
    available  to any party  whose failure to fulfill  any obligation under this
    Agreement has  been  the  cause of,  or  resulted  in, the  failure  of  the
    Effective  Time to occur on or before such  date, or (ii) there shall be any
    law that makes  consummation of any  part of the  Reorganization illegal  or
    otherwise   prohibited  or  if  any   court  of  competent  jurisdiction  or
    Governmental Entity shall have issued an order, decree, ruling or taken  any
    other action restraining, enjoining or otherwise prohibiting any part of the
    Reorganization  and such  order, decree, ruling  or other  action shall have
    become final and unappealable; provided that the party seeking to  terminate
    this  Agreement pursuant to this subsection (b)(ii) shall have complied with
its obligations under Section 8.7 above; or                             

        (c) by OSP, if (i) the Board of Directors of KRSI withdraws, modifies or
    changes  its  recommendation  of   this  Agreement  or   any  part  of   the
    Reorganization  in a manner adverse to OSP  or shall have resolved to do any
    of the foregoing or the Board of Directors of KRSI shall have recommended to
    the shareholders of  KRSI any Competing  Transaction or resolved  to do  so,
    (ii)  KRSI  receives an  unsolicited proposal  that constitutes  a Competing
    Transaction and the  Board of  Directors of  KRSI, within  30 calendar  days
    after  such  proposal  is  received  by  KRSI,  either  fails  to  terminate
    discussions with the maker of such proposal and its agents, or determines to
    accept, or takes no position with respect to, such proposal, (iii) a  tender
    offer  or exchange offer for  25% or more of  the outstanding shares of KRSI
    Common Stock is  commenced, and the  Board of Directors  of KRSI, within  10
    business  days after  such tender offer  or exchange offer  is so commenced,
    either fails  to  recommend  against  acceptance of  such  tender  offer  or
    exchange  offer by its shareholders or takes no position with respect to the
    acceptance of such  tender offer or  exchange offer by  its shareholders  or
    (iv)  any person  shall have acquired  beneficial ownership or  the right to
    acquire beneficial ownership  of, or any  "group" (as such  term is  defined
    under  Section  13(d) of  the  Exchange Act  and  the rules  and regulations
    promulgated thereunder) shall have been  formed which beneficially owns,  or
    has  the right to acquire  beneficial ownership of, 25%  or more of the then
    outstanding shares of KRSI Common Stock (excluding for this purpose holdings
    of shares by persons  or groups as currently  reflected in filings with  the
SEC under Section 13(d)); or                                            

        (d) by KRSI, if the Board of Directors of KRSI shall have recommended or
    resolved to recommend to the shareholders of KRSI a proposal for a Competing
    Transaction   under  circumstances  where  a   majority  of  such  Directors
    reasonably determines in good  faith, that failure  to accept such  proposal
would be a breach of the fiduciary duty of such Directors; or           

        (e)  by either KRSI or OSP, if the Shareholders' Meeting shall have been
    held and the  shareholders of  KRSI shall have  failed to  approve the  KRSI
    Merger  or  this Agreement  at such  meeting  (including any  adjournment or
postponement thereof); or                                               

        (f) by  OSP,  in  the  event  of  a  material  breach  by  KRSI  of  any
    representation,  warranty, covenant or agreement  contained herein which has
not been cured or is not curable on or before August 31, 1996; or       

        (g) by KRSI, in the event of a material breach by Global One, OSP or the
    OSP Shareholders  of any  representation,  warranty, covenant  or  agreement
    contained  herein which has  not been cured  or is not  curable on or before
August 31, 1996.                                                        

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10.2  CONSEQUENCES OF TERMINATION.                                      

        (a) In the event KRSI terminates this Agreement other than in compliance
    with Section 10.1 above,  or in the event  OSP terminates this Agreement  in
    compliance  with  the provisions  of  Section 10.1(b)(i)  above  because the
    Effective Time has not occurred on or before August 31, 1996 as a result  of
    a  material  breach of  this Agreement  by  KRSI or  in compliance  with the
    provisions of Section 10.1(e) or (f) above, OSP shall be entitled to all  of
    the  funds held  by the  Escrow Agent  pursuant to  the Escrow  Agreement as
    liquidated damages,  and  in  such  event,  Global  One,  OSP  and  the  OSP
Shareholders may not pursue any other remedies at law or equity.        

        (b) KRSI may pursue any remedies available at law or equity in the event
    Global  One or OSP  terminates this Agreement other  than in compliance with
    Section 10.1  above, or  in  the event  KRSI  terminates this  Agreement  in
    compliance  with  the provisions  of  Section 10.1(b)(i)  above  because the
    Effective Time has not occurred on or before August 31, 1996 as a result  of
    a  material  breach  of  this  Agreement  by  Global  One,  OSP  or  the OSP
   Shareholders or in compliance with the provisions of Section 10.1(g) above.

    10.3  AMENDMENT.   This Agreement may  be amended by  the parties hereto  by
action taken by or on behalf of their respective Boards of Directors at any time
prior  to the Effective Time; provided, however, that, after the approval of the
KRSI Merger and this Agreement by the shareholders of KRSI, no amendment may  be
made  which would reduce  the amount or  change the type  of consideration to be
received by the shareholders  of KRSI or OSP  upon consummation of the  Mergers.
This  Agreement may not be amended except  by an instrument in writing signed by
the parties hereto.                                                             

    10.4  WAIVER.  At any time prior to the Effective Time, any party hereto may
(a) extend the time for  the performance of any obligation  or other act of  any
other  party  hereto,  (b)  waive  any  inaccuracy  in  the  representations and
warranties contained herein or in any document delivered pursuant hereto and (c)
waive compliance  with any  agreement or  condition contained  herein. Any  such
extension  or waiver shall  be valid if  set forth in  any instrument in writing
signed by the party or parties to be bound thereby.                             

ARTICLE XI -- GENERAL PROVISIONS

    11.1  SURVIVAL OF REPRESENTATIONS  AND WARRANTIES.  The representations  and
warranties  in this Agreement  and in any instrument  delivered pursuant to this
Agreement shall survive for one year following the Effective Time.              

    11.2    NOTICES.    All   notices,  requests,  claims,  demands  and   other
communications to any party hereunder shall be in writing (including telecopy or
similar  writing)  and  shall  be  deemed  given  if  delivered  personally,  by
facsimile, by certified mail (postage prepaid, return receipt requested) or sent
by overnight courier (in each case, providing proof of delivery) to the  parties
at  the following addresses and/or facsimile  numbers set forth at the beginning
of this Agreement  (or such other  address or  facsimile number for  a party  as
shall be specified in like notice).                                             

    11.3    ENTIRE  AGREEMENT.    This  Agreement  (including  the  Exhibits and
Schedules hereto) and the other  documents referenced herein contain the  entire
agreement  between the  parties with  respect to  the subject  matter hereof and
supersede all prior arrangements and understandings, both written and oral, with
respect thereto.                                                                

    11.4  SEVERABILITY.   It is the  desire and intent of  the parties that  the
provisions of this Agreement be enforced to the fullest extent permissible under
the law and public policies applied in each jurisdiction in which enforcement is
sought.  Accordingly, in the event that any provision of this Agreement would be
held in any  jurisdiction to  be invalid,  prohibited or  unenforceable for  any
reason,  such provision, as to such  jurisdiction, shall be ineffective, without
invalidating the  remaining  provisions  of  this  Agreement  or  affecting  the
validity  or  enforceability  of  such  provision  in  any  other  jurisdiction.
Notwithstanding the foregoing, if such provision could be more narrowly drawn so
as not                                                                          

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to be invalid, prohibited or unenforceable in such jurisdiction, it shall, as to
such jurisdiction,  be so  narrowly drawn,  without invalidating  the  remaining
provisions of this Agreement or affecting the validity or enforceability of such
provision in any other jurisdiction.                                            

    11.5   SUCCESSORS AND  ASSIGNS.  The  provisions of this  Agreement shall be
binding upon and inure to the benefit of the parties hereto and their respective
successors and assigns, provided that no party may assign, delegate or otherwise
transfer any  of its  rights or  obligations under  this Agreement  without  the
consent of the other parties hereto.                                            

    11.6   PARTIES IN INTEREST.  This Agreement shall be binding upon and insure
solely to  the benefit  of each  party hereto,  and nothing  in this  Agreement,
express  or implied, is  intended to or  shall confer upon  any other person any
right, benefit or remedy  of any nature  whatsoever under or  by reason of  this
Agreement, other than Section 8.9 above (which is intended to be for the benefit
of  the persons covered by the  indemnification provisions contained therein and
may be enforced by such persons).                                               

    11.7  ENFORCEMENT.  The parties agree that irreparable damage would occur in
the event that any  of the provisions  of this Agreement  were not performed  in
accordance  with  their  specific  terms  or  were  otherwise  breached.  It  is
accordingly agreed  that the  parties  shall be  entitled  to an  injunction  or
injunctions  to prevent breaches  of this Agreement  and to enforce specifically
the terms and provisions  of this Agreement  in any court  of the United  States
located in the State of California or in a California state court, this being in
addition  to any other remedy to which they are entitled at law or in equity. In
addition, each  of the  parties hereto  (a)  consents to  submit itself  to  the
personal jurisdiction of any federal court located in the State of California or
any  California  state  court  in  the event  any  dispute  arises  out  of this
Agreement, (b) agrees that it will not  attempt to deny or defeat such  personal
jurisdiction  by motion or other  request for leave from  any such court and (c)
agrees that it  will not  bring any  action relating  to this  Agreement or  the
transactions  contemplated by this  Agreement in any court  other than a federal
court sitting in the State of California or a California state court.           

    11.8  GOVERNING LAW.  This  Agreement shall be construed in accordance  with
and governed by the law of the State of California, without giving effect to the
principles of conflict of laws thereof.                                         

    11.9   COUNTERPARTS;  EFFECTIVENESS.   This Agreement  may be  signed in any
number of counterparts, each of which shall be an original, with the same effect
as if the  signatures thereto  and hereto were  upon the  same instrument.  This
Agreement  shall become  effective when  each party  hereto shall  have received
counterparts hereof signed by all of the other parties hereto.                  

    IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly
executed as of the day and year first above written.                            

                                   GLOBAL ONE DISTRIBUTION &
                        MERCHANDISING INC.
                                          By ___________________________________
               Name:
                Title:

                        OSP PUBLISHING, INC.
                                          By ___________________________________
               Name:
                Title:

(signatures continued on next page)                                             

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                            O.S.P. ACQUISITION CORP.
                                          By ___________________________________
               Name:
                Title:

                               KELLY RUSSELL STUDIOS, INC.
                                          By ___________________________________
               Name:
                Title:

                          KRSI ACQUISITION CORP.
                                          By ___________________________________
               Name:
                Title:

                             THE BUTTON EXCHANGE, LTD.
                                          By ___________________________________
               Name:
                Title:

                         BEx ACQUISITION CORP.
                                          By ___________________________________
               Name:
                Title:
                                          ______________________________________
                    Joseph C. Angard
                                          ______________________________________
                   Michael A. Malm

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                                                                      APPENDIX B
OPINION OF EQUISOURCE 

May 28, 1996                                                                    

Board of Directors                                                              
Kelly Russell Studios, Inc.                                                     
2905 Northwest Blvd.                                                            
Suite 220                                                                       
Plymouth, Minnesota                                                             

Gentlemen:                                                                      

    You  have requested The Equisource Group ("Equisource") to render an opinion
as to the fairness, from  a financial point of  view, to Kelly Russell  Studios,
Inc.  ("KRSI") and its shareholders of the  proposed merger to be effected under
the terms of the Final Amended and Restated Agreement and Plan of Reorganization
between KRSI, Global One Distribution & Merchandising Inc. ("Global One"),  KRSI
Acquisition  Corp. ("KRSI Acquisition"), O.S.P. Publishing, Inc. ("OSP"), O.S.P.
Acquisition Corp. ("OSP  Acquisition"), The  Button Exchange,  LTD ("BEx"),  BEx
Acquisition  Corp. ("BEx  Acquisition"). Joseph C.  Angard and  Michael A. Malm,
(the "Agreement").                                                              

    We understand  that  under the  terms  of  the Agreement,  Global  One  will
exchange 2,041,187 shares of Global One common stock, representing approximately
15.7%  of Global One immediately after completion of the transaction, for all of
the issued and outstanding shares of KRSI's common stock. The Global One  shares
issued  to the KRSI  shareholders will be registered  pursuant to a registration
statement filed with the Securities and Exchange Commission under the provisions
of The Securities Act of 1933.  After the merger, the existing OSP  shareholders
will  hold 6,448,088 shares,  representing approximately 49.6%  of the surviving
company 4,504,234 shares of Global One common stock, representing  approximately
34.7%  of Global One, will be issued at $1.50 per share to provide financing for
the transaction. Warrants and  options for the purchase  of 3,143,033 shares  of
Global  One common stock will be  outstanding immediately after closing, 197,069
of which  will  be exercisable  at  a nominal  price,  with the  balance  to  be
exercisable at prices ranging from $1.50 to $8.40 per share.                    

    In  arriving at our  opinion, we have reviewed,  among other information (i)
the Agreement; (ii) audited financial statements for O.S.P. Publishing, Inc. and
Subsidiaries for the  years ended December  31, 1994 and  1993, and  preliminary
audited  consolidated balance sheets as  of December 31, 1995  and 1994, and the
related consolidated statements of operations for the three years ended December
31, 1995, prepared by Deloitte & Touche LLP; (iii) audited financial  statements
prepared  for Kelly Russell  Studios, Inc. by  McGladrey & Pullen  for the three
years ended December 31, 1994, with preliminary audited statements for the  year
ended  December  31,  1995;  (iv) certain  financial  and  operating information
relating to  OSP, including  forecasts provided  by OSP's  management and  OSP's
financial  advisor; (v) certain financial  and operating information relating to
KRSI, including forecasts  internally provided by  KRSI management; (vi)  public
market  price information and trading volumes for KRSI's common stock from March
31, 1994 to April 3, 1996; (vii) the operating results, financial condition  and
market  performance of various companies with publicly traded stock and which we
deem to be engaged in businesses similar  to those of KRSI and OSP; (viii)  such
other  information, analyses, investigations and  financial, economic and market
criteria we considered relevant.                                                

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    In addition to the above described  information, we have discussed with  the
board  of directors and  management of KRSI the  overall business operations and
future prospects of KRSI in  the event the merger  is not consummated, and  have
held  similar discussions  with OSP  management. With  respect to  the financial
forecasts, we have assumed that they have been reasonably prepared on the  basis
of  the best estimates and  judgments of KRSI's and  OSP's managements as to the
future performance of the respective companies.  We have not been provided,  nor
have we considered, pro forma combined financial statements based on forecasts. 

    In  connection with our  review, we have not  assumed any responsibility for
independent  verification  of  any  of  the  foregoing  information,   including
financial  forecasts provided by  the Company and  OSP, and have  relied on such
information provided by KRSI and OSP being complete and accurate in all material
respects. We  have  not  been  furnished with  any  independent  evaluations  or
appraisals  of the assets or liabilities of KRSI, OSP or OSP's subsidiaries. Our
opinion  is  necessarily  based  upon  financial,  economic,  market  and  other
conditions as they exist and can be evaluated on the date hereof.               

    We have acted as financial advisor to KRSI in connection with the merger and
will  receive  a  fee  for  our services,  a  significant  portion  of  which is
contingent upon the consummation of the merger.                                 

    Our opinion is  directed to  the Board  of Directors  of KRSI  and does  not
constitute  a recommendation  as to how  KRSI's shareholders should  vote at the
shareholders' meeting to consider and vote on the proposed merger.              

    Based upon and subject to the foregoing,  it is our opinion that, as of  the
date  hereof, the proposed  merger is fair,  from a financial  point of view, to
KRSI and its shareholders.                                                      

Very truly yours,                                                               

The Equisource Group                                                            

By: /s/ Robert H. Thurmond III                                                  
Robert H. Thurmond III                                                  

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                                                                      APPENDIX C

MINNESOTA BUSINESS CORPORATION ACT

302A.471.  RIGHTS OF DISSENTING SHAREHOLDERS                                    

    Subdivision 1.  ACTIONS CREATING RIGHTS.  A shareholder of a corporation may
dissent  from, and obtain payment for the fair value of the shareholder's shares
in the event of, any of the following corporate actions:                        

        (a) An amendment of the  articles that materially and adversely  affects
    the  rights or  preferences of the  shares of the  dissenting shareholder in
that it:                                                                

 (1) alters or abolishes a preferential right of the shares;

           (2)  creates,  alters,  or  abolishes  a  right  in  respect  of  the
       redemption of the shares, including a provision respecting a sinking fund
for the redemption or repurchase of the shares;                   

           (3)  alters  or abolishes  a preemptive  right of  the holder  of the
       shares to  acquire shares,  securities other  than shares,  or rights  to
purchase shares or securities other than shares;                  

           (4)  excludes  or limits  the right  of  a shareholder  to vote  on a
       matter, or to  cumulate votes,  except as the  right may  be excluded  or
       limited  through  the  authorization  or  issuance  of  securities  of an
       existing or new class or series with similar or different voting  rights;
       except that an amendment to the articles of an issuing public corporation
       that  provides that  section 302A.671 does  not apply to  a control share
       acquisition does not give rise to the right to obtain payment under  this
section;                                                          

        (b)   A  sale,  lease,   transfer,  or  other   disposition  of  all  or
    substantially all of  the property and  assets of the  corporation, but  not
    including  a transaction  permitted without shareholder  approval in section
    302A.661, subdivision  1,  or  a disposition  in  dissolution  described  in
    section  302A.725, subdivision 2, or a disposition pursuant to an order of a
    court,  or  a  disposition  for  cash   on  terms  requiring  that  all   or
    substantially  all of the net proceeds  of disposition be distributed to the
    shareholders in accordance with their  respective interests within one  year
after the date of disposition;                                          

        (c)  A plan of merger, whether under this chapter or under chapter 322B,
 to which the corporation is a party, except as provided in subdivision 3;

        (d) A plan of exchange, whether under this chapter or under chapter 322B
    to which the corporation is a party as the corporation whose shares will  be
    acquired  by the acquiring corporation, if the shares of the shareholder are
entitled to be voted on the plan; or                                    

        (e) Any other corporate action taken pursuant to a shareholder vote with
    respect to the articles, the bylaws,  or a resolution approved by the  board
 directs that dissenting shareholders may obtain payment for their shares.

    Subd.  2.    BENEFICIAL  OWNERS.    (a)    A  shareholder  shall  not assert
dissenters' rights as to less than all  of the shares registered in the name  of
the  shareholder, unless the shareholder dissents with respect to all the shares
that are beneficially owned by another person but registered in the name of  the
shareholder and discloses the name and address of each beneficial owner on whose
behalf  the shareholder  dissents. In  that event,  the rights  of the dissenter
shall be determined as if the shares  as to which the shareholder has  dissented
and the other shares were registered in the names of different shareholders.    

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    (b)  The beneficial owner  of shares who  is not the  shareholder may assert
dissenters' rights  with respect  to shares  held on  behalf of  the  beneficial
owner,  and shall be treated as a dissenting shareholder under the terms of this
section and section 302A.473, if the beneficial owner submits to the corporation
at the time of or  before the assertion of the  rights a written consent of  the
shareholder.                                                                    

    Subd.  3.   RIGHTS NOT  TO APPLY.   Unless  the articles,  the bylaws,  or a
resolution approved by the board otherwise provide, the right to obtain  payment
under  this section does not apply to a shareholder of the surviving corporation
in a merger, if the  shares of the shareholder are  not entitled to be voted  on
the merger.                                                                     

    Subd.  4.  OTHER RIGHTS.  The shareholders of a corporation who have a right
under this section to obtain payment for their shares do not have a right at law
or in equity to have a corporate action described in subdivision 1 set aside  or
rescinded,  except when  the corporate action  is fraudulent with  regard to the
complaining shareholder or the corporation.                                     

302A.473.  PROCEDURES FOR ASSERTING DISSENTERS' RIGHTS                          

    Subdivision 1.  DEFINITIONS.  (a)   For purposes of this section, the  terms
defined in this subdivision have the meanings given them.                       

    (b)  "Corporation" means the issuer of the shares held by a dissenter before
the corporate  action referred  to in  section 302A.471,  subdivision 1  or  the
successor by merger of that issuer.                                             

    (c)  "Fair  value  of  the  shares"  means the  value  of  the  shares  of a
corporation immediately  before  the  effective date  of  the  corporate  action
referred to in section 302A.471, subdivision 1.                                 

    (d)  "Interest" means interest commencing five days after the effective date
of the corporate action  referred to in section  302A.471, subdivision 1, up  to
and  including the date of  payment, calculated at the  rate provided in section
549.09 for interest on verdicts and judgments.                                  

    Subd. 2.  NOTICE OF ACTION.  If a corporation calls a shareholder meeting at
which any action  described in section  302A.471, subdivision 1  is to be  voted
upon,  the notice of the  meeting shall inform each  shareholder of the right to
dissent and shall  include a copy  of section  302A.471 and this  section and  a
brief description of the procedure to be followed under these sections.         

    Subd. 3.  NOTICE OF DISSENT.  If the proposed action must be approved by the
shareholders,  a shareholder who wishes to exercise dissenters' rights must file
with the corporation before the vote on the proposed action a written notice  of
intent  to demand the fair value of the shares owned by the shareholder and must
not vote the shares in favor of the proposed action.                            

    Subd. 4.  NOTICE OF PROCEDURE; DEPOSIT  OF SHARES.  (a)  After the  proposed
action  has been approved by the board  and, if necessary, the shareholders, the
corporation shall send to all shareholders who have complied with subdivision  3
and to all shareholders entitled to dissent if no shareholder vote was required,
a notice that contains:                                                         

        (1)  The  address to  which  a demand  for  payment and  certificates of
    certificated shares must be sent in order to obtain payment and the date  by
which they must be received;                                            

        (2)  Any restrictions on transfer of  uncertified shares that will apply
after the demand for payment is received;                               

        (3) A form to be used to  certify the date on which the shareholder,  or
    the  beneficial owner on whose behalf the shareholder dissents, acquired the
shares or an interest in them and to demand payment; and                

        (4) A copy of section 302A.471 and this section and a brief  description
of the procedures to be followed under these sections.                  

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    (b)  In  order  to  receive  the fair  value  of  the  shares,  a dissenting
shareholder must demand payment and  deposit certificated shares or comply  with
any  restrictions on transfer of uncertificated  shares within 30 days after the
notice required by paragraph (a) was given, but the dissenter retains all  other
rights of a shareholder until the proposed action takes effect.                 

    Subd.  5.  PAYMENT; RETURN OF SHARES.  (a)  After the corporate action takes
effect, or after the corporation receives a valid demand for payment,  whichever
is  later the  corporation shall  remit to  each dissenting  shareholder who has
complied with subdivisions 3  and 4 the amount  the corporation estimates to  be
the fair value of the shares, plus interest, accompanied by:                    

        (1)  The corporation's closing balance sheet  and statement income for a
    fiscal year ending not more than 16 months before the effective date of  the
    corporate  action,  together  with the  latest  available  interim financial
statements;                                                             

        (2) An estimate by the corporation of the fair value of the shares and a
brief description of the method used to reach the estimate; and         

        (3) A copy of section 302A.471 and this section, and a brief description
of the procedure to be followed in demanding supplemental payment.      

    (b) The corporation may withhold  the remittance described in paragraph  (a)
from  a person who was  not a shareholder on the  date the action dissented from
was first announced to the public or who is dissenting on behalf of a person who
was not a  beneficial owner on  that date.  If the dissenter  has complied  with
subdivision  3  and  4,  the  corporation shall  forward  to  the  dissenter the
materials described in paragraph (a), a statement of the reason for  withholding
the  remittance, and an offer  to pay to the dissenter  the amount listed in the
materials if the dissenter  agrees to accept that  amount in full  satisfaction.
The  dissenter may  decline the  offer and  demand payment  under subdivision 6.
Failure to do  so entitles  the dissenter  only to  the amount  offered. If  the
dissenter makes demand, subdivisions 7 and 8 apply.                             

    (c)  If the corporation fails to remit payment within 60 days of the deposit
of certificates or  the imposition  of transfer  restrictions on  uncertificated
shares,  it  shall return  all deposited  certificates  and cancel  all transfer
restrictions. However, the corporation may again give notice under subdivision 4
and require deposit or restrict transfer at a later time.                       

    Subd. 6.  SUPPLEMENTAL  PAYMENT; DEMAND.  If  a dissenter believes that  the
amount  remitted under subdivision 5  is less than the  fair value of the shares
plus interest, the dissenter may give  written notice to the corporation of  the
dissenter's  own estimate of the fair value of the shares, plus interest, within
30 days after  the corporation  mails the  remittance under  subdivision 5,  and
demand payment of the difference. Otherwise, a dissenter is entitled only to the
amount remitted by the corporation.                                             

    Subd.  7.   PETITION; DETERMINATION.   If the corporation  receives a demand
under subdivision 6, it shall, within 60 days after receiving the demand, either
pay to the dissenter  the amount demanded  or agreed to  by the dissenter  after
discussion  with the corporation or file in court a petition requesting that the
court determine the fair value of the shares, plus interest. The petition  shall
be  filed in  the county in  which the  registered office of  the corporation is
located, except  that a  surviving foreign  corporation that  receives a  demand
relating  to the  shares of  a constituent  domestic corporation  shall file the
petition in the county in this state in which the last registered office of  the
constituent  corporation was  located. The  petition shall  name as  parties all
dissenters who  have demanded  payment  under subdivision  6  and who  have  not
reached  agreement with the corporation. The corporation shall, after filing the
petition, serve all parties with  a summons and copy  of the petition under  the
rules of civil procedure. Nonresidents of this state may be served by registered
or  certified mail  or by  publication as provided  by law.  Except as otherwise
provided,  the  rules  of  civil   procedure  apply  to  this  proceeding.   The
jurisdiction  of  the court  is  plenary and  exclusive.  The court  may appoint
appraisers, with  powers and  authorities  the court  deems proper,  to  receive
evidence  on and recommend the amount of the fair value of the shares. The court
shall determine whether the shareholder or                                      

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shareholders in  question have  fully  complied with  the requirements  of  this
section,  and shall determine the  fair value of the  share, taking into account
any and  all  factors  the court  finds  relevant,  computed by  any  method  or
combination  of methods  that the  court, in  its discretion,  sees fit  to use,
whether or not used by the corporation or by a dissenter. The fair value of  the
shares  as  determined by  the court  is binding  on all  shareholders, wherever
located. A dissenter is entitled to judgment in cash for the amount by which the
fair value of  shares as  determined by the  court, plus  interest, exceeds  the
amount,  if any, remitted  under subdivision 5,  but shall not  be liable to the
corporation for the amount, if any, by which the amount, if any, remitted to the
dissenter under subdivision 5 exceeds the fair value of the shares as determined
by the court, plus interest.                                                    

    Subd. 8.  COSTS, FEES; EXPENSES.   (a)  The court shall determine the  costs
and  expenses  of a  proceeding under  subdivision  7, including  the reasonable
expenses and compensation of  any appraisers appointed by  the court, and  shall
assess  those costs and expenses against  the corporation, except that the court
may assess part or  all of those  costs and expenses  against a dissenter  whose
action  in  demanding payment  under  subdivision 6  is  found to  be arbitrary,
vexatious, or not in good faith.                                                

    (b)  If  the  court  finds  that  the  corporation  has  failed  to   comply
substantially  with this section, the court may  assess all fees and expenses of
any experts or attorneys as the  court deems equitable. These fees and  expenses
may also be assessed against a person who has acted arbitrarily, vexatiously, or
not  in good  faith in bringing  the proceeding, and  may be awarded  to a party
injured by those actions.                                                       

    (c) The court may award, in its discretion, fees and expenses to an attorney
for the dissenters out of the amount awarded to the dissenters, if any.         

Laws 1981, c. 270, Section 81, eff. July 1, 1981. Amended by laws 1987, c.  104,
SectionSection 30 to 33; Laws 1993, c. 17, SectionSection 41, 42.               

534337                                                                          

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KELLY RUSSELL STUDIOS, INC. 
SPECIAL MEETING OF SHAREHOLDERS 

THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS.

    The  undersigned hereby appoints George Vrabeck and William J. Righeimer and
each of  them as  proxies, each  with full  power of  substitution, to  vote  as
designated  below all shares of common stock of Kelly Russell Studios, Inc. held
of record as of July 19, 1996,  which the undersigned would be entitled to  vote
if  personally present  at the  Special Meeting  of Shareholders  to be  held on
August 26, 1996, at 10:00 a.m., local time, at the Minnesota Athletic Club,  615
Second  Avenue South, Twelfth Floor, Minneapolis, Minnesota, and any adjournment
or adjournments thereof, upon the following matters:                            

    Proposal to approve the  principal terms of the  Final Amended and  Restated
Agreement  and Plan of Reorganization (the "Merger Agreement") providing for the
merger of Kelly Russell  Studios, Inc. with and  into KRSI Acquisition Corp.,  a
wholly  owned subsidiary of Global One  Distribution & Merchandising Inc., which
will be the surviving  company. KRSI Acquisition Corp.  will change its name  to
and  conduct its business under the name "Kelly Russell Studios, Inc." A copy of
the Merger Agreement is attached as Appendix A to the Proxy Statement/Prospectus
for the Special Meeting.                                                        

                                                                [Download Table]
                                                          
/ /  FOR               / /  AGAINST           / /  ABSTAIN

(CONTINUED AND TO BE SIGNED AND DATED ON THE OTHER SIDE)

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    This proxy will be voted as specified  by the shareholder, but if no  choice
is specified, this proxy will be voted FOR approval of the Merger Agreement.    

    IMPORTANT:  Please sign exactly as name or names appear on this Proxy. Joint
owners  should  each  sign  personally.  When  signing  as  attorney,  executor,
administrator,  trustee or guardian,  please give your full  title as such. When
signing as a corporation or a partnership, please sign in the name of the entity
by an authorized person.                                                        
Dated: ________________________________                                         
                                                 _______________________________
                                             (Please sign name exactly as it
                                             appears hereon)
                                                 _______________________________
                                              (Signature of joint owner, if any)

    PLEASE MARK,  DATE,  SIGN AND  RETURN  THIS  PROXY IN  THE  ENCLOSED  RETURN
ENVELOPE,  WHICH  REQUIRES NO  POSTAGE IF  MAILED  IN THE  UNITED STATES.  IF AN
ENVELOPE IS NOT  ENCLOSED OR HAS  BEEN MISPLACED, PLEASE  RETURN THIS  COMPLETED
PROXY  TO NORWEST BANK MINNESOTA, N.A., STOCK TRANSFER DEPARTMENT, P.O. BOX 119,
SOUTH SAINT PAUL, MINNESOTA 55075-9988.