Distinctive Devices Inc – ‘DEF 14A’ for 9/30/02

On:  Wednesday, 8/28/02, at 10:37am ET   ·   For:  9/30/02   ·   Accession #:  950120-2-481   ·   File #:  0-02749

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Definitive Proxy Solicitation Material   —   Schedule 14A
Filing Table of Contents

Document/Exhibit                   Description                      Pages   Size 

 1: DEF 14A     Definitive Proxy Statement                            43    191K 

Document Table of Contents

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SCHEDULE 14A INFORMATION

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

PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE
 SECURITIES EXCHANGE ACT OF 1934

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

 FILED BY THE REGISTRANT |X|
FILED BY A PARTY OTHER THAN THE REGISTRANT |_|

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

Check the appropriate box:                                                      

| |  Preliminary Proxy Statement                                                
|_|  Confidential, for use of the Commission Only (as permitted by Rule         
14a-6(e)(2))                                                          
|X|  Definitive Proxy Statement                                                 
|_|  Definitive Additional Materials                                            
|_|  Soliciting Materials Pursuant to ss. 240.14a-11(c) or ss. 240.14a-12       

 DISTINCTIVE DEVICES, INC.
 -------------------------
(Name of Registrant as Specified In Its Charter)

------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than Registrant)

Payment of Filing Fee (Check the appropriate box):                              

|X|  No fee required.                                                           

|_|  Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.   

1)   Title of each class of securities to which transaction applies:  
                                                                        ------

2)   Aggregate number of securities to which transaction applies:     
                                                                  ------

3)   Per unit price or other underlying value of transaction computed 
     pursuant to Exchange Act Rule 0-11 (Set forth amount on which the
filing fee is calculated and state how it was determined):  

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

4)   Proposed maximum aggregate value of transaction:                 
                                                ------------

5)   Total fee paid:                                                  
----------------------------  

|_| Fee paid previously with preliminary materials.                             

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|_|  Check box if any part of the fee is offset as provided by Exchange Act     
  Rule 0-11(a)(2) and identify the filing for which the offsetting fee was
 paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.           

1)   Amount Previously Paid:                                          
          ------------------------

2)   Form, Schedule or Registration Statement No:                     
                                       -----------

3)   Filing Party:                                                    
----------------------------------

4)   Date Filed:                                                      
------------------------------------  

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 DISTINCTIVE DEVICES, INC.

 NOTICE OF SPECIAL MEETING OF SHAREHOLDERS

SEPTEMBER 30, 2002

To the Shareholders of DISTINCTIVE DEVICES, INC.                                

   A Special Meeting of Shareholders (the "Meeting") of Distinctive Devices,
Inc., a New York corporation (the "Company"), will be held on September 30, 2002
at 10:00 a.m., local time, at the offices of Thelen Reid & Priest LLP, 40 West  
57th Street, New York, New York, for the following purposes:                    

     1.   To elect Sanjay Mody, Alexander Ammosov, Earl M. Anderson, Jr., Walter
E. Freeman and Shrikant C. Mehta as Directors.              

    2.   To approve a change in the state of incorporation of the Company from
        New York to Delaware, to be effected by a merger of the Company with
and into Distinctive Devices, Inc., a Delaware corporation. 

3.   To ratify the adoption of the 2001 Stock Option Plan.            

  4.   To authorize the Board of Directors to effect a reverse stock split
   (falling within a range of one-for-four and one-for-ten) of the
outstanding Common Stock.                                   

  5.   To approve an increase in the number of authorized shares of Common
         Stock to 100,000,000 shares and to change the par value to $0.001 per
       share, and authorized shares of Preferred Stock to 5,000,000 shares
and to change the par value to $0.001 per share.            

6.   To approve an amendment to the Certificate of Incorporation to   
eliminate certain liabilities of directors to the Company.  

7.   To transact such other business as may properly come before the  
Meeting and any adjournment or adjournments thereof.        

     Only shareholders of record at the close of business on August 16, 2002 are
entitled to notice of and to vote at the Meeting and any adjournment or         
adjournments thereof.                                                           

     A Proxy Statement describing the matters to be considered at the Meeting is
attached to this Notice. The Company's Annual Report on Form 10-KSB for the     
fiscal year ended December 31, 2001 and Quarterly Report on Form 10-QSB for the 
three month and six months ended June 30, 2002 accompany this Notice, but they  
are not deemed to be part of this Proxy Statement.                              

                           By Order of the Board of Directors,

             Earl M. Anderson, Jr.
 Secretary
August 29, 2002                                                                 

SHAREHOLDERS WHO DO NOT EXPECT TO ATTEND THE MEETING IN PERSON, BUT WISH THEIR  
STOCK TO BE VOTED ON MATTERS TO BE PRESENTED TO THE MEETING, ARE URGED TO REVIEW
THE ATTACHED PROXY STATEMENT PROMPTLY AND THEN COMPLETE AND RETURN THE ENCLOSED 
PROXY IN THE ACCOMPANYING POSTAGE-PAID, ADDRESSED ENVELOPE. IF YOU ATTEND THE   
MEETING, YOU MAY WITHDRAW YOUR PROXY AND VOTE YOUR SHARES PERSONALLY.           

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 DISTINCTIVE DEVICES, INC.
 ONE BRIDGE PLAZA, SUITE 100
FORT LEE, NJ 07024

----------

 PROXY STATEMENT

----------

INTRODUCTION

This Proxy Statement is furnished with respect to the solicitation of 
proxies by the Board of Directors of Distinctive Devices, Inc., a New York      
corporation (the "Company"), for the Special Meeting of Shareholders (the       
"Meeting") of the Company to be held at 10:00 a.m., local time, on September 30,
2002 and at any adjournment or adjournments thereof, at the offices of Thelen   
Reid & Priest LLP, 40 West 57th Street, New York, New York.                     

 The approximate date on which the Proxy Statement and form of proxy are
intended to be sent or given to shareholders is August 30, 2002.                

   The expense of the solicitation of proxies for the Meeting, including the
cost of mailing, will be borne by the Company. In addition to mailing copies of 
the enclosed proxy materials to shareholders, the Company may request persons,  
and reimburse them for their expenses with respect thereto, who hold stock in   
their names or custody or in the names of nominees for others to forward copies 
of such materials to those persons for whom they hold the Common Stock of the   
Company and to request authority for the execution of the proxies. In addition  
to the solicitation of proxies by mail, it is expected that some of the         
officers, directors and regular employees of the Company, without additional    
compensation, may solicit proxies on behalf of the Board of Directors by        
telephone, telefax and personal interview.                                      

 VOTING SECURITIES, VOTING AND PROXIES

RECORD DATE                                                                     

    Only stockholders of record as of the close of business on August 16, 2002
(the "Record Date"), are entitled to notice of and to vote at the Meeting and   
any adjournment or adjournments thereof.                                        

VOTING STOCK                                                                    

On the Record Date, the Company had issued and outstanding 19,134,824 
shares of common stock, $.05 par value (the "Common Stock"), 10,000 shares of   
Series C Preferred Stock, $1.00 par value, and 173,333 shares of Series D       
Preferred Stock, $1.00 par value.                                               

   The holders of the Common Stock are entitled to one vote per share on all
matters to be voted on at the Meeting. The holders of the Series C Preferred    
Stock and the Series D Preferred Stock are entitled to 125 votes per share on   
all matters to be voted upon at the Meeting, which is on an "as converted"      
basis, voting together with the holders of the Common Stock. However, with      
respect to the voting on the changes in the Common Stock and Preferred Stock    
(Proposal 5), the holder of the Series D Preferred Stock will vote his shares in
the same proportion that the holders of the Common Stock vote their shares on   
Proposal 5.                                                                     

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At the Meeting, when the Series C Preferred Stock and the Series D    
Preferred Stock vote together with the Common Stock as one class, all such      
shares would represent an aggregate of 42,051,490 votes.                        

QUORUM                                                                          

   The presence at the Meeting of a majority of the votes represented by the
outstanding Common Stock, Series C Preferred Stock and Series D Preferred Stock,
in person or by proxy, are required for a quorum. Any shareholder who submits a 
proxy, even though the shareholder abstains as to one or more proposals, or who 
is present in person, shall be counted for the purpose of determining if a      
quorum is present.                                                              

VOTING                                                                          

 Under New York law, (i) a plurality of the votes cast at the Meeting is
necessary to elect directors, (ii) the affirmative vote of the holders of at    
least two-thirds of the shares eligible to vote at the Meeting is required for  
approval of the proposal for the reincorporation of the Company in the State of 
Delaware (the "Reincorporation"), (iii) the affirmative vote of a majority of   
the votes cast at the Meeting is required to ratify the adoption of the 2001    
Stock Option Plan (the "2001 Option Plan"), and (iv) the affirmative vote of the
holders of at least a majority of the shares eligible to vote at the Meeting is 
required for the changes in the Common Stock and the Preferred Stock, the       
reverse stock split and the change in the liability of directors.               

   Broker "non-votes" and the shares as to which a shareholder abstains from
voting are included for the purposes of determining whether a quorum of shares  
is present at the Meeting. A broker "non-vote" occurs when a nominee, such as a 
brokerage firm, bank or trust company, holding shares of record for a beneficial
owner does not have discretionary voting power with respect to that item and has
not received voting instructions from the beneficial owner. A broker "non-vote" 
will have the effect of an AGAINST vote on the proposed Reincorporation, the    
proposed change in the capital stock, the proposed reverse stock split and the  
proposed change in the liability of directors.                                  

   A beneficial owner who is not also the registered shareholder cannot vote
directly at the Meeting. Such beneficial owner must provide voting instructions 
to his or her nominee holder. A beneficial holder who wishes to vote in person  
at the Meeting must obtain from the record holder a proxy issued in the name of 
the beneficial holder.                                                          

   At the Meeting, ballots will be distributed with respect to each proposal
to be voted upon to each shareholder (or the shareholder's proxy if not the     
management proxy holders) who is present and did not deliver a proxy to the     
management proxy holders or another person. The ballots shall then be tallied,  
the votes being in three categories: FOR, AGAINST or ABSTAIN, except in the case
of the proposal to elect directors, the three categories will be, with respect  
to each director to be elected, FOR the director nominee, WITHHOLD AUTHORITY    
from voting FOR the director nominee or FOR another person to be elected as a   
director.                                                                       

PROXIES                                                                         

    The form of proxy solicited by the Board of Directors affords shareholders
the ability to specify a choice among approval of, disapproval of, or abstention
with respect to each matter to be acted upon at the Meeting. Shares represented 
by the proxy will be voted and, where the solicited shareholder indicates a     
choice with respect to any matter to be acted upon, the shares will be voted as 
specified. If no choice is given, a properly executed proxy will be voted for   
the election of management's nominated directors, for the Reincorporation, for  
the ratification of the 2001 Option Plan, for the change in the authorized      
capital stock, for authorization of a reverse stock split, for the change in    

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liability of directors, and as to any other matters which any properly come     
before the Meeting, at the discretion of the persons designated as proxies.     

REVOCABILITY                                                                    

Shareholders who execute proxies retain the right to revoke them by   
notifying the Company at any time before they are voted. Such revocation may be 
effected by execution of a subsequently dated proxy, or by a written notice of  
revocation, sent to the attention of the Secretary at the address of the        
Company's principal office set forth above in the introductory paragraph to this
Proxy Statement or delivered to him at the Meeting. Unless so revoked, the      
shares represented by proxies, if received in time, will be voted in accordance 
with the directions given therein.                                              

LIST OF STOCKHOLDERS                                                            

     In accordance with New York law, a list of shareholders entitled to vote at
the Meeting will be available for inspection at the Meeting and for ten days    
prior to the Meeting during business hours at the Company's offices by          
contacting the Secretary of the Company.                                        

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 SECURITIES OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
AND MANAGEMENT

The following table sets forth information regarding the beneficial   
ownership of the Company's Common Stock as of the Record Date by (i) persons    
known to the Company to beneficially own more than 5% of the outstanding Common 
Stock, (ii) by each director and nominee for director and (iii) by all directors
and officers as a group:                                                        

                                                        [Enlarge/Download Table]

                                           Common Stock                                   
                                           ------------                                   

                                Amount and Nature                   Series C     Series D 
Name and Address of             of Beneficial         Percent of    Preferred    Preferred
Beneficial Owner(1)             Ownership(2)          Class         Stock        Stock    
-------------------             -----------------     ----------    ---------    ---------
                                                                                          
Shrikant C. Mehta               21,816,666 shs.(3)    53.5%            -         173,333  

Alexander Ammosov                3,350,000 shs(4)     16.2%            -            -     

Sanjay Mody                      2,050,000 shs.(5)     9.9%         1,000           -     

Earl M. Anderson, Jr.              835,800 shs.        4.3%            -            -     

Walter E. Freeman                   40,780 shs.(6)     0.2%            -            -     

James W. Wolff                      42,620 shs.(7)     0.2%            -            -     

Directors and Officers          28,135,866 shs.(8)    65.0%            -            -     
as a group (6 persons)                                                                    

----------                                                                                
<FN>                                                                                      
(1)  Unless otherwise provided, the address is c/o Distinctive Devices, Inc.,             
     One Bridge Plaza, Fort Lee, New Jersey 07024.                                        

(2)  Unless otherwise noted, all persons named in the table have sole voting and          
     investment power with respect to all shares owned by them. The number of             
     shares beneficially owned by each person includes shares that are currently          
     exercisable or convertible within 60 days of the Record Date pursuant to             
     convertible securities, and assuming approval of Proposal 2 and/or 5.                

(3)  Includes 21,666,666 shares underlying the Series D Preferred Stock.                  

(4)  Includes (i) 1,250,000 shares owned by a company controlled by Mr. Ammosov           
     and (ii) 1,600,000 shares underlying a 10% Convertible Debenture held by a           
     second company controlled by him.                                                    

(5)  Includes 125,000 shares underlying the Series C Preferred Stock. Does not            
     include 1,125,000 shares of Common Stock underlying 9,000 shares of Series           
     C Preferred Stock owned by Mr. Mody's wife, as to which shares he disclaims          
     any beneficial ownership.                                                            

(6)  Shares held by Mr. Freeman's wife, as to which shares he disclaims any               
     beneficial interest.                                                                 

(7)  These shares are owned by a company controlled by Mr. Wolff.                         

(8)  See notes (3) through (7).                                                           
</FN>                                                                                     

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PROPOSAL 1

 ELECTION OF DIRECTORS

INFORMATION ABOUT NOMINEES                                                      

Five directors will be elected at the Special Meeting. The Company    
currently has six directors, five of whom are management nominees. The sixth    
director, James W. Wolff, is not on the management slate. As of the Meeting, the
number of directors shall be reduced to five persons.                           

   The enclosed proxy, unless otherwise specified, will be voted to elect as
directors the nominees named below. Each director elected at the Meeting will   
serve until the next Annual Meeting of Shareholders and until his successor is  
duly elected and qualified. All nominees have consented to serve as directors.  
If a nominee should not be available for election as contemplated, the          
management proxy holders will vote for a substitute designated by the current   
Board of Directors.                                                             

    The following table sets forth certain information, as of the Record Date,
concerning the nominees for election as directors of the Company. For           
information as to the shares of the Common Stock held by each nominee, see the  
section "Security Ownership of Certain Beneficial Holders and Management"       
elsewhere in this Proxy Statement.                                              

                                                                [Download Table]

                            Age as of     Director    Other Position(s)         
Nominee                     Record Date   Since       With Company              
-------                     -----------   --------    -----------------         
                                                                                
Sanjay Mody                 44            2000        Chief Executive Officer,  
                                                      President, Chief Financial
                                                      Officer and Treasurer     

Earl M. Anderson, Jr.       77            1982        Secretary                 

Alexander Ammosov           38            2002                                  

Walter E. Freeman           77            1983                                  

Shrikant C. Mehta           58            2001                                  

 Mr. Mody has served as President, CEO, Treasurer and CFO of the Company
since May 2001, and has been a director since March 2000. Since March 2000, he  
has been an active investor in several technology companies and headed Webpulse 
Consulting, Inc., engaged in website and portal development until its           
acquisition by the Company in October 2001. Prior thereto, he served for four   
years as Vice President of Laidlaw Global Securities in New York City. He is a  
director of Realtime Access Inc., which in April 2002 filed for reorganization  
under Chapter 11 of the Federal Bankruptcy Law. He also serves as a director of 
Caprius, Inc., (OTCBB:CAPR), a manufacturer and distributor of diagnostic test  
kits.                                                                           

Mr. Ammosov is the Deputy Chairman of "COPF" Bank and Chairman of     
Linkcapital Business Consulting, Ltd., both headquartered in Moscow, Russia, and
has been so involved for the past five years. "COPF" is a securities brokerage  
firm where Mr. Ammosov supervises financing of new Bank projects. Linkcapital is
a diversified holding company with interests in oil distribution, aircraft      
sales, retail food chains, tourism, diamond production and pension fund         
management.                                                                     

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     Mr. Anderson has been an independent management consultant for more than 30
years. He served as the Company's President from 1978 to 1999 and since 1999 he 
has been Secretary. He is also a director of Sunair Electronics, Inc. (AMEX:    
SNR), a manufacturer and provider of high frequency radio communications        
systems. He holds B.S. and J.D. Degrees from Northwestern University and is a   
retired member of the Illinois Bar.                                             

     Mr. Freeman has acted as a financial consultant and bank management advisor
in the Washington D.C. area for more than the last five years. Prior thereto, he
had served as Vice President of the International Bank of Washington. During a  
30-year tenure, he was the President of Bank subsidiaries engaged in consumer   
credit, property and casualty insurance and industrial lending and investments. 
He holds a Bachelors Degree from the American Institute of Business.            

     Mr. Mehta has served for more than the past five years as CEO and President
of Combine International, Inc., a manufacturer and distributor of fine jewelry, 
and Internet Operations Center, Inc., a provider of web hosting and Internet    
professional services, both located in the Detroit, Michigan area. He also was  
founder of Inknowvator, Inc., I*Logic, Inc., POM Group, Inc. and Lenderlive.com,
all closely-held corporations. He also serves as a director of Caprius, Inc. He 
is a director of Real Time Access Inc. which in April 2002 filed for            
reorganization under Chapter 11 of the Federal Bankruptcy Law. He holds Bachelor
and Master Degrees in Electronics from Case Institute of Technology and Wayne   
State University, respectively.                                                 

 Mr. Mehta is the uncle of Mr. Mody. There are no other family relations
among the officers and directors.                                               

EXECUTIVE COMPENSATION                                                          

  The following table sets forth compensation paid or accrued to the chief
executive officer. No executive officer received compensation exceeding $100,000
for any of the last three completed fiscal years.                               

                                                                [Download Table]

                           SUMMARY COMPENSATION TABLE                          

Name and                                                   Other               
Principal Position        Period       Fee or Salary    Compensation     Total 
------------------        ------       -------------    ------------     ----- 
                                                                               
James W. Wolff                                                                 
  President and CEO    Jan.-May 2001      $46,200           None        $46,200

Sanjay S. Mody                                                                 
  President and CEO    May-Dec. 2001      $65,000           None        $65,000

The above compensation does not include benefits which may be deemed  
personal, the amount of which cannot be precisely determined. No stock options  
or stock appreciation rights were granted in 2001 nor are any stock options or  
SARs outstanding.                                                               

     The Company has had no formal compensatory plan or contract with respect to
the employment, resignation, retirement or termination of any director or       
officer, nor arising from a change in control of the Company.                   

     On May 15, 2001, Sanjay Mody became President, Chief Executive Officer, CFO
and Treasurer of the Company at a base compensation of $108,000 per annum.      

Mr. Anderson receives $3,000 per month for the performance of         
administrative and corporate services to the Company.                           

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   The Company is authorized to pay to each non-employee director the amount
of $1,000 for each Board or Committee meeting attended in person (plus          
reimbursement of travel expenses) or $500 for each telephonic meeting. During   
the 2001 fiscal year, an aggregate of $4,000 was paid or accrued to the         
non-employee directors.                                                         

BOARD MEETINGS AND COMMITTEES                                                   

During fiscal year 2001, four board meetings were held at which all   
directors were present. Other matters requiring board action were taken by the  
unanimous written consent of directors, in lieu of a meeting.                   

   In July 2001, the Board of Directors established a Compensation Committee
and designated Messrs. Anderson and Mehta as its members. This Committee will   
recommend the compensation for the executive officers and would administer the  
2001 Option Plan. This Committee did not hold any formal meetings in fiscal     
2001.                                                                           

RELATED TRANSACTIONS                                                            

  On October 31, 2001, the Company acquired all of the outstanding capital
stock of Webpulse Consulting, Inc. ("Webpulse") for 1,770,000 shares of the     
Company's Common Stock. Mr. Mody was a founder and is President and sole        
director of Webpulse and his wife is Secretary and was a principal shareholder  
for which she received 1,100,000 shares of the Company's Common Stock. Webpulse 
is engaged primarily in software design and the operation of an online website  
for manufacturers and suppliers of materials used in the creation of jewelry    
permitting them an alternative means of buying, selling or otherwise transacting
business. The Company did not obtain a third party opinion regarding the        
fairness of the financial terms of the Webpulse transaction.                    

In December 2001, Mr. Mody and his wife exchanged 1,250,000 shares of 
Common Stock for 10,000 shares of the Company's newly-authorized Series C       
Preferred Stock. The exchange was undertaken to enable the Company to sell the  
same number of shares of Common Stock for cash to Alexander Ammosov because the 
available number of authorized and unissued shares of Common Stock was          
inadequate. Each share of Series C Preferred Stock is convertible into 125      
shares of Common Stock and votes on an as-converted basis, subject to mandatory 
conversion upon an increase in authorized Common Stock, see Proposal 5.         

   In December 2001, a company controlled by Mr. Ammosov purchased 1,250,000
shares of Common Stock at $.08 per share and simultaneously Linkcapital Business
Consulting, Ltd. ("Linkcapital"), a second company controlled by him, acquired  
for $400,000 a 10% Convertible Subordinated Debenture in the principal amount of
$400,000 and repayable in five years. The Debentures are convertible into Common
Stock at prices ranging from $.25 per share in the first year to $.75 in the    
fifth year. Mr. Ammosov became a director of the Company in March 2002.         

Linkcapital holds a 49% interest in a venture with the Company for the
marketing in Russia of products under the Company's distribution agreement with 
Realtime Access, Inc. ("RTA"). The distribution agreement was entered into in   
September 2001 and covers Bulgaria, Russia, Turkey and Ukraine. Mr. Mody is a   
director and a shareholder of RTA and Mr. Mehta is a director of RTA. In April  
2002, RTA filed for reorganization under Chapter 11 of the Federal Bankruptcy   
Law.                                                                            

 In August 2002, Shrikant C. Mehta, a director of the Company, purchased
173,333 shares of the Company's newly-authorized Series D Preferred Stock for   
$650,000. Each share of Series D Preferred Stock is convertible into 125 shares 
of Common Stock, votes on an as-converted basis on most matters, is subject to  

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mandatory conversion upon an increase in authorized Common Stock, and has a     
liquidation preference of $3.75 per share.                                      

PROPOSAL 2

 APPROVAL OF REINCORPORATION IN DELAWARE

GENERAL                                                                         

  The Board of Directors has approved and declared advisable a proposal to
change the Company's state of incorporation from New York to Delaware. The      
Reincorporation will be effected by merging the Company with and into           
Distinctive Devices, Inc., a Delaware corporation ("DDI-DE"), in accordance with
the terms of an Agreement and Plan of Merger (the "Merger Agreement"). A copy of
the form of Merger Agreement is attached to this Proxy Statement as Exhibit A,  
and statements herein regarding such Agreement are qualified by reference to the
complete Merger Agreement.                                                      

    Upon the effective date of the Reincorporation, every outstanding share of
the Company's Common Stock will be automatically exchanged for one share of the 
common stock of DDI-DE (the "DDI-DE Common Stock"), each outstanding share of   
Series C Preferred Stock will be exchanged for 125 shares of DDI-DE Common      
Stock, and each outstanding share of Series D Preferred Stock will be exchanged 
for 125 shares of DDI-DE Common Stock, subject to approval of a reverse         
stock-split, which is Proposal 4 to this Proxy Statement, and implementation    
thereof prior to the effective date of the Reincorporation. The Company will    
cease to exist as a New York corporation, and DDI-DE will be the continuing or  
surviving corporation of the Reincorporation. Thus, DDI-DE will succeed to all  
of the business and operations, own all of the assets and other properties and  
will assume and become responsible for all of the liabilities and obligations of
the Company. The Reincorporation, therefore, will not involve any change in the 
business, properties or management of the Company. The name of the surviving    
company will be Distinctive Devices, Inc. The persons serving as officers and   
directors of the Company will serve as the officers and directors of DDI-DE     
after the Reincorporation, see Proposal 1, "Election of Directors."             

     At the Board's direction, DDI-DE was formed as a wholly-owned subsidiary of
the Company for the purpose of the Reincorporation. The only activities that    
DDI-DE will engage in prior to the Reincorporation are formation and            
organizational matters.                                                         

PURPOSE OF MERGER AND REINCORPORATION                                           

    The purpose of the Reincorporation is to change the state of incorporation
and legal domicile of the Company from New York to Delaware. The Board of       
Directors believes that this change in the domicile would be in the best        
interests of the Company and its shareholders.                                  

    The Company was incorporated in New York in 1961 as its initial operations
were located in New York. Over the years, the Company has moved its operations, 
whereby it has ceased any activities in New York and now has its principal      
operations in New Jersey. Delaware has long been a leading state in adopting,   
construing, and implementing comprehensive and flexible corporate laws that     
respond to the legal and business needs of corporations. As a result, the       
Delaware General Corporation Law (the "DGCL") is widely regarded to be one of   
the best-defined bodies of corporate law in the United States. The Delaware     
legislature is particularly sensitive to corporate law issues, and Delaware     
courts have developed considerable expertise in construing Delaware's corporate 
law. Accordingly, the Board of Directors believes that Delaware law would       
provide greater predictability in the Company's legal affairs than is currently 
available under New York law.                                                   

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The interests of the Company's Board of Directors, management, and    
affiliated shareholders in voting on the Reincorporation proposal may not be the
same as those of unaffiliated shareholders. Delaware law does not afford        
minority shareholders some of the rights and protections available under New    
York law. A discussion of the principal differences between New York and        
Delaware law as they affect shareholders is set forth below in the section      
entitled "Significant Changes Caused by the Reincorporation."                   

AUTHORIZED SHARES OF STOCK                                                      

    The Company's Certificate of Incorporation authorizes 20,000,000 shares of
Common Stock, par value $.05 per share, and 1,000,000 shares of preferred stock,
par value $1.00 per share (the "Preferred Stock"), of which 19,134,824 shares of
Common Stock, 10,000 shares of Series C Preferred Stock and 173,333 shares of   
Series D Preferred Stock were issued and outstanding as of the Record Date.     
DDI-DE's Certificate of Incorporation authorizes 100,000,000 shares of common   
stock, par value $0.001 per share and 5,000,000 shares of preferred stock, par  
value $0.001. Assuming the Reincorporation proposal is not approved, Proposal 5 
in this Proxy Statement provides for shareholders to vote upon proposed         
increases in the authorized capital stock of the Company, and Proposal 4 seeks  
authorization for the Board to implement a reverse stock split (the "Reverse    
Split"). Should the Reverse Split be implemented prior to effecting the         
Reincorporation, depending upon the ratio for the Reverse Split, DDI-DE would   
reduce the number of authorized shares of its capital stock in order to lower   
its Delaware franchise tax liability. The only shares of capital stock that     
DDI-DE will issue in connection with the Reincorporation are shares of DDI-DE   
Common Stock in exchange for the Company's outstanding Common Stock and upon    
mandatory conversion of the outstanding Preferred Stock.                        

EXCHANGE OF THE STOCK                                                           

Assuming shareholder approval of this proposal, as soon as the        
Reincorporation becomes effective, each outstanding share of the Company's      
Common Stock will automatically convert into and be exchangeable for one share  
of DDI-DE Common Stock, and each share of outstanding Series C Preferred Stock  
and Series D Preferred Stock will be exchanged for 125 shares of DDI-DE Common  
Stock; provided that in the event the Reverse Split in Proposal 4 is approved   
and implemented prior to the effective date of the Reincorporation, the exchange
will be based upon the outstanding post-split capital stock of the Company and  
the Company shareholders will automatically become stockholders of DDI-DE. In   
lieu of issuing fractional shares, any exchange resulting in fractional shares  
will be rounded up or down to the nearest whole share, provided that at least   
one whole share would be issued to each record holder.                          

Shareholders do not need to take any action to exchange their stock   
certificates for DDI-DE stock certificates prior to the Special Meeting. Upon   
completion of the Reincorporation, DDI-DE will send a notice to all shareholders
of the Company as of the effective date of the Reincorporation, notifying them  
of the completion and advising them how to exchange their certificates of shares
of the Company's Common Stock for DDI-DE stock certificates. Shareholders should
not destroy their old certificates. After the Reincorporation, shareholders of  
the Company may continue to make sales or transfers using their Company stock   
certificates. DDI-DE will issue new certificates representing shares of DDI-DE  
Common Stock for transfers occurring after the Reincorporation. On request,     
DDI-DE will issue new certificates to anyone who holds Company stock            
certificates in exchange therefor. Any request for new certificates into a name 
different from that of the registered holder will be subject to normal stock    
transfer requirements, including proper endorsement and signature guarantee, if 
required.                                                                       

Shareholders do not have any statutory appraisal rights on the        
Reincorporation.                                                                

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TRANSFERABILITY OF SHARES                                                       

     Shareholders whose shares of the Company's Common Stock are freely tradable
before the Reincorporation will own shares of DDI-DE that are freely tradable   
after the Reincorporation. Similarly, any shareholders holding securities with  
transfer restrictions before the Reincorporation will hold shares of DDI-DE that
have the same transfer restrictions after the Reincorporation. For purposes of  
computing the holding period under Rule 144 of the Securities Act, those who    
hold DDI-DE stock certificates will be deemed to have acquired their shares on  
the date they originally acquired their Company shares.                         

After the Reincorporation, DDI-DE will continue to be a publicly held 
company, and, like the Company's shares, shares of DDI-DE will be quoted on the 
OTC Bulletin Board, however under a different trading symbol and CUSIP number.  
DDI-DE will also file periodic reports and proxy material with the SEC and      
provide to its stockholders the same types of information that the Company has  
previously filed and provided.                                                  

CERTAIN FEDERAL INCOME TAX CONSEQUENCES OF THE REINCORPORATION                  

   The discussion of U.S. federal income tax consequences set forth below is
for general information only and does not purport to be a complete discussion or
analysis of all potential tax consequences that may apply to a shareholder.     
Shareholders are urged to consult their tax advisors to determine the particular
tax consequences of the Reincorporation, including the applicability and effect 
of federal, state, local, foreign and other tax laws.                           

   The following discussion sets forth the principal U.S. federal income tax
consequences of the Reincorporation to the Company shareholders who hold their  
shares as a capital asset. It does not address all of the federal income tax    
consequences that may be relevant to particular shareholders based upon their   
individual circumstances or to shareholders who are subject to special rules,   
such as financial institutions, tax-exempt organizations, insurance companies,  
dealers in securities, foreign holders or holders who acquired their shares     
pursuant to the exercise of employee stock options or otherwise as compensation.

    The following disclosure is based on the Internal Revenue Code of 1986, as
amended (the "Code"), laws, regulations, rulings and decisions in effect as of  
the date of this Proxy Statement, all of which are subject to change, possibly  
with retroactive effect, and to differing interpretations. The following        
disclosure does not address the tax consequences to our shareholders under      
state, local and foreign laws. The Company has neither requested nor received a 
tax opinion from legal counsel with respect to the consequences of the          
Reincorporation. No rulings have been or will be requested from the Internal    
Revenue Service with regard to the consequences of Reincorporation. There can be
no assurance that future legislation, regulations, administrative rulings or    
court decisions would not alter the consequences set forth below.               

    The Reincorporation provided for in the Merger Agreement is intended to be
a tax-free reorganization under the Code. Assuming the Reincorporation qualifies
as a reorganization, no gain or loss will be recognized to the holders of the   
Company's capital stock as a result of consummation of the reincorporation, and 
no gain or loss will be recognized by the Company or DDI-DE. Each former holder 
of the Company's Common Stock will have the same basis in the capital stock of  
DDI-DE received by that holder pursuant to the reincorporation as that holder   
has in the Company's Common Stock held by that holder at the time the           
Reincorporation is consummated. Each shareholder's holding period with respect  
to DDI-DE's Common Stock will include the period during which that holder held  
the corresponding Company Common Stock, provided the latter was held by such    
holder as a capital asset at the time of consummation of the Reincorporation was
consummated.                                                                    

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ACCOUNTING TREATMENT                                                            

  In accordance with generally accepted accounting principles, the Company
expects that the Reincorporation will be accounted for as a reorganization of   
entities under common control and recorded at historical cost.                  

REGULATORY APPROVALS                                                            

The Reincorporation will not be consummated until after shareholder   
approval. The Company will obtain all required consents of governmental         
authorities, including the filing of a Certificate of Merger with the Secretary 
of State of the State of New York and the filing of a Certificate of Ownership  
and Merger with the Secretary of the State of Delaware.                         

SIGNIFICANT CHANGES CAUSED BY THE REINCORPORATION                               

    Delaware law differs in certain respects from New York law. Although it is
not practical to compare all the differences between the laws governing         
corporations in New York and Delaware, the following discussion provides a      
summary of the material differences which may affect the rights of shareholders.
The Company's corporate affairs are governed at present by the Business         
Corporation Law of New York (the "New York Law") and by its Certificate of      
Incorporation filed in New York (the "New York Certificate") and by the By-laws 
adopted pursuant to New York Law (the "New York By-laws"). Following the        
Reincorporation, the Company's corporate affairs will be governed by the DGCL   
and by the certificate of incorporation of DDI-DE (the "Delaware Certificate")  
and by the by-laws of DDI-DE (the "Delaware By-laws"). Both sets of Certificates
of Incorporation and By-laws are available for inspection during business hours 
at the Company's principal executive offices. In addition, copies may be        
obtained by writing to the Company at Distinctive Devices, Inc., One Bridge     
Plaza, Suite 100, Fort Lee, NJ 07024, Attention: Secretary.                     

   Under New York Law, a person who owns stock of the Company is referred to
as a "shareholder;" while under Delaware Law, such person is known as a         
"stockholder." Such terms have the same meaning and are used herein             
interchangeably.                                                                

  Action by Written Consent of Shareholders in lieu of a Shareholder Vote.
New York Law allows shareholders to act by written consent in lieu of a meeting 
only by unanimous written consent of those shareholders who would have been     
entitled to vote on a given action at a meeting, unless the certificate of      
incorporation permits that action to be taken by the holders of outstanding     
shares having at least the minimum number of votes required to authorize the    
action at a meeting at which all shares entitled to vote thereon were present   
and voted. The New York Certificate does not contain such a provision.          
Conversely, Delaware Law states that unless the certificate of incorporation    
provides otherwise, stockholders may act by written consent if at least the     
minimum number of votes required to authorize that action at a meeting at which 
all shares entitled to vote thereon were present and voted. The Delaware        
Certificate does not contain any provision to the contrary so stockholders may  
take action by written consent to the extent permitted by Delaware Law.         

     Amendment of By-laws. Delaware Law allows a Board of Directors to recommend
that stockholders amend the certificate of incorporation, and a majority of the 
shares entitled to vote at a stockholders' meeting are normally enough to       
approve that amendment. Under New York Law, except for certain ministerial      
changes to the certificate of incorporation that the Board of Directors may     
authorize and except as otherwise required by the certificate of incorporation, 
the Board of Directors may recommend an amendment to the certificate of         
incorporation for approval by shareholders and a majority of the shares entitled
to vote at a shareholders' meeting is enough to approve that amendment.         

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     Who May Call a Special Meeting of Shareholders. Under both New York Law and
Delaware Law, the Board of Directors or anyone authorized in the certificate of 
incorporation or by-laws may call a special meeting of shareholders. Under both 
the New York By-laws and the Delaware By-laws a special meeting can be called by
the President, any two directors or by any officer instructed by the Board to   
call the meeting, or shareholders holding at least 25% of the shares entitled to
vote at the meeting.                                                            

  Right of Shareholders to Inspect Shareholder List. Under New York Law, a
shareholder of record may inspect the list of shareholders of record if at least
five days previously he delivered a written demand to do so. A corporation may  
deny a shareholder's demand if the shareholder refuses to give an affidavit that
his inspection is not for certain purposes unrelated to company business and    
that the shareholder has not been involved in the last five years in selling or 
offering to sell a list of record shareholders. Under Delaware Law, any         
stockholder may, upon making a demand under oath stating the purpose thereof,   
inspect the stockholders' list for any purpose reasonably related to that       
person's interest as a stockholder. In addition, for at least ten days prior to 
each stockholder's meeting, as well as at the meeting, a Delaware corporation   
must make available for examination a list of stockholders entitled to vote at  
the meeting.                                                                    

   Vote Required for Certain Transactions. Until February 1998, New York Law
required the holders of at least two-thirds of the outstanding stock of a New   
York corporation to approve certain mergers, consolidations or sales of all or  
substantially all the corporation's assets that may occur outside the ordinary  
course of business. Since February 1998, a New York corporation then in         
existence, which would include the Company, may provide in its certificate of   
incorporation that the holders of a majority of the outstanding stock may       
approve such transactions. The Company has not, however, adopted such a         
provision in its Certificate of Incorporation, and so the holders of at least   
two-thirds of the Company's outstanding stock must approve such transactions.   

Under Delaware Law, unless the certificate of incorporation or by-laws
provide otherwise (but in no case may such requirement be less than one-third of
the outstanding stock entitled to vote on such transactions), the holders of a  
majority of the outstanding stock entitled to vote on such transactions have the
power to approve a merger, consolidation, or sale of all or substantially all   
the assets. The Delaware Certificate does not contain any provision otherwise,  
so the holders of a majority of the outstanding stock entitled to vote thereon  
may approve a merger, consolidation, or sale of all or substantially all of the 
Company's assets. Notwithstanding the foregoing, under Delaware Law the vote of 
the stockholders of the surviving corporation is not required to authorize a    
merger if these three conditions are met:                                       

-    the merger agreement does not amend the surviving corporation's  
certificate of incorporation;                               

   -    each share of stock of the surviving corporation that is outstanding
     or in the treasury immediately prior to the effective date of the
     Merger is to be an identical outstanding or treasury share of the
surviving corporation after the effective date; and         

   -    the merger results in no more than a 20% increase in its outstanding
common stock.                                               

   Special vote requirements may apply to certain business combinations with
interested shareholders. See the discussion of these requirements below under   
the heading "Business Combinations with Interested Shareholders."               

Limitation of Directors' Liability. Both New York Law and Delaware Law
permit a corporation to limit a director's personal liability for actions taken 
in that director's official capacity. Under New York Law, a director is not     
liable to the corporation for the benefit of its creditors or shareholders for  
damages if the director has acted in good faith and with the same degree of care
that an ordinarily prudent person would exercise in similar circumstances. New  
York Law also permits a corporation to include in its certificate of            

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incorporation a provision eliminating or limiting the personal liability of a   
director, with certain specific exceptions, to the corporation or its           
shareholders for damages for any breach of duty in that capacity. The New York  
Certificate does not contain such a provision. However, Proposal 5 in this Proxy
Statement seeks shareholder approval of an amendment to the New York Certificate
to provide for the limitation of directors' liability to the extent permitted   
under the New York Law. Under Delaware Law limits on a director's liability must
be addressed in the certificate of incorporation. The Delaware Certificate      
limits directors' monetary liability to the fullest extent permitted by Delaware
Law. However, in some cases directors may be liable despite these limitations.  
Delaware Law forbids any limitation of liability where (1) a director breached  
the duty of loyalty to the corporation or its stockholders, (2) a director's    
acts or omissions were not in good faith or involved intentional misconduct or a
knowing violation of law, (3) a director received an improper personal benefit  
from a transaction involving the corporation, or (4) a director authorized an   
unlawful dividend or stock repurchase or redemption.                            

   Indemnification of Directors and Officers. With some variations, both New
York Law and Delaware Law allow a corporation to "indemnify," that is, to make  
whole, any person who is or was a director or officer of the corporation if that
person is held liable or incurs costs for something that person did or failed to
do in an official capacity.                                                     

Additionally, each of the two laws permits a corporation to purchase  
insurance for its directors and officers against some or all of the costs of    
such indemnification or against liabilities arising from actions and omissions  
of the insured person, even though the corporation may not have power to        
indemnify the person against such liabilities. New York Law, however, restricts 
the kinds of claims that may be made under insurance purchased by the           
corporation against these liabilities. For example, there would be no insurance 
coverage if the person to be indemnified was guilty of deliberate dishonesty and
that dishonesty was material to the event that produced the claim, or if the    
person gained some financial profit or other advantage to which he or she was   
not legally entitled.                                                           

   If the Reincorporation is approved by the Company's shareholders, the New
York Law indemnification provisions will continue to apply to acts and omissions
that occurred prior to the effective date of the Reincorporation.               

Transactions with Interested Directors. New York Law provides several 
methods for establishing the validity of transactions between a corporation and 
interested directors, including a vote by the uninterested directors. The       
comparable provision of Delaware Law provides that no transaction between a     
corporation and an interested director is void or voidable solely because such  
director is present at or participates in the meeting or because that director's
votes are counted if the material facts of that director's interest are known to
the board of directors and the board of directors in good faith authorizes the  
transaction by vote of a majority of the disinterested directors, or if that    
director's interest is disclosed to stockholders and the stockholders in good   
faith approve the transaction.                                                  

Appraisal Rights. Generally, "appraisal rights" entitle dissenting    
shareholders to receive the fair value of their shares in a merger or           
consolidation of a corporation or in a sale of all or substantially all its     
assets. New York Law also extends appraisal rights to an exchange of a          
corporation's shares. New York Law provides that dissenting shareholders have no
appraisal rights if their shares are listed on the New York Stock Exchange or   
another national securities exchange. However, in the case of shares not listed 
on an exchange, appraisal rights under New York Law allow a voting and          
dissenting shareholder of a New York corporation, with various exceptions, to   
receive fair value for its shares in such transactions. One exception is a      
merger between a parent corporation and its subsidiary when the parent owns at  
least 90% of the subsidiary. In this case, a shareholder of the parent          
corporation has no appraisal rights. When appraisal rights are available, the   
shareholder may have to request the appraisal and follow other required         
procedures.                                                                     

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Similarly, under Delaware Law, appraisal rights are not available to a
stockholder if, among other things, the corporation's shares are listed on a    
national securities exchange or designated as a national market system security 
on an interdealer quotation system by the National Association of Securities    
Dealers, Inc., held by more than 2,000 stockholders of record, or if the        
corporation will be the surviving corporation in a merger that does not require 
the approval of the surviving corporation's stockholders. However, regardless of
the foregoing, a dissenting shareholder in a merger or consolidation has        
appraisal rights under Delaware Law if the transaction requires the exchange of 
shares for anything of value other than one or more of the following:           

   -    shares of stock of the surviving corporation or of a new corporation
that results from the merger or consolidation;              

-    shares of another corporation that will be listed on a national  
        securities exchange, designated as a national market system security
     on an interdealer quotation system by the National Association of
        Securities Dealers, Inc., or held by more than 2,000 stockholders of
record after the merger or consolidation occurs; or         

-    cash instead of fractional shares of the surviving corporation or
another corporation.                                        

    Business Combinations with Interested Shareholders. Under New York Law, an
interested shareholder is generally prohibited from entering into certain types 
of business combinations with a New York corporation for a period of five years 
after becoming an "interested shareholder," unless the Board of Directors       
approved either the business combination or the acquisition of stock by the     
interested shareholder before the interested shareholder acquired its shares. An
"interested shareholder" under New York Law is generally a beneficial owner of  
at least 20% of the corporation's outstanding voting stock or is an affiliate or
associate of a corporation who owned at least 20% of the outstanding stock      
within the preceding five years. "Business combinations" under New York Law     
include the following:                                                          

    -    mergers and consolidations between corporations or with an interested
shareholder;                                                

    -    sales, leases, mortgages, pledges, transfers or other dispositions to
      an interested shareholder of assets with an aggregate market value
     which either equals 10% or more of the corporation's consolidated
 assets or outstanding stock, or represents 10% or more of the
consolidated earning power or net income of the corporation;

 -    issues and transfers to an interested shareholder of stock with an
          aggregate market value of at least 5% of the aggregate market value of
the outstanding stock of the corporation;                   

-    liquidation or dissolution of the corporation proposed by or in  
connection with an interested shareholder;                  

    -    reclassification or recapitalization of stock that would increase the
   proportionate stock ownership of an interested shareholder; and

-    the receipt by an interested shareholder of benefit from loans,  
     guarantees, pledges or other financial assistance or tax benefits
provided by the corporation.                                

    New York Law allows such a business combination to take place five or more
years after the interested shareholder became an interested shareholder if the  
transaction is approved by a majority of the voting stock not owned by the      
interested shareholder or by an affiliate or associate of the interested        
shareholder. Business combinations are also permitted when certain statutory    
"fair price" requirements are met and in certain other circumstances.           

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   Section 203(a) of DGCL generally prohibits an interested stockholder from
entering into certain types of business combinations with a Delaware corporation
for three years after becoming an interested stockholder unless:                

    -    before the stockholder became an interested stockholder, the Board of
       Directors approved the business combination or the transaction that
   resulted in the stockholder becoming an interested stockholder;

 -    after the transaction that resulted in the stockholder becoming an
         interested stockholder, the interested stockholder owned at least 85%
      of the voting stock of the corporation outstanding at the time the
     transaction commenced, subject to technical calculation rules; or

   -    on or after the time the interested stockholder became an interested
          stockholder, the board of directors approved the business combination,
       and at least two-thirds of the outstanding voting stock that is not
  owned by the interested stockholder also ratified the business
combination at a stockholders' meeting.                     

     An "interested stockholder" under Delaware Law is any person other than the
corporation and its majority-owned subsidiaries who owns at least 15% of the    
outstanding voting stock or is an affiliate or associate of the corporation who 
owned at least 15% of the outstanding stock within the preceding three years,   
and this definition includes affiliates of the corporation. Briefly described,  
the prohibited combinations include:                                            

-    mergers or consolidations;                                       

-    sales, leases, exchanges, mortgages, pledges, transfers or other 
        dispositions of 10% or more of (1) the aggregate market value of all
          assets of the corporation or (2) the aggregate market value of all the
outstanding stock of the corporation;                       

-    any transactions resulting in the issuance or transfer by the    
         corporation of stock in the corporation to the interested stockholder
except in limited instances;                                

-    receipt by the interested stockholder of the benefit of loans,   
         advances, guarantees, pledges or other financial benefits provided by
the corporation; and                                        

 -    any other transaction, with certain exceptions, that increases the
         proportionate share of the stock owned by the interested stockholder.

     Proxies. Under New York Law, a proxy cannot be voted or acted upon after 11
months from its date unless the proxy provides for a longer period. Under       
Delaware Law a proxy cannot be voted or acted upon after three years from its   
date unless the proxy provides for a longer period.                             

    Nomination of Directors. Neither the New York Certificate nor the New York
By-laws contain provisions regarding the nomination of directors. The Delaware  
By-laws provide that nominations of directors may be made at annual meetings of 
stockholders by or at the direction of the Board of Directors, or by any        
stockholder entitled to vote for the election of directors at such annual       
meeting who provides timely notice to the Secretary of the Corporation.         

     Other Changes to Reflect Technical Differences Between Delaware Law and New
York Law. In addition to the changes described above, certain technical changes 
have been made in the Delaware Certificate and Delaware By-laws from the New    
York Certificate and New York By-laws to reflect differences between Delaware   
Law and New York Law. Such technical changes include designation of a registered

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office and registered agent in the State of Delaware for jurisdiction in certain
claims against the Corporation.                                                 

BLANK CHECK PREFERRED                                                           

    Both the Company and DDI-DE authorize their respective Boards of Directors
to issue shares of Preferred Stock in series with such preferences as designated
at the time of issuance. The Board of Directors of DDI-DE does not currently    
intend to seek stockholder approval prior to any issuance of shares of its      
Preferred Stock if the Reincorporation proposal is approved, except as required 
by law or regulation. Frequently, opportunities arise that require prompt       
action, and the Board of Directors believes that the delay necessary for        
stockholder approval of a specific issuance would be a detriment to DDI-DE and  
its stockholders. The Board of Directors does not intend to issue any Preferred 
Stock except on terms which the Board of Directors deems to be in the best      
interests of DDI-DE and its then existing stockholders. The foregoing has been  
the policy of the Company's Board of Directors.                                 

   It should be noted that the voting rights and other rights to be accorded
to any unissued series of Preferred Stock of DDI-DE remain to be fixed by the   
Delaware Board. Accordingly, if the Delaware Board so authorizes, the holders of
Preferred Stock may be entitled to vote separately as a class in connection with
approval of certain extraordinary corporate transactions or might be given a    
disproportionately large number of votes. Such Preferred Stock could also be    
convertible into a large number of shares of common stock of DDI-DE under       
certain circumstances or have other terms that might make acquisition of a      
controlling interest in DDI-DE more difficult or more costly, including the     
right to elect additional directors to the Board of Directors of DDI-DE.        
Potentially, Preferred Stock could be used to create voting impediments or to   
frustrate persons seeking to effect a merger or otherwise to gain control of    
DDI-DE. Also, Preferred Stock could be privately placed with purchasers who     
might side with the management of DDI-DE in opposing a hostile tender offer or  
other attempt to obtain control.                                                

FINANCIAL STATEMENTS                                                            

    Accompanying this Proxy Statement are the Company's (i) 2001 Annual Report
containing its Form 10-KSB for the fiscal year ended December 31, 2001; and (ii)
Quarterly Report on Form 10-QSB for the three and the six month periods ended   
June 30, 2002. The Annual Report includes audited financial statements for the  
two years ended December 31, 2001.                                              

BOARD RECOMMENDATION                                                            

    A vote FOR the Reincorporation will constitute approval of the merger, the
Delaware Certificate, the Delaware By-laws, and adoption and assumption by      
DDI-DE of the Company's employee benefit plans, agreements and liabilities.     

  THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT SHAREHOLDERS VOTE FOR
THE REINCORPORATION.                                                            

PROPOSAL 3

RATIFICATION OF 2001 STOCK OPTION PLAN

GENERAL                                                                         

The Board of Directors of the Company has unanimously approved for    
submission to a vote of the shareholders a proposal to ratify adoption of the   
2001 Stock Option Plan covering 6,500,000 shares of Common Stock reserved for   

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issuance pursuant to the exercise of options granted thereunder. The number of  
authorized number of shares of Common Stock under the 2001 Option Plan assumes  
shareholder approval of the Reincorporation and the increase in capital stock   
proposals. Assuming implementation of the Reverse Split, the number of shares of
Common Stock reserved for the 2001 Option Plan may be reduced to give effect to 
the Reverse Split. It is noted that DDI-DE has adopted an option plan identical 
to the Company's 2001 Option Plan. Assuming approval of the Reincorporation, any
options granted under the Company's 2001 Option Plan would be exchanged for     
options under the DDI-DE plan on the same ratio as the Common Stock exchange    
ratio. A copy of the 2001 Option Plan is attached to this Proxy Statement as    
Exhibit B, and statements herein regarding the Plan are qualified by reference  
to the complete Plan.                                                           

  As of the Record Date, no stock options have been granted under the 2001
Option Plan. Mr. Mody had been granted an option thereunder to purchase 500,000 
shares, however, such option has been cancelled. There are no other stock       
options outstanding to purchase shares of the Company's Common Stock.           

PURPOSES OF THE 2001 OPTION PLAN                                                

The purposes of the 2001 Option Plan are to (i) provide incentives to 
certain directors, officers, employees and other persons who perform services on
behalf of the Company and any subsidiaries of the Company by providing them with
opportunities to purchase Common Stock in the Company pursuant to options       
granted thereunder which qualify as "incentive stock options" under Section     
422(b) of the Internal Revenue Code of 1986, as amended (the "Code") ("ISO") or 
which do not qualify as ISOs ("Non-Qualified Option" or "NQSO") and (ii) to     
individuals who are directors but not also employees of the Company and the     
subsidiaries ("Non-Employee Directors"), and to individuals who are independent 
contractors, or consultants to the Company or its subsidiaries, by providing    
them with opportunities to purchase Common Stock pursuant to NQSOs.             

ADMINISTRATION                                                                  

 The 2001 Option Plan is administered by the Compensation Committee (the
"Committee"), each member of which is a Non-Employee Director within the meaning
of Rule 16b-3 or any successor provision under the Exchange Act, or the whole   
Board of Directors. The Committee has authority (i) to select the individuals   
who are to be granted options from among those eligible to participate in the   
Option Plan, (ii) to establish the number of shares which may be issued under   
each option, (iii) to determine at what time options may be granted, (iv) to    
determine the exercise price of shares subject to each option, (v) to determine 
the time at which each option shall become exercisable and the duration of the  
exercise period, (vi) to determine whether restrictions are to be imposed on    
shares subject to options and the nature of such restrictions, if any, and (vii)
to interpret the Option Plan and prescribe and rescind rules and regulations    
relating to it.                                                                 

ELIGIBILITY                                                                     

 Options may be granted only to (i) individuals who are employees of the
Company and its subsidiaries, including officers and directors who are also     
employees at the time the Option is granted, (ii) Non-Employee Directors, and   
(iii) any other persons who perform services for or on behalf of the Company and
its subsidiaries, affiliates or any entity in which the Company has an interest,
or who are deemed by the Board of Directors to be in a position to perform such 
services in the future. Options that constitute ISOs may only be granted to     
employees described in clause (i) above, and Non-Employee Directors shall only  
be granted NQSOs. No option shall be granted pursuant to the Plan after October 
28, 2011.                                                                       

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OPTION PRICE AND TERMS                                                          

Options granted under the 2001 Stock Option Plan may be either ISOs or
NQSOs. The option price of each share of Common Stock subject to an option will 
be fixed by the Committee but shall not be less than the fair market value of   
the Common Stock on the date of grant of the option, defined as the average bid 
and ask price over the prior five days' trading. An option designated as an ISO 
is intended to qualify as such under Section 422 of the Code. Thus, the         
aggregate fair market value, determined at the time of grant, of the shares with
respect to which ISO's are exercisable for the first time by an individual      
during any calendar year may not exceed $100,000. NQSOs are not subject to this 
requirement. Certain adjustments in the option price may be made for            
extraordinary dividend distributions. The Committee determines the option       
period, provided it is not longer than five years, in the case of ISOs granted  
to employees who hold 10% of the outstanding stock of the Company, 10 years in  
the case of ISOs generally, or 10 years, in the case of NQSOs, subject to       
earlier termination, the vesting period and the payment terms. In the event of  
termination of employment, the Optionee may exercise his options at any time    
within one year of the termination, but in no event later than the expiration   
date of the option; however, if the employee is terminated "for cause," the     
option expires immediately. All options vest immediately upon a "change of      
control" of the Company. Upon exercise of an option, payment for shares may be  
made in cash, or, if the option agreement so provides, in shares of Common Stock
calculated based upon their fair market value as of the date of their delivery  
or, a combination of stock and cash.                                            

TRANSFERABILITY                                                                 

Options granted under the 2001 Stock Option Plan are not assignable or
transferable by the Optionee otherwise than (i) by will or the laws of descent  
and distribution, (ii) pursuant to a qualified domestic relations order or Title
I of the Employee Retirement Income Security Act or (iii) with respect to NQSOs,
to a spouse or lineal descendant of the optionee. Options are exercisable during
the lifetime of the Optionee only by the Optionee or by the Optionee's guardian 
or legal representative.                                                        

TERMINATION, SUSPENSION OR MODIFICATION OF THE 2001 OPTION PLAN                 

  The Board of Directors may terminate, suspend, or modify the 2001 Option
Plan at any time but may not, without authorization of the Company's            
stockholders, effect any change which under Section 16(b) of the Securities     
Exchange Act of 1934, as amended, applicable state corporation law or tax law,  
or the rules of any national securities exchange or national quotation system on
which the Common Stock is then listed or traded requires the prior approval of  
stockholders.                                                                   

FEDERAL INCOME TAX CONSEQUENCES                                                 

A participant under the 2001 Option Plan does not realize income for  
federal income tax purposes as a result of (i) the grant of an ISO under the    
2001 Option Plan or (ii) the exercise of an ISO under the 2001 Option Plan. The 
Company is not entitled to a federal income tax deduction upon the grant or     
exercise of an ISO. Long-term capital gains tax rates will apply to the gain    
(excess of the amount received for the shares over the amount paid for the      
shares) at the time that the participant disposes of the shares provided that   
certain holding requirements discussed below are met. The spread between the    
exercise price and the fair market value of the transferred shares at the time  
of the exercise of an ISO is included in alternative minimum taxable income     
subject to the alternative minimum tax for the taxable year in which such       
transfer occurs. If the shares are disposed of in the same taxable year and the 
amount realized is less than that fair market value at the time of exercise, the
amount included in the alternative minimum taxable income will not exceed the   
amount realized over the adjusted basis of the shares.                          

 The availability of the income tax treatment discussed in the foregoing
paragraph is subject to two conditions. First, the participant must continue to 
be an employee of the Company or a parent or subsidiary of the Company at all   

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times during the period beginning on the date that the ISO was granted and      
ending (with exceptions for disability and death) on the date three months      
before the option is exercised. Second, such income tax treatment is available  
only if the participant does not dispose of the shares acquired pursuant to the 
exercise of the ISO (i) within two years from the date of granting of the option
nor (ii) within one year after the shares were issued pursuant to the exercise  
of the option. If the participant disposes of the shares prior to the expiration
of the required holding period, the participant realizes ordinary income in the 
year of disposition and the same amount is then deductible by the Company.      

   A participant realizes no income as a result of the grant of a NQSO under
the 2001 Option Plan. However, a participant realizes ordinary income upon the  
exercise of the NQSO (or at the later date described below) equal to the excess 
of the fair market value of the shares at the time of exercise (or at such later
date) over the option exercise price. The Company is not entitled to a federal  
income tax deduction upon the grant of the NQSO, but upon transfer of the shares
to such participant upon its exercise (or at the later date described below) an 
amount corresponding to the participant's taxable income becomes deductible by  
the Company. The amount of income recognized at the time of exercise is added to
the option price to determine the participant's basis in the shares, and any    
further appreciation upon ultimate sale of the shares is taxable as short- or   
long-term capital gains (with the holding period measured from the date of      
exercise). If the shares received upon exercise are not transferable and are    
subject to a substantial risk of forfeiture, the realization of compensation    
income is postponed until the earlier of the lapse of the forfeiture            
restrictions or the making of an "IRC 83(b) election." For such purposes,       
potential liability by Company insiders under securities laws with respect to   
short swing trading constitutes a substantial risk of forfeiture. Where other   
shares of stock have been purchased within six months of exercise of the option,
recognition of the compensation attributable to such exercise may be postponed  
for a period of six months from the date of purchase of such other shares of    
stock due to such liability.                                                    

THE FOREGOING SUMMARY OF THE EFFECT OF UNITED STATES FEDERAL INCOME   
TAXATION LAWS UPON THE OPTIONEE OR PURCHASER AND THE COMPANY IN CONNECTION WITH 
THE 2001 OPTION PLAN DOES NOT PURPORT TO BE COMPLETE, AND REFERENCE SHOULD BE   
MADE TO THE APPLICABLE PROVISIONS OF THE CODE. IN ADDITION, THIS SUMMARY DOES   
NOT DISCUSS THE PROVISIONS OF THE INCOME TAX LAWS OF ANY MUNICIPALITY, STATE OR 
FOREIGN COUNTRY IN WHICH THE PARTICIPANT MAY RESIDE.                            

BOARD RECOMMENDATION                                                            

    THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT SHAREHOLDERS VOTE "FOR"
RATIFICATION OF THE 2001 STOCK OPTION PLAN.                                     

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PROPOSAL 4

   AUTHORIZE THE BOARD OF DIRECTORS TO EFFECT A REVERSE STOCK SPLIT (FALLING
WITHIN A RANGE BETWEEN AND INCLUDING A ONE-FOR-FOUR AND A ONE-FOR-TEN, REVERSE  
STOCK SPLIT) OF THE COMPANY'S OUTSTANDING COMMON STOCK, DEPENDING UPON A        
DETERMINATION BY THE BOARD THAT A REVERSE STOCK SPLIT IS IN THE BEST INTERESTS  
OF THE COMPANY AND THE SHAREHOLDERS                                             

BACKGROUND                                                                      

The Board of Directors authorized, subject to shareholder approval, a 
Reverse Split (any one falling within a range between and including a           
one-for-four and a one-for-ten split) of the Company's outstanding Common Stock 
that may be effected by the Board depending on market conditions. The intent of 
the Reverse Split is to increase the marketability and liquidity of the Common  
Stock.                                                                          

If the Reverse Split is approved by the shareholders at the Special   
Meeting, the Board of Directors will select the ratio, which shall fall within a
range between and including a one-for-four and a one-for-ten, which, in its     
judgment, would result in the greatest marketability and liquidity of the Common
Stock, based upon prevailing market conditions, on the likely effect on the     
market price of the Common Stock and other factors deemed relevant.             

   If approved by the shareholders, the Reverse Split would become effective
on any date (the "Effective Date") selected by the Board of Directors on or     
prior to the Company's next meeting of shareholders, provided that should the   
Reincorporation in Proposal 2 be approved, the determination to effect the      
Reverse Split would be made prior to the effective date of the Reincorporation. 
Upon the Reincorporation, the post-split shares of the Company's Common Stock   
would be exchanged on a one-for-one basis for shares of DDI-DE Common Stock If  
no Reverse Split is effected by such date, the Board of Directors will take     
action to abandon the Reverse Split. The procedures for the consummation of the 
Reverse Split are attached hereto as Exhibit C.                                 

     The primary reasons for the Reverse Split are to permit the Company to have
sufficient authorized but unissued shares of Common Stock for future issuance   
and to try to increase the per share price in order to facilitate trading       
activity in the Common Stock.                                                   

   There are presently 20,000,000 shares of Common Stock authorized of which
19,134,824 shares are issued and outstanding. In addition, the Company is       
committed to issue: (i) 22,916,666 shares upon the conversion of the outstanding
Series C and Series D Preferred Stock, (ii) up to 6,500,000 shares assuming     
shareholders ratify the adoption of the 2001 Option Plan, see Proposal 3, and   
(iii) 1,600,000 shares assuming conversion of Debentures prior to December 26,  
2002. The Company also desires to have additional authorized shares for future  
capital raising, acquisitions and other options, although there are no current  
plans for any such issuances other than described above.                        

In the event neither this Proposal nor the Reincorporation Proposal is
adopted, the Company would be compelled to seek approval at the next            
shareholders meeting of an increase in the authorized shares of capital stock   
beyond the increase sought in Proposal 5, and may have to postpone              
implementation of certain corporate transactions pending approval of a further  
increase in the authorized capital stock.                                       

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PURPOSES AND EFFECTS OF A REVERSE SPLIT                                         

   Consummation of the Reverse Split will not alter the number of authorized
shares of Common Stock, which will remain 20,000,000 shares, $.05 par value,    
assuming neither the Reincorporation nor Proposal 5 is approved. Consummation of
the Reverse Split will not have any federal tax consequences to shareholders.   

    The Common Stock is listed for trading on the OTC Bulletin Board under the
symbol DDEV. On the Record Date, the reported closing price of the Common Stock 
on the OTC Bulletin Board was $0.02 per share.                                  

 The Board believes that the current per share price of the Common Stock
limits the effective marketability of the Common Stock because of the reluctance
of many brokerage firms and institutional investors to recommend lower-priced   
stocks to their clients or to hold them in their own portfolios. Certain        
policies and practices of the securities industry may tend to discourage        
individual brokers within those firms from dealing in lower-priced stocks. Some 
of those policies and practices involve time-consuming procedures that make the 
handling of lower-priced stocks economically unattractive. The brokerage        
commission on a sale of lower-priced stock may also represent a higher          
percentage of the sale price than the brokerage commission on a higher-priced   
issue. Any reduction in brokerage commissions resulting from the Reverse Split  
may be offset, however, in whole or in part, by increased brokerage commissions 
required to be paid by stockholders selling "odd lots" created by such Reverse  
Split.                                                                          

The Reverse Split would have the following effects upon the number of 
shares of Common Stock outstanding and the number of authorized and unissued    
shares of Common Stock (assuming that no additional shares of Common Stock are  
issued by the Company after the Record Date). The following examples are not    
exhaustive of all possible Reverse Splits that fall within the Board approved   
range, and are only intended for illustrative purposes.                         

                                                        [Enlarge/Download Table]

                             Common                                   Unissued and        
Reverse Stock Split     Stock Outstanding    Reserved Shares*    Authorized Common Stock**
-------------------     -----------------    ---------------     -----------------------  
                                                                                          
     Current               19,134,824          31,016,666                865,176          
     1 for 4                4,783,706           7,754,167              7,462,127          
     1 for 6                3,189,137           5,169,444             11,641,419          
     1 for 10               1,913,482           3,101,667             14,984,851          

----------                                                                                
<FN>                                                                                      
*    Includes shares reserved under the 2001 Option Plan, and for conversion of           
     the Series C Preferred Stock, the Series D Preferred Stock and Debentures.           
     These reserved shares cannot be exercised or converted unless the                    
     shareholders approve the increase in the authorized shares of Common Stock;          
     see Proposal 5. The Series C Preferred Stock and Series D Preferred Stock            
     automatically convert into Common Stock upon approval of Proposal 5.                 

**   Based upon 20,000,000 shares as presently authorized, assumes shareholder            
     approval of the Reverse Split, but does not assume shareholder approval of           
     the increase in the authorized capital stock.                                        
</FN>                                                                                     

At the Effective Date, each share of the Common Stock issued and      
outstanding immediately prior thereto (the "Old Common Stock"), will be         
reclassified as and changed into the appropriate fraction of a share of the     
Company's Common Stock (the "New Common Stock"), subject to the treatment of    
fractional share interests as described below. Shortly after the Effective Date,
the Company will send transmittal forms to the holders of the Old Common Stock  
to be used in forwarding their certificates formerly representing shares of Old 
Common Stock for surrender and exchange for certificates representing whole     

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shares of New Common Stock. No certificates or scrip representing fractional    
share interests in the New Common Stock will be issued. Instead, any fractional 
share interest will be adjusted either upward or downward to the nearest whole  
share.                                                                          

RECOMMENDATION                                                                  

    THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT SHAREHOLDERS VOTE "FOR"
APPROVAL OF THE REVERSE SPLIT.                                                  

PROPOSAL 5

 INCREASE IN AUTHORIZED SHARES OF COMMON STOCK
 AND PREFERRED STOCK

PROPOSAL                                                                        

The Company has authorized 20,000,000 shares of Common Stock, $.05 par
value, of which 19,134,824 shares are issued and outstanding, and 1,000,000     
shares of Preferred Stock, $1.00 par value, of which 10,000 shares of Series C  
Preferred Stock and 173,333 shares of Series D Preferred Stock are outstanding. 
In the event shareholders do not approve the Reincorporation (see Proposal 2),  
the Company will need additional authorized shares of Common Stock to fulfill   
future needs for capital raising, any option exercises, Preferred Stock         
conversions, acquisitions and other corporate purposes. Management therefore    
proposed an amendment to the Company's Certificate of Incorporation (i) to      
increase the number of authorized shares of Common Stock to 100,000,000 shares  
and to decrease the par value to $0.001 per share, and (ii) to increase the     
number of authorized shares of Preferred Stock to 5,000,000 shares and to       
decrease the par value to $0.001 per share.                                     

BACKGROUND                                                                      

   The Company has authorized 1,000,000 shares of Preferred Stock, $1.00 par
value, of which 60,000 shares have been designated as Series C Preferred Stock  
and 250,000 shares have been designated as Series D Preferred Stock. The shares 
of Preferred Stock may be issued having such preferences and rights as the Board
of Directors of the Company may designate at the time of issuance, including    
having anti-takeover provisions. The Board of Directors has no present intention
to issue any additional shares of Preferred Stock.                              

     The holders of Common Stock are entitled to one vote for each share held of
record on all matters to be voted on by stockholders. There is no cumulative    
voting with respect to the election of directors, with the result that the      
holders of more than 50% of the shares voting for the election of directors can 
elect all of the directors then up for election. In the event of liquidation,   
dissolution or winding up of the Company, the holders of Common Stock are       
entitled to share ratably in all assets remaining which are available for       
distribution to them after payment of liabilities and after provision has been  
made for each class of stock, if any, having preference over the Common Stock.  
Holders of Common Stock, as such, have no conversion, preemptive or other       
subscription rights, and there are no redemption provisions applicable to the   
Common Stock. For other rights of the shareholders, see Proposal 2 - "Approval  
of Reincorporation in Delaware - Significant Changes Caused by the              
Reincorporation."                                                               

 Holders of shares of the Common Stock are entitled to receive dividends
when, as and if declared by the Board of Directors from funds legally available 
therefore, subject to any preferred or contemporaneous dividend on any          
outstanding series of Preferred Stock. Management does not intend to declare    
cash dividends on the Common Stock in the foreseeable future.                   

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The Company desires to have shares of Common Stock available for the  
exercise of any options which may be declared under the 2001 Option Plan (see   
Proposal 3), acquisition of other businesses and financings. The change in the  
par value from $.05 per share to $.001 per share is needed as the recent market 
price of the Company's Common Stock on the OTC Bulletin Board was $____ per     
share. The concept of par value is no longer critical, as evidenced by some     
states changing their corporate laws to eliminate the par value concept. By     
reducing the par value, the Company would be able to issue Common Stock at      
prices reflective of the current market price as determined in good faith by the
Board of Directors. The change in par value would have no effect on the rights  
of the Common Stock other than the minimum amount per share the Company may     
receive upon the issuance of authorized but unissued shares.                    

 If the proposed amendment is approved by the stockholders, generally no
further stockholder approval would be required for the issuance of the          
authorized shares of Common Stock, unless required by law or the rules of any   
national securities exchange or automated quotation system on which the Common  
Stock may then be listed. The Common Stock is not presently listed on any       
national securities exchange or automated quotation system. The OTC Bulletin    
Board is not considered an automatic quotation system. However, upon becoming   
eligible to list the Common Stock on an exchange or quotation system, management
would proceed to secure such listing. Management has no plans to issue any      
shares of its Common Stock except to the extent previously disclosed herein.    

RECOMMENDATION                                                                  

In the event this Proposal and the Reincorporation proposal are not   
approved, the Company will continue as a New York corporation under its present 
Certificate of Incorporation with only 20,000,000 shares of Common Stock and    
1,000,000 shares of Preferred Stock authorized, almost all of which is either   
outstanding or reserved for issuance. Management believes that adoption of this 
Proposal is necessary in order that the Company has a sufficient number of      
authorized but unissued shares of Common Stock and Preferred Stock in order to  
meet its business objectives for the benefit of shareholders.                   

    THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT SHAREHOLDERS VOTE "FOR"
APPROVAL OF THE CHARTER AMENDMENT FOR THE INCREASE IN THE NUMBER OF AUTHORIZED  
SHARES OF COMMON STOCK AND PREFERRED STOCK.                                     

PROPOSAL 6

AMENDMENT TO LIMIT DIRECTORS LIABILITY

PROPOSAL                                                                        

  Management has authorized, subject to shareholder approval, an amendment
(the "Amendment") to the limit the personal liability of members of the Board of
Directors to the Company or any of its shareholders resulting breaches of the   
directors' fiduciary duties under certain circumstances. This limitation on     
directors' liability was first permitted under New York law subsequent to the   
Company's formation and has become quite common in the certificates of          
incorporation of New York corporations. The proposed amendment would add a new  
Article SEVENTH to the Company's Certificate of Incorporation as follows:       

     "No director shall be personally liable to the Corporation or its
  shareholders for damages for any breach of duty in such capacity, except
that this provision shall not eliminate or limit the liability of any 
     director if a judgment or other final adjudication adverse to such director
 establishes that such director's acts or omissions were in bad faith or
    involved intentional misconduct or a knowing violation of law or that such

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     director personally gained in fact a financial profit or other advantage to
   which such director was not legally entitled or that such director's acts
violated Section 719 of the Business Corporation Law, nor shall this  
   provision eliminate or limit the liability of any director for any act or
omission prior to the adoption of this provision.                     

         Any repeal or modification of this Article SEVENTH shall not increase
  the personal liability of any director of the Corporation for any act or
    occurrence taking place prior to such repeal or modification, or otherwise
   adversely affect any right or protection of a director of the Corporation
existing at the time of such repeal or modification.                  

          The provisions of this Article SEVENTH shall not be deemed to limit or
     preclude indemnification of a director by the Corporation for any liability
of a director which has not been eliminated by the provisions of this 
Article SEVENTH."                                                     

REASONS FOR AMENDMENT                                                           

    In 1987, New York amended the New York Law adding Section 402(b) to permit
the limitation on liabilities of directors as proposed in the Amendment. The New
York provision is similar to provisions enacted at that time in the corporation 
laws of other states. This limitation of liability must be set forth in a       
corporation's certificate of incorporation. Corporations formed after the       
effective date of Section 402(b) could insert the limitation provision in their 
initial certificate of incorporation, while pre-existing corporations have to   
obtain shareholder approval to amend their certificates of incorporation to add 
the provision. The Company was incorporated in 1961, so a charter amendment is  
required for the provision to apply to the Company's directors.                 

     The Certificate of Incorporation of DDI-DE contains a provision pursuant to
Delaware Law that is substantially similar to the proposed amendment herein to  
the Company's Certificate of Incorporation.                                     

     In the late 1980s, New York and other states amended their corporation laws
as a response to substantial increases in premium costs and reductions in       
coverage for directors' liability insurance policies. The proliferation of      
stockholder derivative suits for breaches of directors' fiduciary duty caused   
the insurance carriers to change their directors' liability policies. In an     
effort to obtain and to maintain qualified directors, most public companies have
included in their charters the limitation on directors' liability in accordance 
with their state of formation.                                                  

     The statutorily permitted limitation would allow only monetary liability of
the directors to be eliminated or limited as provided for in the Amendment. The 
Amendment would not relieve a director of liability for breaches of his         
fiduciary duty of loyalty, if his acts or omissions were in bad faith or        
involved a knowing violation of law or he had personally gain a financial profit
or other advantage to which he was not legally entitled or he violated the      
statutory provisions governing payment of dividends, share repurchases,         
liquidating distributions or loans to directors. Moreover, the limitation would 
not be applicable for acts done prior to the adoption of the proposed Amendment.
No suits are currently pending or, to the knowledge of the Company, threatened  
against the directors alleging a violation of their fiduciary duties to the     
Company or the shareholders. The proposed Amendment to the Company's Certificate
of Incorporation does not have any effect on the remedies of stockholders under 
the federal securities laws.                                                    

RECOMMENDATION                                                        

 The Board of Directors believes that the impact of the Amendment on the
ability of the Company to retain experienced and qualified independent directors
could be large. Although recognizing that they could have a personal interest in
these matters, the Board of Directors strongly urges its approval.              

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    THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT SHAREHOLDERS VOTE "FOR"
APPROVAL OF THE AMENDMENT TO THE CERTIFICATE OF INCORPORATION AS STATED IN THIS 
PROPOSAL.                                                                       

 STOCKHOLDER PROPOSALS FOR THE NEXT ANNUAL MEETING

    Shareholders who desire to submit proposals for inclusion in the Company's
proxy statement for the 2003 Annual Meeting of Stockholders of the Company must 
submit such proposals to the Secretary of the Company at the Company's principal
executive offices by May 30, 2003. Nothing in this paragraph shall be deemed to 
require the Company to hold a 2003 Annual Meeting upon the anniversary date of  
this Meeting or to include in its proxy statement and proxy relating to any such
2003 Annual Meeting any shareholder proposal that does not meet the requirements
for inclusion in effect at such time.                                           

INDEPENDENT PUBLIC ACCOUNTANTS

Representatives of Rosen Seymour Shapps Martin & Company LLP ("Rosen  
Seymour"), the Company's independent accountants for the fiscal year ended      
December 31, 2001, may attend the Meeting. If in attendance, they will also be  
given an opportunity to make a statement if they so desire. Goldstein Lewin &   
Co. ("Goldstein Lewin") had been the Company's independent accountants for the  
fiscal year ended December 31, 2000. In April 2002, the Board of Directors      
decided to change back to Goldstein Lewin to be the Company's independent       
accountants for the fiscal year ending 2002.                                    

OTHER BUSINESS

     Management is not aware of any matters to be presented at the Meeting other
than those set forth in this Proxy Statement. However, should any other business
properly come before the Meeting, or any adjournment or adjournments thereof,   
the enclosed proxy confers upon the persons entitled to vote the shares         
represented by such proxies, discretionary authority to vote the same in respect
to any such other business in accordance with their best judgment in the        
interest of the Company.                                                        

                          By Order of the Board of Directors

             Earl M. Anderson, Jr.
 Secretary

August 29, 2002                                                                 

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 DISTINCTIVE DEVICES, INC. SPECIAL MEETING
TO BE HELD ON SEPTEMBER 30, 2002

 THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS

The undersigned shareholder of DISTINCTIVE DEVICES, INC., a New York  
corporation (the "Company"), acknowledges receipt of the Notice of Special      
Meeting of Shareholders and Proxy Statement, dated August 29, 2002, and hereby  
constitutes and appoints Sanjay Mody and Earl M. Anderson, Jr., or either of    
them acting singly in the absence of the other, with the power of substitution  
in either of them, the proxies of the undersigned to vote with the same force   
and effect as the undersigned all shares of Common Stock of the Company held by 
the undersigned at the Special Meeting of Shareholders of the Company to be held
on September 30, 2002, and at any adjournment or adjournments thereof, hereby   
revoking any proxy or proxies heretofore given and ratifying and confirming all 
that said proxies may do or cause to be done by virtue thereof with respect to  
the following matters:                                                          

The undersigned hereby instructs said proxies or their substitutes:   

    1.   Election of five persons nominated by the Board of Directors to serve
as Directors as indicated below:                                                

FOR all nominees listed below: [ ] (except as indicated)              

WITHHOLD AUTHORITY to vote for all nominees listed below: [ ]         

    NOMINEES: Sanjay Mody, Alexander Ammosov, Earl M. Anderson, Jr., Walter E.
Freeman and Shrikant C. Mehta.                                                  

(INSTRUCTION:  To withhold authority to vote for any individual nominee or      
              nominees, write such nominee's or nominees' name(s) in the space
provided below.)                                  

  2.   Approve a migratory merger of the Company with Distinctive Devices,
Inc., a Delaware corporation.                               

  FOR [ ]           AGAINST [ ]            ABSTAIN [ ]

3.   Ratify the adoption of the Company's 2001 Stock Option Plan.     

  FOR [ ]           AGAINST [ ]            ABSTAIN [ ]

4.   Approve a reverse stock split within a range of one-for-four and 
one-for-ten.                                                

  FOR [ ]           AGAINST [ ]            ABSTAIN [ ]

5.   Approve an increase in the authorized shares of Common Stock and 
Preferred Stock and a decrease in the par value thereof.    

  FOR [ ]           AGAINST [ ]            ABSTAIN [ ]

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    6.   Approve an amendment to the Certificate of Incorporation to eliminate
certain liabilities of directors of the Company.            

  FOR [ ]           AGAINST [ ]            ABSTAIN [ ]

     7.   Upon such other matters as may properly come before the Meeting or any
adjournment or adjournments thereof                         

This Proxy when properly executed will be voted as directed. If no    
direction is indicated, this Proxy will be voted FOR the election of the five   
named individuals as directors, FOR the other proposals.                        

Please sign, date and mail this proxy immediately in the enclosed envelope.     

                    Name
                                                     ---------------------------

                               Name (if joint)

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

                                         Date  _____________, 2002

                                                Please sign your name exactly as
                                               it appears hereon. When signing
                                      as attorney, executor,
                                         administrator, trustee or
                                               guardian, please give your full
                                                title as it appears hereon. When
                                             signing as joint tenants, all
                                            parties in the joint tenancy
                                                must sign. When a proxy is given
                                              by a corporation, it should be
                                               signed by an authorized officer
                                               and the corporate seal affixed.
                                         No postage is required if
                                        returned in the enclosed
                         envelope.

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                                                                       EXHIBIT A

AGREEMENT AND PLAN OF MERGER

     AGREEMENT, dated as of July 24, 2002 (the "Agreement"), between DISTINCTIVE
DEVICES, INC., a New York corporation ("DDI-NY"), and DISTINCTIVE DEVICES, INC.,
a Delaware corporation ("DDI-DE") (DDI-NY and DDI-DE are sometimes referred to  
herein collectively as the "Constituent Corporations").                         

  W I T N E S S E T H:
 - - - - - - - - - -

     WHEREAS, DDI-DE was incorporated in the State of Delaware on July 10, 2001,
and is a wholly-owned subsidiary of DDI-NY; and                                 

   WHEREAS, the Board of Directors of DDI-NY believes that it is in the best
interest of DDI-NY to reincorporate in the State of Delaware by merging with and
into DDI-DE pursuant to this Agreement.                                         

NOW, THEREFORE, in consideration of the foregoing premises, the mutual
agreements and undertakings herein given and other good and valuable            
consideration, the parties hereto agree, in accordance with the applicable      
provisions of the statutes of New York and Delaware, respectively, which permit 
such merger, DDI-NY shall be, and hereby is, merged with and into DDI-DE, at the
Effective Time (as herein defined), and that the terms and conditions of the    
merger hereby agreed to (the "Merger") shall be as hereinafter set forth:       

 ARTICLE ONE
 Principal Terms of Merger

 Section 1.01. Merger. At the Effective Time (as herein defined), DDI-NY
shall merge with and into DDI-DE provided that this Agreement has not been      
terminated pursuant to Section 4.02 herein.                                     

   Section 1.02. Effective Time of Merger. The Merger shall become effective
as of the completion of all filing requirements specified in Sections 4.03 and  
4.04 of this Agreement, and such date and time is hereinafter referred to as the
"Effective Time."                                                               

 ARTICLE TWO
 Certificate of Incorporation, By-Laws and Directors

Section 2.01. Certificate of Incorporation. The Certificate of        
Incorporation of DDI-DE in effect at the Effective Time of the Merger shall be  
the Certificate of Incorporation of DDI-DE, to remain unchanged until amended as
provided by law.                                                                

 Section 2.02. By-Laws. The By-Laws of DDI-DE in effect at the Effective
Time of the Merger shall be the By-Laws of DDI-DE, to remain unchanged until    
amended as provided by law.                                                     

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 Section 2.03. Directors. DDI-NY, in its capacity as sole stockholder of
DDI-DE, shall elect as directors of DDI-DE those individuals elected by the     
shareholders of DDI-NY prior to the Effective Time of the Merger, and such      
persons shall serve as directors of DDI-DE until the next annual meeting of the 
stockholders of DDI-DE.                                                         

 ARTICLE THREE
 Exchange and Cancellation of Shares

  Section 3.01 Exchange and Issuance. At the Effective Time of the Merger,
all issued and outstanding shares of DDI-NY common stock, $.05 par value (the   
"Old Common Stock"), and all issued and outstanding shares of DDI-NY's Series C 
and Series D Preferred Stock, $1.00 par value (the "Old Preferred Stock"), or   
such shares of DDI-NY capital stock resulting from a recapitalization of DDI-NY 
prior to the Effective Time of the Merger, shall be canceled and the corporate  
existence of DDI-NY, shall cease. Shares of DDI-DE's common stock, par value    
$.001 per share (the "New Common Stock"), and to the extent any DDI-NY Series C 
Preferred Stock and/or Series D Preferred Stock are outstanding shares of       
DDI-DE's Series C Preferred Stock and Series D Preferred Stock, $.001 par value 
(the "New Preferred Stock"), shall be issued to the shareholders of DDI-NY as a 
result of the Merger as herein provided.                                        

 Section 3.02. The Surviving Corporation Stock. Each share of Old Common
Stock which is outstanding prior to the Effective Time of the Merger shall be   
converted into one issued and outstanding share of New Common Stock and, from   
and after the Effective Time of the Merger, the holders of all of said issued   
and outstanding shares of Old Common Stock shall automatically be and become    
holders of shares of New Common Stock upon the basis above specified, whether or
not certificates representing said shares are then issued and delivered. Each   
share of Old Preferred Stock which is outstanding prior to the Effective Time of
the Merger shall be converted into one issued and outstanding share of New      
Preferred Stock and, from and after the Effective Time of the Merger, the       
holders of all of said issued and outstanding shares of Old Preferred Stock     
shall automatically be and become holders of shares of New Preferred Stock upon 
the basis above specified, whether or not certificates representing said shares 
are then issued and delivered.                                                  

 Section 3.03. Cancellation of Old Common Stock and Old Preferred Stock.
After the Effective Time of the Merger, each holder of record of any outstanding
certificate or certificates theretofore representing shares of Old Common Stock 
or Old Preferred Stock, if any, may surrender the same to the Company's transfer
agent for same, and such holder shall be entitled upon such surrender to receive
in exchange therefor a certificate or certificates representing the number of   
shares of New Common Stock or New Preferred Stock calculated on the basis       
described in this Article. Until so surrendered, each outstanding certificate   
which, prior to the Effective Time of the Merger, represented one or more shares
of Old Common Stock or Old Preferred Stock shall be deemed for all corporate    
purposes to evidence ownership of a number of shares of New Common Stock or New 
Preferred Stock, respectively, calculated on the basis described in this        
Article. Upon the surrender of a certificate or certificates representing shares
of Old Common Stock or Old Preferred Stock, a proper officer of DDI-DE shall    
cancel said certificate or certificates.                                        

   Section 3.03. No Fractional Shares. Upon the exchange, in lieu of issuing
certificates for fractional shares, fractional shares will be rounded up or     

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rounded down to the nearest whole share, provided that a record holder must     
receive at least one whole share of New Common Stock or New Preferred Stock.    

ARTICLE FOUR
Adoption and Termination

   Section 4.01. Submission to Vote of Shareholders. This Agreement shall be
submitted to the shareholders of DDI-NY, as provided by applicable law, and     
shall take effect, and be deemed to be the Agreement and Plan of Merger of the  
Constituent Corporations, upon the approval or adoption thereof by said         
shareholders of DDI-NY in accordance with the requirements of the laws of the   
State of New York.                                                              

     Section 4.02. Termination of Agreement. Anything herein or elsewhere to the
contrary notwithstanding, this Agreement may be abandoned by DDI-NY by an       
appropriate resolution of its Board of Directors at any time prior to the       
Effective Time of the Merger if such Board of Directors believes that the Merger
is not in the best interests of DDI-NY.                                         

    Section 4.03. Filing of Certificate of Merger in the State of New York. As
soon as practicable after the requisite shareholder approval referenced in      
Section 4.01 herein, subject to any reverse split of the Old Common Stock and to
any conversion of the Old Preferred Stock occurring prior to the Effective Time 
of the Merger, upon approval by the shareholders of DDI-NY of a reverse stock   
split and an increase in its authorized shares of capital stock, the Certificate
of Merger to effectuate the terms of this Agreement shall be executed and signed
on behalf of each of the Constituent Corporations and thereafter delivered to   
the Department of State (the "Department") of the State of New York for filing  
and recording in accordance with applicable law, unless this Agreement has been 
terminated pursuant to Section 4.02 herein.                                     

     Section 4.04. Filing of Certificates of Merger in the State of Delaware. As
soon as practicable after the requisite shareholder approval referenced in      
Section 4.01 herein, a Certificate of Merger to effectuate the terms of this    
Agreement shall be executed by each of the Constituent Corporations and         
thereafter delivered to the Secretary of State of the State of Delaware for     
filing and recording in accordance with applicable law, unless this Agreement   
has been terminated pursuant to Section 4.02 herein.                            

ARTICLE FIVE
Effect of Merger

  Section 5.01. Effect of Merger. At the Effective Time of the Merger, the
Constituent Corporations shall be a single corporation, which shall be DDI-DE,  
and the separate existence of DDI-NY shall cease except to the extent provided  
by the laws of the States of New York and Delaware. DDI-DE shall thereupon and  
thereafter possess all the rights, privileges, immunities and franchises, of    
both a public and private nature, of each of the Constituent Corporations; and  
all property, real, personal and mixed, and all debts due on whatever account,  
including subscriptions to shares, and all other choses in action, and all and  
every other interest of, or belonging to, or due to each of the Constituent     
Corporations, shall be taken and deemed to be vested in DDI-DE without further  
act or deed; and the title to all real estate, or any interest therein, vested  
in either of the Constituent Corporations shall not revert or be in any way     
impaired by reason of the Merger. DDI-DE shall thenceforth be responsible and   
liable for all of the liabilities and obligations of each of the Constituent    

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Corporations and any claim existing or action or proceeding pending by or       
against either of the Constituent Corporations may be prosecuted to judgment as 
if the Merger had not taken place, or the Surviving Corporation may be          
substituted in its place, and neither the rights of creditors nor any liens upon
the property of either of the Constituent Corporations shall be impaired by the 
Merger. DDI-DE shall assume any stock option or similar employee benefits plan  
of DDI-NY, and all contractual rights of DDI-NY for the issuance of shares of   
the Old Common Stock and Old Preferred Stock, and such issuances or reserves for
issuances shall be of shares of New Common Stock and New Preferred Stock on an  
as-converted basis as set forth in Section 3.01 hereof.                         

 ARTICLE SIX
Post Merger Undertakings

     Section 6.01 Service of Process. DDI-DE hereby agrees that it may be served
with process within the State of New York in any proceeding for the enforcement 
of any obligation of DDI-NY and in any proceeding for the enforcement of the    
rights of any dissenting shareholder of DDI-NY.                                 

    Section 6.02 Authorization of Service of Process. DDI-DE hereby authorizes
service of process on it pursuant to Section 6.01 herein by registered or       
certified mail return receipt requested to its principal office as set forth in 
the Articles of Merger to be filed pursuant to Section 4.03 herein or as changed
by notice to the Department.                                                    

 ARTICLE SEVEN
 Miscellaneous

  Section 7.01 Further Actions. Each of the Constituent Corporations shall
take or cause to be taken all action, or do, or cause to be done, all things    
necessary, proper or advisable under the laws of the States of New York and     
Delaware to consummate and make effective the Merger following approval of the  
Merger by the shareholders of DDI-NY in accordance with the laws of said States.

  Section 7.02. Amendments. At any time prior to the Effective Time of the
Merger (notwithstanding any shareholder approval), if authorized by their       
respective Board of Directors, the parties hereto may, by written agreement,    
amend or supplement any of the provisions of this Agreement. Any written        
instrument or agreement referred to in this section shall be validly and        
sufficiently authorized for the purposes of this Agreement if signed on behalf  
of each of the Constituent Corporations by a person authorized to sign this     
Agreement.                                                                      

     Section 7.03. Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be deemed to be an original instrument, but   
all such counterparts together shall constitute one and the same instrument.    

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    IN WITNESS WHEREOF, the Constituent Corporations, pursuant to the approval
and authority duly given by resolutions adopted by their respective Board of    
Directors have caused this Agreement and Plan of Merger to be executed by an    
authorized officer of each party hereto, and the corporate seal affixed on the  
date above first written.                                                       

                             DISTINCTIVE DEVICES, INC.
                            (a Delaware corporation)

       By:
                                       -----------------------------
                                 Name:  Sanjay S. Mody
                            Title: President

                             DISTINCTIVE DEVICES, INC.
                              (a New York corporation)

       By:
                                       -----------------------------
                                 Name:  Sanjay S. Mody
                            Title: President

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                                                                       EXHIBIT B

 DISTINCTIVE DEVICES, INC.

2001 STOCK OPTION PLAN

1    Purpose. This 2001 Stock Option Plan (the "Plan") of Distinctive 
Devices, Inc., a New York corporation (the "Company"), is intended to provide   
incentives: (i) to certain directors, officers, employees and other persons who 
perform services for or on behalf of the Company and any subsidiaries of the    
Company (collectively, the "Subsidiaries") by providing them with opportunities 
to purchase capital stock in the Company pursuant to options granted hereunder  
which qualify as "incentive stock options" under Section 422(b) of the Internal 
Revenue Code of 1986, as amended (the "Code") ("ISO" or "ISOs") or which do not 
qualify as ISOs ("Non-Qualified Option" or "Non-Qualified Options"); and (ii) to
individuals who are directors but not also employees of the Company and the     
Subsidiaries ("Non-Employee Directors"), and to individuals who are members of  
any advisory board or an independent consultant to the Company or its           
Subsidiaries, by providing them with opportunities to purchase capital stock in 
the Company pursuant to Non-Qualified Options. Both ISOs and Non-Qualified      
Options are referred to hereinafter individually as an "Option" and collectively
as "Options," and persons to whom Options are granted are referred to           
hereinafter individually as an "Optionee" and collectively as "Optionees." As   
used herein, the term "Subsidiary" means "subsidiary corporation" as that term  
is defined in Section 424(f) of the Code.                                       

2    Administration of the Plan. The Plan shall be administered by the
Compensation Committee of the Board of Directors of the Company (the            
"Committee"), each member of which shall be a "Non-Employee Director" within the
meaning of Rule 16b-3 or any successor provision ("Rule 16b-3") under the       
Securities Exchange Act of 1934, as amended (the "Exchange Act"). The Committee 
shall consist of two or more members. Subject to the terms of the Plan, the     
Committee shall have the authority to (i) determine which persons (from among   
the class of persons eligible under Section 4 hereof to receive Options; (ii)   
determine the number of shares which may be issued under each Option; (iii)     
determine the time or times at which Options may be granted; (iv) determine the 
exercise price of shares subject to each Option, which price shall not be less  
than the fair market value as specified in Section 6; (v) determine (subject to 
Sections 7 and 9) the time or times when each Option shall become exercisable   
and the duration of the exercise period; (vi) determine whether restrictions are
to be imposed on shares subject to Options and the nature of such restrictions, 
if any, and (vii) interpret the Plan and prescribe and rescind rules and        
regulations relating to it. If the Committee determines to issue a Non-Qualified
Option, it shall take whatever actions it deems necessary, under Section 422 of 
the Code and the regulations promulgated thereunder, to ensure that such Option 
is not treated as an ISO. The interpretation and construction by the Committee  
of any provisions of the Plan or of any Option granted under it shall be final. 
The Committee may from time to time adopt such rules and regulations for        
carrying out the Plan as it may deem best. No member of the Committee or of the 
Board of Directors of the Company shall be liable for any action or             
determination made in good faith with respect to the Plan or any Option granted 
under it.                                                                       

3    Stock. The stock delivered under this Plan shall be the Company's
Common Stock, par value $.05 per share (the "Common Stock"), either authorized  
and unissued, treasury stock or shares purchased on the open market. The        
aggregate number of shares which may be issued pursuant to the Plan is          
6,500,000, subject to adjustment as provided in Section 13. If any Option       
granted under the Plan shall expire or terminate for any reason without having  
been exercised in full or shall cease for any reason to be exercisable in whole 
or in part, the unpurchased shares subject to such Option shall again be        
available for grants of Options under the Plan.                                 

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   4    Eligible Employees and Others. ISOs and Non-Qualified Options may be
granted to individuals who are employees of the Company and its Subsidiaries,   
including officers and directors who are also employees at the time the Option  
is granted. Non-Qualified Options may be granted to Non-Employee Directors and  
independent contractors and consultants to the Company and its Subsidiaries,    
affiliates or any entity in which the Company has an interest, or who are deemed
by the Committee to be in a position to perform such services in the future.    
Granting of any Option to any person shall neither entitle that person to, nor  
disqualify him from, participation in any other Option grant.                   

    5    Term of Plan; Granting of Options. The term of the Plan will commence
on the date of adoption of the Plan by the Company's Board of Directors, subject
to approval by stockholders within one year of adoption, and terminate on the   
day immediately preceding the tenth anniversary of said adoption, except as to  
Options outstanding on that date and subject to earlier termination as provided 
in Sections 9 and 10 hereof. Options may be granted under the Plan at any time  
during the term of the Plan. The date of grant of an Option under the Plan shall
be the date specified by the Committee at the time it grants the Option;        
provided, however, that such date shall not be prior to the date on which the   
Committee acts to approve the grant. No Option shall be granted pursuant to the 
Plan after October 2011.                                                        

6    Minimum Exercise Price; ISO Limitations.                         

          6.1  Price for Non-Qualified Options. The exercise price per share for
each Non-Qualified Option granted under the Plan shall not be less than the fair
market value of the Common Stock on the date of grant of the Option, and in no  
event shall be less than the minimum legal consideration required therefor under
the laws of the State of Delaware or the laws of any jurisdiction in which the  
Company or its successors in interest may be organized.                         

          6.2  Price for ISOs. The exercise price per share for each ISO granted
under the Plan shall not be less than the fair market value per share of Common 
Stock on the date of such grant. In the case of an ISO to be granted to an      
employee owning stock possessing more than ten percent (10%) of the total       
combined voting power of all classes of stock of the Company or any Subsidiary  
(a "10% Employee"), the price per share for such ISO shall not be less than one 
hundred ten percent (110%) of the fair market value per share of Common Stock on
the date of grant. For purposes of determining stock ownership under this       
Section, the rules of Section 424(d) of the Code shall apply.                   

          6.3  $100,000 Annual Limitation on ISO Vesting. To the extent that, in
the aggregate under this Plan and all incentive stock option plans of the       
Company and any Subsidiary, ISOs become exercisable for the first time by an    
employee during any calendar year with respect to stock having a fair market    
value (determined at the time the ISOs were granted) in excess of $100,000, such
excess amount of stock shall be deemed to have been granted as a Non-Qualified  
Option, and not as an ISO.                                                      

        6.4  Determination of Fair Market Value. If at the time an Option is
granted under the Plan, the Company's Common Stock is publicly traded, "fair    
market value" shall be determined as of the last business day for which the     
prices or quotes discussed in this sentence are available prior to the date such
Option is granted and shall be (i) the mean (on that date) of the high and low  
prices of the Common Stock on the principal national securities exchange on     
which the Common Stock is traded, if the Common Stock is then traded on a       
national securities exchange; (ii) the average of the last reported sale prices 
of the Common Stock on the NASDAQ National Market or Small Cap Market (or other 
interdealer quotation system), for the five trading dates immediately preceding 
the date of grant, if the Common Stock is not then traded on a national         
securities exchange; or (iii) the average of the closing bid prices (or average 
of bid prices) last quoted (on that date) by the OTC Electronic Bulletin Board  
or other established quotation service for over-the-counter securities for the  
five trading dates immediately preceding the date of grant, if the Common Stock 

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is not reported on the NASDAQ National Market or Small Cap Market (or other     
interdealer quotation system); but in no event shall the exercise price be less 
than the closing prices on the date of grant. However, if the Common Stock is   
not publicly traded at the time an Option is granted under the Plan, the "fair  
market value" shall be deemed to be the fair value of the Common Stock as       
determined by the Committee in good faith after taking into consideration all   
factors which it deems appropriate, including, without limitation, recent sale  
and offer prices of the Common Stock in private transactions negotiated at arm's
length.                                                                         

7    Option Duration. Subject to earlier termination as provided in   
Sections 9 and 10, each Option shall expire on the date specified by the        
Committee, but not more than (i) ten (10) years from the date of grant in the   
case of Non-Qualified Options, (ii) ten (10) years from the date of grant in the
case of ISOs generally, and (iii) five (5) years from the date of grant in the  
case of ISOs granted to a 10% Employee, as determined under Section 6.2. Subject
to earlier termination as provided in Sections 9 and 10, the term of each ISO   
shall be the term set forth in the original instrument granting such ISO, except
with respect to any part of such ISO that is converted into a Non-Qualified     
Option pursuant to Section 16.                                                  

  8    Exercise of Option. Subject to the provisions of Sections 9 through
12, each Option granted under the Plan shall be exercisable as follows:         

          8.1  Vesting. The Option shall either be fully exercisable on the date
of grant or shall become exercisable thereafter in such installments as the     
Committee may specify, provided that an Option granted to a director or         
executive officer of the Company may not vest earlier than six (6) months from  
the date of grant.                                                              

  8.2  Full Vesting of Installments. Once an installment becomes
exercisable it shall remain exercisable until expiration or termination of the  
Option, unless otherwise specified by the Committee.                            

         8.3  Partial Exercise. Each Option or installment may be exercised at
any time or from time to time, in whole or in part, for up to the total number  
of shares with respect to which it is then exercisable.                         

       8.4  Acceleration of Vesting. The Committee shall have the right to
accelerate the date of exercise of any installment of any Option, provided that 
the Committee shall not, without the consent of an Optionee, accelerate the     
exercise date of any installment of any Option granted to any employee as an ISO
if such acceleration would violate the annual vesting limitation contained in   
Section 422(d) of the Code, as described in Section 6.03.                       

    9    Termination of Employment. If an Optionee ceases his employment with,
or service by, the Company and all Subsidiaries other than by reason of death or
disability as defined in Section 10 or by the Company or any Subsidiary for     
cause, no further installments of his Options shall become exercisable, and his 
Options shall terminate after the passage of one (1) year from the date of      
termination of his employment or service (or three (3) months as to ISOs), but  
in no event later than on their specified expiration dates, during which period 
he shall have the right to exercise any Options exercisable by him on the date  
of termination of employment, subject to exercise for such other periods as     
determined by the Committee at the time of grant. Options held by an Optionee   
whose termination of employment or service is for cause shall terminate upon    
such termination. For purposes of this Section 9 only, employment or service    
shall be considered as continuing uninterrupted during any bona fide leave of   
absence (such as those attributable to illness, military obligations or         
governmental service). A bona fide leave of absence with the written approval of
the Committee shall not be considered an interruption of employment or service  
under this Section 9, provided that such written approval contractually         

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obligates the Company or any Subsidiary to continue the employment or service of
the Optionee after the approved period of absence. Options granted under the    
Plan shall not be affected by any change of employment or service within or     
among the Company and Subsidiaries, so long as the Optionee continues to be an  
employee or independent contractor or advisor of the Company or any Subsidiary. 
Nothing in the Plan shall be deemed to give any Optionee the right to be        
retained in employment or other service by the Company or any Subsidiary for any
period of time. The Committee may, in its sole discretion, change the           
termination period for any Option from the period provided for in this Section 9
or in Section 10 to a period less than the respective periods specified herein. 

10   Death; Disability.                                               

       10.1 Death. If an Optionee ceases his employment with or service by
the Company and all Subsidiaries by reason of his death, any Option may be      
exercised, to the extent of the number of shares with respect to which he could 
have exercised it on the date of his death, by his estate, personal             
representative or beneficiary who has acquired the Option by will or by the laws
of descent and distribution at any time within one (1) year from the date of the
Optionee's death or such later date as fixed by the Committee as to             
Non-Qualified Options, but in no event later than on their specified expiration 
dates.                                                                          

         10.2 Disability. If an Optionee ceases his employment with or service
by the Company and all Subsidiaries by reason of his disability, he shall have  
the right to exercise any Option held by him on the date of termination of      
employment, to the extent of the number of shares with respect to which he could
have exercised it on that date, at any time prior to one (1) year from the date 
of the termination of the Optionee's employment or service or such later date as
fixed by the Committee as to Non-Qualified Options, but in no event later than  
on their specified expiration dates. For the purposes of the Plan, the term     
"disability" shall mean "permanent and total disability" as defined in Section  
22(e)(3) of the Code or successor statute.                                      

  11   Assignability. No Option shall be assignable or transferable by the
Optionee except (i) by will or by the laws of descent and distribution, (ii)    
pursuant to a qualified domestic relations order or Title I of the Employee     
Retirement Income Security Act or (iii) with respect to Non-Qualified Options,  
to a spouse or lineal descendant or lineal ascendant of the Optionee.           

12   Terms and Conditions of Options. Options shall be evidenced      
instruments (which need not be identical) in such forms as the Committee may    
from time to time approve (the "Option Agreements"). The Option Agreements shall
conform to the terms and conditions set forth in Sections 6 through 11 hereof   
and may contain such other provisions as the Committee deems advisable which are
not inconsistent with the Plan, including restrictions applicable to shares of  
Common Stock issuable upon the exercise of Options. The Committee may from time 
to time confer authority and responsibility on one or more of its own members   
and/or one or more officers of the Company to execute and deliver the Option    
Agreements. The proper officers of the Company are authorized and directed to   
take any and all action necessary or advisable from time to time to carry out   
the terms of the Option Agreements.                                             

  13   Adjustments. Upon the occurrence of any of the following events, an
Optionee's rights with respect to Options granted to him hereunder shall be     
adjusted as hereinafter provided, unless otherwise specifically provided in the 
written agreement between the Optionee and the Company relating to such Option: 

        13.1 Stock Dividends and Stock Splits. If the shares of Common Stock
shall be subdivided or combined into a smaller or greater number of shares or if
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outstanding Common Stock, the number of shares of Common Stock deliverable upon 
the exercise of Options shall be appropriately decreased or increased           
proportionately, and appropriate adjustments shall be made in the purchase price
per share to reflect such subdivision, combination or stock dividend.           

        13.2 Consolidations or Mergers. If the Company is to be consolidated
with or acquired by another entity in a merger, sale of all or substantially all
of the Company's assets or otherwise (an "Acquisition"), the Committee or the   
board of directors of any entity assuming the obligations of the Company        
hereunder (the "Successor Board"), shall, as to outstanding Options, either (i) 
make appropriate provision for the continuation of such Options by substituting 
on an equitable basis for the shares then subject to such Options the           
consideration payable with respect to the outstanding shares of Common Stock in 
connection with the Acquisition; (ii) upon written notice to the Optionees,     
provide that all Options must be exercised, to the extent then exercisable,     
within a specified number of days of the date of such notice, at the end of     
which period the Options shall terminate; or (iii) terminate all Options in     
exchange for a cash payment equal to the excess of the fair market value of the 
shares subject to such Options (to the extent then exercisable) over the        
exercise price thereof.                                                         

13.3 Recapitalization or Reorganization. In the event of a  
recapitalization or reorganization of the Company (other than a transaction     
described in Section 13.02) pursuant to which securities of the Company or of   
another corporation are issued with respect to the outstanding shares of Common 
Stock, an Optionee upon exercising an Option shall be entitled to receive for   
the purchase price paid upon such exercise the securities he would have received
if he had exercised his Option prior to such recapitalization or reorganization.

      13.4 Change in Control. In the event of a change in control of the
Company, all Options under the Plan which are not fully vested shall vest 100%  
and shall be immediately exercisable. For purposes of this Plan, a "change in   
control" shall mean any of the following events: (a) the Company receives a     
report on Schedule 13D filed with the Securities and Exchange Commission        
pursuant to Section 13(d) of the Exchange Act disclosing that any person, group,
corporation or other entity is the beneficial owner, directly or indirectly, of 
twenty percent (20%) or more of the outstanding Common Stock of the Company; (b)
any person (as such term is defined in Section 13(d) of the Exchange Act),      
group, corporation or other entity other than the Company or any Subsidiary,    
purchases shares pursuant to a tender offer or exchange offer to acquire any    
Common Stock of the Company for cash, securities or any other consideration,    
provided that after consummation of the offer, the person, group, corporation or
other entity in question is the beneficial owner (as such term is defined in    
Rule 13d-3 under the Exchange Act), directly or indirectly, of twenty percent   
(20%) or more of the outstanding Common Stock of the Company (calculated as     
provided in paragraph (d) of Rule 13d-3 under the Exchange Act in the case of   
rights to acquire common stock); (c) the stockholders of the Company approve (i)
any consolidation or merger of the Company in which the Company is not the      
continuing or surviving corporation or pursuant to which shares of Common Stock 
would be converted into cash, securities or other property, or (ii) any sale,   
lease, exchange or other transfer (in one transaction or a series of related    
transactions) of all or substantially all of the assets of the Company; or (d)  
there shall have been a change in a majority of the members of the Board of     
Directors of the Company within a twenty-four (24) month period unless the      
election or nomination for election by the Company's stockholders of each new   
director was approved by the vote of two-thirds of the directors then still in  
office who were in office at the beginning of the twenty-four (24) month period.

 13.5 Modification of ISOs. Notwithstanding the foregoing, any
adjustments made pursuant to Section 13.01, 13.02, 13.03 or 13.04 with respect  
to ISOs shall be made only after the Committee, after consulting with counsel   
for the Company, determines whether such adjustments would constitute a         
"modification" of such ISOs (as that term is defined in Section 424 of the Code)
or would cause any adverse tax consequences for the holders of such ISOs. If the

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Committee determines that such adjustments made with respect to ISOs would      
constitute a modification of such ISOs, it may refrain from making such         
adjustments.                                                                    

 13.6 Dissolution or Liquidation. In the event of the proposed
dissolution or liquidation of the Company, each Option will terminate           
immediately prior to the consummation of such proposed action or at such other  
time and subject to such other conditions as shall be determined by the         
Committee.                                                                      

         13.7 Issuances of Securities. Except as expressly provided herein, no
issuance by the Company of shares of stock of any class, or securities          
convertible into shares of stock of any class, shall affect, and no adjustment  
by reason thereof shall be made with respect to, the number or price of shares  
subject to Options. No adjustments shall be made for dividends paid in cash or  
in property other than securities of the Company.                               

          13.8 Fractional Shares. No fractional shares shall be issued under the
Plan and the Optionee shall receive from the Company cash in lieu of such       
fractional shares.                                                              

          13.9 Adjustments. Upon the happening of any of the events described in
Section 13.01, 13.02, 13.03 or 13.04 above, the class and aggregate number of   
shares set forth in Section 3 hereof that are subject to Options which          
previously have been or subsequently may be granted under the Plan shall also be
appropriately adjusted to reflect the events described in such subparagraphs.   
The Committee or the Successor Board shall determine the specific adjustments to
be made under this Section 13 and, subject to Section 2 hereof, its             
determination shall be conclusive.                                              

    14   Means of Exercising Options. An Option (or any installment or portion
of an installment thereof) shall be exercised by giving written notice to the   
Company at its principal office address. The notice shall identify the Option   
being exercised and specify the number of shares as to which such Option is     
being exercised, accompanied by full payment of the purchase price therefor     
either: (a) in United States dollars in cash or by check; (b) at the discretion 
of the Committee, through delivery of shares of Common Stock having a fair      
market value equal as of the date of the exercise to the cash exercise price of 
the Option; or (c) at the discretion of the Committee, by any combination of (a)
and (b) above. If the Committee exercises its discretion to permit payment of   
the exercise price of an ISO by means of the methods set forth in clauses (b) or
(c) of the preceding sentence, such discretion shall be exercised in writing at 
the time of the grant of the Option in question. An Optionee shall not have the 
rights of a stockholder with respect to the shares covered by his Option until  
the date of issuance of a stock certificate to him for such shares. Except as   
expressly provided above in Section 13 with respect to changes in capitalization
and stock dividends, no adjustment shall be made for dividends or similar rights
for which the record date is before the date such stock certificate is issued.  

     15   Termination or Amendment of Plan. The Board of Directors may terminate
or amend the Plan in any respect at any time; however, without the approval of  
the Company's stockholders obtained within twelve (12) months before or after   
the Board of Directors adopts a resolution authorizing any such termination or  
amendment, the Board of Directors may not so terminate or amend the Plan if     
prior stockholder approval is then required by Section 16(b) of the Exchange    
Act, applicable Delaware law or tax law, or the rules of any applicable national
securities exchange or national stock quotation system on which the Common Stock
may then be listed or traded. Except as otherwise provided in this Section 15,  
in no event may action of the Board of Directors or stockholders alter or impair
the rights of an Optionee, without his consent, under any Option previously     
granted to him.                                                                 

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  16   Notice to Company of Disqualifying Disposition. By accepting an ISO
granted under the Plan, each Optionee agrees to notify the Company in writing   
immediately after making a Disqualifying Disposition, as described in Sections  
421, 422 and 424 of the Code and regulations thereunder, of any stock acquired  
under the Plan (or stock received in a transaction described in Section 424(b)  
or 424(c)(1)(B) of the Code, relating to distributions of stock with respect to 
stock acquired under the Plan and certain tax-free exchanges of stock acquired  
under the Plan for other stock or securities). A Disqualifying Disposition (with
certain exceptions) is generally any disposition within two (2) years of the    
date the ISO was granted or within one (1) year of the date the ISO was         
exercised, whichever period ends later. With respect to stock held jointly with 
right of survivorship, a termination of such joint tenancy may constitute a     
Disqualifying Disposition. This Section 16 shall be made binding upon the       
Optionee and upon any transferee of stock described in this Section to whom     
Section 424(c)(4)(B) of the Code applies.                                       

17   Withholding of Additional Income Taxes. Upon the exercise of a   
Non-Qualified Option or the making of a Disqualifying Disposition (as defined in
Section 16), the Company may withhold taxes in respect of amounts that          
constitute compensation includible in gross income, whenever the Company        
determines that such withholding is required. The Committee in its discretion   
may condition the exercise of an Option on the Optionee's making satisfactory   
arrangement for such withholding. In addition to tax withholding, government    
regulations may impose reporting or other obligations on the Company with       
respect to the Plan. For example, the Company may be required to send tax       
information statements to employees and former employees that exercise ISOs.    

     18   Governing Law, Construction. The validity and construction of the Plan
and the agreements evidencing Options shall be governed by the laws of the State
of New York, or the laws of any jurisdiction in which the Company or its        
successors in interest may be organized. In construing this Plan, the singular  
shall include the plural and the masculine gender shall include the feminine and
neuter, unless the context otherwise requires.                                  

Adopted by the Board of Directors on October 29, 2001                           

Adopted by the Shareholders on September ___, 2002                              

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EXHIBIT C:

 THE REVERSE STOCK SPLIT

RESOLVED, that, prior to the Company's next meeting of shareholders, on the     
condition that no other amendment to the Company's Certificate of Incorporation 
shall have been filed subsequent to September ___, 2003 effecting a reverse     
stock split of the Common Stock, Article IV of the Company's Restated Articles  
of Incorporation be amended by addition of the following provision:             

  Simultaneously with the effective date of this amendment (the "Effective
  Date"), each share of the Company's Common Stock, issued and outstanding
immediately prior to the Effective Date (the "Old Common Stock") shall
   automatically and without any action on the part of the holder thereof be
reclassified and changed, pursuant to a reverse stock split, into any 
    fraction thereof falling within a range between and including one-for-four
   and one-for-ten of a share of the Company's outstanding Common Stock (the
"New Common Stock"), depending upon a determination by the Board of   
Directors that a reverse stock split is in the best interests of the  
    Company and the shareholders. Each holder of a certificate or certificates
which immediately prior to the Effective Date represented outstanding 
  shares of Old Common Stock (the "Old Certificates," whether one or more)
     shall be entitled to receive upon surrender of such Old Certificates to the
  Company's Transfer Agent for cancellation, a certificate or certificates
  (the "New Certificates," whether one or more) representing the number of
     whole shares of the New Common Stock into which and for which the shares of
the Old Common Stock formerly represented by such Old Certificates so 
  surrendered, are reclassified under the terms hereof. From and after the
    Effective Date, Old Certificates shall represent only the right to receive
New Certificates pursuant to the provisions hereof. No certificates or
   scrip representing fractional share interests in New Common Stock will be
issued, and no such fractional share interest will entitle the holder 
thereof to vote, or to any rights of a shareholder of the Company. Any
     fraction of a share of New Common Stock to which the holder would otherwise
     be entitled will be adjusted upward or downward to the nearest whole share.
   If more than one Old Certificate shall be surrendered at one time for the
  account of the same shareholder, the number of full shares of New Common
   Stock for which New Certificates shall be issued shall be computed on the
     basis of the aggregate number of shares represented by the Old Certificates
   so surrendered. In the event that the Company's Transfer Agent determines
     that a holder of Old Certificates has not tendered all his certificates for
     exchange, the Transfer Agent shall carry forward any fractional share until
    all certificates of that holder have been presented for exchange such that
     share issuance for fractional shares to any one person shall not exceed one
    share. If any new Certificate is to be issued in a name other than that in
 which the Old Certificates surrendered for exchange are issued, the Old
    Certificates so surrendered shall be properly endorsed and otherwise be in
proper form for transfer, and the person or persons requesting such   
 exchange shall affix any requisite stock transfer tax stamps to the Old
     Certificates surrendered, or provide funds for their purchase, or establish
    to the satisfaction of the Transfer Agent that such taxes are not payable.
    From and after the Effective Date the amount of capital represented by the
   shares of the New Common Stock into which and for which the shares of the
    Old Common Stock are reclassified under the terms hereof shall be the same
   as the amount of capital represented by the shares of Old Common Stock so
reclassified, until thereafter reduced or increased in accordance with
applicable law.                                                       

FURTHER RESOLVED, that at any time prior to the filing of the foregoing         
amendment to the Company's Certificate of Incorporation effecting a Reverse     
Stock Split, notwithstanding authorization of the proposed amendment by the     
shareholders of the Company, the Board of Directors may abandon such proposed   
amendment without further action by the shareholders.                           

C-1 

Dates Referenced Herein   and   Documents Incorporated by Reference

				Referenced-On Page
This ‘DEF 14A’ Filing		Date		First		Last			Other Filings
		10/28/11		20
		5/30/03		28
		12/26/02		23
For Period End:		9/30/02		3		29			10QSB,  NT 10-Q
		8/30/02		4					4
		8/29/02		3		29
Filed on:		8/28/02
		8/16/02		3		4
		7/24/02		31
		6/30/02		3		19			10QSB
		12/31/01		3		28			10KSB,  4,  5,  NT 10-K
		10/31/01		10					8-K
		10/29/01		42
		7/10/01		31
		5/15/01		9					10QSB,  8-K
		12/31/00		28					10KSB
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