REGULATORS HAVE APPROVED THE EXCHANGE OFFER DESCRIBED IN THIS PROSPECTUS OR THE NEW VASCO SHARES, OPTIONS OR WARRANTS TO BE ISSUED IN THE EXCHANGE OFFER, AND THEY HAVE NOT DETERMINED IF THIS PROSPECTUS IS TRUTHFUL OR COMPLETE. FURTHERMORE, NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES REGULATOR HAS DETERMINED THE FAIRNESS OR MERITS OF THE EXCHANGE OFFER. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.

This Prospectus is dated , 1997.

(c) Its options (collectively such options are referred to in this document as "New VASCO Conversion Options") to acquire its Common Stock in exchange for (i) the cancellation of outstanding options to acquire Current VASCO Common Stock pursuant to conversion of Current VASCO convertible notes (collectively such options are referred to in this document as "Current VASCO Conversion Options"), and (ii) a release by each exchanging holder of any and all Associated Corporate Matter Claims. The New VASCO Conversion Options will be for the same number of shares and will have the same conversion price, conversion period and other terms of conversion as the Current VASCO Conversion Options;

(d) Its warrants (collectively such warrants are referred to in this document as "New VASCO Warrants") to purchase its Common Stock in exchange for (i) the cancellation of outstanding warrants to purchase Current VASCO Common Stock (collectively such warrants are referred to in this document as "Current VASCO Warrants"), and (ii) a release by each exchanging holder of any and all Associated Corporate Matter Claims. The New VASCO Warrants will be for the same number of shares and have the same exercise price and expiration dates as the Current VASCO Warrants.

The release to be executed in connection with an exchange of Current VASCO securities will release and waive any and all Associated Corporate Matter Claims the exchanging holder (or, if the Current VASCO securities are held in a nominee name, the beneficial owner of the Current VASCO securities) may have even if less than all of the exchanging holder's (beneficial owner's) Current VASCO securities are exchanged; provided that if a nominee holds Current VASCO securities on behalf of more than one beneficial owner, any release executed by the nominee will be effective only with respect to any Associated Corporate Matter Claims of beneficial owners directing such nominee to exchange all or any part of the Current VASCO securities in which such beneficial owner has an interest. If the Exchange Offer and Reorganization are completed and a security holder or group of security holders brings suit, the validity and enforceability of the release will be determined by a court of law. See "RISK FACTORS -- Risks Relating to Exchange Offer and New VASCO -- No Assurances as to Enforceability of Releases of Associated Corporate Matter Claims" and "REORGANIZATION OF CURRENT VASCO -- Releases from Security Holders in Exchange Offer."

The Exchange Offer is subject to the terms and conditions set forth in this Prospectus, including the condition that there must as of the Expiration Date be tendered for exchange at least 80% of the outstanding shares of Current VASCO Common Stock (referred to in this document as the "Minimum Condition"). Based on the number of shares of Current VASCO outstanding on October 15, 1997, if an aggregate of 16,106,374 shares of Current VASCO Common Stock are tendered for exchange, the Minimum Condition will be satisfied.

The Exchange Offer is intended for federal income tax purposes to be a tax-free transaction with respect to the exchange of the Current VASCO Common Stock, the Current VASCO Stock Options, the Current VASCO Conversion Options and those Current VASCO Warrants (referred to herein as "Current VASCO Compensatory Warrants"). The exchange of Current VASCO Warrants that were not issued for services (referred to herein as "Current VASCO Noncompensatory Warrants") may be deemed to be a taxable event for federal income tax purposes. See "REORGANIZATION OF CURRENT VASCO -- Federal Income Tax Consequences."

The Exchange Agent for the exchange of Current VASCO Common Stock and Current VASCO Warrants is Illinois Stock Transfer Company, 223 West Jackson Boulevard, Suite 1210, Chicago, Illinois 60606; telephone (312) 427-2953.

Exchanges of Current VASCO Stock Options and Current VASCO Conversion Options are to be made through Gregory T. Apple, Vice President and Treasurer, VASCO Data Security International, Inc., 1901 South Meyers Road, Suite 210, Oakbrook Terrace, Illinois 60181; telephone (630) 932-8844.

New VASCO is not required to deliver an annual report to its security holders pursuant to Section 14 of the Securities Exchange Act of 1934, as amended (the "Exchange Act"). New VASCO nonetheless expects to prepare and deliver an annual report to security holders. Unless it becomes obligated under the Exchange Act, however, any such voluntary annual report might not contain all information that would otherwise be required under Rule 14a-3 under the Exchange Act. New VASCO expects that any such annual report would contain financial information that has been examined and reported upon, with an opinion expressed by, independent public or certified public accountants.

THE EXCHANGE OFFER

In the Exchange Offer, New VASCO is offering to exchange New VASCO Securities for (i) Current VASCO Securities, and (ii) a release by each exchanging holder of any and all Associated Corporate Matter Claims. The New VASCO Securities you receive in exchange for Current VASCO Securities will have the same material terms as the Current VASCO Securities you surrender, except that the New VASCO Stock Options will be issued under and subject to the terms of the 1997 VASCO Data Security International, Inc. Stock Option Plan, as amended (the "New VASCO 1997 Stock Option Plan"). The New VASCO Stock Options will be for the same number of shares and have the same vesting, exercise price, termination provisions and expiration dates as the Current VASCO Stock Options you exchange. With respect to the Current VASCO Conversion Options, the New VASCO Conversion Options will have the same conversion price, conversion period and other terms of conversion as the Current VASCO Conversion Options you exchange. The New VASCO Warrants will also be for the same number of shares, with the same exercise price and expiration dates, as the Current VASCO Warrants you surrender. In addition, New VASCO's Certificate of Incorporation, as amended, (i) authorizes the issuance of up to 75,000,000 shares of common stock, while the Restated and Amended Certificate of Incorporation of Current VASCO, as amended, authorizes the issuance of 50,000,000 common shares, and (ii) the New VASCO Certificate of Incorporation, as amended, does not contain a requirement found in the Restated and Amended Certificate of Incorporation of Current VASCO, as amended, that all dividends on preferred stock must be paid before payment of dividends on Common Stock, which deletion will permit the creation of a class or series of preferred stock that could participate with common stock in dividend payments. See "COMPARISON OF STOCKHOLDER RIGHTS."

Your release of any and all Associated Corporate Matter Claims will be effected when the Exchange Offer is consummated if you exchange your Current VASCO Securities and sign and deliver the Letter of Transmittal and Release, the New VASCO Option Agreement, the New VASCO Convertible Note Agreement or the New VASCO Warrant Agreement, as applicable, that accompanies this Prospectus. YOU SHOULD CAREFULLY REVIEW THE PROVISIONS OF ANY OF THESE DOCUMENTS THAT YOU USE TO EFFECT THE EXCHANGE OF YOUR CURRENT VASCO SECURITIES.

BENEFITS AND DISADVANTAGES OF PARTICIPATING IN THE EXCHANGE OFFER

Current VASCO's management believes that, subject to all of the factors set forth in this document under the heading "RISK FACTORS," the following are the principal benefits and disadvantages of participating in the Exchange Offer, from the perspective of a holder of Current VASCO Securities:

Benefits

- Consummation of the Exchange Offer should minimize the effect of the Corporate Matters on Current VASCO's ability to realize its plans for growth, by establishing a new holding company that would not be hindered by the Corporate Matters from raising capital in the public and private markets.

- Current VASCO has executed engagement letters with Banque Paribas S.A. and Generale Bank for a possible future public offering. New VASCO currently expects that the possible offering, if it occurs, would commence in 1998; no date has yet been determined. As contemplated in the engagement letters, the offering would involve up to approximately $60 million of New VASCO Common Stock to be sold in offerings in the United States and Europe. In addition, Banque Paribas S.A., as global coordinator and lead manager for the offering, has an option of up to $9 million to allow the underwriters to stabilize the market after allocation of the offering. The engagement letter also contemplates that New VASCO would apply to list the offered shares of New VASCO Common Stock on the European Association of Securities Dealers Automated Quotation ("Easdaq") and/or Nasdaq. Unissued, but authorized, shares of New VASCO Common Stock may be used for this offering. For the potential dilutive effects of such an offering on investors, see "RISK FACTORS -- Risks Relating to Exchange Offer and New VASCO -- Potential Dilution." Any such offering would be conditioned on the completion of the Exchange Offer and is subject to a number of additional

contingencies and there can be no assurance that it will occur. If the Exchange Offer is consummated and New VASCO's future capital-raising efforts in the public markets are successful, New VASCO intends to apply for quotation of the New VASCO Common Stock on the Nasdaq National Market, and to register to become a reporting company under the Exchange Act. If the New VASCO Common Stock is quoted on the Nasdaq National Market, it is likely that the shares of New VASCO Common Stock will be more liquid than the shares of Current VASCO Common Stock presently outstanding, as well as any shares of Current VASCO Common Stock that are not exchanged in the Exchange Offer. There can be no assurance, however, that New VASCO's capital-raising efforts will be successful or that the New VASCO Common Stock will be so quoted or registered under the Exchange Act.

Disadvantages

- Current VASCO's plans to raise capital in the future, to the extent facilitated by consummation of the Exchange Offer, are likely to result in dilution of the interests of the holders of Current VASCO Shares or, after the Exchange Offer, of New VASCO Shares. See "RISK FACTORS -- Risks Relating to Exchange Offer and New VASCO -- Potential Dilution," and "-- Factors Relating to Operations -- Additional Capital Needed."

- The exchange of Current VASCO Noncompensatory Warrants for New VASCO Warrants may be deemed to be a taxable transaction. See "REORGANIZATION OF CURRENT VASCO -- Federal Income Tax Consequences."

- Holders of Current VASCO Securities must agree to relinquish any and all Associated Corporate Matter Claims they may hold in order to receive any New VASCO Securities in the Exchange Offer. See "RISK FACTORS -- Risks Relating to Exchange Offer and New VASCO -- Not all Potential Claims will be Eliminated."

THERE ARE NUMEROUS OTHER SIGNIFICANT FACTORS THAT YOU SHOULD CONSIDER IN EVALUATING THE EXCHANGE OFFER. IN PARTICULAR, YOU SHOULD CAREFULLY REVIEW THE INFORMATION SET FORTH IN THE "RISK FACTORS" SECTION OF THIS PROSPECTUS, AS WELL AS CONSIDER THE TAX CONSEQUENCES OF THE EXCHANGE OFFER, WHICH ARE SET FORTH UNDER THE HEADING "REORGANIZATION OF CURRENT VASCO -- FEDERAL INCOME TAX CONSEQUENCES."

Certain Features of the Exchange Offer. The following are highlights of certain features of the Exchange Offer:

- EXPIRATION DATE: The Exchange Offer expires at 5:00 p.m., Chicago, Illinois time, on , 1997, unless extended by New VASCO (the "Expiration Date").

- PROCEDURE FOR TENDERING CURRENT VASCO SHARES AND CURRENT VASCO WARRANTS:
To tender (a) your Current VASCO Shares, you should deliver your Current VASCO stock certificates and a duly signed Letter of Transmittal and Release, or (b) your Current VASCO Warrants, you should complete, sign and deliver the New VASCO Warrant Agreement (with original Current VASCO Warrants attached thereto), so as to be received prior to the Expiration Date by the following exchange agent (the "Exchange Agent"):

Illinois Stock Transfer Company 223 West Jackson Boulevard, Suite 1210 Chicago, Illinois 60606 (312) 427-2953

Under certain circumstances, your signature on the Letter of Transmittal and Release must be guaranteed and there is also a procedure for a guaranteed delivery if you are unable to deliver all your documents prior to the Expiration Date. IF YOUR CURRENT VASCO STOCK CERTIFICATES ARE REGISTERED IN THE NAME OF A NOMINEE, THE LETTER OF TRANSMITTAL AND RELEASE MUST BE SIGNED BY THE NOMINEE AND BY THE BENEFICIAL OWNER(S) OF THE CURRENT VASCO SHARES. The instructions to the Letter of Transmittal and Release and the sections of this document entitled "THE EXCHANGE OFFER -- Procedures for Tendering Current VASCO Shares and Current VASCO Warrants" and "-- Guaranteed Delivery

Procedure for Current VASCO Shares" explain these features. To tender your Current VASCO Warrants, you must attach them to the New VASCO Warrant Agreement. See "THE EXCHANGE OFFER -- Procedures for Tendering Current VASCO Shares and Current VASCO Warrants."

- PROCEDURE FOR TENDERING CURRENT VASCO STOCK OPTIONS AND CURRENT VASCO CONVERSION OPTIONS: To exchange your Current VASCO Stock Options and Current VASCO Conversion Options you should complete, sign and deliver one or both of the following agreements, as appropriate, which accompany this document: the New VASCO Option Agreement with respect to Current VASCO Stock Options, or the New VASCO Convertible Note Agreement with respect to Current VASCO Conversion Options. These agreements must be delivered to, and received by, the following individual prior to the Expiration Date:

Gregory T. Apple Vice President and Treasurer VASCO Data Security International, Inc.

1901 South Meyers Road, Suite 210

Oakbrook Terrace, Illinois 60181

(630) 932-8844

- WITHDRAWAL RIGHTS: If you want to withdraw your deposit of Current VASCO Securities, you must deliver written notice of withdrawal to the Exchange Agent in the case of Current VASCO Shares or Current VASCO Warrants, or to Mr. Apple in the case of Current VASCO Stock Options or Current VASCO Conversion Options, prior to 5:00 p.m., Chicago, Illinois time on the Expiration Date, which is , 1997 (or such later date if extended), or unless the tender has previously been accepted, after [60 days after date of commencement of the offer].

- CONDITIONS TO THE EXCHANGE OFFER. The consummation of the Exchange Offer is conditioned on the following as of the Expiration Date:

- there must be no Securities and Exchange Commission order threatened or in effect suspending the effectiveness of the Registration Statement of which this document is a part;

- shares representing at least 80% of the outstanding shares of Current VASCO Common Stock must be tendered;

- there must be no pending or threatened action or proceeding which, in the judgment of the Board of Directors of New VASCO, might impair the Exchange Offer or have a material adverse effect on the benefits of the Exchange Offer to New VASCO; and

- there must be no proposed, adopted or enacted new law, statute, rule or regulation that might materially impair the Exchange Offer or have a material adverse effect on the benefits of the Exchange Offer to New VASCO or make the exchange of Current VASCO Shares in the Exchange Offer taxable for federal income tax purposes.

New VASCO may in its discretion waive or amend any of the foregoing conditions and reserves the right to terminate and abandon the Exchange Offer at any time prior to the Expiration Date. See "THE EXCHANGE OFFER -- Expiration Date; Extensions; Termination; Amendment" and "-- Conditions to the Exchange Offer."

Exchange by Directors of Current VASCO. As of October 15, 1997, 20,132,968 shares of Current VASCO Common Stock were outstanding of which 10,682,330 were owned by Current VASCO's directors and their spouses ("Current VASCO Affiliates"). In addition, as of October 15, 1997 the Current VASCO Affiliates owned, directly or indirectly, Current VASCO Stock Options for an aggregate of 909,507 shares of Current VASCO Common Stock and Current VASCO Warrants for an aggregate of 205,883 shares of Current VASCO Common Stock. The Current VASCO Affiliates have indicated their intent to exchange all of their Current VASCO Securities in the Exchange Offer.

QUESTIONS AND ANSWERS
ABOUT THE EXCHANGE OFFER

Q. WHY IS CURRENT VASCO PROPOSING THE EXCHANGE OFFER?

A. Current VASCO plans on expanding and raising additional capital which could include financings and public stock offerings. In this connection, Current VASCO's independent legal counsel, the law firm of Jenner & Block, Chicago, Illinois, reviewed the historical corporate proceedings of Current VASCO and its predecessors and noted the absence of certain corporate documentation and the noncompliance with certain procedural requirements, which matters are referred to in this document as "Corporate Matters" and more fully discussed below under "REORGANIZATION OF CURRENT VASCO -- Reasons for the Reorganization." While these Corporate Matters have not hindered Current VASCO's business operations, they present problems in obtaining legal opinions as to compliance with applicable corporate law governing prior reorganizations and certain prior issuances of Current VASCO capital stock. The inability to obtain a legal opinion does not mean that the transactions were invalid but that a legal opinion as to their compliance with applicable corporate law cannot be given. Opinions as to validity of the issuance of all outstanding shares may be required in future financings, stock offerings or other transactions that could be beneficial to security holders.

Management of Current VASCO believes that the Reorganization will facilitate obtaining legal opinions as to the validity of stock issuances by the new corporation. Consequently, Current VASCO has proposed that you become a stockholder, or the holder of options or warrants to purchase stock, of New VASCO through the Exchange Offer and that New VASCO be the entity in the future that issues shares to future stockholders. Management has obtained the legal opinion of Jenner & Block that the New VASCO Common Stock to be issued in the Exchange Offer will be validly issued. Legal opinions with respect to future issuances of stock by New VASCO will depend on the circumstances existing at the time of the respective issuances.

THE BOARD OF DIRECTORS OF CURRENT VASCO BELIEVES THAT THE EXCHANGE OFFER IS IN THE BEST INTERESTS OF CURRENT VASCO AND HAS UNANIMOUSLY APPROVED THE EXCHANGE OFFER. THE DIRECTORS OF CURRENT VASCO AND THEIR SPOUSES OWN IN THE AGGREGATE APPROXIMATELY 53% OF THE CURRENT VASCO COMMON STOCK OUTSTANDING. THEY HAVE INDICATED THEIR INTENT TO EXCHANGE THEIR CURRENT VASCO SHARES FOR NEW VASCO SHARES PURSUANT TO THE EXCHANGE OFFER.

To review the reasons for the Exchange Offer in greater detail, see "REORGANIZATION OF CURRENT VASCO -- Reasons for the Reorganization." To review a comparison of the principal benefits and disadvantages of the Exchange Offer, see "Benefits and Disadvantages of Participating in the Exchange Offer" above.

Q. WHAT ARE THE CORPORATE MATTERS?

A. The company's history dates back to 1984 when VASCO CORP., a predecessor, but distinct legal entity ("Old VASCO"), of Current VASCO was incorporated in the State of Delaware. In 1986, Old VASCO reorganized with a publicly held Utah company, which later was combined with Current VASCO in 1990. The documentation and procedure surrounding these corporate transactions, as well as other corporate actions taken by Current VASCO and its predecessors, appear to have been irregular and not in full compliance with requisite corporate law. These corporate irregularities are collectively referred to in this document as "Corporate Matters." Included among the following are all of the known instances of material non-compliance:

- the failure by Old VASCO to document whether an amendment to its Certificate of Incorporation was duly authorized or to file a Certificate of Amendment with the Delaware Secretary of State to amend its Certificate of Incorporation in 1984 to effect a three-for-one stock split of its common stock and to provide for 600,000 shares of non-voting common stock prior to purportedly effecting the stock split and issuing such non-voting common shares;

- the failure of Old VASCO to document whether it afforded its stockholders, in connection with issuances of Old VASCO capital stock, the preemptive rights to purchase, upon the issuance or sale of Old VASCO stock (or securities convertible into Old VASCO stock), shares (or securities) in proportion to the amount of Old VASCO common stock then owned by such holder, subject to conditions and time limitations prescribed (and at a price determined as permitted by law), by Old VASCO's Board of Directors, as provided for in the Old VASCO Certificate of Incorporation;

- the failure by Old VASCO to document whether director and stockholder approval was obtained for an amendment to its Certificate of Incorporation increasing the number of authorized shares of common stock in 1986;

- the failure to document the approval by Old VASCO's stockholders of the 1986 reorganization through the share exchange undertaken by Old VASCO and Ridge Point Enterprises, Inc. ("Ridge Point"), a Utah corporation which concurrently changed its name to Vasco Corp. ("VASCO Utah"), the failure to document whether all stockholders of Old VASCO voluntarily exchanged their shares for shares of Ridge Point/VASCO Utah, and the failure to document the mechanics of the exchange of Old VASCO shares for shares of Ridge Point/VASCO Utah;

- the failure to properly document any stockholder approval of the dissolution of Old VASCO and to document actions taken to dissolve, liquidate and wind-up Old VASCO in 1987 and the failure to vest effectively title and ownership in VASCO Utah of Old VASCO's assets and to document the assumption by VASCO Utah of Old VASCO's liabilities;

- the purported issuance of Series A preferred stock in 1989 by VASCO Utah at a time when the issuance of preferred shares was not authorized by VASCO Utah's charter;

- the administrative dissolution of VASCO Utah in 1990 prior to the intended merger transaction with Current VASCO and before the filing of a Certificate of Merger with the State of Delaware;

- the failure of VASCO Utah to document whether it afforded its stockholders the appraisal rights provided for by Utah law in connection with the intended 1990 merger of VASCO Utah with Current VASCO;

- the purported issuance of preferred stock by Current VASCO in connection with the 1990 merger of VASCO Utah with Current VASCO when the rights, powers and preferences of such stock were not specified in Current VASCO's Certificate of Incorporation and when its Certificate of Incorporation did not provide its Board of Directors the power to designate such rights, powers and preferences;

- the following procedural irregularities which call into question the validity of the intended 1990 merger of VASCO Utah and Current VASCO, as well as Current VASCO's title to the assets of VASCO Utah purportedly succeeded to by Current VASCO by virtue of the merger:

(1) the incorporation of Current VASCO after the date of the 1990 plan of merger,

(2) Current VASCO's approval of the plan of merger, including approval of the plan of merger prior to the incorporation of Current VASCO, the lack of documented stockholder approval as called for by the plan of merger and the effectiveness of the approval by Current VASCO's then Board of Directors,

(3) the authorization and issuance of stock by Current VASCO pursuant to the merger,

(4) the adoption of Current VASCO's initial bylaws, the appointment of Current VASCO's initial directors and the election of its initial officers,

(5) the administrative dissolution of VASCO Utah prior to the filing of a Certificate of Merger with the State of Delaware, and

(6) the failure to file Articles of Merger with the State of Utah in connection with the intended merger of VASCO Utah and Current VASCO; and

- the failure to: document approval by the board of directors and stockholders of Current VASCO and its predecessors of stock option plans; specify and authorize the number of shares of stock to be subject to such plans; reserve the number of shares subject to such plans; document the authorization for the grant of options pursuant to such plans and the issuance of shares upon exercise of such options; and design such plans in a manner that would ensure options granted thereunder would be treated as incentive stock options under Section 422 of the Internal Revenue Code of 1986, as amended.

The Corporate Matters were brought to the attention of Current VASCO by its independent legal counsel, who, commencing in 1996, reviewed the historical corporate proceedings of Current VASCO and its predecessors.

See "REORGANIZATION OF CURRENT VASCO -- Reasons for the Reorganization."

Current VASCO had been operating with the understanding that the 1990 merger was effected in full compliance with the applicable laws of Delaware and Utah. If the 1990 merger was not valid, the succession to VASCO Utah's assets by Current VASCO may not have been properly effected in 1990. In April 1997, Current VASCO contacted the Division of Corporations of the Utah Department of Commerce and inquired whether the Division would accept for filing Articles of Merger relating to the intended 1990 merger transaction. The Division responded that it would not accept the Articles of Merger for filing. Management of Current VASCO believes that VASCO Utah's assets, which consisted primarily of furniture, fixtures and office equipment that are no longer in use by Current VASCO, are not material, and are not related to, the business presently conducted by Current VASCO. However, as documentation to further support the intended 1990 merger transaction, which was approved by approximately 90% of the shares of VASCO Utah entitled to vote on the 1990 merger, the individuals who were members of the Board of Directors of VASCO Utah in 1990 have recently executed a transfer document assigning all of VASCO Utah's right, title and interest in its assets to Current VASCO. No assurance can be given as to what effect, if any, this attempt to document retroactively what was intended at the time may have had on Current VASCO's title to VASCO Utah's assets.

The Corporate Matters uncovered in the review of the historical organization of Current VASCO and its predecessors have not previously caused problems in the business operations of Current VASCO. However, these issues do preclude the obtaining of a legal opinion as to the validity of the issuances of certain shares by predecessors of Current VASCO, of the 1990 merger transaction and of the issuance of shares by Current VASCO pursuant to and subsequent to the 1990 merger transaction.

To review the Corporate Matters in greater detail, see "REORGANIZATION OF CURRENT VASCO -- Organizational History of Current VASCO" and "REORGANIZATION OF CURRENT VASCO -- Reasons for the Reorganization."

Q. IF I AM A CURRENT VASCO STOCKHOLDER, WHAT AM I BEING ASKED TO GIVE UP?

A. You are being asked to exchange for New VASCO Shares, your Current VASCO Shares and the release of any and all Associated Corporate Matter Claims. The release of Associated Corporate Matter Claims will be effected by the accompanying Letter of Transmittal and Release, which you should review carefully. By executing and delivering the Letter of Transmittal and Release, you will release any and all Associated Corporate Matter Claims you may have, even if you do not exchange all of your Current VASCO Shares. Although no claims based on the Corporate Matters have been asserted and the existence and extent of any such rights, interests and claims are uncertain, under certain theories the Associated Corporate Matter Claims that holders of Current VASCO Shares will agree to release by exchanging any of their Current VASCO Shares for New VASCO Shares could include, among other things, claims for rescission of stock issuances, acquisitions, sales or exchanges, claims of a direct interest in assets of Current VASCO or one of its predecessor entities, claims for rescission of corporate transactions, or claims for monetary damages in connection with, resulting from or relating to the Corporate Matters.

For example, a Current VASCO stockholder who acquired stock from Current VASCO in the past three years might assert a claim under federal or state securities laws, which provide remedies for material misstatements or omissions in connection with the sale of securities. For a discussion of some of the types of claims and of the remedies that may be available to the holders of Current VASCO Shares if they successfully assert Associated Corporate Matter Claims, see "REORGANIZATION OF CURRENT VASCO -- Associated Corporate Matter Claims." For a discussion of the impact of the release on possible claims, see "REORGANIZATION OF CURRENT VASCO -- Releases from Security Holders in Exchange Offer."

The nature of the Associated Corporate Matter Claims that may be available to you if you also hold Current VASCO Stock Options, Current VASCO Conversion Options and/or Current VASCO Warrants may differ from the Associated Corporate Matter Claims available to holders of Current VASCO Shares. In this connection, see the response below to the question: "What am I being asked to give up in exchange for New VASCO options or warrants?"

For a more complete discussion of the types of Associated Corporate Matter Claims, and possible remedies therefor, that may be available to holders of Current VASCO Securities depending on whether they hold Current VASCO Shares, Current VASCO Stock Options, Current VASCO Conversion Options or Current VASCO Warrants, see "REORGANIZATION OF CURRENT VASCO -- Associated Corporate Matter Claims."

Q. WHAT WILL I RECEIVE IN THE EXCHANGE OFFER?

A. If you exchange Current VASCO Shares (and release any and all Associated Corporate Matter Claims), you will receive one New VASCO Share, for each share of Current VASCO Common Stock exchanged.

Current VASCO Common Stock is quoted on the Over-the-Counter Bulletin Board (the "OTC BB"). However, there has been no public market for the New VASCO Common Stock, and there can be no assurance that an active public market for the New VASCO Common Stock will develop or that the New VASCO Common Stock will be quoted or listed on the OTC BB or any other quotation system or stock exchange following the Exchange Offer.

To review in greater detail the terms of the Exchange Offer, see "THE EXCHANGE OFFER -- Terms of the Exchange Offer." To review in greater detail the rights of stockholders of New VASCO, see "DESCRIPTION OF CAPITAL STOCK OF NEW VASCO" and "COMPARISON OF STOCKHOLDER RIGHTS."

Q. WHAT IF I DON'T EXCHANGE MY CURRENT VASCO SHARES?

A. If the Exchange Offer is consummated and you did not exchange your Current VASCO Shares and release any and all Associated Corporate Matter Claims you may have, you will remain a stockholder of Current VASCO and will continue to be afforded your rights as such, including your rights under Delaware law and the Current VASCO Restated and Amended Certificate of Incorporation, as amended, to participate in dividends, if any, to holders of Current VASCO Common Stock. However, as the principal stockholder of Current VASCO, New VASCO will have the power to control and direct the affairs of Current VASCO. New VASCO may, without the consent of any other stockholder of Current VASCO, but subject to appraisal rights, if any, and/or other remedies, if any, available under Delaware law, at a later date merge Current VASCO into New VASCO or into or with a subsidiary of New VASCO on a stock or cash basis or undertake some other corporate reorganization of Current VASCO without a meeting of stockholders and, if New VASCO is the owner of at least 90% of the outstanding shares of each class of stock of Current VASCO, the Board of Directors of New VASCO could effect a merger of Current VASCO with and into New VASCO without a vote of the stockholders of Current VASCO (again, subject to appraisal rights or other available remedies, if any, under Delaware law). At the present time, neither Current VASCO nor New VASCO has any plans or proposals to merge Current VASCO following the Exchange Offer or to effect a second-step transaction to eliminate any shares of Current VASCO that are not tendered in the Exchange Offer. In addition, it is possible that the Current

VASCO Common Stock will not be quoted on the OTC BB if the Exchange Offer is consummated. If you do not exchange any of your Current VASCO Shares or any of your Current VASCO Equity Equivalent Securities, you will retain your ability to assert Associated Corporate Matter Claims, if any, which may be available under applicable law.

See "RISK FACTORS -- Risks Relating to Exchange Offer and New VASCO -- Stockholders Who Do Not Exchange will become Minority Stockholders of Current VASCO," "-- Reduced Liquidity of Current VASCO Common Stock," and "-- Limited or No Liquidity in New VASCO Common Stock" for more detail on the effects of not participating in the Exchange Offer.

Q. WILL MY RIGHTS AS A STOCKHOLDER OF NEW VASCO BE ANY DIFFERENT THAN MY RIGHTS AS A STOCKHOLDER OF CURRENT VASCO?

A. No, except that you will have released any and all Associated Corporate Matter Claims.

Both Current VASCO and New VASCO are Delaware corporations and are governed by the laws of the State of Delaware. The certificates of incorporation and bylaws of the two companies are substantially the same, except for (i) the authorization to issue up to 75,000,000 shares of New VASCO Common Stock in New VASCO's Certificate of Incorporation, as amended, whereas Current VASCO's Restated and Amended Certificate of Incorporation, as amended, authorizes the issuance of 50,000,000 shares of Current VASCO Common Stock,
(ii) the fact that New VASCO will not designate Series A Preferred Stock or Series B Preferred Stock since there are no longer any shares of Current VASCO Series A Preferred Stock or Series B Preferred Stock outstanding,
(iii) the deletion from New VASCO's Certificate of Incorporation, as amended, of a general requirement that all dividends on preferred stock be paid before payment of dividends on common stock, which deletion will permit the creation of a class or series of preferred stock that could participate with common stock in dividend payments, and (iv) certain clarifying and conforming changes and certain changes included to reflect current Delaware law.

See "RISK FACTORS -- Risks Relating to Exchange Offer and New VASCO -- Potential Dilution," "DESCRIPTION OF CAPITAL STOCK OF NEW VASCO" and "COMPARISON OF STOCKHOLDER RIGHTS" for further detail on rights of New VASCO stockholders.

Q. WHAT DO I DO TO EXCHANGE MY CURRENT VASCO SHARES (AND ANY AND ALL ASSOCIATED CORPORATE MATTER CLAIMS) FOR NEW VASCO SHARES?

A. You should complete and sign the Letter of Transmittal and Release that accompanied this Prospectus and deliver the Letter of Transmittal and Release with your stock certificates for Current VASCO Shares, and any other documentation or signatures required by the Letter of Transmittal and Release, to the Exchange Agent prior to the Expiration Date:

Illinois Stock Transfer Company 223 West Jackson Boulevard, Suite 1210 Chicago, Illinois 60606 (312) 427-2953

Read carefully the instructions on the Letter of Transmittal and Release. You will bear the risk of loss in delivering the stock certificates to the Exchange Agent. IF YOU MAIL THEM, WE SUGGEST THAT YOU USE PROPERLY INSURED, REGISTERED MAIL, WITH RETURN RECEIPT REQUESTED, AND THAT THE MAILING BE MADE SUFFICIENTLY IN ADVANCE OF THE EXPIRATION DATE TO PERMIT DELIVERY TO THE EXCHANGE AGENT ON OR PRIOR TO THAT TIME.

Q. IF I AM THE HOLDER OF OPTIONS OR WARRANTS EXERCISABLE FOR CURRENT VASCO COMMON STOCK, CAN I EXCHANGE THEM FOR OPTIONS OR WARRANTS OF NEW VASCO?

A. Yes. The Current VASCO Stock Options are exchangeable for New VASCO Stock Options for the same number of shares of New VASCO Common Stock with the same exercise price, same vesting terms, same termination provisions and the same expiration date as presently exist for the corresponding

Current VASCO Stock Options. The New VASCO Stock Options will be issued under the New VASCO 1997 Stock Option Plan and will be nonqualified stock options for tax purposes.

The Current VASCO Conversion Options are exchangeable for New VASCO Conversion Options for the same number of shares of New VASCO Common Stock, with the same conversion price, conversion expiration date and other conversion terms as the Current VASCO Conversion Options surrendered.

New VASCO is also offering to exchange New VASCO Warrants, having the same number of shares, exercise price and exercise terms as corresponding Current VASCO Warrants tendered for exchange.

For further information on New VASCO Stock Options, New VASCO Conversion Options and New VASCO Warrants see "DESCRIPTION OF CAPITAL STOCK OF NEW VASCO -- Stock Options, Warrants and Convertible Notes."

Q. WHAT AM I BEING ASKED TO GIVE UP IN EXCHANGE FOR NEW VASCO OPTIONS OR WARRANTS?

A. You are being asked to agree to the cancellation of your Current VASCO Stock Options, Current VASCO Conversion Options or Current VASCO Warrants and to release any and all Associated Corporate Matter Claims. The Associated Corporate Matter Claims potentially available to holders of Current VASCO Stock Options, Current VASCO Conversion Options and Current VASCO Warrants may differ from those available to holders of Current VASCO Shares, since unlike Current VASCO Shares these classes of Current VASCO Securities do not represent an equity or ownership interest in Current VASCO, but rather constitute a contractual right to acquire such an equity or ownership interest. As a result, Associated Corporate Matter Claims that may be available to holders of Current VASCO Shares which derive from legal principles designed to safeguard the interests of corporate stockholders may not be available to holders of Current VASCO options and warrants. Examples of Associated Corporate Matter Claims that may be available to holders of Current VASCO Stock Options, Current VASCO Conversion Options and Current VASCO Warrants include those arising under contract law and securities law principles. For example, a holder of Current VASCO Equity Equivalent Securities who acquired such securities in the past three years arguably could have a claim under federal or state securities laws, which provide remedies for material misstatements or omissions in connection with the sale of securities. Holders of Current VASCO Stock Options may also be entitled to assert Associated Corporate Matter Claims regarding the treatment, for federal income tax purposes, they receive due to the exercise of their stock options. For a more complete discussion of the types of Associated Corporate Matter Claims, and possible remedies therefor, that may be available to holders of Current VASCO Securities depending on whether they hold Current VASCO Shares, Current VASCO Stock Options, Current VASCO Conversion Options or Current VASCO Warrants, see "REORGANIZATION OF CURRENT VASCO -- Associated Corporate Matter Claims."

The release of any and all Associated Corporate Matter Claims will be effected by, as appropriate, the New VASCO Option Agreement, the New VASCO Convertible Note Agreement or the New VASCO Warrant Agreement. By executing and delivering one or more of these documents, which you should review carefully, you will release any and all Associated Corporate Matter Claims you may have, even if you do not exchange all of your Current VASCO Equity Equivalent Securities.

Also, you are being asked to exchange your Current VASCO Stock Option for a New VASCO Stock Option which will not be an incentive stock option, as defined in Section 422 of the Internal Revenue Code of 1986, as amended ("ISOs"). There is different tax treatment for ISOs and for nonqualified stock options such as those offered by New VASCO in the Exchange Offer. For example, if the holder of an ISO exercises it and meets certain applicable holding requirements, the holder may avoid current taxability on the gain realized upon exercise. When the holder of a nonqualified option exercises it, the holder is taxable upon the gain realized. Holders of ISOs frequently exercise them and fail to comply with the holding requirements with the result that their tax effects are the same as those that would have applied if the options had been nonqualified in any event.

Q. WHAT IF I DON'T EXCHANGE MY OPTIONS OR WARRANTS?

A. If you do not exchange any of your Current VASCO Equity Equivalent Securities, you will continue to be a holder of options or warrants to purchase shares of Current VASCO Common Stock, and if you also do not exchange any of your Current VASCO Shares, you will retain your ability to assert Associated Corporate Matter Claims, if any, which may be available under applicable law. If the Exchange Offer is consummated and you subsequently exercise your Current VASCO Equity Equivalent Securities and acquire Current VASCO Common Stock you will be a minority stockholder of Current VASCO. In this connection, see the response above to the question:
"What if I don't exchange my Current VASCO Shares?"

Q. WHAT DO I DO TO EXCHANGE MY OPTIONS OR WARRANTS?

A. To exchange your Current VASCO Stock Options or Current VASCO Conversion Options, you will need to deliver a signed New VASCO Option Agreement or New VASCO Convertible Note Agreement, as applicable, to the following individual prior to the Expiration Date:

Gregory T. Apple Vice President and Treasurer VASCO Data Security International, Inc.

1901 South Meyers Road

Suite 210

Oakbrook Terrace, Illinois 60181

To exchange your Current VASCO Warrants, you will need to deliver a signed New VASCO Warrant Agreement, with your original Current VASCO Warrants attached thereto, to the Exchange Agent, prior to the Expiration Date, at the following address:

Illinois Stock Transfer Company

223 West Jackson Boulevard, Suite 1210

Chicago, Illinois 60606

(312) 427-2953

The exchange of Current VASCO Equity Equivalent Securities won't be effective unless the Exchange Offer is consummated.

Q. WILL THERE BE ANY DIFFERENCES IN THE MANAGEMENT OF CURRENT VASCO AND NEW VASCO?

A. No. The persons who are officers and the persons who are directors of both companies are currently identical. Changes in the persons who are officers and directors of the companies may occur after the completion of the Exchange Offer, however.

See "CERTAIN INFORMATION CONCERNING CURRENT VASCO -- Management" and "CERTAIN INFORMATION CONCERNING NEW VASCO -- Management" for further information on directors and officers.

Q. WILL THE EXCHANGE OFFER AFFECT THE BUSINESS OPERATIONS OF CURRENT VASCO?

A. No. Current VASCO presently conducts business through two operating subsidiaries. The subsidiaries will continue business operations without regard to the Exchange Offer and will remain as subsidiaries of Current VASCO. If the Exchange Offer is consummated, the subsidiaries will become indirect subsidiaries of New VASCO. However, if not all of the Current VASCO Shares are exchanged or if not all of the Current VASCO Equity Equivalent Securities are exchanged and after the Exchange Offer are converted or exercised into Current VASCO Common Stock, New VASCO will own less than 100% of Current VASCO and, indirectly, these two subsidiaries.

Q. WHAT IS REQUIRED FOR THE EXCHANGE OFFER TO BE EFFECTED?

A. In order for the Exchange Offer to be consummated, stockholders of Current VASCO who possess at least 80% of the outstanding shares of Current VASCO Common Stock must tender their shares for exchange and execute and deliver a Letter of Transmittal and Release prior to the Expiration Date. This is called the "Minimum Condition."

Current VASCO's present directors and their spouses owned at October 15, 1997 approximately 53% of the outstanding shares of Current VASCO Common Stock, and they have indicated their intention to tender all of their Current VASCO Shares (and to release any and all Associated Corporate Matter Claims) in exchange for New VASCO Shares.

There are certain other conditions to the Exchange Offer and information on these conditions is set forth under "THE EXCHANGE OFFER -- Conditions to the Exchange Offer."

Q. WHAT IF 80% OF THE CURRENT VASCO COMMON STOCK IS NOT TENDERED IN THE EXCHANGE OFFER?

A. Current VASCO and New VASCO have not decided the course of action that will be taken if 80% of the Current VASCO Common Stock is not tendered in the Exchange Offer. However, preliminary consideration has been given to restructuring the Reorganization under Section 351 of the Internal Revenue Code of 1986, as amended, if the Minimum Condition is not satisfied. Section 351 does not require New VASCO to obtain 80% of the Current VASCO Common Stock. If the Minimum Condition is not met and a determination is made to effect a reorganization under Section 351, New VASCO intends to extend the Expiration Date of the Exchange Offer and amend this document to make appropriate disclosures with respect to a reorganization under Section 351.

Q. WHAT IS THE DEADLINE FOR THE EXCHANGE OFFER?

A. The Expiration Date for the Exchange Offer is at 5:00 p.m. Chicago, Illinois time on , 1997, unless extended by New VASCO.

For greater detail on the Expiration Date, see "THE EXCHANGE OFFER -- Expiration Date; Extensions; Termination; Amendment."

Q. WHAT IF I DEPOSIT MY STOCK CERTIFICATES OR WARRANT AGREEMENT WITH THE EXCHANGE AGENT OR MY AGREEMENT WITH RESPECT TO OPTIONS WITH MR. APPLE AND THEN CHANGE MY MIND? WILL I BE ABLE TO WITHDRAW MY STOCK CERTIFICATES OR AGREEMENT?

A. Stock certificates or agreements may be withdrawn at any time prior to the Expiration Date or, unless the tender has previously been accepted for exchange after , 1997 [60 days after date of commencement of the offer].

For greater detail on withdrawal rights, see "THE EXCHANGE OFFER -- Withdrawal Rights."

Q. WHAT ARE THE TAX CONSEQUENCES FOR EXCHANGING MY SHARES, OPTIONS AND WARRANTS (AND ANY AND ALL ASSOCIATED CORPORATE MATTER CLAIMS)?

A. The exchange of Current VASCO Shares, Current VASCO Stock Options, Current VASCO Conversion Options and Current VASCO Compensatory Warrants (and the release of any and all Associated Corporate Matter Claims) for New VASCO Shares, New VASCO Stock Options, New VASCO Conversion Options or New VASCO Warrants will be tax-free for federal income tax purposes. The exchange of Current VASCO Noncompensatory Warrants (and the release of any and all Associated Corporate Matter Claims) for New VASCO Warrants may be deemed to be a taxable event.

To review the tax consequences in greater detail, see "REORGANIZATION OF CURRENT VASCO -- Federal Income Tax Consequences."

Q. ARE THERE APPRAISAL RIGHTS?

A. Under Delaware law, holders of Current VASCO Securities do not have any right to an appraisal of the value of their securities in connection with the Exchange Offer.

For information regarding the security holdings of Current VASCO's management (who also serve as New VASCO's management), as well as other arrangements concerning Current VASCO and its management, see "PRINCIPAL STOCKHOLDERS," "CERTAIN INFORMATION CONCERNING CURRENT VASCO" and "CERTAIN INFORMATION CONCERNING NEW VASCO."

Q. ARE ANY STATE OR FEDERAL REGULATORY APPROVALS REQUIRED FOR THE EXCHANGE OFFER?

A. No special state or federal regulatory approvals of the Exchange Offer must be obtained, except for necessary filings under securities laws.

* * * * * * * * * *

POTENTIAL BENEFITS OF EXCHANGE OFFER TO MEMBERS OF CURRENT VASCO'S MANAGEMENT AND BOARD OF DIRECTORS AND LARGE SECURITY HOLDERS. The completion of the Exchange Offer may benefit members of Current VASCO's present management and Board of Directors, as well as certain holders of large numbers of Current VASCO Securities. For example, the New VASCO 1997 Stock Option Plan provides that the compensation committee, to be appointed by the New VASCO Board of Directors to administer the New VASCO 1997 Stock Option Plan, will have the authority to, among other things, grant New VASCO Stock Options to persons who are officers, employees, directors, consultants or advisers of New VASCO and its subsidiaries, to set the terms of the New VASCO Stock Options granted thereunder, and to adjust the terms of the New VASCO Stock Options in the event of changes that impact New VASCO or the price (or status) of shares of New VASCO Common Stock.

In addition, to the extent that the Exchange Offer facilitates the raising of capital by New VASCO by means of a registered public offering of New VASCO Securities, certain members of Current VASCO's management, as well as certain holders of a large number of Current VASCO Securities, may be granted the opportunity to have a number of the shares of New VASCO Common Stock that they receive in the Exchange Offer included in any such registered offering, if New VASCO enters into registration rights agreements with such holders in connection with the Exchange Offer with provisions comparable to the agreements such persons have entered into with Current VASCO with respect to shares of Current VASCO Common Stock. A registered public offering of New VASCO Securities following the Exchange Offer may also include a number of shares of New VASCO Common Stock received by New VASCO's Board of Directors and management in the Exchange Offer, in addition to newly issued shares of New VASCO Common Stock, depending on the structure of any such offering that may be negotiated by New VASCO and the prospective underwriters thereof.

Certain Current VASCO Warrants also provide that the shares of Current VASCO Common Stock into which they may be exercised shall be included in the next registration statement to be filed by Current VASCO with the Securities and Exchange Commission. To the extent that such Current VASCO Warrants are tendered in the Exchange Offer, the New VASCO Warrants issued in exchange therefor will entitle the holders, including Mario Houthooft, Managing Director of Current VASCO's European operating subsidiary, and Osprey Partners, a firm in which a member of the Board of Directors of Current VASCO and of New VASCO, Michael Mulshine, is a principal, to the same right with respect to the shares of New VASCO Common Stock underlying such New VASCO Warrants. See "DESCRIPTION OF CAPITAL STOCK OF NEW VASCO -- Registration Rights and Other Arrangements."

FACTORS RELATING TO OPERATIONS

The following factors are applicable to the operations of Current VASCO and are not dependent on the completion of the Reorganization. However, in the event the Reorganization is completed, the factors will also apply to New VASCO.

HISTORY OF OPERATING LOSSES; ACCUMULATED DEFICIT. Current VASCO has incurred losses from continuing operations before interest and taxes for the years ended December 31, 1995, December 31, 1996 and the six months ended June 30, 1997 of $357,000, $9,241,000 and $1,237,000, respectively. As of June 30, 1997, Current VASCO had an accumulated deficit of $11,194,000, which amount includes a write-off of acquired in-process technology related to the acquisitions of Lintel Security NV and Digipass SA for the year ended December 31, 1996 in the amount of $7,351,000. See "MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS." In view of Current VASCO's loss history, there can be no assurance that Current VASCO will be able to achieve or sustain profitability on an annual or quarterly basis in the future.

POTENTIAL FLUCTUATIONS IN QUARTERLY RESULTS. Current VASCO's quarterly operating results have in the past varied and may in the future vary significantly. Factors affecting operating results include: the level of competition; the size, timing, cancellation or rescheduling of significant orders; market acceptance of new products and product enhancements; new product announcements or introductions by Current VASCO's competitors; adoption of new technologies and standards; changes in pricing by Current VASCO or its competitors; the ability of Current VASCO to develop, introduce and market new products and product enhancements on a timely basis, if at all; component costs and availability; Current VASCO's success in expanding its sales and marketing programs; technological changes in the market for data security products; foreign currency exchange rates; and general economic trends and other factors. In addition, because a high percentage of Current VASCO's operating expenses are fixed, a small variation in the timing of recognition of revenue can cause significant variations in operating results from quarter to quarter.

ADDITIONAL CAPITAL NEEDED. Current VASCO requires additional capital to finance its working capital and other needs, including the repayment of outstanding obligations and the financing of future growth. While Current VASCO intends to raise capital in the near future through, among other potential financing sources, a possible public offering of New VASCO Common Stock, the inability of Current VASCO to obtain additional funds will adversely affect its results of operations and financial condition and its ability to conduct its business. See "MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS -- Liquidity and Capital Resources." In addition, while the Reorganization of Current VASCO pursuant to the Exchange Offer is intended to enhance New VASCO's ability to raise capital in the public markets, there can be no assurance that the Reorganization will be successful or, if it is successful, that the Reorganization will improve New VASCO's ability to raise capital in the public markets or otherwise.

RAPID TECHNOLOGICAL CHANGES AND DEPENDENCE ON NEW PRODUCTS. The market for Current VASCO's products is very dynamic and characterized by rapidly changing technology, evolving industry standards and government policies, changing customer requirements, price-competitive bidding and frequent product enhancements and innovations. The introduction by Current VASCO or its competitors of products embodying new technologies and the emergence of new industry standards could render Current VASCO's existing products obsolete and unmarketable. Therefore, Current VASCO's future success will depend in part upon its ability to enhance its current products and develop innovative products to distinguish itself from the competition and to meet customers' changing needs in the data security industry. Current VASCO is presently expending significant resources to enhance its existing products and develop and introduce the next generation of token and other security products. There can be no assurance that security-related product developments and technology innovations by others will not adversely affect Current VASCO's competitive position or that Current VASCO will be able to successfully anticipate or adapt to changing technology, industry standards or customer requirements on a timely basis. Any failure by Current VASCO to anticipate and respond to such changes could have a material adverse effect on Current VASCO's results of operations and financial condition.

DEPENDENCE ON MAJOR CUSTOMERS. Approximately 44% (approximately 33% on a pro forma basis after giving effect to the Digipass SA and Lintel Security NV acquisitions and assuming the acquisitions had occurred on January 1, 1996) of Current VASCO's revenues during 1996 were derived from the sale of Current VASCO's security products to one European distributor, Concord-Eracom Nederland BV, a customer with which Current VASCO presently has a product acceptance dispute regarding the sale in 1995 of certain smartcard readers. On the same pro forma consolidated basis, taking into account Lintel Security NV and Digipass SA sales for the calendar year 1996, two other European customers each would have accounted for approximately 10% of Current VASCO's total revenues. There can be no assurance that Current VASCO will be able to modify its existing products or develop new products that will continue to meet the specifications of these customers. Absent significant future revenues from alternative sources, the unforeseen loss of one or more of Current VASCO's major customers' business, or the inability to maintain reasonable profit margins on sales to any of these customers, would have a material adverse effect on Current VASCO's results of operations and financial condition. See "MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS" and "CERTAIN INFORMATION
CONCERNING CURRENT VASCO -- Business -- Customers and Markets" and "-- Litigation."

PRODUCT CONCENTRATION. Sales of Current VASCO's AccessKey II and Digipass security tokens together comprised the majority of Current VASCO's net sales during fiscal 1995 and 1996. Should the demand for or pricing of either of these products decline due to the introduction of superior or lower cost products by competitors, changes in the computer industry or other factors, Current VASCO's results of operations and financial condition would be adversely affected.

DEPENDENCE ON DEVELOPMENT OF INDUSTRY RELATIONSHIPS. Current VASCO is party to collaborative arrangements with a number of corporations and evaluates, on an ongoing basis, potential strategic alliances and intends to continue to pursue such relationships. Current VASCO's future success will depend significantly on the success of its current arrangements and its ability to establish additional arrangements. There can be no assurance that these arrangements will result in commercially successful products. See "CERTAIN INFORMATION CONCERNING CURRENT VASCO -- Business -- Current VASCO Security Products -- Strategic Relationships."

RISKS OF INTERNATIONAL OPERATIONS. Sales to customers outside the United States accounted for approximately 44%, 61% and 95% of Current VASCO's net revenues in the years ended December 31, 1994, 1995 and 1996, respectively. Because a significant number of Current VASCO's principal customers are located in other countries, management expects that international sales will continue to generate a significant portion of Current VASCO's (and, upon consummation of the Exchange Offer, New VASCO's) total revenue. Current VASCO's international business is subject to a variety of risks, including tariffs and other trade barriers, the establishment and expansion of indirect distribution channels in certain countries or regions, delays in expanding its international distribution channels, difficulties collecting international accounts receivable from distributors or resellers, increased costs associated with maintaining international marketing efforts, the introduction of non-tariff barriers and difficulties in enforcing intellectual property rights. In addition, the majority of the supply and sales transactions of VASCO Data Security, Inc. are denominated in U.S. dollars, whereas many of the supply and sales transactions of VASCO Data Security NV/SA are denominated in various foreign currencies. A decrease in the value of any of these foreign currencies relative to the U.S. dollar could affect the profitability in U.S. dollars of Current VASCO's products sold in these markets. Current VASCO is therefore subject to the risks associated with fluctuations in currency exchange rates. In order to reduce the risk of fluctuations in currency exchange rates, VASCO Data Security NV/SA began in 1997 to buy U.S. dollars based on three- to six-month estimated future needs for U.S. dollars, has developed price lists denominated in both U.S. dollars and foreign currencies, and endeavors to denominate its new supply and sales transactions in U.S. dollars. In this connection, in September 1997 VASCO Data Security NV/SA purchased $300,000 in U.S. dollars to cover purchases of supplies for a six-month period. VASCO Data Security NV/SA is also beginning to attempt to match as to timing of delivery, amount of product and denomination of currency, some purchase orders from vendors with sales orders to customers. There can be no assurance that these matching efforts will be successful in reducing currency exchange risks or that the risks of

international operations will not have a material adverse effect on Current VASCO's financial condition or results of operations. Current VASCO does not hold forward exchange contracts or other hedging instruments to exchange various foreign currencies for U.S. dollars to offset currency rate fluctuations which might affect its obligations in relation to its repayment out of income from sales (which are principally in foreign currency) of debt under its loan obligations (which are principally in U.S. dollars). See "MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS."

COMPETITION. The market for computer and network security products is highly competitive and subject to rapid change. Current VASCO believes that the principal competitive factors affecting the market for computer and network security products include name recognition, technical features, ease of use, quality/reliability, level of security, customer service and support, distribution channels and price. Current VASCO's competitors include organizations that provide computer and network security products based upon approaches similar to and different from those employed by Current VASCO. There can be no assurance that the market for computer and network security products will not ultimately be dominated by approaches other than the approach marketed by Current VASCO. See "CERTAIN INFORMATION CONCERNING CURRENT VASCO -- Business
-- The Data Security Industry -- Industry Background," "-- Current VASCO Security Products" and "-- Competition."

Many of Current VASCO's potential competitors have significantly greater financial, marketing, technical and other competitive resources than Current VASCO. As a result, they may be able to adapt more quickly to new or emerging technologies and changes in customer requirements, or to devote greater resources to the promotion and sale of their products than can Current VASCO. Competition could increase if new companies enter the market or if existing competitors expand their product lines. Any reduction in gross margins resulting from competitive factors could have a material adverse effect on Current VASCO's financial condition or results of operations.

Although Current VASCO believes it has certain technological and other advantages over its competitors, maintaining such advantages will require continued investment by Current VASCO in research and development and sales and marketing. There can be no assurance that Current VASCO will have sufficient resources to make such investments or that Current VASCO will be able to make the technological advances necessary to maintain such competitive advantages. In addition, current and potential competitors have established or may in the future establish collaborative relationships among themselves or with third parties, including third parties with whom Current VASCO has strategic relationships, to increase the ability of their products to address the security needs of Current VASCO's prospective customers. Accordingly, it is possible that new competitors or alliances may emerge and rapidly acquire significant market share. If this were to occur, the financial condition and results of operations of Current VASCO would be materially adversely affected. See "CERTAIN INFORMATION CONCERNING CURRENT VASCO -- Business -- Competition."

DEPENDENCE ON SINGLE SOURCE SUPPLIERS. The majority of Current VASCO's products are manufactured by two independent vendors headquartered in Hong Kong. One of the vendors is under a contract that extends to January 21, 1999, with automatic one-year renewals subject to termination on six months notice and purchases from the other vendor are on a purchase order by purchase order basis. Each vendor assembles Current VASCO's security tokens at facilities in mainland China. The importation of these products from China exposes Current VASCO to the possibility of product supply disruption and increased costs in the event of changes in the policies of the Chinese government, political unrest or unstable economic conditions in China or developments in the United States that are adverse to trade, including enactment of protectionist legislation. While Current VASCO believes that it could find substitute contractors for the manufacture and assembly of its products, and has had discussions to that effect with a vendor in Belgium, in the event that the supply of components or finished products is interrupted or relations with either of the two principal vendors is terminated, there could be a considerable delay finding suitable replacement sources to manufacture Current VASCO's products which could have a material adverse effect on Current VASCO's results of operations and financial condition. In addition, Current VASCO's AccessKey II product contains a custom-designed microprocessor which is fabricated by a single supplier located in the United States and is procured by purchase orders. Current VASCO expects AccessKey II production to be reduced by the end of 1997 and be

replaced by AccessKey III, which will employ a widely available microprocessor. However, any unforeseen interruption in the supply of microprocessors for the AccessKey II from the sole supplier prior to the full phase-in of the AccessKey III product would have a material adverse effect on Current VASCO's results of operations and financial condition. See "CERTAIN INFORMATION CONCERNING CURRENT VASCO -- Business -- Production."

PROPRIETARY TECHNOLOGY AND INTELLECTUAL PROPERTY. Current VASCO's success depends significantly upon its proprietary technology. Current VASCO currently relies on a combination of patent, copyright and trademark laws, trade secrets, confidentiality agreements and contractual provisions to protect its proprietary rights. Current VASCO seeks to protect its software, documentation and other written materials under trade secret and copyright laws, which afford only limited protection. Current VASCO generally enters into confidentiality and nondisclosure agreements with its employees and with key vendors and suppliers. Current VASCO holds several patents in the United States and a corresponding patent in certain European countries, which cover certain aspects of its technology. The remaining terms of the U.S. patents are between six and nine years. There can be no assurance that Current VASCO will develop proprietary products or technologies that are patentable, that any issued patent will provide Current VASCO with any competitive advantages or will not be challenged by third parties, or that patents of others will not have a material adverse effect on Current VASCO's business.

There has also been substantial litigation in the technology industry regarding intellectual property rights, and litigation may be necessary to protect Current VASCO's proprietary technology. Current VASCO expects that companies in the computer and information security market will increasingly be subject to infringement claims as the number of products and competitors in Current VASCO's target market grows. Any such claims or litigation may be time-consuming and costly, cause product shipment delays, require Current VASCO to redesign its products or require Current VASCO to enter into royalty or licensing agreements, any of which could have a material adverse effect on Current VASCO's results of operations and financial condition.

Despite Current VASCO's efforts to protect its proprietary rights, unauthorized parties may attempt to copy aspects of Current VASCO's products or to obtain and use information and software that Current VASCO regards as proprietary. To the extent Current VASCO believes its proprietary rights are being violated, and regardless of its desire to do so, it may not have adequate financial resources to engage in litigation against the party or parties who may infringe on its proprietary technology. In addition, the laws of some foreign countries do not protect proprietary and intellectual property rights to as great an extent as do the laws of the United States. There can be no assurance that Current VASCO's means of protecting its proprietary and intellectual property rights will be adequate or that Current VASCO's competitors will not independently develop similar technology, duplicate Current VASCO's products or design around patents issued to Current VASCO or other intellectual property rights of Current VASCO.

PRODUCT LIABILITY RISKS. Customers rely on Current VASCO's token-based security products to prevent unauthorized access to their data. A malfunction of or design defect in Current VASCO's products could result in tort or warranty claims. Current VASCO does not presently maintain product liability insurance for these types of claims. In order to reduce the risk of exposure from such claims, Current VASCO attempts to obtain warranty disclaimers and liability limitation clauses in its agreements with distributors, resellers and end-user clients. However, there can be no assurance that Current VASCO will be successful in obtaining such provisions in its agreements or that such measures will be effective in limiting Current VASCO's liability for any such damages. Any liability for damages resulting from security breaches could be substantial and would have a material adverse effect on Current VASCO's results of operations and financial condition. In addition, a well-publicized actual or perceived security breach involving token-based security systems could adversely affect the market's perception of token-based security products in general, or Current VASCO's products in particular, regardless of whether such breach is attributable to Current VASCO's products. This could result in a decline in demand for Current VASCO's products, which would have a material adverse effect on Current VASCO's results of operations and financial condition.

GOVERNMENT REGULATION OF TECHNOLOGY EXPORTS. Current VASCO's international sales and operations are subject to risks such as the imposition of government controls, new or changed export license

requirements, restrictions on the export of critical technology, trade restrictions and changes in tariffs. While Current VASCO believes its products are designed to meet the regulatory standards of foreign markets, any inability to obtain foreign regulatory approvals on a timely basis could have a material adverse effect on Current VASCO's financial condition or results of operations.

Certain products of Current VASCO are subject to export controls under U.S. law, and Current VASCO believes it has obtained or will obtain all necessary export approvals as required. There can be no assurance, however, that the list of products and countries for which export approval is required, and the regulatory policies with respect thereto will not be revised from time to time. The inability of Current VASCO to obtain required approvals under these regulations could materially adversely affect the ability of Current VASCO to make international sales. For example, U.S. governmental controls on the exportation of encryption technology prohibit Current VASCO from exporting some of its products with the more sophisticated data security encryption technology. As a result, foreign competitors facing less stringent controls may be able to compete more effectively than Current VASCO in the global data security market. There can be no assurance that these factors will not have a material adverse effect on Current VASCO's financial condition or results of operations.

Similarly, VASCO Data Security NV/SA, the Belgian operating subsidiary of Current VASCO, is subject to export licensing requirements under Belgian law. The inability of VASCO Data Security NV/SA to obtain required approvals or licenses under Belgian law also could have a material adverse effect on Current VASCO's financial condition or results of operations. For additional information on such export restrictions and licensing requirements under U.S. and Belgian law, see "CERTAIN INFORMATION CONCERNING NEW VASCO -- Business -- Competition."

DEPENDENCE ON KEY PERSONNEL. Current VASCO now depends, and upon the consummation of the Exchange Offer New VASCO will depend, to a significant degree on the efforts of Current VASCO's President, Chief Executive Officer and the Chairman of its Board of Directors, T. Kendall Hunt, and those of other key personnel employed by or serving as consultants to its subsidiaries, including John Haggard, Mario Houthooft, Frank Hoornaert, Hyon Im, Jan Valcke and Richard Vaden. Neither Mr. Hunt nor Current VASCO's other key personnel have entered into employment agreements with Current VASCO or New VASCO, with the exception of Mr. Houthooft, who has entered into a consulting agreement with VASCO Data Security NV/SA, Current VASCO's European operating subsidiary. As a result, there are no restrictions on competition by these individuals (other than Mr. Houthooft) after termination of employment or consulting services. Key man insurance in the amount of $1.5 million is currently maintained by Current VASCO on the life of Mr. Hunt but not on any of the other key personnel. The loss of the services of Mr. Hunt or one or more of its other key personnel could have an adverse effect on Current VASCO's business and operating results.

Current VASCO's continued success is also dependent upon its ability to attract and retain qualified employees to support its future growth. Competition for such personnel is intense, and there can be no assurance that Current VASCO can retain its key employees or that it can attract, assimilate or retain other highly qualified personnel in the future.

MANAGEMENT AND CONTROL. Control of Current VASCO presently is, and after the consummation of the Exchange Offer control of New VASCO will be, largely in the hands of its Board of Directors, management and T. Kendall Hunt. Upon consummation of the Exchange Offer, based on the number of shares of Current VASCO Common Stock outstanding on October 15, 1997, the Board of Directors of New VASCO and their spouses will own beneficially and of record approximately 53% (and Mr. Hunt and his family will own beneficially and of record 51.8%) of the outstanding shares of New VASCO Common Stock, assuming all of the shares of Current VASCO Common Stock are exchanged for shares of New VASCO Common Stock. Mr. Hunt will also be Chairman of the New VASCO Board of Directors, Chief Executive Officer and President of New VASCO. As a result, T. Kendall Hunt will have control over the direction and operation of New VASCO and with his family will be able to elect the directors of New VASCO and to approve corporate action requiring majority stockholder approval. Such concentration of control may have an adverse effect on the market price of New VASCO Common Stock.

CURRENT VASCO AND NEW VASCO

Current VASCO is a Delaware corporation which, through its operating subsidiaries, designs, develops, markets and supports open standards-based hardware and software security systems which manage and secure access to data. Current VASCO's hardware products include time-synchronous response only, challenge/response and time-synchronous challenge/response user authentication devices, some of which incorporate an electronic signature feature to guarantee the integrity of data transmissions. These devices are commonly referred to as security tokens. Current VASCO's security tokens are based upon Current VASCO's core encryption technology, which utilizes two widely known and accepted algorithms, Data Encryption Standard ("DES") and Rivest, Shamir, Adelman ("RSA"). Current VASCO's Cryptech division produces high speed hardware and software encryption products used both internally for Current VASCO's security tokens and for OEM vendors requiring real time encryption services. In addition, Current VASCO recently has introduced a smartcard security token that uses the challenge/response mode and the X.509 certificate authentication standard. Current VASCO's security tokens are designed to be used with the VASCO Access Control Manager server software or to be integrated directly into applications. See "CERTAIN INFORMATION CONCERNING CURRENT VASCO -- Business" for further information about the business of Current VASCO.

New VASCO is a newly incorporated Delaware corporation which has been organized by representatives of Current VASCO for the purpose of effecting the Reorganization of Current VASCO through the Exchange Offer. See "REORGANIZATION OF CURRENT VASCO" and "THE EXCHANGE OFFER" for details on the Reorganization of Current VASCO and on the Exchange Offer.

The principal executive offices of Current VASCO and of New VASCO are located at 1901 South Meyers Road, Suite 210, Oakbrook Terrace, Illinois 60181; telephone: (630) 932-8844.

REORGANIZATION OF CURRENT VASCO

Current VASCO is essentially a holding company that conducts its business through operating subsidiaries in the United States and Europe.

ORGANIZATIONAL HISTORY OF CURRENT VASCO

Current VASCO's Present Organizational Structure. Current VASCO presently has two operating subsidiaries. VASCO Data Security, Inc. ("VDSI"), a Delaware corporation headquartered in Oakbrook Terrace, Illinois, is owned directly by Current VASCO. Current VASCO's other operating subsidiary, VASCO Data Security NV/SA ("VDS NV/SA") is a Belgian corporation headquartered in a suburb of Brussels, Belgium. VDS NV/SA is owned by Current VASCO's European holding company subsidiary, VASCO Data Security Europe SA ("VDSE"). VDSI and VDS NV/SA are engaged in the design, development, marketing and support of open standards-based hardware and software based security systems which manage and secure access to data and also provide products that permit their customers to encrypt data.

                                                        __________________________________
                                                        |                                |
                        ________________________________|           VASCO CORP.          |_____________________
                       |                                |                                |                    |
                       |     100%                       |________________________________|                    |      100%*
            ___________|______________                                                                        |
            |                        |                                                        ________________|___________________
____________|_________   ____________|______________                                          |                                  |
|                    |   |                         |                                          |     VASCO Data Security          |
| VASCO Data Security|   |VASCO Data Security, Inc.|                                          |          Europe SA               |
| International, Inc.|   | US Operating Company    |                                          |   European Holding Company       |
|____________________|   |_________________________|                                          |                                  |
                                                                                              |__________________________________|
                                                                                                              |
                                                                                                              |
                                                                                                              |  100%*
                                                                                              ________________|___________________
                                                                                              |                                  |
                                                                                              |        VASCO Data Security       |
                                                                                              |              NV/SA               |
                                                                                              |   European Operating Company     |
                                                                                              |__________________________________|

* All shares are held by the parent corporation, except that shares representing less than 1% are held by T. Kendall Hunt.

VDSI. In November 1989, a Utah corporate predecessor of Current VASCO acquired an option to purchase a controlling interest in ThumbScan, Inc. ("ThumbScan"). Current VASCO acquired a controlling interest in ThumbScan in January 1991, and in December 1991 Current VASCO increased its holdings in ThumbScan. Current VASCO subsequently acquired the remaining shares of ThumbScan. In July 1993, ThumbScan was renamed VASCO Data Security, Inc.

VDS NV/SA. VDS NV/SA is a combination of two European companies (Lintel Security NV and Digipass SA) acquired by Current VASCO, through VDSE, in 1996, and accounts for a substantial portion of Current VASCO's consolidated revenues.

ACQUISITION OF LINTEL SECURITY. Effective March 1, 1996, Current VASCO began a significant expansion of its computer security business by acquiring a 15% interest in Lintel Security NV ("Lintel Security"). Lintel Security, a newly formed Belgian corporation, concurrently purchased from Lintel NV, a Brussels, Belgium based company, certain assets associated with the development of security tokens and security technologies for personal computers ("PCs"), computer networks and telecommunications systems using DES and RSA cryptographic algorithms. Current VASCO acquired the remaining 85% of Lintel Security in June 1996. At the time of acquisition of Lintel NV's assets by Lintel Security, Lintel NV was a competitor of Current VASCO in Europe. The purchase price paid for Lintel Security was approximately $4.4 million, and

was paid in cash, shares of Current VASCO Common Stock, Current VASCO Warrants and notes that include Current VASCO Conversion Options.

ACQUISITION OF DIGIPASS. In July 1996, Current VASCO acquired the stock of Digipass SA ("Digipass") for an aggregate purchase price of $8.2 million. Digipass, based in a suburb of Brussels, was also a developer of security tokens and security technologies for PCs, computer networks and telecommunications systems using the DES cryptographic algorithm. At the time of acquisition, Digipass was a competitor of Current VASCO in Europe.

Prior to Current VASCO's acquisition of Digipass, certain assets and liabilities of the interactive voice response ("IVR") business of Digiline SA, an integrator of IVR products based in Belgium, were transferred to Digipass. Digipass' IVR products are used primarily in telebanking applications and incorporate authentication and access control technology. In some cases, customers for Digipass' IVR products are the same as those for Digipass' computer security products.

In January 1997, Digipass changed its name to VASCO Data Security NV/SA ("VDS NV/SA"). Concurrent with this event Lintel Security's operations were consolidated with those of VDS NV/SA at a single location near Brussels.

CURRENT VASCO'S HISTORICAL TRANSACTIONS. VASCO CORP. ("Old VASCO") was incorporated as a Delaware corporation on May 22, 1984. Current VASCO's President, T. Kendall Hunt, was an initial director and stockholder of Old VASCO. On September 5, 1986 Old VASCO was combined with Ridge Point Enterprises, Inc. ("Ridge Point"), a non-operating company incorporated in Utah on January 7, 1985. This combination was effected by means of share exchange, resulting in Old VASCO becoming a subsidiary of Ridge Point, which concurrently changed its name to Vasco Corp. ("VASCO Utah"). Old VASCO then filed a certificate of dissolution with the State of Delaware on August 3, 1987. On August 20, 1990, a certificate of merger was filed with the Secretary of State of the State of Delaware for the intended merger of VASCO Utah with a newly formed Delaware corporation and since that date business has been conducted as VASCO CORP., a Delaware corporation (referred to in this document as "Current VASCO"). The organization of, and certain corporate transactions undertaken by, Current VASCO and/or its predecessors were not effected in strict accordance with applicable statutory and procedural requirements. See "Reasons for the Reorganization" below.

Current VASCO's original business was providing consulting, training and software services to companies and government agencies. These services were marketed as VASCO Performance Systems ("VPS"). In 1996, management determined that Current VASCO should focus its energies and resources on the data security industry, where it believes significant growth and profit potential exist and on August 20, 1996 Current VASCO sold the assets of VPS to Wizdom Systems, Inc. and withdrew from the consulting and technical training business.

THE REORGANIZATION

The Board of Directors of Current VASCO has concluded that reorganizing Current VASCO's corporate structure is in the best interests of Current VASCO's stockholders. After considering various alternatives, management determined that Current VASCO should effect the Reorganization by means of the Exchange Offer by New VASCO to the holders of all outstanding Current VASCO Securities. See "Reasons for the Reorganization" below. In the Exchange Offer, New VASCO is offering to exchange New VASCO Securities for (i) Current VASCO Securities and
(ii) a release by each exchanging holder of Current VASCO Securities of any and all Associated Corporate Matter Claims. See "Reasons for the Reorganization" below and "THE EXCHANGE OFFER -- Terms of the Exchange Offer."

Current VASCO has one class of equity security outstanding: Current VASCO Common Stock. In addition, Current VASCO has issued Current VASCO Equity Equivalent Securities, consisting of Current VASCO Stock Options, Current VASCO Conversion Options and Current VASCO Warrants, all of which are exercisable or convertible into Current VASCO Common Stock.

New VASCO has created a single class of equity security, New VASCO Common Stock, the provisions of which are substantially identical with the corresponding Current VASCO Common Stock, with the exception of the fact that New VASCO's Certificate of Incorporation, as amended, authorizes the issuance of 75,000,000 shares of New VASCO Common Stock as compared to 50,000,000 shares of authorized Current VASCO Common Stock. See "Federal Income Tax Consequences" below, "DESCRIPTION OF CAPITAL STOCK OF NEW VASCO" and "COMPARISON OF STOCKHOLDER RIGHTS."

New VASCO has also created New VASCO Stock Options and New VASCO Warrants as substitutes for the Current VASCO Stock Options and Current VASCO Warrants, and is offering to grant New VASCO Conversion Options to holders of Current VASCO Conversion Options.

New VASCO has entered into an agreement with Current VASCO that provides for New VASCO's assumption, upon consummation of the Exchange Offer, of certain Current VASCO obligations under a financing agreement with Generale Bank for a $2.5 million loan and with respect to a registration rights agreement with certain holders of Current VASCO Equity Equivalent Securities, as well as for the substitution of New VASCO Common Stock for Current VASCO Common Stock in connection with Current VASCO Equity Equivalent Securities that are exchanged in the Exchange Offer and certain related agreements of Current VASCO. See "DESCRIPTION OF CAPITAL STOCK OF NEW VASCO -- Registration Rights and Other Arrangements."

In order for the Reorganization and the Exchange Offer to become effective, as of the Expiration Date the Minimum Condition must be satisfied, unless waived by New VASCO. Based on the number of Current VASCO Shares outstanding at October 15, 1997, at least 16,106,374 shares of Current VASCO Common Stock must be tendered for exchange to satisfy the Minimum Condition. See "THE EXCHANGE OFFER -- Conditions to the Exchange Offer" for more detail on conditions of the Exchange Offer.

If the Exchange Offer is consummated, New VASCO will initially be a holding company owning at least 80% of the outstanding shares of capital stock of Current VASCO and possessing the requisite voting power to control the affairs of Current VASCO. Current VASCO stockholders who exchange their Current VASCO Shares and release their Associated Corporate Matter Claims will become stockholders of New VASCO. Holders of Current VASCO Shares who do not exchange such shares and release their Associated Corporate Matter Claims for New VASCO Shares will remain stockholders of Current VASCO. See "RISK FACTORS -- Risks Relating to Exchange Offer and New VASCO."

New VASCO has conducted no operations and has virtually no assets. The Reorganization will not result in any change in the business or the consolidated assets, liabilities or net worth of Current VASCO and will not result in any change in the persons who constitute the Board of Directors and management of Current VASCO or New VASCO (although the officers and directors may change following completion of the Exchange Offer). See "CERTAIN INFORMATION CONCERNING CURRENT VASCO -- Management" and "CERTAIN INFORMATION CONCERNING NEW VASCO --
Management."

The Reorganization may be abandoned by the Board of Directors of New VASCO prior to its consummation if circumstances arise which, in the opinion of the New VASCO Board of Directors, make the Reorganization inadvisable. The New VASCO Board of Directors currently has no reason to believe that the Reorganization will be abandoned.

After the Exchange Offer, New VASCO may merge Current VASCO with or into New VASCO or a subsidiary of New VASCO, cause Current VASCO to distribute assets to New VASCO, or make other changes in the corporate structure, assets, liabilities and businesses among New VASCO and its subsidiaries subject to appraisal rights, if any, or any other remedies available under Delaware law. However, at the present time neither Current VASCO nor New VASCO has any plans or proposals to effect any such transaction. The acquisition of Current VASCO Shares by New VASCO pursuant to the Exchange Offer will be treated by New VASCO for accounting purposes as an "as if" pooling of interest of entities under common control.

See "Reasons for the Reorganization" below; "DESCRIPTION OF CAPITAL STOCK
OF NEW VASCO" and "COMPARISON OF STOCKHOLDER RIGHTS."

REASONS FOR THE REORGANIZATION

In early 1996, Management of Current VASCO began to explore the possibility of voluntarily registering the Current VASCO Common Stock under the Exchange Act, and registering future capital offerings under the Securities Act of 1933, as amended (the "Securities Act"). In May 1996, Current VASCO filed with the Securities and Exchange Commission a registration statement on Form 10-SB to register voluntarily the Current VASCO Common Stock under the Exchange Act. Current VASCO filed the registration statement to increase the amount and frequency of information concerning Current VASCO available to the public and in anticipation of applying for the listing of Current VASCO Common Stock on a securities exchange at such time as Current VASCO could satisfy applicable listing requirements. While the registration statement on Form 10-SB was on file with the Securities and Exchange Commission, Current VASCO, which was in the process of acquiring Lintel Security and Digipass, engaged new independent legal counsel. The significance of these acquisitions to Current VASCO's operations at the time would have triggered a requirement under Securities and Exchange Commission rules that audited financial statements of Lintel Security and Digipass be filed as part of the Form 10-SB. However, such audited financial statements had not previously been prepared for Lintel Security or Digipass. In addition, Current VASCO's new independent legal counsel had begun to examine the historical corporate documentation furnished by Current VASCO, and requested that Current VASCO provide additional documentation. Since the requested information could not be located in a timely manner and the audited financial statements for Lintel Security and Digipass were not available for timely filing as part of the Form 10-SB, Current VASCO withdrew the filing in July 1996. After reviewing the organizational history of Current VASCO and its predecessors, independent legal counsel noted the absence of certain historical corporate documentation and certain other corporate procedural irregularities. These corporate irregularities, collectively referred to in this document as "Corporate Matters," include all acts or omissions occurring on or before the date of this Prospectus which arise from or in connection with the following, whether undertaken by, involving or relating to Current VASCO or any of its predecessor entities:

(i) any prior authorization, designation or issuance of stock, any stock split, reclassification, redesignation, dividend or distribution of or upon stock, any amendment to the certificate or articles of incorporation or bylaws including those affecting the amount, rights, powers or preferences of stock, and any failure to properly authorize, approve or effect any of the foregoing actions, including

(a) the failure by Old VASCO to document whether an amendment to its Certificate of Incorporation was duly authorized or to file a Certificate of Amendment with the Delaware Secretary of State to amend its Certificate of Incorporation in 1984 to effect a three-for-one stock split of its common stock and to provide for 600,000 shares of non-voting common stock prior to purportedly effecting the stock split and issuing such non-voting common shares, (b) the failure by Old VASCO to document whether director and stockholder approval was obtained for an amendment to its Certificate of Incorporation increasing the number of authorized shares of common stock in 1986, (c) the purported issuance of Series A preferred stock in 1989 by VASCO Utah at a time when the issuance of preferred shares was not authorized by VASCO Utah's charter, and (d) the purported issuance of preferred stock by Current VASCO in connection with the 1990 merger when the rights, powers and preferences of such stock were not specified in Current VASCO's Certificate of Incorporation and when its Certificate of Incorporation did not provide its Board of Directors the power to designate such rights, powers and preferences;

(ii) any failure to properly design, approve, adopt, administer, or authorize the number of shares subject to, any stock option plan or program, including actions required to allow for options awarded thereunder to be treated as ISOs under the Internal Revenue Code of 1986, as amended (the "Code"), including the failure by Old VASCO, VASCO Utah and/or Current VASCO to

(a) document approval by the Board of Directors and stockholders of stock option plans, (b) specify and authorize the number of shares of stock to be subject to such plans, (c) reserve the number of shares subject to such plans, (d) document the authorization for the grant of options pursuant to such plans and the issuance of shares upon exercise of such options, and (e) design such plans in a manner that would ensure options granted thereunder would be treated as ISOs;

(iii) any organization or any merger, consolidation, share exchange, reorganization, recapitalization, sale of assets or like event, or any failure properly to authorize, approve, effect or consummate same, including

(a) the failure to document the approval by Old VASCO's stockholders of the 1986 reorganization through the share exchange undertaken by Old VASCO and Ridge Point/VASCO Utah, (b) the failure to document whether all stockholders of Old VASCO voluntarily exchanged their shares for shares of Ridge Point/VASCO Utah, (c) the failure to document the mechanics of the exchange of Old VASCO shares for shares of Ridge Point/VASCO Utah, and (d) the following procedural irregularities which call into question the validity of the intended 1990 merger of VASCO Utah and Current VASCO, as well as Current VASCO's title to the assets of VASCO Utah purportedly succeeded to by Current VASCO by virtue of the merger: (1) the incorporation of Current VASCO after the date of the 1990 plan of merger, (2) Current VASCO's approval of the plan of merger, including approval of the plan of merger prior to the incorporation of Current VASCO, the lack of documented stockholder approval as called for by the plan of merger and the effectiveness of the approval by Current VASCO's then Board of Directors, (3) the authorization and issuance of stock by Current VASCO pursuant to the merger, (4) the adoption of Current VASCO's initial bylaws, the appointment of Current VASCO's initial directors and the election of its initial officers, (5) the administrative dissolution of VASCO Utah prior to the filing of a Certificate of Merger with the State of Delaware, and
(6) the failure to file Articles of Merger with the State of Utah in connection with the intended merger of VASCO Utah and Current VASCO;

(iv) the dissolution, liquidation or winding up of any of Current VASCO's predecessors, or any failure properly to approve or effect said dissolution, liquidation or winding up, including

(a) the failure to properly document any stockholder approval of the dissolution of Old VASCO and to document actions taken to dissolve, liquidate and wind-up Old VASCO in 1987, (b) the failure to vest effectively title and ownership in VASCO Utah of Old VASCO's assets and to document the assumption by VASCO Utah of Old VASCO's liabilities, and
(c) the administrative dissolution of VASCO Utah in 1990 prior to the intended merger transaction with Current VASCO and before the filing of a Certificate of Merger with the State of Delaware; and

(v) any failure to afford security holders any appraisal, preemptive or other rights, whether accorded by statute or by the articles of incorporation, certificate of incorporation or bylaws of Current VASCO or any of its predecessors, in connection with any of the matters described in the foregoing clauses (i), (ii), (iii) or (iv), including

(a) the failure of Old VASCO to document whether it afforded its stockholders, in connection with issuances of Old VASCO capital stock, the preemptive rights to purchase, upon the issuance or sale of Old VASCO stock (or securities convertible into Old VASCO stock), shares (or securities) in proportion to the amount of Old VASCO common stock then owned by such holder, subject to conditions and time limitations prescribed (and at a price determined as permitted by law) by Old VASCO's Board of Directors, as provided for in the Old VASCO Certificate of Incorporation and (b) the failure of VASCO Utah to document whether it afforded its stockholders the appraisal rights provided for by Utah law in connection with the intended 1990 merger of VASCO Utah with Current VASCO.

In an attempt to remedy certain Corporate Matters, in April 1997, Current VASCO contacted the Division of Corporations of the Utah Department of Commerce and inquired whether the Division would accept for filing Articles of Merger relating to the intended 1990 merger transaction. The Division responded that it would not accept the Articles of Merger for filing. Current VASCO had been operating on the belief that all prior issuances of capital stock, as well as all corporate organizations and reorganizations, had been

effected in compliance with requisite corporate law. Current VASCO also considered a possible merger with a subsidiary, but rejected that alternative because a merger would not effect a release by Current VASCO's stockholders of Associated Corporate Matter Claims and there was no assurance of obtaining a legal opinion that shares issued in such a merger would be validly issued.

The Corporate Matters have not previously presented any problems to Current VASCO in the conduct of its business operations. However, the Corporate Matters may preclude legal opinions as to the compliance with applicable corporate law with respect to the issuance of certain shares of Current VASCO presently outstanding, and may complicate a future public offering. In the proposed Reorganization, the holders of Current VASCO Securities who exchange their securities for New VASCO Securities will also release any and all Associated Corporate Matter Claims, and in such event the effect of the Corporate Matters on Current VASCO will be diminished, to the ultimate benefit of Current VASCO stockholders who become holders of New VASCO Common Stock in the Exchange Offer. See "REORGANIZATION OF CURRENT VASCO -- Releases from Security Holders in Exchange Offer."

If the Exchange Offer is consummated, New VASCO would initially serve as a holding company for Current VASCO and its subsidiaries and be the entity for raising capital in the public market. Management believes that the Reorganization, if consummated, will facilitate plans to raise additional capital to meet financing needs by increasing the likelihood of obtaining an opinion of counsel concerning the validity of to-be-issued New VASCO Shares. However, there can be no assurance that the Reorganization will successfully facilitate the raising of capital by New VASCO.

ASSOCIATED CORPORATE MATTER CLAIMS

In the Exchange Offer the Current VASCO security holders who exchange their securities for New VASCO Securities are required to release any and all potential claims against Current VASCO and its predecessor entities arising out of or related to the Corporate Matters (the "Associated Corporate Matter Claims"). Although no Associated Corporate Matter Claim has ever been asserted against Current VASCO or its predecessors, the potential for claims arising from or in connection with Corporate Matters exists. The strength of a potential claim can be assessed only upon an examination of all of the facts and circumstances on which a claim is based and the application thereto of relevant law. Factors relevant to such an assessment would appear to include, among others, the date on which securities were acquired, whether such Current VASCO Securities were acquired directly from Current VASCO (or its predecessors) or in the open market, whether the holder voluntarily participated in one or more of the historical corporate transactions undertaken by Current VASCO and its predecessors, and the extent to which the holder incurred damages, if any, as a result of the Corporate Matters.

Current VASCO's Board of Directors believes that, due largely to the unavailability of documentation relevant to, as well as the novel questions of law implicated by and the passage of time relating to, the transactions comprising the Corporate Matters, it is not possible to identify with any certainty the types of claims (or potential remedies) that might conceivably be available to holders of Current VASCO Securities or to prior security holders as a result of the Corporate Matters. Each holder of Current VASCO Securities should consult legal counsel or other advisers of the holder's choice in connection with determining whether to participate in the Exchange Offer.

Under certain theories, the Associated Corporate Matter Claims that may be available to holders of Current VASCO Securities might include, among other things, claims for rescission of stock issuances, acquisitions, sales or exchanges, claims of a direct interest in assets of Current VASCO or one of its predecessor entities, claims for rescission of corporate transactions, or claims for monetary damages in connection with, resulting from or relating to the Corporate Matters.

In addition, to the extent that Current VASCO entered into agreements with the holders of such Current VASCO Securities related to the issuance thereof, contract law claims might be asserted. In the event a claim is asserted, the facts surrounding each claim and the applicable law would need to be examined to determine the availability and merits of such claims or the potentially available remedies.

Set forth below is a discussion of certain types of Associated Corporate Matter Claims that under certain theories might be asserted by holders of Current VASCO Securities and, to the extent they can be identified, various potential remedies that could be sought as a result of the Corporate Matters. The release of these claims are included in the releases requested in the Exchange Offer.

Possible Securities Law Claims

Associated Corporate Matter Claims might be asserted by holders of Current VASCO Securities under federal or state securities laws, pursuant to which either rescission of the transactions in which such Current VASCO Securities were issued or damages could be sought on the basis of the nondisclosure of the existence of the Corporate Matters.

For example, if a security holder prior to the date of this Prospectus purchased stock directly from Current VASCO, the purchaser might assert a claim under federal or state securities laws, such as Section 12(a)(2) of the federal Securities Act. Section 12(a)(2) provides, in pertinent part, that any person who sells a security by means of a prospectus or oral communication which includes an untrue statement of a material fact or omits to state a material fact necessary in order to make the statements, in light of the circumstances under which they were made, not misleading shall be liable, subject to certain limitations, to the purchaser of the securities for the consideration paid, with interest thereon, less the amount of any income received thereon, upon the tender of such security, or for damages if the purchaser no longer owns the security. Any action to enforce liability under Section 12(a)(2) must be brought within the applicable period of the statute of limitations (see "Statutes of Limitations" below). Further, there is case authority to the effect that Section 12(a)(2) does not apply to private placements of securities not subject to federal registration requirements. See, e.g., Gustafson v. Alloyd Co., 513 U.S.
561 (1995); Glamorgan Coal Corp. v. Ratner's, 1995 U.S. Dist. Lexis 9548, 1995 WL 906169 (S.D.N.Y. July 10, 1995).

A purchaser might also seek to assert a claim under Section 10(b) of the Exchange Act, and Rule 10b-5 promulgated thereunder. Rule 10b-5 essentially prohibits (1) fraudulent devices and schemes, (2) misstatements or omissions of material facts, and (3) acts and practices which operate as a fraud or deceit in connection with the purchase or sale of a security. In order to maintain an action, the plaintiff must be either the purchaser or seller of the securities in question. In addition, a showing of negligent conduct will not suffice; the defendant must have acted with "scienter," that is, the intent to deceive, manipulate or defraud or recklessness in that regard. Other elements of a Rule 10b-5 action include the requirement that the act or omission must be material and have caused the loss for which recovery is sought. The measure of damages under a Rule 10b-5 action depends to a large extent on the underlying facts, but possible measures include rescission and out-of-pocket recovery. As with actions under Section 12(a)(2), any action to enforce liability under Rule 10b-5 must be brought within the applicable limitations period (see "Statutes of Limitations" below).

State blue sky laws also provide remedies for persons injured in securities transactions. The Uniform Securities Act, which has been adopted (with modifications) by many states, includes a provision closely modeled on Section 12(a)(2) of the Securities Act. In addition to damages, the provision allows recovery of attorneys' fees and pre-judgment interest. The Uniform Securities Act also contains a provision similar to Rule 10b-5 under the Exchange Act. In those states which permit actions under these Rule 10b-5 counterparts, the plaintiff may not be required to prove scienter or recklessness, as under Rule 10b-5. In addition, some states may provide common law causes of action for persons injured in securities transactions, including claims for fraud and negligent misrepresentation. The standards for those common law actions vary from state to state.

The release of Associated Corporate Matter Claims in the Exchange Offer is intended to include a release of any and all claims arising from and out of Corporate Matters, including any claims under Section 12(a)(2) of the Securities Act, Rule 10b-5 under the Exchange Act, and any other state and federal claims the exchanging security holder may have. See "REORGANIZATION OF CURRENT VASCO -- Releases from Security Holders in Exchange Offer."

Other Possible Claims by Holders of Current VASCO Shares

Holders of Current VASCO Shares might allege Associated Corporate Matter Claims that arise under state corporation law requirements. Such claims might include those based on the Corporate Matters discussed below.

OLD VASCO PRE-EMPTIVE RIGHTS. Holders of Current VASCO Shares who held shares in Old VASCO might claim that, to the extent they may not have been afforded the pre-emptive rights provided for in the Old VASCO Certificate of Incorporation in connection with the issuance of capital stock of Old VASCO, they were damaged by any failure of Old VASCO to afford such pre-emptive rights. Moreover, to the extent that stockholder approval may not have been secured for amendments to Old VASCO's Certificate of Incorporation, and due to the failure to file amendments to Old VASCO's Certificate of Incorporation, holders of Current VASCO Shares who held Old VASCO common stock could challenge any issuance of shares in excess of those authorized in Old VASCO's Certificate of Incorporation, or seek damages as a result of such issuances.

1986 REORGANIZATION. With respect to the 1986 reorganization of Old VASCO and Ridge Point/VASCO Utah, Associated Corporate Matter Claims that might be asserted by holders of Current VASCO Shares who held shares of Old VASCO common stock include claims to challenge or set aside that transaction, or otherwise claim damages in connection therewith, to the extent such holders assert they did not voluntarily surrender their Old VASCO shares in exchange for shares in Ridge Point/VASCO Utah. Holders of Current VASCO Shares who held shares of common stock in VASCO Utah might also challenge the purported issuance of Series A preferred stock by VASCO Utah in 1989, at a time when no shares of preferred stock were authorized by VASCO Utah's charter. The issuance of such preferred shares might be challenged as having been void under Utah law at the time of issuance, even though such shares of preferred stock were issued for valuable consideration. It is unclear what remedies, if any, might flow from such claims.

INTENDED 1990 MERGER. In connection with the administrative dissolution of VASCO Utah prior to the intended 1990 merger with Current VASCO, a stockholder of VASCO Utah common stock at the time of the dissolution might assert a direct interest in VASCO Utah's assets because of the dissolution. The strength of such claims, and the potential remedies that may be available therefor, is unclear.

Holders of Current VASCO Shares who held shares in VASCO Utah might also assert claims because of the administrative dissolution of VASCO Utah prior to the attempted merger with Current VASCO in 1990. The dissolution of VASCO Utah calls into question the validity of this transaction as a statutory merger under Utah and Delaware law, although approximately 90% of VASCO Utah's shareholders at the time approved the proposed merger and no challenge to the validity of this transaction has ever been brought. Regardless of the effect of the administrative dissolution of VASCO Utah, Current VASCO issued shares of its capital stock to all holders of VASCO Utah capital stock in exchange for the shares they held in VASCO Utah. The issuance of Current VASCO Shares to the holders of VASCO Utah capital stock may affect the strength of any Associated Corporate Matter Claims seeking damages, a rescission of the transaction, or other relief.

Other Possible Claims by Holders of Current VASCO Equity Equivalent Securities

Associated Corporate Matter Claims that might be asserted by holders of Current VASCO Warrants, Current VASCO Conversion Options and Current VASCO Stock Options would appear to derive primarily from contract and/or securities law principles. As a result, the facts and circumstances surrounding the manner in which those Current VASCO Equity Equivalent Securities were issued will be determinative of the nature and extent of any Associated Corporate Matter Claims, and the remedies therefor, available to the holders of such Current VASCO Equity Equivalent Securities.

The Current VASCO Warrants presently outstanding were issued either as a component of an investment in units including other Current VASCO Securities, such as Current VASCO Shares and/or convertible notes with Current VASCO Conversion Options, or to compensate certain persons for services performed for Current VASCO. Debt obligations with Current VASCO Conversion Options were issued in exchange for loans of funds to Current VASCO or with respect to the purchase of the stock of Lintel Security for the

payment of a portion of the purchase price for the stock of Lintel Security. Current VASCO Stock Options have been issued as a performance incentive to employees, directors, consultants and other key persons of Current VASCO and its subsidiaries.

With respect to Current VASCO Stock Options granted to employees of Current VASCO and its subsidiaries, Current VASCO's Board of Directors intended that such stock options qualify as incentive stock options under the Internal Revenue Code of 1986, as amended. However, documentation necessary to support such income tax treatment may not be available in all instances. To the extent that various Current VASCO Stock Options may not entitle the holder to incentive stock option treatment under the U.S. tax laws, by participating in the Exchange Offer such holders will be agreeing to release any Associated Corporate Matter Claims that might be asserted on this basis.

Statutes of Limitations

In the event an Associated Corporate Matter Claim is asserted, in addition to any available factual or legal defenses on the merits, or equitable defenses such as the doctrine of laches, that may be advanced to defeat the claim, an attempt may be made to bar the claim on the basis of the applicable statute of limitations. For example, a claim under Section 12(a)(2) of the Securities Act in connection with the sale of securities must be brought within one year after the discovery of the untrue statement or omission, or after such discovery should have been made by the exercise of reasonable diligence, but in no event more than three years after the sale. A claim under Rule 10b-5 promulgated under the Exchange Act must also be brought within such time periods. Lampf, Pleva, Lipkind, Prupis and Petigrow v. Gilbertson, 501 U.S. 350 (1991).

If an action is brought under the securities laws of the State of Illinois, the state where Current VASCO is headquartered, the Illinois Securities Law of 1953, as amended (the "Illinois Securities Law"), provides that the action must be brought prior to the expiration of three years from the date of sale; provided that if the party bringing the action neither knew nor in the exercise of reasonable diligence should have known of any alleged violation of the Illinois Securities Law which is the basis of the action, the three-year period begins to run upon the earlier of (i) the date upon which the party has actual knowledge of the alleged violation of the Illinois Securities Law, or (ii) the date upon which the party bringing the action has notice of facts which in the exercise of reasonable diligence would lead to actual knowledge of the alleged violation of the Illinois Securities Law, but in no event is the period of limitation extended by more than two years beyond the expiration of the three-year period otherwise applicable. In addition, the Illinois Securities Law provides that notice of any election to void a sale of securities made in violation of the Illinois Securities Law must be given by the purchaser within six months after the purchaser has knowledge that the sale is voidable. Securities laws of other states may contain statute of limitations provisions similar to those in Illinois or the time periods for bringing an action may be longer or shorter than those in Illinois. The Uniform Securities Act, which has been adopted (with modifications) by many states, contains a statute of limitations precluding actions brought more than one year after actual or constructive knowledge of a violation, but in no event beyond three years from the date of sale.

With respect to a claim based on a contract, if the statute of limitations of Illinois, the state where Current VASCO is headquartered, applies, the action must be brought within ten years from the date the cause of action under the contract arose. 735 Ill. Comp. Stat. sec. 5/13-206. However, depending on the place where the action is brought and the facts relating to the contract, the statute of limitations of a state other than Illinois may apply.

If a claim is asserted under the laws of the State of Delaware, Current VASCO's state of incorporation, Delaware law generally provides for a three-year limitations period, subject to the potential application of equitable principles. In addition, depending on the jurisdiction in which a claim is asserted, the nature of the claim and other factors, there may be other statutes of limitations that apply in an action to enforce a claim.

RELEASES FROM SECURITY HOLDERS IN EXCHANGE OFFER

Each of the security holders who exchanges securities in the Exchange Offer is required to grant a release of any and all Associated Corporate Matter Claims. The releases are set forth in the applicable Letter of

Transmittal and Release, New VASCO Warrant Agreement, New VASCO Option Agreement and New VASCO Convertible Note Agreement which an exchanging security holder (beneficial owner) is required to execute and deliver to New VASCO in connection with exchanging securities in the Exchange Offer. Each of the Current VASCO security holders should carefully study the applicable document containing the release prior to signing it and consult with the security holder's legal and other advisers as the holder deems necessary.

The validity or enforceability of a release of all Associated Corporate Matter Claims pursuant to the Exchange Offer has not been legally tested or determined by any court. Management of New VASCO believes that a release given by an exchanging security holder will be given for valid consideration from New VASCO and will constitute a valid contract binding on and enforceable against the exchanging security holder. However, there has been no court determination on the issue and no assurances can be given that if tested in judicial proceedings, the releases will be determined to be valid and enforceable. If the Exchange Offer is completed, it is possible that theories might be advanced in opposition to the validity and enforceability of the releases. Set forth below is a discussion of certain theories that might be raised in opposition to the releases, but an analysis of the nature and scope of theories that may be asserted in opposition to the releases will depend on the specific facts, the legal principles and other factors involved in each contest.

Federal Securities Laws Anti-Waiver Provisions

Section 14 of the Securities Act and Section 29 of the Exchange Act contain provisions, in general, to the effect that agreements waiving compliance with the Securities Act or the Exchange Act, respectively, are void. These provisions in the federal securities laws are sometimes referred to as the "anti-waiver provisions." The anti-waiver provisions have been uniformly interpreted to "forbid . . . enforcement of agreements to waive 'compliance' with the provisions of the [Exchange Act.]" Shearson/American Express v. McMahon, 482 U.S. 220, 228 (1987). However, a release "of claims under the federal securities laws is valid . . . as to mature, ripened claims of which the releasing party had knowledge before signing the release." Hamilton v. Harrington, 807 F.2d 102,
105 (7th 1986); Goodman v. Epstein, 582 F.2d 388, 402 (7th Cir 1978), cert. denied, 440 U.S. 939 (1979); see Petro-Ventures, Inc. v. Takessian, 967 F.2d 1337, 1341 (9th Cir. 1992); Burgess v. Premier Corporation, 727 F.2d 826 (9th Cir. 1984); Korn v. Franchard, 388 F. Supp. 1326, 1328 (S.D.N.Y. 1975). For example, in Petro-Ventures, Inc. v. Takessian, 967 F.2d at 1341, a release of "all claims, demands, damages or causes of action they might have, each against the other, based upon the negotiations of sale . . . regardless of whether or not said claims have been set forth in the litigation" was determined not to be void under Section 29(a) of the Exchange Act. Also, in Goodman v. Epstein, 582 F.2d at 402, it was recognized that Section 29(a) "does NOT bar a release or settlement of an existing, matured claim but only 'anticipatory waiver of compliance with the provisions of the Securities Exchange Act of 1934'. . . ." The court in Goodman also upheld a requirement that a person executing a release has a duty to make reasonable inquiry into the matter concerning which the release was executed.

New VASCO seeks a release from all claims that have matured and ripened. The releases requested in the Exchange Offer do not seek to avoid compliance with existing securities laws, nor do they seek to provide a release from any continuing violations of the securities laws. The releases requested in the Exchange Offer are intended to avoid legal entanglements related to past practices. New VASCO believes that the releases of such claims will be valid and enforceable and are not precluded by the anti-waiver provisions.

The foregoing discussion of the anti-waiver provisions is not an exhaustive analysis of the anti-waiver provisions and should not be interpreted as a definitive statement of the law under the anti-waiver provisions. The effect of the anti-waiver provisions on a release of securities law matters is a complex issue. The ultimate determination as to the validity of a release will depend on facts and legal principles involved in any challenge to a release, if and when a challenge is made, and in such event will be made by a court of law.

Scope of Releases

The releases requested in the Exchange Offer are with respect to certain identified Corporate Matters and, in addition, extend to types of corporate activities. For example, the release in the Letter of Transmittal and Release extends to the following types of corporate activities:

"all direct or indirect claims . . . as a result of acts or omissions occurring on or before the date of the Prospectus which arise from or are in connection with:

(i) any prior authorization, designation or issuance of stock, any stock split, recapitalization, redesignation, dividend or distribution of or upon stock, any amendment to the certificate of incorporation or articles of incorporation or bylaws including those affecting the amount, rights, powers or preferences of stock, and any failure to properly authorize, approve or effect any of the foregoing actions, . . . ;

(ii) any failure to properly design, approve, adopt or administer, or authorize the number of shares subject to, any stock option plan or program . . . ;

(iii) any organization or any merger, consolidation, share exchange, reorganization, recapitalization, sale of assets or like event, or any failure properly to authorize, approve, effect or consummate same. . .;

(iv) the dissolution, liquidation or winding up of any of Current VASCO's predecessors, or any failure properly or approve or effect said dissolution, liquidation or winding up . . .; and

(v) any failure to afford security holders any appraisal, pre-emptive or other rights, whether accorded by statute or by the articles of incorporation, certificate of incorporation or bylaws of Current VASCO or any of its predecessors, in connection with any of the matters described in the foregoing clauses (i), (ii), (iii) or (iv) . . . ." (Emphasis added.)

New VASCO and Current VASCO believe that the waivers of general categories of corporate deficiencies contained in the releases, in addition to the specifically identified deficiencies, are desirable. If adequate corporate documentation for Current VASCO and its predecessors were available, the ability to determine all prior corporate activity and procedures or to identify additional specific deficiencies would be facilitated. In the absence of such corporate documentation, New VASCO and Current VASCO believe it is advisable to obtain releases with respect to Corporate Matters of the type generally described above in addition to the specific Corporate Matters identified. By seeking to obtain such general releases, New VASCO and Current VASCO are attempting to reduce potential claims, if any, that might be asserted following the completion of the Exchange Offer against New VASCO, or Current VASCO or its predecessors.

Each of the Letter of Transmittal and Release, New VASCO Warrant Agreement, New VASCO Option Agreement and New VASCO Convertible Note Agreement contains a provision that the document is to be governed by Illinois law. Although there is no assurance that a court considering the validity or enforceability of a release contained in such document will apply Illinois law, New VASCO and Current VASCO believe that Illinois law should be applicable, except to the extent securities law claims may be governed by applicable securities laws.

There is Illinois case authority to the effect that "a release is a contract, wherein a party abandons a claim to a person against whom the claim exists . . . [and] its construction is governed by contract law." Murphy v. S-M Delaware, Inc., 95 Ill. App. 3d 562, 564 (1st Dist. 1981); see Shultz v. Delta-Rail Corp., 156 Ill. App. 3d 1, 10 (2d Dist. 1987); Farm Credit Bank v. Federal Land Bank, 202 Ill. App. 3d 609, 611 (4th Dist. 1990). Further, in Shultz the court repeated the oft-stated principle that "the intention of the parties controls the scope and effect of a release; such intention is discerned from the language and the circumstances of the transaction." 156 Ill. App. 3d at
10. Under Illinois law broad releases that are acknowledged and signed by shareholders are generally upheld as simple contracts. Murphy, 95 Ill. App. 3d at 566. It is the intention of New VASCO and Current VASCO that the releases be broadly interpreted and that they extend not only to the specific Corporate Matters identified but also to any claims arising from or in connection with the Corporate Matters generally described in the respective releases. There is no assurance, however, that the releases will be broadly interpreted or that they will be validated. The specific facts with respect to a release

and the application of legal principles to the facts will be determined by judicial proceedings if the validity of a release is challenged in court.

THE EXCHANGE OFFER

 ONE CURRENT VASCO SHARE AND ALL
ASSOCIATED CORPORATE MATTER CLAIMS                     ONE SHARE OF NEW VASCO
----------------------------------                     ----------------------
Current VASCO Common Stock                 for         New VASCO Common Stock

Associated Corporate Matter Claims. The Letter of Transmittal and Release, in addition to providing for the assignment and transfer of Current VASCO Shares, provides for the release, waiver and relinquishment of any and all of the following (collectively referred to in this document as "Associated Corporate Matter Claims") in accordance with the express terms of the Letter of Transmittal and Release:

all direct or indirect demands, claims, payments, obligations, actions or causes of action, assessments, losses, liabilities, damages (including without limitation special, consequential, exemplary, punitive and similar damages), reasonable costs and expenses paid or incurred, or diminutions in value of any kind or character (whether or not known or asserted prior to the date hereof, fixed or unfixed, conditional or unconditional, choate or inchoate, liquidated or unliquidated, secured or unsecured, accrued, absolute, contingent or otherwise), that the holder of Current VASCO Securities now has or ever had against Current VASCO, any of its predecessor entities, or their respective assets, together with the respective successors and assigns of Current VASCO and any of its predecessor entities, as a result of acts or omissions occurring on or before the date of this Prospectus which arise from or are in connection with the Corporate Matters.

Although no claims based on the Corporate Matters have been asserted to date and the ability of any particular holder of Current VASCO Securities to assert any Associated Corporate Matter Claim is uncertain, and although certain Associated Corporate Matter Claims may or may not be barred by applicable statutes of limitations or any corresponding doctrines of laches, the Associated Corporate Matter Claims could include, among other things:

(i) claims for rescission of stock (or other securities) issuances, acquisitions, sales or exchanges;

(ii) claims of a direct interest in assets (including securities or other property) of Current VASCO or one of its predecessor entities;

(iii) claims for rescission of corporate transactions; or

(iv) claims for money damages.

The Associated Corporate Matter Claims which you are being asked to release, waive and relinquish in the Exchange Offer do not include claims, if any, that an exchanging holder of Current VASCO Securities may or may not be entitled to assert against any past or present officers, directors, shareholders, employees or agents of Current VASCO or its predecessors, arising from or in connection with the Corporate Matters, regardless of whether such claims are raised in an individual or a derivative capacity. Any such claim not released may or may not be subject to factual, legal or equitable defenses and, if asserted against an officer, director, employee or agent, may or may not be subject to indemnification by Current VASCO to the extent permitted by applicable law.

For further information on Associated Corporate Matter Claims and releases with respect thereto, see "REORGANIZATION OF CURRENT VASCO -- Associated Corporate Matter Claims" and "RELEASES FROM SECURITY HOLDERS" and "EXCHANGE
OFFER."

For a discussion of possible indemnification of directors and officers of Current VASCO and its predecessors, see "RISK FACTORS -- Risks Relating to Exchange Offer and New VASCO -- Potential Claims Against Directors and Officers of Current VASCO and its Predecessors."

Stock Options. New VASCO hereby offers, upon the terms and subject to the conditions set forth in this Prospectus and the accompanying New VASCO Option Agreement, to exchange New VASCO Stock Options for Current VASCO Stock Options and a release of any and all Associated Corporate Matter Claims. The New VASCO Stock Options will be issued pursuant to the New VASCO 1997 Stock Option Plan and will be for the same number of shares and have the same vesting, termination, exercise price and exercise expiration terms as the Current VASCO Stock Options tendered for exchange, but, in all cases, they will be nonqualified stock options. The New VASCO Option Agreement, in addition to providing for the New VASCO Stock Options also provides for the cancellation of the Current VASCO Stock Options and a release of any and all Associated Corporate Matter Claims, and includes a provision for the adjustment of the number of shares underlying the New VASCO Stock Options and of the exercise price for such shares in the event of a change in the capital structure of New VASCO. A copy of the New VASCO Option Agreement and a copy of the New VASCO 1997 Stock Option Plan are being distributed with this document to holders of outstanding Current VASCO Stock Options. See "DESCRIPTION OF CAPITAL STOCK OF NEW VASCO -- Stock Options, Warrants and Convertible Notes" for further information on the New VASCO 1997 Stock Option Plan.

Conversion Options. New VASCO hereby offers, upon the terms and subject to the conditions set forth in this Prospectus and the accompanying New VASCO Convertible Note Agreement, to exchange New VASCO Conversion Options (i.e., options to convert notes into shares of New VASCO Common Stock) for Current VASCO Conversion Options (options to convert notes into shares of Current VASCO Common Stock) on substantially the same terms and conditions, and a release of any and all Associated Corporate Matter Claims. The New VASCO Convertible Note Agreement, in addition to providing for the grant of New VASCO Conversion Options and the agreement of New VASCO to be a co-obligor of the respective convertible note, also provides for the cancellation of the Current VASCO Conversion Options and a release of any and all Associated Corporate Matter Claims. A copy of the New VASCO Convertible Note Agreement is being distributed with this document to holders of Current VASCO Conversion Options.

Warrants. New VASCO hereby offers, upon the terms and subject to the conditions set forth in this Prospectus and the accompanying New VASCO Warrant Agreement, to exchange New VASCO Warrants for Current VASCO Warrants and a release of any and all Associated Corporate Matter Claims. The New VASCO Warrants will be for the same number of shares and have the same exercise price, expiration date and other terms as the Current VASCO Warrants tendered for exchange. The New VASCO Warrant Agreement provides for the grant of New VASCO Warrants, the cancellation of Current VASCO Warrants and the release of any and all Associated Corporate Matter Claims, and includes a provision for the adjustment of the number of shares underlying the New VASCO Warrants and of the exercise price for such shares in the event of a change in the capital structure of New VASCO. A copy of the New VASCO Warrant Agreement is being sent with this document to holders of Current VASCO Warrants.

Exchange of Any Current VASCO Securities Releases Any and All Associated Corporate Matter Claims. The exchange of any of the Current VASCO Securities by a holder will release and waive any and all Associated Corporate Matter Claims the exchanging holder (or, if the Current VASCO Securities are held in a nominee name, the beneficial owner of the Current VASCO Securities) may have even if less than all of the exchanging holder's (beneficial owner's) Current VASCO Securities are exchanged; provided that if a nominee holds Current VASCO Securities on behalf of more than one beneficial owner, any release executed by the nominee will be effective only with respect to any Associated Corporate Matter Claims of beneficial owners directing such nominee to exchange all or any part of the Current VASCO Securities in which such beneficial owner has an interest.

OTHER ARRANGEMENTS RELATING TO THE EXCHANGE OFFER

Certain holders of Current VASCO Shares, Current VASCO Warrants and Current VASCO Conversion Options have entered into agreements with Current VASCO which grant such holders the right, under certain circumstances, to either sell the shares they hold to Current VASCO or to require Current VASCO to register under the Securities Act the shares they now hold or the shares they may acquire upon exercise or conversion of Current VASCO Warrants or Current VASCO Conversion Options. In the event that the holders of these

rights exchange their Current VASCO Shares, Current VASCO Warrants or Current VASCO Conversion Options upon the terms and conditions set forth in this Prospectus and, as applicable, the accompanying Letter of Transmittal and Release, the New VASCO Warrant Agreement or the New VASCO Convertible Note Agreement, New VASCO, if the holders of these rights so request, may enter into registration rights agreements with provisions substantially the same as those of the respective registration rights agreements entered into by Current VASCO that have not been performed as of the Expiration Date. See "DESCRIPTION OF CAPITAL STOCK OF NEW VASCO -- Registration Rights and Other Arrangements."

Upon consummation of the Exchange Offer, New VASCO may at a later date merge Current VASCO into New VASCO or into or with a subsidiary of New VASCO on a stock or cash basis or undertake some other corporate reorganization of Current VASCO, subject to appraisal rights, if any, and any other remedies available under Delaware law. New VASCO also reserves the right in its sole discretion to purchase or make offers for any Current VASCO Shares that remain outstanding subsequent to the Expiration Date. The terms of any such purchases or offers could differ from the terms of the Exchange Offer.

Tendering holders of Current VASCO Securities will not be required to pay brokerage commissions or fees or, subject to the instructions in the Letter of Transmittal and Release, transfer taxes with respect to the exchange of Current VASCO Securities pursuant to the Exchange Offer. New VASCO will pay all charges and expenses, other than certain applicable taxes, in connection with costs incurred by it for the Exchange Offer. See "Payment of Expenses" below.

EXPIRATION DATE; EXTENSIONS; TERMINATION; AMENDMENT

The Exchange Offer will expire at 5:00 p.m., Chicago, Illinois time, on the Expiration Date, , 1997 [+21 business days], subject to extension by New VASCO by notice to the Exchange Agent as herein provided. New VASCO reserves the right to so extend the Exchange Offer at its discretion, in which event the term "Expiration Date" shall mean the time and date on which the Exchange Offer as so extended shall expire. New VASCO will notify the Exchange Agent of any extension by oral or written notice and will make a public announcement thereof, each prior to 8:00 a.m., Chicago, Illinois time, on the next business day after the previously scheduled Expiration Date.

New VASCO reserves the right in its sole discretion (i) to delay accepting any Current VASCO Securities for exchange or to extend or terminate the Exchange Offer and not accept for exchange any Current VASCO Securities if the Minimum Condition shall not have been satisfied prior to the Expiration Date or any of the events set forth below under the caption "Conditions to the Exchange Offer" shall have occurred and shall not have been waived by New VASCO prior to the Expiration Date by giving oral or written notice of such delay or termination to the Exchange Agent, (ii) to amend the terms of the Exchange Offer in any manner, or (iii) to terminate and abandon the Exchange Offer at any time prior to the Expiration Date. Any such delay in acceptance for exchange, extension, amendment or termination and abandonment will be followed as promptly as practicable by public announcement thereof. If the Exchange Offer is amended in a manner determined by New VASCO to constitute a material change, New VASCO will promptly disclose such amendment in a manner reasonably calculated to inform the holders of Current VASCO Securities of such amendment. New VASCO will extend the Exchange Offer so that there is a period of at least ten business days from the announcement of the amendment to the Expiration Date, depending upon the significance of the amendment and the manner of disclosure to the holders of Current VASCO Securities, if the Exchange Offer would otherwise expire during such ten business-day period. The rights reserved by New VASCO in this paragraph are in addition to New VASCO's rights set forth below under the caption "Conditions to the Exchange Offer."

PROCEDURE FOR TENDERING CURRENT VASCO SHARES AND CURRENT VASCO WARRANTS

Current VASCO Shares. The tender of any Current VASCO Shares as set forth below and the acceptance thereof by New VASCO will constitute a binding agreement between the tendering holder and New VASCO upon the terms and subject to the conditions set forth in this Prospectus and in the accompanying Letter of Transmittal and Release. Holders of Current VASCO Shares who wish to tender in

exchange for New VASCO Shares pursuant to the Exchange Offer must transmit the certificates for the Current VASCO Shares together with a properly completed and duly executed Letter of Transmittal and Release, and all other documents required by such Letter of Transmittal and Release, so as to be received by the Exchange Agent on or prior to the Expiration Date, except as otherwise provided below under the caption "Guaranteed Delivery Procedure for Current VASCO Shares." LETTERS OF TRANSMITTAL AND RELEASE AND CURRENT VASCO SHARES SHOULD NOT BE SENT TO NEW VASCO; THEY SHOULD BE SENT TO THE EXCHANGE AGENT AT THE ADDRESS SET FORTH BELOW.

Illinois Stock Transfer Company 223 West Jackson Boulevard, Suite 1210 Chicago, Illinois 60606 (312) 427-2953

If any Letter of Transmittal and Release, endorsement, or other document required by the Letter of Transmittal and Release or the Notice of Guaranteed Delivery is signed by a trustee, executor, administrator, guardian, attorney-in-fact, officer of a corporation, or other person acting in a fiduciary or representative capacity, such person should so indicate when signing, and unless waived by New VASCO, proper evidence satisfactory to New VASCO of such person's authority to so act, including the authority to release, waive and relinquish any and all Associated Corporate Matter Claims on behalf of the holder, must be submitted.

Signatures on a Letter of Transmittal and Release or a notice of withdrawal, as the case may be, are not required to be guaranteed if the Letter of Transmittal and Release is tendered (i) by a registered holder of Current VASCO Shares who has not completed the box entitled "Special Issuance and Delivery Instructions" on the Letter of Transmittal and Release or (ii) for the account of an Eligible Institution (as defined below). Signatures on all other Letters of Transmittal and Release must be guaranteed by an Eligible Institution. If signatures on a Letter of Transmittal and Release or a notice of withdrawal, as the case may be, are required to be guaranteed, such guarantee must be by a firm that is a member of a registered national securities exchange or a member of the National Association of Securities Dealers, Inc. or by a commercial bank or trust company having an office or correspondent in the United States (an "Eligible Institution").

If the Letter of Transmittal and Release is signed by a person other than a registered holder of any certificates representing Current VASCO Shares listed thereon, such Current VASCO Shares must be endorsed or accompanied by appropriate stock powers, in either case signed exactly as the name or names of the registered holder or holders appear on such Current VASCO Shares.

IF THE CURRENT VASCO SHARES ARE HELD IN "STREET NAME" OR BY OTHER NOMINEE, BOTH THE REGISTERED STOCKHOLDER AND THE BENEFICIAL OWNER ARE REQUIRED TO SIGN THE LETTER OF TRANSMITTAL AND RELEASE.

Current VASCO Warrants. Holders of Current VASCO Warrants who wish to exchange their warrants for New VASCO Warrants should deliver a signed new VASCO Warrant Agreement, with original Current VASCO Warrants attached thereto, to the Exchange Agent prior to the Expiration Date at the following address:

Illinois Stock Transfer Company

223 West Jackson Boulevard, Suite 1210

Chicago, Illinois 60606

(312) 427-2953

The exchange of Current VASCO Warrants will not be effected unless the Exchange Offer for the Current VASCO Shares is effected.

GUARANTEED DELIVERY PROCEDURE FOR CURRENT VASCO SHARES

If a holder of Current VASCO Shares desires to tender shares and certificate(s) representing such shares are not immediately available, or time will not permit such holder's certificate(s) or any other required

documents to reach the Exchange Agent before 5:00 p.m., Chicago, Illinois time, on the Expiration Date, a tender of Current VASCO Shares will be acceptable if:

(a) The tender is made by or through an Eligible Institution;

(b) Prior to 5:00 p.m., Chicago, Illinois time, on the Expiration Date, the Exchange Agent receives from (i) the registered holder of Current VASCO Shares (as well as from the beneficial owner of such shares, if applicable), a properly completed and duly executed Letter of Transmittal and Release, and (ii) such Eligible Institution, a properly completed and duly executed Notice of Guaranteed Delivery (by facsimile transmission, mail or hand delivery), setting forth the name and address of such holder and the number of Current VASCO Shares tendered, stating that the tender is being made thereby and guaranteeing that, within five business days after the Expiration Date, the certificate(s) representing such Current VASCO Shares (for which a properly completed and duly executed Letter of Transmittal and Release was received by the Exchange Agent prior to 5:00
p.m., Chicago, Illinois time on the Expiration Date) and all other documents required by the Letter of Transmittal and Release, will be deposited by the Eligible Institution with the Exchange Agent; and

(c) The certificate(s) for all tendered Current VASCO Shares, as well as all other documents required by the Letter of Transmittal and Release, are received by the Exchange Agent within five business days after the Expiration Date.