As filed with the Securities and Exchange Commission on April 9, 1997.
    
                                                      Registration No. 333-20505
================================================================================

                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549
                                  ------------
   
                                 AMENDMENT NO. 1
    
                                       TO
                                    FORM S-3
                             REGISTRATION STATEMENT
                                      UNDER
                           THE SECURITIES ACT OF 1933
                                  ------------
                    CELLULAR TECHNICAL SERVICES COMPANY, INC.
             (Exact name of registrant as specified in its charter)
                                  ------------
           Delaware                    4812                     11-2962080
(State or other jurisdiction of  (Primary Standard            (I.R.S. Employer
 incorporation or organization)      Industrial              Identification No.)
                             Classification Code Number)
                              ---------------------
                  2401 Fourth Avenue, Seattle, Washington 98121
                                 (206) 443-6400
                        (Address, including zip code, and
                     telephone number, including area code,
                       of registrant's principal executive
                                    offices)
                              ---------------------
         Stephen Katz, Chairman of the Board and Chief Executive Officer
                    Cellular Technical Services Company, Inc.
                  2401 Fourth Avenue, Seattle, Washington 98121
                                 (206) 443-6400
       (Name, address, including zip code, and telephone number, including
                        area code, of agent for service)
                              ---------------------
                           Copy of communications to:
                             Edward R. Mandell, Esq.
                       Parker Chapin Flattau & Klimpl, LLP
                           1211 Avenue of the Americas
                          New York, New York 10036-8701
                               Tel: (212) 704-6000
                               Fax: (212) 704-6288
                              ---------------------
      Approximate  date of proposed sale to the public:  From time to time after
the  effective  date of this  Registration  Statement  as  determined  by market
conditions.

      If any of the securities  being  registered on this form are to be offered
on a delayed or continuous  basis  pursuant to Rule 415 under the Securities Act
of 1933, as amended (the "Securities Act"), check the following box. [X]

      If this Form is filed to register  additional  securities  for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list  the  Securities  Act  registration  statement  number  of the  earlier
effective registration statement for the same offering. [ ]

      If this Form is a  post-effective  amendment filed pursuant to Rule 462(c)
under the  Securities  Act,  check the following box and list the Securities Act
registration  statement number of the earlier effective  registration  statement
for the same offering. [ ]

      If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [ ]

                              ---------------------
                         CALCULATION OF REGISTRATION FEE

<TABLE>
<CAPTION>
=============================================================================================================
                                                       Proposed
                                                       Maximum
                                                     Offering Price   Proposed Maximum         Amount of
Title of Each Class of               Amount to be        Per         Aggregate Offering     Registration Fee
Securities to be Registered           Registered       Share (1)         Price (1)                (2)
- -------------------------------------------------------------------------------------------------------------
   
<S>                                  <C>               <C>              <C>                   <C>         
Shares of Common Stock, par value        
$.001 per share..................... 400,000 Shares    $10.5625         $4,225,000            $1,280.30(3)
    
=============================================================================================================
</TABLE>

(1)   Estimated solely for purposes of calculating the registration fee.
(2)   Estimated  solely for the purpose of  calculating  the  registration  fee,
      pursuant to Rule 457(c).
(3)   A registration  fee in the amount of $2,068.18 was paid upon filing of the
      Registration Statement.
                                  ------------

      THE REGISTRANT HEREBY AMENDS THIS  REGISTRATION  STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER  AMENDMENT  WHICH  SPECIFICALLY  STATES  THAT  THIS  REGISTRATION
STATEMENT SHALL  THEREAFTER  BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES  ACT OF 1933 OR UNTIL THIS  REGISTRATION  STATEMENT  SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION,  ACTING PURSUANT TO SAID SECTION 8(A),
MAY DETERMINE.

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

<PAGE>
================================================================================
Information   contained  herein  is  subject  to  completion  or  amendment.   A
registration  statement  relating  to these  securities  has been filed with the
Securities  and Exchange  Commission.  These  securities may not be sold nor may
offers to buy be accepted prior to the time the registration  statement  becomes
effective.  This  prospectus  shall  not  constitute  an  offer  to  sell or the
solicitation of an offer to buy nor shall there be any sale of these  securities
in any State in which such offer,  solicitation  or sale would be unlawful prior
to registration or qualification under the securities laws of any such State.
================================================================================
   
                  SUBJECT TO COMPLETION -- DATED APRIL 9, 1997
    

PROSPECTUS
                                 400,000 Shares
                    CELLULAR TECHNICAL SERVICES COMPANY, INC.
                                  Common Stock

           This  Prospectus  relates to an aggregate of 400,000 shares of common
stock (the  "Common  Stock") of Cellular  Technical  Services  Company,  Inc., a
Delaware corporation (the "Company"), which may be offered and sold from time to
time by the Selling  Shareholders named herein. The Company will not receive any
of the  proceeds  from the sale of the shares of Common  Stock being sold by the
Selling Shareholders. See "Selling Shareholders."

           The  shares of Common  Stock may be offered  for sale by the  Selling
Stockholders  from time to time in the  over-the-counter  market,  in  privately
negotiated  transactions or otherwise at market prices prevailing at the time of
sale,  at prices  related  to such  prevailing  market  prices or at  negotiated
prices.  The  shares  of  Common  Stock  may be  sold  directly  by the  Selling
Stockholders or through underwriters, brokers or dealers. In connection with any
such sales,  the Selling  Stockholders  and brokers or dealers  participating in
such sales may be deemed "underwriters" within the meaning of the Securities Act
or  1933,  as  amended  ("Securities  Act"),  and  any  discounts,  commissions,
concessions  and any  profits  realized by them on the sale of the Shares may be
deemed to be underwriting compensation under the Securities Act. At such time as
Rule 144 ("Rule 144") promulgated under the Securities Act becomes available for
the sale of such shares, such shares may be sold under Rule 144 instead of under
this  Prospectus,  subject  to  compliance  with the  volume  and manner of sale
limitations,  as well as the  other  requirements,  of Rule  144.  See  "Plan of
Distribution".

   
           The Common  Stock is included in The Nasdaq Stock  Market's  National
Market (the  "Nasdaq  National  Market")  under the symbol  "CTSC." On April 14,
1997, the last reported sales price for the Common Stock on the Nasdaq  National
Market was $11.00 per share.
    
                              ---------------------
   
                  SEE "RISK FACTORS" BEGINNING ON PAGE 5 FOR A
                   DISCUSSION OF CERTAIN MATERIAL FACTORS THAT
                   SHOULD BE CONSIDERED IN CONNECTION WITH AN
                 INVESTMENT IN THE COMMON STOCK OFFERED HEREBY.
    
                              ---------------------
          THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE
           SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
          COMMISSION NOR HAS THE SECURITIES AND EXCHANGE COMMISSION OR
            ANY STATE SECURITIES COMMISSION PASSED UPON THE ACCURACY
              OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO
                       THE CONTRARY IS A CRIMINAL OFFENSE.
                              ---------------------

                 The date of this Prospectus is           , 1997


<PAGE>
                              AVAILABLE INFORMATION

           The  Company  is  subject to the  informational  requirements  of the
Exchange Act and, in accordance  therewith files reports,  proxy  statements and
other   information   with  the   Securities   and  Exchange   Commission   (the
"Commission"). Such reports, proxy statements and other information filed by the
Company  can  be  inspected  and  copied  at  the  public  reference  facilities
maintained by the Commission at Room 1024,  Judiciary  Plaza,  450 Fifth Street,
N.W.,  Washington,  D.C. 20549, and at the Commission's Regional Offices located
at 7 World Trade  Center,  13th  Floor,  New York,  New York 10048 and  Citicorp
Center,  500 West Madison  Street,  Suite 1400,  Chicago,  Illinois  60661-2511.
Copies of such material can also be obtained at prescribed rates from the Public
Reference  Section of the Commission,  Judiciary Plaza, 450 Fifth Street,  N.W.,
Washington, D.C. 20549. The Commission maintains a Web site (http://www.sec.gov)
that contains  reports,  proxy and information  statements and other information
electronically  filed  through  the  Commission's   Electronic  Data  Gathering,
Analysis and Retrieval system ("EDGAR"). The Common Stock is currently quoted on
The Nasdaq  Stock  Market and such  reports  and other  information  can also be
inspected at the offices of Nasdaq Operations,  1735 K Street, N.W., Washington,
D.C. 20006.

   
           The Company has filed with the Commission,  Washington, D.C. 20549, a
Registration  Statement  (No.  333- 20505) and an  amendment  thereto  under the
Securities  Act with  respect to the shares of Common  Stock (the  "Registration
Statement").  As permitted by the rules of the Commission,  this Prospectus does
not contain all of the information set forth in the  Registration  Statement and
the exhibits  thereto.  For further  information with respect to the Company and
the shares of Common Stock offered hereby, reference is made to the Registration
Statement  and  the  exhibits  filed  therewith.  Statements  contained  in this
Prospectus,  and in any document  incorporated  herein by  reference,  as to the
contents of any contract or any other document  referred to are not  necessarily
complete and, in each  instance,  reference is made to the copy of such contract
or other  document  filed as an exhibit to the  Registration  Statement  or such
document, each such statement being qualified in all respects by such reference.
A copy of the  Registration  Statement  may be inspected  without  charge at the
Commission's  principal  office,  Room 1024,  Judiciary Plaza, 450 Fifth Street,
N.W., Washington,  D.C. 20549, and copies of all or any part of the Registration
Statement  may be  obtained  from  such  office  upon  the  payment  of the fees
prescribed by the Commission.  The Registration Statement has been filed through
EDGAR  and  is  also  publicly  available  through  the  Commission's  Web  site
(http://www.sec.gov).
    
                      INFORMATION INCORPORATED BY REFERENCE
   
           The  following  documents  heretofore  filed by the Company  with the
Commission are incorporated herein by reference: (1) the Company's Annual Report
on Form 10-K for the year ended  December 31, 1996;  (2) the  Company's  Current
Reports on Form 8-K filed on January  27,  1997,  February  5, 1997 and March 6,
1997;  and (3) the  description of the Company's  Common Stock  contained in the
Company's  Registration  Statement on Form 8-A and any amendment or report filed
by the Company for the purpose of updating such description. Each document filed
pursuant  to  Sections  13(a),  13(c),  14 or 15(d) of the  Exchange  Act by the
Company  subsequent to the date of this  Prospectus but prior to the termination
of this  offering  shall be  deemed  to be  incorporated  by  reference  in this
Prospectus  and to be a  part  hereof  from  the  date  of the  filing  of  such
documents.  Any  statement  contained  in  this  Prospectus  or  in  a  document
incorporated or deemed to be incorporated herein by reference shall be deemed to
be modified or superseded  for purposes of this  Prospectus to the extent that a
statement  contained  herein or in any other  subsequently  filed document which
also  is or is  deemed  to be  incorporated  by  reference  herein  modifies  or
supersedes such statement.  Any statement so modified or superseded shall not be
deemed,  except as so  modified  or  superseded,  to  constitute  a part of this
Prospectus.
    

           THE COMPANY WILL PROVIDE,  WITHOUT CHARGE, TO EACH PERSON,  INCLUDING
ANY BENEFICIAL  OWNER, TO WHOM A COPY OF THIS PROSPECTUS IS DELIVERED,  UPON THE
WRITTEN OR ORAL REQUEST OF ANY SUCH PERSON, A COPY OF ANY DOCUMENT  INCORPORATED
BY REFERENCE IN THIS  PROSPECTUS  (OTHER THAN EXHIBITS  UNLESS SUCH EXHIBITS ARE
EXPRESSLY  INCORPORATED  BY REFERENCE  IN SUCH  DOCUMENTS).  REQUESTS  SHOULD BE
DIRECTED TO CELLULAR  TECHNICAL  SERVICES  COMPANY,  INC.,  2401 FOURTH  AVENUE,
SEATTLE,  WASHINGTON 98121, ATTENTION:  MICHAEL E. MCCONNELL, VICE PRESIDENT AND
CHIEF FINANCIAL OFFICER.


                                        2

<PAGE>
                                   THE COMPANY

   
           The  Company's  mission is to be the premier  provider  of  real-time
information  processing  and  information  management  solutions  for the global
wireless  communications  industry . Over the past nine  years,  the Company has
used its extensive  experience  with  real-time  technology  to create  advanced
solutions  for this  industry.  Today,  the Company  develops  both software and
hardware for sale as part of its  integrated  systems  solutions in the areas of
"user/device authentications" and "service metering."

           "User/device  authentication"  primarily  involves  various  forms of
"pre-call"  verification  to ensure  that the use of a  wireless  communications
device (e.g., a cellular  telephone) is legitimate  before the device is allowed
to connect to a wireless  communications network. In this area, the Company is a
leading provider of radio frequency ("RF") based solutions for the prevention of
"cloning fraud," with its Blackbird(R)  Platform,  PreTect(TM)  fraud prevention
application,  and No Clone Zone(sm) roaming fraud prevention service ("Blackbird
Products").  "Cloning  fraud"  is the  term  used by the  cellular  industry  to
describe  the illegal  activity of using a cellular  telephone  that has had its
electronic  serial  number and  telephone  number  altered  to match  those of a
legitimate  subscriber's  telephone.  The Cellular  Telecommunications  Industry
Association  ("CTIA") has  estimated  that in 1996 cloning fraud has resulted in
more than $1 billion in costs and lost  revenues to the United  States  cellular
industry . The Company  believes  that in 1997  cloning  fraud will result in an
increased  amount  of such  costs and lost  revenues.  The  Company's  Blackbird
Platform  provides  the  underlying  technology  for the  Company's  application
products for  user/device  authentication.  The  Company's  PreTect  application
product, the first application product on the Blackbird Platform,  is designated
to proactively  prevent cloning fraud in real-time.  The Company's No Clone Zone
service is  designed  to  effectively  prevent  roaming-based  cloning  fraud in
real-time between markets using the Blackbird  Platform and PreTect  application
product.

           "Service metering" primarily involves the collection of various forms
of "post-call"  information (within minutes after the end of the call) to ensure
that a wireless communications carrier's subscriber has proper account status to
make  additional  calls.  The  Company's   Hotwatch(R)   Platform  provides  the
underlying technology for post-call application products and services for credit
management and prepaid billing ("Hotwatch Products").

           The Company's current activities are primarily focused on 
    
                                       3

<PAGE>

   
the further  development,  marketing,  and deployment of the Blackbird Platform,
the PreTect  fraud  prevention  application  product,  the No Clone Zone roaming
fraud prevention service,  and other products and services that may be developed
on the Blackbird Platform . During 1996, the Company entered into agreement with
AirTouch Cellular ("AirTouch"),  Bell Atlantic NYNEX Mobile ("BANM"),  Ameritech
Mobile  Communications,  Inc.  ("Ameritech"),  and GTE  Mobilnet  of  California
Limited Partnership  ("GTE-California")  establishing terms for the provision of
the Blackbird  Products for use in over 2,000 cell sites  throughout  the United
States.

           The Company's  products and services  currently are used  exclusively
for analog cellular networks.  The Company believes that, as of the end of 1996,
there were approximately  30,000 domestic cell sites of analog cellular networks
in  which  the   Company's   products  and  services   currently  can  be  used.
Additionally,  the Company believes that the number of international  cell sites
of analog cellular networks to which its products are either currently adaptable
or could be  adaptable  may be equal to or greater  than the number of  domestic
cell sites.  The Company  also  believes  that its  products and services may be
adaptable for use in other wireless communications networks.

           During the last eleven  years,  wireless  communications  service has
been one of the fastest growing segments of the telecommunications industry. The
CTIA has estimated that the number of cellular  subscribers in the United States
increased   from   approximately   340,000   subscribers  in  December  1985  to
approximately 44 million  subscribers in December 1996. The Company believes the
worldwide  wireless   communications   market  may  have  exceeded  100  million
subscribers  by the end of 1996.  The  Company  expects  significant  growth  in
wireless  communications  to  continue  in the United  States as a result of the
increased   demand  for   cellular   service  and  the   emergence  of  personal
communications service ("PCS") as a new form of wireless communications service.
The  Company  also  expects   that   significant   growth  will  also  occur  in
international  markets. The Company believes that the number of cellular and PCS
subscribers  may grow to 80  million  in the  United  States  and more  than 300
million  worldwide by the end of 2001. The Company also believes that the demand
for its products  and  services may increase as the Company  adapts its products
and  creates  new  products  to  service  an  expanded  wireless  communications
industry.
    

           The  Company  was  incorporated  in Delaware in August 1988 under the
name  NCS  Ventures  Corp.  ("Ventures")  as  a  majority-owned   subsidiary  of
Nationwide Cellular Service, Inc. ("Nationwide"),  a publicly-traded company. In
September  1988,  Ventures  formed,  as equal partners with NYNEX Mobile Billing
Services,  Inc.  ("NYNEX"),  a partnership,  Cellular Technical Services Company
(the  "Partnership").  In May  1991,  Ventures  changed  its  name  to  Cellular
Technical Services Company, Inc. In August 1991, the Company exercised an option
to purchase the interest in the  Partnership  owned by NYNEX and consummated the
initial public offering of its securities.  In 1995,  concurrent with the merger
of Nationwide  into MCI  Communications  Corp.,  Nationwide  distributed  to its
stockholders all of its shares of the Company's Common Stock.


                                       4

<PAGE>

           The Company's  principal  offices are located at 2401 Fourth  Avenue,
Seattle, Washington, 98121 and its telephone number is (206) 443-6400.

       



                                       5

<PAGE>

                SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS

   
           A  number   of   statements   contained   in  this   Prospectus   are
forward-looking   statements  within  the  meaning  of  the  Private  Securities
Litigation  Reform Act of 1995 that involve risks and  uncertainties  that could
cause actual results to differ materially from those expressed or implied in the
applicable statements. These risks and uncertainties include but are not limited
to:  the  Company's  dependence  on  the  cellular  communications  market;  its
vulnerability  to rapid  industry  change and  technological  obsolescence;  the
limited nature of its product life, and the uncertainty of market  acceptance of
its products;  the unproven status of its products in widespread commercial use,
including the risks that its current and future products may contain errors that
would be  difficult  and costly to detect  and  correct  and that  technological
difficulties may in general hinder or prevent  commercialization  of its present
and   future   products;   potential   manufacturing   difficulties;   potential
difficulties  in managing  growth;  dependence on key  personnel;  the Company's
limited  customer  base and reliance on a relatively  small number of customers;
the possible impact of competitive  products and pricing; the uncertain level of
actual  purchases of its products by current  domestic and prospective  domestic
and international  customers under existing and future  agreements,  as the case
may be;  uncertainties  in the Company's  ability to implement these  agreements
sufficiently  to permit it to recognize  revenue under its  accounting  policies
(including its ability to meet product  performance  criteria  contained in such
contracts); the results of financing efforts;  uncertainties with respect to the
Company's  business  strategy;  general  economic  conditions;  and other  risks
described  in  this   Prospectus  and  the  Company's  other  filings  with  the
Commission.
    


                                       6

<PAGE>


                                  RISK FACTORS

           An investment in the shares of Common Stock offered hereby involves a
high  degree  of risk.  Prospective  investors  should  carefully  consider  the
following risk factors,  in addition to the other  information set forth in this
Prospectus,  in  connection  with an  investment  in the shares of Common  Stock
offered hereby.

   
           Dependence   on   Cellular   Market;   Rapid   Industry   Change  and
Technological  Obsolescence.  The  Company's  future  success will depend on the
continued  and  expanded  use of its existing  products  and  services,  and its
ability to develop new  products  and  services or adapt  existing  products and
services to keep pace with changes in the wireless communications  industry. The
Company  historically  has provided its  products  and services  exclusively  to
cellular  carriers.  In  addition,  the  Company's  user/device   authentication
products  currently  are  designed to provide  security  exclusively  for analog
cellular  telephones.  The Company  believes that over 95% of domestic  cellular
telephone  service  currently  is  provided  in the  analog  mode,  but that the
industry  is  undertaking  a shift to digital  mode in the major  markets due to
certain advantages of the digital mode,  including  expanded  capacity,  greater
privacy and enhanced  security.  Technological  changes or  developments  in the
cellular  industry,   such  as  encryption   technology  for  enhanced  privacy,
"Authentication"  ("A-Key")  technology for enhanced  security  against  cloning
fraud, improved switching technologies, or further industry consolidation, could
reduce  or  eliminate  demand  for  the  Company's  user/device   authentication
products. A rapid shift away from the use of analog cellular telephones in favor
of digital cellular  telephones  utilizing A-Key or to other wireless  services,
such as PCS,  could affect demand for the Company's  user/device  authentication
products  and could  require  the  Company to develop  modified  or  alternative
user/device authentication products addressing the particular needs of providers
of such new services. The Company's user/device authentication products apply to
digital phones  operating in the analog mode and to TDMA phones operating in the
digital  mode.  In  addition,   the  Company   believes  that  its   user/device
authentication  products  could apply to other types of digital phones if market
demand requires it. To date, the Company has emphasized its product  development
efforts in other areas where  greater  market  potential is seen.  The number of
subscribers using analog cellular systems worldwide  continues to increase,  and
as a result, the Company sees a continued increase in demand for its user/device
authentication  products  for fraud  protection.  The  Company is  pursuing  the
development of other applications for the Blackbird Platform. However, there can
be no assurance  that the Company will be  successful in modifying or developing
its existing or future products in a timely manner, or at all. If the Company is
unable,  due to resource,  technological  or other  constraints,  to  adequately
anticipate   or  respond  to  changing   market,   customer   or   technological
requirements,  the  Company's  business,  financial  condition  and  results  of
operations  will be  materially  adversely  affected.  Further,  there can be no
assurance  that  products  or services  developed  by others will not render the
Company's products and services non-competitive or obsolete.
    

           Limited Product Line;  Uncertainty of Widespread  Market  Acceptance.
The  Company's  revenues have been and can be expected to continue to be derived
from a limited number of products and services.  The Company  recently  expanded
its product line with the introduction of the Blackbird  Products.  Although the
Company  believes  that  the  Blackbird  Products  present   significant  growth
opportunities for its business,  there can be no assurance that the Company will
derive significant revenues from the commercialization of such technology or any
other  products.  By virtue of the  signing of certain  contracts  in 1996,  the
Company  commenced the commercial  installation  of the Blackbird  Products in a
number  of  major  cellular  markets.  Such  installations  are  subject  to the
Blackbird  Products'   compliance  with  contractual   requirements,   including
acceptance  testing to ensure that the Blackbird Products are properly installed
and performing in accordance with  contractual  specifications.  Given the early
stage of  commercial  use,  however,  there can be no  assurance  that any given
installation  of  Blackbird  Products  will  satisfy  contractual  requirements.
Additionally,  achieving  widespread  market  acceptance and  penetration of the
Blackbird  Products and the Company's  other products and services will, in some
cases,  require  additional  enhancements and improvements to those products and
services and increased

                                         7


<PAGE>

marketing efforts to effectively  compete and increase customer awareness of the
Company's products and services.  There can be no assurance,  however, that such
additional  enhancements  and  improvements  or  increased  marketing  and sales
efforts will result in a more successful  commercialization and increased market
penetration of the Company's products and services.

           Technological Factors;  Uncertainty of Product Development;  Unproven
Technology.  The Company's  products are currently  being  utilized by a limited
number of  customers  and there can be no  assurance  that they will prove to be
sufficiently  reliable in widespread  commercial  use. It is common for hardware
and software as complex and  sophisticated as that incorporated in the Company's
products to experience  errors or "bugs" both during  development and subsequent
to commercial  introduction.  In particular,  the Company has identified certain
software and hardware  errors in its  Blackbird  Products and to date  corrected
some, but not all, of such errors.  There can be no assurance that any errors in
the Company's existing or future products will be identified, and if identified,
corrected.  Any such errors could delay commercial  introduction of new products
and  require  modifications  in  products  that  have  already  been  installed.
Remedying such errors has been and may continue to be costly and time consuming.
Delays in  remedying  any such  errors  could  materially  adversely  affect the
Company's  competitive position with respect to existing or new technologies and
products offered by its competitors. In particular, delays in remedying existing
or future errors in the Company's Blackbird Products could materially  adversely
affect the Company's ability to achieve  significant market penetration prior to
the  possible  widespread  use of A-Key.  In  addition,  software  and  hardware
warranties are generally included as part of the Company's obligations under its
agreements with its customers.  To date, the costs to the Company of meeting the
Company's warranty  obligations  relating to its Hotwatch Products have not been
substantial.  Warranty  obligations  related to the Blackbird Products have been
and are expected to continue to be greater than those  encountered with Hotwatch
Products due to the expanded customer base for Blackbird  Products.  However, to
the extent that the software and hardware maintenance fees from its products are
not adequate to cover the costs of making any necessary modifications or meeting
the  Company's  warranty  obligations,  the  Company  could be  required to make
significant additional expenditures,  which could have a material adverse effect
on the Company.  The Company is  continually  seeking to enhance and improve its
existing  products  and  services  and to develop  new  products  and  services,
including  other  application  products  utilizing  the  Blackbird  and Hotwatch
Platforms. Accordingly, the Company remains subject to all of the risks inherent
in  new  product  development,   including   unanticipated  technical  or  other
development   problems  which  could  result  in  material   delays  in  product
commercialization  or significantly  increased costs.  There can be no assurance
that the  Company  will be able to  successfully  enhance  or  improve  existing
products or develop new products.

           Risk of New Hardware Manufacturing Activities. For the most part, the
Company's  engineering  resources  historically  have been  devoted to  software
design and  development.  As a result,  only a limited  number of such resources
were  initially  used in the design and  prototype  production  of the Company's
proprietary  hardware. In recent quarters the Company has added significantly to
its hardware design and development process. In addition,  the Company continues
to  utilize  a  number  of  subcontractors  for  hardware  design,  engineering,
manufacturing  and  integration of certain  proprietary  printed circuit boards,
radio  equipment and other  subassemblies  which are components of the Company's
Blackbird  Products.  The  Company's  future  success will continue to depend on
enhancing and expanding its manufacturing  activities with respect to the design
and  engineering  of  hardware,   improving  its  inventory   control   systems,
maintaining effective quality control, procuring component parts and maintaining
subcontractor relationships.  Failure to achieve any of these factors could have
a material  adverse effect on the Company's  business,  financial  condition and
results of operations.

           Ability to Manage  Growth.  The Company has expanded  its  operations
rapidly, which has created significant demands on the Company's  administrative,
operational, development and financial personnel and other resources. Additional
expansion by the Company may further strain the Company's management,  financial
and 
                                       8

<PAGE>


other  resources.  There  can  be  no  assurance  that  the  Company's  systems,
procedures, controls and existing space will be adequate to support expansion of
the Company's  operations.  The Company's future operating  results will depend,
among other things, on its ability to manage changing business conditions and to
continue to improve its operational and financial control and reporting systems.
If the  Company's  management  is  unable  to  manage  growth  effectively,  its
business,  financial  condition  and results of  operations  could be materially
adversely affected.  The Company's ability to manage growth depends in part upon
the  Company's  ability  to  attract,  train and retain a  sufficient  number of
qualified personnel or independent  contractors  commensurate with the expanding
needs of the  Company.  An increase  in the  turnover  rate among the  Company's
employees would increase the Company's recruiting and training costs, and if the
Company  were unable to recruit and retain a  sufficient  number of employees or
independent  contractors,  it could be forced to limit  its  growth or  possibly
curtail its  operations.  There can be no  assurance  that the  Company  will be
successful  in  attracting,  training  and  retaining  the  required  number  of
qualified employees or independent contractors to support the Company's business
in the future.

   
           Dependence on Key Personnel.  The Company's future success depends in
large part on the continued services of its key management,  sales, engineering,
research  and  development  and  operational  personnel  and on its  ability  to
continue  to  attract,  motivate  and  retain  highly  qualified  employees  and
independent  contractors  in those  areas.  Competition  for such  personnel  is
intense and there can be no  assurance  that the Company will be  successful  in
attracting,  motivating and retaining key  personnel.  The inability to hire and
retain  qualified  personnel or the loss of the services of key personnel  could
have a material adverse effect upon the Company's business,  financial condition
and results of operations.  The Company has entered into  employment  agreements
with, among others,  its President and Chief Operating Officer (which expires in
February 1999),  Chief Financial  Officer (which expires in December 1997), Vice
President,  Engineering  (which expires in July 1998) and General Counsel (which
expires in August,  1997). There can be no assurance that any of these contracts
will be renewed.  The Company  does not  maintain  any  key-man  life  insurance
policies on any of its employees.

           Limited  Customer  Base;  Reliance  on  Significant  Customers.   The
Company's  potential  customer base is relatively limited due to the significant
concentration of ownership and/or operational control of wireless  communication
markets.  Currently,  the Company  markets its  services  and  products  only to
cellular carriers,  of which there are 27 in the United States and approximately
150 in  international  markets.  There can be no assurance  that any  customers,
current or future,  will maintain business  relationships with the Company.  See
"--  International  Operations."  Revenues  attributable  to a relatively  small
number  of  customers  historically  have  represented  and are  likely  for the
foreseeable  future to continue to represent a  significant  percentage,  in any
given period,  of the Company's total revenues.  Sales to customers  aggregating
10% or more,  either  individually  or  combined  as  affiliates  due to  common
ownership,  were concentrated as follows: three customers with sales of 42%, 38%
and 10% (such three customers being AirTouch,  BANM and AT&T Wireless  Services,
Inc.,  respectively),  three  customers with sales of 59%, 15% and 12% and three
customers  with sales of 54%, 22% and 11% in the years ended  December 31, 1996,
1995 and  1994,  respectively.  The  aggregate  sales to these  customers  (none
accounted for more than 10% in all three years) represented 90%, 86%, and 87% of
the  Company's  total  system  and  service  revenues  in 1996,  1995 and  1994,
respectively.  There can be no assurance  that such  customers  will continue to
maintain  business  relationships  with the  Company.  The Company has  recently
signed  contracts with new customers  which,  if  successfully  implemented  and
performed,  would generate significant revenue. However, the loss of one or more
major customers could have a material adverse effect on the Company's  business,
financial condition and results of operations.
    


                                        9

<PAGE>

           Competition.  The market for the  Company's  products and services is
highly competitive and subject to rapid change. A number of companies  currently
offer one or more  similar  products and  services  offered by the  Company.  In
addition,  many wireless  communications  carriers are providing or can provide,
in-house,  certain of the Hotwatch  Products that the Company offers.  Trends in
the  wireless  communications  industry,  including  greater  consolidation  and
technological or other developments that make it simpler or more  cost-effective
for wireless  communications  carriers to provide certain  services  themselves,
could affect  demand for the  Company's  products and services and could make it
more  difficult  for the  Company  to offer a  cost-effective  alternative  to a
wireless  communications  carrier's  own  capabilities.  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 the Company has a relationship, to increase the visibility and utility
of their products and services. Accordingly, it is possible that new competitors
or  alliances  may emerge and  rapidly  acquire  significant  market  share.  In
addition,   the   Company   anticipates   continued   growth  in  the   wireless
communications  industry and,  consequently,  the entrance of new competitors in
the future. An increase in competition could result in price reductions and loss
of market  share and  could  have a  material  adverse  effect on the  Company's
business, financial condition and results of operations.

           The Company  believes that the principal  competitive  factors facing
the  Company in the  wireless  communications  industry  include  the ability to
identify and respond to customer needs,  the quality and breadth of products and
services, technical expertise and price. To remain competitive, the Company will
need to continue to invest in research  and  development,  sales and  marketing,
customer service, manufacturing activities and administrative systems. There can
be no  assurance  that the Company will have  sufficient  resources to make such
investments or that the Company will be able to make the technological  advances
necessary to remain  competitive.  Many of the  Company's  current and potential
competitors have significantly greater financial, marketing, technical and other
competitive resources, as well as greater name recognition, than the Company. As
a result, the Company's  competitors may be able to adapt more quickly to new or
emerging  technologies  and changes in customer  requirements  or may be able to
devote  greater  resources  to the  promotion  and  sale of their  products  and
services.  There can be no  assurance  that the Company  will be able to compete
successfully  with  its  existing  competitors  or  with  new  competitors.  The
Company's  principal  competitors  in the service  metering  field  include IBM,
I-NET,  Inc.,  GTE  Telecommunications   Services,   Inc.  ("GTE-TSI"),   Boston
Communications Group, EDS Personal Communications  Corporation,  Cincinnati Bell
Information Systems, Inc.,  Lightbridge,  Inc., Subscriber Computing,  Inc., CSC
Intellicom,  Systems/Link  Corporation,  Brite Voice Systems, Inc. and Orga Card
Systems  Inc.  The   Company's   principal   competitors   in  the   user/device
authentication field include Corsair  Communications,  Inc.  ("Corsair"),  Coral
Systems,  Inc. ("Coral") (in connection with a joint venture with Applied Signal
Technology),  Authentix Network,  Inc., GTE-TSI and Signal Science  Incorporated
("Signal Science"). The Company believes that Corsair has agreements pursuant to
which  Corsair has installed or will install its RF-based  fingerprinting  fraud
protection product in a number of major markets. The Company has no knowledge of
any such agreements or installations  by others,  although others may be testing
or  developing  such  products.  In  addition,  there  are  numerous  companies,
including wireless  communications  carriers,  hardware and software development
companies  and  others,  which have or may  develop  the  expertise  which would
encourage  them to attempt to develop and market  products (such as A-Key) which
could render the Company's products obsolete or less marketable.

   
           History of Net Losses;  Accumulated Deficit. Although the Company had
net income of $63,000  for the year ended  December  31,  1995 and net income of
$1,550,000  for the year ended  December 31, 1994,  the Company  sustained a net
loss in each of the preceding  years,  had a net loss of $7,350,000 for the year
ended December 31, 1996,  and, at December 31, 1996, had an accumulated  deficit
of $10,976,000.  In addition, in the event that the Company is not successful in
generating sufficient 
    


                                       10

<PAGE>



   
future product revenues,  the carrying value of capitalized software development
costs,  inventories and other assets could be significantly impaired.  There can
be no assurance that the Company's  operations will be profitable in the future.
The introduction of the Blackbird Platform  contributed to interim losses of the
Company as a result of certain  contractual  performance  criteria,  pursuant to
which only a portion of the  system's  revenues and the majority of the system's
costs are recorded during the early stages of deployment.  Accordingly, revenues
and direct  margins  recorded  by the  Company  can be  expected to be lowest in
earlier  periods  of  deployment  and  inconsistent  from  quarter  to  quarter,
especially  during  the  initial  market  deployment  under new  contracts.  The
resulting deferral of revenue will be recorded,  in subsequent  periods,  as the
performance criteria specified in the applicable contract is met.
    

           International  Operations.  The Company is marketing its products and
services in international  markets. In pursuing such opportunities,  the Company
is  and  will  remain  subject  to  all  the  risks  inherent  in  international
transactions,  such as  changes  in  export,  import,  tariff  and  other  trade
regulations,  currency  exchange  rates,  foreign  tax laws,  and  other  legal,
economic,  and political  conditions.  There can be no assurance that changes in
any of the foregoing  will not have a material  adverse  effect on the Company's
business,  financial condition and results of operations.  Further,  the laws of
certain foreign countries do not protect the Company's  intellectual property to
the same extent as the laws of the United States. See " -- Proprietary  Rights".
In certain  international  markets, the Company will need to modify its products
or  develop  new or  additional  products  to  adapt to the  different  wireless
technologies  or network  standards  utilized by the  carriers in such  markets.
There can be no assurance that the Company's marketing efforts and technological
enhancements will result in successful commercialization or market acceptance or
penetration  in  such  international  markets.  If  the  Company  is  unable  to
adequately anticipate and respond to marketing or technological  requirements in
the international marketplace,  the Company's business,  financial condition and
results of operation could be materially adversely affected.

   
           Fluctuations  in Quarterly  Performance.  The Company has experienced
fluctuations  in its  quarterly  operating  results  and  anticipates  that such
fluctuations  will  continue  and  could  intensify.   The  Company's  quarterly
operating  results  may vary  significantly  depending  on a number of  factors,
including  the timing of the  introduction  or  acceptance  of new  products and
services  offered by the  Company,  changes in the mix of products  and services
provided by the Company, long sales cycles, changes in regulations affecting the
wireless industry,  changes in the Company's operating expenses,  uneven revenue
streams, and general economic conditions.  Revenue recognition for the Company's
products is based upon various performance  criteria and varies from customer to
customer and product to product.  Hardware  and  software  delivery and customer
acceptance  in  accordance  with  contractual   definitions  are  generally  the
significant  factors used in determining  revenue  recognition.  There can be no
assurance that the Company's levels of profitability will not vary significantly
among  quarterly  periods  or that in future  quarterly  periods  the  Company's
results of  operations  will not be below prior results or the  expectations  of
public market analysts and investors.  In such event, the price of the Company's
Common Stock could be materially adversely affected.
    

           Dependence  on  Third-Party  Vendors.  The  Company has been and will
continue to be dependent on third-party vendors for computer equipment,  network
services,  component  parts,  manufacturing,  systems  integration  and  certain
software  all of which are  incorporated  in its products  and  services.  While
available  from  multiple  sources,  the Company  currently  obtains or licenses
certain  equipment and software from a limited  number of sources.  Although the
Company believes that there are currently  available  substitute sources for all
such equipment and software,  the Company could be required to redesign affected
products  to  accommodate   substitutes   therefor.  In  an  attempt  to  ensure
satisfactory  sources of supply,  the  Company  currently  maintains  supply and
software license arrangements with various suppliers. There can be no assurance,
however,  that the  Company  will be able to  procure  necessary  equipment  and
software on a satisfactory and timely basis. For


                                       11

<PAGE>



example,  from time to time the electronic computer component parts industry has
experienced  parts  allocation  restrictions.  Any failure or delay in obtaining
necessary equipment, component parts or software, or if necessary,  establishing
alternative   procurement   arrangements,   could   cause   delays  in   product
commercialization and could require product redesign or modification.  There can
be no assurance that the Company could complete any necessary modifications in a
timely manner or that modified or redesigned  products  would  maintain  current
functionality or performance  features or could be successfully  commercialized.
Any inability or delay in  establishing  necessary  procurement  arrangements or
successfully  modifying  products  could have a material  adverse  effect on the
Company's business, financial condition and results of operations.

   
           Possible Need for Additional Financing. In the event of unanticipated
technical or other problems,  or if the funds currently available to the Company
prove to be insufficient to fund operations, the Company may be required to seek
additional  financing  sooner than  currently  anticipated or may be required to
curtail its activities. There can be no assurance that additional financing will
be available  on  acceptable  terms,  or at all. In November  1996,  the Company
obtained a $5.0 million line of credit from The Chase  Manhattan  Bank. The line
of credit is secured by all the personal property of the Company, bears interest
at the prime rate plus .75%,  and expires  September 30, 1997.  All  outstanding
balances  under the line must be repaid for a  consecutive  30-day period before
such  expiration  date.  The line of credit  will be used to fund the  Company's
growth and provide additional  working capital.  No funds have been drawn on the
line of credit as of the date of this prospectus.
    

           Proprietary  Rights. The Company's success will depend in part on its
ability  to  protect  its  technology,   processes,   trade  secrets  and  other
proprietary  rights from unauthorized  disclosure and use and to operate without
infringing the proprietary rights of third parties. The Company's strategy is to
protect its technology and other proprietary rights through patents, copyrights,
trademarks,  nondisclosure  agreements,  license agreements,  and other forms of
protection.  The  Company  has been active in  pursuing  patent  protection  for
technology and processes  involving its Hotwatch Products and Blackbird Products
that it  believes  to be  proprietary  and that  offer a  potential  competitive
advantage for the Company's products and services. To date, the Company has been
granted  patents on certain  features of the  Hotwatch  Products and has patents
pending for certain features of the Hotwatch Products and Blackbird Products. In
addition,  the Company has also licensed patents from third parties in an effort
to maintain flexibility in the development and use of its technology,  including
exclusive  and  non-exclusive  rights  to use  patents  in  connection  with the
Blackbird  Products.  There can be no  assurance,  however,  that any pending or
future  patent  application  of the  Company  or its  licensors  will  result in
issuance of a patent,  that the scope of protection of any patent of the Company
or its licensors will be held valid if  subsequently  challenged,  or that third
parties  will not  claim  rights  in or  ownership  of the  products  and  other
proprietary rights held by the Company or its licensors.  In addition,  the laws
of certain foreign countries do not protect the Company's  intellectual property
rights to the same extent as the laws of the United States.

           Litigation   or  regulatory   proceedings,   which  could  result  in
substantial  cost and  uncertainty  to the  Company,  may also be  necessary  to
enforce  patent or other  proprietary  rights of the Company or to determine the
scope and validity of a third party's proprietary  rights.  Although the Company
believes  that its  technology  has been  independently  developed  and that its
products do not infringe patents known to be valid or violate other  proprietary
rights of third parties,  it is possible that such  infringement  of existing or
future  patents or violation of  proprietary  rights may occur.  There can be no
assurance that third parties will not assert  infringement  claims in the future
with respect to the Company's current or future products or that any such claims
will not result in litigation or regulatory  proceedings  or require the Company
to modify its products or enter into licensing  arrangements,  regardless of the
merits of such claims. No assurance can be given that any necessary licenses can
be obtained in a timely manner,  upon commercially  reasonable terms, or at all,
and no assurance  can be given that third  parties will not assert  infringement
claims with respect to any current licensing arrangements. The Company's failure
to successfully  enforce its proprietary  rights or defend against  infringement
claims  brought 

                                       12

<PAGE>


by third  parties  could have a material  adverse  effect upon the  Company.  In
addition,  there can be no assurance  that the Company  will have the  resources
necessary to successfully defend an infringement claim brought by a third party.

           In  addition  to the  foregoing  methods of  protection,  the Company
employs various physical security measures to protect its software source codes,
technology and other proprietary rights.  However,  such measures may not afford
complete  protection  and  there  can  be no  assurance  that  others  will  not
independently  develop  similar  source codes,  technology or other  proprietary
rights or obtain access to the Company's  software codes,  technology,  or other
proprietary  rights.  Furthermore,  although  the  Company  has and  expects  to
continue  to have  internal  nondisclosure  agreements  with its  employees  and
consultants,  and license agreements with customers,  which contain restrictions
on  disclosure,  use and transfer of  proprietary  information,  there can be no
assurance  that  such  arrangements   will  adequately   protect  the  Company's
proprietary  rights or that the  Company's  proprietary  rights  will not become
known to third  parties  in such a manner  that  the  Company  has no  practical
recourse.

           Risk of System  Failure  or  Inadequacy.  The  Company  operates  and
maintains  internal computers and  telecommunication  equipment for, among other
things,  monitoring and supporting its products and services,  and operating its
Real-Time  Roaming  Fraud  Prevention  Service.  The  Company's  operations  are
dependent  upon its ability to maintain such  equipment and systems in effective
working order and to protect them against  damage from fire,  natural  disaster,
power loss,  telecommunications  failure or similar events. Although the Company
provides back-up for substantially  all of its systems,  these measures will not
eliminate  the  risk to the  Company's  operations  from a  system  failure.  In
addition to its own systems,  the Company relies on certain  equipment,  systems
and services from third parties that are also subject to risks,  including risks
of system  failure.  There can be no assurance  that the Company's  property and
business  interruption  insurance will be adequate to compensate the Company for
any losses that may occur in the event of a system failure. Any damage,  failure
or delay that causes  interruptions  in the  Company's  operations  could have a
material  adverse  effect on the  Company's  business,  financial  condition and
results of operations. See " -- Dependence on Third Party Vendors."

           Government  Regulation and Legal  Uncertainties.  While, for the most
part, the Company's operations are not directly regulated, the wireless carriers
that  constitute  the  Company's  customers  are heavily  regulated  at both the
federal and state levels. Such regulation may inhibit the growth of the wireless
telecommunications  industry,  limit the number of potential  customers  for the
Company's  services  and  impede  the  Company's  ability  to offer  competitive
services to the  wireless  communications  market or  otherwise  have a material
adverse  effect on the Company's  business,  financial  condition and results of
operations.  At the same time, recently enacted federal legislation deregulating
the  telecommunications  industry may cause changes in the  industry,  including
entrance  of new  competitors  or  industry  consolidation,  which could in turn
subject the Company to increased pricing pressures,  decrease the demand for the
Company's  services,  increase the Company's cost of doing business or otherwise
have a material adverse effect on the Company's  business,  financial  condition
and results of  operations.  Additionally,  media  reports and certain  interest
groups  have  suggested  that  certain  RF  emissions  from  portable   cellular
telephones might be linked to various health concerns, including cancer, and may
cause  interference  with hearing aids,  pacemakers  and other medical  devices.
Concerns  over RF  emissions  may have the  effect  of  discouraging  the use of
cellular and other wireless  communications  services,  such as PCS, which could
have an adverse effect upon the Company's  business.  In addition,  the Personal
Communications   Industry  Association  announced  in  July  1995  that  it  was
undertaking  an  industry-wide  study to  gather  information  on  possible  PCS
interference  with  medical  devices  for all  PCS  protocols.  There  can be no
assurance  that such  reports  and the  findings  of such  study will not have a
material  adverse  effect on the  Company's  business,  financial  condition and
results  of  operations  or that  such  findings  will  not  lead to  government
regulation that will have a material  adverse effect on the Company's  business,
financial condition and results of operations.



                                       13

<PAGE>

           No Dividends.  To date, the Company has not paid any dividends on the
Common Stock and does not expect to declare or pay any  dividends on such Common
Stock in the foreseeable future.

   
           Outstanding Options. As of April 1, 1997 there were outstanding stock
options to  purchase  an  aggregate  of  2,379,520  shares of Common  Stock at a
weighted average exercise price of approximately  $8.01 per share. To the extent
that these  outstanding  stock options are exercised,  dilution to the Company's
stockholders  may occur if the market price or book value of the Common Stock of
the Company at the time of exercise is greater  than the  exercise  price of the
options.  Moreover,  the terms  upon  which the  Company  will be able to obtain
additional  equity  capital may be adversely  affected since the holders of such
outstanding  securities  can be  expected  to  exercise  them at a time when the
Company would, in all likelihood,  be able to obtain any needed capital on terms
more favorable to the Company than those provided in the outstanding options.

           Shares  Eligible for Future Sale. As of the date of this  Prospectus,
the Company has outstanding  22,643,068  shares of Common Stock (including 7,200
shares  issued for option  exercises,  from January 1, 1997, to the date of this
Prospectus),  of which the 400,000  shares to be resold in this offering and the
4,600,000  shares sold in the Company's  initial public  offering in August 1991
and all other shares will be freely  tradeable  without  restriction  or further
registration  under  the  Securities  Act,  except  for  those  shares  held  by
"affiliates"  (as defined in the  Securities  Act) of the Company.  There are no
restricted  shares  currently  outstanding.  Affiliates  are able to sell shares
pursuant  to Rule  144  ("Rule  144")  under  the  Securities  Act,  subject  to
compliance  with  certain  requirements  set  forth in Rule  144.  In  addition,
5,400,000  shares  of Common  Stock are  authorized  under  the  Company's  1991
Qualified Stock Option Plan, as amended,  1991 Non-Qualified  Stock Option Plan,
as amended,  1993 Non-Employee  Director Stock Option Plan and 1996 Stock Option
Plan.  Of these  shares,  2,274,520  shares are  issuable  upon the  exercise of
outstanding  stock options granted by the Company,  of which options to purchase
799,136 shares are currently  exercisable.  Registration  Statements on Form S-8
have been  filed  with the  Commission  registering  all of the shares of Common
Stock that may be issued  under  these  plans as well as the  105,000  shares of
Common Stock subject to options (all of which are currently exercisable) granted
to Robert Dahut,  the Company's former  President,  which were not granted under
any stock  option  plan of the Company . No new  options  will be granted  under
either  the  Company's  1991  Non-Qualified  Stock  Option  Plan,  or under  the
Company's 1991  Qualified  Stock Option Plan.  Sales of  substantial  amounts of
shares of Common Stock in the public market,  or the availability of such shares
for future sale, could adversely affect the market price of the Common Stock and
could impair the Company's future ability to raise additional capital through an
offering of its equity securities.
    

           Possible  Volatility  of Stock Price.  The market price of the Common
Stock could be subject to significant  fluctuations in response to variations in
financial  results or  announcements  of  material  events by the Company or its
competitors.  Regulatory  changes  or changes in the  general  condition  of the
economy or the financial markets could also adversely affect the market price of
the Common Stock.

           Anti-Takeover  Provisions.   The  Certificate  of  Incorporation  and
By-laws of the Company contain various  provisions  which may have the effect of
discouraging,  delaying  or  preventing  future  changes of control or  takeover
attempts,  which  the  Company's  stockholders  may  deem  to be in  their  best
interests,  and  perpetuating  the Company's  existing  management.  Among other
things,  such  provisions:  (i)  provide  the  Board  of  Directors  with  broad
discretion to issue serial  preferred  stock;  (ii) provide for three-year terms
for the  directors  of the  Company  and the  election  of such  directors  on a
staggered  basis;  (iii) prohibit  repurchases by the Company from a stockholder
owning  5% or  more  or  the  Company's  voting  securities  (other  than  those
stockholders  meeting such  description  as of May 30, 1991) who have held their
securities  for less  than two  years,  unless  approved  by 


                                       14

<PAGE>

a majority of the disinterested  stockholders;  and (iv) require the approval of
two-thirds  of all shares  eligible to vote for any  proposed  amendment  to the
Certificate  of  Incorporation  or  By-laws  that  seeks to modify or remove the
foregoing  provisions.  In  addition,  in certain  circumstances,  Delaware  law
requires the approval of two-thirds  of all shares  eligible to vote for certain
business  combinations  involving  a  stockholder  owning  15%  or  more  of the
Company's voting  securities  (other than  stockholders  currently  meeting such
description), excluding the voting power held by such stockholder. The existence
of all of the above provisions may have the effect of discouraging,  delaying or
preventing a future change of control or takeover attempt of the Company,  which
could have an adverse effect on the market price of the Common Stock.






                                       15

<PAGE>

                            DESCRIPTION OF SECURITIES

           The following  summary  description of the Company's capital stock is
qualified  in  its  entirety  by  reference  to  the  Company's  Certificate  of
Incorporation.

COMMON STOCK

   
           The Company is authorized to issue up to 30,000,000  shares of Common
Stock,  par  value  $.001  per  share.  As of April 2,  1997,  the  Company  had
approximately  200  shareholders  of record and the Company  believes its Common
Stock is beneficially owned by in excess of 5,000 holders.
    

           Holders of Common  Stock are entitled to one vote for each share held
of  record  on each  matter  submitted  to a vote of  shareholders.  There is no
cumulative voting for election of directors.  Subject to the prior rights of any
series of preferred  stock which may from time to time be  outstanding,  if any,
holders of Common Stock are entitled to receive ratably  dividends when, as, and
if declared by the Board of Directors out of funds legally  available  therefore
and,  upon the  liquidation,  dissolution  or  winding  up of the  Company,  are
entitled to share ratably in all assets  remaining  after payment of liabilities
and payment of accrued  dividends and  liquidation  preferences on the preferred
stock,  if any.  Holders of Common Stock have no  preemptive  rights and have no
rights to convert their Common Stock into any other securities.  The outstanding
Common Stock is, and the Common Stock to be outstanding  upon completion of this
Offering  will  be,  duly  authorized  and  validly   issued,   fully  paid  and
nonassessable.

PREFERRED STOCK

           The  Company  is  authorized  to  issue  up to  5,000,000  shares  of
preferred  stock, par value $.01 per share. The preferred stock may be issued in
one or more series, the terms of which may be determined at the time of issuance
by the Board of  Directors,  without  further  action by  shareholders,  and may
include  voting  rights  (including  the right to vote as a series on particular
matters), preferences as to dividends and liquidation, conversion and redemption
rights and sinking fund provisions.

   
           No shares of preferred stock will be outstanding as of the closing of
this  offering,  and the Company has no present plans for the issuance  thereof.
The issuance of any such preferred  stock could  adversely  affect the rights of
the holders of Common Stock and therefore, reduce the value of the Common Stock.
The ability of the Board of Directors to issue preferred stock could discourage,
delay or prevent a takeover of the Company.  See "Risk Factors --  Anti-Takeover
Provisions."
    

ANTI-TAKEOVER PROVISIONS

           The Certificate of  Incorporation  and By-laws of the Company contain
various  provisions  which may have the  effect  of  discouraging,  delaying  or
preventing future changes of control or takeover  attempts,  which the Company's
stockholders  may deem to be in  their  best  interests,  and  perpetuating  the
Company's existing management.  Among other things, such provisions: (i) provide
the Board of Directors with broad  discretion to issue serial  preferred  stock;
(ii)  provide  for  three-year  terms for the  directors  of the Company and the
election of such directors on a staggered basis;  (iii) prohibit  repurchases by
the  Company  from a  stockholder  owning  5% or  more or the  Company's  voting
securities (other than those stockholders meeting such description as of May 30,
1991) who have held their securities for less than two years, unless approved by
a majority of the disinterested  stockholders;  and (iv) require the approval of
two-thirds  of all shares  eligible to vote for any  proposed  amendment  to the
Certificate  of  Incorporation  or  By-laws  that  seeks to modify or remove the
foregoing  
                                       16

<PAGE>



provisions.  In addition,  in certain  circumstances,  Delaware law requires the
approval of  two-thirds  of all shares  eligible  to vote for  certain  business
combinations  involving a stockholder owning 15% or more of the Company's voting
securities  (other  than  stockholders   currently  meeting  such  description),
excluding the voting power held by such stockholder. The existence of all of the
above provisions may have the effect of  discouraging,  delaying or preventing a
future change of control or takeover attempt of the Company, which could have an
adverse effect on the market price of the Common Stock.

ELECTION OF DIRECTORS

           The Certificate of  Incorporation  and By-laws of the Company set the
number of  directors  at a minimum of three and a maximum of fifteen and provide
for three-year terms of office on a staggered basis.

REMOVAL OF DIRECTORS

           The Certificate of Incorporation of the Company permits  stockholders
to remove a director with or without cause by an affirmative  vote of two-thirds
of the total votes  eligible  to be cast at a duly  constituted  meeting  called
expressly for that purpose.

APPROVAL OF REPURCHASES

           The Certificate of Incorporation of the Company prohibits repurchases
by the Company from a shareholder  owning more than 5% of the  Company's  voting
securities (a "Significant  Shareholder") (other than those shareholders meeting
such  description  as of May 30,  1991) who has  owned  such  securities  of the
Company for less than two years,  unless  approved by an affirmative  vote of at
least a majority of the total votes  entitled to vote  generally in the election
of directors other than the voting power held by the Significant Shareholders.

AMENDMENT OF CERTIFICATE OF INCORPORATION AND BY-LAWS

           The  Certificate  of  Incorporation  provides that in addition to the
general  requirements  to amend a certificate of  incorporation,  an affirmative
vote of the holders of at least  two-thirds  of the total  votes  eligible to be
cast is required to amend the anti-takeover provisions described above.

           The Certificate of  Incorporation of the Company provides that either
the Board of  Directors  or the  stockholders  may  alter,  amend or repeal  the
By-laws  of the  Company.  The Board of  Directors  may take  such  action by an
affirmative vote of at least a majority of the directors at a meeting  expressly
called for that purpose.  Such action by  stockholders  requires an  affirmative
vote of at least  two-thirds of the total votes eligible to be cast at a meeting
called expressly for that purpose.

TRANSFER AGENT

           Continental  Stock  Transfer & Trust  Company,  New York, New York as
Transfer Agent for the Common Stock.



                                       17

<PAGE>

                              SELLING SHAREHOLDERS

   
           The  following  table sets forth  information,  as of March 31, 1997,
with  respect to (i) each  Selling  Shareholder's  beneficial  ownership  of the
Company's  Common  Stock  prior to the  offering  of any shares of Common  Stock
hereunder  by such  Selling  Stockholders,  (ii) the  number of shares of Common
Stock which may be offered for sale  hereunder and (iii) the number of shares of
Common Stock to be  beneficially  owned by each Selling  Shareholders  after the
offering  (assuming  the  sale of all  shares  of  Common  Stock  being  offered
hereunder).  The Company will not receive any of the  proceeds  from the sale of
such securities. There are no material relationships between any of such Selling
Shareholders  and the  Company  or any of its  predecessors,  nor  have any such
material relationships existed within the past three years.


<TABLE>
<CAPTION>
                             Shares  of            Shares of        Shares of
                            Common Stock           Common          Common Stock
 Name of Selling         Beneficially Owned      Stock to be     Beneficially Owned
  Stockholders            Prior to Offering   Offered Hereunder    After Offering
  ------------            -----------------   -----------------    --------------
<S>                          <C>                   <C>                 <C>    
Harvey Sandler               1,061,116             120,000             941,116
                                                           
Phyllis Sandler                124,000(1)           60,000              64,000

Fusion Partners, L.P.           89,000              65,000              24,000

Fusion Offshore Fund Ltd.        2,300               1,300               1,000

Ricky Sandler                    3,700               3,700                   0

Andrew Sandler                  10,000              10,000                   0

Martin Tash                    160,000(2)          120,000              40,000(2)

Jeffrey M. Levine               22,000(3)           10,000              12,000

David Ross                      11,200(4)           10,000               1,200(4)
</TABLE>

    

- ---------------------
(1)   Includes 1,000 shares of Common Stock in an IRA Account,
(2)   Additional  shares of Common  Stock in which  Martin Tash may be deemed to
      have an interest  include (i) Martin and Arlene S. Tash,  Joint  Account -
      90,500  shares;  (ii) Arlene S. Tash - 6,622  shares;  and (iii) Arlene S.
      Tash, IRA - 10,778 shares.  Arlene S. Tash is the wife of Martin Tash. 
(3)   Includes 5,156 shares of Common Stock in an IRA Account.
(4)   Includes 1,200 shares of Common Stock in an IRA Account.  Does not include
      18,002 shares of Common Stock held by Amy Ross (the wife of David Ross).



                                       18

<PAGE>



                              PLAN OF DISTRIBUTION

   
           The  shares of Common  Stock may be offered  for sale by the  Selling
Shareholders  from time to time in the  over-the-counter  market,  in  privately
negotiated  transactions or otherwise at market prices prevailing at the time of
sale,  at prices  relating to such  prevailing  market  prices or at  negotiated
prices.  The shares of Common Stock may be sold by one or more of the  following
methods:  (a) ordinary  brokerage  transactions  and  transactions  in which the
broker  solicits  purchasers;  (b) purchases by a broker or dealer as principal,
and the  resale by such  broker  or  dealer  for its  account  pursuant  to this
Prospectus,  including resale to another broker or dealer;  (c) a block trade in
which the broker or dealer so engaged  will attempt to sell the shares of Common
Stock as agent but may  position  and resell a portion of the block as principal
in order to facilitate the transaction;  or (d) negotiated  transactions between
one or more Selling  Shareholders and purchasers  without a broker or dealer. In
connection  with  any  sales,  a  Selling   Shareholder  and  broker  or  dealer
participating in such sales may be deemed  "underwriters"  within the meaning of
the Securities Act.

           Brokers  or  dealers   selling  under  this  Prospectus  may  receive
discounts,   commissions  or  concessions  from  a  Selling  Shareholder  and/or
purchasers  of the Shares for whom such broker or dealers may act as agents,  or
to  whom  they  may  sell as  principal,  or both  (which  compensation  as to a
particular broker or dealer may be in excess of customary commissions). Any such
discounts,  commissions and concessions and any profits  realized on the sale of
Shares may be deemed to be underwriting  compensation  under the Securities Act.
Certain  of the  Selling  Shareholders  may,  under  certain  circumstances,  be
entitled  to  indemnification  against  liabilities  under  the  Securities  Act
pursuant to agreements between them and the Company.
    

           At such  time as Rule  144  becomes  available  for the  sale of such
shares of Common Stock,  such shares may be sold under Rule 144 instead of under
this Prospectus,  subject to compliance with the volume limitations,  as well as
the other requirements of Rule 144.

           The Selling  Shareholders  have been  advised by the Company that (i)
they are subject to the prospectus  delivery  requirements  under the Securities
Act with respect to any sale of shares pursuant to this  Prospectus;  (ii) that,
to the extent deemed  "distributing"  Common Stock, neither they nor any brokers
or  dealers  acting  for them  nor any  "affiliated  purchasers"  may bid for or
purchase  any  Common  Stock of the  Company  or attempt to induce any person to
purchase  any Common  Stock in  violation  of Rule 10b-6  promulgated  under the
Exchange  Act or (iii)  they may not  engage in any  stabilization  activity  in
connection with the Common Stock.

                                  LEGAL MATTERS

           The validity of the Common Stock offered  hereby has been passed upon
for the Company by Parker Chapin Flattau & Klimpl, LLP, New York, New York.

                                     EXPERTS

   
           The financial  statements  of the Company  appearing in the Company's
Annual  Report  (Form  10-K) for the year ended  December  31,  1996,  have been
audited by Ernst & Young LLP, independent auditors, as set forth in their report
thereon  incorporated by reference therein and incorporated herein by reference.
Such financial  statements are incorporated herein by reference in reliance upon
such report given upon the authority of such firm as experts in  accounting  and
auditing.
    


                                       19

<PAGE>


=======================================  =======================================
    No person has been authorized in
 connection  with the offering  made
 hereby to give any  information  or
 to  make  any   representation  not
 contained in this  Prospectus  or a
 supplement to this Prospectus, and,
 if given or made, such  information               CELLULAR TECHNICAL  
 or   representation   must  not  be             SERVICES COMPANY, INC.
 relied    upon   as   having   been                                   
 authorized  by  the  Company,   the                                   
 Selling  Shareholders  or any other                                   
 person. Neither this Prospectus nor                                   
 any  supplement to this  Prospectus                400,000 Shares of  
 constitutes  an  offer to sell or a                  Common Stock     
 solicitation  of an  offer  to buy,                                   
 any   securities   other  than  the                                   
 securities  to which it  relates or                                   
 an    offer    to   sell   or   the                                   
 solicitation  of an  offer  to  buy                                   
 such securities in any jurisdiction                                   
 where,  or to any person to whom it                                   
 is  unlawful  to make such an offer                                   
 or   solicitation.    Neither   the               ___________________ 
 delivery of this Prospectus nor any                                   
 supplement to this  Prospectus  nor                   PROSPECTUS      
 any   sale   made    hereunder   or               ___________________ 
 thereunder    shall,    under   any                                   
 circumstances,      create      any                                   
 implication  that there has been no                                   
 change  in  the   affairs   of  the                                   
 Company  since  the date  hereof or                                   
 thereof  or  that  the  information                                   
 contained  herein is  correct as of                                   
 any time subsequent to the dates as                                   
 of  which   such   information   is                                   
 furnished.                                                            
                                                                       
         --------------------                                          
           TABLE OF CONTENTS                                           
                                 Page                                  
                                      
   
Available Information............. 2            
Information Incorporated by
  Reference....................... 2
The Company....................... 3
Special Note Regarding 
 Forward-Looking Statements....... 4
Risk Factors...................... 5
Description of Securities.........14
Selling Shareholders..............16
Plan of Distribution..............17
Legal Matters.....................17
Experts...........................17
    
         --------------------

                                                                , 1997        
=======================================  =======================================



<PAGE>



                                     PART II
                     INFORMATION NOT REQUIRED IN PROSPECTUS

ITEM 14.   OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.

           All of the  expenses  listed below are  estimated  except for the SEC
registration  fee.  The  itemized  statement  below  includes  all  expenses  in
connection with the distribution of the securities being registered,  other than
underwriting discounts and commissions:


     Securities and Exchange Commission registration fee ...   $    2,068.18
     Blue Sky fees and expenses ............................        2,500.00
     Printing and engraving expenses .......................        2,500.00
     Accounting fees and expenses ..........................        5,000.00
     Legal fees and expenses ...............................       25,000.00
     Miscellaneous expenses ................................          931.82
                                                               -------------
                TOTAL ......................................   $   38,000.00
                                                               =============


ITEM 15.   INDEMNIFICATION OF DIRECTORS AND OFFICERS.

           The Company is incorporated  under the laws of the State of Delaware.
Section 145 of the General  Corporation  Law of the State of Delaware  ("Section
145") provides that a Delaware corporation may indemnify any persons who are, or
are  threatened  to be made,  parties to any  threatened,  pending or  completed
action,  suit  or  proceeding,   whether  civil,  criminal,   administrative  or
investigative (other than an action by or in the right of such corporation),  by
reason of the fact that such person was a director,  officer,  employee or agent
of such corporation,  or is or was serving at the request of such corporation as
a  director,  officer,  employee or agent of another  corporation,  partnership,
joint venture,  trust or other  enterprise.  The indemnity may include  expenses
(including  attorneys'  fees),  judgments,  fines and amounts paid in settlement
actually and reasonably  incurred by such person in connection with such action,
suit or proceeding,  provided such person acted in good faith and in a manner he
reasonably  believed to be in or not opposed to the corporation's best interests
and, with respect to any criminal action or proceeding,  had no reasonable cause
to believe that his conduct was unlawful.  A Delaware  corporation may indemnify
any persons who are, or are  threatened  to be made, a party to any  threatened,
pending or  completed  action or suit by or in the right of the  corporation  by
reason of the fact that such person was a director,  officer,  employee or agent
of another corporation,  partnership,  joint venture, trust or other enterprise.
The indemnity may include  expenses  (including  attorneys'  fees)  actually and
reasonably  incurred by such person in connection with the defense or settlement
of such action or suit, provided such person acted in good faith and in a manner
he  reasonably  believed  to be in or  not  opposed  to the  corporation's  best
interests except that no  indemnification is permitted without judicial approval
if the  director,  officer,  employee  or agent is  adjudged to be liable to the
corporation.  Where a director,  officer, employee or agent is successful on the
merits or  otherwise  in the  defense  of any  action  referred  to  above,  the
corporation  must  indemnify him against the expenses  which he has actually and
reasonably incurred.

           The  Company's   certificate  of   incorporation   provides  for  the
indemnification  of directors and officers of the Company to the fullest  extent
permitted by Section 145.




                                      II-1


<PAGE>



ITEM 16.   EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.

   (a)       Exhibits:

  4.1  --  Specimen Certificate for Common Stock of Registrant(1)
  4.2  --  Stock Purchase Agreement dated as of November 8, 1996, among the
           Company and the investors specified therein (2)
   
  5.1  --  Opinion of Parker Chapin Flattau & Klimpl, LLP(3)
 23.1  --  Consent of Ernst & Young  LLP(4)
    
 23.2  --  Consent of Parker Chapin Flattau & Klimpl, LLP (included in opinion
           filed as Exhibit 5.1)
- -----------
(1)   Incorporated by reference to  Registration  Statement on Form S-1 declared
      effective on August 6, 1991 (File No. 33-41176).
(2)   Incorporated  by  reference  to  Quarterly  Report on Form  10-Q  filed on
      November  14, 1996,  for the quarter  ended  September  30, 1996 (File No.
      O-19437).
   
(3)   Filed previously.
(4)   Filed herewith..
    

ITEM 17.   UNDERTAKINGS.

           Insofar  as  indemnification   for  liabilities   arising  under  the
Securities  Act of 1933 (the "Act") may be permitted to directors,  officers and
controlling persons of the registrant pursuant to the foregoing  provisions,  or
otherwise, the registrant has been advised that in the opinion of the Securities
and  Exchange  Commission  such  indemnification  is  against  public  policy as
expressed in the Act and is, therefore, unenforceable. In the event that a claim
for  indemnification  against  such  liabilities  (other than the payment by the
registrant of expenses  incurred or paid by a director,  officer or  controlling
person of the  registrant  in the  successful  defense  of any  action,  suit or
proceeding)  is  asserted by such  director,  officer or  controlling  person in
connection with the securities being registered,  the registrant will, unless in
the opinion of its counsel the matter has been settled by controlling precedent,
submit  to a  court  of  appropriate  jurisdiction  the  question  whether  such
indemnification  by it is against public policy as expressed in the Act and will
be governed by the final adjudication of such issue.

           The undersigned registrant hereby undertakes:

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

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

                  (ii)  To reflect in the prospectus any facts or events arising
after the  effective  date of the  Registration  Statement  (or the most  recent
post-effective  amendment  thereof)  which,  individually  or in the  aggregate,
represent a fundamental  change in the information set forth in the Registration
Statement; and

                  (iii) To include any material  information with respect to the
plan of distribution  previously disclosed in the Registration  Statement or any
material change to such information in the Registration Statement;


                                      II-2


<PAGE>



provided,  however, that paragraphs (a)(1)(i) and (a)(1)(ii) do not apply if the
information  required  to be  included in a  post-effective  amendment  by those
paragraphs  is  contained  in periodic  reports  filed with or  furnished to the
Commission by the  Registrant  pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934 that are  incorporated  by  reference  in the  Registration
Statement.

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

           (3)  to  remove  from  the  Registration  Statement  by  means  of  a
post-effective  amendment any of the securities  being  registered  which remain
unsold at the termination of the offering.

           The  undersigned  registrant  hereby  undertakes that for purposes of
determining  any liability  under the Securities Act of 1933, each filing of the
Registrant's  annual  report  pursuant to Section  13(a) or Section 15(d) of the
Securities  Exchange  Act of 1934  that is  incorporated  by  reference  in this
Registration  Statement  shall  be  deemed  to be a new  registration  statement
relating to the securities  offered herein,  and the offering of such securities
at that time shall be deemed to be the initial bona fide offering thereof.



                                      II-3


<PAGE>




                                   SIGNATURES

   
           Pursuant  to the  requirements  of the  Securities  Act of 1933,  the
registrant certifies that it has reasonable grounds to believe that it meets all
of the requirements for filing on Form S-3 and has duly caused this Amendment to
the  Registration  Statement  to be  signed on its  behalf  by the  undersigned,
thereunto duly  authorized,  in the City of New York,  State of New York, on the
8th day of April 1997.
    

                                       CELLULAR TECHNICAL SERVICES COMPANY, INC.

                                       By:   /s/ Stephen Katz
                                       -----------------------------------------
                                       Stephen Katz, Chairman of the Board of 
                                         Directors and Chief Executive Officer

       

   
           Pursuant to the  requirements  of the  Securities  Act of 1933,  this
Amendment to the  Registration  Statement has been signed below by the following
persons in the capacities and on the date indicated.
    


    Signature                            Title                          Date
   
/s/ Stephen Katz             Chairman of the Board of Directors    April 8, 1997
- ------------------------     and Chief Executive Officer
Stephen Katz                                        


/s/ William C. Zollner       Director, President and Chief         April 8, 1997
- ------------------------     Operating Officer 
William C. Zollner           


        *                    Vice President and Chief Financial    April 8, 1997
- ------------------------     Officer (Principal Financial and
Michael E. McConnell         Accounting Officer)Director


         *                   Director                              April 8, 1997
- ------------------------                                   
Jay Goldberg


         *                   Director                              April 8, 1997
- ------------------------                                   
Lawrence Schoenberg
    

                                      II-4

<PAGE>



   
*By:/s/ Stephen Katz
- ------------------------                                   
Stephen Katz
Attorney-in-fact
    






                                      II-5


<PAGE>




                                  EXHIBIT INDEX

   4.1     --    Specimen Certificate for Common Stock of Registrant(1)
   4.2     --    Stock Purchase Agreement dated as of November 8, 1996, among 
                 the Company and the investors specified therein (2)
   5.1     --    Opinion of Parker Chapin Flattau & Klimpl, LLP(3)
  23.1     --    Consent of Ernst & Young  LLP(4)
  23.2     --    Consent of Parker Chapin Flattau & Klimpl, LLP (included in
                 opinion filed as Exhibit 5.1)
- -----------
(1)   Incorporated by reference to  Registration  Statement on Form S-1 declared
      effective on August 6, 1991 (File No. 33-41176).
(2)   Incorporated  by  reference  to  Quarterly  Report on Form  10-Q  filed on
      November  14, 1996,  for the quarter  ended  September  30, 1996 (File No.
      O-19437).
   
(3)   Filed previously.
(4)   Filed herewith.
    









                         Consent of Independent Auditors

   
           We consent to the  reference to our firm under the caption  "Experts"
in  Amendment  No.  1 to the  Registration  Statement  (Form  S-3)  and  related
Prospectus of Cellular Technical Services Company,  Inc. for the registration of
400,000 shares of its common stock and to the incorporation by reference therein
of our report dated March 5, 1997, with respect to the financial  statements and
schedules of Cellular  Technical  Services Company,  Inc. included in its Annual
Report  (Form  10-K)  for the year  ended  December  31,  1996,  filed  with the
Securities and Exchange Commission.
    

                                                   /s/ ERNST & YOUNG LLP

   
Seattle, Washington
April 7, 1997