<PAGE>

                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                                    FORM 10-K

        (Mark One)
            [X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
                 SECURITIES EXCHANGE ACT OF 1934 [NO FEE REQUIRED]
                    For the fiscal year ended July 31, 1996
                                       OR
            [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
                 SECURITIES EXCHANGE ACT OF 1934 [NO FEE REQUIRED]
              For the transition period from _________ to _________
                           Commission File Number 0-23388

                           INTERNATIONAL POST LIMITED
                          (Exact name of registrant as
                            specified in its charter)


              DELAWARE                                     13-3735647
    (State or other jurisdiction of                    (I.R.S. Employer
      incorporation or organization)                  Identification No.)

          545 FIFTH AVENUE                                    10017
         NEW YORK, NEW YORK                                (Zip Code)
       (Address of principal
         executive offices)


        Registrant's telephone number, including area code (212) 986-6300

           SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT:
                                      NONE

           SECURITIES REGISTERED PURSUANT TO SECTION 12(g) OF THE ACT:
                     COMMON STOCK, PAR VALUE $.01 PER SHARE
                                (Title of Class)

         Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the  Securities  Exchange  Act of
1934  during  the  preceding  12 months  (or for such  shorter  period  that the
registrant was required to file such reports),  and (2) has been subject to such
filing requirements for at least the past 90 days.
                           Yes   [X]     No   [ ]

         Indicate by check mark if disclosure of delinquent  filers  pursuant to
Item 405 of Regulation  S-K (229.405) is not contained  herein,  and will not be
contained,  to the  best of  registrant's  knowledge,  in  definitive  proxy  or
information  statements  incorporated by reference in Part III of this Form 10-K
or any amendment to this Form 10-K [X].


         The  aggregate  market value of the common stock held by persons  other
than affiliates of the registrant,  as of September 30, 1996, was  approximately
$12,171,000.

         The number of shares outstanding of each of the registrant's classes of
common stock, as of September 30, 1996, is as follows:

            Class                                       Number of Shares
-------------------------------------------------------------------------
Common Stock, par value $.01 per share                     6,226,958


                      DOCUMENTS INCORPORATED BY REFERENCE

         Portions of the  Registrant's  proxy  statement in connection  with its
1996 annual meeting of shareholders (the "Proxy  Statement") are incorporated by
reference into Part III.

<PAGE>



                                     PART 1

ITEM 1.    BUSINESS.


GENERAL

         International  Post  Limited and its  subsidiaries  (collectively,  the
"Company")  provide a wide range of  post-production  services  primarily to the
television  advertising  industry and distributors of television  programming to
the international  market and, to a lesser extent, to program  originators.  The
Company's services, which are provided by its skilled technicians and artists at
state-of-the-art facilities in the New York metropolitan area and South Florida,
include creative editorial  services,  film-to-tape  transfer,  electronic video
editing,  computer-generated  graphics,  standards  conversion,  duplication and
audio  services,  all in  multiple  standards  and  formats,  as well as network
playback  and  studio  operations.  The  combination  of the  Company's  skilled
personnel and technical resources has enabled the Company to compete effectively
in the rapidly changing video communications industry.

         Producers  of  television   programming   and   commercials   generally
out-source post-production services in order to minimize the high fixed overhead
and substantial  capital  investment  needed to provide quality  services and to
maintain a staff of expert  technicians and artists.  The Company  believes that
the recent  development of cable and independent  television  networks,  and the
deregulation and privatization of overseas  television  markets,  will result in
increased  programming  needs which will present  substantial  opportunities for
growth in the post-production services industry.

BACKGROUND

         The Company was formed in October 1993 to own and operate,  through its
subsidiaries,  the businesses  previously  conducted by Manhattan  Transfer/Edit
Company  ("MTE  Co.") and Audio  Plus Video  International,  Inc.  ("Audio  Plus
Video").  The Company acquired the business of MTE Co. immediately prior to, and
in connection  with, the consummation of its initial public offering in February
1994  pursuant to a  transaction  in which (i) the  general  partners of MTE Co.
received  additional  shares of  common  stock,  $.01 par  value per share  (the
"Common Stock"),  of the Company in exchange for their partnership  interests in
MTE Co. and (ii) the assets  and  liabilities  of MTE Co.  were  contributed  to
Manhattan  Transfer/Edit,   Inc.,  a  newly-formed  subsidiary  of  the  Company
("Manhattan  Transfer").  The Company  used a portion of the  proceeds  from the
offering to acquire,  simultaneously with the consummation of the offering,  all
of the outstanding  capital stock of Audio Plus Video from subsidiaries of Video
Services  Corporation  (Video  Services  Corporation  and its  subsidiaries  are
collectively referred to herein as "VSC").

PRINCIPAL SERVICES

         The  production of every  commercial,  television  program or corporate
communications  video  involves the recording of the image on film or videotape.
This is done on  location  or in a  studio  by a  production  company.  Once the
footage  has been  recorded,  the  post-production  process  begins  in order to
transform  the raw recorded  footage into a final usable  product.  Creative and
technical input, which includes the transfer of film-to-tape,  color correction,
editing,  addition  of  special  effects  utilizing  3D  and  computer-generated
graphics  and audio,  is needed to complete the process and generate a videotape
master for duplication and  distribution  to  broadcasters.  The master tape may
need  additional   post-production   services,   such  as  standards  or  format
conversion, audio layback of a foreign language track, or the enhancement of the
music and effects tracks to facilitate international distribution.

         The Company's services that are provided to the television  advertising
industry and program originators, and the specialized video services that are


<PAGE>

provided to television  program  distributors to the international  market,  are
generally  offered on an hourly or daily rate basis.  Standards  conversion  and
duplication   services  provided  to  television  program  distributors  to  the
international  market are offered at rates that are based on program length. The
Company  maintains an in-house  engineering staff to facilitate the modification
of equipment to meet client requirements.

         The Company  provides  the  following  post-production  services to the
television   advertising   industry  and  to  program   originators,   including
corporations and educational institutions:

         CREATIVE EDITORIAL SERVICES (DESIGN):  The creative editing process, or
first stage of post-production,  for a television  commercial generally involves
the  selection of the best footage  from several  thousand  feet of film and the
combination of that footage  through editing along with special video effects to
create a cohesive message with audience appeal. The creative editor typically is
involved with all facets of the post-production  process and usually selects the
post-production  facilities  in which  the  remaining  and  final  stages of the
television commercial's post-production takes place.

         FILM-TO-VIDEOTAPE  TRANSFER: The Company has film-to-videotape transfer
suites for the  transferring  of images and sound from film to  videotape.  This
process can be used for either  positive or negative,  16 or 35 millimeter  film
and for both composite and multi-track  systems. The Company's skilled colorists
operate  state-of-the-art  electronic  equipment which provides color correction
and  expansion or  repositioning  of film images.  In addition,  the Company can
correct and enhance the color of projects originated on videotape. The videotape
element masters  resulting from the transfer process can be edited to create the
final product which can then be  duplicated  for a variety of markets  including
television  advertising,  corporate video cassettes,  home video cassettes,  pay
cable   television,    television   program   syndication,   airline   in-flight
entertainment,  foreign  distribution and ancillary  application.  Transfers are
made in both  the PAL  (Phase  Alternate  Line)  and NTSC  (National  Television
Systems Committee) standards.

         ELECTRONIC VIDEO EDITING:  The Company operates a combination of analog
and  digital  edit  suites.  The  editing  process  ranges  from simple cuts and
assembly with dissolves, wipes and titles, to complicated layering of images and
special  effects.  Videotape is edited in many tape  formats  (sizes) for use in
commercials, shows, corporate and educational videos and other presentations.

         COMPUTER-GENERATED  GRAPHICS: Company artists create computer-generated
television imagery working with sophisticated computer software for applications
such as main titles for television shows, credits and various electronic special
visual effects including computer animation and electronic  graphics in both two
and three dimensions.

         VIDEOTAPE DUPLICATION: The Company offers video tape duplication in all
professional  broadcast  formats,  including D1, D2, BetaCam SP, 1" and 3/4", to
meet the needs of the commercial  advertising,  corporate video, motion picture,
television production and syndicated television program distribution industries.
The Company also creates  duplication  masters  with closed  captioning  for the
hearing impaired.

         The  Company  provides  the  following   post-production   services  to
international television program originators and distributors:

         STANDARDS CONVERSION:  Throughout the world, video signals are recorded
in four principal standards:  NTSC-used in several countries including the U.S.,
Canada,  Mexico and Japan;  PAL-used in numerous  countries,  including England,
Italy, Australia and China;  PAL-Modified-used  exclusively in Brazil; and SECAM
(Sequential  Color and Memory - used in France,  Russia and the Middle  East.  A
program  recorded in one  standard  cannot be  broadcast  or played back through
equipment  employing another standard unless the program is first "converted" to
the other standard. If for example, RTL, a German television broadcaster, wants

                                       2

<PAGE>

to air "Sesame Street" (a program produced in the United States and,  therefore,
in the NTSC  standard),  the video signal must first be converted to PAL to make
it compatible with the German standard. The Company provides conversion services
to and from all of the standards currently available.

         DUPLICATION:  Duplication services are required to accommodate multiple
broadcast  locations  receiving  the  same  product  in the same  standard,  but
utilizing a variety of videotape  formats.  Using the same analogy as above, the
German broadcaster received a PAL tape for his 1" equipment,  but a Scandinavian
broadcaster needs to receive a PAL tape of that same "Sesame Street" episode for
his D2 equipment.  Accordingly,  the Company would  "duplicate"  the tape to the
different format in the same standard.

         SPECIALIZED VIDEO SERVICES: The Company is meeting an increasing demand
for specialized services using  state-of-the-art,  multi-standard  film-to-tape,
editing and audio suites.  Extensive  audio  capabilities  include  restoration,
layback, ADR (automatic dialogue replacement),  audio-for-video editing, and the
recreation or enhancement of music and sound effects tracks. Additional services
include  scene-by-scene  color correction of film or tape, video restoration and
I3 (International  Image  Interpretation),  an innovative  standards  conversion
technology which achieves extremely high quality for film-originated material.

         ADDITIONAL  SERVICES:  In  addition,  in the  Company's  South  Florida
facilities,  the Company provides studio facilities and technical  personnel for
MTV  Latino  and  network  playback  operations  for  Discovery  Latin  America,
Discovery Spain/Portugal and Discovery Brazil/Argentina.

DEVELOPMENT OF BUSINESS

         In May 1995,  the Company  acquired (the "PE  Acquisition")  all of the
outstanding shares of common stock of The Post Edge, Inc., a Florida corporation
("Post Edge").  In connection with such  acquisition,  the Company also acquired
(i) all of the outstanding  shares of common stock of Interactive  Edge, Inc., a
Florida  corporation,  and (ii)  approximately 67% of the outstanding  shares of
common  stock of Edge  Communications,  Inc.,  a  Florida  corporation  which is
dormant, from certain of the shareholders of Post Edge.

         In  addition,   in  May  1995,   the  Company   acquired   (the  "BP/ET
Acquisition") all of the outstanding shares of common stock of Even Time Ltd., a
New York corporation  ("ET"),  and 85% of the outstanding shares of common stock
of The Big Picture Editorial, Inc., a New York corporation ("BP"). In July 1995,
the Company acquired the remaining 15% of the common stock of BP pursuant to its
rights under a certain  Put/Call  Agreement  entered into in connection with the
BP/ET Acquisition.

         The PE Acquisition and BP/ET Acquisition were each funded by borrowings
by the  Company  from The Bank of New York  ("BNY")  and  Fleet  Bank  ("Fleet")
pursuant  to  a  Credit  Agreement,  dated  as  of  May  4,  1995  (the  "Credit
Agreement"),  by and among the Company, BNY, in its capacity as a Lender, as the
Issuer  and as the Agent (in each case as such  terms are  defined in the Credit
Agreement),  and Fleet as a Lender,  as amended by Amendment No. 1 thereto.  The
aggregate  outstanding  principal  balance of the Term Loans (as  defined in the
Credit Agreement), which as of July 31, 1996 was $18,320,000, is due and payable
in twenty-two consecutive  installments,  payable on the last day of each fiscal
quarter,  with final payment due on January 31, 2001. An additional  $10,000,000
borrowed under the Credit Agreement is attributable to Working Capital Loans (as
defined in the Credit  Agreement) which the Company may from time to time during
the  Working  Capital  Commitment  Period (as  defined in the Credit  Agreement)
prepay and reborrow in accordance  with the provisions of the Credit  Agreement.
The Credit Agreement also included an $18 million  acquisition  facility to fund
future acquisitions that met certain parameters.  Such acquisition  facility was
terminated by the Company in May 1996. At the Company's option, borrowings under
the Credit Agreement bear interest at 1.75% (including 1/4 of 1% as a result of

                                       3

<PAGE>

the Company's  Leverage Ratio (as defined in the Credit Agreement) being greater
than 2.00:1.00 at July 31, 1996) above the Eurodollar Rate or the Prime Interest
Rate plus .375% announced by BNY from time to time.

         In October 1995,  the Company  entered into Amendment No. 2 ("Amendment
No. 2") to the Credit Agreement,  which changed,  among other things,  the Fixed
Charge  Coverage  Ratio (as defined in the Credit  Agreement)  and the  Leverage
Ratio.  In November 1995, the Company entered into Amendment No. 3 to the Credit
Agreement,  pursuant to which the financial covenants were raised above those in
Amendment  No. 2 but  remained  lower than those  prior to  Amendment  No. 2. In
addition,  the calculation of such ratios  commenced on August 1, 1995 which had
the effect of  excluding  the results of the fourth  quarter of fiscal year 1995
from the calculations. In September 1996, the Company entered into Amendment No.
4 to the Credit Agreement, pursuant to which the Fixed Charge Coverage Ratio was
changed from  1.50:1.00 to (a) 1.10:1.00 for the twelve month period ending July
31, 1996, (b) 1.15:1.00 for the twelve month periods ending October 31, 1996 and
January 31, 1997,  (c) 1.25:1.00  for the twelve month periods  ending April 30,
1997 and July 31, 1997,  and (d)  1.50:1.00  for the twelve month period  ending
October 31, 1997 and thereafter.

         In February 1996, the Company entered into an interest rate swap with a
member of its bank  syndicate.  Under the  agreement,  the Company  pays a fixed
LIBOR  (London  Interbank  Offered  Rate) rate of 5.32% to the bank and the bank
pays a  floating  rate equal to 90 day LIBOR to the  Company on the  outstanding
balance of the Term Loans (final maturity  January 31, 2001). The effect of this
interest rate swap was to fix the interest rate on the Term Loans at 6.695%.  In
March 1996,  the Company  sold its fixed rate  position for  $313,000.  The Term
Loans were fixed at 6.695%  through  June 11,  1996,  floated at the BNY's Prime
rate or LIBOR plus  1.375%  through  July 31,  1996 and will float at such Prime
rate plus .375% or LIBOR plus 1.75% thereafter.

         In August 1996, Fleet Bank, N.A. (formerly known as NatWest Bank, N.A.)
and Key Bank of New York ("Key Bank")  entered into an Assignment and Acceptance
Agreement,  pursuant to which Fleet Bank, N.A. assigned to Key Bank a percentage
of its rights and obligations under the Loan Documents (as defined in the Credit
Agreement).

MAJOR CLIENTS AND CUSTOMERS

         The Company's major clients include advertising agencies, film editors,
video  production   companies  and  international   distributors  of  television
programming.  Among  the  advertising  agencies  to which the  Company  provides
services are BBDO New York ("BBDO"),  Saatchi & Saatchi, Wells Rich Greene BDDP,
Grey  Advertising,  Messner Vetere,  Uniworld Group, N.W. Ayer, Ogilvy & Mather,
FCB  Leber  Katz  and  J.  Walter  Thompson.  International  television  program
distributors to which the Company provides services include the major television
networks  (CBS,  NBC and  ABC) and  syndicators  such as Sony  Pictures,  Turner
Entertainment  and  Worldvision.  In  addition,  the  Company  provides  network
playback and studio facilities,  including technical personnel, to the following
networks:   Discovery  Latin  America,   Discovery   Spain/Portugal,   Discovery
Brazil/Argentina  and MTV Latino. The Company also provides  post-production and
other services to a variety of program  originators  including the NBA, National
Geographic,  Children's  Television  Workshop and Discovery Channel. No customer
accounted for more than 10% of the total  revenues of the Company  during fiscal
year 1996.

         Except as set forth  below,  the Company has no  long-term or exclusive
agreements   with  its  clients;   however,   the  Company  has  had   long-term
relationships  with many of its clients.  Because clients  generally do not make
arrangements  with the Company until  shortly  before its services are required,
the Company usually does not have any significant backlog of service orders.

                                       4

<PAGE>

         The Company has a five year  contract  with  Discovery  Communications,
Inc.,  dated as of January  9,  1993,  pursuant  to which the  Company  provides
services to Discovery Latin America.  The contract was amended on August 4, 1994
to include the provision of services to Discovery  Spain/Portugal.  In addition,
in September  1995,  the Company  amended its contract  with MTV Latin  America,
Inc., dated as of June 7, 1993,  pursuant to which the Company provides services
to MTV Latino, extending the term thereof to September 15, 2000.

MARKETING AND SALES STRATEGY

         A full time sales force,  together with the  Company's top  management,
actively market the Company's  services  through  industry  contacts and through
advertising  in the major industry  trade  magazines such as Shoot,  Ad Week and
Post.  The focus of this  advertising  is to  promote  the  Company's  image for
quality   services,   its  technical   capabilities  and  its   state-of-the-art
facilities.

         The  Company's  marketing  strategy,  with  respect to the  services it
provides for television program distributors to the international  market, is to
focus on the needs of the end-users as well as on the needs of the clients.  The
Company   actively   develops   relationships   with  overseas   facilities  and
broadcasters  through  visits  and  multi-lingual  communication,  to learn  and
respond  to  their  individual  technical  and  operational  requirements.  This
strategy  has  resulted  in  end-users   requesting  that  their   international
television  program   distributors   utilize  the  Company's  services  and  has
alleviated many problems between the distributors  and the  broadcasters.  Sales
and  marketing  efforts  emphasize  the needs of the  client  and the  end-user,
technical proficiency, and the Company's global perspective.

COMPETITION

         The   video   services   industry   is  highly   competitive.   Certain
post-production  service businesses (both independent companies and divisions of
diversified  companies)  provide  most  of the  same  services  provided  by the
Company,  while others  specialize in one or several of these services.  Certain
film production companies also provide  post-production  services. The Company's
primary  competitors are located in New York City, the principal  market for the
Company's  services.  Certain  of  these,  as well as other  competitors  of the
Company, have greater financial resources than the Company.

         The  Company's  successful  competitive  record  is based  on  customer
satisfaction with the range,  quality and pricing of its offered  services.  Its
ability to remain  competitive  is also based in part on its capacity to respond
to technological change by purchasing  state-of-the-art  equipment.  The Company
also  competes  on the basis of its  ability  to attract  and retain  qualified,
highly skilled personnel.  The Company believes that prices for its services are
competitive within its industry,  although some competitors may offer certain of
their  services at lower rates than the Company.  The  post-production  services
industry  has been and is likely to  continue  to be  subject  to  technological
change to which the Company must respond in order to remain competitive.

EMPLOYEES

         The Company  and its  subsidiaries  have  approximately  332  full-time
employees. None of the Company's employees is represented by a labor union or is
subject to a collective bargaining agreement.  The Company has never experienced
a work stoppage and believes that its employee relations are satisfactory.


ITEM 2.    PROPERTIES.

         The Company leases seven principal production facilities, three located
in New York City, one in Northvale,  New Jersey and three in South Florida.  The
New  Jersey  facilities  were  consolidated into  a  38,000 square foot facility

                                       5

<PAGE>

including  4,000 square feet for  expansion.  The Company's  three New York City
facilities consist of approximately  68,000 square feet, including the Company's
principal executive offices. The Company plans to move and consolidate two 8,000
square foot  facilities  in New York City to one 18,000  square foot facility in
the second  quarter of fiscal  year 1997.  The three  South  Florida  facilities
consist of approximately 42,000 square feet.

         The Company's  facilities include nine film-to-tape  transfer and color
correction  suites,  sixteen on-line editing suites,  seventeen off-line editing
suites,  sixteen  graphic suites  (several of which can operate as edit suites),
seven  audio  suites,  ten  special  project  booths  and two  production  rooms
dedicated to standards  conversion and duplication  services.  In addition,  the
Company's South Florida facilities  include two network playback  operations and
one studio facility.


ITEM 3.    LEGAL PROCEEDINGS.

         The Company is involved in various  claims and legal  proceedings  of a
nature considered normal to its business. While it is not possible to predict or
determine the outcome of these proceedings, it is the opinion of management that
their outcome will have no material  adverse  effect on the financial  position,
liquidity or results of operations of the Company.


ITEM 4.    SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.

         None.


                                       6

<PAGE>

                                     PART II

ITEM 5.    MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED
           STOCKHOLDER MATTERS.

         The  Company's  Common  Stock is listed on the NASDAQ  National  Market
System  (NASDAQ  symbol:  POST).  The  Company's  Common Stock began  trading on
February 8, 1994 at the effective time of the Company's initial public offering.
Prior to such time, there was no public market for the Company's Common Stock.

         As of  September  30,  1996,  there were  approximately  720 holders of
record of the Company's Common Stock.

         The  following  table  sets  forth  the high and low bid  prices of the
Company's Common Stock for each full quarterly period within the two most recent
fiscal years.


        Fiscal Year 1995                High                  Low
        ----------------                ----                  ---

First Quarter                          9 1/4                 7 3/4
(August 1 to October 31)

Second Quarter                           9                   3 1/2
(November 1 to January 31)

Third Quarter                          7 5/8                 5 1/4
(February 1 to April 30)

Fourth Quarter                         6 1/4                 3 5/8
(May 1 to July 31)

        Fiscal Year 1996                High                  Low
        ----------------                ----                  ---

First Quarter
(August 1 to October 31)                 5                     4

Second Quarter                         4 1/4                 3 1/8
(November 1 to January 31)

Third Quarter                          4 3/64                  3
(February 1 to April 30)

Fourth Quarter                         4 1/8                 3 3/4
(May 1 to July 31)

         No cash  dividends have ever been declared by the Company on the Common
Stock.  The Company  intends to retain  earnings to finance the  development and
growth of its business.  Accordingly,  the Company does not anticipate  that any
dividends  will be  declared  on the Common  Stock for the  foreseeable  future.
Future payment of cash dividends, if any, will depend on the Company's financial
condition,  results of operations,  business conditions,  capital  requirements,
restrictions contained in agreements,  future prospects and other factors deemed
relevant by the Company's Board of Directors.

                                       7

<PAGE>

ITEM 6.    SELECTED CONSOLIDATED FINANCIAL DATA.

         The  following  table  sets  forth  selected  historical   consolidated
financial data for the Company,  MTE Co. and its predecessor (the "Predecessor")
for  the  periods  and at the  dates  indicated.  The  Predecessor  consists  of
substantially all of the operating assets and certain of the liabilities,  prior
to fiscal year 1993,  of MTE  Holdings,  Inc.  ("Holdings"),  formerly  known as
Manhattan  Transfer/Edit,  Inc. The historical  consolidated  financial data for
each of the years in the five-year  period ended July 31, 1996,  and at July 31,
1992,  1993,  1994, 1995 and 1996, is derived from and qualified by reference to
the  historical  consolidated  financial  statements  that have been audited and
reported  upon by Arthur  Andersen  LLP,  independent  public  accountants.  The
information  in the table  should  be read in  conjunction  with the  historical
financial  statements  and the notes  thereto  and other  financial  information
appearing  elsewhere herein. See also  "Management's  Discussion and Analysis of
Financial Condition and Results of Operations."


<TABLE>
<CAPTION>


                                                    PREDECESSOR       MTE Co.                    COMPANY
                                                    -----------     ----------    --------------------------------------
                                                    Year Ended      Year Ended    Year Ended    Year Ended    Year Ended
                                                     July 31,        July 31,      July 31,      July 31,      July 31,
                                                       1992            1993         1994 (1)      1995 (1)      1996 (1)
                                                    ----------      ----------    -----------   ----------    ----------

                                                                   (in thousands, except per share amounts)
<S>                                                   <C>             <C>           <C>           <C>           <C>

  Revenues.....................................       $11,648         $20,871       $27,827       $38,349       $49,352
  Depreciation and amortization................         2,822           3,343         3,905         5,749         8,369
  Income from operations.......................         1,281           2,347 (2)     3,709 (3)     3,475         3,842
  Income before income taxes...................         1,269           1,262         3,243         2,680         1,676
  Net income
    (Pro forma for Predecessor and MTE Co.)....            37             466         3,320 (4)     1,606           814
  Net income per share
    (Pro forma for MTE Co.)(2) ................             -            0.13          0.70          0.26          0.13
  Weighted average number of shares outstanding
    (Pro forma for MTE Co.)(2).................             -           3,471          4,714        6,214         6,220

  Total assets.................................        17,691          23,447         35,893       66,673        67,861
  Long-term debt, net of current portion.......             -           4,500            415       20,257        19,797
  Subordinated debt, net of current portion....             -               -              -        4,927         5,096
  Stockholders' equity.........................       $16,712         $14,177        $27,930      $29,461       $29,835

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

  (1)  See Note  3 of the Notes to Consolidated Financial Statements contained herein.
  (2)  See Note  1 of the Notes to Consolidated Financial Statements contained herein.
  (3)  See Note 11 of the Notes to Consolidated Financial Statements contained herein.
  (4)  See Note  9 of the Notes to Consolidated Financial Statements contained herein.


</TABLE>

                                       8

<PAGE>

ITEM 7.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
         OF OPERATIONS.

         On February 15, 1994 the Company completed its initial public offering.
The net proceeds  were used to acquire  Audio Plus Video and to repay debt.  The
following  discussion of the Results of Operations  for the years ended July 31,
1996, 1995, and 1994 include the operations of Audio Plus Video from the date of
acquisition  and include the  operations  of MTE Co. for the year ended July 31,
1994 as if the reorganization,  in which the business of MTE Co. was contributed
to a  newly-formed  subsidiary of the Company,  had occurred at the beginning of
such period.  For Post Edge, BP and ET the  discussion  includes the  operations
from the dates of acquisition for fiscal year 1995 and a full year of operations
for fiscal year 1996.

RESULTS OF OPERATIONS:

FISCAL YEARS ENDED JULY 31, 1996 AND 1995

         Revenues  increased by  $11,003,000  or 28.7% to  $49,352,000 in fiscal
year 1996  compared to fiscal year 1995.  The growth in revenues  was  primarily
attributable to the  acquisitions  of Post Edge (acquired  5/4/95) and BP and ET
(acquired 5/4/95). Fiscal year 1996 includes a full year of operations for these
companies.  Revenues recorded in fiscal year 1996 were $7,399,000 and $8,906,000
for Post Edge and BP and ET,  respectively,  as  compared to fiscal year 1995 of
$1,385,000 and $1,673,000,  respectively.  These increases were partially offset
by a decrease in revenues at Manhattan  Transfer  and the loss of revenues  from
specialized  services  discontinued  in the first and fourth  quarters of fiscal
year 1995.

         Direct  salaries  and  costs  (consisting  primarily  of  salaries  and
benefits paid to artists,  technicians and engineers,  outside labor,  occupancy
costs, direct costs including tape stock and equipment rental, and client costs)
decreased as a percentage  of revenues to 48.7% in fiscal year 1996  compared to
49.1% in the prior fiscal year. The decrease was primarily attributable to lower
equipment  rentals  and client  related  costs,  offset by  increased  equipment
maintenance  costs.  In the fourth  quarter of fiscal  year  1995,  the  Company
discontinued its test commercial and print design divisions, reorganized certain
portions of the operations of Manhattan Transfer,  and closed Audio Plus Video's
New  York  City  facility.  The  Company  incurred  losses  from  operations  of
approximately  $1,100,000 in connection with the items described in the previous
sentence.

         Selling,  general and administrative expenses decreased as a percentage
of revenues in fiscal  year 1996 to 26.0% from 26.8% in the prior  fiscal  year.
The decrease  was  primarily  attributable  to lower sales  commissions  accrued
during fiscal year 1996. In addition, the costs of the reorganization  described
above that  related to selling and general and  administrative  expenses did not
reoccur in fiscal year 1996.

         Depreciation expense was $7,229,000 and $5,168,000 in fiscal years 1996
and 1995,  respectively.  The increase was primarily the result of Post Edge, BP
and ET included for the full fiscal year.


         Amortization of intangibles was $1,140,000 and $581,000 in fiscal years
1996 and 1995, respectively. The increase was primarily the result of Post Edge,
BP and ET included for the full fiscal year.

         As part of the  consolidation  of two facilities to one facility,  both
located  in New York  City,  the  Company  recorded  a  non-cash  lease  related
obligation in the fourth quarter of fiscal 1996 of $255,000. This represents net
future lease  payments the Company will be obligated to make for leases from the
expected  vacancy date (second quarter of fiscal 1997) through their  respective
termination dates.

         Interest  expense was  $2,262,000 and $810,000 in fiscal years 1996 and
1995, respectively. The increase in interest expense was due to the debt used to
acquire Post Edge,  BP and ET being  outstanding  for the fiscal year ended July
31, 1996.

                                       9

<PAGE>

         The income tax rate applied  against  pre-tax income was 51% and 40% in
fiscal years 1996 and 1995,  respectively.  The applicable tax rates include 13%
and  7% in  fiscal  years  1996  and  1995,  respectively,  as a  result  of the
non-deductibility  of the intangibles  recorded on the Company's balance sheets.
Lower pre-tax  income in fiscal year 1996 compared to fiscal year 1995 on higher
amortization of intangibles is the reason for the increase in the impact of this
non-deductible  item.  The  impact  of state  and local  taxes  (net of  federal
benefit)  increased  in fiscal  year  1996  compared  to  fiscal  year 1995 as a
percentage  of pre-tax  income.  The primary  reason for the increase was higher
state taxable income for certain Company subsidiaries.

         Net income  decreased  to  $814,000  in fiscal  year 1996  compared  to
$1,606,000 in fiscal year 1995. This decrease is a result of the items discussed
above.

FISCAL YEARS ENDED JULY 31, 1995 AND 1994

         Revenues  increased by  $10,522,000  or 37.8% to  $38,349,000 in fiscal
year 1995  compared to fiscal year 1994.  The growth in revenues  was  primarily
attributable to the  acquisitions of Audio Plus Video (acquired  2/15/94),  Post
Edge (acquired 5/4/95),  and BP and ET (acquired 5/4/95) partially offset by the
decrease in revenues from  specialized  services  discontinued  in the first and
fourth quarter of fiscal year 1995.

         Direct  salaries  and  costs  (consisting  primarily  of  salaries  and
benefits paid to artists,  technicians and engineers,  outside labor,  occupancy
costs, direct costs including tape stock and equipment rental, and client costs)
increased as a percentage  of revenues to 49.1% in fiscal year 1995  compared to
46.5% in the prior fiscal year. In the fourth  quarter of fiscal year 1995,  the
Company discontinued its test commercial and print design divisions, reorganized
certain portions of the operations of Manhattan Transfer,  and closed Audio Plus
Video's New York City facility.  The Company  incurred losses from operations of
approximately  $1,100,000 in connection with the items described in the previous
sentence.  In addition,  equipment rentals related to satisfying  customer needs
and  equipment  maintenance  were the primary  reasons for the  increase in this
category as a percentage of revenues.

         Selling,  general and administrative expenses increased as a percentage
of revenues in fiscal  year 1995 to 26.8% from 21.8% in the prior  fiscal  year.
The costs of the  reorganization  described  above that  related to selling  and
general and  administrative  expenses  and the costs  relating to operating as a
public company including  investor  relations  expenses,  professional fees, and
directors  and  officers'  insurance  costs  were the  primary  reasons  for the
increase in this category as a percentage of revenues.

         Depreciation expense was $5,168,000 and $3,534,000 in fiscal years 1995
and  1994,   respectively.   The  increase  was  primarily  the  result  of  the
acquisitions of Audio Plus Video, Post Edge, BP and ET.

         Amortization  of intangibles  was $581,000 and $371,000 in fiscal years
1995  and  1994,   respectively.   The  amortization  expenses  related  to  the
acquisitions  of Post Edge,  BP and ET are the reason for the  increase  in this
category.

         Non-cash stock option related compensation of $1,202,000 in fiscal year
1994 is attributable to stock options granted by two stockholders of the Company
to the President and Chief Executive Officer of the Company. The options entitle
the holder to purchase from such stockholders  208,250 shares of Common Stock at
amounts which range  between $1.80 and $7.78 per share.  Such amounts were below
the initial public offering price of $11.00 per share at the time of grant.

         Interest  expense was  $810,000  and  $506,000 in fiscal years 1995 and
1994,  respectively.  The increase in debt used to acquire Post Edge,  BP and ET
more than offset the pay down in debt,  which  occurred after the initial public
offering in February 1994.

                                       10

<PAGE>

         The Company became a taxable  corporation on February 15, 1994.  Income
taxes have been  presented in the  financial  statements as if the Company was a
corporate  entity in each  fiscal  year.  The  income tax rate  applied  against
pre-tax income was 40% and 45% in fiscal years 1995 and 1994, respectively.  The
applicable  tax  rates  include  7%  and  4% in  fiscal  years  1995  and  1994,
respectively,  as a result of the  non-deductibility of the intangibles recorded
on the  Company's  balance  sheets.  Lower  pre-tax  income in fiscal  year 1995
compared to fiscal year 1994 on higher amortization of intangibles is the reason
for the increase in the impact of this non-deductible  item. The impact of state
and local taxes (net of federal  benefit)  declined in fiscal year 1995 compared
to fiscal year 1994 as a percentage of pre-tax income.  Lower state tax rates in
the states where certain of the Company's  newly-acquired  subsidiaries  operate
were the primary  reason for the decline.  These  subsidiaries  were acquired in
February 1994 and May 1995.

         The impact of change in tax status in fiscal year 1994 is a tax benefit
of $1,550,000 relating to the establishment of $1,550,000 of deferred tax assets
primarily  attributable  to reserves  established by MTE Co. which have not been
deducted  for tax  purposes,  and an  increase  in the tax  basis of the  assets
obtained from MTE Co.

         Net income  decreased  to  $1,606,000  in fiscal year 1995  compared to
$3,320,000 in fiscal year 1994. This decrease is a result of the items discussed
above.


LIQUIDITY AND CAPITAL RESOURCES:

FISCAL YEARS ENDED JULY 31, 1996 AND 1995

         The  Company's   strategy  is  to  continue  to  expand  the  range  of
video-related services which it provides to existing clients and to increase its
customer  base  through  internal  growth  and   acquisition.   The  Company  is
considering  expanding  its  territorial  markets by  acquiring  post-production
businesses in other areas with a high concentration of production  companies and
advertising  agencies,  such as Los  Angeles,  subject to its  ability to obtain
financing.  In fiscal year 1995,  the  Company  acquired  three  post-production
companies.

         In May  1995,  the  Company  acquired  BP and  ET,  two  privately-held
companies  which  provided  a variety  of  creative  editorial  services  to the
television advertising industry. Both companies were based in Manhattan and were
merged with Big  Picture/Even  Time Limited,  a  wholly-owned  subsidiary of the
Company  ("BP/ET"),  in December 1995. The purchase price of the acquisition was
$12,070,000,  including $6,350,000 principal amount of convertible  subordinated
debt of the Company with a 4.0%  interest  coupon  convertible  at $14 per share
after five years and  redeemable  after six years  (valued at  $4,890,000 at the
date of acquisition).  The purchase agreement  provides for contingent  payments
depending upon future  revenues and increases in  profitability  of the acquired
entities.  During fiscal year 1996,  the Company was required to pay $342,000 in
such contingent payments,  which was added to the excess of cost over fair value
of net assets acquired.

         Further,  in May 1995, the Company acquired Post Edge, a privately-held
company which provides  post-production  services to the television  advertising
industry  and  corporate  clients  as  well as  network  playback  services  for
Discovery Latin America and  Spain/Portugal  and studio services and a stage for
MTV Latino.  Post Edge has  facilities  in  Hollywood  and Miami,  Florida.  The
purchase price of the acquisition was $8,000,000 in cash.

                                       11

<PAGE>

         On May 4, 1995, and as increased on June 12, 1995, the Company  entered
into a $50,000,000 credit facility with three banks. To finance the cash portion
of the  acquisitions  described above and to refinance the Company's  $5,000,000
outstanding under its line of credit, the Company entered into a $22,000,000 six
year term loan. In addition, the credit facilities (i) include a $10,000,000 six
year  revolving  credit  facility  for  working  capital  and (ii)  included  an
$18,000,000  acquisition  facility to fund future acquisitions that meet certain
parameters which was subsequently terminated by the Company in May 1996. Pricing
is at a spread over the BNY's  Prime rate or a spread  over LIBOR.  Outstandings
currently  bear interest at 6.90625%.  The credit  facilities are secured by all
assets of the Company and contain covenants limiting future debt, dividends, and
capital expenditures.  In addition,  the Company must maintain certain cash flow
and leverage  ratios.  In October 1995, the company entered into Amendment No. 2
to the Credit  Agreement  which changed the Fixed Charge  Coverage Ratio and the
Leverage  Ratio.  In November 1995, the Company  entered into Amendment No. 3 to
the Credit  Agreement,  pursuant to which the  financial  covenants  were raised
above those in Amendment No. 2 but remained  lower than those prior to Amendment
No. 2. In addition,  the calculation of such ratios  commenced on August 1, 1995
which had the effect of  excluding  the results of the fourth  quarter of fiscal
year 1995 from the  calculations.  In September  1996, the Company  entered into
Amendment  No. 4 to the Credit  Agreement,  pursuant  to which the Fixed  Charge
Coverage  Ratio was changed from 1.50:1.00 to (a) 1.10:1.00 for the twelve month
period ending July 31, 1996,  (b) 1.15:1.00 for the twelve month periods  ending
October 31,  1996 and  January 31,  1997,  (c)  1.25:1.00  for the twelve  month
periods  ending  April 30, 1997 and July 31,  1997,  and (d)  1.50:1.00  for the
twelve month period ending October 31, 1997 and thereafter.

         In February 1996, the Company entered into an interest rate swap with a
member of its bank  syndicate.  Under the  agreement,  the Company  pays a fixed
LIBOR  rate of 5.32% to the bank and the bank pays a  floating  rate equal to 90
day LIBOR to the  Company on the  outstanding  balance of the Term Loans  (final
maturity January 31, 2001). The effect of this interest rate swap was to fix the
interest rate on the Term Loans at 6.695%.  In March 1996,  the Company sold its
fixed rate position for $313,000,  which is being amortized over the life of the
Term Loans.  The Term Loans were fixed at 6.695% through June 11, 1996,  floated
at the Agent's  Prime rate or LIBOR plus 1.375%  through  July 31, 1996 and will
float at such Prime plus .375% rate or LIBOR plus 1.75% thereafter.

         In August 1996, Fleet Bank, N.A. (formerly known as NatWest Bank, N.A.)
and Key Bank entered into an Assignment  and Acceptance  Agreement,  pursuant to
which  Fleet Bank,  N.A.  assigned  to Key Bank a  percentage  of its rights and
obligations under the Loan Documents.

         Capital expenditures were $5,573,000 in fiscal year 1996 as compared to
$11,078,000  and  $8,143,000  in fiscal years 1995 and 1994,  respectively.  The
expenditures  in fiscal  year 1996 were used to  complete  Post Edge's new South
Beach and Hollywood  post-production  facilities,  complete the consolidation of
Audio Plus  Video's  facilities,  and make  technological  upgrades  to existing
equipment.   The  expenditures  in  fiscal  year  1995  were  used  to  increase
computer-generated graphics capabilities, upgrade and expand equipment, complete
a 25,000 square foot digital  post-production  facility to consolidate  New York
City  operations  into one facility,  and  consolidate  the Company's New Jersey
facilities  into  one  34,000  square  foot  facility.  Finally,   approximately
$1,500,000   was  spent  in  the  fourth   quarter   to  expand  the   Company's
newly-acquired  facilities.  The  expenditures  in fiscal year 1994 consisted of
commencing  construction of the 25,000 square foot facility  described  above, a
digital edit suite, the acquisition of equipment  required to expand services to
program originators,  and the acquisition of equipment to remain technologically
competitive.

         The  Company   generated  net  cash  from   operations  of  $5,386,000,
$5,079,000  and  $7,935,000  in the fiscal years ended July 31,  1996,  1995 and
1994,  respectively.  This net cash was  used in  investing  activities  for net
capital  expenditures of $5,324,000,  $10,822,000 and $8,143,000 in fiscal years
1996, 1995 and 1994,  respectively.  In fiscal years 1995 and 1994,  $11,661,000
and $17,696,000,  respectively,  of net cash was used in investing activities to


                                       12
<PAGE>

acquire Post Edge,  BP and ET in fiscal year 1995 and Audio Plus Video in fiscal
year 1994.  Net cash used by financing  activities  in fiscal year 1996 includes
$3,494,000  in net proceeds  from the revolving  credit  facility,  subordinated
debt, and related parties, which was used to repay $3,770,000 of long-term debt.
Net  cash  provided  by  financing  activities  in  fiscal  year  1995  includes
$27,565,000 in proceeds from long-term debt, notes payable, and the net proceeds
from the revolving credit  facility,  which was used in part to repay $5,730,000
in notes payable and  $4,402,000 of long-term  debt,  including  amounts paid to
related parties.  Net cash provided by financing  activities in fiscal year 1994
includes  $25,505,000  in proceeds  from the initial  public  offering of Common
Stock  less the  costs  associated  with  such  sale of  $2,089,000  and the net
decrease in borrowing of $5,923,000. These activities resulted in a net decrease
in cash of $264,000 in fiscal  year 1996,  a net  increase in cash of $29,000 in
fiscal year 1995, and a net decrease in cash of $634,000 in fiscal year 1994.

         The Company's capital  structure  remains strong.  Total long-term debt
(excluding  current portion of long-term debt)  including  subordinated  debt at
July  31,  1996  was  $24,893,000.   The  Company's   stockholders'  equity  was
$29,835,000  at July 31,  1996.  Outstandings  under the  Company's  $10,000,000
revolving  credit  facility  were  $5,000,000  at July 31, 1996.  The  Company's
capital  budget  for  fiscal  year  1997  is  $5,269,000.  Capital  projects  of
approximately $340,000, approved in fiscal year 1996, will be incurred in fiscal
year 1997 bringing total capital outlays to  approximately  $5,609,000 in fiscal
year 1997. Management believes that these expenditures can be financed either by
internally generated funds or by the Company's revolving credit facility.

         The Company's  fiscal year 1997 capital  budget of  $5,269,000  and the
$340,000  in  carry-over  projects  approved in fiscal year 1996 will be used to
complete  the  consolidation  of the BP and ET  facilities  into  one  location,
install a new computer system, and keep the Company's operations technologically
advanced.

         The above discussion  contains  forward-looking  statements.  There are
certain  important  factors that could cause results to differ  materially  from
those anticipated by the statements made above.  These factors include,  but are
not limited to: general  performance of the economy,  specifically as it affects
the advertising industry; the international economic and political climate which
could impact the sale of domestic programming  overseas;  significant changes in
video technology in the post-production industry; and the loss of key personnel.


ITEM 8.  FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

         The response to this item appears in Item 14(a) of this Form 10-K.


ITEM 9.  CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
         FINANCIAL DISCLOSURE.

         None.



                                       13
<PAGE>

                                    PART III

ITEMS 10, 11, 12, AND 13

         The information called for by Items 10, 11, 12 and 13 of this Form 10-K
is  incorporated  by reference  to those  portions of the  Company's  1996 Proxy
Statement which contains such information.

                                     PART IV

ITEM 14.  EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K.

(a)        (1) The consolidated financial statements,  related notes thereto and
           reports of independent public accountants required by Item 8 begin at
           page F-1 herein.

     (2)   The financial statement schedule begins at page F-22 herein.

     (3)   Exhibits:


     Exhibit Number        Exhibits

       2.1*                Acquisition   Agreement   dated  as of  December  23,
                           1993  among   the  Company,  VSC  Video  Corporation,
                           Waterfront Communications Corporation, Martin  Audio-
                           Video Corporation, Atlantic Satellite Communications,
                           Inc.,  A.F.  Associates,  Inc.  and   Video  Services
                           Corporation.
       2.2                 Stock Purchase Agreement, dated as of May 4, 1995, by
                           and among the Company, The Post Edge, Inc. and all of
                           the  stockholders of The Post Edge,  Inc.,  including
                           the  exhibits  thereto but  excluding  the  schedules
                           thereto  (incorporated by reference to exhibit number
                           2.1  contained in the  Company's  Report on Form 8-K,
                           dated May 18, 1995).
       2.3                 Stock Purchase Agreement, dated as of April 25, 1995,
                           by and among the Company,  The Big Picture Editorial,
                           Inc., Even Time Ltd., BP Partnership, ET Partnership,
                           BPET   Partnership,    Barbara   D'Ambrogio,    David
                           D'Ambrogio,   Gregory  Letson,   Michael   Schenkein,
                           Leonard Smalheiser,  Jane Stuart and Big Picture/Even
                           Time  Limited,  including  the  exhibits  thereto but
                           excluding  the  schedules  thereto  (incorporated  by
                           reference  to  exhibit  number 2.2  contained  in the
                           Company's Report on Form 8-K, dated May 18, 1995).
       3.1+                Certificate of Incorporation of the Company.
       3.2+                By-Laws of the Company.
       4.1                 Form  of  4%  Convertible  Subordinated  Note of  the
                           Company  (incorporated by reference to the exhibit of
                           the same number  contained in the Company's Report on
                           Form 8-K, dated May 18, 1995).
      10.1*                Form of Employment Agreement between Martin Irwin and
                           the Company.
      10.2*                Form  of  Employment  Agreement  between  Jeffrey  J.
                           Kaplan and the Company.
      10.3*                Form  of Employment Agreement between Adrien Macaluso
                           and the Company.
      10.4*                Form   of   International  Post  Group Inc. Long-term
                           Incentive Plan, together with  form of  International
                           Post Group Inc. Stock Option Agreement.
      10.5*                Form  of  International  Post  Group Inc.  Restricted
                           Share  Plan   for  Directors,  together  with form of
                           Restricted Share Agreement.

                                       14
<PAGE>
     Exhibit Number        Exhibits
   
      10.6*                Form   of   Registration  Rights Agreement  among the
                           Company,  Holdings, VSC, Martin   Irwin,  Jeffrey  J.
                           Kaplan, Adrien Macaluso, Terrence A.Elkes and Kenneth
                           F. Gorman.
      10.7**               Form  of  Lease  Agreements  between Audio Plus Video
                           and L.I.M.A. Partners.
      10.8*                Purchase Agreement, dated September 10, 1993, between
                           A.F. Associates, Inc. and MTE Co.
      10.9+                Lease  Agreements, dated as of June 30, 1993, between
                           MTE Co. and  Nineteen  New York Properties Limited
                           Partnership.
      10.10+               Agreement  of  Lease,  dated  as of  March  7,  1990,
                           between 225 Realty Associates and VSC Post,  together
                           with First Supplemental Agreement.
      10.11+               Contribution  Agreement,  dated as of  July 30, 1992,
                           between Holdings and VSC Post.
      10.12*               Forms of Promissory  Notes made by Manhattan Transfer
                           in favor of Martin Irwin.
      10.13+               Letter  Agreement,  dated  February 22, 1993, between
                           Apollo and Holdings.
      10.14+               Promissory  Note,  dated  January  1,  1993,  made by
                           MTE Co. in favor of Terrence  A. Elkes and Kenneth F.
                           Gorman.
      10.15+               Security Agreement, dated as of January 1, 1993 among
                           MTE Co., Terrence A. Elkes and Kenneth F. Gorman.
      10.16+               Agreement, dated  as of  July 1, 1993, among MTE Co.,
                           Terrence A. Elkes and Kenneth F. Gorman.
      10.17+               Security  Agreement,  dated as of July 1, 1993, among
                           MTE Co.,  Terrence A. Elkes and Kenneth F. Gorman.
      10.18**              Promissory  Note,  dated  July 31,  1992, made by MTE
                           Co.  in   favor  of  P.C.  Leasing,  a   division  of
                           Phoenixcor, Inc.
      10.19*               Form  of Services Agreement between VSC and Manhattan
                           Transfer.
      10.20*               Form of Services Agreement between VSC and Audio Plus
                           Video.
      10.21*               Form   of   Roll-Up  and   Exchange  Agreement  among
                           Holdings, VSC Video,Inc., Video Services Corporation,
                           the Company and Manhattan Transfer.
      10.22**              Form  of  Stock  Option Agreement among VSC, Holdings
                           and Martin Irwin.
      10.23**              Form  of  Stock Option  Agreement between the Company
                           and Jeffrey J. Kaplan.
      10.24**              Form  of  Settlement  Agreement  between  Apollo  and
                           Holdings.
      10.25**              Form  of  Services  and   Option   Agreement  between
                           Holdings and Kenneth F. Gorman.
      10.26**              Form  of  Services  and   Option   Agreement  between
                           Holdings and Terrence A. Elkes.
      10.27**              Form  of  Stock  Option  Agreement  between  VSC  and
                           Kenneth F. Gorman.
      10.28**              Form  of  Stock  Option  Agreement  between  VSC  and
                           Terrence A. Elkes.
      10.29**              Form  of  Stock  Option Agreement between the Company
                           and Kenneth F. Gorman.
      10.30**              Form  of  Stock  Option Agreement between the Company
                           and Terrence A. Elkes.
      10.31**              Consent and Authorization, dated December  23,  1993,
                           by Martin Irwin, Jeffrey J. Kaplan, Adrien  Macaluso,
                           Terrence  A.  Elkes,  Kenneth  F.  Gorman,  VSC,  the
                           Company, Holdings and Apollo.
      10.32++              Employment  Agreement,  dated  as  of April 21, 1994,
                           between the Company and Daniel Rosen.

                                       15
<PAGE>
     Exhibit Number        Exhibits

      10.33++              Stock Option Agreement, dated  as of April 21,  1994,
                           between  the Company and Daniel Rosen.
      10.34                Consulting  Agreement,  dated  as  of  May  4,  1995,
                           between  The Post  Edge,  Inc.  and  Michael  Orsburn
                           (incorporated  by  reference  to exhibit  number 10.1
                           contained in the Company's  Report on Form 8-K, dated
                           May 18, 1995).
      10.35                Employment Agreement,  dated as of May 4, 1995, among
                           Big  Picture/Even  Time  Limited,   the  Company  and
                           Barbara  D'Ambrogio  (incorporated  by  reference  to
                           exhibit number 10.2 contained in the Company's Report
                           on Form 8-K, dated May 18, 1995).
      10.36                Employment Agreement,  dated as of May 4, 1995, among
                           Big Picture/Even Time Limited,  the Company and David
                           D'Ambrogio  (incorporated  by  reference  to  exhibit
                           number 10.3 contained in the Company's Report on Form
                           8-K, dated May 18, 1995).
      10.37                Employment Agreement,  dated as of May 4, 1995, among
                           Big  Picture/Even  Time  Limited,   the  Company  and
                           Gregory Letson  (incorporated by reference to exhibit
                           number 10.4 contained in the Company's Report on Form
                           8-K, dated May 18, 1995).
      10.38                Employment Agreement,  dated as of May 4, 1995, among
                           Big  Picture/Even  Time  Limited,   the  Company  and
                           Michael  Schenkein   (incorporated  by  reference  to
                           exhibit number 10.5 contained in the Company's Report
                           on Form 8-K, dated May 18, 1995).
      10.39                Employment Agreement,  dated as of May 4, 1995, among
                           Big  Picture/Even  Time  Limited,   the  Company  and
                           Leonard  Smalheiser  (incorporated  by  reference  to
                           exhibit number 10.6 contained in the Company's Report
                           on Form 8-K, dated May 18, 1995).
      10.40                Employment Agreement,  dated as of May 4, 1995, among
                           Big Picture/Even  Time Limited,  the Company and Jane
                           Stuart  (incorporated  by reference to exhibit number
                           10.7  contained in the Company's  Report on Form 8-K,
                           dated May 18, 1995).
      10.41                Put/Call Agreement,  dated as of May 4, 1995, between
                           Gregory  Letson  and  the  Company  (incorporated  by
                           reference  to exhibit  number 10.8  contained  in the
                           Company's Report on Form 8-K, dated May 18, 1995).
      10.42                Pledge  Agreement,  dated as of May 4, 1995,  made by
                           and among BP  Partnership,  ET  Partnership,  Barbara
                           D'Ambrogio,  David  D'Ambrogio,   Michael  Schenkein,
                           Leonard  Smalheiser,  Jane  Stuart  and  the  Company
                           (incorporated  by  reference  to exhibit  number 10.9
                           contained in the Company's  Report on Form 8-K, dated
                           May 18, 1995).
      10.43                Pledge  Agreement,  dated as of May 4, 1995,  made by
                           and   between   Gregory   Letson   and  the   Company
                           (incorporated  by reference  to exhibit  number 10.10
                           contained in the Company's  Report on Form 8-K, dated
                           May 18, 1995).
      10.44                Escrow  Agreement,  dated as of May 4,  1995,  by and
                           among  ET  Partnership,   David  D'Ambrogio,  Barbara
                           D'Ambrogio,  the  Company and Cowan,  Gold,  DeBaets,
                           Abrahams & Sheppard, as Escrow Agent (incorporated by
                           reference to exhibit  number  10.11  contained in the
                           Company's Report on Form 8-K, dated May 18, 1995).
      10.45                Escrow  Agreement,  dated as of May 4,  1995,  by and
                           among  BP  Partnership,  Michael  Schenkein,  Leonard
                           Smalheiser,  Jane Stuart, Gregory Letson, the Company
                           and Cowan,  Gold,  DeBaets,  Abrahams & Sheppard,  as
                           Escrow  Agent  (incorporated  by reference to exhibit
                           number  10.12  contained in the  Company's  Report on
                           Form 8-K, dated May 18, 1995).
      10.46                Credit  Agreement,  dated as of May 4,  1995,  by and
                           among  the  Company,  The  Bank of New  York,  in its
                           capacity as a Lender, as the Issuer and as the Agent,
                           and  Fleet  Bank,  as  a  Lender   (incorporated   by
                           reference to exhibit  number  10.13  contained in the
                           Company's Report on Form 8-K, dated May 18, 1995).

                                       16
<PAGE>
     Exhibit Number        Exhibits

      10.47                Security  Agreement,  dated as of May 4, 1995, by and
                           between  the  Company  and The Bank of New  York,  as
                           Agent  (incorporated  by reference to exhibit  number
                           10.14 contained in the Company's  Report on Form 8-K,
                           dated May 18, 1995).
      10.48                Guaranty,  dated as of May 4, 1995,  by and among the
                           Persons  party  thereto and The Bank of New York,  as
                           Agent  (incorporated  by reference to exhibit  number
                           10.15 contained in the Company's  Report on Form 8-K,
                           dated May 18, 1995).
      10.49***             Amendment No. 1 and Reallocation Agreement,  dated as
                           of June 12, 1995,  by and among The Bank of New York,
                           Fleet Bank, NatWest Bank N.A. and the Company, to the
                           Credit  Agreement,  dated as of May 4,  1995,  by and
                           among  International Post Limited,  the Lenders party
                           thereto,  and The Bank of New York, as the Issuer and
                           as Agent.
      10.50***             Form of Amendment No.2, dated as of October 30, 1995,
                           to the Credit Agreement, dated as of May 4, 1995,  by
                           and  among the  Company,  the Lenders party  thereto,
                           and The Bank of New York, as the Issuer and as Agent.
      10.51***             Agreement, dated as of June 7, 1993, by  and  between
                           MTV Latin America, Inc. and The Post Edge, Inc.
      10.52***             Agreement,  dated  as  of  December  9, 1993,  by and
                           between  Discovery Communications, Inc. and  The Post
                           Edge, Inc., and Amendment No. 1 thereto.
      10.53                Amendment  No. 3, dated  as of  November 30, 1995, to
                           the Credit Agreement, dated as of May 4, 1995, by and
                           among the Company, the Lenders party thereto and  The
                           Bank of New York, as the Issuer and as Agent.
      10.54                Amendment  No. 4, dated as of October 3, 1996, to the
                           Credit  Agreement, dated  as of  May 4, 1995,  by and
                           among the Company, the Lenders party thereto and  The
                           Bank of New York, as the Issuer and as Agent.
      10.55                Amendment No. 1, dated  as  of September 15, 1995, to
                           the  Agreement,  dated  as  of  June 7, 1993, by  and
                           between MTV Latin America,Inc. and The Post Edge,Inc.
      10.56                Assignment  and  Acceptance  Agreement,  dated  as of
                           August 22, 1996, by and between Fleet Bank, N.A.
                           (formerly known as NatWest Bank, N.A.) and  Key  Bank
                           of New York.
      21.1***              Subsidiaries of the Company.
      27****               Financial Data Schedule.
--------------------
*    Incorporated  by reference  to the exhibit of the same number  contained in
     Amendment  No. 4 to the Company's  Registration  Statement on Form S-1 (the
     "Registration   Statement"),   filed  with  the   Securities  and  Exchange
     Commission (the "SEC") on February 4, 1994.

+    Incorporated by reference to the exhibit of the same number contained in
     Amendment No. 1 to the Company's Registration Statement filed with the SEC
     on October 21, 1993.

**   Incorporated by reference to the exhibit of the same number contained in
     Amendment No. 3 to the Company's Registration Statement filed with the SEC
     on January 10, 1994.

++   Incorporated  by reference  to the exhibit of the same number  contained in
     the Company's Form 10-K for the fiscal year ended July 31, 1994.

***  Incorporated  by  reference to  the exhibit of the same number contained in
     the Company's Form 10-K for the fiscal year ended July 31, 1995.

**** Exhibit No. 27 - Financial Data Schedule, which is submitted electronically
     to  the  Securities  and  Exchange  Commission for information only and not
     filed.

(b)        None.

(c)        See Item 14(a)(3) above.

(d)        Financial Statement Schedule.

           Schedule II - Valuation and Qualifying Accounts.


                                       17
<PAGE>



                                   SIGNATURES

     Pursuant  to the  requirements  of  Section  13 or 15(d) of the  Securities
Exchange Act of 1934, the registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized.

Date: 10/15/96                              INTERNATIONAL POST LIMITED


                                            By:    /s/ Martin Irwin
                                                   ------------------------

                                            Name:  Martin Irwin
                                            Title: President and
                                                   Chief Executive Officer

     Pursuant to the  requirements of the Securities  Exchange Act of 1934, this
report has been signed below by the following person on behalf of the registrant
and in the capacities and on the dates indicated.

Name and Signature                    Title                              Date

/s/ Martin Irwin                      President, Chief Executive       10/15/96
------------------------              Officer and Director
Martin Irwin                          (Principal Executive
                                      Officer)

/s/ Jeffrey J. Kaplan                 Executive Vice President,        10/15/96
------------------------              Chief Financial Officer and
Jeffrey J. Kaplan                     Director (Principal
                                      Financial Officer)

/s/ Gary R. Strack                    Vice President, Treasurer        10/15/96
------------------------              and Secretary (Principal
Gary R. Strack                        Accounting Officer)

/s/ Terrence A. Elkes                 Chairman of the Board of         10/15/96
------------------------              Directors
Terrence A. Elkes

/s/ Kenneth F. Gorman                 Director                         10/15/96
------------------------
Kenneth F. Gorman

/s/ Louis H. Siracusano               Director                         10/15/96
------------------------
Louis H. Siracusano

/s/ Robert H. Alter                   Director                         10/15/96
------------------------
Robert H. Alter

/s/ Julius Barnathan                  Director                         10/15/96
------------------------
Julius Barnathan



                                       18
<PAGE>
                                  EXHIBIT INDEX

                                                                    SEQUENTIALLY
                                                                      NUMBERED
EXHIBIT NUMBER             EXHIBITS                                     PAGE
--------------             ------------------------------------------- -------

     2.1*                  Acquisition  Agreement dated as of December
                           23,  1993  among  the  Company,  VSC  Video
                           Corporation,    Waterfront   Communications
                           Corporation,       Martin       Audio-Video
                           Corporation,       Atlantic       Satellite
                           Communications, Inc., A.F. Associates, Inc.
                           and Video Services Corporation.
     2.2                   Stock Purchase  Agreement,  dated as of May
                           4, 1995, by and among the Company, The Post
                           Edge,  Inc. and all of the  stockholders of
                           The Post Edge, Inc., including the exhibits
                           thereto but excluding the schedules thereto
                           (incorporated   by   reference  to  exhibit
                           number  2.1   contained  in  the  Company's
                           Report on Form 8-K, dated May 18, 1995).
     2.3                   Stock Purchase Agreement, dated as of April
                           25, 1995, by and among the Company, The Big
                           Picture Editorial, Inc., Even Time Ltd., BP
                           Partnership,    ET    Partnership,     BPET
                           Partnership,   Barbara  D'Ambrogio,   David
                           D'Ambrogio,    Gregory   Letson,    Michael
                           Schenkein,  Leonard Smalheiser, Jane Stuart
                           and   Big   Picture/Even    Time   Limited,
                           including   the   exhibits    thereto   but
                           excluding     the     schedules     thereto
                           (incorporated   by   reference  to  exhibit
                           number  2.2   contained  in  the  Company's
                           Report on Form 8-K, dated May 18, 1995).
     3.1+                  Certificate   of   Incorporation   of   the
                           Company.
     3.2+                  By-Laws of the Company.
     4.1                   Form of 4% Convertible Subordinated Note of
                           the Company  (incorporated  by reference to
                           the exhibit of the same number contained in
                           the Company's Report on Form 8-K, dated May
                           18, 1995).
     10.1*                 Form of Employment Agreement between Martin
                           Irwin and the Company.
     10.2*                 Form  of   Employment   Agreement   between
                           Jeffrey J. Kaplan and the Company.
     10.3*                 Form of Employment Agreement between Adrien
                           Macaluso and the Company.
     10.4*                 Form  of  International   Post  Group  Inc.
                           Long-term  Incentive  Plan,  together  with
                           form of International Post
                           Group Inc. Stock Option Agreement.
     10.5*                 Form  of  International   Post  Group  Inc.
                           Restricted   Share   Plan  for   Directors,
                           together  with  form  of  Restricted  Share
                           Agreement.
     10.6*                 Form of Registration Rights Agreement among
                           the Company,  Holdings,  VSC, Martin Irwin,
                           Jeffrey   J.   Kaplan,   Adrien   Macaluso,
                           Terrence A. Elkes and Kenneth F. Gorman.
     10.7**                Form of Lease Agreements between Audio Plus
                           Video and L.I.M.A. Partners.
     10.8*                 Purchase  Agreement,  dated  September  10,
                           1993, between A.F. Associates, Inc. and MTE
                           Co.
     10.9+                 Lease  Agreements,  dated  as of  June  30,
                           1993, between MTE Co. and Nineteen New York
                           Properties Limited Partnership.

                                       19
<PAGE>
                                  EXHIBIT INDEX

                                                                    SEQUENTIALLY
                                                                      NUMBERED
EXHIBIT NUMBER             EXHIBITS                                     PAGE
--------------             ------------------------------------------- -------

     10.10+                Agreement  of  Lease,  dated as of March 7,
                           1990, between 225 Realty Associates and VSC
                           Post,   together  with  First  Supplemental
                           Agreement.
     10.11+                Contribution  Agreement,  dated  as of July
                           30, 1992, between Holdings and VSC Post.
     10.12*                Forms of Promissory Notes made by Manhattan
                           Transfer in favor of Martin Irwin.
     10.13+                Letter Agreement,  dated February 22, 1993,
                           between Apollo and Holdings.
     10.14+                Promissory  Note,  dated  January  1, 1993,
                           made by MTE Co.  in  favor of  Terrence  A.
                           Elkes and Kenneth F. Gorman.
     10.15+                Security Agreement,  dated as of January 1,
                           1993 among MTE Co.,  Terrence  A. Elkes and
                           Kenneth F. Gorman.
     10.16+                Agreement,  dated as of July 1, 1993, among
                           MTE Co.,  Terrence  A. Elkes and Kenneth F.
                           Gorman.
     10.17+                Security  Agreement,  dated  as of  July 1,
                           1993, among MTE Co.,  Terrence A. Elkes and
                           Kenneth F. Gorman.
     10.18**               Promissory  Note, dated July 31, 1992, made
                           by MTE Co.  in  favor  of P.C.  Leasing,  a
                           division of Phoenixcor, Inc.
     10.19*                Form of Services  Agreement between VSC and
                           Manhattan Transfer.
     10.20*                Form of Services  Agreement between VSC and
                           Audio Plus Video.
     10.21*                Form  of  Roll-Up  and  Exchange  Agreement
                           among  Holdings,  VSC  Video,  Inc.,  Video
                           Services   Corporation,   the  Company  and
                           Manhattan Transfer.
     10.22**               Form of Stock Option  Agreement  among VSC,
                           Holdings and Martin Irwin.
     10.23**               Form of Stock Option Agreement  between the
                           Company and Jeffrey J. Kaplan.
     10.24**               Form of Settlement Agreement between Apollo
                           and Holdings.
     10.25**               Form  of  Services  and  Option   Agreement
                           between Holdings and Kenneth F. Gorman.
     10.26**               Form  of  Services  and  Option   Agreement
                           between Holdings and Terrence A. Elkes.
     10.27**               Form of Stock Option Agreement  between VSC
                           and Kenneth F. Gorman.
     10.28**               Form of Stock Option Agreement  between VSC
                           and Terrence A. Elkes.
     10.29**               Form of Stock Option Agreement  between the
                           Company and Kenneth F. Gorman.
     10.30**               Form of Stock Option Agreement  between the
                           Company and Terrence A. Elkes.
     10.31**               Consent and  Authorization,  dated December
                           23,  1993,  by  Martin  Irwin,  Jeffrey  J.
                           Kaplan, Adrien Macaluso, Terrence A. Elkes,
                           Kenneth  F.   Gorman,   VSC,  the  Company,
                           Holdings and Apollo.
     10.32++               Employment Agreement, dated as of April 21,
                           1994, between the Company and Daniel Rosen.
 
                                       20
<PAGE>
                                  EXHIBIT INDEX

                                                                    SEQUENTIALLY
                                                                      NUMBERED
EXHIBIT NUMBER             EXHIBITS                                     PAGE
--------------             ------------------------------------------- -------

     10.33++               Stock Option  Agreement,  dated as of April
                           21,  1994,  between  the Company and Daniel
                           Rosen.
     10.34                 Consulting  Agreement,  dated  as of May 4,
                           1995,  between  The  Post  Edge,  Inc.  and
                           Michael Orsburn  (incorporated by reference
                           to exhibit  number  10.1  contained  in the
                           Company's Report on Form 8-K, dated May 18,
                           1995).
     10.35                 Employment  Agreement,  dated  as of May 4,
                           1995,   between   Big   Picture/Even   Time
                           Limited, the Company and Barbara D'Ambrogio
                           (incorporated   by   reference  to  exhibit
                           number  10.2  contained  in  the  Company's
                           Report on Form 8-K, dated May 18, 1995).
     10.36                 Employment  Agreement,  dated  as of May 4,
                           1995,   between   Big   Picture/Even   Time
                           Limited,  the Company and David  D'Ambrogio
                           (incorporated   by   reference  to  exhibit
                           number  10.3  contained  in  the  Company's
                           Report on Form 8-K, dated May 18, 1995).
     10.37                 Employment  Agreement,  dated  as of May 4,
                           1995,   between   Big   Picture/Even   Time
                           Limited,  the Company  and  Gregory  Letson
                           (incorporated   by   reference  to  exhibit
                           number  10.4  contained  in  the  Company's
                           Report on Form 8-K, dated May 18, 1995).
     10.38                 Employment  Agreement,  dated  as of May 4,
                           1995,   between   Big   Picture/Even   Time
                           Limited,  the Company and Michael Schenkein
                           (incorporated   by   reference  to  exhibit
                           number  10.5  contained  in  the  Company's
                           Report on Form 8-K, dated May 18, 1995).
     10.39                 Employment  Agreement,  dated  as of May 4,
                           1995,   between   Big   Picture/Even   Time
                           Limited, the Company and Leonard Smalheiser
                           (incorporated   by   reference  to  exhibit
                           number  10.6  contained  in  the  Company's
                           Report on Form 8-K, dated May 18, 1995).
     10.40                 Employment  Agreement,  dated  as of May 4,
                           1995,   between   Big   Picture/Even   Time
                           Limited,   the   Company  and  Jane  Stuart
                           (incorporated   by   reference  to  exhibit
                           number  10.7  contained  in  the  Company's
                           Report on Form 8-K, dated May 18, 1995).
     10.41                 Put/Call  Agreement,  dated  as of  May  4,
                           1995,   between   Gregory  Letson  and  the
                           Company   (incorporated   by  reference  to
                           exhibit   number  10.8   contained  in  the
                           Company's Report on Form 8-K, dated May 18,
                           1995).
     10.42                 Pledge Agreement,  dated as of May 4, 1995,
                           made  by BP  Partnership,  ET  Partnership,
                           Barbara   D'Ambrogio,   David   D'Ambrogio,
                           Michael Schenkein, Leonard Smalheiser, Jane
                           Stuart  and the  Company  (incorporated  by
                           reference to exhibit  number 10.9 contained
                           in the Company's  Report on Form 8-K, dated
                           May 18, 1995).
     10.43                 Pledge Agreement,  dated as of May 4, 1995,
                           made by  Gregory  Letson  and  the  Company
                           (incorporated   by   reference  to  exhibit
                           number  10.10  contained  in the  Company's
                           Report on Form 8-K, dated May 18, 1995).
 
                                       21
<PAGE>
                                  EXHIBIT INDEX

                                                                    SEQUENTIALLY
                                                                      NUMBERED
EXHIBIT NUMBER             EXHIBITS                                     PAGE
--------------             ------------------------------------------- -------

     10.44                 Escrow Agreement,  dated as of May 4, 1995,
                           by  and   among   ET   Partnership,   David
                           D'Ambrogio, Barbara D'Ambrogio, the Company
                           and  Cowan,  Gold,   DeBaets,   Abrahams  &
                           Sheppard,  as Escrow Agent (incorporated by
                           reference to exhibit number 10.11 contained
                           in the Company's  Report on Form 8-K, dated
                           May 18, 1995).
     10.45                 Escrow Agreement,  dated as of May 4, 1995,
                           by  and  among  BP   Partnership,   Michael
                           Schenkein, Leonard Smalheiser, Jane Stuart,
                           Gregory  Letson,  the  Company  and  Cowan,
                           Gold,  Debaets,  Abrahams  &  Sheppard,  as
                           Escrow Agent  (incorporated by reference to
                           exhibit  number  10.12   contained  in  the
                           Company's Report on Form 8-K, dated May 18,
                           1995).
     10.46                 Credit Agreement,  dated as of May 4, 1995,
                           by and among the  Company,  The Bank of New
                           York,  in its capacity as a Lender,  as the
                           Issuer and as the Agent, and Fleet Bank, as
                           a  Lender  (incorporated  by  reference  to
                           exhibit  number  10.13   contained  in  the
                           Company's Report on Form 8-K, dated May 18,
                           1995).
     10.47                 Security  Agreement,  dated  as of  May  4,
                           1995,  by and  between  the Company and The
                           Bank of New York, as Agent (incorporated by
                           reference to exhibit number 10.14 contained
                           in the Company's  Report on Form 8-K, dated
                           May 18, 1995).
     10.48                 Guaranty,  dated as of May 4, 1995,  by and
                           among the  Persons  party  thereto  and The
                           Bank of New York, as Agent (incorporated by
                           reference to exhibit number 10.15 contained
                           in the Company's  Report on Form 8-K, dated
                           May 18, 1995).
     10.49***              Amendment No. 1 and Reallocation Agreement,
                           dated as of June 12, 1995, by and among The
                           Bank of New York, Fleet Bank,  NatWest Bank
                           N.A.  and  the   Company,   to  the  Credit
                           Agreement,  dated as of May 4, 1995, by and
                           among   International  Post  Limited,   the
                           Lenders party thereto,  and The Bank of New
                           York, as the Issuer and as Agent.
     10.50***              Form  of  Amendment  No.  2,  dated  as  of
                           October 30, 1995, to the Credit  Agreement,
                           dated  as of May  4,  1995,  by  and  among
                           International  Post  Limited,  the  Lenders
                           party thereto, and The Bank of New York, as
                           the Issuer and as Agent.
     10.51***              Agreement, dated as of June 7, 1993, by and
                           between  MTV Latin  America,  Inc.  and The
                           Post Edge, Inc.
     10.52***              Agreement, dated as of December 9, 1993, by
                           and between Discovery Communications,  Inc.
                           and The Post Edge,  Inc., and Amendment No.
                           1 thereto.
     10.53                 Amendment  No. 3, dated as of November  30,
                           1995, to the Credit Agreement,  dated as of
                           May 4, 1995, by and among the Company,  the
                           Lenders  party  thereto and The Bank of New
                           York, as the Issuer and as Agent.
     10.54                 Amendment  No. 4,  dated as of  October  3,
                           1996, to the Credit Agreement,  dated as of
                           May 4, 1995, by and among the Company,  the
                           Lenders  party  thereto and The Bank of New
                           York, as the Issuer and as Agent.

                                       22

<PAGE> 
                                   EXHIBIT INDEX

                                                                    SEQUENTIALLY
                                                                      NUMBERED
EXHIBIT NUMBER             EXHIBITS                                     PAGE
--------------             ------------------------------------------- -------

     10.55                 Amendment  No. 1, dated as of September 15,
                           1995, to the Agreement, dated as of June 7,
                           1993,  by and  between  MTV Latin  America,
                           Inc. and The Post Edge, Inc.
     10.56                 Assignment and Acceptance Agreement,  dated
                           as of August 22, 1996, by and between Fleet
                           Bank, N.A. (formerly known as NatWest Bank,
                           N.A.) and Key Bank of New York.
     21.1***               Subsidiaries of the Company.
     27****                Financial Data Schedule.

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

*    Incorporated  by reference  to the exhibit of the same number  contained in
     Amendment  No. 4 to the Company's  Registration  Statement on Form S-1 (the
     "Registration   Statement"),   filed  with  the   Securities  and  Exchange
     Commission (the "SEC") on February 4, 1994.

+    Incorporated  by reference  to the exhibit of the same number  contained in
     Amendment No. 1 to the Company's  Registration Statement filed with the SEC
     on October 21, 1993.

**   Incorporated  by reference  to the exhibit of the same number  contained in
     Amendment No. 3 to the Company's  Registration Statement filed with the SEC
     on January 10, 1994.

++   Incorporated  by reference  to the exhibit of the same number  contained in
     the Company's Form 10-K for the fiscal year ended July 31, 1994.

***  Incorporated by reference to the exhibit of  the same  number  contained in
     the Company's Form 10-K for the fiscal year ended July 31, 1995.

**** Exhibit No. 27 - Financial Data Schedule, which is submitted electronically
     to  the  Securities  and  Exchange  Commission for information only and not
     filed.


                                       23
<PAGE>


                   INTERNATIONAL POST LIMITED AND SUBSIDIARIES

             INDEX TO CONSOLIDATED FINANCIAL STATEMENTS AND SCHEDULE


                                                                Page Number
                                                                -----------
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS                            F-2

FINANCIAL STATEMENTS:

 Consolidated Balance Sheets as of
  July 31, 1995 and 1996.                                           F-3

 Consolidated Statements of Income for the
  years ended July 31, 1994, 1995 and 1996.                         F-4

 Consolidated Statements of Partners' Capital and
  Stockholders' Equity for the years ended
  July 31, 1994, 1995 and 1996.                                     F-5

 Consolidated Statements of Cash Flows for the
  years ended July 31, 1994, 1995 and 1996.                         F-6


 Notes to Consolidated Financial Statements.                    F-7 to F-21




SUPPLEMENTAL SCHEDULE:

 II. Valuation and Qualifying Accounts                              F-22





NOTE:

        Schedules  other  than  those  referred  to above  have been  omitted as
        inapplicable  or  not  required  under  the  instructions  contained  in
        Regulation S-X or the information is included elsewhere in the financial
        statements or the notes thereto.

                                      F-1

<PAGE>

                    REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS



To the Board of Directors and Stockholders
        of International Post Limited:

         We  have  audited  the  accompanying  consolidated  balance  sheets  of
International Post Limited (a Delaware  corporation) and subsidiaries as of July
31, 1995 and 1996, and the related consolidated statements of income,  partners'
capital and  stockholders'  equity and cash flows for each of the three years in
the period ended July 31, 1996.  These  consolidated  financial  statements  and
schedule referred to below are the  responsibility of the Company's  management.
Our  responsibility  is to express an  opinion on these  consolidated  financial
statements and schedule based on our audits.

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

         In our opinion,  the  financial  statements  referred to above  present
fairly, in all material  respects,  the financial position of International Post
Limited and  subsidiaries  as of July 31, 1995 and 1996 and the results of their
operations  and their cash flows for each of the three years in the period ended
July 31, 1996 in conformity with generally accepted accounting principles.

         Our audits were made for the purpose of forming an opinion on the basic
financial  statements  taken as a whole.  The  schedule  listed  in the Index to
Consolidated  Financial  Statements  and Schedule is  presented  for purposes of
complying with the Securities and Exchange Commission's rules and is not part of
the basic financial statements. This schedule has been subjected to the auditing
procedures  applied in the audits of the basic financial  statements and, in our
opinion,  fairly states in all material  respects the financial data required to
be set forth therein in relation to the basic  financial  statements  taken as a
whole.



/s/ ARTHUR ANDERSEN LLP

ARTHUR ANDERSEN LLP

New York, New York
September 25, 1996



                                      F-2
<PAGE>

                   INTERNATIONAL POST LIMITED AND SUBSIDIARIES

                           CONSOLIDATED BALANCE SHEETS

                     As of July 31, 1995 and July, 31, 1996

                                 (in thousands)

<TABLE>
<CAPTION>

                                                          1995           1996
                                                        --------      ---------
<S>                                                     <C>           <C>

ASSETS

Current assets:
     Cash and cash equivalents .....................    $   368       $   104
     Accounts receivable, net ......................      8,921        10,308
     Deferred income taxes .........................        823           597
     Prepaid expenses and other current assets .....        738         1,654
                                                        -------       -------
          Total current assets .....................     10,850        12,663

     Fixed assets, net .............................     31,007        29,533
     Excess of cost over fair value of
     net assets acquired, net ......................     22,937        22,397
     Deferred income taxes .........................        476         1,770
     Other assets ..................................      1,403         1,498
                                                        -------       -------
          Total assets .............................    $66,673       $67,861
                                                        =======       =======


LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities:
     Accounts payable and accrued expenses .........    $ 6,331       $ 5,070
     Due to related parties ........................        383           408
     Current portion of long-term debt .............      3,866         3,856
     Income taxes payable ..........................        821         2,283
                                                        -------       -------
          Total current liabilities ................     11,401        11,617

     Long-term debt ................................     20,257        19,797
     Subordinated debt .............................      4,927         5,096
     Other liabilities .............................        627         1,516
                                                        -------       -------
          Total liabilities ........................     37,212        38,026
                                                        -------       -------
Commitments and contingencies

Stockholders' equity:
     Preferred stock: $.01 par value - 3,000
       shares authorized;  no shares outstanding
       at July 31, 1995 and July 31, 1996 ..........          -             -
     Common stock:  $.01 par value - 15,000 shares
       authorized; 6,214 and 6,227 shares
       issued and outstanding at July 31, 1995 and
       July 31, 1996, respectively .................         62            62
     Additional paid-in-capital ....................     25,419        24,979
     Retained earnings .............................      3,980         4,794
                                                        -------       -------
          Total stockholders' equity ...............     29,461        29,835
                                                        -------       -------
          Total liabilities and stockholders' equity    $66,673       $67,861
                                                        =======       =======

</TABLE>

                 See notes to consolidated financial statements.

                                       F-3
<PAGE>

                   INTERNATIONAL POST LIMITED AND SUBSIDIARIES

                        CONSOLIDATED STATEMENTS OF INCOME

                For the Years Ended July 31, 1994, 1995 and 1996

                    (in thousands, except per share amounts)

<TABLE>
<CAPTION>


                                                            1994          1995         1996
                                                          ----------------------------------
<S>                                                       <C>           <C>          <C>

Revenues ............................................     $27,827       $38,349      $49,352

Direct salaries and costs ...........................      12,953        18,840       24,049

Selling, general and administrative expenses ........       6,058        10,285       12,837

Depreciation ........................................       3,534         5,168        7,229

Amortization ........................................         371           581        1,140

Non-cash stock option related compensation ..........       1,202           --           --

Non-cash lease related obligation ...................         --            --           255
                                                          --------      --------     --------

     Income from operations .........................       3,709         3,475        3,842

Other expense (income):

     Interest expense ...............................         506           810        2,262

     Interest income and other ......................         (40)          (15)         (96)
                                                          --------      --------     --------
          Income before taxes .......................       3,243         2,680        1,676

Provision for income taxes:

          Income taxes ..............................       1,473         1,074          862

          Impact of change in tax status ............      (1,550)          --           --
                                                          --------      --------     --------
Net income ..........................................     $ 3,320       $ 1,606      $   814
                                                          ========      ========     ========

Net income per share ................................     $  0.70       $  0.26      $  0.13
                                                          ========      ========     ========
Weighted average number of shares outstanding .......       4,714         6,214        6,220
                                                          ========      ========     ========

</TABLE>

                 See notes to consolidated financial statements.

                                       F-4

<PAGE>


                   INTERNATIONAL POST LIMITED AND SUBSIDIARIES

      CONSOLIDATED STATEMENTS OF PARTNERS' CAPITAL AND STOCKHOLDERS' EQUITY

                For the Years Ended July 31, 1994, 1995 and 1996

                                 (in thousands)

<TABLE>
<CAPTION>

                                                         MTE Co.
                                                        (Note 1)       Common     Common     Capital in
                                                        Partners'      Stock      Stock      Excess of     Retained
                                                         Capital       Shares     Amount     Par Value     Earnings
                                                        ---------      ------     ------     ----------    --------

<S>                                                     <C>            <C>        <C>        <C>            <C>
Balance, August 1, 1993 ...........................     $ 14,177         --       $  --      $    --        $  --
     Initial capitalization .......................          --            1         --            1           --
     Net income for the period ended
       February 8, 1994  (1) ......................        1,892         --          --           --           --
     Contribution of MTE Co. into IPL at
       February 8, 1994 ...........................      (16,069)      3,470         35        16,034          --
     Initial public offering of Common
       Stock at February 8, 1994 ..................          --        2,300         23        22,562          --
     Issuance of Common Stock in
       conjunction with the acquisition
       of Audio Plus Video at
       February 15, 1994 ..........................          --          250          2         2,748          --
     Preferential dividend paid in
       conjunction with the acquisition
       of Audio Plus Video at
       February 15, 1994 ..........................          --          --          --       (17,825)         --
     Secondary offering of Common Stock at
       March 15, 1994 .............................          --          193          2         1,974          --
     Net income for the period February 9,
       1994 through July 31, 1994 .................          --          --          --           --         2,374
                                                        ---------      -----      -----      ---------      ------
Balance July 31, 1994 .............................          --        6,214         62        25,494        2,374
     Stock and stock option related
       compensation ...............................          --          --          --           (75)         --
     Net Income for the year ended
       July 31, 1995 ..............................          --          --          --           --         1,606
                                                        ---------      -----      -----      ---------      ------
Balance July 31, 1995 .............................          --        6,214         62        25,419        3,980
     Stock and stock option related
       compensation ...............................          --           13         --          (440)         --
     Net Income for the year ended
       July 31, 1996 ..............................          --          --          --           --           814
                                                        ---------      -----      -----      ---------      ------
Balance July 31, 1996 .............................     $    --        6,227      $  62      $ 24,979       $4,794
                                                        =========      =====      =====      =========      ======

(1)  Does not reflect pro forma tax provision of $946.

</TABLE>

                 See notes to consolidated financial statements.

                                       F-5

<PAGE>

                   INTERNATIONAL POST LIMITED AND SUBSIDIARIES

                      CONSOLIDATED STATEMENTS OF CASH FLOWS

                For the Years Ended July 31, 1994, 1995 and 1996

                                 (in thousands)

<TABLE>
<CAPTION>

                                                               1994        1995        1996
                                                            ----------------------------------
<S>                                                          <C>         <C>         <C>
Cash Flows From Operating Activities:
  Net income .............................................   $ 3,320     $ 1,606     $   814
   Adjustments to reconcile net income to net cash
    provided by operating activities:
      Pro forma provision for income taxes in 1994 .......       946         --          --
      Depreciation .......................................     3,534       5,168       7,229
      Amortization .......................................       371         581       1,140
      Provision for bad debts ............................         8         185         232
      (Gain) loss on disposal of fixed assets ............        (2)         55        (136)
      Provision for stock options ........................     1,202         --          --
      Deferred taxes .....................................       (22)         37      (1,508)
      Impact of change in tax status .....................    (1,550)        --          --
   (Increase) decrease in operating assets:
      Accounts receivable ................................    (1,319)       (577)     (1,915)
      Prepaid expenses and other current assets ..........      (348)        278        (916)
      Other assets .......................................       258        (749)       (644)
   Increase (decrease) in operating liabilities:
      Accounts payable and accrued liabilities ...........     1,418        (827)     (1,261)
      Income taxes payable ...............................       468        (484)      1,462
      Other liabilities ..................................      (349)       (194)        889
                                                             --------    --------    --------
          Net cash provided by operating activities ......     7,935       5,079       5,386
                                                             --------    --------    --------
Cash Flows From Investing Activities:
      Additions to fixed assets ..........................    (8,143)    (11,078)     (5,573)
      Proceeds from sale of fixed assets .................       --          256         249
      Deposits on fixed assets ...........................      (223)        --          (50)
      Purchase of companies, net of cash acquired ........   (17,696)    (11,661)        --
                                                             --------    --------    --------
          Net cash (used in) investing activities ........   (26,062)    (22,483)     (5,374)
                                                             --------    --------    --------
Cash Flows From Financing Activities:
      Proceeds from notes payable ........................     1,500       3,500         --
      Repayment of notes payable .........................       --       (5,730)        --
      Proceeds from revolving credit facility, net .......       --        1,700       3,300
      Proceeds from subordinated debt ....................       --          --          169
      Proceeds from long-term debt borrowing .............       193      22,337         --
      Proceeds from related parties ......................        42          28          25
      Repayment of related parties .......................      (854)       (267)        --
      Repayment of long-term debt ........................    (6,804)     (4,135)     (3,770)
      Proceeds from sale of common stock .................    25,505         --          --
      Costs associated with initial public offering ......    (2,089)        --          --
                                                             --------    --------    --------
          Net cash provided by (used in)
              financing activities .......................    17,493      17,433        (276)
                                                             --------    --------    --------
                        Net (decrease) increase in cash ..      (634)         29        (264)

Cash and cash equivalents, beginning of period ...........       973         339         368
                                                             ========    ========    ========
Cash and cash equivalents, end of period .................   $   339     $   368     $   104
                                                             ========    ========    ========
</TABLE>

                 See notes to consolidated financial statements.

                                       F-6

<PAGE>


                   INTERNATIONAL POST LIMITED AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS



NOTE 1 - ORGANIZATION AND BASIS OF PRESENTATION

         International  Post Limited and  subsidiaries  ("IPL" or the "Company")
was organized by the partners of Manhattan Transfer/Edit Company ("MTE Co.") for
the purpose of  acquiring  the  business of MTE Co. The partners in MTE Co. were
MTE Holdings,  Inc. ("Holdings" or "Predecessor") and Video Services Corporation
("VSC").  This partnership was established for the purpose of enabling  Holdings
to effect  the  acquisition  of  specified  assets and  liabilities  of VSC Post
Production,  Inc. ("VSC Post"), a wholly-owned subsidiary of VSC. IPL was formed
on October 12, 1993 and began operations on February 8, 1994.

         The Company was established with an initial  capitalization  of $1,000,
represented  by 1,000  shares  of  Common  Stock  having a par value of $.01 per
share.  Pursuant to a transaction  which occurred  immediately  prior to, and in
connection  with,  the  consummation  of the offering of shares of the Company's
common stock (the "Offering") on February 8, 1994, the assets and liabilities of
MTE  Co.  were  contributed  to  Manhattan   Transfer/Edit,   Inc.   ("Manhattan
Transfer"),  a  newly-formed  subsidiary  of IPL, and an  incremental  3,469,833
shares  were  issued  to  IPL's  shareholders.  The  Company  accounted  for the
contribution of these assets and liabilities at the historical amounts reflected
in MTE Co.'s financial statements.

         Manhattan  Transfer provides a wide range of  post-production  services
primarily  to  the  television  advertising  industry,   including  film-to-tape
transfers,   electronic   video   editing,   computer-generated   graphics   and
duplication.

         Audio Plus Video International,  Inc. ("APV") provides a broad range of
services to distributors of television  programming to the international  market
and, to a lesser extent, a variety of program  originators,  including standards
conversion,  duplication,  electronic video editing,  film-to-tape transfers and
audio services in multi-standards and formats.

         The Post Edge,  Inc.  ("Post  Edge")  provides post-production services
to the television  advertising industry and corporate clients as well as network
playback and studio services.

         Big Picture/Even Time Limited ("BP/ET")  provides a variety of creative
editorial services to the television advertising industry.

         In connection with the Offering,  the Company  registered  2,961,250 of
its shares. Of the total shares  registered,  the Company sold 2,493,125 shares,
VSC sold 377,125  shares and Holdings sold 91,000 shares.  The Company  received
net proceeds of $25,504,669,  after deducting underwriters' discounts applicable
to the shares sold by the Company and all costs of the Offering.

                                      F-7
<PAGE>

                   INTERNATIONAL POST LIMITED AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

         The Company  recorded a pretax  restructuring  charge of  $1,702,000 in
fiscal year 1993 in connection with the  consolidation  of the VSC Post facility
into MTE Co.'s  facilities.  The balance of the  liability  at July 31, 1995 and
1996 was $534,704 and $491,353, respectively. At July 31, 1996, it was estimated
that the remaining liability,  consisting of lease commitments,  will be settled
in fiscal 1997.  Management  anticipates  that funding for these amounts will be
provided by operations.


NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES


PRINCIPLES OF CONSOLIDATION - The consolidated  financial statements include the
accounts of IPL and its wholly-owned subsidiaries.  All significant intercompany
balances and transactions have been eliminated in consolidation.


REVENUE  RECOGNITION - Revenue from services  (except  editorial) is recorded at
completion  of services  for the  customer.  Revenue for  editorial  services is
recorded as services are provided to  customers  on a percentage  of  completion
method.


INVENTORY  -  Inventory  consists of blank video tape stock and is valued at the
lower of cost or market on a FIFO basis.


FIXED ASSETS - Property and equipment are carried at cost and depreciated by the
straight-line method over their estimated useful lives.  Leasehold  improvements
are amortized  over the shorter of their  estimated  useful lives or the term of
the underlying lease. Estimated useful lives by class of assets are as follows:

                  Machinery and equipment............  3-10 years
                  Furniture and fixtures.............  3-10 years
                  Leasehold improvements.............  3-15 years

         Repairs  and   maintenance   are   charged  to  expense  as   incurred.
Expenditures  that  result in the  enhancement  of the  value of the  facilities
involved are treated as additions  to property and  equipment.  Cost of property
and equipment disposed of and accumulated  depreciation thereon are removed from
the related accounts, and gain or loss, if any, is recognized.


GOODWILL  - The  excess of cost  over net  assets  acquired  is  amortized  on a
straight-line  basis over a 25 year period.  Amortization  expense for the years
ended July 31, 1994, 1995 and 1996 was $355,757, $517,311 and $1,002,892,


                                      F-8
<PAGE>

                   INTERNATIONAL POST LIMITED AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

respectively.  Accumulated amortization at July 31, 1995 and 1996 was $2,177,511
and $3,180,403,  respectively.  The Company  continually  evaluates the carrying
value and the remaining  economic  useful life of all goodwill,  and will adjust
the carrying value and related amortization period if and when appropriate.

CASH  EQUIVALENTS - The Company  classifies as cash  equivalents all short-term,
highly liquid  instruments  having original  maturities of three months or less.
The fair market value of these instruments approximate their carrying value.

FAIR VALUE OF  FINANCIAL  INSTRUMENTS  - The carrying  amounts of the  Company's
accounts receivable,  accounts payable,  accrued liabilities an debt approximate
fair market value based upon the relatively short-term nature of these financial
instruments.

CONCENTRATION OF CREDIT - Financial  instruments which  potentially  subject the
Company to  concentration  of credit risk consist  principally of trade accounts
receivable.  The Company performs  ongoing credit  evaluations of its customers'
financial condition and generally requires no collateral from its customers. The
Company  had  sales to an  individual  customer  aggregating  13%,  8% and 5% of
revenues for the years ended July 31,  1994,  1995 and 1996,  respectively.  The
Company had accounts  receivable  from such  customer  amounting to $307,826 and
$505,708 at July 31, 1995 and 1996, respectively.

USE OF ESTIMATES - The  financial  statements  are prepared in  conformity  with
generally accepted accounting principles and, accordingly,  include amounts that
are based on management's best estimates and judgements.

RECLASSIFICATIONS  - Certain  reclassifications  have  been  made to prior  year
amounts to conform with current year presentation.

NET INCOME PER SHARE - Net income per share has been computed using the weighted
average number of shares outstanding during each period.

INCOME TAXES - The Company accounts for income taxes pursuant to the  provisions
of the Statement of Financial  Accounting Standards ("SFAS") No. 109 "Accounting
for Income Taxes."


                                      F-9
<PAGE>

                   INTERNATIONAL POST LIMITED AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


Supplemental Statement of Cash Flow Information -

                                                  (in thousands)

                                         1994          1995         1996
                                        ------        ------       ------
Amounts paid for:

   Interest........................     $  489        $  731       $1,797
                                        ======        ======       ======
   Income taxes....................     $   -         $1,520       $  904
                                        ======        ======       ======

Non-cash transactions:

Investing-
   Acquisition of Audio
    Plus Video:
     Common stock issued...........     $2,750
                                        ======
Financing-
   Acquisition of Big Picture
    Editorial Inc. and Even
    Time Limited:
     Subordinated debt issued......                   $4,890
                                                      ======


NOTE 3 - ACQUISITIONS

         On February 15, 1994, the Company used a portion of the net proceeds of
the  Offering  to  acquire  all of the  outstanding  stock of APV and all of the
outstanding  stock of VSC Express  Courier,  Inc.  (collectively  referred to as
"Audio Plus Video"),  each formerly  indirectly-owned  subsidiaries  of VSC. The
aggregate  purchase  price for Audio Plus Video was  $20,179,923,  consisting of
$17,429,923  in cash and the issuance of 250,000  common  shares of IPL totaling
$2,750,000,  valued at the initial  public  offering  price.  The balance of the
proceeds  has  been  used to  retire  debt of Audio  Plus  Video  and  Manhattan
Transfer.

         The Company  accounted for the  acquisition  of Audio Plus Video at the
historical  cost of Audio Plus Video's  assets and  liabilities  as reflected in
Audio Plus Video's financial  statements at February 15, 1994. The excess of the
purchase  price  paid over the  historical  cost of the net assets  acquired  is
deemed to be a  preferential  dividend and was  accounted for as a charge to the
Company's stockholders' equity.

         On May 4, 1995,  the  Company  used a portion of its new Term Loan (see
Note 6) to purchase Post Edge, The Big Picture Editorial, Inc. ("BP") and Even

                                      F-10
<PAGE>

                   INTERNATIONAL POST LIMITED AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


Time Ltd.  ("ET").  The assets and  operations of BP and ET were merged into the
Company's wholly-owned subsidiary BP/ET in December 1995.

         The purchase  price for Post Edge was  $8,000,000 in cash. The purchase
price for BP and ET was $12,070,000, including  $6,350,000  principal  amount of
convertible  subordinated  debt  of the  Company  with a  4.0%  interest  coupon
convertible  at $14 per share  after five years and  redeemable  after six years
(valued  at  $4,890,000  at the date of  acquisition).  The  purchase  agreement
provides for contingent payments depending upon future revenues and increases in
profitability  of BP/ET.  These  acquisitions  have been accounted for under the
purchase  method and the excess  purchase price paid over the historical cost of
the net assets  acquired is accounted  for as goodwill.  During fiscal year 1996
the Company was required to pay $342,000 of contingent  purchase price which was
added to the excess of cost over fair value of net assets acquired.

         The  following  presents the  unaudited  combined pro forma  results of
operations for the years ended July 31, 1994 and 1995, as if the  acquisition of
Audio Plus Video,  Post Edge, BP and ET had been  completed by the Company as of
the beginning of the year ended July 31, 1994. The unaudited  combined pro forma
results  of  operations  are  not  necessarily  indicative  of  the  results  of
operations that would have occurred had the companies  actually  combined during
the  periods  presented  or of future  results  of  operations  of the  combined
operations.

                    (in thousands, except per share amounts)

                                                   1994                1995
                                                 -------             -------
Revenues...................................      $47,402             $47,775
Net income.................................      $ 3,848             $   141
Net income per share (a)...................      $   .66             $   .02

         (a) The pro forma weighted average number of shares outstanding for
         1994  (5,792,039)  and 1995  (6,213,958)  gives  effect  to: 1) the
         acquisition of MTE Co. by the Company  (3,470,833),  2) the sale by
         the Company of 1,737,778 shares of its common stock, which provided
         the Company with proceeds of  $17,429,923 in order to acquire Audio
         Plus Video, and 3) the issuance of an additional  250,000 shares of
         the Company's  common stock to VSC as part of the purchase price of
         Audio Plus Video for an aggregate  value of $2,750,000,  as if each
         transaction  had  been  consummated  as of  August  1,  1993.  This
         calculation gives effect as of February 15, 1994 to the sale by the
         Company of 755,347  shares of its common  stock which  provided the
         Company with proceeds to reduce outstanding indebtedness.

         As  part  of the  consolidation  of the  BP  and ET  facilities  to one
facility  in New York  City,  the  Company  recorded a  non-cash  lease  related
obligation in the fourth quarter of fiscal 1996 of $255,000. This represents net
future lease  payments the Company will be obligated to make for leases from the
expected  vacancy date (second quarter of fiscal 1997) through their  respective
termination dates.


                                      F-11
<PAGE>

                  INTERNATIONAL POST LIMITED AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


NOTE 4 - ACCOUNTS RECEIVABLE

                                                  July 31,            July 31,
                                                    1995                1996
                                                 ----------         -----------
Accounts receivable, trade.................      $9,537,200         $11,032,078
  Less: Allowance for doubtful accounts....         615,754             724,565
                                                 ----------         -----------
                                                 $8,921,446         $10,307,513
                                                 ==========         ===========

NOTE 5 - FIXED ASSETS

Fixed assets, at cost, including  capitalized leases (see Note 6), summarized by
major categories consist of the following:

                                                  July 31,          July 31,
                                                    1995              1996
                                                -----------       -----------
Machinery and equipment....................     $33,119,832       $35,092,788
Leasehold improvements.....................      11,129,538        12,147,475
Furniture and fixtures.....................       1,652,018         1,918,573
                                                -----------       -----------
                                                 45,901,388        49,158,836
  Less: Accumulated depreciation...........      14,894,052        19,625,422
                                                -----------       -----------
                                                $31,007,336       $29,533,414
                                                ===========       ===========

NOTE 6 - LONG-TERM DEBT

Senior long-term debt
                                                  July 31,          July 31,
                                                    1995              1996
                                                -----------       -----------
Senior secured term loan...................     $22,000,000       $18,320,000
Senior secured revolving credit loan.......       1,700,000         5,000,000

Collateralized by fixed assets
Notes payable to credit institutions
 bearing interest at 8.0%, originally
 payable through 1996......................          16,989             4,815
Capital lease obligations..................         405,198           328,665
                                                -----------       -----------
                                                 24,122,187        23,653,480
Less: Current maturities...................       3,865,624         3,856,292
                                                -----------       -----------
                                                $20,256,563       $19,797,188
                                                ===========       ===========

SENIOR SECURED LONG-TERM DEBT - During fiscal year 1995, the Company established
a $22,000,000  senior secured term loan (the "Term Loan") and the Revolving Loan
(as   defined   herein),  pursuant  to  a  Credit  Agreement  with  a  syndicate
of  financial   institutions  secured  by  1)  all  assets  of  the  Company and
its existing and  future  direct  and indirect owned  subsidiaries  and   2) the

                                      F-12

<PAGE>

                  INTERNATIONAL POST LIMITED AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


capital stock of all such  subsidiaries.  The Term Loan and the  Revolving  Loan
bear interest at the Bank of New York's Prime rate or LIBOR plus 1.375%  through
July 31,  1996 and will  float at such Prime rate plus .375% or LIBOR plus 1.75%
thereafter,  and contains various covenants limiting future debt,  dividends and
capital expenditures.  In addition,  the Company must maintain certain cash flow
and  leverage  ratios.  In  September  1996,  the  Company  amended  the  Credit
Agreement, pursuant to which certain covenants were changed for fiscal year 1996
and prospective periods.

         In February  1996,  the  Company  entered  into an  interest  rate swap
agreement with a member of the bank syndicate.  Under the agreement, the Company
had  effectively  fixed the LIBOR rate and thereby the interest rate of the Term
Loan until maturity  (January  2001) at 6.695%.  In March 1996, the Company sold
the fixed rate position for $313,000,  which is being amortized over the life of
the Term Loan. The Company's Term Loan rate was fixed at 6.695% through June 11,
1996,  and floated at the BNY's Prime rate or LIBOR plus 1.375% through July 31,
1996.

         In August 1996, Fleet Bank, N.A. (formerly known as NatWest Bank, N.A.)
and Key Bank of New York ("Key Bank")  entered into an Assignment and Acceptance
Agreement, pursuant to which Fleet Bank, N.A.  assigned to Key Bank a percentage
of its rights and obligations under the Loan Documents (as defined in the Credit
Agreement).

LINE OF CREDIT AND  REVOLVING  CREDIT  FACILITY - During  fiscal year 1995,  the
Company repaid its outstanding  $5,000,000 bank line of credit and established a
$10,000,000 senior secured revolving credit facility (the "Revolving Loan") with
a syndicate  of financial  institutions  pursuant to the Credit  Agreement.  The
Company had outstanding direct borrowings of $1,700,000 under the Revolving Loan
at July 31, 1995, and $5,000,000  under the Revolving Loan at July 31, 1996. The
Company is being  charged a commitment  fee equal to 0.375% on the unused amount
of the Revolving Loan. In addition,  the Company also had outstanding letters of
credit in the  amount of  $761,337  and  $1,196,482  at July 31,  1995 and 1996,
respectively.

SUBORDINATED DEBT - The Company, in connection with the acquisition of BP and ET
in May  1995,  issued  $6,350,000  principal  amount of eight  year  convertible
subordinated  notes,  due May 4, 2003, with an interest rate of 4.0% convertible
at $14 per share after five years and redeemable  after six years.  The debt was
valued at  $4,890,000  at the date of  acquisition  using an  effective  rate of
8.34%. The valuation discount is being accreted over the life of the notes.

         Required   payments  of  principal  on  senior  and  subordinated  debt
outstanding at July 31, 1996, are summarized as follows:

        Fiscal Year                                       Amount
        -----------                                    -----------
           1997............................            $ 3,856,000
           1998............................              3,776,000
           1999............................              3,762,000
           2000............................              3,680,000
           2001............................             10,717,000
           Thereafter......................              4,233,000
                                                       -----------
                                                       $30,024,000
                                                       ===========


                                      F-13

<PAGE>

                   INTERNATIONAL POST LIMITED AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


NOTE 7 - RELATED PARTIES

         In connection with the acquisition of specified  assets and liabilities
from VSC Post, MTE Co. agreed to assume  responsibility  for all payments due by
VSC Post under a lease for a facility  which was  utilized  by VSC Post.  Annual
rent under  such  lease was  approximately  $400,000  per year (plus  additional
amounts for real estate taxes and  operating  expenses) and the lease expired in
June 1996.

         From January 1993 to February  1994,  MTE Co. paid VSC $4,000 per month
in return for certain consulting services.  In addition,  beginning August 1993,
the Company paid VSC $3,500 per month with respect to the rental and maintenance
of computer  hardware and software.  These  arrangements  were terminated by the
Company in March 1995.

         In connection  with the acquisition of specified  operating  assets and
liabilities  from VSC Post,  MTE Co.  was  required  to make  payments  on notes
payable  to an  officer  of MTE Co.,  now the  chief  executive  officer  of the
Company.  These notes bore  interest  at rates  ranging  from 8.0% to 9.2%.  The
balance of the notes at July 31,  1995 and 1996 as  reflected  in the  Company's
consolidated balance sheets is $382,724 and $408,000,  respectively. The balance
at July 31, 1996 was subsequently paid in August 1996.

         As part of the  consolidation of its  post-production  facilities,  the
Company  had  entered  into an  agreement  with  A.F.  Associates,  Inc.  ("A.F.
Associates"),  a  subsidiary  of VSC, to purchase  video  equipment  and design,
engineer,  fabricate and install turnkey video systems. Payment in the amount of
$931,000 was made during the year ended July 31, 1995.  During fiscal 1996,  the
Company  purchased  certain  machinery and equipment  from A.F.  Associates  for
$103,000.  The  Company  believes  that  the  terms  of  these  agreements  were
comparable to terms it could have obtained in an arms-length transaction.

         During fiscal 1995, the Company purchased certain computer hardware and
software  from VSC for  $135,000.  The Company  believes  that the terms of this
agreement  were  comparable  to terms it could have  obtained in an  arms-length
transaction.

         During the years  ended July 31, 1995 and 1996,  the  Company  provided
services totaling $165,000 and $184,000 to, and purchased materials and services
totaling  $313,000  and  $241,000  from,  VSC  and  its  affiliated   companies,
respectively.  Revenues included  post-production work and courier services, and
direct costs included duplication services,  repairs and maintenance,  equipment
rentals and tape stock purchases.  In addition,  the Company  purchased  certain
machinery and equipment from VSC and its affiliated companies for $192,000.

         The Company  leased a New York City  facility  from VSC,  under a lease
accounted for as an operating  lease. The lease was terminated on July 31, 1995.
Such rental expense of the Company amounted to $176,004, for the year ended July
31, 1995.

         The  Company  sublets  its New York City  corporate  office  from a VSC
affiliate,  under a lease  accounted  for as an  operating  lease.  Such  rental
expense of the Company  for the years  ended July 31, 1995 and 1996  amounted to
$5,675 and $24,500, respectively. In addition, the Company contracted with the


                                      F-14
<PAGE>

                   INTERNATIONAL POST LIMITED AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


VSC affiliate to perform the leasehold improvements in the amount of $48,000 for
its New York City corporate office.  The Company believes that the terms of this
agreement  were  comparable  to terms it could have  obtained in an  arms-length
transaction.

         The  Company  consolidated  its New  Jersey  operations  into a  single
facility  that it leases  from a  partnership,  whose  partners  own a  majority
interest in VSC, under a lease  accounted for as an operating  lease.  The lease
was renegotiated and extended, with such rental expense of the Company amounting
to $161,000,  $376,000 and $444,000, for the years ended July 31, 1994, 1995 and
1996, respectively.

         At  July  31,  1996,   future  minimum   rental   payments  under  such
non-cancelable leases are as follows (see Note 8):

        Fiscal Year                                      Amount
        -----------                                    ----------
           1997............................            $  414,600
           1998............................               414,600
           1999............................               414,600
           2000............................               407,937
           2001............................               387,948
           Thereafter......................             4,041,125
                                                       ----------
                                                       $6,080,810
                                                       ==========


Note 8 - COMMITMENTS AND CONTINGENCIES

LEASE  COMMITMENTS - The Company leases  property under leases  accounted for as
operating leases.  Certain leases include escalation  clauses. At July 31, 1996,
future  minimum  rental  payments,   including   related  party  leases,   under
non-cancelable leases for buildings and equipment are as follows:

         Fiscal Year                                      Amount
         -----------                                   -----------
           1997............................            $ 3,108,159
           1998............................              3,656,660
           1999............................              3,664,768
           2000............................              3,377,758
           2001............................              3,272,954
           Thereafter......................             22,009,940
                                                       -----------
                                                       $39,090,239
                                                       ===========

         Rental  expense  for the  years  ended  July  31,  1994,  1995 and 1996
amounted to $1,232,881, $2,047,762 and $2,781,750, respectively.


                                      F-15

<PAGE>

                   INTERNATIONAL POST LIMITED AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


EMPLOYMENT  AGREEMENTS  - At July 31,  1996,  the  Company  is  obligated  under
employment  contracts  with certain key employees  providing for base salary and
incentive  bonuses  based upon the results of  operations.  Minimum  amounts due
under these contracts are as follows:

        Fiscal Year                                      Amount
        -----------                                    ----------
           1997............................            $1,245,569
           1998............................               695,833
           1999............................               600,000
           2000............................               450,000
                                                       ----------
                                                       $2,991,402
                                                       ==========

LITIGATION - The Company is involved in various claims and legal  proceedings of
a nature considered normal to its business.  While it is not possible to predict
or determine the outcome of these  proceedings,  it is the opinion of management
that  their  outcome  will have no  material  adverse  effect  on the  financial
position, liquidity or results of operations of the Company.

NOTE 9 - INCOME TAXES

         The Company  accounts for income taxes  pursuant to the  provisions  of
Statement of  Financial  Accounting  Standards  No. 109  "Accounting  for Income
Taxes."  Deferred  income taxes reflect the tax impact of temporary  differences
between  financial  reporting  and income tax  purposes,  measured  by  applying
currently  enacted tax laws.  During fiscal year 1994,  the Company  established
$1,550,000  of  deferred  tax  assets,   primarily   attributable   to  reserves
established by MTE Co. which have not yet been deducted for tax purposes, and an
increase in the tax basis of the assets obtained from MTE Co.

         MTE Co.  was  treated as a  partnership  for  Federal,  state and local
income tax  purposes and the net income of the  partnership  was included in the
Federal,  state and local income tax returns of its  partners.  No provision for
income taxes has been deducted in determining MTE Co.'s net income for the first
six  months of the year  ended  July 31,  1994.  As a result,  the  Company  has
presented a pro forma income tax  provision  as if it were a corporate  taxpayer
for the twelve months of the year ended July 31, 1994.

         The  reconciliation  between the statutory tax rate and those reflected
in the Company's income tax provision is as follows:

                                                1994        1995        1996
                                                ----        ----        ----
Statutory tax rate...........................    34%         34%         34%
Non-deductible intangibles...................     4           7          13
State & local taxes, net of Federal benefit..    10          (1)          -
Other........................................    (3)          -           4
                                                ----        ----        ----
                                                 45%         40%         51%
                                                ====        ====        ====

                                      F-16

<PAGE>

                   INTERNATIONAL POST LIMITED AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


         The provision for income taxes for the Company is as follows:

                                              1994         1995         1996
                                           ----------   ----------   ----------
Current
  Federal...............................   $1,498,918   $  480,063   $1,263,647
  State and local.......................      597,292      159,691      300,362
Deferred
  Federal...............................     (468,496)     605,702     (408,378)
  State and local.......................     (154,092)    (171,782)    (293,781)
                                           ----------   ----------   ----------
                                           $1,473,622   $1,073,674   $  861,850
                                           ==========   ==========   ==========


         The  Company's  1994  provision  for income taxes  includes a pro forma
income tax provision of $946,254 for the first six months of the fiscal year.

         The  impact  of  change in tax  status  in  fiscal  1994 of  $1,550,000
includes  $1,098,000  for  Federal  purposes  and  $452,000  for state and local
purposes.

         The  components  of net  deferred  tax assets  arising  from  temporary
differences as of July 31, 1995 and 1996 were as follows:

                                                  July 31,          July 31,
                                                    1995              1996
                                                ----------        ----------
Restructuring reserves.....................     $  260,000        $  238,000
Stock options and  awards..................        541,000              -
Depreciation...............................       (244,000)          583,000
Allowance for doubtful accounts............        284,000           309,000
State net operating loss...................        337,000           702,000
Interest rate swap.........................           -              124,000
Straight lined rent........................           -              141,000
Other......................................        121,000           270,000
                                                ----------        ----------
                                                $1,299,000        $2,367,000
                                                ==========        ==========

         At July 31, 1996, the Company has available  $6,452,000 of unused state
operating loss  carryforwards  that may be applied against future taxable income
and that expire in years 2009, 2010 and 2011.

                                      F-17

<PAGE>

                  INTERNATIONAL POST LIMITED AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

         Management  believes  that  the  deferred  tax  benefits  will be fully
realized through future taxable income.

NOTE 10 - RETIREMENT PLANS

         The Company  adopted a qualified  salary  reduction  plan for  eligible
employees  under Section  401(k) of the Internal  Revenue Code (the  "Retirement
Plan").  The Retirement Plan is funded by salary reduction  contributions by the
participants  thereof.  The Company's  contributions  to the Retirement Plan are
based on participant  contributions  (which are limited to a fixed percentage of
participant  compensation) and matching employer  contributions with a five year
vesting provision in Company stock.  Additionally,  the Company may contribute a
discretionary  amount.  For the years ended July 31, 1995 and 1996,  the Company
contributed $44,654 and $116,575, respectively.

         The  Company  does not offer  any  post-retirement  health  or  welfare
benefits,  nor does it have any post-employment  benefits required to be accrued
at July 31, 1995 and 1996.

NOTE 11 - STOCK OPTIONS

         The stockholders and directors of the Company have approved a long-term
incentive  plan (the "Stock  Plan") under which  eligible  employees may receive
grants of options,  stock  appreciation  rights and restricted stock awards.  An
aggregate  of 600,000  shares of common  stock have been  reserved  for issuance
under the Stock Plan and  options or other  grants with  respect  thereto may be
made over a ten-year term. Options may be either incentive  options,  within the
meaning of the Internal Revenue Code, or non-qualified  options.  The Stock Plan
is administered by the  compensation  committee of the board of directors of the
Company who will determine the employees entitled to grants, the exercise price,
which may not be less than the fair market  value on the date of grant,  and the
other  terms of options or grants.  During  fiscal year 1995,  60,000  shares of
common stock  options were granted.  During fiscal year 1996,  all prior options
granted from inception of the Stock Plan were replaced.  The replacement options
were  granted with  revised  terms,  including  without  limitation,  three year
vesting  commencing in fiscal year 1996 and a range in price from $4.00 to $6.00
per share.  In addition,  65,600  shares were  forfeited by employees  that were
terminated during fiscal year 1996.


                                      F-18
<PAGE>

                  INTERNATIONAL POST LIMITED AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

         Changes  in  outstanding  options  and  options  available  for  grant,
expressed in number of shares, are as follows:

                                                                   Price Range
                                                Shares              Per Share
                                                -------         ----------------

Options outstanding at February 8, 1994....        --                  --
Granted....................................     436,500              $11.00
Exercised..................................        --                  --
Forfeited or cancelled.....................        --                  --
                                                -------         ----------------
Options outstanding at July 31, 1994.......     436,500              $11.00
Granted....................................      60,000         $5.75  --  $9.00
Exercised..................................        --                  --
Forfeited or cancelled.....................        --                  --
                                                -------         ----------------
Options outstanding at July 31, 1995.......     496,500         $5.75  -- $11.00
Granted....................................     430,900         $4.00  --  $6.00
Exercised..................................        --                  --
Forfeited or cancelled.....................     496,500         $5.75  -- $11.00
                                                -------         ----------------
Options outstanding at July 31, 1996.......     430,900         $4.00  --  $6.00
                                                =======         ================
Options available for grant July 31, 1996..     169,100
                                                =======

         The  stockholders  and  directors of the Company  have also  approved a
restricted  share plan for  directors  who are not  employees of the Company.  A
total of 50,000  shares of common stock are  available  for issuance  under such
plan.  Upon grant  these  options  will vest upon the  earliest  to occur of two
consecutive years of board service,  the death or disability of the recipient or
a "change of control date" (as defined in the Company's  restricted share plan).
During  fiscal  year 1994,  13,000  shares of common  stock were  awarded to the
directors of the Company.  All such shares are currently  vested. At the date of
grant, the share price was $11.375.  Compensation  expense charged to operations
in fiscal year 1995 was $148,000. During fiscal 1996, the directors received the
13,000 shares previously awarded. Accordingly, the Company utilized a portion of
the deferred tax asset in relation to  compensation  expense  recognized  by the
directors.  The Company  recorded a  reduction  of $70,918 to net  deferred  tax
assets with  corresponding  decreases in current income taxes payable of $23,338
and additional paid in capital of $47,580.

        In February  1994,  in  connection  with the  acquisition  of Audio Plus
Video,  the  chief  financial  officer  of the  Company  was  granted  ten-year,
non-qualified  stock options to purchase  181,818 shares of the Company's common
stock at an exercise price of $9.35 per share. Such options are fully vested and
are presently exercisable.

         In  February  1994,   the  Company  and  VSC  each  granted   five-year
non-qualified options to purchase an aggregate of 60,000 shares of the Company's
common  stock  to  the two principals of the trustee. The exercise price of such

                                      F-19
<PAGE>

                   INTERNATIONAL POST LIMITED AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


options is equal to the initial  public  offering  price of $11 per share.  Such
options vested three months after the consummation of the Offering.

         The  principals of the trustee have been granted by Holdings  six-year,
non-qualified  options to purchase  299,024 shares of common stock from Holdings
at an exercise price of $2.06 per share. Such options are  non-transferable  and
vested on January 1, 1995. Such principals  covenanted  under the related option
agreements  to serve as  directors  of the Company  and to not compete  with the
Company for a term of two years commencing on the date of the Offering.

         The  principal  shareholders  of  Holdings,  through  a trust,  and VSC
granted options to the Company's chief executive officer, which were exercisable
immediately,  to acquire 138,833  outstanding shares of IPL common stock held by
such  shareholders  at amounts  which ranged  between $1.80 and $5.98 per share.
These shareholders also granted to the Company's chief executive officer options
to acquire a further 69,417 outstanding shares of IPL common stock, at $7.78 per
share, which became exercisable if certain  performance  targets were met. These
options  expired on  December  31,  1995.  Given that  these  options  contained
exercise prices which were below the initial public offering price,  the Company
recorded in the period of the initial  public  offering a non-cash  compensation
charge  to  pre-tax  income  of  $1,202,000  and  a  corresponding  increase  in
additional  paid-in  capital of $637,000,  net of taxes.  At July 31, 1995,  the
value of the 69,417 stock  options with an exercise  price of $7.78 was adjusted
based upon the quoted market price of the Company's common stock on that date of
$4.75,  which required an adjustment to compensation  expense increasing pre-tax
income for fiscal year 1995 by $223,000.  During fiscal year 1996, the Company's
chief executive  officer  exercised 69,417 stock options at $1.80, at which time
the quoted market price of the Company's common stock was $4.125.  In connection
with this  transaction,  the  Company  recorded  a  reduction  of $77,000 to net
deferred tax assets and current income taxes payable. The remaining 69,416 stock
options at $5.98  expired.  In connection  with the expiration of these options,
the Company  recorded a reduction  of  $392,000 to net  deferred  tax assets and
additional paid-in capital.

NOTE 12 - REGISTRATION RIGHTS

         The Company has agreed to register for sale shares of common stock held
by Holdings,  upon its request.  The Company has also agreed to register shares,
on a pro-rata basis,  held by VSC and its  transferees,  certain officers of the
Company  and  principals  of the  trustee  at  such  time  as  Holdings  demands
registration  of its shares of common  stock.  In addition,  the Company will be
required to file a shelf  registration  statement on Form S-3 to register shares
of common stock  underlying  options granted to certain  officers of the Company
and principals of the trustee.

NOTE 13 - PREFERRED STOCK

         The Company's  certificate  of  incorporation  authorizes  the board of
directors to issue from time to time, in one or more series, shares of preferred
stock with such  designations  and  preferences,  relative voting rights (except
that voting rights, if any, in respect of the election of directors shall be

                                      F-20
<PAGE>

                   INTERNATIONAL POST LIMITED AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


limited to voting with the holders of common  stock,  with no more than one vote
per share of preferred stock), redemption,  conversion,  participation and other
rights and qualifications, limitations and restrictions as permitted by law. The
board of directors by its  approval of certain  series of preferred  stock could
adversely  affect  the voting  power of the  holders of common  stock,  and,  by
issuing shares of preferred  stock with certain voting,  conversion,  redemption
rights or other terms, could delay, discourage or make more difficult changes of
control or management of the Company.

NOTE 14 - DIVIDEND POLICY

         The board of  directors  of the Company  does not intend to declare any
dividends  in the  foreseeable  future and intends to retain all earnings in the
Company to finance  the growth of  operations,  including  acquisitions.  Future
dividend  policy  will be  based  upon  the  Company's  results  of  operations,
financial condition, capital requirements and other circumstances.

NOTE 15 - UNAUDITED QUARTERLY RESULTS

         Unaudited quarterly financial information for fiscal year 1995 and 1996
is set forth below (See Note 3). All dollar amounts are in thousands  except per
share data.

<TABLE>
<CAPTION>

                                                                         Quarter Ended
                                                ----------------------------------------------------------------
                                                                            Company
                                                ----------------------------------------------------------------
                                                October 31,      January 31,        April 30,          July 31,
                                                   1994             1995              1995               1995
                                                -----------      -----------        ---------          --------
Fiscal 1995
<S>                                               <C>              <C>               <C>              <C>
  Revenues.................................       $8,372           $9,384            $9,364            $11,228
  Income (loss) from operations............       $1,094           $1,512            $1,511           ($   641)
  Net income (loss)........................       $  653           $  847            $  809           ($   703)
  Net income (loss) per share..............       $ 0.11           $ 0.14            $ 0.13           ($  0.11)

</TABLE>

<TABLE>
<CAPTION>

                                                                         Quarter Ended
                                                ----------------------------------------------------------------
                                                                            Company
                                                ----------------------------------------------------------------
                                                October 31,      January 31,        April 30,          July 31,
                                                   1995             1996              1996               1996
                                                -----------      -----------        ---------          --------
Fiscal 1996
<S>                                               <C>              <C>               <C>              <C>
  Revenues.................................       $12,202          $12,099           $12,666           $12,385
  Income (loss) from operations............       $ 1,813          $ 1,347           $ 1,283          ($   601)
  Net income (loss)........................       $   673          $   405           $   307          ($   571)
  Net income (loss) per share..............       $  0.11          $  0.07           $  0.05          ($  0.09)

</TABLE>






                                      F-21
<PAGE>

                   INTERNATIONAL POST LIMITED AND SUBSIDIARIES

                              SUPPLEMENTAL SCHEDULE


SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS

<TABLE>
<CAPTION>


                                                                       Additions
                                                    Balance at        Charged to                            Balance at
                                                   Beginning of       Costs and         Deductions            End of
                                                      Period           Expenses         Write-Offs            Period
                                                   ------------       ----------        ----------          ----------
<S>                                                  <C>               <C>               <C>                 <C>
International Post Limited For the year
 ended July 31, 1994:
    Allowance for doubtful accounts.............     $470,871          $156,874          $ 57,868            $569,877
                                                     ========          ========          ========            ========

International Post Limited For the year
 ended July 31, 1995:
    Allowance for doubtful accounts.............     $569,877          $184,771          $138,894            $615,754
                                                     ========          ========          ========            ========

International Post Limited For the year
 ended July 31, 1996:
    Allowance for doubtful accounts.............     $615,754          $231,983          $123,172            $724,565
                                                     ========          ========          ========            ========

</TABLE>


                                      F-22