<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 

         For the fiscal year ended September 30, 1996

                                          OR

/ /      TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
         EXCHANGE ACT OF 1934 

         For the transition period from __________ to __________

                           Commission File Number:  1-7921

                             SECURITY CAPITAL CORPORATION
            -------------------------------------------------------------
                (Exact name of registrant as specified in its charter)


           DELAWARE                                 13-3003070  
--------------------------------       ------------------------------------
(State or other jurisdiction of        (I.R.S. Employer Identification No.)
incorporation or organization)


                1111 NORTH LOOP WEST, SUITE 400, HOUSTON, TEXAS  77008
        ---------------------------------------------------------------------
                       (Address of principal executive offices) (Zip Code)
                                           
Registrant's telephone number, including area code:  (713) 880-7100
                                                    --------------   
             Securities registered pursuant to Section 12(b) of the Act:

                                                 Name of each exchange
         Title of each class                      on which registered 
         -------------------                     ---------------------

         Class A Common Stock,                        Pacific Stock Exchange
         $.01 par value


             Securities registered pursuant to Section 12(g) of the Act:

                                         None

         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 the past 90 days.

                   Yes   X             No      
                        ---                ---

         Indicate by check mark if disclosure of delinquent filers pursuant to
Item 405 of Regulation S-K 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]

         As of December 13, 1996, 4,059,390 shares of the Registrant's voting
stock were issued and outstanding, of which 2,835,432 shares were held by
affiliates of the Registrant.  The aggregate market value of the remaining
1,223,958 shares of voting stock held by non-affiliates (based upon the closing
price of the Registrant's Class A Common Stock on December 13, 1996 of $2 3/4)
was approximately $3,366,000.


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                                  TABLE OF CONTENTS

                                                                            PAGE
                                                                            ----

Item 1.  Business.............................................................1
Item 2.  Properties..........................................................10
Item 3.  Legal Proceedings...................................................10
Item 4.  Submission of Matters to a Vote of Security Holders.................11
Item 5.  Market for the Registrant's Common Equity and Related Stockholder
         Matters.............................................................12
Item 6.  Selected Financial Data ........................................... 14
Item 7.  Management's Discussion and Analysis of Financial Condition and  
         Results of Operations ............................................  15
Item 8.  Financial Statements and Supplementary Data ......................  17
Item 9.  Changes in and Disagreements with Accountants on Accounting and 
              Financial Disclosure...........................................18
Item 10. Directors and Executive Officers of the Registrant..................18
Item 11. Executive Compensation..............................................21
Item 12. Security Ownership of Certain Beneficial Owners and Management......23
Item 13. Certain Relationships and Related Transactions......................25
Item 14. Exhibits, Financial Statement Schedules, and Reports on Form 8-K....27




                                         (i)

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                                        PART I

ITEM 1.  BUSINESS.
------   -------- 

GENERAL

    Security Capital Corporation (the "Company" or "Security Capital") is a
holding company which was incorporated in Delaware in November 1979.  Through
its subsidiary, Possible Dreams, Ltd. ("Possible Dreams"), the Company engages
in the design, importation and distribution of fine quality collectibles, other
specialty seasonal giftware and religious giftware and statuary.  Through its
subsidiary, Security Capital Insurance Group, Inc. ("SCIGI"), the Company
engages in insurance brokerage.

                                   POSSIBLE DREAMS

BACKGROUND

    On May 17, 1996, the Company, through its subsidiary, P.D. Holdings, Inc.,
a newly- formed Delaware corporation, and Possible Dreams, Ltd., a newly-formed 
Delaware corporation and a subsidiary of P.D. Holdings, Inc., acquired
substantially all of the assets and assumed certain liabilities of Possible
Dreams, Ltd., a Massachusetts corporation established in 1988 and engaged in the
design, importation and distribution of fine quality collectible and other
speciality seasonal giftware, and Columbia National Corporation, a Massachusetts
corporation established in 1957 and engaged in the design, importation and
distribution of religious giftware and statuary. The assets purchased consisted
of cash, accounts receivable, inventories, prepaid expenses, real estate,
furniture, fixtures, computer and intellectual property rights and other
intangibles.  The consideration paid in connection with the acquisition
aggregated $17,360,000.  For additional information regarding the acquisition of
such assets, see "Management's Discussion and Analysis of Financial Condition
and Results of Operations" and the Notes to Consolidated Financial Statements of
the Company.

OVERVIEW

    Possible Dreams is a leading designer, importer and distributor of fine
quality collectibles and other specialty seasonal giftware.  Possible Dreams is
known for its hand-crafted collectible series of Clothtique-Registered
Trademark- items.  Possible Dreams' products include the Clothtique-Registered
Trademark- Santa Collection, the American Artists Collection-Registered
Trademark-, the Saturday Evening Post Covers of Norman Rockwell and J.C.
Leyendecker-Registered Trademark-, Pepsi-Registered Trademark- products and a
variety of Angels and ornaments.  Other lines include Crinkle Claus-TM-, The
Thickets At Sweetbriar-TM- and Floristine Angels-TM-. Possible Dreams
distributes its products throughout the United States to approximately 15,000
independent gift retailers, as well as to department stores, mail order houses
and large card and gift chains. 


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PRODUCTS

    Possible Dreams designs, imports and distributes more than 2,000 products. 
Possible Dreams' leading product line is Clothtique-Registered Trademark-. 
Blending stiffened cloth, porcelain and cold cast, the process was first
utilized by Possible Dreams for a series of angels and Santas.  Clothtique is
now used in a variety of both holiday and year round collections.  It has the
ability to mimic the look and feel of real wardrobes.  

    One of Possible Dreams' earliest Clothique collections is entitled the
Santa Claus Collection-Registered Trademark-.  This line is known for presenting
a traditional Santa character yet contemporizing its appeal through style and
theme.  Many are now retired and have become more valuable as product
availability decreases.  A more recent entry, The Clothique Lifestyles
Collection-Registered Trademark-, is designed to appeal to those looking for a
way to pay tribute to postmen, policemen, firemen and other public servants.  

    In 1989, Possible Dreams introduced its figurines based on the art of
Norman Rockwell and J.C. Leyendecker.  Each of such Clothtique pieces is taken
from a classic Saturday Evening Post cover and licensed by CURTIS PUBLISHING
COMPANY. 1/ 

     In addition, hundreds of original figurines, including approximately 165
Santas, have been created through the design talents of many artisans.  The
American Artist Collection-Registered Trademark- is an array of Clothtique
Santas inspired by renderings from Tom Browning, Judi Vaillancourt, Mark Alvin,
Mary Monteiro, Judity Ann Griffth, David Wenzel and other nationally recognized
professionals.  

     Possible Dreams also recently introduced a Clothique line based on classic
cartoon characters.  As licensee for Looney Tunes-Registered Trademark-, Warner
Bros.-Registered Trademark-, Hanna-Barbera-Registered Trademark- and
Garfield-Registered Trademark-, Possible Dreams has created Clothique characters
such as Bugs Bunny, Sylvester & Tweety, Tom & Jerry and Garfield the Cat dressed
in Santa Claus suits, as well as other inspired wardrobes.

     There are new introductions each year to the Possible Dreams product line,
beyond those to Clothique.  Crinkle Claus is a novel technique that lays a cold
cast texture or wrinkly puckers and crannies over an array of Santa shapes and
designs.  The success of this product from the time of its introduction has led
to the development and introduction of architectural pieces called Crinkle
Village, Crinkle Cousins, Crinkle Angels and Limited Editions Crinkles.  A
Crinkle Claus Collectors Club also is now in the works.  Other prominent lines
include a romantic fantasy world of miniature animals called the Thickets At
Sweetbriar-Registered Trademark- and Little Orphan Angels, along with the line's
regular Musical Waterdomes, Stocking Holders and Glass Ornaments.

     Possible Dreams takes various steps to enhance the collectibility of its
products.  In particular, Possible Dreams limits the availability of certain
styles and retires other styles that are still selling well.  While these
actions sometimes cause Possible Dreams to forego some sales, they 

-------------------
1/   (c) 1989-1992 Curtis Publishing Co.


                                         -2-
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tend to provide recurring product demand, increase access to retailer shelf
space and enhance the long-term value of Possible Dreams' products.  Possible
Dreams also attempts to improve collectibility by the regular introductions of
product line extensions and new series additions.

     Possible Dreams further enhances collectibility and improves sales through
the creation of Collector Clubs.  These Clubs can stimulate interest in
particular product lines, strengthen retail relationships and provide helpful
consumer preference data.  For example, in addition to the Crinkle Claus
Collectors Club now being formed, the success of Possible Dreams' Santa line led
to the establishment in 1992 of the Santa Claus Network, a Clothtique-Registered
Trademark- Santa Collectors Club.  This Club has approximately 15,000 members
worldwide paying a $25 annual membership fee and receiving quarterly
newsletters.   

DESIGN AND PRODUCTION

     Possible Dreams' in-house creative team, together with outside artists,
have frequently developed new products that have established trends within the
giftware industry.  The team regularly attends trade shows and seminars, and
travels extensively throughout the world for ideas.  All catalog design and
preparation, excluding some photograph and printing, is done in-house.

     The design and manufacture of Possible Dreams' many product lines is a
complex process.  Once a  product is conceived, it can take up to a year before
it is introduced into the market.  First, detailed and scaled drawings are made
for each piece.  A prototype is then produced and reviewed by creative directors
and management.  Samples of the various designs are then made by the
manufacturer for review by Possible Dreams and, often, prospective buyers. 
Typically, only about 40% of new designs created each year will make it into
production.

     Possible Dreams endeavors to use first-rate craftsmanship at affordable
prices.  This strategy limits the possible sources of manufacturers and,
accordingly, helps to achieve more controlled growth of product lines.  Possible
Dreams has long-standing relationships with overseas manufacturers, which to
date have helped account for reliable delivery of goods.

DISTRIBUTION AND SYSTEMS

     As noted above, Possible Dreams has a retail customer base of approximately
15,000 independent gift shops, department stores and mail order houses.  Its
products are primarily sold by approximately 14 sales groups with over 105 sales
representatives operating out of 13 showrooms nationwide located in each of the
major giftware markets in the United States. 

     Possible Dreams also has a preferred dealer network consisting of some of
its best retail customers.  These customers agree to certain product display and
other requirements.  In return, they are entitled to sell certain limited pieces
not available through non-network channels.


                                         -3-
<PAGE>

     Products sold by Possible Dreams in the United States are generally shipped
by ocean freight from abroad and then by rail and/or common carrier to the
company's warehouse and distribution center in Foxboro, Massachusetts. 
Shipments from Possible Dreams to its customers are handled by United Parcel
Service or commercial trucking lines.

     Possible Dreams utilizes computer systems and internally developed software
to help maintain efficient order processing from the time a product enters the
company's system through shipping and ultimate payment collection from its
customers.  Possible Dreams has developed software for the processing and
shipment of orders from its warehouse and believes that this has played a
significant role in allowing it to maintain customer satisfaction. 

TRADEMARKS AND OTHER PROPRIETARY RIGHTS

     Possible Dreams has several federal trademark registrations and 
copyrights. In addition, Possible Dreams from time to time registers certain 
of its trademarks in foreign countries.  The registrations for the trademarks 
are currently scheduled to expire or be canceled at various times between 
1999 and 2005, but Possible Dreams believes that the marks can be maintained 
and renewed provided that they are still in use for the goods and services 
covered by such registrations. 

EMPLOYEES

     Possible Dreams employed 94 people at September 30, 1996, 11 of whom were
salaried employees, with the remainder being hourly employees.  None of the
employees is represented by a labor union, and Possible Dreams considers its
relationship with employees to be satisfactory.

COMPETITION

     Possible Dreams competes with other producers of fine quality collectibles,
specialty giftware and home decorative accessory products.  The giftware
industry is highly fragmented and competitive, with a substantial number of both
large and small participants.  Possible Dreams believes that the principal
elements defining competitiveness are product design and quality, product brand
name loyalty, product display and price.  Although Possible Dreams believes it
generally competes favorably with respect to these factors, some of Possible
Dreams' competitors are larger than Possible Dreams and have greater financial
resources and a wider range of products.

IMPORTS; MAJOR SUPPLIERS

     Possible Dreams does not own or operate any manufacturing facilities and,
like most of its competitors, imports most of its products from the Pacific Rim,
primarily mainland China and, to a lesser extent, Taiwan and the Philippines. 
Possible Dreams' ability to import products and thereby satisfy customer orders
is affected by the availability of, and demand for, quality 


                                         -4-
<PAGE>

production capacity abroad.  Possible Dreams competes with other importers of
specialty giftware products for a limited number of foreign manufacturing
sources that can produce detailed, high quality products at affordable prices. 
In addition, Possible Dreams' import operations may be adversely affected by
political instability resulting in the disruption of trade from exporting
countries, regulatory changes, increases in transportation costs or delays, any
significant fluctuation in the value of the United States dollar against foreign
currencies and restrictions on the transfer of funds.

     Substantially all of Possible Dreams' products are subject to United States
Customs Service duties and regulations pertaining to the importation of goods,
including requirements for the marking of certain information regarding the
country of origin on its products.  The United States and the countries in which
Possible Dreams' products are manufactured may, from time to time, impose new
quotas, duties, tariffs or other charges or restrictions, or adjust presently
prevailing quotas, duty, or tariff levels, which could adversely affect Possible
Dreams' financial condition or results of operations or its ability to continue
to import products at current or increased levels.

     From May 1, 1996 to September 30, 1996, Possible Dreams purchased
approximately 50%, 36% and 10% of its supplies from, respectively, Folkcraft,
Seagull Decor Co. and Novelty Trading.  The loss of any of these suppliers could
have an adverse effect on Possible Dreams' results of operations and
financial condition.


                        SECURITY CAPITAL INSURANCE GROUP, INC.
                               AND ASSOCIATED ENTITIES

OVERVIEW

     Organized in November 1984, SCIGI owns all of the outstanding capital stock
of Foster Insurance Managers, Inc. ("FIM"), a Texas managing general agency.  As
more fully described below, FIM is a party to an Agency and Management Services
Agreement with Foster Insurance Services, Inc. ("FIS"), an insurance brokerage
firm that is a Texas-licensed local recording agency.  Pursuant to the Agency
and Management Services Agreement, as compensation for providing management
consulting services to FIS, FIM is entitled to a percentage of the net pre-tax
income of FIS.  See "-- Agency Agreement and Buy-Sell Agreement Among FIM, FIS
and Edward G. Britt, Jr."  FIS is primarily engaged in brokering property,
liability, automobile, workers' compensation and life insurance and surety
bonds.  

     During fiscal year 1993, FIS entered into an interim agreement with Bowen,
Miclette & Descant, Inc. ("BMD"), an unaffiliated independent insurance agency,
to create a joint enterprise.  The joint enterprise began doing business as a
corporation under the name of Bowen, Miclette, Descant & Britt, Inc. ("BMD&B
Inc.") on January 1, 1993.  On that date, the Company began accounting for its
investment in BMD&B Inc. on the equity method.  On July 23, 1993, the Texas
State Board of Insurance approved the application for an insurance license for
FIS and BMD to form a general partnership.  FIS and BMD began operating as a
general partnership, effective 


                                         -5-
<PAGE>

October 1, 1993, under the name of Bowen, Miclette, Descant & Britt (the
"Partnership").  BMD&B Inc. provides support services to FIS and to the
Partnership pursuant to separate agreements with each of such entities.  See
"--Management Services Agreement with BMD&B Inc." and "--Interim Agreement with
BMD, Partnership Agreement with BMD and Partnership Services Agreement with
BMD&B Inc." 

INSURANCE AGENCY BUSINESS

     The partnership of FIS and BMD makes the combined entity, Bowen, Miclette,
Descant & Britt, one of the largest independent insurance agents in Houston,
Texas.  The Partnership combines FIS's strength in sales with BMD's strength in
service and administration and provides the combined entity with access to
markets previously served by one, but not both, entities.

     The Partnership provides all forms of commercial and personal insurance. 
For commercial customers with highly specialized insurance needs, the
Partnership provides risk management, loss control services, surety bonds,
insurance consulting, claims analysis, client support during contract
negotiations, group coverage and customized forms of umbrella protection.  The
Partnership also underwrites personal life, disability, homeowner's and
automobile insurance.

     The Partnership offers clients national and international insurance
underwriting capabilities through most major domestic insurance carriers in the
"Standard" market, numerous other carriers in the "Excess" market and direct
access to the London insurance market.

     The Partnership currently brokers property and casualty insurance policies
with aggregate premiums totaling between $60 and $70 million.

COMPETITION

     The Partnership competes with other insurance brokerages, many of which
have greater financial, marketing and other resources, offer more varied lines
of policies and enjoy more significant economies of scale.  Insurance brokerage
firms compete principally with respect to premiums charged, the scope of policy
coverage and the quality of service provided to clients.

AGENCY AGREEMENT AND BUY-SELL AGREEMENT AMONG FIM, FIS AND EDWARD G. BRITT, JR. 

     Effective September 1, 1992, FIM entered into (i) an Agency and Management
Services Agreement (as amended, the "Agency Agreement") with FIS which replaced
a previous agreement with Stanley L. Spring, and (ii) a Buy-Sell Agreement (the
"Buy-Sell Agreement") with FIS and Edward G. Britt, Jr. ("Britt"), the sole
shareholder of FIS.

     Pursuant to the Agency Agreement, FIM appointed FIS as the local recording
agent in Texas for FIM and related insurance companies and FIM agreed to provide
management consultation services to FIS and to use its best efforts to maintain
insurance markets for the 


                                         -6-
<PAGE>

placement of the insurance business produced by FIS.  As compensation for its
management consultation services, FIM was paid 100% of the net pre-tax income of
FIS (after the accrual of up to 25% of the pre-tax income to FIS for the payment
of bonuses to FIS's employees) until the earlier of (i) the payment to FIM of
(x) $1,000,000 (plus or minus the net pre-tax profits or losses of FIS from
October 1, 1991 through the effective date of the Agency Agreement and less
amounts paid to FIM as rental for certain office furniture), reduced by (y) an
amount equal to two times any amount paid by FIS to FIM prior to September 30,
1995 from the proceeds of capital contributions by Britt (collectively, the "FIM
Fee") and (ii) September 30, 1996.  Thereafter, FIM will be paid a percentage of
FIS's net pre-tax income based upon the amounts theretofore paid to FIM, as
provided in the Agency Agreement, but in any event not less than 50% of such net
pre-tax income (after the accrual of up to 25% of the pre-tax income to FIS for
the payment of bonuses to FIS's employees).  The $1,000,000 in pre-tax income
level discussed above was reached during fiscal year 1996.  The Agency Agreement
has a term of 20 years, and will be automatically renewed for successive one
year periods unless terminated by either party on 60 days' prior notice.  The
Agency Agreement will also terminate upon (i) the death or disability of Britt;
(ii) a sale of the stock of FIS by Britt or the termination of the Buy-Sell
Agreement; (iii) the inability of FIM and FIS to resolve material disputes on or
after September 30, 1994 upon notice of termination from either party; or (iv)
notice from FIM following the suspension, cancellation or failure to renew any
of the insurance licenses of FIS.

     Pursuant to the Buy-Sell Agreement, FIM received an option to purchase 50%
of the stock of FIS at any time for $1,000.  In addition, Britt received an
option, exercisable at any time after the later of (i) September 30, 1994 and
(ii) the payment to FIM of $1,000,000 pursuant to the Agency Agreement, to sell
to FIM, for $1,000, any shares of FIS then owned by him (the "Put Option"), and
an additional option to repurchase such shares from FIM or to purchase all of
the assets of FIS and to terminate the Agency Agreement for a purchase price
equal to 50% of the then fair market value of FIS (which fair market value shall
in any event not be less than $3,000,000) plus an amount equal to $1,000,000
less the amounts previously paid to FIM pursuant to the Agency Agreement.  The
Buy-Sell Agreement also provides that, upon the termination of the Agency
Agreement due to the death or disability of Britt, FIS shall cause $500,000 to
be paid to Britt's wife (or other beneficiary designated by Britt), and Britt's
estate, heirs or guardian will transfer the shares of FIS to FIM.  The Buy-Sell
Agreement further requires Britt to make certain payments to FIM in the event
that the Agency Agreement is terminated for any other reason.  FIS has entered
into a Stock Purchase Agreement with BMD&B Inc. which provides, in part, for the
termination of the Buy-Sell Agreement and the purchase by BMD&B Inc. of all of
the shares or assets of FIS upon the death or disability of Britt.  See "--
Stock Purchase Agreement."

     On August 29, 1996, Britt exercised his put option pursuant to Section 2(a)
of the Buy-Sell Agreement to require FIM to purchase all of the shares of FIS
common stock held by Britt for the put option price of $1,000.  By the same
notice, Britt also exercised his option pursuant to Section 2(b) of the Buy-Sell
Agreement to purchase all of the assets, liabilities and business of FIS at
fifty percent (50%) of their Fair Market Value (as defined in the Buy-Sell
Agreement).  FIM 


                                         -7-
<PAGE>

and Britt are in the process of determining such Fair Market Value with the
assistance of an independent third party appraiser.  Upon the consummation of
the purchases and sales described above, which are anticipated to occur in the
first half of 1997, the Agency Agreement and the Buy-Sell Agreement will
terminate and the Company no longer will have any interest in the insurance
brokerage business currently operated through FIS.

PARTICIPATION AGREEMENT WITH LARRY M. KARREN

     Mr. Larry M. Karren ("Karren"), the Vice President and Treasurer of the
Company, the Controller of FIS and the Vice President and Chief Financial
Officer of FIM, has entered into an agreement (the "Participation Agreement")
with Britt, FIS and FIM pursuant to which Karren is entitled to receive from
FIS, after payment in full of the FIM Fee, a bonus payment equal to 10% of the
net pre-tax income of FIS until (i) the exercise by Britt of the Put Option
under the Buy-Sell Agreement or (ii) the sale of a majority of the stock or
assets of FIS to a party other than Karren, FIS or FIM.  As discussed above, Mr.
Britt has exercised the Put Option.  Accordingly, Karren will be entitled to
purchase for nominal consideration approximately 10% of the stock of, or an
interest in, FIS.

MANAGEMENT SERVICES AGREEMENT WITH BMD&B INC.

     FIS entered into a Management Services Agreement with BMD&B Inc., dated
August 10, 1994 and effective January 1, 1993, pursuant to which BMD&B Inc.
provided sales, administrative, management and other services to FIS on a cost
plus basis.  As of October 1, 1993, the arrangement with BMD&B Inc. described in
this paragraph was superseded by the arrangements described below pursuant to
which FIS and BMD agreed to conduct their combined insurance agency operations
through the Partnership, which is jointly owned by them.  While the Partnership
arrangements provide for BMD&B Inc. to furnish certain services to the
Partnership, the services to be provided by BMD&B Inc. have been limited as
described below.  See "-- Interim Agreement with BMD, Partnership Agreement with
BMD and Partnership Services Agreement with BMD&B Inc."

INTERIM AGREEMENT WITH BMD, PARTNERSHIP AGREEMENT WITH BMD AND PARTNERSHIP
SERVICES AGREEMENT WITH BMD&B INC. 

     On October 30, 1992, FIS entered into an interim agreement (the "Interim 
Agreement") with BMD, an independent insurance agency, pursuant to which, 
among other things, FIS and BMD indicated their intent to participate in 
shared management services through a joint enterprise.  The Interim Agreement 
was entered into so that an office lease could be executed for the joint 
enterprise. 

     FIS then negotiated and executed a Partnership Agreement with BMD, dated 
June 15, 1994 and effective October 1, 1993 (the "Partnership Agreement"), 
pursuant to which each entity acquired 50% of the Partnership formed thereunder.
Concurrently, FIS and BMD negotiated and 

                                         -8-
<PAGE>

executed a Personnel Services and Clarification Agreement with BMD&B Inc., dated
June 15, 1994 and effective October 1, 1993, pursuant to which BMD&B Inc.
provides sales, administrative, management and other support services to the
Partnership on a cost plus basis (the "Partnership Services Agreement").  

     As noted above, on July 23, 1993, the Texas State Board of Insurance
approved the application of FIS and BMD to form a general partnership.  Since
October 1, 1993, many of the activities previously conducted by BMD&B Inc. for
FIS have been conducted by the Partnership, and BMD&B Inc. has acted as agent
for BMD, FIS and the Partnership for the following limited purposes:  (i) to
continue as lessee of the office facilities and equipment; (ii) to process
specific insurance business which BMD, FIS and the Partnership decide to handle
in BMD&B Inc.'s name; and (iii) to render personnel and employment services for
BMD, FIS and the Partnership, including acting as common paymaster.  

     The Partnership Agreement outlines the terms of the Partnership relating to
capital contributions, distributions of Partnership interests and the rights and
obligations of each partner.  It also describes the terms in the event of
dissolution, termination or liquidation of the Partnership.  Each of BMD and FIS
has a 50% interest in the Partnership.  Partnership income, gains, credits,
losses and deductions are allocated among the corporate partners for Federal
income tax and accounting purposes in accordance with their Partnership
interests, except for calendar years 1993 and 1994.  For these calendar years,
FIS's allocation was 46% and 48%, respectively, with the remainder allocated to
BMD.  

STOCK PURCHASE AGREEMENT

     FIS has entered into a Stock Purchase Agreement with BMD&B Inc. and certain
other parties, effective as of the 1st day of January, 1993, which provides for
the termination of the Partnership Services Agreement and the Buy-Sell Agreement
and the purchase by BMD&B Inc. of all of the shares or assets of FIS upon the
death of Britt.  The Stock Purchase Agreement also provides for BMD&B Inc. to
make a payment to FIS in consideration of the termination of the Partnership
Services Agreement and the Buy-Sell Agreement upon Britt's death.  Such payment
will be funded from the proceeds of one or more life insurance policies to be
acquired by BMD&B Inc. on Britt's life.  The amount of such payment will equal
(i) 50% of the fair market value of FIS as of the date of Britt's death, plus
(ii) $1,000,000, plus (iii) FIS's net pre-tax losses, if any, for the period
October 1, 1991 to September 1, 1992, less (iv) FIS's net pre-tax income, if
any, for the period from October 1, 1992 to September 1, 1993, less (v) payments
previously made by FIS to FIM.  

ADVISORY SERVICES AGREEMENT

     On April 27, 1990, effective as of January 26, 1990, the Company entered
into an Advisory Services Agreement (the "Advisory Agreement") with Capital
Partners, Inc. ("CP Inc."), an entity controlled by Brian D. Fitzgerald, the
Chairman of the Board of the Company, 


                                         -9-
<PAGE>

and for which A. George Gebauer, the President and Secretary of the Company,
serves as an officer.  Pursuant to the Advisory Agreement, CP Inc. provides
certain advisory services in the areas of investments, general administration,
corporate development, strategic planning, stockholder relations, financial
matters and general business policy.  See "Item 13.  Certain Relationships and
Related Transactions." 

EMPLOYEES

     As described under "Item 7.  Management's Discussion and Analysis of
Financial Condition and Results of Operations," effective January 1, 1993, all
employees of FIS and BMD were transferred to BMD&B Inc.  BMD&B Inc. employed
approximately 115 full-time employees and one part-time employee at September
30, 1996.  The Company estimates that 58 of the full-time and the only part-time
employee were engaged in activities relating to the insurance operations of FIM
and FIS at September 30, 1996.  The Company considers relations with such
employees to be satisfactory.  None of these employees is represented by any
union or other collective bargaining agreement.

ITEM 2.   PROPERTIES.
------    -----------

     Possible Dreams owns a 55,000 square feet building in Foxboro,
Massachusetts where it maintains all its distribution, sales and administrative
facilities.  Possible Dreams currently utilizes approximately 48,000 square feet
as distribution space and approximately 7,000 square feet as sales and
administrative offices.  Substantially all of the properties and other assets of
Possible Dreams are pledged to Possible Dreams' principal lender as security for
a line of credit and related loans.  

     The Company also leases 33,478 square feet of office space in Houston,
Texas for its insurance brokerage business. 

     The Company believes its owned and leased space is adequate for its current
needs.  For further information regarding the Company's properties, see Note 5
of Notes to Financial Statements of the Partnership.

ITEM 3.   LEGAL PROCEEDINGS. 
------    -----------------  

     On May 4, 1992, the Company received a notice from the State of New York
that the Company owed $244,116 in additional withholding taxes, interest and
penalties for calendar year 1984.  The Company has submitted information to the
State of New York and is awaiting a reply.  At this time, although the Company
is unable to determine the amount, if any, which may eventually be owed to the
State of New York, the Company believes its previously filed returns are correct
and that no additional amounts are owed to the state. 



                                         -10-
<PAGE>

     By notice received January 3, 1994, the Company's insurance agency
affiliate, FIS, was sued in the 281st Judicial District Court of Harris County,
Texas by Quality Oilfield Products, Inc. for damages of at least $2,000,000 plus
attorneys' fees, plus potentially treble damages, for alleged failure to provide
a policy of insurance for compensation for future losses related to business
interruption.  FIS turned the claim into its Errors & Omissions Insurance
carrier to handle the litigation and to respond to the lawsuit.  FIS' Errors and
Omissions carrier has responded to the lawsuit, and both parties are in the
discovery phase of the suit.  Although there can be no assurance, the Company
does not believe that FIS will incur any material loss with respect to this
matter in excess of insurance coverage.  

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

     Not applicable.



                                         -11-
<PAGE>

                                       PART II
                                       -------

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

     The Class A Common Stock of Security Capital is traded on the Pacific Stock
Exchange (the "PSE").  The following table states the high and low sales prices
for the Class A Common Stock on the PSE for the quarterly periods indicated:


                                    Fiscal 1995        Fiscal 1996
                                    Price Range*       Price Range*
Quarter                           High      Low       High      Low
First--ended December 31st        $2 1/2    $1        $2 1/4    $1 1/4
Second--ended March 31st          $2 1/2    $1 1/2    $1 3/4    $1 1/4
Third--ended June 30th            $1 3/4    $1 1/2    $1 15/16  $1 9/16
Fourth--ended September 30th      $3        $1 1/4    $3 3/8    $2
-----------------

*    Stock prices prior to March 27, 1996 have been adjusted retroactively for 
the one-to-eight Reverse Split described below.


     As of December 13, 1996, there were approximately 2,311 stockholders of
record of the Class A Common Stock and 4,059,015 shares of outstanding, and 13
stockholders of record of the Common Stock and 375 shares outstanding.  On such
date, the closing price of the Class A Common Stock on the PSE was $2 3/4. There
is no public trading market for the Common Stock.

     In early 1996, the Company's Class A Common Stock was trading below the
minimum price maintenance requirement of the PSE.  As a result, a reverse split
(the "Reverse Split") of the Class A Common Stock and of the Common Stock was
authorized by the Board of Directors of the Company, approved by the
stockholders of the Company on March 20, 1996 and became effective on March 27,
1996.  As a result of the Reverse Split, each share of Class A Common Stock and
of Common Stock outstanding as of the close of business on March 27, 1996 was
converted into one-eighth of a share of either Class A Common Stock or Common
Stock, as the case may be.



                                         -12-
<PAGE>

     The Company's tangible net worth is currently only slightly above the $2
million minimum required by the PSE.  If the Company effects another
acquisition, it is likely that goodwill (which is not counted by the PSE as an
asset for purposes of calculating tangible net worth) will be recorded in 
connection with such acquisition and will result in the Company's failure to
meet such tangible net worth requirement.  This could result in the delisting of
the Class A Common Stock from the PSE.  

     Security Capital has not paid any dividends since the first quarter of
fiscal year 1987.



                                         -13-
<PAGE>




ITEM 6.  SELECTED FINANCIAL DATA.
------   ----------------------- 


The following table sets forth certain selected consolidated financial data for
the Company.  This selected consolidated financial data should be read in
conjunction with the Consolidated Financial Statements and the Notes thereto
included in Item 8 of this Form 10-K and "Management's Discussion and Analysis
of Financial Condition and Results of Operations" included in Item 7 of this
Form 10-K.

<TABLE>
<CAPTION>

---------------------------------------------------------------------------------------------------------
Year ended September 30,             1996               1995          1994           1993            1992
---------------------------------------------------------------------------------------------------------
                                                          (In thousands, except per share amounts)
<S>                                   <C>               <C>            <C>             <C>            <C>
Total assets                    $   34,502       $   10,926     $   10,362      $   3,734      $   2,976

Long-term debt                  $   11,710       $        -     $        -      $       -      $     203

Class A preferred stock 
(redeemable)(including 
dividends in arrears of 
$1,425, $975, $525, and $75)    $    4,425       $    3,975     $    3,525      $   3,075      $       -

Total stockholders' equity      $    6,884       $    6,321     $    6,694      $     309      $     504

Operating revenues              $    9,854       $        -     $        -      $     842      $   2,473

Income from joint enterprise    $      362       $      415     $      282      $     197      $       -

Income (loss) from continuing
operations before 
extraordinary item              $    1,013       $      244     $      (69)     $     (91)     $    (421)

Net income (loss)               $    1,013       $      244     $      (91)     $     (91)     $    (421)
Less preferred stock dividends        (450)            (450)          (450)           (75)             -
                                     -----            -----           -----          ----           ----
Net income(loss) applicable to  
common stockholders             $      563       $     (206)    $     (519)     $    (166)     $    (421)

Earnings (loss) per common share:

Earnings (loss) from 
continuing operations before 
extraordinary items             $      .14       $    *(.05)    $    *(.24)     $   *(.14)     $   *(.35)

Earnings (loss) per common 
share                           $      .14       $    *(.05)    $    *(.24)     $   *(.14)     $   *(.35)

Dividends per share
of common stock                 $        -       $        -     $               $       -      $       -

---------------------------------------------------------------------------------------------------------
</TABLE>

* For the fiscal years presented, earnings(loss) per share has been restated for
the one for eight reverse stock split effected in March 1996.


                                         -14-

<PAGE>


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

RESULTS OF OPERATIONS
---------------------

Security Capital reported net income of $1,013,000 for fiscal year 1996 as
compared to net income of $244,000 and a net loss of $69,000 for fiscal years
1995 and 1994, respectively.  The net earnings per common share (after accrual
for Class A Preferred Stock dividends) were $.14 for fiscal year 1996 as
compared to a net loss per common share (after accrual for Class A Preferred
Stock dividends) of $.05 and $.24 for fiscal years 1995 and 1994, respectively.

On May 17, 1996, Possible Dreams, Ltd, a Delaware corporation ("Possible
Dreams"), acquired substantially all of the assets and assumed certain
liabilities of Possible Dreams, Ltd. and Columbia National Corporation both
Massachusetts corporations (collectively, the "Sellers"), for consideration of
approximately $17.4 million. The assets purchased from the Sellers consisted of
the assets used in the conduct of their business. These assets included cash,
accounts receivable, inventories, prepaid expenses, real estate, furniture,
fixtures, computers, and intellectual property rights and other intangibles. See
Note 2 of Notes to Consolidated Financial Statements of the Company.

The Company's product sales and gross profit increased to $9,854,000 and 
$5,090,000, respectively, due to the acquisition of Possible Dreams. Possible 
Dreams' sales figures reflect the five month period from May 1, 1996 to the 
end of the fiscal year. Possible Dreams' business is very seasonal in nature 
because its main products are Christmas related. Therefore, demand for 
Possible Dreams' products and the company's best sales activity and gross 
margins are in the last two calendar quarters of any year. Selling, general 
and administrative expense increased to $4,086,000 for fiscal year 1996 as 
compared to $695,000 for fiscal year 1995. This increase can be attributed to 
the addition of five months of  Possible Dreams' selling, general and 
administrative expenses to the Company's results. The Company incurred 
interest expense of $731,000, primarily due to debt incurred to acquire 
Possible Dreams and due to increased borrowings by Possible Dreams during its 
busiest seasonal period. Interest income during the current fiscal year 
decreased by $53,000 to $362,000, primarily due to the reduction in cash 
related to the payment of $2,700,000 to the Sellers in connection with the 
acquisition of Possible Dreams.

The Company's percentage of Bowen, Miclette, Descant & Britt's (the
"Partnership's") net revenue and expenses are classified on the Company's income
statement under the caption "Income from joint enterprise" and amounted to
$362,000 and $415,000 for fiscal years 1996 and 1995. The Company's percentage
interest in the net revenues and expenses of the Partnership was 48% for
calendar year 1994 and has increased to 50% for every calendar year thereafter. 
Income from joint enterprise was down $53,000, primarily due to a change in the
bonus percentage due certain officers of the Partnership, from 25% to 50%,
pursuant to the terms of the Agency Agreement. On August 29, 1996, an officer of
the Partnership exercised the put option in the Buy-Sell Agreement to purchase
all of the assets, liabilities and business of Foster Insurance Services,
Inc.("FIS"), the 50% corporate partner of the Partnership. The purchase price
for FIS will be determined by an independent third party appraiser. It is
anticipated that the sale of the Company's interest in FIS will be completed
during the first half of 1997. Management expects a gain to be recorded in
connection with the purchase of FIS by Britt. However, at this time management
cannot estimate the gain to be recorded.

Interest income was $513,000 for fiscal year 1995 as compared to $153,000 for
fiscal year 1994.  This increase in interest income can be attributed to the
increase in funds invested by the Company due to the receipt of $6,904,000 from
a rights offering effected during the latter part of fiscal year 1994. Selling,
general and administrative expenses increased $173,000 to $695,000 for fiscal
year 1995 as compared to $522,000 for fiscal year 1994, primarily due to the
Company reserving $205,849 for New York State and City tax assessments. The
Company paid $155,396 of the above reserve on November 2, 1995 to the City of
New York for calendar years 1986 and 1987, which closed out the remaining tax
years that the Company was subject to audit with respect to its former New York
operations.

                                         -15-

<PAGE>

SEASONALITY
-----------

Possible Dreams experiences a significant seasonal pattern in its working
capital requirements and operating results. Possible Dreams has historically
received orders representing approximately 50% of its annual bookings during the
first quarter for each of the last three calendar years. It ships product
throughout the year, with a majority of the shipping occurring in the third and
fourth calendar quarters of each year. Possible Dreams hires temporary employees
during its third and fourth calendar quarters to accomodate peak shipping
periods. Possible Dreams offers extended payment terms to some of its customers
for seasonal merchandise and, accordingly, collects a substantial portion of its
accounts receivable in the fourth calendar quarter. Due to the seasonal pattern,
Possible Dreams has had greater working capital needs in its second and third
calendar quarters and has experienced greater cash availability in its fourth
calendar quarter. As a result of this sales pattern, Possible Dreams typically
records a substantial portion of its revenues in its third and fourth calendar
quarters and expects this seasonal pattern to continue for the foreseeable
future. Possible Dreams has historically financed its operations through
internally generated cash flow and short term seasonal borrowings.

LIQUIDITY AND CAPITAL RESOURCES
-------------------------------

Cash and cash equivalents decreased by $1,088,000 to $8,706,000 at September 
30, 1996, primarily due to the cost of the Possible Dreams acquisition. Of  the
cash paid to the Sellers, $2,700,000 was provided by the Company, $300,000 was
provided from the proceeds of Class A Common Stock of P.D. Holdings,
Inc.("Holdings"),the holding company for Possible Dreams, purchased by an
executive officer of the Sellers, and the balance was borrowed pursuant  to a
credit agreement.  In connection with the closing of the acquisition, the
lenders provided various credit facilities to Possible Dreams to partially
finance the acquisition, refinance existing bank debt of the Sellers, provide
for seasonal working capital and letter of credit requirements and to pay
transaction expenses. The credit facilities consist of a revolving credit
facility for short-term working capital and seasonal fluctuations of Possible
Dreams' business and $9,250,000 in amortizing term debt maturing from five to
seven years from the closing date. The credit facilities are secured by all of
the acquired assets, as well as a pledge to the lenders of the capital stock
of Possible Dreams owned by Holdings. In connection with the credit facility,
the lenders were issued warrants exercisable for 12.5% of the Class B Common
Stock, on a fully diluted basis, of Possible Dreams. The Class B Common Stock
is non-voting and convertible at any time into voting, Class A Common Stock of
Possible Dreams. The warrants have certain restrictions on transfer,
registration, put and call rights.  

In addition, the Company entered into a Consolidated Income Tax Sharing 
Agreement (the "Tax Sharing Agreement") with Possible Dreams and Holdings 
whereby Possible Dreams will calculate and pay to the Company the amount of 
its income tax liability as if Possible Dreams was not part of a consolidated 
group. The excess of the payment made by Possible Dreams to the Company over 
the Company's tax liability will accrue to the Company subject to certain 
rights of the lenders. The lenders required the Company to set aside in a 
separate account such excess amounts paid by Possible Dreams to the Company 
during the first three years of the Tax Sharing Agreement and to pledge the 
Company's rights in such account to the lenders as additional collateral for 
the loans to Possible Dreams.

The Company's consolidated working capital at September 30, 1996 increased by
$2,437,000 to $11,781,000 from $9,344,000 at September 30, 1995. The main reason
for the increase in working capital can be attributed to the impact of the new
credit agreement with the lenders, as part of the acquisition of Possible
Dreams, on the Company's financial statements. The Company expects no major 
increase in capital expenditures during fiscal year 1997. The Company believes
that with the addition of Possible Dreams, the proceeds from the sale of the
Company's insurance agency affiliate, FIS, and from  cash and cash equivalents
at September 30, 1996, there will be sufficient cash on hand to meet the
Company's working capital and operating expenditure requirements during fiscal
year 1997 and to compete for other acquisition opportunities.

                                         -16-

<PAGE>

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.
        --------------------------------------------

FINANCIAL STATEMENTS
--------------------

                     INDEX TO FINANCIAL STATEMENTS AND SCHEDULES
                     -------------------------------------------
                                           

SECURITY CAPITAL CORPORATION
----------------------------

                                           
Independent Auditors' Report. . . .. . . . . . . . . . . . . . . . .. .    F-1

Consolidated Financial Statements

          Consolidated Statements of Income--For the Years Ended 
          September 30, 1996, 1995 and 1994 . . . . . . . . . . . . . .    F-2

          Consolidated Balance Sheets -- As of
          September 30, 1996 and 1995. . .  . . . . . . . . . . . . . .    F-3
     
          Consolidated Statements of Cash Flows--For the Years Ended 
          September 30, 1996, 1995 and 1994  . . . . . . . . . . .  . .    F-4
     
          Consolidated Statements of Stockholders' Equity--For the Years
          Ended September 30, 1996, 1995 and 1994 . . . . . . . . . . .    F-5
     
          Notes to Consolidated Financial Statements . . .. . . . . . .    F-6

Supplementary Financial Information

          See Note 9 to Consolidated Financial Statements under this Item 8. 

BOWEN, MICLETTE, DESCANT & BRITT
--------------------------------

Independent Auditors' Report . . . . . . . . . . .  . . . . . . . . . .    F-16

Financial Statements

          Statements of Income--For the Years Ended September 30, 1996, 
          1995 and 1994. . . . . .  . . . . . . . . . . . . . . . . . .    F-17
     
          Balance Sheets--As of September 30, 1996 and 1995. . .  . . .    F-18
     
          Statements of Cash Flows--For the Years Ended 
          September 30, 1996, 1995 and 1994. . . . . . . . . . . . . . .   F-19
     
          Statement of  Partners' Equity --For the Years Ended 
          September 30, 1996, 1995 and 1994. . . . . . . . . . . . . . .   F-20
     
          Notes to Financial Statements  . . . . . . . . . . . . . . . .   F-21


                                         -17-


<PAGE>


INDEPENDENT AUDITORS' REPORT

To the Board of Directors of 
Security Capital Corporation
Houston, Texas 77008

We have audited the accompanying consolidated balance sheets of Security Capital
Corporation and subsidiaries (the "Company") as of September 30, 1996 and 1995
and the related consolidated statements of income, stockholders' equity, and
cash flows for each of the three years in the period ended September 30, 1996. 
These financial statements are the responsibility of the Company's management. 
Our responsibility is to express an opinion on these financial statements based
on our audits.

We conducted our audits in accordance with generally accepted auditing
standards.  Those standards require that we plan and perform the 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, such consolidated financial statements present fairly, in all
material respects, the financial position of  Security Capital Corporation and
subsidiaries at September 30, 1996 and 1995, and the results of their operations
and their cash flows for each of the three years in the period ended September
30, 1996 in conformity with generally accepted accounting principles.





DELOITTE & TOUCHE LLP
Houston,  Texas
December 6, 1996

                                       F-1

<PAGE>

Consolidated Statements of Income
Security Capital Corporation and Subsidiaries
---------------------------------------------------------------------------
Year Ended September 30,                    1996       1995          1994
---------------------------------------------------------------------------
                    (In thousands, except share and per share amounts)

Product sales                            $   9,854    $      -     $      -

Cost of goods sold                           4,764           -            -
---------------------------------------------------------------------------
Gross profit                             $   5,090    $            $      -
---------------------------------------------------------------------------

Selling, general and administrative          4,086         695          522

---------------------------------------------------------------------------
Operating income(loss)                   $   1,004    $  (695)     $  (522)
---------------------------------------------------------------------------

Other income/expense
--------------------
Income from joint enterprise             $     362    $    415     $    282
Interest income                                483         513          153
Interest expense                             (731)           -            -
Other income                                    82          11           18

---------------------------------------------------------------------------
Total other income                       $     196    $    939     $    453
---------------------------------------------------------------------------

Minority interest share of net income        (129)           -            -
---------------------------------------------------------------------------
Income(loss) before provision for 
     income tax                          $   1,071    $    244     $   (69)
Provision for income taxes                      58           -            -

---------------------------------------------------------------------------
Net income(loss)                         $   1,013    $    244     $   (69)
                                                                           
                                                                           
Less preferred stock dividends               (450)       (450)        (450)
---------------------------------------------------------------------------

Net income(loss) applicable to common
stockholders                             $     563    $  (206)     $  (519)
---------------------------------------------------------------------------


Net income(loss) per common share:            $.14     $*(.05)      $*(.24)
---------------------------------------------------------------------------
Weighted average shares outstanding          4,060      *4,061       *2,146
---------------------------------------------------------------------------
* Restated for one-for-eight reverse stock split. 
The accompanying Notes to Consolidated Financial Statements are an integral part
of these financial statements.

                                        F-2

<PAGE>

Security Capital Corporation and Subsidiaries
Consolidated Balance Sheets
---------------------------------------------------------------------------
As of September 30,                                1996                1995
---------------------------------------------------------------------------
ASSETS                            ( In thousands, except par value and shares)
------
Current assets:                                                          
Cash and cash equivalents                 $       8,706       $       9,794
Account receivable (net of allowance for 
     doubtful accounts of $412 and $0)            9,793                   -
Inventory                                         5,010                   -
Other current assets                                278                 180
                                           ------------        ------------
Total current assets                             23,787               9,974

Property and equipment (net of accumulated
     depreciation of $200 and $353)               1,105                  14
Intangible assets (net of accumulated 
     amortization of $215 and $0 )                9,122                   -
Investment in and advances to joint enterprise       87                 653
Licenses and other assets                           401                 285
---------------------------------------------------------------------------
Total Assets                              $      34,502        $     10,926
---------------------------------------------------------------------------
Liabilities and Stockholders' Equity
------------------------------------
Current liabilities:                                   
Note payable                              $       8,884        $          -
Current portion of long-term debt                 1,010                   -
Accounts payable                                  1,646                   -
Accounts payable - FGS & designee                     -                 166
Accrued expenses and other liabilities              466                 464
                                           ------------        ------------
Total current liabilities                        12,006                 630

Long-term debt, less current portion             10,329                   -
Minority interest                                   858                   -
---------------------------------------------------------------------------
Total Liabilities                         $      23,193        $        630
---------------------------------------------------------------------------
Commitments and Contingencies             $           -        $          -
---------------------------------------------------------------------------
Class A preferred stock
   (redeemable), $.01
    par value, 50,000
    shares authorized,
    30,000 shares
    issued (including
    dividends in arrears
    of $1,425 and $975)                   $       4,425        $      3,975
---------------------------------------------------------------------------
Stockholders' Equity
--------------------
Common stock, $.01 par value, 
  7,500 shares   authorized; 
  551 and *564 shares issued              $           -        $          -
Class A common stock, $.01 par value,
  10,000,000 and *10,000,000 shares 
  authorized; 4,378,190 and *4,378,671 
  shares issued                                      44                 350
Preferred stock, $.01 par value, 2,500,000
  shares authorized; none issued                      -                   -
Additional paid-in capital                       62,544              62,238
Accumulated deficit                            (50,489)            (51,052)
Less: Treasury stock, at cost, 318,575 and
   *318,575 shares                              (5,215)             (5,215)
---------------------------------------------------------------------------
Total Stockholders' Equity                $       6,884        $      6,321
---------------------------------------------------------------------------

---------------------------------------------------------------------------
Total Liabilities and Stockholders' 
  Equity                                  $      34,502        $     10,926
---------------------------------------------------------------------------

* Restated for one-for-eight reverse stock split.
The accompanying notes to consolidated financial statements are an integral part
of these statements. 

                                        F-3


<PAGE>

Consolidated Statements of Cash Flows
Security Capital Corporation and Subsidiaries
---------------------------------------------------------------------------
Year ended September 30,                     1996        1995        1994
---------------------------------------------------------------------------
(In thousands)

Cash flows from operating activities:                     
Net income (loss)                       $    1,013    $    244   $    (69)
Adjustments to reconcile 
net income (loss) 
to net cash provided
(used) by operating activities:                   
  Depreciation and amortization 
  of property
  and equipment, and 
  amortization of deferred items               296          17          41
  Provision for possible losses                  -           -           6
  Minority interest                            129           -           -
  Changes in operating assets and 
   liabilities, net of effects from 
   acquisition of business
   Increase in accounts receivable         (6,969)           -           -
   Increase in inventories                 (1,566)           -           -
   (Increase)decrease in other assets          839       (169)       (127)
   Increase(decrease) in payables              885         321       (207)

---------------------------------------------------------------------------
Net cash provided (used) by operating 
   activities                              (5,373)         413       (356)
---------------------------------------------------------------------------
Cash flows from investing activities:             
   Capital expenditures                       (13)           -           -
Purchase of assets of  Possible Dreams 
   and Columbia National Corporation 
  (net of cash acquired of $764)          (16,296)           -           -

---------------------------------------------------------------------------
Net cash provided (used) by 
  investing activities                    (16,309)           -           -
---------------------------------------------------------------------------

Cash flows from financing activities:
   Net increase in borrowings 
     under line of credit                    6,234           -           -
   Borrowings incurred to finance the 
     acquisition of Possible Dreams 
     and Columbia National Corporation      14,360           -            
   Proceeds from stock rights offering, 
     net of issuance costs of $227               -           -       6,904

---------------------------------------------------------------------------
Net cash provided (used) by 
   financing activities                     20,594           -       6,904
---------------------------------------------------------------------------

Increase in cash and cash equivalents      (1,088)         413       6,548

Cash and cash equivalents, 
   beginning of year                         9,794       9,381       2,833
---------------------------------------------------------------------------
Cash and cash equivalents, end of year  $    8,706 $    9,794$       9,381
---------------------------------------------------------------------------

The accompanying Notes to Consolidated Financial Statements are an integral part
of these financial statements.

                                         F-4


<PAGE>

Consolidated Statement of Stockholders' Equity
Security Capital Corporation and Subsidiaries

<TABLE>
<CAPTION>

                                                                   Class A      Additional
                                       Number of       Common      Common         Paid-in      Accumulated     Treasury
(In thousands except shares)      Shares Issued *       Stock       Stock         Capital        Deficit          Stock      Total
<S>                                      <C>             <C>          <C>           <C>            <C>             <C>         <C>
-----------------------------------------------------------------------------------------------------------------------------------
Balance, September 30, 1993           12,056,452     $    -      $    121       $    55,730    $  (50,327)    $   (5,215)   $  309
-----------------------------------------------------------------------------------------------------------------------------------

Net loss for fiscal year 1994             -               -             -              -            (69)            -          (69)

Dividends in arrears on 
preferred stock                           -               -             -              -            (450)           -         (450)

Issuance of 22,977,428 shares              
of Class A common stock as
part of stock rights offering,
less issuance costs of $227           22,977,428          -           229             6,675           -             -         6,904

-----------------------------------------------------------------------------------------------------------------------------------
Balance, September 30, 1994           35,033,880     $    -      $    350       $    62,405    $  (50,846)    $ (5,215)     $ 6,694
-----------------------------------------------------------------------------------------------------------------------------------

Price adjustment of stock
previously sold to FGS and
designees                                 -               -             -             (167)           -             -         (167)

Net income for fiscal year 1995           -               -             -              -             244                       244

Dividends in arrears on referred 
stock                                     -               -             -              -            (450)           -         (450)

-----------------------------------------------------------------------------------------------------------------------------------
Balance, September 30, 1995           35,033,880     $    -      $    350       $  62,238      $ (51,052)     $ (5,215)     $ 6,321
-----------------------------------------------------------------------------------------------------------------------------------

Net income for fiscal year 1996           -                                                       1,013                       1,013

Dividends in arrears on preferred 
stock                                     -               -             -              -           (450)            -         (450)

Reverse one-for-eight stock split   (30,654,102)          -          (306)           306              -             -            -

Payment for fractional shares            (1,037)          -             -              -              -             -            -

-----------------------------------------------------------------------------------------------------------------------------------
Balance, September 30, 1996           4,378,741      $    -      $     44       $  62,544      $ (50,489)     $ (5,215)     $ 6,884
-----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
 * Includes both Common Stock and Class A Common Stock
The accompanying  Notes to Consolidated Financial Statements are an integral
part of these financial statements.

                                        F-5

<PAGE>

Notes to Consolidated Financial Statements
Security Capital Corporation and Subsidiaries

-------------------------------------------------------------------------------
1.  Organization
-------------------------------------------------------------------------------

Security Capital Corporation ("Security Capital" or, when referred to 
together with its subsidiaries, the "Company") owns, effective May 1, 1996, 
through its 90% owned subsidiary, P.D. Holdings, Inc. 90% (77.5% effective 
after consideration of the outstanding warrants issued in conjunction with 
debt to purchase outstanding shares of common stock) of the outstanding 
shares of Possible Dreams, Ltd.("Possible Dreams"), a Delaware corporation. 
Possible Dreams acquired substantially all of the assets and assumed certain 
liabilities of Possible Dreams, Ltd. and Columbia National Corporation, both 
Massachusetts corporations, during May 1996. Possible Dreams operates as an 
importer, designer, warehouser and distributor of collectible Christmas 
figurines and ornaments and, to a lesser extent, religious articles. The 
Company owns all of the outstanding shares of Security Capital Insurance 
Group, Inc. ("SCIGI") and, through SCIGI, the Company owns Foster Insurance 
Managers, Inc. ("FIM") and Lloyd's Management Corporation ("LMC").  FIM has a 
management services agreement with the Company's insurance agency affiliate, 
Foster Insurance Services, Inc. ("FIS").  FIS and Bowen, Miclette & Descant, 
Inc. ("BMD"), another unaffiliated independent insurance agency, entered into 
a partnership agreement effective October 1, 1993. The new enterprise was 
named Bowen, Miclette, Descant & Britt ("BMDB") and has done business under 
that name since October 1, 1993.

-------------------------------------------------------------------------------
2.  Summary of significant accounting and reporting policies
-------------------------------------------------------------------------------

ACQUISITION OF POSSIBLE DREAMS, LTD. 
The Company acquired the assets and assumed certain liabilities of Possible 
Dreams, Ltd., a Massachusetts corporation, and Columbia National Corp., a 
Massachusetts corporation, in May 1996, for a total purchase price of 
$17,360,000 (the "Acquisition").  To finance the transaction, the Company 
used $3,000,000 of equity contribution from P.D. Holdings, Inc. ($300,000 
provided by minority owners of P.D. Holdings, Inc.), borrowed $9,250,000 
under term loan agreements, borrowed $2,650,000 under a line-of-credit 
agreement and issued $2,460,000 in subordinated debt.  The acquisition was 
accounted for under the purchase method of accounting and the acquisition can 
be summarized as follows:

Source of acquisition funds:  
     Cash                                              $ 2,700,000
     Debt issued (Note 5)                               14,360,000
     Minority interests investment                         300,000
                                                  -----------------
                                                       $17,360,000
                                                  -----------------
                                                  -----------------


Allocation of purchase price: 
     Goodwill and other intangible assets              $ 9,337,175
     Inventories                                         3,443,796
     Accounts receivable                                 2,824,506
     Property and equipment                              1,100,000
     Other assets                                          113,605
     Working capital                                       540,918
                                                  -----------------
                                                       $17,360,000
                                                  -----------------
                                                  -----------------

The consolidated financial statements of the Company include the operations of
Possible Dreams since May 1, 1996.


                                         F-6

<PAGE>

The following unaudited pro forma financial data have been prepared assuming
that the acquisition of Possible Dreams occurred on October 1, 1995.

----------------------------------------------------------
Year ended September 30,             1996            1995
----------------------------------------------------------
          (In thousands, except per share amounts)

Revenues                           $18,189        $20,655
Net income                            $534           $951
Earnings per share                    $.02           $.12


CONSOLIDATION
The accompanying consolidated financial statements include the accounts of
Security Capital, all of its subsidiaries and its affiliate, FIS.  All
significant intercompany balances have been eliminated in consolidation.  The
Company accounts for its investment in BMDB under the equity method of
accounting.

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

CONSOLIDATED STATEMENTS OF CASH FLOWS
For purposes of the consolidated statements of cash flows, the Company considers
all highly liquid debt instruments with a maturity of three months or less to be
cash equivalents.  Interest paid during the three years ended September 30, 1996
was $730,942, $0, and $0, respectively.  There were no income taxes 
paid during the prior three years ended September 30, 1996.

REVENUE RECOGNITION
Revenues from product sales are recognized in the period in which the
merchandise is shipped.

INVENTORIES
Inventories, comprised of finished goods, are valued at the lower of cost or
market, with cost being determined by the first-in, first-out method("FIFO").

PROPERTY AND EQUIPMENT
Property and equipment are carried at cost.  Depreciation is computed using the
straight-line method over the estimated useful lives of the assets.  Fixed
assets are comprised of the following:

-----------------------------------------------------------------
September 30,                           1996                1995
-----------------------------------------------------------------
                                              (In thousands)
Land and improvements                 $   370            $      -
Buildings and improvements                630                   -
Machinery and equipment                    24                   -
Data processing equipment                  52                 176
Furniture and fixtures                    229                 191
                              -----------------------------------
Total cost                            $ 1,305            $    367
                              -----------------------------------
Less:  accumulated depreciation           200                 353

                              -----------------------------------
Net book value                        $ 1,105            $     14
                              -----------------------------------
                              -----------------------------------

                                         F-7

<PAGE>

INTANGIBLE ASSETS
Intangible assets consist of the cost in excess of the fair value of net assets
acquired in the Possible Dreams acquisition ("Goodwill") of $8,663,348 (net of
amortization) and net deferred financing costs of $458,702. Goodwill and
deferred financing costs are being amortized on a straight-line basis over 20
years and the estimated term of the related debt, respectively.

FAIR VALUE OF FINANCIAL INSTRUMENTS
Financial instruments consist of current assets, current liabilities, notes
payable and long-term debt. Current assets and current liabilities are carried
at cost, which approximates fair value. Note payable and long-term debt bear
interest at current market rates and, accordingly, the carrying value of the
debt approximates fair value.

EARNINGS PER SHARE
Earnings per common share amounts are based on the weighted average number of
Common and Class A Common Shares outstanding and the dilutive effect, if any, of
outstanding stock options.  The sum of Common and Class A Common Stock is used
because the two classes are identical except for certain transfer restrictions. 
Earnings per common share assuming full dilution are based on the actual shares
outstanding and the dilutive effect, if any, of outstanding stock options.  The
assumed conversion of these options was anti-dilutive or had no impact for all
periods presented.

The weighted average number of shares outstanding used in the computations of
primary earnings per share was 4,060,166, 4,060,659 and 2,145,873 for fiscal
years 1996, 1995 and 1994, respectively. All references to amounts per share and
number of shares in the financial statements and elsewhere throughout this
report are restated to give effect to the one-for-eight reverse stock split
effected in March 1996.

INCOME TAXES
The Financial Accounting Standards Board has issued Statement of Financial
Accounting Standards No. 109 "Accounting for Income Taxes" (the "Statement"). 
The Statement requires an asset and liability approach for financial accounting
and reporting for income taxes which differs from the method previously required
by generally accepted accounting principles.  The Company adopted the Statement
during the year ended September 30, 1994.  As discussed further in Note 4, the
adoption of the Statement did not materially impact the Company's financial
statements.

-------------------------------------------------------------------------------
3.  Stock option plan
-------------------------------------------------------------------------------

Security Capital's 1982 Incentive Stock Option Plan (the "Plan"), as amended on
December 10, 1990, provides for the granting of  options to purchase up to
950,000 shares of Class A Common Stock to eligible employees of the Company at
the fair market value on the date of the grant.  Options may be exercised in
installments over the option period, but no options may be exercised after 10
years from the date of the grant.  The Plan terminated on January 25, 1992.

                                         F-8

<PAGE>

Changes in outstanding shares under option during each of the three years in the
period ended September 30, 1996 and the balance outstanding and available for
future grant at September 30, 1996 are summarized as follows:

-------------------------------------------------------------------------------
                                        Number of                 Option Price
                                        Shares *                    Range *
-------------------------------------------------------------------------------

Outstanding at September 30, 1993         4,325                  $5.00 - $49.04
Granted                                       -
Exercised                                     -
Canceled                                      -

-------------------------------------------------------------------------------
Outstanding at September 30, 1994         4,325                  $5.00 - $49.04
Granted                                       -   
Exercised                                     -   
Canceled                                    313   

-------------------------------------------------------------------------------
Outstanding at September 30, 1995         4,012                  $5.00
Granted                                       -   
Exercised                                     -   
Canceled
-------------------------------------------------------------------------------
Outstanding at September 30, 1996         4,012                  $5.00
Exercisable:        
          At September 30, 1996           4,012
-------------------------------------------------------------------------------
Available for future grant                    0
-------------------------------------------------------------------------------

* Restated for one-for-eight reverse stock split.

-------------------------------------------------------------------------------
4.  Federal income taxes
-------------------------------------------------------------------------------

Security Capital files a consolidated Federal income tax return with its
subsidiaries.

At September 30, 1996, the Company had net operating loss carryforwards for
Federal income tax purposes of approximately $17.0 million, the expiration dates
of which are as follows:

-------------------------------------------------------------------------------
September 30,                                              Amount
-------------------------------------------------------------------------------
                                                       (In thousands)
  1998                                                      $               200
  1999                                                                    2,500
  2000                                                                    1,300
  2001                                                                    3,600
  2002                                                                    1,800
  2003                                                                    4,000
  2004                                                                    2,400
  2006                                                                      400
  2007                                                                      200
  2008                                                                      600
-------------------------------------------------------------------------------
                                                            $            17,000
-------------------------------------------------------------------------------

                                         F-9


<PAGE>

In addition, in connection with the disposition of a former subsidiary of the
Company, the Company incurred a tax loss amounting to approximately $26 million
during the year ended September 30, 1988.  The Company believes that a
substantial portion of this loss is an ordinary loss for Federal income purposes
which may be carried forward to 2003, although there can be no assurance that
this position would prevail, if challenged.  The Company believes that
approximately $7.4 million of the loss is a capital loss which expired unused at
September 30, 1994. The Company's Federal income tax returns have been examined
by the Internal Revenue Service (the "IRS") through fiscal 1986 and the above
loss carryforwards, including the loss on disposition of the aforementioned
subsidiary, remain subject to review by the IRS.

During 1994, the Company adopted the Statement, which requires the Company to
compute deferred income taxes based on the difference between the financial
statement and tax basis of assets and liabilities using enacted tax rates in
effect in the years in which the differences are expected to reverse.  The
adoption had no effect on financial position or results of operations because of
a 100% valuation allowance applied against the Company's net deferred tax asset.

The tax effects of the items comprising the Company's net deferred tax asset at
September 30, 1996 and 1995 in the Company's statement of financial position are
as follows:

-------------------------------------------------------------------------------
September 30,                                     1996                     1995
-------------------------------------------------------------------------------
                                                         (In thousands)    
  Deferred tax assets (credits):
    Allowance for doubtful accounts     $           39      $                 -
    Operating loss carryforwards                12,122                   12,635
    Partnership income (loss)                                              (139)
    Accelerated depreciation                       (17)                       -
                                        ----------------    -------------------
                                                12,144                   12,496


    100% Valuation allowance                   (12,144)                 (12,496)
                                        ----------------    -------------------


  Net deferred tax asset                $           -0-     $               -0-
                                        ----------------    -------------------
                                        ----------------    -------------------

A reconciliation of the provision for income taxes to income taxes based on the
34% statutory rate for the year ended September 30, 1996 is as follows (in
thousands):

Income taxes based on 34% of  net income                    $              344
Utilization of net operating loss carryforwards                           (352)
State income taxes                                                          58
Other                                                                        8
Provision for income taxes                                  $               58

                                         F-10

<PAGE>

-------------------------------------------------------------------------------
5.  Debt
-------------------------------------------------------------------------------

Long-term debt consists of the following at September 30, 1996 (there was no
debt outstanding at September 30, 1995):


Tranche A Term Loan, payable in twenty quarterly installments 
through July 1, 2001. The loan bears interest at the commercial
paper rate plus 4% (9.46% at September 30, 1996). Interest 
is payable monthly.                                                 $5,750,000

Tranche B Term Loan, payable in seven annual installments 
through April 1, 2003. The loan bears interest at the 
commercial paper rate plus 6% (approximately 11.46% at 
September 30, 1996). Interest is payable monthly.                    3,500,000

Subordinated promissory notes payable to the former owners 
of Possible Dreams, interest rates ranging from 10 - 14% 
( 10% at September 30, 1996) per annum.  The principal 
payments are due in one installment on May 31, 2003.  
Interest is payable in semi-annual installments on 
May 1 and November 1.                                                2,460,000
                                                            ------------------
                                                                    11,710,000
Less amounts representing debt discount                               (371,089)
Less current portion                                                (1,010,000)
                                                            ------------------
Total long term debt                                               $10,328,911
                                                            ------------------
                                                            ------------------


The scheduled repayments of the loans are as follows:

                               September 30,                          Amount
                               -------------                          ------
                                   1997                             $1,010,000
                                   1998                              1,000,000
                                   1999                              1,250,000
                                   2000                              1,250,000
                                   2001                              1,240,000
                                Thereafter                           5,960,000

In connection with the Tranche A and Tranche B loans, Possible Dreams issued 
warrants to purchase 250 shares (12.5%) of Possible Dreams Class B Common Stock
at a  price of $.01 per share. The Class B Common Stock is non-voting  and
convertible at any time into voting, Class A Common Stock of Possible Dreams.
The warrants were valued at approximately $428,571 and  recorded as an original
issue discount. The discount will be amortized over  the life of the debt using
the effective interest method. The Tranche A and B  loans contain financial and
prepayment of principal covenants. If Possible  Dreams' cash flows meet certain
thresholds, as defined in the loan  agreements, payments due under the Tranche
A and B loans will become  accelerated.

In addition, the Company entered into a Consolidated Income Tax Sharing 
Agreement (the "Tax Sharing Agreement") with Possible Dreams and P.D. Holdings,
Inc. whereby Possible Dreams will calculate and pay to the Company the amount 
of its income tax liability as if Possible Dreams was not part of a 
consolidated group. The excess of the payment made by Possible Dreams to the 
Company over the Company's tax liability will accrue to the Company subject 
to certain rights of the lenders. The lenders required the Company to set 
aside in a separate account such excess amounts paid by Possible Dreams to 
the Company during the first three years of the Tax Sharing Agreement and to 
pledge the Company's rights in such account to the lenders as additional 
collateral for the loans to Possible Dreams. The amount to be segregated for 
the five months ended September 30, 1996 is $385,000.

Note Payable - Bank - The Company maintains a $10,000,000 revolving line of
credit that expires on May 17, 2003. The amount outstanding under the revolving
line of credit was $8,884,410 at September 30, 

                                         F-11


<PAGE>

1996. The line of credit bears interest at the commercial paper rate plus 4%
(9.46% at September 30, 1996). Interest on the revolving line of credit is
payable monthly.  

The Tranche A and B loans and the revolving line of credit are secured by
substantially all the assets of Possible Dreams as well as a pledge to the
lender of the capital stock of  Possible Dreams.

-------------------------------------------------------------------------------
6.  Redeemable Preferred Stock
-------------------------------------------------------------------------------

FGS and its designees purchased 30,000 shares of Preferred Stock from the
Company for $3,000,000, on July 30, 1993.  This non-voting preferred stock is
subject to mandatory redemption on the following date or dates: (1) eight years
from the date of issuance of the first shares of such stock; (2) the occurrence
of a change of control in the majority of  the Board of  Directors; or (3) each
date, if any, on which an adjustment to the purchase price of the stock shall be
required. The stock has a purchase price and redemption price equal to the
liquidation value, which is $100 per share.  In addition, the Class A Preferred
Stock bears a dividend of 15% per annum payable in cash. Until redemption or the
liquidation of the Company, dividends on Preferred Stock are payable only out of
cumulative net income since January 1, 1990. (At a redemption date or upon the
liquidation of the Company, accumulated but unpaid dividends are payable in full
regardless of earnings since January 1, 1990.) Therefore, since there has been a
cumulative net loss since January 1, 1990 of $456,000, preferred stock dividends
of $1,425,000 accrued from July 30, 1993 to September 30, 1996, were in arrears
at September 30, 1996.

-------------------------------------------------------------------------------
7.  Stockholders' Equity
-------------------------------------------------------------------------------

On January 26, 1990, Security Capital executed a Stock Purchase Agreement 
with FGS, Inc., a Delaware corporation ("FGS").  Pursuant to the Stock 
Purchase Agreement, FGS and its designees had acquired for an aggregate 
consideration to date of $4,416,613 (subject to adjustments as noted below) 
4,483,975 shares (without adjusting for the reverse stock split) of Class A 
Common Stock, 1,025 shares (without adjusting for the reverse stock split) of 
Common Stock and 30,000 shares of Class A Preferred Stock. The original 
purchase price per share for such Common Equity purchased by FGS and its 
designees was $.3822816 per share.  This per share price was the 
unconsolidated net book value of the Company's Common Stock as of September 
30, 1989 subject to various adjustments pursuant to the Stock Purchase 
Agreement.  The adjustments to the Per Share Price under the Stock Purchase 
Agreement which have been made since the purchase of capital stock by FGS, 
and which may in the future be made, reflect the difference, if any, between 
estimated amounts and actual amounts (a) received in connection with (i) the 
liquidation of the Company's investment in Security Capital Lloyds("SCL"), 
(ii) the sale of certain assets of the Company and (iii) the termination of 
the Company's pension plan and (b) expended in connection with termination of 
the lease of the Company's New York office.  Such adjustments shall be made 
no less frequently than every six months with the final adjustment no later 
than the date of termination of the sublease of the Company's former New York 
office in January 1995.  In addition, the Per Share Price is subject to 
adjustment (i) to reflect liabilities of the Company, if any, existing prior 
to January 26, 1990 not included in the calculation of the Per Share Price or 
(ii) in satisfaction of Security Capital's obligation to indemnify FGS for 
losses resulting from or relating to (x) any misrepresentation, breach of 
warranty or breach of covenant in the Stock Purchase Agreement or (y) 
operations of the Company prior to January 26, 1990.  As of the date of this 
report, the only known remaining adjustments to the per share price under the 
Stock Purchase Agreement relate to possible amounts due to the City and State 
of New York. During fiscal year 1996, the Company paid $166,000 to FGS and 
its designees for prior year adjustments.

In March 1996, the Company effected a one-for-eight reverse split of the
Company's Common Stock and Class A Common Stock. The reverse split had the
effect of decreasing the number of issued shares from 35,033,880 to
approximately 4,378,741. The par value of the reduced shares in connection with
the reverse split was charged to Common Stock and Class A Common Stock and a
like amount credited to paid in capital. Accordingly, all share and per share
data in the financial statements and footnotes have been restated to reflect the
reverse stock split. 


                                         F-12

<PAGE>

-------------------------------------------------------------------------------
8.  Related party transactions
-------------------------------------------------------------------------------
On April 27, 1990, Security Capital entered into an Advisory Services 
Agreement effective as of January 26, 1990 (the "Advisory Agreement") with 
Capital Partners, Inc. ("CP, Inc."), an entity affiliated with FGS, pursuant 
to which such entity provides certain advisory services in the areas of 
investments, general administration, corporate development, strategic 
planning, stockholder relations, financial matters and general business 
policy in lieu of the services previously provided by certain of the 
Company's officers and other support personnel from the Company's former New 
York office.  The annual fee for such services pursuant to the Advisory 
Agreement was $150,000 (due in quarterly installments in advance) plus 
certain out-of-pocket costs (which do not include rent and utilities of CP, 
Inc. and compensation of CP, Inc. employees). In connection with the 
acquisition of Possible Dreams, the Company entered into an amendment to the 
Advisory Agreement with CP, Inc. to provide management advisory services to 
Possible Dreams for an increase in the annual fee of $175,000 to $325,000.  
Such fee is subject to appropriate adjustment should the scope of operations 
of the Company change, whether from an acquisition or otherwise. Pursuant to 
the Advisory Agreement, no compensation is paid to the current Chairman of 
the Board, President and Secretary and Assistant Secretary in their 
respective capacities as such.

The Advisory Agreement states that, from time to time, CP, Inc. may present
acquisition opportunities to the Company that it believes may be appropriate for
the Company, but that CP, Inc. is under no obligation to present any or all
acquisition candidates of which it is aware to the Company except for insurance
agency business.  If the Company or any of its subsidiaries completes any
acquisition which was presented by CP, Inc., the Company is obligated to pay CP,
Inc. an investment banking fee at the usual and customary rate for transactions
of such size and complexity.  In connection with the Possible Dreams
acquisition, an investment banking fee of  $200,000 was paid to CP, Inc.

Both of the key executives of Possible Dreams have entered into employment, 
consulting and non-competition agreements. Mr. Warren Stanley, the President 
and Chief Executive Officer of Possible Dreams, acquired 10% of the Class A 
Common Stock of Holdings for $300,000, as part of the Company's transaction 
to purchase Possible Dreams. Mr. Stanley and another executive officer were 
granted options to purchase an additional 10% of such Class A Common Stock at 
an exercise price of approximately $1,904 per share. Both executive officers, 
Holdings and the Company entered into a Stockholders' Agreement providing for 
certain restrictions on transfers of the shares of Holdings owned by them, 
together with certain preemptive rights, rights of first refusal, puts and 
calls, "tag along/drag along" rights and registration rights with respect to 
the Class A and Class B Common Stock of Holdings.

The initial term of the Advisory Agreement was for one year commencing on
January 26, 1990; the agreement provides that thereafter it will be
automatically extended for additional one-year periods unless either party gives
30 days' written notice to the other of its intention to terminate.

Effective September 1, 1992, FIM entered into (i) an Agency and Management
Services Agreement (as amended, the "Agency Agreement") with FIS which replaced
a previous agreement with Stanley L. Spring, and (ii) a Buy-Sell Agreement (the
"Buy-Sell Agreement") with FIS and Edward G. Britt, Jr. ("Britt"), the sole
shareholder of FIS.

Pursuant to the Agency Agreement, FIM reappointed FIS as its local recording
agent in Texas for FIM and related insurance companies and FIM agreed to provide
management consultation services to FIS and to use its best efforts to maintain
insurance markets for the placement of the insurance business produced by FIS. 
As compensation for its management consultation services, FIM will be paid 100%
of the net pre-tax income of FIS (after the accrual of up to 25% of the pre-tax
income to FIS for the payment of bonuses to FIS's employees) until the earlier
of (i) the payment to FIM of (x) $1,000,000 (plus or minus the net pre-tax
profits or losses of FIS from October 1, 1991 through the effective date of the
Agency Agreement and less amounts paid to FIM as rental for certain office
furniture), reduced by (y) an amount equal to two times any amount paid by FIS
to FIM prior to September 30, 1995 from the proceeds of capital contributions by
Britt or (ii) September 30, 1996.  Thereafter, FIM will be paid a percentage of
FIS's net pre-tax income based upon the amounts theretofore paid to FIM as
provided in the Agency Agreement, but in any event not less than 50% of such net
pre-tax income. The Agency Agreement has a term of 20 years, and will be
automatically renewed for successive one year periods unless terminated by
either party on 60 days' prior notice; provided, however, that the Agency
Agreement will terminate upon the earliest to occur of (i) the death or
disability of Britt, (ii) a sale of the stock of FIS by Britt or the termination
of the Buy-Sell Agreement, (iii) the inability of FIM and FIS to resolve
material disputes on or after September 30, 1994 upon notice of termination from
either party, and (iv) notice from FIM following the suspension, cancellation or
failure to renew any of the insurance licenses of FIS.

                                         F-13

<PAGE>

Pursuant to the Buy-Sell Agreement, FIM received an option to purchase 50% of
the stock of FIS at any time for $1,000.  In addition, Britt received the
option, any time after the later of (i) September 30, 1994 and (ii) the payment
to FIM of $1,000,000 pursuant to the Agency Agreement, to purchase any shares of
FIS then owned by FIM and to terminate the Agency Agreement for a purchase price
equal to 50% of the then fair market value of FIS (which fair market value shall
in any event not be less than $3,000,000) plus an amount equal to $1,000,000
less the amounts previously paid to FIM pursuant to the Agency Agreement. On
August 29, 1996 Britt exercised the Put Option in the Buy-Sell agreement to
purchase all of the assets, liabilities and business of FIS, the 50% corporate
partner of BMDB for a price to be determined by an independent third party
appraiser. It is expected that Britt's purchase of FIS will be concluded in the
first half of 1997.  Management expects a gain to be recorded in connection with
the purchase of FIS by Britt.  However, at this time, management cannot estimate
the gain to be recorded.

Mr. Larry M. Karren ("Karren"), the Vice President and Treasurer of Security
Capital, the Controller of FIS and the Vice President and Chief Financial
Officer of FIM, has entered into an agreement (the "Participation Agreement")
with Britt, FIS and FIM whereby Karren will be entitled to receive from FIS,
after payment in full of the FIM Fee (as defined in the Buy-Sell Agreement), a
bonus payment equal to 10% of the net pre-tax income of FIS until the occurrence
of either (i) the exercise by Britt of the Put Option under the Buy-Sell
Agreement or (ii) the sale of a majority of the stock or assets of FIS to a
party other than Karren, FIS or FIM.  In the case of (i), Karren will be
entitled to purchase for nominal consideration approximately 10% of the stock
of, or an interest in, FIS.  In the case of (ii), Karren will be entitled to
receive a portion of the net proceeds of any such sale described in (ii)
otherwise distributable to Britt.

-------------------------------------------------------------------------------
9.  Quarterly information (unaudited)
-------------------------------------------------------------------------------

The following is a summary of operations by quarter (dollar amounts in
thousands, except per share amounts):


                              1st            2nd            3rd            4th
                          Quarter        Quarter        Quarter        Quarter

Fiscal Year 1996:
-----------------

Operating revenues     $        -    $         -    $     1,453    $     8,401
Net income (loss)              12            249           (272)         1,024
Earnings (loss) per common 
share                        (.02)           .03           (.09)           .22
Dividends per share of 
common stock                    -              -              -              -

Fiscal Year 1995:
-----------------
                                        
Operating revenues     $        -    $         -    $         -    $         -
Net income (loss)             (101)          277          (114)            182
Earnings (loss) per common 
share                         (.05)          .04          (.06)            .02
Dividends per share of 
common stock                    -              -              -              -

                                         F-14

<PAGE>

------------------------------------------------------------------------------
10.  Commitments and Contingencies
------------------------------------------------------------------------------

COMMITMENTS

Possible Dreams maintains certain agreements with giftware designers which
require payment of royalties based upon a percentage of net sales of certain
products and other formulas as stated in the agreements. The royalty expense
under these agreements amounted to $124,496 for the period May 1, 1996 to
September 30, 1996.

CONTINGENCIES

On May 4, 1992, the Company received a notice from the State of New York that
the Company owed $244,116 in additional withholding taxes, interest and
penalties for calendar year 1984.  The Company has submitted information to the
State of New York and is awaiting a reply.  At this time, although the Company
is unable to determine the amount, if any, which may eventually be owed to the
State of New York, the Company believes its previously filed returns are correct
and that no additional amounts are owed to the state.

By notice received January 3, 1994, the Company's insurance agency affiliate,
FIS, was sued in the 281st Judicial District Court of Harris County, Texas by
Quality Oilfield Products, Inc. for damages of at least $2,000,000 plus
attorneys' fees, plus potentially treble damages, for alleged failure to provide
a policy of insurance for compensation for future losses related to business
interruption.  FIS has turned the claim into its Errors & Omissions Insurance
carrier to handle the litigation and to respond to the lawsuit.  FIS' Errors and
Omissions carrier has responded to the lawsuit and both parties are in the
discovery phase of the suit.  Although there can be no assurance, the Company
does not believe that FIS will incur any loss with respect to this matter in
excess of insurance coverage.

An affiliate of Security Capital is a party to several legal actions arising in
the ordinary course of its business.  In management's opinion, the Company has
adequate legal defenses to these actions, and they should have no material
adverse effect on the operations or financial condition of the Company.

                                         F-15

<PAGE>

INDEPENDENT AUDITORS' REPORT

To the Board of Directors of 
Bowen, Miclette, Descant & Britt
Houston, Texas  77008

We have audited the accompanying balance sheets of Bowen, Miclette, Descant &
Britt (the "Company") as of September 30, 1996 and 1995 and the related
statements of income, partners' equity and cash flows for each of the three
years in the period ended September 30, 1996. These financial statements are the
responsibility of the Company's management.  Our responsibility is to express an
opinion on these financial statements based on our audits.

We conducted our audits in accordance with generally accepted auditing
standards.  Those standards require that we plan and perform the 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, such financial statements present fairly, in all material
respects, the financial position of  Bowen, Miclette, Descant & Britt at
September 30, 1996 and 1995, and the results of its operations and its cash
flows for each of the three years in the period ended September 30, 1996 in
conformity with generally accepted accounting principles. 





DELOITTE & TOUCHE LLP
Houston, Texas
December 6, 1996

                                         F-16

<PAGE>

Statements of Income
Bowen, Miclette, Descant & Britt

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

Year ended September 30,               1996            1995           1994
---------------------------------------------------------------------------
                                                 (In thousands)

Revenues:
---------
Commissions                    $    10,418      $     9,391     $     7,155
Investment income                       27               22              16
Risk management fees                    17               15              32
Other income                             7              (1)               4
---------------------------------------------------------------------------
Total revenues                 $    10,469      $     9,427     $     7,207
---------------------------------------------------------------------------
Expenses:
---------
Salaries and commission 
  expenses                     $     6,161      $     5,480     $     4,304
Payroll taxes and benefits             930              818             668
Travel and entertainment               586              496             431
Office and equipment rental            449              376             280
Office expenses                        394              388             299
Professional fees                      180              191              61
Insurance                              199              180             129
Depreciation and amortization          285              217             160
Interest                                46               41              35
Bad debt expense                        65               87              35
Data processing                         72               56              29
Other                                  377              279             197
---------------------------------------------------------------------------

Total expenses                 $     9,744      $     8,609     $     6,628
----------------------------------------------------------------------------
Net income                     $       725      $       818     $       579
----------------------------------------------------------------------------
The accompanying Notes to Financial Statements are an integral part of these
financial statements.

                                         F-17

<PAGE>

Balance Sheets
Bowen, Miclette, Descant & Britt

----------------------------------------------------------------------------
As of  September 30,                              1996              1995
----------------------------------------------------------------------------
                                                       (In thousands)
Assets
------
Current assets:
Cash and cash equivalents                     $     700      $     1,019
Accounts receivable - premiums 
  (net of allowance for
  doubtful accounts of $199 and $145)             2,849            2,283
Accounts receivable - company direct 
  bill commissions                                  671              504
Accounts receivable - joint owners                  123               46
Other receivable                                    132              102
Expense advances:
    Employees                                        38               48
    Officers                                        358              348
Prepaid insurance                                    58               45
                                              ---------      -----------
Total current assets                              4,929            4,395
Fixed assets, (net of $650 and $400 of 
    accumulated depreciation)                       887              756
Other assets                                         31               47
----------------------------------------------------------------------------
Total assets                                  $   5,847      $     5,198
----------------------------------------------------------------------------
Liabilities and Partners' Equity
--------------------------------
Current liabilities:                                   
Accounts payable - insurance companies        $   4,140      $     3,145
Producers' commissions payable                      113              139
Accrued expenses                                    181              126
Note payable - current                                9               13
Lease obligation - current                          213              152
Accounts payable - joint owners                      16               63
                                              ---------      -----------
Total current liabilities                         4,672            3,638
Long term liabilities:
Note payable - long term                              6               15
Lease obligations - long term                       369              339
Partners' advances                                  260              100
                                              ---------      -----------
Total long term liabilities                         635              454
----------------------------------------------------------------------------
Total liabilities                             $   5,307      $     4,092
----------------------------------------------------------------------------
Commitments and Contingencies                 $       -      $         -
----------------------------------------------------------------------------
Total partners' equity                        $     540      $     1,106
----------------------------------------------------------------------------
Total liabilities and partners' equity        $   5,847      $     5,198
----------------------------------------------------------------------------
The accompanying Notes to Financial Statements are an integral part of these
financial statements.


                                         F-18

<PAGE>

Statements of Cash Flows
Bowen, Miclette, Descant & Britt
------------------------------------------------------------------------------
Year ended September 30,                   1996            1995           1994
------------------------------------------------------------------------------
                                                      (In thousands)

Cash flows provided (used) by 
  operating activities:                        
Net income                             $    725       $    818       $    579
Adjustment to reconcile net income 
  to net cash provided (used) by 
operating activities:                          
   Depreciation and amortization            285            217            160

   Changes in operating assets and liabilities:
     Decrease (increase) in assets 
      Accounts receivable - premiums      (566)            447          1,105
      Other receivables                   (274)          (177)            271
      Federal income tax recoverable          -              -              6
      Prepaid insurance                    (13)            (6)            (8)
      Expense advances                        -          (109)          (115)
                                       --------       --------       --------
         Subtotal                         (853)            155          1,259

   Increase (decrease) in liabilities:
     Accounts payable - insurance 
        companies                           995            250        (2,321)
     Producers' commissions payable        (26)             26             22
     Accrued expenses                        55           (31)           (10)
     Management fee payable to joint 
        owners                                -          (128)              -
     Accounts payable - joint owners       (47)           (53)          (155)
     Other liabilities                      295            231            216
                                       --------       --------       --------
             Subtotal                     1,272            295        (2,248)
------------------------------------------------------------------------------
Net cash provided (used) by 
     operating activities                 1,429          1,485          (250)
------------------------------------------------------------------------------
Cash flows from investing activities:                                        
                                                                             
       Capital expenditures               (400)          (318)          (345)
       Other                                  -              -            123
------------------------------------------------------------------------------
Net cash flow provided (used) for 
       investing activities               (400)          (318)          (222)
------------------------------------------------------------------------------
Cash flows from financing activities:
       Distribution to partners         (1,291)          (291)           (43)
       Lease payments                     (204)          (132)           (81)
       Note payments                       (13)            (7)           (22)
       Partners' advances                   160          (198)            100
------------------------------------------------------------------------------
Net cash provided (used) by 
       financing activities             (1,348)          (628)           (46)
------------------------------------------------------------------------------
Increase (decrease) in cash and 
       cash equivalents                   (319)            539          (518)
Cash and cash equivalents, beginning 
       of the year                        1,019            480            998
------------------------------------------------------------------------------
Cash and cash equivalents, end 
       of the year                         $700         $1,019           $480
------------------------------------------------------------------------------
The accompanying Notes to Financial Statements are an integral part of these
financial statements.

                                         F-19

<PAGE>

Statement of Partners' Equity
Bowen, Miclette, Descant & Britt
------------------------------------------------------------------------------
          (In Thousands)                               Partners' Equity
------------------------------------------------------------------------------
Balance, October 1, 1993                      $             43
------------------------------------------------------------------------------
Net income for fiscal year 1994                            579
                                                              
Distributions to partners                                 (43)
                                                              
------------------------------------------------------------------------------
Balance, September 30, 1994                   $            579
------------------------------------------------------------------------------

Net income for fiscal year 1995                            818

Distribution to partners                                 (291)

------------------------------------------------------------------------------
Balance, September 30, 1995                   $          1,106
------------------------------------------------------------------------------
                                                              
Net income for fiscal year 1996                            725
                                                              
Distribution to partners                               (1,291)
                                                              
------------------------------------------------------------------------------
Balance, September 30, 1996                   $            540
------------------------------------------------------------------------------
The accompanying Notes to Financial Statements are an integral part of these
statements.

                                         F-20

<PAGE>

Notes to Financial Statements
Bowen, Miclette, Descant & Britt

------------------------------------------------------------------------------
1. Organization
------------------------------------------------------------------------------

Bowen, Miclette, Descant and Britt, a general partnership (the "Company" or
"BMDB"), is a licensed local recording insurance agency domiciled in the State
of Texas.  Foster Insurance Services, Inc. ("FIS") and Bowen, Miclette and
Descant, Inc. ("BMD"), two unaffiliated independent insurance agencies, are the
corporate partners of BMDB. On July 23, 1993, the Texas State Board of Insurance
approved the application for an insurance license for BMD and FIS to form the
general partnership.  The Company began operating as a general partnership
effective October 1, 1993.  

The accompanying Statements of Income reflect results for the years ended
September 30, 1996, 1995 and 1994 of BMDB. The Company conducts operations as a
retail insurance agency collecting commissions on property and casualty, life
and health policies and bonds  placed with insurance carriers.

------------------------------------------------------------------------------
2.  Summary of significant accounting policies
------------------------------------------------------------------------------

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

CASH AND CASH EQUIVALENTS
For purposes of the statements of cash flows, the Company considers all highly
liquid debt instruments with a maturity of three months or less to be cash
equivalents.  Interest paid during the twelve month periods ended September 30,
1996, 1995 and 1994 was $45,750, $40,916 and $35,392, respectively.

REVENUE RECOGNITION
Commissions are recognized on the effective date of the applicable policies or
the billing date, whichever is later.  Contingent commissions are recognized
when the related contingent periods have expired and such commissions can be
reasonably estimated.  Fee income for services other than placement of insurance
coverage is recognized as those services are provided. 

PROVISION FOR POSSIBLE LOSSES
A provision for possible losses is included in expense based on management's
evaluation of customer receivables under existing economic conditions.  The
provision for possible losses is based on estimates, and actual losses may vary
from current estimates.  These estimates are reviewed periodically and, as
adjustments become necessary, they are reported in earnings in the periods in
which they become known.

FEDERAL INCOME TAXES
Income taxes are the responsibility of each partner.

                                         F-21

<PAGE>

FIXED ASSETS
Property and equipment are carried at cost.  Depreciation is computed using the
straight line method over the estimated useful lives of the assets.  Fixed
assets are comprised of the following:

------------------------------------------------------------------------------
September 30,                                 1996                 1995
------------------------------------------------------------------------------
                                                   (In thousands)

Leased Equipment                            $1,063               $  779
Furniture and Fixtures                         102                   67
Leasehold Improvements                         105                   89
Automobiles                                     93                   92
Computers                                      174                  129
                                     ------------------------------------
Total                                       $1,537               $1,156
                                     ------------------------------------
Less:  accumulated depreciation                650                  400
                                     ------------------------------------
Net book value                              $  887               $  756
                                     ------------------------------------
                                     ------------------------------------

------------------------------------------------------------------------------
3.  Notes payable
------------------------------------------------------------------------------

Notes payable is comprised of the following:

------------------------------------------------------------------------------
September 30,                                   1996                  1995
------------------------------------------------------------------------------
                                                       (In thousands)

Sterling Bank-auto loan                          $ 1                    $ 8

Frost Bank-auto loan                              14                     20
                                     ---------------------------------------
Total                                            $15                    $28
                                     ---------------------------------------
Less:  current portion                             9                     13
                                     ---------------------------------------
Long-term portion                                $ 6                    $15
                                     ---------------------------------------


------------------------------------------------------------------------------
4.  Employee benefits
------------------------------------------------------------------------------

The Company provides a 401(k) plan for eligible employees.  Employees may
contribute up to 20% of their compensation to the maximum allowed by the
Internal Revenue Service.  The Company matches employee contributions up to two
and one half percent of an employee's compensation.  Contributions by the
Company paid to the plan for the twelve month period ended September 30, 1996
amounted to $100,157 (fiscal year 1995 and 1994 amounted to $73,439 and $65,187
respectively).  In addition the Company accrued  a $40,000 profit sharing bonus
for  the employees of the 401(k) plan for 1996.  The Company paid that same
amount to the plan for fiscal years 1995 and 1994. 


                                         F-22

<PAGE>

------------------------------------------------------------------------------
5.  Lease commitments 
------------------------------------------------------------------------------

The lease agreement on the Company's office space was for a six year term
effective January 1, 1993.  The landlord required that certain officers of  FIS
and BMD execute individual, as well as corporate, guarantees.  During the end of
fiscal year 1994, the Company leased additional office space adjacent to its
current space.  The landlord paid for all the costs of leasehold improvements
and the Company agreed to extend the term of the original lease by one year. 
The original lease had a buy-out option at the end of the fifth year, which
allowed the Company to terminate the sixth year of the lease if the Company
reimbursed the landlord for the unamortized leasehold improvements and the pro
rata broker commissions.  With the lease of the additional space, the option
year was transferred to the seventh year of the lease agreement.  The Company
leased more adjacent space in January 1995 and November 1995.  The landlord paid
for substantially all costs of leasehold improvements and there was no extension
of the lease required.  For the year ended September 30, 1996, rentals were
approximately $395,000 for the fiscal year pursuant to these lease agreements. 
Periodic lease rentals under these agreements through the years ending September
30, 2000 are as follows:

------------------------------------------------------------------------------
         Year ending September 30,             Lease Rentals
------------------------------------------------------------------------------
                                             (in thousands)

                  1997                               $414
                  1998                                430
                  1999                                440
                  2000                                150
------------------------------------------------------------------------------
                   Total                            1,434
------------------------------------------------------------------------------

The Company has entered into several capital leases for office furniture and
equipment.  The leases transfer title of the equipment to the Company at the end
of the lease period.  The amount capitalized is shown in Note 2 under the
caption "leased equipment."   The future minimum lease payments under the
capitalized leases and the present value of the net minimum lease payments as of
September 30, 1996 are as follows:

------------------------------------------------------------------------------
                Fiscal Year                      Lease Obligations

------------------------------------------------------------------------------
                                                  (In thousands)
                  1997                                  $258
                  1998                                   218
                  1999                                   116
                  2000                                    59
                  2001                                    12
------------------------------------------------------------------------------
     Total minimum lease payments                       $663
------------------------------------------------------------------------------
     Less: amount representing interest                   81
------------------------------------------------------------------------------
     Present value of net minimum lease 
     payments including current 
     maturity of $213                                   $582
------------------------------------------------------------------------------
6.  Related party transactions
------------------------------------------------------------------------------

On July 23, 1993, the Texas State Board of Insurance approved the application
for an insurance license for FIS and BMD to form a general partnership.  The
Company entered into a partnership agreement effective October 1, 1993 and began
operations as a general partnership instead of a corporation, and, in 

                                         F-23

<PAGE>

connection therewith, changed its name to Bowen, Miclette, Descant & Britt. The
agreement provides a formula for the division of profits and losses between FIS
and BMD (1994 profit and losses split 52% to BMD and 48% to FIS and every year
thereafter split 50% to each partner), as well as the individual rights and
obligation of each partner. 

BMD&B, Inc. acts as agent for BMD, FIS and the partnership (hereinafter
"Affiliated Companies") for the following limited purposes: (i) to continue as
lessee of the office facilities and equipment; (ii) to process specific
insurance business which the Affiliated Companies decide to handle in BMD&B,
Inc.'s name; and (iii) to render personnel and employment services for the
Affiliated Companies, including acting as common paymaster for BMD, FIS and the
partnership.  As payment for rendering personnel and employment services to
BMDB, BMD&B, Inc. has charged BMDB $2,500 per month, or $30,000 annually since
October 1, 1993.


On August 29, 1996, Edward G. Britt, Jr.("Britt") exercised his put option 
under the Buy-Sell Agreement to purchase all of the assets, liabilities, and 
business of FIS, the 50% corporate partner of BMDB for a price to be 
determined by an independent third party appraiser. It is expected that 
Britt's purchase of FIS will be concluded in the first half of 1997.  This 
transaction is not expected to have any significant effect on the operations 
of the Company.

                                         F-24

<PAGE>


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

     Not applicable.


                                       PART III

ITEM 10.  DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT.


     The following table sets forth certain information with respect to the
directors and executive officers of the Company.



                              Director   Principal Occupations During the Last
Name                  Age     Since      Five Years; Other Directorships
----                  ---     --------   -------------------------------------

William T. Bozarth    56      1988       Vice President and Controller of 
                                         Travelers Group Inc., a diversified
                                         financial services company, since
                                         November 1991; Senior Vice President
                                         and Chief Financial Officer of Gulf
                                         Insurance Group, a property and
                                         casualty insurance company, since
                                         September 1990; Executive Vice
                                         President of the Company from March
                                         1989 until January 1990; Senior Vice
                                         President of the Company from August
                                         1984 until March 1989; a former
                                         director or officer of various present
                                         and former subsidiaries or affiliates
                                         of the Company; and, previously, a
                                         Partner of Arthur Andersen & Co., New
                                         York, New York, public accountants.


                                         -18-

<PAGE>

                              Director   Principal Occupations During the Last
Name                  Age     Since      Five Years; Other Directorships
                      ---     --------   -------------------------------------

Brian D. Fitzgerald   52      1990       Chairman of the Board of the Company
                                         since January 1990; President,
                                         Treasurer and a director of FGS since
                                         March 1989; and a partner, general
                                         partner, stockholder, officer and/or
                                         director of various Capital Partners
                                         entities for more than five years. 
                                         Mr. Fitzgerald was a director of
                                         Bryant Universal Roofing, Inc.
                                         ("Bryant"), a privately-held Delaware
                                         corporation that on May 17, 1996 filed
                                         a petition for bankruptcy under
                                         Chapter 11 of the U.S. Bankruptcy Code
                                         in the United States Bankruptcy Court
                                         for the District of Arizona.

A. George Gebauer     63      1990       President of the Company since January
                                         1990 and Secretary of the Company
                                         since February 1994; Vice President,
                                         Secretary and a director of FGS since
                                         March 1989; and a partner, general
                                         partner, stockholder, officer and/or
                                         director of various Capital Partners
                                         entities for more than five years. 
                                         Mr. Gebauer was formerly a director
                                         and executive officer of Alpha Modular
                                         Systems, Inc., a privately-held
                                         California corporation which had an
                                         involuntary petition under Chapter 7
                                         of the U.S. Bankruptcy Code filed
                                         against it on March 18, 1994 by
                                         certain of its creditors in the United
                                         States Bankruptcy Court for the
                                         Central District of California, San
                                         Bernardino division.  Mr. Gebauer also
                                         was a director of Bryant, a
                                         privately-held Delaware corporation
                                         that on May 17, 1996 filed a petition
                                         for bankruptcy under Chapter 11 of the
                                         U.S. Bankruptcy Code in United States
                                         Bankruptcy Court for the District of
                                         Arizona.


                                         -19-

<PAGE>

                              Director   Principal Occupations During the Last
Name                  Age     Since      Five Years; Other Directorships
----                  ---     --------   -------------------------------------

Thomas J. Gochberg    57      1979       President of TJG Holdings, Inc., a New
                                         York corporation which is the general
                                         partner of various real estate
                                         investment entities, since July 1991;
                                         President and Chief Executive Officer
                                         of the Company from its inception in
                                         November 1979 until January 1990; a
                                         former director or officer of various
                                         present and former subsidiaries or
                                         affiliates of the Company; and a
                                         director of Smith Barney, Inc., New
                                         York, New York, an investment banking
                                         holding company, from February 1979
                                         until March 1984.

Larry M. Karren       42      --         Vice President of the Company since
                                         February 1990; Vice President and
                                         Secretary of SCIGI for more than five
                                         years; current or former officer or
                                         underwriter of various present or
                                         former subsidiaries or affiliates of
                                         SCIGI.

     Each director holds office until the next annual meeting of stockholders
and until his successor shall have been duly elected and qualified.  Officers
serve at the pleasure of the Board of Directors.

     The Board of Directors has an Audit Committee and a Stock Option 
Committee. The Audit Committee, which is presently composed of Messrs. 
Gebauer, Gochberg and Bozarth, selects the independent auditors, consults 
with such auditors and management with regard to the adequacy of the 
Company's internal accounting controls, considers any non-audit functions to 
be performed by the independent auditors and carries out such activities 
related to the financial statements of the Company as the Board of Directors 
shall from time to time request.

     The Stock Option Committee is composed of Messrs. Fitzgerald and Gebauer
and administers the Security Capital Corporation 1982 Incentive Stock Option
Plan.  The Board of Directors does not have a nominating committee, compensation
committee or any committee performing similar functions.


                                         -20-

<PAGE>

ITEM 11.  EXECUTIVE COMPENSATION.
-------   ---------------------- 

     1.   SUMMARY COMPENSATION TABLE
          --------------------------

          The following Summary Compensation Table sets forth certain
information about the cash and non-cash compensation earned by or awarded to the
chief executive officer of the Company, A. George Gebauer, President and
Secretary of the Company, and to the two other executive officers of the Company
for services rendered to the Company during the fiscal years ended September 30,
1996, September 30, 1995 and September 30, 1994.

                              SUMMARY COMPENSATION TABLE

                                       Annual Compensation
                                       --------------------
Name and Principal Position                                          All Other
                                 Fiscal Year  Salary      Bonus    Compensation
                                 -----------  -------     -----    ------------

A. George Gebauer                   1996        (1)        (1)          (1)
President and Secretary             1995        (1)        (1)          (1)
                                    1994        (1)        (1)          (1)
                                                                         
Brian D. Fitzgerald                 1996        (1)        (1)          (1)
Chairman of the Board               1995        (1)        (1)          (1)
                                    1994        (1)        (1)          (1)
                                                                         
Larry M. Karren                     1996    $121,250      $15,997     $5,237
Vice President (2) and Treasurer    1995    $110,000      $26,204     $3,938
                                    1994    $107,500      $ 8,417     $3,081
_________________________

(1)  Messrs. Fitzgerald and Gebauer receive no compensation for their services
     as officers of the Company.  CP Inc., a corporation controlled by Mr.
     Fitzgerald and for which Mr. Gebauer serves as an officer, is paid a
     management fee pursuant to the Advisory Agreement between the Company and
     CP Inc.  Pursuant to the Advisory Agreement, CP Inc. provides certain
     advisory services to the Company in the areas of investments, general
     administration, corporate development, strategic planning, stockholder
     relations, financial matters and general business policy.  The annual fee
     for such services pursuant to the Advisory Agreement is $325,000 (due in
     quarterly installments in advance) plus certain out-of-pocket costs (which
     do not include rent and utilities of CP Inc. and compensation of CP Inc.
     employees).  Such fee is subject to appropriate adjustment should the scope
     of operations of the Company change, whether from an acquisition or
     otherwise.  For example, when the Company acquired the assets of Possible
     Dreams, Ltd. and Columbia National Corporation, the Advisory Agreement was
     amended to increase the annual fee from $150,000 to $325,000.  During
     fiscal 1996, CP Inc. was paid a fee of $227,400 and was reimbursed for
     expenses incurred by it of approximately $12,800.  In addition, CP Inc. was
     reimbursed for approximately $105,000 of legal, investment banking and
     other expenses incurred by it on behalf of the Company in connection with
     two prospective acquisitions that failed to close.   See "Item 13.  Certain
     Relationships and Related Transactions." 

(2)  Includes $1,228 of insurance premiums paid by the Company on a term life
     insurance policy for the benefit of Mr. Karren and approximately $4,009 of
     Company contributions for the account of Mr. Karren under a Section 401(k)
     plan.


                                         -21-

<PAGE>


     2.   OPTION/SAR GRANTS IN LAST FISCAL YEAR
          -------------------------------------

          No Options or SARs were granted to any executive officer of the 
Company during the fiscal year ended September 30, 1996.

     3.   AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR AND FISCAL 
          -------------------------------------------------------------- 
YEAR-END OPTION/SAR VALUE TABLE
-------------------------------

          No Options or SARs were exercised by any executive officer of the 
Company during the fiscal year ended September 30, 1996. Set forth below are 
the number of unexercised options and the value of unexercised, in-the-money 
options held by executive officers of the Company at September 30, 1996.

                                           OPTION EXERCISES IN LAST FISCAL YEAR
                                             AND FISCAL YEAR END OPTION VALUES

<TABLE>
<CAPTION>
                     Number of                     Number of Unexercised Options           Value of Unexercised In-the-Money
                     Shares Acquired     Value     Held at Fiscal Year End                 Options at Fiscal Year End(1)
Name                 On Exercise         Realized  Exercisable         Unexercisable       Exercisable         Unexercisable
------               ----------------    --------  -----------         -------------       -----------         -------------
<S>                  <C>                 <C>       <C>                 <C>                 <C>                 <C>
Larry M. Karren          --                --        2,250                  --  --              --

____________________
</TABLE>

(1)  Options are "in-the-money" if the closing market price of the Company's
     Class A Common Stock on September 30, 1996 exceeded the exercise prices of
     the options.  There were no in-the-money options held by executive officers
     of the Company at September 30, 1996.


     4.   LONG-TERM INCENTIVE PLAN ("LTIP") AWARDS IN LAST FISCAL YEAR

          No LTIP Awards were made to any executive officer of the Company
during the fiscal year ended September 30, 1996.

     5.   COMPENSATION OF DIRECTORS

          William T. Bozarth and Thomas J. Gochberg, who are not employees or
officers of the Company, receive an annual fee of $5,000 plus reasonable
expenses in connection with attendance at meetings of the Board of Directors or
any committee thereof, but do not receive any separate fee for attendance at
meetings.  Messrs. Fitzgerald and Gebauer do not receive any annual fee, or any
fees for attendance at meetings.


                                          -22-


<PAGE>

ITEM 12.  SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.

     The following table and the notes thereto set forth information, as of
December 13, 1996, with respect to the beneficial ownership of shares of each
class of equity securities of the Company by the only persons known to the
Company to have beneficial ownership of more than 5% of such class, by each
director of the Company, by each executive officer of the Company and by the
directors and executive officers of the Company as a group.  Except as otherwise
indicated, each person is believed to exercise sole voting and dispositive power
over the shares reported.


<TABLE>
<CAPTION>

                                               Amount of Beneficial Ownership
                                                  As of December 13, 1996
                                      -------------------------------------------------
                                                                                     Percentage
                                                           Class A                       of           Class A
Name and Address                    Common   Percentage     Common      Percentage     Common        Preferred     Percentage
of Beneficial Owner                  Stock    of Class       Stock       of Class      Equity          Stock        of Class 
<S>                                 <C>      <C>           <C>          <C>          <C>             <C>            <C>
Brian D. Fitzgerald                   128       34.1%      2,766,614       68.2%        68.2%           27,978        93.3%
One Pickwick Plaza
Suite 310, Greenwich
CT 06830(1)(2)

FGS, Inc.                             128       34.1%      2,711,177       66.8%        66.8%            4,160        13.9%
1105 North Market St.
Suite 1300, Wilmington,
DE 19894(1)(2)

Capital Partners, Inc.                 __         __       2,356,388       58.1%        58.1%              650         2.2%
One Pickwick Plaza
Suite 310, Greenwich,
CT 06830(1)(2)

CP Acquisition,                        __         __       2,356,388       58.1%        58.1%            23,168       77.2%
  L.P. No. 1
1105 North Market St.
Suite 1300, Wilmington,
DE 19894(1)(2)

FGS Partners, L.P.                     __         __       2,356,388       58.1%        58.1%               __         __
One Pickwick Plaza
Suite 310, Greenwich,
CT 06830(1)(2)

William T. Bozarth                     __         __            __           __          __                 __         __

A. George Gebauer(1)(2)                __         __          59,980        1.5%          1.5%              703        2.3%

Thomas J. Gochberg                     1           *           8,709         *             *                __         __

Larry M. Karren                        __         __           2,284(3)      *             *                __         __

All Directors and                      129       34.4%     2,837,587(3)    69.9%         69.9%           28,681       95.6%
Executive Officers as
a Group (5 persons)


*  Less than one percent

                                                        (FOOTNOTES ON FOLLOWING PAGE)
</TABLE>

                                         -23-


<PAGE>

__________________

     (1)  The following related entities are generally referred to as "Capital
          Partners":  (a) CP Inc., a Connecticut corporation, of which Brian D.
          Fitzgerald is the sole stockholder and director, and A. George Gebauer
          is an officer; (b) Fitzgerald and Partners, a Delaware general
          partnership ("F&P"), of which Messrs. Fitzgerald and Gebauer are
          partners; (c) Capital Partners  I, L.P., a New York limited
          partnership, of which CP Inc. and F&P are the general partners; and
          (d) 13 related Delaware limited partnerships, known collectively as
          "Capital Partners II," as follows:  (i) CP Acquisition; (ii) CP
          Acquisition, L.P. No. 2; (iii) CP Acquisition, L.P. No. 3; (iv) CP
          Acquisition, L.P. No. 4A; (v) CP Acquisition, L.P. No. 4B; (vi) CP
          Acquisition, L.P. No. 5A; (vii) CP Acquisition, L.P. No. 5B; (viii) CP
          Acquisition, L.P. No. 6A; (ix) CP Acquisition, L.P. No. 6B; (x) CP
          Acquisition, L.P. No. 7A; (xi) CP Acquisition, L.P. No. 7B; (xii) CP
          Acquisition, L.P. No. 8A; and (xiii) CP Acquisition, L.P. No. 8B.  CP
          Inc., FGS, a Delaware corporation, of which Mr. Fitzgerald is the
          controlling stockholder, president, treasurer and a director, and FGS
          Partners, L.P., a Connecticut limited partnership, of which CP Inc. is
          the general partner, are the general partners of the 13 related
          partnerships.

          Brian D. Fitzgerald owns of record 55,437 shares of the Class A Common
          Stock.  CP Inc. owns of record 650 shares of the Class A Preferred
          Stock, CP Acquisition owns of record 2,356,388 shares of the Class A
          Common Stock and 23,168 shares of the Class A Preferred Stock and FGS
          owns of record 354,789 shares of the Class A Common Stock, 1,025
          shares of the Common Stock and 4,160 shares of the Class A Preferred
          Stock.

     (2)  Mr. Fitzgerald may be deemed to own beneficially the 55,437 shares of
          the Class A Common Stock owned of record by him, the 650 shares of the
          Class A Preferred Stock owned of record by CP Inc., the 2,356,388
          shares of the Class A Common Stock and the 23,168 shares of the Class
          A Preferred Stock owned of record by CP Acquisition and the 354,789
          shares of the Class A Common Stock, the 128 shares of the Common Stock
          and the 4,160 shares of the Class A Preferred Stock owned of record by
          FGS.  Mr. Fitzgerald has shared authority to vote and dispose of the
          FGS-owned shares of the Class A Common Stock and the Common Stock and
          the Class A Preferred Stock and disclaims beneficial ownership of such
          FGS-owned shares for all other purposes.  Mr. Gebauer is also a
          stockholder, officer and director of FGS and an officer of CP Inc.,
          but he disclaims beneficial ownership of shares of the Class A Common
          Stock, the Common Stock and the Class A Preferred Stock owned of
          record by such corporations for any purpose.  The ownership noted
          above excludes the 55,437 shares of the Class A Common Stock and the
          Common Stock and the 650 shares of the Class A Preferred Stock owned
          by the Fitzgerald Trust (of which Mr. Fitzgerald's brother is sole
          trustee and Mr. Fitzgerald's minor children are sole beneficiaries),
          as to which beneficial ownership is disclaimed for all purposes.

     (3)  Includes 2,250 shares subject to options exercisable within 60 days.



                                         -24-

<PAGE>

ITEM 13.  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.
-------   ---------------------------------------------- 

ADVISORY SERVICES AGREEMENT; ACQUISITION CRITERIA AND PROCEDURES 

     On April 27, 1990, effective as of January 26, 1990, the Company entered
into the Advisory Agreement with CP Inc., an entity controlled by Mr. Fitzgerald
and for which Mr. Gebauer serves as an officer.  Pursuant to the Advisory
Agreement, CP Inc. provides certain advisory services in the areas of
investments, general administration, corporate development, strategic planning,
stockholder relations, financial matters and general business policy.   The
annual fee for such services pursuant to the Advisory Agreement was $150,000
(due in quarterly installments in advance) plus certain out-of-pocket costs
(which do not include rent and utilities of CP Inc. and compensation of CP Inc.
employees) prior to the acquisition of the assets of Possible Dreams, Ltd. and
Columbia National Corporation.  In connection with such acquisition, the
Advisory Agreement was amended to increase the annual fee to $325,000.  Such fee
is subject to appropriate adjustment should the scope of operations of the
Company change again, whether from an acquisition or otherwise.  In this regard,
CP Inc. would likely be paid an annual fee for ongoing advisory services
following an acquisition of no more than 4% to 5% of the acquired company's
annual operating profit.  Pursuant to the Advisory Agreement and otherwise, no
compensation is paid to the current Chairman of the Board (Mr. Fitzgerald),
President and Secretary (Mr. Gebauer) and Assistant Secretary (Grace Santacqua)
in their respective capacities as such.  During fiscal 1996, CP Inc. was paid
$227,400 in fees and reimbursed for expenses incurred by it of approximately
$12,800.  In addition, CP Inc. was reimbursed for approximately $105,000 of
legal, investment banking and other expenses incurred by it on behalf of the
Company in connection with two prospective acquisitions that failed to close.

     The initial term of the Advisory Agreement was for one year commencing on
January 26, 1990; thereafter, the agreement will be automatically extended for
additional one-year periods unless either party gives 30 days' written notice to
the other of its intention to terminate.  The Advisory Agreement was
automatically renewed for a one-year period commencing January 26, 1997.

     The Advisory Agreement confirms that, from time to time, CP Inc. may
present acquisition opportunities to the Company that it believes may be
appropriate for the Company, but that CP Inc. is under no obligation to present
any or all acquisition candidates of which it is aware to the Company except for
insurance agency businesses.  If the Company or any of its subsidiaries
completes any acquisition which was presented by CP Inc., the Company is
obligated to pay CP Inc. an investment banking fee at the usual and customary
rate for transactions of such size and complexity.  This fee is likely to be in
the range of 1% to 1-1/2% of the aggregate purchase price for the acquisition.  

     While enterprises proposed for acquisition may be in any line of business,
to date the acquisitions in which CP Inc. and its affiliates have participated
have been primarily in the manufacturing, distribution and service fields. 
Consistent with the investment strategies and principles utilized by CP Inc.,
the Company currently intends in general to focus upon, as potential targets,
established companies of medium size with histories of earnings and cash flow
stability, favorable earnings growth prospects, good management and strong
competitive positions.  It is currently the Company's plan that acquisitions
will be undertaken directly or by one or more subsidiaries of the Company, with
financing achieved through equity contributed by the Company and debt and
subordinated debt raised at the subsidiary or parent level.  It may be necessary
to issue preferred stock, common equity or warrants or options to purchase
common equity of the Company or of the acquired entity to one or more lenders in
order to obtain the financing.  In some 



                                         -25-

<PAGE>

instances, it may be possible to obtain financing from the sellers of the
acquired entity in the form of subordinated notes or earn-outs.  Such sellers
may also receive shares of common equity or warrants or options to purchase the
same of the Company or the acquired entity.  Typically, certain members of
management of the acquired entity will be granted incentives (usually
equity-based) to remain with the acquired entity following the acquisition.  The
companies targeted usually will have annual operating profits of $3,000,000 to
$10,000,000.  Consequently, purchase prices should range from approximately
$10,000,000 to $75,000,000.  Under such acquisition strategy, significant
uncertainties involving product life cycles, volatile market demand,
organization changes and other major turnaround aspects will generally
disqualify a prospect.  The acquisition criteria set forth above are only
guidelines and may change from time to time in response to market conditions,
the Company's financial condition and results of operations and other factors.

     In connection with its acquisition activities on behalf of the Company,
other portfolio companies and for its own account, CP Inc. maintains ongoing
relationships with hundreds of merger and acquisition intermediary firms,
ranging from large investment banks and accounting firms to small business
brokerages.  In a typical year, CP Inc. receives over 1,000 leads on companies
which are or might be for sale. Of these, perhaps 100 are sufficiently close to
the Company's acquisition criteria set forth above to merit further
consideration.

     CP Inc. may decide at some future date to present one of its portfolio
companies to the Company for possible acquisition.  Any such acquisition would
be submitted to the Company's independent directors for their approval.  



                                         -26-

<PAGE>

                                       PART IV

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

     (a) (1) and (2). FINANCIAL STATEMENTS AND FINANCIAL STATEMENT SCHEDULES
                      ------------------------------------------------------

               See "Index to Financial Statements and Schedules" set forth in
               Item 8 on page 17 of this Form 10-K.

     (a) (3).  EXHIBITS REQUIRED TO BE FILED BY ITEM 601 OF REGULATION S-K
               -----------------------------------------------------------

               The documents required to be filed as exhibits to this Form 10-K
               are listed below.  Each management contract or compensatory plan
               or arrangement required to be filed as an exhibit to this Form
               10-K pursuant to Item 14(c) of Form 10-K is marked with an
               asterisk.


EXHIBIT NO.    DESCRIPTION OF DOCUMENT
----------     -----------------------

     3.1  -    Restated Certificate of Incorporation of the Registrant
               (incorporated by reference to Exhibit 2 to the Registrant's Form
               8-K Current Report dated June 22, 1990), and amendment thereto
               (incorporated by reference to Exhibit 1 to the Registrant's Form
               8-K Current Report dated February 23, 1994).

     3.1A -    Certificate of Amendment dated March 27, 1996 to Restated
               Certificate of Incorporation of the Registrant. 

     3.1B -    Certificate of Amendment dated March 27, 1996 to Restated
               Certificate of Incorporation of the Registrant.

     3.2  -    By-laws of the Registrant (incorporated by reference to Exhibit 3
               to the Registrant's Form 8-K Current Report dated June 22, 1990).

     4.2  -    Reference is made to Exhibit 3.1.

   *10.1  -    Security Capital Corporation 1982 Incentive Stock Option
               Plan, as amended through December 10, 1990 (incorporated by
               reference to Exhibit (10)(A) to the Registrant's Form 10-K
               Annual Report for the fiscal year ended September 30, 1990).

    10.4  -    Stock Purchase Agreement between Security Capital Corporation and
               FGS, Inc. dated January 26, 1990, as amended May 14, 1990
               (incorporated by reference to Exhibit (c) to the Registrant's
               Form 8-K Current Report dated January 26, 1990 and Exhibit 10.7
               to the Registrant's Registration Statement on Form S-4 (Reg.
               33-34324) as filed on May 17, 1990).

    10.5  -    Agreement Regarding Adjustment of Purchase Price Pursuant to
               Section 2 of Stock Purchase Agreement between Security Capital
               Corporation and FGS, Inc., executed 


                                         -27-

<PAGE>


               September 28, 1990, between and among the Corporation, FGS, Inc.,
               CP Acquisition, L.P. No. 1 and Mr. John A. Bogardus, Jr.
               (incorporated by reference to Exhibit 1 to the Registrant's Form
               8-K Current Report dated September 28, 1990).

     10.7   -  Advisory Services Agreement dated as of April 27, 1990 and
               effective as of January 26, 1990, between Security Capital
               Corporation and Capital Partners, Inc. (incorporated by reference
               to Exhibit (10)(B) to the Registrant's Form 10-Q Quarterly Report
               for the period ended March 31, 1991).

     10.10  -  Agency and Management Services Agreement dated as of
               September 1, 1992 (the "Agency Agreement") between Foster
               Insurance Managers, Inc. ("FIM") and Foster Insurance
               Services, Inc. ("FIS") (incorporated by reference to Exhibit
               1 to the Registrant's Form 8-K Current Report dated October
               16, 1992).

     10.10A -  Amendment, dated September 30, 1994, to the Agency Agreement
               between FIM and FIS (incorporated by reference to Exhibit 10.10A
               to the Registrant's Form 10-K Annual Report for the fiscal year
               ended September 30, 1994).

     10.11  -  Buy-Sell Agreement dated as of September 1, 1992 between
               FIM, Edward G. Britt, Jr., and FIS (incorporated by
               reference to Exhibit 2 to the Registrant's Form 8-K Current
               Report dated October 16, 1992).

     10.12  -  Agreement dated September 1, 1992 between FIS, Edward G.
               Britt, Jr., FIM and Larry M. Karren (incorporated by
               reference to Exhibit 10(O) to the Registrant's Form 10-K
               Annual Report for the fiscal year ended September 30, 1992).

     10.13  -  Interim Agreement dated October 30, 1992 between FIS, FIM,
               Bowen, Miclette & Descant, Inc. ("BMD"), Samuel F. Bowen,
               David G. Miclette, D. Michael Descant, William G. Bowen,
               Jr., Thomas C. Cook, and Edward G. Britt, Jr. (incorporated
               by reference to Exhibit 10(P) to the Registrant's Form 10-K
               Annual Report for the fiscal year ended September 30, 1992).

     10.14  -  Office Lease Agreement dated October 9, 1992 between
               Telephone Real Estate Equity Trust, Karsten Realty Advisors,
               FIS, BMD and Bowen, Miclette, Descant & Britt, Inc. ("BMD&B
               Inc."), including Addendum One thereto (incorporated by
               reference to Exhibit 10(Q) to the Registrant's Form 10-K
               Annual Report for the fiscal year ended September 30, 1992).

     10.14A -  Addendum Two dated July 1, 1994 to Office Lease Agreement
               dated October 9, 1992 between Telephone Real Estate Equity
               Trust, Karsten Realty Advisors, FIS, BMD and BMD&B Inc.
               (incorporated by reference to Exhibit 10.14A to the
               Registrant's Form 10-K Annual Report for the fiscal year
               ended September 30, 1995).

     10.14B -  Addendum Three dated January 9, 1995 to Office Lease
               Agreement dated October 9, 1992 between Telephone Real
               Estate Equity Trust, Karsten Realty Advisors, FIS, BMD and
               BMD&B Inc. (incorporated by reference to Exhibit 10.14B to
               the Registrant's Form 10-K Annual Report for the fiscal year
               ended September 30, 1995).


                                         -28-

<PAGE>


     10.15  -  Management Services Agreement dated August 10, 1994 between
               FIS, BMD and BMD&B Inc. (incorporated by reference to
               Exhibit 10.15 to the Registrant's Form 10-Q Quarterly Report
               for the period ended June 30, 1994).

     10.16  -  Personnel Services and Clarification Agreement dated June
               15, 1994 among BMD, FIS, BMD&B Inc. and Bowen, Miclette,
               Descant & Britt (the "Partnership") (incorporated by
               reference to Exhibit 10.16 to the Registrant's Form 10-Q
               Quarterly Report for the period year ended June 30, 1994).

     10.17  -  Partnership Agreement of the Partnership dated June 15, 1994
               between BMD and FIS (incorporated by reference to Exhibit 3
               to the Registrant's Form 10-Q Quarterly Report for the
               period ended June 30, 1994).

     10.18  -  Stock Purchase Agreement effective the 1st day of January,
               1993 among Edward C. Britt, Patricia C. Britt, Larry M.
               Karren, Jodi S. Karren, FIS, FIM and BMD&B Inc.
               (incorporated by reference to Exhibit 10.18 to the
               Registrant's Form 10-K Annual Report for the fiscal year
               ended September 30, 1995).

     10.19  -  Subscription Agreement dated as of March 28, 1994 between
               the Registrant and CP Acquisition, L.P. No. 1 ("CP
               Acquisition") (incorporated by reference to Exhibit 10.19 to
               the Registrant's Registration Statement on Form S-1 (Reg.
               No. 33-74680)).

     10.20  -  Registration Rights Agreement and Amendment to Stock
               Purchase Agreement dated as of March 28, 1994 among the
               Registrant, CP Acquisition and FGS, Inc.  (incorporated by
               reference to Exhibit 10.20 to the Registrant's Registration
               Statement on Form S-1 (Reg. No. 33-74680)).

     10.21  -  Undertaking dated March 28, 1994 from Brian D. Fitzgerald to
               the Registrant. (incorporated by reference to Exhibit 10.21
               to the Registrant's Registration Statement on Form S-1 (Reg.
               No. 33-74680)).

     10.22  -  Shareholder Agreement effective as of the 1st day of
               January, 1993 by and among BMD, David G. Miclette, Dennis
               Michael Descant, Samuel F. Bowen, William G. Bowen, Larry M.
               Karren, their respective spouses, BMD&B Inc., FIM and FIS
               (incorporated by reference to Exhibit 10.22 to the
               Registrant's Form 10-K Annual Report for the fiscal year
               ended September 30, 1995).

     10.23  -  Asset Purchase Agreement dated as of May 17, 1996 by and
               among Possible Dreams, Ltd., a Massachusetts corporation,
               Columbia National Corporation, a Massachusetts corporation,
               Leonard Miller, Richard L. Seegal, as trustee of the Samuel
               C. Miller Trust u/d/t 8/5/85, Warren Stanley and Arnold Lee
               and Possible Dreams, Ltd., a Delaware corporation ("Possible
               Dreams") (incorporated by reference to Exhibit 1 to the
               Registrant's Form 8-K Current Report dated May 17, 1996).

     10.24  -  Subordinated Promissory Note dated May 17, 1996 in the
               amount of $2,128,000 from Possible Dreams to Possible
               Dreams, Ltd., a Massachusetts corporation (incorporated by
               reference to Exhibit 2 to the Registrant's Form 8-K Current
               Report dated May 17, 1996).



                                         -29-

<PAGE>

     10.25  -  Corrective Amendment dated November 25, 1996 to Subordinated
               Promissory Note dated May 17, 1996 in the amount of
               $2,128,000 from Possible Dreams to Possible Dreams, Ltd., a
               Massachusetts corporation.

     10.26  -  Subordinated Promissory Note dated May 17, 1996 in the
               amount of $332,000 from Possible Dreams to Columbia National
               Corporation (incorporated by reference to Exhibit 3 to the
               Registrant's Form 8-K Current Report dated May 17, 1996).

     10.27  -  Corrective Amendment dated November 25, 1996 to Subordinated
               Promissory Note dated May 17, 1996 in the amount of $332,000
               from Possible Dreams to Columbia National Corporation.

     10.28  -  Credit Agreement dated as of May 17, 1996 among Possible
               Dreams, P.D. Holdings, Inc., a Delaware corporation
               ("Holdings"), the Lenders referred to therein and
               NationsCredit Commercial Corporation ("NationsCredit"), as
               Agent (incorporated by reference to Exhibit 4 to the
               Registrant's Form 8-K Current Report dated May 17, 1996).

     10.29  -  Warrant dated May 17, 1996 from Possible Dreams to
               NationsCredit (incorporated by reference to Exhibit 5 to the
               Registrant's Form 8-K Current Report dated May 17, 1996). 

     10.30  -  Warrantholders Rights Agreement dated as of May 17, 1996
               among Possible Dreams, Holdings, Security Capital
               Corporation ("Security Capital"), Warren Stanley and Arnold
               Lee and NationsCredit (incorporated by reference to Exhibit
               6 to the Registrant's Form 8-K Current Report dated May 17,
               1996).

     10.31  -  Security Capital Pledge and Guarantee Agreement dated as of
               May 17, 1996 between Security Capital and NationsCredit, as
               Agent (incorporated by reference to Exhibit 7 to the
               Registrant's Form 8-K Current Report dated May 17, 1996).

     10.32  -  Holdings Pledge Agreement dated as of May 17, 1996 among
               Holdings and NationsCredit, as Agent (incorporated by
               reference to Exhibit 8 to the Registrant's Form 8-K Current
               Report dated May 17, 1996).

     10.33  -  Investors Subordination Agreement dated as of May 17, 1996
               among Possible Dreams, the Subordinated Obligations Holders
               (as defined therein) and NationsCredit, as Agent
               (incorporated by reference to Exhibit 9 to the Registrant's
               Form 8-K Current Report dated May 17, 1996).

     10.34  -  Sellers Subordination Agreement dated as of May 17, 1996
               among Possible Dreams, the Subordinated Obligations Holders
               (as defined therein) and NationsCredit, as Agent
               (incorporated by reference to Exhibit 10 to the Registrant's
               Form 8-K Current Report dated May 17, 1996).

     10.35  -  Stockholders' Agreement dated as of May 17, 1996 among
               Holdings, Arnold Lee, Warren Stanley and Security Capital
               (incorporated by reference to Exhibit 11 to the Registrant's
               Form 8-K Current Report dated May 17, 1996).



                                         -30-

<PAGE>

     10.36  -  Employment, Consulting and Non-Competition Agreement dated
               May 17, 1996 by and between Possible Dreams and Warren
               Stanley (incorporated by reference to Exhibit 12 to the
               Registrant's Form 8-K Current Report dated May 17, 1996).

     10.37  -  Employment, Consulting and Non-Competition Agreement dated
               May 17, 1996 by and between Possible Dreams and Arnold Lee
               (incorporated by reference to Exhibit 13 to the Registrant's
               Form 8-K Current Report dated May 17, 1996).

     10.38  -  First Amendment to Advisory Services Agreement dated as of
               May 17, 1996 by and between Security Capital and Capital
               Partners, Inc (incorporated by reference to Exhibit 14 to
               the Registrant's Form 8-K Current Report dated May 17,
               1996). 

     10.39  -  Consolidated Income Tax Sharing Agreement dated as of May
               17, 1996 among Possible Dreams, Holdings and Security
               Capital (incorporated by reference to Exhibit 15 to the
               Registrant's Form 8-K Current Report dated May 17, 1996).

     21     -  Subsidiaries of the Registrant.

     23     -  Consent of Deloitte & Touche LLP.

     27     -  Financial Data Schedule.

     (b)  REPORTS ON FORM 8-K.

          A Form 8-K/A, dated July 30, 1996, was filed on August 2, 1996
          reporting under Items 2 and 7 of Form 8-K.  The following combined
          financial statements and notes thereto of Possible Dreams, Ltd. and
          Columbia National Corporation, each a Massachusetts corporation, were
          filed with such Form 8-K/A:

               (i)  Independent Auditors' Report.

               (ii)  Combined balance sheets as of December 31, 1994 and 1995
               and as of March 31, 1996 (unaudited).

               (iii)  Combined statements of income (loss) for the years ended
               December 31, 1993, 1994 and 1995 and for the three months ended
               March 31, 1995 (unaudited) and 1996 (unaudited).

               (iv)  Combined statements of retained earnings for the years
               ended December 31, 1993, 1994 and 1995 and for the three months
               ended March 31, 1995 (unaudited) and 1996 (unaudited).

               (v)  Combined statements of cash flows for the years ended
               December 31, 1993, 1994 and 1995 and for the three months ended
               March 31, 1995 (unaudited) and 1996 (unaudited).

               (vi)  Notes to combined statements for the years ended December
               31, 1993, 1994 and 1995 and for the three months ended March 31,
               1995 (unaudited) and 1996 (unaudited).


                                         -31-

<PAGE>

          The following pro forma financial information and notes thereto of the
          Company were filed with such Form 8-K/A:

               (i)  Introduction to pro forma financial information.

               (ii)  Pro forma combined balance sheet as of March 31, 1996
               (unaudited).

               (iii)  Pro forma combined statement of operations for the fiscal
               year ended September 30, 1995 (unaudited).

               (iv)  Pro forma combined statement of operations for the six
               months ended March 31, 1996 (unaudited).

               (v) Notes to pro forma financial information.



                                         -32-

<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.

                              SECURITY CAPITAL CORPORATION


                              By: /S/ A. GEORGE GEBAUER
                                  ---------------------
                                   A. George Gebauer
                                   President

                              Date: January 10, 1997

          Pursuant to the requirements of the Securities Exchange Act of 1934,
this Report has been signed below by the following persons on behalf of the
Registrant and in the capacities and on the date or dates indicated.

SIGNATURE                              POSITION                    DATE
---------                              --------                    ----


/S/ A. GEORGE GEBAUER         President, Secretary and Director    January 10, 
-------------------------     (Principal Executive Officer)        1997
A. George Gebauer

/S/ LARRY M. KARREN           Vice President (Principal Financial  January 10,
-------------------------     and Accounting Officer)              1997
Larry M. Karren               


/S/ BRIAN D. FITZGERALD       Director and Chairman                January 10,
-------------------------     of the Board                         1997
Brian D. Fitzgerald           


/S/ WILLIAM T. BOZARTH        Director                             January 10,
-------------------------                                           1997
William T. Bozarth


/S/ THOMAS J. GOCHBERG        Director                             January 10,
-------------------------                                           1997
Thomas J. Gochberg



                                         -33-

<PAGE>

                                    EXHIBIT INDEX
                                    -------------
<TABLE>
<CAPTION>
                                                                                        Sequentially
Exhibit No.    Description of Document                                                  Numbered Page
-----------    -----------------------                                                  --------------
<S>            <C>                                                                      <C>
     3.1  -    Restated Certificate of Incorporation of the Registrant
               (incorporated by reference to Exhibit 2 to the Registrant's
               Form 8-K Current Report dated June 22, 1990), and amendment
               thereto (incorporated by reference to Exhibit 1 to the
               Registrant's Form 8-K Current Report dated February 23,
               1994).

     3.1A -    Certificate of Amendment dated March 27, 1996 to Restated 
               Certificate of Incorporation of the Registrant.

     3.1B -    Certificate of Amendment dated March 27, 1996 to Restated 
               Certificate of Incorporation of the Registrant. 

     3.2  -    By-laws of the Registrant (incorporated by reference to
               Exhibit 3 to the Registrant's Form 8-K Current Report dated
               June 22, 1990).

     4.2  -    Reference is made to Exhibit 3.1.

     *10.1-    Security Capital Corporation 1982 Incentive Stock Option Plan, as
               amended through December 10, 1990 (incorporated by reference to
               Exhibit (10)(A) to the Registrant's Form 10-K Annual Report for
               the fiscal year ended September 30, 1990).

     10.4 -    Stock Purchase Agreement between Security Capital
               Corporation and FGS, Inc. dated January 26, 1990, as amended
               May 14, 1990 (incorporated by reference to Exhibit (c) to
               the Registrant's Form 8-K Current Report dated January 26,
               1990 and Exhibit 10.7 to the Registrant's Registration
               Statement on Form S-4 (Reg. 33-34324) as filed on May 17,
               1990).

     10.5 -    Agreement Regarding Adjustment of Purchase Price Pursuant to
               Section 2 of Stock Purchase Agreement between Security
               Capital Corporation and FGS, Inc., executed September 28,
               1990, between and among the Corporation, FGS, Inc., CP
               Acquisition, L.P. No. 1 and Mr. John A. Bogardus, Jr.
               (incorporated by reference to Exhibit 1 to the Registrant's
               Form 8-K Current Report dated September 28, 1990).

     10.7 -    Advisory Services Agreement dated as of April 27, 1990 and
               effective as of January 26, 1990, between Security Capital
               Corporation and Capital Partners, Inc. (incorporated by reference 




<PAGE>

                                                                                       Sequentially
Exhibit No.    Description of Document                                                  Numbered Page
-----------    -----------------------                                                  --------------


               to Exhibit (10)(B) to the Registrant's Form 10-Q Quarterly
               Report for the period ended March 31, 1991).

     10.10-    Agency and Management Services Agreement dated as of September 1,
               1992 (the "Agency Agreement") between Foster Insurance Managers,
               Inc. ("FIM") and Foster Insurance Services, Inc. ("FIS")
               (incorporated by reference to Exhibit 1 to the Registrant's Form
               8-K Current Report dated October 16, 1992).

     10.10A-   Amendment, dated September 30, 1994, to the Agency Agreement
               between FIM and FIS (incorporated by reference to Exhibit
               10.10A to the Registrant's Form 10-K Annual Report for the
               fiscal year ended September 30, 1994).

     10.11 -   Buy-Sell Agreement dated as of September 1, 1992 between
               FIM, Edward G. Britt, Jr., and FIS (incorporated by
               reference to Exhibit 2 to the Registrant's Form 8-K Current
               Report dated October 16, 1992).

     10.12 -   Agreement dated September 1, 1992 between FIS, Edward G.
               Britt, Jr., FIM and Larry M. Karren (incorporated by
               reference to Exhibit 10(O) to the Registrant's Form 10-K
               Annual Report for the fiscal year ended September 30, 1992).

     10.13 -   Interim Agreement dated October 30, 1992 between FIS, FIM,
               Bowen, Miclette & Descant, Inc. ("BMD"), Samuel F. Bowen,
               David G. Miclette, D. Michael Descant, William G. Bowen,
               Jr., Thomas C. Cook, and Edward G. Britt, Jr. (incorporated
               by reference to Exhibit 10(P) to the Registrant's Form 10-K
               Annual Report for the fiscal year ended September 30, 1992).

     10.14 -   Office Lease Agreement dated October 9, 1992 between
               TelephoneReal Estate Equity Trust, Karsten Realty Advisors,
               FIS, BMD and Bowen, Miclette, Descant & Britt, Inc. ("BMD&B
               Inc."), including Addendum One thereto (incorporated by
               reference to Exhibit 10(Q) to the Registrant's Form 10-K
               Annual Report for the fiscal year ended September 30, 1992).

     10.14A-   Addendum Two dated July 1, 1994 to Office Lease Agreement
               dated October 9, 1992 between Telephone Real Estate Equity
               Trust, Karsten Realty Advisors, FIS, BMD and BMD&B Inc.
               (incorporated by reference to Exhibit 10.14A to the
               Registrant's Form 10-K Annual Report for the fiscal year
               ended September 30, 1995).




<PAGE>

                                                                                        Sequentially
Exhibit No.    Description of Document                                                  Numbered Page
-----------    -----------------------                                                  --------------

     10.14B -  Addendum Three dated January 9, 1995 to Office Lease
               Agreement dated October 9, 1992 between Telephone Real
               Estate Equity Trust, Karsten Realty Advisors, FIS, BMD and
               BMD&B Inc. (incorporated by reference to Exhibit 10.14B to
               the Registrant's Form 10-K Annual Report for the fiscal year
               ended September 30, 1995).

     10.15-    Management Services Agreement dated August 10, 1994 between
               FIS, BMD and BMD&B Inc. (incorporated by reference to
               Exhibit 10.15 to the Registrant's Form 10-Q Quarterly Report
               for the period ended June 30, 1994).

     10.16-    Personnel Services and Clarification Agreement dated June
               15, 1994 among BMD, FIS, BMD&B Inc. and Bowen, Miclette,
               Descant & Britt (the "Partnership") (incorporated by
               reference to Exhibit 10.16 to the Registrant's Form 10-Q
               Quarterly Report for the period year ended June 30, 1994).

     10.17-    Partnership Agreement of the Partnership dated June 15, 1994
               between BMD and FIS (incorporated by reference to Exhibit 3
               to the Registrant's Form 10-Q Quarterly Report for the
               period ended June 30, 1994).

     10.18-    Stock Purchase Agreement effective the 1st day of January,
               1993 among Edward C. Britt, Patricia C. Britt, Larry M.
               Karren, Jodi S. Karren, FIS, FIM and BMD&B Inc.
               (incorporated by reference to Exhibit 10.18 to the
               Registrant's Form 10-K Annual Report for the fiscal year
               ended September 30, 1995).

     10.19-    Subscription Agreement dated as of March 28, 1994 between
               the Registrant and CP Acquisition, L.P. No. 1 ("CP
               Acquisition") (incorporated by reference to Exhibit 10.19 to
               the Registrant's Registration Statement on Form S-1 (Reg.
               No. 33-74680)).

     10.20-    Registration Rights Agreement and Amendment to Stock
               Purchase Agreement dated as of March 28, 1994 among the
               Registrant, CP Acquisition and FGS, Inc.  (incorporated by
               reference to Exhibit 10.20 to the Registrant's Registration
               Statement on Form S-1 (Reg. No. 33-74680)).

     10.21-    Undertaking dated March 28, 1994 from Brian D. Fitzgerald to
               the Registrant. (incorporated by reference to Exhibit 10.21
               to the Registrant's Registration Statement on Form S-1 (Reg.
               No. 33-74680)).




<PAGE>

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     10.22-    Shareholder Agreement effective as of the 1st day of
               January, 1993 by and among BMD, David G. Miclette, Dennis
               Michael Descant, Samuel F. Bowen, William G. Bowen, Larry M.
               Karren, their respective spouses, BMD&B Inc., FIM and FIS
               (incorporated by reference to Exhibit 10.22 to the
               Registrant's Form 10-K Annual Report for the fiscal year
               ended September 30, 1995).

     10.23-    Asset Purchase Agreement dated as of May 17, 1996 by and
               among Possible Dreams, Ltd., a Massachusetts corporation,
               Columbia National Corporation, a Massachusetts corporation,
               Leonard Miller, Richard L. Seegal, as trustee of the Samuel
               C. Miller Trust u/d/t 8/5/85, Warren Stanley and Arnold Lee
               and Possible Dreams, Ltd., a Delaware corporation ("Possible
               Dreams") (incorporated by reference to Exhibit 1 to the
               Registrant's Form 8-K Current Report dated May 17, 1996).

     10.24-    Subordinated Promissory Note dated May 17, 1996 in the
               amount of $2,128,000, from Possible Dreams to Possible
               Dreams, Ltd., a Massachusetts corporation (incorporated by
               reference to Exhibit 2 to the Registrant's Form 8-K Current
               Report dated May 17, 1996).

     10.25-    Corrective Amendment dated November 25, 1996 to Subordinated
               Promissory Note dated May 17, 1996 in the amount of
               $2,128,000 from Possible Dreams to Possible Dreams, Ltd., a
               Massachusetts corporation.

     10.26-    Subordinated Promissory Note dated May 17, 1996 in the
               amount of $332,000, from Possible Dreams to Columbia
               National Corporation (incorporated by reference to Exhibit 3
               to the Registrant's Form 8-K Current Report dated May 17,
               1996).

     10.27-    Corrective Amendment dated November 25, 1996 to Subordinated
               Promissory Note dated May 17, 1996 in the amount of $332,000
               from Possible Dreams to Columbia National Corporation.

     10.28-    Credit Agreement dated as of May 17, 1996 among Possible
               Dreams, P.D. Holdings, Inc., a Delaware corporation
               ("Holdings"), the Lenders referred to therein and
               NationsCredit Commercial Corporation ("NationsCredit"), as
               Agent (incorporated by reference to Exhibit 4 to the
               Registrant's Form 8-K Current Report dated May 17, 1996).

     10.29-    Warrant dated May 17, 1996 from Possible Dreams to
               NationsCredit 




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Exhibit No.    Description of Document                                                  Numbered Page
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               (incorporated by reference to Exhibit 5 to the
               Registrant's Form 8-K Current Report dated May 17,
               1996). 

     10.30-    Warrantholders Rights Agreement dated as of May 17, 1996
               among Possible Dreams, Holdings, Security Capital
               Corporation ("Security Capital"), Warren Stanley and Arnold
               Lee and NationsCredit (incorporated by reference to Exhibit
               6 to the Registrant's Form 8-K Current Report dated May 17,
               1996).

     10.31-    Security Capital Pledge and Guarantee Agreement dated as of
               May 17, 1996 between Security Capital and NationsCredit, as
               Agent (incorporated by reference to Exhibit 7 to the
               Registrant's Form 8-K Current Report dated May 17, 1996).

     10.32-    Holdings Pledge Agreement dated as of May 17, 1996 among
               Holdings and NationsCredit, as Agent (incorporated by
               reference to Exhibit 8 to the Registrant's Form 8-K Current
               Report dated May 17, 1996).

     10.33-    Investors Subordination Agreement dated as of May 17, 1996
               among Possible Dreams, the Subordinated Obligations Holders
               (as defined therein) and NationsCredit, as Agent
               (incorporated by reference to Exhibit 9 to the Registrant's
               Form 8-K Current Report dated May 17, 1996).

     10.34-    Sellers Subordination Agreement dated as of May 17, 1996
               among Possible Dreams, the Subordinated Obligations Holders
               (as defined therein) and NationsCredit, as Agent
               (incorporated by reference to Exhibit 10 to the Registrant's
               Form 8-K Current Report dated May 17, 1996).

     10.35-    Stockholders' Agreement dated as of May 17, 1996 among
               Holdings, Arnold Lee, Warren Stanley and Security Capital
               (incorporated by reference to Exhibit 11 to the Registrant's
               Form 8-K Current Report dated May 17, 1996).

     10.36-    Employment, Consulting and Non-Competition Agreement dated
               May 17, 1996 by and between Possible Dreams and Warren
               Stanley (incorporated by reference to Exhibit 12 to the
               Registrant's Form 8-K Current Report dated May 17, 1996).

     10.37-    Employment, Consulting and Non-Competition Agreement dated 




<PAGE>

                                                                                        Sequentially
Exhibit No.    Description of Document                                                  Numbered Page
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               May 17, 1996 by and between Possible Dreams and Arnold Lee
               (incorporated by reference to Exhibit 13 to the Registrant's
               Form 8-K Current Report dated May 17, 1996).


     10.38-    First Amendment to Advisory Services Agreement dated as of
               May 17, 1996 by and between Security Capital and Capital
               Partners, Inc (incorporated by reference to Exhibit 14 to
               the Registrant's Form 8-K Current Report dated May 17,
               1996). 

     10.39-    Consolidated Income Tax Sharing Agreement dated as of May
               17, 1996 among Possible Dreams, Holdings and Security
               Capital (incorporated by reference to Exhibit 15 to the
               Registrant's Form 8-K Current Report dated May 17, 1996).

     21   -    Subsidiaries of the Registrant.

     23   -    Consent of Deloitte & Touche LLP.

     27   -    Financial Data Schedule.



</TABLE>