<PAGE>



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                                  UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                    FORM 10-K

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

(Mark one)

[ X ] Annual report  pursuant to section 13 or 15(d) of the Securities  Exchange
Act of 1934 (No Fee Required) for the FISCAL YEAR ENDED DECEMBER 31, 1996

[ ] Transition report pursuant to section 13 or 15(d) of the Securities Exchange
Act of 1934 (No Fee  Required)  for the  transition  period from  __________  to
__________
                         Commission File Number 0-27788

                                EVOLUTIONS, INC.
             (Exact name of registrant as specified in its charter)

       DELAWARE                                           22-3420712
(State of Incorporation)                    (I.R.S. Employer Identification No.)

                266 Harristown Road, Glen Rock, New Jersey 07452
              (Address of principal executive offices and zip code)

                                (201) 493 - 9595
              (Registrant's telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act: None

Securities  registered  pursuant to Section 12(g) of the Act:  Common Stock (par
value $.01 per share)

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 No X

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 registrants'  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. [ ]

Indicate the number of shares outstanding of each of the registrant's classes of
stock as of the latest practicable date.

           Class                               Outstanding at September 19, 1997
          -------                              ---------------------------------
Common Stock, $.01 par value                                 6,562,280*

*  Reflects the 0.033-for-1 stock split of February 1996

The  aggregate  market  value of  voting  stock  held by  non-affiliates  of the
Registrant was approximately $459,360 as of September 19, 1997.

Documents Incorporated by Reference:  See Index to Exhibits.

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



<PAGE>




                                     PART I

Item 1.  BUSINESS

INTRODUCTION

         Evolutions,  Inc., a Delaware  corporation (the "Company")  merged with
Gold Securities Corporation ("Gold"), an Idaho corporation, in February 1996 for
the purpose of changing the state of incorporation  from Idaho to Delaware.  The
Company trades publicly on the NASDAQ electronic bulletin board under the symbol
"EVOI" and prior to the merger traded on the NASDAQ  electronic  bulletin  board
under the symbol "GLDS." Gold was incorporated in 1922 under the name of Kaniksu
Mining Company ("Kaniksu").  In 1981, Kaniksu merged with Gold, and adopted that
company's  name.  In July of 1995,  Gold entered into a reverse  merger with EVO
Manufacturing,  Inc., a company incorporated in the State of New Jersey ("EVO").
The majority  owner of EVO,  PureTec  Corporation  ("PureTec"),  a publicly held
specialty plastics and plastics recycling company,  retained ownership of 74% of
the  outstanding  common stock of the Company after  completion of the July 1995
reverse merger. EVO was the only operating  subsidiary of the combined companies
at the time of the July 1995 merger.  For accounting  purposes,  the transaction
was  treated  as the  acquisition  of Gold by EVO.  As a result,  the  Company's
financial  statements  consist  of the  results of  operations  of EVO since its
inception in 1994. In February 1996, the Company effected a 0.033-for-1  reverse
stock split. All share amounts reflect this split.

         On  September  27,  1995,  Kidsview,   Inc.  ("KVI"),  a  wholly  owned
subsidiary  of  the  Company,   purchased   certain  assets  of  Direct  Connect
International  Inc.  ("DCI")  consisting  primarily  of a  licensed  line of toy
animals  marketed under the trade names TEA BUNNIES  (Registered  Trademark) and
ZOO BORNS (Registered  Trademark).  In consideration,  the Company,  among other
things, released DCI of an aggregate of $950,000 in indebtedness to the Company.
In  addition,  the  Company  agreed to issue to DCI 49,500  shares of its Common
Stock. Up to an additional  132,000 shares of the Company's Common Stock will be
issued to DCI if over a period of three  years  certain  net sales and  earnings
tests are met in connection with the business acquired from DCI. Under the terms
of the  agreement  between  the  Company  and DCI,  KVI and DCI  entered  into a
management  agreement pursuant to which DCI will continue to manage the business
relating to the toy animals for a monthly fee of up to $100,000 through December
1995 and up to a maximum monthly fee of $85,000  thereafter.  The first $150,000
of these fees have been offset against DCI's indebtedness to the Company under a
secured note in the amount of $150,000.  As part of the original  loan to DCI by
the Company, DCI issued to the Company warrants to purchase up to 100,000 shares
of DCI common stock at $0.10 per share and 250,000 shares of DCI common stock at
$0.20 per share.

         In February 1996, the Company acquired  substantially all the assets of
Smart Style Industries, Inc. and Affiliates (collectively "SSI") in exchange for
$1,125,000  cash,  a  thirty-day,  promissory  note in the  amount of  $500,000,
$1,000,000 in notes, payable in quarterly  installments with Common Stock of the
Company valued at  $1,000,000,  the  assumption of  approximately  $1,200,000 of
liabilities,  and warrants to purchase an additional  100,000  shares of Company
Stock. An additional  $1,000,000  will be payable in stock if certain  operating
results are achieved over the next five years. On December 1, 1996, the terms of
SSI sale were renegotiated.  SSI received from the Company 700,000 shares of the
Company's  Common  Stock  in  settlement  of the  $1,000,000  of  notes  and SSI
relinquished the $1,000,000 payable in stock

                                        2

<PAGE>




upon reaching  certain  operating  results.  The Company  operates  these assets
through its wholly- owned  subsidiaries,  Smart Style Acquisition  Corp.,  Lions
Acquisition  Corp.  and  Lions  Holding  Corp.  (collectively  "SSA").  SSA is a
manufacturer and marketer of children's apparel.  The Company's line of recycled
apparel products will be combined with SSA's business operations.

         In connection with the SSI acquisition,  SSA also acquired a license to
use the H.W. Carter & Sons,  Inc.'s ("H.W.  Carter") Watch the Wear  (Registered
Trademark) label. The license  agreement  provides for a 3% royalty on all sales
of the  H.W.  Carter  label to be paid to H.W.  Carter,  with a  minimum  annual
payment of $100,000.  The initial term of the  agreement is for three years with
thirty-three  options to renew for additional three year periods held by SSA. On
December 1, 1996, the H.W. Carter license was  renegotiated to a $52,000 minimum
annual payment.

         On September 9, 1996, KVI entered into a license agreement with Sandbox
Entertainment,  Inc. ("SEI") with respect to Pillow People  (Trademark)  stuffed
toy and doll  products.  The license is  exclusive  and KVI can only sell Pillow
People in the  United  States,  its  territories  and  possessions  and  Canada.
However,  the license  grants KVI worldwide  manufacturing  rights.  The license
expires on December 31, 1998. KVI has the option of renewing the license for one
three-year  term,  upon 60 days notice prior to the end of the initial term. The
royalty rate ranges from 6% to 10% based on sales in the United  States and from
8% to 10% based on FOB sales.  Pursuant  to the license  agreement,  KVI made an
advance  payment to SEI of $50,000 with a minimum  guarantee,  due by the end of
the initial term, of $200,000. With respect to renewal of the license agreement,
KVI will be  obligated to make an advance  payment,  due on the first day of the
renewal  term,  of  $100,000  with a  minimum  guarantee,  due by the end of the
renewal term, of $400,000.

         In April 1997,  SSA ceased its  apparel  manufacturing  operations  and
laid-off  all   employees  at  its  Gastonia,   GA  location   involved  in  the
manufacturing process.

         On April 30, 1997, SSA sold its Cutecumber  (Registered Trademark) line
to Snake Creek  Manufacturing  Co.,  Inc.,  for cash and a future  royalty,  the
proceeds all of which were made payable to Heller Financial, Inc., ("Heller") in
accordance with SSA's financing agreement with Heller.

         Effective April 30, 1997, the management  agreement between DCI and KVI
was  terminated.  KVI has not generated  any revenue  since April 30, 1997,  and
there can be no assurance that KVI will be successful in generating  revenues in
the future.

         On May 2, 1997, the owner of the H.W. Carter Watch the Wear (Registered
Trademark) label terminated SSA's rights to the license.

         On  May  15,  1997,  SSA's  secured  lender,  Heller  Financial,  Inc.,
foreclosed  on  substantially  all of the  assets of the  apparel  subsidiaries.
Effective June 6, 1997, the  subsidiaries  filed for protection under Chapter 11
of the Bankruptcy  Code. SSA is in the process of actively seeking the return of
preference  payments made ninety days prior to the bankruptcy.  Proceeds will be
used for secured  creditors and any  remaining  balance will be  distributed  to
priority creditors.



                                        3

<PAGE>




         On July 15,  1997,  the license for KVI's  rights to market TEA BUNNIES
(Trademark) was terminated by the licensor.

         For certain  information  about the apparel and toy business  segments,
see Note 19 to the Consolidated  Financial Statements included in Item 8 to this
Form 10-K.

OPERATIONS

         In April 1997,  SSA ceased  operations.  From SSA's  inception  through
April 1997, SSA was engaged in the following businesses:

APPAREL

Product Lines

         The Company was initially established for the purpose of developing and
expanding markets for apparel products manufactured from recycled materials that
promote environmental  awareness.  In 1995, the Company began to pursue vertical
expansion in the apparel  industry and in 1996  purchased the  operations of SSI
and  acquired  the  license  for the H.W.  Carter  Watch  the  Wear  (Registered
Trademark) label.

         SSA manufactured a varied line of apparel for many age groups.  The Wee
Willie  (Registered  Trademark)  line  included  pants  and vest  sets made from
polyester or poly/ cotton blends and was marketed to infants and toddlers, sizes
4 to 7 and sizes 8 to 20. Additionally, SSA marketed suits made from poly/cotton
blends  under the names Elliot  Stevens  (Registered  Trademark)  and Sim Daniel
(Registered  Trademark) and these items were marketed to toddlers,  sizes 4 to 7
and  sizes 8 to 20.  The  Wee  Willie  (Registered  Trademark),  Elliot  Stevens
(Registered  Trademark) and Sim Daniels (Registered  Trademark) lines were known
for their quality holiday wear.

         Also,  SSA  manufactured  a diverse line of denim and  corduroy  items.
Cutecumber  (Registered  Trademark)  produced  denim and  corduroy  jumpers  for
infants and toddlers in sizes 4 to 7. The H.W. Carter Watch the Wear (Registered
Trademark)  lines included denim,  corduroy and twill carpenter  pants,  painter
pants and overalls for junior sizes. The garments  manufactured by SSA under the
H.W.  Carter  label  were  garments  that had been  traditionally  termed  "work
clothes," namely, jeans and overalls. However, they were also marketed in retail
stores that carry popular "urban styles."

Manufacturing

         A majority of SSA's holiday items were produced in its facility located
in Gastonia,  North Carolina.  SSA did subcontract a significant amount of piece
work.  The  Cutecumber   (Registered   Trademark)   line  was   manufactured  by
subcontractors  in Haiti,  the Elliot Stevens  (Registered  Trademark)  line was
subcontracted  to  manufacturers  in Mexico  and the H.W.  Carter's  (Registered
Trademark) line was subcontracted to a plant in Nicaragua.  SSA was not party to
any long term contractual or other arrangements with any specific subcontractor.




                                        4

<PAGE>




Raw Materials

         The principal raw materials  used in the  production of SSA's  products
were denim,  corduroy,  twill,  polyester and  poly/cotton  blend  fabrics.  The
sources  and  availability  of raw  materials  for  the  apparel  products  were
abundant.  SSA purchased  goods both from domestic and foreign sources and there
were many suppliers.

Marketing and Distribution

         SSA marketed its apparel to department  stores and catalog houses.  The
primary  target market was the United  States.  Some of the major accounts which
ordered  SSA's  products  included  Kmart,   Wal-Mart,   Sears,  JC  Penney  and
Nordstroms.  SSA accepted  returns and issued  credits to the customer.  SSA had
many different discount outlets to resell returned items.

Seasonality

         Sales  differed  amongst  the various  apparel  lines.  The  Cutecumber
(Registered  Trademark) line produced  consistent sales throughout the year. The
H.W.  Carter line was  generally  consistent  and peaked during "back to school"
time, which meant the line's heaviest  shipments  occurred in the months of July
and August. The Wee Willie (Registered  Trademark),  Elliot Stevens  (Registered
Trademark) and Sim Daniels  (Registered  Trademark) lines were holiday wear with
peak sales between  August and March.  Light  shipments  from April through June
generally resulted in negative cash flow for that period which was traditionally
offset by positive  cash flow  starting  in  September.  SSA  carried  inventory
because it shipped large orders. SSA produced a substantial portion of its goods
against firm orders.  SSA  accumulated  a large  inventory  position  during the
months of November through February.

Competition

         The main  competitive  conditions in the apparel industry are price and
service.  Many of SSA's competitors  imported their goods and were able to offer
better pricing. As a domestic  manufacturer,  SSA was able to offer quicker turn
times for shipping and could  capture  business if customers  under  ordered and
needed goods quickly at the end of the seasons.  Most of SSA's  competitors were
much larger and had much more resources.

Product Liability

         SSA maintained  product liability  coverage in the amount of $1,000,000
which was the amount acceptable to SSA's customers. SSA had not been the subject
of any  product  liability  litigation.  As of April  30,  1997,  SSA no  longer
maintained product liability insurance.

Inflation

         SSA had not been materially affected by the impact of inflation.

TOY PRODUCTS

         On April 30, 1997, DCI and KVI dissolved  their  management  agreement.
From KVI's  inception  through April 30, 1997,  KVI was engaged in the following
businesses:

                                        5

<PAGE>




Product Lines

         In September 1995, the Company's wholly-owned subsidiary, KVI, acquired
the  licenses  to two toy  products,  TEA  BUNNIES  (Trademark)  and  ZOO  BORNS
(Trademark),  and  entered  into an  agreement  to retain  the  services  of key
management  personnel  from  DCI.  DCI  managed  these  product  lines  and  was
responsible for the development of new products.

         The ZOO BORNS  (Trademark)  product line was discontinued by management
in early 1996.

         The TEA BUNNIES  (Trademark)  product line was  introduced in 1995. TEA
BUNNIES  (Trademark) toy products  combine fashion doll and tea party play value
and were  positioned in the  "mini-doll"  market in order to achieve status as a
"collectible,"  which KVI believed was  beneficial in the  procurement of repeat
sales. On July 15, 1997, the licensor terminated KVI's rights to the license.

         TEA BUNNIES (Trademark) are a group of bunny-like  characters that live
in the  fantasy  town of  Sunny  Bunny  Bay.  KVI had  developed  a range of toy
miniature dolls and play accessories depicting these characters.  Each Tea Bunny
featured a specific  flower in its ears and lives in a matching tea cup house or
shop.

Manufacturing

         KVI  did  not  manufacture  any  of  its  toy  products.  Instead,  KVI
contracted,  through  Amerawell  Products,  Ltd., a Hong Kong subsidiary of DCI,
("Amerawell") for the manufacture of its products by third parties, primarily in
China.  Contracting decisions were made on the basis of price (including freight
charges and customs duties), availability of payment terms, quality, reliability
and the ability to meet KVI's timing  requirements for production in relation to
delivery  schedules.  KVI  believed  that its  manufacturing  arrangements  were
advantageous to KVI in providing  quality  products at reasonable  prices,  with
prompt  responses to orders.  KVI incurred  none of the fixed costs  involved in
owning its own  factories,  and the  flexibility  provided  by this  arrangement
allowed KVI to seek out the best manufacturing terms available. However, the use
of third party  manufacturers  reduced  KVI's  ability to control  directly  the
timing and quality of the manufacturing  process.  Delays in shipment or defects
in products could result in a loss of orders which could have a material adverse
effect on KVI. Substantially all contracted  manufacturing services were paid by
either letter of credit or telegraphic transfer only upon the proper fulfillment
of terms  established  by KVI  such as  adhering  to  product  quality,  design,
packaging and shipping standards and proper documentation  relating thereto. All
products purchased were made and paid for in U.S. dollars.

         KVI was not a party to any long-term  contractual or other arrangements
with any specific supplier.  A substantial portion of KVI's product was produced
by two manufacturers,  Tri-S Manufacturing Co., and Well World Toy Co., Ltd. KVI
arranged for the making of its products  with such  manufacturers  who, in turn,
subcontract   for  the   manufacture   of  components  of  these  products  with
unaffiliated  third parties also located in the Far East.  These  companies used
KVI's tools and molds.




                                        6

<PAGE>




Raw Materials

         The principal raw materials  used in the  production  and sale of KVI's
toy products were plastics, plush and printed fabrics and paper products, all of
which were available at reasonable prices from a variety of sources. KVI's tools
and  molds  (which  are  approximately  six  years  old and are in good  working
condition) and package  designs,  which were owned by KVI, were designed both by
KVI and by third  parties and were  engineered  and  produced for KVI in the Far
East. KVI directly,  or through its sales  representatives,  took written orders
(standard  purchase orders) for its products and arranged for the manufacture of
its products as discussed above.  Cancellations  were generally made in writing,
and  KVI  took  the  appropriate  steps  to  notify  its  manufacturers  of such
cancellation.  The manufacturers  generally shipped KVI's products by commercial
ocean carrier pursuant to instructions from KVI's customers

Marketing and Manufacturing

         KVI  marketed its products to major toy,  discount  department  stores,
drug chains and catalog  companies.  The  primary  target  market was the United
States. KVI also distributed its products in Canada.  Substantially all of KVI's
sales were made on a direct import bases to customers, F.O.B. Far East port, and
payments were made by irrevocable letter of credit or telegraphic transfer. As a
result,  on those sales,  KVI did not have to finance  inventory or offer credit
terms to the customer. This reduced much of the risk that is commonly associated
with a fashion business such as toys.  During 1997, KVI's management  decided to
focus on domestic  shippings due to better profit margins,  however,  at greater
risk to KVI. KVI was required to maintain adequate levels of inventory to ensure
availability of goods to customers which required  additional  working  capital.
Virtually  all of the  products  manufactured  have been  tested  for  safety by
independent laboratories contracted by KVI and its retail customers. The results
of these tests  indicated  that the  products  shipped by KVI met  industry  and
government standards.  KVI's customers had the right to appoint a representative
to  inspect  KVI's  product  before  shipment.  If they did not elect to make an
inspection, a representative of KVI did so. Generally,  payment for the products
under the letter of credit will not be made unless inspections are completed. At
that point,  KVI's  general  policy was that such sales were final,  and product
returns  were not  permitted.  However,  should a defect  have  occurred  in the
product or if sales of the product did not meet the customer's expectations, KVI
intended to support its  customers  by making a product  exchange or providing a
cash  allowance.  KVI believed  that the toy industry  generally  followed  this
policy.

Seasonality

         The  seasonality  of the toy business  varied by product line.  The TEA
BUNNIES  (Trademark)  product line was predominately a spring item with sales in
January,  February  and March  leading up to the Easter  holiday;  if Easter was
late,  the season was longer.  The Pillow  People  (Trademark)  product line was
being  designed  to be a year round item with the  heaviest  shipping  from July
through December for the Christmas holiday.

Product Liability

         KVI maintained  product liability  coverage in the amount of $1,000,000
which was the amount  acceptable  to the KVI's  customers.  KVI had not been the
subject of any product liability litigation. As of April 30, 1997, KVI no longer
maintained product liability insurance.

                                        7

<PAGE>




Competition

         The market for toy  products is highly  competitive  and  sensitive  to
changing customer  preferences and demands. KVI believed that the quality of its
products  enabled  it to  compete  effectively  and  achieved  positive  product
reception and position in retail outlets.  However, there are toy products which
are better known than the products  developed and distributed by KVI. There were
also many companies which were  substantially  larger and more diversified,  and
which have substantially  greater financial and marketing resources than KVI, as
well as greater name recognition, and the ability to develop and market products
similar to, and more competitively  priced than, those developed and distributed
by KVI.

Trademarks

         The  products  offered  by  KVI  have  generally  been  licensed  on an
exclusive  basis  whereby KVI paid a  percentage  of sales in return for product
design and  development  services and an exclusive  right to use the copyrighted
and trademark names of the property.  KVI bought the rights to these  copyrights
and  trademarks  for its  products in order to protect  certain  features of the
products and to prevent unauthorized copying of protected features,  which could
have materially  adversely  affected the sales volume of such products.  Many of
the designers and developers that had such  arrangements with KVI have a history
of enforcing their  trademarks and copyrights to the extent necessary to prevent
copying.  However,  it is  possible  to create  artwork  and names that convey a
similar concept to a proprietary  product that may not infringe on KVI's rights.
Therefore,  KVI  believes  that its past  success  was  dependent  upon  ongoing
development  of new  products and product  concepts as well as on trademark  and
copyright  protection.   There  can  be  no  assurance  that  KVI  will  operate
successfully in the future.

Government Regulation

         KVI was subject to the  provisions  of,  among other laws,  the Federal
Hazardous Substances Act and the Federal Consumer Product Safety Act. These laws
empower the Consumer  Product Safety  Commission  (the "Safety  Commission")  to
protect children from hazardous toys and other articles.  The Safety  Commission
has the  authority  to exclude  from the market  articles  which are found to be
hazardous and can require a manufacturer  to repurchase  such toys under certain
circumstances.  Any such  determination  by the Safety  Commission is subject to
court review.  Similar laws exist in some states and cities in the United States
and in Canada and Europe. KVI believes that its products were in compliance with
the aforementioned acts.

         The United States  government has  established a Generalized  System of
Preferences  which  now  provides  favorable  duty  status to  certain  of KVI's
products that are imported into the U.S. from certain countries in the Far East.
The Generalized  System of Preferences is administered by the Office of the U.S.
Trade  Representative.  It is  possible  that  these  products,  which  were now
imported  on a  favorable  duty status  from  certain  countries,  may lose such
status.  In such case,  products imported from such location into the U.S. would
be  subject  to  duties  ranging  from  approximately  5% to  30%.  While  KVI's
competitors  whose  products  are  manufactured  in the  Far  East  also  may be
affected, KVI's profit margin may be materially adversely affected.



                                        8

<PAGE>




Inflation

         KVI has not been materially affected by the impact of inflation.

Employees

         The Company currently has no employees.

Item 2.  PROPERTIES


                                                 Approximate      
Location                Function                   Square    Lease
                                                    Feet   Expiration

Glen Rock, NJ           Corporate Offices and       3,000     2001       (1)
                        KVI headquarters

New York,               SSA division headquarters   6,000     2001       (2)
NY                      and three showrooms

Gastonia, NC            SSA apparel                60,000    Owned       (3)
                        manufacturing

Gastonia, NC            SSA apparel                60,000     1997       (2)
                        manufacturing

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


(1) SSA is the tenant on this lease.

(2) SSA is the tenant on these leases. SSA is no longer party to these leases as
these leases were voided by the bankruptcy court.

(3)  The premises have been foreclosed on by SSA's lender.

Item 3.  LEGAL PROCEEDINGS

         SSA's  secured  lender,  Heller  Financial,  Inc.,  has  foreclosed  on
substantially all of the assets of the apparel subsidiaries.  Effective, June 6,
1997,  the  subsidiaries  have  filed for  protection  under  Chapter  11 of the
Bankruptcy  Code.  SSA is in the  process  of  actively  seeking  the  return of
preference  payments made ninety days prior to the bankruptcy.  Proceeds will be
used for secured  creditors and any  remaining  balance will be  distributed  to
priority creditors.


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

         There were no matters submitted to a vote of security holders in 1996.



                                                         9

<PAGE>




                                                      PART II

Item 5.  MARKET FOR REGISTRANT'S COMMON STOCK AND RELATED SECURITY
                             HOLDER MATTERS.

         The Company's  Common Stock was listed on the Spokane Stock Exchange on
June 26, 1986.  The Spokane Stock  Exchange  ceased  operations in May 1991. The
prices  reflected  below for the years 1996 and 1995 are from  brokers that have
quoted and traded  the stock as it was listed on the NASDAQ  Bulletin  Board and
"Pink Sheets"  under the trading  symbol  "GLDS"  through  February 1996 and the
symbol "EVOI" from February 1996  forward.  The prices  reflect the  0.033-for-1
stock split authorized by the shareholders in February 1996.



Calendar Quarter                     High            Low
-----------------                   ------          ----
First 1995                           $5.16          $1.55
Second 1995                          $3.61          $1.55
Third 1995                           $4.64          $1.55
Fourth 1995                          $5.15          $1.55

First 1996                           $3.00          $1.25
Second 1996                          $5.00          $3.00
Third 1996                           $4.00          $3.00
Fourth 1996                          $3.00          $1.75

         The Company has  approximately  330 record  holders of its Common Stock
and believes  that the  approximate  total of  beneficial  holders of the Common
Stock of the Company to be in excess of 500, based on information  received from
the transfer agent and those brokerage  firms who hold the Company's  securities
in custodial or "street" name.

         The Company  has not paid any cash  dividends  and does not  anticipate
paying any cash dividends in the foreseeable future.

Item 6.  SELECTED FINANCIAL DATA

         The selected financial data presented below for the Company's statement
of  operations  for the years ended  December 31, 1995 and the period of January
21, 1994  (inception) to December 31, 1994 and the balance sheet at December 31,
1995 and 1994 are derived from financial  statements  which have been audited by
Holtz Rubenstein & Co., LLP, independent public accountants, and are included in
Item 8 to this Form  10-K.  In July  1995,  Gold and EVO  consummated  a reverse
merger. For accounting purposes,  the transaction was treated as the acquisition
of Gold by EVO. As a result, the Company's  financial  statements consist of the
results of operations of EVO since its inception in 1994.



                                       10

<PAGE>




         The  financial  statements  for the year ended  December  31,  1996 are
unaudited. Due to the Company's financial position, the Company did not have the
monies  necessary  to have  Holtz  Rubenstein  & Co.,  LLP,  independent  public
accountants for the past fiscal year, complete the audit.

Statements of Operations Data:


                                                              Period of
                                                             January 21,
                        Year Ended         Year Ended           1994
                        December 31,       December 31,     (inception) to
                            1996               1995           December
                        (Unaudited)                           31, 1994
                        -----------         ----------      -------------

Revenues                $ 21,521,910    $    571,326    $    124,281
Net loss from
 continuing operations   (11,640,120)     (1,602,952)       (341,538)
Net loss per share      $      (1.77)   $      (0.52)   $      (0.27)
Weighted average
 shares of common
 stock outstanding         6,562,281       3,079,358       1,265,297

Balance Sheet Data:

                             December 31,     December 31,   December 31,
                                1996              1995          1994
                             (Unaudited)
                             ------------   ------------     -----------
Working capital (deficit)   $(4,618,401)   $  (502,010)       456,457
Total Assets                  7,171,888      2,579,766        556,522
Long-term liabilities              --             --             --
Stockholders' Equity         (4,063,621)       824,589        463,068


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

         The following  discussion  and analysis  should be read in  conjunction
with the Financial  Statements and notes thereto included in Item 8 to this Form
10-K. For the year ended December 31, 1995, this discussion does not include any
results of the  operations  acquired  from SSA, as these  acquisitions  occurred
after  the  close  of the  1995  calendar  year.  In  July  1995,  Gold  and EVO
consummated a reverse  merger.  For accounting  purposes,  the  transaction  was
treated as the acquisition of Gold by EVO. As a result, the Company's  financial
statements  consist of the results of  operations  of EVO since its inception in
1994.





                                       11

<PAGE>




Results of Operations

Fiscal 1996 compared to 1995

         The Company had net sales of  $21,521,910  for the year ended  December
31, 1996 as  compared to $571,326  for the year ended  December  31,  1995.  The
increase in net sales is primarily  attributable to the Company's acquisition of
SSI in February 1996.  The apparel  segment  recorded  sales of $12,432,880  and
$349,226  for the years  ended  December  31, 1996 and 1995,  respectively,  and
operating loss was $2,810,781 and $523,012 for the years ended December 31, 1996
and  1995,  respectively.  The toy  segment  recorded  sales of  $9,089,030  and
$222,100 for the years ended December 31, 1996 and 1995,  respectively,  and had
operating  losses of  $2,821,280  and $575,000 for the years ended  December 31,
1996 and 1995.  The increase in toy segment  sales can be attributed to the fact
that the year ended December 31, 1996 includes a full year of sales and the year
ended  December 31, 1995 only  includes  sales from  September 27, 1995 (date of
purchase) through December 31, 1995.

         Gross margin for the Company was $4,443,853 for the year ended December
31, 1996 as  compared to $137,544  for the year ended  December  31,  1995.  The
increase in gross margin is attributable to an increase in the apparel  segment,
which had a gross margin of $230,076 as compared to $27,320 for 1995 and the toy
segment which was $4,213,777 for 1996 compared to $110,224 for 1995.

         During 1996, the Company sold the remaining  230,000 PureTec shares and
recorded a loss of $611,146 on the sale.  The Company had received  these shares
from PureTec in March 1995 as a capital contribution.

         In the year ended December 31, 1996, the Company wrote-off fixed assets
of  $1,844,135;  $587,890  was  attributable  to the toy segment and  $1,256,245
related to the apparel segment.

         Additionally,  the Company  wrote-off  intangibles  relating to the toy
segment of $1,234,761 and $1,574,384 from the apparel segment.

         The Company had a net loss of $11,640,120 for 1996 as compared to a net
loss of $1,602,952 for 1995.

Fiscal 1995 compared to 1994

         The Company had net sales of $571,326  for the year ended  December 31,
1995,  as  compared  to  $124,281  for the period of January  21,  1994 (date of
inception)  through December 31, 1994. The increase in net sales is attributable
to volume increases made by the Company in the apparel business and the addition
of the toy line  revenues due to the  acquisition  of the toy licenses from DCI.
The Company had two distinct  operating  segments in 1995.  The apparel  segment
recorded sales and operating losses of $349,226 and $523,012,  respectively, for
the year ended December 31, 1995.  The toy segment  recorded sales and operating
losses of $222,100 and $575,000,  respectively,  for the year ended December 31,
1995. The Company only operated in the apparel segment in 1994.



                                       12

<PAGE>




         The Company had a net loss of $1,602,952  for 1995 as compared to a net
loss of $341,538 for 1994. The Company had a significant increase in expenses in
1995 as compared to 1994.  During 1995, the Company  recorded a bad debt expense
related to a contractor who was producing goods for the Company.  The contractor
had been advanced  $198,814 as of December 31, 1994. At December 31, 1995,  this
advance was determined to be  unrecoverable.  The Company also had a significant
increase in interest  expense  during 1995 as compared to 1994.  The increase is
attributable  to loans received from  affiliates and related  parties which were
used to finance  the  purchase  of the toy  licenses.  The  decrease in interest
income from 1994 to 1995 is due to the  reduction in cash balances as funds were
used in operations of the Company.

         The Company  experienced a significant  increase in gross profit during
1995 as compared to 1994.  The majority of the increase is  attributable  to the
toy  division,  which had sales of $220,100  and a gross  margin of $110,224 for
1995. In addition,  the recycled content apparel division sold off all remaining
inventory  by the end of 1995.  The  sales  and gross  margin  during  1995 were
$349,226  and  $27,320,  respectively,  as compared to sales and gross margin of
$124,281 and $(92,108) for 1994.

       The Company experienced a significant loss on its portfolio of marketable
securities.  The principal  component of the Company's  portfolio is the 350,000
shares of PureTec  stock the  Company  received as a capital  contribution  from
PureTec in March 1995. The market value of the stock on the date it was received
was  $5.50  per  share,  amounting  to  $1,925,000.   The  value  of  the  stock
significantly  declined in August 1995. During 1995, the Company sold 120,000 of
the PureTec shares and recorded a loss of $360,000 on the sale. The remainder of
the loss on sale of securities related to other securities  acquired during 1994
and sold during 1995. In addition to the recognized  loss on sale of securities,
the Company recorded and unrealized  holding loss of  approximately  $623,000 on
securities available for sale.

Financial Position, Liquidity and Capital Resources

          The Company had a working capital deficit of approximately  $4,618,401
at December 31, 1996 and $502,010 at December 31, 1995.  The increase in working
capital  deficit is  attributable  to the Company's  acquisition  of SSI and the
expansion of the toy business and due to the Company's  bankruptcy  status,  all
loans  and  the  mortgage  are  in  default  and  thus   classified  as  current
liabilities.

Bridge Notes

         In February  and March of 1996,  the Company  borrowed an  aggregate of
$3,000,000 from various outside sources (the "Bridge Lenders"). In exchange, the
Company  issued to the Bridge  Lenders  notes (the "Bridge  Notes") for the face
amount of the  loans due May  through  August  1996.  The  Bridge  Notes  accrue
interest at the rate of 8% per annum.  In  addition,  the Company  issued to the
Bridge Lenders warrants to purchase a total of 3,700,000 shares of the Company's
Common  Stock.  The  exercise  price of the warrants is $3.50 per share of stock
purchased  and expire  five years from the date of  issuance.  In May 1996,  the
Company  borrowed an  additional  $100,000 on terms  identical  to the  original
Bridge Notes and used those proceeds to repay some of the expiring Bridge Notes.

         In October  1996,  $100,000  of Bridge  Notes were  converted  into the
private  placement,  as fully  described  below,  and, in addition,  the Company
converted $400,000 of Bridge Notes into

                                       13

<PAGE>




a Convertible Note bearing interest at 8%. The terms allow the holder to convert
the Convertible Note into the private  placement until the due date on April 22,
1997. The balance of the Bridge Notes totaling $450,000 have been converted into
Demand  Notes.  As of December  31,  1996,  the Company had $850,000 of original
Bridge Notes  outstanding.  The Convertible Notes and Demand Notes are currently
in default.

Private Placements

         In  March  1996,  the  Company  offered  a  private  placement  of  its
securities.  The  placement  consisted of 500,000  Units at a purchase  price of
$5.00 per unit. Each Unit consisted of two shares of the Company's  Common Stock
and one Stock  Purchase  Warrant to acquire  one share of the  Company's  Common
Stock at an exercise  price of $3.50.  The Stock  Purchase  Warrants will expire
five years from the date of issue. As of December 31, 1996, the Company had sold
a total of 475,750 Units in this offering for total proceeds of  $2,378,750.  Of
the funds received, $1,900,000 were from the conversion of Bridge Notes into the
private  placement  and  the  balance  was  direct  investments  in the  private
placement.

         In May 1996, the Company  commenced a second  private  placement of its
securities.  The placement  consisted of 600,000 Units,  each  consisting of two
shares of the Company's  Common Stock, and one Stock Purchase Warrant to acquire
one share of the  Company's  Common Stock in exchange  for $3.50,  at a purchase
price of $5.00 per Unit. The Stock Purchase Warrants will expire five years from
the date of issue.  As of  December  31,  1996,  the Company had sold a total of
440,000 Units in this offering for total  proceeds of  $2,200,000.  Of the funds
received,  $100,000 was used for the repayment of Bridge Notes,  and the balance
has been used for working capital.

         One of the  investors in the private  placement was DCI. As part of the
consideration  for their 160,000 Units,  DCI  transferred  to Evolutions  equity
securities of a publicly  traded  unrelated third party with a fair market value
of $800,000.  The Company  subsequently  transferred  these  securities to repay
$800,000 of outstanding  Bridge Loans. The Company recognized no gain or loss on
these transactions.

Loans Payable

         At  December  31,  1996,  the  Company  had loans  payable  and accrued
interest of approximately  $148,000 consisting of secured notes to relatives and
affiliates of Michael Nafash, CEO, President and a Director of the Company.  The
notes are due on demand  and bear  interest  at the rate of 12% per  annum.  The
notes are secured by 25,000 shares of Glasgal Communications,  Inc. common stock
and all other  marketable  securities held by the Company.  On May 29, 1997, the
noteholder foreclosed on the collateral and has since accepted the collateral as
full payment of the debt.  At that date,  the  collateral  had a market value of
approximately $100,000.

Factoring Arrangements

         In February  1996,  SSA entered into a financing  agreement  with First
Factors Corporation whereby SSA may take advances on their uncollected  accounts
receivable up to a limit of 90%. This facility was  terminated by SSA on July 2,
1996. In July 1996, SSA and EVO, entered into a financing  agreement with Heller
Financial, Inc. ("Heller") whereby SSA may take advances on

                                       14

<PAGE>




both subsidiaries' uncollected accounts receivable up to a limit of 90%. SSA may
over advance on this facility by up to $1,000,000. Interest accrues at the prime
rate plus 1%.  Additionally,  a fee of 0.75% is due on  invoices  assigned.  The
facility  can be canceled by either  party on sixty days  written  notice.  This
facility  is  collateralized  by the  accounts  receivable  and  finished  goods
inventory of SSA and EVO and guaranteed by the Company. This facility supersedes
the facility  entered into in February  1996 between the SSA and First  Factors,
Inc.  As part of the  agreement,  Heller has  indemnified  First  Factors,  Inc.
against all outstanding over advances and uncollected accounts receivable.

         In April 1996,  KVI  entered  into a  financing  agreement  with Heller
Financial,  Inc. whereby KVI may take advance on uncollected accounts receivable
up to a limit of 90%. Interest accrues on monies advanced at the prime rate plus
2%.  Additionally,  a fee of 1% is due on amounts  advanced.  This  facility  is
guaranteed by the accounts  receivable and domestic inventory of KVI and also by
the Company.  Because of the bankruptcy proceedings with SSA, Heller advised KVI
that it would no longer make advances to KVI.

         On May 15, 1997,  Heller  foreclosed on substantially all of the assets
of SSA.  Effective,  June 6, 1997, the  subsidiaries  filed for protection under
Chapter 11 of the Bankruptcy Code. SSA is in the process of actively seeking the
return of preference payments made ninety days prior to the bankruptcy. Proceeds
will be used for secured creditors and any remaining balance will be distributed
to priority creditors.

Mortgage Payable

         In May 1996, SSA refinanced the existing mortgage on its production and
warehouse facility located in Gastonia,  North Carolina with Branch Bank & Trust
Co.("BB&T") The $750,000 loan bears interest at the prime rate plus 1.5% payable
monthly.  The term is for 35 months,  with  principal  payments of $4,166.67 due
monthly  beginning  June  1,  1996,  and a  balloon  payment  at May 1,  1999 of
$604,166.55.  The loan is  collateralized  by the property and guaranteed by the
Company.  On July  29,  1997,  BB&T  foreclosed  on the  property  due to  SSA's
inability to meet the mortgage payments.

Convertible Debentures

         On August 15, 1996,  the Company  issued  convertible  debentures  in a
principal amount of $250,000.  The debentures carry an interest rate of 3.0% and
are due on December  31,  1996.  The  debentures  are  convertible,  on or after
September 24, 1996,  into Common Stock at a rate equal to 67% of the average bid
and ask price on the date of conversion.  The funds raised though this financing
was  exclusively  used for the repayment of the Bridge  Notes.  On September 29,
1996,  $50,000 of the proceeds was converted into 21,322 shares of the Company's
Common  Stock.  On  December  31,  1996,  the  remaining  balance of $200,00 was
converted into 132,669 shares of the Company's common stock.

Cash Flow

          The Company currently has no cash flows from operations.

         Net cash used in operating activities for 1996 was $4,216,147 which was
comprised  of  an  increase  in  inventory  of  $3,857,991  and a  net  loss  of
$11,640,120 adjusted for non-cash charges

                                       15

<PAGE>




for the write-off of  intangible  assets of  $2,638,145,  the write-off of fixed
assets of $1,844,135 and  depreciation  and  amortization  of $554,015 which was
partially offset by an increase in accounts  payable of $3,668,857,  an increase
in accrued  expenses of $1,555,456,  and an increase in payroll taxes payable of
$935,659.  The  Company  funded  the  above  activities,  acquired  Smart  Style
Industries for $1,038,237,  expended  $802,612 for additions to property,  plant
and  equipment,  and  repaid  debt of  $2,605,250  through  proceeds  from  debt
borrowings of $4,013,583 and net borrowings from factor of $638,421.

         The  Company's  statement of cash flows for 1995  reflects cash used in
operations of $202,681,  which is a result of the net loss of $1,602,952  offset
by an increase in accounts payable of $634,455, a loss on sales of securities of
$407,538,  bad debt expense of $199,195,  and an increase in accrued expenses of
$119,171. Net cash used in investing activities,  approximated  $903,000,  which
reflects an increase in loans  receivable  of $1,100,000  from DCI.  These loans
were canceled in connection with the asset acquisition and management  agreement
with  DCI  in  September  1995.  The  Company  funded  operating  and  investing
activities  from financing  activities,  consisting of loan proceeds of $795,000
and capital contributions of $300,000.

Inflation

         The  Company  has  not  been  materially  affected  by  the  impact  of
inflation.

Item 8.  FINANCIAL STATEMENTS

         The financial statements commence on Page F-1.

Item 9.  CHANGES AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING
                              AND FINANCIAL DISCLOSURE

         The  financial  statements  for the year ended  December  31,  1996 are
unaudited. Due to the company's financial position, the Company did not have the
monies  necessary  to have  Holtz  Rubenstein  & Co.,  LLP,  independent  public
accountants for the past fiscal year, complete the audit.

         On September 27, 1995, the Company's Board of Directors appointed Holtz
Rubenstein  & Co.,  LLP  ("Holtz  Rubenstein")  as  independent  auditors of the
Company for 1995.  This was  ratified by  shareholder  vote on February 2, 1996.
Holtz  Rubenstein was appointed upon the  resignation of Terrence J. Dunne,  CPA
("Dunne") of Spokane,  Washington which resignation  became effective  September
27, 1995. Dunne had been the principal  auditor of the Company since March 1995.
Dunne's  reports on the financial  statements of the Company for the fiscal year
ended  December  31, 1995 did not contain any  adverse  opinion,  disclaimer  of
opinion,  modification  or  qualification  as to  uncertainty,  audit  scope  or
accounting  principles.  During  the  time  of  his  engagement  there  were  no
disagreements  with Dunne on any matter of accounting  principles and practices,
financial   statement   disclosure,   or  audit  scope  and   procedure,   which
disagreement,  if not resolved to the  satisfaction of Dunne,  would have caused
him to make  reference to the subject matter of the  disagreement  in connection
with his report.

        Dunne replaced Daniel Murphy, CPA, as the Company's independent auditor.
Mr. Murphy had served in such capacity  during February and March 1995 and prior
to January 1995.
                                       16

<PAGE>




During the intervening  period,  the Company engaged as its independent  auditor
the firm of Bayaa & Dimeglios, CPA ("Bayaa").

         Messrs. Murphy's and Bayaa's reports on the financial statements of the
Company for the fiscal year ended  December 31, 1995 did not contain any adverse
opinion, disclaimer of opinion, modification or qualification as to uncertainty,
audit scope or accounting principles.  During the time of their engagement there
were no disagreements  with Messrs.  Murphy or Bayaa on any matter of accounting
principles and practices,  financial  statement  disclosure,  or audit scope and
procedure, which disagreement, if not resolved to the satisfaction of Mr. Murphy
and Bayaa, would have caused them to make reference to the subject matter of the
disagreement in connection with their report.

                                                     PART III

Item 10.  DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

Name and Age                        Position
------------                        --------
Michael Nafash, 35                  Chairman, Chief Executive Officer, President
Robert O'Brien, 61                  Director
Paul Litwinczuk, 43                 Vice President and Secretary, Director
Mark Mastroianni, 34                Vice President, Director
David C. Katz, 56                   Director

         On April 16, May 1, May 1, and May 12, 1997, Messrs.  Mark Mastroianni,
Paul  Litwinczuk,  David  Katz and Robert  O'Brien,  respectively,  resigned  as
members of the Company's  Board of Directors.  The only remaining  member of the
Board is Michael  Nafash,  President and Chief  Executive  Officer.  None of the
resignations  involved any disagreement  with the Company on any matter relative
to the Company's operations, policies or practices.

         Mr. Nafash has been Chairman,  President and Chief Executive Officer of
the Company  since July 1995.  He has been the  president  of EVO  Manufacturing
since its inception in February 1994. From June 1992 until March 1995, he worked
for  PureTec,  where he served as Chief  Financial  Officer from October 1993 to
March  1995.  Prior  thereto  he had  been a  partner  with  Michaels,  Nafash &
Georgallas, Certified Public Accountants.

         Mr. O'Brien had been President and a Director of Gold  Securities since
1982.  He resigned from his position as President in July 1995. In addition from
1985 until July 1993,  Mr.  O'Brien was  Secretary,  Treasurer and a Director of
Inland  Resources,  Inc.  formerly  known as Inland  Gold and  Silver  Corp.,  a
publicly traded company involved in the exploration of oil and gas.

      Mr. Litwinczuk  has served as Secretary of the Company since July 1995 and
as a Director since  February  1996.  Mr.  Litwinczuk has served as Secretary of
PureTec since July 1995.  From  September 1991 until July 1995, he was Assistant
Secretary of that company.  Prior to 1991,  Mr.  Litwinczuk  was  Administrative
Manager with REI  Distributors,  Inc. a company  engaged in glass  recycling and
fabrication of reprocessing equipment.

     Mr.  Mastroianni  has served as Vice President of the Company since October
1995 and as a Director  since  February  1996.  Prior to that he was the Finance
Manager of PureTec from
                                                        17

<PAGE>




1993 to March  1995.  From 1990 until  1993,  Mr.  Mastroianni  was  employed by
Merrill Lynch as a financial  analyst and systems liaison.  From 1987 until 1990
he was a financial analyst and systems liaison at Prudential Insurance.

         Mr. Katz has served as a Director of the Company since  February  1996.
Mr. Katz has served as President of PureTec  since August 1988 and as a director
of that  company  since  September  1991 and he was  appointed  Chief  Operating
Officer  in March  1994.  From  1987  until  August  1988 he was an  independent
consultant to contract and food and beverage  packers.  From 1982 until 1987, he
was Vice  President  and  operations  director  for Taylor Wine  Company and was
responsible for operation, distribution, purchasing and maintenance of the plant
owned by Taylor Wine Company in Hammondsport, New York. From 1977 until 1982, he
was U.S. manager of packaging for the Coca-Cola Company in Atlanta, Georgia.

         There are no family relationships between any of the executive officers
and directors.

Committees of the Board

         The Company's  Board does not currently have an audit,  compensation or
other committee.


Item 11.  EXECUTIVE COMPENSATION

         The following table sets forth the compensation  paid or accrued by the
Company  during the three  fiscal  years  ended  December  31, 1996 to its Chief
Executive Officer and key employees of the Company who received  compensation in
excess of $100,000 during these periods.

                                                          Restricted
                                                            Stock      Stock
Name                              Year          Salary      Awards    Options

Michael Nafash                    1996          $120,674       --       --
                                  1995              --       90,000   99,000
                                  1994              --         --       --

Howard Katz                       1996           134,100       --       --
                                  1995              --         --       --
                                  1994              --         --       --

Arnold Feldman                    1996           124,038       --       --
                                  1995              --         --       --
                                  1994              --         --       --

Steven Moskowitz                  1996           121,154       --       --
                                  1995              --         --       --
                                  1994              --         --       --

Robert O'Brien                    1996              --         --       --
                                  1995              --      5,000       --
                                  1994              --      5,000       --




                                       18

<PAGE>




          Robert  O'Brien  resigned as President  and CEO of the Company in July
1995. Michael Nafash was appointed to those positions at that time.

Director's Compensation

          Directors  of  the  Company  receive  stock  options  for  serving  as
directors.

Stock Options / Stock Appreciation Rights

         There were no exercises of stock options by the above-named officers in
the year ended December 31, 1996.


Item 12.  VOTING SECURITIES AND PRINCIPAL HOLDERS THEREOF

         The table below sets  forth,  as of  September  15,  1997,  information
regarding the beneficial  ownership of the Company's Common Stock based upon the
most recent  information  available  to the Company for (i) each person known by
the Company to own  beneficially  more than five percent  (5%) of the  Company's
outstanding  Common Stock, (ii) each of the Company's officers and directors and
(iii) all officers and  directors  of the Company as a group.  Unless  otherwise
indicated,  the address for all parties is c/o the Company, 266 Harristown Road,
Glen Rock, New Jersey 07452.


Name                                   Number of Shares     Percentage
----                                   -----------------    ----------
PureTec Corporation                      2,659,312          40.6%
Direct Connect International, Inc. (1)     769,500          11.7%
Norman Moskowitz (2)                       700,000           5.8%
Samax Technology, Inc. (3)                 340,000           5.2%
Michael Nafash (4)                         336,383           5.1%
All current officers and directors
  as a group (5)                           336,383           5.1%


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


(1)  Does not include  360,000 shares of common stock issuable upon the exercise
     of stock options at $3.50 per share and does not include  400,000 shares of
     common stock issuable upon the exercise of stock options at $2.50.
(2)  Does not include  100,000 shares of common stock issuable upon the exercise
     of stock options at $3.50 per share.
(3)  Does not include  170,000 shares of common stock issuable upon the exercise
     of stock options at $3.50 per share.
(4)  Does not include  99,000 shares of common stock  issuable upon the exercise
     of stock options at $3.50 per share.
(5)  Effective May 12, 1997, Michael Nafash was the only remaining member of the
     Board of Directors.


                                       19

<PAGE>




         Section  16(a) of the  Securities  Exchange  Act of 1934  requires  the
Company's  directors and executive  officers,  and persons who own more than ten
percent of the Company's  Common Stock, to file with the Securities and Exchange
Commission  initial  reports of ownership and reports of changes in ownership of
Common  Stock and other  equity  securities  of the  Company.  To the  Company's
knowledge, based on information furnished to the Company, all applicable Section
16(a) filing requirements for 1996 were met.


Item 13.  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.

          During 1995 PureTec  contributed  to the Company  securities  and cash
with a total value of  $2,225,000  in exchange  for  2,659,312  shares of Common
Stock of the Company as adjusted for the 0.033-for-1 stock split.

         On July 24, 1995, the Company acquired EVO, a majority owned subsidiary
of PureTec. The transaction was consummated by merging a wholly owned subsidiary
of the  Company  into  EVO.  In  connection  with the  merger,  Michael  Nafash,
President  of EVO,  was elected to the  Company's  Board and was  appointed  the
Company's President and Chief Executive Officer.  Robert O'Brien resigned as the
Company's President but remained on the Company's Board. The parties agreed that
upon meeting the  shareholder  information  requirements of Rule 14(f) under the
Securities Exchange Act of 1934, David C. Katz,  President of PureTec,  and Paul
Litwinczuk,  an executive  officer of PureTec  would be elected to the Company's
Board.  The  shareholder  information  requirement  was completed on February 2,
1996.

         In  exchange  for the  merger,  the  Company  issued  or will  issue an
aggregate of 3,552,489  shares of the  Company's  Common Stock to the holders of
EVO Common Stock,  consisting of 2,659,312  shares to PureTec and 893,177 shares
to other shareholders of EVO. As a result of this transaction and the subsequent
issuance of additional  shares,  PureTec held approximately 74% of the Company's
Common Stock at December 31, 1995.  As of December 31, 1996,  PureTec owns 40.6%
of the outstanding common stock of the Company.

                                       20

<PAGE>




                                     PART IV

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

   (a)            1. and 2.  Financial Statements and Schedules

   The financial  statements are listed in the Index to Financial  Statements on
page F-1 and are filed as part of this annual report.

         3.  Exhibits

   The Index to Exhibits  following  the Signature  Page  indicates the exhibits
which are filed  herewith  and the  exhibits  which are  incorporated  herein by
reference.

   (b)            Reports on Form 8-K

   There were no Reports on Form 8-K filed during the last quarter of the fiscal
year ended December 31, 1996.

                                       21

<PAGE>




                                   SIGNATURES

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

                                                     EVOLUTIONS, INC.


                                            /s/ Michael Nafash
                                            ---------------------------------
                                            By:  Michael Nafash
                                            Chief Executive Officer, President 
                                                 and Chief Financial Officer


Dated: September 19, 1997


   Pursuant to the  requirements  of the Securities  Exchange Act of 1934,  this
Report has been signed below as of September 15, 1997 by the  following  persons
on behalf of Registrant and in the capacities indicated.


/s/ Michael Nafash                        Dated:September 19, 1997
------------------                        ------------------------
Michael Nafash, Director, CEO, CFO and
  President




                                       22

<PAGE>




                                    EXHIBITS

   Except where otherwise indicated,  the following exhibits are incorporated by
reference to the exhibits in documents  previously filed with the Securities and
Exchange Commission:

     2.01 Agreement  and Plan of Merger,  dated  July 21,  1995 by and among the
          Company, Evolutions, Inc. (NJ), GSC Acquisition Corporation and Robert
          O'Brien(1)
     2.02 Agreement  and Plan of Merger  dated  February 6, 1996,  between  Gold
          Securities Corporation and Evolutions, Inc.(2)
     3.01 Certificate of Incorporation as amended(2)
     3.02 Amended  and  Restated  Bylaws(3)(5) 
     10.01Form of 1996  Stock  Option Plan(2)
     10.02Agreement  dated as of September 27, 1995 by and among Gold Securities
          Corporation,   Evolutions,   Inc.,  Kidsview,   Inc.,  Direct  Connect
          International Inc., and Amerawell Products Limited(4)
     10.03Management   Agreement   dated  September  27,  1995  by  and  between
          Kidsview, Inc. and Direct Connect International Inc.(4)
     10.04Agreement  of Sale dated  February  26, 1996 among  Evolutions,  Inc.,
          Smart Style Acquisition  Corp.,  Lions Acquisition  Corp., Smart Style
          Industries, Inc., Classic Craft, Inc. and Lions Manufacturing, Inc.(5)
     10.05License Agreement dated February 26, 1996, by and between  Evolutions,
          Inc. and H.W. Carter & Sons, Inc.(5)
     17.01Resignation  of Board of Directors  during the period April 16 through
          May 12, 1997.(6)
--------------------------------------------


     (1)  Incorporated  by  reference  to a  Current  Report on Form 8-K by Gold
          Securities Corporation dated August 2, 1995 (File No. 1-8958)
     (2)  Incorporated  by  reference  to  an  Information   Statement  by  Gold
          Securities Corporation dated January 8, 1996 (File No. 1-8958)
     (3)  Incorporated by reference to the Company's  Registration  Statement on
          Form 8-B declared effective March 4, 1996 (File No. 0-27788)
     (4)  Incorporated by reference to the Company's  Current Report on Form 8-K
          dated October 10, 1995 (File 0-27788)
     (5)  Incorporated by reference to the Company's  Current Report on Form 8-K
          dated March 11, 1996 (File 0-27788)
     (6)  Incorporated by reference to the Company's  Current Report on Form 8-K
          dated June 10, 1996 (File 0-27788)












                                       23


<PAGE>


                       EVOLUTIONS, INC AND SUBSIDIARIES

                  REPORT OF CONSOLIDATED FINANCIAL STATEMENTS

               YEARS ENDED DECEMBER 31, 1996 (UNAUDITED) AND 1995
        AND THE PERIOD JANUARY 21, 1994 (INCEPTION) TO DECEMBER 31, 1994


                                    CONTENTS

                                                                         Page

Consolidated Balance Sheets as of
  December 31, 1996 (unaudited) and 1995                                  F-1


Consolidated  Statements  of  Operations  for the years ended  December 31, 1996
 (unaudited) and 1995 and the period January 21, 1994 (inception) to
 December 31, 1994                                                        F-2


Consolidated  Statement of Stockholders' Equity for the years ended December 31,
 1996 (unaudited) and 1995 and the period January 21, 1994 (inception) to
 December 31, 1994                                                        F-3


Consolidated  Statements  of Cash Flows for the years  ended  December  31, 1996
 (unaudited) and 1995 and the period January 21, 1994 (inception) to
 December 31, 1994                                                        F-4


Notes to consolidated financial statements                                F-5



<PAGE>
                        EVOLUTIONS, INC. AND SUBSIDIARIES
                           CONSOLIDATED BALANCE SHEETS
<TABLE>

<CAPTION>

                                                                          December 31,
                                                                 --------------------------------
ASSETS                                                                 1996             1995
                                                                 --------------    --------------
                                                                   (Unaudited)
<S>                                                              <C>               <C>

CURRENT ASSETS:
   Cash and cash equivalents                                     $    222,284    $     11,508
   Due from agent (Note 5)                                            318,000            --
   Due from broker                                                       --           280,851
   Investments in available-for-sale securities
       (Note 4)                                                         7,173         762,119
   Accounts receivable                                                358,142         183,689
   Due from factor                                                    257,687
   Inventories                                                      5,246,163            --
   Prepaid expenses and other current assets                          207,659          15,000
                                                                 ------------    ------------
                                                                    6,617,108       1,253,167

PROPERTY, PLANT AND EQUIPMENT, net (Note 7)                           504,087          89,147
GOODWILL, net of accumulated amortization (Note 2c)                      --           261,262
LICENSES, net of accumulated amortization (Note 2c)                      --           976,190
OTHER ASSETS                                                           50,693            --
                                                                 ------------    ------------
                                                                 $  7,171,888    $  2,579,766
                                                                 ============    ============


LIABILITIES and STOCKHOLDERS' EQUITY

CURRENT LIABILITIES:
    Due to factor (Note 8)                                       $  1,138,421    $       --
    Payroll taxes payable (Note 9)                                    935,659            --
    Accounts payable                                                5,604,688         664,866
    Accrued expenses                                                1,721,246         168,311
    Accrued compensation                                                 --           112,500
    Bridge notes payable (Note 10)                                    850,000            --
    Loans payable (Note 11)                                           143,719         809,500
    Long-term debt in default (Note 12)                               841,776            --
                                                                 ------------    ------------
                                                                   11,235,509       1,755,177
                                                                 ------------    ------------

COMMITMENTS (Notes 20)

STOCKHOLDERS' EQUITY:  (Notes 3 and 13)
   Common stock, $.01 par value; 50,000,000 shares authorized;
       6,562,280 issued and outstanding at December 31, 1996           65,623            --
   Common stock, no par value, 50,000,000 shares
       authorized; 3,599,553 issued and outstanding
       at December 31, 1996, stated at                                   --         3,392,035
    Preferred stock; authorized 5,000,000 shares;
       -0- issued and outstanding                                        --              --
    Additional paid-in capital                                      9,469,585            --
    Deficit                                                       (13,584,610)     (1,944,490)
    Unrealized holding loss on securities available-for-sale          (10,269)       (622,956)
       (Note 4)
    Treasury stock                                                     (3,950)           --
                                                                 ------------    ------------
                                                                   (4,063,621)        824,589
                                                                 ------------    ------------

                                                                 $  7,171,888    $  2,579,766
                                                                 ============    ============
</TABLE>

                        See notes to financial statements
                                       F-1
<PAGE>
<TABLE>

                        EVOLUTIONS, INC. AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF OPERATIONS

<CAPTION>

                                                  Years Ended                 Period
                                                  December 31,            January 21, 1994
                                      ---------------------------------    (Inception) to
                                          1996                 1995       December 31, 1994
                                       ---------------   --------------    ------------
                                            (Unaudited)
<S>                                     <C>               <C>             <C>    

REVENUES                                  $ 21,521,910    $    571,326    $    124,281

COST OF SALES                               17,078,057         433,782         216,389
                                          ------------    ------------    ------------

GROSS PROFIT                                 4,443,853         137,544         (92,108)
                                          ------------    ------------    ------------

COSTS AND EXPENSES:
    Selling, general and administrative      5,023,238         832,379          94,205
    Advertising and promotion                4,677,748         143,813         133,040
    Amortization                               318,177          60,169            --
    Bad debt expense                            56,751         199,195            --
                                          ------------    ------------    ------------

                                            10,075,914       1,235,556         227,245
                                          ------------    ------------    ------------

OPERATING LOSS                              (5,632,061)     (1,098,012)       (319,353)
                                          ------------    ------------    ------------

OTHER:
    Write-off of intangible assets           2,809,145            --              --
    Write-off of fixed assets                1,844,135            --              --
    Loss on sale of securities                 594,189         407,538          60,874
    Interest expense                           766,433          98,319           3,573
    Interest income                             (5,843)           (917)        (42,262)
                                          ------------    ------------    ------------

                                             6,008,059         504,940          22,185
                                          ------------    ------------    ------------

NET LOSS                                  ($11,640,120)   ($ 1,602,952)   ($   341,538)
                                          ============    ============    ============

NET LOSS PER SHARE (Note 13)              $      (1.77)   $       (.52)   $       (.27)
                                          ============    ============    ============

Weighted average number of common
    share outstanding (Note 13)              6,562,281       3,079,358       1,265,297
                                          ============    ============    ============

</TABLE>

                        See notes to financial statements

                                       F-2
<PAGE>
<TABLE>
                        EVOLUTIONS, INC. AND SUBSIDIARIES
                 CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY
                              (SEE NOTES 3 AND 13)
                                                                                                  Unrealized          
<CAPTION>
                                          Common Shares                                            Loss on
                          -----------------------------------------     Additional                Available-
                           Common,    Common,   Common,                  Paid-in                   for-Sale     Treasury
                           $10 Par    No Par    $.01 Par    Amount       Capital        Deficit   Securities    Stock       Total
                           -------    ------    --------    ------       -------        -------   -----------    -----       -----
<S>                      <C>      <C>           <C>        <C>         <C>              <C>        <C>           <C>         <C>

Initial capital-
 ization,
 Janurary 21, 1994       200        $--         $--    $     2,000   $    23,000          $--         $--      $--         $ 25,000
Issuance of stock
 to parent               800         --          --          8,000       842,000          --          --        --          850,000
Unrealized holding
 loss on available-
 for-sale
 securities
 (Note 4)               --           --          --           --            --            --       (70,394)     --          (70,394)
Net loss                --           --          --           --            --        (341,538)       --        --         (341,538)
                      ------   ----------   ---------  -----------   -----------   -----------   ---------   -------   ------------

Balance,
 December 31, 1994     1,000            0           0       10,000       865,000      (341,538)    (70,394)        0        463,068

Issuance of stock
 to parent               850         --          --          8,500     1,916,500          --          --        --        1,925,000
Surrender of stock      (200)        --          --         (2,000)        2,000          --          --        --                0
Capital contribution    --           --          --           --         300,000          --          --        --          300,000
Merger with Gold
 Securities Inc.
 (Note 3a)            (1,650)   3,550,053        --      3,300,535    (3,083,500)         --          --        --          217,035
Issuance of stock
 in connection with
 asset acquisition
 (Note 3b)              --         49,500        --         75,000          --            --          --        --           75,000
Change in unrealized
 holding loss on
 available-for-sale
 securities (Note 4)    --           --          --           --            --            --      (552,562)     --         (552,562)
Net Loss                --           --          --           --            --      (1,602,952)       --        --       (1,602,952)
                      ------   ----------   ---------  -----------   -----------   -----------   ---------   -------   ------------
Balance,
 December 31, 1995         0    3,599,553           0    3,392,035             0    (1,944,490)   (622,956)        0        824,589
       (Unaudited)
Adjustments for
 reverse split          --          6,236        --           --            --            --          --        --                0
Merger to affect
 change of state
 of incorporation       --     (3,605,789)  3,605,789   (3,355,977)    3,355,977          --          --        --                0
Issuance of stock
 in connection
 with asset
 acquisition
 (Note 3c)              --           --       845,000        8,450     1,194,550          --          --        --        1,203,000
Issuance of common
 shares for payment
 of accrued bonuses     --           --       125,000        1,250       111,250          --          --        --          112,500
Issuance of securi-
 ties in private
 placements for
 cash, net              --           --     1,832,500       18,325     4,559,348          --          --        --        4,577,673
Issuance of securi-
 ties in conversion
 with debentures        --           --       153,991        1,540       248,460          --          --        --          250,000
Change in unrealized
 holding loss on
 available- for-sale
 securities (Note 4)    --           --          --           --            --            --       612,687      --          612,687
Repurchase of shares    --           --          --           --            --            --          --      (3,950)        (3,950)
Net loss                --           --          --           --            --     (11,640,120)       --        --      (11,640,120)
                      ------   ----------   ---------  -----------   -----------   -----------   ---------   -------   ------------

Balance,
 December 31, 1996         0            0   6,562,280  $    65,623   $ 9,469,585  ($13,584,610)  ($ 10,269)  ($3,950)  ($ 4,063,621)
                      ======   ==========   =========  ===========   ===========   ===========    =========   =======   ============
</TABLE>

                       See notes to financial statements

                                       F-3
<PAGE>
<TABLE>
                        EVOLUTIONS, INC. AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF CASH FLOWS

<CAPTION>

                                                                    Years Ended                Period
                                                                    December 31,          January 21, 1994
                                                         -------------------------------    (Inception) to
                                                              1996              1995      December 31, 1994
                                                         --------------   --------------  -----------------
                                   (Unaudited)
<S>                                                      <C>               <C>            <C>   

CASH FLOWS FROM OPERATING ACTIVITIES:
    Net loss                                              ($11,640,120)   ($ 1,602,952)   ($   341,538)
                                                          ------------    ------------    ------------
    Adjustments to reconcile net loss to net cash used in operating activities:
    Write-off of intangible assets                           2,638,145            --              --
    Write-off of fixed assets                                1,844,135            --              --
           Bad debt expense                                     56,751         199,195            --
           Depreciation and amortization                       554,015         102,482           1,653
           Non-cash compensation                                  --              --            25,000
           Loss on sale of securities                          594,189         407,538          60,874
           Non-cash interest income                               --              --           (37,500)
           Changes in operating assets and liabilities:
              (Increase) decrease in assets:
                 Accounts receivable                          (231,204)       (183,689)           --
                 Prepaid expenses and other                   (207,659)           --              --
                 Due from contractor                              --              (381)       (148,814)
                 Due from agent                               (318,000)           --              --
                 Due from factor                               242,313            --              --
                 Inventory                                  (3,857,991)          9,000          (9,000)
                 Other assets                                  (50,693)           --              --
              Increase in liabilities:
                 Accounts payable                            3,668,857         634,455          30,814
                 Accrued expenses                            1,555,456         119,171          48,140
                 Payroll taxes payable                         935,659            --              --
                 Accrued compensation                             --           112,500            --
                                                          ------------    ------------    ------------
           Total adjustments                                 7,423,973       1,400,271         (28,833)
                                                          ------------    ------------    ------------
           Net cash used in operating activities            (4,216,147)       (202,681)       (370,371)
                                                          ------------    ------------    ------------

CASH FLOWS FROM INVESTING ACTIVITIES:
    Additions to property, plant and equipment                (802,612)       (124,849)         (8,264)
    Increase in due from broker                                280,851        (280,851)           --
    Proceeds from sales of securities                          773,444         486,165       1,205,170
    Additions to licenses                                     (100,000)           --              --
    Purchases of available-for-sale securities                    --            (4,000)       (878,322)
    Increase in loans receivable                                  --        (1,100,000)        (50,000)
    Repayment of loans receivable                                 --           150,000            --
    Increase in note receivable-officer                           --              --           (40,000)
    Repayment in note receivable                                15,000          25,000            --
    Net cash paid for Smart Style acquisition               (1,038,237)           --              --
    Net cash paid for Gold acquisition                            --           (54,989)           --
                                                          ------------    ------------    ------------
           Net cash (used in) provided by
               investing activities                           (871,554)       (903,524)        228,584
                                                          ------------    ------------    ------------

CASH FLOWS FROM FINANCING ACTIVITIES:
    Net borrowings from factor                                 638,421            --              --
    Proceeds from debt borrowings                            4,013,583         795,000          14,500
    Repayments of debt                                      (2,605,250)           --              --
    Loan from related party                                       --              --            54,000
    Repayment to related party                                    --              --           (54,000)
    Net proceeds from issuance of stock                      3,255,673            --           150,000
    Capital contribution                                          --           300,000            --
    Repurchase of treasury stock                                (3,950)           --              --
                                                          ------------    ------------    ------------
           Net cash provided by financing activities         5,298,477       1,095,000         164,500
                                                          ------------    ------------    ------------

Net increase (decrease) in cash                                210,776         (11,205)         22,713
Cash and cash equivalents at beginning of period                11,508          22,713            --
                                                          ------------    ------------    ------------

Cash and cash equivalents at end of period                $    222,284    $     11,508    $     22,713
                                                          ============    ============    ============
</TABLE>

                        See notes to financial statements

                                       F-4
<PAGE>






                        EVOLUTIONS, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

        YEARS ENDED DECEMBER 31, 1996 (Unaudited) AND 1995 AND THE PERIOD
                JANUARY 21, 1994 (INCEPTION) TO DECEMBER 31, 1994


1.       Nature of Operations

         Evolutions,  Inc. (the "Company" or "Evolutions") was formed on January
21, 1994 and is engaged in the  manufacturing  and  marketing of apparel and the
marketing of a line of toy animals.

         The  consolidated  financial  statements  include  the  accounts of the
Company  and  its   wholly-owned   subsidiaries.   Intercompany   balances   and
transactions  have  been  eliminated.  See  Note 3a  with  respect  to the  Gold
Securities Corporation merger and the basis of presentation.

         On May 15,  1997,  the apparel  subsidiaries'  secured  lender,  Heller
Financial,  Inc.,  foreclosed on substantially  all of the assets of the apparel
subsidiaries.  Effective  June 6,  1997,  the  apparel  subsidiaries  filed  for
protection under Chapter 11 of the Bankruptcy Code. (see Note 8).

         On July 15,  1997,  the license for KVI's  rights to market TEA BUNNIES
(Trademark) were foreclosed on by the licensor.

         The consolidated  financial  statements for the year ended December 31,
1996 are unaudited and have been prepared in accordance with generally  accepted
accounting  principles.  In the opinion of  management  all  adjustments  (which
include  only  normal  recurring  accruals)  necessary  to  present  fairly  the
financial position, results of operations and cash flows have been included. Due
    to the  Company's  financial  position,  the Company did not have the monies
necessary to have Holtz Rubenstein & Co., LLP,  independent  public  accountants
for the past fiscal year, complete the audit.

2.       Summary of Significant Accounting Policies

         a.  Inventories

         Inventories  are  valued  at the  lower  of cost  (first-in,  first-out
method) or market.

         b.  Revenue recognition

         The Company's revenue is from the sale of apparel and toys. The Company
recognizes revenues as products are shipped.



                                       F-5



<PAGE>





         c.  Depreciation and amortization

         Depreciation  is  computed  using  the  straight-line  method  over the
estimated useful lives of the related assets.

         Intangible assets are amortized using the straight-line method over the
following periods:
                           Goodwill                           10 years
                           Licenses                            7 years

         The  goodwill  was  acquired  when the  Company  purchased  Smart Style
Industries  Inc. and Affiliates (see Note 3c).  Substantially  all of the assets
related to this purchase were  foreclosed  upon on May 15, 1997 (see Note 8) and
the goodwill was written-off.

         The  licenses  were  for  KVI's  rights  to  manufacture   TEA  BUNNIES
(Trademark).  On July 15,  1997,  the  licensor  terminated  KVI's rights to the
license and the license was written-off.

         d.  Income taxes

         The Company  provides  for Federal  and State  income  taxes based upon
financial  accounting  income.  Deferred  income taxes are recorded in instances
where transactions are included in different periods for financial reporting and
income tax purposes.

         e.  Statements of cash flows

         For purposes of the statement of cash flows, the Company  considers all
highly liquid debt instruments purchased with a maturity of three months or less
to be cash equivalents.

         f.  Marketable securities

         Trading securities consist of equity securities held for the purpose of
selling  in the  near  term.  They  are  reported  at fair  market  value,  with
unrealized gains and losses included in earnings.

         Available-for-sale  securities  are  carried  at fair  value  with  the
unrealized  holding gain (loss) included in  stockholders'  equity. A decline in
the market value of any  available-for-sale  security  below cost that is deemed
other than temporary is charged to earnings  resulting in the establishment of a
new cost basis for the security.




                                       F-6




<PAGE>





         g.  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
reporting period. Actual results could differ from those estimates.

         h.  Reclassifications

         Certain  reclassifications  have been made to the financial  statements
for  the  periods  ended  December  31,  1995  and  1994  to  conform  with  the
classifications used in 1996.

3.       Business Combinations

         a.  Gold Securities Corporation

         On  July  24,  1995,  Gold  Securities  Corporation  ("Gold")  acquired
Evolutions by merging a wholly-owned  subsidiary,  GSC Acquisition  Corporation,
into the  Company.  The holders of  Evolutions'  stock  received an aggregate of
330,000  shares of Gold  common  stock and the right to  receive  an  additional
2,932,089 upon  shareholder  approval to increase  Gold's  authorized  number of
shares.  As a result of this transaction,  voting and management  control of the
Company was transferred to the shareholders of Evolutions.  This transaction has
been accounted for as a reverse acquisition with Evolutions deemed the acquiree.
In addition,  the Company paid a $75,000  finder's fee in  connection  with this
transaction.

         As a result of this transaction, the following was recorded at July 24,
1995:

Cash                                                                $   (55,000)
Goodwill                                                                272,600
                                                                    -----------
                                                                    $   217,600
                                                                    ===========

Accrued expenses                                                    $       600
Common stock                                                          3,000,600
Additional paid-in-capital                                           (2,783,600)
                                                                    -----------
                                                                    $   217,600
                                                                    ===========



                                       F-7




<PAGE>





         b.  Direct Connect International

         On  September  27,  1995,   Kidsview,   Inc.  ("KVI"),  a  wholly-owned
subsidiary of Evolutions,  purchased the rights and interest in certain  product
lines of Direct Connect  International  Inc.  ("DCI"),  a distributor of infant,
preschool,  and  general  soft  toy  products.  Consideration  consisted  of the
cancellation  of loans  aggregating  $950,000 and issuing  49,500  shares of the
Company's  common stock.  DCI is entitled up to an additional  132,000 shares of
the Company's common stock based upon certain  performance levels of the product
lines over the next two years.

         As part of the  agreement,  DCI is  managing  the  product  lines for a
specified period, for which it receives an amount equal to its monthly operating
costs.  The  agreement  provides  for a maximum  monthly fee of  $85,000.  These
management services include the services of DCI's president.  The first $150,000
of fees were offset against DCI's indebtedness to EVO under a secured note. Fees
under this agreement approximated $900,000 and $300,000 for the years ended 1996
and 1995, respectively.

         As an inducement for the Company to enter into this agreement, DCI will
issue to  Evolutions  warrants  to  purchase  100,000  shares of its stock at an
exercise  price of $.10 and 250,000  shares of its stock at an exercise price of
$.20. No value was assigned to these warrants.

         As a  result  of  this  transaction,  the  following  was  recorded  at
September 27, 1995:

Licenses                                                            $ 1,025,000
Prepaid management fees                                                 150,000
Notes receivable                                                     (1,100,000)
                                                                    -----------
                                                                    $    75,000
                                                                    ===========

Common stock                                                        $    75,000
                                                                    ===========

         c.  Business acquisition

         On February  26, 1996,  the Company  acquired  certain  assets of Smart
Style  Industries  Inc. and Affiliates (the  "Seller"),  a North  Carolina-based
apparel  manufacturer.  Consideration,  as amended,  consisted of (i) $1,125,000
cash,  (ii)  a  30  day  $500,000  promissory  note,  (iii)  the  assumption  of
liabilities approximating  $1,200,000,  and (iv) 700,000 shares of the Company's
Common Stock. The Company also issued warrants to the Seller to purchase 100,000
shares of the Company's Common Stock.


                                       F-8





<PAGE>





        The Company operates these assets through its wholly-owned subsidiaries,
Smart Style Acquisition Corp. and Lions Holding Corp.  (Collectively "SSA"). The
Company's line of recycled  apparel  products  ("EVO") will be combined with the
operations of SSA.

        In connection  with the purchase,  SSA entered into a license  agreement
for the right to use certain trademarks.

         In addition,  SSA entered into a five-year employment agreement with an
officer of the Seller which provides for minimum annual salary of $150,000.  The
employee was also issued 20,000 shares of common  stock.  The employee  resigned
from SSA in April 1997.

         As a result of this transaction, the following was recorded at February
26, 1996 (unaudited):

Inventories                                                           $1,388,172
Property, plant and equipment                                          1,606,000
Goodwill                                                               1,443,871
                                                                      ----------
                                                                      $4,438,043
                                                                      ==========

Accounts payable                                                      $1,030,404
Accrued expenses                                                         250,000
Loans payable                                                             72,222
Mortgage payable                                                         460,417
Common Stock                                                               7,000
Additional Paid-in-Capital                                             2,618,000
                                                                      ----------
                                                                      $4,438,043
                                                                      ==========
         Pro-forma  consolidated  information  assuming these  transactions  had
taken place as of January 21, 1994 is as follows:

                                                                   Period
                                           Years Ended         January 21, 1994
                                            December 31,       (Inception) to
                                    ------------------------     December 31,
                                   1996           1995              1994
                                -------------  -------------    ----------
                                 (Unaudited)

Revenues                        $ 23,382,670   $ 11,125,697   $ 13,269,727
Net loss                         (11,246,460)    (2,999,752)      (894,783)
Net loss per share                     (1.71)          (.84)          (.71)
Weighted average number
      of shares outstanding        6,562,281      3,574,358      1,265,297
                                                        F-9




<PAGE>





         d.  License Agreement

         On September 9, 1996, KVI entered into a license agreement with Sandbox
Entertainment,  Inc. ("SEI") with respect to Pillow People  (Trademark)  stuffed
toy and doll  products.  The license is  exclusive  and KVI can only sell Pillow
People  (Trademark) in the United States,  its  territories  and possessions and
Canada.  However,  the license grants KVI worldwide  manufacturing  rights.  The
license expires on December 31, 1998. KVI has the option of renewing the license
for one  three-year  term,  upon 60 day notice  prior to the end of the  initial
term. The royalty rate ranges from 6% to 10% based on sales in the United States
and from 8% to 10% based on FOB sales.  Pursuant to the license  agreement,  KVI
made an advance payment to SEI of $50,000 with a minimum  guarantee,  due by the
end of the initial  term,  of  $200,000.  With respect to renewal of the license
agreement,  KVI will be obligated to make an advance  payment,  due on the first
day of the renewal term, of $100,000 with a minimum guarantee, due by the end of
the renewal term, of $400,000.

4.       Investments in Available-for-Sale Securities

         Investments in available-for-sale securities consist of the following:

                                        December 31,
                                      1996      1995
                                   ---------  --------
                                   (Unaudited)
PureTec International common stock  $   --    $575,000
Other equity securities                7,173   187,119
                                    --------  --------
                                    $  7,173  $762,119
                                    ========  ========

         Gross  unrealized  gains  and gross  unrealized  losses  pertaining  to
marketable securities were as follows:
                                        December 31,
                                      1996         1995
                                    ---------   --------
                                   (Unaudited)
Gains                              $    --     $  81,419
Losses                               (10,269)   (704,375)
                                   ---------   ---------
                                   $ (10,269)  $(622,956)
                                   =========   =========






                                      F-10





<PAGE>





Proceeds  from  the sale of  marketable  securities  available-for-sale  and the
resulting loss were:
<TABLE>
<CAPTION>

                                                              Period January 21, 1994
                                    Years Ended December 31,    (Inception) to
                      1996                   1995               December 31, 1994
              --------------------  ----------------------      -----------------
                  (Unaudited)
                           Gain                    Gain                      Gain
             Proceeds     (Loss)    Proceeds      (Loss)       Proceeds     (Loss)
             --------   ---------   --------    ----------    ----------   --------
<S>         <C>          <C>         <C>         <C>          <C>           <C>

Total gain  $ 637,794   $  16,957   $ 130,249   $    38,448   $ 1,003,883   $ 24,925
Total loss    135,650    (611,146)    355,916      (445,986)      201,287    (85,799)
            ---------   ---------   ---------   -----------   -----------   --------
            $ 773,444   $(594,189)  $ 486,165   $  (407,538)  $ 1,205,170   $(60,874)
            =========   =========   =========   ===========   ===========   ========
</TABLE>

5.       Due from Agent

          Due from agent  represents  funds held by the Hong Kong-based agent of
     KVI.

6.       Inventories

         Inventories consist of the following at December 31, 1996 (Unaudited):

Raw Materials                              $1,170,968
Work-in-process                             1,036,570
Finished goods                              3,038,625
                                           ----------
                                           $5,246,163
                                           ==========


7.       Property, Plant and Equipment

         Property, plant and equipment, at cost, consist of the following:
                                                             December 31,
                                                         1996            1995
                                                        -----            -----
                                                     (Unaudited)
Buildings and improvements                             $350,000         $   --
Machinery and equipment                                 220,000             --
Molds                                                      --            118,884
Office equipment                                         14,229           14,229
                                                    -----------      -----------
                                                        584,229          133,113
Less accumulated depreciation                            80,142           43,996
                                                   ------------     ------------
                                                       $504,087         $ 89,147
                                                     ==========        =========

         The building was SSA's  manufacturing  facility.  On July 29, 1997, the
building was foreclosed on by SSA's lender. The building's valued was determined
by an independent appraiser.

                                      F-11



<PAGE>





         Additionally,   machinery  and  equipment  related  to  SAA's  business
activity.  The machinery and equipment are valued at $220,000.  On May 15, 1997,
the assets were  foreclosed  upon (see Note 8) by SSA's secured  lender and were
subsequently auctioned for approximately $220,000.

         The molds were used for the  production of TEA BUNNIES  (Trademark)  by
KVI. As KVI could no longer make  royalty  payments to the license  holder,  the
licensee terminated KVI's rights to the license. The molds have no value.

8.       Due to Factor

         In February  1996,  SSA entered into a financing  agreement  with First
Factors Corporation whereby SSA may take advances on their uncollected  accounts
receivable up to a limit of 90%. This facility was  terminated by SSA on July 2,
1996. In July 1996, SSA and EVO, entered into a financing  agreement with Heller
Financial,  Inc.  ("Heller") whereby SSA may take advances on both subsidiaries'
uncollected  accounts  receivable  up to a limit of 90%. SSA may over advance on
this facility by up to $1,000,000.  Interest  accrues at the prime rate plus 1%.
Additionally,  a fee of 0.75% is due on invoices  assigned.  The facility can be
canceled  by  either  party on sixty  days  written  notice.  This  facility  is
collateralized  by the accounts  receivable and finished goods  inventory of SSA
and EVO and  guaranteed by the Company.  This facility  supersedes  the facility
entered into in February 1996 between the SSA and First Factors, Inc. As part of
the  agreement,   Heller  has  indemnified  First  Factors,   Inc.  against  all
outstanding over advances and uncollected accounts receivable.

         In April 1996,  KVI  entered  into a  financing  agreement  with Heller
whereby KVI may take advances on uncollected  accounts  receivable up to a limit
of 90%.  Interest  accrues  on  monies  advanced  at the  prime  rate  plus  2%.
Additionally,  a fee  of  1% is  due  on  amounts  advanced.  This  facility  is
guaranteed by the accounts  receivable and domestic inventory of KVI and also by
the Company.  Because of the bankruptcy proceedings with SSA, Heller advised KVI
that it would no longer make advances to KVI (see Note 20).

        On May 15, 1997, Heller foreclosed on substantially all of the assets of
SSA.  Effective,  June 6, 1997,  the  subsidiaries  filed for  protection  under
Chapter 11 of the Bankruptcy Code. SSA is in the process of actively seeking the
return of preference payments made ninety days prior to the bankruptcy. Proceeds
will be used for secured creditors and any remaining balance will be distributed
to priority creditors.

9.       Payroll Taxes Payable

         Payroll tax payable includes  delinquent  federal and state payroll tax
installments  of  approximately  $810,000 and accrued  penalties and interest of
approximately $125,000 thereon.

                                                        F-12



<PAGE>





10.      Bridge Notes Payable

         In 1996, the Company  borrowed an aggregate of $3,450,000  from various
outside sources (the "Bridge Lenders").  The Bridge Lenders received  short-term
notes for the face  amount of the loans  bearing  interest  at 8% per annum.  In
addition,  the  Company  issued  to the  Bridge  Lenders  and loan  facilitators
warrants to purchase a total of 4,575,000  shares of the Company's Common Stock.
The warrants  have an exercise  price of $3.50 per share of stock  purchased and
expire five years from the date of  issuance.  The Company  recorded an interest
charge of $42,000 related to these warrants.

         In May 1996,  the  Company  borrowed  an  additional  $100,000 on terms
identical to the original  Bridge Notes and used those proceeds to repay some of
the expiring Bridge Notes.

         In October  1996,  $100,000  of Bridge  Notes were  converted  into the
private  placement and, in addition,  the Company  converted  $400,000 of Bridge
Notes into a Convertible Note bearing interest at 8%. The terms allow the holder
to convert the Convertible Note into the private placement until the due date on
April 22, 1997.  The balance of the Bridge  Notes  totaling  $450,000  have been
converted  into  Demand  Notes.  The  Convertible  Notes  and  Demand  Notes are
currently in default.

11.      Loans Payable

         At  December  31,  1996,  the  Company  had loans  payable  and accrued
interest of approximately  $148,000 consisting of secured notes to relatives and
affiliates of Michael Nafash, CEO, President and a Director of the Company.  The
notes are due on demand  and bear  interest  at the rate of 12% per  annum.  The
notes are secured by 25,000 shares of Glasgal  Communications  Inc. common stock
and all other  marketable  securities held by the Company.  On May 29, 1997, the
noteholder foreclosed on the collateral and has since accepted the collateral as
full payment of the debt.  At that date,  the  collateral  had a market value of
approximately $100,000.

12.      Long-Term Debt in Default

         Long-term   debt  consists  of  the  following  at  December  31,  1996
(Unaudited):

Mortgage payable, bearing interest
 at prime plus 1 1/2%, payable in monthly
 installments  of $4,167 plus  interest 
 through May 1999 at which time a balloon
 payment of approximately $604,000 is due, 
 collateralized by land and building of SSA                             $716,667

Equipment note, bearing interest at 17%, 
 payable in monthly  installments  of
 $3,081, including interest through
 September 1999, collateralized by certain 
 equipment of SSA                                                         80,665
(Continued)
                                      F-13



<PAGE>





(Continued)
Note  payable, bearing  interest at prime 
 plus  3/4%,  payable  in  monthly
 installments  of $2,778 plus  interest 
 through  April 1998,  collateralized  by
 machinery and equipment of SSA.                                          44,444
                                                                      ----------
                                                                         841,776
Less current portion                                                     108,420
                                                                      ----------
                                                                       $ 733,356
                                                                      ==========

         SSA is in default of its current portion of long-term debt.  Therefore,
all of the debt is classified as current liabilities.

13.      Stockholders' Equity

         a.  Capitalization

         The  Company's  authorized  capital  consists of  50,000,000  shares of
common stock with $.01 par value and 5,000,000  shares of preferred  stock.  The
terms and rights of the  preferred  shares  will be  determined  by the Board of
Directors at the time of issuance.

         b.  Reverse stock split

         On February 2, 1996, the Company's  shareholders  authorized a .033 for
one reverse stock split of common stock outstanding.  All per share and weighted
average share amounts have been restated to reflect this stock split.

         c.  Initial capitalization

         In  January  1994,  the  Company  issued  200  shares  to the  founding
shareholders in  consideration  for services  provided.  The services and shares
were valued at $25,000.

         d.  Issuance of shares to PureTec

         In  June  1994,   the  Company   issued  800  shares  of  common  stock
(representing 80% of the outstanding shares) to PureTec Corporation  ("PureTec")
for  $150,000  cash and 153,850  shares of  PureTec's  common  stock  (valued at
$700,000).  The  153,850  shares  represented   approximately  1%  of  PureTec's
outstanding  common  stock.  The Company  sold these shares in July 1994 for net
proceeds approximating $700,000.

        In March 1995, the Company issued an  aggregate of 850 shares of  common
stock and 55 stock  options  ("1995  options")  to  PureTec  and  certain of its
officers for 350,000 shares of PureTec common stock (valued at $5 1/2 per share,
the trading price of PureTec stock on the date of the transaction). The
                                      F-14



<PAGE>





350,000 shares  represented  approximately  2% of PureTec's  outstanding  common
stock. Concurrently,  the founding shareholders surrendered 200 shares of common
stock  and  outstanding  options  in  exchange  for  165  stock  options  ("1995
options"). The 1995 options, as adjusted for the merger and reverse stock split,
provide for the issuance of 400,000 shares at $.30 per share.

         As of December 31, 1996, PureTec holds 41% of the Company's outstanding
common stock.

         e.  Capital contribution

         In July 1995, PureTec made a $300,000 cash contribution to the Company.

         f.  Private placements

         In  March  1996,  the  Company  offered  a  private  placement  of  its
securities. The placement consists of 500,000 Units at a purchase price of $5.00
per Unit. Each Unit consists of two shares of the Company's Common Stock and one
Stock Purchase  Warrant to acquire one share of the Company's Common Stock at an
exercise price of $3.50. The Stock Purchase Warrants will expire five years from
the date of issue.  As of  December  31,  1996,  the Company had sold a total of
475,750 Units in this offering for total  proceeds of  $2,378,750.  Of the funds
received,  $1,900,000  were from the  conversion of Bridge Note into the private
placements and the balance is direct investments in the private placement.

         In May 1996, the Company  commenced a second  private  placement of its
securities.  The placement  consists of 600,000  Units,  each  consisting of two
shares of the Company's  Common Stock and one Stock Purchase  Warrant to acquire
one share of the  Company'  Common  Stock in exchange  for $3.50,  at a purchase
prince of $5.00 per Unit. The Stock Purchase Warrant will expire five years from
the date of issue.  As of  December  31,  1996,  the Company had sold a total of
440,000 Units in this offering for total  proceeds of  $2,200,000.  Of the funds
received,  $100,000 was used for the repayment of Bridge Notes,  and the balance
has been used for working capital.

         One of the investors in the private  placements was DCI. As part of the
consideration  for their 160,000 Units,  DCI  transferred  to Evolutions  equity
securities of a publicly  traded  unrelated third party with a fair market value
of $800,000.  The Company  subsequently  transferred  these  securities to repay
$800,000 of outstanding  Bridge Loans (Note 10). The Company  recognized no gain
or loss on these transactions.

         g.  Loss per share

         Net loss per common  share was computed by dividing the net loss by the
weighted average number of shares of common stock outstanding during each period
presented. The weighted average number of shares gives effect to the exchange of
Evolutions for Gold Securities.
                                                         F-15



<PAGE>





         h.  Reserved shares

         Common shares reserved at December 31, 1996 are as follows:
1995 Options                       100,000
1996 Stock Option Plan             500,000
                                   -------
                                   600,000
                                   =======
         i.  Convertible Debentures

          On August 15, 1996, the Company  issued  convertible debentures in the
principal amount of $250,000.  The debentures carry an interest rate of 3.0% and
are due on December  31,  1996.  The  debentures  are  convertible,  on or after
September 24, 1996,  into Common Stock at a rate equal to 67% of the average bid
and ask price on the date of conversion. The funds raised through this financing
was  exclusively  used for the repayment of the Bridge  Notes.  On September 29,
1996, $50,000 of the proceeds was converted into 21,322 shares for the Company's
Common  Stock.  On December  31,  1996,  the  remaining  balance of $200,000 was
converted into 132,669 shares of the Company's Common Stock.

14.      Income Taxes

         At  December  31,  1996,  the Company  has a 100%  valuation  allowance
against  the  deferred  income  tax asset  related to net  operating  loss carry
forwards.

15.      Supplementary Information-Statement of Cash Flows

         Cash paid for interest  approximated $321,000 and $20,000 for the years
ended  December  31, 1996 and 1995,  and $3,600 for the period  January 21, 1994
(inception) to December 31, 1994, respectively.

         In January  1994,  the  Company  issued  common  stock to the  founding
shareholders for services  provided (see Note 13d). In June 1994 and March 1995,
the Company issued common stock to PureTec for an aggregate of 503,850 shares of
PureTec  common  stock (See Note 13d).  In October  1994,  the Company  received
marketable  securities (valued at $37,500) as consideration for a loan made to a
third party.

         During 1995, the Company loaned  $1,100,000 to DCI under two notes.  In
September  1995,  $950,000  of the loan was  canceled  with the  acquisition  of
certain  assets  of  DCI,  and the  remaining  $150,000  was  offset  against  a
management fee (see Note 3b).


                                      F-16




<PAGE>





16.      Fair Value of Financial Instruments

         The Company has adopted Financial  Accounting Standards Board Statement
No.  107,  which  required  disclosures  about the fair  value of the  Company's
financial  instruments.  The methods and  assumptions  used to estimate the fair
value of the following classes of financial instruments were:

         Current Assets and Current Liabilities: The carrying amount of cash and
temporary cash investments,  current  receivables and payables and certain other
short-term financial instruments approximate their fair value.

         Loans  Payable:  The  carrying  amount of loans  payable,  based on the
Company's  current  incremental  borrowing  rates for similar types of borrowing
arrangements, approximate their fair value.

         The  carrying  amount  and  fair  value  of  the  Company's   financial
instruments at December 31, 1996 are as follows:
                                                 Carrying       Fair
                                                  Amount        Value
Cash and cash equivalents                      $  222,284   $  222,284
Investments in available-for-sale securities        7,173        7,173
Other current assets                              207,659      207,659
Accounts payable and accrued expenses           7,325,932    7,325,932
Loans payable                                     143,719      143,719

17.      Major Customers

         In 1996,  the Company  operated in two industry  segments,  apparel and
toys.  In the  apparel  segment,  one  customer  accounted  for 11% of the total
apparel revenues. In the toy segment, two customers accounted for 30% and 27% of
the  toy  revenues.  These  same  two  customers  accounted  for  17%  and  10%,
respectively,  of total revenues in 1995. No single customer  accounted for more
than 10% of revenues in 1994.

18.      Advertising

         KVI expenses the  production  costs of  advertising  the first time the
advertising takes place. Advertising expense approximated  $4,129,000,  $124,000
and $1,000 in 1996, 1995 and 1994, respectively.




                                      F-17




<PAGE>





19.      Industry Segments

         The  Company  operates  in two  industry  segments,  apparel  and toys.
Information  concerning the Company's  business segments as of December 31, 1996
(unaudited) is as follows:

                                  Clothing          Toys         Consolidated

Revenues                        $ 12,432,880    $  9,089,300    $ 21,521,910
Operating loss                    (2,810,781)     (2,821,280)     (5,632,061)
Identifiable assets                4,706,348       2,465,540       7,171,888
Depreciation and amortization        503,648          50,367         554,015
Capital expenditures                 144,266         658,346         802,612

         The  Company  operates  in two  industry  segments,  apparel  and toys.
Information  concerning the Company's  business segments as of December 31, 1995
is as follows:

                                   Clothing        Toys        Consolidated

Revenues                        $   349,200    $    22,100    $   571,300
Operating loss                     (523,000)      (575,000)    (1,098,000)
Identifiable assets               1,359,900      1,219,900      2,579,800
Depreciation and amortization        14,000         88,500        102,500
Capital expenditures                  5,900        118,900        124,800

         In 1994, the Company operated solely in the apparel segment.

         KVI's line of toys is  manufactured  in Asia and sold to North American
retailers and distributors.

20.      Subsequent Events

         In April 1997,  SSA ceased its apparel  manufacturing  operations at it
Gastonia,  GA location and laid off all employees  involved in the manufacturing
process.

         On April 30, 1997, SSA sold its Cutecumber  (registered Trademark) line
to Snake Creek  Manufacturing  Co., Inc., for cash and a future royalty,  all of
the  proceeds  which  were  made  payable  to Heller in  accordance  with  SSA's
financing agreement with Heller.

         Effective April 30, 1997, the management  agreement between DCI and KVI
terminated. KVI has not generated any revenue since April 30, 1997 and there can
be no  assurance  that KVI will be  successful  in  generating  revenues  in the
future.
                                      F-18



<PAGE>





         On May 2, 1997, the owner of the H.W. Carter Watch the Wear (Registered
Trademark) label terminated SSA's rights to the license.

         On  May  15,  1997,   SSA's  secured  lender,   Heller   foreclosed  on
substantially all of the assets.  Effective June 6, 1997, the subsidiaries filed
for protection under Chapter 11 of the Bankruptcy Code. SSA is in the process of
actively seeking the return of preference payments made ninety days prior to the
bankruptcy.  Proceeds  will be used  for  secured  creditors  and any  remaining
balance will be distributed to priority creditors.

         On July  15,1997,  the licensor of TEA BUNNIES  (Trademark)  terminated
KVI's rights to the license.






























                                      F-19



<PAGE>