<PAGE>
                  SECURITIES AND EXCHANGE COMMISSION
                         WASHINGTON, D.C. 20549
                               FORM 10-K

(X)  ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
     EXCHANGE ACT OF 1934      For the fiscal year ended December 31, 1996

Or (  ) Transition report pursuant to section 13 or 15(d) of the
     Securities Exchange Act of 1934 for the transition period from   to

                     Commission File No. 0-20938

                         SCRIPTEL HOLDING, INC.
          (Exact name of Registrant as specified in its charter)
Delaware                                                      31-1069865
(State or jurisdiction                                     (IRS Employer
of incorporation or organization)                      Identification No.)

4153 Arlingate Plaza
Columbus, Ohio                                                43228
(Address of principal executive offices)                  (Zip Code)

(614) 276-8402                                          THE INDEX TO EXHIBITS
(Registrant's telephone number, including area code)       BEGINS ON PAGE

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

Securities registered pursuant to Section 12(g) of the Act:
Common Stock, $0.10 Par Value
(title of each class)

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

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

The aggregate market value of the voting shares held by non-affiliates of the
Registrant, based upon the average of the closing bid and ask prices of
Registrant's Common Shares on March 13, 1997 was approximately $3.1 million.
Common Shares held by each officer and director of the Company and its
principal shareholders have been excluded in that such persons may be deemed
to be affiliates.  This determination of affiliate status is not necessarily a
conclusive determination for other purposes.

The number of common shares outstanding at March 13, 1997 was 49,843,809.

DOCUMENTS INCORPORATED BY REFERENCE: None
<PAGE>
TABLE OF CONTENTS
SCRIPTEL HOLDING, INC.
FORM 10-K FOR YEAR ENDED DECEMBER 31, 1996
                                                                              
                                                                   Page No.
PART I

Item 1.  Business
Item 2.  Properties
Item 3.  Legal proceedings
Item 4.  Submission of matters to a vote of security holders

PART II

Item 5.  Market for the registrant's common equity and related                
           stockholder matters
Item 6.  Selected financial data
Item 7.  Management's discussion and analysis of financial
           condition and results of operations
Item 8.  Financial statements and supplementary data
Item 9.  Changes in and disagreements with accountants on
           accounting and financial disclosure

PART III

Item 10.  Directors and executive officers of the registrant
Item 11.  Executive compensation
Item 12.  Security ownership of certain beneficial owners and
            management
Item 13.  Certain relationships and related transactions

PART IV

Item 14.  Exhibits, financial statement schedules and reports
            on Form 8-K

SIGNATURES


PART II, ITEM 7 -  Management's discussion and analysis of financial
                    condition and results of operations

PART II, ITEM 8 -  Financial statements and supplementary data

PART IV, ITEM 14 - Exhibits: (not attached to mailed copies)


<PAGE>





PART I, ITEM 1 - BUSINESS
                                    
Scriptel Holding, Inc. (the" Company") is a Delaware corporation founded in
1982, with its principal corporate offices in Columbus, Ohio.  The Company has
two wholly-owned subsidiaries: Scriptel Corporation ("Scriptel"), and Scriptel
Communications Corp. ("Scriptcom").  Another former wholly-owned subsidiary,
Ampsco Corporation ("Ampsco"), was sold in April 1996 and has been reported as
a discontinued operation.  Until late in 1996, the Company also had a
consolidated majority-owned subsidiary, Coloray Display Corporation
("Coloray"), a development stage company.  This investment dropped below 50%
at December 31, 1996.  Neither Ampsco nor Coloray is consolidated in the
accompanying balance sheet as of December 31, 1996.  The disposal of Ampsco
and Coloray enabled the Company to focus on its core pen/touch technology and
related Scriptel products.  Financial information about industry segments is
included in Note 11 to the accompanying consolidated financial statements for
the year ended December 31, 1996.

NEED FOR ADDITIONAL CAPITAL

The accompanying consolidated financial statements have been prepared on the
basis that the Company will continue to operate as a going concern.  This
contemplates the realization of assets and the satisfaction of liabilities in
the normal course of business.  However, due to continuing losses and
immediate need for additional financing, it is possible that the Company may
not be able to continue as a going concern.  See Notes 1, 2 and 3 to the
accompanying consolidated financial statements, and Management's Discussion
and Analysis of Financial Condition and Results of Operations, for a
discussion of this subject.

SCRIPTEL

Scriptel's mission is to develop products that enhance the human/machine
interface for users of computers and communications devices.

Corporate Objectives.  Scriptel has as its objectives: (a) to set the industry
standard in digital pen and touch as it is used in computers and communication
devices, (b) to advance and maintain a dominant technological position as the
world's leading provider of digital pen and touch technology for computers and
communication devices, (c) to leverage its technological advantage through
development and profitable commercialization so that pen and touch input
becomes a ubiquitous tool in the use of computers and communication devices,
and (d) through the commercialization of its technology provide a superior
return on investment to its partners and shareholders.

Corporate Overview.  Scriptel was founded in 1982.  Its purpose was to develop
digitizer technology that could be integrated into flat panel displays,
allowing for writing directly on the display through the use of electronic
ink.  The technology chosen to accomplish this was electrostatic, due to the
transparent nature of its sensing layer.  The first commercialization of
Scriptel's technology was in a transparent graphic tablet that was marketed to
the medical and CAD/CAM markets, where transparency of the digitizer tablet
was needed.  This product was somewhat successful in the market place by the
late 1980's.  During the late 1980's, the price for digitizer tablets was
eroded by foreign competition.  Scriptel redirected its technology to the then
emerging pen computing market.

Scriptel's strategy for becoming the dominant supplier of pen/touch technology
for pen computer products was to engage development partners with significant
R&D, manufacturing, and distribution capabilities to co-develop a cordless
pen/touch input digitizer subsystem that would work with computers and
communication devices of any size and form.  The partners chosen were Symbios
Logic, Inc. (formerly the Microelectronics Division of NCR Corporation) for a
single chip controller, and Samsung Electronics for the glass sensor panels.
In addition to working with the two partners and developing the controller and
sensor panel, Scriptel developed the electronic pen.

The pen development was started in 1992 and was completed in 1995.  During the
latter part of 1995 and early 1996 the subsystem parts were productized,
integrated in a subsystem, and put into production.  The Company shipped
development kits to OEMs in 1996 and in 1997 began shipping product to two
customers.  Scriptel has products under development with three other
customers.

Products And Technology

Background.  Various types of digital pens and graphic input devices have been
commercially available for about 25 years, including standard electromagnetic
digitizers developed for computer-aided-design purposes and touch screen
products for activating selections on a CRT. However, until Scriptel perfected
its digital pen products, no transparent electrostatic resistive technology
had been developed which could use a pen to interact directly on a flat-panel
computer display, creating the electronic equivalent of pen and paper, as well
as finger touch for pointing.  In computers with pen, the digital pen
continuously tracks the location of the pen tip as it moves over the surface
of the display. The movements of the pen are then translated as "electronic
ink" onto the display, giving the illusion of handwriting.  Digital pen is the
enabling technology that permits the user to control and enter information
into the computer/communicator by writing, drawing, and "clicking" on the
screen with an electronic pen or finger touch.

Scriptel's Products & Technology.  Scriptel's current products are: (a) a
Cordless Pen/Touch Digitizer Subsystem, and (b) a Corded Pen/Touch Digitizer
Subsystem.  These subsystems include a transparent sensor panel, electronic
pen, controller, and software drivers.  These products are sold to original
equipment manufacturers ("OEMs") for integration into end user devices.

Over the last decade, four different types of digital pen technologies have
emerged, all vying to become the industry standard: electrostatic, direct
contact, membrane, and electromagnetic.  Management believes that Scriptel's
patented proprietary electrostatic technology has the capacity to set the
industry standard for the pen computer market, because of its significant
advantages over the other technology types.  Among those advantages are:
higher performance; more reliability, flexibility and durability; lower
production and manufacturing costs; less susceptibility to "noise" emissions
or errors; no added incremental weight; both stylus and finger touch; and
compatibilty with all LCD technology.

Scriptel's Proprietary Transparent Electrostatic Technology.  The core of
Scriptel's business has long been its proprietary electrostatic digital pen
technology.  Scriptel's digital pen is fundamentally different from other
technologies. It consists of a single glass pane, rather than multiple layers.
That alone makes it less expensive to produce.  Because the pane lies on top
of the display, it protects it from scratches and is easily changed according
to customers' size specifications.  In fact, designers of new computers do not
have to design around Scriptel's sensor panel because it fits right on top.
Since Scriptel's digital pen design uses an electrostatic technology which
also acts as an interference shield,  EMI is minimized.  That, too, makes the
company's technology a better choice for advanced communications products.

Delivering the Pen Promise.  There are three generations of digital pen
capabilities for mobile computing.  The first was developed for stationary
technologies; the second attempted to move those technologies into mobile
platforms - with poor results.  The third, with Scriptel technology, is truly
mobile.  Scriptel's WriteTouch (TM) delivers features that OEMs demand: a high
resolution pen that allows for thinner computers, is immune to noise, has less
stringent shielding requirements, and is lighter weight.  And, has both pen
and finger touch capability.

Patent Protection.  Prior to the development of Scriptel's digital pen
technology, it was generally thought that resistive digitizers which consist
of a single, continuous layer of resistive material would be inherently
inaccurate due to the difficulty of obtaining sufficiently uniform resistive
layers. In addition, edge effects produce non-linear response even in uniform
resistive layers. Scriptel has overcome these difficulties by developing a
patented, proprietary method of error correction which is powerful enough to
correct for resistive layer non-uniformities in the range of plus or minus
twenty percent. Management believes that the Company's error correction
process is a key technology in its business.

Scriptel's products are strongly protected by twelve US patents. The most
important have been filed in Canada, Europe and Japan. Most of the Company's
patents were issued from the U.S. Patent Office on the "first office action,"
meaning that the patent examiner found, on first review of the application,
that there was little or no prior art and all claims in the original
application were granted.  Management believes that the Company's patents have
broad coverage and may prove to be dominant in the field of transparent
digital pen technology.  In addition to protecting the Company's electrostatic
design, these patents may apply to other pen-based computer input devices
which utilize some type of "error correction" calibration.  None of the
Company's patents have been challenged or requested to be re-examined.

Although all of Scriptel's patents may be valuable for defensive purposes, two
patents, which apply most directly to Scriptel's current products, are viewed
by management as "key patents." These are the calibration "error correcting"
patent (U.S. Patent No. 4,650,926) and the RDT patent (U.S. Patent No.
4,853,493).  These patents expire in the year 2006 and 2004, respectively. The
calibration patent protects the system and method whereby accuracy on the
order of +/- 0.1% is achieved using commercially available, coated glass
sensor panels.  The RDT patent protects the design and operation features of
the RDT-Model Digitizers, the digitizer system used in custom OEM digital pen
products.

Competition

Direct Contact Technology.  Direct contact is an adaptation of an older touch
screen technology that requires a special coating be placed on the top surface
of the glass so the stylus can directly contact the electrically active layer.
The major problem with this technology is that it is subject to wear and
scratches easily. It does not meet the durability requirements needed by pen
computers, and it requires a corded stylus.

Electromagnetic Technology.  Electromagnetic digitizers have a multilayer
design with wires imbedded in the digitizer sensor layer.  This sensor layer
must be located under the display, requiring the pen signals to pass through
the display.  Since the display is a very noisy device electrically, it has so
far proved not possible to create a controller that can effectively filter the
pen signal through this environment.  Since this problem gets worse as
displays advance in resolution and size, it is not likely that electromagnetic
technology will ever perform adequately when it is integrated into the
display.  Additionally, this technology can never support touch input, and is
not compatible with current and future LCD technology.

Membrane Technology.  Membrane digitizer panels consist of two layers.  The
top layer is mylar with a coating of ITO (Indium Tin Oxide) on the underside.
The second layer is a glass with an ITO layer on the top side.  These two
layers are separated by micro dots so that pressure on the top mylar surface
causes contact between the two layers.  Since the ITO layers have a voltage
gradient across them, the XY coordinate of the contact point can be
calculated.  Since this technology is essentially a mechanical switch, it has
a number of disadvantages, including low resolution, low data rates, multiple
touch registration, limited size, as well as poor durability and
transmissivity.


Competitors.  Scriptel has several competitors making digitizers, flat panel
displays and pens using these different technologies.

Market Analysis

Market Focus.  Scriptel is initially focusing its digitizer products in four
market segments: Notebooks, Pen Tablets, Handheld Personal Computers, and
Projectors.  Targeted customers in each of the four market segments have seen
the Scriptel technology and are currently evaluating it or have plans to
evaluate it for product opportunities in their current or next generation of
products. 

Notebooks.  The notebook market could be by far the most lucrative market for
Scriptel.  It is a very large market with world wide applications.  It is also
a market where Scriptel's technology has very little competition for the next
generation of notebooks.  The lack of competition is due to the fact that as
flat panel displays increase in complexity (TFT displays, larger sized
displays, etc.) electromagnetic or membrane technology does not work in these
environments.  Target customers include large OEM computer manufacturers like
IBM, Apple, HP, Dell, Toshiba, Sun, Compaq, and Texas Instruments.

Pen Tablet.  The largest established market for digital pen input is the pen
tablet market.  The pen tablet market is primarily a vertical application
market (i.e. systems that are used for a very specific function).  For
example, these include signature capture devices evidencing receipt of goods
or for credit card sales.  Scriptel's largest current customer, with about 66%
of total sales in 1996, is NCR for a point-of-sale signature capture unit.

Handheld Personal Computers.  The handheld personal computer market has not
solidified enough to reflect the total market potential.  Originally known as
PDA's or Personal Digital Assistants they are at this time in a price range
that is currently too low cost for Scriptel's technology.  Management believes
that the introduction of new operating systems and the growing use of the
Internet will redefine these products.

Projectors.  The projector market is a relatively small market but one that is
likely to offer a good opportunity for Scriptel as there is little competition
to its technology.  About 28% of Scriptel's total sales in 1996 were to
Polycom, an imaging conference company, for projector glass panels.

Sales And Distribution

Distribution and Licensing.  One of the key elements designed into the
Company's marketing plan is the selective and effective use of distributors
and licensees.  Scriptel looks for distributors and licensees who are staffed
with professionals possessing appropriate technical backgrounds, selling
complimentary products, or making products incorporating Scriptel's
technology. Currently Scriptel has distribution and licensing agreements with
Symbios and Samsung.  Symbios has heavily invested in the development of a
controller chip for Scriptel's cordless stylus.  Scriptel and Symbios will
jointly develop new products and market them worldwide through various
distribution systems.  Scriptel has two license agreements with Samsung.  The
first is to manufacture and distribute the sensor panels.  The second is to
develop, manufacture, and distribute a complete corded digitizer subsystem.
Additionally they have an agreement to integrate Scriptel technology into
their end user products.  In order to accomplish this, Samsung has recently
formed a digitizer business unit. Samsung also has an equity position in
Scriptel.

Scriptel has engaged other distributors in the United States.  Those partners
currently sell products that are complementary to Scriptel's products, and
that can be sold to the same target customer base.  Each of the agents has a
local distribution network and strong product support.  Scriptel considers
them an extension of its direct sales force, and gives them the same technical
support as its internal sales staff.  One of Scriptel's goals for 1997 is to
strengthen its sales efforts in the OEM notebook market through these
distributors and through selected additions to its staff.

Scriptel, recognizing that (1) the volume for pen computer products may exceed
Scriptel's production capacity, (2) certain high volume customers may wish to
manufacture, or develop second suppliers for digitizer components based on
Scriptel's technology, and (3) certain foreign markets, such as the Far East
and Europe, may be better served by manufacturing in those regions, has
decided to license its technology in certain situations.  The agreements with
Symbios and Samsung are representative of Scriptel's strategy for licensing
its technology, and Scriptel may develop manufacturing and marketing ventures
with its customers and other entities.  

Manufacturing

Scriptel's manufacturing process consists of assembly, calibration, testing
and quality control.  Certain preassembled components are purchased from
external suppliers.  Scriptel uses sole suppliers for certain components;
however, management believes that alternative sources for such components are
available and could be incorporated into Scriptel's products if necessary.
Currently most of the component manufacturing for Scriptel's sensor panels and
controller chips are done through its strategic partners.  The electronic pens
are manufactured by Scriptel in Columbus, Ohio.

The controller chip and software drivers for the WriteTouch (TM) subsystem are
manufactured and distributed by Symbios Logic, Inc.  But during 1997 Scriptel
expects to begin developing a new pen controller with another integrated
circuit company in order to strengthen the functionality of the pen.

The sensor panels are manufactured by Samsung Electronics in Korea, and by
Donnelly Corporation in Holland, Michigan.  At the present time all sensor
panels for the WriteTouch (TM) product are distributed by Scriptel.  However,
Samsung has a distribution license for sensor panels and will be distributing
them in other products.  Management has been informed that Samsung has
recently started construction of a new highly automated manufacturing facility
in Korea for digitizer products.  It should be operational in the last half of
1997.  In addition to Samsung's investment, Donnelly Corporation has indicated
that they are upgrading their facility for more efficient manufacturing of the
sensor panels.

Some of the final operations on the sensor panels are currently done by
Scriptel.  In the future, Scriptel plans to have its partners perform all
value add functions on the sensor panels at the place of manufacture in order
to reduce cost.  If Samsung eventually performs all manufacturing steps on the
sensor panels and ships direct to the customer, the revenue will not flow
through Scriptel and will have a negative impact on Scriptel revenue.  It
should not affect operating profit, as royalties on each panel will then be
paid by Samsung.  If Scriptel has to continue performing a part of the
manufacturing steps on the sensor panels, it will require additional capital
investment as unit volumes shipped increase.

The manufacturing of the electronic pens has been reserved for Scriptel.
Scriptel has invested heavily in production tooling to manufacture the
components for the stylus.  The tools reside in the component suppliers
location but are owned by Scriptel.  All pen components are shipped to
Scriptel in Columbus for final assembly and testing.  Scriptel has installed
in its facility in Columbus the assembly and test equipment to produce up to
30,000 pens per month.  This capacity can be increased incrementally with a 90
day lead time.  

Governmental Regulations

Management believes that Scriptel is in compliance with all applicable
governmental regulations with respect to its products and manufacturing
processes.

Research and Development

The Company has historically financed the funding of research and development,
and anticipates that continued funding of research and development will be
financed by internal cash flow sources such as additional offerings or private
placements of securities, and cash flow from operations.  Scriptel intends to
continue its research and development activities for further application of
its present technology in new products and the development of new products
based on other technologies.

Employees

As of December 31, 1996, Scriptel employed a total of 15 full-time employees.
The Company may hire additional employees, primarily in production and sales
areas, in order to meet anticipated demand for its proprietary glass sensor
and stylus products.

Backlog

At December 31,  1996, Scriptel's backlog was approximately $100,000, all of
which is expected to be shipped early in 1997.  Backlog at December 31, 1995
was not significant.


Ampsco

Ampsco was sold on April 4, 1996.  It has been treated as a discontinued
operation in the accompanying financial statements.  See note 18 to the
accompanying consolidated financial statements for the year ended December 31,
1996.  Ampsco was a metal machining and tooling manufacturer.
   
Coloray

In 1996, the Company determined that it could no longer continue to fund
Coloray's research and development efforts.  Beginning in March 1996 the
Company took steps to close Coloray and liquidate its investment.  The
Company's investment in Coloray dropped below 50% at December 31, 1996.  See
note 16 to the accompanying consolidated financial statements for the year
ended December 31, 1996.  Coloray was engaged in the development of a new
generation flat-panel display product commonly referred to as an FED.  







PART I, ITEM 2 - PROPERTIES

Scriptel

Scriptel has a leasehold interest in the approximately 23,000 square feet
office and manufacturing space at 4145 and 4153 Arlingate Plaza, Columbus,
Ohio  43228 for administration and the Scriptel operation.  This leasehold is
for a term expiring on January 31, 1997.  The Company has arranged a month-to-
month lease and anticipates amending the lease to the year 2000.


PART I, ITEM 3 - LEGAL PROCEEDINGS 

See discussion in Note 3 to the accompanying consolidated financial
statements.

PART I, ITEM 4 - SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

a. The annual meeting of the stockholders of the Company was held on October
23, 1996.

b. Stockholders elected nominee Bernard H. Eckstein for a two year term of
office to expire in 1998.  Stockholders also elected nominee Philip A.
Schlosser for a three year term of office to expire in 1999.  J. Vance
Holloway, a director whose term of office expires in 1997, will continue his
term in office after the meeting.

c. Stockholders voted on these items:

   1. electing one Director for the term of office expiring in 1998 and one
Director for the term of office expiring in 1999;

   2. amending Scriptel's Certificate of Incorporation to increase the number
of authorized shares to 125,000,000 shares of Common Stock;

   3. amending Scriptel's Certificate of Incorporation to authorize a class of
15,000,000 shares of undesignated Preferred Stock;

   4. approving an amendment to the 1993 Stock Option Plan to increase the
number of shares which may be issued under the Plan to 7,500,000 shares; and

   5. appointing Norman, Jones, Enlow & Co. as Scriptel's independent
accountants for the fiscal year ending December 31, 1996.

The following is a tabulation of the vote for each nominee and each issue.
There were 26,585,991 shares eligible to vote, of which 21,138,868, or 79.5%,
were represented at the meeting.  A quorum was present.

                                                       Abstain/     Broker
                                 For       Against     Withheld    Non-Votes
                             ----------  ----------   ----------  ----------
1. Election of directors     21,003,348           0      135,520           0
    Individually:
    Bernard H. Eckstein      20,909,531           0      229,337           0
    Philip A. Schlosser      20,915,676           0      223,192           0

2. Increase in authorized
   Common Stock              20,392,934     502,918      243,016           0

3. Authorizing a class of
   Preferred Stock            9,863,995   1,086,236      287,139   9,901,498

4. Amending the 1993
   Stock Option Plan          9,976,456   1,088,292      182,822   9,891,298

5. Appointing independent
   accountants               20,885,087     136,659      117,122           0

As a result of the vote:
1. The stockholders elected each of the nominee directors by more than 50% of
the votes actually cast.

2. The stockholders approved the increase in authorized Common Stock by more
than 50% of total eligible shares.

3. The stockholders did not approve the authorization of a class of Preferred
Stock, as less than 50% of total eligible shares were voted on this proposal.

4.  The stockholders approved the amendment to the 1993 Stock Option Plan by
more than 50% of the votes actually cast.

5. The stockholders ratified the appointment of the independent accountants by
more than 50% of the votes actually cast.



PART II, ITEM 5 - MARKET FOR THE REGISTRANT'S COMMON EQUITY AND RELATED
STOCKHOLDER MATTERS

The Company's Common Stock is not traded in any established trading market.
The prices set forth in the table below represent "bid" prices without
adjustments for retail markups, markdowns or commissions, and may not
necessarily represent actual transactions.  They are based on "pink sheet"
quotations reported in a Columbus, Ohio newspaper of general circulation.

1996                                   High                   Low
First Quarter                         $1.375                $0.500
Second Quarter                         1.188                 0.438
Third quarter                          0.813                 0.438
Fourth quarter                         0.430                 0.135

1995
First Quarter                          3.688                 1.406
Second Quarter                         2.375                 1.500
Third Quarter                          2.000                 0.625
Fourth Quarter                         1.125                 0.438

As of December 31, 1996, the Company had approximately 6,000 stockholders of
record.  The Company has not paid, nor does it have present plans to pay, cash
dividends on its Common Stock.  The Board of Directors intends to retain all
earnings, if any, for use in the business.





PART II, ITEM 6 - SELECTED FINANCIAL DATA

Scriptel Holding, Inc. and Subsidiaries
Year Ended December 31,      1996        1995        1994      1993      1992

(Dollars in thousands except per share data)

Total Revenues             $  512      $  431      $  383    $  950    $  552

(Loss) from continuing
    operations            (15,964)    (14,194)    (16,225)   (2,588)   (3,639)
(Loss) from discontinued
     operations                --        (955)       (705)     (856)     (279)
(Loss) before
    extraordinary item    (15,964)    (15,149)    (16,930)   (3,444)   (3,918)
Extraordinary item-debt
 reduction in 1996 and
 debt conversion in 1992    4,017          --          --        --      (222)
Net (loss)                (11,947)    (15,149)    (16,930)   (3,444)   (4,140)
Loss per share of common
    stock:
(Loss) from continuing
    operations              (0.64)      (0.81)      (1.27)    (0.32)    (0.58)
(Loss) from discontinued
     operations                --       (0.05)      (0.05)    (0.10)    (0.05)
(Loss) before
    extraordinary item      (0.64)      (0.86)      (1.32)    (0.42)    (0.63)
Extraordinary item           0.16          --          --        --     (0.03)
Net (loss) per share        (0.48)      (0.86)      (1.32)    (0.42)    (0.66)

Total assets at year end      733       1,461       3,962     6,096     3,823
Long term debt                370       1,000          44       665       360
    
No dividends were paid in any year.  Ampsco was acquired on September 30, 1992
and disposed of on April 4, 1996; a majority interest in Coloray was acquired
on April 11, 1994 and this interest dropped below a majority in December 1996.
Results of operations of Ampsco are included as discontinued operations in the
consolidated selected financial data.  Results of operations of Coloray are
included in the consolidated selected financial data from date of acquisition
to the date the investment dropped below 50%.  Coloray is not included in the
consolidated balance sheet at December 31, 1996.


PART II, ITEM 7 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS

This information begins on page    .


PART II, ITEM 8 - FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

This information begins on page    .


PART II, ITEM 9 - CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING
AND FINANCIAL DISCLOSURE

The Company reported the following information on a Form 8-K/A dated August
14, 1995.  By letter dated August 10, 1995 and received August 14, 1995,
Coopers & Lybrand L.L.P. indicated that they had resigned as the independent
accountants for Scriptel Holding, Inc. (the Company).

Coopers & Lybrand L.L.P. had audited the consolidated financial statements of
Scriptel Holding, Inc. for 1994, 1993 and 1992.  Their opinion for each year
indicated that the consolidated financial statements had been prepared
assuming that the Company will continue as a going-concern and, as discussed
in the financial statements, the Company's recurring losses from operations,
net working capital deficiency, and need for immediate financing to fund its
operations raise substantial doubt about its ability to continue as a
going-concern.  Management's plans concerning these matters, and the
repercussions if they are not successful, are described in notes to the
consolidated financial statements.  The consolidated financial statements do
not include any adjustments that might result from the outcome of these
uncertainties.

In connection with the audits by Coopers & Lybrand L.L.P. and through the date
of their resignation, there were no disagreements with the former accountants
in any matter of accounting principles or practices, financial statements
disclosure, or auditing scope or procedure, or reportable events, within the
meaning of Item 304 of Regulation S-K.

The Company requested that Coopers & Lybrand L.L.P. provide the company with a
letter addressed to the SEC as required by Item 304 (a) (3) of Regulation S-K,
stating whether they agree with the above statements.  A copy of their letter
to the SEC, dated August 22, 1995, is filed as Exhibit 16 to the Form 8-K/A
dated August 14, 1995, and incorporated herein by reference.

In a Form 8-K dated January 11, 1996, the Company announced that it had
engaged Norman, Jones, Enlow & Co. to act as the Registrant's independent
certified public accountants for the year ended December 31, 1995.


PART III, ITEM 10 - DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

The officers and directors of the Company at December 31, 1996 were as
follows:

Name, Age, Position with the Company:

Bernard H. Eckstein, 59, Director, and Chairman and Chief Executive Officer

J. Vance Holloway, 59, Director, and President and Chief Operating Officer

Philip A. Schlosser, Ph.D., 54, Director, and Executive Vice President-
Research and Development, and Secretary

Edward Palmer, 54, Executive Vice President-Operations

Frederick A. Niebauer, 47, Treasurer

Robert G. Kable, 47, Vice President-Development and Production of Scriptel
Corporation

Jack A. Salvato, 52, Vice President-Sales and Marketing of Scriptel
Corporation

Scriptel's Board of Directors presently consists of three (3) serving
directors divided into three classes, consisting of one, one, and one member,
respectively, of nine (9) available Board seats.  Four vacancies on the Board
of Directors were created by resignation during 1995.  An additional two
vacancies were created by resignation in 1996.  The Board of Directors is
conducting a search for qualified persons to fill the remaining vacancies.
Two of the vacancies may be filled at the direction of Everest Securities,
Inc. ("Everest") of Minneapolis, Minnesota under Scriptel's May 1996 exclusive
investment banking relationship agreement with Everest.  Everest will advise
and consult with the Company, and will use its best efforts to obtain
commitments for financings using debt, convertible debt, or stock.  The
agreement contains a provision giving Everest the right to appoint two (2)
directors to the Board of Directors for a minimum period of three years.
Everest has not yet named these individuals to the Board of Directors.  In
accordance with Delaware law, the Company's bylaws state that Board vacancies
may be filled on approval by a majority of the directors then in office.
Under this provision, the Board has agreed to accept the nominees by Everest
once they are named. (Note - subsequent to signing the agreement with Everest,
Everest merged into Sheffield Securities, Inc., and the agreement continues in
effect with that company.)

The following sets forth information concerning the principal occupations of
each of the officers and directors of the Company for the last five years: 

Bernard Eckstein has been a Director since January 1992 (Mr. Eckstein's term
of office expires in 1998).  In May 1996, Mr. Eckstein was appointed Chairman
and Chief Executive Officer of the Company.  From October 1995 to May 1996,
Mr. Eckstein was a self employed financial consultant.  Prior to that he was
treasurer for more than five years of Qualstan Corporation (a real estate
development company).

J. Vance Holloway has been President and Chief Operating Officer of Scriptel
Corporation since May 1993, and was also appointed President and Chief
Operating Officer of Scriptel Holding, Inc. in May 1996.  He has been a
Director of the Company since May 1994 (Mr. Holloway's term of office expires
in 1997).  Prior to joining the Company, Mr. Holloway was employed for more
than five years by NCR Corporation holding his most recent position as
Consulting Director, Strategic Planning of Workstation Products Division.

Philip A. Schlosser, Ph.D. is Executive Vice President - Research and
Development and Secretary of the Company.  Dr. Schlosser is one of Scriptel's
founders and has been a Director of the Company since its inception in 1982
(Dr. Schlosser's term of office expires in 1999).  He is the inventor or
co-inventor of twenty-one U.S. and foreign patented technologies, including
some issued to the Company on its digitizer products.

Edward Palmer has been Executive Vice President - Operations of the Company
since June 1996.  Prior to that, he was Vice President and Chief Information
Officer of the Company since January 1994.  Prior to joining the Company, Mr.
Palmer was Director of Marketing for the U.S. Group of AT&T Global Information
Systems (Formerly NCR Corp.) for more than five years.

Frederick A. Niebauer was appointed Treasurer of the Company on October 27,
1994.  From September 1993 to the time he joined the Company in September
1994, Mr. Niebauer was a self-employed financial consultant.  From April 1987
until September 1993, Mr. Niebauer served as a Director of Financial Reporting
for Ranco Incorporated, a large, privately-owned, international manufacturer.

Robert Kable has been Vice President - Development and Production of Scriptel
Corporation for more than the last five years.  He is the inventor or co-
inventor of several of the Company's patents.

Jack Salvato joined Scriptel Corporation in February 1995 as Vice President -
Sales and Marketing.  Prior to joining Scriptel, Mr. Salvato was responsible
for Strategic Planning and New Ventures for Ross Laboratories (a division of
Abbott Laboratories) for more than five years.


Compliance with Section 16(a)
      
As required by the Securities & Exchange Commission rules under section 16 of
the Securities Exchange Act of 1934, the Company notes that the following
directors, executive officers and beneficial owners of more than ten percent
of the Company's Common Stock filed untimely reports with respect to events in
1996 and prior thereto: Kevin Woodbridge (a former director) did not file
three reports with four transactions; James W. France, Jr. (a former director
and officer) did not file two reports with four transactions; J. Vance
Holloway did not file one report with one transaction; Edward Palmer filed one
report late with four transactions; Philip A. Schlosser filed one report late
with two transactions; Bernard H. Eckstein did not file one report with two
transactions; Thomas J. Leukart (a former director and officer) did not file
one report with one transaction.


PART III, ITEM 11 - EXECUTIVE COMPENSATION

Directors Compensation

All directors and officers of the company devote such of their time as may be
necessary to the company's business.  Non-employee directors of the Company do
not presently receive any cash compensation for their attendance at meetings
of the Company's Board of Directors.  In lieu thereof,  non-employee directors
annually receive under the 1993 Stock Option Plan options to purchase 25,000
shares of Common Stock at the then current stock price.  Pursuant to the terms
of the Plan, non-employee directors received options to purchase a total of
50,000 shares of Common Stock on January 1, 1996.

Executive Compensation

The following table provides certain summary information concerning the
compensation paid or accrued by the Company, to or on behalf of its chief
executive officer for the years ended December 31, 1996, 1995 and 1994, and
other officers of the Company who earned more than $100,000 in salary and
bonus in any of the years ended December 31, 1996, 1995 and 1994.



                          SUMMARY COMPENSATION TABLE
                                                                 Other
Names and Principal                                             Annual
Position                    Year      Salary       Bonus      Compensation
                                        (1)                        (2)
Bernard H. Eckstein         1996    $ 94,935     $     0       $ 20,167
Chairman and Chief          1995           0           0              0
Executive Officer           1994           0           0              0
(From May 16, 1996)

James W. France, Jr.        1996     187,500           0        408,005
Chief Executive Officer     1995     193,054           0         77,500  (4)
(Until May 15, 1996)        1994     152,962      25,000              0

J. Vance Holloway,          1996     135,911           0         18,150
President                   1995     117,291           0              0
                            1994      91,666           0              0

Edward Palmer,              1996     134,639           0         17,982
Executive Vice President-   1995     133,750           0              0
Operations                  1994     112,500           0         41,800  (5)

Philip A. Schlosser         1996      70,000      75,000 (3)     97,384
Executive Vice President-   1995      70,000           0              0
Research, and Secretary     1994      69,166           0              0

Frederick A. Niebauer       1996     120,638           0         16,134
Treasurer                   1995      75,000       2,500              0
                            1994      21,058           0              0

continued
















                        SUMMARY COMPENSATION TABLE, continued

                                  Restricted        Stock              All
Names                                Stock        Underlying          Other
                                    Awards        Warrants &     Compensation
                                       (2)         Options

Bernard H. Eckstein        1996     $ 25,000     1,122,857  (6,7,8,12) $  0
                           1995            0             0                0
                           1994            0        45,000  (6)           0

James W. France, Jr.       1996            0     1,500,000  (9)           0
                           1995            0     1,400,000  (9)           0
                           1994            0       235,000  (9)           0

J. Vance Holloway          1996       22,500     1,013,629  (7,8,10,12)   0
                           1995            0             0                0
                           1994        7,000       121,100  (10)          0

Edward Palmer              1996       22,292       529,893  (7,8,11,12)   0
                           1995            0       100,000  (11)          0
                           1994            0       104,500  (11)          0

Philip A. Schlosser        1996    $  11,667       855,400  (7,8)         0
                           1995            0             0                0
                           1994            0       317,700  (14)          0

Frederick A. Niebauer      1996       20,000       215,000  (7,8,12)      0
                           1995            0       100,000  (15)          0
                           1994            0             0                0


Notes to the SUMMARY COMPENSATION TABLE follow the table of OPTIONS AND
WARRANTS GRANTED IN 1996, which is immediately below.





















The following table contains information concerning the grant of stock options
and employment related options to the named executive officers listed below
during the fiscal year ended December 31, 1996:
                               
                       OPTIONS AND WARRANTS GRANTED IN 1996
                                  
                                         % of Total
                                           Options          Per
                                         Granted to        Share       Market
                            Options       Employees      Exercise       Bid
Name                        Granted        in 1996         Price       Price

Bernard H. Eckstein
            New               100,000 (6)                  $0.75       $0.906
            New                25,000 (6)                   3.00        0.688
            New                25,000 (6)                   3.00        0.688
            New               752,857 (6,7,12)              0.40        0.38
            Repriced           25,000 (8)                   0.40        0.50
            Repriced           25,000 (8)                   0.40        0.50
            Repriced           20,000 (8)                   0.40        0.50
            Repriced          100,000 (8)                   0.40        0.50
            Repriced           25,000 (8)                   0.40        0.50
            Repriced           25,000 (8)                   0.40        0.50
                            ---------
             Total          1,122,857        15.9%
                            =========

James W. France, Jr.
            New               800,000 (9)                   0.75        0.38
            New                74,533 (9)                   0.68        0.75
            Repriced          625,467 (9)                   0.68        0.75
                            ---------
             Total          1,500,000        21.2%
                            =========

J. Vance Holloway
            New               267,529 (7,12)                0.40        0.38
            New               500,000 (10)                  0.40        0.21
            Repriced          125,000 (8)                   0.40        0.50
            Repriced          121,100 (8)                   0.40        0.50
                            ---------
             Total          1,013,629        14.3%
                            =========
Edward Palmer
            New                50,000 (11)                  0.40        0.75
            New               275,393 (7,12)                0.40        0.38
            Repriced           50,000 (8)                   0.40        0.50
            Repriced           54,500 (8)                   0.40        0.50
            Repriced          100,000 (8)                   0.40        0.50
                            ---------
             Total            529,893         7.5%
                            =========

Continued

                 OPTIONS AND WARRANTS GRANTED IN 1996 - Continued
                                  
                                         % of Total
                                           Options          Per
                                         Granted to        Share       Market
                            Options       Employees      Exercise       Bid
Name                        Granted        in 1996         Price       Price

Philip A. Schlosser
            New               427,700 (7)                  $0.40       $0.38
            Repriced          100,000 (8)                   0.40        0.50
            Repriced            5,000 (8)                   0.40        0.50
            Repriced            5,000 (8)                   0.40        0.50
            Repriced            5,000 (8)                   0.40        0.50
            Repriced          312,700 (8)                   0.40        0.50
                            ---------
             Total            855,400        12.1%
                            =========
                               
Frederick A. Niebauer
            New               115,000 (7,12)                0.40        0.38
            Repriced          100,000 (8)                   0.40        0.50
                            ---------
             Total            215,000         3.0%
                            =========
continued




























                  OPTIONS AND WARRANTS GRANTED IN 1996, continued


                              Options      Expiration       Grant Date
Name                          Granted         Date        Present Value $
                                                                  (13)
Bernard H. Eckstein
            New               100,000        01/29/01        $  37,953  
            New                25,000        01/01/00            5,644
            New                25,000        01/01/01            5,644
            New               752,857        11/04/01          114,410
            Repriced           25,000        10/21/98            2,942
            Repriced           25,000        01/01/99            4,134
            Repriced           20,000        08/01/99            1,663
            Repriced          100,000        01/29/01            2,353
            Repriced           25,000        01/01/00            2,079
            Repriced           25,000        01/01/01            1,493
                            ---------                         --------
             Total          1,122,857                          178,315
                            =========                         ========

James W. France, Jr.
            New               800,000        11/04/02          117,655
            New                74,533        05/15/99           21,191
            Repriced          625,467        05/15/99            9,172
                            ---------                         --------
             Total          1,500,000                          148,018
                            =========                         ========

J. Vance Holloway
            New               267,529        11/04/01           40,656
            New               500,000        12/06/02           41,004
            Repriced          125,000        06/01/98           21,339
            Repriced          121,100        05/12/99           14,247
                            ---------                         --------
             Total          1,013,629                          117,246
                            =========                         ========
Edward Palmer
            New                50,000        06/28/01           16,685
            New               275,393        11/04/01           41,851
            Repriced           50,000        01/26/00            1,999
            Repriced           54,500        05/12/99            6,412
            Repriced          100,000        01/26/00            6,716
                            ---------                         --------
             Total            529,893                           73,663
                            =========                         ========

continued






                  OPTIONS AND WARRANTS GRANTED IN 1996, continued


                              Options      Expiration       Grant Date
Name                          Granted         Date        Present Value $
                                                                 (13)
Philip A. Schlosser
            New               427,700        11/04/01        $  64,996
            Repriced          100,000        03/01/97           13,830
            Repriced            5,000        03/01/97              692
            Repriced            5,000        03/01/98              888
            Repriced            5,000        03/01/99              964
            Repriced          312,700        05/12/99           36,788
                            ---------                         --------
             Total            855,400                          118,158
                            =========                         ========
                               
Frederick A. Niebauer
            New               115,000        11/04/01           17,477
            Repriced          100,000        01/26/00            8,315
                            ---------                         --------
             Total            215,000                           25,792
                            =========                         ========

NOTES TO THE SUMMARY COMPENSATION TABLE AND THE TABLE OF OPTIONS AND WARRANTS
GRANTED IN 1996

(1)  The amounts shown as Salary in 1996 include amounts which have not been
paid to each of the individuals.  A detail by person is included below as well
as a general description of the reasons for each deferral of payment.

Bernard H. Eckstein:
  Amount paid in cash                                     $  28,333
  Amount deferred under agreement                            40,625
  Interest on amount deferred under agreement                 1,185
  Payrolls not paid because of lack of cash                  24,792
                                                          ---------
                                                          $  94,935
                                                          =========
James W. France, Jr.:
  Amount paid in cash                                     $  72,917
  Payrolls not paid because of lack of cash                 114,583
                                                          ---------
                                                          $ 187,500
                                                          =========
J. Vance Holloway:
  Amount paid in cash                                     $  96,667
  Amount deferred under agreement                            31,250
  Interest on amount deferred under agreement                   911
  Payrolls not paid because of lack of cash                   7,083
                                                          ---------
                                                          $ 135,911
                                                          =========


Edward Palmer:
  Amount paid in cash                                     $  96,198
  Amount deferred under agreement                            30,469
  Interest on amount deferred under agreement                   889
  Payrolls not paid because of lack of cash                   7,083
                                                          ---------
                                                          $ 134,639
                                                          =========
Philip A. Schlosser:
  Amount paid in cash                                     $  64,167
  Payrolls not paid because of lack of cash                   5,833
                                                          ---------
                                                          $  70,000
                                                          =========
Frederick A. Niebauer:
  Amount paid in cash                                     $  91,042
  Amount deferred under agreement                            21,875
  Interest on amount deferred under agreement                   638
  Payrolls not paid because of lack of cash                   7,083
                                                          ---------
                                                          $ 120,638
                                                          =========

In May 1996, certain of the Company's officers agreed to defer that part of
their annual compensation which exceeded $85,000 until such time as the
Company's cash situation improved.  As part of the agreements with these
individuals (including Messrs. Eckstein, Holloway, Palmer, and Niebauer), the
Company agreed to pay interest at 10% per annum on the amounts deferred, and
agreed to issue an option to purchase one share of Common Stock at an exercise
price of $0.40 per share and with an expiration date of five years after
issuance (which options are subject to availability of authorized shares) for
each dollar of salary deferred.  These would total 195,000 options if such
deferral continued for a year, and similar amounts annually thereafter.  The
amounts deferred under these agreements and the amount of interest thereon are
shown above.

The Company had significant cash flow problems in 1996.  Consequently, the
Company did not pay the December 1996 payroll for all employees, including the
current officers noted above.  In addition, the Company did not pay Mr.
Eckstein his salary for the period from September 16, 1996 to November 30,
1996.  Also because of the cash flow problems, the Company did not pay Mr.
France for one month while he was still an officer (from April 16, 1996 to May
15, 1996), nor did it pay him for his severance payroll (from May 16, 1996 to
September 30, 1996) after he resigned.  The total of these deferrals is shown
above.

(2)  Other Annual Compensation in 1996 includes $20,167 for Mr. Eckstein;
$18,150 for Mr. Holloway; $17,982 for Mr. Palmer; $9,411 for Mr. Schlosser;
and $16,134 for Mr. Niebauer as accrued "gross-up" taxes on a 1996 stock
grant.  The taxes have not been paid.  The estimated value of the shares to be
issued under the stock grant has been shown as Restricted Stock Awards for
1996.  (The Company agreed to issue a one time stock grant to all current
employees of Scriptel at June 1, 1996 equal in value to twice each employee's
monthly salary, and valued at $0.75 per share.  This grant approximates
244,000 shares in total.  The Company also agreed to pay the employees' taxes
on the stock grant, subject to the availability of cash.  A charge of $311,000
was recorded in the first quarter of 1996 as the value of the grant plus
taxes.  No amounts have been paid under these agreements.)  Shares to be
issued to each named officer are: Mr. Eckstein 33,333 shares; Mr. Holloway
30,000 shares; Mr. Palmer 29,722 shares; Mr. Schlosser 15,556 shares; and Mr.
Niebauer 26,667 shares.

At the year-end stock price, the values of the 1996 restricted stock awards to
the individuals were as follows: Eckstein $4,667; Holloway $4,200; Palmer
$4,161; Schlosser $2,178; Niebauer $3,733.  All shares were immediately
vested.  There were no dividends on any shares.

Other Annual Compensation in 1996 also includes accrued but unpaid severance
costs of $150,000 for Mr. France under his separation agreement.  It also
includes forgiveness of debts of $258,005 for Mr. France under his separation
agreement and $87,973 for Mr. Schlosser as additional compensation for his
service since the Company was founded.

(3)  The Company issued 100,000 shares of Common Stock in January 1996 to Mr.
Schlosser, a founder, director, and officer of the Company, as additional,
bonus, compensation for his service since the Company was founded.  The value
of this stock, $75,000, is shown as a bonus above, and was expensed in January
1996 when it was issued.

(4)  Mr. France received a one-time grant of 40,000 shares of Common Stock in
1995 per terms included in his employment contract.  The fair market value of
these shares at the date of the grant, $77,500, was recorded as compensation
expense.

(5)  Mr. Palmer's Other Compensation in 1994 was a reimbursement of his moving
expenses.

(6)  Mr. Eckstein received 100,000 options in January 1996 at an exercise
price of $0.75 per share for consulting services rendered to the Company in
its 1995 year end closing.  In January 1996, he also received 25,000 options
at an exercise price of $3.00 per share for his service as an outside director
in 1994 and another 25,000 options at $3.00 per share for his service as an
outside director in 1995.  In November 1996, he received 500,000 options at an
exercise price of $0.40 per share as part of his employment negotiations in
May 1996.  (These options were originally contingent on the availability of
authorized shares; the options were issued after the stockholders had approved
an increase in authorized shares at their October 1996 meeting.)  See also
Notes 7 and 12 for additional options granted to Mr. Eckstein in 1996, and
Note 8 for repriced options.

Mr. Eckstein received 25,000 options in 1994 at an exercise price of $3.00 per
share for his service as an outside director in 1993.  He also received 20,000
options in 1994 at an exercise price of $3.00 per share for consulting
services in 1994.

(7)  In the third quarter of 1996, the Company entered into several agreements
with its officers, nine employees, and four consultants.  Under these
agreements, the individuals agreed to let the Company use in its current
financings the authorized shares represented by a total of 2,685,647 options
and warrants held by these individuals.  All of such released authorized
shares were used to support financings in the third quarter of 1996 (see Note
7 to the accompanying consolidated financial statements).  The individuals
agreed not to exercise their options and warrants until such time as
authorized shares became available.  These became available in October 1996
when stockholders approved an increase in authorized shares.  This restriction
on exercise has now been released.  The Company also agreed to issue an
additional option to each individual for each of the 2,685,647 authorized
shares used, as soon as authorized shares became available.  The additional
options have an exercise price of $0.40 per share and will expire in 2001.
The options were issued in November 1996.  The stock price was $0.38 per share
at the date of issue.  The options issued under this agreement included the
following amounts to the named executive officers: Mr. Eckstein 225,000
options; Mr. Holloway 246,100 options; Mr. Palmer 254,500 options; Mr.
Schlosser 427,700 options; and Mr. Niebauer 100,000 options.

(8)  The Company did not have the funds to pay its employees in April, May and
June 1996.  To recognize the sacrifices made by the employees during this
period, and to partially compensate them for their continued dedication and
service, in June 1996 the Company reduced the exercise price to $0.40 per
share on 1,805,700 options and warrants owned by the employees.  Expiration
dates were not changed.  Formerly, such options and warrants carried exercise
prices ranging from $0.75 per share to $4.00 per share.  The repriced options
included the following amounts to the named executive officers: Mr. Eckstein
220,000 options; Mr. Holloway 246,100 options; Mr. Palmer 204,500 options; Mr
Schlosser 427,700 options; and Mr. Niebauer 100,000 options.

(9)  Mr. James W. France, Jr., the Company's former Chairman and Chief
Executive Officer, retired and resigned all his positions with the Company on
May 15, 1996, citing personal reasons.  The Company executed a severance
agreement with Mr. France under which Mr. France was to receive a severance
package of: continuation of his salary through September 1996, additional
severance pay of $150,000, cancellation of all his old options (a total of
1,425,467 options including 800,000 which were subject to a separate agreement
as outlined below) and issuance of new options to purchase a total of
1,500,000 shares, and cancellation of all the Company's notes receivable
(approximately $158,000) and advances receivable (approximately $100,000) from
Mr. France.  Mr. France had separately agreed with the Company in April 1996
to cancel 800,000 of his options at an exercise price of $1.74 per share so
the Company could use the released authorized shares in its current
financings, subject to their reissuance at an exercise price of $0.75 per
share when authorized shares became available.  In October 1996 Scriptel
stockholders approved an increase in authorized shares, and these 800,000
options were issued on their agreed terms.  The Company repriced a total of
625,467 options from exercise prices of $1.74 to $2.00 per share to the
severance contract terms of $0.68 per share.  The Company also issued the
remaining 74,533 options at an exercise price of $0.68 per share to bring Mr.
France's total options to 1,500,000 as required in the severance agreement.

Mr. France received 400,000 options in 1995 for meeting performance objectives
in his contract, and 1,000,000 options in 1995 as a replacement for options he
transferred to debt holders in 1994 (see below).  These were immediately
vested and immediately exercisable.

In 1994 Mr. France received options and warrants to purchase 225,000 shares of
Common Stock in an exchange of options with Mr. Gerald S. Jacobs, a principal
stockholder.  Such options and warrants were at prices ranging between $1.70
and $2.00 per share and expiring at various dates through October 2000.  For
no consideration to Mr. France at the time, Mr. France transferred these
options and warrants to purchase 225,000 shares of Common Stock, and
additional options to purchase 993,200 shares of Common Stock to note holders
as an inducement to loan funds (options and warrants for 1,078,200 shares) and
to Mr. Ronald Pellett, an outside independent consultant, for services
rendered (options for 140,000 shares).  The options and warrants transferred
had exercise prices ranging from $1.70 to $2.50 per share and expire at
various dates through October 2000.  See above for details about a replacement
for some of these options.

(10)  Mr. Holloway received 500,000 options in December 1996 at an exercise
price of $0.40 per share as part of his employment negotiations with the
Company.  See also Notes 7 and 12 for additional options granted to Mr.
Holloway in 1996, and Note 8 for repriced options.

Mr. Holloway received a grant of options to purchase 121,100 shares of Common
Stock as part of a distribution to all employees under the Company's Stock
Option Plan in 1994.  In 1995 he received no options; however the expiration
date on 125,000 options he received in 1993 was extended from 1996 to 2000.

(11)  Mr. Palmer received 50,000 options in 1996 at an exercise price of $0.40
as part of his employment negotiations with the Company.  See also Notes 7 and
12 for additional options granted to Mr. Palmer in 1996, and Note 8 for
repriced options.

In 1995, Mr. Palmer received options to purchase 100,000 shares of Common
Stock as part of his employment agreement with the Company.  In addition, in
1995 the expiration date on 50,000 options he received in 1994 was extended
from 1997 to 2000.  In 1994, Mr. Palmer received options to purchase 50,000
shares of Common Stock as part of his employment agreement with the Company.
He also received a grant of options to purchase 54,500 shares of Common Stock
as part of a distribution to all employees under the Company's Stock Option
Plan.


(12)  Certain of the named executive officers received options in 1996 as part
of an agreement to defer part of their salaries (see Note 1).  These options
were issued in November 1996 for salary deferred through October 15, 1996:
Mr. Eckstein 27,857 options; Mr. Holloway 21,429 options; Mr. Palmer 20,893
options; and Mr. Niebauer 15,000 options.  Additional amounts will be granted
to the officers based on the amount of salary deferred from October 16, 1996
to date.

(13)  In late 1995, the Financial Accounting Standards Board adopted Statement
of Financial Accounting Standards No. 123, "Accounting for Stock Compensation"
(SFAS-123).  The Company adopted this statement in 1996.  SFAS-123 requires
use of a specific method of valuing options.  The Company uses the binomial
pricing method of valuing the options and warrants it issued or modified.
This method is one of the accepted methods in SFAS-123.  The Company used the
following assumptions for the 1996 valuations: expected volatility of the
Company's stock price - 90%; risk free rate of return - 6%; stock price -
closing bid price on the date of grant; dividend yield - none; expected life -
actual option term in years (generally five to six years); vesting -
immediate.  After calculating value under the binomial pricing method, the
Company discounts the result by 50% to take into account the combined effects
of restrictions on the sale of the stock (the SEC's "Rule 144" restrictions)
and the lack of an established market for the stock.  For options which are
repriced during the year, the Company calculates the net value of the option
given up, under the old terms, and the reissued option, under the new terms.
The present values for each option to management which was issued or repriced
in 1996 are shown above.

(14)  Mr. Schlosser received 317,700 options in 1994 as part of a distribution
to all employees under the Company's Stock Option Plan.  See also Note 7 for
additional options granted to Mr. Schlosser in 1996, and Note 8 for repriced
options.

(15)  Mr. Niebauer received 100,000 options in 1995 as part of his employment
agreement with the Company.  See also Notes 7 and 12 for additional options
granted to Mr. Niebauer in 1996, and Note 8 for repriced options.

End of footnotes to the SUMMARY COMPENSATION TABLE  and table of OPTIONS AND
WARRANTS GRANTED IN 1996.

The following table contains information concerning the exercise of stock
options and employment related options and information on unexercised stock
options and warrants held as of the end of fiscal year 1996 by the named
executive officers:

          OPTION AND WARRANT EXERCISES AND YEAR-END VALUE TABLE
                                                                           
                                                                    Value of
                                           Number of Unexercised   Unexercised
                      Shares                Options & Warrants    In-the-money
                     Acquired              --------------------    Options and
                        on       Value                   Non-      Warrants at
Name                 Exercise  Realized  Exercisable  Exercisable  December 31
                                                                     1996 (1)

Bernard H. Eckstein       0      $  0       972,857            0      $  0

James W. France, Jr.      0         0     1,500,000            0         0

J. Vance Holloway         0         0     1,013,629            0         0

Edward Palmer             0         0       529,893            0         0

Philip A. Schlosser       0         0       855,400            0         0

Frederick A. Niebauer     0         0       215,000            0         0

(1)   The average of the bid and asked prices at December 31, 1996 was $0.145.
Value equals the difference between the average of the bid and asked price and
the exercise price.

EMPLOYMENT CONTRACTS

Bernard H. Eckstein, the Company's Chairman and Chief Executive Officer, is
serving in that capacity without an employment contract.  The Board of
Directors set the compensation of Mr. Eckstein at an annual base salary of
$150,000 beginning on May 16, 1996.

James W. France, Jr., former Chairman, President and Chief Executive Officer,
had an employment contract which expired September 1, 1995.  On September 1,
1995, after his contract expired, the Board set Mr. France's salary at
$250,000 per year on a month-to-month basis.  Mr. France remained in the same
capacity without a contract, until he resigned from all positions with the
Company on May 15, 1996.  See Note 9 to the SUMMARY COMPENSATION TABLE and
table of OPTIONS AND WARRANTS GRANTED IN 1996.

J. Vance Holloway entered into a three year contract with the Company on June
1, 1993, which expired in June 1996.  In 1996, this contract was extended for
another two years.  Mr. Holloway received 125,000 options as his total
compensation from June 1, 1993 to March 1, 1994, at which time he began to
receive an annual base salary of $110,000 per year.  His salary increased to
$135,000 per year effective September 16, 1995, and it has remained at that
level.  Mr. Holloway is entitled to receive annual options to purchase 5,000
shares of Common Stock at a price of $4.00 per share; to date the Board of
Directors has not formally granted these options.  Mr. Holloway received 5,000
shares of Common Stock as additional compensation in 1994.

Edward Palmer entered into a three-year employment agreement with the Company
commencing January 1, 1994.  Under the agreement, Mr. Palmer received a base
annual salary of $100,000 until July 1, 1994 at which time his annual base
salary increased to $125,000 per year.  Effective January 1, 1995, his salary
was set at $133,750 per year, and it has remained at that level.  The
agreement provided for the granting of options to purchase 50,000 shares of
Common Stock in January 1994 at a price of $1.75 per share, and further
provided for a grant of options to purchase 100,000 shares of Common Stock at
a price of $2.50 per share exercisable one third per year for each year of the
contract.  Mr. Palmer's contract expired December 31, 1996, and he is now
serving in the same capacity without a contract.

Philip A. Schlosser had an employment contract with the Company, which expired
in 1995.  He continued to serve in the same capacity without a contract at a
base annual salary of $70,000.

Frederick A. Niebauer started with the Company in September 1994.  Mr.
Niebauer has an employment contract with the Company, which expires in
September 1997.  Under the contract, his base pay was set at $75,000 per year,
and it remained at that level through 1995.  On January 1, 1996, his salary
was increased to $120,000 per year.  His contract requires an increase of at
least 5% as of January 1, 1997.  To date, this increase has not gone into
effect.  The contract required a grant of 100,000 options at $3.00 per share,
which were issued to Mr. Niebauer in January 1995.




The following table contains information concerning the repricing of all
options or warrants to any executive officer during the last ten years (see
Note 8 to the SUMMARY COMPENSATION TABLE AND THE TABLE OF OPTIONS AND WARRANTS
GRANTED IN 1996):

                      TEN-YEAR OPTION REPRICINGS
                                                                    Length of
                        Number of          At time                   Original
                        Securities      of Repricing               Option Term
                        Underlying      or Amendment              Remaining at
                         Options      ----------------    New        Date of
                        Repriced or   Market  Exercise  Exercise  Repricing or
Name            Date    Amended (#)   Price    Price     Price      Amendment
-----------  ---------  -----------   ------  -------   -------   ------------

Bernard H.    06/04/96      25,000    $0.50    $2.25     $0.40      2 years
 Eckstein     06/04/96      25,000     0.50     3.00      0.40      3 years
              06/04/96      20,000     0.50     3.00      0.40      3 years
              06/04/96     100,000     0.50     0.75      0.40      5 years
              06/04/96      25,000     0.50     3.00      0.40      4 years
              06/04/96      25,000     0.50     3.00      0.40      5 years

James W.      06/28/96      16,800     0.75     1.70      0.68      2 years
 France, Jr.  06/28/96       8,667     0.75     2.00      0.68      3 years
              06/28/96     600,000     0.75     1.74      0.68      4 years
 (in 1992)    09/01/92      96,667     3.50     2.50      2.50      2 years

J. Vance      06/04/96     125,000     0.50     1.75      0.40      2 years
 Holloway     06/04/96     121,100     0.50     2.25      0.40      3 years

Edward        06/04/96      50,000     0.50     1.75      0.40      4 years
 Palmer       06/04/96      54,500     0.50     2.25      0.40      3 years
              06/04/96     100,000     0.50     2.50      0.40      4 years

Philip A.     06/04/96     100,000     0.50     1.69      0.40      1 year
 Schlosser    06/04/96       5,000     0.50     4.00      0.40      1 year
              06/04/96       5,000     0.50     4.00      0.40      2 years
              06/04/96       5,000     0.50     4.00      0.40      3 years
              06/04/96     312,700     0.50     2.25      0.40      3 years
                               
Frederick A.  06/04/96     100,000     0.50     3.00      0.40      4 years
 Niebauer

Robert G.     06/04/96      35,337     0.50     1.50      0.40      1 year
 Kable        06/04/96     120,000     0.50     1.69      0.40      1 year
              06/04/96      10,600     0.50     2.25      0.40      3 years
              06/04/96       5,000     0.50     4.00      0.40      1 year
              06/04/96       5,000     0.50     4.00      0.40      2 years
              06/04/96       5,000     0.50     4.00      0.40      3 years
              06/04/96     328,000     0.50     2.25      0.40      3 years
  (in 1989)   09/26/89      10,600     2.00    11.88      2.25      5 years

Jack A.       06/04/96     100,000     0.50     3.00      0.40      4 years
 Salvato
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION

Bernard H. Eckstein served as the sole member and chairman of the Compensation
Committee of the Board of Directors from January 1, 1996 to May 15, 1996 on
which date he became Chairman and Chief Executive Officer of the Company.  The
Company does not currently have a Compensation Committee as it has no outside
directors.  In the absence of any outside directors from May 1996 to date, the
full Board of Directors reviews compensation issues.  The Board is composed of
Mr. Eckstein, Mr. Holloway, and Mr. Schlosser.

In January 1996, Mr. Eckstein received options to purchase 100,000 shares of
Common Stock at an exercise price of $0.75 per share for consulting services
rendered to the Company in its 1995 year-end closing.  The options were
approved by the Board of Directors, with Mr. Eckstein abstaining.  In June
1996, the Company committed to issue to Mr. Eckstein, as part of his
employment negotiations, options to purchase 500,000 shares of Common Stock at
an exercise price of $0.40 per share and which will expire five years after
issuance.  Issuance of these options was contingent on the availability of
authorized shares.  The options were issued in November 1996, after
stockholders approved an increase in authorized shares.  The Board of
Directors also set the compensation of Mr. Eckstein at an annual base salary
of $150,000 beginning on May 16, 1996.  Mr. Eckstein abstained from voting on
all Board proposals relating to his compensation.

BOARD COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION 

General

The Compensation Committee has general authority to review the Company's
employee and management compensation practices, to monitor compliance, and to
recommend changes to those practices.  The Compensation Committee also
administers the Company's 1993 Stock Option Plan.  The Compensation Committee
has final review and approval of the terms and conditions of the Company's
Pay for Performance Plan.  The Compensation Committee establishes objectives
for the Company's CEO and meets privately to evaluate his performance and
recommends changes to his compensation which are then brought to the full
board for approval.  The Compensation Committee has no authority with respect
to the granting of options to directors eligible to receive stock options
under the 1993 Stock Option Plan.  In general, the CEO establishes
compensation for all other senior executives with guidance from the
Compensation Committee.

Pay for Performance Plan

The Company's Pay for Performance Plan applies to all officers of the Company,
officers of its subsidiaries, and certain management positions as designated
by the presidents of the individual operations.  The purpose of the plan is to
provide contingent benefits to employees to reflect their contributions to the
Company and to serve as an incentive to contribute to future Company success.
The Pay for Performance Plan balances financial incentives with a combination
of near term cash bonuses and long term stock options.

Quantitative factors in the Pay for Performance Plan include revenue and
income measurements as compared to the company's business plan.  Cash bonuses
are paid based on attainment of specified percentages of Pay for Performance
Plan revenues and income.  The Pay for Performance Plan also includes
qualitative measurements based on evaluation of customer satisfaction, timely
and accurate forecasting and reporting, and other factors.  Stock options are
used to compensate individuals for their qualitative performance.

No bonuses or options were granted under the Pay for Performance Plan in 1996.

Stock Options

A stock option permits the holder to buy shares of Company Common Stock at a
specific price during a specific time period.  As the prices of Company stock
rises, the option increases in value.  The Company has a stock option plan
permitting the Committee to award stock options to executive officers, other
key employees of the Company, and to consultants who perform significant
valuable services.  The intent of such awards is to provide the recipient with
an incentive to perform at levels that will result in better Company
performance and enhanced stock values.

Whether or not an option grant is made and the size of any particular grant
depends on the committee's subjective evaluation of performance and input from
senior executives.  In some cases, stock options are used to attract and
retain key employees of the Company or to compensate consultants in lieu of
cash for services rendered.

During 1996 several employees, including all of the named executive officers,
were granted stock options based on their individual employment negotiations
and other agreements.

Chief Executive Officer Compensation

The Board of Directors set the compensation of Mr. Eckstein at an annual base
salary of $150,000.  He is serving without a contract.  The Board feels that
this level of compensation is justified because of the Company's continuing
financial difficulties.  In fact, the Board considers Mr. Eckstein's
compensation to be well below the level given to CEOs by other companies in
similar circumstances.  Mr. Eckstein has provided leadership in arranging new
financing for the Company and in moving Scriptel closer to its goals.

Effective September 1995, Mr. France's annual base salary was set at $250,000.
In providing this increase, the Compensation Committee at that time considered
that, under Mr. France's leadership, the Company had met several milestones in
its development.  Among these were the evolution of the WriteTouch (TM) chip
through fabrication, the ongoing relationship with Samsung, recruitment of key
senior staff, and continued new financings under challenging circumstances. 
Mr. France had two loans payable to the Company for shares purchased in 1992.
The Compensation Committee agreed in 1994 to cease his current monthly
payments on the notes, and to restructure the notes to require a balloon
payment of the principal and accrued interest on December 31, 1995.  The
Compensation Committee believed this would help Mr. France focus his energies
on the Company's objectives.  (In May 1996, Mr. France resigned all positions
with the Company.  As part of his  separation agreement, all notes and
advances receivable were forgiven.)


By the Board of Directors:
Bernard Eckstein (former Chairman of the Compensation Committee, and sole
member until May 1996), Director
J. Vance Holloway, Director
Philip A. Schlosser, Director


Performance Graph

The following performance graph compares the cumulative total return (change
of the bid stock price) of the Company's Common Stock for the five year period
from December 31, 1991 through December 31, 1996 with the S&P Small Cap Index
and the S&P Computer Systems Index.  The graph assumes that the value of the
investment in the Company's Common Stock and each index was $100 at December
31, 1991 and that all dividends, if any, were reinvested.  The comparisons are
not intended to forecast or be indicative of possible future performance of
the Company's stock.

An approximation of the performance line graph is shown below.  A line graph
cannot be presented in electronic filing format.  The data points are shown
below the graph.

         Comparison of Five Year Cumulative Stockholder Return
  250 :-------------------------------------------------------
D     :
      :
O     :
      :
L 200 :-------------------------------------------------IIII--
      :                                              III
L     :                                            II
      :                                          II       CC
A     :                                       III       CC
  150 :------------------------------------III--------CC------
R     :                  IIIIII         III         CC
      :             IIIII      IIIIIIIII          CC
S     :         IIII                           CCC
      :     IIII                            CCC
  100 :--SCI----------------------------CCCC------------------
      :   SCCC                      CCCC
      :    SS CCC              CCCCC
      :      S   CCCCCCCCCCCCCC
      :       S
   50 :--------S--------SSSSSSSSSSSSSSSSSSS-------------------
      :         SS   SSS                   SS
      :           SSS                        SS
      :                                        SS
      :                                          SSSSSSSSSS
    0 :--+---------+---------+---------+---------+---------S--
       1991      1992      1993      1994      1995      1996

S = Scriptel;  I = S&P Small Cap Index;  C = S&P Computer Systems Index


Data Points:
December 31,          1991      1992      1993      1994      1995      1996

Scriptel             100.00     32.14     51.86     51.86      9.00      2.00
S&P SmallCap Index   100.00    119.44    140.45    132.26    170.08    204.33
S&P Computer Systems
Index                100.00     70.51     71.89     91.86    119.93    165.82

PART III, ITEM 12 - SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT

As of December 31, 1996, the Company had 42,299,512 shares of Common Stock
issued and outstanding and an additional 47,161,967 shares reserved for
issuance upon the exercise of existing options and warrants, the conversion of
convertible promissory notes, and other contractual commitments.  The address
of each person, unless otherwise indicated, is c/o of the Company:

MANAGEMENT (at December 31, 1996):
                                           Shares
                       Shares Owned     Issuable Upon      Total    Percent of
Names                      (4)           Exercise Of      Shares    Class (2)
                                          Warrants &
                                          Options (1)

Bernard H. Eckstein       71,326           972,857        1,044,183     2.4%

James W. France, Jr.(3)   46,767         1,500,000        1,546,767     3.5%

J. Vance Holloway         60,500         1,013,629        1,074,129     2.5%

Edward Palmer             29,722           529,893          559,615     1.3%

Philip A. Schlosser      115,556           855,400          970,956     2.2%

Frederick A. Niebauer     28,667           215,000          243,667       * 


All Executive Officers and
Directors as a Group
(8 persons)              591,375         6,311,625        6,903,000    14.2%
                                   
*   Less than 1%.

(1) Includes options and warrants exercisable within 60 days following March
15, 1997.

(2) In calculating the percentage of ownership, in accordance with SEC
rules, the denominator includes number of shares outstanding plus shares
issuable to the individual or group whose percentage is being calculated.
The numerator also contains shares issuable to the individual or group
whose percentage is being calculated.

(3) Resigned May 15, 1996.

(4) Includes shares which will be issued as part of a grant to all employees
in June 1996.  These include 33,333 shares for Mr. Eckstein; 30,000 shares for
Mr. Holloway; 15,556 shares for Mr. Schlosser; 29,722 shares for Mr. Palmer;
26,667 shares for Mr. Niebauer; and 174,115 shares for executive officers and
directors as a group.


SIGNIFICANT STOCKHOLDERS (at December 31, 1996):

                                   Shares         Shares
                                  Issuable       Issuable
                                    Upon           Upon                Percent
                       Shares    Exercise Of     Exercise    Total        Of
Names & Addresses       Owned    Convertible        Of       Shares     Class
                                    Notes        Warrants                (2)
                                                & Options

Walter T. Krumm
4951 Gulfshore Blvd.
Naples, FL 33940      8,741,616          0      5,669,332  14,410,948   30.0%

Gerald S. Jacobs (1)
6480 Busch Blvd.
Columbus, OH 43229      268,872    171,200      7,746,000   8,186,072   16.3%

M & M Capital Management
P.O. Box 309
Georgetown
Grand Cayman, Cayman
Islands, BWI          3,333,333          0              0   3,333,333    7.9%

(1)   Includes shares held by Standard Energy Company, of which Mr. Jacobs is
President and sole stockholder.

(2)   In calculating the percentage of ownership, in accordance with SEC
rules, the denominator includes number of shares outstanding plus shares
issuable to the individual or group whose percentage is being calculated.
The numerator also contains shares issuable to the individual or group
whose percentage is being calculated.


PART III, ITEM 13 - CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

Information in response to this Item 13 is included in Notes 3, 6, 7, 8, 9,
13, 14, 15, 16, and 18 to the accompanying consolidated financial statements
for the year ended December 31, 1996.


PART IV - EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K

(a)(1) Financial statements, footnotes, and accountants opinions are included
herein in PART II, ITEM 8.

(a)(2) Schedule II - "Valuation and qualifying accounts" for the years ended
December 31, 1996, 1995 and 1994 is included in PART II, ITEM 8.

(a)(3) The exhibits filed herewith are included in PART IV, ITEM 14(c) below.

(b) The Company filed the following reports on Form 8-K in the fourth quarter
of 1996:

Form 8-K dated November 13, 1996 related to settlement of a lawsuit, the
substance of a press release, and sales of equity securities pursuant to the
provisions of Regulation S.

Form 8-K dated December 16, 1996 related to sales of equity securities
pursuant to the provisions of Regulation S.

Form 8-K dated December 19, 1996 related to sales of equity securities
pursuant to the provisions of Regulation S.

Form 8-K dated December 31, 1996 related to disposition of a majority interest
in Coloray, and notice of the conversion of debt to 7,723,994 shares of common
stock by Walter Krumm.

In addition to those filed in the fourth quarter of 1996, the Company filed a
Form 8-K dated January 22, 1997 related to sales of equity securities pursuant
to the provisions of Regulation S.

(c) The index to exhibits begins on page    .

(d) Not applicable.

<PAGE>

























SIGNATURES

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

Scriptel Holding, Inc.

By: /s/ Bernard H. Eckstein
   Bernard, H. Eckstein, Chairman and Chief Executive Officer

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

Signature and Title                      Date


/s/ Bernard H. Eckstein
Bernard H. Eckstein                March 26, 1997
Director, and Chairman and Chief Executive Officer


/s/ J. Vance Holloway
J. Vance Holloway                  March 26, 1997
Director, and President and Chief Operating Officer


/s/ Philip A. Schlosser
Philip A. Schlosser                March 26, 1997
Director, and Executive Vice President-Research, and Secretary


/s/ Frederick A. Niebauer
Frederick A. Niebauer              March 26, 1997
Treasurer (Principal Financial and Accounting Officer)


















PART IV, ITEM 14(c) - INDEX TO EXHIBITS

The following Exhibits are filed herewith and made a part hereof:
                                                                  Sequential
                                                              Page Number or
                                                                Reference to
Exhibit                                                        Incorporation
Number    Description                                           By Reference

3(a)    Amended and Restated Articles of Incorporation              Ref.(7)
         of Scriptel Holding, Inc.

3(b)    Amended By-Laws of Scriptel Holding, Inc.                   Ref.(1)

4(a)    Specimen form of Common Stock Certificate                   Ref.(1)

4(b)    Form of Convertible Promissory Note and related Warrant     Ref.(1)

4(c)    Form of Patent Pledge Agreement between Scriptel and
         various lenders                                            Ref.(4)

4(d)    Secured Loan and Warrant Agreement between Registrant
         and Finance Tech, Inc., dated as of November 1, 1991       Ref.(1)

4(e)    Agreement between Scriptel and CommTech International
         and CommTech Technology Partners IV, dated as of
         December 31, 1993                                          Ref.(2)

4(f)    Stock Purchase Agreement between Scriptel and Samsung
         Display Devices Co., LTD.                                  Ref.(2)

4(g)    Letter agreement extending term of Secured Loan from
         Finance Tech                                               Ref.(4)

4(h) to 4(m)  (Intentionally left blank)

4(n)    Sample letter on reduction in option and warrant price.     Ref.(9)

4(o)    Letter agreement dated September 21, 1995 as amended
         February 29, 1996, between Scriptel Holding, Inc.,
         Standard Energy Company, and Gerald S. Jacobs,
         an individual.                                             Ref.(10)

4(p)    Letter agreement dated February 29, 1996 between
         Scriptel Holding, Inc., Standard Energy Company,
         and Gerald S. Jacobs, an individual.                       Ref.(10)

4(q)    Form of letter agreement on surrender of options
         or warrants                                                Ref.(14)

4(r)    Letter agreement dated March 29, 1996 between
         Scriptel Holding, Inc., Standard Energy Company,
         and Gerald S. Jacobs, an individual.                       Ref.(15)

4(s)    Letter from Kevin Woodbridge, approved by the Board
         on April 4, 1996.                                          Ref.(15)

4(t)    Form of convertible debenture dated December 16, 1996       Page

4(u)    Promissory note of Scriptel Holding, Inc. payable to
         Mission Court Properties, Inc., dated September 20, 1996   Page

10(a)   (Intentionally left blank)

10(b)   Letter Agreement, Cognovit Promissory Note, Security
         Agreement, and Patent Pledge Agreement relating to
         $450,000 loan to the Company to facilitate Coloray
         acquisition and related transfer of 28.8% of the
         Coloray stock.                                             Ref.(3)

10(c)   NCR Joint Technology Development Agreement dated
         July 28, 1992.                                             Ref.(1)

10(d)   Hardware Development and Technology Licensing Agreement
         between Apple Computer and Registrant as of
         November 1, 1991.                                          Ref.(1)

10(e)   1996 amendment to employment agreement with J. Vance
        Holloway, President of the Company                          Page    *

10(f)   Employment Agreement with J. Vance Holloway, President
         of Scriptel Corporation.                                   Ref.(4) *

10(g)   Employment Agreement with James W. France, Jr.,             Ref.(1) *
         President of the Company, as amended.                      Ref.(5) *

10(h)   Form of Employment Agreement with other officers.           Ref.(1) *

10(i)   (Intentionally left blank)

10(j)   1993 Stock Option Plan                                      Ref.(6) *

10(k)   1996 amendment to the 1993 Stock Option Plan                Page    *

10(l) and 10(m)  (Intentionally left blank)

10(n)   Development Agreement and License with Xetron
         Corporation.                                               Ref.(4)

10(o)   Employment Agreement between the Company and
         C. Edward Palmer III, Vice President and Chief
         Information Officer.                                       Ref.(4) *

10(p)   Amended and restated USDC Participation Agreement
         dated May 11, 1994 between the U.S. Display Consortium
         and Coloray Display Corporation                            Ref.(8)

10(q)   Cooperative Research and Development Agreement
         No. SC92/01148 between Sandia Corporation and
         Coloray Display Corporation, dated April 19, 1994          Ref.(8)

10(r)   Cooperative Research and Development Agreement
         No. 94- MULT-350-FP between several organizations and
         Coloray Display Corporation, dated December 19, 1994.      Ref.(8)

10(s)   Cooperative Research and Development Agreement
         No. SC94/01240 between two organizations and Coloray
         Display Corporation, version of January 26, 1994.          Ref.(8)

10(t)   Agreement to sell Ampsco Corporation's real estate to
         American Energy Services, Inc., dated June 30, 1995.       Ref.(11)

10(u)   License Agreement between SRI International and
         Coloray Display Corporation.                               Ref.(12)

10(v)   Stock Purchase Agreement, dated April 4, 1996 by
         1896, Inc., the buyer, and Scriptel Holding, Inc.,
         the seller, for the purchase of all of Ampsco
         Corporation's common stock, and related documents.         Ref.(15)

10(w)   Investment banking relationship agreement with Everest
         Securities, Inc.                                           Ref. (17)

10(x)   Securities Exchange Agreement between Scriptel Holding,
         Inc. and Walter T. Krumm, dated December 31, 1996          Ref. (16)

10(y)   Employment agreement between the Company and Frederick
         A. Niebauer, Treasurer                                     Page    *

16      Letter regarding change in certifying accountant            Ref. (13)

21      Subsidiaries of Scriptel Holding, Inc.                      Page

23(a)   Consent of Norman, Jones, Enlow & Co.  NOT FILED WITH THIS 10-K
                                              TO BE FILED BY AMENDMENT
23(b)   Consent of Coopers & Lybrand, L.L.P.   NOT FILED WITH THIS 10-K
                                              TO BE FILED BY AMENDMENT
27      Financial Data Schedule                                     Page

--
(1) Incorporated by reference to exhibit with same number filed with Form
10-SB, declared effective November 22, 1992 (SEC File No. 0-20271)

(2) Incorporated by reference to exhibit with same number filed with Form 8-K
on February 24, 1994 (SEC File No. 0-20271)

(3) Incorporated by reference to exhibit with the same number filed with Form
10- KSB for the year ended December 31, 1993.  (SEC File No. 0-20271)

(4) Incorporated by reference to exhibit with a Registration Statement
declared effective February 13, 1995 (Registration No. 33-81406)

(5) Incorporated by reference to exhibit with the same number filed with Form
10-QSB on November 14, 1994.

(6) Incorporated by reference to exhibit with the same number filed with Form
10-KSB for the year ended December 31, 1993.

(7) Incorporated by reference to exhibit with the number EX-3.(i) filed with
Form 10-Q for the period ended September 30, 1996 (SEC File No. 0-20938).

(8) Incorporated by reference to exhibit with the same number filed with Form
10-KSB/A for the year ended December 31, 1994 (SEC File No. 0-20271).

(9) Incorporated by reference to exhibit with the same number filed with Form
10-Q for the period ended September 30, 1995 (SEC File No. 0-20271).

(10) Incorporated by reference to exhibit with the same number filed with Form
8-K dated September 21, 1995 (SEC File No. 0-20271).

(11) Incorporated by reference to exhibit with the same number filed with Form
8-K dated July 27, 1995 (SEC File No. 0-20271).

(12) Incorporated by reference to exhibit with the same number filed with Form
10-Q for the period ended June 30, 1995 (SEC File No. 0-20271)

(13) Incorporated by reference to exhibit with the same number filed with Form
8-K/A dated August 14, 1995 (SEC File No. 0-20271).

(14) Incorporated by reference to exhibit with the same number filed with Form
10-K for the year ended December 31, 1995 (SEC File No. 0-20271).

(15) Incorporated by reference to exhibit with the same number filed with Form
8-K dated April 4, 1996 (SEC File No. 0-20271).

(16) Incorporated by reference to exhibit with the same number filed with Form
8-K dated December 31, 1996 (SEC File No. 0-20938).

(17) Incorporated by reference to exhibit with the same number filed with Form
10-Q/A for the period ended March 31, 1996 (SEC File No. 0-20271).

* Indicates management contract or compensatory plan or arrangement.















PART II, ITEM 7 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS

SCRIPTEL HOLDING, INC. AND SUBSIDIARIES

OVERVIEW

The Company has been in the research, development, and ultimately the
manufacturing and licensing business of pen-based computing products for over
ten years, through its wholly owned subsidiary, Scriptel Corporation.
However, the marketplace has only recently begun focusing on and identifying
broad based applications for pen-based computers, an area in which the Company
views its proprietary technology as critical and in which management considers
Scriptel primarily an early stage company.  In May 1996, the Company began
shipping development kits to potential customers of its cordless pen/touch
digitizer subsystem.  As the market continues to develop and pen-based
applications become more common, Scriptel's focus is expected to shift from
one principally based on the development of pen-based computer components to
commercialization of these products.  Based on current marketing forecasts of
original equipment manufacturers ("OEM") and licensee shipments and, in part,
upon the growth forecasted by industry experts for the pen-based computer
markets, management believes Scriptel will experience revenue growth
associated with its pen-based operating activities commencing in 1997.  The
Company has received notice from two OEMs that those manufacturers will use
the Company's patented WriteTouch (TM) technology in their new computer
notebook and tablet applications.  Due to the anticipated cost associated with
the completion of the research and development of the Company's products and
the ramp up of production, management cannot predict when the Company will
achieve profitable operations on a consolidated basis. 

Management believes that Scriptel's electrostatic system is the most viable
technology  currently available for electronic ink applications.  All the
other known technologies have either functionality or cost penalties that
render them non-competitive versus Scriptel's patented electrostatic coupling
technology.  There are some approaches that could result in a next generation
system, but they are in the early stages of research and development.
Scriptel is aware of these and is currently spending research and development
money to develop a next generation replacement for its current technology.  It
is estimated that the current electrostatic system will be highly competitive
for the next four to five years.

As the pen-based computer market experiences its anticipated growth, it is
anticipated that revenues from royalties and direct sales to OEM's will  be
the principal source of total revenue of the Company.  Additionally, Scriptel
anticipates its development of proprietary products for the mobile
communications markets will generate some future revenues.

In 1994 the Company acquired a majority of the outstanding shares of Coloray,
a company engaged principally in researching and developing flat-panel field
emission displays (FEDs) for use in conjunction with computers and other
sophisticated electronic applications.  Although management believes expanded
growth of Coloray is desirable, it believes that the Company cannot continue
to fund research and development for Coloray, and overall returns to
shareholders will be higher by concentrating its limited financial resources
on the pen computer market.  This is one of the reasons that in March 1996,
the Company decided to close down its Coloray operation and in December 1996
its investment in Coloray dropped below 50%.  Coloray is no longer a
consolidated subsidiary.  This is more fully described in the notes in the
accompanying consolidated financial statements.
  
During 1995 and 1996, management reevaluated the cost structure of Ampsco.
Certain aspects of Ampsco's business activities require significant capital,
labor and management commitment to compete effectively.  In 1994, the Company
decided that it would no longer supply the capital needed for Ampsco's highway
contracting division.  This division was sold in April 1994.  Ampsco requires
some major repairs and maintenance to its roof and equipment, and has a need
for additional equipment in order to remain competitive and become profitable.
In late 1995, the Company determined that it could not fund the required
repairs and capital improvements.  Because of this, and to cut the ongoing
losses of Ampsco, the Company sold the remaining machining division of Ampsco
on April 4, 1996.  Ampsco has been reported as a discontinued operation in the
accompanying financial statements.

RESULTS OF OPERATIONS FOR THE THREE YEARS ENDED DECEMBER 31, 1996

The consolidated statements of operations for the Company and its subsidiaries
include the results of operations for Coloray since date of acquisition in
April 1994 until the investment in Coloray dropped below 50% in December 1996.

                                1996               1995             1994

Sales                        $ 512,000          $ 230,000       $ 205,000
Licensing and
 development fees                   --            201,000         178,000
                              --------           --------         -------
Total revenues               $ 512,000          $ 431,000       $ 383,000
                              ========           ========        ========
Percent change from
the prior year                 18.8%               12.5%          (59.7%)

The Company operates as a single business segment, providing computer
peripheral equipment to OEMs.  The Company increased its sales of current
products in 1996 and 1995 due to higher demand for Scriptel's glass panels for
pen-based computer systems.  In 1993 the Company had $500,000 of licensing
revenues which was not repeated in 1994.  The $500,000 of licensing fee
revenues in 1993 resulted from the expiration of license conversion rights
relating to an OEM customer of Scriptel.  Development fees in 1994 and 1995
stemmed from partial funding of Coloray development efforts by outside
companies.  There were no development fees in 1996.

                                   1996              1995          1994
Cost of Sales                    $410,000         $360,000      $615,000
Percent change
from the prior year                13.9%           (41.5%)         5.9%

The year-to-year fluctuations in cost of sales generally follow the change in
revenues.  In 1995, Scriptel scrapped the inventory of a product line which
had been terminated.  The net cost of $60,000 was expensed as cost of sales in
1995.  Scriptel recorded a similar charge in 1994.  Since Scriptel's
activities have been principally oriented to research and development, gross
margins have remained relatively low due to the unabsorbed burden caused by
the minimal level of manufacturing volume and the direct costs of excess
capacity.

                                          1996            1995         1994

General and administrative expenses   $6,125,000      $3,708,000   $6,809,000
Sales and marketing expenses             214,000         258,000      320,000
Research and development expenses      4,048,000       5,117,000    7,368,000

In 1994, general and administrative expenses increased substantially.  This
increase was due principally to addition to the Company's management,
increased use of outside consultants, and the inclusion of the general and
administrative expenses of Coloray for the period since acquisition.  During
late 1993 and early 1994, the Company substantially broadened its executive
and supporting staffs to meet the increased management demands related to the
acquisition of Coloray and the anticipated emergence of the pen-based
computing market place.  During this period, the Company added several senior
officers and supporting staffs.  The Company also increased its use of outside
consultants in this period to hire the staff, evaluate the Company's products
and its competitors' products, and to perform financial public relations
services.  Certain members of management, employees and certain outside
consultants received stock, compensatory stock options, or repriced stock
options to attract them to the Company or to pay for their services.  The fair
value of the stock or options at the date of issuance, $2,492,000 in 1996,
$180,000 in 1995, and $2,001,000 in 1994, was expensed when all restrictions
had lapsed.  The 1996 administrative expenses also include $400,000 of costs
on the closure of Coloray, $353,000 of severance costs, and $220,000 of legal
costs or costs of lawsuit settlements.  The Company lowered its general and
administrative expenses in late 1995 by reducing staff at Coloray and
Scriptel, and reducing use of consultants.
                                                                              
Sales and marketing expenses have been reduced in 1994, 1995 and 1996.

Research and development expenses have increased significantly in the last few
years.  Most of the amounts reported in 1996 and 1995 related to the research
efforts of Coloray.  The Company expanded its development efforts in pen-based
computer technologies and, with the Coloray acquisition, entered FED research.
Management anticipates that such costs will continue for Scriptel, but
Coloray's ongoing costs have now dropped to zero.  Research and
development expenses also include unfunded costs of research agreements with
Xetron (by Scriptel) and SRI (by Coloray), and Cooperative Research and
Development Agreements (by Coloray).  Cash payments on research and
development will increase, as the Company funds Scriptel's research agreement
obligations.  In 1995, the Company expensed $425,000 of fair value of stock
options issued to research and development consultants.  In 1996, Coloray
accrued the full remaining $2,036,000 of Coloray's research commitments as
part of the costs of closure of Coloray.  The Company is working on reducing
these commitments.  Approximately $3,357,000 of the costs associated with the
acquisition of Coloray in 1994 related to purchased research and development
projects in progress which were charged to expense at the date of acquisition.


                              1996                1995             1994

Other Expenses            $5,679,000         $5,182,000         $1,496,000

Other expenses include interest expense of $1,156,000, $1,967,000, and
$1,261,000 in 1996, 1995, and 1994, respectively.  Other expense also includes
finance costs of $4,255,000 in 1996, $2,958,000 in 1995 and $636,000 in 1994.
Interest expense reflects high levels of debt financing and, in 1995 and 1994,
included $720,000 and $880,000, respectively, related to the value of options
transferred to noteholders as an inducement for them to loan funds to the
Company or as additional interest compensation.  Interest expense in 1996
included stated interest of $242,000 on new demand notes totaling $672,000 of
principal.  Finance expenses in 1994 related principally to the transfer of a
28.8% interest in Coloray to the noteholders who financed part of the
acquisition.  (See Note 15 to the accompanying financial statements).  Finance
expenses in 1996 and 1995 included $2,193,000 and $720,000, respectively, in
value of stock or options surrendered as compensation on new financing.  They
also included cash costs of new financing, and $1,502,000 in 1996 and
$2,256,000 in 1995 as the difference in value at the date of the transaction
or at the date of conversion between conversion prices on debentures and notes
issued in 1996 or 1995 and the market price of the Company's common shares.

Income from minority interest of $65,000 in 1995 and $517,000 in 1994
represents the portion of the net loss of Coloray from the date of acquisition
through year end that is allocable to the minority stockholders of Coloray.
Early in 1995, minority interest was reduced to zero; therefore, during the
remainder of 1995 and until December 1996, the Company incurred 100% of the
losses of Coloray in its consolidated statement of operations.

In 1996 the Company sold Coloray's property and equipment at auction, and
eliminated its leasehold improvements, resulting in a loss from disposition of
assets of approximately $300,000.  The Company also recognized a $105,000 gain
from sale of its Ampsco subsidiary in 1996.  In 1995 the Company sold Ampsco's
land and buildings to a related party (see Note 7) and issued 700,000 warrants
to the buyer of the property as part of the sale.  The value of the warrants,
$350,000, is the primary component of the loss on sale of assets of $323,000
in 1995. 

                                           1996           1995          1994

Discontinued operations:
  Loss from operation of Ampsco            $   --     $(507,000)    $(705,000)
  Loss on disposal of Ampsco                   --      (448,000)           --
                                           ------      --------     ---------
Total loss from discontinued operations    $   --     $(955,000)    $(705,000)
                                           =======     =========     =========

Ampsco has had continuing losses from operations since acquisition, and at
December 31, 1995 had an accumulated deficit in stockholders equity of
approximately $2.2 million.  The Company determined that it could not fund the
required repairs and capital improvements needed for Ampsco to remain
competitive and become profitable.  Because of this, and to cut the ongoing
losses and to focus the Company on the computer peripheral segment, in April
1996 the Company sold all of the Common Stock of Ampsco to a related party.
See Note 18 to the accompanying consolidated financial statements for a more
complete description of the transaction.                                      
                                
The Company has treated the sale as a discontinued operation.  Consequently,
Ampsco's results are excluded from the accompanying balance sheet at December
31, 1996 and 1995 and from the loss from continuing operations shown on the
accompanying statements of operations for 1996, 1995 and 1994.  The Company
recorded a loss of $448,000 on the disposal of Ampsco primarily because the
Company was contractually liable on certain of Ampsco's debts.  The loss from
operations of Ampsco in 1995 included a loss of $286,000 from sale of Ampsco's
land and buildings in 1995.
                                                                         

Extraordinary Item:

In December 1996, the Company's investment in Coloray dropped below 50% and
Coloray ceased to be a consolidated subsidiary.  The Company recognized an
extraordinary gain of $4,017,000 in 1996 because of elimination of Coloray's
separate liabilities from the December 31, 1996 balance sheet.  This was
primarily due to the elimination of Coloray's payables to SRI, on CRADAs, and
on its notes and accounts payable.  See Note 15 to the accompanying
consolidated financial statements for a more complete description.


LIQUIDITY AND CAPITAL RESOURCES

The Company's financial condition, the risk of liquidation if its current
financing efforts are unsuccessful, and its severe liquidity problems are
outlined in the accompanying notes to the consolidated financial statements.
The Company has funded its operations primarily through the sale of common
stock, the issuance of debt instruments with common stock conversion features,
and private, institutional and bank financing.  As of December 31, 1996, the
Company's stockholders had paid or surrendered in value $51,489,000 to acquire
42,299,512 shares of common stock and to obtain the outstanding options and
warrants.  In addition, $4,821,000 of notes payable and debentures were
outstanding as of December 31, 1996, and accrued interest on notes was
$1,475,000 at that date.  From inception of the Company through December 31,
1996, the Company has incurred an accumulated deficit of $62,505,000.

The Company had current liabilities in excess of current assets of
approximately $11,200,000 at December 31, 1996.  This has occurred due to
cumulative operating losses being financed by the issuance of notes payable
and other liabilities.

Several debt and equity transactions occurred in 1996 and to date in 1997.
(See notes to the consolidated financial statements).  Management believes
that these recently concluded private placements of debt and equity securities
are not sufficient to finance the Company's planned operating, development and
capital expenditures for 1997 and to repay defaulted indebtedness.  Management
has cut back on operating and development activities, and anticipates further
reductions.  Management also intends to seek additional financing through
other private placements of debt, convertible debt and/or common stock to fund
such activities.

In October, shareholders approved a substantial increase in the Company's
authorized shares.  There can be no assurance that such shares could be sold,
nor that the proceeds from such sales or other financing activities will be
sufficient to fund operating activities and repayment of defaulted
indebtedness.  If funds received are insufficient, then the Company's ability
to continue as a going concern could be adversely affected, and the Company
may have to liquidate.

Management believes that Scriptel will experience revenue growth associated
with its pen- based operating activities commencing in 1997, and anticipates
that this revenue growth will help provide for Scriptel's working capital
needs on an ongoing basis after 1997.

The Company's independent accountants have included a paragraph in their
report, stating that the Company's financial statements as of December 31,
1996 and for the periods then ended have been prepared assuming that the
Company will continue as a going concern and that the Company's recurring
losses from operations, net working capital deficiency and need for immediate
financing to fund operations raise substantial doubt about its ability to
continue as a going concern.  See Notes 1, 2, and 3.


ADOPTION OF ACCOUNTING STANDARDS

The Financial Accounting Standards Board has issued SFAS No. 123, "Accounting
for Stock Compensation."  The Company adopted this statement in 1996.  The
effects of this pronouncement on the consolidated financial statements are
outlined in Note 8.

INFLATION AND ECONOMIC CONDITIONS

Management believes that the effect of inflation on the Company's operations
is not material.  The Company does not have long-term contracts requiring
performance at fixed rates.  Accordingly, management believes it will be able
to pass through to its customers most cost increases resulting from inflation.
                                                                         
<PAGE>

PART II, ITEM 8 - FINANCIAL STATEMENTS                                Page

Opinion of Independent Accountants          THE AUDITOR'S OPINION IS NOT
INCLUDED WITH THIS FORM 10-K.  IT WILL BE FILED BY AMENDMENT WHEN IT IS
RECEIVED.  BECAUSE OF THE LACK OF AN OPINION, ALL OF THE FINANCIAL STATEMENTS
ENCLOSED HEREIN ARE UNAUDITED.
Consolidated Balance Sheets as of December 31, 1996 and 1995
Consolidated Statements of Operations for the years ended
  December 31, 1996, 1995, and 1994
Consolidated Statements of Changes in Stockholders' Deficit
  for the years ended December 31, 1996, 1995, and 1994
Consolidated Statements of Cash Flows for the years ended
  December 31, 1996, 1995, and 1994
Notes to Consolidated Financial Statements
<PAGE>          

Scriptel Holding, Inc. and Subsidiaries
CONSOLIDATED BALANCE SHEETS
                                                  December 31,    December 31,
                                                      1996             1995
                                                   ---------        ---------
Assets
Current assets:
  Cash and cash equivalents                         $  1,000       $  51,000
  Trade accounts receivable, net of allowance for
    doubtful accounts of $3,000 in 1996 and 1995      75,000          65,000
  Inventories                                         59,000           2,000
  Other current assets                                 6,000           2,000
                                                  ------------    -----------
      Total current assets                           141,000         120,000

Property and equipment, net                          592,000         947,000
Patents, net                                             ---         184,000
Deposits                                                 ---         122,000
Other assets                                             ---          88,000
                                                  ------------    -----------
      Total assets                                $  733,000     $ 1,461,000
                                                  ============    ==========

Liabilities and Stockholder's Deficit
Current liabilities:
  Notes and debentures payable                   $ 4,451,000      $ 4,741,000
  Accounts payable                                 1,057,000        1,681,000
  Accrued interest                                 1,475,000          855,000
  Other accrued liabilities                        4,396,000        3,247,000
                                                  -----------     -----------
    Total current liabilities                     11,379,000       10,524,000

Notes and debentures payable, long-term              370,000        1,000,000

Commitments and contingencies

Stockholders' deficit:
  Common stock, $0.10 par value,
   125,000,000 shares authorized in 1996,
   50,000,000 shares authorized in 1995:
    42,299,512 and 21,058,217 shares issued
    and outstanding at December 31, 1996 and
    1995, respectively                             4,230,000        2,106,000
  Additional paid in capital                      47,259,000       38,529,000
  Accumulated deficit                            (62,505,000)     (50,558,000)
  Notes receivable - stockholders                        ---         (140,000)
                                                 ------------     -----------
    Total stockholders' deficit                  (11,016,000)     (10,063,000)
                                                 ------------     -----------
  Total liabilities and stockholders' deficit     $  733,000      $ 1,461,000
                                                 ============     ===========

The accompanying notes are an integral part of the financial statements.
<PAGE>
Scriptel Holding, Inc. and Subsidiaries
CONSOLIDATED STATEMENTS OF OPERATIONS
Years ended December 31,                      1996         1995         1994
                                           --------     --------     --------
Revenues:
  Sales                                    $512,000     $230,000     $205,000
  Licensing and development fees                ---      201,000      178,000
                                          ---------    ---------     --------
    Total revenues                          512,000      431,000      383,000
Cost of sales                               410,000      360,000      615,000
                                          ---------    ---------     --------
                                            102,000       71,000     (232,000)
Costs and expenses:
  General and administrative              6,125,000    3,708,000    6,809,000
  Sales and marketing                       214,000      258,000      320,000
  Research and development                4,048,000    5,117,000    7,368,000
                                         ----------    ---------   ----------
    Total costs and expenses             10,387,000    9,083,000   14,497,000
                                         ----------   ----------   ----------
    Loss from operations                (10,285,000)  (9,012,000) (14,729,000)

Other expense (income):
  Interest expense                        1,156,000    1,967,000    1,261,000
  Finance charge                          4,255,000    2,958,000      636,000
  Other expense, net                         12,000          ---       70,000
  Loss on disposition of assets             209,000      323,000          ---
  Interest income                               ---       (1,000)     (32,000)
  Write-down of investments                  47,000          ---       78,000
  Minority interest                             ---      (65,000)    (517,000)
                                         -----------  -----------  -----------
    Total other expense                   5,679,000    5,182,000    1,496,000
                                         -----------  -----------  -----------
  Loss from continuing operations
   before extraordinary item            (15,964,000) (14,194,000) (16,225,000)

Discontinued operations:
  Loss from operations of Ampsco                ---     (507,000)    (705,000)
  Loss on disposal of Ampsco                    ---     (448,000)         ---
                                        ------------  -----------  -----------
 Total loss from discontinued operations        ---     (955,000)    (705,000)
                                        ------------  -----------  -----------

  Loss before extraordinary item        (15,964,000) (15,149,000) (16,930,000)

Extraordinary item -- income from
 elimination of Coloray liabilities       4,017,000          ---          ---
                                       ------------   -----------  -----------
   Net loss                            $(11,947,000)$(15,149,000)$(16,930,000)
                                       ============   ===========  ==========


The accompanying notes are an integral part of the financial statements.

                             -Continued-
Scriptel Holding, Inc. and Subsidiaries
CONSOLIDATED STATEMENTS OF OPERATIONS, Continued

Years ended December 31,                      1996         1995         1994
                                           --------     --------     --------
Income (loss) per share of common stock:
  Continuing operations                      $(0.64)      $(0.81)      $(1.27)
  Discontinued operations                        --        (0.05)       (0.05)
  Extraordinary item                            .16           --           --
                                           ---------     --------     --------
    Net loss per share                       $(0.48)      $(0.86)      $(1.32)
                                           =========     ========     ========
Weighted average number of common shares
  used in computing net loss per share    25,132,182   17,519,171   12,785,243
                                          ==========   ==========   ==========

The accompanying notes are an integral part of the financial statements.    




































<PAGE>
Scriptel Holding, Inc. and Subsidiaries
CONSOLIDATED STATEMENTS OF CASH FLOWS
              
Years ended December 31,                      1996         1995         1994
                                          --------     ---------    ---------
Cash flows from operating activities:
Net loss                               $(11,947,000)$(15,149,000)$(16,930,000)
Adjustments to reconcile net loss to
 cash used in operating activities:
  Depreciation and amortization            263,000       690,000      532,000
  Non-cash compensation                  2,681,000       677,000    2,180,000
  Non-cash interest expense                 45,000     1,282,000      880,000
  Non-cash lawsuit settlement              210,000           ---          ---
  Inventory reserves                           ---        20,000       60,000
  Write down of investments                 47,000           ---       78,000
  Loss on disposition of assets            165,000       610,000       89,000
  Acquired research and development expense    ---           ---    3,357,000
  Non-cash finance charges               3,634,000     2,695,000      582,000
  Extraordinary item                    (4,017,000)          ---          ---
  Minority interest in subsidiary loss         ---       (65,000)    (517,000)
  Changes in certain assets and liabilities:
    Trade accounts receivable              (10,000)      115,000      505,000
    Inventories                            (57,000)      122,000      136,000
    Deposits and other assets              159,000        26,000      (41,000)
    Accounts payable                        29,000       696,000      361,000
    Accrued interest                       919,000       611,000       62,000
    Other accrued liabilities            5,053,000     2,001,000      828,000
                                        ----------      ---------    ---------
 Net cash used in operating activities  (2,826,000)   (5,669,000)  (7,838,000)

Cash flows from investing activities:
  Acquisition of Coloray Display Corporation   ---           ---     (580,000)
  Purchase of investments                      ---           ---     (125,000)
  Sale of restricted short-term investment     ---           ---      992,000
  Purchase of property and equipment      (308,000)     (420,000)    (280,000)
  Sale of property and equipment           289,000       211,000      113,000
  Disposal of assets held for sale             ---       548,000      346,000
  Purchase of patents                          ---       (22,000)      (4,000)
                                          ---------     ---------    ---------
  Net cash provided by (used in)
    investing activities                   (19,000)      317,000      462,000



The accompanying notes are an integral part of the financial statements.

                                                        -continued-






<PAGE>
Scriptel Holding, Inc. and Subsidiaries
CONSOLIDATED STATEMENTS OF CASH FLOWS, continued
              
Years ended December 31,                      1996         1995         1994
                                           --------    ---------   ----------
Cash flows from financing activities:
  Proceeds from notes payable            2,667,000    5,398,000    4,021,000
  Repayment of notes payable              (633,000)  (1,209,000)  (3,536,000)
  Proceeds from the issuance of stock      761,000    1,153,000    6,413,000
  Receipt of short swing profits from
    related parties, and other                 ---       30,000       69,000
                                         ----------   ----------   ----------
 Net cash provided by
   financing activities                  2,795,000    5,372,000     6,967,000
                                         ----------   ----------   ----------
Increase (decrease) in cash and 
      cash equivalents                     (50,000)      20,000      (409,000)

Cash and cash equivalents, at the
  beginning of the year                     51,000       31,000       440,000
                                         ----------    ---------      --------
Cash and cash equivalents, at the
  end of the year                          $ 1,000     $ 51,000      $ 31,000
                                           ========     ========     ========

Supplemental disclosures of cash flow information:
 Cash paid during the year for interest   $ 89,000     $137,000      $413,000
                                          ========     ========      ========

Supplemental schedule for non-cash financing and investing activities:
Debt conversion and use of debt to exercise options and warrants:
  Decrease in notes payable             $3,219,000   $3,142,000      $111,000
  Decrease in accounts payable             205,000       85,000        15,000
  Decrease in accrued interest             284,000      125,000         8,000
  Increase in common stock              (1,790,000)    (467,000)       (5,000)
  Increase in additional paid-in-capital(1,918,000)  (2,885,000)     (129,000)
                                        -----------   ----------    ----------
      Net effect on cash                        $0           $0            $0
                                              =====        =====         =====
Acquisition of Coloray Display Corporation:
  Increase in property and equipment           ---          ---    $1,416,000
  Increase in patents                          ---          ---       197,000
  Increase in common stock                     ---          ---      (125,000)
  Increase in additional paid-in-capital,
   including the value of 1,640,000
   options issued for the Coloray
   acquisition                                 ---          ---    (3,387,000)
  Research and development expense             ---          ---     1,899,000
                                             ------   ---------     ---------
    Net effect on cash                         ---          ---            $0
                                             ======       =====     =========
              
The accompanying notes are an integral part of the financial statements.   
  -continued-
<PAGE>
Scriptel Holding, Inc. and Subsidiaries
CONSOLIDATED STATEMENTS OF CASH FLOWS, continued
Supplemental schedule for non-cash financing and investing activities:

In 1994, the Company transferred 28.8% of Coloray's common stock to two major
stockholders of the Company in partial consideration for loans from those
stockholders to finance part of the acquisition of Coloray.  The Company
recognized a minority interest in Coloray of $582,000 and also recognized a
non-cash finance charge of $582,000 related to this transfer.

In 1994, the Company issued a note payable of $105,000 to purchase machinery
and equipment, and the Company issued a note payable of $399,000 to a supplier
to settle the accounts payable with that supplier.  In 1995, the Company
issued a note payable of $37,000 to a supplier to settle the accounts payable
with that supplier.  In 1996, the Company issued a note payable of $280,000 to
the landlord of Coloray to settle unpaid lease costs and costs of the
environmental clean up of the Coloray facility.

In 1994, the Company issued compensatory stock, stock options and warrants as
follows: 300,000 warrants on sales of common stock (no value assigned),
680,000 options on debt financings (value of $317,000 treated as interest
expense), 7,000 shares of stock and 2,655,050 options as compensation to
officers, directors and consultants (value of $1,921,000 treated as
administrative expense).  In 1995, the Company issued compensatory stock,
stock options, and warrants as follows:  170,000 shares of stock, 7,000
options and 2,818,656 warrants as additional compensation to debt holders
(value of $438,000 treated as finance charge and value of $1,282,000
treated as interest expense); 40,000 shares of stock, 4,191,450 options and
94,610 warrants as compensation to officers, directors and consultants
(value of $252,000 treated as administrative expense and value of $425,000
treated as research and development expense); and 700,000  warrants to the
buyer of Ampsco's land and buildings (value of $350,000 treated as other
expense).  In 1996, the Company had these non-cash transactions relating to
stock, stock options and convertible debt:  issued 258,333 shares and
21,946,578 stock options and warrants, net, to officers, directors, employees,
creditors, and consultants; repriced and extended a total of 16,503,334 stock
options and warrants; cancelled and reissued a total of 2,953,125 stock
options and warrants; repriced certain convertible debt; and issued 750,000
shares to settle a lawsuit.  The Company recorded the combined value of these
transactions as administrative expense ($2,492,000); finance charges
($2,152,000); and loss on sale of assets ($34,000).

In 1994, options to purchase a total  of 1,218,200 shares of common stock
were transferred from an officer of the Company to note holders as an
inducement to loan funds (options for 1,078,200 shares) and to a consultant
for services rendered (options for 140,000 shares).  See Notes 4 and 7. 
These options were valued at $563,000 treated as interest expense, and
$104,000 treated as administrative expense, respectively.


The accompanying notes are an integral part of the financial statements.   
  -continued-

<PAGE>
Scriptel Holding, Inc. and Subsidiaries
CONSOLIDATED STATEMENTS OF CASH FLOWS, continued
Supplemental schedule for non-cash financing and investing activities:

In 1996 and 1995, the Company recognized finance charges of $1,502,000 and
$2,256,000, respectively, on the conversion of convertible debentures.  This
amount represented the difference in value between the market price of the
common stock and the conversion price on the date of issuance or conversion.

As part of a separation agreement with the Company's former Chairman, in 1996
the Company cancelled all notes receivable (approximately $150,000) and
advances receivable (approximately $100,000) from the individual.





The accompanying notes are an integral part of the financial statements.    

<PAGE>              
               

































Scriptel Holding, Inc. and Subsidiaries
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' DEFICIT
              
Years ended December 31, 1994, 1995, and 1996
                                                                           
                                                                   Additional
                                             Common      Common      Paid-in
                                             Shares       Stock      Capital
                                           --------    ---------   ----------
Balance, December 31, 1993               10,638,138  $1,064,000   $17,015,000
Sale of common stock, net                 2,200,311     220,000     4,371,000
Stock and options issued in the
 acquisition of Coloray                   1,254,131     125,000     3,387,000
Stock or options issued as compensation       7,000       1,000     2,904,000
Conversion of notes and accounts
 payable to common stock                     52,747       5,000       129,000
Exercise of warrants for common stock,
 less 795 shares received in partial
 payment and cancelled                       42,634       4,000        64,000
Exercise of options for common stock      1,039,177     104,000     1,650,000
Return of short swing profits                   ---         ---        58,000
Collections on notes receivable                 ---         ---           ---
Net loss                                        ---         ---           ---
                                          ---------     --------  -----------
Balance, December 31, 1994               15,234,138   1,523,000    29,578,000
Stock or options issued as compensation     211,000      21,000     2,426,000
Conversion of notes and accounts
 payable to common stock                  4,269,671     428,000     5,231,000
Exercise of warrants for common stock       870,122      87,000       759,000
Exercise of options for common stock        473,286      47,000       510,000
Return of short swing profits                   ---         ---        30,000
Write off notes receivable                      ---         ---        (5,000)
Net loss                                        ---         ---           ---
                                         ----------    ---------   ----------
Balance, December 31, 1995               21,058,217   2,106,000    38,529,000
Sale of common stock, net                 2,054,500     206,000       421,000
Stock or options issued as compensation     272,394      27,000     6,287,000
Conversion of notes and accounts
 payable to common stock                 17,563,810   1,756,000     1,787,000
Exercise of warrants for common stock       210,507      21,000        85,000
Exercise of options for common stock      1,140,084     114,000       290,000
Write off notes receivable                      ---         ---      (140,000)
Net loss                                        ---         ---           ---
                                         ----------    ---------   ----------
Balance, December 31, 1996               42,299,512  $4,230,000   $47,259,000
                                         ==========   =========    ==========
The accompanying notes are an integral part of the financial statements. 

 -continued-
<PAGE>




Scriptel Holding, Inc. and Subsidiaries
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' DEFICIT, continued

Years ended December 31, 1994, 1995, and 1996
                                                                           
                                                       Notes        Total
                                      Accumulated  Receivable    Stockholders'
                                       Deficit    Stockholders     Deficit
                                      -----------  -----------   ------------
Balance, December 31, 1993          $(18,479,000)   $(156,000)      $(556,000)
Sale of common stock, net                    ---          ---       4,591,000
Stock and options issued in the
 acquisition of Coloray                      ---          ---       3,512,000
Stock or options issued as compensation      ---          ---       2,905,000
Conversion of notes and accounts
 payable to common stock                     ---          ---         134,000
Exercise of warrants for common stock,
 less 795 shares received in partial
 payment and cancelled                       ---          ---          68,000
Exercise of options for common stock         ---          ---       1,754,000
Return of short swing profits                ---          ---          58,000
Collections on notes receivable              ---       11,000          11,000
Net loss                             (16,930,000)         ---     (16,930,000)
                                      ----------     ---------    ------------
Balance, December 31, 1994           (35,409,000)    (145,000)     (4,453,000)
Stock or options issued as compensation      ---          ---       2,447,000
Conversion of notes and accounts
 payable to common stock                     ---          ---       5,659,000
Exercise of warrants for common stock        ---          ---         846,000
Exercise of options for common stock         ---          ---         557,000
Return of short swing profits                ---          ---          30,000
Write off notes receivable                   ---        5,000               0
Net loss                             (15,149,000)         ---     (15,149,000)
                                      ----------      --------    -----------
Balance, December 31, 1995           (50,558,000)    (140,000)    (10,063,000)
Sale of common stock, net                    ---          ---         627,000
Stock or options issued as compensation      ---          ---       6,314,000
Conversion of notes and accounts
  payable to common stock                    ---          ---       3,543,000
Exercise of warrants for common stock        ---          ---         106,000
Exercise of options for common stock         ---          ---         404,000
Write off notes receivable                   ---      140,000               0
Net loss                             (11,947,000)         ---     (11,947,000)
                                      ----------      --------    -----------
Balance, December 31, 1996          $(62,505,000)       $   0    $(11,016,000)
                                     ============    =========    ===========

The accompanying notes are an integral part of the financial statements.
<PAGE>





Scriptel Holding, Inc.
and Subsidiaries    

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1. GOING CONCERN BASIS OF PRESENTATION:

The consolidated financial statements include the accounts of Scriptel
Holding, Inc. and its wholly-owned subsidiaries, Scriptel Corporation 
("Scriptel"), and Scriptel Communications Corp. ("Scriptcom"), (collectively
known as "the Company" ).  Another former wholly-owned subsidiary, Ampsco
Corporation ("Ampsco") has been reported as a discontinued operation, and was
sold in April 1996.  (See Note 18).  Until late in 1996, the Company also had
a consolidated majority-owned subsidiary, Coloray Display Corporation
("Coloray"), a development stage company.  This investment dropped below 50%
at December 31, 1996.  (See Note 15).  Neither Ampsco nor Coloray is
consolidated in the accompanying balance sheet as of December 31, 1996.  All
significant intercompany transactions have been eliminated.  The disposal of
Ampsco and Coloray enabled the Company to focus on its core pen/touch
technology and related Scriptel products.

Scriptel has developed and licensed certain technology to various
manufacturers and suppliers engaged in pen-based computer product development;
however, Scriptel has not earned significant royalties to date.  Scriptel's
future revenue growth is partially dependent on royalties provided under these
license agreements.

The accompanying consolidated financial statements have been prepared on a
going-concern basis, which contemplates the realization of assets and the
satisfaction of liabilities in the normal course of business.  Scriptel
Holding, Inc. and each of its subsidiaries have incurred recurring losses from
operations and resulting cash flow problems since inception.  Management's
plan for meeting obligations as they come due is summarized below.

Management is seeking additional financing through other public or private
placements of debt, convertible debt and or common stock to fund its
activities.  There can be no assurance that the Company will be able to obtain
such funds, that such funds obtained will be sufficient, or that the Company
will be able to meet or restructure its debt obligations as they come due.  If
the funds are not received, management plans to cut back further on its
planned research and development and capital expenditures, which could
jeopardize the timing and ultimate completion of certain critical projects.
Completion of these projects and further market development for Scriptel's
products are necessary for the Company to achieve profitable operations.

At December 31, 1996, the Company was in default on approximately $2.8
million of its notes and interest payable (of which approximately $1.0 million
have been demanded), and in arrears over 60 days on trade accounts payable
totaling approximately $0.9 million.  In addition, approximately $2.2 million
of notes payable were represented by demand cognovit notes at December 31,
1996.  At December 31, 1996 the Company had a reported deficit in equity of
approximately $11.0 million.  The Company is currently attempting to negotiate
new terms with certain debt holders, as well as to seek the execution of
conversion privileges on convertible notes.  See Note 16 for a summary of the
significant financing activities by the Company subsequent to December 31,
1996.

At December 31, 1996, the Company was a party to legal proceedings brought by
several creditors.  (See Note 3 for a summary of litigation issues.)
Subsequent to December 31, 1996, several additional creditors threatened legal
action against the Company to collect amounts due and payable.  The Company
has successfully deferred, for the present, legal action by other creditors
and has made some partial payments on the amounts due.  There can be no
assurance, however, that the creditors will not hereafter seek other remedies
that might result in the Company ceasing to be a going concern.

If the Company is unable to obtain additional funding, and meet or restructure
its debt obligations as they come due, there would be a substantial likelihood
that it could not proceed as a going concern.  The consolidated financial
statements do not include any adjustments relating to the recoverability and
classification of recorded asset amounts or the amounts and classification of
liabilities that might be necessary should the Company be unable to continue
as a going concern.

2. RISK OF LIQUIDATION (UNAUDITED):

Due to the Company's history of operating losses and immediate need for
additional capital, there is a risk that the Company will have to liquidate.
Substantially all of the Company's assets, including patents, are pledged as
collateral on certain of the Company's debt instruments.  If the Company were
forced into liquidation, it is likely that all of the assets would be used to
settle the claims of secured creditors and none, except possibly some of the
value of the patents, would be available to other creditors.  If the Company
were to liquidate, management estimates that the realizable value of the
Company's property and equipment would be substantially less than the carrying
values of those assets at December 31, 1996, and the realizable value of the
Company's other assets, except patents, would be less, but would not be
materially different than the reported values for those assets at December 31,
1996.  It is also management's estimate that the value of the Company's
patents would be higher than their recorded value at December 31, 1996.  The
valuation of assets necessarily requires many estimates and assumptions.  The
actual value of assets if liquidation were to occur would depend on a variety
of factors, including finding interested buyers, the timing of any sales,
sales commissions and selling costs, operating losses incurred to the date of
any sale, and the forced nature of the sale.  Management considered these
factors in developing its estimate of realizable values if liquidation were to
occur.  The Company has not had a current outside appraisal of the assets made
because it is management's intention to continue to operate the Company on a
going concern basis.  Management's estimate of realizable value on liquidation
of current assets is approximately $100,000, compared to a carrying value at
December 31, 1996 of $141,000.  Management's estimate of realizable value on
liquidation of property and equipment is approximately $300,000, compared to a
carrying value at December 31, 1996 of $592,000.  Excluding patents, for
which an appraisal is not available and management is otherwise unable to
reasonably estimate value, management's estimates of realizable value on
liquidation of all assets is approximately $400,000, compared to a carrying
value of all assets of $733,000 at December 31, 1996.  At that date, the
Company's recorded liabilities totaled approximately $11,750,000.  The Company
also has other contractual commitments (see Note 14).  

If the Company could continue as a going concern and achieve profits, the
Company could realize substantial savings from the use of its net operating
loss carryforwards to offset future taxable income.  If the Company were
liquidated, it is unlikely that any benefit would be realized from these tax
loss carryforwards.

3. LEGAL PROCEEDINGS:

During 1996, the Company settled former litigation entitled "Nicholas G.
Venetis vs. Scriptel Corporation and Scriptel Holding, Inc." by entering into
a consulting agreement with Mr. Venetis and issuing warrants to him; and also
settled former litigation entitled "Michael W. Blas, M. Kathy Vieth, and
Daniel J. Devine vs. Coloray Display Corporation and Scriptel Holding, Inc."
through issuance of 750,000 shares to the plaintiffs and cancellation of all
their options.

The Company is a defendant in several legal actions brought by creditors to
collect amounts due.

On September 6, 1995, a promissory note holder filed suit in the Circuit Court
of Cook County, Illinois, entitled "Stimsonite Corporation vs. Scriptel
Holding, Inc.", for collection of principal, interest and other charges on a
note; these total approximately $515,000 at December 31, 1996.  Stimsonite
Corporation received a judgement against the Company in Illinois in November
1995, and domesticated the judgement against the Company in Ohio in February
1996.  The Company is attempting to negotiate a resolution with the creditor.

A creditor filed suit against the Company in February 1996 in the Court of
Common Pleas, Franklin County, Ohio, entitled "Financetech, Inc. vs. Scriptel
Holding, Inc.", for collection of a debt and accrued interest which total
approximately $650,000 at year end.  The Company has filed a counterclaim
against the creditor and its parent company, Apple Computer, Inc., for amounts
of royalty that the Company feels is due it from the creditor, and has
requested the court to offset the note payable by the amount of royalty due.
This action is pending, with an initial court date set for summer 1997.

In February 1997, the Company was named as a defendant in a suit for trademark
infringement.  The suit was filed in the United States District Court, Central
District of California, Western Division, and is entitled "NMB Technologies,
Inc. vs Symbios Logic, Inc. and Scriptel Corporation".  NMB Technologies, Inc.
has a trademark "RIGHT TOUCH (TM)" which it alleges is being infringed by the
Company's use of the trademark "WriteTouch (TM)".  No alleged damages are
specified.  This case is in the early stages.  The Company intends to
vigorously pursue the case.

The Company is not a defendant in any other actions.  However, several other
creditors have indicated that they may file suit against the Company and its
subsidiaries for payment of amounts due them.

Coloray's landlord had threatened legal action for non-payment of rents.  In
September 1996, the Company settled the outstanding lease payments of Coloray
and the environmental shutdown costs of the Coloray operation by issuing a
$280,000 note payable to Coloray's landlord.  The note is due in two years.

In January 1996 the State of Ohio issued a final claim against the Company for
unpaid sales and use taxes of $41,000.  These taxes were included in the
Company's liabilities at December 31, 1994 and for all subsequent periods.

The Internal Revenue Service has filed a payroll tax levy against the assets
of Coloray.  In February 1996, the IRS attached $42,000 of funds held on
deposit in Coloray's bank account, and obtained those funds.  Several other
payments have been made and Coloray still owes approximately $100,000 of
federal payroll tax liabilities, penalties and interest.  In addition, Coloray
has received a levy for withheld but unpaid California state income taxes of
approximately $30,000.  The Company has recorded a liability for the federal
and state payroll taxes owed by Coloray because of the Company's contractual
obligations made to former officers of Coloray.

The Company has unpaid payroll, personal property, franchise, capital stock,
workers compensation, and other taxes aggregating approximately $260,000 at
December 31, 1996 (and an additional $100,000 arising subsequently).  Such
amounts may be subject to levy against Company assets.  The Company intends to
pay these taxes as funds become available.

Demands for payment have been made by several cognovit note holders, for loans
and costs totaling approximately $1,000,000.  A cognovit note allows the
holder to obtain immediate judgement against the Company if the note is
presented in court.  To date, the cognovit note holders have not exercised
this right.

There can be no assurance that creditors will not hereafter seek other legal
remedies.


4. SIGNIFICANT ACCOUNTING  POLICIES:

Cash and Cash Equivalents:

The Company includes in cash and cash equivalents all highly liquid
investments with maturities of three months or less upon acquisition.  The
Company's cash was held in two financial institutions at December 31, 1996.

Inventories:

Inventories are stated at the lower of cost (first-in, first-out method) or
market.  Management conducts a general review of the adequacy of excess and
obsolete inventory reserves on a quarterly basis.  In performing obsolescence
reviews, management considers, among other factors, changes in the Company's
customer base, changes in its products, and technological obsolescence.
Reported inventories at December 31, 1996 and 1995 are mainly raw materials.

Property and Equipment:

Property and equipment are stated at cost.  Depreciation of property and
equipment is computed using the straight-line method over the estimated 


useful lives of the assets.  The detail of property and equipment at December
31, 1996 and 1995 is as follows:
                                              1996                 1995

Machinery and equipment                   $  924,000         $ 1,051,000
Furniture and fixtures                           ---              86,000
Leasehold improvements                        14,000             627,000
                                          ----------           ----------
                                             938,000           1,764,000
Accumulated depreciation                    (346,000)           (817,000)
                                          ----------           ----------
                                          $  592,000          $  947,000
                                           =========           =========

Depreciation expense for the years ended December 31, 1996, 1995 and 1994, was
$209,000, $569,000, and $491,000, respectively.

Patents:

The Company capitalizes costs incurred in acquiring patents.  These assets are
amortized using the straight-line method over their expected technological
life, which is less than their 17 year legal life.  Accumulated amortization
at December 31, 1996 and 1995 was $275,000 and $310,000, respectively, and
amortization expense for the years ended December 31, 1996, 1995 and 1994 was
$54,000, $113,000, and $41,000, respectively.

Other Accrued Liabilities:

Other accrued liabilities included the following amounts at December 31, 1996
and 1995:
                                              1996                 1995

Contracted research agreements           $ 2,055,000         $ 2,152,000
Stimsonite Corporation lawsuit               515,000             450,000
Employee stock awards                        331,000                 ---
Severance payments to former Chairman        265,000                 ---
Payroll, sales, personal property,
 franchise and capital stock taxes,
 and workers compensation accruals           309,000             106,000
Other, less than $300,000 each               921,000             539,000
                                          ----------           ----------
                                         $ 4,396,000         $ 3,247,000
                                           =========           =========
Revenue Recognition:

Revenues from product sales are recognized when the goods are shipped.  The
Company periodically reviews the credit collection status of its customers
and provides for potential losses.  A majority of the Company's sales are to
two customers and, consequently, the Company's credit risks are highly
concentrated.

Stock Issued to Employees:

The Company maintains a stock option plan under which it is authorized to
grant incentive stock options and non-qualified stock options to employees,
directors and consultants.  In addition, the Company has issued Common Stock
and options and warrants to purchase Common Stock to certain officers and
employees in recognition of services they have performed.  The Company
recognizes as compensation expense the amount of the fair value of the Common
Stock at the measurement date or the calculated value of the options (using
the binomial pricing method - see Note 8).  The compensation expense is
allocated to the periods in which the employees perform services.  The
estimated fair value of the Common Stock is determined based on the OTC
Bulletin Board bid price.

Options and Warrants:

Options and warrants are considered to be outstanding only when the Board of
Directors has formally approved their issuance.

Per Common Share Information:

Net loss per common share is based on the weighted average number of common
shares outstanding during the year.  The effect on net loss per common share
of the assumed exercise of stock options and warrants and conversions of
convertible notes has not been considered as the effect would be antidilutive.

Use of Estimates:

The preparation of financial statements requires management to make estimates
and assumptions that affect certain reported amounts and disclosures.
Accordingly, actual results could differ from those estimates.

Reclassification:

In order to conform with the 1996 presentation, certain 1995 and 1994 amounts
have been reclassified.


5. INCOME TAXES:

The Company records deferred tax assets and liabilities based on temporary
differences between the financial statement and tax basis of assets and
liabilities using current statutory tax rates.  The Company records a
valuation allowance against net deferred tax assets if, based on the available
evidence, it is more likely than not that some or all of the deferred tax
assets will not be realized.

The Company's deferred tax assets relate principally to accrued expenses which
are not yet deductible for taxes, and a net operating loss carryforward.
These are summarized below.  Deferred tax liabilities, related to accelerated
depreciation on fixed assets, are not significant.






Deferred tax assets at December 31,                   1996           1995
                                                  ----------      ----------
Temporary differences on accrued liabilities     $ 1,020,000     $ 1,020,000
Net operating loss carryforward - Scriptel        11,152,000      10,370,000
Net operating loss carryforward - Coloray                 --       1,768,000
                                                  ----------      ----------
                                                  12,172,000      13,158,000
Asset valuation reserve                          (12,172,000)    (13,158,000)
                                                  ----------      ----------
  Net deferred taxes                             $        --     $        --
                                                  ==========      ==========
The reduction in deferred tax assets in 1996 compared to 1995 was due to the
elimination of Coloray from the consolidated financial statements.  Because of
the net operating loss carryforwards, no provision for income taxes was
recorded in 1996, 1995, or 1994.  The net operating loss carryforward of
approximately $32,800,000 expires at various dates through 2011.  Net
operating losses are subject to limitations under Section 382 of the Internal
Revenue Code.  Due to the uncertainty surrounding the realization of these
favorable tax attributes in future tax returns, all of the net deferred tax
assets have been fully offset by a valuation allowance.


































6. NOTES PAYABLE AND DEBENTURES:

Notes payable and debentures as of December 31, 1996 and 1995 consist of the
following:

                                                                           
                                                        1996            1995
Convertible notes, at rates ranging from
10% to 18% principal and interest
convertible to common shares at $0.55
to $3.50 per share; in default                       $  918,000    $1,156,000

Convertible debenture, 8%, due November 1998                ---     1,000,000

Convertible debenture, 6%, due December 1999             90,000           ---

Convertible debenture, 14%, due September 1997          221,000           ---

Notes payable to a corporation, $250,000 at
10% and $250,000 at 8%; in default                      500,000       500,000

Demand notes payable to major stockholders,
at 18% per annum                                      2,169,000     2,021,000

Demand and cognovit promissory notes
payable, at rates from 8% to 18%; in default            513,000       622,000

Note payable on machinery purchases, due
August 1996; in default                                  93,000       104,000

Notes payable to a corporation, 10%,
due March 1998                                          280,000           ---

Demand notes payable to suppliers, 18%;
in default                                               37,000        38,000

Demand secured cognovit convertible
promissory note, 10%                                        ---       300,000
                                                     -----------   ----------
                                                      4,821,000     5,741,000
        Less current portion                          4,451,000     4,741,000
                                                     ----------    ----------
Non-current - payable 1998 and 1999                 $   370,000   $ 1,000,000
                                                      =========     =========

The prime interest rate was 8.5% at December 31, 1996.  Substantially all
assets of the Company are pledged as collateral for certain of the notes.

The Company has approximately $343,000 of interest accrued on convertible
notes at December 31, 1996, which is also convertible to Common Stock.  This
amount is generally payable on demand.



1995 DEBT TRANSACTIONS

*  During 1995, notes payable, related accrued interest, and certain accounts
payable, in the amounts of $882,000, $82,000, and $34,000 respectively, were
converted to Common Stock.  The price associated with these conversions ranged
from $1.43 to $1.70 per share.  As a result of the conversions, 726,077 common
shares were issued.  In 1995, an additional $260,000, $43,000, and $51,000 of
notes payable, accrued interest, and accounts payable, respectively, were used
as payment by holders to exercise options and warrants for a total of 393,249
shares.

*  The Company entered into a private placement to a foreign investor of
$1,000,000 of convertible debentures in March 1995.  Net proceeds of $900,000
were received on April 5, 1995, after payment of a finders fee and a
consulting fee.  Interest was 8%, payable at maturity.  The debentures would
have matured in March 1998.  The conversion price floated.  The March
debentures were converted into 1,385,281 shares in the third quarter of 1995.
The Company has recorded a finance charge of $429,000 on the conversion equal
to the difference between fair value of the shares issued and the conversion
price at the date of conversion.

*  The Company entered into a private placement to a foreign investor of
$1,000,000 of convertible debentures in May 1995.  Net proceeds were $880,000,
after payment of finders fees and legal fees.  The debentures would have
matured in May 1998.  Interest was 8%, payable at maturity.  The conversion
price floated.  The May debentures were converted into 2,165,060 shares in the
third quarter of 1995.  The Company has recorded a finance charge of $475,000
on the conversion equal to the difference between fair value of the shares
issued and the conversion price at the date of conversion.  Effective June 15,
1995, in accordance with certain penalty provisions included in the agreement,
the Company was required to issue to the foreign investor warrants to purchase
50,000 shares of Common Stock at a rate equal to the market price on the date
of the conversion, and the Company was required to pay the investor $20,000 in
penalties.  (In 1996, the Company settled the penalties and cancelled the
50,000 warrants by issuing 83,333 shares of common stock to the investor.)

*  Both the March and the May 1995 debenture issues were made in accordance
with the provisions of Regulation S of the Securities Act of 1933, as amended.
The shares acquired on the conversion of the debentures were exempted from
registration under the provisions of Regulation S, and were immediately
tradeable.

*  In November 1995 the Company issued a demand, secured, convertible
promissory note to an affiliate of Mr. Gerald S. Jacobs ("Mr. Jacobs"), a
major creditor and stockholder of the Company, in exchange for proceeds of
$300,000.  The note bears interest at 10% and the rate increased to 18% in
1996.  The note and accrued interest were convertible into a maximum of
700,000 shares at $0.50 per share.  The market price of the Company's Common
Stock on the date of the note was $0.75 per share.  The Company recorded a
finance charge of $131,000 in the fourth quarter of 1995 on this note, equal
to the difference between fair value of the common shares on the date of the
note and the conversion price implicit in the note.  (This loan was paid off
in 1996, together with $25,000 of interest.)

*  In November 1995 the Company entered into an agreement to issue $1,000,000
of convertible debentures to M&M Capital Management, a foreign investor, under
the provisions of Regulation S promulgated by the Securities and Exchange
Commission.  The debentures bear interest at 8% and would have matured in
1998.  The debentures were convertible into common shares at a floating rate
subject to a minimum conversion price of $0.30 per share (equivalent to
3,333,333 shares) and a maximum conversion price of $0.45 per share
(equivalent to 2,222,223 shares).  The market price of the Company's Common
Stock on the date of issue of the debenture was $1.00 per share.  The Company
recorded a finance charge of $1,222,000 in the fourth quarter of 1995, equal
to the difference between fair value of the Common Stock on the date of the
debenture and the maximum conversion price of the debenture.  The Company paid
$58,000 and issued (in 1996) 15,000 shares (value approximately $15,000) to
financial consultants as closing costs on this debenture transaction.  (This
debenture was converted into 3,333,333 shares of common stock in October 1996.
The market price of the Company's common stock on the date of conversion was
$0.38 per share.)

1996 DEBT TRANSACTIONS:

*  In May 1996 the Company engaged Everest Securities, Inc. ("Everest") of
Minneapolis, Minnesota in an exclusive investment banking relationship.
Everest will advise and consult with the Company, and will use its best
efforts to obtain commitments for financings using debt, convertible debt or
stock.  As part of the agreement, the Company sold to Everest for a nominal
amount a warrant to purchase 350,000 shares of common stock at a price of
$0.60 per share.  The Company also granted Everest an additional warrant to
purchase 350,000 shares of common stock at $0.60 per share for services under
a prior consulting agreement.  Both warrants expire in December 1999.  The
estimated value of these warrants, $132,000, was expensed as a finance charge
in the second quarter of 1996.

The agreement also contains the following provisions.  The minimum term is one
year, cancelable by either party with ninety days written notice.  Upon
completion of at least $1,000,000 in funding in any form, the Company will pay
$20,000 monthly to Everest for the term of the agreement.  Everest will have
the right to appoint two (2) directors to the Board of Directors for a minimum
period of three years.  (No directors have yet been named under this
provision.)  Everest will get cash placement fees on any financing the Company
receives; such fees range from 2% on any financing which Everest does not
manage, to 13% on equity funds raised by Everest.  In addition, Everest will
receive warrants for 10% of any shares issued in the financings.  Generally,
such fees are payable on any financings from a source introduced to the
Company by Everest, during the term of the agreement and for 60 months
thereafter.

In August 1996, the Company entered into an agreement through Everest to issue
up to $1,000,000 of 14%, 1-year convertible debentures to domestic accredited
investors.  A total of $221,000 of debentures were issued in 1996.  Such
debentures are convertible into common stock of the Company at a conversion
price equal to 60% of the market price of the stock, as defined, on the day of
conversion subject to a minimum conversion price of $0.25 per share.  The
investors also received one warrant for each dollar of debentures; such
warrant has an exercise price of $0.42 per share and expires in 1999.  The
Company paid a cash commission to the agent of 10% of the funds received, paid
a non-accountable expense allowance of 3% of the funds received, plus gave the
agent 3-year warrants to purchase 22,050 shares at $0.40 per share.  The
debentures and the warrants will be subject to the provisions of Rule 144
promulgated by the Securities and Exchange Commission ("Rule 144").  The stock
price on the dates of issuance of the debentures ranged from $0.32 to $0.40
per share.  The Company recorded a finance charge in 1996, equal to the
difference between fair value of the common stock on the dates the debentures
were issued, and the minimum conversion price of the debentures.

The company expensed the estimated value of all the warrants as a finance
charge in 1996.

The Company has entered into separate agreements with the individual debenture
holders agreeing to convert the debentures to shares if and when the Company's
stock price next hits $0.42 per share.  At that price, the debentures would be
converted at the minimum conversion price of $0.25 per share.

*  In June 1996, Mr. Walter Krumm, a major stockholder of the Company, loaned
$30,000 to the Company under a demand cognovit promissory note at 18% per
annum interest.  In consideration for the loan, and for Mr. Krumm's
forbearance in not demanding repayment of other notes, the Company reduced the
price of 1,020,000 warrants held by Mr. Krumm from $1.69 per share to $0.40
per share, and extended the warrants from 1997 to March 2001.  The estimated
value of the repricing and extension, $340,000, was expensed as a finance
charge in the second quarter of 1996.

*  In June 1996, Sonata Investment Company, an affiliate of Mr. Jacobs, loaned
$45,000 to the Company under a demand cognovit note.  On demand, $10,000 of
interest was due.  In consideration for the loan, and for Sonata's forbearance
in not demanding repayment of another note, the Company agreed to issue to
Sonata warrants to purchase 500,000 common shares at $0.50 per share and which
expire six years after issuance.  Such warrants were issued in December 1996
after shareholders approved an increase in authorized shares.  This note was
paid off in 1996, together with $12,000 interest.

*  In May 1996, the Company issued 60,000 shares and a cognovit note for
$115,000 in return for title to certain assets leased by Coloray and for
settlement of $70,000 of recorded but unpaid lease payments.  The Company
recorded the $38,000 value of the shares and the $45,000 difference in lease
costs in the first quarter of 1996 as an adjustment of the estimated costs of
closure of Coloray (see below).

*  In June 1996, the Company entered into an agreement with Alexander Wescott
& Co., Inc. (Wescott) under which Wescott would use its best efforts to place
up to $2,500,000 of 6%, 3-year Scriptel debentures to foreign investors.  This
agreement was modified several times in 1996 and 1997.  The principal and
interest on such debentures is convertible into common stock of the Company
under the provisions of Regulation S promulgated by the Securities and
Exchange Commission.  The conversion price was initially 60% of the market
price of the stock, as defined, on the day of conversion subject to a minimum
conversion price of $0.375 per share and a maximum conversion price of $1.50
per share.  The conversion price was amended to have a minimum conversion
price of $0.20 per share, and further amended to a conversion price of $0.10
per share.  The Company paid a cash commission to the agent of 13% of all
funds received (a total commission of $216,000), plus warrants equal to 10% of
the shares issued upon conversion.  Such warrants were priced at 120% of the
actual conversion price, and will expire in 2001.  The warrants bear piggyback
registration rights.  The Company expensed as a finance charge the $53,000
value of the warrants issued to the agent.

The Company issued a total of $1,665,000 of these debentures in 1996.  Of
these, $1,575,000 plus interest were converted into 9,043,736 shares in 1996.
An additional 1,001,151 shares were issued in 1997 to effectively reduce the
conversion  price on one of these debentures from $0.20 per share to $0.10 per
share.  The remaining $90,000 debenture plus interest was converted into
906,066 shares in January 1997.  All shares issued have now become
unrestricted and immediately tradeable under the provisions of Regulation S. 
Proceeds of all debentures were used for operating costs.

The market price of the Company's common stock was about $0.75 on the date of
first issuance of the debentures in June 1996.  The stock price had declined
to $0.14 by December 31, 1996.  The Company recorded a finance charge in 1996,
equal to the difference between fair value of the common stock on the dates
the debentures were issued or converted and the minimum conversion price of
the debentures.

*  In 1996 the Company borrowed a total of $672,000 in five separate
transactions with Mr. Jacobs and Mr. Krumm, both major creditors and
shareholders.  The loans are payable on demand, and bear interest at stated
amounts up to 41% of principal.  The Company repaid $224,000 to Mr. Jacobs
through the end of 1996.  The Company has a "handshake" agreement with Mr.
Jacobs under which the Company pays Mr. Jacobs, as reduction of debt, an
amount equal to 15% of the net proceeds from its financings.

*  As of May 21, 1996, the Company agreed to amend all amounts owed to Mr.
Jacobs or his affiliates to bear interest at 18% per annum from that date.
This affected loans totaling approximately $3,000,000.  The loans had
previously accrued interest at stated amounts or at per annum rates of 10% to
12%.

*  In September 1996, the Company issued a $280,000 note payable to the
landlord of Coloray to settle the unpaid lease costs of Coloray and the
environmental shut down of the former Coloray facility.  The note bears
interest at 10% and matures in March 1998.

*  On December 31, 1996, Mr. Krumm converted his interest in the $772,399
indebtedness due by Scriptel to him on that date into 7,723,994 shares of
Scriptel Common Stock.  In addition, as further inducement to effect the
conversion and for other consideration, including the prior relinquishment of
1,800,000 warrants to the Company so as to provide the Company with sufficient
authorized shares to effectuate certain private offerings in 1996, Mr. Krumm
and the Company also agreed to cancel Mr. Krumm's currently owned warrants to
purchase 5,669,332 shares of Scriptel Common Stock at prices ranging from
$0.40 to $0.75 per share and expiring at various dates through November 2002
and replace them with a new warrant to purchase 5,669,332 shares at an
exercise price of $0.14 per share.  The new warrant is exercisable until
December 31, 2001, subject to earlier termination if the Company's stock price
exceeds $1.00 per share.  The shares which were issued, and the shares to be
issued if the new warrant is exercised, are subject to the provisions of Rule
144 promulgated by the Securities and Exchange Commission, and Mr. Krumm has
demand registration rights on them.

Including shares Mr. Krumm previously owned, his total shares held on that day
were 8,741,616 shares, or about 20% of total outstanding shares.  If all of
the new warrants were also exercised on that day, Mr. Krumm would have owned
approximately 30% of the shares then outstanding.


7. COMMON STOCK AND COMMON STOCK COMMITMENTS:

1995 STOCK TRANSACTIONS

The Company entered into the following significant Common Stock transactions
and made the following Common Stock commitments for the year ended December
31, 1995:

*  The Company issued 40,000 shares in 1995 and 7,000 shares in 1994 to
officers and directors for services rendered, and recorded compensation
expense of $78,000 and $24,000, respectively.

*  The Company filed a registration statement in July 1994 which became
effective in February 1995, and which expired March 31, 1995.  The
registration statement covered the registration of: (a) up to 2,000,000 shares
of Common Stock offered by the Company; (b) up to 17,303,780 shares of Common
Stock to be sold by selling stockholders, 5,006,843 shares of which were
already held by selling stockholders and 12,296,937 of which shares were
issuable following exercise of certain outstanding options and warrants and
conversion of outstanding convertible promissory notes; and (c) up to $556,000
of convertible promissory notes and Common Stock issuable upon conversion
thereof, or cash plus accrued interest in rescission of convertible promissory
notes purchased in a private offering during September, July, and August 1994.
Due in part to a substantial decrease in the market value of the Company's
Common Stock on the day of effectiveness, none of the shares offered by the
Company were sold during the registration period.  Of the 12,296,937 shares
which could have been issued on exercise of options, warrants, or convertible
debt by the selling stockholders, a total of 683,375 shares were actually
issued.  The Company received proceeds of $798,000 in a combination of cash
and reduction in notes payable from the exercises.  This capital was used to
meet payroll and other immediate obligations.  Of the $556,000 of convertible
promissory notes, two noteholders elected to receive registered notes in the
combined principal amount of $29,000, four noteholders used a total of $46,000
of principal of notes to exercise warrants they owned, and the remaining
noteholders elected or were deemed to have elected rescission of the notes for
cash.

*  Option and warrant holders exercised existing options and warrants at $1.00
to $1.69 per share, for a total of 901,694 common shares which includes those
which were issued in the registration statement effective in the first quarter
of 1995.  Net cash proceeds from these exercises totaled $961,000.

*  In May and June 1995, the Company converted otherwise non-convertible debt
and accrued interest into 348,722 common shares at $1.43 per share.  The
Company also issued related warrants to purchase an additional 348,722 common
shares at $1.69 per share.  The warrants expire in the year 2000.  The
estimated fair value of the warrants, $160,000, was expensed as financing
costs in 1995.  The shares and warrants have piggyback registration rights.

*  In September 1995, the Company converted certain debt and accrued interest
into 292,001 common shares at $1.50 per share.  The Company also issued to
certain noteholders related warrants to purchase an additional 292,001 common
shares at $1.50 per share and warrants (as compensation for delays in payment
of principal and interest on certain notes) to purchase an additional 472,933
common shares at $2.00 per share.  The warrants expire in the year 2000.  The
estimated fair value of the warrants, $438,000, was expensed as financing
costs in 1995.  The shares and warrants have piggyback registration rights.

*  The Company issued warrants to a financial consultant to purchase 100,000
common shares at $1.70 per share.  The estimated fair value of the warrants,
$46,000, was treated as a finance charge in 1995.  The Company issued warrants
to purchase 94,610 common shares at $1.69 per share to a consultant in lieu of
payment of a consulting bill (value of $44,000, treated as administrative
expense).

*  In July 1995 the Company issued 170,000 shares and granted warrants to
purchase 1,500,000 shares of Common Stock at $1.51 per share to Mr. Jacobs.
These grants were made in recognition of bridge loans made by this stockholder
to the Company over the last several years, voluntary transfers of options to
investors during recent funding activities, and return of short-swing profits
incurred to help the Company in its financing.  The estimated value of the
warrants, $750,000, and shares, $298,000, was expensed in 1995 as interest
expense.

*  On July 27, 1995, the Board of Directors approved a sale effective June 30,
1995 of all real estate owned by Ampsco.  The purchaser was an affiliate of
Mr. Jacobs (who also had a security interest in the property).  The purchase
price of $350,000 was received in two installments of $150,000 each, with the
remaining $50,000 used by the purchaser to pay off existing mortgages on the
property and for legal costs of the transaction.  In addition, the Company
granted Mr. Jacobs warrants to purchase 700,000 shares of Common Stock at a
price of $1.51 per share.  Management estimated the value of warrants at
$350,000 (treated as a loss on the sale of property).  The book value of the
land and buildings sold was $626,000.  The Company recorded a loss in the
second quarter of 1995 including the loss on the land and buildings (this was
subsequently restated as discontinued operations of Ampsco), the value of the
warrants, and the legal costs.

*  The Company granted warrants to purchase 55,000 shares of Common Stock at
$0.81 per share to certain noteholders as compensation for delays in payment
(value of $25,000 treated as interest expense).

*  In July 1995, the Board of Directors approved a recommendation by the
Compensation Committee to grant the Company's chairman a combination of Common
Stock and options to purchase Common Stock, based on his achievement of goals
in his employment contract.  Mr. James W. France received 40,000 shares of
Common Stock (value of $78,000 treated as administrative expense) and options
to purchase 400,000 shares of Common Stock at $1.74 per share, all per his
contract.  In addition, he received options to purchase 1,000,000 shares of
Common Stock at $1.74 per share to replace the compensation incentive inherent
in the options Mr. France transferred to noteholders and consultants in 1994
at no benefit to him.

*  The Company issued to employees, consultants and certain noteholders a
total of 2,798,450 options to purchase common shares.  These options were
granted under existing agreements or as part of employment negotiations with
certain employees.  Option prices range from $0.63 to $3.20 per share and
expire at various dates from 1997 to 2000.  Option values were $3,000 treated
as interest expense, $137,000 treated as administrative expense, and $425,000
treated as research and development expense.

*  The Company issued 21,104 common shares to vendors to convert the balance
owed to the vendors at $1.50 to $1.70 per share.  The shares have piggyback
registration rights.

*  In December 1995, the Company offered a reduction in the purchase price for
its outstanding options and warrants to $0.55 per share if the holders would
exercise within a brief period of time. As a result of this offer, a total of
497,051 shares were issued upon exercise.  Payment included $113,681 in cash
and $159,697 from reduction of debt owed to the holders.  All shares issued
have piggyback registration rights.  The cash was used for operating purposes.


1996 STOCK TRANSACTIONS

The Company entered into the following significant Common Stock transactions
and made the following Common Stock commitments for the year ended December
31, 1996:

*  The Company issued 100,000 shares in January 1996 to Mr. Philip A.
Schlosser, a founder, director, and officer of the Company as additional
compensation for his service since the Company was founded.  The value of this
stock, $75,000, was expensed in January 1996 when it was issued.  In a related
action, the Board of Directors authorized cancellation of all the notes and
advances receivable from Mr. Schlosser.  These receivables approximated
$91,000, most of which had been fully reserved at December 31, 1994.  All
remaining amounts were expensed in December 1995.

*  The Company issued 15,000 shares to a consultant for services rendered on a
financing concluded in November 1995.  The value of this stock, $11,000, was
expensed as a finance charge.

*  Option and warrant holders exercised existing options and warrants, at a
price per share lower than the stated exercise price, for a total of 600,591
common shares.  Net cash proceeds from these exercises totaled $135,000, and
holders also used $172,000 of Company debt in payment of the reduced exercise
price.  The Company issued 146,080 shares in settlement of payables totaling
$65,000.

*  The Company entered into two letter agreements between the Company,
Standard Energy Company, and Mr. Jacobs, which agreements are dated September
21, 1995 as amended February 29, 1996 (the "September Agreement"), and dated
February 29, 1996 (the "February Agreement").  The Company entered into a
further agreement between the same parties, dated March 29, 1996 (the "March
Agreement") which supersedes the September and February Agreements.  The March
Agreement was ratified by the Company's Board of Directors on April 4, 1996.
Standard Energy Company and Mr. Jacobs are both major creditors and
shareholders of the Company.  Mr. Jacobs is the sole owner of Standard Energy
Company.

The Agreements, as amended in March 1996, compensate Mr. Jacobs as an
individual for his help personally or through companies he owns or is
affiliated with in providing debt financing to the Company over the last
several years, patience in not demanding repayment of those loans and
cooperation with other matters, and for relinquishing a part of his currently
owned options or warrants for cancellation so that the Company could use those
authorized shares in its current financings.  Under the Agreements, the
Company had to issue to Mr. Jacobs, or his nominee, warrants to purchase
3,600,000 common shares at a price of $0.75 per share, and which expire six
years after issuance.  The Company also had to issue to Sonata Investment
Company, Ltd. (at the time the holder of a $300,000 convertible note, and also
an affiliate of Mr. Jacobs) warrants to purchase 2,400,000 common shares at a
price of $0.50 per share, and which expire six years after issuance.  The
warrants to Mr. Jacobs and Sonata were contingent upon the Company having
available authorized shares.  In October 1996, the Company's shareholders
approved additional authorized shares and the Company fulfilled these
commitments (see below).

Mr. Jacobs agreed to surrender a part of the options or warrants he currently
owns, so the Company could use the authorized shares to issue in its current
financings.  This was subject to the requirement that the Company must reissue
those options or warrants when, as and if authorized shares are first
available.  The new warrants are exercisable at a price of $0.75 per share and
expire six years after issuance under these provisions.  These terms are more
favorable than the terms of the options surrendered.  In March 1996, the
Company used 853,125 of Mr. Jacobs' options to provide part of the authorized
shares on new issuances under the provisions of Regulation S (see below).  The
Company replaced these options in October 1996 on the new terms.

This agreement also specifies that all options and warrants currently owned by
Mr. Jacobs, and by Donna L. Sanger, a vice president of Standard Energy
Company, will be reissued with a new expiration date of October 1, 2001 and
with a new price of $1.00 per share.  At December 31, 1995, Mr. Jacobs owned
2,190,000 warrants and 1,956,000 options at prices ranging from $1.51 to $2.62
per share and which expire at various dates through October 29, 2000.  At
December 31, 1995, Ms. Sanger owned 65,000 warrants and 63,500 options at
prices ranging from $1.51 to $2.50 per share and which expire at various dates
through July 12, 2000.  The options and warrants were repriced and reissued as
of February 29, 1996.  The Company recorded the $392,000 estimated value of
these transactions as a finance charge in the first quarter of 1996.

*  In March and April 1996, the Company entered into several agreements with
foreign investors for them to purchase shares at $0.40 per share under the
provisions of Regulation S promulgated by the Securities and Exchange
Commission.  A total of 2,357,000 shares were issued under these agreements.
The market price of the Company's common stock on the dates of issuance was
approximately $0.75 to $1.12.  Cash proceeds were $943,000, less a total of
$130,000 paid as finders fees and expenses.  The Company was delayed in filing
certain of its reports to the Securities and Exchange Commission for the year
ended December 31, 1995 and the quarter ended March 31, 1996.  Because of
this, the Company was forced to rescind certain of these stock transactions,
and the Company repurchased 302,500 shares from the foreign investors at their
then-current market price of $230,000.  The net proceeds after the rescission
were used to fund payrolls, audit and legal costs, and other operating
expenses.  In addition to the cash costs of closing, the Company committed to
issue warrants to purchase common shares equal to 5% of the shares issued, at
a price of $0.48, and which will expire five years after issuance.  A total of
102,725 warrants have been issued (the estimated value of $39,000 was expensed
in the second quarter of 1996 as a finance charge).  Mr. Jacobs relinquished
853,125 of his options, (see above), Mr. Krumm relinquished 800,000 of his
options with an exercise price of $1.69 to $1.70 per share and expiring in
1998, and Mr. France, the Company's former Chairman relinquished 800,000 of
his options with an exercise price of $1.74 per share and expiring in July
2000, so that the Company would have enough authorized shares available to
issue the new shares and warrants.  As part of the agreements with these
individuals, the Company agreed to reissue the surrendered instruments as
warrants when, as and if Scriptel is first able to do so, but in no event
later than when Scriptel shareholders approve an increase in the amount of
authorized shares, at a price of $0.75 per share, and with an expiration date
of six years after the date of any reissue under these provisions.  Kevin
Woodbridge, a director at the time, also relinquished 500,000 options (see
below).  The revised terms on all of these options and warrants are more
favorable than those surrendered.  The Company issued the new instruments in
October 1996 after stockholders approved an increase in authorized shares. 

*  The Board of Directors approved in April 1996 a repricing and reissuance
of all the options owned by Kevin Woodbridge, a director.  This is additional
compensation for his continuing to operate under a consulting contract with
the Company without receiving his retainer fee for eight months, relinquishing
part of his retainer and part of his stock options to obtain a release of a
1995 judgment against the Company on a cognovit note, and relinquishing
500,000 currently owned options for cancellation so that the Company could use
those authorized shares in its current financings.  At March 31, 1996, Mr.
Woodbridge owned 870,797 options with exercise prices ranging from $1.43 to
$2.00 per share and with expiration dates of 1996 to 2000.  All of his options
were reissued with a new expiration date of April 1, 2000 and with a new
exercise price of $0.50 per share.  The Company recorded in the second quarter
of 1996 the estimated $161,000 value of the reissuance of currently existing
options with new pricing and expiration dates.  Mr. Woodbridge also has rights
to immediate registration of his options through an S-8 filing.  The Company
reissued the 500,000 relinquished options in October 1996 after shareholders
approved an authorization of additional shares.  In December 1996, Mr.
Woodbridge agreed to release all his options for cancellation and cancel all
amounts owed to him for consulting services in return for 350,000 shares of
the Company's common stock.  The Company issued the shares to him.

*  In April 1996, the Company was successful in obtaining a one-year
extension on four convertible notes payable totaling $71,000.  The Company
agreed to modify the conversion price from $1.69 per share to $0.55 per share.
This transaction increased the authorized shares committed for conversion by
87,358 shares.  The estimated value of these additional shares of $78,000 was
expensed as a finance charge in the first quarter of 1996.

*  The Company issued 100,000 options in January 1996 to Bernard Eckstein, a
director, as compensation for his services in helping with 1995 year end
activities.  The options are exercisable at a price of $0.75 per share (the
market price at the date of grant), and expire in January 2001.  The estimated
value of $62,000 was charged to administrative expense in the first quarter of
1996.

*  In May 1996, Mr. France, the Company's former Chairman, President and Chief
Executive Officer retired and resigned his positions as an officer and
director of the Company.  Mr. France received a severance package of:
continuation of his salary through September 1996, cancellation of all old
options (a total of 1,425,467 options, including the 800,000 he relinquished
as outlined above) held by Mr. France and issuance of new options to purchase
1,500,000 shares at $0.68 per share and which expire in May 1999, severance
pay of $150,000, and cancellation of all of the Company's notes receivable
(approximately $150,000) and advances receivable (approximately $100,000) from
Mr. France.  The Company has made no payments to Mr. France under this
agreement.  The Company has engaged Mr. France to act as a consultant in
arranging financings for the Company.  If these efforts are successful, Mr.
France will receive in cash 9% of the amount raised (which will first be used
to pay the severance costs outlined above).  Bernard Eckstein, a director of
the Company since 1992, has been appointed as the Company's Chairman and Chief
Executive Officer.  J. Vance Holloway, President and Chief Operating Officer
of Scriptel Corporation, has been appointed as President and Chief Operating
Officer of Scriptel Holding, Inc.

*  The Company issued to a consultant options to purchase 70,000 shares of
common stock at $1.00 per share and which expire in 2001.  The $20,000 value
was expensed in the second quarter of 1996.

*  The settlement of the lawsuit (see Note 3) and consulting agreement with
Mr. Nicholas Venetis included the following terms:  the Company and Mr.
Venetis each released the other, with prejudice, from any claims or
counterclaims in the lawsuit.  The Company will pay Mr. Venetis $60,000 either
from the first funds raised for the Company through Mr. Venetis' efforts, or
in any case by October 31, 1996 (the Company is in default on this payment as
it was not paid by October 31).  The Company will pay Mr. Venetis a total of
$50,000 under the consulting agreement, at $5,000 per month for ten months
beginning September 1, 1996.  Mr. Venetis will provide consulting services, as
required, in various areas of financing, marketing, and business development.
The Company issued Mr. Venetis warrants to purchase 500,000 shares of common
stock at an exercise price of $0.55 per share.

*  The Company did not have the funds to pay its employees on time for
several months in 1996.  To recognize the sacrifices made by the employees
during this period, and to partially compensate them for their continued
dedication and service, in June 1996 the Company reduced the exercise price to
$0.40 per share on 1,805,700 options and 255,337 warrants owned by the
employees.  Expiration dates were not changed.  Formerly, such options and
warrants carried exercise prices ranging from $0.75 per share to $4.00 per
share.  In addition, the Company issued a total of 122,000 options at $0.40
per share to employees.  The estimated value of the repricing ($228,000) and
issuance ($33,000) was expensed in the second quarter of 1996.

*  The Company agreed to issue a one-time stock grant to employees of
Scriptel at June 1, 1996, equal to twice each employee's monthly salary
divided by $0.75 per share.  This grant approximates 244,000 shares.  The
Company will also pay the employees' taxes on the stock grant, subject to
availability of cash.  A charge of $311,000 has been recorded in the second
quarter of 1996 as the value of the grant plus taxes.

*  In June 1996, the Company committed to issue to Mr. Bernard Eckstein, the
Company's Chairman and Chief Executive Officer, as part of his employment
negotiations, options to purchase 500,000 shares of Common Stock at an
exercise price of $0.40 per share and which expire five years after issuance.
Issuance of these options was contingent on the availability of authorized
shares.  The Company issued these options in October 1996.  The Board of
Directors also set the compensation of Mr. Eckstein at an annual base salary
of $150,000 beginning on May 16, 1996.

*  In the third quarter of 1996, the Company entered into several agreements
with its officers, nine employees, and four consultants.  Under these
agreements, the individuals agreed to let the Company use in its current
financings the authorized shares represented by a total of 2,685,647 options
and warrants held by these individuals.  All of such released authorized
shares were used to support financings in the third quarter.  The individuals
agreed not to exercise their options and warrants until such time as
authorized shares become available.  These became available in October 1996
when stockholders approved an increase in authorized shares.  This restriction
has now been released, and these individuals may exercise the options and
warrants.  The Company also agreed to issue an additional option to each
individual for each of the 2,685,647 authorized shares used, as soon as
authorized shares become available.  The additional options have an exercise
price of $0.40 per share and expire five years after their issuance.  The
options were issued in October 1996; the stock price was $0.38 per share at
the date of issue.

*  In May 1996, certain of the Company's officers and employees agreed to
defer that part of their annual compensation which exceeded $85,000 until such
time as the Company's cash situation improved.  As part of the agreements with
these individuals (including officers Bernard Eckstein, J. Vance Holloway,
Edward Palmer, and Frederick A. Niebauer), the Company agreed to pay interest
at 10% per annum on the amounts deferred, and agreed to issue an option to
purchase one share of common stock at an exercise price of $0.40 per share and
with an expiration date of five years after issuance (which options were
subject to the availability of authorized shares) for each dollar of salary
deferred.  These would total 195,000 options if such deferral continued for a
year, and similar amounts annually thereafter.  The deferral has continued to
date.

*  The Company issued 50,000 options to Mr. Bernard Eckstein and 25,000
options to Mr. Woodbridge for their services as directors in 1994 and 1995,
under the provisions of the 1993 Stock Option Plan.  These options had an
exercise price of $0.40 per share and expire in 2001.

*  In August and September 1996, the Company entered into an agreement with
five consultants to issue the consultants, as payment for services to be
rendered, warrants to purchase a total of 5,000,000 shares of common stock.
Of these, 2,500,000 will have an exercise price of $0.75 per share; 1,250,000
will have an exercise price of $0.80 per share; and 1,250,000 will have an
exercise price of $0.85 per share.  All of these warrants expire in two years.
The issuance was contingent on shareholders approving an increase in
authorized shares.  The Company has agreed to register the warrants in an S-8
registration statement as soon as possible after issuance.  The individuals
(George Furla, Gregg Rondinelli, Peter Benz, Merrick Okamoto, and Steve
Westlund, all from Los Angeles, California) will consult with the Company on
matters pertaining to the restructuring and design of the Company's operations
and long term strategic plan, including, but not limited to the development of
sponsorship for the Company's securities through meetings with brokers, market
makers, securities analysts, and fund managers in key financial centers in the
United States and Europe.  the consulting period will be one year.  The
warrants were issued in October 1996 after shareholders approved an increase
in the authorized shares.

*  Trenwith Capital, Inc. (Trenwith) consulted with the Company in 1995 and
1996, and was due cash commissions and approximately 160,000 warrants as
commissions for services rendered.  In August 1996, the Company agreed to
issue a total of 300,000 common shares to settle all claims by Trenwith
against the Company.  Such shares were issued immediately after shareholders
approved an increase in authorized shares.  The Company has agreed to register
the shares in an S-8 registration statement as soon as possible after
issuance.  The value of the shares is estimated at $120,000.  This amount was
expensed through the third quarter of 1996 as the value of the cash
commissions and warrants due to Trenwith.

*  In October 1996, the Company issued a total of 3,869,332 additional
warrants to Mr. Krumm.  Of these, 1,000,000 were priced at $0.65 per share and
2,869,332 were priced at $0.75 per share.  All expire six years from the date
of issuance.  The issuance of these warrants is additional compensation to Mr.
Krumm for his assistance in the funding efforts of the Company in 1995 (by
exercising warrants), surrendering 800,000 options for use by the Company in
its 1996 financing efforts (see above), agreeing not to exercise 1,000,000
warrants to further help the Company in its 1996 financings, and delays by the
Company in making promised payments on a loan from Mr. Krumm earlier in 1996.
The Company also agreed to lower the exercise price on a total of $300,000 of
convertible loans held by him (convertible at $1.00 to $1.69 per share) to
$0.65 per share.  The warrants were subsequently repriced to $0.14 per share,
and all the debt payable to Mr. Krumm was converted to shares at year end at a
conversion price of $0.10 per share (see above).

*  In the third quarter, the Company agreed to reduce the exercise price of
1,230,508 options and warrants as compensation to the holders for agreeing not
to exercise the instruments until such time as authorized shares became
available.  The Company used the freed up authorized shares in its 1996
financings.  The repricing was effected in October 1996 after shareholders
approved an increase in authorized shares.  The repriced options and warrants
included: 700,000 held by Everest Securities, Inc. expiring in 2001, from an
exercise price of $0.60 per share to a new exercise price of $0.40 per share;
and 530,508 options and warrants held by three accredited investors, expiring
in 1997 and 1998, from an exercise price ranging from $1.50 to $4.00 per
share, all to a new exercise price of $0.55 per share.

*  Summarizing the above activity, after the shareholders approved an increase
in authorized shares, the Company issued or scheduled the issuance of a total
of 22,100,255 options and warrants, and repriced 1,230,508 options and
warrants.  The stock price on the date of issue was $0.38 per share.

*  Mr. J. Vance Holloway, the Company's President, received 500,000 options in
December 1996 at an exercise price of $0.40 per share as part of his
employment negotiations with the Company.

*  The total fair value of all options and warrants issued or modified in 1996
was approximately $4.7 million, all of which was expensed in 1996.


***

The Company is now authorized to issue up to 125,000,000 shares of its Common
Stock, par value $.10 per share.  Of these, the Company had the following
outstanding or committed shares of Common Stock at December 31, 1996:

Outstanding common shares at December 31, 1996                    42,299,512
Shares reserved for outstanding:
     Options  (See Note 8)                                        12,885,936
     Warrants  (See Note 9)                                       29,100,623
     Convertible debt and accrued interest (See Note 6)            2,606,408
Shares committed to be granted to employees, based on their
     respective salaries  (See Note 7 above)                         244,000
Options to officers, employees, directors and consultants  which
     have been committed in various agreements of the Company
     but not yet granted at December 31, 1996                      2,325,000
                                                                -------------
Total outstanding or committed common shares at
 December 31, 1996                                                89,461,479
                                                                =============

See Note 16 for events occurring subsequent to December 31, 1996 which affect
common stock or common stock commitments.


8.  STOCK OPTIONS:

The Company's Stock Option Plan ("Plan") was approved by the stockholders at
their 1994 annual meeting, and amended by the stockholders at their 1996
meeting.  The Plan as amended provides for the grant of options to purchase up
to 7,500,000 shares of Company Common Stock.  All employees of the Company and
its subsidiaries, as well as non-employee directors and consultants, are
eligible for the grant of options under the Plan.  The Plan provides for the
grant of incentive stock options and non-qualified options.  The Board of
Directors or a committee of three disinterested directors ("Committee")
administers the Plan.  The purchase price for the shares subject to options
granted under the Plan will be determined by the Board of Directors or the
Committee, as the case may be.  Each option becomes exercisable at the time or
times determined by the Board or the Committee when the option is granted
provided that no option may be exercised within six months of date of grant;
however the Board of Directors or the Committee has the right to accelerate
the exercisability of the options upon the occurrence of certain events that
involve, or may result in, a change in control of the Company.  Each option
terminates on the date set by the Board or the Committee at the time of grant,
but no termination date may be later than 10 years from the date of the grant.
Generally, no option may be exercised unless the holder of the option has
continued to be an employee of the Company or one of its subsidiaries except
for limited exercise rights after termination of employment.  An optionee can
pay the purchase price for the stock option in cash, by delivery of Company
Common Stock already owned by the optionee, or by a combination of these
methods, as determined by the Board or the Committee, as the case may be.
Approximately 2,500,000 options were outstanding under the provisions of the
Plan at December 31, 1996.  These are included in the table below.


1994 OPTIONS TRANSACTION SUMMARY:

For the year ended December 31, 1994, the Company granted the following
options to purchase one share of Common Stock:

*  1,485,000 options at prices ranging from $1.70 to $4.00 per share, expiring
in 1997 through 1999, related to employment contracts.

*  140,000 options to non-employee directors at prices ranging from $2.25 to
$3.00 per share, expiring in 1998 and 1999.

*  3,050,525 options at prices ranging from $2.25 to $2.97 per share, expiring
in 1999, to employees under the employee stock option plan approved by
stockholders at the May 12, 1994 annual meeting.

*  580,000 options related to the Coloray acquisition, at $2.00 per share, of
which 400,000 expire in 1999, and 180,000 options at $2.00 per share expired
in November 1994.  In addition, the Company committed to grant an additional
60,000 options to SRI (formerly known as Stanford Research Institute) related
to the Coloray acquisition, pending entering into a new contract with SRI.

*  1,675,000 options at prices ranging from $1.69 to $2.62 per share, expiring
from 1998 through 2000, related to debt financing.

*  1,954,583 options at prices ranging from $1.69 to $3.20 per share, expiring
from 1997 through 1999, related to consulting agreements.

*  A total of $1,103,000 of cognovit promissory notes were issued in August
through October 1994 at the prime interest rate. During 1994, for no
consideration to the officer involved, options and warrants to purchase
shares of Common Stock were transferred from an officer of the Company to
these noteholders to assist the Company in its financing activities (1,078,200
options and warrants, see Note 6) and to a consultant for services rendered
(140,000 options).  The options have exercise prices ranging from $1.70 to
$2.50 per share and expire at various dates through October 2000.  Certain of
such options and warrants transferred by the officer were received by the
officer in an exchange of options and warrants with a principal stockholder.
Such options and warrants transferred from such principal stockholder were
exercisable for shares of Common Stock at prices ranging between $1.70 to
$2.00 per share and expiring at various dates through October 2000.   The
Company accounted for these latter options and warrants as a contribution to
paid in capital by the principal stockholder and a charge to compensation
expense.

1995 OPTIONS TRANSACTION SUMMARY:

For the year ended December 31, 1995, the Company granted the following
options to purchase one share of Common Stock:

*  1,912,450 options at prices ranging from $0.63 to $3.20 per share, expiring
in 1997 through 2000, related to employment contracts or offers.

*  1,279,000 options at prices ranging from $1.43 to $2.75 per share, expiring
in 1997 through 2000, related to consulting agreements.

*  7,000 options at a price of $1.69 per share, expiring in 2000, related to
debt financing.

*  1,000,000 options at a price of $1.74 per share, expiring in 2000, related
to a replacement for options transferred from an officer of the Company to
noteholders in 1994 (see above).


1996 OPTIONS TRANSACTION SUMMARY:

For the year ended December 31, 1996, the Company granted the following
options to purchase one share of Common Stock:

*  1,300,000 options at prices ranging from $0.50 to $0.75 per share, expiring
in 2002, related to reissuance of options surrendered to help the Company in
its financings.

*  2,686,230 options at $0.40 per share, expiring in 2001, related to
financing.

*  294,533 options at prices ranging from $0.68 to $3.20 per share, expiring
in 1999 through 2001, related to consulting agreements.

*  1,197,000 options at prices ranging from $0.40 to $3.00 per share, expiring
in 2001 and 2002, related to employment contracts or offers.

*  92,151 options at $0.40 per share, expiring in 2001, related to deferral of
part of certain officers' salaries.









***
The table below reflects all options granted and outstanding through December
31, 1995, all of which are exercisable (See notes 4 and 7):

                                          Number of Shares      Option Price
Options outstanding at
December 31, 1993                          3,058,816            $1.69-$5.00

Granted                                    8,885,108            $1.69-$4.00
Forfeited                                 (  459,962)           $1.75-$5.00
Exercised                                 (1,039,177)           $1.69-$2.00
                                            --------
Options outstanding at
December 31, 1994                         10,444,785            $1.69-$4.00

Granted                                    4,198,450            $0.63-$3.20
Forfeited                                   (906,013)           $2.25-$3.00
Exercised                                   (473,286)           $1.69-$2.50
                                         -----------
Options outstanding at
December 31, 1995                         13,263,936            $0.63-$4.00
                                         ===========

NEW ACCOUNTING PRONOUNCEMENT

In late 1995, the Financial Accounting Standards Board adopted Statement of
Financial Accounting Standards No. 123, "Accounting for Stock Compensation"
(SFAS-123).  The Company adopted this statement in 1996.  SFAS-123 requires a
substantial change in the calculation of the value of options and warrants
granted to directors, officers and employees.  Had the Company used the
provisions of SFAS-123 to calculate the value of options and warrants granted
in 1995, management estimates that the reported net loss of the Company for
the year ended December 31, 1995 would have increased by approximately
$4,746,000, or $0.27 per share.

SFAS-123 requires use of a specific method of valuing options.  The Company
uses the binomial pricing method of valuing the options and warrants it issued
or modified.  This method is one of the accepted methods in SFAS-123.  The
Company used the following assumptions for the 1996 valuations (and 1995 pro
forma revaluations): expected volatility of the Company's stock price - 90%;
risk free rate of return - 6%; stock price - closing bid price on the date of
grant; dividend yield - none; expected life - actual option term in years
(generally five to six years); vesting - immediate.  After calculating value
under the binomial pricing method, the Company discounts the result by 50% to
take into account the combined effects of restrictions on the sale of the
stock (the SEC's "Rule 144" restrictions) and the lack of an established
market for the stock.







A summary of the status of the Company's options as of December 31, 1996 and
changes for the year then ended is as follows:

OPTIONS                                 Number of     Weighted Average
                                         Options      Exercise Price
For the year ended December 31, 1996:
Outstanding at beginning of year        13,263,936        $2.09
Granted                                  5,569,914         0.54
Forfeited                               (4,807,830)        1.68
Exercised                               (1,140,084)        1.94 (see note)
Outstanding at December 31, 1996        12,885,936         0.92

Options exercisable December 31, 1996   12,885,936        $0.92

Note: The weighted average exercise price shown above is based on the original
contract exercise price.  However, the weighted average actual exercise price
accepted by the Company in 1996 was approximately $0.50 per share.

                                          Weighted        Weighted
                                           Average         Average
For the year ended December 31, 1996:    Fair Value    Exercise Price
Weighted-average fair value of
 options granted during the year:
  Issued at market price                     none          none
  Issued above market price                $ 0.21        $ 0.53
  Issued below market price                  0.31          0.59

  All options                                0.22          0.54


At December 31, 1996:                                Weighted        Weighted
                           Number       Exercise      Average         Average
                             of           Price      Remaining       Exercise
                           Options        Range        Life            Price
Range of exercise prices:
$0.10 to $1.00             9,737,197   $0.40-$1.00      4.1            $0.58
Over $1.00                 3,148,739    1.70-4.00       1.5             1.98


In addition to the issuance of options in 1996, the Company at various times
in 1996 repriced and/or extended a total of 5,796,047 options.  The repricings
were from exercise prices ranging from $0.75 to $4.00 per share, with a
weighted average of $2.12 per share, into new options with prices ranging from
$0.40 to $1.00 per share, with a weighted average of $0.70 per share.  The
option extensions were from a weighted average remaining life of 2.7 years to
a new weighted average remaining life of 3.4 years.  The Company calculated
the net value of the cancellations and reissuances as $628,000.  This was
recorded as expense in 1996.






9. STOCK WARRANTS:

1994 WARRANTS TRANSACTION SUMMARY:

For the year ended December 31, 1994, the Company granted the following
warrants to purchase one share of Common Stock:

*  In 1994, the Company issued 300,000 warrants in conjunction with sales of
Common Stock.  No expense was recorded in connection with issuing these
warrants due to immateriality.

1995 WARRANTS TRANSACTION SUMMARY:

For the year ended December 31, 1995, the Company granted the following
warrants to purchase one share of Common Stock:

*   94,610 warrants at a price of $1.65 per share, expiring in 2000, related
to consulting agreements.

*  150,000 warrants at a price of $1.70 per share (or for 50,000, at a price
which floats with the market price), expiring in 1998, related to new debt
financings.

*  700,000 warrants at a price of $1.51 per share, expiring in 2000, related
to the sale of Ampsco's land and buildings.

*  2,668,656 warrants at prices ranging from $0.81 to $2.00 per share,
expiring in 1998 through 2000, related to negotiations with debt holders.

1996 WARRANTS TRANSACTION SUMMARY:

For the year ended December 31, 1996, the Company granted the following
warrants to purchase one share of Common Stock:

*  11,476,664 warrants at prices ranging from $0.12 to $0.75 per share,
expiring in 1999 through 2002, related to debt financings or debt
negotiations.

*  6,200,000 warrants at prices ranging from $0.55 to $0.85 per share,
expiring in 1998 through 2001, related to consulting agreements.

*  1,653,125 warrants at $0.75 per share, expiring in 2002, related to
reissuances of warrants surrendered to help the Company in its financings.











***

The table below reflects all warrants issued and outstanding through December
31, 1995, all of which are exercisable (See notes 4 and 7):
                                                                           
                                            Warrants            Warrant Price
Warrants outstanding at
December 31, 1993                          8,447,299            $0.75-$5.25

Issued                                       300,000               $2.00
Terminated                                   (25,000)              $3.50
Exercised                                    (43,429)           $1.00-$1.69
                                          -----------
Warrants outstanding at
December 31, 1994                          8,678,870            $0.75-$5.25

Issued                                     3,613,266            $0.81-$2.00
Terminated                                  (250,091)           $0.75-$2.88
Exercised                                   (870,122)           $1.00-$5.25
                                          -----------
Warrants outstanding at
December 31, 1995                         11,171,923            $0.81-$4.00
                                          ==========

A summary of the status of the Company's warrants as of December 31, 1996 and
changes for the year then ended is as follows:

WARRANTS                                Number of     Weighted Average
                                         Warrants      Exercise Price
For the year ended December 31, 1996:
Outstanding at beginning of year        11,171,923        $1.58
Granted                                 19,329,789         0.69
Forfeited                               (1,190,582)        1.10
Exercised                               (  210,507)        1.75 (see note)
Outstanding at December 31, 1996        29,100,623         0.76

Warrants exercisable December 31, 1996  29,100,623        $0.76

Note: The weighted average exercise price shown above is based on the original
contract exercise price.  However, the weighted average actual exercise price
accepted by the Company in 1996 was approximately $0.50 per share.

                                          Weighted        Weighted
                                           Average         Average
For the year ended December 31, 1996:    Fair Value    Exercise Price
Weighted-average fair value of
 warrants granted during the year:
  Issued at market price                     none          none
  Issued above market price                $ 0.13        $ 0.70
  Issued below market price                  0.13          0.24

  All warrants                               0.13          0.69


At December 31, 1996:                                Weighted        Weighted
                            Number      Exercise      Average         Average
                             of           Price      Remaining       Exercise
                           Warrants       Range        Life            Price
Range of exercise prices:
$0.10 to $1.00            22,652,119   $0.12-$1.00      4.0            $0.54
Over $1.00                 6,448,504    1.39-4.00       1.6             1.51


In addition to the issuance of warrants in 1996, the Company at various times
in 1996 repriced and/or extended a total of 10,707,287 warrants.  The
repricings were from exercise prices ranging from $0.40 to $4.00 per share,
with a weighted average of $1.06 per share, into new warrants with prices
ranging from $0.14 to $1.00 per share, with a weighted average of $0.40 per
share.  The warrant extensions were from a weighted average remaining life of
4.0 years to a new weighted average remaining life of 4.2 years.  The Company
calculated the net value of the cancellations and reissuances as $643,000.
This was recorded as expense in 1996.


10.  LEASES:

The Company leases Scriptel's office and production facility under a month-to-
month operating lease that provides for lease payments of approximately
$10,000 per month.  The Company is trying to get the lease extended through
2000.  The Company also leases various equipment through short-term operating
leases.  Total rent expense for the years ended December 31, 1996, 1995, and
1994 amounted to $317,000, $395,000, and $452,000, respectively.

Future minimum lease payments are not significant.

Lease payments of $160,000 were past due at December 31, 1996.


11.   BUSINESS SEGMENT INFORMATION:

The Company currently operates in a single business segment -- computer
peripheral equipment.  The computer peripherals segment involves manufacturing
and marketing of high performance digitizers, stylus pens, control chips and
glass screens for computer aided design, business graphics, and personal
computer applications, and revenues from development fees.  Prior to the
disposition of Ampsco, the Company also operated in a machining/contracting
segment.  The machining/contracting segment involved the repair and
customizing of machine tools and precision machining equipment.  Ampsco was
sold in April 1996.  The Company has treated the sale as a discontinued
operation in the accompanying consolidated financial statements.








Summarized financial information by business segment for the years ended
December 31 are as follows:

                                           1996          1995         1994
Total assets:
Computer peripherals                   $  733,000    $1,461,000    $2,191,000
Machining/contracting                         ---           ---     1,771,000
                                      -----------    ----------    ----------
     Total                             $  733,000    $1,461,000    $3,962,000
                                      ===========    ==========    ==========

Depreciation and amortization:
Computer peripherals                   $ 263,000      $ 580,000     $ 411,000
Machining/contracting                        ---        110,000       121,000
                                        --------      ----------     --------
     Total                             $ 263,000      $ 690,000     $ 532,000
                                        ========       ========      ========
Capital expenditures:
Computer peripherals                   $ 308,000      $ 359,000     $ 372,000
Machining/contracting                        ---         61,000        14,000
                                        --------       --------       -------
     Total                             $ 308,000      $ 420,000     $ 386,000
                                        ========       ========      ========


12.   MAJOR CUSTOMERS:

Sales to one customer comprised 66.2%, 66.2%, and 7.0% of total sales in 1996,
1995, and 1994, respectively.  Sales to a second customer comprised 28.7%,
15.2% and 18.4% of total sales in 1996, 1995, and 1994, respectively.  In
addition, the Company had 16.2% of sales to a third customer in 1994.

13.   RELATED PARTY TRANSACTIONS:

In addition to the several items described elsewhere herein, the Company had
the following transactions with related parties:

*  In connection with a financial public relations agreement dated April 20,
1993, and amended twice in 1994, Mr. Kevin Woodbridge and Woodbridge &
Associates (collectively, "Woodbridge"), an unaffiliated entity at that time,
was paid $150,000 in 1994 and was granted three year options to purchase
1,500,000 shares of Common Stock at a price of $1.69 per share (the market bid
price at the time of grant was $3.50 for unrestricted shares).  Under the
agreement, as amended, Woodbridge performed financial public relations
services and referred the Company to sources of investment capital.
Woodbridge received an aggregate retainer of $130,000 in 1995.  Additionally,
Woodbridge has received reimbursement of documented travel and other
expenditures of $100,000 in 1994. In November 1994, the Company granted an
additional 300,000 options at an exercise price of $2.00 per share, expiring
in 1997, in accordance with the October 1994 amendment to the consulting
agreement with Woodbridge.  At the date of grant, the bid price of the
underlying Common Stock on the over-the-counter market was $3.375 per share.
The consulting agreement further provided for grants of 100,000 options on
February 28, 1995 and 100,000 options on May 31, 1995, on the same terms,
provided that Woodbridge continued to provide services to the Company on those
dates.  These options were granted on those dates.  Pursuant to the agreement,
Woodbridge could appoint an individual to the Company s Board of Directors.
Mr. Woodbridge became a Director of the Company in June 1995.  Mr. Woodbridge
also received 80,000 options at an exercise price of $1.43 per share in 1995.
Mr. Woodbridge resigned from the Board in May 1996.  The Company terminated
the consulting agreement and settled all remaining liabilities to Mr.
Woodbridge, and cancelled all remaining options held by Mr. Woodbridge in
December 1996 by issuing 350,000 restricted shares to Mr. Woodbridge.

*  A director of the Company from May 1994 to May 1995 was a consultant
to the Company from July 1993 to February 1995.  In January 1994 the Company
and the director entered into a Consulting Memorandum of Understanding and
Consulting Agreement with respect to his consulting services to the Company. 
The Consulting Memorandum of Understanding provided for a 90 day term,
compensation of $5,000 per month, and options to purchase 50,000 shares of
Common Stock of the Company for $2.25 per share (the market bid price at
the time of grant was $3.875 for unrestricted shares).  The Consulting
Agreement included provisions for the protection of the Company's intellectual
property. The director and the Company continued the consulting arrangement
following the 90 day term referenced above but terminated the agreement in
February 1995.

*  In 1994, the Company granted 14,583 options under the Stock Option Plan at
an exercise price of $3.00 per share, expiring in 1999, to a director of
Coloray who is also a consultant to the Company.  In addition , 175,000
options were granted under the Stock Option Plan at an exercise price of
$3.20 per share, expiring in 1999, in accordance with provisions of a
consulting agreement with that consultant.  A further 275,000 options were
approved for grant to consultants under the Stock Option Plan, and 125,000
options were granted in 1994, 50,000 options were granted in 1995, and 50,000
options were granted in 1996 to three consultants at a price of $3.20 per
share, expiring in 1999 or 2000, and the remainder will be granted by the
Compensation Committee of the Board of Directors when they determine the
consultants who will receive the options.  Such future grants will be at an
exercise price which is the higher of 85% of the fair market value of the
underlying shares at the date of grant or $3.20 per share, and will expire
five years after grant.

*  In April 1994, the Company repaid the outstanding balance of a 1992 loan
from Mr. Jacobs.  In March 1994, Mr. Jacobs loaned the Company $90,000 in the
form of a cognovit promissory note payable on demand, which the Company repaid
in April 1994 with $9,000 of interest.  In May 1994 Mr. Jacobs loaned the
Company a total of $500,000 in the form of cognovit promissory notes payable
on demand, bearing interest at 10% per annum.  As additional consideration for
these loans, Mr. Jacobs was granted options to purchase 500,000 shares of the
Company's stock at $2.62 per share, and the exercise period of all his options
and warrants was extended to the year 2000.  At various dates in 1994 the
Company repaid $61,000 of these loans.  On September 15, 1994 and September
30, 1994, Mr. Jacobs loaned the Company $75,000 and $120,000, respectively, in
the form of cognovit promissory notes payable on demand.  Both of these loans
were repaid on November 28, 1994, together with interest of $7,500 and
$12,000, respectively.  Mr. Jacobs has a security interest in substantially
all tangible and intangible assets of the Company and pledges on all current
and future patent rights.  At the time of the issuance of notes and grants of
options and warrants to Mr. Jacobs, the market bid price for unrestricted
Common Stock was between $2.125 and $4.875 per share.  On October 31, 1994 and
December 29, 1994, the Company issued demand cognovit promissory notes to  Mr.
Jacobs in the principal amount of $100,000 and $235,000, respectively.  Upon
demand, interest of $23,500 is payable on the $235,000 note.

*  On January 17, 1995, the Company issued demand cognovit promissory notes in
the combined principal amount of $200,000 to Mr. Krumm and Mr. Jacobs for
funds in that amount.  The Company repaid Mr. Krumm's note, with $10,000
interest, in February 1995 and repaid Mr. Jacobs' note, with $10,000 interest,
by November 1995.

*  In January and March 1995 the Company issued demand cognovit promissory
notes to Mr. Jacobs in the principal amount of $100,000 and $175,000,
respectively, for funds in that amount.  The Company paid off these notes,
with $10,000 and $25,000 interest, respectively, in April 1995.

*  In February 1995, the Company paid $10,000 of principal and interest on a
demand note payable to Standard Energy Company.

*  Between May 10 and November 2, 1995 the Company borrowed $1,375,000 from
Standard Energy Company under ten separate demand cognovit promissory notes.
Upon demand, total interest of $195,000 is due.  One of the notes in the
amount of $70,000 dated May 15, 1995, together with interest of $10,000, was
paid off on May 19, 1995.  One note in the amount of $150,000 dated November
2, 1995, together with interest of $10,000, was paid off on November 6, 1995.

*  On October 16, 1995 the Company borrowed $40,000 under a demand cognovit
note from a relative of Mr. Jacobs.  A principal payment of $30,000 was made
on October 20, 1995, and the remaining $10,000 of principal and $10,000 of
interest was paid on November 6, 1995.

*  In January through June 1995 Coloray sold certain equipment which was not
being used.  Proceeds were $380,000, which approximated the net book value of
the assets sold.  Half of the proceeds, or a total of $190,000 were paid to
Standard Energy Company against notes (see above) to obtain release of liens
on the assets.

*  On March 9, 1992 the Company loaned $90,000 to its President, Mr. France,
which was used by Mr. France to exercise options to purchase 60,000 shares of
Common Stock at $1.50 per share.  The note was due on demand with interest at
10%.  On December 30, 1992, an additional $75,000 was loaned to Mr. France.
This was originally due on December 31, 1993, with interest at 10%.  The
proceeds of this loan were used by Mr. France to exercise options to purchase
50,000 shares at $1.50 per share.  As of December 31, 1995, $71,000 in
principal and interest was due on the March note and $81,000 was due on the
December note.  In addition, the Company made advances to Mr. France of
approximately $91,000 through December 31, 1995.  All of these notes and
advances were forgiven in 1996 as part of Mr. France's severance package.

*  In addition to the borrowing noted above , during 1993, and 1994, the
Company borrowed additional funds from Messrs.  Krumm and Jacobs in connection
with the purchase of Coloray, all of which were subsequently repaid.

*  In 1995, Coloray borrowed a total of $106,000 from certain of its officers
to cover payroll and other immediate needs.  These notes were payable on
demand with interest at 12% to 20% of the principal.  Coloray repaid $72,000
of principal and $14,000 of interest in 1995.

The Company's Board of Directors will continue its policy of authorizing or
approving transactions in which any director, officer or other affiliate has
an interest only if the terms thereof are believed by the directors to be no
more favorable with respect to the interest of any such affiliate than could
be obtained from unaffiliated third persons.


14. COMMITMENTS:

License and Technology agreements:

In July 1992, the Company entered into a joint technology development
agreement with a major original equipment manufacturer ("OEM") for the
development of certain cordless chip technology.  Pursuant to the agreement,
the Company was required to make payments totaling $200,000 (none have been
made).  Due to scheduling delays, the OEM has agreed to defer these payments.
Upon sale of units containing the licensed technology, the OEM is obligated to
make royalty payments at rates that decline as volumes increase, with a
minimum annual royalty of $50,000.  The agreement has a 5 year term with
automatic one-year renewal terms thereafter.  If the OEM ceases development or
manufacture of the chip, the OEM will grant Scriptel a non-exclusive permanent
license on its technology in return for a payment of $1,000,000, and Scriptel
will pay royalties to the OEM.

In January 1994, the Company entered into a development and licensing
agreement with a major OEM which provides for the OEM to develop, license,
manufacture, sell and distribute certain products derived from the technology.
In addition, as a condition to the agreement, the OEM and the Company executed
a stock purchase agreement in February 1994 pursuant to which the OEM
purchased 477,099 shares of the Company's Common Stock for an aggregate price
of $1,250,000.  The stock sale was effected in April 1994.
  
The Company has entered into license agreements with various OEMs and
suppliers for use of the Company's technology in their products.  The Company
will be paid licensing fees based on the volume of use of its technology.  No
royalty fee income was recognized under these agreements during 1996, 1995 or
1994.

On December 16, 1994, Scriptel signed a Development Agreement and License with
Xetron Corporation, a designer and developer of radio frequency products.
Xetron is developing for Scriptel radio frequency technology to enable
Scriptel's hand-held devices to communicate using radio frequencies.  Under
the agreement Scriptel is obligated to pay Xetron a total of $875,000 in
quarterly installments from September  30, 1995 through December 15, 1996,
(this was expensed over the term of the agreement), in addition to royalty
payments upon reaching threshold sales of the resulting Scriptel hand-held
device incorporating the radio frequency technology.  During the three year
period ending December 16, 1997, Xetron has an option to purchase, upon
mutually acceptable terms, a 50% interest in a subsidiary to be formed by
Scriptel to exploit the radio frequency hand-held product.  If Xetron elects
to purchase the 50% interest, royalty payments under the agreement will
terminate.  Research and development expense in 1996, 1995 and 1994 included
$419,000, $438,000 and $18,000, respectively relating to this agreement.  No
payments have yet been made.

In 1993, 1994 and 1995 Coloray entered into several joint development
agreements with outside companies under Cooperative Research and Development
Agreements (CRADAs) and also with the U.S. Display Consortium on various
on-going projects relating to flat panel display technology.  Under these
agreements, Coloray is obligated to provide cash or in-kind payments of
$2,460,000 through various periods to June 1997.  The Company accrued $896,000
in 1996, $875,000 in 1995 and $689,000 in 1994, which is shown as research and
development expense.  In August 1995, Coloray entered into a license and
royalty agreement with SRI International.  The agreement requires an initial
$100,000 payment to SRI, and additional payments of $1,750,000 over a three
year term of research on field emission display (FED) technology.  It also
requires royalties on sale of FED units.  Costs of $1,507,000 and $343,000
were expensed in 1996 and 1995, respectively, relating to this agreement.  The
Company recognized an extraordinary income in the fourth quarter of 1996,
principally from eliminating from the consolidated financial statements the
liabilities for the CRADAs and for SRI.  The Company continues to have an
accrual for $1,180,000 payable to the U.S. Display Consortium as it may be
contractually liable on the debt.

Employment Agreements:

The Company has agreed to issue to each of J. Vance Holloway, its President,
and Bernard H. Eckstein, its Chairman, options to purchase 1,000,000 shares at
$0.25 per share, subject to achievement of certain performance goals in 1997.

At December 31, 1996, the Company has employment agreements with several key
employees and officers expiring at various dates through February 1998.  The
aggregate commitment for future salaries under these employment agreements is
approximately $300,000 in 1997, and $62,000 in 1998.


15.  ACQUISITION AND DISPOSITION OF COLORAY:

ACQUISITION

In April 1994, the Company acquired a majority of the outstanding shares of
Coloray, a development-stage company engaged in research and development of
flat panel displays for use in conjunction with computers and other
sophisticated electronic applications.  Coloray was under reorganization
pursuant to Chapter 11 of the Federal Bankruptcy Code, and the acquisition was
subject to the Bankruptcy Court's approval.  Coloray's principal assets were
its proprietary rights in basic field emission display technologies and its
sophisticated equipment used to fabricate display components.  Under the
court-approved plan of reorganization, the Company, in exchange for a 79.8%
interest in Coloray, issued approximately 1,261,000 shares of Common Stock,
purchased and extinguished $1,057,000 of claims against Coloray, issued
five-year options to purchase 460,000 shares at $2.00 per share, and paid
approximately $400,000.  An additional 180,000 options to purchase Scriptel
stock at $2.00 per share, that were exercisable over a period not to exceed
180 days, were issued to certain former common stockholders of Coloray.   The
former preferred stockholders of Coloray, in cancellation of their preferred
equity interests, received a 20.2% equity interest in Coloray. To meet its
cash requirements in the acquisition, the Company received in March 1994, a
loan of $450,000 in the form of a 10% interest bearing, secured, demand
promissory note, payable to Messrs. Krumm and Jacobs.  The loan was repaid in
April 1994.  As additional consideration for the loan, the Company conveyed to
the two stockholders 28.8%, in the aggregate, of the Coloray Common Stock
leaving the Company with a 51% ownership interest in Coloray and which
resulted in a finance charge of $582,000 in 1994.  Scriptel entered into a
lease agreement with Coloray's landlord.

Approximately $3,357,000 of  the costs associated with the 1994 acquisition,
including the value of options issued, related to purchased research and
development projects in progress.  Such amount has been reported as research
and development expense in the Company's 1994 financial statements.


DISPOSITION

In March 1996, the Company determined that it could no longer support the
operations of Coloray and announced plans to close that operation.  The
Company incurred additional costs to close Coloray of approximately $400,000
including rental payments, environmental shutdown, severance, and equipment
decommissioning.  All of Coloray's equipment was sold in 1996; proceeds were
used to pay off part of Coloray's (and the Company's) secured debt with Mr.
Jacobs or his affiliates.  The Company will attempt to obtain the release of
Coloray from its CRADA, SRI, and U.S. Display Consortium commitments as part
of the closure.  Coloray has no assets except rights on patents.  At December
31, 1996, Coloray had approximately $8 million of liabilities, including about
$3 million of intercompany debt with the Company.  If value cannot be obtained
from the sale of other disposition of patent rights, it is likely
that Coloray will have to liquidate.

On December 31, 1996, Coloray (until then a majority owned subsidiary of the
Company) and the Company entered into a consulting agreement with M. Kathy
Vieth, former president of Coloray, for the purpose of having Ms. Vieth
promote Coloray's technology, license that technology to other companies, and
seek a monetary return on that technology.  As part of the agreement with Ms.
Vieth, Scriptel transferred to Ms. Vieth 50,000 of its shares of Coloray
common stock.  This reduced Scriptel's ownership interest in Coloray to forty-
six percent (46%), and Coloray then ceased to be a consolidated subsidiary of
Scriptel.  Because of this, Scriptel reported approximately $4.0 million lower
liabilities at December 31, 1996 than if it had continued to consolidate
Coloray.  This amount has been shown as an extraordinary item in the
accompanying consolidated financial statements.


16. SUBSEQUENT EVENTS:

In addition to several items described above, the Company had the following
events occur subsequent to December 31, 1996, and through the date of the
accompanying independent accountants opinion.

*  On January 22, 1997, the Company sold and issued 1,000,000 shares of common
stock to a foreign investor at a price of $0.10 per share.  The shares were
issued under the provisions of Regulation S promulgated by the Securities and
Exchange Commission ("Regulation S").  The Company received cash proceeds of
$100,000.  The Company paid a $13,000 cash commission to Alexander, Wescott &
Co., Inc. ("Wescott"), the placement agent for the shares.  Under an agreement
with Wescott, the Company will also issue to Wescott warrants to purchase
100,000 shares of common stock at an exercise price of $0.10 per share and
which will expire five years after issuance.  Such warrants will be issued
under the provisions of Rule 144.  The closing market bid price of the
Company's common stock on January 22, 1997 was $0.17 per share.

*  Another, similar, sale of 1,000,000 shares to a foreign investor took place
on January 28, 1997.  The closing market bid price of the Company's common
stock on January 28, 1997 was $0.14 per share.  Wescott was also the agent on
that transaction.

*  A debenture issued in November 1996 had been converted into 1,001,151
shares at a conversion rate of $0.20 per share.  These shares were issued
under the provisions of Regulation S.  Wescott was the placement agent.  Due
to a change in price of the Company's common stock, the conversion terms were
amended and an additional 1,001,151 shares were issued to the investor in
January 1997 under the provisions of Regulation S.  This effectively set the
revised conversion price on the debenture at $0.10 per share.

*  In February 1997, the Company sold 520,000 shares at $0.10 per share to an
accredited investor.  The market bid price was approximately $0.10 per share
on the date of the transaction.  Such shares are subject to the provisions of
Rule 144.  The $52,000 proceeds were used to support the Company's operations.

*  Nine accredited investors converted their notes and accrued interest into a
total of 1,708,330 shares at $0.10 per share.  The market bid price was
approximately $0.10 per share on the date of the transactions.  The shares are
subject to the provisions of Rule 144.  The Company has reduced debt by
$171,000 as a result of this conversion.

*  In January 1997, the Company issued 700,000 shares of common stock to a
consultant in payment for services rendered in 1997.  Such shares are subject
to the provisions of Rule 144.  The value of approximately $105,000 will be
treated as an administrative expense in the first quarter of 1997.

*  An agreement with two creditors in February 1997 reduced the conversion
terms on $85,000 of debt from a conversion price of $0.55 per share to a new
conversion price of $0.10 per share.  As a result, an additional 695,000
shares were committed for the conversion features on this debt.

*  The Company amended its agreement with Wescott on February 12, 1997.  The
amendment requires the Company to give Wescott a warrant to purchase an
aggregate of 30% of the shares issued under the agreement.  The exercise price
will be $0.10 per share and the warrant will expire five years after issuance.
Wescott has piggyback registration rights on the shares which would be issued
if the warrants are exercised. (The prior agreements with Wescott limited the
warrants to a maximum of 10% of the shares issued under the agreement.)

*  The Company made payments totaling $26,000 on debt payable to Mr. Jacobs.

*  The Company amended the consulting agreement with M. Kathy Vieth (see Note
15).  The revised agreement requires payment of 500,000 shares of stock and
$10,000 cash, with half to be paid on success in obtaining an acceptable
conclusion to the research agreement with SRI and the other half paid on
success in obtaining an acceptable conclusion to the membership in the U.S.
Display Consortium.

*  The Company defaulted in payment of its payroll taxes in January, February
and March 1997.  The unpaid taxes from this period total approximately
$100,000.

*  In March 1997, the Company entered into an agreement with two investors.
Under this agreement, the investors purchased a total of 300,000 shares of
Common Stock at $0.10 per share and exercised options to purchase an
additional 400,000 shares of Common Stock at $0.10 per share.  The Company
gave the investors new options to purchase 400,000 shares of Common Stock at
an initial exercise price of $0.10 per share (which exercise price increases
in steps to a maximum of $0.20 per share), and which are exercisable until
2002.  The Company also issued 600,000 new options to the investors at a flat
exercise price of $0.10 per share and which will expire in 2000.  All of the
options are callable by the Company if the Company's stock price reaches $0.50
per share.

17. SUMMARY OF STOCKHOLDERS MEETING

At their annual meeting in October 1996, the Company's shareholders: elected
Bernard H. Eckstein and Philip A. Schlosser as directors; approved an increase
in the authorized shares of Common Stock from 50,000,000 shares to 125,000,000
shares (the Company has filed a Restated Certificate of Incorporation with the
state of Delaware to reflect the change); approved an increase in the amount
of shares which may be issued under the 1993 Stock Option Plan from 5,000,000
shares to 7,500,000 shares; and ratified the selection of Norman, Jones, Enlow
& Co. as the Company's independent accountants for the fiscal year ending
December 31, 1996.  The shareholders did not approve the requested amendment
to the Company's Certificate of Incorporation to authorize a class of
15,000,000 shares of undesignated Preferred Stock.


18. DISCONTINUED OPERATIONS - SALE OF AMPSCO:

Ampsco has had continuing losses from operations since acquisition, and at
December 31, 1995 had an accumulated deficit in shareholders' equity of
approximately $2.2 million.  To cut the ongoing losses and to focus the
Company on the computer peripheral segment, in April 1996 the Company sold all
of the common stock of Ampsco.  No appraisal of Ampsco was made in connection
with this transaction.

The buyer was 1896, Inc., a corporation headed by Thomas J. Leukart, a
director of the Company at the time of sale.  Dennis J. Leukart, president of
Ampsco at the time of the sale is a brother of Thomas Leukart and the
father-in-law of James W. France, Jr., the Company's former Chairman,
President, and CEO.  As part of the agreement of sale, both Thomas Leukart and
Dennis Leukart resigned from their positions with the Company and cancelled
their employment agreements.  Thomas Leukart also resigned as Director of the
Company.

The buyer issued a Promissory Note (the "Note") to the Company in partial
payment of the purchase price.  The Note was for $650,000, with interest at
5%.  Interest was payable monthly, with the entire principal balance due on
April 1, 1999.  The Company endorsed this Note to Mr. Jacobs, who had a
security interest in the Ampsco shares which were sold.  The Company did not
record any amount of the Note as proceeds on the sale of Ampsco because
management estimates that collection of the Note is improbable.  Ampsco made
small, contractual, payments on the Note for April and May, which were
transferred to Mr. Jacobs and used to offset notes payable to him.  In June
1996, the Company sold the Ampsco Note to Mr. Jacobs in return for a $100,000
reduction in notes and interest payable to him.  The Company recorded these
transactions as income in the second quarter.  If the Note is repaid to Mr.
Jacobs, Mr. Jacobs has agreed to release Ampsco from any further obligation it
may have as endorser of several notes the Company has with Mr. Jacobs or his
affiliates.

The remaining payments of the purchase price were to be in the form of monthly
royalties at 2% of Ampsco's collected sales for a ten-year period.  These
payments were subject to a maximum of $100,000 per year.  (Ampsco's sales in
1995 were $1,827,000, which would have resulted in a royalty payment of
approximately $37,000 had the agreement then been in effect.)  The Company
sold its right to royalty payments to Mr. Jacobs as part of the $100,000
reduction of debt noted above.

The Company has treated the sale of Ampsco as a discontinued operation.
Consequently, Ampsco's results are excluded from the accompanying consolidated
balance sheets at December 31, 1996 and 1995, and from the loss from
continuing operations shown on the accompanying statements of operations for
the years ended December 31, 1996, 1995, and 1994.

The Company is contractually obligated on Ampsco's notes payable to Stimsonite
Corporation (see Note 3).  Stimsonite has obtained a judgment against the
Company on this debt.  The Company recorded a loss on disposal of Ampsco of
$450,000 to recognize the contractual obligation to Stimsonite as of April
1996.  The Company is also negotiating with the creditor to settle the debt
for a reduced amount.  As part of the agreement to sell the common stock of
Ampsco, the Company contributed its $2.2 million intercompany receivable from
Ampsco to the capital of Ampsco.  This resulted in almost complete liquidation
of Ampsco's shareholders deficit, and the buyer assumed the remaining net
liabilities of Ampsco.  The Company also recorded in 1995 the loss from
operations of Ampsco until the disposal date in April.

Ampsco's sales were $1,827,000 for the year ended December 31, 1995 and
$494,000 for the three months ended March 31, 1996  No information is
available on Ampsco's sales since March 31, 1996.






PART IV, ITEM 14(d)

Schedule II - Valuation and qualifying accounts

Scriptel Holding, Inc. and Subsidiaries

Schedules other than the one listed above are omitted for the reason that they
are not required or are not applicable, or the required information is shown
in the consolidated financial statements or notes thereto.

                                           Additions
                              Balance at  charged to                Balance at
                              beginning    costs and   Deductions-    end of
Description                   of period    expenses     describe      period
----------------------       ----------   ----------   ----------   ----------

Allowance deducted from asset
 to which it applies:

Allowance for doubtful accounts
 for years ended:
  December 31, 1996           $  3,000        $  --        $  --     $  3,000

  December 31, 1995             52,000           --       (8,000)(B)    3,000
                                                         (41,000)(C)

  December 31, 1994            189,000       51,000     (188,000)(B)   52,000

Inventory obsolescence reserve
 for years ended:
  December 31, 1996                 --           --           --           --

  December 31, 1995            150,000           --     (150,000)(A)       --

  December 31, 1994             90,000       60,000           --      150,000

Note A - The obsolete inventory was physically scrapped.
Note B - Uncollectible accounts were written off.
Note C - The allowance for doubtful accounts of a discontinued operation was
removed from the consolidated balance sheet at December 31, 1995.