SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                    FORM 10-Q

(Mark One)

[X]  Quarterly report pursuant to Section 13 or 15(d) of the Securities Exchange
     Act of 1934 for the quarterly period ended June 30, 1997 or

[ ]  Transition  report  pursuant  to  Section  13  or  15(d)  of the Securities
     Exchange Act of 1934 for the transition period from _______ to _________.

        Commission file number:  333-23519

                           VESTCOM INTERNATIONAL, INC.
             (Exact name of registrant as specified in its charter)
 
       New Jersey                                           22-2476114
(State or other jurisdiction of                            (I.R.S. Employer
 incorporation or organization)                             Identification No.)

                            1100 Valley Brook Avenue
                           Lyndhurst, New Jersey 07071
           (Address of principal executive office, including zip code)

                                  201-935-7666
              (Registrant's telephone number, including area code)


________________________________________________________________________________
   (Former name, former address and former fiscal year, if changed since last
    report)


Indicate by check mark whether  registrant (1) has filed all reports required to
be filed by section 13 or 15(d) of the  Securities  Exchange  Act of 1934 during
the  preceding 12 months (or for such  shorter  period that the  registrant  was
required  to file  such  reports)  and  (2)  has  been  subject  to such  filing
requirements for the past 90 days.


                                 Yes [ ] No [X]


The  number of shares of common  stock  outstanding  as of August 5,  1997,  was
8,349,291 shares.

<PAGE>

                                  INDEX TO 10-Q


Part I:  Financial Information                                          Page(s) 

Item 1:  Financial Statements

Vestcom International, Inc.:
    Condensed Balance Sheets - As of December 31, 1996 
      and June 30, 1997 (unaudited)                                        4
    Condensed Statements of Operations - For the Three Months Ended 
      June 30, 1997 (unaudited) and the Six Months 
      Ended June 30, 1997 (unaudited)                                      5
    Condensed Statements of Cash Flows - For the Six Months Ended 
     June 30, 1997 (unaudited)                                             6
    Notes to Condensed Financial Statements (unaudited)                  7-11

Comvestrix Corp.:
    Condensed Balance Sheets - As of December 31, 1996 and 
     June 30, 1997 (unaudited)                                            12
    Condensed Statements of Income - For the Three Months 
     Ended June 30, 1996 (unaudited) and 1997 (unaudited) 
     and the Six Months Ended June 30, 1996 (unaudited) 
          and 1997 (unaudited)                                            13
    Condensed Statements of Cash Flows - For the Six 
         Months Ended June 30, 1996 (unaudited) and 
         1997 (unaudited)                                                 14
    Notes to Condensed Financial Statements (unaudited)                   15

Morris County Direct Mail Services, Inc. and related companies:
    Condensed Combined Balance Sheets - As of December 31, 1996 
        and June 30, 1997 (unaudited)                                     16
    Condensed Combined Statements of Income - For the Three 
        Months Ended June 30, 1996 (unaudited) and 1997 
         (unaudited) and the Six Months Ended June 30, 1996 
         (unaudited) and 1997 (unaudited)                                 17
    Condensed Combined Statements of Cash Flows - For the Six 
          Months Ended June 30, 1996 (unaudited) and 
          1997 (unaudited)                                                18
    Notes to Condensed Combined Financial Statements (unaudited)          19

Image Printing Services, Inc.:
    Condensed Balance Sheets - As of December 31, 1996 
          and June 30, 1997 (unaudited)                                   20
    Condensed Statements of Income - For the Three Months Ended 
          June 30, 1996 (unaudited) and 1997 (unaudited) and the 
          Six Months Ended June 30, 1996 (unaudited) and 1997
         (unaudited)                                                      21
    Condensed Statements of Cash Flows - For the Six 
          Months Ended June 30, 1996 (unaudited)
          and 1997 (unaudited)                                            22
    Notes to Condensed Financial Statements (unaudited)                   23

Electronic Imaging Services, Inc.:
    Condensed Balance Sheets - As of December 31, 1996 and 
          June 30, 1997 (unaudited)                                       24
    Condensed Statements of Operations - For the Three 
          Months Ended June 30, 1996 (unaudited)
          and 1997 (unaudited) the Six Months Ended 
          June 30, 1996 (unaudited) and 1997
         (unaudited)                                                      25
    Condensed Statements of Cash Flows - For the Six 
          Months Ended June 30, 1996 (unaudited)
          and 1997 (unaudited)                                            26
    Notes to Condensed Financial Statements (unaudited)                   27

Computer Output Systems, Inc.:
    Condensed Balance Sheets - As of December 31, 1996 and 
          June 30, 1997 (unaudited)                                       28

    Condensed Statements of Income - For the Three Months 
          Ended June 30, 1996 (unaudited) and 1997 
               (unaudited) and the Six Months Ended 
          June 30, 1996 (unaudited) and 1997
         (unaudited)                                                      29
    Condensed Statements of Cash Flows - For the Six Months 
          Ended June 30, 1996 (unaudited)
         and 1997 (unaudited)                                             30
    Notes to Condensed Financial Statements (unaudited)                   31

Lirpaco Inc. and Subsidiary:
    Condensed Consolidated Balance Sheets - As of 
          December 31, 1996 and June 30, 1997
         (unaudited)                                                      32
    Condensed Consolidated Statements of Income - For the 
          Three Months Ended June 30, 1996
          (unaudited) and 1997 (unaudited) 
          and the Six Months Ended June 30, 1996 
          (unaudited) and 1997 (unaudited)                                33
    Condensed Consolidated Statements of Cash Flows - For the 
           Six Months Ended June 30, 1996
          (unaudited) and 1997 (unaudited)                                34
    Notes to Condensed Consolidated Financial 
          Statements (unaudited)                                          35


Item 2:  Management's Discussion and Analysis of Financial Condition and Results
         of Operations

Introduction                                                             36

Comvestrix Corp.                                                         37

Morris County Direct Mail Services, Inc. and related companies           38

Image Printing Systems, Inc.                                             39

Electronic Imaging Services, Inc.                                        40
Computer Output Systems, Inc.                                            41

COS Information                                                          42


Part II:  Other Information

Item 6. Exhibits and Reports on Form 8-K                                 43

    Signatures                                                           43

<PAGE>
<TABLE>

                           VESTCOM INTERNATIONAL, INC.

                            CONDENSED BALANCE SHEETS
                    As of December 31, 1996 and June 30, 1997


                                                                                                             Pro Forma
                                                              December 31, 1996       June 30, 1997        June 30, 1997
                                                                                       (unaudited)           (unaudited)

                                                              ASSETS

<S>                                                      <C>                     <C>                       <C>            
CASH AND CASH EQUIVALENTS                                $    1,344,758          $       238,376           $       238,376

PROPERTY AND EQUIPMENT, net                                      -                        16,560                    16,560
DEFERRED OFFERING COSTS                                         392,664                2,149,194                 2,149,194
                                                                -------                ---------                 ---------

                  Total assets                           $    1,737,422          $     2,404,130            $    2,404,130
                                                         ==============          ===============            ==============


                      LIABILITIES AND SHAREHOLDERS' EQUITY

LIABILITIES:
         Notes payable to related parties                $    1,292,732          $    1,292,732             $    1,292,732
         Pro forma cash due to Founding Companies                -                        -                     18,432,403
         Other liabilities                                      320,230               1,092,363                  1,092,363
                                                                -------               ---------                  ---------

                  Total liabilities                           1,612,962               2,385,095                 20,817,498

COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS' EQUITY
         Common stock                                         5,481,501               5,481,501                  5,481,501
         Pro forma distributions to Founding Companies           -                       -                     (18,432,403)
         Subscriptions receivable                              (279,082)                 -                         -
         Accumulated deficit                                 (5,077,959)             (5,462,466)                (5,462,466)
                                                             ----------              ----------                 ---------- 

               Total stockholders' equity                       124,460                  19,035                (18,413,368)
                                                                -------                  ------                ----------- 

               Total liabilities and stockholders' equity  $  1,737,422          $    2,404,130             $    2,404,130
                                                           ============          ==============             ==============

</TABLE>



            The accompanying notes to condensed financial statements
                  are an integral part of these balance sheets.

<PAGE>
<TABLE>
<CAPTION>

                                                   VESTCOM INTERNATIONAL, INC.

                                                CONDENSED STATEMENTS OF OPERATIONS
                                             For the Three Months Ended June 30, 1997
                                              and the Six Months Ended June 30, 1997


                                                                        Three Months Ended June 30,       Six Months Ended June 30,
                                                                                1997                                1997    
                                                                                (unaudited)                     (unaudited)

<S>                                                                            <C>                                  <C>    
REVENUES                                                                       $     -                              $     -
COST OF REVENUES                                                                     -                                    -
                                                                                --------                             --------
Gross profit                                                                         -                                    -

SELLING, GENERAL AND ADMINISTRATIVE
    EXPENSES                                                                     342,794                                346,691
                                                                                 -------                                -------
         Loss from operations                                                   (342,794)                              (346,691)

OTHER INCOME (EXPENSE)
    Interest expense                                                             (27,881)                               (54,694)
    Interest and other income                                                      5,018                                 16,878
                                                                                   =====                                 ======
         Net loss                                                              $(365,657)                           $  (384,507)
                                                                               =========                            =========== 

Earnings per share - Primary                                                   $    0.09                            $      0.10
                                                                               =========                            ===========
Earnings per share - Diluted                                                   $    0.09                            $      0.10
                                                                               =========                            ===========

Weighted average shares used in computing
    primary and diluted losses per share                                       3,921,791                              3,921,791
                                                                               =========                              =========


</TABLE>










            The accompanying notes to condensed financial statements
                  are an integral part of these statements.

<PAGE>
<TABLE>
<CAPTION>

                           VESTCOM INTERNATIONAL, INC.

                       CONDENSED STATEMENTS OF CASH FLOWS
                     For The Six Months Ended June 30, 1997

                                                                                         
                                                                                     1997 
                                                                                     ----
                                                                                  (unaudited)

CASH FLOWS FROM OPERATING ACTIVITIES:
<S>                                                                              <C>         
    Net loss                                                                     $  (384,507)
    Adjustments to reconcile net income to 
          net cash used in operating activities-
         Depreciation and amortization                                                   878
         Changes in operating assets (increase) decrease in-
                  Deferred offering costs                                         (1,756,530)
         Changes in operating liabilities increase (decrease) in-
                  Accrued expenses                                                   772,133
                                                                                     -------

                           Net cash used in operating activities                  (1,368,026)
                                                                                  ---------- 

CASH FLOWS FROM INVESTING ACTIVITIES:
    Acquisition of property and equipment                                            (17,438)
                                                                                     ------- 

CASH FLOWS FROM FINANCING ACTIVITIES:
    Collection of subscriptions receivable                                           279,082
                                                                                     -------

                           Net cash provided by financing activities                 279,082
                                                                                     -------

                           Net decrease in cash and cash equivalents             (1,106,382)

CASH AND CASH EQUIVALENTS, beginning of period                                     1,344,758
                                                                                   ---------

CASH AND CASH EQUIVALENTS, end of period                                         $   238,376
                                                                                 ===========

</TABLE>


     The accompanying notes to condensed financial statements
                  are an integral part of these statements.


<PAGE>
                           VESTCOM INTERNATIONAL, INC.

                     NOTES TO CONDENSED FINANCIAL STATEMENTS
                                   (unaudited)

(1)  BASIS OF PRESENTATION

     The  accompanying   unaudited  condensed  financial  statements  have  been
     prepared in accordance with generally  accepted  accounting  principles for
     interim  financial  information and with the  instructions to Form 10-Q and
     Article 10 of Regulation S-X.  Accordingly,  they do not include all of the
     information  and  footnotes  required  by  generally  accepted   accounting
     principles for complete financial statements. The balance sheet at December
     31, 1996 has been derived  from the audited  financial  statements  at that
     date. In the opinion of management,  all adjustments  (consisting of normal
     recurring  adjustments)  considered  necessary for a fair presentation have
     been included.  Operating results for the six and three-month periods ended
     June 30, 1997 are not  necessarily  indicative  of the results  that may be
     expected for the year ended December 31, 1997.

     The pro forma balance sheet as of June 30, 1997, reflects a distribution of
     the cash  consideration  of  $18,432,403  to be  received  by the  Founding
     Company  stockholders  in connection  with the  Acquisitions  as defined in
     Footnote 2. The cash  consideration of $18,432,403 is to be funded from the
     proceeds  of the  Company's  initial  public  offering  ("Offering").  (See
     Footnote 11.)

(2)  NATURE OF BUSINESS 

     Vestcom  International,  Inc. (a New Jersey corporation)  ("Vestcom" or the
     "Company"),  was  formed  in  September  1996 to  create  an  international
     provider of computer output and document management services. The Company's
     primary strategy is to consolidate  similar and complementary  companies in
     the highly  fragmented  computer  output and document  management  services
     industry through acquisition.

     Vestcom intends to acquire seven companies (the  "Acquisitions"),  complete
     an initial  public  offering  (the  "Offering")  of its common stock (taken
     together "the Consolidation") and, subsequent to the Consolidation, intends
     to continue to acquire,  through merger or purchase,  similar  companies to
     expand  its  operations.  In  March  1997,  Vestcom  filed  a  registration
     statement on Form S-1 for the initial public  offering of its common stock.
     The Offering and the Acquisitions were consummated on August 4, 1997.

     Vestcom's  primary assets at June 30, 1997, are cash, and deferred offering
     costs. Vestcom has not conducted any operations, and all activities to date
     have related to the Acquisitions and the Offering.  Cash was generated from
     related parties for the initial  capitalization of the Company. There is no
     assurance that Vestcom will be able to generate future operating  revenues.
     (See Footnote 11.)

(3)  MERGER AGREEMENT 

     The Founding  Companies  are  Comvestrix  Corp.,  Morris County Direct Mail
     Services,  Inc.  and related  companies,  Computer  Output  Systems,  Inc.,
     Electronic  Imaging  Services,  Inc., Image Printing Systems Inc.,  Lirpaco
     Inc.  and  Subsidiary  and  Mystic  Graphic  Systems,  Inc.  The  aggregate
     consideration  that  will  be paid  by  Vestcom  to  acquire  the  Founding
     Companies  is,  subject  to  working  capital   adjustments  and  earnouts,
     approximately  $18.4 million in cash and 2,852,111  shares  Vestcom  common
     stock.

<PAGE>

                           VESTCOM INTERNATIONAL, INC.

               NOTES TO CONDENSED FINANCIAL STATEMENTS (Continued)
                                   (unaudited)

(4) CREDIT FACILITY
      
     In March  1997,  the  Company  received  a  commitment  letter  from a bank
     providing  for  a  $30  million  bank  credit   facility  to  be  used  for
     acquisitions,  working capital and other corporate purposes.  (See Footnote
     11.)

(5)  STOCK OPTION PLAN

     In March 1997, the Company  approved the 1997 Equity  Compensation  Program
     (the "Stock  Option  Plan") which  provides for the granting or awarding of
     stock  options  and stock  appreciation  rights to  nonemployee  directors,
     officers and other key employees and consultants (including officers of the
     Founding  Companies).  The number of shares  authorized  and  reserved  for
     issuance  under the Plan is limited to the greater of 700,000  shares or 10
     percent of the number of shares of common  stock  outstanding.  In general,
     the  terms of the  option  awards  (including  vesting  schedules)  will be
     established  by  the  Company's   Board  of  Directors  or  a  Compensation
     Committee.

(6)  EMPLOYMENT AGREEMENTS

     Certain  executives  of the  company  have  each  entered  into  employment
     agreements with the Company. Mr. Cartun's will commence on the consummation
     of the  Offering  and  the  Acquisitions  and  Mr.  McLaughlin's  agreement
     commenced on March 1, 1997.  Both  agreements  will  continue for a term of
     three years following the  consummation of the Offering.  Pursuant to their
     respective  agreements,  Mr.  Cartun  will  serve as  President  and  Chief
     Executive  Officer of the Company at an annual base salary of $200,000  and
     Mr.  McLaughlin will serve as Executive Vice President of the Company at an
     annual base salary of  $144,000.  Mr.  Goldman has entered  into an at-will
     employment agreement with Vestcom, dated May 21, 1997, pursuant to which he
     will serve as Executive Vice President and Chief  Financial  Officer of the
     Company at an annual  base  salary of  $180,000.  Mr.  Goldman's  agreement
     provides  that in the event of a Change in Control,  if he does not receive
     sufficient  prior  notice of continued  employment,  he will be entitled to
     receive severance pay of $180,000, in 12 monthly installments.  Mr. Goldman
     also has the right in the event of a Change in  Control  to  terminate  his
     employment,  in which case he will be entitled  to receive the  $180,000 of
     severance   pay.   Mr.   Goldman's    agreement   also   contains   certain
     non-competition  covenants  which  will  continue  for one  year  following
     termination of employment. Upon consummation of the Offering, Mr. Goldman's
     agreement  provides  that he will be  granted  options to  purchase  50,000
     shares of Common  Stock at an exercise  price  equal to the initial  public
     offering price.

     Each  of  the  employment  agreements  provides  that,  in the  event  of a
     termination of employment by the Company without cause,  such employee will
     be  entitled  to  receive  from the  Company an amount in cash equal to the
     employee's then current annual base salary for the remainder of the term.

(7)  CAPITAL STOCK In March,  1997, the Company filed a restated  Certificate of
     Incorporation,  to  eliminate  the  Preferred  Stock and  create a class of
     10,000,000 shares of Undesignated Stock.

     In May and July 1997,  Oppenheimer  returned  to Vestcom  an  aggregate  of
     225,512 shares of common stock.

(8)  NEW ACCOUNTING STANDARD 

     In February 1997, the Financial Accounting Standards Board issued Statement
     No. 128,  "Earnings per Share".  This statement  supersedes APB Opinion No.
     15,  "Earnings per Share" and  simplifies  the  computation of earnings per
     share ("EPS"). Primary EPS is replaced with a presentation of basic


<PAGE>

                           VESTCOM INTERNATIONAL, INC.

               NOTES TO CONDENSED FINANCIAL STATEMENTS (Continued)
                                   (unaudited)

     EPS.  Basic EPS  includes  no dilution  and is computed by dividing  income
     available to common stockholders by the  weighted-average  number of common
     shares  outstanding  for the period.  Fully  diluted  EPS is replaced  with
     diluted  EPS.  Diluted  EPS  reflects  the  potential  dilution  if certain
     securities are converted.  SFAS No. 128 requires dual presentation of basic
     and diluted EPS by entities that issue any  securities  other than ordinary
     common stock.  SFAS No. 128 will be effective for financial  statements for
     both  interim and annual  periods  ending  after  December  15,  1997,  and
     requires  retroactive  restatements of all EPS data presented.  The Company
     plans to adopt the  statement on December  31,  1997.  The Company does not
     expect the effect of adopting SFAS No. 128 to have a material impact on its
     EPS calculations,  and, if adopted currently, SFAS No. 128 would not have a
     material impact on the Company's reported EPS.

(9)  PREPAID  EXPENSES  

     In connection with the filing of the  Registration  Statement  discussed in
     Note 2, the Company has recorded  Deferred  Offering Costs of approximately
     $2,149,194 as of June 30, 1997. Such amount,  which  represents fees of the
     Company's  professionals  and  consultants in connection with the Offering,
     will be charged against equity upon successful  completion of the Offering.
     (See Footnote 11.)

(10) COMMITMENTS  AND  CONTINGENCIES 

     In May, 1997 the Company entered into an agreement with  Oppenheimer & Co.,
     Inc.   ("Oppenheimer")   pursuant  to  which  the  Company  agreed  to  pay
     Oppenheimer an aggregate amount of up to $1.8 million for advisory services
     provided by  Oppenheimer.  Such amount is payable only upon the  successful
     completion  of the  Consolidation.  In  addition,  Vestcom  has  agreed  to
     reimburse  Oppenheimer for up to $75,000 of out-of-pocket  expenses related
     to such services.

(11) SUBSEQUENT EVENTS

     On July 30, 1997, Vestcom International,  Inc. announced the initial public
     offering of  3,850,000  shares of its Common Stock at a price of $13.00 per
     share. The Company's  underwriters  exercised in full an option to purchase
     an additional  577,500  shares of the Company's  Common Stock at $13.00 per
     share to cover over allotments of the initial public offering.  The initial
     public  offering was  consummated  on August 4, 1997. The capital raised by
     this offering was approximately $54,000,000, net of underwriting discounts.

     Concurrently   with  the  consummation  of  the  Company's  initial  public
     offering,  Vestcom  International,  Inc.  acquired  seven  companies in the
     computer  output and  document  management  services  industry - Comvestrix
     Corp.,  Morris County  Direct Mail  Services,  Inc. and related  companies,
     Image  Printing  Systems,  Inc.,  Electronic  Imaging  Services,  Inc., COS
     Information Inc., Computer Output Systems, Inc. and Mystic Graphic Systems,
     Inc.

     The net  proceeds of the offering are being used to pay the cash portion of
     the purchase price for the seven Founding Companies,  and are being used to
     repay certain indebtedness of Vestcom and of the Founding Companies, to pay
     certain fees in connection with the acquisitions of the Founding  Companies
     and for general  corporate  purposes,  which are expected to include future
     acquisitions.  

     On August 13,  1997,  the Company and Summit Bank entered into an Equipment
     Loan and Revolving Credit Agreement in the amount of $30,000,000.

     The following  schedules  reflect the financial  position and Statements of
     Operations for Vestcom International,  Inc., on a pro forma basis, assuming
     that  the  acquisitions  were  consummated  on  January  1 of  the  periods
     presented. The information is not necessarily indicative of the results the
     Company would have  attained had these events  actually then occurred or of
     the Company's future results.

<PAGE>

Note (11) Continued


               VESTCOM INTERNATIONAL, INC. AND FOUNDING COMPANIES

                             PRO FORMA BALANCE SHEET
                               As of June 30, 1997
                                   (unaudited)


                                  Pro Forma For
                                   Offering
Current Assets:

   Cash and cash equivalents    $ 22,883,728
   Accounts receivable, net       11,837,752
   Due from related parties          196,428
   Postage receivable                656,374
   Notes receivable                   75,473
   Supplies inventory              1,929,557
   Prepaid postage                 1,325,592
   Prepaid expenses and other        914,947
                                  ----------
    Total current assets          39,819,851

   Property and Equipment, Net    19,045,784
   Goodwill                       44,030,717
   Other assets                      496,426
                                 -----------
       Total assets              103,392,778
                                 ===========

Current Liabilities:
   Short-term borrowings             -
   Current portion of long-term
     debt and capital lease        1,125,929
   Due to related parties            -
   Accounts payable and accrued
     expenses                      8,799,214
   Pro forma cash due Founding
     Companies                       -
   Postage advance                 2,858,279
   Deferred income taxes           1,854,512
   Other liabilities                 466,330
                                  ----------
     Total current liabilities    15,104,264

Long-Term Debt and Capital
  Lease Obligations                5,403,692
Pledged Stock                         -
Deferred Charges and Other
  Liabilities                      2,403,329
Deferred Income Taxes                218,158
                                  ----------
Total liabilities                 23,129,443

Stockholders' Equity:
   Common stock                   79,132,389
   Preferred stock                 2,651,867
   Additional paid-in capital         -
   Subscriptions receivable           -
   Retained earnings              (1,520,930)
                                  80,263,335
Less - treasury stock adjustments     -
Cumulative translation equity         - 
                                  -----------
     Total stockholders' equity   80,263,335
                                  -----------

       Total liabilities and
         stockholders' 
         equity                $ 103,392,778
                               ==============

<PAGE>
Note (11) Continued


<TABLE>
<CAPTION>
               VESTCOM INTERNATIONAL, INC. AND FOUNDING COMPANIES

                       PRO FORMA STATEMENTS OF OPERATIONS
        For the Three Months and Six Months Ended June 30, 1996 and 1997
                                   (unaudited)

          
                                 Three Months          Three Months       Six Months        Six Months
                                 Ended June 30,        Ended June 30,     Ended June 30,   Ended June 30,
                                    1996                   1997              1996             1997

<S>                               <C>                  <C>               <C>             <C>
Revenues                        $ 16,125,082            $ 17,756,968     $32,318,506     $ 36,063,704
Cost of revenues                  10,447,584              11,343,792      20,855,581       22,868,649
                                  ----------              ----------     ---------         ----------
    Gross profit                   5,677,498               6,413,176      11,462,925       13,195,055
Selling, general and 
   administrative expenses         3,962,811               4,178,420       7,623,110        8,254,725
Goodwill amortization                376,650                 364,554         753,301          729,108
                                   ---------               ---------     -----------        ---------
Income (loss) from operations      1,338,037               1,870,202       3,086,514        4,211,222
Other income (expense):
    Interest expense                  -                        -               -                -
    Interest and other income         68,392                  32,527          83,673           36,926
                                   ---------                --------         -------        ---------
Income before provision 
     for income taxes              1,406,429               1,902,729       3,170,187        4,248,148
Provision for income taxes           713,231                 906,913       1,569,395        1,990,903
                                    --------               ---------       ---------        ---------
Net income                      $    693,198            $    995,816       1,600,792        2,257,245
                                ------------            ------------       ---------        ---------
Earnings per share                      0.08                    0.12            0.19             0.27
Weighted average shares used    ============            ============       =========        =========
  in computing pro forma net 
  income per share               $ 8,349,291            $  8,349,291       8,349,291        8,349,291
                               =============            ============       =========        =========
</TABLE>

<PAGE>
<TABLE>
<CAPTION>
                                                         COMVESTRIX CORP.

                                                     CONDENSED BALANCE SHEETS
                                            As of December 31, 1996 and June 30, 1997


                                                          December 31, 1996         June 30, 1997
                                                                                    (unaudited)

                                     ASSETS
CURRENT ASSETS:
<S>                                                       <C>                      <C>        
    Cash and cash equivalents                             $   106,610              $   107,562
    Accounts receivable, net                                4,135,168                4,152,270
    Other current assets                                    2,789,112                2,787,860
                                                            ---------                ---------

         Total current assets                               7,030,890                7,047,692

PROPERTY AND EQUIPMENT, net                                 4,385,047               10,035,927
OTHER ASSETS                                                  105,750                  199,412
                                                              -------                  -------

         Total assets                                     $11,521,687              $17,283,031
                                                          ===========              ===========

                                               LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
    Short-term borrowings                                 $1,900,000               $     -
    Current portion of debt                                  785,472                2,116,068
    Other current liabilities                              3,485,661                4,514,420
                                                           ---------                ---------

         Total current liabilities                         6,171,133                6,630,488

LONG-TERM DEBT AND CAPITAL LEASE OBLIGATIONS                 682,611                5,117,304
DEFERRED EXPENSES                                            383,454                  613,565
                                                           ---------               ----------

         Total liabilities                                 7,237,198               12,361,357
                                                           ---------               ----------

COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS' EQUITY:
    Common stock                                              7,500                     7,500
    Additional paid-in capital                              355,863                   355,863
    Subscriptions receivable                               (106,297)                  (93,335)
    Retained earnings                                     5,465,803                 6,090,026
                                                          ---------                 ---------
                                                          5,722,869                 6,360,054
    Less-Treasury stock                                  (1,438,380)               (1,438,380)
                                                         ----------                ---------- 

         Total stockholders' equity                       4,284,489                 4,921,674
                                                          ---------                 ---------

         Total liabilities and stockholders' equity   $  11,521,687             $  17,283,031
                                                      =============             =============
</TABLE>




            The accompanying notes to condensed financial statements
                  are an integral part of these balance sheets.

<PAGE>

<TABLE>
<CAPTION>
                                                         COMVESTRIX CORP.

                                                  CONDENSED STATEMENTS OF INCOME
                                        For the Three Months Ended June 30, 1996 and 1997
                                         and the Six Months Ended June 30, 1996 and 1997


                                         Three Months Ended June 30,        Six Months Ended June 30,
                                         1996           1997                    1996        1997  
                                        (unaudited)  (unaudited)            (unaudited) (unaudited)

<S>                                   <C>             <C>                 <C>               <C>         
REVENUES                              $  5,303,329    $ 6,030,841         $ 10,763,261      $ 12,081,470
COST OF REVENUES                         3,018,490      3,312,804            6,064,119         6,523,858
                                         ---------      ---------            ---------         ---------
         Gross profit                    2,284,839      2,718,037            4,699,142         5,557,612

SELLING, GENERAL AND ADMINISTRATIVE
    EXPENSES                             1,773,488      1,934,668            3,597,474         3,989,104
                                         ---------      ---------            ---------         ---------
         Income from operations            511,351        783,369            1,101,668         1,568,508

OTHER INCOME (EXPENSE)
    Interest expense                       (40,644)      (176,397)             (72,542)         (336,585)
    Interest and other income               21,030         20,020               30,888            21,065
                                            ------         ------               ------            ------
         Income before provision 
          for income taxes                 491,737        626,992            1,060,014         1,252,988

PROVISION FOR INCOME TAXES                  23,492         15,675               26,500            31,325
                                            ------         ------               ------            ------
         Net income                   $    468,245    $   611,317         $  1,033,514      $  1,221,663
                                      ============    ===========         ============      ============


</TABLE>


            The accompanying notes to condensed financial statements
                  are an integral part of these statements.


<PAGE>

<TABLE>
<CAPTION>

                                COMVESTRIX CORP.

                       CONDENSED STATEMENTS OF CASH FLOWS
                 For the Six Months Ended June 30, 1996 and 1997


                                                       1996                        1997 
          
                                                     (unaudited)                 (unaudited)

CASH FLOWS FROM OPERATING ACTIVITIES:
<S>                                                <C>                      <C>          
    Net income                                     $   1,033,514            $   1,221,663
    Adjustments to reconcile net 
       income to net cash provided 
       by operating activities-
         Depreciation and amortization                   535,850                  991,390
         Loss on sale of property                           -                       4,266
         Changes in operating assets 
           (increase) decrease in -
                Accounts receivable                     (733,309)                 (17,102)
                Other current assets                    (339,951)                   1,252
                Other assets                                (453)                 (93,662)
         Changes in operating liabilities increase 
          (decrease) in -
                   Other current liabilities           1,698,024                1,028,759
                   Deferred charges                       24,014                  230,111
                                                       ---------                ---------

               Net cash provided by 
                    operating activities               2,217,689                3,366,677
                                                       ---------                ---------

CASH FLOWS FROM INVESTING ACTIVITIES:
    Acquisition of property and equipment               (631,906)                (399,015)
    Proceeds from sale of equipment                         -                       2,700
                                                                                 --------

               Net cash used in investing activities    (631,906)                (396,315)
                                                        --------                 -------- 

CASH FLOWS FROM FINANCING ACTIVITIES:
    Collection of subscriptions receivable                 5,980                   12,962
    Net payments on borrowings                          (964,944)              (2,384,932)
    Distributions to Stockholders                       (672,114)                (597,440)
                                                        --------                 -------- 

               Net cash used in financing activities  (1,631,078)              (2,969,410)
                                                      ----------               ---------- 

NET (DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS     (45,295)                     952

CASH AND CASH EQUIVALENTS, beginning of period           150,832                  106,610
                                                         -------                  -------

CASH AND CASH EQUIVALENTS, end of period             $   105,537               $  107,562
                                                     ===========               ==========

SUPPLEMENTAL SCHEDULE OF NONCASH INVESTING
   AND FINANCING ACTIVITIES:
    Capital lease obligations                               -                  $6,250,221
                                                      ==========               ===========

</TABLE>

     The accompanying notes to condensed financial statements
                  are an integral part of these statements.


<PAGE>

                                COMVESTRIX CORP.

                     NOTES TO CONDENSED FINANCIAL STATEMENTS
                                   (unaudited)

(1)  BASIS OF PRESENTATION

     The  accompanying   unaudited  condensed  financial  statements  have  been
     prepared in accordance with generally  accepted  accounting  principles for
     interim  financial  information and with the  instructions to Form 10-Q and
     Article 10 of Regulation S-X.  Accordingly,  they do not include all of the
     information  and  footnotes  required  by  generally  accepted   accounting
     principles for complete financial statements. The balance sheet at December
     31, 1996 has been derived  from the audited  financial  statements  at that
     date. In the opinion of management,  all adjustments  (consisting of normal
     recurring  adjustments)  considered  necessary for a fair presentation have
     been included.  Operating results for the six and three-month periods ended
     June 30, 1997 are not  necessarily  indicative  of the results  that may be
     expected for the year ended December 31, 1997.

     In  February  1997,  the  Company  and  its  stockholders  entered  into  a
     definitive agreement with Vestcom International, Inc. (Vestcom) pursuant to
     which the Company will merge with Vestcom.  All  outstanding  shares of the
     Company  will be exchanged  for cash and shares of  Vestcom's  common stock
     concurrent  with the  consummation  of the initial  public  offering of the
     common stock of Vestcom.

(2)  ACQUISITION OF EQUIPMENT

     Effective  January 1, 1997,  the Company  entered into a capital lease on a
     portion  of its  production  equipment.  The term of the  lease is for five
     years and the minimum  monthly  payments  will be $129,838.  In  connection
     therewith the Company recorded a capital lease liability of $6,250,221.

(3)  SUBSEQUENT EVENTS

     On July 30, 1997, Vestcom International,  Inc. announced the initial public
     offering of  3,850,000  shares of its Common Stock at a price of $13.00 per
     share. The Company's  underwriters  exercised in full an option to purchase
     an additional  577,500  shares of the Company's  Common Stock at $13.00 per
     share to cover over allotments of the initial public offering.  The initial
     public  offering was  consummated  on August 4, 1997. The capital raised by
     this offering was approximately $54,000,000, net of underwriting discounts.

     Concurrently   with  the  consummation  of  the  Company's  initial  public
     offering,  Vestcom  International,  Inc.  acquired  seven  companies in the
     computer  output and  document  management  services  industry - Comvestrix
     Corp.,  Morris County  Direct Mail  Services,  Inc. and related  companies,
     Image  Printing  Systems,  Inc.,  Electronic  Imaging  Services,  Inc., COS
     Information Inc., Computer Output Systems, Inc. and Mystic Graphic Systems,
     Inc.

     The net  proceeds of the offering are being used to pay the cash portion of
     the purchase price for the seven Founding Companies,  and are being used to
     repay certain indebtedness of Vestcom and of the Founding Companies, to pay
     certain fees in connection with the acquisitions of the Founding  Companies
     and for general  corporate  purposes,  which are expected to include future
     acquisitions.  

     Subsequent to June 30, 1997, the Company made distributions to shareholders
     of $1,618,382.

<PAGE>

<TABLE>
<CAPTION>
         MORRIS COUNTY DIRECT MAIL SERVICES, INC. AND RELATED COMPANIES

                        CONDENSED COMBINED BALANCE SHEETS
                    As of December 31, 1996 and June 30, 1997


                                                                                 December 31, 1996                 June 30, 1997
                                                                                                                    (unaudited)

                                     ASSETS
CURRENT ASSETS:
<S>                                                                                 <C>                            <C>          
    Cash and cash equivalents                                                       $     572,714                  $     266,108
    Accounts receivable, net                                                            2,647,434                      3,183,239
    Other current assets                                                                  873,099                        927,493

         Total current assets                                                           4,093,247                      4,376,840

PROPERTY AND EQUIPMENT, net                                                             1,504,158                      1,560,404
GOODWILL                                                                                  396,184                        282,333
OTHER ASSETS                                                                              131,488                        181,651

         Total assets                                                               $   6,125,077                  $   6,401,228

                                               LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
    Short-term borrowings                                                           $     160,000                  $     150,000
    Current portion of long-term debt and capital lease obligations                       481,807                        612,740
    Other current liabilities                                                           3,004,922                      2,565,462

         Total current liabilities                                                      3,646,729                      3,328,202

LONG-TERM DEBT AND CAPITAL LEASE OBLIGATIONS                                              949,482                      1,311,745
DEFERRED EXPENSES                                                                          11,420                         69,889

         Total liabilities                                                              4,607,631                      4,709,836

COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS' EQUITY                                                                       19,990                         19,990
    Common stock                                                                          182,768                        182,768
    Additional paid-in capital                                                          1,716,188                      1,890,134
    Retained earnings                                                                   1,918,946                      2,092,892

    Less-Treasury stock                                                                 (401,500)                       (401,500)

         Total stockholders' equity                                                    1,517,446                       1,691,392

         Total liabilities and stockholders' equity                                 $  6,125,077                    $  6,401,228

</TABLE>



            The accompanying notes to condensed financial statements
                  are an integral part of these balance sheets.

<PAGE>

<TABLE>
<CAPTION>
         MORRIS COUNTY DIRECT MAIL SERVICES, INC. AND RELATED COMPANIES

                     CONDENSED COMBINED STATEMENTS OF INCOME
                For the Three Months Ended June 30, 1996 and 1997
                 and the Six Months Ended June 30, 1996 and 1997


                                                           Three Months Ended June 30,      Six Months Ended June 30,
                                                             1996          1997                   1996         1997    
                                                          (unaudited)  (unaudited)          (unaudited)   (unaudited)

<S>                                                       <C>           <C>                 <C>             <C>         
REVENUES                                                  $  3,608,147  $  3,652,146        $  6,815,377    $  7,015,639
COST OF REVENUES                                             2,188,065     2,551,478           4,310,177       4,746,303
                                                             ---------     ---------           ---------       ---------
         Gross profit                                        1,420,082     1,100,668           2,505,200       2,269,336

SELLING, GENERAL AND ADMINISTRATIVE
    EXPENSES                                                 1,003,925       689,217           1,699,706       1,471,086
                                                             ---------       -------           ---------       ---------
         Income from operations                                416,157       411,451             805,494         798,250

OTHER INCOME (EXPENSE)
    Interest expense                                           (45,963)      (42,246)            (59,952)        (81,260)
    Interest and other income                                   33,325        (4,500)             38,439           4,705
                                                                ------        ------              ------           -----
         Income before provision for income taxes              403,519       364,705             783,981         721,695

PROVISION FOR INCOME TAXES                                        -            2,908              15,786          17,188
                                                              --------       -------             -------         -------
         Net income                                        $   403,519  $    361,797        $    768,195     $   704,507
                                                           ===========  ============        ============     ===========


</TABLE>

            The accompanying notes to condensed financial statements
                  are an integral part of these statements.


<PAGE>
<TABLE>
<CAPTION>
         MORRIS COUNTY DIRECT MAIL SERVICES, INC. AND RELATED COMPANIES

                   CONDENSED COMBINED STATEMENTS OF CASH FLOWS
                 For the Six Months Ended June 30, 1996 and 1997


                                                                                 1996                    1997 
                                                                               (unaudited)           (unaudited)

CASH FLOWS FROM OPERATING ACTIVITIES:
<S>                                                                            <C>                   <C>      
    Net income                                                                 $  768,195            $ 704,507
    Adjustments to reconcile net income to net cash
       provided by operating activities-
         Depreciation and amortization                                            275,165              299,265
         Gain on sale of property                                                    -                 (17,617)
         Changes in operating assets (increase) decrease in -
                   Accounts receivable                                         (1,245,008)            (535,805)
                   Other current assets                                         1,155,680              (78,921)
                   Other assets                                                       245               63,688
         Changes in operating liabilities increase (decrease) in -
                   Other current liabilities                                     (745,422)            (439,460)
                   Other liabilities                                             (324,740)              58,470
 
                    Net cash provided by (used in) operating activities          (115,885)              54,127

CASH FLOWS FROM INVESTING ACTIVITIES:
    Acquisition of property and equipment                                        (607,491)            (337,894)
    Acquisition of goodwill                                                      (412,300)                -

                    Net cash used in investing activities                      (1,019,791)            (337,894)

CASH FLOWS FROM FINANCING ACTIVITIES:
    Net proceeds from borrowing                                                 1,033,150              446,704
    Issuance of note receivable                                                     -                   61,019
    Distributions to Stockholders                                                   -                 (530,562)

                    Net cash provided by (used in) financing activities         1,033,150              (22,839)

NET DECREASE IN CASH AND CASH EQUIVALENTS                                        (102,526)            (306,606)

CASH AND CASH EQUIVALENTS, beginning of period                                    534,459              572,714

CASH AND CASH EQUIVALENTS, end of period                                      $   431,933           $  266,108

</TABLE>

     The accompanying notes to condensed financial statements
                  are an integral part of these statements.


<PAGE>

                    MORRIS COUNTY DIRECT MAIL SERVICES, INC.
                              AND RELATED COMPANIES

                NOTES TO CONDENSED COMBINED FINANCIAL STATEMENTS
                                   (unaudited)

(1)  BASIS OF PRESENTATION

     The  accompanying   unaudited  condensed  financial  statements  have  been
     prepared in accordance with generally  accepted  accounting  principles for
     interim  financial  information and with the  instructions to Form 10-Q and
     Article 10 of Regulation S-X.  Accordingly,  they do not include all of the
     information  and  footnotes  required  by  generally  accepted   accounting
     principles for complete financial statements. The balance sheet at December
     31, 1996 has been derived  from the audited  financial  statements  at that
     date. In the opinion of management  all  adjustments  (consisting of normal
     recurring  adjustments)  considered  necessary for a fair presentation have
     been included.  Operating results for the six and three-month periods ended
     June 30, 1997 are not  necessarily  indicative  of the results  that may be
     expected for the year ended December 31, 1997.

     In  February  1997,  the  Company  and  its  stockholders  entered  into  a
     definitive agreement with Vestcom International, Inc. (Vestcom) pursuant to
     which the Company will merge with Vestcom.  All  outstanding  shares of the
     Company  will be  exchanged  for cash and  shares of Vestcom  common  stock
     concurrent  with the  consummation  of the initial  public  offering of the
     common stock of Vestcom.

(2)  SUBSEQUENT EVENTS

     On July 30, 1997, Vestcom International,  Inc. announced the initial public
     offering of  3,850,000  shares of its Common Stock at a price of $13.00 per
     share. The Company's  underwriters  exercised in full an option to purchase
     an additional  577,500  shares of the Company's  Common Stock at $13.00 per
     share to cover over allotments of the initial public offering.  The initial
     public  offering was  consummated  on August 4, 1997. The capital raised by
     this offering was approximately $54,000,000, net of underwriting discounts.

     Concurrently   with  the  consummation  of  the  Company's  initial  public
     offering,  Vestcom  International,  Inc.  acquired  seven  companies in the
     computer  output and  document  management  services  industry - Comvestrix
     Corp.,  Morris County  Direct Mail  Services,  Inc. and related  companies,
     Image  Printing  Systems,  Inc.,  Electronic  Imaging  Services,  Inc., COS
     Information Inc., Computer Output Systems, Inc. and Mystic Graphic Systems,
     Inc.

     The net  proceeds of the offering are being used to pay the cash portion of
     the purchase price for the seven Founding Companies,  and are being used to
     repay certain indebtedness of Vestcom and of the Founding Companies, to pay
     certain fees in connection with the acquisitions of the Founding  Companies
     and for general  corporate  purposes,  which are expected to include future
     acquisitions.  


<PAGE>

                          IMAGE PRINTING SYSTEMS, INC.

                            CONDENSED BALANCE SHEETS
                    As of December 31, 1996 and June 30, 1997


<TABLE>
<CAPTION>
                                                                                December 31, 1996         June 30, 1997
                                                                                                            (unaudited)

                                     ASSETS
CURRENT ASSETS:
<S>                                                                             <C>                     <C>          
    Cash and cash equivalents                                                   $     61,137            $     202,402
    Accounts receivable, net                                                       1,422,234                1,346,911
    Other current assets                                                             659,389                  381,574
                                                                                     -------                  -------

         Total current assets                                                      2,142,760                1,930,887

PROPERTY AND EQUIPMENT, net                                                        2,725,129                3,503,244
OTHER ASSETS                                                                           -                       23,741
                                                                                   ---------                 --------

         Total assets                                                           $  4,867,889            $   5,457,872
                                                                                ============            =============


                      LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
    Short-term borrowings                                                       $    795,494             $    645,494

    Current portion of long-term debt and capital lease obligations                  468,094                  772,454
    Other current liabilities                                                      1,864,883                1,478,039
                                                                                   ---------                ---------

         Total current liabilities                                                 3,128,471                2,895,987

LONG-TERM DEBT AND CAPITAL LEASE OBLIGATIONS                                       1,433,810                2,022,663

         Total liabilities                                                         4,562,281                4,918,650
                                                                                   ---------                ---------

COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS' EQUITY
    Common stock                                                                      15,593                   15,593
    Retained earnings                                                                291,748                  525,362
                                                                                     -------                  -------
                                                                                     307,341                  540,955
    Less-Treasury stock                                                               (1,733)                  (1,733)

         Total stockholders' equity                                                  305,608                  539,222
                                                                                     -------                  -------

         Total liabilities and stockholders' equity                             $  4,867,889              $ 5,457,872
                                                                                 ===========              ============


</TABLE>


            The accompanying notes to condensed financial statements
                  are an integral part of these balance sheets.


<PAGE>
<TABLE>
<CAPTION>

                          IMAGE PRINTING SYSTEMS, INC.

                         CONDENSED STATEMENTS OF INCOME
                For the Three Months Ended June 30, 1996 and 1997
                 and the Six Months Ended June 30, 1996 and 1997


                                                                      Three Months Ended June 30,     Six Months Ended June 30,
                                                                    1996           1997                 1996        1997
                                                                   (unaudited)  (unaudited)          (unaudited)  (unaudited)

<S>                                                               <C>           <C>                <C>             <C>         
REVENUES                                                          $  1,930,127  $  2,239,115       $  4,506,252    $  5,119,013
COST OF REVENUES                                                     1,396,887     1,607,853          3,198,140       3,564,114
         Gross profit                                                  533,240       631,262          1,308,112       1,554,899

SELLING, GENERAL AND ADMINISTRATIVE
    EXPENSES                                                           538,665       548,312          1,140,056       1,111,869
         Income (loss ) from operations                                 (5,425)       82,950            168,056         443,030

OTHER INCOME (EXPENSE)
    Interest expense                                                  (143,109)     (162,062)          (176,230)       (215,319)
    Interest and other income                                             -            6,790               -              5,903
         Loss before provision for income taxes                       (148,534)      (72,322)            (8,174)       (233,614)

PROVISION FOR INCOME TAXES                                                -             -                  -                -
         Net loss                                                 $   (148,534) $    (72,322)      $     (8,174)    $  (233,614)


</TABLE>


            The accompanying notes to condensed financial statements
                  are an integral part of these statements.


<PAGE>

<TABLE>
<CAPTION>
                          IMAGE PRINTING SYSTEMS, INC.

                       CONDENSED STATEMENTS OF CASH FLOWS
                 For the Six Months Ended June 30, 1996 and 1997


                                                              1996                      1997  
                                                           (unaudited)              (unaudited)

CASH FLOWS FROM OPERATING ACTIVITIES:
<S>                                                     <C>                          <C>      
    Net income (loss)                                   $    (8,174)                 $ 233,614
    Adjustments to reconcile net income 
       (loss) to net cash 
       provided by operating activities-
         Depreciation and amortization                      322,601                    358,997
         Loss on write-off of subscriptions receivable        5,427                        -
         Changes in operating assets (increase) 
               decrease in -
                   Accounts receivable                     (202,729)                    75,323
                   Other current assets                     145,998                    265,721
         Changes in operating liabilities increase 
               (decrease) in -
                   Other current liabilities                217,822                   (386,842)
                                                            -------                   -------- 

                  Net cash provided by operating activities 480,945                    546,813
                                                            -------                    -------

CASH FLOWS FROM INVESTING ACTIVITIES:
    Acquisition of property and equipment                  (275,957)                  (375,210)
                                                           --------                   -------- 

CASH FLOWS FROM FINANCING ACTIVITIES:
    Net proceeds from borrowings                            (92,433)                   (18,691)
    Distributions to Stockholders                              -                       (11,647)
                                                           --------                    ------- 

                  Net cash (used in) financing activities   (92,433)                   (30,338)
                                                            -------                    ------- 

NET INCREASE IN CASH AND CASH EQUIVALENTS                   112,555                    141,265

CASH AND CASH EQUIVALENTS, beginning of period               61,835                     61,137
                                                             ------                     ------

CASH AND CASH EQUIVALENTS, end of period                $   174,390                $   202,402
                                                        ===========                ===========

SUPPLEMENTAL SCHEDULE OF NONCASH INVESTING
   AND FINANCING ACTIVITIES:
    Capital lease obligation incurred                   $   151,702                $   761,904
                                                        ===========                ===========

</TABLE>

            The accompanying notes to condensed financial statements
                   are an integral part of these statements.

<PAGE>

                          IMAGE PRINTING SYSTEMS, INC.

                     NOTES TO CONDENSED FINANCIAL STATEMENTS
                                   (unaudited)

(1)  BASIS OF PRESENTATION

     The  accompanying   unaudited  condensed  financial  statements  have  been
     prepared in accordance with generally  accepted  accounting  principles for
     interim  financial  information and with the  instructions to Form 10-Q and
     Article 10 of Regulation S-X.  Accordingly,  they do not include all of the
     information  and  footnotes  required  by  generally  accepted   accounting
     principles for complete financial statements. The balance sheet at December
     31, 1996 has been derived  from the audited  financial  statements  at that
     date. In the opinion of management,  all adjustments  (consisting of normal
     recurring  adjustments)  considered  necessary for a fair presentation have
     been included.  Operating results for the six and three-month periods ended
     June 30, 1997 are not  necessarily  indicative  of the results  that may be
     expected for the year ended December 31, 1997.

     In  February  1997,  the  Company  and  its  stockholders  entered  into  a
     definitive agreement with Vestcom International, Inc. (Vestcom) pursuant to
     which the Company will merge with Vestcom.  All  outstanding  shares of the
     Company  will be exchanged  for cash and shares of  Vestcom's  common stock
     concurrent  with the  consummation  of the initial  public  offering of the
     common stock of Vestcom.

(2)  SUBSEQUENT EVENTS

     On July 30, 1997, Vestcom International,  Inc. announced the initial public
     offering of  3,850,000  shares of its Common Stock at a price of $13.00 per
     share. The Company's  underwriters  exercised in full an option to purchase
     an additional  577,500  shares of the Company's  Common Stock at $13.00 per
     share to cover over allotments of the initial public offering.  The initial
     public  offering was  consummated  on August 4, 1997. The capital raised by
     this offering was approximately $54,000,000, net of underwriting discounts.

     Concurrently   with  the  consummation  of  the  Company's  initial  public
     offering,  Vestcom  International,  Inc.  acquired  seven  companies in the
     computer  output and  document  management  services  industry - Comvestrix
     Corp.,  Morris County  Direct Mail  Services,  Inc. and related  companies,
     Image  Printing  Systems,  Inc.,  Electronic  Imaging  Services,  Inc., COS
     Information Inc., Computer Output Systems, Inc. and Mystic Graphic Systems,
     Inc.

     The net  proceeds of the offering are being used to pay the cash portion of
     the purchase price for the seven Founding Companies,  and are being used to
     repay certain indebtedness of Vestcom and of the Founding Companies, to pay
     certain fees in connection with the acquisitions of the Founding  Companies
     and for general  corporate  purposes,  which are expected to include future
     acquisitions.  


<PAGE>

<TABLE>
<CAPTION>
                        ELECTRONIC IMAGING SERVICES, INC.

                             CONDENSED BALANCE SHEET
                    As of December 31, 1996 and June 30, 1997



                                                           December 31, 1996         June 30, 1997
                                                                                       (unaudited)

                                     ASSETS
CURRENT ASSETS:
<S>                                                        <C>              
    Cash and cash equivalents                              $     45,089             $     -
    Accounts receivable, net                                    826,655                925,140
    Other current assets                                        525,906                624,373
                                                                -------                -------

         Total current assets                                 1,397,650              1,549,513

PROPERTY AND EQUIPMENT, net                                   1,526,992              1,687,829
OTHER ASSETS                                                     54,944                 36,952
                                                                 ------                 ------

         Total assets                                      $  2,979,586             $3,274,294
                                                           ============             ==========

                      LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
    Short-term borrowings                                  $    662,575             $  543,360
    Current portion of long-term debt and 
          capital lease obligations                             402,256                422,424
    Other current liabilities                                 1,440,516              1,520,049
                                                              ---------              ---------

         Total current liabilities                            2,505,347              2,485,833

LONG-TERM DEBT AND CAPITAL LEASE OBLIGATIONS                    817,148              1,028,186
DEFERRED EXPENSES                                                86,740                 86,740
PLEDGED STOCK                                                   375,000                375,000
                                                              ---------              ---------
         Total liabilities                                    3,784,235              3,975,759

COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS' EQUITY
    Common stock                                                     11                     11
    Accumulated deficit                                        (429,660)              (326,476)
                                                               --------               -------- 
                                                               (429,649)              (326,465)
     Less-Treasury stock                                       (375,000)              (375,000)
                                                               --------               -------- 

         Total stockholders' equity (deficit)                  (804,649)              (701,465)
                                                                --------               -------- 

         Total liabilities and stockholders' equity        $  2,979,586            $ 3,274,294
                                                           ============            ===========

</TABLE>





            The accompanying notes to condensed financial statements
                  are an integral part of these balance sheets.

<PAGE>

<TABLE>
<CAPTION>

                        ELECTRONIC IMAGING SERVICES, INC.

                       CONDENSED STATEMENTS OF OPERATIONS
                For the Three Months Ended June 30, 1996 and 1997
                 and the Six Months Ended June 30, 1996 and 1997


                                                                  Three Months Ended June 30,      Six Months Ended June 30,
                                                                     1996            1997              1996         1997
                                                                   (unaudited)  (unaudited)         (unaudited)  (unaudited)

<S>                                                             <C>             <C>                <C>           <C>       
REVENUES                                                        $1,900,557      $2,146,329         $3,464,557    $4,400,849
COST OF REVENUES                                                 1,640,413       1,582,177          2,891,308     3,364,379
                                                                 ---------       ---------          ---------     ---------
         Gross profit                                              260,144         564,152            573,249     1,036,470

SELLING, GENERAL AND ADMINISTRATIVE
    EXPENSES                                                       311,847         387,490            663,787       749,257
                                                                   -------         -------            -------       -------
         Income (loss) from operations                             (71,703)        176,662            (90,538)      287,213

OTHER INCOME (EXPENSE)
    Interest expense                                                (9,364)        (58,898)          (26,187)      (107,884)
    Interest and other income                                       14,037            (411)           14,346        (15,062)
                                                                    ------            ----            ------        ------- 
          Income (loss) before provision for income taxes          (67,030)        117,353          (102,379)       164,267

PROVISION FOR INCOME TAXES                                            -             42,594               -           61,084
         Net income (loss)                                    $    (67,030)     $   74,759         $(102,379)    $  103,183
                                                              ============      ==========         =========     ==========

</TABLE>




            The accompanying notes to condensed financial statements
                  are an integral part of these statements.

<PAGE>

<TABLE>
<CAPTION>

                        ELECTRONIC IMAGING SERVICES, INC.

                       CONDENSED STATEMENTS OF CASH FLOWS
                 For the Six Months Ended June 30, 1996 and 1997


                                                                 1996                    1997     
                                                              (unaudited)             (unaudited)

CASH FLOWS FROM OPERATING ACTIVITIES:
<S>                                                            <C>                    <C>       
    Net income (loss)                                          $ (102,379)            $  103,183
    Adjustments to reconcile net income (loss) to net cash
       provided by operating activities-
         Depreciation and amortization                             77,891                200,389
         Provision for doubtful accounts                           36,267                 16,700
         Gain on sale property                                       -                    12,650
         Changes in operating assets (increase) 
          decrease in 
                   Accounts receivable                           (170,616)              (115,185)
                   Other current assets                          (220,631)               (98,467)
         Changes in operating liabilities increase 
          (decrease) in-
                   Other current liabilities                      117,366                 76,640
                                                                  -------                 ------

                  Net cash provided by (used in) 
                    operating activities                         (262,102)               198,910
                                                                 --------                -------

CASH FLOWS FROM INVESTING ACTIVITIES:
    Acquisition of property and equipment                        (102,468)                (8,324)
                                                                 --------                 ------ 

CASH FLOWS FROM FINANCING ACTIVITIES:
    Net proceeds from borrowings                                  341,672               (235,675)
                                                                  -------               -------- 

NET DECREASE IN CASH AND CASH EQUIVALENTS                         (22,898)               (45,089)

CASH AND CASH EQUIVALENTS, beginning of period                     22,898                 45,089
                                                                   ------                 ------

CASH AND CASH EQUIVALENTS, end of period                              -                      -  
                                                                  =======                 ======
SUPPLEMENTAL SCHEDULE OF NONCASH INVESTING
   AND FINANCING ACTIVITIES:
    Capital lease obligation incurred                                 -                $ 347,559

    Purchase of  treasury stock through issuance of note     $    375,000                    -  
                                                             ============              =========

</TABLE>

<PAGE>

                        ELECTRONIC IMAGING SERVICES, INC.

                     NOTES TO CONDENSED FINANCIAL STATEMENTS
                                   (unaudited)

(1)  BASIS OF PRESENTATION

     The  accompanying   unaudited  condensed  financial  statements  have  been
     prepared in accordance with generally  accepted  accounting  principles for
     interim  financial  information and with the  instructions to Form 10-Q and
     Article 10 of Regulation S-X.  Accordingly,  they do not include all of the
     information  and  footnotes  required  by  generally  accepted   accounting
     principles for complete financial statements. The balance sheet at December
     31, 1996 has been derived  from the audited  financial  statements  at that
     date. In the opinion of management,  all adjustments  (consisting of normal
     recurring  adjustments)  considered  necessary for a fair presentation have
     been included.  Operating results for the six and three-month periods ended
     June 30, 1997 are not  necessarily  indicative  of the results  that may be
     expected for the year ended December 31, 1997.

     In  February  1997,  the  Company,  and  its  stockholders  entered  into a
     definitive agreement with Vestcom International, Inc. (Vestcom) pursuant to
     which the Company will merge with Vestcom.  All  outstanding  shares of the
     Company  will be  exchanged  for cash and  shares of Vestcom  common  stock
     concurrent  with the  consummation  of the initial  public  offering of the
     common stock of Vestcom.

(2)  SUBSEQUENT EVENTS

     On July 30, 1997, Vestcom International,  Inc. announced the initial public
     offering of  3,850,000  shares of its Common Stock at a price of $13.00 per
     share. The Company's  underwriters  exercised in full an option to purchase
     an additional  577,500  shares of the Company's  Common Stock at $13.00 per
     share to cover over allotments of the initial public offering.  The initial
     public  offering was  consummated  on August 4, 1997. The capital raised by
     this offering was approximately $54,000,000, net of underwriting discounts.

     Concurrently   with  the  consummation  of  the  Company's  initial  public
     offering,  Vestcom  International,  Inc.  acquired  seven  companies in the
     computer  output and  document  management  services  industry - Comvestrix
     Corp.,  Morris County  Direct Mail  Services,  Inc. and related  companies,
     Image  Printing  Systems,  Inc.,  Electronic  Imaging  Services,  Inc., COS
     Information Inc., Computer Output Systems, Inc. and Mystic Graphic Systems,
     Inc.

     The net  proceeds of the offering are being used to pay the cash portion of
     the purchase price for the seven Founding Companies,  and are being used to
     repay certain indebtedness of Vestcom and of the Founding Companies, to pay
     certain fees in connection with the acquisitions of the Founding  Companies
     and for general  corporate  purposes,  which are expected to include future
     acquisitions.  


<PAGE>
<TABLE>
<CAPTION>

                          COMPUTER OUTPUT SYSTEMS, INC.

                            CONDENSED BALANCE SHEETS
                    As of December 31, 1996 and June 30, 1997


                                                      December 31, 1996         June 30, 1997
                                                                                (unaudited)

                                     ASSETS
CURRENT ASSETS:
<S>                                                   <C>                       <C>          
    Cash and cash equivalents                         $     -                   $     247,064
    Accounts receivable, net                            964,035                       962,682
    Other current assets                                341,311                       257,600
                                                        -------                       -------

         Total current assets                         1,305,346                     1,467,346

PROPERTY AND EQUIPMENT, net                             472,003                       627,818
OTHER ASSETS                                             36,240                        37,559
                                                         ------                        ------

         Total assets                              $  1,813,589                 $   2,132,723
                                                   ============                 =============

                      LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
    Short-term borrowings                          $      -                     $     250,000
    Current portion of long-term debt and 
      capital lease obligations                         244,584                        90,128
    Other current liabilities                           904,389                     1,120,009
                                                        -------                     ---------

         Total current liabilities                    1,148,973                     1,460,137

LONG-TERM DEBT AND CAPITAL LEASE OBLIGATIONS            130,072                       249,120
DEFERRED EXPENSES                                         -                              -
                                                      ---------                     ----------
         Total liabilities                            1,279,045                     1,709,257

COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS' EQUITY
    Common stock                                             10                            10
    Additional paid-in capital                          732,470                       732,470
    Retained earnings                                  (197,936)                     (309,014)
                                                       --------                      -------- 

         Total stockholders' equity                     534,544                       423,466
                                                        -------                       -------

         Total liabilities and stockholders' equity   1,813,589                     2,132,723
                                                      =========                     =========

</TABLE>


            The accompanying notes to condensed financial statements
                  are an integral part of these balance sheets.

<PAGE>

<TABLE>
<CAPTION>

                          COMPUTER OUTPUT SYSTEMS, INC.

                         CONDENSED STATEMENTS OF INCOME
                For the Three Months Ended June 30, 1996 and 1997
                 and the Six Months Ended June 30, 1996 and 1997


                                            Three Months Ended June 30,          Six Months Ended June 30,
                                            1996               1997                  1996         1997    
                                           (unaudited)      (unaudited)          (unaudited)   (unaudited)

<S>                                      <C>               <C>              <C>               <C>         
REVENUES                                 $  1,178,091      $  1,948,155     $  2,368,427      $  3,475,877
COST OF REVENUES                              780,094         1,271,428        1,529,360         2,276,692
                                              -------         ---------        ---------         ---------
        Gross profit                          397,997           676,727          839,067         1,199,185

SELLING, GENERAL AND ADMINISTRATIVE
    EXPENSES                                  283,490           330,573          537,761           638,326
                                              -------           -------          -------           -------
        Income from operations                114,507           346,154          301,306           560,859
 
OTHER INCOME (EXPENSE)
    Interest expense                             -              (16,544)         (11,051)          (25,285)
    Interest and other income                    -                 -                -                1,952
                                             -------            -------         ---------          --------
        Income before provision for 
          income taxes                       114,507            329,600          290,255           537,526

PROVISION FOR INCOME TAXES                    10,090             30,204           28,555            55,204
                                            --------            -------          -------            ------
        Net income                           104,417            299,396          261,700           482,322
                                             =======            =======          =======           =======

</TABLE>




            The accompanying notes to condensed financial statements
                  are an integral part of these statements.

<PAGE> 

<TABLE>
                          COMPUTER OUTPUT SYSTEMS, INC.

                       CONDENSED STATEMENTS OF CASH FLOWS
                 For the Six Months Ended June 30, 1996 and 1997


                                                                                   1996            1997             
                                                                                (unaudited)     (unaudited)

CASH FLOWS FROM OPERATING ACTIVITIES:
<S>                                                                             <C>             <C>       
    Net income                                                                  $  261,700      $  482,322
    Adjustments to reconcile net income to net cash
       provided by operating activities-
        Depreciation and amortization                                               63,174          76,036
        Changes in operating assets (increase) 
          decrease in -
               Accounts receivable                                                 147,912           1,353
               Other current assets                                                 11,856          83,712
        Changes in operating liabilities increase (decrease) in 
               Other current liabilities                                          (122,810)        215,620
                                                                                  --------         -------

               Net cash provided by operating activities                           361,832         859,043
                                                                                   -------         -------

CASH FLOWS FROM INVESTING ACTIVITIES:
    Acquisition of property and equipment                                         (101,683)        (70,668)
    Security deposits                                                                  700          (1,320)
                                                                                       ---          ------ 

               Net cash used in investing activities                              (100,983)        (71,988)
                                                                                  --------         ------- 

CASH FLOWS FROM FINANCING ACTIVITIES:
    Net proceeds from borrowings                                                  (172,183)         53,409
    Distributions to Stockholders                                                  (17,910)       (593,400)
                                                                                   -------         ------- 

               Net cash used in financing activities                              (190,093)       (539,991)
                                                                                  --------        -------- 

NET INCREASE IN CASH AND CASH EQUIVALENTS                                           70,756         247,064

CASH AND CASH EQUIVALENTS, beginning of period                                      95,468            -
                                                                                    ------        --------

CASH AND CASH EQUIVALENTS, end of period                                        $  166,224      $  247,064
                                                                                ==========      ==========

SUPPLEMENTAL SCHEDULE OF NONCASH INVESTING
   AND FINANCING ACTIVITIES:
    Capital lease obligations incurred                                              -           $  161,183
                                                                                ===========     ==========

</TABLE>

            The accompanying notes to condensed financial statements
                    are an integral part of these statements.


<PAGE>

                          COMPUTER OUTPUT SYSTEMS, INC.

                     NOTES TO CONDENSED FINANCIAL STATEMENTS
                                   (unaudited)

(1)  BASIS OF PRESENTATION

     The  accompanying   unaudited  condensed  financial  statements  have  been
     prepared in accordance with generally  accepted  accounting  principles for
     interim  financial  information and with the  instructions to Form 10-Q and
     Article 10 of Regulation S-X.  Accordingly,  they do not include all of the
     information  and  footnotes  required  by  generally  accepted   accounting
     principles for complete financial statements. The balance sheet at December
     31, 1996 has been derived  from the audited  financial  statements  at that
     date. In the opinion of management,  all adjustments  (consisting of normal
     recurring  adjustments)  considered  necessary for a fair presentation have
     been included.  Operating results for the six and three-month periods ended
     June 30, 1997 are not  necessarily  indicative  of the results  that may be
     expected for the year ended December 31, 1997.

     In  February  1997,  the  Company,  and  its  stockholders  entered  into a
     definitive agreement with Vestcom International, Inc. (Vestcom) pursuant to
     which the Company will merge with Vestcom.  All  outstanding  shares of the
     Company  will be  exchanged  for cash and  shares of Vestcom  common  stock
     concurrent  with the  consummation  of the initial  public  offering of the
     common stock of Vestcom.

(2)  SUBSEQUENT EVENTS

     On July 30, 1997, Vestcom International,  Inc. announced the initial public
     offering of  3,850,000  shares of its Common Stock at a price of $13.00 per
     share. The Company's  underwriters  exercised in full an option to purchase
     an additional  577,500  shares of the Company's  Common Stock at $13.00 per
     share to cover over allotments of the initial public offering.  The initial
     public  offering was  consummated  on August 4, 1997. The capital raised by
     this offering was approximately $54,000,000, net of underwriting discounts.

     Concurrently   with  the  consummation  of  the  Company's  initial  public
     offering,  Vestcom  International,  Inc.  acquired  seven  companies in the
     computer  output and  document  management  services  industry - Comvestrix
     Corp.,  Morris County  Direct Mail  Services,  Inc. and related  companies,
     Image  Printing  Systems,  Inc.,  Electronic  Imaging  Services,  Inc., COS
     Information Inc., Computer Output Systems, Inc. and Mystic Graphic Systems,
     Inc.

     The net  proceeds of the offering are being used to pay the cash portion of
     the purchase price for the seven Founding Companies,  and are being used to
     repay certain indebtedness of Vestcom and of the Founding Companies, to pay
     certain fees in connection with the acquisitions of the Founding  Companies
     and for general  corporate  purposes,  which are expected to include future
     acquisitions.  


<PAGE>
<TABLE>
<CAPTION>
                           LIRPACO INC. AND SUBSIDIARY

                      CONDENSED CONSOLIDATED BALANCE SHEETS
                    As of December 31, 1996 and June 30, 1997


                                         December 31, 1996         June 30, 1997
                                                                     (unaudited)
                           ASSETS
CURRENT ASSETS:
<S>                                      <C>                         <C>       
    Cash and cash equivalents            $    88, 198                $    2,049
    Accounts receivable, net                  743,380                   720,706
    Other current assets                      221,989                   250,880
                                              -------                   -------
         Total current assets               1,053,567                   973,635
PROPERTY AND EQUIPMENT, net                   661,901                   704,030
                                              -------                   -------
         Total assets                    $  1,715,468                 1,677,665
                                         ============                 =========


                      LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
    Current portion of long-term debt 
        and capital leases              $      51,752                $    14,856
    Other current liabilities                 711,573                    506,797
                                              -------                    -------

         Total current liabilities            763,325                    521,653

LONG-TERM DEBT AND CAPITAL LEASE OBLIGATIONS  245,166                    298,717
DEFERRED EXPENSES                              26,474                     26,294
                                               ------                     ------

         Total liabilities              $   1,034,965               $    846,664
                                        =============               ============

COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS' EQUITY
    Common stock                                  102                        102
    Preferred stock                           170,206                    170,206
    Retained earnings                         474,943                    584,091
    Cumulative translation adjustments         35,252                     76,602
                                               ------                     ------

         Total stockholders' equity           680,503                    831,001
                                              -------                    -------

         Total liabilities and stockholders'
           equity                       $   1,715,468               $  1,677,665
                                        =============               ============


</TABLE>


            The accompanying notes to condensed financial statements
                  are an integral part of these balance sheets.

<PAGE>
<TABLE>
<CAPTION>
                           LIRPACO INC. AND SUBSIDIARY

                   CONDENSED CONSOLIDATED STATEMENTS OF INCOME
                For the Three Months Ended June 30, 1996 and 1997
                 and the Six Months Ended June 30, 1996 and 1997


                                          Three Months Ended June 30,        Six Months Ended June 30,
                                            1996              1997             1996           1997 
                                         (unaudited)       (unaudited)       (unaudited)  (unaudited)

<S>                                     <C>               <C>              <C>            <C>         
REVENUES                                $  1,232,761      $  1,007,929     $  2,484,121   $  2,137,817
COST OF REVENUES                             801,668           692,386        1,636,247      1,454,040
                                             -------           -------        ---------      ---------
         Gross profit                        431,093           315,543          847,874        683,777

SELLING, GENERAL AND ADMINISTRATIVE
    EXPENSES                                 341,699           230,822          633,189        522,016
                                             -------           -------          -------        -------
        Income from operations                89,394            84,721          214,685        161,761

OTHER INCOME (EXPENSE)
    Interest expense                             -             (12,384)          (8,659)       (16,231)
    Interest and other income                    -               5,434              -              -
                                              ------             -----          -------        --------
         Income before provision 
           for income taxes                   89,343            77,771          206,026        145,530

PROVISION FOR INCOME TAXES                    22,348            19,443           51,506         36,383
                                              ------            ------           ------         ------
         Net income                     $     67,046     $      58,328    $     154,520   $    109,147
                                        ============     =============    =============   ============

</TABLE>



            The accompanying notes to condensed financial statements
                  are an integral part of these statements.


<PAGE>
<TABLE>
<CAPTION>

                           LIRPACO INC. AND SUBSIDIARY

                 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
                 For the Six Months Ended June 30, 1996 and 1997


                                                        1996                 1997
                                                    (unaudited)          unaudited)

CASH FLOWS FROM OPERATING ACTIVITIES:
<S>                                               <C>                   <C>       
    Net income                                    $   154,520           $  109,147
    Adjustments to reconcile net income to net cash
       provided by operating activities-
         Depreciation and amortization                 29,535               37,000
         Changes in operating assets 
           (increase) decrease
              Accounts receivables                    141,442               22,674
                   Other current assets               253,295              (28,891)
         Changes in operating liabilities 
            increase (decrease) 
                   Other current liabilities          (74,378)            (204,775)
                   Deferred charges                      (672)                (180)
                                                         ----                 ---- 
                    Net cash provided by 
                    operating activities              503,742              (65,025)

CASH FLOWS FROM INVESTING ACTIVITIES:
    Acquisition of property and equipment             (38,634)             (79,129)
                                                      -------              ------- 

CASH FLOWS FROM FINANCING ACTIVITIES:
    Cumulative translation adjustment                  (4,964)             (41,350)
    Net (proceeds) repayments from borrowings        (460,144)              16,655
                                                      --------              -------

            Net cash provided by (used in) 
               financing activities                  (465,108)              58,005

NET INCREASE IN CASH AND CASH EQUIVALENTS                -                 (86,149)

CASH AND CASH EQUIVALENTS, beginning of period           -                  88,198
                                                     ---------              ------

CASH AND CASH EQUIVALENTS, end of period             $      -            $   2,049
                                                     =========            ========

</TABLE>

<PAGE>
                           LIRPACO INC. AND SUBSIDIARY

              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                   (unaudited)

(1)  BASIS OF PRESENTATION

     Lirpaco Inc. (the "Company"), a Canadian corporation,  is a holding company
     with one subsidiary, COS Information Inc., a Quebec corporation.

     The  accompanying   unaudited  condensed  financial  statements  have  been
     prepared in accordance with generally  accepted  accounting  principles for
     interim  financial  information and with the  instructions to Form 10-Q and
     Article 10 of Regulation S-X.  Accordingly,  they do not include all of the
     information  and  footnotes  required  by  generally  accepted   accounting
     principles for complete financial statements. The balance sheet at December
     31, 1996 has been derived  from the audited  financial  statements  at that
     date. In the opinion of management  all  adjustments  (consisting of normal
     recurring  adjustments)  considered  necessary for a fair presentation have
     been included.  Operating results for the six and three-month periods ended
     June 30, 1997 are not  necessarily  indicative  of the results  that may be
     expected for the year ended December 31, 1997.

     In March 1997, the Company and its  stockholders  entered into a definitive
     agreement with Vestcom International,  Inc. (Vestcom) pursuant to which all
     outstanding shares of the Company's common stock will be exchanged for cash
     and shares of a Canadian  subsidiary of Vestcom which are  exchangeable for
     Vestcom common stock concurrent with the consummation of the initial public
     offering of the common stock of Vestcom.

(2)  SUBSEQUENT EVENTS

     On July 30, 1997, Vestcom International,  Inc. announced the initial public
     offering of  3,850,000  shares of its Common Stock at a price of $13.00 per
     share. The Company's  underwriters  exercised in full an option to purchase
     an additional  577,500  shares of the Company's  Common Stock at $13.00 per
     share to cover over allotments of the initial public offering.  The initial
     public  offering was  consummated  on August 4, 1997. The capital raised by
     this offering was approximately $54,000,000, net of underwriting discounts.

     Concurrently   with  the  consummation  of  the  Company's  initial  public
     offering,  Vestcom  International,  Inc.  acquired  seven  companies in the
     computer  output and  document  management  services  industry - Comvestrix
     Corp.,  Morris County  Direct Mail  Services,  Inc. and related  companies,
     Image  Printing  Systems,  Inc.,  Electronic  Imaging  Services,  Inc., COS
     Information Inc., Computer Output Systems, Inc. and Mystic Graphic Systems,
     Inc.

     The net  proceeds of the offering are being used to pay the cash portion of
     the purchase price for the seven Founding Companies,  and are being used to
     repay certain indebtedness of Vestcom and of the Founding Companies, to pay
     certain fees in connection with the acquisitions of the Founding  Companies
     and for general  corporate  purposes,  which are expected to include future
     acquisitions.  


<PAGE>

                     MANAGEMENT'S DISCUSSION AND ANALYSIS OF
                  FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The  following  discussion  of the  results of  operations  of certain  Founding
Companies: Comvestrix Corp. ("Comvestrix"),  Morris County Direct Mail Services,
Inc. and related companies ("DMS"),  Imaging Printing Systems,  Inc.  ("Image"),
Electronic  Imaging  Services,  Inc.  ("EIS"),  Computer  Output  Systems,  Inc.
("Computer Output") and COS Information;  should be read in conjunction with the
Financial  Statements of the Founding  Companies and the related notes  thereto.
The  discussion  of  the  results  of  COS   Information,   a  Founding  Company
headquartered in Montreal, Quebec, Canada, is presented in U.S. dollars.

INTRODUCTION

Vestcom  International,  Inc. was  incorporated in September 1996.  Concurrently
with the consummation of the Company's  initial public offering (the "Offering")
on August 4, 1997, the Company  acquired the Founding  Companies,  each of which
had been operating as a separate independent entity.

The Founding  Companies have been managed  throughout  the periods  presented as
independent private companies, and their results of operations reflect different
tax  structures  (S  corporations  and C  corporations  for  the  U.S.  Founding
Companies),  which have influenced,  among other things, their historical levels
of owners'  compensation.  In connection  with the  organization of the Company,
these  owners and certain key  employees  have agreed to certain  reductions  in
their compensation commencing on the consummation of the Offering.

This  Quarterly  Report on Form 10-Q contains  forward-looking  statements  made
pursuant to the safe harbor  provisions  of the  Private  Securities  Litigation
Reform  Act of 1995  ("Forward-Looking  Statements"),  which  involve  risks and
uncertainties.  The Company's actual results may differ  significantly  from the
results discussed in the  Forward-Looking  Statements.  Factors that might cause
such a difference  include the risks  described under the caption "Risk Factors"
in the  Company's  Prospectus  dated July 30, 1997.  Such factors may also cause
substantial volatility in the market price of the Company's Common Stock.

Vestcom, which conducted no operations prior to the consummation of the Offering
other than in connection with the  acquisitions  of the Founding  Companies (the
"Acquisitions")  and the financing  activities  related  thereto,  including the
Offering,  intends  to  integrate  these  businesses  and their  operations  and
administrative  functions over a period of time.  This  integration  process may
present  opportunities  to reduce costs through the  elimination  of duplicative
functions  and through  economies of scale,  particularly  in obtaining  greater
volume discounts from suppliers,  but will also necessitate additional costs and
expenditures  for  corporate  management  and  administration  (including  costs
related to the hiring of additional  management  personnel),  corporate expenses
related to being a public company, systems integration and facilities expansion.
These various costs and possible  cost-savings may make comparison of historical
operating  results not comparable to, or indicative of, future  performance.  In
addition, Vestcom may make payments of up to $2.8 million and may issue up to an
additional 844,997 shares of Common Stock in connection with the Acquisitions of
four Founding Companies if specified revenue or earnings thresholds are attained
during various periods ending no later than two years after the first day of the
fiscal quarter in which the Offering is consummated. Any earn-outs will increase
goodwill  recorded for the  Acquisition  transactions.  The  amortization of any
additional  goodwill and the increased  number of shares issued if the earn-outs
are achieved will negatively affect the Company's future earnings per share.

<PAGE>

RESULTS OF OPERATIONS - COMVESTRIX

________________________________________________________________________________
Six Months Ended June 30, 1997 Compared to Six Months Ended June 30, 1996

Revenues  increased  $1,318,000,  or 12.2%,  from $10,763,000 for the six months
ended June 30, 1996 to $12,081,000  for the six months ended June 30, 1997. This
increase was primarily attributable to an increase in the volume of Comvestrix's
production of statements,  although  revenues also increased in most other areas
of Comvestrix's business.

Comvestrix's gross profit increased $859,000,  or 18.3%, from $4,699,000 for the
six months ended June 30, 1996 to  $5,558,000  for the six months ended June 30,
1997.  The gross  profit  margin  increased  from 43.7% in 1996 to 46.0% in 1997
primarily due to improved  capacity  utilization  resulting from the increase in
the volume of business.

Selling,  general and administrative expenses increased $392,000, or 10.9%, from
$3,597,000  for the six months  ended June 30,  1996 to  $3,989,000  for the six
months ended June 30, 1997.  As a percentage of revenues,  selling,  general and
administrative  expenses  decreased  from  33.4% in 1996 to  33.0% in 1997.  The
increase in the dollar amount of selling,  general and  administrative  expenses
was primarily  attributable to increased  compensation expense for new technical
personnel,  increased  commissions  and  increased  administrative  expenses  to
support the greater volume of business.

Net income  increased from  $1,034,000 for the six months ended June 30, 1996 to
$1,222,000 for the six months ended June 30, 1997.

________________________________________________________________________________
Three Months Ended June 30, 1997 Compared to Three Months Ended June 30, 1996

Revenues  increased  $728,000,  or 13.7%,  from  $5,303,000 for the three months
ended June 30, 1996 to $6,031,000 for the three months ended June 30, 1997. This
increase was primarily attributable to an increase in the volume of Comvestrix's
production of statements,  although  revenues also increased in most other areas
of Comvestrix's business.

Comvestrix's gross profit increased $433,000,  or 18.9%, from $2,285,000 for the
three months ended June 30, 1996 to  $2,718,000  for the three months ended June
30, 1997. The gross profit margin  increased from 43.0% in 1996 to 45.0% in 1997
primarily due to improved  capacity  utilization  resulting from the increase in
the volume of business.

Selling,  general and administrative expenses increased $162,000, or 10.9%, from
$1,773,000  for the three months ended June 30, 1996 to $1,935,000 for the three
months ended June 30, 1997.  As a percentage of revenues,  selling,  general and
administrative  expenses  decreased  from  33.4% in 1996 to  32.1% in 1997.  The
increase in the dollar amount of selling,  general and  administrative  expenses
was primarily  attributable to increased  compensation expense for new technical
personnel,  increased  commissions  and  increased  administrative  expenses  to
support the greater volume of business.

Net income  increased  from $468,000 for the three months ended June 30, 1996 to
$611,000 for the three months ended June 30, 1997.

________________________________________________________________________________
LIQUIDITY AND CAPITAL RESOURCES - COMVESTRIX

At June 30, 1997,  Comvestrix had working capital of $417,000 and total cash and
cash   equivalents   of  $108,000,   as  compared  to  $860,000  and   $107,000,
respectively,  at December  31, 1996.  Comvestrix  has  historically  funded its
operations  with cash flow from  operations  and  limited  borrowings  from bank
lenders. Net cash provided by operating activities for the six months ended June
30, 1997 was  $3,367,000 as compared with  $2,218,000,  for the six months ended
June 30,  1996.  At June 30,  1997,  Comvestrix  had a  $2,550,000  bank line of
credit,  which  includes a $300,000  line to be  utilized  solely for  equipment
financing. An aggregate of $2,550,000 was available under this line of credit at
June 30,  1997.  Historically,  Comvestrix  has been able to fund its  equipment
purchase needs through secured loans or equipment leases.  During the six months
ended June 30, 1997,  Comvestrix  entered  into a  $6,250,000  five year capital
lease for production  equipment.  This lease replaced existing operating leases,
upgraded production  equipment to the latest available  technology and increased
production capacity. The net annual cost of the new capital lease was lower than
the cost of the operating leases which were replaced.

Comvestrix  incurs  postage  costs  on  behalf  of  customers  of  approximately
$1,000,000  to  $2,000,000  each month.  Comvestrix's  policy is to collect such
postage  costs  from its  customers  in  advance.  To the extent  Comvestrix  is
unsuccessful in doing so, cash flow is negatively  affected,  and Comvestrix may
be required to utilize its bank credit line.  While no  assurance  can be given,
management  of  Comvestrix  believes  it has  adequate  cash flow and  financing
alternatives available to it to fund its operations and capital requirements for
the foreseeable future.

<PAGE>

RESULTS OF OPERATIONS - DMS

________________________________________________________________________________
Six Months Ended June 30, 1997 Compared to Six Months Ended June 30, 1996

Revenues increased  $201,000,  or 2.9%, from $6,815,000 for the six months ended
June 30, 1996 to $7,016,000 for the six months ended June 30, 1997. A portion of
this increase was attributable to DMS'  acquisitions in May 1996 of a four-color
printing and  processing  company and a presorting  company to support DMS' core
operations.  DMS' revenue  growth is  currently  constrained  by physical  space
limitations.  DMS has entered into a lease for a new and larger facility,  which
it  believes  will  allow  for  increased   revenues  and  improved   production
efficiencies.

DMS' gross profit  decreased  $236,000,  or 9.4%,  from  $2,505,000  for the six
months ended June 30, 1996 to $2,269,000 for the six months ended June 30, 1997.
The gross profit margin decreased from 37.0% in 1996 to 32.0% in 1997.  Revenues
from the increased  volume of business were offset by the costs  associated with
the businesses acquired in May 1996,  compensation expense related to the hiring
of new  personnel  to support  the  increased  volume of business  and  expenses
related to DMS' telemarketing service.

Selling,  general and administrative expenses decreased $229,000, or 13.5%, from
$1,700,000  for the six months  ended June 30,  1996 to  $1,471,000  for the six
months ended June 30, 1997.  As a percentage of revenues,  selling,  general and
administrative  expenses  decreased  from  24.9% in 1996 to  21.0% in 1997.  The
decrease  in  selling,   general  and  administrative   expenses  was  primarily
attributable to the expenses  incurred in 1996 relating to the acquisitions made
in May, 1996.

Net income  decreased  from  $768,000  for the six months ended June 30, 1996 to
$705,000 for the six months ended June 30, 1997.

________________________________________________________________________________
Three Months Ended June 30, 1997 Compared to Three Months Ended June 30, 1966

Revenues increased $44,000,  or 1.2%, from $3,608,000 for the three months ended
June 30, 1996 to $3,652,000  for the three months ended June 30, 1997. A portion
of  this  increase  was  attributable  to  DMS'  acquisitions  in May  1996 of a
four-color  printing and processing  company and a presorting company to support
DMS' core operations.

DMS' gross profit decreased  $319,000,  or 22.5%,  from $1,420,000 for the three
months  ended June 30, 1996 to  $1,101,000  for the three  months ended June 30,
1997. The gross profit margin  decreased from 39.0% in 1996 to 30.0% in 1997 for
the reasons set forth in the six month discussion above.

Selling,  general and administrative expenses decreased $315,000, or 13.5%, from
$1,004,000  for the three  months  ended June 30, 1996 to $689,000 for the three
months ended June 30, 1997.  As a percentage of revenues,  selling,  general and
administrative  expenses  decreased  from  27.8% in 1996 to  18.9% in 1997.  The
decrease  in  selling,   general  and  administrative   expenses  was  primarily
attributable to expenses  incurred in 1996 relating to the acquisitions  made in
May, 1996.

Net income  decreased  from $404,000 for the three months ended June 30, 1996 to
$362,000 for the three months ended June 30, 1997.

________________________________________________________________________________
LIQUIDITY AND CAPITAL RESOURCES - DMS

At June 30, 1997, DMS had working  capital of $1,049,000 and total cash and cash
equivalents of $266,000,  as compared with $447,000 and $573,000,  respectively,
at December 31, 1996. DMS had accounts  receivable of $2,647,000 at December 31,
1996 and  $3,183,000 at June 30, 1997.  The increase in accounts  receivable was
primarily  attributable to the increased volume of business and the acquisitions
which were consummated  during 1996. DMS has historically  funded its operations
with cash flow from  operations and limited  borrowings  from bank lenders.  Net
cash provided by operating activities for the six months ended June 30, 1997 and
1996  was  $54,000  and ($116,000)  respectively.  At June 30,  1997,  DMS had a
$425,000 line of credit,  which  includes a $200,000 line to be utilized  solely
for equipment financing.  An aggregate of $275,000 was available under this line
of  credit  at June  30,  1997.  Historically,  DMS has  been  able to fund  its
equipment purchase needs through secured loans or equipment leases. During 1996,
DMS utilized approximately $762,000 to acquire two companies.

DMS incurs postage costs on behalf of customers of  approximately  $1,000,000 to
$2,000,000  each month.  DMS' policy is to collect such  postage  costs from its
customers in advance.  To the extent that DMS is  unsuccessful in doing so, cash
flow is negatively affected,  and DMS may be required to utilize its bank credit
line.  While no  assurance  can be  given,  management  of DMS  believes  it has
adequate  cash  flow  and  financing  alternatives  available  to it to fund its
operations and capital requirements for the foreseeable future.

<PAGE>

RESULTS OF OPERATIONS - IMAGE

________________________________________________________________________________
Six Months Ended June 30, 1997 Compared to Six Months Ended June 30, 1996

Revenues increased $613,000,  or 13.6%, from $4,506,000 for the six months ended
June 30,  1996 to  $5,119,000  for the six  months  ended  June 30,  1997.  This
increase was primarily  attributable to increases in the volume of Image's print
and mail and micrographics businesses.

Image's gross profit margin increased  $247,000,  or 18.9%,  from $1,308,000 for
the six months ended June 30, 1996 to  $1,555,000  for the six months ended June
30, 1997. The gross profit margin  improved from 29.0% in 1996 to 30.4% in 1997.
The increase in the gross profit margin was primarily  attributable  to improved
cost control and increased volume.

Selling,  general and administrative  expenses decreased $28,000,  or 2.5%, from
$1,140,000  for the six months  ended June 30,  1996 to  $1,112,000  for the six
months ended June 30, 1997.  As a percentage of revenues,  selling,  general and
administrative  expenses decreased from 25.3% in 1996 to 21.7% in 1997 which was
primarily attributable to the sales volume increase noted above.

Image recorded a net loss of ($8,000) for the six months ended June 30, 1996 and
net income of $234,000 for the six months ended June 30, 1997.

________________________________________________________________________________
Three Months Ended June 30, 1997 Compared to Three Months Ended June 30, 1996

Revenues  increased  $309,000,  or 16.0%,  from  $1,930,000 for the three months
ended June 30, 1996 to $2,239,000 for the three months ended June 30, 1997. This
increase was primarily  attributable to increases in the volume of Image's print
and mail and micrographics businesses.

Image's gross profit margin increased  $98,000,  or 18.4%, from $533,000 for the
three months ended June 30, 1996 to $631,000 for the three months ended June 30,
1997. The gross profit margin remained unchanged at 28% in 1996 and 1997.

Selling,  general and administrative  expenses increased $9,000,  or 1.7%, from
$539,000  for the three  months  ended June 30, 1996 to  $548,000  for the three
months ended June 30, 1997.  As a percentage of revenues,  selling,  general and
administrative  expenses decreased from 27.6% in 1996 to 24.5% in 1997 which was
primarily attributable to the sales volume increase noted above.

Image recorded a net loss of ($149,000) for the three months ended June 30, 1996
and a net loss of ($72,000) for the three months ended June 30, 1997.

________________________________________________________________________________
LIQUIDITY AND CAPITAL RESOURCES - IMAGE

At June 30, 1997, Image had a working capital deficit of $965,000 and total cash
and cash  equivalents  of $202,000,  as compared  with a deficit of $986,000 and
cash and cash equivalents of $61,000,  respectively, at December 31, 1996. Image
has  historically  met its working  capital  requirements by borrowing from bank
lenders and by managing its accounts receivable.  Net cash provided by operating
activities for the six months ended June 30, 1997 was $547,000, as compared with
$476,000 for the six months ended June 30, 1996.  At June 30, 1997,  Image had a
$850,000 bank line of credit,  of which  $205,000 was  available.  Historically,
Image has been able to fund its equipment  purchase needs through  secured loans
or equipment  leases.  During the six months ended June 30, 1997,  Image entered
into a $762,000  five year capital  lease for  production  equipment.  The lease
replaced existing operating leases,  upgraded production equipment to the latest
available technology and increased  production capacity.  The net annual cost of
the new capital lease was lower than the cost of the operating leases which were
replaced.

Image incurs postage costs on behalf of customers of approximately $1,000,000 to
$1,500,000 each month.  Image's policy is to collect such postage costs from its
customers in advance. To the extent Image is unsuccessful in doing so, cash flow
is  negatively  affected,  and Image may be  required to utilize its bank credit
line.  While no assurance can be given,  management of Image  believes that with
the  financing  alternatives  available  to it  and  by  managing  its  accounts
receivable,  it will be able to fund its operations and capital requirements for
the foreseeable future.

<PAGE>
RESULTS OF OPERATIONS - EIS

________________________________________________________________________________
Six Months Ended June 30, 1997 Compared to Six Months Ended June 30, 1996

Revenues increased $936,000,  or 27.0%, from $3,465,000 for the six months ended
June 30,  1996 to  $4,401,000  for the six  months  ended  June 30,  1997.  This
increase was primarily  attributable  to additional EIS facilities in Nashville,
Tennessee,  and  Greenville,  South  Carolina  (which  were  opened in 1996) and
business from a new customer at the existing facility in Little Rock, Arkansas.

EIS' gross profit increased $462,000, or 80.5%, from $573,000 for the six months
ended June 30, 1996 to  $1,036,000  for the six months ended June 30, 1997.  The
gross profit margin increased from 16.5% in 1996 to 23.5% in 1997,  primarily as
a result of EIS' expenses remaining  relatively stable or decreasing as revenues
increased.

Selling,  general and administrative  expenses increased $85,000, or 12.8%, from
$664,000  for the six months  ended June 30, 1996 to $749,000 for the six months
ended  June  30,  1997.  As  a  percent  of  revenues,   selling,   general  and
administrative  expenses  decreased  from  19.1% in 1996 to  17.0% in 1997.  The
increase in the dollar amount of selling,  general and  administrative  expenses
was primarily  attributable to compensation  for additional  personnel while the
percentage  decrease  was  attributable  to the  increase in revenues  discussed
above.

EIS  recorded a net loss of $102,000  for the six months ended June 30, 1996 and
net income of $103,000 for the six months ended June 30, 1997.

________________________________________________________________________________
Three Months Ended June 30, 1997 Compared to Three Months Ended June 30, 1996

Revenues  increased  $245,000,  or 12.9%,  from  $1,901,000 for the three months
ended June 30, 1996 to $2,146,000 for the three months ended June 30, 1997. This
increase was primarily  attributable  to additional EIS facilities in Nashville,
Tennessee,  and  Greenville,  South  Carolina  (which  were  opened in 1996) and
business from a new customer at the existing facility in Little Rock, Arkansas.

EIS' gross profit  increased  $304,000,  or 116.9%,  from $260,000 for the three
months ended June 30, 1996 to $564,000 for the three months ended June 30, 1997.
The gross profit margin increased from 14.0% in 1996 to 26.0% in 1997, primarily
as a result  of EIS'  expenses  remaining  relatively  stable or  decreasing  as
revenues increased.

Selling,  general and administrative  expenses increased $55,000, or 16.6%, from
$332,000  for the three  months  ended June 30, 1996 to  $387,000  for the three
months  ended June 30,  1997.  As a percent of  revenues,  selling,  general and
administrative  expenses  increased  from  17.5% in 1996 to  18.0% in 1997.  The
increase  in  selling,   general  and  administrative   expenses  was  primarily
attributable to compensation for additional personnel.

EIS  recorded a net loss of $67,000 for the three months ended June 30, 1996 and
net income of $75,000 for the three months ended June 30, 1997.

________________________________________________________________________________
LIQUIDITY AND CAPITAL RESOURCES - EIS

At June 30, 1997, EIS had a working  capital deficit of $936,000 and no cash and
cash  equivalents,  as compared with a working capital deficit of $1,108,000 and
cash and cash  equivalents of $45,000 at December 31, 1996.  EIS's  expansion of
its operations and ownership restructuring primarily contributed to the deficit.
EIS has historically  funded operations from existing cash flow and the use of a
$750,000 bank line of credit.  An aggregate of $206,000 was available under this
line of credit  at June 30,  1997.  Historically,  EIS has been able to fund its
equipment purchase needs through secured loans or equipment leases.

<PAGE>

RESULTS OF OPERATIONS - COMPUTER OUTPUT

________________________________________________________________________________
Six Months Ended June 30, 1997 Compared to Six Months Ended June 30, 1996

Revenues  increased  $1,108,000,  or 46.8%,  from  $2,368,000 for the six months
ended  June 30,  1996 to  $3,476,000  for the six months  ended  June 30,  1997.
Approximately  $939,000 of the additional  revenue was  attributable  to one new
customer.  The  remainder  of the increase  was  attributable  to an increase in
volume from new and existing customers.

Computer Output's gross profit increased $360,000, or 42.9%, from $839,000,  for
the six months ended June 30, 1996 to  $1,199,000  for the six months ended June
30, 1997. The gross profit margin decreased from 35.4% in 1996 to 34.5% in 1997.
This decrease was primarily  attributable to costs associated with the hiring of
additional  management  personnel and production  staff to support the increased
sales volume and the  acquisition  of equipment to position  Computer  Output to
perform additional services.

Selling,  general and administrative expenses increased $100,000, or 18.6%, from
$538,000 in 1996 to $638,000 in 1997.  As a  percentage  of  revenues,  selling,
general and  administrative  expenses  decreased  from 22.7% in 1996 to 18.4% in
1997. The increase in the dollar amount of selling,  general and  administrative
expenses was primarily  attributable to increased  commissions of  approximately
$92,000,  while the  percentage  decrease  was  attributable  to the increase in
revenues discussed above.

Net income  increased  from  $262,000  for the six months ended June 30, 1996 to
$482,000 for the six months ended June 30, 1997.

________________________________________________________________________________
Three Months Ended June 30, 1997 Compared to Three Months Ended June 30, 1996

Revenues  increased  $770,000,  or 65.4%,  from  $1,178,000 for the three months
ended June 30, 1996 to  $1,948,000  for the three  months  ended June 30,  1997.
Approximately  $665,000 of the additional  revenue was  attributable  to one new
customer.  The  remainder  of the increase  was  attributable  to an increase in
volume from new and existing customers.

Computer Output's gross profit increased $279,000, or 33.3%, from $398,000,  for
the three months ended June 30, 1996 to $677,000 for the three months ended June
30, 1997. The gross profit margin increased from 34.0% in 1996 to 35.0% in 1997.
This increase was primarily  attributable  to fixed costs  remaining  relatively
stable while sales volume increased.

Selling,  general and administrative  expenses increased $48,000, or 17.0%, from
$283,000 in 1996 to $331,000 in 1997.  As a  percentage  of  revenues,  selling,
general and  administrative  expenses  decreased  from 24.0% in 1996 to 17.0% in
1997. The increase in the dollar amount of selling,  general and  administrative
expenses was primarily  attributable to increased  commissions of  approximately
$47,000.

Net income  increased  from $104,000 for the three months ended June 30, 1996 to
$299,000 for the three months ended June 30, 1997.

________________________________________________________________________________
LIQUIDITY AND CAPITAL RESOURCES - COMPUTER OUTPUT

At June 30, 1997,  Computer  Output had working capital of $7,000 and total cash
and  cash   equivalents   of  $247,000,   as  compared  with  $156,000  and  $0,
respectively,  at December 31, 1996. Computer Output has historically funded its
operations  with cash flow from  operations  and  limited  borrowings  from bank
lenders. Net cash provided by operating activities for the six months ended June
30, 1997 was  $859,000,  as compared with $362,000 for the six months ended June
30, 1996. At June 30, 1997,  Computer Output had a $300,000 bank line of credit,
of which $50,000 was available.  Historically,  Computer Output has been able to
fund its equipment  purchase  needs through  secured loans or equipment  leases.
While no assurance can be given,  management of Computer  Output believes it has
adequate  cash  flow  and  financing  alternatives  available  to it to fund its
operations and capital requirements for the foreseeable future.

<PAGE>

RESULTS OF OPERATIONS - COS INFORMATION

________________________________________________________________________________
Six Months Ended June 30, 1997 compared to Six Months Ended June 30, 1996

Revenues decreased $346,000,  or 13.9%, from $2,484,000 for the six months ended
June 30,  1996 to  $2,138,000  for the six  months  ended  June 30,  1997.  This
decrease  was  primarily  attributable  to a  decrease  in  the  volume  of  COS
Information's  label and laser printing business and also to delays in the start
of new contracted business.

COS Information's gross profit decreased  $164,000,  or 19.3%, from $848,000 for
the six months ended June 30, 1996 to $684,000 for the six months ended June 30,
1997. The gross profit margin decreased from 34.0% in 1996 to 32.0% in 1997. The
decrease in the gross profit margin was primarily a result of COS  Information's
increased costs related to the move to its new premises and the decreased volume
of business.

Selling,  general and  administrative  expenses decreased $111,000 or 17.5% from
$633,000 for the six months ended June 30, 1996 compared to $522,000 for the six
months ended June 30, 1997.  As a percentage of revenues,  selling,  general and
administrative  expenses  decreased  from  25.5% in 1996 to 24.4% in 1997 due to
decreased volume.

Net income  decreased  from  $155,000  for the six months ended June 30, 1996 to
$109,000 for the six months ended June 30, 1997.

________________________________________________________________________________
Three Months Ended June 30, 1997 compared to Three Months Ended June 30, 1996

Revenues  decreased  $225,000,  or 18.2%,  from  $1,233,000 for the three months
ended June 30, 1996 to $1,008,000 for the three months ended June 30, 1997. This
decrease  was  primarily  attributable  to a  decrease  in  the  volume  of  COS
Information's  label and laser printing business and also to delays in the start
of new contracted business.

COS Information's gross profit decreased  $115,000,  or 26.7%, from $431,000 for
the three months ended June 30, 1996 to $316,000 for the three months ended June
30, 1997. The gross profit margin decreased from 35.0% in 1996 to 31.3% in 1997.
The  decrease  in  the  gross  profit  margin  was  primarily  a  result  of COS
Information's  increased  costs  related to the move to its new premises and the
decreased volume of business.

Selling,  general and  administrative  expenses decreased $111,000 or 32.5% from
$342,000 for the three  months ended June 30, 1996  compared to $231,000 for the
three months ended June 30, 1997. As a percentage of revenues,  selling, general
and administrative expenses decreased from 27.7% in 1996 to 22.9% in 1997 due to
the decreased volume.

Net income  decreased  from  $67,000 for the three months ended June 30, 1996 to
$58,000 for the three months ended June 30, 1997.

________________________________________________________________________________
LIQUIDITY AND CAPITAL RESOURCES - COS INFORMATION

At June 30, 1997, COS  Information had working capital of $452,000 and $2,000 of
cash and cash  equivalents as compared with $290,000 and $88,000,  respectively,
at December 31, 1996. COS  Information  has  historically  funded its operations
with cash flow from  operations and limited  borrowings  from bank lenders.  Net
cash provided by operating activities for the six months ended June 30, 1996 was
$504,000 and net cash used by operating activities for the six months ended June
30, 1997 was $65,000.  Historically,  COS  Information has been able to fund its
equipment  purchase needs through  secured loans or equipment  leases.  While no
assurance can be given,  management of COS Information  believes it has adequate
cash flow and financing  alternatives available to it to fund its operations and
capital requirements for the foreseeable future.

<PAGE>

                           Part II: Other Information


Item 6.   Exhibits and Reports on Form 8-K


     (a) Exhibits:

           3.1 Registrant's Restated Certificate of Incorporation, as amended.
          10.1 Equipment Loan and Revolving Credit Agreement between the 
               Registrant and Summit Bank, dated August 13, 1997.
          27.1 Financial Data Schedule

       (b) Reports on Form 8-K:

                  None



                                   Signatures

Pursuant  to the  requirements  of the  Securities  Exchange  Act of  1934,  the
Registrant  has duly  caused  this  report  to be  signed  on its  behalf by the
undersigned thereunto duly authorized.

                                             VESTCOM INTERNATIONAL, INC.



                                             By:  /s/Harvey Goldman
                                                  ______________________________
                                                  Harvey Goldman, Executive Vice
                                                  President and Chief Financial 
                                                  Officer


                                                  Dated:  August 21, 1997