SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                                   FORM 10-KSB

[X]   ANNUAL REPORT UNDER SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF
      1934

      For the fiscal year ended December 31, 1997

[ ]   TRANSITION REPORT UNDER SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT
      OF 1934

                         COMMISSION FILE NUMBER 0-20594

                                COMPSCRIPT, INC.
                 ----------------------------------------------
                 (Name of Small Business Issuer in Its Charter)

FLORIDA                                                     65-0506539
-------------------------------                             -------------------
(State or Other Jurisdiction of                             (I.R.S. Employer
Incorporation or Organization)                              Identification No.)

                            1225 BROKEN SOUND PARKWAY
                            BOCA RATON, FLORIDA 33481
               --------------------------------------------------
               (Address of Principal Executive Offices)(Zip Code)

                                 (561) 994-8585
                ------------------------------------------------
                (Issuer's Telephone Number, Including Area Code)

Securities registered under Section 12(b) of the Securities Exchange Act of
1934:

TITLE OF EACH CLASS                    NAME OF EACH EXCHANGE ON WHICH REGISTERED
-------------------                    -----------------------------------------
       NONE                                             NONE

Securities registered under Section 12(g) of the Securities Exchange Act of
1934:

                    COMMON STOCK, PAR VALUE $.0001 PER SHARE
                    ----------------------------------------
                                (Title of Class)

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

Check if disclosure of delinquent filers in response to Item 405 of Regulation
S-B is not contained in this form, and no disclosure will be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-KSB or any amendment to
this Form 10- KSB. [X]

State registrant's revenues for the year ended December 31, 1997.  $50,590,325

State the aggregate market value of the voting stock held by non-affiliates of
the registrant on February 26, 1998 computed by reference to the closing bid
price of the CompScript, Inc. Common Stock as reported by THE WALL STREET
JOURNAL on that date ($4.1875): $40,343,954

                      APPLICABLE ONLY TO CORPORATE ISSUERS

The number of shares outstanding of the registrant's Common Stock, par value
$.0001 per share (the "Common Stock"), as of February 26, 1998, was 14,072,063.

Transitional Small Business Disclosure Format (check one):

Yes [ ]  No [X]

                       DOCUMENTS INCORPORATED BY REFERENCE

                                      None.

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                                    PART 1

Item 1. DESCRIPTION OF BUSINESS

COMPANY OVERVIEW

      CompScript, Inc. (formerly Capital Brands, Inc.,) (the "Company" or
"Compscript") is a comprehensive provider of pharmacy management services
equipped to both lower costs and improve the quality of care to its customers.
CompScript offers a broad range of pharmacy, infusion therapy, consulting
services and mail order, to managed care networks, long-term and subacute care
facilities, home health patients, and recipients of managed care. CompScript's
proprietary pharmacy management capabilities combine sophisticated clinical
tools with the latest technologies in databases and drug profiles.

      Since May 1996, the Company has consummated four acquisitions of
institutional pharmacy providers located in Mobile, Alabama (May 1996), Miami,
Florida (January 1997), Metarie, Louisiana (February 1997) and Mentor, Ohio
(March 1997), and one acquisition of a mail service dispensing pharmacy with its
principal operations in Cleveland, Ohio (August 1996). See Item 1. "Description
of Business - Acquisition Strategy".

      CompScript presently operates 7 institutional pharmacies that serve
long-term and subacute facilities in Florida, Alabama, Mississippi, Louisiana
and Ohio.

      Capital Brands, Inc.'s ("Capital Brands") predecessor, Capital
Acquisitions, Inc. was incorporated in March 1988 as a Delaware corporation.
Prior to September, 1991, Capital Brands was principally engaged in
organizational activities, raising capital through a public offering and
searching for and investigating business opportunities. On April 26, 1996,
CompScript, Inc. acquired approximately 93% of the outstanding common stock of
CompScript-Boca, Inc. (formerly CompScript, Inc.) ("CompScript-Boca"), a
privately-held provider of pharmacy management services by merger of the Company
into CompScript-Boca in exchange for issuance of 7,394,982 shares of the
Company's common stock. As a result of this transaction, CompScript-Boca
shareholders became the owners of approximately 80% of the Company's then
outstanding common stock and assumed 100% control of the Company's Board of
Directors. Accordingly, the acquisition has been treated for financial reporting
purposes as a reverse acquisition. After completion of this transaction, the
Company became the owner of approximately 93% of the outstanding common stock of
CompScript-Boca and accordingly, recorded at the time of the transaction, a
minority interest in the acquired subsidiary of $222,628, representing
approximately 7% of the net assets of the acquired subsidiary on the date of
acquisition. In connection with the share exchange with the Company, Capital
Brands divested itself of its interest in all businesses except for its equity
interest in securities of QPQ Corporation. The securities are classified as
"available for sale" and were valued on December 31, 1997, at $53,906.

      On February 23, 1998, the Company entered into an Agreement and Plan of
Merger (the "Merger Agreement") with Omnicare, Inc., pursuant to which a
wholly-owned subsidiary of Omnicare will merge with and into the Company (the
"Merger"). Following the Merger, the Company will become a wholly-owned
subsidiary of Omnicare. In connection with the Merger, shareholders of the
Company will receive shares of Omnicare common stock (NYSE: OCR) with a market
value of $4.50 per share, determined in accordance with, and subject to the
terms of, the Merger Agreement. Omnicare is a leading independent provider of
pharmacy and related services to long-term care institutions such as nursing
homes, retirement centers and other institutional health care facilities.
Consummation of the Merger is conditioned on, among other things, receipt of
approval from holders of more than 50% of the Company's outstanding common
stock. It is anticipated that the Company's shareholders will be asked to vote
upon the Merger, and that consummation of the Merger will occur by the end of
the third quarter of 1998.

                                       -2-

<PAGE>

See Item 10. "Executive Compensation", Item 12. "Security Ownership of Certain
Beneficial Owners and Management - Changes in Control" and Item 13. Certain
Relationships and Related Transactions".

      Effective December 31, 1997, the Company cancelled its contracts to
provide pharmacy benefit management ("PBM") services due to lack of
profitability and cash flow constraints.

PRODUCTS AND SERVICES

      INSTITUTIONAL PHARMACY. CompScript purchases, repackages and dispenses
prescription and non-prescription medication in accordance with physician orders
and delivers such prescriptions at least daily to the nursing facilities for
administration to individual patients by the facility's nursing staff.
CompScript typically services nursing homes within a 150-mile radius of its
pharmacy locations. CompScript maintains a 24-hour, on-call pharmacist service
365 days per year for emergency dispensing and delivery or for consultation with
the facility's staff or attending physician.

      Compscript has received accreditation under the Joint Commission on
Accreditation of Health Care Organizations ("JCAHO") in connection with the
Company's long-term care institutional pharmacy services. This accreditation was
received in October 1996, for the Company's Boca Raton facility, in October 1997
for its Ohio facility, and in January 1998 for its Miami facility. The Company
intends to attain such accreditation for its other institutional pharmacy
locations. The Company believes this accreditation distinguishes the Company
from many of its competitors.

      Upon receipt of a prescription, the relevant patient information is
entered into CompScript's computerized proprietary dispensing and billing
systems. At that time, the dispensing system will check the prescription for any
potentially adverse drug interactions or patient sensitivity. When required
and/or specifically requested by the physician or patient, branded drugs are
dispensed; generic drugs are substituted in accordance with applicable state and
federal laws and as requested by the physician or patient. The Company also
provides therapeutic interchange, with physician approval, in accordance with
the company's pharmaceutical care guidelines.

      CompScript provides a "modified unit-dose" distribution system. Most of
its prescriptions are filled utilizing specialized unit-of-use packaging and
delivery systems. Maintenance medications are typically provided in 30-day
supplies utilizing either a box unit-dose system or unit-dose punch card system.
The unit doses system, preferred over the bulk delivery systems employed by
retail pharmacies, improves control over drugs in the nursing facility and
improves patient compliance with drug therapy by increasing the accuracy and
timeliness of drug administration.

      Integral to CompScript's drug distribution system is its proprietary
computerized medical records and documentation system. CompScript provides to
the facility computerized medication administration records and physician's
order sheets and treatment records for each patient. Data extracted from these
computerized records are also formulated into monthly management reports on
patient care and quality assurance. The computerized documentation system in
combination with the modified unit-dose drug delivery system results in greater
efficiency in nursing time, improved control, reduced drug waste in the facility
and lower error rates in both dispensing and administration. These benefits
improve drug efficacy and result in fewer drug-related failures and
hospitalizations.

      CONSULTANT PHARMACIST SERVICES. Federal and state regulations mandate that
nursing facilities, in addition to providing a source of pharmaceuticals, retain
consultant pharmacist services to monitor and report on prescription drug
therapy in order to maintain and improve the quality of patient care. The
Omnibus Budget Reconciliation Act ("OBRA") implemented in 1990 seeks to further
upgrade

                                       -3-

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and standardize care by setting forth more stringent standards relating to
planning, monitoring and reporting on the progress of prescription drug therapy
as well as facility-wide drug usage.

      CompScript provides consultant pharmacist services which help clients
comply with such federal and state regulations applicable to nursing homes.
Consultant pharmacists work on a proprietary laptop program to offer
institutions patient specific clinical data. The services offered by
CompScript's consultant pharmacists include: (i) comprehensive, monthly drug
regimen reviews for each patient in the facility to assess the appropriateness
and efficacy of drug therapies, including a review of the patient's medical
records, monitoring drug reactions to other drugs or food, monitoring lab
results and recommending alternate therapies or discontinuing unnecessary drugs;
(ii) participation on the Pharmacy and Therapeutics, Quality Assurance and other
committees of client nursing facilities as well as periodic involvement in staff
meetings; (iii) monthly inspection of medication carts and storage rooms; (iv)
monitoring and monthly reporting on facility-wide drug usage and drug
administration systems and practices; (v) development and maintenance of
pharmaceutical policy and procedures manuals; and (vi) assistance to the nursing
facility in complying with state and federal regulations as they pertain to
patient care.

      Additionally, CompScript offers a specialized line of consulting services
which help nursing facilities enhance care and reduce and contain costs as well
as to comply with state and federal regulations. Under this service line,
CompScript provides: (i) data required for OBRA and other regulatory purposes,
including reports on psychotropic drug usage (chemical restraints), antibiotic
usage (infection control) and other drug usage; (ii) Plan of Care programs which
assess each patient's state of health upon admission and monitor progress and
outcomes using data on drug usage as well as dietary, physical therapy and
social service inputs; (iii) counseling related to appropriate drug usage and
implementation of drug protocols; (iv) on-site educational seminars for the
nursing facility staff on topics such as drug information relating to clinical
indications, adverse drug reactions, drug protocols and special geriatric
considerations in drug therapy, and information and training on intravenous drug
therapy and updates on OBRA and other regulatory compliance issues; (v) mock
regulatory reviews for nursing staffs; and (vi) nurse consultant services and
consulting for dietary, social services and medical records.

      ANCILLARY SERVICES. CompScript provides the following ancillary products
and services to nursing facilities:

      Infusion Therapy Products and Services. With cost containment pressures in
the health care industry, nursing facilities are increasingly providing subacute
care as a means of treating moderately acute but stabilized patients more
cost-effectively than hospitals, provided that the nursing staff and pharmacy
are capable of supporting higher degrees of acuity. CompScript provides infusion
therapy support services for such residents in its client nursing facilities
and, to a lesser extent, hospice and home care patients. Infusion therapy
consists of the product (a nutrient, antibiotic, chemotherapy or other drugs in
solution) and the intravenous ("IV") administration of the product.

      CompScript prepares the product to be administered using proper equipment
in a sterile environment and then delivers the product to the nursing home for
administration by the nursing staff. Proper administration of IV drug therapy
requires a highly trained nursing staff. CompScript's consultant pharmacists and
nurse consultants operate an education and certification program on IV therapy
to assure proper staff training and compliance with regulatory requirements in
client facilities offering an IV program.

      By providing an infusion therapy program, CompScript enables its client
nursing facilities to admit and retain patients who otherwise would need to be
cared for in an acute-care facility. CompScript's proprietary computer system
and specialization in the subacute arena have been instrumental in new

                                       -4-

<PAGE>

business development and the reason over 65% of the facilities are considered
subacute or competent in IV therapy. The Company believes that by providing
these high acuity pharmacy services it has a competitive advantage over other
pharmacy providers. The most common infusion therapies CompScript provides in
the nursing home environment are total parenteral nutrition, antibiotic therapy,
chemotherapy, pain management and hydration.

      HOME INFUSION THERAPY SERVICES. CompScript has established a Joint
Commission on Accreditation of Healthcare Organization ("JCAHO") accredited home
infusion company to serve homebound patients. CompScript offers outcomes
management with an emphasis on diagnosis of level of severity, specialized
management reporting, and statewide coverage, which makes CompScript
particularly attractive to managed care companies. CompScript offers managed
care companies a full continuum of coverage for their clients, from hospitals to
subacute units to long-term care facilities to the patient's homes.

      Infusion therapy services involve the administration of prescription drugs
and other products that are prescribed by a physician to a patient by catheter,
feeding tube or intravenously. The Company's managed care clients benefit from
outpatient infusion therapy services because the length of hospital stays can be
reduced. Rather than receiving infusion therapy in a hospital, the Company can
provide infusion therapy services to patients at home, in a physician's office
or in a free-standing center operated by a health maintenance organization
("HMO") or other entity. The Company provides antimicrobial, cardiovascular,
hematological, nutritional, pain management, chemotherapeutic, hydration,
endocrine, respiratory and AIDS management treatments to patients.

      MAIL SERVICE PHARMACY BENEFITS. The Company operates a mail service
pharmacy in Florida that provides members with convenient access to maintenance
medications, and enables the Company and its clients to control drug costs
through purchasing efficiencies and other economies of scale. In addition,
through its mail service pharmacy, the Company is able to be directly involved
with the prescriber and member, and is generally able to achieve a higher level
of generic and therapeutic substitution than can be achieved through the retail
pharmacy network, which further reduces the client's costs.

                                       -5-

<PAGE>

      RECENT EVENTS. Effective December 31, 1997, the Company cancelled its
contracts to provide pharmacy benefit management ("PBM") services due to lack of
profitability and cash flow constraints. Prior to that, PBM consisted of retail
pharmacy network administration, except in the Long-Term Care Pharmacy Network;
formulary administration; electronic point-of-sale claims processing, drug
utilization review ("DUR"); mail pharmacy service; and benefit plan design
consultation. Advanced PBM services included the development of advanced
formulary compliance and therapeutic substitution programs; therapy management
services such as prior authorization, therapy guidelines, step therapy
protocols, and disease management interventions, and sophisticated management
information reporting and analytic services.

      In connection with the growth and expansion of the Company's mail service
operations, on January 1, 1998, the Company entered into an Independent
Consulting Agreement ("Consulting Agreement") with Gerard Altieri, ("Altieri"),
a former director of the Company, and Ronald J. Reith ("Reith"), a former
officer of the Company (the "Consultants"). The Consultants assist the Company
in securing new mail order and related business. The Consulting Agreement
provides that for a five year period through December 31, 2002, the Consultants
shall receive commissions attributable to all new business obtained by
Consultants in excess of certain established base-line pricing. Additionally,
the Consultants received a total of 115,000 shares of the Company's common stock
in January 1998 as compensation for these services. The Consultants shall devote
such time as reasonably necessary to perform services under the Consulting
Agreement. This Consulting Agreement supersedes a January 1997 agreement which
provided for the payment of $50,000 per month through January 1998, and was
renewable for an additional 12 month period if gross revenues (less adjustments)
attributable to all mail order business exceeded certain targeted amounts.

ACQUISITION STRATEGY

      The Company has targeted acquisition candidates with strong management, a
demonstrated capacity for growth and opportunities to realize efficiencies
through consolidation and integration. The Company has identified acquisition
candidates with management who intend to continue to participate in the
operation of the business but believe that there are more substantial
opportunities in being involved in a larger, stronger organization. The Company
has historically issued equity in CompScript as the purchase price for an
acquired company in order to align the interests of the acquired company's
management with those of CompScript.

      On May 31, 1996, in a transaction accounted for as a pooling of interests,
the Company acquired Delta Pharmacy Services, Inc. ("Delta"). In connection with
the transaction, the Company exchanged 666,350 shares of the Company's Common
Stock for all of the outstanding common stock of Delta. Delta is in the business
of supplying prescription pharmaceuticals, consulting and enteral and parental
therapies to long-term and alternate care providers in Alabama and Northern
Florida.

                                       -6-

<PAGE>

      On August 19, 1996, in a transaction accounted for as a pooling of
interests, the Company acquired SECURx, Inc. ("SECURx"). In connection with the
transaction, the Company exchanged 187,500 shares of the Company's Common Stock
for all of the outstanding common stock, of SECURx. SECURx is in the business of
selling and distributing prescription drugs through mail order distribution to
the general public through corporate sponsored benefit plans of employers
located in the Northeastern United States.

      On January 10, 1997, in a transaction accounted for as a pooling of
interests, the Company acquired Medical Services Consortium, Inc. ("MSC"). In
connection with the transaction, the Company exchanged 1,400,000 shares of the
Company's Common Stock for all of the outstanding common stock of MSC. MSC is in
the business of supplying prescription pharmaceuticals, consulting and enteral
and parental therapies to long-term and alternate care providers in South
Florida.

      On February 28, 1997, in a transaction accounted for as a pooling of
interests, the Company acquired Campo Medical Pharmacy, Inc. ("Campo"). In
connection with the transaction, the Company exchanged 375,000 shares of the
Company's Common Stock for all of the outstanding common stock of Campo. Campo
is in the business of supplying prescription pharmaceuticals, and consulting
services to long-term and alternate care providers in Louisiana.

      On March 26, 1997, in a transaction accounted for as a pooling of
interests, the Company acquired Hytree Pharmacy, Inc. ("Hytree"). In connection
with the transaction, the Company exchanged 850,000 shares of the Company's
Common Stock for all of the outstanding common stock of Hytree. Hytree is in the
business of providing institutional pharmacy services, home care, distribution
of durable medical equipment and supplies in Ohio.

      In connection with the Company's acquisition strategy, on October 1, 1996,
the Company entered into a five year Consulting and Acquisition Management
Agreement with Shulman & Associates Inc. ("Shulman"), pursuant to which Shulman
would assist CompScript in identifying, evaluating, structuring, negotiating,
and closing business acquisitions, including, but not limited to, asset
purchases, consolidations, mergers, joint ventures and strategic alliances. In
connection with such agreement (the "Shulman Agreement"), Shulman will receive a
fee of 15,000 shares of the Company's Common Stock if the "aggregate market
value" (defined in such agreement) of the acquisition transaction is up to
$5,000,000, 30,000 shares if the aggregate market value of the acquisition
transaction is between $5,000,000, but less than $10,000,000, and 45,000 shares
if the aggregate market value of the acquisition transaction is in excess of
$10,000,000. In the event the Company consummates a merger or consolidation
involving itself or 50% or more of its voting stock or a substantial portion of
its assets is acquired in any one transaction by way of tender or exchange
offer, negotiated purchase or otherwise, Shulman shall be paid a fee of 3% of
the aggregate market value of the business combination with a minimum of
$1,000,000 and a maximum of $3,000,000, provided, that if Shulman introduces the
transaction to the Company there shall be no maximum fee limitation.

SUPPLIERS

      The Company's inventory in its pharmacies includes over 3,000 brand and
generic pharmaceuticals. If a pharmaceutical is not in its inventory, the
Company can generally obtain it from a supplier within one to two business days.
The Company purchases its pharmaceuticals primarily through wholesale
distributors. Generic pharmaceuticals are generally purchased directly from
manufacturers or through wholesale distributors. The Company believes that
alternative sources of supply for most generic and brand name pharmaceuticals
are readily available.

                                       -7-

<PAGE>

COMPETITION

      The Long Term-Care industry is highly fragmented but experiencing
significant consolidation. By its nature, the long-term care pharmacy business
is highly regionalized and, within a given geographic region of operations,
highly competitive. In the geographic regions it serves, CompScript competes
with numerous local retail pharmacies, local and regional institutional
pharmacies and pharmacies owned by long-term care facilities. CompScript
competes in this market on the basis of quality, cost-effectiveness and the
increasingly comprehensive and specialized nature of its services along with the
clinical expertise, pharmaceutical technology and professional support it
offers. In its program of acquiring institutional pharmacy providers, the
Company competes with several other companies with similar acquisition
strategies, some of which have greater resources than the Company. No individual
customer or market group is critical to the total sales of the Company's
long-term care pharmacy business. The Company considers its principal
competitive advantages to be independence from nursing home owner/operators,
strong managed care knowledge and experience which supports the development of
advanced services, and its commitment to providing flexible and distinctive
service to its customers.

      Consolidation is a critical factor in the pharmaceutical industry
generally. Horizontal and vertical merger and acquisition activity in the
manufacturing segment has been robust, with significant resultant movements in
market share. Competitors that are owned by nursing home owners/operators and
manufacturers may have pricing advantages that are unavailable to the Company
and other independent companies.

      With respect to infusion therapy services, the Company competes with a
number of regional and large national companies. Many of these larger companies
have greater financial and marketing resources than the Company.


GOVERNMENT REGULATION

LTC PHARMACY

      Institutional pharmacies, as well as the long-term care facilities they
serve, are subject to extensive federal, state and local regulation. These
regulations cover required qualifications, day-to-day operations, reimbursement
and the documentation of activities. CompScript continuously monitors the
effects of regulatory activity on its operations.

      LICENSURE, CERTIFICATION AND REGULATION. States generally require that
companies operating a pharmacy within the state be licensed by the state board
of pharmacy. The Company currently has pharmacy licenses in each state in which
it operates a pharmacy. In addition, CompScript's pharmacies are registered with
the appropriate state and federal authorities pursuant to statutes governing the
regulation of controlled substances.

      Client nursing facilities are also separately required to be licensed in
the states in which they operate and, if serving Medicare or Medicaid patients,
must be certified to be in compliance with

                                       -8-

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applicable program participation requirements. Client nursing facilities are
also subject to the nursing home reforms of the Omnibus Budget Reconciliation
Act of 1987, which imposed strict compliance standards relating to quality of
care for nursing home operations, including vastly increased documentation and
reporting requirements. In addition, pharmacists, nurses and other health care
professionals who provide services on the Company's behalf are, in most cases,
required to obtain and maintain professional licenses and are subject to state
regulations regarding professional standards of conduct.

      MEDICARE AND MEDICAID. The nursing home pharmacy business has long
operated under regulatory and cost containment pressures from state and federal
legislation primarily affecting Medicaid and, to a lesser extent, Medicare.

      As is the case for nursing home services generally, CompScript receives
reimbursement from the Medicaid programs, directly from individual residents
(private pay), and from other payors such as third-party insurers. The Company
believes that its reimbursement mix is in line with nursing home expenditures
nationally. For the year ended December 31, 1997, CompScript's payor mix was
approximately as follows: 35% private pay and nursing homes, 27% Medicaid, 20%
Medicare (of which, 19% was attributable to Part A and 1% to Part B) and 18%
insurance and other private sources.

      For those patients who are not covered by government-sponsored programs or
private insurance, CompScript generally directly bills the patient or the
patient's responsible party on a monthly basis. Depending upon local market
practices, CompScript may alternatively bill private patients through the
nursing facility. Pricing for private pay patients is based on prevailing
regional market rates or "usual and customary" charges.

      The Medicaid program is a cooperative federal-state program designed to
enable states to provide medical assistance to aged, blind, or disabled
individuals, or members of families with dependent children whose income and
resources are insufficient to meet the costs of necessary medical services.
State participation in the Medicaid program is voluntary. To become eligible to
receive federal funds, a state must submit a Medicaid "state plan" to the
Secretary of the Department of Health and Human Services ("HHS") for approval.
The federal Medicaid statute specifies a variety of requirements which the state
plan must meet, including requirements relating to eligibility, coverage of
services, payment and administration.

      Federal law and regulations contain a variety of requirements relating to
the furnishing of prescription drugs under Medicaid. States are given broad
authority, subject to certain standards, to limit or specify conditions to the
coverage of particular drugs. Federal Medicaid law establishes standards
affecting pharmacy practice. These standards include general requirements
relating to patient counseling and drug utilization review and more specific
requirements for nursing facilities relating to drug regiment reviews for
Medicaid patients in such facilities. Recent regulations clarify that, under
federal law, a pharmacy is not required to meet the general standards for drugs
dispensed to nursing facility residents if the nursing facility complies with
the drug regimen review requirements. However, the regulations indicate that
states may nevertheless require pharmacies to comply with the general standards,
regardless of whether the nursing facility satisfies the drug regimen review
requirement, and the states in which the Company operates currently do require
its pharmacies to comply therewith.

      Federal regulations impose certain requirements relating to reimbursement
for prescription drugs furnished to Medicaid patients. In addition to
requirements imposed by federal law, states have substantial discretion to
determine administrative, coverage, eligibility and payment policies under their
state Medicaid programs which may affect the Company's operations. For example,
some states have enacted "freedom of choice" requirements which may prohibit a
nursing facility from requiring its residents to purchase pharmacy or other
ancillary medical services or supplies from particular providers that deal with
the

                                       -9-

<PAGE>

nursing home. Such limitations may increase the competition which the Company
faces in providing services to nursing facility patients.

      The Medicare program is a federally funded and administered health
insurance program for individuals age 65 and over or who are disabled. The
Medicare program consists of two parts: Part A, which covers, among other
things, inpatient hospital, skilled nursing facility, home health care and
certain other types of health care services; and Medicare Part B, which covers
physicians' services, outpatient services, and certain items and services
provided by medical suppliers. Medicare Part B also covers a limited number of
specifically designated prescription drugs. The Medicare program establishes
certain requirements for participation of providers and suppliers in the
Medicare program. Pharmacies are not subject to such certification requirements.
Skilled nursing facilities and suppliers of medical equipment and supplies,
however, are subject to specified standards. Failure to comply with these
requirements and standards may adversely affect an entity's ability to
participate in the Medicare program and receive reimbursement for services
provided to Medicare beneficiaries.

      The Medicare and Medicaid programs are subject to statutory and regulatory
changes, retroactive and prospective rate adjustments, administrative rulings,
and freezes and funding reductions, all of which may adversely affect the
Company's business. There can be no assurance that payments for pharmaceutical
supplies and services under governmental reimbursement programs will continue to
be based on the current methodology or remain comparable to present levels. In
this regard, the Company may be subject to rate reductions as a result of
federal budgetary legislation related to the Medicare and Medicaid programs. In
addition, various state Medicaid programs periodically experience budgetary
shortfalls which may result in Medicaid payment delays to the Company. To date,
the Company has not experienced any material adverse effect due to any such
budgetary shortfall. In addition, the failure, even if inadvertent, of
CompScript and/or its client institutions to comply with applicable
reimbursement regulations could adversely affect CompScript's business.
Additionally, changes in such reimbursement programs or in regulations related
thereto, such as reductions in the allowable reimbursement levels, modifications
in the timing or processing of payments and other changes intended to limit or
decrease the growth of Medicaid and Medicare expenditures, could adversely
affect the Company's business.

      REFERRAL RESTRICTIONS. The Company is subject to federal and state laws,
which govern financial and other arrangements between health care providers.
These laws include the federal anti-kickback statute, which prohibits, among
other things, knowingly and willfully soliciting, receiving, offering or paying
any remuneration directly or indirectly in return for or to induce the referral
of an individual to a person for the furnishing of any item or service for which
payment may be made in whole or in part under Medicare or Medicaid. Many states
have enacted similar statutes, which are not necessarily limited to items, and
services for which Medicare or Medicaid makes payment. Violations of these laws
may result in fines, imprisonment, and exclusion from the Medicare and Medicaid
programs or other state-funded programs. Federal and state court decisions
interpreting these statutes are limited, but have generally construed the
statutes to apply if "one purpose" of remuneration is to induce referrals or
other conduct within the statute.

      Federal regulations establish "safe harbors," which give immunity from
criminal or civil penalties to parties in good faith compliance with applicable
regulations. While the failure to satisfy all criteria for a safe harbor does
not mean that an arrangement violates the statute, it may subject the
arrangement to review by the Office of Inspector General ("OIG"), which is
charged with administering the federal anti-kickback statute. Until recently,
there were no procedures for obtaining binding interpretations or advisory
opinions from the OIG on the application of the federal anti-kickback statute to
an arrangement or its qualification for a safe harbor upon which the Company can
rely. However, the Health Insurance Portability and Accountability Act of 1996,
signed into law on August 21, 1996, now requires the Secretary of HHS to issue
written advisory opinions, which are binding on the Secretary and the party
requesting the opinion, regarding the applicability of certain aspects of the
anti-kickback statute to specific or proposed arrangements.

                                      -10-

<PAGE>

      The OIG issues "Fraud Alerts" identifying certain questionable
arrangements and practices which it believes may implicate the federal
anti-kickback statute. The OIG has issued a Fraud Alert providing its views on
certain joint venture and contractual arrangements between health care
providers. The OIG also issued a Fraud Alert concerning prescription drug
marketing practices that could potentially violate the federal statute.
Pharmaceutical marketing activities may implicate the federal anti-kickback
statute because drugs are often reimbursed under the Medicaid program. According
to the Fraud Alert, examples of practices that may implicate the statute include
certain arrangements under which remuneration is made to pharmacists to
recommend the use of a particular pharmaceutical product.

      In addition, a number of states have recently undertaken enforcement
actions against pharmaceutical manufacturers involving pharmaceutical marketing
programs, including programs containing incentives to pharmacists to dispense
one particular product rather than another. These enforcement actions arose
under state consumer protection laws, which generally prohibit false
advertising, deceptive trade practices, and the like.

      The Company believes its contractual arrangements with other health care
providers, its pharmaceutical suppliers and its pharmacy practices are in
compliance with these laws. There can be no assurance that such laws will not,
however, be interpreted in the future in a manner inconsistent with the
Company's interpretation and application.

      HEALTH CARE REFORM AND FEDERAL BUDGET LEGISLATION.  In recent years, the
Clinton administration and Congress have considered various proposals to reform
the health care system. On August 5, 1997, the Balanced Budget Act of 1997 (the
"Balanced Budget Act") was enacted. The Balanced Budget Act, among other things,
mandates the establishment of a prospective payment system ("PPS") for Medicare
skilled nursing facilities ("SNFs"), under which facilities will be paid a
federal per diem rate for virtually all covered SNF services. It is anticipated
that the PPS will be phased in over three cost reporting periods, starting with
cost reporting periods beginning on or after July 1, 1998. In order to ensure
that the frail elderly residing in SNFs receive needed and appropriate
medication therapy, the results of studies conducted by independent
organizations, including those which examine appropriate payment mechanism and
payment rates for medication therapy, must be considered as part of the PPS for
SNFs. The Balanced Budget Act provides for the imposition of cost savings
measures affecting Medicare SNF services, and imposes limits on annual updates
in payments to Medicare SNFs for routine services, and institutes consolidated
billing for SNF residents, effective July 1, 1998. The Balanced Budget Act also
imposes numerous other cost savings measures affecting Medicare SNF services.

      The Balanced Budget Act also repeals the federal payment standard for
Medicaid payments to Medicaid nursing facilities effective October 1, 1997.
There can be no assurance that budget constraints or other factors will not
cause states to reduce Medicaid reimbursement to nursing facilities or that
payments to nursing facilities will be made on a timely basis. The law also
grants greater flexibility to states to establish Medicaid managed care projects
without the need to obtain a federal waiver. Although these waiver projects
generally exempt institutional care, including nursing facility and
institutional pharmacy services, no assurances can be given that managed care or
capitated rates will not replace fee-for-service reimbursement for long-term
care, including pharmacy services. The Company anticipates that federal and
state governments will continue to review and assess alternative health care
delivery systems and payment methodologies. It is not possible to predict the
effect of the recent budget legislation or the interpretation or administration
of such legislation on the Company's business. There can be no assurance that
future health care or budget legislation or other changes will not have an
adverse effect on the business of the Company.

    Several state Medicaid programs have established mandatory statewide
managed care programs for Medicaid beneficiaries to control costs through
negotiated or capitated rates, rather than traditional cost-based reimbursement.
These programs propose to use savings acheived to expand coverage to include
those not previously eligible for Medicaid. HHS has approved waivers for
statewide managed care demonstration projects in several states, and similar
waivers are pending in several other states. To date, the Company's operations
have not been adversely affected by these demonstration projects. There is no
assurance that future Medicaid managed care systems will not have an adverse
effect on the Company's business.

                                      -11-

<PAGE>

      Federal and state laws and regulations govern various aspects of the
Company's businesses. Since sanctions may be imposed for violations of these
laws, compliance is a significant operational requirement for the Company. The
Company believes that it is in substantial compliance with all existing legal
requirements material to the operation of its businesses.

OTHER REGULATION:

      MAIL PHARMACY REGULATION. The Company's mail service pharmacy is located
in Florida and the Company is licensed to do business as a pharmacy in that
state. Many of the states into which the Company delivers pharmaceuticals have
laws and regulations that require out-of-state mail service pharmacies to
register with, or be licensed by, the board of pharmacy or similar regulatory
body in the state. These states generally permit the mail service pharmacy to
follow the laws of the state within which the mail service pharmacy is located,
although one state also requires that the Company employ a pharmacist licensed
in that state. The Company has registered in every state in which, to the
Company's knowledge, such registration is required.

      Other statutes and regulations impact the Company's mail service
operations. Federal statutes and regulations govern the labeling, packaging,
advertising and adulteration of prescription drugs and the dispensing of
controlled substances. The Federal Trade Commission requires mail order sellers
of goods generally to engage in truthful advertising, to stock a reasonable
supply of the product to be sold, to fill mail orders within thirty days, and to
provide customers with refunds when appropriate. The Company believes it is in
compliance with all requirements of the Federal Trade Commission.

      REGULATION OF INFUSION THERAPY SERVICES. The Company's infusion therapy
services business is subject to many of the same or similar state laws and
regulations affecting the Company's pharmacy management business. In addition,
some states require that providers of infusion therapy services be licensed. The
Company is licensed as a home health agency, infusion pharmacy and pharmacy in
Florida. The Company is licensed as a pharmacy only, in Alabama. The Company
believes that it is in substantial compliance with such licensing requirements.

      JCAHO, a non-profit, private organization, has established written
standards for health care organizations and home care services, including
standards for services provided by home infusion therapy companies. The
Company's Miami and Boca Raton, Florida, and Mentor, Ohio facilities have
received JCAHO accreditation. When accredited by JCAHO, the Company can market
infusion therapy services to Medicare and Medicaid programs. If the Company
expands its home infusion therapy services to other states or to Medicaid
programs, it may be required to comply with other applicable laws and
regulations.

      FUTURE REGULATION. The Company is unable to predict accurately what
additional federal or state legislation or regulatory initiatives may be enacted
in the future relating to the businesses of the Company or the health care
industry in general, or what effect any such legislation or regulations might
have on the Company. There can be no assurance that federal or state governments
will not impose additional restrictions or adopt interpretations of existing
laws that could have a material adverse effect on the Company's business or
financial position.

SERVICEMARKS AND TRADEMARKS

      The Company has registered the servicemark "CompScript" with the United
States Patent and Trademark Office. The Company's rights to this servicemark
will continue so long as the Company complies with the usage, renewal filing and
other legal requirements relating to the renewal of service marks. The Company
is in the process of applying for registration of several other trademarks and

                                      -12-

<PAGE>

servicemarks. If the Company is unable to obtain any additional registrations,
the Company believes there would be no material adverse effect on the Company.

INSURANCE

      The dispensing of pharmaceutical products by the Company's pharmacies, and
the products and services provided in connection with the Company's infusion
therapy programs (including the associated nursing services) may subject the
Company to litigation and liability for damages. The Company believes that its
insurance protection is adequate for its present business operations, but there
can be no assurance that the Company will be able to maintain its professional
and general liability insurance coverage in the future or that such insurance
coverage will be available on acceptable terms or be adequate to cover any or
all potential product or professional liability claims. A successful product or
professional liability claim in excess of the Company's insurance coverage could
have a material adverse effect upon the Company.

EMPLOYEES

      As of February 28, 1998, the Company and its subsidiaries employed a total
of 365 employees.

PRODUCT AND MARKET DEVELOPMENT

      CompScript's pharmacy business engages in a continuing program for the
development of new services and the marketing thereof. While new service and new
market development are important factors for the growth of this business,
CompScript does not expect that any new service or marketing effort, including
those in the developmental stage, will require the investment of a material
portion of CompScript's assets.

MATERIALS/SUPPLIES

      CompScript purchases pharmaceuticals through a wholesale distributor and,
on an increasing basis, under contracts negotiated directly with pharmaceutical
manufacturers. The Company also is a member of industry buying groups which
contract with manufacturers for discounted prices. The Company has numerous
sources of supply available to it and has not experienced any difficulty in
obtaining pharmaceuticals or other products and supplies used in the conduct of
its business.

INVENTORIES

      CompScript's pharmacies maintain adequate on-site inventories of
pharmaceuticals and supplies to ensure prompt delivery service to its customers.
Inventories on hand are not considered to be high, beyond industry standards.
The Company's primary wholesale distributor also maintains local warehousing in
most major geographic markets in which the Company operates.

ENVIRONMENTAL MATTERS

      In operating its facilities, CompScript makes every effort to comply with
pollution control laws. No major difficulties have been encountered in effecting
compliance. No material capital expenditures for environmental control
facilities are expected. While CompScript cannot predict the effect which any
future legislation, regulations, or interpretations may have upon its
operations, it does not anticipate any changes that would have a material
adverse impact on its operations.

                                      -13-

<PAGE>

Item 2. DESCRIPTION OF PROPERTIES

      The Company's principal offices, mail order pharmacy operations and
largest institutional pharmacy are located in leased facilities in Boca Raton,
Florida. The Company has leased 20,000 square feet in Boca Raton under a lease
that expires in December 2002 and has an annual average rental of $147,000 plus
common area charges. The chart listed below sets forth the approximate square
footage, annual lease cost (exclusive of common area charges) and the lease
termination date for each institutional pharmacy maintained by the Company,
exclusive of the institutional pharmacy at the Company's principal offices.

                           SQUARE                            TERMINATION
LOCATION                  FOOTAGE        ANNUAL COST            DATE
--------                  -------        -----------        -------------

Mobile, Alabama            4,200           $26,000          August 2000
Tampa, Florida             2,520            28,000          December 1999
Miami, Florida            17,000           130,000          November 2001
Metarie, Louisiana         4,400            45,600          July 2001
Jackson, Mississippi       2,831            23,300          November 1999
Mentor, Ohio              20,000           120,000          August 2000
Mentor, Ohio               1,684            28,320          May 2001

Item 3. LEGAL PROCEEDINGS

      The Company is not a party to any material legal proceeding.


Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITYHOLDERS

      On November 7, 1997, the Company held its Annual Meeting of Shareholders
(the "Annual Meeting"). At the Annual Meeting, five directors were elected to
serve on the Company's Board of Directors until the next Annual Meeting of
Shareholders and until their successors are duly elected and qualified. The
number of votes cast for and withheld for each director was as follows:

            NAME               VOTES FOR              VOTES WITHHELD
            ----               ---------              --------------

      Brian A. Kahan          10,441,035              233,150
      Robert Gardner          10,438,316              235,869
      Robert Edelheit         10,440,101              234,084
      Paul H. Heimberg        10,359,034              315,151
      Malcolm Leonard         10,440,214              233,971

      At the Annual Meeting, shareholders also voted upon (i) an increase to the
number of shares available for issue under the Company's Stock Option Plan
("Proposal 2") and (ii) ratification of the appointment of Ernst & Young LLP as
the Company's independent certified public accountants ("Proposal 3"). The
number of shares cast for and against, along with the number of abstentions and
non-votes, was as follows:

                    VOTES FOR      VOTES AGAINST     ABSTENTIONS     NON-VOTES
                   ----------      -------------     -----------     ---------

Proposal 2          7,529,144         907,224           30,531       2,207,286
Proposal 3         10,634,505          29,475           10,205               0

                                      -14-

<PAGE>

                                   PART II

Item 5. MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS

      The Company's Common Stock, $.0001 par value, is traded on the NASDAQ
SmallCap Market under the symbol "CPRX." The following sets forth the range of
high and low closing bid prices for the Common Stock as reported on the NASDAQ
during each of the quarters presented. The quotations set forth below are
inter-dealer quotations, without retail mark-ups, markdowns or commissions and
may not necessarily represent actual transactions. The quotations have been
adjusted for the Company's 1 for 8 reverse stock split on April 26, 1996.

                              HIGH               LOW
                              ----               ---
      1995

      First Quarter           20.25             11.00
      Second Quarter          20.50              6.50
      Third Quarter            7.25              3.50
      Fourth Quarter           6.50              3.00

      1996

      First Quarter            8.75              3.00
      Second Quarter           9.00              5.75
      Third Quarter            7.25              4.13
      Fourth Quarter          10.25              5.75

      1997

      First Quarter           11.13              7.94
      Second Quarter           8.25              6.75
      Third Quarter            7.06              3.19
      Fourth Quarter           3.63              1.97

      The Company believes that as of March 20, 1998, there were approximately
300 record holders of the Company's Common Stock. The Company believes that
there are substantially in excess of 300 beneficial and round lot holders of the
Company's Common Stock.

      The Company has not paid any cash dividends on its common stock and
currently does not intend to declare or pay cash dividends in the foreseeable
future. The Company presently intends to retain any earnings that may be
generated to provide funds for the operation of business.

Item 6. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATIONS

GENERAL

      CompScript, Inc. ("CompScript" or the "Company", f/k/a Capital Brands,
Inc.) is a comprehensive provider of pharmacy management services including
institutional pharmacy, infusion therapy, mail order and consultant pharmacist
services to managed care networks, long-term and subacute care facilities, home
health patients and recipients of managed care. The Company is the successor to
CompScript-Boca, Inc.

                                      -15-

<PAGE>

("Boca", f/k/a CompScript, Inc. which was f/k/a Aldencare, Inc.), which was
incorporated under the laws of the State of Florida on October 3, 1991.

      On April 26, 1996, shareholders who previously owned approximately 93% of
Boca exchanged their shares of Boca's Common Stock for 7,394,982 common shares
(representing an 80% interest) of Capital Brands, Inc. ("Capital"), a
publicly-held company involved in the development of consumer-based businesses
in the Republic of Poland (the "Acquisition"). This exchange was structured as a
tax-free reorganization. The Acquisition was accounted for as a reverse
acquisition of Capital by Boca, for an aggregate purchase price of approximately
$2,125,000, pursuant to which Boca was recapitalized to include the assets and
liabilities of Capital revalued to reflect the market value of Capital's net
tangible assets at the date of the Acquisition. The net tangible assets
consisted of cash of $1,000,000 and marketable securities, consisting of
1,125,000 shares of the Common Stock of QPQ Corporation (currently 18,750
shares, following reverse stock splits effected by QPQ), valued at $1,125,000.
The Company incurred acquisition costs of approximately $1,889,000, all of which
were charged to additional paid-in capital. As Capital had no operations as of
the Acquisition date, no pro forma financial information is presented related to
this transaction.

      Immediately prior to the Acquisition, Capital's assets included equity
interests it held in various entities. Capital agreed that, at or prior to
closing, it would divest itself of certain of the equity interests, and deliver
its remaining assets consisting of cash and marketable equity securities. In
anticipation of consummating the Acquisition, Capital divested itself of (i) its
interest in international Fast Foods Corporation to Mitchell Rubinson, the
former president of Capital, in exchange for 1,300,000 shares of Capital owned
by Mr. Rubinson and valued at $325,000 (consistent with Capital's accounting
treatment of those shares), (ii) its interest in Family Chicken, Inc. to Mr.
Rubinson, in exchange for 18,750 shares of Capital owned by Mr. Rubinson, valued
at $37,500 (consistent with Capital's accounting treatment of those shares) and
(iii) its interest in International Hotel Corporation to Mr. Rubinson, for
nominal ($100) consideration. Effective July 5, 1996, Capital changed its name
to CompScript, Inc. On October 3, 1996, Boca issued an additional 27,000 shares
of its common stock to a shareholder of the Company, increasing the minority
interest's aggregate ownership in Boca to approximately 8%. The remaining 8% of
Boca is accounted for as a minority interest in a consolidated subsidiary on the
Company's December 31, 1997 consolidated balance sheet.

      On May 31, 1996, the Company issued 666,350 shares of its Common Stock,
having an aggregate value of $5,497,388 (or $8.25 per share), for all the
outstanding common stock of Delta Pharmacy Services, Inc. ("Delta"). In
connection with this transaction, the Company also issued (i) 22,500 shares,
having an aggregate market value of $135,000 (or $6.00 per share), pursuant to
the Shulman Agreement, and (ii) 3,666 shares, having an aggregate market value
of $21,996 (or $6.00 per share) to the Company's counsel as consideration for
legal services rendered. The acquisition of Delta enhanced the Company's
institutional pharmacy services for long-term care into Alabama, Mississippi,
and Northern Florida.

      On August 19, 1996, the Company issued 187,500 shares of its Common Stock,
having an aggregate value of $984,375 (or $5.25 per share), for all the
outstanding stock of SECURx, Inc. ("Securx"). In connection with this
transaction, the Company also issued (i) 67,500 shares, having an aggregate
market value of $405,000 (or $6.00 per share), to Shulman and (ii) 3,667 shares,
having an aggregate market value of $22,002 (or $6.00 per share) to the
Company's counsel as consideration for legal services rendered. In addition to
identifying Securx and assisting in the structuring, negotiating and closing of
the Securx transaction, Shulman provided other services including assisting
shareholders of a corporate owner of Securx to structure the transaction to meet
their needs, reviewing the claims involved in a litigation between Securx and a
predecessor of Securx and evaluating the consequences of the litigation on the
Company's proposed acquisition, and negotiating the terms of a resolution to an
outstanding judgment against Securx by one of its suppliers, including a lien
filed against the inventory

                                      -16-

<PAGE>

of Securx. The acquisition of Securx enabled the Company to strengthen its
overall pharmacy benefit management program and become a nationally recognized
full service, on line adjudicated mail order dispensing pharmacy.

      During the first quarter of 1997, the Company also completed three
acquisitions that enabled the Company to continue to expand its existing
institutional pharmacy and long term care business.

      On January 10, 1997, the Company acquired Medical Services Consortium,
Inc. ("MSC") by issuing an aggregate of 1,400,000 shares of the Company's Common
Stock, having an aggregate market value of $12,600,000 (or $9.00 per share), for
all of the outstanding Common Stock of MSC. In connection with this transaction,
the Company also issued, in December 1996, (i) 45,000 shares, having an
aggregate market value of $414,855 (or $9.219 per share), pursuant to the
Shulman Agreement and (ii) 3,667 shares, having an aggregate market value of
$22,002 (or $6.00 per share) to the Company's counsel as consideration for legal
services rendered.

      On February 28, 1997, the Company issued an aggregate of 375,000 shares of
Common Stock, having an aggregate market value of $3,984,375 (or $10.625 per
share), for all of the outstanding common stock of Campo Medical Pharmacy, Inc.
("Campo"). In connection with this transaction, the Company also issued 15,000
shares, having an aggregate market value of $90,000 (or $6.00 per share),
pursuant to the Shulman Agreement.

      On March 26, 1997, the company acquired Hytree Pharmacy, Inc. ("Hytree")
by issuing an aggregate of 850,000 shares of the Company's Common Stock, having
an aggregate market value of $7,384,375, (or $8.69 per share) for all of the
outstanding shares of Hytree. In connection with this transaction, the Company
also issued 30,000 shares, having an aggregate market value of $150,000 (or
$5.00 per share), pursuant to the Shulman Agreement.

      The per share value of the shares issued to Shulman and the Company's
counsel, respectively, in connection with the foregoing acquisitions is
different from the per share value of the shares issued in exchange for the
outstanding shares of the acquired companies, as a result of arms' length
negotiations between the Company, on the one hand, and Shulman and the Company's
counsel, respectively, on the other hand. See Item 1. "Description of Business -
Acquisition Strategy".

RESULTS OF OPERATIONS

FISCAL YEARS ENDED DECEMBER 31, 1997 AND 1996

      All acquisitions discussed above were accounted for as pooling of
interests and, accordingly, the Company's consolidated financial statements have
been restated for all periods presented. (See Note 1 to the Consolidated
Financial Statements.) In accordance with accounting rules for pooling of
interests transactions, charges to operating income for acquisition-related
expenses of approximately $689,000 and $934,000 were recorded during 1997 and
1996, respectively.

      In March 1997, the Company recorded an $800,000 charge against the
$1,125,000 note receivable included in the consolidated balance sheet at
December 31, 1996. The Company deemed it appropriate to evaluate the collateral
underlying the note, as the value of the collateral (marketable equity
securities) declined significantly subsequent to December 31, 1996. In May 1997,
the note receivable was rescinded by the Company and the collateral of 1,125,000
shares of QPQ Corporation Common Stock (18,750 after a reverse split of 20:1 and
another of 3:1) reverted back to the Company. During 1997, QPQ Corporation
changed its name to Regenesis Holding Corp. The shares, which have been
classified as "available for

                                      -17-

<PAGE>

sale," are valued at $53,906, resulting in the recognition of an unrealized loss
of $271,094, and are included in marketable securities in the consolidated
balance sheet at December 31, 1997.

      The Company also incurred significant costs (which the Company believes
are nonrecurring) associated with the start up and reorganization of its mail
order pharmacy ("Mail Order") operations during 1996. As a result of the Company
incurring dual operating costs while moving the operations from Ohio to Florida;
installing an entirely new proprietary order entry, customer service, dispensing
and on-line adjudication software system; incurring ramp up costs in the area of
customer service and dispensing personnel to handle new contracts which began in
January 1997, the Company incurred losses of approximately $1,100,000 related to
Mail Order operations during the fourth quarter of 1996 and approximately
$1,200,000 during the year ended December 31, 1997.

      The Company believes that as a result of the Mail Order operations
nonrecurring costs incurred during the fourth quarter of 1996, it has put into
place the infrastructure to support anticipated future growth associated with
further development of its Mail Order operations. While the results of the Mail
Order operations cannot be predicted and is dependent, in large part, on the
Company's success in implementing its marketing and business strategy,
management believes the additional personnel and increased administrative and
operational expenses will be partially offset by increased growth in the Mail
Order operations. However, management estimates that the Company's Mail Order
revenues will need to at least double its current levels to cover its costs.
There is no assurance that the Company's Mail Order revenues will increase to
levels permitting profitable Mail Order operations.

      The Company entered into the workers' compensation, pharmacy benefits
management ("PBM") line of business with its 1994 acquisition of CompScript,
Inc., which became the Ohio Division. During the years ended December 31, 1997
and 1996, the contracts attributed to the Ohio Division generated minimal
revenue due in part to the nonexclusive nature of the contracts. In addition,
the inability of the Ohio Division to convert existing relationships with
prospective clients into new PBM contracts or to secure new prospective clients
contributed to significant operating losses and negative cash flows relative to
the Ohio Division in 1997 and 1996. As a result, management decided to cancel
all PBM contracts by December 31, 1997.

      Revenues for the year ended December 31, 1997 increased 18.5% to
$50,631,230 from $42,716,356 for the year ended December 31, 1996. Approximately
15% of the growth is attributable to marketing efforts to new clients, and
approximately 3.5% is attributable to growth in sales made to existing clients.

      Gross profits increased to $20,687,323 in 1997 from $17,025,573 in 1996,
an increase of $3,661,750 or 21.5%. Gross profit margins increased to 40.9% in
1997 from 39.9% in 1996 primarily as a result of more favorable purchasing
discounts based on the increase in volumes and centralization of the purchasing
function for some of the Company's locations.

      Selling general and administration expenses as a percentage of revenues
for 1997 and 1996 were 39.2% and 37.4% respectively. This increase is
attributable to the increases in payroll costs from the addition of new
executives, as well as legal and professional fees related to the Company's
acquired entities along with costs associated with being a public entity.

      The Company's provision for doubtful accounts increased approximately
26.1% or $295,743 in the year ended December 31, 1997, primarily due to the
increase in reserves attributable to the increase in revenues.

                                      -18-

<PAGE>

      Interest and other income decreased $13,431 to $44,900 during 1997,
compared to 1996, as interest from temporary cash investments declined.

      Interest expense for the year ended December 31, 1997 increased to
$575,124 from $359,298 during 1996, primarily due to higher levels of borrowings
outstanding.

      As a result of the items previously discussed, net loss for the year ended
December 31, 1997 was $2,356,848 compared to net loss of $1,155,756 in 1996. Net
loss per share was $.17 in 1997 compared to $.09 in 1996.

LIQUIDITY AND CAPITAL RESOURCES

      The Company has funded its operating requirements to date primarily
through operations, the private sale of equity securities (prior to the reverse
acquisition on April 26, 1996), and the exercise of options and warrants and
borrowings under its existing line of credit agreement. As of December 31, 1997,
the Company had cash of $529,343, accounts receivable of $9,900,717, working
capital of $2,461,370, a current ratio of 1.19 to 1.00, and available funds
under its revolving credit facility of approximately $285,000.

      Net cash used in operating activities for the year ended 1997 was
$4,435,920 compared to net cash used in operations during 1996 of $1,080,633.
The increase in cash used in operating activities of $3,355,287 during 1997 was
primarily attributable to the operating loss incurred during the year ended
December 31, 1997, along with increases in accounts receivable and inventory to
support the 18.5% increase in revenues.

      Net cash used in investing activities was $1,571,678 year ended December
31, 1997, which was a direct result of net purchases of property and equipment
related to the Company's expansion of its Boca Raton office and new mail order
facility which was completed in February 1997. The Company also made
expenditures for computer and processing equipment, and leasehold improvements
pertaining to the new office and institutional pharmacy location that MSC moved
into during September 1997. This new facility was necessary to accommodate the
increased revenues at MSC, along with its continuing emphasis on infusion
therapy services. During 1997, the Company opened two new branch locations in
Jackson, Mississippi and Tampa, Florida, which began operations in February and
March 1997, respectively. Net cash used in investing activities of $434,191 for
the year ended December 31, 1996 consisted primarily of $943,422 used in
purchases of equipment net of $403,808 of cash received in excess of costs
incurred from the reverse acquisition of Capital Brands, Inc.

      Financing activities provided $5,679,201 in cash in 1997 compared to
$1,822,716 in 1996, comprised of the following:

                                               YEAR ENDED DECEMBER 31,
                                           -----------------------------
                                               1997              1996
                                           -----------       -----------

Exercise of options and warrants           $ 1,969,997       $ 1,163,376
Net proceeds from line of credit             6,040,774           469,946
Net repayments of other debt                (2,278,010)          221,394
Distribution to shareholders                   (53,560)          (32,000)
                                           -----------       -----------
                                           $ 5,679,201       $ 1,822,716

                                      -19-

<PAGE>

      The Company's future capital requirements for operations include financing
the growth of working capital items such as accounts receivable and inventory,
purchasing equipment and upgrading management information and inventory control
systems.

      Based upon the continuation of the Company's business development, the
Company believes that cash flow from operations and borrowings under its credit
facility will provide sufficient cash to fund its operations and meet current
obligations for the year ending December 31, 1998. The Company is attempting to
improve cash flows from operations and maintain flexibility in financing both
interim and long-term working capital requirements by increasing its collection
efforts of its accounts receivable. Additionally, management's decision to
terminate the PBM contracts effective December 31, 1997 is expected to result in
a material reduction in selling, general and administrative expenses.

      In the event the Company dramatically expands its operations or makes
acquisitions that would require funds in addition to its existing liquid assets
and cash flows, it would have to seek additional debt or equity financing. There
can be no assurance that the Company could obtain such financing or that such
financing would be available on terms acceptable to the Company.

      In August 1997, the Company amended its financing agreement with its
primary lender, to increase its revolving line of credit agreement to allow for
borrowings up to $7,000,000 from the $5,000,000 limit previously in effect.
Prior to that, in January 1997, the Company had amended its financing agreement
with the same lender, to increase its revolving line of credit agreement to
allow for borrowings up to $5,000,000 from the $750,000 limit previously in
effect. The primary reason for these increases was to provide additional working
capital for operations and fund the Company's acquisition activity.

      The credit facility is collateralized by all of the Company's accounts
receivable, inventory, fixed assets and other assets, and consists of a term
loan due on April 30, 1998. Interest, which is paid monthly on the credit
facility, accrues at the lesser of the prime rate or the three-month London
Interbank Offered Rate, plus two hundred fifty (250) basis points (effective
rate 8.5% at December 31, 1997). The credit facility requires the Company to
maintain at all times, certain net worth, debt coverage and working capital
levels and restricts acquisitions and dispositions of property, and limits
additional borrowings from other lenders. At December 31, 1997, the Company had
an outstanding balance of $6,715,467 under the credit facility. The Company has
utilized borrowings under the credit facility as additional working capital.

      The Company has entered into discussions with its lender to renew and/or
extend the terms of the Company's credit facilities. There is no assurance that
extended or renewed terms will be made available to the Company on favorable
terms, or at all. In addition, as of December 31, 1997, the Company was not in
compliance with certain covenants under the Company's credit facilities;
however, the lender has waived such compliance for the fiscal year ended
December 31, 1997.

      In connection with the credit facility, on January 3, 1997, the Company
also entered into a $500,000 promissory note with the same lender to fund the
company's office and Mail Order expansion, which was completed in the first
quarter of 1997. The principal sum of the promissory note is being paid in
monthly installments of $8,333.33 plus interest at 9.0% for 60 months beginning
on February 1, 1997. Collateral and debt covenants are the same as those of the
Company's $7,000,000 revolving credit line facility.

      On March 19, 1997, the Company entered into an additional $750,000
promissory note, bearing interest at prime, with its existing lender, primarily
for working capital purposes. Such loan matured in July 1997, and was repaid
during 1997.

                                      -20-

<PAGE>

      Except for the historical information contained herein, the matters set
forth in this Form 10-KSB are forward looking and involve a number of risks and
uncertainties that could cause actual results to differ materially from these
statements and trends. Such factors include, but are not limited to: the effect
of changes in governmental regulation, reimbursement policies and federal and
state healthcare funding; the continued availability of suitable acquisition
candidates; significant changes to general economic conditions; strengthened
competition in the Company's geographic markets; the failure of the Company to
obtain or maintain required regulatory licenses and approvals or the loss of key
personnel.

IMPACT OF THE YEAR 2000

      The Securities and Exchange Commission, in Staff Legal Bulletin No. 5
(CF/IM), has stated that public operating companies should consider whether they
will be affected by any material expenditures, problems or uncertainties
associated with the Year 2000 issue, which affects many existing computer
systems that use only two digits to identify a year in the date field. The
Company believes that the matters raised by Staff Legal Bulletin No. 5 are not
applicable in any material way to its own computer systems, and the Company
intends to confirm that any computer systems that the Company may purchase or
lease in the future will have addressed the Year 2000 issue.

      The Company is currently determining the extent to which it may be
impacted by third parties' failure to remedy their own year 2000 issues.
CompScript is having, and will continue to have, formal communications with all
of its significant customers, payers, suppliers, and other third parties to
determine the extent, if any, to which CompScript's interface systems could be
impacted by any third party year 2000 issues and related remedies. There can be
no assurance that the systems of other companies with which the Company's
systems interact will be timely converted and would not have an adverse effect
on the Company's business.

Item 7. FINANCIAL STATEMENTS

      See "Index to Financial Statements" for the financial statements included
in this Form 10-KSB.

Item 8. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
      FINANCIAL DISCLOSURE

      Information concerning changes in the Company's accountants has been
previously reported, within the meaning of Rule 12b-2 and no additional
disclosure is required to be made herein pursuant to the instructions to Item
304 of Regulation S-B.

                                   PART III

Item 9. DIRECTOR'S, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS;
      COMPLIANCE WITH SECTION 16(A) OF THE EXCHANGE ACT

      The following table sets forth certain information concerning the current
directors and the executive officers of the Company:

                                      -21-

<PAGE>

      NAME                      AGE      TITLE
      ----                      ---      -----

      Brian A. Kahan            46       Chairman of the Board, Chief Executive
                                         Officer and President of the Company

      Robert J. Gardner         42       Vice President, Chief Operating Officer
                                         and Director

      Juan C. Cocuy             39       Chief Financial Officer

      Robert Edelheit           58       Director

      Paul E. Heimberg          47       Director

      Malcolm Leonard           55       Director

      BRIAN A. KAHAN has been the Chairman, Chief Executive Officer and
President of the Company since April 1996. In October 1991, Mr. Kahan founded
Aldencare and served as its Chief Executive Officer and became Chief Executive
Officer of CompScript when it merged with Aldencare in 1994. Mr. Kahan has a
B.S. in Pharmacy from the University of Maryland, School of Pharmacy. Mr. Kahan
is former President of the American Society of Consultant Pharmacists. Mr. Kahan
is presently a clinical instructor for the University of Florida and Nova
Southeastern College of Pharmacy and is a trustee for the Florida Pharmacy
Foundation. Additionally, he is a member of the University of Florida College of
Pharmacy National Advisory Board.

      ROBERT J. GARDNER has been Vice President of the Company since August
1996, a director since November 1996, and Chief Operating Officer since August
1997. From July 1995 to August 1996 Dr. Gardner was group leader of infusion
therapy services for Olsten Kimberly Quality Care. From May 1994 to July 1995
Dr. Gardner served as a healthcare consultant. From August 1992 to April 1994
Dr. Gardner served as President of Abbey Pharmaceutical Services, a nationwide
provider of institutional and subacute pharmacy services, and, as Western Area
Vice President for Abbey Home Healthcare. From 1986 to 1992 Dr. Gardner held a
variety of positions with Pharmacy Corporation of America including Vice
President of Operations. Dr. Gardner has a Doctor of Pharmacy Degree from the
University of Pacific and a Master of Business Administration from the
University of Washington.

      JUAN C. COCUY was appointed Chief Financial Officer on July 1, 1997. Mr.
Cocuy has been a partner with the accounting firm Martinelli, Cocuy & Co., CPA's
in Wellington, Florida since January 1996. From August 1995 to December 1995,
Mr. Cocuy was Vice President of the Vinca Group, LLC, Owings Mills, Maryland, a
healthcare consulting company. From August 1992 to August 1995, Mr. Cocuy was
Vice President of Finance, Chief Financial Officer and Director of IntegraCare,
Inc. in Delray Beach, Florida, a publicly traded integrated health care services
provider. From October 1982 to August 1992, Mr. Cocuy served in various
capacities with Ernst & Young in West Palm Beach, Florida, most recently as
Senior Manager. Mr. Cocuy has a Bachelor of Science degree in business
administration from the University of South Florida and is licensed in the State
of Florida as a certified public accountant. He is a member of the Florida and
American Institutes of CPA's.

      ROBERT EDELHEIT has served as a Director of the Company since April 1996.
Mr. Edelheit is President of United Group Programs, employee benefit sales and
consulting firm with offices in Boca Raton, Atlanta and Philadelphia. Mr.
Edelheit received his B.S. in Business from the State University of New York.
Mr. Edelheit is editor and publisher of the newsletter, SYNOPSIS, a tax digest
with an

                                      -22-

<PAGE>

emphasis on employee benefits. Mr. Edelheit has been an Associate Professor at
Florida Atlantic University in Boca Raton, Florida and speaks nationally on
employee benefits.

      PAUL E. HEIMBERG has served as Director of the Company since April 1996.
Mr. Heimberg is a partner with the law firm of Heimberg & Lumer, in Boca Raton,
Florida since November 1995. Previously Mr. Heimberg was a partner with the firm
of Heimberg, Heimberg, Rader & Levenstein, P.A. from 1990 to 1995. Mr. Heimberg
received his B.A. from the University of Wisconsin and his J.D. from Boston
University Law School.

      MALCOLM LEONARD has served as a Director of the Company since April 1996.
Mr. Leonard is a Certified Public Accountant and has been the managing partner
of Leonard & Danzinger, CPA's since 1975. Mr. Leonard is a member of the
American Institute of Certified Public Accountants and the Florida Institute of
Certified Public Accountants. Mr. Leonard received a B.S. from Farleigh
Dickinson University.

      The Company's officers are elected annually by the Company's Board of
Directors and serve at the discretion of the Company's Board of Directors. The
Company reimburses directors for their expenses in connection with their
activities as directors of the Company. Directors of the Company do not receive
additional compensation for their services as directors. Historically, the
Company has granted option to its Directors as compensation for services
granted. During fiscal 1997, the Company did not grant options to its outside
directors.

      Upon consummation of the Merger with Omnicare, Messrs. Kahan, Gardner,
Edelheit, Heimberg and Leonard will resign from the Company's Board of Directors
(see Item 1. "Description of Business - Company Overview", Item 11. "Security
Ownership of Certain Beneficial Owners and Management - Changes in Control" and
Item 12. "Certain Relationships and Related Transactions").

Item 10. EXECUTIVE COMPENSATION

SUMMARY COMPENSATION TABLE

      The following table sets forth the aggregate compensation paid to Brian A.
Kahan and Robert J. Gardner (the "Named Executive Officers") by the Company. No
other executive officer of the Company was paid a total annual salary and bonus
for the fiscal year ended December 31, 1997 which was $100,000 or more.

<TABLE>
<CAPTION>
                                                                     LONG-TERM
                            ANNUAL COMPENSATION                      COMPENSATION
                  ----------------------------------------------     ------------
                                                    OTHER            SECURITIES
NAME AND PRIN-    FISCAL                            ANNUAL           UNDERLYING   ALL OTHER
CIPAL POSITION    YEAR      SALARY      BONUS       COMPENSATION     OPTIONS      COMPENSATION
--------------    ------    --------    -------     ------------     ----------   ------------
<S>               <C>       <C>         <C>         <C>              <C>          <C>
Brian A. Kahan    1997      $304,154    $30,000     None             200,000      $8,103 (1)
Chief Executive   1996      $270,000    None        None             121,017      $5,075 (1)
  Officer         1995      $180,000    $52,000     None             None         $4,393 (1)

Robert J. Gardner 1997      $148,847    $25,000     None             100,000      $9,000 (1)
Chief Operating
  Officer
<FN>
----------------------
(1) Consists of automobile lease payments or allowances.
</FN>
</TABLE>

                                      -23-

<PAGE>

      The Company entered into an agreement with Mr. Kahan, amended and restated
on August 19, 1996, which provides that he shall serve as Chief Executive
Officer and Chairman of the Board of Directors for an initial term of five (5)
years, which may be extended for up to three (3) additional one (1) year terms.
Mr. Kahan's annual salary for the first year shall be $300,000 subject to annual
increases equal to the greater of the percentage increase in the consumer price
index or six percent (6%) of the executive's previous year's base salary.
Pursuant to the Employment Agreement, Mr. Kahan is required to devote
substantially all his business time and attention to the business and affairs of
the Company. Mr. Kahan is entitled to a bonus equal to ten percent (10%) of the
Company's pre-tax profits for each year of the Agreement. Mr. Kahan was granted
200,000 options exercisable at $2.75 per share. Mr. Kahan is entitled to certain
fringe benefits including an automobile allowance and reimbursements for
charitable donations or contributions in an amount not to exceed $25,000. During
1997, the Company made approximately $2,000 in donations to a charity on Mr.
Kahan's behalf. In the event that Mr. Kahan's employment is terminated by the
Company other than for cause, he shall receive either a lump sum equal to his
total compensation and benefits for the remaining balance of the term of the
agreement, reduced to present value or such payments on a monthly basis.

      The Company entered into an agreement on June 19, 1996 with Dr. Gardner
which provides that Dr. Gardner will serve as Vice President and Chief Operating
Officer until December 31, 2000. Dr. Gardner's 1997 annual salary was $150,000,
subject to an increase to $200,000 on January 1, 1998. Dr. Gardner is entitled
to receive an annual cash bonus equal to $15,000 per year, and an additional
cash bonus of an amount not less than $10,000 a year based upon an agreed upon
formula. Dr. Gardner was granted fully vested options to purchase 100,000 shares
at a price of $2.50 per share. Dr. Gardner is entitled to certain fringe
benefits including an automobile allowance. In the event that within twelve (12)
months of any change of control of the Company or attempted change of control of
the Company (as such terms are defined in the Employment Agreement), the Company
terminates the employment of Dr. Gardner under the Employment Agreement, for any
reason, or Dr. Gardner's employment is constructively terminated, then in any
such event Dr. Gardner shall be entitled to receive the balance of the
consideration due under the Employment Agreement.

      In connection with the proposed Merger between the Company and Omnicare
(see Item 1. "Description of Business - Company Overview", Item 11. "Security
Ownership of Certain Beneficial Owners and Management - Changes in Control" and
Item 12. "Certain Relationships and Related Transactions"), it is anticipated
that the employment agreements with Messrs. Kahan and Gardner will be terminated
and that each of such persons will enter into new employment and/or consulting
agreements. The terms and conditions of such agreements have not as yet been
formalized.

      On October 31, 1997, the Company entered into an Agreement with Mr. Cocuy
that provides that Mr. Cocuy serve as the Company's Chief Financial Officer. Mr.
Cocuy's annual salary is $135,000 and shall be increased to $150,000 per year
beginning July 1, 1998. Mr. Cocuy is entitled to receive a discretionary bonus
at the election at the Company's Chief Executive Officer based on Mr. Cocuy's
role and performance relative to the Company's acquisitions, financing, equity
transactions, assistance to operations, profitability of the Company and
enhancement of shareholder value. Mr. Cocuy was granted fully vested options to
purchase 70,000 shares at a price of $2.50 per share. Mr. Cocuy has an
automobile allowance. If Mr. Cocuy is terminated without cause, the Company
shall be obligated to pay him continued compensation for one year following
termination according to the terms of his employment agreement. If an event
occurs which results in a change of control of the Company, Mr. Cocuy is
entitled to a lump sum payment equal to one year (twelve months) of his base pay
plus any other accrued bonuses and reimbursable business expenses on the date
such a change occurs.

                                      -24-

<PAGE>

OPTION/SAR GRANTS IN LAST FISCAL YEAR

      The following table sets forth certain information concerning stock
options granted to the Named Executive Officers during the year ended December
31, 1997.

                                 (INDIVIDUAL GRANTS)

                           NUMBER OF   PERCENT OF TOTAL
                          SECURITIES     OPTIONS/SARS
                          UNDERLYING      GRANTED TO
                         OPTIONS/SARS      EMPLOYEES     EXERCISE OR  EXPIRATION
                            GRANTED     IN FISCAL YEAR   BASE PRICE      DATE
                         ------------  ----------------  -----------  ----------

Brian A. Kahan, CEO         200,000          32.6%          $2.75      11/14/07
Robert J. Gardner, COO      100,000          16.3%          $2.50      11/14/07

AGGREGATED FISCAL YEAR END OPTION VALUE TABLE

      The following table sets forth certain information concerning unexercised
stock options held by the Named Executive Officers as of December 31, 1997. No
stock options were exercised by the Named Executive Officers during the period
ended December 31, 1997. No stock appreciation rights were granted or are
outstanding.

<TABLE>
<CAPTION>
                        NUMBER OF UNEXERCISED OPTIONS     VALUE OF UNEXERCISED IN THE MONEY
                          HELD AT DECEMBER 31, 1997        OPTIONS AT DECEMBER 31, 1997 (1)
                      ---------------------------------   ---------------------------------
NAME                  EXERCISABLE         UNEXERCISABLE     EXERCISABLE       UNEXERCISABLE
----                  -----------         -------------   --------------     ---------------
<S>                   <C>                 <C>             <C>                <C>
Brian A. Kahan          321,017                 --               $0              $0

Robert J. Gardner       240,000                 --               $0              $0
<FN>
--------------
(1) Dollar values are calculated based on the difference between the option
exercise price and $2.125, the closing price of the Company's Common Stock on
December 31, 1997, as reported by NASDAQ.
</FN>
</TABLE>

      Pursuant to the Merger Agreement, upon consummation of the Merger, each
outstanding option to purchase shares of CompScript Common Stock will be
converted into an option to acquire, on the same terms and conditions as were
applicable under such CompScript stock option, the number of shares of Omnicare
stock (rounded up to the nearest whole share) determined by multiplying the
number of CompScript shares subject to such CompScript stock option by the
conversion ratio described in the Merger Agreement, at an exercise price per
share of Omnicare stock equal to the price per share specified in such
CompScript Stock Option divided by the exchange ratio; provided that such
exercise price shall be rounded up to the nearest whole cent.

Item 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

      As of March 20, 1998, there were 14,072,063 shares of the Company's Common
Stock issued and outstanding. The following table sets forth, as of such date,
information with respect to the beneficial ownership of the Company's Common
Stock by (i) each person who is known by the Company to own beneficially more
than 5% of its Common Stock, (ii) each director, (iii) each executive officer,
and (iv) all directors and executive officers as a group:

                                      -25-

<PAGE>

                                                              PERCENTAGE OF
                                 AMOUNT AND NATURE OF          OUTSTANDING
NAME AND ADDRESS(1)             BENEFICIAL OWNERSHIP(2)      SHARES OWNED(2)
-------------------             -----------------------      ---------------

Brian A. Kahan..............         4,656,670(3)                 32.3%
Robert J. Gardner...........           241,025(4)                  1.7%
Malcolm Leonard.............            35,086(5)                    *
Robert Edelheit.............           107,206(6)                    *
Paul E. Heimberg............           115,351(7)                    *
Juan C. Cocuy...............            72,500(8)                    *
Omnicare, Inc...............         4,335,653(9)                 30.8%
 255 East Fifth Street
 Cincinatti, OH 45203
All directors and executive
  officers as a
  group (6 persons).........        5,227,838(10)                 35.2%
--------------------------------

 *   Less than 1%.

(1)  Unless otherwise indicated, the address of each of the listed beneficial
     owners identified is 1225 Broken Sound Parkway, N.W., Suite A, Boca Raton,
     Florida 33451. Unless otherwise noted, the Company believes that all
     persons named in the table have sole voting and investment power with
     respect to all the shares of Common Stock beneficially owned by them.

(2)  A person is deemed to be the beneficial owner of securities that can be
     acquired by such person within 60 days from the date of this Report upon
     the exercise of warrants or options. Each beneficial owner's percentage
     ownership is determined by assuming that warrants or options that are held
     by such person (but not those held by any other person) and that are
     exercisable within 60 days from the date of this Report have been
     exercised.

(3)  Includes 4,207,453 shares of Common Stock held in AldenCare Limited
     Partnership, of which Mr. Kahan is the general partner and 125,000 held by
     Mr. Kahan's wife. Includes options to purchase 321,017 shares. Also
     includes 3,200 shares held in a retirement account for the benefit of Mr.
     Kahan.

(4)  Includes options to purchase 240,000 shares.

(5)  Includes 3,898 shares of Common Stock held by Mr. Leonard in a Joint
     Tenancy with a Right of Survivorship ("JTWROS") with his sister Corinne
     Leonard, 5,848 shares of Common Stock held by Mr. Leonard in a JTWROS with
     his daughter Jennifer Gottlieb and 5,848 shares of Common Stock held by Mr.
     Leonard in a JTWROS with his daughter Shari Leonard and options to purchase
     19,492 shares.

(6)  Includes options to purchase 58,476 shares.

(7)  Includes options to purchase 77,967 shares.

(8)  Includes options to purchase 70,000 shares.

(9)  Represents shares which are subject to the Voting Agreement with Omnicare.
     As a result of the provisions of the Voting Agreement, Mr. Kahan and
     Omnicare may be deemed to share voting and dispositive power with respect
     to the Company's shares subject to the Voting Agreement. Pursuant to a
     stock option agreement, Omnicare would have the right to acquire 2,800,000
     shares (representing approximately 19.9% of the Company's outstanding
     shares) under the circumstances set forth in the stock option agreement.
     Omnicare disclaims beneficial ownership of the shares underlying the stock
     option agreement. The Voting Agreement and stock option agreement were
     entered into in connection with the Merger Agreement. See "Description of
     Business - Company Overview", "Changes in Control", below, and, Item 12.
     "Certain Relationships and Related Transactions".

                                      -26-

<PAGE>

     The 4,335,653 shares described in this paragraph are also included in the
     shares attributable to Mr. Kahan in the table.

(10) See notes 3 - 8 above.

COMPLIANCE WITH SECTION 16(A) OF THE SECURITIES EXCHANGE ACT OF 1934

      Section 16(a) of the Securities Exchange Act of 1934 requires the
Company's directors and executive officers, and persons who own more than ten
percent of the Company's outstanding Common Stock to file with the Securities
and Exchange Commission (the "SEC") initial reports of ownership and reports of
changes in ownership of Common Stock. Such persons are required by SEC
regulation to furnish the Company with copies of all such reports they file.

      To the Company's knowledge, based solely on a review of the copies of such
reports furnished to the Company and written representations that no other
reports were required, all Section 16(a) filing requirements applicable to its
officers, directors and greater than ten percent beneficial owners have been
complied with.

CHANGES IN CONTROL

      On February 23, 1998, the Company entered into an Agreement and Plan of
Merger (the "Merger Agreement") with Omnicare, Inc., pursuant to which a
wholly-owned subsidiary of Omnicare will merge with and into the Company (the
"Merger"). Following the Merger, the Company will become a wholly-owned
subsidiary of Omnicare. Upon consummation of the Merger, the current members of
the CompScript Board of Directors will be replaced by designees of Omnicare, who
will thereupon constitute all of the members of the CompScript board.

      In connection with the Merger, shareholders of the Company will receive
shares of Omnicare common stock (NYSE: OCR) with a market value of $4.50 per
share, determined in accordance with, and subject to the terms of, the Merger
Agreement. Omnicare is a leading independent provider of pharmacy and related
services to long-term care institutions such as nursing homes, retirement
centers and other institutional health care facilities. Consummation of the
Merger is conditioned on, among other things, receipt of approval from holders
of more than 50% of the Company's outstanding common stock. It is anticipated
that the Company's shareholders will be asked to vote upon the Merger and that
consummation of the Merger will occur by the end of the third quarter of 1998.

Item 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

      Leonard & Danzinger, an accounting firm, of which Malcolm Leonard, a
Director of the Company is a principal, provided financial services to the
Company. In connection for such services, Mr. Leonard's firm received $13,000
during fiscal 1997.

      Robert Edelheit, a Director of the Company served as the agent in
connection with the Company's placement of certain of its employee insurance
programs. The transaction was an arms length transaction and the policies
entered into by the Company were no less favorable than could be obtained from
other third parties. Mr. Edelheit received an agent's commission from the
insuring company in connection with such policies. The Company paid no
consideration to Mr. Edelheit for his services.

                                      -27-

<PAGE>

      Pursuant to the Merger Agreement, the Company has granted an option to
Omnicare to purchase up to 2,800,000 shares of the Company's Common stock, at an
exercise price equal to $4.50 per share. The Option is only exercisable in
certain events, and was granted to induce Omnicare to enter into the Merger
Agreement.

      Pursuant to the Merger Agreement, Brian A. Kahan has entered into a Voting
Agreement with Omnicare, pursuant to which Mr. Kahan has granted a designee of
Omnicare the right to vote all off the shares of CompScript Common Stock over
which Mr. Kahan has voting power in favor of the Merger Agreement, the Merger
and the transactions contemplated thereby, and against business combinations,
asset sales or other similar transactions in lieu of the Merger.

                                     PART IV

Item 13. EXHIBITS AND REPORTS ON FORM 8-K.

A.    EXHIBITS:


<TABLE>
<CAPTION>
     EXHIBIT                           DESCRIPTION
     -------                           -----------
<S>           <C>
      3.1     CompScript's Articles of Incorporation (1)
      3.2     Amendments to CompScript's Articles of Incorporation dated April 24, 1996,
              and July 3, 1996 (3.2)(10)
      3.3     CompScript's Bylaws(1)
      4.1     Form of CompScript's Common Stock Certificate (2)
      10.1    CompScript 1996 Stock Option Plan (4)
      10.2    Share Exchange Agreement, dated February 29, 1996, among Capital Brands,
              CompScript, Inc. and certain shareholders of CompScript, Inc.  (10.1)(5)
      10.3    Employment Agreement dated August 19, 1996 between CompScript and Brian
              A. Kahan (10.3)(10)
      10.4    Stock Purchase Agreement dated May 31, 1996 between CompScript and
              the Shareholders of Delta Pharmacy Services, Inc. (10.1)(6)
      10.5    Stock Purchase Agreement dated August 19, 1996 between CompScript and the
              Shareholders of SECURx, Inc. (10.1)(7)
      10.6    Stock Purchase Agreement dated January 10, 1997 between CompScript
              and the Shareholders of Medical Services Consortium, Inc. (8)
      10.7    Employment Agreement dated October 31, 1997 between CompScript and Juan
              C. Cocuy*
      10.8    Employment Agreement dated June 19, 1996 between CompScript and Robert
              J. Gardner (12)
      10.9    1997 Amendment to Stock Option Plan*
      10.10   Revolving Loan Agreement dated January 3, 1997 between CompScript
              and SunTrust Bank South Florida N.A. (12)
      10.11   Independent Consulting Agreement dated as of January 1, 1998 between
              Compscript, Gerard Altieri, Ronald J. Reith and Comprehensive Formulary
              Management*
      10.12   Management Consulting Agreement dated October 1996 between Compscript
              and Shulman & Associates, Inc. (4.1)(9)
      10.13   Merger Agreement dated March 26, 1997 between Compscript, Compscript
              Acquisition Subsidiary, Hytree Pharmacy, Inc. and the shareholders of Hytree
              Pharmacy, Inc. (10.1)(11)

                                      -28-

<PAGE>

      10.14   Agreement and Plan of Merger dated February 23, 1998 between CompScript
              and OmniCare, Inc. (1.0) (13)
      10.15   Stock Option Agreement dated February 23, 1998 between CompScript and
              Omnicare, Inc. (2.0) (13)
      10.16   Voting Agreement dated February 23, 1998 between Brian Kahan and
              Omnicare, Inc. (3.0) (13)
      22.1    CompScript's Subsidiaries (22.1) (12)
      27      Financial Data Schedule*
<FN>
-----------------
      (1)     Incorporated by reference to the exhibit of the same number filed
              with CompScript's Form 8-B dated September 2, 1994.
      (2)     Incorporated by reference to the exhibit of the same number filed
              with CompScript's Form 10- KSB for the year ended December 31,
              1994.
      (4)     Incorporated by reference to Appendix B of CompScript's Proxy
              Statement for the year ended December 31, 1995.
      (5)     Incorporated by reference to the exhibit of the number indicated
              filed with CompScript's Form 8-K dated March 14, 1996.
      (6)     Incorporated by reference to the exhibit of the number indicated
              filed with CompScript's 8-K dated June 14, 1996.
      (7)     Incorporated by reference to the exhibit of the number indicated
              filed with CompScript's 8-K dated August 30, 1996.
      (8)     Incorporated by reference to the exhibit of the number indicated
              filed with CompScript's 8-K dated January 10, 1997.
      (9)     Incorporated by reference to the exhibit of the number indicated
              filed with CompScript's Registration Statement Form S-8 dated
              December 24, 1996.
      (10)    Incorporated by reference to the exhibit of the number indicated
              filed with CompScript's Transition Report on 10-K for the
              transition period from September 30, 1995 to December 31, 1995.
      (11)    Incorporated by reference to the exhibit of the number indicated
              filed with CompScript's 8-K dated March 26, 1997.
      (12)    Incorporated by reference to the exhibit of the number indicated
              filed with CompScript's Form 10-KSB for the year ended December
              31, 1996.
      (13)    Incorporated by reference to the exhibit of the number indicated
              filed with CompScript's 8-K dated March 10, 1998.

*     Filed herewith.
</FN>
</TABLE>

      B.      REPORTS ON FORM 8-K:

              None

                                      -29-

<PAGE>

                                     SIGNATURES

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

                                       COMPSCRIPT, INC.

DATE: March 24, 1998              By: /s/ BRIAN A. KAHAN
                                      ------------------
                                  Brian A. Kahan, Chairman of the Board, Chief
                                                Executive Officer [Principal
                                                Executive Officer]

DATE: March 24, 1998              By: /s/ JUAN C. COCUY
                                      -----------------
                                  Juan C. Cocuy, Chief Financial Officer
                                                [Principal Financial and
                                                Accounting Officer]

        In accordance with the Securities Exchange Act of 1934, this report has
been signed below by the following persons on behalf of the Registrant and in
the capacities and on the dates indicated:

DATE: March 24, 1998              /s/ BRIAN A. KAHAN
                                  ------------------
                                  Brian A. Kahan, Director

DATE: March 24, 1998              /s/ ROBERT J. GARDNER
                                  ---------------------
                                  Robert J. Gardner, Director

DATE: March 24, 1998              /s/ PAUL E. HEIMBERG
                                  --------------------
                                  Paul E. Heimberg, Director

DATE: March 24, 1998              /s/ ROBERT EDELHEIT
                                  -------------------
                                  Robert Edelheit, Director

DATE: March 24, 1998              /s/ MALCOLM LEONARD
                                  -------------------
                                  Malcolm Leonard, Director

<PAGE>

                        CompScript, Inc. and Subsidiaries

                        Consolidated Financial Statements





                         INDEX TO FINANCIAL INFORMATION

Report of Independent Certified Public Accountants...........................F-2

Consolidated Balance Sheet--December 31, 1997................................F-3

Consolidated Statements of Operations--Years ended December 31, 1997 and
1996.........................................................................F-4

Consolidated Statements of Shareholders' Equity--Years ended December 31,
1997 and 1996................................................................F-5

Consolidated Statements of Cash Flows--Years ended December 31, 1997 and
1996.........................................................................F-6

Notes to Consolidated Financial Statements--December 31, 1997................F-8


                                      F-1
<PAGE>







               Report of Independent Certified Public Accountants

The Board of Directors
  and Shareholders
CompScript, Inc.

We have audited the accompanying consolidated balance sheet of CompScript, Inc.
and Subsidiaries (the Company) as of December 31, 1997, and the related
consolidated statements of operations, shareholders' equity and cash flows for
each of the two years in the period ended December 31, 1997. These financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.

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

In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the consolidated financial position of
CompScript, Inc. and Subsidiaries at December 31, 1997, and the consolidated
results of their operations and their cash flows for each of the two years in
the period ended December 31, 1997, in conformity with generally accepted
accounting principles.

                                                              Ernst & Young, LLP


West Palm Beach, Florida
March 6, 1998


                                      F-2
<PAGE>


                        CompScript, Inc. and Subsidiaries

                           Consolidated Balance Sheet
<TABLE>
                                December 31, 1997
<CAPTION>

ASSETS
<S>                                                                             <C>
Current assets:
   Cash  and cash equivalents                                                   $    529,343
   Accounts receivable, net of allowance of $1,510,690                             9,900,717
   Inventory                                                                       3,180,397
   Marketable securities                                                              53,906
   Income tax refund receivable                                                      575,075
   Deferred tax asset                                                                260,168
   Prepaid expenses and other current assets                                         950,059
                                                                                ------------
Total current assets                                                              15,449,665

Property and equipment, net                                                        3,542,866

Other assets:
   Costs in excess of net assets acquired, less accumulated
     amortization of $102,267                                                        102,263
   Other                                                                             485,846
                                                                                ------------
Total other assets                                                                   588,109
                                                                                ------------
Total assets                                                                    $ 19,580,640
                                                                                ============

LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
   Accounts payable                                                             $  4,694,341
   Accrued salaries and benefits                                                     355,393
   Accrued expenses                                                                  693,888
   Accrued pharmaceuticals dispensed by third parties                                 49,413
   Line of credit                                                                  6,715,467
   Current portion of notes payable to shareholders                                   75,000
   Current portion of notes payable                                                  185,354
   Current portion of capital lease obligations                                      219,439
                                                                                ------------
Total current liabilities                                                         12,988,295

Deferred tax liability                                                               215,067

Long-term debt:
   Notes payable                                                                     495,781
   Capital lease obligations                                                         211,500
                                                                                ------------
Total long-term debt                                                                 707,281
                                                                                ------------
Total liabilities                                                                 13,910,643

Minority interest                                                                    222,628

Shareholders' equity:
   Common stock, $.0001 par value--50,000,000 shares authorized,
     13,957,063 shares issued and outstanding                                          1,396
   Preferred stock; $.0001 par value--1,000,000 shares authorized;
     no shares issued and outstanding                                                      -
   Additional paid-in capital                                                     12,119,195
   Accumulated deficit                                                            (6,402,128)
   Unrealized loss on marketable securities                                         (271,094)
                                                                                ------------
Total shareholders' equity                                                         5,447,369
                                                                                ------------
Total liabilities and shareholders' equity                                      $ 19,580,640
                                                                                ============
</TABLE>


SEE ACCOMPANYING NOTES.

                                      F-3
<PAGE>


                        CompScript, Inc. and Subsidiaries

<TABLE>
                      Consolidated Statements of Operations
<CAPTION>

                                                                        YEARS ENDED DECEMBER 31
                                                                        1997                1996
                                                              --------------------------------------
<S>                                                           <C>                 <C>
Sales                                                         $      50,631,230   $     42,716,356
Cost of sales                                                        29,943,907         25,690,783
                                                              --------------------------------------
Gross profit                                                         20,687,323         17,025,573

Selling, general and administrative expenses                         19,838,020         15,953,914
Provision for doubtful accounts                                       1,427,684          1,131,941
Merger costs                                                            688,706            934,223
                                                              --------------------------------------
Total operating expenses                                             21,954,410         18,020,078
                                                              --------------------------------------
Operating loss                                                       (1,267,087)          (994,505)

Other:
   Interest and other income                                             44,900             58,331
   Interest expense                                                    (575,124)          (359,298)
   Loss on note receivable                                             (800,000)                 -
                                                              --------------------------------------
Loss before provision for income taxes                               (2,597,311)        (1,295,472)
Income tax benefit                                                     (240,463)          (139,716)
                                                              --------------------------------------
Net loss                                                      $      (2,356,848)  $     (1,155,756)
                                                              ======================================


Net loss per share                                            $           (0.17)  $         (0.09)
                                                              ======================================

Weighted average shares outstanding                                  13,812,080         12,466,648
                                                              ======================================
</TABLE>



SEE ACCOMPANYING NOTES.

                                      F-4
<PAGE>



                        CompScript, Inc. and Subsidiaries

<TABLE>
                 Consolidated Statements of Shareholders' Equity
<CAPTION>



                                                                                     COMMON STOCK              ADDITIONAL
                                                                            -------------------------------     PAID-IN
                                                                                SHARES         AMOUNT           CAPITAL
                                                                            -------------------------------------------------
<S>                                                                             <C>               <C>           <C>
Balance at January 1, 1996                                                      11,536,206        $1,154        $6,056,859
   Reverse acquisition of Capital Brands, Inc.:
     Acquisition of Capital Brands, Inc.'s common shares, net of
       acquisition costs of $1,888,807                                           1,806,750           181           261,012
     Recording of minority interest in CompScript-Boca, Inc.                      (662,341)          (66)         (384,875)
   Transfer of acquired entity's (Delta) accumulated deficit to additional
     paid-in capital upon conversion from an S to a C
     corporation                                                                         -             -          (101,687)
   Adjustment for Hytree Pharmacy, Inc., pooling-of-interests from
     year-end change (see Note 1)                                                        -             -                 -
   Distributions to shareholders                                                         -             -                 -
   Exercise of warrants                                                            102,550            10           538,366
   Exercise of stock options                                                       625,000            62           624,938
   Fair market value of stock options issued to nonemployees                             -             -         1,411,250
   Common shares issued to consultants                                             125,000            13           923,127
   Net loss                                                                              -             -                 -
                                                                            -------------------------------------------------
Balance at December 31, 1996                                                    13,533,165         1,354         9,328,990
   Exercise of warrants                                                            378,898            38         1,969,959
   Fair market value of stock options issued to nonemployees                             -             -           580,250
   Common shares issued to consultants                                              45,000             4           239,996
   Unrealized loss on marketable securities                                              -             -                 -
   Net loss                                                                              -             -                 -
                                                                            =================================================
Balance at December 31, 1997                                                    13,957,063 $       1,396       $12,119,195
                                                                            =================================================
</TABLE>



<TABLE>
                                                                                                  UNREALIZED
                                                                                                    LOSS ON
                                                                                                   AVAILABLE            TOTAL
                                                                                 ACCUMULATED        FOR SALE        SHAREHOLDERS'
                                                                                   DEFICIT         SECURITIES          EQUITY
                                                                               -----------------------------------------------------
<S>                                                                                 <C>           <C>                    <C>
Balance at January 1, 1996                                                          $(3,107,476)  $            -         $2,950,537
   Reverse acquisition of Capital Brands, Inc.:
     Acquisition of Capital Brands, Inc.'s common shares, net of
       acquisition costs of $1,888,807                                                        -                -            261,193
     Recording of minority interest in CompScript-Boca, Inc.                            162,313                -           (222,628)
   Transfer of acquired entity's (Delta) accumulated deficit to additional
     paid-in capital upon conversion from an S to a C
     corporation                                                                        101,687                -                  -
   Adjustment for Hytree Pharmacy, Inc., pooling-of-interests from
     year-end change (see Note 1)                                                        39,512                -             39,512
   Distributions to shareholders                                                        (85,560)               -            (85,560)
   Exercise of warrants                                                                       -                -            538,376
   Exercise of stock options                                                                  -                -            625,000
   Fair market value of stock options issued to nonemployees                                  -                -          1,411,250
   Common shares issued to consultants                                                        -                -            923,140
   Net loss                                                                          (1,155,756)               -         (1,155,756)
                                                                                 ---------------------------------------------------
Balance at December 31, 1996                                                         (4,045,280)               -          5,285,064
   Exercise of warrants                                                                       -                -          1,969,997
   Fair market value of stock options issued to nonemployees                                  -                -            580,250
   Common shares issued to consultants                                                        -                -            240,000
   Unrealized loss on marketable securities                                                   -         (271,094)          (271,094)
   Net loss                                                                          (2,356,848)               -         (2,356,848)
                                                                                 ===================================================
Balance at December 31, 1997                                                        $(6,402,128)       $(271,094)        $5,447,369
                                                                                 ===================================================
</TABLE>

SEE ACCOMPANYING NOTES.

                                      F-5
<PAGE>



                        CompScript, Inc. and Subsidiaries

<TABLE>
                      Consolidated Statements of Cash Flows
<CAPTION>

                                                                                      YEARS ENDED DECEMBER 31
                                                                                      1997              1996
                                                                                ------------------------------------
OPERATING ACTIVITIES
<S>                                                                                 <C>               <C>
Net loss                                                                            $( 2,356,848)     $(1,155,756)
Adjustments to reconcile net loss to net cash used in operating
   activities:
     Depreciation and amortization of leasehold improvements                             701,958          515,460
     Loss on note receivable                                                             800,000                -
     Adjustment for Hytree Pharmacy, Inc. pooling-of-interests from year-end
       change                                                                                  -           39,512
     Noncash merger costs                                                                240,000          739,492
     Deferred taxes                                                                            -          (22,901)
     Amortization                                                                         40,908           43,815
     Provision for doubtful accounts                                                   1,427,684          842,779
     Changes in operating assets and liabilities:
       Accounts receivable                                                            (4,958,681)      (1,961,725)
       Inventory                                                                        (712,758)        (616,371)
       Prepaid and other receivables                                                    (257,322)          80,830
       Other assets                                                                      394,164          (10,878)
       Income tax refund receivable                                                     (356,563)        (440,903)
       Accounts payable and accrued expenses                                             601,538          866,013
                                                                                ------------------------------------
Net cash used in operating activities                                                 (4,435,920)      (1,080,633)

INVESTING ACTIVITIES
Purchase of property and equipment                                                    (1,571,678)        (943,422)
Proceeds from sale of equipment                                                                -           71,216
Payments received on notes receivable                                                          -           21,225
Payments received on loans to shareholders                                                     -           12,982
Acquisitions, net of cash acquired                                                             -          403,808
                                                                                ------------------------------------
Net cash used in investing activities                                                 (1,571,678)        (434,191)
</TABLE>

                                      F-6
<PAGE>


                        CompScript, Inc. and Subsidiaries

<TABLE>
                Consolidated Statements of Cash Flows (continued)
<CAPTION>

                                                                         YEARS ENDED DECEMBER 31
                                                                         1997              1996
                                                                   ------------------------------------
FINANCING ACTIVITIES
<S>                                                                <C>               <C>
Exercise of options and warrants                                   $      1,969,997  $     1,163,376
Proceeds from lines of credit                                             6,185,774          800,000
Repayment of lines of credit                                               (145,000)        (330,054)
Proceeds from notes payable to shareholder                                  300,000          450,414
Repayments of notes payable to shareholder                               (1,568,737)        (355,801)
Proceeds from notes payable                                               2,622,110        2,647,113
Repayment of notes and leases payable                                    (3,631,383)      (2,520,332)
Distribution to shareholders                                                (53,560)         (32,000)
                                                                   ------------------------------------
Net cash provided by financing activities                                 5,679,201        1,822,716
                                                                   ------------------------------------
Net (decrease) increase in cash and cash equivalents                       (328,397)         307,892
Cash and cash equivalents at beginning of year                              857,740          549,848
                                                                   ------------------------------------
Cash and cash equivalents at end of year                           $        529,343  $       857,740
                                                                   ====================================
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION
Cash paid for income taxes                                         $        103,256  $       141,349
                                                                   ====================================
Cash paid for interest                                             $        575,124  $       298,329
                                                                   ====================================
SCHEDULE OF NONCASH INVESTING ACTIVITIES
Stock options issued in exchange for prepaid consulting fees       $        580,250  $       302,285
                                                                   ====================================
Conversion of accounts receivable to a note receivable             $              -  $       239,441
                                                                   ====================================
Distribution payable                                               $              -  $        53,560
                                                                   ====================================
Fixed assets acquired pursuant to capital lease obligations
and notes payable                                                  $        441,651  $        63,916
                                                                   ====================================
</TABLE>


SEE ACCOMPANYING NOTES.

                                      F-7
<PAGE>


                        CompScript, Inc. and Subsidiaries

                   Notes to Consolidated Financial Statements

                                December 31, 1997

1. THE COMPANY

CompScript, Inc. and Subsidiaries (CompScript or the Company), f/k/a Capital
Brands, Inc., is a comprehensive provider of pharmacy management services
including institutional pharmacy, infusion therapy, mail order and consultant
pharmacist services. The Company is the successor to CompScript-Boca, Inc.
(Boca), f/k/a CompScript, Inc. which was f/k/a Aldencare, Inc., which was
incorporated under the laws of the State of Florida on October 3, 1991.

On April 26, 1996, shareholders who previously owned approximately 93% of Boca
exchanged their shares of Boca's Common Stock for 7,394,982 common shares
(representing an 80% interest) of Capital Brands, Inc. (Capital), a
publicly-held company (the Acquisition). This exchange was structured as a
tax-free reorganization. The Acquisition was accounted for as a reverse purchase
of Capital by Boca pursuant to which Boca was recapitalized to include the
assets and liabilities of Capital revalued to reflect the market value of
Capital's net tangible assets at the date of the Acquisition, consisting of cash
and marketable equity securities. The Company incurred acquisition costs of
approximately $1,888,807, all of which was charged to additional paid-in
capital. As Capital had no operations as of the Acquisition date, no pro forma
financial information is presented. On July 5, 1996, Capital changed its name to
CompScript, Inc. The remaining 7% of Boca is accounted for as a minority
interest in a consolidated subsidiary on the Company's December 31, 1997 and
1996 consolidated balance sheet. On October 3, 1996, Boca issued an additional
27,000 shares of its Common Stock to a shareholder of the Company, increasing
the minority interest's aggregate ownership interest in Boca to approximately
8%. Boca was recapitalized to reflect Capital's capital structure for all
periods presented.

The following table reconciles the common shares issued in the reverse
acquisition to the beginning balance (January 1, 1996) of common shares
presented in the Consolidated Statements of Shareholders' Equity:

<TABLE>

<S>                                                                             <C>
Issuance of Capital Brands, Inc. common stock to CompScript-Boca, Inc.
  shareholders                                                                  7,394,982
Common shares issued to entities acquired through poolings-of-interests to
  reflect recapitalization of CompScript-Boca, Inc. as a result of the
  reverse acquisition of Capital Brands, Inc.                                   3,478,883
Shares of CompScript-Boca related to minority interest converted into
  Capital Brands shares                                                           662,341
                                                                             ----------------
                                                                               11,536,206
                                                                             ================
</TABLE>

                                      F-8
<PAGE>


                        CompScript, Inc. and Subsidiaries

             Notes to Consolidated Financial Statements (continued)

1. THE COMPANY (CONTINUED)

On May 31, 1996, in a transaction accounted for as a pooling-of-interests, the
Company acquired Delta Pharmacy Services, Inc. (Delta). As a result, the
accompanying consolidated financial statements include the accounts and results
of operations of Delta for all periods presented. In connection with the
transaction, the Company exchanged 666,350 shares of the Company's Common Stock
for all of the outstanding common stock of Delta. Delta is in the business of
supplying prescription pharmaceuticals, consulting services and enteral and
parental therapies to long-term and alternate care providers in Alabama and
Northern Florida.

On August 19, 1996, in a transaction accounted for as a pooling-of-interests,
the Company acquired SECURx, Inc. (SECURx). As a result, the accompanying
consolidated financial statements include the accounts and results of operations
of SECURx for all periods presented. In connection with the transaction, the
Company exchanged 187,500 shares of the Company's Common Stock for all of the
outstanding common stock of SECURx. SECURx is in the business of selling and
distributing prescription drugs to the general public through corporate
sponsored benefit plans of employers located in the northeastern United States.

On January 10, 1997, in a transaction accounted for as a pooling-of-interests,
the Company acquired Medical Services Consortium, Inc. (MSC). As a result, the
accompanying consolidated financial statements include the accounts and results
of operations of MSC for all periods presented. In connection with the
transaction, the Company exchanged 1,400,000 shares of the Company's Common
Stock for all of the outstanding common stock of MSC. MSC is in the business of
supplying prescription pharmaceuticals, consulting services and enteral and
parental therapies to long-term and alternate care providers in South Florida.

On February 28, 1997, in a transaction accounted for as a pooling-of-interests,
the Company acquired Campo Medical Pharmacy, Inc. (Campo). As a result, the
accompanying consolidated financial statements include the accounts and results
of operations of Campo for all periods presented. In connection with the
transaction, the Company exchanged 375,000 shares of the Company's Common Stock
for all of the outstanding common stock of Campo. Campo is in the business of
supplying prescription pharmaceuticals and consulting services to long-term and
alternate care providers in Louisiana.

                                      F-9
<PAGE>


1. THE COMPANY (CONTINUED)

On March 26, 1997, in a transaction accounted for as a pooling-of-interests, the
Company acquired Hytree Pharmacy, Inc. (Hytree). As a result, the accompanying
consolidated financial statements include the accounts and results of operations
of Hytree for all periods presented. In connection with the transaction, the
Company exchanged 850,000 shares of the Company's Common Stock for all of the
outstanding common stock of Hytree. Hytree is in the business of supplying
prescription pharmaceuticals, respiratory and consulting services to long-term
and alternate care providers along with home care and sales and rentals of
durable medical equipment and supplies within the Ohio market.

Years ended December 31, 1997 and 1996 represent the results of CompScript,
Delta, SECURx, MSC, Campo, and Hytree assuming that all of their operations had
been combined since January 1, 1996.

The following unaudited financial information represents revenue and net (loss)
income for each of the pooled companies from the beginning of the respective
periods to the dates of the combinations.

<TABLE>
                      COMPSCRIPT        DELTA        SECURX           MSC            CAMPO         HYTREE     CONSOLIDATED
                    -------------- -------------- ------------- --------------- ------------- --------------- -------------
<S>                 <C>            <C>            <C>           <C>             <C>           <C>            <C>
YEAR ENDED
DECEMBER 31, 1997
Total revenue       $46,837,412    $         -    $       -     $   316,175(2)  $   480,842(2)$  2,996,801(2)$ 50,631,230
                    ============== ============== ============= =============== ============= =============== =============

Net (loss) income   $(2,454,317)   $         -    $       -     $    35,692(2)  $    20,153(2)$     41,624(2)  $(2,356,848)
                    ============== ============== ============= =============== ============= =============== =============

YEAR ENDED
DECEMBER 31, 1996

Total revenue       $15,469,263    $ 1,173,945(1) $3,406,563(1) $ 8,577,551     $ 3,181,263    $10,907,771    $42,716,356
                    ============== ============== ============= =============== ============= =============== =============

Net (loss) income   $(1,937,123)   $   165,479(1)   (226,698)(1)$   477,874     $   131,876   $    232,836    $(1,155,756)
                    ============== ============== ============= =============== ============= =============== =============
</TABLE>

(1) Represents results of operations for Delta and SECURx from January 1, 1996
    to the date of their acquisitions.

(2) Represents results of operations for MSC, Campo and Hytree from January 1,
    1997 to the date of their acquisitions.

                                      F-10
<PAGE>


2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

FISCAL YEAR

Effective June 29, 1996, the Company elected to change its year end from
September 30 to December 31. The Company's 1996 consolidated statement of
operations have been restated to conform with this change in year end.

BASIS OF CONSOLIDATION

The accompanying consolidated financial statements include the accounts of the
Company, its wholly-owned subsidiaries, and Boca, of which the Company owns
approximately 92%. All significant intercompany balances and transactions have
been eliminated.

CASH AND CASH EQUIVALENTS

The Company considers all investments with an original maturity of less than
three months, when acquired, to be cash equivalents.

CONCENTRATION OF CREDIT RISK

The Company's customers are primarily long-term and alternate care providers in
Florida, Ohio, Louisiana, Mississippi and Alabama and corporate sponsored
benefit plans of employers in the northeastern United States. The Company
directly bills its customers or third-party payers, which are primarily
Medicaid, Medicare and private insurers. Credit is extended based on an
evaluation of the customer's financial condition, and collateral is not
required. Credit losses are provided for in the consolidated financial
statements and consistently have been within management's expectations.

INVENTORY

Inventory is stated at the lower of cost or market. Cost is determined by the
first-in, first-out method, and market represents the lower of replacement cost
or estimated net realizable value.

                                      F-11
<PAGE>

                       CompScript, Inc. and Subsidiaries

             Notes to Consolidated Financial Statements (continued)

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

OTHER ASSETS

At December 31, 1996, the Company had a note receivable from the former chief
executive officer of Capital which was collateralized by 1,125,000 shares of QPQ
Corporation Common Stock. In March 1997, the Company recorded an $800,000 charge
against the $1,125,000 note receivable. The Company deemed it appropriate to
evaluate the collateral underlying the note, as the value of the collateral
(marketable equity securities) declined significantly subsequent to December 31,
1996 and the collectability of the note was uncertain. On May 16, 1997, the note
receivable was rescinded by the Company and the collateral of 1,125,000 shares
of QPQ Corporation Common Stock reverted back to the Company.

In accordance with FASB Statement No. 115, ACCOUNTING FOR CERTAIN INVESTMENTS IN
DEBT AND EQUITY SECURITIES, the Company, as of December 31, 1997, has valued its
investment in QPQ Corporation at fair value of $53,906, resulting in the
recognition of unrealized loss of $271,094. These securities are classified as
"available for sale."

PROPERTY AND EQUIPMENT

Property and equipment is recorded at cost and depreciated using the
straight-line and declining balance methods over the estimated useful lives of
the related assets. Furniture and equipment and vehicles are depreciated over a
five to seven year period. Leasehold improvements and assets under capital lease
are amortized over the useful lives of the underlying assets or the term of the
lease, whichever is shorter. Expenditures for maintenance and repairs are
charged to expense as incurred.

COSTS IN EXCESS OF NET ASSETS ACQUIRED

In July 1995, SECURx recorded approximately $205,000 of costs in excess of net
assets acquired in connection with the acquisition of substantially all of the
assets and liabilities of a predecessor company of the same name. Costs in
excess of net assets acquired are amortized on a straight-line basis over five
years.

                                      F-12
<PAGE>

                       CompScript, Inc. and Subsidiaries

             Notes to Consolidated Financial Statements (continued)


2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

The Company periodically evaluates the recovery of the carrying amount of costs
in excess of net assets acquired by determining if any impairment indicators are
present. These indicators include duplication of resources resulting from
acquisitions, income derived from businesses acquired, the estimated
undiscounted cash flows of the entity over the remaining amortization period and
other factors.

REVENUE RECOGNITION

Revenue and the related cost of sales are recognized when services are provided
or products are delivered. For some pharmaceuticals that are located at the
customers' facilities, revenues are recognized when the product is dispensed to
the patient. Revenues are recorded net of adjustments and allowances resulting
from the difference between established rates for the products and services and
amounts reimbursable by government-sponsored health care programs (primarily
Medicaid) and private insurance carriers.

Laws and regulations governing the Medicare and Medicaid programs are complex
and subject to interpretation. The Company believes that it is in compliance
with all applicable laws and regulations and is not aware of any pending or
threatened investigations involving allegations of potential wrongdoing. While
no such regulatory inquiries have been made, compliance with such laws and
regulations can be subject to future government review and interpretation as
well as significant regulatory action including fines, penalties, and exclusion
from the Medicare and Medicaid programs.

STOCK BASED COMPENSATION

The Company has elected to follow Accounting Principles Board (APB) Opinion No.
25, ACCOUNTING FOR STOCK ISSUED TO EMPLOYEES, and related Interpretations in
accounting for its employee stock options because the alternative fair value
accounting provided for under Financial Accounting Standards Board (FASB)
Statement No. 123, ACCOUNTING FOR STOCK-BASED COMPENSATION, requires the use of
option valuation models that were not developed for use in valuing employee
stock options. No compensation expense is recognized under APB Opinion No. 25
when the exercise price of the Company's employee stock options equals or
exceeds the market price of the underlying stock on the date of grant.

                                      F-13
<PAGE>

                       CompScript, Inc. and Subsidiaries

             Notes to Consolidated Financial Statements (continued)


2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

The Company accounts for equity awards issued to nonemployee consultants,
attorneys and other vendors at fair market value based on the fair value of the
consideration received or the fair value of the equity instruments issued,
whichever is more reliably measurable on the date of grant. The fair value of
equity instruments issued to a nonemployee is measured as of the date that the
parties come to a mutual understanding of the terms of the arrangement and agree
to a binding contract.

ADVERTISING COSTS

In accordance with the Statement of Position (SOP) 93-7, REPORTING ON
ADVERTISING COSTS, the Company expenses advertising costs as incurred. The
Company recognized advertising expenses of $100,374 and $57,372 during the years
ended December 31, 1997 and 1996, respectively. These amounts are included in
the selling, general and administrative expenses. The Company did not incur any
direct response advertising costs, as defined by SOP 93-7 during 1997 and 1996.

INCOME TAXES

The Company accounts for income taxes in accordance with FASB No. 109,
ACCOUNTING FOR INCOME TAXES. Under this method, deferred income taxes at the end
of each period are determined based on the differences between the financial
statement and tax basis of assets and liabilities using the enacted tax rates
for the years in which the taxes are expected to be paid or recovered.

The Company files a consolidated income tax return with its majority-owned
subsidiaries which includes the taxable income or loss of each subsidiary from
its acquisition date through the end of the Company's tax year. Each entity was
required to file a separate income tax return prior to becoming a member of the
Company's consolidated income tax return.

Prior to the acquisition of MSC by the Company on January 10, 1997, MSC was
taxed under the provisions of Subchapter S of the Internal Revenue Code (IRC).
Concurrent with the acquisition of MSC, this entity was converted to C
corporation status with respect to federal income taxes

                                      F-14
<PAGE>

                       CompScript, Inc. and Subsidiaries

             Notes to Consolidated Financial Statements (continued)


2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

and, for those states that recognize such tax election, state income taxes. As a
result, the accompanying consolidated financial statements include no provision
(benefit) for income taxes related to MSC's income (loss) prior to its
acquisition by the Company. Accordingly, the consolidated statements of
operations for the years ended December 31, 1997 and 1996 include adjustments
for income tax expense which would have been recorded MSC been a taxable
corporations and had the Company been able to file a consolidated income tax
return with the entities acquired during 1997 and 1996 based on the tax laws in
effect during the years presented.

NET LOSS PER SHARE

In 1997, the Financial Accounting Standards Board issued Statement No. 128,
EARNINGS PER SHARE. Statement 128 replaced the calculation of primary and fully
diluted earnings per share with basic and diluted earnings per share. Unlike
primary earnings per share, basic earnings per share excludes any dilutive
effects of options, warrants, and convertible securities. Diluted earnings per
share is very similar to the previously reported fully diluted earnings per
share. All earnings per share amounts for all periods have been presented, and
where appropriate, restated to conform to the Statement 128 requirements.

Net loss per share is calculated using the weighted average number of common
shares outstanding as the effect of the Company's outstanding Common Stock
equivalents was antidilutive for all periods presented.

LONG-LIVED ASSETS

FASB No. 121, ACCOUNTING FOR THE IMPAIRMENT OF LONG-LIVED ASSETS AND FOR
LONG-LIVED ASSETS TO BE DISPOSED OF, requires impairment losses to be recorded
on long-lived assets used in operations when indicators of impairment are
present and the undiscounted cash flows estimated to be generated by those
assets are less than the assets' carrying amounts. The Company adopted FASB No.
121 during 1996 and, based on current circumstances, does not believe that any
impairment indicators are present relative to its long-lived assets at December
31, 1997.

                                      F-15
<PAGE>

                       CompScript, Inc. and Subsidiaries

             Notes to Consolidated Financial Statements (continued)


2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

USE OF ESTIMATES

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

3. PROPERTY AND EQUIPMENT

Property and equipment at December 31, 1997 consists of the following:

         Furniture and equipment                              $4,716,357
         Vehicles                                                279,400
         Leasehold improvements                                  584,971
         Assets under capital leases                             636,570
                                                         ------------------
                                                               6,217,298
         Less accumulated depreciation                        (2,674,432)
                                                         ------------------
                                                              $3,542,866
                                                         ==================

4. LINE OF CREDIT

In May 1995, the Company entered into a line of credit agreement which permitted
borrowings up to $750,000. On January 3, 1997, the Company amended its financing
agreement with its primary lender to increase its revolving line of credit
agreement to allow for borrowings up to $5,000,000 from the $750,000 previously
in effect. On August 25, 1997, the Company further amended the financing
agreement to allow for borrowings up to $7,000,000. The primary reason for these
increases was to provide additional working capital for operations and fund the
Company's acquisition activity. The line of credit is due upon demand and, in
any event, expires April 30, 1998, and is collateralized by all of the Company's
accounts receivable, inventory, fixed assets and other assets. The Company is in
the process of obtaining an extension or renewal of this line of credit at
comparable terms. Interest is payable monthly 8.50% with a .125% per annum fee
on the unused portion of the line. Under the agreement, $6,715,467 is
outstanding at December 31, 1997, with an available balance of $284,533.

                                      F-16
<PAGE>


                       CompScript, Inc. and Subsidiaries

             Notes to Consolidated Financial Statements (continued)


4. LINE OF CREDIT (CONTINUED)

The line-of-credit requires the Company to maintain at all times, certain net
worth, debt coverage and working capital levels, and restricts acquisitions and
dispositions of property and limits additional borrowings from other lenders. As
of December 31, 1997, the Company was not in compliance with covenants relating
to the $7,000,000 revolving credit agreement. A waiver has been obtained from
the financial institution, effective for the fiscal year ended December 31,
1997.

5. NOTES PAYABLE

<TABLE>
Notes payable consist of the following at December 31, 1997:
<CAPTION>

<S>                                                                                                    <C>
$500,000 promissory note collateralized by all of the Company's accounts receivable,
   inventory, fixed assets and other assets. Terms are discussed below.                                $400,000
$50,000 promissory note collateralized by computer equipment, interest at 9%.
   Monthly principal payments of $833 plus accrued interest from November 1997
   through October 2002.                                                                                 47,500
$200,000 promissory note with a financial institution, interest at 9% fixed,
   collateralized by substantially all of the Company's assets. Monthly payments of
   $3,333 plus accrued interest are payable monthly from March 1997 through
   February 2002.                                                                                       163,333
Various notes payable to financing companies bearing interest at rates ranging
   from 8.75% to 10.15% and expiring at various dates through 2000, collateralized by
   vehicles with an aggregate carrying value of approximately $118,000.                                  70,302
                                                                                                 ------------------
                                                                                                        681,135
Less current portion                                                                                   (185,354)
                                                                                                 ==================
Long-term portion                                                                                      $495,781
                                                                                                 ==================
</TABLE>

At December 31, 1997, annual payments on notes payable are as follows:

         1998                                                       $185,354
         1999                                                        184,247
         2000                                                        150,700
         2001                                                        150,000
         2002                                                         10,834
                                                                  -------------
                                                                    $681,135
                                                                  =============

                                      F-17
<PAGE>

                       CompScript, Inc. and Subsidiaries

             Notes to Consolidated Financial Statements (continued)


5. NOTES PAYABLE (CONTINUED)

In connection with the January 3, 1997 amended line of credit agreement, the
Company entered into a $500,000 promissory note with the same financial
institution. The proceeds from the debt were to be used to fund the Company's
office and mail order space expansion, which was completed in the first quarter
of 1997. The principle sum of the promissory note is being paid in monthly
installments of $8,333 plus interest at 9.0% for 60 months through January 2002.
Collateral and debt covenants are the same as those of the line-of-credit. A
waiver for debt covenant violations has been obtained from the financial
institution, effective for the fiscal year ended December 31, 1997.

On March 19, 1997, the Company entered into a $750,000 promissory note, which
bore interest at prime, with a financial institution, primarily for working
capital purposes which was repaid in August 1997.

6. NOTES PAYABLE TO SHAREHOLDERS

In March 1997, the Company entered into three $100,000 demand notes payable to
the former shareholders of Hytree, bearing interest at 8.25%. Under these
agreements, $75,000 is outstanding at December 31, 1997. These notes were paid
in full in February 1998.

7. CAPITAL LEASES

The Company leases certain equipment under long-term capital leases. Future
obligations are as follows:

         Year ending December 31,
            1998                                              $271,628
            1999                                               158,310
            2000                                                66,833
            2001                                                25,622
            2002                                                10,791
                                                            --------------
                                                               533,184
         Less interest                                        (102,245)
                                                            --------------
                                                              $430,939
                                                            ==============


                                      F-18
<PAGE>

                       CompScript, Inc. and Subsidiaries

             Notes to Consolidated Financial Statements (continued)


8. MINORITY INTEREST

The Company has filed with the Securities and Exchange Commission a registration
statement (Form S-4) to exchange the shares held by the minority interest
shareholders for the Company's Common Stock, which will be accounted for as a
purchase business combination. The minority interest's share of Boca's 1997 and
1996 results of operations is not significant.

9. SHAREHOLDERS' EQUITY

EQUITY INSTRUMENTS ISSUED TO NONEMPLOYEES

During 1996, the Company granted 625,000 stock options at an exercise price of
$1 per share to certain consultants, 100,000 stock options at $6 per share to an
investment banking firm and 75,000 stock options at an exercise price of $6 and
9,000 shares of Common Stock to a law firm as consideration for services
rendered in connection with the Acquisition. The stock options were fully vested
on the date of grant. Included in the costs of the Acquisition, all of which
were charged against additional paid-in capital attributed to the Acquisition,
is an aggregate $1,292,000 related to the issuance of these equity instruments.
The consultants exercised the 625,000 stock options prior to December 31, 1996.
The 75,000 stock options referred to above were exercised in March 1997; while
the 100,000 stock options were exercised in 50,000 increments during April and
May 1997, respectively.

During 1996, the Company issued 90,000 shares of Common Stock to certain
consultants and 11,000 shares of Common Stock to a law firm as consideration for
services rendered in connection with the Company's acquisitions of Delta, SECURx
and MSC. The Company recorded an aggregate $740,000 related to the issuance of
these common shares, all of which is included in merger costs in the 1996
consolidated statement of operations.

                                      F-19
<PAGE>

                       CompScript, Inc. and Subsidiaries

             Notes to Consolidated Financial Statements (continued)


9. SHAREHOLDERS' EQUITY (CONTINUED)

On May 1, 1996, the Company granted 200,000 stock options (100,000 options at an
exercise price of $8 and 100,000 options an exercise price of $10) to an
investment banking firm as consideration for a two-year consulting agreement
commencing on December 31, 1996. The stock options were fully vested on the date
of grant. In connection with the stock options granted, the Company recorded a
prepaid consulting fee of $144,000 as of December 31, 1996. In May 1997, the
investment banking firm agreed to perform additional consulting services and in
exchange, the Company reduced the exercise price for 100,000 options from $8 to
$4. As a result of this reduction in exercise price, the Company recorded an
additional $262,000 in prepaid consulting fees which will be amortized over the
term of the consulting agreement. The investment banking firm exercised the
100,000 options at $4 during May 1997.

On June 12, 1997, an additional 100,000 stock options with an exercise price of
$5 were awarded to two executives of the investment banking firm as
consideration for a 12 month agreement to provide additional marketing,
strategic planning and investor relation services. An additional $303,000 in
prepaid consulting fees was recorded during 1997 relative to these options. The
100,000 options were exercised during July 1997.

On July 2, 1996, the Company granted 75,000 stock options exercisable at $7 per
share to a public relations firm in connection with a two-year contract. The
stock options were fully vested on the date of grant. In addition, the Company
agreed to issue an additional 75,000 options on July 2, 1997 and pay $30,000 per
year in connection with this contract. The contract was cancelled at the end of
the first year so the additional 75,000 options were not issued. In connection
with the stock options granted, the Company recorded a prepaid expense of
$20,000 for these fees, which was expensed and included in selling, general and
administrative expenses in the consolidated statement of operations for the year
ended December 31, 1997. These stock options expire five years from their
respective dates of grant. On November 14, 1997, the Company issued 25,000
options exercisable at the market price of $2.50 in consideration of services
rendered after the cancellation of the original contract, and in anticipation of
entering into a new contract commencing in 1998. In connection with the stock
options granted, the Company recorded a prepaid expense of $15,250.

                                      F-20
<PAGE>


                       CompScript, Inc. and Subsidiaries

             Notes to Consolidated Financial Statements (continued)


9. SHAREHOLDERS' EQUITY (CONTINUED)

During the year ended December 31, 1997, approximately $390,000 of all of the
above-mentioned prepaid consulting fees was amortized and is included in
selling, general and administrative expenses in the consolidated statement of
operations. Approximately $356,000 is unamortized and included in prepaid
expenses and other current assets in the December 31, 1997 consolidated balance
sheet.

On December 27, 1996, the Company issued 15,000 of its common shares to certain
consultants as consideration for consulting services rendered in connection with
the Company obtaining a five-year agreement to provide mail order pharmacy
services to an insurer. The Company recorded a prepaid expense of approximately
$138,000 for these fees, of which approximately $115,000 is included in prepaid
expenses and other current assets on the December 31, 1997 consolidated balance
sheet. The Company intends to amortize these costs over the life of the
agreement.

COMMON STOCK WARRANTS

During 1996, the Company issued 102,550 common shares in connection with the
exercise of the Company's Class A and Class B warrants at a weighted average
exercise price of $5.25. On December 31, 1996, the remaining 96,950 outstanding
warrants expired unexercised.

STOCK OPTION PLANS

In May 1996, the Company adopted a stock option plan (the 1996 Plan). The 1996
Plan provides for the granting of both incentive stock options and nonqualified
stock options for the purchase of up to 900,000 shares of the Company's Common
Stock. During 1997, shareholders approved an additional 1,000,000 shares of the
Company's Common Stock to be added to the 1996 Plan. On May 28, 1997, the
Company awarded a total of 8,500 options to employees at the then market price
of $7.13. In addition, on November 14, 1997, the Company awarded a total of
629,750 options to employees and consultants at the then market price of $2.50.
The exercise price and vesting schedule of each stock option is determined by
the Compensation Committee of the Company. Stock options granted under the 1996
Plan expire after ten years from the date of grant.

                                      F-21
<PAGE>


                       CompScript, Inc. and Subsidiaries

             Notes to Consolidated Financial Statements (continued)


9. SHAREHOLDERS' EQUITY (CONTINUED)

In October 1995, the FASB issued FASB No. 123, which provides an alternative to
APB Opinion No. 25. FASB No. 123 allows for a fair value based method of
accounting for stock options. However, for companies that continue to account
for stock-based compensation arrangements under APB Opinion No. 25, such as the
Company, FASB No. 123 requires disclosure of the pro forma effect on net loss
and loss per share of its fair value based accounting for those arrangements.
The fair value for these options was estimated at the date of grant using the
Black-Scholes option pricing model with the following weighted-average
assumptions for 1997 and 1996: risk free interest rate of 6.49%, dividend yield
of 0%, volatility factor of the expected market price of the Company's Common
Stock of .47 and a weighted-average expected life of the options of 4.09 years.
As of December 31, 1997, the weighted average remaining contractual life of all
options outstanding was 9.2 years.

The following unaudited pro forma summary presents the Company's net loss and
loss per share as if the estimated fair value of the options were amortized to
expense over the options' vesting period.

                                                       DECEMBER 31
                                                 1997                1996
                                          ------------------ -------------------

       Pro forma net loss                      $(2,661,888)       $(2,777,053)
                                          ================== ===================
       Pro forma net loss per share       $          (0.19)   $         (0.22)
                                          ================== ===================

The pro forma effect of compensation expense from stock option awards on pro
forma net income reflects the vesting of 1996 option awards in 1997 and 1996, in
accordance with FASB No. 123. Because pro forma compensation expense associated
with a stock option award is recognized over the vesting period, the initial
impact of applying FASB No. 123 may not be indicative of pro forma compensation
expense in future years, when the effect of multiple awards will be reflected in
pro forma net loss.

                                      F-22
<PAGE>

                       CompScript, Inc. and Subsidiaries

             Notes to Consolidated Financial Statements (continued)


9. SHAREHOLDERS' EQUITY (CONTINUED)

A summary of the Company's stock option activity and related information for the
year ended December 31, 1997 relative to the Company's employee/director and
nonemployee stock options is as follows:
<TABLE>
                                                     EMPLOYEE/DIRECTOR                     NONEMPLOYEE
                                                       STOCK OPTIONS                      STOCK OPTIONS
                                             ---------------------------------- ----------------------------------
                                                                  WEIGHTED                           WEIGHTED
                                               OPTIONS FOR         AVERAGE        OPTIONS FOR         AVERAGE
                                                  SHARES       EXERCISE PRICE        SHARES       EXERCISE PRICE
                                             ----------------- ---------------- ----------------- ----------------

<S>                                                <C>               <C>               <C>         <C>
Outstanding at December 31, 1996                   882,500           $5.17             450,000     $     7.50
Granted                                            613,250            2.65             125,000           4.50
Exercised                                            3,898            5.13             375,000           5.20
Forfeited                                           43,590            5.17                   -              -
                                             -----------------                  -----------------
Outstanding at December 31, 1997                 1,448,262            4.10             200,000           7.94
                                             =================                  =================

Exercisable at end of year                       1,256,839                             200,000
                                             =================                  =================

Weighted-average fair value of options
   granted during the year                           $1.03                               $2.55
                                             =================                  =================
</TABLE>

The exercise prices of the employee stock options granted during 1997 were at or
below the Company's stock prices on the dates of grant.

Options outstanding and exercisable at December 31, 1997 are as follows:

<TABLE>
                                                        OPTIONS OUTSTANDING                       OPTIONS EXERCISABLE
                                          ------------------------------------------------- ---------------------------------
                                                               WEIGHTED
                                                               AVERAGE         WEIGHTED                          WEIGHTED
                                                              REMAINING         AVERAGE                          AVERAGE
                                              OPTIONS      CONTRACTUAL LIFE    EXERCISE         OPTIONS          EXERCISE
         RANGE OF OPTION PRICES             OUTSTANDING                          PRICE        EXERCISABLE         PRICE
-----------------------------------------------------------------------------------------------------------------------------

<S>                     <C>                    <C>            <C>               <C>            <C>                 <C>
Employees               $ 2.5--$7.13           1,448,262      9.2 years         $ 4.10         1,256,839           $ 4.12
                                            ================                                  =================

Nonemployees            $ 2.50                    25,000      9.9 years         $ 2.50            25,000           $ 2.50
                        $ 7.00                    75,000      0.5 years         $ 7.00            75,000           $ 7.00
                        $10.00                   100,000      1.3 years         $10.00           100,000           $10.00
                                            ----------------                                  -----------------
                                                 200,000                                         200,000
                                            ================                                  =================
</TABLE>

                                      F-23
<PAGE>

                       CompScript, Inc. and Subsidiaries

             Notes to Consolidated Financial Statements (continued)


9. SHAREHOLDERS' EQUITY (CONTINUED)

At December 31, 1997, there are 251,738 options available for grant under the
1996 Plan.

COMMON STOCK

The following shares of Common Stock have been reserved for future issuance as
of December 31, 1997:

          Upon the conversion of the minority interest                662,375
          Upon the exercise of stock options outstanding or
           available for grant                                      1,900,000
                                                                 ---------------
                                                                    2,562,375
                                                                 ===============

PREFERRED STOCK

The Company is authorized to issue 1,000,000 shares of preferred stock, par
value $.0001. No shares of preferred stock have been issued as of December 31,
1997.

DISTRIBUTIONS TO SHAREHOLDERS

During 1996, the Board of Directors of MSC declared a $85,560 distribution to
the shareholders of MSC, of which $32,000 was paid prior to December 31, 1996
and the remaining balance of $53,560 was paid during the year ended December 31,
1997.

10. FAIR VALUES OF FINANCIAL INSTRUMENTS

The following methods and assumptions were used by the Company in estimating its
fair value disclosures for financial instruments:

CASH AND CASH EQUIVALENTS: The carrying amount reported in the consolidated
balance sheet for cash and cash equivalents approximates its fair value.

MARKETABLE SECURITIES: The fair values of marketable securities are estimated
based on quoted market prices.

                                      F-24
<PAGE>


10. FAIR VALUES OF FINANCIAL INSTRUMENTS (CONTINUED)

LINE OF CREDIT, NOTES PAYABLE, AND NOTES PAYABLE TO SHAREHOLDERS: The fair
values of the Company's line of credit, notes payable and notes payable to
shareholders are estimated using discounted cash flow analysis, based on the
Company's current incremental borrowing rates for similar types of borrowing
arrangements.

The carrying and fair values of the Company's financial instruments at December
31, 1997 approximate their carrying values.

11. INCOME TAXES

The components of the income tax provision (benefit) are as follows:

                                                  YEAR ENDED DECEMBER 31
                                                  1997               1996
                                          -----------------------------------
         Current:
            Federal                            $(240,463)        $(154,995)
            State                                      -            34,044
                                          -----------------------------------
                                                (240,463)         (120,951)
         Deferred                                      -           (18,765)
                                          ===================================
         Total                                 $(240,463)        $(139,716)
                                          ===================================


                                      F-25
<PAGE>

                       CompScript, Inc. and Subsidiaries

             Notes to Consolidated Financial Statements (continued)


11. INCOME TAXES (CONTINUED)

Deferred income taxes reflect the net tax effects of temporary differences
between the carrying amount of assets and liabilities for financial reporting
purposes and the amounts used for income tax purposes. Significant components of
the Company's net deferred income taxes are as follows:

                                                              DECEMBER 31
                                                                  1997
                                                           -------------------
         Deferred tax liability:
            Tax over book depreciation                        $    (57,283)
            Internally developed software                         (157,784)
                                                           -------------------
                                                                  (215,067)
         Deferred tax assets:
            Allowance for uncollectible accounts                   529,511
            Net operating loss carryforwards                       691,373
            Accrued stock bonus                                     27,000
            Tax credits                                             25,377
            Costs in excess of net assets acquired                  25,655
            Other                                                    8,227
                                                           -------------------
         Total deferred tax assets                               1,307,143
         Less valuation allowance                               (1,046,975 )
                                                           ===================
         Net deferred tax assets                                   260,168
                                                           ===================
         Net deferred income taxes                            $     45,101
                                                           ===================

FASB No. 109 requires a valuation allowance to reduce the deferred tax assets
reported if, based on the weight of the evidence, it is more likely than not
that some portion or all of the deferred tax assets will not be realized. After
consideration of all the evidence, both positive and negative, management has
determined that a $1,046,975 valuation allowance is necessary at December 31,
1997. The change in valuation allowance for the current year is $797,212. At
December 31, 1997, the Company has available net operating loss carryforwards of
$2,527,292 which expire in 2012. In addition, the Company has tax credits of
$25,377 that have no expiration date.

                                      F-26
<PAGE>


11. INCOME TAXES (CONTINUED)

The differences between the provision for income taxes and the amount which
results from applying the federal and state statutory tax rates to income before
income taxes are as follows:

<TABLE>
                                                                      YEAR ENDED DECEMBER 31
                                                                      1997            1996
                                                                 --------------------------------

<S>                                                                <C>             <C>
         Income tax benefit at statutory rate                      $(909,059)      $(440,660)
         State income tax benefit, net                               (89,943)        (36,621)
         Non-deducting items                                         255,166         352,650
         Taxes on Delta's and MSC's losses incurred
           (income earned) prior to revocation of
           Subchapter S election
                                                                           -        (274,335)
         Reduction in prior year payable                            (200,000)              -
         Reduction in net operating loss carryback benefit                 -          52,105
         Change in valuation allowance                               797,212         171,973
         Other                                                       (93,839)         35,172
                                                                --------------------------------
                                                                   $(240,463)      $(139,716)
                                                                ================================
</TABLE>

12. LEASE COMMITMENTS

The Company has various operating leases, primarily relating to branch offices
and warehouse facilities. The leases have various renewal options and escalation
clauses and often require the Company to make additional payments for
maintenance costs. Total rent expense for the years ended December 31, 1997 and
1996 amounted to $616,856 and $738,258, respectively.

Approximate future minimum annual rentals under noncancelable operating leases
with initial or remaining terms in excess of one year are:

         1998                                             $   679,205
         1999                                                 690,339
         2000                                                 693,276
         2001                                                 668,630
         2002                                                 502,538
                                                      ------------------
                                                           $3,233,988
                                                      ==================


                                      F-27
<PAGE>


12. LEASE COMMITMENTS (CONTINUED)

The Company rents two of its facilities from entities controlled by shareholders
under long-term leases expiring in 2001 and 2002, respectively. Included in rent
expense is approximately $212,000 and $0 paid in 1997 and 1996, respectively, to
these related parties. Future minimum annual payments on these two related party
rentals, which are included in the above-mentioned total future annual rentals
are $210,266 in 1998, $210,266 in 1999, $210,266 in 2000, $191,266 in 2001, and
$164,666 in 2002.

13. PROFIT SHARING PLANS

In 1993, the Company established a profit sharing savings plan (the Plan) that
covers substantially all of its employees and that qualifies as a cash or
deferred arrangement under Section 401(k) of the IRC. Under the Plan,
participating employees may defer up to 20% of their pre-tax salary before
reduction, but not more than approximately $9,500 per plan year. The Company may
make matching or other contributions to the Plan. There were no Company
contributions to the Plan for the fiscal years ended December 31, 1997 and 1996.

Effective January 1, 1995, MSC established the Medical Services Consortium, Inc.
401(k) Plan (the MSC Plan), a deferred profit sharing savings plan that covers
all employees of MSC that are at least 21 years old and who have been employed
by MSC at least 6 months. Under the MSC Plan, participating employees may defer
up to 15% of their pre-tax salary before reduction each year. MSC may make
contributions to the MSC Plan at MSC's discretion. Contributions vest over a
six-year period. MSC did not make any contributions to the MSC Plan for the
fiscal years ended December 31, 1997 and 1996.

Effective March 1, 1996, Hytree established the Hytree Pharmacy, Inc. 401(k)
Retirement Plan (the Hytree Plan), a deferred profit sharing savings plan that
covers all employees of Hytree that are at least 18 years old and who have been
employeed by MSC at least 90 days. Under the Hytree Plan, participating
employees may defer up to 15% of their pre-tax salary before reduction each
year. Hytree will match employee contributions up to 6% of each employee's
pre-tax salary before reduction each year. Hytree may make profit-sharing
contributions to the Hytree Plan at Hytree's discretion. Contributions vest over
a six-year period. Hytree's contributions to the Hytree Plan for the fiscal
years ended December 31, 1997 and 1996 were not significant.

                                      F-28
<PAGE>

                       CompScript, Inc. and Subsidiaries

             Notes to Consolidated Financial Statements (continued)


14. SUBSEQUENT EVENT

On January 1, 1998, the Company entered into a five-year agreement with two
shareholders (each of which has less than a 5% beneficial ownership interest in
the Company) of the Company pursuant to which the shareholders will assist the
Company secure new contracts for the Company's mail order division. The Company
agreed to issue the shareholders 115,000 shares of common stock, as well as
commissions of 1% of net revenues generated by new contacts obtained by the
shareholders. The Company may cancel the contract at any time with a thirty day
written notice. This contract replaces a previous contract entered into on
January 9, 1997, which was canceled on October 31, 1997.

On February 23, 1998, the Company entered into a definitive merger agreement
pursuant to which it will be acquired through a merger with a wholly-owned
subsidiary of Omnicare, Inc. Upon completion of the merger, each outstanding
common share of CompScript will be converted into a $4.50 market value of
Omnicare common shares, subject to certain terms of the agreement. Omnicare will
issue approximately $63.3 million in its stock and assume CompScript's debt. The
transaction is structured as a pooling of interests and a tax-free
reorganization. As a condition to entering into this Agreement and Plan of
Merger, the two companies executed a separate Stock Option Agreement whereby the
Company granted an option to Omnicare to purchase up to 19.9% of CompScript's
common shares. Omnicare can exercise this option if certain events occur prior
to the closing of the merger.

                                      F-29

<PAGE>

                                INDEX TO EXHIBITS

EXHIBIT
NUMBERS                                DESCRIPTION
-------                                -----------

10.7     Employment Agreement dated October 31, 1997 between CompScript and Juan
         C. Cocuy

10.9     1997 Amendment to Stock Option Plan

10.11    Independent Consulting Agreement dated as of January 1, 1998 between
         Compscript, Gerard Altieri, Ronald J. Reith and Comprehensive Formulary
         Management

27       Financial Data Schedule