<PAGE>
                                                           
                 U. S. Securities and Exchange Commission
                          Washington, D.C. 20549

                             Amendment No. 2 to
                                Form 10-KSB

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

          For the fiscal year ended July 31, 1997

( )  TRANSITION REPORT UNDER SECTION 13 OR 15 (d) OF THE EXCHANGE
     ACT

          For the transition period from _____________ to _________

Commission file number 33-90344

                          Sigma Alpha Group, Ltd. 
          (Exact name of small business issuer as specified in its charter)

         Delaware                                 23-2498715                   
(State or other jurisdiction of         (I.R.S. Employer Identification
 incorporation or organization)           Number)


1341 North Delaware Avenue, Philadelphia, PA             19125
(Address of principal executive offices)                (Zip Code) 

Issuer's telephone number, including area code  (215) 425-8682      

Securities registered under Section 12(b) of the Exchange Act: NONE

Securities registered under Section 12(g) of the Exchange Act: NONE

Check whether the issuer (1) filed all reports required to be filed by
Section 13 or 15 (d) of the Exchange Act 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 the 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 the 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. ________

The Registrant's revenues for its most recent fiscal year were:     $350,000
 






                                    
<PAGE>
The aggregate market value of voting stock held by non-affiliates of the
Registrant, based on the average closing bid and asked prices of the
Registrant's Common Stock in the over-the-counter market on October 17, 1997, 
was approximately $22,227,000.  Shares of voting stock held by each officer and
director and by each person who owns 5% or more of the outstanding voting stock
have been excluded in that such persons may be deemed to be affiliates.  This 
determination of affiliate status is not necessarily conclusive.

As of October 17, 1997 20,234,924 shares of Common Stock, $.001 par value were 
outstanding.

                         DOCUMENTS INCORPORATED BY REFERENCE

None.

Transitional Small Business Disclosure Format:  Yes ( )  No (X)










































                                    2     
<PAGE>
                               PART I

ITEM 1.  BUSINESS

General Background

     Sigma Alpha Group, Ltd. (the "Company") was incorporated under the laws of
the Commonwealth of Pennsylvania in February 1988 and commenced operations in 
June, 1989, as the successor-in-interest of Sigma Sound Studios, Inc. ("Sigma
Sound") a recording studio owned and operated by Joseph Tarsia, the former
Chairman of the Company.  In 1987, Sigma Sound purchased the assets of Alpha 
International Recording Studios, Inc. ("Alpha International"), a recording 
studio owned and operated by Peter Pelullo, the Chief Executive Officer, 
President and Chairman of the Company's Board.

     The Company became publicly held upon its merger in January 1991 with
Fabulous Mergers, Inc., an inactive public company incorporated in Nevada. 
Pursuant to the terms of the merger, Fabulous Mergers, Inc., as the surviving 
corporation changed its name to "Sigma Alpha Entertainment Group, Ltd." and was
subsequently reincorporated in Delaware.  In 1995 the Company changed its name 
to Sigma Alpha Group, Ltd.

     From 1993 through early 1995, the Company's management attempted to 
develop valuable contacts in the Southeast Asia region, particularly in China, 
in an effort to establish distribution and agency arrangements that would link
Southeast Asian and U.S. based recording companies and artists and other 
business ventures in Southeast Asia.  In April 1995, the Company acquired an
80% interest in Global Telecommunications of Delaware, Inc. ("Global"), an 
entity that was formed to complete development of wireless telecommunication 
technology. 

     During 1996, management discontinued plans to reestablish its music 
industry operations and all other proposed ventures in Southeast Asia with the 
exception of the continued development and marketing of telecommunication 
products.  

The Company's Telecommunications Products

     The Company is presently developing wireless telecommunication products 
that utilize radio frequencies transmitted by FM radio stations.  Management 
believes that a need exists in second and third world developing countries that
lack developed telecommunication infrastructures such as China, for 
telecommunication products that communicate information in an economically 
feasible manner without the need for intensive capital investment.  The Company
is developing a process that utilizes FM radio frequencies to provide a voice 
paging network without the significant investment capital requirements of 
traditional telecommunication and cellular infrastructure.

     The primary product the Company intends to produce which will utilize this
patent pending technology is a hand held Digital Voice Pager ("Digital Voice 
Pager" or "Digital Voice Paging System") which will allow subscribers to 
receive actual voice messages through the pager.  The Company also has 
developed a Stock Market Information Receiver ("SIR") which allows subscribers 



                                   3


<PAGE>

to receive a scrambled analog FM radio signal that is transmitted by a 
commercial FM radio station over their excess bandwidth.  The SIR allows a 
subscriber to receive stock market information from the stock exchange in 
China, which is special programming transmitted by the Chinese radio stations.

     Global commercialized the SIR in China during 1996; however, the Company 
suspended the SIR program to conserve resources for development of its Digital 
Voice Paging System (see"Stock Information Receiver").  As of October 29, 1997,
the Company's Digital Voice Paging System was still under development and no 
testing of the related technology had been performed.

     Commercialization of the Company's Digital Voice Paging System also 
requires access to existing FM radio stations broadcasting in the 
respective marketplaces.  The Company believes that only minimal modification 
to existing FM radio station transmitters is necessary to utilize the Company's 
Digital Voice Paging System.  The Company expects to use a joint 
venture approach to market the Digital Voice Paging System, joining forces with 
local companies that have better knowledge of local market conditions and are 
better positioned to educate radio station owners regarding the advantages of 
the Company's products.  The Company expects the joint ventures to lease the 
use of the radio station's FM-SCA channels at a cost competitive with other 
potential users of SCA channels in the area.

    The Company's Digital Voice Paging technology utilizes FM-SCA channels 
available on all FM radio frequencies worldwide.  In the United States, the 
Federal Communications Commission ("FCC") considers FM-SCA channels to be part 
of the total FM frequency allocated to a radio station and therefore does not 
separately license or regulate FM-SCA channels.  The Company believes that 
regulators in the foreign markets it plans to enter take a similar position in 
their countries to that of the FCC regarding the licensing and regulation of 
FM-SCA channels.  The Company plans to rely on its local joint venture partners 
to facilitate access to and use of FM-SCA channels in the local markets. There 
can be no assurance that the Company will be successful in this regard.

The Technology

     The Company's Digital Voice Pager will utilize voice compression 
technology, digital signal processing ("DSP") technology, and an FM 
broadcasting technique known as Subsidiary Communication Authorization ("SCA") 
broadcasting, which has been in existence for more than two decades.  The 
combined product utilizing the integration of the FM-SCA, DSP and digital voice
compression technologies will provide a voice paging service through existing 
FM broadcasting stations.  The system will be designed to deliver fast and 
reliable voice messages to the whole FM station's coverage area through the 
addition of simple SCA encoding boxes to existing FM transmitters.  The system 
will utilize the excess bandwidth that a radio station does not use in 
transmitting its regular FM radio broadcasts.  Accordingly, the implementation 
of the Digital Voice Pager System will not require the purchase or lease of new
radio frequencies from government entities.

     Cellular phone and pager systems typically require a large spectrum of 
frequencies to be dedicated to their services.  Clear frequencies, particularly
frequencies allocated to cellular phones and pagers, may be difficult to obtain



                                      4

<PAGE>

due to the rapid expansion of cellular and paging services.  Even when 
bandwidth has been made available, technology considerations typically 
associated with operating these newly available frequencies have costs which, 
in the Company's opinion, are prohibitively high.  However, within that area of
the radio frequency spectrum associated with FM broadcasting (i.e. the band 
from 88 MHz to 108 MHz), there is a portion of bandwidth within each FM channel
known as the FM SCA bandwidth which is not required for transmitting the main 
FM station broadcast signal, and which the Company believes has not been fully 
utilized.

     The management of the Company understands, based on discussions with FM 
radio stations, that a demand exists for more efficient utilization of their 
allotted frequency resource including the FM SCA bandwidth.  Similar to the 
United States, FM radio stations in China and most other foreign countries are 
granted government licenses to operate an FM radio signal within an assigned 
range of frequency.  A typical FM station is assigned a bandwidth of 100 kHz.  
An FM station will take up to a maximum of 53 kHz for their commercial (main 
channel) programming.  The remaining SCA portion of the base band signal from 
54 kHz to 100 kHz, or close to 50% of the available FM channel spectrum 
resource, is not required for broadcasting the main FM station signal.

     FM SCA has been used in the United States and other developed countries 
for background music without commercial interruption, reading services for the 
blind, stock market, sports, and weather reports, and educational and religious
applications. As a result, the use of in-place FM transmission systems to 
provide a wide coverage paging application may in some instances be limited due
to previous user allocation. This is not the case, however, in emerging growth 
nations.  Chinese, Latin American, and other foreign FM radio stations have 
actively been pursuing the use of this FM SCA bandwidth to generate significant
revenues for operations. 

     Recent advancements in the state-of-the-art for digital voice compression 
and digital signal processing make it feasible for an FM SCA channel to support
an individualized subscription service such as a paging network.  The Company 
is taking full advantage of these technological advancements in its 
implementation of the Digital Voice Paging System.  The Company believes that 
the combination of FM SCA, DSP and digital voice compression presents a unique 
opportunity to implement an effective paging system in a relatively short time 
with low capital investment costs.

 Digital Voice Paging System

     The Company believes that the demand for personal telecommunication 
devices has increased drastically in the past decade in China, Latin America 
and other emerging markets, with the major market growth focused on two 
products: cellular mobile phones and paging systems.  Cellular phone networks 
require extensive front end investment for their initial implementation, and 
continuous investment to increase the number of cells in order to maintain an 
acceptable user density level per cell, since the density level grows with the 
increase in numbers of subscribers.  Cellular phone networks also require a 
developed telephone infrastructure network encompassing a large coverage area 
which the Company believes China and other emerging markets presently lack.



                                    5


<PAGE>

     Traditional paging systems, on the other hand, require less investment, 
but typically provide a one way message service in numbers or characters.  The 
first generation pager was a beeper-based system which "beeped" when a number 
associated with a specific pager was accessed.  Subsequently, numerical based 
pagers were developed capable of transmitting a telephone number to a hand held
pager device.  Both of these systems are "notification" based in that no actual
message is sent.  The individual carrying the pager needs to call a telephone 
number to receive the particular message.  The Company believes that this 
presents a problem to users in countries with a low per capita number of 
telephones and underdeveloped telecommunication infrastructures such as China.
Accordingly, users of beepers or numeric pagers in China may not have ready 
access to a telephone to receive their messages.  

     Character or alphanumeric pagers, on the other hand, are not 
"notification" based as they provide a subscriber with an actual character 
message.  These pagers allow subscribers to receive and store messages 
consisting of both letters and numbers.  The Company believes, based upon its 
market research, that alphanumeric paging systems present significant problems,
particularly in China, due to the number and complexity of Chinese characters 
(in excess of 13,000).  These problems include the need for large pools of 
typists who possess the skills needed to translate different Chinese dialects 
with accuracy and speed into correct Chinese characters for transmission to 
Chinese character pagers.  In addition, substantial investment is required in 
China and other marketplaces to establish the network and to purchase the 
necessary hardware to operate a paging system.

     The use of beepers, numeric pagers and alphanumeric pagers in China and 
Latin America has grown at tremendous rates.  Based upon information from the 
Chinese Ministry of Post and Telecommunications, subscribers to pager services 
in China rose from approximately 400,000 in 1990 to approximately 25,000,000 in
1995. The New China News Agency has reported that pager use in China is 
expected to continue to increase rapidly into the next century.

     The Company believes that its Digital Voice Paging System will possess 
significant advantages over existing numeric, alphanumeric and character pagers
by allowing a subscriber to receive and play on a hand held Digital Voice 
Pager, a voice message from the actual party trying to reach the subscriber.  
The Digital Voice Paging System will not require the subscriber to have access 
to a telephone to receive a message.  Moreover, the Digital Voice Paging System
does not require large pools of typists to transcribe messages.  This ensures 
message privacy and eliminates translation errors resulting from dialect 
differences that the Company believes are currently being experienced in the 
Chinese pager market. The Digital Voice Paging System also eliminates 
significant investments required for establishing the network and hardware of 
other pager systems.

     The Digital Voice Paging System allows a designated FM radio station to 
provide a service that transmits a message to the owner of a Digital Voice 
Pager in the actual voice of the person generating the message.  In order to 
implement a Digital Voice Paging System, hardware containing the Company's 
proprietary software will be integrated into the FM radio station's 
transmitter. This provides the broadcast path for the individualized voice 
pages.  The Digital Voice Paging System provides paging that coexists with, but
does not interfere with the FM radio station's existing commercial broadcasts.  
Therefore, a very short start-up time is needed to set up a voice paging 
service.  

                                    6
<PAGE>

     A subscriber to the paging system must first buy a hand held Digital 
Voice Pager from the radio station or other retail outlet and then pay a 
monthly subscription fee for the paging service.  Once a subscriber's account 
has been established, callers can leave voice messages for the subscriber by 
calling the paging system's central phone number and entering the subscriber's 
personal identification number. The calling party's message is then digitized, 
compressed and transmitted by the radio station's FM transmitter to the 
specific Digital Voice Pager subscriber.

Digital Voice Paging System Equipment Description

     The Digital Voice Paging System consists of two major parts, a base 
station and a number of hand held Digital Voice Pagers.

Base Station

     The base station features accessory equipment built around an existing FM 
radio transmitter and includes a Pager Terminal (also referred to as a call 
processor) and an SCA Generator.  The Pager Terminal automatically answers 
incoming telephone calls, prompts the caller for the subscriber's personal
identification number and records actual voice messages like a standard 
voicemail system.  Voice messages are digitally compressed into a compact 
paging message and a destination pager address is appended. The messages are 
then forwarded to the SCA Generator for modulation and mixing with the FM 
station main channel programming.  This composite signal is then broadcast 
through the existing FM transmitter. With the use of existing FM transmitters, 
the Company believes that its system installation costs are several orders of 
magnitude less than traditional paging systems. The cost of a base station is 
expected to be approximately $130,000, including installation and training.

Digital Voice Pager

     The Digital Voice Pager receives the FM signal, extracts the FM SCA 
portion of the signal, decodes the message, and stores all messages that are 
addressed to it.  An audible or vibrating signal alerts the user that a message
has been received.  Upon playback the user listens to the message in the 
caller's actual voice.  Operation of the Digital Voice Pager will be similar to
a compact personal message recorder enabling the user to easily play back 
messages, fast forward and rewind through messages, lock messages in storage, 
and delete messages. 

Stock Information Receiver

     Global has identified FM SCA technology concerning the distribution of 
stock market information in the Chinese market place.  Global has a working 
relationship with several Chinese radio stations and as a result of their 
requests, Global developed a stock market information receiver ("SIR").  The 
SIR is a radio receiver designed to receive a scrambled analog FM radio signal 
transmitted by an FM radio station's transmitter over their excess bandwidth.  
The SIR allows a subscriber to receive stock market information from the stock 
exchange in China, which is transmitted by Chinese radio stations.

     Currently certain Chinese radio stations sell a stock market information 
device to interested subscribers.  Subscribers pay a fee to the radio station 
to purchase the device and a monthly fee to receive the radio transmission.  


                                      7
<PAGE>

The Company believes, based on discussions with Chinese radio stations, in the 
past, unauthorized receivers have appeared in the Chinese market.  These 
devices allow unauthorized users to pirate the radio station's signal without 
paying a monthly subscription fee.

     Global's SIR system is designed to allow the radio station to install
a computer with the Company's proprietary software at the FM transmitter and 
broadcast the information in a scrambled form, which is then unscrambled at the
subscriber's SIR.  Management believes that the SIR will decrease the risk of 
piracy and allow radio stations to better maintain their subscription revenue 
streams.  In addition, the SIR system will allow the radio station to remotely 
turn off an SIR receiver if the subscriber has not paid his/her monthly 
subscription fee.  Management believes its SIR system has additional 
applications and can be used wherever there is a market demand for one way 
communications that can be received by a select receiver and turned off at the 
source of the signal.  Management believes that these additional markets 
include corporate communications to select employees, sports information 
dissemination, weather reporting services, educational courses, and special 
programming.

     In June 1996, Global received its first order for SIR units from Pearl 
River Economic Radio, an affiliate of Radio Guangdong, in China.  However, 
Global has discontinued manufacturing the first generation of SIR units ("SIR 
100") due to certain "locking" problems that limited the reception of stock 
market information programming in a percentage of such units.  Consequently,
it will be necessary to complete the development of a second generation of SIR
units ("SIR 200") designed to improve upon the performance of the SIR 100.
Global has expended approximately $1,600,000 in developing the SIR system.

     In July 1997, the Company determined that the expected cost of continuing 
Global's activities directed toward development, production and sale of the SIR
200 product line was higher than originally anticipated.  As a result, the 
Company concluded that its limited capital resources would not allow for the 
funding of Global's continued development of the SIR system in parallel with 
the Company's core business strategy of developing and commercializing its 
Digital Voice Pager technology.  The Company currently intends to complete the 
development of the Digital Voice Pager before devoting significant additional 
funds to an SIR program.  Management continues to believe that the SIR system 
could possibly be developed into a commercially successful product for the 
Chinese market.  However, significant capital resources will be required to 
complete development of the SIR 200 and to commercialize the product.  
Therefore, the Company has decided to evaluate strategic alternatives for 
Global's SIR program that will minimize the need for the Company's capital 
resources.  Alternatives to be evaluated include, but are not limited to, joint
venture arrangements and royalty/licensing arrangements. 

     On October 15, 1997, the Company's Board of Directors determined that it 
was necessary to record a special charge of $687,000 as a provision for write-
down of assets and other accruals relating to the Company's decision to 
temporarily suspend Global's SIR program.  See "Management's Discussion and 
Analysis of Financial Condition and Results of Operations - Results of 
Operations" for further details of this special charge.


                                     8



<PAGE>

Production and Manufacturing Plans

     The Company does not presently intend to establish its own manufacturing 
facilities to produce its Digital Voice Pager and future products.  Instead the
Company plans to contract manufacture custom made Application Specific 
Integrated Circuits ("ASIC") and masked Central Processing Units ("CPU").  In 
addition, the Company will purchase the various component parts necessary to 
produce finished products from a variety of vendors. The Company intends to 
ship ASIC and other component parts to contract manufacturers abroad to 
assemble the Digital Voice Pager and future products.  Since the Company will 
not operate its own manufacturing facilities, it will be dependent upon the 
ability of contract manufacturers to manufacture and assemble products in 
accordance with specifications provided by the Company.  In the event that the 
contractors are unable to meet these specifications or experience delays in 
delivering products to the Company, the Company's business would be adversely 
affected.

     The Company may in the future seek to establish its own manufacturing 
facilities and/or form joint ventures with manufacturers in China and abroad in
order to manufacture and assemble the Company's products.  In such event, the
Company may need further financing to implement such manufacturing plans. 
There can be no assurance that financing will be available to the Company at 
such time, or if available on terms acceptable to the Company.

Marketing

    	According to statistics of the Chinese Ministry of Post and
Telecommunications the number of paging subscribers in China has grown from 
approximately 400,000 in 1990 to approximately 25,000,000 at the end of 1995.
The New China News Agency reported projections that indicate paging users in
China will continue to expand at rapid rates.  Similar growth projections exist
for pager markets in many other populous developing countries.  The Company 
plans to be a significant part of this growing worldwide paging market using FM
SCA technology.

     Based on Global's experience marketing the SIR system in China, the 
Company plans to refocus its marketing strategy on the development of joint 
venture relationships with local companies in specified target areas.  The 
Company intends to seek out joint venture partners who are experienced with 
marketing, distribution and regulatory issues related to the paging industry 
and radio station operations, as well as the economic, cultural and political 
environments in their respective areas.  The Company believes that a joint 
venture approach will result in a rapid deployment of its products in multiple 
areas throughout the world.

	The marketing strategy of each joint venture will vary, depending on the 
circumstances in each geographic area.  However, several elements of the 
strategy are likely to be the same.  It will be important for the joint 
ventures to educate radio stations regarding their ability to generate 
significant additional revenues by utilizing the Company's technology with 
their available FM SCA band.  In addition, emphasis will focus on their ability
to generate these revenues without the need for significant investment capital 
and highlight the advantages of the Company's Digital Voice Paging System 
compared to traditional paging systems currently in use. The joint ventures 

                                     9


<PAGE>

also will be responsible to market voice pager services to local subscribers 
and implement support and service personnel needed to run a paging service.   
Each joint venture will determine the best method of sales and distribution for
their operation, directly to the subscriber, through retail electronic outlets,
or through the radio stations themselves. 

     The Company is currently researching prospective joint venture partners in
various target markets.  Although no final joint venture terms have been 
established yet, the Company expects that such ventures are likely to take the 
form of that proposed in a letter of intent the Company signed with the Batista
Group in Brazil during April 1997.  The letter of intent provides for the 
formation of a joint venture between the Company and the Batista Group for the 
purpose of marketing, selling and distributing the Company's Digital Voice 
Pager and other telecommunication products in Central and South America 
pursuant to the terms of a definitive joint venture agreement to be negotiated 
between the parties.  The joint venture agreement is expected to provide that 
the Batista Group will have a 51% interest in the joint venture and the Company
will own the remaining 49% interest. The Batista Group will be responsible for 
marketing, distribution and sale of products in the countries.  The Company 
will produce and sell Digital Voice Pagers to the joint venture in addition to 
supplying its Digital Voice Paging System and other product technology together
with technical training and marketing support.  The capital requirements of the
joint venture will be funded by each party based upon their ownership interest 
in the joint venture.  The joint venture is expected to receive all or a 
significant part of the monthly subscription revenue paid by Digital Voice 
Pager subscribers.

     The Company believes the advantages associated with its Digital Voice 
Paging System as compared to tone-only pagers, numeric pagers, and alphanumeric
and character pagers will allow the Company to successfully market its 
products.  However, there can be no assurance that the Company's products will 
be successfully received in those market places the Company chooses to target. 
The Company believes the price of its Digital Voice Pager will be competitive 
with existing alphanumeric/text pagers in use around the world.

Patents and Trade Secrets

     In January 1996, the Company filed a patent application for protection of 
the Digital Voice Pager technology under United States patent laws.  The 
Company also has filed similar patent applications in numerous foreign 
countries around the world.  In September 1997, the Company was notified that 
its patent application was approved by government authorities in South Africa. 
There can be no assurance as to the ultimate success of the Digital Voice Pager
patent application in the United States or any other foreign country.  
Furthermore, even if a patent is issued to the Company, there can be no 
assurance that such patent will not be circumvented and/or invalidated by 
competitors of the Company.  Further, the enforcement of patent rights often 
requires the institution of litigation against infringers, which litigation is 
often costly and time consuming.  The Company also intends to rely on trade 
secrets, know how and continuing technological advancement to establish a 
competitive position in the marketplace.  There can be no assurance that the 
Company will be able to adequately protect its technology from competitors in 
the future.



                                    10

<PAGE>

Government Regulations

     The Company's proposed operations relate to conduct of operations in China
and other foreign countries.  Accordingly, the Company's operations will be 
subject to the risks of conducting business internationally, including possible
instability in foreign governments, changes in regulatory requirements, 
difficulties in obtaining foreign licenses, as well as other general barriers 
and restrictions in relation to compliance with foreign laws.

Competition

     The Company's products compete with those of numerous well-established 
companies which design, manufacture or market beepers, numeric pagers and 
alphanumeric pager systems and telecommunications products.  All of these 
companies have substantially greater financial, technical, personnel and other 
resources than the Company, and have established reputations for success in the
development, licensing, sale and service of their products and technology. 
Certain of these competitors may also have the financial resources necessary to
enable them to withstand substantial price competition or downturns in the 
market for voice pagers and related products.

Research and Development

     Research and development expenditures were approximately $445,000 and 
$434,000 for the years ended July 31, 1997 and 1996, respectively for the 
Company's Digital Voice Pager and Global's SIR products.

     The Company does not currently have internal research and development 
capabilities.  Therefore, it relies on contractual relationships with third 
party engineering and development firms to develop the Company's products to 
its specifications.  Generally, such contracts provide for payments to be made 
by the Company on a time and material basis.  On large contracts, a maximum 
limit typically is placed on the amount the Company will be required to pay.  
However, periodic modifications to such contracts may increase the maximum 
amount to be paid.  During the years ended July 31, 1997 and 1996, costs 
aggregating approximately $391,000 and $392,000, respectively, were incurred 
for product research and development work performed by third parties.

     Management believes that significant progress has been made on the 
development of the Digital Voice Pager.  The Company's development contractors 
have in the past experienced delays in connection with the development of the 
Digital Voice Pager.  At this time, completion of a production ready prototype 
of the first generation of the Digital Voice Pager is expected within the next 
twelve months.  During that time, the Company and its development contractors 
expect to complete the product engineering and development process and conduct 
exhaustive testing of the prototypes.  The Company is dependent upon the 
success of its development contractors in developing the Digital Voice Pager.  
The inability of, and/or delay by such contractors in performing such 
developmental services could have a material adverse effect on the Company.

     The Company has incurred research and development costs of $1,049,000 on 
the Digital Voice Pager through October 17, 1997, including $321,000 incurred 
during the year ended July 31, 1997.  The Company also expects to incur an 
estimated $1,000,000 of additional research and development costs to complete 


                                   11

<PAGE>

development of the first generation of the Digital Voice Pager.  Management is 
aware, however, that there can be no assurances that the Digital Voice Paging 
System will be developed into a commercially viable product, or if developed, 
that it can be successfully marketed. 

Employees

     The Company has eight employees, all of whom are full time, consisting of 
its Chief Executive Officer and Chairman of the Board, President, Chief 
Operating Officer, Vice President of Finance and Chief Accounting Officer, 
Secretary, Investor Relations Manager, Controller, and administrative staff.

Recent Developments

     Letter of Intent to Acquire General Atronics Corporation

     On October 15, 1997 the Company signed a letter of intent to acquire all 
of the outstanding capital stock of General Atronics Corporation and its 
subsidiaries ("GAC") for $6,000,000 in cash and 1,000,000 shares of the 
Company's common stock.  The purchase agreement also provides for future 
contingent consideration of up to $6,000,000 and up to 1,000,000 shares of the 
Company's common stock in the event that GAC achieves certain minimum levels of
signed contracts for sales commitments.  The acquisition is contingent on the 
Company's ability to raise sufficient funds to finance the initial cash 
requirements.

     GAC is a high technology communications company that specializes in the 
application of real-time digital signal processing to high frequency and ultra-
high frequency data modems, tactical digital telephones and communications 
systems.  GAC functions primarily as a subcontractor for larger defense 
contractors who build communication systems for U.S. and foreign defense 
forces.  GAC's 1996 revenues were $18,805,000.

     Management expects to operate GAC as a largely independent subsidiary 
without significantly changing its operations.  However, the Company expects to
take full advantage of the outstanding technical resources available within GAC
to help develop the Company's technologies on a more timely basis.  In 
addition, GAC offers the Company a stable and consistently profitable operation
with excellent marketing contacts in foreign countries.  The Company also 
expects to be able to help GAC develop new marketing opportunities and 
commercial applications of its technology.

     The Company is currently attempting to raise sufficient equity capital to 
pay for the initial cash outlay required to purchase GAC.  Management is aware,
however, that there can be no assurances that the Company will be able to 
secure sufficient funds from its financing efforts to complete the acquisition 
of GAC.  In addition, there can be no assurance that the Company will be able 
to negotiate a definitive acquisition agreement acceptable to the Company and 
GAC's shareholders.  As a result of these significant uncertainties, it is 
management's opinion that the acquisition of GAC is not yet probable.





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<PAGE>

     Key Additions to Management

     Michael P. McAndrews was appointed President of the Company effective 
October 1, 1997.  Prior to joining the Company, Mr. McAndrews had been in 
several senior marketing positions in Motorola's Two-Way Paging and Cellular 
Phone divisions since 1992.  See Item 9, "Directors, Executive Officers, 
Promoters and Control Persons."

     David C. Bryan was appointed Senior Vice President and Chief Operating 
Officer of the Company in July 1997.  Prior to joining the Company, Mr Bryan 
spent 18 years with GAC. See Item 9, "Directors, Executive Officers, Promoters 
and Control Persons."

     James M. Boyd, Jr. was appointed Vice President of Finance and Chief 
Accounting Officer in February 1997, replacing Scott McPherson who left the 
Company to pursue other opportunities.  Prior to joining the Company, Mr. Boyd 
spent 15 years with Sun Company, Inc. in a variety of financial management 
positions. See Item 9, "Directors, Executive Officers, Promoters and Control 
Persons."

ITEM 2.     DESCRIPTION OF PROPERTY

     The Company's headquarters are located at 1341 N. Delaware Avenue, Suite
408, Philadelphia, Pennsylvania 19125, which the Company leases pursuant to a 
written lease expiring in 1999.  The rent for the 3,233 square feet of office 
space is $29,100 per year subject to certain customary increases.

ITEM 3.     LEGAL PROCEEDINGS

     In April 1997 the Company settled an action instituted by Josephberg,
Grosz & Company, Inc. ("JGC") in the United States District Court for the
Southern District of New York for specific performance of a contract which
JGC claimed entitles them to receive 15,000 shares of the Company's Common
Stock or in the alternative the sum of $66,000.  The Company settled the claim
("JGC Action") through the issuance of 7,500 shares of the Company's restricted
common stock, which was subsequently registered by the Company under the 
Securities Act of 1933, as amended.

     As of October 10, 1997, the Company had several judgments related to 
accounts payable and taxes payable, the aggregate amount of which is not 
material to the Company's results of operations and cash flows. Management has 
been negotiating actively and attempting to work out settlements with respect
to these judgments and tax assessments.
 
In September 1997, Global Telecommunications of Delaware, Inc. ("Global") 
the Company's 80 percent owned subsidiary, was served with a Summons and 
Complaint by a former supplier of electronic parts in the U.S. District Court 
for the Eastern District of Pennsylvania..  The Complaint seeks specific 
performance of a contract and plaintiff claims they are entitled to receive 
approximately $106,000 from Global.  Global has filed an answer to the
complaint denying complainant's right to receive any monetary compensation.

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

     No matters were submitted to a vote of the Company's security holders 
during the quarter ended July 31, 1997.

                                   13
<PAGE>
                                 PART II

ITEM 5.     MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS.           

     The Company's Common Stock is quoted on the National Association of
Securities Dealers, Inc., over-the-counter market on the OTC Bulletin Board 
under the symbol "SGAL."

     The following table sets forth the high and low bid prices per share of 
Common Stock as quoted by National Quotation Bureau, Inc. for the years
July 31, 1997 and 1996.

<TABLE>

Fiscal Year Ended July 31, 1996 
_______________________________

<CAPTION> 
                                          High Bid                 Low Bid
                                          ________                 _______
<S>                                       <C>                      <C>
Quarter ended
  October 31, 1995                       $ 6                       $5 1/4
  January 31, 1996                         5 15/16                  2 1/8 
  April 30, 1996                           5 1/4                    4 1/8
  July 31, 1996                            4 7/8                    2 3/8

Fiscal Year Ended July 31, 1997
_______________________________

<CAPTION>
                                         High Bid                 Low Bid
                                         ________                 _______
<S>                                      <C>                      <C>
Quarter ended
  October 31, 1996                       $3 1/8                   $1 1/2
  January 31, 1997                        2 11/16                  2 1/16
  April 30, 1997                          3                        2 3/16
  July 31, 1997                           2 1/2                    1 27/32
             
     The above prices presented are bid prices, which represent prices between 
broker dealers and do not include retail mark-ups, mark-downs or commissions to
the dealer.  The prices also may not necessarily reflect actual transactions.
On October 23, 1997 the closing price for the Company's common stock was $2.00 
per share.
                                               
     As of October 17, 1997 the Company had 220 shareholders of record of its 
Common Stock.  Such number of record holders was derived from the stockholder 
list maintained by the Company's transfer agent, American Stock Transfer & 
Trust Co., and does not include the list of beneficial owners of the Company 
whose shares are held in the names of various dealers and clearing agencies.  
The Company's transfer agent has advised the Company that it has in excess of 
300 record and beneficial owners of its common shares.



                                    14


<PAGE>

Dividends

     To date, the Company has not declared or paid any cash dividends and does 
not intend to do so for the foreseeable future.  The Company intends to retain 
all earnings, if any, to finance the continued development of its business. 
Any future payment of dividends will be determined solely by the discretion of 
the Company's Board of Directors.

ITEM 6.     MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
            RESULTS OF OPERATIONS.

     The following discussion should be read in conjunction with the Company's 
consolidated Financial Statements appearing elsewhere in this report.

General Operations
__________________

     Sigma Alpha Group, Ltd. ("the Company") is pursuing a business strategy of
bringing new telecommunications technology to China and other developing
countries.  During the year ended July 31, 1997, the Company and its 80% owned
subsidiary, Global Telecommunications of Delaware, Inc. ("Global") (together,
"Sigma Alpha") conducted activities directed toward the research and develop-
ment of a digital voice pager ("Digital Voice Pager") and the development,
production and sale of Global's Stock Information Receiver ("SIR") system in
China.

Year Ended July 31, 1997
vs. Year Ended July 31, 1996
________________________

Results of Operations

     For the year ended July 31, 1997 ("Fiscal 1997"), the Sigma Alpha incurred
a net loss of $7,297,000 on revenues of $350,000 compared to a net loss of 
2,189,000 on revenues of $2,000 for the year ended July 31, 1996 ("Fiscal 
1996").  The increase in the net loss of $5,108,000 was primarily due to a 
$687,000 provision for write-down of assets and other accruals in Fiscal 1997, 
as well as higher officers' compensation ($2,294,000), other salaries and 
payroll costs ($112,000), consulting fees ($1,701,000), professional fees 
($82,000), travel ($91,000) and other operating expenses ($97,000).

     Sigma Alpha recognized operating revenue from Global's telecommunication 
business operations for the first time in Fiscal 1997 with the sale of 
approximately 12,500 of Global's SIR 100 units, which generated $348,000 of 
revenue and $34,000 of gross profit all in the first half of Fiscal 1997.  
However, as further described above, the Company has temporarily suspended 
Global's SIR program and as a result, no revenues were incurred in the second 
half of Fiscal 1997 (see "Stock Information Receiver").

     The Company's Board of Directors determined that it was necessary to 
record a special charge relating to the Company's decision to temporarily 
suspend activities directed toward development, production and sale of its SIR.
The Company concluded that its limited capital resources would not allow for 
the continued development of the SIR system in parallel with the Company's core


                                    15

<PAGE>

business strategy of developing and commercializing its Digital Voice Pager 
technology.  The Company is currently evaluating several strategic alternatives
for the SIR program; however, it is more likely than not that the Company will 
incur significant losses on Global's SIR program regardless of which 
alternative is selected.  As a result, the Company recorded a pretax provision 
for loss of $687,000 in Fiscal 1997.  The components of the provision are as 
follows:

      Write-down of assets:
        Inventory                               $ 513,000
        Accounts receivable (net)                  37,000
        Fixed assets (net)                         73,000
        Prepaid expenses and other
         current assets                            26,000
      Accrual for loss on purchase commitments     38,000
                                                _________
      Total provision                           $ 687,000 
                                                _________

     Global's inventory was written down to estimated net realizable value 
($78,000) and all other SIR assets were written off entirely.  It is reasonably
possible that a further write-down of the inventory may be necessary if Global 
is unable to utilize the inventory in future products and/or sell the inventory
at or above net realizable value.
 
     For Fiscal 1997, officers' compensation was $2,834,000 as compared to 
$540,000 for Fiscal 1996, an increase of $2,294,000, or 425%.  The increase was 
primarily due higher compensation received by the Company's Chairman in the 
form of (1) 1,250,000 shares of the Company's restricted common stock valued at
$2,000,000, (2) $106,000 of accumulated but unpaid vacation pay since the 
inception of the Chairman's employment contract with the Company, (3) $49,000 
of compensation resulting from retirement of the Company's Series C preferred 
stock, and (4) scheduled increases in the Chairman's salary.  The increase was 
also attributable to higher salaries for other officers.

     For Fiscal 1997, other salaries and payroll costs were $243,000 as 
compared to $131,000 for Fiscal 1996, an increase of $112,000, or 85%.  The 
increase was attributable to higher payroll taxes and higher non-officer 
salaries. For Fiscal 1997, consulting fees were $2,020,000 as compared to
$319,000 for Fiscal 1996, an increase of $1,701,000, or 533%.  The increase was 
primarily due to the adoption of FASB Statement 123 which valued common stock 
warrants granted to investment banking consultants at $1,415,000.  The increase 
in consulting fees was also attributable to several new consulting agreements 
entered during Fiscal 1997 to assist the Company in raising more equity 
capital.  Directors' fees declined $38,000, or 70%, in Fiscal 1997 due to the 
absence of common stock granted to the outside directors in Fiscal 1996. 
Professional fees increased $82,000, or 55%, in Fiscal 1997 due to higher legal
fees, which resulted primarily from the Company's expanded efforts to finance 
its operations, including $67,000 incurred to the Company's securities counsel.

     For Fiscal 1997, marketing expenses were $123,000 as compared to none for 
Fiscal 1996 as a result of marketing activities associated with the sale of 
Global's SIR units in China.  Travel expenses increased $91,000, or 25%, in 
Fiscal 1997 also due to activities associated with the sale of Global's SIR 


                                     16

<PAGE>

units in China and travel resulting from efforts to raise equity capital.  
Other operating expenses were $366,000 for Fiscal 1997 as compared to $269,000 
for Fiscal 1996, and increase of $97,000, or 36%.  The increase was primarily 
attributable to higher advertising costs and filing fees.

Liquidity and Capital Resources

     At July 31, 1997, the Company had working capital of $1,412,000 (including
a cash balance of $1,688,000) as compared to working capital of $924,000 
(including a cash balance of $1,173,000) at July 31, 1996.  The working capital
increase of $488,000 largely reflects the sale of 2,625,000 shares of Sigma 
Alpha common stock for $4,725,000 net of commissions, partially offset by 
operating expenses and the provision for write-down of assets and other 
accruals, which reduced working capital by $614,000.

     In April 1995, the Company entered into a Separation Agreement with Joseph 
Tarsia, the former Chairman of the Board of Directors of the Company (the 
"Former Chairman").  At the time of the Former Chairman's separation, he held 
1,740,063 shares of the Company's common stock and the Company owed the Former 
Chairman and certain parties related to the Former Chairman a total of 
$2,038,000 ("Debt Due the Former Chairman"), the details of which are disclosed 
in the following table.

          Obligee                    Nature of the Debt               Amount
-------------------------------   -----------------------           ----------
Joseph Tarsia                       Accrued compensation            $1,080,000
Joseph Tarsia                       Loan payable                        42,000
Joseph and Cecelia Tarsia (H/W)     Loan payable                       332,000
Sigma Sound Services, Inc.(1)       Loan payable                       113,000
Sigma Sound Studios Profit
  Sharing Plan (2)                  Loan payable                       471,000
                                                                    ----------
Total Debt Due the Former Chairman                                  $2,038,000
                                                                    ----------
(1) The Former Chairman is the President and sole owner of all of the 
    outstanding common stock of Sigma Sound Services, Inc.

(2) The Former Chairman is Trustee of the Sigma Sound Studios Profit Sharing 
    Plan.

In conjunction with the Former Chairman's separation from the Company, Kathleen
Patten, a third party investor (the "Third Party"), purchased all of the Former
Chairman's shares of common stock in the Company for $417,000.  In addition to 
the Former Chairman's stock, the Third Party also acquired all of the Debt Due 
the Former Chairman.  The Third Party then agreed to release the Company of all
obligations and claims under the Debt Due the Former Chairman in consideration 
for payment by the Company of $61,000 in cash and 395,000 shares of the 
Company's Series B Preferred Stock.  The Preferred Stock was valued at 
$1,977,000, the difference between the total face value of the Debt Due the 
Former Chairman assumed by the Third Party and the $61,000 cash payment. In 
accordance with the terms of the Former Chairman's Separation Agreement, the 
Company is contingently liable to pay the Former Chairman up to a maximum of 
$2,000 per week until such time that the Third Party has completed making all 
payments to the Former Chairman required under the terms of the Third Party's 


                                    17

<PAGE>

agreement with the Former Chairman. Pursuant to the Separation Agreement, 
amounts paid by the Company to the Former Chairman were $17,750 and $18,750 in
the years ended July 31, 1997 and 1996, respectively.  In addition, $61,750 has
been accrued as of July 31, 1997, which represents the estimated maximum 
liability to the Former Chairman in the event that the Third Party fails to 
perform. As of October 29, 1997, the Third Party had not completed making all 
required payments to the Former Chairman.  See Note 7 to the Consolidated 
Financial Statements.

     As of October 17, 1997, the Company maintained a cash balance of $760,000.
Management is aware that additional funding will be required within the next
three months in order to achieve its primary objectives.  In addition to the
estimated $6,000,000 that will be required to purchase GAC, the Company expects
that approximately $1,500,000 will be required to complete the first generation
of the Digital Voice Paging System.  Upon commercialization of the Digital
Voice Paging System, the Company expects that at least $20 million will be
required in the second half of calendar 1998 to fund production and marketing
of Digital Voice Pagers.

     The Company is actively trying to raise the required funds.  Effective 
August 18, 1997, the Company filed a registration statement to register
5,000,000 shares of the Company's common stock at $2.00 per share.  In October 
1997, the Company chose to terminate the offer as sufficient demand did not 
exist for the Company's securities at that time.  The Company declined  the 
only subscription tendered to purchase its common stock under the registration 
statement as the amount of funds under such subscription would not materially 
assist the Company in its operations.  The Company has undertaken efforts to 
raise additional equity capital through alternate sources, primarily private 
placements to institutional investors.

    	The Company's ability to achieve its plan of operations is dependent on 
its ability to secure sufficient proceeds from financing efforts.  There can be
no assurances that such funding will be generated or available, or if 
available, on terms acceptable to the Company.  In addition, management is 
aware that there can be no assurances that the Digital Voice Pager will be 
developed into a commercially viable product or that the Company will be able 
to negotiate a definitive acquisition agreement acceptable to the Company and 
GAC's shareholders.


ITEM 7.     FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.
                
     The consolidated financial statements of the Company, including the notes 
thereto, together with the report of independent certified public accountants 
thereon, are presented beginning at page F-1.  Such consolidated financial 
statements are hereby incorporated by reference into this Item 7.





                                   18






<PAGE>
                          SIGMA ALPHA GROUP, LTD.

                       INDEX TO FINANCIAL STATEMENTS

                                                                  PAGE

          A.   Independent Auditors' Report                       F-1
 
          B.   Consolidated Balance Sheets at July 31, 1997       
                and 1996                                          F-2 to F-4

          C.   Consolidated Statements of Operations for the
                years ended July 31, 1997 and 1996                F-5

          D.   Consolidated Statements of Stockholders' Equity
                for the years ended July 31, 1997 and 1996        F-6 to F-9

          E.   Consolidated Statements of Cash Flows for the
                years ended July 31, 1997 and 1996                F-10 to F-11

          F.   Notes to Consolidated Financial Statements         F-12 to F-27


































                                    19



<PAGE>









                          INDEPENDENT AUDITORS' REPORT


To the Board of Directors
Sigma Alpha Group, Ltd.
Philadelphia, Pennsylvania

We have audited the accompanying consolidated balance sheets of Sigma Alpha
Group, Ltd. and subsidiaries as of July 31, 1997 and 1996, and the related 
consolidated statements of operations, stockholders' equity, and cash flows
for the years then ended.  These consolidated financial statements are the 
responsibility of the Company's management.  Our responsibility is to express 
an opinion on these consolidated 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 consolidated 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 financial position of Sigma Alpha Group, 
Ltd. and subsidiaries as of July 31, 1997 and 1996, and the results of their 
operations and cash flows for the years then ended in conformity with generally
accepted accounting principles.

As discussed in Note 12 to the consolidated financial statements, restricted 
common stock issued to the Chairman of the Board and common stock warrants 
issued to non-employees during the year ended July 31, 1997 were revalued.  
Accordingly, the 1997 financial statements have been restated to reflect the 
revaluation of the issuance of the restricted common stock to the Chairman of 
the Board and the revaluation of the issuance of common stock warrants.


                                    s/COGEN SKLAR LLP
                                    COGEN SKLAR LLP


Bala Cynwyd, Pennsylvania
October 16, 1997, except for Note 12,
as to which the date is July 23, 1998




                                       F-1
<PAGE>

</TABLE>
<TABLE>



                     SIGMA ALPHA GROUP, LTD. AND SUBSIDIARIES
                           CONSOLIDATED BALANCE SHEETS
                             JULY 31, 1997 AND 1996
                          (Rounded to Nearest Thousand)

<CAPTION>
                                               
                                                 1997               1996   
                                               __________       __________   
<S>                                           <C>              <C>       
                ASSETS

CURRENT ASSETS
  Cash and equivalents                         $1,688,000       $1,173,000
  Inventory                                        78,000          119,000
  Prepaid expenses and other current assets        20,000           20,000 
                                                _________        _________ 
                                                1,786,000        1,312,000 
                                                _________        _________

PROPERTY AND EQUIPMENT, NET                        48,000           80,000 
                                                _________        _________

OTHER ASSETS
  Goodwill                                         42,000           58,000 
  Patent                                           22,000            9,000
                                                _________        _________
                                                   64,000           67,000 
                                                _________        _________

TOTAL ASSETS                                   $1,898,000       $1,459,000 
                                                =========        =========
















    
<FN> 
The accompanying notes are an integral part of these consolidated financial
Statements.
                                    F-2
</TABLE>

<PAGE>
<TABLE>
                      SIGMA ALPHA GROUP, LTD. AND SUBSIDIARIES
                            CONSOLIDATED BALANCE SHEETS
                              JULY 31, 1997 AND 1996
                           (Rounded to Nearest Thousand)


<CAPTION>
                                                  1997              1996 
                                               ___________        _________

<S>                                            <C>              <C>
                     LIABILITIES


CURRENT LIABILITIES
  Loan payable                                    $  -             $ 16,000
  Accounts payable - trade                         190,000          231,000 
  Accrued taxes, other than income taxes            52,000            7,000 
  Accrued wages - officers                          21,000           40,000
  Accrued expenses and other current
   liabilities                                     111,000           94,000 
                                                 _________        _________
TOTAL LIABILITIES                                  374,000          388,000 
                                                 _________        _________

COMMITMENTS AND CONTINGENCIES

























<FN>
The accompanying notes are an integral part of these consolidated financial
Statements.
                                      F-3
</TABLE>


<PAGE>
<TABLE>
                   SIGMA ALPHA GROUP, LTD. AND SUBSIDIARIES
                         CONSOLIDATED BALANCE SHEETS
                           JULY 31, 1997 AND 1996
                        (Rounded to Nearest Thousand)               

<CAPTION>
                                                   1997             1996
                                                 ________         _______
<S>                                              <C>              <C> 
 
     STOCKHOLDERS' EQUITY

PREFERRED STOCK
  SERIES A, $5.00 CONVERTIBLE, $.001 par value;
   authorized, 750,000 shares; issued and
   outstanding, 0 shares at July 31, 1997 and
   178,000 shares at July 31, 1996                   -                -
  SERIES B, $5.00 CONVERTIBLE, $.001 par value;
   authorized, 800,000 shares; issued and
   outstanding, 664,000 shares at July 31,
   1997 and 1996                                     1,000            1,000 
  SERIES C, $5.00 CONVERTIBLE, $.001 par value;
   authorized, 109,000 shares; issued and
   outstanding, 0 shares at July 31, 1997 and
   97,000 shares at July 31, 1996                    -                -

  ADDITIONAL PAID-IN CAPITAL                     3,321,000        4,690,000 

COMMON STOCK, $.001 par value; authorized
 50,000,000 shares; issued and outstanding,
 18,907,000 shares at July 31, 1997 and
 14,809,000 at July 31, 1996                        19,000           15,000 

  WARRANTS OUTSTANDING                           1,540,000            2,000

  ADDITIONAL PAID-IN CAPITAL                    24,048,000       16,471,000 

ACCUMULATED DEFICIT                            (27,405,000)     (20,108,000)
                                                __________       __________
TOTAL STOCKHOLDERS' EQUITY                       1,524,000        1,071,000 
                                                __________       __________

TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY     $ 1,898,000      $ 1,459,000 
                                                ==========       ==========


<FN>
The accompanying notes are an integral part of these consolidated financial
Statements.
                                   F-4
</TABLE>







<PAGE>
<TABLE>
                       SIGMA ALPHA GROUP, LTD. AND SUBSIDIARIES
                        CONSOLIDATED STATEMENTS OF OPERATIONS
                          YEARS ENDED JULY 31, 1997 AND 1996
                            (Rounded to Nearest Thousand)
<CAPTION>
                                                1997         1996
                                             __________   _________
<S>                                          <C>          <C>     
SALES                                        $  348,000   $    -
COST OF SALES                                   314,000        -
                                             __________    _________
GROSS PROFIT                                     34,000        -
                                             __________    _________
OPERATING EXPENSES:
  Officers' compensation                      2,834,000      540,000   
  Other salaries and payroll costs              243,000      131,000
  Consulting fees                             2,020,000      319,000
  Directors' fees                                16,000       54,000 
  Professional fees                             230,000      148,000
  Marketing expenses                            123,000        -
  Research and development                      445,000      434,000
  Travel                                        449,000      358,000 
  Provision for write-down of assets and
   other accruals                               687,000        -
  Other                                         366,000      269,000 
                                              _________    _________       
TOTAL OPERATING EXPENSES                      7,413,000    2,253,000 
                                              _________    _________
LOSS FROM CONTINUING OPERATIONS BEFORE OTHER
 INCOME (EXPENSE) AND EXTRAORDINARY GAIN     (7,379,000)  (2,253,000) 
                                              _________    _________   
OTHER INCOME (EXPENSE)
 Royalties                                        2,000        2,000 
 Interest income                                 80,000       21,000
 Interest expense                                 -          (21,000)  
                                              _________    _________   
                                                 82,000       (2,000)
                                              _________    _________

LOSS BEFORE EXTRAORDINARY GAIN               (7,297,000)  (2,251,000) 
EXTRAORDINARY GAIN ON EXTINGUISHMENT OF DEBT      -           62,000 
                                              _________    _________   
NET LOSS                                    $(7,297,000) $(2,189,000) 
                                              =========    =========
WEIGHTED AVERAGE NUMBER
 OF SHARES OUTSTANDING                       17,519,000   13,848,000

NET LOSS PER COMMON SHARE
 Net loss before extraordinary gain         $     (0.42)  $    (0.16)
 Extraordinary gain on extinguishment of debt      -            -  
                                              _________    _________ 
NET LOSS PER COMMON SHARE                    $    (0.42)  $    (0.16)    
                                              =========    =========
<FN>
The accompanying notes are an integral part of these consolidated financial
Statements.
                                    F-5
</TABLE>
<PAGE>
<TABLE>

                            SIGMA ALPHA GROUP, LTD. AND SUBSIDIARIES
                         CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY 
                               YEARS ENDED JULY 31, 1997 AND 1996     
                                 (Rounded to Nearest Thousand)

                                          COMMON STOCK
                  ____________________________________________________________

<CAPTION>
                                         COMMON                    ADDITIONAL 
                    NUMBER OF             STOCK       WARRANTS      PAID-IN
                     SHARES    AMOUNT   SUBSCRIBED   OUTSTANDING    CAPITAL     
                   __________  _______  __________   ___________   __________ 
<S>                <C>         <C>      <C>          <C>           <C>
BALANCES,
 AUGUST 1, 1995    12,837,000  $13,000  $1,499,000        $-       $12,664,000 
Year ended 
 July 31, 1996
  Issuance of 
   common stock:
    Under   
     subscription,
     agreement        850,000    1,000  (1,499,000)        -         1,498,000
    Under
     underwriting 
     agreement         33,000    -           -             -           100,000
    Interest            9,000    -           -             -             1,000
    Directors fees    200,000    -           -             -            50,000
    Warrant
     Exercise, net
     of commission
     of $42,000       880,000    1,000       -             -         2,158,000
    Warrants issued 
     For services       -        -           -             2,000         - 
                   __________   ______   _________    __________   ___________

BALANCES,
JULY  31, 1996     14,809,000  $15,000   $    -           $2,000   $16,471,000





<FN>
The accompanying notes are an integral part of these consolidated financial
Statements.

                                      F-6
</TABLE>








<PAGE>
<TABLE>
                            SIGMA ALPHA GROUP, LTD. AND SUBSIDIARIES
                         CONSOLIDATED STATEMENTS OF STOCKHOLDERS'S EQUITY
                               YEARS ENDED JULY 31, 1997 AND 1996
                                 (Rounded to Nearest Thousand)
                       
                                     COMMON STOCK
                   ___________________________________________________________
<CAPTION>
                                         COMMON                   ADDITIONAL
                    NUMBER OF             STOCK       WARRANTS     PAID-IN    
                     SHARES    AMOUNT   SUBSCRIBED   OUTSTANDING   CAPITAL     
                   __________  ______   __________   ___________  __________  
                   <C>         <C>      <C>          <C>          <C>      
BALANCES,
 JULY 31, 1996     14,809,000  $15,000  $    -        $    2,000  $16,471,000  
Year ended
 July 31, 1997:
  Issuance of
   common stock     2,625,000    3,000       -             -        5,247,000 
  Commissions           -        -           -             -         (525,000)
  Officer's
   compensation     1,255,000    1,000       -             -        2,011,000
  Consulting fees      32,000    -           -             -           65,000
  Preferred Series
   A conversion       178,000    -           -             -          882,000
  Settlement of
   lawsuit              8,000    -           -             -           18,000
  Warrants issued
   for cash             -        -           -             3,000        -
  Warrants issued
   for services         -        -           -         1,535,000     (121,000)
                   __________   ______   _________   ___________    __________

BALANCES,
 JULY 31, 1997     18,907,000  $19,000  $    -        $1.540,000   $24,048,000
                   ==========   ======   =========   ===========    ========== 
</TABLE>
<TABLE>
<CAPTION>
                               ACCUMULATED DEFICIT
                               ___________________   
<S>                            <C>
BALANCE, AUGUST 1, 1995        $(17,919,000)
Net loss                         (2,189,000)
                                ___________

BALANCE JULY 31, 1996           (20,108,000)                     
Net loss                         (7,297,000)
                                ___________

BALANCE JULY 31, 1997          $(27,405,000)
                                ===========  
</TABLE>
[FN]
The accompanying notes are an integral part of these consolidated financial
statements.
                                    F-7

<PAGE>
                       SIGMA ALPHA GROUP, LTD. AND SUBSIDIARIES
                    CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
                          YEARS ENDED JULY 31, 1997 AND 1996
                            (Rounded to Nearest Thousand)

<TABLE>
                                  PREFERRED STOCK "SERIES A"
                               ___________________________________ 
<CAPTION>
                                                         ADDITIONAL
                               NUMBER OF                  PAID-IN
                                SHARES       AMOUNT       CAPITAL
                               ________      _______      ________
<S>                            <C>          <C>          <C>
BALANCES, AUGUST 1, 1995 AND
 JULY 31, 1996                  178,000     $   -        $ 882,000
Year ended July 31, 1997:
 Conversion to common stock    (178,000)        -         (882,000)
                               ________      _______      ________
BALANCES, JULY 31, 1997            -         $   -        $   -
                               ========      =======      ========
</TABLE>
<TABLE> 
                                    PREFERRED STOCK "SERIES B"
                                 __________________________________        
<CAPTION>
                                                           ADDITIONAL
                                 NUMBER OF                  PAID-IN
                                  SHARES       AMOUNT       CAPITAL
                                 _________     _______      ________
<S>                              <C>          <C>          <C> 
BALANCES, AUGUST 1, 1995          726,000     $  1,000     $3,628,000 

Year ended July 31, 1996
 Issuance of preferred stock
  for conversion of debt           15,000        -             77,000 
 Repurchase of shares for
  retirement                      (77,000)       -           (385,000)
                                 ________      _______      _________ 

BALANCES, JULY 31, 1996 AND 1997  664,000     $  1,000     $3,321,000 
                                 ========      =======      ========= 
</TABLE>
[FN]
The accompanying notes are an integral part of these consolidated financial
statements.
                                         F-8












<PAGE>                             
                        SIGMA ALPHA GROUP, LTD. AND SUBSIDIARIES
                     CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
                           YEARS ENDED JULY 31, 1997 AND 1996
                             (Rounded to Nearest Thousand)
             
<TABLE>

                                       PREFERRED STOCK "SERIES C"
                                  _____________________________________
<CAPTION>   
                                                             ADDITIONAL
                                  NUMBER OF                   PAID-IN
                                   SHARES       AMOUNT        CAPITAL
                                 ________      _______      __________
<S>                              <C>          <C>          <C>
BALANCES, AUGUST 1, 1995          109,000     $   -        $  544,000

Year ended July 31, 1996
 Repurchase of shares for
   retirement                     (12,000)        -           (57,000)
                                 ________      _______      _________

BALANCES, JULY 31, 1996            97,000         -           487,000

Year ended July 31, 1997
  Repurchase of shares for
   retirement                     (97,000)        -          (487,000)
                                 ________      _______      _________

BALANCES, JULY 31, 1997             -         $   -        $    - 
                                 ========      =======      =========     



















<FN>
The accompanying notes are an integral part of these consolidated financial
statements.
                                          F-9
</TABLE>




<PAGE>
<TABLE>
                             SIGMA ALPHA GROUP, LTD. AND SUBSIDIARIES
                              CONSOLIDATED STATEMENTS OF CASH FLOWS
                                YEARS ENDED JULY 31, 1997 AND 1996
                                 (Rounded to Nearest Thousand)

<CAPTION>
                                             1997            1996 
                                          ___________       ________
<S>                                      <C>             <C>    
CASH FLOWS FROM OPERATING ACTIVITIES
 Net loss                                $(7,297,000)    $(2,189,000)
 Adjustments to reconcile net loss
  to net cash flows used in operating
  activities:
   Provision for write-down of assets
    and other accruals                       687,000           -
   Extraordinary gain on extinguishment
    of debt                                    -             (62,000)
   Depreciation  of property and
    equipment and amortization of
    goodwill and patent                       46,000          34,000 
   Amortization of unearned compensation       -               8,000 
   Issuance of common stock for:
    Directors fees                             -              50,000
    Officer compensation                   2,012,000           -
    Consulting fees                           65,000           -  
    Settlement of lawsuit                     18,000           -
   Issuance of warrants for services       1,414,000           2,000 
(Increase) decrease in:
  Receivable from underwriting                 -             198,000
  Accounts receivable                       (143,000)          -
  Inventory                                 (472,000)       (119,000)
  Prepaid expenses and other current
   assets                                    (26,000)        (13,000)
 Increase (decrease) in:
  Accounts payable                            65,000         107,000
  Taxes, other than income taxes              45,000         (56,000)
  Accrued wages - officers                   (19,000)         40,000
  Accrued expenses and other current
   liabilities                               (23,000)         (2,000)
                                           _________       _________
 Net cash used in operating activities    (3,628,000)     (2,002,000)
                                           _________       _________    
CASH FLOWS FROM INVESTING ACTIVITIES
 Cost of patent and trademark                (16,000)        (10,000)
 Purchase of equipment                       (66,000)        (71,000)
                                           _________         _______
 Net cash used in investing activities       (82,000)        (81,000)
                                           _________         _______




<FN>
The accompanying notes are an integral part of these consolidated financial
statements
                                    F-10
</TABLE>
<PAGE>
<TABLE>
                             SIGMA ALPHA GROUP, LTD.
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                        YEARS ENDED JULY 31, 1997 AND 1996 
                          (Rounded to Nearest Thousand)      

<CAPTION>
                                               1997         1996 
                                             _________   __________
<S>                                        <C>           <C>
CASH FLOWS FROM FINANCING ACTIVITIES
 Proceeds from loans payable                     -           16,000
 Repayment of loans payable                    (16,000)       -
 Proceeds from issuance of common stock      5,250,000    2,300,000 
 Commission on issuance of common stock       (525,000)     (41,000)
 Repurchase of Preferred Series B stock          -         (385,000)
 Repurchase of Preferred Series C stock       (487,000)     (57,000)
 Proceeds from issuance of warrants              3,000        -
                                             _________    _________
 Net cash provided by financing activities   4,225,000    1,833,000 
                                             _________    _________

NET CHANGE IN CASH AND EQUIVALENTS             515,000     (250,000)

CASH AND EQUIVALENTS, BEGINNING OF YEAR      1,173,000    1,423,000 
                                             _________    _________

CASH AND EQUIVALENTS, END OF YEAR           $1,688,000   $1,173,000 
                                             =========    =========

SUPPLEMENTAL DISCLOSURES OF CASH FLOW
 INFORMATION
  Cash paid during the year:
   Interest                                 $    -       $   21,000

SUPPLEMENTAL SCHEDULE OF NONCASH
 FINANCING ACTIVITIES
  Series B Preferred Stock issued for
   conversion of debt                       $    -       $   77,000
  Common stock issued for conversion
   of debt                                  $    -       $    1,000
  Common stock issued for retirement
   of Series A Preferred Stock              $  882,000   $    -
  Common stock warrants issued for
   legal costs of preparing
   registration statement                   $  121,000   $    -

<FN>
The accompanying notes are an integral part of these consolidated financial
statements

                                    F-11
</TABLE>






<PAGE>
                  SIGMA ALPHA GROUP, LTD. AND SUBSIDIARIES
                  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                           JULY 31, 1997 AND 1996


NOTE 1 - HISTORY AND NATURE OF THE BUSINESS

Sigma Alpha Group, Ltd. (the "Company") was incorporated under the laws of the
Commonwealth of Pennsylvania in February 1988 and commenced operations in
June 1989, as the successor-in-interest of Sigma Sound Studios, Inc. ("Sigma 
Sound") a recording studio owned and operated by the former Chairman of the 
Company.  In 1987, Sigma Sound purchased the assets of Alpha International 
Recording Studios, Inc. ("Alpha International"), a recording studio owned and 
operated by the Company's Chief Executive Officer and current Chairman of the
Board.

The Company became publicly held upon its merger in January 1991 with Fabulous
Mergers, Inc., an inactive public company incorporated in Nevada.  Pursuant to 
the terms of the merger, Fabulous Mergers, Inc., as the surviving corporation 
changed its name to "Sigma Alpha Entertainment Group, Ltd." and was 
subsequently reincorporated in Delaware.  In 1995, the Company changed its name
to Sigma Alpha Group, Ltd.

In April 1995, the Company acquired an 80% interest in Global 
Telecommunications of Delaware, Inc. ("Global"), an entity which was formed to 
complete development of a Digital Voice Pager ("Digital Voice Pager") 
technology.  During 1996, management discontinued its plans to reestablish its 
music industry operations and changed its business activities to focus 
exclusively on the development and commercialization of wireless 
telecommunication products which utilize radio frequencies transmitted by FM 
radio stations.

During the year ended July 31, 1997, Global began selling its first product, a 
stock information receiver ("SIR"), in China. The SIR is a radio receiver 
designed to receive a scrambled analog FM radio signal transmitted by an FM 
radio station's transmitter over their excess bandwidth.  The SIR allows a 
subscriber to receive stock market information from the stock exchange in 
China, which is transmitted by Chinese radio stations.  However, the Company 
has discontinued manufacturing the first generation of SIR units due to certain
locking problems that affected a percentage of such units. See Note 3 for 
further information regarding a provision for write-down of assets and other 
accruals related to the SIR program.

The Company's current plan of operations largely consists of the development of
its Digital Voice Pager technology and the subsequent marketing of Digital 
Voice Paging Systems to developing nations. Completion of a production ready 
prototype of the first generation of the Digital Voice Pager is expected within
the next twelve months.  The Company will require additional funds to carry out
this plan of operations.  Management believes that the Company has available
sources to carry out the plan of operations and to fund its operating expenses
during the year ended July 31, 1998.





                                    F-12


<PAGE>  
                   SIGMA ALPHA GROUP, LTD. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                            JULY 31, 1997 AND 1996


NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES 

Principles of Consolidation
___________________________
The consolidated financial statements include the accounts of the Company and 
all wholly-owned and majority-owned subsidiaries.  All significant intercompany
transactions have been eliminated in consolidation.

Cash Equivalents
________________
The Company considers certificates of deposit, money market funds and all other
highly liquid debt instruments purchased with a maturity of three months or 
less to be cash equivalents.

Concentration of Credit Risk
____________________________
The Company maintains its cash balances in several financial institutions.
Accounts at each institution are insured by the Federal Deposit Insurance
Company or the Securities Investor Protection Corporation up to $100,000.  
During the year the Company may have cash balances in these institutions in 
excess of these limits.  At July 31, 1997, balances were in excess of insurable
amounts by approximately $1,556,000.

Estimates
_________
The preparation of financial statements in conformity with generally accepted 
accounting principles requires the use of estimates based on management's 
knowledge and experience.  Accordingly actual results may differ from those 
estimates.

Fair Value of Financial Instruments
___________________________________
The Company's financial instruments consist primarily of cash and equivalents, 
accounts receivable, accounts payable, and accrued expenses. These balances, as
presented in the financial statements as of July 31, 1997 and 1996, approximate
their fair value because of their short maturities.

Inventory
_________
Inventory is stated at the lower of cost or market determined on a first-in, 
first-out basis and consists of component parts for the SIR.  The Company 
recorded a write-down of the SIR inventory to its net realizable value in the 
year ended July 31, 1997 (see Note 3).

Property and Equipment
______________________
Property and equipment are recorded at cost.  Fixtures and equipment are 
depreciated primarily using the declining balance and straight line methods 
over the estimated useful lives of 3 to 10 years.




                                   F-13
<PAGE>
                  SIGMA ALPHA GROUP, LTD. AND SUBSIDIARIES
                  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                           JULY 31, 1997 AND 1996

Goodwill
________
The Company amortizes goodwill on a straight-line basis over a 5 year period.
Goodwill in the consolidated financial statements relates to the Company's
1995 acquisition of an 80% interest in Global.  Recoverability of such goodwill
is evaluated based on the estimated expected future cash flows from the future 
commercialization of Global's technology in relation to the net book value of 
the goodwill.  Amortization recorded was $16,000 in each of the years ended 
July 31, 1997 and 1996.  Accumulated amortization was $38,000 and $22,000 at 
July 31, 1997 and 1996, respectively.

Minority Interest
_________________
As of July 31, 1997, Global had incurred cumulative net losses aggregating 
$2,001,000 in excess of its equity capital, including net losses of $1,197,000 
and $710,000 incurred in the years ended July 31, 1997 and 1996, respectively.  
In accordance with generally accepted accounting principles, the Company has 
recognized 100% of Global's cumulative net losses, including $400,000 of such 
net losses applicable to the 20% minority interest.

Patent
______
Global has filed patent applications for its Voice Pager technology in the 
United States and numerous foreign countries.  The costs of its patent 
applications are amortized on a straight line basis over a 5 year period.  
Amortization recorded was $3,000 and $1,000 in the years ended July 31, 1997 
and 1996, respectively.  Accumulated amortization was $4,000 and $1,000 at July
31, 1997 and 1996, respectively.

Research and Development Expenses
_________________________________
Research and development expenditures are expensed as incurred and totaled 
approximately $445,000 and $434,000 for the years ended July 31, 1997 and 1996,
respectively.

Income Taxes
____________
The Company has adopted FASB Statement No. 109, "Accounting for Income Taxes", 
which requires an asset and liability approach to financial accounting and 
reporting for income taxes.  Deferred income tax assets and liabilities are 
computed annually for temporary differences between financial statement and  
tax bases of assets and liabilities that will result in taxable or deductible 
amounts in the future based on enacted tax laws and rates applicable to the 
periods in which the differences are expected to be realized.  Income tax 
expense is the tax payable or refundable for the period plus or minus the 
change during the period in deferred tax assets and liabilities.


                                 F-14






<PAGE>
                  SIGMA ALPHA GROUP, LTD. AND SUBSIDIARIES
                  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                           JULY 31, 1997 AND 1996


Net Loss Per Share
__________________
Net loss per share is based upon the weighted average number of shares 
outstanding without assumed conversion of common stock warrants and options, 
both of which are considered to be common stock equivalents, because the effect
on net loss per share would be anti-dilutive.

Accounting for Stock-Based Compensation
_______________________________________
Compensation costs attributable to stock option and similar plans are 
recognized based on any difference between the quoted market price of the stock
on the date of the grant over the amount the employee is required to pay to 
acquire the stock (the intrinsic value method under Accounting Principles Board
Opinion 25).  Such amount, if any, is accrued over the related vesting period, 
as appropriate.

Effective August 1, 1996, the Company implemented Financial Accounting 
Standards Board ("FASB") Statement 123, "Accounting for Stock-Based 
Compensation," which encourages employers to account for stock-based 
compensation awards based on their fair value on their date of grant.  The fair
value method was used to value common stock warrants issued in transactions 
with other than employees during the year ended July 31, 1997.  Entities may 
choose not to apply the new accounting method for options issued to employees 
but instead, disclose in the notes to the financial statements the pro forma 
effects on net income and earnings per share as if the new method had been 
applied.  The Company has adopted the disclosure-only approach to Statement 123
for options issued to employees.  See Note 9.

Recently Issued Accounting Pronouncements
_________________________________________
During February 1997, the FASB issued Statement 128, "Earnings Per Share," 
which establishes standards for computing and presenting earnings per share 
("EPS"), replacing the presentation of currently required "primary" EPS with a 
presentation of "basic" EPS.  For entities with complex capital structures, the
statement requires the dual presentation of both "basic" EPS and "diluted" EPS 
on the face of the statement of operations.  Under this new standard, "basic" 
EPS is computed based on weighted average shares outstanding and excludes any 
potential dilution.  "Diluted" EPS reflects potential dilution from the 
exercise or conversion of securities into common stock and is similar to the 
currently required "fully diluted" EPS.  Statement 128 is effective for 
financial statements issued for periods ending after December 15, 1997, 
including interim periods, and earlier application is not permitted.  Adoption 
of Statement 128 is not expected to have a material effect on the Company's 
loss per share.

During June 1997, the FASB issued Statement 130, "Reporting Comprehensive 
Income," which establishes standards for reporting and display of comprehensive 
income and its components.  The reporting and display requirements of Statement
130 are effective for fiscal years beginning after December 15, 1997.  The 
Company presently intends to comply with this statement for its year ended July
31, 1999.


                                  F-15
<PAGE>
                 SIGMA ALPHA GROUP, LTD. AND SUBSIDIARIES
                 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  
                          JULY 31, 1997 AND 1996


During June 1997, the FASB issued Statement 131, "Disclosures About Segments of
an Enterprise and Related Information," which establishes standards for the way
that public business enterprises report information about operating segments in
annual financial statements and related disclosures about products and 
services, geographic areas and major customers.  The reporting and disclosure 
requirements of Statement 131 are effective for periods beginning after 
December 15, 1997.  The Company presently intends to comply with this statement
for its year ended July 31, 1999.

Reclassifications
_________________
Certain 1996 amounts have been reclassified to conform with the 1997 
presentation.  

NOTE 3 - PROVISION FOR WRITE-DOWN OF ASSETS AND OTHER ACCRUALS

On October 15, 1997 the Company's Board of Directors determined that it was 
necessary to record a special charge of $687,000 as a provision for write-down 
of assets and other accruals relating to the Company's decision to temporarily 
suspend activities directed toward development, production and sale of Global's
Stock Information Receiver ("SIR"), a product developed for certain Chinese 
radio stations.  The Company concluded that its limited capital resources would
not allow for the continued development of the SIR system in parallel with the 
Company's core business strategy of developing and commercializing its Voice 
Pager technology.  The Company is currently evaluating several strategic 
alternatives for the SIR program; however, it is more likely than not that the 
Company will incur significant losses on the SIR program regardless of which 
alternative is selected.  As a result, the Company recorded a pretax provision 
for loss of $687,000 in the quarter ended July 31, 1997.  There was no tax 
benefit recognized as a result of recording the provision due to the Company's 
tax position (see Note 6).  The components of the provision are as follows:

      Write-down of assets:
        Inventory                               $ 513,000
        Accounts receivable (net)                  37,000
        Fixed assets (net)                         73,000
        Prepaid expenses and other
         current assets                            26,000
      Accrual for loss on purchase commitments     38,000
                                                _________
      Total provision                           $ 687,000
                                                _________

Global's inventory was written down to estimated net realizable value 
($78,000) and all other SIR assets were written off entirely.



                                     F-16





<PAGE>
                      SIGMA ALPHA GROUP, LTD. AND SUBSIDIARIES
                      NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                               JULY 31, 1997 AND 1996


NOTE 4  - PROPERTY AND EQUIPMENT

Property and equipment consist of the following:
<TABLE>
<CAPTION>
                                        July 31          July 31 
                                          1997            1996
                                        _______          _______
<S>                                    <C>              <C>
     Equipment                         $ 87,000         $ 92,000
     Molds                                -               28,000
     Automotive equipment                18,000           18,000
     Furniture and fixtures              11,000           11,000
     Equipment under capital lease       64,000           64,000
                                        _______          _______
                                        180,000          213,000  
     Less accumulated depreciation      132,000          133,000
                                        _______          _______
                                       $ 48,000         $ 80,000
                                        =======          =======
</TABLE>
Depreciation expense was $26,000 for the year ended July 31, 1997 and $17,000 
for the year ended July 31, 1996.

NOTE 5 - LOAN PAYABLE

The loan payable had no terms of repayment or interest.  The loan was repaid in
full in September 1996.

NOTE 6 - INCOME TAXES

There is no income tax benefit for operating losses for the years ended July
31, 1997 and 1996 due to the following:

     Current tax benefit - the operating losses cannot be carried back to
                           earlier years.

     Deferred tax benefit - the deferred tax assets were offset by a valuation
                            allowance.  Management believes that a valuation
                            allowance is considered necessary since it is more
                            likely than not that the deferred tax asset will 
                            not be realized through future taxable income.


                                  F-17









<PAGE>
                     SIGMA ALPHA GROUP, LTD. AND SUBSIDIARIES
                     NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                              JULY 31, 1997 AND 1996


     The components of the net deferred tax assets are as follows:

<TABLE>
<CAPTION>
                                           1997              1996
                                        _________          _________
<S>                                    <C>                <C>      
     Net operating loss carryforwards  $8,725,000         $7,113,000
     Research and development             275,000             30,000
     Contribution carryforwards             6,000              6,000
     Incorporation costs                    -                  1,000
     Valuation allowance               (9,006,000)        (7,150,000)
                                        _________          _________ 
  
                                       $    -             $    -
                                        =========          =========
</TABLE>
The use of net operating loss carryforwards is limited when there has been a 
substantial change in ownership (as defined) during a three year period.
Because of the recent and contemplated changes in common stock, options and 
warrants, such a change may occur in the future.  In this event, the use of net
operating losses each year would be restricted to the value of the Company on 
the date of such change multiplied by the federal long-term rate ("annual 
limitation"); unused annual limitations may then be carried forward without 
this limitation. Also, in the event the business enterprise of the loss 
corporation is not continued for the two year period commencing on the change 
date, the net operating loss carryforwards may no longer be available.

At July 31, 1997 the Company had net operating loss carryforwards of
approximately $24,236,000, which if not used will expire primarily during the 
years 2005 through 2012.  The Company also has a research and development 
credit carryforward of $6,000 and a contribution carryforward of $16,000 as of 
July 31, 1997.      

NOTE 7 - COMMITMENTS AND CONTINGENCIES

Leases
______
Most of the Company's operations use leased facilities and equipment consisting
of administrative offices, office equipment and automobiles.  Some of the 
leases contain provisions for lease renewal, and also require payment of taxes,
maintenance, insurance and other occupancy expenses.

The following is a schedule of future minimum rental payments for all non-
cancelable operating leases that have initial or remaining lease terms in 
excess of one year at July 31, 1997:



                                  F-18




<PAGE>
                    SIGMA ALPHA GROUP, LTD. AND SUBSIDIARIES
                    NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                             JULY 31, 1997 AND 1996


<TABLE>
<CAPTION>
                       Year Ending
                         July 31,
                       ___________
<S>                      <C>                  <C>

                         1998                  $48,000
                         1999                   37,000
                         2000                    5,000       
                                               _______

                                               $90,000
                                               =======
</TABLE>
Rent expense for operating leases in the years ended July 31, 1997 and 1996 was
$49,000 and $64,000, respectively.

Employment Agreements
_____________________
Effective in April 1991, the Company agreed to pay the Chairman an annual 
salary of $250,000, increasing 10% per year cumulatively, plus annual bonuses 
equal to 5% of pretax income and certain fringe benefits, through the year 
2001. Upon his death or disability, the Company is to pay his annual salary 
for the lesser of eight years or the balance of the term, or, upon 
termination without cause or resignation for "good reason," his annual salary
plus certain fringe benefits for four years or the balance of the term.  On 
November 14, 1995, the Chairman's agreement was extended 5 years to the year 
2006 by the Board of Directors.  On July 22, 1996, the Board of Directors 
authorized a 15% increase in the Chairman's salary and a provision to increase 
his bonus from 5% of pretax income to 10%.

Effective in February 1997, the Company hired a Vice President of Finance and 
Chief Accounting Officer (" VP of Finance") to replace the former Chief 
Accounting Officer and agreed to pay the VP Finance $90,000 per year for three 
months increasing to $95,000 per year after the three months and increasing
5%, 6% and 7% cumulatively and respectively for each of the three years, plus 
certain fringe benefits.  As consideration for entering into the agreement the 
Company will issue the VP of Finance 5,000 shares of the Company's restricted 
common stock two years from the date of the agreement, provided that the VP of 
Finance has not terminated employment prior to that time.  The fair market 
value of the stock at the date of grant was approximately $12,000.  For the 
year ended July 31, 1997, the Company accrued approximately $3,000 for the 
amount vested in the stock as of the year end.  Additionally, the Company 
issued the VP of Finance options to purchase 25,000 shares of common stock at 
the market price as of the date of the commencement of his employment, and 
minimum options after each year of employment to purchase 10,000 shares of 
common stock at the market price on the anniversary date of the agreement.  The
options remain in effect for two years from the date of the grant. 



                                   F-19

<PAGE>
                     SIGMA ALPHA GROUP, LTD. AND SUBSIDIARIES
                     NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                              JULY 31, 1997 AND 1996


Effective in July 1997, the Company hired a Senior Vice President and Chief 
Operating Officer ("COO") and agreed to pay the COO $125,000 per year 
increasing 5%, 6% and 7% cumulatively for each of the next three years, plus 
certain fringe benefits.  In addition, the Company issued the COO options to 
purchase 350,000 shares of common stock at a price of $2.00 per share, the 
market price on the date the COO's employment with the Company commenced. The 
options vest over a three year period and remain in effect for ten years from 
the date of the grant.

Effective in October 1997, the Company hired a President and agreed to pay him 
$240,000 per year increasing 9%, 10% and 10% cumulatively for each of the next 
three years, plus certain fringe benefits.  In addition, the Company issued the
President options to purchase 500,000 shares of common stock at a price of 
$2.00 per share, the market price on the date the President's employment with 
the Company commenced. The options vest over a three-year period and remain in 
effect for ten years from the date of the grant.  The President also is 
entitled to annual bonus options to purchase 100,000 shares of common stock at 
the market price on the anniversary date of the agreement.  The bonus options 
vest immediately upon grant and remain in effect for ten years from the date of
the grant.

Separation Agreement
____________________
As of April 27, 1995, the Company entered into a Separation Agreement with the 
former Chairman of the Board of Directors of the Company (the "Former 
Chairman").  The Company was released of all obligations, claims and debts due 
the Former Chairman.  These obligations, claims and debts were assumed by
a third party (the "Third Party") in consideration for $61,000 in cash and 
395,000 shares of the Company's Series B Preferred Stock valued at $1,977,000.
In addition, the Third Party agreed to purchase the Former Chairman's 1,740,063
shares of the Company's common stock.  In accordance with the terms of the 
Separation Agreement, the Company agreed to pay to the Former Chairman up to 
$2,000 per week until such time that these obligations are paid to the Former 
Chairman by the Third Party (currently estimated to be December 31, 1997).  
The compensation paid by the Company to the Former Chairman was $17,750 and
$18,750 in the years ended July 31, 1997 and 1996, respectively.  In addition, 
$61,750 has been accrued as of July 31, 1997, which represents the estimated 
maximum liability to the Former Chairman in the event that the Third Party 
fails to perform.

Development Agreements
______________________
The Company does not currently have internal research and development 
capabilities.  Therefore, it relies on contractual relationships with third 
party engineering and development firms to develop the Company's products to 
its specifications.  Generally, such contracts provide for payments to be made 
by the Company on a time and material basis.  On large contracts, a maximum 
limit typically is placed on the amount the Company will be required to pay.  
However, periodic modifications to such contracts may increase the maximum 
amount to be paid by the Company.  As of July 31, 1997, there were two 


                                   F-20

<PAGE>
                     SIGMA ALPHA GROUP, LTD. AND SUBSIDIARIES
                     NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                              JULY 31, 1997 AND 1996

significant development contracts outstanding under which the Company had paid 
an aggregate of $690,000 against contract limits aggregating $929,000.  
Management expects to continue its development work under such contractual 
arrangements.

Legal Proceedings
_________________
As of July 31, 1997, the Company had several judgments outstanding against it 
related to accounts payable and taxes payable, the aggregate amount of which is
not material to the Company's results of operations and cash flows.  Management 
has been negotiating actively and attempting to work out settlements with 
respect to these judgments and tax assessments. 

In September 1997, Global Telecommunications of Delaware, Inc. ("Global") the 
Company's 80 percent owned subsidiary, was served with a Summons and Complaint 
by a former supplier of electronic parts in the U.S. District Court for the 
Eastern District of Pennsylvania. The Complaint seeks specific performance of a
contract and plaintiff claims they are entitled to receive approximately 
$106,000 from Global.  Global has filed an answer to the complaint denying 
complainant's right to receive any monetary compensation.

In August 1996, the Company was served with a Summons and Complaint.  The 
Complaint sought specific performance of a contract and entitled the plaintiff 
to receive 15,000 shares of the Company's common stock or alternatively 
$66,000.  In May 1997, the Company's Board of Directors authorized the issuance
of 7,500 shares of its restricted common stock valued at $18,000 to the 
Plaintiff in settlement of this complaint. These shares were subsequently 
registered in the Company's registration statement dated August 18, 1997.

NOTE 8 - RELATED PARTY TRANSACTIONS

Effective April 1, 1993, the Company entered into a three year agreement with a
consultant who is also a stockholder of the Company.  The consultant received 
350,000 shares of the Company's common stock, and consulting fees of $2,500 per
week.  Since then, the consultant's fees have increased to $5,000 per week and 
the contract has been extended to 1999.  As of July 31, 1997 all payments due 
the consultant were current.  As of July 31, 1996 the balance due the 
consultant was approximately $34,000.

NOTE 9 - STOCKHOLDERS' EQUITY 

Preferred Stock
_______________
The Company is authorized to issue 2,000,000 shares of preferred stock, $.001 
par value, in one or more series.  On August 17, 1993, the Board of Directors 
designated 750,000 shares as Series A, $5 convertible preferred stock with 
preferences over common as to dividends and liquidation. During the year ended 
July 31, 1995, the Company issued 178,000 of such shares to stockholders and 
certain trade creditors in consideration for professional services ($15,000) 
and conversion of debt ($867,000).  On August 31, 1996, each share of Series A 
preferred stock was converted into one share of common stock.    


                                    F-21    

<PAGE>
                     SIGMA ALPHA GROUP, LTD. AND SUBSIDIARIES
                     NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                              JULY 31, 1997 AND 1996


On March 16, 1995, the Board of Directors designated 800,000 shares of
Series B, $5 convertible preferred stock to have preference over common
stock and  Series A preferred stock as to dividends and liquidation.  The 
Company issued to one investor 741,000 shares of the Series B preferred stock 
in consideration for the investor assuming $3,706,000 of debt of the Company.  
Pursuant to the terms of the Series B preferred stock which required the 
Company to pay 3% of the debt assumed, the Company paid to the investor an 
aggregate amount of $115,000 in cash.  During the year ended July 31, 1996, the
Company repurchased approximately 77,000 shares of Preferred Series B for 
approximately $385,000.  As a result, the investor returned approximately 
$12,000 in cash to the Company for three percent of the debt assumed on the 
77,000 shares repurchased.  On September 2, 1997, the Company redeemed the 
remaining 664,000 shares of Series B preferred stock for the Company's common 
stock on a two for one basis, or an aggregate of 1,328,000 common shares.

On June 7, 1995, the Board of Directors designated 109,000 shares of Series C,
$5 Convertible Preferred Stock to have preference over common stock and 
Series A and Series B preferred stocks for dividends and liquidation.  The 
Company issued to the Chairman of the Company 109,000 shares of Series C 
preferred tock in consideration for $544,000 of deferred compensation.  During 
the year ended July 31, 1996, the Company retired approximately 12,000 shares 
of Series C preferred stock for approximately $57,000.  During the year ended 
July 31, 1997, the Company retired the remaining 97,000 shares of Series C 
preferred stock for $536,000, of which $49,000 was reflected as additional 
compensation to the Chairman pursuant to the terms of the Series C preferred 
stock agreement.          

Common Stock
____________
In November 1995, the Company sold 33,334 shares if its common stock under a 
subscription agreement at a price of $3.00 per share.  

In November 1995, the Company's Board of Directors authorized a 33% increase in
the Chairman's stock position upon the next substantial receipt of funding.  In
August 1996, the Board approved the issuance of 1,250,000 shares of restricted 
common stock for the Chairman's equity financing efforts.  The Company valued
the shares  at $2,000,000, or $1.60 per share.  The valuation discount of 20% 
compared to market value of approximately $2.00 per share principally reflects 
the significant restrictions placed on the Chairman's ability to resell the 
shares.

In January 1996, 100,000 shares of the Company's common stock were issued to 
each of the two outside members of the Board of Directors valued at $50,000 in 
recognition of services.

Pursuant to a registration statement dated September 6, 1996 which registered 
2,500,000 shares of the Company's common stock at $2.00 per share, the Company 
raised $4,490,000, net of commissions, during the year ended July 31, 1997.

On February 18, 1997, the Board of Directors authorized the issuance of 32,600 
shares of the Company's common stock with a fair market value of $65,000 to be 
issued to a consultant in consideration for services rendered to the Company.  

                                  F-22
<PAGE>
                    SIGMA ALPHA GROUP, LTD. AND SUBSIDIARIES    
                    NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                             JULY 31, 1997 AND 1996

On February 18, 1997, the Board of Directors authorized the issuance of 5,000 
shares of the Company's common stock with a fair market value of $12,000 to be 
issued to the former Chief Accounting Officer of the Company in lieu of the 
5,000 shares of the Company's common stock forfeited under the terms of his 
employment contract as a result of his leaving Sigma Alpha prior to completing 
two years of service.

In June 1997, the Company sold 125,000 unregistered shares of its common stock 
for $235,000, net of commissions.  These shares were subsequently registered in
the Company's registration statement dated August 18, 1997.

Warrants
________
From time to time, the Board of Directors of the Company may issue warrants to 
purchase its common stock to parties other than employees and directors.  
Warrants may be issued as an incentive to help the Company achieve its goals, 
or in consideration for cash or services rendered to the Company, or a 
combination of the above.

In December 1995, the Company issued warrants to purchase 400,000 shares of its
common stock at a price of $2.50 per share.  Such warrants were exercised at 
that time generating $1,000,000 in capital for the Company.

In December 1995, the Company issued warrants to purchase 1,666,667 shares of 
its common stock at a price of $2.50 per share.  Of these warrants, 480,000 
were exercised during the year ended July 31, 1996 generating $1,158,000 (net 
of Commissions) in capital for the Company.  The remaining 1,186,667 warrants 
expired in August 1996.

In December 1995, the Company issued to a consultant warrants to purchase 
10,000 shares of the Company's common stock for $.01 per share in consideration
for services rendered to the Company valued at $2,000.  This warrant expires 
December 15, 1997.

Effective August 1, 1996, the Company adopted FASB Statement 123, "Accounting 
for Stock-Based Compensation," which requires compensation cost associated with
warrants issued to other than employees to be valued based on the fair value of
the warrants.  Such fair value was estimated using the Black-Scholes model with
the following assumptions: no dividend yield, expected volatility of 80%, and a
risk-free interest rate of 5.5%.  The following is a detailed list of the 
Company's common stock warrants issued during the year ended July 31, 1997.

     - In August 1996, the Company issued to its SEC counsel warrants to 
       purchase 100,000 shares of the Company's common stock at a price of
       $2.00 per share in consideration for services rendered.  These 
       Warrants expire on August 31, 1999.  The Black-Scholes model valued 
       these warrants at $121,000.

     - On December 16, 1996, the Company issued to its investment banker 
       warrants to purchase 300,000 shares of the Company's common stock at 
       an exercise price of $2.00 per share in consideration for $3,000 and 
       services rendered.  These warrants expire in December 2001. The Black-
       Scholes model valued these warrants at $540,000.

                                   F-23
<PAGE>
                     SIGMA ALPHA GROUP, LTD. AND SUBSIDIARIES    
                    NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                             JULY 31, 1997 AND 1996


     - On February 5, 1997, the Company issued to a consultant warrants to
       purchase 300,000 shares of the Company's common stock at an exercise 
       price of $3.00 per share in consideration for $3,000 and services 
       rendered.  These warrants expire in February 2001. The Black-Scholes 
       model valued these warrants at $411,000.

     - On May 1, 1997, the Company issued to a consultant warrants to purchase 
       25,000 shares of the Company's common stock at an exercise price of 
       $3.50 per share for services to be rendered between May 1, 1997 and 
       October 31, 1997.  These warrants expire on April 30, 1998. The Black-
       Scholes model valued these warrants at $14,000.

     - On May 1, 1997, the Company issued to a consultant warrants to purchase 
       100,000 shares of the Company's common stock at an exercise price of 
       $3.00 per share for services to be rendered to the Company as Chairman 
       of an advisory board established by the Board of Directors.  These 
       warrants expire on May 1, 2002. The Black-Scholes model valued these 
       warrants at $126,000.

     - On May 8, 1997, the Company issued to a consultant warrants to 
       purchase 500,000 shares of the Company's common stock at an exercise 
       price of $2.40 per share for services to be rendered to the Company
       between May 8, 1997 and May 8, 1998.  Warrants representing the 
       consultants right to purchase 250,000 of such shares became exercisable 
       immediately upon execution of the consulting agreement and expire on
       May 8, 2000.  The Black-Scholes model valued these warrants at $326,000.
       Warrants representing the consultants right to purchase the 250,000 
       share balance become exercisable commencing on the date the Company's 
       securities are listed on the NASDAQ Small-Cap Market and expire three 
       years from that date.  These warrants were assigned a zero value due to 
       the contingent nature of their issuance.

Stock Option Plan
_________________
The Company, with stockholder approval, has adopted a Stock Option Plan (the
"Plan") which provides for the granting of options to officers, key employees, 
consultants and others.  Options to purchase the Company's common stock may be 
made for a term of up to ten years at the fair market value at the time of the 
grant.  Incentive options granted to a ten percent or more stockholder may not 
be for less than 110% of fair market value nor for a term of more than five 
years.

The aggregate fair market value of the stock for which an employee may be 
granted incentive options which are first exercisable in any calendar year 
shall not exceed $100,000.  The Company has reserved a total of 5,000,000 
shares for issuance under the Plan.  No options have been granted under this 
plan through July 31, 1997.  The Plan terminates in November 2001, unless 
terminated earlier by the Board of Directors.


                                     F-24



<PAGE>
                     SIGMA ALPHA GROUP, LTD. AND SUBSIDIARIES    
                    NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                             JULY 31, 1997 AND 1996


Stock Options
_____________
The Company's Board of Directors periodically authorizes the issuance of 
options to purchase the Company's common stock to employees and members of the 
Board of Directors.  These options may be exercised at the fair market value of
the common stock on the date of the grant and generally carry such other terms 
as are outlined in the Company's stock option plan.  During the years ended
July 31, 1997 and 1996, the following stock options were granted:

     - On August 14, 1995, the Company granted the former Chief Accounting
       Officer the option to purchase 25,000 shares of the Company's common 
       stock at $5.75 per share, the market price on the date of grant.  
       Pursuant to the former Chief Accounting Officer's employment agreement, 
       on August 14, 1996, he was granted options to purchase another 5,000
       shares at $2.75 per share, the market price on the date of grant. On
       March 30, 1997, all 30,000 options previously granted to the former
       Chief Accounting Officer expired without being exercised pursuant to the
       terms of his employment contract. 

     - On July 22, 1996, the Board of Directors authorized 250,000 options to 
       purchase shares of the Company's common stock at $3.875 per share, which
       represents the fair market value of the common stock as of that date, to
       be awarded to each of two outside members of the Board of Directors.  

     - Also on July 22, 1996, the Board of Directors authorized 500,000 options
       to purchase shares of the Company's common stock at $3.875 per share, 
       which represents the fair market value of the common stock as of that 
       date, to be awarded to the Chairman of the Company.  

     - In November 1996, 16,667 options to purchase the Company's common stock
       at a price of $15.00 per share expired.

     - On February 10, 1997, 25,000 options were granted to the Company's Vice
       President of Finance,the terms of which are further described in Note 7.

     - On February 18, 1997, 250,000 options were granted to the Company's
       Chairman.

     - On February 18, 1997, 50,000 options were granted to each of the two
       outside members of the Company's Board of Directors.
 
     - On March 10, 1997, 10,000 options were granted to the Company's Manager
       of Investor Relations.

     - In July 1997, 350,000 options were granted to the Company's newly hired
       Senior Vice President and Chief Operating Officer, the terms of which
       are further described in Note 7.
 
The following additional stock options have been granted since July 31, 1997:

     - In October 1997, 500,000 options were granted to the Company's newly
       hired President, the terms of which are further described in Note 7. 

                                      F-25
<PAGE>
                    SIGMA ALPHA GROUP, LTD. AND SUBSIDIARIES    
                    NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                             JULY 31, 1997 AND 1996


The following table summarizes activity for stock options outstanding during 
the years ended July 31, 1997 and 1996:

                                                              Wtd Avg Price
                               Shares      Price Per Share      Per Share
___________________________________________________________________________

Options Outstanding, 7/31/95     16,667        $15.00            $15.00    
  Options granted             1,025,000     $3.88 - $ 5.75       $ 3.92 
  Options cancelled               -               -                 -
___________________________________________________________________________
Options outstanding, 7/31/96  1,041,667     $3.88 - $15.00       $ 4.10
  Options granted               740,000     $2.00 - $ 2.75       $ 2.20
  Options canceled              (46,667)    $2.75 - $15.00       $ 8.73
___________________________________________________________________________
Options outstanding, 7/31/97  1,735,000     $2.00 - $ 3.88       $ 3.16
___________________________________________________________________________

The Company applies APB Opinion 25, "Accounting for Stock Issued to Employees,"
and related interpretations in accounting for the issuance of its stock 
options.  Accordingly, no compensation cost has been recognized for its stock 
options issued during the years ended July 31, 1997 and 1996.  Had compensation
cost for the Company's issuance of stock options been determined based on the 
fair value at grant dates for options consistent with the method of FASB 
Statement 123, "Accounting for Stock-Based Compensation," the Company's net 
loss and net loss per share would have been increased to the pro forma amounts 
indicated below.  Fair value amounts were estimated using the Black-Scholes 
model with the following assumptions: no dividend yield, expected volatility of
80%, and a risk-free interest rate of 5.5%.

                                                      Year Ended July 31
                                                      1997          1996     
                                                  ____________  ____________
Loss before extraordinary gain    As reported     $(7,297,000)  $(2,251,000)
                                  Pro forma       $(8,631,000)  $(5,211,000)

Net loss                          As reported     $(7,297,000)  $(2,189,000)
                                  Pro forma       $(8,631,000)  $(5,149,000)

Net loss per share before         As reported       $(0.42)        $(0.16)
 extraordinary gain               Pro forma         $(0.49)        $(0.38)

Net loss per share                As reported       $(0.42)        $(0.16)
                                  Pro forma         $(0.49)        $(0.37)

NOTE 10 - EXTRAORDINARY GAIN ON EXTINGUISHMENT OF DEBT
 
The Company recognized an extraordinary gain on the extinguishment of debt of
$62,000 during the year ended July 31, 1996 relating to the settlement of trade
payables, taxes payable, and accrued expenses in the aggregate amount of 
$129,000.  The funds used to reduce the Company's outstanding debt were
received from equity financing.

                                   F-26
<PAGE>
                     SIGMA ALPHA GROUP, LTD. AND SUBSIDIARIES    
                    NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                             JULY 31, 1997 AND 1996

NOTE 11 - SUBSEQUENT EVENT

The Company filed a registration statement dated August 18, 1997 to register 
5,000,000 shares of the Company's common stock at $2.00 per share.   In October
1997, the Company chose to decline all subscriptions that had been tendered to 
purchase common stock under the registration statement, and allowed the 
registration statement to expire.  The Company has undertaken efforts to raise
additional equity capital through alternative sources.

NOTE 12 - RESTATEMENT OF FINANCIAL STATEMENTS FOR YEAR ENDED JULY 31, 1997

In July 1998 the Company reviewed the valuation assigned to 1,250,000 shares of
restricted common stock issued to its Chairman in August 1996 ("Chairman's 
Restricted Common Stock"). This review resulted in the determination that the 
independent expert used by the Company to value the Chairman's Restricted 
Common Stock had valued such stock too low relative to its market value.  
Accordingly, the Company has restated its financial statements for the year 
ended July 31, 1997 to reflect an increase in the value assigned to the 
Chairman's Restricted Common Stock from $188,000 to $2,000,000.

In July 1998 the Company also reviewed the calculations of fair value of common
stock warrants issued to non-employees and common stock options issued to 
employees during the year ended July 31, 1997.  This review resulted in the 
determination that the 0% volatility rate used in the Black-Scholes model 
calculations was not determined correctly.  Accordingly, the Company has 
restated its financial statements for the year ended July 31, 1997 to reflect a
volatility rate of 80%, resulting in an increase in the fair value assigned to 
common stock warrants issued during the year from $426,000 to $1,538,000.  Of 
the increase of $1,112,000, $1,034,000 was charged to operations and $77,000 
was charged to additional paid-in capital representing legal costs of preparing
a registration statement.

The impact of these restatements on the consolidated balance sheet as of July 
31, 1997 and the consolidated statement of operations for the year then ended 
is as follows (rounded to nearest thousand, except per share amounts):

                                                  Amounts
                                                Previously       Restated
                                                 Reported         Amounts
                                               -------------   -------------
Loss from continuing operations before other
 income (expense) and extraordinary gain       $ (4,532,000)   $ (7,379,000)
Net loss                                       $ (4,450,000)   $ (7,297,000)
Net loss per share                             $      (0.25)   $      (0.42)
Warrants outstanding                           $    428,000    $  1,540,000
Additional paid-in capital                     $ 22,313,000    $ 24,048,000
Accumulated deficit                            $(24,558,000)   $(27,405,000)

The impact of the restatements also resulted in changes to the consolidated 
statements of stockholders equity and cash flows for the year ended July 31, 
1997 and note 9.

                                     F-27


<PAGE>

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

            None.
      
ITEM 9.     DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS;
            COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE ACT

     The following table sets forth the names and ages of all directors and
officers of the Company and their positions in the Company:
<TABLE>
<CAPTION>
                                    Position(s)
Name                   Age          with Company            Director Since
____                   ___          ____________            ______________
<S>                    <C>          <C>                     <C>

Peter S. Pelullo       45           Chief                   June 1989
                                    Executive Officer,      (Class Two)
                                    Chairman of the 
                                    Board, Chief
                                    Financial Officer
                                    and Director

Michael P. McAndrews   36           President

David C. Bryan         42           Senior Vice
                                    President and
                                    Chief Operating
                                    Officer

James M. Boyd, Jr.     41           Vice President of
                                    Finance and Chief
                                    Accounting Officer


Ernest J. Cimadamore   35           Secretary 

John N. D'Anastasio    49           Director                June 1991
                                                            (Class Three)

Robert J. Sannelli     52           Director                June 1991
                                                            (Class Three)

</TABLE>

     The Board of Directors is divided into three classes; first class, second 
class and third class, with the term of one class expiring each year.  The term
of each class is three years.  The term of each class has expired.  Therefore, 
all current directors serve until their successors are duly elected and 
qualified.  Vacancies in the board are filled by majority vote of the remaining
directors.  The executive officers of the Company are elected by, and serve at 
the discretion of, the Board of Directors.




                                 19
<PAGE>

     The business experience during the past five years or more of each 
director and executive officer of the Company is as follows:

     Peter S. Pelullo became President, Chief Executive Officer and Chief 
Financial Officer of the Company in 1991.  In 1995, Mr. Pelullo was appointed 
as the Company's Chairman of the Board.  In October 1997, Mr. Pelullo 
relinquished the title of President of the Company with the appointment of 
Michael P. McAndrews to that position.  Mr. Pelullo has been involved in the 
music industry since 1976, when he formed Philadelphia-based Alpha
International Recording Studios, Inc. ("Alpha International").  Mr. Pelullo 
also founded Philly World Records in 1982 to establish domestic and 
international record distribution networks.  Mr. Pelullo created a promotional 
team which has successfully marketed artists such as Anita Baker, Teddy
Pendergrass, Levert, The Whispers, and NEW Edition, and record companies 
including Capitol Records, Manhattan, EMI, Atlantic and Elektra have 
subcontracted this team to market their acts.  In 1986, Philly World Records 
was sold to Magnolia Sound, while Alpha International was retained in order to 
focus on studio operations and the formation of a new record company.  Alpha
International was merged with Sigma Sound in 1987 creating Sigma Alpha
Entertainment Group, Ltd., which became a public company in 1991.  Since 
becoming the Company's Chairman in 1995, Mr. Pelullo has been instrumental in 
divesting the Company's interests in the recording industry and spearheading 
its entry into the telecommunications field, while liquidating substantially 
all of the Company's debt.  More recently, he has actively sought to strengthen
the Company's senior management team with the addition a new President, Chief 
Operating Officer and Vice President of Finance.

     Michael P. McAndrews was appointed President of the Company effective 
October 1, 1997.  Prior to joining the Company, Mr. McAndrews had been in 
several senior marketing positions in Motorola's Two-Way Paging and Cellular 
Phone divisions since 1992. During his tenure at Motorola, Mr. McAndrews helped
conceive and develop a number of wireless communications products, including 
the StarTAC TM cellular phone and the PageWriter TM 2000 two-way pager.  Mr. 
McAndrews also spent several years in charge of Motorola's cellular phone 
marketing activities for Japan. In addition to Motorola, Mr. McAndrews has held
positions at DuPont and General Electric.  Mr. McAndrews holds a bachelors 
degree in electrical engineering from Princeton University and an MBA from 
Harvard Business School.

     David C. Bryan was appointed Senior Vice President and Chief Operating 
Officer of the Company in July 1997.  Prior to joining the Company, Mr Bryan 
spent 18 years with General Atronics Corporation ("GAC"), a company engaged in 
the development and manufacturing of military RF communication and 
telecommunication systems and products.  In his most recent position, Mr. Bryan
was GAC's Director of Business Development.  From 1993 to 1997, Mr. Bryan was 
GAC's Director of Advanced Systems and from 1990 to 1993, he was General 
Manager of GAC's Electron Tube Operation.  Mr. Bryan holds a bachelors degree 
in electrical engineering from Bucknell University, a masters degree in 
electrical engineering from Villanova University and an MBA from Temple 
University.

     James M. Boyd, Jr. was appointed Vice President of Finance and Chief 
Accounting Officer in February 1997 replacing the Company's former Chief 
Accounting Officer who resigned to pursue other opportunities.  Prior to 


                                    20

<PAGE>

joining the Company, Mr. Boyd spent 15 years with Sun Company, Inc. ("Sun") a 
public company engaged in petroleum refining and marketing.  Mr. Boyd has 
extensive experience in financial and external reporting areas including the 
preparation of annual, quarterly and current reports required to be filed with 
the Securities and Exchange Commission. In his most recent position, Mr. Boyd 
managed Sun's Credit Department and, from 1991 to 1996, he managed Sun's 
worldwide accounting for petroleum inventories.  Mr. Boyd was formerly a senior
accountant with Price Waterhouse.  Mr. Boyd is a certified public accountant in
Pennsylvania.  He holds a bachelors degree in accounting from the University of
Delaware and an MBA from Drexel University.

     Ernest J. Cimadamore became secretary of the Company in 1990.  Mr. 
Cimadamore was employed by Alpha International from 1981 to 1993, where he
oversaw marketing sales and promotions of the Company's music products.  Mr.
Cimadamore attended Temple University, where he studied business.

     John N. D'Anastasio has been the President of D'Anastasio Corp., a real
estate development company, since 1986. Mr. D'Anastasio received a Bachelor of 
Arts Degree in Economics and Accounting from Villanova University.

     Robert J. Sannelli has served since 1986 as director of operations and
Vice President of D'Anastasio Corp., a real estate development company of which
John D'Anastasio is President.  Mr. Sannelli holds a Bachelor of Science Degree
in Accounting from Rutgers University, where he graduated Summa Cum Laude.
     
Significant Employees

     Ying Dong was hired on October 9, 1995 as Controller of the Company.  Miss
Dong has experience with the Bank of Communication, New York Branch and China
National Textile Import and Export Corporation.  Miss Dong received a Bachelor
of Arts in International Business from Shanghai International Business College
in Shanghai, China in 1991.  Miss Dong has completed her Masters of Business 
Administration in Finance from Temple University.  Miss Dong is fluent in 
Mandarin and Shanghainese as native languages.


                                   21





















<PAGE>

ITEM 10.     EXECUTIVE COMPENSATION

     The following table sets forth cash compensation paid or accrued to the
Company's most highly compensated executive officers whose total annual salary
and bonus exceeded $100,000 during the fiscal years ended July 31, 1997, 1996 
and 1995.   
<TABLE>
                             SUMMARY COMPENSATION TABLE 
<CAPTION>
                                                            Long-term 
                                                            Compensation
                                                            __________________
                                                            Awards
                                                            __________________
       (A)            (B)    (C)       (D)        (E)         (F)      (G)
                     Year                     Other Annual Restricted
Name and Principal  Ended   Salary     Bonus  Compensation    Stock   Options 
Position           July 31    ($)       ($)       ($)          ($)   
__________________   ____  ________   _____  ____________ __________ _______
<S>                  <C>   <C>        <C>    <C>          <C>        <C>       
Peter S. Pelullo     1997   581,000(1)       29,000(4)    188,000    250,000  
Chief Executive      1996   389,000(2)       51,000(4)    625,000    500,000
Officer, Chairman    1995   344,000(3)       27,000(4)
of the Board
</TABLE>
<TABLE>
<CAPTION>
                                Long-term
                              Compensation     
                              ____________
                                 Payouts
                              ____________
       (A)           (B)         (H)              (I)
                     Year
Name and Principal  Ended        LTIP           All Other    
Position           July 31       Payouts       Compensation
                                                   ($)
__________________   ____     ____________     ____________    
<S>                           <C>              <C>
Peter S. Pelullo     1997                      49,000(5)
Chief Executive      1996
Officer, Chairman    1995
of the Board
</TABLE>

    (1) During the year ended July 31, 1997, Mr. Pelullo was paid salaries of 
        $480,000, including $22,000 representing the payment of accrued but
        unpaid salaries from the prior year.  In addition, Mr. Pelullo was paid
        $106,000 for his accumulated but unpaid vacation pay since the 
        inception of his employment contract with the Company.  As of July 31, 
        1997, accrued but unpaid compensation due Mr. Pelullo was $17,000.

    (2) During the year ended July 31, 1996, Mr. Pelullo was paid salaries of 
        $365,000. As of July 31, 1996, accrued but unpaid compensation due Mr. 
        Pelullo was $24,000.


                                     22
<PAGE>

    (3) During the year ended July 31, 1995, Mr. Pelullo was paid $724,000 of 
        which $380,000 represented the payment of accrued but unpaid salaries 
        from prior years.   In July 1995, $544,000 in accrued compensation due 
        Mr. Pelullo was retired in exchange for approximately 109,000 shares of
        Series C Preferred Stock.  

    (4) Other annual compensation for Mr. Pelullo consists of the following:

                                              Year Ended July 31
                                         1997        1996        1995
                                       _______     _______     _______
        Auto expense                   $16,000     $38,000     $16,000
        Travel allowance                 5,000       5,000       5,000
        Health benefits                  8,000       8,000       6,000
                                       _______     _______     _______
        Totals                         $29,000     $51,000     $27,000
                                       _______     _______     _______

    (5) During the year ended July 31, 1997, the Company retired the remaining 
        approximately 97,000 shares of  Series C preferred stock for $536,000, 
        of which $49,000 was reflected as additional compensation to the 
        Chairman pursuant to the terms of the Series C preferred stock 
        agreement.

<TABLE>
                        Option/SAR Grants in Last Fiscal Year

                                 Individual Grants              
                          For the Year Ended July 31, 1997
<CAPTION>
 (A)                   (B)          (C)            (D)                (E)     
                    Number of    % of Total
                   Securities   Options/SARs
                   Underlying    Granted to
                  Options/SARs  Employees in    Exercise or         Expiration 
Name               Granted (#)   Fiscal Year  Base Price ($/Sh)        Date
____              ____________  ____________  _________________  ______________
<S>               <C>           <C>           <C>                <C>  
Peter S. Pelullo  250,000 shs.   39%           2.3750            Feb. 18, 2007
                  common stock 

David C. Bryan    350,000 shs.   55%           2.0000            July 14, 2007
                  comm. stk.(1)

James M. Boyd,Jr.  25,000 shs.    4%           2.4375            Feb. 10, 1999
                  common stock

    (1) Of Mr. Bryan's options, 50,000 vested upon his employment by the
        Company.  The remaining options vest on the following dates if he is
        still employed by the Company on such dates:

                  100,000 shares      July 14, 1998
                  200,000 shares      July 14, 1999 
</TABLE>



                                    23
<PAGE>
<TABLE>
                          Aggregated Option/SAR in Last Fiscal Year          
                               and FY-End Option/SAR Values

                              For the Year Ended July 31, 1997

<CAPTION>
     (A)                 (B)           (C)          (D)              (E)
                                                  Number of        
                                                 Securities        Value of
                                                 Underlying      Unexercised
                                                Unexercised      In-the-Money 
                                                Options/SARs     Options/SARs
                                                at FY-End (#)    at FY-End ($)
   
                  Shares Acquired    Value      Exercisable/    Exercisable/
Name              on Exercise(#)   Realized($)  Unexercisable   Unexercisable 
____              _______________  ___________  _____________   ______________
<S>               <C>              <C>          <C>             <C>   
Peter S. Pelullo         0              0       750,000 (1)          0

David C. Bryan           0              0        50,000 (1)          0
                                                300,000 (2)          0

James M. Boyd,Jr.        0              0        25,000 (1)          0

                                               (1) exercisable
                                               (2) unexercisable
</TABLE>

Compensation Plans

    With the exception of compensation in the form of certain health, medical 
and similar benefits paid pursuant to plans that do not discriminate in favor 
of officers or directors of the Company and are available generally to all 
employees who have been employed by the Company for three months, the Company 
has no plans pursuant to which cash or non-cash compensation was paid or 
distributed during the fiscal years ended July 31, 1997 and 1996, or is 
proposed to be paid or distributed in the future, to the individuals and group 
specified under "Cash Compensation" above, except as noted below.

Employment Arrangements

     The Company entered into employment agreements (the "Agreements") with
Peter S. Pelullo (the "Executive") on September 1, 1991.  The Agreements were 
effective as of April 11, 1991.  Pursuant to the provisions of the Agreements, 
as amended, which continue for a period of fifteen years (the "Term") unless 
earlier terminated in accordance with their terms, the Executive is entitled to
a base salary, initially $250,000 per year, and a bonus based upon the
Company's net profits, if any, an automobile allowance of $1,500 per month, as 
well as health insurance and other benefits generally available to the 
Company's executives.  The Agreement also provides that, upon termination of 
the Executive by the Company without cause or the Executive's resignation for
"Good Reason" as defined in the Agreement, the Executive will be entitled to 
receive his base salary plus executive bonuses prescribed by the Agreements for


                                     24

<PAGE>

the longer of four years or the balance of the Term.  In addition, the
Company shall maintain in full force and effect, for the longer of the four 
years or the balance of the Term, all employee benefit plans and programs in 
which the Executive was entitled to participate immediately prior to 
termination or resignation for Good Reason.  For purposes of this provision, 
"Good Reason" is defined to include (i) a material change in the nature or 
scope of the Executive's responsibilities, duties or authority, (ii) failure by
the Company to comply with the Agreements or to obtain the assumption of the  
agreements by any successor to the Company, (iii) the removal of the Executive 
as director of the Company (iv) ill health of the Executive or a member of his 
family, or any other compelling circumstance, which in the sole discretion of 
the Executive makes his continued employment impossible or inappropriate; and 
(v) a change in control of the Company.  In August 1996, the Company's Board of
Directors authorized a bonus for Mr. Pelullo in the amount of 1,250,000 shares 
of the Company's restricted common stock.   In February 1997, the Board granted
to Mr. Pelullo options to purchase 250,000 shares of the Company's common stock
at $2.375 per share, the market price on the date of the grant.

     Effective February 10, 1997, the Company hired James M. Boyd, Jr. as its 
Vice President of Finance and Chief Accounting Officer to replace the former 
Chief Accounting Officer.  The Company agreed to pay Mr. Boyd $90,000 per year 
for three months increasing to $95,000 per year after the three months and 
increasing 5%, 6% and 7% cumulatively and respectively for each of the three 
years, plus certain fringe benefits.  As consideration for entering into the 
agreement the Company will issue to Mr. Boyd 5,000 shares of the Company's 
restricted common stock two years from the date of the agreement, provided that
Mr. Boyd has not terminated employment prior to that time.  Additionally, the 
Company issued to Mr. Boyd options to purchase 25,000 shares of common stock at
$2.4375 per share, the market price as of the date of the commencement of his 
employment, and minimum options after each year of employment to purchase 
10,000 shares of common stock at the market price on the anniversary date of 
the agreement.  The options remain in effect for two years from the date of the
grant, except upon termination, in which case Mr. Boyd will have 30 days to 
exercise the options before they are canceled. 

     Effective July 14, 1997, the Company hired David C. Bryan as its Senior 
Vice President and Chief Operating Officer and agreed to pay Mr. Bryan $125,000
per year increasing 5%, 6% and 7% cumulatively for each of the next three 
years, plus certain fringe benefits.  In addition, the Company issued Mr. Bryan
options to purchase 350,000 shares of common stock at a price of $2.00 per 
share. The options vest over a three year period and remain in effect for ten 
years from the date of the grant.

     Effective October 1, 1997, the Company hired Michael P. McAndrews as its 
President and agreed to pay him $240,000 per year increasing 9%, 10% and 10% 
cumulatively for each of the next three years, plus certain fringe benefits.  
In addition, the Company issued to Mr. McAndrews options to purchase 500,000 
shares of common stock at a price of $2.00 per share. The options vest over a 
three year period and remain in effect for ten years from the date of the 
grant.  The President also is entitled to annual bonus options to purchase 
100,000 shares of common stock at the market price on the anniversary date of 
the agreement.  The bonus options vest immediately upon grant and remain in 
effect for ten years from the date of the grant.
Stock Option Plan



                                    25
<PAGE>

     The Company's Stock Option Plan (the "Stock Option Plan") was approved by 
a majority of the Company's stockholders in November 1991.  The Stock
Option Plan is intended to qualify, in part, as an incentive stock option plan 
under Section 422 of the Internal Revenue Code (the "Code") and in part as a 
non-qualified stock option plan, and to provide an incentive to those 
directors, key employees of the Company and its subsidiaries and certain other 
persons who are contributing materially to the Company's progress.  As of
July 31, 1997, no options have been issued under the Stock Option Plan.

     The Stock Option Plan is administered by a committee of the Board of 
Directors, none of whom has received a discretionary grant or award under any
stock plan of the Company, during one year prior to serving on the committee.

     The Stock Option Plan terminates November 2001, unless terminated sooner 
by the Board of Directors.  A total of 5,000,000 shares of common stock have 
been reserved for issuance under the Stock Option Plan.  The Board of Directors
may terminate, modify or suspend the Stock Option Plan.  The Board of Directors
may not, however, without the approval of the stockholders of the Company, (i) 
increase the maximum number of shares of common stock which may be issued under
the Stock Option Plan, except pursuant to a stock split, stock dividend, or 
similar transaction; (ii) change the provisions of the Stock Option Plan 
relating to the establishment of the option exercise price; (iii) extend the 
period during which the options may be granted under the Stock Option Plan, 
except for non-qualified options; (iv) materially modify the benefits accruing 
to employees participating under the Stock Option Plan; or (v) materially 
modify the requirements as to eligibility for participation in the Stock Option
Plan.  Since the adoption of the Stock Option Plan, no options have been 
granted thereunder.

Committees of the Board

     The Board of Directors has established separate compensation, audit and 
nominating committees.  However, there have been no meetings of such committees
as of July 31, 1997.

Compensation of Directors

     Prior to January 1997, outside directors received payments of $200 per 
month plus reasonable costs and expenses of travel and lodging for attendance 
at director's meetings.  Effective in January 1997, such payments were increase
to $1,000 per month.  During the year ended July 31, 1997, directors 
D'Anastasio and Sannelli each received options to purchase 50,000 shares of 
common stock at a price of $2.375, the market price on the date of the grant.

Limitations of Liability and Indemnification of Directors and Officers

     Section 145 of the Delaware General Corporation Law, the Company's
Articles of Incorporation and the Company's Bylaws contain provisions for 
indemnification of officers, directors, employees and agents of the Company.
The Company's Bylaws require the Company to indemnify such persons to the full 
extent permitted by Delaware law.  Each person will be indemnified in any 
proceeding if he acted in good faith and in a manner which he reasonable 
believed to be in, or not opposed to the best interests of the Company.  
Indemnification would cover expenses, including attorneys' fees, judgments, 
fines and amounts paid in settlement.


                                      26
<PAGE>

     The Company's Bylaws also provide that the Company may purchase and 
maintain insurance on behalf of any present or past director or officer 
insuring against any liability asserted against such person incurred in the 
capacity of director or officer or arising out of such status, whether or not 
the Company would have the power to indemnify such person.

     Insofar as indemnification for liabilities arising under the Securities
Act may be permitted to directors, officers and controlling persons of the
Company pursuant to the foregoing provisions, or otherwise, the Company has 
been advised that in the opinion of the Securities and Exchange Commission such
indemnification is against public policy as expressed in the Securities Act and
is, therefore, unenforceable.  In the event that a claim for indemnification 
against such liabilities (other than the payment by the Company of expenses 
incurred or paid by a director, officer, or controlling person of the Company 
in the successful defense of any action, suit or proceeding) is asserted by 
such director, officer, or controlling person in connection with registered 
securities, the Company will, unless in the opinion of its counsel the matter 
has been settled by controlling precedent, submit to a court of appropriate 
jurisdiction the questions whether such indemnification by it is against public
policy as expressed in the Securities Act and will be governed by the final 
adjudication of such court.









                                     27



























<PAGE>

ITEM 11.     SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

     The following table sets forth, as of October 17, 1997, certain 
information with respect to ownership of the Company's common stock by the 
record and beneficial ownership by each person known to the Company to be the 
beneficial owner of more than 5% of the Company's common stock, and each of the
Company's directors and named executive officers, and by all officers and 
directors as a group.  Unless otherwise specified, the individuals listed 
possess sole voting and investment power with respect to the shares indicated 
as owned by them.
<TABLE>
<CAPTION>
                                      Amount and
                                      Nature of 
                                      Beneficial   Title of   Percent of  
Name and Address       Position       Ownership    Class (1)    Class
________________       ________      ___________   ________   __________
<S>                    <C>           <C>           <C>        <C>
Peter S. Pelullo       Director,     5,750,000(2)  Common         27.4%
1341 N. Delaware Ave.  Chairman,
Philadelphia, PA 19125 and Chief 
                       Executive 
                       Officer

Joseph D. Tarsia       Former        1,740,063(3)  Common          8.6
1341 N. Delaware Ave.  Chairman
Philadelphia, PA 19125 and Treasurer    

Kathleen Patten                      2,374,297(4)  Common         11.7
John Patten
5 Saddlehill Road
Far Hills, NJ  07931

Jacob Der Hagopian                   1,500,000     Common          7.4
1341 N. Delaware Ave.
Philadelphia, PA 19125

John N. D'Anastasio     Director       425,000(5)  Common          2.1
4300 Haddonfield Road
Suite 111
Pennsauken, NJ  08109
       
Robert J. Sannelli      Director       425,000(6)  Common          2.1
4300 Haddonfield Road
Suite 111
Pennsauken, NJ  08109

All officers and                     6,800,000(7)   Common        31.2%    
directors as a group
(7 persons)
</TABLE>
                                         



                                   28


<PAGE>

    (1) Based upon an aggregate of 20,234,924 shares of common stock
        outstanding plus options to purchase common stock, where appropriate.

    (2) Gives effect to options to purchase 750,000 shares of common stock 
        exercisable within 60 days (see "Employment Agreements").

    (3) The Company's transfer records indicate that Mr. Tarsia owns 1,740,063 
        shares of the Company's common stock.  However, the Company has been 
        advised by Mr. Tarsia that all of his shares have been sold to Kathleen
        Patten.  Therefore, the Company has concluded that such shares are 
        beneficially owned by Ms.Patten (see Note 4 below).

    (4) Reflects Kathleen Patten's ownership of 1,740,063 shares of common
        stock as set forth in Note 3 above, as well as John Patten's ownership
        of 631,234 shares of common stock. Mr. and Mrs. Patten disclaim
        beneficial ownership of each others shares in the Company.

    (5) Gives effect to options to purchase 300,000 shares of common stock 
        exercisable within 60 days. 

    (6) Gives effect to options to purchase 300,000 shares of common stock
        exercisable within 60 days.

    (7) Gives effect to options to purchase 1,550,000 shares of common stock 
        exercisable within 60 days.

ITEM 12.     CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

     In October 1997, the Company signed a letter of intent to acquire 100 
percent of the capital stock of General Atronics Corporation ("GAC") and 100 
percent of the capital stock of General Atronics Realty Corporation ("GARC") 
not owned by GAC.  The Company's Senior Vice President and Chief Operating 
Officer, David C. Bryan, owns approximately 3% of the GAC and GARC capital 
stock the Company plans to buy.  Based on the terms of the letter of intent 
which are equally applicable to all shareholders of GAC and GARC, Mr. Bryan 
will receive approximately $180,600 and 30,100 shares of the Company's common 
stock when the acquisition is completed.  In addition, Mr. Bryan could receive 
as much as an additional $180,600 and 30,100 shares of the Company's common 
stock if GAC meets certain performance targets.  

     In July 1997, 350,000 options were granted to David Bryan, the Company's 
newly hired Senior Vice President and Chief Operating Officer.  The exercise 
price of the options is $2.00 per share, the market price on the date the COO's
employment with the Company commenced. The options vest over a three year
period and remain in effect for ten years from the date of the grant.

     In October 1997, 500,000 options were granted to Michael McAndrews, the 
Company's newly hired President. The exercise price of the options is $2.00 per
share, the market price on the date the President's employment with the Company
commenced. The options vest over a three year period and remain in effect for 
ten years from the date of the grant.


                                    29




<PAGE>

     In February 1997, the Company authorized the issuance of 250,000 stock 
options to Peter S. Pelullo, the Company's Chairman and Chief Executive 
Officer, 50,000 options to John N. D'Anastasio, a director of the Company, and 
50,000 options to Robert J. Sannelli, a director of the Company.  These options
are exercisable at a price of $2.375 per share and expire in February 2007.

     In August 1996, the Company authorized the issuance of 1,250,000 shares
of restricted common stock to Peter S. Pelullo, the Company's Chairman and 
Chief Executive Officer, in consideration for services rendered valued at 
$188,000.

     In July 1996, the Company authorized the issuance of 500,000 stock options
to Peter S. Pelullo, the Company's Chairman and Chief Executive Officer, 
250,000 options to John N. D'Anastasio, a director of the Company, and 250,000 
options to Robert J. Sannelli, a director of the Company.  These options are 
exercisable at a price of $3.875 per share and expire in July 2006.

     In July 1995, the Company authorized the issuance of an aggregate of
108,759 shares of Series C Preferred Stock to the Company's Chairman and Chief 
Executive Officer, Peter S. Pelullo.  In consideration of the issuance of such 
shares, Mr. Pelullo agreed to retire an aggregate of $543,795 in accrued 
compensation due him.  Pursuant to the terms of the Series C Preferred Stock 
agreement, the Company redeemed an aggregate of 11,300 shares of Series C 
Preferred Stock at a price of $5.00 per share through the payment to Mr. 
Pelullo of a total of $56,500 during the year ended July 31, 1996.  The 
remaining 97,459 shares of Series C Preferred Stock were redeemed by the 
Company at a price of $5.50 per share through the payment to Mr. Pelullo of a 
total of $536,019 during the year ended July 31, 1997, of which $48,726 was 
reflected as additional compensation to Mr. Pelullo.  

     The Company entered into a consulting agreement ("Consulting Agreement") 
for a period of three years commencing April 1, 1993 with Jacob Der Hagopian 
(the "Consultant").  The Consultant agreed to provide consulting services to 
the Company in the areas of general corporate finance, business plan 
development, corporate reorganization, communication, and negotiations. 
Pursuant to the Consulting Agreement, the Company issued 350,000 shares of its 
common stock as consideration for Mr. Der Hagopian's entry into the Consulting 
Agreement and agreed to pay a weekly retainer of $2,500 subject to increases 
based upon future financing and/or revenues.  As of August 1, 1994, the weekly 
retainer payable to Mr. Der Hagopian was increased to $4,000.  The Company has 
also agreed to reimburse the Consultant for any out of pocket expenses.  The 
Consulting Agreement may be terminated for cause or amended upon the mutual 
written consent of both parties.  If the Company elects to terminate the 
Agreement, any money due or required to be paid shall be accelerated and 
payable upon termination.  In August 1996, the Company's Board of Directors 
authorized a three year extension of the Consulting Agreement and a $200 per 
week increase in Mr. Der Hagopian's consulting fee to $4,200 per week 
commencing upon receipt by the Company of substantial additional equity, which 
the Company received.  In April 1997, the Board of Directors authorized an $800
per week increase in Mr. Der Hagopian's consulting fee to $5,000 per week.
Total consulting fees paid to Mr. Der Hagopian were $232,000 and $60,000 during
the year ended July 31, 1997 and during the period from August 1, 1997 to
October 29, 1997, respectively.



                                    30

<PAGE>
     In April 1995, the Company acquired 80% of Global Telecommunications of 
Delaware, Inc. ("Global").  At the time of the acquisition, Global was a newly 
formed company which had no operating revenues, and its assets consisted 
principally of technology and design rights associated with a digital voice 
pager system.  The Company acquired its interest in Global from Global 
Telecommunications, Inc., a New Jersey company owned by Michael Yang, in 
exchange for 100,000 shares of the Company's common stock and the Company's 
agreement to issue up to an additional 300,000 shares of the Company's common 
stock subject to Global achieving specified sales and revenue performance 
objectives over a five year period.  The Global purchase price was negotiated 
on an arms length basis after considering various factors including projections
presented to the Company by Mr. Yang regarding potential results of Global's 
operations once its products were fully developed and marketed.  Prior to 
August 1997, Michael Yang served as Global's President pursuant to a the terms 
of a consulting agreement that paid him $8,000 per month.  Mr. Yang's position 
as President of Global and his consulting agreement with Global were terminated
in August 1997.  As a result, Mr. Yang's relationship to the Company consists 
only of his ownership (through Global Telecommunications, Inc.) of a 20% 
interest in Global and 100,000 shares of the Company's restricted common stock.

ITEM 13.     EXHIBITS AND REPORTS ON FORM 8-K

     The following exhibits marked with an * are filed herewith.  All other
exhibits were previously filed by the Company:

3(i)  Articles of Incorporation (a)
3(ii) Bylaws (a)
10.1  Amendment to Employment Agreement between Registrant and Joseph  
       Tarsia (b)
10.2  Form of Agreement between Global Telecommunications of Delaware, Inc.
       and Guangdong Radio Station - Pearl River Stock Market Radio (c)
10.3  Employment Agreement with James M. Boyd, Jr. *
10.4  Employment Agreement with David C. Bryan *
10.5  Employment Agreement with Michael P. McAndrews *
10.6  Separation Agreement between the Registrant and Joseph Tarsia (a)
21.1  Subsidiaries of the Registrant
      (i) Global Telecommunications of Delaware, Inc. (80% owned - 
          incorporated in Delaware))
27.1  Financial data schedule *
 
Incorporated by reference from the Company's (a) Form S-18 Registration
Statement on Form S-18 (File No. 32881-NY), (b) Form S-1 Registration Statement
on Form S-1 (File No. 33-90344), (c) Reports on Form 8-K dated June 12, 1996,
and July 9, 1996.

Reports on Form 8-K

(a) The Company filed a Form 8-K on November 4, 1996.  The report 
    disclosed in Item 5,  agreements entered with  radio stations in
    China pursuant to which the radio stations agreed to purchase 16,000 
    SCA Radios.
        
(b) The Company filed a Form 8-K on December 18, 1996.  The report
    disclosed in Item 5 that the Company entered into a corporate 
    financing agreement with Pennsylvania Merchant Group, Ltd. ("PMG")
    under which PMG will provide strategic advisory and corporate finance
    services to the Company for a minimum of one year. 
      
                                     31
<PAGE>
                             SIGNATURES
                             __________

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

                                   SIGMA ALPHA GROUP, LTD.



                                   By:  s/Peter S. Pelullo      
                                        _____________________ 
                                        Peter S. Pelullo
                                        Chief Executive Officer 

Dated: July 23, 1998

     In accordance with Section 13 or 15(d) of the Exchange Act, this report
has been signed below by the following person on behalf of the registrant and
in the capacities and on the dates indicated.

<TABLE>
<CAPTION>

<S>                           <C>                           <C>
Signature                     Title                         Date
_________                     _____                         ____

s/Peter S. Pelullo            Chief Executive Officer       July 23, 1998
Peter S. Pelullo              and Chairman of the Board

s/James M. Boyd, Jr.          Vice President of Finance     July 23, 1998
James M. Boyd, Jr.            and Chief Accounting
                              Officer

s/John N. D'Anastasio         Director                      July 23, 1998
John N. D'Anastasio

s/Robert J. Sannelli          Director                      July 23, 1998
Robert J. Sannelli

</TABLE>









                                     32