SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                   FORM 10-KSB

(Mark One)

                 [X] ANNUAL REPORT UNDER SECTION 13 OR 15(d) OF
               THE SECURITIES EXCHANGE ACT OF 1934 [Fee Required]
                  For the Fiscal Year Ended December 31, 1996

                 [ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d)
            OF THE SECURITIES EXCHANGE ACT OF 1934 [No Fee Required]

                         Commission file number 0-20743

                             OPEN PLAN SYSTEMS, INC.
                 (Name of Small Business Issuer in Its Charter)

                 Virginia                               54-1515256
       (State or Other Jurisdiction                  (I.R.S. Employer
    of Incorporation or Organization)               Identification No.)

     4299 Carolina Avenue, Building C                      23222
            Richmond, Virginia                          (Zip Code)
 (Address of Principal Executive Offices)

                                 (804) 228-5600
                (Issuer's Telephone Number, Including Area Code)

           Securities registered under Section 12(b) of the Act: None.

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

                           Common Stock, no par value

         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 there is no  disclosure  of  delinquent  filers in response to
Item 405 of  Regulation  S-B contained in this form,  and no disclosure  will be
contained,  to the  best of  registrant's  knowledge,  in  definitive  proxy  or
information statements incorporated by reference in Part III of this Form 10-KSB
or any amendment to this Form 10-KSB. [X]

         The issuer's  revenues for the fiscal year ended December 31, 1996 were
$22,398,000.

         The  aggregate market value of the Common Stock held by  non-affiliates
of the Company as of March 14, 1997 was $16,994,079.

         The number of shares of Common Stock  outstanding as of March 14, 1997,
was 4,472,433.

         Transitional Small Business Disclosure Format (check one): Yes___ No_X_

                       DOCUMENTS INCORPORATED BY REFERENCE

         Portions  of the  Company's  definitive  Proxy  Statement  for its 1997
Annual Meeting of  Shareholders  (to be filed) is incorporated by reference into
Part III of this Form 10-KSB.


<PAGE>

                                TABLE OF CONTENTS

<TABLE>
<CAPTION>

                                     PART I

                                                                                                          Page
                                                                                                          ----

<S>               <C>                                                                                       <C>
Item 1            Description of Business.................................................................  1

Item 2            Description of Property.................................................................  7

Item 3.           Legal Proceedings.......................................................................  7

Item 4.           Submission of Matters to a Vote of Security Holders.....................................  7


                                                      PART II

Item 5.           Market for Common Equity and Related Stockholder Matters................................  8

Item 6.           Management's Discussion and Analysis or Plan of Operation...............................  9

Item 7.           Financial Statements.................................................................... 14

Item 8.           Changes in and Disagreements with Accountants
                  on Accounting and Financial Disclosure.................................................. 29


                                                     PART III

Item 9.           Directors, Executive Officers, Promoters and Control Persons;
                  Compliance with Section 16(a) of the Exchange Act....................................... 29

Item 10.          Executive Compensation.................................................................. 29

Item 11.          Security Ownership of Certain Beneficial Owners and Management.......................... 29

Item 12.          Certain Relationships and Related Transactions.......................................... 29

Item 13.          Exhibits, List and Reports on Form 8-K.................................................. 30

</TABLE>


<PAGE>
                                     PART I

Item 1.           Description of Business

         Open Plan Systems, Inc. (the "Company") was incorporated under the laws
of the  Commonwealth  of Virginia on September 11, 1989.  The Company  restores,
remanufactures,  manufactures  and markets  modular  office Work  Stations.  The
Company operates remanufacturing  facilities in Richmond,  Virginia and Lansing,
Michigan,  and  manufactures  its own  line of Work  Stations  at its  Richmond,
Virginia facility.

The Office Furniture Industry

         The trend in the office  furniture  industry  for the past twenty years
has been away from a simple desk and file design to a sophisticated Work Station
design because of the  flexibility  and  productivity  advantages that such Work
Stations provide.  Work Stations have become more  sophisticated as the usage of
computers and telecommunications equipment has increased in modern offices.

         The Company competes in the office furniture industry with national and
regional  manufacturers  of new office  furniture  and with  local and  regional
remanufacturers of used office furniture. Steelcase, Inc. ("Steelcase"),  Herman
Miller,  Inc. ("Herman  Miller") and Haworth,  Inc.  ("Haworth")  constitute the
dominant manufacturers,  collectively  representing  approximately two-thirds of
the installed base of Work Stations.  Each of these  manufacturers has created a
unique system for  connecting  panels,  power and  telecommunications  raceways,
resulting  in  virtually  no  interchangeability  between  products of different
manufacturers.  Each  manufacturer's  Work Stations  provide for several hundred
variations.  In  recent  years,  more  sophisticated  telecommunications,  power
distribution  and wire  management  elements have been added to Work Stations as
computer   usage  has  increased  in  offices.   With  respect  to   independent
remanufacturers  of used  Work  Stations,  the  Company  believes  that the vast
majority of such  remanufacturers  are local operations serving a single city or
metropolitan area from a single sales office.

         Since the  mid-1980s,  end-users  with  existing Work Stations have had
four primary options when  considering  changes in their existing Work Stations:
(i) acquire upgraded power  components,  new fabric and panel trim from the Work
Station  manufacturer  to be retrofitted  on existing Work Stations,  frequently
during  installation  in a new  facility;  (ii) acquire new Work Stations from a
manufacturer or dealer while  disposing of existing  furniture and Work Stations
to a broker  or  remanufacturing  company;  (iii)  acquire  remanufactured  Work
Stations  while  disposing of the old  furniture and Work Stations to brokers or
the remanufacturer; and (iv) acquire "as is" Work Stations.

         The business of  remanufacturing  Work Stations has grown steadily over
the past several years.  The Company  believes this growth is principally due to
the greater availability of high quality  remanufactured Work Stations at prices
substantially  below  manufacturers'  retail list prices for new Work  Stations,
thereby providing  end-users with substantial value. In addition,  the growth of
the remanufacturing  business has been assisted by the increased availability of
used Work  Stations for  remanufacturing.  Used Work  Stations  have become more
readily  available in recent years due to an  increased  base of installed  Work
Stations  and  corporate  events  such as mergers,  acquisitions,  divestitures,
downsizings and relocations.  The adoption of recycling  programs or policies by
businesses  has  also  been a major  factor  leading  to  increased  demand  for
remanufactured Work Stations.

Overview of the Company's Operations

         The Company's  primary  business to date has been the  remanufacture of
modular  office Work  Stations.  The Company  purchases  used Work Stations from
end-users,  brokers  and  dealers  and  transports  the  Work  Stations  to  its
facilities in Richmond,  Virginia and Lansing,  Michigan.  The Work Stations are
disassembled,  inventoried  by  component  parts and stored.  The  Company  then
restores  the used Work  Stations  through the  remanufacturing  process to meet
customers'   needs.   Remanufacturing   usually  includes   sanding,   painting,
laminating,  reupholstering and updating electrical  components.  In addition to
the  remanufacture  of  used  Work  Stations,  the  Company  in  1996  began  to
manufacture  its own line of new Work  Stations as part of its growth  strategy.
See "- Products" below. As a result of its increased 

<PAGE>


manufacturing   capacity,   the  Company  also  has  increased  its  ability  to
manufacture new component  parts for  installation  in its  remanufactured  Work
Stations.

         The Company's  design staff works with customers to maximize  available
office space through  customized space plans.  Customers are able to choose from
among  several  colors of laminate and paint and over 1,000  different  fabrics.
After the initial sales call, the Company  responds to the customer's needs with
a proposal which  includes a computer  aided design of the space,  the number of
Work Stations and the cost,  typically within 72 hours. Once a purchase order is
received,  the fabric selected by the customer is applied to the panels, and the
various  components of the Work  Stations are  assembled for shipping.  The Work
Stations  sold  by  the  Company's  direct  sales  force  are  installed  at the
customer's offices by the Company's  employees or by approved outside installers
giving  the  Company  control  over the  entire  process.  The  Company's  large
inventory of disassembled  component  parts permits  shipping  generally  within
three weeks of receiving a purchase order. The Company believes that its ability
to provide high quality Work  Stations at  discounted  prices,  coupled with its
emphasis  on superior  customer  service  through  its design  staff and Company
trained  or  approved  installers,   gives  it  a  competitive   advantage  over
manufacturers and other remanufacturers of Work Stations.

         The  Company's  Richmond,  Virginia  and Lansing,  Michigan  facilities
include all of the equipment  required to remanufacture  Work Stations including
closed and open painting and drying booths as well as sanding,  woodworking  and
reupholstering equipment.  Plant layout has been designed to facilitate the most
efficient flow of materials and streamline the  remanufacturing  process through
disassembly,  storage,  remanufacturing  and shipping.  Quality  control for the
remanufactured  products  occurs at various  stages  during the  remanufacturing
process  including the final quality control  verifications at shipment and upon
installation.  The  Company's  own  line  of  private  label  Work  Stations  is
manufactured in its Richmond, Virginia, facility. The Company no longer conducts
limited finishing and assembly operations at its facility in Atlanta, Georgia.

         Open Plan sells  Work  Stations  primarily  through a network of twelve
Company-owned  direct sales offices. The Company believes that each of the fifty
largest  metropolitan areas of the United States will support a sales office. In
marketing  its  products,  the Company  utilizes  several  innovative  programs,
including its asset  banking  program,  which allows  customers to trade-in used
Work Stations in exchange for a credit towards future purchases.

Products

         The Company's principal product to date has been remanufactured  Herman
Miller Work Stations.  However,  with the October 1996 acquisition of Immaculate
Eagle, Inc., d/b/a TFM Remanufactured Office Furniture ("TFM"), a privately-held
regional manufacturer of Work Stations based in Lansing,  Michigan,  the Company
is now able to  remanufacture  panel systems  produced by Haworth,  the nation's
third largest manufacturer of new office Work Stations.

         The Company  believes that Work Stations offer  significant  advantages
over the traditional  desk,  free-standing  file and permanent  drywall dividers
common to historical  office layouts.  Work Stations enable  businesses to house
more people in a given space than previously was possible  because Work Stations
combine moveable panels, work surfaces,  storage units,  lighting and electrical
distribution  combined  into a single  integrated  unit.  The end result is less
square feet of office space per worker and, therefore,  lower facility costs per
employee.

         Work Stations often are acoustically treated to provide  conversational
privacy  required by closer  quarters.  Because Work Stations  usually are lower
than ceiling height, lighting, heating, ventilation and air conditioning are not
confined to individual  spaces,  allowing  distribution among more workers which
reduces  building and operating  costs per employee.  Work Stations  incorporate
electrical  circuitry  necessary  to operate  computers  and  telecommunications
equipment.  The Company's Work Stations meet the safety standards established by
Underwriters  Laboratories.  The  Company  believes  it is  one  of  only  a few
remanufacturers  whose Work  Station  components  are listed  with  Underwriters
Laboratories.

         Manufacturers   and   remanufacturers   customize   Work   Stations  to
accommodate  specific job functions.  Each manufacturer offers its Work Stations
with or without power access in a variety of panel 

                                      -2-
<PAGE>

heights,  widths,  paint  colors and  fabrics.  Work  surfaces,  drawer and file
pedestals,  storage components and accessories are offered with various size and
finish options.

         The core of the Work  Station is a panel two inches  thick with  widths
varying  from 12 inches to 60 inches.  Heights vary from 34 inches to 96 inches.
The panel  frame may be covered  with a laminated  surface or, most  frequently,
fabric over an acoustical  batting to which removable,  slotted steel side rails
and top caps are  attached to  accommodate  the  customized  interconnection  of
panels and the hanging of work surfaces or other components.  Electrical outlets
and space for telephone and computer  cables are provided by removable  raceways
of metal and plastic attached at the base of the panel.

         The Company currently offers office chairs,  desks and other case goods
from various manufacturers.  In addition, with the June 1996 purchase of certain
assets from Birum Corporation,  a Michigan City, Indiana manufacturer of modular
office products, the Company has introduced its own  newly-manufactured  private
label Work Stations which it intends to market and sell through  selected office
products dealers.

Inventory

         The number of installed  Work Stations has increased  steadily over the
past twenty years and is now believed to exceed 19 million. The gradual aging of
this installed base of Work Stations has resulted in the increased  availability
of used Work  Stations  for  remanufacturing.  The  Company  continuously  seeks
opportunities  to  purchase  used Work  Stations  throughout  the United  States
through  competitive bids or private  negotiations  with end-users,  brokers and
dealers.

         Manufacturers of new Work Stations have developed  trade-in programs to
assist their dealers in encouraging their customers to purchase the most current
products.  Trade-ins  also have been used to entice  customers  of  dealers  and
manufacturers to trade-in a competitor's  Work Stations for new Work Stations of
the manufacturer.  While each manufacturer has a slightly  different approach to
the trade-in market, each manufacturer  frequently contacts a list of brokers or
remanufacturers,  such as the Company, to solicit the highest bid for the entire
inventory.

         At the time the Company purchases  inventory,  it disassembles the Work
Stations and ships the  disassembled  Work Stations to its facilities  where the
Company  determines  whether the parts should be cleaned and sold as part of its
"as is"  sales  program  or  remanufactured  and  stored as  inventory  and sold
thereafter.  The Company strives to ship its customers' orders in three weeks or
less.  The  Company  also has the  ability to  purchase or produce new parts and
accessories  which are in short  supply in the used  furniture  market,  thereby
eliminating  the need to purchase  additional  Work Stations for these  specific
parts. The Company believes its ability to  opportunistically  acquire used Work
Stations  at  attractive  prices  and  hold  them  for  future  sale  gives it a
competitive  advantage  over other  remanufacturers  with less capital to do the
same.

         The Company  utilizes a  computerized  inventory  control  system which
serves its sales,  production,  shipping and  accounting  functions.  The system
enables the Company to continually  monitor its inventory of component parts, to
determine its needs for additional purchases of used Work Stations, to track its
work in process and to facilitate  the prompt  delivery of  remanufactured  Work
Stations to its customers.

Distribution

         Sales Offices.  The Company currently  operates twelve sales offices in
the  metropolitan  areas  of  Richmond,   Washington  D.C./Baltimore,   Atlanta,
Charlotte, Nashville, Chicago, New York, Philadelphia, Raleigh, Norfolk, Lansing
and Detroit.  The Company  believes  that  marketing and  distributing  its Work
Stations through a direct sales force located in geographically  dispersed sales
offices  gives  it a  competitive  advantage  over  independent  remanufacturing
competitors   who  are  typically   local   companies  with  limited  sales  and
distribution capacity outside of their immediate market area.  Approximately 80%
of Open Plan's sales  historically  have been made to end-users by the Company's
own sales representatives.  The Company intends to open additional sales offices
as conditions permit.

                                      -3-
<PAGE>

         Marketing  and  distributing  its Work  Stations  through its own sales
staff allows the Company to eliminate  the costs and  additional  price  mark-up
associated  with  wholesale  distribution,  as well as  enabling  the Company to
retain direct control and oversight of its products and the selling  process.  A
direct sales force also permits the Company to deliver  quality  service to each
customer through its design and installation programs.

         Dealer  Network.  In  addition  to its own  sales  staff,  the  Company
maintains a dealer network in those markets that are not sufficiently  developed
to support a sales  office or in larger  markets  where the Company does not yet
have a sales  office.  The  dealer  network  allows the  Company to market  Work
Stations on a cost-effective basis to a large number of businesses which may not
be reached by the Company's  sales  representatives.  Approximately  20% of Open
Plan's sales  historically have been made through dealers.  The Company believes
that its limited dealer network  complements its strategy of expanding  revenues
through its own sales offices.  All dealer  agreements are non-exclusive and may
be  terminated  at any time,  which gives the Company the ability to establish a
sales office as soon as a market becomes capable of supporting an office.

         "As Is" Sales. A small but  profitable  portion of Open Plan's sales is
made to  brokers,  end-users  and  others  who buy used Work  Stations  from the
Company  on an "as is"  basis.  The  Company's  "as  is"  program  involves  the
selective  purchase of used Work Stations in good  condition that do not require
substantial repair or other alteration.  The Company sells "as is" Work Stations
at prices that are typically 20% of the retail list price for new Work Stations.
The "as is" program appeals to customers  seeking sizable  quantities of quality
Work Stations at "budget" prices.

Sales and Marketing

         General.  The Company's sales and marketing  strategy relies  primarily
upon producing  quality  products at competitive  prices and providing  superior
customer service. Each sales office advertises through direct mail,  billboards,
newspapers,   business  magazines  and  journals.  Direct  mailing  to  targeted
professional  groups as well as mailings prior to and following trade shows have
resulted in large sales to several new  customers.  The Company often uses booth
displays at trade  shows for  national  organizations  of  purchasing  managers,
facility managers, interior designers, architects and local business groups. The
Company is firmly committed to advertising and constantly  re-evaluates the most
efficient means of reaching prospective customers.

         The Company's  marketing  also  emphasizes its commitment to recycling.
Through its remanufacturing process, the Company recycles several million pounds
of office  systems  furniture  each year that might  otherwise  be  deposited in
landfills.  Some  companies  have adopted  recycling  policies or programs  that
require those businesses to purchase  recycled  products in varying  quantities.
Because the Company's  remanufactured Work Stations are a recycled product,  the
Company may have a marketing advantage over manufacturers of new Work Stations.

         Asset Banking.  The Company developed its asset banking program in 1994
as a means to offer additional  services to larger middle market and Fortune 500
businesses who  reconfigure,  dismantle and warehouse  large  quantities of Work
Stations  as an ongoing  part of their  operations.  The asset  banking  program
allows  businesses to trade-in used Work Stations by "depositing"  them with the
Company in  exchange  for a "credit"  based on current  list  prices of new Work
Stations toward future purchases of the Company's  remanufactured Work Stations.
Work Stations "deposited" by customers become part of the Company's inventory of
used  Work  Stations  that  can be  remanufactured  and are not  expected  to be
returned to the customer.  When a business  with a "credit"  chooses to purchase
Work  Stations at  then-prevailing  prices,  the customer can make a complete or
partial "withdrawal" from its account to pay for the Work Stations. The customer
has the option to receive  cash  rather  than a "credit"  toward a Work  Station
purchase. The effect of the program is to make a customer's used Work Stations a
renewable asset. The program  eliminates the customer's  inventory,  storage and
maintenance  costs  for  Work  Stations  not in  use,  while  at the  same  time
positioning the Company for a future sale and increasing the Company's inventory
which can be  immediately  remanufactured  and sold.  The Company also  provides
value-added services,  such as design and project management,  without charge to
the  customer  to enhance  the  attractiveness  of the  program.  The Company is
currently able to offer both Herman Miller and Haworth Work Stations as a 


                                      -4-
<PAGE>

result of the Company's recent expansion into the Haworth product line,  thereby
expanding the availability and attractiveness of the program to more prospective
purchasers of Work Stations.

         Rental Program.  The Company's  rental program offers a  cost-effective
alternative  to  ownership of Work  Stations  which the Company  believes  could
become a significant source of revenue in the future.  Under the rental program,
the Company rents Work Stations for a minimum term of six months.  Rates charged
by the Company vary with the term of the rental, with higher rates being charged
for terms of less than one year.  Rent  payments  typically are due monthly from
customers  during the term of the  rental.  Upon  expiration  of the term of the
rental, the Work Stations are returned to the Company and can be rented again or
remanufactured  and sold for an  additional  profit.  The  rental  program is an
attractive alternative for those customers with capital spending constraints. In
addition,  customers who wish to evaluate long-term  furniture  requirements are
able to defer a  commitment  to  purchase  Work  Stations  while  meeting  their
short-term requirements for office furniture. To date,  substantially all of the
Company's  rentals have been of "as is" Work  Stations,  although the Company is
planning  to expand its  rentals of  remanufactured  Work  Stations.  The rental
program has not contributed  significantly to the Company's past revenues due to
the limited number of rentals which have occurred to date under the program.

         Government  Services  Administration.   The  United  States  Government
Services  Administration ("GSA") in 1996 approved the Company's inclusion on the
New  Introductory  Schedule as a distributor  of Work Stations and other related
products and services to the federal government. This has enabled the Company to
sell its  remanufactured  Work  Stations  to the federal  government  as well as
develop a previously  untapped  source of supply  through  trade-ins  and "asset
banking." The Company  believes that its asset  banking  program  should be very
attractive to the  government  due to the large  inventories of excess and aging
Work Stations held by the government.

Customers

         The  Company's  customers  range from small  businesses  to Fortune 500
companies.  The  typical  size of a  customer  order  is ten  Work  Stations  or
approximately  $25,000.  Profit  margins on smaller orders by small to mid-sized
customers  are greater  than on larger  orders by Fortune 500  companies  due to
volume discounts provided by manufacturers of new Work Stations on large orders,
which the Company is required to meet to compete for such orders. The Company is
not  dependent  upon any single  customer or any single group of customers for a
significant  portion of its sales. In 1996, the largest  customer  accounted for
less than 6% of sales.  The loss of any one  customer  would not have a material
adverse effect on the Company.

Competition

         The Company  experiences  intense  competition  in both the purchase of
used Work Stations and the sale of remanufactured and "as is" Work Stations.  In
purchasing used Work Stations, the Company competes with manufacturers, dealers,
brokers and other remanufacturers.  The competition between  remanufacturers and
either  manufacturers  or  dealers  generally  takes  place in  connection  with
trade-ins  by end-users of used Work  Stations  for new Work  Stations.  Brokers
typically  purchase  used Work  Stations for resale to end-users  and  customers
which may include the Company,  while other  remanufacturers  generally purchase
Work Stations for their own remanufacturing activities.

         The Company  competes with  manufacturers,  dealers,  brokers and other
remanufacturers  in the sale of its newly  manufactured,  remanufactured and "as
is" Work Stations.  Competition is primarily based upon price,  design,  quality
and  customer  service.  Certain  manufacturers,   such  as  Herman  Miller  and
Steelcase,  have  operations  that  remanufacture  their  own brand of used Work
Stations for resale to customers. These manufacturers and their dealers are able
to offer both new and  remanufactured  Work Stations to  customers.  The Company
believes  it has a  competitive  advantage  over  such  manufacturers  and other
remanufacturers due to its innovative  marketing  programs,  direct sales force,
discount pricing and customer service. However, manufacturers and dealers of new
and remanufactured Work Stations have certain competitive  advantages  including
established distribution channels and marketing programs,  substantial financial
strength, long-term customers, ready access to component parts, and availability
of used Work Stations through  trade-ins.  Manufacturers  also can sell new Work
Stations at very  substantial  discounts  which  reduces the  Company's  pricing
advantage. Such deeply discounted sales, however,  

                                      -5-
<PAGE>


generally  occur only for very large orders which often provide  remanufacturers
such as the  Company  the  opportunity  to acquire  used Work  Stations  of such
purchasers at very attractive prices.

         The Company believes it is the largest  independent  remanufacturer  of
Work  Stations  in the  United  States  based on  gross  revenues.  Unlike  most
independent  remanufacturers,  which are typically  local  operations  serving a
single city or metropolitan area from a single sales office, the Company is able
to compete  effectively in many markets through its distribution  channels.  The
Company also believes that its  remanufacturing  services are more comprehensive
than the services provided by most other  remanufacturers.  Many remanufacturers
provide minor repair services, but lack the personnel,  equipment and facilities
necessary to completely remanufacture Work Stations. The Company's manufacturing
facilities  include  all of the  equipment  required  to produce  new as well as
remanufactured Work Stations including sanding,  painting,  drying,  woodworking
and reupholstering equipment, and parts manufacturing equipment.

Intellectual Property

         The  Company  is the owner of a service  mark for "Open  Plan  Systems"
registered with the United States Patent and Trademark  Office.  The Company has
no trademarks or patents.

         Original  equipment  manufacturers have obtained United States' patents
on certain  component parts and design and  manufacturing  processes  associated
with  their own Work  Stations.  Management  of the  Company  believes  that the
remanufacturing of such Work Stations does not constitute an infringement of any
patents held by these  manufacturers.  However,  there can be no assurance  that
infringement  claims will not be asserted  against the  Company.  If such claims
were  asserted,  the Company  could incur  significant  costs and  diversion  of
resources defending such claims and, in the event the Company did not prevail in
its  defense,  the Company  could incur  substantial  damages  that could have a
material  adverse  effect on the  Company's  financial  condition and results of
operations.

         The Company  manufactures  new component  parts that it cannot purchase
through the used Work Station  market.  In addition,  the Company has introduced
newly  manufactured  private  label Work  Stations to be sold through a national
office  products  retailer.  The  Company  intends  to review  existing  patents
applicable  to  Work  Stations  in the  ordinary  course  of  manufacturing  new
component parts and developing its own product line.

Seasonality and Backlog

         Historically,  the Company's  sales volume has been lower in the spring
and summer months and higher in the fall and winter months. The Company believes
that this seasonal increase in sales volume,  which generally coincides with the
first and fourth  quarters of the Company's  fiscal year, is due to the tendency
of customers to expend funds budgeted for office  furniture  either early in the
calendar  year  or  after  the  summer  vacation  season.  Because  the  Company
recognizes revenues upon shipment and typically ships Work Stations within three
weeks of an order,  a  substantial  portion  of the  Company's  revenue  in each
quarter  results  from orders  placed by  customers  during that  quarter.  As a
result,  the  Company's  revenues  and profits are  difficult to predict and may
fluctuate  from  quarter to  quarter.  The Company  typically  does not have any
significant  backlog of customer  orders  because it  generally  ships  products
within three weeks of receipt of an order.

Employees

         As of December  31,  1996,  the  Company  had 249 full time  employees,
consisting of 121 manufacturing and remanufacturing personnel, 9 sales managers,
47 salespersons,  25 installers,  37 office  administrators,  telemarketers  and
designers  and 10  management  employees.  The  Company  also  had 20 part  time
employees  consisting  of  1  telemarketer,   3  office  administrators  and  16
production personnel. The Company believes that its continued success depends on
its  ability  to attract  and retain  highly  qualified  personnel.  None of the
Company's  employees are covered by a collective  bargaining  agreement with the
Company. The executive officers and substantially all of the salespersons of the
Company have agreed that they will not disclose certain proprietary  information
of the  Company,  and upon  termination,  will not 

                                      -6-
<PAGE>

solicit any  customer of the Company for two years and will not compete with the
Company  for one year.  The  Company  has never  suffered  a work  stoppage  and
considers its relations with employees to be good.

Government Regulation

         The Company's operations are subject to a variety of federal, state and
local  environmental  laws and  regulations  including  those  which  limit  the
discharge,  storage, handling and disposal of hazardous materials. The Company's
principal  environmental  concerns relate to the handling and disposal of paints
and solvents.  Management  believes  that the Company is in material  compliance
with applicable federal, state and local environmental  regulations.  Compliance
with  these  regulations  has not in the past  had any  material  effect  on the
Company's earnings,  capital expenditures or competitive position;  however, the
effect  of such  compliance  in the  future  cannot be  determined.  Regulations
currently  proposed  under  the  Clean Air Act  Amendments  of 1990 may  require
reduced emissions of volatile organic compounds  including emissions from paints
and solvents used by the Company in the  remanufacturing  process.  As a result,
the  Company  may be  required  to  institute  changes  in  its  remanufacturing
processes  in order  to  comply  with  these  reduced  emission  standards.  The
furniture industry and its suppliers are attempting to develop water-based paint
and  finishing  materials  to  replace  commonly-used  organic-based  paints and
finishes which are a major source of regulated emissions.  The Company cannot at
this time estimate the impact of these new standards on the Company's operations
and future capital expenditure requirements, or the cost of compliance.

         The  Company's  operations  are also  governed by laws and  regulations
relating to work-place  safety and worker health,  principally the  Occupational
Safety and Health Act and  accompanying  regulations  and various state laws and
regulations.  The Company does not believe that future  compliance  with current
laws and  regulations  will have a  material  adverse  effect  on its  financial
condition or results of operations.

Insurance

         The Company maintains liability insurance policies covering a number of
risks,   including   business   interruption,    property,   commercial   crime,
comprehensive   general  liability  and  workers   compensation  and  employer's
liability  insurance.  The  Company  believes  that its  insurance  coverage  is
adequate.  In  addition,  the Company has  obtained  "key-man"  insurance in the
amount of  $3,000,000  on the life of Mr.  Fischer  naming  the  Company as sole
beneficiary.

Item 2.           Description of Property

         The Company  leases  180,000  square  feet of space at its  facility in
Richmond,  Virginia and 107,000 square feet of space at its facility in Lansing,
Michigan. The Richmond lease expires in July 1999, subject to an option to renew
for an additional  three-year  term. The Lansing lease expires in December 1998.
The Company also has numerous other leases for its sales offices  throughout the
states  in  which  it  operates.  The  Company  owns  substantially  all  of its
equipment,  including office and manufacturing  equipment.  The Company believes
that its properties are maintained in good operating  condition and are suitable
for its purposes.

Item 3.           Legal Proceedings

         There are no material  pending legal  proceedings,  other than ordinary
routine  litigation  incidental to the business,  or any proceedings known to be
contemplated  by governmental  authorities,  to which Open Plan is a party or of
which any of its property is the subject.

Item 4.           Submission of Matters to a Vote of Security Holders

         No matters  were  submitted  to a vote of security  holders  during the
fourth quarter of the fiscal year covered by this report.

                                      -7-
<PAGE>



                                     PART II


Item 5.           Market for Common Equity and Related Stockholder Matters

         Market for Common Stock.  The  Company's  Common Stock is listed on the
Nasdaq National  Market under the symbol "PLAN." The following table shows,  for
the periods  indicated,  the high and low sales  prices per share for the Common
Stock as reported by the Nasdaq National Market.

Calendar Year                                                High        Low
-------------                                                ----        ---
   1996
         Second Quarter (from May 31, 1996) (1).............$13.00     $11.13
         Third Quarter......................................$12.00     $ 8.75
         Fourth Quarter.....................................$10.25     $ 8.25
   1997
         First Quarter (through March 14, 1997).............$ 9.25     $ 5.00
----------

(1)      The Company's  Common Stock began trading on the Nasdaq National Market
         on May 31,  1996,  at an initial  public  offering  price of $10.00 per
         share. Prior to that date, there was no established  trading market for
         the Common Stock.

         As of March 14, 1997, there were approximately 111 holders of record of
the Company's Common Stock.

         Dividend Policy.  Prior to the Company's initial public offering in May
1996,  the  Company  elected to be treated as an S  Corporation  for federal and
state income tax purposes.  As a result, the Company's taxable net earnings were
taxed as income to the Company's  shareholders in proportion to their individual
stockholdings.   Commencing  in  1992,   the  Company  made   distributions   to
shareholders  to enable them to pay the federal and state  income taxes on their
pro rata share of the Company's S  Corporation  earnings and to provide a return
on their  investment.  In 1995 and  1996,  the  Company  made  distributions  to
shareholders   in  the  amounts  of   approximately   $947,000  and  $4,350,000,
respectively.  The amount distributed in 1996 included  $1,131,000 in March 1996
and $3,219,000 as a final S Corporation  distribution in June 1996,  payable out
of the net proceeds of the offering.

         Since the  Company's  initial  public  offering,  the  Company  has not
declared or paid any cash dividends or distributions on its capital stock (other
than  the  final  S  Corporation  distribution  described  above).  The  Company
currently intends to retain earnings of the Company to support operations and to
finance expansion and therefore does not anticipate paying cash dividends on the
Common Stock in the  foreseeable  future.  The payment of cash  dividends in the
future will depend upon such factors as earnings levels,  capital  requirements,
the Company's financial condition and other factors deemed relevant by the Board
of Directors.

         Sales of  Unregistered  Securities.  On October 1,  1996,  the  Company
acquired all of the outstanding  capital stock of TFM from its two  shareholders
for a purchase  price  consisting of $4,033,000 in cash  (including  transaction
costs of $125,000)  and 87,500  shares of Common Stock with an agreed upon value
of  $1,312,500  or $15.00 per share.  The offer and sale of the 87,500 shares of
Common Stock to the two shareholders of the acquired business in connection with
the  transaction  was made by the Company in reliance  upon  Section 4(2) of the
Securities Act of 1933, as amended,  and the rules and  regulations  thereunder.
For  additional  information,  see the Company's Form 8-K filed October 16, 1996
reporting the acquisition and Items 1 and 13(b) of this report.


                                      -8-
<PAGE>



Item 6.           Management's Discussion and Analysis or Plan of Operation

1996 Compared to 1995

         Net Sales.  Net sales for the year ended December 31, 1996 increased to
$22.4  million  from $15.5  million  in the year ended  December  31,  1995,  an
increase of 44.5%.  The increase  was  primarily  due to increased  sales in the
Company's branch sales offices due to increased market share in existing markets
and additional sales in new markets. In addition, the purchase of certain assets
from the Birum  Corporation  ("Birum")  in the  second  quarter  of 1996 and the
purchase of TFM Remanufactured Office Furniture ("TFM") in the fourth quarter of
1996 contributed to the increase to a lesser extent.

         The  Company's  product  sales mix for 1995 and 1996 was  predominantly
remanufactured Herman Miller, while the fourth quarter of 1996 was split between
remanufactured  Herman  Miller  (68%),  remanufactured  Haworth  (31%),  and new
products  (1%).  The Company  believes that future period  product mixes will be
more similar to the fourth  quarter of 1996 rather than that of earlier  periods
due to the increases in products  offered as a result of the acquisition of TFM,
a  remanufacturer  of Haworth  Furniture,  and the introduction of a new product
line previously  manufactured by Birum. As the Company completes the integration
of TFM,  remanufactured  Haworth  products will be offered through the Company's
sales offices and remanufactured  Herman Miller products will be offered through
the  former  TFM sales  offices.  The  integration  process  is  expected  to be
completed in the first six months of 1997.  During the fourth  quarter,  1996, a
line of new office Work  Stations  was  introduced  to all the  Company's  sales
offices to help  capture the segment of the market  that  prefers new  furniture
over remanufactured.

         During  1996,   the  Company  opened  three  new  sales  offices  while
continuing to add resources to existing  offices.  Management  believes that its
strategy of controlling  distribution  through its own sales offices provides an
important  competitive  advantage  over  manufacturers  of new Work Stations who
distribute  through  a  dealer  network  and over  independent  remanufacturers.
Independent remanufacturers are primarily local operations without a significant
number of trained sales employees. Dealers often have conflicts of interest as a
result of carrying  other  products  that compete with Work  Stations.  A direct
sales  force not only  gives  the  Company  complete  control  over the  selling
process,  but also  allows the  Company  to  capture a portion  of the  dealer's
"mark-up" in addition to manufacturing profit.

         Gross Margin.  The Company's  gross margin  increased from $5.0 million
for the year ended December 31, 1995 to $7.2 million for the year ended December
31,  1996,  an increase of 44.0% from prior year  levels.  This  increase is due
primarily to the additional sales volume. The gross margin percentage  decreased
slightly  from  32.6%  in 1995 to  32.3% in 1996.  The  Company's  gross  margin
percentage  decreased  from 32.6% in the fourth  quarter of 1995 to 30.2% in the
fourth quarter of 1996. While annual rates stayed relatively constant,  the last
two  quarters  of the  year  saw the  gross  margin  percentage  decline  due to
increased costs  associated with the expansion of  manufacturing  capability and
capacity.  While  management  believes that the new  manufacturing  capacity and
capabilities will reduce overall  manufacturing and remanufacturing costs in the
future, the significant  learning curve negatively impacted cost of sales in the
fourth quarter of 1996, and will continue to impact the gross margin in the next
several quarters.

         Operating Expenses. Selling expenses increased by 61.9% to $3.4 million
for the year  ended  December  31,  1996 from $2.1  million  for the year  ended
December  31,  1995.  The  increase  was due to the  addition of three new sales
offices  during 1996 as well as new sales  management to manage the sales force.
When the Company opens new sales  offices,  it typically  takes several years to
generate enough sales to provide  targeted  returns.  With the large increase in
sales offices, the higher initial costs of these sales offices have not yet been
offset  with  the  increased   sales  volume   expected   from  these   offices.
Additionally,  the Company  began  utilizing  several  new types of  advertising
during the fourth quarter that it believes will increase sales volumes in future
periods.

         General and administrative  expenses increased by 60.0% to $1.6 million
for the year  ended  December  31,  1996 from $1.0  million  for the year  ended
December 31, 1995. The increase in 1996 was due to several  causes.  The Company
incurred  additional  compensation  expenses  as the result of the growth of the
Company and the addition of several new management level resources to handle the
Company's  increased  size and  complexity.  Additionally,  the  Company  became
publicly traded in 1996 and incurred  

                                      -9-
<PAGE>


significant  costs  related  to  the  increased  costs  of SEC  and  shareholder
reporting requirements.  Finally, the Company dedicated significant resources in
the  evaluation of potential  business  combination  relationships  and incurred
expenses  related to the  integration  of the successful  ventures.  The Company
believes  that it has added the  appropriate  resources to manage the  Company's
current  operations and  foreseeable  future growth.  1997  initiatives  include
several items,  such as evaluation of new information  systems,  continued sales
office expansion and exploring other potential business partnerships,  that will
require these expenses to remain  relatively  high in early 1997 but to decrease
as a percentage of sales as time continues.  Management believes the initiatives
indicated  above will add shareholder  value and allow for future  profitability
gains.

         Other Non-Operating Income and Expenses. Total other income and expense
changed  from an expense of $.1 million for the year ended  December 31, 1995 to
income of $.1 million for the year ended  December 31, 1996,  an increase of $.2
million.  The  primary  reason  for the  increase  is due to cash  raised in the
Company's initial public offering. During 1996, the Company paid off its line of
credit  agreement  debt and  invested  excess cash  proceeds of the  offering to
maximize returns.

         Income  Taxes.  Income  taxes  for the year  ended  December  31,  1996
increased by $.4 million.  This increase was the result of the Company no longer
being treated as an S Corporation  for federal and state tax purposes  following
the initial public offering.

         Net Income.  Net income for the year ended  December 31, 1996 was $ 1.9
million versus $1.9 million for the year ended December 31, 1995. The net income
level for 1996 was  impacted  by the  increased  sales  volume  offset by higher
operating  expenses and income taxes. On a pro forma basis, net income increased
27.3% from $1.1 million in 1995 to $1.4 million in 1996.

Liquidity and Capital Resources

         Cash Flows from Operating  Activities.  Net cash used by operations was
$1.5  million for the year ended  December 31, 1996 versus $0 for the year ended
December 31,  1995.  The decrease in cash from  operations  is due  primarily to
increases in accounts receivable and inventories without corresponding increases
in accounts  payable.  The increase in accounts  receivable  is due to increased
sales  volumes  along with an increase in the number of days sales  outstanding.
The increase in  inventories  is due to the new product lines  manufactured,  as
well as the raw  materials  required  to build such  items.  The  Company  would
anticipate that accounts receivable growth will be tempered in 1997 by decreases
in the number of days sales outstanding.

         Cash  Flows  from  Investing  Activities.  Net cash  used in  investing
activities  was $6.0 million in 1996 versus $.5 million in 1995. The increase in
investing  activities was the result of the TFM  acquisition  which totaled $4.0
million and other capital expenditures of $1.9 million.

         Cash Flows from  Financing  Activities.  Net cash provided by financing
activities  was $10.2 million in 1996 versus $.5 million in 1995.  Net cash from
financing  activities  in 1996 was  primarily  related to the issuance of Common
Stock of $17.6 million. Of these proceeds, $3.8 million was distributed to prior
S Corporation shareholders to fund their tax liabilities and provide them with a
return on their  investment  in the Company until the initial  public  offering.
Additionally,  the Company repaid $3.0 million of borrowings on revolving  lines
of  credits,  including  amounts  acquired  in the  acquisition  of  TFM.  Other
principal payments on notes payable, long-term debt and capital leases, amounted
to $.3 million in 1996.

         The net cash  provided by financing  activities  in 1995 was related to
$.8 million of  distributions  to S  Corporation  shareholders  for  purposes of
paying tax obligations, net proceeds of borrowings of $1.6 million, net loans to
shareholders  of $.1 million and the  repurchase of stock from a shareholder  of
$.1 million.

         Expected  Future Cash Flows.  Cash  provided  by  operating  activities
should  increase as continued  profitability  growth should exceed the growth in
receivables and inventory.  The Company  anticipates  that current cash balances
plus cash flows from operating  activities and borrowings  under its credit line
will be  adequate  to fund its  capital  expenditure  and  business  acquisition
strategy.

                                      -10-
<PAGE>

         Capital  expenditures are anticipated to range between $1 to $2 million
this year as the Company continues to grow its new manufacturing  operations and
improves the efficiency of its remanufacturing operations.

         The  Company  does   anticipate   making  future   strategic   business
acquisitions to complement the existing  business and grow the geographic  range
of the business.  It is anticipated that at least one strategic acquisition will
occur during 1997.

Seasonality and Impact of Inflation

         Historically, the Company has experienced lower net sales levels in the
second  and third  quarters  of the year and  increased  levels in the first and
fourth  quarters.  The Company  believes  that this  seasonal  increase in sales
volume is due to the tendency of  customers to expend funds  budgeted for office
furniture either early in the calendar year or after the summer vacation season.
The  Company  believes  that its new  product  offerings  will  enable  it to be
somewhat more competitive on a year-round basis.  Because the Company recognizes
revenues upon shipment and typically  ships Work Stations  within three weeks of
an order,  a  substantial  portion of the  Company's  revenues  in each  quarter
results from orders placed by customers  during that quarter.  As a result,  the
Company's results may vary from quarter to quarter.

         Inflation  has not had a material  impact on the Company's net sales or
income to date. However,  there can be no assurances that the Company's business
will not be affected in the future by inflation.

Forward-Looking Statements

         The foregoing discussion contains certain  forward-looking  statements,
which may be  identified  by phrases such as "the  Company  expects" or words of
similar  effect.  In  addition,  from  time to time,  the  Company  may  publish
forward-looking  statements  relating to such matters as  anticipated  financial
performance,  business  prospects and similar  matters.  The Private  Securities
Litigation  Reform  Act of  1995  provides  a safe  harbor  for  forward-looking
statements.  The following important factors,  among other things, in some cases
have affected,  and in the future could affect, the Company's actual results and
could cause the  Company's  actual  results for fiscal year 1997 and any interim
period  to  differ  materially  from  those  expressed  in  any  forward-looking
statements made by, or on behalf of, the Company. The Company assumes no duty to
update any of the statements in this report.

         Potential  Limitations  on Future Growth.  The Company has  experienced
rapid growth since it commenced  operations  in 1989.  The  Company's  continued
growth  will be  dependent  in part on the  Company's  ability to manage  growth
effectively, including the improvement of the Company's financial and management
information   systems,   the  expansion  of  the  Company's   manufacturing  and
remanufacturing  operations and the recruitment and retention of executive staff
and key employees.  The Company also will be required to manage working  capital
and  generate  cash  flow  from  operations  to meet the  needs of an  expanding
business.  There can be no assurances that the Company's  future growth will not
be limited by insufficient cash flow or the lack of adequate  financing required
to fund such growth.

         Impact of Customer  Preferences  and  Technological  Advances on Sales.
Certain  potential  customers  may prefer  new Work  Stations  to the  Company's
remanufactured  Work  Stations  due  to  various  factors,  including  the  more
developed   and  better   financed   marketing   efforts  of  new  Work  Station
manufacturers   and   such   potential   customers'   reluctance   to   purchase
remanufactured  products  because of image,  perceived  questions  of quality or
other factors. In addition,  technological advances are frequently  incorporated
in new Work Stations by the leading manufacturers,  particularly with respect to
electrical circuits necessary for more advanced computer and  telecommunications
features.   Although   the  Company  has  the  ability  to   incorporate   these
technological   advances  in  its   remanufactured   Work  Stations,   any  such
incorporation  may  increase  remanufacturing  costs  and may  reduce  the price
advantage of remanufactured Work Stations over newly manufactured Work Stations.

         Dependence  Upon  Supply of Work  Stations  and  Component  Parts.  The
Company presently purchases only used Herman Miller and Haworth Work Stations in
its remanufacturing operations. The Company does not have any binding agreements
relating to the  purchase of used Herman  Miller or Haworth  Work  Stations  for
remanufacturing  and generally purchases such used Work Stations from end-

                                      -11-
<PAGE>

users,  brokers  and dealers  through  competitive  bids or directly  negotiated
transactions. Although the Company in the past has not experienced a shortage of
used Work  Stations  at  competitive  prices,  the success of the Company in the
future will depend in part upon its continued  ability to obtain Herman  Miller,
Haworth and other  manufacturers'  used Work  Stations  for  remanufacturing  in
sufficient quantities and at competitive prices. While the Company believes that
the availability of used Work Stations for remanufacturing  will increase as the
installed  base of Work  Stations  increases  and ages,  there may be periods of
tight supply as the demand for used Work Stations  increases  which could have a
material adverse effect on the Company's business and profitability.

         The Company also purchases new and used component  parts for use in the
remanufacture of Work Stations. The Company experienced a shortage in the supply
of certain  component parts during 1995 that resulted in the Company's  purchase
of such component  parts at higher prices.  Although the Company can manufacture
many of its  component  parts,  there can be no  assurances  that  shortages  of
certain  component  parts or higher  prices for such parts will not occur in the
future.  An  inability  to  produce or  purchase  necessary  component  parts in
adequate  quantities  and at  competitive  prices could have a material  adverse
effect on the Company's results of operations and financial condition.

         No Assurance of Expansion of Product  Lines and  Business.  The Company
historically  has  concentrated  its business on  remanufacturing  Work Stations
manufactured by Herman Miller.  However, in October 1996, the Company acquired a
privately-held  remanufacturer of Haworth Work Stations.  The Company intends to
continue  to  expand  its  product  line  to  include  Work  Stations  of  other
manufacturers  (particularly  Steelcase)  through the  acquisition  of companies
specializing  in  remanufacturing   products  of  those   manufacturers  or  the
establishment of additional remanufacturing  facilities. The Company has limited
experience in remanufacturing  Work Stations of manufacturers  other than Herman
Miller and Haworth. Due to the differences in and lack of  interchangeability of
the various Work  Stations  and certain  component  parts  produced by the major
manufacturers,  the  Company's  expansion  of  its  product  line  will  require
additional  training of production  personnel,  the  establishment of additional
sources of supply of used Work Stations and component  parts and, in some cases,
the establishment of different  remanufacturing  processes. As a result of these
factors,  there  can be no  assurance  that the  Company  will be able to expand
successfully  its product line or maintain its  historical  gross  margins.  The
failure of the  Company to expand  successfully  its  product  line could have a
material  adverse  effect  on the  growth  and  profitability  of the  Company's
business.

         Dependence  Upon  Primary  Remanufacturing   Facilities.   The  Company
primarily  remanufactures  Herman  Miller  Work  Stations  at  one  facility  in
Richmond,  Virginia  and  Haworth  Work  Stations  at one  facility  in Lansing,
Michigan.  Although  the  Company  presently  maintains  $3,000,000  of business
interruption  insurance on the Richmond  facility and $250,000 of such insurance
on  the  Lansing  facility,   a  lengthy  interruption  of  its  remanufacturing
operations at the Richmond or Lansing  facilities  would have a material adverse
effect on the Company's results of operations and financial condition.

         Tax Matters Associated with Prior S Corporation  Status.  Until May 31,
1996,  the Company had elected to be taxed under  Subchapter  S of the  Internal
Revenue  Code of 1986,  as amended,  as an S  Corporation  for federal and state
income tax  purposes  since its  incorporation  in 1989.  Unlike a regular or "C
Corporation,"  an S  Corporation  is generally  not subject to income tax at the
corporate level;  instead,  the S Corporation's  income is taxed on the personal
income tax returns of its shareholders. The Company's status as an S Corporation
was  terminated  upon  commencement  of  its  initial  public  offering.  If the
Company's  S  Corporation  status  were  denied  for any  periods  prior to this
termination  by reason of a failure to satisfy  the S  Corporation  election  or
eligibility requirements of the Code, the Company would be subject to tax on its
income as if it were a C Corporation for these periods.  The payment of any such
tax could have a material  adverse effect on the Company's  financial  condition
and results of operations if the full amount  thereof is not reimbursed by those
individuals  who were  shareholders  of the Company prior to the initial  public
offering.  Such shareholders have agreed to pay their pro rata share of any such
tax and any  applicable  interest,  penalties and expenses in the event that the
Company's S Corporation  status is denied for any taxable periods up to the date
of the termination of the Company's S Corporation status on May 31, 1996.

         Potential Fluctuations in Quarterly Results; Seasonality. Historically,
the Company's business has been significantly  affected by seasonal factors. The
Company  typically has higher sales during the first 



                                      -12-
<PAGE>


and  fourth  quarters  of its  fiscal  year due  primarily  to the  tendency  of
customers to expend  funds  budgeted  for office  furniture  either early in the
calendar  year  or  after  the  summer  vacation  season.  Because  the  Company
recognizes revenues upon shipment and typically ships Work Stations within three
weeks of an order,  a  substantial  portion  of the  Company's  revenue  in each
quarter  results from orders placed by customers in that  quarter.  Accordingly,
quarterly  revenue levels are subject to substantial  fluctuations and are often
difficult  to  predict.  Fluctuations  in  operating  results  could  result  in
volatility in the price of the Company's  Common  Stock.  If revenue  levels are
below expectations, operating results will be adversely affected.

         Competition.  Competition  in the Work  Station  segment  of the office
furniture industry is intense. The Company competes with many other companies in
the sale of its new and  remanufactured  products as well as in the  purchase of
"as  is"  Work   Stations  and   component   parts  for  use  in  the  Company's
remanufactured  Work  Stations.  In the  sale  of new  and  remanufactured  Work
Stations, the Company competes with manufacturers of new Work Stations and their
remanufacturing  subsidiaries,  other independent remanufacturers and dealers of
"as is" Work  Stations.  In the  purchase  of used  Work  Stations  that are the
primary source of the Company's supply for its remanufacturing  operations,  the
Company  competes  with  the  manufacturers  of  new  Work  Stations  and  their
remanufacturing  subsidiaries,  both  of  which  sometimes  provide  a  trade-in
allowance to purchasers of their products, other independent remanufacturers and
Work Station brokers and dealers.

         Sales  of  the  Company's   remanufactured   Work  Stations  depend  on
maintaining  a  successful  balance  between  price and quality so that its Work
Stations  are  positioned  in the  marketplace  to provide a product that is (i)
comparable or superior in quality, design and appearance to higher cost new Work
Stations and (ii) superior in quality, features and appearance to lower cost "as
is" Work  Stations.  Failure by the  Company to  maintain  this  balance  due to
increased  competition  in either the  purchase or sale of Work  Stations  could
adversely affect the Company's business. Additionally,  certain of the Company's
competitors have greater financial, technical,  manufacturing,  marketing, sales
and other resources than the Company.

         Environmental  Regulations.  The  Company  is  subject  to a variety of
federal,  state and local governmental  regulations related to the storage, use,
discharge and disposal of toxic,  volatile or otherwise hazardous chemicals used
in its manufacturing  processes.  In addition,  regulations  currently  proposed
under the Clean Air Act  Amendments  of 1990 may require  reduced  emissions  of
volatile organic compounds  including emissions from paints and solvents used by
the  Company in the  remanufacturing  process.  As a result,  the Company may be
required  to  institute  changes in its  remanufacturing  processes  in order to
comply with these reduced  emission  standards.  There can be no assurance  that
these and other  changes in  environmental  regulations  in the future  will not
result  in the need for  capital  expenditures  or  otherwise  impose  financial
burdens on the Company.  Further,  such regulations could restrict the Company's
ability to expand its operations.  Any failure by the Company to obtain required
permits  for,  control the use of, or  adequately  restrict  the  discharge  of,
hazardous  substances  under  present or future  regulations  could  subject the
Company to substantial liability or could cause its manufacturing  operations to
be suspended.  Such liability or suspension of  manufacturing  operations  could
have a  material  adverse  effect on the  Company's  results of  operations  and
financial condition.

         Risk of Patent  Infringement  Claims.  Newly manufactured Work Stations
contain numerous patented component parts.  Although the Company is not aware of
any existing or threatened  patent  infringement  claims asserted against it and
does not  believe  that  the  remanufacturing  of Work  Stations  infringes  the
proprietary  rights  of  any  third  parties,  there  can be no  assurance  that
infringement claims will not be asserted against the Company.  In addition,  the
Company  manufactures or purchases certain new and used component parts included
in its  remanufactured  Work  Stations and has begun to sell newly  manufactured
private  label  Work  Stations.  To the  extent  that  such  activities  involve
purchasing or manufacturing component parts similar to patented component parts,
the  Company  could  become  subject  to claims of  patent  infringement  if the
manufacture or use of such component parts  infringed the proprietary  rights of
third  parties.  In addition,  the existence of third party  proprietary  rights
could limit the  Company's  ability to produce or use certain  component  parts.
Damages for violation of third party proprietary rights could be substantial and
could have a material  adverse effect on the Company's  financial  condition and
results of operation.  Regardless of the validity or the successful assertion of
such  claims,  the  Company  would  incur  significant  costs and  diversion  of
resources with respect to the defense thereof.


                                      -13-
<PAGE>


Item 7.           Financial Statements

         The following audited consolidated  financial statements of the Company
are included in this report:

         Report of Independent Auditors

         Consolidated Balance Sheets at December 31, 1996 and 1995

         Consolidated Statements of Income for the Years Ended
          December 31, 1996 and 1995

         Consolidated Statement of Shareholders' Equity for the Years Ended
          December 31, 1996 and 1995

         Consolidated Statements of Cash Flows for the Years Ended
          December 31, 1996 and 1995

         Notes to Consolidated Financial Statements





                                      -14-
<PAGE>




Report of Independent Auditors


Board of Directors and Shareholders
Open Plan Systems, Inc.

We have  audited  the  accompanying  consolidated  balance  sheets  of Open Plan
Systems,  Inc.  as of December  31,  1996 and 1995 and the related  consolidated
statements of income,  shareholders'  equity,  and cash flows for the years then
ended.  These  financial  statements  are the  responsibility  of the  Company's
management.  Our  responsibility  is to express  an  opinion on these  financial
statements based on our audits.

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

In our opinion,  the financial  statements  referred to above present fairly, in
all material respects, the consolidated financial position of Open Plan Systems,
Inc.  at  December  31,  1996 and  1995,  and the  consolidated  results  of its
operations  and its cash  flows  for the years  then  ended in  conformity  with
generally accepted accounting principles.

                                                               ERNST & YOUNG LLP

Richmond, Virginia
February 13, 1997


                                      -15-
<PAGE>


OPEN PLAN SYSTEMS, INC.
Consolidated Balance Sheets
(amounts in thousands, except per share amounts)
<TABLE>
<CAPTION>


                                                                             December 31
                                                                       1996              1995
                                                                ------------------------------------
<S>                                                                      <C>                <C>  
ASSETS
Current assets:
   Cash and cash equivalents                                            $ 3,066            $  242
   Accounts receivable, net                                               5,252             3,136
   Inventories (Note 3)                                                   6,807             3,978
   Prepaids and other                                                       431               383
   Refundable income taxes                                                  385                 -
   Deferred income taxes (Note 7)                                            52                 -
                                                                ------------------------------------
TOTAL CURRENT ASSETS                                                     15,993             7,739

Property and equipment, net (Note 4)                                      2,698               754
Goodwill, net (Note 2)                                                    4,621                 -
Advances to shareholders (Note 10)                                           -                378
Other                                                                       398               138
                                                                ------------------------------------
TOTAL ASSETS                                                            $23,710            $9,009
                                                                ====================================



LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities:
   Revolving line of credit (Note 5)                                     $    -            $2,706
   Trade accounts payable                                                 1,457               734
   Accrued compensation                                                     247               356
   Other accrued liabilities                                                150                62
   Customer deposits                                                        655               337
   Current portion of long-term debt (Note 5)                               212               183
                                                                ------------------------------------
TOTAL CURRENT LIABILITIES                                                 2,721             4,378

Deferred income taxes (Note 7)                                              106                 -
Long-term debt, less current portion (Note 5)                                92               304
                                                                ------------------------------------
TOTAL LIABILITIES                                                         2,919             4,682

Shareholders' equity (Note 6):
   Preferred stock, no par value:
     Authorized shares - 5,000
     Issued and outstanding shares - none                                     -                 -
   Common stock, no par value:
     Authorized shares - 50,000
     Issued and outstanding shares - 4,472 for 1996
       and 2,430 for 1995                                                20,088             1,215
   Additional capital (Note 7)                                              137                 -
   Retained earnings                                                        566             3,112
                                                                ------------------------------------
TOTAL SHAREHOLDERS' EQUITY                                               20,791             4,327
                                                                ------------------------------------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY                              $23,710            $9,009
                                                                ====================================
</TABLE>

See accompanying notes to consolidated financial statements



                                      -16-
<PAGE>




OPEN PLAN SYSTEMS, INC.
Consolidated Statements of Income
(amounts in thousands, except per share amounts)

<TABLE>
<CAPTION>

                                                                           Year ended
                                                                          December 31
                                                                     1996            1995
                                                                --------------------------------

<S>                                                                    <C>             <C>    
Net sales                                                              $22,398         $15,478

Cost of sales                                                           15,160          10,435
                                                                --------------------------------
Gross profit                                                             7,238           5,043

Operating expenses:
   Amortization of intangibles                                              70               -
   Selling and marketing                                                 3,410           2,056
   General and administrative                                            1,584             975
                                                                --------------------------------
                                                                         5,064           3,031
                                                                --------------------------------
Operating income                                                         2,174           2,012

Other (income) expense:
   Interest expense                                                        141             163
   Interest income                                                        (266)            (30)
   Other, net                                                              (18)             (6)
                                                                --------------------------------
                                                                          (143)            127
                                                                --------------------------------
Income before income taxes                                               2,317           1,885

Provision for income taxes (Note 7)                                        376               -
                                                                --------------------------------
Net income                                                            $  1,941          $1,885
                                                                ================================


Pro forma income data (Unaudited) (Note 12):
   Pro forma income before income taxes                                $ 2,317          $1,885
   Pro forma provision for income taxes                                    930             747
                                                                --------------------------------
   Pro forma net income                                                $ 1,387          $1,138
                                                                ================================

   Pro forma earnings per common share                                    $.38            $.42
                                                                ================================

   Weighted average common shares outstanding                            3,676           2,716
                                                                ================================
</TABLE>

See accompanying notes to consolidated financial statements.




                                      -17-
<PAGE>



OPEN PLAN SYSTEMS, INC.
Consolidated  Statements of  Shareholders'  Equity Years ended December 31, 1996
and 1995 (amounts in thousands, except per share amounts)

<TABLE>
<CAPTION>


                                                                 Common           Additional         Retained
                                                                  Stock            Capital           Earnings            Total
                                                           ------------------------------------------------------------------------

<S>                                                              <C>               <C>                <C>                 <C>   
           BALANCE AT DECEMBER 31, 1994                          $1,286            $  -               $2,261              $3,547

           Purchase of 27 shares of stock from                      (71)              -                  (87)               (158)
              shareholder
           Distributions to shareholders:
              Cash                                                  -                 -                 (791)               (791)
              Offset against advances to shareholders               -                 -                 (156)               (156)
           Net income for 1995                                      -                 -                1,885               1,885
                                                           ------------------------------------------------------------------------

           BALANCE AT DECEMBER 31, 1995                          $1,215               -               $3,112              $4,327

           Distributions to shareholders:
             Cash                                                   -                 -               (3,760)             (3,760)
             Offset against advances to shareholders                -                 -                 (590)               (590)
           Reclassification of undistributed
              S Corporation retained earnings (Note 7)                                137               (137)                -
           Initial Public Offering (Note 6)                      17,560               -                   -               17,560
           Issuance of common stock in connection
              with acquisition (Note 2)                           1,313               -                   -                1,313
           Net income for 1996                                      -                 -                1,941               1,941
                                                           ------------------------------------------------------------------------

           BALANCE AT DECEMBER 31, 1996                         $20,088              $137               $566             $20,791
                                                           ========================================================================

</TABLE>




See accompanying notes to consolidated financial statements.


                                      -18-
<PAGE>

OPEN PLAN SYSTEMS, INC.
Consolidated Statements of Cash Flows
(amounts in thousands, except per share amounts)

<TABLE>
<CAPTION>

                                                                                       Year ended
                                                                                       December 31
                                                                                  1996             1995
                                                                            ----------------------------------
<S>                                                                           <C>               <C>          
Operating activities
Net income                                                                    $       1,941     $       1,885
Adjustments to reconcile net income to net cash
  (used) provided by operating activities:
     Provision for losses on receivables                                                 29                65
     Depreciation expense                                                               299               134
     Amortization expense                                                                70                 -
     (Gain) loss on disposal of property and equipment                                   (3)                3
     Deferred income taxes                                                               46                 -
     Changes in operating assets and liabilities:
       Accounts receivable                                                           (1,290)           (1,604)
       Inventories                                                                   (2,136)             (903)
       Prepaids and other current assets                                                (30)             (289)
       Refundable income taxes                                                         (261)                -
       Other non-current assets                                                         (45)              (43)
       Trade accounts payable                                                           126               588
       Customer deposits                                                                (23)             (126)
       Accrued and other liabilities                                                   (186)              302
                                                                            ----------------------------------
Net cash (used) provided by operating activities                                     (1,463)               12

Investing activities
Proceeds from sale of property and equipment                                             80                 1
Purchases of property and equipment                                                  (1,940)             (525)
Acquisition (net of cash acquired)                                                   (4,033)                -
Other                                                                                   (15)                6
                                                                            ----------------------------------
Net cash used in investing activities                                                (5,908)             (518)


</TABLE>



                                      -19-
<PAGE>



OPEN PLAN SYSTEMS, INC.
Consolidated Statements of Cash Flows (continued)
(amounts in thousands, except per share amounts)

<TABLE>
<CAPTION>


                                                                                        Year ended
                                                                                        December 31
                                                                                  1996             1995
                                                                            -----------------------------------
<S>                                                                         <C>               <C>            
Financing activities
Advances to shareholders                                                    $          (306)  $         (323)
Repayment of advances to shareholders                                                    84              200
Net (repayments) borrowings on revolving lines of credit                             (3,036)           1,364
Proceeds from notes payable to bank                                                       -              300
Principal payments on notes payable, long-term debt,
   and capital lease obligations                                                       (347)             (63)
Proceeds from sale of common stock                                                   17,560                -
Purchase of common stock                                                                  -             (145)
Distributions to shareholders                                                        (3,760)            (791)
                                                                            -----------------------------------
Net cash provided by financing activities                                            10,195              542
                                                                            -----------------------------------

Increase  in cash and cash equivalents                                                2,824               36

Cash and cash equivalents at beginning of year                                          242              206
                                                                            -----------------------------------
Cash and cash equivalents at end of year                                    $         3,066   $          242
                                                                            ===================================

Supplemental disclosures
Interest paid                                                               $           144   $          161
                                                                            ===================================
Income taxes paid                                                           $           585   $            -
                                                                            ===================================

Summary of noncash transactions
Equipment acquired under capital leases                                     $                 $           81
                                                                            ===================================

Amounts offset against advances to shareholders:
   Distributions to shareholders                                            $           590   $          156
                                                                            ===================================
   Purchase of common stock                                                 $             -   $           13
                                                                            ===================================

Issuance of common stock in connection with acquisition                     $         1,313   $            -
                                                                            ===================================

</TABLE>



See accompanying notes to consolidated financial statements.



                                      -20-
<PAGE>



OPEN PLAN SYSTEMS, INC.
Notes to Consolidated Financial Statements
December 31, 1996 and 1995


NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Open Plan Systems,  Inc. (the Company) was incorporated in Virginia in September
1989 and is a remanufacturer  and marketer of modular office Work Stations.  The
Company  principally  manufactures new product and remanufactures  Herman Miller
and Haworth product lines and markets them through Company sales offices located
in the East Coast and Mid-West  regions of the United States.  In addition,  the
Company  also  sells  new  product  office  workstation  components  from  other
manufacturers.  The following is a description of the Company's more significant
accounting policies.

Principles of Consolidation

The accompanying  consolidated  financial statements include the accounts of the
Company and its wholly-owned  subsidiary.  All significant intercompany balances
and transactions have been eliminated in consolidation.

Inventories

Inventories  are stated at the lower of average cost or market.  Work-in-process
inventories  include both the direct and indirect  costs of  manufacturing  such
products.

Property and Equipment

Property and equipment is stated on the basis of cost. Depreciation of equipment
and  vehicles is provided  by  straight-line  or  accelerated  methods  over the
estimated  useful lives of the related  assets,  generally three to seven years.
Improvements to leased  properties are amortized on a  straight-line  basis over
the shorter of the term of the respective lease or the estimated useful lives of
the related assets.

Goodwill

Goodwill represents the excess of the purchase price of acquired businesses over
the fair value of net assets acquired (see Note 2) and is being amortized on the
straight-line  method  over a period  of twenty  years.  The  carrying  value of
goodwill is  periodically  evaluated by management  based on  undiscounted  cash
flows of the related business units to determine if there has been an impairment
in value. Accumulated amortization was $60,000 at December 31, 1996.

Revenue Recognition

Revenues  from product  sales are  recognized  when the products are shipped and
title and risk of loss pass to the customer.

Advertising

Production   costs   associated  with  advertising  are  expensed  as  incurred.
Communication  costs  associated  with  advertising  are reported as advertising
expense as the related space is used.  Prepaid  advertising  costs were $157,000
and  $166,000 at December  31, 1996 and 1995,  respectively.  Advertising  costs
charged to expense totaled $414,000 in 1996 and $198,000 in 1995.

Income Taxes

Deferred  income  taxes are  determined  based on the  differences  between  the
financial  statement and tax bases of assets and  liabilities  using enacted tax
rates in effect in the years the differences are expected to reverse.



                                      -21-
<PAGE>


NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

Cash Equivalents

The Company considers all highly liquid investments with original  maturities of
three months or less when purchased to be cash equivalents.

Use of Estimates

The preparation of financial  statements in conformity  with generally  accepted
accounting  principles  requires  management make estimates and assumptions that
affect the amounts reported in the financial  statements and accompanying notes.
Actual results could differ from those estimates.

Long-Lived Assets

In March 1995, the Financial  Accounting  Standards  Board issued  Statement No.
121,  Accounting  for the  Impairment  of Long-Lived  Assets and for  Long-Lived
Assets to Be  Disposed  Of,  which  requires  impairment  losses be  recorded on
long-lived  assets used in operations  when indicators of impairment are present
and the  undiscounted  cash flows  estimated to be generated by those assets are
less  than  the  assets'  carrying  amount.  Statement  121 also  addresses  the
accounting  for  long-lived  assets that are  expected  to be  disposed  of. The
Company  adopted  Statement  121 in the first quarter of 1996 and, such adoption
had no effect on the consolidated financial statements. Prior to the adoption of
Statement 121, the Company  periodically  reviewed the remaining  utility of its
property and equipment,  which constituted its only material  long-lived assets,
and considered the ultimate net realizable  value. Any situation  involving what
was  considered  permanent  impairment  would have  resulted  in  adjustment  to
carrying value.

Reclassifications

Certain prior year amounts have been reclassified to conform to the current year
presentation.

NOTE 2. ACQUISITION

On October 1, 1996, the Company acquired all of the outstanding  common stock of
Immaculate Eagle, Inc. (d/b/a TFM  Remanufactured  Office Furniture) ("TFM") for
an aggregate purchase price of $5,346,000,  including  transaction costs. TFM is
located  in  Lansing,  Michigan  and is a  specialized  remanufacturer  of panel
systems produced by Haworth, Inc. Consideration for the acquisition consisted of
cash of  $4,033,000  and 87,500  shares of common stock valued at a price of $15
per share.  The 87,500  shares will be held in escrow  until  October 1, 1998 as
security for  indemnification  obligations  of the former  Shareholders  of TFM.
Under the terms of the  purchase  agreement,  if the closing  sales price of the
Company's common stock on October 1, 1998 is less than $15 per share (subject to
certain  adjustments),  the  Company  will  make a cash  payment  to the  former
Shareholders  equal to the  difference  between the closing  sales price on that
date and $15, multiplied times the 87,500 shares of common stock.

The  acquisition of TFM was recorded using the purchase method of accounting and
the excess of the purchase price over the estimated fair value of the net assets
acquired was recorded as goodwill.  The results of operations have been included
in the  accompanying  consolidated  results  of  operations  since  the  date of
acquisition.

The following unaudited  summarized,  pro forma data for the year ended December
31, 1996 presents the combined  results of the Company as if the TFM acquisition
had  occurred  at the  beginning  of 1996 (in  thousands  $,  except  per  share
amounts):

             Net sales                                         $27,093
             Income before income taxes                         $1,798
             Pro forma net income                               $1,079
             Pro forma earnings per share                         $.29

Results of TFM for years prior to 1996 are unavailable.


                                      -22-
<PAGE>

NOTE 3. INVENTORIES

Inventories  are in two main stages of completion and consisted of the following
(in thousands $):

                                                   December 31
                                              1996             1995
                                         ---------------- ----------------

Components and fabric                            $3,355           $2,036
Jobs in process and finished goods                3,452            1,942
                                         ---------------- ----------------
                                                 $6,807           $3,978
                                         ================ ================

NOTE 4. PROPERTY AND EQUIPMENT

Property and equipment by major classification was as follows (in thousands $):

                                                        December 31
                                                   1996             1995
                                              ---------------- ----------------

Production and warehouse equipment            $        2,240   $          596
Office equipment                                         758              323
Vehicles                                                 204              138
Leasehold improvements                                   201              106
                                              ---------------- ----------------
                                                       3,403            1,163
Accumulated depreciation and amortization               (705)            (409)
                                              ---------------- ----------------
                                              $        2,698   $          754
                                              ================ ================

NOTE 5. INDEBTEDNESS

At December  31,  1996,  the Company has a revolving  line of credit from a bank
providing for short-term  borrowings up to $5,000,000  through April 1997. These
borrowings  bear  interest  at the lesser of the prime rate or LIBOR plus 2.25%.
There  were no  outstanding  borrowings  under the line at  December  31,  1996.
Advances  under the line are limited to specified  percentages of trade accounts
receivable and  inventories.  Under the terms of the  agreement,  the Company is
required to maintain a defined debt to net worth ratio and an interest  coverage
ratio.  The Company was in  compliance  with all  covenants of the  agreement at
December 31, 1996.

Long-term debt consisted of the following (in thousands $):
<TABLE>
<CAPTION>

                                                                       December 31
                                                                  1996              1995
                                                            ------------------ ----------------

<S>                                                            <C>              <C>          
Note payable to bank, due $8 per month, plus interest
   at 7.75% per annum, through November 1998                   $       191      $         300

Note payable to bank, due $5 per month, plus interest
   at 8.25% per annum, through May 1998
                                                                        57                113

Capital lease obligations (see Note 8)                                  56                 74
                                                            ------------------ ----------------
                                                                       304                487
Less current portion                                                   212                183
                                                            ------------------ ----------------
                                                            $           92     $          304
                                                            ================== ================
</TABLE>

Substantially all assets are pledged as collateral for the above indebtedness.



                                      -23-
<PAGE>

NOTE 6. SHAREHOLDERS' EQUITY

In June 1996,  the Company  completed an initial  public  offering of its common
stock, pursuant to which the Company sold 1,955,000 shares of common stock at an
initial offering price of $10 per share.

The Company has agreements  with two officers to purchase upon the death of each
all of the shares of common  stock  owned at the time of his death.  In order to
fund its potential purchase obligations under these agreements, the Company owns
and is the  beneficiary of certain life insurance  policies.  The purchase price
for the shares will be the fair market value of the shares on the date of death,
except that the Company's purchase  obligations under the agreements are limited
to the face amounts of the policies which total $4,000,000.

In March 1996, the Company's  shareholders adopted the 1996 Stock Incentive Plan
(the "Incentive Plan") and the 1996 Stock Option Plan for Non-Employee Directors
(the "Outside Directors' Plan").

The  maximum  aggregate  number of shares  of  common  stock  that may be issued
pursuant to the Outside  Directors' Plan is 25,000.  The Outside Directors' Plan
will terminate  following the annual meeting of shareholders in 2000.  Under the
Outside  Directors' Plan, each  non-employee  director of the Company serving on
the Board of Directors  on July 1, 1996 was granted an option to purchase  1,000
shares of common stock of the Company.  Thereafter,  each non-employee  director
serving on the Board of  Directors  shall  receive an option to  purchase  1,000
shares of common stock on the first  business day following  each annual meeting
of  shareholders.  The exercise price of stock options granted under the Outside
Directors'  Plan must be equal to the fair market  value of the common  stock on
the date of grant.  Each  option is first  exercisable  on the date which is six
months from the date of grant of the option and shall continue to be exercisable
for a term of ten years,  subject to certain  exceptions.  At December 31, 1996,
the Company had granted a total of 5,000 options under the plan with an exercise
price of $11.75 per share, none of which were exercisable at December 31, 1996.

The  maximum  aggregate  number of shares  of  common  stock  that may be issued
pursuant to the  Incentive  Plan is 400,000.  The  Incentive  Plan  provides for
grants  of  incentive  stock  options,   non-qualified   stock  options,   stock
appreciation  rights,  restricted  stock,  and/or  phantom stock to any officer,
director,  or key employee of the Company.  The Incentive Plan will terminate in
March 2006.

The exercise price of incentive  stock options  granted under the Incentive Plan
must be equal to at least the fair market  value of the common stock on the date
of grant. The exercise price for non-statutory stock options will be established
by the Compensation Committee.  The terms of all other options granted under the
Incentive Plan will be determined by the Compensation  Committee.  The aggregate
fair  market  value of common  stock  (determined  as of the date of the  option
grant) for which an incentive stock option, or related stock appreciation rights
may for the first time become  exercisable  in any calendar  year may not exceed
$100,000.  At  December  31,  1996,  the  Company had granted a total of 109,375
non-qualified stock options under this plan with an exercise price of $9.875 per
share, none of which were exercisable at December 31, 1996. These options have a
term of seven years.

In October 1995, the Financial  Accounting  Standards Board issued Statement No.
123,  Accounting for  Stock-Based  Compensation.  This statement  defines a fair
value based method of accounting for employee stock options whereby compensation
cost is  measured  at the  grant  date  based on the  value of the  award and is
recognized  over the  service  period,  which is  usually  the  vesting  period.
However, companies may elect to continue to use the intrinsic value based method
as prescribed  by Accounting  Principles  Board Opinion No. 25,  Accounting  for
Stock Issued to Employees (APB 25), and provide pro forma  disclosures as if the
Company had accounted for its employee  stock options under the fair value based
method. Under the intrinsic value based method, compensation cost is the excess,
if any,  of the market  price of the stock at the grant  date over the  exercise
price.

The  Company  has  elected  to  follow  APB 25 and  related  interpretations  in
accounting for its employee stock options.  If the Company had accounted for its
employee  stock  options  under the fair value based method pro forma net income
would have decreased $ 29,000 and pro forma earnings per common share would have
decreased by $.01 for the year ended December 31, 1996.  These pro forma amounts
are not  indicative  of future  effects of applying  the fair value based method
since a 4 year vesting period was used 



                                      -24-
<PAGE>


NOTE 6. SHAREHOLDERS' EQUITY (Continued)

to measure pro forma compensation  expense. The fair value for these options was
estimated  at the date of  grant  using a  Black-Scholes  option  pricing  model
assuming a risk-free interest rate of 5.6%,  dividend yield of 0.0%,  volatility
factors of .20, and a  weighted-average  expected life of the option of 6 years.
The  weighted  average fair value of options  granted  during 1996 was $3.39 per
share.

NOTE 7. INCOME TAXES

Prior to the Company's initial public offering of common stock in June 1996, the
Company  had  elected  by  consent  of its  shareholders  to be taxed  under the
provisions of Subchapter S of the Internal Revenue Code. Under these provisions,
the Company did not pay federal and state income taxes on its corporate  income.
Instead the Company's  income was included in the income of its shareholders for
federal and state income tax  purposes.  The Company  revoked its S  Corporation
election  effective May 31, 1996 and a deferred tax asset of $21,000 and related
benefit was recognized  representing  cumulative  temporary  differences at that
date. The  undistributed  balance of retained earnings of $137,000 as of May 31,
1996 was reclassified to additional capital.

The provision for income taxes for the year ended December 31, 1996 is comprised
of the following (in thousands $):

Current:
   Federal                                          $          282
   State                                                        48
                                                    -----------------
                                                               330
Deferred:
   Federal                                                      62
   State                                                         5
                                                    -----------------
                                                                67

Deferred tax asset recognized at
   S Corporation termination                                   (21)
                                                    -----------------
                                                    $          376
                                                    =================

A  reconciliation  of the provision for income taxes for the year ended December
31, 1996 and the amount computed by applying the U.S.  statutory  federal income
tax rate of 34% to income before income taxes is as follows (in thousands $):

Income tax at U.S. statutory rates                            $          788
State taxes, net of federal benefit                                       37
Tax effect on earnings during S Corporation period                      (468)
Deferred tax asset recognized at S Corporation termination               (21)
Amortization of goodwill                                                  20
Other, net                                                                20
                                                              ------------------
Total provision for income taxes                              $          376
                                                              ==================

The net deferred tax  liability at December 31, 1996  consisted of the following
(in thousands $):

Deferred tax assets
   Accounts receivable allowances                             $           44
   Other                                                                   8
Deferred tax liabilities:
   Tax over book depreciation                                           (106)
                                                              ==================
                                                              $          (54)
                                                              ==================

The net deferred tax liability is classified  in the  accompanying  consolidated
balance  sheets as a current  asset of $52,000  and a  noncurrent  liability  of
$106,000.

                                      -25-
<PAGE>

NOTE 8. COMMITMENTS AND CONTINGENCIES

During 1995, the Company  entered into capital lease  agreements to purchase two
trucks with an aggregate cost of $81,000. The net book value of these trucks was
$59,000 and $73,000 at December 31, 1996 and 1995, respectively. Amortization of
these trucks is included in depreciation expense.

The Company  leases  office  space and  production  facilities  in Richmond  and
Lansing.  The Richmond  lease expires in July 1999 and provides for an option to
renew for an additional three years. The Lansing lease expires in December 1998.
In  addition,  the  Company  leases  its sales  offices  under  operating  lease
agreements  expiring in various periods through  December 2001.  Automobiles are
also leased under terms not  exceeding  three years.  All of the  aforementioned
leases are accounted for as operating leases.

Future minimum lease payments under the above leases were as follows at December
31, 1996 (in thousands $):

         Year                                         Capital       Operating
                                                   ----------------------------


         1997                                        $       26   $        861
         1998                                                19            782
         1999                                                13            355
         2000                                                10             28
         2001                                                 -             28
                                                   ----------------------------

Total minimum lease payments                                 68   $      2,054
                                                                  =============
Amounts representing interest                                12
                                                   ---------------
Present value of total minimum lease payments        $       56
                                                   ===============

The above amounts have been reduced by expected  sublease  rentals of $78,000 in
1997, $78,000 in 1998 and $26,000 in 1999.

Rent expense amounted to $747,000 in 1996 and $596,000 in 1995.

In 1995 and during part of 1996, the Company  guaranteed certain bank borrowings
of 5  shareholders  aggregating  $270,000 at December 31,  1995.  The loans bore
interest  at the prime rate plus 1.5% and were  scheduled  to be repaid by April
1999. During 1996, the guarantee was released and the Company has no obligations
with regards to the loans at December 31, 1996.

NOTE 9. EMPLOYEE BENEFIT PLAN

In January  1995,  the  Company  adopted a defined  contribution  plan  covering
substantially all employees meeting  eligibility  requirements.  Under the plan,
participants may elect to contribute a specified  portion of their  compensation
to the plan on a tax  deferred  basis.  The Company  will match  one-half of the
participant's  contributions up to six percent of compensation.  The Company may
make additional contributions at its discretion.

Additionally, the Company's wholly-owned subsidiary maintains a similar plan for
its employees. The plan allows participants to contribute a specified portion of
their  compensation to the plan on a tax deferred  basis.  The Company matches a
pre-determined  amount.  According  to  the  terms  of the  purchase  agreement,
participants  of the  subsidiary's  plan would be eligible to participate in the
Company's  plan at the first plan entry date after the first annual  anniversary
date of the complete distribution of assets from the subsidiary's plan.

The Company recorded total expense related to these plans of $75,000 in 1996 and
$53,000 in 1995.

                                      -26-
<PAGE>

NOTE 10. RELATED PARTY TRANSACTIONS

Prior to the  consummation of its initial public  offering the Company  advanced
funds to certain  shareholders  from time to time.  At December 31, 1995,  these
advances  bore  interest  at rates  ranging  from 6.58% to 8.19% per annum.  All
outstanding  advances  were repaid in May 1996.  Interest  income  recognized on
these advances amounted to $10,000 in 1996 and $29,000 in 1995.

The Company  incurred  legal fees of $306,000 in 1996 to a law firm in which one
of the Company's directors is a partner.

In  connection  with the Company's  initial  public  offering,  the Company paid
underwriting fees of $606,000 to an investment  banking firm in which one of the
Company's  directors is an officer.  The Company's revolving line of credit, its
notes  payable and certain of the  operating  bank  accounts  are with a bank in
which one of the Company's director is an officer (see Note 5).

NOTE 11. CONCENTRATIONS OF CREDIT RISK AND FINANCIAL INSTRUMENTS

Financial instruments which potentially subject the Company to concentrations of
credit risk consist primarily of cash equivalents and accounts  receivable.  The
Company's temporary cash in invested in short-term money market accounts.

The Company markets its products and services to customers  located primarily in
the  Southeastern,  Mid-Atlantic  and  Mid-West  United  States.  Production  is
primarily  in  response to customer  orders and larger  jobs  typically  require
advance deposits. The Company performs credit evaluations of its customers prior
to  delivery  or   commencement  of  services  and  normally  does  not  require
collateral.  Payments  are  typically  due within  thirty days of  billing.  The
Company  maintains  an allowance  for  potential  credit  losses and losses have
historically been within management's expectations.

The  carrying  values  of  amounts  classified  as  current  assets  or  current
liabilities  approximate  fair value due to the  short-term  maturities of these
instruments. The carrying value of long-term debt approximates fair value as the
current rates approximate market rates.

NOTE 12. PRO FORMA INFORMATION (UNAUDITED)

The  accompanying pro forma income data reflects a provision for income taxes as
if the Company's  earnings had been subject to federal and state income taxes as
a regular corporation for all years presented.

Pro forma  earnings per common share are based on the  weighted  average  common
shares  outstanding  increased  by 270,000  shares of common  stock deemed to be
outstanding,  which  represents the  approximate  number of common shares deemed
sold by the Company at the initial public  offering of $10 per share to fund the
final S Corporation distribution of $2,695,000 to the Company's shareholders.


                                      -27-
<PAGE>


NOTE 13.  SELECTED QUARTERLY FINANCIAL DATA (UNAUDITED)

Results of operations  for each of the quarters  during the years ended December
31, 1996 and 1995 are as follows (in thousands, except per share data):

<TABLE>
<CAPTION>
                                                                     Quarter Ended
                                              --------------------------------------------------------
                                                 March         June         Septmeber       December
                                                 31st          30th            30th           31st
                                              ------------ -------------- --------------- ------------
Year ended December 31, 1996

<S>                                             <C>          <C>            <C>              <C>    
Net sales                                       $  5,580     $  4,965       $  4,402         $ 7,451
Operating income                                $    963     $    577       $    227         $   407
Income before income taxes                      $    914     $    564       $    363         $   476
Pro forma net income                            $    558     $    344       $    216         $   269
Pro forma earnings per common share             $    .21     $    .11       $    .05         $   .06

Year ended December 31, 1995

Net sales                                       $  4,574      $ 3,091        $ 3,382         $ 4,431
Operating income                                $    738      $   362        $   396         $   516
Income before income taxes                      $    714      $   335        $   363         $   473
Pro forma net income                            $    431      $   202        $   220         $   285
Pro forma earnings per common share             $    .16      $   .07        $   .08         $    11
                                                                                           
</TABLE>



                                      -28-
<PAGE>



Item 8.           Changes in and Disagreements with Accountants on Accounting 
                  and Financial Disclosure

         The Company,  during the two most recent fiscal years or any subsequent
interim period, has not dismissed an independent accountant nor has one resigned
based on any  disagreement  regarding  accounting and financial  disclosure.  In
March 1996,  the Board of Directors of the Company  engaged Ernst & Young LLP as
outside  auditors and notified  Martin,  Dolan & Holton,  Ltd.  that the Company
elected  not to engage  that firm to  perform  the 1995  audit.  The  reports of
Martin,  Dolan & Holton, Ltd. on the Company's financial statements for 1994 and
1993  contained  no  disclaimers,   adverse   opinions,   or  qualifications  or
modifications as to uncertainty,  audit scope or accounting  principles.  During
the period of those audits and through the  Company's  decision in March 1996 to
change  auditors,  there were no  disagreements  between the Company and Martin,
Dolan & Holton, Ltd.


                                    PART III

Item 9.           Directors, Executive Officers, Promoters and Control Persons;
                  Compliance with Section 16(a) of the Exchange Act

         The  information  required  by this  item  is  incorporated  herein  by
reference  to the  Company's  definitive  Proxy  Statement  for its 1997  Annual
Meeting  of  Shareholders  to be  filed  within  120 days of the end of the 1996
fiscal year.

Item 10.          Executive Compensation

         The  information  required  by this  item  is  incorporated  herein  by
reference  to the  Company's  definitive  Proxy  Statement  for its 1997  Annual
Meeting  of  Shareholders  to be  filed  within  120 days of the end of the 1996
fiscal year.

Item 11.          Security Ownership of Certain Beneficial Owners and Management

         The  information  required  by this  item  is  incorporated  herein  by
reference  to the  Company's  definitive  Proxy  Statement  for its 1997  Annual
Meeting  of  Shareholders  to be  filed  within  120 days of the end of the 1996
fiscal year.

Item 12.          Certain Relationships and Related Transactions

         The  information  required  by this  item  is  incorporated  herein  by
reference  to the  Company's  definitive  Proxy  Statement  for its 1997  Annual
Meeting  of  Shareholders  to be  filed  within  120 days of the end of the 1996
fiscal year.



                                      -29-
<PAGE>

                                     PART IV

Item 13.          Exhibits, List and Reports on Form 8-K

         (a)      Exhibits

                  The  following  exhibits are filed on behalf of the Company as
                  part of this report:

                  3(i)     Amended and Restated  Articles of  Incorporation,  
                           incorporated by reference to Exhibit 3(i) of the 
                           Registrant's Form SB-2 Registration  Statement, as 
                           amended, File No. 333-3188.
                  3(ii)    Amended and Restated Bylaws, incorporated by 
                           reference to Exhibit 3(ii) of the Registrant's Form 
                           SB-2 Registration Statement, as amended, File No. 
                           333-3188.
                  4        Form of Stock  Certificate, incorporated by reference
                           to Exhibit 4 of the Registrant's Form SB-2 
                           Registration Statement, as amended, File No. 
                           333-3188.
                  10.1     Deed of  Lease,  as  amended,  dated  April 6,  1992,
                           between   Lingerfelt  and  Carpenter  and  Open  Plan
                           Systems,  Inc.,  incorporated by reference to Exhibit
                           10.1  of  the  Registrant's  Form  SB-2  Registration
                           Statement, as amended, File No. 333-3188.
                  10.2     Commercial Lease Contract, dated May 4, 1993, between
                           M.D. Hodges Enterprises, Inc. and Open Plan Systems, 
                           Inc.,  incorporated by reference to Exhibit 10.2 of
                           the  Registrant's  Form SB-2 Registration  Statement,
                           as  amended,  File No. 333-3188.
                  10.3     Commercial Note made by Open Plan Systems,  Inc. in 
                           favor of Crestar Bank as of May 9, 1996, incorporated
                           by reference to Exhibit 10.3 of the Registrant's Form
                           SB-2 Registration Statement, as amended, File No. 
                           333-3188.
                  10.4     Security  Agreement,   dated  May  7,  1996,  between
                           Crestar   Bank   and   Open   Plan   Systems,   Inc.,
                           incorporated  by  reference  to  Exhibit  10.4 of the
                           Registrant's  Form SB-2  Registration  Statement,  as
                           amended, File No. 333-3188.
                  10.5     Open Plan Systems, Inc. 1996 Stock Incentive Plan, as
                           amended,  incorporated by reference to Exhibit 4.4 of
                           the Registrant's  Form S-8 Registration  Statement,
                           File No. 333-15217.
                  10.6     Open Plan Systems, Inc. 1996 Stock Option Plan For
                           Non-Employee  Directors, as amended,  incorporated by
                           reference to Exhibit 4.4 of the Registrant's Form S-8
                           Registration Statement, File No. 333-15219.
                  10.7     Buy-Sell  Agreement, dated  May 24, 1996, between the
                           Company  and Stan A. Fischer,  incorporated  by 
                           reference to Exhibit 10.7 of the  Registrant's  Form
                           SB-2 Registration Statement, as amended, File No. 
                           333-3188.
                  10.8     Buy-Sell  Agreement,  dated May 15,  1996,  between
                           the Company and Gregory P. Campbell,  incorporated by
                           reference to Exhibit 10.8 of the  Registrant's  Form
                           SB-2 Registration Statement, as amended, File No. 
                           333-3188.
                  10.9     Tax Sharing Agreement, dated May 1, 1996, between the
                           Company and each of the  shareholders  named therein,
                           incorporated  by  reference  to  Exhibit  10.9 of the
                           Registrant's  Form SB-2  Registration  Statement,  as
                           amended, File No. 333-3188.
                  10.10    Form of Employee Non-Qualified Stock Option 
                           Agreement*
                  10.11    Form of Non-Employee Director Non-Qualified Stock 
                           Option Agreement*
                  10.12    Stock Purchase Agreement,  dated September 24, 1996, 
                           between Open Plan Systems, Inc.,  Immaculate  Eagle,
                           Inc.,  Paul A.  Covert,  Todd A. Thomann and Siimon,
                           Inc.,  incorporated  by reference to Exhibit 2.1 of 
                           the  Registrant's  Form 8-K filed October 16, 1996, 
                           File No. 0-20743.


                                      -30-
<PAGE>

                  10.13    Lease,  dated August 8, 1993,  between  Quality Dairy
                           Company and  Immaculate  Eagle, Inc.*
                  10.14    Open Plan Systems, Inc. Bonus Program for Officers*
                  11       Statement re: Computation of Earnings Per Share*
                  16       Letter from Martin, Dolan & Holton,  Ltd.  regarding
                           change in  accountants, incorporated by reference  to
                           Exhibit  16  of  the  Registrant's  Form  SB-2
                           Registration Statement, as amended, File No. 
                           333-3188.
                  21       Subsidiaries of the Registrant*
                  23.1     Consent of Ernst & Young LLP*
                  23.2     Consent of Ernst & Young LLP*
                  27       Financial Data Schedule * (filed electronically only)
         --------
         *  Filed herewith

         (b)      Reports on Form 8-K.

                  The Company filed a Current  Report on Form 8-K on October 16,
         1996 to report under Items 2 and 7 thereof the  acquisition  on October
         1, 1996 of Immaculate  Eagle,  Inc.,  d/b/a TFM  Remanufactured  Office
         Furniture, a Michigan corporation,  as a wholly owned subsidiary of the
         Company.



                                      -31-
<PAGE>

                                   SIGNATURES

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

                                           OPEN PLAN SYSTEMS, INC.


                                           By: /s/ Stan A. Fischer
                                               --------------------------------
                                               Stan A. Fischer
March 24, 1997                                 President


         In accordance  with the Exchange Act, this report has been signed below
by the following  persons on behalf of the  registrant and in the capacities and
on the dates indicated:
<TABLE>
<CAPTION>

         Signature                                         Title                                Date
         ---------                                         -----                                ----

<S>                                            <C>                                          <C> 
/s/ Stan A. Fischer                            President and Director (principal            March 24, 1997
----------------------------                   executive officer)
    Stan A. Fischer

/s/ Gary M. Farrell                            Chief Financial Officer and Secretary        March 24, 1997
----------------------------                   (principal financial officer)
    Gary M. Farrell

/s/ Neil F. Suffa                              Corporate Controller                         March 24, 1997
----------------------------                   (principal accounting officer)
    Neil F. Suffa

/s/ Troy A. Perry,  Jr.                        Director                                     March 24, 1997
----------------------------
    Troy A. Peery, Jr.

/s/ Anthony F. Markel                          Director                                     March 24, 1997
-----------------------------
    Anthony F. Markel

/s/ Theodore L. Chandler, Jr.                  Director                                     March 24, 1997
-----------------------------
    Theodore L. Chandler, Jr.

/s/ Robert F. Mizell                           Director                                     March 24, 1997
-----------------------------
    Robert F. Mizell

/s/ C. T. Hill                                 Director                                     March 24, 1997
-----------------------------
    C. T. Hill

</TABLE>

<PAGE>

                                  EXHIBIT INDEX

<TABLE>
<CAPTION>

Exhibit No.                                                  Document
-----------                                                  --------


<S>      <C>                                                                                                 <C>    
3(i)     Amended and  Restated  Articles of  Incorporation,  incorporated  by reference to Exhibit 3(i) of
         the Registrant's Form SB-2 Registration Statement, as amended, File No. 333-3188.
3(ii)    Amended and Restated  Bylaws,  incorporated  by reference  to Exhibit  3(ii) of the  Registrant's
         Form SB-2 Registration Statement, as amended, File No. 333-3188.
4        Form of Stock  Certificate,  incorporated by reference to Exhibit 4 of the Registrant's Form SB-2
         Registration Statement, as amended, File No. 333-3188.
10.1     Deed of Lease, as amended,  dated April 6, 1992, between Lingerfelt and Carpenter and Open Plan  
         Systems,  Inc.,  incorporated  by reference to Exhibit 10.1 of the Registrant's Form SB-2 
         Registration  Statement,  as amended, File No. 333-3188.
10.2     Commercial  Lease Contract,  dated May 4, 1993,  between M.D. Hodges  Enterprises,  Inc. and Open
         Plan  Systems,  Inc.,  incorporated  by reference to Exhibit 10.2 of the  Registrant's  Form SB-2
         Registration Statement, as amended, File No. 333-3188.
10.3     Commercial  Note made by Open Plan  Systems,  Inc.  in favor of  Crestar  Bank as of May 9, 1996,
         incorporated by reference to Exhibit 10.3 of the Registrant's Form SB-2  Registration  Statement,
         as amended, File No. 333-3188.
10.4     Security  Agreement,  dated May 7, 1996,  between Crestar Bank and Open Plan Systems,  Inc.,  
         incorporated  by reference to Exhibit 10.4 of the Registrant's Form SB-2  Registration  Statement,  
         as amended,  File No. 333-3188.
10.5     Open Plan Systems,  Inc. 1996 Stock  Incentive  Plan,  as amended,  incorporated  by reference to
         Exhibit 4.4 of the Registrant's Form S-8 Registration Statement, File No. 333-15217.
10.6     Open  Plan  Systems,  Inc.  1996  Stock  Option  Plan For  Non-Employee  Directors,  as  amended,
         incorporated by reference to Exhibit 4.4 of the  Registrant's  Form S-8  Registration  Statement,
         File No. 333-15219.
10.7     Buy-Sell  Agreement,  dated May 24, 1996,  between the Company and Stan A. Fischer,  incorporated
         by reference to Exhibit 10.7 of the Registrant's  Form SB-2 Registration  Statement,  as amended,
         File No. 333-3188.
10.8     Buy-Sell  Agreement,   dated  May  15,  1996,  between  the  Company  and  Gregory  P.  Campbell,
         incorporated by reference to Exhibit 10.8 of the Registrant's Form SB-2  Registration  Statement,
         as amended, File No. 333-3188.
10.9     Tax Sharing Agreement,  dated May 1, 1996, between the Company and each of the shareholders named 
         therein, incorporated by reference to Exhibit 10.9 of the Registrant's Form SB-2 Registration  
         Statement, as amended, File No. 333-3188.
10.10    Form of Employee Non-Qualified Stock Option Agreement*
10.11    Form of Non-Employee Director Non-Qualified Stock Option Agreement*
10.12    Stock Purchase Agreement,  dated September 24, 1996, between Open Plan Systems,  Inc., Immaculate
         Eagle,  Inc.,  Paul A. Covert,  Todd A. Thomann and Siimon,  Inc.,  incorporated  by reference to
         Exhibit 2.1 of the Registrant's Form 8-K filed October 16, 1996, File No. 0-20743.
10.13    Lease, dated August 8, 1993, between Quality Dairy Company and Immaculate Eagle, Inc.*
10.14    Open Plan Systems, Inc. Bonus Program for Officers*
11       Statement re: Computation of Earnings Per Share*
16       Letter from  Martin,  Dolan & Holton,  Ltd.  regarding  change in  accountants,  incorporated  by
         reference to Exhibit 16 of the Registrant's Form SB-2 Registration  Statement,  as amended,  File
         No. 333-3188.
21       Subsidiaries of the Registrant*
23.1     Consent of Ernst & Young LLP*
23.2     Consent of Ernst & Young LLP*
27       Financial Data Schedule    * (filed electronically only)

</TABLE>

--------
*  Filed herewith