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

                                   FORM 10-KSB

     [X]  ANNUAL  REPORT  PURSUANT  TO  SECTION  13 OR 15(d)  OF THE  SECURITIES
EXCHANGE ACT OF 1934

     For the fiscal year ended February 29, 1996

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

                           Commission File No.: 1-7948

                             AIC INTERNATIONAL, INC.
             (Exact name of registrant as specified in its charter)

              Delaware                                        11-2192898
   (State or other jurisdiction of                         (I.R.S. Employer
    incorporation or organization)                        Identification No.)


            117 East 57th Street, Room 21-H, New York, New York 10022
               (Address of principal executive offices) (Zip Code)

     Registrant's telephone number, including area code: (212) 838-3220

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

     Securities registered pursuant to Section 12(g) of the Exchange Act:

                     Common Stock, par value $.10 per share
                                (Title of Class)

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

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

     The  aggregate  market  value  of  the  shares  of  Common  Stock  held  by
non-affiliates of the Company is unavailable.

     Indicate  the  number of  shares  outstanding  of each of the  registrant's
classes of common equity, as of the latest practicable date:



         Class of                                     Number of
       Common Equity                                   Shares

       Common Stock                                   4,207,379
      par value $.10




<PAGE>



                                     PART I

     Item 1. Business

     The Company

     AIC International,  Inc., and its subsidiaries (collectively the "Company")
are engaged in the importation, merchandising and wholesale distribution of high
quality  photographic  equipment.   Currently,   the  Company's  operations  are
conducted  exclusively  in  Germany,  through  Soligor  GmbH,  Foto Optik  Video
Elektronik (f/k/a A.I.C.  Fototechnik GmbH), a wholly-owned German subsidiary of
the Company's  wholly owned  subsidiary,  Allied Impex  Corporation,  a New York
corporation.  The Company does not  presently  conduct any  business  activities
other than Soligor GmbH.

     Historically,  the Company's  primary  business has been the sale of lenses
for 35mm single lens reflex (SLR)  cameras  which has declined in past years due
to the popularity of auto focus cameras and compact cameras. In fiscal 1996, the
Company experienced a significant increase in demand for its SLR camera lenses.

     During fiscal 1996,  the Company's  domestic  activities  were comprised of
maintaining a small  administrative  office and a minimal staff. The Company has
no present plans to expand its business activities in the U.S., however, Soligor
GmbH continues to remain active in the  photographic  industry.  U.S.  operating
expenses are funded through dividends from Soligor GmbH.

Products

     The Company,  through Soligor GmbH,  markets Soligor  photographic  lenses,
autofocus  (shutter)  cameras,  electronic  flash  equipment and  accessories in
Germany and other European  countries on an exclusive  distributorship  basis, a
common practice in the industry. Most of the Company's photographic equipment is
intended for sophisticated amateur users, as well as professional photographers.
Equipment  sold by the Company is  manufactured  exclusively  for the Company by
various manufacturers in Japan, Hong Kong, Taiwan, Korea, and China. All Soligor
lenses,  as well as the other  equipment,  are  warranted  by the  Company.  The
periods of such  warranties vary from one to five years depending on the type of
equipment.

     The Company has been marketing and  distributing  Soligor lenses,  exposure
meters and accessories since 1956.  Accessories available under the Soligor name
include  tripods,  electronic flash units,  camera bags,  binoculars and optical
devices. Soligor sales represented  approximately 76.7% of the Company's overall
consolidated  sales for the fiscal year 1996 and 78.5% for the fiscal year 1995.
The Company owns the Soligor  trademark and has  registered it in many countries
around the world.

     Since 1972, Soligor GmbH has been the exclusive  distributor in Germany for
Elmo, formerly a manufacturer of film cameras and projectors who now produces AV
equipment and CCD surveillance  cameras in Japan.  Elmo sales  represented 22.4%
and 20.6% of the Company's overall consolidated sales for fiscal year ended 1996
and 1995, respectively.

     In 1986, the Company began purchasing flashes and winders for cameras to be
marketed by the Company and Soligor  GmbH under the name of Soligor from Maxwell
Electronics,  Ltd.  ("Maxwell").  Maxwell,  a Hong Kong corporation all of whose
shares are owned by Daniel C.K. Yu, Chairman of the

                                        2

<PAGE>



Board,  principal shareholder and a Director of the Company. Mr. Yu is also
the sole shareholder of AIC Investment Ltd., a Hong Kong corporation  which owns
77.6% of the Company's  Common Stock.  For fiscal years 1996 and 1995,  sales of
Maxwell  products  represented  approximately  4.5% and 6.5%,  respectively,  of
consolidated net sales of Soligor products. In connection with these sales, from
1986 to March  1989,  Maxwell  extended  financing  to the  Company  and,  as of
February 29, 1996, was owed an aggregate of $1,232,186 by the Company, including
accrued interest of $558,912. See Note 8 to Financial Statements.

     Distribution and Repair Operation

     The Company  distributes its merchandise by utilizing its warehouse located
in  Leinfelden-  Echterdingen  near  Stuttgart,  Germany.  Warranty  repairs and
service operations for the U.S. are now being performed on behalf of the Company
by a  third  party  repairer.  Customers  are  billed  for  repairs  made  after
expiration  of the  applicable  warranty  period.The  Company had  liability for
product   warranties   for  fiscal  1996  and  1995  of  $93,674  and   $82,745,
respectively.

     Competitive Conditions

     Despite  the weak  economic  conditions  in  Europe  in  fiscal  1996,  the
Company's  sales increased  significantly.  This was mainly due to the Company's
successful  introduction  of  several  new  product  lines  which have been well
received  by  European  consumers.   In  particular,   the  demand  for  Soligor
interchangeable  lenses for SLR cameras increased by 91.7% and Elmo AV-Equipment
increased by 41.2% from the previous year's sales.  Sales in the German domestic
market  also  increased  by 26%  compared to the  previous  year.  The  positive
business  trend is  expected  to continue in fiscal year 1996/7 with an expected
average increase in sales of approximately 7%.

     Material Licenses

     The Company has an exclusive distribution agreement with Elmo Co. Ltd. (for
an unstated  period of time) for the  distribution  of Elmo AV equipment and CCD
surveillance cameras in Germany.

     Employees

     As of February  29,  1996,  the Company  employed  one person in the United
States and Soligor GmbH employed 35 persons in Germany.

     Foreign Operations

     Soligor   equipment  is   manufactured   exclusively  for  the  Company  by
manufacturers in Japan, Hong Kong, Taiwan,  Korea and China (including  Maxwell)
usually under verbal  agreement,  terminable  at will.  Soligor GmbH imports and
sells Soligor  equipment in Germany as well as to importers and  distributors in
other countries. Sales from operations conducted by Soligor GmbH constituted all
of the Company's total consolidated sales during the last fiscal year.

     Item 2. Properties

     The Company  leases its  regional  offices in New York and  Germany.  These
leases cover an aggregate of approximately 14,000 square feet of floor space and
$122,000 in annual rentals. The lease

                                        3

<PAGE>



for the Company's  German  offices  expires in the year 2000. The Company's
executive offices are located at 117 East 57th Street,  Suite 21H, New York, New
York 10022,  in a  condominium  owned by the Chairman of the Board and principal
shareholder  of the Company and are occupied on a month to month basis  pursuant
to which the Company pays building maintenance fees and property taxes.

     Item 3. Legal Proceedings

     On February 1, 1995, the U.S. Tax Court issued a decision (the  "Decision")
with respect to a Notice of Deficiency of the Internal  Revenue  Service for the
Company's  tax years 1980  through  1984.  Under the  Decision,  the Company was
required to pay an aggregate of  $195,509.86  (including  interest)  for the tax
years 1980 through 1982.  No penalties  were assessed and no taxes were required
to be paid for 1983 and 1984.

     On December 8, 1995, all amounts were paid including  additional  penalties
and interest of $7,531.66 for the late payment of the assessed  amount  referred
to above.

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

     None.


                                        4

<PAGE>



                                     PART II

     Item 5.  Market for  Registrant's  Common  Equity and  Related  Stockholder
Matters

     The Company's  Common Stock, par value $.10 per share (the "Common Stock"),
was traded on the  American  Stock  Exchange  (APH) until March 9, 1985 at which
time it was delisted. To the best of the Company's knowledge, there is no active
trading market in the Common Stock. Accordingly, the Company is unable to obtain
price information for the Common Stock.

     The number of  recordholders  of the Common Stock as of October 31, 1996 is
934.

     No cash or stock  dividends  were paid  during  fiscal  1995 and 1996.  The
future payment by the Company of dividends,  if any, is  discretionary  with the
Board  of  Directors  and  will  depend  upon the  Company's  earnings,  capital
requirements and financial  condition,  as well as other relevant  factors.  The
Company is not contractually restricted in its ability to pay dividends.

     Item 6. Selected Financial Data

<TABLE>
<CAPTION>
                                                                      Year Ended

                                          Feb. 29             Feb. 28           Feb. 28            Feb. 28            Feb. 29
                                            1996               1995              1994               1993               1992

                                                           (Thousands of dollars, except per share amounts)
<S>                                          <C>                <C>               <C>                 <C>                <C>

Income Statement Data

Net Sales                            $14,274                  $10,703           $9,916             $11,398            $11,145

Net Loss                                (36)                    (592)            (125)                 (4)              (193)

Average Number of
 Outstanding Shares                    4,207                  4,207            4,207               4,207               4,207

Net Loss Per Share of
Common Stock                            (.01)                  (.14)             (.03)                -               ($0.05)

Cash Dividends                        None                     None              None               None               None

Balance Sheet Data

Total Assets                           5,878                    6,377            6,312               5,722              5,831

Working Capital                        2,040                  2,121            2,181               2,426               2,261

Long Term Obligations                    127                    133              105                 113                 116

Stockholders' Equity                    1,993                 2,073            2,147               2,407               2,415

</TABLE>



                                        5

<PAGE>



     Item 7.  Management's  Discussion  and Analysis of Financial  Condition and
Results of Operation

     Financial Condition of Discontinued Operations

     Maintaining the Company's  presence in New York,  which has been reduced to
minimal  operations,  is funded by dividends generated from the Company's German
subsidiary.

     Results of Operations

     Net sales increased in fiscal 1996 by $3,571,215 to $14,273,933  from sales
of  $10,702,718  in fiscal  1995.  In fiscal  year 1996,  the  Company's  german
subsidiary,  Soligor  GmbH,  successfully  introduced  several new product lines
including  video  surveillance   equipment  and  various  electronic  goods.  In
addition,  there was a significant increase in sales of Soligor lenses by adding
4 new lenses to the line in fiscal year 1996.

     Cost of Sales

     As a percentage of sales, the Company's cost of sales decreased to 66.5% in
fiscal 1996 from 68.5% in 1995.  The main reason for the  decrease was the lower
cost of imported  products due to fluctuation of exchanges rates of Japanese Yen
and German Deutsche Mark.

     Operating Expenses

     Total selling,  general and administrative expenses increased to $3,765,245
from $3,419,195.

     In fiscal 1996,  operating  expenses of Soligor GmbH increased by DM404,500
(US $283,676) compared to the prior year, due to an increase in sales.

     The Company  incurred  expenses of $111,000 in fiscal 1996 and  $120,000 in
fiscal 1995 in connection with maintaining a New York office.

     Taxes on Income

     In fiscal  1996,  taxes  recovery  on the  income of the  Company's  German
subsidiary,  Soligor GmbH, were approximately $25,000 on net income. This amount
is subject to adjustment  following  completion of a German government tax audit
which took place in June 1996.

     Summary

     In fiscal  1996,  the higher sales volume and lower cost of products due to
fluctuations  and  translation  of  exchange  rates,   combined  with  increased
operating expenses,  resulted in a net loss of $36,000 compared to a net loss of
$592,000 for fiscal 1995.

     Liquidity

     The Company's  working  capital at February 29, 1996 was $2,039,783 and was
$2,121,028  at  February  28,  1995.  The ratio of  current  assets  to  current
liabilities  was 1.54 to 1 at February 29,  1996,  and 1.51 to 1 at February 28,
1995.

                                        6

<PAGE>




     Net cash  provided  by  operating  activities  was  $596,350 in fiscal 1996
compared to net cash used in operating activities of $445,461 in fiscal 1995. In
fiscal 1996, the effect of exchange rate changes on cash was an increase of cash
of $44,464 as compared to a decrease of cash of $517,543 for fiscal 1995.

     Net cash of  $3,494  was  received  by sale of  equipment  in  fiscal  1996
compared to $74,229 which was used in investing activities in fiscal 1995.

     Net cash of  $653,035  was used in  financing  activities  in  fiscal  1996
compared to net cash of $145,194  fiscal  1995.  The Company  believes  its cash
flow, working capital,  internally generated funds and the funds available under
its line of credit is sufficient to meet its current working capital needs.

     Item 8. Financial Statements

     This information is contained on Pages F-1 through F-15 hereof.

     Item 9. Changes in and  Disagreements  with  Accountants  on Accounting and
Financial Disclosure

     None.


                                        7

<PAGE>



                                    PART III

     Item 10. Directors and Executive Officers of the Registrant

     Each of the  following  individuals  was a  director  of the  Company as of
February 29, 1996.

<TABLE>
<CAPTION>


                                            Position with the Company
                                            Business Experience During
                                            the Past Five Years and
           Name                   Age       Other Public Directorships                 Director Since

<S>                               <C>                <C>                                   <C>

Daniel C.K. Yu                    60        Director of the Company,                        1986
                                            Managing Director of
                                            Maxwell Electronics, Ltd.

James B. Wong                     64        Director and President of the                   1987
                                            Company

Stephen P.Y. Chow                 68        Director of the Company,                        1987
                                            Director of Top-Q-A
                                            Development Ltd., Top-Q-S
                                            Investment Ltd., P.Y. Chow
                                            (Secretaries) Ltd., P.Y. Chow
                                            (Consultants) Ltd. and
                                            Kiangsu and Chekiang
                                            Residents (H.K.) Association

Robert I. Campbell                48        President of Stratheden                         1988
                                            Investment Ltd. of Monrovia,
                                            Liberia, Solicitor & Notary
                                            Public qualified in England &
                                            Wales, Hong Kong and
                                            Australia
</TABLE>



     The term of office of each  director  will  continue  until the next annual
meeting of stockholders or until his earlier death, resignation or removal.

     The  executive  officers of the Company as of February 29,  1999,  together
with their ages are:


     Name                        Age            Office

James B. Wong                    64             President

Stephen Lai                      42             Secretary, Chief Financial
                                                Officer and Vice President



                                        8

<PAGE>



     Item 11. Executive Compensation

     The  following  table  sets forth the  compensation  paid or accrued by the
Company during the three fiscal years ended February 29, 1996, February 28, 1995
and February 28, 1994 to the Company's chief executive  officer.  For the fiscal
years ended  February 29, 1996,  February  28, 1995,  and February 28, 1994,  no
executive officer received cash compensation in excess of $100,000.

                                            SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>


        Name and Principal Position           Year               Salary
<S>                                            <C>                 <C>

James B. Wong..............................   1996               $36,000
 President.................................   1995               $36,000
                                              1994               $36,000

</TABLE>

     The Company  also pays an annual  service fee of DM10,000 to members of the
Advisory Council of Soligor GmbH and a service fee of $3,000 to directors of the
Company.

     Item 12. Security Ownership of Certain Beneficial Owners and Management

     The following table sets forth certain  information as of February 29, 1996
based on information  obtained from the persons named below, with respect to the
beneficial  ownership  of shares of Common Stock by (i) each person known to the
Company to  beneficially  own more than 5% of the  outstanding  shares of Common
Stock,  (ii) each executive  officer and director of the Company,  and (iii) all
officers and directors of the Company as a group.  Except as otherwise indicated
each  beneficial  owner has sole voting and  investment  power over such owner's
shares.
<TABLE>
<CAPTION>


                     Name                                    Shares                      Percent of Class
<S>                 <C>                                        <C>                             <C>

AIC Investment Ltd., Hong Kong                              3,267,361                          77.6%

Estate of Rose Silverman, Forest                             424,851                           10.1%
Hills, New York

All Directors and Officers as a group                          01                               01
(five persons)
</TABLE>


     Compliance with Section 16(a) of the Exchange Act

     Section 16(a) of the Securities Exchange Act of 1934 requires the Company's
officers and directors and persons who own more than ten percent of a registered
class of the Company's equity securities (collectively, the "Reporting Persons")
to file reports of ownership and changes in ownership  with the  Securities  and
Exchange  Commission  and to furnish the Company  with copies of these  reports.

     --------

     1 Does not include 3,267,361 shares owned by AIC Investment Ltd., Hong Kong
which is indirectly  controlled  by Daniel C.K. Yu,  chairman of the Board and a
Director of the Company.


                                        9

<PAGE>



New rules  governing  these  reports  were  adopted  in  February  1991 and
generally  became effective in May 1991. Based solely on the Company's review of
the copies of such forms  received by it during the Company's  fiscal year ended
February 29, 1996, the Company believes that all filing requirements  applicable
to the Reporting Persons were complied with.

     Item 13. Certain Relationships and Related Transactions

     In 1986, the Company began purchasing flashes and winders for cameras to be
marketed by the Company and Soligor  GmbH under the name of Soligor from Maxwell
Electronics,  Ltd.  ("Maxwell").  Maxwell,  a Hong Kong corporation all of whose
shares are owned by Daniel C.K. Yu, Chairman of the Board, principal shareholder
and a  Director  of the  Company.  Mr.  Yu is also the sole  shareholder  of AIC
Investment  Ltd.,  a Hong Kong  corporation  which owns  77.6% of the  Company's
Common  Stock.  For  fiscal  years  1996 and  1995,  sales of  Maxwell  products
represented approximately 4.5% and 6.5%, respectively, of consolidated net sales
of Soligor  products.  In connection with these sales,  from 1986 to March 1989,
Maxwell extended financing to the Company and, as of February 29, 1996, was owed
an  aggregate  of  $1,232,187  by the  Company,  including  accrued  interest of
$558,912.

     Item 14. Exhibits, Financial Statements and reports on Form 8-K

     (a)(1) CONSOLIDATED FINANCIAL STATEMENTS PAGE(S)
<TABLE>
<CAPTION>
<S>                                                                                                             <C>

Index to Consolidated Financial Statements......................................................................F-2

Report of Independent Certified Public Accountants..............................................................F-3

Consolidated Balance Sheets as of February 29, 1996 and February 28, 1995.......................................F-4

Consolidated Statements of Operations for the years ended
 February 29, 1996 and February 28, 1995........................................................................F-5

Consolidated Statements of Stockholder's Equity for the years
 ended February 29, 1996 and February 28, 1995..................................................................F-6

Consolidated Statements of Cash Flows for the years ended
 February 29, 1996 and February 28, 1995........................................................................F-7

Summary of Accounting Policies............................................................................F-8 - F-9

Notes to Consolidated Financial Statements..............................................................F-10 - F-15
</TABLE>

     (a)(3) EXHIBITS

     3(i) Certificate of Incorporation of the Company, incorporated by reference
to Exhibit 3(a) to the Company's Registration Statement No. 2-29168.

     3(ii)  Certificate  of Amendment to  Certificate  of  Incorporation  of the
Company  incorporated  by reference to the Company's  Annual Report on Form 10-K
for the fiscal year ended February 28, 1988.

                                       10

<PAGE>




     3(iii) By-Laws of the Company, incorporated by reference to Exhibit 3(b) to
the Company's Registration Statement No. 2-29168.

     22 Subsidiaries of the Company.

     (b)(1) REPORTS ON FORM 8-K

     None.



<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.



                                             AIC INTERNATIONAL, INC.
                                                   Registrant



                                          By:
                                             James B. Wong, President


Dated:  January 22, 1997



     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/James B. Wong
----------------------------------  President, Chief Executive Officer                   January 24, 1997
James B. Wong                         and Director

/s/Stephen Lai
----------------------------------  Vice President, Secretary and Chief                  January 24, 1997
Stephen Lai                         Financial  Officer

/s/Daniel C.K. Yu                
----------------------------------  Director and Chairman of the Board                   January 24, 1997
Daniel C.K. Yu

/s/Stephen P.Y. Chow
----------------------------------  Director                                             January 24, 1997
Stephen P.Y. Chow

/s/Robert I. Campbell
----------------------------------  Director                                             January 24, 1997
Robert I. Campbell

</TABLE>


                                       12

<PAGE>




                             AIC International, Inc.
                                and Subsidiaries


                                    Contents


Report of independent certified public accountants                      F-3

Consolidated balance sheets:
 February 29, 1996 and February 28, 1995                                F-4

Consolidated financial statements for the years
   ended February 29, 1996 and February 28, 1995:

 Statements of operations                                               F-5

      Statement of stockholders' equity                                 F-6

      Statements of cash flows                                          F-7


Summary of accounting policies                                    F-8 - F-9

Notes to consolidated financial statements                      F-10 - F-15


                                       F-1

<PAGE>



     Report of Independent Certified Public Accountants


     AIC International, Inc. and Subsidiaries
     New York, New York


     We  have  audited  the  accompanying  consolidated  balance  sheets  of AIC
International,  Inc. and  subsidiaries  as of February 29, 1996 and February 28,
1995,  and the related  consolidated  statements  of  operations,  stockholders'
equity and cash flows for each of the two years in the period ended February 29,
1996.  These  financial  statements  are  the  responsibility  of the  Company's
management.  Our  responsibility  is to express  an  opinion on these  financial
statements based on our audits.

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

     In our opinion,  the consolidated  financial  statements  referred to above
present  fairly,  in  all  material  respects,  the  financial  position  of AIC
International,  Inc. and its  subsidiaries at February 29, 1996 and February 28,
1995,  and the results of their  operations and their cash flows for each of the
two years in the period ended  February 29, 1996 in  conformity  with  generally
accepted accounting principles.





BDO Seidman, LLP
Mitchel Field, New York
May 9, 1996


                                       F-2
<PAGE>











                             AIC International, Inc.
                                and Subsidiaries


                           Consolidated Balance Sheets



<TABLE>
<CAPTION>

                                                                                       February 29,                   February 28,
                                                                                          1996                            1995
<S>                                                                                     <C>                               <C>

Assets
Current:
   Cash                                                                                    $  471,008                 $    568,663
   Trade receivables, less allowances of $82,925 and $66,865
      for possible losses (Note 5)                                                          1,479,840                    1,632,745
   Merchandise inventories (Note 5)                                                         3,529,399                    3,669,960
   Prepaid expenses and other current assets                                                  317,786                      322,365
   Due from related party (Note 8)                                                                  -                       98,264
                                                                                          ___________                  ___________ 
      Total current assets                                                                  5,798,033                    6,291,997
Property and equipment, at cost less accumulated
   depreciation and amortization (Note 2)                                                      62,074                       66,871
Other assets                                                                                   17,821                       17,821
                                                                                          ___________                  ___________
                                                                                           $5,877,928                   $6,376,689
                                                                                          ===========                  =========== 

Liabilities and Stockholders' Equity
Current:
   Bank loans (Note 5)                                                                     $1,565,641                   $2,218,676
   Accounts payable - trade                                                                   109,578                       63,010
   Due to related party (Note 8)                                                            1,399,550                    1,126,697
   Income taxes payable                                                                        83,478                      195,510
   Other taxes payable                                                                        213,105                      204,255
   Liability for product warranties                                                            93,674                       82,735
   Accrued payrolls, commissions and other liabilities                                        293,224                      280,086

           Total current liabilities                                                        3,758,250                    4,170,969
Accrued pension costs (Note 7)                                                                126,832                      132,700
                                                                                          ___________                  ___________
           Total liabilities                                                                3,885,082                    4,303,669
Commitments and Contingencies (Notes 6 and 7)
Stockholders' equity:
   Common stock, $.10 par - shares authorized, 10,000,000;
      issued, 4,244,879                                                                       424,488                      424,488
   Additional paid-in capital                                                               6,719,500                    6,719,500
   Deficit                                                                                (6,315,265)                   (6,279,555)
   Accumulated translation adjustment                                                       1,276,623                    1,321,087
   Treasury stock, at cost - 37,500 shares                                                  (112,500)                     (112,500)
                                                                                          ___________                   __________ 
           Total stockholders' equity                                                       1,992,846                    2,073,020
                                                                                          ___________                   __________ 
                                                                                           $5,877,928                   $6,376,689
                                                                                          ===========                   ==========
</TABLE>

     See accompanying  summary of accounting  policies and notes to consolidated
financial statements.

                                       F-3
         

<PAGE>

                             AIC International, Inc.
                                and Subsidiaries


                      Consolidated Statements of Operations
<TABLE>
<CAPTION>
                  
                     
                                                                                       February 29,                 February 28, 
Year ended                                                                                 1996                        1995
__________                                                                             _____________                _____________
<S>                                                                                       <C>                          <C>

Net sales (Note 3)                                                                      $14,273,933                  $10,702,718
Cost of sales                                                                             9,487,677                    7,328,994
                                                                                       _____________                _____________
   Gross profit                                                                           4,786,256                    3,373,724
                                                                                       _____________                _____________   
Operating expenses:
   Selling, general and administrative                                                    3,765,245                    3,419,195
   Advertising                                                                              738,007                      493,341
   Interest                                                                                 264,216                      267,371
                                                                                       _____________                _____________   
      Total operating expenses                                                            4,767,468                    4,179,907
                                                                                       _____________                _____________ 
     Loss from operations                                                                   18,788                     (806,183)
                                                                                       _____________                _____________   
Other income (expense):
   Net foreign exchange gain (loss)                                                         (82,710)                      99,805  
   Other                                                                                      7,319                       24,966
                                                                                       _____________                ______________
      Other income (expense) - net                                                          (75,391)                     124,771
                                                                                       _____________                ______________  
      Loss from operations before income tax expenses
        (recovery) (Note 3)                                                                 (56,603)                    (681,412)
Income tax expenses (recovery) (Note 4)                                                     (20,893)                     (89,577)
                                                                                       _____________               ______________
Net loss                                                                               $    (35,710)                $   (591,835)
                                                                                       =============               ==============
Net loss per share                                                                     $       (.01)                $       (.14)
                                                                                       _____________               ______________
Average number of shares used in computation of net
   loss per share                                                                         4,207,379                    4,207,379
                                                                                       =============               ===============
</TABLE>

     See accompanying  summary of accounting  policies and notes to consolidated
financial statements.

                                       F-4
                                        

<PAGE>



                             AIC International, Inc.
                                and Subsidiaries


                            Consolidated Statement of
                              Stockholders' Equity



For the two years ended February 29, 1996
<TABLE>
<CAPTION>

                                                                     Common Stock
                                                                Authorized 10,000,000
                                                                   Shares $.10 Par
                                                   ------------------------------------------------



                                                                        Additional                   Accumulated      Treasury  
                                                                         Paid-in                     Translation       Stock,
                                                Shares Issued  Amount    Capital       Deficit       Adjustment       At Cost
<S>                                                     <C>        <C>     <C>            <C>           <C>             <C>
                                                                                     
    Year ended February 28, 1995:
       Net loss                                        -          -           -        (591,835)           -              -     
       Foreign currency translation adjustment         -          -           -            -            517,543           -
                                                  _________   ________  __________   ___________      __________     __________
Balance, February 28, 1995                        4,244,879    424,488   6,719,500   (6,279,555)      1,321,087      (112,500)
   Year ended February 29, 1996:
     Net loss                                          -          -           -         (35,710)           -              -
       Foreign currency translation adjustment         -          -           -            -            (44,464)          -
                                                  _________   ________  __________   ___________     ___________     __________
Balance, February 29, 1996                        4,244,879   $424,488  $6,719,500   $(6,315,265)    $1,276,623      $(112,500)
                                                  =========   ========  ==========   ============    ===========     ==========
</TABLE>

     See accompanying  summary of accounting  policies and notes to consolidated
financial statements.

                                      F-5
                                                               

<PAGE>






                             AIC International, Inc.
                                and Subsidiaries

<TABLE>
<CAPTION>

                      Consolidated Statements of Cash Flows

                                                                                        February 29,                 February 28,
Year ended                                                                                 1996                          1995
<S>                                                                                         <C>                           <C>


Cash flows from operating activities:
   Net loss                                                                               $ (35,710)                    $(591,835)
   Items in net loss not affecting cash:
      Depreciation and amortization                                                            1,303                       60,656
      Increase (decrease) in provision for possible losses
        on accounts receivable                                                                16,060                        3,968
   Increase (decrease) in cash flows from changes in
      operating assets and liabilities:
      Accounts receivable                                                                    136,845                     (480,432)
      Inventories                                                                            140,561                      217,479
      Prepaid expenses and other current assets                                                4,579                      113,362
      Due from related party                                                                  98,264                      (53,137)
      Accounts payable                                                                        46,568                      (48,522)
      Due to related parties                                                                 272,853                       82,375
      Income taxes payable                                                                  (112,032)                      65,951
      Other liabilities                                                                       27,059                      184,674
                                                                                           __________                    _________
        Net cash provided by (used in) operating activities                                  596,350                     (445,461)
Cash flows from investing activities:
   Capital expenditures, net of proceeds from sale of
      equipment                                                                                3,494                      (74,229)
Cash flows from financing activities:
   Net borrowings from (repayments to) banks                                               (653,035)                     (145,194)
Effect of exchange rate changes on cash                                                     (44,464)                      517,543
                                                                                           _________                     _________
Net increase (decrease) in cash                                                             (97,655)                     (147,341)
Cash, at beginning of year                                                                   568,663                      716,004
                                                                                           _________                     _________
Cash, at end of year                                                                        $471,008                     $568,663
                                                                                           =========                     =========

</TABLE>
 

     See accompanying  summary of accounting  policies and notes to consolidated
financial statements.

                                       F-6

<PAGE>



                             AIC International, Inc.
                                and Subsidiaries


                         Summary of Accounting Policies




     Organization  and Business

     The Company is a 77.6% owned  subsidiary  of AIC  Investments,  Ltd.  which
Business is a wholly-owned subsidiary of Maxwell Electronics, Ltd. Its principal
business  is  the  importation,  merchandising  and  wholesale  distribution  of
photographic equipment. The principal portion of its operations are in Germany.



     Consolidation

     The  consolidated   financial   statements  include  the  accounts  of  AIC
International,  Inc. and its subsidiaries (all wholly-owned), with the exception
of its immaterial Hong Kong and Japanese subsidiaries.



     Use of Estimates

     In preparing  financial  statements in conformity  with generally  accepted
accounting principles,  management is required to make estimates and assumptions
that affect the reported amounts of assets and liabilities and the disclosure of
contingent  assets and  liabilities.  Actual  results  could  differ  from those
estimates.



     Concentrations of Credit Risk
           
     Financial   instruments   which   potentially   subject   the   Company  to
concentrations of credit risk consist  principally of accounts  receivable.  The
Company engages in the sale of photographic equipment to customers, the majority
of whom are in the retail industry. Concentration of credit risk with respect to
accounts  receivable  from one  industry is limited due to the diverse  group of
distributors to whom the Company sells.  Also, the Company  attempts to minimize
credit risk by reviewing all customers'  credit history before extending credit,
and by monitoring  customers'  credit  exposure on a regular basis.  The Company
established an allowance for accounts  receivable based upon factors surrounding
the credit risk of specific customers, historical trends and other information.



     Merchandise Inventory

     Inventories,  which consist only of finished goods, are valued at the lower
of cost or market. Cost is determined by the first-in, first-out (FIFO) method.



Property, Equipment and Depreciation
                 
     Depreciation and amortization are computed principally by the straight-line
method over the estimated useful lives of the assets.


                                       F-7
                                       

<PAGE>





                                                        AIC International, Inc.
                                                               and Subsidiaries

                                                 Summary of Accounting Policies


     Translation of Foreign Currency Financial Statements

     Substantially all assets and liabilities of the Company's German subsidiary
are  translated  at year-end  exchange  rates,  while  income and  expenses  are
translated at average  exchange rates for the year.  Gains and losses  resulting
from  translation  of foreign  currency  financial  statements  are deferred and
classified as a separate component of stockholders' equity.



     Product Warranties

     The Company  sells its products with  warranties  ranging from one to seven
years. The estimated cost of repairs under existing warranties has been provided
for in the consolidated financial statements.



     Advertising Costs

     The Company expenses advertising costs when they are incurred.



     Per Share Data

     Per share loss is based on the weighted  average number of shares of common
stock.



     Statement of Cash Flows

     For purposes of the  statement  of cash flows,  the Company  considers  all
highly liquid debt instruments purchased with a maturity of three months or less
to be cash equivalents.



     Prospective Accounting Changes

     In March 1995, the Financial Accounting Standards Board issued Statement of
Financial  Accounting  Standards  No.  121  "Accounting  for the  Impairment  of
long-lived  assets and for long-lived assets to be disposed of ("SFAS No. 121").
SFAS No. 121 is effective  for fiscal year  beginning  after  December 15, 1995.
SFAS  No.  121  requires  that  long-lived   assets  and  certain   identifiable
intangibles  to be held and used by an  entity  to be  reviewed  for  impairment
whenever events or changes in circumstances indicate that the carrying amount of
an asset may not be  recoverable.  The  impact of  adopting  SFAS No. 121 is not
expected to be material.



                                       F-8
                                                               

<PAGE>





                             AIC International, Inc.
                                and Subsidiaries

                              Notes to Consolidated
                              Financial Statements




     1. Business

     Since  1988,  the  Company's   domestic   business   activities  have  been
substantially  curtailed  in order to reduce  operating  losses and the level of
operating  funds needed from the German  subsidiary.  During 1996, the Company's
domestic activities were comprised of maintaining a small administrative  office
and a minimum staff.

     At present  there are no plans to expand the United  States  operations  to
prior levels. As a result, Soligar GmbH, Fotoo Optiko Videoo Elektronik, Germany
(formerly A.I.C. Fototechnik GmbH) became autonomous, developed its own supplier
relationships and imports merchandise directly. The Germany subsidiary continues
to account for  substantially  all of the consolidated 1996 assets and revenues.
Management plans to continue operating the Company in this manner and is funding
the operating expenses in the United States with dividends from Germany.



     2. Property and Equipment

     Major classes of property and equipment are as follows:
         
<TABLE>
<CAPTION>


                                        February 29,      February 28,        Estimated
                                            1996              1995           useful lives
<S>                                        <C>                <C>              <C>             


Office furniture and equipment           $313,273         $316,170           4 -10 years      

Leasehold improvements                     58,561           59,157          Term of lease
                                         _________         ________         _____________
                                          371,834          375,327

Less accumulated depreciation
       and amortization                  (309,760)        (308,456)
                                         _________        _________

                                         $ 62,074         $ 66,871
                                         ==========       =========
</TABLE>


                                       F-9
                                                               

<PAGE>


                             AIC International, Inc.
                                and Subsidiaries

                              Notes to Consolidated
                              Financial Statements




     3. Information about the Company's Operations in Different Geographic Areas

     The  Company  operates  in  one  business  segment  - the  importation  and
wholesale  distribution  of  photographic  equipment.  Operations  in  different
geographic  areas are summarized on this page for 1996 and on the following page
for 1995.

<TABLE>
<CAPTION>

                                                1996
                                                ____

                                               United         Adjustments and
                               Germany          States         Eliminations         Consolidated

                                                              (in thousands)
<S>                               <C>            <C>               <C>                  <C>

Revenues:

  Sales to unaffiliated 
    customers                 $14,274         $    -           $     -                $14,274
                              ========        ========         ============         ==========

Income (loss) from
  operations before
  income tax expenses
  (recovery)                      218           (275)                -                   (57)
                              ========        ========         ============        ===========

Identifiable assets:

  Current assets                5,809            (11)                -                 5,798

 Property and
    equipment                      61              1                 -                    62

  Investment in
    subsidiary                      -          3,479              (3,479)                  -

  Other assets                      -             18                 -                    18
                              ________        ________         ____________         __________       
                               $5,870         $3,487             $(3,479)            $ 5,878       

</TABLE>






                                      F-10
                                                               

<PAGE>


                             AIC International, Inc.
                                and Subsidiaries

                              Notes to Consolidated
                              Financial Statements




     3. Information about the Company's Operations in Different Geographic Areas
(concluded)

<TABLE>
<CAPTION>


                                               1995
                                               _____
                                               United       Adjustments and
                               Germany         States         Eliminations        Consolidated

                                                             (in thousands)
<S>                              <C>             <C>               <C>                 <C> 
                                                            
Revenues:
    Sales to unaffiliated                                                                   
       customers               $10,703       $   -             $   -                 $10,703
                               =======       ========         ==========             =======

Income (loss) from
  operations before
  income tax expenses
  (recovery)                      (313)         (368)              -                    (681)
                              ________       ________         __________             ________
Identifiable assets:
  Current assets                 6,118           174               -                   6,292
  Property and
    equipment                       66             1               -                      67
  Investment in
    subsidiary                       -         3,335            (3,335)                   -
  Other assets                       -            18               -                      18
                              ________       ________          ________             _________
                               $ 6,184        $3,528           $(3,335)             $  6,377
                              ========       ========          ========             =========


     4. Income Tax Expenses (Recovery)

     (a) Income tax  expenses  (recovery)  consists of the  following:  Expenses
(Recovery)

                                         1996                    1995
                                         ____                    ____
Current:
   Federal                            $    -                  $    -
   State                                4,001                    4,028
   Foreign                            (24,894)                 (93,605)
                                      ________                _________
                                     $(20,893)                $(89,577)
                                      ========                =========

</TABLE>



                                      F-11
                                                              
<PAGE>





                             AIC International, Inc.
                                and Subsidiaries


                              Notes to Consolidated
                              Financial Statements





     (b) The  reasons  for the  difference  between the  reported  tax  expenses
(recovery)  and the amounts  computed by using the statutory  Federal income tax
rate are summarized as follows:
<TABLE>
<CAPTION>

                                               1996                    1995
<S>                                            <C>                     <C>

Federal income tax (recovery) at
   statutory rate based on pretax
   income (loss)                            $(19,245)               $(231,680)
Domestic losses which did not
   result in tax benefit (net
   operating loss carryforwards)               93,499                  129,323
Foreign tax at rates higher
   (lower) than U.S. statutory
   rate                                      (39,757)                  106,385
Prior year overaccrual                       (55,390)                 (93,605)
                                            _________                _________
                                            $(20,893)               $ (89,577)
                                            =========                =========

</TABLE>

     (c) The Company  and its  domestic  subsidiaries  have net  operating  loss
carryforwards of approximately $6,205,000,  which are available to offset future
domestic  income through 2011.  The deferred tax assets  resulting from possible
utilization  of the net  operating  loss  carryforwards  have  been  offset by a
valuation reserve of the same amount.



     5. Notes and Loans Payable- Banks 

     The Company has $1,565,641 of outstanding notes to its banks as of February
29, 1996. The note is payable on demand with an average  interest rate of 4.44%.
The  maximum  amount  and  average  amount  outstanding  during  the  period was
$3,679,787 and $2,288,057.

     As of February  29,  1996,  the  Company's  lines of credit with its German
lending banks were as follows:

     The  Company  has  access to several  lines of credit  which  aggregate  to
approximately DM 7,200,000 ($4,886,000). The credit lines are also available for
discounted  notes  receivable and for letters of credit.  The credit lines of DM
3,200,000  ($2,172,000)  and DM 2,500,000  ($1,697,000)  are  collateralized  by
inventory and accounts receivable, respectively, of the German subsidiary.


                                      F-12

<PAGE>



                             AIC International, Inc.
                                and Subsidiaries

                              Notes to Consolidated
                              Financial Statements



    6.   Commitments and Contingencies   

     Rent  expense for the years ended  February  29, 1996 and February 28, 1995
totalled $122,031 and $107,639, respectively.

     The principal leases are the Company's offices and warehouses in Germany.

     The minimum  annual rental  commitments  under all  noncancellable  leases,
exclusive of taxes and other charges, as of February 29, 1996 are as follows:


Year ending February 28,
________________________
1997                                                                $194,446
1998                                                                 124,179
1999                                                                 102,684
2000                                                                 102,684
2001                                                                  32,974
                                                                    ________
                                                                    $556,967
                                                                    ========   



     7. Retirement Plan

     The Company's  unfunded  foreign  retirement plan provides  benefits to the
foreign subsidiary's director based on length of service and compensation.

     The  actuarial  present  value of vested plan benefits at February 29, 1996
and February 28, 1995 aggregated $127,000 and $132,700, respectively. Plan costs
charged to expense for the years ended  February 29, 1996 and February 28, 1995,
were  approximately  $12,000 and $24,000,  respectively.  Payments are currently
being made to the director.




                                      F-13
       

<PAGE>




                             AIC International, Inc.
                                and Subsidiaries

                              Notes to Consolidated
                              Financial Statements




     8. Related Party Transactions

     At February 29, 1996 and February 28, 1995, the Company owed $1,232,186 and
$1,126,697 to Maxwell Electronics, Ltd. arising from the purchase of merchandise
before March 1989. Interest on this indebtedness is accrued at the prime rate of
Hong Kong & Shanghai Banking Corp. Accrued interest thereon at February 28, 1996
of $558,912 is included in the $1,232,186.  Purchases from Maxwell  Electronics,
Ltd. for the years ended  February  29, 1996 and  February  28,  1995,  totalled
$250,805  and  $258,742,  respectively.  Interest  expenses  accrued  to Maxwell
Electronics,  Ltd. for the years ended  February 29, 1996 and February 28, 1995,
were $105,491 and $82,374.

     The Company had a payable of $20,344 at February  29, 1996 and a receivable
of $98,264 at February 28, 1995 from its  unconsolidated  Hong Kong  subsidiary,
Soligor (AIC) Ltd. This amount was advances to the subsidiary to pay for foreign
purchases and expenses on behalf of the Company.  The Company also had a payable
of $147,020 at February 29, 1996 to another affiliate.



     9. Supplemental Disclosures of Cash Flow Information

     Cash paid during the year for:

                                                1996                   1995
                                                ____                   ____

Interest                                      $89,250                $97,703
                                              =======                =======

Taxes                                         $  -                   $  -
                                              =======                =======


                                      F-14