<PAGE>   1
                     U.S. 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 (NO FEE REQUIRED)

         For the fiscal year ended September 30, 1997

/ /      TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES
         EXCHANGE ACT OF 1934 (NO FEE REQUIRED)

         For the transition period from                      to

                           COMMISSION FILE NO. 0-16530

                        FINANCIAL PERFORMANCE CORPORATION
                 (Name of small business issuer in its charter)


           NEW YORK                                           13-3236325
(State or Other Jurisdiction of                            (I.R.S. Employer
Incorporation or Organization)                             Identification No.)

                               335 MADISON AVENUE
                            NEW YORK, NEW YORK 10017
          (Address of principal executive offices, including zip code)

                                 (212) 557-0401
                           Issuer's telephone number)

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

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

                          COMMON STOCK, $0.01 PAR VALUE
                                (Title of class)

         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 is not contained in this form, and no disclosure will
be contained, to the best of registrant's knowledge, in
<PAGE>   2
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]

         Issuer's revenue for the fiscal year ended September 30, 1997 were
$7,785,250.

         The aggregate market value of the voting stock (Common Stock) held by
non-affiliates of the registrant on December 30, 1997 was approximately
$1,754,710, based on the volume-weighted average price of such stock on such
date, as reported by the OTC Bulletin Board.

         The number of shares outstanding of each of the issuer's classes of
common equity, as of January 5, 1998, was: 8,021,534 shares of Common Stock,
$0.01 par value.

         DOCUMENTS INCORPORATED BY REFERENCE    None.

         Transitional Small Business Disclosure Format:  Yes    [ ]   No     [X]
<PAGE>   3
                        FINANCIAL PERFORMANCE CORPORATION
                          ANNUAL REPORT ON FORM 10-KSB
                                TABLE OF CONTENTS

<TABLE>
<CAPTION>

                                                                                                               Page
                                                                                                               ----

<S>                                                                                                            <C>
PART I............................................................................................................1

         ITEM 1 - DESCRIPTION OF BUSINESS.........................................................................1
         ITEM 2 -- DESCRIPTION OF PROPERTY........................................................................14
         ITEM 3 -- LEGAL PROCEEDINGS..............................................................................14
         ITEM 4 -- SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS............................................14

PART II...........................................................................................................15

         ITEM 5 -- MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER
                        MATTERS..................................................................................15
         ITEM 6 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
                        CONDITION AND RESULTS OF OPERATIONS......................................................15
         ITEM 7 - FINANCIAL STATEMENTS...........................................................................21
         ITEM 8 - CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
                        ACCOUNTING AND FINANCIAL DISCLOSURE......................................................21

PART III.........................................................................................................22

         ITEM 9 - DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL
                        PERSONS; COMPLIANCE WITH SECTION 16(A) OF THE
                        EXCHANGE ACT.............................................................................22
         ITEM 10 - EXECUTIVE COMPENSATION........................................................................25
         ITEM 11 -  SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
                         MANAGEMENT..............................................................................30
         ITEM 12 - CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS................................................32
         ITEM 13 - EXHIBITS AND REPORTS ON FORM 8-K..............................................................35

FINANCIAL STATEMENTS............................................................................................F-1
</TABLE>


                                       -i-
<PAGE>   4
                                     PART I


ITEM 1 -- DESCRIPTION OF BUSINESS

INTRODUCTION

         Financial Performance Corporation and its subsidiaries (the "Company")
market specialized merger communications consulting services and computer
software to the financial services industry. The Company's services and software
are designed to identify and analyze the financial impact and competitive
position of its customer's products and services and assist its customers in
developing and analyzing marketing and communications strategies. The Company's
current and recent customers include First Union National Bank, Chemical Bank
(now The Chase Manhattan Bank), First National Bank of Maryland, The Dime
Savings Bank of New York, The Bank of New York, Citibank, CIT Group, PNC
National Bank, Fleet Bank and NatWest Bank.

         The Company's principal business is merger communications and marketing
services to financial institutions. The Company has developed a particular
expertise in providing services to banks with respect to communications
concerning mergers and other business combinations, marketing and financial
information software.

         The Company's software, referred to as MARS(TM) (Managing Account
Relationships), functions as an integrated planning and sales management system
designed to coordinate the user's marketing activity and analyze the results of
its sales efforts and the profitability of its products. The Company believes
that MARS(TM) enables its users to monitor the income and new business
contributions of each department, branch, sector or group within a business
enterprise faster and more efficiently than current applications. The Company
also believes that future projections by a business enterprise using MARS(TM)
will be easier since the software regularly maintains information regarding
pending sales.



HISTORY

         The Company was incorporated in New York in August 1984 under the name
Performance Services Group, Inc. and changed its name to Financial Performance
Corporation in June 1986. In January 1987, the Company consummated an initial
public offering of its Common Stock and in July 1989, the Common Stock was
delisted from the Nasdaq over-the-counter market for failure to maintain
Nasdaq's minimum capital requirements. In February 1990, the Company ceased
day-to-day operations and was inactive from February 1990 to November 1992.

         The Company resumed operations in January 1993. At that time, the
Company raised working capital through private debt and equity issuances. In
1994, the Company began implementing a business strategy of establishing
subsidiary companies to engage in related or complementary areas of the
financial services industry. As a result, the Company, together with other
parties, formed three subsidiaries (Michaelson Kelbick Partners Inc. ("MKP"),
FPC Information Corp. ("FPC Information") and Aspen Capital Management, LLC
("Aspen")). MKP is engaged in providing merger communications and marketing
services to the financial services industry. FPC Information was formed to
market the Company's software and Aspen was formed to operate as an
international sponsor of cash management funds. For further information
concerning these subsidiaries, see "--
<PAGE>   5
Subsidiaries" and "Item 6 -- Management's Discussion and Analysis of Financial
Condition and Results of Operations."

         The Company incurred losses in each of the three fiscal years ended
September 30, 1995. For the year ended September 30, 1996, the Company generated
approximately $8,780,000 in revenues, $278,000 in operating income, a loss of
approximately $15,000 from continuing operations, and a net loss of
approximately $235,000. For the year ended September 30, 1997, the Company
generated approximately $7,785,000 in revenues, had an operating loss of
approximately $569,000, a loss from continuing operations of approximately
$545,000 and a net loss of approximately $545,000.

         As of November 27, 1996, the Company's Common Stock resumed trading on
the OTC Bulletin Board under the symbol "FPCX". The high and low sale price of
the Common Stock for the period from November 29, 1996 to January 5, 1998 were
$2.75 and $0.22, respectively.

         The Company's offices are located at 335 Madison Avenue, New York, New
York 10017. The Company's telephone number is (212) 557-0401. Unless the context
is otherwise, the term the "Company" shall mean Financial Performance
Corporation and its subsidiaries.

SUBSIDIARIES

         In 1994, the Company began implementing a business strategy of
establishing subsidiary companies to engage in related or complementary areas of
the financial services industry. As a result, the Company, together with other
parties, formed three subsidiaries.

         MICHAELSON KELBICK PARTNERS INC. In October 1994, the Company, together
with Susan Michaelson and Hillary Kelbick, formed Michaelson Kelbick Partners
Inc. ("MKP"). The Company owns 80% of the outstanding equity of MKP and each of
Ms. Michaelson and Ms. Kelbick own 10% of the outstanding equity of MKP. MKP is
engaged in providing specialized business and marketing services to the
financial services industry. MKP has developed particular expertise in providing
advice to its customers with respect to communications concerning mergers and
other business combinations and sales promotions.

         Ms. Michaelson and Ms. Kelbick have over 32 years of combined
experience in financial services marketing. They were both formerly employed as
Senior Vice Presidents by Wilcox Associates, in New York, New York, where they
were primarily responsible for the planning, development and execution of
marketing communications projects for numerous financial institutions. See "Item
9 -- Directors, Executive Officers, Promoters and Control Persons."

         FPC INFORMATION CORP. In November 1994, the Company, together with
Robert S. Trump, formed FPC Information Corp. ("FPC Information"). Mr. Trump
furnished $150,000 to the Company in connection with the establishment and
initial operations of FPC Information in exchange for a 20% equity interest in
FPC Information. In October, 1997, Mr. Trump acquired an additional 30% equity
interest in FPC Information in exchange for an additional investment of
$225,000. Accordingly, as of January 5, 1998, Mr. Trump owns 50% of the 
outstanding equity of FPC Information. However, the Company has the option to
repurchase a 30% equity interest in FPC Information from Mr. Trump exercisable
at any time prior to September 30, 1999 at the fair market value of such
interest, but in no event less than $225,000.



                                       -2-
<PAGE>   6
         The MARS(TM) software and any rights associated therewith and related
liabilities have been transferred by the Company to FPC Information Corp.
Accordingly, the Company functions as a holding company and will continue to
seek investment and acquisition opportunities in the financial services
industry. As of January 5, 1998, Mr. Trump beneficially owned approximately
60.93% of the Company's shares of Common Stock. See "Item 11 -- Security
Ownership of Certain Beneficial Owners and Management."

         ASPEN CAPITAL MANAGEMENT, LLC. In January 1995, the Company, together
with Messrs. Richard Loos and Sean Brennan, formed Aspen Capital Management, LLC
("Aspen"). Aspen was established to operate as an international sponsor of cash
management funds. In February 1995, Aspen was converted to a New York limited
liability company.

         In connection with Aspen's formation and operation, the Company entered
into shareholders' and executive employment agreements with Richard Loos and
Sean Brennan. Richard J. Loos previously was Managing Director and a member of
the Board of Directors of HSBC Asset Management Americas Inc., a global asset
management group, and Sean P. Brennan previously was affiliated with CS First
Boston Investment Management Group. The Company owns 80% of the outstanding
equity of Aspen and each of Messrs. Loos and Brennan own 10% of the outstanding
equity of Aspen.

         During the period from January through April 1995, Robert S. Trump, one
of the principal stockholders of the Company, loaned the Company an aggregate of
$500,000, which was utilized in connection with the funding and the initial
operations of Aspen. In August 1995, Aspen officially commenced operations with
the formation of the Aspen Worldwide Dollar Fund (the "Fund"). The Fund was
administered by ABN--AMRO Trust Company (Cayman) Limited. The Fund received
approximately $5,000,000 through initial subscriptions provided by persons
associated with Mr. Trump and raised with Mr. Trump's assistance. The Fund never
received any additional subscriptions. As a result, during the fiscal year ended
September 30, 1996, the initial investors redeemed all of their interests in the
Fund. The Fund is currently inactive. In July and September 1996, Messrs.
Brennan and Loos, respectively, resigned as officers of the Company and have no
affiliation with the Fund. There can be no assurance that the Company will
retain an investment advisor for the Fund or that the Fund or Aspen will
recommence operations.


MERGER COMMUNICATIONS SERVICES

         Since the resumption of the Company's operations, substantially all of
the Company's revenues have been generated by MKP. MKP's primary business is
bank merger communications, which accounts for approximately 85% of MKP's
revenues. MKP also specializes in marketing planning and communications
strategies, sales promotion and direct mail. The principals of MKP have managed
over 50 merger communications and other projects for banks, including Bank of
Boston/Bay Bank, The Bank of New York, Citibank, First Union National Bank,
First National Bank of Maryland, Nat West Bank, Fleet Bank, The Dime Savings
Bank of New York, Great Western, First Fidelity, CIT Group, PNC and Chemical 
Bank (now The Chase Manhattan Bank).







                                       -3-
<PAGE>   7
         The merger communications projects which are undertaken by MKP involve
planning, strategizing, managing and executing customer communications in
support of the merger related events, including:

         -        Systems conversions
         -        Product consolidations
         -        Price changes
         -        Branch Closings

MERGER COMMUNICATIONS SERVICES

         MKP's merger communications services include:

         -        Business Strategies and Marketing Planning
         
         -        Advisory Services: impact assessments by product, service and
                  customer group

         -        Data Processing: data sources, customer account file
                  integration

         -        Proprietary methodologies for Matrix programming instructions
                  for customized copy block messaging

         -        Communications Development and Execution: Comprehensive
                  layouts, pre-press production, mail file development, print
                  and mail production

         -        Project Management including milestones and budgets

         -        Communications Recommendations: vehicles, audiences, timing

         -        File Collapse Methodology (definition of the customer)

         -        Regulatory requirements for disclosure

DATA MANAGEMENT

         MKP's data management services include:

         -        PLANNING. Includes defining the communications requirements,
                  including product/account types, file integration and
                  merge/purge requirements and level of personalization
                  required.

         -        DATA SOURCE(S) AND EXTERNAL SUPPLIERS. MKP advises on the most
                  advantageous data source(s) for each project (i.e., operating
                  systems, CIF or a combination thereof). In addition, MKP can
                  assist in assessing internal and external data processing
                  requirements.

         -        TAPE SPECIFICATIONS. Includes definition of tape formats,
                  record information, and all file coding required for data
                  integration and the customization of messages.

         -        CUSTOMER MAIL FILE DEVELOPMENT. Includes development of
                  specifications and procedures for record selection, file
                  clean-up programming, merge/purge and file verification.






                                       -4-
<PAGE>   8
         -        VERIFICATION/QUALITY CONTROL. Includes development of detailed
                  procedures to ensure that counts are correct (all records are
                  accounted for), established procedures are followed, all
                  programming steps are verified and exceptions are identified
                  and properly handled. A key step includes the creation of a
                  test file including all copy blocks and block assignment
                  criteria existing in the main file.


MKP QUALITY CONTROL

         MKP's premise is that quality control begins with the initial steps in
planning a project. As MKP works to develop concepts and strategies for its
clients, MKP confirms that the concepts and strategies which are developed can
be properly executed. MKP adheres to strict quality control procedures and uses
numerous quality control/verification checks in this process, including the
following:

         -        Developing tape specifications and mail house instructions 
                  (before tape is cut)
         -        Initial tape verification (immediately upon receipt of type)
         -        File clean-up verification
         -        Merge/Purge verification
         -        Verification of programmed data, including copy block 
                  assignment and line count
         -        Account number verifications
         -        Verification of live laser proofs
         -        Laser printing quality control
         -        Lettershop quality control
         -        Postal receipts

DATA MANAGEMENT/QUALITY CONTROL

         MKP has significant experience in developing systems for customizing
data processing and programming verification in order to ensure quality control
integrity of each merger project. MKP must often operate under tight time frames
and legal deadlines that generally accompany merger projects. MKP assembles and
manages both internal and external resources in support of large-scale, complex
projects.

CROSS-SELLING POTENTIAL

         The Company believes that services furnished by MKP to its banking
clients could provide a significant opportunity for the Company's subsidiary,
FPC Information Corp., to introduce its software and related services to these
institutions. The Company also believes that the type of analysis generally
performed by MKP for its bank clients in connection with its merger
communications services can often be instrumental in planning the foundation for
a more efficient MIS gathering system for such clients. In the Company's view,
with this type of information about potential clients, FPC Information could
have certain advantages over its competitors when making proposals to implement
system-wide computer software improvements in such banking institutions.







                                       -5-
<PAGE>   9
FINANCIAL INFORMATION SOFTWARE

         MARS(TM) (MANAGING ACCOUNT RELATIONSHIPS)

         GENERAL. The Company has developed a software program referred to as
MARS(TM) (Managing Account Relationships). MARS(TM) functions as an integrated
planning and sales management system designed to coordinate the user's sales and
marketing activity and analyze the results of its sales efforts and the
profitability of its products. MARS(TM) was designed to allow management at
banks to analyze in greater detail the products it offers in light of an
increasingly competitive industry environment. The Company believes that
MARS(TM) enables its users to monitor income and new business contributions of
each department, branch, sector or group within a business enterprise faster and
more efficiently than current applications. The Company also believes that
future projections by a business enterprise using MARS(TM) will be easier since
the software regularly maintains information regarding pending sales.

         The Company believes that the sales management aspect of MARS(TM) can
also provide management with extensive "on line" information to enable fast and
informed decisions to be made based upon total customer sales and other
financial information. MARS(TM) can retrieve data directly from the customer's
mainframe computers, access overall sales information and match the retrieved
data to targets previously set by the customer. Reporting can be done by
customer, product, account officer, department or division.

         In addition to the capability of MARS(TM) to coordinate sales and
marketing activities, individual department managers can use MARS(TM) to measure
productivity of each employee on a daily, weekly, monthly or annual basis. The
overall performance of a business enterprise can be evaluated and compared
against the contributions of each employee. Planning and performance results can
be accessed instantly through standard reports or by means of customized
reporting formats.

         Another way of describing MARS(TM) is in the context of the emerging
trend toward Sales Force Automation (SFA) which is beginning to have a major
impact in the business world. SFA involves the use of computers, armed with a
sophisticated software program, which allows an organization to more efficiently
and effectively manage the sales function with the objective of enhancing
profitability. The Company believes that the necessity for SFA techniques is
particularly important to the banking industry, which is currently faced with
acute competitive pressures and the necessity to more effectively cross-sell
products to customers. The Company's research suggests that the banking industry
is in serious need of applications that will complement the goal of executing
successful selling strategies. The senior management of the Company, with its
experience in the banking area, recognized the acute need for SFA early in the
development stage for the MARS(TM) product. Accordingly, the MARS(TM) system was
targeted specifically to the banning and financial services community.

         In the Company's view, a primary reason that banks and other financial
institutions are in need of a SFA program is represented by the so-called
"80-20" rule, a measure of profitability used in the banking industry which
suggests that, as a general rule of thumb, approximately 80% of a business
enterprise's profits come from approximately 20% of its customers, on average.
Additionally, the wide range of products offered by the typical large bank makes
cross-selling strategies extremely complex. For example, corporate banking
relationships encompass many product categories ranging from loans to cash
management. Larger banks, in particular, have had a difficult time assembling a
company-wide


                                       -6-
<PAGE>   10
view of what products and services have been sold, or could be sold, to an
established client base. Because banks are usually organized on a very
structured departmental basis, each department operating with its own systems
and sales force, information that would be useful in the cross-selling of
products is often dispersed among a myriad of confusing systems. MARS(TM) is
designated to allow the integration of vital relationship information on a firm
(bank) wide basis, while at the same time providing the tools for enhanced
productivity. The Tower Group, which provides technology consulting services to
financial institutions, has stated in a May 1995 report titled "Sales
Applications for Wholesale Banking" that "successful cross-selling is one of the
keys to bank profitability, as it maximizes the return on each relationship. An
additional component to successful relationship management in the banking
industry is the continuous delivery of high quality customer service, which is
also enhanced by multi-user access to a database which describes a customer
relationship". The Tower Group report also estimates that "85% of the top 100
banks and 20% of all other banks will have installed at least departmental sales
and relationship management application for users on the wholesale side of the
bank by the year 2000. Of the larger banks, half will have extended these
systems beyond a single functional department by that time". The Company
believes that the MARS(TM) product is well suited to meet the SFA needs of both
larger and smaller banking institutions.


MARKETING STRATEGIES RELATING TO MARS(TM)

         In the Company's view, the senior management of the Company's
subsidiary, FPC Information Corp., in addition to developing the MARS(TM)
software, has developed an excellent reputation within the banking community for
its ability to provide quality, high level consultation in the areas of
strategic business planning and product management. Moreover, the Company's 80%
owned subsidiary, MKP, specializes in market and communications strategies for
the financial services community involving a wide array of services. The Company
believes that the natural synergy of these closely connected organizations
allows for a cross-selling opportunity with which to successfully launch the
MARS(TM) product. In fact, the MARS(TM) product is currently under evaluation at
four banks. The Company believes that by the end of calendar year 1998, at least
one highly recognizable banking institution will have committed to MARS(TM),
thereby providing a valuable reference from which to pursue future
installations.

         If reliable references MARS(TM) are developed, the Company will seek to
build a channel of product distribution to augment its own direct selling
efforts. In this regard, the banking industry is served by a large number of
consulting firms specializing in financial services industry information
technology. For example, the "Big Six" accounting firms and most of the second
tier accounting firms provide information technology services to banks. The
Company believes that the MARS(TM) product is the best available solution for
SFA to the banking and financial services community and that certain accounting
firms could have a substantial interest in representing MARS(TM) to their
clients as part of the services such firms can offer.

         In addition to these potential business partners, the Company believes
that the opportunity exists for possible alliances with over a dozen regional
systems integrators whose businesses are primarily concerned with the
installation and modification of banking and financial services applications.
The third group which the Company intends to target in the channel strategy is
software product companies with banking specific applications which would
complement MARS(TM). The Company also intends to explore a less formal lead
sharing relationship with hardware providers who have relationships with the
banking market. The Company believes in the possibility that a MARS(TM) sale
could justify the purchase of a large number of both PC's and laptops. The
Company expects


                                       -7-
<PAGE>   11
these channel development efforts to result in a number of product relationships
over the course of the next twelve to eighteen months.

         If MARS(TM) becomes well accepted within the banking community, the
Company plans to modify the product in a second version which would be suitable
for the insurance industry. A third version of MARS(TM) for the brokerage
community could then be developed. In the view of the Company's management, both
of these industries, like the banking industry, could benefit from effective
cross selling, but until now have lacked the proper computer software to achieve
this goal.

         SPECIFIC PRODUCT DESCRIPTION. The MARS(TM) program contains modules for
key areas, including customer information, product information, customization,
management reports, report writer, SOL (Structured Query Language) Support and
MARS(TM) Remote.

         -        CUSTOMER AND PRODUCT INFORMATION. The customer and product
                  information modules of MARS(TM) allow a user to retrieve in
                  real time its client's record and select marketing and
                  technical information on its products, programs and services.
                  The customer and product information modules are designed to
                  enable the user's sales team to offer the most suitable
                  products to its clients. The product files contain pricing and
                  competitive information and textual descriptions of features,
                  benefits and various terms and conditions of the products
                  offered.

         -        MARS-TM- CUSTOMIZATION. MARS(TM) customization allows a user
                  to set system capabilities for office automation, passwords
                  and access paths to customer information and product
                  databases. Additionally, it provides the user with the ability
                  to pre-load the system with text and terminology for windows
                  and menus so that the particular culture and methodology of
                  the user is replicated throughout the system.

         -        MANAGEMENT REPORTS. MARS(TM) allows the user to generate
                  management reports on officer performance, sales in process
                  and other sales information by month and quarter. These
                  reports can be accessed by the user at any time and viewed
                  on-line or in a printed report. Management can access a
                  complete picture of the activities of each employee by task,
                  account or as a calendar of activities. Many of the major
                  reports of the system are also presented graphically as pie or
                  bar charts, allowing for alternative presentations of complex
                  relationships.

         -        REPORT WRITER. In addition to the standard reports provided by
                  MARS(TM), the system supports the popular report writer called
                  "Crystal Reports," which is considered by the Company and
                  others as virtually an industry standard. Through the use of
                  this third party product, the Company believes the user can
                  easily add new reports to its MARS(TM) installation, thereby
                  potentially increasing the value of the data provided.

         -        SOL SUPPORT. The Company expects to complete shortly a module
                  for MARS(TM) which will include SOL (Structured Query
                  Language) support thus enabling MARS(TM) to be used as a
                  single desk top sales support system or a system that is
                  implemented throughout an organization.





                                       -8-
<PAGE>   12
         -        E-MAIL SUPPORT. The Company is currently designing a module to
                  the MARS(TM) system to include its own E-Mail capability,
                  thereby connecting all users and enabling effective data
                  sharing for management communication or team selling efforts.
                  Alternatively, the system could be supported by connections to
                  popular E-Mail products such as Microsoft Mail and Lotus
                  Notes.

         -        ADVANCED SOFTWARE TECHNOLOGY. MARS(TM) is fully compliant with
                  the Microsoft Windows user interface. MARS(TM) system
                  navigation is mouse driven requiring minimum keying by the
                  user. A simple export of MARS(TM) files to Microsoft Word or
                  spread sheets tools, such as EXCEL, allows the user to quickly
                  gather, sort, and combine information from multiple sources
                  into one format.

         -        MARS-TM- REMOTE. MARS(TM) permits mobile computing by the
                  exchange and synchronization of information between the
                  computer of the remote user and the server data base. The
                  system supports both direct or Internet connections, thereby
                  providing its users with greater availability and flexibility.

         TECHNICAL INFORMATION. The MARS(TM) system can produce over 30 on-line
reports to assist the user and management in recommending appropriate products
to customers in a short period of time. Each transaction can be monitored in
real time.

         The Company provides a wide range of delivery options for MARS(TM),
including installation of a fully-configured workstation. MARS(TM) is a
client/server application implemented with state-of-the-art technologies.
MARS(TM) requires an IBM compatible PC with a 386 or higher processor, 8MB RAM
and a 20 MB hard drive. The front-end windows-based application provides a
user-friendly, easy-to-access graphic user interface and is consistent to all
users with different desktop or laptop operating systems, such as Windows, OS/2,
Windows 95 or Windows NT. The back-end server can be implemented with a wide
range of relational database systems such as MS Access, MS Fox-Pro, NS SQL
Server for Windows NT, Sybase Infomix, or Oracle, which also may reside on a
variety of platforms.

         MARS(TM) ran be used in a wide range of working environments, ranging
from a single PC or a workstation, or a small LAN, to a large corporate setting
with multiple sites connected by Wide Area Network. MARS(TM) supports a variety
of networking communication environments including Novell NetWare, Microsoft
Windows for Workgroups, Microsoft Windows NT, IBM LAN Manager, the TCP/IP
Networks (UNIX bases networks) and remote dial-up.


SOFTWARE LICENSING

         The Company expects to license MARS(TM) to customers under nonexclusive
license agreements. Under a standard Company licensing arrangement, the Company
anticipates that the customer will pay a fixed license fee and acquire the
nontransferable and nonexclusive right to use MARS(TM) at one or more designated
sites. The Company anticipates that additional license fees can be negotiated
between the parties depending upon the number of sites at which the customer
intends to use the Company's software. As part of the fixed license fee for
MARS(TM), customers will receive, for a period of one year after installation,
all announced software enhancements to the licensed software at the latest
standard release level being offered for license by the Company, including all
software and documentation updates. The Company has not derived any revenues
from MARS(TM) since the recommencement of its


                                       -9-
<PAGE>   13
operations in November 1992 and there can be no assurance it will generate any
such revenues in the future,

         The Company expects to recognize revenue from license fees after
delivery of the documentation and the software components to the customer and
upon final customer acceptance, provided that no significant Company obligations
remain and collection of the resulting receivable is deemed probable. Because of
the nature of the Company's software and the overall commitment to a software
based, integrated sales and marketing approach, the Company anticipates that the
installation of MARS(TM) can take from up to several months for a single
customer and up to twelve months for an entire integrated system. The period of
installation is also dependent upon the level of commitment made by the customer
to installation as well as the learning speed of the customer's personnel.
Lengthy installation periods can delay the recognition of revenue from the
Company's software licensing fees.


CUSTOMER SUPPORT; SOFTWARE MAINTENANCE AND SERVICE

         In connection with MARS(TM), the Company expects to provide support
services such as project planning, system installation, software implementation,
user training and ongoing technical support and documentation. In addition, the
Company expects to offer a full range of consulting services, including
planning, research and custom design for modifications to meet the specific
needs of a customer. Support services will be provided either by Company
personnel or independent subcontractors.

         The Company anticipates that it will offer software maintenance
services to its customers for a period of time following the installation of
MARS(TM). The Company expects that its software maintenance agreements will
generally provide for the maintenance of Company-licensed software at a specific
site for a specified period of time. The Company will be required to remedy
significant programming errors, as well as provide the customer with certain
improvements, revisions or modifications.

         There have been no revenues from customer support, software maintenance
and service fees since the recommencement of operations by the Company in
November 1992. While it is expected that the Company will recognize revenues
from such activities, there can be no assurance that any such revenues will be
generated.


FINANCIAL SERVICES INDUSTRY

         Consulting services currently provided to the financial services
industry are rendered by a diverse group of companies or firms, substantially
all of which are privately-held. These companies or firms range in size from
large firms which are divisions or subsidiaries of major accounting firms or
Fortune 100 companies to organizations which are smaller than the Company.

         The Company believes that the recent increase of mergers and
acquisitions in the financial services industry has generated an increase in
demand for related consulting services. The Company believes that this increased
demand includes a trend towards outsourcing certain services and a greater focus
on product and sales analyses and marketing and communications strategies used
in connection with business combinations.



                                      -10-
<PAGE>   14
         The Company believes that the industry will continue to consider
methods to analyze the financial impact and competitive position of its products
and reduce in-house corporate functions which may be more efficiently
effectuated by outside resources. The Company believes it can capitalize on this
trend.


COMPETITION

         Competition among enterprises which render merger communications
services and software products to financial institutions and other business
organizations is intense. The Company faces competition from other companies
which offer services or products similar to those offered by the Company and
which have greater financial resources, more technical personnel and more
extensive service capabilities than the Company. For example, MKP competes
against larger and more established companies such as Harte-Hanks Communication,
Dimac Corporation and Arthur Anderson LLP.

         The Company is aware of several competitors which offer computer
software products as comprehensive as MARS(TM) as well as other competitors. The
Company believes that the software products which most directly compete with
MARS(TM) are Lotus NOTES, Siebel Systems SALES ENTERPRISES, Aurum Software SALES
TRAK and Borealis ARSENAL. In particular, Lotus Development Corp. markets the
Notes product as a universal information sharing tool for collaborative work
groups. The Company believes that the flexibility and workflow components of
NOTES makes that product a viable competitor, although at a significantly higher
cost than MARS(TM).

         The Company endeavors to distinguish its services and software from
those of its competitors based upon the following factors: (i) its services and
software are specifically designed for application in financial institution
environments, unlike most competitive products which are designed for more
general applications and require modification for effective utilization by
financial institutions; and (ii) the experience of the Company's management in
the financial services industry.

         There can be no assurances that the Company will be successful in its
efforts to distinguish the qualities of its services and software in the
marketplace. Other entities, with substantially greater resources than the
Company, compete directly with the Company, by offering services and/or software
to the same industry.

         The Company believes, however, that MKP possesses certain competitive
advantages in the merger communications field. Specifically, the principals of
MKP, Susan Michaelson and Hillary Kelbick, have over 32 years of combined
experience and have successfully completed more than 50 merger projects. Prior
to the establishment of MKP in 1994, Ms. Michaelson and Ms. Kelbick completed
the NationsBank merger which created the then third largest banking organization
in the United States. MKP's first two major merger assignments were the First
Union/First Fidelity merger and the Bank of Boston/Bay Bank merger. Since its
formation, MKP has also performed services for various other banking
institutions, including Chemical Bank (now The Chase Manhattan Bank), The Bank
of New York, Citibank, First National Bank of Maryland, The Dime Savings Bank of
New York, Fleet Bank, CIT Group and PNC National Bank. MKP was recently awarded
the First Union/Signet Bank merger and has received a "Future Bank Initiative"
assignment from First Union National Bank. In 1997, MKP received the Vendor of
the Year Award from First Union National Bank.




                                      -11-
<PAGE>   15
MARKETING

         The Company's founder and principal executive officer, together with
the Company's other executive officers, are primarily responsible for marketing
its services and software. In the past, the Company conducted its marketing
activities primarily through advertising in selected financial institution trade
media and at professional financial institution conventions. The Company
currently markets its services and software primarily through direct sales
calls, referral business and personal contacts.

         The Company markets primarily to domestic and foreign banks. The
Company believes that there are approximately 500 banks in the United States
engaged in activities which may require services and/or software offered by the
Company. The Company also believes that significant opportunities exist for it
to sell its services and/or software in Europe and the Far East, where it
believes that market conditions have made financial institutions acutely aware
of the necessity to develop sales, marketing and business development
priorities.

         The Company's overall marketing strategy includes internal as well as
external channels of distribution. The Company believes that cross-selling its
services and software will provide it with greater opportunities. For example,
the Company believes that it can build a channel of product distribution for
MARS(TM) through its consulting services to augment its own direct selling
efforts. The Company intends to develop relationships with accounting firms
which sponsor information technology services to banks. In addition, the Company
believes that there are additional opportunities for alliances with regional
system integrators whose business is composed entirely of the installation and
modification of banking and financial services applications.

         In general, the Company is primarily retained to fulfill specific needs
of its customers. Accordingly, the success of the Company is dependent upon its
ability to attract a flow of new customers as well as new assignments from past
customers. The solicitation of new assignments from past customers has been and
is expected to be an integral part of the Company's marketing strategy.


INTELLECTUAL PROPERTY RIGHTS AND PROTECTION

         Like many software companies, the Company does not hold any patents and
relies upon a combination of copyright and trade secret laws and contractual
restrictions to protect its rights in its software, technology and trade
secrets. There can be no assurance that the Company's proprietary technology
will remain a secret or that others will not develop similar technology and use
such technology to compete with the Company.

         Although there can be no assurance, the Company believes that its
software and related technology are proprietary and protected by copyright law,
license agreements and non-disclosure agreements. The Company intends to require
its customers to sign license agreements. Although there can be no assurance,
the Company believes that copyright protection, regardless of whether a license
agreement exists, is sufficient to protect the Company's rights in its software
and technology. Certain protections, such as limitations on use of a product and
limitations on warranties and liability, are not afforded by copyright law and
may not be available without an enforceable license agreement. The ability of
software companies to enforce its licenses has not been clearly defined and
there can be no assurances that the Company will be successful in any
enforcement proceedings. In addition, there can be no assurance that the Company
will have the ability or the resources necessary to enforce its rights


                                      -12-
<PAGE>   16
under such licenses or agreements or defend any action commenced by another
party for infringement or any other similar claim.

         Pursuant to the indemnification provisions included in its license
agreements, the Company generally will agree to indemnify its customers from
losses resulting from any third-party claims that the Company's software
infringes upon proprietary rights of such third parties. The amount of such
indemnification is generally limited to the amount of the license fee paid by
the customer to the Company. To date, the Company has not received any written
claims of infringement.

         The Company also owns exclusive rights to videotapes, manuals and
workbooks utilized in its sales, marketing and business programs and seeks to
protect its proprietary rights therein through restrictions in its license
agreements. The licenses for videotapes, manuals and workbooks generally have a
term of one year. To date, the Company has not been required to enforce these
contractual safeguards relating to the use of its videotapes, manuals and
workbooks. There can be no assurance that the Company would have the ability or
the resources necessary to enforce its rights under such licenses.


EMPLOYEES

         As of January 5, 1998, the Company had 17 full-time employees. The
Company also engages independent contractors and consultants from time to time
in connection with certain projects. The Company expects to employ additional
personnel as needed in connection with its operations. The Company believes that
it has good relations with its employees and independent contractors.


FORWARD-LOOKING STATEMENTS

         Certain statements contained in this Annual Report on Form 10-KSB,
including without limitation, statements containing the words "believes,"
"anticipates," "may," "intends," "expects" and words of similar import,
constitute "forward-looking statements" within the meaning of the Private
Securities Litigation Reform Act of 1995. Such forward-looking statements
involve known and unknown risks, uncertainties and other factors that may cause
the actual results, performance or achievements of the Company or industry
results to be materially different from any future results, performance or
achievements expressed or implied by such forward-looking statements. Such
factors include, among others, the following: general economic and business
conditions, both nationally and in the regions in which the Company operates;
competition; changes in business strategy or development plans; the development
or testing of the Company's software; technological, engineering, manufacturing,
quality control or other problems which could delay the sale of the Company's
software; the Company's ability to obtain appropriate licenses from third
parties, protect its trade secrets, operate without infringing upon the
proprietary rights of others and prevent others from infringing on the
proprietary rights of the Company; and the Company's ability to obtain
sufficient financing to continue operations. Certain of these factors are
discussed in more detail elsewhere in this Annual Report on Form 10-KSB,
including without limitation, under the caption "Item 6 -- Management's
Discussion and Analysis of Financial Condition and Results of Operations."






                                      -13-
<PAGE>   17
ITEM 2 -- DESCRIPTION OF PROPERTY

         The Company's principal executive offices are located in New York City
at 335 Madison Avenue, 8th Floor, New York, New York. In September 1995, the
Company entered into a direct sub-sublease agreement with MCI Telecommunications
Corp. ("MCI") covering approximately 5,000 rentable square feet on the llth
floor of 335 Madison Avenue. The sub-sublease expired on December 29, 1996,
which coincided with the expiration date of MCI's sublease arrangement with its
sublessor. However, Builtland Partners, the owner of the building known as 335
Madison Avenue, New York, New York, agreed to permit the Company to remain in
occupancy of the llth floor premises until May, 1997 on the same terms and
conditions set forth in the Company's sub-sublease with MCI.

         In October 1996, the Company entered into a direct lease with Builtland
Partners, covering approximately 11,142 square feet on the 8th floor at 335
Madison Avenue. This lease has a ten-year term commencing as of October 1996.
Fixed minimum rent of approximately $31,000 per month is payable by the Company
during the first five years of the term and fixed minimum rent of approximately
$35,000 per month is payable by the Company during the final five years of the
term. Under the terms of the lease, the Company's fixed minimum rent obligations
have been abated until March 20, 1997 and for the months of October, November
and December in each of the first four years of the lease term. Additionally, in
September 1997, the landlord agreed to a further one month abatement of fixed
minimum rent. The Company will be required to pay operating expense and real
estate tax escalation payments as additional rent. Also, the landlord has paid
or reimbursed the Company for approximately $500,000 of construction and other
related costs. The Company assumed occupancy of the 8th floor premises in May
1997.

         The Company believes that the facilities which it presently occupies
are well maintained, in good condition and suitable for the Company to continue
its operations in the foreseeable future, including the needs generated by any
future growth.


ITEM 3 -- LEGAL PROCEEDINGS

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


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

         The Company did not submit any matters to a vote of its shareholders
during the Company's fiscal year ended September 30, 1997.


                                      -14-
<PAGE>   18
                                     PART II

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

         From January 1987 until July 6, 1989, the Common Stock traded in the
over-the-counter market under the Nasdaq symbol "FPCC." The Company's Common
Stock was delisted by Nasdaq in July 1989 primarily due to its failure to
maintain Nasdaq's minimum capital requirements.

         As of November 27, 1996, the Company's Common Stock resumed trading
quoted on the OTC Bulletin Board under the symbol "FPCX." The high and low sale
price quotations for the Company's Common Stock for the period November 29, 1996
to January 5, 1998 were $2.75 and $0.22, respectively, as reported by the OTC
Bulletin Board. The Company believes that these quotations represent interdealer
quotations, without adjustment for retail mark-up, mark-down or commissions. The
average weekly volume of the Common Stock since the resumption of trading on the
OTC Bulletin Board in November 1996 was approximately 34,150 shares. The Company
believes that there are at least twelve "market-makers" in the Common Stock
including Van Kasper & Company, Inc., Laidlaw Equities, Inc., Value Investing
Partners, Inc., Fahnstock, Hill Thompson, Nash Weiss and Wilson Davis. See "Item
9 -- Directors, Executive Officers, Promoters and Control Persons; Compliance
with Section 16(a) of the Exchange Act" and "Item 12 -- Certain Relationships
and Related Transactions -- Transactions with Directors and Executive Officers."

         As of January 5, 1998, the Company had approximately 181 shareholders
of record, excluding the number of beneficial owners whose securities are held
in "streetname." The Company believes that a substantial number of shares of
Common Stock are held in "streetname."

         To date, the Company has not paid any dividends on its Common Stock and
does not anticipate paying any such dividends in the foreseeable future. The
Company intends to retain any future earnings to finance the growth and
development of its business. Any future determination as to the payment of
dividends will be at the discretion of the Board of Directors and will depend
on, among other things, the Company's operating results, financial condition,
capital requirements and such other factors as the Board of Directors may deem
relevant.


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

OVERVIEW

         HISTORY. The Company was incorporated in New York in 1984 under the
name Performance Services Group, Inc. and at that time was primarily engaged in
offering banking institutions a range of proprietary sales and marketing
products, strategic planning and product consulting services and financial
software products. From its inception in 1984 through February 1990, it incurred
continuous losses and working capital deficiencies which limited its marketing
efforts and operations. In July 1989, the Company's Common Stock was delisted
from the Nasdaq over-the-counter market and from February 1990 to November 1992
the Company was inactive.




                                      -15-
<PAGE>   19
         In January 1993, the Company recommenced its operations and raised
working capital through private debt and equity issuances, including issuances
to one of the Company's principal stockholders. Although the Company generated
revenues for each of the last four fiscal years ended September 30, 1997, it
incurred losses of $146,036, $801,296, $235,049 and $544,848 for the fiscal
years ended September 30, 1994, 1995, 1996 and 1997, respectively. In addition,
the report of the Company's independent accountants for its balance sheet as of
September 30, 1995 and 1994 and the results of operations, stockholders' equity
and cash flows for the years then ended included an explanatory paragraph which
referred to the Company's substantial losses and concluded that such results
raised substantial doubt about its ability to continue as a going concern.

         REVENUES. The Company's revenues historically have been derived from a
limited number of customers. For the year ended September 30, 1997, two
customers accounted for approximately 72% for the Company's revenues, with one
customer accounting for approximately 56% of its revenues. The Company
anticipates that a substantial amount of its revenues will continue to be
concentrated from a limited number of customers. As a result, the Company's
sales and operating results are subject to substantial variations in any given
year and from quarter to quarter. The Company's sales and net income (if any) in
a particular quarter may be lower than the sales and net income (if any) of the
Company for the comparable quarter in the prior year. In addition, sales and net
income (if any) of the Company in any particular quarter may not necessarily
reflect the results of operations for the Company for the full year.

         SUBSIDIARIES. The Company's consolidated financial statements include
the accounts of Financial Performance Corporation and its three subsidiaries.
All significant intercompany accounts and transactions have been
eliminated.

         Summary financial information concerning MKP, excluding intercompany
eliminations, as of September 30, 1997 and 1996 and for the years then ended, is
as follows:


<TABLE>
<CAPTION>
                                                                   1997                           1996
                                                                   ----                           ----
<S>                                                             <C>                            <C>        
Cash.............................................               $ 1,091,000                    $ 1,685,000
Accounts receivable..............................                1,646,000                       903,000
Other assets.....................................                  47,000                         14,000
Accounts payable.................................                1,435,000                      1,705,000
Revenues.........................................                7,785,000                      8,784,000
Operating costs..................................                7,167,000                      8,178,000
Net income.......................................                 642,000                        504,000
</TABLE>

         Summary financial information concerning the Company's other two
subsidiaries, FPC Information and Aspen, as of September 30, 1997 and 1996 and
for the years then ended, is not separately set forth as these entities had no
revenues for such periods and their assets and liabilities during such periods
were immaterial.




                                      -16-
<PAGE>   20
         Aspen had no revenues and incurred losses of $219,872 and $530,644 for
the years ended September 30, 1996 and 1995, respectively. Aspen, whose
operations commenced in March 1995, suspended its operations in September 1996.
Aspen was reported as a discontinued operation at September 30, 1996. The net
assets and liabilities relating to the disposal of the discontinued operation is
immaterial.

         FPC Information had no revenues and incurred losses of $340,540 and
$428,245 for the fiscal years ended September 30, 1997 and 1996, respectively.

         OTHER. Income taxes are computed in accordance with the provisions of
Financial Accounting Standards Board Statement No. 109, "Accounting for Income
Taxes" ("SFAS 109"), which requires, among other things, a liability approach to
calculating deferred income taxes. SFAS 109 requires a company to recognize
deferred tax liabilities and assets for the expected future tax consequences of
events that have been recognized in a company's financial statements or tax
returns. Under this method, deferred tax liabilities and assets are determined
based on the difference between the financial statement carrying amounts and tax
basis of assets and liabilities using enacted tax rates in effect in the years
in which the differences are expected to reverse.

         At September 30, 1997, the Company had net operating loss carryforwards
of approximately $1,150,000, which will expire in 2012. Certain provisions of
the tax law may limit the net operating loss carryforwards available for use by
the Company in the event of a significant change in the ownership interest of
the Company. At September 30, 1997, the Company had a deferred tax asset of
approximately $460,000. The deferred tax asset consisted primarily of net
operating loss carryforwards and was fully offset by a valuation allowance of
the same amount.

         The income tax expense of $25,397 represents state and local income
taxes on the income of MKP.

         Costs associated with software development subsequent to the
establishment of technological feasibility, including enhancements to software
products, are capitalized and amortized as required by Statement of Financial
Accounting Standards No. 86. Costs incurred prior to achieving technological
feasibility are expenses as incurred and classified as research and development
costs. There were no research and development costs incurred by the Company for
the years ended September 30, 1997 and 1996.

         Amortization of capitalized software development costs is generally
provided on a product-by-product basis at the greater of the amount computed by
using the ratio of current gross revenue to total current and anticipated gross
revenue of the product or on the straight-line method over the sixty-month
estimated useful life of the product, commencing when the product is available
for general release to customers.

     The Company's consolidated financial statements listed under "Item 7 -- 
Financial Statements" should be read in connection herewith.

     FORWARD-LOOKING STATEMENTS. Certain statements contained in this Annual
Report on Form 10-KSB, including, without limitation, statements containing the
words "believes," "anticipates," "may," "intends," "expects" and words of
similar import, constitute "forward-looking statements" within the meaning of
the Private Securities Litigation Reform Act of 1995. Such forward-looking
statements involve known and unknown risks, uncertainties and other factors that
may cause the actual


                                      -17-
<PAGE>   21
results, performance or achievements of the Company or industry results to be
materially different from any future results, performance or achievements
expressed or implied by such forward-looking statements. Such factors include,
among others, the following: general economic and business conditions, both
nationally and in the regions in which the Company operates; competition;
changes in business strategy or development plans; the development or testing of
the Company's software; technological, engineering, manufacturing, quality
control or other problems which could delay the sale of the Company's software;
the Company's ability to obtain appropriate licenses from third parties, protect
its trade secrets, operate without infringing upon the proprietary rights of
others and prevent others from infringing on the proprietary rights of the
Company; and the Company's ability to obtain sufficient financing to continue
operations. Certain of these factors are discussed in more detail elsewhere in
this Annual Report on Form 10-KSB, including without limitation, under the
caption "Item 1 -- Description of Business."


RESULTS OF OPERATIONS

FISCAL YEARS ENDED SEPTEMBER 30, 1997 AND SEPTEMBER 30, 1996

         REVENUES. Revenues for the fiscal year ended September 30, 1997
decreased by $998,887 to $7,785,250 from $8,784,137 for the fiscal year ended
September 30, 1996. This decrease was attributable to a decrease in revenues
generated by MKP, resulting from the reduced scope of the merger projects for
which MKP was engaged during this period.

         COST OF REVENUES. Cost of revenues decreased by $788,572 to $6,482,542
for the fiscal year ended September 30, 1997 from $7,271,114 for the fiscal year
ended September 30, 1996. This decrease was attributable primarily to the
reduced costs of performing the merger projects for which MKP was engaged during
this period.

         SALARIES AND RELATED EXPENSES. Payroll expenses increased by $80,187 to
$605,864 for the fiscal year ended September 30, 1997 from $525,677 for the
fiscal year ended September 30, 1996. This increase was attributable primarily
to the increase in staff employed by MKP.

         SELLING, GENERAL AND ADMINISTRATIVE EXPENSES.  Selling, general and
administrative expenses increased by $556,685 to $1,265,803 for the fiscal year
ended September 30, 1997 from $709,118 for the fiscal year ended September 30,
1996. This increase was attributable primarily to increased expenditures
relating to the Company's new lease for expanded premises, increased
professional fees as well as additional Company personnel and independent 
contractors retained in connection with MKP's business operations.

         OPERATING LOSS. The Company had an operating loss of $568,959 for the
fiscal year ended September 30, 1997 as compared to an operating profit of
$278,228 for the fiscal year ended September 30, 1996.

         NET LOSS. The Company had a net loss of $544,848 for the fiscal year
ended September 30, 1997 as compared to a net loss of $235,049 for the fiscal
year ended September 30, 1996.





                                      -18-
<PAGE>   22
         FISCAL YEARS ENDED SEPTEMBER 30, 1996 AND SEPTEMBER 30, 1995

         REVENUES. Revenues during the fiscal year ended September 30, 1996
increased by $7,468,537 to $8,784,137 from $1,315,600 for the prior year. This
increase was attributable to revenues generated by MKP. During this period, MKP
was awarded a contract to work on merger and marketing communications for two
major banking institutions. MKP generated approximately 100% of the consolidated
revenues of the Company for the fiscal year ended September 30, 1996.

         COST OF REVENUES. Cost of revenues increased by $6,454,999 to
$7,271,114 for the fiscal year ended September 30, 1996 from $816,115 for the
fiscal year ended September 30, 1995. This increase resulted primarily from a
substantial increase in outsourcing expenses and fees for independent
contractors retained by MKP in connection with its increased business during
such period and bonuses paid to the two Managing Directors of MKP in the
aggregate amount of approximately $344,000.

         SALARIES AND RELATED EXPENSES. Payroll expenses increased by $161,497
to $525,677 for the fiscal year ended September 30, 1996 from $364,180 for the
fiscal year ended September 30, 1995. This increase was primarily due to the
increase in staff employed by MKP as well as the payment of year-end bonuses to
the two Managing Directors of MKP.

         SELLING, GENERAL AND ADMINISTRATIVE EXPENSES.  Selling, general and
administrative expenses increased by $312,230 to $615,106 for the fiscal year
ended September 30, 1996 from $302,876 for the fiscal year ended September 30,
1995. This increase was due primarily to increased expenditures related to
additional Company personnel and independent contractors.

         OPERATING PROFIT. The Company had an operating profit of $278,228 for
the fiscal year ended September 30, 1996 compared to an operating loss of
$284,898 for the fiscal year ended September 30, 1995.

         NET INCOME (LOSS). The Company had a net loss of $235,049 for the
fiscal year ended September 30, 1996 as compared to a net loss of $801,296 for
the fiscal year ended September 30, 1995. The Company's operating loss from
continuing operations after income taxes for the fiscal year ended September 30,
1996 was $15,177. Without giving effect to payments made to two of the Company's
executive officers (the two Managing Directors of MKP) in the aggregate of
approximately $430,000, the Company would have had net income of approximately
$155,000 for the fiscal year ended September 30, 1996. These payments were made
in connection with annual incentive pool provisions contained in such
executives' employment agreements with the Company. See "Item 10 --Executive
Compensation -- Employment Agreements."

LIQUIDITY AND CAPITAL RESOURCES

     In the past, the Company required continuous capital to fund its operating
losses which were primarily attributable to expenses in connection with
marketing activities, research and development costs and other expenses
including salaries and related expenses and selling, general and administrative
expenses. The Company has financed its operations to date primarily through
public and private sales of its debt and equity securities, including
significant sales to one of its principal stockholders, and more recently
through revenues generated by the Company's subsidiary, MKP. See "Item 1
-- Description of Business" and "Item 12 -- Certain Relationships and Related
Transactions -- Transactions with Principal Stockholders."


                                      -19-
<PAGE>   23
     As of September 30, 1997, the Company had working capital of $1,121,581,
stockholders' equity of $1,753,415 and a working capital ratio (current assets
to current liabilities) of 1.65:1. As of September 30, 1997 and 1996, the
Company had cash and cash equivalents of $1,139,974 and $1,972,056 ,
respectively. For the years ended September 30, 1997 and 1996, the Company used
cash for operations of $800,432 and generated positive cash flow from operations
of $262,290, respectively, primarily as a result of a decrease in revenues and
utilized $406,727 and $320,076 for investing activities during the years ended
September 30, 1997 and 1996, respectively. Net cash provided by the Company's
financing activities for the years ended September 30, 1997 and 1996 were
$375,077 and $1,681,087, respectively.

     As of September 30, 1997, the Company had no short-term debt and no
long-term debt. In November 1996, long and short-term debt plus accrued interest
thereon in the aggregate amount of $289,614 which was due to a principal
stockholder was converted into shares of the Company's common stock.

     As of September 30, 1997, the Company has made no material capital 
commitments other than those related to non-cancelable operating leases for
office space and equipment. For the years ended September 30, 1998, 1999, 2000
and 2001, the Company's minimum payments in connection with these leases are
approximately $281,000, $281,000, $281,000 and $374,000 per year, respectively.
In addition, the Company expects to spend approximately $100,000 for the fiscal
year ending September 30, 1998 in connection with its research and development
activities.

     Based on the Company's current plan of operations, it is anticipated that
the Company's existing working capital and expected operating revenues will
provide sufficient working capital for operations through September 30, 1998.
However, there can be no assurance that the Company will not require additional
financing prior to that time. For the years ended September 30, 1998, 1999, 2000
and 2001, the Company's minimum payments in connection with the leases are
approximately $281,000, $281,000, $281,000 and $374,000 per year, respectively.
The Company anticipates that it will require additional capital to fund its
operations. The Company's capital requirements depend on, among other things,
whether the Company is successful in generating revenues and income from its
marketing efforts, including those related to MARS(TM), the progress and costs
of the Company's research and development programs, the ability of the Company
to successfully market its software and services and the effect of such efforts
on the Company's operations, competing technological and market developments,
the costs involved in protecting and enforcing its proprietary rights and any
litigation related thereto and the cost and availability of third-party
financing.

     The Company may also seek additional financing in connection with the
acquisition of one or more products (or rights related thereto) or entities or
the consummation of other business combinations. Although the Company has
engaged in discussions with third parties from time to time concerning potential
acquisitions and other business combinations and anticipates continuing such
activities in the future, the Company has no current commitments regarding such
acquisitions or other business combinations.

     Financing may be raised by the Company through additional equity offerings,
joint ventures or other collaborative relationships, borrowings and other
transactions. The Company may seek additional funding through any such
transaction or a combination thereof. There can be no assurance that additional
financing will be available to the Company or, if available, that such financing
will be available on acceptable terms.


                                      -20-
<PAGE>   24
INFLATION

     In general, the Company believes that it will be able to offset any
inflationary pressures by increasing operating efficiency, monitoring and
controlling expenses and increasing prices to the extent permitted by
competitive factors.

ITEM 7 -- FINANCIAL STATEMENTS

     The audited consolidated financial statements of the Company for the fiscal
years ended September 30, 1997 and 1996 are set forth at the end of this Annual
Report on Form 10-KSB and begin on page F-1.

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

         None.


                                      -21-
<PAGE>   25
                                    PART III

ITEM 9 --         DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL
                  PERSONS; COMPLIANCE WITH SECTION 16(A) OF THE
                  EXCHANGE ACT

         The following table sets forth certain information concerning the
Company's directors, executive officers and key employees:

<TABLE>
<CAPTION>
NAME                                     AGE         POSITION
----                                     ---         --------
<S>                                      <C>          <C>                                                   
William F. Finley                        54          President; Chief Executive Officer; Chief Financial
                                                     Officer; Chairman of the Board of Directors
Duncan G. Burke                          54          Vice President and Director
Richard Levy                             62          Secretary and Director
Susan Michaelson                         40          Managing Director of MKP
Hillary Kelbick                          41          Managing Director of MKP
</TABLE>


     The business experience of each of the directors, executive officers and
key employees of the Company for at least the most recent five years is as
follows:

     WILLIAM F. FINLEY is the founder of the Company and has served as its
President, Chief Executive Officer and Chairman of the Board since its inception
in 1984, and has served as its Chief Financial Officer since December 1987. From
1978 through 1984, Mr. Finley served as Vice President-Corporate Banking and
Manager of a consulting services group known as the Performance Services
Department of Marine Midland Bank, N.A. Prior thereto, from 1971 to 1978, Mr.
Finley held the position of Personnel-Training Director at Irving Trust Company.
From 1969 to 1971, Mr. Finley was employed in the Corporate and Management
Development Department at Chase Manhattan Bank. Mr. Finley has a Masters Degree
in Business Administration from New York University and a Bachelors of Arts
Degree in Psychology and Sociology from Miami University (Ohio). Mr. Finley is
the husband of Susan Michaelson, one of the two Managing Directors of MKP.

     DUNCAN G. BURKE has served as a Director of the Company since April 1994.
He has also been the sole principal of Burke Capital Group, Greenwich,
Connecticut since 1994. From 1992 to 1994, Mr. Burke was a Senior Vice President
of Laidlaw Holdings Asset Management, Inc. and from August 1991 to November 1992
he served as a Vice President of Laidlaw Equities, Inc. From 1989 to 1991, Mr.
Burke was a Vice President with Tucker Anthony Incorporated. He was in the
investment banking group with Dean Witter Reynolds, Inc. from 1970 to 1989. Mr.
Burke holds a B.A. in Economics from Dartmouth College and an M.B.A. in Finance
from Columbia University Graduate School of Business.

     RICHARD LEVY has served as a Director of the Company since April 1994. He
is a Senior Director at Cushman & Wakefield, Inc., a real estate consulting and
brokerage firm, and has been


                                      -22-
<PAGE>   26
employed by the firm for more than 35 years. Mr. Levy is also a director of
Mascott Corporation, a restaurant and catering company. Mr. Levy attended
Muhlenberg College and Columbia University.

     SUSAN MICHAELSON is one of the co-founders of MKP, together with Hillary
Kelbick and the Company, and has been a Managing Director of MKP since its
inception in October 1994. From 1990 to 1994, Ms. Michaelson served as Senior
Vice President at Wilcox Associates. From 1986 to 1990, Ms. Michaelson was also
a Senior Vice President of the Company. Ms. Michaelson is the wife of William F.
Finley, President, Chairman of the Board and Chief Executive Officer of the
Company. Ms. Michaelson holds a Bachelor of Arts Degree from Syracuse
University.

     HILLARY KELBICK is one of the co-founders of MKP, together with Susan
Michaelson and the Company, and has been a Managing Director of MKP since its
inception in October 1994. From 1982 to 1994, Ms. Kelbick served as Senior Vice
President at Wilcox Associates. Ms. Kelbick holds a Bachelor of Arts Degree from
SUNY Albany.

     There are currently three members on the Company's Board of Directors.
Philip L. Hage, who served as a Director of the Company since August 1996,
resigned effective as of June 30, 1997. The Company's certificate of
incorporation and by-laws authorize the Board of Directors to fix the number of
authorized directors. The Company's by-laws also authorize the Board of
Directors to fill any vacancy on the Board of Directors. The Company's by-laws
provide that directors are to be elected annually by the shareholders and hold
office until the next annual meeting and until their respective successors are
elected and qualified. Executive officers are elected by the Board of Directors
and hold office until their respective successors are elected and qualified. The
Company has employment agreements with each of its executive officers and key
employees. Other than Mr. Finley and Ms. Michaelson who are married, there are
no other family relationships between the Company's directors, executive
officers and key personnel.

LIMITATION ON PERSONAL LIABILITY; INDEMNIFICATION

     The Company's Certificate of Incorporation and By-Laws contain provisions
exculpating the Company's directors from personal liability for actions taken or
omitted to be taken by them in connection with their positions, with limited
exceptions. The Company's By-Laws also contain provisions which require the
Company to indemnify current and former officers and directors for any
judgments, fines, amounts paid in settlement or reasonable attorneys' fees
incurred in the defense of certain actions and proceedings to the fullest extent
permitted under New York law. Insofar as indemnification for liabilities arising
under the Securities Act of 1933, as amended, may be permitted to directors,
officers and controlling persons of the Company pursuant to the foregoing
provisions or otherwise, the Company has been advised that in the opinion of the
Securities and Exchange Commission, such indemnification is against public
policy as expressed in the Securities Act and is, therefore, unenforceable.

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

     The Securities and Exchange Commission (the "Commission") has comprehensive
rules relating to the reporting of securities transactions by directors,
officers and stockholders who beneficially own more than 10% of the Company's
Common Stock (collectively, the "Reporting Persons"). These rules are complex
and difficult to interpret. Based solely on a review of Section 16 reports
received by the Company from Reporting Persons, the Company believes that no
Reporting Person has failed to file a Section 16 report on a timely basis during
the most recent fiscal year (or any prior fiscal year


                                      -23-
<PAGE>   27
discovered prior to the filing of this Annual Report on Form 10-KSB), other than
each of Ms. Kelbick and Ms. Michaelson (who each failed to file a Form 3 in
October 1994 and a Form 4 in October 1996), Mr. Levy (who failed to file a Form
3 in June 1994 and a Form 4 in July and October 1996), Mr. Burke (who failed to
file a Form 3 in June 1994 and a Form 4 in January 1995 and October 1996) and
Mr. Finley (who failed to file a Form 3 and failed to file a Form 4 in October
1993, December 1993, October 1995 and October 1996).

CONSULTING AGREEMENTS

     In November 1996, the Company entered into a two-year, non-exclusive
advisory agreement with Van Kasper & Company ("Van Kasper"). Pursuant to the
terms of the agreement, the Company issued Van Kasper a three-year warrant to
purchase 150,000 shares of Common Stock with an exercise price of $0.50 per
share. The Company registered the shares of Common Stock underlying the warrant
under a registration statement filed by the Company which was declared effective
in February 1997. Under the agreement, Van Kasper will provide general corporate
advice to the Company, including advice in connection with developing
relationships with analysts and market-makers and advice on investor
presentations. See "Item 5 -- Market for Common Equity and Related Stockholder
Matters" and "Item 12 -- Certain Relationships and Related Transactions --
Transactions with Directors and Executive Officers."

     In November 1996, the Company entered into a non-exclusive advisory
agreement with Laidlaw Equities, Inc. ("Laidlaw") which provided that Laidlaw
would render general corporate advice to the Company and proposed to act as a
placement agent in connection with potential acquisition financing. Pursuant to
the terms of the agreement, the Company issued Laidlaw a three-year warrant to
purchase 150,000 shares of Common Stock with an exercise price of $0.50 per
share. The Company registered the shares of Common Stock underlying the warrant
under a registration statement filed by the Company which was declared effective
in February 1997. During the Company's fiscal year ended September 30, 1997, the
Company advised Laidlaw that Laidlaw had abrogated the provisions of this
agreement and that the three-year warrant issued to Laidlaw referred to above
had been cancelled. See "Item 5 -- Market for Common Equity and Related
Stockholder Matters" and "Item 12 -- Certain Relationships and Related
Transactions -- Transactions with Directors and Executive Officers."




                                      -24-
<PAGE>   28
ITEM 10 --  EXECUTIVE COMPENSATION

     The following table summarizes, for the fiscal years ended September 30,
1997, 1996 and 1995, the compensation paid by the Company to the Company's Chief
Executive Officer and to each other executive officer whose total annual salary
and bonus exceeded $100,000 for services rendered in all capacities to the
Company (the "named executive officers"). See "-- Employment Agreements."

SUMMARY COMPENSATION TABLE


<TABLE>
<CAPTION>
                                                                                                          LONG-TERM     
                                                             ANNUAL COMPENSATION                        COMPENSATION   
                                                             -------------------                        ------------   
                                                                                                          AWARDS      
NAME AND                               FISCAL                                        OTHER ANNUAL         OPTIONS/     
PRINCIPAL POSITION                      YEAR         SALARY($)        BONUS($)       COMPENSATION        WARRANTS(#)    
------------------                     ------        ---------        --------       ------------        -----------     
<S>                                    <C>          <C>              <C>              <C>               <C>
William F. Finley (1)                   1997         $150,000               __           $9,750(7)             __
Chief Executive Officer                 1996         $150,000         $ 25,000         $ 30,000(9)        200,000
                                        1995         $125,000               __                __          200,000

Susan Michaelson (2)(3)                 1997         $160,000         $141,500         $ 10,400(8)             __
Managing Director of MKP                1996         $127,000         $215,000         $ 30,000(9)       200,000(3)
                                        1995         $ 92,000               __          $100,000               __

Hillary Kelbick(4)                      1997         $160,000         $141,500         $ 10,400(8)             __
Managing Director of MKP                1996         $127,000         $215,000         $ 30,000(9)       200,000(4)
                                        1995         $ 92,000               __          $100,000               __

Sean Brennan(5)                         1997           $   __               __                __               __
Member of Aspen                         1996         $ 83,334               __                __               __
                                        1995         $185,000               __                __               __

Richard Loos(6)                         1997               __               __                __               __
Member Officer of Aspen                 1996         $ 37,500               __                __               __
                                        1995         $111,000               __                __               __
</TABLE>


(1)      On November 11, 1993, Mr. Finley received warrants to purchase 100,000
         shares of Common Stock at $0.50 per share, exercisable until August 31,
         1998. On September 15, 1995, the Company issued to Mr. Finley warrants
         to purchase 200,000 shares of Common Stock at $0.50 per share,
         exercisable until September 15, 2010. On September 16, 1996, the
         Company issued to Mr. Finley warrants to purchase 200,000 shares of
         Common Stock with an exercise price of $1.00 per share, exercisable
         until September 15, 2006. All of the shares of Common Stock underlying
         the warrants issued to Mr. Finley were registered by the Company under
         a registration statement which was declared effective in February 1997.
         Effective as of January 1, 1995, the Company entered into an employment
         agreement with Mr. Finley for a period of five


                                      -25-
<PAGE>   29
         years providing for an annual salary of $125,000.00. Effective as of
         July 1, 1996, the Company agreed to amend the employment agreement to
         increase Mr. Finley's annual salary to $150,000.00 and to grant Mr.
         Finley a bonus in the amount of $25,000. Effective as of October 1,
         1997, the Company entered into a new employment agreement with Mr.
         Finley for a period of three years providing for an annual salary of
         $150,000. In November 1997, the Company's Board of Directors voted to
         grant Mr. Finley a bonus of $100,000. As of January 5, 1998, no part of
         such bonus had been paid to Mr. Finley. See "-- Employment Agreements."

(2)      Susan Michaelson is the wife of William F. Finley, the Company's
         President, Chief Executive Officer and Chief Financial Officer.

(3)      As of October 1994, Ms. Michaelson received 100,000 shares of Common
         Stock pursuant to the terms of the Company's agreement dated October
         17, 1994 with Ms. Michaelson and Hillary Kelbick. On September 16,
         1996, the Company issued to Ms. Michaelson warrants to purchase 200,000
         shares of Common Stock with an exercise price of $1.00 per share,
         exercisable until September 15, 2006. Effective as of September 11,
         1997, MKP entered into a new employment agreement with Ms. Michaelson
         for a period of three years providing for an annual salary of $150,000.
         See "-- Employment Agreements."

(4)      As of October 1994, 100,000 shares of common Stock were issued to Ms.
         Kelbick pursuant to the terms of the Company's agreement dated October
         17, 1994 with Susan Michaelson and Ms. Kelbick. On September 16, 1996,
         the Company issued to Ms. Kelbick warrants to purchase 200,000 shares
         of Common Stock with an exercise price of $1.00 per share, exercisable
         until September 15, 2006. Effective as of September 11, 1997, MKP
         entered into a new employment agreement with Ms. Kelbick for a period
         of three years providing for an annual salary of $150,000. See
         "--Employment Agreements."

(5)      Mr. Brennan resigned as an officer of Aspen in July 1996 and does not
         currently receive any compensation from the Company.

(6)      Mr. Loos resigned as an officer of Aspen in September 1996 and does not
         currently receive any compensation from the Company.

(7)      For the year ended September 30, 1997, the Company contributed an
         aggregate of $9,750 for such executive under its 401-K and profit
         sharing plan. See "Pension Plan".

(8)      For the year ended September 30, 1997, the Company contributed an
         aggregate of approximately $10,400 for such executive under its 401-K
         and profit sharing plan. See "Pension Plan."

(9)      For the year ended September 30, 1996, the Company contributed an
         aggregate of $30,000 for such executive under its non-contributing
         pension and profit sharing plan. See "Pension Plan."


                                      -26-
<PAGE>   30
STOCK OPTION AND WARRANT GRANTS IN 1997

    No options or warrants were issued by the Company to any of the "named
executive officers" of the Company during the fiscal year ended September 30,
1997.

OPTION EXERCISES AND FISCAL YEAR-END HOLDINGS

     No options or warrants were exercised by any named executive officer for
the fiscal year ended September 30, 1997 except for 49,414 warrants exercised
by William F. Finley at an exercise price of $0.50 per share in November, 1996.
The following table sets forth information, as of September 30, 1997, concerning
the number of shares received upon exercise of warrants, the aggregate dollar
value received upon exercise, the number of shares issuable as to exercisable
and nonexercisable options or warrants and the value of "in the money" options
and warrants held by the Company's "named executive officers."

                 AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
                             AND FY-END OPTION VALUE

<TABLE>
<CAPTION>

                                                                              
                       SHARES                                                                  VALUE OF UNEXERCISED   
                      ACQUIRED                          NUMBER OF UNEXERCISED                      IN-THE-MONEY      
                         ON           VALUE                OPTIONS/WARRANTS                       OPTIONS/WARRANTS    
          NAME        EXERCISE     REALIZED(1)            AT FISCAL YEAR-END                   AT FISCAL YEAR-END(2)      
          ----        --------     -----------                 
                                                   EXERCISABLE         UNEXERCISABLE   EXERCISABLE         UNEXERCISABLE  
         ------                                    -----------         -------------   -----------         -------------  
<S>                   <C>         <C>              <C>                 <C>             <C>                 <C>    
William F. Finley     49,414      $24,707            507,546                 __            $0                    __
Susan Michaelson           __         __             230,000                 __            $0                    __
Hillary Kelbick            __         __             200,000                 __            $0                    __
</TABLE>


 ..............................

(1)      The value realized with regard to exercised warrants is based on the
         Company's estimate of the fair market value of the Common Stock
         underlying the warrants on the date of exercise, minus the exercise
         price of the warrant.

(2)      The value of exercisable options and warrants is based on the
         volume-weighted average price of the Common Stock as reported on the
         OTC Bulletin Board on December 30, 1997, which was $0.22, minus the
         exercise price of the option or warrant, as the case may be.


COMPENSATION OF DIRECTORS

     The Company has no standard arrangement relating to the compensation of its
directors. Directors who are also officers of the Company are not paid any
monetary compensation for attendance at directors' meetings or for attending or
participating in any committee meetings. Historically, directors


                                      -27-
<PAGE>   31
of the Company have been compensated for their services and attendance at
meetings through the grant of options and warrants to purchase shares of Common
Stock.

     All directors are eligible for grants of stock options pursuant to the
Company's 1988 Incentive Stock Option Plan. As of September 30, 1997, the
Company had granted options to two of its directors (including the chief
executive officer) and two former directors under the Option Plan, representing
a total of 70,000 shares, exercisable at an average exercise price of
approximately $4.60 per share until October 1998.

     In December 1994 and July 1996, Duncan Burke and Richard Levy,
respectively, received 20,000 shares of Common Stock for services rendered to
the Company. In addition, in September 1996, Messrs. Burke and Levy each
received warrants to purchase 50,000 shares of Common Stock at $1.00 per share
exercisable until September 15, 2006. In September 1996, Philip L. Hage received
warrants to purchase 25,000 shares of Common Stock at $1.00 per share,
exercisable until September 15, 2006. In November 1997, the Company issued to
each of Richard Levy and Duncan Burke warrants to purchase 50,000 shares of
Common Stock at $0.50 per share, exercisable until November 1999, together with
"piggyback" registration rights as to the shares of Common Stock underlying the
warrants. All of the warrants are immediately exercisable. See "Item 12 --
Certain Relationships and Related Transactions --Transactions with Directors and
Executive Officers."

INCENTIVE STOCK OPTION PLAN

     In March 1988, the Company adopted an Incentive Stock Option Plan (the
"Option Plan") pursuant to which 140,000 shares of Common Stock have been
reserved for issuance to officers, directors and key employees of the Company.
Under the Option Plan, options are granted at 100% of fair market value on the
date of grant (or 110% of fair market value, if the grantee is the owner of 10%
or more of the Company's Common Stock as of the date of grant). As of September
30, 1997, the Company had granted options to 5 individuals to purchase a total
of 70,000 shares, exercisable at an average exercise price of approximately
$4.60 per share until October 1998.

EMPLOYMENT AGREEMENTS

     On September 1, 1995, the Company entered into a five-year employment
agreement with Mr. Finley which expired on August 31, 2000. Under the agreement,
Mr. Finley's initial annual salary was $125,000, subject to increases as
determined by the Company's Board of Directors, and Mr. Finley's salary was
subsequently increased to $150,000.

     Effective as of October 1, 1997, the Company entered into a new three-year
employment agreement with Mr. Finley which expires on September 30, 2000. Under
the new employment agreement, Mr. Finley's initial salary is $150,000 per annum,
subject to periodic increases as shall be determined by the Company's Board of
Directors. In the event of the termination of Mr. Finley's employment by reason
of (a) a "change in control" (as such term is defined in the employment
agreement) of the Company, (b) an uncured default by the Company under the
employment agreement, (c) a material and adverse change in Mr. Finley's
management functions, duties or responsibilities, (d) Mr. Finley's ceasing to be
a director and the Chief Executive Officer of the Company (other than by reason
of Mr. Finley's death, incapacity or resignation) or (e) an improper termination
of Mr. Finley's employment by the Company, then in addition to paying Mr.
Finley's salary and accrued benefits through the date of termination of
employment, the Company shall be obligated to pay to Mr. Finley, as severance
pay, an amount equal to 200% of Mr. Finley's annual base salary rate as of the
effective date of termination and to maintain


                                      -28-
<PAGE>   32
through the remaining balance of the term of the employment agreement (but not
less than two years from the date of termination of Mr. Finley's employment
agreement) all employee benefit plans and programs in which Mr. Finley was
entitled to participate. The Company agreed to pay reasonable travel and
entertainment expenses incurred by Mr. Finley on behalf of the Company and to
provide Mr. Finley with a leased automobile. If Mr. Finley does not elect not to
renew his employment agreement at the expiration of the term and the Company
does not elect to renew Mr. Finley's employment upon the expiration of the term
thereof, then Mr. Finley shall be entitled to receive a severance payment of
$100,000. Pursuant to the terms of the employment agreement, for a period of one
year after the expiration or termination of the employment agreement, Mr. Finley
may not disrupt any relationships, contractual or otherwise, between the Company
and any of its customers, clients, employees or independent contractors.

     Mr. Finley's executive employment agreement does not provide for the
issuance of any Common Stock, warrants or options. On September 15, 1995, the
Company granted Mr. Finley warrants to purchase 200,000 shares of the Common
Stock with an exercise price of $0.50 per share, exercisable through September
15, 2010. Additionally, on September 16, 1996, the Company granted Mr. Finley
warrants to purchase 200,000 shares of the Common Stock with an exercise price
of $1.00 per share, exercisable through September 15, 2006.

     In October 1994, MKP entered into executive employment agreements with each
of Ms. Michaelson and Ms. Kelbick for a term of three years ending on October
17, 1997. Under the terms of the agreements, the initial annual salary of Ms.
Michaelson and Ms. Kelbick was $80,000. The annual base salary payable to each
of Ms. Michaelson and Ms. Kelbick was subsequently increased to $115,000.

     Effective as of September 11, 1997, MKP entered into a new three-year
employment agreement with each of Ms. Michaelson and Ms. Kelbick which expires
on September 10, 2000. Under the new agreements, the initial annual base salary
payable to each of Ms. Michaelson and Ms. Kelbick is $150,000, subject to
periodic increases as shall be determined by MKP's Board of Directors. The
employment agreements further provide for an annual incentive compensation
payment for each of Ms. Michaelson and Ms. Kelbick equal to a percentage,
determined annually by the Board of Directors (not to exceed 30% in the
aggregate) of the net income before taxes of MKP as if MKP was not a member of
the Company's consolidated group. For the year ended September 30, 1997, Ms.
Michaelson and Ms. Kelbick received an aggregate of approximately $283,000 under
the incentive program. Ms. Michaelson and Ms. Kelbick have the option to receive
all or a portion of any bonus payment by means of issuance of securities of the
Company.

     If either Ms. Michaelson or Ms. Kelbick does not elect not to renew her
respective employment agreement with MKP at the expiration of the term and MKP
elects not to renew the employment agreement, the respective executive will be
entitled to receive a severance payment in the amount of $250,000. The
employment agreements provide each of Ms. Michaelson and Ms. Kelbick with a
clothing expense allowance of $10,000 for each year of the term of the agreement
and a leased automobile throughout the term. In the event of the termination of
employment of either Ms. Michaelson or Ms. Kelbick by reason of (a) a "change in
control" (as such term is defined in the employment agreement) of MKP or the
Company, (b) an uncured default by MKP under the employment agreement, (c) a
material and adverse change in the management functions, duties or
responsibilities of the employee or (d) an improper termination by MKP of
employment of the employee, then in addition to paying all salary and accrued
benefits through the date of termination of employment, MKP shall be obligated
to pay to the employee, as severance pay, an amount equal to 200% of the
employee's annual base salary rate in effect as of the date of termination and
to maintain through the remaining balance of


                                      -29-
<PAGE>   33
the term of the employment agreement (but not less than two years from the date
of termination of the employee's employment agreement) all employee benefit
plans and programs in which the employee was entitled to participate. "See Item
12 -- Certain Relationships and Related Transactions -- Transactions with
Directors and Executive Officers." For a period of one year after the expiration
or termination of the respective employment agreements, Ms. Michaelson and Ms.
Kelbick may not disrupt or interfere with any relationship, contractual or
otherwise, between MKP and any of its customers, clients, employees or
independent contractors.

PENSION PLAN

     In September 1996, the Company established a non-contributory pension and
profit sharing plan for the benefit of its eligible full-time employees. The
plan provided for annual contributions to a trust fund, which are based upon a
percentage of qualifying employees' annual compensation. Total contributions are
limited to the maximum amount deductible for federal income tax purposes. For
the year ended September 30, 1996, the Company contributed an aggregate of
$90,000 in connection with the plan for the benefit of Mr. Finley, Ms.
Michaelson and Ms. Kelbick. This plan was terminated in March 1997.

In January, 1997, the Company established a 401(k) salary deferred benefit plan
covering substantially all employees who have met certain requirements. The plan
requires contributions by the Company equal to 50% up to a maximum of 3% of each
participant's contribution percentage. In September, 1997, the Company amended
its 401(k) plan to provide a provision for discretionary profit sharing plan
contributions. Total contributions to the plan (401(k) and profit sharing) were
$82,000 for the year ended September 30, 1997.


ITEM 11 --        SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
                  MANAGEMENT

     The following table sets forth, as of January 5, 1998, certain information
regarding the beneficial ownership of Common Stock by (i) each person who is
known to the Company to be the beneficial owner of more than 5% of the Common
Stock, (ii) each director and executive officer of the Company, (iii) each of
the Company's "named executive officers" as determined in accordance with the
rules and regulations of the Commission, and (iv) all directors and executive
officers of the Company as a group. The following information is based in part
upon data furnished by the persons indicated below:

<TABLE>
<CAPTION>
                                                        NUMBER OF SHARES
BENEFICIAL OWNER                                      BENEFICIALLY OWNED(1)                       PERCENT OF CLASS(1)
----------------                                      ---------------------                       -------------------
<S>                                                   <C>                                         <C>   
Robert S. Trump(2)                                          4,887,422                                   60.93%
William F. Finley(3)                                         837,546                                     9.56%
Marvin M. Reiss(4)                                           434,392                                     5.19%
Duncan G. Burke(5)                                           120,000                                     1.48%
Richard Levy(6)                                              120,000                                     1.48%
Philip L. Hage(7)                                            25,200                                      0.31%
</TABLE>



                                      -30-
<PAGE>   34
<TABLE>
<CAPTION>
<S>                                                        <C>                                         <C>  
Susan Michaelson(8)                                          330,000                                     4.00%
Hillary Kelbick(9)                                           300,000                                     3.65%
All directors and executive
officers as a group (5 persons)                             1,377,546                                    14.60%
</TABLE>


 ..............................

(1)      Based upon an aggregate of 8,021,534 shares of Common Stock outstanding
         as of January 5, 1998, plus, for each listed beneficial owner, the
         number of shares which such person has the right to acquire within 60
         days of January 5, 1998.

(2)      The address of Mr. Trump is c/o Trump Management, Inc. 2611 West Second
         Street, Brooklyn, New York 11223. For further information concerning
         Mr. Trump's relationships to the Company, see "Item 12 -- Certain
         Relationships and Related Transactions -- Transactions with Principal
         Stockholders."

(3)      Includes: (i) 15,000 shares issuable upon the exercise of an option
         granted pursuant to the Option Plan; (ii) 81,960 shares issuable upon
         the exercise of warrants granted on September 30, 1993 in partial
         consideration for the exchange of approximately $25,612 of indebtedness
         owed by the Company; (iii) 10,586 shares issuable upon the exercise of
         warrants granted on November 11, 1993; (iv) 10,000 shares issuable upon
         the exercise of an option granted to Susan Michaelson pursuant to the
         Option Plan; (v) 20,000 shares issuable upon the exercise of warrants
         granted to Susan Michaelson on November 11, 1993; (vi) 100,000 shares
         of Common Stock held by Susan Michaelson; (vii) 200,000 shares issuable
         upon the exercise of warrants granted on September 15, 1995; (viii)
         200,000 shares issuable upon the exercise of warrants granted on
         September 16, 1996; and (ix) 200,000 shares issuable upon the exercise
         of warrants granted to Susan Michaelson on September 16, 1996. Susan
         Michaelson is the wife of Mr. Finley and a Managing Director and 10%
         stockholder of MKP. Mr. Finley disclaims beneficial ownership of the
         shares beneficially owned by his wife. The address of Mr. Finley is 335
         Madison Avenue, New York, New York 10017.

(4)      Includes: (i) 15,000 shares issuable upon the exercise of an option
         granted pursuant to the Option Plan; (ii) 79,611 shares of Common Stock
         held by Rebot Corporation, a private corporation whose sole stockholder
         is Mr. Reiss; (iii) 239,781 shares issuable upon the exercise of
         warrants granted to Rebot Corporation on September 30, 1993 in
         consideration for the exchange of $74,931 of indebtedness owed by the
         Company; and (iv) 100,000 shares issuable upon the exercise of warrants
         granted on November 11, 1993. The address of Mr. Reiss is 5 Walden
         Lane, Rye, New York 10580.

(5)      Includes 50,000 shares issuable upon the exercise of warrants granted
         to Mr. Burke on September 16, 1996 and 50,000 shares issuable upon the
         exercise of warrants granted to Mr. Burke on December 29, 1997. The
         address of Mr. Burke is c/o Burke Capital, Two Greenwich Plaza, P.O.
         Box 628, Greenwich, Connecticut 06836.



                                      -31-
<PAGE>   35
(6)      Includes 50,000 shares issuable upon the exercise of warrants granted
         to Mr. Levy on September 16, 1996 and 50,000 shares issuable upon the
         exercise of warrants granted to Mr. Levy on December 29, 1997. The
         address of Mr. Levy is c/o Cushman & Wakefield, 100 Wall Street, New
         York, New York 10005.

(7)      Includes 25,000 shares issuable upon the exercise of warrants granted
         to Mr. Hage on September 16, 1996. The address of Mr. Hage is c/o Van
         Kasper & Company, 600 California Street, Suite 1700, San Francisco,
         California 94108. Mr. Hage resigned as a director of the Company
         effective as of June 30, 1997.

(8)      Includes: (i) 10,000 shares issuable upon the exercise of an option
         granted pursuant to the Option Plan; (ii) 20,000 shares issuable upon
         the exercise of an option to purchase Common Stock granted on November
         11, 1993; and (iii) 200,000 shares issuable upon the exercise of
         warrants granted on September 16, 1996. Does not include any equity
         securities of the Company beneficially owned by Ms. Michaelson's
         husband, William F. Finley, the Company's Chairman of the Board,
         President and Chief Executive Officer. Ms. Michaelson disclaims
         beneficial ownership of the shares beneficially owned by her husband.
         The address of Ms. Michaelson is 335 Madison Avenue, New York, New York
         10017.

(9)      Includes 200,000 shares issuable upon the exercise of warrants granted
         to Ms. Kelbick on September 16, 1996. The address of Ms. Kelbick is 335
         Madison Avenue, New York, New York 10017.


ITEM 12 -- CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

     The following is a discussion of certain transactions entered into by the
Company and its principal stockholders, executive officers and directors. The
Company believes that the terms of these transactions were no less favorable to
the Company than would have been obtained from non-affiliated third parties for
similar transactions at the time of such transactions. The Company's current
policy is that all transactions between the Company and its directors, officers
and principal stockholders should be on terms no less favorable to the Company
than could be obtained from unaffiliated parties.

TRANSACTIONS WITH PRINCIPAL STOCKHOLDERS

     ROBERT S. TRUMP. In January 1993, Robert S. Trump (who as of January 5,
1998 beneficially owned approximately 60.93% of the Common Stock) loaned the
Company an aggregate of $125,000 in connection with the recommencement of its
operations. The loan was evidenced by a secured, exchangeable promissory note
which bore interest at the rate of 10% per annum and was due on December 31,
1995 (the "Exchangeable Note"). The indebtedness under the Exchangeable Note was
secured by a first priority security interest in the Company's accounts
receivable, contract rights and rights relating to certain computer software. In
connection with the issuance of the Exchangeable Note, Mr. Trump received
warrants to purchase 400,000 shares of Common Stock at an exercise price of
$0.3125 per share, which were exercisable until January 6, 1998.

     In September 1993, the Company sold 320,000 shares of Common Stock to Mr.
Trump for an aggregate of $100,000 in cash. In connection therewith, Mr. Trump
also received warrants to purchase 320,000 shares of Common Stock, with an
exercise price of $0.50 per share, which were exercisable


                                      -32-
<PAGE>   36
until August 31, 1998. In March 1994, the Company sold an aggregate of 133,334
shares of Common Stock to Mr. Trump for $100,000 in cash.

     In July 1994, Mr. Trump loaned the Company an aggregate of $150,000
pursuant to a secured promissory note which bore interest at the rate of 10% per
annum and was due on December 31, 1997 (the "Secured Promissory Note"). The
Secured Promissory Note was cross-collateralized and cross-defaulted with the
Exchangeable Note.

     In October 1994, Mr. Trump loaned the Company an aggregate of $280,000
pursuant to a secured promissory note which bore interest at the rate of 8% per
annum and was due on December 31, 1997 (the "Second Secured Promissory Note").
The net proceeds therefrom were utilized by the Company primarily for the
formation and initial operations of its 80% subsidiary, MKP. The Second Secured
Promissory Note was cross-collateralized and cross-defaulted with the
Exchangeable Note and the Secured Promissory Note.

     In December 1994, Mr. Trump loaned the Company an aggregate of $150,000
pursuant to a secured promissory note which bore interest at the rate of 8% per
annum and was due on December 31, 1997 (the "Third Secured Promissory Note").
The Third Secured Promissory Note was cross-collateralized and cross-defaulted
with the $125,000 Exchangeable Note issued to Mr. Trump in January 1993, the
$150,000 Secured Promissory Note issued to Mr. Trump in July 1994 and the
$280,000 Second Secured Promissory Note issued to Mr. Trump in October 1994.

     In January 1995, Mr. Trump loaned the Company an aggregate of $250,000
pursuant to a secured promissory note (the "Fourth Secured Promissory Note").
The net proceeds of the Fourth Secured Promissory Note were utilized by the
Company primarily in connection with the formation and initial operations of
Aspen. Pursuant to agreements between Mr. Trump and the Company dated as of
January 13, 1995, all accrued and unpaid interest in respect of the Exchangeable
Note and the Secured Promissory Note were added to the principal of each note
and such notes were consolidated, cross-collateralized and cross-defaulted with
the Second Secured Promissory Note, the Third Secured Promissory Note and the
Fourth Secured Promissory Note, thereby representing consolidated indebtedness
to Mr. Trump in the aggregate principal amount of $986,500 (the "Consolidated
Note"). Indebtedness under the Consolidated Note bore interest at the rate of 8%
per annum and was due and payable on December 31, 1997. Under the terms of the
Consolidated Note, the Company was entitled to receive 30% of the pre-tax net
operating income of its subsidiaries and was obligated to apply the balance of
such income on an annual basis towards the payment of accrued interest on such
indebtedness and then to reduce principal. On January 11, 1995, the Company also
agreed to extend for an additional period of three years the exchange period in
respect to the Exchangeable Note and the exercise periods for all of the
warrants held by Mr. Trump to purchase Common Stock.

     In April 1995, Mr. Trump loaned the Company an aggregate of $250,000
pursuant to a secured promissory note (the "Fifth Secured Promissory Note"). The
net proceeds therefrom were utilized by the Company primarily in connection with
the further development of Aspen's operations. Pursuant to agreements between
Mr. Trump and the Company dated April 6, 1995, this note was consolidated,
cross-collateralized and cross-defaulted with the indebtedness under the
Consolidated Note and contained identical terms. During the period from March to
November 1996, all of the Company indebtedness held by Mr. Trump, including all
of the indebtedness represented by the Exchangeable Note, the Consolidated Note
and the Fifth Secured Promissory Note, was converted into Common Stock, at an
exchange rate to $1.00 per share.



                                      -33-
<PAGE>   37
     In September 1995, the Company issued to Mr. Trump warrants to purchase
1,000,000 shares of Common Stock with an exercise price of $0.50 per share,
exercisable through September 15, 2010, in consideration for, among other
things, (i) Mr. Trump's prior debt and equity investments in the Company (which
provided the Company with substantially all of the working capital required to
continue operations during the fiscal years ended September 30, 1994 and 1995);
(ii) Mr. Trump's agreement to exercise all of his remaining warrants to purchase
Common Stock under the warrant agreement dated January 7, 1993; (iii) Mr.
Trump's assistance in raising $5,000,000 in subscriptions for the international
cash management fund established by the Company's subsidiary, Aspen; and (iv)
Mr. Trump's willingness to consider future proposals by the Company to provide
additional capital.

     In March 1996, Mr. Trump exercised warrants to purchase 1,000,000 shares of
Common Stock for an aggregate purchase price of $500,000. In addition, Mr. Trump
agreed to convert approximately $1,000,000 of Company indebtedness under the
Consolidated Note into 1,000,000 shares of Common Stock at a conversion price of
$1.00 per share.

     In June 1996, Mr. Trump converted an additional $517,474 of Company
indebtedness into 517,474 shares of Common Stock at a conversion price of $1.00
per share. In connection with the conversion, the Company agreed with Mr. Trump
that if the Company issues additional shares of Common Stock at any time after
March 29, 1996 for less than $1.00 per share, then the conversion price
applicable to the shares issued to Mr. Trump in connection with the debt
conversion would be correspondingly decreased and the Company would issue Mr.
Trump an appropriate number of additional shares so that the total number of
shares issued in connection with this debt conversion corresponds to the
adjusted conversion price.

     In November 1996, Mr. Trump exercised his right to exchange the
Exchangeable Note into 400,000 shares of Common Stock, which represents an
effective exchange rate of $0.3125 per share and converted the remaining balance
of all outstanding indebtedness of the Company which aggregated $164,614,
represented by the balance of the outstanding amount under the Consolidated Note
and other outstanding demand loans held by Mr. Trump, into 164,614 shares of
Common Stock at a conversion rate of $1.00 per share.

     As of December 24, 1996, all of the warrants to purchase Common Stock held
by Mr. Trump have been exercised.

     In October 1997, Mr. Trump purchased from the Company an additional 30%
equity interest in FPC Information for a purchase price of $225,000.
Accordingly, as of January 5, 1998, Mr. Trump owns a 50% equity interest in 
FPC Information and the Company owns a 50% equity interest in FPC Information.

         For further information concerning certain other arrangements between
the Company and its principal stockholders. See "Item 1 -- Description of
Business."


TRANSACTIONS WITH DIRECTORS AND EXECUTIVE OFFICERS

     WILLIAM F. FINLEY. In November 1993, Mr. Finley, the Company's Chief
Executive Officer and President who as of January 5, 1998 may be deemed to
beneficially own approximately 9.56% of the Company's outstanding Common Stock,
received warrants to purchase 100,000 shares of Common Stock with an exercise
price of $0.50 per share, which warrants are exercisable until August 31, 1998.
In November 1995, Mr. Finley sold 40,000 of these warrants to a shareholder and
former director of the


                                      -34-
<PAGE>   38
Company. In November 1996, Mr. Finley exercised a portion of these warrants and
received 49,414 shares of Common Stock. On September 15, 1995, the Company
issued to Mr. Finley warrants to purchase 200,000 shares of Common Stock with an
exercise price of $0.50 per share, which warrants are exercisable through
September 15, 2010, in consideration of Mr. Finley's past services performed on
behalf of the Company. On September 16, 1996, the Company issued Mr. Finley
warrants to purchase 200,000 shares of Common Stock with an exercise price of
$1.00 per share, which warrants are exercisable through September 15, 2006, in
consideration of Mr. Finley's past services performed on behalf of the Company.
All of the warrants which have been issued by the Company to Mr. Finley are
exercisable immediately.

     DUNCAN G. BURKE, currently a Vice President and Director of the Company,
was a Senior Vice President of Laidlaw Holdings Asset Management, Inc. from 1992
to 1994. That firm acted as a consultant to the Company during 1994 and 1995. To
date, neither Mr. Burke nor Laidlaw Holdings Asset Management, Inc. received any
compensation from the Company for services performed other than as described in
this Annual Report on Form 10-KSB. As consideration for past services performed
by Mr. Burke on behalf of the Company, in December 1994 Mr. Burke received
20,000 shares of Common Stock, and in September 1996 Mr. Burke received warrants
to purchase 50,000 shares of Common Stock which are exercisable at $1.00 per
share for a ten-year period and in December 1997 Mr. Burke received warrants to
purchase 50,000 shares of Common Stock which are exercisable at $0.50 per share
through November 1999. The shares of Common Stock issued to Mr. Burke in
December 1994 and the shares of Common Stock underlying the warrants issued to
Mr. Burke in September 1996 were registered by the Company under a registration
statement which was declared effective in February 1997. The shares of Common
Stock underlying the warrants issued to Mr. Burke in December 1997 are entitled
to "piggyback" registration rights. All of these warrants are immediately
exercisable. Mr. Burke was also a Vice President of Laidlaw Equities, Inc.
during 1991 and 1992. See "Item 9 -- Directors, Executive Officers, Promoters
and Control Persons; Compliance with Section 16(a) of the Exchange Act --
Consulting Agreements."

     RICHARD LEVY, currently the Secretary and a Director of the Company, is a
Senior Director at Cushman & Wakefield, which firm has acted as a real estate
broker with regard to the Company's recent lease of a portion of the 8th floor
at 335 Madison Avenue, New York, New York in October 1996. The Company is not
obligated to pay any commissions to Mr. Levy in connection with the lease.
However, Cushman & Wakefield did receive brokerage commissions from the lessor
in connection with the consummation of the lease with the Company. As
consideration for past services performed by Mr. Levy on behalf of the Company,
in July 1996, Mr. Levy received 20,000 shares of Common Stock, in September
1996, Mr. Levy received warrants to purchase 50,000 shares of Common Stock
exercisable at $1.00 per share for a ten-year period and in December 1997 Mr.
Levy received warrants to purchase 50,000 shares of Common Stock which are
exercisable at $0.50 per share through November 1999. The shares of Common Stock
issued to Mr. Levy in July 1996 and the shares of Common Stock underlying the
warrants issued to Mr. Levy in September 1996 were registered by the Company
under a registration statement which was declared effective in February 1997.
The shares of Common Stock underlying the warrants issued to Mr. Levy in
December 1997 are entitled to "piggyback" registration rights. All of these
warrants are exercisable immediately.

     PHILIP L. HAGE is a former Director of the Company and is currently a Vice
President of Van Kasper & Company. As consideration for past services performed
by Mr. Hage on behalf of the Company, in September 1996, Mr. Hage received
warrants to purchase 25,000 shares of Common Stock exercisable at $1.00 per
share for a ten-year period. These warrants are exercisable immediately. Van
Kasper provides advisory services to the Company pursuant to the terms of a
two-year, non-exclusive


                                      -35-
<PAGE>   39
advisory agreement. Mr. Hage resigned as a director of the Company effective as
of June 30, 1997. See "Item 9 -- Directors, Executive Officers, Promoters and
Control Persons; Compliance with Section 16(a) of the Exchange Act -- Consulting
Agreements."

     SUSAN MICHAELSON is the President and Treasurer and a Managing Director of
the Company's subsidiary, MKP. As of October 1994, Ms. Michaelson received
100,000 shares of Common Stock pursuant to the terms of the Managing Director's
Agreement dated October 18, 1994 by and among the Company, Ms. Michaelson and
MKP. On September 16, 1996, Ms. Michaelson received warrants to purchase 200,000
shares of Common Stock at an exercise price of $1.00 per share for a ten-year
period, for services previously rendered to the Company.

     HILLARY KELBICK is the Vice President and Secretary and a Managing Director
of the Company's subsidiary, MKP. As of October 1994, Ms. Kelbick received
100,000 shares of Common Stock pursuant to the terms of the Managing Director's
Agreement dated October 18, 1994 by and among the Company, Ms. Kelbick and MKP.
On September 16, 1996, Ms. Kelbick received warrants to purchase 200,000 shares
of Common Stock at an exercise price of $1.00 per share for a ten-year period,
for services previously rendered to the Company.

         For further information concerning employment agreements and certain
other arrangements between the Company and its directors and executive officers,
see "Item 10 -- Executive Compensation."


ITEM 13 -- EXHIBITS AND REPORTS ON FORM 8-K

         (a) The Company's consolidated financial statements that are listed in
Item 7 are set forth at the end of this Annual Report on Form 10-KSB.

         (c)      The following exhibits are included herewith unless otherwise 
indicated:

         3.1      Certificate of Incorporation dated August 9, 1984
                  (incorporated by reference to Exhibit 3.1 to Registration
                  Statement on Form S-8, No. 33-7778).

         3.2      Amendment to Certificate of Incorporation dated August 29,
                  1984 (incorporated by reference to Exhibit (i) to Registrant's
                  Quarterly Report on Form 10-0 for the period ended March 31,
                  1988).

         3.3      Amendment to Certificate of Incorporation dated July 1,
                  1986 (incorporated by reference to Exhibit 3.3 to the
                  Company's Report on Form 10-KSB for the Company's fiscal year
                  ended September 30, 1996).

         3.4      Amendment to Certificate of Incorporation dated March 14,
                  1988 (incorporated by reference to Exhibit 3.4 to the
                  Company's Report on Form 10-KSB for the Company's fiscal year
                  ended September 30, 1996).

         3.5      Amendment to Certificate of Incorporation dated September 13,
                  1996 (incorporated by reference to Exhibit 3.5 to the
                  Company's Report on Form 10-KSB for the Company's fiscal
                  year ended September 30, 1996).               

         3.6      By-laws (incorporated by reference to Exhibit 3.2 to
                  Registration Statement on Form S- 18, No. 33-7778).

         3.7      Amendment to By-Laws dated July 1995 (incorporated
                  by reference to Exhibit 3.7 to the Company's Report on Form   
                  10-KSB for the Company's fiscal year ended September 30,
                  1996).

         4.1      Specimen Certificate of Common Stock (incorporated
                  by reference to Exhibit 4.1 to the Company's Report on
                  Form 10-KSB for the Company's fiscal year ended September 30,
                  1996).                                                


                                      -36-
<PAGE>   40
         4.2      Incentive Stock Option Plan (incorporated by reference to
                  Exhibit 4.7 to Registration Statement on Form S-1, No.
                  33-20886).

         10.1     Agreement between Marine Midland Bank, N.A. and William F.
                  Finley (incorporated by reference to Exhibit 10.12 to
                  Registration Statement on Form S-18, No. 33-7778).

         10.2     Form of Indemnification Agreement between Registrant and its
                  Officers and Directors (incorporated by reference to Exhibit
                  10.35 to Registration Statement on Form S-1, No.
                  33-20886).

         10.3     Promissory Note due on May 1, 1989 in the principal amount of
                  $50,000 executed by the Registrant in favor of Marvin M. Reiss
                  (incorporated by reference to Exhibit 10.41 to Amendment No. 2
                  to Registration Statement on Form S-1, No. 33-20886).

         10.4     Promissory Note due on November 1, 1989 in the principal
                  amount of $50,000 executed by the Registrant in favor of
                  William F. Finley (incorporated by reference to Exhibit 10.4
                  to the Company's Report on Form 10-KSB for the Company's
                  fiscal year ended September 30, 1993).

         10.5     Promissory Note due on November 1, 1989 in the principal
                  amount of $50,000 executed by the Registrant in favor of
                  Marvin M. Reiss (incorporated by reference to Exhibit 10.5 to
                  the Company's Report on Form 10-KSB for the Company's fiscal
                  year ended September 30, 1993).

         10.6     Form of Subscription Agreement dated as of June 23, 1989
                  between the Registrant and Julius London (incorporated by
                  reference to Exhibit 10.6 to the Company's Report on Form
                  10-KSB for the Company's fiscal year ended September 30,
                  1993).

         10.7     Form of Subscription Agreement dated as of June 23, 1989
                  between the Registrant and Marie Monell (incorporated by
                  reference to Exhibit 10.7 to the Company's Report on Form
                  10-KSB for the Company's fiscal year ended September 30,
                  1993).

         10.8     Promissory Note due on November 1, 1989 in the principal
                  amount of $12,500 executed by the Registrant in favor of Paul
                  M. Diamond (incorporated by reference to Exhibit 10.8 to the
                  Company's Report on Form 10-KSB for the Company's fiscal year
                  ended September 30, 1993).

         10.9     Promissory Note due on November 1, 1989 in the principal
                  amount of $10,000 executed by the Registrant in favor of Paul
                  M. Diamond (incorporated by reference to Exhibit 10.9 to the
                  Company's Report on Form 10-KSB for the Company's fiscal year
                  ended September 30, 1993).

         10.10    Promissory Note due on November 1, 1989 in the principal
                  amount of $2,500 executed by the Registrant in favor of Paul
                  M. Diamond (incorporated by reference to Exhibit 10.10 to the
                  Company's Report on Form 10-KSB for the Company's fiscal year
                  ended September 30, 1993).

         10.11    Promissory Note due on November 1, 1989 in the principal
                  amount of $30,000 executed by the Registrant in favor of
                  Marvin M. Reiss (incorporated by reference to Exhibit


                                      -37-
<PAGE>   41
                  10.11 to the Company's Report on Form 10-KSB for the Company's
                  fiscal year ended September 30, 1993),

         10.12    Promissory Note due on November 1, 1989 in the principal
                  amount of $20,000 executed by the Registrant in favor of
                  Marvin M. Reiss (incorporated by reference to Exhibit 10.12 to
                  the Company's Report on Form 10-KSB for the Company's fiscal
                  year ended September 30, 1993).

         10.13    Promissory Note due on November 1, 1989 in the principal
                  amount of $10,000 executed by the Registrant in favor of
                  Marvin M. Reiss (incorporated by reference to Exhibit 10.13 to
                  the Company's Report on Form 10-KSB for the Company's fiscal
                  year ended September 30, 1993).

         10.14    Promissory Note due on November 1, 1989 in the principal
                  amount of $15,000 executed by the Registrant in favor of
                  Marvin M. Reiss (incorporated by reference to Exhibit 10.14 to
                  the Company's Report on Form 10-KSB for the Company's fiscal
                  year ended September 30, 1993).

         10.15    Demand Promissory Note in the principal amount of $5,000
                  executed by the Registrant in favor of Marvin M. Reiss
                  (incorporated by reference to Exhibit 10.15 to the Company's
                  Report on Form 10-KSB for the Company's fiscal year ended
                  September 30, 1993).

         10.16    Form of Exchangeable Note due on December 31, 1995 in the
                  principal amount of $125,000 executed by the Registrant in
                  favor of Robert S. Trump (incorporated by reference to Exhibit
                  10.16 to the Company's Report on Form 10-KSB for the Company's
                  fiscal year ended September 30, 1993).

         10.17    Security Agreement dated as of January 7, 1993 between the
                  Registrant and Robert S. Trump (incorporated by reference to
                  Exhibit 10.17 to the Company's Report on Form 10-KSB for the
                  Company's fiscal year ended September 30, 1993).

         10.18    Letter Agreement dated January 7, 1993 between the Registrant
                  and Robert S. Trump (incorporated by reference to Exhibit
                  10.18 to the Company's Report on Form 10-KSB for the Company's
                  fiscal year ended September 30, 1993).

         10.19    Warrant Agreement dated as of January 7, 1993 between the
                  Registrant and Robert S. Trump (incorporated by reference to
                  Exhibit 10.19 to the Company's Report on Form 10-KSB for the
                  Company's fiscal year ended September 30, 1993).

         10.20    Subscription Agreement dated as of June 1, 1993 between the
                  Registrant and Henry T. Doherty (incorporated by reference to
                  Exhibit 10.20 to the Company's Report on Form 10-KSB for the
                  Company's fiscal year ended September 30, 1993).

         10.21    Subscription Agreement dated as of June 1, 1993 between the
                  Registrant and Nick Varsames (incorporated by reference to
                  Exhibit 10.21 to the Company's Report on Form 10-KSB for the
                  Company's fiscal year ended September 30, 1993).



                                      -38-
<PAGE>   42
         10.22    Letter Agreement dated September 1, 1993 between the
                  Registrant and Robert S. Trump (incorporated by reference to
                  Exhibit 10.22 to the Company's Report on Form 10-KSB for the
                  Company's fiscal year ended September 30, 1993).

         10.23    Warrant Agreement dated as of September 1, 1993 between the
                  Registrant and Robert S. Trump (incorporated by reference to
                  Exhibit 10.23 to the Company's Report on Form 10-KSB for the
                  Company's fiscal year ended September 30, 1993).

         10.24    Form of Subscription Agreement dated September 22, 1993
                  between the Registrant and Henry T. Doherty (incorporated by
                  reference to Exhibit 10.24 to the Company's Report on Form
                  10-KSB for the Company's fiscal year ended September 30,
                  1993).

         10.25    Term Note in the principal amount of $112,397.27 executed by
                  the Registrant in favor of The Rebot Corporation (incorporated
                  by reference to Exhibit 10.25 to the Company's Report on Form
                  10-KSB for the Company's fiscal year ended September 30,
                  1993).

         10.26    Form of Warrant dated as of September 30, 1993 between the
                  Registrant and Rebot Corporation (incorporated by reference to
                  Exhibit 10.26 to the Company's Report on Form 10-KSB for the
                  Company's fiscal year ended September 30, 1993).

         10.27    Term Note in the principal amount of $38,418.40 executed by
                  the Registrant in favor of William F. Finley (incorporated by
                  reference to Exhibit 10.27 to the Company's Report on Form
                  10-KSB for the Company's fiscal year ended September 30,
                  1993).

         10.28    Form of Warrant dated as of September 30, 1993 between the
                  Registrant and William F. Finley (incorporated by reference to
                  Exhibit 10.28 to the Company's Report on Form 10-KSB for the
                  Company's fiscal year ended September 30, 1993).

         10.29    Letter Agreement dated September 30, 1993 between the
                  Registrant and Paul M. Diamond (incorporated by reference to
                  Exhibit 10.29 to the Company's Report on Form 10-KSB for the
                  Company's fiscal year ended September 30, 1993).

         10.30    Form of Warrant dated as of September 30, 1993 between the
                  Registrant and Paul M. Diamond (incorporated by reference to
                  Exhibit 10.30 to the Company's Report on Form 10-KSB for the
                  Company's fiscal year ended September 30, 1993).

         10.31    Form of Warrant dated as of November 11, 1993 between the
                  Registrant and Paul M. Diamond (incorporated by reference to
                  Exhibit 10.31 to the Company's Report on Form 10-KSB for the
                  Company's fiscal year ended September 30, 1993).

         10.32    Form of Warrant dated as of November 11, 1993 between the
                  Registrant and William F. Finley (incorporated by reference to
                  Exhibit 10.32 to the Company's Report on Form 10-KSB for the
                  Company's fiscal year ended September 30, 1993).

         10.33    Form of Warrant dated as of November 11, 1993 between the
                  Registrant and Marvin M. Reiss (incorporated by reference to
                  Exhibit 10.33 to the Company's Report on Form 10- KSB for the
                  Company's fiscal year ended September 30, 1993).



                                      -39-
<PAGE>   43
         10.34    Form of Warrant dated as of November 11, 1993 between the
                  Registrant and Alan M. Swiedler (incorporated by reference to
                  Exhibit 10.34 to the Company's Report on Form 10-KSB for the
                  Company's fiscal year ended September 30, 1993).

         10.35    Form of Warrant dated as of November 11, 1993 between the
                  Registrant and Susan M. Michaelson (incorporated by reference
                  to Exhibit 10.35 to the Company's Report on Form 10-KSB for
                  the Company's fiscal year ended September 30, 1993).

         10.36    Form of Warrant dated as of November 11, 1993 between the
                  Registrant and Leonard Gartner (incorporated by reference to
                  Exhibit 10.36 to the Company's Report on Form 10-KSB for the
                  Company's fiscal year ended September 30, 1993).

         10.37    Form of Warrant dated as of November 11, 1993 between the
                  Registrant and Ted Prince (incorporated by reference to
                  Exhibit 10.37 to the Company's Report on Form 10-KSB for the
                  Company's fiscal year ended September 30, 1993).

         10.38    Form of Subscription Agreement dated November 17, 1993 between
                  the Registrant and Henry T. Doherty (incorporated by reference
                  to Exhibit 10.38 to the Company's Report on Form 10-KSB for
                  the Company's fiscal year ended September 30, 1993).

         10.39    Form of Subscription Agreement dated February 28, 1994 between
                  the Registrant and Robert S. Trump (incorporated by reference
                  to Exhibit 10.39 to the Company's Report on Form 10-KSB for
                  the Company's fiscal year ended September 36, 1993).

         10.40    Letter Agreement dated November 24, 1992 between the
                  Registrant and Management Technologies, Incorporated
                  (incorporated by reference to Exhibit 10.40 to the Company's
                  Report on Form 10-KSB for the Company's fiscal year ended
                  September 30, 1993).

         10.41    Agreement dated April 29, 1994 between the Registrant and New
                  Paradigm Software Corporation (incorporated by reference to
                  the Registrant's Report on Form 10-QSB for the Quarter Ended
                  March 31, 1994).

         10.42    Occupancy Agreement dated October 10, 1994 between the
                  Registrant and New Paradigm Software Corp. (incorporated by
                  reference to Exhibit 10.42 to the Company's Report on Form
                  10-KSB for the Company's fiscal year ended September 30,
                  1994).

         10.43    Letter agreement dated October 10, 1994 between the Registrant
                  and New Paradigm Software Corp. (incorporated by reference to
                  Exhibit 10.43 to the Company's Report on Form 10-KSB for the
                  Company's fiscal year ended September 30, 1994).

         10.44    Letter agreement dated August 10, 1994 between the Registrant
                  and Management Technologies, Inc. concerning the conversion of
                  the MARS-TM- product to Windows IBM (incorporated by reference
                  to Exhibit 10.44 to the Company's Report on Form 10- KSB for
                  the Company's fiscal year ended September 30, 1994).

         10.45    $150,000 Secured Promissory Note dated July 21, 1994 issued by
                  the Registrant in favor of Robert S. Trump (incorporated by
                  reference to Exhibit 10.45 to the Company's Report on Form
                  10-KSB for the Company's fiscal year ended September 30,
                  1994).


                                      -40-
<PAGE>   44
         10.46    Letter agreement dated July 21, 1994 between the Registrant
                  and Robert S. Trump concerning $125,000 Exchangeable Note
                  dated January 7, 1993 (incorporated by reference to Exhibit
                  10.46 to the Company's Report on Form 10-KSB for the Company's
                  fiscal year ended September 30, 1994).

         10.47    $280,000 Secured Promissory Note dated October 17, 1994 issued
                  by the Registrant in favor of Robert S. Trump (incorporated by
                  reference to Exhibit 10.47 to the Company's Report, on Form
                  10-KSB for the Company's fiscal year ended September 30,
                  1994).

         10.48    $150,000 Secured Promissory Note dated December 13, 1994
                  issued by the Registrant in favor of Robert S. Trump
                  (incorporated by reference to Exhibit 10.48 to the Company's
                  Report on Form 10-KSB for the Company's fiscal year ended
                  September 30, 1994).

         10.49    $149,791.67 Amended and Restated Exchangeable Note dated
                  January 1, 1995 issued by the Registrant in favor of Robert S.
                  Trump (incorporated by reference to Exhibit 10.49 to the
                  Company's Report on Form 10-KSB for the Company's fiscal year
                  ended September 30, 1994).

         10.50    $156,708.37 Amended and Restated Secured Promissory Note dated
                  January 1, 1995 issued by the Registrant in favor of Robert S.
                  Trump (incorporated by reference to Exhibit 10.50 to the
                  Company's Report on Form 10-KSB for the Company's fiscal year
                  ended September 30, 1994).

         10.51    $250,000 Secured Promissory Note dated January 11, 1995 issued
                  by the Registrant in favor of Robert S. Trump (incorporated by
                  reference to Exhibit 10.51 to the Company's Report on Form
                  10-KSB for the Company's fiscal year ended September 30,
                  1994).

         10.52    Letter agreement dated December 29, 1994 between the
                  Registrant and Robert S. Trump (incorporated by reference to
                  Exhibit 10.52 to the Company's Report on Form 10-KSB for the
                  Company's fiscal year ended September 30, 1994).

         10.53    Letter agreement dated January 13, 1995 between the Registrant
                  and Robert S. Trump (incorporated by reference to Exhibit
                  10.53 to the Company's Report on Form 10-KSB for the Company's
                  fiscal year ended September 30, 1994).

         10.54    Letter agreement dated January 13, 1995 between the Registrant
                  and Robert S. Trump (incorporated by reference to Exhibit
                  10.54 to the Company's Report on Form 10-KSB for the Company's
                  fiscal year ended September 30, 1994).

         10.55    Letter of Intent dated October 17, 1994 by and among the
                  Registrant, Hillary Kelbick and Susan Michaelson concerning
                  Michaelson Kelbick Partners Inc. (then known as FPC Consulting
                  Corp.) (incorporated by reference to Exhibit 10.55 to the
                  Company's Report on Form 10-KSB for the Company's fiscal year
                  ended September 30, 1994).

         10.56    Managing Director's Agreement dated October 17, 1994 by and
                  among Michaelson Kelbick Partners Inc. (then known as FPC
                  Consulting Corp.), Susan Michaelson and the Registrant
                  (incorporated by reference to Exhibit 10.56 to the Company's
                  Report on Form 10-KSB for the Company's fiscal year ended
                  September 30, 1994).



                                      -41-
<PAGE>   45
         10.57    Managing Director's Agreement dated October 17, 1994 by and
                  among Michaelson Kelbick Partners Inc. (then known as FPC
                  Consulting Corp.), Hillary Kelbick and the Registrant
                  (incorporated by reference to Exhibit 10.57 to the Company's
                  Report on Form 10-KSB for the Company's fiscal year ended
                  September 30, 1994).

         10.58    Shareholders Agreement dated as of January 5, 1995 by and
                  among the Registrant, Aspen Capital Management Corp. (then
                  known as FPC Funds Corp.), Richard J. Loos and Sean P. Brennan
                  (incorporated by reference to Exhibit 10.58 to the Company's
                  Report on Form 10-KSB for the Company's fiscal year ended
                  September 30, 1994).

         10.59    Executive Employment Agreement dated January 5, 1995 between
                  Aspen Capital Management Corp. (then known as FPC Funds
                  Corp.), the Registrant and Richard J. Loos (incorporated by
                  reference to Exhibit 10.59 to the Company's Report on Form 10-
                  KSB for the Company's fiscal year ended September 30, 1994).

         10.60    Executive Employment Agreement dated January 5, 1995 between
                  Aspen Capital Management Corp. (then known as FPC Funds
                  Corp.), the Registrant and Sean P. Brennan (incorporated by
                  reference to Exhibit 10.60 to the Company's Report on Form
                  10-KSB for the Company's fiscal year ended September 30,
                  1994).

         10.61    $250,000 Secured Promissory Note dated April 6, 1995 issued by
                  the Registrant in favor of Robert S. Trump (incorporated by
                  reference to Exhibit 10.14 to Report of Form 10- QSB for
                  fiscal quarter ended March 31, 1995).

         10.62    Letter agreement dated May 3, 1995 between the Registrant and
                  New Paradigm Software Corp. (incorporated by reference to
                  Exhibit 10.15 to Report on Form 10-QSB for fiscal quarter
                  ended March 31, 1995).

         10.63    Agreement dated July 28, 1995 by and among the Company, Scott
                  Rhodes, Scott Rhodes d/b/a "Metamorphic Computing", Scott
                  Rhodes d/b/a "Metamorphic Systems", Scott Rhodes d/b/a "MCC",
                  Scott Rhodes d/b/a "Metamorphic Computing Corp." and
                  Metamorphic Computing Corp. (incorporated by reference to
                  Exhibit to Report on Form 10-KSB for fiscal year ended
                  September 30, 1995).

         10.64    Form of Warrant dated as of September 15, 1995 between the
                  Registrant and Robert S. Trump (incorporated by reference to
                  Exhibit 10.64 to Report on Form 10-KSB for fiscal year ended
                  September 30, 1995).

         10.65    Form of Warrant dated as of September 15, 1995 between the
                  Registrant and William F. Finley (incorporated by reference to
                  Exhibit 10.65 to Report on Form 10-KSB for fiscal year ended
                  September 30, 1995).

         10.66    Letter dated March 29, 1996 from Robert S. Trump regarding
                  conversion of debt into equity (incorporated by reference to
                  Exhibit 10.66 to Report on Form 10-KSB for fiscal year ended
                  September 30, 1996).

         10.67    Letter dated June 20, 1996 from Robert S. Trump regarding
                  conversion of debt into equity (incorporated by reference to
                  Exhibit 10.67 to Report on Form 10-KSB for fiscal year ended
                  September 30, 1996).


                                      -42-
<PAGE>   46
         10.68    General Form of Subscription Agreement used in private
                  placements in 1996 (incorporated by reference to Exhibit 10.68
                  to Report on Form 10-KSB for fiscal year ended September 30,
                  1996).

         10.69    Form of Warrant Agreement for Warrants issued in September
                  1996 (incorporated by reference to Exhibit 10.69 to Report on
                  Form 10-KSB for fiscal year ended September 30, 1996).

         10.70    Letter agreement dated November 12, 1996 with Robert S. Trump
                  regarding exercise of Restated Exchangeable Note dated January
                  1, 1995 and conversion of debt into equity (incorporated by
                  reference to Exhibit 10.70 to Report on Form 10-KSB for fiscal
                  year ended September 30, 1996).

         10.71    Executive Employment Agreement dated as of September 11, 1997
                  between the Registrant and William F. Finley.

         10.72    Managing Director's Agreement dated as of September 11, 1997
                  between the Registrant's subsidiary, MKP, and Susan
                  Michaelson.

         10.73    Managing Director's Agreement dated as of September 11, 1997
                  between the Registrant's subsidiary, MKP, and Hillary Kelbick.

         10.74    Form of Warrant dated as of December 29, 1997 issued to Duncan
                  Burke.

         10.75    Form of Warrant dated as of December 29, 1997 issued to
                  Richard Levy.

         10.76    Stock Purchase Agreement dated as of October 1, 1997 by and
                  between the Company and Robert S. Trump.

         21.1     Subsidiaries of Registrant.

         27.1     Financial Data Schedule.



                                      -43-
<PAGE>   47
                                   SIGNATURES

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


Dated: January 12, 1998

                        FINANCIAL PERFORMANCE CORPORATION



                                                  By: /s/ WILLIAM F. FINLEY
                                                     ---------------------------
                                                       William F. Finley
                                                       Chief Executive Officer
                                                       and President


         In accordance with the Exchange Act, this report has been signed 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/ WILLIAM F. FINLEY                    Chief Executive Officer and President;                  January 12, 1998
---------------------------
William F. Finley                         (Principal Executive Officer and Principal
                                          Financial and Accounting Officer)
/s/ RICHARD LEVY                          Secretary and Director                                  January 12, 1998
-----------------------------
Richard Levy

/s/ DUNCAN G. BURKE                       Vice President and Director                             January 12, 1998
-------------------------
Duncan G. Burke
</TABLE>








                                                        -44-

<PAGE>   48
               FINANCIAL PERFORMANCE CORPORATION AND SUBSIDIARIES

                   INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
                          ANNUAL REPORT ON FORM 10-KSB











REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS                           F-2


CONSOLIDATED BALANCE SHEETS AS OF SEPTEMBER 30, 1997 AND 1996                F-3


CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY FOR               F-4
  THE YEARS ENDED SEPTEMBER 30, 1997 AND 1996


CONSOLIDATED STATEMENTS OF OPERATIONS FOR THE YEARS ENDED                    F-5
  SEPTEMBER 30, 1997 AND 1996


CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE YEARS ENDED                    F-6
  SEPTEMBER 30, 1997 AND 1996


NOTES TO CONSOLIDATED FINANCIAL STATEMENTS                                   F-7






                                       F-1
<PAGE>   49
                        [GOLDSTEIN AND MORRIS LETTERHEAD]






               REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS



To the Board of Directors and Shareholders
Financial Performance Corporation and Subsidiaries
New York, New York


We have audited the accompanying consolidated balance sheet of Financial
Performance Corporation and Subsidiaries as of September 30, 1997 and 1996 and
the related consolidated statements of changes in stockholders' equity,
operations 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 audits 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 Financial
Performance Corporation and Subsidiaries as of September 30, 1997 and 1996 and
the results of its consolidated operations and its cash flows for the years then
ended in conformity with generally accepted accounting principles.




                                               /s/Goldstein and Morris


New York, New York
January 8, 1998


                                       F-2
<PAGE>   50
               FINANCIAL PERFORMANCE CORPORATION AND SUBSIDIARIES

                           CONSOLIDATED BALANCE SHEET

                           SEPTEMBER 30, 1997 AND 1996

<TABLE>
<CAPTION>
                                     ASSETS
                                                                                 1997               1996
                                                                             -----------        -----------

<S>                                                                          <C>                <C>
Current assets
    Cash and cash equivalents                                                $ 1,139,974        $ 1,972,056
    Accounts receivable                                                        1,645,918            902,516
    Prepaid expenses and other current assets                                     69,337             57,340
                                                                             -----------        -----------

          Total current assets                                                 2,855,229          2,931,912

Computer equipment, net of accumulated depreciation
       of $96,505 and $46,193 (Note B (7))                                       172,242            111,852

Software development costs (Note B (3))                                          574,720            452,299

Other assets                                                                     307,918            264,368
                                                                             -----------        -----------

                                                                             $ 3,910,109        $ 3,760,431
                                                                             ===========        ===========

                                  LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities
    Accounts payable and accrued expenses                                    $ 1,733,648        $ 1,362,571
    Current portion of long-term debt (Note D)                                        --              7,520
    Short-term borrowings (Note C)                                                    --            113,000
                                                                             -----------        -----------

          Total current liabilities                                            1,733,648          1,483,091
                                                                             -----------        -----------

Long-term debt, net of current maturities (Note D)                                    --            168,095
                                                                             -----------        -----------

Minority interest in consolidated subsidiaries                                   423,046            256,046
                                                                             -----------        -----------

Stockholders' equity (Note I)
    Common stock - authorized 50,000,000 shares
    of $.01 par value per share: issued and
    outstanding 8,021,534 as of September 30, 1997 and
   7,192,562 as of September 30, 1996                                             80,215             71,926
    Additional paid in capital                                                 7,480,761          7,043,986
    Accumulated (deficit)                                                     (5,807,561)        (5,262,713)
                                                                             -----------        -----------

          Total stockholders' equity                                           1,753,415          1,853,199
                                                                             -----------        -----------

                                                                             $ 3,910,109        $ 3,760,431
                                                                             ===========        ===========
</TABLE>


   The accompanying notes are an integral part of these financial statements.
                                       F-3
<PAGE>   51
               FINANCIAL PERFORMANCE CORPORATION AND SUBSIDIARIES

           CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY

                     YEARS ENDED SEPTEMBER 30, 1997 AND 1996


<TABLE>
<CAPTION>
                               Common Stock        Additional
                          ---------------------      Paid In
                            Shares    Par Value      Capital         Deficit            Total
                          ---------   ---------     ----------     -----------      -----------
<S>                       <C>         <C>           <C>            <C>              <C>
BALANCE -
 SEPTEMBER 30, 1995       3,500,617     $35,006     $4,142,732     $(5,027,664)     $  (849,926)

Issuance of common
  shares in private
  placement, net of
  costs                     879,500       8,795        691,992              --          700,787

Issuance of common
  shares for
  compensation and
  services                  294,971       2,950        216,963              --          219,913

Issuance of common
  shares on exercise
  of warrants             1,000,000      10,000        490,000              --          500,000

Issuance of common
  shares on
  conversion of
  convertible note
  and short-term debt     1,517,474      15,175      1,502,299              --        1,517,474

Net (loss)                       --          --             --        (235,049)        (235,049)
                          ---------     -------     ----------     -----------      -----------

BALANCE -
 SEPTEMBER 30, 1996       7,192,562      71,926      7,043,986      (5,262,713)       1,853,199

Issuance of common
shares on exercise of
warrants                     49,414         494         24,213              --           24,707

Issuance of shares in
  private placement,
  net of costs              198,942       1,989        166,881              --          168,870

Issuance of common
shares on conversion
of convertible note
and short-term debt         564,614       5,646        234,341              --          239,987

Sale of common shares        16,002         160         11,340              --           11,500

Net (loss)                       --          --             --        (544,848)        (544,848)
                          ---------     -------     ----------     -----------      -----------

BALANCE -
 SEPTEMBER 30, 1997       8,021,534     $80,215     $7,480,761     $(5,807,561)     $ 1,753,415
                          =========     =======     ==========     ===========      ===========
</TABLE>

   The accompanying notes are an integral part of these financial statements.
                                       F-4
<PAGE>   52
               FINANCIAL PERFORMANCE CORPORATION AND SUBSIDIARIES

                      CONSOLIDATED STATEMENTS OF OPERATIONS

                     YEARS ENDED SEPTEMBER 30, 1997 AND 1996





<TABLE>
<CAPTION>
                                                     1997               1996
                                                 -----------        -----------


<S>                                              <C>                <C>
Revenues                                         $ 7,785,250        $ 8,784,137
                                                 -----------        -----------

Costs and expenses
    Cost of revenues                               6,482,542          7,271,114
    Salaries and related expenses                    605,864            525,677
    Selling, general and administrative            1,265,803            709,118
                                                 -----------        -----------

                                                   8,354,209          8,505,909
                                                 -----------        -----------

          Operating income (loss)                   (568,959)           278,228
                                                 -----------        -----------

Other income (expense):
    Interest income                                   49,489             13,081
    Interest expense                                  (2,981)           (89,424)
    Minority interest in loss (income) of
      consolidated subsidiaries                        3,000           (101,000)
                                                 -----------        -----------

                                                      49,508           (177,343)
                                                 -----------        -----------

Income (loss) from continuing operations
   before income taxes                              (519,451)           100,885
Income taxes                                          25,397            116,062
                                                 -----------        -----------

          Income (loss) from continuing
            operations                              (544,848)           (15,177)

Loss from discontinued operations (Note L)                --           (219,872)
                                                 -----------        -----------

          Net income (loss)                      $  (544,848)       $  (235,049)
                                                 ===========        ===========

Per share data:
  Net (loss) from continuing operations          $      (.07)       $     (.003)
                                                 ===========        ===========
  Net (loss)                                     $      (.07)       $      (.05)
                                                 ===========        ===========
  Weighted average number of common shares
    outstanding                                    7,878,401          4,899,023
                                                 ===========        ===========
</TABLE>


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

                                       F-5
<PAGE>   53
               FINANCIAL PERFORMANCE CORPORATION AND SUBSIDIARIES

                      CONSOLIDATED STATEMENTS OF CASH FLOWS

                     YEARS ENDED SEPTEMBER 30, 1997 AND 1996


<TABLE>
<CAPTION>
                                                                              1997               1996
                                                                          -----------        -----------
Cash flows provided by operating activities:

<S>                                                                       <C>                <C>
    Net (loss)                                                            $  (544,848)       $  (235,049)
    Adjustments to reconcile net (loss) to net cash used for
      operating activities:
      Depreciation and amortization                                           175,288             80,063
      Minority interest in (loss) and income of
        consolidated subsidiaries                                              (3,000)           101,000
      Issuance of stock for compensation                                           --             91,309

      Changes in operating assets and liabilities:
          Increase in accounts receivable                                    (743,402)          (675,129)
          Increase in prepaid expenses
             and other current assets                                         (11,997)           (20,042)
          Decrease (Increase) in other assets                                 (43,550)          (116,318)
          Increase in accounts payable                                        371,077          1,036,456
                                                                          -----------        -----------

                Net cash provided by (used for)
                  operating activities                                       (800,432)           262,290
                                                                          -----------        -----------

Cash flows from investing activities:
    Purchase of equipment                                                    (175,331)           (67,909)
    Software development costs                                               (231,396)          (252,167)
                                                                          -----------        -----------

                Net cash used for investing activities                       (406,727)          (320,076)
                                                                          -----------        -----------

Cash flows from financing activities:
    Repayments on notes payable to stockholders                                    --            (37,174)
    Proceeds from sale of common shares and
      exercise of warrants, net of costs                                      205,077            857,952
    Proceeds from long-term borrowings                                             --             72,309
    Proceeds from short-term borrowings                                            --            788,000
   Subsidiary company stock issued to minority stockholder                    170,000                 --
                                                                          -----------        -----------

          Net cash provided by financing activities                           375,077          1,681,087
                                                                          -----------        -----------

Net increase (decrease) in cash                                              (832,082)         1,623,301

Cash, beginning of year                                                     1,972,056            348,755
                                                                          -----------        -----------

Cash, end of year                                                         $ 1,139,974        $ 1,972,056
                                                                          ===========        ===========

Supplemental disclosure of cash flow information:
  Cash paid during the year for:
    Interest                                                              $        --        $     1,750
                                                                          ===========        ===========
    Income taxes                                                          $   116,062        $        --
                                                                          ===========        ===========
</TABLE>


   The accompanying notes are an integral part of these financial statements.
                                       F-6
<PAGE>   54
               FINANCIAL PERFORMANCE CORPORATION AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


NOTE A - ORGANIZATION AND BUSINESS

    Financial Performance Corporation (the "Company") through its subsidiaries
currently markets merger communications services and computer software to the
financial services industry. The Company was incorporated in New York on August
14, 1984. The Company ceased operations from February 1990 through November
1992.

    During the fiscal year ended September 30, 1995, the Company established
three eighty percent owned subsidiaries, Michaelson Kelbick Partners Inc.
("MKP"), FPC Information Corp. ("FPC Information") and Aspen Capital Management,
LLC ("Aspen").

    MKP was formed and commenced operations in October 1994. MKP is engaged in
providing specialized merger communications and marketing services to the
financial services industry (see Note B (1)).

    FPC Information was formed in November 1994 for the purpose of marketing the
Company's software products.

    Aspen was formed in January 1995 as an international sponsor of cash
management funds and planned to engage in the development, investment management
and administration of such funds. Aspen, which was in the development stage,
ceased operations in September 1996 (see Note L).


NOTE B - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES


    (1)    Principles of Consolidation

           The consolidated financial statements include the accounts of
Financial Performance Corporation and Subsidiaries (its three eighty percent
owned subsidiaries). All significant intercompany accounts and transactions have
been eliminated.

           Condensed financial information of its eighty percent owned
subsidiary, MKP, excluding intercompany eliminations, as of September 30, 1997
and 1996 and for the years then ended, is as follows:


<TABLE>
<CAPTION>
                                                    1997             1996
                                                ----------       ----------

<S>                                             <C>              <C>
        Cash                                    $1,091,000       $1,685,000
        Accounts receivable                      1,646,000          903,000
        Other assets                                47,000           14,000
        Accounts payable                         1,435,000        1,705,000
        Revenues                                 7,785,000        8,784,000
        Operating costs                          7,167,000        8,178,000
        Net income                                 642,000          504,000
</TABLE>


                                       F-7
<PAGE>   55
               FINANCIAL PERFORMANCE CORPORATION AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (Continued)


NOTE B - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)


(1)        Principles of Consolidation (continued)

           Condensed financial information for the Company's other two eighty
percent subsidiaries, Aspen Capital Management, LLC and FPC Information Corp.,
have not been separately disclosed. These entities had no revenues and their
assets and liabilities are immaterial.

           Aspen, whose operations commenced in March 1995, suspended its
operations in September 1996 (see Note L). Aspen had no revenues and incurred
losses of $219,872 for the year ended September 30, 1996. FPC Information Corp.
had no revenues and incurred losses of $340,540 and $428,245 for the years ended
September 30, 1997 and 1996, respectively.

(2)        Revenue recognition

           Revenue from software products is recognized upon delivery to the
customer, provided that no significant vendor obligations remain, and collection
of the resulting receivable is deemed probable.


(3)        Software Development Costs and Amortization

           Costs associated with software development subsequent to the
establishment of technological feasibility, including enhancements to software
products, are capitalized and amortized as required by Statement of Financial
Accounting Standards No. 86. Costs incurred prior to achieving technological
feasibility are expensed as incurred and classified as research and development
costs. There were no research and development costs incurred for the years ended
September 30, 1997 and 1996.

           Amortization of capitalized software development costs is generally
provided on a product-by-product basis at the greater of the amount computed by
using the ratio that current gross revenue bears to the total current and
anticipated gross revenue of the product or on the straight-line method over the
sixty-month estimated useful life of the product commencing when the product is
available for general release to customers.

           Software development costs are summarized as follows:


<TABLE>
<CAPTION>
                                     1997             1996
                                  ---------        ---------
<S>                               <C>              <C>
Balance - beginning of year       $ 452,299        $ 238,289
  Additions                         231,396          252,166
  Amortization                     (108,975)         (38,156)
                                  ---------        ---------

  Balance - end of year           $ 574,720        $ 452,299
                                  =========        =========
</TABLE>


                                       F-8
<PAGE>   56
               FINANCIAL PERFORMANCE CORPORATION AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (Continued)


NOTE B -   SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

(4)        Income (loss) per common share

           Income (loss) per common share is computed using the weighted average
number of common shares outstanding for each period adjusted for incremental
shares assumed issued for common stock equivalents using the treasury stock
method, provided that the effect is not antidilutive.


(5)        Cash and cash equivalents

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


(6)        Estimates

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


(7)        Depreciation and amortization

           Computer equipment is stated at cost. Depreciation is provided using
the straight-line method over the estimated useful lives of the assets.

           Amortization of an intangible asset, a customer list of $164,000,
included on the balance sheet under the caption, other assets, is being
amortized on the straight line basis, over ten years.


(8)        Income Taxes

           Income taxes are computed in accordance with the provisions of
Financial Accounting Standards Board Statement No. 109, "Accounting for Income
Taxes" ("SFAS 109"), which requires, among other things, a liability approach to
calculating deferred income taxes. SFAS 109 requires a company to recognize
deferred tax liabilities and assets for the expected future tax consequences of
events that have been recognized in a company's financial statements or tax
returns. Under this method, deferred tax liabilities and assets are determined
based on the difference between the financial statement carrying amounts and tax
basis of assets and liabilities using enacted tax rates in effect in the years
in which the differences are expected to reverse.


                                       F-9
<PAGE>   57
               FINANCIAL PERFORMANCE CORPORATION AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (Continued)

NOTE B -   SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

(8)        Income taxes (continued)

           At September 30, 1997, the Company had net operating loss
carryforwards of approximately $1,150,000, which would expire by 2012. Certain
provisions of the tax law may limit the net operating loss carryforwards
available for use in any given year in the event of a significant change in
ownership interest. At September 30, 1997, the Company had a deferred tax asset
amounting to approximately $460,000. The deferred tax asset consisted primarily
of net operating loss carryforwards and has been fully offset by a valuation
allowance of the same amount.

           The income tax expense for the years ended September 30, 1997 and
1996 represents state and local income taxes on the income of MKP.


NOTE C -   SHORT-TERM BORROWINGS

    During the fiscal year ended September 30, 1996, $675,000 of short-term
financing was advanced to the Company by a principal shareholder. These advances
plus prior short-term borrowings which aggregated $125,000 at December 31, 1995
totaled $800,000. This aggregate amount ($800,000) was converted into 800,000
shares of the Company's common stock on March 29, 1996 and June 20, 1996.
Subsequent to the conversion, an additional $113,000 was advanced to the Company
by the same principal shareholder. In November 1996, the short-term debt of
$113,000 was converted into 113,000 shares of the Company's common stock, at a
conversion price of $1.00 per share.


NOTE D -   LONG-TERM  DEBT

           Long-term debt as of September 30, 1997 and 1996 consists of the
following:


<TABLE>
<CAPTION>
                                                                         1997           1996
                                                                       --------       --------
<S>                                                                    <C>            <C>
        Note payable, stockholders, matured on
        October 1, 1996 and required monthly
        payments of $3,575 including interest at
        9% per annum                                                   $     --       $  7,520


        Amended and restated secured convertible note
        payable to a principal shareholder, matures on
        December 31, 1997 with accrued interest from
        January 1, 1995 at 8% per annum, see Note D (1)
        and (2)                                                              --        168,095
                                                                       --------       --------

                                                                             --        175,615

        Less: current portion due within one year                            --          7,520
                                                                       --------       --------

                                                                       $     --       $168,095
                                                                       ========       ========
</TABLE>


                                      F-10
<PAGE>   58
               FINANCIAL PERFORMANCE CORPORATION AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (Continued)



NOTE D -   LONG-TERM  DEBT - (Continued)


(1) The original principal amount of the note was converted in November 1996
into 400,000 shares of the Company's common stock.


(2) Until such time as the convertible note was paid, the Company was obligated
to cause an amount equal to 30% of the pre-tax income of all of the operating
income of the Company and its subsidiaries to be paid to the holder of the note
annually in arrears, on or before the 60th day following the end of the
Company's fiscal year commencing with the fiscal year ending September 30, 1995.
Such payments were to be applied first to accrued interest with the balance
applied to principal. The note was secured by the Company's accounts receivable,
contract rights, patents, trademarks and any other rights in computer software.
In November 1996, the outstanding principal amount due under this note
($125,000), was converted into 400,000 shares of the Company's common stock at
the effective exchange rate of $0.3125 per share set forth in the convertible
note. At such time, the holder of the convertible note agreed with the Company
to convert the then current remaining principal balance and accrued interest in
respect of the convertible note ($47,154) together with the current principal
balance and accrued interest thereon in respect of all other indebtedness of the
Company then held by the holder of the consolidated note ($117,460) into an
aggregate of $164,614 additional shares of the Company's common stock of the
conversion rate of $1.00 per share. The conversion rate of $1.00 per share
represented the Company's estimate of the then current fair market value of such
shares, as reflected by the most recently effectuated private placements of the
Company's common stock. Accordingly, the Company's obligations under the note
and the security interests granted as collateral therein are no longer in
effect.


NOTE E -   SIGNIFICANT CUSTOMERS

       For the year ended September 30, 1997 two customers of the Company's
subsidiary, MKP, accounted for 72% of the Company's consolidated revenues in the
following respective percentages:

<TABLE>
<CAPTION>
<S>                   <C>          <C>
        Customer        A           56%
        Customer        B           16%
                                    --

                                    72%
                                    ==
</TABLE>

  The total accounts receivable from these customers at September 30, 1997
amounted to 56% of the total accounts receivable balance.


                                      F-11
<PAGE>   59
               FINANCIAL PERFORMANCE CORPORATION AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (Continued)





NOTE F - WARRANTS TO PURCHASE COMMON STOCK

    At September 30, 1997, the Company had outstanding warrants as follows:


<TABLE>
<CAPTION>
        Number of                 Exercise                 Expiration
         Shares                    Price                      Date
        ---------                 --------              ------------------
<S>                               <C>                   <C>
          330,586                 $ .50                 August 31, 1998
          427,063                   .50                 September 30, 1998
          200,000                   .50                 September 15, 2010

          725,000                  1.00                 September 15, 2006
          150,000                   .50                 November  30, 1999
           20,000                  1.00                 September 16, 2006
</TABLE>

In December, 1997, the Company issued 100,000 warrants to purchase 100,000
shares of the Company's common stock at an exercise price of $.50 per share with
an expiration date of November 30, 1999 to members of the Board of Directors.


NOTE G - INCENTIVE STOCK OPTION PLAN

    In March 1988, the Company adopted a stock option plan. The plan provides
for the granting of options to purchase up to 140,000 shares of common stock to
key employees, officers and directors at an exercise price equal to fair market
value at the date of grant. The right to exercise options granted under the plan
commences one year from the date of the grant and such options are exercisable
in increments of 25% each year provided employment with the Company is
continuous.

    Outstanding options granted pursuant to the stock option plan, as of
September 30, 1997, are as follows:


<TABLE>
<CAPTION>
     Number of                   Exercise                   Exercisable at
      Shares                      Price                   September 30, 1997
     --------                    --------                -------------------
<S>                              <C>                     <C>
      40,000                     $ .4375                        40,000
      30,000                      4.8125                        30,000
</TABLE>


                                      F-12
<PAGE>   60
               FINANCIAL PERFORMANCE CORPORATION AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (Continued)


NOTE H -EMPLOYEE BENEFIT PLANS

    In September 1996, the Company established a non-contributory pension and
profit sharing plan for the benefit of eligible full-time employees. The plan
provides for annual contributions to a trust fund, which are based upon a
percentage of qualifying employees' annual compensation. Total contributions are
limited to the maximum amount deductible for federal income tax purposes. The
Company contributed $90,000 for the year ended September 30, 1996.

The plan was terminated in March, 1997.

In January, 1997, the Company established a 401(k) salary deferred benefit plan
covering substantially all employees who have met certain requirements. The plan
requires Company contributions equal to 50% to a maximum of 3% of each
participant's contribution percentage.

In September, 1997, the Company amended its 401(k) plan to provide a provision
for discretionary profit sharing plan contributions. Total contributions to the
plan (401(k) and profit sharing) were $82,000 for the year ended September 30,
1997.


NOTE I - STOCKHOLDERS' EQUITY

    In September 1996, the Company effectuated a one-for-five reverse stock
split of its common stock. All share and price per share information in the
consolidated financial statements and related notes have been adjusted to give
retroactive effect for this reverse stock split.


NOTE J - COMMITMENTS

    The Company has commitments under non-cancelable operating leases for office
space and equipment, which expire on October 31, 2006 and September 30, 2000,
respectively. The office lease includes provisions requiring the Company to pay
a proportionate share of increases in real estate taxes and operating expenses
over base period amounts.

    Minimum payments for the leased properties for subsequent years are as
follows:


<TABLE>
<CAPTION>
                 Years Ending
                 September 30,
                 -------------
<S>                                             <C>
                    1998                        $  281,000
                    1999                           281,000
                    2000                           281,000
                    2001                           374,000
                    2002                           415,000
                  Thereafter                     1,711,000
                                                 ---------

                                                $3,343,000
                                                ==========
</TABLE>


Rent and equipment leasing expense for the years ended September 30, 1997 and
1996 was $347,000 and $112,000 respectively.


                                      F-13
<PAGE>   61
               FINANCIAL PERFORMANCE CORPORATION AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (Continued)




NOTE K - EMPLOYMENT AGREEMENTS

    On September 1, 1995, the Company entered into a five year employment
agreement with Mr. Finley which expired on August 31, 2000. Under the agreement,
Mr. Finley's initial annual salary was $125,000, subject to increases as
determined by the Company's Board of Directors, and Mr. Finley's salary was
subsequently increased to $150,000.

    Effective as of October 1, 1997, the Company entered into a new three year
employment agreement with Mr. Finley which expires on September 30, 2000. Under
the new employment agreement, Mr. Finley's initial salary is $150,000 per annum,
subject to periodic increases as shall be determined by the Company's Board of
Directors. In the event of the termination of Mr. Finley's employment by reason
of a "change in control" (as such term is defined in the employment agreement)
of the Company or certain other events, then in addition to paying Mr. Finley's
salary and accrued benefits through the date of termination of employment, the
Company shall be obligated to pay to Mr. Finley, as severance pay, an amount
equal to 200% of Mr. Finley's annual base salary rate as of the effective date
of termination and to maintain through the remaining balance of the term of the
employment agreement (but not less than two years from the date of termination
of Mr. Finley's employment agreement) all employee benefit plans and programs in
which Mr. Finley was entitled to participate. The Company agreed to pay
reasonable travel and entertainment expenses incurred by Mr. Finley on behalf of
the Company and to provide Mr. Finley with a leased automobile. If Mr. Finley
does not elect not to renew his employment agreement at the expiration of the
term and the Company does not elect to renew Mr. Finley's employment upon the
expiration of the term thereof, then Mr. Finley shall be entitled to receive a
severance payment of $100,000.

    In October, 1994, MKP entered into executive employment agreements with each
of Ms. Michaelson and Ms. Kelbick for a term of three years ending October 17,
1997. Under the terms of the agreements, the initial annual salary of Ms.
Michaelson and Ms. Kelbick was $80,000. The annual base salary payable to each
of Ms. Michaelson and Ms. Kelbick was subsequently increased to $115,000.
Effective as of September 11, 1997, MKP entered into a new three year employment
agreement with each of Ms. Michaelson and Ms. Kelbick which expires on September
10, 2000. Under the new agreements, the initial annual base salary payable to
each of Ms. Michaelson and Ms. Kelbick is $150,000, subject to periodic
increases as shall be determined by MKP's Board of Directors. The employment
agreements further provide for an annual incentive compensation payment for each
of Ms. Michaelson and Ms. Kelbick equal to a percentage not to exceed 30%,
determined annually by the Board of Directors, (such percentage initially
established at 30%) of the net income before taxes of MKP as if MKP was not a
member of the Company's consolidated group. Ms. Michaelson and Ms. Kelbick have
the option to take all or a portion of the bonus in the Company's securities.

    If either Ms. Michaelson or Ms. Kelbick does not elect to renew her
respective employment agreement with MKP at the expiration of the term and MKP
elects not to renew the employment agreement, the respective executive will be
entitled to receive a severance payment in the amount of $250,000. The
employment agreements provide each of Ms. Michaelson and Ms. Kelbick with a
clothing expense allowance


                                      F-14
<PAGE>   62
               FINANCIAL PERFORMANCE CORPORATION AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (Continued)




NOTE K - EMPLOYMENT AGREEMENTS (Continued)

of $10,000 for each year of the term of the agreement and a leased automobile
throughout the term. In the event of the termination of employment of either Ms.
Michaelson or Ms. Kelbick by reason of a "change in control" (as such term is
defined in the employment agreement) of MKP or the Company, or certain other
events, then in addition to paying all salary and accrued benefits through the
date of termination of employment, MKP shall be obligated to pay to the
employee, as severance pay, an amount equal to 200% of the employee's annual
base salary rate in effect as of the date of termination and to maintain through
the remaining balance of the term of the employment agreement (but not less than
two years from the date of termination of the employee's employment agreement)
all employee benefit plans and programs in which the employee was entitled to
participate. The Company has issued 20 shares of MKP and 200,000 shares of the
Company, in the aggregate, to Ms. Michaelson and Ms. Kelbick.


NOTE L - DISCONTINUED OPERATIONS

    Effective September 1996, the Company elected to suspend operations of
Aspen. Accordingly, Aspen, which was in the development stage, was reported as a
discontinued operation at September 30, 1996. The net assets and liabilities
relating to the disposal of the discontinued operation is immaterial. Aspen had
no revenues and incurred losses of $219,872 for the year ended September 30,
1996.


NOTE M - RESTRICTED CASH AND CONTINGENCIES

    At September 30, 1997 $160,000 was invested in a Certificate of Deposit and
is pledged as security for a letter of credit issued in connection with the
lease for office space (see Note J). The $160,000 Certificate of Deposit is
included on the balance sheet under the caption, other assets. This exceeds the
federally insured limit.


NOTE N - SUBSEQUENT EVENT

    In October 1997, the Company's investment in FPC Information Corp., a
subsidiary, was reduced from eighty percent to fifty percent, as a result of a
$170,000 additional investment by the minority shareholder. The Company has the
option to repurchase a thirty percent equity interest in FPC Information Corp.
exercisable at any time prior to September 30, 1999 at the fair market value of
such interest, but in no event less than $225,000.


NOTE O - CONCENTRATION OF CREDIT RISK

The Company maintains it's cash in bank deposit accounts at one financial
institution. The balance at times, may exceed federally insured limits. At
September 30, 1997 and 1996, the Company exceeded the insured limit by
approximately $1,000,000 and $1,801,000, respectively.


                                      F-15


<PAGE>   63
                                EXHIBIT INDEX


         3.1      Certificate of Incorporation dated August 9, 1984
                  (incorporated by reference to Exhibit 3.1 to Registration
                  Statement on Form S-8, No. 33-7778).

         3.2      Amendment to Certificate of Incorporation dated August 29,
                  1984 (incorporated by reference to Exhibit (i) to Registrant's
                  Quarterly Report on Form 10-0 for the period ended March 31,
                  1988).

         3.3      Amendment to Certificate of Incorporation dated July 1,
                  1986 (incorporated by reference to Exhibit 3.3 to the
                  Company's Report on Form 10-KSB for the Company's fiscal year
                  ended September 30, 1996).

         3.4      Amendment to Certificate of Incorporation dated March 14,
                  1988 (incorporated by reference to Exhibit 3.4 to the
                  Company's Report on Form 10-KSB for the Company's fiscal year
                  ended September 30, 1996).

         3.5      Amendment to Certificate of Incorporation dated September 13,
                  1996 (incorporated by reference to Exhibit 3.5 to the
                  Company's Report on Form 10-KSB for the Company's fiscal
                  year ended September 30, 1996).               

         3.6      By-laws (incorporated by reference to Exhibit 3.2 to
                  Registration Statement on Form S- 18, No. 33-7778).

         3.7      Amendment to By-Laws dated July 1995 (incorporated
                  by reference to Exhibit 3.7 to the Company's Report on Form   
                  10-KSB for the Company's fiscal year ended September 30,
                  1996).

         4.1      Specimen Certificate of Common Stock (incorporated
                  by reference to Exhibit 4.1 to the Company's Report on
                  Form 10-KSB for the Company's fiscal year ended September 30,
                  1996).                                                



                                 
<PAGE>   64
         4.2      Incentive Stock Option Plan (incorporated by reference to
                  Exhibit 4.7 to Registration Statement on Form S-1, No.
                  33-20886).

         10.1     Agreement between Marine Midland Bank, N.A. and William F.
                  Finley (incorporated by reference to Exhibit 10.12 to
                  Registration Statement on Form S-18, No. 33-7778).

         10.2     Form of Indemnification Agreement between Registrant and its
                  Officers and Directors (incorporated by reference to Exhibit
                  10.35 to Registration Statement on Form S-1, No.
                  33-20886).

         10.3     Promissory Note due on May 1, 1989 in the principal amount of
                  $50,000 executed by the Registrant in favor of Marvin M. Reiss
                  (incorporated by reference to Exhibit 10.41 to Amendment No. 2
                  to Registration Statement on Form S-1, No. 33-20886).

         10.4     Promissory Note due on November 1, 1989 in the principal
                  amount of $50,000 executed by the Registrant in favor of
                  William F. Finley (incorporated by reference to Exhibit 10.4
                  to the Company's Report on Form 10-KSB for the Company's
                  fiscal year ended September 30, 1993).

         10.5     Promissory Note due on November 1, 1989 in the principal
                  amount of $50,000 executed by the Registrant in favor of
                  Marvin M. Reiss (incorporated by reference to Exhibit 10.5 to
                  the Company's Report on Form 10-KSB for the Company's fiscal
                  year ended September 30, 1993).

         10.6     Form of Subscription Agreement dated as of June 23, 1989
                  between the Registrant and Julius London (incorporated by
                  reference to Exhibit 10.6 to the Company's Report on Form
                  10-KSB for the Company's fiscal year ended September 30,
                  1993).

         10.7     Form of Subscription Agreement dated as of June 23, 1989
                  between the Registrant and Marie Monell (incorporated by
                  reference to Exhibit 10.7 to the Company's Report on Form
                  10-KSB for the Company's fiscal year ended September 30,
                  1993).

         10.8     Promissory Note due on November 1, 1989 in the principal
                  amount of $12,500 executed by the Registrant in favor of Paul
                  M. Diamond (incorporated by reference to Exhibit 10.8 to the
                  Company's Report on Form 10-KSB for the Company's fiscal year
                  ended September 30, 1993).

         10.9     Promissory Note due on November 1, 1989 in the principal
                  amount of $10,000 executed by the Registrant in favor of Paul
                  M. Diamond (incorporated by reference to Exhibit 10.9 to the
                  Company's Report on Form 10-KSB for the Company's fiscal year
                  ended September 30, 1993).

         10.10    Promissory Note due on November 1, 1989 in the principal
                  amount of $2,500 executed by the Registrant in favor of Paul
                  M. Diamond (incorporated by reference to Exhibit 10.10 to the
                  Company's Report on Form 10-KSB for the Company's fiscal year
                  ended September 30, 1993).

         10.11    Promissory Note due on November 1, 1989 in the principal
                  amount of $30,000 executed by the Registrant in favor of
                  Marvin M. Reiss (incorporated by reference to Exhibit


                                      
<PAGE>   65
                  10.11 to the Company's Report on Form 10-KSB for the Company's
                  fiscal year ended September 30, 1993),

         10.12    Promissory Note due on November 1, 1989 in the principal
                  amount of $20,000 executed by the Registrant in favor of
                  Marvin M. Reiss (incorporated by reference to Exhibit 10.12 to
                  the Company's Report on Form 10-KSB for the Company's fiscal
                  year ended September 30, 1993).

         10.13    Promissory Note due on November 1, 1989 in the principal
                  amount of $10,000 executed by the Registrant in favor of
                  Marvin M. Reiss (incorporated by reference to Exhibit 10.13 to
                  the Company's Report on Form 10-KSB for the Company's fiscal
                  year ended September 30, 1993).

         10.14    Promissory Note due on November 1, 1989 in the principal
                  amount of $15,000 executed by the Registrant in favor of
                  Marvin M. Reiss (incorporated by reference to Exhibit 10.14 to
                  the Company's Report on Form 10-KSB for the Company's fiscal
                  year ended September 30, 1993).

         10.15    Demand Promissory Note in the principal amount of $5,000
                  executed by the Registrant in favor of Marvin M. Reiss
                  (incorporated by reference to Exhibit 10.15 to the Company's
                  Report on Form 10-KSB for the Company's fiscal year ended
                  September 30, 1993).

         10.16    Form of Exchangeable Note due on December 31, 1995 in the
                  principal amount of $125,000 executed by the Registrant in
                  favor of Robert S. Trump (incorporated by reference to Exhibit
                  10.16 to the Company's Report on Form 10-KSB for the Company's
                  fiscal year ended September 30, 1993).

         10.17    Security Agreement dated as of January 7, 1993 between the
                  Registrant and Robert S. Trump (incorporated by reference to
                  Exhibit 10.17 to the Company's Report on Form 10-KSB for the
                  Company's fiscal year ended September 30, 1993).

         10.18    Letter Agreement dated January 7, 1993 between the Registrant
                  and Robert S. Trump (incorporated by reference to Exhibit
                  10.18 to the Company's Report on Form 10-KSB for the Company's
                  fiscal year ended September 30, 1993).

         10.19    Warrant Agreement dated as of January 7, 1993 between the
                  Registrant and Robert S. Trump (incorporated by reference to
                  Exhibit 10.19 to the Company's Report on Form 10-KSB for the
                  Company's fiscal year ended September 30, 1993).

         10.20    Subscription Agreement dated as of June 1, 1993 between the
                  Registrant and Henry T. Doherty (incorporated by reference to
                  Exhibit 10.20 to the Company's Report on Form 10-KSB for the
                  Company's fiscal year ended September 30, 1993).

         10.21    Subscription Agreement dated as of June 1, 1993 between the
                  Registrant and Nick Varsames (incorporated by reference to
                  Exhibit 10.21 to the Company's Report on Form 10-KSB for the
                  Company's fiscal year ended September 30, 1993).



                                      
<PAGE>   66
         10.22    Letter Agreement dated September 1, 1993 between the
                  Registrant and Robert S. Trump (incorporated by reference to
                  Exhibit 10.22 to the Company's Report on Form 10-KSB for the
                  Company's fiscal year ended September 30, 1993).

         10.23    Warrant Agreement dated as of September 1, 1993 between the
                  Registrant and Robert S. Trump (incorporated by reference to
                  Exhibit 10.23 to the Company's Report on Form 10-KSB for the
                  Company's fiscal year ended September 30, 1993).

         10.24    Form of Subscription Agreement dated September 22, 1993
                  between the Registrant and Henry T. Doherty (incorporated by
                  reference to Exhibit 10.24 to the Company's Report on Form
                  10-KSB for the Company's fiscal year ended September 30,
                  1993).

         10.25    Term Note in the principal amount of $112,397.27 executed by
                  the Registrant in favor of The Rebot Corporation (incorporated
                  by reference to Exhibit 10.25 to the Company's Report on Form
                  10-KSB for the Company's fiscal year ended September 30,
                  1993).

         10.26    Form of Warrant dated as of September 30, 1993 between the
                  Registrant and Rebot Corporation (incorporated by reference to
                  Exhibit 10.26 to the Company's Report on Form 10-KSB for the
                  Company's fiscal year ended September 30, 1993).

         10.27    Term Note in the principal amount of $38,418.40 executed by
                  the Registrant in favor of William F. Finley (incorporated by
                  reference to Exhibit 10.27 to the Company's Report on Form
                  10-KSB for the Company's fiscal year ended September 30,
                  1993).

         10.28    Form of Warrant dated as of September 30, 1993 between the
                  Registrant and William F. Finley (incorporated by reference to
                  Exhibit 10.28 to the Company's Report on Form 10-KSB for the
                  Company's fiscal year ended September 30, 1993).

         10.29    Letter Agreement dated September 30, 1993 between the
                  Registrant and Paul M. Diamond (incorporated by reference to
                  Exhibit 10.29 to the Company's Report on Form 10-KSB for the
                  Company's fiscal year ended September 30, 1993).

         10.30    Form of Warrant dated as of September 30, 1993 between the
                  Registrant and Paul M. Diamond (incorporated by reference to
                  Exhibit 10.30 to the Company's Report on Form 10-KSB for the
                  Company's fiscal year ended September 30, 1993).

         10.31    Form of Warrant dated as of November 11, 1993 between the
                  Registrant and Paul M. Diamond (incorporated by reference to
                  Exhibit 10.31 to the Company's Report on Form 10-KSB for the
                  Company's fiscal year ended September 30, 1993).

         10.32    Form of Warrant dated as of November 11, 1993 between the
                  Registrant and William F. Finley (incorporated by reference to
                  Exhibit 10.32 to the Company's Report on Form 10-KSB for the
                  Company's fiscal year ended September 30, 1993).

         10.33    Form of Warrant dated as of November 11, 1993 between the
                  Registrant and Marvin M. Reiss (incorporated by reference to
                  Exhibit 10.33 to the Company's Report on Form 10- KSB for the
                  Company's fiscal year ended September 30, 1993).



                                  
<PAGE>   67
         10.34    Form of Warrant dated as of November 11, 1993 between the
                  Registrant and Alan M. Swiedler (incorporated by reference to
                  Exhibit 10.34 to the Company's Report on Form 10-KSB for the
                  Company's fiscal year ended September 30, 1993).

         10.35    Form of Warrant dated as of November 11, 1993 between the
                  Registrant and Susan M. Michaelson (incorporated by reference
                  to Exhibit 10.35 to the Company's Report on Form 10-KSB for
                  the Company's fiscal year ended September 30, 1993).

         10.36    Form of Warrant dated as of November 11, 1993 between the
                  Registrant and Leonard Gartner (incorporated by reference to
                  Exhibit 10.36 to the Company's Report on Form 10-KSB for the
                  Company's fiscal year ended September 30, 1993).

         10.37    Form of Warrant dated as of November 11, 1993 between the
                  Registrant and Ted Prince (incorporated by reference to
                  Exhibit 10.37 to the Company's Report on Form 10-KSB for the
                  Company's fiscal year ended September 30, 1993).

         10.38    Form of Subscription Agreement dated November 17, 1993 between
                  the Registrant and Henry T. Doherty (incorporated by reference
                  to Exhibit 10.38 to the Company's Report on Form 10-KSB for
                  the Company's fiscal year ended September 30, 1993).

         10.39    Form of Subscription Agreement dated February 28, 1994 between
                  the Registrant and Robert S. Trump (incorporated by reference
                  to Exhibit 10.39 to the Company's Report on Form 10-KSB for
                  the Company's fiscal year ended September 36, 1993).

         10.40    Letter Agreement dated November 24, 1992 between the
                  Registrant and Management Technologies, Incorporated
                  (incorporated by reference to Exhibit 10.40 to the Company's
                  Report on Form 10-KSB for the Company's fiscal year ended
                  September 30, 1993).

         10.41    Agreement dated April 29, 1994 between the Registrant and New
                  Paradigm Software Corporation (incorporated by reference to
                  the Registrant's Report on Form 10-QSB for the Quarter Ended
                  March 31, 1994).

         10.42    Occupancy Agreement dated October 10, 1994 between the
                  Registrant and New Paradigm Software Corp. (incorporated by
                  reference to Exhibit 10.42 to the Company's Report on Form
                  10-KSB for the Company's fiscal year ended September 30,
                  1994).

         10.43    Letter agreement dated October 10, 1994 between the Registrant
                  and New Paradigm Software Corp. (incorporated by reference to
                  Exhibit 10.43 to the Company's Report on Form 10-KSB for the
                  Company's fiscal year ended September 30, 1994).

         10.44    Letter agreement dated August 10, 1994 between the Registrant
                  and Management Technologies, Inc. concerning the conversion of
                  the MARS-TM- product to Windows IBM (incorporated by reference
                  to Exhibit 10.44 to the Company's Report on Form 10- KSB for
                  the Company's fiscal year ended September 30, 1994).

         10.45    $150,000 Secured Promissory Note dated July 21, 1994 issued by
                  the Registrant in favor of Robert S. Trump (incorporated by
                  reference to Exhibit 10.45 to the Company's Report on Form
                  10-KSB for the Company's fiscal year ended September 30,
                  1994).


                                  
<PAGE>   68
         10.46    Letter agreement dated July 21, 1994 between the Registrant
                  and Robert S. Trump concerning $125,000 Exchangeable Note
                  dated January 7, 1993 (incorporated by reference to Exhibit
                  10.46 to the Company's Report on Form 10-KSB for the Company's
                  fiscal year ended September 30, 1994).

         10.47    $280,000 Secured Promissory Note dated October 17, 1994 issued
                  by the Registrant in favor of Robert S. Trump (incorporated by
                  reference to Exhibit 10.47 to the Company's Report, on Form
                  10-KSB for the Company's fiscal year ended September 30,
                  1994).

         10.48    $150,000 Secured Promissory Note dated December 13, 1994
                  issued by the Registrant in favor of Robert S. Trump
                  (incorporated by reference to Exhibit 10.48 to the Company's
                  Report on Form 10-KSB for the Company's fiscal year ended
                  September 30, 1994).

         10.49    $149,791.67 Amended and Restated Exchangeable Note dated
                  January 1, 1995 issued by the Registrant in favor of Robert S.
                  Trump (incorporated by reference to Exhibit 10.49 to the
                  Company's Report on Form 10-KSB for the Company's fiscal year
                  ended September 30, 1994).

         10.50    $156,708.37 Amended and Restated Secured Promissory Note dated
                  January 1, 1995 issued by the Registrant in favor of Robert S.
                  Trump (incorporated by reference to Exhibit 10.50 to the
                  Company's Report on Form 10-KSB for the Company's fiscal year
                  ended September 30, 1994).

         10.51    $250,000 Secured Promissory Note dated January 11, 1995 issued
                  by the Registrant in favor of Robert S. Trump (incorporated by
                  reference to Exhibit 10.51 to the Company's Report on Form
                  10-KSB for the Company's fiscal year ended September 30,
                  1994).

         10.52    Letter agreement dated December 29, 1994 between the
                  Registrant and Robert S. Trump (incorporated by reference to
                  Exhibit 10.52 to the Company's Report on Form 10-KSB for the
                  Company's fiscal year ended September 30, 1994).

         10.53    Letter agreement dated January 13, 1995 between the Registrant
                  and Robert S. Trump (incorporated by reference to Exhibit
                  10.53 to the Company's Report on Form 10-KSB for the Company's
                  fiscal year ended September 30, 1994).

         10.54    Letter agreement dated January 13, 1995 between the Registrant
                  and Robert S. Trump (incorporated by reference to Exhibit
                  10.54 to the Company's Report on Form 10-KSB for the Company's
                  fiscal year ended September 30, 1994).

         10.55    Letter of Intent dated October 17, 1994 by and among the
                  Registrant, Hillary Kelbick and Susan Michaelson concerning
                  Michaelson Kelbick Partners Inc. (then known as FPC Consulting
                  Corp.) (incorporated by reference to Exhibit 10.55 to the
                  Company's Report on Form 10-KSB for the Company's fiscal year
                  ended September 30, 1994).

         10.56    Managing Director's Agreement dated October 17, 1994 by and
                  among Michaelson Kelbick Partners Inc. (then known as FPC
                  Consulting Corp.), Susan Michaelson and the Registrant
                  (incorporated by reference to Exhibit 10.56 to the Company's
                  Report on Form 10-KSB for the Company's fiscal year ended
                  September 30, 1994).



                                 
<PAGE>   69
         10.57    Managing Director's Agreement dated October 17, 1994 by and
                  among Michaelson Kelbick Partners Inc. (then known as FPC
                  Consulting Corp.), Hillary Kelbick and the Registrant
                  (incorporated by reference to Exhibit 10.57 to the Company's
                  Report on Form 10-KSB for the Company's fiscal year ended
                  September 30, 1994).

         10.58    Shareholders Agreement dated as of January 5, 1995 by and
                  among the Registrant, Aspen Capital Management Corp. (then
                  known as FPC Funds Corp.), Richard J. Loos and Sean P. Brennan
                  (incorporated by reference to Exhibit 10.58 to the Company's
                  Report on Form 10-KSB for the Company's fiscal year ended
                  September 30, 1994).

         10.59    Executive Employment Agreement dated January 5, 1995 between
                  Aspen Capital Management Corp. (then known as FPC Funds
                  Corp.), the Registrant and Richard J. Loos (incorporated by
                  reference to Exhibit 10.59 to the Company's Report on Form 10-
                  KSB for the Company's fiscal year ended September 30, 1994).

         10.60    Executive Employment Agreement dated January 5, 1995 between
                  Aspen Capital Management Corp. (then known as FPC Funds
                  Corp.), the Registrant and Sean P. Brennan (incorporated by
                  reference to Exhibit 10.60 to the Company's Report on Form
                  10-KSB for the Company's fiscal year ended September 30,
                  1994).

         10.61    $250,000 Secured Promissory Note dated April 6, 1995 issued by
                  the Registrant in favor of Robert S. Trump (incorporated by
                  reference to Exhibit 10.14 to Report of Form 10- QSB for
                  fiscal quarter ended March 31, 1995).

         10.62    Letter agreement dated May 3, 1995 between the Registrant and
                  New Paradigm Software Corp. (incorporated by reference to
                  Exhibit 10.15 to Report on Form 10-QSB for fiscal quarter
                  ended March 31, 1995).

         10.63    Agreement dated July 28, 1995 by and among the Company, Scott
                  Rhodes, Scott Rhodes d/b/a "Metamorphic Computing", Scott
                  Rhodes d/b/a "Metamorphic Systems", Scott Rhodes d/b/a "MCC",
                  Scott Rhodes d/b/a "Metamorphic Computing Corp." and
                  Metamorphic Computing Corp. (incorporated by reference to
                  Exhibit to Report on Form 10-KSB for fiscal year ended
                  September 30, 1995).

         10.64    Form of Warrant dated as of September 15, 1995 between the
                  Registrant and Robert S. Trump (incorporated by reference to
                  Exhibit 10.64 to Report on Form 10-KSB for fiscal year ended
                  September 30, 1995).

         10.65    Form of Warrant dated as of September 15, 1995 between the
                  Registrant and William F. Finley (incorporated by reference to
                  Exhibit 10.65 to Report on Form 10-KSB for fiscal year ended
                  September 30, 1995).

         10.66    Letter dated March 29, 1996 from Robert S. Trump regarding
                  conversion of debt into equity (incorporated by reference to
                  Exhibit 10.66 to Report on Form 10-KSB for fiscal year ended
                  September 30, 1996).

         10.67    Letter dated June 20, 1996 from Robert S. Trump regarding
                  conversion of debt into equity (incorporated by reference to
                  Exhibit 10.67 to Report on Form 10-KSB for fiscal year ended
                  September 30, 1996).


                                 
<PAGE>   70
         10.68    General Form of Subscription Agreement used in private
                  placements in 1996 (incorporated by reference to Exhibit 10.68
                  to Report on Form 10-KSB for fiscal year ended September 30,
                  1996).

         10.69    Form of Warrant Agreement for Warrants issued in September
                  1996 (incorporated by reference to Exhibit 10.69 to Report on
                  Form 10-KSB for fiscal year ended September 30, 1996).

         10.70    Letter agreement dated November 12, 1996 with Robert S. Trump
                  regarding exercise of Restated Exchangeable Note dated January
                  1, 1995 and conversion of debt into equity (incorporated by
                  reference to Exhibit 10.70 to Report on Form 10-KSB for fiscal
                  year ended September 30, 1996).

         10.71    Executive Employment Agreement dated as of September 11, 1997
                  between the Registrant and William F. Finley.

         10.72    Managing Director's Agreement dated as of September 11, 1997
                  between the Registrant's subsidiary, MKP, and Susan
                  Michaelson.

         10.73    Managing Director's Agreement dated as of September 11, 1997
                  between the Registrant's subsidiary, MKP, and Hillary Kelbick.

         10.74    Form of Warrant dated as of December 29, 1997 issued to Duncan
                  Burke.

         10.75    Form of Warrant dated as of December 29, 1997 issued to
                  Richard Levy.

         10.76    Stock Purchase Agreement dated as of October 1, 1997 by and
                  between the Company and Robert S. Trump.

         21.1     Subsidiaries of Registrant.

         27.1     Financial Data Schedule.