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                                  UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                    FORM 10-K
(Mark One)
           [X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE 
                        SECURITIES EXCHANGE ACT OF 1934

                                       OR

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

For the year ended December 31, 1997                 Commission File No. 0-12361

                        Richton International Corporation
             (Exact name of registrant as specified in its charter)

           Delaware                                               05-012205
(State or other jurisdiction of                               (I.R.S. Employer
 incorporation or organization)                              Identification No.)

  340 Main Street, Madison, New Jersey                              07940
(Address of principal executive offices)                         (Zip Code)

Issuer's telephone number ..................................... (973) 966-0104

    Securities registered under            Name of Exchange on which Registered:
 Section 12(b) of the Exchange Act:

    Common Stock, par value $.10                   American Stock Exchange

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

            Series A Preferred Stock, par value $1.00. Purchase Right

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

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

State the aggregate market value of the voting stock held by  non-affiliates  of
the Registrant.

         Aggregate market value at March 1, 1998 amounted to $10,600,000

Indicate the number of shares outstanding of each of the Registrant's classes of
Common Stock, as of the latest practicable date.
                          
        Common Stock, par value $.10, 2,947,000 shares at March 1, 1998

                       DOCUMENTS INCORPORATED BY REFERENCE

Portions of the annual  shareholders report for the year ended December 31, 1997
are  incorporated  by  reference  into  Parts I and II.  

Portions of the proxy statement for the annual  shareholders  meeting to be held
April 29, 1998 are incorporated by reference into Part III.

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<PAGE>

                                     PART I

Item 1. Business

     Richton  International  Corporation  (the  "Company"  or  "Richton")  is  a
diversified  service  company with two operating  subsidiaries,  Century  Supply
Corp. ("Century") and CBE Technologies, Inc. ("CBE").

      CBE was  acquired  in March  1995 by  issuance  of $5.0  million  in notes
including  $3.0  million in senior  debt to a Michigan  bank and  assumption  of
certain liabilities.

      Century  is a leading  full-service  wholesale  distributor  of  sprinkler
irrigation   systems,   outdoor  lighting  and  decorative  fountain  equipment.
Headquarted  in Madison  Heights,  Michigan it has  branches in 18 States in the
Eastern  half of the country  and  Ontario,  Canada.  Irrigation  products  have
historically been sold by manufacturers primarily through wholesale distributors
and Century is a leading  distributor of irrigation  equipment in the geographic
areas it serves.  Century is  currently  a  distributor  for all of the  leading
original  equipment  manufacturers  (OEM) of turf  irrigation  equipment  in the
United States.

      Century's primary  customers are irrigation and landscape  contractors who
install irrigation systems for commercial,  residential and golf course watering
systems.  Approximately  93% of revenues are derived from  irrigation  products,
with the remaining 7% from lighting and fountains.  Century represents more than
60  suppliers  and  provides a complete  product  line to  approximately  12,000
customers through 65 branches.

      Century is organized into five geographical  regions, each with a regional
team that  manages  branches  within a  specific  geographic  area.  Purchasing,
accounts receivable,  accounting and cash management are centralized  functions.
Close control is maintained  over  receivables,  inventory and other key factors
through a centralized order entry management  information  system.  All branches
are linked to the on-line system, and substantially all of Century's business is
conducted in a real time order entry environment.

      Century's operations  constitute a material portion of Richton's business.
Although  Century  has a history of  operating  profitability,  its  business is
impacted by both the economic and climatic  conditions in the  geographic  areas
where its branches are located.  Since irrigation and landscape  contractors are
Century's  primary  customers,  business is best when commercial and residential
construction is strong and general economic  conditions and consumer  confidence
are favorable.  Weather is also a significant non-controllable element affecting
Century's  business.  Business is better during warm dry periods,  especially in
spring and early summer months and when general construction is strong. Climatic
factors that can adversely  affect Century  principally  relate to above-average
rainfall  during the primary  selling  season or other  unusual  weather-related
conditions.  Century's  geographic  diversity makes it much less  susceptible to
weather than many of its  competitors  who operate in a more limited  geographic
area.  Century has  mitigated  some of the impact of both  economic and climatic
conditions by pursuing an  aggressive  growth  program.  By opening or acquiring
branches (see  Competition)  in new areas and continuing to grow its business in
existing markets,  Century has created both geographic  diversity and consistent
growth.  Even so, seasonality causes a significant  disparity in quarterly sales
and results.

      CBE Technologies, Inc. ("CBE") headquartered in Boston, Massachusetts with
satellite  offices in New York,  Los  Angeles and  Portland,  Maine is a systems
integrator  providing network  consulting,  design,  and  installation;  network
management and related support;  technical services  outsourcing;  comprehensive
hardware maintenance; and equipment sales.

      CBE's  technical   certifications   include:   Novell  Platinum  reseller,
Microsoft Channel partner, Cisco Premier,  Novell Authorized Training Center, as
well as a Novell Authorized Service Center.

      Physical   resources  include  a  fully  integrated  network  lab  with  a
functioning model of most computer  operating  systems; a network management lab
to support  remote  management;  training  labs at both the Boston and  Portland
sites to support in-house training programs.

      CBE is also a  authorized  service  and  warranty  center  for most of the
leading PC manufacturers including IBM, Conpaq, Hewlett Packard, Apple, AST, and
services  most every other make of PC and printer.  The field staff is supported
by a fully  automated  call control and dispatch  center;  a parts depot with an
extensive inventory; and a complete diagnostic/repair lab for PC's, printers and
monitors.


                                       1
<PAGE>

      CBE's business is impacted by  technological  changes both in software and
hardware.  There can be no  assurance  that CBE can (a) continue to maintain the
highly qualified and experienced  technicians and engineers,  and (b) that those
technicians continue to remain technically proficient in an environment in which
technology changes occur regularly.

Suppliers

      Century  maintains a broad base of  suppliers  that enables the Company to
offer a wide range of irrigation equipment. Products are obtained from more than
60 suppliers  with no one supplier  comprising  more than 30% of average  annual
purchases.  Century has master  distrubutor  agreements in place with Rain Bird,
Hunter,  Irritrol  (formerly  Hardie,)  and  Legacy  as well as with  other  OEM
suppliers that authorize Century as a distributor of their products for specific
geographic  areas.  These  agreements  are renewable  annually,  and there is no
assurance that these agreements will be renewed.  Therefore,  Century's business
is subject to change in these  distribution  agreements with manufacturers or in
manufacturers  pursuing  alternate  channels of distribution.  However,  Century
maintains  excellent  vendor  relations  with  these  suppliers  and  management
believes the  wholesale  distribution  channel will  continue to be the dominant
professional channel for the irrigation industry.

      CBE acquires its products  from OEM suppliers as well as  wholesalers  and
distributors,  such as Tech Data  Corporation,  Ingrim  Micro,  and Gates  Arrow
Electronics which accounts for approximately 14%, 19% and 9% of CBE's purchases,
respectively.

Competition

      Historically,  irrigation  distribution,  like the wholesale  distribution
industry  in  general,  has been  fragmented  with many  small  distributorships
serving  specific  geographic  markets.   However,  the  more  recent  trend  in
distribution has been one of consolidation,  where larger wholesaler chains have
been created as a result of mergers,  acquisitions and distributors  moving into
new territories to expand market share and achieve economy of scale.  Within the
irrigation   industry,   Century   has  been  a  leader  in  the  trend   toward
consolidation.

      During the period of Richton ownership, Century has grown from 29 branches
and $43 million in sales for 1993 to the current 65 branches, and $87 million in
sales for 1997. Since Century has a sophisticated computer system supporting its
branch  operations  and most of its  administrative  functions are  centralized,
Century has been able to achieve  significant  economies of scale as a result of
consolidation and growth.

      This growth has resulted in Century facing different competitors in almost
every  market it serves.  Century  competes  with these  other  distributors  by
providing local warehousing linked to a centralized computer system that enables
Century customers to get product when they need it, and by providing value-added
services, such as design assistance,  training seminars,  incentive programs and
sales leads to its  customers.  Century also  competes  against  large  discount
stores and plumbing supply companies that sell irrigation  products,  but who do
not  provide  the range of  services  that  Century  offers.  While  some of its
competitors  in  specific  markets  are larger  than the  corresponding  Century
operations, none are larger when only the irrigation business is considered.

      CBE competes in maintenance  service with many companies,  both larger and
smaller than CBE. Larger companies generally are OEM suppliers that also provide
network  installation  and  maintenance  services  and offer a  broader  line of
product and service than CBE.

Employee Relations

      At December 31, 1997,  the Company  employed  approximately  425 full-time
employees.  None of these  employees  are  covered  by a  collective  bargaining
agreement.

      The  Company  considers  its people to be one of its  greatest  assets and
provides  training courses on sales,  product features and benefits,  management
skills,  and  communication.  This has created an effective,  knowledgeable  and
self-motivated work force with a strong focus on customer service.


                                       2
<PAGE>

Working Capital

      Century's business is seasonal due principally to the fact that irrigation
systems are normally  installed  during warm weather and a majority of Century's
branches  are located in the  northern  half of the United  States.  As a result
Century's  monthly and quarterly  sales,  operating  results and working capital
requirements fluctuate significantly.  Century relies on short-term borrowing to
finance its working capital needs.  During the first quarter  Century's  working
capital requirements are at minimum, with short-term borrowings of approximately
$15 million,  a  significant  increase from prior years due  principally  to the
added branch  acquisitions.  Beginning in April needs expand. By July short-term
borrowings  have increased to  approximately  $22 million.  During the remaining
months receivable balances are liquidated, releasing substantial amounts of cash
that  may be used to  reduce  short-term  borrowing.  (See  Note 7 of  Notes  to
Consolidated  Financial  Statements  for a description  of the Company's  credit
line.)

Business Acquisitions

      On March 29,  1995 the  Company,  through  its  wholly  owned  subsidiary,
Century,  acquired all the  operating  assets and business of CBE  Technologies,
Inc.  for $5.0  million,  plus  assumption  of  certain  liabilities,  which was
financed by bank borrowings of $3.0 million, a $1.0 million unsecured promissory
note to the former  owners and a $1.0  million  note to the Chairman of Richton.
The note to the  Chairman  was subject to a fairness  opinion of an  independent
advisor chosen by Richton's  Board of Directors.  The note to the former owners,
which is guaranteed by both Century and Richton, is to be paid over four years.

      In the fourth quarter of 1997 Century  acquired six branch  operations for
$3.3  million.  The three  businesses  acquired  had  combined  sales in 1997 of
approximately  $9 million .In  addition  to  inventory  and  account  receivable
balances,  the Company acquired nearly $1.7 million of intangibles which will be
written off over the next 5 - 15 years.

Liquidity

      The Company's financial  condition continues to improve.  The net worth as
of December 31, 1997 has increased to $9.3 million. Tangible net worth, which at
the end of 1995 was nil has  increased to nearly $4.0 million as of December 31,
1997.  At  December  31,  1997,  the  Company's  long-term  debt was nearly $7.4
million,  including $5.0 million of senior secured debt owed to a Michigan bank.
Of the  balance  of the  outstanding  debt,  $0.9  million  is  owed  to Fred R.
Sullivan,  Chairman and Chief Executive  Officer of Richton,  which is repayable
over the next two and half years. Notes issued to Mr. Sullivan were subject to a
fairness  opinion issued by an independent  advisor chosen by Richton's Board of
Directors.  The  bank  debt  carries  with  it a loan  covenant  that  precludes
distribution of funds to shareholders.

      The  operating   cash  flow  of  the   Company--before   working   capital
requirements--improved  to $5.18 million as compared to $4.40 million last year.
These  funds were used to retire  nearly $1.8  million of term and  subordinated
debt which came due during the year, and fund the acquisitions noted above.

     At December 31, 1997 working capital  increased nearly $1.7 million to $7.3
million from $5.6 million last year.

     Though the Company has continued to generate  sufficient  cash to liquidate
its  term  and  subordinated  debt as it  becomes  due,  and  make  acquisitions
necessary  for it's  growth,  there is no  assurance,  given the high  degree of
leverage and the seasonally of its principal business that it can continue to do
so. The Company has now exhausted  it's net operating  loss carry  forward.  The
remaining deferred tax benefit--currently at $1.2 million--is due principally to
the amortization of goodwill at a rate more quickly than can be deducted for tax
purposes.

ITEM 2. Properties

     Richton's current  executive  offices at 340 Main St. Madison,  New Jersey,
are leased on a  month-to-month  basis.  In January,  1998 Richton signed a five
year  lease for  executive  offices  at 767 Fifth  Avenue,  New York,  New York.
Century's principal offices are in Madison Heights, Michigan, under a lease that
expires in October 2000. In addition,  Century leases  warehouse and sales space
in its other  branches.  The  aggregate  of such leased  space is  approximately
293,000  square  feet.  Expiration  dates  extend to July  2006.  Eight of these
facilities  are leased from the former owner of Century under a lease  agreement
which approximates  current market value. These leases expire in October,  2000.
One  facility is leased from a  partnership  which  includes  the  President  of
Century. The lease, which


                                       3
<PAGE>

is currently on a month to month basis  approximates  current  market value.  In
addition,  during  1996  Century  acquired  a 10,000  square  foot  facility  in
Sarasota,  Florida which it had previously  leased.  CBE's principal offices are
located in Boston,  Mass. This office is leased under an agreement which expires
in June, 1998. CBE leases  approximately 10,000 square feet of additional office
space  at  its  other  locations.  Richton  believes  that  its  properties  are
adequately  equipped,  maintained  and suited to the  purpose for which they are
used.

ITEM 3. Legal Proceedings

      None.

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

      No matter was  submitted to a vote of security  holders  during the fourth
quarter of fiscal 1997.

                      EXECUTIVE OFFICERS OF THE REGISTRANT

      For the information about the executive officers of Richton required to be
included  in this Part I, see  "Executive  Officers  of  Registrant  in Part III
below, which is incorporated into Part I by reference.


                                       4
<PAGE>

                                     PART II

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

      (a) Market information:

      The Company's Common Stock trades on the American Stock Exchange under the
symbol "RHT".  The following  table sets forth the high and low sales prices for
the Common Stock.  The  quotations  shown are as reported by the American  Stock
Exchange.

                                          1997                       1996
                                     --------------             --------------
          Calendar Quarter           High      Low              High       Low
          ----------------           ----      ----             ----      ----
 First ...........................  $4 3/4    $4 1/8           $3 7/16  $3 1/8
 Second ..........................   4 9/16    3 3/4            4 7/16   3 7/16
 Third ...........................   5 1/2     4 1/2            4 3/16   3 13/16
 Fourth ..........................   7 3/16    5 1/16           4 7/16   4 3/8

      (b) Approximate Number of Equity Stockholders:

                                                           Approximate Number
                                                            of Record Holders
           Title of Class                                 at February 28, 1998
           --------------                                 --------------------
    Common Stock, $ .10 par value                                  523
      
     (c) Dividends:

     No cash dividends were paid by the Company in 1997 or 1996.

     ITEM 6. Selected Financial Data

                              SUMMARY OF OPERATIONS
            (In thousands, except percentages and per share amounts)
<TABLE>
<CAPTION>
                                                                       December 31
                                            --------------------------------------------------------------
                                                1997         1996         1995         1994        1993
                                                ----         ----         ----         ----        ----
<S>                                          <C>           <C>           <C>          <C>          <C>    
Net Sales ................................   $106,523      $87,750       $66,659      $50,306      $11,080
Gross Profit percentage ..................         28%          28%           28%          28%          27%
Operating Profit (Loss) ..................      5,505        3,832         3,466        2,702         (847)
Interest expense, net ....................    $ 1,334        1,216         1,092          817           21
Income (loss) from operations ............      2,290        1,766         1,365        1,004         (573)
Income (loss) from Discontinued
   Operations ............................        --           --            --           --          (426)
Net Income ( loss) .......................      2,290        1,766         1,365        1,004         (999)
Net Income (loss) per share ..............      $ .68       $ 0.54        $ 0.43       $ 0.34      $ (0.37)

</TABLE>

                               FINANCIAL POSITION
                          (In thousands, except ratios)
<TABLE>
<CAPTION>

                                                                       December 31
                                            --------------------------------------------------------------
                                                1997         1996        1995(a)       1994       1993(b)
                                                ----         ----        -------       ----       -------
<S>                                            <C>          <C>           <C>          <C>          <C>   
Total Assets .............................     41,632       32,374        26,114       15,801       15,849
Long-term Debt ...........................      5,591        6,986         7,150        3,834        6,621
Working Capital ..........................      7,330        5,610         3,029        2,341        2,537
Current ratio ............................  1.27 to 1    1.31 to 1     1.22 to 1    1.28 to 1    1.32 to 1

</TABLE>

     Notes to Selected Financial Data:

     Note a--The Registrant acquired CBE effective March 29, 1995

     Note b--The Registrant acquired Century effective August 31, 1993


                                       5
<PAGE>

ITEM 7. Management's  Discussion and Analysis of Financial Condition and Results
        of Operations

      The  following  information  should be read  along  with the  Consolidated
Financial Statements and Notes to Consolidated  Financial Statements on page F-6
through F-13.

RESULTS OF OPERATIONS

1997 Compared with 1996

      Sales for the year  ended  December  31,  1997  were  $106.5  million,  an
increase  of $18.7  million or  approximately  21% over the 1996 amount of $87.8
million.  Century  contributed  $13  million  of this  increase  due  largely to
favorable  economic and weather  conditions  in most of it's market areas and to
geographical  expansion-principally  in the East and South East  sections of the
country. Presently,  Century has 65 branches. CBE's sales in 1997 have increased
more  than 40%  over  1996  levels  principally  due to  expansion  through  the
acquisition made a year ago in Maine and in Los Angeles, California.

      Gross  profit for the year ended  December  31, 1997 was $30.2  million an
increase  of $5.4  million or  approximately  22% over the 1996  amount of $24.8
million.  This  increase is due  primarily to the higher sales noted above.  The
overall gross profit percentage of sales remained about 28.3%.

      Selling,  general and administration  expenses for the year ended December
31, 1997 increased $3.8 million or 18.1% to $24.7 million from $20.9 million for
the year ended  December  31,  1996.  The full year  effect of the  geographical
expansion noted above accounted for a portion of this increase.

      Interest  expense,  net for the year ended December 31, 1997 increased $.1
million  or nearly  10% to $1.3  million  over the year  earlier  period of $1.2
million.  This increase  reflects the higher line of credit facility incurred in
carrying  the higher  working  capital,  partially  offset by a  slightly  lower
borrowing rate.

      The federal,  state and foreign  income tax  provision  for the year ended
December 31, 1997 was $1.9  million,  a increase of  approximately  $1.0 million
from last year. The higher tax is principally due higher income.

      Net income for the year ended December 31, 1997 was $2.29 million, or $.68
per  share-diluted.  This compares with $1.77 million or $.54 per  share-diluted
reported  for the year ended  December  31,  1996.  The higher net income is due
principally to higher sales.

      This report contains forward-looking  statements. The matters expressed in
such  statements are subject to numerous  uncertainties  and risks including but
not limited to general economic and climatic  conditions in the markets in which
Richton and its  subsidiaries  operates,  fluctuation in demand for the products
and services  offered by these  subsidiaries,  and current  expectations  of the
Company or its management.  Should one or more of those  uncertainties  or risks
materialize,  or should  the  underlying  assumptions  prove  incorrect,  actual
results may vary materially from those described as forward-looking  statements.
The Company does not intend to update those forward-looking statements.

1996 Compared with 1995

      Sales for the year ended December 31, 1996 were $87.8 million, an increase
of $21.1  million  over the 1995 amount of $66.7  million.  Century  contributed
nearly $17 million of this increase due largely to favorable weather  conditions
in most of it's  market  areas  and to  geographical  expansion.  A  significant
portion of this  expansion  has occurred in the Eastern half of the Country from
North Carolina to New Jersey. As of December 31, 1996,  Century had 54 branches.
CBE's sales reflects a full year for 1996. It was acquired  effective  March 30,
1995.  CBE's sales in 1996, on a full year basis,  have  increased more than 20%
over 1995 levels  principally  due to expansion  through the  acquisition of two
businesses in Maine and another in Los Angeles, California.

      Gross  profit for the year ended  December  31, 1996 was $24.8  million an
increase  of $6.2  million or  approximately  33% over the 1995  amount of $18.6
million.  This increase is due primarily to the higher sales noted above.  While
CBE continued to  experience  declining  typewriter  maintenance  revenues,  its
overall gross profit percentage was about the same as the prior year.


                                       6
<PAGE>

      Selling,  general and administration  expenses for the year ended December
31, 1996 increased $5.8 million or 38.4% to $20.9 million from $15.1 million for
the year ended  December  31,  1995.  The  geographical  expansion  noted  above
accounted for nearly $4.2 million of this increase. The balance of this increase
relates to CBE's costs  associated  with  acquiring and expanding into three new
market  areas  during  1996 and to higher  goodwill  amortization  charges  $.56
million--principally   associated  with  the  typewriter  contract   maintenance
business.

      Interest  expense,  net for the year ended December 31, 1996 increased $.1
million  or 10% over the year  earlier  period to $1.2  million.  This  increase
reflects  the higher  term debt and higher line of credit  facility  incurred in
acquiring the various  businesses noted above and in carrying the higher working
capital, partially offset by a slightly lower borrowing rate.

      The federal,  state and foreign  income tax  provision  for the year ended
December 31, 1996 was $.85  million,  a decrease of  approximately  $.16 million
from last  year.  The  lower  tax rate is  principally  due the  recognition  of
deferred  tax benefit  associated  with the goodwill  amortization  and to lower
state taxes.

      Net income for the year ended December 31, 1996 was $1.76 million, or $.54
per share.  This compares with $1.36 million or $.43 per share  reported for the
year ended December 31, 1995. The higher net income is due principally to higher
sales.

Financial Condition

      The Company's financial  condition continues to improve.  The net worth as
of December 31, 1997 has increased to $9.3 million. Tangible net worth, which at
the end of 1995 was nil has  increased to nearly $4.0 million as of December 31,
1997.  The  Company's  long term debt at December 31, 1997 was $5.6  million,  a
decrease of $1.4 million from December 31, 1996. The long-term debt continues to
decline even though the Company  spent more than $3.3  million in acquiring  new
businesses during the fourth quarter of 1997.

      As was noted  last  year,  the  Company  continues  to rely on  short-term
borrowings  to finance it's working  capital.  During the first  quarter of each
year, Century's working capital requirements are at a low point, with short-term
borrowings  of  $15.0  million--a  significant  increase  from  prior  year  due
principally  to the higher level of working  capital.  During the second quarter
working capital requirements begin to expand and by July of each year the amount
necessary  to  carrying  the  working  capital  expands to  approximately  $22.0
million.  From July through the remainder of the year,  receivable  balances are
liquidated,  releasing  substantial  amounts  of cash that may be used to reduce
short-term debt. The operating cash flow of the Company--before  working capital
requirements--improved  to $5.18  million  from $4.40  million  last  year.  The
Company  was thus able to retire  nearly $1.8  million of term and  subordinated
debt which came due during the year.  This amount is  approximately  the same as
last year. At December 31, 1997 working capital increased nearly $1.7 million to
$7.3 million from $5.6 million last year.

      During the first quarter of 1998, the Company  completed a renegotition of
it's senior debt and revolving line of credit  financing.  The revised agreement
(a) lowered the rate of interest charged on the line of credit to LIBOR plus 175
basis  points  rather  than  prime  less an eighth,  (b)  reduced  the number of
financial  covenants  required,  (c)  transferred  the obligor  from  Century to
Richton,  (d) increased  the amount of unsecured  financing to nearly $8 million
and released the pledge of common stock of Century,  which had  previously  been
held as security for the bank loans.

      Though the Company has continued to generate  sufficient cash to liquidate
its  term  and  subordinated  debt as it  becomes  due,  and  make  acquisitions
necessary  for its  growth,  there is no  assurance,  given  the high  degree of
leverage,  the seasonality of its principal business, and the elimination of the
net tax loss carry forward that it can continue to do so in the future.


                                       7
<PAGE>

ITEM 8. Financial Statements

      The financial statements required by this Item, are set forth below:
                                                                           Page
                          Description                                     Number
                          -----------                                     ------
Report of Independent Public Accountants .................................  F-1
Consolidated Balance Sheets at December 31, 1997 and
   December 31, 1996 .....................................................  F-2
Consolidated Statements of Income for the three years
   ended December 31, 1997 ...............................................  F-3
Consolidated Statements of Shareholders' Equity for the
   three years ended December 31, 1997 ...................................  F-4
Consolidated Statements of Cash Flows for the three years
   ended December 31, 1997 ...............................................  F-5
Notes to Consolidated Financial Statements ...............................  F-6

Richton International Corporation

      Quarterly analysis of sales, operating margin, net income and earnings per
share

<TABLE>
<CAPTION>

                                                         Pre-Tax      Net                   Equivalent
                                  Gross        Gross      Profit     Income     Earnings      Shares
                     Sales      Profit $      Profit %    (Loss)     (Loss)     Per Share   Outstanding
                     -----      --------      --------    ------     -------    ---------   -----------
<S>       <C>       <C>         <C>            <C>     <C>         <C>             <C>      <C>      
1st Qtr.  1997     14,081,000   3,692,000      26.22   (1,780,000) (1,071,000)    (0.33)     3,279,000
          1996     10,449,000   2,445,000      23.40   (1,373,000)   (872,000)    (0.27)     3,185,000

2nd Qtr.  1997     35,932,000  10,444,000      29.07    3,408,000   2,070,000      0.63      3,267,000
          1996     27,903,000   8,773,000      31.44    2,962,000   1,860,000      0.57      3,236,000

3rd Qtr.  1997     35,145,000  10,143,000      28.86    2,386,000   1,370,000      0.41      3,321,000
          1996     32,660,000   9,714,000      29.74    1,829,000   1,107,000      0.34      3,247,000

4th Qtr.  1997     21,365,000   5,910,000      27.66     157,0000     (79,000)    (0.02)     3,377,000
          1996     16,738,000   3,852,000      23.01     (802,000)   (329,000)    (0.10)     3,290,000
                   ----------   ---------      -----     --------     -------      ----      ---------

Year      1997    106,523,000  30,189,000      28.34    4,171,000   2,290,000      0.68      3,372,000
          1996     87,750,000  24,784,000      28.24    2,616,000   1,766,000      0.54      3,290,000

</TABLE>

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

      None


                                       8
<PAGE>

                                    PART III

ITEM 10. Executive Officers of Registrant

      Identification of the executive officers:
                                                                         Officer
       Name               Age            Positions and Offices            Since
       ----               ---            ---------------------          --------
Fred R. Sullivan ........  83       Director, Chairman of the Board       1989
                                      & Chief Executive Officer
Cornelius F. Griffin ....  58       Vice President & Chief                1985
                                      Financial Officer
Marshall E. Bernstein ...  59       Secretary                             1985

      There is no family  relationship  among any of the executive  officers and
directors of the Company.  Each  executive  officer holds office for one year or
until a respective successor is chosen,  except that each officer may be removed
from office, with or without cause, at any time by the Board of Directors.
      
     The business experience of the executive officers is:

     Fred R. Sullivan--Director, Chairman of the Board & Chief Executive Officer
for more than five years.
  
     Cornelius F.  Griffin--Vice  President & Chief  Financial  Officer for more
than five years.
   
     Marshall E. Bernstein--For more than five years a Member of the law firm of
Robinson, Brog, Leinwand, Greene, Genovese & Gluck P.C. and predecessor.

ITEM 11. Executive Compensation

      The  information  required by Item 11 is  incorporated by reference to the
Company's  definitive  proxy  statement  to be  filed  with the  Securities  and
Exchange Commission not later than April 30, 1998.

ITEM 12. Security Ownership of Certain Beneficial Owners and Management

      The  information  required by Item 12 is  incorporated by reference to the
Company's  definitive  proxy  statement  to be  filed  with the  Securities  and
Exchange Commission not later than April 30, 1998.

ITEM 13. Certain Relationships and Related Transaction

      The  information  required by Item 13 is  incorporated by reference to the
Company's  definitive  proxy  statement  to be  filed  with the  Securities  and
Exchange Commission not later than April 30, 1998.

                                     PART IV

ITEM 14. Exhibits, Financial Statement Schedules, and Reports on Form 8-K

      (a) (1) (2) The  list of  financial  statements  and  financial  statement
schedules by this item are included in Item 8 on page 8.

   (a)  Exhibits:
        (2) Exhibits

            2.1     --Stock  Purchase  Agreeement dated  as of July 31, 1993 and
                      amendment  thereto  dated August 27, 1993 and among Ernest
                      Hodas as trustee of the Ernest Hodas Revocable  Trust, The
                      Hodas Family Limited  Partnership,  Ernest Hodas,  Century
                      Supply Corp., Century Acquisition  Corporation and Richton
                      International Corporation

                    --Incorporated  by reference to Exhibit 2.1 to  Registrant's
                      Current  report on Form 8 for January 5, 1994

            2.2     --Agreement for the  Purchase of Assets  dated March 29,1995
                      by and among CBE Acquisition Corp., (the "Buyer"), Century
                      Supply Corp.,  Richton  International  Corporation and CBE
                      Technologies, Inc. (the "Seller")

                    --Incorporated by reference  to Exhibit 2.1 to  Registrant's
                      Current  report on Form 8-K for April 5, 1995
 

                                       9
<PAGE>

        (3) Exhibits

            3.1    --Certificate   of  Incorporation  of  Richton  International
                     Corporation 
 
                   --Incorporated by reference to Exhibit 99.1  to  Registrant's
                     Annual  Report on Form 10-K for the year ended December 31,
                     1995

            3.2    --Restated   Certificate   of   Incorporation   of  Richton
                     International  Corporation
                  
            3.3    --By laws of Richton International Corporation

                   --Incorporated  by  reference to Exhibit 99.1 to Registrant's
                     Annual  Report on Form 10-K for the year ended December 31,
                     1995
        (4) Exhibits

            4.1      --Stock Certificate (Specimen)

        (10)Exhibits --Material contracts

            10.1     --1990 Long-Term Incentive Plan

                     --Incorporated  by reference to Exhibit (b) to Registrant's
                      Annual Report on Form 10-K for the fiscal year ended April
                      30, 1990

            10.2    --Amendment to the 1990 Long Term Incentive  Plan  providing
                      for additional  150,000 shares for issuance under the Plan
        
                    --Incorporated   by    reference   to   Exhibit   10(b)   to
                      Registrant's  Annual  Report on Form 10-KSB for the fiscal
                      year ended December 31, 1994 Incorporated

            10.3    --Amendment to the 1990 Long-Term  Incentive  Plan providing
                      for additional  140,000 shares for issuance under the Plan
                    --Incorporated   by   reference    to   Exhibit   10(b)   to
                      Registrant's  Annual  Report on Form  10-K for the  fiscal
                      year ended December 31, 1996 Incorporated

            10.4    --Business  Loan Agreement with Addendum  dated March 4,1998
                      with  Michigan  National  Bank relating to the $30 million
                      line of credit financing

            10.5    --Business  Loan Agreement with  Addendum dated March 4,1998
                      with  Michigan  National  Bank relating to the  $5 million
                      Term Loan
 
            10.6    --Promissory  Note for $30 million  dated March 4, 1998.with
                      Michigan  National Bank
 
            10.7    --Promissory  Note  for $5 million  dated March 4, 1998 with
                      Michigan National Bank
 
            10.8    --Security  Agreement  dated  March 4, 1998. with   Michigan
                      National Bank
   
            10.9    --Subordination   Agreement   dated  October  27, 1993 among
                      Michigan National Bank (the "bank"),Century  Supply  Corp.
                      (the "borrower")  and  Richton  International  Corporation
                      (the"Subordinating Creditor")

                    --Incorporated by reference to Exhibit  28.4 to Registrant's
                      Current  report on Form 8 for January 5, 1994

            10.10   --Subordination  Agreement  dated   October  27, 1993  among
                      Michigan National Bank (the "bank"), Richton International
                      Corporation  and  Ernest  Hodas,  as Trustee of the Ernest
                      Hodas Revocable Trust (the "Trustee") and the Hodas Family
                      Limited   Partnership")  and  Ernest  Hodas  (collectively
                      referred to a "Subordinating Creditor")

                    --Incorporated  by reference to Exhibit 28.5 to Registrant's
                      Current  report on Form 8 for January 5, 1994

            10.11   --Non-Competition   and   Non-Disclosure   Agreement   dated
                      October 27, 1993 by and between Ernest Hodas  and  Century
                      Supply Corp.
 
                    --Incorporated  by reference to Exhibit 2.3 to  Registrant's
                      Current  report on Form 8 for January 5, 1994
                
            10.12   --Consulting Agreement dated October 27, 1993 by and between
                      Century Supply Corp. and Ernest Hodas
             
                    --Incorporated  by  reference to Exhibit 2.4 to Registrant's
                      Current  report on Form 8 for January 5, 1994


                                       10
<PAGE>

            10.13   --Guaranty  dated  October 27, 1993 by Richton International
                      Corporation   in  favor  of  the  Hodas   Family   Limited
                      Partnership  and  Ernest  Hodas,  as Trustee of the Ernest
                      Hodas Revo-cable Trust and Ernest Hodas

                    --Incorporated by reference to Exhibit  2.6 to  Registrant's
                      Current  report on Form 8 for January 5, 1994
                     
            10.14   --Subordination  Agreement  dated  October 27, 1993  between
                      Michigan   National  Bank,   Century  Supply  Corp.   (the
                      "borrower"),  Ernest Hodas, as Trustee of the Ernest Hodas
                      Revocable  Trust and the Hodas Family Limited  Partnerhsip
                      and   Ernest   Hodas   (collectively    referred   to   as
                      "Subordinating creditor")

                    --Incorporated  by reference to Exhibit 28.6 to Registrant's
                      Current  report on Form 8 for January 5, 1994
                    
            10.15   --Series A  Warrant  to  Purchase  236,250  shares of Common
                      Stock of  Richton  International Corporation
                    
                    --Incorporated  by reference to Exhibit 28.9 to Registrant's
                      Current  report on Form 8 for January 5, 1994 
                    
            10.16   --Subordinated  Note issued by Richton  International  Corp.
                      dated  October  26,  1993 to Mr.  Fred R.  Sullivan in the
                      principal amount of $1,181,250.

                    --Incorporated by reference to Exhibit 28.10 to Registrant's
                      Current  report on Form 8 for January 5, 1994
                      
            10.17   --Subordinated   Promissory   Note   for  $1.0 million dated
                      March 29, 1995   between   CBE  Acquisition Corp. and  CBE
                      Liquidating Corp.

                    --Incorporated  by reference to Exhibit 2.2 to  Registrant's
                      Current  report on Form 8K for April 5, 1995
                    
            10.18   --Subordinated   Promissory  Note  for  $1.0  million  dated
                      March  29, 1995  between Richton International Corporation
                      and Fred R. Sullivan

                    --Incorporated  by reference to Exhibit 2.3 to  Registrant's
                      Current  report on Form 8K for April 5, 1995

            10.19   --Guaranty  dated March 29,  1995 by  Richton  International
                      Corp. in favor of the CBE  Liquidating 
 
                    --Incorporated  by reference  to Exhibit 2.4 to Registrant's
                      Current report on Form 8K for April 5, 1995
                     
            10.20   --Guaranty  dated March 29, 1995 by Century  Supply Corp. in
                      in favor of the CBE Liquidating Corp.
                   
                    --Incorporated  by reference to Exhibit 2.5 to  Registrant's
                      Current report on Form 8K for April 5, 1995 (11) Exhibit

            11.1    --Calculation of earnings per share

                    --Incorporated  by  reference  to  Footnote  11 to  Notes to
                      Consolidated  Financial  Statements of Registrant's Annual
                      Report on Form 10- K for the year ended December 31, 1997

        (21)Exhibits--Subsidiaries of the Registrant

        (99)Exhibits--Other

            99.1    --Fairness  Opinion  received  from  Quirk,  Carson & Pettit
                      relating to the $1.0 million the promissory note agreement
                      between F.R. Sullivan and the Registrant

                    --Incorporated  by reference to Exhibit 99.1 to Registrant's
                      Annual Report on Form 10-K for the year ended December 31,
                      1995

            99.2    --Fairness  Opinion  received  from  Quirk,  Carson & Pettit
                      relating to the $1.0 million the promissory note agreement
                      between F.R. Sullivan and the Registrant

                    --Incorporated  by reference to Exhibit 99.1 to Registrant's
                      Annual Report on Form 10-K for the year ended December 31,
                      1995

        (b) Reports on Form 8-K 
            None.


                                       11
<PAGE>

                                   SIGNATURES

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

                                               RICHTON INTERNATIONAL CORPORATION
                                                          (Registrant)
           
                                               By:   /s/     Fred R. Sullivan
                                                     ---------------------------
                                                           Fred R. Sullivan
                                                     Chairman of the Board and
                                                      Chief Executive Officer
                                                   (Principal Executive Officer)
Date: March 9, 1998

                                               By:   /s/  Cornelius F. Griffin
                                                     ---------------------------
                                                       Cornelius F. Griffin
                                                         Vice President and
                                                       Chief Financial Officer
                                                      (Principal Financial and
                                                         Accounting Officer)

     Pursuant to the  requirements of the Securities  Exchange Act of 1934, this
report  has  been  signed  below  by the  following  persons  on  behalf  of the
Registrant and in the capacities and on the date indicated.

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

/s/   Fred R. Sullivan        Chairman of the Board and            March 9, 1998
------------------------
      Fred R. Sullivan          Chief Executive Officer
                                (Principal Executive Officer)

/s/ Cornelius F. Griffin      Vice President and Chief             March 9, 1998
------------------------
    Cornelius F. Griffin        Financial Officer (Principal
                                Financial and Accounting Officer)

/s/  Norman E. Alexander      Director                             March 9, 1998
------------------------                                                  
     Norman E. Alexander                                                  
                                                                          
/s/   Donald A. McMahon       Director                             March 9, 1998
------------------------                                                  
      Donald A. McMahon                                                   
                                                                          
/s/    Thomas J. Hilb         Director                             March 9, 1998
------------------------                                                  
       Thomas J. Hilb                                                     
                                                                          
/s/   Stanley J. Leifer       Director                             March 9, 1998
------------------------                                                  
      Stanley J. Leifer                                                   
                                                                          
/s/    Peter A. White         Director                             March 9, 1998
------------------------                                                  
       Peter A. White
                     
                     
                                       12  
<PAGE>                                     
                                           
                    REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS

To the Shareholders of
      Richton International Corporation:

      We have audited the  accompanying  consolidated  balance sheets of Richton
International  Corporation  (a  Delaware  corporation)  and  subsidiaries  as of
December 31, 1997 and 1996, and the related  consolidated  statements of income,
shareholders'  equity and cash  flows for each of the three  years in the period
ended December 31, 1997. These financial  statements are the  responsibility  of
the Company's  management.  Our responsibility is to express an opinion on these
financial statements based on our audits.

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

      In our opinion,  the consolidated  financial  statements referred to above
present  fairly,  in all material  respects,  the financial  position of Richton
International Corporation and subsidiaries, as of December 31, 1997 and 1996 and
the results of their operations and their cash flows for each of the three years
in the period ended  December 31, 1997 in  conformity  with  generally  accepted
accounting principles.

                                                   ARTHUR ANDERSEN LLP

Detroit, Michigan
March 4, 1998


                                       F-1
<PAGE>

               RICHTON INTERNATIONAL CORPORATION AND SUBSIDIARIES
                           CONSOLIDATED BALANCE SHEETS
                                    
<TABLE>
<CAPTION>
                                     
                                                                                           December 31
                                                                                  ----------------------------
                                                    ASSETS                            1997            1996
                                                                                   -----------     -----------
<S>                                                                                <C>              <C> 
Current Assets:
    Cash and Cash Equivalents .................................................   $   474,000      $   372,000
    Notes and Accounts Receivable, net of allowance for
           doubtful accounts of $690,000 in 1997 and $700,000 in 1996 .........    16,292,000       13,004,000
    Inventories ...............................................................    16,190,000        9,550,000
    Prepaid Expenses and Other Current Assets .................................       602,000          467,000
    Deferred Taxes ............................................................       493,000          568,000
                                                                                  -----------      -----------
      Total Current Assets ....................................................    34,051,000       23,961,000
Property, Plant and Equipment, ................................................     2,633,000        2,287,000
    Less: Allowance for Depreciation and Amortization .........................    (1,038,000)        (747,000)
                                                                                  -----------      -----------
                                                                                    1,595,000        1,540,000
Other Assets: Deferred taxes ..................................................       716,000        2,224,000
    Goodwill ..................................................................     4,011,000        4,050,000
    Other Intangibles .........................................................     1,217,000          599,000
                                                                                  -----------      -----------
TOTAL ASSETS ..................................................................   $41,590,000      $32,374,000
                                                                                  ===========      ===========

                                      LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
    Current Portion of Long Term Debt .........................................   $ 1,773,000      $ 1,879,000
    Notes Payable .............................................................    15,135,000        7,947,000
    Accounts Payable,Trade ....................................................     5,204,000        3,978,000
    Accrued Liabilities .......................................................     2,228,000        2,387,000
    Deferred Income ...........................................................     2,339,000        2,160,000
                                                                                  -----------      -----------
      Total Current Liabilities ...............................................    26,679,000       18,351,000
Noncurrent Liabilities
    Long Term Senior Debt .....................................................     5,000,000        5,200,000
    Subordinated Debt .........................................................     2,364,000        3,665,000
    Less: Current Portion of Long-term Debt ...................................    (1,773,000)      (1,879,000)
                                                                                  -----------      -----------
                                                                                    5,591,000        6,986,000
Stockholders' Equity
      Preferred Shares, $1.00 par value; authorized
      500,000 shares; none issued                                                       --               --
    Common Shares, $.10 par value; authorized 6,000,000 shares; issued 3,086,692
      shares at December 31,
      1997 and 3,088,347 shares at December 31, 1996 ..........................       309,000          309,000
    Additional Paid-in Capital ................................................    17,654,000       17,661,000
    Retained Earnings .........................................................    (8,228,000)     (10,518,000)
    Treasury Stock ............................................................      (415,000)        (415,000)
                                                                                  -----------      -----------
      Total Shareholders' Equity ..............................................     9,320,000        7,037,000
                                                                                  -----------      -----------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY ....................................   $41,590,000      $32,374,000
                                                                                  ===========      ===========

</TABLE>

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


                                       F-2
<PAGE>

               RICHTON INTERNATIONAL CORPORATION AND SUBSIDIARIES
                        CONSOLIDATED STATEMENTS OF INCOME
<TABLE>
<CAPTION>


                                                      Year ended December 31
                                            ------------------------------------------
                                               1997            1996          1995
                                               ----            ----          ----
<S>                                        <C>             <C>            <C>        
Net Sales ...............................  $106,523,000    $87,750,000    $66,659,000
Cost of Sales ...........................    76,334,000     62,966,000     48,101,000
                                            -----------     ----------     ----------
Gross Profit ............................    30,189,000     24,784,000     18,558,000

Selling, general & 
  administrative expenses ...............    24,684,000     20,952,000     15,092,000
Interest (income) .......................      (519,000)      (407,000)      (349,000)
Interest expense ........................     1,853,000      1,623,000      1,441,000
                                            -----------      ---------     ----------
Income before Taxes .....................     4,171,000      2,616,000      2,374,000
Provision for income taxes ..............     1,881,000        850,000      1,009,000
                                            -----------     ----------     ----------
Net Income ..............................  $  2,290,000    $ 1,766,000    $ 1,365,000
                                            ===========     ==========     ==========

Net Income Per share:

Basic earnings per common share: ........  $       0.78    $      0.60    $      0.46
                                            ===========     ==========     ==========
Diluted earnings per common share: ......  $       0.68    $      0.54    $      0.43
                                            ===========     ==========     ==========
Average Common and Common Equivalent
    Shares outstanding
           Basic-- ......................     2,948,000      2,949,000      2,931,000
                                            ===========     ==========    ==========
           Diluted-- ....................     3,372,000      3,290,000      3,161,000
                                            ===========     ==========    ==========

</TABLE>

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


                                       F-3
<PAGE>

               RICHTON INTERNATIONAL CORPORATION AND SUBSIDIARIES
                 CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY

<TABLE>

                                                  Additional                                Cumulative
                                        Common      Paid-in       Accumulated    Treasury   Translation
                                        Shares      Capital         Deficit        Stock    Adjustment
                                        -------    ---------      -----------    ---------  -----------
<S>                                    <C>        <C>           <C>             <C>          <C>     
Balance at December 31, 1994 ........  $303,000   $17,490,000   $(13,649,000)   $(415,000)    $ 3,000
Issuances of 58,877 common shares ...     6,000       171,000            --           --
Cumulative Translation Adjustment                                                              (3,000)
Net Income ..........................       --            --       1,365,000          --          --
                                       --------   -----------   ------------    ---------     -------
Balance at December 31, 1995 ........  $309,000   $17,661,000   $(12,284,000)   $(415,000)    $     0
Net Income ..........................       --            --       1,766,000          --          --
                                       --------   -----------   ------------    ---------     -------
Balance at December 31, 1996 ........  $309,000   $17,661,000   $(10,518,000)   $(415,000)    $     0
Net Income ..........................       --            --       2,290,000          --          --
Purchase of 1,555 Odd-Lot Shares ....       --         (7,000)           --           --          --
                                       --------   -----------   ------------    ---------     -------
Balance at December 31, 1997 ........  $309,000   $17,654,000   $ (8,228,000)   $(415,000)    $     0
                                       ========   ===========   ============    =========     =======

</TABLE>

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


                                      F-4
<PAGE>

               RICHTON INTERNATIONAL CORPORATION AND SUBSIDIARIES
                     CONSOLIDATED STATEMENTS OF CASH FLOWS

<TABLE>
<CAPTION>

                                                                               Year ended December 31
                                                                     ------------------------------------------
                                                                        1997            1996          1995
                                                                        ----            ----          ----
<S>                                                                   <C>           <C>            <C>    
OPERATING ACTIVITIES
Net Income .........................................................  $2,290,000    $1,766,000     $1,365,000
   Reconciliation of net cash provided by
      (used by) operating activities:
      Depreciation and amortization of assets ......................     291,000       302,000        424,000
      Amortization of Intangibles ..................................   1,059,000     1,558,000      1,000,000
      Deferred Income ..............................................     179,000      (115,000)       (95,000)
      Other working capital items, assets ..........................  (8,229,000)   (4,839,000)    (3,658,000)
      Other working capital items, liabilities .....................   1,002,000       625,000        131,000
      Decrease (increase) in deferred taxes ........................   1,583,000       672,000      1,275,000
      Decrease (increase) in other assets ..........................      (7,000)      142,000       (180,000)
                                                                       ---------     ---------      ---------

        Net cash provided by (used by) operating activities ........  (1,832,000)      111,000        262,000

INVESTING ACTIVITIES
Capital expenditures ...............................................    (135,000)     (350,000)      (147,000)
Cash (paid) for businesses acquired, net ...........................  (3,318,000)   (2,093,000)      (166,000)
                                                                       ---------     ---------      ---------
        Net cash used by investing activities ......................  (3,453,000)   (2,443,000)      (313,000)

FINANCING ACTIVITIES
Increase (Decrease) of Long-Term Debt ..............................    (200,000)    1,400,000     (1,310,000)
Repayment of Subordinated Debt .....................................  (1,594,000)   (1,235,000)           --
Repayment of Long-term Debt ........................................         --       (600,000)           --
Repurchase of Odd-Lot Shares .......................................      (7,000)          --             --
Increase in Line of Credit .........................................   7,188,000     2,672,000      1,800,000
                                                                       ---------     ---------      ---------
        Net cash provided by financing activities ..................   5,387,000     2,237,000        490,000

Effect of exchange rate on cash balances ...........................         --            --          (3,000)
                                                                       ---------     ---------      ---------
Increase (Decrease) in cash and cash equivalents ...................     102,000       (95,000)       436,000
Cash and cash equivalents, beginning of period .....................     372,000       467,000         31,000
                                                                       ---------     ---------      ---------
Cash and cash equivalents, end of period ...........................  $  474,000    $  372,000     $  467,000 
                                                                       =========     =========      =========

SUPPLEMENTAL DISCLOSURE OF CASH FLOW
INFORMATION:
        Cash payments during the period for interest ...............  $1,728,000    $1,391,000     $1,408,000
                                                                       =========     =========      =========
        Cash payments during the period for income taxes ...........  $  247,000    $  430,000     $  366,000
                                                                       =========     =========      =========

</TABLE>

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


                                       F-5
<PAGE>

               RICHTON INTERNATIONAL CORPORATION AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1. Description of Business:

      Richton  International  Corporation  ("Richton") is a holding company with
two  principal   subsidiaries,   Century  Supply  Corp.   ("Century")   and  CBE
Technologies  Inc,  ("CBE"),  collectively  the  "Company"  Century is a leading
full-service  wholesale  distributor of sprinkler  irrigation  systems,  outdoor
lighting and  decorative  fountain  equipment.  Branches are in 18 States in the
Eastern half of the United States and in Ontario,  Canada.  Irrigation  products
have  historically  been  sold  by  manufacturers  primarily  through  wholesale
distributors. Century is a major distributor in the United States for all of the
leading original equipment manufacturers (OEM) in the irrigation systems field.

      CBE Technologies, Inc. ("CBE") headquartered in Boston, Massachusetts with
satellite  offices in New York,  Los  Angeles and  Portland,  Maine is a Systems
Integrator  providing,  network  consulting,  design, and installation;  network
management and related support;  technical services  outsourcing;  comprehensive
hardware  maintenance;  and  equipment  sales.  CBE's  technical  certifications
include;   Novell  Platinum   reseller,   Microsoft   Channel  partner,   Banyan
Enterprise/Network  dealer,  Novell  authorized  Training  Center,  as well as a
Novell Authorized Service Center.

2.  Summary of Significant Accounting Policies:

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

      As of August 31, 1993 Richton  acquired 100% of the issued and outstanding
shares of Century Supply Corp. On March 30, 1995 Richton  acquired CBE (See Note
3).

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

      Cash and Cash  Equivalents--Cash  and Cash Equivalents are defined as cash
on demand at a bank, and  certificates  of deposit and or government  securities
purchased with maturities of less than three months.

      Allowance  For Doubtful  Accounts--The  Company  provides an allowance for
doubtful  accounts  arising from operations of the business,  which allowance is
based  upon a specific  review of certain  outstanding  amounts  and  historical
collection performance.  In determining the amount of the allowance, the Company
is required to make certain  estimates and  assumptions  and actual  results may
differ from these estimates and assumptions.

      Inventories--The  Company values  inventory at the lower of cost or market
using the first-in first-out ("FIFO") method of accounting.

      Goodwill and other  Intangibles--Goodwill is amortized on a  straight-line
basis over periods of 5 - 15 years as follows:

<TABLE>
<CAPTION>

                             Amortization    12/31/95                                     12/31/96
                                Period        Balance       Additions     Reductions       Balance
                             ------------     -------       ---------     ----------       -------
<S>                           <C>            <C>              <C>         <C>             <C>    
Goodwill
Typewriter Maintenance .....  5 years        1,700,000          --        1,310,000         390,000
Computer Maintenance .......  15 years       3,360,000        167,000       227,000       3,300,000
Irrigation .................  5-15 years       141,000        240,000        21,000         360,000
                                              --------        -------      --------        --------
                                             5,201,000        407,000     1,558,000       4,050,000
                                             =========        =======     =========       =========
</TABLE>


                                       F-6
<PAGE>

               RICHTON INTERNATIONAL CORPORATION AND SUBSIDIARIES

              NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-Continued

<TABLE>
<CAPTION>
                            Amortization    12/31/96                                     12/31/97
                               Period        Balance       Additions     Reductions       Balance
                            ------------     -------       ---------     ----------       -------
<S>                          <C>              <C>          <C>           <C>               <C>    
Goodwill 
Typewriter Maintenance ....  5 years          390,000          --          390,000           --
Computer Maintenance ......  15 years       3,300,000          --          344,000       2,956,000
Irrigation ................  5 -15 years      360,000        733,000        38,000       1,055,000
                                            ---------        -------      --------       ---------
                                            4,050,000        733,000       772,000       4,011,000
Other Intangibles
Irrigation ................  1- 5 years       361,000        908,000       154,000       1,115,000
Computer Maintenance ......  1- 5 years       133,000           --         133,000           --
                                            ---------        -------      --------       ---------
                                              494,000        908,000       287,000       1,115,000
                                            =========        =======      ========       =========
</TABLE>

      Long-Lived  Assets--During  1995,  the Company  adopted the  provisions of
Statement  of  Financial   Accounting  Standard  No.  121  "Accounting  for  the
Impairment of Long Lived Assets"  ("SFAS 121").  SFAS 121 requires,  among other
things,  that an  entity  review  its  long-lived  assets  and  certain  related
intangibles for impairment  whenever changes in circumstances  indicate that the
carrying  amount of an asset  may not be fully  recoverable.  As a  result,  the
Company  continually  evaluates whether events and  circumstances  have occurred
that  indicate  the  remaining  estimated  useful  life  of  long-lived  assets,
including goodwill, may not be recoverable.  The acquisition of CBE (See Note 3)
resulted in goodwill of approximately  $6.0 million which was based on CBE's two
major lines of business--computer  maintenance and network installation services
and typewriter  services.  Since the acquisition of CBE, the typewriter contract
maintenance  business has experienced a continual decline in revenues and it was
determined that expected future cash flows  (undiscounted  and without  interest
charges)  would be less than the  carrying  amount of goodwill  allocated to the
typewriter maintenance business. Based on discounted estimated future cash flow,
the Company  recorded a write-down  of Goodwill in the amount of $1.0 million in
1995, and based on further decline of that business, an additional charge of $.8
million in the third  calendar  quarter of 1996,  which is  included in selling,
general and administrative  expenses in the consolidated statement of operations
for the respective periods involved.

      Deferred Income--Deferred income represents income received from customers
related to service  contracts  that extend for specified  periods of time,  less
than  one  year.  Income  is  recognized  proportionally  over  the  life of the
contract.

      Income  Taxes--The  Company  accounts for income taxes in accordance  with
Statement of Financial  Accounting  Standards  No. 109,  "Accounting  for Income
Taxes" (SFAS No. 109). This statement requires the Company to recognize deferred
tax assets and liabilities  for the expected  future tax  consequences of events
that have been recognized in the Company's financial  statements or tax returns.
Under this method,  deferred tax assets and liabilities are determined  based on
the  difference  between the financial  statement  carrying  amounts and the tax
basis of assets and liabilities.

      Accounting  for Stock Based  Compensation--Company  has elected to account
for  stock-based  compensation  using the intrinsic  value method  prescribed in
Accounting  Principles  Board  Opinion No. 25,  "Accounting  for Stock issued to
Employees,"  and related  interpretations.  Accordingly,  compensation  cost for
stock  options is measured as the excess,  if any, of the quoted market price of
the  Company's  stock at the date of grant over the amount the employee must pay
to acquire the stock in the accompanying  Statements of Income.  As supplemental
information,  the Company has provided pro forma disclosure of the fair value at
the date of grant of stock options  granted  during 1997 and 1996 in Note 10, in
accordance with the requirements of Statement of Financial  Accounting Standards
No.123, "Accounting for Stock-Based Compensation" (SFAS 123).


                                       F-7

<PAGE>

               RICHTON INTERNATIONAL CORPORATION AND SUBSIDIARIES

              NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-Continued

3.  Acquisitions:

      On March 29,  1995 the  Company,  through  its  wholly  owned  subsidiary,
Century,  acquired all the  operating  assets and business of CBE  Technologies,
Inc. for $5.0 million plus assumption of certain liabilities. The $5 million was
financed by bank borrowings of $3.0 million, a $1.0 million unsecured promissory
note to the former owners and a $1 million  unsecured  subordinated  note to the
Chairman of Richton.  The note to the Chairman was subject to a fairness opinion
of an independent advisor chosen by Richton's Board of Directors.

      The following  unaudited pro forma summary presents the 1995  consolidated
results of  operations as if the  acquisition  of CBE had occurred on January 1,
1995. These pro forma results do not purport to be indicative of what would have
occurred had the  acquisition  been made as of that date or of the results which
may occur in the future.

                                                           Twelve Months Ended
                                                            December 31 1995
                                                          -------------------
                                                               (Unaudited)
     Net Sales ..........................................      $69,066,000
                                                               ===========
     Net Income .........................................      $ 1,377,000
                                                               ===========
     Net Income per Share ...............................      $       .44
                                                               ============
4.  Property and Equipment:
                                                        December 31
                                                 --------------------------
                                                    1997             1996
                                                  --------         --------
     Land .....................................   $  80,000      $   80,000
     Property held for sale or future use .....     107,000         108,000
     Building and Improvements ................     848,000         820,000
     Autos and Trucks .........................     539,000         445,000
     Machinery and Equipment ..................     600,000         479,000
     Furniture and Fixtures ...................     459,000         355,000
                                                 ----------      ----------  
                                                 $2,633,000      $2,287,000
     Less: Accumulated Depreciation ...........   1,038,000         747,000
                                                 ----------      ----------
                                                 $1,595,000      $1,540,000
                                                 ==========      ==========
                                              
      All fixed assets are currently depreciated over five years except building
improvements which are based upon the respective lease terms which are from 2 to
10 years.

5.  Income Taxes:

      At December  31,  1997,  and 1996 the Company has  deferred  tax assets of
approximately   $1.1  million  and  $2.8  million,   respectively.   Significant
components of the deferred tax assets as of December 31, are as follows:

                                                    1997            1996
                                                  --------        --------
     Current:                                  
     Allowance for bad debts ..................  $ 234,000       $  238,000
     Accrued Pension Cost .....................       --             97,000
     Other ....................................    259,000          233,000
                                                 ---------       ----------  
                                                 $ 493,000       $  568,000
                                                 =========       ==========
     Long Term:                                
     Net operating loss carry forward .........  $    --         $1,383,000
     Goodwill .................................    682,000          666,000
     Depreciation .............................    34,000            --
     Other ....................................       --            175,000
                                                 ---------       ----------    
                                                 $ 716,000       $2,224,000
                                                 =========       ==========


                                       F-8
<PAGE>

               RICHTON INTERNATIONAL CORPORATION AND SUBSIDIARIES

              NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-Continued

      The provision for income taxes for the three years ended December 31, 1997
consists of the following:

                                         1997            1996           1995
                                         ----            ----           ----
Federal
  Current Payable (refundable) ....  $  160,000       $109,000       $ (436,000)
  Deferred ........................   1,399,000        672,000        1,275,000
State & Local .....................     322,000         50,000          151,000
Foreign ...........................         --          19,000           19,000
                                     ----------       --------       ----------
                                     $1,881,000       $850,000       $1,009,000
                                     ==========       ========       ==========

      A  reconciliation  of  the  Federal  provision  for  income  taxes  at the
statutory  rate to the actual  provision  for income  taxes for the three  years
ended December 31, 1997, is as follows:

                                            1997              1996          1995
                                            ----              ----          ----
Federal .................................    34%              34%            35%
State & Local ...........................     8                3              7
Other ...................................     3               (4)            --
                                             --               --             --
                                             45%              33%            42%
                                             ==               ==             ==
                
6.  Statement of Cash Flows:

      The components of other working capital items included in the Consolidated
Statement of Cash Flows are as follows:

                                              For Twelve Months Ended
                                                     December 31
                                     ------------------------------------------
                                       1997            1996           1995
                                       ----            ----           ----
                               
Receivables ...................     $(2,471,000)     (3,232,000)    $(2,388,000)
Inventories ...................      (5,623,000)     (1,595,000)     (1,238,000)
Prepaid Expenses ..............        (135,000)        (12,000)        (32,000)
                                    -----------     -----------     -----------
Increase in Working            
  Capital Items, Assets .......     $(8,229,000)    $(4,839,000)    $(3,658,000)
                                    ===========     ===========     ===========
Accounts Payable ..............       1,226,000         775,000         (35,000)
Accrued Expenses ..............        (224,000)       (150,000)        166,000
                                    -----------     -----------     -----------
Increase Working Capital       
  Items, Liabilities ..........     $ 1,002,000     $   625,000     $   131,000
                                    ===========     ===========     ===========
                               
7.  Bank Borrowing:            
                          
     During the first quarter of 1998, the Company  completed a renegotition  of
it's senior debt and revolving line of credit  financing.  The revised agreement
(a) increased the  availability  to $30 million and lowered the rate of interest
charged on the line of credit to LIBOR plus 175 basis  points  rather than prime
less an eighth,  (b ) transferred the principal obligor from Century to Richton,
(c) to increase the amount of  unsecured  financing to nearly $8 million and (d)
released the pledge of common stock of Century,  which had previously  been held
as security for the bank loans. The outstanding balance on the line of credit at
December 31, 1997 and 1996 were $15.1  million and $7.9  million,  respectively.
The term loan will continue to amortize at the rate of $.18 million per quarter.
In addition, certain financial covenants and distribution restrictions were also
modified or curtailed completely.


                                       F-9
<PAGE>

               RICHTON INTERNATIONAL CORPORATION AND SUBSIDIARIES

              NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-Continued

8.  Long-Term Debt:

      The Company has the following long-term debt as of December 31, 1997:

<TABLE>
<CAPTION>
                                                                                      1997             1996
                                                                                      ----             ----
<S>                                                                                 <C>            <C>    
Term note payable to a bank, secured by accounts receivable, inventory, fixtures
and  equipment,  interest at prime (8.5% as of December  31,  1997),  payable in
quarterly installments of $175,000,final payment due April 27, 2001 ............    $5,000,000     $5,200,000

Installments payable to former owner of Century, unsecured and subordinated to
the bank debt, payable in quarterly installments of $50,000, final payment due 
June 30, 2000 ..................................................................       468,000        668,000

Note payable to related party, unsecured and subordinated to bank debt, interest
at 9%, payable in semi-annual  installments of $118,125  commencing  April 1996,
final payment due October 31, 1999--
net of discount (A) ............................................................       459,000        887,000

Notes payable to former owner of Century--repaid in 1997 .......................          --          106,000

Note  payable to related  party,  unsecured  and  subordinated  to the term note
payable to bank,  interest  at 10%,  payable in 10  installments  of $100,000 on
October 15th and April 15th, final payment
April 2000 (B) .................................................................       450,000        900,000

Note payable to seller of CBE Technologies,  Inc.  unsecured and subordinated to
the all bank debt,  interest  at 9% payable in 10  installments  of  $100,000 on
October 15th and April 15th, final
payment due April 2000. ........................................................       428,000        700,000

Other ..........................................................................       559,000        404,000
                                                                                    ----------     ----------
                                                                                     7,364,000      8,865,000
Less--Current Portion ..........................................................     1,773,000      1,879,000
                                                                                    ----------     ----------
                                                                                    $5,591,000     $6,986,000
                                                                                    ==========     ==========

</TABLE>


      (A): The Company issued 236,250  warrants to acquire 236,250 shares of the
common stock of Richton at $1 3/8 per share in  connection  with this loan.  The
warrants were valued at $143,000.

      (B): The Company  issued  100,000  warrants to acquire  100,000  shares of
Richton's  common stock at $3.0 per share--the  fair market value at the time of
issuance.

      The scheduled  future  maturities  of long-term  debt at December 31, 1997
after refinancing described in note 7, are as follows:

            1998 ................................................    $1,773,000
            1999 ................................................     1,769,000
            2000 ................................................       920,000
            2001 ................................................     2,902,000
                                                                     ----------
                                                                     $7,364,000
                                                                     ==========
9.  Retirement Plans:

      The Company's Richton employees were covered by a noncontributory, defined
benefit plan (the "Retirement Plan") sponsored by Richton.  Effective,  June 30,
1997 the Plan was  effectively  terminated  and the  amounts  then  


                                       F-10
<PAGE>

               RICHTON INTERNATIONAL CORPORATION AND SUBSIDIARIES

              NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-Continued

owing to its active  employees  were paid out; an amount of  approximately  $.55
million.  Richton  during  1996 paid out its  obligations  to all of its  former
employees and participants in the Retirement Plan.

     Pension expense reflected in the consolidated statements of income for this
Plan was $37,000 in 1997 and 1996 and $155,000 in 1995.

      Century and CBE have Tax Deferred Savings Plans under Section 401 (k) (the
"Plans") of the Internal Revenue Code. The Plans allows employees to defer up to
15% of eligible  compensation  on a pre-tax basis through  contributions  to the
Plans.  In line  with the  provisions  of the  Plans,  Century  has  elected  to
contribute,  for every dollar the employee  contributes,  50 % of the employee's
amount, up to 4 % of eligible compensation.  Century may also make discretionary
contributions.  The charge to income for employer  contributions  to the Century
Plan was  approximately  $285,000,$224,000,  and  $182,000  for the years  ended
December  31,  1997,  1996  and  1995,  respectively.   Century's  discretionary
contribution  to the Plan were $190,000,  $170,000,  and $125,000 in each of the
three years ended in December  31,  1997,  respectively.  CBE has elected to not
contribute to its Plan.

10.  Stock Options:

      The Company has as part of its 1990 Long-Term  Compensation  Plan, a Stock
Option Plan ("the Plan").  Richton  accounts for this plan under APB Opinion No.
25, under which no compensation cost has been recognized.  Had compensation cost
for this plan been determined  consistent with SFAS 123 the Company's net income
and earnings per share would have been approximately the same.

                                                           1997          1996
                                                           -----        ------
     Net Income:                          
         As reported ..............................   $2,290,000      $1,766,000
         Pro Forma ................................    2,266,000       1,766,000
     EPS:                                 
         As reported ..............................        $ .68           $ .54
         Pro Forma-diluted ........................          .67             .54
                                       
      Because the SFAS 123 method of accounting  has not been applied to options
granted prior to January 1, 1995, the resulting pro forma  compensation cost may
not be representative of that to be expected in future years.

      The Company may grant options for up to 415,000 shares under the Plan. The
Company has granted options on 315,000 shares through  December 31, 1997.  Under
the Plan,  the option  exercise price equals the stock's market price on date of
grant except for options  granted to Mr.  Sullivan.  The exercise  price for Mr.
Sullivan's options are at 110% of the current market price at date of grant.

     A summary of the status of the Company  stock  option plan at December  31,
1997, 1996 and 1995 is presented in the table below:

<TABLE>
<CAPTION>
                                                 1997                     1996                    1995
                                         --------------------      -------------------     --------------------
                                                       Wtd Avg                 Wtd Avg                  Wtd Avg
                                          Shares      ex price     Shares     ex price      Shares     ex price
                                          -------     ---------    -------    ---------    --------    --------
<S>                                       <C>       <C>            <C>       <C>            <C>       <C>      
Outstanding at beginning of Year ......   275,000     $  2.20      270,000     $  2.15      210,000     $  1.98
Granted ...............................    40,000        5.24        5,000        5.09       60,000        2.72
Exercised .............................       --          --           --          --           --          --
Forfeited .............................       --          --           --          --           --          --
Expired ...............................       --          --           --          --           --          --
                                          -------    --------      -------     -------      -------     -------
Outstanding at End of Year ............   315,000     $  2.59      275,000     $  2.20      270,000     $  2.15
Exercisable at End of Year ............   315,000        2.59      270,000        2.15      260,000        2.10

</TABLE>

      The Company has issued warrants to purchase 336,250 shares of Common Stock
in  connection  with several debt  agreements  (see Note 5). These  warrants are
currently exercisable and will expire in seven years from date of issue.


                                       F-11
<PAGE>

               RICHTON INTERNATIONAL CORPORATION AND SUBSIDIARIES

              NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-Continued

11.  Earnings per Common Share and Common Share Equivalent:

      Earnings  per common  share  equivalent  were  calculated  on the basis of
3,372,000,   3,290,000,   and  3,161,000  weighted  average  common  and  common
equivalent  shares  outstanding in the years ending December 31, 1997, 1996, and
1995, respectively.

<TABLE>
<CAPTION>
                                                                                             Per-Share
                                                              Income           Shares         Amount
                                                              -------          -------       ---------
                                                               For the year ended December 31, 1995
                                                                 ---------------------------------
<S>                                                         <C>              <C>                <C> 
Net Income ...............................................  $1,365,000       2,931,000          $.46
Options issued to Executives .............................                      86,000
Shares subject to exercise of warrants ...................                     146,000
Income available to common shareholders ..................  $1,365,000       3,163,000          $.43

<CAPTION>
                                                               For the year ended December 31, 1996
                                                                 ---------------------------------
<S>                                                         <C>              <C>                <C> 
Net Income ...............................................  $1,766,000       2,949,000          $.60
Options issued to Executives .............................                     139,000
Shares subject to exercise of warrants ...................                     202,000
Income available to common shareholders ..................  $1,766,000       3,290,000          $.54

<CAPTION>
                                                               For the year ended December 31, 1997
                                                                 ---------------------------------
<S>                                                         <C>              <C>                <C> 
Net Income ...............................................  $2,290,000       2,948,000          $.78
Options issued to Executives .............................                     180,000
Shares subject to exercise of warrants ...................                     244,000
Income available to common shareholders ..................  $2,290,000       3,372,000          $.68

</TABLE>

      Basic  earnings per common  share were  computed by dividing net income by
the weighted  average  number of shares of common stock  outstanding  during the
year.  Diluted  earnings per common share for the years 1997, 1996 and 1995 were
determined on the assumptions  that the warrants were converted upon issuance on
the respective dates of issuance.

12.  Stockholders' Equity:

      In 1995 the  Company  issued  58,877  shares  of the  Common  Stock to its
Chairman  in lieu of  compensation  and  interest  owed to him of $177,000 . The
number of shares issued was  determined  based on the quoted market price of the
shares at the time of issuances.

13.  Long-term Leases and other Commitments:

      The Company leases its corporate offices, distribution facilities and data
processing  equipment  under  agreements  which expire at varying  dates through
2007. Minimum annual rental commitments at December 31, 1997, are as follows:

            1998 ...................................................  $1,700,000
            1999 ...................................................   1,442,000
            2000 ...................................................   1,123,000
            2001 ...................................................     510,000
            2002 ...................................................     357,000
            Thereafter .............................................   
                                                                       ---------
                                                                      $5,132,000
                                                                       =========

     Rent expense under the Company's  various  operating leases was $1,795,000,
$1,478,000,  and  $1,374,000  for the years ended  December 31, 1997,  1996, and
1995, respectively.


                                       F-12
<PAGE>

               RICHTON INTERNATIONAL CORPORATION AND SUBSIDIARIES

              NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-Continued

14.  Segment Data:

      The Company operates in two industry segments, wholesale distribution, and
computer  services.  See Notes 1 and 3 for description of businesses and details
of the  acquisitions  of businesses.  There are no  inter-segment  sales and all
sales occur in North America.  Income (loss) from operations by industry segment
consists of net sales less related cost and expenses. In computing income (loss)
from operations by segment, cost of borrowed funds for working capital have been
included.  Corporate  includes the general and corporate  expenses and interest,
incurred to acquire the two businesses.  Corporate operating expenses,  directly
traceable to industry  segments,  if any, have been allocated to those segments.
Amortization of goodwill and related  impairment  charges are considered segment
related and accordingly  charged to the related industry  segment.  Identifiable
assets by  industry  segment are those  assets  that are used in the  business's
operation in each industry segment and do not include general  corporate assets.
General  corporate  assets  consist  primarily  of  cash,  deferred  taxes,  and
corporate property.

                                                         Corporate
                         Wholesale        Computer        Charges/
                        Distribution      Services        Interest         Total
                        ------------     ----------      ----------       ------
                                                (in millions)
                       ---------------------------------------------------------
Sales ...............        $86.9          $19.6           $ --          $106.5
                         =========      =========       =========    ===========
Pre-Tax Income ......          6.0            (.3)           (1.5)           4.2
                         =========      =========       =========    ===========
Identifiable Assets .        $33.2          $ 6.2           $ 2.2         $ 41.6
                         =========      =========       =========    ===========

15.  Shareholder Rights Plan:

      On January 26, 1998, the Shareholder  Rights Plan expired pursuant to it's
provisions., No rights were ever issued under this Plan.


                                      F-13