<PAGE>
 
                       SECURITIES AND EXCHANGE COMMISSION
                            WASHINGTON, D.C.  20549

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

                           Commission File No. 0-8488

                  For the fiscal year ended December 31, 1996

                             TWENTY SERVICES, INC.
================================================================================
            (Exact name of registrant as specified in its charter)

           ALABAMA                                     63-0372577  
--------------------------------                 ---------------------
(State or other jurisdiction                     (I.R.S. Employer
of incorporation or organization)                Identification No.)

        105 Vulcan Road
      Birmingham, Alabama                                 35209
--------------------------------                 ----------------------
Registrant's telephone number, including area code (205) 945-1581
                                                   ----------------
Securities registered pursuant to Section l2(g) of the Act:

                                 Common Stock
                        7% Cumulative Preferred Stock*
--------------------------------------------------------------------------------
                               (Title of Class)

Indicate by checkmark whether the Registrant (l) has filed all reports required
to be filed by Section l3 or l5(d) of the Securities Exchange Act of 1934 during
the preceding twelve (l2) 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 ninety (90) days.

           YES [X]                                   NO [  ]

As of December 31, 1996, the Registrant had issued and outstanding

l,283,068 shares of common stock, par value of $0.l0 per share, and as of
December 31, 1996, the aggregate market value of the voting stock of the
Registrant held by nonaffiliates of the Registrant, based upon the book value of
such shares as of such date, was approximately $l,429,000.

                   Documents incorporated by reference:  None
                                        
----------
*   Includes 7% Cumulative Series A-1980 Preferred Stock,
    7% Cumulative Series A-198l Preferred Stock, 7% Cumulative
    Series A-1982 Preferred Stock, and 7% Cumulative Series
    A-1985 Preferred Stock.

                                  Page 1 of 36
<PAGE>
 
                                    PART I

1.  BUSINESS.
    ---------

     (a) General Development of Business.  Since its inception in 1955, Twenty
         --------------------------------                                     
Services, Inc. (hereinafter sometimes referred to as the "Registrant" or
"Company"), has been engaged principally in the general finance business,
including the purchase and sale of real estate.  In October 1980, the
stockholders of the Registrant authorized the Board of Directors to redeploy the
Registrant's assets and reinvest the proceeds derived from such redeployment in
a business other than the general finance business.  During 1982 and 1983, the
Company and an affiliate of Twenty Services Holding, Inc. ("Holding"), the owner
of approximately 54% of the Registrant's outstanding common stock, acquired an
interest in the common stock of The Statesman Group, Inc., an insurance holding
company based in Des Moines, Iowa ("Statesman").  The investment in Statesman
was sold in 1994. The Registrant invested the proceeds in equities and fixed
income securities that offer attractive returns commensurate with the risk
assumed.  In 1995, the Company acquired an interest in the common stock of
American Equity Investment Life Holding Company, an insurance holding company
based in Des Moines, Iowa ("American Equity").  As of the date of this Annual
Report on Form 10-K the Registrant owns 79,000 shares of common stock of
American Equity.

     Depending upon the financial condition of the Registrant, the opportunities
available to the Registrant and other matters, the Registrant may acquire
majority interests in, and thereafter direct the operations of, other
corporations or business entities engaged in one or more active businesses.  The
Registrant will continue to engage in certain aspects of the general finance
business, including extending credit to certain persons and collecting its loan
receivables.  As of the date of this annual report on Form 10-K, the Registrant
does not believe that the composition of its investments and the nature of its
business activities render it subject to the Investment Act of 1940, and the
Board of Directors of the Registrant intend that any future acquisitions by
and/or business activities of the Registrant will be structured in a manner so
that the Registrant will not become subject to the Investment Company Act of
1940.

     (b)  Financial Information Regarding Industry Segments.
          --------------------------------------------------

     The Registrant is not required to supply information respecting industry
segments.  However, for certain information respecting the general finance and
other business activities of the Registrant, see the Financial Statements of
Twenty Services, Inc., including the notes thereto, which are included elsewhere
herein.


                                  Page 2 of 36
<PAGE>
 
     (c) Narrative Description of Business.
         ----------------------------------


     General Finance Business.  As stated above, the Registrant historically has
     -------------------------                                                  
engaged in the general finance business which has consisted of (i) extending
credit to finance various real estate projects, including the purchase of
single-family dwellings and commercial real estate, and to finance home
improvements (the "Real Estate Loans"), and (ii) extending credit for business
and miscellaneous purposes (the "Business and Miscellaneous Loans").

     Loan Portfolio.  The following tabulation sets forth the outstanding
     ---------------                                                     
balances of the Registrant's loan portfolio as of December 31 of each year
indicated below (including, if appropriate, unearned interest), classified
according to the types of loans comprising the Registrant's loan portfolio:
<TABLE>
<CAPTION>
 
Type of Loans      1996      1995      1994      l993      l992
---------------  --------  --------  --------  --------  --------
<S>              <C>       <C>       <C>       <C>       <C>
 
Real Estate      $124,40l  $l93,429  $l98,854  $205,820  $24l,045
Business and
Miscellaneous     l53,l50   118,396   148,640   123,647   133,347
                 --------  --------  --------  --------  --------
Total:           $277,55l  $311,825  $347,494  $329,467  $374,292
</TABLE>

As of December 3l, 1996, the duration of the Real Estate Loans  ranged from 18
to 239 months, with such loans having an average duration of 154 months, and the
per annum interest rate of such loans ranged from 7.5% to l2.5% and the duration
of the Business and Miscellaneous Loans ranged from 3 to 36 months, with such
loans having an average duration of 3 months, and the per annum interest rate of
such loans ranged from 7% to 11%.

Of the Registrant's aggregate loan portfolio as of December 31, 1996,
approximately 45% was secured by mortgages on real estate and approximately 55%
was unsecured.


Notes Receivable - Related Parties
----------------------------------

     The Chairman of the Board and the Executive Vice-President, individually or
together, have equity interests in four other entities which had transactions
with the Company during the year.  As of December 31, 1996 the outstanding loans
totaled $403,648.  One loan for $l40,500 to the company owned by the Executive
Vice-President has been fully reserved.  The Company intends to pursue and
expects collection of this loan.  One loan for $50,000 was paid

                                  Page 3 of 36
<PAGE>
 
Notes Receivable - Related Parties (continued)
----------------------------------------------

on March 31, 1997. One loan for $l89,000 is due in 1997 and is collateralized by
a second mortgage on an aircraft which is for sale. One remaining loan for
$24,148 is due in 1997 and is unsecured.

Allowance For Loan Losses and Delinquent Loans Receivable - Finance Receivables
-------------------------------------------------------------------------------

The Registrant maintains an allowance or reserve for loan losses which is an
amount reflecting, in management's judgment, the maximum amount of outstanding
loans that ultimately may be charged off.  Upon determining that a loan, or a
portion thereof, is uncollectible the Registrant charges its allowance or
reserve for loan losses in the amount deemed uncollectible by the Registrant.

As of December 31, 1996, approximately 12% of the dollar amount of the
Registrant's total loan portfolio, including accrued interest, was delinquent by
thirty (30) days or more with respect to one or more payments as compared to
comparable delinquencies of approximately 17% of the dollar amount of the
Registrant's total loan portfolio as of December 31, 1995.  Of the Registrant's
delinquent loans as of December 31, 1996, one loan representing approximately
$32,000 was delinquent by more than ninety (90) days. At December 31, 1996, the
largest principal amount owed by a single debt or related borrower, which was
deemed to be delinquent, was $32,000.  However, the foregoing figures reflect
the fact that the entire amount of a loan is classified as delinquent if any
portion of the scheduled payments are past due.  At December 31, 1996, one (1)
loan was deemed delinquent.  This loan is a first mortgage loan.  The Registrant
believes the each loan deemed delinquent is adequately secured.

During the year ended December 31, 1996, the Registrant did not charge off any
loan receivable.  At December 31, 1996, the Registrant's allowance for loan
losses with respect to its loan portfolio was $27,293.

     The following tabulation sets forth for each of the years indicated certain
information regarding charges to the Registrant's allowance or reserve for loan
losses and the salvage value of the collateral or other assets received during
each of such years with respect to loans previously charged off:
<TABLE>
<CAPTION>
 
                           Percentage of
        Principal Amount  Loan Portfolio   Other Assets
Year      Charged Off       Charged Off      Received
------  ----------------  ---------------  ------------
<S>     <C>               <C>              <C>
1996          $  -0-             -0-%        $    0
1995          $  -0-             -0-%        $  156
1994             -0-             -0-%           369
1993           1,989              .6%         l,907
</TABLE>

                                  Page 4 of 36

<PAGE>
 
      Interest Income.   The following tabulation sets forth certain information
      ----------------                                                          
respecting the Registrant's net interest income for each of the years indicated:

                           1996          1995        1994
                           ----          ----        ----

Interest Income (l)     $ 82,903      $129,953     $59,532

Net Interest Income     $ 82,903      $ 59,532     $55,043

(l)  Includes income of $37,000, $105,757 and $39,24l, during 1996, 1995 and
1994 respectively, derived from sources other than the Registrant's loans
receivable.

     The Registrant utilizes the interest (actuarial) method in recognizing
income attributable to interest charges.  Accrual of interest income on finance
receivables is suspended when a loan is contractually delinquent for 90 days or
more and resumed when the loan becomes contractually current.

     Other Business Activities.  As described above, the Registrant's
     --------------------------                                      
stockholders have authorized the Registrant to redeploy the Registrant's assets
by conversion of such assets into cash and the reinvestment of the proceeds
thereof in other business entities.  The Registrant intends to invest in
equities and fixed income securities that offer attractive returns commensurate
with the risk assumed. In December 1996, the Company acquired a 19.75% interest
in a newly formed insurance holding company, American Equity Investment Life
Holding Company.  The Chairman of the Des Moines, Iowa based company is also the
Chairman of the Board of the Registrant. American Equity acquired a block of
individual and group insurance policies in 1995 and 1996.  In 1996 American
Equity obtained additional equity financing from other investors which reduced
the Company's interest therein to 6.7%.

     Depending upon the financial position of the Registrant, the opportunities
available to the Registrant and other matters, the Registrant may acquire
majority-owned or controlling interests of one (l) or more other corporations or
business entities engaged in one (l) or more active businesses.  In the opinion
of the Registrant, the Registrant's composition of assets and business
activities do not subject the Registrant as of the date of this annual report on
Form 10-K to the Investment Company Act of 1940, and the Board of Directors of
the Registrant intends that future acquisitions and/or future business
activities of the Registrant will be structured in such manner so that
Registrant will not be subject to the Investment Company Act of 1940.  As in the
past, the Registrant will continue to engage in certain aspects of general
finance business, including extending credit to certain persons and collecting
its loans receivable.

                                  Page 5 of 36
<PAGE>
 
     Competition.  With respect to the general finance business, the Registrant
     ------------                                                              
is in direct competition with banks and other finance companies located within
and without the State of Alabama.  Many of these firms are substantially larger
than the Registrant, have more capital available for lending activities, pursue
more actively new loan activity and enjoy a distinct competitive advantage over
the Registrant.

     Employees.  During 1996 and 1995, the Registrant employed two (2) persons
     ----------                                                               
to fill two (2) positions; one (l) of such positions was an executive position,
and one (l) of such positions was a clerical/administrative position.

     At March l5, 1997, the Registrant employed two (2) persons to fill two (2)
positions; one (l) of such positions was an executive position and one (l) of
such positions was a clerical/administrative position.

     The Registrant considers its relationship with its employees to be good.


     Certain Government Regulations.  The Registrant is subject to federal and
     -------------------------------                                          
state regulations relating to consumer credit financing and is subject to
periodic examinations by officials of the State of Alabama charged with the
responsibility of enforcing such regulations.  The last examination of the
Registrant by officials of the State of Alabama occurred on September 20, 1996.
As a result of such examination, the Registrant was found to be in compliance
with the regulations described above, and the Board of Directors of the
Registrant believes that the Registrant presently is in compliance with such
regulations. No material monetary claim has been made by any borrower against
the Registrant respecting failure to comply with such regulations.

     The Registrant is not subject in any material way to regulations relating
to the discharge of materials into the environment.

     Other Matters.  The Registrant's business is not seasonal.
     --------------                                            

     No material portion of the contracts or subcontracts of the Registrant is
subject to renegotiation by the United States Government.

     The business of the Registrant is not dependent upon any raw materials, and
as of the date of this annual report on Form 10-K, the Registrant does not own
any material patent, trademark, license, franchise or concession.  During the
last two (2) years, the Registrant has not spent any money on research and
development activities.

                                  Page 6 of 36

<PAGE>
 
     Due to the nature of its business, the Registrant does not have backlogs of
orders believed to be firm.  In addition, except as described in Management's
Discussion and Analysis of Financial Condition and Results of Operations, the
Registrant does not follow any specified practice with respect to working
capital.

     The Registrant is not dependent upon a single customer or related customers
or a very few customers, the loss of any one (l) or more of which would have a
materially adverse effect upon its business.

     Financial Information Regarding Foreign and Domestic Operations and
     -------------------------------------------------------------------
Export Sales.  Substantially all of the Registrant's business activities have
------------                                                
been conducted within the southeastern portion of the United States.

2.  PROPERTIES.
    -----------

     The Registrant maintains its principal executive office in an office
facility located in Birmingham, Alabama, which it leases on a month-to-month
basis and for which it pays aggregate annual rentals of $7,200.  The Registrant
believes its office facilities are adequate for its present needs.

     The Registrant also owns approximately one (l) acre of undeveloped real
estate, and one parcel of residential property, obtained in 1989 as a result of
foreclosure.

3.  LEGAL PROCEEDINGS.
    ------------------

     As of the date of this annual report on Form 10-K, the Registrant is not a
party of any legal proceedings, other than routine collection matters arising in
the ordinary course of the Registrant's business.

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

     During the quarter ended December 31, 1996, no matter was submitted to a
vote of the security holders of the Registrant.



                                  Page 7 of 36
<PAGE>
 
                              PART II

5.  MARKET FOR THE REGISTRANT'S COMMON STOCK AND RELATED SECURITY
    --------------------------------------------------------------
    HOLDER MATTERS.
    ---------------

     (a)  Market Information.  No broker or dealer makes an active market in the
          ------------------                                                    
shares of Common Stock or the Series A-Preferred Stock of the Registrant,
although the Common Stock is quoted from time to time in certain interdealer
quotations by brokers.  Except for such transactions and sales in privately
negotiated transactions among stockholders, there is no established trading
market for the Common Stock or the Series A-Preferred Stock of the Registrant.

     (b)  Holder of Records.  As of December 31, 1996 there were 1,994 holders
          ------------------                                                  
of record of the outstanding Common Stock of the Registrant, and 1,108 holders
of record of the outstanding Series A-Preferred Stock of the Registrant.

     (c)  Dividends.  During the past two (2) years, no dividends have been paid
          ---------                                                             
respecting the shares of Common Stock of the Registrant.  Under Alabama law,
cash dividends may be paid only out of earned surplus (or retained earnings) of
the Registrant, except that dividends respecting securities entitled to
preferential treatment in the payment of dividends may be paid out of capital
surplus of the Registrant.  As of December 31, 1996, the Registrant reflected
earned surplus of $l,l69,946 and reflected capital surplus of $l,716,074.

     As of December 3l, 1996, the Registrant has issued and outstanding 505,ll0
shares of Series A-Preferred Stock, consisting of four (4) series of such
Preferred Stock issued in 1980, 198l, 1982 and 1985.  The holders of the Series
A-Preferred Stock are entitled to cumulative dividends at the rate of $.07 per
share per annum before any dividend may be declared or paid respecting the
shares of Common Stock of the Registrant.  During 1996 and 1995, the Registrant
paid a dividend of $.07 per share respecting the outstanding Series A-Preferred
Stock.

     The Registrant intends, to the extent that future earnings and its capital
surplus permit, to pay dividends respecting the shares of Series A-Preferred
Stock.  The Registrant believes it is unlikely that dividends will be paid in
the future respecting the shares of Common Stock of the Company, although such
payment will depend upon the future earnings and business prospects of the
Registrant.


                                  Page 8 of 36
<PAGE>
 
6.  SELECTED FINANCIAL DATA
    -----------------------

    The following tabulation sets forth certain financial information respecting
the Registrant:
<TABLE> 
<CAPTION> 

                                        1996            1995            1994            1993            1992
                                        ----            ----            ----            ----            ----
<S>                                 <C>              <C>             <C>             <C>            <C> 
Revenues                            $  182,303       $  234,686      $  118,337      $  101,356     $   72,217
                                    ==========       ==========      ==========      ==========     ==========

Net Income (Loss)                   $  (57,242)      $   70,513      $1,777,270      $  (26,137)    $  (75,903)
                                    ==========       ==========      ==========      ==========     ==========

Earnings  (Loss) Per Common Share:

Net Income (Loss)                   $     (.07)      $      .03      $     1.36      $     (.05)    $     (.09)
                                    ==========       ==========      ==========      ==========     ==========
                
Total Assets                        $3,110,572       $3,210,614      $3,134,191      $1,355,001     $1,390,002
                                    ==========       ==========      ==========      ==========     ==========
Dividends
 Declared:

Common Stock                        $        0       $        0      $        0      $        0     $        0
                                    ==========       ==========      ==========      ==========     ==========

Preferred Stock                     $   35,357/1/    $   35,357/2/   $   35,357/3/   $   35,358/4/  $   35,357/5/
                                    ==========       ==========      ==========      ==========     ==========

Total                               $   35,357       $   35,357      $   35,358      $   35,357     $   35,358
                                    ==========       ==========      ==========      ==========     ==========

Book Value Per 
  Common Share Outstanding          $     1.98       $     2.06      $     1.96      $      .64     $      .68
                                    ==========       ==========      ==========      ==========     ==========
</TABLE> 
-----------------------

/1/  Reflects dividend respecting Preferred Stock declared on February 10, 1997.

/2/  Reflects dividend respecting Preferred Stock declared on February 15, 1996.

/3/  Reflects dividend respecting Preferred Stock declared on February 4, 1995.

/4/  Reflects dividend respecting Preferred Stock declared on February 15, 1994.

/5/  Reflects dividend respecting Preferred Stock declared on January 17, 1993.


                                 Page 9 of 36

<PAGE>
 
7.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
    -----------------------------------------------------------
    AND RESULTS OF OPERATIONS.
    --------------------------

     Liquidity and Capital Resources.  During 1996, the Registrant's liquidity
     --------------------------------                                         
remained virtually unchanged. The Company has no notes payable nor long term
debt and does not anticipate the need for borrowing in the near future.  The
Registrant has sufficient cash and temporary cash investments to meet its short
term liquidity needs.  Should long term liquidity needs exceed cash and
temporary cash investments, then the Registrant would dispose of marketable
securities as it deems appropriate.  Current trends and known demands and
commitments do not create a need for liquidity in excess of the Company's
current abilities to generate liquidity.

     The Company anticipates that its operating activities will continue to use
net cash flows, that its investing activities will continue to generate positive
net cash flows and that its financing activities will continue to use cash
flows.
 
     Results of Operations.  The Registrant reported a net loss of $57,242 in
     ----------------------                                                  
1996 as compared to net income of $70,513 in 1995.  The decrease was primarily
due to provision for an estimated uncollectible note receivable, provision for
the Company's equity in the net loss of American Equity and a reduction in
interest income as a result of the Company's investment of $790,000 in American
Equity Investment Life Holding Company in December 1995.

General and administrative expenses decreased from $163,900 in 1995 to $138,000
in 1996 due primarily to a decrease of $20,000 in executive salaries.

     During 1994, the Registrant reflected net income of $1,777,270, as compared
to a loss of $26,137 during 1993.  The increase is due primarily to 1994
including a gain on sale of marketable securities net of taxes of approximately
$1,796,000.

     During 1994, the Registrant's general and administrative expenses amounted
to $l20,315 as compared to $l13,979 during 1993.  The increase resulted
primarily from increased costs for professional services.


     Impact of Inflation.  Inflation has an impact upon the Registrant's
     --------------------                                               
financial position.  Inflationary pressures generally increase the cost of
borrowed funds to the Registrant, rendering it less economic for the Registrant
to borrow money for re-lending purposes.



                                 Page 10 of 36
<PAGE>
 
8.  FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.
    --------------------------------------------

     The financial statements of the Registrant are set forth at page F-3
through F-13 hereof and are incorporated herein by reference.


9.  DISAGREEMENTS ON ACCOUNTING AND FINANCIAL DISCLOSURE.
    -----------------------------------------------------

     There has been no disagreement between the Registrant and its independent
certified public accountants respecting any matter
of disclosure, during the past twenty-four (24) months.



                                 Page 11 of 36

<PAGE>
 
                                   Part III

10.  DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT.
     ---------------------------------------------------

     (a)-(e) - Identification of Directors and Executive Officers and Other
               ------------------------------------------------------------
Matters.  The following tabulation sets forth certain information respecting the
--------                                                                        
persons who are serving as the directors and executive officers of the
Registrant as of March 15, 1996.
<TABLE>
<CAPTION>
                                                      Material Occupations and
Names and Positions                                       Positions During
with the Registrant      Age                          the last five (5) years
-----------------------  ---       -----------------------------------------------------------------
<S>                      <C>       <C>
 
David J. Noble           65        Chairman of the Board of Directors, Twenty Services, of Directors
Chairman of the Board              and Inc., Birmingham, Alabama (finance business), since 1980 and 1970
Director                           respectively; Chairman of Board of Directors, Treasurer and Director, Twenty Services
                                   Holding, Inc., Birmingham, Alabama (holding company) since 1979; Chairman
                                   of the Board of Directors and President of American Equity Investment Life
                                   Holding Company since 1995; Vice-Chairman of the Board of Directors,
                                   President and Director, The Statesman Group, Des Moines, Iowa 1982-1995,
                                   1979-1995 and 1975-1995, repectively.

Dr. James P. Armatas     66        Director, Twenty Services, Inc., Birmingham, Alabama (general finance business)
                                   since 1979; Director, Twenty Services Holding, Inc., Birmingham, Alabama
                                   (holding company), since 1979; President, James P. Armatas & Associates,
                                   Shawnee Mission, Kansas (consulting psychologist), since
</TABLE> 

                                 Page 12 of 36
<PAGE>
 
<TABLE> 
<CAPTION> 
                                                     Material Occupations and
Names and Positions                                  Positions During the last
with the Registrant         Age                            Five (5) years
------------------------    ---    -----------------------------------------------------------------
<S>                      <C>     <C> 

Dr. James P. Armatas               1972; President, Alvarado Manufacturing Company; Chino, California since 1985.  
(continued)                  

Dr. A. J. Strickland, III   54     Director and Vice-Chairman of the Board of Directors, Twenty Services, Inc.,
                                   Birmingham Alabama (general finance business), since 1977; Directors,
                                   Twenty Services Holding, Inc., Birmingham, Alabama (holding company),
                                   since 1970; Professor of Strategic Management School of Commerce,
                                   University of Alabama, Tuscaloosa, Alabama since 1980; Director, The
                                   Statesman Group, 1986-1995.

Thomas L. Hinson, Jr.       50     Executive Vice-President, Secretary and Treasurer, Twenty Services, Inc., since
                                   1992; Certified Public Accountant, Birmingham, Alabama since 1973;
                                   President, CTT Investment, Inc., Birmingham, Alabama (food services),
                                   since 1989; President, Air Carriers, Inc., Birmingham, Alabama (air cargo),
                                   since 1991; President, Vulcan Designs, Inc., Birmingham, Alabama (residential
                                   construction) since 1991.
</TABLE> 
                                 Page 13 of 36
<PAGE>
 
---------------
     There is no family relationship between any of the persons named above.
Directors of the Registrant are elected at each annual meeting of the
stockholders of the Registrant and serve until their successors have been
elected and qualified.  Executive officers of the Registrant are elected at a
meeting of the Board of Directors immediately following each annual meeting of
the stockholders of the Registrant.  Mr. Noble was elected director of the
Registrant in November 1979 pursuant to a resolution adopted by the Board of
Directors of the Registrant stating that if Twenty Services Holding, Inc.
acquired approximately 20% of the outstanding Common Stock of the Registrant,
the Registrant would make available to nominees of Twenty Services, Inc.
Holding, Inc. two (2) places on the Registrant's Board of Directors.

     (F) Involvement in Certain Legal Proceedings.
         -----------------------------------------

     During the past ten (l0) years, no officer or director of the Registrant
has been involved in any event of the type described in Item 3(f) of the
Regulations S-K of the Securities Exchange Act of 1934.

11.  EXECUTIVE COMPENSATION
     ----------------------

     Current Remuneration.  During 1994 no officer or director of the Registrant
     ---------------------                                                      
received aggregate direct remuneration from the Registrant in excess of $60,000.
The following tabulation sets forth certain information concerning all
remuneration paid by the Registrant to all officers and directors of the
Registrant during the year ended December 31, 1996.
<TABLE>
<CAPTION>
 
                                       Salaries, fees,
Name of Individuals                    directors' fees,
or number of persons     Capacities     commission and
in group                which served       bonuses
----------------------  -------------  ----------------
<S>                     <C>            <C>
 
All directors and       Directors and           $37,400
officers as a group     Officers
(five (5) persons)
</TABLE> 

     REMUNERATION IN THE FUTURE.  As of December 31, 1996, no officer or
     --------------------------                                         
directors of the Registrant has any contact or other arrangement with the
Registrant relating to any future remuneration, except that as long as such
officers and directors continue to serve in such capacity, they will receive
from the Registrant the customary fees and salaries at a rate to be agreed upon
by the Registrant and such persons.

     Directors' Remuneration.  All directors of the Registrant receive $200,
     ------------------------                                               
plus expenses, for each meeting of the Board of Directors and each meeting of
any committee of the Board of Directors which they attend (except the Executive
Committee of the Board of Directors).  Members of the Executive Committee
receive compensation of $300 per month.       

                                 Page 14 of 36

<PAGE>
 
     Options, Warrants, or Rights.  The Registrant does not maintain any plan
     -----------------------------                                           
pursuant to which persons are entitled to acquire any equity securities of the
Registrant.

     Termination of Employment.   Except as otherwise described in Item 11 of
     --------------------------                                              
this annual report on Form 10-K, there are no plans or arrangements relating to
payments to be made to any officer, or director of the Registrant, which
resulted or will result from any person's resignation, retirement, or
termination or employment with the Registrant.

12.  SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
     --------------------------------------------------------------

     (a)  Security Ownership of Certain Beneficial Owners.
          ------------------------------------------------

     As of the date of this annual report on Form 10-K, the only person who owns
of record and directly more than 5% of the Registrant's outstanding voting
securities is Twenty Services Holding, Inc., a Delaware corporation, whose
principal business address is 105 Vulcan Road, Birmingham, Alabama.  As of such
date, Twenty Services Holding, Inc. and an affiliate of Holding own 704,312
shares of Common Stock of the Registrant and approximately 39% of the combined
outstanding shares of Common Stock and Series A Preferred Stock of the
Registrant.  Exccept as otherwise requred by Alabama law and except for certain
rights accorded by the Registrant's Certificate of Incorporation in the event
that dividends respecting the Series A-Preferred tock are not paid the holders
of the Series A-Preferred Stock are entitled to vote respecting matters coming
before any  meeting of the stockholders of the Registrant.

     By virtue of his ownership of Common Stock of Twenty Services, Holding,
Inc., Mr. David J. Noble, the Chairman of the Board or Directors of the
Registrant, owns indirectly and beneficially approximately 51% of the
outstanding Common Stock of the Registrant.

     (b) Security Ownership of Management.  The following tabulation sets forth
         --------------------------------                                      
certain information regarding the shares of equity securities of the Registrant.
<TABLE>
<CAPTION>
                                      Approximate Amount    Percent
Title of              Name of            and Nature of         of
Class            Beneficial Owner      Beneficial Owner      Class
--------------  -------------------  ---------------------  --------
<S>             <C>                  <C>                    <C>
 
Common Stock    David J. Noble       648,877 Indirect(l)      50.57%
 
Common Stock    A.J. Strickland,III  48,204 Indirect(l)        3.76%
 
</TABLE>


                                 Page 15 of 36

<PAGE>
 
-----------------------------------
(l)  Reflects each person's interest in the shares of common stock
     of the Registrant owned by Twenty Services Holding, Inc. based upon such
     person's ownership of the outstanding shares of common stock of Twenty
     Services Holding, Inc. as of March 15, 1997, excluding 6,000 shares of
     common stock of Twenty Services Holding, Inc. held by the Registrant.
     Twenty Services Holding, Inc. owns 704,312 shares or approximately 55% of
     the outstanding shares of common stock.
------------------------------------


       As of March 15, 1997, all officers and directors of the Registrant as a
group beneficially owned, based upon their ownership of the outstanding common
stock of Twenty Services Holding, Inc. ("Holding"), and excluding adjustment for
the shares of common stock of Holding, held by the Registrant, 697,08l shares of
common stock of the Registrant, or approximately 54% of the outstanding common
stock of the Registrant as of such date.

     (c)  Changes in Control.  There are no arrangements known to the Registrant
          ------------------                                                    
which subsequently could result in a change of control of the Registrant.

13.  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.
     -----------------------------------------------
 
     The Chairman of the Board and the Executive Vice-President, indivdually or
together, have equity interests in four other entities which had transactions
with the Company during the year.  As of December 3l, 1996, the outstanding
loans totaled $403,648. One loan for $l40,500 to the company owned by the
Executive Vice-President has been fully reserved.  The Company intends to pursue
and expects collection of this loan.  One loan for $50,000 was paid on March 31,
1997.  One loan for $l89,000 is due in 1997 and is collateralized by a second
mortgage on an aircraft which is for sale.  One remaining loan for $24,l48 is
due in 1997 and is unsecured.

     There were no transactions during 1996 nor are there any currently proposed
transactions between any pension, retirement, savings or similar plan of the
Registrant and its affiliates, on the other hand, and the Registrant and its
affiliates, any officer, director or principal stockholder of the Registrant, or
any person who has been nominated as a director of the Registrant, on the other
hand.


                                 Page 16 of 36
                                        
<PAGE>
 
                                    PART IV

14.  EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K.
     ----------------------------------------------------------------
     
     (a) (l) - (a) (2) - Financial Statements and Financial Statement Schedules.
                         -------------------------------------------------------
The financial statements and the financial statement schedules required to be
filed as part of this report are listed in the accompanying Index to Financial
Statements and Financial Statement Schedules, and are set forth at the pages
shown in such Index.

     (a) (d) - Exhibits.  The Certificate of Incorporation of the Registrant, as
               --------                                                         
amended, the By Law of the Registrant, as amended, and Resolutions of the Board
of Directors of the Registrant creating the 7% Cumulative Series A-1980
Preference Stock, the 7% Cumulative Series A-1981 Preference Stock, the 7%
Cumulative Series A-1985 Preference Stock, which were filed as exhibits to the
Registrant's Annual Report on Form 10-K for the years ended December 3l, 1980,
December 3l, 1981, December 3l, 1982 and 1985, and the Registrant's report on
Form 8-K dated as of April 10 1984, are incorporated by reference.

     (b)  Reports on Form 8-K.  No report on Form 8-K was filed during the year.
          --------------------                                                  



                                 Page 17 of 36



 
<PAGE>
 
                      TWENTY SERVICES, INC. AND SUBSIDIARY
                      ------------------------------------

         Index to Financial Statements and Financial Statement Schedule

                       December 31, 1996, 1995, and 1994
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
 
<S>                                                                  <C>
 
Independent Auditors' Report................................         F-1
 
Consolidated Balance Sheets.................................         F-2
 
Consolidated Statements of Operations.......................         F-3
 
Consolidated Statements of Cash Flows.......................   F-4 & F-5
 
Consolidated Statements of Changes in Stockholders' Equity..         F-6
 
Notes to Consolidated Financial Statements..................  F-7 - F-16
 
Consolidated Financial Statement Schedule:
 
 Schedule I - Marketable Securities - Other Investments.....        F-17
 
</TABLE>
<PAGE>
 
  [LETTERHEAD OF BORLAND, BENEFIELD, CRAWFORD AND WEBSTER, P.C. APPEARS HERE]

                          Independent Auditors' Report
                          ----------------------------

The Shareholders and
 the Board of Directors
Twenty Services, Inc.

We have audited the consolidated financial statements and the financial
statement schedule of Twenty Services, Inc. (the Company) and subsidiary at
December 31, 1996 and 1995, and for the years ended December 31, 1996, 1995, and
1994, listed in the index on page F-1 of this Form 10-K. These financial
statements and financial statement schedule are the responsibility of the
Company's management. Our responsibility is to express an opinion on these
financial statements and financial statement schedule based on our audits.

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

In our opinion, the financial statements referred to above present fairly, in
all material respects, the consolidated financial position of Twenty Services,
Inc. and subsidiary at December 31, 1996, 1995, and 1994, and the consolidated
results of their operations and their cash flows for the years ended December
31, 1996, 1995, and 1994, in conformity with generally accepted accounting
principles. In addition, in our opinion, the financial statement schedule
referred to above, when considered in relation to the basic financial statements
taken as a whole, presents fairly, in all material respects, the information
required to be included therein.

As discussed in Note 1 to the consolidated financial statements, effective
January 1, 1994, the Company changed its method of accounting for investments in
debt and equity securities.

BORLAND, BENEFIELD, CRAWFORD & WEBSTER, P.C.

/s/ Borland, Benefield, Crawford & Webster, P.C.



April 14, 1997
<PAGE>
 
                      TWENTY SERVICES, INC. AND SUBSIDIARY
                      ------------------------------------
 
                          Consolidated Balance Sheets
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
 
 
                                                             December 31,
                                                           1996        1995
                                                        ----------  ----------
<S>                                                     <C>         <C>
 
                        Assets
 
Cash and Temporary Investments........................  $   95,438  $   41,379
Marketable Securities.................................   1,597,040   1,532,614
Finance Receivables, Net..............................     248,750     277,059
Notes Receivable - Related Parties, Net...............     263,148      95,000
Receivable - American Equity Investment Life Holding
 Company..............................................           0     410,000
Other Receivables.....................................      71,581      19,277
Investment - American Equity Investment Life Holding
 Company..............................................     713,700     790,000
Property Held for Sale................................      13,205      13,205
Property and Equipment, Net...........................      38,310      21,080
Prepaid Income Taxes..................................       4,500      11,000
Deferred Income Tax Benefit...........................      64,900           0
                                                        ----------  ----------
Total Assets..........................................  $3,110,572  $3,210,614
                                                        ==========  ==========

         Liabilities and Stockholders' Equity
 
Liabilities:
   Accounts Payable and Accrued Expenses..............  $   20,211  $   11,637
   Deferred Income Taxes..............................      25,000      31,000
                                                        ----------  ----------
      Total Liabilities...............................      45,211      42,637
                                                        ----------  ----------
 
Stockholders' Equity:
   Preferred Stock, Cumulative Nonvoting, Par Value
     $.10; 2,500,000 Shares Authorized; 505,110 Shares
     Issued and Outstanding (Involuntary Liquidation
     Value $530,366)..................................      50,511      50,511
   Common Stock, Par Value $.10; 2,500,000 Shares
     Authorized, 1,283,068 Shares Issued and 
     Outstanding......................................     128,307     128,307
   Additional Paid-In Capital.........................   1,716,074   1,716,074
   Retained Earnings..................................   1,169,946   1,262,545
   Net Unrealized Gain on Available-for-Sale 
    Securities, Net of $25,000 and $31,000 Deferred 
    Income Taxes in 1996 and 1995, Respectively.......      60,523      70,540
   Less Investment in Twenty Services Holding, Inc....     (60,000)    (60,000)
                                                        ----------  ----------
      Net Stockholders' Equity........................   3,065,361   3,167,977
                                                        ----------  ----------
 
Total Liabilities and Stockholders' Equity............  $3,110,572  $3,210,614
                                                        ==========  ==========
</TABLE>
--------------------------------------------------------------------------------
The accompanying notes are an integral part of these financial statements.   F-2

<PAGE>
 
                      TWENTY SERVICES, INC. AND SUBSIDIARY
                      ------------------------------------

                     Consolidated Statements of Operations
<TABLE>
<CAPTION>
 
                                                            For the Years Ended
                                                                December 31,
                                                        1996         1995        1994
                                                      -----------  ---------  -----------
<S>                                                   <C>          <C>        <C>
 
Revenues:
 Interest..................................            $  82,903   $129,953   $   59,532
 Rentals...................................                9,289      2,901       28,251
 Dividends.................................               90,111    101,781       30,221
 Other.....................................                    0         51          333
                                                       ---------   --------   ----------
 
   Total Revenues..........................              182,303    234,686      118,337
                                                       ---------   --------   ----------
 
Expenses:
 General and Administrative................              138,019    163,900      120,315
 Depreciation..............................                7,268      2,818       19,677
 Provision for Doubtful Notes Receivable...              140,500          0            0
                                                       ---------   --------   ----------
 
   Total Expenses..........................              285,787    166,718      139,992
                                                       ---------   --------   ----------
 
Gain (Loss) from Operations................             (103,484)    67,968      (21,655)
                                                       ---------   --------   ----------
 
Other Income (Loss):
 Gain on Sale of Marketable Securities.....               21,142      8,575    2,411,908
 Gain on Sale of Property..................                    0      2,970        1,967
 Provision for Recovery of Prior Year
  Income Taxes.............................               43,000          0            0
 Provision for Equity in Loss of American
  Equity...................................              (76,300)         0            0
                                                       ---------   --------   ----------
 
   Total Other Income (Loss)...............              (12,158)    11,545    2,413,875
                                                       ---------   --------   ----------
 
Income (Loss) Before Income Taxes..........             (115,642)    79,513    2,392,220
 
Provision for Income Taxes.................               58,400     (9,000)    (615,000)
                                                       ---------   --------   ----------
 
Net Income (Loss)..........................            $ (57,242)  $ 70,513   $1,777,220
                                                       =========   ========   ==========
 
Income (Loss) Per Common Share.............                $(.07)      $.03        $1.36
                                                       =========   ========   ==========
</TABLE>
--------------------------------------------------------------------------------
The accompanying notes are an integral part of these financial statements.   F-3
<PAGE>
 
                      TWENTY SERVICES, INC. AND SUBSIDIARY
                      ------------------------------------

                     Consolidated Statements of Cash Flows
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
 
 
                                                               For the Years Ended
                                                                  December 31,
                                                        1996         1995           1994
                                                     ----------  -------------  ------------
<S>                                                  <C>         <C>            <C>
 
Cash Flows From Operating Activities:
  Interest and Dividends Received..................  $ 156,069    $   253,158   $    58,940
  Rental Income....................................      9,289          2,901        28,251
  Other Income.....................................          0             51           333
  Cash Paid to Suppliers and Employees.............   (136,713)      (163,241)     (125,268)
  Income Taxes Paid................................          0       (110,000)     (525,000)
                                                     ---------    -----------   -----------
 
Net Cash Provided (Used) by Operating
 Activities........................................     28,645        (17,131)     (562,744)
                                                     ---------    -----------   -----------
 
Cash Flows From Investing Activities:
  Principal Collected on Loans.....................    159,408        215,782        96,467
  Loans Made to Customers..........................    (22,566)      (177,100)     (118,597)
  Loans Made to Related Parties....................   (398,648)       (95,000)            0
  Principal Collected on Held-to-Maturity
   Securities......................................          0      1,075,675         1,591
  Purchases of Held-to-Maturity Securities.........          0              0    (1,310,476)
  Proceeds from Sale of Available-for-Sale
   Securities......................................    191,578        463,115     3,240,850
  Purchases of Available-for-Sale Securities.......   (254,503)      (461,861)   (1,077,443)
  Initial Investment in American Equity
   Investment Life Holding Company.................          0     (1,200,000)            0
  Collection of Account Receivable from
   American Equity Investment Life Holding
   Company.........................................    410,000              0             0
  Proceeds From Sale of Investment and
   Other Property and Equipment....................          0          2,970        40,824
  Purchases of Property and Equipment..............    (24,498)       (20,985)       (2,461)
                                                     ---------    -----------   -----------
 
Net Cash Provided (Used) by Investing
 Activities........................................     60,771       (197,404)      870,755
                                                     ---------    -----------   -----------
 
Cash Flows From Financing Activities -
  Preferred Stock Dividends Paid...................    (35,357)       (35,357)      (35,357)
                                                     ---------    -----------   -----------
 
Net Increase (Decrease) in Cash....................     54,059       (249,892)      272,654
 
Cash and Temporary Investments -
 Beginning of Year.................................     41,379        291,271        18,617
                                                     ---------    -----------   -----------
 
Cash and Temporary Investments -
 End of Year.......................................  $  95,438    $    41,379   $   291,271
                                                     =========    ===========   ===========
</TABLE> 
--------------------------------------------------------------------------------
The accompanying notes are an integral part of these financial statements.   F-4
<PAGE>
 
                      TWENTY SERVICES, INC. AND SUBSIDIARY
                      ------------------------------------
 
Consolidated Statements of Cash Flows (Continued)
--------------------------------------------------------------------------------
<TABLE> 
<CAPTION> 
                                                            For the Years Ended
                                                                 December 31,
                                                          1996           1995          1994
                                                     ---------    -----------   -----------
<S>                                                  <C>           <C>          <C> 
Reconciliation of Net Income to Net Cash
 Provided (Used) by Operating Activities:
  Net Income (Loss)................................  $ (57,242)   $    70,513   $ 1,777,220
  Adjustments to Reconcile Net Income to
   Net Cash Provided (Used) by Operating
   Activities:
    Depreciation and Amortization..................      7,268          2,818        19,677
    Provision for Doubtful Notes Receivable........    140,500              0             0
    Provision for Equity in Loss of American
     Equity........................................     76,300              0             0
    Provision for Recovery of Prior Year
     Income Taxes..................................    (43,000)             0             0
    Provision for Deferred Income Tax Benefits.....    (64,900)             0             0
    Gain on Sale of Marketable Securities..........    (21,142)        (8,575)   (2,411,908)
    Gain on Sale of Property.......................          0         (2,970)       (1,967)
    Amortization of Bond Premium and
     Discount, Net.................................        826            866        (5,273)
    (Increase) Decrease in Accrued
     Investment Interest...........................    (18,039)        20,558       (25,540)
    Increase (Decrease) in Accounts
     Payable and Accrued Liabilities...............      8,574            659        (4,953)
    Increase (Decrease) in Income Taxes
     Payable.......................................       (500)      (101,000)       90,000
                                                     ---------    -----------   -----------
 
Net Cash Provided (Used) by Operating
 Activities........................................  $  28,645    $   (17,131)  $  (562,744)
                                                     =========    ===========   ===========
</TABLE>
--------------------------------------------------------------------------------
The accompanying notes are an integral part of these financial statements.   F-5
<PAGE>
 
                      TWENTY SERVICES, INC. AND SUBSIDIARY
                      ------------------------------------

           Consolidated Statements of Changes in Stockholders' Equity

             For the Years Ended December 31, 1996, 1995, and 1994
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
                                                                                                        Investment
                                                                                       Unrealized        in Twenty
                                                         Additional    Retained      Gain (Loss) on      Services
                                 Preferred     Common      Paid-In     Earnings    Available-for-Sale    Holding,
                                 Stock $.10  Stock $.10    Capital     (Deficit)       Securities          Inc.         Total
                                 ----------  ----------  -----------  -----------  -------------------  -----------  ------------
<S>                              <C>         <C>         <C>          <C>          <C>                  <C>          <C>
 
Balance - December 31,
 1993..........................     $50,511    $128,307  $1,751,431   $ (549,831)         $         0     $(60,000)  $ 1,320,418
 
Adjustment to Beginning
 Balance for Change in
 Accounting Principle, Net
 of Deferred Income
 Taxes of $615,000.............                                                             1,326,325                  1,326,325
 
Net Income.....................                                        1,777,220                                       1,777,220
 
Dividends on Preferred
 Stock, ($.07 Per Share).......                             (35,357)                                                     (35,357)
 
Change in Unrealized Gain
 (Loss) on Available-for-Sale
 Securities, Net of Deferred
 Income Taxes of $634,000......                                                            (1,355,393)                (1,355,393)
                                                                                   ------------------                -----------
 
Balance - December 31,
 1994..........................      50,511     128,307   1,716,074    1,227,389              (29,068)     (60,000)    3,033,213
 
Net Income.....................                                           70,513                                          70,513
 
 Dividend on Preferred
  Stock ($.07 Per Share).......                                          (35,357)                                        (35,357)
 
Change in Unrealized Gain
 (Loss) on Available-for-Sale
 Securities, Net of Deferred
 Income Tax of $50,000.........                                                                99,608                     99,608
                                                                                   ------------------                -----------
 
Balance, December 31,
 1995..........................      50,511     128,307   1,716,074    1,262,545               70,540      (60,000)    3,167,977
 
Net Loss.......................                                          (57,242)                                        (57,242)
 
Dividend on Preferred
 Stock ($.07 Per Share)........                                          (35,357)                                        (35,357)
 
Change in Unrealized
 Loss on Available-for-
 Sale Securities, Net of
 Deferred Income Tax
 of $25,000....................                                                               (10,017)                   (10,017)
                                                                                   ------------------                -----------
 
Balance - December 31,
 1996..........................     $50,511    $128,307  $1,716,074   $1,169,946          $    60,523     $ 60,000   $ 3,065,361
                                    =======    ========  ==========   ==========   ==================   ==========   ===========
------------------------------------------------------------------------------------------------------------------
The accompanying notes are an integral part of these financial statements.                                     F-6
</TABLE> 
<PAGE>
 
                      TWENTY SERVICES, INC. AND SUBSIDIARY
                      ------------------------------------

                   Notes to Consolidated Financial Statements

             For the Years Ended December 31, 1996, 1995, and 1994
--------------------------------------------------------------------------------

Note 1 -  Accounting Policies

       Principles of Consolidation - The accompanying consolidated financial
       ---------------------------                                          
       statements include the accounts of Twenty Services, Inc. (the Company)
       and its wholly-owned subsidiary TSI Development Corporation. All
       significant intercompany accounts and transactions have been eliminated
       in consolidation.

       Income Recognition - Interest income from finance receivables is
       ------------------                                              
       recognized using the interest (actuarial) method. Accrual of interest
       income on finance receivables is suspended when a loan is contractually
       delinquent for 90 days or more and resumed when the loan becomes
       contractually current.

       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.

       Credit Losses - Provisions for credit losses are charged to income in
       -------------                                                        
       amounts sufficient to maintain the allowance at a level considered
       adequate to cover the losses of principal and interest in the existing
       portfolio. The Company's charge-off policy is based on a loan-by-loan
       review for all receivables which are charged off when they are deemed
       uncollectible.

       Cash Equivalents - Holdings of highly liquid investments with original
       ----------------                                                      
       maturities of three months or less and investments in money market funds
       are considered to be cash equivalents.

       Marketable Securities - On January 1, 1994, the Company adopted the
       ---------------------                                              
       provisions of Statement of Financial Accounting Standards No. 115,
       "Accounting for Certain Investments in Debt and Equity Securities".  In
       accordance with the Statement, prior period financial statements have not
       been restated to reflect the change in accounting principle. The
       cumulative effect as of January 1, 1994, of adopting Statement 115 was an
       increase in stockholders' equity of $1,326,325 (net of $615,000 in
       deferred income taxes) to reflect the net unrealized gain on securities
       classified as available-for-sale that were previously carried at the
       lower of amortized cost or market.

--------------------------------------------------------------------------------
                                                                             F-7
<PAGE>
 
TWENTY SERVICES, INC. AND SUBSIDIARY
------------------------------------

Notes to Consolidated Financial Statements (Continued)

For the Years Ended December 31, 1996, 1995, and 1994
--------------------------------------------------------------------------------

Note 1 -  Accounting Policies (Continued)

       Management determines the appropriate classification of its investment in
       debt and equity securities at the time of purchase and reevaluates such
       determination at each balance sheet date. The Company's securities are
       classified in two categories and accounted for as follows:
                                                                                
       .  Securities Held-to-Maturity. Bonds, notes, certain preferred stocks
          and other debt securities for which the Company has the positive
          intent and ability to hold to maturity are reported at cost, adjusted
          for amortization of premiums and accretion of discounts which are
          recognized in interest income using methods which approximate level
          yields over the period to maturity.

       .  Securities Available-for-Sale. Bonds, notes and certain preferred
          stocks not classified as held-to-maturity and common stocks are
          reported at fair value.

       Declines in the fair value of individual held-to-maturity and available-
       for-sale securities below their cost that are other than temporary,
       result in write-downs of the individual securities to their fair value.
       The write-downs are included in earnings as realized losses.

       Unrealized holding gains and losses, net of deferred income taxes, on
       securities available-for-sale are reported as a net amount in a separate
       component of stockholders' equity until realized.
                                                                                
       Realized gains and losses on the sale of securities available-for-sale
       are determined using the specific-identification method.

       Investment - American Equity Investment Life Holding Company - This
       ------------------------------------------------------------       
       investment is accounted for on the "Equity Basis."

       Property and Equipment - Property and equipment are stated at cost.
       ----------------------                                              
       Expenditures for repairs and maintenance are charged to expense as
       incurred and additions and improvements that significantly extend the
       lives of assets are capitalized. Upon sale or other retirement of
       depreciable property, the cost and accumulated depreciation are removed
       from the related accounts and any gain or loss is reflected in
       operations.

       Depreciation is provided primarily by the straight-line method over the
       estimated useful lives of the depreciable assets, which range from 3 to
       10 years.

--------------------------------------------------------------------------------
                                                                             F-8
<PAGE>
 
TWENTY SERVICES, INC. AND SUBSIDIARY
------------------------------------

Notes to Consolidated Financial Statements (Continued)

For the Years Ended December 31, 1996, 1995, and 1994
--------------------------------------------------------------------------------

Note 1 - Accounting Policies (Continued)

         Income Taxes - Deferred income taxes are recognized for the effects 
         ------------
         of temporary differences between financial statement and tax reporting.

         Earnings Per Common Share - Earnings per common share are determined by
         -------------------------                                              
         dividing net income (loss), after giving effect to preferred stock
         dividends, by the weighted average number of common shares outstanding
         during the year. The weighted average number of common shares
         outstanding for each of the years ended December 31, 1996, 1995, and
         1994 was 1,283,068.

Note 2 - Nature of Operations, Risks, and Uncertainties

         The Company is primarily engaged in the general finance business.  The
         Company grants commercial and personal real estate loans and general
         business and personal loans to customers located primarily in Alabama.
         The majority of the loan portfolio is secured by various types of
         collateral including mortgages and security interests in equipment and
         other property with a significant concentration in loans collateralized
         by residential real estate.

Note 3 - Fair Values of Financial Instruments

         Statement of Financial Accounting Standards (SFAS) No. 107,
         "Disclosures about Fair Value of Financial Instruments," requires
         disclosure of fair value information about financial instruments,
         whether or not recognized in the consolidated balance sheet, for which
         it is practicable to estimate that value. The following sets forth a
         comparison of fair values and carrying values of the Company's
         financial instruments subject to the provisions of SFAS No. 107.

<TABLE>
<CAPTION>
                                       1996                    1995
                              ----------------------  ----------------------
                               Carrying      Fair      Carrying      Fair
                                Value       Value       Value       Value
                              ----------  ----------  ----------  ----------
<S>                           <C>         <C>         <C>         <C>
 
Cash and Temporary
 Investments................  $   95,438  $   95,438  $   41,379  $   41,379
Marketable Securities.......   1,597,040   1,602,467   1,532,614   1,546,064
Finance Receivables, Net....     248,750     248,750     277,059     277,059
Notes Receivable - Related
 Parties....................     263,148     263,148      95,000      95,000
Other Receivables...........      28,581      28,581     429,277     429,277
 
</TABLE>

--------------------------------------------------------------------------------
                                                                             F-9

<PAGE>
 
TWENTY SERVICES, INC. AND SUBSIDIARY
------------------------------------

Notes to Consolidated Financial Statements (Continued)

For the Years Ended December 31, 1996, 1995, and 1994
--------------------------------------------------------------------------------

Note 3 - Fair Values of Financial Instruments (Continued)

         The following methods and assumptions were used by the Company in
         estimating the fair values of financial instruments:

         .  Short-term financial instruments are carried at their carrying
            amounts reported in the balance sheet which are reasonable estimates
            of fair values due to the relatively short period to maturity of the
            instruments. This approach applies to cash and temporary
            investments, finance receivables, notes receivable from related
            parties and other receivables.

         .  Marketable securities are valued at quoted market values.

         .  The investment in American Equity Investment Life Holding Company is
            not valued since it is a relatively new company and the shares are
            not traded.

Note 4 - Marketable Securities

         The amortized cost and aggregate fair values of investments in
         securities are as follows:

<TABLE>
<CAPTION>
 
                                                   December 31, 1996
                                     ----------------------------------------------
                                                   Gross       Gross
                                     Amortized   Unrealized  Unrealized     Fair
                                        Cost       Gains       Losses      Value
                                     ----------  ----------  ----------  ----------
<S>                                  <C>         <C>         <C>         <C>
 
Available-for-Sale Securities:
   Equity Securities...............  $1,192,351     $86,277        $753  $1,277,875
                                     ==========  ==========  ==========  ==========
Held-to-Maturity Securities:
   Obligations of U.S. Government
    Corporations and Agencies......  $  319,165     $ 6,027        $  0  $  325,192
                                     ==========  ==========  ==========  ==========
</TABLE>

--------------------------------------------------------------------------------
                                                                            F-10
<PAGE>
 
TWENTY SERVICES, INC. AND SUBSIDIARY
------------------------------------

Notes to Consolidated Financial Statements (Continued)

For the Years Ended December 31, 1996, 1995, and 1994
--------------------------------------------------------------------------------

Note 4 -  Marketable Securities (Continued)

<TABLE>
<CAPTION>
                                                   December 31, 1995
                                     ----------------------------------------------
                                                   Gross       Gross
                                     Amortized   Unrealized  Unrealized     Fair
                                        Cost       Gains       Losses      Value
                                     ----------  ----------  ----------  ----------
<S>                                  <C>         <C>         <C>         <C>
 
Available-for-Sale Securities -
   Equity Securities...............  $1,108,465    $101,360          $0  $1,209,825
                                     ==========  ==========  ==========  ==========
 
Held-to-Maturity Securities -
   Obligations of U.S. Government
    Corporations and Agencies......  $  322,789    $ 13,451          $0  $  336,240
                                     ==========  ==========  ==========  ==========
</TABLE>

       The amortized cost and aggregate fair value of debt securities at
       December 31, 1996, by contractual maturity, are as follows. Expected
       maturities will differ from contractual maturities because borrowers may
       have the right to call or prepay obligations with or without call
       prepayment penalties.

                                                           Amortized      Fair
                                                              Cost        Value
                                                           ---------      -----

       Held-to-Maturity Securities:
          Due After Zero Years Through Five Years           $319,165    $325,192
                                                            ========    ========

       Proceeds from the sale of available-for-sale securities were $191,578 for
       the year ended December 31, 1996. Gross gains of $21,142 were realized on
       these sales. There were no sales of held-to-maturity securities during
       the year ended December 31, 1996.

       Proceeds from the sale of available-for-sale securities were $463,115 for
       the year ended December 31, 1995.  Gross gains of $32,095 were realized
       on these sales. Proceeds from the sale of held-to-maturity securities
       were $1,075,673 for the year ended December 31, 1995. Gross losses of
       $23,520 were realized. Held-to-maturity securities were sold prior to
       maturity to provide funds for investment in other securities which
       offered a greater long-term return.



--------------------------------------------------------------------------------
                                                                           F-11
<PAGE>
 
TWENTY SERVICES, INC. AND SUBSIDIARY
------------------------------------

Notes to Consolidated Financial Statements (Continued)

For the Years Ended December 31, 1996, 1995, and 1994
--------------------------------------------------------------------------------

Note 5 -  Finance Receivables and Allowance for Credit Losses

          Finance receivables consisted of the following at December 31:
<TABLE>
<CAPTION>
 
                                                                                                                 1996       1995
                                                                                                               ---------  ---------
<S>                                                                                                            <C>        <C>
            Real Estate......................................................................................  $124,401   $193,429
            Business and Other...............................................................................   153,150    118,396
                                                                                                               --------   --------
            Total Finance Receivables........................................................................   277,551    311,825
            Less Unearned Interest...........................................................................    (1,508)    (7,473)
            Less Allowance for Credit Losses.................................................................   (27,293)   (27,293)
                                                                                                               --------   --------
            Finance Receivables, Net.........................................................................  $248,750   $277,059
                                                                                                               ========   ========
 
            At December 31, 1996, the accrual of
             interest income was suspended on $32,002 of
             real estate loans.
 
            At December 31, 1996, contractual maturities
             of finance receivables were as follows:
 
                                                                   1997        1998    1999    2000    2001     After      Total
                                                                 --------    -------  ------  ------  -------  --------   --------
<S>                                                              <C>         <C>      <C>     <C>     <C>      <C>        <C>  
Real Estate..............................................        $  5,200    $ 6,300  $7,700  $9,200  $10,200  $ 85,801   $124,401
Business and Other.......................................         147,653      5,497       0       0        0         0    153,150
                                                                 --------    -------  ------  ------  -------  --------   --------
 
Totals...................................................        $152,853    $11,797  $7,700  $9,200  $10,200  $ 85,801   $277,551
                                                                 ========    =======  ======  ======  =======  ========   ========
</TABLE>
       Changes in the allowance for credit losses on finance receivables for the
       years ended December 31, 1996, 1995, and 1994 are as follows:
<TABLE>
<CAPTION>
 
<S>                                                                                                                       <C>
            Balance - December 31, 1993.................................................................................   $26,768
            Recoveries of Write-offs in Prior Years.....................................................................       369
                                                                                                                           -------

            Balance - December 31, 1994.................................................................................    27,137
            Recoveries of Write-offs in Prior Years.....................................................................       156
                                                                                                                           -------

            Balance - December 31, 1996 and 1995........................................................................   $27,293
                                                                                                                           =======
 
</TABLE>

--------------------------------------------------------------------------------
                                                                            F-12
<PAGE>
 
TWENTY SERVICES, INC. AND SUBSIDIARY
------------------------------------

Notes to Consolidated Financial Statements (Continued)

For the Years Ended December 31, 1996, 1995, and 1994
--------------------------------------------------------------------------------


Note 6 -  Notes Receivable - Related Parties

       The Chairman of the Board of the Company and the Executive Vice
       President, individually or together, have equity interests in four other
       entities which had transactions with the Company during the years.  The
       activity in this account was as follows for the year ended December 31:
<TABLE>
<CAPTION>
 
                                                       1996      1995
                                                    ----------  -------
<S>                                                 <C>         <C>
 
       Balance, January 1.........................  $  95,000   $     0
       Advances...................................    398,648    95,000
       Reductions.................................    (90,000)        0
       Provision for Possible Uncollectible Note..   (140,500)        0
                                                    ---------   -------
       Balance December 31........................  $ 263,148   $95,000
                                                    =========   =======
</TABLE>

       One note for $140,500 which is due from a company owned by the Executive
       Vice President has been fully reserved at December 31, 1996.  The Company
       intends to pursue collection of this note; however, such collection,
       while anticipated,  cannot be assured at this time.  One note for $50,000
       was paid on March 31, 1997.  One note for $189,000 is due in 1997 and is
       collateralized by a second mortgage on an aircraft which is for sale.
       One remaining note for $24,148 is due in 1997 and is unsecured.

Note 7 -  Investment - American Equity Investment Life Holding Company

       On December 27, 1995, the Company invested $790,000 in American Equity
       Investment Life Holding Company (American).  This was a new company
       formed by the Chairman of the Board of Twenty Services, Inc.  He is
       Chairman and Chief  Executive Officer of American.  American acquired
       some blocks of life insurance as of December 31, 1995.  This investment
       represented a 19.75% ownership of the common stock.  The Company's pro-
       rata share of American's net worth at December 31, 1995 approximated its
       investment.

       During 1996, American had a 100 for 1 stock split.  Subsequently, it
       issued 780,000 shares of common stock through a private placement for net
       proceeds of $7,493,050.  These transactions caused the Company's
       percentage ownership to decrease from 19.75% to 6.7%.


--------------------------------------------------------------------------------
                                                                            F-13
<PAGE>
 
TWENTY SERVICES, INC. AND SUBSIDIARY
------------------------------------

Notes to Consolidated Financial Statements (Continued)

For the Years Ended December 31, 1996, 1995, and 1994
--------------------------------------------------------------------------------


Note 7 -  Investment - American Equity Investment Life Holding Company
          (Continued)

       The following is a summary of the audited balance sheets and statements
       of operations of American:
<TABLE>
<CAPTION>
                                                               1996          1995
                                                           ------------  ------------
<S>                                                        <C>           <C>
       Available for sale fixed maturity securities, at
        market...........................................  $22,195,922   $ 6,833,363
       Cash and cash equivalents.........................    5,475,395     2,846,603
       Property, furniture and equipment, net............    2,160,717             0
       Value of insurance in force acquired..............    1,725,000     1,500,000
       Other assets......................................    3,657,563     2,047,288
                                                           -----------   -----------
 
       Total Assets......................................  $35,214,597   $13,227,254
                                                           ===========   ===========
 
       Liabilities:
        Policy benefit reserves..........................  $11,846,566   $ 4,251,306
        Notes payable....................................   10,000,000     4,000,000
        Other liabilities................................    3,230,929     1,991,367
                                                           -----------   -----------
       Total Liabilities.................................   25,077,495    10,242,673
 
       Stockholders' Equity..............................   10,137,102     2,984,581
                                                           -----------   -----------
 
 
       Total Liabilities and Stockholders' Equity........  $35,214,597   $13,227,254
                                                           ===========   ===========
 
       Revenues..........................................  $15,419,869   $     5,830
 
       Benefits and Expenses.............................   16,558,842        21,249
                                                           -----------   -----------
 
       Net Loss..........................................  $(1,138,973)  $   (15,419)
                                                           ===========   ===========
 
</TABLE>

       As required by the equity method of accounting, the Company's investment
       of $790,000 has been reduced by $76,300 which is 6.7% of American's loss.
       The management of both companies believe that this decline is temporary
       and will be recovered in the very near future.  This assumption is based
       upon their expectation that American will reflect a net income in 1997
       and, also, they expect to make another substantial private placement in
       1997 at a rate per share greater than current book value.


--------------------------------------------------------------------------------
                                                                            F-14
<PAGE>
 
TWENTY SERVICES, INC. AND SUBSIDIARY
------------------------------------

Notes to Consolidated Financial Statements (Continued)

For the Years Ended December 31, 1996, 1995, and 1994
--------------------------------------------------------------------------------

Note 8 -  Property and Equipment

          Property and equipment consisted of the following at December 31:
<TABLE>
<CAPTION>
 
                                                                                                           1996       1995
                                                                                                         ---------  ---------
<S>                                                                                                      <C>        <C>
 
       Equipment, Furniture and Automobiles.........................................................     $ 78,195   $ 53,697
       Less Accumulated Depreciation................................................................      (39,885)   (32,617)
                                                                                                         --------   --------
 
       Net Property, Plant and Equipment............................................................     $ 38,310   $ 21,080
                                                                                                         ========   ========
 
Note  9 - Income Taxes
 
        The provision for income taxes was as follows for the years ended December 31:
 
                                                                                                1996       1995       1994
                                                                                              --------   --------   --------
        <S>                                                                                   <C>        <C>        <C> 
        Current:
        Federal.........................................................................      $  3,000   $  7,000   $510,000
        State...........................................................................         3,500      2,000    105,000
        Deferred Benefit................................................................       (64,900)         0          0
                                                                                              --------   --------   --------
 
        Total Provision for Income Taxes................................................      $(58,400)  $  9,000   $615,000
                                                                                              ========   ========   ========
</TABLE>

        The principal differences between the provision for income taxes and the
        amount of income taxes computed at the federal statutory rate of 34% are
        state income taxes, dividends received deduction, and the use of
        available net operating tax loss carryforwards.

        The deferred tax benefit of $64,900 included in the balance sheet is
        related to the provisions for doubtful notes receivable and the
        provision for equity in the loss of American Equity.

        The net deferred tax liability of $25,000 included in the accompanying
        balance sheet at December 31, 1996, is related to the unrealized gain on
        marketable securities available-for-sale.


--------------------------------------------------------------------------------
                                                                            F-15
<PAGE>
 
TWENTY SERVICES, INC. AND SUBSIDIARY
------------------------------------

Notes to Consolidated Financial Statements (Continued)

For the Years Ended December 31, 1996, 1995, and 1994
--------------------------------------------------------------------------------

Note 10 -  Stockholders' Equity

        The preferred stock has a cumulative dividend of $.07 per share and is
        redeemable at the Company's option of $1.05 per share.  In the event of
        liquidation, the preferred stockholders receive $1.05 per share before
        any distributions are made to common stockholders.  The 1993 dividend
        (approximately $35,400) was declared in February 1994 and paid in March
        1994.  The 1994 dividend (approximately $35,400) was declared in
        February 1995 and paid in March 1995.  The 1995 dividend (approximately
        $35,400) was declared in February 1996 and paid in March 1996.

Note 11 -  Investment in Twenty Services Holding, Inc.

        The Company owns 6,000 shares of common stock of Twenty Services
        Holding, Inc. (the Holding Company), a holding company which owns
        approximately 54% of the Company's outstanding common stock.  The amount
        paid for the Holding Company's common stock ($60,000) has been deducted
        from stockholders' equity in the accompanying balance sheet.

<PAGE>
 
                     TWENTY SERVICES, INC., AND SUBSIDIARY
                     -------------------------------------

             Schedule I - Marketable Securities - Other Investments

                      For the Year Ended December 31, 1996
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
                                                                                        Amount at which
                                                                                       each portfolio of
                                            Number of                                equity security issues
                                            shares or                 Market value       and each other
            Name of Issuer               units-principal              of each issue      security issue
             and title of                amount of bonds   Cost of     at balance        carried in the
              each issue                    and notes     each issue   sheet date        balance sheet
           ---------------               ---------------  ----------  -------------  ----------------------
<S>                                      <C>              <C>         <C>            <C>
 
Equity Securities Available-for-Sale:
   James River Corp. PFD 8.25%.........           10,000  $  254,503     $  253,750              $  253,750
   Berkley W R Corp Dep Shs
    Repstg 1/6 Cum PFD Ser A
     7.375%............................            7,000     147,815        181,125                 181,125
   Chase Manhattan Corp. PFD
    8.375%.............................            6,000     148,682        151,500                 151,500
     Yld 8.375%........................
   Citicorp Dep Shs Repstg 1/10
     PFD Ser 20 Non Cum 8.3%...........            6,000     145,818        160,500                 160,500
   Merrill Lynch & Co Inc 9%
     Dep Shs Rep Ser A 1/400
     Cum PFD...........................            2,000      50,000         58,500                  58,500
   Pacificorp Perp PFD Yld 7.92%.......            6,000     145,533        153,750                 153,750
   CitCorp 8.5% Non-Cum PFD............            6,000     150,000        162,000                 162,000
   Bankers Trust 7.75% PFD.............                      150,000        156,750                 156,750
                                                          ----------     ----------  ----------------------
 
Total Equity Securities-for-Sale.......                    1,192,351      1,277,875               1,277,875
                                                          ----------     ----------  ----------------------
 
Debt Securities Held-to-Maturity:
  Fed Natl Mtg Assn Mtn
   CPN 8.420% Due 10/20/04
     DTD 10/20/94 FC 4/20/95
     Call 10/20/97 @100.000............          300,000     301,098        307,125                 301,098
 
GNMA Mortgage
  Backed Certificates, Due 2012........                       18,067         18,067                  18,067
                                                          ----------     ----------  ----------------------
 
Total Debt Securities..................                      319,165        325,192                 319,165
                                                          ----------     ----------  ----------------------
 
Totals.................................                   $1,511,516     $1,603,067              $1,597,040
                                                          ==========     ==========  ======================
</TABLE>
--------------------------------------------------------------------------------
                                                                            F-17
<PAGE>
 
                                   SIGNATURES

     Pursuant to the requirements of Section 13 or l5() 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.

                                       TWENTY SERVICES, INC.

                                       By: /s/ David J. Noble
                                           ------------------------------------
                                           David J. Noble
                                           President


Dated:     April 14, 1997              
       ------------------------


Signature                      Capacity                   Date
---------                      --------                   ----



/s/ David J. Noble          Chairman and Director      April 14, 1997
------------------------    of Twenty Services, Inc.   --------------
David J. Noble              (the Registrant).    
                            (Principal Executive 
                            Officer)              
                          

/s/ Mary C. Daniel          Assistant Secretary        April 14, 1997
------------------------                               --------------
Mary C. Daniel
 


/s/ A.J. Strickland, III    Vice-Chairman and                  , 1997
------------------------    Director of the            --------------
A.J. Strickland, III        Registrant      
                            
                                            
                            Director of the                    , 1997
------------------------    Registrant                 --------------
James P. Armatas            
                            

                                 Page 36 of 36